The Board of Commissioners met in regular session at 5:30 p.m., in the Main Office Building, 123 West Ottawa Street, Lansing, Michigan. The meeting was called to order by the Chair, Ernest Christian.

Absent: Commissioners Graves and O’Leary.

The Secretary declared a quorum present.

The invocation was delivered by Chairman Christian.

The Pledge of Allegiance was said by all.

Motion was made by Commissioner Werbelow, seconded by Commissioner Royal, to approve the minutes of regular session held November 25, 1997 and special session of December 11, 1997.

The carried unanimously.

CHAIRMAN CHRISTIAN ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW, OR AT THE END OF THE MEETING.

No persons spoke.

No communications were received.

There were no committee reports.

RESOLVED, That pursuant to the provisions in Article II, Section 2.1 of the Board’s Rules of Administrative Procedure, the following dates for the regular meetings of the Board of Water and Light Commissioners for the ensuing six (6) months be and is hereby set.

1998

January 27 - Tuesday

February 24 - Tuesday

March 24 - Tuesday

April 28 - Tuesday

May 26 - Tuesday

June 23 - Tuesday

Regular meetings of the Board shall commence at 5:30 p.m.

This schedule is subject to change as a result of date conflicts with rescheduled City Council meetings.

RESOLVED FURTHER, That a notice of the meeting schedule be published in the Lansing State Journal the week of January 4, 1998.

Motion was made by Commissioner Creamer, seconded by Commissioner Werbelow, to approve

Resolution 97-12-2.

RESOLVED, That the Aspect Model 100R Automatic Call Distribution System be purchased for $214,426.00 from Aspect Telecommunications. This system will serve incoming and outgoing customer calling needs for routine and emergency outage operations.

The award recommendation is based on a competitive bid evaluation developed by a cross-functional team. Bid evaluation criteria included compatibility with the BWL Unisys Mainframe and Octel VMX 300 voice mail system, technology that will grow with customer needs, and vendor’s ability to customize and support a state of the art phone system to serve BWL customers.

Other vendors considered with Cintech, Lucent Technologies, Northern Telcom c/o Ameritech, Siemens Rolm and Telcom Communications.

Motion was made by Commissioner Werbelow, seconded by Commissioner Creamer, to adopt

Resolution 97-12-3.

Discussion. In response to questions raised by the Commissioners, General Manager Pandy gave an overview on how the Automatic Call Distribution System will enhance customer service and improve employee efficiency.

Customer enhancements include

1. Reduced wait time in queue (on-hold) and during emergency conditions.
2. Virtually no more busy signals. this new system will handle 100 incoming lines simultaneously, as compared to 31 today.
3. Option to speak to bilingual Customer Service Representative (CSR).
4. Customers will be able to access their account information without engaging a CSR through Interactive Voice Response (IVR).

BWL Employee efficiencies:

1. Staffing flexibility for flex-time and home based options. Home based work stations can be activated during emergency conditions.
2. Allows larger volunteer pool to go on-line during emergencies.
3. Provides outbound calling for collections, satisfaction surveys and marketing (up-selling).

Action. Following discussion, the motion carried.

RESOLVED, That the Board approve Amendment No. 1 to C-8514 Transportation Contract ("Contract") with Norfolk Southern Railroad (NS) and Canadian National Railway (CN), subject to approval as to form by the BWL’s Legal Counsel. The amendment particulars are as follows:

1. The terms of this Contract will be extended 12 months with an expiration date of December 31, 1998.
   
2. There shall be no minimum volume commitment.
   
3. The rates will be the same as in the current Contract.
   
4. The rates will be held firm and free from escalation for the entire amendment period.

Motion was made by Commissioner Royal, seconded by Commissioner Werbelow, to approve

Resolution 97-12-4.

Discussion. Mr. Pandy reported that by amending this Contract with NS and CN, the BWL will be able to maintain its broad base of potential spot coal suppliers. This Contract serves as a backup to CSX and Grand Trunk and will ensure that spot coal competition is maximized and purchased at the lowest delivered cost possible.

Action. Following discussion, the motion carried.

Following discussion, it was the consensus of the Board to hold action on the resolution until the regular meeting in January. This will give the Commissioners who are not present the opportunity to review it and provide feedback prior to consideration.

In response to an inquiry by Chairman Christian, General Manager Pandy and Electric System Control Director Bill Cook reported on California’s experience with electric deregulation. Mr. Pandy noted that there are a total of 300 companies registered to sell power in California, and consumers are viewing that as very confusing and overwhelming. The State of California has spent $57 million to try to educate citizens on how they can make choices. He also noted that according to news articles, the savings in electric prices in California are not expected to be as great as anticipated.

General Manager Pandy reported that the Board has engaged a second actuarial firm to review the calculations provided to employees who are deciding whether to convert to the new Defined Contribution Pension Plan. The firm, William Mercer, was chosen by an Implementation Advisory Committee that interviewed four companies. Actuaries from the company will double check the lump sum conversion amounts supplied to all participants of the existing Defined Benefit Plan. Those conversion amounts will be the beginning account balances for employees who decide to switch to the new Defined Contribution Pension Plan. Over the past month, errors were found in the way those calculations were made by Gabriel, Roeder, Smith & Co., the actuarial firm that has handled the account for the Defined Benefit Plan. Mr. Pandy elaborated on the three problems that occurred: (1) the erroneous use of gender-based actuarial tables, (2) a rounding problem which affected the examples used for the annual annuities, and (3) the algebraic formula used under one of the methods to determine conversation amounts erroneously underestimated the Defined Contribution conversion amounts for over 400 employees.

General Manager Pandy reported on the progress of negotiations taking place with Bath Township and DeWitt Township regarding the extension of retail water service to this area. [The Board was first briefed on the background of this issue at their December 11, 1997 Planning Retreat.] A memo from Water Utility Director Clyde Dugan, dated December 16, 1997, regarding follow up on these expansions was handed out. There is tentative agreement between the BWL and DeWitt Township officials on the contribution-in-aid requirement of $642,153. Mr. Pandy noted that there is a possibility of a referendum from a citizen’s petition against zoning for the manufactured housing portion of the development in DeWitt. If that materializes, then the question could be on the next general election ballot. In the meantime, the Township is willing to extend the BWL water service area to the north. The revised Service Area will probably include all areas of the Township east of I-127, in addition to the areas currently being served by the BWL. A request by resolution from the DeWitt Township Board for an extension of water service along State Road and an amendment to the Water Service Area is to be sent to our Board at some future date for consideration.

Mr. Pandy reported that the Bath Township Board unanimously voted to negotiate an agreement for retail water service with the BWL. The Township is also interested in turning over their existing system to the BWL when appropriate and to have the BWL assume operating responsibility at the earliest convenience. Mr. Pandy noted that staff is working with Bath Township officials to have the agreements finalized for [BWL] Board consideration at the regular meeting in January.

General Manager Pandy congratulated Water Utility Director Clyde Dugan and Water Technical Support Manager Sue McCormick for their work on this project.

The Board received a copy of the (1) Consolidated Financial Statements for water, electric, steam, and general properties, dated November 1997 and (2) Planned and Bonded Capital Projects Status Report as of November 30, 1997. General Manager Pandy noted that normally these reports are sent to the Board in advance of the regular meeting, but because the meeting date was moved up due to the holidays there was not enough time to send them out.

General Manager Pandy acknowledged the Board’s suggestion made at the December 11, 1997 Planning Retreat relative to producing financial reports that are in a more understandable format. He noted that it will take a couple of months to restructure the reports to show a comparison to a benchmark.

General Manager Pandy reported that Electric Transmission and Distribution is piloting the reading of meters via phone lines. Also new technology is being tested using video cameras on traffic lights to activate traffic signals for turn lanes, turn arrows, etc. From preliminary research, these two projects appear to be economically feasible.

In response to the Board’s suggestion from the November 25, 1997 regular meeting, Mr. Pandy reported that he talked to the City about using some of the Cooperative Development Fund monies toward the BWL’s purchase of the rail strip property at Haco Drive/Pennsylvania Avenue Complex from Grand Trunk Western Railroad [Resolution 97-11-4]. Both Mayor Hollister and Dennis Sykes, Director of Planning & Neighborhood Development, have agreed to this. A resolution will be submitted to the Council in January for action. Mr. Pandy noted that from a total of $88,868 in the Cooperative Development Fund, $48,000 has been spent for collaborative projects with the City, leaving a balance of $40,868 to apply toward the $42,780.50 purchase price.

[Commissioner Aquilina arrived at 6:00 p.m.]

General Manager Pandy reported that the BWL’s steam line to serve General Motors’ (GM) Body Plant, Fabrication Plant and Craft Centre is working very well. The new steam service is currently supplying steam at a rate of about 100,000 pounds per hour while all components of the new steam supply system are checked out. GM will supplement that with steam from their own boilers until everyone is satisfied the system is operating correctly. Ultimately, more than 1 million MLB’s of steam per year will be delivered to GM through the new steam line. Project cleanup work, involving landscaping and sidewalks, is also being completed.

General Manager Pandy reported that with the January 1 deadline approaching for Thomas J. Coates to report his findings on the Sony market research, he attempted to contact Mr. Coates but was unsuccessful in reaching him. Mr. Pandy indicated that he and Commissioner Christian will continue to follow-up with Mr. Coates and will report back to the Board in January.

Commissioner Werbelow remarked that he clipped the following articles on deregulation from the WALL STREET JOURNAL: "Montana Power to Sell Assets in Generating," December 10, 1997, and "The Outlook - Pick a Power Supplier? Many Aren’t Interested," December 15, 1997. Copies are on file with the Corporate Secretary.

Commissioner Pratt inquired if a response has been received from customer James Strouse as a result of the Board’s letter relative to the October 27, 1997 ice storm and associated damage to his trees.

Bill Cook, Director of Electric System Control, responded that staff is working closely with Mr. Strouse to resolve his concerns to his satisfaction.

Commissioner Aquilina stated that her lateness in arriving for the Board meeting was due to a court matter she is representing.

CHAIRMAN CHRISTIAN ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT.

BWL employee, Robert (Bob) Murphy, Parts Controller in Electric Production Maintenance, addressed the Board regarding a warehouse inventory project in which he has been involved. He remarked that he and several employees in Electric Production Maintenance feel that the combining of inventories of Production Maintenance and the Stores Department may not be in the best interest of the BWL.

General Manager Pandy responded that Mr. Murphy’s approach of bypassing management and going directly to the Board is an inappropriate forum. Mr. Pandy added that to his knowledge Mr. Murphy has not brought this matter to the Directors who are responsible for that area. Mr. Pandy indicated that since this is a matter that needs to be addressed by management, he would investigate Mr. Murphy’s concerns and report back to the Board.

On motion by Commissioner Creamer, seconded by Commissioner Royal, the absences of Commissioners Graves and O’Leary were excused.

Adopted unanimously.

On motion by Commissioner Werbelow, the Board adjourned at 6:17 p.m.

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Marilynn Slade, City Clerk