VERMONT ELECTRIC COOPERATIVE, INC.
REGULAR MEETING OF THE BOARD OF DIRECTORS
MARCH 30, 2010
APPROVED MINUTES

As required under the VEC By-Laws, notice of this meeting was sent to each Director by deposit in U.S. mail on March 24, 2010. 

CALL TO ORDER – AGENDA ITEM # 1

President Tom Bailey called the meeting to order at 12:05 p.m. in the Robert P. Northrop Boardroom at VEC offices in Johnson, Vermont. Present were Thomas Bailey and Directors Dorothy Allard, Dan Carswell, Michelle DaVia, Craig Kneeland, Bertrand Lague, Howard Leighton, John Miller, John Ward, John Westie and Mark Woodward. Priscilla Matten and Daniel Parsons were absent. Also present from VEC were COO Jeffery Wright, CFO Michael Bursell, Manager of Corporate Services Elizabeth Gamache, and Manager of Communications Kathryn Kantorski. Debra Machia, Assistant Controller was present for the beginning of the meeting. Also present was Charles Camber a VEC member running as a candidate for the Board in the 2010 election.

Woodward joined the meeting at 12:11 p.m.

Randy Pratt, Manager of Government Relations joined the meeting at 1:08 p.m. 

MINUTES OF FEBRUARY 23, 2010 REGULAR MONTHLY MEETING APPROVED –AGENDA ITEM #2
Miller moved Lague seconded: 

That the minutes of the February 23, 2010 meeting be approved as presented. 

The motion carried unanimously and the minutes were approved as presented.

AUDITORS’ REPORT – AGENDA ITEM #3

Dana Kittell and Mark Mayer of Kittell, Branagan & Sargent presented to the Board their summary highlights of VEC’s 2009 Financial Audit. Kittell commended VEC on their excellent work and told Directors that this year’s report was finalized earlier than ever before. Kittell stated that their “unqualified opinion” is that VEC’s financial statements are fairly presented, and there were no corrections required. Kittell turned the discussion over to Mayer for review of the audit highlights.

Mayer reviewed some of the highlights regarding the Balance Sheet, Income Statement and Statement of Cash Flow. Directors had an opportunity to ask questions of Mayer and Kittell on their findings. 

Kittell and Mayer left the meeting at 1:35 p.m. 

CFO Bursell then introduced Debra Machia, Assistant Controller and told the Board that Debra is the employee behind VEC’s successful clean audits for the last seven years. 

Machia left the meeting at 1:36 p.m. and did not return.

Gamache left the meeting at 1:36 p.m. and returned at 1:39 p.m. 

Ward moved and Lague seconded: 

            That the Board accept the audit report as presented. 

The motion carried by unanimous vote.

FINANCIAL UPDATE – ITEM #4

990 Forms:
Bursell requested that Directors return their completed 990 form that was included in the Board packet. Bursell told the Board that VEC retained their previous information on file if any of the Directors needed to review it.

Fairpoint Bankruptcy:
Currently there are seven [7] or eight [8] entities that have filed proof of claims in the Fairpoint bankruptcy. VEC received correspondence from Fairpoint’s agents suggesting that VEC is scheduled to be 100% compensated. VEC has taken safety measures by holding up payments of pre-bankruptcy monies owed to Fairpoint which will be used as an offset against our claims. 

DaVia moved and Lague 

That the Board enter into Executive Session to discuss a financial issue. 

The motion carried unanimously.

The Board entered into Executive Session at 12:42 p.m.

Charles Camber, guest left the meeting at 12:42 p.m. 

By majority vote of those Directors present the Executive Session ended at 12:59 p.m. 

Long range Forecast:
The long range forecast projects that VEC is looking at a potential 5.9% rate increase in 2011 based on VELCO forecasts of an increase of $2M in transmission costs. Bursell said that a more detailed presentation will be forthcoming at the April monthly Board meeting. 

Letter of Credit Facility:
CFC has informed VEC that when our short term credit facility expires in 2011, they will require a commitment fee of .5% plus 1% for each letter of credit written. VEC is looking to move the letters of credit from CFC to CoBank since they do not have a commitment fee. This will make  VEC less diversified but it would result in a $50 - $60k savings. VEC does not need regulatory approval to make the switch but it will entail some legal consultation. 

Pratt joined the meeting at 1:08 p.m.

Gamache left the meeting at 1:09 p.m. and returned at 1:11 p.m. 

Financial Commentary:
February results finished better than expected despite the major storm that occurred during the last week of February that cost about $259k. Energy sales were hurt by the unseasonably warm weather in February but some of the non-electric revenues were better than anticipated and VEC performed well in all other areas of the budget. 

Lague left the meeting at 1:17 p.m. and returned at 1:21 p.m. 

TOUCHSTONE  ENERGY - ITEM #5
Anne Maggard from Touchstone Energy presented to the Board on Touchstone Energy’s programs and tools, to help Co-op’s communicate and demonstrate the cooperative difference to their members. Maggard and Directors engaged in a question and answer forum following the presentation. 

Bailey left the meeting at 1:30 p.m. and returned at 1:32 p.m.

Pratt left the meeting at 1:35 p.m. and returned at 1:37 p.m.

Wright left the meeting at 1:35 p.m. and returned at 1:38 p.m.

Maggard left the meeting at 1:55 p.m. and did not return. 

President Bailey called for break in the proceedings at 1:55 p.m.

The meeting resumed in the Robert P. Northrop Boardroom at 2:34 p.m.

DaVia returned to the meeting at 2:36 p.m.

President Bailey told Directors that there was a request to bring the Touchstone Energy presentation to a motion and vote at today’s meeting whether or not VEC should enter into a contract for their services. 

Leighton returned to the meeting at 2:37 p.m.

Discussion ensued about the presentation. Some Directors felt they needed more information before voting, so President Bailey requested that the Communications Committee along with management to devise a list of the pros and cons, obtain a list of Cooperatives that use Touchstone, to get Touchstone’s financials, and to present their findings to the full Board at April’s Regular Board Meeting. 

A Director  asked Parliamentarian Pratt for a point of order on Roberts’ Rules of Order in regard to making amendments to the agenda. Pratt indicated that it requires two-thirds vote to make requested amendments. 

PENSION TRUST ADOPTION AGREEMENT – ITEM #6
This agenda item was tabled.

 MANAGERS’ UPDATES – ITEM #7
Pratt requested that the Board vote to allow an amendment to the agenda and that the Board consider a resolution allowing management to accept funds under the Smart Grid grant program. 

Ward moved and Lague seconded:

That the Board amend the agenda to consider a resolution on the Smart Grid Investment Program. 

The motion carried unanimously, being more than  the required two-thirds vote and the agenda was amended.

Pratt gave Directors an overview of the proposed resolution and answered questions pertaining to the match in dollars.

Ward moved and Lague seconded:

RESOLUTION:

WHEREAS the Vermont Electric Cooperative, Inc. (VEC) applied for and was approved for 50% matching funds from the Department of Energy under its Smart Grid Investment Grant program, and 

WHEREAS VEC has identified approximately $10.4 million in Advanced Metering Infrastructure completion, Grid Automation, and “customer systems pilot” (home area network, in-home display) programs to be implemented over the next three years, 

IT IS RESOLVED that the VEC Board of Directors authorizes VEC management to accept 50% in matching funds from the Department of Energy under its Smart Grid Investment Grant program. 

The motion carried unanimously.

Steel Tower Line:
COO Wright played a video for Directors which showed the progress of the Steel Tower project. The right-of-way is completely cleared and crews have set 72 wood replacement poles. To date the project is on budget. 

Bursell and Gamache left the meeting at 3:15 p.m. and returned at 3:23 p.m. 

SAFI
COO Wright told the Board that the storm in February was the worse storm VEC has experienced since the summer of 2008. VEC was lucky however, that it was mostly snow loading and escaped the severe winds that affected other utilities. This storm affected over eleven thousand VEC members. 

Projects not planned in 2010 Budget
Directors were referred to page 78 of the Board packet which provided an outline of unplanned projects that have caused overages in the capital budget. 

Low-income Program
The requirement of VEC to participate in a low-income program is unclear, but not expected to be forced. The next step in the PSB Docket will be technical hearings probably sometime in May. VEC continues to take the position that a low-income program is not appropriate for the Coop.

CEO EVALUATION AND CONTRACT EXTENSION – ITEM #8

DaVia moved and Lague seconded: 

That the Board enter into Executive Session to discuss a personnel issue of a contract. 

The motion carried unanimously.

The Board entered into Executive Session at 3:30 p.m.

By majority vote of those Directors present the Executive Session ended at 4:28 p.m. 

Carswell moved and Ward seconded:

That President Tom Bailey be authorized to sign a year contract for Dave Hallquist to continue as CEO. 

The motion carried unanimously. 

DaVia moved and Lague seconded: 

To approve the goals as corrected for CEO Hallquist for the upcoming year. 

The motion carried unanimously. 

There being no objections President Bailey recommended that Agenda Items 9 and 10 be deferred to the April meeting. 

KINGDOM COMMUNITY WIND PROCESS REVIEW – ITEM #9
Deferred to April meeting 

COMMITTEE REPORTS – AGENDA ITEM #10
Deferred to April meeting. 

Power Supply and Operations Committee:
Communications Committee: 

OTHER BUSINESS-AGENDA ITEM #11

There will be a teleconference call Thursday April 1, 2010 at 4 p.m. for presentation from the Annual Meeting Review Committee on the confirmed Candidates for Director positions.

Annual Meeting Guest Speaker

It was requested that Directors be prepared at the teleconference call to give suggestions on potential guest speakers for Annual Meeting. 

ADJOURN – AGENDA ITEM # 12

There being no further business before the meeting, 

Lague moved and Miller seconded that: 

The meeting be recessed until Thursday, April 1, 2010 at 4:00 to reconvene as a teleconference call meeting. 

No discussion was forthcoming and the motioned carried unanimously.

The meeting adjourned at 4:50 p.m. 

Respectfully submitted:

Michelle DaVia, Secretary  and Thomas Bailey, President

Signed minutes (PDF)