Approved by the
Board: January 27, 2009
MINUTES OF THE BOARD OF COMMISSIONERS’ RESCHEDULED MEETING
____________________________
Tuesday, November 18, 2008
____________________________
The Board of Commissioners met in the
Boardroom of the Administrative Offices,
Present: Commissioners Robert Cochran (teleconference), Tony DeLuca, Semone James, Peter Kramer, Tracy Thomas and Sandra
Zerkle.
Absent:
Commissioners Frank Lain and
Julee Rodocker.
The Secretary declared a quorum present.
Acting Chairperson Zerkle called the meeting
to order at 5:35 p.m.
APPROVAL OF MINUTES
Motion by Commissioner Kramer, seconded by
Commissioner Thomas, to approve the minutes of the regular meeting held
September 23, 2008 and special board meetings held October 16 and 29, 2008.
Carried unanimously.
PUBLIC COMMENTS
THE CHAIR ANNOUNCED THAT MEMBERS OF THE
PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT
ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT.
There were no public comments.
COMMUNICATIONS
Card received September 25, 2008, from Ann L.
Andrews concerning proposed BWL coal plant.
Received and placed on file.
Card received September 26, 2008, from Eric
W. Crosley concerning proposed BWL coal plant.
Received and placed on file.
Verbal complaint received September 26, 2008,
from Tandy Bidinger regarding general manager’s salary increase.
Received and placed on file.
Card received October 1, 2008, from Matt
Nester concerning proposed BWL coal plant.
Received and placed on file.
Card received October 1, 2008, from Carol Ann
Brun Del Re concerning proposed BWL coal plant.
Received and placed on file.
Card received October 7, 2008, from Frank
Joranko concerning proposed BWL coal plant.
Received and placed on file.
Card received October 7, 2008, from Virginia
Oemke concerning proposed BWL coal plant.
Received and placed on file.
Card received October 7, 2008, from Rebecca
A. Payne concerning proposed BWL coal plant.
Received and placed on file.
Letter dated October 20, 2008, from Douglas
B. Jester urging BWL to adopt an Energy Efficiency PAYS (Pay-As-You-Save)
program.
Received and placed on file.
Card received October 21, 2008, from Molly
Ryan concerning proposed BWL coal plant.
Received and placed on file.
Card received October 24, 2008, from Kevin
Curtin concerning proposed BWL coal plant.
Received and placed on file.
COMMITTEE REPORTS
October 8, 2008
The Executive Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 9:00 a.m. on Wednesday, October 8, 2008.
Executive Committee Chair Frank Lain called the meeting to order. The following members were present: Commissioners Semone James, Peter Kramer, Frank Lain and Sandra Zerkle. Commissioners Robert Cochran, Tony DeLuca, and Tracy Thomas were also present.
Absent: None.
There were no public comments.
In response to a Commissioner inquiry, Ms. Devon noted that
the BWL could invest a maximum of 3% of assets or $25 million in any one
particular institution. It was also
noted that LaSalle Bank and
Following further discussion, the Commissioners commended staff for their proactive efforts in the management and safeguarding of the BWL’s cash assets.
Bargaining Unit Contract. Commissioner Zerkle reported that the IBEW Local 352 bargaining unit contract negotiations are going well and appear to be coming to an end. After the contract is presented to the union body, union representatives will then ask the Board of Commissioners to hold a Special Board meeting to ratify the contract. The current contract is set to expire November 1, 2008.
There being no further business, the meeting adjourned at 9:29 a.m.
Respectfully submitted,
Frank Lain, Chair
Executive Committee
The Finance Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 4:00 p.m. on Thursday, October 14, 2008.
Finance Committee Chair Peter Kramer called the meeting to order and asked the secretary to call the roll. The following members were present: Commissioners Robert Cochran, Peter Kramer and Tracy Thomas. Alternate committee members Tony DeLuca and Semone James were also present in addition to Commissioner Frank Lain.
Absent: Commissioner Julee Rodocker
There were no public comments.
Motion by Commissioner Cochran, seconded by Commissioner Thomas to approve the minutes of the Finance Committee meeting held September 18, 2008.
Action: Carried unanimously.
Marie Vanerian, First Vice President and Associate Financial Advisors Michael Muirhead and Boll Mackay with Merrill Lynch Institutional Consulting Group further expounded on the process and noted that they review risk and return, growth, philosophy, past performance and whether or not the performance is repeatable. Every year Merrill Lynch reviews investment manager firms and their individual processes. In addition to the normal review process, the investment manager firms were asked to fill out a 15-page questionnaire for each respective asset class to assist in the analysis and selection process. Merrill Lynch negotiated relatively low basis points for both respective plans while attempting to balance risk and return in the selection of the investment managers. In response to a Commissioner inquiry, Ms. Vanerian also provided insight as to the current financial environment from an economic and historical standpoint relative to regulatory changes and the ripple effect on the economy.
Following further brief economic discussion, Ms. Devon advised that she wanted to ensure the committee’s comfort level with the process and the outcome. As such, staff will move forward with the transition phase of the project with the guidance of Merrill Lynch.
Update on Internal Auditor Selection
Following brief clarification regarding the vendor’s fees and expenses, Mr. Flowers recommended the selection of Global Business Resource Group Incorporated due to their scope of work, communication, past experience and quality of work. Subsequent to discussion regarding the cost differential between vendor fees and expenses, the Finance Committee took the following action:
On motion by Commissioner Lain, seconded by Commissioner DeLuca, the Finance Committee moved to award the RFP for the Internal Auditor Executive Search Services to Global Business Resource Group Incorporated.
Abstain: Commissioner James.
Action: Carried unanimously.
Additional Comments:
Mr. Flowers noted that he would move forward and provide the Finance Committee with an update next month. In response to a Commissioner inquiry, Mr. Flowers also noted a 30-60 day selection process.
Commissioner Kramer advised that there had been varying opinions from different Commissioners over time regarding the Internal Auditor position. As such, he asked the committee members if there were any particular qualities or qualifications of importance that the search firm should be aware of as they move forward in the process. Commissioner Kramer also indicated that he wanted all of the Commissioners to come out of the process buying into the qualifications of the individual and knowing that it is the right choice.
In response to Commissioner Kramer’s inquiry, Commissioner
James advised that she would like to see highly qualified and able
candidates. Commissioner Lain noted that
he would defer to
There being no further business, the meeting adjourned at 4:47 p.m.
Respectfully submitted,
Peter W. Kramer, Chair
Finance Committee
The Pension Fund Trustees held their annual meeting on November 4, 2008, to receive the financial statements for the Defined Benefit Pension Plan, Defined Contribution Pension Plan and the Post-retirement Benefit Plan. The plans performance reports were reviewed in detail for the period ending June 30, 2008.
Executive Director and Chief
Financial Officer
Staff did not propose any changes to the existing policies that include the Defined Benefit Pension Plan Investment Policy, Defined Contribution Pension Plan Investment Policy and the Post-retirement Benefit Plan and Trust Investment Policy.
There being no further business, the meeting adjourned at 6:15 p.m.
Respectfully submitted,
Frank Lain, Chair
Pension Fund Trustees
MINUTES
BOARD OF WATER AND
LIGHT
PENSION FUND
TRUSTEES’ ANNUAL MEETING
Present: Trustees
Robert W. Cochran, Tony DeLuca, Semone M. James, Frank Lain, Julee M. Rodocker
and Tracy Thomas.
Absent: Trustees Peter W. Kramer and Sandra Zerkle
Staff Present: General Manager J. Peter Lark, Executive
Director and Chief Financial Officer
Consultant Present: First Vice President Marie Vanerian, Associate Financial Advisors Keith Azar and Michael Muirhead of Merrill Lynch.
The Secretary declared a quorum.
Chairperson Lain called the meeting to order at 5:30 p.m.
There were no public comments.
Executive Director and Chief Financial Officer
First Vice President Marie Vanerian with Merrill Lynch provided an overview of fiscal year end market returns for the Defined Benefit Pension Plan for the period ending June 30, 2008. It was noted that in determining basis performance measurement, Merrill Lynch reviews risk return and responsibility risk of the portfolio. They also measure risk in a variety of different ways including that of standard deviation and time weighted rate of return. Associated charts and reports also reviewed during the presentation included the following:
Total Portfolio Performance Summary
· There was a 0.0% rate of return as of June 30, 2008. The Defined Benefit plans performance ranks 15% for March 31, 2008 to June 30, 2008. Active managers outperformed the bear benchmark by 1.3%. It is of primary importance to see absolute positive returns first and economic returns secondly.
Asset and Manager Allocations
· The graphical information provides a breakdown between asset and manager allocations. The plan was underweight in Core and overweight in International Equity and Large Cap Growth. Large Cap Growth also outperformed Large Cap Value approximately 700 basis points during the quarter, which lead to its out performance of the benchmark.
Investment Earnings and Cash Flows
· These statistics provide the investment earnings and cash flows for each asset category during the last quarter, previous year and cumulative earnings. In the future, as the information becomes more meaningful, it will also highlight the investment managers that have done extremely well with their respective portfolios and also display a snapshot of the cash flow going in and out.
Distribution of Returns
· The annualized return for the period of May 2007 to June 2008 was –6.7%, which improved to 0.0% for the period of March 2008 to June 2008. The annual return also outperformed the benchmark for the aforementioned quarter.
· Plan assets by class
· Historical performance of funds
· Historical performance benchmarks
In response to a Trustee request, it was noted that future benchmark reports would contain the corresponding fund information on the same page. It was also advised that once the transition from Prudential to ICMA is complete, the Board of Trustees would begin to see new reporting.
In response to a Trustee inquiry, it was noted that the BWL’s VEBA funding is doing well compared to other local entities. The BWL’s policy also dictates that the trust will be fully funded in 15 years.
Marie Vanerian provided a brief overview of fiscal year end market returns for the Post-retirement Benefit Plan and Trust for the period ending June 30, 2008. Summary reports pertaining to the trusts performance highlighted the following areas: total portfolio performance, asset and manager allocations, investment earnings and cash flows, and distribution returns. It was noted that a glossary of terms is contained in the report to aid in understanding the terminology. In the future, the report will also contain a running addendum that speaks to policy changes and various matters that the board has considered over time. The addendum will provide new board members with a history of decisions made by the board to provide insight regarding the trust. In addition, it was also advised that the trust was overweight in Cash and Cash Equivalents and underweight in Large Cap Exposure. There was also underperformance in the bond accounts due to issues with some of the bonds contained within the portfolio. The total distribution of returns for March 2008 to June 2008 was –1.7% and it ranked 68% against other managers, which does not take into account risk factors that the peer group comparison is incurring within their respective portfolios. Following the presentation, the Pension Fund Trustees took the following action:
Moved by Trustee James, seconded by Trustee Thomas, to approve the following resolution:
ACCEPTANCE OF 2008 AUDITED FINANCIAL STATEMENT FOR DEFINED BENEFIT PENSION PLAN, DEFINED CONTRIBUTION PENSION PLAN, AND POST-EMPLOYMENT RETIREE BENEFIT PLAN (VEBA)
Resolved, that the Corporate Secretary receive and place on file the Defined Benefit, Defined Contribution, and Post-employment Retiree Benefit Pension reports presented during the Pension Trustee Meeting.
_______________________________________________________________________
Staff comment: All three Plans received clean, unqualified audit reports.
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Discussion: In response to Trustee Cochran’s inquiry, Interim Director of Internal Audit Charles Moore noted that he had reviewed the pension packet materials and supported the documents.
Action: Carried unanimously.
There being no further business, the Pension Fund Trustees meeting adjourned at 6:15 p.m.
Submitted by:
Rhonda Jones
Corporate Secretary
The Committee of the Whole of the Board of Water and Light met at the Executive Offices, Lansing beginning at 5:30 p.m. on Tuesday, November 11, 2008.
Committee of the Whole Chair Sandra Zerkle called the meeting to order and asked the secretary to call the roll. The following members were present: Commissioners Robert Cochran, Tony DeLuca, Semone James, Peter Kramer, Frank Lain, Julee Rodocker, Tracy Thomas and Sandra Zerkle.
Absent: None.
Stephen Rall of
Commissioner Zerkle noted that she would ask the Board to consider the matter and would contact Mr. Rall regarding their response. Contact information was provided to Secretary Jones on behalf of the Board.
Doug Jester of
Motion by Commissioner Lain, seconded by Commissioner DeLuca to approve the minutes of the Committee of the Whole meeting held September 9, 2008 as amended.
Action:
Carried unanimously.
General Manager J. Peter Lark presented the proposed
resolution. The discharge of easements
is no longer needed for facilities that have been removed as a consequence of
the Ottawa Property sale. The BWL
released the property to the City of
On motion by Commissioner Cochran, seconded by Commissioner DeLuca, the Committee of the Whole agreed to move the proposed resolution for the Discharge of Easements to the full board for consideration and approval.
Abstain: Commissioner Kramer.
Action: Carried unanimously.
On motion by Commissioner Lain, seconded by
Commissioner Cochran, the Committee of the Whole corrected the last line in
staff comments to read, “City of
Abstain: Commissioner Kramer.
Action: Carried unanimously.
Consideration of PURPA Standards Under the
J. Peter Lark introduced the proposed resolution
concerning PURPA Standards Under the Independence and Security Act of
2007. The Board must consider five
standards that include integrated resource planning, rate design, smart grid
investments and information, and recovery of industrial waste energy. Following the adoption of the resolution,
staff will plan a public hearing and make recommendations for the Board’s
consideration by December 2009.
Discussion:
Commissioner Cochran noted his pride in the BWL and thanked staff for
being ahead of the curve in addressing these matters.
On motion by Commissioner James, seconded by Commissioner Rodocker,
the Committee of the Whole agreed to forward the proposed resolution for the
Consideration of PURPA Standards Under the Independence and Security Act of
2007 to the full board for consideration and approval.
Action: Carried unanimously.
Other
Veterans Day.
Commissioner Lain thanked all veterans who were present at the meeting
and their family members for their support.
Corporate Secretary. On motion by Commissioner Lain, seconded by Commissioner
Cochran, to approve a 3% retroactive salary increase and to renew the contract
for Corporate Secretary Rhonda Jones.
Discussion: The
committee members discussed removing the matter from the Human Resource
Committee, as it was forwarded to committee during a prior board meeting.
Following brief discussion, Commissioner James introduced
a friendly amendment to remove the matter from the Human Resource Committee and
have the Committee of the Whole act on the matter.
Commissioners Lain and Cochran accepted the friendly
amendment.
It was also clarified that the Human Resource Committee
would continue the review of the Corporate Secretary position and the
retroactive salary increase is effective July 1, 2008.
Action: Carried unanimously.
There being no further business, the meeting adjourned at 5:50 p.m.
Respectfully submitted,
Sandra Zerkle, Chair
Committee of the Whole
November 18, 2008
The Finance Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 4:05 p.m. on Tuesday, November 18, 2008.
Finance Committee Chair Peter Kramer called the meeting to order and asked the Secretary to call the roll. Commissioner Peter Kramer and alternate committee members Tony DeLuca and Semone James were present.
Absent: Commissioners Robert Cochran, Julee Rodocker and Tracy Thomas.
There were no public comments.
Motion by Commissioner DeLuca, seconded by Commissioner James to approve the minutes of the Finance Committee meeting held October 14, 2008.
Action: Carried unanimously.
General Manager J. Peter Lark reviewed the proposed utility
rate increases for calendar year 2009.
Due to recent stock market fluctuations and higher than anticipated
operating expenses, i.e. healthcare costs, the value of the Defined Benefit
(DB) Pension fund is lower than expected.
Although, the DB plan is still fully funded, money cannot be transferred
from the DB fund to the Post-retirement Benefit Plan and Trust (VEBA) as
originally budgeted thereby, creating a $6.5 million shortfall for the VEBA fund. Other concerns affecting the current fiscal
budget include fewer cooling degree-days that lead to a 15% decrease in retail
sales, lower than usual natural gas prices, and decreased third party sales. Board of Water and Light (BWL) residential
electric rates are approximately 24% lower than Consumers Energy who recently
filed for a 16.4% residential rate increase with the Michigan Public Service
Commission. BWL residential electric
rates are also lower than DTE, whose rates are currently higher than Consumers
Energy. The BWL’s return on assets is
6.18%. In order to achieve the return on
assets, the BWL would need to increase utility rates by the following: electric 11%, water 47%, steam 30% and
chilled water 60%. Recognizing that
such utility rate increases are not amendable to the ratepayer the BWL budgeted
for rate increases of 4% for electric, 7% for water and 9% for steam. Nevertheless, due to the existing difficult
economic landscape, the City of
In response to Commissioner inquiries, staff advised that
they are not seeing a greater number of uncollectible accounts. Special payment arrangement plans have
increased and they are tracking the number of shutoffs. As of October 30, 2008, the BWL’s cash
balance was $151 million, which includes $47 million of unrestricted
funds. The BWL’s goal is to breakeven
and avoid subsidizing operations through the use of cash reserves. There were no unforeseen capital expenditures
and storm damage costs from June 2008 were primarily covered through
insurance. To staff’s knowledge, there
is no national utility index for items such as commodities and materials. However, the BWL receives information
regarding expected increases for different utilities across the nation, other
Following further discussion, the Finance Committee supported presenting the 2.5% proposed rate increase at the public hearing, deemed more palatable than the originally budgeted amount. In response to a Commissioner inquiry, Interim Director of Internal Audit Charles Moore noted that he thought staff’s proposal to reduce the rate increase amount and address cost containment issues was an excellent approach.
On motion by Commissioner DeLuca, seconded by Commissioner James to approve the proposed resolution regarding the Public Hearing for 2009 Rate Increase.
Action: Carried unanimously.
There being no further business, the meeting adjourned at 4:56 p.m.
Respectfully submitted,
Peter W. Kramer, Chair
Finance Committee
MANAGER’S RECOMMENDATIONS
Resolution 2008-11-1
|
A. |
Discharge of
Easements |
RESOLVED, that the Board of
Commissioners of the Board of Water & Light release, discharge and vacate
the easements at
FURTHER RESOLVED, that the Corporate Secretary be directed to record the release of easement with the Ingham County Register of Deeds.
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Motion by Commissioner James,
seconded by Commissioner Thomas to approve the Discharge of Easements at
Abstain:
Commissioner Kramer
In response to a Commissioner inquiry, it was
noted that the easement, which is small in scale would become a part of the
Accident Fund redevelopment project.
Action: Carried unanimously.
Resolution 2008-11-2
|
B. |
Consideration of
PURPA Standards under the Energy |
WHEREAS, the Energy Independence and Security Act of 2007 (EISA) contains four new Public Utility Regulatory Policies Act (PURPA) standards and a fifth non-PURPA “standard” requiring covered utilities to consider adopting these new standards; and
WHEREAS, the EISA of 2007 amendments to PURPA require covered utilities to begin consideration of 1) Integrated Resource Planning, 2) Rate Design Modifications to Promote Energy Efficiency Investments, 3) Consideration of Smart Grid Investments, and 4) Smart Grid Information. Although, the fifth standard is not an amendment to PURPA, utilities are required to consider “Additional Incentives for Recovery, Use, and Prevention of Industrial Waste Energy” under the same process as the other PURPA standards; and
WHEREAS, the Lansing Board of Water and Light, with electric retail sales in excess of 500 million kWhs meets the definition of a non-regulated covered utility.
RESOLVED, that the
FURTHER RESOLVED, that the Lansing Board of Water and Light shall hold a public hearing to accept public comments on the five EISA standards listed above, in 2009.
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Motion by Commissioner James,
seconded Commissioner Kramer to approve the resolution regarding the
Consideration of PURPA Standards under the Energy Independence Security Act of
2007.
Discussion:
Commissioner Cochran complimented staff for their proactive efforts
regarding the Board of Water and Light’s consideration of PURPA Standards.
Action: Carried unanimously.
UNFINISHED BUSINESS
None.
NEW BUSINESS
None.
RESOLUTIONS
Resolution 2008-11-3
Reappointment of the Charter Position of
Corporate Secretary
The
Board’s Rules of Administrative Procedures specify that the Board is to appoint
a Director and General Manager, Internal Auditor, and Corporate Secretary,
respectively at its first regular meeting following July 1st of each
year or as soon thereafter as may be appropriate.
RESOLVED,
That the Board of Commissioners hereby reappoints the following individual to
the Charter position of Corporate Secretary for fiscal year 2008-2009, or,
until a successor is appointed, whichever last occurs:
Rhonda
Jones, Corporate Secretary
RESOLVED,
That Rhonda Jones’ current employment contract is amended to reflect the new
reappointment and contract commencement period of July 1, 2008.
----------------
Motion
by Commissioner James,
seconded by Commissioner Thomas, to approve the resolution regarding the
Reappointment of the Charter Position of Corporate Secretary.
Discussion: Commissioner Thomas expressed his
appreciation for Corporate Secretary Jones and highlighted that he has been
impressed with her work during his short time on the Board.
Commissioner
James noted her involvement in hiring Corporate Secretary Jones two years ago
and that the decision to reappoint Ms. Jones was a smart Board decision. She further added that she appreciated the
attention given to each board member and looked forward to many more years of
service.
Action:
Carried unanimously.
Resolution 2008-11-4
Compensation Increase
For Charter Position of Corporate
Secretary
RESOLVED,
That the Corporate Secretary, Rhonda Jones, is hereby eligible to receive a
salary adjustment effective as of July 1, 2008.
RESOLVED FURTHER, That the Board
of Commissioners authorizes a three percent (3.00%) salary adjustment for the
Corporate Secretary, based on the evaluation of the employee’s performance from
July 24, 2007 through June 30,2008.
----------------
Motion by Commissioner James, seconded by Commissioner Thomas to approve the resolution regarding the Compensation Increase for Charter Position of Corporate Secretary.
Action: Carried unanimously.
Resolution 2008-11-5
BOARD MEETING SCHEDULE
In
accordance with the Board’s Rules of Administrative Procedure, a schedule of
dates, places, and times for each regular meeting of the Board of Commissioners
for the calendar year shall be adopted in November.
RESOLVED,
That regular meetings of the Board of Commissioners are hereby set for calendar
year 2009 as follows, unless otherwise notified or as a result of date
conflicts with rescheduled City Council meetings:
2009
Tuesday January 27
Tuesday March 24
Tuesday May 26
Tuesday July 28
Tuesday September 22
Tuesday November 24
Meetings
will be held in the Board Room located in the Board of Water and
RESOLVED
FURTHER, That a notice of the meeting schedule be published in the Lansing
State Journal the week of January 4, 2009.
-----------------
Motion
by Commissioner Kramer,
seconded by Commissioner DeLuca to approve the resolution regarding the 2009
Board Meeting Schedule.
Action:
Carried unanimously.
MANAGER’S REMARKS
Tree Trimming. General Manager J. Peter Lark announced that the BWL
issued a request for proposal with respect to tree trimming services. Seven vendors applied and Ash One Company was
selected effective January 2009. The pricing
is 10% below the existing contract, which will save the BWL $500,000 over a 3
year period.
Granger Landfill Gas Renewable Energy. Peter Lark thanked those who were
able to attend the Granger Landfill Gas Ceremony held November 18th. The Granger site will have a generating
capacity of 4.8 megawatts (mW) of electricity and will ramp up to 12 mW with
the possible addition of 3 mW. The
initial start amount is estimated to power approximately 3,000 to 6,000 residential
homes.
BWL
COMMISSIONERS’ REMARKS
Commissioner James noted that she could not attend the BWL
Holiday Party due to a previous engagement.
Commissioner Thomas advised that prior to his board
appointment, his experience with the BWL was that of a paying customer. He has since met employees and management
alike and complimented staff on their contagious positive attitudes. Commissioner Thomas also noted that it is a
pleasure to be associated with the BWL and its staff.
EXCUSED ABSENCE
On motion by Commissioner DeLuca, seconded by Commissioner James to
excuse the absence of Commissioners Frank Lain and Julee Rodocker.
Action: Carried unanimously.
PUBLIC COMMENTS
None.
ADJOURNMENT
On motion by Commissioner Cochran, seconded by
Commissioner James, the meeting adjourned at 6:00 p.m.
/s/ Rhonda Jones, Corporate Secretary
Filed with
November 26, 2008