Board Meeting Minutes

VERMONT ELECTRIC COOPERATIVE, INC.

REGULAR MEETING OF THE BOARD OF DIRECTORS

AUGUST 29, 2017

APPROVED MINUTES

As required under the VEC Bylaws, notice of this meeting was sent to each Director

via US Mail on August 22, 2017

CALL TO ORDER – AGENDA ITEM #1

President Dan Carswell called the meeting to order at 12:02 p.m. in the Robert P. Northrop Boardroom at VEC offices in Johnson, Vermont.  Present were Directors Rich Goggin, Ken Hoeppner, Carol Maroni (Second Vice President), John Ward (Treasurer), Rich Westman, Mark Woodward (Secretary), Tom Bailey, George Lague, Paul Lambert, and Don Worth.  Also present from VEC was CEO Christine Hallquist, Safety & Security Manager John Varney, Chief Operating Officer Peter Rossi, Manager of Government Affairs and Member Relations Andrea Cohen, Chief Financial Officer Mike Bursell, and General Counsel Vickie Brown.

MEMBER INPUT – AGENDA ITEM #2

There were no members present.

SAFETY DRILL – AGENDA ITEM #3

Safety message:  Be careful on the road to watch for other drivers who take risks.  Remember that the time saved by taking chances on the road is not worth it.

Cyber message:  It is better practice to use pass phrases instead of passwords, fourteen characters, with a combination of letters, numbers, e.g., “My favorite food is . . . “

APPROVAL OF MINUTES – AGENDA ITEM #4

President Carswell asked if there were any additions or corrections to the minutes of the regular monthly Board of Directors meeting held on July 25, 2017. 

Hoeppner moved and Worth seconded:

That the minutes of the regular monthly Board of Directors meeting held on July 25, 2017 be approved.

A director noted that there was ambiguity as to the approval of the minutes of the two prior meetings.  Management will check the recording and make sure the minutes reflect what actually happened.  

A director also asked that the minutes be revised in one instance to use the director’s last name, not his first. 

The motion carried by unanimous vote and the minutes were approved.

STRATEGIC PLANNING GUEST JIM MEIERS – AGENDA ITEM #6

This agenda item was moved forward to accommodate the Board’s guest speaker.  Jim Meiers is Regional Vice President of Cooperative Finance Corporation (CFC). He gave a presentation on the Key Ratio Trend Analysis (KRTA).  The KRTA is developed based on data provided by over 800 electric cooperatives throughout the country.  There are 145 measures, and Meiers focused his presentation on those measures that are related to VEC’s income statement.   He presented comparisons of a number of VEC ratios to the ratios of (1) other New England co-ops, (2) co-ops nationally of similar size to VEC, and (3) median for all U.S. co-ops. 

There were numerous questions by directors throughout the presentation.

EXECUTIVE SESSION

Lague moved and Goggin seconded to go into executive session to discuss Board norms.  After a 15 minute break, the Board entered executive session at 1:45.

 By unanimous consent of the Board, the Board exited executive session at 2:40.

CONFLICT OF INTEREST COMMITTEE REPORT – AGENDA ITEM #7

Carswell noted that the packet included a report from the ad hoc committee to address potential conflicts of interest of a new Board member.  The report included the following recommendation:  “that the Board reject the motion to remove Mr. Lambert as a director, since it has seen no instance where Mr. Lambert has acted in a manner that has violated Policy B. 3.”

 A discussion ensued whether this should be dealt with in executive session and the consensus was that the discussion should be in public session. 

Westman moved and Worth seconded to move

That the Board accept the recommendations contained in the ad hoc committee’s report.

Woodward, the committee chair, explained the committee’s process for investigating the allegation of conflict of interest, and he summarized the committee’s conclusions and recommendations.  Several directors expressed their view commending the committee’s work.

A director asked whether Lambert had direct contact with VEC employees within the scope of his employment at VEIC and he replied that he has in the past.  Discussion ensued as to whether a working relationship between a director and VEC employees was of concern.  A director noted that directors and employees have crossed paths in other contexts, for example at the legislature.  A committee member noted that when the Board is engaged in policy as it affects VEC’s relationship with Efficiency Vermont, then that may need some sensitivity around conflicts of interest.  Once the policy is being implemented by VEC employees, then interactions between VEIC and VEC employees are less of a concern. 

A director asked about committee’s recommendation that the governance committee undertake further review of two issues.  A committee member explained that additional training as to navigating conflicts should be considered, especially for new board members, but also as refreshers for current Board members.  The committee noted that it heard from Ty Thompson of the NRECA about other cooperatives seeing more frequent conflicts as the utility business changes.

Hoeppner called the question.  Carswell noted that the Board would rely on Lambert to update the Board if there was a major change in his dealings with VEC in his role as an employee of VEIC.  Further discussion ensued about avoiding even a perception of a conflict and whether this could be addressed further by the Governance Committee.  

Carswell concluded the discussion by noting the expectation that director Lambert would recuse himself from any discussions involving Efficiency Vermont or VEIC.  Lambert agreed but noted that he might have valuable information to share with the Board which he would want to be able to do so.  Discussion ensued.  There was general consensus that Board members should exercise caution to avoid even an appearance of a conflict.

Carswell asked for votes on the motion.  The vote was ten in favor of the motion and one abstention. The motion passed. 

CEO UPDATE/BOARD TRAINING FOR FALL – AGENDA ITEM #8

There was an update on the status of VEC’s investigation into battery storage.  Hallquist explained the pros and cons of various kinds of battery technologies and noted that VEC is considering a hybrid approach to meet different needs.  There are two grants that we are working under.  There is a lot of activity and also a lot of moving parts at this point.  The strategic objective is to control peaks.

Regarding the investigation as status of broadband service in VEC’s territory, Hallquist has been doing further research and provided a status report as to the availability of broadband in VEC’s service territory.   A director encouraged management to consult with a New York state co-op which had implemented broadband and John Chambers, an expert who spoke at a recent NRECA meeting. 

Regarding utility scale storage, there was extensive discussion about the scope battery project that the Board asked management to investigate at the June board meeting.  Those minutes were reviewed and the direction of the battery research was confirmed.

CLARIFICATION OF ROLE OF AD HOC COMMITTEE TO INVESTIGATE EMPLOYEE COMPLAINT – AGENDA ITEM #9

Ad Hoc Committee chair Goggin passed out a report summarizing the findings of the ad hoc committee assigned to investigate an employee complaint about behavior of a Board member.

Bailey moved and Worth seconded to enter executive session to discuss a matter involving a VEC employee.  The Board entered into executive session at 3:13.

By unanimous consent the Board exited executive session at 3:50.

Carswell noted that after discussion, he would entertain a motion to accept the report of the ad hoc committee. 

Bailey moved and Ward seconded to accept the committee’s recommendations.

Carswell summarized the recommendations: that the governance committee should discuss and broaden the scope of board Policy B.13 to further define the Board’s interaction with management; that the communications committee review the merits of a longer term retention of Board meeting audio tapes; and that the Board engage in training on Robert’s Rules of Order.  He noted that the report concluded that there were some improprieties that took place at the Board level which the Board was taking steps to address.  

The motion passed by unanimous vote. 

MEMBER SURVEY – AGENDA ITEM #10

Hallquist gave a presentation that summarized the results of our 2017 member survey.  Member satisfaction continues to be good.

Key drivers of member satisfaction for residential members are (1) cost and efficiency and (2) member service.  Other drivers are quality of electric service (reliability) and convenient and accurate bills and payments.  For commercial and industrial members, the key driver is member service, with less emphasis on cost and efficiency. 

Hallquist noted that her key take away points from the survey included the following:   

  • VEC members continue to favor solar power over other power sources.  64% of residential members and 60% of C&I members are willing to pay more for renewable sources.  An increasing number of members are willing to support a rate increase to meet state renewable mandates. 
  • VEC members are widely aware of Efficiency Vermont (EVT) and have found that EVT is beneficial.  Fifty-seven percent of residential members and sixty-two percent of commercial and industrial members are willing to pay about the same or more for EVT services. 
  • VEC’s demographics show that a majority is over age 55 and a significant number are either retired or unemployed.

There was discussion as to how VEC can use this data in our messaging and in strategic initiatives. 

(DRAFT) STRATEGIC PLAN PRESENTATION – AGENDA ITEM #11

This was deferred to a future Board meeting. 

MANAGER REPORTS – AGENDA ITEM #12

Staff fielded numerous question as to the operational details included in their monthly reports.  Follow up items included:

  • Discuss with Encore the possibility of using the solar projects it is developing for VEC as locations for bee pollinators. 
  • Research whether VEC uses the pesticide Round Up and prepare talking points for directors to use when responding to members.

Brown noted that we need a Board resolution to update our pension documents to ensure that they remain compliant with any changes in governing regulations. 

Ward moved and Worth seconded to authorize the Secretary to sign the resolution, which is attached to these minutes. 

The motion passed by unanimous vote.

ANY OTHER BUSINESS – AGENDA ITEM #13 

Goggin asked whether VEC has a winter assistance program like GMP’s.  Bursell noted that GMP’s is part of a low income program established as part of its acquisition of CVPS.  VEC offers assistance to members in working with the state-wide WARMTH program. 

Hallquist noted that she was tasked with doing a survey among directors as to the topic to be covered in fall training.  The leading response was equity management and Boardroom decision making.  Discussion ensued.

Maroni moved and Goggin seconded that we bring in a trainer to address conflicts of interest in the fall, if such training is available. If not, the fallback would be to do equity management and board decision making.

The motion passed by unanimous vote.

 ADJOURN – AGENDA ITEM #14

There being no further business before the meeting,

 Woodward moved and Worth seconded:

That the meeting be adjourned.

The motion carried unanimously.

The meeting adjourned.