MINUTES OF THE BOARD OF COMMISSIONERS' MEETING
LANSING BOARD OF WATER AND LIGHT

___________________________
Tuesday, December 14, 1999
___________________________

The Board of Commissioners met in regular session at 5:30 p.m., in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan.  The meeting was called to order by the Chair, Diane Royal.

The Assistant Secretary declared a quorum present.

The Pledge of Allegiance was said by all.

APPROVAL OF MINUTES

Motion was made by Commissioner O’Leary, seconded by Commissioner Christian, to approve the minutes of regular session held November 23, 1999 and the special board meeting held November 30, 1999.

Carried unanimously.

PUBLIC COMMENTS

THE CHAIR 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.

COMMUNICATIONS

Three communications were noted by Chairperson Royal.

       Letter from Tom Bartley of East Lansing RE: Wind driven electricity generators.

       Letter from Nello Valentine RE: Green Power

       E-mail communication from LeRoy Harvey RE: Green Power

The communication items were noted and placed on file.

REPORTS OF COMMITTEES

#99-12-1
FINANCE COMMITTEE REPORT

The Finance Committee met with the external auditors, Deloitte & Touche, LLP, on November 30, 1999, to review the audit of the Board of Water and Light financial statements for Fiscal Year (FY) ended June 30, 1999.  Robert Phelps, Senior Manager, and Michael Styczenski partner, of Deloitte & Touche reported that the audit report expresses a clean, unqualified opinion of the financial statements.  There were no material weaknesses noted in procedures or controls.  Included in the audit was supplementary information addressing Year 2000 issues.  The auditors noted that they received the full cooperation of management and staff and had unrestricted access to senior management in the performance of their audit.  The FY 1999 audit report for the Board of Water and Light was filed with the City of Lansing on November 2, 1999.  Copies of the Employees’ Defined Benefit Pension Plan and Employees Defined Contribution Pension Plan have been received and reviewed by the Pension Fund Trustees.

The Finance Committee recommends the following:

RESOLVED, That the Corporate Secretary be directed to file copies of the audit reports and the report on the system of internal control with the State Treasurer as required by law.

Submitted by,
Charles Creamer, Chair
Finance Committee

Motion by Commissioner Creamer, seconded by Commissioner Christian, to adopt the resolution.

Action:   Carried unanimously.

#99-12-2
COMMITTEE OF THE WHOLE REPORT

The Committee of the Whole met on November 30, 1999, to review a draft of Board of Water and Light policies as submitted by the Board’s Policy Review Committee consisting of Commissioners Royal and Creamer.

Present were Commissioners Aquilina, Callen, Christian, Creamer, O’Leary, Royal and Werbelow. Absent was Commissioner Murray.

General Manager Pandy and Legal Staff presented an overview of management’s process in reviewing, researching and writing proposed revisions to the policies. This procedure involved several drafts before it was presented to the Board’s Policy Review Committee for feedback and evaluation. The policies were then presented to the Committee of the Whole for final review and input.

Suggestions made by the Commissioners are being incorporated into final policies, intended to be broad to simplify the policy manual, for submission to the Board in January, 2000 for adoption. Staff recommendations to rescind items in the old policy manual that are no longer relevant and to reaffirm those that are to be retained as resolutions will be included.

Submitted by:
Charles Creamer, Chair Pro Tem
Committee of the Whole

Motion by Commissioner Royal, seconded by Commissioner Christian, to adopt the resolution.

Action:   Carried unanimously.

GENERAL MANAGER’S RECOMMENDATIONS

Background materials on items presented are on file in the Office of the Corporate Secretary.

#99-12-3
BOARD MEETING SCHEDULE

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

2000

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 3, 2000.

Motion by Commissioner Christian, seconded by Commissioner Callen, to adopt the resolution.

Action:   Carried unanimously.

#99-12-4
SCHEDULED CURTAILMENT/INTERRUPTIBLE SERVICE RIDER

RESOLVED, That the current rate schedule entitled “Scheduled Curtailment Service Rider” effective 1/1/97 be rescinded.

RESOLVED FURTHER, that the attached and revised rate schedule entitled “Scheduled Curtailment/Interruptible Service Rider” be adopted and made effective January 1, 2000.

The subject rate schedule was the subject of a public hearing at the regular board meeting of 11/23/99.  There were no comments, except staff substitution of an amended rate schedule.  The attached rate schedule has had further staff input and is recommended for adoption.

The change is needed to compete for large industrial electric customer requests.  The most recent example is the Select Steel proposal.  Staff needs the authority to negotiate with potential large industrial customers on this topic.

Motion by Commissioner Christian, seconded by Commissioner Creamer, to adopt the resolution.

Action:   Carried unanimously.

#99-12-5
EXCHANGE OF PROPERTY

RESOLVED, That surplus portions of the former Lansing Connecting Railroad (LCRR) property purchased by the Lansing Board of Water and Light (BWL) in 1998 (Res. No. 97-11-4) be exchanged for the following described property from the Holmes Street Building Company.  The surplus BWL property consists of three parcels containing approximately 10047 sq. ft. and the property the BWL will receive in exchange consists of two parcels containing approximately 9403 sq. ft.  In addition to the property exchange, the BWL will receive an easement for vehicle access from S. Holmes Street into the back of the BWL Main Office property at 1232 Haco Dr.

PARCEL 1. – Part of Lot 21 of Assessor’s Plat No. 26, City of Lansing, Ingham County, Michigan, described as follows: Beginning at a point on the South Line of Lot 3 of Haco Subdivision that is N 89°18’51” W 152.51 Ft. from the Southeast Plat corner of Haco Subdivision; thence southerly along a line that is parallel to and 24 ft. westerly of the west side of the west block wall of the “Builders Heating Supply” Building (1234 S. Holmes Street, Lansing, Michigan) S 00°50’32” W 111.61 Ft. to a point on the northeasterly sideline of the former Lansing Connecting Railroad (LCRR); thence northwesterly along the curved LCRR sideline on a curve to the right with a radius of 1218.36 Ft., long chord bearing N 54°25’57” W 186.36 Ft., an arc distance of 186.54 Ft.; thence continuing along the former LCRR sideline N 50°07’57” W 7.96 Ft. to a point at the intersection of the south line of Haco Subdivision and the northeasterly sideline of the former LCRR; thence S 89°18’51” E 159.35 Ft. to the point of beginning, containing 9391 Sq. Ft. of land, more or less.

PARCEL 2. – Part of Lot 19 of Assessor’s Plat No. 26, City of Lansing, Ingham County, Michigan, described as follows: Beginning at a point at the intersection of the centerline of the former Lansing Connecting Railroad (LRCC) with the north line of Lot 19 of Assessor’s Plat No. 26; thence along the north line of said Lot 19 S 89°28’31” E 6.46 Ft.; thence S 00° 50’32” W 3.75 Ft. to a point on the centerline of the former LRCC; thence northwesterly along the centerline of the former LCRR on a curve to the right with a radius of 1239.16 Ft., long chord bearing N 59°13’36” W 7.45 Ft., an arc distance of 7.45 Ft. to the point of beginning, containing 12 Sq. Ft. of land, more or less.

The property to be received from the Holmes Street Building Company is adjacent to property behind the BWL main office facilities located at 1232 Haco Dr.  When we purchased the former LCCR property, our intent was to retain and consolidate portions with our existing properties and sell any surplus to adjacent property owners.  As an adjacent property owner, the Holmes Street Building Company agreed to exchange a portion of its property for portions of the surplus LCRR property.  The BWL will consolidate the new parcels with our existing property to improve the existing property boundaries and utilize the easement for an emergency entrance into 1232 Haco Dr. from S. Holmes Street.

Motion by Commissioner Creamer, seconded by Commissioner Murray, to adopt the resolution.

Discussion:   Commissioner Callen inquired as to whether an evaluation was done on the value of the property.  General Manager Pandy responded that there was not a formal appraisal.  The properties are similar in value.

Commissioner Werbelow inquired if the exchange of property between the BWL and the Holmes Street Building Company required City Council approval.  Staff Attorney Larry Wilhite was under the impression that City Council approval was not required.  (Subsequent to the meeting, Staff Attorney Wilhite informed the Corporate Secretary that City Council approval is required.)

Action:   Carried unanimously.

#99-12-6
AMENDMENT NO. 4 TO C-8514 TRANSPORTATION CONTRACT

RESOLVED, That the Board approve Amendment No. 4 to C-8514 Transportation Contract (“Contract”) with Norfolk Southern Railroad (NS) and Canadian National Railway (CN), subject to approval by the BWL’s Legal Counsel.  The amendment particulars are as follows:

1.                       The term of this Contract will be extended twenty-four (24) months, with an expiration date of December 31, 2001.

2.                       There shall be no minimum volume commitment.

3.                       The rate, as outlined on the attached supplemental price sheet, will be the same as that in effect on December 31, 1999.

4.                       The rates will be held firm and free from escalation for the entire amendment period.

By amending this Contract with NS and CN, the BWL will be able to maintain its broad base of potential eastern Spot coal suppliers.  This will ensure that eastern Spot coal competition is maximized and purchased at the lowest delivered cost possible.  This amendment freezes the transportation rates of 1999 levels for the next two years.  Railroad expenses, as tracked by the Association of American Railroads, exhibited an increase of 0.73% from the first quarter of 1998 through the second quarter of 1999.

Motion by Commissioner O’Leary, seconded by Commissioner Christian, to adopt the resolution.

Action:   Carried unanimously.

#99-12-7
REFUND CONTRACT WITH NORFOLK SOUTHERN RAILROAD

RESOLVED, That the Board enter into a Refund Contract (“Contract”) with Norfolk Southern Railroad (NS) subject to approval by the BWL’s Legal Counsel.  The Contract particulars are as follows:

1.     The term of this Contract will be effective from January 1, 2000 through December 31, 2001.

2.     This Contract will provide for an annual refund payment based on attaining certain tonnage levels of eastern coal shipped under Transportation Contract C-8514.

3.     The tonnage levels and refund amounts are outlined on the attached supplemental price sheet.

4.     NS will be responsible for the entire refund, as such the Canadian National Railway will not be a party to this Contract.

By entering into this Contract with NS, BWL will have the opportunity to further reduce its delivered price of eastern coal, by shipping tonnage levels in excess of 50,000 tons/year, as per the attached supplemental price sheet.  During FY 1999, BWL shipped 55,354 tons of coal on NS.

Motion by Commissioner O’Leary, seconded by Commissioner Murray, to adopt the resolution.

Action:   Carried unanimously.

UNFINISHED BUSINESS

No unfinished business

NEW BUSINESS

No new business.

GENERAL MANAGER'S REMARKS

General Manager Pandy announced that Brian McLeod will be the new Manager of the Delivery Resource Center, which includes the electric, water, and steam utility construction.

Chilled Water Update.  General Manager Pandy handed out three communications relative to the Chilled Water Plant.  Lengthy discussion was held on the status of the Chilled Water Plant.  Staff will continue working on legal issues with Saga Communications, and the Michigan Bar Association, and also with Ingham County on purchase of the property on the corner of Kalamazoo and Walnut Streets.  Questions from the Commissioners on many of the obstacles in continuing the project, customers willing to commit to purchasing chilled water, and environmental clean-up of the project property were responded to by staff.

Commissioner Creamer stated, for the record, that he did not and will not participate in the discussion on the Chilled Water Plant because of his position with Michigan Retailers Association.

Ottawa Development Project.  General Manager Pandy reported on a recent trip to view the Easton Town Center in Columbus Ohio.  A letter of interest from Steiner and Associates, the developer of Easton Town Center, was handed out.  In it, they expressed their interest in conducting an analysis of the Lansing Market for a development of this type.  Discussion was held on the duration of continuing to pursue the project, status of the State Waterfront Redevelopment Grant, and support from the City of Lansing and Economic Development Corporation (EDC) on the project.  Staff was directed to proceed with the project.

Analytical Review.  Internal Auditor Kellie Willson presented the BWL Analytical Review for 1999.

Union Negotiations.  Negotiations with I.B.E.W. are commencing.  Health care is the main issue still being negotiated.

REMARKS BY COMMISSIONERS

Chairperson Diane Royal wished everyone a Merry Christmas and Happy New Year.

Commissioner Christian inquired whether the health care issue currently in negotiations will be for current employees only or includes retirees.  The health care includes all Bargaining, and Non-Bargaining employees, and retirees.

Commissioner Callen will be testifying in a contested case before the Michigan Public Service Commission.  He disclosed that he will be unable to participate in any of the discussions on Green Power because of this.

EXCUSED ABSENCES

Motion by Commissioner Christian, seconded by Commissioner Murray, that the absence of Commissioner Aquilina be excused.

Action:   Carried unanimously.

PUBLIC COMMENTS

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

No persons spoke.

ADJOURNMENT

On motion by Commissioner Christian, seconded by Commissioner Murray, the meeting adjourned at 7:10 p.m.

                                            /s/ Rosemary Sullivan, Acting Secretary

Filed:          December 17, 1999

__________________________

Marilynn Slade, City Clerk Revised Sheet No. EB28

SCHEDULED CURTAILMENT/INTERRUPTIBLE SERVICE RIDER

Availability   -  This rider is available to customers on Primary Electric Service Rate No. 5 or Large Capacity Electric Service Rate No. 8 and any applicable future primary or transmission service rate approved by the Commissioners.  A customer desiring service under this rider must contract to curtail or interrupt its demand by 1,000 kW or more, upon notice by the Board of Water and Light (BWL).  The amount of curtailable or interruptible demand subject to this rider may be limited by the Commissioners in total and by customer.

Conditions of Curtailment/Interruption  -  The Commissioners may determine the total kW demand subject to this rider.  The General Manager has authorization to negotiate with qualifying customers as to the following terms and conditions of this rider; [1] the customer kW demand subject to interruption or curtailment, [2] metering requirements, [3] the duration of any interruption or curtailment, [4] the notice period, and, [5] buy through provisions (if any).

The contract with the customer will contain the conditions under which the BWL will require curtailment or interruption.  Any reduced rate available will include some contribution to fixed costs and depend upon the customer’s individual circumstances.

The customer agrees to pay $50 per kW for the highest 15-minute kW demand created during the curtailed or interrupted period plus replacement energy out of pocket cost plus 10% should the customer choose not to curtail or interrupt electric load.

Definitions

Curtailed load   -  The customer agrees to reduce electric load upon notice from the BWL.

Interrupted load  -  The customer agrees to receive no electricity upon notice from the BWL.

Adopted:   December 14, 1999                                   Effective:   January 1, 2000