VERMONT ELECTRIC COOPERATIVE, INC.
REGULAR MEETING OF THE BOARD OF DIRECTORS
APRIL 27, 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 April 20, 2010.  

CALL TO ORDER – AGENDA ITEM # 1
President Tom Bailey called the meeting to order at 12:12 p.m. in the Robert P. Northrop Boardroom at VEC offices in Johnson, Vermont. Present were Thomas Bailey and Directors Dorothy Allard,  Michelle DaVia, Craig Kneeland, Bertrand Lague, Howard Leighton,  John Miller, Daniel Parsons, and John Ward. Directors Dan Carswell, Priscilla Matten and John Westie were absent. Also present from VEC were CEO Dave Hallquist, COO Jeffery Wright, CFO Michael Bursell, Manager of Corporate Services Elizabeth Gamache, Manager of Government Relations Randy Pratt, and Manager of Communications Kathryn Kantorski.

 Mark Woodward joined the meeting @ 12:18 p.m.

MINUTES OF MARCH 30, 2010 REGULAR MONTHLY MEETING APPROVED –AGENDA ITEM #2 

Allard moved Miller seconded: 

That the minutes of the March 30, 2010 meeting and the April 1, 2010 Continuation of the March 30, 2010 meeting be approved as presented. 

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

FINANCIAL UPDATE – AGENDA ITEM #3
CFO Bursell and those present engaged in a discussion of the Financial Update.

Bursell indicated that VEC has experienced three consecutive months of performance which has been better than budget expectations and VEC’s outlook is positive.

990 Forms
Bursell reminded Directors that the 990 forms are due to be filed on May 15, 2010.  He asked that the Board review the 990’s and contact him as soon as possible if  there any concerns or questions so that VEC can avoid filing for an extension. If it is necessary to file for an extension it will be done. 

DaVia moved and Lague seconded: 

That VEC file the form 990’s on or before May 15, 2010 pending any changes necessary. 

The motion carried unanimously.

Long Range Forecast:
The report on VEC’s anticipated financial outlook over the next nine [9] years is completed. Based on the latest forecast, VEC’s current projection is that we will need a 5.81% rate increase for 2011. The most significant driver of the increase is for transmission costs. This driver is not exclusive to VEC and will impact all Vermont utilities.

VEC Audit Report:
VEC has been using the same auditors for over 6 years. The Finance Committee recommends that VEC pursue a Request for Proposal (RFP) for audit services. VEC’s indenture states that the audit must be conducted by a firm with national standing. There are few firms in Vermont that can meet this requirement because of size with the exception of Kittell, Branagan & Sargent, Gallagher Flynn and KPMG. 

Lague moved and Miller seconded:

To approve the management team seeking an RFP substantially in the form of the RFP included in the packet from pages 130- 143. 

Brief discussion on the RFP ensued.

DaVia left the meeting at 12:33 p.m. and returned at 12:38 p.m.

The motion carried unanimously by those Directors present. The RFP as included in the Board packet on pages 130 – 143 is appended to these minutes.

Capital Budget Management Plan:
COO Wright reminded Directors that the management team agreed to share the details of variances within the capital budget plan. Wright told Directors that this information would be included in their packets monthly. 

Parliamentarian Pratt read to the Board Section 41 of Robert’s Rules of Order in regards to amending the agenda. He concluded that no Board action was required. 

Board Attorney Joseph Cahill joined the meeting at 12:40 p.m.

ANNUAL MEETING BALLOTING PROCESS – ADDED ITEM
Secretary DaVia gave an overview for the Board of the issue regarding the election ballots for Director at large Candidates and member confusion on voting for Director at large candidates. DaVia said the Governance Committee is recommending that Survey & Ballot System count the District Directors ballots and that VEC should mail a corrected ballot to members as soon as possible for the Director at large seats. 

Discussion ensued and Directors were given further clarification of the issue at hand. Attorney Cahill gave the Board his opinion regarding the miscommunication about the balloting process for the Director at large seats. What was advertised in the Coop Life verses the actual ballots and voting directions that were mailed. To clarify Cahill told Directors if you allow members to vote for three of the eight candidates, you are not giving them 3 votes, its one vote for each of the 3 different candidates they are entitled to elect. 

DaVia moved and Lague seconded: 

To adopt the process that Survey and Ballot System is proposing; to count the district votes, the bylaw changes and projects votes as is on the original ballot. 

The motion carried by majority vote of those Directors present.

Discussion ensued and whereby directors had an opportunity to express their concerns and ask questions. 

DaVia moved and Lague seconded: 

That the Board adopts the recommendation of the Governance Committee of the Board, that members would vote for up to 3 candidates in the West and up to two candidates in the East; and authorize issuance of corrected ballots to members for voting for the at large delegates in the Western and Eastern Zone in conjunction with the May 15, 2010 Annual Members Meeting or at a duly warned special meeting of the members if necessary. 

Woodward moved and Ward seconded:

                         That a roll call vote be taken.

 The motion carried by majority vote and a roll call vote on the motion was taken.

 Seven [7] Directors voted yes, one [1] Director voted no, that being Craig Kneeland, one [1] Director abstained, that being Mark Woodward and three [3] Directors were absent. The main motion carried by majority vote of those Directors present.

Allard moved and Woodward seconded:

That the governance committee review the ballots before they are mailed. 

Miller moved and Lague seconded: 

            That a roll call vote be taken. 

The motion carried by majority vote and a roll call vote on the main motion was taken. 

Three [3] Directors voted yes, those being Dorothy Allard, Dan Parsons and Mark Woodward. Six [6] Directors voted no and three [3] Directors were absent. The main motion carried by majority vote. 

The motion was defeated by a majority of those Directors present. 

Joseph Cahill left the meeting at 1:54 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 2:23 p.m.

Kathryn Kantorski, minute recorder did not return to the meeting after break. Amanda Niklaus, Internal Communications Specialist joined the meeting at 2:23 p.m. to record the minutes.

KINGDOM COMMUNITY WIND UPDATE – AGENDA ITEM # 4
CEO Hallquist shared with the Board concerns he had with some assumptions that were made in regards to the partnership with GMP on the Kingdom Community Wind Project. VEC currently does not have a Letter of Intent (LOI) with GMP. Management will be meeting with GMP to clarify their project plans prior to entering into an LOI.

COO Wright presented to the Board and answered questions on the update on the Kingdom Community Wind project that was included in the Board packet. Directors expressed concern about:

• What turbine manufacturer had been selected and what will factor into the decision
• The aggressive schedule of the project
• Financial challenges currently associated with the project  

In conclusion, Wright told the Board that this project is economical for VEC and there is tremendous transmission benefits associated with it. The overall cost of the project has not changed only the timeline of when certain costs will be incurred. There is concern that if VEC steps out of the project, GMP will step out as well. 

Gamache left the meeting at 2:41 p.m. and returned at 2:48 p.m.

TERRITORIAL RATIONALIZATION – AGENDA ITEM # 5

Miller moved and Lague seconded: 

That the Board enter into Executive Session to discuss territorial rationalization. 

The motion carried unanimously.

The Board entered into Executive Session at 2:55 p.m.

By majority vote of those Directors present the Executive Session ended at 3:13 p.m. 

VELCO/VEPPSA – AGENDA ITEM # 6

DaVia moved and Lague seconded: 

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

The motion carried unanimously.

The Board entered into executive session at 3:13 p.m.

By majority vote of those Directors present the Executive Session ended at 3:21 p.m. 

ANNUAL MEETING UPDATE – AGENDA ITEM # 7
CEO Hallquist confirmed that Greg Pahl has been selected and has accepted to be the keynote speaker at the Annual Meeting of the Membership.  Hallquist told the Board that Washington Electric Coop is holding their Annual Meeting on May 12, 2010 and all VEC Directors are invited. 

MANAGEMENT UPDATES – AGENDA ITEM # 8

DaVia motioned and Miller seconded: 

That the Board enter into executive session to discuss a personnel matter. 

The motioned carried unanimously.

The Board entered into an executive session at 3:26 p.m. 

Gamache left the meeting at 3:26 p.m. and returned at 3:57 p.m.
Wright left the meeting at 3:26 p.m. and returned at 3:54 p.m.
Pratt left the meeting at 3:26 p.m. and returned at 3:54 p.m.
Bursell left the meeting at 3:26 p.m. and returned at 3:54 p.m.
Niklaus left the meeting at 3:26 p.m. and returned at 3:42 p.m. 

By majority vote of those Directors present the Executive Session ended at 3:42 p.m.

Management had requested that the Governance Committee develop a Harassment Policy for the Board.

Harassment Policy for the Board
Chairperson DaVia presented to the Board a draft policy on harassment that was a copy derived from other Cooperatives’ adopted policy and included input from Manager of Corporate Services, Liz Gamache. This draft policy will be sent to Attorney Joseph Cahill for final review. DaVia indicated that Cahill will provide expertise in two specific areas; describing the process of how VEC will handle the investigation process and creating appropriate disciplinary actions. 

Miller moved and Woodward seconded: 

To approve the draft harassment policy developed by the Governance Committee and obtain review of it by Attorney Cahill. 

Brief discussion ensued on the draft policy.

The motion carried unanimously. 

Ward moved and Allard seconded:

To approve attorney fees in excess of one [1] hour in order to review the draft harassment policy 

The motion carried unanimously.

Meeting with the DPS
VEC senior management team had a very positive meeting with the DPS last week. The DPS recognized both VEC and its Board for their progress and continuing improvement efforts.  

Stimulus Grant
The 11.2 million EDA grant is slated an award and final announcement the week of May 6, 2010.  

Operations Update
COO Wright engaged in a discussion regarding the operations update included in the Board packet mailed to all Directors.  Wright told Directors that the purchase of the Jay land deal has reached a settlement and negotiations are currently underway with GMP as to how the cost of this land purchase will be handled.  

School Street
CEO Hallquist reported that Johnson Community Housing would be hosting a groundbreaking ceremony on the School Street property on May 12, 2010 at 3 p.m. 

COMMITTEE REPORTS – AGENDA ITEM #9

Power Supply Committee
The approved minutes of the April 27, 2010 Power Supply Committee meeting were distributed to all Directors present at the meeting.  Bursell told the Board that the Power Supply Committee is recommending that Board of Directors authorize VEC to negotiate the terms of the Purchase Power Agreement between Hydro-Quebec and the Vermont utilities.

Discussion ensued on the long term purchase negotiation from Hydro Quebec. Bursell explained that VEC is seeking approximately 17 megawatts which will be a 30% reduction from the current deal. 

Allard moved and Lague seconded:

To approve the Resolution set forth from the Power Supply Committee.

The Committee recommends that Board of Directors authorize VEC to negotiate     the terms of the Purchase Power Agreement between Hydro-Quebec and the Vermont utilities.

RESOLUTION

WHEREAS, the Board of Directors and the Power Supply and Operations Committee agree that it desirable that VEC secure a portion of the power offered by Hydro-Quebec (HQ) to the Vermont Distribution Utilities (VT DU’s) to replace a portion of VEC’s current HQ contractual power which will expire on October 31, 2012. 

RESOLVED: That the Board of Directors hereby delegates to key management employees; specifically, Chief Executive Officer David Hallquist, Chief Financial Officer Michael Bursell, Power Supply and Rates Manager Kevin Perry, and Senior Power Resource Planner Craig Kieny; full authority to negotiate in good faith the terms of a Long Term (November 1, 2012 – May 31, 2038) Purchase Power Agreement (PPA) between HQ and the VT DU’s.  The terms of this PPA shall be based on a Memorandum of Understanding executed between HQ Energy Services (US) Inc., a wholly-owned subsidiary of HQ, Central Vermont Public Service Corp., and Green Mountain Power Corp, executed on or about March 11, 2010. 

Discussion ensued on the details of the Hydro Quebec deal.

Hallquist and Gamache left the meeting at 4:09 p.m. and returned at 4:11 p.m.

The motion carried unanimously. 

Finance Committee
CFO Bursell reported the Finance Committee update to the Board. Bursell requested and it was agreed that the roles and responsibilities of the Governance Committee in regard to VEC’s financial audit would be reviewed at the next Governance Committee meeting. 

Communications Committee
Chairperson Allard presented the approved minutes from the April 20, 2010 committee meeting. Allard told Directors that the committee was charged with reviewing the pros and cons of VEC becoming members of Touchstone Energy and making a recommendation to the full Board. The committee engaged in a lengthy review of the facts presented by Gamache and the committee has requested Gamache to obtain answers to several more questions before making a recommendation. 

ANY OTHER BUSINESS – AGENDA ITEM #10
Directors were reminded of the April 30^th deadline to register for the NEAEC Annual Meeting to be held May 18 – 21^st in North Conway, NH. 

ADJOURN – AGENDA ITEM #11
There being no further business before the meeting,

Lague moved and Miller seconded:

 That the meeting be adjourned.

No discussion was forthcoming and the motioned carried unanimously.

The meeting adjourned at 4:42 p.m. 

Respectfully submitted:  

 
Michelle DaVia, Secretary and Thomas Bailey, President

Signed minutes (PDF)