Approved by the Board:
MINUTES OF THE BOARD OF COMMISSIONERS
REGULAR MEETING
_________________________
_________________________
The
Board of Commissioners met in the Boardroom of the Administrative Offices,
Present: Commissioners Joseph Graves, Semone
James, Peter Kramer, Julee Rodocker, Robin Smith and Sandra Zerkle.
Absent: Commissioner Robert Cochran.
(Note: 4th Ward vacancy exists.)
The
Secretary declared a quorum present.
Chairperson
James asked all to rise for the Pledge of Allegiance to the Flag.
Chairperson
James called the meeting to order at
APPROVAL OF MINUTES
By
motion of Commissioner Graves, seconded by Commissioner Smith the minutes of
the
PUBLIC COMMENT
THE
CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON
ANY AGENDA SUBJECT AND ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE
AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT.
There
were no public comments.
COMMUNICATIONS
Letter
dated
Received
and placed on file.
COMMITTEE REPORTS
EXECUTIVE COMMITTEE
The
Executive Committee of the Board of Water and Light met at the Executive
Offices, Lansing beginning at Tuesday
Executive
Committee Chair, Santiago Rios called the meeting to order and asked the
secretary to call the roll. The
following members were present:
Commissioners Robert Cochran, Semone James, Santiago Rios, and Robin
Smith. Commissioner Graves was also
present.
Absent: None
Public Comments
There
were no public comments.
Discuss Pending Litigation
Moved
by Commissioner James, seconded by Commissioner Cochran to go into executive
session to discuss a pending litigation with outside counsel, Melissa Jackson
of Foster, Swift, Collins & Smith, P.C. protected by the Open Meetings Act
exemption MCL 15.268(h). (
Yeas: Commissioners Cochran,
Nays: None.
Absent: None
Carried
unanimously.
Moved
by Commissioner Graves, seconded by Commissioner Cochran that the Executive
Committee return to open session.
Carried
unanimously.
The
Executive Committee meeting reconvened in open session at
Commissioner
Rios advised that the Executive Committee received an update regarding pending
litigation.
There
being no further business, the meeting adjourned at
Respectfully
submitted,
Executive
Committee
The
report will be filed with the minutes of the
The Human Resource Committee of the Board
of Water and Light met at the Executive Offices, Lansing beginning at
Human Resource Committee Chair, Julee
Rodocker called the meeting to order and asked the secretary to call the
roll. The following committee members
were present: Commissioners Robert
Cochran, Julee Rodocker and Sandra Zerkle.
Absent:
Commissioner Joseph Graves.
Public Comment
There were no public comments.
Director of Internal Audit Six-month Review
Susan
Pifer, Director of Internal Audit and Board appointee requested a closed
session for the purpose of receiving her six-month performance review as
permitted by Open Meetings Act exemption MCL 15.268(a). (
Yeas: Commissioners Cochran, Rodocker, and Zerkle.
Nays: None.
Absent: Commissioner Graves.
Carried
unanimously.
Moved
by Commissioner Cochran, seconded by Commissioner Zerkle that the Human
Resource Committee return to open session.
Carried
unanimously.
The
Human Resource Committee meeting reconvened in open session at
On
motion by Commissioner Cochran, seconded by Commissioner Zerkle, the
Human Resource Committee recommended that the salary increase package for Susan
Pifer, Director of Internal Audit be forwarded to the full Board for
discussion.
Action:
Carried unanimously
There
being no further business, the meeting adjourned at
Respectfully
submitted,
Julee
M. Rodocker, Chair
Human
Resource Committee
The
report will be filed with the minutes of the
AD HOC COMMITTEE
The
Ad Hoc Committee on Workforce Development met at the Executive Offices,
Lansing, beginning at
Ad
Hoc Committee Chair, Sandra Zerkle called the meeting to order and asked the
secretary to call the roll. The
following members were present:
Commissioners Robert Cochran, Santiago Rios, and Sandra Zerkle. Alternate committee member Joseph Graves was
also present.
Absent: Commissioner Julee Rodocker
Public Comments
There
were no public comments.
CSO Project
·
With
additional staffing and equipment, the BWL could perform any or all of the
water main work that the CSO contractors now perform.
·
Approximate
annual expenditures paid to the City of
·
Based
on historical comparisons there may not be any savings to BWL customers. However, it would allow the development of
new employees to replace those retiring within the next few years.
·
The
City would likely be concerned with two different construction forces working
in the same streets.
·
The
State Revolving Fund (SRF) advantage may be lost to the BWL if the BWL performs
the work.
·
CSO
related work stops in November and starts back in the spring. This may be a staffing concern as BWL Water
T&D Maintenance is essentially completing current staffing.
After
lengthy discussion, the Ad Hoc Committee directed staff to draft a letter to the
appropriate parties indicating the BWL’s interest in establishing dialogue to
discuss its ability to do some of the CSO work.
The City and the BWL share the same objective in wanting to serve its
customers in the most effective and efficient means possible. Therefore, the letter will reflect the BWL’s
proactive interest in possibly addressing the task at hand. It was also noted that the BWL might propose
working in one area as a demonstration of its ability to handle the task, which
might involve the creation of one water crew (4-5 persons) who could also be
utilized on other BWL projects as well.
In addition, staff will also develop a business plan to determine the
feasibility of either doing some, all or none of the CSO work in a cost
effective and competitive manner.
Master Plumbers
Dick
Peffley, Executive Director of Operations gave a verbal update regarding Master
Plumbers in relation to the Lead Service Replacement Program. When replacing a lead service, the BWL chops
off the service line on the customer’s side of the meter, installs a new
service line, and reconnects the service.
A plumber is then called to make the final termination to the customers
plumbing, as the BWL is not allowed to work on the customer’s side of the meter
because it is a violation of the City and State plumbing code. The former General Manager previously
approached the City to obtain a variance to work 2 or 3 feet down from the
meter to allow the BWL to reconnect the meter and provide one stop
shopping. However, the variance was
denied because the BWL is not licensed.
If the variance had been approved then the BWL would have hired a master
plumber as part of the licensing requirement.
Currently, there are two individuals in the bargaining unit willing to
take a license. In addition, the BWL
could decide to become a master plumber contractor by establishing a limited
liability corporation (LLC). The LLC
would allow the BWL to file for full permits, perform work on BWL facilities,
and have a master plumber on staff. Mr.
Peffley is in the process of researching additional information regarding the
above matter.
Commissioner
Rios noted that he viewed the topic from a broader perspective in that the
BWL’s creditability is paramount in terms of any work that it performs. It appears that the BWL should have the
highest possible certification available relative to its ability to do water
work. A master plumber on staff serves
the BWL in terms of creditability, general work, and contract negotiations,
i.e. CSO Project, Delta Township, etc.
There is a significant amount of work done on BWL premises that is
classified as plumbers work but contracted out to vendors, which raises the
question of what can the BWL do more effectively and efficiently in house, if
it had its own master plumber. In
addition, the Ad Hoc Committee is seeking to develop the workforce and as such,
they have discussed planning and developing people
Susan
Pifer, Director of Internal Audit provided a handout entitled, “Vendor
Analysis” and gave a brief overview of its contents. A complete copy of the handout dated
Assumptions
·
Reported
payments to plumbing companies represent labor, tools and equipment (not
materials)
·
Plumbing
services provided by plumbing companies may be adequately performed or
supervised by Board employees
·
Reported
payments to (three) plumbing companies is representative of the work volume
that a licensed employee-plumber (or plumbers) will perform
·
Average
salaries do not include fringe benefits or tools and equipment required by a
licensed plumber (or plumbers)
Conclusions
·
2007
meter connect and reconnects approached $160,000 in payments to John E. Green
·
Average
salary for a master plumber in
·
Assuming
40% fringe benefit rate and a discount rate of 70% for billable hours, the
annual cost for a master plumber employed by the BWL is $96,000 or 60% of the
cost to contract meter connects and reconnects
·
Current
contracts for heating, plumbing, valve installation and boilermakers to perform
work on LBWL premises exceed $1 million
Limitations
·
Michigan
Compiled Law (MCL) 338.3525 provides that plumbing shall not be performed
unless a “plumbing contractor” who is responsible for the work has secured a
permit
·
MCL
338.3531 provides that only a sole proprietorship, partnership, corporate, or
limited liability company may apply for licensure as a “plumbing contractor”
·
Although,
MCL 338.3521 provides that licensure is not required for installation of pipe
from the water main to the services, a permit and inspections are still
required per MCL 338.3525(b)
·
MCL
338.3551 provides that where a business requires the regular employment of a
plumber, a licensed master plumber shall be authorized to secure permits for
installations of plumbing on the premises owned or occupied and used by the
business
Next
Steps
·
Even
if the Code is interpreted to prohibit meter connects and reconnects by an LBWL
master plumber-employee, current contracts for plumbing on LBWL premises exceed
$1 million
·
Special
filings may permit a master plumber employed by LBWL to pull the permits and
supervise on-premises work, e.g. City of
·
Refer
citations to general counsel for further interpretation regarding scope of work
legally permissible for a master plumber-employee
Ms.
Pifer noted that the vendor analysis was a cursory level review. Additional research relative to the specific
work conducted and the skill level of the employee conducting the work, i.e.
master plumber, journeyman plumber, etc. may be required.
Following
the presentation materials, Dick Peffley noted that prior to the report a
request to add two welders on staff was made for the purpose of succession
planning and reducing the amount of contract work awarded to outside
vendors. It was also clarified that a
BWL master plumber can perform work on BWL facilities. In addition, there was also discussion as to
what contractor work was performed by a master plumber and/or journeyman
plumber pipe fitter.
On
recommendation by Commissioner Rios, it was suggested that the BWL investigate
and move forward the hiring of a master plumber and journeyman in order to help
increase the BWL’s creditability in this area and build workforce
development.
In
addition, Jim Dravenstat-Morceri, Assistant Business Manager of IBEW Local 352
recommended that the BWL search for a master plumber with heating and air
conditioning credentials. The added
skill level would allow the BWL to avoid contracting heating and air
conditioning work. It was also noted
that revenue generated from BWL inspections is credited to the general fund but
should be reflected in Water Department revenue.
J.
Peter Lark, General Manager noted that there was a recent meeting in which he
met with Water Department management to discuss the departments concerns. It is his belief that they are beginning to
address those issues, which could include the addition of a master plumber. After further discussion, it was noted that
the various suggestions are all ideas that can be explored.
Updates
Denise
Mulder, Director of Human Resources provided updates on several topics that
include the items listed below.
Contract
Language Re-establishing Groundsmen. The groundsmen position was previously used
as a feeder role to the lineman helper.
Lineman helper duties essentially combined the responsibilities of a
truck driver and groundsmen. The lineman
helper position eliminated approximately 15 years ago provided employees
exposure to the work conducted by a lineman.
Therefore, if an employee were interested in that position then they
would traditionally begin as a groundsman, become a lineman helper, and then
apply for the lineman apprentice pool to become a lineman if they so
desired. Presently, the BWL posts
notices three times a year advertising all apprenticeships within the
organization. In its current capacity,
any employee is eligible to test and be considered for an apprenticeship
position. It was suggested that the BWL
consider re-establishing the groundsmen role to increase the number of
candidates who successfully transition from an apprentice to a lineman. In addition, the committee also discussed
utilizing a combined lineman helper program in which persons can either
attrition from a groundsmen to lineman apprentice to lineman, or apply for the
lineman apprenticeship regardless of their current work classification. As such, the combined program would allow the
BWL to pull from the entire employee resource pool and prevent the program from
becoming too limiting in nature. After
further discussion and upon recommendation by Commissioner Zerkle, it was
suggested that Denise Mulder and
Commissioner Graves
departed the meeting at
Erickson
Training Facilities. No update was provided.
High
School Partnership for Training Linemen in Schools.
The committee discussed the possibility of creating a high school
partnership; whereas, persons could apply for a linemen helper position and
possibly test to become a lineman apprentice.
A program of this nature would allow the BWL to draw from the local
population and expose the student body to a career in skilled trades. Concern was expressed relative to the concept
of allowing high school participants to receive the higher salaried
positions. As a result, it was suggested
that giving student participants consideration regarding entry level BWL
positions maybe more appropriate. The
committee also discussed the necessity of expanding its recruiting efforts to
build on the number of BWL lineman apprentices but to also increase the number
of existing lineman on staff. Although,
salaries are competitive it was noted that lineman have expressed concerns regarding
the contribution amount for the BWL’s defined contribution plan. Denise Mulder noted that the Human Resource
Department have begun discussions regarding the improvement of recruiting
efforts and the employment process, which may include advertising linemen
positions in the upper peninsula. After
further discussion and upon recommendation by Commissioner Zerkle, it was
suggested that Denise Mulder and
Diversity
Employee Recruitment. It was reported that former Diversity
Administrator/Ombudsperson, Shan Shaw accepted a new position with another
entity and is no longer with the BWL.
However, prior to his departure a diversity plan was submitted to the
General Manager per previous request.
The plan addressed the need for the General Manager to make known to
staff and management his interest in diversity.
Denise Mulder advised that diversity is not the responsibility of one
but is driven by the employment process.
Therefore, anyone who touches the employment process should understand
diversity and develop a methodology to expand the BWL’s recruiting efforts. Some of those efforts include periodic
diversity training sessions and concentrated outreach. It was further noted that Peter Lark is
scheduled to participate in an eight month CEO Program to enhance his knowledge
of diversity. In addition, it was also
suggested that the BWL attend Michigan Works Job Fairs and work with existing
programs such as the Hope Scholarship and Junior Achievement in an effort to
expand its recruiting efforts.
Contract
Work Back In-house. No update was provided.
JTTC
Survey. The Joint Technical Training Committee (JTTC)
developed a survey, which was sent to every department that contains bargaining
unit employees. The respective areas
formed departmental training committees overseen by the JTTC in order to
provide input. The JTTC will tabulate
the survey results and forward recommendations to Denise Mulder who will review
and evaluate the recommendations for submittal to senior management for further
review.
There
being no further business, the meeting adjourned at
Respectfully
submitted,
Sandra
Zerkle, Chair
Ad Hoc
Committee
The
report will be filed with the minutes of the
COMMITTEE OF THE WHOLE
The
Committee of the Whole of the Board of Water and Light met at the Executive Offices,
Lansing beginning at
Committee
of the Whole Chair, Semone James called the meeting to order and asked the
secretary to call the roll. The
following members were present:
Commissioners Robert Cochran, Semone James, Peter Kramer, Santiago Rios,
Julee Rodocker, Robin Smith, and Sandra Zerkle.
Absent: Commissioner Joseph Graves
Public Comments
Keith
Harrison, Ronald Shull, and Paul David Arnold of the Sons of Union Veterans of
the Civil War, Lansing/Sunfield Curtenius Guard Camp #17 presented a
certificate of appreciation to members of the Board of Water and Light (BWL),
Maintenance and
Background on Establishing a Foundation
Dennis
W. Fliehman, President of Capital Region Community Foundation (CRCF) in
Private
Foundation
·
Advantageous
for organizations who want to exercise a great deal of control over all aspects
of charitable giving; including the investment and supervision of money.
·
Additional
staffing needs are typically necessary to manage the gifts, address
governmental regulations, and file appropriate tax forms.
Business
Advised Fund
·
Advantageous
for businesses who want the satisfaction of charitable giving without the
administrative burden.
·
Gifts
are made corporately or by individuals to a fund managed by CRCF.
·
The
advisory committee for the respective fund is not allowed to invade the
principle unless by extraordinary circumstance.
The donation becomes the asset of the community foundation with
direction from the BWL as to how it would like a portion of the net income
distributed. Maximum distribution amount
is 4% (or a total of 5% including the CRCF fee).
·
CRCF
Fee – 1.25% annual fee based on the value of the fund, which allows CRCF to
provide grants to numerous non-profit organizations in the community.
·
Investment
Management Fee – Approximately 62 basis points that are prorated across all
funds.
·
Fund
Managers – There are eleven fund managers and CRCF has a fee based consultant,
named Itech, Inc. that selects and monitors the managers on a quarterly
basis. Asset allocation is 70% equity
and 30% fixed.
·
Donations
are tax deductible and if eligible one may receive a 50% tax credit on State of
·
Minimum
investment amount is $10,000.
Following
the presentation, the Board of Commissioners discussed the merits of a private
foundation, a business advised fund, and a 501C3 relative to the needs and
goals of the BWL. It was suggested that
the Board consider leaving their existing community sponsorship mechanism as is
and raise additional funds to establish a private foundation. After further discussion, the Board directed
staff to provide the following information:
cost associated with establishing a private foundation, the amount of
funds currently spent for community sponsorships including administrative
costs, the amount spent on community sponsorships during the past 3-5 years,
and the parameters and cost associated with establishing a 501C3.
Update on the
Robert
Trezise, Jr., President of the Economic Development Corporation of the City of
The
Commissioners noted their excitement about the Phoenix Project and the positive
impact that it will have on the community.
The influx of new jobs and removal of expenses related to maintaining
the
J.
Peter Lark, General Manager noted that they are working on a business case for
the Phoenix Project. In addition, the
BWL will gain electric and water load and they are also seeking to gain steam
and chilled water for said location.
After
further discussion, the Board asked Mr. Trezise to provide them with a packet
of materials that contained an executive summary and term sheet, which would
speak to the specifics of the project.
The Board also directed staff to prepare a business case that speaks to
the additional utility load, financials, and intangible value that the project
will generate.
There
being no further business, the meeting adjourned at
Respectfully
submitted,
Semone M.
James, Chair
Committee of
the Whole
The
report will be filed with the minutes of the
AD HOC COMMITTEE
Commissioner
Zerkle called the Ad Hoc to order at
Public Comments
There
were no public comments.
Master Plumber/Outside Services
Sue
Pifer, Director of Internal Audit handed out a Vendor Analysis of Outside
Services listing nine outside contractors who have done work for the BWL and
who were paid over $25,000.00. Miller
Pipeline is currently being used for the lead service replacement and William
E. Walter for HVAC work. The Board of
Water and Light has been doing 50% of lead service replacement work. By the beginning of the next construction
season, the board will hire permanent employees and will be doing 75% of this
work. Also by the next construction
season, board forces will do 100% of the HVAC work; this work is currently
being done by outside forces. As this is
a new classification, a wage structure will be set up. There will be considerable savings to the BWL
by hiring its own labor. Both of these
projects will be evaluated in the future to make sure they are financially
prudent.
There
are currently two Board of Water and Light employees who have expressed an
interest in taking the test to become the Board’s Master Plumber. If one of these persons gets the master
plumber position, the job that was vacated will be replaced.
CSO Project
As
directed at the last Ad Hoc Committee Meeting, General Manager Lark drafted a
letter to Chad Gamble, Director of Public Service for the City of
Updates
Denise
Mulder stated that the results from the Joint Technical Training Committee
(JTTC) survey results are back from the departmental training committees and
are being analyzed. A list of
recommendations will be forwarded to senior management for review such as for
organizational priorities. General
Manager Lark spoke of a program in the
Denise
Mulder spoke on a program to partner with the local school system and the best
methodology is through LCC Technical education.
There are 8 positions that would be entry-level positions that we
currently hire from the outside. The BWL
and the union would be willing to set aside a certain number of those positions
for incoming high school students; this would have to be determined on an
annual basis because of manpower planning.
This program is not for linemen but for entry-level positions into the
BWL. Charles Moore reported on a canned
curriculum, which is available through
General
Manager Lark reported on the responsibilities of the newly established
Diversity Advisory Council. Members are
Sue Devon,
Commissioner
Zerkle made the recommendation to disperse the Ad Hoc Committee as the original
goals of the committee have been met.
Issues are in process.
Commissioner Zerkle will give a final report at the next Committee of
the Whole. The Ad-Hoc Committee would
like to receive an update at the end of 2008 from Internal Auditor Susan
Pifer. This report should show a
comparison as to whether or not there is a cost savings to the BWL by bringing
some of the contract work in-house.
Motion
for adjournment was made by Commissioner Rios, seconded by Commissioner
Cochran. There being no further
business, the meeting adjourned at
Respectfully
submitted,
Sandra
Zerkle, Chair
Ad Hoc
Committee
The
report will be filed with the minutes of the
FINANCE COMMITTEE MEETING
The
Finance Committee met at the Executive Offices,
Finance
Committee Chair, Robin Smith called the meeting to order and asked the acting
secretary to call the roll. The
following members were present:
Commissioners Semone James, Peter Kramer, and Robin Smith. Alternate committee members Robert Cochran
and Joseph Graves were also present.
Public Comments
There
were no public comments.
Utility Rate Adjustments
Sue
Devon introduced William Aldrich the new Manager of Finance and Planning area.
General
Manager Peter Lark presented an overview of the direction of the BWL regarding
a potential rate increase. The FY08
budget called for rate increases of 4% in electric, 6% in water and 6% in
steam. Instead, Mr. Lark is suggesting a
5% increase in the electric rates.
Based
on the FY08 budget, net income projections are not positive but the net income
for the 1st quarter of this year was very positive because of
excellent wholesale and retail electric sales.
The projected combined net income losses for FY08 of $5.8M, together
with the capital expenditures and debt service would result in a cash deficit
of $11M. Even though the first quarter
of operations boosted the projections for FY08 to a positive net operating
income for the year of $1.2 million, it is still significantly below the $20M
requirement to generate a 4% return on fixed assets.
A
5% increase will amount to $1.87 for a residential customer per month. The BWL rates will still be approximately 20%
below Consumers Energy. The $48M cash on
hand at the end of FY07 is very important to maintain as it affects our bond
rating and because there will be a lot of expenditures in the future, some of
which involve the new mercury Sox and Nox rulings. In addition to being considerate of our
customers, we need to be able to have the reserves and meet capital
expenditures.
Chief Financial Officer Sue Devon spoke on the financial plan that was presented in May of 2007, which contained the original rate increases for 2008. The financial goals of the BWL are to maintain credit quality, ensure adequate liquidity, maintain rate competitiveness, efficient and appropriate use of capital and to have fin