VERMONT ELECTRIC COOPERATIVE, INC.
REGULAR MEETING OF THE BOARD OF DIRECTORS
OCTOBER 25, 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 October 19, 2011.

CALL TO ORDER – AGENDA ITEM # 1

President Tom Bailey called the meeting to order at 12:00 p.m. in the Robert P. Northrop Boardroom at VEC offices in Johnson, Vermont.  Present were Thomas Bailey (President) and Directors Dorothy Allard, Daniel Carswell (First Vice President), Michelle DaVia (Secretary), Craig Kneeland, Carol Maroni, John Miller, Daniel Parsons (Second Vice President), John Ward (Treasurer), Mark Woodward and Don Worth.  Also present from VEC were CEO David Hallquist, COO Jeffery Wright, Manager of Corporate Services Liz Gamache, General Counsel Vickie Brown, Safety Manager Les Burns, Controller Caroline Mashia, Director of Policy and Programs Randy Pratt, and Corporate Assistant Nina Russo-Sanchez.

Also attending was VEC member Schuyler Jackson.

APPROVAL OF MINUTES - AGENDA ITEM #2

Miller moved and Ward seconded:

            That the minutes of the September 27, 2011 meeting be approved as presented.

A lengthy discussion ensued regarding contents of board minutes and the requirements of Roberts Rules of Order.

DaVia moved and Ward seconded: 

            That approval of the minutes should be tabled until later in the meeting.

The motion carried unanimously.

COMMITTEE REPORTS - AGENDA ITEM #3

Governance Committee

Chair DaVia reported that the committee has completed its work revising the Board Policy B-11, which addresses the role of Board committees.  The policy includes Appendix A, which establishes Board committees and their functions.

DaVia moved and Miller seconded:

That revised Policy B.11 only (not Attachment A) as presented in the Board packet be approved.

A typographical error was requested to be corrected.

The motion carried unanimously and Policy B.11 was approved as corrected. 

DaVia moved and Worth seconded:

            That Appendix A be approved as presented in the Board packet.

A discussion ensued regarding committee functions.  Revisions were requested to the functions listed for the Communications Committee, i.e., that Function 2 changed to read; 2. Review the design of Coop Life. Function 3 be revised to read; 3. Review VEC’s communication plan. Function 5 being redundant is eliminated.

The motion carried unanimously and Appendix A was approved as revised.

Finance Committee

Chairperson Ward noted that the Finance Committee met on September 16 and October 11 and the minutes were in the Board packet.  A joint meeting of the Finance and Power Supply/Operations committees will be scheduled in November to discuss the capital budget.

Power Supply & Operations Committee

Chairperson Carswell noted that the Power Supply & Operations Committee met on August30 and that the minutes were in the Board packet.

Communications Committee

A committee meeting will be held on November 18 at 1:00, with an agenda that includes reviewing the communications plan and discussing member communications going forward.

Candidate Select Committee

Chairperson Woodward reported that 40 application packets were mailed out to potential candidates.  A discussion ensued regarding the process for reviewing and selecting final candidates for Board to review.

CEO SUMMARY – AGENDA ITEM #4

Hallquist provided an overview of the meeting agenda.

Hallquist informed the Board that Gamache has prepared a letter for Board review that may be sent to members by directors explaining the potential return of patronage capital.  Alternatively, directors can refer questions to staff.

Mr. Jackson left the meeting at 1:35.

Hallquist informed the Board that GMP and VEC staff would be meeting to discuss VEC’s proposal to jointly own certain CVPS assets.

A discussion ensued regarding the State of Vermont Comprehensive Energy Plan, power supply alternatives, cost, and the need for straight talk to VEC members about power supply choices.

Woodward moved and Miller seconded:

         That the Board enter into executive session to discuss personnel matters.

By majority vote of those present the Board entered into executive session at 2:00 p.m.

By majority vote of those present the executive session ended.

President Bailey called a break in the proceedings at 2:10 p.m.

The meeting resumed in the Robert P. Northrop Boardroom at 2:30 p.m. 

AUDITORS DISCUSSION ON CHECKS AND BALANCES – AGENDA ITEM #7 (moved forward)

Dana Kittell and Mark Meyer of VEC’s auditing firm, participating by phone, reviewed the procedures and requirements that VEC has in place to ensure the integrity of its financial systems, and they answered questions from directors.  They noted that part of their firm’s annual audit was a review of these processes and requirements.

MANAGEMENT UPDATES – AGENDA ITEM #5

Safety Drill

Safety Manager Burns reminded the Board that with the first weather event of the season predicted, all should take case because most slips and falls occur at the beginning of snow season.

Financial Update

Controller Mashia and those present engaged in a discussion of items reported in the Financial Update, included in the Board packet. 

As to facilities, Mashia reported that the parking lot is complete and under budget and that Grand Isle facility construction started last Monday.

Mashia reviewed with those directors present the resolution required for a change in the trustee on VEC’s indenture included on page 49 of the board packet.

Kneeland moved and Miller seconded:

            That the following Resolution of Board of Directors be approved:

            The Board of Directors of Vermont Electric Cooperative, Inc. hereby adopts the following resolutions at a regular meeting of its Board of Directors:

WHEREAS, Vermont Electric Cooperative, Inc. (“VEC” or the “Corporation”) previously executed and delivered a First Mortgage Indenture, dated as of August 1, 1997, with The Bank of New York as trustee (as the same has been amended and supplemented, the “Indenture”), to secure, as provided therein, Bonds to be designated generally as “First Mortgage Bonds”; 

WHEREAS, VEC intends to accept the resignation of The Bank of New York Mellon Trust Company, N.A. as trustee of the Indenture or, upon removal of the trustee by the holders of the Bonds as provided in the Indenture, to effect such removal;

WHEREAS, upon such removal or resignation, People’s United Bank shall be appointed as successor trustee of the Indenture; and

WHEREAS, this transaction is subject to satisfaction of the conditions in the Indenture. 

NOW, THEREFORE, BE IT RESOLVED that the Corporation hereby approves the resignation or removal of the Bank of New York Mellon Trust Company, N.A. as trustee under the Indenture and approves the appointment of People’s United Bank as successor trustee under the Indenture subject to the conditions and provisions of the Indenture.  This transaction is further subject to provisions of the Indenture in which all the rights, powers, duties and obligations conferred or imposed upon the Bank of New York Mellon Trust Company, N.A. shall be conferred or imposed upon or exercised and performed by People’s United Bank via the execution and delivery of instruments set forth in the Indenture;

BE IT FURTHER RESOLVED, that the President, Chief Executive Officer, Treasurer, Chief Financial Officer, Secretary and Assistant Secretary of the Corporation, and any other appropriate officer of the Corporation, are each hereby authorized and empowered to take any and all actions necessary, including the execution and delivery of a Supplemental Indenture, if needed,  and the filing of all appropriate documents and notices, to effectuate the resignation or removal of the Bank of New York Mellon Trust Company, N.A. as trustee under the Indenture and the appointment of People’s United Bank as the successor trustee under the Indenture.

This Resolution shall become effective upon its passage by the Board of Directors of Vermont Electric Cooperative, Inc.

The motion carried unanimously and the resolution was approved.

Operations Update

COO Wright summarized the Operations Update included in the Board packet and answered Directors’ questions.  Wright noted that staff is still working on the capital budget plan for 2012 and the Integrated Resource Plan that will be filed with the state on December 1.  Both will be presented to the Board in November. 

Corporate Services Update

Manager of Corporate Services Gamache reported that there are no major updates in addition to what was provided in the Board packet.

She asked that Agenda Item #8 be addressed, and then discussed management’s recommendation that the annual meeting be held at Jay Peak Ski Resort on May 12. 

Kneeland moved and Ward seconded:

That VEC’s annual member meeting be held at Jay Peak Ski Resort on May 12.

After a brief discussion, the motion carried unanimously.

Safety Update

Safety Manager Burns reported that VEC is breaking safety records, with no accidents and no near misses.

Program & Policy Update

Manager of Programs and Policy Pratt reported that the Public Service Board has opened several proceeding to address issues posed by implementation of Smart Meters.  A discussion ensued regarding opt out policy, radio frequency issues, and a low income assistance program.

Pratt reported that preliminary testing of the consumer behavior study will begin in December prior to full roll out to study participants.  VEC is looking for friends, family or Board members to take part in the preliminary testing.

General Counsel Update

General Counsel Brown reported that there are no major updates in addition to what was provided in the Board packet.

2012 OPERATING BUDGET PLAN – AGENDA ITEM #6

Board Action Requested – Approve Budget

Controller Mashia reported to the Board that the Finance Committee met on 10/11 and reviewed the 2012 Operating Budget.  The budget will be level-funded from the 2011 budget and therefore there will be no rate increase in 2012 to members.  The Committee made a unanimous decision to recommend that the Board pass the 2012 Operating Budget as presented.

Miller moved and Ward seconded:

That the 2012 Operating Budget be approved as presented.

A brief discussion ensued.

The motion carried unanimously. 

AUDITORS’ DISCUSSION ON CHECKS AND BALANCES- AGENDA ITEM #7

This was addressed under CEO summary.

LOCATION AND TIME OF 2012 ANNUAL MEETING – AGENDY ITEM #8

This was addressed under Corporate Services’ Update.

BOARDROOM TABLE – AGENDA ITEM #9

DaVia moved and Parsons seconded:

            That the boardroom table be approved as presented in the Board packet.

A discussion ensued regarding the process used to select the table.

Ward requested that the question be called.  Seven Directors voted in favor, three opposed, one abstained.   The question was called. 

On the main motion, eight directors voted in favor, two directors opposed, one abstained.  By majority vote, the motion passed.

ANY OTHER BUSINESS - AGENDA ITEM #10

A discussion ensued regarding contents of minutes and guidelines for minute taking as outlined in Roberts Rules of Order.

Bailey presented a paragraph to be added to September minutes at a director’s request concerning BNE Energy.

A vote was taken on the motion to accept the minutes of the September 27, 2011 meeting, as amended.  With one director abstaining, the motion passed.

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