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| April 26, 2011 Board Meeting Minutes |
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VERMONT ELECTRIC COOPERATIVE, INC. As required under the VEC Bylaws, notice of this meeting was sent to each Director by deposit in U.S. mail on April 20, 2011. CALL TO ORDER – AGENDA ITEM # 1 President Tom Bailey called the meeting to order at 12:17 p.m. in the Johnson Truck Bay at VEC offices in Johnson, Vermont. Present were Thomas Bailey and Directors Dorothy Allard, Daniel Carswell, Michelle DaVia, Craig Kneeland, Bertrand Lague, John Miller, Daniel Parsons, John Ward, Mark Woodward and Don Worth. Also present from VEC were CEO David Hallquist, CFO Michael Bursell, Manager of Corporate Services Liz Gamache, Safety Manager Les Burns, Programs and Policy Manager Randy Pratt, General Counsel Vickie Brown, Power Supply Manager Kevin Perry, Senior Power Resource Planner Craig Kieny, and Internal Communications Specialist Amanda Niklaus. Also present were members Schuyler Jackson of Hinesburg, Bob Shea of Fairfax, Carol Maroni of Craftsbury, and Carl Powden of Johnson. Hallquist discussed the importance of keeping the meeting on schedule to the agenda. He recommended that the board consider adopting a resolution that would set time parameters in which each member and director would have to speak. He recommended that both members and directors be limited to two minutes each. Lague moved and Miller seconded: To limit debate on all questions concerning Vermont Yankee to one speech per Director and member of not more than two minutes each. A discussion ensued. Ward moved and Allard seconded: To amend the motion to allow five minutes for members and five minutes for directors. The amendment to the main motion carried by majority vote. The main motion carried unanimously as amended. MINUTES OF FEBRUARY 22, 2011, MARCH 29, 2011 REGULAR MONTHLY MEETINGS AND APRIL 6, 2011 SPECIAL MEETING APPROVED – AGENDA ITEM #2 Kneeland moved and Miller seconded: That the minutes of the February 22, 2011 meeting be approved as presented. The motion carried unanimously and the minutes were approved as amended. Miller moved and Lague seconded: That the minutes of the March 29, 2011 meeting be approved as presented. The motion carried unanimously and the minutes were approved as presented. Miller moved and Lague seconded: That the minutes of the April 6, 2011 special meeting be approved as presented. The motion carried unanimously and the minutes were approved as presented. FORM 990 – AGENDA ITEM #3 Bursell stated that he has presented a final draft of the IRS Form 990 for review in the board packet that was previously mailed to all Directors. He requested that the board approve the 990 Form as presented. He explained that if approved, the 990 Form will be filed by May 15, 2011 and made available to the public on VEC’s website. Lague moved and Miller seconded: To approve Form 990 as presented. A brief discussion ensued. The motioned carried unanimously. VERMONT YANKEE CONTRACT INFORMATION– AGENDA ITEM #4 Senior Resource Planner Craig Kieny provided a summary of highlights of the purchase power agreement (PPA) offered by Entergy Corporation. He provided an overview of the agreement terms which consisted of the following: • 10MW of energy and associated capacity • 20 year contract • $49.00/MWh March 22, 2012 – March 21, 2013 – Unit Contingent Kieny stated that the price will be adjusted each March 22 thereafter and explained the pricing model. Directors had an opportunity to ask questions of Kieny and a brief discussion ensued. Kieny continued his presentation by providing an overview of the economic benefits and risks associated with the proposed PPA. He provided an overview of the following benefits:
Then, Kieny provided an overview of the risks which consisted of the following:
Kieny engaged in a question and answer session with those Directors present and a lengthy discussion ensued. A brief discussion ensued regarding the PPA’s positive economic impact to VEC industrial members. Kieny presented four options for board action consideration. They included the following:
A brief discussion ensued. Hallquist clarified that option number 2 implies that the board would approve Entergy’s PPA if they obtain the right to continue operating without the certificate of public good but through the legal process. He also clarified that option number 3 implies that management should cease all discussions with Entergy. Ward moved The board approve the proposed PPA if Entergy obtains the right to continue to operate through the legal process. Being informed that Agenda Item # 9 was not yet on the floor Ward withdrew his motion. FAIREWINDS PRESENTATION– AGENDA ITEM #5 Arnie Gundersen with Fairewinds Associates joined the meeting at 1:02 p.m. Gundersen introduced himself to those Directors and members present and stated that the purpose of his presentation will be to discuss whether Vermont Yankee is a reliable partner for 20 more years. He stated that the Vermont Yankee Public Oversight Panel Assessment of Entergy Nuclear Vermont Yankee’s (ENVY) Reliability found the following issues:
He stated that within the past year, the Vermont Yankee plant has been shut down three times because of age related issues. He provided an overview of Vermont Yankee’s plant design and identified specific areas where the plant does not meet current design standards. He stated that nuclear regulatory bodies have “grandfathered” the operation of Vermont Yankee, but it does not meet today’s design standards. Gundersen described specific issues associated with Vermont Yankee’s single unit site design. He stated that Vermont Yankee will need to undertake several major capital upgrades in order to maintain safe operations. He provided an overview of the financial expenses associated with those upgrades. Gundersen stated that in light of the Fukushima accident, the U.S. nuclear industry is facing regulatory uncertainty while nuclear costs are rising. He stated that in addition to an already aging plant that requires upgrades, additional upgrades could be required as a result of the Japan disaster during the next three years. He stated that these new upgrades could include creating emergency planning zones, preparation plans for earthquakes, flood, and other catastrophic events including terrorist attacks. He stated that Vermont Yankee would incur significant costs in order to complete these upgrades. Gundersen concluded his presentation by highlighting the following observations and projections: • As a result of the Japan disaster, the U.S. will see nuclear costs rise. • Entergy will have little to no operating margin due to maintenance of a plant with age related problems. • The proposed PPA is perceived as a 20 year commitment to Entergy, but Entergy perceives Vermont Yankee’s operation as a day to day commitment. • Entergy will make a financial business decision to shut the plant down rather then modify it. • Vermont Yankee will not be in operation for the next 20 years and he thinks that Entergy will shut the plant down for financial reasons within the next 5 years.
Directors had an opportunity to ask questions of Gundersen and a brief discussion ensued. Gundersen left the meeting at 1:30 p.m. and did not return. ENTERGY PRESENTATION– AGENDA ITEM #6 Site VP Mike Colomb with Entergy joined the meeting at 1:35 p.m. Colomb introduced himself to those Directors and members present and provided a brief overview of his background and qualifications. Colomb began his presentation by providing an overview of Entergy’s Integrated Business design. He also described Vermont Yankee’s facility background including an overview of its emergency plan strategies. He provided a detailed explanation of the generation process performed at Vermont Yankee nuclear plant. Columb stated that Entergy’s current PPA has saved Vermont ratepayers over $330 million. He continued his presentation by describing the Mark 1 Containment design and discussed its operational structure. He provided a detailed description of the fuel tank system. He provided an overview of recent modifications and upgrades to the boiling water reactors with Mark 1 design containment systems. He stated that it could take many years to identify all the issues associated with the Fukushima nuclear plant disaster in Japan. He stated that an issue that was recently identified that caused the explosion was due to a hydrogen leak. He further explained that hydrogen had leaked through a vent system which caused the explosion. He stated that Vermont Yankee does not have a piping system that would allow hydrogen to leak into the building if there is a failure. He stated that the information received thus far has indicated that the tsunamis caused the incident and not the earthquake. He stated that Vermont Yankee plant is designed to withstand the largest credible earthquake in the area. River flooding is a concern, and Colomb described Vermont Yankee’s emergency planning efforts in the event of an emergency. Colomb engaged in a question and answer session with those Directors present. A brief discussion ensued. Colomb left the meeting at 2:05 p.m. and did not return. President Bailey called for break in the proceedings at 2:05 p.m. The meeting resumed in the Robert P. Northrop Boardroom at 2:24 p.m. PRESENTATIONS FROM VEC MEMBERS– AGENDA ITEM #7 President Bailey turned the discussion over to those VEC members that had previously requested to address the board. Schuyler Jackson, member from Hinesburg
Bob Shea, member from Fairfax
Carl Powden, member from Johnson VEC BOARD OF DIRECTORS STATEMENTS– AGENDA ITEM #8 President Bailey turned the discussion over to Directors wishing to make final remarks. John Ward Mark Woodward Dorothy Allard Michelle DaVia Tom Bailey Bert Lague Craig Kneeland Jack Miller Dan Parsons Dan Carswell Don Worth ENTERGY VOTE – AGENDA ITEM #9 Allard moved and DaVia seconded: To reject the proposed PPA regardless of status of Certificate of Public Good Ward moved and Lague seconded: To conduct a roll call vote A roll call vote on the motion was taken. Nine [9] Directors voted yes, one [1] Director voted no, that being John Ward, and one [1] Director was absent. The main motion carried by majority vote of those Directors present. OTHER BUSINESS – AGENDA ITEM # 10 Pratt provided a detailed overview of the status of the Green Pricing Program. He indicated that he has been asked to provide testimony on Friday on whether VEC would like to offer to its members the option to participate in the Green Pricing Program. A lengthy discussion ensued. A brief discussion ensued regarding the General Counsel position and its impact on the operating budget. Director Allard suggested that the board consider its options for replacing Director Matten who had recently announced her resignation from the board. It was suggested that preparations be made for a director election in conjunction with the July special meeting of the members. Ward moved and Lague seconded: To have an election to fulfill Director Matten’s position at the next special meeting if in accordance with VEC’s bylaws. The motion carried unanimously. A brief discussion ensued regarding the Northeast Connector (NEK Connector) project. A brief discussion ensued regarding the Beecher Falls gas generation facility. PARKING LOT – AGENDA ITEM #11 No parking lot topics were identified.
ADJOURN OR RECESS – AGENDA ITEM #12 There being no further business before the meeting, Lague moved and DaVia seconded: That the meeting be adjourned. No discussion was forthcoming and the motioned carried unanimously. The meeting adjourned at 3:31 p.m.
Respectfully submitted: ____________________ _____________________ Michelle DaVia, Secretary and Thomas Bailey, President
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