About Us Menu
| May 31, 2011 Board Meeting Minutes |
 |
 |
|
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 May 25, 2011. CALL TO ORDER – AGENDA ITEM # 1 MINUTES OF APRIL 26, 2011 REGULAR MONTHLY MEETING APPROVED – AGENDA ITEM #2 Miller moved and Carswell seconded: That the minutes of the April 26, 2011 meeting be approved as presented. The motion carried unanimously and the minutes were approved as amended. CEO SUMMARY – AGENDA ITEM #3 Hallquist provided an overview of the meeting agenda and highlighted important meeting agenda topics. Hallquist informed those Directors present that Central Vermont Public Service (CVPS) recently announced that they have entered into a tentative agreement to be acquired by a large Canadian utility called Fortis. He stated that when the deal becomes final, 71 percent of the meters in the State of Vermont will be owned by Canadian companies. A brief discussion ensued. Hallquist concluded that the Fortis acquisition is subject to approval by the Public Service Board (PSB). Green Mountain Power (GMP) Nextera Energy Contract Hallquist discussed GMP’s recent announcement that the electric utility had reached a tentative agreement to purchase power from Seabrook Nuclear Power Plant in New Hampshire. He provided summary highlights of the proposed power purchase agreement and discussed the differences between the Nextera- A lengthy discussion ensued regarding a report that had been circulated by a VEC member regarding the Kingdom Community Wind (KCW) project. Several Directors suggested that management should include clear communication regarding the connection of the transmission upgrades to the KCW project in the special election ballot materials. A brief discussion ensued. MANAGEMENT UPDATES – AGENDA ITEM #4 Financial Update CFO Bursell and those present engaged in a discussion of the Financial Update. He reported that April results for VEC’s operating budget exceeded expectations with a positive variance of $36k. He also reported that VEC’s operating budget is exceeding expectations year-to-date by $800k. He contributed the positive variances to two factors:
He reported that the capital budget is performing under budget by $1,741k and is exceeding expectations year-to-date by $1,150k. Bursell continued his financial update and reported on the following items: Federal Emergency Management Agency (FEMA) Grant On May 5, VEC received an electronic payment of $1.2 million dollars for reimbursement of damages caused by the December 1, 2010 storm. The storm had cost VEC $1.7 million dollars and FEMA provided reimbursement of 75 percent of those costs. Northeast Kingdom Connector (NEK) Grant On May 19, VEC received confirmation that the Economic Development Administration (EDA) will reimburse VEC for $1.8 million dollars for its Steel Tower Line project. Bursell stated that management will review the next phase of the NEK project to ensure that VEC is financially able to move forward. He concluded that the EDA is willing to reimburse VEC for interval expenditures which will allow VEC to bill on a monthly basis and maintain a positive cash flow balance. A brief discussion ensued regarding the status of obtaining Rights of Way (ROW). CFO Forum Bursell reported that during the recent CFO Forum, the possibility of forming a financing company to be utilized to purchase TRANSCO stock was discussed at length. He explained that the company, called Vermont Capital, would provide the investment funds necessary to procure TRANSCO stock. He stated that CVPS, GMP, and Burlington Electric Department (BED) requested that the topic be tabled due to lack of interest. However, VEC and other municipal utilities expressed interest and will evaluate the potential of a smaller Vermont Capital. Bursell concluded that further discussions will take place in the month of June. Bursell engaged in a question and answer session regarding TRANSCO stock. Transformer Numbering Project Bursell explained that the transformer numbering project will allow for completion of the Zone 2 transformers to be uniquely identified and assigned within our engineering and design systems. The information from the project will help in identifying specific outage information by service location and will allow for future transformer loading studies and analysis. He stated that the work is labor intensive and requires a visit to each unnumbered pole. He explained that the project will take years unless VEC can execute the project with efficiencies versus negatively impacting member rates. He reported that an additional $45k was authorized to continue with the project and an additional $180k will be needed to fund the project entirely. A brief discussion ensued. Projected Financing Plan Bursell stated that he is currently evaluating two potential options to obtain long term financing that will help to reduce costs.
Since frequent changes in bonds are difficult to execute and track, Bursell indicated that option 1 was the most favorable as it provided flexibility. He explained that it will also save money on trustee and legal fees. A Director suggested that this topic be deferred to the Finance Committee. Several Directors expressed support in pursing Bursell’s recommendation. Lague moved and Worth seconded: To enter into Executive Session to discuss potential rate increases over the next 3 years. The motion carried unanimously. Member O’Neill left the room at 12:51 p.m. and returned at 1:04 p.m. By majority of those Directors present, the Executive Session ended. Directors had an opportunity to ask questions of Bursell’s financial update and a brief discussion ensued. Operations Update COO Wright and those present engaged in a discussion of the Operations Update and reported on the following items: System Reliability Wright reported that VEC reliability was negatively impacted by the poor weather conditions in April. He stated that VEC experienced approximately the same amount of outages in the month of April than in the entire year. He highlighted that the year-to-date System Average Interruption Frequency Index (SAIFI) at the end of April 2011 was .65 which is 33 percent higher than last year. Lead Time Wright stated that he is continuing to report lead times separately between engineering and scheduling departments. He reported that in the month of March the average lead time for new services or line extensions was 8 days. Wright reported that the amount of new service requests VEC receives is considerably lower compared to prior years. Green Folder Retirements Wright referred those Directors present to page 49 in the board packet previously mailed to all Directors. He provided an overview of the project and provided a status update. A brief discussion ensued. Operational Highlights Vermont Electric Power Company (VELCO) has undertaken several major transmission construction projects in order to improve reliability. As a result, their asset base has grown and their capital and operating budgets have intensified. Wright stated that VEC’s role in providing governance is more critical than ever to help limit the impacts to Vermont ratepayers. Wright provided an overview of several projects VELCO currently has underway including a study to analyze the loss of Vermont Yankee as an energy generation source. Wright described the role of a newly formed Operating Committee that meets monthly to focus on setting operational policy, monitoring planning functions, and overseeing construction projects. Wright reported that the Operating Committee is helping to develop a policy that ensures consistency among utilities when executing real estate transactions. He explained that this request was made by VEC as a result of the Richford land transaction that was executed earlier this year. He stated that a draft policy was developed and has been provided in the board packet. Capital Budget and Plans Wright reported that the capital budget is meeting expectations with few exceptions. He stated that one exception is the Jay Tap project. He explained an error that was discovered when calculating work order overhead which caused the project to slip 14 percent over budget. He added that this overage will impact the overall capital budget. Wright briefly discussed a project in North Hero where VEC is waiting for FairPoint to complete their portion of the project. Directors had an opportunity to ask questions of Wright regarding his update and a brief discussion ensued. A brief discussion ensued regarding allocation of system losses on the CVPS and Morrisville systems as result of commissioning the Stowe Substation. General Counsel Update Brown described her observations as an internal counsel for the past 2 ½ months and discussed her role as supporting the Senior Leadership Team. Brown provided an overview on the following key items: KCW VEC is waiting to receive an order from the Public Service Board (PSB) regarding the KCW project and VEC’s associated transmission upgrades. She indicated that it could be as soon as today. Jay Peak Switching Station Amendment A new statute enacted by the Vermont General Assembly eliminates the need for a member vote for transmission projects that are unrelated to generation projects. Once VEC is granted a CPG from the PSB for the Jay Peak Switching Station, a member vote will not be required to for the project. Patronage Capital Brown has been working with CFO Bursell to develop a Patronage Capital recommendation which will be discussed later in the meeting as a separate agenda item. Affirmative Action Audit VEC received notice that the U.S. Department of Labor (DOL) is performing a “desk audit” to assess compliance with laws related to the hiring and promotion of minorities, individuals with disabilities, and veterans (commonly referred to as Affirmative Action). VEC has hired a consultant to provide direction through the process. The results have been positive and a report will be submitted to the DOL this week. Brown recommended that this topic be an agenda item for the next monthly meeting in order to conduct a presentation on the results. Directors asked questions of Brown regarding VEC’s affirmative action plan and cost of hiring a consultant. A discussion ensued regarding the ballots for the upcoming Special Meeting of the Membership. A Director inquired as to whether the Board would be able to review the ballots before they are mailed to the membership. Hallquist responded that the Board can call a special meeting if they desire. Brown discussed the elements of information provided in the Notice of the Special Meeting. Directors discussed the need to create ballot language that allows all members to understand the ballot questions and ensure a knowledgeable member vote. A brief discussion ensued. Safety Update Safety Manager Burns reviewed safety performance metric data and discussed VEC’s safety performance. A brief discussed ensued regarding VEC’s safety performance compared to other utilities. Burns engaged in a question and answer session regarding the safety update and a brief discussion ensued. Programs & Policy Update Low Income Docket Pratt informed those Directors present that the PSB issued a decision last Wednesday on the Low Income Docket. He stated that overall VEC had received favorable results. He explained that the order imposed requirements to the larger utilities that include a 25 percent discount for low income customers. He explained that the hearing officers indicated that such a program should not be directed to VEC at this time. However, it may be appropriate at one point for VEC to implement a similar program and those issues will be worked through in future proceedings. A discussion ensued. DOE Grant Pratt reported that VEC met with the DOE recently to review the status of the Smart Grid Investment Grant (SGIG). He stated that the DOE was very complimentary of VEC’s work; however, they cautioned about the need to provide more focus on cyber security. Pratt engaged in a question and answer session with the Board. A brief discussion ensued regarding penalties associated with not meeting renewable energy requirements. Corporate Services Update Gamache discussed briefly the Affirmative Action plan and confirmed that it will be presented during the next regularly monthly meeting. She stated that in preparation of the upcoming Special Meeting of the membership, a public outreach strategy has been designed to build member engagement and increase member voting. She stated that VEC will be holding informational meetings throughout VEC’s service territory to present updates on VEC’s Smart Grid story, discuss the upcoming special election, and provide members with an open forum to exchange feedback. The first information meeting will be held in Grand Isle on June 6 and additional meetings will follow. A brief discussion ensued regarding communications strategies. President Bailey called for break in the proceedings at 2:15 p.m. The meeting resumed in the Robert P. Northrop Boardroom at 2:31 p.m. SPECIAL MEETING – AGENDA ITEM #5 Hallquist informed those Directors present that the Special Meeting of the Membership will be held on Tuesday, July 26 immediately following the July Board meeting. Member Pat O’Neil requested to address the Board regarding the upcoming Special Meeting. She stated that the language placed on the ballot regarding the transmission upgrades needs to be very clear. She stated that part of the State of Vermont Statute indicates that the Co-op is able to present other risks in addition to risks identified by the PSB. She recommended having members participate in developing information materials because members need simpler language in order to understand the vote. Hallquist stated that management will present the information as clear as possible and will continue to provide public outreach opportunities for member education. A brief discussion ensued regarding Washington Electric Cooperative’s (WEC) Patronage Capital policy. In accordance with VEC Bylaws, Hallquist requested that the Board nominate individuals to serve on the Petition Review Committee. He provided a brief explanation of the role of the Committee during a director election. Lague moved and DaVia seconded: To nominate the same people as during annual meeting substituting Mark Woodward for Dorothy Allard. The motion carried unanimously. Member Pat O’Neil left the meeting at 2:42 p.m. and did not return. SAFETY PRESENTATION – AGENDA ITEM #6 Hallquist stated that in order for the Green Mountain Voluntary Protection Program (GMVPP) to be successful, VEC needs to engage its workforce in building a safety culture. He stated that VEC’s current culture enforces safety and the objective with GMVPP is to transition to a level of engagement which could take years to achieve. He described several challenges that exist in shifting the safety culture. Hallquist turned over the discussion to Safety Manager Burns who provided a safety culture presentation. In summary, Burns described the GMVPP program and how working on building an engaged safety culture will support VEC’s achievement of the GMVPP certification. Directors had an opportunity to ask questions regarding the GMVPP program and a brief discussion ensued. Hallquist indicated a scheduling conflict with appointing one of the members to the Petition Review Committee. He suggested that the Board replace Amanda Niklaus with Vickie Brown. Lague moved and DaVia That the Petition Review Committee shall consist of the following members: Vickie Brown, Liz Gamache, and Mark Woodward. The motion carried unanimously. Wright left the meeting at 3:08 p.m. and did not return Burns left the meeting at 3:08 p.m. and did not return Hallquist left the meeting at 3:08 p.m. and returned at 3:32 p.m. Gamache left the meeting at 3:08 p.m. and did not return. PATRONAGE CAPITAL – AGENDA ITEM #7 CFO Bursell and General Counsel Brown provided a joint update on the status of creating a Patronage Capital program. Brown referred those Directors present to pages 118 and 119 in the board packet previously mailed to all Directors. She provided a step by step overview of actions management has taken to identify a course of action with patronage capital allocations and retirements. Bursell recommended that the board consider taking the following three steps to move forward with a patronage capital program:
Bursell stated that he recommends that the board address the first two steps at the next regularly monthly meeting and defer the issue of retirement until later in the year. Directors had an opportunity to ask questions of Bursell and Brown of their findings and a lengthy discussion ensued. A lengthy discussion ensued regarding accounting and legal risks. A lengthy discussion ensued regarding capital credits allocation. Lague left the meeting at 3:16 p.m. and returned at 3:20 p.m. Bursell and Brown proposed that the Board invite Ty Thompson, Legal Expert with NRECA and Tom Strait, CPA with Washington Utility Group, to the next regularly scheduled board meeting to discuss the patronage capital and answer questions that the board may have. A lengthy discussion ensued. Woodward left the meeting at 3:30 p.m. and returned at 3:34 p.m. Bursell concluded that a resolution from the board will be necessary at the next board meeting in order to meet reporting requirements by September 15, 2011. Miller moved and Worth seconded: To invite Ty Thompson by phone and Tom Strait to the next board meeting. The motion carried unanimously. Woodward left the meeting at 3:53 p.m. and did not return. A discussion ensued regarding Line Extension Patronage. Bursell explained the timeline associated with executing patronage capital by the September 15, 2011 deadline and indicated that VEC will require the PSB amendment by the end of July in order to deliver on the September 15, 2011 deadline. Pratt left the meeting at 3:58 p.m. and returned at 4:00 p.m. Directors expressed the need to obtain more information regarding this topic before taking any action in order to make an informed decision. It was suggested that this topic be placed first on the agenda for the next regularly scheduled board meeting. It was also recommended that management provide the board with reading material in the interim to become educated on the subject. COMMITTEE STRUCTURE – AGENDA ITEM # 8 Bursell left the meeting at 4:02 p.m. and did not return. Brown left the meeting at 4:02 p.m. and did not return. President Bailey provided an overview of the current board committee structure which is as follows: • The VEC Board has five committees With this structure, he stated that there are 33 Director opening but only 25 committee seats. A Director suggested that all the committees should consist of the full board and another Director suggested that a Director should be able to attend a committee meeting when they choose and receive payment. Another Director expressed concern regarding committees making decisions that represent the entire board. A lengthy discussion ensued. A Director expressed concerns regarding the lack of transparency in the Communications Committee. Gamache rejoined the meeting at 4:14 p.m. Gamache explained the structure of the Communications Committee and how the Directors that serve on the Committee are used as advisors. Communications Committee Chair, Director Allard provided a detailed explanation of the process of creating VEC’s quarterly newsletter Coop Life. Ward moved and Carswell seconded: To continue the current committee structure and allow any Director to attend any committee meeting and get paid for it. And that the Governance Committee evaluate options for a workable committee structure and make a recommendation to the full board. The motion passed by majority vote. Governance Committee Chair, Director DaVia indicated that the next committee meeting will be held the morning of the next monthly board meeting in June. COMMITTEE REPORTS – AGENDA ITEM #9 There were no committee reports. ANY OTHER BUSINESS – AGENDA ITEM #10 There was no other business. 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, Ward moved and Lague seconded: That the meeting be adjourned. No discussion was forthcoming and the motioned carried unanimously. The meeting adjourned at 4:25 p.m.
Respectfully submitted: __________________ ________________ Michelle DaVia, Secretary and Thomas Bailey, President
|
