Town of Wellesley, MA - Municipal Light Plant Minutes 03/10/2008

PURSUANT TO notice given the Wellesley Municipal Light Board (“Board”) met in the conference room of the DPW/MLP Building, 455 Worcester Street, at 5:30 PM.

Those present included Chairman Thomas E. Peisch, Commissioners William E. Charlton, Michael D. Humphrys and Edward J. Stewart; Municipal Light Plant (“MLP”) Director Richard F. Joyce; staff members Peter Bracken, Francisco A. Frias, Debra J. Healy, William H. Marsh, Donald H. Newell, Suzanne M. Newark and James W. Verner. Also in attendance were Advisory Representatives Steven W. Hansen and Paul L. Criswell as well as Selectmen and Chair of School Building Committee Katherine R. Babson and Donald S. McCauley.

Board Meeting. The Board scheduled its next meetings for Tuesday, April 22, 2008; Monday, May 12, 2008 and Monday, June 16, 2008 all starting at 5:30 PM.

VOTED: To approve the December 6, 2007 Minutes as written by Attorney Albert S. Robinson with the stipulation that these Minutes are regarded as Public Session Minutes.

Voted: To approve the January 29, 2008 Public Session Minutes as amended with language that recognizes the Board’s authorization to appoint Debra J. Healy as the MLP liaison to the Green Ribbon Committee.

Mr. Peisch provided all those in attendance with the opportunity to speak on matters of interest with respect to the MLP. No one in attendance wished to speak.

Mr. Peisch asked Ms. Babson to join the Board and provide an update on the Green Ribbon Committee initiatives. Ms. Babson thanked the Board for their leadership in support of energy conservation measures in Wellesley. The Green Committee would like the Board to consider funding energy modeling consulting services for the proposed High School. The School Building Committee rationale for requesting MLP funding due to the fact that if the Town were served by an investor-owned utility these conservation services might be paid by electric ratepayer contributions to the Massachusetts Technology Collaborative. Ms. Babson estimated the energy modeling costs to be approximately $40,000 and suggested that the funding could come from T-Mobile distributed antenna profits.

Mr. Humphrys expressed his support of energy conservation and the MLP’s role within the Town but questioned the reciprocal commitment of other Town Departments. Ms. Babson recognized the existence of this perception and is working with the Green Committee to educate other Town Departments.

Mr. Peisch articulated his concern that the MLP was in the midst of implementing a significant rate increase and the Board has a responsibility to balance the needs of ratepayers. He also questioned whether others would look to the MLP as the funding source for other conservation initiatives. Ms. Babson stated that their request was limited to funding for the energy modeling services at a cost with an upper limit in the $40,000 range.

Ms. Babson asked the Board if she could portray the Board’s energy modeling position at the Town Meeting to be “receptive to providing funding for these services”. Ms. Babson further suggested that the Board or staff meet with the High School architect to obtain a more in-depth understanding of this process. The Board was in agreement with Ms. Babson on her remarks to Town Meeting and a follow-up meeting with the architect.

Savoy Wind. Mr. McCauley, President of Minuteman Wind provided the Board with a power point presentation summarizing the progress made in the 12.5 megawatt (“MW”) Savoy Wind project (“Project”). Mr. McCauley was optimistic that the Project could be completed and in-service by the end of 2009 as a result of the overwhelming support of Savoy residents. Additional approvals are required but the Savoy residents’ overall support was considered to be most critical.

Mr. Peisch asked what role the MLP was expected to play in this Project. Mr. McCauley discussed the financial benefits of public power and referred to the MLP’s participation in the Braintree and Dighton generating plants. Mr. Joyce stated that there was a lot of interest among public power systems and Energy New England does not envision any problems obtaining the full 12.5 MW commitment should the MLP elect not to participate. Mr. Stewart asked how the MLP’s power supply portfolio would be impacted if we purchased 50% of the output. Mr. McCauley and Mr. Joyce agreed that this would comprise approximately 8% of the energy portfolio.

High School Solar Panels. The Director referred to the correspondence included in the Board packet from Moneer H. Azzam and Douglas Brown, Department Head of the High School Science and Technology Department. Mr. Azzam’s letter addresses the re-use of the existing solar panels and the need to replace the inverter to generate electricity. Mr. Brown’s correspondence was provided as confirmation that the solar panels would be specifically incorporated within the High School curriculum. Mr. Joyce summarized his conversation with Thomas Fontaine, President of Wellesley Bank, regarding fund raising for the solar panels and, specifically, the Bank’s participation.

The Board expressed some concern with the lack of support received from the School Department and Mr. Brown’s general reference to the solar panels inclusion within the curriculum. Mr. Charlton agreed the School Department should be more supportive but was of the opinion that the educational benefits to the students took precedence. All Board Members were in agreement and asked the Director to outline the necessary steps. Mr. Joyce provided the following response:

VOTED: To authorize the expenditure of $8,800 from the Municipal Energy Conservation fund to repair and upgrade the High School solar panels as detailed by the Green Team’s January 29, 2008 presentation to the Board.

T-Mobile Antennas. The Director reviewed the five locations in Wellesley where T-Mobile’s distributed antennas (“DAS”) have been installed. To date, the MLP has not received any complaints regarding the aesthetics of the antennas, however, one Nantucket Road resident expressed concerns regarding the radio frequency (“RF”) impact. Mr. Joyce met with the resident twice and provided the requested RF information.

Based on the initial cost-benefit analysis the MLP staff projected a cash payback of 11-months for the T-Mobile installation. Actual installation costs came in below budget and the MLP fully recovered all related expenditures as of February 1, 2008. During the 10-year term of this agreement the MLP is predicting a net profit of $436,000. The Board’s approval of the T-Mobile agreement contained the stipulation that all profits would be allocated to energy conservation and/or renewable energy. Mr. Joyce recommended that a future Board agenda include a discussion of an overall strategy for consideration of additional DAS installations. The Board was in agreement.

Town Payment. Mr. Peisch asked the Board to change the agenda order to vote on the 2009 Town payment since Mr. Charlton had to attend another Town-related meeting. The Board and Director discussed the continuation of the $1,000,000 cash payment and upon a motion made by Mr. Humphrys and seconded by Mr. Charlton, it was unanimously

Five-Year Financial Forecast. Mr. Joyce reviewed the MLP’s financial forecast from Fiscal Year (“FY”) 2008 through FY12. Based on the first twelve months of the 1% rate increase the MLP’s financial strategy has produced the intended results. The Five-Year Financial Forecast (“Forecast”) extends the 1% increase for 23 months, through February 2010, and freezes electric rates from March 2010 to the end of the forecast period, June 2012. Overall, the Board’s decision to spread out the rate increase over 36 months has successfully fulfilled its three primary objectives: meet MLP’s cash requirements; avoid customer complaints and eliminate rate shock.

The Forecast includes the continuation of a fairly aggressive capital work plan. The MLP staff is exploring funding and scheduling alternatives for two major projects budgeted for FY10; $2.2

million administrative building addition; and $3.5 million supply line from NStar’s Needham substation. Forecast expenditures reflect the first six months of activity for FY08 and the FY09 approved operating budget. For FY10 through FY12 the FY09 budget was increased by 2.5% each year.

The Director referred to rate comparisons provided by the Massachusetts Wholesale Electric Cooperative for various classes of customers. The MLP remains in the bottom 15% of Massachusetts electric utilities in all comparisons which indicates that Wellesley’s cost of service allocations are equitably applied to residential and commercial customers.

Mr. Joyce noted that streetlight costs were projected to increase from $195,000 in FY09 to $271,000 in FY10. This increase reflects calendar year 2008 operating costs at market power rates. The Director also noted that FY09 streetlight rates were significantly reduced as a result of the $1 million Forward Capacity Market settlement payment received in February/March 2007.

January Financial Statements. The Director referred to Page 2, Year-To-Date Income Statement to confirm the accuracy of the rate increases, discounts and impact of the FY09 zero-based operating budgets. Reference was also made to Page 3, Balance Sheet, with respect to the drawdown of the Rate Stabilization Fund, cash impact of Devens and the transfer of building funds to the Permanent Building Committee.

Mr. Joyce reviewed the October 2007 through January 2008 monthly line losses compared to last year. Based on the first four months of the Energy New England (“ENE”) contract the MLP’s line losses are exceptional. In fact, ENE’s losses are a little better than the Constellation “All Requirements” purchases. Finally, the Director summarized the FY08 budget versus actual operating results on Page 15. The MLP’s revenue and expense projections are on target with the exception of power supply purchases. Power costs are higher than expected as a result of the MLP’s 20% open position and the impact of price increases in crude oil and natural gas.

Hunnewell School. Debra J. Healy summarized the analyses that MLP staff prepared to measure actual electricity usage decreases compared to Northern Energy Services (“NES”) payback estimates. Based on these analyses the Town Hall, Fire Station; Hardy School and Hunnewell School did not realize the projected reduction.

Since the Town Hall, Fire Station and Hardy School lighting retrofits have been fully paid, Ms. Healy recommended that the MLP extend the Hunnewell reimbursement from 60 months to 120 months to maintain the MLP’s commitment to insure there is no budget impact to participating departments. Mr. Stewart asked if the MLP had any recourse with NES because their projected savings were not realized. Mr. Joyce stated that NES was contracted to provide retrofit services at a specific price and NES fulfilled their obligation. Ms. Healy informed the Board that the staff was meeting with ENE on March 11, 2008 to evaluate NES’ payback model. The Board agreed to extend the Hunnewell School payback as recommended subject to the approval of the School Department.

Demand Side Management. Ms. Healy discussed the MLP’s and ENE’s solicitation efforts to encourage private and public commercial customer participation in ISO-New England’s Demand Response Program (“DRP”). None of the private businesses and only three municipal accounts have signed-up. ENE has confirmed that the DPW Highway Garage is ready to have the time-of-use meters installed. The two water-pumping stations have not yet responded to ENE’s request to confirm the availability of telephone lines.

Mr. Joyce informed the Board that it had been determined that participating departments would receive DRP revenues. The Director estimated meter costs of $2,500 for each participating facility, of which $1,000 will likely be offset by a grant from ISO-New England. The Board and Mr. Joyce discussed the funding for meter installations and upon a motion made by Mr. Humphrys and seconded by Mr. Stewart it was unanimously

VOTED: To have individual departments fund all out-of-pocket meter installation costs from initial ISO-New England payments; the Municipal Light Plant will donate all labor at no cost to participating departments.

Garage and Warehouse. The Director summarized the progress made in the construction of the MLP’s Garage and Warehouse. The parking lot PCB remediation has been completed. The only remaining work is the disposal of PCB’s of less than 50/ppm to an approved facility. Douglas R. Stewart, as the Project Manager for site work has indicated that total costs will exceed the budgeted amount of $400,000.

Roger M. Gurney has confirmed that all ram aggregate piers have been installed. Mr. Gurney is pleased with the progress made to date. Mr. Joyce informed the Board that he has not received a transfer request for the site work. In working with Doug Stewart, the MLP has asked that the site work completed by the MLP for the removal of concrete and soil during the garage demolition, sewer pipe asbestos abatement and gasoline tank removal be deducted from the adjusted site work cost allocation. Mr. Joyce was of the opinion that making a one-time, lump sum payment is the best method to fund the MLP’s site work.