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| February 22, 2011 |
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VERMONT ELECTRIC COOPERATIVE, INC. 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 16, 2011. CALL TO ORDER – AGENDA ITEM # 1 MINUTES OF JANUARY 25, 2011 REGULAR MONTHLY MEETING APPROVED – AGENDA ITEM #2 That the minutes of the January 25, 2011 meeting be approved as presented. The motion carried unanimously and the minutes were approved as amended. CEO SUMMARY – AGENDA ITEM #3
Hallquist provided a brief overview of Don Kreis’ qualifications and indicated that his presentation will cover conflict of interest policies. Miller moved and Lague seconded: To enter into Executive Session to discuss Vermont Yankee contract negotiations. The motioned carried unanimously. The Board entered into Executive Session. By majority vote of those Directors present the Executive Session ended. Safety Update
Two-Minute Safety Drill • Do not text while driving • Use a hands free device to talk on the phone while driving • Pull over to dial phone calls or take phone calls if no hands free device is available. A brief discussion ensued. MANAGEMENT UPDATES – AGENDA ITEM #4 Financial Update He indicated that the financial information enclosed in this month’s board packet contains final unaudited December, 2010 results and January, 2011 results. Bursell reported that December results for VEC’s operating budget exceeded expectations with a positive variance of $373k. The capital budget performed better than budget by $53k. He reported that the TIER year end result was 2.24. Bursell reported that January results for VEC’s operating budget were slightly below expectations with a negative operating variance of $61k. The capital budget is performing over budget by $349k for the month of January. He stated that VEC is over budget for the Jay Tap Switching station project because VEC continues to wait for committed funds from the Economic Development Administration (EDA) for the Northeast Connector project (NEK). Bursell continued his financial update by reporting on the following items: December 1, 2010 Wind Storm (FEMA Update) Bursell reported that VEC has completed their analysis of the costs associated with the December 1, 2010 wind storm and those costs have been submitted to the Federal Emergency Management Agency (FEMA). The total storm costs totaled $1.793 million which is considered VEC’s most expensive storm in history. Bursell reported that the reimbursement from FEMA will total $1.2 million. He believes VEC should receive payment within the next two months. Fairpoint Bankruptcy Bursell reported that VEC has received payment for the entire Fairpoint Communication’s delinquent balance. Their bankruptcy is now considered closed. Miscellaneous Audit Work The state tax department recently conducted an audit of VEC’s collection of Vermont sales tax. The audit period covered the years of 2008, 2009, and 2010. VEC has received a preliminary report that suggests adjustments of approximately $90k. Bursell briefly discussed VEC’s options to help mitigate the potential liability. He stated that VEC will work to resolve the sales tax adjustments once the final audit report is received. A brief discussion ensued. Pratt left the meeting at 12:30 p.m. and returned at 12:31 p.m. Banking Resolution Bursell provided an extensive overview regarding the proposed resolution to approve a new $3 million credit facility with National Rural Utilities Cooperative Finance Corporation (CFC). Lague moved and Miller seconded: To accept the resolution set forth on page 59 included in the February board packet. The full resolution approved as presented are appended to these minutes. The motion carried unanimously. Patronage Capital During the January Board meeting, an extensive discussion was held concerning patronage capital. The Board had authorized management to utilize legal support up to $20k in order to identify a plan to resolve issues associated with patronage capital; specifically the lack of historical patronage capital records and the impact of prior bankruptcy. As a result of consulting with a lawyer, Bursell reported the following;
In the year 2000, there was a specific provision within the bankruptcy plan that allowed the membership to retain their balances in patronage capital. He indicated that the provision did not contain exceptions since the equity was negative.
It was recommended not to make any bylaw changes at this time and continue solidifying the plan throughout the year.
VEC is now evaluating legal and tax precedence on a national level that might address specifically patronage balances for historical records. Bursell stated that he will continue to report to the Board the progress of this project on a monthly basis. A brief discussion ensued regarding penalties of not meeting SPEED (Sustainably Priced Energy Development Program) requirements. Pratt engaged in a question and answer session regarding SPEED requirements. Bursell engaged in a question and answer session regarding equity. A brief discussion ensued. A brief discussion ensued regarding the difference between nonprofit and not-for-profit status. Hallquist left the meeting at 12:50 p.m. and returned at 12:51 p.m.
Reliability In January, VEC’s 12-month System Average Interruption Frequency Index (SAIFI) exceeded expectations and met an all time record low. He stated that VEC is on track with vegetation maintenance and capital projects and believes VEC will be able to sustain this position. Momentary Average Interruption Frequency Index (MAIFI) By the end of the year, VEC will begin tracking MAIFI. When implemented, VEC will become the first utility in Vermont to utilize this measurement. Wright explained that MAIFI tracks blink counts and believes this will be a valuable measure because a blink precedes an outage. A brief discussion ensued. Jay Tap Project Wright reported that a decision was made to continue moving forward with the project and monitor costs on a weekly basis. VEC will incur additional costs in order to keep the ground thawed. Kingdom Community Wind (KCW) The Public Service Board (PSB) is currently holding its KCW hearings. Wright indicated that the public has engaged in a debate concerning the state’s position to balance the need for providing renewable energy while minimizing environmental impacts. Miller left the meeting at 1:04 p.m. and returned at 1:07 p.m. Corporate Services Update Gamache reported that various communication projects are in the works in order to effectively communicate VEC’s smart grid story. She provided an overview of project deliverables. A brief discussion ensued. Gamache informally asked those Directors present if she could solicit Director Woodward’s participation for a communication project and no objections were mentioned.
Programs, Policy and Smart Grid Update Smart Grid Update Pratt provided a brief smart grid investment grant (SGIG) update. He reported that he was recently informed of Congress’s consideration to cut future funding for smart grid programs. He indicated that the impact to VEC would be minimal considering VEC has already spent more than a third of the grant funds awarded. He concluded that VELCO will go to Vermont’s Congressional delegation to obtain support for Vermont to keep the unspent funds. Automated Meter Information (AMI) Consumer Behavior Study Pratt reported that VEC and Vermont Energy Investment Corporation (VEIC) agreed to delay the start of the consumer behavior study to October 1, 2011. He explained that this will allow more time to consider the meter technology components and gather variable peak pricing information. A brief discussion ensued. Meeting with the Department of Public Service (DPS) Pratt stated that VEC recently attended a meeting that included VELCO, DPS, Telecom, and Connect VT to discuss the plan for a broadband rollout across the state to be concluded by 2013. During this meeting, VEC participated in a discussion regarding pole attachments. Pratt stated that VEC presented its position that adequate notice is required when Telecom wants to attach to VEC poles. Legislature Pratt discussed the several components of a new bill related to the Vermont Energy Act of 2011. A brief discussion ensued regarding solar pricing. Pratt indicated that, if approved, the energy bill will allow utilities to use credit cards for bill payments without going through a third party. Right of Way (ROW) As a result of a recent member dispute, VEC will be evaluating its current ROW policies and identifying locations where VEC does not possess ROW. A brief discussion ensued regarding VEC’s current ROW policy. Worth left the meeting at 1:32 p.m. Safety Update Burns reviewed safety performance metric data and discussed VEC’s safety performance. He stated that VEC is currently 158 days without a loss time incident which is close to meeting VEC’s record of 161 days. Burns stated that VEC has applied for the VOSHA Green Mountain Voluntary Participation Program which is a Vermont safety program and has been accepted. He stated that VOSHA has assigned the Agency of Transportation District 7 as a mentor to guide VEC through the challenge process. ANNUAL MEETING – AGENDA ITEM #5 Miller moved and Worth seconded: To approve Liz Miller, Department of Public Service Commissioner, as guest speaker at VEC’s 2011 Annual Meeting of the Membership. The motion carried unanimously. DaVia moved and Ward seconded: To approve Dorothy Allard, Liz Gamache and Amanda Niklaus as members of the petition review committee for the 2011 candidate election The motion carried unanimously. President Bailey called for break in the proceedings at 1:45 p.m. The meeting resumed in the Robert P. Northrop Boardroom at 2:00 p.m. Burns left the meeting at 1:45 p.m. and did not return GUEST SPEAKER – DON KREIS – AGENDA ITEM #6 CEO PERFORMANCE EVALUATION – AGENDA ITEM #7 Ward moved and DaVia seconded: To enter into Executive Session to discuss personnel. Motioned carried unanimously. The Board entered into Executive Session. Niklaus left the meeting at 2:01 p.m. and returned at 2:28 p.m. By majority vote of those Directors present the Executive Session ended. Assistant Professor of Law and Associate Director Don Kreis with Vermont Law School joined the meeting at 2:28 p.m. GUEST SPEAKER – DON KREIS – AGENDA ITEM #6 Kreis began his presentation by summarizing his background and describing his expertise in electric cooperatives and energy regulation. Kreis conducted a detailed discussion on the topics of Director fiduciary duties and conflict of interest policies. A brief discussion ensued regarding the difference between non-profit and not-for-profit status. Kreis reviewed the VEC Board of Directors’ current conflict of interest policy and provided recommendations. Kreis engaged in a question and answer session regarding conflict of interest policies and a lengthy discussion ensued. Miller left the meeting at 3:47 p.m. and returned at 3:49 p.m. Kreis engaged in a question and answer session regarding board committee structures and a lengthy discussion ensued. Woodward left the meeting at 4:07 p.m. and returned at 4:10 p.m. COMMITTEE REPORTS– AGENDA ITEM #8 OTHER BUSINESS – AGENDA ITEM # 9 PARKING LOT – AGENDA ITEM #10 ADJOURN OR RECESS – AGENDA ITEM #11 Ward moved and Lague seconded: That the meeting be adjourned. No discussion was forthcoming and the motioned carried unanimously. The meeting adjourned at 4:23 p.m.
Respectfully submitted: ___________________ _____________________ Michelle DaVia, Secretary and Thomas Bailey, President 
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