Town of Wellesley, Massachusetts - Municipal Light Plant Minutes 07/16/2007

MUNICIPAL LIGHT BOARD

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 William E. Charlton, Commissioners David A. T. Donohue, Michael D. Humphrys, Thomas E. Peisch and Edward J. Stewart; Municipal Light Plant (“MLP”) Director Richard F. Joyce; staff members Joseph A. Bisol, Kevin P. Bracken, Peter Bracken, Francisco A. Frias, Debra J. Healy, William H. Marsh, Suzanne M. Newark, Donald H. Newell and James W. Verner. Also in attendance was Advisory Representative Katherine Gibson.

APPROVAL OF MINUTES

Upon a motion made by Mr. Donohue and seconded by Mr. Humphrys, it was unanimously

VOTED: To approve the June 12, 2007 Public Session Minutes as written.

Upon a motion made by Mr. Donohue and seconded by Mr. Humphrys, it was unanimously

VOTED: To approve the June 12, 2007 Executive Session Minutes as written.

Mr. Charlton 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.

DIRECTOR’S ITEMS

Financial Statements. Accounting Supervisor Joseph A. Bisol reviewed the May and Fiscal Year 2007 (“FY07”) year-to-date financial results. The MLP’s projected net income for FY07 is projected to be $3 million higher than the initial forecast primarily as a result of the Mystic settlement and the additional 1% monthly rate increase.

Municipal Energy Conservation. Debra J. Healy informed the Board that the Selectmen’s Office has paid the full amount of the lighting retrofit costs for the Town Hall and Fire Department. Ms. Healy reviewed the energy audit that was performed at the Recycling and Disposal Facility (“RDF”) by Alan R. Mulak. Mr. Mulak’s audit offers six recommendations on reducing energy consumption, primarily with the replacement of motors. Ms. Healy informed the Board that she is in the process of independently verifying the energy savings and will be working with Gordon Martin to confirm motor ratings and usage.

Mr. Stewart asked what the cost of the audit was and if these costs were included in the payback. Ms. Healy stated the audit cost $1,000 and would be reimbursable. The Board authorized Ms. Healy to proceed with the cost-benefit analysis.

Minutes of Municipal Light Board Meeting: July 16, 2007 Page 1

Fiscal Year 2008 Capital Work Plan. Donald H. Newell reviewed the revisions to the Fiscal Year 2008 (“FY08”) Capital Work Plan. These revisions included a carryover of FY07 projects, downward adjustments for FY08 projects started prior to July 1, 2007 and the addition of the 1581 Overhead Line that had been deferred.

After a brief discussion and upon a motion made by Mr. Humphrys and seconded by Mr. Peisch it was unanimously

VOTED: To approved the revised Fiscal Year 2008 Capital Work Plan in the amount of $10,729,737; this includes $6,997,948 for the demolition and replacement of the garage and warehouse.

Reliability Results. Francisco A. Frias reviewed the fourth quarter and FY07 reliability results. Although there were 11,425 customers that experienced outages this year compared to 6,962 last year, the average outage duration of 36 minutes was approximately 50% less than 2006. As a result the MLP’s System Average Interruption Duration Index for FY07 was 42 minutes, a reduction of 7 minutes.

Mr. Stewart asked about the various methodologies the MLP uses to track outages and if additional emphasis is placed on that those outages interrupting the most customers. Mr. Joyce stated that the MLP tracks and analyses outages by circuit, cause, frequency and customers affected. The results of these analyses are a main component for the determination of expenditures for the following year’s capital work plan.

Uniform Bid Award. Francisco A. Frias reviewed the results of the three bids received in response to Bid Specification #07C-80-99, Rental of Work Clothes. This bid covers the requirement that MLP employees wear flame resistant clothing while working on, or nearby, high voltage lines. Three bids were received and the current uniform provider, Cintas Corporation submitted the lowest annual bid of $9,698.00.

Mr. Stewart asked why the Board needed to spend time on a small dollar item such as this. Mr. Joyce said there was no legal obligation. Mr. Donohue stated that the Board of Public Works (“BPW”) only reviews bid awards over $25,000 and the Department of Public Works (“DPW”) staff provides the BPW with a list of those awards below this amount. Mr. Joyce said the Cintas bid award was not typical and recommended the MLP follow the same process as the DPW with an upper limit of $50,000. The Board was in agreement.

Mass Development-Devens. Peter Bracken updated the Board on the status of the Devens extension. Mr. Bracken was of the opinion that the parties were in agreement and the extension would be executed sometime during the week of July 16, 2007.

FY08 Director’s Objectives. Mr. Joyce reviewed the addition of a twelfth objective for FY08 which requires the establishment of a “commercial energy conservation” program. This objective will evaluate conservation programs offered by other public power and investor-owned systems. These programs combined with the knowledge obtained from the MLP’s commercial workshop and municipal lighting retrofit program will form the basis of the MLP’s commercial energy conservation program.

Upon a motion made by Mr. Donohue and seconded by Mr. Humphrys, it was unanimously

VOTED: To approve the Fiscal Year 2008 Director’s Objectives as presented.

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Garage and Warehouse. Mr. Joyce informed the Board that significant progress was made on two important building issues: 1) Polychlorinated Biphenyls (“PCB”) parking lot remediation; and 2) Garage and Warehouse (“G&W”) demolition. As expected, the low bidder, TMC Services, Inc. withdrew their bid when informed of PCB disposal requirements. The second lowest bidder, Mill City Environmental, submitted a bid in the amount of $146,325; $14,000 below BETA Engineering’s estimate. The current schedule anticipates excavation will begin on, or before, July 31^st and full site remediation will be completed by the end of August 2007.

On June 21, 2007 the MLP staff attended the Permanent Building Committee (“PBC”) meeting and asked that the G&W demolition work be separated from the General Contractor bid request. The MLP staff is of the opinion that three important benefits could be achieved if the demolition schedule was accelerated. These are:

1) PBC cost estimate of $371,000 could be reduced if the bid focuses solely on the demolition by increasing the number of potential bidders.

2) Separating the demolition requirement could accelerate the schedule by 3 or 4 weeks and reduce or eliminate the expenditure of $194,627 the PBC estimated for work during “winter conditions”.

3) Building an additional few weeks into the schedule could be beneficial if something unforeseen (additional ash, PCB or asbestos) were to occur.

Broadband Over Power Lines (“BPL”). The Director reviewed the MLP staff’s recommendation for the implementation of BPL in Wellesley. This technology has proven to be effective in a full deployment in Manassas, Virginia and in pilot programs initiated by the Taunton Municipal Lighting Plant (“TMLP”) and Marblehead Municipal Light Department (“MMLD”). Mr. Joyce was of the opinion that this application in its present state would not be well received in Wellesley despite a survey response that 84% of the residents would be interested in receiving telecommunication services from the MLP. The Director stated that it would likely be impossible to attract 2,200 customers at $30/month by offering an unbundled product that was slower than Verizon FiOS and Comcast Internet. BPL in Wellesley could only be cost-justified if the MP had a need for the associated utility applications. In this regard the MLP already has two major applications; SCADA and Automated Meter Reading, in place.

It was the Director’s recommendation that the MLP take the following action with respect to BPL:

· Monitor TMLP and MMLD pilot programs;

· Expand fiber network through the deployment of distributed antennas;

· Meet with leading BPL providers:

o MainNet Communications

o Corninex Corporation

o Ambient Corporation; and

· Consider hiring a telecommunications consultant.

The Board discussed Mr. Joyce’s recommendations and was in agreement with the staff’s conclusions and recommendations.

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Demand Side Management. The Director reviewed the recently established Demand Side Management (“DSM”) program recently established by ISO-New England. This program was revised to encourage more participation by commercial customers. Prior to the implementation of Forward Capacity Market (“FCM”) charges, ISO-New England’s DSM programs targeted customers that had the ability to shed 200 kilowatts (“kW”) of load or more. The new DSM program allows commercial customers with the ability to shed 40 to 50 kW’s to participate.

The MLP staff has done some research on three companies that could offer DSM services to the MLP’s commercial customers: 1) DemandDirect; 2) Global Montello Group and 3) EnerNOC. DemandDirect appears to provide a better overall proposal. Mr. Joyce referred to the matrix included in the Board packet that compared the services/prices provided by each company. DemandDirect’s affiliation with Energy New England will provide additional benefits in the areas of oversight and accountability.

Mr. Joyce recommended that the Board approve the MLP’s retention of DemandDirect to work with the MLP staff in offering ISO-New England’s recently implemented DSM program to MLP commercial customers. The Board authorized Mr. Joyce to proceed with DemandDirect.

Standard & Poor’s (“S&P”) Rating. The Director recognized the contributions of Debra J. Healy and Joseph A. Bisol in preparing the S&P Executive Summary. The preparation and quality of the MLP’s Executive Summary has been recognized by S&P in the past. Mr. Joyce discussed the critical importance of maintaining the “AA Stable’ credit rating as the MLP enters into the new power supply market and needs to issue debt for the construction of its garage and warehouse.

Position Descriptions. Mr. Joyce referred to the ten (10) Position Descriptions that were revised and included in the Board packet. These revisions reflect the MLP’s interest in expanding outside business opportunities, emphasis on safety, cultivating a team environment and providing high quality services to Mass Development-Devens. Mr. Charlton recognized the importance of maintaining up-to-date Position Descriptions. The Board and Director discussed the process for obtaining the approval of the revised Position Descriptions from the Human Resources Department.

Executive Session

The Secretary, Mr. Humphrys, polled each member of the Board individually for authorization to enter into Executive Session to discuss and negotiate the Director’s Employment Contract. Each Board Member responded in the affirmative and the Board entered into Executive Session at 7:10 PM.

Return To Open Session. The Board returned to Open Session at 7:24 PM. Upon a motion made by Mr. Humphrys and seconded by Mr. Donohue it was unanimously

VOTED: To approve an annual salary increase of 3% for Mr. Joyce for Fiscal Year 2008; in addition, in recognition of the Director’s outstanding performance in the achievement of Fiscal Year 2007 Objectives, as itemized and attached to the Executive Session Minutes, the Board approved the award of a 30% bonus in accordance with Section 5(a), Compensation and Benefits of the Employment Contract and M.G.L. 164.

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Election of Officers. Upon a motion made by Mr. Charlton and seconded by Mr. Humphrys, it was unanimously

VOTED: To elect Thomas E. Peisch Municipal Light Board Chairman for Fiscal Year 2008.

Upon a motion made by Mr. Peisch and seconded by Mr. Stewart, it was unanimously

VOTED: To elect Michael D. Humphrys Municipal Light Board Vice Chairman for Fiscal Year 2008.

Upon a motion made by Mr. Humphrys and seconded by Mr. Peisch, it was unanimously

VOTED: To elect Edward J. Stewart Municipal Light Board Secretary for Fiscal Year 2008.

Mr. Donohue asked that the Board Minutes reflect the Board’s appreciation to Mr. Charlton for his outstanding leadership as Chairman this past year. All Board Members were in agreement and thanked Mr. Charlton for his many contributions.

The Board Meeting was adjourned at 7:35 PM.

Respectfully submitted,

__________________________

Edward J. Stewart, Secretary

Minutes of Municipal Light Board Meeting: July 16, 2007 Page 5