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HomeMy WebLinkAbout2009 Minutes BWL MINUTES OF THE BOARD OF COMMISSIONERS' RESCHEDULED MEETING LANSING BOARD OF WATER AND LIGHT Tuesday, December 1, 2009 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Present: Commissioners Margaret Bossenbery, Tony DeLuca, Peter Kramer, Frank Lain, Dennis Louney, Marilyn Plummer and Sandra Zerkle. Absent: Tracy Thomas Chairperson Zerkle called the meeting to order at 5:30 p.m. The Corporate Secretary declared a quorum present. Commissioner Louney lead the Pledge of Allegiance. Motion by Commissioner Lain, seconded by Commissioner Kramer to amend the Agenda to included a late item Committee Report from today's Finance Committee Meeting. Action: Carried unanimously. APPROVAL OF MINUTES Motion by Commissioner Plummer, seconded by Commissioner Bossenbery to approve the minutes of the Regular Board Meeting of September 22, 2009, Action: Carried unanimously, PUBLIC COMMENTS MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There were no public comments. COMMUNICATIONS a. Thank you note from Beverly Bishop Regular Board Mtg. December 1,2009 Page 2 of 49 Received and Placed on File COMMITTEE REPORTS BOARD OF WATER & LIGHT COMMITTEE OF THE WHOLE October 6, 2009 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 5:30 p.m. on Tuesday, October 6, 2009. Committee of the Whole Chair Frank Lain called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Tony DeLuca, Frank Lain, Dennis Louney, Marilyn Plummer, Tracy Thomas and Sandra Zerkle (arrived at 5:36 p.m.). Absent: None. Public Comments There were no public comments. Approval of Minutes Motion by Commissioner DeLuca, seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of September 8, 2009. Action: Carried unanimously. �qfety Equipment Fashion Sho General Manager J. Peter Lark stated that at the BWL, safety is taken very seriously and thought it would be nice to share some of the items that are used for employee's safety. Mr. Lark stated that this was the idea of Administrative Assistant Sue Ramsey and that Secretary Rosemary Sullivan assisted her. Larry Shields of Electric Delivery Services was the moderator the BWL Safety Fashion Show. The models for the Fashion Show included: Dan Barnes, Ritch Lewis, Marilyn Montgomery, Juan Ortiz, Teresa Revilla, Carol Scott and Linda Taylor. New Source Revie General Manager J. Peter Lark presented information regarding the New Source Review (NSR). The NSR is a program that is part of the Clean Air Act Amendments and is enforced by the United States Environmental Protection Agency (EPA). Mr. Lark stated that when there are new plans for major modifications to old utility plants there are certain standards that have to be met emissions wise. The Board of Water& Light's (BWL) older utility plants are grandfathered in because they predate the EPA NSR and only routine maintenance is undertaken at those plants. In the1980's the EPA started looking Regular Board Mtg. December 1,2009 Page 3 of 49 closer at older plants to determine if any modifications were routine or not. Mr. Lark stated that the EPA began their reviews with the larger companies like Detroit Edison and Consumers and there have been actions sanctioned by the EPA against Detroit Edison. The NSR just completed their work with Consumer Energy that they started about nine years ago and now that they are done with the larger companies, they are starting with the municipal utilities. Mr. Lark stated that the BWL has received a Section 114 Letter from the EPA which means that information has to be turned over to them as to what has been going on with the utility plants over the time period they are looking at. The BWL has turned over 17 boxes of information. George Stojic, Director of Strategic Planning & Development stated that there is a lot of confusion out there as to what amounts to maintenance and repair. This process takes an enormous amount of time and he does not expect to hear anything back for a long time. He stated that over the last 25 years EPA's investigation pursuit depends upon who is in Washington and with the Obama Administration it is pretty vigorous. Mr. Lark gave some examples of possible actions the EPA could take and said the BWL is preparing for situations that may come up Vice Chair Lain stated that the NSR is nothing new and the EPA may or may not find something but Mr. Lark thought it advisable to present the Board with worse case scenarios. He stated that this is a very important matter but there is not a problem right now. Shut-Off Rules General Manager Lark introduced Bob Perialas, Manager of Customer Service who provided an update on the Board of Water & Light's Winter Shut Off Protection Rules. Printed below is the PowerPoint presentation that was reviewed by Mr. Perialas and included in the Committee of the Whole packet. Customer Service Update Winter Shut Off Protection Rules Bob Perialas Manager, Customer Service October 6, 2009 Michigan Municipal Electric Association Shut Off Rules -MMEA has developed Shut Off Rules —MMEA created a Shut-Off Protection Workgroup, chaired by J. Peter Lark, to develop rules to protect "At Risk" Customers. —New rules effective Nov 1, 2009 —MMEA Rules mirrors proposed legislation Regular Board Mtg. December 1,2009 Page 4 of 49 -Reason for new rules: 93-year-old man in Bay City died as a result of an electric shut off/use of an electric meter limiter last winter. -BWL billing programming would not have allowed the shut off to occur on our system if he was flagged as a senior. Rules Summarized -implementing safeguards to protect "at risk" customers from electric shut offs —Seniors (3,500 currently flagged) —Certified Medical Conditions —Military Families —Low Income Families -Increase Winter Protection Season —November 1 — March 31 (added November) -Prohibit use of Electric Limiters —BWL currently complies -Ensuring notices contain important information prior to shut off —BWL currently complies -Ensure we pass on information to prevent shut offs, such as the number to 2-1-1 —BWL currently complies -Detailing, when shut offs do occur, the steps to restore power —New Door Hangers have been developed -Permit low-income customers to set up a payment plan to prevent shut off —We currently make payment arrangements for all of our customers. Low income specifics are being developed. -Provide shut off protection for customers with certified medical conditions —BWL currently complies -Make efforts to allow senior citizens to identify themselves —Notices will be printed on the bill, website enrollment, article in November Connections. -Attempt to contact known seniors after a shut off does occur —Phone calls will be placed —Personal visits will also be available -Allow customers to name a third party to receive bills and notices in addition to themselves —BWL currently complies: Our customers can name up to 7 additional people and addresses. Mr. Perialas stated that next months edition of "Connections" contains information regarding Winter Shut Off Protection. The Board of Commissioner were provided a "Notice of Service Interruption" Door Hanger that will be distributed to customer that are being shut off for non-pay. This Door Hanger provides contact information to the customers as well as the requirements for restoration; The Door Hanger also informs customers of the availability the 2-1-1 system. Regular Board Mtg. December 1,2009 Page 5 of 49 BWL's 125th Anniversary Mr. Lark spoke about the 125th Anniversary of the Board of Water & Light (BWL). The BWL has formed a committee to organize the celebration of the 125 Anniversary and it is chaired by Mark Nixon, Director of Communications. Mr. Nixon displayed for the Board of Commissioners a copy of the new edition of the "Pipeline". He reviewed some of the history of the Board of Water & Light and stated that the BWL was here twenty-five years after the City was incorporated and that was very special. Mr. Nixon stated that the Committee really would like for the celebration to be special. He said that General Manager Lark re-instated the BWL picnic and in 2010 there are plans to invite the retirees as part of the celebration. Some of the other ideas that the Committee has come up with to celebrate the 125th Anniversary include: an open house in the Board Room, a contest to select a BWL flavored ice cream, show customers the new holiday video, opportunity for Mr. Lark to make a few remarks and to meet customers. Other ideas include starting an Employee of the Year award with the first being announced at the 2010 Holiday party and to have Silver Bells themed with the 125 year Anniversary. The 125th Anniversary Committee includes the following members: Beverly Bishop, Bill Maier, Chris Thompson, Gennie Eva, Honey Bentley, Jeff Schwarz, Jerry Mills, John Rossi, Juan Ortiz, Justin Bowman, Leslie Grannell, Linda Voorhees, Lori Pung, Orlando Smith, Randy Sinko, Rebecca Rostar, Roger Adsit, Rosemary Sullivan, Shellie Starkey, Sherry Markey, Steve Smith, Sue Warren, Tansay Carter, Tracy Tolbert, Wendy Sorek. 2010 Proposed Board Meeting Schedule Motion by Commissioner DeLuca , seconded by Commissioner Zerkle to forward proposed 2010 Board Meeting Schedule to the Board for approval. Action: Carried unanimously. Other General Manager Lark stated that he has been working with a lobbyist from Washington, D.C. trying to acquire stimulus funds from the Federal Government. He said there are a couple of things in the works and one of the things that they have worked on is a request for hybrid vehicle money and charging stations. He said this request looks very positive and the BWL may be receiving $750,000 for hybrid vehicles and charging stations. Mr. Lark stated that there is nothing in the way of this happening except President Obama's signature. General Manager Lark introduced and congratulated Susan Devon who was promoted to the Assistant General Manager, M. Denise Griffin who was promoted to Corporate Secretary and Bruce Cook who was promoted to Director Regular Board Mtg. December 1,2009 Page 6 of 49 of Safety. He invited the Commissioners to a reception to celebrate their promotions at 4:00 p.m. tomorrow. With there being no further business the meeting adjourned at 6:40 p.m. Respectfully submitted Frank Lain, Chair Committee of the Whole FINANCE COMMITTEE November 10, 2009 The Finance Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 4:00 p.m. on Tuesday, November 10, 2009. Finance Committee Chairperson Peter Kramer called the meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Peter Kramer, Frank Lain and Dennis Louney. Other Board Members present include: Commissioners DeLuca and Zerkle. Absent: Commissioner Margaret Bossenbery Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Louney, seconded by Commissioner Lain to approve the Finance Committee meeting minutes of September 8, 2009. Action: Carried unanimously. Quarterly Financial Update and Rate Recommendation General Manager J. Peter Lark stated that this is a quarterly Financial Update Report with a Rate Increase recommendation attached to it. General Manager Lark stated that basically the quarterly financial update reveals that our sales are significantly less than what we expected them to be. As a result of that we are now projecting that our net income will be a negative $13 million for 2010. General Manager Lark reviewed the financial documents included in the packet. (Attachment on file in the Office of the Corporate Secretary) He said the first quarter was not as stellar as he hoped it would be and that is usually our big money making quarter. He stated that we have to make up a lot of ground and Regular Board Mtg. December 1,2009 Page 7 of 49 noted that the difference between Consumers Energy's rates and the Board of Water & Light's rates are significant (27-31% higher than ours). General Manager Lark stated that we have a continually shortfall of revenue that we need to address. Over time rates need to generate the Commission approved 6.18% return on assets in order to meet our current and future financial requirements. Also another contributor to the shortfall is that the Board of Water & Light is putting $15 million into the VEBA and DB Plan whereas in prior years we put in less and that was due to the stock market plunge. General Manager Lark said that we need raise rates by at least 5.6% strictly to recover the funds needed to pay for the governors and the legislator's mandated Renewable Energy Program (REP) and Energy Optimization (EO) programs. This does not help our own financial condition in any way and all that money will have to be earmarked and used for renewables which we are doing now with energy optimization. General Manager Lark said that he is hoping to take care of the electric short fall with additional sales next year and by raising the service charge. He said that raising the service charge puts the Board of Water & Light more in the mainstream of what utilities are doing as far as utility charges go. The other area where rates would be raised is water. He said that the Administration is asking today is that the Board of Commissioners allows a notice for a Public Hearing to be published. Commissioner Kramer questioned where the Board sees the 2010 Fiscal Year going. In response Sue Devon, Assistant General Manager and CFO, stated they are looking overall at negative return on investment of about 2.59%. Mrs. Devon said that the 6.18% was based on how much money we need to set aside to fund all of our future operations. That number is still good. The problem is that we are so far behind on our rates that we would need a very significant increase in our raise in order to reach that required 6.18% all in one year. A more gradual approach, meaning a little bit of an increase each year, is recommended. Commissioner Kramer stated that he is trying to understand what the Commissioners most responsible business solution to implement would be with both the economy and constituents in mind at the same time. Commissioner Kramer stated that he does not feel that the proposed percentage is where this needs to be and that we would just break even because of the requirements that the governor has placed on us and that the Board of Water & Light is not supporting the basis or foundation of the utility for the future and that concerns him. Commissioner Lain questioned if there was a water charge and if anyone had thought about if it would be worthwhile adjusting those cost. In response Mrs. Devon responded that the resident water charge is $7.71. Regular Board Mtg. December 1,2009 Page 8 of 49 Commissioner Zerkle stated her concerns for people who are struggling financially. She said that she would prefer to use the word usage instead of Service increase. Commissioner Kramer asked if there were any Commissioners that have any thoughts on having the resolution being any different than what management presented. He questioned if there were any thoughts of having more of an increase than what management has brought forward. He stated that he believes that there is another percent here that the public could handle. Commissioner Kramer said that he is thinking of two or three years down the road when we look back at this time right now we are sitting here trying to deal with things that happened three to five years ago when the Board did not raise rates the way they should have and we are fighting that cost. We all know that in a few years down the road our rates will be higher than they are today and to not ask for the increase now just delays the problem and pushes it into the future. He said this is okay as long as we all have talked about it and we have good reason for doing it and we say this is the best way to manage the utility. Commissioner Lain asked if we approve the resolution could we still visit the service charges? General Manager Lark stated yes. We are not locked into this resolution. Commissioner Kramer said the question is what is the most responsible thing the Board of Commissioners can do for the Board of Water & Light. Right now the most responsible thing that we see is to support management's recommendations. He said that there has been good dialogue today but believes that the Commissioners are undershooting and as a Board are not acting as responsible as we should fiscally. Resolution Public Hearing for 2010 Electric and Water Rate Increases WHEREAS, the Corporate Financial Target for each of the Lansing Board of Water and Light's Strategic business units is 6.18% return on net fixed assets and materials and supplies that would require $18.1 million of electric net income and $11.8 million of water net income; and WHEREAS, the Fiscal Year 2010 Electric Utility budget filed with the City of Lansing, including mandated costs of Renewable Energy and Energy Optimization Plans in compliance with 2008 PA 295, would result in electric net income of $3.2 million or a 1.13% return on net fixed assets and materials and supplies; and WHEREAS, first quarter electric retail sales reduction caused by a cooler than normal summer and reductions in wholesale revenues reflective of the current economic conditions will negatively affect the Fiscal Year 2010 budgeted net income beyond that reflected in the original budget projections; and Regular Board Mtg. December 1,2009 Page 9 of 49 WHEREAS, the Fiscal Year 2010 Water Utility budget filed with the City of Lansing would result in a water utility net loss of $6.4 million or a negative 3.53% return on net fixed assets and materials and supplies; and WHEREAS, the current forecast of electric and water net income projection for Fiscal Year 2010 are losses of$3.8 million and $6.4 million respectively; and WHEREAS, the Staff proposes implementation of a Renewable Energy Plan Surcharge to recover the cost of 2008 PA 295 compliance; and WHEREAS, the Staff proposes implementation of an Energy Optimization Surcharge to recover the cost of 2008 PA 295 compliance; and WHEREAS, the Staff recommends that the Basic Service Charges for certain electric rate schedules be increased; and WHEREAS, the Staff proposes to increase annual water billings by $2.4 million, and WHEREAS, the proposed rate adjustments will not take effect until March 1, 2010. RESOLVED, the proposed rate adjustments will be subject to further consideration after a public hearing is held. FURTHER RESOLVED, that the Board of Commissioners hereby sets the date of January 21, 2010 at 5:30 PM for a public hearing to solicit public input on the proposed rate adjustments. The hearing will be held in the Board of Water and Light offices, 1232 Haco Drive, Lansing. The Corporate Secretary is directed to file with the City Clerk no later than December 7, 2009 information regarding proposed rate adjustments with an effective date of March 1, 2010. On motion by Commissioner Lain, seconded by Commissioner Zerkle to move the proposed resolution to set a Public Hearing for 2010 Electric and Water Rate Increase to the full board for consideration. Action: Carried unanimously FAS-71 Accounting Authority for Energy Optimization and Renewable Energy Plan Programs General Manager Lark stated that request for the Accounting Authority for FAS- 71 Accounting is to record the revenue and expenses associated with the REP Plan as well as the Energy Optimization Plan. In order to do this kind of accounting we have to have the approval of the Board and we have done that several times. It means in instances where you have cost now but you are picking up the revenue later, it becomes a regulatory asset and if you have the recovery now and the costs are incurred later it is a regulatory Regular Board Mtg. December 1,2009 Page 10 of 49 liability and that is what we are talking about and it has to do with the REP and the Energy Optimization Plan. RESOLUTION Application of Financial Accounting Standard #71 (FAS #71) to Renewable Energy Plan and Energy Optimization Revenue and Expense. WHEREAS, pursuant to Resolution #2003-8-3 the Board of Commission requires management to receive Board approval before any deferrals under FAS 71; and WHEREAS, the Renewable Energy Plan Surcharge and the Energy Optimization Surcharge are proposed to be implemented as electric rate schedules on March 1, 2010; and WHEREAS, the proposed surcharges allow for Board approved levelized rate recovery of applicable renewable energy plan expenditures and energy optimization expenditures, including those expenditures already incurred; and WHEREAS, as allowed under FAS #71 a regulatory liability account will be set up for both the renewable energy plan and the energy optimization program; and WHEREAS, levelized rates for the renewable energy plan and the energy optimization program will collect customer payments in excess of program costs in initial years; and WHEREAS, customer payments in excess of program costs will be recorded as an increase to the regulatory liability accounts; and WHEREAS, in later years renewable energy plan and energy optimization program costs will exceed levelized customer payments; and WHEREAS, program costs in excess of levelized customer payments will be offset by amounts withdrawn from the regulatory liability accounts. RESOLVED, that the Board of Commissioners, as the regulatory body of the Board of Water and Light, approve, pursuant to the Financial Accounting Standards (FAS) 71, the appropriate accounting, as described above, for the renewable energy plan and energy optimization program. On motion by Commissioner Zerkle, seconded by Commissioner Louney to move the proposed resolution for an Application of Financial Accounting Standard #71 (FAS #71) to Renewable Energy Plan and Energy Optimization Revenue and Expense to the full Board for consideration. Action: Motion Carried lQuarterly Cash Repo Regular Board Mtg. December 1,2009 Page 11 of 49 General Manager Lark stated that earlier this Board adopted an Investment Policy Statement for Operating Cash and according to that resolution management was to bring forward a quarterly statement according to operating funds. Bill Aldrich, Manager of Finance, stated that the cash balance is down slightly from the beginning of the quarter primarily due to the payment of principal and interest on our bond indebtedness and that happens every July 1 st. We ended fiscally on a high note cash wise and then immediately it dropped down considerably $10 to $12 million. He stated that the cash position has improved due to Mr. Lark putting the word out that we need to conserve cash and the Managers and Directors have been doing a good job conserving cash and it shows. Mr. Aldrich reviewed the attached documents. (Attachment on file in the Office of the Corporate Secretary) Quarterly Internal Audit Status Report Internal Auditor Phil Perkins stated that in his Status Report he would be covering the Board of Water& Light's first quarter progress, but since we're well into Quarter Two he will also address where we are right now, and where we plan to go for the remainder of this fiscal year. He said that he would briefly describe our ongoing risk assessment efforts that help us with the audit planning, and some current challenges and how they are being addressed. Mr. Perkins introduced his assistants Perez Goree and Charles Moore, without whose efforts many of the accomplishments on the following slides would not have been possible Mr. Perkins said that he and his assistants finished three carryover audits from FY09 plan in the first quarter, along with a brief consulting engagement that Ms. Devon requested. In this engagement they evaluated management's analysis of obtaining a lockbox service versus acquiring a new data processing machine for customer payments processing. The international auditing standards promulgated by the Institute of Internal Auditors not only allow, but encourage participation in consulting engagements as time permits and when we believe it will add value to the organization, as long as we do nothing to impair our independence. In this case, we made a couple of suggestions to improve the management-prepared financial analysis, without making a recommendation as to which option to pursue. Mr. Perkins said in the first quarter they started a couple of new FY2010 audits and continued working on several carryover audits from FY2009. Two of these audits have since been finished and the reports are attached. Included in the attached packet is a list of lists the remaining audits on FY2010 Audit Plan that was presented couple of months ago Planning is a continuing function as internal and external changes occur and the associated risks may change as well, so we are looking ahead to the next fiscal year now but will need to refresh our tentative plans over time. We will keep you apprised of any such situations as they develop. Regular Board Mtg. December 1,2009 Page 12 of49 Mr. Perkins stated that ongoing risk assessment is a very important part of our activity, since identification of key risks helps to drive our audit planning into the areas where we can add the most value to the organization. We need to look at general or high-level risks so that we have some grasp of the big picture. Often, these risks are due to external factors such as the economy and are largely outside of BWL's control, and management is already aggressively addressing what mitigation it can through cost saving and other measures. He stated that when we look at a more specific risk such as the potential impact of ending our MPPA power pool relationship next year, we are in a position to add some value in mitigating this and other more specific risks. In that light, we appreciate that Ms. Devon has asked Internal Audit to be involved in the Energy Risk Management process in the coming months. Mr. Perkins stated that looking at challenges, our continued risk assessment is critical since we must rely on management's input as at least a starting point, and because we live in a world of constant change and risks tend to evolve along with the changes. Monthly meetings with Ms. Devon and periodic meetings with Executive Directors and their staffs help in this regard. Mr. Perkins said regarding resources, his department has a good budget but are performing a lot of first-time audits and the planning estimates are often just best guesses of how much effort it will take to complete the audits in the plan. He said that he will continue to prioritize during the year based on risks but we also need to consider the auditee's availability, partly in terms of recent management changes, for example in the Safety Department. He said that he has had ongoing discussions with Ms. Devon and the Internal Control Department regarding the process and timing of discussing draft findings, management responses and the audit report format. As a result, he believes there is a more streamlined and efficient process that allows him to align on the findings and recommendations before the closing conference and preparation and release to management of the draft audit report. (The full Report is on file in the Office of the Corporate Secretary) Recent Internal Audits Reports Completed Internal Auditor Phil Perkins presented his reports on the Billing Functions, Bond Financing and Procurement of Good and Services. The Billing Function Report is presented two parts. Part One is the Executive Summary that contains an outline of our findings, recommendations and management responses. Part Two is the detailed audit report that contains a description of programs and activities; audit objectives, scope and methodology and prior audit follow-up; comments, findings, recommendations, and management responses; and a glossary of acronyms and terms. The Bond Financing Report is presented in two parts. Part One is an executive summary that provides a snapshot of the audit results. Part Two is the detailed report that contains a description of programs and activities; audit objectives, scope, and methodology; prior audit follow-up; comments, findings, and recommendations; and a glossary of acronyms and terms. Regular Board Mtg. December 1,2009 Page 13 of 49 The Procurement of Goods and Services is presented in two parts: (1) the Executive Summary that contains a capsule version of the audit results and (2) the Detailed Report that contains a description of programs and activities; audit objectives; scope and methodology and prior audit follow-up, if any; comments, detailed findings, recommendations; and management responses; and a glossary of acronyms and terms. Management responses have been summarized in full in the Detailed Report Mr. Perkins stated that he appreciate the courtesy and cooperation extended during the audit. Commissioners Zerkle and Kramer thanked Mr. Perkins for his thorough report and all his hard work. (The full Report is on file in the Office of the Corporate Secretary) Other General Manager Lark stated that his Administration had decided to implement furlough days for the non-bargaining employees starting around Christmas. He said that they have talked to the Unions (IBEW) and the union leadership is certainly listening. They are going to present this idea to their Board. He said that he is very hopeful that this will be the bottom and maybe next year we can crawl out. He stated that he is confident that they will be able to close the cash gap. Mr. Lark thanked Sue Ramsey for cleaning up the Executive Conference Room. Adjourn On motion by Commissioner Lain, seconded by Commissioner Zerkle to excuse Commissioner Bossenbery from today's meeting. Action: Carried unanimously On motion by Commissioner Zerkle, seconded by Commissioner Lain, the meeting adjourned at 5:30 p.m. Action: Carried unanimously Respectfully submitted, Peter W. Kramer, Chair Finance Committee COMMITTEE OF THE WHOLE November 10, 2009 Regular Board Mtg. December 1,2009 Page 14 of 49 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 6:08 p.m. on Tuesday, November 10, 2009. Chair Frank Lain called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Tony DeLuca, Peter Kramer, Dennis Louney, Marilyn Plummer and Sandra Zerkle. Absent: Commissioners Margaret Bossenbery and Tracy Thomas Public Comments There were no public comments. Approval of Minutes Motion by Commissioner DeLuca, seconded by Commissioner Plummer to approve the Committee of the Whole meeting minutes of October 6, 2009. Action: Carried unanimously. i nature A udiority Resolution a. Delegation of Authority General Manager J. Peter Lark stated that this Resolution provides in the absence of the General Manager two people who are designated full authority and responsibility to operate the Board of Water & Light. Prior to this the first designee was the Executive Director of Operations, who we no longer have and the number two designee was the Chief Financial Officer. The first Resolution designates the Assistant General Manager and Chief Financial Officer Susan Devon as designee number one and the second designee is Executive Director of Electric Operations, Doug Wood. Motion by Commissioner DeLuca, seconded by Commissioner Plummer to forward the proposed Delegation of Authority Resolution on to the full Board for consideration and approval. Action: Carried unanimously b. Authority to Sign Checks General Manager J. Peter Lark said this item is the authority to sign checks. The prior resolution that the Board passed is identical to this one. The only difference is the number two person is now the Assistant General Manager and Chief Financial Officer, this new Resolution reflect Ms. Devon's new title. Regular Board Mtg. December 1,2009 Page 15 of 49 Motion by Commissioner DeLuca, seconded by Commissioner Plummer to forward the proposed Authority to sign Checks Resolution on to the full Board for consideration and approval. Action: Carried unanimously c. Authority to Invest Operating and Pension Funds General Manager Lark said this is the Authority to Invest Operating and Pension Funds Resolution. This resolution reflects the new title of the Assistant General Manager and Chief Financial Officer, Susan Devon as well as designating the Manager of Finance and Planning Bill Aldrich as a designee. Motion by Commissioner Plummer, seconded by Commissioner Louney to forward the proposed Authority to Invest Operating and Pension Funds Resolution on to the full Board for consideration and approval. Action: Carried unanimously Update on Net Metering, Renewable Energy Plans and Energy Optimization General Manager J. Peter Lark introduced George Stojic, Director of Strategic Planning and Development. Mr. Stojic's update and review included: Net Metering Plan Update The Purpose ❑Enable customers who generate electricity using renewable energy sources to connect to the BWL's distribution system :]Allows customers to send renewable energy back to the electric grid when their generation exceeds their own use for installations designed to produce no more than the customer's annual electric energy needs Eligible Renewable Energy Resources ❑Biomass ❑Solar Photovoltaic ❑Wind ❑Other renewable energy sources must be approved by the BWL Program Availability ❑Voluntary ❑Available to customers on any BWL rate schedule ❑Selection of participants for the program will be the order in which applications are received ❑Generating system limited to 50 kW per site Regular Board Mtg. December 1,2009 Page 16 of 49 ❑In effect until total nameplate capacity of all generators is equal to 1% of BWL peak load for preceding calendar year ❑May be limited to geographic regions within the BWL territory Generation Requirements ❑Renewable generation equipment must be located on the customer's premise and serve only that customer ❑Generation capacity must not exceed the customer's electric demand and energy needs ❑Must meet all current local and state electric and construction code requirements Application Process ❑Customer completes a Net Metering Application ❑Customer reviews the Generator Interconnection procedural guidelines ❑BWL will work with the customer to determine size of renewable energy system Interconnection Requirements ❑Customers must meet all the BWL interconnection requirements ❑Customer's equipment must be certified to IEEE 1547.1 and comply with UL 1741 scope 1.1 A standard ❑Complete the Generator Interconnection Application process which allows for safe connection to the BWL distribution system Metering ❑BWL will determine appropriate meter(s) to be installed that are capable of measuring the flow of energy in both directions ❑Customers who request a separate generation meter will be responsible for costs for the meter and installation Customer Billing ❑Monthly fee of $5.00 billed to operate the Net Metering program Li Generation systems of 20 kW or less qualify for true net metering —Net of bidirectional flow of kwh across the customer interconnection during billing period including excess generation credits will be credited at full retail energy (kwh) rate ❑Generating systems greater than 20 kW but less than 50 kW qualify for modified net metering Net Excess Generation (NEG) ❑Credit for NEG, if any, will appear on next bill and if not used to offset current charges will be carried forward to subsequent billing periods ❑Reconciliation of NEG credits occurs at end of each calendar year ❑NEG credit balance reset to zero and any credits will be refunded at the retail power supply rate Regular Board Mtg. December 1,2009 Page 17 of49 JRetail power supply rate includes generation costs, purchase power and other related costs Renewable Energy Plan Mr. Stojic gave an overview of what the requirements of State Law are and how the Board of Water & Light is complying regarding Renewables and Energy Optimization. He stated that last fall the Legislature did pass a new law PA295 that had maybe four or five major parts to it. Two of those major parts are applicable to municipal electric utilities. The first is a renewable energy standard and it requires all electric providers in Michigan to attain 2% of there electric energy from renewable sources by 2012 that goes up to 10% by 2015. This Board adopted a renewable energy policy before the state of Michigan did so we are well on our way. We already acquired about a number of megawatt hours, about 4% of our needs from renewable energy so we are well ahead of the requirements. Each megawatt of renewable energy that we generate creates a renewable energy credit or a REC and we can carry those forward for three years. Energy Optimization Plan: Sue Warren, Manager of Marketing & Eco-Strategies, provided the Board with a Hometown Energy Savers Packet. This packet included everything that the Board of Water & Light is offering to customers to help reduce energy usage. She stated that the Board of Water & Light has two programs one is perspective and one is replacement. Ms. Warren said that the Board of Water & Light has two programs right now for residential customers: Refrigerator Recycling and Residential Lighting Program. Next year we are adding an appliance program and we are going to target our electric water heating apartment complexes. They will be given low flow shower heads and CFL's. We launched the CFL give away and that has been very successful. We are also launching our LED light exchange next week. General Manager Lark stated that Ms. Warren does a great job with the Public Service Commission. Update on new BWL Logo General Manager Lark gave an update on the Board of Water & Light's new logo.He stated that they are taking the new logo to the Board on December 1, 2009 for approval. Mr. Stojic described the new logo and said this is a friendly, progressive forward looking contemporary logo that represents the Board and its culture. General Manager Lark stated that we didn't want to get it out there too soon because the Board of Water& Light's anniversary is February 16, 2010 and that's when were going to officially unveil the logo. Regular Board Mtg. December 1,2009 Page 18 of 49 Other General Manager Lark spoke about the ethics training that all Board of Water & Light employees go through and invited the Commissioner to contact Mike Flowers in Human Resources if they are interested in taking the training. Adjourn On motion by Commissioner Lain, seconded by Commissioner Kramer to excuse Commissioner Bossenbery and Thomas from today's meeting. Action: Carried unanimously On motion by Commissioner Zerkle, seconded by Commissioner Lain, the meeting adjourned at 6:45 p.m. Action: Carried unanimously Respectfully submitted Frank Lain, Chair Committee of the Whole BOARD OF WATER AND LIGHT PENSION FUND TRUSTEES' ANNUAL MEETING Tuesday, November 12, 2009 Present: Trustees Margaret Bossenbery, Tony DeLuca, Peter Kramer, Frank Lain, Dennis Louney, Marilyn Plummer and Sandra Zerkle. Absent: Trustee Tracy Thomas Staff Present:General Manager J. Peter Lark, Assistant General Manager and Chief Financial Officer Susan Devon, Director of Internal Audit Phil Perkins, Manager of Finance and Planning Bill Aldrich, Marilyn Montgomery, Treasury Analyst Heidi Myers Senior Rate Analyst and Corporate Secretary M. Denise Griffin Consultants Present: From Merrill Lynch: Michael Muirhead Associate Financial Advisor and Keith Azar, Senior Financial Advisor. From ICMA: Linda Brooks, Kevin Kilpatrick and John McCann The Secretary declared a quorum. Chairperson Zerkle called the meeting to order at 6:30 p.m. On Motion by Trustee Kramer and Seconded by Trustee Bossenbery to amend the Agenda to include a late item for the approval of November 4, 2008 Pension Fund Trustees' Annual Meeting Minutes. Regular Board Mtg. December 1,2009 Page 19 of 49 Action: Motion Carried On Motion by Trustee Bossenbery and Seconded by Trustee Kramer to approve the Minutes of November 4, 2008 Pension Fund Trustees' Annual Meeting Minutes. Action: Motion Carried Public Comments There were no public comments. Pension Plan Performance Reviews General Manager J. Peter Lark said that at this time we have before you a resolution to allow the Corporate Secretary to receive and place on file Defined Benefit, Defined Contribution, and Retiree Benefit Pension reports that are being received at this meeting. Please note that all three plans have received a clean audit report. General Manager Lark said with us today we have representatives from ICMA as well as Merrill Lynch. Merrill Lynch is responsible for the Board of Water & Light's (BWL) Defined Benefit (DB) Plan and the Post Employment Retiree Benefit (VEBA) Plan and ICMA is responsible for the 401 A Plan. Sue Devon, Assistant General Manager and CFO gave an overview of the different Pension Plans. She stated that the packet that the Board received is broken down into plan areas. The Defined Benefit Plan, the Defined Contribution Plan and the Post Retirement Benefit Plan. Each of the sections in the packet includes general information consisting of the Plan and Trust documents, the Audited Financial Statements, the Actuarial Study Report, the Investment Policy Statement for each Plan and the Investment Results. Ms. Devon introduced: Investment Advisory of the DB and VEBA Trust Plan from Merrill Lynch: Michael Muirhead and Keith Azar; Plan Administrator for the Defined Contribution Plan from ICMA Linda Brooks, Kevin Kilpatrick and John McCann. Ms. Devon stated that the Investment Policy Statement for the DB and the VEBA was updated with the assistance of Merrill Lynch and approved by the Board in August 2008 and that they are in the process of updating the Investment Policy Statement for the Defined Contribution Plan with the assistance of ICMA. Ms. Devon stated the following in her overview: Defined Benefit Plan. This Plan was closed to new employees hired after December 31, 1996. There are currently 466 retirees and beneficiaries, 15 terminated employees with Regular Board Mtg. December 1,2009 Page 20 of 49 vested benefits and 46 current employees in this plan for a total 527 Plan participants. The key highlights of the Audited Financial Statements is obviously that the Independent Auditors report has stated that our financial statements present fairly in all material respect the net asset held in the Plan for pension benefit at June 30, 2009 and 2008 in conformity with generally accepted accounting principles. During the Fiscal Year (FY) of 2009 the net investment income in our plan was unfortunately a negative $25.9 million due to the decline in the stock market as a whole. Benefit payments to eligible retirees in FY 2009 was $8 million causing our Plan assets to fall from $107 million at June 30, 2008 to $73 million at June 30, 2009, a net reduction of$34 million or 32%. While this is not particularly good news there has been some good new since the end off the FY and we are now seeing the balances in our Plan assets rising due to improvements in the stock market in general and our managed investments funds in particular. Our funds grew 18.10% during the 2nd Quarter out performing our bench marks by 4.5%. Fund balances at September 30, 2009 were improving reaching $82 million; $2 million of the increase was due to our own BWL contribution to the Plan. If our Funds continue to perform well our asset balances should shortly exceed our liabilities of $83 million. Plan assets as of yesterday are still at $82 million just $1 million short. Also included in the packet is a copy of the BWL's Actuarial Report for the DB Plan. This report is prepared every year for the purposes of presenting the results of the evaluation of the Plan and providing us with reporting and disclosure information for the financial statement. The report provides the Board with next Fiscal Year's annual pension cost. Since we have been over funded in this Plan for many years, we generally have had no pension cost associated with this DB Plan. Last year the funding ratio was a 127% meaning that our assets exceeded liabilities by about 27%. This year however, our funding ratio was only 77% and because of this we do have to report DB Pension expense this FY in the amount of $2 million, which has already been contributed to the Plan. We decided to make the contribution in the first quarter of this year because our DB investment earnings have been very good and much higher than what we can get on our cash balances at this point and time. Post Retirement Plan with VEBA There are currently 1800 participants in the Post Retirement Plan. This Plan includes 724 active employees 435 Retirees and 641 spouses and surviving spouses. We have an unqualified opinion from Plante & Moran on our Audited Financial Statements. Our net investments also fell in this Plan this year, $11.6 million due to the decline in the stock market. The BWL made cash contributions to the Trust in the amount of $9.5 million causing the Plan Assets to be $56 million at June 30, 2009 as compared to $62 million at June 30, 2008 a net reduction of$2 million or 3.3%. The funded ratio for the Post Retirement Plan was 24% in 2008 Regular Board Mtg. December 1,2009 Page21 of49 but because of the reduction in the Plan Assets it was 18% for 2009. The good news is that we are seeing a significant increase in our Plan Assets during the 3rd Quarter this year, whereas we closed out our last FY at $60 million. As of September 30th they are at $69 million and as of yesterday $71.4 million and $2.5 million of that increase is attributable to our cash contribution to the plan. Defined Contribution Plan This Plan was established in 1997 and replaced the Defined Benefit Plan which was closed to new employees at that time. At the time the DB Plan was closed 602 of the then active 750 employees switched over to the new DB Plan. We transferred $75 million over from the DB Plan to the Defined Contribution Plan. There are currently 880 participants in the Plan with 668 being active employees. ICMA was selected through our competitive bidding process and approved by the Board in September 2008 to be our new DC Plan Administrators. As with our DB and VEBA our external auditors have issued an unqualified opinion on our DC Pension Plan. As with our other Plans the value of the Assets in the DC Plan for our participants have fallen in 2009 from $122 million to $102 million. Investment earnings fell $17 million and we made $5 million of contributions to Plan. And we also paid out $7 million in benefits to participants. This Plan obviously differs from our DB Plan in that thee Board through it Pension Trustee Committee, makes the investment decisions on behalf of our employees for the DB Plan whereas the Board makes contributions to the DC Plan on behalf of our DC participants, but those participants themselves have to make their own investment decision based on the array of funds provided for them. Under the DC Plan it is very important that we have a very good education and communication process so that the BWL employees know what to do. Ms. Devon provided the Board with a handout that reviewed Communication and Education Activities for 2009. (The handout is on file in the Office of the Corporate Secretary) There was dialogue regarding the low number of individuals that partook in meetings with consultant. Ms. Devon noted that the low number was recognized and as a result ICMA was asked to attend some of the mandatory Safety meetings in order to provide information. Ms. Devon stated that they do try and give the employees as many opportunities to speak with representatives and they are reminded often that Representatives are going to be on-site. Ms. Devon said they are actively trying to find ways to encourage employees to take advantage of the educational seminars. Moved by Trustee Lain, seconded by Trustee Kramer, to approve the following resolution: RESOLUTION ACCEPTANCE OF 2009 AUDITED FINANCIAL STATEMENTS FOR DEFINED BENEFIT PENSION PLAN, DEFINED CONTRIBUTION PENSION PLAN, AND RETIREE BENEFIT PLAN (VEBA) Regular Board Mtg. December 1,2009 Page 22 of 49 Resolved, that the Corporate Secretary receive and place on file the Defined Benefit, Defined Contribution, and Retiree Benefit Pension reports presented during the Pension Trustee Meeting. -------------------------- Staff comments: All three Plans received clean audit reports. -------------------- Action: Motion Carried Ms. Devon thanked Marilyn Montgomery and Bill Aldrich for putting this book together and stated that they spent a lot of time on it. She also thanked Beverly Bishop and Sue Ramsey for assisting and putting the packet in paperless form. On Motion by Trustee Lain and Seconded by Trustee Plummer to excuse Trustee Thomas from today's meeting. Action: Motion Carried On Motion by Trustee Lain and Seconded by Trustee DeLuca with no further business the Pension Fund Trustees meeting adjourned at 6:30 p.m. Action: Motion Carried Submitted by: M. Denise Griffin Corporate Secretary FINANCE COMMITTEE December 1, 2009 The Finance Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 12:30 P.M. on Tuesday, December 1, 2009. Finance Committee Chairperson Peter Kramer called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Peter Kramer, Margaret Bossenbery, Frank Lain and Dennis Louney (arrived at 12:40 p.m.). Also present: Commissioners DeLuca and Zerkle. Absent: None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Bossenbery, seconded by Commissioner Lain to approve the Finance Committee meeting minutes of November 10, 2009. Regular Board Mt,-- December 1,2009 Page 23 of 49 Action: Carried unanimously. Discussion Regarding Proposed Resolution for Rate Increases Commissioner Kramer stated that there is only one agenda item today and that is to give Commissioners an opportunity to have more discussion on a previous Finance agenda item that was discussed at the last Committee meeting regarding the proposed Public Hearing for rate increases for electricity and water. He said that during the original presentation of the resolution management presented a lot of information outlining the bases for where these numbers came from and what the background was, and wanted another opportunity to have an further discussion amongst the members of the Finance Committee to discuss the Board's financial situation and to address any questions Commissioners may have. Commissioner Zerkle stated that she was happy with the current resolution. She stated that Assistant General Manager Susan Devon has formulated what the Commissioners asked her to do with putting some of the rate increase into a customer charge on the water side. General Manager J. Peter Lark stated that Commissioner Zerkle's suggestion was a good idea. Instead of going up 9% across the board on the water we would increase the commodity charge by 5% and the service charge would increase $1.19 to a typical residential customer. The service charge would have increased about .700 any way if we used the 9% factor. So really the service charge is going to be .500 higher than it would be if we had a 9% rate increase. General Manager Lark stated the Commissioners' suggestion of breaking this in to two pieces is a good one and a good way to go. Commissioner Peter Kramer questioned if this still equates to 9%. General Manager Lark confirmed. Commissioner Bossenbery questioned if the $1.19 was enough and would it help the company to get $2.00? Commissioner Lain questioned if$1.19 really corrected the problem. In response General Manager Lark stated $1.19 does not correct the problem, but it is the beginning of the correction Commissioner Marge Bossenbery stated that she does not want to charge more than what we need but if we are going to have to request more in the future that is a concern. Commissioner Peter Kramer said the question is how many identical rate increases will we have over the next ten years to be at the point where this utility breaks even on water. Is this an appropriate graduated approach? Regular Board Mtg. December 1,2009 Page 24 of 49 In response General Manager Lark stated that he has plans for the next budget in which they will present a six year plan that will get the Board to a 6.18% return on net fixed assets on all four of our utilities. Commissioner Peter Kramer agreed that is a good plan and a good approach, as we cannot solve all of our problems in one fiscal year. General Manager Lark said that the Board of Water & Light is really tightening down and made some real significant improvements, and if you look at the October numbers they are showing improvement. Improvements both in revenue growth and significant cut backs in overtime and O&M cost. He stated that the team assembled can really put something together that can make the Board of Water & Light great without hitting customers to hard. General Manager Lark stated in regard to electric operations, pursuant to PA 295, there are two new mandated charges for Renewable Energy and Energy Optimization Programs. The Renewable Energy Program would increase an average customers rate by 3.7% and the Energy Optimization would increase rates by 2%. That means an increase of approximately $3.89 a month for the average customer using 750 kw hours. The Board of Water & Light gets nothing from these increases for its continuing operations. There was some discussion about if a customer charge increase of $2.50 would be in order. General Manager Lark stated that the numbers are looking a little more positive in electric rather than water. He believes the $2.50 would help to put us where we need to be. Commissioner Peter Kramer said that he would like to see more on the commodity side with electric because it puts revenue in the hands of the people who are most appropriately paying for the revenue. He said that he would like to see a higher return on electric. He stated as the Board thinks long term it is appropriate to seek out a larger service charge this year with the intent of not addressing that service charge next year and dealing with the adjustment on the commodity side next year because we do not have the ability to deal with the commodity side change this year. He stated that if we could get that two-year adjustment in service charges this year and defer that commodity side situation until we do not have that 5.6% burden then we have the ability to deal with that next year knowing that we have that extra dollar in the bank. Assistant General Manager and Chief Financial Officer Susan Devon stated the 2010 budget it really tight and the electric side is really tight on maintenance and capital expenditures. That really needs to be beefed up again because we cannot continue deterring capital or maintenance work indefinitely. Commissioner Dennis Louney said that he is of the belief that we need to do the $2.50 increase and the Board needs to make a committee to make sure that we can properly maintain what we have. He said this service charge provides a better balance across the board. Regular Board Mt,-- December 1,2009 Page 25 of 49 Commissioner Peter Kramer said that he appreciates today's dialogue. He said that we currently have a resolution from the previous Finance Committee meeting and he reviewed the numbers. He questioned if any amendment needed to be made to reflect today's meeting. General Manager Lark stated that we do not have to adjust the resolution. We can just agree to something now and that is what will be published for the hearing and the published notice will have the numbers that have been discussed. Commissioner Peter Kramer stated that the Board has been striving to having a good cohesive approach to the decision making process through dialogue. He said that once the Board agrees on something he would like to make sure there is a good consensus and that we all have a good clear course of action that we are on and to stand behind the decision made. The main purpose of this meeting is to have cohesiveness and to make sure that we do not second guess ourselves down the road when things get difficult and to make sure that we feel this is the best course of action for this company and that we provide management with that support. Commissioner Peter Kramer said there is no need to take action here today. Other There was no other business. Adjourn On motion by Commissioner Lain, seconded by Commissioner Bossenbery, the meeting adjourned at 1:30 p.m. Action: Carried unanimously Respectfully submitted, Peter W. Kramer, Chair Finance Committee -------------------- MANAGER'S RECOMMENDATIONS Resolution 2009-12-1 REVISION OF LANSING BOARD OF WATER & LIGHT LOGO WHEREAS, the BWL will be celebrating its 125th anniversary in 2010; and WHEREAS, the BWL has grown and changed over the past century to meet the Lansing community's energy and water needs; and Regular Board Mtg. December 1,2009 Page 26 of 49 WHEREAS, the BWL has established itself as Michigan's largest municipal utility and a reliable, low cost provider of energy and water service and an important member of the Lansing community; and WHEREAS, The Lansing community is undergoing changes and facing new challenges that will require the BWL to continue supplying reliable, affordable energy and water services; and WHEREAS, the BWL is continuing to change and evolve, as demonstrated with new progressive energy policies, new strategies for meeting future energy needs of our customers along with a diverse workforce and a focus on new initiatives for the community; and WHEREAS, in response to changing market and economic conditions, the BWL is committed to continuing its environmental stewardship in the Lansing community by continuing as a leader in renewable energy, energy efficiency, and innovative energy production policies and practices; and WHEREAS, the BWL's current logo is 25 years old and the BWL would be well served with a logo that reflects its progressive policies, its commitment to environmental stewardship, and its role as an important community economic and cultural institution; and WHEREAS, the proposed logo revisions will better represent the BWL as a modern, forward looking company, responsive to the Lansing community's needs, with a proud history of reliable, affordable service as we celebrate our 125th anniversary. RESOLVED, that the revised BWL logo be accepted by the Board of Commissioners. On Motion by Commissioner Zerkle and Supported by Commissioner Kramer to approve the resolution for the new Board of Water & Light Logo. Action: Carried unanimously. -------------------- Resolution 2009-12-2 Resolution CONSIDERATION OF PURPA STANDARDS UNDER THE ENERGY INDEPENDENCE AND SECURITY ACT OF 2007 WHEREAS, the Energy Independence and Security Act of 2007 (EISA) contains four new Public Utility Regulatory Policies Act (PURPA) standards and a fifth non-PURPA "standard" requiring covered utilities to consider adopting these new standards; and Regular Board Mtg. December 1,2009 Page 27 of 49 WHEREAS, The EISA of 2007 amendments to PURPA require covered utilities to begin consideration of these standards by December 19, 2008 with a public hearing and final determination made by December 19 2009; and WHEREAS, the Lansing Board of Water and Light, with electric retail sales in excess of 500 million kWhs meets the definition of a non-regulated covered utility. WHEREAS, a public hearing on these PURPA standards under the Energy Independence and Security Act of 2007 was held on November 12, 2009. BE IT RESOLVED, that the BWL shall implement the PURPA Standards accordingly: 1. Integrated Resource Planning: Adopt the Integrated Resource Planning standard as applicable to the BWL. 2. Rate Design Modifications to Promote Energy Efficiency Investments: Adopt the Rate Design Modifications to Promote Energy Efficiency Investments standard as applicable to the BWL. 3. Consideration of Smart Grid Investments: Adopt the Consideration of Smart Grid Investments standard as applicable to the BWL. 4. Smart Grid Information: Research and evaluate a Smart Grid Information program which meets the PURPA standard as applicable to the BWL. 5. Non-PURPA Additional Incentives For Recovery, Use, and Prevention of Industrial Waste Energy: Evaluate each project received within the timelines outlined in this standard and make a final determination as applicable to the BWL. On Motion by Commissioner Kramer and Supported by Commissioner Louney to approve the resolution for the PURPA Standards under the new Energy Independence and Security Act of 2007 Action: Carried unanimously. Wxi ER,ucHr go- LANSING BOARD OF WATER & LIGHT DETERMINATION RECOMMENDATION FOR Integrated Resource Planning Rate Design Modification to Promote Energy Efficiency Investments Regular Board Mtg. December I,2009 Page 28 of 49 Smart Grid Investments Smart Grid Information Additional Incentives for Recovery, Use, and Prevention of Industrial Waste (non-PURPA) Under Energy Independence and Security Act of 2007 PURPA AMENDMENTS November 2009 Introduction The Energy Independence and Security Act of 2007 was signed into law by President Bush on December 19, 2007. The purpose of this act was "to move the United States toward greater energy independence and security, to increase the production of clean renewable fuels, to protect consumers, to increase the efficiency of products, buildings, and vehicles, to promote research on and deploy greenhouse gas capture and storage options, and to improve the energy performance of the Federal Government, and for other purposes." The Public Utility Regulatory Policies Act (PURPA), originally approved in 1978, included stated purposes to encourage: (a) conservation of energy supplied by electric utilities, (b) the optimization of the efficiency of the use of facilities and resources by electric utilities and (c) equitable rates to electric consumers. PURPA was subsequently amended by the Energy Policy Act of 1992, the Energy Policy Act of 2005 and, most recently, the Energy Independence and Security Act of 2007 (EISA). The amendments to PURPA require utilities with annual retail sales greater than 500 million kilowatt hours to consider the additional standards. The Lansing Board of Water & Light falls under these requirements. Four additional PURPA standards are described in the EISA Sections 532 and 1307 and are titled as follows: Integrated Resource Planning; Rate Design Modifications to Promote Energy Efficiency Investments; Consideration of Smart Grid Investments; and Smart Grid Information. The EISA also includes an additional non-PURPA standard in Section 374 titled, Additional Incentives for Recovery, Use, and Prevention of Industrial Waste Energy. Under EISA, utilities were required to "commence consideration" for these new PURPA standards by December 19, 2008 and final Determination whether to adopt theses standards must be competed by December 19, 2009. On November 18, 2008 the Board of Commissioners passed Resolution 2008-11-2 that officially approved staff to commence consideration of the PURPA standards under EISA. A Public Hearing was held on November 12, 2009 to accept public comments on the five EISA standards. Regular Board Mtg. December 1,2009 Page 29 of 49 Staff has now completed its' consideration and has made recommendations for the final determination which is due by December 19, 2009 and those recommendations are contained in this document. (It should be noted that consideration and determination of a PURPA standard is mandatory. Adoption and implementation of the standard is not mandatory.) TITLE V— ENERGY SAVINGS IN GOVERNMENT AND PUBLIC INSTITUTIONS Subtitle D: Energy Efficiency in Public Institutions Section 532 PURPA 111(d) Standards. (16) INTEGRATED RESOURCE PLANNING. Definition under EISA EISA Section 532 (16) amending PURPA 111(d). It states: "Each electric utility shall— (A) integrate energy efficiency resources into utility, State, and regional plans; and (B) adopt policies establishing cost-effective energy efficiency as a priority resource." The term "Integrated Resource Planning" (IRP) typically refers to a comprehensive planning process intended to systematically consider appropriate supply and demand resources to meet current and future load requirements. The PURPA standard is written specifically to address one aspect of IRP, integrating energy efficiency into utility plans and adopting policy that encourage cost-effective energy efficiency. Consideration On a state level, Governor Jennifer Granholm signed into law Public Act 295 of 2008 which is also known as the "clean, renewable, and efficient energy act" on October 8, 2008. PA 295 promotes the development of clean and renewable energy and energy optimization through the implementation of standards that will cost-effectively provide greater energy security and diversify the energy resources used to meet consumers' needs, encourage private investment in renewable energy and energy efficiency and improve air quality. The overall goal of the Energy Optimization Plans under PA 295 was to reduce future cost of service for suppliers and delay the need for constructing new power plants. All the energy optimization programs, collectively, are required to be cost effective using standardized Utility Cost Tests. The BWL's Energy Optimization Plan was approved by the MPSC on July 1, 2009 and the programs under this Plan were found to be cost-effective. The BWL periodically prepares integrated resource plans that identify BWL's future generation needs, evaluations providing a broad set of resource options including renewable energy and energy efficiency, and planning contingencies. One of the major goals on an IRP is to analyze the BWL's utility exposure to future risks and uncertainties. The latest IRP update was in 2008 and it concludes with a recommendation of the best set of resource options that minimize costs and protect BWL ratepayers from future risks. Regular Board Mtg. December 1,2009 Page 30 of 49 Determination Recommendation Staff believes the BWL current meets the IRP Standard as the IRP process integrates and evaluates energy efficiency resources and has already implemented policies establishing cost-effective energy efficiency as a priority resource, including consumer education and efficiency programs. Therefore, staff recommends adoption of the PURPA standard as applicable to the BWL. (17) RATE DESIGN MODIFICATIONS TO PROMOTE ENERGY EFFICIENCY INVESTMENTS. Definition under EISA 2007 Section 532 (17) of EISA amends PURPA 111 (d) requires consideration of modifying rate design to promote energy efficiency investments. EISA states: IN GENERAL.—The rates allowed to be charged by any electric utility shall— (i) align utility incentives with the delivery of cost-effective energy efficiency, and (ii) promote energy efficiency investments. (B) POLICY OPTIONS.—In complying with subparagraph (A), each State regulatory authority and each nonregulated utility shall consider— (i) removing the throughput incentive and other regulatory and management disincentives to energy efficiency, (H) providing utility incentives for the successful management of energy efficiency programs; (iii) including the impact on adoption of energy efficiency as 1 of the goals of retail rate design, recognizing that energy efficiency must be balanced with other objectives; (iv) adopting rate designs that encourage energy efficiency for each customer class; (v) allowing timely recovery of energy efficiency related costs; and (vi) offering home energy audits, offering demand response programs, publicizing the financial and environmental benefits associated with making home energy efficiency improvements, and educating homeowners about all existing Federal and State incentives, including the availability of low-cost loans, that make energy efficiency improvements more affordable." Consideration The BWL is a non-profit organization whose primary objective is to provide reliable, lowest cost electric service consistent with sound business practices. Furthermore, the BWL is not regulated by the Michigan Public Service Commission and there are not any "regulatory disincentives" to energy efficiency. The BWL rates are designed in conjunction with other corporate goals including utilizing energy efficiency as a resource option as recommended by the recent Integrated Resource Plan update. The BWL current rates are designed to encourage customers to participate in energy efficiency. Current Residential Electric Rates 1 and 21 have an "inclining Regular Board Mtg. December 1,2009 Page 31 of 49 tier block" structure where the cost per kilowatt hour increases in incremental steps as the customer consumes more electricity. Published BWL electric Rates 3, 4, 5, 8 and 12 for commercial and industrial customers all have a seasonal component that change twice a year to reflect elevated costs in the summer when demand and pricing is higher. In addition, Rate 5 and Rate 8 have on-peak and off-peak pricing schedule that allows the larger customers to shift usage to off-peak periods to reduce overall consumption. Public Act 295 allows all electric and natural gas utilities to recover the costs associated with the mandated energy optimization programs. In addition, the BWL Energy Optimization Plan offers education and incentives to assist customers in understanding and reducing their energy use. This PURPA amendment suggests various options to promote energy efficiency investments and the BWL is implementing the majority of these options through the Hometown Energy Savers (HES) programs. Examples of options that are offered under the HES programs include: on-line home energy audits; educational materials and incentives for customers to upgrade to more energy efficiency options. In addition, the BWL is currently evaluating load management programs. Determination Recommendation Staff finds that BWL's current retail rate design methodology and the Hometown Energy Savers energy efficiency programs serve the three purposes of PURPA. Therefore, staff recommends adoption of the PURPA standard as applicable to the BWL. TITLE XIII — SMART GRID Section 1307 PURPA 111(d) Standards. (18) CONSIDERATION OF SMART GRID INVESTMENTS. Definition under EISA 2007 Standard definition under EISA 2007 states: (A) IN GENERAL.—Each State shall consider requiring that, prior to undertaking investments in nonadvanced grid technologies, an electric utility of the State demonstrate investment in a qualified smart grid system based on appropriate factors, including— (i) total costs; (ii) cost-effectiveness; (iii) improved reliability; (iv) security; (v) system performance; and (vi) societal benefit. (8) RATE RECOVERY.—Each State shall consider authorizing each electric utility of the State to recover from ratepayers any capital, operating expenditure, or other costs of the electric utility relating to the deployment of a qualified smart grid system, including a reasonable rate of return on the capital expenditures of the electric utility for the deployment of the qualified smart grid system. Regular Board Mtg. December 1,2009 Page 32 of 49 (C) OBSOLETE EQUIPMENT.—Each State shall consider authorizing any electric utility or other party of the State to deploy a qualified smart grid system to recover in a timely manner the remaining book-value costs of any equipment rendered obsolete by the deployment of the qualified smart grid system, based on the remaining depreciable life of the obsolete equipment. Consideration The BWL has and will continue to make cost-effective investments in its electric system. Examples of smart grid investments that have been made by the BWL in recent years include: ➢ GIS Mapping_ Both the overhead and underground distribution maps are now accessible to crews in the field through the computers in their vehicles. ➢ Intelligent Electronic Devices (IED). IED's are now installed in 7 out of the 10 BWL substations. They record information on events on our system such as when fuses fail. ➢ Digital Relays. Digital Relays provide time-stamped information on events such as voltage drops and short circuits. Remote communication capability where staff can call from the office and make changes if necessary. ➢ Supervisory Control & Data Acquisition (SCADA). Allows staff to see power flows and circuit loading which allows for voltage control when needed. ➢ Recent smart meter test. The BWL recently completed a smart meter test of 10 electric and 10 water meters on BWL system for a period of a month. This test allowed staff to demonstrate the ability of these meters to obtain hourly data from the customer along with remote disconnect functionality. Determination Recommendation Staff finds that the BWL does evaluate smart grid investments based on appropriate factors, including the PURPA factors listed above when upgrading its' electric system and therefore staff recommends adoption of the PURPA standard as applicable to the BWL. (19) SMART GRID INFORMATION.— Definition under EISA 2007 (A) STANDARD.—All electricity purchasers shall be provided direct access, in written or electronic machine-readable form as appropriate, to information from their electricity provider as provided in subparagraph (B). (B) INFORMATION.—Information provided under this section, to the extent practicable, shall include: "(i) PRICES.—Purchasers and other interested persons shall be provided with information on— Regular Board Mtg. December 1,2009 Page 33 of 49 "(1) time-based electricity prices in the wholesale electricity market, and "(II) time-based electricity retail prices or rates that are available to the purchasers. "(ii) USAGE.—Purchasers shall be provided with the number of electricity units, expressed in kwh, purchased by them. "(iii) INTERVALS AND PROJECTIONS.—Updates of information on prices and usage shall be offered on not less than a daily basis, shall include hourly price and use information, where available, and shall include a day-ahead projection of such price information to the extent available. "(iv) SOURCES.—Purchasers and other interested persons shall be provided annually with written information on the sources of the power provided by the utility, to the extent it can be determined, by type of generation, including greenhouse gas emissions associated with each type of generation, for intervals during which such information is available on a cost effective basis. C) ACCESS.—Purchasers shall be able to access their own information at any time through the Internet and on other means of communication elected by that utility be able to access information not specific to any purchaser through the Internet. Information specific to any purchaser shall be provided solely to that purchaser.". Consideration The BWL provides customers (electricity purchasers) information related to the kilowatt-hours of electricity purchased during each billing period. Information about electric rates, pricing and sources of power supply are readily available on the BWL website. Currently the BWL does not have the technology infrastructure to provide usage information "on not less than a daily basis". However, future plans for the development of a smart metering program with the associated infrastructure will enable customers to obtain both daily and hourly data. Determination Recommendation The BWL is not yet capable of providing most of the information specified in the Smart Grid Information standard. Staff recommends that the BWL research and evaluate a smart metering program which will meet the PURPA standard as applicable to the BWL. Section 374 Standard (Non-PURPA standard) ADDITIONAL INCENTIVES FO RECOVERY, USE, AND PREVENTION OF INDUSTRIAL WASTE ENERGY The Energy Independence and Security Act of 2007 contained a standard for states and nonregulated utilities to consider that is not an amendment to PURPA. The focus of this standard is to encourage "waste energy recovery" projects that generate "net excess power". The standard is divided into six main subsections Regular Board Mt,-- December 1,2009 Page 34 of 49 which include: a) consideration of the standard; b) standard for sales of excess power; c) options for treatment of net excess power; d) rate considerations and criteria; e) procedural requirements for Consideration and Determination and f) implementation. The full standard language can be found in Attachment A. The project that is to be considered by utilities must be on the "Registry" which is managed by the Environmental Protection Agency Administrator. The standard states that "not later than 180 days after the receipt" by a state commission or nonregulated electric utility the consideration must be started. Each project is to be considered on a project-by-project basis and require a public hearing. Determination Recommendation Staff believes that requests for waste energy recovery projects will be minimal and recommends that each request be evaluated at the time they are received. The evaluation should render a decision based on appropriate legal criteria and be mutually beneficial to the BWL and the project owner. EISA 2007 PURPA Amendments Time Limitation Requirements The deadline for compliance is one year after enactment (December 19, 2008) and by that date state commissions and each nonregulated electric utility are to begin consideration or set a hearing date for such consideration. Within two years after enactment (December 19, 2009) considerations are to be completed and a determination for each standard is to be made as to whether or not to adopt the standards. ➢ On November 18, 2008, the BWL officially "commenced consideration" on these standards. The BWL Board of Commissioners supported this process by passing Resolution #2008-11-2. (See Attachment 2). A Public Hearing was scheduled for 2009. ➢ A Public Hearing was held on November 12, 2009 for the purpose of allowing public comment on these three standards. Staff is now respectfully requesting that the Board of Commissioners approve the Determination recommendations presented in this evaluation. LANSING BOARD OF WATER & LIGHT ATTACHMENT 1 EISA 2007 PURPA AMENDMENTS Integrated Resource Planning Rate Design Modification to Promote Energy Efficiency Investments Smart Grid Investments Regular Board Mtg. December 1,2009 Page 35 of 49 Smart Grid Information Additional Incentives for Recovery, Use, and Prevention of Industrial Waste (non-PURPA) TITLE V— ENERGY SAVINGS IN GOVERNMENT AND PUBLIC INSTITUTIONS Subtitle D: Energy Efficiency in Public Institutions Section 532 PURPA 111(d) Standards. (16) INTEGRATED RESOURCE PLANNING.—Each electric utility shall— (A) integrate energy efficiency resources into utility, State, and regional plans; and (B) adopt policies establishing cost-effective energy efficiency as a priority resource. (17) RATE DESIGN MODIFICATIONS TO PROMOTE ENERGY EFFICIENCY INVESTMENTS.— (A) IN GENERAL.—The rates allowed to be charged by any electric utility shall—(i) align utility incentives with the delivery of cost-effective energy efficiency; and (ii) promote energy efficiency investments. (B) POLICY OPTIONS.—In complying with subparagraph (A), each State regulatory authority and each nonregulated utility shall consider— removing the throughput incentive and other regulatory and management disincentives to energy efficiency; ➢ providing utility incentives for the successful management of energy efficiency programs; ➢ including the impact on adoption of energy efficiency as 1 of the goals of retail rate design, recognizing that energy efficiency must be balanced with other objectives; ➢ adopting rate designs that encourage energy efficiency for each customer class; ➢ allowing timely recovery of energy efficiency-related costs; and ➢ offering home energy audits, offering demand response programs, publicizing the financial and environmental benefits associated with making home energy efficiency improvements, and educating homeowners about all existing Federal and State incentives, including the availability of low-cost loans, that make energy efficiency improvements more affordable. TITLE XIII — SMART GRID Section 1307 PURPA 111(d) Standards. (18) CONSIDERATION OF SMART GRID INVESTMENTS.— "(A) IN GENERAL.—Each State shall consider requiring that, prior to undertaking investments in nonadvanced grid technologies, an electric utility of the State Regular Board Mtg. December],2009 Page 36 of 49 demonstrate investment in a qualified smart grid system based on appropriate factors, including— "(i) total costs; "(ii) cost-effectiveness; "(iii) improved reliability; "(iv) security; "(v) system performance; and "(vi) societal benefit. (B) RATE RECOVERY.—Each State shall consider authorizing each electric utility of the State to recover from ratepayers any capital, operating expenditure, or other costs of the electric utility relating to the deployment of a qualified smart grid system, including a reasonable rate of return on the capital expenditures of the electric utility for the deployment of the qualified smart grid system. (C) OBSOLETE EQUIPMENT.—Each State shall consider authorizing any electric utility or other party of the State to deploy a qualified smart grid system to recover in a timely manner the remaining book-value costs of any equipment rendered obsolete by the deployment of the qualified smart grid system, based on the remaining depreciable life of the obsolete equipment. (19) SMART GRID INFORMATION.— (A) STANDARD.—All electricity purchasers shall be provided direct access, in written or electronic machine-readable form as appropriate, to information from their electricity provider as provided in subparagraph (B). (B) INFORMATION.—Information provided under this section, to the extent practicable, shall include: ➢ PRICES.—Purchasers and other interested persons shall be provided with information on— o time-based electricity prices in the wholesale electricity market; and o time-based electricity retail prices or rates that are available to the purchasers. USAGE.—Purchasers shall be provided with the number of electricity units, expressed in kwh, purchased by them. ➢ INTERVALS AND PROJECTIONS.—Updates of information on prices and usage shall be offered on not less than a daily basis, shall include hourly price and use information, where available, and shall include a day-ahead projection of such price information to the extent available. ➢ SOURCES.—Purchasers and other interested persons shall be provided annually with written information on the sources of the power provided by the utility, to the extent it can be determined, by type of generation, including greenhouse gas emissions associated with each type of generation, for intervals during which such information is available on a cost-effective basis. (C) ACCESS- Purchasers shall be able to access their own information at any time through the Internet and on other means of communication elected by that utility for Smart Grid applications. Other interested persons shall be able to Regular Board Mtg. December 1,2009 Page 37 of 49 access information not specific to any purchaser through the Internet. Information specific to any purchaser shall be provided solely to that purchaser. Section 374 Standard (Non-PURPA standard) ADDITIONAL INCENTIVES FO RECOVERY, USE, AND PREVENTION OF INDUSTRIAL WASTE ENERGY (a) CONSIDERATION OF STANDARD.— (1) IN GENERAL.—Not later than 180 days after the receipt by a State regulatory authority (with respect to each electric utility for which the authority has ratemaking authority), or nonregulated electric utility, of a request from a project sponsor or owner or operator, the State regulatory authority or nonregulated electric utility shall— (A) provide public notice and conduct a hearing respecting the standard established by subsection (b); and(B) on the basis of the hearing, consider and make a determination whether or not it is appropriate to implement the standard to carry out the purposes of this part. (2) RELATIONSHIP TO STATE LAW.—For purposes of any determination under paragraph (1) and any review of the determination in any court, the purposes of this section supplement otherwise applicable State law. (3) NONADOPTION OF STANDARD.—Nothing in this part prohibits any State regulatory authority or nonregulated electric utility from making any determination that it is not appropriate to adopt any standard described in paragraph (1), pursuant to authority under otherwise applicable State law. (b) STANDARD FOR SALES OF EXCESS POWER.—For purposes of this section, the standard referred to in subsection (a) shall provide that an owner or operator of a waste energy recovery project identified on the Registry that generates net excess power shall be eligible to benefit from at least 1 of the options described in subsection (c) for disposal of the net excess power in accordance with the rate conditions and limitations described in subsection d). (c) OPTIONS.—The options referred to in subsection (b) are as follows: (1) SALE OF NET EXCESS POWER TO UTILITY.—The electric utility shall purchase the net excess power from the owner or operator of the eligible waste energy recovery project during the operation of the project under a contract entered into for that purpose. (2) TRANSPORT BY UTILITY FOR DIRECT SALE TO THIRD PARTY.— The electric utility shall transmit the net excess power on behalf of the project owner or operator to up to 3 separate locations on the system of the utility for direct sale by the owner or operator to third parties at those locations. (3) TRANSPORT OVER PRIVATE TRANSMISSION LINES.—The State and the electric utility shall permit, and shall waive or modify such laws as would otherwise prohibit, the construction and operation of private electric wires constructed, owned, and operated by the project owner or operator, to transport the power to up to 3 purchasers within a 3- mile radius of the project, allowing the wires to use or cross public rights-of-way, without subjecting the project to regulation as a public utility, and according the wires the same treatment for safety, zoning, land use, and other legal privileges as apply or would apply to the wires of the utility, except that— (A) there shall be no grant of any power of eminent domain to take or cross private property for the wires; and (B) the wires shall be physically segregated and not interconnected with any portion of the system of the utility, except on the customer side of the revenue meter of the Regular Board Mtg. December 1,2009 Page 33 of 49 utility and in a manner that precludes any possible export of the electricity onto the utility system, or disruption of the system. (4) AGREED ON ALTERNATIVES.—The utility and the owner or operator of the project may reach agreement on any alternate arrangement and payments or rates associated with the arrangement that is mutually satisfactory and in accord with State law. LANSING BOARD OF WATER & LIGHT ATTACHMENT 2 RESOLUTION 2008-11-2 CONSIDERATION OF PURPA STANDARDS AS REQUIRED BY THE ENERGY INDEPENDENCE AND SECURITY ACT OF 2007 Resolution 2008-11-2 B. Consideration of PURPA Standards under the Energy Independence and Security Act of 2007 WHEREAS, the Energy Independence and Security Act of 2007 (EISA) contains four new Public Utility Regulatory Policies Act (PURPA) standards and a fifth non-PURPA "standard" requiring covered utilities to consider adopting these new standards; and WHEREAS, the EISA of 2007 amendments to PURPA require covered utilities to begin consideration of 1) Integrated Resource Planning, 2) Rate Design Modifications to Promote Energy Efficiency Investments, 3) Consideration of Smart Grid Investments, and 4) Smart Grid Information. Although, the fifth standard is not an amendment to PURPA, utilities are required to consider "Additional Incentives for Recovery, Use, and Prevention of Industrial Waste Energy" under the same process as the other PURPA standards; and WHEREAS, the Lansing Board of Water and Light, with electric retail sales in excess of 500 million kWhs meets the definition of a non-regulated covered utility. RESOLVED, that the Lansing Board of Water and Light will commence consideration of the five standards required by the Energy Independence and Security Act of 2007 before December 19, 2008. FURTHER RESOLVED, that the Lansing Board of Water and Light shall hold a public hearing to accept public comments on the five EISA standards listed above, in 2009. Motion by Commissioner James, seconded Commissioner Kramer to approve the resolution regarding the Consideration of PURPA Standards under the Energy Independence Security Act of 2007. Discussion: Commissioner Cochran complimented staff for their proactive efforts regarding the Board of Water and Light's consideration of PURPA Standards. Regular Board Mtg. December 1,2009 Page 39 of 49 Action: Carried unanimously. -------------------- Resolution 2009-12-3 Resolution LANSING BOARD OF WATER & LIGHT'S RENEWABLE ENERGY NET METERING PROGRAM AND COMPANION RATE RIDER WHEREAS, the Energy Policy Act of 2005 (EP Act 2005) amended the Public Utility Regulatory Policies Act of 1978 (PURPA) requiring covered utilities to consider adopting five new standards including net metering; and WHEREAS, the Lansing Board of Water & Light Board of Commissioners passed Resolution 2008-7-5 that resolved the BWL shall develop and promote a net metering program which meets applicable PURPA standards; and WHEREAS, there is a growing interest by residential and business customers to invest in customer generated sources of power supply and a net metering program will encourage the installation and use of customer-owned renewable energy systems. RESOLVED, that the Renewable Energy Net Metering Program and companion rate rider be made the subject of a public hearing prior to further consideration by the Board of Commissioners. RESOLVED FURTHER, that the Board of Commissioners hereby set the date of Thursday, November 12, 2009, at 5:30 pm for a public hearing to solicit public input on the Renewable Energy Net Metering Program and companion rate rider. The hearing will be held in the Board of Water and Light's offices, 1232 Haco Drive, Lansing. The Corporate Secretary is directed to file with the City Clerk, no later than September 23, 2009, information regarding the Renewable Energy Net Metering Program and companion rate rider with an effective date of January 1, 2010. Motion by Commissioner Plummer , seconded by Commissioner Lain to approve the resolution for the Renewable Energy Net Metering Program and Companion Rate Rider. Action: Carried unanimously. Renewable Energy Net Metering Rider Purpose —The purpose of this rider it to enable customers who generate electricity using renewable energy sources to connect to the BWL's electric distribution system and to send electricity back to the electric grid at time when their generation exceeds their own use. Regular Board Mtg. December 1,2009 Page 40 of 49 Availability - Net Metering applicants must be an electric customer making use of any BWL Electric Rate Schedule. The Net Metering Program will be voluntary and selection of customers for participation in the net metering program shall be based on the order in which the applications for the net metering program are received by the BWL. The Net Metering Program will be in effect until the total nameplate capacity of all participating generators is equal to the maximum program limit of 1% of the BWL peak load for the proceeding calendar year. The renewable energy generating system will not exceed 50 kW per site and may be limited to geographical regions within the BWL's service territory. Eligible Renewable Energy Resources - Customers must generate a portion or all of their own retail electricity requirements using a renewable energy resource including but not limited to the following: Biomass, Solar Photovoltaic or Wind. Other renewable energy resources not included in the list above must be approved in advance by the BWL. Generation and Interconnection Requirements- The generation equipment must be located on the customer's premise and serve only the customer's premises. The Net Metering applicant shall be limited to generation capacity designed to meet the customer's electric demand and energy needs. The BWL, at its discretion, will make the final determination of the acceptable size of the renewable energy generating system eligible for participation. Before participating in the Net Metering Program customers must be approved for parallel operation with BWL's electric distribution system by meeting all interconnection requirements. Monthly Rate — All Net Metering customers will be billed $5.00 per month to recover costs associated with operating the Net Metering Program. Net metering customers with a system capable of generating 20 kW or less shall qualify for true net metering. For customers who qualify for true net metering, the net of the bidirectional flow of kWh across the customer interconnection with the BWL distribution system during the billing period, including excess generation credits, shall be credited at the full retail energy (kWh) rate. a) The credit for Net Excess Generation (NEG), if any, shall appear on the next bill and any excess credit not used to offset current charges shall be carried forward for use in subsequent billing periods. b) Reconciliation of any NEG credits will occur at the end of each calendar year. At that time the customer's NEG credit balance will be reset to zero and any NEG credits will be refunded at the retail power supply rate. c) If a customer leaves the provider's system or service is terminated for any reason, the BWL shall refund to the customer the remaining NEG credit amount. Remaining NEG credits will be refunded at the retail power supply rate. d) The retail power supply rate includes the BWL generation costs and purchase power and other related costs. Net metering customers with a system capable of generating more than 20 kW but less than 50 kW will qualify for modified net metering. The BWL shall require Regular Board Mtg. December I,2009 Page 41 of 49 individual contracts with customers with generation systems of more than 20 kW for billing purposes. Rules and Regulations — Service under this rider is subject to the BWL Rules and Regulations for Electric Service and the Renewable Energy Net Metering Program Standards. The BWL reserves the right to revise the terms and conditions including any electric energy buy-back pricing rates of future Net Metering programs. Lansing Board of Water & Light's Renewable Energy Net Metering Program Standards The Lansing Board of Water & Light (BWL) is currently offering a Net Metering Program to its electric customers who wish to install renewable electric energy systems. This program will also allow the BWL to evaluate the market demand and operational impact for Net Metering in its electric service territory. The Net Metering Program will enable customers who generate electricity using renewable energy sources to connect to the BWL's electric distribution system and to send electricity back to the electric grid at time when their generation exceeds their own use. The BWL reserves the right to revise the terms and conditions including any electric energy buy-back pricing rates of future Net Metering programs. PROGRAM AVAILABILITY The Net Metering Program will be voluntary and selection of customers for participation in the net metering program shall be based on the order in which the applications for the net metering program are received by the Lansing Board of Water & Light. The Net Metering Program will be in effect until the total nameplate capacity of all participating generators is equal to the maximum program limit of 1% of the BWL peak load for the proceeding calendar year. The renewable energy generating system will not exceed 50 kW per site and may be limited to geographical regions within the BWL's service territory. CUSTOMER ELIGIBILITY Net Metering applicants must be an electric customer making use of any BWL Electric Rate Schedule and receive electric service from the BWL distribution system. Customers must generate a portion or all of their own retail electricity requirements using a renewable energy resource including but not limited to the following: ➢ Biomass ➢ Solar Photovoltaic Wind Regular Board Mtg. December 1,2009 Page 42 of 49 Other renewable energy resources not included in the list above must be approved in advance by the BWL. APPLICATION FOR SERVICE AND FEES For a customer to participate in the BWL Net Metering Program a completed Net Metering Application shall be submitted. An applicant applying for net metering shall at the same time make application for interconnection with the BWL's electric distribution system. Net Metering Applications shall be available through direct mail or through the BWL website. (www.lbwl.com) GENERATION REQUIREMENTS The generation equipment must be located on the customer's premise and serve only the customer's premises. The Net Metering applicant shall be limited to generation capacity designed to meet the customer's electric demand and energy needs. The customers' electric needs may be determined by one of the following methods: a) The customers' annual energy usage, measure in kilowatt hours (kWh), during the previous 12-month period. b) For a customer with metered demand data available, the maximum integrated hourly demand measure in kilowatts (kW) during the past 12- month period. c) In those cases where there is no data, incomplete data, or incorrect data for the customer's energy usage or where the customer is making changes on-site that will affect total usage, the BWL and the customer shall mutually agree on a method to determine the customer's electric needs. The BWL, at its discretion, will make the final determination of the acceptable size of the renewable energy generating system eligible for participation in this net metering program. GENERATION AND NET METERING EQUIPMENT New generation and net metering equipment and its installation must meet all current local and state electric and construction code requirements. Any equipment that is certified by a nationally recognized testing laboratory to IEEE 1547.1 testing standards and in compliance with UL 1741 scope 1.1A and installed in compliance with this part is considered eligible equipment. GENERATOR INTERCONNECTION REQUIREMENTS Customers interested in participating in the Net Metering Program must meet all BWL interconnection requirements. Applicants must request and review the information in the BWL's Generator Interconnection procedural guidelines and complete the Generator Interconnection Application. Before participating in the Net Metering Program customers must be approved for parallel operation with BWL's electric distribution system by meeting all interconnection requirements and by signing a "Generator Interconnection Regular Board Mtg. December 1,2009 Page 43 of 49 Agreement". This agreement will give the customer permission to safely connect to LBWL's electric distribution system. METERING REQUIREMENTS Electric meters shall be used to determine the amount of the customer's energy use in each billing period, net of any excess energy the customer's renewable energy generating system delivers to the BWL's distribution system during that same billing period. The BWL will determine the appropriate meter(s) to be installed and that will be capable of measuring the flow of energy in both directions. The installation of generation meters will be at the discretion of the BWL. Customers who request a separate generation meter will be responsible for all costs associated with the meter and installation of that meter. CUSTOMER BILLING Net metering customers with a system capable of generating 20 kW or less shall qualify for true net metering. For customers who qualify for true net metering, the net of the bidirectional flow of kWh across the customer interconnection with the BWL distribution system during the billing period, including excess generation credits, shall be credited at the full retail energy (kWh) rate. e) The credit for Net Excess Generation (NEG), if any, shall appear on the next bill. Any excess credit not used to offset current charges shall be carried forward for use in subsequent billing periods. f) Reconciliation of any NEG credits will occur at the end of each calendar year. At that time the customer's NEG credit balance will be reset to zero and any NEG credits will be refunded at the retail power supply rate. g) If a customer leaves the provider's system or service is terminated for any reason, the BWL shall refund to the customer the remaining NEG credit amount. Remaining NEG credits will be refunded at the retail power supply rate. h) The retail power supply rate includes the BWL generation costs and purchase power and other related costs. Net metering customers with a system capable of generating more than 20 kW but less than 50 kW will qualify for modified net metering. The BWL shall require individual contracts with customers with generation systems of more than 20 kW for billing purposes. COST RECOVERY OF NET METERING PROGRAM All Net Metering customers will be billed $5.00 per month to recover costs associated with operating the Net Metering Program. CUSTOMER DISCONNECTION OR TERMINATION The BWL may refuse to connect or may disconnect a project from the distribution system if any of the following conditions apply: a) Lack of a fully executed interconnection agreement. b) Termination of interconnection by mutual agreement. Regular Board Mtg. December 1,2009 Page 44 of 49 c) Noncompliance with technical or contractual requirements in the interconnection agreement after notice is provided to the applicant of the technical or contractual deficiency. d) Distribution system emergency. e) Routine maintenance, repairs, and modifications, but only for a reasonable length of time necessary to perform the required work and upon reasonable notice. f) Failure to apply for and receive an electrical permit and inspection by the appropriate permit granting authority. g) Failure to remain current on all BWL bills. The customer may terminate their participation in the Net Metering Program at any time for any reason with 60-days notice. NET METERING PROGRAM STATUS AND EVALUATION REPORTS The BWL will maintain records of all Net Metering applications and up-to-date records of all eligible electric generators within its electric service territory. The Net Metering Agreements will be reviewed on an annual basis by BWL. The BWL reserves the right, at its discretion, to choose to renew, revise or revoke any agreement entered into during this program. The applicant will receive, in writing, an explanation for any decision made concerning the status of their Net Metering Agreement. -------------------- Resolution 2009-12-4 Resolution Public Hearing for 2010 Electric and Water Rate Increases WHEREAS, the Corporate Financial Target for each of the Lansing Board of Water and Light's Strategic business units is 6.18% return on net fixed assets and materials and supplies that would require $18.1 million of electric net income and $11.8 million of water net income; and WHEREAS, the Fiscal Year 2010 Electric Utility budget filed with the City of Lansing, including mandated costs of Renewable Energy and Energy Optimization Plans in compliance with 2008 PA 295, would result in electric net income of$3.2 million or a 1.13% return on net fixed assets and materials and supplies; and WHEREAS, first quarter electric retail sales reduction caused by a cooler than normal summer and reductions in wholesale revenues reflective of the current economic conditions will negatively affect the Fiscal Year 2010 budgeted net income beyond that reflected in the original budget projections; and WHEREAS, the Fiscal Year 2010 Water Utility budget filed with the City of Lansing would result in a water utility net loss of$6.4 million or a negative 3.53% return on net fixed assets and materials and supplies; and Regular Board Mt.-- December 1,2009 Page 45 of 49 WHEREAS, the current forecast of electric and water net income projection for Fiscal Year 2010 are losses of$3.8 million and $6.4 million respectively; and WHEREAS, the Staff proposes implementation of a Renewable Energy Plan Surcharge to recover the cost of 2008 PA 295 compliance; and WHEREAS, the Staff proposes implementation of an Energy Optimization Surcharge to recover the cost of 2008 PA 295 compliance; and WHEREAS, the Staff recommends that the Basic Service Charges for certain electric rate schedules be increased; and WHEREAS, the Staff proposes to increase annual water billings by $2.4 million, and WHEREAS, the proposed rate adjustments will not take effect until March 1, 2010. RESOLVED, the proposed rate adjustments will be subject to further consideration after a public hearing is held. FURTHER RESOLVED, that the Board of Commissioners hereby sets the date of January 21, 2010 at 5:30 PM for a public hearing to solicit public input on the proposed rate adjustments. The hearing will be held in the Board of Water and Light offices, 1232 Haco Drive, Lansing. The Corporate Secretary is directed to file with the City Clerk no later than December 7, 2009 information regarding proposed rate adjustments with an effective date of March 1, 2010. Motion by Commissioner Louney, seconded by Commissioner DeLuca to approve the resolution to set a Public Hearing for January 21, 2010 to consideration Electric and Water Rates Increases. Action: Carried unanimously Resolution 2009-12-5 RESOLUTION Application of Financial Accounting Standard #71 (FAS #71) to Renewable Energy Plan and Energy Optimization Revenue and Expense. WHEREAS, pursuant to Resolution #2003-8-3 the Board of Commission requires management to receive Board approval before any deferrals under FAS 71; and WHEREAS, the Renewable Energy Plan Surcharge and the Energy Optimization Surcharge are proposed to be implemented as electric rate schedules on March 1, 2010; and WHEREAS, the proposed surcharges allow for Board approved levelized rate recovery of applicable renewable energy plan expenditures and energy optimization expenditures, including those expenditures already incurred; and Regular Board Mtg. December 1,2009 Page 46 of 49 WHEREAS, as allowed under FAS #71 a regulatory liability account will be set up for both the renewable energy plan and the energy optimization program; and WHEREAS, levelized rates for the renewable energy plan and the energy optimization program will collect customer payments in excess of program costs in initial years; and WHEREAS, customer payments in excess of program costs will be recorded as an increase to the regulatory liability accounts; and WHEREAS, in later years renewable energy plan and energy optimization program costs will exceed levelized customer payments; and WHEREAS, program costs in excess of levelized customer payments will be offset by amounts withdrawn from the regulatory liability accounts. RESOLVED, that the Board of Commissioners, as the regulatory body of the Board of Water and Light, approve, pursuant to the Financial Accounting Standards (FAS) 71, the appropriate accounting, as described above, for the renewable energy plan and energy optimization program. Motion by Commissioner Kramer, seconded by Commissioner Louney to approve the resolution for the Application of Financial Accounting Standards #71 (FAS71) to Renewable Energy Plant and Energy Optimization Revenue and Expenses. Action: Carried unanimously Resolution 2009-12-6 DELEGATION OF AUTHORITY RESOLVED, That Board of Water and Light Policy 1-03 "Delegation of Authority" is hereby amended as follows: In the General Manager's absence, the officers listed below shall have the full authority and responsibility for Board of Water and Light (BWL) operations, in the order in which they are listed, or as otherwise designated by the General Manager. 1. Assistant General Manager and Chief Financial Officer 2. Executive Director of Electric Operations. This resolution supersedes Resolution 2007-9-11 Staff Comments: Due to organizational and title changes, this resolution is necessary to incorporate the new title of Assistant General Manager and Chief Financial Officer Motion by Commissioner Plummer, seconded by Commissioner Bossenbery to approve the resolution for the Delegation of Authority. Regular Board Mt.-- December 1,2009 Page 47 of 49 Action: Carried unanimously Resolution 2009-12-7 AUTHORITY TO SIGN CHECKS RESOLVED, That Board of Water and Light Policy 1-01 "Authority to Sign Checks" is hereby amended as follows: The signatures of not less than two (2) of the following officers shall be required to sign checks for the general checking account at National City Bank and the payroll/pension checking account at Bank of America. 1. General Manager 2. Assistant General Manager and Chief Financial Officer 3. Corporate Secretary This resolution supersedes Resolution 2007-9-10 Staff Comments: Due to organizational and title changes, this resolution is necessary to incorporate the new title of Assistant General Manager and Chief Financial Officer. Motion by Commissioner Zerkle , seconded by Commissioner Plummer to approve the resolution for the Authority to Sign Checks. Action: Carried unanimously Resolution 2009-12-8 AUTHORITY TO INVEST OPERATING AND PENSION FUNDS RESOLVED, That Board of Water and Light Policy 7-01 "Authority to Invest Operating and Pen Funds" is hereby amended as follows: RESOLVED, That the General Manager and/or one of the following designated representatives in the sequence listed below, shall be authorized to invest operating and pension funds in such securities as permitted by law and to purchase, sell, sign and endorse for transfer, certificates representing said securities and invested in the name of the Board of Water and Light (BWL): 1. Assistant General Manger and Chief Financial Officer This resolution supersedes Resolution 2007-9-12 Staff Comments: Due to organizational and title changes, this resolution is necessary to incorporate the new title of Assistant General Manager and Chief Financial Officer. Regular Board Mtg. December 1,2009 Page 48 of 49 Motion by Commissioner Lain, seconded by Commissioner Plummer to approve the resolution for Authority to Invest Operating and Pension Funds. Action: Carried unanimously UNFINISHED BUSINESS None NEW BUSINESS None RESOLUTIONS Resolution 2009-12-9 BOARD MEETING SCHEDULE In accordance with the Board's Rules of Administrative meeting he Board of Commissioners le of dates, calendplaces,an year shall be adopted regularmes for each in November. for the Cale Y RESOLVED, That regular meetings of the Board of norras a result are bof set for calendar year 2010 as follows, unless otherwise notified date conflicts with rescheduled City Council meetings: 2010 Tuesday January 26 Tuesday March 23 Tuesday May 25 Tuesday July 27 Tuesday September 28 Tuesday November 23 Meetings will be held in the Board Room located in s the B5 r pfm.Water and Light Customer Service Center, 1232 Haco Drive, Lansing, a RESOLVED FURTHER, That a notice of theCounty weeklofbapuary 3e2010 in a newspaper of general circulation in Ingham Y he ----------------- er Motion by Commissioner Lain, seconded by eet no ionBosenbery to approve the resolution setting the 2010 g datesschedule. Action: Carried unanimously Regular Board Mtg. December 1,2009 Page 49 of 49 MANAGER'S REMARKS General Manager Lark stated the Board of Water & Light is the signature sponsor for the Silver Bells in the City. He said the event was a success and very well attended. COMMISSIONERS' REMARKS Commissioner Peter Kramer thanked the General Manager and his staff for a great year of hard work. General Manager Lark stated that working with the Board has been very pleasant this year and we thank you. Commissioner Marilyn Plummer thanked the General Manager and the Administration for the great job with the Silver Bells in the City event. She said it was a pleasant experience. EXCUSED ABSENCE On Motion by Commissioner Lain, seconded Commissioner Kramer to excuse the absence of CommissionerTracy Thomas. Action: Carried unanimously. PUBLIC COMMENTS There were no public comments. ADJOURNMENT On Motion by Commissioner Lain, seconded by Commissioner Kramer, the meeting adjourned at 6:00 p.m. M. Denise Griffin, Corporate Secretary Filed with Lansing City Clerk December 11, 2009 aust High N Knee e , ` (Ages 3-5) [a a r J`{ a curiosit for story books can createy Many y �. 1 doors. Jean Bolley of the children about the out Library will begin with a Capital Area District y � p ill continue with a or then a staff naturalist w , ,, . sty earns thee. -� discovery walk and activity on the a craft to take home• oon end with ` �{ The afternoon will IT, Thursday, February 11 � 1.00- 2:30pm - esident a $5ReSident or NRon y ?lease Call to Register • ; Fenner Nature Center 4 2020 E Mt Hope, Lansing, Mi 517-483-4224 www.fofnc.org , y •r-,,.., _�.3:-"" --•ice_,...y'^:�r�7_-,:,ice '.-: • 4- Adult) lt)ter carnpFire (Ages _} F winter evening around e Enjoya . � h the campfire. After a guided hike thr®ug u i e woods , warm up around the f ete with s mores , ho t chocolate and songs . SaturdaY February I 27th 6:30-8:30 PM Child or Adult: $5 al please call to register. Fenner Nature Center 2020 E Mt Hope, Lansing , MI 517-483-4224 www.fofnc.org Preliminary Board Meeting Minutes to be approved January 26,2010 MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT Tuesday, December 1, 2009 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Present: Commissioners Margaret Bossenbery, Tony DeLuca, Peter Kramer, Frank Lain, Dennis Louney, Marilyn Plummer and Sandra Zerkle. Absent: Tracy Thomas Chairperson Zerkle called the meeting to order at 5:30 p.m. The Corporate Secretary declared a quorum present. Commissioner Louney lead the Pledge of Allegiance. Motion by Commissioner Lain, seconded by Commissioner Kramer to amend the Agenda to included a late item Committee Report from today's Finance Committee Meeting. Action: Carried unanimously. APPROVAL OF MINUTES Motion by Commissioner Plummer, seconded by Commissioner Bossenbery to approve the minutes of the Regular Board Meeting of September 22, 2009. Action: Carried unanimously. PUBLIC COMMENTS MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There were no public comments. COMMUNICATIONS a. Thank you note from Beverly Bishop Regular Board Mtg. December 1,2009 Page 2 of 49 Received and Placed on File COMMITTEE REPORTS BOARD OF WATER & LIGHT COMMITTEE OF THE WHOLE October 6, 2009 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 5:30 p.m. on Tuesday, October 6, 2009. Committee of the Whole Chair Frank Lain called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Tony DeLuca, Frank Lain, Dennis Louney, Marilyn Plummer, Tracy Thomas and Sandra Zerkle (arrived at 5:36 p.m.). Absent: None. Public: Comments There were no public comments. Approval of Minutes Motion by Commissioner DeLuca, seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of September 8, 2009. Action: Carried unanimously. �qfety Equipment Fashion Sho General Manager J. Peter Lark stated that at the BWL, safety is taken very seriously and thought it would be nice to share some of the items that are used for employee's safety. Mr. Lark stated that this was the idea of Administrative Assistant Sue Ramsey and that Secretary Rosemary Sullivan assisted her. Larry Shields of Electric Delivery Services was the moderator the BWL Safety Fashion Show. The models for the Fashion Show included: Dan Barnes, Ritch Lewis, Marilyn Montgomery, Juan Ortiz, Teresa Revilla, Carol Scott and Linda Taylor. ew Source Revie General Manager J. Peter Lark presented information regarding the New Source Review (NSR). The NSR is a program that is part of the Clean Air Act Amendments and is enforced by the United States Environmental Protection Agency (EPA). Mr. Lark stated that when there are new plans for major modifications to old utility plants there are certain standards that have to be met emissions wise. The Board of Water & Light's (BWL) older utility plants are grandfathered in because they predate the EPA NSR and only routine maintenance is undertaken at those plants. In the1980's the EPA started looking Regular Board Mtg. December 1,2009 Page 3 of 49 closer at older plants to determine if any modifications were routine or not. Mr. Lark stated that the EPA began their reviews with the larger companies like Detroit Edison and Consumers and there have been actions sanctioned by the EPA against Detroit Edison. The NSR just completed their work with Consumer Energy that they started about nine years ago and now that they are done with the larger companies, they are starting with the municipal utilities. Mr. Lark stated that the BWL has received a Section 114 Letter from the EPA which means that information has to be turned over to them as to what has been going on with the utility plants over the time period they are looking at. The BWL has turned over 17 boxes of information. George Stojic, Director of Strategic Planning & Development stated that there is a lot of confusion out there as to what amounts to maintenance and repair. This process takes an enormous amount of time and he does not expect to hear anything back for a long time. He stated that over the last 25 years EPA's investigation pursuit depends upon who is in Washington and with the Obama Administration it is pretty vigorous. Mr. Lark gave some examples of possible actions the EPA could take and said the BVVL is preparing for situations that may come up Vice Chair Lain stated that the NSR is nothing new and the EPA may or may not find something but Mr. Lark thought it advisable to present the Board with worse case scenarios. He stated that this is a very important matter but there is not a problem right now. Shut-Off Rules General Manager Lark introduced Bob Perialas, Manager of Customer Service who provided an update on the Board of Water & Light's Winter Shut Off Protection Rules. Printed below is the PowerPoint presentation that was reviewed by Mr. Perialas and included in the Committee of the Whole packet. Customer Service Update Winter Shut Off Protection Rules Bob Perialas Manager, Customer Service October 6, 2009 Michigan Municipal Electric Association Shut Off Rules -MMEA has developed Shut Off Rules —MMEA created a Shut-Off Protection Workgroup, chaired by J. Peter Lark, to develop rules to protect "At Risk" Customers. —New rules effective Nov 1, 2009 —MMEA Rules mirrors proposed legislation Regular Board Mtg. December 1,2009 Page 4 of 49 -Reason for new rules: 93-year-old man in Bay City died as a result of an electric shut off/use of an electric meter limiter last winter. -BWL billing programming would not have allowed the shut off to occur on our system if he was flagged as a senior. Rules Summarized -Implementing safeguards to protect "at risk" customers from electric shut offs —Seniors (3,500 currently flagged) —Certified Medical Conditions —Military Families —Low Income Families -Increase Winter Protection Season —November 1 — March 31 (added November) -Prohibit use of Electric Limiters —BWL currently complies -Ensuring notices contain important information prior to shut off —BWL currently complies -Ensure we pass on information to prevent shut offs, such as the number to 2-1-1 —BWL currently complies -Detailing, when shut offs do occur, the steps to restore power —New Door Hangers have been developed -Permit low-income customers to set up a payment plan to prevent shut off —We currently make payment arrangements for all of our customers. Low income specifics are being developed. -Provide shut off protection for customers with certified medical conditions —BWL currently complies -Make efforts to allow senior citizens to identify themselves Notices will be printed on the bill, website enrollment, article in November Connections. -Attempt to contact known seniors after a shut off does occur —Phone calls will be placed —Personal visits will also be available -Allow customers to name a third party to receive bills and notices in addition to themselves —BWL currently complies: Our customers can name up to 7 additional people and addresses. Mr. Perialas stated that next months edition of "Connections" contains information regarding Winter Shut Off Protection. The Board of Commissioner were provided a "Notice of Service Interruption" Door Hanger that will be distributed to customer that are being shut off for non-pay. This Door Hanger provides contact information to the customers as well as the requirements for restoration; The Door Hanger also informs customers of the availability the 2-1-1 system. Regular Board Mtg. December 1,2009 Page 5 of 49 BWL's 125" Anniversary Mr. Lark spoke about the 125th Anniversary of the Board of Water & Light (BWL). The B%NL has formed a committee to organize the celebration of the 125 Anniversary and it is chaired by Mark Nixon, Director of Communications. Mr. Nixon displayed for the Board of Commissioners a copy of the new edition of the "Pipeline". He reviewed some of the history of the Board of Water & Light and stated that the BWL was here twenty-five years after the City was incorporated and that was very special. Mr. Nixon stated that the Committee really would like for the celebration to be special. He said that General Manager Lark re-instated the BWL picnic and in 2010 there are plans to invite the retirees as part of the celebration. Some of the other ideas that the Committee has come up with to celebrate the 125tn Anniversary include: an open house in the Board Room, a contest to select a BWL flavored ice cream, show customers the new holiday video, opportunity for Mr. Lark to make a few remarks and to meet customers. Other ideas include starting an Employee of the Year award with the first being announced at the 2010 Holiday party and to have Silver Bells themed with the 125 year Anniversary. The 125th Anniversary Committee includes the following members: Beverly Bishop, Bill Maier, Chris Thompson, Gennie Eva, Honey Bentley, Jeff Schwarz, Jerry Mills, John Rossi, Juan Ortiz, Justin Bowman, Leslie Grannell, Linda Voorhees, Lori Pung, Orlando Smith, Randy Sinko, Rebecca Rostar, Roger Adsit, Rosemary Sullivan, Shellie Starkey, Sherry Markey, Steve Smith, Sue Warren, Tansay Carter, Tracy Tolbert, Wendy Sorek. 2010 Proposed Board Meeting Schedule Motion by Commissioner DeLuca , seconded by Commissioner Zerkle to forward proposed 2010 Board Meeting Schedule to the Board for approval. Action: Carried unanimously. Other General Manager Lark stated that he has been working with a lobbyist from Washington, D.C. trying to acquire stimulus funds from the Federal Government. He said there are a couple of things in the works and one of the things that they have worked on is a request for hybrid vehicle money and charging stations. He said this request looks very positive and the BWL may be receiving $750,000 for hybrid vehicles and charging stations. Mr. Lark stated that there is nothing in the way of this happening except President Obama's signature. General Manager Lark introduced and congratulated Susan Devon who was promoted to the Assistant General Manager, M. Denise Griffin who was promoted to Corporate Secretary and Bruce Cook who was promoted to Director Regular Board Mtg. December 1,2009 Page 6 of 49 of Safety. He invited the Commissioners to a reception to celebrate their promotions at 4:00 p.m. tomorrow. With there being no further business the meeting adjourned at 6:40 p.m. Respectfully submitted Frank Lain, Chair Committee of the Whole FINANCE COMMITTEE November 10, 2009 The Finance Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 4:00 p.m. on Tuesday, November 10, 2009. Finance Committee Chairperson Peter Kramer called the meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Peter Kramer, Frank Lain and Dennis Louney. Other Board Members present include: Commissioners DeLuca and Zerkle. Absent: Commissioner Margaret Bossenbery Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Louney, seconded by Commissioner Lain to approve the Finance Committee meeting minutes of September 8, 2009. Action: Carried unanimously. lQuarterly Financial Update and Rate Recommendation General Manager J. Peter Lark stated that this is a quarterly Financial Update Report with a Rate Increase recommendation attached to it. General Manager Lark stated that basically the quarterly financial update reveals that our sales are significantly less than what we expected them to be. As a result of that we are now projecting that our net income will be a negative $13 million for 2010. General Manager Lark reviewed the financial documents included in the packet. (Attachment on file in the Office of the Corporate Secretary) He said the first quarter was not as stellar as he hoped it would be and that is usually our big money making quarter. He stated that we have to make up a lot of ground and Regular Board Mtg. December 1,2009 Page 7 of 49 noted that the difference between Consumers Energy's rates and the Board of Water & Light's rates are significant (27-31% higher than ours). General Manager Lark stated that we have a continually shortfall of revenue that we need to address. Over time rates need to generate the Commission approved 6.18% return on assets in order to meet our current and future financial requirements. Also another contributor to the shortfall is that the Board of Water & Light is putting $15 million into the VEBA and DB Plan whereas in prior years we put in less and that was due to the stock market plunge. General Manager Lark said that we need raise rates by at least 5.6% strictly to recover the funds needed to pay for the governors and the legislator's mandated Renewable Energy Program (REP) and Energy Optimization (EO) programs. This does not help our own financial condition in any way and all that money will have to be earmarked and used for renewables which we are doing now with energy optimization. General Manager Lark said that he is hoping to take care of the electric short fall with additional sales next year and by raising the service charge. He said that raising the service charge puts the Board of Water& Light more in the mainstream of what utilities are doing as far as utility charges go. The other area where rates would be raised is water. He said that the Administration is asking today is that the Board of Commissioners allows a notice for a Public Hearing to be published. Commissioner Kramer questioned where the Board sees the 2010 Fiscal Year going. In response Sue Devon, Assistant General Manager and CFO, stated they are looking overall at negative return on investment of about 2.59%. Mrs. Devon said that the 6.18% was based on how much money we need to set aside to fund all of our future operations. That number is still good. The problem is that we are so far behind on our rates that we would need a very significant increase in our raise in order to reach that required 6.18% all in one year. A more gradual approach, meaning a little bit of an increase each year, is recommended. Commissioner Kramer stated that he is trying to understand what the Commissioners most responsible business solution to implement would be with both the economy and constituents in mind at the same time. Commissioner Kramer stated that he does not feel that the proposed percentage is where this needs to be and that we would just break even because of the requirements that the governor has placed on us and that the Board of Water & Light is not supporting the basis or foundation of the utility for the future and that concerns him. Commissioner Lain questioned if there was a water charge and if anyone had thought about if it would be worthwhile adjusting those cost. In response Mrs. Devon responded that the resident water charge is $7.71. Regular Board Mtg. December 1,2009 Page 8 of 49 Commissioner Zerkle stated her concerns for people who are struggling financially. She said that she would prefer to use the word usage instead of Service increase. Commissioner Kramer asked if there were any Commissioners that have any thoughts on having the resolution being any different than what management presented. He questioned if there were any thoughts of having more of an increase than what management has brought forward. He stated that he believes that there is another percent here that the public could handle. Commissioner Kramer said that he is thinking of two or three years down the road when we look back at this time right now we are sitting here trying to deal with things that happened three to five years ago when the Board did not raise rates the way they should have and we are fighting that cost. We all know that in a few years down the road our rates will be higher than they are today and to not ask for the increase now just delays the problem and pushes it into the future. He said this is okay as long as we all have talked about it and we have good reason for doing it and we say this is the best way to manage the utility. Commissioner Lain asked if we approve the resolution could we still visit the service charges? General Manager Lark stated yes. We are not locked into this resolution. Commissioner Kramer said the question is what is the most responsible thing the Board of Commissioners can do for the Board of Water & Light. Right now the most responsible thing that we see is to support management's recommendations. He said that there has been good dialogue today but believes that the Commissioners are undershooting and as a Board are not acting as responsible as we should fiscally. Resolution Public Hearing for 2010 Electric and Water Rate Increases WHEREAS, the Corporate Financial Target for each of the Lansing Board of Water and Light's Strategic business units is 6.18% return on net fixed assets and materials and supplies that would require $18.1 million of electric net income and $11.8 million of water net income; and WHEREAS, the Fiscal Year 2010 Electric Utility budget filed with the City of Lansing, including mandated costs of Renewable Energy and Energy Optimization Plans in compliance with 2008 PA 295, would result in electric net income of$3.2 million or a 1.13% return on net fixed assets and materials and supplies; and WHEREAS, first quarter electric retail sales reduction caused by a cooler than normal summer and reductions in wholesale revenues reflective of the current economic conditions will negatively affect the Fiscal Year 2010 budgeted net income beyond that reflected in the original budget projections; and Regular Board Mtg. December 1,2009 Page 9 of 49 WHEREAS, the Fiscal Year 2010 Water Utility budget filed with the City of Lansing would result in a water utility net loss of$6.4 million or a negative 3.53% return on net fixed assets and materials and supplies; and WHEREAS, the current forecast of electric and water net income projection for Fiscal Year 2010 are losses of$3.8 million and $6.4 million respectively; and WHEREAS, the Staff proposes implementation of a Renewable Energy Plan Surcharge to recover the cost of 2008 PA 295 compliance; and WHEREAS, the Staff proposes implementation of an Energy Optimization Surcharge to recover the cost of 2008 PA 295 compliance; and WHEREAS, the Staff recommends that the Basic Service Charges for certain electric rate schedules be increased; and WHEREAS, the Staff proposes to increase annual water billings by $2.4 million, and WHEREAS, the proposed rate adjustments will not take effect until March 1, 2010. RESOLVED, the proposed rate adjustments will be subject to further consideration after a public hearing is held. FURTHER RESOLVED, that the Board of Commissioners hereby sets the date of January 21, 2010 at 5:30 PM for a public hearing to solicit public input on the proposed rate adjustments. The hearing will be held in the Board of Water and Light offices, 1232 Haco Drive, Lansing. The Corporate Secretary is directed to file with the City Clerk no later than December 7, 2009 information regarding proposed rate adjustments with an effective date of March 1, 2010. On motion by Commissioner Lain, seconded by Commissioner Zerkle to move the proposed resolution to set a Public Hearing for 2010 Electric and Water Rate Increase to the full board for consideration. Action: Carried unanimously FAS-71 Accounting Authority for Energy Optimization and Renewable Energy Plan Programs General Manager Lark stated that request for the Accounting Authority for FAS- 71 Accounting is to record the revenue and expenses associated with the REP Plan as well as the Energy Optimization Plan. In order to do this kind of accounting we have to have the approval of the Board and we have done that several times. It means in instances where you have cost now but you are picking up the revenue later, it becomes a regulatory asset and if you have the recovery now and the costs are incurred later it is a regulatory Regular Board Mtg. December 1,2009 Page 10 of 49 liability and that is what we are talking about and it has to do with the REP and the Energy Optimization Plan. RESOLUTION Application of Financial Accounting Standard #71 (FAS #71) to Renewable Energy Plan and Energy Optimization Revenue and Expense. WHEREAS, pursuant to Resolution #2003-8-3 the Board of Commission requires management to receive Board approval before any deferrals under FAS 71; and WHEREAS, the Renewable Energy Plan Surcharge and the Energy Optimization Surcharge are proposed to be implemented as electric rate schedules on March 1, 2010; and WHEREAS, the proposed surcharges allow for Board approved levelized rate recovery of applicable renewable energy plan expenditures and energy optimization expenditures, including those expenditures already incurred; and WHEREAS, as allowed under FAS #71 a regulatory liability account will be set up for both the renewable energy plan and the energy optimization program; and WHEREAS, levelized rates for the renewable energy plan and the energy optimization program will collect customer payments in excess of program costs in initial years; and WHEREAS, customer payments in excess of program costs will be recorded as an increase to the regulatory liability accounts; and WHEREAS, in later years renewable energy plan and energy optimization program costs will exceed levelized customer payments; and WHEREAS, program costs in excess of levelized customer payments will be offset by amounts withdrawn from the regulatory liability accounts. RESOLVED, that the Board of Commissioners, as the regulatory body of the Board of Water and Light, approve, pursuant to the Financial Accounting Standards (FAS) 71, the appropriate accounting, as described above, for the renewable energy plan and energy optimization program. On motion by Commissioner Zerkle, seconded by Commissioner Louney to move the proposed resolution for an Application of Financial Accounting Standard #71 (FAS #71) to Renewable Energy Plan and Energy Optimization Revenue and Expense to the full Board for consideration. Action: Motion Carried lQuarterly Cash Re or Regular Board Mtg. December 1,2009 Page 11 of 49 General Manager Lark stated that earlier this Board adopted an Investment Policy Statement for Operating Cash and according to that resolution management was to bring forward a quarterly statement according to operating funds. Bill Aldrich, Manager of Finance, stated that the cash balance is down slightly from the beginning of the quarter primarily due to the payment of principal and interest on our bond indebtedness and that happens every July Vt. We ended fiscally on a high note cash wise and then immediately it dropped down considerably $10 to $12 million. He stated that the cash position has improved due to Mr. Lark putting the word out that we need to conserve cash and the Managers and Directors have been doing a good job conserving cash and it shows. Mr. Aldrich reviewed the attached documents. (Attachment on file in the Office of the Corporate Secretary) Quarterly Internal Audit Status Report Internal Auditor Phil Perkins stated that in his Status Report he would be covering the Board of Water & Light's first quarter progress, but since we're well into Quarter Two he will also address where we are right now, and where we plan to go for the remainder of this fiscal year. He said that he would briefly describe our ongoing risk assessment efforts that help us with the audit planning, and some current challenges and how they are being addressed. Mr. Perkins introduced his assistants Perez Goree and Charles Moore, without whose efforts many of the accomplishments on the following slides would not have been possible Mr. Perkins said that he and his assistants finished three carryover audits from FY09 plan in the first quarter, along with a brief consulting engagement that Ms. Devon requested. In this engagement they evaluated management's analysis of obtaining a lockbox service versus acquiring a new data processing machine for customer payments processing. The international auditing standards promulgated by the Institute of Internal Auditors not only allow, but encourage participation in consulting engagements as time permits and when we believe it will add value to the organization, as long as we do nothing to impair our independence. In this case, we made a couple of suggestions to improve the management-prepared financial analysis, without making a recommendation as to which option to pursue. Mr. Perkins said in the first quarter they started a couple of new FY2010 audits and continued working on several carryover audits from FY2009. Two of these audits have since been finished and the reports are attached. Included in the attached packet is a list of lists the remaining audits on FY2010 Audit Plan that was presented couple of months ago Planning is a continuing function as internal and external changes occur and the associated risks may change as well, so we are looking ahead to the next fiscal year now but will need to refresh our tentative plans over time. We will keep you apprised of any such situations as they develop. Regular Board Mtg. December 1,2009 Page 12 of 49 Mr. Perkins stated that ongoing risk assessment is a very important part of our activity, since identification of key risks helps to drive our audit planning into the areas where we can add the most value to the organization. We need to look at general or high-level risks so that we have some grasp of the big picture. Often, these risks are due to external factors such as the economy and are largely outside of BWL's control, and management is already aggressively addressing what mitigation it can through cost saving and other measures. He stated that when we look at a more specific risk such as the potential impact of ending our MPPA power pool relationship next year, we are in a position to add some value in mitigating this and other more specific risks. In that light, we appreciate that Ms. Devon has asked Internal Audit to be involved in the Energy Risk Management process in the coming months. Mr. Perkins stated that looking at challenges, our continued risk assessment is critical since we must rely on management's input as at least a starting point, and because we live in a world of constant change and risks tend to evolve along with the changes. Monthly meetings with Ms. Devon and periodic meetings with Executive Directors and their staffs help in this regard. Mr. Perkins said regarding resources, his department has a good budget but are performing a lot of first-time audits and the planning estimates are often just best guesses of how much effort it will take to complete the audits in the plan. He said that he will continue to prioritize during the year based on risks but we also need to consider the auditee's availability, partly in terms of recent management changes, for example in the Safety Department. He said that he has had ongoing discussions with Ms. Devon and the Internal Control Department regarding the process and timing of discussing draft findings, management responses and the audit report format. As a result, he believes there is a more streamlined and efficient process that allows him to align on the findings and recommendations before the closing conference and preparation and release to management of the draft audit report. (The full Report is on file in the Office of the Corporate Secretary) Recent Internal Audits Reports Completed Internal Auditor Phil Perkins presented his reports on the Billing Functions, Bond Financing and Procurement of Good and Services. The Billing Function Report is presented two parts. Part One is the Executive Summary that contains an outline of our findings, recommendations and management responses. Part Two is the detailed audit report that contains a description of programs and activities; audit objectives, scope and methodology and prior audit follow-up; comments, findings, recommendations, and management responses; and a glossary of acronyms and terms. The Bond Financing Report is presented in two parts. Part One is an executive summary that provides a snapshot of the audit results. Part Two is the detailed report that contains a description of programs and activities; audit objectives, scope, and methodology; prior audit follow-up; comments, findings, and recommendations; and a glossary of acronyms and terms. Regular Board Mtg. December 1,2009 Page 13 of 49 The Procurement of Goods and Services is presented in two parts: (1) the Executive Summary that contains a capsule version of the audit results and (2) the Detailed Report that contains a description of programs and activities; audit objectives; scope and methodology and prior audit follow-up, if any; comments, detailed findings, recommendations; and management responses; and a glossary of acronyms and terms. Management responses have been summarized in full in the Detailed Report Mr. Perkins stated that he appreciate the courtesy and cooperation extended during the audit. Commissioners Zerkle and Kramer thanked Mr. Perkins for his thorough report and all his hard work. (The full Report is on file in the Office of the Corporate Secretary) Other General Manager Lark stated that his Administration had decided to implement furlough days for the non-bargaining employees starting around Christmas. He said that they have talked to the Unions (IBEW) and the union leadership is certainly listening. They are going to present this idea to their Board. He said that he is very hopeful that this will be the bottom and maybe next year we can crawl out. He stated that he is confident that they will be able to close the cash gap. Mr. Lark thanked Sue Ramsey for cleaning up the Executive Conference Room. Adiourn On motion by Commissioner Lain, seconded by Commissioner Zerkle to excuse Commissioner Bossenbery from today's meeting. Action: Carried unanimously On motion by Commissioner Zerkle, seconded by Commissioner Lain, the meeting adjourned at 5:30 p.m. Action: Carried unanimously Respectfully submitted, Peter W. Kramer, Chair Finance Committee COMMITTEE OF THE WHOLE November 10, 2009 Regular Board Mtg. December 1,2009 Page 14 of 49 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 6:08 p.m. on Tuesday, November 10, 2009. Chair Frank Lain called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Tony DeLuca, Peter Kramer, Dennis Louney, Marilyn Plummer and Sandra Zerkle. Absent: Commissioners Margaret Bossenbery and Tracy Thomas Public Comments There were no public comments. Approval of Minutes Motion by Commissioner DeLuca, seconded by Commissioner Plummer to approve the Committee of the Whole meeting minutes of October 6, 2009. Action: Carried unanimously. i nature AuthorityResolutions a. Delegation of Authority General Manager J. Peter Lark stated that this Resolution provides in the absence of the General Manager two people who are designated full authority and responsibility to operate the Board of Water & Light. Prior to this the first designee was the Executive Director of Operations, who we no longer have and the number two designee was the Chief Financial Officer. The first Resolution designates the Assistant General Manager and Chief Financial Officer Susan Devon as designee number one and the second designee is Executive Director of Electric Operations, Doug Wood. Motion by Commissioner DeLuca, seconded by Commissioner Plummer to forward the proposed Delegation of Authority Resolution on to the full Board for consideration and approval. Action: Carried unanimously b. Authority to Sign Checks General Manager J. Peter Lark said this item is the authority to sign checks. The prior resolution that the Board passed is identical to this one. The only difference is the number two person is now the Assistant General Manager and Chief Financial Officer, this new Resolution reflect Ms. Devon's new title. Regular Board Mtg. December 1,2009 Page 15 of 49 Motion by Commissioner DeLuca, seconded by Commissioner Plummer to forward the proposed Authority to sign Checks Resolution on to the full Board for consideration and approval. Action: Carried unanimously c. Authority to Invest Operating and Pension Funds General Manager Lark said this is the Authority to Invest Operating and Pension Funds Resolution. This resolution reflects the new title of the Assistant General Manager and Chief Financial Officer, Susan Devon as well as designating the Manager of Finance and Planning Bill Aldrich as a designee. Motion by Commissioner Plummer, seconded by Commissioner Louney to forward the proposed Authority to Invest Operating and Pension Funds Resolution on to the full Board for consideration and approval. Action: Carried unanimously Update on Net Metering, Renewable Energy Plans and Energv Optimization General Manager J. Peter Lark introduced George Stojic, Director of Strategic Planning and Development. Mr. Stojic's update and review included: Net Metering Plan Update The Purpose []Enable customers who generate electricity using renewable energy sources to connect to the BWL's distribution system []Allows customers to send renewable energy back to the electric grid when their generation exceeds their own use for installations designed to produce no more than the customer's annual electric energy needs Eligible Renewable Energy Resources ❑Biomass []Solar Photovoltaic ❑Wind ❑Other renewable energy sources must be approved by the BWL Program Availability ❑Voluntary []Available to customers on any BWL rate schedule ❑Selection of participants for the program will be the order in which applications are received ❑Generating system limited to 50 kW per site Regular Board Mtg, December 1,2009 Page 16 of 49 ❑In effect until total nameplate capacity of all generators is equal to 1% of BWL peak load for preceding calendar year ❑May be limited to geographic regions within the BWL territory Generation Requirements ❑Renewable generation equipment must be located on the customer's premise and serve only that customer ❑Generation capacity must not exceed the customer's electric demand and energy needs []Must meet all current local and state electric and construction code requirements Application Process []Customer completes a Net Metering Application ❑Customer reviews the Generator Interconnection procedural guidelines ❑BWL will work with the customer to determine size of renewable energy system Interconnection Requirements ❑Customers must meet all the BWL interconnection requirements ❑Customer's equipment must be certified to IEEE 1547.1 and comply with UL 1741 scope 1.1 A standard ❑Complete the Generator Interconnection Application process which allows for safe connection to the BWL distribution system Metering ❑BWL will determine appropriate meter(s) to be installed that are capable of measuring the flow of energy in both directions ❑Customers who request a separate generation meter will be responsible for costs for the meter and installation Customer Billing ❑Monthly fee of $5.00 billed to operate the Net Metering program ❑Generation systems of 20 kW or less qualify for true net metering —Net of bidirectional flow of kwh across the customer interconnection during billing period including excess generation credits will be credited at full retail energy (kwh) rate ❑Generating systems greater than 20 kW but less than 50 kW qualify for modified net metering Net Excess Generation (NEG) []Credit for NEG, if any, will appear on next bill and if not used to offset current charges will be carried forward to subsequent billing periods El Reconciliation of NEG credits occurs at end of each calendar year ❑NEG credit balance reset to zero and any credits will be refunded at the retail power supply rate Regular Board Mtg. December 1,2009 Page 17 of 49 ❑Retail power supply rate includes generation costs, purchase power and other related costs Renewable Energy Plan Mr. St..-)jic gave an overview of what the requirements of State Law are and how the Board of Water & Light is complying regarding Renewables and Energy Optimization. He stated that last fall the Legislature did pass anew law PA295 that had maybe four or five major parts to it. Two of those major parts are applicable to municipal electric utilities. The first is a renewable energy standard and it requires all electric providers in Michigan to attain 2% of there electric energy from renewable sources by 2012 that goes up to 10% by 2015. This Board adopted a renewable energy policy before the state of Michigan did so we are well on our way. We already acquired about a number of megawatt hours, about 4% of our needs from renewable energy so we are well ahead of the requirements. Each megawatt of renewable energy that we generate creates a renewable energy credit or a REC and we can carry those forward for three years. Energv Optimization Plan: Sue Warren, Manager of Marketing & Eco-Strategies, provided the Board with a Hometown Energy Savers Packet. This packet included everything that the Board of Water & Light is offering to customers to help reduce energy usage. She stated that the Board of Water & Light has two programs one is perspective and one is replacement. Ms. Warren said that the Board of Water & Light has two programs right now for residential customers: Refrigerator Recycling and Residential Lighting Program. Next year we are adding an appliance program and we are going to target our electric water heating apartment complexes. They will be given low flow shower heads and CFL's. We launched the CFL give away and that has been very successful. We are also launching our LED light exchange next week. General Manager Lark stated that Ms. Warren does a great job with the Public Service Commission. Update on new BWL Logo General Manager Lark gave an update on the Board of Water & Light's new Iogo.He stated that they are taking the new logo to the Board on December 1, 2009 for approval. Mr. Stojic described the new logo and said this is a friendly, progressive forward looking contemporary logo that represents the Board and its culture. General Manager Lark stated that we didn't want to get it out there too soon because the Board of Water & Light's anniversary is February 16, 2010 and that's when were going to officially unveil the logo. Regular Board Mtg. December 1,2009 Page 18 of 49 Other General Manager Lark spoke about the ethics training that all Board of Water & Light employees go through and invited the Commissioner to contact Mike Flowers in Human Resources if they are interested in taking the training. Adjourn On motion by Commissioner Lain, seconded by Commissioner Kramer to excuse Commissioner Bossenbery and Thomas from today's meeting. Action: Carried unanimously On motion by Commissioner Zerkle, seconded by Commissioner Lain, the meeting adjourned at 6:45 p.m. Action: Carried unanimously Respectfully submitted Frank Lain, Chair Committee of the Whole BOARD OF WATER AND LIGHT PENSION FUND TRUSTEES' ANNUAL MEETING Tuesday, November 12, 2009 Present: Trustees Margaret Bossenbery, Tony DeLuca, Peter Kramer, Frank Lain, Dennis Louney, Marilyn Plummer and Sandra Zerkle. Absent: Trustee Tracy Thomas Staff Present:General Manager J. Peter Lark, Assistant General Manager and Chief Financial Officer Susan Devon, Director of Internal Audit Phil Perkins, Manager of Finance and Planning Bill Aldrich, Marilyn Montgomery, Treasury Analyst Heidi Myers Senior Rate Analyst and Corporate Secretary M. Denise Griffin Consultants Present: From Merrill Lynch: Michael Muirhead Associate Financial Advisor and Keith Azar, Senior Financial Advisor. From ICMA: Linda Brooks, Kevin Kilpatrick and John McCann The Secretary declared a quorum. Chairperson Zerkle called the meeting to order at 6:30 p.m. On Motion by Trustee Kramer and Seconded by Trustee Bossenbery to amend the Agenda to include a late item for the approval of November 4, 2008 Pension Fund Trustees' Annual Meeting Minutes. Regular Board Mtg. December 1,2009 Page 19 of 49 Action: Motion Carried On Motion by Trustee Bossenbery and Seconded by Trustee Kramer to approve the Minutes of November 4, 2008 Pension Fund Trustees' Annual Meeting Minutes. Action: Motion Carried Public Comments There were no public comments. Pension Plan Performance Reviews General Manager J. Peter Lark said that at this time we have before you a resolution to allow the Corporate Secretary to receive and place on file Defined Benefit, Defined Contribution, and Retiree Benefit Pension reports that are being received at this meeting. Please note that all three plans have received a clean audit report. General Manager Lark said with us today we have representatives from ICMA as well as Merrill Lynch. Merrill Lynch is responsible for the Board of Water & Light's (BWL) Defined Benefit (DB) Plan and the Post Employment Retiree Benefit (VEBA) Plan and ICMA is responsible for the 401 A Plan. Sue Devon, Assistant General Manager and CFO gave an overview of the different Pension Plans. She stated that the packet that the Board received is broken down into plan areas. The Defined Benefit Plan, the Defined Contribution Plan and the Post Retirement Benefit Plan. Each of the sections in the packet includes general information consisting of the Plan and Trust documents, the Audited Financial Statements, the Actuarial Study Report, the Investment Policy Statement for each Plan and the Investment Results. Ms. Devon introduced: Investment Advisory of the DB and VEBA Trust Plan from Merrill Lynch: Michael Muirhead and Keith Azar; Plan Administrator for the Defined Contribution Plan from ICMA Linda Brooks, Kevin Kilpatrick and John McCann. Ms. Devon stated that the Investment Policy Statement for the DB and the VEBA was updated with the assistance of Merrill Lynch and approved by the Board in August 2008 and that they are in the process of updating the Investment Policy Statement for the Defined Contribution Plan with the assistance of ICMA. Ms. Devon stated the following in her overview: Defined Benefit Plan. This Plan was closed to new employees hired after December 31, 1996. There are currently 466 retirees and beneficiaries, 15 terminated employees with Regular Board Mtg. December 1,2009 Page 20 of 49 vested benefits and 46 current employees in this plan for a total 527 Plan participants. The key highlights of the Audited Financial Statements is obviously that the Independent Auditors report has stated that our financial statements present fairly in all material respect the net asset held in the Plan for pension benefit at June 30, 2009 and 2008 in conformity with generally accepted accounting principles. During the Fiscal Year (FY) of 2009 the net investment income in our plan was unfortunately a negative $25.9 million due to the decline in the stock market as a whole Benefit payments to eligible retirees in FY 2009 was $8 million causing our Plan assets to fall from $107 million at June 30, 2008 to $73 million at June 30, 2009, a net reduction of$34 million or 32%. While this is not particularly good news there has been some good new since the end off the FY and we are now seeing the balances in our Plan assets rising due to improvements in the stock market in general and our managed investments funds in particular. Our funds grew 18.10% during the 2nd Quarter out performing our bench marks by 4.5%. Fund balances at September 30, 2009 were improving reaching $82 million; $2 million of the increase was due to our own BWL contribution to the Plan. If our Funds continue to perform well our asset balances should shortly exceed our liabilities of$83 million. Plan assets as of yesterday are still at $82 million just $1 million short. Also included in the packet is a copy of the BWL's Actuarial Report for the DB Plan. This report is prepared every year for the purposes of presenting the results of the evaluation of the Plan and providing us with reporting and disclosure information for the financial statement. The report provides the Board with next Fiscal Year's annual pension cost. Since we have been over funded in this Plan for many years, we generally have had no pension cost associated with this DB Plan. Last year the funding ratio was a 127% meaning that our assets exceeded liabilities by about 27%. This year however, our funding ratio was only 77% and because of this we do have to report DB Pension expense this FY in the amount of$2 million, which has already been contributed to the Plan. We decided to make the contribution in the first quarter of this year because our DB investment earnings have been very good and much higher than what we can get on our cash balances at this point and time. Post Retirement Plan with VEBA There are currently 1800 participants in the Post Retirement Plan. This Plan includes 724 active employees 435 Retirees and 641 spouses and surviving spouses. We have an unqualified opinion from Plante & Moran on our Audited Financial Statements. Our net investments also fell in this Plan this year, $11.6 million due to the decline in the stock market. The BWL made cash contributions to the Trust in the amount of$9.5 million causing the Plan Assets to be $56 million at June 30, 2009 as compared to $62 million at June 30, 2008 a net reduction of$2 million or 3.3%. The funded ratio for the Post Retirement Plan was 24% in 2008 Regular Board Mtg. December 1,2009 Page 21 of 49 but because of the reduction in the Plan Assets it was 18% for 2009. The good news is that we are seeing a significant increase in our Plan Assets during the 3rd Quarter this year, whereas we closed out our last FY at $60 million. As of September 30th they are at $69 million and as of yesterday $71.4 million and $2.5 million of that increase is attributable to our cash contribution to the plan. Defined Contribution Plan This Plan was established in 1997 and replaced the Defined Benefit Plan which was closed to new employees at that time. At the time the DB Plan was closed 602 of the then active 750 employees switched over to the new DB Plan. We transferred $75 million over from the DB Plan to the Defined Contribution Plan. There are currently 880 participants in the Plan with 668 being active employees. ICMA was selected through our competitive bidding process and approved by the Board in September 2008 to be our new DC Plan Administrators. As with our DB and VEBA our external auditors have issued an unqualified opinion on our DC Pension Plan. As with our other Plans the value of the Assets in the DC Plan for our participants have fallen in 2009 from $122 million to $102 million. Investment earnings fell $17 million and we made $5 million of contributions to Plan. And we also paid out $7 million in benefits to participants. This Plan obviously differs from our DB Plan in that thee Board through it Pension Trustee Committee, makes the investment decisions on behalf of our employees for the DB Plan whereas the Board makes contributions to the DC Plan on behalf of our DC participants, but those participants themselves have to make their own investment decision based on the array of funds provided for them. Under the DC Plan it is very important that we have a very good education and communication process so that the BWL employees know what to do. Ms. Devon provided the Board with a handout that reviewed Communication and Education Activities for 2009. (The handout is on file in the Office of the Corporate Secretary) There was dialogue regarding the low number of individuals that partook in meetings with consultant. Ms. Devon noted that the low number was recognized and a:-., a result ICMA was asked to attend some of the mandatory Safety meetings in order to provide information. Ms. Devon stated that they do try and give the employees as many opportunities to speak with representatives and they are reminded often that Representatives are going to be on-site. Ms. Devon said they are actively trying to find ways to encourage employees to take advantage of the educational seminars. Moved by Trustee Lain, seconded by Trustee Kramer, to approve the following resolution: RESOLUTION ACCEPTANCE OF 2009 AUDITED FINANCIAL STATEMENTS FOR DEFINED BENEFIT PENSION PLAN, DEFINED CONTRIBUTION PENSION PLAN, AND RETIREE BENEFIT PLAN (VEBA) Regular Board Mtg. December 1,2009 Page 22 of 49 Resolved, that the Corporate Secretary receive and place on file the Defined Benefit, Defined Contribution, and Retiree Benefit Pension reports presented during the Pension Trustee Meeting. -------------------------- Staff comments: All three Plans received clean audit reports. -------------------- Action: Motion Carried Ms. Devon thanked Marilyn Montgomery and Bill Aldrich for putting this book together and stated that they spent a lot of time on it. She also thanked Beverly Bishop and Sue Ramsey for assisting and putting the packet in paperless form. On Motion by Trustee Lain and Seconded by Trustee Plummer to excuse Trustee Thomas from today's meeting. Action: Motion Carried On Motion by Trustee Lain and Seconded by Trustee DeLuca with no further business the Pension Fund Trustees meeting adjourned at 6:30 p.m. Action: Motion Carried Submitted by: M. Denise Griffin Corporate Secretary FINANCE COMMITTEE December 1, 2009 The Finance Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 12:30 P.M. on Tuesday, December 1, 2009. Finance Committee Chairperson Peter Kramer called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Peter Kramer, Margaret Bossenbery, Frank Lain and Dennis Louney (arrived at 12:40 p.m.). Also present: Commissioners DeLuca and Zerkle. Absent: None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Bossenbery, seconded by Commissioner Lain to approve the Finance Committee meeting minutes of November 10, 2009. Regular Board Mtg. December I,2009 Page 23 of 49 Action: Carried unanimously. Discussion Regarding Proposed Resolution for Rate Increases Commissioner Kramer stated that there is only one agenda item today and that is to give Commissioners an opportunity to have more discussion on a previous Finance agenda item that was discussed at the last Committee meeting regarding the proposed Public Hearing for rate increases for electricity and water. He said that during the original presentation of the resolution management presented a lot of information outlining the bases for where these numbers came from and what the background was, and wanted another opportunity to have an further discussion amongst the members of the Finance Committee to discuss the Board's financial situation and to address any questions Commissioners may have. Commissioner Zerkle stated that she was happy with the current resolution. She stated that Assistant General Manager Susan Devon has formulated what the Commissioners asked her to do with putting some of the rate increase into a customer charge on the water side. General Manager J. Peter Lark stated that Commissioner Zerkle's suggestion was a good idea. Instead of going up 9% across the board on the water we would increase the commodity charge by 5% and the service charge would increase $1.19 to a typical residential customer. The service charge would have increased about .700 any way if we used the 9% factor. So really the service charge is going to be .500 higher than it would be if we had a 9% rate increase. General Manager Lark stated the Commissioners' suggestion of breaking this in to two pieces is a good one and a good way to go. Commissioner Peter Kramer questioned if this still equates to 9%. General Manager Lark confirmed. Commissioner Bossenbery questioned if the $1.19 was enough and would it help the company to get $2.00? Commissioner Lain questioned if$1.19 really corrected the problem. In response General Manager Lark stated $1.19 does not correct the problem, but it is the beginning of the correction Commissioner Marge Bossenbery stated that she does not want to charge more than what we need but if we are going to have to request more in the future that is a concern. Commissioner Peter Kramer said the question is how many identical rate increases will we have over the next ten years to be at the point where this utility breaks even on water. Is this an appropriate graduated approach? Regular Board Mtg. December 1,2009 Page 24 of 49 In response General Manager Lark stated that he has plans for the next budget in which they will present a six year plan that will get the Board to a 6.18% return on net fixed assets on all four of our utilities. Commissioner Peter Kramer agreed that is a good plan and a good approach, as we cannot solve all of our problems in one fiscal year. General Manager Lark said that the Board of Water & Light is really tightening down and made some real significant improvements, and if you look at the October numbers they are showing improvement. Improvements both in revenue growth and significant cut backs in overtime and O&M cost. He stated that the team assembled can really put something together that can make the Board of Water & Light great without hitting customers to hard. General Manager Lark stated in regard to electric operations, pursuant to PA 295, there are two new mandated charges for Renewable Energy and Energy Optim?nation Programs. The Renewable Energy Program would increase an average customers rate by 3.7% and the Energy Optimization would increase rates by 2%. That means an increase of approximately $3.89 a month for the average customer using 750 kw hours. The Board of Water & Light gets nothing from these increases for its continuing operations. There was some discussion about if a customer charge increase of $2.50 would be in order. General Manager Lark stated that the numbers are looking a little more positive in electric rather than water. He believes the $2.50 would help to put us where we need to be. Commissioner Peter Kramer said that he would like to see more on the commodity side with electric because it puts revenue in the hands of the people who are most appropriately paying for the revenue. He said that he would like to see a higher return on electric. He stated as the Board thinks long term it is appropriate to seek out a larger service charge this year with the intent of not addressing that service charge next year and dealing with the adjustment on the commodity side next year because we do not have the ability to deal with the commodity side change this year. He stated that if we could get that two-year adjustment in service charges this year and defer that commodity side situation until we do not have that 5.6% burden then we have the ability to deal with that next year knowing that we have that extra dollar in the bank. Assistant General Manager and Chief Financial Officer Susan Devon stated the 2010 budget it really tight and the electric side is really tight on maintenance and capital expenditures. That really needs to be beefed up again because we cannot continue deterring capital or maintenance work indefinitely. Commissioner Dennis Louney said that he is of the belief that we need to do the $2.50 increase and the Board needs to make a committee to make sure that we can properly maintain what we have. He said this service charge provides a better balance across the board. Regular Board Mtg. December 1,2009 Page 25 of 49 Commissioner Peter Kramer said that he appreciates today's dialogue. He said that we currently have a resolution from the previous Finance Committee meeting and he reviewed the numbers. He questioned if any amendment needed to be made to reflect today's meeting. General Manager Lark stated that we do not have to adjust the resolution. We can just agree to something now and that is what will be published for the hearing and the published notice will have the numbers that have been discussed. Commissioner Peter Kramer stated that the Board has been striving to having a good cohesive approach to the decision making process through dialogue. He said that once the Board agrees on something he would like to make sure there is a good consensus and that we all have a good clear course of action that we are on and to stand behind the decision made. The main purpose of this meeting is to have cohesiveness and to make sure that we do not second guess ourselves down the road when things get difficult and to make sure that we feel this is the best course of action for this company and that we provide management with that support. Commissioner Peter Kramer said there is no need to take action here today. Other There was no other business. Adjourn On motion by Commissioner Lain, seconded by Commissioner Bossenbery, the meeting adjourned at 1:30 p.m. Action: Carried unanimously Respectfully submitted, Peter W. Kramer, Chair Finance Committee -------------------- MANAGER'S RECOMMENDATIONS Resolution 2009-12-1 REVISION OF LANSING BOARD OF WATER & LIGHT LOGO WHEREAS, the BWL will be celebrating its 125th anniversary in 2010; and WHEREAS, the BWL has grown and changed over the past century to meet the Lansing community's energy and water needs; and Regular Board Mtg. December 1,2009 Page 26 of 49 WHEREAS, the BWL has established itself as Michigan's largest municipal utility and a reliable, low cost provider of energy and water service and an important member of the Lansing community; and WHEREAS, The Lansing community is undergoing changes and facing new challenges that will require the BWL to continue supplying reliable, affordable energy and water services; and WHEREAS, the BWL is continuing to change and evolve, as demonstrated with new progressive energy policies, new strategies for meeting future energy needs of our customers along with a diverse workforce and a focus on new initiatives for the community; and WHEREAS, in response to changing market and economic conditions, the BWL is committed to continuing its environmental stewardship in the Lansing community by continuing as a leader in renewable energy, energy efficiency, and innovative energy production policies and practices; and WHEREAS, the BWL's current logo is 25 years old and the BWL would be well served with a logo that reflects its progressive policies, its commitment to environmental stewardship, and its role as an important community economic and cultural institution; and WHEREAS, the proposed logo revisions will better represent the BWL as a modern, forward looking company, responsive to the Lansing community's needs, with a proud history of reliable, affordable service as we celebrate our 125th anniversary. RESOLVED, that the revised BWL logo be accepted by the Board of Commissioners. On Motion by Commissioner Zerkle and Supported by Commissioner Kramer to approve the resolution for the new Board of Water & Light Logo. Action: Carried unanimously. -------------------- Resolution 2009-12-2 Resolution CONSIDERATION OF PURPA STANDARDS UNDER THE ENERGY INDEPENDENCE AND SECURITY ACT OF 2007 WHEREAS, the Energy Independence and Security Act of 2007 (EISA) contains four new Public Utility Regulatory Policies Act (PURPA) standards and a fifth non-PURPA "standard" requiring covered utilities to consider adopting these new standards; and Regular Board Mtg. December 11 2009 Page 27 of 49 WHEREAS, The EISA of 2007 amendments to PURPA require covered utilities to begin consideration of these standards by December 19, 2008 with a public hearing and final determination made by December 19 2009; and WHEREAS, the Lansing Board of Water and Light, with electric retail sales in excess of 500 million kWhs meets the definition of a non-regulated covered utility. WHEREAS, a public hearing on these PURPA standards under the Energy Independence and Security Act of 2007 was held on November 12, 2009. BE IT RESOLVED, that the BWL shall implement the PURPA Standards accordingly: 1. Integrated Resource Planning: Adopt the Integrated Resource Planning standard as applicable to the BWL. 2. Rate Design Modifications to Promote Energy Efficiency Investments: Adopt the Rate Design Modifications to Promote Energy Efficiency Investments standard as applicable to the BWL. 3. Consideration of Smart Grid Investments: Adopt the Consideration of Smart Grid Investments standard as applicable to the BWL. 4. Smart Grid Information: Research and evaluate a Smart Grid Information program which meets the PURPA standard as applicable to the BWL. 5. Non-PURPA Additional Incentives For Recovery, Use, and Prevention of Industrial Waste Energy: Evaluate each project received within the timelines outlined in this standard and make a final determination as applicable to the BWL. On Motion by Commissioner Kramer and Supported by Commissioner Louney to approve the resolution for the PURPA Standards under the new Energy Independence and Security Act of 2007 Action: Carried unanimously. wnrER&UGHr go, LANSING BOARD OF WATER & LIGHT DETERMINATION RECOMMENDATION FOR Integrated Resource Planning Rate Design Modification to Promote Energy Efficiency Investments Regular Board Mtg. December 1,2009 Page 28 of 49 Smart Grid Investments Smart Grid Information Additional Incentives for Recovery, Use, and Prevention of Industrial Waste (non-PURPA) Under Energy Independence and Security Act of 2007 PURPA AMENDMENTS November 2009 Introduction The Energy Independence and Security Act of 2007 was signed into law by President Bush on December 19, 2007. The purpose of this act was "to move the United States toward greater energy independence and security, to increase the production of clean renewable fuels, to protect consumers, to increase the efficiency of products, buildings, and vehicles, to promote research on and deploy greenhouse gas capture and storage options, and to improve the energy performance of the Federal Government, and for other purposes." The Public Utility Regulatory Policies Act (PURPA), originally approved in 1978, included stated purposes to encourage: (a) conservation of energy supplied by electric utilities, (b) the optimization of the efficiency of the use of facilities and resources by electric utilities and (c) equitable rates to electric consumers. PURPA was subsequently amended by the Energy Policy Act of 1992, the Energy Policy Act of 2005 and, most recently, the Energy Independence and Security Act of 2007 (EISA). The amendments to PURPA require utilities with annual retail sales greater than 500 million kilowatt hours to consider the additional standards. The Lansing Board of Water & Light falls under these requirements. Four additional PURPA standards are described in the EISA Sections 532 and 1307 and are titled as follows: Integrated Resource Planning; Rate Design Modifications to Promote Energy Efficiency Investments; Consideration of Smart Grid Investments; and Smart Grid Information. The EISA also includes an additional non-PURPA standard in Section 374 titled, Additional Incentives for Recovery, Use, and Prevention of Industrial Waste Energy. Under EISA, utilities were required to "commence consideration" for these new PURPA standards by December 19, 2008 and final Determination whether to adopt theses standards must be competed by December 19, 2009. On November 18, 2008 the Board of Commissioners passed Resolution 2008-11-2 that officially approved staff to commence consideration of the PURPA standards under EISA. A Public Hearing was held on November 12, 2009 to accept public comments on the five EISA standards. Regular Board Mtg. December 1,2009 Page 29 of 49 Staff has now completed its' consideration and has made recommendations for the final determination which is due by December 19, 2009 and those recommendations are contained in this document. (It should be noted that consic'eration and determination of a PURPA standard is mandatory. Adoption and implementation of the standard is not mandatory.) TITLE V — ENERGY SAVINGS IN GOVERNMENT AND PUBLIC INSTITUTIONS Subtitle D: Energy Efficiency in Public Institutions Section 532 PURPA 111(d) Standards. (16) INTEGRATED RESOURCE PLANNING. Definition under EISA EISA Section 532 (16) amending PURPA 111(d). It states: "Each electric utility shall— (A) integrate energy efficiency resources into utility, State, and regional plans; and (B) adopt policies establishing cost-effective energy efficiency as a priority resource." The term "Integrated Resource Planning" (IRP) typically refers to a comprehensive planning process intended to systematically consider appropriate supply and demand resources to meet current and future load requirements. The PURPA standard is written specifically to address one aspect of IRP, integrating energy efficiency into utility plans and adopting policy that encourage cost-effective energy efficiency. Consideration On a state level, Governor Jennifer Granholm signed into law Public Act 295 of 2008 which is also known as the "clean, renewable, and efficient energy act" on October 8, 2008. PA 295 promotes the development of clean and renewable energy and energy optimization through the implementation of standards that will cost-effectively provide greater energy security and diversify the energy resources used to meet consumers' needs, encourage private investment in renewable energy and energy efficiency and improve air quality. The overall goal of the Energy Optimization Plans under PA 295 was to reduce future cost of service for suppliers and delay the need for constructing new power plants. All the energy optimization programs, collectively, are required to be cost effective using standardized Utility Cost Tests. The BWL's Energy Optimization Plan was approved by the MPSC on July 1, 2009 and the programs under this Plan were found to be cost-effective. The BWL periodically prepares integrated resource plans that identify BWL's future generation needs, evaluations providing a broad set of resource options including renewable energy and energy efficiency, and planning contingencies. One of the major goals on an IRP is to analyze the BWL's utility exposure to future risks and uncertainties. The latest IRP update was in 2008 and it concludes with a recommendation of the best set of resource options that minimize costs and protect BWL ratepayers from future risks. Regular Board Mtg. December 1,2009 Page 30 of 49 Determination Recommendation Staff believes the BWL current meets the IRP Standard as the IRP process integrates and evaluates energy efficiency resources and has already implemented policies establishing cost-effective energy efficiency as a priority resource, including consumer education and efficiency programs. Therefore, staff recommends adoption of the PURPA standard as applicable to the BWL. (17) RATE DESIGN MODIFICATIONS TO PROMOTE ENERGY EFFICIENCY INVESTMENTS. Definition under EISA 2007 Section 532 (17) of EISA amends PURPA 111 (d) requires consideration of modifying rate design to promote energy efficiency investments. EISA states: IN GENERAL.—The rates allowed to be charged by any electric utility shall— (i) align utility incentives with the delivery of cost-effective energy efficiency, and (ii) promote energy efficiency investments. (8) POLICY OPTIONS.—In complying with subparagraph (A), each State regulatory authority and each nonregulated utility shall consider— (i) removing the throughput incentive and other regulatory and management disincentives to energy efficiency, (ii) providing utility incentives for the successful management of energy efficiency programs; (iii) including the impact on adoption of energy efficiency as 1 of the goals of retail rate design, recognizing that energy efficiency must be balanced with other objectives; (iv) adopting rate designs that encourage energy efficiency for each customer class; (v) allowing timely recovery of energy efficiency related costs; and (vi) offering home energy audits, offering demand response programs, publicizing the financial and environmental benefits associated with making home energy efficiency improvements, and educating homeowners about all existing Federal and State incentives, including the availability of low-cost loans, that make energy efficiency improvements more affordable." Consideration The BWL is a non-profit organization whose primary objective is to provide reliable, lowest cost electric service consistent with sound business practices. Furthermore, the BWL is not regulated by the Michigan Public Service Commission and there are not any "regulatory disincentives" to energy efficiency. The BWL rates are designed in conjunction with other corporate goals including utilizing energy efficiency as a resource option as recommended by the recent Integrated Resource Plan update. The BWL current rates are designed to encourage customers to participate in energy efficiency. Current Residential Electric Rates 1 and 21 have an "inclining Regular Board Mtg. December 1,2009 Page 31 of 49 tier block" structure where the cost per kilowatt hour increases in incremental steps as the customer consumes more electricity. Published BWL electric Rates 3, 4, 5, 8 and 12 for commercial and industrial customers all have a seasonal component that change twice a year to reflect elevated costs in the summer when demand and pricing is higher. In addition, Rate 5 and Rate 8 have on-peak and off-peak pricing schedule that allows the larger customers to shift usage to off-peak periods to reduce overall consumption. Public Act 295 allows all electric and natural gas utilities to recover the costs associated with the mandated energy optimization programs. In addition, the BWL Energy Optimization Plan offers education and incentives to assist customers in understanding and reducing their energy use. This PURPA amendment suggests various options to promote energy efficiency investments and the BWL is implementing the majority of these options through the Hometown Energy Savers (HES) programs. Examples of options that are offered under the HES programs include: on-line home energy audits; educational materials and incentives for customers to upgrade to more energy efficiency options. In addition, the BWL is currently evaluating load management programs. Determination Recommendation Staff finds that BWL's current retail rate design methodology and the Hometown Energy Savers energy efficiency programs serve the three purposes of PURPA. Therefore, staff recommends adoption of the PURPA standard as applicable to the BWL. TITLE XIII — SMART GRID Section 1307 PURPA 111(d) Standards. (18) CONSIDERATION OF SMART GRID INVESTMENTS. Definition under EISA 2007 Standard definition under EISA 2007 states: (A) IN GENERAL.—Each State shall consider requiring that, prior to undertaking investments in nonadvanced grid technologies, an electric utility of the State demonstrate investment in a qualified smart grid system based on appropriate factors, including— (i) total costs; (ii) cost-effectiveness; (iii) improved reliability, (iv) security, (v) system performance; and (vi) societal benefit. (B) RATE RECOVERY.—Each State shall consider authorizing each electric utility of the State to recover from ratepayers any capital, operating expenditure, or other costs of the electric utility relating to the deployment of a qualified smart grid system, including a reasonable rate of return on the capital expenditures of the electric utility for the deployment of the qualified smart grid system. Regular Board Mtg. December 1,2009 Page 32 of 49 (C) OBSOLETE EQUIPMENT.—Each State shall consider authorizing any electric utility or other party of the State to deploy a qualified smart grid system to recover in a timely manner the remaining book-value costs of any equipment rendered obsolete by the deployment of the qualified smart grid system, based on the remaining depreciable life of the obsolete equipment. Consideration The BWL has and will continue to make cost-effective investments in its electric system. Examples of smart grid investments that have been made by the BWL in recent years include: ➢ GIS Mapping. Both the overhead and underground distribution maps are now accessible to crews in the field through the computers in their vehicles. ➢ Intelligent Electronic Devices (IED). IED's are now installed in 7 out of the 10 BWL substations. They record information on events on our system such as when fuses fail. ➢ Digital Relays. Digital Relays provide time-stamped information on events such as voltage drops and short circuits. Remote communication capability where staff can call from the office and make changes if necessary. ➢ Supervisory Control & Data Acquisition (SCADA). Allows staff to see power flows and circuit loading which allows for voltage control when needed. ➢ Recent smart meter test. The BWL recently completed a smart meter test of 10 electric and 10 water meters on BWL system for a period of a month. 'This test allowed staff to demonstrate the ability of these meters to obtain hourly data from the customer along with remote disconnect functionality. Determination Recommendation Staff finds that the BWL does evaluate smart grid investments based on appropriate factors, including the PURPA factors listed above when upgrading its' electric system and therefore staff recommends adoption of the PURPA standard as applicable to the BWL. (19) SMART GRID INFORMATION.— Definition under EISA 2007 (A) STANDARD.—All electricity purchasers shall be provided direct access, in written or electronic machine-readable form as appropriate, to information from their electricity provider as provided in subparagraph (B). (B) INFORMATION.—Information provided under this section, to the extent practicable, shall include: "(i) PRICES.—Purchasers and other interested persons shall be provided with information on— Regular Board Mtg. December 1,2009 Page 33 of 49 "(1) time-based electricity prices in the wholesale electricity market, and "(11) time-based electricity retail prices or rates that are available to the purchasers. "(ii) USAGE.—Purchasers shall be provided with the number of electricity units, expressed in kwh, purchased by them. "(iii) INTERVALS AND PROJECTIONS.—Updates of information on prices and usage shall be offered on not less than a daily basis, shall include hourly price and use information, where available, and shall include a day-ahead projection of such price information to the extent available. "(iv) SOURCES.—Purchasers and other interested persons shall be provided annually with written information on the sources of the power provided by the utility, to the extent it can be determined, by type of generation, including greenhouse gas emissions associated with each type of generation, for intervals during which such information is available on a cost effective basis. C) ACCESS.—Purchasers shall be able to access their own information at any time through the Internet and on other means of communication elected by that utility be able to access information not specific to any purchaser through the Internet. Information specific to any purchaser shall be provided solely to that purchaser.". Consideration The BWL provides customers (electricity purchasers) information related to the kilowatt-hours of electricity purchased during each billing period. Information about electric rates, pricing and sources of power supply are readily available on the BWL website. Currently the BWL does not have the technology infrastructure to provide usage information "on not less than a daily basis". However, future plans for the development of a smart metering program with the associated infrastructure will enable customers to obtain both daily and hourly data. Determination Recommendation The BWL is not yet capable of providing most of the information specified in the Smart Grid Information standard. Staff recommends that the BWL research and evaluate a smart metering program which will meet the PURPA standard as applicable to the BWL. Section 374 Standard (Non-PURPA standard) ADDITIONAL INCENTIVES FO RECOVERY, USE, AND PREVENTION OF INDUSTRIAL WASTE ENERGY The Energy Independence and Security Act of 2007 contained a standard for states and nonregulated utilities to consider that is not an amendment to PURPA. The focus of this standard is to encourage "waste energy recovery" projects that generate "net excess power". The standard is divided into six main subsections Regular Board Mtg. December 1,2009 Page 34 of 49 which include: a) consideration of the standard; b) standard for sales of excess power; c) options for treatment of net excess power; d) rate considerations and criteria; e) procedural requirements for Consideration and Determination and f) implementation. The full standard language can be found in Attachment A. The project that is to be considered by utilities must be on the "Registry" which is managed by the Environmental Protection Agency Administrator. The standard states that "not later than 180 days after the receipt" by a state commission or nonregulated electric utility the consideration must be started. Each project is to be considered on a project-by-project basis and require a public hearing. Determination Recommendation Staff believes that requests for waste energy recovery projects will be minimal and recommends that each request be evaluated at the time they are received. The evaluation should render a decision based on appropriate legal criteria and be mutually beneficial to the BWL and the project owner. EISA 2007 PURPA Amendments Time Limitation Requirements The deadline for compliance is one year after enactment (December 19, 2008) and by that date state commissions and each nonregulated electric utility are to begin consideration or set a hearing date for such consideration. Within two years after enactment (December 19, 2009) considerations are to be completed and a determination for each standard is to be made as to whether or not to adopt the standards. ➢ On November 18, 2008, the BWL officially "commenced consideration" on these standards. The BWL Board of Commissioners supported this process by passing Resolution #2008-11-2. (See Attachment 2). A Public Hearing was scheduled for 2009. ➢ A Public Hearing was held on November 12, 2009 for the purpose of allowing public comment on these three standards. Staff is now respectfully requesting that the Board of Commissioners approve the Determination recommendations presented in this evaluation. LANSING BOARD OF WATER & LIGHT ATTACHMENT 1 EISA 2007 PURPA AMENDMENTS Integrated Resource Planning Rate Design Modification to Promote Energy Efficiency Investments Smart Grid Investments Regular Board Mtg. December 1,2009 Page 35 of 49 Smart Grid Information Additional Incentives for Recovery, Use, and Prevention of Industrial Waste (non-PURPA) TITLE V— ENERGY SAVINGS IN GOVERNMENT AND PUBLIC INSTITUTIONS Subtitle D: Energy Efficiency in Public Institutions Section 532 PURPA 111(d) Standards. (16) INTEGRATED RESOURCE PLANNING.—Each electric utility shall— (A) integrate energy efficiency resources into utility, State, and regional plans; and (B) adopt policies establishing cost-effective energy efficiency as a priority resource. (17) RATE DESIGN MODIFICATIONS TO PROMOTE ENERGY EFFICIENCY INVESTMENTS.— (A) IN GENERAL.—The rates allowed to be charged by any electric utility shall—(i) align utility incentives with the delivery of cost-effective energy efficiency; and (ii) promote energy efficiency investments. (B) POLICY OPTIONS.—In complying with subparagraph (A), each State regulatory authority and each nonregulated utility shall consider— removing the throughput incentive and other regulatory and management disincentives to energy efficiency; ➢ providing utility incentives for the successful management of energy efficiency programs; ➢ including the impact on adoption of energy efficiency as 1 of the goals of retail rate design, recognizing that energy efficiency must be balanced with other objectives; ➢ adopting rate designs that encourage energy efficiency for each customer class; ➢ allowing timely recovery of energy efficiency-related costs; and ➢ offering home energy audits, offering demand response programs, publicizing the financial and environmental benefits associated with making home energy efficiency improvements, and educating homeowners about all existing Federal and State incentives, including the availability of low-cost loans, that make energy efficiency improvements more affordable. TITLE XIII — SMART GRID Section 1307 PURPA 111(d) Standards. (18) CONSIDERATION OF SMART GRID INVESTMENTS.— "(A) IN GENERAL.—Each State shall consider requiring that, prior to undertaking investments in nonadvanced grid technologies, an electric utility of the State Regular Board Mtg. December 1,2009 Page 36 of 49 demonstrate investment in a qualified smart grid system based on appropriate factors, including— "(i) total costs; "(ii) cost-effectiveness; "(iii) improved reliability; "(iv) security; "(v) system performance; and "(vi) societal benefit. (B) RATE RECOVERY.—Each State shall consider authorizing each electric utility of the State to recover from ratepayers any capital, operating expenditure, or other costs of the electric utility relating to the deployment of a qualified smart grid system, including a reasonable rate of return on the capital expenditures of the electric utility for the deployment of the qualified smart grid system. (C) OBSOLETE EQUIPMENT.—Each State shall consider authorizing any electric utility or other party of the State to deploy a qualified smart grid system to recover in a timely manner the remaining book-value costs of any equipment rendered obsolete by the deployment of the qualified smart grid system, based on the remaining depreciable life of the obsolete equipment. (19) SMART GRID INFORMATION.— (A) STANDARD.—All electricity purchasers shall be provided direct access, in written or electronic machine-readable form as appropriate, to information from their electricity provider as provided in subparagraph (B). (B) INFORMATION.—Information provided under this section, to the extent practicable, shall include: ➢ PRICES.—Purchasers and other interested persons shall be provided with information on— o time-based electricity prices in the wholesale electricity market; and o time-based electricity retail prices or rates that are available to the purchasers. ➢ USAGE.—Purchasers shall be provided with the number of electricity units, expressed in kwh, purchased by them. ➢ INTERVALS AND PROJECTIONS.—Updates of information on prices and usage shall be offered on not less than a daily basis, shall include hourly price and use information, where available, and shall include a day-ahead projection of such price information to the extent available. ➢ SOURCES.—Purchasers and other interested persons shall be provided annually with written information on the sources of the power provided by the utility, to the extent it can be determined, by type of generation, including greenhouse gas emissions associated with each type of generation, for intervals during which such information is available on a cost-effective basis. (C) ACCESS- Purchasers shall be able to access their own information at any time through the Internet and on other means of communication elected by that utility for Smart Grid applications. Other interested persons shall be able to Regular Board Mtg. December 1,2009 Page 37 of 49 access information not specific to any purchaser through the Internet. Information specific to any purchaser shall be provided solely to that purchaser. Section 374 Standard (Non-PURPA standard) ADDITIONAL INCENTIVES FO RECOVERY, USE, AND PREVENTION OF INDUSTRIAL WASTE ENERGY (a) CONSIDERATION OF STANDARD.— (1) IN GENERAL.—Not later than 180 days after the receipt by a State regulatory authority (with respect to each electric utility for which the authority has ratemaking authority), or nonregulated electric utility, of a request from a project sponsor or owner or operator, the State regulatory authority or nonregulated electric utility shall— (A) provide public notice and conduct a hearing respecting the standard established by subsection (b); and(B) on the basis of the hearing, consider and make a determination whether or not it is appropriate to implement the standard to carry out the purposes of this part. (2) RELATIONSHIP TO STATE LAW.—For purposes of any determination under paragraph (1) and any review of the determination in any court, the purposes of this section supplement otherwise applicable State law. (3) NONADOPTION OF STANDARD.—Nothing in this part prohibits any State regulatory authority or nonregulated electric utility from making any determination that it is not appropriate to adopt any standard described in paragraph (1), pursuant to authority under otherwise applicable State law. (b) STANDARD FOR SALES OF EXCESS POWER.—For purposes of this section, the standard referred to in subsection (a) shall provide that an owner or operator of a waste energy recovery project identified on the Registry that generates net excess power shall be eligible to benefit from at least 1 of the options described in subsection (c) for disposal of the net excess power in accordance with the rate conditions and limitations described in subsection d). (c) OPTIONS.—The options referred to in subsection (b) are as follows: (1) SALE OF NET EXCESS POWER TO UTILITY.—The electric utility shall purchase the net excess power from the owner or operator of the eligible waste energy recovery project during the operation of the project under a contract entered into for that purpose. (2) TRANSPORT BY UTILITY FOR DIRECT SALE TO THIRD PARTY.— The electric utility shall transmit the net excess power on behalf of the project owner or operator to up to 3 separate locations on the system of the utility for direct sale by the owner or operator to third parties at those locations. (3) TRANSPORT OVER PRIVATE TRANSMISSION LINES.—The State and the electric utility shall permit, and shall waive or modify such laws as would otherwise prohibit, the construction and operation of private electric wires constructed, owned, and operated by the project owner or operator, to transport the power to up to 3 purchasers within a 3- mile radius of the project, allowing the wires to use or cross public rights-of-way, without subjecting the project to regulation as a public utility, and according the wires the same treatment for safety, zoning, land use, and other legal privileges as apply or would apply to the wires of the utility, except that— (A) there shall be no grant of any power of eminent domain to take or cross private property for the wires; and (B) the wires shall be physically segregated and not interconnected with any portion of the system of the utility, except on the customer side of the revenue meter of the Regular Board Mtg. December 1,2009 Page 38 of 49 utility and in a manner that precludes any possible export of the electricity onto the utility system, or disruption of the system. (4) AGREED ON ALTERNATIVES.—The utility and the owner or operator of the project may reach agreement on any alternate arrangement and payments or rates associated with the arrangement that is mutually satisfactory and in accord with State law. LANSING BOARD OF WATER & LIGHT ATTACHMENT 2 RESOLUTION 2008-11-2 CONSIDERATION OF PURPA STANDARDS AS REQUIRED BY THE ENERGY INDEPENDENCE AND SECURITY ACT OF 2007 Resolution 2008-11-2 B. Consideration of PURPA Standards under the Energy Independence and Security Act of 2007 WHEREAS, the Energy Independence and Security Act of 2007 (EISA) contains four new Public Utility Regulatory Policies Act (PURPA) standards and a fifth non-PURPA "standard" requiring covered utilities to consider adopting these new standards; and WHEREAS, the EISA of 2007 amendments to PURPA require covered utilities to begin consideration of 1) Integrated Resource Planning, 2) Rate Design Modifications to Promote Energy Efficiency Investments, 3) Consideration of Smart Grid Investments, and 4) Smart Grid Information. Although, the fifth standard is not an amendment to PURPA, utilities are required to consider "Additional Incentives for Recovery, Use, and Prevention of Industrial Waste Energy" under the same process as the other PURPA standards; and WHEREAS, the Lansing Board of Water and Light, with electric retail sales in excess of 500 million kWhs meets the definition of a non-regulated covered utility. RESOLVED, that the Lansing Board of Water and Light will commence consideration of the five standards required by the Energy Independence and Security Act of 2007 before December 19, 2008. FURTHER RESOLVED, that the Lansing Board of Water and Light shall hold a public hearing to accept public comments on the five EISA standards listed above, in 2009. Motion by Commissioner James, seconded Commissioner Kramer to approve the resolution regarding the Consideration of PURPA Standards under the Energy Independence Security Act of 2007. Discussion: Commissioner Cochran complimented staff for their proactive efforts regarding the Board of Water and Light's consideration of PURPA Standards. Regular Board Mtg. December 1,2009 Page 39 of 49 Action: Carried unanimously. -------------------- Resolution 2009-12-3 Resolution LANSING BOARD OF WATER & LIGHT'S RENEWABLE ENERGY NET METERING PROGRAM AND COMPANION RATE RIDER WHEREAS, the Energy Policy Act of 2005 (EP Act 2005) amended the Public Utility Regulatory Policies Act of 1978 (PURPA) requiring covered utilities to consider adopting five new standards including net metering; and WHEREAS, the Lansing Board of Water & Light Board of Commissioners passed Resolution 2008-7-5 that resolved the BWL shall develop and promote a net metering program which meets applicable PURPA standards; and WHEREAS, there is a growing interest by residential and business customers to invest in customer generated sources of power supply and a net metering program will encourage the installation and use of customer-owned renewable energy systems. RESOLVED, that the Renewable Energy Net Metering Program and companion rate rider be made the subject of a public hearing prior to further consideration by the Board of Commissioners. RESOLVED FURTHER, that the Board of Commissioners hereby set the date of Thursday, November 12, 2009, at 5:30 pm for a public hearing to solicit public input on the Renewable Energy Net Metering Program and companion rate rider. The hearing will be held in the Board of Water and Light's offices, 1232 Haco Drive, Lansing. The Corporate Secretary is directed to file with the City Clerk, no later than September 23, 2009, information regarding the Renewable Energy Net Metering Program and companion rate rider with an effective date of January 1, 2010. Motion by Commissioner Plummer , seconded by Commissioner Lain to approve the resolution for the Renewable Energy Net Metering Program and Companion Rate Rider. Action: Carried unanimously. Renewable Energy Net Metering Rider Purpose —The purpose of this rider it to enable customers who generate electricity using renewable energy sources to connect to the BWL's electric distribution system and to send electricity back to the electric grid at time when their generation exceeds their own use. Regular Board Mtg. December 1,2009 Page 40 of 49 Availability - Net Metering applicants must be an electric customer making use of any BWL Electric Rate Schedule. The Net Metering Program will be voluntary and selection of customers for participation in the net metering program shall be based on the order in which the applications for the net metering program are received by the BWL. The Net Metering Program will be in effect until the total nameplate capacity of all participating generators is equal to the maximum program limit of 1% of the BWL peak load for the proceeding calendar year. The renewable energy generating system will not exceed 50 kW per site and may be limited to geographical regions within the BWL's service territory. Eligible Renewable Energy Resources - Customers must generate a portion or all of their own retail electricity requirements using a renewable energy resource including but not limited to the following: Biomass, Solar Photovoltaic or Wind. Other renewable energy resources not included in the list above must be approved in advance by the BWL. Generation and Interconnection Requirements-The generation equipment must be located on the customer's premise and serve only the customer's premises. The Net Metering applicant shall be limited to generation capacity designed to meet the customer's electric demand and energy needs. The BWL, at its discretion, will make the final determination of the acceptable size of the renewable energy generating system eligible for participation. Before participating in the Net Metering Program customers must be approved for parallel operation with BWL's electric distribution system by meeting all interconnection requirements. Monthly Rate —All Net Metering customers will be billed $5.00 per month to recover costs associated with operating the Net Metering Program. Net metering customers with a system capable of generating 20 kW or less shall qualify for true net metering. For customers who qualify for true net metering, the net of the bidirectional flow of kWh across the customer interconnection with the BWL distribution system during the billing period, including excess generation credits, shall be credited at the full retail energy (kWh) rate. a) The credit for Net Excess Generation (NEG), if any, shall appear on the next bill and any excess credit not used to offset current charges shall be carried forward for use in subsequent billing periods. b) Reconciliation of any NEG credits will occur at the end of each calendar year. At that time the customer's NEG credit balance will be reset to zero and any NEG credits will be refunded at the retail power supply rate. c) If a customer leaves the provider's system or service is terminated for any reason, the BWL shall refund to the customer the remaining NEG credit amount. Remaining NEG credits will be refunded at the retail power supply rate. d) The retail power supply rate includes the BWL generation costs and purchase power and other related costs. Net metering customers with a system capable of generating more than 20 kW but less than 50 kW will qualify for modified net metering. The BWL shall require Regular Board Mtg. December 1,2009 Page 41 of 49 individual contracts with customers with generation systems of more than 20 kW for billing purposes. Rules and Regulations — Service under this rider is subject to the BWL Rules and Regulations for Electric Service and the Renewable Energy Net Metering Program Standards. The BWL reserves the right to revise the terms and conditions including any electric energy buy-back pricing rates of future Net Metering programs. Lansing Board of Water & Light's Renewable Energy Net Metering Program Standards The Lansing Board of Water & Light (BWL) is currently offering a Net Metering Program to its electric customers who wish to install renewable electric energy systems. This program will also allow the BWL to evaluate the market demand and operational impact for Net Metering in its electric service territory. The Net Metering Program will enable customers who generate electricity using renewable energy sources to connect to the BWL's electric distribution system and to send electricity back to the electric grid at time when their generation exceeds their own use. The B'NL reserves the right to revise the terms and conditions including any electric energy buy-back pricing rates of future Net Metering programs. PROGRAM AVAILABILITY The Net Metering Program will be voluntary and selection of customers for participation in the net metering program shall be based on the order in which the applications for the net metering program are received by the Lansing Board of Water & Light. The Net Metering Program will be in effect until the total nameplate capacity of all participating generators is equal to the maximum program limit of 1% of the BWL peak load for the proceeding calendar year. The renewable energy generating system will not exceed 50 kW per site and may be limited to geographical regions within the BWL's service territory. CUSTOMER ELIGIBILITY Net Metering applicants must be an electric customer making use of any BWL Electric Rate Schedule and receive electric service from the BWL distribution system. Customers must generate a portion or all of their own retail electricity requirements using a renewable energy resource including but not limited to the following: ➢ Biomass ➢ Solar Photovoltaic ➢ Wind Regular Board Mtg. December 1,2009 Page 42 of 49 Other renewable energy resources not included in the list above must be approved in advance by the BWL. APPLICATION FOR SERVICE AND FEES For a customer to participate in the BWL Net Metering Program a completed Net Metering Application shall be submitted. An applicant applying for net metering shall at the same time make application for interconnection with the BWL's electric distribution system. Net Metering Applications shall be available through direct mail or through the BWL website. (www.lbwl.com) GENERATION REQUIREMENTS The generation equipment must be located on the customer's premise and serve only the customer's premises. The Net Metering applicant shall be limited to generation capacity designed to meet the customer's electric demand and energy needs. The customers' electric needs maybe determined by one of the following methods: a) The customers' annual energy usage, measure in kilowatt hours (kWh), during the previous 12-month period. b) For a customer with metered demand data available, the maximum integrated hourly demand measure in kilowatts (kW) during the past 12- month period. c) In those cases where there is no data, incomplete data, or incorrect data for the customer's energy usage or where the customer is making changes on-site that will affect total usage, the BWL and the customer shall mutually agree on a method to determine the customer's electric needs. The BWL, at its discretion, will make the final determination of the acceptable size of the renewable energy generating system eligible for participation in this net metering program. GENERATION AND NET METERING EQUIPMENT New generation and net metering equipment and its installation must meet all current local and state electric and construction code requirements. Any equipment that is certified by a nationally recognized testing laboratory to IEEE 1547.1 testing standards and in compliance with UL 1741 scope 1.1A and installed in compliance with this part is considered eligible equipment. GENERATOR INTERCONNECTION REQUIREMENTS Customers interested in participating in the Net Metering Program must meet all BWL interconnection requirements. Applicants must request and review the information in the BWL's Generator Interconnection procedural guidelines and complete the Generator Interconnection Application. Before participating in the Net Metering Program customers must be approved for parallel operation with BWL's electric distribution system by meeting all interconnection requirements and by signing a "Generator Interconnection Regular Board Mtg. December 1,2009 Page 43 of 49 Agreement". This agreement will give the customer permission to safely connect to LBWL's electric distribution system. METERING REQUIREMENTS Electric meters shall be used to determine the amount of the customer's energy use in each billing period, net of any excess energy the customer's renewable energy generating system delivers to the BWL's distribution system during that same billing period. The BWL will determine the appropriate meter(s) to be installed and that will be capable of measuring the flow of energy in both directions. The installation of generation meters will be at the discretion of the BWL. Customers who request a separate generation meter will be responsible for all costs associated with the meter and installation of that meter. CUSTOMER BILLING Net metering customers with a system capable of generating 20 kW or less shall qualify for true net metering. For customers who qualify for true net metering, the net of the bidirectional flow of kWh across the customer interconnection with the BWL distribution system during the billing period, including excess generation credits, shall be credited at the full retail energy (kWh) rate. e) The credit for Net Excess Generation (NEG), if any, shall appear on the next bill. Any excess credit not used to offset current charges shall be carried forward for use in subsequent billing periods. f) Reconciliation of any NEG credits will occur at the end of each calendar year. At that time the customer's NEG credit balance will be reset to zero and any NEG credits will be refunded at the retail power supply rate. g) If a customer leaves the provider's system or service is terminated for any reason, the BWL shall refund to the customer the remaining NEG credit amount. Remaining NEG credits will be refunded at the retail power supply rate. h) The retail power supply rate includes the BWL generation costs and purchase power and other related costs. Net metering customers with a system capable of generating more than 20 kW but less than 50 kW will qualify for modified net metering. The BWL shall require individual contracts with customers with generation systems of more than 20 kW for billing purposes. COST RECOVERY OF NET METERING PROGRAM All Net Metering customers will be billed $5.00 per month to recover costs associated with operating the Net Metering Program. CUSTOMER DISCONNECTION OR TERMINATION The B'vVL may refuse to connect or may disconnect a project from the distribution system if any of the following conditions apply: a) Lack of a fully executed interconnection agreement. b) Termination of interconnection by mutual agreement. Regular Board Mtg. December 1,2009 Page 44 of 49 c) Noncompliance with technical or contractual requirements in the interconnection agreement after notice is provided to the applicant of the technical or contractual deficiency. d) Distribution system emergency. e) Routine maintenance, repairs, and modifications, but only for a reasonable length of time necessary to perform the required work and upon reasonable notice. f) Failure to apply for and receive an electrical permit and inspection by the appropriate permit granting authority. g) Failure to remain current on all BWL bills. The customer may terminate their participation in the Net Metering Program at any time for any reason with 60-days notice. NET METERING PROGRAM STATUS AND EVALUATION REPORTS The BWL will maintain records of all Net Metering applications and up-to-date records of all eligible electric generators within its electric service territory. The Net Metering Agreements will be reviewed on an annual basis by BWL. The BWL reserves the right, at its discretion, to choose to renew, revise or revoke any agreement entered into during this program. The applicant will receive, in writing, an explanation for any decision made concerning the status of their Net Metering Agreement. -------------------- Resolution 2069-12-4 Resolution Public Hearing for 2010 Electric and Water Rate Increases WHEREAS, the Corporate Financial Target for each of the Lansing Board of Water and Light's Strategic business units is 6.18% return on net fixed assets and materials and supplies that would require $18.1 million of electric net income and $11.8 million of water net income; and WHEREAS, the Fiscal Year 2010 Electric Utility budget filed with the City of Lansing, including mandated costs of Renewable Energy and Energy Optimization Plans in compliance with 2008 PA 295, would result in electric net income of$3.2 million or a 1.13% return on net fixed assets and materials and supplies; and WHEREAS, first quarter electric retail sales reduction caused by a cooler than normal summer and reductions in wholesale revenues reflective of the current economic conditions will negatively affect the Fiscal Year 2010 budgeted net income beyond that reflected in the original budget projections; and WHEREAS, the Fiscal Year 2010 Water Utility budget filed with the City of Lansing would result in a water utility net loss of$6.4 million or a negative 3.53% return on net fixed assets and materials and supplies; and Regular Board Mtg. December 1,2009 Page 45 of 49 WHEREAS, the current forecast of electric and water net income projection for Fiscal Year 2010 are losses of$3.8 million and $6.4 million respectively; and WHEREAS, the Staff proposes implementation of a Renewable Energy Plan Surcharge to recover the cost of 2008 PA 295 compliance; and WHEREAS, the Staff proposes implementation of an Energy Optimization Surcharge to recover the cost of 2008 PA 295 compliance; and WHEREAS, the Staff recommends that the Basic Service Charges for certain electric rate schedules be increased; and WHEREAS, the Staff proposes to increase annual water billings by $2.4 million, and WHEREAS, the proposed rate adjustments will not take effect until March 1, 2010. RESOLVED, the proposed rate adjustments will be subject to further consideration after a public hearing is held. FURTHER RESOLVED, that the Board of Commissioners hereby sets the date of January 21, 2010 at 5:30 PM for a public hearing to solicit public input on the proposed rate adjustments. The hearing will be held in the Board of Water and Light offices, 1232 Haco Drive, Lansing. The Corporate Secretary is directed to file with the City Clerk no later than December 7, 2009 information regarding proposed rate adjustments with an effective date of March 1, 2010. Motion by Commissioner Louney, seconded by Commissioner DeLuca to approve the resolution to set a Public Hearing for January 21, 2010 to consideration Electric and Water Rates Increases. Action: Carried unanimously Resolution 2009-12-5 RESOLUTION Application of Financial Accounting Standard #71 (FAS #71) to Renewable Energy Plan and Energy Optimization Revenue and Expense. WHEREAS, pursuant to Resolution #2003-8-3 the Board of Commission requires management to receive Board approval before any deferrals under FAS 71; and WHEREAS, the Renewable Energy Plan Surcharge and the Energy Optimization Surcharge are proposed to be implemented as electric rate schedules on March 1, 2010; and WHEREAS, the proposed surcharges allow for Board approved levelized rate recovery of applicable renewable energy plan expenditures and energy optimization expenditures, including those expenditures already incurred; and Regular Board Mtg. December 1,2009 Page 46 of 49 WHEREAS, as allowed under FAS #71 a regulatory liability account will be set up for both the renewable energy plan and the energy optimization program; and WHEREAS, levelized rates for the renewable energy plan and the energy optimization program will collect customer payments in excess of program costs in initial years; and WHEREAS, customer payments in excess of program costs will be recorded as an increase to the regulatory liability accounts; and WHEREAS, in later years renewable energy plan and energy optimization program costs will exceed levelized customer payments; and WHEREAS, program costs in excess of levelized customer payments will be offset by amounts withdrawn from the regulatory liability accounts. RESOLVED, that the Board of Commissioners, as the regulatory body of the Board of Water and Light, approve, pursuant to the Financial Accounting Standards (FAS) 71, the appropriate accounting, as described above, for the renewable energy plan and energy optimization program. Motion by Commissioner Kramer, seconded by Commissioner Louney to approve the resolution for the Application of Financial Accounting Standards #71 (FAS71) to Renewable Energy Plant and Energy Optimization Revenue and Expenses. Action: Carried unanimously Resolution 2009-12-6 DELEGATION OF AUTHORITY RESOLVED, That Board of Water and Light Policy 1-03 "Delegation of Authority" is hereby amended as follows: In the General Manager's absence, the officers listed below shall have the full authority and responsibility for Board of Water and Light (BWL) operations, in the order in which they are listed, or as otherwise designated by the General Manager. 1. Assistant General Manager and Chief Financial Officer 2. Executive Director of Electric Operations. This resolution supersedes Resolution 2007-9-11 Staff Comments: Due to organizational and title changes, this resolution is necessary to incorporate the new title of Assistant General Manager and Chief Financial Officer Motion by Commissioner Plummer, seconded by Commissioner Bossenbery to approve the resolution for the Delegation of Authority. Regular Board Mtg. December 1,2009 Page 47 of 49 Action: Carried unanimously Resolution 2009-12-7 AUTHORITY TO SIGN CHECKS RESOLVED, That Board of Water and Light Policy 1-01 "Authority to Sign Checks" is hereby amended as follows: The signatures of not less than two (2) of the following officers shall be required to sign checks for the general checking account at National City Bank and the payroll/pension checking account at Bank of America. 1. General Manager 2. Assistant General Manager and Chief Financial Officer 3. Corporate Secretary This resolution supersedes Resolution 2007-9-10 Staff Comments: Due to organizational and title changes, this resolution is necessary to incorporate the new title of Assistant General Manager and Chief Financial Officer. Motion by Commissioner Zerkle , seconded by Commissioner Plummer to approve the resolution for the Authority to Sign Checks. Action: Carried unanimously Resolution 2009-12-8 AUTHORITY TO INVEST OPERATING AND PENSION FUNDS RESOLVED, That Board of Water and Light Policy 7-01 "Authority to Invest Operating and Pen Funds" is hereby amended as follows: RESOLVED, That the General Manager and/or one of the following designated representatives in the sequence listed below, shall be authorized to invest operating and pension funds in such securities as permitted by law and to purchase, sell, sign and endorse for transfer, certificates representing said securities and invested in the name of the Board of Water and Light (BWL): 1. Assistant General Manger and Chief Financial Officer This resolution supersedes Resolution 2007-9-12 Staff Comments: Due to organizational and title changes, this resolution is necessary to incorporate the new title of Assistant General Manager and Chief Financial Officer. Regular Board Mtg. December 1,2009 Page 48 of 49 Motion by Commissioner Lain, seconded by Commissioner Plummer to approve the resolution for Authority to Invest Operating and Pension Funds. Action: Carried unanimously UNFINISHED BUSINESS None NEW BUSINESS None RESOLUTIONS Resolution 2009-12-9 BOARD MEETING SCHEDULE In accordance with the Board's Rules of Administrative Procedure, a schedule of dates, places, and times for each regular meeting of the Board of Commissioners for the calendar year shall be adopted in November. RESOLVED, That regular meetings of the Board of Commissioners are hereby set for calendar year 2010 as follows, unless otherwise notified or as a result of date c-)nflicts with rescheduled City Council meetings: 2010 Tuesday January 26 Tuesday March 23 Tuesday May 25 Tuesday July 27 Tuesday September 28 Tuesday November 23 Meetings will be held in the Board Room located in the Board of Water and Light Customer Service Center, 1232 Haco Drive, Lansing, at 5:30 p.m. RESOLVED FURTHER, That a notice of the meeting schedule be published in a newspaper of general circulation in Ingham County the week of January 3, 2010. ----------------- Motion by Commissioner Lain, seconded by Commissioner Bossenbery to approve the resolution setting the 2010 meeting dates schedule. Action: Carried unanimously Regular Board Mtg. December 1,2009 Page 49 of 49 MANAGER'S REMARKS General Manager Lark stated the Board of Water & Light is the signature sponsor for the Silver Bells in the City. He said the event was a success and very well attended. COMMISSIONERS' REMARKS Commissioner Peter Kramer thanked the General Manager and his staff for a great year of hard work. General Manager Lark stated that working with the Board has been very pleasant this year and we thank you. Commissioner Marilyn Plummer thanked the General Manager and the Administration for the great job with the Silver Bells in the City event. She said it was a pleasant experience. EXCUSED ABSENCE On Motion by Commissioner Lain, seconded by Commissioner Kramer to excuse the absence of Commissioner Tracy Thomas. Action: Carried unanimously. PUBLIC COMMENTS There were no public comments. ADJOURNMENT On Motion by Commissioner Lain, seconded by Commissioner Kramer, the meeting adjourned at 6:00 p.m. M. Denise Griffin, Corporate Secretary Filed with Lansing City Clerk December 11, 2009 Message Page I of I Chris Swope - BWL Board Meeting 001 From: Denise Griffin <mdg@LBWL.COM> To: <cswope@1ansingrni.gov>, <c1erk@1ansingmi.gov> Date: 9/29/2009 3:25 PM Subject: BWL Board Meeting Lansing City Clerk Swope, This e-mail is to inform you that the Board of Water & Light's regular Board meeting scheduled for the month of November is being rescheduled to December 1 , 2009. At that time the Board of Commissioner's will adopt a Resolution to set the 2010 Board Meeting Schedule. I will place the meeting schedule on file in your office on December 2, 2009. Thanks, Denise M. Denise Griffin Lansing Board of Water& Light Corporate Secretary 1232 Haco Dr. P.O. Box 13007 Lansing, MI 48901 Office: 517-702-6033 Cell: 517-388-4902 Fax: 517-702-6855 E-Mail: (nd.ggib.W.com If,. --A T A'KTC1T-hTt-\T ___1 A A rN Inn/nnc%n Preliminary Minutes to be approved on December 1, 2009 MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT Tuesday, September 22,2009 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Present: Commissioners Margaret Bossenbery, Tony DeLuca, Peter Kramer, Frank Lain, Dennis Louney, Marilyn Plummer, Tracy Thomas and Sandra Zerkle. Absent: None, Chairperson Zerkle called the meeting to order at 5:30 p.m. C`✓ tIJ The Interim Corporate Secretary declared a quorum present. Commissioner Louney lead the Pledge of Allegiance. SPECIAL PRESENTATION CiJ PRESENTATION OF CHECKS FROM PROCEEDS OF THE 2009 CHILI COOK-OFF TO H.O.P.E SCHOLARSHIP, IMPRESSION FIVE SCIENCE CENTER AND SPARROW FOUNDATION. General Manager J. Peter Lark stated that he would be presenting checks to the Sparrow Foundation, H.O.P.E. Scholarship and the Impression Five Science Center from the proceeds of the Chili Cook-off. He asked Board Chair Sandra Zerkle join him for the presentation of the checks. General Manager Lark and Chair Zerkle presented a proceeds check of$10,000 to Lansing Police Chief Mark Alley for the H.O.P.E. Scholarship. Lansing Police Chief Alley thanked the Board of Water& Light for the check and for being supportive of the scholarship program. General Manager Lark and Chair Zerkle presented a proceeds check of$10,000 to Erik Larson, Executive Director of the Impression Five Science Center. Mr. Larson thank the Board of Water& Light for the check as well as their continued support. Mr. Larson stated that the funds would be used to support the Adopt-A-River program. General Manager Lark and Chair Zerkle presented a proceeds check of$5,000 to Mike Wall from the Sparrow Foundation. Mr. Wall thanked the Board of Water& Light on behalf of the Sparrow Foundation. He stated that the funds would go to support the Emergency Regional Trauma Center/ Sparrow Tower Campaign. On behalf of the Board of Commissioner's Chair Zerkle congratulated and thanked the Board of Water& Light employees for making Chili Cook-off a successful event, particularly Calvin Jones Regular Board Mtg. September 22,2009 Page 2 of 25 who made sure that there was very little cost to the Board, She stated that it was nice to be able to raise this money for the different foundations that you believe in. APPROVAL OF MINUTES Motion by Commissioner Plummer, seconded by Commissioner Thomas to approve the minutes of the Regular Board Meeting of July 28, 2009. Action: Carried unanimously, PUBLIC COMMENTS MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There were no public comments. COMMUNICATIONS There were no Communications. COMMITTEE REPORTS HUMAN RESOURCE COMMITTEE MINUTES August 12, 2009 The Human Resource Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 11:30 a.m. on Wednesday, August 12, 2009. Human Resource Committee Chair Tony DeLuca called the meeting to order and asked the interim secretary to call the roll. The following committee members were present: Commissioners Tony DeLuca, Marilyn Plummer, Tracy Thomas, and Sandra Zerkle. Also present were Board Members Marge Bossenbery, Frank Lain and Dennis Louney. Absent: None Public Comments There were no public comments. Corporate Secretary Position Motion by Commissioner Zerkle and seconded by Commissioner Thomas to go into closed session at 11:33 a.m. Action: Carried unanimously. Motion by Commissioner Zerkle and seconded by Commissioner Thomas to reconvene the Human Resource meeting in open session at 12:30 p.m. Regular Board Mtg. September 22,2009 Page 3 of 25 Action: Carried unanimously. Committee Chair DeLuca stated that as one of three candidates for the Corporate Secretary position, Human Resource Director Michael Flowers would like to ask Interim Corporate Secretary M. Denise Griffin a few questions. Human Resource Director Michael Flowers asked the following questions: 1. Please convey to the Commissioners your ability to act with diplomacy and act in confidential matters? Ms. Griffin stated that this was something that she dealt with in her previous position. She stated that she previously worked with Politicians and was privy to a lot of confidential and sensitive information on a daily basis and it was important to keep information confidential and it is important to know when to speak and when not to speak. 2. How comfortable are you with your oral and written communication skill? Ms. Griffin stated that she was very comfortable with her oral and written communication skills. She stated that she conducted quite a few City Council Meetings and spoke in front of large crowds on a weekly basis. She stated that she had written Resolutions in her previous position as well as prepared the weekly City Council Agendas, Minutes and Committee Reports. 3. How are your proficiencies with Microsoft programs as far as documents, Excel spreadsheets and Microsoft Word? Ms. Griffin stated that she was very competent with many different programs and always found a way to complete jobs accurately. 4. Please convey to the Board your abilities for record management? Ms. Griffin stated that record management was part of her duties in her previous positions. She spoke about the different records management systems and styles in the City Clerk's office as well as the Income Tax Division. Motion by Commissioner Thomas and seconded by Commissioner Plummer to go into closed session at 12:45 p.m. Action: Carried unanimously. Motion by Commissioner Thomas and seconded by Commissioner Plummer to reconvene the Human Resource meeting in open session at 12:50 p.m. Action: Carried unanimously. Motion by Commissioner Thomas, seconded by Commissioner Zerkle to remove interim from the title and offer the position of Corporate Secretary to candidate number one and forward this matter to the full board for consideration and approval, Regular Board Mtg. September 22,2009 Page 4 of 25 Action: Carried unanimously. Approval of Minutes Motion by Commissioner Zerkle, seconded by Commissioner Thomas to approve the minutes of the Human Resource Committee meeting held July 23, 2009. Action: Carried unanimously. There being no further business, the meeting adjourned at 12:55 p.m. Respectfully submitted, Tony DeLuca, Chair Human Resource Committee EXECUTIVE COMMITTEE August 24, 2009 The Executive Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 8:00 a.m. on Monday, July 24, 2009. Executive Committee Chair Sandra Zerkle called the meeting to order. The following committee members were present: Commissioners Sandra Zerkle, Peter Kramer and Frank Lain. Also present were Board Commissioners Margaret Bossenbery and Dennis Louney. Absent: None. Public Comments Jan Simpson stated that she was a Board of Water& Light Retiree and President of the Retiree Association. She stated that she knew what the dynamics of this meeting was all about and wanted the Board to think about the tough economic times and to be cognizant of this when dealing with the General Manager's contract. General Manager's Employment Contract Chair Zerkle stated that she wanted to have this meeting because there were some edits to the original contract and she wanted the Commissioners to be comfortable with the changes. Board of Water& Light General Counsel Brandie Ekren explained the language changes and edits on the General Manager's contract. She explained the difference between termination of"cause" and termination of"at-will" and what the payout out would be in each situation. She stated that General Manager Lark would be paid up for the remainder of the contract agreement for an "at-will" termination if there is no "cause" associated. If there is "cause" he is basically paid up for 6 months. Commissioner Lain questioned what was the benchmark to determine if the termination was "at- will" or"cause". General Counsel Ekren stated that information was spelled out in section "Y of the contract. Regular Board Mtg. September 22,2009 Page 5 of 25 Chair Zerkle stated that there was no pay increase involved in General Manager Lark's contract. Motion by Commissioner Kramer, seconded by Commissioner Lain to sign and execute the General Manager's edited contract. Action: Carried unanimously. Consideration of Obtaining Outside Legal Counsel to assist with preparation of the General Manager's Employment Contract Chair Zerkle stated that during her talks between General Manager Peter Lark and General Counsel Brandie Ekren regarding the General Manager's contract that she became nervous because Brandie Ekren is technically an employee of Peter's and felt that it became a little awkward when negotiating Mr. Lark's contract and that it put Mrs. Ekren in a tough spot. She stated that the Board has access to outside counsel and questioned if obtaining outside counsel was something to consider for the future. Motion by Commissioner Kramer, seconded by Commissioner Lain to bring this item to the Committee of the Whole for discussion. Action: Carried unanimously. Respectfully submitted, Sandra Zerkle, Chair Executive Committee FINANCE COMMITTEE September 8, 2009 The Finance Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 4:00 p.m. on Tuesday, September 8, 2009, Finance Committee Chairperson Peter Kramer called the meeting to order and asked the Interim Secretary to call the roll. The following members were present: Commissioners Peter Kramer, Margaret Bossenbery and Dennis Louney. Absent: Commissioner Frank Lain Public Comments There were no public comments, Approval of Minutes Motion by Commissioner Bossenbery, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of July 14, 2009. Action: Carried unanimously, Plante & Moran Audited Financial Report for fiscal year 2009 Regular Board Mtg. September 22,2009 Page 6 of 25 General Manager J. Peter Lark introduced Doug Rober a Partner with Plante Moran (P&M). Douglas Rober reviewed the process for the audit of the financial statements and related pension plans for the Board of Water and Light(BWL) for fiscal year ending 2009. Shaun Krick, Manager of P&M, stated that the General Motors bankruptcy and operating issues has resulted in less demand of energy which has resulted in less cost incurred by the Board of Water& Light and less revenue. He stated that as the graph charts are reviewed you will see the impact of the bankruptcy and it will be a common theme throughout the report. He reviewed the following information from the graphs: Operating Revenue—Four-year Comparison Years Ended June 30 Shaun Krick, CPA Associate with Plante Moran stated that revenues were just under$262 Million in the current year compared to last year at about$267 Million. This is a decrease of about 5% and the largest component of the operating revenue was derived from the electric utility. There were less kilowatt-hours being sold and that is attributable to the General Motors plant that was closed and attributable to the much cooler weather, Mr. Krick also stated that chilled water and water utilities revenues remain relatively consistent from previous years' levels, even though there was a 6% or 7% decrease in the volumes that were sold. There were rate increases through the year and that has helped offset the decrease in units sold. Steam revenue increased through the year mainly due to rate increases. The units sold were actually down by about 9% from previous years' levels. Operating Expenses- Four-year Comparison Years Ended June 30 Mr. Krick stated that Operating Expenses were just under$260 Million in the current year up from $256 Million the in prior year. This is an increase of about 1.5%. The biggest component of operating expense was those relating to production of energy, due in large part to the lower demand of energy caused by General Motors. Mr. Krick stated the total units across all the different utilities decreased by 12.6% feeding in to the decrease in transmission of distribution cost line item. Administrative and General costs increased slightly due to salary, wages and related benefits. Depreciation increased significantly in fiscal year 2009 due to the write off of the steam facility impairment. Operating Income (Loss) Years Ended June 30 Mr. Krick stated that Water, Electric and Chilled Water are operating in the black. Steam had operating loss in the current year and this again is due entirely to the write off of the impaired steam asset of$122 Million. Sales Source of Kilowatt Hours Generated Years Ended June 30 Mr. Krick stated that of the 3.2 Billion kilowatt hours sold, 1/3 was sold through the MPPA contract, and an additional 2/3 was sold to retail customers. This is pretty consistent with operations of the past two years. Regular Board Mtg. September 22,2009 Page 7 of25 Kilowatt Hours Generated Versus Purchased Years Ended June 30 Mr. Krick stated that energy, both purchased and sold total about 3.3 Billion kilowatt hours, which is down about 12.6% from previous years due to demand. There was a significant increase in purchased energy due in part to the Board of Water& Light undergoing a green initiative and a contract with Granger to purchase energy. The other reason for the increase in the energy purchased is because the energy purchased from Belle River was less expensive than generating it from the Eckert Station due to the age of the infrastructure. Significant Power Costs Year Ended June 30 Mr. Krick stated that energy costs in total were down about$5 Million from the previous year. More energy was purchased from Belle River and the MPPA so there is an increase in related cost and since less energy was produced those cost decreased as well. Bond Debt Service Requirements Year Ended June 30 Mr. Krick stated that this particular graph looks at debt service requirements on bonds that the Board of Water& Light has issued for the current year and the next five years. Over the next five years, 35% of total debt is expected to be paid off. Mr. Krick said remaining graphs give a separate look at each of the utilities current year information compared to the past three years. Jacob Horner, an Associate with Plante Moran, reviewed the letters that were included in the packet. He stated that the first letter reviewed their responsibilities to the Board and what Plante Moran is required to communicate to the Board about their findings, Mr. Horner stated that there will be a Single Audit Report at a later date and this report is a result of the use of over$5000.00 of Federal money for expenditures which relates to the FEMA monies that were received in 2008 to help make the necessary repairs to damaged Eckert Cooling Towers. The money was spent in 2008 but not considered federal until FEMA approved the expenditures, and that is why it is being audited in the 2009 fiscal year. The other letters or reports that were reviewed by Mr. Horner were titled Results of the Audit, Summary of Unrecorded Possible Adjustments and Other Recommendations. Mr. Horner stated that there were no findings to report. Plante Moran stated that it was a pleasure to work with the Board of Water& Light's Staff. A complete copy of the Plante Moran's Presentation to the Finance Committee regarding the Audited Financial Statements & findings is on file in the Corporate Secretary's office. Update on DENEEA 2nd Quarter 2009 Reports General Manager J. Peter Lark introduced First Vice President Marie Vanerian of Merrill Lynch Institutional Consulting Group who provided an update on the economy. Regular Board Mtg, September 22,2009 Page 8 of25 Marie Vanerian stated that getting bad at a slower rate is not quite the same as getting better GDP. In the first quarter GDP was a-1% but estimates that there will be growth in the 3rd and 4th quarters. Unemployment improved slightly during the second quarter but probably will not peak until the middle of next year. She stated that we have to remember that the credit market had to thaw and the equity market will follow and the economy would be next and the lagging indicator would be unemployment. She said we do not have to have huge growth in order to make the next 10 years good. ® LBWL DB 2nd Quarter 2009 Reports ® LBWL VEBA 2nd Quarter 2009 Reports Michael Muirhead, Associate Financial Advisor for Merrill Lynch Institutional Consulting Group provided 2nd Quarter updates on the Defined Benefit(DB) Plan and the Voluntary Employees Beneficiary Association (VEBA) Plan. The following overview documents were reviewed. Lansing Board of Water& Light Defined Benefit Plan Asset Allocation Quarter Ending June 30, 2009 Asset Class Current Allocation Target Policy Difference Fixed Income 27.80% 31.00% -3.20% Large Cap Equity 46.80% 45.00% 1.80% Small/Mid Cap Equity 8.50% 10.00% -1.50% International Equity 14.90% 14.00% 0.90% Cash&Cash Equivalents 2.00% 0% 2.00% TOTAL 100.00% 100.00% VEBA Plan Asset Allocation Quarter Ending June 30, 2009 Asset Class Current Allocation Target Policy Difference Fixed Income 29.00% 31.00% -2.00% Large Cap Equity 39.30% 43.00% -3.70% Small/Mid Cap Equity 8.50% 10.00% -1.50% International Equity 10.10% 11.00% -0.90% Private Equity 0.00% 5.00% -5.00% Cash& Cash Equivalents 13.10% 0% 13.10% TOTAL 100.00% 100.00% *Note high cash allocation was due to cash placeholderfor Private Equity allocation and VEBA contributions made during the Second Quarter. Regular Board Mtg. September 22,2009 Page 9 of 25 DB Performance 4th Quarter FY 2009 (Net of Fees) Benchmark Favl(Unfav) Fund Name: Allocation Market Value 2nd Qtr Perf:% Investment Ob'. 2nd Qtr.Perf.-% vs.Benchmark Large Cap Growth Edgewood 9.7% 7,103,355 17.39 S&P 500 Total Return 15.93 1.46 Aletheia 9.2% 6,722,037 23.36 Russell 1000 Growth 16.32 7.04 Large-Cap Value Eaton Vance 8.6% 6,323,435 12.83 Russell 1000 Value 16.69 (3.86) Jenison 9.4% 6,866,799 18.27 Russell 1000 Value 16.69 1.58 Atlanta Life " International Wentworth(Growth) 5.7% 4,160,944 28.60 MSCI EAFE Total Return 25.85 2.75 MFS(Core) 5.3% 3,919,976 21.61 MSCI EAFE Total Return 25.85 (4.24) JP Morgan Intl(Value) 4.5% 3,323,507 20.27 "' MSCI EAFE Total Return 25.85 (5.58) Smid Cap Growth Insight 2.6% 1.934,207 (0,07) Russell 2000 Growth 23.37 (23.44) O'Shaughanessy 3.1% 2,295,830 9.41 Russell 2500 Growth 21.79 (12.38) Smid Value Advisory Research 20.12 "• Russell 2500 Value 20.90 (0.78) Fixed Income JP Morgan 10.1% 7,405,033 2.86 Barclays Aggregate Index 1.70 1.16 Metwest 17.9% 13,144.617 3.40 Bard ays Agg re gate Index 1.70 1,70 ishares R1000 Growth 9.9% 7,234.363 + Russell 2000 Value 2.9% 2,153,818 ++ Cash 1.1% 826,619 Total 100.0% 73,414,540 18.10 +++ Returns for this asset allocation 13.60 +++ 4.50 Started trading 5-25-09 •• Did not start trading until 4-30-09 Did not start trading until4-18-09 + Placeholder for Atlanta Life ++ Placeholder for Advisory +++Gross offees VEBA Performance 4th Quarter FY 2009 (Net of Fees) Benchmark Fav/(Unfav) Fund Name: Allocation Market Value 2nd Qtr Perf:% Investment Ob'. 2nd Qtr.Pert=/ vs.Benchmark Large Cap Growth Edgewood 8.6% 5,174.267 17.71 S&P 500 Total Return 15.93 1.78 Aletheia 8.6% 5,145,573 23.67 Russell 1000 Growth 16.32 7.35 Large-Cap Value Eaton Vance 8.7% 5,189.048 12.78 Russell 1000 Value 16.69 (3.91) Jenison 8.7% 5,217,461 18.31 Russell 1000 Value 16.69 1.62 Atlanta Life International Wentworth(Growth) 3.8% 2.299,163 28.62 MSCI EAFE Total Return 25.85 2.77 MFS(Core) 3.5% 2,079.564 21.69 MSCI EAFE Total Return 25.85 (4.16) JP Morgan Intl(Value) 3.5% 2,092,047 20.22 MSCI EAFE Total Return 25.85 (5.63) Smid Cap Growth Insight 3.3% 1,977,240 0.17 Russell 2000 Growth 23.37 (23.20) O'Shaughanessy 3.4% 2,012,463 9A0 Russell 2500 Growth 21.79 (12.39) Smid Value Advisory Research 20.18 "` Russel 2500 Value 20.90 (0.72) Fixed Income JP Morgan 15.2% 9,099.316 0.80 Barclays Aggregate Index 1.70 (0.90) Metwest 15.8% 9,442,731 1.68 Barclays Aggregate Index 1.70 (0.02) Russell 1000 Index Fund 8.7% 5,204,855 + ishares Russell 2000 3.3% 1,977,796 ++ Cash 5.0% 2,986,035 Total 100.0% 59,897,579 11.90 +++ Returns for thisassetaliocation 13.30 +++ (1.40) Started trading 5-25-09 Did not start trading until 4-30-09 Did not start trading until4-18-09 + Placeholder forAtlanta Life ++ Placeholder forAdvisory +++Gross of fees The full set of 2nd Quarter Reports are included in the packet and available for viewing in the Office of the Corporate Secretary. Regular Board Mtg. September 22,2009 Page 10 of 25 Internal Controls General Manager J. Peter Lark introduced Mike Collins, Manager of the Lansing Board of Water& Light Internal Control Department. Mike Collins gave an overview of the activities of the Internal Control Department. He also introduced Kathy Krause and commented that she is highly skilled in evaluating information technology internal controls, and he mentioned that Sue Sims, a CPA, had joined his staff, too. A PowerPoint slide presentation titled "2009 Report, Internal Control Structure"was included in the Committee's packet. Mr. Collins gave a brief overview of internal controls and how they provide the Board with reasonable assurance the BWL achieves it corporate objectives of 1) effective and efficient operations, 2) reliable financial statements, and 3) compliance with applicable laws and regulations. Chair Kramer asked Mr. Collins to explain the difference between the Internal Control Department and Internal Audit, Mr. Collins explained that the function of Internal Control is to work directly with various departments to help insure they have designed and implemented controls to mitigate the risks associated with their business activities in the most economical and efficient manner. The role of Internal Audit is to review those business activities and evaluate the adequacy of their associated risks and controls and report their findings to the Board. Mr. Collins concluded by offering to meet with anyone that had questions on internal controls and recommended that they visit the Internal Control Department's website. Internal Audit Update • Audit Report(Project Engineering Department) ® Audit Report (Collections Process) ® Internal Audit Status Report Internal Auditor Phil Perkins gave a brief presentation on two recently completed audits, a status report on FY2009 completed and in-progress audits, and the FY2010 proposed audit plan. Mr. Perkins noted that in both of the audit reports that were in the packet, there were findings relating to a lack of documentation. He noted that Internal Audit is careful to assess the risk and impact of not having the documentation since this is more important in some cases than others. He cited an example in one of the reports about a pre-construction form that is important because it may protect the company's interest in case of an accident on the job if it can be demonstrated that personnel were briefed on safety before starting the work. Mr. Perkins then gave a brief presentation on FY2009 audits and the proposed FY2010 audit plan, along with some challenges he has noted in his first few months on the job. He gave management credit for being cooperative and supportive of Internal Audit and keeping the lines of communication open, citing monthly status meetings that he has with the Chief Financial Officer Susan Devon and continued contact with the Internal Controls group. Motion by Commissioner Louney, seconded by Commissioner Bossenbery to excuse Commissioner Frank Lain from today's meeting. Action; Carried unanimously. Regular Board Mtg. September 22,2009 Page 11 of25 On motion by Commissioner Louney, seconded by Commissioner Bossenbery, the meeting adjourned at 5:50 p.m. Respectfully submitted, Peter W. Kramer, Chair Finance Committee COMMITTEE OF THE WHOLE September 8, 2009 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 6:08 p.m. on Tuesday, September 8, 2009. Chair Sandra Zerkle called the Committee of the Whole meeting to order and asked the Interim Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Tony DeLuca, Dennis Louney, Marilyn Plummer and Sandra Zerkle. Absent: Commissioners Frank Lain, Pete Kramer and Tracy Thomas. Public Comments There were no public comments. Approval of Minutes Motion by Commissioner DeLuca, seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of July 14, 2009. Action: Carried unanimously. Designated Representative regarding EPA General Manager J. Peter Lark stated that the purpose of this resolution is to have the latest designees named for the purpose of reporting to the Environmental Protection Agency (EPA). Those representatives are George Stojic and Douglas Wood as the alternate. Motion by Commissioner Bossenbery, seconded by Commissioner DeLuca to forward the proposed resolution on to the full Board for consideration and approval. Action: Carried unanimously Net Metering Program—Set Public Hearing wResolution ®Net Metering Standards ®Net Metering Rider General Manager J. Peter Lark gave a brief explanation of net metering. He stated that he would like the Board to set up a public hearing so the customers can have input on net metering.Also included in the committee packet are the net Metering Program Standards and the Net Metering Regular Board Mtg. September 22,2009 Page 12 of 25 Rider, which enables customers using renewable energy sources to connect to the Board of Water & Light's electric distribution system and send electricity back to the BWL when their generation exceeds their own use, Under Federal law the BWL is required to at least look at net metering. Commissioner Louney questioned the $5.00 charge that was indicated on page#3 of the Net Metering Program Standards. In response George Stojic stated that net metering cannot be billed easily and that the billing process has to be done by hand and there is an administrative cost associated with that. At the time the program was being put together it was estimated that the administrative cost was about $5.00. Motion by Commissioner Louney, seconded by Commissioner Plummer to forward the proposed resolution on to the full Board for consideration and approval. Action: Carried unanimously. Census Bureau Resolution Commissioner Plummer stated that this resolution is about community outreach and what the Census Bureau is looking for is partners to support what they are doing, She stated that this relates to federal dollars coming back to our community. Motion by Commissioner Bossenbery, seconded by Commissioner Louney to forward the proposed resolution on the full Board for consideration and approval. Action: Carried unanimously Resolutions Honoring Former Commissioners o Bob Cochran and ® Semone James-Howes Motion by Commissioner Bossenbery, seconded by Commissioner DeLuca to forward the resolutions of tribute on to the full Board for approval. Action: Carried unanimously. Resolution Honoring Calvin Jones Chair Zerkle stated that this resolution is a tribute for Calvin Jones and his work on the Chili Cook- Off event. Motion by Commissioner Plummer, seconded by Commissioner Bossenbery to forward this resolution of tribute on to the full Board for approval. Action: Carried unanimously, Consideration of Outside Legal Counsel in preparation for future General Manager contracts Regular Board Mtg, September 22,2009 Page 13 of 25 Commissioner Zerkle stated that at the Executive Committee Meeting there was a discussion regarding using an outside counsel in the future when dealing with the General Manager's contract. She stated that she felt having General Counsel Brandie Ekren negotiate her boss's contract with the Board puts her in a precarious position. Chair Zerkle stated she did not know if the Board needs a resolution to obtain outside counsel. General Counsel Brandie Ekren stated that a resolution was not necessary at this time but if in the future the Board feels the need for outside counsel please talk with her and she will be happy to assist and provide information regarding obtaining outside legal counsel and also that City Attorney Brigham Smith is available for assistance. Other General Manager J. Peter Lark gave an update on the First STEP Program. Mr. Lark stated that this program was born of the notion that 40% of the BWL's staff is at retirement age and can retire within 3 years. However, since the economy has gotten bad and everyone's 401 K has taken a hit, the BWL is not seeing a lot of employees interested in retiring. As a result of employees not retiring and revenue being down there will be some changes to the First STEP Program. He stated that the program would continue on a much smaller scale. General Manager Lark reminded the Board of Commissioners that typically in November there is a Pension Trustees meeting and arrangements will be made for that meeting. Motion by Commissioner Zerkle, seconded by Commissioner DeLuca to excuse Commissioners Frank Lain, Pete Kramer and Tracy Thomas from today's meeting. Action: Carried unanimously. With there being no further business the meeting adjourned at 6:45 p.m, Respectfully submitted Sandra Zerkle, Acting Chair Committee of the Whole MANAGER'S RECOMMENDATIONS -------------------- RESOLUTIONS RESOLUTION#2009.09.1 Designated Representative and Alternate Designated Representative RESOLVED, that George Stojic be named the BWL's designated representative and Douglas Wood be named the BWL's alternate designated representative, all for the purpose of reporting to the Environmental Protection Agency (EPA) under the Clean Air Act; and FURTHER RESOLVED, that the designated representative and the alternative designated representative be authorized to bind the BWL by their respective actions, inactions, and submissions with respect to the Clean Air Act. Regular Board Mtg. September 22,2009 Page 14 of 25 -------------------- Staff Comments: Due to changes in personnel, this revised resolution is necessary. This supersedes Resolution No. 09-01-02. -------------------- Motion by Commissioner Kramer, seconded by Commissioner Lain, to approve the resolution of designating George Stojic as the BWL's designated representative and Douglas Wood as the BWL's alternate designated representative for the purpose of reporting to the Environmental Protection Agency. Action: Carried unanimously RESOLUTION#2009.09.2 LANSING BOARD OF WATER& LIGHT'S RENEWABLE ENERGY NET METERING PROGRAM AND COMPANION RATE RIDER WHEREAS, the Energy Policy Act of 2005 (EP Act 2005) amended the Public Utility Regulatory Policies Act of 1978 (PURPA) requiring covered utilities to consider adopting five new standards including net metering; and WHEREAS, the Lansing Board of Water& Light Board of Commissioners passed Resolution 2008- 7-5 that resolved the BWL shall develop and promote a net metering program which meets applicable PURPA standards; and WHEREAS, there is a growing interest by residential and business customers to invest in customer generated sources of power supply and a net metering program will encourage the installation and use of customer-owned renewable energy systems. RESOLVED, that the Renewable Energy Net Metering Program and companion rate rider be made the subject of a public hearing prior to further consideration by the Board of Commissioners. RESOLVED FURTHER, that the Board of Commissioners hereby set the date of Thursday, November 12, 2009, at 5:30 pm for a public hearing to solicit public input on the Renewable Energy Net Metering Program and companion rate rider. The hearing will be held in the Board of Water and Light's offices, 1232 Haco Drive, Lansing. The Corporate Secretary is directed to file with the City Clerk, no later than September 23, 2009, information regarding the Renewable Energy Net Metering Program and companion rate rider with an effective date of January 1, 2010. -------------------- Staff Comments: The BWL's Renewable Energy Net Metering Program and companion rate rider will be offered to its electric customers who wish to install renewable electric energy systems on their premises. The program will be evaluated on a periodic basis to determine customer interest and operational impacts on the BWL's system and revised if needed. Following adoption of this resolution, the Staff will prepare for the public hearing date. Following the public hearing, the Staff Regular Board Mtg. September 22,2009 Page 15 of25 will prepare a report summarizing public comments and making recommendations on any revisions to the Net Metering program and rate rider if necessary. Renewable Energy Net Metering Rider Purpose—The purpose of this rider it to enable customers who generate electricity using renewable energy sources to connect to the BWL's electric distribution system and to send electricity back to the electric grid at time when their generation exceeds their own use. Availability- Net Metering applicants must be an electric customer making use of any BWL Electric Rate Schedule. The Net Metering Program will be voluntary and selection of customers for participation in the net metering program shall be based on the order in which the applications for the net metering program are received by the BWL. The Net Metering Program will be in effect until the total nameplate capacity of all participating generators is equal to the maximum program limit of 1% of the BWL peak load for the proceeding calendar year. The renewable energy generating system will not exceed 50 kW per site and may be limited to geographical regions within the BWL's service territory. Eligible Renewable Energy Resources - Customers must generate a portion or all of their own retail electricity requirements using a renewable energy resource including but not limited to the following: Biomass, Solar Photovoltaic or Wind. Other renewable energy resources not included in the list above must be approved in advance by the BWL. Generation and Interconnection Requirements-The generation equipment must be located on the customer's premise and serve only the customer's premises, The Net Metering applicant shall be limited to generation capacity designed to meet the customer's electric demand and energy needs. The BWL, at its discretion, will make the final determination of the acceptable size of the renewable energy generating system eligible for participation. Before participating in the Net Metering Program customers must be approved for parallel operation with BWL's electric distribution system by meeting all interconnection requirements. Monthly Rate—All Net Metering customers will be billed $5.00 per month to recover costs associated with operating the Net Metering Program. Net metering customers with a system capable of generating 20 kW or less shall qualify for true net metering. For customers who qualify for true net metering, the net of the bidirectional flow of kWh across the customer interconnection with the BWL distribution system during the billing period, including excess generation credits, shall be credited at the full retail energy (kWh) rate. a) The credit for Net Excess Generation (NEG), if any, shall appear on the next bill and any excess credit not used to offset current charges shall be carried forward for use in subsequent billing periods. b) Reconciliation of any NEG credits will occur at the end of each calendar year. At that time the customer's NEG credit balance will be reset to zero and any NEG credits will be refunded at the retail power supply rate. c) If a customer leaves the provider's system or service is terminated for any reason, the BWL shall refund to the customer the remaining NEG credit amount. Remaining NEG credits will be refunded at the retail power supply rate. d) The retail power supply rate includes the BWL generation costs and purchase power and other related costs. Regular Board Mtg. September 22,2009 Page 16 of 25 Net metering customers with a system capable of generating more than 20 kW but less than 50 kW will qualify for modified net metering, The BWL shall require individual contracts with customers with generation systems of more than 20 kW for billing purposes. Rules and Regulations—Service under this rider is subject to the BWL Rules and Regulations for Electric Service and the Renewable Energy Net Metering Program Standards. The BWL reserves the right to revise the terms and conditions including any electric energy buy-back pricing rates of future Net Metering programs. Motion by Commissioner Bossenbery and seconded by Commissioner Lain, to set the date of Thursday, November 12, 2009, at 5:30 pm for a public hearing to solicit public input on the Renewable Energy Net Metering Program and companion rate rider and PURPA Standards under the energy independence and security ACT of 2009, Action: Carried unanimously. -------------- Net Metering Supporting Document Lansing Board of Water& Light's Renewable Energy Net Metering Program Standards The Lansing Board of Water & Light (BWL) is currently offering a Net Metering Program to its electric customers who wish to install renewable electric energy systems. This program will also allow the BWL to evaluate the market demand and operational impact for Net Metering in its electric service territory. The Net Metering Program will enable customers who generate electricity using renewable energy sources to connect to the BWL's electric distribution system and to send electricity back to the electric grid at time when their generation exceeds their own use. The BWL reserves the right to revise the terms and conditions including any electric energy buy- back pricing rates of future Net Metering programs. PROGRAM AVAILABILITY The Net Metering Program will be voluntary and selection of customers for participation in the net metering program shall be based on the order in which the applications for the net metering program are received by the Lansing Board of Water& Light. The Net Metering Program will be in effect until the total nameplate capacity of all participating generators is equal to the maximum program limit of 1% of the BWL peak load for the proceeding calendar year. The renewable energy generating system will not exceed 50 kW per site and may be limited to geographical regions within the BWL's service territory. CUSTOMER ELIGIBILITY Net Metering applicants must be an electric customer making use of any BWL Electric Rate Schedule and receive electric service from the BWL distribution system. Customers must generate a portion or all of their own retail electricity requirements using a renewable energy resource including but not limited to the following: Regular Board Mtg. September 22,2009 Page 17 of25 Biomass Solar Photovoltaic Wind Other renewable energy resources not included in the list above must be approved in advance by the BWL. APPLICATION FOR SERVICE AND FEES For a customer to participate in the BWL Net Metering Program a completed Net Metering Application shall be submitted. An applicant applying for net metering shall at the same time make application for interconnection with the BWL's electric distribution system. Net Metering Applications shall be available through direct mail or through the BWL website. (www.lbwl.com) GENERATION REQUIREMENTS The generation equipment must be located on the customer's premise and serve only the customer's premises. The Net Metering applicant shall be limited to generation capacity designed to meet the customer's electric demand and energy needs. The customers' electric needs may be determined by one of the following methods: a) The customers' annual energy usage, measure in kilowatt hours (kWh), during the previous 12-month period. b) For a customer with metered demand data available, the maximum integrated hourly demand measure in kilowatts (kW) during the past 12-month period. c) In those cases where there is no data, incomplete data, or incorrect data for the customer's energy usage or where the customer is making changes on-site that will affect total usage, the BWL and the customer shall mutually agree on a method to determine the customer's electric needs. The BWL, at its discretion, will make the final determination of the acceptable size of the renewable energy generating system eligible for participation in this net metering program. GENERATION AND NET METERING EQUIPMENT New generation and net metering equipment and its installation must meet all current local and state electric and construction code requirements. Any equipment that is certified by a nationally recognized testing laboratory to IEEE 1547.1 testing standards and in compliance with UL 1741 scope 1.1A and installed in compliance with this part is considered eligible equipment. GENERATOR INTERCONNECTION REQUIREMENTS Customers interested in participating in the Net Metering Program must meet all BWL interconnection requirements. Applicants must request and review the information in the BWL's Generator Interconnection procedural guidelines and complete the Generator Interconnection Application. Before participating in the Net Metering Program customers must be approved for parallel operation with BWL's electric distribution system by meeting all interconnection requirements and by signing a "Generator Interconnection Agreement". This agreement will give the customer permission to safely connect to LBWL's electric distribution system. METERING REQUIREMENTS Regular Board Mt,-- September 22,2009 Page IS of 25 Electric meters shall be used to determine the amount of the customer's energy use in each billing period, net of any excess energy the customer's renewable energy generating system delivers to the BWL's distribution system during that same billing period. The BWL will determine the appropriate meter(s) to be installed and that will be capable of measuring the flow of energy in both directions. The installation of generation meters will be at the discretion of the BWL, Customers who request a separate generation meter will be responsible for all costs associated with the meter and installation of that meter. CUSTOMER BILLING Net metering customers with a system capable of generating 20 kW or less shall qualify for true net metering. For customers who qualify for true net metering, the net of the bidirectional flow of kWh across the customer interconnection with the BWL distribution system during the billing period, including excess generation credits, shall be credited at the full retail energy (kWh) rate. e) The credit for Net Excess Generation (NEG), if any, shall appear on the next bill. Any excess credit not used to offset current charges shall be carried forward for use in subsequent billing periods. f) Reconciliation of any NEG credits will occur at the end of each calendar year. At that time the customer's NEG credit balance will be reset to zero and any NEG credits will be refunded at the retail power supply rate. g) If a customer leaves the provider's system or service is terminated for any reason, the BWL shall refund to the customer the remaining NEG credit amount. Remaining NEG credits will be refunded at the retail power supply rate. h) The retail power supply rate includes the BWL generation costs and purchase power and other related costs. Net metering customers with a system capable of generating more than 20 kW but less than 50 kW will qualify for modified net metering. The BWL shall require individual contracts with customers with generation systems of more than 20 kW for billing purposes. COST RECOVERY OF NET METERING PROGRAM All Net Metering customers will be billed $5.00 per month to recover costs associated with operating the Net Metering Program. CUSTOMER DISCONNECTION OR TERMINATION The BWL may refuse to connect or may disconnect a project from the distribution system if any of the following conditions apply: a) Lack of a fully executed interconnection agreement. b) Termination of interconnection by mutual agreement. c) Noncompliance with technical or contractual requirements in the interconnection agreement after notice is provided to the applicant of the technical or contractual deficiency. d) Distribution system emergency. e) Routine maintenance, repairs, and modifications, but only for a reasonable length of time necessary to perform the required work and upon reasonable notice. f) Failure to apply for and receive an electrical permit and inspection by the appropriate permit granting authority. g) Failure to remain current on all BWL bills. Regular Board Mtg. September 22,2009 Page 19 of25 The customer may terminate their participation in the Net Metering Program at any time for any reason with 60-days notice. NET METERING PROGRAM STATUS AND EVALUATION REPORTS The BWL will maintain records of all Net Metering applications and up-to-date records of all eligible electric generators within its electric service territory. The Net Metering Agreements will be reviewed on an annual basis by BWL. The BWL reserves the right, at its discretion, to choose to renew, revise or revoke any agreement entered into during this program. The applicant will receive, in writing, an explanation for any decision made concerning the status of their Net Metering Agreement. -------------------- UNFINISHED BUSINESS There was no Unfinished Business. NEW BUSINESS Chair Zerkle stated that the Executive Committee has three members in place and they are the Past Chair, Current Chair and the Acting Past Chair and that a fourth member is needed to complete the Committee. Motion by Chair Zerkle, seconded by Commissioner Thomas, to nominated Dennis Louney as the fourth member of the Executive Committee. Action: Carried unanimously. There was no other New Business. RESOLUTIONS RESOLUTION#2009.09-3 Appointment of the Charter Position of Corporate Secretary The Board's Rules of Administrative Procedures specify that the Board is to appoint a Director and General Manager, Internal Auditor, and Corporate Secretary, respectively at its first regular meeting following July 1 st of each year or as soon thereafter as may be appropriate. RESOLVED, That the Board of Commissioners hereby appoints the following individual to the Charter position of Corporate Secretary for fiscal year 2009-2010, or, until a successor is appointed, whichever last occurs: M. Denise Griffin, Corporate Secretary FURTHER RESOLVED, That M. Denise Griffin shall be extended an employment contract which shall be effective from July 1, 2009, and expire on June 30, 2010, or until a successor is appointed, whichever later occurs. Regular Board Mtg. September 22,2009 Page 20 of 25 Motion by Commissioner Lain, seconded by Commissioner DeLuca, to appoint M. Denise Griffin as the Corporate Secretary. Action: Carried unanimously, WATER&LIGHT 2010 Census Partner Proclamation RESOLUTION noog-Og-4 WHEREAS an accurate census count is vital to our community and residents' well-being by helping planners determine where to locate schools, day care centers, roads and public transportation, hospitals and other facilities, and achieving an accurate and complete count of the nation's growing and changing population; WHEREAS more than $400 billion per year in federal and state funding is allocated to states and communities based, in part, on census data; WHEREAS census data help determine how many seats each state will have in the U.S. House of Representatives and often is used for the redistricting of state legislatures, county and city councils and voting districts; WHEREAS the 2010 Census creates jobs that stimulate economic growth and increase employment; WHEREAS the information collected by the census is confidential and protected by law; Now, therefore, we PROCLAIM that Lansing Board of Water & Light is committed to partnering with the U.S. Census Bureau to help ensure a full and accurate count in 2010. As a 2010 Census partner, we will: 1. Support the goals and ideals for the 2010 Census and disseminate 2010 Census information to encourage those in our community to participate. 2. Encourage people in our community to place an emphasis on the 2010 Census and participate in events and initiatives that will raise overall awareness and ensure a full and accurate census. 3. Support census takers as they help our community complete an accurate count. 4. Create or seek opportunities to collaborate with other like-minded groups in our community by participating in Complete Count Committees and/or utilizing high-profile, trusted voices to advocate on behalf of the 2010 Census. Signed this 22, day of September, in the year 2009. Lansing Board of Water& Light Board of Commissioners Motion by Commissioner Thomas, seconded by Commissioner DeLuca, to support and partner with the Census Bureau to assist with obtaining a accurate census count, Action: Carried unanimously. Form D-3257(E) 2010census.gov Regular Board Mtg. September 22,2009 Page 22 of 25 RESOLUTION#2009.09.5 LANSING BOARD OF WATER AND LIGHT RESOLUTION HONORING ROBERT W. COCHRAN WHEREAS, it is indeed a pleasure to extend this expression of our thanks and best wishes to Robert W. Cochran; and WHEREAS, Robert W. Cochran was appointed an At-Large Commissioner on February 20, 2006; and WHEREAS, he last served on the Board's Finance Committee and has previously served as a member of the Executive and Human Resource Committees; and WHEREAS, Bob Cochran served in the United States Air Force from 1957 through 1979 and cultivated a distinguished career in the military, space, and defense industries. He has also co-chaired Mayor Virg Bernero's transition Technical and Infrastructure Committee and was the proprietor of a Lansing based residential contracting firm. WHEREAS, Bob is currently enjoying his retirement; but is actively volunteering his time, talent and energy in support of the community. He has also lent his financial expertise, quantitative and analytical skill set to the governing of the Lansing Board of Water and Light. NOW THEREFORE BE IT RESOLVED, That the Lansing Board of Water and Light Board of Commissioners, hereby honor and commend Robert W. Cochran upon leaving this Board with over three years of distinguished service. In Regular Session this 22nd day of September, 2009, we sincerely wish Bob continued success in all his future endeavors and achieving that which is in the best interest of our community. Sandra Zerkle, Chair Frank Lain, Vice Chair Margaret A. Bossenbery Tony DeLuca Peter W. Kramer Dennis M. Louney Marilyn D. Plummer Tracy Thomas Motion by Commissioner Kramer, seconded by Commissioner Lain, to approve the resolution of tribute for the outgoing Commissioner Robert Cochran. Action: Carried unanimously. Regular Board Mtg. September 22,2009 Page 23 of 25 RESOLUTION#2009-09-6 LANSING BOARD OF WATER AND LIGHT RESOLUTION HONORING SEMONE M. JAMES-HOWES WHEREAS, it is indeed a pleasure to extend this expression of our sincere thanks and best wishes to Semone M. James-Howes; and WHEREAS, Semone M. James-Howes was appointed as the 1st Ward Commissioner on February 20, 2006; and WHEREAS, She last served on the Board's Executive Committee and as an alternate member of the Finance and Human Resource Committees, respectively. She also previously served as the Chair and Vice-Chair for the Board of Commissioners and as Chair of the Committee of the Whole, Finance Committee, Nominating Committee and Ad Hoc Committee to revise the Rules of Administrative Procedure; and WHEREAS, Semone M. James-Howes was appointed Executive Director of the State of Michigan Land Bank Fast Track Authority by Governor Jennifer M. Granholm and has worked to cultivate an exceptional career with the State of Michigan for over 15 years, having worked in several capacities with the Departments of Labor and Economic Growth, Transportation, and Treasury. Semone currently serves as an Investment Specialist with the Department of Treasury, Bureau of Investments'Administration Division; and WHEREAS, Semone is a lifelong resident of Michigan and dedicates her time and energy to several community oriented and faith-based organizations; and WHEREAS, She has worked diligently in support of the Lansing community; and lent her financial and business expertise as well as her leadership skills in governing the organization and encouraging it to reach its goals and be the best utility company possible. NOW, THEREFORE, BE IT RESOLVED, That the Lansing Board of Water and Light Board of Commissioners, hereby, honor and commend Semone M. James-Howes upon leaving this Board with over three years of distinguished service. In Regular Session this 22nd day of September 2009, we sincerely wish Semone continued success in all her endeavors of being of service and achieving all that is in the best interest of our community. Sandra Zerkle, Chair Frank Lain, Vice Chair Margaret A. Bossenbery Tony DeLuca Peter W. Kramer Dennis M. Louney Marilyn D. Plummer Tracy Thomas Motion by Commissioner Kramer, seconded by Commissioner Lain, to approve the resolution of tribute for the outgoing Commissioner Semone James-Howes. Action; Carried unanimously. Regular Board Mtg. September 22,2009 Page 24 of25 BOARD OF WATER AND LIGHT RESOLUTION HONORING CALVIN L. JONES WHEREAS, It is with great appreciation for his many contributions to the Lansing Board of Water and Light and to the success of the 14th Annual Chili Cook Off that we honor Calvin L. Jones; and WHEREAS, the 2009 BWL Chili Cook-Off had more than 50 food vendors, which was the most in the event's history; and the event had a record attendance of more than 12,000; the event generated sufficient funds to provide contributions to the Hope Scholars, Impression 5 Science Center and the Sparrow Foundation in the amounts of$10,000, $10,000 and $5,000 respectively. WHEREAS, the Board of Water& Light Board of Commissioners extends a well deserved thank you to Calvin L. Jones and all of the Board of Water& Light Chili Cook off events staff and volunteers for making the June 5th event the biggest and best in the event's history. NOW, THEREFORE BE IT RESOLVED that a unanimous accolade of praise and tribute be given to Calvin L. Jones for his many contributions to the Board of Water and Light's successful 14th Annual Chili Cook Off. In Regular Session this 22nd day of September 2009, we congratulate and thank Calvin L. Jones, BOARD OF COMMISSIONERS Sandra Zerkle, Chair Frank Lain, Vice Chair Margaret A. Bossenbery Tony DeLuca Peter Kramer Dennis Louney Marilyn Plummer Tracy Thomas Motion by Commissioner Kramer, seconded by Commissioner Lain, to approve this resolution of tribute for Calvin Jones. Action: Carried unanimously Calvin Jones accepted his resolution of tribute and stated that the 2009 Chili Cook-off was his most rewarding achievement during his thirty-three years at the Board of Water&Light. He thanked General Manager J. Peter Lark for his vision to accomplish this community event without using rate payers money. He thanked all Board of Water& Light volunteers and gave special thanks to Cheval Breggins. He also thanked the Board of Commissioner for his tribute. Preliminary—Subject to Board Approval on September 22, 2009 MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT Tuesday,July 28, 2009 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Present: Commissioners Margaret Bossenbery, Tony DeLuca, Peter Kramer, Frank Lain, Dennis Louney, Marilyn Plummer and Sandra Zerkle. Absent: Commissioner Tracy Thomas. The Interim Corporate Secretary declared a quorum present. Chairperson Lain called the meeting to order at 5:35 p.m. APPROVAL OF MINUTES _w Motion by Commissioner Kramer, seconded by Commissioner Louney to approve the minutes of the Regular Board Meeting of May 26, 2009 and the Special Board Meeting of June 9, 2009. Carried unanimously. PUBLIC COMMENTS MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There were no public comments. COMMUNICATIONS There were no Communications. Regular Board Mtg. July 28,2009 Page 2 of 19 COMMITTEE REPORTS FINANCE COMMITTEE June 9, 2009 The Finance Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 4:30 p.m. on Tuesday, June 9, 2009. Finance Committee Chairperson Peter Kramer called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Robert Cochran, Tony DeLuca, Peter Kramer and Tracy Thomas. Alternate committee member Margaret Bossenbery (arrived 5:14 p.m.) was present in addition to Commissioner Sandra Zerkle (arrived 5:20 p.m.). Absent: None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner DeLuca, seconded by Commissioner Thomas to approve the Finance Committee meeting minutes of May 12, 2009 as amended. Action: Carried unanimously. DB/VEBA Updat First Vice President Marie Vanerian and Associate Financial Advisor Michael Muirhead of Merrill Lynch Institutional Consulting Group provided an update with respect to the Lansing Board of Water and Light's (BWL) Defined Benefit (DB) and Retiree Benefit Plan and Trust (VEBA). The update included a brief overview of the total portfolio performance summary report and review of handouts entitled, "Time Weighted Rate of Return by Account" for DB and VEBA and the 10-year Moving Average of United States (U.S.) Large Capitalization Common Stock". The Asset Information and Measurement Service reports for DB and VEBA reflect the transition from the old to the new reporting. The Time Weighted Rate of Return by Account reports reflects the performance of the new asset managers. Ms. Vanerian expressed that all current federal loan programs are designed to infuse money into the system. As a result, markets have responded and banks have brought credit to the market. Anticipated market issues include inflation, overcapacity in the world market and devaluation of the U.S. dollar. In response to a Commissioner inquiry regarding next quarter results, Merrill Lynch noted that typically a test occurs when there is a significant rise in the market to determine if the markets can substance the increase. The economy must continue to receive good news for the market to continue to improve. Finance (quarterly Update General Manager J. Peter Lark provided a brief quarterly update with respect to the Financial Reports for month ending March 31, 2009. The Financial Report also included information pertaining to the Balanced Scorecard and Financial Statements. Management is continuing with its cost cutting efforts and has exceeded its target to decrease Operations and Maintenance costs. Regular Board Mtg. July 28,2009 Page 3 of 19 reserves for fiscal year 2009. The fiscal year 2010 budget proposes a $2 million cut into reserves and does not include any future rate increases, as management will take a wait and see approach with respect to proposed rate changes for the new fiscal period. Bond Resolution J. Peter Lark introduced the BWL Resolution Authorizing the Sale of Refunding Bonds. Bond Advisor Warren Creamer and Bond Attorney Bill Danhof were available to answer questions with respect to bond refinancing and the proposed resolution. The Series 2009A bonds (previously entitled, "Series 199913") were originally used to develop the Central Utilities Complex at the General Motors (GM) Lansing Grand River Facility. The bond issuance involves the private placement of the bonds to the bond purchaser instead of sale to an underwriter. Refinancing the bonds reduced the interest rate from 7.5% to 5.34% and lowered the BWL's exposure by approximately $3.9 million. The placement agent is Citibank and the bond purchaser is Bank of America N.A. In response to a Commissioner inquiry, it was advised that a GM bankruptcy would not affect the bond refinancing. The purchasers analyzed the BWL and were impressed with its credit rating and relationship with GM. On motion by Commissioner Cochran, seconded by Commissioner Thomas, the Finance Committee agreed to move the Resolution Authorizing Sale of Refunding Bonds to the Special Board meeting scheduled for June 9, 2009 for further consideration and approval. Action: Carried unanimously. GM Bankruptcy J. Peter Lark provided an update with respect to analyzing the affects of a GM bankruptcy relative to the r)NL. In response to a Commissioner inquiry, Mr. Lark confirmed that the anticipated GM steam termination payment is not reflected in the new budget. There being no further business, the Finance Committee meeting adjourned at 5:20 p.m. Respectfully submitted, Peter W. Kramer, Chair Finance Committee HUMAN RESOURCE COMMITTEE June 23, 2009 The Human Resource Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 5:30 p.m. on Tuesday, June 23, 2009. Human Resource Committee Chairperson Tony DeLuca called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Tony DeLuca, Tracy Thomas and Sandra Zerkle. Commissioner Frank Lain was also present. Absent: Commissioner Peter Kramer Public Comments Regular Board Mtg. July 28,2009 Page 4 of 19 There were no public comments. Approval of Minutes Motion by Commissioner Zerkle, seconded by Commissioner Thomas to approve the Human Resource Committee meeting minutes of July 21, 2008. Action: Carried unanimously. Proposed Evaluation Forms for the General Manager, Corporate Secretary and Internal Auditor The Human Resource Committee reviewed two proposed employee performance appraisal forms for the purpose of utilizing the forms to conduct the board appointees' performance review. The appointee positions include the General Manager, Corporate Secretary and Internal Auditor. Subsequent to discussion and additional clarification the committee agreed to utilize form Option 2 with modifications. The modifications include removing the section entitled, "Developmental Plans" and the word, "strong" with respect to "Noteworthy Strong Areas of Present Performance", and adding a section regarding employee performance goals for the upcoming year. On motion by Commissioner Zerkle, seconded by Commissioner Thomas, the Human Resource Committee recommended the use of Employee Performance Appraisal Form—Option 2 with minor changes and agreed to utilize the schedule included in the packet materials presented by the Chief Financial Officer. Discussion: The committee confirmed with General Manager Lark and Corporate Secretary Jones that the timeline is sufficient for them to complete their evaluations respectively. The committee also noted the possibility of changing the timeline in light of possible scheduling conflicts. In addition, they also discussed the evaluation period for Internal Auditor Perkins. Action: Carried unanimously. On motion by Commissioner Lain, seconded by Commissioner Thomas, the Human Resource Committee recommended that they evaluate the Internal Auditor at his 6-month anniversary. Action: Carried unanimously. Other On motion by Commissioner Lain, seconded by Commissioner Thomas, to excuse the absence of Commissioner Peter Kramer. Action: Carried unanimously. There being no further business, the Human Resource Committee meeting adjourned at 6:20 p.m. FINANCE COMMITTEE July 14, 2009 Regular Board Mtg. July 28,2009 Page 5 of 19 The Finance Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 4:30 p.m. on Tuesday, July 14, 2009. Finance Committee Chairperson Peter Kramer called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Tony DeLuca, Peter Kramer and Tracy Thomas. Alternate committee member Margaret Bossenbery was also present. Also present were: Commissioners Frank Lain, Dennis Louney and Marilyn Plummer. Absent. None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Thomas, seconded by Commissioner DeLuca to approve the Finance Committee meeting minutes of June 9, 2009. Action: Carried unanimously. SAS 114 Communication Douglas Rober, Partner with Plante & Moran (P&M) reviewed the planning process for the audit of the financial statements and related pension plans for the Board of Water and Light(BWL) for fiscal year end 2009. Shaun Krick, Manager of P&M was also present. The BWL audit engagement letter for the Enterprise Fund and retirement plans include the Defined Benefit, Defined Contribution and the Retiree Benefit Plan and Trust. SAS 1"I Communications is a statement of auditing standards that involve communications between the external auditors Plante Moran and the Governing Board. In response to the presentation from Douglas Rober of P&M, referring to required discussion points mentioned on page 12 of the presentation, Commissioner Kramer spoke about the Internal Auditor's involvement in the Audit process. He stated that he would prefer if there were something that needs to be brought to the Committees attention that it be presented during the course of a normal committee meeting or a special committee meeting and not have it be presented to a specific individual but have it be presented to the Finance Committee and that the Board's voice would potentially be through the Internal Auditor as an Auditing Representative of the Board of Commissioners. A complete copy of the BWL Presentation to the Finance Committee regarding the Audit of June 30, 2009 Financial Statements & Related Pension Plans is on file in the Corporate Secretary's office. 10perating Cash Investment Policy Resolution J. Peter Lark introduced the BWL Resolution Authorizing the Adoption of Investment Policy for Operating Cash. General Manager J. Peter Lark introduced Chief Financial Officer, Susan Devon who provided an Regular Board Mtg. July 28,2009 Page 6 of 19 provide new opportunities for the BWL as a result of the recently revised PA 20. Chief Financial Officer Devon stated that the Administration would like to update and make the changes to this policy that would allow the pooling of funds that are now kept separate and that is in the order of efficiencies and administrative fees. On motion by Commissioner Lain, seconded by Commissioner Thomas to approve the proposed resolution for the Operating Cash Investment Policy Resolution and forward it to the full board for consideration and approval. Action: Carried unanimously. Author,L to Invest Operating and Pension Funds J. Peter Lark introduced the BWL Resolution Authorizing the Adoption of Authority to Invest Operating and Pension Funds. General Manager J. Peter Lark stated that under the old Investment Policy, investments would be undertaken by the General Manager, Chief Financial Officer and Manager of Finance & Planning. This new Resolution would allow the General Manager and the Chief Financial Officer to delegate the responsibility to someone else in the absence of the Manager of Finance and Planning. On motion by Commissioner Lain, seconded by Commissioner DeLuca to approve the proposed resolution for the Authority to Invest Operating and Pension Funds and forward it to the full board for consideration and approval. Action: Carried unanimously. Purchasing Policy Reporting Update General Manager J. Peter Lark provided an update to the Purchase Policy. General Manager Lark stated that the Administration was in the process of updating this policy and making it more clear and it vvill be brought to the Boards attention at a later date. A number of areas that require reporting to this Board are highlighted in the packet. In response to General Manager Lark's update, Commissioner Kramer stated that there has been a lot of discussions in City Management regarding the Purchasing Policy and local participation of trades and contractors and was curious how the Board was considering addressing that in the new policy. Commissioner Kramer stated that it is important at this time to do what we can for the local economy through businesses and wants to make sure that the Board's Purchasing Policy supports that in every way possible General Manager Lark stated as a general rule the Board tries to support local businesses anyway. 2009A Bond Refunding General Manager J. Peter Lark introduced Sue Devon, Chief Financial Officer to speak about the Board of Water& Light Bonds related to General Motors. Sue Devon reported that there was a Bond sale on June 22, 2009 and that sale resulted in a Regular Board Mtg. July 28,2009 Page 7 of 19 supporting the Central Utility Complex (CUC) and that the 7.7% rate has been reduced to 5.34%. The maturity date is 2016 and the savings as a result of the issuance of the new bonds is approximately$4 Million over the life of the bond. GM Bankruptcy Update General Manager Lark spoke about the CUC Bond that stated General Motors has been making payments. General Manager Lark stated that he has in his possession a check for $3 million and that was a security deposit that General Motors made to us related to utility services. One of the requirements of the new General Motors is that they keep everything current so no problems are expected with the CUC payments. General Manager Lark stated that the Board of Water & Light closed their books around July 10th, and General Motors did not pay their $1.3 million utility bill to and that affected the budget, but we still managed not to tap in to reserves. General Manager Lark stated that the new General Motors requires them to stay current with payments and the Administration has solid reason to believe future payments will be made. With there being no further business, the Finance Committee meeting adjourned at 4:55 p.m. Respectfully submitted, Peter W. Kramer, Chair Finance Committee COMMITTEE OF THE WHOLE July 14, 2009 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 5:35 p.m. on Tuesday, July 14, 2009. Committee of the Whole Chairperson Sandra Zerkle called the meeting to order and asked the secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Tony DeLuca, Peter Kramer, Frank Lain, Dennis Louney, Marilyn Plummer, Tracy Thomas and Sandra Zerkle. Absent None Public Comments There were no public comments. Committee of the Whole Chair Sandra Zerkle stated that with new Board Members in attendance she would like for all Board Members to introduce themselves. Approval of Minutes Motion by Commissioner Lain, seconded by Commissioner Thomas to approve the Committee of the Whole meeting minutes of April 14, 2009 as amended. Action: Carried unanimously. Regular Board Mtg. July 28,2009 Page 8 of 19 Aurelius Road Lime Field Updat General Manager J. Peter Lark reported that there is no ash at this field. This field in question is located on Aurelius Road. The Board of Water& Light removes the lime from the water and makes it into lime cakes and then it is hauled away to landfills. There is no danger from the lime field, it's about 20-30 ft deep and it is walled off so the lime cannot escape. George Stojic, Executive Director of Strategic Planning for the Board of Water & Light, stated that there has been an geo-technical and environmental study done at the site and according to the study the site looks stable; the walls around it looks stable. Their only suggestion was to add some sensors to it to make sure that it doesn't move. If it does move, the sensors would alert us ahead of time and allow us to take remedial action. That's just a precaution they recommended. Officer Selection Committee of the Whole Chair Zerkle stated that she has been through a couple of Officer Selection processes and wanted to have at least a minimal discussion. There was discussion regarding who was interested in becoming the next Chair of the Board. The nominating process was visited briefly. Commissioner Kramer stated that in the past if there were ever any issues with this matter or process it would be brought back to Committee of the Whole for discussion. With there being no further business, the meeting adjourned at 6:00 p.m. Respectfully submitted Sandra Zerkle, Chair Committee of the Whole NOMINATING COMMITTEE MINUTES July 23, 2009 The Nominating Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 4:30 p.m. on Thursday, July 23, 2009. Nominating Committee Chair Pete Kramer called the meeting to order and asked the interim secretary to call the roll. The following committee members were present: Commissioners Marge Bossenbery, Tony DeLuca, Pete Kramer and Tracy Thomas; Alternates present were Commissioners Dennis Louney and Marilyn Plummer. Absent. None Public Comment There were no public comments. Nominate Board Officer Candidates for FY 2009 The Nominating Committee met to review the Commissioner survey responses for consideration of board officer nominations for fiscal year 2010. Upon discussing and reviewing the submitted survey forms the Nominating Committee recommended a slate of officers for fiscal year 2010. Regular Board Mtg. July 28,2009 Page 9 of 19 On Motion by Commissioner Bossenbery, seconded by Commissioner Thomas, the Nominating Committee recommends the follow slate of officer candidates for Fiscal Year 2009-2010: Chair: Sandra Zerkle Vice chair: Frank Lain Action: Carried unanimously, Discussion: Commissioner Louney questioned if there was any type of procedure set forth in regards to serving in a leadership role. He stated that he would like to have some discussion in future meetings to examine the process. Commissioner Kramer stated that the Board would need to address the issue of the Past Chair position since the only purpose of the past chair is to fill in if the Chair and Vice Chair are not present at meetings. He stated that is a formality that needs to be undertaken if Commissioner Zerkle and Commissioner Lain are approved as the Chair and Vice Chair. There being no further business, the meeting adjourned at 4:55 p.m. Respectfully submitted, Peter Kramer Nominating Committee HUMAN RESOURCE COMMITTEE MINUTES July 23, 2009 The Human Resource Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 5:30 p.m. on Thursday, July 23, 2009. Human Resource Committee Chair Tony DeLuca called the meeting to order and asked the secretary to call the roll. The following committee members were present: Commissioners Tony DeLua, Pete Kramer, Tracy Thomas, Sandra Zerkle. Also present were Board Members Marge Bossenbery, Frank Lain, Dennis Louney and Marilyn Plummer. Absent: None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Kramer, seconded by Commissioner Lain to approve the minutes of the Human Resource Committee meeting held June 23, 2009. Action: Carried unanimously. FY 2009 Board Appointee Performance Review for General Manager Lark Regular Board Mtg. July 28,2009 Page 10 of 19 General Manager Performance Review General Manager J. Peter Lark, requested a closed session for the purpose of receiving his contractual year-end performance evaluation as permitted by Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Lain, seconded by Commissioner Kramer to go into closed session. Action: Carried unanimously. The Human Resource Committee meeting went in to closed session at 5:40 p.m. Motion by Commissioner Thomas, seconded by Commissioner Bossenbery that the Human Resource Committee return to open session, Action: Carried unanimously. The Human Resource Committee meeting reconvened in open session at 6:30 p.m. Upon conclusion of the closed session, the Human Resource Committee took the following action: On motion by Commissioner Lain and seconded by Commissioner Kramer to extend a three (3) year contract to BLW General Manager, J. Peter Lark with a an annual performance evaluation, Action- Carried unanimously. Discussion: Commissioner Zerkle questioned what the process would be for replacing the former Corporate Secretary Rhonda Jones and Commissioner DeLuca stated that he would be meeting with Human Resource Director Michael Flowers soon to move forward with that process. There being no further business the meeting adjourned at 6:35 p.m. Respectfully submitted, Tony DeLuca, Chair Human Resource Committee Regular Board Mtg. July 28,2009 Page 11 of 19 MANAGER'S RECOMMENDATIONS esolution 2009-07- Adoption of Investment Policy for Operating Cash WHEREAS, the BWL's Operating Cash Investment Policy was last approved by the Board 17 years ago (Resolution 92-2-1); and WHEREAS, Public Act 20 of 1943, Investment of Surplus Funds of Political Subdivisions, was recently amended to allow new investment options for the BWL; and WHEREAS, the Government Finance Officers Association (GFOA) provides guidance regarding investment policy recommendations; and WHEREAS, the Staff has incorporated the changes in Public Act 20 and the recommendations of the GFOA in the proposed Investment Policy of Operating Cash; RESOLVED, that the Finance Committee approve the proposed attached Investment Policy for Operating Cash and forward the policy to the Board for adoption. -------------------- Motion by Commissioner Kramer, seconded by Commissioner Bossenbery, to approve the resolution entitled, "Investment Policy for Operating Cash". Action: Carried unanimously. WATER&LIGHT Nometown People. Hometown Power. Lansing Board of Water and Light Investment Policy Statement For Operating Cash The purpose of this policy is to provide guidelines which govern the investment of Lansing Board of Water and Light operating funds. I. Governing Authority The investment program shall be operated in conformance with federal, state, and other legal requirements, including the Lansing City Charter, the State of Michigan [Investment Act 20 of 1943, as amended and Investment and The Revenue Bond Act 94 of 1933, as amended], and current Lansinc Board of Water and Light Bond Resolutions. 11 e,.--- Regular Board Mtg. July 28,2009 Page 12 of 19 This policy applies to the investment of all funds of the Lansing Board of Water and Light (hereinafter referred to as the LBWL)excluding the investment of employees' retirement funds. Proceeds from certain bond issues and related funds are also subject to the restrictions of applicable bond covenants. 1. Pooling of Funds Except for the balance in certain restricted funds, the LBWL may consolidate balances from all funds to maximize investment earnings. Investment income will be allocated to the various funds based on their respective participation. III. Gen?ral Objectives The primary objectives, in priority order, of investment activities shall be safety, liquidity, and yield: 1. Safety Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective will be to mitigate credit risk and interest rate risk. a. Credit Risk The LBWL will minimize credit risk, which is the risk of loss due to the failure of the security issuer or backer to make payment, by: • Limiting investments to the types of securities referred to in Section VI of this Investment Policy • Diversifying the investment portfolio so that potential losses on individual securities will be minimized. b. Interest Rate Risk The LBWL will minimize the interest rate risk, which is the risk that the market value of securities in the portfolio will fall due to changes in market interest rates, by: • Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity. • Investing operating funds primarily in shorter-term securities, money market mutual funds, or similar investment pools. Regular Board Mtg. July 28,2009 Page 13 of 19 1. Liquidity The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by structuring the portfolio so that securities mature concurrent with cash needs to meet anticipated demands. Furthermore, since all possible cash demands cannot be anticipated, the portfolio should consist largely of securities with active secondary or resale markets. A portion of the portfolio also may be placed in money market mutual funds or local government investment pools which offer same-day liquidity. 2. Yield The investment portfolio shall be designed with the objective of attaining a market rate of return taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. The core of investments must be limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. IV. Standards of Care 'I. Prudence The standard of prudence to be used by investment officials (the Chief Financial Officer and the Manager of Finance and Planning) shall be the "prudent person" standard and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with this investment policy and exercising due diligence shall be relieved of personal responsibility for investment losses. The "prudent person" standard states that, "Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived." 2. Ethics and Conflicts of Interest Investment officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions. Employees and investment officers shall disclose any material interests in financial institutions with which they conduct business. They shall further disclose any personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and investment officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the LBWL. 3. Delegation of Authority Authority to invest Operating Funds is granted to the General Manager, Chief Financial Officer and the Manager of Finance and Planning. Additionally, the Chief Financial Officer Regular Board Mtg. July 28,2009 Page 14 of 19 and Planning. This authority is derived from the LBWL Policy 7-01 "Authority to Invest Operating and Pension Funds" as amended. No person may engage in an investment transaction except as provided in LBWL Policy 7-01 as amended. V. Safekeeping and Custody 1. Safekeeping Securities will be held by independent third-party custodians selected by the LBWL. The safekeeping institution shall annually provide a copy of their most recent report on internal controls (Statement of Auditing Standards No. 70, or SAS 70 or acceptable alternative). VI. Suitable and Authorized Investments 1. Investment Types Investments shall be in conformance with Section 1 of Public Act 20 of 1943 as amended from time to time. With respect to mutual funds, authorization to invest is limited to securities whose intention is to maintain a net asset value of$1 per share. VII. Investment Parameters 1. Diversification The investments shall be diversified by: • Limiting investments to avoid over concentration in securities from a specific issuer or business sector (excluding U.S. Treasury securities). • Investing in securities with varying maturities, and • Continuously investing a portion of the portfolio in readily available funds such as local government investment pools (LGIPs), money market funds or overnight repurchase agreements. 2. Maximum Maturities To the extent possible, the LBWL shall attempt to match its investments with anticipated :ash flow requirements. Unless matched to a specific cash flow, the LBWL will not directly invest in securities maturing more than five (5) years from the date of purchase. Vlll. Reporting 1. Methods The Chief Financial Officer shall provide quarterly a written report to the Board of Commissioners of the LBWL concerning the investment of the Operating Funds. IX. The Board of Water and Light Operating Funds and Accounts Regular Board Mtg. July 28,2009 Page 15 of 19 1. Restricted by Bond Resolution: a. Bond and Interest Redemption Fund This fund accumulates and pays bond interest and principal when due. b. Bond Reserve Account This account shall be used solely for the payment of the principal of, redemption premium, if any, and interest on bonds as to which there would otherwise be a default. c. Operation and Maintenance Fund This fund must include a sum sufficient to provide for the payment during the succeeding period of the next month's expenses of administration and operation of the System, including such current expenses for the maintenance thereof as may be necessary to preserve the same in good repair and working order. d. Construction Funds These funds include bond proceeds earmarked for specific projects and spent only on those projects. e. Rebate Fund This fund shall be used to hold an amount sufficient to enable the LBWL to rebate excess investment earnings to the federal government. f. Receiving Fund This fund is required by bond resolution. All revenues of the LBWL are credited to this fund and are pledged for the purpose of meeting the requirements of the aforementioned restricted funds and accounts. 2. Designated by the Board of Commissioners of the LBWL: a. Coal Inventory Account This account is used to overstock coal and prevent shortage in anticipation of a coal or freight strike. b. Uninsured Losses Account This account is used to cover uninsured losses in environmental liability, property damage self insurance and workers compensation self insurance. c. Water Facilities Account Regular Board Mtg. July 28,2009 Page 16 of 19 This account was funded with proceeds received from Delta and Lansing townships for future water system expansion. 3. Unrestricted and Undesignated a. Any revenue remaining in the receiving fund after satisfying all requirements of the restricted and designated funds and accounts shall be deemed to be monies that may be used for such purposes as the LBWL deems to be in its best interest. esolution Authority to to Invest Operating and Pension Funds RESOLVED, that Board of Water and Light Policy 7-01 "Authority to Invest Operating and Pension Funds" is hereby amended as follows: RESOLVED, that the General Manager and the Chief Financial Officer shall be authorized to establish all necessary cash and investment accounts and to enter into all necessary transactions and agreements required to provide for the investment of operating and pension funds in the name of the Board of Water and Light (BWL), in such securities as permitted by law. Allowable transactions include, but are not limited to, the purchase, sale, and endorsement for transfer of certificates representing said securities. All transactions must also be in compliance with the then current i3WL Pension and Operating Fund Investment Policies. RESOLVED, that the General Manager and the Chief Financial Officer delegate full investment authority to the Manager of Finance and Planning. RESOLVED, that the General Manager and/or the Chief Financial Officer may delegate full or limited investment authority to other specified BWL staff. The General Manager and/or Chief Financial Officer shall document the extent of authority delegated as well as the specific BWL staff receiving said authority. Only employees with actual, documented authority may be permitted to execute investment activities. The Revenue Bond Act of 1933 (PA 94 of 1933, MSA 5.2731), as amended, Act 20 of 1943, as amended, and BWL Bond Resolution 89-10-3 govern and restrict the investment of BWL operating funds. Pension funds are governed by the Public Retirement System Investment Act (MCL 38.1132 et seq.), as amended. This resolution supersedes Resolution 2007-9-12. -------------------- Motion by Commissioner Kramer, seconded by Commissioner Zerkle, to approve the resolution entitled "Authority to Invest Operating and Pension Funds" Action: Carried unanimously. Regular Board Mtg. July 28,2009 Page 17 of 19 UNFINISHED BUSINESS None. NEW BUSINESS The Nominating Committee recommended a slate of officers for the 2009-2010 Fiscal Year. The slate of officers included Commissioner Zerkle as the Chair and Commissioner Lain as the Vice Chair. Chairman Lain asked if there were any nominations from the floor and with no nominations from the floor, the nominations were closed. Moved by Commissioner Kramer and Supported by Commissioner Bossenbery to approve the slate of officers as recommended by the Nominating Committee with Commissioner Zerkle as the Chair and Commissioner Lain as the Vice Chair. Action: Carried unanimously. -------------------- RESOLUTIONS esolution 2009.07 Reappointment of the Charter Position of Director and General Manager The Board's Rules of Administrative Procedures and the Lansing City Charter specify that the Board is to appoint a Director and General Manager, Internal Auditor, and Corporate Secretary. RESOLVED, That the Board of Commissioners hereby reappoints the following individual to the Chartei position of Director and General Manager for a period of three years (July 1, 2009 —June 30, 2012): J. Peter Lark, Director and General Manager FURTHER RESOLVED, That J. Peter Lark shall receive an annual performance evaluation. Moved by Commissioner Kramer and Supported by Commissioner Bossenbery to reappoint J. Peter Lark to the Charter position of Director and General Manager. Action: Carried unanimously. -------------------- Commissioner Lain thanked Mr. Lark for all of his work and stated that it has truly been a pleasure to work with him and he could not be more excited about Mr. Lark remaining at the Board of Water & Light. -------------------- Regular Board Mtg. July 28,2009 Page 18 of 19 MANAGER'S REMARKS General Manager Lark stated that just recently in Mt. Pleasant there was a water test taste off competition for the best water in Mid-Michigan and the Board of Water & Light was the winner of the Regional Award. General Manager Lark introduced Tim Hyde, Manager of Water Production and stated that he was the person who is most responsible for the Board of Water& Light receiving this award. He asked Mr. Hyde to stand to be recognized. COMMISSIONERS' REMARKS Commissioner Kramer thanked Commissioner Lain for his service as Chair. He stated that there were s(_veral item on the Board of Commissioners agenda this year and Commissioner Lain took that leadership role of someone standing up and taking responsibility for the Board's collective actions and did a wonderful job. He said that he was proud to serve with Commissioner Lain in the leadership capacity and looks forward to next year's leadership under Commissioner Zerkle. Commissioner Bossenbery spoke about her office taking part in green initiatives and participating in a water taste-testing event that compared bottled water and city water. She said only 4 people could tell the difference. This is a part of moving towards not having bottled water at any of their office meetings. General Manager Lark stated that the Board of Water& Light's water is considered quite excellent and has finished in the top 15 in taste tests nationally. He also stated that it has been a pleasure to work with Commissioner Lain and that he has been an outstanding leader. He congratulated Commissioner Zerkle on becoming the new Chair. Commissioner Zerkle stated that it has been a pleasure to work with Commissioner Lain and that she appreciates the Commissioners support for her in the upcoming year. She congratulated General Manager Lark on a successful Chili Cook-Off and the amount of money that was raised. Commissioner Lain stated that since he has been chosen as the Vice Chair the Board needed to addres>: the position of Past Chair. -------------------- Moved by Commissioner Lain and seconded by Commissioner Bossenbery to have Commissioner Kramer assume the duties of the Past Chair. Action: Carried unanimously. -------------------- Commissioner Lain spoke about his term as the Chair of the Board and said that he had fun and has enjoyed working with all of the Commissioners as well as the Administration and J. Peter Lark. He stated that General Manager Lark has put together a marvelous team and everyone has been extremely supportive. EXCUSED ABSENCE On Motion by Commissioner Plummer, seconded by Commissioner Zerkle to excuse the absence of Commissioner Tracy Thomas. Regular Board Mtg. July 28,2009 Page 19 of 19 Action: Carried unanimously. PUBLIC COMMENTS There were no public comments. ADJOURNMENT On motion by Commissioner DeLuca, seconded by Commissioner Kramer, the meeting adjourned at 5:51 p.m. M. Denise Griffin, Interim Corporate Secretary Filed with Lansing City Clerk August 4, 2009 Preliminary—Subject to Board Approval on September 22, 2009 MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT Tuesday,July 28,2009 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Present: Commissioners Margaret Bossenbery, Tony DeLuca, Peter Kramer, Frank Lain, Dennis Louney, Marilyn Plummer and Sandra Zerkle. Absent: Commissioner Tracy Thomas. The Interim Corporate Secretary declared a quorum present. Chairperson Lain called the meeting to order at 5:35 p.m. APPROVAL OF MINUTES Motion by Commissioner Kramer, seconded by Commissioner Louney to approve the minutes of the Regular Board Meeting of May 26, 2009 and the Special Board Meeting of June 9, 2009. Carried unanimously. PUBLIC COMMENTS MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There were no public comments. COMMUNICATIONS There were no Communications. Regular Board Mtg. July 28,2009 Page 2 of 19 COMMITTEE REPORTS FINANCE COMMITTEE June 9, 2009 The Finance Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 4:30 p.m. on Tuesday, June 9, 2009. Finance Committee Chairperson Peter Kramer called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Robert Cochran, Tony DeLuca, Peter Kramer and Tracy Thomas. Alternate committee member Margaret Bossenbery (arrived 5:14 p.m.)was present in addition to Commissioner Sandra Zerkle(arrived 5:20 p.m.). Absent: None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner DeLuca, seconded by Commissioner Thomas to approve the Finance Committee meeting minutes of May 12, 2009 as amended. Action: Carried unanimously. DB/VEBA U dat First Vice President Marie Vanerian and Associate Financial Advisor Michael Muirhead of Merrill Lynch Institutional Consulting Group provided an update with respect to the Lansing Board of Water and Light's(BWL) Defined Benefit(DB) and Retiree Benefit Plan and Trust(VEBA). The update included a brief overview of the total portfolio performance summary report and review of handouts entitled, "Time Weighted Rate of Return by Account"for DB and VEBA and the 10-year Moving Average of United States(U.S.) Large Capitalization Common Stock". The Asset Information and Measurement Service reports for DB and VEBA reflect the transition from the old to the new reporting. The Time Weighted Rate of Return by Account reports reflects the performance of the new asset managers. Ms. Vanerian expressed that all current federal loan programs are designed to infuse money into the system. As a result, markets have responded and banks have brought credit to the market. Anticipated market issues include inflation, overcapacity in the world market and devaluation of the U.S. dollar. In response to a Commissioner inquiry regarding next quarter results, Merrill Lynch noted that typically a test occurs when there is a significant rise in the market to determine if the markets can substance the increase. The economy must continue to receive good news for the market to continue to improve, Finance Quarterly Update General Manager J. Peter Lark provided a brief quarterly update with respect to the Financial Reports for month ending March 31, 2009. The Financial Report also included information pertaining to the Balanced Scorecard and Financial Statements. Management is continuing with its cost cutting efforts and has exceeded its target to decrease Operations and Maintenance costs. Barring any unexpected issues for fiscal yearend, the BWL anticipates that it will not cut into cash Regular Board Mtg. July 28,2009 Page 3 of 19 reserves for fiscal year 2009. The fiscal year 2010 budget proposes a$2 million cut into reserves and does not include any future rate increases, as management will take a wait and see approach with respect to proposed rate changes for the new fiscal period. Bond Resolution J. Peter Lark introduced the BWL Resolution Authorizing the Sale of Refunding Bonds. Bond Advisor Warren Creamer and Bond Attorney Bill Danhof were available to answer questions with respect to bond refinancing and the proposed resolution. The Series 2009A bonds (previously entitled, "Series 19996")were originally used to develop the Central Utilities Complex at the General Motors(GM) Lansing Grand River Facility. The bond issuance involves the private placement of the bonds to the bond purchaser instead of sale to an underwriter. Refinancing the bonds reduced the interest rate from 7.5%to 5.34% and lowered the BWL's exposure by approximately$3.9 million. The placement agent is Citibank and the bond purchaser is Bank of America N.A. In response to a Commissioner inquiry, it was advised that a GM bankruptcy would not affect the bond refinancing. The purchasers analyzed the BWL and were impressed with its credit rating and relationship with GM. On motion by Commissioner Cochran, seconded by Commissioner Thomas, the Finance Committee agreed to move the Resolution Authorizing Sale of Refunding Bonds to the Special Board meeting scheduled for June 9, 2009 for further consideration and approval. Action: Carried unanimously. GM Bankruptcy J. Peter Lark provided an update with respect to analyzing the affects of a GM bankruptcy relative to the BWL. In response to a Commissioner inquiry, Mr. Lark confirmed that the anticipated GM steam termination payment is not reflected in the new budget. There being no further business, the Finance Committee meeting adjourned at 5:20 p.m. Respectfully submitted, Peter W. Kramer, Chair Finance Committee HUMAN RESOURCE COMMITTEE June 23, 2009 The Human Resource Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 5:30 p.m. on Tuesday, June 23, 2009. Human Resource Committee Chairperson Tony DeLuca called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Tony DeLuca, Tracy Thomas and Sandra Zerkle. Commissioner Frank Lain was also present. Absent: Commissioner Peter Kramer Public Comments Regular Board Mtg. July 28,2009 Page 4 of 19 There were no public comments. Approval of Minutes Motion by Commissioner Zerkle, seconded by Commissioner Thomas to approve the Human Resource Committee meeting minutes of July 21, 2008. Action: Carried unanimously. Proposed Evaluation Forms for the General Manager, Corporate Secretary and Internal Auditor The Human Resource Committee reviewed two proposed employee performance appraisal forms for the purpose of utilizing the forms to conduct the board appointees' performance review. The appointee positions include the General Manager, Corporate Secretary and Internal Auditor. Subsequent to discussion and additional clarification the committee agreed to utilize form Option 2 with modifications. The modifications include removing the section entitled, "Developmental Plans" and the word, "strong"with respect to"Noteworthy Strong Areas of Present Performance", and adding a section regarding employee performance goals for the upcoming year. On motion by Commissioner Zerkle, seconded by Commissioner Thomas, the Human Resource Committee recommended the use of Employee Performance Appraisal Form—Option 2 with minor changes and agreed to utilize the schedule included in the packet materials presented by the Chief Financial Officer. Discussion: The committee confirmed with General Manager Lark and Corporate Secretary Jones that the timeline is sufficient for them to complete their evaluations respectively. The committee also noted the possibility of changing the timeline in light of possible scheduling conflicts. In addition, they also discussed the evaluation period for Internal Auditor Perkins. Action: Carried unanimously. On motion by Commissioner Lain, seconded by Commissioner Thomas,the Human Resource Committee recommended that they evaluate the Internal Auditor at his 6-month anniversary. Action: Carried unanimously. Other On motion by Commissioner Lain, seconded by Commissioner Thomas, to excuse the absence of Commissioner Peter Kramer. Action: Carried unanimously. There being no further business, the Human Resource Committee meeting adjourned at 6:20 p.m. FINANCE COMMITTEE July 14, 2009 Regular Board Mtg. July 28,2009 Page 5 of 19 The Finance Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 4:30 p.m. on Tuesday, July 14, 2009. Finance Committee Chairperson Peter Kramer called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Tony DeLuca, Peter Kramer and Tracy Thomas. Alternate committee member Margaret Bossenbery was also present. Also present were: Commissioners Frank Lain, Dennis Louney and Marilyn Plummer. Absent: None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Thomas, seconded by Commissioner DeLuca to approve the Finance Committee meeting minutes of June 9, 2009. Action: Carried unanimously. SAS 114 Communication Douglas Rober, Partner with Plante& Moran (P&M) reviewed the planning process for the audit of the financial statements and related pension plans for the Board of Water and Light(BWL)for fiscal year end 2009. Shaun Krick, Manager of P&M was also present. The BWL audit engagement letter for the Enterprise Fund and retirement plans include the Defined Benefit, Defined Contribution and the Retiree Benefit Plan and Trust. SAS 114 Communications is a statement of auditing standards that involve communications between the external auditors Plante Moran and the Governing Board. In response to the presentation from Douglas Rober of P&M, referring to required discussion points mentioned on page 12 of the presentation, Commissioner Kramer spoke about the Internal Auditor's involvement in the Audit process. He stated that he would prefer if there were something that needs to be brought to the Committees attention that it be presented during the course of a normal committee meeting or a special committee meeting and not have it be presented to a specific individual but have it be presented to the Finance Committee and that the Board's voice would potentially be through the Internal Auditor as an Auditing Representative of the Board of Commissioners. A complete copy of the BWL Presentation to the Finance Committee regarding the Audit of June 30, 2009 Financial Statements & Related Pension Plans is on file in the Corporate Secretary's office. Operating Cash Investment Polic Resolufio J. Peter Lark introduced the BWL Resolution Authorizing the Adoption of Investment Policy for Operating Cash. General Manager J. Peter Lark introduced Chief Financial Officer, Susan Devon who provided an update with respect to the Investment Policy for Operating Cash. This Investment Policy will Regular Board Mtg. July 28,2009 Page 6 of 19 provide new opportunities for the BWL as a result of the recently revised PA 20. Chief Financial Officer Devon stated that the Administration would like to update and make the changes to this policy that would allow the pooling of funds that are now kept separate and that is in the order of efficiencies and administrative fees. On motion by Commissioner Lain, seconded by Commissioner Thomas to approve the proposed resolution for the Operating Cash Investment Policy Resolution and forward it to the full board for consideration and approval. Action: Carried unanimously. Authority to Invest Operating and Pension Funds J. Peter Lark introduced the BWL Resolution Authorizing the Adoption of Authority to Invest Operating and Pension Funds. General Manager J. Peter Lark stated that under the old Investment Policy, investments would be undertaken by the General Manager, Chief Financial Officer and Manager of Finance & Planning. This new Resolution would allow the General Manager and the Chief Financial Officer to delegate the responsibility to someone else in the absence of the Manager of Finance and Planning. On motion by Commissioner Lain, seconded by Commissioner DeLuca to approve the proposed resolution for the Authority to Invest Operating and Pension Funds and forward it to the full board for consideration and approval. Action: Carried unanimously. Purchasing Policy Reporting Update General Manager J. Peter Lark provided an update to the Purchase Policy. General Manager Lark stated that the Administration was in the process of updating this policy and making it more clear and it will be brought to the Boards attention at a later date. A number of areas that require reporting to this Board are highlighted in the packet. In response to General Manager Lark's update, Commissioner Kramer stated that there has been a lot of discussions in City Management regarding the Purchasing Policy and local participation of trades and contractors and was curious how the Board was considering addressing that in the new policy. Commissioner Kramer stated that it is important at this time to do what we can for the local economy through businesses and wants to make sure that the Board's Purchasing Policy supports that in every way possible. General Manager Lark stated as a general rule the Board tries to support local businesses anyway. 2009A Bond Refundinq General Manager J. Peter Lark introduced Sue Devon, Chief Financial Officer to speak about the Board of Water& Light Bonds related to General Motors. Sue Devon reported that there was a Bond sale on June 22, 2009 and that sale resulted in a reduction in the interest rate. She stated that these are fully taxable Bonds because they are Regular Board Mtg. July 28,2009 Page 7 of 19 supporting the Central Utility Complex(CUC) and that the 7.7% rate has been reduced to 5.34%. The maturity date is 2016 and the savings as a result of the issuance of the new bonds is approximately$4 Million over the life of the bond. GM Bankruptcy Update General Manager Lark spoke about the CUC Bond that stated General Motors has been making payments. General Manager Lark stated that he has in his possession a check for$3 million and that was a security deposit that General Motors made to us related to utility services. One of the requirements of the new General Motors is that they keep everything current so no problems are expected with the CUC payments. General Manager Lark stated that the Board of Water& Light closed their books around July 10th, and General Motors did not pay their$1.3 million utility bill to and that affected the budget, but we still managed not to tap in to reserves. General Manager Lark stated that the new General Motors requires them to stay current with payments and the Administration has solid reason to believe future payments will be made. With there being no further business, the Finance Committee meeting adjourned at 4:55 p.m. Respectfully submitted, Peter W. Kramer, Chair Finance Committee COMMITTEE OF THE WHOLE July 14, 2009 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 5:35 p.m. on Tuesday, July 14, 2009. Committee of the Whole Chairperson Sandra Zerkle called the meeting to order and asked the secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Tony DeLuca, Peter Kramer, Frank Lain, Dennis Louney, Marilyn Plummer, Tracy Thomas and Sandra Zerkle. Absent: None Public Comments There were no public comments. Committee of the Whole Chair Sandra Zerkle stated that with new Board Members in attendance she would like for all Board Members to introduce themselves. Approval of Minutes Motion by Commissioner Lain, seconded by Commissioner Thomas to approve the Committee of the Whole meeting minutes of April 14, 2009 as amended. Action: Carried unanimously. Regular Board Mtg. July 28,2009 Page 8 of 19 Aurelius Road Lime Field U dat General Manager J. Peter Lark reported that there is no ash at this field. This field in question is located on Aurelius Road. The Board of Water& Light removes the lime from the water and makes it into lime cakes and then it is hauled away to landfills. There is no danger from the lime field, it's about 20-30 ft deep and it is walled off so the lime cannot escape. George Stojic, Executive Director of Strategic Planning for the Board of Water& Light, stated that there has been an geo-technical and environmental study done at the site and according to the study the site looks stable; the walls around it looks stable. Their only suggestion was to add some sensors to it to make sure that it doesn't move. If it does move, the sensors would alert us ahead of time and allow us to take remedial action. That's just a precaution they recommended. Officer Selectio Committee of the Whole Chair Zerkle stated that she has been through a couple of Officer Selection processes and wanted to have at least a minimal discussion. There was discussion regarding who was interested in becoming the next Chair of the Board. The nominating process was visited briefly. Commissioner Kramer stated that in the past if there were ever any issues with this matter or process it would be brought back to Committee of the Whole for discussion. With there being no further business, the meeting adjourned at 6:00 p.m. Respectfully submitted Sandra Zerkle, Chair Committee of the Whole NOMINATING COMMITTEE MINUTES July 23, 2009 The Nominating Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 4:30 p.m. on Thursday, July 23, 2009. Nominating Committee Chair Pete Kramer called the meeting to order and asked the interim secretary to call the roll. The following committee members were present: Commissioners Marge Bossenbery, Tony DeLuca, Pete Kramer and Tracy Thomas;Alternates present were Commissioners Dennis Louney and Marilyn Plummer. Absent: None Public Comment There were no public comments. Nominate Board Officer Candidates for FY 2009 The Nominating Committee met to review the Commissioner survey responses for consideration of board officer nominations for fiscal year 2010. Upon discussing and reviewing the submitted survey forms the Nominating Committee recommended a slate of officers for fiscal year 2010. Regular Board Mtg. July 28,2009 Page 9 of 19 On Motion by Commissioner Bossenbery, seconded by Commissioner Thomas,the Nominating Committee recommends the follow slate of officer candidates for Fiscal Year 2009-2010: Chair: Sandra Zerkle Vice chair: Frank Lain Action: Carried unanimously. Discussion: Commissioner Louney questioned if there was any type of procedure set forth in regards to serving in a leadership role. He stated that he would like to have some discussion in future meetings to examine the process. Commissioner Kramer stated that the Board would need to address the issue of the Past Chair position since the only purpose of the past chair is to fill in if the Chair and Vice Chair are not present at meetings. He stated that is a formality that needs to be undertaken if Commissioner Zerkle and Commissioner Lain are approved as the Chair and Vice Chair.- There being no further business, the meeting adjourned at 4:55 p.m. Respectfully submitted, Peter Kramer Nominating Committee HUMAN RESOURCE COMMITTEE MINUTES July 23, 2009 The Human Resource Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 5:30 p.m. on Thursday, July 23, 2009. Human Resource Committee Chair Tony DeLuca called the meeting to order and asked the secretary to call the roll. The following committee members were present: Commissioners Tony DeLua, Pete Kramer, Tracy Thomas, Sandra Zerkle. Also present were Board Members Marge Bossenbery, Frank Lain, Dennis Louney and Marilyn Plummer. Absent: None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Kramer, seconded by Commissioner Lain to approve the minutes of the Human Resource Committee meeting held June 23, 2009. Action: Carried unanimously. FY 2009 Board Appointee Performance Review for General Manager Lark General Manager Performance Review Regular Board Mtg. July 28,2009 Page 10 of 19 General Manager J. Peter Lark, requested a closed session for the purpose of receiving his contractual year-end performance evaluation as permitted by Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Lain, seconded by Commissioner Kramer to go into closed session. Action: Carried unanimously. The Human Resource Committee meeting went in to closed session at 5:40 p.m. Motion by Commissioner Thomas, seconded by Commissioner Bossenbery that the Human Resource Committee return to open session. Action: Carried unanimously. The Human Resource Committee meeting reconvened in open session at 6.30 p.m. Upon conclusion of the closed session, the Human Resource Committee took the following action: On motion by Commissioner Lain and seconded by Commissioner Kramer to extend a three(3) year contract to BLW General Manager, J. Peter Lark with a an annual performance evaluation. Action: Carried unanimously. Discussion: Commissioner Zerkle questioned what the process would be for replacing the former Corporate Secretary Rhonda Jones and Commissioner DeLuca stated that he would be meeting with Human Resource Director Michael Flowers soon to move forward with that process. There being no further business the meeting adjourned at 6:35 p.m. Respectfully submitted, Tony DeLuca, Chair Human Resource Committee Regular Board Mtg. July 28,2009 Page 11 of 19 MANAGER'S RECOMMENDATIONS Resolution 2009-07-9 Adoption of Investment Policy for Operating Cash WHEREAS, the BWL's Operating Cash Investment Policy was last approved by the Board 17 years ago(Resolution 92-2-1); and WHEREAS, Public Act 20 of 1943, Investment of Surplus Funds of Political Subdivisions,was recently amended to allow new investment options for the BWL; and WHEREAS, the Government Finance Officers Association (GFOA) provides guidance regarding investment policy recommendations; and WHEREAS, the Staff has incorporated the changes in Public Act 20 and the recommendations of the GFOA in the proposed Investment Policy of Operating Cash; RESOLVED, that the Finance Committee approve the proposed attached Investment Policy for Operating Cash and forward the policy to the Board for adoption. -------------------- Motion by Commissioner Kramer, seconded by Commissioner Bossenbery, to approve the resolution entitled, "Investment Policy for Operating Cash". Action: Carried unanimously. WATER&LIGHT Hometown People. Hometown Power. Lansing Board of Water and Light Investment Policy Statement For Operating Cash The purpose of this policy is to provide guidelines which govern the investment of Lansing Board of Water and Light operating funds. I. Governing Authority The investment program shall be operated in conformance with federal, state, and other legal requirements, including the Lansing City Charter, the State of Michigan [Investment Act 20 of 1943, as amended and Investment and The Revenue Bond Act 94 of 1933, as amended], and current Lansing Board of Water and Light Bond Resolutions. II. Scope Regular Board Mtg. July 28,2009 Page 12 of 19 This policy applies to the investment of all funds of the Lansing Board of Water and Light (hereinafter referred to as the LBWL)excluding the investment of employees' retirement funds. Proceeds from certain bond issues and related funds are also subject to the restrictions of applicable bond covenants. 1. Pooling of Funds Except for the balance in certain restricted funds,the LBWL may consolidate balances from all funds to maximize investment earnings. Investment income will be allocated to the various funds based on their respective participation. III.General Objectives The primary objectives, in priority order, of investment activities shall be safety, liquidity, and yield: 1. Safety Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective will be to mitigate credit risk and interest rate risk. a. Credit Risk The LBWL will minimize credit risk, which is the risk of loss due to the failure of the security issuer or backer to make payment, by: • Limiting investments to the types of securities referred to in Section VI of this Investment Policy • Diversifying the investment portfolio so that potential losses on individual securities will be minimized. b. Interest Rate Risk The LBWL will minimize the interest rate risk,which is the risk that the market value of securities in the portfolio will fall due to changes in market interest rates, by: • Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity. • Investing operating funds primarily in shorter-term securities, money market mutual funds, or similar investment pools. 1. Liquidity The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by structuring the portfolio so that securities mature concurrent with cash needs to meet anticipated demands. Regular Board Mtg. July 28,2009 Page 13 of 19 Furthermore, since all possible cash demands cannot be anticipated, the portfolio should consist largely of securities with active secondary or resale markets. A portion of the portfolio also may be placed in money market mutual funds or local government investment pools which offer same-day liquidity. 2. Yield The investment portfolio shall be designed with the objective of attaining a market rate of return taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. The core of investments must be limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. IV.Standards of Care 1. Prudence The standard of prudence to be used by investment officials (the Chief Financial Officer and the Manager of Finance and Planning)shall be the "prudent person" standard and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with this investment policy and exercising due diligence shall be relieved of personal responsibility for investment losses. The"prudent person"standard states that, "Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived." 2. Ethics and Conflicts of Interest Investment officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions. Employees and investment officers shall disclose any material interests in financial institutions with which they conduct business. They shall further disclose any personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and investment officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the LBWL. 3. Delegation of Authority Authority to invest Operating Funds is granted to the General Manager, Chief Financial Officer and the Manager of Finance and Planning. Additionally, the Chief Financial Officer is authorized to delegate aforementioned privilege on behalf of the Manager of Finance and Planning. This authority is derived from the LBWL Policy 7-01 "Authority to Invest Operating and Pension Funds" as amended. No person may engage in an investment transaction except as provided in LBWL Policy 7-01 as amended. V. Safekeeping and Custody Regular Board Mtg. July 28,2009 Page 14 of 19 1. Safekeeping Securities will be held by independent third-party custodians selected by the LBWL. The safekeeping institution shall annually provide a copy of their most recent report on internal controls (Statement of Auditing Standards No. 70, or SAS 70 or acceptable alternative). VI.Suitable and Authorized Investments 1. Investment Types Investments shall be in conformance with Section 1 of Public Act 20 of 1943 as amended from time to time. With respect to mutual funds, authorization to invest is limited to securities whose intention is to maintain a net asset value of$1 per share. VII. Investment Parameters 1. Diversification The investments shall be diversified by: • Limiting investments to avoid over concentration in securities from a specific issuer or business sector(excluding U.S. Treasury securities). • Investing in securities with varying maturities, and • Continuously investing a portion of the portfolio in readily available funds such as local government investment pools (LGIPs), money market funds or overnight repurchase agreements. 2. Maximum Maturities To the extent possible, the LBWL shall attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the LBWL will not directly invest in securities maturing more than five (5) years from the date of purchase. VIII. Reporting 1. Methods The Chief Financial Officer shall provide quarterly a written report to the Board of Commissioners of the LBWL concerning the investment of the Operating Funds. IX. The Board of Water and Light Operating Funds and Accounts The Board of Water and Light has three classes of operating funds and accounts: 1. Restricted by Bond Resolution: a. Bond and Interest Redemption Fund This fund accumulates and pays bond interest and principal when due. Regular Board Mtg. July 28,2009 Page 15 of 19 b. Bond Reserve Account This account shall be used solely for the payment of the principal of, redemption premium, if any, and interest on bonds as to which there would otherwise be a default. c. Operation and Maintenance Fund This fund must include a sum sufficient to provide for the payment during the succeeding period of the next month's expenses of administration and operation of the System, including such current expenses for the maintenance thereof as may be necessary to preserve the same in good repair and working order. d. Construction Funds These funds include bond proceeds earmarked for specific projects and spent only on those projects. e. Rebate Fund This fund shall be used to hold an amount sufficient to enable the LBWL to rebate excess investment earnings to the federal government. f. Receiving Fund This fund is required by bond resolution. All revenues of the LBWL are credited to this fund and are pledged for the purpose of meeting the requirements of the aforementioned restricted funds and accounts. 2. Designated by the Board of Commissioners of the LBWL: a. Coal Inventory Account This account is used to overstock coal and prevent shortage in anticipation of a coal or freight strike. b. Uninsured Losses Account This account is used to cover uninsured losses in environmental liability, property damage self insurance and workers compensation self insurance. c. Water Facilities Account This account was funded with proceeds received from Delta and Lansing townships for future water system expansion. 3. Unrestricted and Undesignated Regular Board Mtg. July 28,2009 Page 16 of 19 a. Any revenue remaining in the receiving fund after satisfying all requirements of the restricted and designated funds and accounts shall be deemed to be monies that may be used for such purposes as the LBWL deems to be in its best interest. Resolution-2009-07 Authority to Invest Operating and Pension Funds RESOLVED, that Board of Water and Light Policy 7-01 "Authority to Invest Operating and Pension Funds" is hereby amended as follows: RESOLVED, that the General Manager and the Chief Financial Officer shall be authorized to establish all necessary cash and investment accounts and to enter into all necessary transactions and agreements required to provide for the investment of operating and pension funds in the name of the Board of Water and Light(BWL), in such securities as permitted by law. Allowable transactions include, but are not limited to, the purchase, sale, and endorsement for transfer of certificates representing said securities. All transactions must also be in compliance with the then current BWL Pension and Operating Fund Investment Policies. RESOLVED, that the General Manager and the Chief Financial Officer delegate full investment authority to the Manager of Finance and Planning. RESOLVED, that the General Manager and/or the Chief Financial Officer may delegate full or limited investment authority to other specified BWL staff. The General Manager and/or Chief Financial Officer shall document the extent of authority delegated as well as the specific BWL staff receiving said authority. Only employees with actual, documented authority may be permitted to execute investment activities. The Revenue Bond Act of 1933(PA 94 of 1933, MSA 5.2731), as amended,Act 20 of 1943, as amended, and BWL Bond Resolution 89-10-3 govern and restrict the investment of BWL operating funds. Pension funds are governed by the Public Retirement System Investment Act(MCL 38.1132 et seq.), as amended. This resolution supersedes Resolution 2007-9-12. -------------------- Motion by Commissioner Kramer, seconded by Commissioner Zerkle, to approve the resolution entitled "Authority to Invest Operating and Pension Funds" Action: Carried unanimously. UNFINISHED BUSINESS None. NEW BUSINESS Regular Board Mtg. July 28,2009 Page 17 of 19 The Nominating Committee recommended a slate of officers for the 2009-2010 Fiscal Year. The slate of officers included Commissioner Zerkle as the Chair and Commissioner Lain as the Vice Chair. Chairman Lain asked if there were any nominations from the floor and with no nominations from the floor, the nominations were closed. Moved by Commissioner Kramer and Supported by Commissioner Bossenbery to approve the slate of officers as recommended by the Nominating Committee with Commissioner Zerkle as the Chair and Commissioner Lain as the Vice Chair. Action: Carried unanimously. -------------------- RESOLUTIONS Resolution 2009-074 Reappointment of the Charter Position of Director and General Manager The Board's Rules of Administrative Procedures and the Lansing City Charter specify that the Board is to appoint a Director and General Manager, Internal Auditor, and Corporate Secretary. RESOLVED, That the Board of Commissioners hereby reappoints the following individual to the Charter position of Director and General Manager for a period of three years (July 1, 2009—June 30, 2012): J. Peter Lark, Director and General Manager FURTHER RESOLVED, That J. Peter Lark shall receive an annual performance evaluation. Moved by Commissioner Kramer and Supported by Commissioner Bossenbery to reappoint J. Peter Lark to the Charter position of Director and General Manager. Action: Carried unanimously. -------------------- Commissioner Lain thanked Mr. Lark for all of his work and stated that it has truly been a pleasure to work with him and he could not be more excited about Mr. Lark remaining at the Board of Water & Light. -------------------- Regular Board Mtg. July 28,2009 Page 18 of 19 MANAGER'S REMARKS General Manager Lark stated that just recently in Mt. Pleasant there was a water test taste off competition for the best water in Mid-Michigan and the Board of Water& Light was the winner of the Regional Award. General Manager Lark introduced Tim Hyde, Manager of Water Production and stated that he was the person who is most responsible for the Board of Water& Light receiving this award. He asked Mr. Hyde to stand to be recognized. COMMISSIONERS' REMARKS Commissioner Kramer thanked Commissioner Lain for his service as Chair. He stated that there were several item on the Board of Commissioners agenda this year and Commissioner Lain took that leadership role of someone standing up and taking responsibility for the Board's collective actions and did a wonderful job. He said that he was proud to serve with Commissioner Lain in the leadership capacity and looks forward to next year's leadership under Commissioner Zerkle. Commissioner Bossenbery spoke about her office taking part in green initiatives and participating in a water taste-testing event that compared bottled water and city water. She said only 4 people could tell the difference. This is a part of moving towards not having bottled water at any of their office meetings. General Manager Lark stated that the Board of Water& Light's water is considered quite excellent and has finished in the top 15 in taste tests nationally. He also stated that it has been a pleasure to work with Commissioner Lain and that he has been an outstanding leader. He congratulated Commissioner Zerkle on becoming the new Chair. Commissioner Zerkle stated that it has been a pleasure to work with Commissioner Lain and that she appreciates the Commissioners support for her in the upcoming year. She congratulated General Manager Lark on a successful Chili Cook-Off and the amount of money that was raised. Commissioner Lain stated that since he has been chosen as the Vice Chair the Board needed to address the position of Past Chair. -------------------- Moved by Commissioner Lain and seconded by Commissioner Bossenbery to have Commissioner Kramer assume the duties of the Past Chair. Action: Carried unanimously. -------------------- Commissioner Lain spoke about his term as the Chair of the Board and said that he had fun and has enjoyed working with all of the Commissioners as well as the Administration and J. Peter Lark. He stated that General Manager Lark has put together a marvelous team and everyone has been extremely supportive. EXCUSED ABSENCE On Motion by Commissioner Plummer, seconded by Commissioner Zerkle to excuse the absence of Commissioner Tracy Thomas. Action: Carried unanimously. Regular Board Mtg. July 28,2009 Page 19 of 19 PUBLIC COMMENTS There were no public comments. ADJOURNMENT On motion by Commissioner DeLuca, seconded by Commissioner Kramer, the meeting adjourned at 5:51 p.m. M. Denise Griffin, Interim Corporate Secretary Filed with Lansing City Clerk August 4, 2009 - MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT Tuesday, September 22, 2009 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Present: Commissioners Margaret Bossenbery, Tony DeLuca, Peter Kramer, Frank Lain, Dennis Louney, Marilyn Plummer, Tracy Thomas and Sandra Zerkle. Absent: None. Chairperson Zerkle called the meeting to order at 5:30 p.m. The Interim Corporate Secretary declared a quorum present. Commissioner Louney lead the Pledge of Allegiance. SPECIAL PRESENTATION PRESENTATION OF CHECKS FROM PROCEEDS OF THE 2009 CHILI COOK-OFF TO H.O.P.E SCHOLARSHIP, IMPRESSION FIVE SCIENCE CENTER AND SPARROW FOUNDATION. General Manager J. Peter Lark stated that he would be presenting checks to the Sparrow Foundation, H.O.P.E. Scholarship and the Impression Five Science Center from the proceeds of the Chili Cook-off. He asked Board Chair Sandra Zerkle join him for the presentation of the checks. General Manager Lark and Chair Zerkle presented a proceeds check of$10,000 to Lansing Police Chief Mark Alley for the H.O.P.E. Scholarship. Lansing Police Chief Alley thanked the Board of Water& Light for the check and for being supportive of the scholarship program. General Manager Lark and Chair Zerkle presented a proceeds check of$10,000 to Erik Larson, Executive Director of the Impression Five Science Center. Mr. Larson thank the Board of Water& Light for the check as well as their continued support. Mr. Larson stated that the funds would be used to support the Adopt-A-River program. General Manager Lark and Chair Zerkle presented a proceeds check of$5,000 to Mike Wall from the Sparrow Foundation. Mr. Wall thanked the Board of Water& Light on behalf of the Sparrow Foundation. He stated that the funds would go to support the Emergency Regional Trauma Center/ Sparrow Tower Campaign. On behalf of the Board of Commissioner's Chair Zerkle congratulated and thanked the Board of Water& Light employees for making Chili Cook-off a successful event, particularly Calvin Jones Regular Board Mtg. September 22,2009 Page 2 of 25 who made sure that there was very little cost to the Board. She stated that it was nice to be able to raise this money for the different foundations that you believe in. APPROVAL OF MINUTES Motion by Commissioner Plummer, seconded by Commissioner Thomas to approve the minutes of the Regular Board Meeting of July 28, 2009. Action: Carried unanimously. PUBLIC COMMENTS MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There were no public comments. COMMUNICATIONS There were no Communications. COMMITTEE REPORTS HUMAN RESOURCE COMMITTEE MINUTES August 12, 2009 The Human Resource Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 11:30 a.m. on Wednesday,August 12, 2009. Human Resource Committee Chair Tony DeLuca called the meeting to order and asked the interim secretary to call the roll. The following committee members were present: Commissioners Tony DeLuca, Marilyn Plummer, Tracy Thomas, and Sandra Zerkle.Also present were Board Members Marge Bossenbery, Frank Lain and Dennis Louney. Absent: None Public Comments There were no public comments. Corporate Secretary Position Motion by Commissioner Zerkle and seconded by Commissioner Thomas to go into closed session at 11:33 a.m. Action: Carried unanimously. Motion by Commissioner Zerkle and seconded by Commissioner Thomas to reconvene the Human Resource meeting in open session at 12:30 p.m. Regular Board Mtg. September 22,2009 Page 3 of 25 Action: Carried unanimously. Committee Chair DeLuca stated that as one of three candidates for the Corporate Secretary position, Human Resource Director Michael Flowers would like to ask Interim Corporate Secretary M. Denise Griffin a few questions. Human Resource Director Michael Flowers asked the following questions: 1. Please convey to the Commissioners your ability to act with diplomacy and act in confidential matters? Ms. Griffin stated that this was something that she dealt with in her previous position. She stated that she previously worked with Politicians and was privy to a lot of confidential and sensitive information on a daily basis and it was important to keep information confidential and it is important to know when to speak and when not to speak. 2. How comfortable are you with your oral and written communication skill? Ms. Griffin stated that she was very comfortable with her oral and written communication skills. She stated that she conducted quite a few City Council Meetings and spoke in front of large crowds on a weekly basis. She stated that she had written Resolutions in her previous position as well as prepared the weekly City Council Agendas, Minutes and Committee Reports, 3. How are your proficiencies with Microsoft programs as far as documents, Excel spreadsheets and Microsoft Word? Ms. Griffin stated that she was very competent with many different programs and always found a way to complete jobs accurately. 4. Please convey to the Board your abilities for record management? Ms. Griffin stated that record management was part of her duties in her previous positions. She spoke about the different records management systems and styles in the City Clerk's office as well as the Income Tax Division. Motion by Commissioner Thomas and seconded by Commissioner Plummer to go into closed session at 12:45 p.m. Action: Carried unanimously. Motion by Commissioner Thomas and seconded by Commissioner Plummer to reconvene the Human Resource meeting in open session at 12:50 p.m. Action: Carried unanimously. Motion by Commissioner Thomas, seconded by Commissioner Zerkle to remove interim from the title and offer the position of Corporate Secretary to candidate number one and forward this matter to the full board for consideration and approval. Regular Board Mtg. September 22,2009 Page 4 of 25 Action: Carried unanimously. Approval of Minutes Motion by Commissioner Zerkle, seconded by Commissioner Thomas to approve the minutes of the Human Resource Committee meeting held July 23, 2009. Action: Carried unanimously. There being no further business,the meeting adjourned at 12:55 p.m. Respectfully submitted, Tony DeLuca, Chair Human Resource Committee EXECUTIVE COMMITTEE August 24, 2009 The Executive Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 8:00 a.m. on Monday, July 24, 2009. Executive Committee Chair Sandra Zerkle called the meeting to order. The following committee members were present: Commissioners Sandra Zerkle, Peter Kramer and Frank Lain. Also present were Board Commissioners Margaret Bossenbery and Dennis Louney. Absent: None. Public Comments Jan Simpson stated that she was a Board of Water& Light Retiree and President of the Retiree Association. She stated that she knew what the dynamics of this meeting was all about and wanted the Board to think about the tough economic times and to be cognizant of this when dealing with the General Manager's contract. General Manager's Employment Contract Chair Zerkle stated that she wanted to have this meeting because there were some edits to the original contract and she wanted the Commissioners to be comfortable with the changes. Board of Water& Light General Counsel Brandie Ekren explained the language changes and edits on the General Manager's contract. She explained the difference between termination of"cause" and termination of"at-will" and what the payout out would be in each situation. She stated that General Manager Lark would be paid up for the remainder of the contract agreement for an "at-will" termination if there is no"cause"associated. If there is"cause" he is basically paid up for 6 months. Commissioner Lain questioned what was the benchmark to determine if the termination was"at- will"or"cause". General Counsel Ekren stated that information was spelled out in section "D"of the contract. Regular Board Mtg. September 22,2009 Page 5 of 25 Chair Zerkle stated that there was no pay increase involved in General Manager Lark's contract. Motion by Commissioner Kramer, seconded by Commissioner Lain to sign and execute the General Manager's edited contract. Action: Carried unanimously. Consideration of Obtaining Outside Legal Counsel to assist with preparation of the General Manager's Employment Contract Chair Zerkle stated that during her talks between General Manager Peter Lark and General Counsel Brandie Ekren regarding the General Manager's contract that she became nervous because Brandie Ekren is technically an employee of Peter's and felt that it became a little awkward when negotiating Mr. Lark's contract and that it put Mrs. Ekren in a tough spot. She stated that the Board has access to outside counsel and questioned if obtaining outside counsel was something to consider for the future. Motion by Commissioner Kramer, seconded by Commissioner Lain to bring this item to the Committee of the Whole for discussion. Action: Carried unanimously. Respectfully submitted, Sandra Zerkle, Chair Executive Committee FINANCE COMMITTEE September 8, 2009 The Finance Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 4:00 p.m. on Tuesday, September 8, 2009. Finance Committee Chairperson Peter Kramer called the meeting to order and asked the Interim Secretary to call the roll. The following members were present: Commissioners Peter Kramer, Margaret Bossenbery and Dennis Louney. Absent: Commissioner Frank Lain Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Bossenbery, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of July 14, 2009. Action: Carried unanimously. Plante& Moran Audited Financial Report for fiscal year 2009 Regular Board Mtg. September 22,2009 Page 6 of 25 General Manager J. Peter Lark introduced Doug Rober a Partner with Plante Moran (P&M). Douglas Rober reviewed the process for the audit of the financial statements and related pension plans for the Board of Water and Light(BWL)for fiscal year ending 2009. Shaun Krick, Manager of P&M, stated that the General Motors bankruptcy and operating issues has resulted in less demand of energy which has resulted in less cost incurred by the Board of Water& Light and less revenue. He stated that as the graph charts are reviewed you will see the impact of the bankruptcy and it will be a common theme throughout the report. He reviewed the following information from the graphs: Operating Revenue—Four-year Comparison Years Ended June 30 Shaun Krick, CPA Associate with Plante Moran stated that revenues were just under$262 Million in the current year compared to last year at about$267 Million. This is a decrease of about 5% and the largest component of the operating revenue was derived from the electric utility. There were less kilowatt-hours being sold and that is attributable to the General Motors plant that was closed and attributable to the much cooler weather. Mr. Krick also stated that chilled water and water utilities revenues remain relatively consistent from previous years' levels, even though there was a 6%or 7%decrease in the volumes that were sold. There were rate increases through the year and that has helped offset the decrease in units sold. Steam revenue increased through the year mainly due to rate increases. The units sold were actually down by about 9%from previous years' levels. Operating Expenses- Four-year Comparison Years Ended June 30 Mr. Krick stated that Operating Expenses were just under$260 Million in the current year up from $256 Million the in prior year. This is an increase of about 1.5%, The biggest component of operating expense was those relating to production of energy, due in large part to the lower demand of energy caused by General Motors. Mr. Krick stated the total units across all the different utilities decreased by 12.6%feeding in to the decrease in transmission of distribution cost line item. Administrative and General costs increased slightly due to salary, wages and related benefits. Depreciation increased significantly in fiscal year 2009 due to the write off of the steam facility impairment. Operating Income (Loss)Years Ended June 30 Mr. Krick stated that Water, Electric and Chilled Water are operating in the black. Steam had operating loss in the current year and this again is due entirely to the write off of the impaired steam asset of$12.2 Million. Sales Source of Kilowatt Hours Generated Years Ended June 30 Mr. Krick stated that of the 3.2 Billion kilowatt hours sold, 1/3 was sold through the MPPA contract, and an additional 2/3 was sold to retail customers. This is pretty consistent with operations of the past two years. Regular Board Mtg. September 22,2009 Page 7 of 25 Kilowatt Hours Generated Versus Purchased Years Ended June 30 Mr. Krick stated that energy, both purchased and sold total about 3.3 Billion kilowatt hours, which is down about 12.6%from previous years due to demand. There was a significant increase in purchased energy due in part to the Board of Water& Light undergoing a green initiative and a contract with Granger to purchase energy. The other reason for the increase in the energy purchased is because the energy purchased from Belle River was less expensive than generating it from the Eckert Station due to the age of the infrastructure. Significant Power Costs Year Ended June 30 Mr. Krick stated that energy costs in total were down about$5 Million from the previous year. More energy was purchased from Belle River and the MPPA so there is an increase in related cost and since less energy was produced those cost decreased as well. Bond Debt Service Requirements Year Ended June 30 Mr. Krick stated that this particular graph looks at debt service requirements on bonds that the Board of Water& Light has issued for the current year and the next five years. Over the next five years, 35%of total debt is expected to be paid off. Mr. Krick said remaining graphs give a separate look at each of the utilities current year information compared to the past three years. Jacob Horner, an Associate with Plante Moran, reviewed the letters that were included in the packet. He stated that the first letter reviewed their responsibilities to the Board and what Plante Moran is required to communicate to the Board about their findings. Mr. Horner stated that there will be a Single Audit Report at a later date and this report is a result of the use of over$5000.00 of Federal money for expenditures which relates to the FEMA monies that were received in 2008 to help make the necessary repairs to damaged Eckert Cooling Towers, The money was spent in 2008 but not considered federal until FEMA approved the expenditures, and that is why it is being audited in the 2009 fiscal year. The other letters or reports that were reviewed by Mr. Horner were titled Results of the Audit, Summary of Unrecorded Possible Adjustments and Other Recommendations. Mr. Horner stated that there were no findings to report. Plante Moran stated that it was a pleasure to work with the Board of Water& Light's Staff. A complete copy of the Plante Moran'5 Presentation to the Finance Committee regarding the Audited Financial Statements&findings is on file in the Corporate Secretary's office. Update on DB/VEBA • 2nd Quarter 2009 Reports General Manager J. Peter Lark introduced First Vice President Marie Vanerian of Merrill Lynch Institutional Consulting Group who provided an update on the economy. Regular Board Mtg. September 22,2009 Page 8 of 25 Marie Vanerian stated that getting bad at a slower rate is not quite the same as getting better GDP. In the first quarter GDP was a-1% but estimates that there will be growth in the 3rd and 4th quarters. Unemployment improved slightly during the second quarter but probably will not peak until the middle of next year. She stated that we have to remember that the credit market had to thaw and the equity market will follow and the economy would be next and the lagging indicator would be unemployment. She said we do not have to have huge growth in order to make the next 10 years good. • LBWL DB 2nd Quarter 2009 Reports • LBWL VEBA 2nd Quarter 2009 Reports Michael Muirhead, Associate Financial Advisor for Merrill Lynch Institutional Consulting Group provided 2nd Quarter updates on the Defined Benefit(DB) Plan and the Voluntary Employees Beneficiary Association (VEBA) Plan. The following overview documents were reviewed. Lansing Board of Water& Light Defined B enefit Plan Asset Allocation Quarter Ending June 30, 2009 Asset Class Current Allocation Target Policy Difference Fixed Income 27.80% 31.00% -3.20% Large Cap Equity 46.80% 45.00% 1.80% Small/Mid Cap Equity 8.50% 10.00% -1.50% International Equity 14.90% 14.00% 0.90% Cash&Cash Equivalents 2.00% 0% 2.00% TOTAL 100.00% 100.00% VEBA Plan Asset Allocation Quarter Ending June 30, 2009 Asset Class Current Allocation Target Policy Difference Fixed Income 29.00% 31.00% -2.00% Large Cap Equity 39.30% 43.00% -3.70% Small/Mid Cap Equity 8.50% 10.00% -1.50% International Equity 10.10% 11.00% -0.90% Private Equity 0.00% 5.00% -5.00% Cash&Cash Equivalents 13.10% 0% 13.10% TOTAL 100.00% 100.00% *Note high cash allocation was due to cash placeholder for Private Equity allocation and VEBA contributions made during the Second Quarter. Regular Board Mtg. September 22,2009 Page 9 of 25 DB Performance 4th Quarter FY 2009 (Nat of Fees) Benchmark Favl(UnfaV) Fund Name: Allocation Market Value 2nd Qlr Perf:% Investment Ob'. 2nd Qtr.Port:% vs.Benchmark Large Cap Growth Edgewood 9.7% 7.103,355 17.39 S&P 500 Total Return 15.93 1.46 Aletheia 9.2% 6,722,037 23.36 Russell 1000 Growth 16.32 7.04 Large-Cap Value Eaton Vance 8.6% 6,323,435 12.83 Russell 1000 Value 16.69 (3.86) Jenison 9.4% 6,866,799 18.27 Russell 1000 Value 16AB 1.58 Atlanta Life International Wentworth(Growth) 5.7% 4,160,944 28.60 MSCI EAFE Total Return 25.85 2.75 MFS(Core) 5.3% 3,919,976 21.61 MSCI EAFE Total Return 25.85 (4.24) JP Morgan Intl(Value) 4.5% 3,323,507 20.27 MSCI EAFE Total Return 25.85 (5.58) Smid Cap Growth Insight 2.6% 1,934,207 (0.07) Russell 2000 Growth 23.37 (23.44) O'Shaughanessy 3.1% 2,295,830 9.41 Russell 2500 Growth 21.79 (12.3B) Smid Value Advisory Research 20.12 ^' Russell 2500 Value 20.90 (0.78) Fixed Income JP Morgan 10.1% 7.405,033 2.86 Bardays Aggregate Index 1.70 1.16 Metwest 17.9% 13,144,617 3.40 Barclays Aggregate Index 1.70 1.70 Ishares R1000 Growth 9.9% 7,234,363 + Russo It 2000 Value 2.9% 2,153,818 ++ Cash 1.1% 826,619 Total 100.0% 73,414,540 18.10 +++ Returns for this asset allocation 13,60 +++ 4.50 Started trading 5-25-09 Did not start trading until 4-30-09 '^ Did not start trading until 4-18-09 + Placeholder for Atlanta Life ++ Placeholder for Advisory +++Gross of fees VEBA Performance 4th Quarter FY 2009 (Net of Fees) Benchmark Favl(Unfav) Fund Name: Allocation I Market Value 2nd Qtr Perf:% Investment Ob'. 2nd Qtr.ParG-% vs.Benchmark Large Cap Growth Edgewood 8.6% 5,174.267 17.71 S&P 500 Total Return 15.93 1.78 Aletheia 8.6% 5,145,573 23.67 Russell 1000 Growth 16.32 7.35 Large-Cap Value Eaton Vance 8.7% 5,189,048 12.78 Russell 1000 Value 16.69 (3.9i) Jenison 8.7% 5,217,461 18.31 Russell 1000 Value 16.69 1.62 Atlanta Life Intemational Wentworth(Growth) 3.8% 2,299,163 28.62 MSCI EAFE Total Return 25.85 2.77 MFS(Core) 3.5% 2,079,584 21.69 MSCI EAFE Total Return 25.85 (4.16) JP Morgan Intl(Value) 3.5% 2,092.047 20.22 MSCI EAFE Total Return 25.85 (5.63) Smid Cap Growth Insight 3.3% 1,977,240 0.17 Russell 2000 Growth 23.37 (23.20) O'Shaughanessy 3.4% 2,012,463 9.40 Russell 2500 Growth 21.79 (12.39) Smid Value Advisory Research 20.18 ^' Russell 2500 Value 20.90 (0.72) Fixed Income JP Morgan 15.2% 9,099.316 0.80 Barclays Aggregate Index 1.70 (0.90) Metwest 15.8% 9.442,731 1.66 Barclays Aggregate Index 1.70 (0.02) Russell 1000 Index Fund 8.7% 5,204.655 + Ishares Russell 2000 3.3% 1,977,796 ++ Cash 5.0% 2,986,035 Total 100.0% 59,897,579 11.90 +++ Returns for this asset allocation 13.30 +++ (1.40) Started trading 5-25-09 Did not start trading unit 4-30-09 Did not starttrading until 4-10-09 + PlaceholderforAllanla Life ++ Placeholder forAdvisory +++Gross of fees The full set of 27d Quarter Reports are included in the packet and available for viewing in the Office of the Corporate Secretary. Regular Board Mtg. September 22,2009 Page 10 of 25 Internal Controls General Manager J. Peter Lark introduced Mike Collins, Manager of the Lansing Board of Water& Light Internal Control Department. Mike Collins gave an overview of the activities of the Internal Control Department. He also introduced Kathy Krause and commented that she is highly skilled in evaluating information technology internal controls, and he mentioned that Sue Sims, a CPA, had joined his staff, too. A PowerPoint slide presentation titled"2009 Report, Internal Control Structure"was included in the Committee's packet. Mr. Collins gave a brief overview of internal controls and how they provide the Board with reasonable assurance the BWL achieves it corporate objectives of 1)effective and efficient operations, 2) reliable financial statements, and 3) compliance with applicable laws and regulations. Chair Kramer asked Mr. Collins to explain the difference between the Internal Control Department and Internal Audit. Mr. Collins explained that the function of Internal Control is to work directly with various departments to help insure they have designed and implemented controls to mitigate the risks associated with their business activities in the most economical and efficient manner. The role of Internal Audit is to review those business activities and evaluate the adequacy of their associated risks and controls and report their findings to the Board. Mr. Collins concluded by offering to meet with anyone that had questions on internal controls and recommended that they visit the Internal Control Department's website. Internal Audit Update • Audit Report(Project Engineering Department) • Audit Report(Collections Process) • Internal Audit Status Report Internal Auditor Phil Perkins gave a brief presentation on two recently completed audits, a status report on FY2009 completed and in-progress audits, and the FY2010 proposed audit plan. Mr. Perkins noted that in both of the audit reports that were in the packet, there were findings relating to a lack of documentation. He noted that Internal Audit is careful to assess the risk and impact of not having the documentation since this is more important in some cases than others. He cited an example in one of the reports about a pre-construction form that is important because it may protect the company's interest in case of an accident on the job if it can be demonstrated that personnel were briefed on safety before starting the work. Mr. Perkins then gave a brief presentation on FY2009 audits and the proposed FY2010 audit plan, along with some challenges he has noted in his first few months on the job. He gave management credit for being cooperative and supportive of Internal Audit and keeping the lines of communication open, citing monthly status meetings that he has with the Chief Financial Officer Susan Devon and continued contact with the Internal Controls group. Motion by Commissioner Louney, seconded by Commissioner Bossenbery to excuse Commissioner Frank Lain from today's meeting. Action: Carried unanimously. Regular Board Mtg. September 22,2009 Page 11 of25 On motion by Commissioner Louney, seconded by Commissioner Bossenbery, the meeting adjourned at 5:50 p.m. Respectfully submitted, Peter W. Kramer, Chair Finance Committee COMMITTEE OF THE WHOLE September 8, 2009 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 6:08 p.m. on Tuesday, September 8, 2009. Chair Sandra Zerkle called the Committee of the Whole meeting to order and asked the Interim Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Tony DeLuca, Dennis Louney, Marilyn Plummer and Sandra Zerkle. Absent: Commissioners Frank Lain, Pete Kramer and Tracy Thomas. Public Comments There were no public comments. Approval of Minutes Motion by Commissioner DeLuca, seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of July 14, 2009. Action: Carried unanimously. Designated Representative regarding General Manager J. Peter Lark stated that the purpose of this resolution is to have the latest designees named for the purpose of reporting to the Environmental Protection Agency(EPA). Those representatives are George Stojic and Douglas Wood as the alternate. Motion by Commissioner Bossenbery, seconded by Commissioner DeLuca to forward the proposed resolution on to the full Board for consideration and approval. Action: Carried unanimously Net Metering Program—Set Public Hearing •Resolution •Net Metering Standards •Net Metering Rider General Manager J. Peter Lark gave a brief explanation of net metering. He stated that he would like the Board to set up a public hearing so the customers can have input on net metering.Also included in the committee packet are the net Metering Program Standards and the Net Metering Regular Board Mtg. September 22,2009 Page 12 of 25 Rider, which enables customers using renewable energy sources to connect to the Board of Water & Light's electric distribution system and send electricity back to the BWL when their generation exceeds their own use. Under Federal law the BWL is required to at least look at net metering. Commissioner Louney questioned the $5.00 charge that was indicated on page#3 of the Net Metering Program Standards. In response George Stojic stated that net metering cannot be billed easily and that the billing process has to be done by hand and there is an administrative cost associated with that. At the time the program was being put together it was estimated that the administrative cost was about $5.00. Motion by Commissioner Louney, seconded by Commissioner Plummer to forward the proposed resolution on to the full Board for consideration and approval. Action: Carried unanimously. Census Bureau Resolution Commissioner Plummer stated that this resolution is about community outreach and what the Census Bureau is looking for is partners to support what they are doing. She stated that this relates to federal dollars coming back to our community. Motion by Commissioner Bossenbery, seconded by Commissioner Louney to forward the proposed resolution on the full Board for consideration and approval. Action: Carried unanimously Resolutions Honoring Former Commissioners • Bob Cochran and • Semone James-Howes Motion by Commissioner Bossenbery, seconded by Commissioner DeLuca to forward the resolutions of tribute on to the full Board for approval. Action: Carried unanimously. Resolution Honoring Calvin Jones Chair Zerkle stated that this resolution is a tribute for Calvin Jones and his work on the Chili Cook- Off event. Motion by Commissioner Plummer, seconded by Commissioner Bossenbery to forward this resolution of tribute on to the full Board for approval. Action: Carried unanimously. Consideration of Outside Legal Counsel in preparation for future General Manager contracts Regular Board Mtg. September 22,2009 Page 13 of25 Commissioner Zerkle stated that at the Executive Committee Meeting there was a discussion regarding using an outside counsel in the future when dealing with the General Manager's contract. She stated that she felt having General Counsel Brandie Ekren negotiate her boss's contract with the Board puts her in a precarious position. Chair Zerkle stated she did not know if the Board needs a resolution to obtain outside counsel. General Counsel Brandie Ekren stated that a resolution was not necessary at this time but if in the future the Board feels the need for outside counsel please talk with her and she will be happy to assist and provide information regarding obtaining outside legal counsel and also that City Attorney Brigham Smith is available for assistance. Other General Manager J. Peter Lark gave an update on the First STEP Program. Mr. Lark stated that this program was born of the notion that 40%of the BWL's staff is at retirement age and can retire within 3 years. However, since the economy has gotten bad and everyone's 401 K has taken a hit, the BWL is not seeing a lot of employees interested in retiring. As a result of employees not retiring and revenue being down there will be some changes to the First STEP Program. He stated that the program would continue on a much smaller scale. General Manager Lark reminded the Board of Commissioners that typically in November there is a Pension Trustees meeting and arrangements will be made for that meeting. Motion by Commissioner Zerkle, seconded by Commissioner DeLuca to excuse Commissioners Frank Lain, Pete Kramer and Tracy Thomas from today's meeting. Action: Carried unanimously. With there being no further business the meeting adjourned at 6:45 p.m. Respectfully submitted Sandra Zerkle,Acting Chair Committee of the Whole MANAGER'S RECOMMENDATIONS -------------------- RESOLUTIONS RESOLUTION #2009-09-1 Designated Representative and Alternate Designated Representative RESOLVED, that George Stojic be named the BWL's designated representative and Douglas Wood be named the BWL's alternate designated representative, all for the purpose of reporting to the Environmental Protection Agency(EPA) under the Clean Air Act; and FURTHER RESOLVED,that the designated representative and the alternative designated representative be authorized to bind the BWL by their respective actions, inactions, and submissions with respect to the Clean Air Act. Regular Board Mtg. September 22,2009 Page 14 of 25 -------------------- Staff Comments Due to changes in personnel, this revised resolution is necessary. This supersedes Resolution No. 09-01-02. -------------------- Motion by Commissioner Kramer, seconded by Commissioner Lain, to approve the resolution of designating George Stojic as the BWL's designated representative and Douglas Wood as the BWL's alternate designated representative for the purpose of reporting to the Environmental Protection Agency. Action: Carried unanimously RESOLUTION#2009-09-2 LANSING BOARD OF WATER& LIGHT'S RENEWABLE ENERGY NET METERING PROGRAM AND COMPANION RATE RIDER WHEREAS, the Energy Policy Act of 2005 (EP Act 2005) amended the Public Utility Regulatory Policies Act of 1978 (PURPA) requiring covered utilities to consider adopting five new standards including net metering; and WHEREAS, the Lansing Board of Water& Light Board of Commissioners passed Resolution 2008- 7-5 that resolved the BWL shall develop and promote a net metering program which meets applicable PURPA standards; and WHEREAS, there is a growing interest by residential and business customers to invest in customer generated sources of power supply and a net metering program will encourage the installation and use of customer-owned renewable energy systems. RESOLVED, that the Renewable Energy Net Metering Program and companion rate rider be made the subject of a public hearing prior to further consideration by the Board of Commissioners. RESOLVED FURTHER, that the Board of Commissioners hereby set the date of Thursday, November 12, 2009, at 5:30 pm for a public hearing to solicit public input on the Renewable Energy Net Metering Program and companion rate rider. The hearing will be held in the Board of Water and Light's offices, 1232 Haco Drive, Lansing. The Corporate Secretary is directed to file with the City Clerk, no later than September 23, 2009, information regarding the Renewable Energy Net Metering Program and companion rate rider with an effective date of January 1, 2010. -------------------- Staff Comments: The BWL's Renewable Energy Net Metering Program and companion rate rider will be offered to its electric customers who wish to install renewable electric energy systems on their premises. The program will be evaluated on a periodic basis to determine customer interest and operational impacts on the BWL's system and revised if needed. Following adoption of this resolution, the Staff will prepare for the public hearing date. Following the public hearing, the Staff Regular Board Mtg. September 22,2009 Page 15 of 25 will prepare a report summarizing public comments and making recommendations on any revisions to the Net Metering program and rate rider if necessary. Renewable Energy Net Metering Rider Purpose—The purpose of this rider it to enable customers who generate electricity using renewable energy sources to connect to the BWL's electric distribution system and to send electricity back to the electric grid at time when their generation exceeds their own use. Availability- Net Metering applicants must be an electric customer making use of any BWL Electric Rate Schedule. The Net Metering Program will be voluntary and selection of customers for participation in the net metering program shall be based on the order in which the applications for the net metering program are received by the BWL. The Net Metering Program will be in effect until the total nameplate capacity of all participating generators is equal to the maximum program limit of 1%of the BWL peak load for the proceeding calendar year. The renewable energy generating system will not exceed 50 kW per site and may be limited to geographical regions within the BWL's service territory. Eligible Renewable Energy Resources-Customers must generate a portion or all of their own retail electricity requirements using a renewable energy resource including but not limited to the following: Biomass, Solar Photovoltaic or Wind. Other renewable energy resources not included in the list above must be approved in advance by the BWL. Generation and Interconnection Requirements-The generation equipment must be located on the customer's premise and serve only the customer's premises. The Net Metering applicant shall be limited to generation capacity designed to meet the customer's electric demand and energy needs. The BWL, at its discretion, will make the final determination of the acceptable size of the renewable energy generating system eligible for participation. Before participating in the Net Metering Program customers must be approved for parallel operation with BWL's electric distribution system by meeting all interconnection requirements. Monthly Rate—All Net Metering customers will be billed $5.00 per month to recover costs associated with operating the Net Metering Program. Net metering customers with a system capable of generating 20 kW or less shall qualify for true net metering. For customers who qualify for true net metering,the net of the bidirectional flow of kWh across the customer interconnection with the BWL distribution system during the billing period, including excess generation credits, shall be credited at the full retail energy(kWh) rate. a) The credit for Net Excess Generation (NEG), if any, shall appear on the next bill and any excess credit not used to offset current charges shall be carried forward for use in subsequent billing periods. b) Reconciliation of any NEG credits will occur at the end of each calendar year. At that time the customer's NEG credit balance will be reset to zero and any NEG credits will be refunded at the retail power supply rate. c) If a customer leaves the provider's system or service is terminated for any reason, the BWL shall refund to the customer the remaining NEG credit amount. Remaining NEG credits will be refunded at the retail power supply rate. d) The retail power supply rate includes the BWL generation costs and purchase power and other related costs. Regular Board Mtg. September 22,2009 Page 16 of 25 Net metering customers with a system capable of generating more than 20 kW but less than 50 kW will qualify for modified net metering. The BWL shall require individual contracts with customers with generation systems of more than 20 kW for billing purposes. Rules and Regulations—Service under this rider is subject to the BWL Rules and Regulations for Electric Service and the Renewable Energy Net Metering Program Standards. The BWL reserves the right to revise the terms and conditions including any electric energy buy-back pricing rates of future Net Metering programs. Motion by Commissioner Bossenbery and seconded by Commissioner Lain, to set the date of Thursday, November 12, 2009, at 5:30 pm for a public hearing to solicit public input on the Renewable Energy Net Metering Program and companion rate rider and PURPA Standards under the energy independence and security ACT of 2009. Action: Carried unanimously. -------------- Net Metering Supporting Document Lansing Board of Water& Light's Renewable Energy Net Metering Program Standards The Lansing Board of Water & Light (BWL) is currently offering a Net Metering Program to its electric customers who wish to install renewable electric energy systems. This program will also allow the BWL to evaluate the market demand and operational impact for Net Metering in its electric service territory. The Net Metering Program will enable customers who generate electricity using renewable energy sources to connect to the BWL's electric distribution system and to send electricity back to the electric grid at time when their generation exceeds their own use. The BWL reserves the right to revise the terms and conditions including any electric energy buy- back pricing rates of future Net Metering programs. PROGRAM AVAILABILITY The Net Metering Program will be voluntary and selection of customers for participation in the net metering program shall be based on the order in which the applications for the net metering program are received by the Lansing Board of Water& Light. The Net Metering Program will be in effect until the total nameplate capacity of all participating generators is equal to the maximum program limit of 1% of the BWL peak load for the proceeding calendar year. The renewable energy generating system will not exceed 50 kW per site and may be limited to geographical regions within the BWL's service territory. CUSTOMER ELIGIBILITY Net Metering applicants must be an electric customer making use of any BWL Electric Rate Schedule and receive electric service from the BWL distribution system. Customers must generate a portion or all of their own retail electricity requirements using a renewable energy resource including but not limited to the following: Regular Board Mtg. September 22,2009 Page 17 of25 ➢ Biomass ➢ Solar Photovoltaic ➢ Wind Other renewable energy resources not included in the list above must be approved in advance by the BWL. APPLICATION FOR SERVICE AND FEES For a customer to participate in the BWL Net Metering Program a completed Net Metering Application shall be submitted. An applicant applying for net metering shall at the same time make application for interconnection with the BWL's electric distribution system. Net Metering Applications shall be available through direct mail or through the BWL website. (www.lbwl.com) GENERATION REQUIREMENTS The generation equipment must be located on the customer's premise and serve only the customer's premises. The Net Metering applicant shall be limited to generation capacity designed to meet the customer's electric demand and energy needs. The customers' electric needs may be determined by one of the following methods: a) The customers' annual energy usage, measure in kilowatt hours (kWh), during the previous 12-month period. b) For a customer with metered demand data available, the maximum integrated hourly demand measure in kilowatts(kW) during the past 12-month period. c) In those cases where there is no data, incomplete data, or incorrect data for the customer's energy usage or where the customer is making changes on-site that will affect total usage, the BWL and the customer shall mutually agree on a method to determine the customer's electric needs. The BWL, at its discretion, will make the final determination of the acceptable size of the renewable energy generating system eligible for participation in this net metering program. GENERATION AND NET METERING EQUIPMENT New generation and net metering equipment and its installation must meet all current local and state electric and construction code requirements. Any equipment that is certified by a nationally recognized testing laboratory to IEEE 1547.1 testing standards and in compliance with UL 1741 scope 1.1A and installed in compliance with this part is considered eligible equipment. GENERATOR INTERCONNECTION REQUIREMENTS Customers interested in participating in the Net Metering Program must meet all BWL interconnection requirements. Applicants must request and review the information in the BWL's Generator Interconnection procedural guidelines and complete the Generator Interconnection Application. Before participating in the Net Metering Program customers must be approved for parallel operation with BWL's electric distribution system by meeting all interconnection requirements and by signing a "Generator Interconnection Agreement". This agreement will give the customer permission to safely connect to LBWL's electric distribution system. METERING REQUIREMENTS Regular Board Mtg. September 22,2009 Page 18 of25 Electric meters shall be used to determine the amount of the customer's energy use in each billing period, net of any excess energy the customer's renewable energy generating system delivers to the BWL's distribution system during that same billing period. The BWL will determine the appropriate meter(s)to be installed and that will be capable of measuring the flow of energy in both directions. The installation of generation meters will be at the discretion of the BWL. Customers who request a separate generation meter will be responsible for all costs associated with the meter and installation of that meter. CUSTOMER BILLING Net metering customers with a system capable of generating 20 kW or less shall qualify for true net metering. For customers who qualify for true net metering, the net of the bidirectional flow of kWh across the customer interconnection with the BWL distribution system during the billing period, including excess generation credits, shall be credited at the full retail energy(kWh) rate. e) The credit for Net Excess Generation (NEG), if any, shall appear on the next bill. Any excess credit not used to offset current charges shall be carried forward for use in subsequent billing periods. f) Reconciliation of any NEG credits will occur at the end of each calendar year. At that time the customer's NEG credit balance will be reset to zero and any NEG credits will be refunded at the retail power supply rate. g) If a customer leaves the provider's system or service is terminated for any reason, the BWL shall refund to the customer the remaining NEG credit amount. Remaining NEG credits will be refunded at the retail power supply rate. h) The retail power supply rate includes the BWL generation costs and purchase power and other related costs. Net metering customers with a system capable of generating more than 20 kW but less than 50 kW will qualify for modified net metering. The BWL shall require individual contracts with customers with generation systems of more than 20 kW for billing purposes. COST RECOVERY OF NET METERING PROGRAM All Net Metering customers will be billed $5.00 per month to recover costs associated with operating the Net Metering Program. CUSTOMER DISCONNECTION OR TERMINATION The BWL may refuse to connect or may disconnect a project from the distribution system if any of the following conditions apply: a) Lack of a fully executed interconnection agreement. b) Termination of interconnection by mutual agreement. c) Noncompliance with technical or contractual requirements in the interconnection agreement after notice is provided to the applicant of the technical or contractual deficiency. d) Distribution system emergency. e) Routine maintenance, repairs, and modifications, but only for a reasonable length of time necessary to perform the required work and upon reasonable notice. f) Failure to apply for and receive an electrical permit and inspection by the appropriate permit granting authority. g) Failure to remain current on all BWL bills. Regular Board Mtg. September 22,2009 Page 20 of 25 Motion by Commissioner Lain, seconded by Commissioner DeLuca, to appoint M. Denise Griffin as the Corporate Secretary. Action: Carried unanimously. WATER&LIGHT RESOLUTION#2009-09-4 WHEREAS an accurate census count is vital to our community and residents' well-being by helping planners determine where to locate schools, day care centers, roads and public transportation, hospitals and other facilities, and achieving an accurate and complete count of the nation's growing and changing population; WHEREAS more than $400 billion per year in federal and state funding is allocated to states and communities based, in part, on census data; WHEREAS census data help determine how many seats each state will have in the U.S. House of Representatives and often is used for the redistricting of state legislatures, county and city councils and voting districts; WHEREAS the 2010 Census creates jobs that stimulate economic growth and increase employment; WHEREAS the information collected by the census is confidential and protected by law; Now, therefore, we PROCLAIM that Lansing Board of Water& Light is committed to partnering with the U.S. Census Bureau to help ensure a full and accurate count in 2010. As a 2010 Census partner, we will: 1. Support the goals and ideals for the 2010 Census and disseminate 2010 Census information to encourage those in our community to participate. 2. Encourage people in our community to place an emphasis on the 2010 Census and participate in events and initiatives that will raise overall awareness and ensure a full and accurate census. 3. Support census takers as they help our community complete an accurate count. 4. Create or seek opportunities to collaborate with other like-minded groups in our community by participating in Complete Count Committees and/or utilizing high-profile, trusted voices to advocate on behalf of the 2010 Census. Signed this 22, day of September, in the year 2009. Lansing Board of Water& Light Board of Commissioners Motion by Commissioner Thomas, seconded by Commissioner DeLuca, to support and partner with the Census Bureau to assist with obtaining a accurate census count. Action: Carried unanimously. Farrn D-325?(E) 2010census.gov Regular Board Mtg. September 22,2009 Page 22 of 25 RESOLUTION#2009-09-5 LANSING BOARD OF WATER AND LIGHT RESOLUTION HONORING ROBERT W. COCHRAN WHEREAS, it is indeed a pleasure to extend this expression of our thanks and best wishes to Robert W. Cochran; and WHEREAS, Robert W. Cochran was appointed an At-Large Commissioner on February 20, 2006; and WHEREAS, he last served on the Board's Finance Committee and has previously served as a member of the Executive and Human Resource Committees; and WHEREAS, Bob Cochran served in the United States Air Force from 1957 through 1979 and cultivated a distinguished career in the military, space, and defense industries. He has also co-chaired Mayor Virg Bernero's transition Technical and Infrastructure Committee and was the proprietor of a Lansing based residential contracting firm. WHEREAS, Bob is currently enjoying his retirement; but is actively volunteering his time, talent and energy in support of the community. He has also lent his financial expertise, quantitative and analytical skill set to the governing of the Lansing Board of Water and Light. NOW THEREFORE BE IT RESOLVED, That the Lansing Board of Water and Light Board of Commissioners, hereby honor and commend Robert W. Cochran upon leaving this Board with over three years of distinguished service. In Regular Session this 22nd day of September, 2009, we sincerely wish Bob continued success in all his future endeavors and achieving that which is in the best interest of our community. Sandra Zerkle, Chair Frank Lain, Vice Chair Margaret A. Bossenbery Tony DeLuca Peter W. Kramer Dennis M. Louney Marilyn D. Plummer Tracy Thomas Motion by Commissioner Kramer, seconded by Commissioner Lain, to approve the resolution of tribute for the outgoing Commissioner Robert Cochran. Action: Carried unanimously. Regular Board Mtg. September 22,2009 Page 23 of 25 RESOLUTION#2009-09-6 LANSING BOARD OF WATER AND LIGHT RESOLUTION HONORING SEMONE M. JAMES-HOWES WHEREAS, it is indeed a pleasure to extend this expression of our sincere thanks and best wishes to Semone M. James-Howes; and WHEREAS, Semone M. James-Howes was appointed as the 1st Ward Commissioner on February 20, 2006; and WHEREAS, She last served on the Board's Executive Committee and as an alternate member of the Finance and Human Resource Committees, respectively. She also previously served as the Chair and Vice-Chair for the Board of Commissioners and as Chair of the Committee of the Whole, Finance Committee, Nominating Committee and Ad Hoc Committee to revise the Rules of Administrative Procedure; and WHEREAS, Semone M. James-Howes was appointed Executive Director of the State of Michigan Land Bank Fast Track Authority by Governor Jennifer M. Granholm and has worked to cultivate an exceptional career with the State of Michigan for over 15 years, having worked in several capacities with the Departments of Labor and Economic Growth, Transportation, and Treasury. Semone currently serves as an Investment Specialist with the Department of Treasury, Bureau of Investments'Administration Division; and WHEREAS, Semone is a lifelong resident of Michigan and dedicates her time and energy to several community oriented and faith-based organizations; and WHEREAS, She has worked diligently in support of the Lansing community; and lent her financial and business expertise as well as her leadership skills in governing the organization and encouraging it to reach its goals and be the best utility company possible. NOW, THEREFORE, BE IT RESOLVED, That the Lansing Board of Water and Light Board of Commissioners, hereby, honor and commend Semone M. James-Howes upon leaving this Board with over three years of distinguished service. In Regular Session this 22nd day of September 2009, we sincerely wish Semone continued success in all her endeavors of being of service and achieving all that is in the best interest of our community. Sandra Zerkle, Chair Frank Lain, Vice Chair Margaret A. Bossenbery Tony DeLuca Peter W. Kramer Dennis M. Louney Marilyn D. Plummer Tracy Thomas Motion by Commissioner Kramer, seconded by Commissioner Lain, to approve the resolution of tribute for the outgoing Commissioner Semone James-Howes. Action: Carried unanimously. Regular Board Mtg. September 22,2009 Page 24 of 25 ��50���ElT�ONz#40(!9^09st}7 BOARD OF WATER AND LIGHT RESOLUTION HONORING CALVIN L. JONES WHEREAS, It is with great appreciation for his many contributions to the Lansing Board of Water and Light and to the success of the 14th Annual Chili Cook Off that we honor Calvin L. Jones; and WHEREAS, the 2009 BWL Chili Cook-Off had more than 50 food vendors, which was the most in the event's history; and the event had a record attendance of more than 12,000; the event generated sufficient funds to provide contributions to the Hope Scholars, Impression 5 Science Center and the Sparrow Foundation in the amounts of$10,000, $10,000 and $5,000 respectively. WHEREAS, the Board of Water& Light Board of Commissioners extends a well deserved thank you to Calvin L. Jones and all of the Board of Water&Light Chili Cook off events staff and volunteers for making the June 5th event the biggest and best in the event's history. NOW, THEREFORE BE IT RESOLVED that a unanimous accolade of praise and tribute be given to Calvin L. Jones for his many contributions to the Board of Water and Light's successful 14tn Annual Chili Cook Off. In Regular Session this 22nd day of September 2009, we congratulate and thank Calvin L. Jones. BOARD OF COMMISSIONERS Sandra Zerkle, Chair Frank Lain, Vice Chair Margaret A. Bossenbery Tony DeLuca Peter Kramer Dennis Louney Marilyn Plummer Tracy Thomas Motion by Commissioner Kramer, seconded by Commissioner Lain, to approve this resolution of tribute for Calvin Jones. Action: Carried unanimously Calvin Jones accepted his resolution of tribute and stated that the 2009 Chili Cook-off was his most rewarding achievement during his thirty-three years at the Board of Water&Light. He thanked General Manager J. Peter Lark for his vision to accomplish this community event without using rate payers money. He thanked all Board of Water&Light volunteers and gave special thanks to Che val Breggins. He also thanked the Board of Commissioner for his tribute. Regular Board Mtg. September 22,2009 Page 25 of 25 MANAGER'S REMARKS General Manager Lark spoke about the opening of the Chiller Plant. He thanked Beverly Bishop and everyone who helped organize the event. He stated that the Chiller Plant is beautiful and that the numbers are coming in as good or better than expected. He stated that Dick Peffley is owed a large debt of gratitude and that he put together a project that is second to none. The project was on time and on budget. Chair Zerkle stated the Chiller Plant sits well and fits right in with the City. COMMISSIONERS' REMARKS There were no Commissioner's remarks. PUBLIC COMMENTS There were no public comments. ADJOURNMENT On motion by Commissioner DeLuca, seconded by Commissioner Kramer, the meeting adjourned at 5:51 p.m. M. Denise Griffin, Corporate Secretary Filed with Lansing City Clerk September 28, 2009 Board Approved on July 28, 2009 MINUTES OF THE BOARD OF COMMISSIONERS SPECIAL MEETING LANSING BOARD OF WATER AND LIGHT Tuesday, June 9, 2009 The Board of Commissioners met at the Executive Offices of 1232 Haco Drive, Lansing, Michigan. Present: Commissioners Margaret Bossenbery, Robert Cochran, Tony DeLuca, Peter Kramer, Tracy Thomas and Sandra Zerkle. a Absent: Commissioners Semone James-Howes and Frank Lain. 11 The Secretary declared a quorum present. 1�' c� Acting Chairperson Zerkle called the meeting to order at 5:30 p.m. w PUBLIC COMMENT THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT AND ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY.DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There were no public comments. MANAGER'S RECOMMENDATION esolution 2009-6-1 Lansing Board of Water and Light City of Lansing, Michigan RESOLUTION AUTHORIZING SALE OF REFUNDING BONDS WHEREAS, on August 12, 2008 the Lansing Board of Water and Light (the "Board") authorized sale of water supply, steam, chilled water and electric utility system subordinate lien revenue refunding bonds in order to refund all or a portion of the Water Supply, Steam and Electric Utility System Subordinate Lien Revenue Bonds, Series 1999B (Federally Taxable) (the "Series 1999B Bonds") and reduce the Board's aggregate debt scr6ce; and Special Board Mtg. June 9,2009 Page 2 of 8 WHEREAS, the Board has received an offer from Bank of America Public Capital Corporation (the "Bond Purchaser") to purchase the bonds authorized by the resolution of August 12, 2008 to be designated as the Water Supply, Steam, Chilled Water and Electric Utility System Subordinate Lien Revenue Refunding Bonds, Series 2009A (Federally Taxable) (the "Series 2009A Bonds"); and WHEREAS, if the Board refunds the Series 1999B Bonds through sale of the Series 2009A Bonds to the Bond Purchaser as described in the offer to purchase, then after g;ving effect to the refunding, the maximum amount of Aggregate Debt Service in each fAure fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding; and WHEREAS, various provisions of the Authorizing Resolution must be updated to reflect the private placement of the Series 2009A Bonds to the Bond Purchaser instead of sale to an underwriter. NOW, THEREFORE, BE IT RESOLVED THAT: Section 1. Supplemental Resolution. The Fourth Supplemental Revenue Bond Resolution and the Resolution of August 12, 2008 are hereby amended and supplemented by this Resolution Authorizing Sale of Refunding Bonds in accordance with Section 20(b) of the Fourth Supplemental Revenue Bond Resolution and Section 23(a)(1) of the amended and restated Bond Resolution. Section 2. Negotiated Sale. The Board hereby determines to sell the Series 2009A Bonds at a negotiated sale to the Bond Purchaser instead of a competitive sale for the reason that a negotiated sale will permit the Board to obtain a lower rate of interest on the Series 2009A Bonds. The action taken by the Chief Financial Officer to accept the proposal of the Bond Purchaser is hereby ratified and confirmed. By adoption of this Resolution the Board assumes no obligations or liability to the Bond Purchaser for any loss o­ damage that may result to the Bond Purchaser from the adoption of this Resolution, and all costs and expenses incurred by the Bond Purchaser in preparing for sale of the Series 2009A Bonds shall be paid from the proceeds of the Series 2009A Bonds, if the Series 2009A Bonds are issued. The Board hereby retains Citigroup Global Markets Inc. as Placement Agent to assist the Board in arranging the sale of the Series 2009A Bonds. Section 3. Changes to Bond Details. The Series 2009A Bonds shall be issued in the amount not-to-exceed Forty-Eight Million Dollars ($48,000,000), as finally determined upon the sale thereof, and shall be designated as the Water Supply, Steam, Chilled Water And Electric Utility System Subordinate Lien Revenue Refunding Bonds, Series 2009A (Federally Taxable) or such other designation as shall reflect the date of sale. All references in the Resolution of August 12, 2008 to the Series 2008B Bonds shall be understood to refer to the Series 2009A Bonds. The Series 2009A Bonds may, at the request of the Bond Purchaser, be issued as a single fully registered, nonconvertible bond of the denomination of the full principal amount thereof payable in principal installments as shown in the bond. If any Series 2009A Bond is signed by the manual signature of either the Chairperson or the Corporate Secretary of the Board then it shall be valid without authentication. If the Bond Special Board Mtg. June 9,2009 Page 3 of 8 Purchaser does not require that the registrar and transfer agent for the Series 2009A Bonds be a bank or trust company, then the Chief Financial Officer of the Board, or her or his designee, is hereby designated as registrar and transfer agent for the Series 2009A Bonds. The Chief Financial Officer is authorized to determine final bond details including, but is not limited to, designation of the portion of the Series 1999B Bonds to be refunded and called for redemption prior to maturity; determination of original principal amount of the Series 2009A Bonds; the date of the Series 2009A Bonds; the schedule of principal maturities; provisions for early redemption; the interest rates and payment dates of the Series 2009A Bonds; application of the proceeds of the Series 2009A Bonds; transfer of balances, if any, from the Junior Lien Bond and Interest Redenil)tion Fund to the Series 1999B Escrow Fund; and purchase of securities, if any, for the Series 1999B Escrow Fund. The Chief Financial Officer is authorized to change the series designation of the Series 2008B Junior Lien Bond Reserve Account to "Series 2009A" or such other designation as shall reflect the date of sale. Approval of the matters delegated to the Chief Financial Officer under this Resolution may be evidenced by execution of a certificate or the Series 1999B Escrow Agreement. Section 4. Modification of Provisions for Additional Junior Lien Bonds. Section 11 of the Resolution of August 12, 2008 and Section 20(b) of the Fourth Supplemental Revenue Bond Resolution are hereby modified to permit issuance of Additional Junior Lien Bonds only as follows. The right is reserved, in accordance with the provisions of Act 94, to issue additional bonds payable from the Net Revenues of the System which shall be of equal standing and priority of lien on the Net Revenues of the System with any Series 1999B Bonds which might remain outstanding and the Series 2009A Bonds (which lien is subordinate in priority of lien on the Net Revenues of the System pledged to secure payment of the Senior Lien Bonds), but only for the following purposes and under the following terms and conditions: (a) For repairs, extensions, enlargements and improvements to the System or for the puJ Dose of refunding a portion of any Outstanding Bonds and paying costs of issuing such Additional Junior Lien Bonds, including deposits which may be required to be made to a junior lien bond reserve account. Junior Lien Bonds for such purposes shall not be issued pursuant to this subparagraph(a) unless the actual or augmented Net Revenues of the System for the fiscal year of the System ending not more than 15 months prior to the sale of Additional Junior Lien Bonds shall be equal to at least one hundred twenty-five (125%) percent of the maximum Aggregate Debt Service Requirement in any current or future fiscal year on the Outstanding Senior Lien Bonds, the Outstanding Junior Lien Bonds, and on the Additional Junior Lien Bonds then being issued. If the Additional Junior Lien Bonds are to be issued in whole or in part for refunding Outstanding Bonds, the maximum Aggregate Debt Service shall be determined by deducting from the principal and interest requirements for each operating year the annual Aggregate Debt Service Requirement of any Bonds to be refunded from the proceeds of the Additional Junior Lien Bonds. Special Board Mtg. June 9,2009 Page 4 of 8 Net Revenues may be augmented as follows for the purposes of this subsection (a): (1) If the System rates, fees or charges shall be increased at or prior to the time of authorizing the Additional Junior Lien Bonds, the Net Revenues may be augmented by an amount which in the opinion of the Board's financial advisor will reflect the effect of the increase had the System's billings during such time been at the increased rates. (2) The actual Net Revenues may be augmented by the estimated increase in Net Revenues which in the opinion of the Board's financial advisor will accrue as a result of new customers which have not been serviced during the fiscal year described in paragraph (a) above or as a result of the acquisition of the repairs, extensions, enlargements and improvements to the System which have been made during or subsequent to the fiscal year described in paragraph (a) .above or which will be acquired in whole or in part from the proceeds of the Additional Junior Lien Bonds to be issued. No Additional Junior Lien Bonds of equal standing as to the Net Revenues of the System with the Outstanding Junior Lien Bonds shall be issued pursuant to the authorization contained in subparagraphs (a) or (c) if the City shall then be in default in making its required payments to the Operation and Maintenance Fund, the Redemption Fund established for payment of the Senior Lien Bonds, or the Junior Lien Bond and Interest Redemption Fund. (b) For refunding all of the Outstanding Junior Lien Bonds and paying costs of issuing such Additional Junior Lien Bonds. (c) Additional Junior Lien Bonds may be issued without meeting any of the conditions and tests set forth in subsection (a) above for any one or more of the following purposes: ( 1) to pay the cost of acquisition and construction of any repairs, replacements, betterments, improvements, major renewals or corrections of any damage or loss to the System necessary, in the opinion of the Consulting Engineer, to keep the System in good operating condition or to prevent a loss of Revenues therefrom or (ii) to pay the cost of decommissioning, disposal or termination of the System. Determination by the Board as to existence of conditions permitting the issuance of Add i i.ional Junior Lien Bonds shall be conclusive. Section 5. Other Actions. In the event that the Chief Financial Officer is not available at the time that it becomes necessary to take actions directed or authorized under this resolution, then either the Manager of Finance and Planning or another person designated by the Chief Financial Officer or the General Manager of the Board or a person designated by him is authorized to take the actions delegated to the Chief Financial Officer by this Resolution. The officers, administrators, agents and attorneys of the Board are authorized and directed to take all other actions necessary and convenient to facilitate issuance and sale of the Series 2009A Bonds and the refunding of Series 1999B Bonds and the call of the refunded bonds prior to maturity, and to execute and deliver all other agreements, documents and certificates and to take all other actions necessary or convenient in accordance with this Resolution, and to pay costs of issuance Special Board Mtg. June 9,2009 Page 5 of 8 including but not limited to a Board Administrative Fee, placement agent fees, financial advisor fees, bond counsel fees, verification agent fees, auditor fees, fees of counsel to the Bond Purchaser, and any other costs necessary to accomplish the refunding of Series 1999B Bonds and the call of the refunded bonds prior to maturity and the sale and delivery of the Series 2009A Bonds. Section 6. Applicability of the Outstanding Bond Resolutions. Except to the extent amended, supplemented or otherwise provided in this Resolution, all of the provisions and covenants provided in Bond Resolution shall apply to the Series 2009A Bonds issued pursuant to provisions of this Resolution, such provisions of said Resolution being made applicable to the Series 2009A Bonds herein authorized. Section 7. Conflicting Resolutions. All resolutions and parts of resolutions insofar as they conflict with the provisions of this resolution are hereby rescinded. Section 8. Severability and Paragraph Headings. If any section, paragraph, clause or provision of this Resolution shall be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the other provisions of this Resolution. The paragraph headings in this Resolution are furnished for convenience of reference only and shall not be considered to be part of this Resolution. Section 9. Publication and Recordation. In accordance with the provisions of Section 6 of Act 94, this Resolution shall be published once in full in either the Lansing State Journal or The City Pulse, which are newspapers of general circulation in the City qualified under State law to publish legal notices, promptly after its adoption, and this Resolution shall be recorded in the minutes of the Board and such recording authenticated by the signatures of the Chairperson and Corporate Secretary of the Board. Section 10. Effective Date. This Resolution is hereby determined to be immediately necessary for the preservation of the public peace, property, health and safety of the City. In accordance with the provisions of Section 6 of Act 94, this Resolution shall become effective immediately upon its adoption. Special Board Mtg. June 9,2009 Page 6 of 8 We hereby certify that the foregoing is a true and complete copy of a resolution duly adopted by the Lansing Board of Water and Light of the City of Lansing, State of Michig,,an, at a Special meeting held on Tuesday, June 9, 2009 at_.__in., prevailing Eastern Time, and that said meeting was conducted and public notice of said meeting was given pursuant to and in full compliance with the Open Meetings Act, being Act 267, Public Acts of Michigan, 1976, and that the minutes of said meeting were kept and will be or have been made available as required by said Act 267. We further certify that notice of said Special meeting was given to each member of the Board in accordance with the rules of procedure of the Board. We further certify that the following Commissioners were present at said meeting: and that the following Commissioners were absent We further certify that Commissioner moved adoption of said Resolution, and that said motion was supported by Commissioner We further certify that the following Commissioners voted for adoption of said Resolution: and that the following Commissioners voted against adoption of said Resolution: I further certify that said Resolution has been recorded in the Resolution Book and that such recording has been authenticated by the signature of the Chairperson and Corporate Secretary of the Board. Chairperson Corporate Secretary Motio,i by Commissioner Cochran, seconded by Commissioner Thomas to approve the resolution entitled, "Resolution Authorizing Sale of Refunding Bonds". Action: Carried unanimously. NEW BUSINESS Special Board Mtg. June 9,2009 Page 7 of 8 None. MANAGER'S REMARKS Delta ! )wnship. General Manager J. Peter Lark announced that the Lansing Board of Water and Light (BWL) and Delta Township signed a new water contract. Congratulations were extended to Executive Director George Stojic and staff with respect to negotiating and signing the new agreement. BWL Chili Cook-off. General Manager Lark advised that approximately 13,000 people attended the 14th Annual BWL Chili Cook-off. A significant portion of the cost was covered by sponsorships and it is possible that the event may come as no expense to the BWL. Congratulations were extended to Director Calvin Jones, Public Relations Manager Cheval Breggins, LEPFA President and Chief Executive Officer Eric Hart and many other volunteers. COMMISSIONERS' REMARKS Commissioner Cochran acknowledged that this maybe his last board meeting as a Board Commissioner, as he is not seeking reappointment at this time. He also commented that differences in opinion are healthy for a board of this level. In addition, Commissioner Cochran advised of an upcoming article written by Gretchen Cochran with respect to efficiency posts. Commissioner Zerkle noted that she was sad to see Commissioner Cochran leave the Board of Commissioners. She also thanked him for his assistance, as he was the first Commissioner to offer aid when she was initially appointed to the board. General Manager Lark thanked Commissioner Cochran for his support and time served on the Board of Commissioners. Commissioner Kramer expressed gratitude for Commissioner Cochran's service to the Board of Commissioners and appreciation for the difference of opinion shared with fellow board members. Commissioner Thomas noted his appreciation for Commissioner Cochran's service and congratulated staff on receiving the Return on Environment Partnership Award. Commissioner Bossenbery thanked staff for their hard work and efforts with respect to the Annual Chili Cook-off. EXCUSED ABSENCE On me Iion by Commissioner Thomas, seconded by Commissioner DeLuca, to excuse the absenc- of Commissioners Semone James-Howes and Frank Lain. Special Board Mtg. June 9,2009 Page 8 of 8 Action: Carried unanimously. PUBLIC COMMENTS There were no public comments. ADJOURNMENT On motion by Commissioner Cochran, seconded by Commissioner Kramer, the meeting adjourned at 5:46 p.m. /s/Rhonda Jones, Corporate Secretary Filed with Lansing City Clerk June 16, 2009 Rescheduled Bd Mtg. March 26,2009 Page 12 of 46 Environmental Charge Chilled Water: (Attachment D) General Chilled Water Service—Rate 1 --------------------- Motion by Commissioner Cochran, seconded by Commissioner Thomas to approve the resolution regarding the 2.5% Rate Increase for Electric, Water, Steam and Chilled Water and to approve the Environmental Charge effective May 1, 2009. Action: The motion carried by a vote of 5-1. UNFINISHED BUSINESS None. NEW BUSINESS None. RESOLUTIONS esolution 2009-3- LANSING BOARD OF WATER AND LIGHT RESOLUTION HONORING JULEE M. RODOCKER WHEREAS, it is indeed a pleasure to extend this expression of our thanks and best wishes to Julee M. Rodocker for the time, energy, and talent she contributed as a Commissioner of the Lansing Board of Water and Light; and WHEREAS, Julee M. Rodocker, a lifelong resident of South Lansing was appointed to the Board of Commissioners on August 21, 2006 as a Second Ward Commissioner. Julee's dedication and commitment coupled with her 4-9 22 years of retail industry experience allowed her to become an invaluable member of the Board of Commissioners; and WHEREAS, Julee was elected Vice Chair from December 2007 through July 2008 and also served as the Chair of the Human Resource Committee; and as a member of the Ad Hoc Committee for Workforce Development and the Executive and Finance Committees respectively; and WHEREAS, On behalf of her colleagues, employees of the Lansing Board of Water and Light and the citizens of Lansing, we offer our sincere gratitude for the knowledge, skills and abilities she utilized and contributed as a Commissioner of the Lansing Board of Water and Light. Rescheduled Bd Mtg. March 26,2009 Page 1 l of 46 WHEREAS, the Board recognizes the decline in Michigan's economy has caused financial difficulties for many of its customers; and WHEREAS, on January 26, 2009, the Board held a Public Hearing and solicited public comment on the proposed increases; and WHEREAS, on March 18, 2009 the Board held a 2"d Public Hearing for the purpose of soliciting additional public comment on the proposed increase; and WHEREAS, the proposed rate increases for the Fiscal Year 2009 Budget will take effect May 1, 2009; and WHEREAS, the Board of Commissioners has considered the comments of the public as well as the recommendations made by the BWL. RESOLVED, That the electric, water, steam, and chilled water rate schedules listed below and detailed in the attached rate schedules be adopted and made effective for electric, water, steam, and chilled water consumption on or after May 1, 2009. Electric: (Attachment A) Residential Service—Rate 1 General Large Service—Rate 3 Large General Service—Rate 4 Primary Electric Service—Rate 5 Municipal Water Pumping Electric Service—Rate 7 Large Capacity Electric Service—Rate 8 Outdoor Lighting Service—Rate 9 Traffic Light Service—Rate 11 Space Conditioning and Electric Water Heating Service—Rate 12 Residential Electric Service, Senior Citizen —Rate 21 Street Lighting Service—Rate 31 Street Lighting Service—Rate 32 Environmental Charge Energy Cost Adjustment Water: (Attachment B) Residential Water Service—Rate 1 General Water Service—Rate 2 Fire Service—Rate 4 Lawn Sprinkling Water Service—Rate 5 Fire Hydrant Charges —Rate 6 Steam: (Attachment C) General Steam Service—Rate 1 Industrial Steam Service—Rate 2 General Steam Service—Rate 3 Residential Steam Service—Rate 5 Fuel Cost Adjustment Rescheduled Bd Mtg. March 26,2009 Page 10 of 46 RESOLVED, that the Fourth Amendment to the Lansing Board of Water and Light Defined Benefit Plan for Employees' Pensions is hereby adopted effective as stated therein; and FURTHER RESOLVED, that the Chair of the Board of Commissioners and the Corporate Secretary are hereby authorized to execute said Fourth Amendment on behalf of the Board. -------------------- Motion by Commissioner Thomas, seconded by Commissioner DeLuca to approve the resolution regarding the Fourth Amendment to the Defined Benefit Pension Plan. Action: Carried unanimously. esolution 2009-3-3 C. Rate Increases for Electric, Water, Steam and Chilled Water; Implementation of Electric and Steam Environmental Charge WHEREAS, the Corporate Financial Targets for each of the Lansing Board of Water and Light's Strategic business units is 6.18% return on fixed assets and materials and supplies that would require $32.1 million of combined net income; and WHEREAS, the Fiscal Year 2009 budget filed with the City of Lansing included the following proposed rate increases: Electric Utility Customers 4%, Water Utility Customers 7%, and Steam Utility Customers 9% to be effective January 1, 2009; and WHEREAS, the proposed Fiscal Year 2009 budget with the proposed rate increases effective January 1, 2009 as filed would result in a combined net income of$4.5 million, or .86% return on fixed assets and materials and supplies; and WHEREAS, unexpected increases in post retirement benefit costs for Fiscal Year 2009 and increased contributions to the Board of Water and Light's Post-Retirement VEBA Trust fund resulting from market declines in the value of the Defined Benefit Plan assets will negatively affect current projections of Fiscal Year 2009 net income beyond that reflected in the original budget projections; and WHEREAS, the revised combined net income projection for Fiscal Year 2009 is less than $1 million; and WHEREAS, the revised Fiscal Year 2009 cash reserves after contributions to pay for budgeted capital expenditures are now expected to be diminished by more than $9 million; and WHEREAS, the Staff recommends that the Electric Residential Basic Service Charge should be changed from$4.76 to $5.00 per month; and WHEREAS, the Staff proposes implementation of an Environmental Charge Tariff to recover expenses related to environmental restoration projects; and Rescheduled Bd Mtg. March 26,2009 Page 9 of 46 Other Commissioner Thomas thanked Communication Director Mark Nixon for the press release regarding the BWL's Water Distribution Department who advanced to nationals after winning a statewide water-tapping competition. There being no further business, the meeting adjourned at 7:40 p.m. Respectfully submitted Sandra Zerkle, Chair Committee of the Whole MANAGER RECOMMENDATIONS esolution 2009-3-I A. Changing Designation of Series 2008B and 2008B Junior Lien Bonds Resolution Regarding RefundingBonds onds WHEREAS, on August 12, 2008 the Lansing Board of Water and Light (the "Board") authorized sale of Water Supply, Steam, Chilled Water and Electric Utility Steam Subordinate Lien Revenue Refunding Bonds, Series 2008B (Federally Taxable) (the "Series 2008B Bonds") in order to refund a prior issue of bonds and reduce the Board's aggregate debt service; and WHEREAS, market conditions in 2008 did not allow for the sale of the Series 2008B Bonds and it is necessary to update the August 12, 2008 resolution. NOW, THEREFORE, BE IT RESOLVED THAT: 1. The Board's Chief Financial Officer is authorized to change the series designation of the Series 2008B Bonds and the Series 2008B Junior Lien Bond Reserve Account to "Series 2009A" or such other designation as shall reflect the date of sale. 2. All resolutions and parts of resolutions insofar as they conflict with the provisions of this resolution are hereby rescinded. This Resolution shall become effective immediately upon its adoption. -------------------- Motion by Commissioner Cochran, seconded by Commissioner James-Howes to approve the resolution regarding the Changing Designation of Series 2008B and 2008B Junior Lien Bonds. Action: Carried unanimously. esolution 2009-3-2 B. Fourth Amendment to the Defined Benefit Pension Plan Rescheduled Bd Mtg. March 26,2009 Page 8 of 46 • Conducted Diversity Training with new employees. • Selected 20 students to the "First Step Program"; a diverse student collaboration. • Conducted Anti-Harassment Policy Training Program with 700 plus employees. • Various community, statewide, and national diversity training and webinars have been made available for staff. • Continue ongoing meetings with Public Power Associates (PPA). • PPA has established a Diversity CEO Roundtable attended by J. Peter Lark and other Chief Executive Officers in the region. • Met with Jackie Thomas-Hall, Diversity & Inclusion Director with Sparrow Health System to discuss regional diversity opportunities. • Potential next steps with regards to diversity. Following the update, committee members thanked staff for their efforts and discussed the importance of diversity and anti-harassment employee-training programs. Update on New Generation J. Peter Lark provided an update regarding new generation. It was advised that the BWL would review and evaluate its current plans in light of new federal administration, possible carbon cap and trade programs, the State of Michigan Governors address regarding a 45% fossil fuel reduction by 2020, and market uncertainties. In order to maintain reliability one must couple renewables with baseload generation. Biomass is a good supplement for renewables but it does not completely replace coal. In response to a Commissioner inquiry, staff reported that the BWL would experiment with burning wood, paper and/or sludge pellets at the Erickson Plant to determine how well the plant processes the material. The goal is to use 10% biomass at the Erickson Plant within 12-months. The BWL's organizational goals are reliability, affordability and environmental stewardship. Quarterly Legal Update Moved by Commissioner James-Howes, seconded by Commissioner Cochran to enter into closed session to discuss pending litigation and a privileged document received from General Counsel Brandie Ekren as protected by Open Meetings Act exemption MCL 15.268(e and h). The roll was called. (7:06 p.m.) Yeas: Commissioners Robert Cochran, Tony DeLuca, Semone James-Howes, Peter Kramer, Frank Lain, Tracy Thomas and Sandra Zerkle. Nays: None. Absent: None. Carried unanimously. Moved by Commissioner Kramer, seconded by Commissioner Cochran that the Committee of the Whole returns to open session. Carried unanimously. The Committee of the Whole meeting reconvened in open session at 7:39 p.m. Rescheduled Bd Mtg. March 26,2009 Page 7 of 46 Rate Noticing Update J. Peter Lark informed the Committee of the Whole that he discussed the rate filing and public notice process with the Corporate Secretary with regards to the previous rate case. With input from management and the Corporate Secretary, a receipt of delivery document was created to ensure that the BWL has proof of service for future matters of this nature. Following the update, the Committee of the Whole briefly discussed the specifics of the previous rate filing relative to the responsibility areas. Delta Township Contract Executive Director of Strategic Planning and Development George Stojic provided an update regarding the Delta Township contract with regards to capacity, contract length, cost of service and interruptible/uninterruptible load. The final contract was sent to Delta Township with an expectation that it would be presented to the Board of Directors for review and approval. Update on Lansing State Journal Editorial Board Interview J. Peter Lark gave an overview of the topics discussed during the Lansing State Journal Editorial Board interview. The discussion points included but were not limited to new generation, proposed rate increase, competitive utility rates, General Motors shutdown, coal contract, third party market sales, economic environment, cost reduction measures, reliability, cost and environmental stewardship. Commissioner Zerkle noted her appreciation for Lark's vocalization of the reasoning for the proposed rate increases. The Commissioners also relayed the positive customer feedback they received following the January 2009 public hearing with regards to how well the speakers were treated during the hearing. Update on BWL Diversity Activities Diversity and Public Relations Manager Cheval Breggins provided an update regarding BWL diversity activities. The update addressed several initiatives that included the following items: • Develop and establish Diversity & Public Relations Department and Training/Organizational Development Department. • Developed the Inclusion, Equity and Diversity Council (IEDC) and the Inclusion and Equity Diversity Advisor Panel to review policies, procedures and processes. • The IEDC has been involved in the IED plan. • Develop and establish Diversity &Public Relations Department. • BWL employees attended NAACP Award Dinner, Rev. Dr. Martin Luther King Jr. Holiday Luncheon, Caesar Chavez Celebration, and Silver Bells. • The Inclusion & Equity Diversity Council and The Inclusion and Equity Diversity Advisor Panel are developing 2010 and 2011 BWL Diversity Calendar. • Established diversity articles in BWL Pipeline Newsletter. • Conducted company-wide diversity survey, one-on-one interviews and retiree focus groups. • Restructured Inclusion, Equity & Diversity Training Focus. • Conducted Supervisor and Management Lunch and Learn Sessions. • Researched and implemented recruitment methods to insure diverse applicant pool. • Conducted Integrated Management Team Development, Coach, and Mentoring Training that has a diversity component. Rescheduled Bd Mtg. March 26,2009 Page 6 of 46 Absent: None. Public Comments There were no public comments. Approval of Minutes Motion by Commissioner James-Howes, seconded by Commissioner Thomas to approve the Committee of the Whole meeting minutes of January 13, 2009. Action: Carried unanimously. Resolution for Commissioner Julee Rodocker On motion by Commissioner James-Howes, seconded by Commissioner Cochran to move the proposed resolution honoring former Commissioner, Julee M. Rodocker to the full board for consideration and approval. Action: Carried unanimously. Rate Case Update General Manager J. Peter Lark briefly discussed the rate case materials pertaining to the upcoming March 18, 2009 public hearing. Lark commented on projected net income and commended staff for their efforts regarding a variety of cost reduction measures. In response to a Commissioner inquiry, Lark confirmed that the new chilled water system project would come in on budget. Commissioner Zerkle thanked staff for their cost reduction efforts and advised that the information makes it easier to communicate the proposed rate increase to the areas they represent. Board Budget Review Finance Committee Chairperson Peter Kramer provided a brief overview regarding the board budget review that took place during the Finance Committee meeting held March 10, 2009. The Finance Committee reviewed the Corporate Secretary, Internal Auditor and Board of Commissioners budget for possible cost saving measures and recommendations for the new fiscal period. Recommendations regarding each respective budget for fiscal year 2009/2010 will take place at the next Finance Committee meeting. Call Center Hours/Remittance Center J. Peter Lark noted that the Call Center hours are scheduled to change effective April 1, 2009. Currently, the Call Center is open 24 hours a day, seven days a week. In an effort to create efficiencies, the Call Center will be open Monday through Friday 7:00 a.m. to 9:00 p.m. and Saturday 9:00 a.m. to 5:00 p.m. The new operating hours were tested during the past holidays and worked quite well. BWL emergency phone numbers will continue to operate 24 hours a day, seven days a week. The change in operating hours will result in savings of$130,000 per year. The information was provided to BWL customers in the "Connections"bill insert. Rescheduled Bd Mtg. March 26,2009 Page 5 of 46 Committee members applauded staff for their efforts regarding the management of BWL's finances. Banking Services Update J. Peter Lark provided an update regarding the BWL's banking services. As such, in 2007 the Board of Commissioners asked staff to review the following areas that included: 1) consolidation of advisory services for the Defined Benefit Plan Trust and VEBA Trust Accounts, 2) consolidation of advisory services for the Defined Contribution 401 a and Deferred Compensation Plans, and 3) banking services. The first two matters are complete and in the process of transitioning to new investment advisors. Due to the uncertainty in the banking industry, staff recommended canceling its existing request for proposal (RFP) for banking services and extending its current contract with PNC (formerly known as National City) for two years. Staff will issue a new RFP to solicit proposals for banking services once the banking industry stabilizes. Board Budget Review The Finance Committee reviewed the fiscal year 2008/2009 budgets for the Corporate Secretary, Internal Auditor and the Board of Commissioners to determine how they could reduce cost. In consideration of possible efficiency measures to effectuate a budget reduction; the committee explored the following: 1) eliminate overtime, 2) reduce non-essential travel and conference for all responsibility areas, 3) consider a 10% reduction of each line item, 4) review the staff size of the Corporate Secretary's office, 5) remove the Audit Specialist position from the Internal Audit Department, and 6) decrease the Board of Commissioners budget by approximately 40-50%. In addition, Commissioner Cochran suggested that the BWL budget for travel and conference to ensure staff is kept abreast of new federal regulation matters. It was also advised that board members consider attending an American Public Power Association conference for the learning experience. There being no further business, the meeting adjourned at 5:30 p.m. Respectfully submitted Peter W. Kramer, Chair Finance Committee COMMITTEE OF THE WHOLE March 10, 2009 The Committee of the Whole of the Board of Water and Light met at the Executive Offices, Lansing beginning at 5:45 p.m. on Tuesday, March 10, 2009. Committee of the Whole Chairperson Sandra Zerkle called the meeting to order and asked the secretary to call the roll. The following members were present: Commissioners Robert Cochran, Tony DeLuca, Semone James-Howes, Peter Kramer, Frank Lain, Tracy Thomas and Sandra Zerkle. Rescheduled Bd Mtg. March 26,2009 Page 4 of 46 Vanerian expressed that total returns could recover before the end of the fiscal year depending on the state of the market. Vanerian also distributed and discussed a handout entitled, "Remembering 2008", which detailed economic matters that occurred within a 60-day timeframe. Vanerian continued to recommend the current asset allocation mix in order to position the BWL to take advantage of the market upswing when it occurs. This recommendation is based on the understanding that asset allocations should be based on a significant period of time, not moments. Our period of time consideration spans approximately 50-70 years, which include anomalies such as the Great Depression, recessions and World War II. 2008A Bond Resolution General Manager J. Peter Lark introduced the Bond Resolution that requests changing the series name designation of the Series 2008B Bonds and the Series 2008B Junior Lien Bond Reserve Account to Series 2009A. Market conditions did not allow for sale of the series bonds in 2008 and hence warranted an update to the resolution to reflect the renaming; staff will also re- evaluate the series. On motion by Commissioner Cochran, seconded by Commissioner Lain to move the proposed resolution regarding the 2008A Bond Resolution to the full board for consideration and approval. Action: Carried unanimously. Defined Benefit Compliance Amendment J. Peter Lark introduced the Defined Benefit Compliance Amendment and resolution. The technical amendments reflect new regulations under Internal Revenue Code Section 415 and the Pension Funding Equity Act. In response to Commissioner inquiries, General Counsel Brandie Ekren confirmed that the Fourth Amendment is a completely new addendum to the BWL's Defined Benefit Plan for Employees' Pension. On motion by Commissioner Lain, seconded by Commissioner Cochran to move the proposed resolution regarding the Defined Benefit Compliance Amendment to the full board for consideration and approval. Action: Carried unanimously. Quarterly Update on Finances J. Peter Lark provided a quarterly financial update that included information relative to the December 2008 monthly financial statements, Financial Report ending December 31, 2008, and the Balance Scorecard. Change in net assets as of December 31, 2008 is $13.5 million with budget fiscal year end projections netting out at zero, which excludes the Boards consideration of the potential rate increase of$833,000. Management is diligently working to implement a variety of measures to avoid cutting into cash reserves, and the positive December 2008 numbers reflect managements cost reduction efforts. Staff will also continue to communicate their cost reduction measures so that the public is aware of their efforts. In response to Commissioner inquiries, it was confirmed that it is currently too speculative for the BWL to provide a definitive answer as to how a General Motors bankruptcy would affect the BWL. Staff will conduct an analysis regarding the matter with the assistance of a bankruptcy expert. Rescheduled Bd Mtg. March 26,2009 Page 3 of 46 credentials and ratings, and the salary range. The committee gave direction to Bill Brewer and Human Resource Director Michael Flowers regarding reference checks and salary consideration. Commissioner Thomas departed the meeting at 6.50 p.m.due to a prior obligation. Following further discussion, the Finance Committee took the subsequent action: Motion by Commissioner Cochran, seconded by Commissioner Lain to authorize the search firm, Global Business Resource Group to make a pending offer of employment to Philip Perkins pending positive references and all other matters. Action: Carried unanimously. There being no further business, the meeting adjourned at 7:30 p.m. Respectfully submitted, Peter W. Kramer, Chair Finance Committee FINANCE COMMITTEE March 10, 2009 The Finance Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 4:00 p.m. on Tuesday, March 10, 2009. Finance Committee Chairperson Peter Kramer called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Robert Cochran, Peter Kramer and Tracy Thomas. Alternate committee member Tony DeLuca was also present in addition to Commissioners Frank Lain and Sandra Zerkle (arrived 4:15 p.m.). Absent: None. Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Thomas, seconded by Commissioner Lain to approve the Finance Committee meeting minutes of January 13, 2009 and February 2-3, 2009. Action: Carried unanimously. Defined Benefit and VEBA Ouarterly Update First Vice President Marie Vanerian of Merrill Lynch Institutional Consulting Group provided the quarterly update on the Lansing Board of Water and Light's (BWL) Defined Benefit and Retiree Benefit Plan and Trust (VEBA) investment strategy. The update included information relative to the distribution of returns, total returns, historical data and current market fluctuations. Rescheduled Bd Mtg. March 26,2009 Page 2 of 46 Received and placed on file. Letter received February 18, 2009 from Philip Wells opposing the proposed new coal-fired power plant. Received and placed on file. Email received Febniary 24, 2009 from Beth Lawrence regarding the recent racial lawsuit filed against the BWL. Received and placed on file. Letter received February 27, 2009 from Joanne Harvey opposing the proposed new coal-fired power plant. Received and placed on file. Letter received March 4, 2009 from former BWL Commissioners Ronald Callen, Gary Calkins, Joseph Graves Jr. and Nancy Wonch submitting recommendations regarding the proposed new coal-fired power plant. Received and placed on file. Letter received March 18, 2009 from Sonya Butler regarding the proposed rate changes for electricity and water. Received and placed on file. COMMITTEE REPORTS FINANCE COMMITTEE February 2-3, 2009 The Finance Committee of the Board of Water and Light met at the Executive Offices, Lansing on Monday, Febniary 2, 2009 at 4:40 p.m. and Tuesday, February 3, 2009 at 5:10 p.m. Finance Comnttee Chairperson Peter Kramer called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Robert Cochran, Peter Kramer and Tracy Thomas. Alternate committee members Tony DeLuca and Semone James-Howes were also present in addition to Commissioner Frank Lain. Absent: None. Public Comments There were no public comments. Interview of Internal Audit Candidates The Finance Committee met to consider the finalists for the Internal Auditor position with the Lansing Board of Water and Light. The committee members received instruction from Bill Brewer of Global Business Resource Group and proceeded to conduct structured interviews with three candidates on February 2rid and adjourned at 9:35 p.m. A structured interview was also held with the fourth candidate on February 3`d, which ended at 6:05 p.m. At the conclusion of the interviews, the committee members discussed the interview results, the candidates' � r... +Cf`'L Approved by the Board: May 26, 2009 14INUTES OF THE BOARD OF COMMISSIONERS RESCHEDULED MEETING LANSING BOARD OF WATER AND LIGHT Thursday,March 26, 2009 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Present: Commissioners Margaret Bossenbery, Robert Cochran, Tony DeLuca, Semone James-Howes, Frank Lain and Tracy Thomas. Absent: Commissioners Peter Kramer and Sandra Zerkle. The Secretary declared a quorum present. Chairperson Lain called the meeting to order at 5:35 p.m. APPROVAL OF MINUTES Motion by Commissioner Cochran, seconded by Commissioner Thomas to approve the minutes of the regular board meeting held January 27, 2009 and the special board meeting held February 26, 2009. Carried unanimously. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMEBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. Joseph Davis, 61h District Representative and former Business Manager of IBEW Local 352 encouraged the Board of Commissioners to continue to address the matters at hand. He also advised the board members to keep up the good work and noted the distortion of facts contained within recent news articles. COMMUNICATIONS Communication received February 2, 2009 from Lacey Cunningham opposing the proposed rate increase. Received and placed on file. Letter received February 3, 2009 from Betty Adams opposing the proposed rate increase. �� r Regular Board Mtg. May 26,2009 Page 13 of 13 ADJOURNMENT On motion by Commissioner Cochran, seconded by Commissioner Bossenbery, the meeting adjourned at 6:03 p.m. /s/Rhonda Jones, Corporate Secretary Filed with Lansing City Clerk June 2, 2009 Regular Board Mtg. May 26,2009 Page 12 of 13 RESOLUTIONS None. MANAGER'S REMARKS Chili Cook-off. General Manager J. Peter Lark reminded everyone of the upcoming 14t1, Annual BWL Chili Cook-off scheduled for Friday, June 5, 2009. Over 50 vendors, two bands, and Michigan State University athletes will participate in this year's event. Proceeds will go to Hope Scholars, Impression 5 Science Museum and Sparrow Foundation. In response to a Commissioner inquiry, Lark noted that the charitable organizations are historically the same every year, with the exception of the Sparrow Foundation, which was added to the list of charities approximately one year ago. Lark also thanked staff members and IBEW for their efforts regarding this endeavor. COMMISSIONERS' REMARKS Commissioner James-Howes expressed the possibility of this being her last official board meeting. She has not requested reappointment for the purpose of devoting more time to her career and family. She expressed fondness for the BWL and its Board appointees, which include the General Manager, Corporate Secretary and Internal Auditor. Commissioner James-Howes remarked that she voted her conscious and felt she represented the citizens of Lansing and did a good job. She went onto acknowledge Lark for his excellence and wished him well in moving forward. General Manager Lark thanked Commissioner James-Howes for her gracious service as a Board Commissioner. Commissioner Zerkle noted that it has been a learning experience and a pleasure working with Commissioner James-Howes. She also thanked Commissioner James-Howes for her time and effort as a Board Commissioner. Commissioner Kramer thanked Chief Financial Officer Susan Devon and staff for their financial efforts with respect to forecasting, developing the budget, and making conce,q;ions and departmental decisions to help keep the BWL successful. EXCUSED ABSENCE On motion by Commissioner DeLuca, seconded by Commissioner Kramer to excuse the absence of Commissioners Frank Lain and Tracy Thomas. Action: Carried unanimously. PUBLIC COMMENTS There were no public comments. i� Regular Board Mtg. May 26,2009 Page 11 of 13 B. Retail customers served by the Lansing Board of Water & Light wishing to bid their demand response into a Commission-approved independent system operator's or regional transmission organization's organized electric markets may do so by participating in the program established by the Lansing Board of Water & Light or its authorized designee. Retail customers are not permitted to participate in the demand response program of any other entity without the express prior authorization of the Lansing Board of Water &Light. FURTHER RESOLVED, the Lansing Board of Water& Light Rules and Regulations for Ele:tric Service, is hereby revised to add under the heading "Ancillary Services Provid,;-ct by Demand Response Resources" a new subsection to provide as follows: A. The Lansing Board of Water &Light or its authorized designee is the sole entity permitted to bid demand response on behalf of retail customers served by Lansing Board of Water & Light directly into any Commission- approved independent system operator's or regional transmission organization's organized markets as allowed by the regional transmission organization's existing tariffs. B. Retail customers served by the Lansing Board of Water & Light wishing to bid their demand response into a Commission-approved independent system operator's or regional transmission organization's organized markets as allowed by the regional transmission organization's existing tariffs may do so by participating in the program established by the Lansing Board of Water&Light or its authorized designee. Retail customers are not permitted to participate in the demand response program of any other entity without the express prior authorization of the Lansing Board of Water & Light. Section 4. This Regulation shall take effect immediately upon approval by the Board. -------------------- Motion by Commissioner Cochran, seconded by Commissioner DeLuca to approve the resolution entitled, "Prohibit Demand Response Aggregators". Action: Carried unanimously. UNFINISHED BUSINESS None. NEW BUSINESS None. Regular Board Mtg. May 26,2009 Page 10 of 13 WHEREAS, pursuant to Order No. 719, 18 C.F.R. § 35.28(g)(1)(i)(A)provides: "Every Commission-approved independent system operator or regional transmission organization that operates organized markets based on competitive bidding for energy imbalance, spinning reserves, supplemental reserves, reactive power and voltage control, or regulation and frequency response ancillary services (or its functional equivalent in the Commission-approved independent system operator's or regional transmission organization's tariff)must accept bids from demand response resources in these markets for that product on a basis comparable to any other resources, if the demand response resource meets the necessary technical requirements under the tariff, and submits a bid under the Commission-approved independent system operator's or regional transmission organization's bidding rules at or below the market-clearing price, unless not permitted by the laws or regulations of the relevant electric retail regulatory authority."; and WHEREAS, pursuant to Lansing City Charter, the Lansing Board of Water & Light is authorized to enact Rules and Regulations governing the provision of electric power its customers; and WHEREAS, the Board of Commissioners of the Lansing Board of Water and Light has determined that it would be harmful to the Lansing Board of Water& Light, and the collective interests of the Lansing Board of Water & Light, as a load-serving entity with an obligation to serve at retail, and the Lansing Board of Water& Light's retail customers to permit any entity other than the Lansing Board of Water &Light itself or its authorized designee to aggregate demand response on behalf of its retail customers; and WHEREAS, the Board of Commissioners of the Lansing Board of Water & Light as the electric retail regulatory authority for the Lansing Board of Water&Light, has determined it to be desirable that the aggregation of demand response on behalf of retail customers served by the Lansing Board of Water &Light to be bid directly into the organized electric and ancillary services markets administered by the Midwest Independent System Operator(or any successor independent system operator or regional transmission organization to which the Lansing Board of Water&Light is a participant either independently or through the Michigan Public Power Agency(MPPA) be performed by the Lansing Board of Water &Light or its authorized designee, the following amendments to the Code of the Lansing Board of Water&Light are hereby adopted. BE IT RESOLVED, the Lansing Board of Water &Light Rules and Regulations for Electric Service, is hereby revised to add under the heading"Aggregation of Retail Customer Demand Response" a new subsection to provide as follows: A. The Lansing Board of Water &Light or its authorized designee is the sole entity permitted to bid demand response on behalf of retail customers served by the Lansing Board of Water& Light directly into any Commission-approved independent system operator's or regional transmission organization's organized electric markets. Regular Board Mtg. May 26,2009 Page 9 of 13 WHEREAS, consistent with Board approved rate recovery of environmental remediation expenses, the staff of the BWL proposes to record all appropriate deferrals allowed under FAS #71 related to the recovery of environmental remediation expenses. RESO),\fED, that the Board of Commissioners, as the regulatory body of the Board of Water and Light, approve,pursuant to the Financial Accounting Standards (FAS) 71, the recognition of all appropriate deferrals related to the incurrence of environmental remediation expenses subject to recovery under the Environmental Charge. -------------------- Motion by Commissioner James-Howes, seconded by Commissioner Cochran, to approve the resolution entitled, "Application of Financial Standards#71 (FAS 471) to All Environmental Remediation Expense". Action: Carried unanimously. esolution 2009-5- Rules and Regulations for Electric,Water, Steam, and Chilled Water Utility Services RESOLVED, that the amendments to the Rules and Regulations for Electric, Water, Steam, and Chilled Water Services be approved as presented, to be effective July 1, 2009 (see at,<<chments.) --------------------- Motion by Commissioner Kramer, seconded by Commissioner Bossenbery to approve the resolution entitled, "Rules and Regulations for Electric, Water, Steam, and Chilled Water Utility Services". Action: Carried unanimously. esolution 2009-5- Prohibit Demand Response Aggregators WHEREAS, the Federal Energy Regulatory Commission has issued Order No. 719, 125 FERC ¶61,071, 73 Fed. Reg. 64,099 (October 28, 2008); and WHEREAS, pursuant to Order No. 719, 18 C.F.R. § 35.28(g)(1)(iii) provides: "Each Commission-approved independent system operator and regional transmission organization must permit a qualified aggregator of retail customers to bid demand response on behalf of retail customers directly into the Commission-approved independent system operator's or regional transmission organization's organized markets, unless the laws and regulations of the relevant electric retail regulatory authority expressly do not permit a retail customer to participate." ; and Regular Board Mtg. May 26,2009 Page 8 of 13 -------------------- Motion by Commissioner James-Howes, seconded by Commissioner Kramer to approve the resolution entitled, "Naming of the Chilled Water Plant". Action: Carried unanimously. esolution 2009-5-3 Fiscal Year 2010 Operating and Capital Budget RESOLVED, that the annual Operating Budget covering Fiscal Year 2010 is hereby approved as presented; RESOLVED, that the Fiscal Year 2010 Capital Budget is hereby approved as presented; RESOLVED, that the forecast for capital expenditures for the Fiscal Years 2010-2015 is hereby accepted as presented; and RESOLVED FURTHER, that the Corporate Secretary be directed to make the appropriate filings with the City of Lansing City Clerk's office and the Mayor's office in accordance with the Lansing City Charter regarding the above actions. -------------------- Motion by Commissioner Kramer, seconded by Commissioner Cochran to approve the resolution entitled, "Fiscal Year 2010 Operating and Capital Budget". Action: Carried unanimously. (See attachments) esolution 2009-5 Application of Financial Accounting Standards#71 (FAS #71) to all environmental remediation expense WHEREAS, pursuant to Resolution#2003-8-3 the Board of Commissioners require management to receive Board approval before any deferrals under FAS 71; and WHEREAS, the Board of Commissioners has approved the specific deferral of environmental remediation expenses associated with the North Lake Lansing Landfill and Comfclt Street sites through Resolution#2004-11-2 and#2006-05-06; and WHEREAS, the environmental charge implemented as part of the May 1, 2009 rate increase allows for Board approved rate recovery of all environmental remediation expenses; and Regular Board Mtg. May 26,2009 Page 7 of 13 resources and to assist each other in the form of personnel, equipment, material and supplies in the event of emergencies that disrupt utility services; and WHEREAS, the Urban Cooperative Act of 1967, being MCL 124.501 et seq., permits public bodies and private entities to work together to provide mutual aid and assistance to both public and private water and wastewater utilities in need of emergency assistance caused by natural or man-made disasters; and WHEREAS, the Members have agreed to enter into this MI-WARN Mutual Aid Agreement, to describe the terms and conditions under which emergency assistance may be requested and provided; and WHEREAS, by executing the Agreement, the Parties express their intent to participate in a program of Mutual Aid and Assistance within the State of Michigan. THEREFORE BE IT RESOLVED, that the Board of Commissioners authorize the Genera? Manager and Corporate Secretary to sign the Michigan Water/Wastewater Agency .Response Network Mutual Aid and Assistance Agreement, in such form as approved by the Staff Attorney. -------------------- Motion by Commissioner James-Howes, seconded by Commissioner Cochran, to approve the resolution entitled, "Enter into an Agreement with the Michigan Water/Wasterwater Agency Response Network". Action: Carried unanimously. [Resolution 2009-5 NAMING OF THE CHILLED WATER PLANT WHEREAS, Roy E. Peffley served the Board of Water and Light for 28 years, the last eight of those as Electric Utility Director; and WHEREAS, during his tenure he was responsible for, among other things, the design, construction, and operations of the Erickson Electric Generation Station; and WHEREAS, in further recognition of his many other outstanding accomplishments including vision, leadership, and planning for the Board of Water and Light's financial future, it is with great honor that his years of devoted service and dedication be recognized. THEREFORE BE IT RESOLVED, that the chilled water plant located at 625 West Allegan Street in Lansing, Michigan, is hereby named the ROY E. PEFFLEY CHILLED WATER PLANT. Regular Board Mtg. May 26,2009 Page 6 of 13 of energy policies, business strategies, workforce diversity and environmental stewardship. The new logo revisions will modernize the look of the BWL as it continues to move forward in the community. In response to Commissioner inquires, Mr. Lark advised that the BWL would phase in the new logo over a period of time, with an expectation to use it in its entirety by 2010, assuming good financial standing. On motion by Commissioner Cochran, seconded by Commissioner Lain, to move the proposed resolution regarding the Revision of Lansing Board of Water and Light Logo to the full board for consideration and approval. Active: Carried unanimously. Excused Absence On motion by Commissioner Lain, seconded by Commissioner Cochran to excuse the absence of Commissioner Tracy Thomas. Action: Carried unanimously. Other Standard&Poor's (S&P) Bond Rating. J. Peter Lark announced that it appears the BWL maintained its AA-bond rating. S&P will notify the BWL of its final analysis once it has been confirmed. Federal Appropriations Budget. It was proposed by U. S. House of Representatives Mark Schauer that the BWL receive $4.7 million in federal appropriations for fiscal year 2010. Approximately$4 million will be designated for biomass projects and $700,000 for electric vehicles. A determination regarding the proposal is expected early 2010. There being no further business, the meeting adjourned at 6:25 p.m. Respectfully submitted Sandra Zerkle, Chair Committee of the Whole MANAGER'S RECOMMENDATIONS esolution 2009-5-1 ENTER INTO AN AGREEMENT WITH THE MICHIGAN WATER/WASTEWATER AGENCY RESPONSE NETWORK WHEREAS, certain Michigan water and wastewater agencies, have formed the "Michigan Water/Wastewater Agency Response Network," (MI-WARN), to share Regular Board Mtg. May 26,2009 Page 5 of 13 another in an emergency. Participation is voluntary and there is no obligation to respond or cost to participate. On motion by Commissioner Cochran, seconded by Commissioner James-Howes to move the proposed resolution regarding the agreement with the Michigan Water/Wastewater Agency Response Network to the full board for consideration and approval. Action: Carried unanimously. Updat,� ion Chiller Dick Peffley, Executive Director of Water and Special Projects reported that the BWL broke ground on the new chiller plant October 2008. Originally estimated at $21 million, the construction management team and trades people have diligently worked to bring the project in on schedule and at a budget not to exceed $20 million. In addition to the original plans, the BWL will also install two 6,000-kilowatt hour windmills, which will produce 12-kilowatts of total power. The new chilled water facility will be 60%more efficient than the previous chiller. Naming of the Chiller Plant J. Peter Lark introduced the proposed resolution regarding the naming of the new chiller plant. It was recommended that the facility be named the "Roy E. Peffley Chilled Water Plant" in recognition of his 28 years of service and responsibility in the building of the Erickson Electric Generating Station. On motion by Commissioner Kramer, seconded by Commissioner Lain, to move the proposed resolution regarding the Naming of the Chilled.Water Plant to the full board for consideration and approval. Discussion: Commissioner Zerkle advised that the plant naming was a wonderful gesture and trilnite to both Roy E. Peffley and Dick Peffley for their dedication to the BWL. Commissioner Kramer shared a childhood story with respect to the opening of the Erickson Electric Generating Station and the pride Roy Peffley felt at said occasion. He also noted that Dick Peffley will experience the same sentiment at the opening of the new chilled water plant. In response Commissioner Lain's suggestion, Mr. Lark noted that he has already directed staff to place a plague and/or picture of BWL retiree, Roy E. Peffley in the new facility. Action: Carved unanimously. BWL Logo Michelle Carlson, Marketing Analyst presented information to the committee members with respect to the newly proposed BWL logo. The BWL recommended a revision to its current logo in light of its upcoming 125th anniversary and progressive efforts in the areas Regular Board Mtg. May 26,2009 Page 4 of 13 Committee of the Whole Chairperson Sandra Zerkle called the meeting to order and asked the secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Robert Cochran, Tony DeLuca, Semone James- Howes, Peter Kramer, Frank Lain and Sandra Zerkle. Absent: Commissioner Tracy Thomas. Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Lain, seconded by Commissioner Cochran to approve the Committee of the Whole meeting minutes of March 10, 2009. Action: Carried unanimously. Presentation by Stephen H. Rall regarding New Generation James Cliff, Douglas Jester, Tremaine Phillips and Stephen Rall from Lansing Can Do Better and the Michigan Environmental Council presented alternative solutions to the Lansing Board of Water and Light's (BWL) current proposal with respect to new generation. The alternative proposal entitled, "Plan B: The Right Decision at the Right Time" includes a three-part strategy that speaks to a comprehensive and open evaluation of all potential resource options, which include: 1) Waiting 24-months before making a decision on new baseload generation. 2) Pursuing aggressive weatherization and energy efficiency programs. 3) Deploying renewable and distributed energy resources. The presentation also included information regarding future energy demands for General Motors, federal legislation, state regulatory action, stability and outlook of financial markets, and BWL policies that support customer utilization of renewable energy sources. Plan B recommends a strong commitment to energy efficiency and weatherization as well as a 24-month timeline to develop a new Integrated Resource Plan, that allows for the full consideration of economic, political, and financial risks and changes. In response to the information, committee members inquired as to the reliability of new technologies referenced during the presentation, more specifically compressed air energy storage. They also noted the importance of providing reliable baseload generation. Following discussion, the committee members noted that there would be need for additional information in the future as they proceed with discussions in regards to new generation. MI-WARN Resolution General Manager J. Peter Lark advised that the Michigan Water/Wastewater Agency Respop,e Network (MI-WARN) is a network of utilities that have agreed to assist one Regular Board Mtg. May 26,2009 Page 3 of 13 The committee also discussed in detail, the proposal to transfer the Corporate Secretary's Administrative Assistant position to a different responsibility area, which also requires an overview of the duties of the respective office. The transfer deemed fiscally responsible would .,flow the Corporate Secretary Office to concentrate on matters specific to the Board of Commissioners and not those of an operational nature. Committee members also noted that traditionally staff shares resources and hence the Corporate Secretary Office would have support when needed. The committee members expressed their thoughts with regard to the proposal, departmental responsibilities relative to board and operational matters as well as City of Lansing charter directives. They also discussed the departments current structure, the need for support should the Secretary be unavailable and the relevance of moving the position to another department. On motion by Commissioner Lain, seconded by Commissioner Bossenbery to move the proposed budget to the full board. Discussion: It was recommended that the Human Resource Committee study the position to determine appropriate responsibilities for the Corporate Secretary Office. It was further suggested the committee conduct a desk audit as part of its evaluation process. In addition, some committee members did not understand the purpose in moving the Administrative Assistant position to another department and suggested sharing the resource with operations by 50%. They also discussed ensuring that there be sufficient resources dedicated to the Corporate Secretary Office to carry out its duties and responsibilities. After further discussion, the Finance Committee took the following action; Action: The motion carried by a vote of 4-2. Excused Absence On motion by Commissioner Cochran, seconded by Commissioner Lain, to excuse the absence of Commissioner Thomas. Action: Carried unanimously. There being no further business, the meeting adjourned at 7:29 p.m. Respectfully submitted, Peter W. Kramer, Chair Finance Committee COMMITTEE OF THE WHOLE April 14, 2009 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 5:35 p.m. on Tuesday, April 14, 2009. Regular Board Mtg. May 26,2009 Page 2 of 13 Letter received May 15, 2009 from Nancy Mahlow of the Eastside Neighborhood Organization regarding the sludge pond on Aurelius Road. Received and placed on file. COMMITTEE REPORTS FINANCE COMMITTEE April 14, 2009 The Finance Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 6:35 p.m. on Tuesday, April 14, 2009. Finance Committee Chairperson Peter Kramer called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Robert Cochran, Tony DeLuca and Peter Kramer. Alternate committee members Margaret Bossenbery and Semone James-Howes were also present in addition to Commissioners Frank Lain and Sandra Zerkle. Absen': Commissioner Tracy Thomas Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Lain, seconded by Commissioner Cochran to approve the Finance Committee meeting minutes of March 10, 2009 as amended. Action: Carried unanimously. Board of Commissioners' Bud1jets: Corporate Secretary, Internal Auditor and Board of Commissioners The Finance Committee met to discuss the fiscal year 2009/2010 proposed budgets for the Corporate Secretary, Internal Auditor and the Board of Commissioners. Fiscal year budget comparisons for 2008/2009 and 2009/2010 were included in the packet materials to demonstrate the proposed net changes. A consolidated budget comparison that represented reductions for each respective department was also included in the materials. The proposed changes reflect the Lansing Board of Water and Light's (BWL) current efforts to reduce cost. Following brief discussion, the committee recommended a$5,000 increa;.e to the travel and conference line item for fiscal year 2009/2010 for both the Internal Auditor and the Board of Commissioners. The travel and conference budget allows for continuing education and certifications with respect to the Internal Audit Department, and utility and governance conferences for the Board of Commissioners. The line item changes for travel and conference represent a$38,500 budget reduction over 2008/2009 figures. 1 Board Approved on July 28, 2009 MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT Tuesday,May 26, 2009 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Present: Commissioners Margaret Bossenbery, Robert Cochran, Tony DeLuca, Semone James-Howes, Peter Kramer and Sandra Zerkle. Absen`: Commissioners Frank Lain and Tracy Thomas. The Secretary declared a quorum present. - Acting Chairperson Zerkle called the meeting to order at 5:40 p.m. c.0 L- APPROVAL OF MINUTES Motion by Commissioner Kramer, seconded by Commissioner Cochran to approve the minutes of the rescheduled regular board meeting held March 26, 2009. Carried unanimously. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMEBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There-were no public comments. COMMUNICATIONS Letter received April 7, 2009 from Clarence Suelter opposing the proposed new coal- fired power plant. Received and placed on file. Thank you e-mail and follow-up information received April 17, 2009 from Tremaine Phillips regarding the presentation held on April 14, 2009. Received and placed on file. Rescheduled Bd Mtg, March 26,2009 Page 13 of 46 RESOLVED, That the members of this Board hereby honor and commend Julee M. Rodocker for her two and a half years of distinguished service in Regular Session this 20h day of March 2009. We wish Julee enormous success as she continues her education at Michigan State University, and in all her future endeavors. Frank Lain, Chair Sandra Zerkle, Vice Chair Margaret A. Bossenbery Robert W. Cochran Tony DeLuca Semone M. James-Howes Peter W. Kramer Tracy Thomas Motion by Commissioner Cochran, seconded by Commissioner DeLuca to approve the resolution honoring former Commissioner Julee M. Rodocker. Action: Carried unanimously. Comments: Julee Rodocker noted that it was a blessing to be a part of the Board of Water and Light (BWL) and she was honored to represent the 2"d Ward. Ms. Rodocker thanked staff and also commented on her learning experience and the relationships developed while at the BWL. General Manager Lark thanked Ms. Rodocker on behalf of staff and noted that it was an honor to serve with her. MANAGER'S REMARKS First Step Resolution. General Manager Lark reported that the Lansing Community College (LCC) Board of Trustees passed a resolution honoring the BWL's First Step Program. Amongst other things, the resolution sited the BWL's efforts to address workforce needs, investment in tri- county area youth and helping to rebuild Michigan's economy. It was also reported that LCC positively reviewed the BWL's First Step Program. Rate Increase Information. General Manager Lark responded in detail to several questions and comments made by the general public during the public hearings held January 26, 2009 and March 18, 2009 respectively. The BWL is aware of the local and national economy and has made several efforts to contain costs. The cost containment measures were presented in detail at both respective public hearings. Although effective, the cost containment measures did not negate the need for a rate increase. The rate increase of 2.5% will apply to the electric, water, steam and chilled water utilities effective May 1, 2009. Rescheduled Bd Mtg. March 26,2009 Page 14 of 46 COMMISSIONERS' REMARKS Commissioner Lain commented on inaccurate news media stories relative to the BWL but also noted his appreciation of staff's respectful treatment of the news media. Commissioner Thomas thanked Julee Rodocker for her service and welcomed Margaret Bossenbery to the Board of Commissioners. He noted his pride in being a BWL board member and referenced the difficulties in the last three weeks relative to the news media coverage of the BWL. Commissioner Thomas also advised of the Board's continued respect and support of staff, the organizations direction, and relationships built with BWL customers. General Manager Lark thanked Commissioner Thomas for his comments and continued support. EXCUSED ABSENCE On motion by Commissioner Cochran, seconded by Commissioner DeLuca to excuse the absence of Commissioners Peter Kramer and Sandra Zerkle. Action: Carried unanimously. On motion by Commissioner Cochran, seconded by Commissioner DeLuca to excuse the absence of Commissioner Tracy Thomas from the Special Board meeting held February 26, 2009. Action: Carried unanimously. PUBLIC COMMENTS Business Manager of IBEW Local 352 Ron Byrnes, Jr., commented on recent news articles that did not reflect an accurate portrayal of the BWL and its union workforce. As such, he noted that compensation received at the BWL is competitive and appropriate for like job titles in the utility industry. Mr. Byrnes also noted the positive things occurring at the BWL, which include but are not limited to the union's participation with the First Step Program, donation of time and skills to community activities, increased employee morale, and the current leadership at the BWL. BWL employee Jack Houghtaling commented on recent news articles with respect to the BWL and linemen. It was advised that the news media did not provide a complete picture of their benefit package in comparison to other utilities. Mr. Houghtaling also commented on linemen retention and noted the difficult, demanding and dangerous job that they perform. Commissioner Lain noted the Board's respect for the work done by linemen to help ensure that people have electricity in Michigan. Commissioner Cochran agreed with the sentiment and also noted the danger involved in linemen work and thanked them for their professionalism and commitment to the utility and the community. Rescheduled Bd Mtg. March 26,2009 Page 15 of 46 ADJOURNMENT On motion by Commissioner Cochran, seconded by Commissioner DeLuca, the meeting adjourned at 6:30 p.m. /s/Rhonda Jones, Corporate Secretary Filed with Lansing City Clerk April 6, 2009 Rescheduled Bd Mtg. March 26,2009 Page 16 of 46 RESIDENTIAL ELECTRIC SERVICE RATE NO. 1 Availability-This rate is available to any single-family or multifamily dwelling of 4 units or less when the entire electric requirements are supplied at one point of delivery through one meter. Service to appurtenant buildings may be taken through the same meter. Service under this rate is not available to any single-family or multifamily dwelling unit of 4 units or less when a portion of the dwelling unit is used for commercial, industrial,or resale purposes unless the wiring is so arranged that service for residential and non-residential purposes are metered separately. Nature of Service-The service is alternating current,60 hertz, single phase, 120/240 nominal volts. Monthly Rate - Shall be computed in accordance with the following charges: 5/1/09 Basic Service Charge $5.00 Per customer per month Conimodit Char e Summer Billing Months of June through October $.0799 Per kWh for the first 500 kWh $.0847 Per kWh for all over 500 kWh Winter Billing Months of November through May $.0799 Per kWh for the first 500 kWh $.0829 Per kWh for all over 500 kWh Minimum Bill-The minimum bill is the basic service charge included in the monthly rate. Energy Cost Adjustment-This rate is subject to an Energy Cost Adjustment factor added to the above energy charges and calculated as defined on a separate rate schedule incorporated herein by this reference. Environmental Charge—This rate is subject to an Environmental Charge as defined on a separate rate schedule incorporated herein by this reference. The current Environmental Charge is$0.0005/kWh. Tax Adjustment-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 of Water and Light(BWL) property,or its operation,or the production and/or sale of electric 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. Application Charge-A$7.00 charge shall be added to the first regular bill for all customers turning on service at a service location irrespective of prior service with the BWL. Auxiliary Power Provision-Domestic customers desiring electric service as an auxiliary source of power to wind or solar powered generating equipment may take service under this rate schedule under special agreement with the BWL. The customer shall pay the charges set forth above. A customer taking auxiliary power under this rate shall pay all reasonable costs associated with any alteration of BWL equipment required for proper operation of the customer's generating equipment in parallel with the BWL system. A customer may elect to sell energy to the BWL at the rate of$.022/kWh delivered. Customers selling energy to the BWL shall pay a charge of$6.40 per month or part thereof instead of the above Basic Service Charge. Rules and Regulations - Service under this rate is subject to the BWL Rules and Regulations for Electric Service incorporated herein by this reference. Adopted: March 26,2009 Effective:May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 17 of 46 GENERAL ELECTRIC SERVICE RATE NO.3 Availability-This rate is available to any customer desiring secondary voltage service for any purpose when supplied at one point of delivery through one meter. The limitation to secondary-voltage service may be waived in instances where the character of the electric load at the premises served has changed substantially. This rate is not available for emergency or standby service. Nature of Service-The service is alternating current,60 hertz,single phase or three phase. The secondary voltage is determined by the Board of Water and Light(BWL). Monthly Rate-Shall be computed in accordance with the following charges. 5/1/09 Basic Service Charge $17.20 per customer per month Commodity Charge Summer Billing Months of June through October $.0924 per kWh Winter Billing Months of November through May $.0892 per kWh Minimum Bill-The minimum bill is the basic service charge included in the monthly rate. Energy Cost Adiustment-This rate is subject to an Energy Cost Adjustment factor added to the above energy charges and calculated as defined on a separate rate schedule incorporated herein by this reference. Environmental Charge—This rate is subject to an Environmental Charge as defined on a separate rate schedule incorporated herein by this reference. The current Environmental Charge is$0.0005/kWh. 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. Metering-Where the BWL elects to measure the service on the primary side of the transformers, the metered kWh thus measured will be reduced by 3%for billing purposes to adjust for transformer losses. Where the customer receives service through more than one meter, the consumption as registered by the different meters will not be combined for billing purposes,but will be computed and billed separately. 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. Application Charge-A$7.00 charge shall be added to the first regular bill for all customers turning on service at a service location irrespective of prior service with the BWL. Auxiliary Power Provision-Customers desiring electric service as an auxiliary source of power to wind or solar powered generating equipment may take service under this rate schedule under special agreement with the BWL. The customer shall pay the charges set forth above. A customer taking auxiliary power under this rate shall pay all reasonable costs associated with any alteration of BWL equipment required for proper operation of the customer's generating equipment in parallel with the BWL system. A customer may elect to sell energy to the BWL at the rate of$.022/kWh delivered. Customers selling energy to the BWL shall pay a charge of$25.00 per month or part thereof instead of the above Basic Service Charge. Rules and Regulations-Service under this rate is subject to the BWL Rules and Regulations for Electric Service incorporated herein by this reference. Adopted: March 26,2009 Effective:May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 18 of 46 LARGE GENERAL ELECTRIC SERVICE RATE NO.4 Availability-This rate is available to any customer desiring secondary voltage for any purpose when the electrical requirements are supplied at one point of delivery through one metering installation and the billing demand is 15 kW or more. The limitation to secondary-voltage service may be waived in instances where the character of the electric load at the premises served has changed substantially. This rate is not available for standby or emergency services. Nature of Service-The service is alternating current,60 hertz, single phase or three phase. The secondary voltage is determined by the Board of Water and Light(BWL). Monthly Rate-Shall be computed in accordance with the following charges. 5/1/09 Basic Service Charge $36.68 per customer per month Capacity Charge $10.03 Per kW for all kW of Maximum Demand Commodity Charge Summer Billing Months of June through October $.0528 Per kWh Winter Billing Months of November through May $.0489 Per kWh Reactive Power Charge $0.0091 per kvarh in excess of 50%of total kWh. The Reactive Power Charge shall be applicable to customers who have reactive kilovar hour(kvarh) metering installed in accordance with BWL Rules and Regulations regarding power factor. Minimum Bill-The minimum bill is the basic service charge included in the monthly rate. Energy Cost Adiustment-This rate is subject to an Energy Cost Adjustment factor added to the above energy charges and calculated as defined on a separate rate schedule incorporated herein by this reference. Environmental Charge—This rate is subject to an Environmental Charge as defined on a separate rate schedule incorporated herein by this reference. The current Environmental Charge is$0.0005/kWh. Tax Adjustment-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. Billing Demand-The billing demand shall be the kW supplied during the 15-minute period of maximum use during the month. Metering-Where the BWL elects to measure the service on the primary side of the transformer, the metered kW and kWh quantities thus measured will be reduced by 3%for billing purposes to adjust for transformer losses. Where the customer receives service through more than one metering installation, the consumption as registered by the different metering installations will not be combined for billing purposes,but will be computed and billed separately. 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. Application Charge-A$7.00 charge shall be added to the first regular bill for all customers turning on service at a service location irrespective of prior service with the BWL. Rules and Regulations-Service under this rate is subject to the BWL Rules and Regulations for Electric Service incorporated herein by this reference. Adopted: March 26,2009 Effective: May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 19 of 46 PRIMARY ELECTRIC SERVICE RATE NO.5 Availability-This rate is available to any customer desiring primary voltage service when the electrical requirements are supplied at one point of delivery through one metering installation(except as provided below for Multiple Delivery Point Aggregation)and the billing demand is 100 kW or more. This rate is not available for standby or emergency service. Nature of Service-The service is alternating current,60 hertz,three phase. The primary voltage is determined by the Board of Water and Light(BWL). Monthly Rate-Shall be computed in accordance with the following charges: 5/1/09 Basic Service Charge $91.73 per customer per month Capacity Charge $8.14 Per kW for all kW of On-Peak Billing Demand,plus $2.70 Per kW for all kW of Maximum Demand Commodity Charge Summer Billing Months of June through October $0.0473 Per kWh for all kWh during the On-Peak Period,plus $0.0435 Per kWh for all kWh during the Off-Peak Period,plus Winter Billing Months of November through May $0.0454 Per kWh for all kWh during the On-Peak Period,plus $0.0435 Per kWh for all kWh during the Off-Peak Period Reactive Power Charge $0.0091 per kvarh in excess of 50%of total kWh The Reactive Power Charge shall be applicable to customers who have reactive kilovar hour(kvarh)metering installed in accordance with BWL Rules and Regulations regarding power factor. Minimum Bill-The minimum bill is the basic service charge included in the monthly rate. Energy Cost Adjustment-This rate is subject to an Energy Cost Adjustment factor added to the above energy charges and calculated as defined on a separate rate schedule incorporated herein by this reference. Environmental Charge—This rate is subject to an Environmental Charge as defined on a separate rate schedule incorporated herein by this reference. The current Environmental Charge is$0.0005/kWh. Tax Adjustment-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. Billing Demand On-Peak Billing Demand: The On-Peak Billing Demand shall be the kW supplied during the 15-minute period of maximum use during the On-Peak Period during the month. Maximum Demand: The Maximum Demand shall be the kW supplied during the 15-minute period of maximum use during the month whether on-peak or off-peak. Schedule of on-peak and off-peak periods-The On-Peak Period shall be from 10:00 a.m. until 6:00 p.m.,Monday through Friday. All other hours shall comprise the Off-Peak Period. Adopted: March 26, 2009 Effective: May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 20 of 46 PRIMARY ELECTRIC SERVICE RATE NO.5 Multiple Delivery Point Aggregation-The 15-minute period demands of multiple delivery points of a customer may be summed for determination of the total On-Peak Billing Demand under the following conditions: (a) the Maximum Demand at each delivery point must equal or exceed 100 kW;(b)the total On-Peak Billing Demand shall not be less than 4,000 kW;and(c)the customer shall agree to a service contract with the BWL for the customer's full electrical service requirements at the aggregated delivery points for a period of not less than five(5)years. Aggregation shall be applicable for determination of the On-Peak Billing Demand only. All other charges, including the Basic Service Charge and Maximum Demand,shall apply to each delivery point independently. Metering-When the BWL elects to measure the service on the secondary side of the transformers,the metered kW and kWh quantities thus measured will be increased by 3%for billing purposes to adjust for transformer losses. Where the customer receives service through more than one meter installation,consumption as registered by the different meter installations will not be combined for billing purposes,but will be billed and computed separately except as provided for in Multiple Delivery Point Aggregation. Equipment Supplied by Customer-The customer shall be responsible for furnishing, installing and maintaining all necessary transforming,controlling and protective equipment required for service beyond the BWL primary- voltage delivery point. At the sole option of the BWL, a customer may lease such transformers or other equipment from the BWL under terms established by the BWL. 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. Application Charge-A$7.00 charge shall be added to the first regular bill for all customers turning on service at a service location irrespective of prior service with the BWL. Rules and Regulations-Service under this rate is subject to the BWL Rules and Regulations for Electric Service incorporated herein by this reference. Adopted:March 26,2009 Effective:May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 21 of 46 MUNICIPAL WATER PUMPING ELECTRIC SERVICE RATE NO.7 Availability-This rate is available to any political subdivision or agency of the State of Michigan desiring service for potable water pumping and associated potable water production equipment when the entire electrical requirements are supplied at one point of delivery through one meter. This rate is not available for emergency, standby, or auxiliary service. Nature of Service-The service is alternating current,60 hertz, three phase. The secondary or primary voltage is determined by the BWL. Monthly Rate-Shall be computed in accordance with the following charges. 5/1/09 Basic Service Charge $11.46 Per customer per month Commodity Charge $.0719 Per kWh Minimum Bill-The minimum bill is the basic service charge included in the monthly rate. Energy Cost Adjustment-This rate is subject to an Energy Cost Adjustment factor added to the above energy charges and calculated as defined on a separate rate schedule incorporated herein by this reference. Environmental Charge—This rate is subject to an Environmental Charge as defined on a separate rate schedule incorporated herein by this reference. The current Environmental Charge is$0.0005/kWh. Tax Adjustment-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. Metering-Where the BWL elects to measure the service on the primary side of the transformers serving the customer, the metered kWh thus measured will be reduced 3%for billing purposes to adjust for transformer losses. 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. Application Charge-A$7.00 charge shall be added to the first regular bill for all customers turning on service at a service location irrespective of prior service with the BWL. Rules and Regulations-Service under this rate is subject to the BWL Rules and Regulations for Electric Service incorporated herein by this reference. Adopted: March 26,2009 Effective: May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 22 of 46 LARGE CAPACITY ELECTRIC SERVICE RATE NO.8 Availability-This rate is available to any customer desiring primary voltage service when: (a) the electrical requirements are supplied at one or more points of delivery as provided below for Multiple Delivery Point Aggregation; (b) where the total On-Peak Billing Demand is 25,000 kW or more; and(c)the customer agrees to a service contract with the BWL for the customer's full electrical service requirements at the applicable delivery points for a period of not less than ten(10)years. This rate is not available for standby or emergency service. Nature of Service-The service is alternating current,60 hertz, three phase. The primary voltage is determined by the Board of Water and Light(BWL). Monthly Rate-Shall be computed in accordance with the following charges: 5/1/09 Basic Service Charge $286.65 per delivery point per month Capacity Charge $9.17 per kW for all kW of On-Peak Billing Demand,plus $1.72 per kW for all kW of Maximum Demand Commodity Summer Billing Months of June through October Charge $0.0421 per kWh for all kWh during the On-Peak Period,plus $0.0374 per kWh for all kWh during the Off-Peak Period,plus Winter Billing Months of November through May $0.0406 per kWh for all kWh during the On-Peak Period,plus $0.0374 per kWh for all kWh during the Off-Peak Period Reactive Power $0.0091 Per k varh in excess of 50%of total kWh Charge Minimum Bill-The minimum bill is the basic service charge included in the monthly rate. Energy Cost Adiustment-This rate is subject to an Energy Cost Adjustment factor added to the above energy charges and calculated as defined on a separate rate schedule incorporated herein by this reference. Environmental Charge—This rate is subject to an Environmental Charge as defined on a separate rate schedule incorporated herein by this reference. The current Environmental Charge is$0.0005/kWh. 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. Billing Demand On-Peak Billing Demand: The On-Peak Billing Demand shall be the total kW supplied to all applicable delivery points during the 15-minute period of maximum use during the On-Peak Period during the month. (See Multiple Delivery Point Aggregation) Maximum Demand: The Maximum Demand for each delivery point shall be the kW supplied during the 15-minute period of maximum use during the month whether on-peak or off-peak. Adopted:March 26, 2009 Effective:May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 23 of 46 LARGE CAPACITY ELECTRIC SERVICE RATE NO.8 Schedule of on-peak and off-peak periods-The On-Peak Period shall be from 10:00 a.m. until 6:00 p.m.,Monday through Friday. All other hours shall comprise the Off-Peak Period. Multiple Delivery Point Aggregation-The 15-minute period demands of multiple delivery points of a customer shall be summed for determination of the total On-Peak Billing Demand under the following conditions: (a)the Maximum Demand determined at each delivery point must equal or exceed 1,000 kW;and(b)the total On-Peak Billing Demand shall not be less than 25,000 kW. Aggregation shall be applicable for determination of the On-Peak Billing Demand only. All other charges,including the Basic Service Charge and Maximum Demand,shall apply to each delivery point independently. Metering-When the BWL elects to measure the service on the secondary side of the transformers, the metered kW and kWh quantities thus measured will be increased by 3%for billing purposes to adjust for transformer losses. Where the customer receives service through more than one meter installation,consumption as registered by the different meter installations will not be combined for billing purposes,but will be billed and computed separately except as provided for Multiple Delivery Point Aggregation. Equipment Supplied by Customer-The customer shall be responsible for furnishing,installing and maintaining all necessary transforming,controlling and protective equipment required for service beyond the BWL primary- voltage delivery point. At the sole option of the BWL,a customer may lease such transformers or other equipment from the BWL under terms established by the BWL. 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. Application Charge-A$7.00 charge shall be added to the first regular bill for all customers turning on service at a service location irrespective of prior service with the BWL. Rules and Regulations-Service under this rate is subject to the BWL Rules and Regulations for Electric Service incorporated herein by this reference. Adopted: March 26,2009 Effective: May 1, 2009 Rescheduled Bd Mtg. March 26,2009 Page 24 of 46 OUTDOOR LIGHTING SERVICE RATE NO.9 Availability-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. The BWL furnishes and maintains all lights. The installation will 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. Luminaires on Overhead Mast Arm on existing BWL poles High Pressure Sodium 5/1/09 100 W $10.36 250 W $17.49 400 W $18.69 Mercury Vapors 175 W $10.87 400 W $18.69 Floodlighting Luminaires on Bracket Arm on existing BWL poles High Pressure Sodium 100 W $14.81 250 W $18.55 400 W $21.73 etal Halide 400 W $27.00 1000 W $46.70 1500 W $64.82 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. IType of Facilities 5/1/09 35-foot wood poles including span of overhead $13.33 Per pole secondary extension 37-foot concrete pole including span of overhead $19.50 Per pole secondary extension Other facilities,hand set poles, or rearrangement of existing facilities 1.67% of estimated cost Adopted: March 26,2009 Effective: May 1,2009 1 Rates apply to existing luminaires only and are not open to new business. Rescheduled Bd Mtg. March 26,2009 Page 25 of 46 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 incorporated herein by this reference. Service Contract-A written service 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:March 26, 2009 Effective:May 1, 2009 Rescheduled Bd Mtg. March 26,2009 Page 26 of 46 TRAFFIC LIGHT SERVICE RATE NO. 11 Availability-This rate is available to any political subdivision or agency of the State of Michigan desiring unmetered secondary service for operating traffic lights installed on streets or highways for traffic control and guidance. Nature of Service-The service is alternating current,60 hertz,single phase, 120/240 nominal volts Monthly Rate-Shall be computed in accordance with the following charges. 5/1/09 Basic Service Charge $2.30 Per customer per month Commodity Charge $.0356 Per watt of active load per month The actual labor,material, miscellaneous and indirect charges experienced maintaining and relamping traffic signals during the preceding month. Minimum Bill-The minimum bill is the basic service charge included in the monthly rate. Tax Adjustment-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. Determination of Active Load-The active load of flasher lamps or cyclically operated traffic control lamps shall be 50%of total wattage of all lamps used during one complete cycle of operation. The active load of continuous, non-intermittent steady burning lamps shall be 100%of the total wattage of all lamps used. 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:March 26,2009 Effective:May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 27 of 46 SPACE CONDITIONING AND ELECTRIC WATER HEATING SERVICE RATE NO. 12 Availability-This rate is available to any customer desiring service for commercial/industrial space conditioning and/or electric water heating furnished through a separate meter to which no other electrical device except electric space heating,electric air conditioning,humidity control equipment or electric water heating equipment may be connected. Electric space heating will be considered to include heating by light system provided the primary means of space heating at the time of maximum heating requirements will be furnished by the lighting system with the balance of the heating requirements furnished by supplementary electric heating equipment. This rate is not available to new applications for heat for light systems received after March 1, 1979. This rate is not applicable to the use of electricity for electric air conditioning unless the customer has permanently installed electric space heating equipment and uses it as the principal source of space heating,or to the use of electricity for occasional or seasonal substitute for another method of water heating. Nature of Service-The service is alternating current, 60 hertz,single phase at Board of Water and Light(BWL) available secondary voltage. Three phase service will be furnished at BWL option. Monthly Rate-Shall be computed in accordance with the following charges. 5/1/09 Basic Service $22.93 Charge Commodity Charge Summer Billing Months of June through October $.1048 per kWh Winter Billing Months of November through May $.0680 per kWh Minimum Bill-The minimum bill is the basic service charge included in the monthly rate. Energy Cost Adjustment-This rate is subject to an Energy Cost Adjustment factor added to the above energy charges and calculated as defined on a separate rate schedule incorporated herein by this reference. Environmental Charge—This rate is subject to an Environmental Charge as defined on a separate rate schedule incorporated herein by this reference. The current Environmental Charge is$0.0005/kWh. Tax Adjustment-Bill 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. Application Charge-A$7.00 charge shall be added to the first regular bill for all customers turning on service at a service location irrespective of prior service with the BWL. Rules and Regulations-Service under this rate is subject to the BWL Rules and Regulations for Electric Service incorporated herein by this reference. Adopted: March 26,2009 Effective: May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 28 of 46 RESIDENTIAL ELECTRIC SERVICE, SENIOR CITIZEN RATE NO.21 Availability-This rate is available to any single family or multifamily dwelling of 4 units or less when the entire electric requirements are supplied at one point of delivery through the same meter. The customer must be 65 years of age and head of the household being served. Service to appurtenant buildings may be taken through the same meter. Service under this rate is not available to any single family or multifamily dwelling of 4 units or less unit when a portion of the residence or dwelling unit is used for commercial,industrial,or resale purposes unless the wiring is so arranged that service for residential and non-residential purposes are metered separately. Customers taking service under this rate shall provide evidence of age and contract with the Board of Water and Light(BWL)to remain on this rate for at least twelve(12)months. Nature of Service-The service is alternating current,60 hertz, single phase, 120/240 nominal volts. Monthly Rate-Shall be computed in accordance with the following charges. 5/1/09 Basic Service Charge $2.83 Commodity Charge $.0598 per kWh for the first 300 kWh $.0957 per kWh for the next 200 kWh $.1257 per kWh for all over 500 kWh Minimum Bill-The minimum bill is the basic service charge included in the monthly rate. Energy Cost Adiustment-This rate is subject to an Energy Cost Adjustment factor added to the above energy charges and calculated as defined on a separate rate schedule incorporated herein by this reference. Environmental Charge—This rate is subject to an Environmental Charge as defined on a separate rate schedule incorporated herein by this reference. The current Environmental Charge is$0.0005/kWh. 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. Application Charge-A$7.00 charge shall be added to the first regular bill for all customers turning on service at a service location irrespective of prior service with the BWL. Rules and Regulations- Service under this rate is subject to the BWL Rules and Regulations for Electric Service incorporated herein by this reference. Adopted: March 26, 2009 Effective:May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 29 of 46 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 5/1/09 70 W $78 100 W $88 150 W $103 250 W $125 400 W $159 1000 W $326 Mercury Vapor Luminaire2 100 W $83 175 W $99 250 W $117 400 W $151 1000 W $285 Metal Halide Luminaire 175 W $174 250 W $199 400 W $201 1000 W $390 1500 W $598 Induction Luminaire 85 W $83 165 W $100 Adopted: March 26,2009 Effective:May 1,2009 Rates apply to existing luminaires only and are not open to new business except where the BWL elects,at the customer's request,to install additional luminaires within an area already served by a mercury vapor lighting system. Rescheduled Bd Mtg. March 26,2009 Page 30 of 46 STREET LIGHTING SERVICE BOARD OWNED SYSTEMS RATE NO.31 Annual Rate(continued) plus an additional annual charge,depending on type of installation, of: 5/1/09 Wood Pole—Overhead Service None Wood Pole—Underground Service $90 Concrete Pole—Overhead Service $142 Concrete Pole—Underground Service $142 Post Top $90 Historic—Single Top $295 Large Historic—Dual Top $863 Small Historic—Dual Top $613 Wall/Tunnel—8760 hours $125 Wall/Tunnel—4200 hours $76 Bollard $293 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 ternunation 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:March 26,2009 Effective:May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 31 of 46 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 equipment except normal lamp and glass replacement shall be 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 5/1/09 70 W $41 100 W $51 150 W $65 250 W $87 400 W $123 1000 W $291 Mercury Vapor Luminaire3 175 W $60 250 W $79 400 W $112 1000 W $247 Incandescent Luminaire4 2500 L $82 4000 L $130 6000 L $158 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:March 26,2009 Effective: May 1, 2009 3 Rates apply to existing luminaires only and are not open to new business except where the BWL elects,at the customer's request,to install additional luminaires within an area already served by a mercury vapor lighting system. 4 Rates apply to existing luminaires only and are not open to new business. Rescheduled Bd Mtg. March 26,2009 Page 32 of 46 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 Adjustment-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:March 26,2009 Effective: May 1, 2009 Rescheduled Bd Mtg. March 26,2009 Page 33 of 46 ENVIRONMENTAL CHARGE The Environmental Charge permits the recovery of environmental remediation expenses incurred as a result of supplying electricity. All residential and general service rates are subject to the Environmental Charge. The following definitions and procedures will be followed in administering the Environmental Charge. Definitions Environmental Charge—The amount per kWh by which the applicable rates shall be billed in each month. Environmental Remediation Costs—Costs incurred as a result of environmental restoration projects. Procedures The Environmental Charge shall be applied to each kWh billed to applicable rates. Environmental Charge revenues will offset environmental remediation costs and associated PILOT expense. The Environmental Charge shall be billed until environmental remediation costs are equal to zero. Should the Environmental Charge collect revenues in excess of environmental remediation costs,the difference shall be refunded to the applicable rates. The Environmental Charge shall be reviewed and revised periodically in accordance with the provisions of this schedule. Environmental Charge—The current Environmental Charge is$0.0005/kWh Adopted:March 26,2009 Effective: May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 34 of 46 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 $0.025839 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. Adopted: March 26,2009 Effective: May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 35 of 46 RESIDENTIAL WATER SERVICE RATE NO. 1 Availability-This rate is available to any single-family residence or multifamily dwelling of 4 units or less served by one meter. Monthly Rate-Shall be computed in accordance with the following charges. Basis Service Charge: per customer per month or part thereof: Meter 5/1/09 5/8" $7.71 3/4" * $10.79 1" $20.06 11/a" or 11/z" $44.74 2" $78.67 Commodity Charge: per ccf of water used per month; $2.13 *The BWL standard residential installation is a 1" service line with a 3/a"meter. The BWL reserves the right,in its sole judgment, to install 5/8"meters on any new service installation when circumstances warrant. Power and Chemical Cost Adjustment-The power and chemical cost adjustment shall consist of an increase or decrease of 0.1¢per ccf billed for each 0.10 increase or decrease in the average cost of power and chemicals required to deliver treated water to the customer's meter above or below 44.70 per ccf. The cost per ccf for the billing period shall consist of the weighted average cost of chemicals,electricity, steam and oil used in pumping and treatment facilities during the one month period preceding the month billed by two months. 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 water,to offset any such cost and thereby prevent other customers from being compelled to share such local increases. Minimum Charge-The minimum charge shall be the above Basic Service Charge applied for 30 days. Delayed Payment Charge-A delayed payment charge of 5%of the unpaid balance,excluding delayed payment charges, shall be added to any bill which is not paid on or before the due date. Application Charge-A$7.00 charge shall be added to the first regular bill for all customers turning on service at a service location irrespective of prior service with the Board. Rules and Regulations-Service under this rate is subject to the Board of Water and Light Rules and Regulations for Water Service which are incorporated herein by this reference. Adopted:March 26,2009 Effective: May 1, 2009 Rescheduled Bd Mtg. March 26,2009 Page 36 of 46 GENERAL WATER SERVICE RATE NO.2 Availability-This rate is available to any customer served on the BWL's water system. Service under this rate is not available for resale. Monthly Rate-Shall be computed in accordance with the following charges. Basic Service Charge: per customer per month or part thereof; Meter 5/1/09 5/8" $7.71 3/4" * $10.79 1" $20.06 11/4" or 11/z" $44.74 2" $78.67 3" $177.39 4" $316.21 6" $711.04 8" $1,263.31 10" $1,974.42 Commodity Charge: per ccf of water used per month; $2.13 *The BWL standard residential installation is a 1"service line with a 3/4"meter. The BWL reserves the right,in its sole judgment,to install 5/8"meters on any new service installation when circumstances warrant. Power and Chemical Cost Adiustment-The power and chemical cost adjustment shall consist of an increase or decrease of 0.10 per ccf billed for each 0.10 increase or decrease in the average cost of power and chemicals required to deliver treated water to the customer's meter above or below 44.70 per ccf. The cost per ccf for the billing period shall consist of the weighted average cost of chemicals,electricity,steam and oil used in pumping and treatment facilities during the one month period preceding the month billed by two months. 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 water, to offset any such cost and thereby prevent other customers from being compelled to share such local increases. Minimum Charge-The minimum charge shall be the above Basic Service Charge applied for 30 days. Delayed Payment Charge-A delayed payment charge of 5%of the unpaid balance,excluding delayed payment charges, shall be added to any bill which is not paid on or before the due date. Application Charge-A$7.00 charge shall be added to the first regular bill for all customers turning on service at a service location irrespective of prior service with the Board. Rules and Regulations-Service under this rate is subject to the Board of Water and Light Rules and Regulations for Water Service which are incorporated herein by this reference. Adopted:March 26,2009 Effective: May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 37 of 46 FIRE SERVICE RATE NO.4 Fire Service - A fire service line will be installed to a fire hydrant(s)or a customer's detector check valve in accordance with the schedule of charges for water system connection fees(Rate 3)and the current water service installation charges set forth in the Rules and Regulations for Water Service. The location of the detector check valve shall be determined by the Water Distribution Engineering Department. Fire service lines shall be used for fire protection purposes only. No additional charges will be made for water used for testing and fire purposes. The customer shall maintain the detector check valve and fire protection system connected thereto in good condition in compliance with Section 34-9, Repair and Protection of Equipment,of the Code of the City of Lansing,Michigan. Monthly Fire Service Charge-Water supply and maintenance of a fire service line to a detector check valve shall be provided in accordance with the following schedule of charges: Service Size 5/1/09 4" or smaller $56 6" $125 8" $221 10" or larger $345 Tax Adjustment-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 water, to offset any such cost and thereby prevent other customers from being compelled to share such local increases. Minimum Charge-Billings subject to this rate are not subject to a minimum charge. Delayed Payment Charge-A delayed payment charge of 5%of the unpaid balance, excluding delayed payment charges, shall be added to any bill which is not paid on or before the due date. Rules and Regulations-Service under this rate is subject to the Board of Water and Light Rules and Regulations for Water Service which are incorporated herein by this reference. Adopted: March 26, 2009 Effective: May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 38 of 46 LAWN SPRINKLING WATER SERVICE RATE NO.5 Availability-This rate is available to any customer served on the BWL's water system where the meter or service is installed solely for lawn sprinkling. Municipalities having jurisdiction over sewer system rates may designate other uses of water which are subject to this rate. Monthly Rate-Shall be computed in accordance with the following charges. Basic Service Charge:Billings subject to this rate are not subject to a Basic Service Charge. Commodity Charge:per ccf of water used per month 5/1/09 all ccf $2.13 Power and Chemical Cost Adiustment-The power and chemical cost adjustment shall consist of an increase or decrease of 0.1¢per ccf billed for each 0.1¢increase or decrease in the average cost of power and chemicals required to deliver treated water to the customer's meter above or below 44.70 per ccf. The cost per ccf for the billing period shall consist of the weighted average cost of chemicals,electricity,steam and oil used in pumping and treatment facilities during the one month period preceding the month billed by two months. Tax Adjustment-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 water, to offset any such cost and thereby prevent other customers from being compelled to share such local increases. Minimum Charge-Billings subject to this rate are not subject to a minimum charge. Delayed Payment Charge-A delayed payment charge of 5% of the unpaid balance,excluding delayed payment charges, shall be added to any bill which is not paid on or before the due date. Application Charge-A$7.00 charge shall be added to the first regular bill for all customers turning on service at a service location irrespective of prior service with the Board. Rules and Regulations-Service under this rate is subject to the Board of Water and Light Rules and Regulations for Water Service which are incorporated herein by this reference. Adopted: March 26,2009 Effective: May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 39 of 46 FIRE HYDRANT CHARGES RATE NO.6 Annual Fire Hydrant Charge- Water Supply and maintenance of a fire service line to a public or private fire hydrant shall be provided in accordance with the following annual schedule of charges: 5/1/09 All Hydrants $366 Tax Adjustment-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 water,to offset any such cost and thereby prevent other customers from being compelled to share such local increases. Minimum Charge-Billings subject to this rate are not subject to a minimum charge. Delayed Payment Charge-A delayed payment charge of 5%of the unpaid balance,excluding delayed payment charges, shall be added to any bill which is not paid on or before the due date. Rules and Regulations-Service under this rate is subject to the Board of Water and Light Rules and Regulations for Water Service which are incorporated herein by this reference. Adopted: March 26,2009 Effective:May 1, 2009 Rescheduled Bd Mtg. March 26,2009 Page 40 of 46 GENERAL STEAM SERVICE RATE NO. 1 Availability-This rate is available to any customer receiving service from the Board of Water and Light(BWL) steam distribution system with a maximum gauge pressure of fifteen pounds per square inch(15 psi). Steam services at gauge pressures above 15 psi but not exceeding 100 psi,when available,may be supplied at the option of the BWL or upon request by the customer. Nature of Service-Saturated steam up to a maximum gauge pressure of 15 psi except as indicated above. Monthly Rate 5/1/09 Basic Service Charge $10.27 per customer per month Commodity Charge Billing Months of June through November $11.71 per 1000 lbs. for the first 200,000 lbs. $12.29 per 1000 lbs.for all 1000 lbs.over 200,000 lbs. Billing Months of December through May $11.85 per 1000 lbs for the first 200,000 lbs. $12.44 per 1000 lbs. for all 1000 lbs. over 200.000 lbs. Surcharge-A surcharge of ten(10)percent shall be added to the above rates for steam service supplied upon customer's request for service at gauge pressure above 15 psi but not exceeding 100 psi. Fuel Cost Adiustment-This rate is subject to a Fuel Cost Adjustment factor added to the above charges and calculated as defined on a separate rate schedule incorporated herein by this reference. Amine Treatment Adiustment-The amine treatment adjustment allows for the monthly adjustment of rates to reflect the actual cost incurred due to amine feed. The factor shall be applied to each 1000 pounds(lbs)billed. The factor shall consist of 1.124 times the weighted average amine cost per 1000 lbs treated during the previous month. Environmental Charge—This rate is subject to an Environmental Charge as defined on a separate rate schedule incorporated herein by this reference. The current Environmental Charge is$0.10/Mlb. Tax Adjustment-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's property, or its operation,or the production and/or sale of steam, to offset any such cost and thereby prevent other customers from being compelled to share such local increases. Minimum Charge-The Basic Service Charge included in the rate except that Special Minimum Charges shall be billed when the revenue received does not adequately compensate the BWL for the cost of furnishing service. Delayed Payment Charge-A delayed payment charge of 5%of the unpaid balance,excluding delayed payment charges,shall be added to any bill which is not paid on or before the due date. Reconnect Charge-A reconnect charge shall be added to any account which discontinues and reconnects service at the same address within a twelve(12)month period. The reconnect charge is specified in the BWL Rules and Regulations for Steam Service. Rules and Regulations-Service under this rate is subject to the BWL Rules and Regulations for Steam Service which are incorporated herein by this reference. Adopted:March 26,2009 Effective: May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 41 of 46 INDUSTRIAL STEAM SERVICE RATE NO.2 Availability:This rate is available to any customer engaged in mining or manufacturing and receiving steam at any BWL plant wall at a minimum gauge pressure of 250 psi. Service will be provided upon customer entering into a steam supply contract with the BWL. Terms and conditions of the contract may vary due to customer requirements and the impact on BWL facilities. Monthly Rate: 5/1/09 Demand Charge: $1.17 per pound per hour(lb/hr)for all lb/hrs of contract demand $1.03 per pound per hour(lb/hr)for all lb/hrs exceeding contract demand Commodity Charge: $7.20 per thousand pounds (Mlb) Fuel Cost Adjustment-This rate is subject to a Fuel Cost Adjustment factor added to the above charges and calculated as defined on a separate rate schedule incorporated herein by this reference. Environmental Charge—This rate is subject to an Environmental Charge as defined on a separate rate schedule incorporated herein by this reference. The current Environmental Charge is$0.10/Mlb. Minimum Charge: Monthly Demand Charge above. Tax Adiustment: Bills shall be increased within the limits of any governmental authority or political subdivision which levies taxes, license fees,or any other charges against the BWL's property. or its operation, or the production and/or sale of steam, to offset any such cost and thereby prevent other customers from being compelled to share such local increases. Billing Demand: The billing demand is the maximum demand (lb/hrs)supplied during the 15 minute period of maximum use during the month, but not less than the contract demand. Delayed Payment Charge: A delayed payment charge of 5%of the unpaid balance,excluding delayed payment charges, shall be added to any bill which 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 Steam Service which are incorporated herein by this reference. Adopted:March 26,2009 Effective: May 1, 2009 Rescheduled Bd Mtg. March 26,2009 Page 42 of 46 GENERAL STEAM SERVICE RATE NO.3 Availability-This rate is available to any customer receiving service from the Board of Water and Light(BWL) steam transmission or distribution system with a gauge pressure in excess of 100 psi. Service will be provided upon customer entering into a steam supply contract with the BWL. Terms and conditions of the contract may vary due to customer requirements and the impact on BWL facilities. This service may include both firm and curtailable service. Monthly Rate -Per contract terms. Fuel Cost Adjustment-This rate is subject to a Fuel Cost Adjustment factor added to the charges and calculated as defined on a separate rate schedule incorporated herein by this reference. Environmental Charge—Per contract terms. Amine Treatment Adjustment-Per contract terms. Tax Adjustment-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's property,or its operation,or the production and/or sale of steam, to offset any such cost and thereby prevent other customers from being compelled to share such local increases. Minimum Charge-Per contract terms. Delayed Payment Charge-A delayed payment charge of 5%of the unpaid balance,excluding delayed payment charges, shall be added to any bill which 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 Steam Service which are incorporated herein by this reference, unless superceded by the terms and conditions of the customer contract. Adopted: March 26, 2009 Effective:May 1,2009 Rescheduled l3d Mtg. March 26,2009 Page 43 of 46 RESIDENTIAL STEAM SERVICE RATE NO.5 Availability-This rate is available to any single-family or multifamily dwelling of 4 units or less when the entire service requirements are supplied at one point of delivery through one meter. Service under this rate is not available to any single-family or multifamily dwelling unit of 4 units or less when a portion of the dwelling unit is used for commercial,industrial, or resale purposes unless the service is so arranged that residential and non-residential purposes are metered separately. Nature of Service-Saturated steam up to a maximum gauge pressure of 15 psi. Steam services at gauge pressures above 15 psi but not exceeding 100 psi,when available, may be supplied at the option of the BWL or upon request by the customer. Monthly Rate 5/1/09 Basic Service Charge $7.61 Per customer per month Commodity Charge Billing Months of June through November $9.06 Per 1000 lbs. for the first 200,000 lbs. $9.49 Per 1000 lbs. for all 1000 lbs. over 200,000 lbs. Billing Months of December through May $9.17 Per 1000 lbs for the first 200,000 lbs. $9.61 Per 1000 lbs. for all 1000 lbs.over 200.000 lbs. Surcharge-A surcharge of ten(10)percent shall be added to the above rates for steam service supplied upon customer's request for service at gauge pressure above 15 psi but not exceeding 100 psi. Fuel Cost Adiustment-This rate is subject to a Fuel Cost Adjustment factor added to the above charges and calculated as defined on a separate rate schedule incorporated herein by this reference. Amine Treatment Adjustment-The amine treatment adjustment allows for the monthly adjustment of rates to reflect the actual cost incurred due to amine feed. The factor shall be applied to each 1000 pounds(lbs)billed. The factor shall consist of 1.124 times the weighted average amine cost per 1000 lbs treated during the previous month. Environmental Charge—This rate is subject to an Environmental Charge as defined on a separate rate schedule incorporated herein by this reference. The current Environmental Charge is$0.10/Mlb. 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's property, or its operation, or the production and/or sale of steam, to offset any such cost and thereby prevent other customers from being compelled to share such local increases. Minimum Charge-The Basic Service Charge included in the rate except that Special Minimum Charges shall be billed when the revenue received does not adequately compensate the BWL for the cost of furnishing service. Delayed Payment Charge-A delayed payment charge of 5%of the unpaid balance,excluding delayed payment charges, shall be added to any bill which is not paid on or before the due date. Reconnect Charge-A reconnect charge shall be added to any account which discontinues and reconnects service at the same address within a twelve(12)month period. The reconnect charge is specified in the BWL Rules and Regulations for Steam Service. Rules and Regulations-Service under this rate is subject to the BWL Rules and Regulations for Steam Service which are incorporated herein by this reference. Adopted:March 26,2009 Effective: May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 44 of 46 FUEL COST ADJUSTMENT The Fuel Cost Adjustment permits the monthly adjustment of rates for the costs of fuel incurred in supplying steam to customers. All general and industrial service rates are subject to the Fuel Cost Adjustment. In applying the Fuel Cost Adjustment the applicable rate per Mlb shall be increased or decreased by the amount of the current Fuel Cost Adjustment. The following definitions and procedures will be followed in calculating the monthly Fuel Cost Adjustment. Definitions Fuel Cost Adjustment-the amount per Mlb by which the applicable rates shall be adjusted for billing in each month. Fuel Costs-those costs incurred in supplying steam. Such costs include fuel burned.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 Fuel Costs for prior months and the amount of fuel cost recovered by means of the Base Cost of Fuel and the Fuel Cost Adjustment. The Over/Under Recovery shall be added to the Fuel Costs for purposes of computing the Fuel Cost Adjustment for each month. Base Cost of Fuel-the average Fuel Cost included in the fuel rates of the various rate schedules. Such amount shall not be recovered by means of the Fuel Cost Adjustment. The current Base Cost of Fuel is$4.7831 per thousand pounds of steam(Mlb) sold. Procedures Estimated Fuel Cost shall be projected for a twelve-month period. Any amount of Over/Under Recovery(positive or negative)shall be added to the Fuel Cost to determine the total cost basis for the Fuel Cost Adjustment. The total cost basis shall be divided by the projected total billed sales for the twelve-month period resulting in the average Fuel cost per Mlb. The Base Cost of Fuel shall be subtracted from the average Fuel cost to result in the Fuel Cost Adjustment. The Fuel 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. Adopted:March 26,2009 Effective:May 1,2009 Rescheduled Bd Mtg. March 26,2009 Page 45 of 46 ENVIRONMENTAL CHARGE The Environmental Charge permits the recovery of environmental remediation expenses incurred as a result of supplying steam. All residential,general service,and industrial rates are subject to the Environmental Charge. The following definitions and procedures will be followed in administering the Environmental Charge. Definitions Environmental Charge—The amount per kWh by which the applicable rates shall be billed in each month. Environmental Remediation Costs—Costs incurred as a result of environmental restoration projects. Procedures The Environmental Surcharge shall be applied to each kWh billed to applicable rates. Environmental Charge revenues will offset environmental remediation costs and associated PILOT expense. The Environmental Charge shall be billed until environmental remediation costs are equal to zero. Should the Environmental Charge collect revenues in excess of environmental remediation costs, the difference shall be refunded to the applicable rates. The Environmental Charge shall be reviewed and revised periodically in accordance with the provisions of this schedule. Environmental Charee—The current Environmental Charge is$0.10/Mlb Adopted: March 26,2009 Effective: May 1, 2009 Rescheduled Bd Mtg. March 26,2009 Page 46 of 46 GENERAL CHILLED WATER SERVICE RATE NO. 1 Availability—this rate is available to any customer desiring service from the Board of Water and Light(BWL) district cooling system. Service will be provided upon the customer entering into a contract with the BWL. The contract will govern the customer's contract demand and terms and conditions of service,which may vary due to customer requirements and the impact on BWL facilities. This rate is not available for standby or emergency service. Monthly Rate—Shall be computed in accordance with the following charges: Capacity Charge: $41.66 per ton for all tons of billing demand less than or equal to 105%of the contract demand,and$58.32 per ton for all tons of billing demand exceeding 105%of the contract demand. Commodity Charge: $0.118 per ton-hr 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'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. Minimum Monthly Charge—The capacity charge included in the rate. Billing Demand—The billing demand shall be the maximum demand(tons)supplied during the 15-minute period of maximum use,but not less than 85%of the contract demand. The General Manager is authorized to waive billing demand in excess of 105%of the contract demand where such billing demand is incurred is the result of emergency conditions on a customer's system and such emergency condition is caused by equipment or piping failure and the BWL concurs in the existence of an emergency condition. Temperature Factor Adjustment—During the months of May through October;if the customer's return water temperature is below 57 degrees Fahrenheit(F), the customer's commodity charge will be increased by 2.0%for either; (1)each degree Fahrenheit the customer's supply and return water temperature differential is less than 150F or, (2)each degree Fahrenheit the customer's return water temperature is below 570 F, whichever is less. The General Manager is authorized to waive the application of the Temperature Factor Adjustment where warranted in cases of customer hardship where such hardship is caused by facilities constructed prior to the BWL's District Cooling System. Metering—All services using chilled water from the BWL chilled water system shall be metered. The BWL shall, through consultation with the customer,determine the form in which the commodity shall be metered. 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 Chilled Water Service that are incorporated herein by this reference. Adopted:March 26,2009 Effective: May 1, 2009 Approved by the Board: March 26, 2009 MINUTES OF THE BOARD OF COMMISSIONERS SPECIAL MEETING LANSING BOARD OF WATER AND LIGHT Thursday, February 26, 2009 The Board of Commissioners met at the Executive Offices of 1232 Haco Drive, Lansing, Michigan. Present: Commissioners Robert Cochran (teleconference), Tony DeLuca, Semone Jam es- Howes, Peter Kramer, Frank Lain and Sandra Zerkle. (Note: 2"d Ward vacancy exists.) ^� t Absent: Commissioner Tracy Thomas. The Secretary declared a quorum present. Chairperson Lain called the meeting to order at 5:10 p.m. PUBLIC COMMENT THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT AND ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There were no public comments. NEW BUSINESS Revised copies of the Internal Auditor contract were distributed to the Board of Commissioners for additional review and discussion. Upon clarification regarding certification and other changes to the contract, the Board directed General Counsel Brandie Ekren to make additional changes to the contract language. The Board also briefly discussed the transition process with regards to the new auditor. Commissioner Cochran departed the meeting at 5:36 p.m. Upon modification of the contract and final review, the Board of Commissioners took the following action: Special Board Mtg. February 26,2009 Page 2 of 2 On motion by Commissioner Kramer, seconded by Commissioner DeLuca to approve the Internal Auditor contract in its current form. Action: Carried unanimously. MANAGER'S REMARKS None. COMMISSIONER REMARKS Commissioner Zerkle suggested that the board discuss their position regarding board member travel and conferences at the next Committee of the Whole meeting. Commissioner Lain concurred and suggested it be added to the agenda. Commissioner James-Howes reported that she would not seek reappointment to the Board of Commissioners nor any other boards due to outside activities and family commitments. Commissioner Lain thanked Commissioner James-Howes for her service to the Board of Commissioners. He also commented on the Internal Auditor interview process and thanked all of the participants. EXCUSED ABSENCE None. PUBLIC COMMENTS There were no public comments. ADJOURNMENT On motion by Commissioner DeLuca, seconded by Commissioner Kramer, the meeting adjourned at 5:58 p.m. /s/Rhonda Jones, Corporate Secretary Filed with Lansing City Clerk March 5, 2009 Approved by the Board: March 26, 2009 MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT Tuesday,January 27, 2009 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Present: Commissioners Tony DeLuca, Semone James, Peter Kramer, Frank Lain, Tracy Thomas and Sandra Zerkle. (Note: 2°d Ward vacancy exists.) Absent: Commissioner Robert Cochran The Secretary declared a quorum present. - Chairperson Lain called the meeting to order at 5:40 p.m. APPROVAL OF MINUTES `~ Motion by Commissioner Zerkle, seconded by Commissioner Thomas, to approve the minutes of the rescheduled regular board meeting held November 18, 2008. Carried unanimously. PUBLIC COMMENTS THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT. ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT. There were no public comments. COMMUNICATIONS Email received January 6, 2009 from Donald Hillman, PhD, Michigan State University regarding CFL emissions. Received and placed on file. Email received January 9, 2009 from Donald Hillman, PhD, Michigan State University regarding mitigating electrical exposure. Board Meeting January 27,2009 Page 2 of 1 I Received and placed on file. Email received January 13, 2009 from Cecilia Garcia, Lansing, opposing the proposed BWL coal-fired plant. Received and placed on file. Letter received January 16, 2009 from Lisa Webb Sharpe, Director of the Michigan Department of Management &Budget opposing the proposed 2.5% rate increase. Received and placed on file. Card received January 21, 2009 from Sharon Monod opposing the proposed BWL coal- fired plant. Received and placed on file. Letter of resignation received January 22, 2009 from BWL Board Commissioner Julee M. Rodocker. Received and placed on file. Letter received January 26, 2009 from Jacquiline MacGillivray opposing the proposed 2.5% rate increase. Received and placed on file. Phone message received January 26, 2009 from Susan Keeney opposing the proposed 2.5% rate increase and a new coal-fired power plant. Received and placed on file. COMMITTEE REPORTS FINANCE COMMITTEE January 13, 2009 The Finance Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 4:00 p.m. on Tuesday, January 13, 2009. Finance Committee Chairperson Peter Kramer called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Robert Cochran, Peter Kramer, Julee Rodocker and Tracy Thomas. Alternate committee member Tony DeLuca was also present in addition to Commissioner Frank Lain. Absent: None. Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Lain, seconded by Commissioner Thomas to approve the Board Meeting January 27,2009 Page 3 of I I minutes of the November 18, 2008 Finance Committee meeting. Action: Carried unanimously. Defined Contribution Plan Document General Manager J. Peter Lark summarized the transitional change for the Defined Contribution administrator. ICMA Retirement Corporation has replaced Prudential as the Defined Contribution administrator. As part of that transition, ICMA Retirement Corporation shall be responsible for the Defined Contribution Plan document compliance. As such, the Defined Contribution Plan document was presented. The Plan document has two components; one that is specific to the Lansing Board of Water and Light (BWL) and the other contains boilerplate statutory language, which is maintained by the ICMA Retirement Corporation. In response to a Commissioner inquiry, General Counsel Brandie Ekren noted that the normal retirement age of 55 (not to exceed age 65) is language specific to Internal Revenue Service Code 401, which is a restriction directed to the BWL not to set normal retirement age beyond 65. On motion by Commissioner Thomas, seconded by Commissioner DeLuca to approve the Defined Contribution Plan Document and forward it to the full board for consideration and approval. Action: Carried unanimously. Update on Internal Auditor Search Commissioner Kramer updated the Committee on the Internal Audit candidate search that was provided by Global Business Resource Group (GBRG) on behalf of the Board of Commissioners. A copy of their work product along with a memorandum from Commissioner Kramer was distributed during the meeting. GBRG provided an interview synopsis of their screening process, which highlights technical attributes of the candidates. GBRG's report also includes a recommendation for interviewing six applicants. Commissioner Kramer's memorandum supplemented GBRG's report with selection process recommendations. A summary of the recommendations are as follows: 1. Interview six candidates recommended by Global Business Resource Group. GBRG to coordinate candidate notifications and assist with interview question preparation and selection criteria. 2. Selection Committee members will consist of the four primary Finance Committee members. The Chief Financial Officer and Director of Human Resources will participate as non-voting resources. 3. The Selection Committee will forward their recommendation to the Committee of the Whole, and present the recommended candidate for final review and approval by the entire Board of Commissioners. 4. Once Board approved, the recommended candidate will receive a contract offer for employment. Board Meeting January 27,2009 Page 4 of 11 On motion by Commissioner Lain, seconded by Commissioner DeLuca to approve the recommendations contained within the memorandum provided to the Finance Committee on January 13, 2009 regarding the Internal Auditor Selection Process. Action: Carried unanimously. There being no further business, the meeting adjourned at 4:43 p.m. Respectfully submitted, Peter W. Kramer, Chair Finance Committee COMMITTEE OF THE WHOLE January 13, 2009 The Committee of the Whole of the Board of Water and Light met at the Executive Offices, Lansing beginning at 5:30 p.m. on Tuesday, January 13, 2009. Committee of the Whole Chairperson Sandra Zerkle called the meeting to order and asked the secretary to call the roll. The following members were present: Commissioners Robert Cochran, Tony DeLuca, Semone James, Peter Kramer, Frank Lain, Julee Rodocker, Tracy Thomas and Sandra Zerkle. Absent: None. Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Kramer, seconded by Commissioner Thomas to approve the minutes of the November 11, 2008 Committee of the Whole meeting. Action: Carried unanimously. Presentation for Rate Increase General Manager J. Peter Lark summarized the presentation materials for the upcoming public hearing for the Board of Water and Light's (BWL) proposed rate increase. The proposed 2.5% increase for electric, water, steam and chilled water is responsive to the current economic environment for the Michigan and Lansing area, which also affects other utility companies such as Consumers Energy and DTE. Consumers Energy is seeking a rate increase of 16.4% and DTE is seeking a rate increase of 4.6%. However, despite the current economic environment the BWL's proposed 2.5% increase is much lower than the previously proposed percentage increase. Mr. Lark also summarized the Board Meeting January 27,2009 Page 5 of 11 previous and current efforts to reduce cost so as to decrease the necessity for a rate increase. Such cost-cutting efforts include, but are not limited to, reduction in overtime and travel, as well as consolidation of management positions. If the BWL approves the 2.5% rate increase, its rates will be approximately 25% lower than Consumers Energy based on their current rate structure. Mr. Lark also summarized the water rate increases for other utilities across Michigan. Research found that the City of Detroit will increase water rates by 10%, Grand Rapids 8.2% and Grand Traverse 46%. Mr. Lark further emphasized the BWL's solid economic position and the diligent efforts to avoid utilizing cash reserves. In response to Commissioner inquiries, Mr. Lark clarified the following: a) amount of cash on hand as compared to what amount is recommended by bond rating agencies, b) net income at the end of the fiscal year will be zero with the rate increase, and c) public relation efforts that have and will be taken to notify customers of the proposed rate increase and public hearing. Mr. Lark further discussed the appropriateness of service charges based on the cost of service study. The Commissioners discussed with staff the importance of highlighting the BWL's efforts to minimize the necessity of a rate increase. They also complimented staff on the work done thus far and the current cost of service study currently in place. In response to a Commissioner inquiry, staff noted that there is minimum mercury and radiation exposure regarding CFL bulbs, which the average person does not need to be concerned about. Renewable Portfolio Standards J. Peter Lark noted that Public Act (PA) 295 requires all electric utility companies in the state of Michigan meet minimum renewable energy standards effective 2012. As such, staff developed a plan that complies with PA 295. The BWL must submit its plan to the Michigan Public Service Commission (MPSC) by April 4, 2009. PA 295 also requires each utility to solicit public comments, which will be included in the plan and submitted to the MPSC for compliance approval with respect to the law. In an effort to comply with PA 295, the BWL will solicit comments through its website and the February edition of Connections. PA 295 also allows for a service charge relative to renewable portfolio standards based on the incremental cost of energy. The service charge cannot take effect for at least 90 days after the MPSC's approval is received. Hence, staff will make further recommendations to the Board regarding this matter within the next 3-6 months. Update on Internal Auditor Search Commissioner Kramer summarized the Finance Committee's discussion on the Internal Auditor search process. As such, it was noted that Global Business Resource Group conducted an independent executive search on behalf of the Board of Commissioners. A copy of their work product that reported the search results along with a supplemental memorandum from Commissioner Kramer was distributed during the Finance Committee meeting held January 13, 2009. The Finance Committee approved a motion to interview Board Meeting January 27,2009 Page 6 of I 1 the top six candidates recommended by GBRG and to utilize a Selection Committee that consist of four primary members of the Finance Committee along with the Chief Financial Officer and Director of Human Resources who would act as non-voting resources. The motion also noted that the Selection Committee would make a recommendation to the Committee of the Whole and present the candidate to the Board of Commissioners for final approval and a contract offer for employment. He further clarified that the intent was to hold interviews within the next three weeks. The Commissioners discussed the recommended internal audit selection process relative to past practice. It was noted that traditionally all eight Board members are given the opportunity to participate in the initial screening process of all Board appointees. Following further discussion, Commissioners James and Zerkle agreed that all Board members be notified of the interview dates and times so that those Commissioners interested in attending can participate and deliberate in the process. Commissioner James departed the meeting at 6:31 p.m.due to a prior obligation. Energy Efficiency (Energy Optimization) J. Peter Lark noted that the Energy Efficiency (Energy Optimization) program is a state law similar to the Renewable Portfolio Standards (RPS). Pursuant to 2008 PA 295, the BWL must file an energy optimization plan with the MPSC by April 14, 2009. In addition to public comment, PA 295 requires a retail savings in megawatt hours of 0.30% by 2009 and increased savings up to 1% by 2012. The MPSC will evaluate whether the BWL's plan complies with PA 295. Thereafter, cost recovery mechanisms will be allowed through itemized customer charges. In response to a Commissioner inquiry, it was noted that staff will meet with the citizens advisory group to determine the impact and perception of the rate increases relative to new generation plans. It was also advised that if the BWL is successful with its energy efficiency goals and renewable resources then it might warrant a different size plant. Mr. Lark also referenced a Detroit News article that supported the continued use of coal and noted possible change relative to the new presidential administration. Naming Designated and Alternate Designated Representatives for Environmental Protection Agency On motion by Commissioner Kramer, seconded by Commissioner Thomas to approve and move forward to the full Board the proposed resolution appointing the Designated Representative and Alternative Designated Representative to Comply with the Clean Air Act. Action: Carried unanimously. Update on FACTA Implementation (Identity Theft) J. Peter Lark summarized Internal Controls Manager Mike Collins leadership in implementing an Identity Theft Prevention Program that complies with Federal guidelines established November 1, 2008. Although, the Federal Trade Commission extended the compliance deadline to May 1, 2009, the BWL had already written its Board Meeting January 27,2009 Page 7 of 11 policy and program and conducted necessary training. Mr. Collins is currently speaking with other municipalities throughout the state to help assist them in their implementation of an identity theft program. Update on Record Retention Policy J. Peter Lark advised that the Board of Commissioners approved a Records Retention Policy and Records Retention and Disposal Schedule on September 23, 2008. The schedule received final approval on November 5, 2008 from the State of Michigan Historical Center's Records Management Services, the State Archives of Michigan and the State Administrative Board. The project lead by Internal Controls Manager Mike Collins is currently moving forward with plans to implement the schedule and conduct appropriate record disposal. FOIA Regarding New Source Review J. Peter Lark advised the Board of a Freedom of Information Act request and its potential implications. Other Commissioner Lain advised that the Executive Committee meeting scheduled for January 2009 is cancelled in light of future internal auditor interviews and other meetings. Commissioner Lain also suggested that Commissioners take into consideration the current budget constraints when considering conference travel and attendance. In addition, given the BWL's current cost cutting efforts, Commissioner Lain also advised of his discussion with J. Peter Lark whereby, he suggested the shared utilization of the Corporate Secretary's Administrative Assistant, Rosemary Sullivan. Commissioner Cochran noted his concerns regarding Commissioner Lain's suggestion and advised that he prefer such discussions take place with the Commissioners prior to addressing staff. Internal Auditor Selection Process. As a reminder, Commissioner Kramer requested that no Commissioners make contact with any of the Internal Auditor candidates outside of the existing process. First Step Program. Commissioner Zerkle provided an update regarding the First Step Program in which over 100 applications were received. Commissioner Zerkle also commented on the quality of the applicants and the outstanding job they did during the interview process. It was noted that 20 high school students were selected to intern with the BWL, with the possibility of future full-time employment. The project is expected to grow based on its anticipated success. Commissioner Lain disclosed that he and Commissioner Thomas knew MLK Commission Chairperson Myron Freeman. parent of a Fifst Stop nr gr-af, ndia +o iuua.. There being no further business, the meeting adjourned at 7:04 p.m. Board Meeting January 27,2009 Page 8 of I 1 Respectfully submitted, Sandra Zerkle, Chair Committee of the Whole MANAGER'S RECOMMENDATIONS esolution 2009-1-1 A. BWL Restated and Amended Defined Contribution Plan as presented at the January 13, 2009, Finance Committee Meeting. -------------------- Motion by Commissioner Kramer, seconded by Commissioner Zerkle, to approve the resolution regarding the Defined Contribution Plan Document. Action: Carried unanimously. esolution 2009-1-2 B. Designated Representative and Alternate Designated Representatives to Comply with Clean Air Act RESOLVED, that Nicholas Burwell be named the BWL's designated representative and Mark Nelson and Steve Brennan be named the BWL's alternate designated representatives, all for the purpose of reporting to the Environmental Protection Agency (EPA) under the Clean Air Act; and RESOLVED FURTHER, that the designated representative and the alternate designated representatives are authorized to bind the BWL by their respective actions, inactions, and submissions with respect to the Clean Air Act. -------------------- Motion by Commissioner DeLuca, seconded by Commissioner Thomas, to approve the Designated Representative and Alternate Designated Representatives to Comply with the Clean Air Act. Action: Carried unanimously. esolution 2009-1-3 C. Public Hearing for 2009 Proposed Rate Increase WHEREAS, the Corporate Financial Targets for each of the Lansing Board of Water and Light's Strategic business units is 6.18%return on fixed assets and materials and supplies that would require $32.1 million of combined net income; and Board Meeting January 27,2009 Page 9 of I 1 WHEREAS, the Fiscal Year 2009 budget filed with the City of Lansing included the following proposed rate increases: Electric Utility Customers 4%, Water Utility Customers 7%, and Steam Utility Customers 9% to be effective January 1, 2009; and WHEREAS, the proposed Fiscal Year 2009 budget with the proposed rate increases effective January 1, 2009 as filed would result in a combined net income of$4.5 million, or .86% return on fixed assets and materials and supplies; and WHEREAS, unexpected increases in post retirement benefit costs for Fiscal Year 2009 and increased contributions to the Board of Water and Light's Post-Retirement VEBA Trust fund resulting from market declines in the value of the Defined Benefit Plan assets will negatively affect current projections of Fiscal Year 2009 net income beyond that reflected in the original budget projections; and WHEREAS, the revised combined net income projection for Fiscal Year 2009 is $1.0 million; and WHEREAS, the revised Fiscal Year 2009 cash reserves after contributions to pay for budgeted capital expenditures are now expected to be diminished by$3.3 million; and WHEREAS, the Staff recommends that the Electric Residential Basic Service Charge should be changed from $4.76 to $5.00 per month; and WHEREAS, the Staff proposes implementation of an Environmental Surcharge Tariff to recover expenses related to environmental restoration projects; and WHEREAS, the Board recognizes the decline in Michigan's economy has caused financial difficulties for many of its customers; and WHEREAS, on January 26, 2009, the Board held a Public Hearing and solicited public comment on the proposed increases; and WHEREAS, the Board desires to hold a 2nd Public Hearing for the purpose of soliciting additional public comment on the proposed increase; and WHEREAS, the proposed rate increases for the Fiscal Year 2009 Budget would not take effect until May 1, 2009, following Board action. RESOLVED, the proposed rate increase of 2.5% for electric, 2.5% for water, 2.5% for steam, and 2.5% for chilled water will be subject to further consideration after a public hearing is held. FURTHER RESOLVED, that the Board hereby sets the date of March 18, 2009 at 5:30 PM for a public hearing to solicit public input on the proposed 2.5% electric, 2.5% water, 2.5% steam, and 2.5% chilled water rate increases, $5.00 Electric Residential Basic Service Charge change, and implementation of an Environmental Surcharge Tariff. The Board Meeting January 27,2009 Page 10 of I I hearings will be held in the Board of Water and Light offices, 1232 Haco Drive, Lansing. The Corporate Secretary is directed to file with the City Clerk no later than January 28, 2009 information regarding proposed rate increases with an effective date of May 1, 2009. -------------------- Motion by Commissioner Zerkle, seconded by Commissioner Kramer to approve the Public Hearing for the 2009 Proposed Rate Increase. Discussion: Following brief discussion and recommendation by Commissioner James, the Board accepted a friendly amendment to the 121h paragraph of the resolution to read, "Whereas, the proposed rate increases for the Fiscal Year 2009 Budget would not take effect until May 1, 2009 following board action." Action: Carried unanimously. UNFINISHED BUSINESS None. NEW BUSINESS None. RESOLUTIONS None. MANAGER'S REMARKS Economic Environment. J. Peter Lark noted that the BWL is aware of the economic downturn affecting the area and has taken proactive steps to assume the BWL's financial viability. Some of those measures include a proposed rate increase significantly lower than originally anticipated, cost-cutting efforts and budget reductions. The BWL continues to work with management to reduce cost and have had very successful budget discussions thus far. COMMISSIONERS' REMARKS Commissioner Rodocker Resignation. Commissioner Lain expressed appreciation for former Commissioner Julee Rodocker's service to the Board of Commissioners. Cost Cutting Efforts. Commissioner Lain thanked General Manager Lark for his cost cutting efforts and advised that it is an endeavor that must stay in forefront of the BWL. EXCUSED ABSENCE Board Meeting January 27,2009 Page 11 of 11 On motion by Commissioner James, seconded by Commissioner Kramer to excuse the absence of Commissioner Robert Cochran. Action: Carried unanimously. PUBLIC COMMENTS Frank Joranko, on Wellington Road in Lansing spoke in opposition to building a coal plant and expressed his concerns regarding environmental issues. Mr. Joranko also donated to the Board of Commissioners a DVD entitled, "Kilowatt Ours—A Plan to re- energize America by Jeff Barrie". Rebecca Payne of East Lansing spoke in opposition to building a new coal plant and encouraged the BWL seek other alternatives such as solar and wind technologies. Ms. Payne also expressed concern regarding the effects of coal mining in the Appalachian mountains. Pastor Dan Johnson of Grace Lutheran Church of Lansing noted his scientific background and expressed concern regarding the effects of pollution and global warming on the earth. Pastor Johnson also spoke in opposition to building a coal plant and noted the moral decisions that need to be made relative to community's energy needs. Susan Harley, BWL customer and Policy Associate with Clean Water Action noted the legal landscape regarding carbon dioxide and greenhouse gases. Ms. Harley spoke in opposition to coal and referenced the Clean Air Act and new federal administration. Shirley Murray of Lansing spoke in opposition to building a new coal plant and asked the BWL to look at other alternatives aside from coal. She also encouraged the development of a solar panel program and increased energy efficiency information for customers. ADJOURNMENT On motion by Commissioner James, seconded by Commissioner DeLuca, the meeting adjourned at 6:20 p.m. /s/Rhonda Jones, Corporate Secretary Filed with Lansing City Clerk February 3, 2009 i