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Home My WebLink About1998 Minutes BOWL ii WATERSUGHT P U BLIC NOTICE Schedule of Regular Meetings of the Board of Water and Light Commissioners For the First Six Months of 1998 Regular meetings of the Board of Water and Light Commissioners of the City of Lansing, Michigan,are scheduled to be held at 5:30 p.m. in the Board Room on the Second Floor of the Main Office Building, 123 West Ottawa Street,on the following dates: 1998 January 27 -Tuesday a-`a/-49 cf.g...Ctih, „� February 24 -Tuesday March 24 -Tuesday April 28 -Tuesday May 26 -Tuesday June 23 -Tuesday In the event a special meeting or rescheduled meeting is held,a notice of same will be posted at 123 West Ottawa Street,Lansing,Michigan,at least 18 hours prior to.the time of the meeting. WATER8UGHT P U B L I C N O T I C E Schedule off Regular Meetings ofthe Board of Water and Light Commissioners For the Last Six Months of 1998 Regular meetings of the Board of Water and Light Commissioners of the City of Lansing, Michigan,are scheduled to be held at 5:30 p.m.in the Board Room on the Second Floor of the Main Office Building, 123 West Ottawa Street,on the following dates: 1998 v a z v T G ;T1 July 28 - Tuesday August25- Tuesday C (��— a' September 22 Tuesday �? October 27 - Tuesday _ p November 24 Tuesday rr' December 15 Tuesday x In the event a special meeting or rescheduled meeting is held,a notice will be posted at 123 West Ottawa Street,Lansing,Michigan,at least 18 hours prior to the time of the meeting. Posted by order of the Board of Water and Light Commissioners in conformity with Act 267,PA 1976. BOARD OF WATER AND LIGHT Mary E.Sova,Corporate Secretary (517) 371-6033 Date of Posting 6/29/98 in accordance with the American with Disabities Ad (ADA), please cat the Corporate Secretary's Office at 371-6033 at least three business days prior to a pubic meeting to request special accommodations such as mobity, visual, hearing,or other assistance. Distribution: BWL Lobby Board commissioners my Clerk Mayor's Office CRy Councl Offke Page 96 MINUTES OF BOARD OF COMMISSIQNERS'ME TINGLANSING BOARD OF WATER'AND L,AG$�' CLEP Tuesday,December 1 199 The Board of Commissioners met in regular session at 5:35 p.m.,in the Administration Building, 1232 Haco Drive,Lansing,Michigan. The meeting was called to order by the Chair,Diane Royal. Present: Commissioners Callen,Christian, Creamer,O'Leary,Royal and Werbelow(by speakerphone). Absent: Commissioner Aquilina. The Secretary declared a quorum present. APPROVAL OF MINUTES Motion was made by Commissioner O'Leary, seconded by Commissioner Christian,to approve the minutes of regular session held November 24, 1998. Carried unanimously. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW,OR AT THE END OF THE MEETING. No persons spoke. COMMUNICATIONS A thank note was received from former Commissioner Peter Pratt(3rd Ward)for the farewell dinner held in his honor. Placed on file. REPORTS OF COMMITTEES There were no committee reports. GENERAL MANAGER'S RECOMMENDATIONS (Background material on each of the items below may be obtained from the Secretary.) The following items were recommended for approval: Page 97 Board Minutes December 15, 1998 #98-12- I A. BOARD MEETING SCHEDULE RESOLVED,That pursuant to the provisions in Article H, Section 2.1 of the Board's Rules of Administrative Procedure. the following dates for the regular meetings of the Board of Water and Light Commissioners for the ensuing six(6)months is hereby set. 1999 January 26 - Tuesday February 23 - Tuesday March 23 - Tuesday April27 - Tuesday May 25 - Tuesdav June 22 - Tuesday Regular meetings of the Board shall commence at 5:30 p.m. This schedule is subject to change as a result of date conflicts with rescheduled City Council meetings. RESOLVED FURTHER, That a notice of the meeting schedule be published in the Lansing State Journal the week of January 4. 1999. Motion by Commissioner Callen, seconded by Commissioner Christian, to adopt the resolution. Action: Carried unanimously. 998-12-2 B. TRANSPORTATION CONTRACT WITH NORFOLK SOUTHERN RAILROAD(NS)AND CANADIAN NATIONAL RAILWAY (CN) RESOLVED, That the Board approve Amendment No. 2 to C-8514 Transportation Contract("Contract")with Norfolk Southern Railroad(NS)and Canadian National Railway(CN), subject to approval as to form by the B WL's Legal Counsel. The amendment particulars are as follows: 1. The terns of this Contract will be extended twelve(12) months,with an expiration date of December 31,1999. 2. There shall be no minimum volume commitment. 3- The rates will be reduced by$1.00 per net ton for carrier-provided railcars and by$0.50 per net ton for private(BWL)railcars. 4. The rates will be held firm and fine from escalation for the entire amendment period. Motion by Commissioner Christian, seconded by Commissioner Creamer,to adopt the resolution. Discussion: By amending the contract with NS and CN, the BWL will be able to maintain its broad base of potential spot coal suppliers. This will ensure that spot coal competition is maximized and purchased at the lowest delivered cost possible. General Manager Pandy noted that this is a back-up rail transportation arrangement. Action: Carried unanimously. Board Minutes Page 98 December 15, 1998 UNFINISHED BUSINESS No unfinished business. NEW BUSINESS No new business. RESOLUTIONS No resolutions. GENERAL MANAGER'S REMARKS General Manager Pandy reported on the following items: Year 2000 Update. A letter on the year 2000 issue prepared by the BWL's independent auditors,Deloitte& Touche. LLP, dated August 26. 1998, was distributed The letter indicated that the audit of BWL financial statements does not assure BWL systems are year 2000 compliant,and included a summary of year 2000 activities currently underway. Director of Corporate Support John Elashkar briefed the Board on the process involved to complete system modifications by this summer for testing before the end of the year. Regular status reports will be presented to the Board on year 2000 readiness activities,which include: -Production and Delivery Facilities for water,electric and steam -Mainframe. Local and Wide Area Networks and Personal Computers -Contingency Plan -Business Partners Electric Deregulation Legislation Fails in the House. The Legislature failed to enact electric deregulation(SB 1340 and SB 1342) before the end of the lame-duck session on December 11. Governor Engler has indicated that he does not plan to push the issue during the 1999-2000 session. Belle River Off-Peak Replacement Energy for MPPA. The BWL was successful in negotiating a contract with the Michigan Public Power Agency(NI PA) Tor off-peak replacement energy. This deai will rea�ii in signifi c it increase in the BWL's export sales. Wholesale sales will increase by 65%to 90%over last year,dependent on the weather and other factors. The sale is expected to generate revenues between$5.5 million and $7.5 million, reduce the cycling of Eckert Station from 99 to 22 times a year, save on equipment maintenance cost,and improve the heat rate on the units. Update on Competitive Issues. General Manager Pandy updated on the status of ongoing negotiations with prospective major customers for electric and water services. Maintenance and Construction Resource Center(MCRC)Realignment. Alternatives are being explored to more effectively utilize the MCRC's personnel,equipment and reporting structures to better serve BWL processes and customers. A copy of a memo sent to BWL Managers was handed out for reference. Proposals for Professional Legal Services. A tabulation was distributed summarizing bid proposals received from various law firms who responded to the Request for Proposals for Professional Legal Services. A briefing will be made to the Board in the near future once the list is narrowed down. The selected firms must receive the recommendation of the City Attorney and approval by the Lansing City Council. Page 99 Board Minutes December 15, 1998 Review of Financial Forecast. A topic for the January Committee of the Whole meeting will include a review of the BWL's ten-year financial forecast and short-term capital needs and strategies. Status of Natural Gas Business Opportunity. The BWL is negotiating an arrangement with AMI Energy to provide natural gas access to customers within the City of Lansing and possibly to surrounding townships. Franchise matters are being addressed. Joint Meeting with City Council. City Council leadership is being contacted to schedule a joint meeting in January. Meetings are being rotated between the BWL and the City every six months. The last meeting was hosted by the BWL in June, 1998. Date for Board Retreat. A tentative date for the Board retreat is Wednesday,February 24, 1999,subject to schedule confirmation by the Commissioners. The last retreat was held December, 1997. BWL Advertising Campaign Airs This Week. Three 30-second TV sprits or,tiic B`wi,'s new advertising campaign.produced by Pace and Partners,were shown to the Board. The ads started airing on all the networks the week of December 14th. The ad campaign focuses on the BWL's hometown connections theme. REMARKS BY COMMISSIONERS Ottawa Station Equipment Removal Status. Commissioner O'Leary inquired on the progress of the Ottawa Street Power Station salvage and removal project. General Manager Pandy reported that the equipment demolition schedule may take most of 1999 to complete. The cleanup project is currently in the heavy stages. This involves jack hammering turbine foundations,cutting up the boilers in large sections and letting them fall from the top to the bottom of the plant, and dragging out the steel. BWL Attorney Mary Dwyer briefed on a recent Federal District Court action which dismissed all tort based claims on negligence pertaining to the Ottawa Station litigation,citing the BWL has governmental immunity. Ms. Dwyer noted that this decision sets legal precedence for future actions of this nature. Contract issues are still in litigation. Separate Water Meters for Sprinkling. Commissioner O'Leary asked about the status of discussions with the City regarding separate water meters for sprinkling. This matter pertains to a letter sent to the City Council in October by K.L. and Vicki Cool. ('mineral Manager Pandy indicated that he is revisiting this issue with the Council's Committee on Intergovemmental Relations. This topic is being suggested for the next joint meeting with City Council to be held possibly in January. [In 1994,the Council by Resolution#437 instructed the BWL to halt installation of separate residential meters for outdoor uses in areas served by the City Sewage Disposal System.] PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT. No persons spoke. Board Minutes Page 100 December 15, 1998 EXCUSED ABSENCES Motion by Commissioner Christian, seconded by Commissioner O'Leary,that the absence of Commissioner Aquilina be excused. Action: Carried unanimously. ADJOURNMENT There being no further business,the meeting adjourned at 6:40 p.m. Al Mary E S a, Secretary Filed: December 18, 1998 Marilynn Slade, City Clerk Page 96 MINUTES OF BOARD OF COMMISSIONERS'MEETING., LANSING BOARD OF WATER AND LIGHT Tuesday,December 15,1998 LAHISli-iG The Board of Commissioners met in regular session at 5:35 p.m.,in the Administration Building, 1232 Haco Drive. Lansing,Michigan. The meeting was called to order by the Chair,Diane Royal. Present: Commissioners Callen,Christian, Creamer, O'Leary,Royal and Werbelow(by speakerphone). Absent: Commissioner Aquilina. The Secretary declared a quon r.:present. APPROVAL OF MINUTES Motion was made by Commissioner O'Leary, seconded by Commissioner Christian,to approve the minutes of regular session held November 24, 1998. Carried unanimously. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW, OR AT THE END OF THE MEETING. No persons spoke. COMMUNICATIONS A thank note was received from former Commissioner Peter Pratt(3rd Ward)for the farewell dinner held in his honor. Placed on file. REPORTS OF COMMITTEES There were no committee reports. GENERAL MANAGER'S RECOMMENDATIONS (Background material on each of the items below may be obtained from the Secretary.) The following items were recommended for approval: Page 97 Board Minutes December 15, 1998 T 98-12- I A. BOARD MEETING SCHEDULE RESOLVED,That pursuant to the provisions in Article H, Section 2.1 of the Board's Rules of Administrative Procedure. the following dates for the regular meetings of the Board of Water and Light Commissioners for the ensuing six(6)months is hereby set. 1999 January 26 - Tuesday February 23 - Tuesday March 23 - Tuesdav April27 - Tuesday May 25 - Tuesday June 22 - Tuesdav Regular meetings of the Board shall commence at 5:30 p.m. This schedule is subject to change as a result of date conflicts with rescheduled City Council meetings. RESOLVED FURTHER. That a notice of the meeting schedule be published in the Lansing State Journal the week of January 4, 1999. Motion by Commissioner Callen, seconded by Commissioner Christian,to adopt the resolution. Action: Carried unanimously. 998-12-2 B. TRANSPORTATION CONTRACT WITH NORFOLK SOUTHERN RAILROAD(NS)AND CANADIAN NATIONAL RAILWAY(CN) RESOLVED,That the Board approve Amendment No. 2 to C-8514 Transportation Contract("Contract") with Norfolk Southern Railroad(NS)and Canadian National Railway(CN), subject to approval as to form by the BWL's Legal Counsel. The amendment particulars are as follows: 1. The term of this Contract will be extended twelve(12)months,with an expiration date of December 31,1999. 2. There shall be no minimum volume commitment. 3. The rates will be reduced by$1.00 per net ton for carrier-provided railcars and by$0.50 per net ton for private(BWL)railcars. 4. The rates will be held firm and free from escalation for the entire amendment period. Motion by Commissioner Christian, seconded by Commissioner Creamer,to adopt the resolution. Discussion: By amending the contract with NS and CN, the BWL will be able to maintain its broad base of potential spot coal suppliers. This will ensure that spot coal competition is maximized and purchased at the lowest delivered cost possible. General Manager Pandy noted that this is a back-up rail transportation arrangement. Action: Carried unanimously. Board Minutes Page 98 December 15, 1998 UNFINISHED BUSINESS No unfinished business. NEW BUSINESS No new business. RESOLUTIONS No resolutions. GENERAL MANAGER'S REMARKS General Manager Pandy reported on the following items: Year 2000 Update. A letter on the year 2000 issue prepared by the BWL's independent auditors,Deloitte& Touche,LLP, dated August 26. 1998, was distributed. The letter indicated that the audit of BWL financial statements does not assure BWL systems are year 2000 compliant, and included a summary of year 2000 activities currently underway. Director of Corporate Support John Elashkar briefed the Board on the process involved to complete system modifications by this summer for testing before the end of the year. Regular status reports will be presented to the Board on year 2000 readiness activities,which include: -Production and Delivery Facilities for water,electric and steam -Mainframe, Local and Wide Area Networks and Personal Computers -Contingency Plan -Business Partners Electric Deregulation Legislation Fails in the House. The Legislature failed to enact electric deregulation(SB 1340 and SB 1342) before the end of the lame-duck session on December 11. Governor Engler has indicated that he does not plan to push the issue during the 1999-2000 session. Belle River Off-Peak Replacement Energy for MPPA. The BWL was successful in negotiating a contract with the Michigan Public Power Agency(MPPA) for off-peak replacement energy. This deal will result in significant increase in the BWL's export sales. Wholesale sales will increase by 65%to 90%over last year,dependent on the weather and other factors. The sale is expected to generate revenues between$5.5 million and $7.5 million, reduce the cycling of Eckert Station from 99 to 22 times a year, save on equipment maintenance cost,and improve the heat rate on the units. Update on Competitive Limes. General Manager Pandy updated on the status of ongoing negotiations with prospective major customers for electric and water services. Maintenance and Construction Resource Center(MCRC)Realignment. Alternatives are being explored to more effectively utilize the MCRC's personnel,equipment and reporting structures to better serve BWL processes and customers. A copy of a memo sent to BWL Managers was handed out for reference. Proposals for Professional Legal Services. A tabulation was distributed summarizing bid proposals received from various law firms who responded to the Request for Proposals for Professional Legal Services. A briefing will be made to the Board in the near future once the list is narrowed down. The selected firms must receive the recommendation of the City Attorney and approval by the Lansing City Council. Page 99 Board Minutes December 15, 1998 Review of Financial Forecast. A topic for the January Committee of the Whole meeting will include a review of the BWL's ten-year financial forecast and short-term capital needs and strategies. Status of Natural Gas Business Opportunity. The BWL is negotiating an arrangement with AMI Energy to provide natural gas access to customers within the City of Lansing and possibly to surrounding townships. Franchise matters are being addressed. Joint Meeting with City Council City Council leadership is being contacted to schedule a joint meeting in January. Meetings are being rotated between the BWL and the City every six months. The last meeting was hosted by the BWL in June, 1998. Date for Board Retreat. A tentative date for the Board retreat is Wednesday,February 24, 1999, subject to schedule confirmation by the Commissioners. The last retreat was held December, 1997. BWL Advert ng Campaign Airs This Week. Three 30-second TV spots on the BWL's new advertising campaign,produced by Pace and Partners,were shown to the Board. The ads started airing on all the networks the week of December 14th. The ad campaign focuses on the BWL's hometown connections theme. REMARKS BY COMMISSIONERS Ottawa Station Equipment Removal Status. Commissioner O'Leary inquired on the progress of the Ottawa Street Power Station salvage and removal project. General Manager Pandy reported that the equipment demolition schedule may take most of 1999 to complete. The cleanup project is currently in the heavy stages. This involves jack hammering turbine foundations,cutting up the boilers in large sections and letting them fall from the top to the bottom of the plant, and dragging out the steel. BWL Attorney Mary Dwyer briefed on a recent Federal District Court action which dismissed all tort based claims on negligence pertaining to the Ottawa Station litigation,citing the BWL has governmental immunity. Ms. Dwyer noted that this decision sets legal precedence for future actions of this nature. Contract issues are still in litigation. Separate Water Meters for Sprinkling. Commissioner O'Leary asked about the status of discussions with the City regarding separate water meters for sprinkling. This matter pertains to a letter sent to the City Council in October by K. L. and Vicki Cool. General Manager Pandy indicated that he is revisiting this issue with the Council's Committee on Intergovernmental Relations. This topic is being suggested for the next joint meeting with City Council to be held possibly in January. [In 1994,the Council by Resolution#437 instructed the BWL to halt installation of separate residential meters for outdoor uses in areas served by the City Sewage Disposal System.] PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT. No persons spoke. Board Minutes Page 100 December 15, 1998 EXCUSED ABSENCES Motion by Commissioner Christian, seconded by Commissioner O'Leary,that the absence of Commissioner Aquilina be excused. Action: Carried unanimously. ADJOURNMENT There being no further business,the meeting adjourned at 6:40 p.m. isi Iviary E. S a, Secretary Filed: December 18, 1998 Marilynn Slade, City Clerk DEC-16-1998 12:33 BD OF WRTER LIGHT 1 517 371 6855 P.01/06 Ems 1 WAMULKWIL Mw P. O. Box 13007 Lansing, MI 48901-3007 Fax Cover Sheet DATE: December 18, 1998 TIME: 12:12 PM TO: Marilynn Slade PHONE: 483-4131 Lansing City Clerk FAX 377-0068 FROM: Mary Sova PHONE: 371-6033 FAX: 371-6855 RE: Filing of Board Minutes Number of pages including cover sheet: 6 Attached is a copy of the minutes of the regular meeting of the Board of Commissioners for filing with your office. An original copy is being mailed to your office. Thank you. DEC-18-1998 12:40 1 517 371 6855 P.01 DEC-16-1998 12:33 BD OF WRTER LIGHT 1 517 371 6855 P.02i06 Page 96 MINUTES OF BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT Tuesday,December 15,1998 The Board of Commissioners met in regular session at 5:35 p.m.,in the Administration Building, 1232 Haco Drive,Lansing,Michigan. The meeting was called to order by the Chair,Diane Royal. Present. Commissioners Callen, Christian, Creamer,O'Leary,Royal and Werbelow(by speake,phor;4 Absent: Commissioner Aquilina. The Secretary declared a quorum present. APPROVAL OF MINUTES Motion was made by Commissioner O'Leary, seconded by Commissioner Christian,to approve the minutcs of regular session held November 24, 1999. Carried unanimously. PUBLIC,COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW,OR AT THE END OF THE MEETING. No persons spoke. COMMUNICATION A thank note was received from former Commissioner Peter Pratt(3rd Ward)for the farewell dinner held in his honor. Placed on file. REPORTS OF COMMITTEES There were no committee reports. GENERAL MANAGER'S RECOMMENDATIONS (Background material on each of the items below may be obtained from the Secretary) The following items were recommended for approval: DEC-18-1998 12:41 1 517 371 6855 P.02 DEC-18-1998 12:33 BD OF WATER LIGHT 1 517 371 6855 P.03i06 Board Minutes Page 97 December 15, 1998 #98-I2- I A. BOARD MEETING SCHEDULE RESOLVED,That pursuant to the provisions in Article II, Section 2.1 of the Board's Rules of Administrative Procedure,the following dates for the regular meetings of the Board of Water and Light Commissioners for the ensuing six(6)months is hereby set. 1999 January 26 - Tuesday February 23 - Tuesday March 23 - Tuesday April27 - Tuesday May 25 - Tuesday June 22 - Tuesday Regular meetings of the Board shall commence at 5:30 p.m. This schedule is subject to change as a result of date conflicts with rescheduled City Council meetings. RESOLVED FURTHER,That a notice of the meeting schedule be published in the Lansing State Journal the week of January 4, 1999. Motion by Commissioner Callen, seconded by Commissioner Christian,to adopt the resolution. Action: Carried unanimously. #98-12-2 B. TRANSPORTATION CONTRACT WITH NORFOLK SOUTHERN R4TLROAD (NS)AND CANADIAN NATIONAL RAILWAY(CN) RESOLVED,That the Board approve Amendment No. 2 to C-8514 Transportation Contract("Contract")with Norfolk Southern Railroad(NS)and Canadian National Railway(CN), subject to approval as to form by the BWL's Legal Counsel. The amendment particulars are as follows: l. The term of this Contract will be extended twelve(12)months,with an expiration date of December 31,1999. 2. There shall be no minimum volume commitment. 3. The rates will be reduced by S 1.00 per net ton for carrier-provided railcars and by$0.50 per net ton for private(BWL)railcars. 4. The rates will be held firm and free from escalation for the entire amendment period. Motion by Commissioner Christian,seconded by Commissioner Creamer,to adopt the resolution. Discussion: By amending the contract with NS and CN,the BWL will be able to maintain its broad base of potential spot coal suppliers. This will ensure that spot coal competition is maximized and purchased at the lowest delivered cost possible. General Manager Pandy noted that this is a back-up rail transportation arrangement. Action: Carried unanimously. DEC-18-1998 12:41 1 517 371 6855 P.03 DEC-18-199B 12:33 BD OF DATER LIGHT 1 517 371 6855 P.04i06 Page 98 Board Minutes December 15, 1998 UNFIIVISHED BUSINESS No unfinished business. NEW BUSINESS No new business. RESOLXJTIONS No resolutions. GENERAL MANAGER'S REMARKS General Manager Pandy reported on the following items: Year 2000 Update- A letter on the year 2000 issue prepared by the BWL's independent auditors,Deloitte& Touche,LLP,dated August 26, 1998,was distributed. The letter indicated that the audit of BWL financial statements does not assure BWL systems are year 2000 compliant, and included a summary of year 2000 activities currently underway. Director of Corporate Support John Elashkar briefed the Board on the process involved to complete system modifications by this summer for testing before the end of the year. Regular status reports will be presented to the Board on year 2000 readiness activities,which include: -Production and Delivery Facilities for water,electric and steam -Mainframe, Local and Wide Area Networks and Personal Computers -Contingency Plan -Business Partners Electric Deregulation Legislation Fails in the House. The Legislature failed to enact electric deregulation(SB 1340 and SB 1342) before the end of the lame-duck session on December 11. Governor Engler has indicated that he does not plan to push the issue during the 1999-2000 session. Belle River Off-Peak Replacement Energy for MPPA. The BWL was successful in negotiating a contract with the Michigan Public Power Agency(MPPA) for off-peak replacement energy. This deal will result in significant increase in the BWL's export sales. Wholesale sales will increase by 65%to 90%over last year,dependent on the weather and other factors. The sale is expected to generate revenues between S5.5 million and S7.5 million, reduce the cycling of Eckert Station from 99 to 22 times a year, save on equipment maintenance cost,and improve the heat rate on the units. Update on Competitive Issues. General Manager Pandy updated on the status of ongoing negotiations with prospective major customers for electric and water services. Maintenance and Construction Resource Center(MCRC)Realignment. Alternatives are being explored to more effectively utilize the MCRC's personnel,equipment and reporting structures to better serve BWL processes and customers. A copy of a memo sent to BWL Managers was handed out for reference. Proposals for Special Legal Counsel. A tabulation was distributed summarizing bid proposals received from various law firms who responded to the Request for Proposals for Professional Legal Services. A briefing will be made to the Board in the near future once the list is narrowed down. The selected firms must receive the recommendation of the City Attorney and approval by the Lansing City Council. DEC-18-1998 12:41 1 517 371 6955 P.04 DEC-16-1998 12:33 BD OF WRTER LIGHT 1 517 371 SB55 P.05i06 Board Minutes Page 99 December 15, 1998 Review of Financial Forecast. A topic for the January Committee of the Whole meeting will include a review of the BWL's ten-year financial forecast and short-term capital needs and strategies. Status of Natural Gas Business Opportunity. The BWL is negotiating an arrangement with AMI Energy to provide natural gas access to customers within the City of Lansing and possibly to surrounding townships. Franchise matters are being addressed. Joint Meeting with City Council. City Council leadership is being contacted to schedule a joint meeting in January. Meetings are being rotated between the BWL and the City every six months. The last meeting was hosted by the BWL in June, 1998. Date for Hoard Retreat. A tentative date for the Board retreat is Wednesday,February 24, 1999, subject to schedule confirmation by the Commissioners. The last retreat was held December, 1997. BWL Advertising Campaign Airs This Week. Three 30-second TV spots on the BWL's new advertising campaign,produced by Pace and Partners,were shown to the Board. The ads started airing on all the networks the week of December 14th. The ad campaign focuses on the BWL's hometown connections theme. REMARKS BY COMMISSIONERS Ottawa Station Equipment Removal Statues Commissioner O'Leary inquired on the progress of the Ottawa Street Power Station salvage and removal project. General Manager Pandy reported that the equipment demolition schedule may take most of'1999 to complete. The cleanup project is currently in the heavy stages. This involves jack hammering turbine foundations,cutting up the boilers in large sections and letting them fall from the top to the bottom of the plant,and dragging out the steel. BWL Attorney Mary Dwyer briefed on a recent Federal District Court action which dismissed all tort based claims on negligence pertaining to the Ottawa Station litigation,citing the BWL has governmental immunity. Ms. Dwyer noted that this decision sets legal precedence for future actions of this nature. Contract issues are still in litigation. Separate Water Meters for Sprinkling. Commissioner O'Leary asked about the status of discussions with the City regarding separate water meters for sprinkling. This matter pertains to a letter sent to the City Council in October by K.L. and Vicki Cool. General Manager Pandy indicated that he is revisiting this issue with the Council's Committee on Intergovernmental Relations. This topic is being suggested for the next joint meeting with City Council to be held possibly in January. [In 1994, the Council by Resolution#437 instructed the BWL to halt installation of separate residential meters for outdoor uses in areas served by the City Sewage Disposal System.] PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT. No persons spoke. DEC-18-1998 12:41 1 517 371 6855 P.05 DEC-18-1996 12:34 ED OF WATER LIGHT 1 517 371 6855 P.06i06 page 100 Board Minutcs December 15, 1998 EXCUSED ABSENCES Motion by Commissioner Christian, seconded by Commissioner O'Leary,that the absence of Commssioner Aquilina be excused. Action: Carried unanimously. ADJOURNMENT There being no further business,the meeting adjourned at 6:40 p.m. L... A/Mary E.Atf, etary Filed: December 16, 1998 Marilynn Slade, City Clerk TOTAL P.06 DEC-18-1998 12:41 1 517 371 6855 P.06 Page 86 7r, ~71,17Fi MINUTES OF BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT - ,DEC -j � n Tuesday,November 24, 1998 LAINSit;C 'CI i CLERK The Board of Commissioners met in regular session at 5:30 p.m., in the Administration Building, 1232 Haco Drive,Lansing,Michigan. The meeting was called to order by the Chair,Diane Royal. Present: Commissioners Aquilina, Callen, Creamer,O'Leary,Pratt,Royal and Werbelow(by speakerphone). Absent: Commissioner Christian. The Secretary declared a quorum present. APPROVAL OF MINUTES Motion was made by Commissioner O'Leary, seconded by Commissioner Aquilina,to approve the minutes of regular session held October 27, 1998. Carried unanimously. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW, OR AT THE END OF THE MEETING. No persons spoke. COMMUNICATIONS A letter from Commissioner Peter Pratt(3rd Ward)was received advising of his resignation from the Board effective December 1, 1998, due to his relocation outside of the City of Lansing. Received with regret, and placed on file. REPORTS OF COMMITTEES (Background material on each of the items below may be obtained from the Secretary.) #98-11-1 FINANCE COMMITTEE REPORT The Finance Committee met with the external auditors on October 26, 1998, to review the audit of the BWL Annual Financial Statements for 1997-98. Board Minutes Page 87 November 24, 1998 Present were Commissioners Rosemarie Aquilina(Chair), Charles Creamer,and Judson Werbelow. Also in attendance were Assistant General Manager John Elashkar, Chief Financial Officer Dana Tousley, Internal Auditor Kellie Willson, General Accounting Manager Dave Cluley,and Corporate Secretary Mary Sova. Terry Fuller,Managing Partner of Deloitte&Touche,LLP,and Rudy Reyes, accounting team member of Deloitte &Touche, briefed the Commissioners on significant 1998 highlights for the following financial statements: 1. Board of Water and Light 2. Employees' Defined Benefit Pension Plan 3. Employees' Defined Contribution Pension Plan The summary report is filed with the Corporate Secretary. Mr. Fuller reported that the audit reports express a clean,unqualified opinion on the financial statements. There were no material weaknesses noted in procedures or controls. A letter from Deloitte&Touche concerning the BWL's Year 2000 readiness process will be forthcoming for the Commissioners review. The audit reports were filed with the City of Lansing by Deloitte&Touche on October 1, 1998. Chief Financial Officer Dana Tousley briefed the Committee on the BWL's operating cash accounts consisting of two classes of cash accounts: (a)those required by bond resolution and(b)those set up by BWL Commissioner resolution as a prudent management practice. The Finance Committee recommends the following resolution: #98-11-2 AUTHORIZATION TO FILE AUDIT REPORTS WITH THE STATE TREASURER RESOLVED,That the Corporate Secretary be directed to file copies of the three audit reports and auditing procedures reports with the State Treasurer as required by law. RESOLVED FURTHER,That publishing a condensed copy of the BWL audit report in THE LANSING STATE .rouRNAL is not required by law; however,it may be done at the discretion of the General Manager. Rosemarie Aquilina, Chair FINANCE COMMITTEE Motion by Commissioner Aquilina, seconded by Commissioner O'Leary,to adopt the report of the Finance Committee, inclusive of Resolution#98-11-2. Action: Carried unanimously. Internal Auditor Kellie Willson reported that the City Council's Ways and Means Committee met on November 18, 1998, to review the Board of Water and Light audit reports. Two areas of concern raised at the Ways and Means Committee were the(1)return on equity payment to the city and(2)over-funding of the pension plan. The Board discussed the need to address these issues with the City Council. Board Minutes Page 88 November 24, 1998 #98-11-3 COMMITTEE OF THE WHOLE REPORT The Committee of the Whole met on November 10, 1998,to receive an update on economic development plans in the Lansing area and electric deregulation activities in the Michigan legislature. Present were Commissioners Aquilina, Callen, Christian, O'Leary, Pratt, and Royal. Excused Absences: Commissioners Creamer and Werbelow. Economic Development Opportunity. The Committee of the Whole met with a representative from a major industrial firm to discuss proposed site and building plans for their facility. The project overview included the firm's corporate strategy,project cost estimates and financial projections. General Manager Pandy also briefed the Committee about discussions taking place with large energy users regarding energy service needs and providing utility services in their quest for more efficient,profitable operations. The feasibility of developing a policy statement to provide a guidance for the BWL to invest in customer energy conversion equipment beyond the meter(point-of-service)to encourage economic development in the BWL service area was discussed A statement is to be drafted by the General Manager for further discussion. Electric Deregulation. Bill Cook,Director of System Control,briefed the Board on electric deregulation activities in the Michigan legislature and issues relating to municipal electric utilities. Peter Pratt, Chair Pro Tern COMMr =OF THE WHOLE Motion by Commissioner O'Leary, seconded by Commissioner Aquilina,to adopt the report of the Committee of the Whole as presented. Action: Carried unanimously. GENERAL MANAGER'S RECOMMENDATIONS (Background material on each of the items below may be obtained from the Secretary.) The following items were recommended for approval: #98-11-4 A. WELLHEAD PROTECTION PLAN PARTICIPATION WHEREAS,the City of Lansing through its Board of Water and Light,operates the largest municipal water supply system in Michigan completely from 128 wells;and WHEREAS,the City of Lansing through its Board of Water and Light is concerned with the health,safety and welfare of the citizens in the Greater Lansing Area;and WHEREAS,contamination of groundwater can and does occur as a result of a variety of land use activities;and WHEREAS, the costs of prevention of contamination of the wells is far outweighed by the costs of remediating their contamination or of obtaining an alternate water supply in the event of contamination;and Page 89 Board Minutes November 24, 1998 WHEREAS, the protection of current and potential future sources of groundwater is of the utmost importance to the City of Lansing as a significant resource to be protected;and WHEREAS,the Board of Water and Light has a strong history of supporting environmental initiatives/efforts to preserve clean drinking water/public health of its citizens;and WHEREAS, the Board of Water and Light through its participation on the Groundwater Management Board continues its commitment to facilitate the development of a regional wellhead protection plan for the Greater Lansing Area. NOW THEREFORE BE IT RESOLVED that the Lansing Board of Water and Light Commissioners declare their support of those efforts on behalf of the City and the Board of Water and Light to protect groundwater and particularly the wellhead protection areas delineated for the Lansing Area Wellhead Protection Project. FURTHER RESOLVED that the Board of Water and Light requests the administration to utilize the resources necessary to actively participate in this regional wellhead protection program by developing a wellhead protection plan for the Board of Water and Light water supply system. Motion by Commissioner Creamer, seconded by Commissioner Aquilina, to adopt the resolution. Action: Carried unanimously. #98-11-5 B. LANSING SUSTAINABLE COMMUNITY INITIATIVE TASKFORCE WHEREAS,The City of Lansing through its Board of Water and Light, operates the largest municipal water supply system in Michigan completely from groundwater sources;and WHEREAS, the Board of Water and Light has recognized the necessity of groundwater planning on a regional basis by its continued participation in the Regional Groundwater Management Board within a nine township area for the last 15 years since its inception in 1983;and WHEREAS,the Board of Water and Light is committed to participating with Tri-County Regional Planning Commission, the State of Michigan,Michigan State University,other educational business and municipal entities to Provide it unuduu.awiii UIC euSLing grvundwatW SiLLiauvn and:.vnd:u^vi.;ihrv^ugh u�Ie d��elopme.^Lt a nd use Of educational and promotional materials;and WHEREAS, the Board of Water and Light is interested in enhancing the opportunities for the community to be involved in the planning and implementation of Groundwater Protection Plans;and WHEREAS,the City of Lansing through its Economic Development Corporation facilitates retention and recruitment of businesses and assists in identifying sites for relocation and/or expansion;and WHEREAS,the Economic Development Corporation is also designated as the City's Brownfield Redevelopment Board charged with the responsibility of developing a Brownfields Redevelopment Plan through which increased tax revenues can be captured to provide funds for initial cleanup or repayment to developers who remediate sites within the City of Lansing,and WHEREAS,the City of Lansing is committed to developing, in conjunction with its many partners,a system which promotes economic development,brownfields reclamation, expanded business and industrial base while,at the same time,promoting environment education and groundwater protection;and Board Minutes Page 90 November 24, 1998 WHEREAS,the City of Lansing through its Department of Planning and Neighborhood Development and the Board of Water and Light, in collaboration with Michigan State University,the State of Michigan Department of Environmental Quality, the Michigan Jobs Commission, Tri-County Regional Planning Commission,Ingham County Department of Public Health,The Lansing Economic Development Corporation/Brownfields Redevelopment Authority,other Public Agencies and interested members of the general public, have formed the Lansing Sustainable Community Initiative Taskforce to coordinate the development of a decision making model and its implementation; and WHEREAS, the U. S. Environmental Protection Agency(EPA)is soliciting proposals for Sustainable Development Challenge Grants through November 24, 1998,for amounts not to exceed$200,000 to be used to develop the system outlined above. NOW THEREFORE BE IT RESOLVED that the Board of Water and Light Commissioners enthusiastically endorse the development and implementation of a decision making process which: • Protects the Regional Groundwater Aquifer • Protects the Regional Drinking Water System • Creates new job and business opportunities within the City • Creates work force educational opportunities at MSU and LCC • Remediates Brownfield sites and expands the business and industrial base • Promotes environmental education within the community • Integrates and modifies existing regulatory systems to enhance groundwater protection • Expands the local tax base • Reduces urban sprawl • Enhances community opportunities for input and use of the system • Promotes regional cooperation and mutual assistance in protecting our vital water resources while encouraging business and employment growth, expanding tax base and increasing community awareness which will sustain and strengthen the Greater Lansing Area as a vital, rich and resourceful community in which to live,work and raise a family. The LSCI, is planned in two phases. The first phase involves designing and building a database(using Arclnfo) with an associated Geographic Information System(GIS)based on community information needs and compilation of existing data from a variety of sources. With the completion of the database and GIS, the information can be utilized by: the business and banking interests,the general public, educational institutions,and government agencies to make locally appropriate decisions concerning the balance between environmental protection and economic growth. Ultimately, there are six goals for this project: 1. Enhance Public Participation 2. Foster Community Commitment to Environmental Protection through Education 3. Create Comprehensive Database to Increase Capacity for Effective Decision Making at City and Regional Levels 4. Build Community Identity through Strategic Planning 5. Re-engineer and Reorganize the Development and Permitting Process 6. Create a Monitoring System for continued Community reinvestment Motion by Commissioner Aquilina, seconded by Commissioner Pratt,to adopt the resolution. Action: Carried unanimously. Page 91 Board Minutes November 24, 1998 #98-11-6 C. FIRST AMENDMENT TO COAL SUPPLY AGREEMENT RESOLVED,That the Board approve the First Amendment to the Coal Supply Agreement("Agreement")with Venture Energy, LLC, subject to approval as to form by the BWL's Legal Counsel. The amendment particulars are as follows: 1. The term of the Agreement will be extended twelve(12)months,with an expiration date of December 31, 1999. 2. The volume of coal to be supplied by Venture Energy shall range from a minimum of 500,000 tons to a maximum of 1,000,000 tons during calendar year 1999. 3. The delivered price payable during calendar year 1999 shall be based on the following table: Eckert Station Coal Transportation Purchase Equipment Type Component Component Price Steel Bottom Dump $4.35 $19.53 $23.88 Aluminum Bottom Dump $4.35 $19.02 $23.37 Erickson Station Coal Transportation Purchase Equipment Type Component Component Price Steel Bottom Dump $4.35 $19.53 $23.88 Aluminum Bottom Dump $4.35 $19.02 $23.37 Aluminum Rotary Dump $4.35 $17.86 $22.21 4. There will be a Volume Incentive Rebate based on the following schedule: Tonnage Shipped $/ton Rebate 0 to 650,000 tons $0.00 650,001 to 750,000 tons $0.70/ton for all tons> 500,000 tons greater than 750,000 tons $1.00/ton for all tons> 500,000 tons 5. The delivered price payable shall remain firm and free of escalation during the additional term of the Agreement. Motion by Commissioner O'Leary,seconded by Commissioner Pratt,to adopt the resolution. Action: Carried unanimously. #98-11-7 D. FIRST AMENDMENT TO AMENDED AND RESTATED COAL SALES AGREEMENT RESOLVED,That the Board approve the First Amendment to the Amended and Restated Coal Sales Agreement ("Agreement")with Coastal Coal Company,LLC, subject to approval as to form by the BWL's Legal Counsel. The amendment particulars are as follows: 1. The term of the Agreement will be extended twelve(12)months,with an expiration date of December 31,2000. Board Minutes Page 92 November 24, 1998 2. The annual volume commitment shall remain at 300,000 tons. 3. There will be a market price re-opener effective 1/1/2000. 4. The price effective 1/1/99 shall be$25.10 per net ton F.O.B. mine. 5. All other major terms and conditions shall remain the same. Motion by Commissioner O'Leary, seconded by Commissioner Pratt,to adopt the resolution. Action: Carried unanimously. #98-11-8 E. REMOVAL AND REUSE OF ASH RESOLVED, That the Board enter into an agreement with D.L. Kesler Construction, Inc. ("Kesler"),for the Removal and Reuse of Ash("Agreement")subject to approval as to form by the BWL's Legal Counsel. The Agreement particulars are as follows: 1. The initial term of the Agreement shall be for ten(10)years,with an expiration date of November 30, 2008. The Agreement may be extended thereafter on an annual basis by mutual agreement. 2. Kesler shall be required to remove and reuse all of the Erickson Station pond ash and bottom ash during the term of the Agreement. Additionally,Kesler plans to remove all of the ash presently in the pond during the first five(5)years of the Agreement. 3. Neither party shall receive any compensation for work performed under the Agreement. 4. BWL will be required to construct a bottom ash collection bin to segregate the bottom ash from the ash pond. This construction project is estimated to cost$1,300,000. In response to questions related to environmental issues, General Manager Pandy reported that D. L. Kesler Construction, Inc. has agreed to full compliance with all regulatory agencies and has a duty to annually provide the BWL with a list of all the required testing to be conducted. Motion by Commissioner Creamer, seconded by Commissioner Aquilina,to adopt the resolution. Action: Carried unanimously. #98-11-9 F. SALE OF OBSOLETE VEHICLES RESOLVED,That the sale of obsolete Board-owned vehicles and equipment be authorized through competitive bids. The items are BWL Unit Numbers 73-1 and 115-1. Motion by Commissioner Creamer, seconded by Commissioner Aquilina,to adopt the recommendation. Action: Carried unanimously. Page 93 Board Minutes November 24, 1998 UNFINISHED BUSINESS No unfinished business. NEW BUSINESS No new business. RESOLUTIONS BY THE BOARD OF COMMISSIONERS: RESOLUTION HONORING PETER P. PRATT WHEREAS, It is a privilege to acknowledge the commitment and leadership of Peter P.Pratt as he brings to a close his over three vears of dedicated service to this utility governing board. He is certainly deserving of our gratitude and praise for his contributions in helping to meet the needs of customers served by the Board of Water and Light. His resignation from the Board effective December 1, 1998, to relocate outside of the City of Lansing leaves a void that will be difficult to fill, and WHEREAS,Peter was appointed to the Board on October 9, 1995, as a Third Ward Commissioner. He was elected Chair Pro Tem in 1997 and continuously served in that capacity to the present. He also served as a member of the Nominating and Personnel Committees and on the Board's Special Committee on the Development of the Ottawa Street Power Station;and WHEREAS,Peter is a professional of the highest caliber, earning both the respect and confidence of this board. His leadership ability, commitment and integrity have been reflected in all his endeavors while serving cooperatively with members of the board and staff. His focus on addressing the needs of our community was instrumental in promoting the"Pennies for Power"program to provide needy families with utility shutoff protection. RESOLVED,That a unanimous accolade of praise and tribute be accorded Peter P. Pratt,on this 24th day of November, 1998, in recognition of his years of effective service as a member of the Board of water and Light Commissioners. We wish Peter and his lovely wife,Linda,and their beautiful daughter,Elizabeth,happiness in their new home. Carried unanimously. A watch was presented to Commissioner Pratt by General Manager Pandy on behalf of staff and employees as a token of appreciation for his service to the Board of Water and Light. GENERAL MANAGER'S REMARKS General Manager Pandy reported on the following items: BWL Bottled Water Called"Aquifer Chill." The BWL's promotional bottled water,Aquifer Chill, is now available to people in the community at$10 per case. Sale proceeds are being designated for the BWL's newly formed charity fund. Page 94 Board Minutes November 24, 1998 Moores Park Neighborhood Ash Fallout Concern. A letter addressed to Shane Powers was handed out in response to a complaint made on behalf of his father, Gay Powers, at the October 27, 1998,Board meeting. The letter outlines an investigative plan in process over the course of one year to find a long-term solution to resolve the fallout problem. Haco Drive Service Center Update. Additional security has been added to monitor Haco Drive facilities over a 24-hour period. A security guard can be reached by cell phone to escort persons to their vehicles during off-hours. Water System Contamination Threat. An individual sent letters to various news media on November 16 claiming to have contaminated the Lansing water supply. The BWL immediately took all necessary precautions to ensure the water supply was safe and secure,and confirmed that the water system was safe. Additional precautions have been taken to ensure the water supply remains secure. This individual has been apprehended by Lansing police. General Manager Pandy noted that a threat to the municipal water supply is also a Federal offense. Utility Services Supply Proposal to General Motors. A copy of a letter to General Motors' (GM)Worldwide Facilities Group from BWL Marketing Director Clyde Dugan was handed out for information. The BWL plans to submit a proposal to GM in January 1999 for utility services to the proposed Lansing Plant#1 site. City of Lansing Reviews Sewer Billing and Collection Fees. A copy of a draft letter to Public Service Director Michael Navabi from BWL Chief Financial Officer Dana Tousley was handed out for information. The City of Lansing has requested budget estimates from the BWL for sewer billing and collection fees based on two different assumptions. Option"A" would result in a separate billing for the three city services(sanitary sewer, storm water, refuse cart)mailed in a separate envelope. The BWL would perform all of the services currently being Provided, except city personnel would handle customer inquiries. Option"B"would result in a separate billing for the three city services mailed in a separate envelope. The City would perform all of the services currently being provided by the BWL,except the BWL would continue to read the water meters. BWL Helps Sponsor Silver Bells and Toys for Tots. Communications Director John Strickler,Public Information Analyst Nancy Tarras, and Erickson Station employees were congratulated for coordinating the"Cram the Caboose Campaign," for the annual Silver Bells in the City event on November 20, 1998. Over 1,200 toys donated by BWL employees and citizens filled the caboose for the Marines' Toys for Tots campaign. The BWL was the signature sponsor of Silver Bells this year. BWL Proposes Off-Peak Power to MPPA. General Manager Pandy reported on a proposal presented to the Michigan Public Power Agency(MPPA)to supply off-peak power based on marginal costing. Riverfront Property Development ProposaL A proposal to develop approximately 2-1/4 acres of Riverfront property into a multi-use facility located north of the Ottawa Power Station,adjacent to Shiawassee Street,was handed out for information. Mr. Pandy indicated that the developers are aware the Board does not want to do anything that would impede the development of the Ottawa Power Station. He briefed the Board on discussions held between the developers and the City related to parking being a key ingredient to development. Following discussion,the Board consented for Mr.Pandy to commence discussions with the City and other interested parties relative to opportunities for this Riverfront property. Analytical Review Report. Internal Auditor Kellie Willson distributed copies of her annual Analytical Review designed to provide a high level,long-term summary of overall BWL performance. The report also includes separate sections on the Electric Utility,the Water Utility,and the Steam Utility along with a comparison of each of the three utilities. A presentation on this topic will be made to the Board at a future meeting. Electric Deregulation Update. System Delivery Director Bill Cook and John Davis of Kheder and Associates, briefed the Commissioners on electric utility deregulation developments related to SB 1340 and SB 1342 recently introduced in the Michigan Senate. A score card listing critical electric utility deregulation issues previously identified by the Board were reviewed in detail. Mr. Cook noted that the issue of local control is addressed in the legislation,giving municipal electric systems the ability to opt out as the regulating body. Amendments to the bills Page 95 Board Minutes November 24, 1998 also permit municipal systems to retain their rate-making authority. The Senate is expected to take up electric deregulation legislation on December 2 and pass it over to the House of Representatives for consideration during the two-week, lame-duck session. REMARKS BY COMMISSIONERS No comments. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT. No persons spoke. EXCUSED ABSENCES Motion by Commissioner Pratt, seconded by Commissioner Aquilina,that the absence of Commissioner Christian be excused. Action: Carried unanimously. ADJOURNMENT There being no further business, the meeting adjourned at 7:09 p.m. Is/Mary E. Sova, Secretary Filed: December 1, 1998 Marilynn Slade, City Clerk Page 86 MINUTES OF BOARD OF COMMISSIONERS' MEETING' LANSING BOARD OF WATER AND LIGHT CLE Tuesday,November 24, 1998 The Board of Commissioners met in regular session at 5:30 p.m., in the Administration Building, 1232 Haco Drive,Lansing,Michigan. The meeting was called to order by the Chair,Diane Royal. Present: Commissioners Aquilina, Callen, Creamer,O'Leary,Pratt,Royal and Werbelow(by speakerphone). Absent: Commissioner Christian. The dPrl2red a nvo=premc APPROVAL OF MINUTES Motion was made by Commissioner O'Leary, seconded by Commissioner Aquilina, to approve the minutes of regular session held October 27, 1998. Carried unanimously. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW, OR AT THE END OF THE MEETING. No persons spoke. COMMUNICATIONS A letter from Commissioner Peter Pratt(3rd Ward)was received advising of his resignation from the Board effective December 1, 1998, due to his relocation outside of the City of Lansing. Received with regret, and placed on file. REPORTS OF COMMITTEES (Background material on each of the items below may be obtained from the Secretary.) 998-11-1 FINANCE COMMITTEE REPORT The Finance Committee met with the external auditors on October 26, 1998, to review the audit of the BWL Annual Financial Statements for 1997-98. Page 87 Board Minutes November 24, 1998 Present were Commissioners Rosemarie Aquilina(Chair), Charles Creamer,and Judson Werbelow. Also in attendance were Assistant General Manager John Elashkar, Chief Financial Officer Dana Tousley, Internal Auditor Kellie Willson, General Accounting Manager Dave Cluley,and Corporate Secretary Mary Sova. Terry Fuller, Managing Partner of Deloitte&Touche,LLP, and Rudy Reyes,accounting team member of Deloitte &Touche,briefed the Commissioners on significant 1998 highlights for the following financial statements: 1. Board of Water and Light 2. Employees' Defined Benefit Pension Plan 3. Employees' Defined Contribution Pension Plan The summary report is filed with the Corporate Secretary. Mr. Fuller reported that the audit reports express a clean,unqualified opinion on the financial statements. There were no material weaknesses noted in procedures or controls. A letter from Deloitte&Touche concerning the BWL's Year 2000 readiness process will be forthcoming for the C ominissiouci3 re'vicw. Tuc audit=p-orts were filed with the City of Lansing by Deloitte&Touche on October 1, 1998. Chief Financial Officer Dana Touslev briefed the Committee on the BWL's operating cash accounts consisting of two classes of cash accounts: (a)those required by bond resolution and(b)those set up by BWL Commissioner resolution as a prudent management practice. The Finance Committee recommends the following resolution: #98-11-2 A UTHORIZATION TO FILE A UDIT REPORTS WITH THE STATE TREASURER RESOLVED,That the Corporate Secretary be directed to file copies of the three audit reports and auditing procedures reports with the State Treasurer as required by law. RESOLVED FURTHER,That publishing a condensed copy of the BWL audit report in THE LANSING STATE JOURNAL is not required by law; however, it may be done at the discretion of the General Manager. Rosemarie Aquilina, Chair FINANCE COMMITTEE Motion by Commissioner Aquilina, seconded by Commissioner O'Leary,to adopt the report of the Finance Committee, inclusive of Resolution#98-11-2. Action: Carried unanimously. Internal Auditor Kellie Willson reported that the City Council's Ways and Means Committee met on November 18, 1998, to review the Board of Water and Light audit reports. Two areas of concern raised at the Ways and Means Committee were the(1)return on equity payment to the city and(2)over-funding of the pension plan. The Board discussed the need to address these issues with the City Council. Board Minutes Page 88 November 24, 1998 #98-11-3 COMMITTEE OF THE WHOLE REPORT The Committee of the Whole met on November 10, 1998,to receive an update on economic development plans in the Lansing area and electric deregulation activities in the Michigan legislature. Present were Commissioners A quilina, Callen, Christian, O Leary, Pratt, and Royal. Excused Absences: Commissioners Creamer and Werbelow. Economic Development Opportunity. The Committee of the Whole met with a representative from a major industrial firm to discuss proposed site and building plans for their facility. The project overview included the firm's corporate strategy,project cost estimates and financial projections. General Manager Pandy also briefed the Committee about discussions taking place with large energy users regarding energy service needs and providing utility services in their quest for more efficient, profitable operations. The fe-gsibility of deveinrina a n r.V ctarezrlent to n*ovide a g�udanCe for the BWL to invest in customer energy conversion equipment beyond the meter(point-of-service)to encourage economic development in the BWL service area was discussed A statement is to be drafted by the General Manager for further discussion. Electric Deregulation. Bill Cook,Director of System Control,briefed the Board on electric deregulation activities in the Michigan legislature and issues relating to municipal electric utilities. Peter Pratt, Chair Pro Tem COMMITTEE OF THE WHOLE Motion by Commissioner O'Leary, seconded by Commissioner Aquilina,to adopt the report of the Committee of the Whole as presented. Action: Carried unanimously. GENERAL MANAGER'S RECOMMENDATIONS (Background material on each of the items below may be obtained from the Secretary.) The following items were recommended for approval: #98-11-4 A. WELLHEAD PROTECTION PLAN PARTICIPATION WHEREAS, the City of Lansing through its Board of Water and Light, operates the largest municipal water supply system in Michigan completely from 128 wells;and WHEREAS, the City of Lansing through its Board of Water and Light is concerned with the health,safety and welfare of the citizens in the Greater Lansing Area;and WHEREAS,contamination of groundwater can and does occur as a result of a variety of land use activities;and WHEREAS, the costs of prevention of contamination of the wells is far outweighed by the costs of remediating their contamination or of obtaining an alternate water supply in the event of contamination;and Page 89 Board Minutes November 24, 1999 WHEREAS,the protection of current and potential future sources of groundwater is of the utmost importance to the City of Lansing as a significant resource to be protected; and WHEREAS, the Board of Water and Light has a strong history of supporting environmental initiatives/efforts to preserve clean drinking water/public health of its citizens;and WHEREAS, the Board of Water and Light through its participation on the Groundwater Management Board continues its commitment to facilitate the development of a regional wellhead protection plan for the Greater Lansing Area. NOW THEREFORE BE IT RESOLVED that the Lansing Board of Water and Light Commissioners declare their support of those efforts on behalf of the City and the Board of Water and Light to protect groundwater and particularly the wellhead protection areas delineated for the Lansing Area Wellhead Protection Project. FURTHER RESOLVED that the Board of Water and Light requests the administration to utilize the resources necessary to actively participate in this regional wellhead protection prograam d.,:elcpirg a we!'he--d-mt---don plan for the Board of Water and Light water supply system. Motion by Commissioner Creamer, seconded by Commissioner Aquilina, to adopt the resolution. Action: Carried unanimously. #98-11-5 B. LANSING SUSTAINABLE COMMUNITY INITIATIVE TASEFORCE WHEREAS,The City of Lansing through its Board of Water and Light,operates the largest municipal water supply system in Michigan completely from groundwater sources;and WHEREAS, the Board of Water and Light has recognized the necessity of groundwater planning on a regional basis by its continued participation in the Regional Groundwater Management Board within a nine township area for the last 15 years since its inception in 1983;and WHEREAS, the Board of Water and Light is committed to participating with Tri-County Regional Planning Commission,the State of Michigan,Michigan State University, other educational business and municipal entities to provide information about the existing groundwater situation and conditions through the development and use of educational and promotional materials;and WHEREAS,the Board of Water and Light is interested in enhancing the opportunities for the community to be involved in the planning and implementation of Groundwater Protection Plans;and WHEREAS,the City of Lansing through its Economic Development Corporation facilitates retention and recruitment of businesses and assists in identifying sites for relocation and/or expansion;and WHEREAS,the Economic Development Corporation is also designated as the City's Brownfield Redevelopment Board charged with the responsibility of developing a Brownfields Redevelopment Plan through which increased tax revenues can be captured to provide funds for initial cleanup or repayment to developers who remediate sites within the City of Lansing,and WHEREAS, the City of Lansing is committed to developing,in conjunction with its many partners,a system which promotes economic development,brownfields reclamation, expanded business and industrial base while, at the same time,promoting environment education and groundwater protection;and Board Minutes Page 90 November 24, 1998 WHEREAS, the City of Lansing through its Department of Planning and Neighborhood Development and the Board of Water and Light, in collaboration with Michigan State University, the State of Michigan Department of Environmental Quality, the Michigan Jobs Commission, Tri-County Regional Planning Commission, Ingham County Department of Public Health,The Lansing Economic Development Corporation/Brownfields Redevelopment Authority, other Public Agencies and interested members of the general public, have formed the Lansing Sustainable Community Initiative Taskforce to coordinate the development of a decision making model and its implementation; and WHEREAS,the U. S. Environmental Protection Agency(EPA)is soliciting proposals for Sustainable Development Challenge Grants through November 24, 1998,for amounts not to exceed$200,000 to be used to develop the system outlined above. NOW THEREFORE BE IT RESOLVED that the Board of Water and Light Commissioners enthusiastically endorse the development and implementation of a decision making process which: * Protects the RAmnr•ol C-rc ndwater Aquifer • Protects the Regional Drinking Water System • Creates new job and business opportunities within the City • Creates work force educational opportunities at MSU and LCC • Remediates Brownfield sites and expands the business and industrial base • Promotes environmental education within the community • Integrates and modifies existing regulatory systems to enhance groundwater protection • Expands the local tax base • Reduces urban sprawl Enhances community opportunities for input and use of the system • Promotes regional cooperation and mutual assistance in protecting our vital water resources while encouraging business and employment growth,expanding tax base and increasing community awareness which will sustain and strengthen the Greater Lansing Area as a vital, rich and resourceful community in which to live,work and raise a family. The LSCI, is planned in two phases. The first phase involves designing and building a database(using ArcInfo) with an associated Geographic Information System(GIS)based on community information needs and compilation of existing data from a variety of sources. With the completion of the database and GIS,the information can be utilized by: the business and banking interests, the general public, educational institutions,and government agencies to make locally appropriate decisions concerning the balance between environmental protection and economic growth. Ultimately, there are six goats for this project: 1. Enhance Public Participation 2. Foster Community Commitment to Environmental Protection through Education 3. Create Comprehensive Database to Increase Capacity for Effective Decision Making at City and Regional Levels 4. Build Community Identity through Strategic Planning 5. Re-engineer and Reorganize the Development and Permitting Process 6. Create a Monitoring System for continued Community reinvestment Motion by Commissioner Aquilina, seconded by Commissioner Pratt,to adopt the resolution. Action: Carried unanimously. Page 91 Board Minutes November 24, 1998 #98-11-6 C. FIRST AMENDMENT TO COAL SUPPLY AGREEMENT RESOLVED,That the Board approve the First Amendment to the Coal Supply Agreement("Agreement")with Venture Energy,LLC, subject to approval as to form by the BWL's Legal Counsel. The amendment particulars are as follows: 1. The term of the Agreement will be extended twelve(12)months,with an expiration date of December 31, 1999. 2. The volume of coal to be supplied by Venture Energy shall range from a minimum of 500,000 tons to a maximum of 1,000,000 tons during calendar year 1999. 3. The delivered price payable during calendar year 1999 shall be based on the following table: Eckert Station Coal Transportation Purchase Equipment Type Component Component Price Steel Bottom Dump $4.35 $19.53 $23.88 Aluminum Bottom Dump $4.35 $19.02 $23.37 Erickson Station Coal Transportation Purchase Equipment Type Component Component Price Steel Bottom Dump $4.35 $19.53 $23.88 Aluminum Bottom Dump $4.35 $19.02 $23.37 Aluminum Rotary Dump $4.35 $17.86 $22.21 4. There will be a Volume Incentive Rebate based on the following schedule: Tonnage Shipped $/ton Rebate 0 to 650,000 tons $0.00 650,001 to 750,000 tons $0.70/ton for all tons> 500,000 tons greater than 750,000 tons $1.00/ton for all tons> 500,000 tons 5. The delivered price payable shall remain firm and free of escalation during the additional term of the Agreement. Motion by Commissioner O'Leary, seconded by Commissioner Pratt,to adopt the resolution. Action: Carried unanimously. #98-11-7 D. FIRST AMENDMENT TO AMENDED AND RESTATED COAL SALES AGREEMENT RESOLVED,That the Board approve the First Amendment to the Amended and Restated Coal Sales Agreement ("Agreement")with Coastal Coal Company,LLC, subject to approval as to form by the BWL's Legal Counsel. The amendment particulars are as follows: 1. The term of the Agreement will be extended twelve(12)months,with an expiration date of December 31, 2000. Board Minutes Page 92 November 24, 1998 2. The annual volume commitment shall remain at 300,000 tons. 3. There will be a market price re-opener effective 1/1/2000. 4. The price effective 1/1/99 shall be$25.10 per net ton F.O.B. mine. 5. All other major terms and conditions shall remain the same. Motion by Commissioner O'Leary, seconded by Commissioner Pratt,to adopt the resolution. Action: Carried unanimously. #98-11-8 E. REMOVAL AND REUSE OF ASH RESOLVED, That the Board enter into an agreement with D.L. Kesler Construction, Inc. ("Kesler"),for the Removal and Reuse of Ash("Agreement")subject to approval as to form by the BWL's Legal Counsel. The Agreement particulars are as follows: 1. The initial term of the Agreement shall be for ten(10)years,with an expiration date of November 30, 2008. The Agreement may be extended thereafter on an annual basis by mutual agreement. 2. Kesler shall be required to remove and reuse all of the Erickson Station pond ash and bottom ash during the term of the Agreement Additionally,Kesler plans to remove all of the ash presently in the pond during the first five(5)years of the Agreement. 3. Neither party shall receive any compensation for work performed under the Agreement. 4. BWL will be required to construct a bottom ash collection bin to segregate the bottom ash from the ash pond. This construction project is estimated to cost$1,300,000. In response to questions related to environmental issues, General Manager Pandy reported that D. L. Kesler Construction, Inc. has agreed to full compliance with all regulatory agencies and has a duty to annually provide the BWL with a list of all the required testing to be conducted. Motion by Commissioner Creamer, seconded by Commissioner Aquilina,to adopt the resolution. Action: Carried unanimously. #98-11-9 F. SALE OF OBSOLETE VEHICLES RESOLVED,That the sale of obsolete Board-owned vehicles and equipment be authorized through competitive bids. The items are BWL Unit Numbers 73-1 and 115-1. Motion by Commissioner Creamer, seconded by Commissioner Aquilina,to adopt the recommendation. Action: Carried unanimously. Page 93 Board Minutes November 24, 1998 UNFINISHED BUSINESS No unfinished business. NEW BUSINESS No new business. RESOLUTIONS BY THE BOARD OF COMMISSIONERS: RESOLUTION HONORING PETER P. PRATT WHEREAS. It is a privilege to acknowledge the commitment and leadership of Peter P. Pratt as he brings to a close his over three years of dedicated service to this utility governing board. He is certainly deserving of our gratitude and praise for his contributions in helping to meet the needs of customers served by the Board of Water and Light. His resignation from the Board effective December 1, 1998, to relocate outside of the City of Lansing leaves a void that will be difficult to fill;and WHEREAS,Peter was appointed to the Board on October 9, 1995,as a Third Ward Commissioner. He was elected Chair Pro Tern in 1997 and continuously served in that capacity to the present. He also served as a member of the Nominating and Personnel Committees and on the Board's Special Committee on the Development of the Ottawa Street Power Station;and WHEREAS,Peter is a professional of the highest caliber,earning both the respect and confidence of this board. His leadership ability, commitment and integrity have been reflected in all his endeavors while serving cooperatively with members of the board and staff. His focus on addressing the needs of our community was instrumental in promoting the"Pennies for Power"program to provide needy families with utility shutoff protection. RESOLVED,That a unanimous accolade of praise and tribute be accorded Peter P. Pratt,on this 24th day of November, 1998, in recognition of his years of effective service as a member of the Board of Water and Light Commissioners. We wish Peter and his lovely wife,Linda,and their beautiful daughter,Elizabeth,happiness in their new home. Carried unanimously. A watch was presented to Commissioner Pratt by General Manager Pandy on behalf of staff and employees as a token of appreciation for his service to the Board of Water and Light. GENERAL MANAGER'S REMARKS General Manager Pandy reported on the following items: BWL Bottled Water Called"Aquifer Chill." The BWL's promotional bottled water, Aquifer Chill,is now available to people in the community at$10 per case. Sale proceeds are being designated for the BWL's newly formed chanty fund. Board Minutes Page 94 November 24, 1998 Moores Park Neighborhood Ash Fallout Concern. A letter addressed to Shane Powers was handed out in response to a complaint made on behalf of his father, Gay Powers, at the October 27, 1998,Board meeting. The letter outlines an investigative plan in process over the course of one year to find a long-term solution to resolve the fallout problem. Haco Drive Service Center Update. Additional security has been added to monitor Haco Drive facilities over a 24-hour period. A security guard can be reached by cell phone to escort persons to their vehicles during off-hours. Water System Contamination Threat. An individual sent letters to various news media on November 16 claiming to have contaminated the Lansing water supply. The BWL immediately took all necessary precautions to ensure the water supply was safe and secure,and confirmed that the water system was safe. Additional precautions have been taken to ensure the water supply remains secure. This individual has been apprehended by Lansing police. General Manager Pandy noted that a threat to the municipal water supply is also a Federal offense. Utility Services Supply Proposal to General Motors. A copy of a letter to General Motors' (GM)Worldwide Facilities Group from BWL viarketing Director Clyde Dugan was 1 :.ded out for info,~mAdon. The B NL p'_aris to submit a proposal to GM in January 1999 for utility services to the proposed Lansing Plant#1 site. City of Lansing Reviews Sewer Billing and Collection Fees. A copy of a draft letter to Public Service Director Michael Navabi from BWL Chief Financial Officer Dana Tousley was handed out for information. The City of Lansing has requested budget estimates from the BWL for sewer billing and collection fees based on two different assumptions. Option"A" would result in a separate billing for the three city services(sanitary sewer, storm water, refuse cart)mailed in a separate envelope. The BWL would perform all of the services currently being provided, except city personnel would handle customer inquiries. Option`B"would result in a separate billing for the three city services mailed in a separate envelope. The City would perform all of the services currently being provided by the BWL,except the BWL would continue to read the water meters. BWL Helps Sponsor Silver Bells and Toys for Tots. Communications Director John Strickler,Public Information Analyst Nancy Tarras, and Erickson Station employees were congratulated for coordinating the"Cram the Caboose Campaign," for the annual Silver Bells in the City event on November 20, 1998. Over 1,200 toys donated by BWL employees and citizens filled the caboose for the Marines' Toys for Tots campaign. The BWL was the signature sponsor of Silver Bells this year. BWL Proposes Off-Peak Power to MPPA. General Manager Pandy reported on a proposal presented to the Michigan Public Power Agency(MPPA)to supply off-peak power based on marginal costing. Riverfront Property Development ProposaL A proposal to develop approximately 2-1/4 acres of Riverfront property into a multi-use facility located north of the Ottawa Power Station, adjacent to Shiawassee Street,was handed out for information. Mr. Pandy indicated that the developers are aware the Board does not want to do anything that would impede the development of the Ottawa Power Station. He briefed the Board on discussions held between the developers and the City related to parking being a key ingredient to development. Following discussion, the Board consented for Mr. Pandy to commence discussions with the City and other interested parties relative to opportunities for this Riverfront property. Analytical Review Report. Internal Auditor Kellie Willson distributed copies of her annual Analytical Review designed to provide a high level, long-term summary of overall BWL performance. The report also includes separate sections on the Electric Utility, the Water Utility,and the Steam Utility along with a comparison of each of the three utilities. A presentation on this topic will be made to the Board at a future meeting. Electric Deregulation Update. System Delivery Director Bill Cook and John Davis of Kheder and Associates, briefed the Commissioners on electric utility deregulation developments related to SB 1340 and SB 1342 recently introduced in the Michigan Senate. A score card listing critical electric utility deregulation issues previously identified by the Board were reviewed in detail. Mr. Cook noted that the issue of local control is addressed in the legislation, giving municipal electric systems the ability to opt out as the regulating body. Amendments to the bills Page 95 Board Minutes November 24, 1998 also permit municipal systems to retain their rate-making authority. The Senate is expected to take up electric deregulation legislation on December 2 and pass it over to the House of Representatives for consideration during the two-week, lame-duck session. REMARKS BY COMMISSIONERS No comments. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT. No persons spoke. EXCUSED ABSENCES Motion by Commissioner Pratt, seconded by Commissioner Aquilina,that the absence of Commissioner Christian be excused. Action: Carried unanimously. ADJOURNMENT There being no further business,the meeting adjourned at 7:09 p.m. Is/Mary E. Sovu,;Secretary Filed: December 1, 1998 Marilynn Slade, City Clerk 14:42 DEC 01, 1998 ID: BORRD OF WATER & LIG TEL NO: (517) 371-6203 463874 PRGE: 2111 Page 86 MINUTES OF BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT :;i! j f: 1 0 k L Tuesday,November 24, 1998 i j r cLER The Board of Comnussioners met in regular session at 5:30 p.m.,in the Administration Building, 1232 Haco Drive,Lansing,Michigan. The meeting was called to order by the Chair,Diane Royal. Present: Commissioners Aquilina, Callen, Creamer,O'Leary,Pratt,Royal and Werbelow(by speakerphone). Absent: Commissioner Christian. The Secretary declared a quorum present. APPROVAL OF MINUTES Motion was made by Commissioner O'Leary,seconded by Commissioner Aquilina,to approve the minutes of regular session held October 27, 1998. Carried unanimously. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW, OR AT THE END OF THE MEETING. No persons spoke. COMMUNICATIONS AND PETITIONS A letter from Commissioner Peter Pratt(3rd Ward)was received advising of his resignation from the Board effective December 1, 1998,due to his relocation outside of the City of Lansing. Received with regret,and placed on file. REPORTS OF COMMITTEES (Background material on each of the items below may be obtained from the Secretary.) #98-11-1 FINANCE COMMITTEE REPORT The Finance Committee met with the external auditors on October 26, 1998,to review the audit of the BWL Annual Financial Statements for 1997-98. nFr—P1—1 R9R 1 d:dR RnARn nF WATER R, I 1 fa 9?% P.02 14:42 DEC 01, 1998 ID: BOARD OF WATER & LIG TEL NO: (517) 371-6203 #63874 PAGE: 3/11 Page 87 Board Minutes November 24, I998 Present were Commissioners Rosemarie Aquilina(Chair), Charles Creamer,and Judson Werbelow. Also in attendance were Assistant General Manager John Elashkar, Chief Financial Officer Dana TousIey,Internal Auditor Kellie Willson,General Accounting Manager Dave Cluley,and Corporate Secretary Mary Sova. Terry Fuller,Managing Partner of Deloitte&Touche,LLP,and Rudy Reyes,accounting team member of Deloitte &Touche,briefed the Commissioners on significant 1998 highlights for the following financial statements: 1. Board of Water and Light 2. Employees'Defined Benefit Pension Plan 3. Employees'Defined Contribution Pension Plan The summary report is filed with the Corporate Secretary. Mr. Fuller reported that the audit reports express a clean,unqualified opinion on the financial statements.There were no material weaknesses noted in procedures or controls. A letter from Deloitte&Touche concerning the BWL's Year 2000 readiness process will be forthcoming for the Commissioners review. The audit reports were filed with the City of Lansing by Deloitte&Touche on October 1, 1998. Chief Financial Officer Dana Tousley briefed the Committee on the BWL's operating cash accounts consisting of two classes of cash accounts: (a)those required by bond resolution and(b)those set up by BWL Commissioner resolution as a prudent management practice. The Finance Committee recommends the following resolution: #98-11-2 A UTHORIZATION TO FILE A UDIT REPORTS WITH THE STATE TREASURER RESOLVED,That the Corporate Secretary be directed to file copies of the three audit reports and auditing procedures reports with the State Treasurer as required by law. RESOLVED FURTHER,That publishing a condensed copy of the BWL audit report in THE LANSING STATE IouRNAI is not required by law;however,it may be done at the discretion of the General Manager_ RosemarieAquilina, Chair FINANCE COMMITTEE Motion by Commissioner Aquilina,seconded by Commissioner O'Leary,to adopt the report of the Finance Committee,inclusive of Resolution#98-11-2. Action: Carried unanimously. Internal Auditor Kellie Willson reported that the City Council's Ways and Means Committee met.on November 18, 1998,to review the Board of Water and Light audit reports. Two areas of concern raised at the Ways and Means Committee were the(1)return on equity payment to the city and(2)over-finding of the pension plan. The Board discussed the need to address these issues with the City Council. nF(--Gil-199R 14:4R B❑ARD ❑F WATER & LIG 97% P.03 14:43 DEC 01, 1998 ID: BOARD OF WATER & LIG TEL NO: (517) 371-6203 #63874 PAGE: 4/11 Board Minutes Page 88 November 24, 1998 #98-11-3 COMMITTEE OF THE WHOLE REPORT The Committee of the Whole met on November 10, 1998,to receive an update on economic development plans in the Lansing area and electric deregulation activities in the Michigan legislature. Present were Commissioners Aquilina, Callen, Christian, O'Leary, Pratt, and Royal. Excused Absences: Commissioners Creamer and Werbelow. Economic Development Opportunity. The Committee of the Whole met with a representative from a major industrial firm to discuss proposed site and building plans for their facility. The project overview included the fnm's corporate strategy,project cost estimates and financial projections. General Manager Pandy also briefed the Committee about discussions taldng place with large energy users regarding energy service needs and providing utility services in their quest for more efficient,profitable operations. The feasibility of developing a policy statement to provide a guidance for the BWL to invest in customer energy conversion equipment beyond the meter(point-of-service)to encourage economic development in the B WL service area was discussed. A statement is to be drafted by the General Manager for further discussion. Electric Deregulation.Bill Cook,Director of System Control,briefed the Board on electric deregulation activities in the Michigan legislature and issues relating to municipal electric utilities. Peter Pratt, Chair Pro Tem COMMITTEE OF THE WHOLE Motion by Commissioner O'Leary,seconded by Commissioner Aquilina,to adopt the report of the Committee of the Whole as presented. Action: Carried unanimously. GENERAL MANAGER'S RECOMMENDATIONS (Background material on each of the items below may be obtained from the Secretary.) The following items were recommended for approval: 498-11-4 A. WELLHEAD PROTECTION PLAN PARTICIPATION WIF-REAS,the City of Lansing through its Board of Water and Light,operates the largest municipal water supply system in Michigan completely from 128 wells;and WHEREAS,the City of Lansing through its Board of Water and Light is concerned with the health,safety and welfare of the citizens in the Greater Lansing Area;and WHEREAS, contamination of groundwater can and does occur as a result of a variety of land use activities;and WHEREAS,the costs of prevention of contamination of the wells is far outweighed by the costs of remediating their contamination or of obtaining an alternate water supply in the event of contamination;and np -p1-1 qqp 1 d:dq Pnopr) nF I,IATFR R. I T r P.04 14:44 DEC 01, 1998 ID: BOARD OF WATER & LIG TEL NO: (517) 371-6203 #63874 PAGE: 5/11 Page 89 Board Minutes November 24, I 998 WHEREAS,the protection of current and potential future sources of groundwater is of the utmost importance to the City of Lansing as a significant resource to be protected;and WHEREAS,the Board of Water and Light has a strong history of supporting en-Oronmental initiatives/efforts to preserve clean drinking water/public health of its citizens;and WHEREAS,the Board of Water and Light through its participation on the Groundwater Management Board continues its commitment to facilitate the development of a regional wellhead protection plan for the Greater Lansing Area. NOW THEREFORE BE 1T RESOLVED that the Lansing Board of Water and Light Commissioners declare their support of those efforts on behalf of the City and the Board of Water and Light to protect groundwater and particularly the wellhead protection areas delineated for the Lansing Area Wellhead Protection Project. FURTHER RESOLVED that the Board of Water and Light requests the administration to utilize the resources necessary to actively participate in this regional wellhead protection program by developing a wellhead protection plan for the Board of Water and Light water supply system. Motion by Commissioner Creamer,seconded by Commissioner Aquilina,to adopt the resolution. Action: Carried unanimously. #98-11-5 B. LANSING SUSTAINABLE COMMUNITY INITIATIVE TASKFORCE WHEREAS,The City of Lansing through its Board of Water and Light,operates the largest municipal water supply system in Michigan completely from groundwater sources;and WHEREAS,the Board of Water and Light has recognized the necessity of groundwater planning on a regional basis by its continued participation in the Regional Groundwater Management Board within a nine township area for the last 15 years since its inception in 1983;and WHEREAS,the Board of Water and Light is committed to participating iidth Tri-County Regional Planning Commission,the State of Michigan,Michigan State University,other educational business and municipal entities to provide information about the existing groundwater situation and conditions through the development and use of educational and promotional materials;and WHEREAS,the Board of Water and Light is interested in enhancing the opportunities for the community to be involved in the planning and implementation of Groundwater Protection Plans;and WHEREAS,the City of Lansing through its Economic Development Corporation facilitates retention and recruitment of businesses and assists in identifying sites for relocation and/or expansion;and WHEREAS,the Economic Development Corporation is also designated as the City's Brownfield Redevelopment Board charged with the responsibility of developing a Brownfields Redevelopment Plan through which increased tax revenues can be captured to provide funds for initial cleanup or repayment to developers who remediate sites within the City of Lansing; and WHEREAS,the City of Lansing is committed to developing,in conjunction with its many partners, a system which promotes economic development,brownfields reclamation, expanded business and industrial base while,at the same time;promoting environment education and groundwater protection;and nr7('-n4_9 000 �A•cZa nnnon nG I,IDTCZD 9 1 T r. P_G15 14:45 DEC 01, 1998 ID: BOARD OF WATER & LIG TEL NO: (517) 371-6203 #63B74 PAGE: 6/11 Board Minutes Page 90 November 24, 1998 WHEREAS,the City of Lansing through its Department of Planning and Neighborhood Development and the Board of Water and Light,in collaboration with Michigan State University,the State of Michigan Department of Environmental Quality,the Michigan Jobs Commission,Tri-County Regional Planning Commission, Ingham County Department of Public Health,The Lansing Economic Development Corporation/Brownfields Redevelopment Authority,other Public Agencies and interested members of the general public,have formed the Lansing Sustainable Community Initiative Taskforce to coordinate the development of a decision making model and its implementation;and WHEREAS,the U. S.Environmental Protection Agency(EPA)is soliciting proposals for Sustainable Development Challenge Grants through November 24, 1999,for amounts not to exceed$200,000 to be used to develop the system outlined above. NOW THEREFORE BE IT RESOLVED that the Board of Water and Light Commissioners enthusiastically endorse the development and implementation of a decision making process which: • Protects the Regional Groundwater Aquifer • Protects the Regional Drinking Water System • Creates new job and business opportunities within the City • Creates work force educational opportunities at MSU and LCC • Remediates Brownfield sites and expands the business and industrial base • Promotes environmental education within the community • Integrates and modifies existing regulatory systems to enhance groundwater protection • Expands the local tax base • Reduces urban sprawl • Enhances community opportunities for input and use of the system • Promotes regional cooperation and mutual assistance in protecting our vital water resources while encouraging business and employment growth,expanding tax base and increasing community awareness which will sustain and strengthen the Greater Lansing Area as a vital,rich and resourceful community in which to live,work and raise a family. The LSCI,is planned in two phases. The first phase involves designing and building a database(using ArcInfo) with an associated Geographic Information System(GIS)based on community information needs and compilation of existing data from a variety of sources. With the completion of the database and GIS,the information can be utilized by: the business and banking interests,the general public,educational institutions,and government agencies to make locally appropriate decisions concerning the balance between environmental protection and economic growth. Ultimately,there are six goals for this project: I. Enhance Public Participation 2. Fostcr Community Commitment to Environmental Protection through Education 3. Create Comprehensive Database to Increase Capacity for Effective Decision Making at City and Regional Levels 4. Build Community Identity through Strategic Planning 5. Re-engineer and Reorganize the Development and Permitting Process 6. Create a Monitoring System for continued Community reinvestment Motion by Commissioner Aquilina,seconded by Commissioner Pratt,to adopt the resolution. Action: Carried unanimously. — .nnn 4 A-C A nnnnn n� 1 in-r= 0 1 Tr O'7V P PC, 14:45 DEC 01, 1998 ID: BOARD OF WATER & LIG TEL NO: (517) 371-6203 #k63874 PAGE: 7/11 Page 91 Board Minutes November 24,I 998 #98-11-6 C. FIRST AMENDMENT TO COAL SUPPLY AGREEMENT RESOLVED,That the Board approve the First Amendment to the Coal Supply Agreement("Agreement")with Venture Energy,LLC, subject to approval as to form by the BWL's Legal Counsel. The amendment particulars are as follows: 1. The term of the Agreement will be extended twelve(12)months,with an expiration date of December 31, 1999. 2. The volume of coal to be supplied by Venture Energy shall range from a minimum of 500,000 tons to a maximum of 1,000,000 tons during calendar year 1999. 3. The delivered price payable during calendar year 1999 shall be based on the following table: Eckert Station Coal Transportation Purchase Equipment Type Component Component Price Steel Bottom Dump $4.35 $19.53 $23.88 Aluminum Bottom Dump $4.35 $19.02 $23.37 Erickson Station Coal Transportation Purchase Equipment Type Component Component Price Steel Bottom Dump $4.35 $19.53 $23.88 Aluminum Bottom Dump $4.35 $19.02 $23.37 Aluminum Rotary Dump $4.3 5 $17.86 $22.21 4. There will be a Volume Incentive Rebate based on the following schedule: Tonnage Shipped Mon Rebate 0 to 650,000 tons $0.00 650,001 to 750,000 tons $0.70/ton for all tons>500,000 tons greater than 750,000 tons $1.00/ton for all tons>500,000 tons 5. The delivered price payable shall remain firm and free of escalation during the additional term of the Agreement. Motion by Commissioner O'Leary,seconded by Commissioner Pratt,to adopt the resolution. Action: Carried unanimously. #98-11-7 D. FIRST AMENDMENT TO AMENDED AND RESTATED COAL SALES AGREEMENT RESOLVED,That the Board approve the First Amendment to the Amended and Restated Coal Sales Agreement ("Agreement")with Coastal Coal Company,LLC,subject to approval as to form by the BWL's Legal Counsel. The amendment particulars are as follows: L The term of the Agreement will be extended twelve(12)months,with an expiration date of December 3I,2000. T1Ff-Gil-9 qqP 1 d:S1 Pnop 1 np I,IQTFR R. I T R 97% P.07 14:46 DEC 01, 1998 ID: BOARD OF WATER & LIG TEL NO: (517) 371-6203 *63874 PAGE: 8/11 Board Minutes Page 92 November 24,1998 2. The annual volume commitment shall remain at 300,000 tons. 3. There will be a market price re-opener effective 1/l/2000. 4. The price effective 111/99 shall be$25.10 per net ton F.O.B.mine. 5. All other major terms and conditions shall remain the same. Motion by Commissioner O'Leary,seconded by Commissioner Pratt,to adopt the resolution. Action: Carried unanimously. #98-11-8 E. REMOVAL AND REUSE OF ASH RESOLVED,That the Board enter into an agreement with D.L.Kesler Construction,Inc. ("Kesler"),for the Removal and Reuse of Ash("Agreement")subject to approval as to form by the BWL's Legal Counsel. The Agreement particulars are as follows: 1. The initial term of the Agreement shall be for ten(10)years,with an expiration date of November 30, 2008. The Agreement may be extended thereafter on an annual basis by mutual agreement. 2. Kesler shall be required to remove and reuse all of the Erickson Station pond ash and bottom ash dining the term of the Agreement. Additionally,Kesler plans to remove all of the ash presently in the pond during the first five(5)years of the Agreement. 3. Neither party shall receive any compensation for work performed under the Agreement. 4. BWL will be required to construct a bottom ash collection bin to segregate the bottom ash from the ash pond. This construction project is estimated to cost$1,300,000. In response to questions related to environmental issues,General Manager Pandy reported that D.L.Kesler Construction,Inc. has agreed to full compliance with all regulatory agencies and has a duty to annually provide the BWL with a Iist of all the required testing to be conducted. Motion by Commissioner Creamer,seconded by Commissioner AquiIina,to adopt the resolution_ Action: Carried unanimously. 498-11-9 F. SALE OF OBSOLETE VEHICLES RESOLVED,That the sale of obsolete Board-owned vehicles and equipment be authorized through competitive bids. The items are BWL Unit Numbers 73-1 and 115-1. Motion by Commissioner Creamer,seconded by Commissioner Aquilina,to adopt the recommendation. Action: Carried unanimously. nErl-nA_,oao 4 n•c�'l nnnon nG I.IDTCI7 9 1 Tr 4'7!/ P_AR 14:46 DEC 01, 199B ID: BOARD OF WATER & LIG TEL NO: (517) 371-6203 463874 PAGE 9/11 Page 93 Board Minutes November 24, 1998 UNFMSHED BUSINESS No unfinished business. NEW BUSINESS No new business. RESOLUTIONS BY THE BOARD OF COMMISSIONERS: RESOLUTION HONORING PETER P. PRATT WHEREAS,It is a privilege to acknowledge the commitment and Ieadership of Peter P.Pratt as he brings to a close his over three years of dedicated service to this utility governing board. He is certainly deserving of our gratitude and praise for his contributions in helping to meet the needs of customers served by the Board of Water and Light His resignation from the Board effective December 1, 1998,to relocate outside of the City of Lansing leaves a void that will be difficult to fill;and WHEREAS,Peter was appointed to the Board on October 9, 1995,as a Third Ward Commissioner. He was elected Chair Pro Tem in 1997 and continuously served in that capacity to the present. He also served as a member of the Nominating and Personnel Committees and on the Board's Special Committee on the Development of the Ottawa Street Power Station;and WHEREAS,Peter is a professional of the highest caliber,earning both the respect and confidence of this board. His Ieadership ability,commitment and integrity have been reflected in all his endeavors while serving cooperatively with members of the board and staff. His focus on addressing the needs of our community was instrumental in promoting the"Pennies for Power"program to provide needy families with utility shutoff protection. RESOLVED,That a unanimous accolade of praise and tribute be accorded Peter P. Pratt,on this 24th day of November, 1998,in recognition of his years of effective service as a member of the Board of Water and Light Commissioners. We wish Peter and his lovely wife,Linda,and their beautiful daughter,Elizabeth,happiness in their new home. Carried unanimously. A watch was presented to Commissioner Pratt by General Manager Pandy on behalf of staff and employees as a token of appreciation for his service to the Board of Water and Light GENERAL MANAGER'S REMARKS General Manager Pandy reported on the following items: BWL Bottled Water Called"Aquifer Chill." The BWL's promotional bottled water,Aquifer Chill,is now available to people in the community at$10 per case. Sale proceeds are being designated for the BWL's newly formed charity fund. nr,r_nI_E 000 4 A•CZ-) nnoon nG 1.10TCCJ 9 1 Tr q7k P_G19 14:47 DEC 01, 199B ID: BOARD OF WATER & LIG TEL NO: (517) 371-6203 463874 PAGE: 10/11 Board Minutes Page 94 November 24, 1998 Response to Moores Park Neighborhood Ash Fallout Concerns. A letter addressed to Shane Powers was handed out in response to a complaint made on behalf of his father, Gay Powers,at the October 27, 1998,Board meeting. The letter outlines an investigative plan in process over the course of one year to find a long-term solution to resolve the fallout problem. Haco Drive Service Center Update. Additional security has been added to monitor Haco Drive facilities over a 24-hour period A security guard can be reached by cell phone to escort persons to their vehicles during off-hours. Water System Contamination Threat. An individual sent letters to various news media on November 16 claiming to have contaminated the Lansing water supply. The BWL immediately took all necessary precautions to ensure the water supply was safe and secure,and confirmed that the water system was safe. Additional precautions have been taken to ensure the water supply remains secure. This individual has been apprehended by Lansing police. General Manager Pandy noted that a threat to the municipal water supply is also a Federal offense. Utility Services Supply Proposal to General Motors. A copy of a letter to General Motors'(GM)Worldwide Facilities Group from BAIL Marketing Director Clyde Dugan was handed out for information. The BWL plans to submit a proposal to GM in January 1999 for utility services to the proposed Lansing Plant#1 site. City of Lansing Reviews Sewer Billing and Collection Fees. A copy of a draft letter to Public Service Director Michael Navabi from BWL Chief Financial Officer Dana Tousley was handed out for information. The City of Lansing has requested budget estimates from the BWL for sewer billing and collection fees based on two different assumptions. Option"A"would result in a separate billing for the three city services(sanitary sewer, storm water, refuse cart)mailed in a separate envelope. The BWL would perform all of the services currently being provided, except city personnel would handle customer inquiries. Option"B"would result in a separate billing for the three city services mailed in a separate envelope. The City would perform all of the services currently being provided by the BWL,except the BWL would continue to read the water meters. BWL Helps Sponsor Silver Bells and Toys for Tots. Communications Director John Strickler,Public Information Analyst Nancy Tarras,and Erickson Station employees were congratulated for coordinating the"Cram the Caboose Campaign,"for the annual Silver Bells in the City event on November 20, 1998. Over 1,200 toys donated by BWL employees and citizens filled the caboose for the Marines'Toys for Tots campaign. The BWL was the signature sponsor of Silver Bells this year. BWL Proposes Off-peak Power to MPPA General Manager Pandy reported on a proposal presented to the Michigan Public Power Agency(MPPA)to supply off-peak power based on marginal costing. Proposal for Riverfront Property Development. A proposal to develop approximately 2-1/4 acres of Riverfront property into a multi-use facility located north of the Ottawa Power Station,adjacent to Shiawassee Street,was handed out for information. Mr.Pandy indicated that the developers are aware the Board does not want to do anything that would impede the development of the Ottawa Power Station. He briefed the Board on discussions held between the developers and the City related to parking being a key ingredient to development_ Following discussion,the Board consented for Mr.Pandy to commence discussions with the City and other interested parties relative to opportunities for this Riverfront property. Analytical Review Report Internal Auditor KeIlie Willson distributed copies of her annual Analytical Review designed to provide a high level,long-term summary of overall BWL performance. The report also includes separate sections on the Electric Utility,the Water Utility,and the Steam Utility along with a comparison of each of the three utilities. A presentation on this topic will be made to the Board at a future meeting_ Deregulation Legislation Update. System Delivery Director Bill Cook and John Davis of Kheder and Associates, briefed the Commissioners on electric utility deregulation developments related to SB 1340 and SB 1 342 recently introduced in the Michigan Senate. A score card listing critical electric utility deregulation issues previously identified by the Board were reviewed in detail. Mr. Cook noted that the issue of local control is addressed in the legislation,giving municipal electric systems the ability to opt out as the regulating body. Amendments to the bills �, nnn , A.r A nnnnn nc 1.inTE'o 0 1 Tr' P_1 R 14:48 DEC 011 1998 ID: BOARD OF WATER & LIG TEL NO: (517) 371-6203 #63874 PAGE: 11/11 Page 95 Board Minutes November 24,I998 also permit municipal systems to retain their rate-making authority. The Senate is expected to take up electric deregulation legislation on December 2 and pass it over to the House of Representatives for consideration during the two-week,lame-duck session. REMARKS BY COMMISSIONERS No comments. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT. No persons spoke. EXCUSED ABSENCES Motion by Commissioner Pratt, seconded by Commissioner Aquilina,that the absence of Commissioner Christian be excused. Action: Carried unanimously. ADJOURNMENT There being no further business,the meeting adjourned at 7:09 p.m. Is/Mary E. Sova, Secretary Filed: December 1, 1998 Marilynn Slade,City Clerk nr� ne 4 nnn 4 A•CA nnoon nu 1.1L)=0 9 1 Tr Q7t P_ I I Page 72 'k-fNUTES OF BOARD OF_COMMISSIONERS`MEETING UV LANSING BOARD OF WATFft�,Z 'PHT 13 1 ITY CLERIK "i Tuesday,October 27, 1998 The Board of Commissioners met in regular session at 5:30 p.m., in the Haco Drive Office Building, 1232 Haco Drive. Lansing-Michigan. The meeting was called to order by the Chair,Diane Royal. Present: Commissioners Aquilina. Callen. Creamer. O'Leary,Royal and Werbelow. Absent: Commissioners Creamer and Pratt. The Secretar,declared a quorum present. APPROVAL OF MINUTES Motion was made by Commissioner Christian to approve the minutes of regular session held September 22, 1998. The Chair announced that if there is no objection.the approval of the minutes would be postponed and carried over under Unfinished Business to discuss the vote on the electric green pricing study taken at the regular meeting of September 22, 1998. The Board was apprised of a procedural mistake which resulted in the adoption of an alternate resolution. There being no objection. Commissioner Christian withdrew his motion and there was consensus to Lay on the Table the approval of the minutes for consideration under Unfinished Business. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW,OR AT THE END OF THE MEETING. Tom Stanton. 216 Huron Street. Lansing, representing several community environmental groups, stated it was his understanding that the Board would be discussing the action taken at the last meeting on the Green Power project. he reiterated his interest in green power and offered his support to the 8WL in the development of an electric green power program. Shane Powers. 1925 Mary y Avenue. Lansing, representing his father, Gay Powers—owner of a small automobile sales lot at 1328 S. Washington. Lansing—registered a complaint on fallout excursions in the immediate area of the Eckert-Moores Park Station and his father's car dealership. Mr.Powers told the Board that over the past five years intermittent incidents involving two types of particulate matter have been occurring;one burns through paint and the other leaves a iron-oxide residue on vehicles and plants. He asked how the BWL plans to alleviate fallout from the Eckert-Moores Park Station. Mr. Powers left samples for Board inspection of a leaf covered with black material. analysis reports prepared by the Department of Environmental Air Quality Management Division,photos of alleged damage to the paint of automobiles stored at his father's car lot,and a nearby sidewalk. Chairperson Royal told Mr. Powers that the Board would investigate this matter with staff and report back on what steps are being taken. Page 73 Board Minutes October 27, 1998 COMMUNICATIONS AND PETITIONS No communications. REPORTS OF COMMITTEES (Background material on each of the items below may be obtained from the Secretary.) #98-10-1 PERSONNEL COMMITTEE REPORT The Personnel Committee met on October 13. 1998. to review the following: 1. Pension Fund Audit Reports for fiscal year ended June 30, 1998. 2. Asset Allocation Studv. 3. Performance Appraisals for the three staff positions reporting to the Board. Committee members present were Commissioners Christian(Chair)and Royal. Excused absences: Commissioners O'Leary and Pratt. Pension Fund Afatters: Asset Allocation Study: The BWL engaged William M. Mercer Investment Consulting,Inc. (Mercer)to conduct an analysis of the investment program for the Defined Benefit(DB)Plan.Anita Andron of Mercer presented the results of the asset and liability projection study,dated September 1998. This information will be used by the Trustees to select an optimal asset allocation policy for the DB Plan. Pension Fund Reports: Chief Financial Officer Dana Tousiey presented the quarterly performance status of the Defined Benefit Fund. The following reports were also provided to the Commissioners. • Defined Benefit and Defined Contribution Pension Fund audit reports for the year ending June 30. 1998. • Defined Benefit Investment Performance Summary,dated June 30, 1998,prepared by Performance Consulting Group. Comerica Bank. • Defined Benefit Fund Actuarial Valuation.dated February 28, 1998. • First draft of a new Defined Benefit Investment policy. • Ten-year history of Defined Benefit Pension Fund Statistics. The Committee recommends that the Pension Fund reports be referred to the Pension Fund Trustees for action. Compensation Increase for Three Staff Positions Reporting to the Board. Performance appraisals and salary increases for the three positions reporting to the Board are administered according to the Board of Water and Light wage and salary plan for non-bargaining unit administrative employees. Board Minutes Page 74 October 27, 1998 The committee therefore recommends that the following resolution be adopted: #98-10-2 RESOLUTION AUTHORIZING COMPENSATION INCREASE FOR GENERAL MANAGER, CORPORATE.SECRETARY AND INTERNAL AUDITOR FOR FY 1998-99 RESOLVED.That because performance appraisals for the General Manager, Corporate Secretary, and Internal Auditor were at an acceptable level they are eligible to receive salary increases. RESOLVED FURTHER That: 1. their salary ranges be increased 2.5%for Fiscal Year 1998-99 and 2. they be granted a 2.5%general increase effective as of July 1, 1998. Ernest Christian, Chair Personnel Committee Motion by Commissioner Werbelow. seconded by Commissioner Aquilina, to adopt the report of the Personnel Committee, inclusive of Resolution#98-10-2. Action: Carried unanimously. #98-10-3 COMMITTEE OF THE WHOLE REPORT The Committee of the Whole met on October 13. 1998.to discuss the following matters: 1. Electric Deregulation 2. Electric Rate Changes Present were Commissioners Aquilina. Creamer. Christian.O'Leary,Pratt, and Royal. Excused Absences: Commissioners Callen and Werbelow. 1. Deregulation. An update on Michigan electric industry restructuring was presented by John Davis and Ralph Ostling of Khedcr and Associates. The Board's fundamental industry restructuring principles adopted in February 1998 were reviewed. Mr. Davis reported on deregulation issues and activities in process to educate and promote the B-W-Us posi-tion. 2. Electric Rate Changes. Chief Financial Officer Dana Tousley presented recommended electric rate schedule changes intended to respond to customer requests for metal halide lighting options,the need to finance capital projects associated with the generating plant's conversion to Western coal. The proposed electric rate changes will make BWL rates more competitive with rates charged to similar customers by other Michigan utilities. The proposed changes would(1)add metal halide and larger-sized lamps to outdoor protective lighting (OPL)and street light rate schedules and(2)freeze electric Energy Cost Adjustment(ECA)at$0.001 per kWh (kilowatt-hour)for four years. These changes in rate schedules will not increase customer bills. The committee authorized that a resolution to set a public hearing to solicit public input on this matter be included in the Board meeting agenda for consideration on October 27, 1998(see General Manager's Recommendations). Peter Pratt, Chair Pro Tem. Committee of the Whole Page 75 Board Minutes October 27, 1998 Motion by Commissioner Christian.seconded by Commissioner O'Leary,to adopt the report of the Committee of the Whole as presented. Action: Carried unanimously. GENERAL MANAGER'S RECOMMENDATIONS (Background material on each of the items below may be obtained from the Secretary.) The following items were recommended for approval: #98-10-4 A. ELECTRIC RATE CHANGES IN RATE STRUCTURE RESOLVED.That the proposed electric rates listed below and detailed in the attached proposed rate schedules be made the subject of a public hearing prior to further consideration by the Board of Commissioners: Rate 9-Outdoor Lighting Service Rate 31 -Street Lighting Service Board Owned Systems Rate 32 -Street Lighting Service Customer Owned Systems Energy Cost Adjustment FURTHER RESOLVED.That a public hearing to solicit public input on this matter be set for Tuesday,December 15. 1998. at 5:30 p.m.. in the Board of Water and Light offices at 1232 Haco Drive. Also that the Corporate Secretary be directed to file with the City Cleric information regarding pending changes in the rate structures on or before October 30. 1998. Motion by Commissioner Werbelow. seconded by Commissioner O'Leary,to adopt the recommendation. Action: Carried unanimously. #98-10-5 B. PROFESSIONAL SERVICES FOR LOBBYIST RESOLVED.That the General Manager and Corporate Secretary be authorized to enter into a two-year contract with the firm of Kiieder at Associates to provide professional ionoying services at a not-to-exceed fee of$3,600 per month($43.200) for the first 12-month period:and a not-to-exceed fee of$3,900 per month($46,800)for the second 12-month period. subject to 30 day cancellation by either party. Motion by Commissioner Christian. seconded by Commissioner Callen,to adopt the recommendation. Action: Carried unanimously. UNFINISHED BUSINESS Assistant General Manager John Elashkar stated that General Manager Pandy reported in his written memo to the Board the result of a procedural mistake made at the regular meeting of September 22, 1998,pertaining to the electric green pricing study. The Board was informed at the September meeting that five votes were needed for passage of the vote to award the green pricing study bid to Bay Energy Services(BES); however,four affirmative Board Minutes Page 76 October 27, 1998 votes constituted a majority of the seven members present. This led to approving an alternate resolution(#98-9-11) to perform the study. In light of the alternative approval to expend$10,000 through the customer attitude survey to determine the level of interest in a green power program. staff recommends reaffirming Resolution#98-9-11. This approach would allow staff to not only conduct an independent study,but also competitively bid other components needed to facilitate such a program. The Chair resumed discussion of the green pricing matter. As a means to gauge the number of votes in support of awarding the green pricing study to BES,the Commissioners agreed to first take a straw vote prior to entertaining a motion to reconsider the award to BES. The question being to award the green pricing study to Bay Energy Services(BES)to perform an electric green Pricing study. YEAS: 2 NAYS: 4 #98-10-6 Motion by Commissioner Christian.seconded by Commissioner Werbelow,to reconsider the award of a contract to Bay Energy Services to perform an electric green pricing study. Carried unanimously #98-10-7 Motion by Commissioner Werbelow, seconded by Commissioner O'Leary,that the Board rescind the vote taken on September 22. 1998. to award a contract to Bay Energy Services of Omena,Michigan,to perform an electric green pricing study with a cost not to exceed$85.558. Discussion: Lengthy discussion followed on the importance of surveying all customer classes. Staff briefed the Board on the approach that will be taken to assure residential,commercial and industrial customers are represented. Commissioner Callen suggested that Colorado Springs Utilities would be a good model to look at relating to their success of marketing the green power program. Action: Carved unanimously. (Thereby, approval of Resolution#98-9-1 1, authorizing the Customer Attitude Survey to include questions on green pricing issues. is reaffirmed as adopted September 22, 1998.1 #98-10-8 i'rltmil_. u T..LI'.♦L.. 1 ,.F Vr�fili r3v �,i7iTw.ia�i6i.�i'''i'c7'iii;IUia'_ iiluet:uJ�.G E�•=��:::u:i v LcfiiY tG iakZuv,ea w :ay.....,:. minutes of regular session held September.22. 1998. Action: Carried unanimously. Action: There being no objection. the minutes were approved by unanimous consent. NEW BUSINESS No new business. Page 77 Board Minutes October 27, 1998 RESOLUTIONS No new resolutions. GENERAL MANAGER'S REMARKS Assistant General Manager Elashkar distributed the following reports for reference: BWL Enters Natural Gas Business. The BWL COMMERCIAL CONNECTIONS newsletter for Fall 1998 announces the BWL's partnership with AMI through participation in a pilot customer choice program. A copy of the newsletter was handed out. Commissioners Royal and Werbelow requested additional information that clarifies the marketing aspect of the proomm Request for Proposals for Outside Special Counsel. The BWL's authority to retain outside counsel for additional legal services expires on January 27 1999. Request for proposals are being solicited from attorneys and law firms based on their reputation in the community and previous competent representation of the BWL. Ottawa Street Office Building Evacuated. The BWL office building at 123 W. Ottawa was evacuated on October 16 because of a potential danger to employees. The construction activities of Granger Development caused bricks and debris to fall inside an elevator shaft. Dust and debris filled the elevator shaft and was threatening employees' work areas. Granger has been billed for lost time which resulted from this incident. Analysis of Employee Compensation. An employee compensation analysis for fiscal 1997-98 was handed out. The analysis presents active employee compensation costs by specific type of compensation per hour paid and per hour worked. REMARKS BY COMMISSIONERS Commissioner Callen reported on a recent seminar he attended,conducted by the American Public Power Association(APPA). He handed out a copy of his written report sharing insights gained at the seminar on deregulation. Commissioner Callen suggested devoting a 1998 retreat on deregulation issues and discussion on strategic plans. Cotrutiissioner We m*eiow asked for an update on deregulation legislation. System Delivery Director Bill Cook briefed the Board on meetings held with staff members from the Governor's Office and the Michigan Public Service Commission relating to pending legislation and its implication to municipal utilities. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT. Shane Powers commented that the fallout excursions could also have an impact on General Motors' decision to keep their facilities in Lansing. Board Minutes Page 78 October 27, 1998 EXCUSED ABSENCES Motion by Commissioner Christian, seconded by Commissioner Werbelow, that the absences of Commissioners Creamer and Pratt be excused. Action: Carried unanimously. ADJOURNMENT On motion by Commissioner Callen, seconded by Commissioner Christian, the Board adjourned at 6:20 p.m. /s/Afary E. Sova, Secretary Filed. October 30, 1998 Marilynn Slade.City Clerk Page 79 Board Minutes October 27, 1998 ATTACHMENT TO RESOLUTION#98-104 5th Revised Sheet No. EB9 OUTDOOR LIGHTING SERVICE RATE NO.9 Availabilitv-This rate is available to any customer located within the Board of Water and Light(BWL)service area for dusk to dawn lighting of customer's premises. All lights will be furnished and maintained by the BWL and will be installed so as to overhang private property from existing or new poles set at points accessible to BWL construction and maintenance equipment. This rate is not available for purposes of street, highway,or public thoroughfare lighting. Monthly Rate-Shall be computed in accordance with the following charges. Luminaarics ona.'verh ..d Mast Arm on existin-^BWL r 1- High Pressure Sodium 100 W $ 8.15 250 W $13.75 400 W $14.70 Mercury Vapors 175 W $ 8.55 400 W $14.70 Floodlighting Luminaire on Bracket Arm on existing BWL poles High Pressure Sodium 100 W $11.65 250 W $14.60 400 W $17.10 Metal Halide 400W 521.25 1000 W S36.75 OOW 551.00 In the event additional facilities or rearrangement of existing facilities is required,the BWL shall install,operate and maintain such facilities for the following monthly charges. Type of Facilities 35-foot wood poles including span of overhead secondary extension$4.75 per pole 37-foot concrete pole including span of overhead secondary extension $11.30 per pole Other facilities,hand set poles,or rearrangement of existing facilities 1.67%of est. cost Adopted: Proposed Effective: 2/1/99 1 Rates apply to existing luminaries only and are not open to new business. Board Minutes Page 80 October 27, 1998 Original Sheet No. EB9-1 OUTDOOR LIGHTING SERVICE RATE NO.9 Tax Adiustment-Bills shall be increased within the limits of any governmental authority or political subdivision which levies taxes. license fees. franchise fees. or any other charges against the Board's property, or its operation, or the production and/or sale of electrical energy. to offset any such cost and thereby prevent other customers from being compelled to share such local increases. Delayed Payment Charge-A delayed payment charge of 5%of the unpaid balance,excluding delayed payment charges, shall be added to any bill that is not paid on or before the due date. Rules and Regulations-Service under this rate is subject to the BWL Rules and Regulations for Electric Service inMn..-•,t'�.�"-`v.si:^.!•v th;v Service Contract- A written sen•ice agreement shall be entered into to take BWL service for a term of years determined as follows: (a) One year. if additional facilities are not required,or (b) Three years, if additional facilities are required (c) Five years,for metal halide lamps or if monthly charges calculated at 1.67%of estimated cost. (d) Ten years. if special contractual arrangements are made. In the event the customer discontinues service before the end of the agreement term,the established rate for the remaining portion of the agreement shall immediately become due and payable. The BWL will replace lamps or make repairs when practicable after the customer has reported that the installation requires servicing. Such replacements and repairs will be made during regular working hours. The BWL may refuse or restrict the service provided in this rate to seasonal type customers and/or may require such customers to pay for the service annually in advance where the permanency of the customer is doubtful or has not been demonstrated by the customer. If relocation. including adjustment. of the outdoor protective light or relocation of other facilities used in connection with the light is desired by the customer during the term of the contract,the BWL will provide this service,if feasible. at the customer's expense. Adopted: Proposed Effective: 2/1/99 Page 81 Board Minutes October 27, 1998 3rd Revised Sheet No. EB 16 STREET LIGHTING SERVICE BOARD OWNED SYSTEMS RATE NO.31 Availability- Available to any political subdivision or agency of the State of Michigan for street lighting service for any system consisting of one or more Luminaires where the BWL has an existing distribution system with secondary voltage available. Luminaires may be installed with no limitations as to spacing between luminaires. Where an overhead line extension is required to serve one or more luminaires,the BWL will furnish 350 linear feet of line extension per luminaire served from such extension. A special agreement will be required if more than 350 linear feet of line extension per luminaire is required. Nature of Service-The BWL will furnish. install. own,operate,and maintain all equipment comprising the street lighting system.and supply the unmetered energy. The BWL reserves the right to furnish service from either a series or multiple system or both. Annual Rate-The annual rate per luminaire with fixture and setting,payable in twelve(12) monthly installments. shall be as follows: High Pressure Sodium Luminaire 70 W $ 62.00 100 W $ 71.00 150 W $ 81.00 250 W $100.00 400 W $128.00 1000 W $259.00 Mercury Vapor Luminaire2 100 W $ 67.00 175 W $ 79.00 250 W $ 93.00 400 W $120.00 1000 W $227.00 Aleta!Halide 175W $138.00 . 2jOW $161.00 40OW $159.00 1000W $312.00 15001f' $477.00 Induction Lamp 85W $67.00 165W $80.00 . Adopted: Proposed Effective: 2/1/99 2 Rates apply to existing luminaries only and are not open to new business except where the BWL elects,at the customer's request,to install additional luminaries within an area already served by a mercury vapor lighting system. Board Minutes Page 82 October 27, 1998 Original Sheet No. EB16-1 STREET LIGHTING SERVICE BOARD OWNED SYSTEMS RATE NO.31 Annual Rate(continued) plus an additional annual charge, depending on type of installation, of: Wood Pole-Overhead Service None Wood Pole- Underground Service $ 73.00 Concrete Pole-Overhead Service $113.00 Concrete Pole- Underground Service $113.00 Historic -Single Top $235.00 Large Historic- Dual Top $688.00 Small Historic- Dual Top $490.00 Wall/Tunnel -8760 hours $100.00 WaWTunnel -4200 hours $ 60.00 Bollard $233.00 Customer Contribution -The annual rates are based on fixtures normally stocked by the BWL,and installed utilizing normal construction techniques. The BWL may,at its option,upon customer request install a street lighting system not covered by the rates below. The customer,after installation,will be required to make a one time contribution equal to the difference between the actual installed cost and the BWL estimated installed cost of a standard installation. The annual unit charge for each luminaire will then be as stated below. Unit Replacement-The BWL may.at its option,upon customer request replace existing street light units. After installation, the customer shall make a one time contribution equal to the undepreciated value of the unit plus the cost of removal. Special Terms and Conditions-The BWL reserves the right to make special contractual arrangements as to termination charges. contributions in aid of construction,term or other special considerations when the customer requests service,equipment or facilities not normally provided under this rate. Tax Adjustment-Bills shall be increased within the limits of any governmental authority or political subdivision .L,•..1. y - 1' C,. r .. �:_ L__ L _ ._ 1 �t�7T �.. - :iy .•�I`�•� N ilf'vl' �.'..�:a iL.i:;.u. YY�YIw l�:ti,J. ll C::1�.l Yi.\�.I��:J.t:Q:\f IYGSi�.a 1.1..;. VJ N. alia:�a li Lam• LI Yr `v:a � - �� . the production and/or sale of electrical energy, to offset any such cost and thereby prevent other customers from being compelled to share such local increases. Delayed Payment Charge-A delayed payment charge of 5%of the unpaid balance, excluding delayed payment charges. shall be added to any bill that is not paid on or before the due date. Rules and Regulations-Service under this rate is subject to the BWL Rules and Regulations for Electric Service incorporated herein by this reference. Adopted: Proposed Effective: 2/1/99 Page 83 Board Minutes October 27, 1998 4th Revised Sheet No. EB 17 STREET LIGHTING SERVICE CUSTOMER OWNED SYSTEMS RATE NO.32 Availability- Available to any political subdivision or agency of the State of Michigan for street lighting service for any system consisting of one or more luminaires where the BWL has an existing distribution system available. Nature of Service-The BWL will connect the customer's equipment to BWL lines,furnish the control equipment,supply the unmetered energy.control the burning hours of the lamps,provide normal replacement of luminaire refractors,control devices and lamps. The customer will furnish, install and own all equipment comprising the street lighting system, including, but not limited to the overhead wires or underground cables between luminaires and the supply circuits extending to the point of attachment with the BWL. All maintenance and replacement of the customer's cgwpracrt:.ccpt ro.-rtr.:ls...r ar;d g.,ass replac,;ntent sh_11-he paid by the customer. The BWL reserves the right to furnish service from either a series or multiple system or both. Annual Rate-The annual rate per luminaire. payable in twelve(12)monthly installments, shall be as follows: High Pressure Sodium Luminaire 70 W $ 32.00 100 W $ 42.00 150 W $ 51.00 250 W $ 70.00 400 W $ 98.00 10001V $231.00 Mercury Vapor Luminaire3 175 W $ 47.00 250 W $ 63.00 400 W $ 89.00 1000 W $197.00 Incandescent Luminaire4 2500 L $ 66.00 4000 L $105.00 6000 L $127.00 Maintenance Charge-The actual labor, material.miscellaneous and indirect charges experienced maintaining street light units during the preceding month. Combined Rates-The annual rate for units consisting of more than one luminaire shall be the appropriate combination of individual unit charges above. Adopted: Proposed Effective: 2/1/99 3 Rates apply to existing luminaries only and are not open to new business except where the BWL elects,at the customer's request,to install additional luminaries within an area already served by a mercury vapor lighting system 4 Rates apply to existing luminaries only and are not open to new business. Board Minutes Page 84 October 27, 1998 Original Sheet No. EB17-1 STREET LIGHTING SERVICE CUSTOMER OWNED SYSTEMS RATE NO.32 Special Terms and Conditions-The BWL reserves the right to make special contractual arrangements as to termination charges,contributions in aid of construction. term or other special considerations when the customer requests service, equipment or facilities not normally provided under this rate. Tax Adiustment-Bills shall be increased within the limits of any governmental authority or political subdivision which levies taxes, license fees, franchise fees.or any other charges against the BWL property,or its operation,or the production and/or sale of electrical energy, to offset any such cost and thereby prevent other customers from being compelled to share such local increases. Delayed Payment Charge-A delayed payment charge of 5%of the unpaid balance,excluding delayed payment charges. shall be added to any bill that is not paid on or before the due date. Rules and Regulations-Service under this rate is subject to the BWL Rules and Regulations for Electric Service incorporated herein by this reference. Adopted: Proposed Effective: 2/1/99 Page 85 Board Minutes October 27, 1998 2nd Revised Sheet No.EB27 ENERGY COST ADJUSTMENT The Energy Cost Adjustment permits the monthly adjustment of rates for the costs of energy incurred in supplying electricity to retail customers. All residential and general service rates are subject to the Energy Cost Adjustment. In applying the Energy Cost Adjustment the applicable rate per kWh shall be increased or decreased by the amount of the current Energy Cost Adjustment. The following definitions and procedures will be followed in calculating the monthly Energy Cost Adjustment. Definitions Energy Cost Adjustment-the amount per kWh by which the applicable rates shall be adjusted for billing in each month. Energy Costs-those costs incurred in supplying retail electricity. Such costs include fuel burned,energy costs associated with firm power purchases, net interchange power costs,and costs associated with other temporary power transactions. The cost of fuel burned shall include the delivered cost of fuel(base cost, escalations, premiums/penalties. transportation. demurrage), outside lab fees and other outside costs related to fuel procurement.and fuel additives such as freeze proofing. Over/Under Recovery-the difference between actual Energy Costs for prior months and the amount of energy cost recovered by means of the Base Cost of Energy and the Energy Cost Adjustment. The Over/Under Recovery shall be added to the Energy Costs for purposes of computing the Energy Cost Adjustment for each month. Base Cost of Energy-the average Energy Cost included in the energy rates of the various rate schedules. Such amount shall not be recovered by means of the Energy Cost Adjustment. The current Base Cost of Energy is $0.017921 per kWh sold. Procedures Estimated Energy Cost shall be projected for a twelve-month period. Any amount of Over/Under Recovery (positive or negative)shall be added to the Energy Cost to determine the total cost basis for the Energy Cost Adjustment. The total cost basis shall be divided by the projected total retail billed sales for the twelve-month period resulting in the average energy cost per kWh. The Base Cost of Energy shall be subtracted from the average energy cost to result in the Energy Cost Adjustment. The Energy Cost Adjustment shall be reviewed and.as necessary, revised periodically in accordance with the provisions of this schedule.but not less frequently than every twelve months. Effective February 2, 1999 through February 2 2003 the xterg C'6kAA jrrsMae t ff.1mien at$01101.060 per kWh Thin the total cost of fuel and purchased power charged.fo customers Is<set a 3 01892 .Der kAth t� 0 01?92I +ECA 0.001000). Adopted: Proposed Effective: 2/1/99 Page 62 MINUTES OF BOARD OF COMMISSIONERS'MEETING f LANSING BOARD OF WATER AND LIGHT ;:, `; �; Tuesday,September 22,1998 Ci I Y CLERK The Board of Commissioners met in regular session at 5:30 p.m., in the Haco Drive Office Building, 1232 Haco Drive. Lansing. Michigan. The meeting was called to order by the Chair,Diane Royal. Present: Commissioners Aquilina. Callen, Creamer,O'Leary, Pratt,Royal and Werbelow. Absent: Commissioner Christian. The Secretary declared a quorum present. APPROVAL OF MINUTES Motion was made by Commissioner Werbelow, seconded by Commissioner Pratt,to approve the minutes of regular session held July 28. 1998. (Note: The regularly scheduled meeting ofAugust.25, 1998, was canceled.) Carried unanimously. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW, OR AT THE END OF THE MEETING. Tom Stanton. 216 Huron Street. Lansing,spoke in support of green power in the BWL service territory. Copies of several articles on energy education were handed out for additional information on renewable energy and demand side management. COMMUNICATIONS AND PETITIONS Thank you letters were received from Habitat for Humanity/Lansing and The Hospice of Lansing acknowledging cash donations made by BWi emplovees. Received and filed. REPORTS OF COMMITTEES (Background material on each of the items below may be obtained from the Secretarv.) #98-9-1 COMMITTEE OF THE WHOLE REPORT The Committee of the Whole met on August 11, 1998, to hear presentations on the following matters for discussion and consideration at the next regular meeting. Present: Commissioners Callen. Christian.Creamer, O'Leary. Royal and Werbelow. Excused Absences: Commissioners Aquilina and Pratt. Board Minutes Page 63 September 22, 1998 1. Omnipoint Communications Midwest Operations. The terms of the proposed Omnipoint Antenna Lease were reviewed by Project Engineering Manager Bob Nicholson. This item with suggested changes to the agreement was approved for placement on the regular meeting agenda. 2. Contract Guidelines. To facilitate a standard policy for considering contractual documents,the Commissioners requested guidelines to form the basis for the amount of detail required by staff to bring to the Board for approval. Staff was directed to work with Commissioner Royal to draft the guidelines for review and approval by the Board. 3. Pennsylvania Avenue Pumping Station. Concern was raised by some Commissioners on a process to be used to determine whether or not to move forward with renovating the former pumping station. Since the new Haco facility included a Boardroom in its blueprint.expenditures for this project were questioned in light of the current competitive business environment. Staff was directed to come back with a business case for the Board's evaluation justifying the value of the renovation versus continuing with the new Haco facility renovation as drafted. A possible conflict of interest concern was expressed with Commissioner O'Leary's relationship to Joan O'Leary of the architectural firm of Raymond-O'Leary. Following discussion. Commissioner O'Leary stated that an Affidavit of Disclosure is being filed with the City Clerk indicating he is not financially connected with the Raymond-O'Leary firm. Before moving forward with the Pumping Station renovation project. General Manager Pandy agreed to prepare a business case to renovate the historic building for evaluation by the Board. 4. Electric Wholesale Trading. System Delivery Director Bill Cook presented an overview of wholesale power trading issues for informational purposes. Wholesale power price spikes, generation scheduling and wholesale power trading activities and risks were discussed in detail. 5. Emergency Electric Curtailment. A draft resolution and guidelines of emergency electric curtailment were presented for discussion and consensus. This item was approved for placement on the regular meeting agenda. 6. Natural Gas Supply Business Opportunity. Mark Taylor,Manager of Sales and Marketing, reported on the results of staffs evaluation of a natural gas retail supply business to provide natural gas to BWL customers through BWL Marketing efforts. Access and research,economic analysis and business risks were discussed. A recommendation to enter the natural gas retail supply business will be placed on the regular meeting agenda. 7. Detail Open Access Pilot Program. An overview of the components of a retail open access pilot program was provided by Doug Wood. Manager of System Integrity and Customer Projects. Due to the complexity of this pilot program, staff received an extension to complete a conceptual plan for presentation at the Committee of the Whole meeting in September for discussion. 8. Electric Green Pricing Study. Dave Bolan. Senior Electric Planning Engineer, presented rationale for commissioning a study to develop a green power program,based on the BWL's Integrated Resources Plan URP) and comments received at the April 28. 1998 public hearing. The scope of the work,criteria to select the consultant,and bids submitted for the study were reviewed. The Commissioners engaged in lengthy discussion relative to the success of green power marketing targets to customers with environmental values. There was consensus to place this item on the regular meeting agenda. 9. BWL Charitable Fund. The Commissioners received a legal analysis on the formation of a Lansing Board of Water and Light(LBWL)Fund with the Capital Region Community Foundation. The purpose of the Fund will be to provide financial support for charitable endeavors within the service area of the Board of Water and Light. Once a minimum of$10.000 is raised from employee and volunteer donations,the Commissioners indicated their intent to consider a Letter of Agreement to establish a LBWL Fund. Page 64 Board Minutes September 22, 1998 Motion by Commissioner Werbelow, seconded by Commissioner Aquilina,to adopt the report of the Committee of the Whole as presented. Action: Carried unanimously. #98-9-2 COMMITTEE OF THE WHOLE REPORT The Committee of the Whole met on September 8, 1998, to discuss the following matters for consideration at the regular meeting on September 22: Present: Commissioners Aquilina. Callen, Creamer, Christian, O'Leary, Pratt,Royal,and Werbelow. L Electric Retail Access Pilot Plan. In May 1998,the Board directed staff to prepare an Electric Pilot Retail Access Plan for consideration. System Delivery Director Bill Cook reported that the development of the Electric Retail Access Pilot Program Study has been a significant educational exercise. As a result of this analysis, staff recommends the following: #98-9-3 RESOLUTION TO DEFER THE ELECTRIC RETAIL ACCESS PILOT PROGRAM RESOLVED, That implementation of the Electric Retail Access Pilot Program be deferred until such time as the deregulation situation in Michigan is clarified. FURTHER RESOLVED. That the BWL continue to update the Pilot Plan, monitor the state of deregulation in Michigan, and at such time that the deregulation picture more clearly materializes, reconsider pilot implementation. Mr. Cook noted that deregulation initiatives will in all likelihood not go away. Electric deregulation or customer choice will happen. The basis for staffs position was discussed in detail. 2. BWL Commissioner Policy Review. The Commissioners received index pages from the current BWL Policy Manual, which documents policies and decisions, contract approvals, resolutions and procedural matters for review. To facilitate the analysis an ad hoc committee was formed consisting of Commissioners Royal,Pratt and Creamer. The committee will examine the Policy Manual to separate policy matters from decision items. A report will be presented to the Board for discussion. 3. Green Power Project. A copy of the Traverse City Light&Power Wind Power Project was presented for information and follow-up from the August 11 Committee of the Whole meeting. Discussion took place regarding the advantages and disadvantages of performing an electric green pricing study. This item will appear on the Board meeting agenda for consideration. Commissioner Pratt refrained from discussions on this topic due to a possible conflict of interest. His employer,Public Sector Consultants,submitted a bid for this study. 4. Omnipoint Antenna Lease. An informational article on the use of transmission towers for telecommunications antennas was received by the Commissioners. This item was also discussed at the August 11 Committee of the Whole meeting. A recommendation will appear on the Board meeting agenda for consideration. 5. Real Estate Matters A,farN OFF/CE BuiLDING RELocATroNAcr=iEs: General Manager Pandy briefed on construction activities at the office building on 123 W. Ottawa Street. To clear a critical path for structural construction, second floor employees completed their move to the new administration building at 1232 Haco Drive on September 4. The Board Minutes Page 65 September 22, 1998 Customer Service Center is also being relocated to the BWL's facility at 312 N. Grand Avenue. A rendering of the converted warehouse to the BWL Customer Service Center on Haco Drive was displayed. The Commissioners were given an update of relocation costs to date. OTTAWA POWER STATION AcTP,7TiEs: General Manager Pandy updated the Commissioners on the status of the Ottawa Power Station cleanup. Asbestos removal is still in progress and demolition work inside the former power plant is progressing to ready it for commercial redevelopment or other useful purpose. Several developers have expressed interest in the Ottawa Power Station and surrounding area. The Commissioners reaffirmed their commitment in preserving options with the power station. 6. Natural Gas Business. This item was discussed at the August 11 Committee of the Whole meeting. A recommendation for entering into the natural gas business will appear on the Board meeting agenda for consideration. 7. Alaiedon Township 425 Agreement. The Commissioners received a copy of an Agreement for Conditional Transfer of Property Pursuant to 1984 P.A. 425 between the City of Lansing and Alaiedon Township for information. A Development Agreement to be executed by the BWL, City of Lansing and Jackson National Life will be forthcoming for review and approval. Motion by Commissioner Werbelow, seconded by Commissioner Aquilina. to adopt the report of the Committee of the Whole,including Resolution 98-9-3 to defer the Electric Retail Access Pilot Program. Action: Carried unanimously. GENERAL MANAGER'S RECOMMENDATIONS (Background material on each of the items below may be obtained from the Secretary.) The following items were recommended for approval: #98-9-4 AUTHORIZATION TO PURCHASE PROPERTY AND LIABILITY INSURANCE COVERAGES RESOLVED,That Property and Boiler and Machinery Insurance be purchased from Arkwright Mutual Insurance Company at an estimated annual premium of$263.500..with the actual premium to be adjusted for 1998 values and possible flood coverage improvements. FURTHER RESOLVED.That Commercial General Liability Insurance be purchased from the Lyman and Sheets Insurance Agency, representing the TIG Insurance Company, at an annual deposit premium of$79,234. FURTHER RESOLVED. That Excess Liability Insurance be purchased from the Lyman and Sheets Insurance Agency, representing the TIG Insurance Company, with a limit of liability of$5 million at an annual premium of $48.513 and from the Lyman and Sheets Insurance Company, representing the American Empire Surplus Lines Insurance Company, with a limit of liability of$20 million at an annual premium of$20,500. FURTHER RESOLVED. That Business Auto Insurance be purchased from Voss Insurance Services,representing the Hartford Insurance Company of the Midwest at an estimated premium of$56,968. FURTHER RESOLVED. That Employee Faithful Performance and Crime Coverage be purchased from the Lyman and Sheets Insurance Agency, representing the United States Fidelity and Guaranty Company,at an annual premium of$2.995 and dishonesty coverage for the Board of Water and Light of the City of Lansing Employees Page 66 Board Minutes September 22, 1998 Pension Fund from the Lyman and Sheets Insurance Agency, representing the United States Fidelity and Guaranty Company. at an annual premium of$481. Motion by Commissioner O'Leary, seconded by Commissioner Callen, to adopt the recommendation. Action: Carried unanimously. #98-9-5 AUTHORIZATION TO ENTER INTO THE NATURAL GAS RETAIL SUPPLY BUSINESS RESOLVED,That the Board of Water and Light be authorized to enter into the natural gas retail supply business. FURTHER RESOLVED. That the General Manager and Corporate Secretary be authorized to execute a contract with AM!Energy. Inc., for the purpose of establishing a strategic alliance to supply natural gas to BWL customers, subject to approval as to form by Board Legal Counsel. Motion by Commissioner Creamer. seconded by Commissioner Pratt,to adopt the recommendation. Action: Carried unanimously. #98-9-6 AUTHORIZATION TO EXCHANGE SURPLUS PROPERTY ON HACO DRIVE RESOLVED, That a surplus portion of the former Lansing Connecting Railroad(LCRR)property recently purchased by the BWL be exchanged for the following described property from Metalist International,Inc. The surplus property contains approximately 42,741 square feet and the property the BWL will receive in exchange contains approximately 42.944 square feet. In addition to the property exchange, the BWL will reimburse Metalist International, Inc. $5.000 for the removal costs for an underground tank located on the former LCRR property. A part of the NW 1/4 of Section 22.T4N. R2W. City of Lansing, Ingham County,Michigan, being particularly described as follows: beginning at the SE corner of Lot 20,assessor's plat No. 26, City of Lansing, Ingham County,Michigan.thence westerly along the south line of Lot 20 331.50 feet: thence across Lots 20& 17 due north 265.61 feet to a point that is on the northeasterly sideline of Lot 17 and the southwesterly sideline of the former Lansing Connecting Railroad(LCBR): }hence southeasterly along the southwestcrly sideline of tt•,;,former LCRR 427 feet, more or less, to the point of beginning. Motion by Commissioner Werbelow, seconded by Commissioner Pratt, to adopt the recommendation. Action: Carried unanimously. #98-9-7 AUTHORIZATION FOR NEW EMERGENCY ELECTRICAL CURTAILMENT PROCEDURES WHEREAS,There may for one reason or another in the future be a shortage of available electrical energy generating capacity: and WHEREAS.It is in the public interest that the Board of Water and Light have procedures available of which the general public should be made aware to meet such a shortage if and when it arises. Board Minutes Page 67 September 22, 1998 NOW THEREFORE BE IT RESOLVED.That the Board of Water and Light adopts the attached Emergency Electrical Curtailment Guidelines for purposes of having available immediate reaction to such shortage emergencies as may arise. BE IT FURTHER RESOLVED.That in those situations where,because of their emergency nature or short term duration action in relation to the same by this Board is not feasible,the General Manager or the Director in charge of Electric Operations shall be responsible to ensure implementation of the procedures hereby adopted; and FURTHER RESOLVED,That in the absence of both of these named individuals, those persons in responsible charge in accordance with the-chain of command" adopted by the Board shall be empowered to implement the necessary procedures as herein adopted. Motion by Commissioner O'Leary. seconded by Commissioner Aquilina,to adopt the recommendation. Action: Carried unanimously. #98-9-8 AUTHORIZATION TO INCREASE COMMUNICATIONS BUDGET RESOLVED,That the Communications Division budget be increased by$282,000 for Fiscal Year 1999. Motion by Commissioner Werbelow. seconded by Commissioner Creamer,to adopt the recommendation. Discussion: The Commissioners requested periodic information showing a direct evaluation of the advertisement results. Communications Director John Strickler agreed to provide preliminary feedback after the December customer attitude survey and also in the Spring of 1999. General Manager Pandy presented an overview of the BWL advertisement campaign. Action: Carried unanimously. #98-9-9 CONTRACT TO PACE AND PARTNERS FOR PROFESSIONAL SERVICES RESOLVED.That the General Manager and Corporate Secretary be authorized to execute a contract with Pace and Partners for professional services on a year-to-year basis, subject to termination by either party upon a 90-day notice. Motion by Commissioner Creamer. seconded by Commissioner O'Leary,to adopt the recommendation. Action: Carried unanimously. #98-9-10 CONTRACT TO WILLIAM M. MERCER,INC. TO REDESIGN THE COMPENSATION SYSTEM RESOLVED.That a contract be awarded to William M.Mercer, Inc. in an amount not to exceed$60,000 to assess and recommend changes in the BWL's total compensation package. The contractor will make recommendations to align our compensation system with a process-based organization, and advise the BWL on implementation of a system which incorporates variable compensation at the organization and small-group levels. This recommendation is based on William M. Mercer, Inc. submitting the lowest and best-evaluated bid. Page 68 Board Minutes September 22, 1998 Motion by Commissioner O'Leary. seconded by Commissioner Pratt, to adopt the recommendation. Action: Carried unanimously. ELECTRIC GREEN PRICING STUDY TO BAY ENERGY SERVICES-FAILS RESOLVED, that Bay Energy Services(BES), of Omena.. Michigan perform an electric green pricing study with a cost not to exceed$85.558. Motion by Commissioner Callen, seconded by Commissioner Aquilina,to adopt the recommendation. Discussion: General Manager Pandy noted that from discussions held at the Committee of the Whole meetings of August l l and September 8, it was clear the Commissioners were not opposed to the concept of"Green Pricing" for electricity,but were concerned with the cost to perform an electric green pricing study. Mr. Pandy handed out a memo prepared by Bill Cook. Director of System Delivery, dated September 20, 1998, regarding Green Pricing Project Recommendations. The memo outlines the rationale for continuing with the green pricing effort and suggests taking a more simplified approach. Steven Smiley of Bay Energy Services was present to respond to questions regarding the proposal submitted. Action: The pending motion failed by the following vote: YEAS: Aquilina. Callen, Creamer. Royal NAYS: O'Leary. Werbelow ABSTENTION: Pratt ABSENT: Christian The Board engaged in lengthy discussion on the matter and consented to consider the following substitute resolution: Motion by Commissioner Creamer. seconded by Commissioner Aquilina: #98-9-11 MODIFY CUSTOMER ATTITUDE SURVEY TO INCLUDE QUESTIONS ON GREEN PRICING ISSUES RESOLVED, That the AWL Residential Customer Attitude Survey-he modified to include fir±pricing issues and questions to assess our customers interest in green power for an added cost of no more than$10,000 for the survey addition and consultant assistance. Action: Adopted by following vote: YEAS: Aquilina, Callen. Creamer, O'Leary,Royal,Werbelow NAYS: None ABSTENTION: Pratt ABSENT: Christian Staff will report survey results following this Fall's customer attitude survey. If adequate customer interest exists in enrolling in the green power program, staff will take the next steps: 1. Design a rate that includes the cost to develop and implement such program. 2. Develop a Request for Proposal to solicit selected quantities of"Green Power"for use in the new rates. Board Minutes Page 69 September 22, 1998 If availability of a reasonably economic supply is also found to exist, development of a limited self-funded program will be recommended. #98-9-12 AUTHORIZE LEASE AGREEMENT WITH OMNIPOINT COMMUNICATIONS FOR RADIO ANTENNAE RESOLVED. that the Board of Water and Light enter into a lease agreement with Omnipoint Communications Midwest Operations L.L.C.. to lease space for radio antennae and associated equipment at both the Erickson and Eckert Stations. The initial term of the lease will be for five(5)years at an annual rental fee of$15,000.00 per site,final terms and acceptance of the lease will be subject to approval by BWL legal staff. Motion by Commissioner O'Leary. seconded by Commissioner Creamer, to adopt the recommendation. Action: Carried unanimously. UNFINISHED BUSINESS The Chairperson Diane Royal announced standing committee appointments for fiscal year 1998-99: Executive Committee Diane Royal. Chair Dave O'Leary, Vice Chair Peter Pratt. Chair Pro Tern Finance Committee Rosemarie Aquilina. Chair Ronald Callen Charles Creamer Judson Werbelow Alternates: Dave O'Leary, Diane Royal Personnel Committee Ernest Christian,Chair Dave O'Leary Peter Pratt Diane Royal Alternates: Ronald Callen, Charles Creamer Nominating Committee Charles Creamer,Chair Ronald Callen Judson Werbelow Alternate: Dave O'Leary Chairperson Royal stated that members of the Nominating Committee are not barred from becoming nominees for office themselves. Page 70 Board Minutes September 22, 1998 NEW BUSINESS No new business. RESOLUTIONS No new resolutions. GENERAL MANAGER'S REMARKS General Manager Pandv distributed the following reports for reference: • Capitol Outlook Payment Schedule for 123 W. Ottawa Building as floors are being released to the developer. • Michigan Public Power Agency Belle River Project fuel dispute calendar. Commissioner Werbelow who testified at the hearing briefed the Board on his testimony. The Arbitration Panel imposed date for final settlement on this dispute is December 15, 1998. • Memo from Jack Hill, Director of Production,dated September 18, 1998, regarding coal scale upgrades for Units 1.4 and 5 at Eckert Station. He reported that a way has been found to purchase nine coal scales at significant savings. Total project savings over original estimated costs would be$1,970,000. • A BWL financial review for fiscal year ended June 30. 1998, was presented by General Manager Pandy. An American Public Power Association survey on electric rates through 1997 was displayed. A comparison of BWL rates versus Consumer Energy and Detroit Edison Co. rates shows the BWL in a favorable rate position. • A WAU STREET JOURNAL Article,entitled"Energy Shock Therapy," dated September 14, 1998.was suggested as excellent reading material on deregulation. REMARKS BY COMMISSIONERS Commissioner Werbelow reported on his meeting with Senator Diane Byrum and others to discuss the status of deregulation bills before the House Public Utilities Committee. Commissioner Callen reported on his meeting on deregulation issues with Kheder and Associates, General Manager Joe Pandy. and Staff Attorney ram ,Wilhite. Commissioner Creamer acknowledged community involvement of BWL employees. He also thanked General Manager Pandy for opening his home to over 1,000 visitors who participated in the Moores River Drive Area Home Tour on September 20. This event benefits the Greater Lansing Housing Coalition. Commissioner Aquilina emphasized the importance of keeping up to date on deregulation activities at the State Capitol. She suggested arranging a tour of BWL facilities for staff members from the Governor's Office,the House and Senate. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT. Board Minutes Page 71 September 22, 1998 Tom Stanton thanked the Board for showing their commitment to pursue"green power"by surveying customers to determine their interest to justify a green power program. EXCUSED ABSENCES Motion by Commissioner Werbelow, seconded by Commissioner Pratt,that the absence of Commissioner Christian be excused. Action: Carried unanimously. ADJOURNMENT On motion by Commissioner Creamer, seconded by Commissioner Aquilina,the Board adjourned at 7:05 p.m. /&/Mary E. Sova, Secretary Filed. September 28, 1998 Marilynn Slade, City Clerk BOARD OF WATER AND LIGHT r, f-- E i D 1232 Haco Drive-Lansing, Michigan Agenda Si P r' ,-'j! f 53 September 22, 1998 - 5:30 p.m. LANS1,1dG CITY CLERK I. Roll Call (Board Commissioners Aquilina, Callen, Christian, Creamer, O'Leary,Pratt, Werbelow and Chairman Royal - 8) II. Pledge of Allegiance III. Approval of Minutes: Regular Session of July 28, 1998 IV. Public Comments Members of the public are welcome to speak to the Board on any agenda subject or on any other subject now, or at the end of the meeting. V. Communications and Petitions VI. Reports of Committees A. Committee of the Whole Report dated August 11, 1998 - Peter Pratt, Chair Pro-Tem B. Committee of the Whole Report dated September 8, 1998 - Peter Pratt, Chair Pro- Tem VII. Manager's Recommendations A. Authorize the purchase of insurance for: 1. Property and Boiler and Machinery 2. Commercial General Liability 3. Excess Liability 4. Business Auto 5. Employee Faithful Performance& Crime Coverage. B. Authorize entering into the natural gas retail supply business. C. Authorize Emergency Electrical Curtailment Procedures. D. Authorize exchanging surplus property with property owner adjacent to 1232 Haco Drive to provide more parking spaces for employees. E. Authorize increasing Communications Division budget. F. Authorize entering into contract with Pace and Partners for professional services. G. Authorize entering into contract William M. Mercer for Re-Designing Compensation System H. Authorize Electric Green Pricing Study(tabled from 7-28-98 Board Meeting) I. Authorize Lease Agreement for Radio Antennae (tabled from 7-28-98 Board Meeting) VIII. Unfinished Business IX. New Business X. Resolutions XI. Manager's Remarks XII. Remarks by Commissioners XIII. Motion of Excused Absence XIV. Public Comments Members of the public are welcome to speak to the Board on anv Board of Water and Light subject. XV. Adjournment BOARD OF WATER AND LIGHT CANCELED BOARD OF COMMISSIONERS MEETING The regular Board Meeting of the Board of Water and Light Commissioners of the City of Lansing, Michigan, scheduled for August 25, 1998, has been canceled. Certified by: Rosemary Sullivan Assistant Secretary C� cn Posted:8-25-98 n o x o Page 53 ' U MINUTES OF BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT _ l:fjt7 1 0 P 1 2: I ! Tuesday,July 28, 1998 LANSING CITY CLERK The Board of Commissioners met in regular session at 5:30 p.m., in the Main Office Building, 123 West Ottawa Street. Lansing, Michigan. The meeting was called to order by the Chair,Ernest Christian. Present: Commissioners Aquilina. Callen, Christian, Creamer, O'Leary,Pratt,Royal, and Werbelow. Absent: None. The Secretary declared a quorum present. The invocation was delivered by the Chair. The Pledge of Allegiance was said by all. ANNUAL MEETING Chairman Christian announced that in accordance with the City Charter and the Board's Rules of Administrative Procedure,the Board is required to organize each year at its first regularly scheduled meeting in July by selecting a Chair, Vice Chair and Chair Pro Tern until the next annual meeting. The Nominations Committee was asked to present its report. #98-7-1 Report of the Nominations Committee The Nominating Committee,comprised of Commissioners Judson Werbelow,its chair,Rosemarie Aquilina, and Charles Creamer. met on July 15. 1998 to review copies of commissioner surveys to consider officers for the Board election to be held at the Annual Meeting. By unanimous decision of the Nominations Committee,be it RESOLVED,That the Board cast a unanimous vote for the following officer candidates: CHAIR: Dune Royal VICE CHAIR: Dave O'Leary CHAIR PRO TEM: Peter Pratt Motion by Commissioner Werbelow, seconded by Commissioner Christian to adopt the recommendation of the Nominations Committee. Action: Carried unanimously. #98-7-2 Resolution to Appoint Charter Staff Positions The Board's Rules of Administrative Procedures specify that the Board is to appoint a Director, Corporate Secretary and Internal Auditor, respectively, at the first regular meeting in July of each year,be it Page 54 Board Minutes July 28, 1998 RESOLVED,That the Board of Commissioners reappoint the following staff positions for fiscal year 1998-99,or, until a successor is appointed. whichever last occurs: DIRECTOR AND GENERAL MANAGER -Joseph Pandy, Jr. CORPORATE SECRETARY -Mary Sova INTERNAL AUDITOR -Kellie Willson Motion by Commissioner Creamer. seconded by Commissioner Christian to adopt the resolution. Action: Carried unanimously. Commissioner Christian announced that the construction schedule for the 123 W. Ottawa Street office building calls for work to begin in the Boardroom. Future meetings of the Board will be moved to the second floor conference room of the Hacu Drive facility being converted into u.c B`,F.i ad..a:i,uative oL ce Commissioner Christian thanked the Board Commissioners for their support during his chairmanship. He presented the gavel to newly elected Chair Diane Royal and congratulated her and the new officers. APPROVAL OF MINUTES Motion was made by Commissioner Christian. seconded by Commissioner Werbelow,to approve the minutes of regular session held June 23. 1998. Carried unanimously. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW,OR AT THE END OF THE MEETING. Max Zemer.Business Agent of IBEW Local 352, 527 Edison Street,Lansing,stated that he has been employed by the BWL for 35 years. He called attention to two proposals for Share the Success(STS)measures to be discussed r_ t_. t,.. �. c.l... Cm ♦ t Mnn na the_fi_SC 1999 later iil the weeting. He iiGLed that as uic result of un..S,S mange..-L-Lt,cc-nun:ttee no. rr.wing- measures submitted by the Employees Performance Measures Committee,a Joint Conference Committee was formed to resolve differences and arrive at a compromise. Since agreement was not reached,the Board is being asked to choose between the two proposals. Mr. Zemer stated that several members from the STS Measures Committee are present in the room to clarify any questions the Board may have on this issue. He reviewed the process that evolved to bring the measures to the Board. He stated that the edge on competition will be the employees at the BWL. The Employees Performance Measures Committee feel their proposal is the best program to move the BWL forward in a competitive market. The Board was urged to give a fair judgment on which STS proposal is to be implemented for this fiscal year. COMMUNICATIONS AND PETITIONS No communications. Board Minutes Page 55 July 28, 1998 REPORTS OF COMMITTEES No committee reports. GENERAL MANAGER'S RECOMMENDATIONS (BACKGRO UND AL9 TERIAL ON EACH OF THE ITEMS BELOW IS A VAILABLE FROM THE SECRETARY.) The following items were recommended for approval: #98-7-3 A. RULES OF ADMINISTRATIVE PROCEDURE AS REVISED RESOLVED,That the Board's Rules of Administrative Procedure as revised be adopted, having been mailed to all Commissioners at least fourteen(14)days before this meeting, subject to approval of the City Attorney and the Board's Staff Attorney. and RESOLVED FURTHER.That the Board's Rules of Administrative Procedure, as amended,adopted December 18, 1990.and filed with the City Clerk December 21, 1990,be rescinded,and RESOLVED FURTHER That in conformity with Article 5, Chapter 1, Section 5-105 (8)of the City Charter,the Secretary file a copy of the Rules with the City Clerk for submission to the City Council for review. ---------------- Motion by Commissioner Christian, seconded by Commissioner Pratt,to adopt the revised Rules of Administrative Procedure. Discussion: Commissioner Werbelow expressed his opinion that he does not feel it is proper for a governmental organization to engage in a prayer during its meetings. He stated his preference to remove the invocation as part of the Board's order of business. Motion to Amend by Commissioner Werbelow, seconded by Commissioner Creamer that the proposed Rules of Administrative Procedure be revised in Section 10.1.1, item 2,deleting the words"Invocation and"and inserting the words"Moment of silence and". Discussion: Commissioner O'Leary expressed concern that by adding the words"moment of silence" in the Rules makes it a requirement at the meeting. He stated his preference to not include"moment of silence" in the Rules, and leave it open on a discretionary basis as determined by the Chair. Action: Adopted by the following vote: Yeas: Callen, Creamer, Pratt,Roval. Werbelow-5 Nays: Aquilina. Christian, O'Leary-3 Discussion: Commissioner Creamer stated that Commissioner O'Leary's comments are appropriate relative to not including the language"moment of silence" in the Rules. Motion to Amend by Commissioner Creamer, seconded by Commissioner Pratt,to concur in striking the words "Moment of silence and"from the amendment. Page 56 Board Minutes July 28, 1998 Action: Carried unanimously. Motion by Commissioner Werbelow, seconded by Commissioner Pratt, on concurring in the adoption of the main motion made to approve the Rules of Administrative Procedure, as amended. Action: Adopted by the following vote: Yeas: Aquilina. Callen. Creamer,O'Leary,Pratt, Royal, Werbelow-7 Nays: Christian Discussion: Commissioner Christian asked whether the Pledge of Allegiance was mandatory at Board meetings. Although this ritual is not required, there was consensus by the Board to leave the Pledge in the Order or Business. #98-7-4 B. DEFINED BENEFIT PLAN RESOLVED, That the First Amendment to the LBWL Defined Benefit Plan for Employee's Pensions is hereby adopted effective as indicated therein:and FURTHER RESOLVED.That the Chairman of the Board of Commissioners and the Corporate Secretary are authorized to execute said amendment on behalf of the Board. Motion by Commissioner Christian, seconded by Commissioner Creamer,to adopt the recommendation. Action: Carried unanimously. #98-7-5 C. INSURANCE RESOLVED,That the following insurance coverage be purchased from Voss Insurance Services,representing The Travelers Indemnity Company of Illinois, Specific Excess Workers Compensation Insurance at an annual estimated p. ,miu:..of$15,000 for the c.,c=year pericd frcm September 1, 1998 to September 1, 1999. The rate is .0379 per$100 of workers compensation remuneration. The self-insured retention is$400,000 per accident and the limit is statutory coverage. Renewal of this coverage will be negotiated for the next two years. Motion by Commissioner Pratt, seconded by Commissioner Werbelow, to adopt the recommendation. Action: Carried unanimously. D. LEASE AGREEMENT FOR RADIO ANTENNAE RESOLVED,That the Board of Water and Light enter into a lease agreement with Omnipoint Communications Midwest Operations LLC, to lease space for a radio antennae and associated equipment at both the Erickson and Eckert Stations. The initial term of the lease will be for 15 years,at a monthly rental fee of$1,000 per site. Final terms and acceptance of the lease will be subject to approval by BWL legal staff. r Board Minutes Page 57 July 28, 1998 Discussion: The Commissioners asked for an outline of agreement provisions for review before taking action. Commissioner Werbelow offered the suggestion of shortening the initial term of the lease to allow flexibility in unexpected situations. Commissioner Callen inquired about the BWL's liability for personal injury issues. Commissioner Creamer asked about the protocol when bringing contracts to the Board for approval. General Manager Pandy responded that the management person responsible for negotiating the contract usually attends the Board meeting to clariA,questions raised. However, in the recent past, the Board indicated it is not necessary to have staff attend Board meetings. Action: TABLED. Following discussion. this item was referred to the Committee of the Whole. A summary of the agreement is to be provided to the Commissioners prior to the Committee of the Whole meeting on August 11. #98-7-6 E. SELLING SURPLUS EQUIPMENT RESOLVED.That the following surplus equipment currently located at the Frandor Shopping Center be sold to the Lorimax Stern Development Company for an amount of$35,148.00. Motion by Commissioner Werbelow, seconded by Commissioner O'Leary, to adopt the recommendation. Action: Carried unanimously. #98-7-7 F. SALE OF OBSOLETE VEHICLES RESOLVED,That the sale of obsolete Board-owned vehicles and equipment through competitive bids be authorized. The items are BWL Unit Numbers 12, 15, 33, 95, 100, 178, 502, 516, 517, 518,609, 712, 731,745, 783, 800, 854. Motion by Commissioner Creamer, seconded by Commissioner O'Leary,to adopt the recommendation. Action: Carried unanimously. #98-7-8 G. ANNUAL COMMODITY PURCHASES RESOLVED.That the BWL purchase the estimated 12 month requirements with the option to extend for two additional one year periods of the following commodities for use in Dye and Wise Road Water Conditioning Plants, Moores Park Steam Plant. and Eckert and Erickson Electric Generating Plants. Pricing is firm through July 31 1999. Commodity quantities are released as required over the 12 month period. All commodities were competitively bid in accordance with the BWL Purchasing Policy and Procedures. Motion by Commissioner Pratt, seconded by Commissioner Christian, to adopt the recommendation. Action: Carried unanimously. r Page 58 Board Minutes July 28, 1998 #98-7-9 H. ELIGIBLE DOMESTIC RELATIONS ORDERS (EDRO) WHEREAS, the BWL periodically receives court orders paying a portion of an employee's future pension to a divorced spouse, and. WHEREAS, the current Board approved procedure requires approval of each court order by Commissioners after extensive review by staff.and, WHEREAS,experience has shown that the staff review can be shortened considerably and that commissioner approval is not required by law. THEREFORE BE IT RESOLVED. That the BWL procedure regarding eligible donies is relatio.ts orders (EDRO's)be revised to allow administrative approval and acceptance of each order rather than commissioners' approval, and. FURTHER RESOLVED, That the Staff Attorney and Chief Financial Officer are granted the authority to jointly approve and accept EDRO's in compliance with Act 46,P.A. of 1991, MCL 38.1710;MSA 5.4002(110)and that the revised procedure be used to process EDRO's effective 7/1/98. ---------------- Motion by Commissioner Werbelow, seconded by Commissioner Aquilina,to adopt the recommendation. Action: Carried unanimously. L ELECTRIC GREEN PRICING STUDY RESOLVED, that Bay Energy Services(BES), of Omena,Michigan perform an electric green pricing study with a cost not to exceed$85.558. Motion by Commissioner Pratt to adopt the recommendation. Discussion: Commissioner Werbelow asked for additional information on the practicality of this type of an expend tUre Bill Director f System Delivery.told the Commissioners that part of the$85,558 cost includes Z141V. 111 ♦.vvr. 'vv yr v. ysw... a survey to our customers as well as a market survey to determine costs and available options related to providing green power resources. Commissioner Callen disclosed for the record that he knows two of the bidders for the green pricing study who are either former co-workers or personal friends. He indicated that he does not plan to argue for or against an individual bidder. Action: TABLED. Following discussion,this item was referred to the Committee of the Whole. Staff was directed to investigate the feasibility of including the green pricing survey as part of the semi-annual customer attitude survey. r Board Minutes Page 59 July 28, 1998 UNFINISHED BUSINESS No unfinished business. NEW BUSINESS Share the Success Measures for Fiscal Year 1999 General Manager Pandy briefed the Board on the process used to bring the Share the Success(STS)measures to the Board for approval. Management's agreement with the IBEW union is that there would be a STS program based on performance measures. The Share the Success(STS)measures are typically recommended by a group of emplovees called the STS Employee Performance Measures Committee(EPMC). Six months ago,management decided that rather than having management drive the process down through the organization, the employees would be asked to take ownership by involving them in designing the measures. The parameters given to the EPMC this year required that the measures for Fiscal 1999 support the BWL Vision Statement and the nine corporate measures. The proposal brought by the EPMC on June 30 was not approved by management. A Joint Conference Committee(JCC)was convened. comprised of management and EPMC employees. The JCC was unable to reach consensus. A majority of management favors the JCC measures. Internal Auditor Kellie Willson. responsible for measurements and metrics at the BWL and advisor for the EPMC, presented their position. With direction from employee survey results,the EPMC considered responses such as lack of ownership of the STS program, feeling that the measures were remote from their experience,etc. The EPMC feels that the issue is about commitment to the process. They believe that the recommendation met all the requirements given by management. The EPMC believes that a trust has been violated. A lengthy question and answer period followed to clarify how the process in designing the measures changed this year as compared to previous years. Motion by Commissioner Werbelow, seconded by Commissioner Pratt: RESOLVED,That the proposed measures of the Employees Performance Measures Committee be adopted. RESOLVED FURTHER.That the guidelines to the Employees Performance Measures Committee from management provide more specific parameters next year on the performance measures they want accomplished. Approved by the following vote: Ayes: Aquilina. Callen, Christian. Creamer.Pratt, Royal, Werbelow-7 Nays: O'Leary-1 RESOLUTIONS No new resolutions. r Page 60 Board Minutes July 28, 1998 GENERAL MANAGER'S REMARKS Wholesale Trading. General Manager Pandy reported that staff will present a briefing on wholesale markets at the Committee of the Whole meeting on August 11. Commissioner Werbelow requested that written guidelines be developed setting forth the authority of the employees involved with wholesale trading on behalf of the BWL for review and discussion at the next Committee of the Whole meeting. Using conservative guidelines was suggested until official guidelines are adopted by the Board. Bill Cook distributed a copy of written parameters under which the BWL is doing wholesale trading for review prior to the Committee of the Whole meeting on August 11. Emergency Electrical Curtailment Authority. A proNsed Emergency E1e�u:cal Cu.-WILInert Authori.t-f was- handed out which details how the BWL would deal with a shortage of available electrical energy generating capacity. The Board will be asked to consider this item at the regular meeting in August. Pennsylvania Avenue Pumping Station Remodeling. General Manager Pandy presented the architectural firm of Aubrey Raymond and Joan O'Leary who developed a conceptual plan of the Pennsylvania Avenue Pumping Station for a proposed Boardroom and community room. They shared ideas on the floor plan,elevation,and perspective of the building. Plans call for the integrity of the historic structure to remain unchanged with an addition at the rear of the existing building,which includes a glass vestibule with skylights for the major entrance and public restroom facilities. General Manager Pandy noted that when the Board toured the Pumping Station in June,there was a consensus to preserve the existing building. He stated that the proposed design would take the project to another step in adding square footage and enhancing the attractiveness of the site. Following discussion,the Board consented for staff to provide cost information for review and further discussion. Commercial Connections Newsletter. General Manager Pandy distributed copies of the BWL's new Commercial Connections newsletter being published quarterly. This publication will concentrate on subjects of particular concern to our major commercial and industrial customers. Topics featured in the first issue include: deregulation. tips for air conditioning,and quality of drinking water. REMARKS BY COMMISSIONERS Deregulation. Commissioner Callen noted that he appreciates the WALL STREET JOURNAL articles on deregulation being forwarded by Commissioner Werbelow. Charitable Fund. Commissioner Pratt asked if the proposed BWL Charitable Fund will be discussed in the near future. General Manager Pandy responded that this topic will be on the Committee of the Whole meeting agenda on August 11. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT. r Board Minutes Page 61 July 28, 1998 Max Zemer.Business Manager of IBEW Local 352,thanked the Commissioners for their consideration on the Fiscal 1999 Share the Success Measures. Also, he introduced BWL employee Joe Davis who was recently elected President of IBEW Local 352. EXCUSED ABSENCES No absences. ADJOURNMENT On motion by Commissioner Callen, the Board adjourned at 7:25 p.m. /.si Mary E. Sova, Secretary Filed: July 31, 1998 Marilynn Slade. City Clerk r Page 43 MINUTES OF BOARD OF COMMISSIONERS'MEETING ,r LANSING BOARD OF WATER AND LIGHT ? 4i i' : 32 LAWS- � G CITY CLERK Tuesday,June 23, 1998 The Board of Commissioners met in regular session at 5:30 p.m., in the Main Office Building, 123 West Ottawa Street. Lansing, Michigan. The meeting was called to order by the Chair,Ernest Christian. Present: Commissioners Aquilina. Callen. Christian. Creamer, O'Leary,Pratt,Royal, and Werbelow. Absent: None. The Secretary declared a quorum present. The invocation was delivered by the Chair. The Pledge of Allegiance was said by all. APPROVAL OF MINUTES Motion was made by Commissioner O'Leary seconded by Commissioner Royal,to approve the minutes of regular session held May 26. 1998. Adopted unanimously. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW, OR AT THE END OF THE MEETING. No persons spoke. COMMUNICATIONS AND PETITIONS No communications. REPORTS OF COMM=ES #98-6-1 COMMITTEE OF THE WHOLE REPORT The Committee of the Whole met on June 9, 1998, to hear presentations on three main topics. Present were Commissioners Aquilina. Callen, Christian, Creamer, O'Leary, Pratt,Royal and Werbelow. Page 44 Board Minutes June 23, 1998 I. Wireless Communication Technology. General Manager Pandy presented information regarding a potential new venture involving a wireless carrier partnering opportunity for Personal Communication Services (PCS) in affiliation with a major telephone company. This endeavor has come through a firm that is working with the City of Lansing's initiative to bring technology to Lansing schools. The Commissioners discussed the business risks and the increasingly competitive environment with this type of technology. They indicated their preference to explore the prospect for the BWL to proNide maintenance and billing services instead of the PCS supplier. It was suggested that staff discuss this alternative with the City. II. City of DeWitt and DeWitt Township Water Proposal. Marketing Director Clyde Dugan and Marketing Manager Sue McCormick presented economic analyses for the proposed water system extension to the City of DeWitt and the Charter Township of DeWitt. The presentation compared project costs and revenues for wholesale versus retail water service. Preliminary principles of the agreement to be negotiated with the City of DeWitt and DeWitt Township were reviewed in detail. Following discussion, Lite Corrunissioners gave their support for staff to proceed with negotiations. III. Joint Meeting with Lansing City Council. The Board of Water and Light is hosting the joint meeting scheduled for June 25th with the City Council. Discussion items include: A. Electric Deregulation/BWL Marketing B. BWL/City Issues 1. Commissioner and Councilmember Pairings 2. Right of Way Sign Removal 3. BWL-HOPE (Home Ownership Program for Employees) IV. Other Matters: The Commissioners later toured the 1232 Haco Drive facility which is being renovated to house the BWL administrative offices. The retired pumping station at 1231 S. Pennsylvania was also visited to determine the feasibility of future renovation of that building to house additional BWL meeting facilities. BWL labor would be used after the remodeling contractor performs roof repairs and fills in the reservoir and basement level of this historic building. Peter P. Pratt, Chair Pro Tem. COMMITTEE OF THE WHOLE Discussion: With respect to item III, above. Chairman Christian noted that an additional item has been added to the BWUCity Council joint meeting agenda to include iris interview by the Council-members for reappointment to the BWL Board of Commissioners. Action: There being no objections. the Committee of the Whole Report was received as presented. GENERAL MANAGER'S RECOMMENDATIONS The following items are recommended for approval: #98-6-2 A. BOARD MEETING SCHEDULE RESOLVED.That pursuant to the provisions in Article IL Section 2.1 of the Board's Rules of Administrative Procedure.the following dates for the regular meetings of the Board of Water and Light Commissioners for the ensuing six(6)months be and is hereby set. Board Minutes Page 45 June 23, 1998 1998 July 28 - Tuesday August 25 - Tuesday September 22 - Tuesday October 27 - Tuesday November 24 - Tuesday December 15 - Tuesday Regular meetings of the Board shall commence at 5:30 p.m. This schedule is subject to change as a result of date conflicts with rescheduled City Council meetings. RESOLVED FURTHER. That a notice of the meeting schedule be published in the Lansing State Journal the week of July 5, 1998. Motion by Commissioner Werbelow, seconded by Commissioner O'Leary, to adopt the resolution. Action: Adopted unanimously. #98-6-3 B. SHARE THE SUCCESS BONUS OPTIONS RESOLVED.That the following options for the 1998-99 STS program be approved: I. That the Flexible Spending Account(FSA)be continued,and That the Board of Water&Light continue the contract,until further notice,with The TPA/United HealthCare Administrators. Inc. for FSA. Management will be responsible to do periodic reviews for continuation of the FSA. II. That the following Share the Success(STS)Bonus Options be approved for FY 1998-99: Deferred Cash will be discontinued for the 1998-99 Plan year. 1. Purchase of Vacation* - No change 2. Purchase of Free Choice* - No change 3. Deferred Compensation(457) - No change 4. FSA(Flexible Spending Account) - No change 5. Charitable Contributions** - Habitat for Humanity& - Meals-on-Wheels 6. Long Term Disability Program - Open enrollment for"buy-up"options 7. UNUM Term Life Insurance - Annual enrollment for changes 8. Cancer, Intensive Care,AFLAC Plan - Annual enrollment for changes * The purchase of vacation and free choice days will be limited to ten(10)total days to include no more than two (2)Free Choice Days. (See attachment) ** To lower administrative costs.all checks less than$5.00 will be defaulted to the charities option. Opt out procedures will be available for employees declining the default. Page 46 Board Minutes June 23, 1998 Motion by Commissioner Royal. seconded by Commissioner Werbelow, to adopt the resolution. Discussion: General Manager Pandy was asked to provide background information on the STS bonus options for the benefit of the newer Commissioners. Action: Adopted unanimously. #98-6-4 C. INTEGRATED RESOURCE PLANNING WHEREAS,a comprehensive study on Integrated Resource Planning(IRP)was started in 1995 to identify the lowest cost options for meeting the needs of Board of Water and Light(BWL)electric and steam customers over the neat twenty(20)years without exposing the BWL to unreasonable risk, and to conform to all environmental regulations. and WHEREAS, the IRP process, conclusions and recommendations have been reviewed with a citizens advisory group and the Board of Commissioners for feedback in the development effort, and WHEREAS, a public hearing to solicit public input on the Integrated Resource Plan was held April 28, 1998,be it RESOLVED.That the Board of Commissioners accepts the conclusions of the Integrated Resource Plan and directs staff to implement the Plan. Motion by Commissioner Werbelow, seconded by Commissioner Royal,to adopt the resolution. Discussion: Commissioner Callen inquired about some of the statements in the Integrated Resource Plan. He noted that the Plan allows the electric utility to make capital investments of$41 million to Eckert Station and so forth. He asked for an explanation on that issue. General Manager Pandy responded that the$41 million is the estimated investment in Eckert Station over the 20 year period of the Plan. This averages out to approximately$2 million per year being invested in the plant to maintain its gmieireting capacity. Mr. Pandy noted that the Plan is not an authorization to spend that amount,but in essence, a guideline. It simply means that staff will present a capital plan to the Board annually which may be more or less than the average of$2 million. Commissioner Callen asked if there were staff response to recommendations made by several citizens who appeared at the public hearing on May 12, 1998. General Manager Pandy commented that the citizens who appeared mainly spoke in favor of green power. The BWL is planning to offer some green power programs. Staff is working on a request for proposals for wind power and other green power sources of supply for Board consideration. Mr.Pandy indicated that customers have indicated that some will pay a premium to be able to say that they received their power from a wind or solar source or other renewable option. Commissioner Callen asked if the BWL has an evaluation program in place on Demand Side Management(DSM). General Manager Pandy responded that consideration is being given to hire a consultant to provide guidance on that issue. Communications Director John Strickler interjected that the basic conclusion from the DSM study conducted in conjunction with the IRP was that given the B WL's capacity reserves and price for power,DSM was Board Minutes Page 47 June 23, 1998 not particularly called for at this time. The IRP recommends further evaluation of the DSM option in the next IRP study. Commissioner Callen indicated he believes there an opportunity for this kind of offering. He noted that if the BWL were in such a position as to not be able to offer such kinds of options,there are competitors who can. He further stated that he sees electric utilities expanding their services to a variety of customers to assist with DSM and similar services rather than solely providing raw energy. General Manager Pandy responded that the BWL has started to look at going beyond the traditional offerings of energy. He shared a recent conversation held with a local business relative to BWL providing an analysis on their energy and lighting needs. Action: Following discussion_ the resolution was adopted unanimously. #98-6-5 D. 1997-98 RETURN ON EOUITY RESOLVED,That the Board of Water and Light(BWL)pay$6,164,566 to the City of Lansing pursuant to our agreement dated June 30. 1992:and RESOLVED FURTHER.That the Receiving Fund cash and investments remaining following the above payment be transferred effective June 30. 1998 to the Special Project Fund for future capital projects. Motion by Commissioner Werbelow, seconded by Commissioner O'Leary,to adopt the resolution. Discussion: Commissioner O'Leary asked for a clarification on the second paragraph of the resolution. Chief Financial Officer Dana Tousley responded that all cash receipts go into the Receiving Fund,then are disbursed to other funds. Theoretically.each year should stand on its own so that receipts minus expenditures is equal to what is referred to as surplus operating revenue. A portion of surplus operating revenue generated during the fiscal year is transferred to the City of Lansing's general fund as a return on equity payment(in-lieu-of--tax), and the remaining balance is transferred to the Special Project Fund for future capital expenditures. The payment to the City is determined by taking 4 percent of retail electric, water and steam revenues,which represents 44 percent of net income. General Manager Pandy remarked that what the BWL is trying to accomplish with the remaining balance being transferred to the Special Project Fund, is the self-funding of $28 million a year in capital improvements.The annual depreciation typically approximates$14 million;by spending$28 million,the utility would need to earn another$14 million to put into the Special Project Fund annually to keep from borrowing money. More importantly,the BWL's low rates are the result of the utility's long standing practice of financing capital improvements internally by paving cash. Mr. Pandy noted an exception: the BWL's purchase of a portion of the Belle River plant required financing with bonds due to the size of the investment,which could not be funded out of operating revenues. The Belle River debt is an off-the-balance-sheet item to be paid over the next twenty plus years. He emphasized that to keep from borrowing money,surplus funds must be available for annual capital projects. Action: Following discussion. the resolution was adopted unanimously. Page 48 Board Minutes June 23, 1998 #98-6-6 D. REMOVAL AND MARKETING OF RESIDUAL LIME RESOLVED. That the Board enter into an Agreement for the Removal and Marketing of Residual Lime with Natural Resource Recovery(NRR)subject to approval as to form by the BWL's Legal Counsel. The Agreement particulars are as follows: 1. The term shall be for five years commencing July 1, 1998 and terminating June 30, 2003. 2. NRR shall remove the Residual Lime from the Filter Press at Dye Water Conditioning Plant, seven days per«-eek. between the hours of 6:00 a.m. and 6:00 p.m. 3. The intended use for the Residual Lime will be agricultural land application. 4. The fee paid to NRR shall be$16.72 per dry ton of Residual Lime removed. This fee shall remain firm and free from escalation for the term of the Agreement. Natural Resource Recovery submitted the best evaluated bid for the work described above. The other bidders and their respective bids are as follows: Cost Per Dry Ton Company Name 1 Year 3 Year 5 Year H&L Farms $17.75 $18.11 $18.86 Michigan Organic Resources No Bid No Bid $28.85 Wheelabrator(Em-iroland) No Bid No Bid No Bid The Environmental Quality Co. $20.00 $22.00 $24.00 National Resource Recovery No Bid $19.89 $16.72 Carl Schlegel. Inc. $26.51 No Bid No Bid ProLime Services $22.00 $20.00 $18.00 The current cost for removal and marketing of the residual lime is$17.90 per dry ton. This new Agreement represents a savings of$1.18 per dry ton resulting in a projected savings to the BWL and its customers of$93,810 over the term of the Agreement. Motion by Commissioner Werbelow, seconded by Commissioner Royal,to adopt the resolution. Discussion: General Manager Pandy noted that the BWL also continues to sell some of the lime to the Michigan South Central Power Agency in Litchfield.Michigan,for use in their scrubber. Action: Adopted unanimously. UNFINISHED BUSINESS No unfinished business. NEW BUSINESS No new business. Board Minutes Page 49 June 23, 1998 RESOLUTIONS No new resolutions. GENERAL MANAGER'S REMARKS Mary Dwyer-Special Assistant to City Attorney. General Manager Pandy introduced Mary Dwyer,a recent Juris Doctor. Cum Laude graduate from Thomas M. Cooley Law School,January 1998. She has been employed by the BWL since 1991 as a legal assistant to Staff Attorney Larry Wilhite. Ms. Dwyer has been promoted to Associate Attorney. May 1998 Electric Production Report. Genera)Manager Pap_dy reported that electric production incrw.sed by 46%in 1998,compared with 1997. for the month of May. He noted that it was fortunate the recent Eckert turbine unit#2 failure coincided with the General Motor(GM)strike-related shutdown,thus reducing the need for capacity. The good news received June 23 is that the turbine spindle has been repaired and is being shipped from Chicago. The turbine is anticipated to be back in service sometime between July 8 and July 14. Turbine unit#2 is being brought back on line with three rows of high pressure blading missing,which may restrict capacity to about 40 MW from its normal rating of 45 MW. An evaluation will be done to determine the impact on the turbine's efficiency. Mr. Pandy noted that unit#2 is an identical mate to unit#1, thus an opportunity exists to replace unit #1 with a non-condensing turbine to take advantage of steam sales to GM. By replacing unit#1 with a non- condenser. the turbine spindle from that unit can be put into unit#2,thereby save the cost of reblading unit#2. This is the first time staff can recall having a blade tendon failure,extensive testing of our other turbines will be done during routine inspections. Customer Service Hours Extended. General Manager Pandy reported that the BWL will be going to 24-hour service five days per week to better serve our customers. A credit card method of payment is also being offered to customers. Mr. Pandy reported that: (1)approximately 1,300 customers(1%of system)pay their utility bill by credit card. (2)monthly income is about$168,000 with an average payment of$129 per month, and(3)BWL fee for accepting credit card payments is 2.6%. Discussion was held relative to ways of reducing the credit card fee. Safety Performance Concerns. General Manager Pandy reported that the BWL is experiencing a rash of accidents and near misses with 12 incidences reported in the last month some of which involved contract service employees. Safety will be the main topic of discussion at the monthly meeting with the union leadership and the management on June 24. Study on Market Power in Michigan. General Manager Pandy distributed a copy of a letter regarding market dominance in the electric deregulation debate, dated June 22, 1998, sent to members of the House of Representatives in the BWL area. The BWL commissioned R. W.Beck,an engineering firm,to conduct a study on market power in Michigan. The study strongly reinforces concerns voiced in the Staff Report of the Michigan Public Service Commission(MPSC),which stated that Consumers Energy and Detroit Edison have dominance in market power Skylights for Haco Facility Being Evaluated. General Manager Pandy displayed an architectural drawing showing the layout of the new BWL main office building at Haco Drive. As a result of comments received from several commissioners following the June 9th tour of the Haco facility,staff is evaluating the feasibility of putting in 25 skylights to bring daylight into the building. Relocation plans are being shared with the employees for input. Page 50 Board Minutes June 23, 1998 Financial Assistance for Economic Development. General Manager Pandy told the Board that the Mayor is pursuing the BWL to explore ways to provide loan monies for Lansing's Economic Development Corporation (EDC). A handout was distributed on American Public Power Association(APPA)survey results summarizing various types of financing assistance that may be provided in support of business development. An example cited includes a loan participation program whereby the utility worked with the bank, the utility commits to purchase one-half of the banks loan at an interest rate equal to one-half of the bank's marketing lending rate and agrees to take a second lien on the assets purchased with the loan proceeds. The bank is required to pass on it's savings associated with the lower interest rate on the utility's participation to the borrower. The borrower at closing repays loan proceeds based on a blended interest rate. Mr. Pandy noted that the example cited above fails to meet the Commissioners criteria that the BWL should not risk any capital in a loan arrangement. Mr. Pandy informed the Board that the Mayor makes the argument that City EDC projects benefit the BWL. For example when EDC accepts a development within the City of Lansing, the project uses BWL utilities as opposed to a competing utility. Mr. Pandy distributed a list of EDC financed projects in Lansing for review. Discussion cnsucd regarding contributions made by the BWL to promote sustainable economic development through both business attraction and business retention.: namely, (1)annual capital improvements averaging$28 million per year to enhance infrastructure for new services and to improve service to long-time customers who expand, (2) rate advantage in excess of 20%saves our customers approximately$30 million a year, which provides an incentive to use BWL utilities. and(3) an economic development incentive rate to new customers using 100 kW or greater--provides a reduction in rates, phased in over a five year period;thus the demand charge of the rate is reduced by 50%percent the first year. 40%the second year, 30%, 20%and 10%respectively. Following discussion, the Commissioners indicated their belief that loan participation for EDC does not fit within the mission of the BWL. General Manager Pandy also related discussions held with the Mayor relative to competitive possibilities for large energy users. REMARKS BY COMMISSIONERS GM Strike Impact. Commissioner Creamer asked for an update on the impact the General Motors(GM)strike- related shutdown of local plants will have on the BWL. General Manager Pandy and Chief Financial Officer Dana Tousley reported that if the strike continues beyond the July 14 shutdown, the net impact in gross revenues would be$2 million per month from sales to GM. Mr.Tousley indicated that cash reserves are currently adequate to meet cash flow requirements,but emphasized that a prolonged shutdown beyond September could lead to some concern,particularly with area s',:ppliers. Chili Cook-off. Commissioner Creamer congratulated the BWL for the successful Chili Cook-off event held June 19th. Communications Director John Strickler and Public Information Analyst Nancy Tarras were credited for their efforts in coordinating this community event. Thanks also went to the BWL employees who volunteered to work on this fundraiser. Proceeds go to Adopt a River. Main Office Relocation Project. Commissioner Werbelow inquired if the BWL main office building relocation project will be included in the Planned and Bonded Capital Projects Status Report under Common Facilities. Chief Financial Officer Dana Tousley responded that as the project accelerates,costs will be reflected on the capital projects list. Commissioner Werbelow inquired if additional funds have been drawn on the Letter of Credit other than the initial draw. Board Minutes Page 51 June 23, 1998 General Manager Pandy responded that Capitol Outlook,L.L.C. has signed a supplemental agreement to take into consideration the installation of caissons in the basement of the main office building. Additional monies will be paid as that work progresses. Conflict of Interest Disclosure. Commissioner Pratt announced that he filed with the City Clerk an Affidavit of Disclosure to clarify his role as an employee of Public Sector Consultants. He reported that his firm will be bidding on a contract to perform the BWL Green Power Study. The affidavit states that he has had no discussions with anyone at Public Sector Consultants about this study,other than to ask if the firm was going to bid on it. Commissioner Pratt stated that green power is not within his area of expertise,which is health care. He further indicated his intent to disqualify himself from any discussions that the Board and staff may have on this issue,and will recuse himself from any decisions the Board may make on the green power study. Commissioner Werbelow suggested that the recommendation to award the Green Power Study be brought before the Board for consideration to take the burden off frorn the staff. This process would snake it clear that Commissioner Pratt has not been involved in the decision. Staff agreed to bring this item to the Board. Utility Restructuring. Commissioner Callen inquired if the issue of utility restructuring is on the agenda for the joint meeting with City Council on June 25. General Manager Pandy responded that a brief presentation will be made on BWL activities dealing with restructuring. Notice of Force Majeure from GM. General Manager Pandy reported that in his written report to the Board, dated June 18. 1998. he mentioned that the"Notice of Force Majeure" received from General Motors(GM)negates the demand charges. He stated for the record that demand charges are not negated because the demand charges were structured in the contract to allow the BWL to recover the cost of the steam line. Consequently,if GM Force Majeured everything and declared their GM Small Car Group(SCG)plants closed,they would still be liable for the steam line. The effect of the Force Majeure simply says SCG does not have to take the steam load as forecasted under their contract. There is, however,a total annual requirement for SCG to take steam. In the event of a long strike, the interpretation of the Force Majeure could come into play. Comments on Write Offs. Chairman Christian expressed concern on the fiscal current year-to-date write off reflected on the May 1998 Budget Variance Analysis and Selected Data report. He noted a 20.8%increase in the current fiscal year versus the previous year. Chief Financial Officer Tousley responded that amounts are being written off much faster than in prior years. A detaiied review on this item will be made to determine if other factors exist that may have an impact on the percentage of the increase. The findings will be submitted to the Board. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT. City Councilmember Harold Leeman requested that an update report be provided to the Councilmembers at the June 25 joint meeting regarding BWL main office relocation activities and timetable. Page 52 Board Minutes June 23, 1998 EXCUSED ABSENCES No absences. ADJOURNMENT On motion by Commissioner Callen, the Board adjourned at 6:35 p.m. Xs/Mary E. Sova, Secretary Filed: June?S, 1998 Marilynn Slade. City Clerk Page 35 MINUTES OF BOARD OF COMMISSIONERS' MEETING, LANSING BOARD OF WATER AND LIGHT y ` IJ-N 3 i i i f: 0,3 L ,' sfidC CIT1'CLERK Tuesday, May 26, 1998 The Board of Commissioners met in regular session at 5:30 p.m., in the Main Office Building, 123 West Ottawa Street_ Lansing, Michigan. The meeting was called to order by the Chair,Ernest Christian. Present: Commissioners Aquilina. Callen. Christian. Creamer. O'Leary,Royal and Werbelow Absent: Commissioner Pratt. The Secretary declared a quorum present. The invocation was delivered by the Chair. The Pledge of Allegiance was said by all. Chairman Christian welcomed Ronald C. Callen as a new Board of Water and Light Commissioner. Commissioner Callen represents the fourth ward, replacing Joseph Graves, Jr. His term Mll expire on June 30, 2000. APPROVAL OF MINUTES Motion was made by Commissioner Werbelow seconded by Commissioner Royal, to approve the minutes of regular session held April 28, 1998. Adopted unanimously. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW, OR AT THE END OF THE MEETING. No persons spoke. COMMUNICATIONS AND PETITIONS A letter of thanks from Joseph Graves. Jr.,former BWL Commissioner,for the Board's resolution of tribute recently presented to him. Received and placed on file. Page 36 Board Minutes May 26, 1998 REPORTS OF COMMITTEES COMMITTEE OF THE WHOLE REPORT The Committee of the Whole met on Mav 12. 1998. to discuss the following items: 1. FY 1998-99 Non-Bargaining Compensation and Related Matters 2. FY 1998-99 Budget 3. Defined Benefit and Defined Contribution Plans 4. Monthly Pensions Prese.. were A I n 1 t n Pratt, l \ 1 oil absences more t Commissioners qui i..a. C .ris ian. .,'Le�:ry,. ti Roy....,anal A erbel Excused Commissioners Callen and Creamer. Non-Bargaining Compensation. Human Resources Director Linda Gardner and Employment Compensation Administrator Steve Pollo presented the results of an external market survey, an analysis of cost of living trends. comparing bargaining and non-bargaining unit salaries within the Board of Water and Light. Staff noted that the recommended increases are conservative compared to compensation increases in the local area,but are equitable when considered against other factors such as inflation. 4 98-5-1 Resolution to Increase Non-Bargaining Compensation for FY 1998-99 Resolved. That effective July 1. 1998. the salary of Non-Bargaining Unit employees be increased as follows: 1. All current Non-Bargaining Unit salary ranges will be increased 2.5%for Fiscal Year 1998-99; 2. All current Non-Bargaining Unit employees in full-time positions will receive a 2.5%general increase. provided they are not"red-circled" and their performance is at an acceptable level; 3. Clerical and Technical employees' performance increases will continue to be administered according to existing policy. and 4. Part-time employees will receive a 2.5%general increase rounded up to the next full nickel. Mot;=by Cor-xiiss'oner O'Leary, seconded by Cormis ion r Royal,to receive t?,(�nt[1tTI1ttP£of the Whole Report as presented. Action. Adopted unanimously. Severance Package Eligibility. A proposed severance package to Non-Bargaining Unit employees who meet certain conditions was reviewed by General Manager Pandy. The Severance Package is a means of treating eligible employees fairly and terminating the employment relationship in an orderly fashion. This item will be presented for Board discussion and consideration at the regular meeting on May 26, 1998. Fiscal Year 1998-99 Budget. Chief Financial Officer Dana Tousley presented the proposed budget by utility. A comparative analysis was presented for projected income statements and cash flow for Fiscal 1999 vs. Fiscal 1998 and for the twelve months ended March 31, 1998. Unit costs for the last six years vs.Fiscal 1999 were also compared. Board Minutes Page 37 Mav 26, 1998 Fiscal 1998 and for the twelve months ended March 31, 1998. Unit costs for the last six years vs. Fiscal 1999 were also compared. 98-5-2 Resolution to Approve Fiscal Year 1998-99 Budget Resolved. That the annual budget covering Fiscal Year 1998-99 be approved as presented(see attachment). Further Resolved. That capital projects are authorized in the amount of the project estimate. Capital expenditures for Fiscal 1998-99 are limited to the amount included in the budget. Motion by Commissioner O'Leary. seconded by Commissioner Roval, to adopt the resolution. Action. Adopted unanimously. Monthly Pensions 4 98-5-3 Resolution to Increase.1 fedicare Reimbursement to Eligible Pensioners Whereas. the Board of Water and Light (BWL)agreed during negotiations to review pensions every three years with a one-year look back, and Whereas, staff has reviewed monthly pensions and other benefits and actuarially costed several options, and Whereas. inflation has averaged less than 2.5%per year(total 7.4%), since the last pension increase in January 1995, and Whereas.as a result of a special conference the International Brotherhood of Electrical Workers(IBEW) Local 352 has agreed to change the current labor agreement for the change to the Medicare reimbursement. and Whereas. the cost of any pension increase is substantially higher than in the past, due to the early retirement program; be it Resolved. That monthly pensions remain the same pending the next review on January 1, 2001, and Further Resolved. That the Medicare reimbursement for eligible pensions and spouses be increased from $25 to$43 per month. effective as of January 1, 1998. This change increases BWL operating costs $126.144 per year. This change benefits pensioners and spouses eligible for Medicare(over age 65). Motion by Commissioner Werbelow. seconded by Commissioner Royal, to adopt the resolution. Action. Adopted unanimously. Defined Benefit and Defined Contribution Plans. To keep the BWL's Defined Benefit and Defined Contribution plans in compliance as qualified plans for the Internal Revenue Service Code 401a, the following resolution is presented: Page 38 Board Minutes May 26, 1998 #98-5-4 Resolution to Amend Defined Contribution Plan Resolved. That the First Amendment to the Lansing Board of Water and Light Employees' Defined Contribution Plan is hereby adopted. and Further Resolved.That the Chairman of the Board of Commissioners and the Corporate Secretary are herebv authorized to execute the Amendment and related documents. Motion by Commissioner Werbelow, seconded by Commissioner Royal, to adopt the resolution. Action. Adopted unanimously. Informational Items The following reports were mailed to the Commissioners prior to the meeting for information: • Transfer of General Cash and Securities. A total of$3,255,067 was transferred from General Cash and Securities to the Capital Improvements Project Fund to re-balance the contingency funds for Coal Inventory and Uninsured Losses. • Loan from Electric to Steam. The loan of electric utility funds to the steam utility to supplement funding for the General Motors Steam Main Project will be repaid from steam revenues over ten years. This complies with the Board's policy that each utility be self-sufficient. • Review of Defined Contribution Investment Options. The defined contribution investment policy requires an annual evaluation of the suitability of the 36 investment options available to plan participants. The Commissioners received reports only on the first quarter that the plan has been in existence. An annual evaluation early in 1999 will be submitted for review. • A summary report on the BWL's investment policy with regard to cash reserves will be mailed to each Commissioner for review. 11i o ions by Commissioner O'Leary. seconded by Commissioner Royal,to receive the Committee-of the Whole Report as presented. Action. Adopted unanimously. GENERAL MANAGER'S RECOMMENDATIONS The following items are recommended for approval: #98-5-5 A. Severance Package Whereas. As the Board of Water and Light(BWL)undergoes the process of redesign, certain work and job duties will be eliminated or outsourced. where practical. Non-bargaining unit employees who perform job duties or work which is eliminated. and who can not be retrained or utilized in other positions, may desire to leave Board Minutes Page 39 May 26, 1998 the organization. This Severance Package is a means of treating those employees fairly and terminating the employment relationship in an orderly fashion. This Severance Package is a change in compensation and benefits for BWL employees. and therefore. must receive the concurring vote of five(5) Commissioners. The Severance Package is only available to non-bargaining unit employees at this time, since it must be collectively bargained with the Union. Further Resolved. That the General Manager is authorized to implement a Severance Package, and enter into Separation Agreements and Releases with eligible employees, in substantially such form as the described attached documents. Motion by Commissioner Royal. seconded by Commissioner Aquilina,to adopt the resolution. Action. Adopted unanimously. #98-5-6 B. Electric Retail Choice Pilot Program Whereas. The Michigan Public Service Commission(MPSC)has directed that the State's investor-owned utilities open up their service territories to retail access, beginning with 1.5 percent of Detroit Edison's and Consumers Energy's load in 1998 and increasing in 2.5 percent increments through 2001 after which all remaining customers would be able to choose an alternative power supplier if they so wish; and Whereas. The MPSC order does not include the Lansing Board of Water and Light(BWL)or any of the State's 41 municipally-owned utilities. and Whereas. The Michigan Legislature is considering, but has not acted,on retail access legislation that would define the roles that all of the State's electric utilities would have in retail access;and Whereas. There are many uncertainties surrounding electric utility restructuring that will only be clarified by experience, and Whereas, As a result of the MPSC order regarding retail access Detroit Edison and Consumers Energy will gain valuable experience in operating in a deregulated environment prior to the implementation of full access in 2002. and Whereas. At some point it is likely that the Board of Water and Light Commissioners will be asked to determine whether retail access is in the best interest of the BWL and its customers; and Whereas. It would be beneficial for the Board of Commissioners,the utility and its customers to become more knowledgeable in the technical and market-based intricacies of retail access and customer choice in order to make an informed decision on whether or not such choice is in the best interests of all concerned; and Whereas. One wav such knowledge can be gained is through experience by participating in a controlled retail choice pilot project. Further Resolved, That staff is directed to prepare for Board consideration a pilot electric retail choice program that would permit a certain number of BWL electric customers to receive their power supply from a source other than the BWL if they so desire. The proposed pilot program will be limited in terms of the number of customers that may participate and/or the total amount of capacity that will be made subject to choice under the program. The proposed pilot program should be submitted for Board consideration no later than August 15, 1998. Page 40 Board Minutes May 26, 1998 An example of how this might work is shown in the attached charts from the Electric Rate Unbundling Studv. Motion by Commissioner Royal. seconded by Commissioner Aquilina, to adopt the resolution. Discussion: Commissioner Werbelow raised a point of clarification. He noted that the agenda characterizes this resolution as the Board authorizing the BWL to enter into an Electric Retail Choice Pilot Program. General Manager Pandy clarified that the intent is for staff to devise a proposed pilot program no later than August 15. 1998. for Board consideration. Mr. Pandy then distributed a summary sheet that outlines the risks and benefits of a Retail Wheeling Pilot Program. General Manager Pandy reported that a package of twelve (12)bills to guide restructuring of the state's electric industry are ex lxcied to be introduced in the State Legislature in Rule. According to the Gorig'v'rc.r 1`le;— Service, there is mixed review by those closely following the issue that they can actually pass this year. Action. Following discussion and clarification, the motion was adopted unanimously. UNFINISHED BUSINESS No unfinished business. NEW BUSINESS Commissioner Creamer voiced his concern relative to the increasing number of people utilizing utility poles to advertise. He cited several examples ranging from employment ads. lost pets,garage sales,etc. The issue being that people are starting to use the right of way as an advertising mechanism. Commissioner Creamer asked management to explore ways to cooperativeiv work with other entities; i.e., telephone companies,cable companies and the City of Lansing to pull off these signs to clearly send a message to persons and companies that this is not the kind of advertising allowed in the Greater Lansing area. Commissioner Creamer suggested including this item on the agenda for the next joint meeting with City Council. General Manager Pandy remarked that it is customary for lineworkers to automatically remove signs when they climb utility poles because they present safety hazards. Signs block the view of the condition of the poles,should there be some imperfection. Also, nails used to put signs on poles represent a hazard to lineworkers;in the event they should slip, the sharp edges would cause injury. Mr. Pandy agreed that an aggressive campaign needs to be developed to communicate concerns. Following discussion, the Commissioners concurred that this matter should be brought to the attention of the City for a cooperative approach in addressing the problem. RESOLUTIONS There were no new resolutions. GENERAL MANAGER'S REMARKS Legislative Office Building Project Schedule. General Manager Pandy handed out a tentative project schedule for the Legislative Office Building.as submitted by the Gary Granger/Joel Ferguson group(Capitol Outlook, Board Minutes Page 41 May 26, 1998 L.L.C.). A preliminary companion BWL schedule was also distributed detailing the time frame involved for remodeling the Haco Drive and Pennsylvania/Hazel Street facilities. Included with the schedule were two scenarios depicting cost comparisons for: scenario#1 to remodel and extend the life of the 123 W.Ottawa Street office building vs. scenario#2 to relocate the BWL main office to Haco Drive and sell the 123 W.Ottawa Street office building. The schedule calls for the BWL to complete its final relocation phase by approximately December 13. 1998. A tour of facilities to be remodeled is planned for the Commissioners on June 9th,immediately following their Committee of the Whole meeting to be held at the Haco Drive conference room. In response to questions raised by the Commissioners regarding coordination of the BWL's work activities performed by employees at the 123 W. Ottawa building while construction is in progress, General Manager Pandy commented that disruption is expected. however.every effort will be made to cooperate with the Granger/Ferguson schedule while minimizing the impact on the employees and the BWL's work flow. Mr. Pandy noted that Gary Granger has indicated to him that air monitoring stations will be set up throughout the building with an independent consultant monitoring the air and reporting results to BWL employees for environmental safety concerns. Also.Mr. Granger plans to provide weekly, if not da;ly comm.m ication updates to heeep employe's informed of the construction progress. Groesbeck Drainage District. General Manager Pandy distributed a copy of a letter he sent to Ingham County Drain Commissioner Patrick Lindemann, dated May 19, 1998, regarding the Groesbeck Drainage District. He reported that the BWL continues to work with Lansing Township and their consultants,the Snell Environmental Group. and other property owners within that area to identify the best solution that is cost effective,protects the drinking water supply and the environment. and takes into account the BWL landfill and its eventual closure requirements. Also. he noted that a written plan has not yet been submitted by the Drain Commissioner with a proposed solution. the property appraisal, or the liability issues for feedback by BWL staff. Update on the Stamp-Rite Matter. General Manager Pandy reported that attorneys are continuing settlement negotiations in the Stamp-Rite case. Copies of latest correspondence from the BWL's attorney and the plaintiff's attorney were handed out to the Commissioners for review. AWWA QualServe Peer Review, General Manger Pandy distributed a letter of appreciation from Jack Hoffbuhr, Executive Director of the American Water Works Association(AWWA),dated May 18, 1998, for Internal Auditor Kellie Willson's recent participation in an AWWA QualServe peer review at the City of Cleveland-Division of Water. Both the Cleveland Division of Water and the peer team felt the peer review was a success. As a contributor to the review of other utilities, the BWL will be able to have a peer review by AWWA, which is part of the program. Commissioners to Meet with the Lansine Citv Council. General Manager Pandy reported that the joint meeting with the Lansing' ity Council is set for Thursday, June 25, i998. The meeting will be held at the Lansing city Club with dinner at 6:00 p.m. and the meeting starting at approximately 7:00 p.m. The Commissioners agreed to institute the"pairing"concept with Councilmembers,based on ward and at-large representation,to encourage more interaction. Price Quotes for Wholesale Enerzy. Director of System Delivery Bill Cook displayed a graphic depicting the high and the low price quotes on wholesale energy markets during the period May 1-21, 1998. Typically during normal weather this time of year. the price is in the$20 per megawatt-hour(MWh)range. Mr. Cook noted that on May 19-20, some utilities with supply shortages paid between$250-$358/MWh due to their units being out of senice for maintenance. General Manager Pandy reported that$5 million is anticipated this year by the BWL in wholesale sales,which benefits customers by keeping electricity rates low. Page 42 Board Minutes May 26, 1998 REMARKS BY COMMISSIONERS Commissioner Werbelow inquired about the status of the Oneida Charter Township Water Service controversy with the City of Grand Ledge. General Manager Pandy responded that the City of Grand Ledge has objected to discussions held by the Mid- Michigan Water Authority(MMWA) relative to water service in Oneida Township. The controversy is based on a fort (40)year Municipal Utility Agreement, dated October 27, 1980,between the City of Grand Ledge and Oneida Charter Township for the provision of water and sanitary sewer service in Oneida Charter Township. Mr. Pandy stated that the BWL is trying to use these discussions as an opportunity to foster a regional water supply concept through the MMWA. The BWL and MMWA would like to suggest that both the City of Grand Ledge and Oneida Charter Township consider becoming members of MMWA and cooperatively assist in planning for the whole region. Oneida Charter Township officials have indicated that the Agreement is not exclusive; it does not exclude them from looking at other uptions. Commissioner Werbelow expressed concern with what may be viewed as an interference of contractual relations. He suggested that the BWL conduct a thorough review of the Municipal Utility Agreement between the City of Grand Ledge and Oneida Charter Township for a clear understanding of the issues involved. General Manager Pandy assured the Board that this matter would be handled cautiously as discussions continue. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT. No persons spoke. EXCUSED ABSENCES On motion by Commissioner O'Leary, seconded by Commissioner Royal, the absence of Commissioner Pratt was excused. Adopted unanimously. ADJOURNMENT On motion by Commissioner Callen. the Board adjourned at 6:20 p.m. Is/Mary E Sova, Secretary Filed: _Vav 29, 1998 Marilynn Slade,City Clerk ATTACHMENT- FROM COMMITTEE OF THE WHOLE REPORT LANSING BOARD OF WATER AND LIGHT MEMO: DATE: May 7, 1998 TO: Mr. Joe Pandy Jr., Director and General Manager FROM: Dana W. Tousley, Treasurer/Controller SUBJECT: Proposed Fiscal 1999 Budget Exhibit A presents the proposed budget by utility for FY 1999. Exhibit R presents projected income statements and cash flows for the BWL for Fiscal 1999 compared to Fiscal 1998 budget and for the twelve months ended 3/31/98. Exhibit C compares unit cost for the last 6 years to FY 99 unit costs. SALES AND REVENUE WATER - Total forecast sales yields revenue of $16.653 million. This is an increase of 3.8% in sales and 2.7% in revenue from the 12 months ended March 1998. ELECTRIC - Sales of electricity will increase 1.8%. Forecast sales will result in revenues of $147.647 million. This is an increase of 2.7% in revenues from the 12 months ended March 1998. STEAM - Forecast sales yields revenues of $15.737 million. This is an increase of 54.7% in sales and an increase of 55.9% in revenue from the 12 months ended March 1998. This is one full year of GM Plant #6 sales. OPERATIONS & MAINTENANCE EXPENSE The proposed 0 & M expense is 1 .2% higher than the twelve months ending 3/31/98. This is due primarily to an expected increase in labor, purchased power and steam fuel cost for GM contract. Revenue increases offset the increase in expense, resulting in a substantial increase in net income. In addition, management has anticipated some of the cost savings expected due to the recent reorganization. FY 99 expense per unit sold is 2.2% lower for electric, and 5.6% and 17.0% lower for water and steam, than the actual operating expense per unit for 12 months ending 3/98. CAPITAL PROJECTS Proposed capital expenditures during Fiscal 1999 are $41,222,000 versus $29,307,000 in Fiscal 1998. This is a 40.7% increase. Two large projects cause the increase.. Eckert Station's conversion to western coal is one of those projects. Also, Erickson Station needs to replace the electrostatic precipitator. The expenditures projected allow for some slippage in actual cash flow due to project delays. Cash flow and the remainder of the 1994 bond proceeds will finance these projects. Exhibit D is a listing of FY 1999 annual and planned capital projects. --See Next Page for Budget-- BOARD OF WATER AND LIGHT-LANSING MICHIGAN BUDGET FISCAL YEAR ENDING JUNE 30, 1999 WATER ELECTRIC STEAM TOTAL (PROJECTED INCOME STATEMENT $(000) FY 99 i ,SALES ccf/kwh/mlb 9,647,969 2,808,581,000 2,278,600 I !OPERATING REVENUE 16,653 147,647 15,737 180,037 Operation/Maint Expense 11,529 119,202 12,147 142,878 Depreciation Expense 3,116 14,864 901 18,881 (TOTAL OPERATING EXPENSE 14,645 134,066 13,048 161,759 OPERATING INCOME 2,008 13,581 2,689 18,278 Other Income 1,800 3,903 160 5,863 Other Expense 575 i,240 126 1,946 (NET INCOME 3,233 16,239 2,723 22,195 (NET INCOME AFTER CITY PAYMENT 2,612 10,973 2,159 15,744 RATE OF RETURN-1/98 RATE BASE 4.9% 5.0% 7.5% 5.2% RETURN ON ASSETS-1/98 ASSETS 2.0% 2.4% 5.1% 2.5% PROJECTED CASH FLOW $(000) FY 99 Restricted Operating Cash 2,210 20,462 1,928 24,600 Restricted General Cash 4,866 8,298 1,066 14,230 Special Project/Const Cash 3,693 16,700 1,237 21,630 BEGINNING CASH 7-1-98 10,769 45,460 4,231 60,460 Sources of Cash Net Income 3,233 16,239 2,723 22,195 Loan from Electric to Steam 1,019 (1,019) 0 Depreciation 3,116 14,864 901 18,881 TOTAL SOURCES OF CASH 6.349 32,122, 2,605 41,076 SOURCES OF CASH 1 BEG. CASH 17,118 77,582 6,836 101,536 Uses of Cash Debt Principal 700 1,552 137 2,389 Transfer Repayment 420 (667) 247 0 Capital Expenditures 5,812 34,165 1,245 41,222 Payment to City 621 5,266 564 6,451 TOTAL USES OF CASH 7,553 40,316 2,193 50,062 Restricted Operating Cash 1,441 14,900 1,518 17,859 Restricted General Cash 5,061 8,630 1,109 14,800 Special Project/Const Cash 3,063 13,736 2,016 18,815 ENDING CASH 6-30-99 9,565 37,266 4,643 51,474 Page 29 MINUTES OF BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT Tuesdav,April 28, 1998 The Board of Commissioners met in regular session at 5:30 p.m., in the Main Office Building, 123 West Ottawa Street. Lansing. Michigan. The meeting was called to order by the Vice Chair,Diane Royal. Present: Commissioners Aquilina. Christian(via speakerphone), Creamer, O'Leary, Pratt, Royal and We velow(vra speakerplrame). Absent: Commissioner Callen. The Secretary declared a quorum present. The invocation was delivered by Vice Chair Roval. The Pledge of Allegiance was said by all. Z: APPROVAL OF MINUTES m ►� _;! Motion was made by Commissioner O'Leary seconded by Commissioner Pratt, to approve the minut s of regular session held March 24. 1998. Adopted unanimously. PUBLIC COMMENTS VICE CHAIR ROYAL ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW, OR AT THE END OF THE MEETING. No persons spoke. COMMUNICATIONS AND PETITIONS A letter of thanks from Roger Ophaug for Board representation and kind words at his recent retirement dinner. Received and placed on file. REPORTS OF COMMITTEES There were no committee report. Page 30 Board Minutes April 28, 1998 GENERAL MANAGER'S RECOMMENDATIONS The following items are recommended for approval: #98-4-1 A. PROFESSIONAL SERVICES - BENEFITS CONSULTING RESOLVED. That a Purchase Order for Professional Benefits Consulting Services be issued to William M. Mercer. Inc.. for the five year period from April 9. 1998 through March 31, 2003. This firm will provide annual actuarial valuations of BWL's defined benefit pension plan and other benefits consulting services as required. Consulting services will be provided on an hourly rate plus actual expenses. Utilization of these consultants will be approved by the Chief Financial Officer, the Director of Human Resources, or the Internal Auditor. Requests for proposals were sent to Deloitte&Touche LLP, Towers Perrin. and Watson Wyatt. Towers Perrin declined to respond. The Mercer firm submitted the best evaluated proposal. Motion by Commissioner O'Leary. seconded by Commissioner Creamer,to adopt the resolution. Action. Adopted unanimously. #98-4-2 B. WATER DISTRICT NO. 3, DeWITT CHARTER TOWNSHIP AMENDMENT TO RESOLUTION 98-1-5 WHEREAS.The Board adopted Resolution 98-1-5 on January 27, 1998, authorizing Water District No. 3 in DeWitt Township to be established. Due to unforeseen delays, the DeWitt Charter Township Board did not officially take action to establish Water District No. 3 until April 13, 1998. consequently, it has become necessary to revise the resolution to reflect some minor changes. RESOLVED, That Resolution 98-1-5 is herebv amended to read as follows: (Deleted text indicated by strikethrough and Inserted text indicated by upper case.) "Resolved,That the Board agree to serve water to proposed Water District No. 3,DeWitt Township,as requested by resolution of the DeWitt Charter Township Board on 3anuefy 26,APRIL 13, 1998 and that in accordance with the agreement between the Board and the Charter Township of DeWitt dated July 14, 1995, covering the furnishing of potable water supplying DeWitt Township, the Board advise the officials of DeWitt Township as follows: Board Minutes Page 31 April 28. 1998 1. The Board will accept Water District No. 3 established by the Township Resolution on �6. APRIL 13. 1998 and will provide a potable water supply to said district. 2, The n.,HM and the Township ae"ewledge that establishing WateF Dist iet Ne. 9 that the WateF Ce AFea be amended to ifielude all areas of the Te ship East of U.S. 127/fiAUFe U.S. 27 3-2. The Board and the Township acknowledge that establishing Water District No. 3 requires the installation of s-,stem reinforcements as outlined in Appendix B of the Water Service Agreement 4-3. The Board and the Township are to enter into a written agreement(Supplement III) covering the furnish?ng of a potable water supply in Water District No. 3, the required system reinforcements as per Option II of Appendix B of the Water Service Agreement. e expansion of the WateF SeBiee A.ee :n the TeA%sh:n 5-4. Water mains are to be installed in accordance with the current Board's Rules and Regulations for water service. 5. That at the Township's request the Board will surcharge all of its water customers in the township as necessan•to cover the Township's costs for annual fire hydrant charges. Such initial surcharge to be set at 12%commencing on July 1, 1998. RESOLVED FURTHER That the projects be approved for installation, and the General Manager and Secretary be authorized to sign the aforementioned agreement(Supplement III). The Geographical area of Water District No. 3 is as follows: State Rd. from N. E. St. easterly 16,300 feet to Chandler Rd. To pro,0de a potable water supply within the proposed new district requires the installation of 16,300 feet of 16" water main and 33 hydrants at the estimated cost of$1,065.872. DeWitt Township ACKNOWLEDGES THE BOARD'S RIGHT TO RECOVER THE COST OF$477.997.00 DIRECTLY FROM PROPERTY OWNERS ALONG THE ROUTE 411 make a eantr-ibutien in id of cens4uetieft in the amount of$6,12 ,cz. The Board will participate in oversizing a^a Feeevefflble f omega in the amount of$587,875 423,719. The main extension will serve five(5)commercial and fortv(40)residential homes existing at this time. One-time connection fees will amount to$54.559. The estimated annual revenue is$62.090. Potential for-c e.,teee ehmges is$30 000 The required system reinforcement requires the installation of 24,336 feet of 24"main and 1000 feet of 16" main from the Board's Dye Water Conditioning Plant Northerly to Weiland,Easterly to Brook, then Northerly to State Road at the estimated cost of$3,260.849. The Board will install the reinforcement at no direct cost to the Township and will recover its costs by a schedule of supplemental connection charges to all suburban water customers directly benefiting from the system reinforcement." Water mains to be installed in District No. 3 in the Spring of 1998. The system reinforcements to be installed during the 1999 construction season. These projects are also part of the construction required in the proposal for service to Bath Township and construction timelines are appropriate to meet the terms of that proposal as well as meet the needs of DeWitt Township's development. Based on conservative estimates of development, recovery of the Board's investment is anticipated within 7 years. Page 32 Board Minutes April 29, 1998 Motion by Commissioner O'Leary. seconded by Commissioner Creamer,to adopt the resolution. Discussion: General Manager Pandy distributed a copy of a memo prepared by Clyde Dugan, Director of Sales& Marketing,dated April 28. 1998, that summarizes the changes made on the above-reference resolution(adopted January 27. 1998). Mr. Pandy reported that proposed amendments to the resolution are due to a stay on the proposed developments along State Road. due to a citizen petition process that will result in a fall referendum on the rezoning request. Without the changes in zoning and subsequent approval of the development projects that would result in 1998 project construction. DeWitt Township was not in a position to request water service on State Road. east of the U. S. 127 corridor. DeWitt Township's action in requesting Water District No. 3 on April 13 is primarily due to their interest in cooperating with the provision of BWL water service to Bath Township and capturing the benefits of a joint project for future reinforcement requirements. The need to amend the resolution was first brought on by DeWitt Township in which they originally intended to act on January 26, 1998,but tabled the matter. On April 13. 1998. action was finally taken by DeWitt Township on Water District No. 3, one week after Bath Township approved entering into a Water Service Agreement. Mr. Pandy noted that DeWitt Township has elected not to extend the water service territory at this time in consideration of the citizen petition process affecting the rezoning and development east of U. S. 127. By mutual agreement, the water service territory could be extended into this area at a future date. The allocation of project cost to DeWitt Township is reduced to $477.997 reflecting the main sizing required to serve the district in accordance with the current zoning. DeWitt Township is requesting Water District No. 3 in cooperation with the BWL, in large part to provide a route for water service to Bath Township. DeWitt Township is not in a position to fund this main through a direct charge to a developer, due to the stay in rezoning. At the BWL's request.DeWitt Township has agreed to allow recovery of these costs through a front footage recovery formula for each property along the route, as the property owners request water service. Sue McCormick, Manager for New Markets and Ventures,was present to respond to questions relative to this water system extension project. Following discussion. Commissioner Werbelow noted that he has received several pieces of informational items on the water extension project over the past several months, but indicated his preference to see a comprehensive report detailing the issues in this matter, particularly who will be served and the economics of the project. Ms. McCormick stated that this information is available and will be forwarded to the Commissioners. Action. Adopted unanimously. UNFINISHED BUSINESS General Manager Pandy presented an update on the matter of Wendall Parsons and Stamp-Rite, Inc.v Board of Water&Light et al. Copies of recent correspondence from BWL's attorney,David Otis of Plunkett&Cooney to the three insurers and to the plaintiffs attorney were distributed to the Board for review. A meeting will be held on Mav 5, 1998. to discuss settlement on this matter. NEW BUSINESS There was no new business. RESOLUTIONS There were no new resolutions. Board Minutes Page 33 April 28. 1998 GENERAL MANAGER'S REMARKS Enron Giving Up on Residential Market. General Manager Pandy handed out a copy of a WALL STATE JOURNAL article, dated April 22. 1998. entitled. "Enron Scales Back California Power Sales." Mr. Pandy noted that Enron has spent millions of dollars in California truing to woo new residential customers as part of its strategy to become a leading national provider of electricity. but to find that only 32.000 residential customers signed up in the entire state--which is an insufficient number to justiN,being there. Despite being given a choice of electric suppliers, less than 1%of California's 10 million-electricity consumers have so far left their three local utilities. Mr.Pandy pointed out that it clearly indicates not all customers are interested in leaving their local utilities given the minimal savings that can be achieved. A Satisfied Customer. General Manager Pandy handed out a copy of a thank you note from BWL customer, Georgia L. Brown for exceptional customer service provided during a broken water.line incident at her home. She acknowledged employees Harold Miller. Pat Martin. Beth DeLoof,Mark Stornant,Dale Smith and John Moore for their excellent work in handling the emergency situation. Electric Business Strategy Plan. General Manager Pandy reported that staff members have been working for some time on identiA ing strategies to meet electric competition. Mr. Pandy yielded his time to Bill Cook,Director of Svstem Deliverv. to present the high points of the Electric Business Strategy report. The written report was provided to each Commissioner together with the Board meeting packet several days prior to the regular meeting. [Commissioner Werbelow signed off from the speakerphone at approximately 6:45 p.m.] Following an in depth presentation and a brief question and answer period. Mr. Cook handed out a draft Electric Retail Choice Pilot Resolution for review and consideration at the next regular meeting. The draft resolution directs staff to prepare a pilot retail access plan for BWL electric customers. The plan would permit a certain number of BWL electric customers to receive their power supply from a source other than the BWL if they desire. The pilot would be limited. either in terms of the number of customers that could participate, or the total amount of capacity that would be opened to customer choice. The pilot program would give both the BWL and its customers some experience in retail choice which the Michigan Public Service Commission(MPSC)is phasing in for customers of Detroit Edison and Consumers Energy. The MPSC plan does not include municipal utilities or their customers. The proposed pilot program would be submitted for Board consideration no later than August 15, 1998:and if approved. would take effect in January. 1999. General Manager Pandy noted that staff is in the process of developing competitive strategies for water and steam. They continue to be the BWL's product lines and profit centers,even though the BW-L is organizing around Production. Delivery. Customer Service, and Marketing. REMARKS BY COMMISSIONERS Commissioner Christian inquired about the Landis&Gyr Utilities Services, Inc. matter relative to the Energy Management System(EMS)at the Brush Electric System Operations Center(BESOC) Computer Replacement Contract. General Manager Pandy responded that legal negotiations with Landis&Gyr Utilities Services are being held to reach a settlement that would permit the B WL to complete the project. He briefed the Board on specifics issues of the dispute. Page 34 Board Minutes Apiil28, 1998 PUBLIC COMMENTS VICE CHAIR ROYAL ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT. No persons spoke. EXCUSED ABSENCES On motion by Commissioner Pratt. seconded by Commissioner O'Leary, the absence of Commissioner Callen was excused. Adopted unanimously. ADJOURNMENT On motion by Vice-Chair Roval. the Board adjourned at 7:11 p.m. 's/Mary E. Sova, Secretary Filed: .4pril30, 1998 Marilynn Slade. City Clerk Page 21 MINUTES OF BOARD OF COMMISSIONERS' MEFJJNG, r<<-;; -•� PNI !c: 46 LANSING BOARD OF WATER AND LIGHT LMSi :U CITY CLERKS Tuesday,March 24, 1998 The Board of Commissioners met in regular session at 5:30 p.m.. in the Main Office Building, 123 West Ottawa Street, Lansing, Michigan. The meeting was called to order by the Chair. Ernest Christian. Present: Commissioners Aquilina(arrived 5:53 p.m.).Christian, Creamer, O'Leary,Pratt. Royal, and Werbelow(via speakerphone). Absent: None The Secretary declared a quorum present. The invocation was delivered by Chairperson Christian. The Pledge of Allegiance was said by all. APPROVAL OF MINUTES Motion was made by Commissioner O'Leary. seconded by Commissioner Creamer. to approve the minutes of regular session held February 24, 1998. Adopted unanimously. PUBLIC COMMENTS CHAIRMAN CHRISTIAN ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW. OR AT THE END OF THE MEETING. No persons spoke. COMMUNICATIONS AND PETITIONS No communications. REPORTS OF COMMITTEES it 98-3-1 Finance Committee Report The Finance Committee met on Februan-26. 1998. at 12:00 noon. to receive information on health care liability. Page 22 Board Minutes March 24, 1998 Present were Commissioners Charles Creamer,Diane Royal,and Judson Werbelow. Also present were General Manager Joe Pandy.Treasurer/Controller Dana Tousley, Internal Auditor Kellie Willson.Human Resource Director,Linda Gardner, and Assistant Secretary Rosemary Sullivan. Internal Auditor Kellie Willson presented information on health care provided to Board of Water and Light(BWL) retirees. She discussed the nature of the health care benefit,the cost of the benefit_ accounting for the liability and paying for the benefit. Coverage can be changed in the future. Requests for proposals have been mailed to four benefits consulting firms: Deloitte&Touche. LLP, William M. Mercer, Inc., Towers Perrin,and Watson Wyatt. The requests for proposals ask for help in identifying alternatives to the current pay-as-you-go approach. Discussion was held on what coverage is currently available and the current qualifications for retirement health benefits. Kellie Willson will now be the Share the Success Advisor, taking over for Corporate Planning Director Roger Ophaug who is retiring on March 31. 1998. Staff reported that 78%of BWL employees chose to convert to the Defined Contribution Plan instead of remaining with the current Defined Benefit Program. The amount of$70 million was transferred to Prudential Investments to cover these costs. Diane Royal, Chair FINANCE COMMITTEE Motion by Commissioner Creamer to amend the Finance Committee Report by inserting a paragraph at the end as follows: THE COMMITTEE INQUIRED ABOUT THE CURRENT INVESTMENT POLICY UTILIZED FOR THE BOARD OF WATER AND LIGHT PENSION FUND. MANAGEMENT AGREED TO PRESENT AT THE NEXT COMMITTEE MEETING AN OVERVIEW OF THE INVESTMENT STRATEGY USED FOR PAST AND CURRENT DEFINED BENEFIT INVESTMENTS. The motion to amend was seconded by Commissioner Royal, and it was unanimously adopted. Action. The Finance Committee Report was received as amended. GENERAL MANAGER'S RECOMMENDATIONS The following items are recommended for approval: #98-3-? A. Chain of Command RESOLVED.that in the absence of the General Manager,the below listed directors, in the sequence in which they are listed, or as otherwise designated by the General Manager, shall be in charge of all Board operations: 1. Director,Technical Services (John Elashkar) 2. Director. Marketing (Clyde Dugan) 3. Treasurer/Controller (Dana Tousley) 4. Director, Communications (John Strickler) This supersedes Resolution 94-6-4 adopted by the Board on June 28. 1994. Board Minutes Page 23 March 24, 1998 Motion by Commissioner Royal, seconded by Commissioner O'Leary, to approve the resolution. Action. Adopted unanimously. #98-3-3 B. Sponsorship Agreement RESOLVED. That the Board authorize the General Manager to enter into a three year sponsorship agreement with the Lansing Lugnuts Baseball Club at an annual cost of$50,350. The sponsorship agreement names the BWL as the exclusive utility sponsor of the Lugnuts and will include nightly promotions and special events that promote the utility and its community involvement. The sponsorship package has been designed to complement our overall marketing goal that positions the BWL as Lansing's hometown utility. ------------------- Motion by Commissioner Royal, seconded by Commissioner Pratt, to approve the resolution. Discussion. General Manager Joe Pandy and Communications Director John Strickler responded to questions raised by the Commissioners regarding the BWL's advertising budget. The BWL's annual budget for advertising has been approximately $150.000 which represents one-tenth of 1 percent of annual revenue (on an average electric bill of S30 per month this amounts to 3 cents per month per residential customer). The Lugnuts sponsorship is the first step toward trying to create a brand image of the BWL's identity as the hometown power company to associate with the Lansing community. The sponsorship package includes the following promotional events: (1)Inflatable Batting Cage bearing the BWL logo. (2)Louie the Lightning Bug will appear nightly. (3) A public announcement accompanied by a Louie safety message followed by a 30-second Louie video on the scoreboard. (4)Power Hitter Promotion. (5) Autograph Area. (6)a full page color ad in the Lugnuts Magazine, and(7)BWL Hometown Power Night. Mr. Strickler reported that his research indicates the BWL sponsorship package with the Lugnuts is in the middle of the road as compared to other sponsors. Because the experience is being at the ball park,the BWL is interested in leveraging that part of the agreement. thus the package does not include television or radio commercials during the broadcast of the games. Commissioner Creamer inquired if information is available on the average advertising budget for public power utilities. John Strickler responded that he has been unsuccessful in narrowing down information based on percentage of revenue or sales. or on a customer basis. However, research indicates that advertising is going to increase by magnum leaps over the next five years as public and investor owned utilities try to get their brand names established in front of their customers to sell products and services. Mr. Strickler informed the Commissioners that the sponsorship agreement with the Lugnuts wilt increase the BW-L's advertising and public relations budget substantially. He noted that to compete in the future with other utilities, the BWL will need to look at increasing its advertising presence in the general media for the Lansing area. Commissioner Creamer suggested that it might be helpful if staff could prepare a three-year plan that outlines the BWL's future direction in the advertising arena. In response to Commissioner Creamer's inquiry on demographics John Strickler reported that the vast majority of fans going to the ball park are within the BWL's service territory. He noted. however, that fans outside of our service territory are potential customers of services and products the BWL plans to market over the next couple of years. Also. the semi-annual customer attitude survey provides information on the numbers of customers exposed to BWL advertisements. Specifically. a comparison analysis is conducted on the attitudes and perceptions of customers who have been exposed to our advertisement with respect to issues the BWL is trying to influence as compared to customers who have not been exposed to those messages. Commissioner Pratt inquired if the Lugnuts sponsorship might reach a point of negative returns by too much advertisement. Mr. Strickler acknowledged that this is a legitimate question but clarified that he does not believe the BWL is anywhere near that point. He pointed out that as the BWL increases its advertising presence--either with the Lugnuts sponsorship or other messages--there may be reaction from some customers that believe the Page 24 Board Minutes March 24, 1998 advertisement is inappropriate. Mr. Strickler asked the Board to keep those comments in context with all the others not heard. Attitudes and perceptions with respect to the Lugnuts sponsorship will be tested in future customer attitude surveys. [Commissioner Aquilina arrived at 5:53 p.m.] Commissioner Werbelow inquired as to how the Oldsmobile Classic(an LPGA tournament)fits into the advertisement budget. General Manager Pandy responded that$15,000 has been funded annually for this event since the inception of the tournament in 1992. Mr. Pandy noted that the LPGA is the one time per year to showcase the Lansing marketplace via national television exposure through ESPN and promotional Chamber of Commerce videos. He also indicated that this type of sponsorship is portrayed more of a responsibility and commitment by the BWL as a member of the corporate community. In contrast, however, the Lugnuts sponsorship is more directly related at the BWL marketing its name brand. Commissioner Werbelow suggested formulating an advertising policy to clarify the purpose for advertising. As a footnote to his comment, he expressed his belief that making monetary contributions for charitable purposes, however_ does not fit the BWI.'s mission. He noted that it is important for the board to sort out the difference between these issues. John Strickler pointed out that a Board policy is currently existent which addresses"no cash contributions to charitable organizations" (#85-7-3. adopted in 1985). The BWL. as a member of the corporate community, sets aside funds on a limited scale to buy ads in programs or other similar sponsorships to events or activities conducted by charitable organizations. A yardstick used to judge whether to become involved in a fundraising activity is that something is received in return for the sponsorship. i.e., a program advertisement or a table to attend the event's luncheon or dinner. Commissioner O'Leary commented that he feels an advertising budget is justified even without a competitive situation. He spoke on the importance for the BWL to appeal to its customers and community, similar to other businesses, and not take the attitude that it has captive customers. He stated his opinion that it is the Board's responsibility to set a reasonable advertising budget and for staff to develop and manage the program. Periodic reports will aid the Board in assessing the effectiveness and value of the ach-ertising program. After discussion. staff agreed to draft a resolution that would address concerns raised by the Board with regard to advertising. General Manager Pandy informed the Commissioners that staff plans to request that the advertising budget be increased for the next fiscal year. In light of discussions held on charitable contributions, Mr. Pandy stated that the time may be right to create a BWL Foundation aimed more for charitable benevolence as previously discussed with the Board in 1996. Funds from an employee's estate or funds raised by the BWL from a community charitable event were cited as examples of ways to raise monies for the foundation. These funds would be used for purposes of charily as ciisiiaguished uom advertising. Mr. Pandy indicated that he will be coming to the Board with a proposal on this concept for discussion and consideration. Action. Following lengthy discussion.the resolution on the sponsorship agreement with the Lugnuts Baseball Club was adopted unanimously. UNFINISHED BUSINESS There was no unfinished business. NEW BUSINESS There was no new business. Board Minutes Page 25 March 24, 1998 RESOLUTIONS BY THE BOARD OF COMMISSIONERS: #98-3-4 RESOLUTION HONORING JOSEPH E. GRAVES,JR WHEREAS. It is with respect and appreciation that we recognize Joseph E. Graves, Jr., for his service as a Commissioner of the Board of Water and Light upon the occasion of his recent resignation on January 27, 1998.to assume a position with the City of Lansing as Chief of Staff; and WHEREAS. Joseph E. Graves. Jr. was appointed as a Commissioner of the Board of Water and Light in September, 1996. to represent the Fourth Ward in the City_ of Lansing. During his time on the Board, he served on the Personnel Committee. Nominations Committee and the Board's Ottawa Street Power Station Development Committee. and WHEREAS. Although his time on the Board was brief. his role as a Commissioner weaved together many perspectives with eloquence and grace. never losing sight of the goal of assuring that electric. water and steam are reliable and delivered at the lowest price possible. RESOLVED. That the Board of Water and Light Commissioners do express grateful thanks and appreciation to Joseph E. Graves.Jr. for his dedicated service on this Board. extending sincere best wishes to him in his new job with the City of Lansing. with gratitude for his advocacy on behalf of the customers of this utility, his friendship. and his spirit of goodwill to colleagues and staff. In regular session this 24th day of March 1998, we wish Joe success in all his future endeavors. Adopted unanimously. GENERAL MANAGER'S REMARKS Main Office Building Sale Update General Manager Pandy reported that negotiations to acquire the BWL Main Office Building at 123 W. Ottawa Street continue. A draft Letter of Credit has been negotiated with Capitol Outlook. L.L.C. (developer)wherein Comerica is irrevocably ordered to pay up to$40.000 of reimbursable costs to the Board of Water and Light for planning. design. and other relocation work. The developer has placed an additional$50,000 on deposit with the BWL to extend the 90-day option period from March 12 to mid-June. 1998. The developer is aiming to close in Aprii. Mr. Pandy also reported that he has been informed by reliabie sources that the developer has made progress in trying to acquire the circuit court space, which is that portion of City Hall sandwiched in between the first and third floors of the BWL office building. It is Mr. Pandy's understanding that circuit court personnel will be out of City Hall into a temporary facility by July_ 1. 1998. and ultimately relocate to the remodeled Grady Porter Hall of Courts project. Commissioner Werbelow commented on the importance of having a Letter of Credit that is clear and unconditional. In the event it is necessary to file a claim, he suggested using a certificate form, attached to the Letter of Credit. to accelerate the ease in filing with Comerica Bank. General Manager Pandy confirmed that those details will be addressed. Chairman Christian stated for the record that lie is employed by Comerica Bank and that he was not involved in negotiating the Letter of Credit. Page 26 Board Minutes March 24, 1998 Commercial Real Estate Development Projects General Manager Pandy distributed a copy of an article which appeared in the World Traveler magazine,March 1998 issue, regarding an entertainment project developed in Indianapolis, Indiana,by the Simon DeBartolo Group (SDG). This project contributed to a major rejuvenation in downtown Indianapolis built around entertainment, performing arts, and other activities. He noted that this Midwest city is a good example of a successful destination project that brought people back downtown. Mr. Pandy distributed a copy of an ad from a publication in Grand Rapids, Michigan. regarding an entertainment project called"The BOB" (The Big Old Building full of fun). This former furniture warehouse has been developed into an entertainment night spot of various varieties ranging from food, a comedy club, cigars, pubs and other entertainment venues all under one roof. This development was done by the Gilmore Partnership of Grand Rapids. RFQ issued for Commercial Real Estate Service for Ottawa Street Power Plant Development Mr. Pandv reported that Request for Qualifications(RFQ)have been issued to eight commercial real estate development service providers to assist in the adaptive re-use development of the Ottawa Street Power Plant and adjacent 6.2 acres, located along the Grand River. Responses to the RFQ's are due on April 10, 1998. Mr. Pandy noted that the RFQ is not meant to replace a Request for Proposal (RFP). Once a commercial real estate service firm is selected, an RFP would then be sent to developers that qualify and meet the business needs of the BWL. Ottawa Street Power Plant Equipment Removal and Salvage Update General Manager Pandy reported that demolition and salvage work on the Ottawa Street Power Plant is well underway. The turbine generators have been removed. the asbestos abatement is progressing well, and workers are cutting through the building with torches. The project is expected to be completely gutted and ready for future development by the end of 1998. Electric Industry Deregulation Update General Manager Pandy distributed a page from Detroit Edison's 1997 Annual Report which summarizes their participation in efforts to introduce competition and customer choice into the generation segment of the electric utilitv industry. On October 7. 1997. Michigan House Bill 5245 was introduced. While this proposed legislation provides for the restructuring of the electric utility industry, it substantially differs from the competitive program contemplated by the Michigan Pubic Service Commission(MPSC). Legislation more consistent with the 1997 and 1998 MPSC Orders is expected to be introduced in the Michigan Legislature in early 1998. Mr. Pandy reported that the BWL is continuing to stay involved in these activities. Commissioner Royal pointed out that the decisions of the MPSC have been taken up by the Michigan Court of Appeals or jumped above them to the Michigan Supreme Court for a decision: consequently. there is a stalemate at this point. Economic Development Options and Return on Equity General Manager Pandy reported on a recent conversation he had with Mayor Hollister, relative to a potential economic development service that could be offered by the BWL to assist the City in its Economic Development Corporation(EDC)programs. This notion involves setting aside a portion of BWL cash reserves for re-investment in the City. Mr. Pandy displayed a slide from a Minnesota program called"The Hometown Network Loan Program." in which member communities work together as part of a power supply group to ensure access to long- term fixed financing and competitive rates to stimulate economic development. Under that program, the public power agency places funds with participating banks for a fixed period at 2 percent below Treasury indexed interest rates. The bank would then lend the funds to qualified borrowers at no more than 2.5 percent above the rate that the power agency was being paid. Mr. Pandy told the Commissioners that further research and analysis is needed by the BWL to structure a similar program. An important question to consider is whether the Charter would permit funds to be committed for this type of venture and if it falls within the logical extension of BWL utility Board Minutes Page 27 March 24, 1998 activities. Mr. Pandy pointed out that public power entities all over the country are providing services that support economic development programs. and cited the Tennessee Valley Authority(TVA)as one of the examples. A summary sheet which outlines TVA's various programs was distributed to the Commissioners for review. The primary concern raised by the Commissioners was that there must be assurance there is no risk for BWL customers. Staff will investigate the legal and risk factors involved and present the findings to the Board for further discussion and consideration. Commissioner Jud Werbelow and Louise Werbelow Receive the 1997 Community Service Award General Manger Pandy and the Commissioners congratulated Jud and Louise Werbelow on the receipt of the Chamber of Commerce.s prestigious Community Service Award on February 26th. The award recognizes outstanding individuals of sound moral character who lend their time and expertise to make Lansing a better community. Because of their combined vision and teamwork, the Werbelows were honored together, the first time the Chamber has recognized more than one person for this honor. REMARKS BY COMMISSIONERS Communications with Cite Council Commissioner O'Leary informed the Commissioners that City Council President Tom• Benavides has expressed an interest in resuming meetings biannually between the City Council and BWL Commissioners to improve communications. The BWL would host the first meeting in June and the Council would be responsible for the December meeting. Councilmember Benavides is also suggesting partnering commissioners with councilmembers for positive working relationships between the Council and the BWL. This topic will be an item for discussion at the next Board meeting. Stamp-Rite vs. City and BWL Commissioner O'Leary commented on the Stamp-Rite lawsuit filed by Stamp-Rite for damages related to the flange failure at the BWL's high lift water pumping station on April 3. 1996. He expressed concern with the claims service being provided by the insurers of the contractor, installer and supplier of the flange and their lack of communication. Upon questioning. General Manager Pandy clarified the BWL's settlement made with the insurers and the offer made to Stamp-Rite by the insurance companies representing the three vendors; namely, Clark Construction, Northern Boiler and the manufacturer of the flange. He noted that as part of that settlement, the insurers have a,—,.ec d to ueieiid Chic,B'P_from clamns of dariage -"rising out of this accident. Staff Attorney Larry Wilhite informed the Board that the insurers will focus on the issue of the appropriate measure or measures of damages. After some discussion, Mr. Pandy and Mr. Wilhite told the Board they would contact the contractor and David Otis of Plunkett and Cooney.P.C., hired to defend the BWL, to convey the Board's concerns on this matter. Comment by Commissioner Aquilina Commissioner Aquilina apologized for her lateness and explained that it was due to a court delay in a matter she is representing. Page 28 Board Minutes March 24, 1998 Neat Committee of the Whole Meeting Scheduled for May 12 Due to the upcoming spring vacation period, General Manager Pandy suggested scheduling the next meeting of the Committee of the Whole for May 12. The 1999 Fiscal Year Budget and the BWL's business strategies for dealing with electric competition and deregulation will be among items to be discussed. Main Office Building Relocation Commissioner Pratt asked about the Mayor's request for the BWL to look at the AT&T building for main office relocation purposes. General Manager Pandy responded that the AT&T building would have the same access problems that our Main Office Building has in terms of downtown traffic and parking for customers. Congratulations to Staff Attorney Larry Wilhite Commissioner Pratt congratulated Lam'Wilhite on receiving the highest accolade,an AV rating, by Martindale- Hubbell. an organization that rates the qualifications of attorneys. Comments on Preparing for Deregulation Commissioner Christian referred to an article from the January/February PUBLIC POWER magazine. which reports that"the essence of survival requires renewed focus on the business enterprise not just the utility. This will mean improving governance of the utility. improved accountability of the utility manager,and an enhanced nimbleness in operating processes and decision making." Commissioner Christian noted that it is very important for the BWL as a utility to continue improving and streamlining operations. He noted that the rate of return posted on the budget variance and the year-to-date write-off are issues that need to be addressed as the BWL proceeds with deregulation. PUBLIC COMMENTS CHAIRMAN CHRISTIAN ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT. No persons spoke. EXCUSED ARSEN47ES There were no absences. ADJOURNMENT On motion by Commissioner Christian,the Board adjourned at 6:45 p.m. /s/Afary E. Sova, Secretary Filed: Afarch 31, 1998 Marilynn Slade. City Clerk Page 11 RECEIVED (1^FEB 26 � MINUTES OF BOARD OF COMMISSIONERS' MEETING `4 I I' 2 9 LANSING BOARD OF WATER AND LIGHT LA'JS1NG CITY CLERK Tuesday,February 24, 1998 The Board of Commissioners met in regular session at 5:30 p.m., in the Main Office Building, 123 West Ottawa Street, Lansing,Michigan. The meeting was called to order by the Vice Chair,Diane Royal. Present: Commissioners Aquilina, O'Leary,Pratt,Royal,and Werbelow-5 Absent: Commissioner Creamer and Christian-2 Vacancy: Open seat from resignation by Joseph Graves, Jr. - 1 The Secretary declared a quorum present. The invocation was delivered by Vice Chair Royal. The Pledge of Allegiance was said by all. APPROVAL OF MINUTES Motion was made by Commissioner Werbelow, seconded by Commissioner O'Leary, to approve the minutes of regular session held January 27, 1998. Adopted unanimously. PUBLIC COMMENTS VICE CHAIR ROYAL ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW, OR AT THE END OF THE MEETING. No persons spoke. COMMUNICATIONS AND PETITIONS A letter from Paul Gentilozzi indicating his interest in being considered for future developer proposals regarding the Ottawa Street Power Station. Received and placed on file. A letter of thanks from Sally A. Synder, Lansing,for the Board of Water and Light supplying"the best water in the country." Received and placed on file. Page 12 Board Minutes February 24, 1998 REPORTS OF COMMITTEES Committee of the Whole Report The Committee of the Whole met on February 24, 1998, to discuss the following items: 1. Integrated Resource Plan(IRP) 2. General Motors Steam Main Costs 3. Bath Township Water System 4. Real Estate Matters Present were Commissioners Aquilina, Creamer,O'Leary,Pratt,Royal, and Werbelow. Absent was Commissioner Christian. #98-2-1 Integrated Resource Plan WHEREAS, a comprehensive study which began in 1995 known as the Integrated Resource Plan to identify the lowest cost options for meeting the needs of our electric and steam customers over the next 20 years has been completed,and WHEREAS, the integrated planning process, conclusions and recommendations have been reviewed with a citizens advisory group and the Board of Commissioners for feedback, and WHEREAS, the Board favorably views the Integrated Resource Plan for use as a general guideline for meeting future resource needs. Prior to Board approval,be it RESOLVED,That a public hearing to solicit public input on the Integrated Resource Plan be set for Tuesday, April 28, 1998. #98-2-2 General Motors Small Car Group Steam Main Project to Serve Plant No. 6 Complex Steam Utility Director Joette Woodard-Yauk presented an update on the 20-inch steam main project with the General Motors Small Car Group(SCG). Details of the negotiated settlement with SCG were reviewed with the Commissioners. #98-2-3 Bath Township Water Service Project General Manager Joe Pandy and Water Utility Director Clyde Dugan reported that Bath Township has agreed to utilize the Board of Water and Light(BWL)for full retail water service. Bath Township would like the BWL to connect to and integrate their existing water system comprised of 39,525 feet of main, 5 wells,and some 75 hydrants. Construction cost estimates and revenue estimates relative to this project were presented. The proposal being negotiated with the township was first discussed with the Commissioners on December 11, 1997,at the Board Retreat. Resolutions for the Board to authorize(1)a Water Service Agreement with Bath Township and (2)the issuance of a purchase order for Professional Services Related to Construction of Watermain in Bath Township are included in the General Manager's Recommendations(see Resolutions 98-2-9 and 98-2-10 respectively, pages 16-17,included in these minutes). Board Minutes Page 13 February 24, 1998 Real Estate Matters #98-2-4 Relocation and Remodeling of Board of Water and Light Facilities WHEREAS,on February 9, 1998, the Lansing City Council approved the sale of the Board of Water and Light(BWL)main office building and North Capitol Avenue parking lot to Capitol Outlook,L.L.C.,owned by developers Joel Ferguson and Gary Granger(Council resolution#052). The developer is working toward closing on March 16, 1998; and WHEREAS, in the "Option to Purchase Agreement"with Capitol Outlook,L.L.C., the BWL agreed to use it's best effort to obtain replacement accommodations following the closing on the sale of the main office building, and WHEREAS, the BWL plans to issue a request for proposals (RFP)to hire a design/construction firm, including architectural services,to accomplish remodeling of BWL facilities. These consultants%gill be hired by the BAIL directly or through a Design and Build Agreement with a local contractor. All consultants will be coordinated by BWL Engineering Staff; and WHEREAS, a Design and Build Agreement will result in the shortest time to relocate. Staff will evaluate this type of agreement with other available options to determine the trade-off between time and cost,and adopt the option with the least cost and minimum disruptions to operations;be it RESOLVED,That the General Manager is hereby authorized to contract with consulting firms as required to assist in the relocation of the main office building employees to the Haco Drive and Hazel/Pennsylvan'a Avenue complex. Presently it is anticipated that the following consultants would be hired: 1. Storage/Shop Planners to evaluate the organizational needs and recommend a consolidation plan of the Construction/Maintenance Facilities and warehousing. 2. Architectural Firm to develop plans for remodeling the Haco Drive Warehouse area into offices. 3. Construction Management Firm to manage the design and construction of the remodeling. #98-2-5 Ottawa Power Station Appraisal and Development WHEREAS, in a report submitted by the Ottawa Street Power Station Development Committee(see Board minutes of January 27, 1998,Resolution#98-1-3), it was recommended that a new request for proposal(RFP)be prepared in search of a developer to transform the Ottawa Station to a commercial attraction for downtown Lansing in consultation with the City of Lansing Department of Planning and Development,be it RESOLVED,That the Board of Water and Light(BWL)Commissioners endorses, in conjunction with the City of Lansing, efforts to acquire the 300 N. Grand Avenue property owned by Frederick Stackable. This would complete the assembly of all parcels bounded by Ottawa Street on the south, Shiawassee Street on the north, Grand Avenue on the west,and the Grand River on the east. This action would provide potential developers with a clear indication that the BWL and the City are seriously contemplating development of the entire six acre parcel. Page 14 Board Minutes February 24, 1998 RESOLVED FURTHER,That the General Manager is hereby authorized to issue a Request for Qualifications(RFQ)for Professional Development Services to qualified national and local firms who have experience in adaptive use development of urban destination projects similar to the Ottawa Street Power Station; i.e., power plants, train stations,and warehouses. RESOLVED FURTHER,That the General Manager is requested to report back to this Board after the RFQ and consultation with developers to determine the value of an appraisal. Respectfully submitted, Peter P.Pratt, Chair Pro Tern COMMITTEE OF THE WHOLE Motion by Commissioner Pratt, seconded by Commissioner O'Leary, to approve the Committee of the Whole report and the Resolutions included with the report. Action. Adopted unanimously. GENERAL MANAGER'S RECOMMENDATIONS The following items are recommended for approval: #98-2-6 A. Declare a Portion of Muskegon Avenue as Surplus Property RESOLVED,That the following described property be declared surplus and not required for Board of Water and Light operations: Muskegon Avenue between Robertson Avenue and Comfort Street. Beginning at the 1/4 corner common to Sections 5 &8, T4N,R2W, City of Lansing, Ingham County,Michigan;thence westerly along the section line 657 feet, more or less, to a point on the centerline of Comfort Street;thence northerly along the centerline of Comfort Street 50 feet; thence easterly parallel to the section line 657 feet, more or less,to a point due north of the 1/4 corner noted above(the Point of Beginning); thence easterly parallel with the section line 839.5 feet, more or less, to a point due north of the northwest corner of Lot 74 of the North Highland Subdivision;thence due south 50 feet to the northwest corner of Lot 74 of North Highland Subdivision(a point on the section line); thence westerly along the section line common to Section 5&8,a distance of 839.5 feet, more or less, to the Point of Beginning,containing 74,825 square feet or 1.718 acres of land, more or less. RESOLVED FURTHER,That the General Manager and Corporate Secretary be authorized to enter into agreements to transfer jurisdiction of this property to the City of Lansing Public Service Department as the right- of-way for Muskegon Avenue,subject to the requirements of State Law, the Lansing City Charter and Codified Ordinances. Muskegon Avenue is a graveled roadway maintained by the City,extending from Comfort Street east to Robertson Avenue. The majority of Muskegon is located on the Board of Water and Light's Northwest Well Field property and there is no record of any dedication of a right-of-way for this roadway on the Board's property. Muskegon Avenue is the only access for those residences facing on Muskegon Avenue. The transfer of jurisdiction of this Board Minutes Page 15 February 24, 1998 parcel provides the City with a right-of-way adequate for maintaining the present roadway as well as for any future improvement of Muskegon Avenue. Motion by Commissioner Werbelow, seconded by Commissioner O'Leary,to adopt the resolution. Action. Adopted unanimously. #98-2-7 B. Extension of Contracts for Professional Services RESOLVED, that the existing Contracts for Professional Services for the following consultants,be extended one year based on satisfactory performance on work completed and in progress. The existing contracts which expire on February 28, 1998 contain provisions to extend the term on an annual basis. 1. Novak Engineering,Inc.,Jackson,Michigan 2. SFT, Inc.,Toledo, Ohio 3. Stanley Consultants,Inc.,Muscatine, Iowa 4. Stone and Webster,Inc.,Boston,Massachusetts Over the last three years the BWL Project Engineering and Electric Engineering Departments have utilized these consultants on projects and studies requiring outside expertise and to supplement existing staff during periods of high project demand due to recent staff reductions. This continued approach of retaining consultants will: 1. Reduce evaluation time and bidding costs by staff 2. Improve project response time to meet our needs 3. Maintain BWL competitiveness due to staff and cost reductions. The utilization of these consultants will continue to be approved by the General Manager or the Purchasing Authority delegated by him to the Directors and Manager of the Electric and Technical Services Division. Motion by Commissioner O'Leary, seconded by Commissioner Werbelow, to adopt the resolution. Action. Adopted unanimously. #98-2-8 C. Filter Press Cake Disposal Agreement RESOLVED,That the Board of Water and Light(BWL)is hereby authorized to enter into a Filter Press Cake Disposal Agreement with Michigan South Central Power Agency(MSCPA),Litchfield,Michigan,effective July 1, 1998, subject to approval as to form by the BWL's legal counsel. The agreement particulars are as follows: 1. MSCPA will receive between 15,000 and 20,000 dry tons(25,000 to 33,333 wet tons)of filter press cake,which is the waste product known as calcium carbonate precipitate consisting of approximately 60%solids. 2. Material will be hauled from the BWL's facility by an independent trucking firm retained by MSCPA. Page 16 Board Minutes February 24, 1998 3. BWL will pay MSCPA$5.50 per wet ton. By entering into this Agreement, the BWL will be able to dispose of water plant softening sludge, or filter press cake,at a savings estimated at S 113,750 for the first year. Motion by Commissioner Werbelow, seconded by Commissioner Pratt,to adopt the resolution. Action. Adopted unanimously. #98-2-9 D. Water Service Agreement Between Board of Water and Light and Bath Township WHEREAS,The Charter Township of Bath owns an existing water distribution system but desires to receive water service from the Lansing Board of Water and Light(BWL);and WHEREAS,The BWL has sufficient excess capacity to provide water service to Bath Township and such service will provide a financial benefit to the BWL; and WHEREAS,Providing water service to Bath Township is deemed to be in the best interest of the BWL and its current customers;be it RESOLVED,That the Board authorizes the General Manager and Corporate Secretary to enter into a Water Service Agreement and Supplemental Agreements to provide service to Bath Township subject to the following conditions: I. The Township shall grant the BWL permission to use the public right-of-ways for the purpose of providing water service and shall grant to the BWL a franchise to provide water service within the geographical boundaries of the Township for a period of thirty years. 2. The Township shall, as required, make a non-refundable contributions-in-aid of construction to cover charges in accordance with the BWL's Policies and Procedures for Water Service. 3. The BWL shall connect to the existing Township water system and will thereafter be responsible to operate and maintain the system in accordance with the Water Service Agreement. 4. The BWL shall install water mains in accordance with the current BWL's Policies and Procedures for Water Service. 5. The BWL shall establish supplemental connection fees to recover the BWL's investment in system reinforcement necessary to provide service to the Township and such fees shall apply to all new water service connections in the Township. The fees shall be assessed from the effective date of Agreement until such time as the BWL recovers its investment. 6. The BWL,at the request of the Township,shall assess a surcharge on Water Rates No. 1 and 2 as payment for the Township's annual fire hydrant charges. The surcharge shall be applied to the total customer and commodity charges,including power and chemical cost adjustments,and may be adjusted,from time to time for new hydrants. 7. The BWL shall impose charges on Township customers in an amount sufficient to retire existing debt of the Township's water system. Board Minutes Page 17 February 24, 1998 Motion by Commissioner O'Leary, seconded by Commissioner Werbelow, to adopt the resolution. Action. Adopted unanimously. Commissioner Werbelow requested a copy of the Water Service Agreement with Bath Township for review. #98-2-10 E. Professional Services Related to Construction of Watermain in Bath Township RESOLVED,That a Purchase Order for Professional Services be issued to Snell Environmental Group(SEG)in an amount not to exceed S 102,660.00 for a period commencing February 24, 1998 through December 1, 1998. This is a sole source arrangement based on SEG's capabilities as the Engineering Firm for Bath Township,to perform Engineering, Construction Contract Management and construction inspection services related to the construction of water main in Bath Township in 1998. During the 1998 construction season we anticipate nearly four times the normal amount of watermain construction due to major extensions in suburban areas. Evaluation by Board of Water and Light staff has determined that supplemental assistance for Construction as well as Engineering and Inspection services is necessary to support our installation commitments. This purchase order will provide supplemental engineering and inspection services for that portion of the first phase of the Bath Township interconnect,which is to be built in 1998, approximating nearly 19,000 feet of 12 and 16 inch watermain. A competitive bid process will be utilized for selection of a contractor for construction of this portion of the interconnect. Motion by Commissioner Pratt, seconded by Commissioner Werbelow, to adopt the resolution. Action. Adopted unanimously. UNFINISHED BUSINESS Commissioner Aquilina noted that as discussions are taking place in the Legislature on restructuring the electric industry,it is important to send a message to the legislators and our customers that the Board of Water and Light considers the consumer and consumer protection a high priority. Action on the following resolution regarding fundamental electric industry restructuring principles was postponed at the January, 1998, pending review by all the Commissioners(inserted language is indicated by upper case type): #98-2-11 Electric Industry Restructuring Resolution Whereas,the electric utility industry, in general, is in a state of moving from a regulated to a competitive generation environment, and Whereas,in Michigan, the Public Service Commission,Jobs Commission,and the Legislature are all involved in the restructuring debate,and Whereas,the Board of Water and Light,while not regulated by the Michigan Public Service Commission (MPSC), may be severely impacted by any industry restructuring that takes place, be it Page 18 Board Minutes February 24, 1998 Resolved,That the Lansing Board of Water and Light Commissioners endorse the following fundamental industry restructuring principles IN PROTECTION OF BOTH THE INDUSTRY AND THE CONSUMER: 1. We support competition that encourages the maximum number of competitors and protects the right of communities to form their own utilities. 2. The safety, integrity and reliability of the electrical system must be preserved. 3. Anti-competitive behavior must be prohibited both during and following the transition. 4. The new industry structure must not tolerate market dominance by a limited number of competitors. 5. Local control of the municipally owned electric system must be preserved. 6. Consumer protection must be a priority; i.e.: (A) ADVERTISING AND SOLICITATION STANDARDS MUST BE FAIR AND EQUITABLE IN ADVISING THE CONSUMER OF THE ACTUAL COST AND RATE CHARGED, INCLUDING BUT NOT LIMITED TO TAXES AND STRANDED COSTS. (B) THE CONSUMER MUST OPT IN,BY WRITING,THAT THEIR NAME, ADDRESS AND/OR TELEPHONE NUMBER MAY BE UTILIZED BY COMPETITORS OR OTHERS IN PROVIDING INFORMATION FOR MAKING AN ALTERNATIVE CHOICE FOR UTILITY SERVICES. (C) NO SWITCHING OF SERVICES SHALL OCCUR UNLESS THE CONSUMER NOTIFIES THE UTILITY IN WRITING OF THE CHANGE. 7. The Michigan electric utility industry must maintain or enhance environmental performance. 8. No new taxes. The tax status of public power is critical to its non-profit public character. Public Power uses its tax status to keep consumer costs down. 9. All utilities participating in an open power supply market should have the opportunity to recover just and reasonable,verifiable and prudently incurred stranded costs arising from past decisions. Utilities have the obligation to take all reasonable measure to mitigate such costs. 10. The competitive environment must be fair and consistent to all participants. 11. The Board opposes a federal mandate on states and localities to implement retail choice. 12. Existing private use rules for existing facilities are a significant impediment to the transition to a restructured electric industry. For existing facilities and outstanding bonds, these private use limits should no longer apply. Entry into a competitive environment must not negatively impact the tax-exempt status of outstanding municipal bonds. Motion by Commissioner Aquilina, seconded by Commissioner Pratt,to adopt the resolution as amended. Action. Adopted unanimously. Board Minutes Page 19 February 24, 1998 NEW BUSINESS There was no new business. GENERAL MANAGER'S REMARKS Lugnuts Sponsorship. General Manager Pandy reported that the Board of Water and Light(BWL) has been working with the Lugnuts organization on sponsorship activities, in conjunction with the Lugnuts baseball season, to reinforce the BWL's position as the hometown,reliable and inexpensive utility. The advertising package valued at$50,000 per year includes a number of promotional ideas;i.e., an inflatable batting cage,an autograph signage area, a full page magazine ad,all bearing the BWL logo. Mr.Pandy noted that as the BWL moves from a monopoly to deregulation,the BWL will be emerging into a marketer—a company creating a brand image and distinction in the minds of our customers as the hometown power company. He noted that if the Board concurs, this amount will be budgeted annually and staff will negotiate a sponsorship contract with the Lugnuts. There was no objection to the sponsorship. Rules of Administrative Procedure. General Manager Pandy distributed a copy of the Board's Rules of Administrative Procedure with proposed revisions suggested at the December 11, 1997,Board retreat. Comments are to be forwarded to Corporate Secretary Mary Sova who will prepare a final draft for consideration. Once the Rules are approved by the Board, they will be forwarded to the City Attorney for approval as to form and then to the City Council for concurrence. Clyde Dugan Reappointed to MDEQ Advisory Board of Examiners. General Manager Pandy congratulated Clyde Dugan on his reappointment as a member of the Advisory Board of Examiners for the certification of drinking water treatment and distribution operators by the Michigan Department of Environmental Quality (MDEQ). Also,Mr. Pandy reported that he recently named Clyde Dugan to head the Market/Sell Process at the BWL. Joe Pandy Receives H. C.Berger Award. General Manager Pandy reported that he was recently recognized with the H. C. Berger Award from the Sales and Marketing Executives of Lansing for his years of community service and leadership in the business community. Mr. Pandy indicated it is because of the Board of Water and Light that he is able to give service to the community. He noted that it is an award the organization has earned. REMARKS BY COMMISSIONERS Commissioner Werbelow expressed concern that municipal utilities are not being heard at the Michigan Legislature as lawmakers pursue deregulation of the electric industry. He noted that to date at least ten drafts of restructuring legislation have been written. Strategies relative to the restructuring process in the legislature and how municipals can become more vocal and proactive was the main topic of discussion. Electric System Control Director Bill Cook updated the Commissioners on deregulation activities taking place in the legislature, and reported that he is in the process of finalizing a paper on market power for review with the Board at a future meeting. The paper provides policy recommendations for competing in a deregulated environment Mr. Cook noted that three issues important to municipals are: (1)local control, (2)market power, and(3)predatory pricing. The importance for the legislature to develop a viable plan that addresses how all utilities will operate and interact in a restructured utility environment was also discussed. Page 20 Board Minutes February 24, 1998 PUBLIC COMMENTS VICE CHAIR ROYAL ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT. No persons spoke. EXCUSED ABSENCES On motion by Commissioner O'Leary, seconded by Commissioner Pratt,the absence of Commissioners Christian and Creamer was excused. Adopted unanimously. ADJOURNMENT On motion by Commissioner Aquilina, the Board adjourned at 8:35 p.m. Is/Mary E. Sova, Secretary Filed: February 26, 1998 Marilynn Slade,City Clerk Page 1 Cl E MMUTES OF BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT LHONS)I►d0 CITY CLERK Tuesday,January 27, 1998 The Board of Commissioners met in regular session at 5:30 p.m.. in the Main Office Building, 123 West Ottawa Street_ Lansing,Michigan. The meeting was called to order by the Chair, Ernest Christian. Present: Commissioners Aquilina. Christian, Creamer, Graves, O'Leary, Pratt, Royal, and Werbelow(via speakerphone). Absent: None The Secretary declared a quonun present. The invocation was delivered by Chairman Christian. The Pledge of Allegiance was said by all. APPROVAL OF MINUTES 98-1-1 Motion was made by Commissioner Royal, seconded by Commissioner Pratt_ to approve the minutes of regular session held December 16. 1997. Adopted unanimously. PUBLIC COMMENTS CHAIRMAN CHRISTIAN ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW, OR AT THE END OF THE MEETING. No persons spoke. COMMUNICATIONS AND PETITIONS A letter from Darryl Burgess. Lansing,expressing his opinion regarding the use of"land dedicated to our war dead." such as the Lansing Civic Center and Veterans' Memorial Building. Received and placed on file. A letter of resignation from Board of Water and Light Commissioner Joseph E. Graves, Jr.,effective at the close of the Board's business meeting on January 27, 1998,due to his recent appointment to the Chief of Staff position for Mayor David C. Hollister. Received with regret. Placed on file. Page 2 Board Minutes January 27, 1998 REPORTS OF COMMITTEES 98-1-2 Committee of the Whole Report The Committee of the Whole met on Tuesday. January 13, 1998. to receive an update from Chicago developer Thomas J. Coates on his proposal to redevelop the Ottawa Street Power Station. Present were Commissioners Rosemarie Aquilina.Ernest Christian. Charles Creamer, Joseph Graves, Jr., Dave O'Leary. Peter Pratt.Diane Roval, and Judson Werbelow(via speaker phone). Thomas Coates. President of Thomas J. Coates&Associates. (Coates&Associates)and David McKinney, project manager for Thomas Coates, discussed their concept for redeveloping the Ottawa Street Power Station into an entertainment complex. Project changes from the original proposal were reviewed. Mr. Coates' development plan includes: 1. A Magic Johnson sports bar. The sports bar project has received strong support by the Magic Johnson group. 2. A multiplex theater. The Magic Johnson theater group has expressed a continued interest in pursuing the cinema development,contingent upon a review of the demographics by Sony Entertainment to determine the feasibility of the project. Mr. Coates noted that other theater groups have expressed interest in the project should the Magic Johnson group choose to proceed with only the sports bar. 3. A theme entertainment project in the area of%irtual reality. Mr. Coates has been in contact with IDEA. Inc.. a firm that focuses on theme entertainment projects, to discuss an appropriate theme for a virtual reality entertainment concept. Additionally, Mr. Coates met with Dr. Thomas Muth. Chairman of Michigan State University's(MSU) Telecommunications Department to discuss MSU's interest in participating in the project. A virtual reality entertainment concept would act as a focus to attract visitors to downtown Lansing. 4. Office space. Leasing and marketing opportunities appear to be strong for downtown Class A office space. A market evaluation would be performed to determine whether additional space should be configured for such use. 5. Rental residential space. Some units would be available as corporate/extended stay rentals with a range of services available. Apartments averaging 1000 SF per unit, would allow for approximately 100 units. This approach has significant potential to enhance the economic viability of the development,and would require additional study. Mr. Coates told the Commissioners that he is prepared to make the financial and human resource commitment to be able to move the project forward. In order to solidify his plan, he requested a formal development agreement with the BWL to provide his firm with a status in the project. Mr. Coates suggested rights and responsibilities that he feels should be specified in the agreement. The Commissioners expressed concern that Thomas Coates did not meet the January 1 deadline to deliver Sony's evaluation on the feasibility of a theater complex in downtown Lansing. Mr. Coates had previously told the Board that he would not pursue the redevelopment plan if the Sony study indicated that the project was not feasible. He Board Minutes Page 3 Januan•27, 1998 has since reconsidered his decision and feels the theater plan is a viable project without Sony, given the right cinema firms to bring the theater complex into fruition. Following discussion, the Committee of the Whole referred this matter to the Board's Special Committee on the Ottawa Station Development. Once the special committee has reviewed the merits of Mr. Coates' plan, alternatives will be presented to the Board for consideration. Respectfully submitted, Peter P. Pratt, Chair Pro Tem COMMITTEE OF THE WHOLE COMMITTEE Motion by Commissioner O'Leary, seconded by Commissioner Royal, to approve the Committee of the Whole Report. Action. Adopted unanimously. 98-1-3 Ottawa Street Power Station Development Committee Report The committee, consisting of Commissioners Christian, Graves,Pratt,and Werbelow(via teleconference)met in the Board Room at 11:00 a.m. on January 20. 1998. Also present were staff members Pandy, Tousley, Wilhite and Strickler. Discussion was held on the content of the Committee of the Whole meeting with Thomas J. Coates of January 13, 1998 and documents related to this meeting. The Committee was mindful of its lengthy efforts to redevelop the Ottawa Station, which was begun late in 1994, with original proposals for development submitted September 1, 1995. Discussion centered on treating all interested developers consistently and fairly throughout this process. The Committee noted that Mr. Coates' proposal is significantly different from the proposal he submitted in 1995, in particular his financial support has withdrawn and he has been unable to firm up the theater component of his proposal. Significant changes have occurred over the time-span of this project, including: • new developments in the Lansing downtown marketplace; • the BWL's commitment of$2.7 million for demolition and removal of equipment in the Ottawa Station as of November. 1997: and • modification of the project design concepts of Thomas J. Coates original proposal. In view of this time frame and these changes, the Committee considered it to be in the best interests of its customers and the citizens of Lansing to review all current alternatives for redevelopment of the Ottawa Station and to shift its focus from a specific development plan to the selection of a developer with experience in conversion of urban destination projects,and accordingly recommends: 1) That the Board express its appreciation to Thomas J. Coates for his continuing interest in the project, and encourages him to further explore development alternatives for consideration. 2) That the General Manager be directed to prepare a new Request for Proposals(RFP)from a nationwide and local list of developers who have experience with urban destination projects. the RFP is to be prepared in consultation with the City of Lansing,Department of Planning&Development, and available experts in the area of commercial real estate development. The RFP is to be reviewed with the Board prior to its issuance to potential developers. Page 4 Board Minutes January 27, 1998 That the Board specifically invites all previously interested developers to submit new proposals based on the RFP when issued, and expresses its intent to fairly evaluate all proposals which will serve the interests of the Lansing community•. Motion by Commissioner O'Leary. seconded by Commissioner Pratt. to approve the Special Committee Report and the Committees recommendation. Discussion. In response to questions raised by some of the Commissioners, Chairman Christian stated that the mission of the Special Committee was to evaluate Thomas J. Coates' proposal. With that charge now completed, the Committee is recommending that new Request for Proposals(RFP)be prepared inviting developers with experience in urban destinations to bid on the project to convert the Ottawa Street Power Station into a commercial attraction for downtown Lansing. It was noted that Mr. Coates would be included among the list of potential developers. Following discussion, it was acknowledged that a decision will need to be made on the role of the Special Committee to clarify its future scope and purpose. and whether the current members would continue to serve on it. Action. Adopted unanimously. GENERAL MANAGER'S RECOMMENDATIONS The following items are recommended for approval: 98-1-4 A. ICMA 401A Plan RESOLVED,That Resolution#97-11-6.approved November 25, 1997, regarding the Board of Water and Light 401 A ICMA Plan be amended to extend the election period from January 30, 1998 to February 27, 1998. RESOLVED FURTHER.That effective November 30, 1997, the RC-administered 401 Plan(ICMA plan number 8824) titled Board of Water and Light 401 A Plan is amended and restated as a zero percent money purchase plan. The Plan will thereafter provide for a zero percent rate of employer contributions and will be maintained solely for the purpose of receiving rollover distributions or transfers from a qualified trust. RESOLVED FURTHER That participants in the Board of Water and Light 401 A Plan must elect,in writing, between January 5. 1998 and 3annaf-30 FEBRUARY 27. 1998, to either leave their account balance as of November 30. 1997 in the Board of Water and Light 401 A Plan or have their balance transferred to the Lansing Board of Water and Light Employees'Defined Contribution Pension Plan. The amount transferred to the Lansing Board of Water and Light Employees'Defined Contribution Pension Plan would consist of the balance as of November 30. 1997 plus earnings thereon and less any losses through the date that the transfer is made. Any participant who fails to make a written election on or before 3 30 FEBRUARY 27. 1998 will be deemed to have elected to leave his or her balance in the Board of Water and Light 401 A Plan. Amendment Note: Deleted words are stricken. Inserted words are In bold capital letters. This resolution provides exempt employees(not eligible for over time)the option of transferring their balances from ICMA to Prudential by extending the election period to February 27, 1998. Board Minutes Page 5 January 27. 1998 All exempt employees receive a 3%contribution to the 401 A Defined Contribution Plan. Prior to December 1, 1997. the Plan was administered by ICMA. Effective December 1, 1997. the 3%contributions are now going into the new defined contribution plan administered by Prudential. Employees have the option of transferring their balances from ICMA to Prudential. ------------------------- Motion was made by Commissioner Pratt. seconded by Commissioner Royal, to approve the resolution. Action. Adopted unanimously. 98-1-5 B. Water District No. 3,DeWitt Township RESOLVED,That the Board agree to serve water to proposed Water District No. 3, DeWitt Township, as requested by resolution of the DeWitt Charter Township Board on January 26. 1998 and that in accordance with the agreement between the Board and the Charter Township of DeWitt dated July 14, 1995, covering the furnishing of potable water supplying DeWitt Township, the Board advise the officials of DeWitt Township as follows: 1. The Board w611 accept Water District No. 3 established by the Township resolution on January 26. 1998 and will provide a potable water supply to said district. 2. The Board and the Township acknowledge that establishing Water District No. 3 requires that the Water Service Area be amended to include all areas of the Township East of U.S. 127/future U.S. 27 3. The Board and the Township acknowledge that establishing Water District No. 3 requires the installation of system reinforcements as outlined in Appendix B of the Water Service Agreement 4. The Board and the Township are to enter into a written agreement(Supplement III)covering the furnishing of a potable water supply in Water District No. 3, the required system reinforcements as per Option II of Appendix B of the Water Service Agreement, and the expansion of the Water Service Area in the Township. 5. Water mains are to be installed in accordance with the current Board's Rules and Regulations for water service. 6. That at the Township's request the Board will surcharge all of its water customers in the township as necessary to cover the Township's costs for annual fire hydrant charges. Such initial surcharge to be set at 12%commencing on July 1, 1998. RESOLVED FURTHER. That the projects be approved for installation, and the General Manager and Secretary be authorized to sign the aforementioned agreement(Supplement III). The Geographical area of Water District No. 3 is as follows: State Rd. from N. E. St. easterly 16300 feet to Chandler Rd. To provide a potable water supply within the proposed new district requires the installation of 16,300 feet of 16" water main and 33 hydrants at the estimated cost of $1,065,872. DeWitt Township will make a contribution in aid of construction in the amount of $642,153. The Board will participate in oversizing and recoverable frontage in the amount of $423,719. The main extension will serve five(5)commercial and forty(40)residential homes Page 6 Board Minutes January 27, 1998 existing at this time. One-time connection fees will amount to$54,559. The estimated annual revenue is$62,090. Potential for frontage charges is$30.000. The required system reinforcement requires the installation of 24.336 feet of 24" main and 1000 feet of 16"main from the Board's Dye Water Conditioning Plant Northerly to Weiland, Easterly to Brook, then Northerly to State Road at the estimated cost of$3.260.849. The Board will install the reinforcement at no direct cost to the Township and will recover its costs by a schedule of supplemental connection charges to all suburban water customers directly benefiting from the system reinforcement. Water mains to be installed in District No. 3 in the Spring of 1998. The system reinforcements to be installed during the 1999 construction season. These projects are also part of the construction required in the proposal for service to Bath Township and construction timelines are appropriate to meet the terms of that proposal as well as meet the needs of DeWitt Township's development. Based on conservative estimates of development, recovery of the Board's investment is anticipated within 7 years. Motion by Commissioner Royal, seconded by Commissioner Graves,to adopt the resolution. Action. Adopted unanimously. 98-1-6 C. Water Service Installations RESOLVED. That the Board of Water and Light charges for water service installations be changed, effective January 1. 1998 as follows: Size Main-to-Curb-Box Curb-Box-to-Bldg. Current Proposed Current Proposed Fee 1998 Fee Fee 1998 Fee 3/4" $760 $760 $13.17* 13.57* F, $850 $850 $13.55* 13.96* *Charges are per foot of installation The new proposed fees reflect zero increase in the charges for 3/4"and 1"Main-to-Curb-Box charges; and an increase of 3%in both the 3/4" and 1" Curb-Box-To-Building charges. The 3%increase is reflective of a C.P.I. adjustment. A new practice that incorporates stubbing the Curb-Box-to-Bldg segment. past the other utility locations.at the time of Main-to-Curb-Box installation has been instituted,but was not able to be reflected in the cost calculations. This change in practice is anticipated to significantly reduce the Curb-Box-to-Bldg. per foot costs. The additional charge of$3.00 per foot for adverse winter weather conditions will remain in effect. Motion by Commissioner Pratt. seconded by Commissioner Royal, to adopt the resolution. Action. Adopted unanimously. Board Minutes Page 7 January 27. 1998 UNFINISHED BUSINESS Electric Restructuring The Board agreed to postpone action on an official Board position regarding fundamental electric industry restructuring principles to allow additional time for review and input by all Commissioners. This item will be considered at the regular meeting in February. NEW BUSINESS Terminating Coordination Agreement with Wolverine, Traverse City and Grand Haven General Manager Pandy reported that a request has been received from Wolverine Power Supply Cooperative of Cadillac. Michigan, to terminate a coordination agreement between the Lansing Board of Water and Light(BWL), Wolverine, Traverse City Light and Power, and Grand Haven Board of Light and Power, dated July 12, 1976. Wolverine is now under the jurisdiction of the Federal Energy Regulatory Commission(FERC) as of January 1, 1998. and would be required to file this agreement as part of their filing with FERC. Mr. Pandy reported that the BWL has not been using this agreement with Wolverine since 1992, due to the existence and operation of the Municipal/Cooperative Coordinated Pool Agreement between the Michigan Public Power Agency and Wolverine Power Supply Cooperative, dated December 20, 1991. Wolverine desires to have the 1976 agreement with the BWL. Traverse City Light and Power and Grand Haven Board of Light and Power eliminated so as to avoid the requirement of filing with FERC. Motion by Commissioner O'Leary, seconded by Commissioner Creamer,to approve the following resolution: 98-1-7 RESOLVED, That pursuant to Section 11 of the Coordination Agreement between Lansing Board of Water and Light and Northern Michigan Electric Cooperative, Inc., Wolverine Electric Cooperative, Inc., City of Grand Haven. Michigan, and City of Traverse City.Michigan. dated July 12, 1976, said Agreement is no longer needed and is hereby terminated and shall be retroactively effective as of December 31, 1997. Action. Adopted unanimously. GENERAL MANAGER'S REMARKS Delays and Implementation of Retail Wheeling in California General Manager Pandy referred to a WALL STREET JouRNAL article entitled,"Utility Plans for California Facing Delays." December 24. 1997, about delays in implementing California's planned January 1, 1998, startup of electric deregulation due to persistent computer problems. Mr. Pandy noted that Commissioner Werbelow has been forwarding a number of news articles on deregulation for the Board's review and information. Deregulation-A Topic at Legislative Rally in Washington,D.C. Director of Electric System Control Bill Cook is in Washington,D. C. this week as part of the Michigan delegation lobbying at the federal level on deregulation issues. He will be representing Michigan and the BWL in the American Public Power Association(APPA) legislative rally that occurs annually. Page 8 Board Minutes January 27, 1998 Newsletter Article Addresses the Issue of Securitization General Manager Pandy shared with the Board a copy of a ViEwpor'T ON PUBLIC ISSUES piece entitled"Consumers Should be Wary of`Securitization."' January 12, 1998, from the Mackinac Center for Public Policy in Midland. Michigan. The article notes that in Michigan the securitization of stranded costs by the two large investor-owned utilities is estimated to cost customers somewhere between$1 billion and$7 billion. Status of Production Maintenance Inventory Project At the Board meeting of December 16. 1997.BWL employee.Bob Murphy, Parts Controller in Electric Production Maintenance,addressed the Board regarding a concern he has with the warehouse inventory project. The Board then requested a report from staff providing a summary of the history and status of this project for review at their regular meeting in January. General Manager Pandy handed out a project status report, prepared by Internal Auditor Kellie Willson, dated January 26. 1998. He reported that this long-term project has involved consolidating and standardizing two warehouses, and much remains to be done. The report provides detail of tasks to be completed. Mr.Pandy indicated that the major issue of Mr. Murphy's objection is that combining the two warehouses into one will change job responsibilities for people in this area. The Board of Water and Light has been honored by the National Safety Council. For the first time,the BWL has won a first place award for calendar year 1996 BWL Receives First Place Safety Award for Calendar Year 1996 General Manger Pandy reported that the National Safety Council has honored the Board of Water and Light with a first place award for the 1996 Utilities Division. Safety and Health Contest. Combination Gas and Electric Division. Group 2. The award is based on the number of lost work days due to accidents. Mr. Pandy noted that this is the first time the BWL has won this award. The BWL finished second in 1993 and received an honorable mention in 1986. Although the BWL is not in the gas business,the Safety Council considered the Water Utility as a similar enterprise. Safety Administrator Bob Cariano was on hand to present the award to the Board. Mr. Pandy noted that Bob Cariano has the distinction of being 1 of 12 individuals nationally being selected to form a water services section for the National Safety Council. Finance Committee to Review Health Care Liability General Manager Pandy reported that a Finance Committee meeting is to be scheduled at the request of Finance Committee Chair Diane Royal to discuss the health care liability issue with respect to BWL retirees and current employees. Staff is proposing to retain a benefits consultant to assist in identifying what the alternatives are and their implications for Board consideration and debate. Analytical Reviews General Manager Pandy congratulated Internal Auditor Kellie Willson on her production of the analytical review of the water utility and the electric utility. An analytical review of the steam utility is planned for next year. Mr. Pandv noted that this review provides an excellent analysis of the competitive position of the water and electric utilities. Board Minutes Page 9 January 27. 1998 Customer Attitude Survev Communications Director John Strickler presented an executive summary of the semi-annual customer attitude survey findings conducted by Market Strategies Energy&Consulting in November, 1997. The survey was done by telephone interview with a cross section of BWL residential customers in our water and electric utilities. The survey is used to gather customer perceptions on a variety of BWL activities, including overall favorability, satisfaction perceptions of reliability and related factors. Significant results include: • overall satisfaction decreased from 83%to 79%for electric, and 87%to 84%for water; • 80%of electric customers would still choose BWL.compared to 77%in June 1997; and • reliability decreased from 92%to 86%based on the October. 1997 ice storm. A summary of the BWL's position relative to other utilities were summarized. Significant benchmark results included: BWL's MSI Avg. BWL Percent Positive vs Positive Response Positive Rating MSI Rating Avg. • Earned loyalty 84 69 +15 • Choice of current electric company over a lower-priced 42 28 +14 competitor with 10%lower rates • Keeping electric rates as low as possible 60 47 +13 • Overall Favorabilitv 84 73 +11 • Choice of current electric utility over another with equal 80 81 — 1 rates • Overall Satisfaction 79 81 — 2 Mr. Strickler reported that the December, 1997 CONNECTIONS newsletter. inserted in customer bills, communicated the impact of the October ice storm: i.e., things the BWL did right, things we did wrong, the severity of the outage and what the BWL is doing to improve service to customers and reliability. REMARKS BY COMMISSIONERS In submitting his resignation from the Board(see"Communications"), Commissioner Joseph Graves,Jr., commented that he enjoyed serving on the Board of Commissioners over the past.16 months. He expressed his appreciation to the Board and staff for their support. Commissioner Graves' resignation was necessitated by his assuming a position with the City of Lansing as Chief of Staff for Mayor Hollister. Commissioner Peter Pratt inquired as to the reason for the low Share the Success(STS)numbers. General Manager Pandy commented on several key factors that have contributed to the low STS score: • Weather conditions in part contributed to lower revenue in the cash flow measures for electric,water and steam. • Revenue is off for steam due to problems associated with the steam main completion. • Revenue is off and expenses are up due to the October ice storm, which cost the electric utility approximately $750.000. • Safety performance has been poor for fiscal year to date. Page 10 Board Minutes January 27, 1998 Commissioner Pratt expressed concern with the safety performance and suggested that this be a topic for Board discussion in the near future. Commissioner Pratt also thanked Commissioner Graves for his manv contributions to the Board. Commissioner Diane Royal expressed her appreciation to Commissioner Graves for his service and wished him well. Commissioner Dave O'Leary asked if the ice storm costs would be charged to the BWL's contingency fund. General Manager Pandy responded that the cost is being incurred as an operating expense this fiscal year,and noted that it will not affect our customers. Commissioner Charles Creamer reported that Councilmember Larry Meyer is the new chair of the Council's Intergovernmental Relations Committee. Councilmember Meyer will be attending BWL Board meetings to encourage open communication between the City Council and the Board of Commissioners. Chairman Christian inquired about the status of the automatic call distribution system approved by the Board at the December 16. 1997 meeting. General Manager Pandy responded that the new call distribution system is expected to be in service sometime in February or March. Commissioner Christian thanked Commissioner Graves for his service on the Board and wished him the best of luck. Commissioner Werbelow also wished Commissioner Graves well on his new position. PUBLIC COMMENTS CHAIRMAN CHRISTIAN ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT. No persons spoke. EXCUSED ABSENCES There were no absences. ADJOURNMENT On motion by Commissioner Graves, the Board adjourned at 6:25 p.m. Mary E. a, Secretary Filed: January.30, 1998 Marilynn Slade, City Clerk