VERMONT ELECTRIC COOPERATIVE, INC.
REGULAR MEETING OF THE BOARD OF DIRECTORS
FEBRUARY 23, 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 February 17, 2010. 

CALL TO ORDER – AGENDA ITEM # 1
President Tom Bailey called the meeting to order at 12:03 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, Daniel Parsons, John Ward, John Westie and Mark Woodward. Priscilla Matten and John Miller were absent. Also present from VEC were CEO David Hallquist, COO Jeffery Wright, Manager of Government Relations Randy Pratt and Manager of Communications Kathryn Kantorski.

Woodward joined the meeting at 12:17 p.m.

Manager of Corporate Services Elizabeth Gamache joined the meeting at 12:37 p.m. 

MINUTES OF JANUARY 26, 2010 REGULAR MONTHLY MEETING APPROVED –AGENDA ITEM #2 

Lague moved and Kneeland seconded: 

That the minutes of the January 26, 2010 meeting be approved as presented. 

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

FINANCIAL UPDATE – AGENDA ITEM #3
CEO Hallquist and those present engaged in a discussion of the Financial Updateincluded in the Board packet, which was distributed to all Directors prior to the meeting.

TIER year end:
The TIER year end finished at 2.19 ahead of VEC’s approved 2.18 budget. As discussed previously, capital spending exceeded budget expectations and staff is in the process of developing processes and reporting that should assist in meeting the approved capital spending plans in 2010.

January results:
January results came in strong partly attributed to cooler weather in the second half of December and first half of January having a positive affect on sales. VEC’s load overall in January was off by 9% which lowered power supply costs for the month but is anticipated to have a negative impact on February sales results. Heating degree days for January were 9% below normal and 16 % below January of 2009 but the good news is that January earnings were up $650k

School Street
VEC closed on the School Street building on January 18, 2010 and entries associated with the sale are complete. Lamoille Housing and Housing Vermont anticipate demolition of the building to begin in March

Fairpoint bankruptcy
Fairpoint has finally filed their bankruptcy plan. VEC does not believe it will have much impact on us because VEC’s accounts receivables to account payables were equal prior to their declared bankruptcy. Finance is currently reviewing Fairpoint’s post bankruptcy invoices to determine how it could affect VEC.

Financial audit:
The financial audit for 2009 is expected to be completed by February 19^th and the report will be presented to Directors at the March Board meeting. 

APPOINT ASSISTANT SECRETARY & ASSISTANT TREASURER – ITEM #4
The Board Secretary expressed concern regarding the motion proposed in the Board packet that would place management staff on the Board of Directors as officers in the role of Assistant Secretary and Assistant Treasurer. In past conversations with NRECA their representatives stated that having management as officers on the Board creates a liability for the Board. Management stated that the request for an Assistant Secretary and Assistant Treasurer is strictly based on expediency of getting documents signed. Discussion ensued on alternative means of addressing expediency in this area. State law permits that the office of Treasurer and Secretary may be held by the same person. Therefore it was recommended that the Board Secretary, could be the Assistant Treasurer, and the Treasurer could be assigned as Assistant Secretary. This would alleviate any co-mingling of management and board duties.

CEO Hallquist requested that consideration of the Secretary’s proposal be tabled until CFO Bursell returns at the March monthly meeting. 

Lague moved Allard seconded:

That the Board table the Appointment of Assistant Secretary and Assistant Treasurer until the March meeting. 

The motion carried unanimously. 

VEC FIBER OPTIC PLAN –ITEM #5
COO Wright presented to Directors the role that fiber plays in the electric utility industry. VEC currently relies heavily on cellular communication which is not always reliable. In addition VEC uses T1 lines which continue to cause big problems for us. The third mode is fiber optics which has many advantages and has become the standard for how utilities communicate with their systems because it’s rugged and reliable but it’s also expensive to install. 

CEO Hallquist outlined four options for the Board to see.

1. VEC runs fiber ourselves >expensive
2. VEC partners with others such as Telecom providers>inexpensive but requires managements time in negotiations
3. VEC becomes telecom company> very risky and little return
4. Wait for VELCO>risky> not in our control. 

Hallquist told Directors that after several discussions with the EDA, it was agreed that the $2M grant for North-Link will be terminated and an audit will be done on Northern Enterprises by the EDA. Hallquist continued to review the proposed 2010 fiber construction plan with Directors indicating that with option 2 there is no business risks to VEC and it will allow us to interconnect the VEC Derby and West Charleston substations using the existing 53 miles of fiber already installed. 

VEC MEMBER GREEN PRICING PROGRAM – ITEM #6
Pratt gave Directors an update on the Voluntary Renewable Pricing Program and a very basic structure of the voluntary contributions as outlined in the managers’ reports on page 55 – 57 in the Board packet. 

Leighton left the meeting at 1:29 p.m. and returned at 1:32 p.m. 
Hallquist left the meeting at 1:31 p.m. and returned at 1:32 p.m.
Woodward left the meeting at 1:47 p.m. and returned at 1:55 p.m.

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

The meeting resumed in the Robert P. Northrop Boardroom at 2:16 p.m.

REVIEW BOARD DISTRICTS AND ZONES – ITEM #8
To provide clarification for all Directors regarding redistricting a brief review of the new districts and zones was discussed. There will be seven [7] District Directors and five [5] At large Directors; two [2] At large Directors from the Eastern Zone, and three [3] from the Western. Candidates can receive both the district and the at large petitions to obtain signatures and must declare which seat they are running for at the time the petition is handed in. The deadline for VEC receiving the petitions is 4 p.m. on March 31, 2010. 

APPOINT COMMITTEE TO REVIEW CANDIDATE PEITIONS – ITEM #7
Hallquist reviewed with Directors bylaw Article IV: Section 3(c) which states “The Board will establish a committee to review all candidates’ petitions to ensure that they conform to the criteria in Section 2(a) and Section 3(g).” 

Ward moved and DaVia seconded:

That the VEC Board of Directors appoints, the VEC CEO, David Hallquist, VEC Corporate Services Manager, Liz Gamache, and VEC Government Relations Manager, Randy Pratt to review candidate petitions in compliance with VEC Bylaw, Section 3C, for the 1010 elections. The committee will dissolve immediately following the VEC 2010 Annual Meeting.                       

The motion carried unanimously. 

MANAGERS’ REPORTS - #9
Annual Meeting:
CEO Hallquist informed the Board that many employees have been asking why VEC is not doing the Energy Fair/Annual Meeting again. Hallquist has been explaining to employees that this year the focus is strictly on the annual meeting 1) because of resources and 2) because all districts are up for election making it a time consuming process. He further explained that it is possible the Board will decide to return to combined energy fair and annual meeting in upcoming years. 

New project form:
COO Wright told Directors that in his manager’s update he has included a sample of the new project form that will be used for all upcoming projects.

Derby to West Charleston line rebuild
COO Wright informed the Board that VEC has resolved the wetland mitigation and conservation easement issue. The wetland mitigation is projected to cost VEC $25k for easement, $15k for trees and $6k for an endowment. VEC is still not in receipt of the Army Corps of Engineers permit and at this time the environmental costs are exceeding the engineering costs.

Jay tap substation and KCW:
Wright told Directors that having the Jay 115kV facility costs regionalized by ISO New England is critical to the project’s success. ISO New England has not yet approved the regionalization of this cost. Failure to get these costs regionalized could kill the project.

It was requested that CEO Hallquist send all Directors an email regarding the results of the Lowell vote on the Kingdom Community Wind project.

Easements
Pratt explained to the Board that the BPRA done a few years ago did not address land use requirements and Directors and management engaged in a lengthy discussion regarding easements and the process. 

COMMITTEE REPORTS – AGENDA ITEM #10 

Governance Committee:
Committee Chairperson DaVia referred Directors to page 133 in the Board packet regarding Board Policy B.5. There was discussion regarding the proposed changes in the Board Members’ Compensation. 

DaVia moved and Lague seconded: 

That the Board of Directors approve policy B.5 as recommended by the Governance Committee. 

Discussion ensued where Directors had an opportunity to express their view. The point was made that the current compensation is so small that some well qualified candidates for Director seats have expressed that they are not able to forgo the income of a minimum of twelve days of work a year since the Board meetings are during work hours on a weekday. Thus the low compensation is limiting the pool of well qualified Members who are able to serve on the Board. Some were in favor of the increase in Director compensation after the May 15, 2010 Annual Meeting as proposed and some were not in favor of increasing the compensation until later. 

Allard moved and Kneeland seconded: 

To amend the motion on the floor so that Directors approve Board Policy B.5, except for the note below Table 1 concerning Board members compensation to read; Effective as of January 1, 2011, so that the Board doesn’t vote itself an increase in compensation during these financially difficult times. 

Ward moved and DaVia seconded:           

That there be a roll call vote on the amended motion. 

The motion carried unanimously and a roll call vote was taken on the amendment to the main motion.

The six [6] Directors voting yes were; Allard, Carswell, Kneeland, Leighton, Parsons and Ward.  The four [4] Directors voting no were; DaVia, Lague, Westie and Woodward. Two [2] Directors were absent. The amendment to the main motion carried by majority vote of those Directors present. 

DaVia moved and Lague seconded:

That the Board of Directors approve policy B.5 as amended.

The main motion carried unanimously. 

DaVia moved and Lague seconded: 

That the Board approve to eliminate Board Policy K. 

The motion carried unanimously. 

Pratt left the meeting at 3:38 p.m. and did not return.
Woodward left the meeting at 3:41 p.m. and returned at 3:45 p.m. 

Committee Chairperson DaVia reviewed with Directors the proposed recommended changes in the Bylaws to be voted on by members at the Annual Meeting. 

Wright left the meeting at 3:45 p.m. and did not return. 

DaVia moved and Lague seconded:  

That the proposed Bylaw changes related to the timing of receiving members’ votes by mail and candidate petition approval be accepted as presented by the Governance Committee. 

During the course of discussion the following addition to Bylaw Article IV, Section 3, (c) was suggested. That it be added; “The term of the Candidate Petition Review Committee shall terminate upon the adjournment of the Annual Members Meeting.” The Board informally agreed that the above phrase should be added. 

DaVia withdrew her motion and Lague withdrew his second. 

DaVia moved and Lague seconded: 

That the proposed Bylaw changes related to the timing of receiving members votes by mail and candidate petition approval be accepted as amended. 

The motion carried unanimously.

The Bylaws changes approved as amended are appended to these minutes. 

Executive Committee:
DaVia moved and Lague seconded: 

That the Board enter into Executive Session to discuss personnel issues. 

The motion carried unanimously.

The Board entered into Executive Session at 3:55 p.m.

By majority vote of those Directors present the Executive Session ended at 4:02 p.m. 

Communications Committee: No report. 

Power Supply and Operations Committee: No report. 

OTHER BUSINESS-AGENDA ITEM #11
There was no other business.

ADJOURN – AGENDA ITEM # 12
There being no further business before the meeting, 

Lague moved and Ward seconded that:

The meeting be adjourned. 

No discussion was forthcoming and the motioned carried unanimously.

The meeting adjourned at 4:05 p.m.

Respectfully submitted:

Michelle DaVia, Secretary and Thomas Bailey, President

Signed minutes (PDF)