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HomeMy WebLinkAbout2012 Minutes BWL ; Approved by the Board o/Commissioners an 5-22-12 5 L D I ilr:1 L iil 1 U� w,m a �va. w MINUTES OF THE BOARD OF COMMISSIONERS'MEETING LANSING BOARD OF WATER AND LIGHT March 27, 2012 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan, Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Dennis M. Louney,Anthony McCloud, Marilyn Plummer, David Price, Cynthia Ward,Tracy Thomas and Sandra Zerkle. Absent: Commissioner Tracy Thomas. The Corporate Secretary declared a quorum present. Commissioner Marilyn Plummer led the Pledge of Allegiance. APPROVAL OF MINUTES Motion by Commissioner Price seconded by Commissioner Louney to approve the minutes of the Regular Board Meeting minutes of January 24,2012. 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 was no Public Comment. ------------------ COMMUNICATIONS a. Letter submitted by James Chiodini of White, Schneider,Young &Chiodini to LBWL management regarding health care costs to retirees. Received and Place on File COMMITTEE REPORTS COMMITTEE OF THE WHOLE February 14,2012 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 5:10 p.m.on Tuesday, February 14, 2012. Regular Board Mtg. March 27,2012 Page 2 of 8 Committee Chair Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Marilyn Plummer, Cynthia Ward and Sandra Zerkle. Absent: Commissioners Anthony McCloud,Tracy Thomas and David Price Public Comments There was no Public Comments Approval of Minutes Motion by Commissioner Ward,seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of January 10,2012. Action: Motion Carried REO Town Update(Informational Only) General Manager Lark stated that the REO Town project is on time and on budget and beginning at approximately 5:30 a.m.on February 15,2012, 1,300 cubic yards of concrete will be poured at the REO site.The concrete will serve as the ground floor of the facility for Board of Water&Light's combined cycle, cogeneration plant. Also on February 17,2012 the tiles for the Depot roof will begin to be placed on the facility.On Monday the 191h the first steel girder will go up at 10:00 a.m. Wise Road Plant Update (Information Only) General Manager Lark stated that his Administration has heard from FTC&H Consultants and the Board's own experts regarding damages to the Wise Road Water Plant.The damages will be paid for by FM Global, the Board of Water & Light's insurance carrier, less a $500,000 deductible. The estimated date for completion of repairs in the Wise Road facility is March 2014. There will be a lawsuit by FM Global against the chlorine carrier and preliminary discussions indicate that FM Global will be pursing at that time the Board of Water& Light's claim for recovery of its deductible. Lead Pipe Replacement and CSO Update(Informational Only) General Manager Lark stated that lead pipe replacement is on schedule and is estimated to be completed in 2016.All high risk customer services have been completed. Regarding the Combined Sewer Overflow(CSO),there is one CSO project slated for this year and none next year; however the budget does call for a ramping up beginning in 2015, Additional Information and Updates provided by General Manager Lark • An ADDY Award was presented to graphic artist Chris VanWyck,for his work on the-Board of Water&Light's 2011 Chili Cook-Off Poster. • The Board of Water&Light will be receiving the RP3 Reliable Power Award at the Platinum level. This award is presented by the American Public Power Association (APPA)and is in recognition of providing customers with the highest level of reliability. • A letter of appreciation to General Manager Lark from Jamie Zimmer of Central United Methodist Church for prompt assistance with their heating and cooling system issues. General Manager Lark thanked Dick Peffley, Executive Director of Water Operations and Special Projects,for his assistance with this matter. Regular Board Mtg. March 27,2012 Page 3 of 8 • In honor of Black History month the Board of Water&Light and its Inclusion, Equity and Diversity Council will be hosting a trip to the Charles H. Wright Museum of African American History on Saturday, February 25,2012 from 8:00 a.m,to 4:30 p.m.The museum is located at 315 Warren Avenue in Detroit. Everyone is invited to attend. • On February 29,2012 there will be a"Celebrate Differences in the Work Place"panel discussion. This discussion will be moderated by General Manager Lark and closing remarks will be provided by Mr. Ronnie Byrnes, Business Manager of Local 352. • General Manager Lark announced that it is hoped that Diversity Training for all Board of Water& Light employees will be completed by the end of this fiscal year. • General Manager Lark announced that Mark Nixon, Communications Director,will be retiring on March 16,2012 and that Stephen Serkaian has been retained on contract in the Communications Department. Other Chair Zerkle thanked General Manager Lark and his Administration for their work with the Central United Methodist Church. Vice Chair Louney thank General Manager Lark and his Administration for all of their hard work. Absence Motion by Commissioner Zerkle seconded by Commissioner Plummer to excuse Commissioners Anthony McCloud, David Price and Tracy Thomas from tonight's meeting. Action: Carried Unanimous Adiourn On Motion by Commissioner Ward, seconded by Commissioner Plummer, the meeting adjourned at 5:39 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE February 14,2012 The Finance Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 5:40 p.m.on Tuesday, February 14, 2012. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Marilyn Plummer.Alternate Committee member Sandra Zerkle was present. Also present was Board member Cynthia Ward, Absent: Commissioner David Price Public Comments There were no public comments. Regular Board Mtg. March 27,2012 Page 4 of 8 Approval of Minutes Motion by Commissioner Plummer,seconded by Commissioner Louney to approve the Finance Committee meeting minutes of January 10,2012. Action; Carried unanimously. Quarterly Financial Update General Manager Lark provided a quarterly financial update that included information relative to Fiscal Year to date of December 31,2011 for Electric,Water, Steam and Chilled Water services. (Combined Utility Financial Report is included in the Finance Committee packet of 2-14-2012 and is available for viewing in the Office of the Corporate Secretary.) Actual v. Budlge.ted Variance in Combined t_7tHity Net Incctrne Fiscal Year to Date Decen-fiber 31, 201.1 Can,pared to FY 2012 Budget (Saoo) Budgeted Net Income 11,275 changes in Operating Income: Reynue Changes(net oftuell RetaiE Electric (527) Wholesale Electric (5,3561 Water Sales (171) Steam sales (56) Chilled Water Sales (15) Oieaa ran eprecia Exsense Chanaes Dtion 1.039 Labor,Material,and Other 5,091 Other 91 Subtotal Changes in.Operating Income (4) Changes in Olhe.r Incomes Interest Earnings 1.250 Other Income 305 Reduced PILOT 453 All Other-N.-Operafing Variances 143 Subtotal Changes in Other Income 2,151 Actual Net Income 13,422 Internal Audit Status Update Internal Auditor Phil Perkins presented a brief overview of • FY2012—Audit Plan Progress — Procurement—Complete, Final Report Issued — Payroll—Complete, Final Report Issued — Capital Assets—in progress, 25%complete — Billing—in progress, 25%complete — Surprise Cash Count#1 —Complete • Remaining FY 2012 Activities — Complete Billing&Capital Assets Audits — Surprise Cash Count#2 — IT Preliminary Risk Assessment/Planning for future IT Audits — External Peer Review(tentatively scheduled for April 30—May 4,2012) — Annual Audit Planning&Risk Assessment for FY 2012 Excused Absence Regular Board Mtg. March 27,2012 Page 5 of 8 Motion by Commissioner Louney seconded by Commissioner Plummer to excuse Commissioner David Price from tonight's meeting. Action: Carried Unanimous Other None Admourn On Motion by Commissioner Louney,seconded by Commissioner Plummer the meeting adjourned at 5:53 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee HUMAN RESOURCE COMMITTEE March 22,2012 The Human Resource Committee of the Lansing Board of Water and Light met at the Board of Water & Light's Board Room, 1233 Haco Dr., Lansing, MI, at 4:00 p.m.on Thursday, March 22,2012. Human Resource Committee Chairperson Tracy Thomas called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Tracy Thomas,Anthony McCloud, Cynthia Ward and Sandra Zerkle. Alternate Committee members present: Commissioners Dennis M. Louney and Marilyn Plummer,Also present were Board members Margaret Bossenbery and David Price. Absent: None Public Comments Ron Byrnes, Business Manager of Local 352 stated his concerns regarding consolidation of services between the City of Lansing and the Board of Water& Light, He questioned how the word consolidation was being defined. Mr. Byrnes stated that the City Charter supports the Board as being an autonomous and self- governing agency and asked that the Board of Commissioners please take that information into consideration. Joe Graves of 3114 S. Deerfield Ave., Lansing,stated that he served two terms on the Board of Water& Light Board of Commissioners and that he served on the Charter Commission that wrote the current operating Charter. He stated concerns about the consolidation of the Board of Water&Light and City of Lansing and that the Charter is very clear about the authority and autonomy of the Board of Water&Light. He said during deliberations while establishing the current Charter it was recognized that is was imperative that the independence of the Board be maintained and that the Board be isolated from any political considerations and political involvements. Approval of Minutes Motion by Commissioner Zerkle, seconded by Commissioner Ward to approve the Human Resource Committee meeting minutes of March 22,2012. Action: Carried unanimously. Regular Board Mtg. March 27,2012 Page 6 of 8 Health Care(Information Only) General Manager Lark stated that at the last two Committee of the Whole(COW)meetings there had been discussion regarding health care and that he would give his recommendation. He stated that the decision regarding this matter needs to be made by June 301h,which is the end of the Fiscal Year. He will be bringing this matter to the attention of the Committee of the Whole at its May,2012 meeting. General Manager Lark stated that there are three options pertaining to Public Act 152 of 2011. 1) The hard cap,which means we limit the expenditures to a certain amount. 2) 20%Premium Co-Pay, instead of the current 5%premium co-pay and that requires a majority vote. 3) 2/3 vote for any other percentage less than 20%. General Manager Lark spoke about Principles of Gradualism. He said that he would recommend a 10%Co- Pay. He said that if the Board follows this recommendation it will have to be evaluated every year.A 10% increase would be a$34.00 per pay period increase for employees, After a lengthy conversation Board Chair Sandra Zerkle and Human Resource Chair Tracy Thomas stated for the record that they would not support the hard cap and that 10%is their preference. General Manager Lark stated that bargaining employees would not be affected immediately because the statute specifically preempts them during the pendency of their contract,which goes through the end of October.They will be affected after November 1st. Consolidation (Information Only) General Manager Lark stated that there has been discussion about consolidation between the City of Lansing and Board of Water&Light. Because this issue has come up recently he would like to share some of the things that the Board has done in cooperation with the City. General Manager Lark stated that working cooperatively with the City of Lansing is a very good thing to do and plans to continue with these efforts. He stated that he always looks to two things when deciding whether to work cooperatively. The first question that he asks himself is-Is there a savings to the Board of Water& Light and the City of Lansing? Meaning is there a cost reduction or revenue enhancement. Is there something good in it for the Board of Water&Light? The second question is- Will it compromise in any way the Board of Water&Light's operational integrity? General Manager Lark stated the following is a list of cooperative agreements that the Board of Water& Light has in place with the City of Lansing: • Equipment arrangement with the City of Lansing • Inspection of Bucket Trucks • Emergency Calls • Dick Peffley, Executive Director of Water Operations and Special Projects, leading the City's effort to build a new garage • The use of Board of Water&Light electricians • Sewer, collections and billings Regular Board Mtg. March 27,2012 Page 7 of 8 General Manager Lark stated that there have been some conversations with officials from the City of Lansing and the Board of Water&Light is exploring those with an optimistic attitude in the hope that we can get something done that will save the City and the Board of Water& Light money and will not cede operational control. General Manager Lark stated that saving is very important to the Board of Water&Light at all times, because the lower we can keep our costs the easier it is to maintain our already low rates for our customers. Chair Zerkle stated that she appreciates Mr. Lark's efforts. She said as Commissioners they are all concerned about the integrity of the Board. She asked that Mr, Lark keep the Board informed where necessary as this situation progresses and they will certainly do whatever is needed to support and meet his objectives because they are the Board's objectives too. Human Resource Chair Thomas stated that communication is a big deal and before this meeting there was a lot speculations and this meeting has shed light on some of those things,this meeting also erased some of the questions that are being asked. Finally this meeting also promotes transparency. Other There being no further business,the Human Resource Committee meeting adjourned at 4:52 p.m. Respectfully submitted, Tracy Thomas, Chair Human Resource Committee MANAGER'S RECOMMENDATIONS There were no Manager's Recommendations UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS There was no New Business RESOLUTIONS There were no Resolutions for Action. MANAGER'S REMARKS General Manager Lark stated that the Wine and Cheese"Dancing with the Starz" Extravaganza or"Pennies for Power"fundraiser for the Capital Area Community Services was a tremendous success with$10,000 being raised. General Manager Lark thanked Chair Sandra Zerkle who came up with the idea for this event. He also thanked the dancers,the committee and all of the volunteers that helped make this event a success. General Manager Lark stated that recently his Administration issued bonds for the purpose of refunding BWL's 2002A Bonds that are callable on July 1,2012. The bond sale has already been done and there Regular Board Mtg. March 27,2012 Page 8 of 8 was a$2.7 million net present value savings. General Manager Lark thanked his financial team for all of their hard work. General Manager Lark thanked General Counsel Brandie Ekren for her work on the General Motors bankruptcy matter,which resulted in approximately a$2 million recovery. General Manager Lark stated at the request of Chair Zerkle he wrote a letter to Senator Stabenow regarding the FRIB, General Manager Lark stated that the Board of Water&Light received a letter from Traverse City Light and Power thanking the Board's crews for their assistance during the March 3,2012 storm. General Manager Lark spoke about the Diversity field trip was recently taken to the African American Historical Museum. He stated that it was fun and there was an attendance of about 100 people.Also there was a Diversity Panel in which he moderated that included 4 panelists from diverse backgrounds that talked about their life experiences. He said that there has been very good feedback on this tremendous event. He thanked Ron Byrnes for his participation. COMMISSIONERS'REMARKS Chair Zerkle stated that the Wine and Cheese Extravaganza was superb.The dedication of the dancers was wonderful and it was a great effort on behalf of the Board of Water&Light. Also the Commissioners met the Is'Step students and as always they are excited to be taking part in this program. This is a tremendous program at the Board of Water&Light and I would love to see it expand. Since the 4 year inception of this program there have been 23 kids hired out of 40 in one capacity or another. Commissioner Louney thanked Calvin Jones, Roberto Hodge, Pat Turner,Jon Ebe and Jan Nelson for their assistance with a tour of the Eckert Station for a local Boy Scout troop. He said the Boy Scouts really enjoyed their tour. PUBLIC COMMENTS There was no Public Comment EXCUSED ABSENCE On motion by Commissioner Price, seconded by Commissioner Plummer to excuse Commissioner Thomas from tonight's meeting. ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Plummer the meeting adjourned at 6:50 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes(Electronic)fled with Lansing City Clerk:April 5,2012 Final Approved Minutes(Electronic)fled with the Lansing City Clerk:May 22,2012 Preliminary/Unapproved Minutes To be Approved by the Board o/Commissioners on 7-24-12 MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT May 22, 2012 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Dennis M. Louney,Anthony McCloud, Marilyn Plummer, David Price, Cynthia Ward,Tracy Thomas and Sandra Zerkle. t 4 Absent: None ,-T1 The Corporate Secretary declared a quorum present _ r Commissioner Dennis M. Louney led the Pledge of Allegiance. APPROVAL OF MINUTES Motion by Commissioner Bossenbery seconded by Commissioner Plummer to approve the minutes of the Regular Board Meeting minutes of March 27,2012. 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. Joel Wolfe, former Assistant General Manager and Director of Operations for the Board of Water& Light stated the following: I am opposed to City of Lansing trying to take more funds from the Board of Water& Light. In the long history of the Board there has always been a desire of many city people to get into the good funds of the Board and he believes that the Board should resist that because the city is already receiving plenty of money. We should be operating for the benefit of the rate payers and keeping the rates low and not trying to make up for the deficits that the City might have. Stan Schuck, UAW 2256 Vice Chair Representative for the City of Lansing, stated the following: I am a lifelong taxpayer and customer of the Board of Water& Light. I have been drinking the Board of Water& Light's water and bathing in it my entire life. I will not drink the Mayor's cool-aid that is made with this water. What the City is asking for is that the Board step up to the community that has supported it forever. With rate hike Regular Board Mtg. May 22,2012 Page 2 of 19 after rate hike, as a matter of fact not too long ago we put into effect a rate hike to support the Board of Water& Light's legacy for their employees. What we are talking about is the City of Lansing and we are your customers. We are the residents and we do work here and what we are talking about is the ability of the Board of Water& Light to give back to the community that has given to it for so many years. This is a difference to the City and this is not about the employees,this is about the tax payers,your customers and the City's ability to maintain a quality of life here. If we cannot maintain that quality your customers are going to leave,just like the tax payers and that is the cold hard reality of it. Many Cities' across the county are collecting as much as 6%, this Board has enjoyed 4%, which is below the national standard for quite some time and 5.5% is on the low end of the National menu. Please take this into consideration. We are talking about repairing the roads,taking care of the parks and buildings all of which has the Board running water in them. Our sewer bills are tied to how much water we use, there is another revenue stream. The less water used and the less people here,the less revenue and sewage money, less CSO money, the less ability to go green. Please take that into mind and realize that we are not asking for that much. We are only asking for a little bit of help and that is not unreasonable. Ron Byrnes, IBW Local 352 Business Manager, stated the following: I oppose the additional 1/2% request for the PILOT. The Board of Water & Light has in upward of 30 positions here at the utility that has not been replaced and every job that is vacated is scrutinized to the fullest extent, so we are not exactly flush with money here. We are giving the City a good return in lieu of taxes in the tune of$14 Million last year and we are going to increase that another 1%. 5% is a reasonable number and we need to stay the course and stick with the 5%that was passed by the Board's Committee of the Whole. Carol Wood, At-Large City Councilperson, 1018 W. Lapeer, stated the following: I have been before this Board previously, to speak for the employees and issues that affected my residents and constituents within the City of Lansing. I stand before you tonight asking you to reconsider the decision that you made on the 5% return on equity. The Board of Water& Light has been paying for the last 20 years only a 4% return on equity which dates back to 1992. What we are asking is not to use these dollars to hire employees, but what we are asking for with these dollars is that it will help us give the services that make a difference on whether people will reside in the City of Lansing.This affects residents and businesses. When we talk about the probability of the Board of Water & Light, you need those things, you need to have those houses filled, you need to have people coming and deciding to do their business here. But when you look at the reduction in services that we have had for the last several years it has had a true impact on people making decisions to be here. We are not trying to raid the Board of Water & Light funds and we are not trying to put a gun to your head, what we are asking for is Regular Board Mtg. May 22,2012 Page 3 of 19 something reasonable. Now someone might say why we are here at this ninth hour on the ninth day asking you for this.To be perfectly honest, foolish of me, I believed something that I was told by the Administration and that was that this process was going to take place between now and July 15t I did not realize that you would be voting on it this soon, and that we would not have had a better opportunity to sit down and discuss this with you. When we looked at our budget and you look at the amount of employees that have been either laid off or position that have not been filled,just walk out the door and look at the streets and the parks, think about your neighborhood, think about the events that you have or had and think about services that are not there. This will help us fill that gap. I cannot tell you enough about the comments that we heard during the budget process and when we were out talking to people during budget hearings that wanted to see their services that were begging us to make sure that their city succeeded I am here in their capacity, I am here speaking for them. I am here letting you know that not only do you wear the hat of the Commissioners of the Board of Water& Light but you represent those people too. You represent us as a city and I hope that you will consider the additional %% and if you are not able to make that decision tonight then I ask that maybe you think about tabling this until we have had a better chance to sit down and talk to you. Brian Jeffries, At-Large/President Lansing City Council, 3229 Moores River Dr., stated the following: I wanted to go in a different direction than Councilmember Wood did in terms of my view of the return on equity; Not only what it means to the City of Lansing but in the long view what it means. As Councilmember Wood alluded to in some of the research that we did today, we found that this return on equity was increased in 1992 from 3.5%to 4% and again it extended in 2001 for another 10 years at 4%. In our budget deliberations we have talked about this issue and what the national average is and we kind of struggled with that issue. We have been told that the national average runs somewhere around 6% and so the way that I am looking as this and I don't want to intertwine this issue with our budget, it does impact our budget this year, but I want to take a little longer view at it. I am looking at it as any return on investment payment from this organization less than the national average, (less than 6%), 1 believe equates to a payment by this city in terms of subsidizing the operations of the Board of Water& Light. I feel that the base payment should be 6%. You all come to us and tell us that you are an exceptional performer in terms of a municipal utility I agree with that and I buy that, and when we look around the Country, if the average is 6% certainly something exceptional might even be higher than that; but we are not asking for an exceptional return on equity and we are not even asking for the average return on equity, we are asking for something less than the average. I believe it should be 6%and I do not have support on Council for that. Council did approve 5.5% and just as a side bar of what Councilmember Wood was talking about in terms of coming to you, we could not come to you as a Council and talk to you about this issue until after we passed our budget. Regular Board Mtg. May 22,2012 Page 4 of 19 Council can only speak through its Resolutions and that is what we did last night. So in terms of timing that is what gets us here today at such a late hour and that is now the formal position of the Council. One thing that I want to leave you with and this is certainly not a threat, I don't come to your house here to threaten in any way. I am very passionate about this and I just want to you know that in the last two increases the one that occurred in 1992 and the one that occurred in 2001 required Council approval, now we are not being told that is going to happen this year but there is a Resolution actually approving the pay on equity that Council had to pass, my view on this is if we are given an agreement that Council has to approve and if comes back less than 5.5% 1 will be voting no; because I believe what is fair and what is right is 6% at least the National average. 5.5% is reasonable for both sides. I ask that you consider that, I am not sure where this is in your process in terms that it has to be a reconsideration or what, but please consider our plea for the 5.5%, 1 mean I look at it as an issue with our budget, but we have gone 20 years at 4% and as we look down the road we cannot continue to get less than what is what we believe the national average should be, the bench mark for the return on equity that we get from the Board of Water& Light. Jody Washington, 15t Ward City Councilperson, stated the following: This should not have been any surprise that we asked for more money. From my lips to Peter Lark's ears, I told him I was going to ask for 6%. 5.5 % is right within the National average. I believe that the responsible thing to do is and that is to give this payment at 5.5%, it is right smack in the middle. I know deals have been made for the 5%, we did not know about that, and that is still below the National average. I have talked to constituents and they are in favor of it. You know the fear of raising rates I am not too concerned about that, I think that we the public probably can afford it and even in the worst case scenario I believe it would be a shared sacrifice between businesses, residents, non- profits, everybody. ----------------- COMMUNICATIONS There was no communications COMMITTEE REPORTS COMMITTEE OF THE WHOLE April 10, 2012 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, April 10, 2012. Committee Chair Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Marilyn Plummer, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Regular Board Mtg. May 22,2012 Page 5 of 19 Absent: None Approval of Minutes Motion by Commissioner Ward, seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of February 14, 2012. Action: Motion Carried Unionization Efforts (Informational Only) General Manager Lark stated that several months ago there was discussion regarding unionization efforts at the Board of Water & Light. These efforts involve the Board of Water& Light's own IBEW 352 Union seeking to unionize approximately 55 technical and clerical employees. General Manager Lark stated that he wanted to inform the Commissioners that there will be a Notice of Elections posted and the election will be held on April 18th. General Manager Lark stated that Management is preparing a letter to affected employees stating that unionization should be considered carefully and that Management is very happy having the employees as non-bargaining, but would also be very happy to have them as bargaining employees. General Manager Lark stated that Management wants to make sure that the employees are fully informed and is urging participation in the election because the outcome is determined by the majority of those who vote. Electric Vehicle Program Update (Information Only) General Manager Lark stated that the Electric Vehicle Program started with the Department of Energy (DOE) Grant for around $750,000. The Board of Water& Light has a number of vehicles on the road as well as a number of charging stations for the vehicles at no cost the Board of Water& Light, due to the DOE grant. The program has been a success for the Board of Water& Light and has garnered much of attention. General Manager Lark stated that he is very proud of the Board's efforts with this program and has lot of people to thank, primarily, Kellee Christensen. General Manager Lark introduced Customer Projects new Manager, Ray Moore. Ray Moore provided the Committee with an update on the Plug-In Vehicle program. Mr. Moore presented the Committee with a PowerPoint presentation that reviewed: o The purpose of the program o Project Goals o Current Projects o Status Update o Vehicles o Charging Station Status o Board of Water& Light Incentives o State Initiatives o Project Timelines o Project Success Regular Board Mtg. May 22,2012 Page 6 of 19 After a short Q&A period Commissioner Tracy Thomas thanked Ray Moore for his presentation and stated that the Committee has heard this information before from Mr. Lark and Kellee Christensen, but it was nice to receive this updated information in this type of format. •PowerPoint Presentation available in the Office of the Corporate Secretary• REO Town Update (Informational Only) General Manager Lark provided an update on the REO Town Co-Generation Plant. He stated that the building of the plant is on time and on budget. General Manager Lark also stated the high voltage transmissions lines are up and ready and that the steam lines are close to completion. General Manager Lark stated that a lot of the work on the plant has been done with local vendors,to name a few, Kramer Management, Christman, Ganger and Clark Construction. He said the Board of Water& Light is trying to put as much emphasis as possible on hiring Lansing based companies. Dick Peffley, Executive Director of Water Operations and Special Projects, also provided an update on the building of the Co-Generation Power Plant. He stated there have been no accidents on site and it is his number one mission to make sure no one get hurt. Dick Peffley stated that the budget for this project is$182 Million and all but$37 Million has been committed. He also stated that major concrete work has been completed and that important pieces of equipment, like the combustion turbines will start to come in around the first of June.There will be a logistics person at the site who will be coordinating truck trafficking. The exterior renovation of the Depot is 90%complete and the interior renovation bids are out. Once the Depot has been completed the plan is to use it as a training facility for future REO Town plant operating staff. There was brief dialogue regarding the training of employees to work at the REO Town Co-Generation Plant. Additional Information and Updates provided by General Manager Lark General Manager Lark presented the Commissioners with an informational flyer on the REO Town commemorative Brick Promotion that will support Board of Water& Light's "Pennies for Power" program. With a donation of$50.00 you can buy a personalized commemorative brick that will be placed the entrance of the Depot. General Manager Lark stated that Susan Devon, Assistant General Manager and Chief Financial Officer and her staff did a wonderful job on the Bond refinancing. It does save us in present value almost $3 Million. Regular Board Mtg. May 22,2012 Page 7 of 19 General Manager Lark stated that he remembers going to the APPA Conference once and one of the Commissioners questioned him about the Board of Water & Light receiving awards. The Board of Water & Light just received notice from the APPA that we will be the recipient of the APPA Community Service Award. General Manager Lark thanked Teece Aronin, Board of Water & Light Communications Representative for spearheading the Board of Water & Light receiving this award. The Award will be presented on June 19th at the APPA National Conference. Other Commissioner Bossenbery spoke about the Peregrine Falcon nest atop the Eckert Station story that was recently in the Lansing State Journal. Commissioner Thomas congratulated Michael Flowers on being appointed a board member of the Ingham Intermediate School District. Excused Absence None Adjourn On Motion by Commissioner Price, seconded by Commissioner Ward, the meeting adjourned at 6:15 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole COMMITTEE OF THE WHOLE May 8, 2012 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, May 8, 2012. Committee Chair Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Marilyn Plummer, David Price, Cynthia Ward and Sandra Zerkle. Absent: Commissioners Anthony McCloud and Tracy Thomas Public Comments There was no Public Comments Approval of Minutes Motion by Commissioner Ward, seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of April 10, 2012. Regular Board Mfg. May 22,2012 Page 8 of 19 Action: Motion Carried Third Party(Informational Only) General Manager Lark stated that in addition to sales to our native customers the Board of Water & Light sells excess power to other entities or the MISO market and this is what is called Third Party Sales. Reflected in this year's budget is the effect of the substantial drop off of Third Party sales. The is because natural gas prices are so low and that sets the price of electricity on the MISO market so we are not making money there; however George Stojic, Executive Director of Strategic Planning, is in charge of locking in natural gas for us for the REO Town Plant. General Manager Lark stated that using REO town to hedge Third Party sales confirms the Board's wise decision in building the REO Town Plant. Mr. Stojic explained changes that have occurred in wholesale electric markets over the past several years that have caused the BWL's third party sales to decline. The causes include: (a) a decline in demand, especially manufacturing demand, (b) a fall in natural gas prices, which have caused wholesale market prices to decline, and (c) an increase in the delivered cost of coal, which has caused BWL operating costs to rise. The combination of falling wholesale market prices and rising fuel costs has resulted in lower third party sales. Rules and Regulations Electric ♦ Water ♦ Steam ♦ Chilled Water ♦ Electric Fees & Charges ♦ Water Fees & Charges George Stojic, Executive Director of Strategic Planning, reviewed the proposed changes to the Board's rules and regulations. He noted that there were no significant changes to the rules and regulations, but that some of the electric and water fees and charges were increased. Fees and charges are reviewed each year and adjusted to reflect changes in costs incurred by the Board for extending distribution facilities to customers. No increases to fees and charges for steam and chilled water were proposed this year. General Manager Lark asks that the Committee forward the resolution approving the Rules and Regulations for Electric, Water, Steam and Chilled Water Utility Services with the updated schedules to be effective July 1, 2012 to the full Board for approval. Motion by Commissioner Price, seconded by Commissioner Plummer to forward the resolution for the Rules and Regulations to full Board for consideration. Action: Motion Carried Energy Optimization and Renewable Annual Update General Manager Lark stated that the State of Michigan Public Service Commission (MPSC) requires the Board of Water& Light to provide the Governing Board an annual update on their Renewable Energy Plans. The Renewable Energy Plan Update is also reviewed by the PSC. Regular Board Mtg. May 22,2012 Page 9 of 19 Sue Warren, Manager of Marketing and Business Strategies, stated that PA 295 was passed in October of 2008. Legislation requires the Board be updated on Renewable Energy Program and an Energy Optimization Program, as well as file annual reports with the MPSC which are due May 31, 2012. The Board of Water & Light is also required to give customers an annual summary, which will be reported in the July edition of the Board of Water & Light's Connections Newsletter. Ms. Warren reviewed the 2011 Energy Optimization Programs, Residential Programs and Business Programs as well as an Energy Optimization Summary. Ms. Warren stated that the Board of Water & Light is meeting goals for both Renewable Energy and Energy Optimization and they continue to look for and evaluate Renewable Energy options. Chair Zerkle requested that Ms. Warren provide this update at a Regular Board of Commissioners meeting as well as to the Lansing City Council. PILOT General Manager Lark stated that the Payment in Lieu of Taxes (PILOT) is currently at 4% and in the City of Lansing's proposed budget there was a 5% PILOT suggested. General Manager Lark stated that he has prepared a resolution providing for a 5% PILOT with the idea in mind that this percentage is where the Board wants to be and that it is reasonable. PILOT payments are made in late June. General Manager Lark stated that we may need a rate increase to cover this PILOT increase at some point, but that will be determined annually following analysis of each year's Revenues and Expenses. After a lengthy discussion regarding the PILOT and the possibility of a rate increase (due to the increase of the PILOT percentage) General Manager Lark respectfully asked that the Committee forward the Resolution to the full Board for consideration. Motion by Commissioner Price, seconded by Commissioner Plummer to forward the proposed resolution to the full Board for consideration. Action: Carried Unanimously Additional Information and Updates provided by General Manager Lark • A copy of the "Building Tradesman" newspaper featuring two articles regarding the REO Town Co-generation Plant. • The last steel beam to go up at the new Plant will be painted white and brought over to the Haco Dr. loading dock area on May 22, 2012 to allow people (employees and Commissioners) to sign their names to it. Also there will be a "Topping Off" Ceremony at the new REO Plant building on May 29, 2012 to place the last beam up. • A Successful Board of Water& Light Adopt-A-River event. Regular Board Mtg. May 22,2012 Page 10 of 19 • Tickets for the 17th Annual Board of Water& Light Chili Cook-off are going on sale. • The Board of Water& Light and Consumers Energy are working out a Mutual Aide agreement to support each other with crew assistance during big storms. Other Marilyn Plummer stated on behalf of the Juneteenth Committee she would like to invite everyone to the 19th Annual Juneteenth events to celebrate the historical significance of the oldest African American Holiday which celebrates the end of slavery in the United States. This year's opening Master of Ceremony is Mr. J. Peter Lark. The event will kick off on June 14, 2011 in downtown Lansing at City Hall. Excused Absence Motion by Commissioner Louney seconded by Commissioner Ward to excuse Commissioners McCloud and Thomas from tonight's meeting. Adiourn On Motion by Commissioner Price, seconded by Commissioner Ward, the meeting adjourned at 6:35 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE May 8, 2012 The Finance Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 6:46 p.m. on Tuesday, May 8, 2012. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Marilyn Plummer and David Price. Alternate Committee member Sandra Zerkle was present. Also present Board member Cynthia Ward. Absent: None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Plummer, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of February 14, 2012. Regular Board Mtg. May 22,2012 Page 11 of 19 Action: Carried unanimously. FY 2013 Budget Resolution General Manager J. Peter Lark provided an overview of the proposed financial plan for fiscal year (FY) 2013 for the Lansing Board of Water and Light (BWL). The total proposed budget for FY 2013 is $369.7 million, of which operations and maintenance comprise $262 million and capital budget is approximately $107.7 million. $46.8 million of the Fiscal Year 2013 capital budget is to provide for on-going services to our utility customers and to sustain our plant facilities for future operations. The remaining $60.9 million will support construction of the Reo Town Plant. Capital expenditures for Fiscal year 2013-2018 are estimated to be $367 million. SALES FORECAST Utility FY13 Forecast FY12 Budget %'13 Forecast To'12 Budget Electric—Retail (MWh) 2,248,434 2,248,434 0.0% Electric-Wholesale(MWh) 250,353 1,114,635 -74.8% Electric(MWh) 2,528,786 3,363,069 -24.8% Water(ccf) 9,458,641 9,223,158 2.6% Steam (Mlb) 698,275 743,000 -6.0% Chilled Water(tnhrs) 10,038,000 10,739,126 -6.5% Electric: -Retail sales volumes by customer class are expected to remain at the same level as FY 2012. -Wholesale sales volumes are expected to decrease as a result of unfavorable market conditions. Water: •Retail sales volume expectations are consistent with FY 2012. •Wholesale sales volumes increased due to expanded consumption for Delta Township. Steam: -Steam sales volumes expectations have been reduced to better represent actual sales volumes experienced in recent years. Chilled Water: -Chilled water sales volume decreased due to better projections of Accident Fund usage and improved metering and operations. General Manager also Lark reviewed the FY 2013 Income Statement and Cash Flow (by Utility) as well as the Financial Projections. *The Financial Plan PowerPoint presentation is included in the Finance Committee Mtg.Packet and is available for viewing in the Office of the Corp*Sec.* General Manager Lark asked that the resolution for the FY 2013 Operating and Capital Budget be forwarded to the full Board for Consideration. After a lengthy discussion regarding the impact of the PILOT increase on the budget and the possibility of rate increases the following motion was made: Regular Board Mtg. May 22,2012 Page 12 of 19 Motion by Commissioner Price, seconded by Commissioner Louney to forward the proposed resolution for the FY 2013 Operating and Capital Budget to the Board for consideration. Finance Committee Chair Bossenbery stated that the contract for Charles Moore will be renewed at the request of Internal Auditor Phil Perkins. Also last week the External Peer Review took place with Internal Auditor Phil Perkins and he will provide an update at the next Finance Committee meeting. Also the proposed budgets for the Board of Commissioners, Internal Auditor and Corporate Secretary are all in included in the total budget that was presented today and that everyone should have received individual budget proposals for the areas mentioned above through email. Excused Absence None Other None Adjourn On Motion by Commissioner Louney, seconded by Commissioner Plummer the meeting adjourned at 7:05 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee HUMAN RESOURCE COMMITTEE May 15, 2012 The Human Resource Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 4:00 p.m. on Tuesday, May 15, 2012. Human Resource Committee Chairperson Tracy Thomas called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Tracy Thomas, Anthony McCloud, Cynthia Ward and Sandra Zerkle. Also present were Alternate Committee member Marilyn Plummer and Board member David Price. Absent: None. Public Comments There were no public comments. Approval of Minutes Motion by Commissioner McCloud, seconded by Commissioner Ward to approve the Human Resource Committee meeting minutes of March 22, 2012. Regular Board Mtg. May 22,2012 Page 13 of 19 Action: Carried unanimously. 1. FY 2012 Board Appointee Resolution -General Manager Combined Results Review Comments Self-Evaluation General Manager J. Peter Lark, requested a closed session for the purpose of receiving his contractual year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Ward, seconded by Commissioner McCloud to go into closed session. Action: Carried unanimously. The Human Resource Committee meeting went in to closed session at 4:05 p.m. Motion by Commissioner Zerkle, seconded by Commissioner McCloud that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 4:51 p.m. and immediately went back into closed session at 4:52. Motion by Commissioner Ward, seconded by Commissioner McCloud that the Human Resource Committee return to closed session. Action: Carried unanimously Motion by Commissioner Zerkle, seconded by Commissioner McCloud that the Human Resource Committee return to open session. Action: Carried unanimously Upon conclusion of the closed session meeting at 5:30 p.m., the Human Resource Committee took the following action: Motion by Commissioner Ward and seconded by Commissioner Zerkle to forward the resolution for the reappointment of Mr. Lark to the Charter position of General Manager for fiscal year 2012-2013 and extend him an employment contract with expiration date of 6/30/17 to the full Board for consideration. Action: Carried unanimously 2. FY 2012 Board Appointee Resolution - Internal Auditor Combined Results Review Comments Self-Evaluation Regular Board Mtg. May 22,2012 Page 14 of 19 Internal Auditor Phil Perkins requested a closed session for the purpose of receiving his contractual year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Ward, seconded by Commissioner McCloud to go into closed session. Action: Carried unanimously. The Human Resource Committee meeting went into closed session at 5:40 p.m. Motion by Commissioner Zerkle, seconded by Commissioner McCloud that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 6:00 p.m. Upon conclusion of the closed session,the Human Resource Committee took the following action: Motion by Commissioner Zerkle and seconded by Commissioner Plummer to forward the resolution for the reappointment of Mr. Perkins to the Charter position of Internal Auditor for fiscal year 2012-2013 and extend him an employment contract with expiration date of 6/30/14 to the full Board for consideration. Action: Carried unanimously 3. FY 2012 Board Appointee Resolution - Corporate Secretary Combined Results Review Comments Self-Evaluation Corporate Secretary M. Denise Griffin requested a closed session for the purpose of receiving her contractual year-end performance evaluation as permitted. Motion by Commissioner Plummer, seconded by Commissioner Thomas to go into closed session. Action: Carried unanimously. The Human Resource Committee meeting went into closed session at 6:04 p.m. Motion by Commissioner McCloud, seconded by Commissioner Ward that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 6:44 p.m. Upon conclusion of the closed session,the Human Resource Committee took the following action: Regular Board Mtg. May 22,2012 Page 15 of 19 Motion by Commissioner Zerkle and seconded by Commissioner McCloud to forward the resolution for the reappointment of Ms. Griffin to the Charter position of Corporate Secretary for fiscal year 2012-2013 and extend her an employment contract with expiration date of 6/30/14 to the full Board for consideration. Action: Motion Carried Human Resource Committee Chair Thomas advised Board Chair Zerkle to execute contracts for the Board's three appointed employees with an effective date of July 1, 2012. Adiourn There being no further business, the Human Resource Committee meeting adjourned at 6:45 p.m. Respectfully submitted, Tracy Thomas, Chair Human Resource Committee MANAGER'S RECOMMENDATIONS RESOLUTION#2012-05.01 Fiscal Year 2013 Operating and Capital Budget RESOLVED, that the annual Operating Budget covering Fiscal Year 2013 is hereby approved as presented; and RESOLVED, that the Fiscal Year 2013 Capital Budget is hereby approved as presented; and RESOLVED, that the forecast for capital expenditures for the Fiscal Years 2013-2018 is hereby accepted as presented; and RESOLVED FURTHER, that the Corporate Secretary be directed to make the appropriate filings with the Lansing City Clerk's office and the Mayor's office in accordance with the Lansing City Charter regarding the above actions. -------------------- Motion by Commissioner Bossenbery, seconded by Commissioner Price to approve the Fiscal Year 2013 Operating and Capital Budget and accept the forecast for capital expenditures for the Fiscal Years 2013-2018 as presented. Action: Carried Unanimously RESOLUTION#2012-05.02 Rules and Regulations for Electric,Water, Steam and Chilled Water Utility Services RESOLVED, THAT THE AMENDMENTS TO THE Rules and Regulations for Electric, Water, Regular Board Mtg. May 22,2012 Page 16 of 19 Steam and Chilled Water Services be approved as presented, to be effective July 1, 2012. Staff Comments: Staff recommends these amendments to the Rules and Regulations for Electric, Water, Steam and Chilled Water Utility Services. If the Committee of the Whole agrees to these amendments at their meeting on May 8, 2012,they will be presented to the full board for adoption at its regular Board Meeting on May 22, 2012. ---------------------- Motion by Commissioner Price, seconded by Commissioner Plummer,to approve the Rules and Regulations for Electric, Water, Steam, and Chilled Water Utility Services to be effective July 1, 2012. Action: Carried Unanimously RESOLUTION#2012-05-03 To Amend the Return on Equity Agreement Between the City of Lansing and the Board of Water and Light WHEREAS, the City of Lansing (the City)provides to the Lansing Board of Water and Light (the Board) use of its streets, alleys, bridges, and other public places without compensation and the Board, as an agency of the City, is exempt from property taxation, and; WHEREAS, since 1972 the Board has contributed to the City an annual amount as a return on equity as payment in lieu of taxes (PILOT) and; WHEREAS, The Board and the City entered into an agreement (Attachment A) on June 30, 1992 for annual payment of a return on equity for ten years commencing on July 1, 1992 in the amount of 4%of net billed retail sales from electric, water, and steam, and; WHEREAS, on December 17th, 2001, the Board and the City modified the agreement by Amendment No. 1 (Attachment B) to extend the terms and other provisions of the agreement for ten more years commencing on July 1, 2002 in the amount of 4% of its revenues from retail and wholesale sales of chilled water, electric, steam, and water utilities, and; WHEREAS, the current agreement terminates on June 30, 2012, and; WHEREAS A PILOT in the amount of 5% is not unusual among municipal utilities in that the American Public Power Association's latest survey of PILOT's throughout the country found the median PILOT for all municipal utilities was 5.2%, and the median PILOT for large municipal utilities like the Board with revenues over$100 million is 6.1%, and; WHEREAS the Board is committed to the City and a modest increase will help the City with increased cost, therefore: Regular Board Mtg. May 22,2012 Page 17 of 19 RESOLVE that the Board desires to extend its agreement with the City for five years commencing on July 1, 2012, in the amount of 5%of its revenues from retail and wholesale sales of electric, water, steam, and chilled water utilities. As a point of personal privilege Chair Sandra Zerkle made the following statement: The BWL is committed to Lansing and wants to do what's necessary to make Lansing prosper. Our mission statement says we will provide reliable services at affordable rates. This proposal takes into account our responsibility to our customers, and our responsibility to the City of Lansing. As Michigan's largest municipally-owned utility, the BWL is one of 284 public utilities across the U.S. that provides a direct benefit to their communities, including monetary payments. The current 10 year agreement with the City of Lansing, which expires on June 30th, sets an annual payment by the BWL to the City in the amount of 4%of BWL revenue from retail and wholesale sales of electric, water, steam and chilled water utilities. Mayor Virg Bernero is proposing in his FY 2012-13 budget that the City and the BWL increase the PILOT rate from 4%to 590, which could generate an additional$3 million dollars or more for the City in the 2012-13 budget year. Over the last 10 years, including this year's projected payment of more than$12 million dollars, the BWL will have made payments to the City totaling more than$108 million dollars. The BWL Board of Commissioners, in our Committee of the Whole meeting two weeks ago, unanimously approved a resolution to increase the BWL's return on equity payment to the City of Lansing from 4% to 5%. This action was taken after careful analysis of the proposal by BWL staff and Commissioners, which determined that a 5%return on equity is a prudent and fiscally responsible rate that we can afford at this time. I fully support this proposal.~Chair Sandra Zerkle Commissioner Tracy Thomas questioned if the Board of Commissioners passed this resolution and later decided that they wanted to consider something else, would there be a chance to talk about this issue down the road? Chair Zerkle stated in response to Commissioner Tracy Thomas' question that there is always room to talk about it. She said as a Commission they would be more than happy to sit down and discuss this whole proposal as a group and hear out both sides in a public meeting if needed. Motion by Commissioner Louney, seconded by Commissioner Ward, to approve the resolution for the PILIOT agreement between the Board of Water & Light and the City of Lansing with a 5% return on equity for a 5 year period. Action: Carried Unanimously UNFINISHED BUSINESS There was no Unfinished Business Regular Board Mtg. May 22,2012 Page 18 of 19 NEW BUSINESS There was no New Business RESOLUTIONS There were no Resolutions for Action. MANAGER'S REMARKS General Manager Lark thanked all of the Board of Water & Light employees for their hard work and contributions to the Board receiving the following awards: • Reliable Public Power provider Platinum level Award • RP3 Award • Community Service Award • Tree Line USA Award • 5th Place Award in the International Competition for the Water Tasting General Manager Lark reminded everyone about the Vt S.T.E.P. Program Award ceremony that is being held on Thursday, May 24, 2012, to recognize the Vt S.T.E.P. students (area and local high school students) who had temporary employment at the Board of Water& Light and completed the program. He also thanked everyone who contributed to the successful Adopt-A-River program on May 5, 2012. COMMISSIONERS' REMARKS Commissioner Marilyn Plummer acknowledged Board of Water& Light's Supervisor of Electrical Distribution, Wayne Lynn for receiving the Boy Scouts "Spirit of Scouting" Service Award to be presented on June 7th Commissioner Tracy Thomas, also acknowledged Wayne Lynn who was the Master of Ceremony for the 53rd Annual Cotillion Ball. Commissioner Thomas stated that Mr. Lynn was fantastic and represented the Board of Water & Light very well. PUBLIC COMMENTS Joel Wolfe, former Assistant General Manager and Director of Operations for the Board of Water& Light, stated that having worked for the Board of Water& Light's Executive Team for many years he has always felt very proud and continues to be proud of General Manager J. Peter Lark and the Board of Commissioners who are doing a fantastic job. He stated that the community is also very supportive of General Manager Lark and the Board of Commissioners. EXCUSED ABSENCE None Regular Board Mtg. May 22,2012 Page 19 of 19 ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Plummer the meeting adjourned at 6:50 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes(Electronic)filed with Lansing City Clerk:June 4,2012 Preliminary Minutes(Unolhcial).__ To be approved by the Board o/Commissioners on 77:73-12 r.. r C- i MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT — ^ C' September 25,2012 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: None The Corporate Secretary declared a quorum present. Commissioner Ward led the Pledge of Allegiance. CHECK PRESENTATIONS General Manager Lark and Board Chair Sandra Zerkle presented Chili Cook-Off proceeds checks to: —Sparrow Foundation President Stella Cash, in the amount of$5000.00. Ms. Cash thanked the Board of Water& Light on behalf of the Sparrow Foundation for supporting their organization. —Lansing Police Chief Teresa Szymanski in the amount of$5000 for the H.O.P.E. Scholarship Program. Chief Szymanski thanked the Board of Water& Light, General Manager Lark and the Commissioners for allowing them to participate in a great program that helps kids in our community. —Executive Director of the Impression Five Science Center Erik Larson, in the amount of $5,000 for the Adopt-A River program. Mr. Larson thanked the Board of Water& Light for the check and for its continued support. Mr. Larson stated that he feels very privileged to be a part of this program. Chair Zerkle said this is a way for the Board of Water& Light to say and show that they believe in this community. She thanked everyone for their efforts in raising money for these 3 honorable charities. Regular Board Mtg. September 25,2012 Page 2 of 17 APPROVAL OF MINUTES Motion by Commissioner Price seconded by Commissioner Bossenbery to approve the minutes of the Regular Board Meeting minutes of July 24, 2012. 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 was no Public Comment. ------------------ COMMUNICATIONS a. Letter of Resignation from BWL Commissioner Marilyn Plummer Received and Place on File b. Congratulatory letter from State Representative Joan Bauer to the BWL for receiving the APPA 2012 Community Service Award Received and Place on File c. E-mail from Retiree Rosemary Sullivan regarding changes to retirees health care program Referred to Chair Sandra Zerkle COMMITTEE REPORTS COMMITTEE OF THE WHOLE August 14, 2012 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, August 14, 2012. Committee of the Whole Acting Chair Sandra Zerkle called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Anthony McCloud, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Regular Board Mtg. September 25,2012 Page 3 of 17 Absent: Commissioner Dennis M. Louney Public Comments There was no Public Comments. Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of July 10, 2012. Action: Motion Carried Tabled Item (Minutes) Motion by Commissioner Price, seconded by Commissioner Ward to remove from the table the Minutes of May 8, 2012 and place them on the agenda for consideration. Action: Motion Carried Motion by Commissioner Price, seconded by Commissioner Ward to approve the Committee of the Whole meeting minutes of May 8, 2012. NERC/RFC Update General Manager Lark stated that North American Electric Reliability Council (NERC) and Reliability First Corporation (RFC) ensure reliability standards for bulk power electric utility systems. General Manager Lark stated that earlier in the year the Board of Commissioners passed a resolution which directed him to develop an electric reliability program and that draft is near completion. This program did not need Board approval and did not have to be presented to the Board, but according to Mr. Lark's read of the NERC and RFC rules and procedures, keeping the Board involved promotes a culture of compliance. George Stojic, Executive Director of Strategic Planning, presented a PowerPoint presentation in which he reviewed NERC compliance. Mr. Stojic discussed the Board of Water & Light's (BWL) electric reliability program and described the importance of electric reliability, the NERC functional model, the components of BWL's program and the roles for BWL staff in implementing the program. Mr. Stojic explained the importance of maintaining a culture of compliance and the Staff's goal of zero violations. With one exception this year, reclosing Eckert out of phase, the BWL has maintained an excellent compliance record and experienced no violations over the past three years. Mr. Stojic stated that the Board of Water & Light is a fully intergraded utility which means that we have a Generation and Transmission & Distribution (T&D) system to serve our customers; other utilities do not have all 3. Regular Board Mtg. September 25,2012 Page 4 of 17 Commissioner Ward questioned if the RFC has made a determination on the one violation that was reported. She also questioned which 3 specific standards were violated. In response to Commissioner Ward's question, Mr. Stojic stated that the matter has not been resolved or addressed fully and no final determination has been declared. Mr. Stojic stated that he would provide Commissioner Ward with the information regarding the specific violation. Commissioner Thomas and Ward praised the Board of Water & Light's leadership team and employees for having an exemplary record considering everything that it is involved with. (PowerPoint presentation is included in the 8-14-12 COW Meeting Packet and is available for viewing in the Office of the Corporate Secretary) REO Town Update Susan Devon, Assistant General Manager, Chief Financial Officer and Project Manager, stated that the building of the REO Town Plant facility is on time and on budget. Ms. Devon stated that one of the things that was emphasized from the beginning of this project by General Manager Lark was the importance of safety and that everything be done in a very safe manner. Ms. Devon thanked Dick Peff ley, Executive Director of Water Operations and Special Projects for overseeing the project on a daily basis and making sure conditions are safe. Ms. Devon stated that there have been approximately 303 days of no incidents, accidents or citations from MIOSHA. Ms. Devon spoke of a recent incident where Mr. Peffley shut down the Reo Plant because of something that he saw and felt could possibly be dangerous or unsafe and as a result was able to avoid a potential serious accident. Ms. Devon stated that all of the major equipment for this project has been ordered and most of it is in. There is a bid out on the Compressor Station and that has not come in yet. The Trestle is now spanning the river but has not been connected to the steam line yet. The outside of the Depot is near completion and the inside should be finished in September. Peter Kramer, Owners Representative for the REO Town Co-Generation facility, presented a PowerPoint picture presentation of the REO Town Plant and Depot. Commissioner Price stated that the REO Plant is incredible but the icing on the cake is the Depot. He questioned if the National Trust for Historic Preservation had been alerted about the project because it is an example of a "Saved Historic Place" that deserves recognition. In response to Commissioner Price's question, Peter Kramer Regular Board Mtg. September 25,2012 Page 5 of 17 stated that General Manager Lark, Assistant General Manager Devon and Dick Peffley are actively working on options for the preservation recognition for the facility. (PowerPoint presentation CD is included in the 8-14-12 COW Meeting Packet and is available for viewing in the Office of the Corporate Secretary) Erickson Update General Manager Lark stated that a couple of weeks ago there was an incident at the Erickson Plant where we thought that the plant could have been on fire,when actually it was an equipment malfunction and forced an outage. The plant filled up with smoke and the operator correctly and dialed 911 because it could have actually been something more serious than it was. General Manager Lark thanked the employees who helped get the plant back on line. Doug Wood, Executive Director of Electric Operations, provided an update on the recent incident at the Erickson Power station that was originally believed to have been a fire. Mr. Wood stated the Emergency Action Plan that General Manager Lark has adopted was proven effective as the employees at the plant, not only made the boiler safe but got out of the building safe with no injuries and that was a testament to the Emergency Action Plan and the training that is done at the BWL. He said the breaker is still down; however the plant is back in operation. Mr. Wood reviewed the process and steps that were taken to get the plant back on line and thanked all of the employees who help with the process of getting the power plant functioning. Commissioner Ward questioned if an alarm went off at the Erickson Plant when the room was full of smoke. In response Doug Wood stated that the Control room alarm did go off and at that point the operator did call 911 and decided that they did need to evacuate. Commissioner Ward questioned the practical effect of a plant going down for two weeks for employees. In response General Manager Lark stated that everyone continued to work and that there was a lot of work at the Erickson plant that needed to be completed and all of the employees at the plant pitched in and helped to get the facility operational. Commissioner McCloud wanted clarification regarding the breaker being down, but the plant is still in operation. Mr. Wood responded that staff is seeking parts to repair the breaker that is down; in the meantime they have found an alternate way to provide power to the plant. The breaker is expected to be replaced in October. Commissioner Thomas stated that he was pleased with the communication from the Administration during this process. Regular Board Mtg. September 25,2012 Page 6 of 17 Other General Manager Lark stated that he accepted a Proclamation on behalf of the Board of Water & Light from Randy Hannan, Executive Assistant to Mayor Bernero,for receiving the "Community Service Award" from the American Public Power Association. General Manager Lark stated that Kellee Christensen, Manager of Real Property& Library Systems Planning, is spearheading a project or a study addressing the Board of Water& Light's floodplain issues. With moving into the new facility next year, this study will help determine who and what will be located in which building. Excused Absence Motion by Commissioner Price seconded by Commissioner Bossenbery to excuse Commissioner Louney from tonight's meeting. Adjourn On Motion by Commissioner Price, seconded by Commissioner Ward, the meeting adjourned at 6:40 p.m. Respectfully Submitted Sandra Zerkle, Acting Chair Committee of the Whole FINANCE COMMITTEE August 14, 2012 The Finance Committee of the Board of Water and Light met at the Executive Offices, beginning at 6:45 p.m. on Tuesday,August 14, 2012. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, David Price and Sandra Zerkle. Alternate Committee Members Tracy Thomas and Cynthia Ward were present. Also present was Board Member Anthony McCloud, Absent: Commissioner Dennis M. Louney Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Zerkle to approve the Finance Committee meeting minutes of July 10, 2012. Regular Board Mtg. September 25,2012 Page 7 of 17 Action: Carried unanimously. FY 2012 4t' Quarter Financial Report General Manager Lark provided a quarterly financial update that included information relative to Fiscal Year to date of June 30, 2012 for Electric, Water, Steam and Chilled Water services. (Combined Utility Financial Report is included in the Finance Committee pocket of 8-14-2012 and is available for viewing in the Office of the Corporate secretary.) VARIANCE IN NET INCOME Fiscal Year-to-Date June 30, 2012 ($000) Budgeted Net Income 17,315 Changes in Operating Income: Re\.enue Changes (net of fuel) Retail Electric (5,505) Wholesale Electric (7,820) Water Sales 404 Steam Sales (752) Chilled Water Sales (102) Operating Expense Changes Depreciation 1,826 Labor, Material, and Other 7,156 Other 1,433 Subtotal Changes in Operating Income (3,361) Changes in Other Income: Interest Earnings (127) Other Income 2,511 Reduced PILOT 1,433 All Other- Non-Operating Variances 89 Subtotal Changes in Other Income 3,906 Actual Net Income 17,861 There was a significant reduction in operating expenses which was the main contributing factor to the increase in net income, however sales were down and that does reduce the PILOT payment. Commissioner David Price questioned if the City was aware of the PILOT situation. General Manager Lark responded that the City is aware that the PILOT payment depends on our revenue. General Manager Lark stated that there was more cost reductions than anticipated, however the Board of Water& Light actually made money in water. General Manager Lark thanked the Board of Commissioner and all of his Managers for running a lean ship. Finance Chair Bossenbery stated that everyone should have received an electronic copy of the 4th Quarter Financial Report for the Board of Commissioners, Internal Auditor and the Corporate Secretary. Regular Board Mtg. September 25,2012 Page 8 of 17 Excused Absence Motion by Commissioner Price seconded by Commissioner Zerkle to excuse Commissioner Louney from tonight's meeting. Action: Carried Unanimously Other None Adjourn On Motion by Commissioner Price, seconded by Commissioner Zerkle, the meeting adjourned at 6:55 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee COMMITTEE OF THE WHOLE September 11, 2012 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, September 11, 2012. Committee of the Whole Chair Dennis M. Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, David Price,Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: None Public Comments There was no Public Comments. Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Ward to approve the Committee of the Whole meeting minutes of August 14, 2012. Action: Motion Carried Tentative Union Contract Regular Board Mtg. September 25,2012 Page 9 of 17 General Manager Lark stated that over the last few months Management and IBEW have been working together to come up with a tentative Collective Bargaining Agreement. General Manager Lark stated that a lot of work went into this contract and would like to thank Ron Byrnes and Jim D rave nstatt-Moceri of the IBEW 352 as well as Susan Devon, Assistant General Manager and Chief Financial Officer and Heidi Myers, Manager of Human Resources of his negotiating team for all of their hard work. General Manager Lark respectfully asked the proposed resolution be forwarded to the full Board of consideration. Chair Zerkle thanked the IBEW and Management for their work on the union contract. She stated as the Chair of the Board, the non-dissension that existed during the negotiations makes her job much easier. She said there has been minimal conversation with IBEW representatives about what transpired during this process and that everyone seems to be extremely happy and content with the proposed agreement. Motion by Commissioner Price, Seconded by Commissioner Bossenbery to move the proposed resolution for the Tentative Agreement to the full Board for consideration. Action: Motion Carried MPPA Alternate Commissioner Resolution General Manager Lark stated that the proposed resolution is to amend the Commissioner appointees to the Michigan Public Power Agency. The proposed resolution will maintain George Stojic, Executive Director of Strategic Planning, as the commissioner with Dave Bolan as the first Alternate Commissioner and added Susan Flores as the Second Alternate Commissioner. Motion by Commissioner Zerkle, Seconded by Commissioner Price to move the proposed resolution to the full Board for consideration. Action: Motion Carried Other General Manager Lark provided information relative to: • Executive Conference room lighting switch to very high efficient LED lights that saves about$114.00 a year. • John Folino, Supervisor of Fuel Supply, for negotiating a 1 year contract to reduce the cost of coal from $14.00 a ton to$10.95 a ton as well as reducing the minimum amount of coal purchased to 500 Thousand tons. • George Stojic, Executive Director of Strategic Planning, Doug Wood, Executive Director of Electric Operations, Ray Moore, Manager of Customer Projects and Regular Board Mtg. September 25,2012 Page 10 of 17 Development and Alan Carroll, Manager of Electrical System Integrity who have done a great job negotiating a contract with Liquid Web Inc. for the installation of a new circuit that will create 1 to 1.5 Megawatts of additional load for us. • Chair Zerkle for providing information that lead to the Board of Water& Light being the recipient of$465,000 of training dollars for employees at the new REO Town Plant. This money was a federal grant provided by the Department of Energy. • Ron Byrnes, Brian Walter, Brian Thelen, Pat Haynes, Lee Nim and Todd Smith for their work that lead to the Board of Water& Light receiving the Apprenticeship Trailblazer and Innovator Award. There are over 25,000 registered apprenticeship programs and we were 1 of 70 to win this award. General Manager Lark also thanked Tansay Carter, Rebecca Rostar, Mike Flowers and Dallas Burdick for their contributions to the success of the JLC Apprenticeship Program. Tracy Thomas stated that in his profession this is the beginning of a new year and wished everyone a new year. He welcomed back Legal Counsel Brandie Ekren who was returning from maternity leave. Commissioner Thomas said the F.I.R.S.T Step Intern presentation was outstanding and that the kids who participate in the program get meaningful experiences from the opportunity. Dennis M. Louney congratulated General Manager Lark and all of the leadership team that worked on the union contract. He congratulated the Board of Water& Light for receiving another award. He said as a Commissioner he feels that he is representing the bes-i utility in the State. Excused Absence None Adiourn On Motion by Commissioner Bossenbery, Seconded by Commissioner Price, the meeting adjourned at 5:55 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE September 11, 2012 The Finance Committee of the Board of Water and Light met at the Executive Offices, beginning at 6:05 p.m. on Tuesday,August 14, 2012. Regular Board Mtg. September 25,2012 Page 11 of 17 Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Dennis M. Louney, David Price and Sandra Zerkle. Alternate Committee Members Tracy Thomas and Cynthia Ward were present. Also present was Board Member Anthony McCloud. Absent: None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Zerkle to approve the Finance Committee meeting minutes of August 14, 2012. Action: Carried Unanimously General Manager Lark requested that the agenda subjects be switched around with the permission of the Finance Chair. Finance Chair Bossenbery agreed to General Manager Lork's request. Proposed Resolution for Accounting Standards Codification 980-Accounting for Regulated Operations for Insurance Recoveries and Other Third Party Revenues General Manager Lark stated that the proposed Resolution before the Finance Committee is to defer monies received from Insurance and Government Grant programs so that these proceeds are not treated as revenues when received but used as an offset to Capital Expenditures, otherwise overtime these items become a depreciable expense that reduces net income and requires an increase in rates. General Manager Lark respectfully asked the Finance Committee to forward the Resolution to the full Board for consideration. Motion by Commissioner Price, Seconded by Commissioner Louney to forward the Proposed Resolution for Accounting Standards Codification 980-Accounting for Regulated Operations for Insurance Recoveries and Other Third Party Revenues to the full Board for consideration. Action: Motion Carried FY 2012 Audited Financial Statement and Proposed Resolution General Manager J. Peter Lark introduced Douglas Rober, Managing Partner with Plante & Moran (P&M). General Manager Lark also thanked Board of Water & Light's Gennie Regular Board Mtg. September 25,2012 Page 12 of 17 Eva, Manager of Financial Services and Miriam Mattison, Accounting Supervisor, as well as Susan Devon, Assistant General Manager and Chief Financial Officer who worked hard with Plante & Moran to complete this audit. Mr. Rober reviewed the audit process of the Financial Statements and the Opinions for fiscal year ending June 30, 2012. The Opinions include the Enterprise Fund and the Fiduciary Pension Trust Funds. The 3 separate Financial Statement represents the Trust Funds, which are the Defined Contribution, Defined Benefit Plan and the Retiree Benefit Plan and Trust (VEBA Plan). He said in each case the Opinion would be unqualified and does not expect that to change in the final statements. He said there was no significant event that was reported in the statements that was outside of the ordinary, other than the Wise Rd. event and a bond refinancing. Brett S. Oumedian, CPA, from Plante & Moran reviewed the following Financial Information: Operating Revenue- Four Year Comparison Operating Expensed— Four Year comparison Operating Income (Loss) Sales Source of Kilowatt Hours Generated Kilowatt Hours Generated Versus Purchased Significant Power Cost Bond Debt Service Requirements Revenues, Expense and Net Income by Utility (Electric, Water, Steam & Chilled Water) Mr. Rober, reviewed the "SAS 114 Report to Commissioners" document as well as Plante & Moran's responsibilities that are required under the U.S. Generally Accepted Auditing Standards. Mr. Rober stated that everyone was cooperative during this engagement. He said that there was one audit adjustment that was made, related to an environmental remediation liability that increased the liability by about$1.7 million that did not have a corresponding net income effect. Motion Commissioner Zerkle, Seconded by Commissioner Price,to forward the resolution for the acceptance of the FY 2012 Audited Financial Statements to the full Board for consideration. Action: Motion Carried 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. Sole Source Review Report Regular Board Mtg. September 25,2012 Page 13 of 17 General Manager Lark presented the annual Report for Sole Source and Emergency Procurements. Internal Auditor Phil Perkins has reviewed the Sole Source Report and stated that he is confident that this report correctly represents the state of the Sole Source expenditures. Motion by Commissioner Price, Seconded by Commissioner Louney to accept the Sole Source Report. Action: Motion Carried Excused Absence None Other Chair Zerkle requested Finance Chair Bossenbery to prepare a report to be presented at the next Finance meeting on the cost of replacing the Commissioner's current computers with IPADS. Adiourn On Motion by Commissioner Price, seconded by Commissioner Zerkle, the meeting adjourned at 6:30 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee MANAGER'S RECOMMENDATIONS General Manager Lark reviewed the following resolutions and respectfully requested approval from the full Board: RESOLUTION #2012-09-01 Collective Bargaining Agreement between the Lansing Board of Water& Light And the International Brotherhood of Electrical Workers, AFL-CIO, Local 352 WHEREAS, on August 17, 2012 the Board of Water & Light and IBEW Local 352 entered into a Tentative Agreement to extend the Collective Bargaining Agreement for four years; and Regular Board Mtg. September 25,2012 Page 14 of 17 WHEREAS, the terms and conditions of the Tentative Agreement are in accordance with the direction and authority that was delegated to the Board's negotiating team by the General Manger; and WHEREAS, the Tentative Agreement was submitted by the IBEW Local 352 negotiating team to the IBEW membership for its approval and was ratified on September 5, 2012. RESOLVED, that the Board of Commissioners approve the attached "Final Tentative Agreement" (dated and signed September 5, 2012). Staff comments: The Board and the Unions have tentatively agreed to a four year extension of the collective bargaining agreement to remain in effect through October 31, 2016. The agreement provides for a across the board increases to all bargaining unit employees on November 1, 2012, 1%, November 1, 2013, 1.7%, November 1, 2015, 1.9%, and November 1, 2015, 2.25%. In addition, beginning January 1, 2013 the board will match employee contributions to each full-time employee's individual deferred compensation plan, at one dollar for every one dollar up to $1,250 in a calendar year, which amounts to an additional $750 match. The clerical and technical classifications as accreted into the union by MOU dated July 27, 2012, will be recognized as part of the bargaining unit and wage rates will be included in Attachment A of the Collective Bargaining Agreement. Applicable progressions for the clerical and technical classifications will be included as Attachments P through Attachment EE. Effective Novemberl, 2012 employees' premium sharing for applicable insurance will be as approved and directed by the Board of Commissioners as prescribed by Public Act 152, 2011. The parties agree to meet to discuss the financial impact on employees should the Board vote to increase premium sharing to 20%. Finally, a sentence will be added to the agreement that an employee under a condition of employment, monitoring agreement, or last chance agreement, will be disqualified as a bidder for a job posting. Motion by Commissioner Price, seconded by Commissioner Ward, to approve the resolution for Collective Bargaining Agreement between the Lansing Board of Water & Light and the International Brotherhood of Electrical Workers, AFL-CIO, Local 352 Action: Carried Unanimously RESOLUTION #2012-09-02 AMENDING APPOINTMENTS TO MICHIGAN PUBLIC POWER AGENCY Regular Board Mtg. September 25,2012 Page 15 of 17 Whereas, George Stojic, is the BWL Commissioner to the Michigan Public Power Agency (MPPA), and Douglas Wood and David Bolan are the Board of Water& Lights first alternate Commissioner and second alternate Commissioner, respectively. Whereas, Douglas Wood has performed this duty on behalf of the Board in an exemplary manner since 1996 but, as Executive Director of Electric Operations, no longer has direct responsibilities with MPPA. Whereas, it is in the interest of the Board to replace Douglas Wood as an alternate Commissioner to the MPPA. RESOLVED,That George Stojic will remain as the BWL Commissioner, and David Bolan will become BWL first alternative Commissioner. RESOLVED,That Susan Flores, will be named as the BWL second alternate Commissioner RESOLVED FURTHER, the Board resolution 2006-5-11 adopted on 5/23/2006 is hereby rescinded. Motion by Commissioner Thomas, seconded by Commissioner Price, to approve the resolution for the MPPA Appointments. Action: Carried Unanimously RESOLUTION #2012-09-03 Fiscal Year 2012 Audited Financial Statements RESOLVED, that the fiscal year 2012 Audited Financial Statements for the Board of Water& Light have been reviewed and are hereby accepted as presented. FURTHER RESOLVED, that the Corporate Secretary is hereby directed to file a copy of the fiscal year 2012 Audited Financial Statements of the Board of Water& Light and the report on auditing procedures with the State Treasurer as required by the Uniform Budgeting and Accounting Act (Public Act 2 of 1068, as amended) not later than December 31, 2012. FURTHER RESOLVED, that the Corporate Secretary is hereby directed to file a copy of the fiscal year 2012 Audited Financial Statement of the Board of Water& Light with the City of Lansing no later than October 15, 2012. Motion by Commissioner Bossenbery, seconded by Commissioner Louney, to approve theResolution for acceptance of the 2012 Audited Financial Statements. Action: Carried Unanimously RESOLUTION #2012-09-04 Application of Accounting Standards Codification (ASC) 980- Regulated Operations Insurance Recoveries and Other Third Party Contributions to Plant. Regular Board Mtg. September 25,2012 Page 16 of 17 WHEREAS, pursuant to Resolution #2003-8-3 the Board of Commission requires management to receive Board approval before any deferrals under Financial Accounting Standard 71, now ASC-980; and WHEREAS, in July of 2011 the Wise Road Water Conditioning Plant was damaged by a chemical spill that included damage to the piping and electrical systems; and WHERAS, the estimate to replace the damaged equipment is approximately$30 million; substantially all cost will be recouped from our insurance carrier. The reconstruction project is expected to be completed by January 1, 2014. To date $10.7 million in funds are either expended or committed of which $5.6 million have been expended. We expect to spend another $4 million by the end of the calendar year 2012 with the balance of estimate expended in 2013. Whereas, from time to time the Board receives reimbursements or other sources of funds to offset the cost of capital expenditures other than contributions in aid of construction from customers; and Whereas, insurance recoveries and other third party contributions to plant will be set up in regulatory liability accounts; and WHEREAS, the regulatory liability accounts will be amortized over the projected lives of the new asset to offset future depreciation expense: RESOLVED, that the Board of Commissioners, as the regulatory body of the Board of Water & Light, approve, pursuant to the Accounting Standards Codification 980, the appropriate accounting, as described above, for the insurance recoveries to reconstruct the Wise Road Water Conditioning Plant and for revenue received on other projects from third parties. Staff Comments: The estimate to replace the damaged equipment is approximately$30 million This accounting treatment will allow the insurance recoveries associated with the reconstruction of the Wise Road Water Conditioning Plant to be deferred to offset the cost of reconstruction. The cost of reconstruction, that are offset by the insurance will be amortized over the life of the plant, thus having no impact on ratepayers. Absent this accounting and rate making treatment, the insurance recoveries are required to be recognized in revenues as collected and the cost of reconstruction amortized over the life of the plant. This alternative treatment will increase depreciation expense and return on asset requirements thus, increasing cost and rates to ratepayers over its remaining useful life. Authority to defer other revenues from third parties is also requested for the same purpose. As examples, funds can be recovered from the Federal Emergency Management Agency (FEMA) to offset storm repair costs or grant monies from other governmental sources can be received to offset capital projects. These revenues should be used to offset capitalized cost associated with the projects to reflect ratemaking treatment of the funds. Regular Board Mtg. September 25,2012 Page 17 of 17 Motion by Commissioner Bossenbery, seconded by Commissioner Price, to approve the Resolution Application of Accounting Standards Codification (ASC) 980- Regulated Operations Insurance Recoveries and Other Third Party Contributions to Plant. Action: Carried Unanimously UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS There was no New Business RESOLUTIONS There were no Resolutions. MANAGER'S REMARKS General Manager Lark stated the construction of the REO Town Plant remains on time and on budget. Mr. Lark congratulated Tony Green, Supervisor of Maintenance Construction for putting together a very successful golf outing to benefit the "Pennies for Power" program. He stated that Ron, Byrnes of IBEW also partnered with Mr. Green on this event. COMMISSIONERS' REMARKS Chair Zerkle thanked everyone for their kind emails and flowers that she received over the last couple of weeks because of her recent medical procedure, it really meant a lot. Commissioner Tracy Thomas congratulated Mr. Lark and his Administration for the REO Town Plant continuing to be on time and on budget. Commissioner Thomas acknowledged Michael Flowers, Dallas Burdick and Tansay Carter for their work with the FIRST Step program. PUBLIC COMMENTS There was Public Comments. EXCUSED ABSENCE None. ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Thomas the meeting adjourned at 5:56 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes(Electronic)filed with Lansing City Clerk:October 4,2012 IJ Approved by the Board o7Commissiomrs:11-73-72 r� nr'�n t.fit,,.e..,. MINUTES OF THE BOARD OF COMMISSIONERS'MEETING LANSING BOARD OF WATER AND LIGHT September 25, 2012 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: None The Corporate Secretary declared a quorum present. Commissioner Ward led the Pledge of Allegiance. CHECK PRESENTATIONS General Manager Lark and Board Chair Sandra Zerkle presented Chili Cook-Off proceeds checks to: —Sparrow Foundation President Stella Cash, in the amount of$5,000.00. Ms. Cash thanked the Board of Water& Light on behalf of the Sparrow Foundation for supporting their organization. —Lansing Police Chief Teresa Szymanski in the amount of$5,000 for the H.O.P.E. Scholarship Program. Chief Szymanski thanked the Board of Water & Light, General Manager Lark and the Commissioners for allowing them to participate in a great program that helps kids in our community. —Executive Director of the Impression Five Science Center Erik Larson, in the amount of $5,000 for the Adopt-A-River program. Mr. Larson thanked the Board of Water& Light for the check and for its continued support. Mr. Larson stated that he feels very privileged to be a part of this program. Chair Zerkle said this is a way for the Board of Water & Light to say and show that they believe in this community. She thanked everyone for their efforts in raising money for these 3 honorable charities. APPROVAL OF MINUTES Regular Board Mtg. September 25,2012 Page 2 of 17 Motion by Commissioner Price seconded by Commissioner Bossenbery to approve the Regular Board Meeting minutes of July 24, 2012. 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 was no Public Comment. ------------------ COMMUNICATIONS a. Letter of Resignation from BWL Commissioner Marilyn Plummer Received and Place on File b. Congratulatory letter from State Representative Joan Bauer to the BWL for receiving the APPA 2012 Community Service Award Received and Place on File c. E-mail from Retiree Rosemary Sullivan regarding changes to retirees health care program Referred to Chair Sandra Zerkle COMMITTEE REPORTS COMMITTEE OF THE WHOLE August 14, 2012 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, August 14, 2012. Committee of the Whole Acting Chair Sandra Zerkle called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Anthony McCloud, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Regular Board Mtg. September 25,2012 Page 3 of 17 Absent: Commissioner Dennis M. Louney Public Comments There was no Public Comments. Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of July 10, 2012. Action: Motion Carried Tabled Item (Minutes) Motion by Commissioner Price, seconded by Commissioner Ward to remove from the table the Minutes of May 8, 2012 and place them on the agenda for consideration. Action: Motion Carried Motion by Commissioner Price, seconded by Commissioner Ward to approve the Committee of the Whole meeting minutes of May 8, 2012. NERC/RFC Update General Manager Lark stated that North American Electric Reliability Council (NERC) and Reliability First Corporation (RFC) ensure reliability standards for bulk power electric utility systems. General Manager Lark stated that earlier in the year the Board of Commissioners passed a resolution which directed him to develop an electric reliability program and that draft is near completion. This program did not need Board approval and did not have to be presented to the Board, but according to Mr. Lark's read of the NERC and RFC rules and procedures, keeping the Board involved promotes a culture of compliance. George Stojic, Executive Director of Strategic Planning, presented a PowerPoint presentation in which he reviewed NERC compliance. Mr. Stojic discussed the Board of Water & Light's (BWL) electric reliability program and described the importance of electric reliability, the NERC functional model, the components of BWL's program and the roles for BWL staff in implementing the program. Mr. Stojic explained the importance of maintaining a culture of compliance and the Staff's goal of zero violations. With one exception this year, reclosing Eckert out of phase, the BWL has maintained an excellent compliance record and experienced no violations over the past three years. Mr. Stojic stated that the Board of Water & Light is a fully intergraded utility which means that we have a Generation and Transmission & Distribution (T&D) system to serve our customers; other utilities do not have all 3. Regular Board Mtg. September 25,2012 Page 4 of 17 Commissioner Ward questioned if the RFC has made a determination on the one violation that was reported. She also questioned which 3 specific standards were violated. In response to Commissioner Ward's question, Mr. Stojic stated that the matter has not been resolved or addressed fully and no final determination has been declared. Mr. Stojic stated that he would provide Commissioner Ward with the information regarding the specific violation. Commissioner Thomas and Ward praised the Board of Water & Light's leadership team and employees for having an exemplary record considering everything that it is involved with. (PowerPoint presentation is included in the 8-14-12 COW Meeting Packet and is available for viewing in the Office of the Corporate Secretary) REO Town Update Susan Devon, Assistant General Manager, Chief Financial Officer and Project Manager, stated that the building of the REO Town Plant facility is on time and on budget. Ms. Devon stated that one of the things that was emphasized from the beginning of this project by General Manager Lark was the importance of safety and that everything be done in a very safe manner. Ms. Devon thanked Dick Peffley, Executive Director of Water Operations and Special Projects for overseeing the project on a daily basis and making sure conditions are safe. Ms. Devon stated that there have been approximately 303 days of no incidents, accidents or citations from MIOSHA. Ms. Devon spoke of a recent incident where Mr. Peffley shut down the Reo Plant because of something that he saw and felt could possibly be dangerous or unsafe and as a result was able to avoid a potential serious accident. Ms. Devon stated that all of the major equipment for this project has been ordered and most of it is in. There is a bid Out on the Compressor Station and that has not come in yet. The Trestle is now spanning the river but has not been connected to the steam line yet. The outside of the Depot is near completion and the inside should be finished in September. Peter Kramer, Owners Representative for the REO Town Co-Generation facility, presented a PowerPoint picture presentation of the REO Town Plant and Depot. Commissioner Price stated that the REO Plant is incredible but the icing on the cake is the Depot. He questioned if the National Trust for Historic Preservation had been alerted about the project because it is an example of a "Saved Historic Place" that deserves recognition. In response to Commissioner Price's question, Peter Kramer Regular Board Mtg. September 25,2012 Page 5 of 17 stated that General Manager Lark, Assistant General Manager Devon and Dick Peffley are actively working on options for the preservation recognition for the facility. (PowerPoint presentation CD is included in the 8-14-12 COW Meeting Packet and is available for viewing in the Office of the Corporate Secretary) Erickson Update General Manager Lark stated that a couple of weeks ago there was an incident at the Erickson Plant where we thought that the plant could have been on fire, when actually it was an equipment malfunction and forced an outage. The plant filled up with smoke and the operator correctly dialed 911 because it could have actually been something more serious than it was. General Manager Lark thanked the employees who helped get the plant back on line. Doug Wood, Executive Director of Electric Operations, provided an update on the recent incident at the Erickson Power station that was originally believed to have been a fire. Mr. Wood stated the Emergency Action Plan that General Manager Lark has adopted was proven effective as the employees at the plant, not only made the boiler safe but got out of the building safe with no injuries and that was a testament to the Emergency Action Plan and the training that is done at the BWL. He said the breaker is still down; however the plant is back in operation. Mr. Wood reviewed the process and steps that were taken to get the plant back on line and thanked all of the employees who help with the process of getting the power plant functioning. Commissioner Ward questioned if an alarm went off at the Erickson Plant when the room was full of smoke. In response Doug Wood stated that the Control room alarm did go off and at that point the operator did call 911 and decided that they did need to evacuate. Commissioner Ward questioned the practical effect of a plant going down for two weeks for employees. In response General Manager Lark stated that everyone continued to work and that there was a lot of work at the Erickson plant that needed to be completed and all of the employees at the plant pitched in and helped to get the facility operational. Commissioner McCloud wanted clarification regarding the breaker being down, but the plant is still in operation. Mr. Wood responded that staff is seeking parts to repair the breaker that is down; in the meantime they have found an alternate way to provide power to the plant. The breaker is expected to be replaced in October. Commissioner Thomas stated that he was pleased with the communication from the Administration during this process. Regular Board Mtg. September 25,2012 Page 6 of 17 Other General Manager Lark stated that he accepted a Proclamation on behalf of the Board of Water & Light from Randy Hannan, Executive Assistant to Mayor Bernero,for receiving the "Community Service Award" from the American Public Power Association. General Manager Lark stated that Kellee Christensen, Manager of Real Property & Library Systems Planning, is spearheading a project or a study addressing the Board of Water& Light's floodplain issues. With moving into the new facility next year, this study will help determine who and what will be located in which building. Excused Absence Motion by Commissioner Price seconded by Commissioner Bossenbery to excuse Commissioner Louney from tonight's meeting. Adiourn On Motion by Commissioner Price, seconded by Commissioner Ward, the meeting adjourned at 6:40 p.m. Respectfully Submitted Sandra Zerkle, Acting Chair Committee of the Whole FINANCE COMMITTEE August 14, 2012 The Finance Committee of the Board of Water and Light met at the Executive Offices, beginning at 6:45 p.m. on Tuesday, August 14, 2012. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, David Price and Sandra Zerkle. Alternate Committee Members Tracy Thomas and Cynthia Ward were present. Also present was Board Member Anthony McCloud. Absent: Commissioner Dennis M. Louney Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Zerkle to approve the Finance Committee meeting minutes of July 10, 2012. Regular Board Mtg. September 25,2012 Page 7 of 17 Action: Carried unanimously. FY 2012 4th Quarter Financial Report General Manager Lark provided a quarterly financial update that included information relative to Fiscal Year to date of June 30, 2012 for Electric, Water, Steam and Chilled Water services. Combined Utility Financial Report is included in the Finance Committee packet of 8-14-2012 and is available for viewing in the Office of the Corporate Secretary.) VARIANCE IN NET INCOME Fiscal Year-to-Date June 30, 2012 ($Ooo) Budgeted Net Income 17,315 Changes in Operating Income: Revenue Changes (net of fuel) Retail Electric (5,505) Wholesale Electric (7,820) Water Sales 404 Steam Sales (752) Chilled Water Sales (102) Operating Exoense Changes Depreciation 1,826 Labor, Material, and Other 7,156 Other 1,433 Subtotal Changes in Operating Income (3,361) Changes in Other Income: Interest Earnings (127) Other Income 2,511 Reduced PILOT 1,433 All Other- Non-Operating Variances 89 Subtotal Changes in Other Income 3,906 Actual Net Income 17.861 There was a significant reduction in operating expenses which was the main contributing factor to the increase in net income, however sales were down and that does reduce the PILOT payment. Commissioner David Price questioned if the City was aware of the PILOT situation. General Manager Lark responded that the City is aware that the PILOT payment depends on our revenue. General Manager Lark stated that there was more cost reductions than anticipated, however the Board of Water& Light actually made money in water. General Manager Lark thanked the Board of Commissioner and all of his Managers for running a lean ship. Finance Chair Bossenbery stated that everyone should have received an electronic copy of the 4th Quarter Financial Report for the Board of Commissioners, Internal Auditor and the Corporate Secretary. Regular Board Mtg. September 25,2012 Page 8 of 17 Excused Absence Motion by Commissioner Price seconded by Commissioner Zerkle to excuse Commissioner Louney from tonight's meeting. Action: Carried Unanimously Other None Adjourn On Motion by Commissioner Price, seconded by Commissioner Zerkle, the meeting adjourned at 6:55 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee COMMITTEE OF THE WHOLE September 11, 2012 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, September 11, 2012. Committee of the Whole Chair Dennis M. Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: None Public Comments There was no Public Comments. Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Ward to approve the Committee of the Whole meeting minutes of August 14, 2012. Action: Motion Carried Tentative Union Contract Regular Board Mtg. September 25,2012 Page 9 of 17 General Manager Lark stated that over the last few months Management and IBEW have been working together to come up with a tentative Collective Bargaining Agreement. General Manager Lark stated that a lot of work went into this contract and would like to thank Ron Byrnes and Jim D rave nstatt-Moceri of the IBEW 352 as well as Susan Devon, Assistant General Manager and Chief Financial Officer and Heidi Myers, Manager of Human Resources of his negotiating team for all of their hard work. General Manager Lark respectfully asked the proposed resolution be forwarded to the full Board of consideration. Chair Zerkle thanked the IBEW and Management for their work on the union contract. She stated as the Chair of the Board, the non-dissension that existed during the negotiations makes her job much easier. She said there has been minimal conversation with IBEW representatives about what transpired during this process and that everyone seems to be extremely happy and content with the proposed agreement. Motion by Commissioner Price, Seconded by Commissioner Bossenbery to move the proposed resolution for the Tentative Agreement to the full Board for consideration. Action: Motion Carried MPPA Alternate Commissioner Resolution General Manager Lark stated that the proposed resolution is to amend the Commissioner appointees to the Michigan Public Power Agency. The proposed resolution will maintain George Stojic, Executive Director of Strategic Planning, as the commissioner with Dave Bolan as the first Alternate Commissioner and added Susan Flores as the Second Alternate Commissioner. Motion by Commissioner Zerkle, Seconded by Commissioner Price to move the proposed resolution to the full Board for consideration. Action: Motion Carried Other General Manager Lark provided information relative to: • Executive Conference room lighting switch to very high efficient LED lights that saves about$114.00 a year. • John Folino, Supervisor of Fuel Supply, for negotiating a 1 year contract to reduce the cost of coal from $14.00 a ton to$10.95 a ton as well as reducing the minimum amount of coal purchased to 500 Thousand tons. • George Stojic, Executive Director of Strategic Planning, Doug Wood, Executive Director of Electric Operations, Ray Moore, Manager of Customer Projects and Regular Board Mtg. September 25,2012 Page 10 of 17 Development and Alan Carroll, Manager of Electrical System Integrity who have done a great job negotiating a contract with Liquid Web Inc. for the installation of a new circuit that will create 1 to 1.5 Megawatts of additional load for us. • Chair Zerkle for providing information that lead to the Board of Water& Light being the recipient of$465,000 of training dollars for employees at the new REO Town Plant.This money was a federal grant provided by the Department of Energy. • Ron Byrnes, Brian Walter, Brian Thelen, Pat Haynes, Lee Nim and Todd Smith for their work that lead to the Board of Water& Light receiving the Apprenticeship Trailblazer and Innovator Award. There are over 25,000 registered apprenticeship programs and we were 1 of 70 to win this award. General Manager Lark also thanked Tansay Carter, Rebecca Rostar, Mike Flowers and Dallas Burdick for their contributions to the success of the JLC Apprenticeship Program. Tracy Thomas stated that in his profession this is the beginning of a new year and wished everyone a new year. He welcomed back Legal Counsel Brandie Ekren who was returning from maternity leave. Commissioner Thomas said the F.I.R.S.T Step Intern presentation was outstanding and that the kids who participate in the program get meaningful experiences from the opportunity. Dennis M. Louney congratulated General Manager Lark and all of the leadership team that worked on the union contract. He congratulated the Board of Water& Light for receiving another award. He said as a Commissioner he feels that he is representing the best utility in the State. Excused Absence None Adjourn On Motion by Commissioner Bossenbery, Seconded by Commissioner Price, the meeting adjourned at 5:55 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE September 11, 2012 The Finance Committee of the Board of Water and Light met at the Executive Offices, beginning at 6:05 p.m. on Tuesday, August 14, 2012. Regular Board Mtg. September 25,2012 Page 11 of 17 Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Dennis M. Louney, David Price and Sandra Zerkle. Alternate Committee Members Tracy Thomas and Cynthia Ward were present. Also present was Board Member Anthony McCloud. Absent: None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Zerkle to approve the Finance Committee meeting minutes of August 14, 2012. Action: Carried Unanimously General Manager Lark requested that the agenda subjects be switched around with the permission of the Finance Chair. Finance Chair Bossenbery agreed to General Manager Lark's request. Proposed Resolution for Accounting Standards Codification 980-Accounting for Regulated Operations for Insurance Recoveries and Other Third Party Revenues General Manager Lark stated that the proposed Resolution before the Finance Committee is to defer monies received from Insurance and Government Grant programs so that these proceeds are not treated as revenues when received but used as an offset to Capital Expenditures, otherwise over time these items become a depreciable expense that reduces net income and requires an increase in rates. General Manager Lark respectfully asked the Finance Committee to forward the Resolution to the full Board for consideration. Motion by Commissioner Price, Seconded by Commissioner Louney to forward the Proposed Resolution for Accounting Standards Codification 980- Accounting for Regulated Operations for Insurance Recoveries and Other Third Party Revenues to the full Board for consideration. Action: Motion Carried FY 2012 Audited Financial Statement and Proposed Resolution General Manager J. Peter Lark introduced Douglas Rober, Managing Partner with Plante & Moran (P&M). General Manager Lark also thanked Board of Water & Light's Gennie Regular Board Mtg. September 25,2012 Page 12 of 17 Eva, Manager of Financial Services and Miriam Mattison, Accounting Supervisor, as well as Susan Devon, Assistant General Manager and Chief Financial Officer who worked hard with Plante & Moran to complete this audit. Mr. Rober reviewed the audit process of the Financial Statements and the Opinions for fiscal year ending June 30, 2012. The Opinions include the Enterprise Fund and the Fiduciary Pension Trust Funds. The 3 separate Financial Statement represents the Trust Funds, which are the Defined Contribution, Defined Benefit Plan and the Retiree Benefit Plan and Trust (VEBA Plan). He said in each case the Opinion would be unqualified and does not expect that to change in the final statements. He said there was no significant event that was reported in the statements that was outside of the ordinary, other than the Wise Rd. event and a bond refinancing. Brett S. Oumedian, CPA, from Plante & Moran reviewed the following Financial Information: Operating Revenue- Four Year Comparison Operating Expensed —Four Year comparison Operating Income (Loss) Sales Source of Kilowatt Hours Generated Kilowatt Hours Generated Versus Purchased Significant Power Cost Bond Debt Service Requirements Revenues, Expense and Net Income by Utility(Electric, Water, Steam & Chilled Water) Mr. Rober, reviewed the "SAS 114 Report to Commissioners" document as well as Plante & Moran's responsibilities that are required under the U.S. Generally Accepted Auditing Standards. Mr. Rober stated that everyone was cooperative during this engagement. He said that there was one audit adjustment that was made, related to an environmental remediation liability that increased the liability by about$1.7 million that did not have a corresponding net income effect. Motion Commissioner Zerkle, Seconded by Commissioner Price, to forward the resolution for the acceptance of the FY 2012 Audited Financial Statements to the full Board for consideration. Action: Motion Carried 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. Sole Source Review Report Regular Board Mtg. September 25,2012 Page 13 of 17 General Manager Lark presented the annual Report for Sole Source and Emergency Procurements. Internal Auditor Phil Perkins has reviewed the Sole Source Report and stated that he is confident that this report correctly represents the state of the Sole Source expenditures. Motion by Commissioner Price, Seconded by Commissioner Louney to accept the Sole Source Report. Action: Motion Carried Excused Absence None Other Chair Zerkle requested Finance Chair Bossenbery to prepare a report to be presented at the next Finance meeting on the cost of replacing the Commissioner's current computers with ]PADS. Adjourn On Motion by Commissioner Price, seconded by Commissioner Zerkle, the meeting adjourned at 6:30 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee MANAGER'S RECOMMENDATIONS General Manager Lark reviewed the following resolutions and respectfully requested approval from the full Board: RESOLUTION#2012-09-01 Collective Bargaining Agreement between the Lansing Board of Water& Light And the International Brotherhood of Electrical Workers, AFL-CIO, Local 352 WHEREAS, on August 17, 2012 the Board of Water& Light and IBEW Local 352 entered into a Tentative Agreement to extend the Collective Bargaining Agreement for four years; and Regular Board Mtg. September 25,2012 Page 14 of 17 WHEREAS, the terms and conditions of the Tentative Agreement are in accordance with the direction and authority that was delegated to the Board's negotiating team by the General Manger; and WHEREAS, the Tentative Agreement was submitted by the IBEW Local 352 negotiating team to the IBEW membership for its approval and was ratified on September 5, 2012. RESOLVED, that the Board of Commissioners approve the attached "Final Tentative Agreement" (dated and signed September 5, 2012). Staff comments: The Board and the Unions have tentatively agreed to a four year extension of the collective bargaining agreement to remain in effect through October 31, 2016. The agreement provides for a across the board increases to all bargaining unit employees on November 1, 2012, 1%, November 1, 2013, 1.7%, November 1, 2015, 1.9%, and November 1, 2015, 2.25%. In addition, beginning January 1, 2013 the board will match employee contributions to each full-time employee's individual deferred compensation plan, at one dollar for every one dollar up to $1,250 in a calendar year, which amounts to an additional $750 match. The clerical and technical classifications as accreted into the union by MOU dated July 27, 2012, will be recognized as part of the bargaining unit and wage rates will be included in Attachment A of the Collective Bargaining Agreement. Applicable progressions for the clerical and technical classifications will be included as Attachments P through Attachment EE. Effective Novemberl, 2012 employees' premium sharing for applicable insurance will be as approved and directed by the Board of Commissioners as prescribed by Public Act 152, 2011. The parties agree to meet to discuss the financial impact on employees should the Board vote to increase premium sharing to 20%. Finally, a sentence will be added to the agreement that an employee under a condition of employment, monitoring agreement, or last chance agreement, will be disqualified as a bidder for a job posting. Motion by Commissioner Price, seconded by Commissioner Ward, to approve the resolution for Collective Bargaining Agreement between the Lansing Board of Water& Light and the International Brotherhood of Electrical Workers, AFL-CIO, Local 352 Action: Carried Unanimously RESOLUTION#2012-09-02 AMENDING APPOINTMENTS TO MICHIGAN PUBLIC POWER AGENCY Regular Board Mtg. September 25,2012 Page 15 of 17 Whereas, George Stojic, is the BWL Commissioner to the Michigan Public Power Agency (MPPA), and Douglas Wood and David Bolan are the Board of Water& Lights first alternate Commissioner and second alternate Commissioner, respectively. Whereas, Douglas Wood has performed this duty on behalf of the Board in an exemplary manner since 1996 but, as Executive Director of Electric Operations, no longer has direct responsibilities with MPPA. Whereas, it is in the interest of the Board to replace Douglas Wood as an alternate Commissioner to the MPPA. RESOLVED, That George Stojic will remain as the BWL Commissioner, and David Bolan will become BWL first alternative Commissioner. RESOLVED, That Susan Flores, will be named as the BWL second alternate Commissioner RESOLVED FURTHER, the Board resolution 2006-5-11 adopted on 5/23/2006 is hereby rescinded. Motion by Commissioner Thomas, seconded by Commissioner Price, to approve the resolution for the MPPA Appointments. Action: Carried Unanimously RESOLUTION #2012-09-03 Fiscal Year 2012 Audited Financial Statements RESOLVED, that the fiscal year 2012 Audited Financial Statements for the Board of Water & Light have been reviewed and are hereby accepted as presented. FURTHER RESOLVED, that the Corporate Secretary is hereby directed to file a copy of the fiscal year 2012 Audited Financial Statements of the Board of Water& Light and the report on auditing procedures with the State Treasurer as required by the Uniform Budgeting and Accounting Act (Public Act 2 of 1068, as amended) not later than December 31, 2012. FURTHER RESOLVED, that the Corporate Secretary is hereby directed to file a copy of the fiscal year 2012 Audited Financial Statement of the Board of Water & Light with the City of Lansing no later than October 15, 2012. Motion by Commissioner Bossenbery, seconded by Commissioner Louney, to approve theResolution for acceptance of the 2012 Audited Financial Statements. Action: Carried Unanimously RESOLUTION#2012-09-04 Application of Accounting Standards Codification (ASC) 980- Regulated Operations Insurance Recoveries and Other Third Party Contributions to Plant. Regular Board Mtg. September 25,2012 Page 16 of 17 WHEREAS, pursuant to Resolution #2003-8-3 the Board of Commission requires management to receive Board approval before any deferrals under Financial Accounting Standard 71, now ASC-980; and WHEREAS, in July of 2011 the Wise Road Water Conditioning Plant was damaged by a chemical spill that included damage to the piping and electrical systems; and WHERAS, the estimate to replace the damaged equipment is approximately$30 million; substantially all cost will be recouped from our insurance carrier. The reconstruction project is expected to be completed by January 1, 2014. To date $10.7 million in funds are either expended or committed of which $5.6 million have been expended. We expect to spend another $4 million by the end of the calendar year 2012 with the balance of estimate expended in 2013. Whereas, from time to time the Board receives reimbursements or other sources of funds to offset the cost of capital expenditures other than contributions in aid of construction from customers; and Whereas, insurance recoveries and other third party contributions to plant will be set up in regulatory liability accounts; and WHEREAS, the regulatory liability accounts will be amortized over the projected lives of the new asset to offset future depreciation expense: RESOLVED, that the Board of Commissioners, as the regulatory body of the Board of Water & Light, approve, pursuant to the Accounting Standards Codification 980, the appropriate accounting, as described above, for the insurance recoveries to reconstruct the Wise Road Water Conditioning Plant and for revenue received on other projects from third parties. Staff Comments: The estimate to replace the damaged equipment is approximately$30 million This accounting treatment will allow the insurance recoveries associated with the reconstruction of the Wise Road Water Conditioning Plant to be deferred to offset the cost of reconstruction. The cost of reconstruction, that are offset by the insurance will be amortized over the life of the plant, thus having no impact on ratepayers. Absent this accounting and rate making treatment, the insurance recoveries are required to be recognized in revenues as collected and the cost of reconstruction amortized over the life of the plant. This alternative treatment will increase depreciation expense and return on asset requirements thus, increasing cost and rates to ratepayers over its remaining useful life. Authority to defer other revenues from third parties is also requested for the same purpose. As examples, funds can be recovered from the Federal Emergency Management Agency (FEMA) to offset storm repair costs or grant monies from other governmental sources can be received to offset capital projects. These revenues should be used to offset capitalized cost associated with the projects to reflect ratemaking treatment of the funds. Regular Board Mtg. September 25,2012 Page 17 of 17 Motion by Commissioner Bossenbery, seconded by Commissioner Price, to approve the Resolution Application of Accounting Standards Codification (ASC) 980- Regulated Operations Insurance Recoveries and Other Third Party Contributions to Plant. Action: Carried Unanimously UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS There was no New Business RESOLUTIONS There were no Resolutions. MANAGER'S REMARKS General Manager Lark stated the construction of the REO Town Plant remains on time and on budget. Mr. Lark congratulated Tony Green, Supervisor of Maintenance Construction for putting together a very successful golf outing to benefit the "Pennies for Power" program. He stated that Ron, Byrnes of IBEW also partnered with Mr. Green on this event. COMMISSIONERS' REMARKS Chair Zerkle thanked everyone for their kind emails and flowers that she received over the last couple of weeks because of her recent medical procedure, it really meant a lot. Commissioner Tracy Thomas congratulated Mr. Lark and his Administration for the REO Town Plant continuing to be on time and on budget. Commissioner Thomas acknowledged Michael Flowers, Dallas Burdick and Tansay Carter for their work with the FIRST Step program. PUBLIC COMMENTS There was Public Comments. EXCUSED ABSENCE None. ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Thomas the meeting adjourned at 5:56 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes(Electronic)filed with Lansing City Clerk:October 4,2012 Final Approved Minutes filed with Lansing City Clerk on November 14,2012 A Approved by the Board of Commissioners on 9-25-12 Cal?ISE 28 Fii12: C.2 W (_ ► 'ii� �� `'s' MINUTES OF THE BOARD OF COMMISSIONERS'MEETING LANSING BOARD OF WATER AND LIGHT July 24, 2012 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Marilyn Plummer, David Price, Cynthia Ward, Tracy Thomas and Sandra Zerkle. Absent: Commissioners Dennis M. Louney and Anthony McCloud. The Corporate Secretary declared a quorum present. Commissioner Price led the Pledge of Allegiance. APPROVAL OF MINUTES Motion by Commissioner Plummer seconded by Commissioner Price to approve the minutes of the Regular Board Meeting minutes of May 22, 2012. Accior: 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 was no Public Comment. ------------------ SPECIAL PRESENTATION Check Presentations General Manager Lark and Board of Commissioners' Chair Sandra Zerkle presented Eric Schertzing, Chairman of the Capital Area community Services Board (CACS) with a check in the amount of$10,545, the proceeds from the Wine & Cheese Extravaganza, Dancing with the Starz event. General Manager Lark stated that the purpose of the event is to help those struggling to pay bills and make a contribution to our"Pennies for Power" program in which the proceeds are administered by the CACS. He thanked everyone who was involved in making the event a success. Regular Board Mtg. July 24,2012 Page 2 of 19 Mr. Schertzing, thanked the Board of Water & Light and General Manager Lark on behalf of the CACS for its generosity. Mr. Schertzing stated that he appreciates the relationship with the Board of Water& Light and all that they do through the "Pennies for Power" initiative and hopes to continue building a great partnership. Commissioner Sandra Zerkle stated that she appreciates the many Board of Water& Light employees and the Commissioners that participated in this event and made it happen. ------------------ COMMUNICATIONS a. Electronic Mail from Peggy (No Last Name Given) Regarding her May 2012 Utility Bill Referred to Management- General Manager Lark stated that the listed email address is not valid, and the information listed does not come up in the Board of Water& Light's files, but will continue to work on this matter. b. Electronic Mail from Norm Ferrier Regarding Property Damage Referred to Management- General Manager Lark stated that Mr. Ferrier's property has been visited twice and the damage is considered to be minor. Mr. Ferrier is happy with the steps that the Board of Water& Light is taking to correct minor damage. C. Electronic Mail from Bill Harrison Regarding Sewer Charges Referred to Management- General Manager Lark stated that a letter is being prepared to send out to the customer in which some options will be presented. We will also let him know that the Board of Water& Light does not have control over sewer rates. COMMITTEE REPORTS FINANCE COMMITTEE June 12, 2012 The Finance Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 5:30 p.m. on Tuesday, June 12, 2012. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Marilyn Plummer (arrived 5:39 p.m.) and David Price. Alternate Committee members Sandra Zerkle and Regular Board Mtg. July 24,2012 Page 3 of 19 Tracy Thomas were present. Also present were Board members David Price and Cynthia Ward. Absent: None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of May 8, 2012. Action: Carried unanimously. Quarterly Financial Update General Manager J. Peter Lark provided a 3rd Quarter Financial Update Report that included the first month of the 4th Quarter. This information is relative to Fiscal Year to date of April 30, 2012 for Electric, Water, Steam and Chilled Water services. (Combined Utility Financial Report is included in the Finance Committee packet of 6-12-2012 and is available for viewing in the Office of the Corporate Secretary.) Actual v. Budgeted Variance in Combined Utility Net income Fiscal Year to Bate April 30, 2012 Compared to FY 2012 Budget 1$000) Budgeted Net Income 17,043 Changes in Operating Income: Rrnue Chances(net of fuel) Retail Electric 14,816) Wholesale Electric (8,084) Water Sales (43) Steam Sales (668) Chilled Water Sales (46) Ooeratinc Expense Changes Depreciation 1,722 Labor, Material, and Other 10,440 Other (1,082) Subtotal Changes in Operating Income (2,576) Changes in Other Income: Interest Earnings 537 Other Income 2,941 Reduced PILOT 1,050 All Other-Non-Operating Variances 301 Subtotal Changes in Other Income 4.829 Actual Net Income 19,295 Regular Board Mtg. July 24,2012 Page 4 of 19 General Manager Lark stated that the Board of Water & Light's net income was budgeted at approximately$17million. To date the Actual Net Income indicates approximately$19million and that is deceiving because not all expenses have been accounted for due to the fact that yearly expenses are often not accounted for until the end of the year. He said that we have a lot of upcoming expenses to account for in the Temporary O&M Expense Timing Difference area and that has been estimated to be around $8million which reduces the projected net income to about$13million. Revised Combined Utility Net Income Projection Fiscal Year 2012 _t nd Based on 1 and 2 Quarter Operating Results (000s) Net Income-Original Budget-Annual $ 17,315 FYTD Favorable Income variance ($19,296 actual minus$17,043 budget) $ 2,253 Temporary O&M Expense Timing Differences $ (7,935) ECA Change-Wholesale Sales Roll-in S 1,523 Eliminate Chilled Water Rate Increase $ (10) Revised Wholesale Sales Forecast $ (20) Projected Net Income $ 13,126 General Manager Lark stated that he believes the$8million projected 0&M Timing Expense may be a little high and believes that it may be closer to $6million and that he is hoping that the $13million projected net income will be more like $15million. General Manager Lark reviewed the Combined Utility Net Fixed Assets and stated it is presently running with a deficiency of 2.42% which means that we are about 3.8% return on assets. He said we are doing well and it is the best that the Board of Water & Light has hit in his tenure as the General Manager, however the recession is still affecting us. COBIT Update Susan Devon, Assistant General Manager and Chief Financial Officer stated that COBIT stands for Control Objectives for Information and Related Technology. Ms. Devon provided some background information on the Enterprise Risk Management Department that was originally named the Internal Control Department. She stated that the responsibility area for Internal Control has expanded to manage more than the financial process; it also oversees insurances, claims and physical security of all of the Board of Water& Light's operations which explains the name change because it encompasses more than just simply accounting controls. Regular Board Mtg. July 24,2012 Page 5 of 19 Kathy Krause, Information Systems Control Analyst, provided information on documenting and evaluating the internal control structure at the BWL with a focus on Information Technology and provided background and project status information. (The complete COB/T PowerPoint presentation is included in the Finance Committee Packet of 6-12-12 and is available for viewing in the Office of the Corporate Secretary) Internal Audit Status Update Internal Auditor Phil Perkins presented an overview of • FY2012—Audit Plan Progress • External Peer Review Results • Review of Internal Audit Charter Motion by Commissioner Price, seconded by Commissioner Louney, to maintain the Internal Audit Charter as currently written. Action: Carried Unanimously Internal Auditor Perkins presented the 2013 Audit Plan which consists of: 1. Risk assessments and scores for each of 100—plus auditable activities at the Board of Water& Light. 2. Review and input by management. 3. Selection of the top several candidates based on (1) and (2) above. 4. Some audits may be put on a rotational basis based on risk, Le, every 3-5 year. 5. Risk assessment must be periodically updated as changes in company operations and financial situation occur. 6. FY 2012 Planned Audits (Draft) Motion by Commissioner Louney, seconded by Commissioner Price to accept the Internal Auditor's recommended 2013 FY Audit Plan. Action: Carried Unanimously Commissioner Ward requested a list of the top twenty-five auditable actives. Internal Auditor Perkins stated that the requested list was still in draft form but would provide a copy of the activities to Commissioner Ward. Excused Absence None Other Regular Board Mtg. July 24,2012 Page 6 of 19 Commissioner Tracy Thomas gave General Manager Lark accolades on how he handled the situation regarding the Board of Water& Light's position on the PILOT increase. General Manager Lark informed the Board that: • Half of the gas requirements for next year have been locked in. • Consumers Energy Gas pipeline that will be supplying the new plant with natural gas is being installed and is currently ahead of schedule. • REO Town is on time and on budget with 90-95%of costs locked in. • The Unionization efforts were successful from the Union's point of view and we are in the process of transitioning employees into IBEW slots. Commissioner David Price questioned the status of the Wise Road Water Plant. General Manager Lark responded that on the recovery of the insurance money we have to wait until things are settled with the insurance company before we pursue the money. Commissioner Margaret Bossenbery inquired about the construction at the Water Plant on Cedar St. In response, General Manager Lark stated we are currently replacing the intake pipeline that feeds the plant. Adiourn On Motion by Commissioner Louney, seconded by Commissioner Plummer the meeting adjourned at 6:45 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee NOMINATING COMMITTEE MINUTES June 26, 2012 The Nominating Committee of the Board of Water and Light met in the Lansing Board of Water& Light's Board Room at 12:15 p.m. on Tuesday,June 26, 2012. Nominating Committee Margaret Bossenbery called the meeting to order and asked the Corporate Secretary to call the roll. The following committee members were present: Commissioners Marge Bossenbery, Marilyn Plummer, Tracy Thomas and Alternate Committee Member David Price. Absent: Commissioner Cynthia Ward Approval of Minutes Motion by Commissioner Thomas, seconded by Commissioner Plummer to approve the Nominating Committee meeting minutes of July 19, 2011. Action: Motion Carried Regular Board Mtg. July 24,2012 Page 7 of 19 Public Comment There were no public comments. Nominate Board Officer Candidates for FY 2012-2013 The Nominating Committee met to review the Commissioner Survey responses for consideration of board officer nominations for the Board of Water & Light Board of Commissioner's Chair and Vice Chair for fiscal year 2012-2013. Nominating Committee Chair Margaret Bossenbery opened the floor for nominations. Motion by Commissioner Price, seconded by Commissioner Thomas, that a unanimous ballot be cast to nominate Sandra Zerkle to serve as the Chair and Dennis M. Louney to serve as the Vice Chair for the 2012-2013 FY. Action: Carried Unanimously The recommended slate of officer candidates for FY 2012-2013 will consist of: Chair: Sandra Zerkle Vice Chair: Dennis Louney There was a brief discussion regarding the procedure of filling reigning Officer (Chair or Vice Chair) positions that may become vacant due to term expiration or no reappointment. Commissioner Tracy Thomas stated for the record that he whole heartily endorses the current slate of Officers. Nominating Committee Chair Bossenbery excused the absence of Commissioner Ward. There being no further business,the meeting adjourned at 1:00 p.m. Respectfully submitted, Margaret Bossenbery, Chair Nominating Committee COMMITTEE OF THE WHOLE July 10, 2012 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,July 10, 2012. Committee of the Whole Chair Dennis M. Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Regular Board Mtg. July 24,2012 Page 8 of 19 Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Marilyn Plummer, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: Commissioners Anthony McCloud Public Comments Jan Simpson, President of the Board of Water& Light Retirees Association, asked that the Administration elaborate on Retiree healthcare during today's meeting, specifically who the insurance carrier might be for the retirees not on Medicare. Ron Byrnes Sr., Board of Water & Light Retiree, stated his concerns about speaking time at the Committee meetings and asks that the Board of Commissioners consider having speaking time at the end of the Agenda to allow the public to comment on any business that may have been discussed during the meeting. -In response to Mr. Byrnes comments Committee of the Whole Chair Louney stated that there would be an opportunity for him to speak at the end of the meeting. Committee of the Whole Chair Louney also stated the Board may want to have a conversation regarding the availability of meeting packets to the public. Approval of Minutes Motion by Commissioner Zerkle, seconded by Commissioner Bossenbery to Table the Minutes of May 8, 2012. Action: Motion Carried Healthcare Resolution General Manager Lark stated that this resolution is an attempt by him to accurately reflect past discussions that haven taken place at the Committee meetings. This matter was brought to the Human Resource Committee on November 14, 2011 and was discussed again on January 10, 2012 at the Committee of the Whole meeting. Included in the packet is information regarding the Hard Cap, the 80/20 Implementation and Alternative Utilizing Opt-Out Options. This is a decision that is made by the Governing Body, however if there is no decision made, we have to use the Hard Cap, if there is a vote of the majority we can go to the 80/20 Implementation and if we have a 2/3's vote we can go to something different. General Manager Lark stated that his sense from the Committee meetings that have taken place seem to suggest that the Board was interested a Principal of Gradualism which is centered on 10%and that is reflected in the resolution. General Manager Lark stated that the chosen option would be effective on September 1, 2012 for Non-Bargaining employees and November 1, 2012 for Regular Board Mtg. July 24,2012 Page 9 of 19 Bargaining employees. General Manager Lark reviewed the following options and asked that the Committee forward the resolution to the full Board for consideration that provides for the 10% Premium Co-Pay. Increase Employee Cost Per Pay Period if Hard Cap Requirement of Act 152 is Implemented Act 152-Hard Cap Requirement Current Per Pay Period Benefit Annual Act 152 Difference Required Payments Plan Benefit Cost Required Cap Current5% Hard Cap Increase Single $ 6,676.56 $ 5.500.00 $ 1,176.56 $ 12.84 $ 45.25 $ 32.41 Empl+1 $ 15,022.20 $ 11,000.00 $ 4,022.20 $ 28.89 $ 154.70 $ 125.81 Family $ 18,694.32 $ 15.000.00 $ 3,694.32 $ 35.95 $ 142.09 $ 106.14 Period if 80/20 Cap is Implemented Per Pay Period Benefit Annual Employee Required Payments Plan Benefit Cost Share20% Current5% 80120Cap Increase Single $ 6,676.56 $ 1,335.31 $ 12.84 $ 51.36 S 38.52 Empl+1 $ 15.022.20 $ 3,004.44 $ 28.89 $ 115.56 $ 86.67 Family $ 18,694.32 $ 3,736.86 $ 35.95 $ 143.80 $ 107.85 Alternatives Utilizing Option 3 to Opt-Out of Act 152, 2011- Various Premium Sharing Options Benefit Annual Per Pay Period* Plan Benefit Cost Current5% 8% 10% 15% 20% Single $ 6,676.56 $ 12.84 $ 20.54 $ 25.68 $ 38.52 $ 51.36 Empi+; 5 15.022.20 $ 28.89 S 46.22 $ 57.78 $ -16.67 $ '115.56 Family $ 18,694.32 $ 35.95 $ 57.52 $ 71.90 $ 107.85 $ 143.80 *For every 1% increase in the premium sharing percentage the per pay amount is increased by$2.56 for Single Coverage, $5.77 for Empl+1 and$7.19 for Family Coverage After a short discussion regarding the impact of the Hard-Cap option the following motion was offered. Motion by Commissioner Zerkle seconded by Commissioner Price to accept the resolution and forward it to the full Board for consideration. Action: Motion Carried Healthcare Update General Manager Lark stated that this update is going to center on some of the changes that we have made with respect to Retiree Healthcare plan. The most important thing to note is that there is no change to the Retiree Healthcare plan except with respect to the Administrator. All benefits will remain as is. Regular Board Mtg. July 24,2012 Page 10 of 19 Susan Devon, Assistant General Manager and Chief Financial Officer, provided detailed information on the Retirees Healthcare plan. Ms. Devon stated for the post 65 retirees there will be no changes to the Retirees Healthcare Plan with respect to benefits, deductibles or co-pays. She said that we have moved from the current funding status for their Healthcare, which is BlueCross self-funded, with Express Script self-funded and D reimbursements. What the Administration has done is move to United American Insurance Company for a fully funded, fully insured plan that will cover medical and prescriptions. Instead of Express Scripts, Medco will be the new drug provider. AmWINS will be the new 3rd Party Administrator. The reason this is being done is because it will significantly reduce our cost without changing any of our benefits to any of our retirees or cause them to occur any additional cost, everything will remain the same. The retirees will be able to use the same doctors, hospital and drugs; they will just be using a new card. Ms. Devon stated as far as the pre-65's, they will still remain in a self-funded plan, and we, the Board of Water& Light will continue to fund that. There will be a new 3rd Party Administrator and that is the Web TPA. The pre-65's will continue to have all of their same coverage and they will continue to have Express Script. Ms. Devon stated that letters have been sent to all of the retirees and this will be effective August 1, 2012. Later this week we will be sending out a packet of additional information to all retirees, which will include frequently asked questions. We will have phone numbers for both the Web TPA and AmWINS TPA and they will be open 24/7 to take calls. Two informational meetings have been set for next week to give all retirees an opportunity to meet the insurance people as well as our benefits people to explain how everything is going to work, as well as allow time for questions to be answered. Those meetings will take place next Tuesday and Thursday at the Lansing Center. Basically that is it;there will be no changes to the Retiree Healthcare Plan other than the providers. Over the next 17 months the Board of Water & Light is expecting to save over$1Million as a result of this change.The City of Lansing and many other municipalities are using this exact same plan. Ms. Devon responded to a question that was asked by Jan Simpson, President of the Board of Water & Light Retirees Association, regarding whom the Insurance Carrier would be. Ms. Devon stated that she would be under Board of Water & Light's self- insured program and would not have an insurance company. Ms. Simpson asked who the Healthcare plan is going to be with. Ms. Devon stated that the TPA is connected with AmWINS and they are with United American. United American is not going to be insuring the pre-65's; it will be the Board of Water& Light. Regular Board Mtg. July 24,2012 Page 11 of 19 Commissioner Cynthia Ward requested a copy of the letter that was prepared for the retirees. Ms. Devon stated that she would forward to Commissioner Ward a copy of the complete packet of information that is going to be sent out to retirees. Other • General Manager Lark passed out copies of the latest edition of the Board of Water & Light's Pipeline magazine. He stated that this will be the last hard copy of this magazine as it will be digitized from now on as part of our initiative to go paperless. • General Manager Lark presented the Board of Commissioner with a "Tombstone" Award, which is in respect to the REO Town Bond Issuance. • General Manager Lark announced the confirmation that the Board of Water& Light is the utility of choice for providing service to the Lodges Apartment Complex at MSU. • The Board of Water& Light won an award from the US Department of Labor titled the "Legislative Apprenticeship Trailblazer and Innovator Award" for the Board of Water & Light's work with the 1st STEP Program,the Apprenticeship Program and with Lansing Community College in the development of the Great Lakes Center for Utility Training. General Manager Lark thanked everyone involved in helping the Board receive this prestigious award, in particular Dallas Burdick. • General Manager Lark thanked the Board of Water & Light employees for all of their hard work especially over the last 10 days due to the extreme heat. General Manager Lark stated that Committee of the Whole Chair Dennis M. Louney requested information on the 25x25 Constitutional Amendment which sets a goal for Michigan Utilities to get 25 percent of their energy from renewable resources like wind, solar, and biofuels by the year 2025. There is a law that came out in 2008 tittle PA 295, which requires 10% by 2015. This is now a ballot initiative and I believe it will be on the ballot in November. This is a Constitutional Amendment and that can be a little bit problematic in that generally the Constitution is used for general ideas and concepts rather than specifics. George Stojic, Executive Director of Strategic Planning, outlined some of the issues being studied by the BWL related to the 25 by 25 proposal. The BWL has a good plan to meet the 10% standard by 2015, but a renewable standard of 25% by 2025 may cause a reconfiguration of the BWL's system. A reconfiguration of the BWL's generation and transmission system will have both cost and reliability impacts. The incremental renewable energy would most likely be generated by wind energy, which would tend to cause baseload plant to be uneconomic during late fall and spring, but require additional generating capacity during the summer months. In addition, a 25% standard could also require the BWL to become a network transmission customer, which would increase the BWL's transmission costs significantly. The BWL staff is continuing to evaluate the complex interactions between traditional generation Regular Board Mtg. July 24,2012 Page 12 of 19 options, network transmission, renewable energy options, MISO markets, cost of service and reliability. Commissioner David Price said that the public needs to try to understand that there is a risk reward in everything you do and that this could pose great risk and cost, because we are either going to have to buy it or build it and both options are going to cost money and the rate payers in the end are going to pay for that. Chair Dennis M. Louney stated that he is not sure about taking a position as suggested by Commissioner Price, at least not at the moment, however it does make sense to have material prepared because the residents will want to know how they will be impacted. Commissioner Plummer thanked the Board of Water & Light for their participation in the Juneteenth Celebration. She also congratulated the Board of Water & Light for receiving for receiving the "Community Service Award"from the American Public Power Association. Excused Absence Motion by Commissioner Price seconded by Commissioner Plummer to excuse Commissioner McCloud tonight's meeting. Adiourn On Motion by Commissioner Price, seconded by Commissioner Ward, the meeting adjourned at 6:28 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE July 10, 2012 The Finance Committee of the Board of Water and Light met at the Executive Offices, beginning at 6:40 p.m. on Tuesday,July 10, 2012. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Dennis M. Louney, Marilyn Plummer and David Price. Also present Alternate committee member Commissioner Sandra Zerkle. Absent: None Public Comments Regular Board Mtg. July 24,2012 Page 13 of 19 There were no public comments. Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Plummer to approve the Finance Committee meeting minutes of June 12, 2012. Action: Carried unanimously. External Audit Communication to the Board Presented by Plante& Moran (Information Only) Doug Rober, Partner with Plante Moran (P&M) said they are beginning the process for the June 30, 2012 Financial Statement Audit, which encompasses the Enterprise Fund, which is the main operations of the Board and the three pension trust funds, and they are all encompassed in one financial statement. He said they are required to have some pre-audit communication with the Governing Board to convey a few things and ask a few questions and at the conclusion of the audit an Audit Statement will be presented to the Board along with a wrap up letter on how everything went. Mr. Rober said the planned approach is to audit the Enterprise Fund and the Pension Trust Funds. The outcome will be their Opinion on fairness of those financial statements. He said they will be looking for an unqualified opinion and hope to get one. The required final communication is the SAS 114 that concludes the engagement. There is always the potential to uncover deficiencies in accounting matters that would be reported in a significant deficiency letter (SAS 115), however, we do not anticipate having that problem. He said they plan to issue the Financial Statements in September and meet with the Board again at that time. Brett Oumedian, P&M Manager reviewed the following: ■ Audit Process ■ Auditor Responsibility ■ Management Responsibility ■ Testing Phases ■ Required Discussion Points ■ Significant Risk Misstatement ■ Responses to Significant Risk Misstatement ■ Additional Required Discussion Points ■ Communication to those Charged with Governance The Finance Committee reviewed the list of items presented to determine if there were any concerns or questions about the audit that they have that would warrant collaborative discussion. There were no areas of concern at this time. In response to the required discussion points mentioned the Finance Committee indicated that the appropriate contact person for the Board of Commissioners is the Chair of the Finance Committee, Margaret Bossenbery. Regular Board Mtg. July 24,2012 Page 14 of 19 Excused Absence None Other Finance Chair Bossenbery stated that everyone should have received a copy of the Audit from Phil Perkins on the Capital Assets and asked that if anyone has a question please feel free to give Mr. Perkins a call. Adjourn On Motion by Commissioner Plummer, seconded by Commissioner Thomas, the meeting adjourned at 7:30 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee MANAGER'S RECOMMENDATIONS RESOLUTION #2012-07-01 To Amend Employer Contribution to Medical Benefit Plans WHEREAS, Governor Rick Snyder, on September 27, 2011, signed legislation known as the "Public Funded Health Insurance Ca,ttribution Act", Public Act 152 of 2011 lifniting the amount public employers may pay for government employee medical benefits, and; WHEREAS, Public Act 152 of 2011 took effect January 1, 2012 and applies to all public employers including the Lansing Board of Water& Light, and; WHEREAS, Public Act 152 of 2011 created a "hard cap" for medical benefit plan coverage year beginning January 1, 2012, so that a public employer may not pay more of the annual costs for medical benefit plans than a total equal to $5,500 for single person coverage, $11,000 for individual and spouse coverage, and $15,000 for family coverage. These caps are to be adjusted by October 1 each year to apply to the following calendar year, based on the change in the medical care component of the United States consumer price index (CPI), and; WHEREAS, by a majority vote of its governing body, a public employer may opt-out of the hard cap and into an 80% cap option where the public employer may not pay more than 80%of the total annual costs of all the medical benefit plans for its employees, and; Regular Board Mtg. July 24,2012 Page 15 of 19 Whereas, by a 2/3 vote of its governing body each year, a local unit of government may exempt itself from the requirements of Public Act 152 of 2011 for the next year, and; WHEREAS, Public Act 152 of 2011 does not apply to existing collective bargaining agreements until the agreements expire, are extended, or renewed. However, any collective bargaining agreement executed after September 15, 2011, must comply with the act, and: WHEREAS, the Human Resources Committee on November 15, 2011 and the Committee of Whole met on January 10, 2012 to discuss the impact and implementation dates for Public Act 152 of 2011 on the Lansing Board of Water & Light, and; RESOLVE that the Board by at least 2/3 vote desires to exempt itself from the requirements of Public Act of 2011 for the upcoming benefit plan year, effective September 1, 2012. FURTHER RESOVE that the Board desires to implement a 10% premium sharing for all active employees for medical benefits effective September 1, 2012 for non-bargaining employees and November 1, 2012 for bargaining unit employees. General Manager Lark stated that the Board of Commissioners met on several occasions to discuss PA 152 of 2011 also known as the "Public Funded Health Insurance Contribution Act"that took effect in January of 2012. The results of the meetings are reflected in the Resolution. General Manager Lark asked that the Board approve the resolution to amend employee contribution to medial benefit plans such that it would raise the premium sharing for all active Board of Water& Light employees from 5% to 10%. Motion by Commissioner Price, Seconded by Commissioner Bossenbery, to approve the Resolution for the implementation a 10%premium sharing for all active Board of Water & Light employees. Action: Motion Carried UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS The Nominating Committee recommended a slate of officers for the 2012-2013 Fiscal Year. The slate of officers included Commissioner Zerkle as the Chair and Commissioner Louney as the Vice Chair. Nominating Committee Chair Bossenbery stated as procedure if there were any nominations from the floor for the positions of Chair or Vice Chair. There were no nominations from the floor and Nominations were closed. Regular Board Mtg. July 24,2012 Page 16 of 19 Moved by Commissioner Price and supported by Commissioner Ward to approve the slate of officers as recommended by the Nominating Committee endorsing Sandra Zerkle as Chair and Dennis M. Louney as Vice Chair. Action: Carried unanimously. Chair Zerkle stated that it was an honor to serve in the positions as an Officer of the Board and thanked everyone for their support and assistance. General Manager Lark congratulated Chair Zerkle on behalf of himself and the Board of Water & Light. Chair Zerkle stated that the Executive Committee consists of the Chair, Vice Chair and Past Chair as well as another member of the Board. With no Past Chair presently on the Board there a two positions on the Executive Committee to make it complete. Motion by Commissioner Zerkle and seconded by Commissioner Plummer to nominate Margaret Bossenbery and Tracy Thomas as the final members of the Executive Committee. Action: Motion Carried RESOLUTIONS RESOLUTION #2012-07-02 Appointment of the Charter Position of Director and General Manager 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 Vt 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 Director and General Manager for fiscal year 2012-2013, or, until a successor is appointed, whichever last occurs: J. Peter Lark, Director and General Manager FURTHER RESOLVED, That Mr. Lark shall be extended an employment contract which shall be effective from July 1, 2012, and expire on June 30, 2017, or until a successor is appointed, whichever later occurs. ---------------- Motion by Commissioner Price, Seconded by Commissioner Bossenbery to reappoint J. Peter Lark to the Charter position of Director and General Manager for fiscal year 2012- 2013. Action: Carried unanimously RESOLUTION #2012-07-03 Appointment of the Charter Position of Internal Auditor Regular Board Mtg. July 24,2012 Page 17 of 19 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 1st 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 Internal Auditor for fiscal year 2012-2013, or, until a successor is appointed, whichever last occurs: Philip Perkins, Internal Auditor FURTHER RESOLVED, That Mr. Perkins shall be extended an employment contract which shall be effective from July 1, 2012, and expire on June 30, 2014, or until a successor is appointed, whichever later occurs. ---------------- Motion by Commissioner Price, Seconded by Commissioner Thomas to reappoint Philip Perkins to the Charter position of Internal Auditor for fiscal year 2012-2013. Action: Carried unanimously RESOLUTION#2012-07-04 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 1st 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 2012-2013, 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, 2012, and expire on June 30, 2014, or until a successor is appointed, whichever later occurs. ---------------- Motion by Commissioner Price, Seconded by Commissioner Plummer, to reappoint M. Denise Griffin to the Charter position of Corporate Secretary for fiscal year 2012-2013 Action: Motion Carried MANAGER'S REMARKS Regular Board Mtg. July 24,2012 Page 18 of 19 General Manager Lark stated that at the next COW meeting there will be a status report on the REO Town Co-generation plant, but wanted to everyone to know that the project is still on time and on budget. General Manager Lark displayed the Community Service Award that was received by Chair Zerkle on behalf of the Board of Water & Light as the recent APPA Conference. General Manager Lark stated that he is very proud of the award and he thanked all employees for their hard work and contributions to the Board receiving the following the award. COMMISSIONERS' REMARKS Commissioner David Price asked that the Community Service Award be noted at a Lansing City Council meeting. Chair Zerkle stated that she was extremely honored to be able to receive the Community Service Award at the APPA National Conference on behalf of the Board of Water & Light. She said that she realizes that it is the Board of Water & Light employees that do all of the work, such as putting together the Electric Vehicle Grant as well as volunteering for many events such as the Wine and Cheese event, the 5K Race, Adopt-A- River Clean up, Chili Cook-off and more and that is the reason we received this award. As a personal point of privilege Chair Zerkle stated that she understands that all employees receive a certificate at 5 years of service. The 5 year date for Mr. Lark has gone by but we do have a letter and certificate for him and there will be refreshments ;mmediate!,r f ;,o;<<.ri^g adjoumme^t. Chair Zerkle informed the Commissioners that the Corporate Secretary will be send out the Committee Assignment notice soon. Commissioner Tracy Thomas stated that the 3 Board appointed employees make the Commissioners look good and thanked them for all of the work that they do. He also thanked Danielle Miller, Shoni Galatian and Steve Sarkaian for their work as well. Commissioner Plummer thanked the appointed employees and said that it has been a pleasure to work with them. She thanked and congratulated the Board's re-elected leaders, Sandra Zerkle and Dennis M. Louney. She said this Board as a collective body works together very well. PUBLIC COMMENTS There was Public Comments. Regular Board Mtg. July 24,2012 Page 19 of 19 EXCUSED ABSENCE On motion by Commissioner Thomas, seconded by Commissioner Price to excuse Commissioners Louney and McCloud from tonight's meeting. Action: Carried Unanimously ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Bossenbery the meeting adjourned at 6:00 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes(Electronic)filed with Lansing City Clerk:August 2,2012 Final Approved Minutes(Electric)filed with the Lansing City Clerk:September 28,2012 Approved by the Board of Commissioners on 7-24.12 MINUTES OF THE BOARD OF COMMISSIONERS'MEETING LANSING BOARD OF WATER AND LIGHT May 22, 2012 = ! =7t They Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. . , Present: Commissioners Margaret Bossenbery, Dennis M. Louney,Anthony McCloud, Marilyn Plummer, David Price, Cynthia Ward,Tracy Thomas and Sandra Zerkle. Absent: None The Corporate Secretary declared a quorum present. Commissioner Dennis M. Louney led the Pledge of Allegiance. APPROVAL OF MINUTES Motion by Commissioner Bossenbery seconded by Commissioner Plummer to approve the minutes of the Regular Board Meeting minutes of March 27,2012. 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. Joel Wolfe,former Assistant General Manager and Director of Operations for the Board of Water& Light stated the following: I am opposed to City of Lansing trying to take more funds from the Board of Water& Light. In the long history of the Board there has always been a desire of many city people to get into the good funds of the Board and he believes that the Board should resist that because the city is already receiving plenty of money. We should be operating for the benefit of the rate payers and keeping the rates low and not trying to make up for the deficits that the City might have. Stan Schuck, UAW 2256 Vice Chair Representative for the City of Lansing, stated the following: I am a lifelong taxpayer and customer of the Board of Water& Light. I have been drinking the Board of Water& Light's water and bathing in it my entire life. I will not drink the Mayor's cool-aid that is made with this water. What the City is asking for is that the Board step up to the community that has supported it forever. With rate hike after rate hike, as a matter of fact not too long ago we put into effect a rate hike to Regular Board Mtg. May 22,2012 Page 2 of 18 support the Board of Water& Light's legacy for their employees. What we are talking about is the City of Lansing and we are your customers. We are the residents and we do work here and what we are talking about is the ability of the Board of Water& Light to give back to the community that has given to it for so many years. This is a difference to the City and this is not about the employees, this is about the tax payers, your customers and the City's ability to maintain a quality of life here. If we cannot maintain that quality your customers are going to leave,just like the tax payers and that is the cold hard reality of it. Many Cities' across the county are collecting as much as 6%, this Board has enjoyed 4%, which is below the national standard for quite some time and 5.5% is on the low end of the National menu. Please take this into consideration. We are talking about repairing the roads, taking care of the parks and buildings all of which has the Board running water in them. Our sewer bills are tied to how much water we use,there is another revenue stream. The less water used and the less people here, the less revenue and sewage money, less CSO money,the less ability to go green. Please take that into mind and realize that we are not asking for that much. We are only asking for a little bit of help and that is not unreasonable. Ron Byrnes, IBEW Local 352 Business Manager, stated the following: I oppose the additional 1/2% request for the PILOT. The Board of Water & Light has in upward of 30 positions here at the utility that has not been replaced and every job that is vacated is scrutinized to the fullest extent, so we are not exactly flush with money here. We are giving the City a good return in lieu of taxes in the tune of$14 Million last year and we are going to increase that another 1%. 5% is a reasonable number and we need to stay the course and stick with the 5%that was passed by the Board's Committee of the Whole. Carol Wood, At-Large City Councilperson, 1018 W. Lapeer, stated the following: I have been before this Board previously, to speak for the employees and issues that affected my residents and constituents within the City of Lansing. I stand before you tonight asking you to reconsider the decision that you made on the 5% return on equity. The Board of Water& Light has been paying for the last 20 years only a 4% return on equity which dates back to 1992. What we are asking is not to use these dollars to hire employees, but what we are asking for with these dollars is that it will help us give the services that make a difference on whether people will reside in the City of Lansing.This affects residents and businesses. When we talk about the probability of the Board of Water & Light, you need those things, you need to have those houses filled, you need to have people coming and deciding to do their business here. But when you look at the reduction in services that we have had for the last several years it has had a true impact on people making decisions to be here. We are not trying to raid the Board of Water & Light funds and we are not trying to put a gun to your head,what we are asking for is something reasonable. Now someone might say why we are here at this ninth hour on Regular Board Mtg. May 22,2012 Page 3 of 18 the ninth day asking you for this. To be perfectly honest, foolish of me, I believed something that I was told by the Administration and that was that this process was going to take place between now and July Vt I did not realize that you would be voting on it this soon, and that we would not have had a better opportunity to sit down and discuss this with you. When we looked at our budget and you look at the amount of employees that have been either laid off or position that have not been filled,just walk out the door and look at the streets and the parks, think about your neighborhood, think about the events that you have or had and think about services that are not there. This will help us fill that gap. I cannot tell you enough about the comments that we heard during the budget process and when we were out talking to people during budget hearings that wanted to see their services that were begging us to make sure that their city succeeded I am here in their capacity, I am here speaking for them. I am here letting you know that not only do you wear the hat of the Commissioners of the Board of Water& Light but you represent those people too. You represent us as a city and I hope that you will consider the additional % %and if you are not able to make that decision tonight then I ask that maybe you think about tabling this until we have had a better chance to sit down and talk to you. Brian Jeffries, At-Large/President Lansing City Council, 3229 Moores River Dr., stated the following: I wanted to go in a different direction than Councilmember Wood did in terms of my view of the return on equity; Not only what it means to the City of Lansing but in the long view what it means. As Councilmember Wood alluded to in some of the research that we did today, we found that this return on equity was increased in 1992 from 3.5%to 4%and again it extended in 2001 for another 10 years at 4%. In our budget deliberations we have talked about this issue and what the national average is and we kind of struggled with that issue. We have been told that the national average runs somewhere around 6%and so the way that I am looking as this and I don't want to intertwine this issue with our budget, it does impact our budget this year, but I want to take a little longer view at it. I am looking at it as any return on investment payment from this organization less than the national average, (less than 6%), 1 believe equates to a payment by this city in terms of subsidizing the operations of the Board of Water& Light. I feel that the base payment should be 6%. You all come to us and tell us that you are an exceptional performer in terms of a municipal utility I agree with that and I buy that, and when we look around the Country, if the average is 6% certainly something exceptional might even be higher than that; but we are not asking for an exceptional return on equity and we are not even asking for the average return on equity, we are asking for something less than the average. I believe it should be 6% and I do not have support on Council for that. Council did approve 5.5%and just as a side bar of what Councilmember Wood was talking about in terms of coming to you, we could not come to you as a Council and talk to you about this issue until after we passed our budget. Council can only speak through its Resolutions and that is what we did last night. So in Regular Board Mtg. May 22,2012 Page 4 of 18 terms of timing that is what gets us here today at such a late hour and that is now the formal position of the Council. One thing that I want to leave you with and this is certainly not a threat, I don't come to your house here to threaten in any way. I am very passionate about this and I just want you to know that in the last two increases the one that occurred in 1992 and the one that occurred in 2001 required Council approval, now we are not being told that is going to happen this year but there is a Resolution actually approving the pay on equity that Council had to pass, my view on this is if we are given an agreement that Council has to approve and if comes back less than 5.5% 1 will be voting no; because I believe what is fair and what is right is 6%at least the National average. 5.5% is reasonable for both sides. I ask that you consider that, I am not sure where this is in your process in terms that it has to be a reconsideration or what, but please consider our plea for the 5.5%, 1 mean I look at it as an issue with our budget, but we have gone 20 years at 4%and as we look down the road we cannot continue to get less than what is what we believe the national average should be, the bench mark for the return on equity that we get from the Board of Water & Light. Jody Washington, 15t Ward City Councilperson, stated the following: This should not have been any surprise that we asked for more money. From my lips to Peter Lark's ears, I told him I was going to ask for 6%. 5.5 % is right within the National average. I believe the responsible thing to do is to give this payment at 5.5%, it is right smack in the middle. I know deals have been made for the 5%, we did not know about that, and that is still below the National average. I have talked to constituents and they are in favor of it. You know the fear of raising rates I am not too concerned about that, I think that we probably can afford it and even in the worst case scenario I believe it would be a shared sacrifice between businesses, residents, non-profits, everybody. ------------------ COMMUNICATIONS There was no communications COMMITTEE REPORTS COMMITTEE OF THE WHOLE April 10, 2012 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, April 10, 2012. Committee Chair Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Marilyn Plummer, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: None Regular Board Mtg. May 22,2012 Page 5 of 18 Approval of Minutes Motion by Commissioner Ward, seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of February 14, 2012. Action: Motion Carried Unionization Efforts (Informational Only) General Manager Lark stated that several months ago there was discussion regarding unionization efforts at the Board of Water & Light. These efforts involve the Board of Water& Light's own IBEW 352 Union seeking to unionize approximately 55 technical and clerical employees. General Manager Lark stated that he wanted to inform the Commissioners that there will be a Notice of Elections posted and the election will be held on April 18' . General Manager Lark stated that Management is preparing a letter to affected employees stating that unionization should be considered carefully and that Management is very happy having the employees as non-bargaining, but would also be very happy to have them as bargaining employees. General Manager Lark stated that Management wants to make sure that the employees are fully informed and is urging participation in the election because the outcome is determined by the majority of those who vote. Electric Vehicle Program Update (Information Only) General Manager Lark stated that the Electric Vehicle Program started with the Department of Energy (DOE) Grant for around $750,000. The Board of Water& Light has a number of vehicles on the road as well as a number of charging stations for the vehicles at no cost the Board of Water& Light, due to the DOE grant. The program has been a success for the Board of Water& Light and has garnered much of attention. General Manager Lark stated that he is very proud of the Board's efforts with this program and has lot of people to thank, primarily, Kellee Christensen. General Manager Lark introduced Customer Projects new Manager, Ray Moore. Ray Moore provided the Committee with an update on the Plug-In Vehicle program. Mr. Moore presented the Committee with a PowerPoint presentation that reviewed: o The purpose of the program o Project Goals o Current Projects o Status Update o Vehicles o Charging Station Status o Board of Water&Light Incentives o State Initiatives o Project Timelines o Project Success After a short Q&A period Commissioner Tracy Thomas thanked Ray Moore for his presentation and stated that the Committee has heard this information before from Mr. Regular Board Mtg. May 22,2012 Page 6 of 18 Lark and Kellee Christensen, but it was nice to receive this updated information in this type of format. •PowerPoint Presentation Available in the Off,Othe Corporate Secretary• REO Town Update (Informational Only) General Manager Lark provided an update on the REO Town Co-Generation Plant. He stated that the building of the plant is on time and on budget. General Manager Lark also stated the high voltage transmissions lines are up and ready and that the steam lines are close to completion. General Manager Lark stated that a lot of the work on the plant has been done with local vendors, to name a few, Kramer Management, Christman, Ganger and Clark Construction. He said the Board of Water & Light is trying to put as much emphasis as possible on hiring Lansing based companies. Dick Peffley, Executive Director of Water Operations and Special Projects, also provided an update on the building of the Co-Generation Power Plant. He stated there have been no accidents on site and it is his number one mission to make sure no one get hurt. Dick Peffley stated that the budget for this project is $182 Million and all but$37 Million has been committed. He also stated that major concrete work has been completed and that important pieces of equipment, like the combustion turbines will start to come in around the first of June. There will be a logistics person at the site who will be coordinating truck trafficking. The exterior renovation of the Depot is 90% complete and the interior renovation bids are out. Once the Depot has been completed the plan is to use it as a training facility for future REO Town plant operating staff. There was brief dialogue regarding the training of employees to work at the REO Town Co-Generation Plant. Additional Information and Updates provided by General Manager Lark General Manager Lark presented the Commissioners with an informational flyer on the REO Town commemorative Brick Promotion that will support Board of Water& Light's "Pennies for Power" program. With a donation of$50.00 you can buy a personalized commemorative brick that will be placed the entrance of the Depot. General Manager Lark stated that Susan Devon, Assistant General Manager and Chief Financial Officer and her staff did a wonderful job on the Bond refinancing. It does save us in present value almost $3 Million. General Manager Lark stated that he remembers going to the APPA Conference once and one of the Commissioners questioned him about the Board of Water & Light receiving awards. The Board of Water & Light just received notice from the APPA that Regular Board Mtg. May 22,2012 Page 7 of 18 we will be the recipient of the APPA Community Service Award. General Manager Lark thanked Teece Aronin, Board of Water & Light Communications Representative for spearheading the Board of Water & Light receiving this award. The Award will be presented on June 19th at the APPA National Conference. Other Commissioner Bossenbery spoke about the Peregrine Falcon nest atop the Eckert Station story that was recently in the Lansing State Journal. Commissioner Thomas congratulated Michael Flowers on being appointed a board member of the Ingham Intermediate School District. Excused Absence None Adiourn On Motion by Commissioner Price, seconded by Commissioner Ward, the meeting adjourned at 6:15 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole COMMITTEE OF THE WHOLE May 8, 2012 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, May 8, 2012. Committee Chair Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Marilyn Plummer, David Price, Cynthia Ward and Sandra Zerkle. Absent: Commissioners Anthony McCloud and Tracy Thomas Public Comments There was no Public Comments Approval of Minutes Motion by Commissioner Ward, seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of April 10, 2012. Action: Motion Carried Third Party(Informational Only) Regular Board Mtg. May 22,2012 Page 8 of 18 General Manager Lark stated that in addition to sales to our native customers the Board of Water & Light sells excess power to other entities or the MISO market and this is what is called Third Party Sales. Reflected in this year's budget is the effect of the substantial drop off of Third Party sales. The is because natural gas prices are so low and that sets the price of electricity on the MISO market so we are not making money there; however George Stojic, Executive Director of Strategic Planning, is in charge of locking in natural gas for us for the REO Town Plant. General Manager Lark stated that using REO town to hedge Third Party sales confirms the Board's wise decision in building the REO Town Plant. Mr. Stojic explained changes that have occurred in wholesale electric markets over the past several years that have caused the BWL's third party sales to decline. The causes include: (a) a decline in demand, especially manufacturing demand, (b) a fall in natural gas prices, which have caused wholesale market prices to decline, and (c) an increase in the delivered cost of coal, which has caused BWL operating costs to rise. The combination of falling wholesale market prices and rising fuel costs has resulted in lower third party sales. Rules and Regulations Electric ♦Water ♦ Steam ♦ Chilled Water♦ Electric Fees & Charges ♦ Water Fees & Charges George Stojic, Executive Director of Strategic Planning, reviewed the proposed changes to the Board's rules and regulations. He noted that there were no significant changes to the rules and regulations, but that some of the electric and water fees and charges were increased. Fees and charges are reviewed each year and adjusted to reflect changes in costs incurred by the Board for extending distribution facilities to customers. No increases to fees and charges for steam and chilled water were proposed this year. General Manager Lark asks that the Committee forward the resolution approving the Rules and Regulations for Electric, Water, Steam and Chilled Water Utility Services with the updated schedules to be effective July 1, 2012 to the full Board for approval. Motion by Commissioner Price, seconded by Commissioner Plummer to forward the resolution for the Rules and Regulations to full Board for consideration. Action: Motion Carried Energy Optimization and Renewable Annual Update General Manager Lark stated that the State of Michigan Public Service Commission (MPSC) requires the Board of Water& Light to provide the Governing Board an annual update on their Renewable Energy Plans. The Renewable Energy Plan Update is also reviewed by the PSC. Sue Warren, Manager of Marketing and Business Strategies, stated that PA 295 was passed in October of 2008. Legislation requires the Board be updated on Renewable Energy Program and an Energy Optimization Program, as well as file annual reports with Regular Board Mtg. May 22,2012 Page 9 of 18 the MPSC which are due May 31, 2012. The Board of Water& Light is also required to give customers an annual summary, which will be reported in the July edition of the Board of Water& Light's Connections Newsletter. Ms. Warren reviewed the 2011 Energy Optimization Programs, Residential Programs and Business Programs as well as an Energy Optimization Summary, Ms. Warren stated that the Board of Water& Light is meeting goals for both Renewable Energy and Energy Optimization and they continue to look for and evaluate Renewable Energy options. Chair Zerkle requested that Ms. Warren provide this update at a Regular Board of Commissioners meeting as well as to the Lansing City Council. PILOT General Manager Lark stated that the Payment in Lieu of Taxes (PILOT) is currently at 4% and in the City of Lansing's proposed budget there was a 5% PILOT suggested. General Manager Lark stated that he has prepared a resolution providing for a 5% PILOT with the idea in mind that this percentage is where the Board wants to be and that it is reasonable. PILOT payments are made in late June. General Manager Lark stated that we may need a rate increase to cover this PILOT increase at some point, but that will be determined annually following analysis of each year's Revenues and Expenses. After a lengthy discussion regarding the PILOT and the possibility of a rate increase (due to the increase of the PILOT percentage) General Manager Lark respectfully asked that the Committee forward the Resolution to the full Board for consideration. Motion by Commissioner Price, seconded by Commissioner Plummer to forward the proposed resolution to the full Board for consideration. Action: Carried Unanimously Additional Information and Updates provided by General Manager Lark • A copy of the "Building Tradesman" newspaper featuring two articles regarding the REO Town Co-generation Plant. • The last steel beam to go up at the new Plant will be painted white and brought over to the Haco Dr. loading dock area on May 22, 2012 to allow people (employees and Commissioners) to sign their names to it. Also there will be a "Topping Off" Ceremony at the new REO Plant building on May 29, 2012 to place the last beam up. • A Successful Board of Water& Light Adopt-A-River event. • Tickets for the 17th Annual Board of Water & Light Chili Cook-off are going on sale. Regular Board Mtg. May 22,2012 Page 10 of 18 • The Board of Water& Light and Consumers Energy are working out a Mutual Aide agreement to support each other with crew assistance during big storms. Other Marilyn Plummer stated on behalf of the Juneteenth Committee she would like to invite everyone to the 19th Annual Juneteenth events to celebrate the historical significance of the oldest African American Holiday which celebrates the end of slavery in the United States. This year's opening Master of Ceremony is Mr. J. Peter Lark. The event will kick off on June 14, 2011 in downtown Lansing at City Hall. Excused Absence Motion by Commissioner Louney seconded by Commissioner Ward to excuse Commissioners McCloud and Thomas from tonight's meeting. Adjourn On Motion by Commissioner Price, seconded by Commissioner Ward, the meeting adjourned at 6:35 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE May 8, 2012 The Finance Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 6:46 p.m. on Tuesday, May 8, 2012. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Marilyn Plummer and David Price. Alternate Committee member Sandra Zerkle was present. Also present Board member Cynthia Ward. Absent: None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Plummer, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of February 14, 2012. Action: Carried unanimously. Regular Board Mtg. May 22,2012 Page 11 of 18 FY 2013 Budget Resolution General Manager J. Peter Lark provided an overview of the proposed financial plan for fiscal year (FY) 2013 for the Lansing Board of Water and Light (BWL). The total proposed budget for FY 2013 is $369.7 million, of which operations and maintenance comprise $262 million and capital budget is approximately $107.7 million. $46.8 million of the Fiscal Year 2013 capital budget is to provide for on-going services to our utility customers and to sustain our plant facilities for future operations. The remaining $60.9 million will support construction of the Reo Town Plant. Capital expenditures for Fiscal year 2013-2018 are estimated to be$367 million. SALES FORECAST Utility FY13 Forecast FY12 Budget %'13 Forecast To'12 Budget Electric—Retail(MWh) 2,248,434 2,248,434 0.0% Electric-Wholesale(MWh) 250,353 1,114,635 -74.8% Electric(MWh) 2,528,786 3,363,069 -24.8% Water(ccf) 9,458,641 9,223,158 2.6% Steam(Mlb) 698,275 743,000 -6.0% Chilled Water(tnhrs) 10,038,000 10,739,126 -6.5% Electric: *Retail sales volumes by customer class are expected to remain at the same level as FY 2012. -Wholesale sales volumes are expected to decrease as a result of unfavorable market conditions. Water: -Retail sales volume expectations are consistent with FY 2012. -Wholesale sales volumes increased due to expanded consumption for Delta Township. Steam: -Steam sales volumes expectations have been reduced to better represent actual sales volumes experienced in recent years. Chilled Water: -Chilled water sales volume decreased due to better projections of Accident Fund usage and improved metering and operations. General Manager also Lark reviewed the FY 2013 Income Statement and Cash Flow (by Utility) as well as the Financial Projections. *The Financial Plan PowerPoint presentation is included in the Finance Committee Mtg.Packet and is available for viewing in the Office of the Corp*Sec.* General Manager Lark asked that the resolution for the FY 2013 Operating and Capital Budget be forwarded to the full Board for Consideration. After a lengthy discussion regarding the impact of the PILOT increase on the budget and the possibility of rate increases the following motion was made: Motion by Commissioner Price, seconded by Commissioner Louney to forward the proposed resolution for the FY 2013 Operating and Capital Budget to the Board for consideration. Regular Board Mtg. May 22,2012 Page 12 of 18 Finance Committee Chair Bossenbery stated that the contract for Charles Moore will be renewed at the request of Internal Auditor Phil Perkins. Also last week the External Peer Review took place with Internal Auditor Phil Perkins and he will provide an update at the next Finance Committee meeting. Also the proposed budgets for the Board of Commissioners, Internal Auditor and Corporate Secretary are all in included in the total budget that was presented today and that everyone should have received individual budget proposals for the areas mentioned above through email. Excused Absence None Other None Adjourn On Motion by Commissioner Louney, seconded by Commissioner Plummer the meeting adjourned at 7:05 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee HUMAN RESOURCE COMMITTEE May 15, 2012 The Human Resource Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 4:00 p.m. on Tuesday, May 15, 2012. Human Resource Committee Chairperson Tracy Thomas called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Tracy Thomas, Anthony McCloud, Cynthia Ward and Sandra Zerkle. Also present were Alternate Committee member Marilyn Plummer and Board member David Price. Absent: None. Public Comments There were no public comments. Approval of Minutes Motion by Commissioner McCloud, seconded by Commissioner Ward to approve the Human Resource Committee meeting minutes of March 22, 2012. Action: Carried unanimously. 1. FY 2012 Board Appointee Resolution -General Manager Combined Results Review Comments Regular Board Mtg. May 22,2012 Page 13 of 18 Self-Evaluation General Manager J. Peter Lark, requested a closed session for the purpose of receiving his contractual year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Ward, seconded by Commissioner McCloud to go into closed session. Action: Carried unanimously. The Human Resource Committee meeting went in to closed session at 4:05 p.m. Motion by Commissioner Zerkle, seconded by Commissioner McCloud that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 4:51 p.m. and immediately went back into closed session at 4:52. Motion by Commissioner Ward, seconded by Commissioner McCloud that the Human Resource Committee return to closed session. Action: Carried unanimously Motion by Commissioner Zerkle, seconded by Commissioner McCloud that the Human Resource Committee return to open session. Action: Carried unanimously Upon conclusion of the closed session meeting at 5:30 p.m., the Human Resource Committee took the following action: Motion by Commissioner Ward and seconded by Commissioner Zerkle to forward the resolution for the reappointment of Mr. Lark to the Charter position of General Manager for fiscal year 2012-2013 and extend him an employment contract with expiration date of 6/30/17 to the full Board for consideration. Action: Carried unanimously 2. FY 2012 Board Appointee Resolution - Internal Auditor Combined Results Review Comments Self-Evaluation Internal Auditor Phil Perkins requested a closed session for the purpose of receiving his contractual year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Ward, seconded by Commissioner McCloud to go into closed session. Regular Board Mtg. May 22,2012 Page 14 of 18 Action: Carried unanimously. The Human Resource Committee meeting went into closed session at 5:40 p.m. Motion by Commissioner Zerkle, seconded by Commissioner McCloud that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 6:00 p.m. Upon conclusion of the closed session, the Human Resource Committee took the following action: Motion by Commissioner Zerkle and seconded by Commissioner Plummer to forward the resolution for the reappointment of Mr. Perkins to the Charter position of Internal Auditor for fiscal year 2012-2013 and extend him an employment contract with expiration date of 6/30/14 to the full Board for consideration. Action: Carried unanimously 3. FY 2012 Board Appointee Resolution -Corporate Secretary Combined Results Review Comments Self-Evaluation Corporate Secretary M. Denise Griffin requested a closed session for the purpose of receiving her contractual year-end performance evaluation as permitted. Motion by Commissioner Plummer, seconded by Commissioner Thomas to go into closed session. Action: Carried unanimously. The Human Resource Committee meeting went into closed session at 6:04 p.m. Motion by Commissioner McCloud, seconded by Commissioner Ward that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 6:44 p.m. Upon conclusion of the closed session, the Human Resource Committee took the following action: Motion by Commissioner Zerkle and seconded by Commissioner McCloud to forward the resolution for the reappointment of Ms. Griffin to the Charter position of Corporate Secretary for fiscal year 2.012-2013 and extend her an employment contract with expiration date of 6/30/14 to the full Board for consideration. Action: Motion Carried Regular Board Mtg. May 22,2012 Page 15 of 18 Human Resource Committee Chair Thomas advised Board Chair Zerkle to execute contracts for the Board's three appointed employees with an effective date of July 1, 2012. Adiourn There being no further business, the Human Resource Committee meeting adjourned at 6:45 p.m. Respectfully submitted, Tracy Thomas, Chair Human Resource Committee MANAGER'S RECOMMENDATIONS RESOLUTION#2012-05-01 Fiscal Year 2013 Operating and Capital Budget RESOLVED, that the annual Operating Budget covering Fiscal Year 2013 is hereby approved as presented; and RESOLVED, that the Fiscal Year 2013 Capital Budget is hereby approved as presented; and RESOLVED, that the forecast for capital expenditures for the Fiscal Years 2013-2018 is hereby accepted as presented; and RESOLVED FURTHER, that the Corporate Secretary be directed to make the appropriate filings with the Lansing City Clerk's office and the Mayor's office in accordance with the Lansing City Charter regarding the above actions. -------------------- Motion by Commissioner Bossenbery, seconded by Commissioner Price to approve the Fiscal Year 2013 Operating and Capital Budget and accept the forecast for capital expenditures for the Fiscal Years 2013-2018 as presented. Action: Carried Unanimously RESOLUTION #2012-05-02 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, 2012. Staff Comments: Staff recommends these amendments to the Rules and Regulations for Electric, Water, Steam and Chilled Water Utility Services. If the Committee of the Whole agrees to these amendments at their meeting on May 8, 2012, they will be presented to the full board for adoption at its regular Board Meeting on May 22, 2012. ---------------------- Regular Board Mtg. May 22,2012 Page 16 of 18 Motion by Commissioner Price, seconded by Commissioner Plummer,to approve the Rules and Regulations for Electric, Water, Steam, and Chilled Water Utility Services to be effective July 1, 2012. Action: Carried Unanimously RESOLUTION#2012-05-03 To Amend the Return on Equity Agreement Between the City of Lansing and the Board of Water and Light WHEREAS, the City of Lansing (the City)provides to the Lansing Board of Water and Light (the Board) use of its streets, alleys, bridges, and other public places without compensation and the Board, as an agency of the City, is exempt from property taxation, and; WHEREAS, since 1972 the Board has contributed to the City an annual amount as a return on equity as payment in lieu of taxes (PILOT) and; WHEREAS,The Board and the City entered into an agreement (Attachment A) on June 30, 1992 for annual payment of a return on equity for ten years commencing on July 1, 1992 in the amount of 4%of net billed retail sales from electric, water, and steam, and; WHEREAS, on December 17th, 2001,the Board and the City modified the agreement by Amendment No. 1 (Attachment B) to extend the terms and other provisions of the agreement for ten more years commencing on July 1, 2002 in the amount of 4%of its revenues from retail and wholesale sales of chilled water, electric, steam, and water utilities, and; WHEREAS,the current agreement terminates on June 30, 2012, and; WHEREAS A PILOT in the amount of 5% is not unusual among municipal utilities in that the American Public Power Association's latest survey of PILOT's throughout the country found the median PILOT for all municipal utilities was 5.2%, and the median PILOT for large municipal utilities like the Board with revenues over$100 million is 6.1%, and; WHEREAS the Board is committed to the City and a modest increase will help the City with increased cost,therefore: RESOLVE that the Board desires to extend its agreement with the City for five years commencing on July 1, 2012, in the amount of 5%of its revenues from retail and wholesale sales of electric, water, steam, and chilled water utilities. As a point of personal privilege Chair Sandra Zerkle made the following statement: The BWL is committed to Lansing and wants to do what's necessary to make Lansing prosper. Our mission statement says we will provide reliable services at affordable rates. This proposal takes into account our responsibility to our customers, and our responsibility to the City of Lansing. Regular Board Mtg. May 22,2012 Page 17 of 18 As Michigan's largest municipally-owned utility, the BWL is one of 284 public utilities across the U.S. that provides a direct benefit to their communities, including monetary payments. The current 10 year agreement with the City of Lansing, which expires on June 30rh, sets an annual payment by the BWL to the City in the amount of 4%of BWL revenue from retail and wholesale sales of electric, water, steam and chilled water utilities. Mayor Virg Bernero is proposing in his FY 2012-13 budget that the City and the BWL increase the PILOT rate from 4% to 5°0, which could generate an additional$3 million dollars or more for the City in the 2012-13 budget year. Over the last 10 years, including this year's projected payment of more than$12 million dollars, the BWL will have made payments to the City totaling more than$108 million dollars. The BWL Board of Commissioners, in our Committee of the Whole meeting two weeks ago, unanimously approved a resolution to increase the BWL's return on equity payment to the City of Lansing from 4%to 5%. This action was taken after careful analysis of the proposal by BWL staff and Commissioners, which determined that a 5%return on equity is a prudent and fiscally responsible rate that we can afford at this time. I fully support this proposal. Regular Board Mtg. May 22,2012 Page 18 of 18 • Reliable Public Power provider Platinum level Award • RP3 Award • Community Service Award • Tree Line USA Award • 5th Place Award in the International Competition for the Water Tasting General Manager Lark reminded everyone about the 1st S.T.E.P. Program Award ceremony that is being held on Thursday, May 24, 2012, to recognize the 1st S.T.E.P. students (area and local high school students) who had temporary employment at the Board of Water & Light and completed the program. He also thanked everyone who contributed to the successful Adopt-A-River program on May 5, 2012. COMMISSIONERS' REMARKS Commissioner Marilyn Plummer acknowledged Board of Water& Light's Supervisor of Electrical Distribution, Wayne Lynn for receiving the Boy Scouts "Spirit of Scouting" Service Award to be presented on June 7tn Commissioner Tracy Thomas, also acknowledged Wayne Lynn who was the Master of Ceremony for this 53rd Annual Cotillion Ball. Commissioner Thomas stated that Mr. Lynn was fantastic and represented the Board of Water & Light very well. PUBLIC COMMENTS Joel Wolfe, former Assistant General Manager and Director of Operations for the Board of Water& Light, stated that having worked for the Board of Water& Light's Executive Team for many years he has always felt very proud and continues to be proud of General Manager J. Peter Lark and the Board of Commissioners who are doing a fantastic job. He stated that the community is also very supportive of General Manager Lark and the Board of Commissioners. EXCUSED ABSENCE None ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Plummer the meeting adjourned at 6:50 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes(Electronic)fled with Lansing City Clerk:June 4,2012 Final Approved Minutes(Electronic)filed with the Lansing City Clerk:July 25,2012 .. Approved by the Board of Commissioners on 7-24-12 — MINUTES OF THE BOARD OF COMMISSIONERS'MEETING -- _ LANSING BOARD OF WATER AND LIGHT C=- 0 3 L, i ^� 1 May 22,2012 C= CV The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m, Present: Commissioners Margaret Bossenbery, Dennis M. Louney,Anthony McCloud, Marilyn Plummer, David Price, Cynthia Ward,Tracy Thomas and Sandra Zerkle. Absent: None The Corporate Secretary declared a quorum present. Commissioner Dennis M. Louney led the Pledge of Allegiance. APPROVAL OF MINUTES Motion by Commissioner Bossenbery seconded by Commissioner Plummer to approve the minutes of the Regular Board Meeting minutes of March 27,2012, 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. Joel Wolfe, former Assistant General Manager and Director of Operations for the Board of Water& Light stated the following: I am opposed to City of Lansing trying to take more funds from the Board of Water& Light. In the long history of the Board there has always been a desire of many city people to get into the good funds of the Board and he believes that the Board should resist that because the city is already receiving plenty of money. We should be operating for the benefit of the rate payers and keeping the rates low and not trying to make up for the deficits that the City might have. Stan Schuck, UAW 2256 Vice Chair Representative for the City of Lansing, stated the following: I am a lifelong taxpayer and customer of the Board of Water& Light. I have been drinking the Board of Water& Light's water and bathing in it my entire life. I will not drink the Mayor's cool-aid that is made with this water. What the City is asking for is that the Board step up to the community that has supported it forever. With rate hike after rate hike, as a matter of fact not too long ago we put into effect a rate hike to Regular Board Mtg. May 22,2012 Page 2 of 18 support the Board of Water& Light's legacy for their employees. What we are talking about is the City of Lansing and we are your customers. We are the residents and we do work here and what we are talking about is the ability of the Board of Water& Light to give back to the community that has given to it for so many years. This is a difference to the City and this is not about the employees, this is about the tax payers, your customers and the City's ability to maintain a quality of life here. If we cannot maintain that quality your customers are going to leave,just like the tax payers and that is the cold hard reality of it. Many Cities' across the county are collecting as much as 6%, this Board has enjoyed 4%, which is below the national standard for quite some time and 5.5% is on the low end of the National menu. Please take this into consideration. We are talking about repairing the roads, taking care of the parks and buildings all of which has the Board running water in them. Our sewer bills are tied to how much water we use, there is another revenue stream. The less water used and the less people here, the less revenue and sewage money, less CSO money,the less ability to go green. Please take that into mind and realize that we are not asking for that much. We are only asking for a little bit of help and that is not unreasonable. Ron Byrnes, IBEW Local 352 Business Manager, stated the following: I oppose the additional 1/2% request for the PILOT. The Board of Water& Light has in upward of 30 positions here at the utility that has not been replaced and every job that is vacated is scrutinized to the fullest extent, so we are not exactly flush with money here. We are giving the City a good return in lieu of taxes in the tune of$14 Million last year and we are going to increase that another 1%. 5% is a reasonable number and we need to stay the course and stick with the 5%that was passed by the Board's Committee of the Whole. Carol Wood, At-Large City Councilperson, 1018 W. Lapeer, stated the following: I have been before this Board previously, to speak for the employees and issues that affected my residents and constituents within the City of Lansing. I stand before you tonight asking you to reconsider the decision that you made on the 5% return on equity. The Board of Water & Light has been paying for the last 20 years only a 4% return on equity which dates back to 1992. What we are asking is not to use these dollars to hire employees, but what we are asking for with these dollars is that it will help us give the services that make a difference on whether people will reside in the City of Lansing. This affects residents and businesses. When we talk about the probability of the Board of Water & Light, you need those things, you need to have those houses filled, you need to have people coming and deciding to do their business here. But when you look at the reduction in services that we have had for the last several years it has had a true impact on people making decisions to be here. We are not trying to raid the Board of Water& Light funds and we are not trying to put a gun to your head, what we are asking for is something reasonable. Now someone might say why we are here at this ninth hour on Regular Board Mtg. May 22,2012 Page 3 of 18 the ninth day asking you for this. To be perfectly honest, foolish of me, I believed something that I was told by the Administration and that was that this process was going to take place between now and July 15t I did not realize that you would be voting on it this soon, and that we would not have had a better opportunity to sit down and discuss this with you. When we looked at our budget and you look at the amount of employees that have been either laid off or position that have not been filled,just walk out the door and look at the streets and the parks, think about your neighborhood, think about the events that you have or had and think about services that are not there. This will help us fill that gap. I cannot tell you enough about the comments that we heard during the budget process and when we were out talking to people during budget hearings that wanted to see their services that were begging us to make sure that their city succeeded I am here in their capacity, I am here speaking for them. I am here letting you know that not only do you wear the hat of the Commissioners of the Board of Water& Light but you represent those people too. You represent us as a city and I hope that you will consider the additional % %and if you are not able to make that decision tonight then I ask that maybe you think about tabling this until we have had a better chance to sit down and talk to you. Brian Jeffries, At-Large/President Lansing City Council, 3229 Moores River Dr., stated the following: I wanted to go in a different direction than Councilmember Wood did in terms of my view of the return on equity; Not only what it means to the City of Lansing but in the long view what it means. As Councilmember Wood alluded to in some of the research that we did today, we found that this return on equity was increased in 1992 from 3.5%to 4%and again it extended in 2001 for another 10 years at 4%. In our budget deliberations we have talked about this issue and what the national average is and we kind of struggled with that issue. We have been told that the national average runs somewhere around 6%and so the way that I am looking as this and I don't want to intertwine this issue with our budget, it does impact our budget this year, but I want to take a little longer view at it. I am looking at it as any return on investment payment from this organization less than the national average, (less than 6%), 1 believe equates to a payment by this city in terms of subsidizing the operations of the Board of Water& Light. I feel that the base payment should be 6%. You all come to us and tell us that you are an exceptional performer in terms of a municipal utility I agree with that and I buy that, and when we look around the Country, if the average is 6%certainly something exceptional might even be higher than that; but we are not asking for an exceptional return on equity and we are not even asking for the average return on equity, we are asking for something less than the average. I believe it should be 6%and I do not have support on Council for that. Council did approve 5.5%and just as a side bar of what Councilmember Wood was talking about in terms of coming to you, we could not come to you as a Council and talk to you about this issue until after we passed our budget. Council can only speak through its Resolutions and that is what we did last night. So in Regular Board Mtg. May 22,2012 Page 4 of 18 terms of timing that is what gets us here today at such a late hour and that is now the formal position of the Council. One thing that I want to leave you with and this is certainly not a threat, I don't come to your house here to threaten in any way. I am very passionate about this and I just want you to know that in the last two increases the one that occurred in 1992 and the one that occurred in 2001 required Council approval, now we are not being told that is going to happen this year but there is a Resolution actually approving the pay on equity that Council had to pass, my view on this is if we are given an agreement that Council has to approve and if comes back less than 5.5% 1 will be voting no; because I believe what is fair and what is right is 6%at least the National average. 5.5%is reasonable for both sides. I ask that you consider that, I am not sure where this is in your process in terms that it has to be a reconsideration or what, but please consider our plea for the 5.5%, 1 mean I look at it as an issue with our budget, but we have gone 20 years at 4%and as we look down the road we cannot continue to get less than what is what we believe the national average should be, the bench mark for the return on equity that we get from the Board of Water & Light. Jody Washington, Vt Ward City Councilperson, stated the following: This should not have been any surprise that we asked for more money. From my lips to Peter Lark's ears, I told him I was going to ask for 6%. 5.5 %is right within the National average. I believe the responsible thing to do is to give this payment at 5.5%, it is right smack in the middle. I know deals have been made for the 5%, we did not know about that, and that is still below the National average. I have talked to constituents and they are in favor of it. You know the fear of raising rates I am not too concerned about that, I think that we probably can afford it and even in the worst case scenario I believe it would be a shared sacrifice between businesses, residents, non-profits, everybody. ------------------ COMMUNICATIONS There was no communications COMMITTEE REPORTS COMMITTEE OF THE WHOLE April 10, 2012 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, April 10, 2012. Committee Chair Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney,Anthony McCloud, Marilyn Plummer, David Price,Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: None Regular Board Mtg. May 22,2012 Page 5 of 18 Approval of Minutes Motion by Commissioner Ward, seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of February 14, 2012. Action: Motion Carried Unionization Efforts (Informational Only) General Manager Lark stated that several months ago there was discussion regarding unionization efforts at the Board of Water & Light. These efforts involve the Board of Water& Light's own IBEW 352 Union seeking to unionize approximately 55 technical and clerical employees. General Manager Lark stated that he wanted to inform the Commissioners that there will be a Notice of Elections posted and the election will be held on April 18t". General Manager Lark stated that Management is preparing a letter to affected employees stating that unionization should be considered carefully and that Management is very happy having the employees as non-bargaining, but would also be very happy to have them as bargaining employees. General Manager Lark stated that Management wants to make sure that the employees are fully informed and is urging participation in the election because the outcome is determined by the majority of those who vote. Electric Vehicle Program Update (Information Only) General Manager Lark stated that the Electric Vehicle Program started with the Department of Energy (DOE) Grant for around $750,000. The Board of Water& Light has a number of vehicles on the road as well as a number of charging stations for the vehicles at no cost the Board of Water& Light, due to the DOE grant. The program has been a success for the Board of Water& Light and has garnered much of attention. General Manager Lark stated that he is very proud of the Board's efforts with this program and has lot of people to thank, primarily, Kellee Christensen. General Manager Lark introduced Customer Projects new Manager, Ray Moore. Ray Moore provided the Committee with an update on the Plug-In Vehicle program. Mr. Moore presented the Committee with a PowerPoint presentation that reviewed: o The purpose of the program o Project Goals o Current Projects o Status Update o Vehicles o Charging Station Status o Board of Water&Light Incentives o State Initiatives o Project Timelines o Project Success After a short Q&A period Commissioner Tracy Thomas thanked Ray Moore for his presentation and stated that the Committee has heard this information before from Mr. Regular Board Mtg. May 22,2012 Page 6 of 18 Lark and Kellee Christensen, but it was nice to receive this updated information in this type of format. •Pow,Wnt Presentation Available in the Office of the Cwporate Secretary' REO Town Update (Informational Only) General Manager Lark provided an update on the REO Town Co-Generation Plant. He stated that the building of the plant is on time and on budget. General Manager Lark also stated the high voltage transmissions lines are up and ready and that the steam lines are close to completion. General Manager Lark stated that a lot of the work on the plant has been done with local vendors, to name a few, Kramer Management, Christman, Ganger and Clark Construction. He said the Board of Water & Light is trying to put as much emphasis as possible on hiring Lansing based companies. Dick Peffley, Executive Director of Water Operations and Special Projects, also provided an update on the building of the Co-Generation Power Plant. He stated there have been no accidents on site and it is his number one mission to make sure no one get hurt. Dick Peffley stated that the budget for this project is$182 Million and all but$37 Million has been committed. He also stated that major concrete work has been completed and that important pieces of equipment, like the combustion turbines will start to come in around the first of June.There will be a logistics person at the site who will be coordinating truck trafficking. The exterior renovation of the Depot is 90% complete and the interior renovation bids are out. Once the Depot has been completed the plan is to use it as a training facility for future REO Town plant operating staff. There was brief dialogue regarding the training of employees to work at the REO Town Co-Generation Plant. Additional Information and Updates provided by General Manager Lark General Manager Lark presented the Commissioners with an informational flyer on the REO Town commemorative Brick Promotion that will support Board of Water& Light's "Pennies for Power" program. With a donation of$50.00 you can buy a personalized commemorative brick that will be placed the entrance of the Depot. General Manager Lark stated that Susan Devon, Assistant General Manager and Chief Financial Officer and her staff did a wonderful job on the Bond refinancing. It does save us in present value almost$3 Million. General Manager Lark stated that he remembers going to the APPA Conference once and one of the Commissioners questioned him about the Board of Water & Light receiving awards. The Board of Water & Light just received notice from the APPA that Regular Board Mtg. May 22,2012 Page 7 of 18 we will be the recipient of the APPA Community Service Award. General Manager Lark thanked Teece Aronin, Board of Water & Light Communications Representative for spearheading the Board of Water & Light receiving this award. The Award will be presented on June 19th at the APPA National Conference. Other Commissioner Bossenbery spoke about the Peregrine Falcon nest atop the Eckert Station story that was recently in the Lansing State Journal. Commissioner Thomas congratulated Michael Flowers on being appointed a board member of the Ingham Intermediate School District. Excused Absence None Adiourn On Motion by Commissioner Price, seconded by Commissioner Ward, the meeting adjourned at 6:15 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole COMMITTEE OF THE WHOLE May 8, 2012 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, May 8, 2012. Committee Chair Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Marilyn Plummer, David Price, Cynthia Ward and Sandra Zerkle. Absent: Commissioners Anthony McCloud and Tracy Thomas Public Comments There was no Public Comments Approval of Minutes Motion by Commissioner Ward, seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of April 10, 2012. Action: Motion Carried Third Party(Informational Only) Regular Board Mtg. May 22,2012 Page 8 of 18 General Manager Lark stated that in addition to sales to our native customers the Board of Water & Light sells excess power to other entities or the MISO market and this is what is called Third Party Sales. Reflected in this year's budget is the effect of the substantial drop off of Third Party sales. The is because natural gas prices are so low and that sets the price of electricity on the MISO market so we are not making money there; however George Stojic, Executive Director of Strategic Planning, is in charge of locking in natural gas for us for the REO Town Plant. General Manager Lark stated that using REO town to hedge Third Party sales confirms the Board's wise decision in building the REO Town Plant. Mr. Stojic explained changes that have occurred in wholesale electric markets over the past several years that have caused the BWL's third party sales to decline. The causes include: (a) a decline in demand, especially manufacturing demand, (b) a fall in natural gas prices, which have caused wholesale market prices to decline, and (c) an increase in the delivered cost of coal, which has caused BWL operating costs to rise. The combination of falling wholesale market prices and rising fuel costs has resulted in lower third party sales. Rules and Regulations Electric ♦ Water ♦ Steam ♦ Chilled Water ♦ Electric Fees & Charges ♦ Water Fees & Charges George Stojic, Executive Director of Strategic Planning, reviewed the proposed changes to the Board's rules and regulations. He noted that there were no significant changes to the rules and regulations, but that some of the electric and water fees and charges were increased. Fees and charges are reviewed each year and adjusted to reflect changes in costs incurred by the Board for extending distribution facilities to customers. No increases to fees and charges for steam and chilled water were proposed this year. General Manager Lark asks that the Committee forward the resolution approving the Rules and Regulations for Electric, Water, Steam and Chilled Water Utility Services with the updated schedules to be effective July 1, 2012 to the full Board for approval. Motion by Commissioner Price, seconded by Commissioner Plummer to forward the resolution for the Rules and Regulations to full Board for consideration. Action: Motion Carried Energy Optimization and Renewable Annual Update General Manager Lark stated that the State of Michigan Public Service Commission (MPSC) requires the Board of Water & Light to provide the Governing Board an annual update on their Renewable Energy Plans. The Renewable Energy Plan Update is also reviewed by the PSC. Sue Warren, Manager of Marketing and Business Strategies, stated that PA 295 was passed in October of 2008. Legislation requires the Board be updated on Renewable Energy Program and an Energy Optimization Program, as well as file annual reports with Regular Board Mtg. May 22,2012 Page 9 of 18 the MPSC which are due May 31, 2012. The Board of Water & Light is also required to give customers an annual summary, which will be reported in the July edition of the Board of Water & Light's Connections Newsletter. Ms. Warren reviewed the 2011 Energy Optimization Programs, Residential Programs and Business Programs as well as an Energy Optimization Summary. Ms. Warren stated that the Board of Water& Light is meeting goals for both Renewable Energy and Energy Optimization and they continue to look for and evaluate Renewable Energy options. Chair Zerkle requested that Ms. Warren provide this update at a Regular Board of Commissioners meeting as well as to the Lansing City Council. PILOT General Manager Lark stated that the Payment in Lieu of Taxes (PILOT) is currently at 4% and in the City of Lansing's proposed budget there was a 5% PILOT suggested. General Manager Lark stated that he has prepared a resolution providing for a 5% PILOT with the idea in mind that this percentage is where the Board wants to be and that it is reasonable. PILOT payments are made in late June. General Manager Lark stated that we may need a rate increase to cover this PILOT increase at some point, but that will be determined annually following analysis of each year's Revenues and Expenses. After a lengthy discussion regarding the PILOT and the possibility of a rate increase (due to the increase of the PILOT percentage) General Manager Lark respectfully asked that the Committee forward the Resolution to the full Board for consideration. Motion by Commissioner Price, seconded by Commissioner Plummer to forward the proposed resolution to the full Board for consideration. Action: Carried Unanimously Additional Information and Updates provided by General Manager Lark • A copy of the "Building Tradesman" newspaper featuring two articles regarding the REO Town Co-generation Plant. • The last steel beam to go up at the new Plant will be painted white and brought over to the Haco Dr. loading dock area on May 22, 2012 to allow people (employees and Commissioners)to sign their names to it. Also there will be a "Topping Off" Ceremony at the new REO Plant building on May 29, 2012 to place the last beam up. • A Successful Board of Water& Light Adopt-A-River event. • Tickets for the 17th Annual Board of Water& Light Chili Cook-off are going on sale. Regular Board Mtg. May 22,2012 Page 10 of 18 The Board of Water& Light and Consumers Energy are working out a Mutual Aide agreement to support each other with crew assistance during big storms. Other Marilyn Plummer stated on behalf of the Juneteenth Committee she would like to invite everyone to the 19th Annual Juneteenth events to celebrate the historical significance of the oldest African American Holiday which celebrates the end of slavery in the United States. This year's opening Master of Ceremony is Mr. J. Peter Lark. The event will kick off on June 14, 2011 in downtown Lansing at City Hall. Excused Absence Motion by Commissioner Louney seconded by Commissioner Ward to excuse Commissioners McCloud and Thomas from tonight's meeting. Adiourn On Motion by Commissioner Price, seconded by Commissioner Ward, the meeting adjourned at 6:35 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE May 8, 2012 The Finance Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 6:46 p.m. on Tuesday, May 8, 2012. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Marilyn Plummer and David Price. Alternate Committee member Sandra Zerkle was present. Also present Board member Cynthia Ward. Absent: None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Plummer, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of February 14, 2012. Action: Carried unanimously. Regular Board Mtg. May 22,2012 Page 11 of 18 FY 2013 Budget Resolution General Manager J. Peter Lark provided an overview of the proposed financial plan for fiscal year (FY) 2013 for the Lansing Board of Water and Light (BWL). The total proposed budget for FY 2013 is $369.7 million, of which operations and maintenance comprise $262 million and capital budget is approximately $107.7 million. $46.8 million of the Fiscal Year 2013 capital budget is to provide for on-going services to our utility customers and to sustain our plant facilities for future operations. The remaining $60.9 million will support construction of the Reo Town Plant. Capital expenditures for Fiscal year 2013-2018 are estimated to be $367 million. SALES FORECAST Utility FY13 Forecast FY12 Budget %'13 Forecast To'12 Budget Electric—Retail(MWh) 2,248,434 2,248,434 0.0% Electric-Wholesale(MWh) 250,353 1,114,635 -74.8% Electric(MWh) 2,528,786 3,363,069 -24.8% Water(ccf) 9,458,641 9,223,158 2.6% Steam(Mlb) 698,275 743,000 -6.0% Chilled Water(tnhrs) 10,038,000 10,739,126 -6.5% Electric: •Retail sales volumes by customer class are expected to remain at the same level as FY 2012. •Wholesale sales volumes are expected to decrease as a result of unfavorable market conditions. Water: •Retail sales volume expectations are consistent with FY 2012. •Wholesale sales volumes increased due to expanded consumption for Delta Township. Steam: •Steam sales volumes expectations have been reduced to better represent actual sales volumes experienced in recent years. Chilled Water: •Chilled water sales volume decreased due to better projections of Accident Fund usage and improved metering and operations. General Manager also Lark reviewed the FY 2013 Income Statement and Cash Flow (by Utility) as well as the Financial Projections. *The Financial Plan PowerPoint presentation is included in the Finance Committee Mtg.Packet and is available for viewing in the Office of the Corp*Sec.* General Manager Lark asked that the resolution for the FY 2013 Operating and Capital Budget be forwarded to the full Board for Consideration. After a lengthy discussion regarding the impact of the PILOT increase on the budget and the possibility of rate increases the following motion was made: Motion by Commissioner Price, seconded by Commissioner Louney to forward the proposed resolution for the FY 2013 Operating and Capital Budget to the Board for consideration. Regular Board Mtg. May 22,2012 Page 12 of 18 Finance Committee Chair Bossenbery stated that the contract for Charles Moore will be renewed at the request of Internal Auditor Phil Perkins. Also last week the External Peer Review took place with Internal Auditor Phil Perkins and he will provide an update at the next Finance Committee meeting. Also the proposed budgets for the Board of Commissioners, Internal Auditor and Corporate Secretary are all in included in the total budget that was presented today and that everyone should have received individual budget proposals for the areas mentioned above through email. Excused Absence None Other None Adjourn On Motion by Commissioner Louney, seconded by Commissioner Plummer the meeting adjourned at 7:05 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee HUMAN RESOURCE COMMITTEE May 15, 2012 The Human Resource Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 4:00 p.m. on Tuesday, May 15, 2012. Human Resource Committee Chairperson Tracy Thomas called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Tracy Thomas, Anthony McCloud, Cynthia Ward and Sandra Zerkle. Also present were Alternate Committee member Marilyn Plummer and Board member David Price. Absent: None. Public Comments There were no public comments. Approval of Minutes Motion by Commissioner McCloud, seconded by Commissioner Ward to approve the Human Resource Committee meeting minutes of March 22, 2012. Action: Carried unanimously. 1. FY 2012 Board Appointee Resolution -General Manager Combined Results Review Comments Regular Board Mtg. May 22,2012 Page 13 of 18 Self-Evaluation General Manager J. Peter Lark, requested a closed session for the purpose of receiving his contractual year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Ward, seconded by Commissioner McCloud to go into closed session. Action: Carried unanimously. The Human Resource Committee meeting went in to closed session at 4:05 p.m. Motion by Commissioner Zerkle, seconded by Commissioner McCloud that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 4:51 p.m. and immediately went back into closed session at 4:52. Motion by Commissioner Ward, seconded by Commissioner McCloud that the Human Resource Committee return to closed session. Action: Carried unanimously Motion by Commissioner Zerkle, seconded by Commissioner McCloud that the Human Resource Committee return to open session. Action: Carried unanimously Upon conclusion of the closed session meeting at 5:30 p.m., the Human Resource Committee took the following action: Motion by Commissioner Ward and seconded by Commissioner Zerkle to forward the resolution for the reappointment of Mr. Lark to the Charter position of General Manager for fiscal year 2012-2013 and extend him an employment contract with expiration date of 6/30/17 to the full Board for consideration. Action: Carried unanimously 2. FY 2012 Board Appointee Resolution -Internal Auditor Combined Results Review Comments Self-Evaluation Internal Auditor Phil Perkins requested a closed session for the purpose of receiving his contractual year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Ward, seconded by Commissioner McCloud to go into closed session. Regular Board Mtg. May 22,2012 Page 14 of 18 Action: Carried unanimously. The Human Resource Committee meeting went into closed session at 5:40 p.m. Motion by Commissioner Zerkle, seconded by Commissioner McCloud that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 6:00 p.m. Upon conclusion of the closed session, the Human Resource Committee took the following action: Motion by Commissioner Zerkle and seconded by Commissioner Plummer to forward the resolution for the reappointment of Mr. Perkins to the Charter position of Internal Auditor for fiscal year 2012-2013 and extend him an employment contract with expiration date of 6/30/14 to the full Board for consideration. Action: Carried unanimously 3. FY 2012 Board Appointee Resolution - Corporate Secretary Combined Results Review Comments Self-Evaluation Corporate Secretary M. Denise Griffin requested a closed session for the purpose of receiving her contractual year-end performance evaluation as permitted. Motion by Commissioner Plummer, seconded by Commissioner Thomas to go into closed session. Action: Carried unanimously. The Human Resource Committee meeting went into closed session at 6:04 p.m. Motion by Commissioner McCloud, seconded by Commissioner Ward that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 6:44 p.m. Upon conclusion of the closed session, the Human Resource Committee took the following action: Motion by Commissioner Zerkle and seconded by Commissioner McCloud to forward the resolution for the reappointment of Ms. Griffin to the Charter position of Corporate Secretary for fiscal year 2012-2013 and extend her an employment contract with expiration date of 6/30/14 to the full Board for consideration. Action: Motion Carried Regular Board Mtg. May 22,2012 Page 15 of 18 Human Resource Committee Chair Thomas advised Board Chair Zerkle to execute contracts for the Board's three appointed employees with an effective date of July 1, 2012. Adiourn There being no further business, the Human Resource Committee meeting adjourned at 6:45 p.m. Respectfully submitted, Tracy Thomas, Chair Human Resource Committee MANAGER'S RECOMMENDATIONS RESOLUTION#2012-05-01 Fiscal Year 2013 Operating and Capital Budget RESOLVED, that the annual Operating Budget covering Fiscal Year 2013 is hereby approved as presented; and RESOLVED, that the Fiscal Year 2013 Capital Budget is hereby approved as presented; and RESOLVED, that the forecast for capital expenditures for the Fiscal Years 2013-2018 is hereby accepted as presented; and RESOLVED FURTHER, that the Corporate Secretary be directed to make the appropriate filings with the Lansing City Clerk's office and the Mayor's office in accordance with the Lansing City Charter regarding-the above actions. -------------------- Motion by Commissioner Bossenbery, seconded by Commissioner Price to approve the Fiscal Year 2013 Operating and Capital Budget and accept the forecast for capital expenditures for the Fiscal Years 2013-2018 as presented. Action: Carried Unanimously RESOLUTION#2012-05-02 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, 2012. Staff Comments: Staff recommends these amendments to the Rules and Regulations for Electric, Water, Steam and Chilled Water Utility Services. If the Committee of the Whole agrees to these amendments at their meeting on May 8, 2012, they will be presented to the full board for adoption at its regular Board Meeting on May 22, 2012. ---------------------- Regular Board Mtg. May 22,2012 Page 16 of 18 Motion by Commissioner Price, seconded by Commissioner Plummer,to approve the Rules and Regulations for Electric, Water, Steam, and Chilled Water Utility Services to be effective July 1, 2012. Action: Carried Unanimously RESOLUTION#2012-05-03 To Amend the Return on Equity Agreement Between the City of Lansing and the Board of Water and Light WHEREAS, the City of Lansing (the City)provides to the Lansing Board of Water and Light (the Board) use of its streets, alleys, bridges, and other public places without compensation and the Board, as an agency of the City, is exempt from property taxation, and; WHEREAS, since 1972 the Board has contributed to the City an annual amount as a return on equity as payment in lieu of taxes (PILOT) and; WHEREAS, The Board and the City entered into an agreement (Attachment A) on June 30, 1992 for annual payment of a return on equity for ten years commencing on July 1, 1992 in the amount of 4%of net billed retail sales from electric, water, and steam, and; WHEREAS, on December 17th, 2001,the Board and the City modified the agreement by Amendment No. 1 (Attachment B) to extend the terms and other provisions of the agreement for ten more years commencing on July 1, 2002 in the amount of 4%of its revenues from retail and wholesale sales of chilled water, electric, steam, and water utilities, and; WHEREAS, the current agreement terminates on June 30, 2012, and; WHEREAS A PILOT in the amount of 5% is not unusual among municipal utilities in that the American Public Power Association's latest survey of PILOT's throughout the country found the median PILOT for all municipal utilities was 5.2%, and the median PILOT for large municipal utilities like the Board with revenues over$100 million is 6.1%, and; WHEREAS the Board is committed to the City and a modest increase will help the City with increased cost, therefore: RESOLVE that the Board desires to extend its agreement with the City for five years commencing on July 1, 2012, in the amount of 5%of its revenues from retail and wholesale sales of electric, water, steam, and chilled water utilities. As a point of personal privilege Chair Sandra Zerkle made the following statement: The BWL is committed to Lansing and wants to do what's necessary to make Lansing prosper. Our mission statement says we will provide reliable services at affordable rates. This proposal takes into account our responsibility to our customers, and our responsibility to the City of Lansing. Regular Board Mtg. = _- = May 22,2012 Page 17 of 18 As Michigan's largest municipally-owned utility, the BWL is one of 284 public utilities across the U.S. that provides a direct benefit to their communities, including monetary payments. The current 10 year agreement with the City of Lansing, which expires on June 30th, sets an annual payment by the BWL to the City in the amount of 4%of BWL revenue from retail and wholesale sales of electric, water, steam and chilled water utilities. Mayor Virg Bernero is proposing in his FY 2012-13 budget that the City and the BWL increase the PILOT rate from 4% to 5% which could generate an additional$3 million dollars or more for the City in the 2012-13 budget year. Over the last 10 years, including this year's projected payment of more than$12 million dollars, the BWL will have made payments to the City totaling more than$108 million dollars. The BWL Board of Commissioners, in our Committee of the Whole meeting two weeks ago, unanimously approved a resolution to increase the BWL's return on equity payment to the City of Lansing from 4%to 5%. This action was taken after careful analysis of the proposal by BWL staff and Commissioners, which determined that a 5%return on equity is a prudent and fiscally responsible rate that we can afford at this time. I fully support this proposal. Regular Board Mtg. May 22,2012 Page 18 of 18 • Reliable Public Power provider Platinum level Award • RP3 Award • Community Service Award • Tree Line USA Award • 5th Place Award in the International Competition for the Water Tasting General Manager Lark reminded everyone about the 15t S.T.E.P. Program Award ceremony that is being held on Thursday, May 24, 2012, to recognize the 1s'S.T.E.P. students (area and local high school students) who had temporary employment at the Board of Water& Light and completed the program. He also thanked everyone who contributed to the successful Adopt-A-River program on May 5, 2012. COMMISSIONERS'REMARKS Commissioner Marilyn Plummer acknowledged Board of Water& Light's Supervisor of Electrical Distribution, Wayne Lynn for receiving the Boy Scouts "Spirit of Scouting" Service Award to be presented on June 7ch Commissioner Tracy Thomas, also acknowledged Wayne Lynn who was the Master of Ceremony for the 53rd Annual Cotillion Ball. Commissioner Thomas stated that Mr. Lynn was fantastic and represented the Board of Water & Light very well. PUBLIC COMMENTS Joel Wolfe, former Assistant General Manager and Director of Operations for the Board of Water& Light, stated that having worked for the Board of Water& Light's Executive Team for many years he has always felt very proud and continues to be proud of General Manager J. Peter Lark and the Board of Commissioners who are doing a fantastic job. He stated that the community is also very supportive of General Manager Lark and the Board of Commissioners. EXCUSED ABSENCE None ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Plummer the meeting adjourned at 6:50 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes(Electronic)fled with Lansing City Clerk:June 4,2012 Final Approved Minutes(Electronic)fled with the Lansing City Clerk:July 25,2012 y Approved by the Board of Commissioners on 1-24-12 MINUTES OF THE BOARD OF COMMISSIONERS'MEETING !_J LANSING BOARD OF WATER AND LIGHT - May 22, 2012 _7 CV The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Dennis M. Louney,Anthony McCloud, Marilyn Plummer, David Price, Cynthia Ward,Tracy Thomas and Sandra Zerkle. Absent: None The Corporate Secretary declared a quorum present, Commissioner Dennis M. Louney led the Pledge of Allegiance. APPROVAL OF MINUTES Motion by Commissioner Bossenbery seconded by Commissioner Plummer to approve the minutes of the Regular Board Meeting minutes of March 27, 2012. 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. Joel Wolfe, former Assistant General Manager and Director of Operations for the Board of Water& Light stated the following: I am opposed to City of Lansing trying to take more funds from the Board of Water& Light. In the long history of the Board there has always been a desire of many city people to get into the good funds of the Board and he believes that the Board should resist that because the city is already receiving plenty of money. We should be operating for the benefit of the rate payers and keeping the rates low and not trying to make up for the deficits that the City might have. Stan Schuck, UAW 2256 Vice Chair Representative for the City of Lansing, stated the following: I am a lifelong taxpayer and customer of the Board of Water & Light. I have been drinking the Board of Water& Light's water and bathing in it my entire life. I will not drink the Mayor's cool-aid that is made with this water. What the City is asking for is that the Board step up to the community that has supported it forever. With rate hike after rate hike, as a matter of fact not too long ago we put into effect a rate hike to Regular Board Mtg. May 22,2012 Page 2of18 support the Board of Water& Light's legacy for their employees. What we are talking about is the City of Lansing and we are your customers. We are the residents and we do work here and what we are talking about is the ability of the Board of Water& Light to give back to the community that has given to it for so many years. This is a difference to the City and this is not about the employees, this is about the tax payers, your customers and the City's ability to maintain a quality of life here. If we cannot maintain that quality your customers are going to leave,just like the tax payers and that is the cold hard reality of it. Many Cities' across the county are collecting as much as 6%, this Board has enjoyed 4%, which is below the national standard for quite some time and 5.5% is on the low end of the National menu. Please take this into consideration. We are talking about repairing the roads,taking care of the parks and buildings all of which has the Board running water in them. Our sewer bills are tied to how much water we use, there is another revenue stream. The less water used and the less people here, the less revenue and sewage money, less CSO money,the less ability to go green. Please take that into mind and realize that we are not asking for that much. We are only asking for a little bit of help and that is not unreasonable. Ron Byrnes, IBEW Local 352 Business Manager, stated the following: I oppose the additional 1/2% request for the PILOT. The Board of Water& Light has in upward of 30 positions here at the utility that has not been replaced and every job that is vacated is scrutinized to the fullest extent, so we are not exactly flush with money here. We are giving the City a good return in lied of taxes in the tune of$14 Million last year and we are going to increase that another 1%. 5%is a reasonable number and we need to stay the course and stick with the 5%that was passed by the Board's Committee of the Whole. Carol Wood, At-Large City Councilperson, 1018 W. Lapeer, stated the following: I have been before this Board previously,to speak for the employees and issues that affected my residents and constituents within the City of Lansing. I stand before you tonight asking you to reconsider the decision that you made on the 5% return on equity. The Board of Water & Light has been paying for the last 20 years only a 4% return on equity which dates back to 1992. What we are asking is not to use these dollars to hire employees, but what we are asking for with these dollars is that it will help us give the services that make a difference on whether people will reside in the City of Lansing.This affects residents and businesses. When we talk about the probability of the Board of Water & Light, you need those things, you need to have those houses filled, you need to have people coming and deciding to do their business here. But when you look at the reduction in services that we have had for the last several years it has had a true impact on people making decisions to be here. We are not trying to raid the Board of Water & Light funds and we are not trying to put a gun to your head, what we are asking for is something reasonable. Now someone might say why we are here at this ninth hour on Regular Board Mtg. May 22,2012 Page 3 of 18 the ninth day asking you for this. To be perfectly honest, foolish of me, I believed something that I was told by the Administration and that was that this process was going to take place between now and July 15t I did not realize that you would be voting on it this soon, and that we would not have had a better opportunity to sit down and discuss this with you. When we looked at our budget and you look at the amount of employees that have been either laid off or position that have not been filled,just walk out the door and look at the streets and the parks, think about your neighborhood, think about the events that you have or had and think about services that are not there. This will help us fill that gap. I cannot tell you enough about the comments that we heard during the budget process and when we were out talking to people during budget hearings that wanted to see their services that were begging us to make sure that their city succeeded I am here in their capacity, I am here speaking for them. I am here letting you know that not only do you wear the hat of the Commissioners of the Board of Water& Light but you represent those people too. You represent us as a city and I hope that you will consider the additional % % and if you are not able to make that decision tonight then I ask that maybe you think about tabling this until we have had a better chance to sit down and talk to you. Brian Jeffries,At-Large/President Lansing City Council, 3229 Moores River Dr., stated the following: I wanted to go in a different direction than Councilmember Wood did in terms of my view of the return on equity; Not only what it means to the City of Lansing but in the long view what it means. As Councilmember Wood alluded to in some of the research that we did today, we found that this return on equity was increased in 1992 from 3.5%to 4%and again it extended in 2001 for another 10 years at 4%. In our budget deliberations we have talked about this issue and what the national average is and we kind of struggled with that issue. We have been told that the national average runs somewhere around 6%and so the way that I am looking as this and I don't want to intertwine this issue with our budget, it does impact our budget this year, but I want to take a little longer view at it. I am looking at it as any return on investment payment from this organization less than the national average, (less than 6%), 1 believe equates to a payment by this city in terms of subsidizing the operations of the Board of Water& Light. I feel that the base payment should be 6%. You all come to us and tell us that you are an exceptional performer in terms of a municipal utility I agree with that and I buy that, and when we look around the Country, if the average is 6% certainly something exceptional might even be higher than that; but we are not asking for an exceptional return on equity and we are not even asking for the average return on equity, we are asking for something less than the average. I believe it should be 6%and I do not have support on Council for that. Council did approve 5.5%and just as a side bar of what Councilmember Wood was talking about in terms of coming to you, we could not come to you as a Council and talk to you about this issue until after we passed our budget. Council can only speak through its Resolutions and that is what we did last night. So in Regular Board Mtg. May 22,2012 Page 4 of 18 terms of timing that is what gets us here today at such a late hour and that is now the formal position of the Council. One thing that I want to leave you with and this is certainly not a threat, I don't come to your house here to threaten in any way. I am very passionate about this and I just want you to know that in the last two increases the one that occurred in 1992 and the one that occurred in 2001 required Council approval, now we are not being told that is going to happen this year but there is a Resolution actually approving the pay on equity that Council had to pass, my view on this is if we are given an agreement that Council has to approve and if comes back less than 5.5% 1 will be voting no; because I believe what is fair and what is right is 6% at least the National average. 5.5% is reasonable for both sides. I ask that you consider that, I am not sure where this is in your process in terms that it has to be a reconsideration or what, but please consider our plea for the 5.5%, 1 mean I look at it as an issue with our budget, but we have gone 20 years at 4% and as we look down the road we cannot continue to get less than what is what we believe the national average should be,the bench mark for the return on equity that we get from the Board of Water& Light. Jody Washington, 15t Ward City Councilperson, stated the following:This should not have been any surprise that we asked for more money. From my lips to Peter Lark's ears, I told him I was going to ask for 6%. 5.5 % is right within the National average. I believe the responsible thing to do is to give this payment at 5.5%, it is right smack in the middle. I know deals have been made for the 5%, we did not know about that, and that is still below the National average. I have talked to constituents and they are in favor of it. You know the fear of raising rates I am not too concerned about that, I think that we probably can afford it and even in the worst case scenario I believe it would be a shared sacrifice between businesses, residents, non-profits, everybody. ------------------ COMMUNICATIONS There was no communications COMMITTEE REPORTS COMMITTEE OF THE WHOLE April 10, 2012 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, April 10, 2012. Committee Chair Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Marilyn Plummer, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle. Absent: None Regular Board Mtg. May 22,2012 Page 5 of 18 Approval of Minutes Motion by Commissioner Ward, seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of February 14, 2012. Action: Motion Carried Unionization Efforts (Informational Only) General Manager Lark stated that several months ago there was discussion regarding unionization efforts at the Board of Water & Light. These efforts involve the Board of Water& Light's own IBEW 352 Union seeking to unionize approximately 55 technical and clerical employees. General Manager Lark stated that he wanted to inform the Commissioners that there will be a Notice of Elections posted and the election will be held on April 18th. General Manager Lark stated that Management is preparing a letter to affected employees stating that unionization should be considered carefully and that Management is very happy having the employees as non-bargaining, but would also be very happy to have them as bargaining employees. General Manager Lark stated that Management wants to make sure that the employees are fully informed and is urging participation in the election because the outcome is determined by the majority of those who vote. Electric Vehicle Program Update (Information Only) General Manager Lark stated that the Electric Vehicle Program started with the Department of Energy (DOE) Grant for around $750,000, The Board of Water & Light has a number of vehicles on the road as well as a number of charging stations for the vehicles at no cost the Board of Water& Light, due to the DOE grant. The program has been a success for the Board of Water& Light and has garnered much of attention. General Manager Lark stated that he is very proud of the Board's efforts with this program and has lot of people to thank, primarily, Kellee Christensen. General Manager Lark introduced Customer Projects new Manager, Ray Moore. Ray Moore provided the Committee with an update on the Plug-In Vehicle program. Mr. Moore presented the Committee with a PowerPoint presentation that reviewed: o The purpose of the program o Project Goals o Current Projects o Status Update o Vehicles o Charging Station Status o Board of Water& Light Incentives o State Initiatives o Project Timelines o Project Success After a short Q&A period Commissioner Tracy Thomas thanked Ray Moore for his presentation and stated that the Committee has heard this information before from Mr. Regular Board Mtg. May 22,2012 Page 6 of 18 Lark and Kellee Christensen, but it was nice to receive this updated information in this type of format. •PowerPoint Presentation Auaila6le in the Office of the Corporate Secretary' REO Town Update (Informational Only) General Manager Lark provided an update on the REO Town Co-Generation Plant. He stated that the building of the plant is on time and on budget. General Manager Lark also stated the high voltage transmissions lines are up and ready and that the steam lines are close to completion. General Manager Lark stated that a lot of the work on the plant has been done with local vendors, to name a few, Kramer Management, Christman, Ganger and Clark Construction. He said the Board of Water & Light is trying to put as much emphasis as possible on hiring Lansing based companies. Dick Peffley, Executive Director of Water Operations and Special Projects, also provided an update on the building of the Co-Generation Power Plant. He stated there have been no accidents on site and it is his number one mission to make sure no one get hurt. Dick Peffley stated that the budget for this project is $182 Million and all but$37 Million has been committed. He also stated that major concrete work has been completed and that important pieces of equipment, like the combustion turbines will start to come in around the first of June.There will be a logistics person at the site who will be coordinating truck trafficking. The exterior renovation of the Depot is 90% complete and the interior renovation bids are out. Once the Depot has been completed the plan is to use it as a training facility for future REO Town plant operating staff. There was brief dialogue regarding the training of employees to work at the REO Town Co-Generation Plant. Additional Information and Updates provided by General Manager Lark General Manager Lark presented the Commissioners with an informational flyer on the REO Town commemorative Brick Promotion that will support Board of Water& Light's "Pennies for Power" program. With a donation of$50.00 you can buy a personalized commemorative brick that will be placed the entrance of the Depot. General Manager Lark stated that Susan Devon, Assistant General Manager and Chief Financial Officer and her staff did a wonderful job on the Bond refinancing. It does save us in present value almost$3 Million. General Manager Lark stated that he remembers going to the APPA Conference once and one of the Commissioners questioned him about the Board of Water & Light receiving awards. The Board of Water & Light just received notice from the APPA that Regular Board Mtg. May 22,2012 Page 7 of 18 we will be the recipient of the APPA Community Service Award. General Manager Lark thanked Teece Aronin, Board of Water & Light Communications Representative for spearheading the Board of Water & Light receiving this award. The Award will be presented on June 19th at the APPA National Conference. Other Commissioner Bossenbery spoke about the Peregrine Falcon nest atop the Eckert Station story that was recently in the Lansing State Journal. Commissioner Thomas congratulated Michael Flowers on being appointed a board member of the Ingham Intermediate School District, Excused Absence None Adiourn On Motion by Commissioner Price, seconded by Commissioner Ward, the meeting adjourned at 6:15 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole COMMITTEE OF THE WHOLE May 8, 2012 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, May 8, 2012. Committee Chair Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Marilyn Plummer, David Price, Cynthia Ward and Sandra Zerkle. Absent: Commissioners Anthony McCloud and Tracy Thomas Public Comments There was no Public Comments Approval of Minutes Motion by Commissioner Ward, seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of April 10, 2012. Action: Motion Carried Third Party(Informational Only) Regular Board Mtg. May 22,2012 Page 8 of 18 General Manager Lark stated that in addition to sales to our native customers the Board of Water & Light sells excess power to other entities or the MISO market and this is what is called Third Party Sales. Reflected in this year's budget is the effect of the substantial drop off of Third Party sales. The is because natural gas prices are so low and that sets the price of electricity on the MISO market so we are not making money there; however George Stojic, Executive Director of Strategic Planning, is in charge of locking in natural gas for us for the REO Town Plant. General Manager Lark stated that using REO town to hedge Third Party sales confirms the Board's wise decision in building the REO Town Plant. Mr. Stojic explained changes that have occurred in wholesale electric markets over the past several years that have caused the BWL's third party sales to decline. The causes include: (a) a decline in demand, especially manufacturing demand, (b) a fall in natural gas prices, which have caused wholesale market prices to decline, and (c) an increase in the delivered cost of coal, which has caused BWL operating costs to rise. The combination of falling wholesale market prices and rising fuel costs has resulted in lower third party sales. Rules and Regulations Electric s Water 9 Steam ♦ Chilled Water o Electric Fees & Charges + Water Fees & Charges George Stojic, Executive Director of Strategic Planning, reviewed the proposed changes to the Board's rules and regulations. He noted that there were no significant changes to the rules and regulations, but that some of the electric and water fees and charges were increased. Fees and charges are reviewed each year and adjusted to reflect changes in costs incurred by the Board for extending distribution facilities to customers. No increases to fees and charges for steam and chilled water were proposed this year. General Manager Lark asks that the Committee forward the resolution approving the Rules and Regulations for Electric, Water, Steam and Chilled Water Utility Services with the updated schedules to be effective July 1, 2012 to the full Board for approval. Motion by Commissioner Price, seconded by Commissioner Plummer to forward the resolution for the Rules and Regulations to full Board for consideration. Action: Motion Carried Energy Optimization and Renewable Annual Update General Manager Lark stated that the State of Michigan Public Service Commission (MPSC) requires the Board of Water& Light to provide the Governing Board an annual update on their Renewable Energy Plans. The Renewable Energy Plan Update is also reviewed by the PSC. Sue Warren, Manager of Marketing and Business Strategies, stated that PA 295 was passed in October of 2008. Legislation requires the Board be updated on Renewable Energy Program and an Energy Optimization Program, as well as file annual reports with Regular Board Mtg. May 22,2012 Page 9 of 18 the MPSC which are due May 31, 2012. The Board of Water & Light is also required to give customers an annual summary, which will be reported in the July edition of the Board of Water & Light's Connections Newsletter. Ms. Warren reviewed the 2011 Energy Optimization Programs, Residential Programs and Business Programs as well as an Energy Optimization Summary. Ms. Warren stated that the Board of Water& Light is meeting goals for both Renewable Energy and Energy Optimization and they continue to look for and evaluate Renewable Energy options. Chair Zerkle requested that Ms. Warren provide this update at a Regular Board of Commissioners meeting as well as to the Lansing City Council. PILOT General Manager Lark stated that the Payment in Lieu of Taxes (PILOT) is currently at 4% and in the City of Lansing's proposed budget there was a 5% PILOT suggested. General Manager Lark stated that he has prepared a resolution providing for a 5% PILOT with the idea in mind that this percentage is where the Board wants to be and that it is reasonable. PILOT payments are made in late June. General Manager Lark stated that we may need a rate increase to cover this PILOT increase at some point, but that will be determined annually following analysis of each year's Revenues and Expenses. After a lengthy discussion regarding the PILOT and the possibility of a rate increase (due to the increase of the PILOT percentage) General Manager Lark respectfully asked that the Committee forward the Resolution to the full Board for consideration. Motion by Commissioner Price, seconded by Commissioner Plummer to forward the proposed resolution to the full Board for consideration. Action: Carried Unanimously Additional Information and Updates provided by General Manager Lark • A copy of the "Building Tradesman" newspaper featuring two articles regarding the REO Town Co-generation Plant. • The last steel beam to go up at the new Plant will be painted white and brought over to the Haco Dr. loading dock area on May 22, 2012 to allow people (employees and Commissioners) to sign their names to it. Also there will be a "Topping Off" Ceremony at the new REO Plant building on May 29, 2012 to place the last beam up. • A Successful Board of Water & Light Adopt-A-River event. • Tickets for the 17th Annual Board of Water& Light Chili Cook-off are going on sale. Regular Board Mtg. May 22,2012 Page 10 of 18 • The Board of Water& Light and Consumers Energy are working out a Mutual Aide agreement to support each other with crew assistance during big storms. Other Marilyn Plummer stated on behalf of the Juneteenth Committee she would like to invite everyone to the 19th Annual Juneteenth events to celebrate the historical significance of the oldest African American Holiday which celebrates the end of slavery in the United States. This year's opening Master of Ceremony is Mr. J. Peter Lark. The event will kick off on June 14, 2011 in downtown Lansing at City Hall. Excused Absence Motion by Commissioner Louney seconded by Commissioner Ward to excuse Commissioners McCloud and Thomas from tonight's meeting. Adiourn On Motion by Commissioner Price, seconded by Commissioner Ward, the meeting adjourned at 6:35 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE May 8, 2012 The Finance Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 6:46 p.m. on Tuesday, May 8, 2012. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Marilyn Plummer and David Price. Alternate Committee member Sandra Zerkle was present. Also present Board member Cynthia Ward. Absent: None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Plummer, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of February 14, 2012, Action: Carried unanimously. Regular Board Mtg. May 22,2012 Page 11 of 18 FY 2013 Budget Resolution General Manager J. Peter Lark provided an overview of the proposed financial plan for fiscal year (FY) 2013 for the Lansing Board of Water and Light (BWL). The total proposed budget for FY 2013 is $369.7 million, of which operations and maintenance comprise $262 million and capital budget is approximately $107.7 million. $46.8 million of the Fiscal Year 2013 capital budget is to provide for on-going services to our utility customers and to sustain our plant facilities for future operations. The remaining $60.9 million will support construction of the Reo Town Plant. Capital expenditures for Fiscal year 2013-2018 are estimated to be $367 million. SALES FORECAST Utility FY13 Forecast FY12 Budget %'13 Forecast To'12 Budget Electric—Retail(MWh) 2,248,434 2,248,434 0.0% Electric-Wholesale(MWh) 250,353 1,114,635 -74.8% Electric(MWh) 2,528,786 3,363,069 -24.8% Water(ccf) 9,458,641 9,223,158 2.6% Steam (Mlb) 698,275 743,000 -6.0% Chilled Water(tnhrs) 10,038,000 10,739,126 -6.5% Electric: -Retail sales volumes by customer class are expected to remain at the same level as FY 2012. -Wholesale sales volumes are expected to decrease as a result of unfavorable market conditions. Water: -Retail sales volume expectations are consistent with FY 2012. Wholesale sales volumes increased due to expanded consumption for Delta Township. Steam: Steam sales volumes expectations have been reduced to better represent actual sales volumes experienced in recent years. Chilled Water: -Chilled water sales volume decreased due to better projections of Accident Fund usage and improved metering and operations. General Manager also Lark reviewed the FY 2013 Income Statement and Cash Flow (by Utility) as well as the Financial Projections. *The Financial Plan PowerPoint presentation is included in the Finance Committee Mtg.Packet and is available for viewing in the Office of the Corp*Sec.* General Manager Lark asked that the resolution for the FY 2013 Operating and Capital Budget be forwarded to the full Board for Consideration. After a lengthy discussion regarding the impact of the PILOT increase on the budget and the possibility of rate increases the following motion was made: Motion by Commissioner Price, seconded by Commissioner Louney to forward the proposed resolution for the FY 2013 Operating and Capital Budget to the Board for consideration. Regular Board Mtg. May 22,2012 Page 12 of 18 Finance Committee Chair Bossenbery stated that the contract for Charles Moore will be renewed at the request of Internal Auditor Phil Perkins. Also last week the External Peer Review took place with Internal Auditor Phil Perkins and he will provide an update at the next Finance Committee meeting. Also the proposed budgets for the Board of Commissioners, Internal Auditor and Corporate Secretary are all in included in the total budget that was presented today and that everyone should have received individual budget proposals for the areas mentioned above through email. Excused Absence None Other None Adiourn On Motion by Commissioner Louney, seconded by Commissioner Plummer the meeting adjourned at 7:05 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee HUMAN RESOURCE COMMITTEE May 15, 2012 The Human Resource Committee of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at 4:00 p.m. on Tuesday, May 15, 2012. Human Resource Committee Chairperson Tracy Thomas called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Tracy Thomas, Anthony McCloud, Cynthia Ward and Sandra Zerkle. Also present were Alternate Committee member Marilyn Plummer and Board member David Price. Absent: None. Public Comments There were no public comments. Approval of Minutes Motion by Commissioner McCloud, seconded by Commissioner Ward to approve the Human Resource Committee meeting minutes of March 22, 2012. Action: Carried unanimously. 1. FY 2012 Board Appointee Resolution -General Manager Combined Results Review Comments Regular Board Mtg. May 22,2012 Page 13 of 18 Self-Evaluation General Manager J. Peter Lark, requested a closed session for the purpose of receiving his contractual year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Ward, seconded by Commissioner McCloud to go into closed session. Action: Carried unanimously. The Human Resource Committee meeting went in to closed session at 4:05 p.m. Motion by Commissioner Zerkle, seconded by Commissioner McCloud that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 4:51 p.m. and immediately went back into closed session at 4:52. Motion by Commissioner Ward, seconded by Commissioner McCloud that the Human Resource Committee return to closed session. Action: Carried unanimously Motion by Commissioner Zerkle, seconded by Commissioner McCloud that the Human Resource Committee return to open session. Action: Carried unanimously Upon conclusion of the closed session meeting at 5:30 p.m., the Human Resource Committee took the following action: Motion by Commissioner Ward and seconded by Commissioner Zerkle to forward the resolution for the reappointment of Mr. Lark to the Charter position of General Manager for fiscal year 2012-2013 and extend him an employment contract with expiration date of 6/30/17 to the full Board for consideration. Action: Carried unanimously 2. FY 2012 Board Appointee Resolution - Internal Auditor Combined Results Review Comments Self-Evaluation Internal Auditor Phil Perkins requested a closed session for the purpose of receiving his contractual year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Ward, seconded by Commissioner McCloud to go into closed session. Regular Board Mtg. May 22,2012 Page 14 of 18 Action: Carried unanimously. The Human Resource Committee meeting went into closed session at 5:40 p.m. Motion by Commissioner Zerkle, seconded by Commissioner McCloud that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 6:00 p.m. Upon conclusion of the closed session, the Human Resource Committee took the following action: Motion by Commissioner Zerkle and seconded by Commissioner Plummer to forward the resolution for the reappointment of Mr. Perkins to the Charter position of Internal Auditor for fiscal year 2012-2013 and extend him an employment contract with expiration date of 6/30/14 to the full Board for consideration. Action: Carried unanimously 3. FY 2012 Board Appointee Resolution - Corporate Secretary Combined Results Review Comments Self-Evaluation Corporate Secretary M. Denise Griffin requested a closed session for the purpose of receiving her contractual year-end performance evaluation as permitted. Motion by Commissioner Plummer, seconded by Commissioner Thomas to go into closed session. Action: Carried unanimously. The Human Resource Committee meeting went into closed session at 6:04 p.m. Motion by Commissioner McCloud, seconded by Commissioner Ward that the Human Resource Committee return to open session. Action: Carried unanimously The Human Resource Committee meeting reconvened in open session at 6:44 p.m. Upon conclusion of the closed session, the Human Resource Committee took the following action: Motion by Commissioner Zerkle and seconded by Commissioner McCloud to forward the resolution for the reappointment of Ms. Griffin to the Charter position of Corporate Secretary for fiscal year 2012-2013 and extend her an employment contract with expiration date of 6/30/14 to the full Board for consideration. Action: Motion Carried Regular Board Mtg. May 22,2012 Page 15 of 18 Human Resource Committee Chair Thomas advised Board Chair Zerkle to execute contracts for the Board's three appointed employees with an effective date of July 1, 2012. Adiourn There being no further business, the Human Resource Committee meeting adjourned at 6:45 p.m. Respectfully submitted, Tracy Thomas, Chair Human Resource Committee MANAGER'S RECOMMENDATIONS RESOLUTION #2012-05-01 Fiscal Year 2013 Operating and Capital Budget RESOLVED, that the annual Operating Budget covering Fiscal Year 2013 is hereby approved as presented; and RESOLVED, that the Fiscal Year 2013 Capital Budget is hereby approved as presented; and RESOLVED, that the forecast for capital expenditures for the Fiscal Years 2013-2018 is hereby accepted as presented; and RESOLVED FURTHER, that the Corporate Secretary be directed to make the appropriate filings with the Lansing City Clerk's office and the Mayor's office in accordance with the Lansing City Charter regarding the above actions. -------------------- Motion by Commissioner Bossenbery, seconded by Commissioner Price to approve the Fiscal Year 2013 Operating and Capital Budget and accept the forecast for capital expenditures for the Fiscal Years 2013-2018 as presented. Action: Carried Unanimously RESOLUTION#2612-05-02 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, 2012. Staff Comments: Staff recommends these amendments to the Rules and Regulations for Electric, Water, Steam and Chilled Water Utility Services. If the Committee of the Whole agrees to these amendments at their meeting on May 8, 2012, they will be presented to the full board for adoption at its regular Board Meeting on May 22, 2012. ---------------------- Regular Board Mtg. May 22,2012 Page 16 of 18 Motion by Commissioner Price, seconded by Commissioner Plummer, to approve the Rules and Regulations for Electric, Water, Steam, and Chilled Water Utility Services to be effective July 1, 2012. Action: Carried Unanimously RESOLUTION#2012-0.5-03 To Amend the Return on Equity Agreement Between the City of Lansing and the Board of Water and Light WHEREAS, the City of Lansing (the City)provides to the Lansing Board of Water and Light (the Board) use of its streets, alleys, bridges, and other public places without compensation and the Board, as an agency of the City, is exempt from property taxation, and; WHEREAS, since 1972 the Board has contributed to the City an annual amount as a return on equity as payment in lieu of taxes (PILOT) and; WHEREAS, The Board and the City entered into an agreement (Attachment A) on June 30, 1992 for annual payment of a return on equity for ten years commencing on July 1, 1992 in the amount of 4%%of net billed retail sales from electric, water, and steam, and; WHEREAS, on December 17th, 2001, the Board and the City modified the agreement by Amendment No. 1 (Attachment B) to extend the terms and other provisions of the agreement for ten more years commencing on July 1, 2002 in the amount of 4% of its revenues from retail and wholesale sales of chilled water, electric, steam, and water utilities, and; WHEREAS, the current agreement terminates on June 30, 2012, and; WHEREAS A PILOT in the amount of 5% is not unusual among municipal utilities in that the American Public Power Association's latest survey of PILOT's throughout the country found the median PILOT for all municipal utilities was 5.2%, and the median PILOT for large municipal utilities like the Board with revenues over$100 million is 6.1%, and; WHEREAS the Board is committed to the City and a modest increase will help the City with increased cost, therefore: RESOLVE that the Board desires to extend its agreement with the City for five years commencing on July 1, 2012, in the amount of 5% of its revenues from retail and wholesale sales of electric, water, steam, and chilled water utilities. As a point of personal privilege Chair Sandra Zerkle made the following statement: The BWL is committed to Lansing and wants to do what's necessary to make Lansing prosper. Our mission statement says we will provide reliable services at affordable rates. This proposal takes into account our responsibility to our customers, and our responsibility to the City of Lansing. Regular Board Mtg. May 22,2012 Page 17 of 18 As Michigan's largest municipally-owned utility, the BWL is one of 284 public utilities across the U.S, that provides a direct benefit to their communities, including monetary payments. The current 10 year agreement with the City of Lansing, which expires on June 30th, sets an annual payment by the BWL to the City in the amount of 4%of BWL revenue from retail and wholesale sales of electric, water, steam and chilled water utilities. Mayor Virg Bernero is proposing in his FY 2012-13 budget that the City and the BWL increase the PILOT rate from 4°o to 55vo, which could generate an additional$3 million dollars or more for the City in the 2012-13 budget year. Over the last 10 years, including this year's projected payment of more than$12 million dollars, the BWL will have made payments to the City totaling more than $108 million dollars. The BWL Board of Commissioners, in our Committee of the Whole meeting two weeks ago, unanimously approved a resolution to increase the BWL's return on equity payment to the City of Lansing from 4%to 5%. This action was taken after careful analysis of the proposal by BWL staff and Commissioners, which determined that a 5%return on equity is a prudent and fiscally responsible rate that we can afford at this time. i fully support this proposal. Regular Board Mtg. May 22,2012 Page 18 of 18 • Reliable Public Power provider Platinum level Award • RP3 Award • Community Service Award • Tree Line USA Award • 5th Place Award in the International Competition for the Water Tasting General Manager Lark reminded everyone about the 15t S.T.E.P. Program Award ceremony that is being held on Thursday, May 24, 2012, to recognize the 15t S.T.E.P. students (area and local high school students) who had temporary employment at the Board of Water & Light and completed the program. He also thanked everyone who contributed to the successful Adopt-A-River program on May 5, 2012. COMMISSIONERS' REMARKS Commissioner Marilyn Plummer acknowledged Board of Water& Light's Supervisor of Electrical Distribution, Wayne Lynn for receiving the Boy Scouts "Spirit of Scouting" Service Award to be presented on June 7tn Commissioner Tracy Thomas, also acknowledged Wayne Lynn who was the Master of Ceremony for the 53rd Annual Cotillion Ball. Commissioner Thomas stated that Mr. Lynn was fantastic and represented the Board of Water & Light very well. PUBLIC COMMENTS Joel Wolfe, former Assistant General Manager and Director of Operations for the Board of Water& Light, stated that having worked for the Board of Water& Light's Executive Team for many years he has always felt very proud and continues to be proud of General Manager J. Peter Lark and the Board of Commissioners who are doing a fantastic job. He stated that the community is also very supportive of General Manager Lark and the Board of Commissioners. EXCUSED ABSENCE None ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Plummer the meeting adjourned at 6:50 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes(Electronic)filed with Lansing Cily Clerk:June 4,2012 Final Approved Minules(Electronic)fled with the Lansing City Clerk:July 25,2012 . ' ` mERLIMINAR Y NNU TES To be~p°ud by^.Board*Commissioners��22-/2 MINUTES OF THE BOARD OF COMMISSIONERS' MEETING u� LAN3|NG BOARD OF WATER AND LIGHT March 27' 201 � ! c� The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zorkle called the meeting ho order od5:3Op.m. Present: Commissioners MorgoedBosoenbery. Dennis M. Louney.Anthony McCloud, Marilyn Plummer, David Price, Cynthia Ward, Tracy Thomas and Sandra Zerkle. Absent: Commissioner Tracy Thomas. The Corporate Secretary declared a quorum present. Commissioner Marilyn P|ummer led the Pledge nfAllegiance. APPROVAL OFMINUTES Motion by Commissioner Price seconded by Commissioner Louney to approve the minutes of the Regular Board Meeting minutes n[January 24' 2012. 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 DOSO IMMEDIATELY PRIOR TOADJOURNMENT. There was no Public Comment, --------- COMMUN|CAT|ONS . - ' G. Letter submitted by James Chiodini of White, Schneider,Young & Chiodini to LBWL management regarding health care costs toretirees. Received and Place onFile COMMITTEE REPORTS COMMITTEE OF THE WHOLE February 14, 2Oi2 The Committee of the Whole of the Lansing Board of Water and Light met at the Executive Offices, Lansing beginning at510p.m.onTuesday, February 14. 2012. Regular Board Mtg. March 27,2012 Page 2 of 8 Committee Chair Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M.Louney, Marilyn Plummer, Cynthia Ward and Sandra Zerkle, Absent: Commissioners Anthony McCloud,Tracy Thomas and David Price Public Comments There was no Public Comments Approval of Minutes Motion by Commissioner Ward, seconded by Commissioner Bossenbery to approve the Committee of the Whole meeting minutes of January 10, 2012, Action: Motion Carried REO Town Update(Informational Only) General Manager Lark stated that the REO Town project is on time and on budget and beginning at approximately 5:30 a.m.on February 15, 2012, 1,300 cubic yards of concrete will be poured at the REO site.The concrete will serve as the ground floor of the facility for Board of Water&Light's combined cycle, cogeneration,plant. Also on February 17,2012 the tiles for the Depot roof will begin to be placed on the facility. On Monday the 191h the first steel girder will go up at 10:00 a.m, Wise Road Plant Update(Information Only) General Manager Lark stated that his Administration has heard,from FTC&H Consultants and the Board's own experts regarding damages to the Wise Road Water Plant. The damages will be paid for by FM Global, the Board of Water & Light's insurance carrier, less a $500,000 deductible. The estimated date for completion of repairs in the Wise Road facility is March 2014. There will be a lawsuit by FM Global against the chlorine carrier and preliminary discussions indicate that FM Global will be pursing at that time the Board of Water&Light's claim for recovery of its deductible. Lead Pipe Replacement and CSO Update(Informational Orly) General Manager Lark stated that lead pipe replacement is on schedule and is estimated to be completed in 2016.All high risk customer services have been completed. Regarding the Combined Sewer Overflow(CSO),there is one CSO project slated for this year and none next year; however the budget does call for a ramping up beginning in 2015, Additional Information and Updates provided by General Manager Lark • An.ADDY Award was presentedeto graphic artist Chris.VanWyck,for his work on the Board of Water&Light's 2011 Chili Cook-Off Poster. • The Board of Water&Light will be receiving the RP3 Reliable Power Award at the Platinum level, This award is presented by the American Public Power Association (APPA)and is in recognition of providing customers with the highest level of reliability. • A letter of appreciation to General Manager Lark from Jamie Zimmer of Central United Methodist Church for prompt assistance with their heating and cooling system issues. General Manager Lark thanked Dick Peffley, Executive Director of Operations and Special Projects,for his assistance with this matter, Regular Board Mtg. March 27,2012 Page 3 of 8 • In honor of Black History month the Board of Water&Light and its Inclusion, Equity and Diversity Council will be hosting a trip to the Charles H.Wright Museum of African American History on Saturday, February 25, 2012 from 8:00 a.m.to 4:30 p.m.The museum is located at 315 Warren Avenue in Detroit. Everyone is invited to attend. • On February 29, 2012 there will be a"Celebrate Differences in the Work Place"panel discussion. This discussion will be moderated by General Manager Lark and closing remarks will be provided by Mr. Ronnie Byrnes, Business Manager of Local 352, • General Manager Lark announced that it is hoped that Diversity Training for all Board of Water& Light employees will be completed by the end of this fiscal year. • General Manager Lark announced that Mark Nixon, Communications Director,will be retiring on March 16,2012 and that Stephen Serkaian has been.retained on contract in the Communications Department, Other Chair Zerkle thanked General Manager Lark and his Administration for their work with the Central United Methodist Church. Vice Chair Louney thank General Manager Lark and his Administration for all of their hard work. Absence Motion by Commissioner Zerkle seconded by Commissioner Plummer to excuse Commissioners Anthony McCloud,David Price and Tracy Thomas from tonight's meeting. Action: Carried Unanimous Adiourn On Motion by Commissioner Ward, seconded by Commissioner Plummer, the meeting adjourned at 5:39 p.m. Respectfully Submitted Dennis M.Louney, Chair Comn•,i4ce of the Whole FINANCE COMMITTEE February 14,2012 The Finance Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 5:40 p.m.on Tuesday, February 14, 2012. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Secretary to call the roll. - Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Marilyn Plummer.Alternate Committee member Sandra Zerkle was present. Also present was Board member Cynthia Ward. Absent: Commissioner David Price Public Comments There were no public comments. Regular Board Mtg. March 27,2012 Page 4 of 8 Approval of Minutes Motion by Commissioner Plummer,seconded by Commissioner Louney to approve the Finance Committee meeting minutes of January 10, 2012. Action: Carried unanimously. Quarterly Financial Update General Manager Lark provided a quarterly financial update that included information relative to Fiscal Year to date of December 31, 2011 for Electric,Water, Steam and Chilled Water services. (Combined Utility Financial Report is included in the Finance Committee packet of 2-14-2012 and is available for viewing in the Office of the Corporate Secretary.) ActUal v. Budgeter;; Variance Ir-I t:l;i"lE'C! Utl-I!iy Net Income Fiscal Year to Date L•, : :i-iber 31, 2011 Cor:iparec-1 to F' )2 BL)dget Budgeted Net ln,-ome 1t.275 charv3es in op—ting In com?: Rewntc.<'1'-.111-(net off- I) Relai!Elrc tnc (527) Vr hotasale Electric (6,35G) Vdater Silas (171) Steam Saws (56) Chill.=.d S:alas (15) De pre iation 1,039 Labor<Mate,ml,and Other 5,09i other .. - f91 `;ul+tolal Changes in Opa-u.n•I Irr_at,e (4) Changes in Other Income: In4>mat Ean,ings 1.250 Other li icome 305 Reduced PILOT 453 All Other-Nan-Operaling Varilnce=_ 143 "..... Subtotal Changes in 1n1;r'.mome 2,151 ACtUal Net Income 13.422 Internal Audit Status Update Internal Auditor Phil Perkins presented a brief overview of: • FY2012—Audit Plan Progress — Procurement—Complete,Final Report Issued — Payroll—Complete, Final Report Issued — Capital Assets—in progress, 25%complete — Billing—in progress,25%complete — Surprise Cash Count#1 —Complete Remaining FY 2012 Activities — Complete Billing &Capital Assets Audits — Surprise Cash Count#2 — IT Preliminary Risk Assessment/Planning for future IT Audits — E;xternal Peer Review(tentatively scheduled for April 30—May 4, 2012) — Annual Audit Planning&Risk Assessment for FY 2012 Excused Absence Regular Board Mig. March 27,2012 Page 5 of 8 Motion by Commissioner Louney seconded by Commissioner Plummer to excuse Commissioner David Price from tonight's meeting. Action: Carried Unanimous Other None Adjourn On Motion by Commissioner Louney,seconded by Commissioner Plummer the meeting adjourned at 5:53 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee HUMAN RESOURCE COMMITTEE March 22,2012 The Human Resource Committee of the Lansing Board of Water and Light met at the Board of Water & Light's Board Room, 1233 Haco Dr., Lansing, MI,at 4:00 p,m.on Thursday, March 22,2012. Human Resource Committee Chairperson Tracy Thomas called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Tracy Thomas,Anthony McCloud,Cynthia Ward and Sandra Zerkle. Alternate Committee members present: Commissioners Dennis M. Louney and Marilyn Plummer.Also present were Board members Margaret Bossenbery and David Price, Absent: None Public Comments Ron Byrnes, Business Manager of Local 352 stated his concerns regarding consolidation of services between the City of Lansing and the Board of Water&Light. 'rte questioned how the word consolidation was being defined. Mr. Byrnes stated that the City Charter supports the Board as being an autonomous and self- governing agency and asked that the Board of Commissioners please take that information into consideration. Joe Graves of 3114 S. Deerfield Ave., Lansing,stated that he served two terms on the Board of Water& Light Board of Commissioners and that he served on the Charter Commission that wrote the current operating Charter. He stated concerns about the consolidation of the Board of Water&Light and City of Lansing and that the Charter is very clear about the authority ad autonomy of the Board of Water&Light. He said during deliberations while establishing the current tha'rter it was recognized that is was imperative that the independence of the Board be maintained and that.the,Board be isolated from any political considerations and political involvements. Approval of Minutes Motion by Commissioner Zerkle,seconded by Commissioner Ward to approve the Human Resource Committee meeting minutes of March 22, 2012. Action: Carried unanimously. Regular Board Mig. March 27,2012 Page 6 of 8 Health Care(Information Only) General Manager Lark stated that at the last two Committee of the Whole(COW)meetings there had been discussion regarding health care and that he would give his recommendation. He stated that the decision regarding this matter needs to be made by June 3011,which is the end of the Fiscal Year. He will be bringing this matter to the attention of the Committee of the V\1hole at its May,2012 meeting. General Manager Lark stated that there are three options pertaining to Public Act 152 of 2011. 1) The hard cap,which means we limit the expenditures to a certain amount, 2) 20% Premium Co-Pay, instead of the current 5%premium co-pay and that requires a majority vote. 3) 2/3 vote for any other percentage less than 20%. General Manager Lark spoke about Principles of Gradualism. He said that he would recommend a 10% Co- Pay. He said that if the Board follows this recommendation it will have to be evaluated every year.A 10% increase would be a$34.00 per pay period increase for employees, After a lengthy conversation Board Chair Sandra Zerkle and Human Resource Chair Tracy Thomas stated for the record that they would not support the hard cap and that 10% is their preference. General Manager Lark stated that bargaining employees would not be affected immediately because the statute specifically preempts them during the pendency of their contract,which goes through the end of October.They will be,affected after November I Consolidation (Information Only General Manager Lark stated that there has been discussion about consolidation between the City of Lansing and Board of Water&Light. Because this issue has come up recently he would like to share some of the things that the Board has done in cooperation with the City. General Manager Lark stated that working cooperatively with the City of Lansing is a very good thing to do and plans to continue with these efforts.He stated that he alvvays looks to two things when deciding whether to work cooperatively. The first question that he asks-himself is-Is there a savings to the Board of Water& Light and the City of Lansing? Meaning is there a cost reduc:tion.or revenue enhancement. Is there something good in it for the Board of Water&Light? The second question is- Will it compromise in any way the'D.card of Water&Light's operational integrity General Manager Lark stated the following is a list of cooperatioP agreements that the Board of Water& Light has in place with the City of Lansing: • Equipment arrangement with the City of Lansing • Inspection of Bucket Trucks • Emergency Calls • Dick Peffley, Executive Director of Water Operations and Special Projects, leading the City's effort to build a new garage • The use of Board of Water&Light electricians • Sewer,collections and billings Regular Board Mtg. March 27,2012 Page 7 of 8 General Manager Lark stated that there have been some cow/oFsations with officials from the City of Lansing and the Board of Water&Light is exploring those .vitli an optimistic attitude in the hope that we can get something done that will save the City and the Board of'Alaler&Light money and will not cede operational control. General Manager Lark stated that saving is very important to the,Board of Water&Light at all times, because the lower we can keep our costs the easier it is to maintain our already low rates for our customers. Chair Zerkle stated that she appreciates Mr. Lark's efforts. She said as Commissioners they are all concerned about the integrity of the Board. She asked that Mir. Lark keep the Board informed where necessary as this situation progresses and they will certainly do whatever is needed to support and meet his objectives because they are the Board's objectives too. Human Resource Chair Thomas stated that communication is a big deal and before this meeting there was a lot speculations and this meeting has shed light on some of those things,this meeting also erased some of the questions that are being asked. Finally this meeting also promotes transparency. Other There being no further business, the Human Resource Committee meeting adjourned at 4:52 p.m, Respectfully submitted, Tracy Thomas, Chair Human Resource Committee MANAGER'S RECOMMENDATIONS There were no Manager's Recommendations UNFINISHED BUSIN':SS There was no Unfinished Business NEW BUSINESO There was no New Business RESOLUTI(.1N;" There were no Resolutions for Action. MANAGER'S REMARKS General Manager Lark stated that the Wine and Cheese"Dancing with the Starz" Extravaganza or"Pennies for Power"fundraiser for the Capital Area Community Services avas a tremendous success with$10,000 being raised. General Manager Lark thanked Chair Sandra Z_e.kie who came up with the idea for this event. He also thanked the dancers,the committee and all of the volunteers that helped make this event a success. General Manager Lark stated that recently his Administration issued bonds for the purpose of refunding BWL's 2002A Bonds that are callable on July 1, 2012, The bond sale has already been done and there Regular Board Mtg. March 27,2012 Page 8 of 8 was a$2.7 million net present value savings. General Manager Lark thanked his financial team for all of their hard work. General Manager Lark thanked General Counsel Bra ndie Ekren for her work on the General Motors bankruptcy matter,which resulted in approximately a$2 million recovery. General Manager Lark stated at the request of Chair Zerkle he wrote a letter to Senator Stabenow regarding the FRIB. General Manager Lark stated that the Board of Water&Lighi received a letter from Traverse City Light and Power thanking the Board's crews for their assistance during the March 3, 2012 storm. General Manager Lark spoke about the Diversity field trip was recently taken to the African American Historical Museum. He stated that it was fun and there was an attendance of about 100 people.Also there was a Diversity Panel in which he moderated that included 4 panelists from diverse backgrounds that talked about their life experiences. He said that there has been very good feedback on this tremendous event. He thanked Ron Byrnes for his participation. COMMISSIONERS' RF.114ARKS Chair Zerkle stated that the Wine and Cheese Extravagan:-,..v,,as superb.The dedication of the dancers was wonderful and it was a great effort on behalf of the'Board of Water& Light. Also the Commissioners met the 1st Step students and as always they are excited to be taking part in this program. This is a tremendous program at the Board of Water&Light and I would love to see it expand. Since the 4 year inception of,this program there have been 23 kids hired out of 4 0 in one capacity or another, Commissioner Louney thanked Calvin Jones, Roberto.Hodge, Pat Turner,Jon Ebe and Jan Nelson for their assistance with a tour of the Eckert Station for a local Boy Scout troop. He said the Boy Scouts really enjoyed their tour. PUBLIC COMiVIEi7',�j There was no Public Comment EXCUSED ABSENCE On motion by Commissioner Price,seconded by Commission ler.Plummer to excuse Commissioner Thomas from tonight's meeting. ADJOURNMENT On motion by Commissioner Price, seconded by Cafflinissioner Plummer the meeting adjourned at 6:50 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes fled with Lansing City Clerk:April 5,2012 Approved by the Board o/Commissioners on 3-27-12 MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT January 24, 2012 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Dennis M. Louney,Anthony McCloud, Marilyn Plummer, David Price, Cynthia Ward, Tracy Thomas and Sandra Zerkle. Absent: None. The Corporate Secretary declared a quorum present. Commissioner David Price led the Pledge of Allegiance. APPROVAL OF MINUTES Motion by Commissioner Price seconded by Commissioner Plummer to approve the minutes of the Regular Board Meeting minutes of November 15, 2011. 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. Jim Harkin, no address given, stated that when the Board of Water& Light provided water to the surrounding areas of Lansing, the City's citizens paid a lot of money for the installations of pipelines and pumping stations. And because the citizens of Lansing have already paid so much the water rate increase should be applicable to citizens in the surrounding areas only. ------------------ COMMUNICATIONS a. Letter of appreciation to Commissioner Bossenbery from Douglas M. Johnson for assisting with setting up a tour of the Eckert Station Received and Place on File b. Letter from David A. Cripe of 1138 W. Maple Street, Lansing, regarding billing charges. Regular Board Mtg. January 24,2012 Page 2 of 35 Received and Place on File c. Letter from Retiree Mary Dwyer regarding changes to retirees health care prescription program Received and Place on File d, Communication from Ron Byrnes, Business Manager of Local 352, submitting his written public comments from the January 10, 2012 Committee of the Whole meeting and a copy of the Michigan Early Retiree Reinsurance Program letter Received and Place on File e. Letter submitted by Board of Water& Light Retiree Roger Jeffers from attorneys to LBWL management regarding health care costs to retirees Received and Place on File f. Emails of opposition to the proposed rate increases from Sonya Butler of 410 West Street, Lansing, and Brad Vauter of 1805 Drexel Road, Lansing Received and Place on File • Also received: o A letter from attorneys submitted by Ron Byrnes, Business Manager for IBEW Local 352 regarding post-retirement healthcare benefits. o Email from Ron Byrnes Sr., Chair of Board of Water& Light's Retirees pension and Benefits Committee regarding a request for updated financial information. Received and Place on File COMMITTEE REPORTS COMMITTEE OF THE WHOLE January 10, 2012 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, January 10, 2012. Committee Chair Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney,Anthony McCloud, Marilyn Plummer, Tracy Thomas, David Price, Cynthia Ward and Sandra Zerkle. Absent: None Public Comments Regular Board Mtg. January 24,2012 Page 3 of 35 Ron Byrnes, Business Manager of Local 352 stated his concerns regarding the Publicly Funded Health Insurance Contribution Act(PA 152). He asked the Board consider his comments before moving forward with making any decisions regarding PA 152. (Mr. Byrnes submitted his comments and information on the Michigan Early Retiree Reinsurance Program to be included as part of the official record) Jan Simpson, President of the Board of Water& Light Retiree Association, stated her concerns regarding PA 152. She stated that as a spokesperson for the retirees that it would be appreciated if both Commissioners and Management would be cognizant of the fact that retirees must manage bills on a fixed income and cannot afford health care increases such as higher prescription co-pays and office calls. Max Zemer, Board of Water& Light retiree and former Business Manager of Local 352, stated his concerns regarding the proposed health care changes. Mr. Zemer asked that this matter be tabled until all parties that are involved have a chance to review the proposed changes so that intelligent comments can be made. Roger Jeffers, Board of Water& Light retiree, submitted a letter that was written by attorneys to the Board of Water& Light's management in 2004 regarding health care cost to Board of Water& Light retirees. He asked that the letter be reviewed and stated that the retirees are ready to follow through on options presented in the letter. Rosemary Sullivan, Board of Water& Light retiree, stated concerns about the health care cost changes and how it would affect retirees. Approval of Minutes Motion by Commissioner Bossenbery, seconded by Commissioner Thomas to approve the Committee of the Whole meeting minutes of November 8, 2011. Action: Motion Carried Healthcare Presentation General Manager Lark stated that the health care presentation packet is the same as presented at the November 15, 2011 Human Resource Committee meeting, with one addition on page#10 of the committee packet and that is alternative premium sharing options. General Manager Lark stated that the purpose of his presentation is to initiate discussion regarding Board compliance with Public Act 152. Many of the other changes that he discussed do not require Board approval such as co-pays. The Board of Water& Light must comply with the benefit caps required under PA 152 unless the Board opts out of PA 152 entirely with a 2/3rd vote of its members. Alternatively, with a majority vote, the Board may opt to limit expenditures on health care cost on an 80-20 percentage split. The complete opt out option requires that a 2/3rd vote take place each year. When the Board does make a decision it will be for both bargaining and non- bargaining, however the effective dates will be different due to the union contact. General Manager Lark thanked the retirees for attending the meeting and for all of their comments. Regular Board Mtg. January 24,2012 Page 4 of 35 General Manager Lark stated that he would like to bring the retirees in-line with the rest of the Board of Water& Light employees with respect to deductibles for office visits, emergency room visits and prescription drugs. After a lengthy discussion Chair Zerkle stated that the Board will take all matters into consideration and review all the options. Rate Presentation General Manager Lark presented the Board with rate change information that will be presented at the Public Hearing on January 19, 2012, He reviewed the effect of Water Rates Increases from 1%to 9%. Revenue Customer Cost Board of Water&Light (Mo.) 1% $283,000 $0.24 2% $566,000 $0.49 3% $849,000 $0.73 4% $1,132,000 $0.97 5% $1,415,000 $1.22 6% $1,698,000 $1.46 7% $1,981,000 $1.70 8% $2,264,000 $1.95 9% $2,547,000 $2.19 General Manager Lark provided the Board of Commissioners with a copy of the Board of Water & Light's Rate Making Principles, which was approved by the Board in January 2000. Rate Making Principles 1. Rates shall be established at a level that will enable the Board of Water and Light(BWL)to meet its mission of serving the Greater Lansing area by providing high quality utility services, reliably, at the lowest reasonable cost. 2. The BWL shall recover the costs of serving its customers through its rates. Rates and charges should be sufficient to cover all 0& M expenses, payment to the city, depreciation expense, and a reasonable return on the BWL's capital investment. 3. The return on the BWL's capital investment shall be sufficient to provide cash flow for debt service, bond coverage, and capital improvements. 4. Board of Water& Light rates should reflect as closely as possible the goals and desires of its customers. 5. Those who benefit from the BWL's services should pay for those services. 6. Rates for each class of customer should, as nearly as practicable, reflect the cost of providing service to that class. Regular Board Mtg. January 24,2012 Page 5 of 35 7. Each utility managed by the BWL should be self-supporting. No utility should subsidize any other utility. 8. Rates should be reviewed annually and adjusted as deemed necessary to maintain the financial integrity of the BWL, and minimize the financial impact on our customers. 9. Rates shall be established and implemented according to Lansing City Charter, Section 5- 205, refers to the BWL authority to set just and reasonable rates and defines the public hearing process. General Manager Lark stated that the Board of Water&Light is in the middle of the pact when comparing residential municipal water bills. NERC Compliance Policy Resolution General Manager Lark presented the Board with a resolution for electric reliability standards that is required by the Federal Energy Regulatory Commissioner, the North American Electric Reliability Council and the Reliability First Corporation. General Manager Lark asked that the Board forward the proposed resolution to the full Board for consideration. RESOLUTION WHEREAS, electric reliability is indispensable for economic growth and development and to promote and protect public safety and welfare; WHEREAS, the Energy Policy Act of 2005 directed the Federal Energy Regulatory Commission to adopt mandatory electric reliability standards for all electric utilities in the United States; WHEREAS, the Federal Energy Regulatory Commission has delegated responsibility for developing and implementing national electric reliability standards to the National Electric Reliability Corporation; WHEREAS, the Board is committed to maintaining a highly reliable electric system within its service territory; WHEREAS, the Board is subject to reliability standards developed and implemented by the National Electric Reliability Corporation; BE IT RESOLVED, that the BWL shall develop and implement an electric reliability program that assures compliance with applicable electric reliability standards adopted by the National Electric Reliability Corporation. Motion by Commissioner Price, seconded by Commissioner Ward to forward the NERC Compliance Policy resolution to full Board for consideration. Action: Carried Unanimously Eastwood Town Center Regular Board Mtg. January 24,2012 Page 6 of 35 General Manager Lark provided an update on the Eastwood Town Center. He stated that the Board of Water& Light has entered into an agreement with the Lansing Township Downtown Development Authority to service the facility; however Consumers Energy has advised that despite a contract with the customer,they believe they have a right to serve the Town Center. REO Town Update Susan Devon, Assistant General Manager and Chief Financial Officer updated the Board on the progress of the building of the new co-generation plant. She stated that a lot of working is being done on the Depot and the outside of the Depot building is near completion. She said the project is on time and on budget. Customer Updates General Manager Lark provided updates on the Trimbley and Cripe families who had concerns with work that had been done by the Board of Water& Light. He stated that staff has addressed concerns and issues and all parties are satisfied with solutions. Other General Manager Lark thanked the retirees for attending tonight's meeting and encouraged them to either contact him or the Board of Commissioners with any questions or issues. Absence None Adjourn On Motion by Commissioner Price, seconded by Commissioner Plummer, the meeting adjourned at 6:30 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE January 10, 2012 The Finance Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 6:37 p.m. on Tuesday, January 10, 2012. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Dennis M. Louney, Marilyn Plummer and David Price. Alternate Committee member Sandra Zerkle was present. Also present was Board member Cynthia Ward and Anthony McCloud. Absent: None Public Comments There were no public comments. Regular Board Mtg. January 24,2012 Page 7 of 35 Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of November 8, 2011. Action: Carried unanimously. Refunding 2002 A Bonds Resolution General Manager Lark stated that by refunding the 2002A Series Bond it is an opportunity for a net savings of about$3,000,000. General Manager Lark introduced the Board of Water& Light's Bond Counsel Bill Danhof of Miller Canfield, who was there to answer any questions for the Commissioners. General Manager Lark asked that the Committee forward the Twelfth Supplemental Revenue Bond Resolution to the full Board for consideration. Resolution Lansing Board of Water and Light TWELFTH SUPPLEMENTAL REVENUE BOND RESOLUTION A RESOLUTION TO AUTHORIZE: • Present Value Savings by refunding the Series 2002A Bonds through issuance of up to $23,000,000 of Refunding Bonds; • Sale by Negotiated or Competitive Sale upon advice of Financial Advisor; • Chief Financial Officer to sell Refunding Bonds without further resolution; • Other matters relative to issuance, sale and delivery of the Refunding Bonds. WHEREAS,from time to time the City of Lansing, acting by and through the Lansing Board of Water and Light, has issued revenue bonds payable from revenues of the water supply, steam, chilled water and electric utility system (the "System") under the provisions of Act 94, Public Acts of Michigan, 1933, as amended, and a Bond Resolution adopted by the Board and amended and restated on October 24, 1989 and further amended and supplemented from time to time (the "Bond Resolution"); and WHEREAS, all terms not defined herein shall have the meanings set forth in the Bond Resolution; and WHEREAS, under the terms of the Sixth Supplemental Revenue Bond Resolution adopted July 23, 2002, the Board issued the Water Supply, Steam and Electric Utility System Revenue Bonds, Series 2002A (the "Series 2002A Bonds") for the purpose of financing the cost of remodeling, updating and extending the life of the System, primarily at the Eckert and Erickson Stations (the "Series 2002A Project"); and WHEREAS, the Board's Financial Advisor, Robert W. Baird & Co. Incorporated (the "Financial Advisor'), has advised the Board that it may be able to accomplish a net savings of debt service costs, and thereby reduce the cost to the Board of the Series 2002A Project, by refunding all or a portion of the outstanding Series 2002A Bonds through the issuance of revenue refunding bonds in an aggregate principal amount of not-to-exceed $23,000,000 (the "Refunding Bonds"); and WHEREAS, Section 18(b) of the Bond Resolution authorizes the issuance of Additional Bonds of equal standing and priority of lien with the outstanding Bonds for the purposes of refunding a part of the Outstanding Bonds and paying costs of issuing such Additional Bonds, if after giving effect to the refunding the maximum amount of Aggregate Debt Service in each future Regular Board Mtg. January 24,2012 Page 8 of 35 fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding; and WHEREAS, in order to take advantage of the most favorable market for sale of the Refunding Bonds and purchase of securities to be escrowed for payment of the Series 2002A Bonds to be refunded, the Board wishes to authorize the Chief Financial Officer to sell the Refunding Bonds at negotiated or competitive sale without further resolution of the Board; and WHEREAS, the conditions and requirements of the Bond Resolution for the issuance of Additional Bonds of equal standing and priority of lien with outstanding bonds have been met for the issuance of the proposed Refunding Bonds. NOW, THEREFORE, BE IT RESOLVED THAT: Section 1. Definitions. All terms not defined herein shall have the meanings set forth in the Bond Resolution, and whenever used in this Bond Resolution, except when otherwise indicated by the context, the following terms shall have the following meanings: (a) "Additional Bonds" means any Additional Bonds of equal standing with the Series 2008A Bonds, the Series 2011A Bonds, and the Refunding Bonds which are issued pursuant to Section 18(a) of the Bond Resolution as amended by Section 13 of the Tenth Supplemental Revenue Bond Resolution. (b) "Bond Resolution" means the Bond Resolution adopted by the Board on September 26, 1989, as amended and restated on October 24, 1989 and supplemented by the First Supplemental Revenue Bond Resolution adopted by the Board on October 26, 1993, the Second Supplemental Revenue Bond Resolution adopted by the Board on January 11, 1994, the Third Supplemental Revenue Bond Resolution adopted on September 2, 1999, the Fourth Supplemental Revenue Bond Resolution adopted October 26, 1999 and amended on August 12, 2008 and June 9, 2009, the Fifth Supplemental Bond Resolution adopted by the Board April 24, 2001, the Sixth Supplemental Revenue Bond Resolution adopted by the Board on July 23, 2002, the Seventh Supplemental Bond Resolution adopted by the Board on July 23, 2002, the Eighth Supplemental Revenue Bond Resolution adopted on August 12, 2003, the Ninth Supplemental Revenue Bond Resolution adopted on July 26, 2005, the Tenth Supplemental Revenue Bond Resolution adopted on January 29, 2008, Eleventh Supplemental Revenue Bond Resolution adopted on May 10, 2011, this Twelfth Supplemental Revenue Bond Resolution, and any other resolution which amends or supplements the Bond Resolution. (c) "Bonds" means the Series 2008A Bonds, the Series 2011A Bonds, the Refunding Bonds and any Additional Bonds of equal standing hereafter issued. (d) "Chief Financial Officer' means the Board's Assistant General Manager and Chief Financial Officer. (e) "Refunding Bonds" means the refunding bonds issued pursuant to this Twelfth Supplemental Revenue Bond Resolution to be designated as the "Utility System Revenue Refunding Bonds, Series 2012A" or such other series designation as shall reflect the date of sale or delivery of the Refunding Bonds. (f) "Reserve Requirement" means the Reserve Requirement established by Section 11 of the Tenth Supplemental Revenue Bond Resolution and described in Section 8 herein. (g) "Series 2002A Escrow Agreement" means the Series 2002A Escrow Agreement described in this Resolution to provide for payment of principal of and interest on the Series 2002A Bonds being refunded. (h) "Series 2002A Escrow Fund" means the Series 2002A Escrow Fund established pursuant to the Series 2002A Escrow Agreement to hold the cash and investments Regular Board Mtg. January 24,2012 Page 9 of 35 necessary provide for payment of principal of and interest on the Series 2002A Bonds being refunded. (i) "Series 2002-2005 Bonds" means: the Water Supply, Steam and Electric Utility System Revenue Bonds, Series 2002A, the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2002B, the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A, and the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2005A. Q) "Series 2008A Bonds" means the Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A. (k) "Series 2011A Bonds" means the Utility System Revenue Bonds, Series 2011A. (1) "System" means the complete facilities of the Board for the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, including all plants, works, instrumentalities and properties used or useful in connection with the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, and all additions, extensions and improvements thereto existing or hereafter acquired by the Board. Section 2. Conditions Permitting Issuance of Additional Bonds. Pursuant to Section 18(b) of the Bond Resolution, the Board hereby determines that the Refunding Bonds shall be issued as Additional Bonds for the purpose of refunding all or a portion of the Series 2002A Bonds and paying costs of issuance of the Refunding Bonds, only if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. The Board hereby determines that the Board is not in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund. Section 3. Refunding of Series 2002A Bonds; Refunding Bonds Authorized; Applicable Law, If refunding all or a portion of the Series 2002A Bonds will accomplish a net savings of debt service costs, then in order to pay costs of refunding all or a portion of the Series 2002A Bonds, including the payment of the costs of legal, financial, bond insurance (if any), underwriter's discount, and other expenses incident thereto and incident to the issuance and sale of the Refunding Bonds, the City, acting by and through the Board, shall borrow the sum of not-to- exceed Twenty-Three Million Dollars ($23,000,000) as finally determined upon the sale thereof, and issue the Refunding Bonds therefor. The Refunding Bonds shall be payable solely out of the Net Revenues of the System. City Council shall not be requested to pledge the full faith and credit of the City for payment of the Refunding Bonds. The Refunding Bonds shall be sold and the proceeds applied in accordance with the provisions of Act 94. The remaining period of usefulness of the Series 2002A Project is estimated to be not less than seven (7)years. Section 4. Refunding Bond Details, The Refunding Bonds shall be designated as the "UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 2012A" or such other series designation as determined at the time of sale by the Chief Financial Officer to reflect the date of sale or delivery of the Refunding Bonds. The Refunding Bonds shall be issued as fully registered bonds registered in the denomination of$5,000 or integral multiples thereof and shall be numbered in consecutive order of registration or authentication from 1 upwards. The Refunding Bonds shall be dated as of the date of delivery thereof or such other date as determined at the time of sale of the Refunding Bonds, shall mature as serial bonds or term bonds on such dates as shall be determined at the time of sale of the Refunding Bonds but not-to-exceed seven annual maturities. The Refunding Bonds shall be subject to optional and mandatory redemption prior to maturity at the times and prices finally determined at the time of sale of the Refunding Bonds, or shall not be subject to redemption prior to maturity, as finally determined at the time of sale of the Refunding Bonds Regular Board Mtg. January 24,2012 Page 10 of 35 The Refunding Bonds shall bear interest at a rate or rates to be determined on sale thereof, payable on July 1, 2012, or such other date as provided at the time of sale of the Refunding Bonds, and semi-annually thereafter on January 1st and July 1st of each year. The Refunding Bonds shall be executed by the manual or facsimile signature of the Chairperson and the Corporate Secretary of the Board. No Refunding Bond shall be valid until authenticated by an authorized representative of the Transfer Agent. The Refunding Bonds shall be delivered to the Transfer Agent for authentication and be delivered by the Transfer Agent to the purchaser in accordance with instructions from the Chief Financial Officer upon payment of the purchase price for the Refunding Bonds. Executed blank bonds for registration and issuance to transferees shall be delivered to the Transfer Agent for safekeeping from time to time as necessary. Notwithstanding the foregoing provisions, if the Refunding Bonds are sold through private placement, then the Refunding 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, and authentication by the Transfer Agent shall not be required for any bond signed by the manual signature of either the Chairperson or the Corporate Secretary of the Board. Section 5. Registration and Transfer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as bond registrar, paying agent and transfer agent (the "Transfer Agent") for the Refunding Bonds, The Chief Financial Officer is hereby authorized to execute one or more agreements with the Transfer Agent on behalf of the Board. The Board reserves the right to replace the Transfer Agent at any time, provided written notice of such replacement is given to the registered owners of record of bonds not less than sixty (60) days prior to an interest payment date. Principal of and interest on the Refunding Bonds shall be payable by check or draft mailed by the Transfer Agent to the registered owner at the registered address as shown on the registration books of the Board maintained by the Transfer Agent. Interest shall be payable to the person or entity who or which is the registered owner of record as of the fifteenth (15th) day of the month prior to the payment date for each interest payment. The date of determination of the registered owner for purposes of payment of interest as provided in this paragraph may be changed by the Board to conform to market practice in the future. The Refunding Bonds may be issued in book-entry-only form through The Depository Trust Company in New York, New York ("DTC"), and the Chief Financial Officer is authorized to execute such custodial or other agreement with DTC as may be necessary to accomplish the issuance of the Refunding Bonds in book-entry-only form and to make such changes in the form of the Refunding Bonds within the parameters of this resolution as may be required to accomplish the foregoing. Notwithstanding the foregoing, if the Refunding Bonds are held in book-entry-only form by DTC, payment of principal of and interest on the Refunding Bonds shall be made in the manner prescribed by DTC. The Refunding Bonds may be transferred upon the books required to be kept by the Transfer Agent pursuant to this section by the person or entity in whose name it is registered, in person or by the registered owner's duly authorized attorney, upon surrender of the bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Transfer Agent. Whenever any bond shall be surrendered for transfer, the Board shall execute and the Transfer Agent shall authenticate and deliver a new bond of the same series in like aggregate principal amount, maturity and interest rate. The Transfer Agent shall require the payment by the bondholder requesting the transfer of any tax or other governmental charge required to be paid with respect to the transfer. Notwithstanding the foregoing, if Bonds are held by DTC in book-entry-only form, the transfer of Bonds shall be made in the manner prescribed by DTC. Regular Board Mtg. January 24,2012 Page 11 of 35 Section 6. Deposit to Bond Reserve Account. On or prior to the date of delivery of the Refunding Bonds, the Board shall deposit into the Bond Reserve Account any amount necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. The Board may meet the Reserve Requirement by a letter of credit, a surety bond, or an insurance policy if the provider or issuer thereof shall be rated AAA by Moody's Investors Service and Standard and Poor's Corporation or any successor to either, and the Chief Financial Officer is hereby authorized to execute an agreement with the provider or issuer of the letter of credit, surety bond, or insurance policy. Section 7. Refunding Bond Proceeds. From the proceeds of sale of the Refunding Bonds there first shall be immediately deposited in the Redemption Fund an amount equal to the accrued interest and premium, if any, received on delivery of the Refunding Bonds, and the Board may take credit for the amount so deposited against the amount required to be deposited in the Redemption Fund for payment of the next maturing interest on the Refunding Bonds. Notwithstanding the foregoing, at the discretion of the Chief Financial Officer, all or a portion of any premium received upon delivery of the Refunding Bonds may be deposited in the Bond Reserve Account or the Series 2002A Escrow Fund in consultation with Bond Counsel. There shall next be deposited in the Bond Reserve Account an amount, if any, designated at the time of sale of the Refunding Bonds as necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. There shall next be deposited in the Series 2002A Escrow Fund from the proceeds of sale of the Refunding Bonds cash and investments in direct obligations of or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, not redeemable at the option of the issuer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as Escrow Agent under the Series 2002A Escrow Agreement. The Escrow Agent shall hold the Series 2002A Escrow Fund in trust pursuant to the Series 2002A Escrow Agreement which shall irrevocably direct the Escrow Agent to take all necessary steps to call the Series 2002A Bonds being refunded for redemption as specified in the Series 2002A Escrow Agreement. Either the Chief Financial Officer or the Manager of Finance and Planning is hereby authorized to execute and deliver the Series 2002A Escrow Agreement, to transfer any moneys as they may deem necessary from the Redemption Fund to the Series 2002A Escrow Fund, and to purchase, or cause to be purchased, escrow securities, including, but not limited to, United States Treasury Obligations — State and Local Government Series (SLGS), for deposit in the Series 2002A Escrow Fund. The Chief Financial Officer is directed to deposit to the Series 2002A Escrow Fund, from Refunding Bond proceeds and other moneys as necessary, an amount which, together with investment proceeds to be received thereon, will be sufficient, without reinvestment, to pay the principal of and interest on the Series 2002A Bonds being refunded as they become due or upon call for redemption. The remaining proceeds of the Refunding Bonds shall be deposited in a fund which may be established in the Series 2002A Escrow Agreement to pay costs of issuance of the Refunding Bonds and the costs of refunding the Series 2002A Bonds. Any moneys remaining after payment of costs of issuance and costs of refunding the Series 2002A Bonds being refunded shall be transferred to the Redemption Fund and used to pay interest on the Refunding Bonds. Section 8. Reserve Requirement. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board must comply with the Reserve Requirement as defined in Section 1 (ff) of the Bond Resolution as amended and restated on October 24, 1989, which is the lesser of (a)the maximum Aggregate Debt Service Requirement for the then current and any subsequent operating year and (b)ten percent of the aggregate proceeds of all Outstanding Bonds. After payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, "Reserve Requirement" shall mean the following as established by Section 11 of the Tenth Supplemental Revenue Bond Resolution: the lesser of (i) the maximum annual debt service Regular Board Mtg. January 24,2012 Page 12 of 35 requirements on the Outstanding Bonds, (ii) 125% of the average annual debt service requirements on the Outstanding Bonds, or (iii) the total of 10% of the original aggregate face amount of each series of the Outstanding Bonds, reduced by the net original issue discount, if any; provided, however, that the Reserve Requirement shall not at any time exceed the amount allowed to be invested at an unrestricted yield pursuant to Treas. Reg, Section 1.148 2(f)(2) or any successor provision thereto as applicable to the Bonds. Section 9. Rate Covenant. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board will comply with the Section 9 of the Bond Resolution, as previously amended by Section 5 of the Second Supplemental Revenue Bond Resolution, and the Board will at all times fix, establish, maintain and collect rates, fees and charges for the sale of the output, capacity, use or service of the System which, together with other income, are reasonably expected to yield Net Revenues equal to at least 150% of the Aggregate Debt Service Requirement for the forthcoming twelve month period plus such amount as is necessary to comply with all covenants in the Bond Resolution and to pay all charges and liens whatsoever payable out of Net Revenues in such period. After payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the following provision shall apply as provided in Section 12 of the Tenth Supplemental Revenue Bond Resolution. The Board will at all times fix, establish, maintain and collect rates, fees and charges for the sale of the output, capacity, use or service of the System which, together with other income, are reasonably expected to yield Net Revenues equal to at least 125% of the Aggregate Debt Service Requirement for the forthcoming twelve month period plus such amount as is necessary to comply with all covenants in the Bond Resolution and to pay all charges and liens whatsoever payable out of Net Revenues in such period. Section 10. Additional Bonds Test. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board must comply with the additional bonds test imposed by Section 6 of the Second Supplemental Revenue Bond Resolution adopted January 11, 1994. After payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the following provision shall apply as provided in Section 13 of the Tenth Supplemental Revenue Bond Resolution. 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 the 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 purpose of refunding a part of any Outstanding Bonds (unless such partial refunding is done in compliance with (b) below) and paying costs of issuing such Additional Bonds, including deposits which may be required to be made to a bond reserve account. 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 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 Bonds and on the Additional Bonds then being issued. If the Additional 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 Bonds. Regular Board Mtg. January 24,2012 Page 13 of 35 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 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 Bonds to be issued. No Additional Bonds of equal standing as to the Net Revenues of the System shall be issued pursuant to the authorization contained in subparagraphs (a) or(c) if the Board shall then be in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund. Additional Bonds may be issued as provided in Section 18 subparagraphs (b) or(c) of the Bond Resolution. Section 11. Covenants. The Board covenants and agrees as follows with the holders of the Refunding Bonds as long as any of the Refunding Bonds remain outstanding and unpaid as to either principal or interest: (a) The Board covenants and agrees with the Registered Owners of the Refunding Bonds that as long as any of the Refunding Bonds remain outstanding and unpaid as to either principal or interest, the Board shall not invest, reinvest or accumulate any moneys deemed to be proceeds of the Refunding Bonds pursuant to the Internal Revenue Code in such a manner as to cause the Refunding Bonds to be "arbitrage bonds" within the meaning of the Internal Revenue Code. The Board hereby covenants that, to the extent permitted by law, it will take all actions within its control and that it shall not fail to take any action as may be necessary to maintain the exemption of interest on the Refunding Bonds from gross income for federal income tax purposes, including but not limited to, actions relating to the rebate of arbitrage earnings, if applicable, and the expenditure and investment of Bond proceeds and moneys deemed to be Bond proceeds, all as more fully set forth in the Tax Compliance Certificate to be delivered by the Board with the Refunding Bonds. (b) The Board will not issue additional bonds of prior standing to the Refunding Bonds. Section 12. Bond Form. The Refunding Bonds shall be in substantially the following form with such revisions, additions and deletions as the Board may deem advisable or necessary to comply with the final terms of the Refunding Bonds established upon sale thereof: BOND No. R- UNITED STATES OF AMERICA STATE OF MICHIGAN COUNTIES OF INGHAM AND EATON Regular Board Mtg. January 24,2012 Page 14 of 35 CITY OF LANSING LANSING BOARD OF WATER AND LIGHT UTILITY SYSTEM REVENUE REFUNDING BOND, SERIES 2012A Interest Rate Date of Maturity Date of Original Issue CUSIP Registered Owner: Cede & Co. Principal Amount: The City of Lansing, Counties of Ingham and Eaton, State of Michigan (the "City'), acting through the governing body of the Lansing Board of Water and Light (the "Board"), acknowledges itself to owe and for value received hereby promises to pay to the Registered Owner specified above, or registered assigns, only from the Net Revenues of the System as hereinafter provided, the Principal Amount specified above, in lawful money of the United States of America, on the Date of Maturity specified above, [unless prepaid prior thereto as hereinafter provided,] with interest thereon (computed on the basis of a 360-day year of twelve 30-day months) from the Date of Original Issue specified above or such later date to which interest has been paid, until paid, at the Interest Rate per annum specified above, first payable on [interest payment date] and semiannually thereafter. Principal of this bond is payable at the designated corporate trust office of [transfer agent], or such other transfer agent as the Board may hereafter designate by notice mailed to the registered owner of record not less than sixty (60) days prior to any interest payment date (the "Transfer Agent"). Interest on this bond is payable by check or draft mailed by the Transfer Agent to the person or entity who or which is as of the fifteenth (15th) day of the month prior to each interest payment date, the registered owner of record at the registered address. For the prompt payment of principal and interest on this bond, the revenues received by the Board from the operations of the water supply and electric utility systems including the steam, steam heat and chilled water distribution systems (the "System") after provision has been made for reasonable and necessary expenses of operation, maintenance and administration of the System (the "Net Revenues"), are irrevocably pledged and a statutory lien thereon has been created to secure the payment of the principal of and interest on this bond, when due; however, the pledge of Net Revenues and the statutory lien are on a parity with the pledge of Net Revenues and statutory lien in favor of the [Water Supply, Steam and Electric Utility System Revenue Bonds, Series 2002A,] Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2002B, Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A, Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2005A, Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A, and Utility System Revenue Bonds, Series 2011A. The pledge of Net Revenues and the statutory lien are senior in priority of lien to the Water Supply, Steam, Chilled Water and Electric Utility System Subordinate Lien Revenue Refunding Bond, Series 2009A (Federally Taxable) and any additional junior lien bonds issued pursuant to the Bond Resolution (defined below). This bond is one of a series of bonds of like tenor, except as to denomination, rate of interest and date of maturity, aggregating the principal sum of$[principal amount], issued pursuant to a Bond Resolution adopted by the Board on October 24, 1989, as amended and supplemented from time to time, including by a Twelfth Supplemental Revenue Bond Resolution adopted by the Board on [date of resolution] (collectively, the 'Bond Resolution"), and under and in full compliance with the Constitution and statutes of the State of Michigan, including specifically Act 94, Public Acts of Michigan, 1933, as amended ("Act 94"), for the purpose of refunding certain outstanding bonds, making a deposit to the bond reserve account created under the Bond Resolution, and paying the costs of issuing the bonds. For a complete statement of the revenues from which and the conditions under which this bond is payable, a statement of the conditions under which additional bonds of equal standing as to the Net Revenues may hereafter be issued, and the general covenants and provisions pursuant to which this bond is issued, reference is made to the Bond Resolution. Reference is hereby made Regular Board Mtg. January 24,2012 Page 15 of 35 to the Bond Resolution and any and all supplements thereto and modifications and amendments thereof, if any, and to Act 94, for a more complete description of the pledges and covenants securing the bonds of this issue, the nature, extent and manner of enforcement of such pledges, the rights and remedies of the registered owners of the bonds of this issue with respect thereto and the terms and conditions upon which the bonds of this issue are issued and may be issued thereunder. To the extent and in the manner permitted by the terms of the Bond Resolution, the provisions of the Bond Resolution or any resolution or agreement amendatory thereof or supplemental thereto, may be modified or amended by the Board, except in specified cases, only with the written consent of the registered owners of at least fifty-one percent (51%) of the principal amount of the bonds of the System then outstanding. Bonds of this issue [maturing in the years [date], inclusive,] shall not be subject to redemption prior to maturity. [Insert optional and mandatory redemption provisions if applicable] This bond is transferable only upon the books of the Board kept for that purpose at the office of the Transfer Agent by the registered owner hereof in person, or by the registered owner's attorney duly authorized in writing, upon the surrender of this bond together with a written instrument of transfer satisfactory to the Transfer Agent duly authorized in writing and thereupon a new registered bond or bonds in the same aggregate principal amount and of the same maturity shall be issued to the transferee in exchange therefor as provided in the Bond Resolution, and upon the payment of the charges, if any, therein prescribed. [The Transfer Agent shall not be required (i)to issue, register the transfer of, or exchange any bond during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of bonds selected for redemption under the Bond Resolution and ending at the close of business on the date of that mailing, or(ii)to register the transfer of or exchange any bond so selected for redemption in whole or in part, except the unredeemed portion of bonds being redeemed in part.] THIS BOND IS A SELF-LIQUIDATING BOND AND IS NOT A GENERAL OBLIGATION OF THE CITY AND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE CITY WITHIN ANY CONSTITUTIONAL, STATUTORY OR CHARTER LIMITATION, AND IS PAYABLE BOTH AS TO PRINCIPAL AND INTEREST SOLELY FROM THE NET REVENUES OF THE SYSTEM AND CERTAIN FUNDS AND ACCOUNTS ESTABLISHED UNDER THE BOND RESOLUTION. THE PRINCIPAL OF AND INTEREST ON THIS BOND ARE SECURED BY THE STATUTORY LIEN HEREINBEFORE DESCRIBED. The Board has covenanted and agreed, and covenants and agrees, to fix and maintain at all times while any bonds payable from the Net Revenues of the System shall be outstanding, such rates for service furnished by the System as shall be sufficient to provide for payment of the principal of and interest on the bonds of this issue and any other bonds payable from the Net Revenues as and when the same shall become due and payable, to provide for the payment of expenses of administration and operation and such expenses for maintenance of the System as are necessary to preserve the same in good repair and working order, and to provide for such other expenditures and funds for the System as are required by the Bond Resolution. It is hereby certified and recited that all acts, conditions and things required by law to be done precedent to and in the issuance of this bond and the series of bonds of which this is one have been done and performed in regular and due time and form as required by law. This bond is not valid or obligatory for any purpose until the Transfer Agent's Certificate of Authentication on this bond has been executed by the Transfer Agent. IN WITNESS WHEREOF, the City, acting through the Board, has caused this bond to be signed in its name by the Chairperson and Corporate Secretary of the Board, and a facsimile of the City's corporate seal to be printed hereon, all as of the Date of Original Issue. LANSING BOARD OF WATER AND LIGHT By [Chairperson to sign Bond 1 Regular Board Mtg. January 24,2012 Page 16 of 35 Chairperson (City Seal) Countersigned: By [Corporate Secretary to sign Bondl Its: Corporate Secretary [INSERT STANDARD FORMS OF CERTIFICATE OF AUTHENTICATION AND ASSIGNMENT] Section 13. Financial Advisor. The Board hereby requests that Robert W. Baird & Co. Incorporated continue to serve the Board as Financial Advisor for the Refunding Bonds. Section 14. Bond Counsel. The Board hereby requests that Miller, Canfield, Paddock and Stone, P.L.C. continue to serve the Board as bond counsel for the Refunding Bonds. The Board recognizes that Miller, Canfield, Paddock and Stone, P.L.C. has represented from time to time, and currently represents, various underwriters, financial institutions, and other potential participants in the bond financing process, in matters not related to the issuance and sale of the Refunding Bonds, and approves them notwithstanding the potential concurrent representation of any other participant in the bond financing process in any unrelated matters. Section 15. Sale of Bonds. The Chief Financial Officer is hereby authorized, in consultation with the Financial Advisor, to determine whether it is in the best interest of the Board to sell the Refunding Bonds by negotiated sale or competitive sale. If the Chief Financial Officer determines, in consultation with the Financial Advisor, that due to the volatile nature of the bond market, in order to enable the Board to select and adjust terms for the Refunding Bonds, to enter the market on short notice at a point in time which appears to be most advantageous, and thereby possibly obtain a lower rate of interest on the Refunding Bonds, to achieve sale efficiencies so as to reduce the cost of issuance and interest expense, and in order to take advantage of the most favorable market for purchase of securities to be escrowed for payment of the Series 2002A Bonds to be refunded, then the Board hereby determines that it is in the best interests of the Board to negotiate the sale of the Refunding Bonds and the Refunding Bonds shall be sold at a negotiated sale instead of a competitive sale. If the Refunding Bonds are sold by negotiated sale then the Chief Financial Officer is hereby authorized, upon the advice of the Financial Advisor, to select a senior managing underwriter for the Refunding Bonds, or, in the alternative, to retain a placement agent to assist the Board in arranging the sale of the Refunding Bonds to a financial institution or other experienced investor. If the Refunding Bonds are sold to an underwriter, the Board reserves the right to name additional co-managers and/or to develop a selling group, and the Chief Financial Officer is authorized to name additional co-managers and/or to develop a selling group in consultation with the Financial Advisor. By adoption of this resolution the Board assumes no obligations or liability to the underwriter or placement agent for any loss or damage that may result to the underwriter or placement agent from the adoption of this resolution, and all costs and expenses incurred by the underwriter or placement agent in preparing for sale of the Refunding Bonds shall be paid from the proceeds of the Refunding Bonds, if the Refunding Bonds are issued, except as may be otherwise provided in the Bond Purchase Agreement for Refunding Bonds. If the Refunding Bonds are sold by competitive sale, the Chief Financial Officer is directed to prepare a Notice of Sale in consultation with the Financial Advisor and bond counsel, to cause the Notice of Sale to be published in The Bond Buyer, and to award sale of the Refunding Bonds to the lowest bidder in accordance with the terms of the Notice of Sale. Section 16. Bond Ratings and Bond Insurance. The Chief Financial Officer is hereby authorized to apply for bond ratings from such municipal bond rating agencies as deemed appropriate, in consultation with the Financial Advisor. If the Financial Advisor recommends that the Board consider purchase of municipal bond insurance, then the Chief Financial Officer is Regular Board Mtg. January 24,2012 Page 17 of 35 hereby authorized to negotiate with insurers regarding acquisition of municipal bond insurance, and, in consultation with the Financial Advisor, to select an insurer and determine which bonds, if any, shall be insured, and the Chief Financial Officer is hereby authorized to execute an agreement with the insurer relating to procedures for paying debt service on the insured bonds and notifying the insurer of any need to draw on the insurance and other matters. Section 17. Official Statement. The Chief Financial Officer is authorized to approve circulation of a Preliminary Official Statement or private placement memorandum describing the Refunding Bonds and, after sale of the Refunding Bonds, to prepare, execute and deliver a final Official Statement or private placement memorandum. Section 18. Continuing Disclosure. The Chief Financial Officer is hereby authorized to execute and deliver, prior to delivery of the Refunding Bonds, a written continuing disclosure undertaking as necessary in order to enable the underwriter or bond purchaser to comply with the requirements of Securities and Exchange Commission Rule 15c2-12. The continuing disclosure undertaking shall be in substantially the form which she shall, in consultation with bond counsel, determine to be appropriate. Section 19. Sale of Refunding Bonds. The Chief Financial Officer is authorized, in consultation with the Financial Advisor,to accept an offer to purchase the Refunding Bonds without further resolution of this Board, if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. This authorization includes, but is not limited to, determination of original principal amount of the Refunding Bonds; the prices at which the Refunding Bonds are sold; the date of the Refunding Bonds; the schedule of principal maturities and whether the Refunding Bonds shall mature serially or as term bonds; provisions for early redemption, if any, including mandatory redemption of term bonds, if any; the interest rates and payment dates of the Refunding Bonds; and application of the proceeds of the Refunding Bonds. Approval of the matters delegated to the Chief Financial Officer under this resolution may be evidenced by her execution of the Bond Purchase Agreement or other offer to purchase the Refunding Bonds, or a certificate of award of sale, or the Official Statement or private placement memorandum. The maximum interest rate on the Refunding Bonds shall not exceed 5.00%. The first maturity of principal on the Refunding Bonds shall occur no earlier than 2012, and the final date of maturity shall occur no later than 2018. The purchase price for the Refunding Bonds, exclusive of any original issue discount, shall not be less than 98.00% of the principal amount of the Refunding Bonds. In making such determinations the Chief Financial Officer is authorized to rely upon data and computer runs provided by the Financial Advisor. Section 20. Verification Agent, The Chief Financial Officer is hereby authorized, at her discretion, to select an independent certified public accountant to serve as verification agent to verify that the securities and cash to be deposited to the Escrow Fund will be sufficient to provide, at the times and in the amounts required, sufficient moneys to pay the principal of and interest on the Series 2002A Bonds being refunded as they become due or upon call for redemption. Section 21. 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 the Manager of Finance and Planning, the General Manager, or a person designated by the Chief Financial Officer or the General Manager 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, sale and delivery of the Refunding Bonds, 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 including but not limited to rating agency fees, bond insurance premiums, transfer agent fees, escrow agent fees, verification agent Regular Board Mtg. January 24,2012 Page 18 of 35 fees, financial advisor fees, placement agent fees, bond counsel fees, costs of printing the preliminary and final official statements, and any other costs necessary to accomplish sale and delivery of the Refunding Bonds. Section 22. Applicability of the Outstanding Bond Resolutions. Except to the extent supplemented or otherwise provided in this resolution, all of the provisions and covenants provided in the Bond Resolution shall apply to the Refunding Bonds issued pursuant to provisions of this resolution, such provisions of the Bond Resolution being made applicable to the Refunding Bonds. Section 23. Conflicting Resolutions. All resolutions and parts of resolutions insofar as they conflict with the provisions of this resolution are hereby rescinded. Section 24. 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 25. 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 City Pulse or the Lansing State Journal, either of which is a newspaper of general circulation in the City qualified under State law to publish legal notices, promptly after its adoption, and 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 26. 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 and the users of the System. In accordance with the provisions of Section 6 of Act 94, this resolution shall become effective immediately upon its adoption. We hereby certify that the foregoing is a true and complete copy of a resolution duly adopted by the Board of Commissioners of the Lansing Board of Water and Light at a Regular meeting held on_, , 2012, at _.m., 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 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 We 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. Chairperson Corporate Secretary Motion by Commissioner Price, seconded by Commissioner Plummer to forward the proposed resolution to the full Board for consideration. Action: Carried Unanimously Excused Absence None Regular Board Mtg. January 24,2012 Page 19 of 35 Other None Adiourn On Motion by Commissioner Price, seconded by Commissioner Plummer the meeting adjourned at 7:41 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee MANAGER'S RECOMMENDATIONS General Manager Lark respectfully requested that the Board of Commissioners approve of the following resolutions. RESOLUTION #2012-01-01' Electric Reliability WHEREAS, electric reliability is indispensable for economic growth and development and to promote and protect public safety and welfare; WHEREAS, the Energy Policy Act of 2005 directed the Federal Energy Regulatory Commission to adopt mandatory electric reliability standards for all electric utilities in the United States; WHEREAS, the Federal Energy Regulatory Commission has delegated responsibility for developing and implementing national electric reliability standards to the National Electric Reliability Corporation; WHEREAS, the Board is committed to maintaining a highly reliable electric system within its service territory; WHEREAS, the Board is subject to reliability standards developed and implemented by the National Electric Reliability Corporation; BE IT RESOLVED, that the BWL shall develop and implement an electric reliability program that assures compliance with applicable electric reliability standards adopted by the National Electric Reliability Corporation. Motion by Commissioner Ward seconded by Commissioner Price, to approve the resolution for the development and implementation of an electric reliability program adopted by NERC. Action: Carried unanimously RESOLUTION#2012-01-02 Regular Board Mtg. January 24,2012 Page 20 of 35 Lansing Board of Water and Light TWELFTH SUPPLEMENTAL REVENUE BOND RESOLUTION A RESOLUTION TO AUTHORIZE: • Present Value Savings by refunding the Series 2002A Bonds through issuance of up to$23,000,000 of Refunding Bonds; • Sale by Negotiated or Competitive Sale upon advice of Financial Advisor; • Chief Financial Officer to sell Refunding Bonds without further resolution; • Other matters relative to issuance, sale and delivery of the Refunding Bonds. WHEREAS, from time to time the City of Lansing, acting by and through the Lansing Board of Water and Light, has issued revenue bonds payable from revenues of the water supply, steam, chilled water and electric utility system (the "System") under the provisions of Act 94, Public Acts of Michigan, 1933, as amended, and a Bond Resolution adopted by the Board and amended and restated on October 24, 1989 and further amended and supplemented from time to time (the "Bond Resolution"); and WHEREAS, all terms not defined herein shall have the meanings set forth in the Bond Resolution; and WHEREAS, under the terms of the Sixth Supplemental Revenue Bond Resolution adopted July 23, 2002, the Board issued the Water Supply, Steam and Electric Utility System Revenue Bonds, Series 2002A (the "Series 2002A Bonds") for the purpose of financing the cost of remodeling, updating and extending the life of the System, primarily at the Eckert and Erickson Stations (the "Series 2002A Project"); and WHEREAS, the Board's Financial Advisor, Robert W. Baird & Co. Incorporated (the "Financial Advisor"), has advised the Board that it may be able to accomplish a net savings of debt service costs, and thereby reduce the cost to the Board of the Series 2002A Project, by refunding all or a portion of the outstanding Series 2002A Bonds through the issuance of revenue refunding bonds in an aggregate principal amount of not-to-exceed $23,000,000 (the "Refunding Bonds"); and WHEREAS, Section 18(b) of the Bond Resolution authorizes the issuance of Additional Bonds of equal standing and priority of lien with the outstanding Bonds for the purposes of refunding a part of the Outstanding Bonds and paying costs of issuing such Additional Bonds, if after giving effect to the refunding the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding; and WHEREAS, in order to take advantage of the most favorable market for sale of the Refunding Bonds and purchase of securities to be escrowed for payment of the Series 2002A Bonds to be refunded, the Board wishes to authorize the Chief Financial Officer to sell the Refunding Bonds at negotiated or competitive sale without further resolution of the Board; and WHEREAS, the conditions and requirements of the Bond Resolution for the issuance of Additional Bonds of equal standing and priority of lien with outstanding bonds have been met for the issuance of the proposed Refunding Bonds. NOW, THEREFORE, BE IT RESOLVED THAT: Regular Board Mtg. January 24,2012 Page 21 of 35 Section 1. Definitions. All terms not defined herein shall have the meanings set forth in the Bond Resolution, and whenever used in this Bond Resolution, except when otherwise indicated by the context, the following terms shall have the following meanings: (a) "Additional Bonds" means any Additional Bonds of equal standing with the Series 2008A Bonds, the Series 2011A Bonds, and the Refunding Bonds which are issued pursuant to Section 18(a) of the Bond Resolution as amended by Section 13 of the Tenth Supplemental Revenue Bond Resolution. (b) "Bond Resolution" means the Bond Resolution adopted by the Board on September 26, 1989, as amended and restated on October 24, 1989 and supplemented by the First Supplemental Revenue Bond Resolution adopted by the Board on October 26, 1993, the Second Supplemental Revenue Bond Resolution adopted by the Board on January 11, 1994, the Third Supplemental Revenue Bond Resolution adopted on September 2, 1999, the Fourth Supplemental Revenue Bond Resolution adopted October 26, 1999 and amended on August 12, 2008 and June 9, 2009, the Fifth Supplemental Bond Resolution adopted by the Board April 24, 2001, the Sixth Supplemental Revenue Bond Resolution adopted by the Board on July 23, 2002, the Seventh Supplemental Bond Resolution adopted by the Board on July 23, 2002, the Eighth Supplemental Revenue Bond Resolution adopted on August 12, 2003, the Ninth Supplemental Revenue Bond Resolution adopted on July 26, 2005, the Tenth Supplemental Revenue Bond Resolution adopted on January 29, 2008, Eleventh Supplemental Revenue Bond Resolution adopted on May 10, 2011, this Twelfth Supplemental Revenue Bond Resolution, and any other resolution which amends or supplements the Bond Resolution. (c) "Bonds" means the Series 2008A Bonds, the Series 2011A Bonds, the Refunding Bonds and any Additional Bonds of equal standing hereafter issued. (d) "Chief Financial Officer" means the Board's Assistant General Manager and Chief Financial Officer. (e) "Refunding Bonds" means the refunding bonds issued pursuant to this Twelfth Supplemental Revenue Bond Resolution to be designated as the "Utility System Revenue Refunding Bonds, Series 2012A" or such other series designation as shall reflect the date of sale or delivery of the Refunding Bonds. (f) "Reserve Requirement" means the Reserve Requirement established by Section 11 of the Tenth Supplemental Revenue Bond Resolution and described in Section 8 herein. (g) "Series 2002A Escrow Agreement" means the Series 2002A Escrow Agreement described in this Resolution to provide for payment of principal of and interest on the Series 2002A Bonds being refunded. (h) "Series 2002A Escrow Fund" means the Series 2002A Escrow Fund established pursuant to the Series 2002A Escrow Agreement to hold the cash and investments necessary provide for payment of principal of and interest on the Series 2002A Bonds being refunded. (i) "Series 2002-2005 Bonds" means: the Water Supply, Steam and Electric Utility System Revenue Bonds, Series 2002A, the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2002B, the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A, and the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2005A. (j) "Series 2008A Bonds"means the Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A. Regular Board Mtg. January 24,2012 Page 22 of 35 (k) "Series 2011A Bonds" means the Utility System Revenue Bonds, Series 2011A. (1) "System" means the complete facilities of the Board for the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, including all plants, works, instrumentalities and properties used or useful in connection with the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, and all additions, extensions and improvements thereto existing or hereafter acquired by the Board. Section 2. Conditions Permitting Issuance of Additional Bonds. Pursuant to Section 18(b)of the Bond Resolution, the Board hereby determines that the Refunding Bonds shall be issued as Additional Bonds for the purpose of refunding all or a portion of the Series 2002A Bonds and paying costs of issuance of the Refunding Bonds, only if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. The Board hereby determines that the Board is not in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund. Section 3. Refunding of Series 2002A Bonds; Refunding Bonds Authorized; Applicable Law. If refunding all or a portion of the Series 2002A Bonds will accomplish a net savings of debt service costs, then in order to pay costs of refunding all or a portion of the Series 2002A Bonds, including the payment of the costs of legal, financial, bond insurance (if any), underwriter's discount, and other expenses incident thereto and incident to the issuance and sale of the Refunding Bonds, the City, acting by and through the Board, shall borrow the sum of not-to- exceed Twenty-Three Million Dollars ($23,000,000) as finally determined upon the sale thereof, and issue the Refunding Bonds therefor. The Refunding Bonds shall be payable solely out of the Net Revenues of the System. City Council shall not be requested to pledge the full faith and credit of the City for payment of the Refunding Bonds. The Refunding Bonds shall be sold and the proceeds applied in accordance with the provisions of Act 94. The remaining period of usefulness of the Series 2002A Project is estimated to be not less than seven (7) years. Section 4. Refunding Bond Details. The Refunding Bonds shall be designated as the "UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 2012A" or such other series designation as determined at the time of sale by the Chief Financial Officer to reflect the date of sale or delivery of the Refunding Bonds. The Refunding Bonds shall be issued as fully registered bonds registered in the denomination of$5,000 or integral multiples thereof and shall be numbered in consecutive order of registration or authentication from 1 upwards. The Refunding Bonds shall be dated as of the date of delivery thereof or such other date as determined at the time of sale of the Refunding Bonds, shall mature as serial bonds or term bonds on such dates as shall be determined at the time of sale of the Refunding Bonds but not-to-exceed seven annual maturities. The Refunding Bonds shall be subject to optional and mandatory redemption prior to maturity at the times and prices finally determined at the time of sale of the Refunding Bonds, or shall not be subject to redemption prior to maturity, as finally determined at the time of sale of the Refunding Bonds, The Refunding Bonds shall bear interest at a rate or rates to be determined on sale thereof, payable on July 1, 2012, or such other date as provided at the time of sale of the Refunding Bonds, and semi-annually thereafter on January 1st and July 1st of each year. The Refunding Bonds shall be executed by the manual or facsimile signature of the Chairperson and the Corporate Secretary of the Board. No Refunding Bond shall be valid until Regular Board Mtg. January 24,2012 Page 23 of 35 authenticated by an authorized representative of the Transfer Agent. The Refunding Bonds shall be delivered to the Transfer Agent for authentication and be delivered by the Transfer Agent to the purchaser in accordance with instructions from the Chief Financial Officer upon payment of the purchase price for the Refunding Bonds. Executed blank bonds for registration and issuance to transferees shall be delivered to the Transfer Agent for safekeeping from time to time as necessary. Notwithstanding the foregoing provisions, if the Refunding Bonds are sold through private placement, then the Refunding 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, and authentication by the Transfer Agent shall not be required for any bond signed by the manual signature of either the Chairperson or the Corporate Secretary of the Board. Section 5. Registration and Transfer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as bond registrar, paying agent and transfer agent (the "Transfer Agent") for the Refunding Bonds. The Chief Financial Officer is hereby authorized to execute one or more agreements with the Transfer Agent on behalf of the Board. The Board reserves the right to replace the Transfer Agent at any time, provided written notice of such replacement is given to the registered owners of record of bonds not less than sixty (60) days prior to an interest payment date. Principal of and interest on the Refunding Bonds shall be payable by check or draft mailed by the Transfer Agent to the registered owner at the registered address as shown on the registration books of the Board maintained by the Transfer Agent. Interest shall be payable to the person or entity who or which is the registered owner of record as of the fifteenth (15th) day of the month prior to the payment date for each interest payment. The date of determination of the registered owner for purposes of payment of interest as provided in this paragraph may be changed by the Board to conform to market practice in the future. The Refunding Bonds may be issued in book-entry-only form through The Depository Trust Company in New York, New York ("DTC"), and the Chief Financial Officer is authorized to execute such custodial or other agreement with DTC as may be necessary to accomplish the issuance of the Refunding Bonds in book-entry-only form and to make such changes in the form of the Refunding Bonds within the parameters of this resolution as may be required to accomplish the foregoing. Notwithstanding the foregoing, if the Refunding Bonds are held in book-entry-only form by DTC, payment of principal of and interest on the Refunding Bonds shall be made in the manner prescribed by DTC. The Refunding Bonds may be transferred upon the books required to be kept by the Transfer Agent pursuant to this section by the person or entity in whose name it is registered, in person or by the registered owner's duly authorized attorney, upon surrender of the bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Transfer Agent. Whenever any bond shall be surrendered for transfer, the Board shall execute and the Transfer Agent shall authenticate and deliver a new bond of the same series in like aggregate principal amount, maturity and interest rate. The Transfer Agent shall require the payment by the bondholder requesting the transfer of any tax or other governmental charge required to be paid with respect to the transfer. Notwithstanding the foregoing, if Bonds are held by DTC in book-entry-only form, the transfer of Bonds shall be made in the manner prescribed by DTC. Section 6. Deposit to Bond Reserve Account. On or prior to the date of delivery of the Refunding Bonds, the Board shall deposit into the Bond Reserve Account any amount Regular Board Mtg. January 24,2012 Page 24 of 35 necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. The Board may meet the Reserve Requirement by a letter of credit, a surety bond, or an insurance policy if the provider or issuer thereof shall be rated AAA by Moody's Investors Service and Standard and Poor's Corporation or any successor to either, and the Chief Financial Officer is hereby authorized to execute an agreement with the provider or issuer of the letter of credit, surety bond, or insurance policy. Section 7. Refunding Bond Proceeds. From the proceeds of sale of the Refunding Bonds there first shall be immediately deposited in the Redemption Fund an amount equal to the accrued interest and premium, if any, received on delivery of the Refunding Bonds, and the Board may take credit for the amount so deposited against the amount required to be deposited in the Redemption Fund for payment of the next maturing interest on the Refunding Bonds. Notwithstanding the foregoing, at the discretion of the Chief Financial Officer, all or a portion of any premium received upon delivery of the Refunding Bonds may be deposited in the Bond Reserve Account or the Series 2002A Escrow Fund in consultation with Bond Counsel. There shall next be deposited in the Bond Reserve Account an amount, if any, designated at the time of sale of the Refunding Bonds as necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. There shall next be deposited in the Series 2002A Escrow Fund from the proceeds of sale of the Refunding Bonds cash and investments in direct obligations of or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, not redeemable at the option of the issuer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as Escrow Agent under the Series 2002A Escrow Agreement. The Escrow Agent shall hold the Series 2002A Escrow Fund in trust pursuant to the Series 2002A Escrow Agreement which shall irrevocably direct the Escrow Agent to take all necessary steps to call the Series 2002A Bonds being refunded for redemption as specified in the Series 2002A Escrow Agreement. Either the Chief Financial Officer or the Manager of Finance and Planning is hereby authorized to execute and deliver the Series 2002A Escrow Agreement, to transfer any moneys as they may deem necessary from the Redemption Fund to the Series 2002A Escrow Fund, and to purchase, or cause to be purchased, escrow securities, including, but not limited to, United States Treasury Obligations — State and Local Government Series (SLGS), for deposit in the Series 2002A Escrow Fund. The Chief Financial Officer is directed to deposit to the Series 2002A Escrow Fund, from Refunding Bond proceeds and other moneys as necessary, an amount which, together with investment proceeds to be received thereon, will be sufficient, without reinvestment, to pay the principal of and interest on the Series 2002A Bonds being refunded as they become due or upon call for redemption. The remaining proceeds of the Refunding Bonds shall be deposited in a fund which may be established in the Series 2002A Escrow Agreement to pay costs of issuance of the Refunding Bonds and the costs of refunding the Series 2002A Bonds. Any moneys remaining after payment of costs of issuance and costs of refunding the Series 2002A Bonds being refunded shall be transferred to the Redemption Fund and used to pay interest on the Refunding Bonds. Section 8. Reserve Requirement. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board must comply with the Reserve Requirement as defined in Section 1 (ff) of the Bond Resolution as amended and restated on October 24, 1989, which is the lesser of (a)the maximum Aggregate Debt Service Requirement for the then current and any subsequent operating year and (b)ten percent of the aggregate proceeds of all Outstanding Bonds. After payment or defeasance in full of the Outstanding Series 2002-2005 Regular Board Mtg. January 24,2012 Page 25 of 35 Bonds, "Reserve Requirement" shall mean the following as established by Section 11 of the Tenth Supplemental Revenue Bond Resolution: the lesser of (i) the maximum annual debt service requirements on the Outstanding Bonds, (ii) 125% of the average annual debt service requirements on the Outstanding Bonds, or (iii) the total of 10% of the original aggregate face amount of each series of the Outstanding Bonds, reduced by the net original issue discount, if any; provided, however, that the Reserve Requirement shall not at any time exceed the amount allowed to be invested at an unrestricted yield pursuant to Treas. Reg. Section 1.148 2(f)(2) or any successor provision thereto as applicable to the Bonds. Section 9. Rate Covenant. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board will comply with the Section 9 of the Bond Resolution, as previously amended by Section 5 of the Second Supplemental Revenue Bond Resolution, and the Board will at all times fix, establish, maintain and collect rates, fees and charges for the sale of the output, capacity, use or service of the System which, together with other income, are reasonably expected to yield Net Revenues equal to at least 150% of the Aggregate Debt Service Requirement for the forthcoming twelve month period plus such amount as is necessary to comply with all covenants in the Bond Resolution and to pay all charges and liens whatsoever payable out of Net Revenues in such period. After payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the following provision shall apply as provided in Section 12 of the Tenth Supplemental Revenue Bond Resolution. The Board will at all times fix, establish, maintain and collect rates, fees and charges for the sale of the output, capacity, use or service of the System which, together with other income, are reasonably expected to yield Net Revenues equal to at least 125% of the Aggregate Debt Service Requirement for the forthcoming twelve month period plus such amount as is necessary to comply with all covenants in the Bond Resolution and to pay all charges and liens whatsoever payable out of Net Revenues in such period. Section 10. Additional Bonds Test. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board must comply with the additional bonds test imposed by Section 6 of the Second Supplemental Revenue Bond Resolution adopted January 11, 1994, After payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the following provision shall apply as provided in Section 13 of the Tenth Supplemental Revenue Bond Resolution. 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 the 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 purpose of refunding a part of any Outstanding Bonds (unless such partial refunding is done in compliance with (b) below) and paying costs of issuing such Additional Bonds, including deposits which may be required to be made to a bond reserve account. 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 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 Bonds and on the Additional Bonds then being issued. If the Additional Bonds are to be issued in whole or in part for refunding Outstanding Bonds, the maximum Aggregate Debt Service shall be determined by Regular Board Mtg. January 24,2012 Page 26 of 35 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 Bonds. 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 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 Bonds to be issued. No Additional Bonds of equal standing as to the Net Revenues of the System shall be issued pursuant to the authorization contained in subparagraphs (a) or (c) if the Board shall then be in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund. Additional Bonds may be issued as provided in Section 18 subparagraphs (b) or(c) of the Bond Resolution. Section 11. Covenants. The Board covenants and agrees as follows with the holders of the Refunding Bonds as long as any of the Refunding Bonds remain outstanding and unpaid as to either principal or interest: (a) The Board covenants and agrees with the Registered Owners of the Refunding Bonds that as long as any of the Refunding Bonds remain outstanding and unpaid as to either principal or interest, the Board shall not invest, reinvest or accumulate any moneys deemed to be proceeds of the Refunding Bonds pursuant to the Internal Revenue Code in such a manner as to cause the Refunding Bonds to be "arbitrage bonds" within the meaning of the Internal Revenue Code, The Board hereby covenants that, to the extent permitted by law, it will take all actions within its control and that it shall not fail to take any action as may be necessary to maintain the exemption of interest on the Refunding Bonds from gross income for federal income tax purposes, including but not limited to, actions relating to the rebate of arbitrage earnings, if applicable, and the expenditure and investment of Bond proceeds and moneys deemed to be Bond proceeds, all as more fully set forth in the Tax Compliance Certificate to be delivered by the Board with the Refunding Bonds. (b) The Board will not issue additional bonds of prior standing to the Refunding Bonds. Regular Board Mtg. January 24,2012 Page 27 of 35 Section 12. Bond Form, The Refunding Bonds shall be in substantially the following form with such revisions, additions and deletions as the Board may deem advisable or necessary to comply with the final terms of the Refunding Bonds established upon sale thereof: BOND No. R- UNITED STATES OF AMERICA STATE OF MICHIGAN COUNTIES OF INGHAM AND EATON CITY OF LANSING LANSING BOARD OF WATER AND LIGHT UTILITY SYSTEM REVENUE REFUNDING BOND, SERIES 2012A Interest Rate Date of Maturity Date of Original Issue CUSIP Registered Owner: Cede & Co. Principal Amount: The City of Lansing, Counties of Ingham and Eaton, State of Michigan (the "City"), acting through the governing body of the Lansing Board of Water and Light (the "Board"), acknowledges itself to owe and for value received hereby promises to pay to the Registered Owner specified above, or registered assigns, only from the Net Revenues of the System as hereinafter provided, the Principal Amount specified above, in lawful money of the United States of America, on the Date of Maturity specified above, [unless prepaid prior thereto as hereinafter provided,] with interest thereon (computed on the basis of a 360-day year of twelve 30-day months) from the Date of Original Issue specified above or such later date to which interest has been paid, until paid, at the Interest Rate per annum specified above, first payable on [interest payment date]and semiannually thereafter. Principal of this bond is payable at the designated corporate trust office of [transfer agent], or such other transfer agent as the Board may hereafter designate by notice mailed to the registered owner of record not less than sixty (60) days prior to any interest payment date (the "Transfer Agent"). Interest on this bond is payable by check or draft mailed by the Transfer Agent to the person or entity who or which is as of the fifteenth (15th) day of the month prior to each interest payment date, the registered owner of record at the registered address. For the prompt payment of principal and interest on this bond, the revenues received by the Board from the operations of the water supply and electric utility systems including the steam, steam heat and chilled water distribution systems (the "System") after provision has been made for reasonable and necessary expenses of operation, maintenance and administration of the System (the "Net Revenues"), are irrevocably pledged and a statutory lien thereon has been created to secure the payment of the principal of and interest on this bond, when due; however, the pledge of Net Revenues and the statutory lien are on a parity with the pledge of Net Revenues and statutory lien in favor of the [Water Supply, Steam and Electric Utility System Revenue Bonds, Series 2002A,] Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2002B, Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A, Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2005A, Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A, and Utility System Revenue Bonds, Series 2011A. The pledge of Net Revenues and the statutory lien are senior in priority of lien to the Water Supply, Steam, Chilled Water and Electric Utility System Subordinate Lien Revenue Refunding Bond, Series 2009A (Federally Taxable) and any additional junior lien bonds issued pursuant to the Bond Resolution (defined below). Regular Board Mtg. January 24,2012 Page 28 of 35 This bond is one of a series of bonds of like tenor, except as to denomination, rate of interest and date of maturity, aggregating the principal sum of$[principal amount], issued pursuant to a Bond Resolution adopted by the Board on October 24, 1989, as amended and supplemented from time to time, including by a Twelfth Supplemental Revenue Bond Resolution adopted by the Board on [date of resolution] (collectively, the "Bond Resolution"), and under and in full compliance with the Constitution and statutes of the State of Michigan, including specifically Act 94, Public Acts of Michigan, 1933, as amended ("Act 94"), for the purpose of refunding certain outstanding bonds, making a deposit to the bond reserve account created under the Bond Resolution, and paying the costs of issuing the bonds. For a complete statement of the revenues from which and the conditions under which this bond is payable, a statement of the conditions under which additional bonds of equal standing as to the Net Revenues may hereafter be issued, and the general covenants and provisions pursuant to which this bond is issued, reference is made to the Bond Resolution. Reference is hereby made to the Bond Resolution and any and all supplements thereto and modifications and amendments thereof, if any, and to Act 94, for a more complete description of the pledges and covenants securing the bonds of this issue, the nature, extent and manner of enforcement of such pledges, the rights and remedies of the registered owners of the bonds of this issue with respect thereto and the terms and conditions upon which the bonds of this issue are issued and may be issued thereunder. To the extent and in the manner permitted by the terms of the Bond Resolution, the provisions of the Bond Resolution or any resolution or agreement amendatory thereof or supplemental thereto, may be modified or amended by the Board, except in specified cases, only with the written consent of the registered owners of at least fifty-one percent (51%) of the principal amount of the bonds of the System then outstanding. Bonds of this issue [maturing in the years [date], inclusive,] shall not be subject to redemption prior to maturity. [Insert optional and mandatory redemption provisions if applicable] This bond is transferable only upon the books of the Board kept for that purpose at the office of the Transfer Agent by the registered owner hereof in person, or by the registered owner's attorney duly authorized in writing, upon the surrender of this bond together with a written instrument of transfer satisfactory to the Transfer Agent duly authorized in writing and thereupon a new registered bond or bonds in the same aggregate principal amount and of the same maturity shall be issued to the transferee in exchange therefor as provided in the Bond Resolution, and upon the payment of the charges, if any, therein prescribed. [The Transfer Agent shall not be required (i) to issue, register the transfer of, or exchange any bond during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of bonds selected for redemption under the Bond Resolution and ending at the close of business on the date of that mailing, or(ii)to register the transfer of or exchange any bond so selected for redemption in whole or in part, except the unredeemed portion of bonds being redeemed in part.] THIS BOND IS A SELF-LIQUIDATING BOND AND IS NOT A GENERAL OBLIGATION OF THE CITY AND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE CITY WITHIN ANY CONSTITUTIONAL, STATUTORY OR CHARTER LIMITATION, AND IS PAYABLE BOTH AS TO PRINCIPAL AND INTEREST SOLELY FROM THE NET REVENUES OF THE SYSTEM AND CERTAIN FUNDS AND ACCOUNTS ESTABLISHED UNDER THE BOND RESOLUTION. THE PRINCIPAL OF AND INTEREST ON THIS BOND ARE SECURED BY THE STATUTORY LIEN HEREINBEFORE DESCRIBED. The Board has covenanted and agreed, and covenants and agrees, to fix and maintain at all times while any bonds payable from the Net Revenues of the System shall be outstanding, such rates for service furnished by the System as shall be sufficient to provide for payment of the Regular Board Mtg. January 24,2012 Page 29 of 35 principal of and interest on the bonds of this issue and any other bonds payable from the Net Revenues as and when the same shall become due and payable, to provide for the payment of expenses of administration and operation and such expenses for maintenance of the System as are necessary to preserve the same in good repair and working order, and to provide for such other expenditures and funds for the System as are required by the Bond Resolution. It is hereby certified and recited that all acts, conditions and things required by law to be done precedent to and in the issuance of this bond and the series of bonds of which this is one have been done and performed in regular and due time and form as required by law. This bond is not valid or obligatory for any purpose until the Transfer Agent's Certificate of Authentication on this bond has been executed by the Transfer Agent. IN WITNESS WHEREOF, the City, acting through the Board, has caused this bond to be signed in its name by the Chairperson and Corporate Secretary of the Board, and a facsimile of the City's corporate seal to be printed hereon, all as of the Date of Original Issue. LANSING BOARD OF WATER AND LIGHT By Sandra Zerkle Chairperson (City Seal) Countersigned: By M. Denise Griffin Its: Corporate Secretary [INSERT STANDARD FORMS OF CERTIFICATE OF AUTHENTICATION AND ASSIGNMENT] Section 13. Financial Advisor, The Board hereby requests that Robert W. Baird & Co. Incorporated continue to serve the Board as Financial Advisor for the Refunding Bonds. Section 14. Bond Counsel. The Board hereby requests that Miller, Canfield, Paddock and Stone, P.L.C. continue to serve the Board as bond counsel for the Refunding Bonds. The Board recognizes that Miller, Canfield, Paddock and Stone, P.L.C. has represented from time to time, and currently represents, various underwriters, financial institutions, and other potential participants in the bond financing process, in matters not related to the issuance and sale of the Refunding Bonds, and approves them notwithstanding the potential concurrent representation of any other participant in the bond financing process in any unrelated matters. Section 15. Sale of Bonds. The Chief Financial Officer is hereby authorized, in consultation with the Financial Advisor, to determine whether it is in the best interest of the Board to sell the Refunding Bonds by negotiated sale or competitive sale. If the Chief Financial Officer determines, in consultation with the Financial Advisor, that due to the volatile nature of the bond market, in order to enable the Board to select and adjust terms for the Refunding Bonds, to enter the market on short notice at a point in time which appears to be most advantageous, and thereby possibly obtain a lower rate of interest on the Refunding Bonds, to achieve sale efficiencies so as to reduce the cost of issuance and interest expense, and in order to take advantage of the most favorable market for purchase of securities to be escrowed for payment of the Series 2002A Bonds to be refunded, then the Board hereby determines that it is in the best interests of the Board to negotiate the sale of the Refunding Bonds and the Refunding Bonds shall be sold at a negotiated sale instead of a competitive sale, If the Refunding Bonds are sold by negotiated sale then the Chief Financial Officer is hereby authorized, upon the advice of the Financial Advisor, to select a senior managing underwriter for the Refunding Bonds, or, in the alternative, to retain a placement agent to assist the Regular Board Mtg. January 24,2012 Page 30 of 35 Board in arranging the sale of the Refunding Bonds to a financial institution or other experienced investor. If the Refunding Bonds are sold to an underwriter, the Board reserves the right to name additional co-managers and/or to develop a selling group, and the Chief Financial Officer is authorized to name additional co-managers and/or to develop a selling group in consultation with the Financial Advisor. By adoption of this resolution the Board assumes no obligations or liability to the underwriter or placement agent for any loss or damage that may result to the underwriter or placement agent from the adoption of this resolution, and all costs and expenses incurred by the underwriter or placement agent in preparing for sale of the Refunding Bonds shall be paid from the proceeds of the Refunding Bonds, if the Refunding Bonds are issued, except as may be otherwise provided in the Bond Purchase Agreement for Refunding Bonds. If the Refunding Bonds are sold by competitive sale, the Chief Financial Officer is directed to prepare a Notice of Sale in consultation with the Financial Advisor and bond counsel, to cause the Notice of Sale to be published in The Bond Buyer, and to award sale of the Refunding Bonds to the lowest bidder in accordance with the terms of the Notice of Sale. Section 16. Bond Ratings and Bond Insurance, The Chief Financial Officer is hereby authorized to apply for bond ratings from such municipal bond rating agencies as deemed appropriate, in consultation with the Financial Advisor. If the Financial Advisor recommends that the Board consider purchase of municipal bond insurance, then the Chief Financial Officer is hereby authorized to negotiate with insurers regarding acquisition of municipal bond insurance, and, in consultation with the Financial Advisor, to select an insurer and determine which bonds, if any, shall be insured, and the Chief Financial Officer is hereby authorized to execute an agreement with the insurer relating to procedures for paying debt service on the insured bonds and notifying the insurer of any need to draw on the insurance and other matters. Section 17. Official Statement. The Chief Financial Officer is authorized to approve circulation of a Preliminary Official Statement or private placement memorandum describing the Refunding Bonds and, after sale of the Refunding Bonds, to prepare, execute and deliver a final Official Statement or private placement memorandum. Section 18. Continuing Disclosure. The Chief Financial Officer is hereby authorized to execute and deliver, prior to delivery of the Refunding Bonds, a written continuing disclosure undertaking as necessary in order to enable the underwriter or bond purchaser to comply with the requirements of Securities and Exchange Commission Rule 15c2-12. The continuing disclosure undertaking shall be in substantially the form which she shall, in consultation with bond counsel, determine to be appropriate. Section 19. Sale of Refunding Bonds. The Chief Financial Officer is authorized, in consultation with the Financial Advisor,to accept an offer to purchase the Refunding Bonds without further resolution of this Board, if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. This authorization includes, but is not limited to, determination of original principal amount of the Refunding Bonds; the prices at which the Refunding Bonds are sold; the date of the Refunding Bonds; the schedule of principal maturities and whether the Refunding Bonds shall mature serially or as term bonds; provisions for early redemption, if any, including mandatory redemption of term bonds, if any; the interest rates and payment dates of the Refunding Bonds; and application of the proceeds of the Refunding Bonds. Approval of the matters delegated to the Chief Financial Officer under this resolution may be evidenced by her execution of the Bond Purchase Agreement or other offer to purchase the Refunding Bonds, or a certificate of award of sale, or the Official Statement or private placement memorandum. The maximum interest rate on the Refunding Bonds shall not exceed 5.00%. The first maturity of principal on the Refunding Bonds shall occur no earlier than 2012, and the final date of maturity shall occur no later than 2018. The purchase price for the Refunding Bonds, exclusive of Regular Board Mtg. January 24,2012 Page 31 of 35 any original issue discount, shall not be less than 98.00% of the principal amount of the Refunding Bonds. In making such determinations the Chief Financial Officer is authorized to rely upon data and computer runs provided by the Financial Advisor. Section 20. Verification Agent. The Chief Financial Officer is hereby authorized, at her discretion, to select an independent certified public accountant to serve as verification agent to verify that the securities and cash to be deposited to the Escrow Fund will be sufficient to provide, at the times and in the amounts required, sufficient moneys to pay the principal of and interest on the Series 2002A Bonds being refunded as they become due or upon call for redemption. Section 21. 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 the Manager of Finance and Planning, the General Manager, or a person designated by the Chief Financial Officer or the General Manager 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, sale and delivery of the Refunding Bonds, 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 including but not limited to rating agency fees, bond insurance premiums, transfer agent fees, escrow agent fees, verification agent fees, financial advisor fees, placement agent fees, bond counsel fees, costs of printing the preliminary and final official statements, and any other costs necessary to accomplish sale and delivery of the Refunding Bonds. Section 22. Applicability of the Outstanding Bond Resolutions. Except to the extent supplemented or otherwise provided in this resolution, all of the provisions and covenants provided in the Bond Resolution shall apply to the Refunding Bonds issued pursuant to provisions of this resolution, such provisions of the Bond Resolution being made applicable to the Refunding Bonds. Section 23. Conflicting Resolutions. All resolutions and parts of resolutions insofar as they conflict with the provisions of this resolution are hereby rescinded. Section 24. 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 25. 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 City Pulse or the Lansing State Journal, either of which is a newspaper of general circulation in the City qualified under State law to publish legal notices, promptly after its adoption, and 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 26. 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 and the users of the System. In accordance with the provisions of Section 6 of Act 94, this resolution shall become effective immediately upon its adoption. We hereby certify that the foregoing is a true and complete copy of a resolution duly adopted by the Board of Commissioners of the Lansing Board of Water and Light at a Regular meeting held on January 24, 2012, at 5:30 p.m., 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. Regular Board Mtg. January 24,2012 Page 32 of 35 We further certify that the following Commissioners were present at said meeting Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Marilyn Plummer, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle and that the following Commissioners were absent None. We further certify that Commissioner Margaret Bossenbery moved adoption of said resolution, and that said motion was supported by Commissioner Cynthia Ward. We further certify that the following Commissioners voted for adoption of said resolution Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Marilyn Plummer, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle and that the following Commissioners voted against adoption of said resolution None. We 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. Sandra Zerkle M. Denise Griffin Chairperson Corporate Secretary General Manager J. Peter Lark addressed observations that were tendered to the Board of Commissioners at the January 19, 2012 Rate Increase Public Hearing. After providing a response to questions and concerns that were addressed by the public at the Rate Hearing, General Manager Lark respectfully asked that the Board approve the resolutions for the water, steam and electric rate schedule. RESOLUTION#2012-01-03 Water and Steam Rate Increases- Electric Rate Adjustment WHEREAS, the Corporate Financial Targets for each of the Lansing Board of Water and Light's strategic business units is a 6.18% return on net fixed assets and materials and supplies that would require $12.3 million of water net income and$2.8 million of steam net income; and WHEREAS, the Fiscal Year 2012 budget filed with the City of Lansing included the proposed rate increases for the water and steam utilities; and WHEREAS, the Fiscal Year 2012 budget with the proposed rate adjustments would result in a water net loss of$690,000 or a negative 0.35% return on net fixed assets and materials and supplies; and WHEREAS,the Fiscal Year 2012 budget with the proposed rate adjustments would result in a steam net loss of$2.4 million or a negative 5.51% return on net fixed assets and materials and supplies; and WHEREAS, the Staff proposes to increase annual water billings by$2.5 million; and WHEREAS, the Staff proposes to increase annual steam billings by$0.8 million; and WHEREAS, BWL production facilities produce electricity to serve the needs of BWL retail customers; and Regular Board Mtg. January 24,2012 Page 33 of 35 WHEREAS, BWL electricity production occasionally exceeds the requirements of retail customers and the excess is sold on the wholesale power market; and WHEREAS, sales of excess electricity production in the wholesale market is an integral part of providing electric service to BWL retail customers, and should not be treated as a stand-alone business; and WHEREAS, to recognize that wholesale sales are integral to BWL electric operations, the Staff proposes offsetting revenue-neutral rate adjustments, decreasing the electric ECA by$0,0035 per kWh and increasing electric commodity charges by$0.0035 per kWh; and WHEREAS, the notice of the proposed increases was communicated to all customers by public notice on January 4, 2012, and a public hearing was held on January 19, 2012 to receive comments on the proposed increases; and WHEREAS, the Board of Commissioners has considered the comments of the public as well as recommendations made by the BWL. RESOLVED, that the water, steam, and electric rate schedules listed below and detailed in the attached rate schedules be adopted and made effective for water, steam, and electric consumption on or after March 1, 2012. Motion by Commissioner Louney seconded by Commissioner Bossenbery, to approve the resolution for water, steam and electric rates schedules effective March 1, 2012. Action: Carried unanimously Water: (Attachment A) Residential Service—Rate 1 General Service—Rate 2 Fire Service—Rate 4 Lawn Sprinkling Service—Rate 5 Fire Hydrant—Rate 6 Steam: (Attachment B) General Service—Rate 1 Industrial Service—Rate 2 Residential Service —Rate 5 Electric: (Attachment C) Residential Service—Rate 1 General Service—Rate 3 Large General Service—Rate 4 Primary Service—Rate 5 Municipal Water Pumping Service—Rate 7 Large Capacity Service—Rate 8 Space Conditioning and Water Heating Service—Rate 12 Residential Senior Citizen Service—Rate 21 Residential Plug-In Electric Vehicle Service—Rate 22 Energy Cost Adjustment Regular Board Mtg. January 24,2012 Page 34 of 35 UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS There was no New Business RESOLUTIONS There were no Resolutions under this section. MANAGER'S REMARKS General Manager Lark stated that the Board of Water& Light has won the 2012 ASM Corporate Award from the Agricultural Society of Michigan. The Board of Water& Light won this award as a business that provides financial support to the agriculture industry through sponsorships of meetings and workshops and providing volunteers or in-kind services for arboriculture projects. This award relates to the Board of Water&Light's tree trimming and preservations of good-looking trees. General Manager Lark stated that the Wine& Cheese Extravaganza-Dancing with the Starz event that is designed to benefit the "Pennies for Power"and Capital Area Community Services, is going to be held on March 8, 2012. COMMISSIONERS' REMARKS Chair Zerkle read the following letter into the record: On behalf of the BWL Board of Commissioners, I thank the LSJ for its interest in proposed water and steam rate increases (Jan. 15 editorial). While the board will surely take your comments into consideration, I would like to point out that the BWL has already undertaken significant cost-saving measures: ■ All departments have seen budget cuts of 10 percent or more, including the Board of Commissioners' budget. ■ Almost half of our employees received no salary increase last year. ■ The work force has been reduced nearly 10 percent. ■ BWL employees have taken eight unpaid furlough days. Additionally, our commission plans a thorough review of health-care premium cost-sharing, in light of Public Act 152. Commissioners will continue taking a hard look at BWL costs, and as always our chief concern will be our customers. The BWL faces needed upgrades to an infrastructure dating back to the turn of the last century. Cities across the country face similar, expensive upgrades. Please know our board will base its decision on behalf of our customers—whom the BWL has served faithfully for 127 years. Sandra Zerkle, Chair Regular Board Mtg. January 24,2012 Page 35 of 35 Board of Commissioners Lansing Board of Water& Light Chair Zerkle also stated some increases have been imposed due to Environmental Protection Agency implementing new regulations on utilities. PUBLIC COMMENTS There was no Public Comment EXCUSED ABSENCE None ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Plummer the meeting adjourned at 5:55 p.m. M.Denise Griffin,Corporate Secretary Preliminary Minutes fled with Lansing City Clerk:February 1,2012 Final Approved Minutes filed with the Lansing City Clerk:March 30,2012 PRERLIMINARY MINUTES To be approved by the Hoard of Commissioners on 3-27-12 - 1.�j - �.„....,,r.,,�,�P nW. <,.•. MINUTES OF THE BOARD OF COMMISSIONERS' MEETING < >' LANSING BOARD OF WATER AND LIGHT "~ January 24, 2012 The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chairperson Sandra Zerkle called the meeting to order at 5:30 p.m. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Marilyn Plummer, David Price, Cynthia Ward, Tracy Thomas and Sandra Zerkle. Absent: None. The Corporate Secretary declared a quorum present. Commissioner David Price led the Pledge of Allegiance. APPROVAL OF MINUTES Motion by Commissioner Price seconded by Commissioner Plummer to approve the minutes of the Regular Board Meeting minutes of November 15, 2011. 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. Jim Harkin, no address given, stated that when the Board of Water& Light provided water to the surrounding areas of Lansing, the City's citizens paid a lot of money for the installations of pipelines and pumping stations. And because the citizens of Lansing have already paid so much the water rate increase should be applicable to citizens in the surrounding areas only. ------------------ COMMUNICATIONS a. Letter of appreciation to Commissioner Bossenbery from Douglas M. Johnson for assisting with setting up a tour of the Eckert Station Received and Place on File b. Letter from David A. Cripe of 1138 W. Maple Street, Lansing, regarding billing charges. Regular Board Mtg. January 24,2012 Page 2 of 35 Received and Place on File c. Letter from Retiree Mary Dwyer regarding changes to retirees health care prescription program Received and Place on File d. Communication from Ron Byrnes, Business Manager of Local 352, submitting his written public comments from the January 10, 2012 Committee of the Whole meeting and a copy of the Michigan Early Retiree Reinsurance Program letter Received and Place on File e, Letter submitted by Board of Water& Light Retiree Roger Jeffers from attorneys to LBWL management regarding health care costs to retirees Received and Place on File f. Emails of opposition to the proposed rate increases from Sonya Butler of 410 West Street, Lansing, and Brad Vauter of 1805 Drexel Road, Lansing Received and Place on File • Also received: o A letter from attorneys submitted by Ron Byrnes, Business Manager for IBEW Local 352 regarding post-retirement healthcare benefits. o Email from Ron Byrnes Sr., Chair of Board of Water& Light's Retirees pension and Benefits Committee regarding a request for updated financial information. Received and Place on File COMMITTEE REPORTS COMMITTEE OF THE WHOLE January 10, 2012 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, January 10, 2012. Committee Chair Louney called the Committee of the Whole meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Marilyn Plummer, Tracy Thomas, David Price, Cynthia Ward and Sandra Zerkle, Absent: None Public Comments Regular Board Mtg. January 24,2012 Page 3 of 35 Ron Byrnes, Business Manager of Local 352 stated his concerns regarding the Publicly Funded Health Insurance Contribution Act(PA 152). He asked the Board consider his comments before moving forward with making any decisions regarding PA 152. (Mr. Byrnes submitted his comments and information on the Michigan Early Retiree Reinsurance Program to be included as part of the official record) Jan Simpson, President of the Board of Water& Light Retiree Association, stated her concerns regarding PA 152. She stated that as a spokesperson for the retirees that it would be appreciated if both Commissioners and Management would be cognizant of the fact that retirees must manage bills on a fixed income and cannot afford health care increases such as higher prescription co-pays and office calls. Max Zemer, Board of Water& Light retiree and former Business Manager of Local 352, stated his concerns regarding the proposed health care changes. Mr. Zemer asked that this matter be tabled until all parties that are involved have a chance to review the proposed changes so that intelligent comments can be made. Roger Jeffers, Board of Water & Light retiree, submitted a letter that was written by attorneys to the Board of Water& Light's management in 2004 regarding health care cost to Board of Water& Light retirees. He asked that the letter be reviewed and stated that the retirees are ready to follow through on options presented in the letter. Rosemary Sullivan, Board of Water& Light retiree, stated concerns about the health care cost changes and how it would affect retirees. Approval of Minutes Motion by Commissioner Bossenbery, seconded by Commissioner Thomas to approve the Committee of the Whole meeting minutes of November 8, 2011. Action: Motion Carried Healthcare Presentation General Manager Lark stated that the health care presentation packet is the same as presented at the November 15, 2011 Human Resource Committee meeting, with one addition on page#10 of the committee packet and that is alternative premium sharing options. General Manager Lark stated that the purpose of his presentation is to initiate discussion regarding Board compliance with Public Act 152. Many of the other changes that he discussed do not require Board approval such as co-pays. The Board of Water& Light must comply with the benefit caps required under PA 152 unless the Board opts out of PA 152 entirely with a 2/3rd vote of its members. Alternatively, with a majority vote, the Board may opt to limit expenditures on health care cost on an 80-20 percentage split. The complete opt out option requires that a 2/3rd vote take place each year. When the Board does make a decision it will be for both bargaining and non- bargaining, however the effective dates will be different due to the union contact. General Manager Lark thanked the retirees for attending the meeting and for all of their comments. Regular Board Mtg. January 24,2012 Page 4 of 35 General Manager Lark stated that he would like to bring the retirees in-line with the rest of the Board of Water& Light employees with respect to deductibles for office visits, emergency room visits and prescription drugs. After a lengthy discussion Chair Zerkle stated that the Board will take all matters into consideration and review all the options. Rate Presentation General Manager Lark presented the Board with rate change information that will be presented at the Public Hearing on January 19, 2012. He reviewed the effect of Water Rates Increases from 1% t0 9%. Revenue Customer Cost Board of Water& Light (Mo.) 1% $283,000 $0.24 2% $566,000 $0.49 3% $849,000 $0.73 4% $1,132,000 $0.97 5% $1,415,000 $1.22 6% $1,698,000 $1.46 7% $1,981,000 $1.70 8% $2,264,000 $1.95 9% $2,547,000 $2.19 General Manager Lark provided the Board of Commissioners with a copy of the Board of Water & Light's Rate Making Principles, which was approved by the Board in January 2000. Rate Making Principles 1, Rates shall be established at a level that will enable the Board of Water and Light(BWL) to meet its mission of serving the Greater Lansing area by providing high quality utility services, reliably, at the lowest reasonable cost. 2. The BWL shall recover the costs of serving its customers through its rates. Rates and charges should be sufficient to cover all 0 & M expenses, payment to the city, depreciation expense, and a reasonable return on the BWL's capital investment. 3. The return on the BWL's capital investment shall be sufficient to provide cash flow for debt service, bond coverage, and capital improvements. 4. Board of Water& Light rates should reflect as closely as possible the goals and desires of its customers. 5. Those who benefit from the BWL's services should pay for those services. 6. Rates for each class of customer should, as nearly as practicable, reflect the cost of providing service to that class. Regular Board Mtg. January 24,2012 Page 5 of 35 7. Each utility managed by the BWL should be self-supporting. No utility should subsidize any other utility. 8. Rates should be reviewed annually and adjusted as deemed necessary to maintain the financial integrity of the BWL, and minimize the financial impact on our customers. 9. Rates shall be established and implemented according to Lansing City Charter, Section 5- 205, refers to the BWL authority to set just and reasonable rates and defines the public hearing process. General Manager Lark stated that the Board of Water& Light is in the middle of the pact when comparing residential municipal water bills. NERC Compliance Policy Resolution General Manager Lark presented the Board with a resolution for electric reliability standards that is required by the Federal Energy Regulatory Commissioner, the North American Electric Reliability Council and the Reliability First Corporation. General Manager Lark asked that the Board forward the proposed resolution to the full Board for consideration. RESOLUTION WHEREAS, electric reliability is indispensable for economic growth and development and to promote and protect public safety and welfare; WHEREAS, the Energy Policy Act of 2005 directed the Federal Energy Regulatory Commission to adopt mandatory electric reliability standards for all electric utilities in the United States; WHEREAS, the Federal Energy Regulatory Commission has delegated responsibility for developing and implementing national electric reliability standards to the National Electric Reliability Corporation; WHEREAS, the Board is committed to maintaining a highly reliable electric system within its service territory; WHEREAS, the Board is subject to reliability standards developed and implemented by the National Electric Reliability Corporation; BE IT RESOLVED, that the BWL shall develop and implement an electric reliability program that assures compliance with applicable electric reliability standards adopted by the National Electric Reliability Corporation. Motion by Commissioner Price, seconded by Commissioner Ward to forward the NERC Compliance Policy resolution to full Board for consideration. Action: Carried Unanimously Eastwood Town Center Regular Board Mtg. January 24,2012 Page 6 of 35 General Manager Lark provided an update on the Eastwood Town Center. He stated that the Board of Water& Light has entered into an agreement with the Lansing Township Downtown Development Authority to service the facility; however Consumers Energy has advised that despite a contract with the customer, they believe they have a right to serve the Town Center. REO Town Update Susan Devon, Assistant General Manager and Chief Financial Officer updated the Board on the progress of the building of the new co-generation plant. She stated that a lot of working is being done on the Depot and the outside of the Depot building is near completion. She said the project is on time and on budget. Customer Updates General Manager Lark provided updates on the Trimbley and Cripe families who had concerns with work that had been done by the Board of Water& Light. He stated that staff has addressed concerns and issues and all parties are satisfied with solutions. Other General Manager Lark thanked the retirees for attending tonight's meeting and encouraged them to either contact him or the Board of Commissioners with any questions or issues. Absence None Adjourn On Motion by Commissioner Price, seconded by Commissioner Plummer, the meeting adjourned at 6:30 p.m. Respectfully Submitted Dennis M. Louney, Chair Committee of the Whole FINANCE COMMITTEE January 10, 2012 The Finance Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 6:37 p.m. on Tuesday, January 10, 2012. Finance Committee Chairperson Margaret Bossenbery called the meeting to order and asked the Secretary to call the roll. The following members were present: Commissioners Margaret Bossenbery, Dennis M. Louney, Marilyn Plummer and David Price. Alternate Committee member Sandra Zerkle was present. Also present was Board member Cynthia Ward and Anthony McCloud. Absent: None Public Comments There were no public comments. Regular Board Mtg. January 24,2012 Page 7 of 35 Approval of Minutes Motion by Commissioner Price, seconded by Commissioner Louney to approve the Finance Committee meeting minutes of November 8, 2011. Action: Carried unanimously. Refunding 2002 A Bonds Resolution General Manager Lark stated that by refunding the 2002A Series Bond it is an opportunity for a net savings of about$3,000,000. General Manager Lark introduced the Board of Water& Light's Bond Counsel Bill Danhof of Miller Canfield, who was there to answer any questions for the Commissioners. General Manager Lark asked that the Committee forward the Twelfth Supplemental Revenue Bond Resolution to the full Board for consideration. Resolution Lansing Board of Water and Light TWELFTH SUPPLEMENTAL REVENUE BOND RESOLUTION A RESOLUTION TO AUTHORIZE: • Present Value Savings by refunding the Series 2002A Bonds through issuance of up to $23,000,000 of Refunding Bonds; • Sale by Negotiated or Competitive Sale upon advice of Financial Advisor; • Chief Financial Officer to sell Refunding Bonds without further resolution; • Other matters relative to issuance, sale and delivery of the Refunding Bonds. WHEREAS, from time to time the City of Lansing, acting by and through the Lansing Board of Water and Light, has issued revenue bonds payable from revenues of the water supply, steam, chilled water and electric utility system (the "System") under the provisions of Act 94, Public Acts of Michigan, 1933, as amended, and a Bond Resolution adopted by the Board and amended and restated on October 24, 1989 and further amended and supplemented from time to time (the "Bond Resolution"); and WHEREAS, all terms not defined herein shall have the meanings set forth in the Bond Resolution; and WHEREAS, under the terms of the Sixth Supplemental Revenue Bond Resolution adopted July 23, 2002, the Board issued the Water Supply, Steam and Electric Utility System Revenue Bonds, Series 2002A (the "Series 2002A Bonds") for the purpose of financing the cost of remodeling, updating and extending the life of the System, primarily at the Eckert and Erickson Stations (the "Series 2002A Project"); and WHEREAS, the Board's Financial Advisor, Robert W. Baird & Co, Incorporated (the "Financial Advisor"), has advised the Board that it may be able to accomplish a net savings of debt service costs, and thereby reduce the cost to the Board of the Series 2002A Project, by refunding all or a portion of the outstanding Series 2002A Bonds through the issuance of revenue refunding bonds in an aggregate principal amount of not-to-exceed $23,000,000 (the "Refunding Bonds"); and WHEREAS, Section 18(b) of the Bond Resolution authorizes the issuance of Additional Bonds of equal standing and priority of lien with the outstanding Bonds for the purposes of refunding a part of the Outstanding Bonds and paying costs of issuing such Additional Bonds, if after giving effect to the refunding the maximum amount of Aggregate Debt Service in each future Regular Board Mtg. January 24,2012 Page 8 of 35 fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding; and WHEREAS, in order to take advantage of the most favorable market for sale of the Refunding Bonds and purchase of securities to be escrowed for payment of the Series 2002A Bonds to be refunded, the Board wishes to authorize the Chief Financial Officer to sell the Refunding Bonds at negotiated or competitive sale without further resolution of the Board; and WHEREAS, the conditions and requirements of the Bond Resolution for the issuance of Additional Bonds of equal standing and priority of lien with outstanding bonds have been met for the issuance of the proposed Refunding Bonds. NOW, THEREFORE, BE IT RESOLVED THAT: Section 1, Definitions. All terms not defined herein shall have the meanings set forth in the Bond Resolution, and whenever used in this Bond Resolution, except when otherwise indicated by the context, the following terms shall have the following meanings: (a) "Additional Bonds" means any Additional Bonds of equal standing with the Series 2008A Bonds, the Series 2011A Bonds, and the Refunding Bonds which are issued pursuant to Section 18(a) of the Bond Resolution as amended by Section 13 of the Tenth Supplemental Revenue Bond Resolution. (b) "Bond Resolution" means the Bond Resolution adopted by the Board on September 26, 1989, as amended and restated on October 24, 1989 and supplemented by the First Supplemental Revenue Bond Resolution adopted by the Board on October 26, 1993, the Second Supplemental Revenue Bond Resolution adopted by the Board on January 11, 1994, the Third Supplemental Revenue Bond Resolution adopted on September 2, 1999, the Fourth Supplemental Revenue Bond Resolution adopted October 26, 1999 and amended on August 12, 2008 and June 9, 2009, the Fifth Supplemental Bond Resolution adopted by the Board April 24, 2001, the Sixth Supplemental Revenue Bond Resolution adopted by the Board on July 23, 2002, the Seventh Supplemental Bond Resolution adopted by the Board on July 23, 2002, the Eighth Supplemental Revenue Bond Resolution adopted on August 12, 2003, the Ninth Supplemental Revenue Bond Resolution adopted on July 26, 2005, the Tenth Supplemental Revenue Bond Resolution adopted on January 29, 2008, Eleventh Supplemental Revenue Bond Resolution adopted on May 10, 2011, this Twelfth Supplemental Revenue Bond Resolution, and any other resolution which amends or supplements the Bond Resolution. (c) "Bonds" means the Series 2008A Bonds, the Series 2011A Bonds, the Refunding Bonds and any Additional Bonds of equal standing hereafter issued. (d) "Chief Financial Officer" means the Board's Assistant General Manager and Chief Financial Officer. (e) "Refunding Bonds" means the refunding bonds issued pursuant to this Twelfth Supplemental Revenue Bond Resolution to be designated as the "Utility System Revenue Refunding Bonds, Series 2012K or such other series designation as shall reflect the date of sale or delivery of the Refunding Bonds. (f) "Reserve Requirement" means the Reserve Requirement established by Section 11 of the Tenth Supplemental Revenue Bond Resolution and described in Section 8 herein. (g) "Series 2002A Escrow Agreement" means the Series 2002A Escrow Agreement described in this Resolution to provide for payment of principal of and interest on the Series 2002A Bonds being refunded. (h) "Series 2002A Escrow Fund" means the Series 2002A Escrow Fund established pursuant to the Series 2002A Escrow Agreement to hold the cash and investments Regular Board Mtg. January 24,2012 Page 9 of 35 necessary provide for payment of principal of and interest on the Series 2002A Bonds being refunded. (i) "Series 2002-2005 Bonds" means: the Water Supply, Steam and Electric Utility System Revenue Bonds, Series 2002A, the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2002B, the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A, and the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2005A. (j) "Series 2008A Bonds" means the Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A, (k) "Series 2011A Bonds" means the Utility System Revenue Bonds, Series 2011A. (1) "System" means the complete facilities of the Board for the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, including all plants, works, instrumentalities and properties used or useful in connection with the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, and all additions, extensions and improvements thereto existing or hereafter acquired by the Board. Section 2. Conditions Permitting Issuance of Additional Bonds. Pursuant to Section 18(b) of the Bond Resolution, the Board hereby determines that the Refunding Bonds shall be issued as Additional Bonds for the purpose of refunding all or a portion of the Series 2002A Bonds and paying costs of issuance of the Refunding Bonds, only if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. The Board hereby determines that the Board is not in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund. Section 3. Refunding of Series 2002A Bonds; Refunding Bonds Authorized; Applicable Law. If refunding all or a portion of the Series 2002A Bonds will accomplish a net savings of debt service costs, then in order to pay costs of refunding all or a portion of the Series 2002A Bonds, including the payment of the costs of legal, financial, bond insurance (if any), underwriter's discount, and other expenses incident thereto and incident to the issuance and sale of the Refunding Bonds, the City, acting by and through the Board, shall borrow the sum of not-to- exceed Twenty-Three Million Dollars ($23,000,000) as finally determined upon the sale thereof, and issue the Refunding Bonds therefor. The Refunding Bonds shall be payable solely out of the Net Revenues of the System, City Council shall not be requested to pledge the full faith and credit of the City for payment of the Refunding Bonds. The Refunding Bonds shall be sold and the proceeds applied in accordance with the provisions of Act 94. The remaining period of usefulness of the Series 2002A Project is estimated to be not less than seven (7) years. Section 4. Refunding Bond Details, The Refunding Bonds shall be designated as the "UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 2012K or such other series designation as determined at the time of sale by the Chief Financial Officer to reflect the date of sale or delivery of the Refunding Bonds. The Refunding Bonds shall be issued as fully registered bonds registered in the denomination of$5,000 or integral multiples thereof and shall be numbered in consecutive order of registration or authentication from 1 upwards. The Refunding Bonds shall be dated as of the date of delivery thereof or such other date as determined at the time of sale of the Refunding Bonds, shall mature as serial bonds or term bonds on such dates as shall be determined at the time of sale of the Refunding Bonds but not-to-exceed seven annual maturities. The Refunding Bonds shall be subject to optional and mandatory redemption prior to maturity at the times and prices finally determined at the time of sale of the Refunding Bonds, or shall not be subject to redemption prior to maturity, as finally determined at the time of sale of the Refunding Bonds Regular Board Mtg. January 24,2012 Page 10 of 35 The Refunding Bonds shall bear interest at a rate or rates to be determined on sale thereof, payable on July 1, 2012, or such other date as provided at the time of sale of the Refunding Bonds, and semi-annually thereafter on January 1st and July 1st of each year. The Refunding Bonds shall be executed by the manual or facsimile signature of the Chairperson and the Corporate Secretary of the Board. No Refunding Bond shall be valid until authenticated by an authorized representative of the Transfer Agent. The Refunding Bonds shall be delivered to the Transfer Agent for authentication and be delivered by the Transfer Agent to the purchaser in accordance with instructions from the Chief Financial Officer upon payment of the purchase price for the Refunding Bonds. Executed blank bonds for registration and issuance to transferees shall be delivered to the Transfer Agent for safekeeping from time to time as necessary. Notwithstanding the foregoing provisions, if the Refunding Bonds are sold through private placement, then the Refunding 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, and authentication by the Transfer Agent shall not be required for any bond signed by the manual signature of either the Chairperson or the Corporate Secretary of the Board. Section 5. Registration and Transfer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as bond registrar, paying agent and transfer agent (the "Transfer Agent") for the Refunding Bonds. The Chief Financial Officer is hereby authorized to execute one or more agreements with the Transfer Agent on behalf of the Board. The Board reserves the right to replace the Transfer Agent at any time, provided written notice of such replacement is given to the registered owners of record of bonds not less than sixty (60) days prior to an interest payment date. Principal of and interest on the Refunding Bonds shall be payable by check or draft mailed by the Transfer Agent to the registered owner at the registered address as shown on the registration books of the Board maintained by the Transfer Agent. Interest shall be payable to the person or entity who or which is the registered owner of record as of the fifteenth (15th) day of the month prior to the payment date for each interest payment. The date of determination of the registered owner for purposes of payment of interest as provided in this paragraph may be changed by the Board to conform to market practice in the future. The Refunding Bonds may be issued in book-entry-only form through The Depository Trust Company in New York, New York ("DTC"), and the Chief Financial Officer is authorized to execute such custodial or other agreement with DTC as may be necessary to accomplish the issuance of the Refunding Bonds in book-entry-only form and to make such changes in the form of the Refunding Bonds within the parameters of this resolution as may be required to accomplish the foregoing. Notwithstanding the foregoing, if the Refunding Bonds are held in book-entry-only form by DTC, payment of principal of and interest on the Refunding Bonds shall be made in the manner prescribed by DTC. The Refunding Bonds may be transferred upon the books required to be kept by the Transfer Agent pursuant to this section by the person or entity in whose name it is registered, in person or by the registered owner's duly authorized attorney, upon surrender of the bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Transfer Agent. Whenever any bond shall be surrendered for transfer, the Board shall execute and the Transfer Agent shall authenticate and deliver a new bond of the same series in like aggregate principal amount, maturity and interest rate. The Transfer Agent shall require the payment by the bondholder requesting the transfer of any tax or other governmental charge required to be paid with respect to the transfer. Notwithstanding the foregoing, if Bonds are held by DTC in book-entry-only form, the transfer of Bonds shall be made in the manner prescribed by DTC. Regular Board Mtg. January 24,2012 Page 11 of 35 Section 6. Deposit to Bond Reserve Account. On or prior to the date of delivery of the Refunding Bonds, the Board shall deposit into the Bond Reserve Account any amount necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. The Board may meet the Reserve Requirement by a letter of credit, a surety bond, or an insurance policy if the provider or issuer thereof shall be rated AAA by Moody's Investors Service and Standard and Poor's Corporation or any successor to either, and the Chief Financial Officer is hereby authorized to execute an agreement with the provider or issuer of the letter of credit, surety bond, or insurance policy. Section 7. Refunding Bond Proceeds. From the proceeds of sale of the Refunding Bonds there first shall be immediately deposited in the Redemption Fund an amount equal to the accrued interest and premium, if any, received on delivery of the Refunding Bonds, and the Board may take credit for the amount so deposited against the amount required to be deposited in the Redemption Fund for payment of the next maturing interest on the Refunding Bonds. Notwithstanding the foregoing, at the discretion of the Chief Financial Officer, all or a portion of any premium received upon delivery of the Refunding Bonds may be deposited in the Bond Reserve Account or the Series 2002A Escrow Fund in consultation with Bond Counsel, There shall next be deposited in the Bond Reserve Account an amount, if any, designated at the time of sale of the Refunding Bonds as necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. There shall next be deposited in the Series 2002A Escrow Fund from the proceeds of sale of the Refunding Bonds cash and investments in direct obligations of or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, not redeemable at the option of the issuer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as Escrow Agent under the Series 2002A Escrow Agreement. The Escrow Agent shall hold the Series 2002A Escrow Fund in trust pursuant to the Series 2002A Escrow Agreement which shall irrevocably direct the Escrow Agent to take all necessary steps to call the Series 2002A Bonds being refunded for redemption as specified in the Series 2002A Escrow Agreement. Either the Chief Financial Officer or the Manager of Finance and Planning is hereby authorized to execute and deliver the Series 2002A Escrow Agreement, to transfer any moneys as they may deem necessary from the Redemption Fund to the Series 2002A Escrow Fund, and to purchase, or cause to be purchased, escrow securities, including, but not limited to, United States Treasury Obligations — State and Local Government Series (SLGS), for deposit in the Series 2002A Escrow Fund, The Chief Financial Officer is directed to deposit to the Series 2002A Escrow Fund, from Refunding Bond proceeds and other moneys as necessary, an amount which, together with investment proceeds to be received thereon, will be sufficient, without reinvestment, to pay the principal of and interest on the Series 2002A Bonds being refunded as they become due or upon call for redemption. The remaining proceeds of the Refunding Bonds shall be deposited in a fund which may be established in the Series 2002A Escrow Agreement to pay costs of issuance of the Refunding Bonds and the costs of refunding the Series 2002A Bonds. Any moneys remaining after payment of costs of issuance and costs of refunding the Series 2002A Bonds being refunded shall be transferred to the Redemption Fund and used to pay interest on the Refunding Bonds. Section 8. Reserve Requirement. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board must comply with the Reserve Requirement as defined in Section 1 (ff) of the Bond Resolution as amended and restated on October 24, 1989, which is the lesser of (a) the maximum Aggregate Debt Service Requirement for the then current and any subsequent operating year and (b) ten percent of the aggregate proceeds of all Outstanding Bonds. After payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, "Reserve Requirement" shall mean the following as established by Section 11 of the Tenth Supplemental Revenue Bond Resolution: the lesser of (i) the maximum annual debt service Regular Board Mtg. January 24,2012 Page 12 of 35 requirements on the Outstanding Bonds, (ii) 125% of the average annual debt service requirements on the Outstanding Bonds, or (iii) the total of 10% of the original aggregate face amount of each series of the Outstanding Bonds, reduced by the net original issue discount, if any; provided, however, that the Reserve Requirement shall not at any time exceed the amount allowed to be invested at an unrestricted yield pursuant to Treas. Reg. Section 1.148 2(f)(2) or any successor provision thereto as applicable to the Bonds. Section 9. Rate Covenant. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board will comply with the Section 9 of the Bond Resolution, as previously amended by Section 5 of the Second Supplemental Revenue Bond Resolution, and the Board will at all times fix, establish, maintain and collect rates, fees and charges for the sale of the output, capacity, use or service of the System which, together with other income, are reasonably expected to yield Net Revenues equal to at least 150% of the Aggregate Debt Service Requirement for the forthcoming twelve month period plus such amount as is necessary to comply with all covenants in the Bond Resolution and to pay all charges and liens whatsoever payable out of Net Revenues in such period. After payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the following provision shall apply as provided in Section 12 of the Tenth Supplemental Revenue Bond Resolution, The Board will at all times fix, establish, maintain and collect rates, fees and charges for the sale of the output, capacity, use or service of the System which, together with other income, are reasonably expected to yield Net Revenues equal to at least 125% of the Aggregate Debt Service Requirement for the forthcoming twelve month period plus such amount as is necessary to comply with all covenants in the Bond Resolution and to pay all charges and liens whatsoever payable out of Net Revenues in such period. Section 10. Additional Bonds Test. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board must comply with the additional bonds test imposed by Section 6 of the Second Supplemental Revenue Bond Resolution adopted January 11, 1994. After payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the following provision shall apply as provided in Section 13 of the Tenth Supplemental Revenue Bond Resolution. 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 the 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 purpose of refunding a part of any Outstanding Bonds (unless such partial refunding is done in compliance with (b) below) and paying costs of issuing such Additional Bonds, including deposits which may be required to be made to a bond reserve account. 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 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 Bonds and on the Additional Bonds then being issued. If the Additional 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 Bonds. Regular Board Mtg. January 24,2012 Page 13 of 35 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 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 Bonds to be issued. No Additional Bonds of equal standing as to the Net Revenues of the System shall be issued pursuant to the authorization contained in subparagraphs (a) or (c) if the Board shall then be in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund. Additional Bonds may be issued as provided in Section 18 subparagraphs (b) or (c) of the Bond Resolution, Section 11. Covenants. The Board covenants and agrees as follows with the holders of the Refunding Bonds as long as any of the Refunding Bonds remain outstanding and unpaid as to either principal or interest: (a) The Board covenants and agrees with the Registered Owners of the Refunding Bonds that as long as any of the Refunding Bonds remain outstanding and unpaid as to either principal or interest, the Board shall not invest, reinvest or accumulate any moneys deemed to be proceeds of the Refunding Bonds pursuant to the Internal Revenue Code in such a manner as to cause the Refunding Bonds to be "arbitrage bonds" within the meaning of the Internal Revenue Code. The Board hereby covenants that, to the extent permitted by law, it will take all actions within its control and that it shall not fail to take any action as may be necessary to maintain the exemption of interest on the Refunding Bonds from gross income for federal income tax purposes, including but not limited to, actions relating to the rebate of arbitrage earnings, if applicable, and the expenditure and investment of Bond proceeds and moneys deemed to be Bond proceeds, all as more fully set forth in the Tax Compliance Certificate to be delivered by the Board with the Refunding Bonds. (b) The Board will not issue additional bonds of prior standing to the Refunding Bonds. Section 12. Bond Form. The Refunding Bonds shall be in substantially the following form with such revisions, additions and deletions as the Board may deem advisable or necessary to comply with the final terms of the Refunding Bonds established upon sale thereof: BOND No. R- UNITED STATES OF AMERICA STATE OF MICHIGAN COUNTIES OF INGHAM AND EATON Regular Board Mtg. January 24,2012 Page 14 of 35 CITY OF LANSING LANSING BOARD OF WATER AND LIGHT UTILITY SYSTEM REVENUE REFUNDING BOND, SERIES 2012A Interest Rate Date of Maturity Date of Original Issue CUSIP Registered Owner: Cede & Co. Principal Amount: The City of Lansing, Counties of Ingham and Eaton, State of Michigan (the "City"), acting through the governing body of the Lansing Board of Water and Light (the 'Board"), acknowledges itself to owe and for value received hereby promises to pay to the Registered Owner specified above, or registered assigns, only from the Net Revenues of the System as hereinafter provided, the Principal Amount specified above, in lawful money of the United States of America, on the Date of Maturity specified above, [unless prepaid prior thereto as hereinafter provided,] with interest thereon (computed on the basis of a 360-day year of twelve 30-day months) from the Date of Original Issue specified above or such later date to which interest has been paid, until paid, at the Interest Rate per annum specified above, first payable on [interest payment date] and semiannually thereafter. Principal of this bond is payable at the designated corporate trust office of [transfer agent], or such other transfer agent as the Board may hereafter designate by notice mailed to the registered owner of record not less than sixty (60) days prior to any interest payment date (the "Transfer Agent"). Interest on this bond is payable by check or draft mailed by the Transfer Agent to the person or entity who or which is as of the fifteenth (15th) day of the month prior to each interest payment date, the registered owner of record at the registered address. For the prompt payment of principal and interest on this bond, the revenues received by the Board from the operations of the water supply and electric utility systems including the steam, steam heat and chilled water distribution systems (the "System") after provision has been made for reasonable and necessary expenses of operation, maintenance and administration of the System (the "Net Revenues"), are irrevocably pledged and a statutory lien thereon has been created to secure the payment of the principal of and interest on this bond, when due; however, the pledge of Net Revenues and the statutory lien are on a parity with the pledge of Net Revenues and statutory lien in favor of the [Water Supply, Steam and Electric Utility System Revenue Bonds, Series 2002A,] Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2002B, Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A, Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2005A, Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A, and Utility System Revenue Bonds, Series 2011A. The pledge of Net Revenues and the statutory lien are senior in priority of lien to the Water Supply, Steam, Chilled Water and Electric Utility System Subordinate Lien Revenue Refunding Bond, Series 2009A (Federally Taxable) and any additional junior lien bonds issued pursuant to the Bond Resolution (defined below). This bond is one of a series of bonds of like tenor, except as to denomination, rate of interest and date of maturity, aggregating the principal sum of$[principal amount], issued pursuant to a Bond Resolution adopted by the Board on October 24, 1989, as amended and supplemented from time to time, including by a Twelfth Supplemental Revenue Bond Resolution adopted by the Board on [date of resolution] (collectively, the "Bond Resolution"), and under and in full compliance with the Constitution and statutes of the State of Michigan, including specifically Act 94, Public Acts of Michigan, 1933, as amended ("Act 94"), for the purpose of refunding certain outstanding bonds, making a deposit to the bond reserve account created under the Bond Resolution, and paying the costs of issuing the bonds, For a complete statement of the revenues from which and the conditions under which this bond is payable, a statement of the conditions under which additional bonds of equal standing as to the Net Revenues may hereafter be issued, and the general covenants and provisions pursuant to which this bond is issued, reference is made to the Bond Resolution. Reference is hereby made Regular Board Mtg. January 24,2012 Page 15 of 35 to the Bond Resolution and any and all supplements thereto and modifications and amendments thereof, if any, and to Act 94, for a more complete description of the pledges and covenants securing the bonds of this issue, the nature, extent and manner of enforcement of such pledges, the rights and remedies of the registered owners of the bonds of this issue with respect thereto and the terms and conditions upon which the bonds of this issue are issued and may be issued thereunder. To the extent and in the manner permitted by the terms of the Bond Resolution, the provisions of the Bond Resolution or any resolution or agreement amendatory thereof or supplemental thereto, may be modified or amended by the Board, except in specified cases, only with the written consent of the registered owners of at least fifty-one percent (51%) of the principal amount of the bonds of the System then outstanding. Bonds of this issue [maturing in the years [date], inclusive,] shall not be subject to redemption prior to maturity. [Insert optional and mandatory redemption provisions if applicable] This bond is transferable only upon the books of the Board kept for that purpose at the office of the Transfer Agent by the registered owner hereof in person, or by the registered owner's attorney duly authorized in writing, upon the surrender of this bond together with a written instrument of transfer satisfactory to the Transfer Agent duly authorized in writing and thereupon a new registered bond or bonds in the same aggregate principal amount and of the same maturity shall be issued to the transferee in exchange therefor as provided in the Bond Resolution, and upon the payment of the charges, if any, therein prescribed. [The Transfer Agent shall not be required (i) to issue, register the transfer of, or exchange any bond during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of bonds selected for redemption under the Bond Resolution and ending at the close of business on the date of that mailing, or(ii) to register the transfer of or exchange any bond so selected for redemption in whole or in part, except the unredeemed portion of bonds being redeemed in part.] THIS BOND IS A SELF-LIQUIDATING BOND AND IS NOT A GENERAL OBLIGATION OF THE CITY AND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE CITY WITHIN ANY CONSTITUTIONAL, STATUTORY OR CHARTER LIMITATION, AND IS PAYABLE BOTH AS TO PRINCIPAL AND INTEREST SOLELY FROM THE NET REVENUES OF THE SYSTEM AND CERTAIN FUNDS AND ACCOUNTS ESTABLISHED UNDER THE BOND RESOLUTION. THE PRINCIPAL OF AND INTEREST ON THIS BOND ARE SECURED BY THE STATUTORY LIEN HEREINBEFORE DESCRIBED. The Board has covenanted and agreed, and covenants and agrees, to fix and maintain at all times while any bonds payable from the Net Revenues of the System shall be outstanding, such rates for service furnished by the System as shall be sufficient to provide for payment of the principal of and interest on the bonds of this issue and any other bonds payable from the Net Revenues as and when the same shall become due and payable, to provide for the payment of expenses of administration and operation and such expenses for maintenance of the System as are necessary to preserve the same in good repair and working order, and to provide for such other expenditures and funds for the System as are required by the Bond Resolution. It is hereby certified and recited that all acts, conditions and things required by law to be done precedent to and in the issuance of this bond and the series of bonds of which this is one have been done and performed in regular and due time and form as required by law, This bond is not valid or obligatory for any purpose until the Transfer Agent's Certificate of Authentication on this bond has been executed by the Transfer Agent. IN WITNESS WHEREOF, the City, acting through the Board, has caused this bond to be signed in its name by the Chairperson and Corporate Secretary of the Board, and a facsimile of the City's corporate seal to be printed hereon, all as of the Date of Original Issue. LANSING BOARD OF WATER AND LIGHT By [Chairperson to sign Bond 1 Regular Board Mtg. January 24,2012 Page 16 of 35 Chairperson (City Seal) Countersigned: By [Corporate Secretary to sign Bondl Its: Corporate Secretary [INSERT STANDARD FORMS OF CERTIFICATE OF AUTHENTICATION AND ASSIGNMENT] Section 13, Financial Advisor. The Board hereby requests that Robert W, Baird & Co. Incorporated continue to serve the Board as Financial Advisor for the Refunding Bonds. Section 14. Bond Counsel. The Board hereby requests that Miller, Canfield, Paddock and Stone, P.L.C. continue to serve the Board as bond counsel for the Refunding Bonds. The Board recognizes that Miller, Canfield, Paddock and Stone, P.L.C. has represented from time to time, and currently represents, various underwriters, financial institutions, and other potential participants in the bond financing process, in matters not related to the issuance and sale of the Refunding Bonds, and approves them notwithstanding the potential concurrent representation of any other participant in the bond financing process in any unrelated matters. Section 15. Sale of Bonds. The Chief Financial Officer is hereby authorized, in consultation with the Financial Advisor, to determine whether it is in the best interest of the Board to sell the Refunding Bonds by negotiated sale or competitive sale. If the Chief Financial Officer determines, in consultation with the Financial Advisor, that due to the volatile nature of the bond market, in order to enable the Board to select and adjust terms for the Refunding Bonds, to enter the market on short notice at a point in time which appears to be most advantageous, and thereby possibly obtain a lower rate of interest on the Refunding Bonds, to achieve sale efficiencies so as to reduce the cost of issuance and interest expense, and in order to take advantage of the most favorable market for purchase of securities to be escrowed for payment of the Series 2002A Bonds to be refunded, then the Board hereby determines that it is in the best interests of the Board to negotiate the sale of the Refunding Bonds and the Refunding Bonds shall be sold at a negotiated sale instead of a competitive sale. If the Refunding Bonds are sold by negotiated sale then the Chief Financial Officer is hereby authorized, upon the advice of the Financial Advisor, to select a senior managing underwriter for the Refunding Bonds, or, in the alternative, to retain a placement agent to assist the Board in arranging the sale of the Refunding Bonds to a financial institution or other experienced investor. If the Refunding Bonds are sold to an underwriter, the Board reserves the right to name additional co-managers and/or to develop a selling group, and the Chief Financial Officer is authorized to name additional co-managers and/or to develop a selling group in consultation with the Financial Advisor. By adoption of this resolution the Board assumes no obligations or liability to the underwriter or placement agent for any loss or damage that may result to the underwriter or placement agent from the adoption of this resolution, and all costs and expenses incurred by the underwriter or placement agent in preparing for sale of the Refunding Bonds shall be paid from the proceeds of the Refunding Bonds, if the Refunding Bonds are issued, except as may be otherwise provided in the Bond Purchase Agreement for Refunding Bonds. If the Refunding Bonds are sold by competitive sale, the Chief Financial Officer is directed to prepare a Notice of Sale in consultation with the Financial Advisor and bond counsel, to cause the Notice of Sale to be published in The Bond Buyer, and to award sale of the Refunding Bonds to the lowest bidder in accordance with the terms of the Notice of Sale. Section 16. Bond Ratings and Bond Insurance. The Chief Financial Officer is hereby authorized to apply for bond ratings from such municipal bond rating agencies as deemed appropriate, in consultation with the Financial Advisor. If the Financial Advisor recommends that the Board consider purchase of municipal bond insurance, then the Chief Financial Officer is Regular Board Mtg. January 24,2012 Page 17 of 35 hereby authorized to negotiate with insurers regarding acquisition of municipal bond insurance, and, in consultation with the Financial Advisor, to select an insurer and determine which bonds, if any, shall be insured, and the Chief Financial Officer is hereby authorized to execute an agreement with the insurer relating to procedures for paying debt service on the insured bonds and notifying the insurer of any need to draw on the insurance and other matters. Section 17. Official Statement. The Chief Financial Officer is authorized to approve circulation of a Preliminary Official Statement or private placement memorandum describing the Refunding Bonds and, after sale of the Refunding Bonds, to prepare, execute and deliver a final Official Statement or private placement memorandum. Section 18. Continuing Disclosure. The Chief Financial Officer is hereby authorized to execute and deliver, prior to delivery of the Refunding Bonds, a written continuing disclosure undertaking as necessary in order to enable the underwriter or bond purchaser to comply with the requirements of Securities and Exchange Commission Rule 15c2-12. The continuing disclosure undertaking shall be in substantially the form which she shall, in consultation with bond counsel, determine to be appropriate. Section 19. Sale of Refunding Bonds. The Chief Financial Officer is authorized, in consultation with the Financial Advisor, to accept an offer to purchase the Refunding Bonds without further resolution of this Board, if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. This authorization includes, but is not limited to, determination of original principal amount of the Refunding Bonds; the prices at which the Refunding Bonds are sold; the date of the Refunding Bonds; the schedule of principal maturities and whether the Refunding Bonds shall mature serially or as term bonds; provisions for early redemption, if any, including mandatory redemption of term bonds, if any; the interest rates and payment dates of the Refunding Bonds; and application of the proceeds of the Refunding Bonds. Approval of the matters delegated to the Chief Financial Officer under this resolution may be evidenced by her execution of the Bond Purchase Agreement or other offer to purchase the Refunding Bonds, or a certificate of award of sale, or the Official Statement or private placement memorandum. The maximum interest rate on the Refunding Bonds shall not exceed 5.00%. The first maturity of principal on the Refunding Bonds shall occur no earlier than 2012, and the final date of maturity shall occur no later than 2018. The purchase price for the Refunding Bonds, exclusive of any original issue discount, shall not be less than 98.00% of the principal amount of the Refunding Bonds. In making such determinations the Chief Financial Officer is authorized to rely upon data and computer runs provided by the Financial Advisor. Section 20. Verification Agent. The Chief Financial Officer is hereby authorized, at her discretion, to select an independent certified public accountant to serve as verification agent to verify that the securities and cash to be deposited to the Escrow Fund will be sufficient to provide, at the times and in the amounts required, sufficient moneys to pay the principal of and interest on the Series 2002A Bonds being refunded as they become due or upon call for redemption. Section 21. 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 the Manager of Finance and Planning, the General Manager, or a person designated by the Chief Financial Officer or the General Manager 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, sale and delivery of the Refunding Bonds, 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 including but not limited to rating agency fees, bond insurance premiums, transfer agent fees, escrow agent fees, verification agent Regular Board Mtg. January 24,2012 Page 18 of 35 fees, financial advisor fees, placement agent fees, bond counsel fees, costs of printing the preliminary and final official statements, and any other costs necessary to accomplish sale and delivery of the Refunding Bonds. Section 22. Applicability of the Outstanding Bond Resolutions, Except to the extent supplemented or otherwise provided in this resolution, all of the provisions and covenants provided in the Bond Resolution shall apply to the Refunding Bonds issued pursuant to provisions of this resolution, such provisions of the Bond Resolution being made applicable to the Refunding Bonds. Section 23. Conflicting Resolutions, All resolutions and parts of resolutions insofar as they conflict with the provisions of this resolution are hereby rescinded, Section 24, 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 25. 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 City Pulse or the Lansing State Journal, either of which is a newspaper of general circulation in the City qualified under State law to publish legal notices, promptly after its adoption, and 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 26. 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 and the users of the System. In accordance with the provisions of Section 6 of Act 94, this resolution shall become effective immediately upon its adoption. We hereby certify that the foregoing is a true and complete copy of a resolution duly adopted by the Board of Commissioners of the Lansing Board of Water and Light at a Regular meeting held on _, , 2012, at _.m., 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 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 We 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. Chairperson Corporate Secretary Motion by Commissioner Price, seconded by Commissioner Plummer to forward the proposed resolution to the full Board for consideration. Action: Carried Unanimously Excused Absence None Regular Board Mtg. January 24,2012 Page 19 of 35 Other None Adiourn On Motion by Commissioner Price, seconded by Commissioner Plummer the meeting adjourned at 7:41 p.m. Respectfully submitted Margaret Bossenbery, Chair Finance Committee MANAGER'S RECOMMENDATIONS General Manager Lark respectfully requested that the Board of Commissioners approve of the following resolutions. RESOLUTION #2012-01-01 WHEREAS, electric reliability is indispensable for economic growth and development and to promote and protect public safety and welfare; WHEREAS, the Energy Policy Act of 2005 directed the Federal Energy Regulatory Commission to adopt mandatory electric reliability standards for all electric utilities in the United States; WHEREAS, the Federal Energy Regulatory Commission has delegated responsibility for developing and implementing national electric reliability standards to the National Electric Reliability Corporation; WHEREAS, the Board is committed to maintaining a highly reliable electric system within its service territory; WHEREAS, the Board is subject to reliability standards developed and implemented by the National Electric Reliability Corporation; BE IT RESOLVED, that the BWL shall develop and implement an electric reliability program that assures compliance with applicable electric reliability standards adopted by the National Electric Reliability Corporation. Motion by Commissioner Ward seconded by Commissioner Price, to approve the resolution for the development and implementation of an electric reliability program adopted by NERC. Action: Carried unanimously RESOLUTION#2012-01-02 Regular Board Mtg. January 24,2012 Page 20 of 35 Lansing Board of Water and Light TWELFTH SUPPLEMENTAL REVENUE BOND RESOLUTION A RESOLUTION TO AUTHORIZE: • Present Value Savings by refunding the Series 2002A Bonds through issuance of up to $23,000,000 of Refunding Bonds; • Sale by Negotiated or Competitive Sale upon advice of Financial Advisor; • Chief Financial Officer to sell Refunding Bonds without further resolution; • Other matters relative to issuance, sale and delivery of the Refunding Bonds. WHEREAS, from time to time the City of Lansing, acting by and through the Lansing Board of Water and Light, has issued revenue bonds payable from revenues of the water supply, steam, chilled water and electric utility system (the "System") under the provisions of Act 94, Public Acts of Michigan, 1933, as amended, and a Bond Resolution adopted by the Board and amended and restated on October 24, 1989 and further amended and supplemented from time to time (the "Bond Resolution"); and WHEREAS, all terms not defined herein shall have the meanings set forth in the Bond Resolution; and WHEREAS, under the terms of the Sixth Supplemental Revenue Bond Resolution adopted July 23, 2002, the Board issued the Water Supply, Steam and Electric Utility System Revenue Bonds, Series 2002A (the "Series 2002A Bonds") for the purpose of financing the cost of remodeling, updating and extending the life of the System, primarily at the Eckert and Erickson Stations (the "Series 2002A Project"); and WHEREAS, the Board's Financial Advisor, Robert W. Baird & Co. Incorporated (the "Financial Advisor"), has advised the Board that it may be able to accomplish a net savings of debt service costs, and thereby reduce the cost to the Board of the Series 2002A Project, by refunding all or a portion of the outstanding Series 2002A Bonds through the issuance of revenue refunding bonds in an aggregate principal amount of not-to-exceed $23,000,000 (the "Refunding Bonds"); and WHEREAS, Section 18(b) of the Bond Resolution authorizes the issuance of Additional Bonds of equal standing and priority of lien with the outstanding Bonds for the purposes of refunding a part of the Outstanding Bonds and paying costs of issuing such Additional Bonds, if after giving effect to the refunding the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding; and WHEREAS, in order to take advantage of the most favorable market for sale of the Refunding Bonds and purchase of securities to be escrowed for payment of the Series 2002A Bonds to be refunded, the Board wishes to authorize the Chief Financial Officer to sell the Refunding Bonds at negotiated or competitive sale without further resolution of the Board; and WHEREAS, the conditions and requirements of the Bond Resolution for the issuance of Additional Bonds of equal standing and priority of lien with outstanding bonds have been met for the issuance of the proposed Refunding Bonds. NOW, THEREFORE, BE IT RESOLVED THAT: Regular Board Mtg. January 24,2012 Page 21 of 35 Section 1. Definitions. All terms not defined herein shall have the meanings set forth in the Bond Resolution, and whenever used in this Bond Resolution, except when otherwise indicated by the context, the following terms shall have the following meanings: (a) "Additional Bonds" means any Additional Bonds of equal standing with the Series 2008A Bonds, the Series 2011A Bonds, and the Refunding Bonds which are issued pursuant to Section 18(a) of the Bond Resolution as amended by Section 13 of the Tenth Supplemental Revenue Bond Resolution. (b) "Bond Resolution" means the Bond Resolution adopted by the Board on September 26, 1989, as amended and restated on October 24, 1989 and supplemented by the First Supplemental Revenue Bond Resolution adopted by the Board on October 26, 1993, the Second Supplemental Revenue Bond Resolution adopted by the Board on January 11, 1994, the Third Supplemental Revenue Bond Resolution adopted on September 2, 1999, the Fourth Supplemental Revenue Bond Resolution adopted October 26, 1999 and amended on August 12, 2008 and June 9, 2009, the Fifth Supplemental Bond Resolution adopted by the Board April 24, 2001, the Sixth Supplemental Revenue Bond Resolution adopted by the Board on July 23, 2002, the Seventh Supplemental Bond Resolution adopted by the Board on July 23, 2002, the Eighth Supplemental Revenue Bond Resolution adopted on August 12, 2003, the Ninth Supplemental Revenue Bond Resolution adopted on July 26, 2005, the Tenth Supplemental Revenue Bond Resolution adopted on January 29, 2008, Eleventh Supplemental Revenue Bond Resolution adopted on May 10, 2011, this Twelfth Supplemental Revenue Bond Resolution, and any other resolution which amends or supplements the Bond Resolution. (c) "Bonds" means the Series 2008A Bonds, the Series 2011A Bonds, the Refunding Bonds and any Additional Bonds of equal standing hereafter issued. (d) "Chief Financial Officer" means the Board's Assistant General Manager and Chief Financial Officer. (e) "Refunding Bonds" means the refunding bonds issued pursuant to this Twelfth Supplemental Revenue Bond Resolution to be designated as the "Utility System Revenue Refunding Bonds, Series 2012A" or such other series designation as shall reflect the date of sale or delivery of the Refunding Bonds. (f) "Reserve Requirement" means the Reserve Requirement established by Section 11 of the Tenth Supplemental Revenue Bond Resolution and described in Section 8 herein. (g) "Series 2002A Escrow Agreement" means the Series 2002A Escrow Agreement described in this Resolution to provide for payment of principal of and interest on the Series 2002A Bonds being refunded. (h) "Series 2002A Escrow Fund" means the Series 2002A Escrow Fund established pursuant to the Series 2002A Escrow Agreement to hold the cash and investments necessary provide for payment of principal of and interest on the Series 2002A Bonds being refunded, (i) "Series 2002-2005 Bonds" means: the Water Supply, Steam and Electric Utility System Revenue Bonds, Series 2002A, the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2002B, the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A, and the Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2005A. (j) "Series 2008A Bonds" means the Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A. Regular Board Mtg. January 24,2012 Page 22 of 35 (k) "Series 2011A Bonds" means the Utility System Revenue Bonds, Series 2011A. (1) "System" means the complete facilities of the Board for the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, including all plants, works, instrumentalities and properties used or useful in connection with the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, and all additions, extensions and improvements thereto existing or hereafter acquired by the Board. Section 2. Conditions Permitting Issuance of Additional Bonds. Pursuant to Section 18(b) of the Bond Resolution, the Board hereby determines that the Refunding Bonds shall be issued as Additional Bonds for the purpose of refunding all or a portion of the Series 2002A Bonds and paying costs of issuance of the Refunding Bonds, only if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. The Board hereby determines that the Board is not in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund. Section 3. Refunding of Series 2002A Bonds; Refunding Bonds Authorized; Applicable Law. If refunding all or a portion of the Series 2002A Bonds will accomplish a net savings of debt service costs, then in order to pay costs of refunding all or a portion of the Series 2002A Bonds, including the payment of the costs of legal, financial, bond insurance (if any), underwriter's discount, and other expenses incident thereto and incident to the issuance and sale of the Refunding Bonds, the City, acting by and through the Board, shall borrow the sum of not-to- exceed Twenty-Three Million Dollars ($23,000,000) as finally determined upon the sale thereof, and issue the Refunding Bonds therefor. The Refunding Bonds shall be payable solely out of the Net Revenues of the System. City Council shall not be requested to pledge the full faith and credit of the City for payment of the Refunding Bonds. The Refunding Bonds shall be sold and the proceeds applied in accordance with the provisions of Act 94. The remaining period of usefulness of the Series 2002A Project is estimated to be not less than seven (7) years. Section 4. Refundinq Bond Details. The Refunding Bonds shall be designated as the "UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 2012A" or such other series designation as determined at the time of sale by the Chief Financial Officer to reflect the date of sale or delivery of the Refunding Bonds, The Refunding Bonds shall be issued as fully registered bonds registered in the denomination of$5,000 or integral multiples thereof and shall be numbered in consecutive order of registration or authentication from 1 upwards. The Refunding Bonds shall be dated as of the date of delivery thereof or such other date as determined at the time of sale of the Refunding Bonds, shall mature as serial bonds or term bonds on such dates as shall be determined at the time of sale of the Refunding Bonds but not-to-exceed seven annual maturities. The Refunding Bonds shall be subject to optional and mandatory redemption prior to maturity at the times and prices finally determined at the time of sale of the Refunding Bonds, or shall not be subject to redemption prior to maturity, as finally determined at the time of sale of the Refunding Bonds. The Refunding Bonds shall bear interest at a rate or rates to be determined on sale thereof, payable on July 1, 2012, or such other date as provided at the time of sale of the Refunding Bonds, and semi-annually thereafter on January 1 st and July 1 st of each year. The Refunding Bonds shall be executed by the manual or facsimile signature of the Chairperson and the Corporate Secretary of the Board. No Refunding Bond shall be valid until Regular Board Mtg. January 24,2012 Page 23 of 35 authenticated by an authorized representative of the Transfer Agent. The Refunding Bonds shall be delivered to the Transfer Agent for authentication and be delivered by the Transfer Agent to the purchaser in accordance with instructions from the Chief Financial Officer upon payment of the purchase price for the Refunding Bonds. Executed blank bonds for registration and issuance to transferees shall be delivered to the Transfer Agent for safekeeping from time to time as necessary. Notwithstanding the foregoing provisions, if the Refunding Bonds are sold through private placement, then the Refunding 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, and authentication by the Transfer Agent shall not be required for any bond signed by the manual signature of either the Chairperson or the Corporate Secretary of the Board. Section 5. Registration and Transfer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as bond registrar, paying agent and transfer agent (the "Transfer Agent") for the Refunding Bonds. The Chief Financial Officer is hereby authorized to execute one or more agreements with the Transfer Agent on behalf of the Board. The Board reserves the right to replace the Transfer Agent at any time, provided written notice of such replacement is given to the registered owners of record of bonds not less than sixty (60) days prior to an interest payment date. Principal of and interest on the Refunding Bonds shall be payable by check or draft mailed by the Transfer Agent to the registered owner at the registered address as shown on the registration books of the Board maintained by the Transfer Agent. Interest shall be payable to the person or entity who or which is the registered owner of record as of the fifteenth (15th) day of the month prior to the payment date for each interest payment. The date of determination of the registered owner for purposes of payment of interest as provided in this paragraph may be changed by the Board to conform to market practice in the future. The Refunding Bonds may be issued in book-entry-only form through The Depository Trust Company in New York, New York ("DTC"), and the Chief Financial Officer is authorized to execute such custodial or other agreement with DTC as may be necessary to accomplish the issuance of the Refunding Bonds in book-entry-only form and to make such changes in the form of the Refunding Bonds within the parameters of this resolution as may be required to accomplish the foregoing. Notwithstanding the foregoing, if the Refunding Bonds are held in book-entry-only form by DTC, payment of principal of and interest on the Refunding Bonds shall be made in the manner prescribed by DTC. The Refunding Bonds may be transferred upon the books required to be kept by the Transfer Agent pursuant to this section by the person or entity in whose name it is registered, in person or by the registered owner's duly authorized attorney, upon surrender of the bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Transfer Agent. Whenever any bond shall be surrendered for transfer, the Board shall execute and the Transfer Agent shall authenticate and deliver a new bond of the same series in like aggregate principal amount, maturity and interest rate. The Transfer Agent shall require the payment by the bondholder requesting the transfer of any tax or other governmental charge required to be paid with respect to the transfer. Notwithstanding the foregoing, if Bonds are held by DTC in book-entry-only form, the transfer of Bonds shall be made in the manner prescribed by DTC. Section 6. Deposit to Bond Reserve Account. On or prior to the date of delivery of the Refunding Bonds, the Board shall deposit into the Bond Reserve Account any amount Regular Board Mtg. January 24,2012 Page 24 of 35 necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. The Board may meet the Reserve Requirement by a letter of credit, a surety bond, or an insurance policy if the provider or issuer thereof shall be rated AAA by Moody's Investors Service and Standard and Poor's Corporation or any successor to either, and the Chief Financial Officer is hereby authorized to execute an agreement with the provider or issuer of the letter of credit, surety bond, or insurance policy. Section 7. Refunding Bond Proceeds. From the proceeds of sale of the Refunding Bonds there first shall be immediately deposited in the Redemption Fund an amount equal to the accrued interest and premium, if any, received on delivery of the Refunding Bonds, and the Board may take credit for the amount so deposited against the amount required to be deposited in the Redemption Fund for payment of the next maturing interest on the Refunding Bonds. Notwithstanding the foregoing, at the discretion of the Chief Financial Officer, all or a portion of any premium received upon delivery of the Refunding Bonds may be deposited in the Bond Reserve Account or the Series 2002A Escrow Fund in consultation with Bond Counsel. There shall next be deposited in the Bond Reserve Account an amount, if any, designated at the time of sale of the Refunding Bonds as necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. There shall next be deposited in the Series 2002A Escrow Fund from the proceeds of sale of the Refunding Bonds cash and investments in direct obligations of or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, not redeemable at the option of the issuer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as Escrow Agent under the Series 2002A Escrow Agreement. The Escrow Agent shall hold the Series 2002A Escrow Fund in trust pursuant to the Series 2002A Escrow Agreement which shall irrevocably direct the Escrow Agent to take all necessary steps to call the Series 2002A Bonds being refunded for redemption as specified in the Series 2002A Escrow Agreement. Either the Chief Financial Officer or the Manager of Finance and Planning is hereby authorized to execute and deliver the Series 2002A Escrow Agreement, to transfer any moneys as they may deem necessary from the Redemption Fund to the Series 2002A Escrow Fund, and to purchase, or cause to be purchased, escrow securities, including, but not limited to, United States Treasury Obligations — State and Local Government Series (SLGS), for deposit in the Series 2002A Escrow Fund. The Chief Financial Officer is directed to deposit to the Series 2002A Escrow Fund, from Refunding Bond proceeds and other moneys as necessary, an amount which, together with investment proceeds to be received thereon, will be sufficient, without reinvestment, to pay the principal of and interest on the Series 2002A Bonds being refunded as they become due or upon call for redemption. The remaining proceeds of the Refunding Bonds shall be deposited in a fund which may be established in the Series 2002A Escrow Agreement to pay costs of issuance of the Refunding Bonds and the costs of refunding the Series 2002A Bonds. Any moneys remaining after payment of costs of issuance and costs of refunding the Series 2002A Bonds being refunded shall be transferred to the Redemption Fund and used to pay interest on the Refunding Bonds. Section 8, Reserve Requirement. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board must comply with the Reserve Requirement as defined in Section 1 (ff) of the Bond Resolution as amended and restated on October 24, 1989, which is the lesser of (a) the maximum Aggregate Debt Service Requirement for the then current and any subsequent operating year and (b) ten percent of the aggregate proceeds of all Outstanding Bonds. After payment or defeasance in full of the Outstanding Series 2002-2005 Regular Board Mtg. January 24,2012 Page 25 of 35 Bonds, `Reserve Requirement" shall mean the following as established by Section 11 of the Tenth Supplemental Revenue Bond Resolution: the lesser of (i) the maximum annual debt service requirements on the Outstanding Bonds, (ii) 125% of the average annual debt service requirements on the Outstanding Bonds, or (iii) the total of 10% of the original aggregate face amount of each series of the Outstanding Bonds, reduced by the net original issue discount, if any; provided, however, that the Reserve Requirement shall not at any time exceed the amount allowed to be invested at an unrestricted yield pursuant to Treas. Reg. Section 1.148 2(f)(2) or any successor provision thereto as applicable to the Bonds. Section 9. Rate Covenant. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board will comply with the Section 9 of the Bond Resolution, as previously amended by Section 5 of the Second Supplemental Revenue Bond Resolution, and the Board will at all times fix, establish, maintain and collect rates, fees and charges for the sale of the output, capacity, use or service of the System which, together with other income, are reasonably expected to yield Net Revenues equal to at least 150% of the Aggregate Debt Service Requirement for the forthcoming twelve month period plus such amount as is necessary to comply with all covenants in the Bond Resolution and to pay all charges and liens whatsoever payable out of Net Revenues in such period. After payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the following provision shall apply as provided in Section 12 of the Tenth Supplemental Revenue Bond Resolution. The Board will at all times fix, establish, maintain and collect rates, fees and charges for the sale of the output, capacity, use or service of the System which, together with other income, are reasonably expected to yield Net Revenues equal to at least 125% of the Aggregate Debt Service Requirement for the forthcoming twelve month period plus such amount as is necessary to comply with all covenants in the Bond Resolution and to pay all charges and liens whatsoever payable out of Net Revenues in such period. Section 10. Additional Bonds Test. Until payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the Board must comply with the additional bonds test imposed by Section 6 of the Second Supplemental Revenue Bond Resolution adopted January 11, 1994. After payment or defeasance in full of the Outstanding Series 2002-2005 Bonds, the following provision shall apply as provided in Section 13 of the Tenth Supplemental Revenue Bond Resolution. 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 the 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 purpose of refunding a part of any Outstanding Bonds (unless such partial refunding is done in compliance with (b) below) and paying costs of issuing such Additional Bonds, including deposits which may be required to be made to a bond reserve account. 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 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 Bonds and on the Additional Bonds then being issued. If the Additional Bonds are to be issued in whole or in part for refunding Outstanding Bonds, the maximum Aggregate Debt Service shall be determined by Regular Board Mtg. January 24,2012 Page 26 of 35 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 Bonds. 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 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 Bonds to be issued. No Additional Bonds of equal standing as to the Net Revenues of the System shall be issued pursuant to the authorization contained in subparagraphs (a) or (c) if the Board shall then be in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund. Additional Bonds may be issued as provided in Section 18 subparagraphs (b) or (c) of the Bond Resolution. Section 11. Covenants, The Board covenants and agrees as follows with the holders of the Refunding Bonds as long as any of the Refunding Bonds remain outstanding and unpaid as to either principal or interest: (a) The Board covenants and agrees with the Registered Owners of the Refunding Bonds that as long as any of the Refunding Bonds remain outstanding and unpaid as to either principal or interest, the Board shall not invest, reinvest or accumulate any moneys deemed to be proceeds of the Refunding Bonds pursuant to the Internal Revenue Code in such a manner as to cause the Refunding Bonds to be "arbitrage bonds" within the meaning of the Internal Revenue Code. The Board hereby covenants that, to the extent permitted by law, it will take all actions within its control and that it shall not fail to take any action as may be necessary to maintain the exemption of interest on the Refunding Bonds from gross income for federal income tax purposes, including but not limited to, actions relating to the rebate of arbitrage earnings, if applicable, and the expenditure and investment of Bond proceeds and moneys deemed to be Bond proceeds, all as more fully set forth in the Tax Compliance Certificate to be delivered by the Board with the Refunding Bonds, (b) The Board will not issue additional bonds of prior standing to the Refunding Bonds, Regular Board Mtg. January 24,2012 Page 27 of 35 Section 12. Bond Form. The Refunding Bonds shall be in substantially the following form with such revisions, additions and deletions as the Board may deem advisable or necessary to comply with the final terms of the Refunding Bonds established upon sale thereof: BOND No. R- UNITED STATES OF AMERICA STATE OF MICHIGAN COUNTIES OF INGHAM AND EATON CITY OF LANSING LANSING BOARD OF WATER AND LIGHT UTILITY SYSTEM REVENUE REFUNDING BOND, SERIES 2012A Interest Rate Date of Maturity Date of Original Issue CUSIP Registered Owner: Cede &Co. Principal Amount: The City of Lansing, Counties of Ingham and Eaton, State of Michigan (the "City"), acting through the governing body of the Lansing Board of Water and Light (the `Board"), acknowledges itself to owe and for value received hereby promises to pay to the Registered Owner specified above, or registered assigns, only from the Net Revenues of the System as hereinafter provided, the Principal Amount specified above, in lawful money of the United States of America, on the Date of Maturity specified above, [unless prepaid prior thereto as hereinafter provided,] with interest thereon (computed on the basis of a 360-day year of twelve 30-day months) from the Date of Original Issue specified above or such later date to which interest has been paid, until paid, at the Interest Rate per annum specified above, first payable on [interest payment date] and semiannually thereafter. Principal of this bond is payable at the designated corporate trust office of [transfer agent], or such other transfer agent as the Board may hereafter designate by notice mailed to the registered owner of record not less than sixty (60) days prior to any interest payment date (the "Transfer Agent"). Interest on this bond is payable by check or draft mailed by the Transfer Agent to the person or entity who or which is as of the fifteenth (15th) day of the month prior to each interest payment date, the registered owner of record at the registered address. For the prompt payment of principal and interest on this bond, the revenues received by the Board from the operations of the water supply and electric utility systems including the steam, steam heat and chilled water distribution systems (the "System") after provision has been made for reasonable and necessary expenses of operation, maintenance and administration of the System (the "Net Revenues"), are irrevocably pledged and a statutory lien thereon has been created to secure the payment of the principal of and interest on this bond, when due; however, the pledge of Net Revenues and the statutory lien are on a parity with the pledge of Net Revenues and statutory lien in favor of the [Water Supply, Steam and Electric Utility System Revenue Bonds, Series 2002A,] Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2002B, Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2003A, Water Supply, Steam and Electric Utility System Revenue Refunding Bonds, Series 2005A, Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A, and Utility System Revenue Bonds, Series 2011A. The pledge of Net Revenues and the statutory lien are senior in priority of lien to the Water Supply, Steam, Chilled Water and Electric Utility System Subordinate Lien Revenue Refunding Bond, Series 2009A (Federally Taxable) and any additional junior lien bonds issued pursuant to the Bond Resolution (defined below). Regular Board Mtg. January 24,2012 Page 28 of 35 This bond is one of a series of bonds of like tenor, except as to denomination, rate of interest and date of maturity, aggregating the principal sum of$[principal amount], issued pursuant to a Bond Resolution adopted by the Board on October 24, 1989, as amended and supplemented from time to time, including by a Twelfth Supplemental Revenue Bond Resolution adopted by the Board on [date of resolution] (collectively, the "Bond Resolution"), and under and in full compliance with the Constitution and statutes of the State of Michigan, including specifically Act 94, Public Acts of Michigan, 1933, as amended ("Act 94"), for the purpose of refunding certain outstanding bonds, making a deposit to the bond reserve account created under the Bond Resolution, and paying the costs of issuing the bonds. For a complete statement of the revenues from which and the conditions under which this bond is payable, a statement of the conditions under which additional bonds of equal standing as to the Net Revenues may hereafter be issued, and the general covenants and provisions pursuant to which this bond is issued, reference is made to the Bond Resolution. Reference is hereby made to the Bond Resolution and any and all supplements thereto and modifications and amendments thereof, if any, and to Act 94, for a more complete description of the pledges and covenants securing the bonds of this issue, the nature, extent and manner of enforcement of such pledges, the rights and remedies of the registered owners of the bonds of this issue with respect thereto and the terms and conditions upon which the bonds of this issue are issued and may be issued thereunder. To the extent and in the manner permitted by the terms of the Bond Resolution, the provisions of the Bond Resolution or any resolution or agreement amendatory thereof or supplemental thereto, may be modified or amended by the Board, except in specified cases, only with the written consent of the registered owners of at least fifty-one percent (51%) of the principal amount of the bonds of the System then outstanding. Bonds of this issue [maturing in the years [date], inclusive,] shall not be subject to redemption prior to maturity. [Insert optional and mandatory redemption provisions if applicable] This bond is transferable only upon the books of the Board kept for that purpose at the office of the Transfer Agent by the registered owner hereof in person, or by the registered owner's attorney duly authorized in writing, upon the surrender of this bond together with a written instrument of transfer satisfactory to the Transfer Agent duly authorized in writing and thereupon a new registered bond or bonds in the same aggregate principal amount and of the same maturity shall be issued to the transferee in exchange therefor as provided in the Bond Resolution, and upon the payment of the charges, if any, therein prescribed. [The Transfer Agent shall not be required (i) to issue, register the transfer of, or exchange any bond during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of bonds selected for redemption under the Bond Resolution and ending at the close of business on the date of that mailing, or (ii) to register the transfer of or exchange any bond so selected for redemption in whole or in part, except the unredeemed portion of bonds being redeemed in part.] THIS BOND IS A SELF-LIQUIDATING BOND AND IS NOT A GENERAL OBLIGATION OF THE CITY AND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE CITY WITHIN ANY CONSTITUTIONAL, STATUTORY OR CHARTER LIMITATION, AND IS PAYABLE BOTH AS TO PRINCIPAL AND INTEREST SOLELY FROM THE NET REVENUES OF THE SYSTEM AND CERTAIN FUNDS AND ACCOUNTS ESTABLISHED UNDER THE BOND RESOLUTION, THE PRINCIPAL OF AND INTEREST ON THIS BOND ARE SECURED BY THE STATUTORY LIEN HEREINBEFORE DESCRIBED. The Board has covenanted and agreed, and covenants and agrees, to fix and maintain at all times while any bonds payable from the Net Revenues of the System shall be outstanding, such rates for service furnished by the System as shall be sufficient to provide for payment of the Regular Board Mtg. January 24,2012 Page 29 of 35 principal of and interest on the bonds of this issue and any other bonds payable from the Net Revenues as and when the same shall become due and payable, to provide for the payment of expenses of administration and operation and such expenses for maintenance of the System as are necessary to preserve the same in good repair and working order, and to provide for such other expenditures and funds for the System as are required by the Bond Resolution, It is hereby certified and recited that all acts, conditions and things required by law to be done precedent to and in the issuance of this bond and the series of bonds of which this is one have been done and performed in regular and due time and form as required by law. This bond is not valid or obligatory for any purpose until the Transfer Agent's Certificate of Authentication on this bond has been executed by the Transfer Agent. IN WITNESS WHEREOF, the City, acting through the Board, has caused this bond to be signed in its name by the Chairperson and Corporate Secretary of the Board, and a facsimile of the City's corporate seal to be printed hereon, all as of the Date of Original Issue. LANSING BOARD OF WATER AND LIGHT By Sandra Zerkle Chairperson (City Seal) Countersigned; By M. Denise Griffin Its: Corporate Secretary [INSERT STANDARD FORMS OF CERTIFICATE OF AUTHENTICATION AND ASSIGNMENT] Section 13. Financial Advisor. The Board hereby requests that Robert W. Baird & Co. Incorporated continue to serve the Board as Financial Advisor for the Refunding Bonds. Section 14. Bond Counsel. The Board hereby requests that Miller, Canfield, Paddock and Stone, P.L.C. continue to serve the Board as bond counsel for the Refunding Bonds. The Board recognizes that Miller, Canfield, Paddock and Stone, P.L.C. has represented from time to time, and currently represents, various underwriters, financial institutions, and other potential participants in the bond financing process, in matters not related to the issuance and sale of the Refunding Bonds, and approves them notwithstanding the potential concurrent representation of any other participant in the bond financing process in any unrelated matters. Section 15. Sale of Bonds. The Chief Financial Officer is hereby authorized, in consultation with the Financial Advisor, to determine whether it is in the best interest of the Board to sell the Refunding Bonds by negotiated sale or competitive sale. If the Chief Financial Officer determines, in consultation with the Financial Advisor, that due to the volatile nature of the bond market, in order to enable the Board to select and adjust terms for the Refunding Bonds, to enter the market on short notice at a point in time which appears to be most advantageous, and thereby possibly obtain a lower rate of interest on the Refunding Bonds, to achieve sale efficiencies so as to reduce the cost of issuance and interest expense, and in order to take advantage of the most favorable market for purchase of securities to be escrowed for payment of the Series 2002A Bonds to be refunded, then the Board hereby determines that it is in the best interests of the Board to negotiate the sale of the Refunding Bonds and the Refunding Bonds shall be sold at a negotiated sale instead of a competitive sale. If the Refunding Bonds are sold by negotiated sale then the Chief Financial Officer is hereby authorized, upon the advice of the Financial Advisor, to select a senior managing underwriter for the Refunding Bonds, or, in the alternative, to retain a placement agent to assist the Regular Board Mtg. January 24,2012 Page 30 of 35 Board in arranging the sale of the Refunding Bonds to a financial institution or other experienced investor. If the Refunding Bonds are sold to an underwriter, the Board reserves the right to name additional co-managers and/or to develop a selling group, and the Chief Financial Officer is authorized to name additional co-managers and/or to develop a selling group in consultation with the Financial Advisor, By adoption of this resolution the Board assumes no obligations or liability to the underwriter or placement agent for any loss or damage that may result to the underwriter or placement agent from the adoption of this resolution, and all costs and expenses incurred by the underwriter or placement agent in preparing for sale of the Refunding Bonds shall be paid from the proceeds of the Refunding Bonds, if the Refunding Bonds are issued, except as may be otherwise provided in the Bond Purchase Agreement for Refunding Bonds. If the Refunding Bonds are sold by competitive sale, the Chief Financial Officer is directed to prepare a Notice of Sale in consultation with the Financial Advisor and bond counsel, to cause the Notice of Sale to be published in The Bond Buyer, and to award sale of the Refunding Bonds to the lowest bidder in accordance with the terms of the Notice of Sale. Section 16. Bond Ratings and Bond Insurance. The Chief Financial Officer is hereby authorized to apply for bond ratings from such municipal bond rating agencies as deemed appropriate, in consultation with the Financial Advisor. If the Financial Advisor recommends that the Board consider purchase of municipal bond insurance, then the Chief Financial Officer is hereby authorized to negotiate with insurers regarding acquisition of municipal bond insurance, and, in consultation with the Financial Advisor, to select an insurer and determine which bonds, if any, shall be insured, and the Chief Financial Officer is hereby authorized to execute an agreement with the insurer relating to procedures for paying debt service on the insured bonds and notifying the insurer of any need to draw on the insurance and other matters. Section 17. Official Statement. The Chief Financial Officer is authorized to approve circulation of a Preliminary Official Statement or private placement memorandum describing the Refunding Bonds and, after sale of the Refunding Bonds, to prepare, execute and deliver a final Official Statement or private placement memorandum. Section 18. Continuing Disclosure, The Chief Financial Officer is hereby authorized to execute and deliver, prior to delivery of the Refunding Bonds, a written continuing disclosure undertaking as necessary in order to enable the underwriter or bond purchaser to comply with the requirements of Securities and Exchange Commission Rule 15c2-12. The continuing disclosure undertaking shall be in substantially the form which she shall, in consultation with bond counsel, determine to be appropriate. Section 19. Sale of Refunding Bonds. The Chief Financial Officer is authorized, in consultation with the Financial Advisor, to accept an offer to purchase the Refunding Bonds without further resolution of this Board, if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. This authorization includes, but is not limited to, determination of original principal amount of the Refunding Bonds; the prices at which the Refunding Bonds are sold; the date of the Refunding Bonds; the schedule of principal maturities and whether the Refunding Bonds shall mature serially or as term bonds; provisions for early redemption, if any, including mandatory redemption of term bonds, if any; the interest rates and payment dates of the Refunding Bonds; and application of the proceeds of the Refunding Bonds. Approval of the matters delegated to the Chief Financial Officer under this resolution may be evidenced by her execution of the Bond Purchase Agreement or other offer to purchase the Refunding Bonds, or a certificate of award of sale, or the Official Statement or private placement memorandum. The maximum interest rate on the Refunding Bonds shall not exceed 5.00%. The first maturity of principal on the Refunding Bonds shall occur no earlier than 2012, and the final date of maturity shall occur no later than 2018. The purchase price for the Refunding Bonds, exclusive of Regular Board Mtg. January 24,2012 Page 31 of 35 any original issue discount, shall not be less than 98.00% of the principal amount of the Refunding Bonds. In making such determinations the Chief Financial Officer is authorized to rely upon data and computer runs provided by the Financial Advisor. Section 20. Verification Agent. The Chief Financial Officer is hereby authorized, at her discretion, to select an independent certified public accountant to serve as verification agent to verify that the securities and cash to be deposited to the Escrow Fund will be sufficient to provide, at the times and in the amounts required, sufficient moneys to pay the principal of and interest on the Series 2002A Bonds being refunded as they become due or upon call for redemption. Section 21. 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 the Manager of Finance and Planning, the General Manager, or a person designated by the Chief Financial Officer or the General Manager 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, sale and delivery of the Refunding Bonds, 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 including but not limited to rating agency fees, bond insurance premiums, transfer agent fees, escrow agent fees, verification agent fees, financial advisor fees, placement agent fees, bond counsel fees, costs of printing the preliminary and final official statements, and any other costs necessary to accomplish sale and delivery of the Refunding Bonds. Section 22. Applicability of the Outstanding Bond Resolutions. Except to the extent supplemented or otherwise provided in this resolution, all of the provisions and covenants provided in the Bond Resolution shall apply to the Refunding Bonds issued pursuant to provisions of this resolution, such provisions of the Bond Resolution being made applicable to the Refunding Bonds. Section 23. Conflicting Resolutions. All resolutions and parts of resolutions insofar as they conflict with the provisions of this resolution are hereby rescinded. Section 24. 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 25. 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 City Pulse or the Lansing State Journal, either of which is a newspaper of general circulation in the City qualified under State law to publish legal notices, promptly after its adoption, and 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 26. 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 and the users of the System. In accordance with the provisions of Section 6 of Act 94, this resolution shall become effective immediately upon its adoption. We hereby certify that the foregoing is a true and complete copy of a resolution duly adopted by the Board of Commissioners of the Lansing Board of Water and Light at a Regular meeting held on January 24, 2012, at 5:30 p.m., 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. Regular Board Mtg. January 24,2012 Page 32 of 35 We further certify that the following Commissioners were present at said meeting Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Marilyn Plummer, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle and that the following Commissioners were absent None. We further certify that Commissioner Margaret Bossenbery moved adoption of said resolution, and that said motion was supported by Commissioner Cynthia Ward. We further certify that the following Commissioners voted for adoption of said resolution Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Marilyn Plummer, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle and that the following Commissioners voted against adoption of said resolution None. We 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. Sandra Zerkle M. Denise Griffin Chairperson Corporate Secretary General Manager J. Peter Lark addressed observations that were tendered to the Board of Commissioners at the January 19, 2012 Rate Increase Public Hearing. After providing a response to questions and concerns that were addressed by the public at the Rate Hearing, General Manager Lark respectfully asked that the Board approve the resolutions for the water, steam and electric rate schedule. RESOLUTION#2012-01-03 Water and Steam Rate Increases— Electric Rate Adjustment WHEREAS, the Corporate Financial Targets for each of the Lansing Board of Water and Light's strategic business units is a 6.18% return on net fixed assets and materials and supplies that would require$12.3 million of water net income and $2.8 million of steam net income; and WHEREAS, the Fiscal Year 2012 budget filed with the City of Lansing included the proposed rate increases for the water and steam utilities; and WHEREAS, the Fiscal Year 2012 budget with the proposed rate adjustments would result in a water net loss of$690,000 or a negative 0.35% return on net fixed assets and materials and supplies; and WHEREAS, the Fiscal Year 2012 budget with the proposed rate adjustments would result in a steam net loss of$2.4 million or a negative 5.51% return on net fixed assets and materials and supplies; and WHEREAS, the Staff proposes to increase annual water billings by $2.5 million; and WHEREAS, the Staff proposes to increase annual steam billings by $0.8 million; and WHEREAS, BWL production facilities produce electricity to serve the needs of BWL retail customers; and Regular Board Mtg. January 24,2012 Page 33 of 35 WHEREAS, BWL electricity production occasionally exceeds the requirements of retail customers and the excess is sold on the wholesale power market; and WHEREAS, sales of excess electricity production in the wholesale market is an integral part of providing electric service to BWL retail customers, and should not be treated as a stand-alone business; and WHEREAS, to recognize that wholesale sales are integral to BWL electric operations, the Staff proposes offsetting revenue-neutral rate adjustments, decreasing the electric ECA by$0.0035 per kWh and increasing electric commodity charges by$0.0035 per kWh; and WHEREAS, the notice of the proposed increases was communicated to all customers by public notice on January 4, 2012, and a public hearing was held on January 19, 2012 to receive comments on the proposed increases; and WHEREAS, the Board of Commissioners has considered the comments of the public as well as recommendations made by the BWL. RESOLVED, that the water, steam, and electric rate schedules listed below and detailed in the attached rate schedules be adopted and made effective for water, steam, and electric consumption on or after March 1, 2012. Motion by Commissioner Louney seconded by Commissioner Bossenbery, to approve the resolution for water, steam and electric rates schedules effective March 1, 2012. Action: Carried unanimously Water: (Attachment A) Residential Service—Rate 1 General Service— Rate 2 Fire Service—Rate 4 Lawn Sprinkling Service—Rate 5 Fire Hydrant—Rate 6 Steam: (Attachment B) General Service—Rate 1 Industrial Service— Rate 2 Residential Service —Rate 5 Electric: (Attachment C) Residential Service— Rate 1 General Service— Rate 3 Large General Service—Rate 4 Primary Service—Rate 5 Municipal Water Pumping Service— Rate 7 Large Capacity Service— Rate 8 Space Conditioning and Water Heating Service—Rate 12 Residential Senior Citizen Service—Rate 21 Residential Plug-In Electric Vehicle Service—Rate 22 Energy Cost Adjustment Regular Board Mtg. January 24,2012 Page 34 of 35 UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS There was no New Business RESOLUTIONS There were no Resolutions under this section. MANAGER'S REMARKS General Manager Lark stated that the Board of Water& Light has won the 2012 ASM Corporate Award from the Agricultural Society of Michigan, The Board of Water& Light won this award as a business that provides financial support to the agriculture industry through sponsorships of meetings and workshops and providing volunteers or in-kind services for arboriculture projects. This award relates to the Board of Water& Light's tree trimming and preservations of good-looking trees. General Manager Lark stated that the Wine & Cheese Extravaganza-Dancing with the Starz event that is designed to benefit the "Pennies for Power" and Capital Area Community Services, is going to be held on March 8, 2012. COMMISSIONERS' REMARKS Chair Zerkle read the following letter into the record: On behalf of the BWL Board of Commissioners, I thank the LSJ for its interest in proposed water and steam rate increases (Jan. 15 editorial), While the board will surely take your comments into consideration, I would like to point out that the BWL has already undertaken significant cost-saving measures: s All departments have seen budget cuts of 10 percent or more, including the Board of Commissioners' budget. ■ Almost half of our employees received no salary increase last year. e The work force has been reduced nearly 10 percent. ■ BWL employees have taken eight unpaid furlough days. Additionally, our commission plans a thorough review of health-care premium cost-sharing, in light of Public Act 152. Commissioners will continue taking a hard look at BWL costs, and as always our chief concern will be our customers. The BWL faces needed upgrades to an infrastructure dating back to the turn of the last century. Cities across the country face similar, expensive upgrades. Please know our board will base its decision on behalf of our customers—whom the BWL has served faithfully for 127 years. Sandra Zerkle, Chair Regular Board Mtg. January 24,2012 Page 35 of 35 Board of Commissioners Lansing Board of Water& Light Chair Zerkle also stated some increases have been imposed due to Environmental Protection Agency implementing new regulations on utilities. PUBLIC COMMENTS There was no Public Comment EXCUSED ABSENCE None ADJOURNMENT On motion by Commissioner Price, seconded by Commissioner Plummer the meeting adjourned at 5:55 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes fled with Lansing City Cleric:February 1,2012