Board Meeting Minutes

August 30, 2016
As required under the VEC Bylaws, notice of this meeting was sent to each Director via United Parcel Service on August 24, 2016
President Dan Carswell called the meeting to order at 12:00 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), Molly Lambert, Carol Maroni (Second Vice President), John Ward (Treasurer), Rich Westman, Mark Woodward (Secretary), Don Worth.  Also present from VEC were CEO Christine Hallquist and Corporate Assistant Nina Russo-Sanchez..

Worth moved and DaVia seconded:
That the Board enters into executive session to discuss the Board operating norms.
Russo-Sanchez left the meeting.
By unanimous vote of those present the Board entered into executive session.
By unanimous vote of those present executive session ended.
COO Jeffery Wright, CFO Mike Bursell, General Counsel Vickie Brown, Safety Manager John Varney, Manager of Government Affairs and Member Relations Andrea Cohen, and Corporate Assistant Nina Russo-Sanchez joined the meeting.
Audio recording of the meeting began.

Safety & Security Manager Varney reported that on July 1, 2016 new legislation became effective that requires drivers traveling on Vermont roads to allow four feet to vulnerable users such as pedestrians and cyclists.  He noted this will require drivers to slow down before passing if there is oncoming traffic.
No members were present.

President Carswell asked if there were any additions or corrections to the minutes of the regular monthly Board of Directors meeting held on July 26, 2016 included in the August 30, 2016 Board packet.
Maroni moved and Hoeppner seconded:
That the minutes of the regular monthly Board of Directors meeting held on July 26, 2016 be approved with certain additions and corrections.
The motion carried by unanimous vote and the minutes were approved as amended.


Hallquist reported that the Public Service Board has issued an order that adopts the new net metering program to begin in 2017. The only significant change from the latest draft was the removal of any cap. Brown noted that the PSB was clearly concerned about the potential for cost shifts in favor of net metering customers and indicated it would open an investigation if the pace of deployment proved to be too fast.
A director asked what prompted Hallquist to provide the information on director compensation that was included in her summary. Hallquist stated that it had been a subject of discussion on the CEO list-serve and also came up at the Board’s offsite as a possible way to improve the Board’s effectiveness. It was noted that any changes to Board compensation would need to be approved by the Board.
A director asked about the status of Hallquist’s intention to hold one-on-one meetings with each director. Directors that had met with Hallquist reported that they found that this type of meeting was helpful. The consensus was to continue to schedule meetings. Russo-Sanchez will coordinate schedules and set up meetings with the remainder of the directors.


Financial Update
Bursell responded to several questions from directors about the information in his report included in the August 30, 2016 Board packet.
A question was raised by a director as to whether VEC can decrease its power costs in light of the current market conditions. Bursell noted that the direction of the Board has been to hedge 95% of the power portfolio, thus leaving only 5% open to take advantage of favorable market conditions, which we are doing. This protects the company from market swings in the other direction which could have drastic consequences.
Discussion ensued. Carswell noted that a detailed discussion of power supply strategy should be a topic for the Power Supply and Operations Committee.
Operational Update
Wright reported that we continue to work on the dual pole issue, as there have been some complaints from members, particularly with respect to the NEK Connector project. FairPoint has no plans to transfer its facilities to the new poles due to the cost. We will be meeting with FairPoint to continue the discussion. Staff is also considering some sort of communication with affected members, whether by letter or Co-op Life.
Wright further reported that substation projects are moving forward per plan and that VEC’s reliability indices are the best they have ever been.
Member Services and Community Relations Update
Cohen noted that the Community Solar program is ready to be rolled out in the next couple of months, that the Grand Isle meet and greet may be changed to coordinate it with the Community Solar launch.
A director asked about the impact of the loss of a commercial customer, EHM Products. Bursell responded that the margins for this customer were relatively modest and can be absorbed, unlike a larger customer such as Jay Peak.
A discussion ensued about the new net metering program, specifically how to handle projects that may never get built and whether we can reserve capacity under the cap for projects 15kW or smaller. Brown responded that there is no cap in 2017. 
Safety Update
Varney reported that VEC completed the second annual program review for its “C2M2” cyber security program and that results show significant progress during the past 12 months. He reported that in the past the approach had been piecemeal and currently it is a much more formalized and integrated approach.
A discussion ensued with regards to VEC’s exposure to hacking. Varney noted that part of the Vigilant Guard exercise was to test how vulnerable VEC might be to hacking. Discussion ensued as to mechanisms to protect against hacking.
General Counsel Update
Brown responded to questions concerning items included in her report. She explained the need for Public Service Board approval of special contracts with members participating in the Clean Air Program, a Tier 3 initiative. Because we are deviating from the terms of our line extension tariff by contributing to the cost, PSB approval is needed.
A director commented on the VEC family day and noted the importance of this type of event for engaging VEC staff.


Ward moved and Westman seconded:
That the Board approve the Finance Committee’s recommendation that VEC purchase $2M in additional TRANSCO stock as part of the 9/30/16 offering.
Discussion ensued as to the risks and benefits to VEC of the purchase.
The motion carried with 9 ayes and 2 nays.
A discussion ensued regarding the second offering of TRANSCO stock which is being held by VPPSA on VEC’s behalf and will be available for re-purchase on December 23, 2016.
Woodward moved and Lague seconded:
That the Board approve the second offering of TRANSCO stock which will be available from VPPSA on 12/23/16.
Discussion ensued. A director asked whether we could defer this vote to a later time. Bursell noted that he needs a decision in order to finalize the 2017 budget.
The motion carried with 10 ayes and one nay.
President Carswell called a break in the proceedings at 2:00 p.m.
The meeting resumed in the Robert P. Northrop Boardroom at 2:15 p.m.

Hallquist provided an overview of the work that she and VEC managers have done to move our culture in a new direction. She showed a video provided by a former consultant, Engagient, in which Don Rheem discusses the three elements of employee engagement: focus, capability and will.
Hallquist then reviewed the elements of the Dennison culture model which VEC has adopted to help drive culture.
DaVia distributed a list of suggestions for new core competencies to be included in the 2017 strategic plan.
A lengthy discussion ensued regarding the relative roles of the Board and management in the strategic planning process. Carswell noted that management is responsible for developing annual strategic plans based on the long-rage strategic planning work of the Board. The Board’s strategic process looks at a longer timeframe. He expressed his goal of using the Board calendar to schedule strategic discussions throughout the year.

This agenda item continued the discussion of strategic planning. Carswell asked directors to send any proposed additions to the calendar or Board agenda items to Hallquist for consolidation.

Cohen reviewed the Tier 3 report that was included in the Board packet. She noted that the goals of the program are (1) to add value to VEC members, (2) meet regulatory requirements and (3) be financially sound. She noted that the Public Service Board has issued an order implementing Act 56. It sets timelines for annual plan review and provides for a check in on program progress in 2020. She noted that the goals are ambitions and the utilities will be learning what works as we move forward. She walked the Board through the elements of VEC’s Tier 3 program.
Directors asked numerous questions as to the details of the program.
Discussion ensued as to whether the program needed to be approved by the Board, particularly the incentive structure that was proposed. It was noted that the incentives would be included in the 2017 budget and a question was raised as to whether support for the budget means support for the program.
Maroni moved and Woodward seconded:
That the Tier 3 plan and incentives be approved as proposed. The motion passed with 9 ayes and 2 nays.

Notice was given that there will be a combined Governance Committee and Communications Committee meeting on September 27, 2016 prior to the Regular Monthly Board of Directors meeting.

Hallquist handed out awards to John Ward and Don Worth for becoming Gold Member Directors upon completion of this NRECA director education program.

There being no further business before the meeting, Ward moved and Goggin seconded: That the meeting be adjourned.
The motion carried unanimously.
The meeting adjourned at 4:17 p.m.
Respectfully submitted: Mark Woodward, Secretary and Dan Carswell, President