Board Meeting Minutes

VERMONT ELECTRIC COOPERATIVE, INC.

REGULAR MEETING OF THE BOARD OF DIRECTORS

DECEMBER 27, 2016

APPROVED MINUTES

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

via US Mail on December 20, 2016

CALL TO ORDER – AGENDA ITEM #1

President Dan Carswell called the meeting to order at 12:09 p.m. in the Robert P. Northrop Boardroom at VEC offices in Johnson, Vermont.  Present were Directors Tom Bailey, Michelle DaVia, Rich Goggin, Ken Hoeppner, George Lague (First Vice President), Carol Maroni (Second Vice President), John Ward (Treasurer), Mark Woodward (Secretary), and Don Worth.  Also present from VEC was CEO Christine Hallquist. 

REVIEW BOARD OPERATING NORMS – AGENDA ITEM #2

By unanimous consent the Board entered into executive session to discuss the Board operating norms.

By majority vote of those present the Board entered into executive session at 12:09 p.m.

By majority vote of those present the executive session ended at 12:46 p.m.

Chief Financial Officer Mike Bursell, General Counsel Vickie Brown, and Manager of Government Affairs and Member Relations Andrea Cohen joined the meeting.

SAFETY DRILL – AGENDA ITEM #3

Tucker Williams joined the meeting to provide each of the directors with copies of the 2017 safety calendar.  The theme this year is “this is my why” and the calendar includes photos of employees and their families. 

MEMBER INPUT – AGENDA ITEM #4

No members were present.

APPROVAL OF MINUTES – AGENDA ITEM #5

President Carswell asked if there were any additions or corrections to the minutes of the regular monthly Board of Directors meeting held on November 29, 2016.

Woodward moved and Bailey seconded:

That the minutes of the regular monthly Board of Directors meeting held on November 29, 2016 be approved.

A director asked to include the list of questions for EVT in the minutes on page 3.

A director corrected a typo in the minutes and noted that the minutes did not reflect that a motion to go into executive session was passed.  A further correction was requested to clarify the following sentence:  

Carswell invited suggestions for proceeding with a discussion of weaknesses that Board members had identified for this meeting.  A as the second step of the SWOT (strengths, weaknesses, threats and opportunities) analysis.  Each director offered their list of weaknesses and the steps VEC can consider to mitigate these risks.

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

CEO SUMMARY – AGENDA ITEM #6

Hallquist asked for direction from the Board as to whether VEC should entertain further PPAs for wind projects, since VEC has been approached by a wind development company for a project in Irasburg.

Ward moved and DaVia seconded to direct management not to enter into negotiations with Kidder Hill Wind. 

Discussion ensued about some of the details of the Irasburg project.  Bursell noted that we could have our needs met until 2024 with current projects that are underway.  He also noted that KCW has a different agreement with VEC than what is being offered for the Irasburg project.  Discussion ensued as to whether this project would be advantageous if it were at a good price.

The motion passed by unanimous vote.

Regarding the hiring process for a Chief Operating Officer, Hallquist noted that the Board has requested to meet the individual prior to making the offer.  Discussion ensued about whether that should be a necessary step in the hiring process.

The consensus was that the CEO should have the responsibility for hiring the COO and be held accountable for that decision.

A director asked about the EQ analysis that is being used as part of the hiring process and if the analysis was used at VEC in the past.  She responded that the Senior Leadership Team used the tool a few years ago and explained the rationale behind using the tool.

A director asked about a potential new tool for engaging members beyond the meter, called EnergyHub.  Hallquist agreed to send an invitation for interested directors to attend a webinar about the tool. 

A director asked for further information about the Aclara system and its capabilities, noting that as the Board develops strategic direction, it might be valuable to understand the tools available.  Management will provide that at a future time.     

MANAGERS’ UPDATES – AGENDA ITEM #7

Financial Update

A director asked about the accounting treatment for the VELCO Newport substation cost overruns.  Bursell explained that the cost of the station would be booked to plant in 2016, when the station was placed into service even though the cost will not be billed by VELCO until 2017.  This is consistent with Generally Acceptable Accounting Procedures (GAAP).

A question was raised about how to understand capacity factors for generators.  Carswell suggested that this issue would be appropriate for a power supply committee meeting at some point in the future.

A director asked about PSB approvals for the net metering tariff, the time-of-use rates and the Service Classification #5 rates.  Bursell noted that the PSB has approved the first two tariffs effective January 1, 2017.  As to the third, we have reached agreement with the DPS and expect PSB approval to follow.

Bursell noted that, due to a scheduling conflict, the Finance Committee meeting with the auditors, which is normally held during the morning of the March board meeting, will need to be moved.  He suggested that the Finance Committee meet separately with the auditors and then the committee can report to the Board at the March board meeting, without the need for the auditors to attend.  It was suggested that the auditors be available by phone at the March board meeting.  

Operational Update

A director asked why the worst-performing circuits reports was not included.  Hallquist noted that the worst performing circuit analysis continues to be performed each month and is an important indicator for the operations team.  The omission was an oversight and it will be included in the future. VEC met with GMP last month to identify an action plan to address the worst performing circuit, which is the feed to Hinesburg. GMP agreed to add breakers to the feed, which should correct the problems.

Member Services and Community Relations Update

A question was raised about legislative outreach around Efficiency Vermont and whether EVT can support our TIER III efforts rather than compete with them.  Cohen responded that we are working with EVT on several different fronts trying to get as much value as possible from that relationship.  A discussion ensued about TIER III services in general and what VEC must do in order to claim savings. 

Cohen noted that VEC received good coverage from VPR concerning the ability to avoid a rate increase in 2017.

Safety Update

There was no discussion of this report

General Counsel Update

A director asked about the standard offer program and the provision that allows distribution utilities to drop out of the program.  Brown noted that it is a problem with the statute that will need to be addressed through a legislative fix. 

Regarding the provision of member data to Efficiency Vermont, a director asked what EVT planned to do with the data.  Brown reported that she is working to get clarity on that from EVT so that we can communicate with our members prior to transferring the data.

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

The meeting resumed in the Robert P. Northrop Boardroom at 2:25 p.m.

Craig Kieny, Manager of Power Planning, joined the meeting  

STORAGE – AGENDA ITEM #8

Hallquist introduced this discussion by noting that this presentation is informational only.  She noted that, like solar, storage is cheaper at utility rather than residential scale due to economies of scale.  Other utilities will be doing utility-scale storage to shave their peak usage.  If VEC does not also shave its peak, it will see increased transmission costs. 

Kieny provided a presentation on the analysis that VEC’s battery team has done as part of its review of possible PPA arrangements with various battery suppliers.  He explained that VEC has the possibility of achieving savings in transmission costs through dispatching the battery at times of Vermont and New England peaks.   

Extensive discussion ensued as to the benefits and risks of a PPA model versus an owned-battery model versus doing nothing.  Bursell noted that if VEC is to own the battery that would require the Board to consider the other competing needs for cash, for example, patronage capital and VELCO stock purchases.  The consensus was that further analysis is needed of the various options for approaching battery storage.  Hallquist noted that this discussion raised many issues that the Board should continue to discuss as part of its strategic planning process so that management can have better guidance going forward.     

STRATEGIC PLAN – AGENDA ITEM #9

Noting that the storage discussion had hit on several topics relevant to strategic planning, Carswell suggested that the Board defer further discussion until a future meeting.

Hoeppner explained the draft flow chart that he prepared to illustrate the Board’s strategic planning process.  Carswell suggested that the Board consider a time line to go with the flow chart.

COMMITTEE REPORTS – AGENDA ITEM #10

There was no discussion of committee reports.

ANY OTHER BUSINESS – AGENDA ITEM #11

There was no other business.

ADJOURN OR RECESS – AGENDA ITEM #12

There being no further business before the meeting,

DaVia moved and Lague seconded:

That the meeting be adjourned.

The motion carried unanimously.

The meeting adjourned at 3:50 p.m.