VERMONT ELECTRIC COOPERATIVE, INC.
REGULAR MEETING OF THE BOARD OF DIRECTORS
AUGUST 30, 2011
APPROVED MINUTES

As required under the VEC Bylaws, notice of this meeting was sent to each Director by deposit in U.S. mail on August 24, 2011.

CALL TO ORDER – AGENDA ITEM # 1

President Tom Bailey called the meeting to order at 12:19 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, 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.

President Bailey led a moment of silence for Bert Lague.

APPROVAL OF MINUTES - AGENDA ITEM #2

President Bailey informed the Directors and those present that the minutes for the July 26, 2011 Regular Monthly Meeting were under legal review during the time of the Board packet mailing.  He stated that the minutes will be presented during the September 27, 2011 meeting.

ELECTION OF TREASURER - AGENDA ITEM #3

Bailey noted that a quorum was present.

Pratt explained the options available for determining how the Board of Directors would elect a treasurer to replace Bert Lague.  He explained that the term for the treasurer would be until the next annual meeting.

A discussion ensued regarding options and methods of electing a new treasurer.  Miller and Ward expressed their interest in becoming the treasurer.  A Director asked that each nominee give a statement of their experience.  Each nominee presented an oral summary of his qualifications. 

A paper ballot vote was taken.

            Ward received 6 votes, and Miller received 4 votes.

Ward was elected Treasurer.

A discussion ensued regarding replacing Bert Lague as Director for the Eastern Zone.  Pratt noted that the Bylaws require that the seat be up for election at the next annual or special meeting of the Members.  Pratt informed the Board that the Bylaws require the Board to appoint a replacement until the election but are silent as to process for the Board to do so. 

A lengthy discussion ensued regarding the appropriate process to use.

Miller moved:

To contact the candidates who received the second highest number of votes from each of the three most recent elections in the East (Eastern Zone, District 3 and District 1) and assess whether those candidates continue to be interested in joining the Board.  They would be interviewed by the Board and a successor selected by Board vote.

Kneeland seconded.  A discussion ensued.

Six Directors voted in favor, three opposed, one abstained.   The motion carried.  

Hallquist indicated that management will contact the candidates to see if they are still interested and invite them to attend the next Board meeting.

CEO SUMMARY – AGENDA ITEM #4

Hallquist reported on VEC’s reaction to Hurricane Irene, complimenting his team on a quick and smooth response.

Hallquist reported that a bus tour of the VEC system has been scheduled for September 22nd to visit key parts of system that will be upgraded as called for in our Integrated Resource Plan (IRP).  The tour will begin at 8:00 a.m. in Johnson, and return to Johnson at 4:00 p.m. 

Safety Drill

Safety Manager Burns reported that a few months ago VEC developed a contest to promote our Voluntary Protection Program (VPP) Safety Challenge Program.  Katie Orost entered the VEC contest into a national competition and won the safety promotion idea for the week.

MANAGEMENT UPDATES – AGENDA ITEM #5

Operations Update

COO Wright reported that the month of July was a very active month due to lightning storms.  VEC had more outages in July than in the prior three months combined, but we are still on track to meet our goals.

As to budget, Wright reported that SCADA project is ahead of schedule, the AMI installations are complete, and VEC is performing well to the Smart Grid plan.

Regarding Hurricane Irene, Wright reported that restoration efforts were executed smoothly.  The storm response team was fully prepared, not only with operations but also with logistics. Wright noted that we took advantage of the NRECA CEO listserve to call on outside line crews from Tennessee, Kansas and Michigan and tree crews from Illinois and Ohio.  Wright reported that the bottom line cost of restoration will be more expensive but that we were able to save on expenses for crews to return home as they moved on to other utilities in the northeast to help with their restoration efforts. 

Financial Update

CFO Bursell stated that if Hurricane Irene gets FEMA treatment it will be the third storm in nine months to be a FEMA event.

Bursell reported on the financial performance through July.  Phase 2 of the Northeast Kingdom Connector project will be delayed until 2012.  As a result, we will finish the year $1.9 million under budget but next year we will add that back, while keeping the base budget the same. We do not want to commit more resources toward that project until we get reimbursement from EDA for phase one of the project.

Regarding patronage capital, Bursell reported that a long-term equity plan is being prepared to help the company make decisions about purchasing additional VT Transco stock, retiring patronage capital and adjusting rates.  He noted that the proposed equity management plan for VEC will be discussed at the next Finance Committee meeting and that information will be forwarded to the Board in advance of the meeting.

Bursell presented possible plans for replacing the table in the Board room.  A brief discussion ensured regarding the configuration of the room.  Bursell will present an updated plan at the September Board meeting.

Corporate Services Update

Corporate Services Manager Gamache answered questions regarding the staff turnover numbers included in the Board packet.  She responded that staff turnover was due to retirements, resignations and terminations.  She reported that a significant portion of the workforce is at or close to retirement age.

A brief discussion ensued regarding measuring employee engagement vs. employee satisfaction and the annual employee survey.  Directors requested a summary of the latest survey to be included in next month’s Board packet.

Gamache reported briefly on the favorable response by members on the recent storm restoration efforts.  She will report more on this at the next Board meeting.

Safety Update

Hallquist reported on behalf of Safety Manager Burns that as of today we have had 347 days without a lost-time injury.

Programs and Policy Update

Programs and Policy Manager Pratt reported that his update in the Board packet speaks for itself and asked if there were any questions.  There were none.

General Counsel Update

Brown reported that VEC is undertaking a review of the July special members meeting.  She will be preparing a summary of the lessons learned for the Board’s review and will include this summary in the September Board packet.

A Director asked management to consider whether there was a way to announce the outcome of member vote other than at the member meeting, noting that it could cause humiliation for the losing candidate. Brown promised to consider this in developing management’s recommendations to the Board.

Brown shared her impressions on participating in her first storm recovery effort and complimented the dedication of VEC employees.

President Bailey reminded directors that, after major storms, Hallquist generally prepares a critique of how things were done and how they could be improved.

The meeting resumed in the Robert P. Northrop Boardroom at 2:18 p.m.

President Bailey presented a letter to Hallquist and staff from the Board commending them on their work on the July special member meeting.

NEXTERACONTRACT RESOLUTION – AGENDA ITEM #6 – Board Action Requested

The following resolution was circulated earlier in the day at the Power Supply Committee meeting:

BOARD of DIRECTORS RESOLUTION

August 30, 2011

That Vermont Electric Cooperative, Inc. (VEC) be and hereby is authorized to execute, deliver and perform a Power Purchase Agreement (PPA) between NextEra Energy, Inc. (NextEra), for approximately 10 Megawatts of the electrical output (capacity and energy) of the Seabrook Nuclear Station, located in Seabrook, New Hampshire; for a period starting January 1, 2015 and ending December 31, 2034.

That the CEO, CFO, COO, or any one or more of them be and hereby is and are authorized and directed on behalf of VEC to sign, execute and deliver, the said Agreement substantially in such form and substance as presented to this meeting and to do all things which any one or more of them by so doing deems in his, her or their sole judgment to be necessary or advisable to act on, carry out or perform the said Agreements or cause it to be acted on, carried out or performed; and

That the CEO, CFO, COO, or any one or more of them be and hereby is and are authorized and directed on behalf of VEC to sign, execute and deliver any and all instruments or documents of whatever kind or character which any one or more of them by so doing deems in his, her or their sole judgment to be necessary or advisable to act on, carry out or perform the said Agreement or cause it to be acted on, carried out or performed AND TO AGREE TO SUCH MODIFICATION OF THE NextEra PPA WHICH ANY ONE OR MORE OF THEM BY SO DOING DEEMS  IN HIS, HER OR THEIR SOLE JUDGMENT TO BE NECESSARY OR ADVISABLE TO CARRY OUT THE INTENT OF THIS BOARD OF DIRECTORS; and

That all of the foregoing is contingent upon all approvals of state and federal boards, courts or tribunals or other bodies as are or may be required by law or the Bylaws.

A copy of the resolution was handed to each Board member.

Woodward requested a roll call vote.  A Director asked about the approval process for the Next Era Agreement.  Bursell explained that the resolution would authorize management to execute the Power Purchase Agreement, and it would then be filed with the Public Service Board and ultimately subject to a member vote at the May annual meeting.

Miller moved to approve the resolution.

DaVia seconded.

Carswell, Bailey, Kneeland, Miller, Parsons, Ward, DaVia and Worth voted in favor of the motion.  Woodward and Allard voted against.   

The motion carried.

PRESENTATION ON GMP – AGENDA ITEM #7

Motion is requested by Bailey to enter into Executive Session.

Miller moved and Worth seconded:

To go into Executive Session to discuss confidential issues relating to the proposed acquisition of Central Vermont Public Service by Green Mountain Power.

The motion carried unanimously.

The Board entered into Executive Session.

By majority vote of those Directors present, the Executive Session ended.

STRATEGIC PLAN – AGENDA ITEM #8

Hallquist presented the 2012 Strategic Plan to the Board.  He noted that there were minor changes to core competencies, mainly the change from “Safety” to “Safety and Security.”  He noted that the new focus area is cyber security, necessary as a result of implementing smart meters.  Hallquist walked through all the focus areas, strategies and key performance indicators for each core competency.

A discussion ensued regarding member service, outreach to schools and other community institutions and re-examining the round up program.

Hallquist noted comments from the Board on the plan are welcomed.  The goal is to get Board approval of the plan at the September meeting.

COMMITTEE REPORTS – AGENDA ITEM #9

Chair DaVia reviewed the minutes of the Governance Committee and the summary of committee functions.  Resolutions to implement the recommendations of the Governance Committee will be presented to the Board at the September Board meeting.

ANY OTHER BUSINESS – AGENDA ITEM #10

Woodward suggested that we ask All Earth Renewables to donate a tracker for VEC headquarters.  A straw poll indicated that a majority was in favor of making such a request.

Miller moved and Worth seconded:

That All Earth Renewables would be contacted and asked to donate a tracker for VEC headquarters.

The motion carried unanimously.

ADJOURN OR RECESS – AGENDA ITEM #11

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

Signed Minutes