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| July 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 July 20, 2011. CALL TO ORDER – AGENDA ITEM # 1 President Tom Bailey called the meeting to order at 12:01 p.m. in the Robert P. Northrop Boardroom 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, COO Jeffery Wright, CFO Michael Bursell, Manager of Corporate Services Liz Gamache, General Counsel Vickie Brown, Safety Manager Les Burns, and Corporate Assistant Nina Russo-Sanchez. APPROVAL OF MINUTES - AGENDA ITEM #2 Miller moved and Kneeland seconded: That the Regular Meeting minutes of May 31, 2011 be approved as presented. The motion carried unanimously and the minutes were approved.
Miller moved and Kneeland seconded: That the Organizational Meeting minutes of May 21, 2011 be approved as presented. The motion carried unanimously and the minutes were approved. Miller moved and Lague seconded: That the Special Meeting minutes of June 10, 2011 be approved as presented. The motion carried unanimously and the minutes were approved as amended. Miller moved and Allard seconded: That the Regular Meeting minutes of June 28, 2011 be approved. The motion carried unanimously and the minutes were approved as amended. CEO SUMMARY – AGENDA ITEM #3 Hallquist provided an overview of the meeting. Two-Minute Safety Drill Safety Manager Burns provided the following safety tips for outdoor activities:
A Director informed the Board of a possible safety hazard where two electric line workers were standing with their backs to traffic by transmission lines across route 104 and near route 115. Wright will contact VELCO about a possible unsafe situation. Special Meeting Overview Hallquist informed the Board that there has been a lot of member interest in the special meeting vote, with a lot of questions about the voting procedure. He provided an overview of the ballot counting process and emphasized the importance of following procedures. A lengthy discussion ensued regarding voting procedure, handling of ballots and the possibility of the press recording the meeting. Gamache reported that an extensive public outreach had been done. Hallquist stated that management has a responsibility to educate members and that we have learned a lot through this process. VEC management will provide a report to the Board on “lessons learned.” Lague commended Gamache on how she conducted the meeting held in Newport. Lague moved and Miller seconded: To go into Executive Session to discuss the proposed purchase by Green Mountain Power (GMP) of the Central Vermont Public Service (CVPS) assets. The motion carried unanimously. The Board entered into Executive Session. By majority vote of those Directors present, the Executive Session ended. Hallquist provided a brief discussion on the Strategic Planning sessions which were held throughout July and informed the Board that a proposed Strategic Plan for 2012 will be presented to the Board in August. Utility Consolidation Hallquist informed the Board that the statewide meeting among the Department of Public Service (DPS) and the distribution utilities to discuss utility consolidation was cancelled. The meeting had been called to discuss the request from Tony Klein that the DPS conduct a study as to whether savings could be achieved if Vermont were served by one utility company. The study is now on hold, in light of GMP’s proposed acquisition of CVPS. MANAGEMENT UPDATES – AGENDA ITEM #4 Financial Update CFO Bursell and those present engaged in a discussion of the CFO’s Financial Update. He reported that June finished better than budget. He anticipated that we will have several months where we will meet budget, but will have some months where we will miss budget because of timing differences, e.g., vegetation maintenance is behind schedule. Bursell reported the transformer numbering project will be completed this year within the approved capital budget so that it will not have an impact on rates. Bursell distributed a chart showing a comparison of the recently-rejected Vermont Yankee power purchase agreement and a potential agreement with NextEra for purchase of power from the Seabrook nuclear power plant. He noted that Seabrook is newer than Vermont Yankee so Seabrook probably does not have the reliability issues of VY. Bursell reported that we are in active discussion with NextEra at this time, as are VPPSA and Stowe. VEC is taking the lead in negotiations on behalf of the other utilities to obtain a fixed price contract. Bursell noted that NextEra will need to be approved by PSB and VEC members. VEC management will present a proposal to the Board at the August meeting. It was agreed that there is no need to go back to power supply committee. A discussion ensured regarding the reliability of the Vermont transmission system if Vermont Yankee is shut down. Hallquist stated that the transmission system will need to be upgraded regardless if Vermont Yankee is off or on line. A brief discussion ensued regarding a large customer that was in arrears. Bursell stated that their meter reading cycle has been revised so that they can receive one consolidated bill, to be paid monthly. Operations Update COO Wright reported that July has been a turbulent month for storms and that it may hurt the reliability indices. Wright called attention to outages per member. He noted that Bakersfield continues to see problems with some members experiencing 19 outages in the same month. Wright reported that the new tracking system for lead times for new services is providing useful information. In May the average lead time was 54 days from the new service request through engineering and 28 days for the actual line construction. Wright discussed a comparison of peak load data for New England, Vermont and VEC. New England and Vermont peaked last weekend, but VEC did not. By date, we are still a winter peaker. Wright informed the Board that twice a year VEC is required to do a voltage reduction event. VEC has done this manually in the past, but recently moved to automated using our SCADA communications. In May, we did not comply with test and have reverted back to doing it manually. By the fall, the installed SCADA should be sufficient to go back to an automated response. With respect to the capital budget, Wright reported that the Jay Tap project has been completed. We can now monitor the power factor, which is much better now that it had been in the past, resulting in more efficient operation. The SCADA project is on schedule and on budget. Other projects are coming along as planned. Wright reported two incidents of copper theft in the past few weeks, both of which have been reported to the State police. Other utilities have experienced similar incidents. Cameras are being installed where feasible. Wright reported that, in light of the equipment failure that occurred when the Jay Tap substation was energized, his team is working with the vendor of the defective equipment to recover VEC’s costs and those of Jay Peak. Corporate Services Update Gamache noted that while she has been very focused on outreach in connection with the Special Meeting election, she is hoping to use the process to build relationships and lay a foundation for future initiatives. Gamache reported that the Strategic Plan is underway, that we are getting back to business as usual after unforeseen staffing shortages, and that we have met SQRP measures for the plan year. A brief discussion ensued regarding the special contracts that VEC has with Jay Peak and Smugglers’ Notch and about whether these contract terms could be included with our tariffed rates. One director commended VEC’s move toward ebilling and suggested that we should consider electronic voting. Safety Update Safety Manager Burns reported that, as of the meeting date, we have gone 312 days without a lost time incident. Burns noted in the past VEC averaged 9 to 12 incidents a year. Burns reported that our safety record ranks well compared to other New England utilities but we expect to improve that ranking. Our safety program has made a lot of head-way but has a long way to go. Voluntary Participation Program (VPP) recently formed several teams to address different elements of our safety program, giving employees the opportunity to get more involved. Programs & Policy Update Pratt was not present at the meeting. Reporting on his behalf, Hallquist noted that our Consumer Behavior Study has sparked member interest, with 1800 members responding to the enrollment survey. The study will begin sometime in October. Hallquist noted that Pratt will provide greater detail regarding the variable peak pricing rate structure that will be used in the Consumer Behavior Study. General Counsel Update Brown reported that, in the context of the July special meeting and member vote, it has been very useful to have a policy in place that addresses the voting process, so that issues did not need to be decided ad hoc. Management may be recommending changes to the policy based on issues identified in connection with the special meeting. Brown reported that members will begin seeing the notification of their patronage capital balances on their August bill. VEC will be doing a public outreach to address members’ questions about patronage capital. Lague moved and Miller seconded: To go into Executive Session to discuss personnel issues. The motion carried unanimously. The Board entered into Executive Session. By majority vote of those Directors present, the Executive Session ended. President Bailey called for break in the proceedings at 2:15 p.m. The meeting resumed in the Robert P. Northrop Boardroom at 2:30 p.m. Burns left the meeting at 2:15pm and did not return. NRECA BOARD OF DIRECTORS REPRESENTATION – AGENDA ITEM #5 – Board action requested DaVia reported that NRECA is in the process of re-examining its governance structure. Over the last decade they have switched from having the Board of Directors run the organization to having the organization run by the resolution of members. Resolutions are generally submitted by the larger states and reviewed by a committee to bring to the regional and then national level. The upshot is that smaller states like Maine, Vermont and New Hampshire are out of the loop and many resolutions are ignored. DaVia further reported that reform is underway to move to a different governance system by the end of the year. The goal is to deconstruct and then reconstruct NRECA, to eliminate certain services that it currently provides (e.g., insurance coverage) and to re-focus the organization on core functions. Lague nominated DaVia to be the NRECA representative for Vermont for the next year. Carswell seconded. A brief discussion ensured regarding role of VEC’s representative and the value provided by the NRECA. President Bailey asked if there were any other nominations. There were no other nominations. Motion was carried unanimously to nominate DaVia to be the NRECA representative. SALES TAX AUDIT RESULTS – AGENDA ITEM #6 – Board action requested Miller moved and Lague seconded: To go into Executive Session to discuss customer-specific information. The motion carried unanimously. The Board entered into Executive Session. By majority vote of those Directors present, the Executive Session ended. NRECA MEMBER SURVEY RESULTS – AGENDA ITEM #7 Gamache left the meeting at 3:40 p.m. and returned at 3:45 p.m. Bursell left the meeting at 3:45 p.m. and returned at 3:47 p.m. Wright left the meeting at 3:52 p.m. and returned at 3:53 p.m. Hallquist left the meeting at 4:07 p.m. and returned at 4:10 Gamache presented the results of a member satisfaction survey recently conducted by the NRECA. Gamache reported that the overall residential rating has stayed flat over the past year. The trend was upward for commercial/industrial customers. Drilling down to specific questions, both sectors showed improvement over last year. Gamache further reported that resolving issues or problems were revealed to be the most important driver of overall residential customer satisfaction. The key driver of residential value is cost. For commercial/industrial, the key drivers of overall satisfaction are member service, electric service, and rates. An extensive discussion ensued over the results of the survey. SPECIAL MEETING OVERVIEW – AGENDA ITEM #8 Hallquist presented the agenda and plans that were put into place for the special meeting. DaVia moved and Miller seconded: That in case of a recount of any of the ballot items, SBS will come to Johnson for the recount. The motion carried unanimously. Hallquist left the meeting at 4:22 p.m. and returned at 4:35 p.m. Bailey left the meeting at 4:30 p.m. and returned at 4:31 p.m. COMMITTEE REPORTS – AGENDA ITEM #9 Ward reported that he was left off as an attendee at the June 28, 2011 Governance Committee meeting. DaVia suggested that the next Governance Committee meeting be reconvened some time during the second week of August. ANY OTHER BUSINESS – AGENDA ITEM #10 There was no other business. ADJOURN OR RECESS – AGENDA ITEM #10 There being no further business before the meeting, Miller moved and Carswell seconded: That the meeting be adjourned. No discussion was forthcoming and the motion carried unanimously.
The meeting adjourned at 4:25 p.m.
Respectfully submitted:
___________________ __________________ Michelle DaVia, Secretary and Thomas Bailey, President 
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