HomeMy WebLinkAbout2015 Minutes BWL Officially Approved May 26,2015
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Hemetcsvr*People.Hometown Puwea
LANSING BOARD OF WATER AND LIGHT
BOARD OF COMMISSIONERS
SPECIAL MEETING MINUTES
May 19, 2015
The Board of Commissioners met at the BWL Headquarters-REO Town Depot located.at 1201
S. Washington Ave., Lansing, MI, at 6:00 p.m. on Tuesday, May 19, 2015.
Chairperson David Price called the Special Board meeting to order at 6:54 p.m. 7
t: t i
Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McClc , T-any
Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle.
Absent: None.
co
The Corporate Secretary declared a quorum.
Commissioner Thomas led the Pledge of Allegiance.
Meeting Purpose:
Closed Session (Attorney—Client Memorandum)....MCL 15.268 (h) & MCL 15.243 (g).
Separation Agreement Settlement Re:J. Peter Lark.
PUBLIC COMMENT
No Public Comment.
Purpose
Closed Session (Attorney-Client Memorandum) MCL 15.268 (h) & MCL 15.243 (g)
Separation Agreement Settlement Re:J. Peter Lark
Motion by Commissioner Ward, Seconded by Commissioner McCloud to go into closed
session.
Action: Motion Carried.
Roll Call Vote:
Yeas: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony
Mullen, David Price, Tracy Thomas, Sandra Zerkle.
Nays: None.
Action: Motion Carried.
The Special Board Meeting went into closed session at 6:55 p.m.
The Special Board Meeting reconvened to open session at 7:16 p.m.
Attorney David Russell, provided an overview of the Separation Agreement and Complete
Mutual Release Agreement regarding J. Peter Lark.
Special Board Mtg.
May 19,2015
Page 2 of 3
Upon conclusion of the Closed Session, the following motion and Resolution was offered:
Motion by Commissioner Cynthia Ward, Seconded by Commissioner Mullen to approve the
Resolution for Separation and Complete Mutual Release Agreement for J. Peter Lark as it is
read into the Records:
RESOLUTION 2015-05-01
BOARD OF COMMISSIONERS OF THE LANSING BOARD OF WATER AND LIGHT
J. PETER LARK SEPARATION AND COMPLETE MUTUAL RELEASE AGREEMENT
At a special meeting of the Board of Commissioners of the Lansing Board of Water and Light
(the "Board"), held at the REO Town Depot, 1201 S. Washington Avenue, Lansing, Michigan
on the 19th day of May, 2015, at 6:00 p.m.
PRESENT: Board of Water & Light Commissioners Margaret Bossenbery, Dennis M. Louney,
Anthony McCloud, Tony Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle.
ABSENT: None
The following Resolution was offered by Commissioner Cynthia Ward and seconded by
Commissioner Anthony McCloud.
WHEREAS,J. Peter Lark ("Mr. Lark") was terminated by the Board on January 13, 2015; and
WHEREAS, Mr. Lark, through his counsel, has made a demand on the Board based on the
January 13, 2015 termination alleging numerous causes of action; and
WHEREAS, the Board desires to resolve the dispute between the parties to avoid the risks
and costs of litigation associated with the allegations; and
WHEREAS, the Board has determined that entering into a settlement is in the best interest of
the Lansing Board of Water and Light.
NOW, THEREFORE, it is resolved by the Board of Commissioners of the Lansing Board of
Water and Light as follows:
1. The Board agrees to enter into the proposed Separation Agreement and
Complete
Mutual Release, which is attached to this resolution;
2. The Board's Chairperson, David Price, is authorized and directed to execute the
Separation Agreement and Complete Mutual Release on behalf of the Board
consistent with this resolution.
3. Any and all resolutions that are in conflict with this Resolution are hereby
repealed to the extent necessary to give this Resolution full force and effect.
Special Board Mtg.
May 19,2015
Page 3 of 3
Roll Call Vote: ADOPTED 8-0 Vote
YEAS: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony
Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle.
NAYS: None
Motion by Commissioner Ward, seconded by Commissioner Mullen to approve Board Chair
Price as the sole designated Board of Commissioner's media contact during the seven day
revocation period.
Action: Motion Carried.
Commissioner Remarks
None.
Motion of Excused Absence
None.
Adjournment
Meeting adjourned at 7:25 p.m.
Official Filing with Lansing City Clerk on June 6,2015
Hometown People,Hometown Power,
LANSING BOARD OF WATER AND LIGHT
BOARD OF COMMISSIONERS
SPECIAL MEETING MINUTES
May 19, 2015
The Board of Commissioners met at the BWL Headquarters-REO Town Depot located at 1201
S. Washington Ave., Lansing, MI, at 6:00 p.m. on Tuesday, February 17, 2015.
Chairperson David Price called the Special Board meeting to order at 6:54 p.m.
Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony
Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle.
Absent: None.
The Corporate Secretary declared a quorum.
Commissioner Thomas led the Pledge of Allegiance.
Meeting Purpose:
Closed Session (Attorney—Client Memorandum)....MCL 15.268 (h) & MCL 15.243 (g).
Separation Agreement Settlement Re: J. Peter Lark.
PUBLIC COMMENT
No Public Comment.
Purpose
Closed Session (Attorney-Client Memorandum) MCL 15.268 (h) & MCL 15.243 (g)
Separation Agreement Settlement Re: J. Peter Lark
Motion by Commissioner Ward, Seconded by Commissioner McCloud to go into closed
session.
Action: Motion Carried.
Roll Call Vote:
Yeas: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony
Mullen, David Price, Tracy Thomas, Sandra Zerkle.
Nays: None.
Action: Motion Carried.
The Special Board Meeting went into closed session at 5:55 p.m.
The Special Board Meeting reconvened to open session at 7:16 p.m.
Attorney David Russell, provided an overview of the Separation Agreement and Complete
Mutual Release Agreement regarding J. Peter Lark.
Special Board Mtg.
May 15,2015
Page 2 of 2
Upon conclusion of the Closed Session, the following motion was offered:
Motion by Commissioner Cynthia Ward, Seconded by Commissioner Mullen to approve the
Resolution for Separation and Complete Mutual Release Agreement for J. Peter Lark as it is
read into the Records:
WHEREAS, J. Peter Lark ("Mr. Lark") was terminated by the Board on January 13, 2015; and
WHEREAS, Mr. Lark, through his counsel, has made a demand on the Board based on the
January 13, 2015 termination alleging numerous causes of action; and
WHEREAS, the Board desires to resolve the dispute between the parties to avoid the risks
and costs of litigation associated with the allegations; and
WHEREAS, the Board has determined that entering into a settlement is in the best interest of
the Lansing Board of Water and Light.
NOW, THEREFORE, it is resolved by the Board of Commissioners of the Lansing Board of
Water and Light as follows:
1. The Board agrees to enter into the proposed Separation Agreement and
Complete Mutual Release, which is attached to this resolution.
2. The Board's Chairperson, David Price, is authorized and directed to execute
the Separation Agreement and Complete Mutual Release on behalf of the
Board consistent with this resolution.
3. Any and all resolutions that are in conflict with this Resolution are hereby
repealed to the extent necessary to give this Resolution full force and effect.
Roll Call Vote:
Yeas: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony
Mullen, David Price, Tracy Thomas, Sandra Zerkle.
Nays: None.
Action: Motion Carried.
Motion by Commissioner Ward, seconded by Commissioner Mullen to approve Board Chair
Price as the sole designated Board of Commissioner's media contact during the seven day
revocation period.
Action: Motion Carried.
Commissioner remarks
None.
Motion of Excused Absence
None.
Adjournment
Meeting adjourned at 7:16 p.m.
Filed with Lansing City Clerk
C:UIVINII I I LL OF I HL WHULL
April 14, 2015
The Committee of the Whole of the Lansing Board of Water and Light met at the BWL
Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 6:00 p.m.
on Tuesday, April 14, 2015.
Committee of the Whole Chair Margaret Bossenbery called the meeting to order and asked the
Corporate Secretary to call the roll.
Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Anthony McCloud, Tony
Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle.
Absent: None
Public Comments
None
Regional Customer Input
None
Approval of Minutes
Motion by Commissioner Price, Seconded by Commissioner McCloud to approve the
Committee of the Whole meeting minutes of March 10, 2015.
Action: Motion Carried
FRIB Update
George Stojic, Executive Director of Strategic Planning and Development, provided the
Committee with a brief history on the Facility for Rare Isotope Beams (FRIB), a nuclear
accelerator that is being built on the campus of MSU in E. Lansing, MI. On three occasions, the
Board of Water & Light submitted requested bids to service the FRIB area. After the third
solicitation, MSU decided not to accept any bids, however since then the BWL has been
negotiating with Consumers Energy to have a 50/50 FRIB net revenue split. Mr. Stojic stated
that the BWL currently does not have an agreement for the split, but does have framework for
a proposal for service to the FRIB.
CRT Update
George Stojic, Executive Director of Strategic Planning and Development, stated that the
Administration is currently reviewing the Community Review Team's Report (CRT) and is
conducting a quality assurance check to identify tasks that have and have not been completed.
Interim General Manager Peffley stated that a report was sent to the Commissioners providing
an update on the Outage Management System (OMS), and that a more detailed report would
be provided at the May Committee of the Whole meeting, which will indicate what tasks have
been addressed and completed, as well as a list of tasks that need to be completed. This report
will make it easy for the Commissioners to see exactly what changes have been incorporated.
Committee of the Whole Chair Bossenbery stated that the Committee should review the
suggested recommendations from the CRT Report for the Board of Commissioners.
PA95 Update
Committee of the Whole Meeting
April 14,2015
Page 2 of 7
CFO Heather Shawa-DeCook provided an update on Public Act 95 (PA95), which is an Act that
creates a low-income energy assistance fund. The Board of Water & Light has the option to opt
into or out of the fund on an annual basis. CFO Shawa-Decook stated that the BWL's staff is
recommending exempting out of this Act for the upcoming period. Ms. Shawa-DeCook stated
that the BWL currently has several projects that are in progress and it may not be cost effective
to implement this Act in the middle of changing and implementing a new billing system.
CFO Shawa-Decook stated that the BWL is reconciling and reviewing the funds currently paid to
the Department of Human Services (DHS) and St. Vincent via Capital Area Community Services
(CACS) and comparing data from previous year's to better understand the impact of opting out
versus not opting out.
The Board of Commissioners and Executive Staff participated in a lengthy conversation
regarding PA95 and agencies that the BWL donates to, how the money is distributed and if it is
beneficial for the BWL to participate in the Act. That conversation included comments from
Robert Nelson of E. Lansing who provided information regarding the Act and grants that were
issued during the last cycle. He informed the Board that the Public Service Commissioner (PSC)
may no longer be handling this account because of a new Energy Agency being created by the
Governor. Mr. Nelson reiterated to the Board that if they do not opt in, that a shut off policy is
mandatory. He stated he believes the best thing to do is to look to next year for applying and
to prepare for the 2016 cycle.
Board Chair Price stated as part of the analysis, it should be taken in to consideration that if
there is no grant and we are not being reimbursed for the no shut offs, that considered with
what it would cost us to opt in, obviously, if those numbers are fairly equal then it makes sense
to opt in. If there is a large gap and it costs significantly more to opt in, then the Board has to
make other decisions.
Electric Transmission and Generator Plan
Interim General Manager Peffley presented and reviewed the following Electric Transmission
and Generation Plans PowerPoint presentation, which included:
• Historic Perspective -Role of the Eckert Generating Station -Reliability Standards
• Recommended Changes to the BWL System *Implementations Issues
Historic Perspective
• Beginning in the 1920's, the BWL Electric System was primarily built around and
supported by the Ottawa and Eckert Power Plants
• In the 1950s through the mid 1970s more generation was added to Eckert, in 1973
Erickson was completed and in the late 1970's the 138 kV transmission system was
constructed
• Since the 1970's, one interconnection has been added to the ITC system,the BWL
contracted for power and transmission from the Belle River power plant and the
REO Town plant was placed in service
• The majority of our electric assets have been in operation for more than 45 years,
some for up to 60 years
• Major portions of the BWL's service territory are still supported by the Eckert
generating plant
Committee of the Whole Meeting
April 14,2015
Page 3 of 7
Issues Driving Development of Transmission Plan
• Eventual retirement of Eckert plant
— Air/Water regulations
— Mandatory federal electric reliability standards
— Age and condition of facilities
• Eckert generation is needed to support electric reliability for a major portion of the
BWL's load
• Eckert cannot be removed from service without additional generation or
transmission infrastructure
• Since a major, new generation plant cannot be built where Eckert now stands,
transmission needs to be constructed to meet electric reliability requirements
Role of the Eckert Generating Station
Eckert is a Maior Generating Station
• Eckert has been the site of a power plant since the early 1920's
— Until recently, it was capable of producing 420 Mw's of electric generating
capacity
— It is currently capable of producing 290 Mw's
— Because of its strategic location, Eckert is very important to maintaining and
meeting electric reliability standards
— As the plant ages, operations and maintenance costs have been increasing while
generation reliability has been decreasing
— Compliance with stricter air and water regulations will add to the cost of
maintaining Eckert:
• Pending greenhouse gas regulations may limit the amount of CO2
emitted by BWL facilities
• The recently released Mercury and Air Toxics rule will result in Eckert
units 1 and 3 being retired March, 2016
• Additional regulations are pending or will be implemented within the
next 10 years
Eckert is the Site of Maior Transmission and Distribution Facilities
— The Eckert electric distribution plant feeds 68 circuits and nearly 1/3 of the BWL's peak
load including critical parts of the BWL's service territory
— Without electric generation at Eckert, electric service to downtown Lansing is one
contingency from failure
— Distribution circuits originating at Eckert are in need of replacement
• Circuits feeding downtown are located in duct banks that are failing
• Transmission and distribution facilities at Eckert are located in the 100 year flood
plain
Reliability Standards
NERC Contingency Planning Requirements
Committee of the Whole Meeting
April 14,2015
Page 4 of 7
• System planning requirements (N-1-1 Criteria)—The system must be designed to be able
to sustain its operation when two elements (e.g. transmission line, breaker, bus,
generator) are simultaneously out of service; commonly called the N-1-1 criteria.
• Operations (N-1) - Preparing System for the next contingency
— The T&D Supervisor is to operate (in real-time)the system such that if a
contingency were to occur, the system would continue to deliver power to the
remaining load centers; commonly called the N-1 criteria. If no options are
available, the T&D Supervisor is authorized to shed load (i.e. cut service to some
customers) until the contingency is relieved.
— Without the Eckert generating plant, the BWL cannot meet these NERC
contingency requirements with its current transmission configuration and it
would violate these standards.
• This would jeopardize reliability to the BWUs system
• It would also expose the BWL to substantial fines or other penalties
BWL Electric System
BWL Electric System
Substations
r
133 KV Tra nsmis;ion System
Eckert
Erickson
Intercon nections to Interstate Grid
Recommended changes to BWL System
BWL Electric System with N-1-1 Contingencies
Subsati.—
r
138 KV Trans mission Sys rem
Power Flow ��
REO
/Contingencies--�
f
- Erickson
Irr-rcannections to Irrtersrate Grid/
3
Transmission Plan Investments
• Construct new transmission lines
• Construct or rebuild six substations
• Reduce number of circuits and the amount of customer demand at the Eckert
distribution facility
• Add capacitor banks at Erickson and Northeast substations
BWL Electric Transmission Plan
Committee of the Whole Meeting
April 14,2015
Page 5 of 7
BWL Electric Transmission Plan
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REO
Erickson \
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Summary of Issues
• Aging Infrastructure
— Failing duct lines under railroad
— Facilities at Eckert are over 50 yrs. old
— Regulation Compliance
— EPA Clean Air Act (Unit retirements)
— NERC reliability compliance requirements (Design T&D system for contingencies)
— Diversify substations serving downtown and GM-LGR. (Eckert substation serves
30%of BWL customers)
• Limited capability of cables to serve new customers and no room in duct banks for new
cables
• Removal of infrastructure from the flood plain exposure (Eckert facility is in the 100 yr.
flood zone)
Implementation Issues
Work load Issues
— Unprecedented level of work for the next 7 to 10 years
— Challenge to human resources, for existing work load and managing consultants
and contractors
— Prepare and train technical resources to replace retiring employees
— Coordination of work while maintaining system reliability
Other Significant Issues
— Ability to get the property
— Availability and timeliness of equipment/contractors Funding
— 4.160 voltage level customers' ability to be moved to 13.2 kV
— Modify transmission service to increase import capability
Project Conceptual Costs
Project Conceptual Costs :Capital Budget
1 lsi000)
a.:.r_ a,ioo I SUJW SG. - S - 5 - $xi
STaw 5],sa0 5:,000 5 5loaaa
SSio SOD
(bush Rerrxcenvn[ 5 300 5 Mi S 7. S 4 ( S L400 S 800 5 S.]oo
r 34tGR5uMsom S !oo $ Soo S 4'iW S l y S. S SSw S
743 S__ 5 - 4� S
S -1.Eoo 5].000 5[iJ—sdj
so aooS sols W
Committee of the Whole Meeting
April 14,2015
Page 6 of 7
Generation Plan
• Eckert supplies both electric energy and capacity to meet BWL's requirements
• Additional generation will be needed when Eckert is removed from service
• The BWL can acquire the electric energy and capacity from a number of sources
— Construct additional generation
— Acquire more renewable energy
— Implement demand-side measures
— Invest in smart grid options
— Rely on market purchases
• The BWL is beginning an IRP process that will involve the community on the best
way to acquire additional electric energy and capacity
Following the PowerPoint presentation Interim General Manager Peffley concluded by stating
more information will be brought forward regarding the transmission regulations but wanted to
make sure that the Board understood that the transmission matters as stated in the
PowerPoint are necessary and mandated. Mr. Peffley stated as Eckert nears the end of its life,
the reliability of the three units that are left 4, 5, and 6 is basically down in the 75% range,
which means 25% of the time, the plant is down. Mr. Peffley stated that money is being put into
the plant now, and is trying to balance with how much to spend keeping in mind the plant will
be shut down in the future.
Construction Plans for Dais
There was a lengthy discussion amongst Commissioners regarding the cost of extending the
dais and other accommodations for the incoming Advisory Board members. Upon conclusion
of the discussion, the following motion was offered.
Motion by Commissioner Price, Seconded by Commissioner Zerkle, to bring the seating
accommodations subject back to the May Regular Board meeting for consideration.
Action: Motion Carried (6/2 Mullen, Ward dissenting)
Upcoming APPA Conference
Committee of the Whole Chair Bossenbery spoke about the upcoming American Public Power
Association (APPA) National Conference that is taking place in June. Ms. Bossenbery stated that
she finds the conference to be very beneficial and a good opportunity for Commissioners to
learn about best practices in the utility industry. She encouraged anyone who is interested in
attending this year to contact Corporate Secretary as soon as possible.
Public Comment
None
Other
Commissioner Cynthia Ward, Human Resources Chair, stated that at the last Human Resources
(HR) Committee meeting she had suggested that the HR Committee get a Gmail account
specifically for the HR Committee and as part of that discussion, Commissioner Mullen asked
the HR Committee to also consider individual email addresses for the Commissioners. Ms.
Ward stated that she believes that matters warrants some discussion and should be agenda
Committee of the Whole Meeting
April 14,2015
Page 7 of 7
item for the Committee of the Whole or the Executive Committee. Ms. Ward stated concerns
regarding the responsibilities of multiple email accounts.
After some discussion regarding email addresses for the Commissioners, Chair Price suggested
that the matter be addressed at a future Committee of the Whole meeting.
Commissioner Dennis M. Louney said after meeting with the new Advisory Commissioners, it
was suggested that some sort of check list of ideas, suggestions, task or assignments that are
discussed at meetings be created and put together in one document versus reviewing minutes
to see what has been requested or suggested. Mr. Louney said this check list would also make
it easier for Commissioner to see if task has been addressed and followed through on.
Board Chair Price suggested a tracking system, something below the level of a Resolution that
would be presented to the Board. After some discussion regarding this matter it was
determined that Ms. Griffin would create a tracking system/action Items document.
Closed Session discussion(Attorney-Client Memo)[MCL 15.268(h);MCL 15.243 Wl
Committee of the Whole Chair Bossenbery stated that attorneys have provided the Board of
Commissioners with an Attorney Client Privilege memorandum and it is appropriate to discuss
the contents of that memorandum in closed session.
Motion by Commissioner Price, Seconded by Commissioner Ward to go into close session for
the purpose of consulting with Legal Counsel on the contents of the attorney-client privileged
memorandum as permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL
15.243(g).
Roll Call Vote:
Yeas: Commissioners Bossenbery, Louney, McCloud, Mullen, Price, Thomas, Ward and Zerkle
Nays: None
The Committee of the Whole went into closed session at 7:07 p.m.
On Motion by Committee Price, Seconded by Commissioner Mullen and supported by all
Commissioners, the Committee of the Whole returned to Open Session at 8:08 p.m.
Excused Absence
None
Adiourn
On Motion by Commissioner McCloud, Seconded by Commissioner Louney, the meeting
adjourned at 8:09 p.m.
Respectfully Submitted
Margaret Bossenbery, Chair
Committee of the Whole
CUIVIIVII I I LL OF I HL WHULL
May 12, 2015
The Committee of the Whole of the Lansing Board of Water and Light met at the BWL
Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 6:00 p.m.
on Tuesday, May 12, 2015.
Committee of the Whole Chair Margaret Bossenbery called the meeting to order and asked the
Corporate Secretary to call the roll.
Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Anthony McCloud, Tony
Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle.
Absent: None
Public Comments
None
Regional Customer Input
Bob Nelson of East Lansing spoke about the possibility of including in the future Rules and
Regulations a credit for outages like the Public Service Commission offers. Also, this credit
suggestion was recommended by the Public Service Commissioner last year as part of their
review.
After a brief conversation regarding outage credit, it was determined that this matter would be
brought back to a Committee for further conversations.
Approval of Minutes
Motion by Commissioner Price, Seconded by Commissioner McCloud to approve the
Committee of the Whole meeting minutes of April 14, 2015.
Action: Motion Carried
CRT Update
George Stojic, Executive Director of Strategic Planning and Development, provided a
Community Review Team (CRT) update. Mr. Stojic stated that there were about 187
recommendations all together from the CRT, the Public Service Commission (PSC) and the
Board of Water and Light's own recommendations, and of the recommendations, 173 of those
were assigned to the BWL staff and of those there are 16 remaining. Most of the remaining
recommendations are scheduled for completion by mid-June. Mr. Stojic stated that he has
undertaken a quality assurance program that will review what recommendations and
implementations have been completed and are working. This program is simply to confirm the
completion of those items that the Administration said were complete.
After some discussion regarding the completion of the recommendations from the CRT and PSC
it was suggested that a matrix be availed to the public and that it be presented to the City
Council and the PSC, to show a finalization or a summary of task have been implemented and
completed. This matrix would also be recognition of the efforts of the BWL's Management.
Committee of the Whole Meeting
May 12,2015
Page 2 of 6
Review of the CRT's Recommendations the Board of Commissioners
There was discussion regarding CRT's recommendation #9 which state "Recommend to the City
a "Best Practice" for recruiting new board members. Not only those that may represent certain
areas that they serve, but recruit to needs of expertise, including, as examples only, an
engineering background, business background or security background". Board Chair Price
stated that it makes since to have this conversation with the Mayor's office, because those
appointments begin in the Mayor's office. Commissioner Ward stated that she felt the Board
should represent the diversity of the City of Lansing as far as background and socioeconomic
status.
The Board had a lengthy discussion regarding the CRT recommendations. Committee of the
Whole Chair Bossenbery, suggested that maybe the Board's Internal Auditor could share his
thoughts from the research that he did regarding an Operational Auditor with the City Council
and the Mayor's Office, to give them a variety of options and maybe suggest where and how
they could conduct the audit that the Council recently approved. Committee of the Whole
Chair Bossenbery stated that Recommendation #9 would be marked as pending.
Rules and Regulations
Nick Burwell, Director of Customer Projects, Planning & Development reviewed the 2016 Fiscal
Year Rules and Regulations.
RULES AND REGULATIONS UPDATE
For Fiscal Year 2016
Electric, Water, Steam and Chilled Water
• Revision of Rule 2, General Provisions, General Provisions
o Address change to current location at Haco Drive
• Revision of Rule8.2, Dispute and Hearing Procedure, Hearings
o Address change to current corporate location at S. Washington Ave.
• Revision of Rule 10.2 (Chilled Water &Steam) & 11.2 (Electric & Water), Services,
Application for
Service
o Address change to current location at Haco Drive
• Revision of Rule 12 (Chilled Water &Steam) & 15 (Electric & Water),
Schedule of Fees & Charges
Electric
• Revision of Rule 7.1, Responsibility for Payment of Bills, General
o Date change to coincide with PA95 dates
• Revision of Rule 11.3, Services, Temporary Service
o Temp service can be included in construction costs
• Revision of Rule 11.7, Services, Commercial and Industrial Underground Services
o Clarify who provides terminal lugs for underground service
• Revision of Rule 13.2, Use of Board Equipment, Authorized Attachments
o Pole attachment process to be outlined in new 3rd party joint use permit policy
Committee of the Whole Meeting
May 12,2015
Page 3 of 6
Water
• Revision of Rule 5.5, Metering, Meter Calibration Request
o Clarification of existing rule
Steam
• Revision to Rule 5.2, Metering, Sizing/Installation/Ownership
o Deleted and master trap to eliminate conflict with previous sentence
o Addition of language allows BWL to continue to provide accurate steam metering
Chilled Water
• Revision of Rule 3.2, Service Conditions, Description of Service
o Service parameters are variable, depending on location and loads. Each
new service must be engineered individually, and the existing rule restricts
the BWL's ability to do so.
Motion by Commissioner Price, seconded by Commissioner Ward to present a resolution for
the acceptance of the proposed changes to the FY 2016 Rules and Regulations to full Board for
consideration.
Action: Motion Carried
Energy Optimization and Renewable Energy Annual Update
Aileen Gow, Senior Analyst of Energy Optimization program, presented the Committee of the
Whole with an Energy Optimization and Renewable Energy Update. Ms. Gow stated that the
State of Michigan Public Service Commission (MPSC) under PA 295 requires the Board of Water
& Light to provide the Governing Board an annual update on their Renewable Energy Plans. PA
295 also requires the Board of Water & Light to report to customers annually.
Ms. Gow presented the following PowerPoint presentation: Energy Optimization Program for 2014.
Energy Optimization 2014 Programs Program Highlights
❑ Services for Low Income Customers ❑ Education in the Community
❑ Residential Programs ■ Attended 26 local events with 3,391 attendees
■ High Efficiency Lighting NDid 20 presentations to community groups
■ Appliance Turn-in & Recycling with 500 customers
■ Multi-Family Services EConducted 1 Solar Array tour for an LCC class
■ Energy Star Products/Equipment of 20 students
❑ Business Prescriptive &Custom Incentives ❑ Pilot Programs
❑ Energy Education Services ■ Think! Energy(school program with
❑ Pilot programs Consumers Energy)
■ Michigan Saves Low Interest Financing
o Partnership with Consumers Energy and
Michigan Saves
o Residential-2.99%for$1,000-$30,000 loans
for up to 10 years
o Business—2.99%for$2000-$250,000 for 2-5
years
Committee of the Whole Meeting
May 12,2015
Page 4 of 6
Ms. Gow stated that the Million Kilowatt Hour Club is businesses who exceed in savings as a
result of participating in the BWL efficiency programs.
Million Kilowatt Hour Club
Peckham Vocational Ind. 1,206,316
Demmer Properties LLC 1,007,592
State of Michigan DMB 2,787,976
General Motors 7,171,042
Quality Dairy 1,387,195
Lansing School District 2,243,169
Ashley/Ryder 4,011,057
George Stojic, Executive Director of Strategic Planning and Development reviewed the Energy
Optimization Summary, Renewable Energy 2014, Results 2014 Updates and the Current
Renewable Energy Portfolio as well as other options that the BWL is continuing to evaluate.
Renewable Energy 2014 Results Energy Optimization Summary
>We are on trackto meetthe RPS standards 2014 Goan 2014 A-31
> RPS standards(based on percent of retail sales)are: Pro.—mPorcfolo GrossFirA Program Gro"'ira Program
Year kWh Y.arkWh
2012 2% Buagel Budget
Savings Savings
• 2013 3.3%
• 2014 5.0% Low l--S—i— 1,015,814 5280,898 302,734 5137,713
• 2015 10% Resldenrial Programs 4,972,797 S3,352,6119 7,055,625 5959,936
>The BWL has about5.2%on an annual basis as of December 2014 13-i—sarvkes 12,022,697 $2,483506 15,335,950 $1,930-150
>The BWL is in comp liance with both renewable energy generation Toral Program Po rofn 18,011,298 $4,117,095 23,094,369 53,077,899
and its inventory ofRECs ProgramAdminmmion $257,501 52S5,755
> Due to the ability to carry-forward renewable energy credits the
BWL will not need any additional renewable energy until 2020for Eva1ua6-(EMPi4) 5306.019 5203,200
compliance with PA295 ANNUALTOTAL5 18,011,298 S4,GW,615 73,094,369 S3.537A94
2014 Updates
• Began commercial operation of solar at REO in June
• Added 104 kWh to the Cedar Street a rray in J uly Current Renewable Energy Portfolio
• Started receiving wind energy from the 8 turbines in >Purchase Energy and RECs
Gratiot County in December •Granger landfill gas
•Tower Kleber Hydro
• Issued and awarded RFP for up to 20 MW of solar Wind from Exelon Wind in Gratiotcounry
• Started development of a community solar project >BWL Owned
• Launched an incentive program for customers who •solar
install solar at their home or business •Hydro
• Reduced RE surchargesforallcustomerclasses
Continue to evaluate RE options
>wind
Exploring additional wind resources
i Biomass
Continue to look for biomass products that can
be co-fired with coal in our existing generating
plants or as stand-alone projects
?Renewable energy will be included in IRP
Committee of the Whole Meeting
May 12,2015
Page 5 of 6
Haco Update
Interim General Manager Peffley provided a brief update on the newly renovated Haco Facility.
Mr. Peffley stated that this is update is a wrap-up of Haco. He said the facility opened on time,
and was slightly under budget. The 120 plus employees that moved over to the facility are
settling in. Mr. Peffley stated the big success is the customer service center, which was tested
on the busiest day of the week, a Friday and the first of the month and all went well.
Table Top Exercise Update
Trent Adkins, Director of Emergency Planning, Safety,. Security and Training, presented an
update on the Table Top Exercise that was held on April 30th. Mr. Atkins stated that this was
the third time an Exercise has been presented at the BWL. Mr. Atkins stated that the 54
participants were broken up into tables, representing different areas of the Board's
organization that would be functioning during an emergency or during a disaster of some type.
The exercise itself was about 2 hours long and consisted of a simulated tornado that came
through the City of Lansing's 496 corridor. The participants walked through the simulations and
thought about continuity of operations. He stated this Table Top Exercise was well received.
Board Chair Price and Commissioner Zerkel stated how impressive and effective the Table Top
Exercise was.
Crisis Communication Plan Update
Steve Serkaian, Executive Director of Public Affair, provided the Committee with an updated
Crisis Communications Plan. Mr. Serkaian said this update is to reflect the new reorganization
plan implemented by Interim General Manager Peffley. Mr. Serkaian read the following from
the document's preamble page, "The purpose of a crisis communications plan is to ensure a
constant and consistent line of reliable information from the LBWL to its customers. This
includes instances of crises and non-crises events. This document will continue to evolve and
grow and is meant to be updated and improved as team members of the BWL evaluate its
effectiveness." Mr. Serkainan stated, this is a living, breathing document that will continue to
evolve. He said this document included the expansion of the Nixel emergency communications
contract. This expansion is important because the Nixel emergency communications contract
will provide the ability to communicate with all customers in a crisis via email, text, social
media, and phone.
Commissioner Email Account
Commissioner Cynthia Ward stated during the last HR Committee meeting she suggested that
the there be a designated Gmail account to facilitate the newly developed employee evaluation
process, and at that time Commissioner Mullen stated that he would like to see the
commissioners have an BWL personal email account. Commissioner Ward stated that she felt
that suggestion or idea warranted a discussion for the Committee of the Whole.
Commissioner Mullen stated his support for the establishment of personal email accounts for
the Board of Commissioners. He said that he believes it would much easier way for customers
to contact the Commissioners directly. Commissioner Mullen said having a personal email
account during the ice storm would have been very helpful.
Committee of the Whole Meeting
May 12,2015
Page 6 of 6
There was a lengthy discussion stating concerns about the Commissioners having a personal
email accounts at the BWL. In conclusion, it was stated that the Board of Water & Light has
things that are in place now that were not in place prior to the ice storm that may suffice
regarding this email proposal.
There was some questions regarding the Commissioners email page site and it was suggested
that Corporate Secretary Griffin and the IT Department review the site and maybe make some
improvement or changes to the area.
Public Comment
Rosemary Sullivan, no address give, expressed her appreciation for the Board of Water & Light
Board of Commissioner professionalism.
Other
Bill Long of Delta Township commended the staff and the Board of Commissioners on their
efforts in regards to the CRT Report.
Chair Price stated that he would like to invite the members of the CRT to have a conversation
regarding the Report and the implementations and changes that have taken place since the ice
storm.
Excused Absence
None
Adiourn
On Motion by Commissioner Price, Seconded by Commissioner McCloud, the meeting
adjourned at 7:07 p.m.
Respectfully Submitted
Margaret Bossenbery, Chair
Committee of the Whole
FINANCE COMMITTEE
APRIL 14, 2015
The Finance Committee of the Board of Water and Light met at the BWL Headquarters — REO
Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m. on Tuesday, April 14,
2015.
Finance Committee Chairperson Dennis M. Louney called the meeting to order and asked the
Corporate Secretary to call the roll.
Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Tony Mullen and Sandra
Zerkle. Also, present Commissioners McCloud, Thomas, Price and Ward.
Absent: None
The Corporate Secretary declared a quorum.
Public Comments
There was no Public Comment
Approval of Minutes
Motion by Commissioner Mullen, Seconded by Commissioner Bossenbery to approve the
Finance Committee meeting minutes of March 10, 2015 with a motion correction to include the
seconded motion on page #4 of the minutes.
Action: Motion Carried
February 2015 Financial Highlights
Chief Financial Officer (CFO) Heather Shawa-DeCook provided the Committee with a brief
overview of the BWL's February financials based on current or year to date information. CFO
Heather Shawa-DeCook reported the following information:
• Cash balance days on hands, at the end of February is under our target, however as of
April 10th, we are above target.
• Revenue year to date is 6% under budget; however, that is a 1% improvement over
January.
• Net Income and Return on Assets year to date, is exceeding the budget even with
revenues being under.
Page 1 of 3
4.14.15
FY15 Update Year End Proiections
CFO Heather Shawa-DeCook provided highlights from the recent review of the BWL's Fiscal Year
End Projections. The highlighted information reported included:
• Cash balance days on hands is projected to be under target by the end of the fiscal year
primarily due to Quarter 4 being heavy with annual projects and capital projects cash
outflow.
• Revenue is projected at year end to be at a 5% shortfall from the original budget and as
a result, the revenue is projected to be $350 million versus an original revenue budget
projection of$369 million.
• Net Income Return on Assets is looking to exceed the initial budget and are projected
currently at a $4.8 million net income versus an initial budget net income of $2.5
million. These numbers are based on key assumptions of 8 months of actual revenue
and expenses and the remaining 4 months, factoring in a 3% reduction to the revenues
that were budgeted originally and then the reductions that were put in place 2nd quarter
from across the board from a management stance.
There was discussion regarding the goal set of a 6.18% return on assets and if it was
reasonable. Commissioner Ward questioned if this subject could be revisited. After a
conversation regarding the set return rate, Finance Committee Chair Louney stated that the
Finance Committee could bring this issue up for discussion at a future Finance Committee
meeting and take a comprehensive look and review the policy to explore and examine a better
proposal to see what percentage amount the Board could establish and actually achieve.
IPS Amendment Resolution
Chief Financial Officer (CFO) Heather Shawa-DeCook presented the Committee with a proposed
Resolution for the Investment Policy Statement for Operating Funds (IPS). Ms. Shawa-DeCook
stated that this Resolution is being proposed due to organizational and title changes as well as
to reflect updated industry practices.
Motion by Commissioner Mullen, Seconded by Commissioner Zerkle to forward the proposed
Resolution to the full Board for consideration.
Action: Motion Carried
Other
Commissioner Mullen spoke about the staffing needs of the Board's appointed employees. He
stated that he has had discussions with various people as to how to accomplish fulfilling the
appointed employee's needs under the City of Lansing Charter confines. Commissioner Mullen
stated that this can be accomplished by authorizing money specifically in the Corporate
Secretary's and Internal Auditor's budget and they can hire the help they need, as they know
Page 2 of 3
E.1E.15
best what is needed. This need can be accomplished and implemented through the budget
process and the Board can vote, as to whether or not to accept this action when voting on the
budget. Board Chair Price stated that, as part of this dialogue there needs to be discussion as
to whether or not there is internal capacity that is currently underutilized within the BWL that
can be inserted to assist the employees, as an option.
Adiourn
On Motion by Commissioner Mullen, seconded by Commissioner Zerkle, the meeting adjourned
at 5:49 p.m.
Respectfully submitted
Dennis M. Louney, Chair
Finance Committee
Page 3 of 3
a-ia.ss
FINANCE COMMITTEE
May 12, 2015
The Finance Committee of the Board of Water and Light met at the BWL Headquarters — REO
Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 7:08 p.m. on Tuesday, May 12,
2015.
Finance Committee Chairperson Dennis M. Louney called the meeting to order and asked the
Corporate Secretary to call the roll.
Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Tony Mullen and Sandra
Zerkle. Also, present Commissioners Price and Ward.
Absent: None.
The Corporate Secretary declared a quorum.
Public Comments
None.
Approval of Minutes
Motion by Commissioner Bossenbery, Seconded by Commissioner Mullen to approve the
Finance Committee meeting minutes of April 4, 2015.
Action: Motion Carried.
March 2015 Financial Highlights
Chief Financial Officer (CFO) Heather Shawa-DeCook provided the Committee with a brief
overview of the BWL's March financials month end. CFO Heather Shawa-DeCook reported the
following information:
o Operating and Maintenance Cash Fund on hand, is above our target goal and as of May
8th we are well above our goal at Just under $90 million, our target goal is $80 million
for our operating fund.
o Hit revenue budget for March (first time this fiscal year).
o Year to date variance to budget is -5% (gaining another percent this past month).
o As reported last month from a net income stance, we are projecting well above budget
as of March month-end. However, by the end of the fiscal year for 4th quarter, we will
beat our budget, which is still projecting about $4.5M for net income.
FY16 O&M and Capital Budget Resolution
Finance Committee
May 12,2015
2
CFO Heather Shawa-DeCook presented a PowerPoint presentation and reviewed the FY 16
O&M Capital Budget that included:
• FY 2016 Financial Plan
—Sales forecast —Operating expense assumptions —FY 2016 O&M Budget by Category
—FY 2016 Budgeted Net Income & Cash Flow —Comparative Financials (FY 2016 vs. FY 2015)
Sales Volume Forecast
116 Bwgae
fdlin' F1161G] r F115130 d So7611vd t Operating Expense Assumptions
Datric-Pehil(lsmh) 216I,f90 2.199,661 22".
Dearioll"holesile(sm[h) I1124 106 371399 17s p"
Flmtric-Tail(mtin) 3165.796 3,061.060 34!i • Overall FY 2016 0&M increase of 2.2%
WAS'(W) 9A9"38 9.460,006 -,.9'S compared to FY 2015 Budget.This
$leas¢(1[dh) 76J969 770936 >.?so increaseisprimarilyattributableto
Chilled W ater t3lhrs) 1O.098D00 10.307.100 _2.w; inflationary pressure.
>Sa�
•tw.a.m..m.may®�tlma �baaab3 Y�in.inlY?ISbay.ttrf
Forecasted CPI Index 2.3%inflation`
psmmupa flmai/1'S16.
41rr
a.me..m.pem,,..aP.aees�.,3t]ayn3x:a2a a...,e.re>mame..-.oa�a
a.^ra:}abSaY VlnnEa[ail-1n.Slp•p zpmabasYea>nbodviem4 n
t•aY Budget assumes 754FTEs—an increase of
1.1%over the FY 2015 budget
oaa an.
W55
FY 2016
Income Statement by Utility
LItLLED
spool ELECTRIC HATER STEAM PATER TOTAL
SALES pntn,tq,MO,tOn rif) 3.127275 909353 760H 10 FIRM
FY 2016 O&M Budget by Category 5ea3 $ :2r.132 s 35 i1E s u3� s 5732 a 332667
5�'0k53e 5 11171 5 3537 s s s uo^a
-in$000%excludes depreciation OPERATSIGREVEINE S MASS $ 10,053 S 13,167 S 5,112 S 31 Ps
• I+S'L9a,623
OYftCn SLa I]Pa^:a El,]re 3 ('S6339)S ¢5 767)S a,f A)S p331)1(tat 623'
S p3003'.S QOl21 i REa)S P3 i;5 11322i.
TOTAL OPERATOIG EXPENSE S )235333)S p33021 S P13021 3 p31S)S i3aslaj
OPERATOIGOICOMEFOIS) S 25155 S 6150 S 1335 S %537 S 35327
�,33�S r^is
'�`� CSNrb'Mn5lJ tmne 5 2 s 7H 1 (173)5 is 5 915
OteCA?•.aa3Tj EQe3e S10311]S 1923 3=L979y1 75 6111 S 017a4.
m,r,� `) �•'^^` RETOILOIRI(LOSS) S 55 3 2503 $ (1.502)S 1.011$ 2131
&TEOFRET111 l:S 11% 1113 111% 21%
W'1 F3dJ��uW
Comparative Income Statement
Eased an Ini;iaf Request3 Prior
FY 2016 Cash Flow by Utility ;o 5:ra:egk Afignn ent and Revtnv
motmc oewnxc rain 3 vm:3 Izas: i s.:>, i a.ni s sa.l ,+.a ,.a.. >rh
a s•.o»s ]
ufce3orc.]w t srAu i u�a i ?,n t s,n, [npo -
ru -
Lst5�G3+
i e5.-_ '..•a»uv.1=..v'si.'� £]yn 1 Sls. ..
llLm' -
S13 .�...•r-=e a__ ..St
of ar ra to i l[1.n,1 i It?mil i I]Snl i P�ttl i Paps=;
IulWnlxnnpyomrwul 1 fsaal i tlpa s nSUI s tpp= i In
IS:1� r,. .r.�. _:+n�,s.�.s �-a,...n„•.-eve,..,: �-■15 ...>a=....: .... .n ...In
Page 2 of 4
Finance Committee
May 12,2015
3
Comparative Income Statement
After Strategrc,alignment and Review
sim• nxtlF unto le.��
Of 1IIASi�t Ent\' f1 µ 3 fntfF31
OEl�7v���D]IatSli'��'Q LOL�YL
aov um:.
]1.iT�L1 IL�3 '
_y TFS...�fYali E.Wl�? !aq?. !I:,)1 u• t.
Le.e era.Eda::;a;E.Lav e_l fE1i�?:�
ror o cnEnsT San... slur 3
fJ[EFSLVGL\IXOtT 1 Jf}]T f nf.at
Lu_.�-e x'�ais ices�v_i !!3,'tl !'A.L:Ii �•
• FY 2016 Capital Budget
FY 2016 Capital Budget Summary
D.11—in t00v5y
UTILITY LOCATION
ELECTRIC 5 38,962 ECKERT S 8,026
WATER s 8.106 ERICK SON 5 1,600
ST E'AM 5 4,506 T&D S d0,009
C H I LL ED WAT ER S 300 DYE/CEDAR 5 1,355
COMMON s 13,192: OTHER S 14.081
TOTAL BUDGET 5 65,OT2 S 65,072
FY 2016 Capital Budget—Major Proiects/Prograrns
P—j—
P—J-1 7atal rY ZD 16
SA P C s(CARE) 1d,828,000 6,907.00O
Ericksonto Wil"-,l38kVLir-Extension 20.100.000 3.5DO.GOD
Moores Park�m Gate Hoist and Phase 2 Datn Repairs d,160,000 3.010.00D
ESI A—I Rebuild T&D Systems 19,175,984 3,002,000
FY 2G16 Lead Service Replace — 42,812,000 2,700,000
Smart Grid tnp --Ution 30 950,000 2,500,00D
Street.Buld'i g and Outdoor Pruteai—Lijtting 16, 44 256,250 2260,0m
Services and line Externions 15,927.8 2ZD0,00O
1ryFse Slbstation double Enfing 7.160,000 2 U50 DOD
N-1,East 5tatin VAR—pensator 10.00D.ODO 2,000,000
Eckert Unit 4,5,and 6 f4e roury C.—AG System 2.249.441 1.967.441
Amual Purr:Fusef Scrap Tra.sfomrersATegulators 8,84T,013 f,385000
Fran 1-0—rhead 4160V S et ub Cutover and Rirement 1.375,000 1,a5:ooO
MichiganR ve Stm True VOashtn to A lley 6 1.326,600 1326,600
Substation Modem nation-EOP 8 1,894.500 1�9d,5O0
For d1GDV Substation Ret'w—t 2,823.900 1.230,D00
FY 20,r.t Wt Llne 31:A n noel Manhde Rplont 7,674,223 1,186.416
rt Ecke Steam Se rd-Out 1.090000 1 63O.000
V11—Bus 2 Dist buti— 3.000.GOO 1,000,DOO
IA01er 8320 C.—, 1,500.000 1,000,000
A.S 2.000.000 1,ODO.000
-- Tl— epraiects a re part of the Electric T—mission&Distrbution Pmn
Page 3 of 4
Finance Committee
May 12,2015
4
Interim General Manager Peffley presented and reviewed a list of requested Capital Projects
that would not be funded, as well as a list of Capital Projects planned for FY16. Interim General
Manager Peffley stated that these two lists were well thought out and prioritized and it was a
struggle to get this point. However, it is important to him that the BWL revenue is built on
bringing businesses and residents to this region, not on the backs of the people.
Finance Chair Louney said this current budget would not be based on any rate increases.
Motion by Commissioner Bossenbery, Seconded by Commissioner Mullen to forward a
Resolution for the approval of the FY 2016 Operating and Capital Budget.
Action: Motion Carried.
Other
None.
Adiourn
On Motion by Commissioner Bossenbery, seconded by Commissioner Mullen, the meeting
adjourned at 7:53 p.m.
Respectfully submitted
Dennis M. Louney, Chair
Finance Committee
Page 4 of 4
HUMAN RESOURCESS COMMITTEE
May 19, 2015
The Human Resources Committee of the Lansing Board of Water and Light met at the BWL
Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m.
on Tuesday, May 19, 2015.
The Human Resources Committee Chairperson Cynthia Ward called the meeting to order and
asked the Corporate Secretary to call the roll. The following members were present:
Commissioners Cynthia Ward, Anthony McCloud, Tony Mullen and David Price. Also present:
Commissioners Margaret Bossenbery, Dennis M. Louney, Tracy Thomas and Sandra Zerkle.
Absent: None.
Public Comments
None.
Approval of Minutes
Motion by Commissioner Mullen, seconded by Commissioner McCloud to approve the Human
Resources Committee meeting minutes of March 17, 2015.
Action: Motion Carried.
FY 15 Board Appointee Performance Reviews
a) Corporate Secretary
Corporate Secretary M. Denise Griffin requested a closed session for the purpose
of, receiving her contractual year-end performance evaluation as permitted by
the Open Meetings Act exemption MCL 15.268(a).
Motion by Commissioner Price, seconded by Commissioner Mullen to go into closed session.
Action: Motion Carried.
Roll Call Vote:
Yeas: Commissioners Cynthia Ward, Anthony McCloud, Tony Mullen, David Price.
Nays: None.
Action: Motion Carried.
The Human Resources Committee into closed session at 5:33 p.m.
The Human Resources Committee reconvened to open session at 5:51 p.m.
Upon conclusion of the Closed Session, the following motion was offered:
Page 1 of 4
Motion by Commissioner McCloud, seconded by Commissioner Mullen to reappoint M. Denise
Griffin to the Charter position of Corporate Secretary for FY16.
Action: Motion Carried.
Human Resources Chair Ward stated that a resolution for Ms. Griffin's reappointment will be
presented at the July regular Board meeting. The goals that were reflected in Ms. Griffin's
evaluation will be the goals that the Board will identify going forward for the next evaluation
period.
b) Internal Auditor
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 Price, seconded by Commissioner McCloud to go into closed session.
Action: Motion Carried.
Roll Call Vote:
Yeas: Commissioners Cynthia Ward, Anthony McCloud, Tony Mullen, David Price
Nays: None.
Action: Motion Carried.
The Human Resources Committee into closed session at 5:52 p.m.
The Human Resources Committee reconvened to open session at 6:14 p.m.
Upon conclusion of the Closed Session, the following motion was offered:
Motion by Commissioner Price, seconded by Commissioner McCloud to reappoint Phil Perkins
to the Charter position of Internal Auditor for FY16.
Action: Motion Carried.
Human Resources Chair Ward stated that a resolution for Mr. Perkins's reappointment will be
presented at the July regular Board meeting. The goals that were reflected in Mr. Perkin's
evaluation will be the goals that the Board will identify going forward for the next evaluation
period.
c) Interim General Manager
Interim General Manager Richard Peffley 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).
Page 2 of 4
Motion by Commissioner Price, seconded by Commissioner Mullen to go into closed session.
Action: Motion Carried.
Roll Call Vote:
Yeas: Commissioners Cynthia Ward, Anthony McCloud, Tony Mullen, David Price.
Nays: None.
Action: Motion Carried.
The Human Resources went into closed session at 6:16 p.m.
The Human Resources Committee reconvened to open session at 6:31p.m.
Upon conclusion of the Closed session, the following motion was offered:
Motion by Commissioner McCloud, seconded by Commissioner Mullen to reappoint Richard
Peffley to the Charter position of General Manager for FY16.
Action: Motion Carried.
A resolution for Mr. Peffley's reappointment will be presented at the July regular Board
meeting. The goals that were reflected in Mr. Peffley's evaluation will be the goals that the
Board will identify going forward for the next evaluation period.
Feedback on New Performance Evaluation Forms/Process
Board Chair David Price stated that he thought the evaluation process went very well. The form
was succinct and it was nice to have it done online. He said his one concern is that there is not
an area to indicate "I don't know or I don't have enough information", which was particularly
true when evaluating the Interim General Manager, who has been on the job a short period of
time.
Commissioner Zerkle questioned how the score is affected if there is a no response from a
Commissioner and if the score would be based on seven answers. In response, HR Chair Ward
stated the score would be based on seven answers or based on the number of Commissions
who responded.
Commissioner Mullen thanked Commissioner Ward for the idea of having the electronic version
of the evaluation. Commissioner Mullen suggested having a read only access as an option, to
make it easier to read finished reviews online.
Commissioner Bossenbery thanked Commissioner Ward for all of her efforts on the evaluation
process. Commissioner Bossenbery questioned if there might be an easier way to compile all of
the comments to identify who made which comment, because it does not seem to flow across.
She suggested that this may be formatting issue.
Page 3 of 4
HR Chair Ward stated one question that was on the Internal Auditor's form but was not on the
Corporate Secretary's and Interim General Manager's form was regarding goals. HR Chair Ward
stated that she would make the next HR Chair aware that the question regarding goals should
be included in all of the Appointed Employees evaluation forms moving forward.
Board Chair Price mentioned that goals should be stated on the evaluation and the goals rated.
(Incomplete, Progress made, Completed, etc.)
The three Board Appointees agreed that this was a nice form and is relevant to evaluate job
responsibilities and duties.
In conclusion, HR Chair Ward stated that she would try to incorporate suggested changes and
pass it along to the next HR Chair.
Next Steps Regarding Contracts
After a discussion regarding the next steps for preparing the Appointed Employees contract for
the next fiscal year, the following motion was offered:
Motion by Commissioner Price, Seconded by Commissioner Mullen to allow HR Chair Ward the
opportunity to prepare the contracts in a way that is consistent with the BWL work force.
Action: Motion Carried.
HR Chair Ward stated that the contracts would be presented to the full Board for review and to
vote on in July.
Excused Absence
None.
Public Comments
None.
Adjourn
On Motion by Commissioner Price, seconded by Commissioner McCloud, the meeting
adjourned at 6:49 p.m.
Respectfully Submitted
Cynthia Ward, Chair
Human Resources Committee
Page 4 of 4
PROPOSED RESOLUTION#
Rules and Regulations for Electric, Water, Steam and Chilled Water Utility Services
RESOLVED, that Fiscal Year 2015-2016 Rules and Regulations for Electric, Water, Steam and Chilled
Water Services be approved as presented, to be effective July 1, 2015.
Proposed Resolution
ADOPTION OF INVESTMENT POLICY STATEMENT FOR OPERATING
FUNDS
WHEREAS, the BWL's Investment Policy Statement for Operating Funds was last
approved by the Board in July 2009 (Resolution 2009-07-1); and
WHEREAS, the Investment Policy Statement should be reviewed periodically to revise
as needed and in accordance with industry practices; and
WHEREAS, the Investment Policy Statement delegates authority by specific title,
including a title no longer held by any BWL staff,
RESOLVED, that the Finance Committee approve the proposed attached Investment
Policy Statement for Operating Funds and forward the policy to the Board for adoption.
--------------------
Staff Comments: Due to organizational and title changes as well as a review of industry
practices this resolution is proposed to remove reference to the title of Manager of
Finance and Planning and update the policy in accordance with industry practices.
--------------------
PROPOSED RESOLUTION
Fiscal Year 2016 Operating and Capital Budget
RESOLVED, that the annual Operating Budget covering Fiscal Year 2016 is hereby
approved as presented; and
RESOLVED, that the Fiscal Year 2016 Capital Budget is hereby approved as presented;
and
RESOLVED FURTHER, that the Corporate Secretary be directed to make the appropriate
filings with the Lansing City Clerk's office in accordance with the Lansing City Charter
regarding the above actions.
--------------------
Staff Comments: In accordance with the provisions of the Lansing City Charter, Article 5,
Chapter 2, Section 5-203.5, staff recommends an operating and maintenance budget of
$294.6 million and a capital budget of$65.1 million for Fiscal Year 2016. The capital
budget is to provide for on-going services to our utility customers and to sustain our
plant facilities for future operations. Staff recommends that the Finance Committee
approve these budgets and resolution for presentation and adoption by the Board at its
May 26, 2015 Board meeting.
Proposed Resolution: Advisory Non-Voting Commissioner Seating Accommodations
RESOLVED,that the Interim General Manager is directed to implement necessary construction and/or
remodeling actions that will address the seating needs for the three additional commissioners, who will
serve as Advisory Non-Voting Representative Members.
Item not available at the time of preparation.
Approved By the Board of Commissioners 1-26-16
MINUTES OF THE BOARD OF COMMISSIONERS' MEETING
LANSING BOARD OF WATER AND LIGHT
November 17, 2015
_ r J
C.2 s
The Board:' of Commissioners met at the BWL Headquarters-REO Town Depot located at 1201 S. Washington
Ave., Lansing,- Ml, at 5:00 p.m. on Tuesday, November 17, 2015.
Chairperson David Price called the meeting to order at 5:49p.m.
Present: Commissioners Mark Alley, Dennis M. Louney (arrived at 6:11 p.m.), Anthony McCloud, Tony
Mullen, David Price, Ken Ross, and Tracy Thomas. Non-Voting Commissioners Mike Froh
(Meridian Township), Bob Nelson (East Lansing).
Absent: Commissioner Sandra Zerkle and Non-Voting Member Bill Long (Delta Township).
The Corporate Secretary declared a quorum present. Commissioner Alley led the Pledge of Allegiance.
SPECIAL CEREMONY CHECK PRESENTATION
Chairperson David Price introduced General Manager Peffley, who introduced a presentation of the check for
the 7th Annual BWL Hometown Power Walk/Run event that was held on August 8th 2015. General Manager
Peffley stated that this event was held on behalf of McLaren Greater Lansing Healthcare Foundation.
APPROVAL OF MINUTES
Motion by Commissioner Mullen, Seconded by Commissioner Thomas to approve the Regular Board
Meeting minutes of September 22, 2015.
Action: Motion Carried
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.
Joe (Dudak), Vice President of GRIDLIANCE & Blackstone Company, spoke to the Board regarding a proposal
that is on tonight's agenda. Mr. Dudak provided information about GRIDLIANCE & Blackstone Company, and
about the services his company can offer the BWL with respect to transmission planning for the Integrated
Resource Planning (IRP).
------------------
COMMUNICATIONS
a. Solicitation Letter from Midcontinent MCN LLC, A GRIDLIANCE & Blackstone Company regarding Electric
Power Transmission Projects
Referred to Management and Committee of the Whole
COMMITTEE REPORTS
1 .RA„
October 20, 2015
The Finance Committee of the Board of Water and Light met at the BWL Headquarters — REO Town Depot
located at 1201 S. Washington Ave., Lansing, MI, at 6:00 p.m. on Tuesday, October 20, 2015.
Finance Committee Chairperson Ken Ross called the meeting to order and asked the Corporate Secretary to call
the roll.
Present: Commissioners Ken Ross, Dennis M. Louney, Tracy Thomas and David Price. Also, present
Commissioners Tony Mullen, Sandy Zerkle and Non-Voting Members: Michael Froh (Meridian Township), Bill
Long (Delta Township) and Bob Nelson (East Lansing).
Absent: None
The Corporate Secretary declared a quorum.
Public Comments
None
Approval of Minutes
Motion by Commissioner Price, Seconded by Commissioner Thomas, to approve the Finance Committee meeting
minutes of September 8, 2015.
Action: Motion Carried
August Financial Overview
Heather Shawa-DeCook, Chief Financial Officer (CFO) highlighted cash flow, year-to-date revenues and year-to-
date net income,to wit: cash flow and operating cash continues to grow; the BWL is at 11% over its June-end
cash position. August year-to-end revenues are slightly under budget, mostly due to reduction in wholesale
revenue as a result of unplanned outages. Ms. Shawa-DeCook stated that this trend is expected to continue
through October.
BWL's net income is exceeding budget due to employee benefit expenditure bills that are lagging one month
behind; true numbers will be reflected in in September Q1 results.
Update on Transition of Pension Investment Consultants
Heather Shawa-DeCook, Chief Financial Officer (CFO) stated Bank of America Merrill Lynch has been BWL's
investment advisor with respect to the investment of the Defined Benefit (DB) and VEBA funds. As a result of
recent legislative changes in the financial industry, Bank of America Merrill Lynch has made a corporate decision
to exit the municipal pension fund advisory business. BWL sent out a Request for Proposal (RFP), which returned
3 qualified bids; each firm was assessed by a BWL 6 person evaluation team and a recommendation was made
and approved internally. BWL intends to introduce the new firm at the BWL's Pension Trustees meeting
scheduled for November 10`h 2015.
Financial Summary Overview
Heather Shawa-DeCook, Chief Financial Officer (CFO) introduced Scott Taylor, Manager of Finance, who provided
a financial summary overview with specific focus on cash balance.
FINANCIAL SUMMARY FOR
August-15
Cash Balance HWWtWn People.PaNi r n Power.
Month End Balance Target Difference %
0&M Fund $ 90,807,255 $ 80,987,574 $ 9,819,681 11%
Days Cash on Hand 172 150.249
Credit Rating AA- AA-
Debt Service Coverage-Rating Agencies 1.64 2.00.2.49
Debt Service Coverage-Bond Covenants 2.23 1.25
Total Cash $ 212,044,817 = $ 90,807,255 + $ 91,638,127 + $ 29,599,435
0&M Fund Designated Funds Restricted Funds
In summary, Mr. Taylor stated that BWL's monthly financial summary, and total operating cash balance is broken
down into three main types of funds, to wit: operating funds for general use, designated funds for special
purposes, and restricted funds for bond repayment.
BWL's days cash on hand and debt service coverage measures are important to credit rating agencies. BWL's
targets are set based on expectations for a double "A" rated utility.
BWL has had its credit rating of AA-since 2003, which remains a good target.
Outage Management System (OMS) Internal Audit Results
Internal Auditor Phil Perkins presented the OMS internal audit findings. The Committee reviewed the Internal
Auditor's Audit Findings thoroughly page by page with an opportunity for questions and answers along the way.
.A000T REPORT 20'15-OT
DESCRIPTION OF r'iGTIG'1TIES
.4.ri.Outage �Szanagenxcnt Systcaaa <:C?�SS} is vied b}'the Causing Board of L�.'ater Sc Light(B��.'L.}
to receit-e povcu•er outage assd s}'steux trouble izrforrnatioss fiom z.�arious :;oxircesr provide
customers, .NXTr-eruployees and management tix•ith up-to>-date outage restoratioss infolaaiatioa'
a�i1E:i1 i orl-cr�s to outage locations based on pliority factors; and, provide oxita qe statistics
and status iss a read}' forruat:for uxe din and public consuutptiass- The cutt-esst KDNIS lass bean i„
u:e sia.ce Febx-uaz-✓ 2013,. u-ith plans to prow a replacer xeat systeaxa in FY 201 6..
. lth,au gh the s3.ate,., ou-racr and prier. -r user of OriiS is the Elects-ic S}Nteux Operations
Dep-ax-t lent, other groups such as customer-sex�.sces representatives sad lia.e repair crew,use
KDNIS to enter outage infotmvation mud cousst on OILS to report curresst issforuiation on outages
and restoration tirxaes.
Dtui ag the DeceztiUer'2013 ice stol po,-;�e-r Cna tage that affected os-er-40.,000 B��v�L cusToniers,
the C>N-fs failed to perforaxz a critical freraction to isolate specific. "lisse dou-n" location=; rl diiag
r�storat.ion assd create a,uvoa.-1c order for tla.e appropriate locations.. Therefore_ a decision ruade
to shut dou-ss 02viS grad use a nrarxual bacl_-vp sy-stena dul-iug tlae outage:for tla.is purpose_ T2aer�e
u-ea-e a.Lso probleuu a:itla tlle- call-iss system that did not relate directly to OtSS but, sirree C>NIS
was taken cats-line until later iu trot oascage period_ it a va-- difficult for B yz.Z cvstame>; to obtain
accurate, cilraesst i:=*Ecnr arati.oss about their outage status_
UI]Ii" OBSE.CTICTES, SCOPE,2+SETHODOLOGY
2�ND PRIOR�LrDIT FOZS_O'JGr-L"P
.1itldit O'b1 e'C ill'25
The audit ofthe Outage 2w4assage- iX nt lead the objectives to detem,E—e
u-Nether=
1 hny further aetiou v•as reclxxired regarding practices used in pre-operational c-eador
selecrion acid testiz o leading up to frill syStem operation
2. S3-^-:tens capacity stress testing u-as svi'ficiesst„ba:s. cl oil olajective criteria_ to demossstrate
the systenx's ability to perforux successfu113.•dxiriu�g a sit ai£icarrt outage scenario such as
tlae Decemlxr 2013 ice sto ou.taae_
3. A.iny further actioir u-as requia:ed regarding sy Stem naaisstenassce an1d reda_iudaut -3..tes3x
bacI=V_
Al Ti dit Sc4L,e,
The audit scope -:Vas limited to the
procxir�euxe sst, testing assd oparati.ou o:f the 01.2S at SiiZ_ -rla S audit u--as conducted iss accordance
vc•ith. r,.[,erryrnri-o rrnf Stnrrdar-caTs_for•the?r•ofcssiorra7 Fra c:`fee:o?'"Sn r�r-r:n F_-1.r�di[i'n�For interzial audit
fxltactiolls and, ac-corcYingl}-, iisscluded such rests oftl, records curd such other auditing procedures
as-we-cosssidered uecessar}Y it the cil-curxastaurces_
9
AUDIT REPORT 2015-d7
Nudit Methodolo.
Audit procedures were performed between April 330 and August 31, 2015. Audit methodology
included reviewing the processes inv olved 'In the manaq ng the OMS and related policies,
procedures and transactions for the period February-2009 through June 2015- The methodology
included.a preliiuinary sur M ey, xhich consisted of interviewing various personnel and revie�Ving
reports and procedures to gain an understanding of the 024S and the related documentation to
audit. We also included discussion of BIXTL actions regarding certain reconintendations of the
C.omrmiuuty Review Team (CRT) and BW L,that were made in reviews subsequent to the
December 2013 ice storm outage and that related to the 0',%—LS-
To accomplish our first objective, we:
Interviewed responsible personnel regarding the pre-procurement and pre-operational
actions taken in procuring the current O1�i5, including potential lessons learned.
Reviewed procurement and testing documentation for compliance with B tYL
procurement procedures and completeness-
To accomplish our second objective, ive:
IntervieM%red responsible personnel.and revie-ved procedures in place to ensure adequate
system stress testing occurred after the systen, failure in December 2013 to prevent a
similar failure in the fiiture.
Re%riewed stress testing results and interpretations from technical experts to enure the
results provided evidence of the systems ability to perform under stressful situations.
To accomplish our third objective, i e:
Intef ietved responsible personnel to s�-stem redtuldancv and baclzip plans.
Re.-ievied the system baclk-up as denoted in the BWL Emergency Operations Plan, and the
contract for OhdS maintenance and support to ensure adequacy of coverage_
Prior Audit Follow-up
There was no prior internal audit of the OMS at B'A.`L to our k-nowledge_
31)
AUDIT REPORT 2015-07
FLNDINGS, RECOI1M-IENDATIONS AND RESPONSES
SYSTEM PROCUREMENT AND PRE-OPERATIONAL TESTING
Audit Objective 1:
Determine whether any further action was required regarding practices used in pre-operational
vendor selection and testing leading up to fidl system operation.
Background:
According to the BITJL Procurement Procedures,the Request for Proposal(RFP)is the longest of
all the procurement processes and often involves the establishment of an evaluation committee
-who will score the bidders in a number of different categories to identify the best value proposal.
An RFP is required�.vhen non-price factors are a major part of the award criteria,and is normally
used for complex procurements such as information technology_As with any purchase,price is
important but will not be the sole basis for a decision_Pre-proposal conferences should be
considered to provide clarification and encourage competition.A mij um of three qualified
bidders should be solicited(excerpted from Procedure 93,Public Bidding).
New software systems are subject to rigorous testing of their capabilities prior to the system
being placed in a live production environment. Two key tests that were used on the GE
Pons erOm ONIS were the Functional Acceptance Test(FAT)led by the vendor,and the Site
Acceptance Test(SAT)led by BWL.Testing results should be documented such that any errors
that occurred are noted and either deemed insignificant or flagged for correction and repeat
testing_ Sufficient time should be scheduled to re-test successfiilly on a priority basis before
going live with the system-
Audit Conclusion:
Actions are needed to improve practices used in pre-operational vendor selection and testing
leading up to fiill system operation
Finding 1:
BINL procurement procedures regarding the Request for Proposal process dealing with
technical evaluation were not clear enough to determine whether they were adequately
followed. Since technical evaluation requirements versus optional actions were not made
clear,the ONIS procurement showed the need for technical evaluation improvements in the
period leading up to contract award to prevent significant technical issues after award_ For
instance:
1. Only two bids were received although eight potential bidders were solicited,in part
because the existing OMS vendor declined to bid on the replacement OILS and no
attempt was made to fiuYher solicit non-bidders to find out why they had not bid on the
project_
a. The existing 0ri5 vendor(Intergraph)had already proposed an upgrade to its current
ONIS that was nearing the end of its Maintenance and Support(_M&S)contract and in
11
AUDIT REPORT 2015-07
need of hardware replacement.Intergraph did not participate in the bidding for the
replacement MNIS because they claimed a lack of opportunity to present thew case
regarding the upgrade. The upgrade was proposed at a cost of$1'4,000;however,
its estimated life cycle cost including maintenance and support could not be
determined at the time since a long-terra support contract was neither requested nor
proposed(the table below shoes an extrapolation of M&S costs based on a one-year
extension offer).
b_ There appeared to be some difference of opinion about whether_in the circumstances,
the Intergraph upgrade could be implemented without going through a competitive
bidding process, since management had directed a long-term OMS solution that
included potential capabilities that the current system may or maynot have possessed.
At the same time,other IT-based systems at BWL were upgraded routinely without
going through the competitive bidding process_
c_ The unresolved question between the system users and project management was
whether the Intergraph upgrade should have been seriously considered given the
desired OMS capabilities going forward,and the need to either upgrade or replace the
current OMS due to impending obsolescence.
?_ The evaluation of non-cost factors was extensive regarding the review of each bidder's
technical and fimetional capabilities,and a series of reference calls to other utilities was
made which overall,seemed to slightly favor the non-selected bidder(CGI Group Inc)_
a_ However,an Excel template file designed to weight and score the proposals on
various non-cost factors,as recommended in the BNT L procurement procedures was
not used. Instead, an informal straw-vote was taken on technical and Rinctional
capabilities as expressed in RFP responses and considering the reference call results
and the straw vote was three for the competing system(CGI),two neutral, and none
for GE Energy Systems.
b_ Since the RFP responses indicated that either bidder could provide the required
functionality and GE's cost proposal was less than half the competitor's(see table
below),the straw vote results were not considered in the decision to select GE Energy
Systems_ However,when such a disparity in cost exists and the technical review
available seemed to point,however slightly to the competitor,that should have at the
least invited more questions, discussion and analysis about technical capabilities
between the bidders before the contract was awarded_
3. Technical reviews of the system's capabilities and limitations continued after the contract
was awarded to GE confirming several significant shortfalls such as the lack of high
12
AUDIT REPORT 2015-07
availability rednadauc}r.
a_ The Oh1S technical(IT)lead raised concerns about GE's lark-of responsiveness to
identified concerns. Those concerns were not adequately addressed and the project
moved forward. Although high availability redundancy'.Would not have helped the
functional failure involvina conductor cuts(see description below) in the December
2013 outage,high availability redwidancy is critical in ensuring real-time receipt of
customer calls from the call system and other key response and reporting capabilities
when major outages occur_
b. It was noted that the comprehensive RFP document sent to the bidders included
thorough questions about high availability system redundancy. However,although
GE responded in the affirmative it could not actually deliver that capability_ GE
promised other reporting and interfacing with other systems that were not adequately
delivered,but may have influenced the decision to procure its PowerOn system at the
time.
c. One key function was the"conductor cuts"capability-that enables the system to
isolate specific"line datarC locations needing restoration and create a work order for
the appropriate location_ An issue regarding this capability not working was
identified in fay 2013 and a correcting"patch"was created;however,the patch was
not installed prior to the December 2013 outage due to uuicertainties front a lad:of
vendor dociuuentation_ Ultimately;the conductor cuts issue was resolved by the GE
help desk on December 2S,2013,at which point it was too late to effectively support
the ice storm outage.
4. The Director of the Information Technology Department(ITD)was appointed to act as
the project manager for a future ONIS procurement in August 2009,per senior
management's direction in consolidating more of the system development and
procurement responsibilities under ITD. Up to that paint,the project manager was the
then-Director of Electric Delivery,who was later moved into TIT)and placed in charge of
the OMS project,with the technical lead also assigned in ITD_ Since the former Director
of Electric Delivery was reas signed to work under the Director of ITD who was
previously assigned OMS project management responsibilities,the situation created some
diffusion of responsibility and authority for project management. According to current
IT management and other Senior executives,the now-accepted business practice is for the
user Group to provide the project manager,as long as he or she has the requisite
qualifications_and obtain assistance from FfD as needed.
5_ The table below show a cost comparison between the two bidders on the replacement
ONIS versus the previous ON-IS vendor's upgrade proposal;and shows that the upgrade
13
AUDIT REPORT 2015-07
was potentially the least expensive option,albeit with no guarantee of the same
capabilities as the GE and CGI system proposals.
Cost Comparison between ONIS Vendors (see footnotes belon)
Contract Item Intergraph(Original GE Energy Systems CGI
OILS contractor
SystemL --ride 517a.000- \ 1
Base Softie are Cost 1ti,L S120,000 S379.200
Implementation Cost I`--%- S476,6S0 S643.17-1
Nhintenance, S396,000'= S64,763 5381,030
Support(3 tr:_)
Total 1 S570 000 S663,344 S1,403.101
The Intergaph upgrade was not based on the technical`fimctional r-,irements in the RFP for the
replacement 014S,although a significant part of the RFP was derived from the original ONTS RFP that
was awarded to Intergraph.
Only one year of-M&S was proposed by Intergraph for$137-1,000 independent of the sy-stem upgrade
proposal. That figure was simply extrapolated to a three-year period to coincide with the other
proposals.
Recommendation 1:
Management should ensure that in the future. for complex-procurements:
1_ Technical factors including predicted performance reliability are fully considered and
evaluated along with cost.
2. A formal bid evaluation is completed with weightings assigned to various factors for all
REP-based procurements,whether or not an"evaluation committee"is established,and
the results are provided to key decision-makers.
3. Full consideration is given to alternatives such as upgrading an existing sy-stem versus
replacing it,in line with sole source and competitive bidding ntidance.
4_ The project manager is selected from the user group or department with defined authority
from senior management,with ITD in a supporting role.
lianagement Response:
1_ Management agrees. A fiill reviely of Piirchasing policy is underway- and will include a
documented technical review requirement for formal bid evaluations_Implementation is
expected by 12f31115_
2. Management agrees. A fall review ofPurchasing policy is underway, and will include a
documented technical review requirement for formal bid evaluations,including the
weighting of factors provided to key decision-makers. Implementation is expected by
1131t15.
3. Nianagement agrees. A recently formed,cross-discipline Enterprise Technolon Team
will vet alternatives and provide recommendations for consideration.
4. Management agrees. The selection of Proj ect Manager is determined by the business system
011'ner.
14
AUDIT REPORT 2015-07
Finding?:
Testing of the GE PowerOn ONIS was not sufficient prior to the go-live date to provide
necessary evidence of the system"!;reliable performance in a production environment_
Specifically..
1. In GE's Functional acceptance Testing(FAT),43 issues were identified and categorized
by severity. Of these.only 12 were listed as "closed in the final report of test results_
In addition,24 functions were not tested and were noted in the report as tests that were
deferred to B"'IT during its Site Acceptance Test(SAT). The usual practice is to correct
FAT issues before proceeding with SAT.
2. Although opinions differed as to the severity of the open issues and whether they could
wait until the system went live to be corrected,the OMS project manager expressed
reservations about going line with the numbers of unresolved items_ The project manager
also believed that a system stress test should have been performed before the system went
live;however, there was no evidence that this testing was performed. In a management
presentation given in early b4arch 2013,it was noted that GE stated its reservations about
the ability to go live by mud-February in a Tanuary 2013 conference call with BWL.
However,after GE promised added resources to address open issues in the coning
weeks,the mud-February go-line date was agreed upon_
3. The PotverOn system went"live"on February 14,2013; only a month after final pre-
implementation testing was completed. In the immediate aftermath,the following were
noted:
a. Eleven open variances from prior to go-live were tagged as'`required"for the
production(post-go-live)system but unresolved according to a February 22.2013
variance listing_ Ten of these variances were still open on a similar listing for May 6,
2013.
b_ On a similar listing dated March 28,2013,in addition to the 11 open pre-go-live
variances, 13 new variances were identified with 6 listed as"Severity 1"or the most
critical level.
c. In a February 20,2013 e-mail to the GE project manager,the BWL project manager
expressed serious concerns with the number of open variances, delayed training.and
OXIS reports that were still under development that were critical to go-live. In
addition,the project manager noted that the system was-very fragile or unstable-'in
his opinion, and that he had never implemented a system that had so many new
problems crop up at this point in the project(this employee had over'-3 0 years of
engineering and project management experience at the BWL). In a related e-mail
dated'March 12,2013,the project manager expressed similar frustrations,including a
problem that prevented daily updates from BW'L'.s Customer Information System to
ONL S to ensure the database in OINIS remained current.
t5
AUDIT REPORT 2015-07
4. The Febmary go-live was deemed critical because of the upcoming storm seasom
concerns about the existing O MS's risk of failure,and the fact that implementation was
already well behind schedule(according to a project schedule prodded by GE in
December 2011. go-live was to occur on October?,20121)_However,the Intergraph
OMS continued to perform reliably even in the absence of an M&S agreement which had
expired in September 2010-Therefore BWL had ah•eady gone without vendor support on
the existing system for ,well over two years before going lire with GE's PowerOn ONIS.
5. Due to the accelerated go-]ire schedule,the resulting uncertainty about Poi eiOn's
overall reliability, and the inability to meet PowerOn internal training requirements
timely,consideration was given by the project team to run the original OMS during an
initial period after the PotiwerOn go-lire date.However,this action(referred to as parallel
processing) was not taken due to the additional cost and time resources of ninnina
parallel systems. A suggestion from the user group to nui the GE OMS as a training
system until the variances and other issues noted above were resolved was not
considered.
Recommendation 2:
Management should:
1. Ensure that future system testing,including a stress test where needed,is followed
through to ensure that all significant errors are corrected as demonstrated by follow-up
testing,prior to allowing the system to become operational.
2. IT systems should have a planned upgrade or replacement schedule that is consistent with
the six-year capital budget planning.
3. Set go-live dates based on an assessment of when the system will be fully tested and
read;;to roll out_Other factors such as the current system"s anticipated obsolescence
should be built into the overall schedule to enable a smooth transition.
4. Consider whether to nun parallel processing or a period of less than full implementation
of the new system for training,etc.on a case-by-case basis_with operational as well as
cost considerations evaluated_
Management Response:
1. Management agrees. This is a responsibility of the Project Manager,with oversight of the
Project Nianager provided by the Enterprise Technology Team.
'. Management agrees.All critical systems will be evaluated by the Enterprise Technology
Team and consistent with the 6-year capital forecast.
3. Management agrees. This it a responsibility of the Project Manager,with oversight of the
Project'Manager provided by the Enterprise Technology Team.
4_ Management agrees. This is a responsibility of the Project M. anager,u7th oversight of the
Project Manager provided by the Enterprise Technology Teams.
to
AUDIT REPORT 2015-07
SYSTE1i iC'APAC:ITi STRESS TESTING
Audit Objective '_:
Determine whether system capacity.stress testin¢was sufficient,based on objective criteria,to
demonstrate the system"s ability to perform successfully during a significant outage scenario
such as the December 2013 ice storm outage.
Sackp,ound:
Stress tests are performed periodically on systems such as the OMS to ensure that the system can
handle its identified capacity limits_ The stress test should therefore test up to the identified
capacity or other defined tolerable limit for assurance that the system can handle maximum
workload in an emergency situation_ Test results should be adequately documented with
conclusions_
The actual calls received per hour during the highest volume call day during the ice storm ouutage
(December 22,2013)could not be determined;however,over 266,000 calls were received during
the 24-hour period,an average of more than 11.000 calls per hour. For peak dayli it hours,the
numbers per hour would presumably be much higher than the average. However,it was noted
that based on informal feedback during the ice storm that many calls were never connected(Le.,
busy signal received in repeated attempts).
Audit Conclusion:
System capacity stress testing_although performed on a periodic basis since the December 2013
ice storm outage,needed further improvements to sufficiently demonstrate the system's ability to
perform successfully during a significant outage scenario_
Finding 3:
Although stress testing results were:interpreted to provide assuurance that a worst-case
scenario call volume could be handled,more analysis of prior experience,lengthier
tests and call processing vendor independent capacity testing were needed to provide
added assurance that the call system can be relied upon to meet a defined tolerable
stress linut. Although semi-annualshess tests of the GE PowerOn OMS have been
performed since the December 2013 ice storm outage,the tests have not been to the
identified call capacity of 40.000 calls per hour or other stated tolerable stress Emit.
Further, the 40,000 calls per hour were not analyzed to confirm whether they exceed a
tolerable stress limit. Also,testing results were only partially documented and lacked a
conclusion about what the results meant_
Recommendation 3:
Nianagement should_
1. Develop more specific testing criteria(i.e...a tolerable stress limit)based on experience
from prior outages,industry benchmarks,etc.
17
AUDIT REPORT 2015-07
2. Have the call processing vendor perform the independent call capacity test to
demonstrate its ability to handle the volume of calls that it is contractually-
bound to handle or an agreed-upon tolerable stress limit.
3. Develop testing plans/scripts to be used when implementing new systems, or
upgrading or changing current systems to ensure thorough testing to the identified
stress limit.
4. Future stress tests should include at least a brief narrative explaining the test results.
liauagement Response:
1. Management agrees and is consulting with an industry-expert to create a stress test
template for this system to be used for Riture OMS stress tests.This will be fully
implemented by 12,31 1 15_
2. Management will review capacity reports from vendors showing peaks,average,and raw
capacity over the past year. If these reports do not reflect the call volume per contract,
existing contract enforcement procedures will be triggered_
I Management agrees.IT will issue a procedure by 121-31;'15 requiring documented
business owner acceptance of test criteria and results.
4. Management agrees and,in the new procedure just mentioned in#31 above,IT will
reference the need to include a narrative with test results.
SYSTEM hLAR\ZTEN-ANCE AND REDUNDANT BACKUP
Audit Objective;:
Determine whether any further action was required regarding system maintenance and redundant
system backup.
Audit Conclusion:
As recommended by the CRT,the OXIS has been integrated into the Emergency Operations;Plan,
inchuding the manual backup system for use if necessary_The nuunual bacitzrp s}stem used during
the ice storm outage was necessitated by fiinctional problems with the OhIS and the calling sy stem
associated with OMS,not by a lack of system redundancy,although the level of redundancy
provided in the current OMS falls short of what was supposed to be delivered(See Finding 1 in the
Detailed Report for further explanation).In order to minimize risk in the event of future OMS
failure,B7,L h.in the initial stages of procuring an Advanced Distribution Management System.
(AD11S)_Once implemented;the ADMS trill serve to integrate O_NLS with other operational
systems and be fuully redundant for all of its operational functions,including Outage Management.
LTntil then,the current OMS is supported by an existing lMaintenamce&Support contract and the
mmual back-up systems is available if necessary.
Finding: -None
;a
Questions were presented to Mr. Perkins during the review, including, whether in Internal Auditor Perkins
opinion, the problems identified in the OMS audit were systemic or isolated. He responded that there was some
of each element present during the audit. For instance, the decision to re-assign the OMS project manager from
the then-Electric Delivery Department to the Information Technology Department (ITD) resulted from a
management decision to place all IT systems procurement and management responsibilities under the ITD. This
could be looked upon as a systemic issue, although it has since been addressed by the new management team.
However, the failure to perform a more formalized technical evaluation of bids was not necessarily systemic,
based on a prior procurement audit in which adequate bid evaluations were apparent.
Another question was whether the pre-operational testing treatment of testing errors was typical, i.e., going
from one testing phase to the next without correcting the errors from the previous phase. Internal Auditor
Perkins stated that in his experience in reviewing system procurements, this situation was not typical.
Commissioner Mullen voiced a similar view based on his IT background and experience and stated that with a
system as complex as the OMS, system stress testing prior to implementation is a must. A system stress test
prior to implementation was not performed on the OMS.
In conclusion, Finance Chair Ross stated that the Board's function is to provide oversight, and not to actually run
the operations of the BWL, which is what we hired the General Manager and his team to do. Chair Ross
furthermore stated that the Finance Committee is interested in understanding how BWL is putting in place
internal controls to detect issues; that BWL has policies and procedures in place to ensure bad things do not
occur, as well as to ensure that the BWL is following such policies and procedures.
Public Comment
None
Other
Board Chair David Price informed everyone of upcoming events:
• November 19, 2015 CRT Community Forum Meeting
• December 15, 2015 Commissioner Governance Training with Janice Beecher from MSU
Adiourn
On Motion by Commissioner Louney, Seconded by Price, the meeting adjourned at 8:48 p.m.
Respectfully submitted
Ken Ross, Chair
Finance Committee
FINANCE COMMITTEE
November 10, 2015
The Finance Committee of the Lansing Board of Water and Light met at the BWL Headquarters — REO Town
Depot located at 1201 S. Washington Ave., Lansing, MI, at 6:28 p.m. on Tuesday, October 10, 2015.
Finance Committee Chairperson Ken Ross called the meeting to order and asked the Corporate Secretary to call
the roll.
Present: Commissioners Ken Ross, Dennis M. Louney, David Price and Alternate Member Sandra Zerkle. Also,
present Commissioners Mark Alley. Non-Voting Members present: Michael Froh (Meridian Township), Bill Long
(Delta Township) and Bob Nelson (East Lansing).
Absent: Commissioner Tracy Thomas
The Corporate Secretary declared a quorum.
Public Comments
None
Approval of Minutes
Motion by Commissioner Price, Seconded by Commissioner Louney, to approve the Finance Committee meeting
minutes of October 20, 2015.
Action: Motion Carried
BWL Finance Committee Oversight/Scope & Current Reporting
Chairperson Ken Ross informed the Committee that the Oversight/Scope & Current Reporting document was
created and is being presented for edification purposes based on the scope of the Finance Committee, as
contained in the BWL's Rules and Procedures. The document outlines (ten) areas of oversight, as well as reports
that are coming before the committee and on what frequency.
September Financial Summary
Heather Shawa-DeCook, Chief Financial Officer (CFO) discussed BWL's September 30th Financial Scorecard,
covering the following:
o Cash o Adjusted Net Income Return
o Income Statement YTD o Ratios
o Budget Status YTD o Employee Data
Financial Summary- September 2015
DHOW.Ela-People.Hoff 10"Power:
Cash Income Statement YTD
Amer)hoe
Ad.1 YTD Y:D 3,ft,.1 Diffuence % YTD DN.— %
Restricted R— $ 69,172,257 5 89,542,131 (369,8741 0% $ 79,303,260 $ 9,BC3,997 L"%
Finds wh.1 ale 5 8580.637 S 11.952.795 (3.072.1581 =26% 5 9.S93195 5(1Al2,653) -IO%
$31,943,499 Told Pev— $ 93,052.894 5 101,4p,927 (1442,0331 .3% 5 89,101,556 5 9,851,339 10%
operating GPcn:es 5 7d,423,581 $ 83.433,6(5 (9,010,MA) -11% S 72,499.575 S 4,924,0M 3%
.,WM McOperating 5 f9,327,470) 5 19A94.322) I.166,852 •12% S 18,97414901 5 652,020 .7%
5gp'950 f Act:encore5 I5 301,843 5 e,5G5,940 8,734.903 79% $ 7,722A90 $ 7,579,353 98%
Oez�grnm P•o-ted FY 2016 net:.n 5 3A,9,781
Curd:
$91X4923
Budget Status YTD
Total Cash: 5316,S1S,53' 0&11 Budget 1TD(euludin,-fuel)
t.larti cry Terget Ac1u1 YTD YTD 9s.',F;ct Dlff-- %
Days Ge:h an)land 15:-2A9 27181TO 5 35,501,771 (6,319,971) -I8%
Credlt P.a:1ng AA- AA-
Ddh 5—Coverage-R40egAg-li- I.c6 2.D3,2.49 Capit.A BudgetlTD
Debi 5ereaC4 me v,-Bend Coveranla 2-..7 L25
Actual YD YTD Bvirt PH--
5 8.671.1-17 S 31915.727 (1.239.A31 -27%
lbe par Cale on Ran4 Av t: Adjusted Net Income Return
ra,gcs are aro.•:ae4 ey rarod/z as aGe�d ufi,'nance
fora AA-rated ekcrc xl:y wtn xen<:amn. &'t 1YTD YFO Bert Ter•-r
217:i IL9}i 6.181
per.senor G'.very-e•Naonp.L,cr. - td—d,Ya mamexrnxa
j0terscrnm.bM CElpatbns) F'ei 1-d Scab.1,eev�a/
'Fim1 okltga[o,s reGrccrt ee:'e P=.er pet:Servxe
AALV
Financial Summary- September 2015
Ratios Employee Data
Dyers t*q Ra Ha
f 6J.x19.9ri c Lr: A,IC.Jl9ia- FrriFa1'c*'t1:l::lt Y'n TZI
'9GVRnw $ 94nS3AHi e�jfGH Y3D ]Rl XO
3®F
avrrq rhpoigtbn c{rramWto rpW N<apratW%W GYer llmicry i1H)
ranamoics m.q ■W qM9
Cunnit Rat:o on-« t,
.V"P?rA<aian
Curren+A_;PGt $ Z'J19r+1.i43 a 3.. 2l1]
LMrcm CabtiGxv f j3.231]]4
rnyrou Data
a.. ,rr sjTclenr raprycvrene 0.a�rx, Oexual ttV rn 9uC:tt n\re+..¢ a�4J Prcrrru newer:n w
.vn�Kr Fcljular $lz,3en„Z'3 312.41031] $ {ii0J 341 S 1!,m9.j93 $ 6TC,<]Il j.]!
Ortnms $1.m55_3 j 1.13.3t. $
Dart to r.NIA=,ft
APPA Mc9ia� Twl $]A,Ib5,ix5 S1i,G3.�33 $ <3,593 $ 13,i1T,j.] $ )4],?'i9 j.9R
tiC<Ct•AGvieR GaPIRt $ il)./YH.39n� .. n,'il Toral Noar WwkW i69,.3Y 'A9.Rs9
imal L'r<3 3Ll33,W6,IiT tstcrrlf aurFWwt2C $ iS.bl $ <3.1H
\Ire,wgbRe!•T3'Yromtttlp w.rm.mJUq umn it:.rPJq APPA 1.3eGlan j 3<.33
APFA Nn:Yn eca w yea m:ot/mma+,ad.m,v mha+.a.weerxm.rnnsk,n
Days'Satc Outst—fznq
F:uYev RrnefGt Cost
r:F.n:rn'abk 3 x<a13,aa5 9,)s 33 ttx3.aa arJ<w A_ual no noew3eT clnwrncc
oc�cesalr. , iz,ra e.Tes s39 Heim $3sH4Gi j s.mm. $ (nx•--1
.O+ Car. W $ 6393T3 S M393 $ (]4@,I
13[XnLL $ M S vAl2w 5 (1-21-1l
GAG 9 /R,)9a S Ts,99s $ RXmx)
B. Debt FIG S S 1,ClL,313 $ =%9(
4%I'A IAC.ian O[Iltt $ i9J.)/x $ mH,95< $ (335.131)
actual Yi❑ ttn9Wxt O•e•/:llrvterl %MRrr�,G T-1 3/.H<TI36] $ 6,LSb,Rlx 3t1-Y,u,
Sa;.Fs)/ 5w3,uz bz4,c4 ca:>,
'APPA MMlanjwm Gth<iJ•PA Yectcd Fnaulal xtl OAe.tlr3 Psbpf al Relt Popp SF:te:n:,ln]<nata.SpttA[allY�L:IWa%••>AeRr300p00 Cutbmen.
Ms. Shawa-DeCook stated that last month, Scott Taylor, Manager of Finance, provided the Committee with
specifics on BWL's Cash Balance. In the month of January, the Administration will provide reports on the Income
Statement year-to-date, Budget year-to-date and the Adjusted Net Income Return. In addition,the Ratio section
of the budget will be covered the following month with the final presentation being the Employee Data section.
Procurement Policy Revision (Resolution)
Heather Shawa-DeCook, Chief Financial Officer (CFO) introduced Bruce Cook, Manager of Purchasing,
Warehousing and Fleet Services, who assisted in providing the Committee information, about the recommended
proposed changes to the current Procurement Policy. A Resolution was also presented for consideration to
support the proposed changed procurement policy.
There was a lengthy discussion regarding the proposed changes to the Procurement Policy.
Motion by Commissioner Price, Seconded by Commissioner Louney, to forward the Procurement Policy to the
full Board for Consideration.
Action: Motion Carried
Status of Management Response to Internal Audits as of 10/30/15
Heather Shawa-DeCook, Chief Financial Officer (CFO) provided an update on the Management's response to
Internal Audits. Ms. Shawa-DeCook covered the following issues and its status:
STATUS OF'-%JL-1Lt AGF—XEF-N-T RESPONSES TO IN-=R\AI -V DITS AS OF 10,30.'15
In Accardaace wirh Board Resolution='_0:�-07-0i
1Y]m rcd
lss Audi.barite L=one D=_scipiion Date Ftespansible Area S:a:uz
Open Issues:
12 Record In:en it Audi:found that records on hand did..[alw'ays March Human Resources Hum—Resources is in the process o£en—.=—that I-9 Fonts—oa File
Rerentiaa correspond wirh the?ecord Retention Schedule, 2014 for all acave env loyees,with an expected completion dare of 11i31,15.
o vary,a portion of l-P forms and soma asbestos bdL;. An appropriate retention schedule for the asbestos bills of lading Hill be
of lading, dererxr5ned aad Wdared as part of the overall review ofthe F.ecord
Retention Schedule.Enterprise Con[eor?r_anagemeit anticipates an
updated schedule le Hill be provided for—cure rr .gQen:review by
1 2 16.
13 Record The la:c-na]Audimr dere r-med twat record;on hand in Nbrcb Enterprise Content Enterprise Content?Ianagentent is reviewing the a asma-Record
Retentioa departments did not always correspond with the Record 2014 \fana__emenr Retention Scbedttle with he appropriate depar_ =s and catalagiag•s11
Rerennou Schedule. proposed revisions.B is anticipated abut m updated schedtde will be
provided for—run—m—e-ear review-by 1:31.15.
17 Closet the The Internal Auduor reco^^ ndnd tbar conside-^Rion Au_pis: Crtneral A Geneml Accou -procedure'%Sanual is being dev--roped,with
Books be sveri to The we of a general accounting manual. 2014 Act:..uas expected completion by 1.2_:32 id..
26 Niar a went The Inm:ual Auditor noted that pidelines for mobile Sept G%ddeliaes on use oftaobile devices are being docuncemed witb
2,,'EW f.Mobile device management should be documented 2015 Te,--
Devices
27, y,Lattagetmenr The la-etmal Audimr reca—de d en-ptiag data an Sept Information Data an any mobile devices is nerd of eact}paca can and will be
1 FV ofhfobile all laptops and sm.Y phones. 2015 Technology identified once the mobile device nsaee—, deliaes rev a under issue
Devices =5 bave been establisbed.Completion by 6.30:16 is anticipated.
28 1,Lartagerr,eat Ime l Audit questioned wbelrer contract te-rrts and Sep[ Information Any needed updarnt_of c-n actte.rms and condinons will be complete by
:Ely afhlobile condiaom crneringdataloss aadninLT.Grion use 2015 Tecinolog• 1 GI215.
Devices suscieot.
29 ]Lana m—t Internal Audit recouanended furher consideration of Sept I fortra3on Once nay data accessed via mobile devices is dery-mined to he in need of
NEW of Mobile procuring safiware with remote cleaning capabilities. 2025 Technology encypbon(i.e..once issue 027 is addressed),it can be dete2rined to what
Devices extent procuring and iniplementing software wifi retn:e cleaning
capabilities would be cost-beneficial I:is macipated clan this issue will
addressed -6;30 16..
30 4lanagemeot Internal Audi:recticumeiided diabling data porn on Sept L-tfo :i— Any needed disabline ofdara porn w-iu be complete by 5:30:16.
E',V ofhfoblle mobile devices. 201= T-haelo_sv
Devices
31 Ouusge The Internal Auditor found that procuremeat procedures Oct imbrmac," A Sall rniew of p rchtsmg policy is underway.with an macipated
Lana
F:v ILaneement re=ardmg techaical evaluaaou dnntiag the F.FP process T.d-3ag<- completion date of 12.31;15.
Issue Audi:Name :sue Des rion Date Pe-
cip :ponsible Area Sa:us
33 Outage The aticb,recommended mare specific test ctite•ia, Oct Safortraaon Nf—ageraentis consulting tsirhanindtLiry-espento create m0\iSstress
1-TW}iatia rinser testing performed by the call processing vendor, 2M Technology rest templxe,r-metsing vendor capacir,-reports;and issuia=anew
System development of test scripts,and a narrative of rest procedure requiring a narrative oftest results and documented business
results. owner acceptance of test criteria and results.Completion is targeted for
1231113.
Closed aces(:rove i;b1,15 report):
15 Accounts The audit revealed the existeenceofsore than 14.000 June Acou=Payable The IT Department detettrinedwhich vendor entries should beblocked
Payable vendor master entries.some no loner needed 2014 on SAP due to inacthuy and blocked them from use.
16 Accounts The Goods F.eceip-laroice Receipt account balance June Accouss Payable Accounts Payable cleared olde:items byw-orlingnuh depar mess to
payable was found to higher dm in precious yeam Internal 'Olt resoh-e gods and invoice receipts older than 15 months and reducing the
Audit reconu heads that ma purer focus on resolving occurrence ofim-oices 45 days or older.To reduce the recurrence of these
ra smatched items in this account and clear unresoh•cd types of issues,a refresher trainia=_coarse on the system receiving
documents older than a par-icular age, function was developed.In addition,automated—.0 notification
fimctionalirywas Made available is October 2016,wbkb will furtbes
20 N13:e-ials The Internal Auditor found access to two inventory- Jan Purchasing C Unnecessary access has been restored Pu:cbaaag-Warehousing has
Im•exory reL.ted 14P system transaction types to be e%cessr:e. 2015 Warehousing also taken it upon itself w develop an additional control,in the form of a
%lira gemeat periodic report run to monitor a par-icuLir situxJon where dunes cannot
always be adequately segregated due to limited availability-ofbaditp
Personnel in non-routin=insmaces.
23 Amual Ln:eml Audi:dete-tmned that the project close-out July Customer projects, The project close-out process u-as enhanced by developing a form and
Projects process did not always include a eocumea:ed narrative 2015 IIec-ic System procedure requiring a narrative explanation when project costs exceed
M=gemeor e=lainnig why actual costs exceeded estimates. Integrity.:nd estimates by a threshold of 15?i and$50,000-
Arate:Disriburion
24 annual Iateml Audi.:determined that the project close-nu July Customer Project, The project close-out process was enhanced by the der:6opmer of a fors
Ptcjeca process did not always idmtfy use of coatingeacy 2015 Electric System and procedure requiring ideamlx3don ofthe use of contizen:.yamoumrs
\Lora_-cent amounts. Iaremity-,and when project cos3 exceed estimates by a threshold of 15?a and$50,000-
Water Dismbution
-_ Outae Iate.-nal Audi:de_er3Ed pre-itmpleme=:joa testis_to be Oct InformEaon rlinsuf5cient.
elopmen:of toe Emerprise TechnologyTeazi has seraed to addess
NEW\Lanagemen[ 2015 Technologysu
ise.TheTeamsrespomibdiues include regnL+s project moni.orjiSystem review and fo:tu l acceptance ofproject delh-embles.
Ms. Shawa-DeCook addressed a typo in the status column of issue number 16, under closed items, whereby it
reads "—functionality was made available in October 2016,"as it should read "October 2015."
Internal Audit Status Report
Phil Perkins, Internal Auditor, updated the Board of the Fiscal Year 2016 Audit Plan progress. Mr. Perkins'
discussion reflected the following:
Approved FY2016 Audit Plan
Planned Audits: Completion Status
Follow-up of Selected CRTlMPSC/BWL Recs. Est Start Date 1/16
Billing Est Start Date 4,116
IT—Information Security Policies Est Start Date 2/16
Training &Development Complete
Hiring Process(replaced Safety Mgt) 33%complete
IT—Manage Changes 10%complete
Other Engagements:
Surprise Cash Counts(2) '1 of 2 completed
Time Reporting Reviews(2) 1 of 2 completed
Central Maintenance&Fleet Vehicle Time Reporting 50%complete
Other Consulting(NERC/CIP Compliance,IRP/Strat No engagements to
Plan) date
M���,',; 4
Chair Ross suggested that the Internal Auditor evaluate whether it was prudent and whether he had available
resources to conduct a cyber-security audit in this cycle.
Internal Auditor Perkins replied that a full-blown cyber-security audit including attempts to penetrate the BWL
network would need to be performed by an outside party with such expertise. He noted that an IT Security
Policies audit is on the schedule for FY 2016 and that cyber-security is high on the risk assessment list for
continued audit work in the foreseeable future.
Public Comment
None
Other
Commissioner Robert Nelson (East Lansing), spoke about the bill insert that BWL electric customers receive as it
relates to Public Act 95 of 2013, which protects customers from shut off during the winter season. Mr. Nelson
stated his concern about the literature/insert not being as informative as it could be.
After a lengthy discussion regarding the insert language Finance Chairperson Ken Ross reminded the Committee
that the Board's duty is not to micromanage the Administration with writing of text. Chair Ross urged
management to develop any appropriate changes that would address raised concerns and possibly those
changes could be presented to the Committee.
Excused Absence
Motion by Commissioner Louney, Seconded by Commissioner Price, to excuse Commissioner Thomas from
tonight's meeting.
Adjourn
On Motion by Commissioner Louney, Seconded by Price, the meeting adjourned at 7:18 p.m.
Respectfully submitted
Ken Ross, Chair
Finance Committee
HUMAN RESOURCE COMMITTEE
November 10, 2015
The Human Resources Committee of the Lansing Board of Water and Light (BWL) met at the BWL Headquarters-
REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m. on Tuesday, November 10, 2015.
Human Resources (HR) Committee Chairperson Tony Mullen called the meeting to order and asked the
Corporate Secretary to call the roll. The following members were present: Commissioners Tony Mullen, Mark
Alley, Sandra Zerkle, and Alternate Member Dennis M. Louney. Also present: Commissioners David Price, Ken
Ross, Non-Voting Commissioners Mike Froh (Meridian Township), Bill Long (Delta Township) and Robert Nelson
(E. Lansing).
Absent: Commissioner Anthony McCloud.
Public Comments
None
Approval of Minutes
Motion by Commissioner Zerkle, Seconded by Commissioner Alley, to approve the Human Resources Committee
meeting minutes of September 15, 2015.
Action: Motion Carried.
PA 152/Employee Contribution to Medical Benefit Plan Resolution
HR Committee Chairperson Tony Mullen introduced Michael Flowers, Executive Director of Human Resources
and Heather Shawa-DeCook, Chief Financial Officer, who gave a presentation on the Employee Contribution to
Medical Benefit Plan.
Mr. Flowers discussed three options for the BWL to remain compliant under PA 152, 2011.
Public Act 152, 2011
o The BWL has three options:
Comply with PA 152 and limit expenditures on health
care cost based on a schedule of dollars provided in
the Act using the Hard Cap as updated annually; or
Limit expenditures on health care cost based on a
80/20 percentage split, requiring a majority vote; or
Exempt itself entirely from the Act & choose some
other percentage of Premium sharing, requiring a 2/3
vote
O
There was an extensive discussion regarding the Employee Contribution to a Medical Benefit Plan. The
Administration presented a proposed Resolution and asked that the Committee forward the Resolution to the
full Board for consideration.
Proposed Resolution
To Amend Employee Contribution to
Medical Benefit Plans
WHEREAS, Governor Rick Snyder, on September 27, 2011, signed legislation known as the "Public Funded Health
Insurance Contribution Act," Public Act 152 of 2011 limiting 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 years beginning January 1,
2012, such that a public employer may not pay more than the statutory caps for medical benefit plans, 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;
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, the Board of Commissioners met on July 24, 2012 and passed a resolution (#2012-07-01) to exempt
itself from the requirements of Public Act 152 of 2011 and implemented a 10% premium sharing, and;
WHEREAS, the Board of Commissioners met on July 23, 2013 and passed a resolution (#2013-07-02) to exempt
itself from the requirements of Public Act 152 of 2011 and implemented a 12% premium sharing, and;
WHEREAS, the Board of Commissioners met on September 23, 2014 and passed a resolution (#2014-09-03) to
exempt itself from the requirements of Public Act 152 of 2011 and kept the 12% premium sharing, and;
WHEREAS, the Board of Commissioners met on July 28, 2015 and passed a resolution (#2015-07-12) to exempt
itself from the requirements of Public Act 152 of 2011 and kept the 12% premium sharing through December 31,
2015, and;
Resolved that the Board by at least 2/3 vote exempts itself from the requirements of Public Act 152 of 2011 for
the 2016 health benefit plan year, which is effective January 1, 2016 through December 31, 2016, and;
Further resolved that effective January 1, 2016 the premium sharing for the 2016 health benefit plan year
remains at 12% until June 30, 2016 for all active employees.
Be it further resolved that, effective July 1, 2016, for the remaining 2016 health benefit plan year the premium
sharing shall increase from 12% to 14% for all non-bargaining employees. Premium sharing for all bargaining
employees will remain at 12%, and will then be subjected to the Collective Bargaining Unit Agreement effective
November 1, 2016.
Motion by Commissioner Zerkle, Seconded by Commissioner Alley, to forward the proposed resolution for PA
152/Employee Contribution to Medical Benefit Plan to full Board for consideration.
Action: Motion Carried.
Excused Absence
Motion by Commissioner Zerkle, Seconded by Commissioner Alley, to excuse Commissioner McCloud from
tonight's meeting.
Action: Motion Carried
Public Comments
None
Adiourn
Motion by Commissioner Zerkle, Seconded by Commissioner Alley,the meeting adjourned at 6:24 p.m.
Action: Motion Carried
Respectfully Submitted
Tony Mullen, Chair
Human Resources Committee
— �..
BOARD OF WATER AND LIGHT
PENSION FUND TRUSTEES ANNUAL MEETING
November 17, 2015
The Pension Fund Trustees of the Lansing Board of Water and Light (BWL) met at the BWL Headquarters — REO
Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:00 P.M. on Tuesday, November 17, 2015.
Chairperson David Price called the meeting to order and asked the Corporate Secretary to call the roll.
Present:Trustees Mark Alley, Anthony McCloud, Tony Mullen, David Price, Ken Ross, and Tracy Thomas.
Absent: Trustee Sandra Zerkle and Dennis M. Louney.
Public Comments
There were no public comments.
Approval of Minutes
On Motion by Trustee Mullen and Seconded by Trustee Thomas to approve the minutes of November 11, 2014,
Pension Fund Trustees' Annual Meeting Minutes.
Action: Motion Carried
FY 2015 Financial Information
FY 2015 Financial Information Relative to DB. DC and VEBA Plan and Proposed Resolution Adopting the
Audited Financial Statements
General Manager, Richard Peffley introduced Chief Financial Officer, Heather Shawa-DeCook, to provide an
overview of the Board of Water & Light's (BWL) different Pension Plans.
Ms. Shawa-DeCook provided information on the FY 2015 performance of the Defined Benefit Plan (DB), VEBA
Trust Plan and Defined Contribution Plan (DC).
Defined Benefit Plan
Ms. Shawa-DeCook stated that Defined Benefit (DB) Plan currently has 420 participants, only 14 of those being
active. As of the valuation date of February 28, 2015, the Plan had $78 million in plan assets and $67 million in
plan liabilities. The BWL is currently over-funded by $11 million, meaning its Funded Ratio is slightly under 116%,
which is up from roughly 115% from the prior year. For FY 15, the BWL had $1.7 million in investment income,
which equates to a 2% return. For FY 14, the BWL had $14.2 million in investment income, which equates to a
19% return. Ms. Shawa-DeCook stated that these results are reflective of the market.
For FY 15, the BWL paid out $8 million in benefits and administrative fees were $576,000.
Retirement Pension Plan—VEBA
Ms. Shawa-DeCook stated that the VEBA Trust, as of the actuarial valuation date of Feb 28, 2015, has 724 active
participants and 713 retiree participants. The VEBA plan had $158 million in plan assets and $200 million in plan
liabilities. The Board of Water & Light was 78.7% funded; up from 76.3% last year. For FY 15, the BWL had $3.6
million in investment income, equaling a 2% return. For the prior FY year, the BWL had a $25.7 million in
investment income, equating to 19% return. The BWL paid out $9.7 million in benefits, and administrative fees
were $1.2 million.
Ms. Shawa-DeCook stated that the BWL's VEBA Plan projects to be fully funded within 10 years, with some
critical key assumptions going into BWL's actuarial projections.
Defined Contribution Plan—401A
Ms. Shawa-DeCook stated that BWL currently has 705 active employees and 222 retirees and beneficiaries in the
DC Plan. For FY 15, the DC Plan had $173 million in plan assets, an increase of$4 million from the prior year. As
of FY 15, the annual fees incurred by plan participants were approximately $978,000 dollars, or .57% of assets.
Approximately $100,000 additional expenses were incurred by some plan participants due to utilization of
ancillary plan services.
For the FY 15, BWL had $7.3 million in investment income, which equates to a 4% return. For the prior FY, the
BWL had $23.5 million in investment income, which equates to a 16% return. For FY 15, the BWL contributed
$5.5 million into the Plan. Retired Plan participants withdrew $4.5 million in regular distributions, and an
additional $6 million was rolled out into other retirement plan providers.
Ms. Shawa-DeCook stated that employees are allowed to take out loans against DC plan. Currently, the BWL has
396 loans outstanding, compared to 403 loans last year. The average carrying value of the loan outstanding is
approximately $11,000. The Plan allows participants to have two loans out at any given time. The balance of
outstanding loans is $4.4 million, however, this trend average and balance is decreasing.
ICMA, BWL's DC provider has in the past provided comparisons of BWL's plan to a typical 401A plan, and
observed that BWL's employees are more sophisticated in their investment approach.
To assist employees in making informed decisions about retirement savings goals, the BWL offers a robust
education by providing employees opportunities to meet with ICMA on weekly basis. The BWL has a powerful,
user-friendly website with an array of online, digital and printed education, including a retirement calculator.
Ms. Shawa-DeCook stated that all three of BWL's plans were issued an "Unqualified" opinion, meaning the
statements are a fair reflection in all material respects and in accordance with accounting principles generally
accepted.
There was a lengthy question and answer discussion regarding the DB, VEBA and DC Plans.
Ms. Shawa-DeCook introduced Marie Vanerian, Managing Director-Wealth Management from Merill Lynch, who
provided information on the market performance differences and changes from FY 14 to FY 15 for the Defined
Benefit and VEBA Plans.
PROPOSED RESOLUTION
ACCEPTANCE OF 2015 AUDITED FINANCIAL STATEMENTS FOR DEFINED BENEFIT PENSIONS PLAN, DEFINED
CONTRIBUTION PENSION PLAN, AND RETIREE BENEFIT PLAN (VEBA)
Motion by Trustee Alley, Seconded by Trustee Thomas to forward the Resolution to the full Board for
consideration.
Excused Absence
Motion by Trustee Mullen, Seconded by Trustee McCloud to excuse Trustees Louney and Zerkle from tonight's
meeting
Action: Motion Carried
Adiourn
On Motion by Trustee Thomas and Seconded by Trustee McCloud with no further business, the Pension Fund
Trustees meeting adjourned at 5:38 p.m.
MANAGER'S RECOMMENDATIONS
There were no Manager's Recommendations
UNFINISHED BUSINESS
There was no Unfinished Business
NEW BUSINESS
There was no New Business
RESOLUTIONS
RESOLUTION 2015-11-01
PROCUREMENT POLICY
WHEREAS, Section 5-203.4 of the Lansing City Charter requires the BWL to adopt policies and procedures to
assure fairness in procuring personal property and services and disposing of personal property; and
WHEREAS, on July 27, 2010 the Board adopted a Procurement Policy which superseded the previously
adopted Purchasing Policy dated May 27, 2003; and
WHEREAS, it is desirable to update the Board's Procurement Policy to revise exclusions to the policy and
competitive bidding thresholds.
RESOLVED, that the Board adopt the attached Procurement Policy dated December 1, 2015 and made effective
December 1, 2015.
RESOLVED FURTHER, that where the adopted policies do not parallel those of the City's, the Board has
determined that the City's policies are inconsistent with the best practices for the operation of a public utility.
RESOLVED FURTHER, that the Procurement Policy adopted July 27, 2010 is superseded as of December 1,
2015.
RESOLVED FURTHER, that Resolution 2010-07-02, which adopted the Procurement Policy, is rescinded as of
December 1, 2015.
RESOLVED FURTHER, this Procurement Policy provides the foundation for revisions to the Procurement
Procedures.
Motion by Commissioner Price, Seconded by Commissioner McCloud to approve the Resolution for the
Procurement Policy amendments.
Action: Motion Carried
RESOLUTION 2015-11-02
Resolution To Amend Employee Contribution to
Medical Benefit Plans
WHEREAS, Governor Rick Snyder, on September 27, 2011, signed legislation known as the "Public Funded
Health Insurance Contribution Act," Public Act 152 of 2011 limiting 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 years beginning January 1,
2012, such that a public employer may not pay more than the statutory caps for medical benefit plans,
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;
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, the Board of Commissioners met on July 24, 2012 and passed a resolution (#2012-07-01) to exempt
itself from the requirements of Public Act 152 of 2011 and implemented a 10% premium sharing, and;
WHEREAS, the Board of Commissioners met on July 23, 2013 and passed a resolution (#2013-07-02) to exempt
itself from the requirements of Public Act 152 of 2011 and implemented a 12% premium sharing, and;
WHEREAS, the Board of Commissioners met on September 23, 2014 and passed a resolution (#2014-09-03)
to exempt itself from the requirements of Public Act 152 of 2011 and kept the 12% premium sharing, and;
WHEREAS, the Board of Commissioners met on July 28, 2015 and passed a resolution (#2015-07-12) to
exempt itself from the requirements of Public Act 152 of 2011 and kept the 12% premium sharing through
December 31, 2015, and;
Resolved that the Board by at least 2/3 vote exempts itself from the requirements of Public Act 152 of 2011
for the 2016 health benefit plan year, which is effective January 1, 2016 through December 31, 2016, and;
Further resolved that effective January 1, 2016 the premium sharing for the 2016 health benefit plan year
remains at 12% until June 30, 2016 for all active employees subject to the Collective Bargaining Unit
Agreement, and;
Be it further resolved that, effective July 1, 2016, for the remaining 2016 heath benefit plan year the
premium sharing shall increase from 12% to 14% for all active employees subject to the Collective
Bargaining Unit Agreement.
Motion by Commissioner Mullen, Seconded by Commissioner Thomas to approve the Resolution for the
PA152 Employee Contribution to their Medical Benefit Plan.
Action: Motion Carried
RESOLUTION 2015-11-03
ACCEPTANCE OF 2015 AUDITED FINANCIAL STATEMENTS FOR THE DEFINED BENEFIT PENSION PLAN,
DEFINED CONTRIBUTION PENSION PLAN,AND RETIREE BENEFIT PLAN (VEBA)
Resolved,that the Corporate Secretary receive and place on file the Defined Benefit, Defined Contribution
and Retiree Benefit Pension reports presented during the Pension Trustee Meeting.
Staff comments: All three Plans received clean audit reports.
Motion by Commissioner Alley, Seconded by Commissioner Ross to approve the Resolution for the
Acceptance of the 2015 Audited Financial Statements for the Defined Benefit, Defined Contribution and
VEBA Pension Plans.
Action: Motion Carried
RESOLUTION 2015-11-04
2016 REGULAR BOARD MEETING SCHEDULE
T`WE-
BOARD MEETING SCHEDULE
In accordance with the Board of Water & Light's Rules of Administrative Procedure, a schedule of dates, places,
and times for each regular meeting of the Board of Commissioners for the calendar year shall be adopted in
November.
RESOLVED, That regular meetings of the Board of Water & Light's Board of Commissioners are hereby set for
calendar year 2016 as follows, unless otherwise notified or, as a result of date conflicts with rescheduled City
Council meetings:
2016
Board of Water & Light Commissioners
Regular Board Meeting Schedule
Tuesday January 26
Tuesday March 22
Tuesday May 24
Tuesday July 26
Tuesday September 27
Tuesday November 15
Meetings will be held in Board of Water & Light's REO Town Depot, located at 1201 S. Washington Ave., Lansing,
MI, at 5:30 p.m.
RESOLVED FURTHER, That a notice of the meeting schedule be published in the Lansing City Pulse the week of
January 1, 2016.
Motion by Commissioner Thomas, Seconded by Commissioner Ross to approve the Resolution for the
2016 Regular Board meeting dates.
Action: Motion Carried
-----------------
MANAGER'S REMARKS
General Manager Peffley stated that the Finance Committee on November 10th asked the Management to
provide the Committee with alternative wording for the BWL Connections. General Manager Peffley asked the
Corporate Secretary to disseminate the revised newsletter to the Committee.
General Manager Peffley reminded everyone to come out to the Silver Bells in the City event.
COMMISSIONERS' REMARKS
Commissioner Alley provided an update to the Committee on the HOPE Scholarship. Commissioner Alley also
stated that the next level of this program is the Lansing Promise Scholarship, which is a program assists Lansing
students with financial help for college. Mr. Alley gave his gratitude to the BWL for its support over the years for
these two programs.
Commissioner Ross asked General Manager Peffley to give the Board an update on the Integrated Resource Plan
(IRP). General Manager Peffley stated that thus far, the BWL has held three out of its five meetings, where the
BWL is seeing a lot of engagement in its panel; however, community engagement has not been very significant.
Mr. Peffley also introduced Mr. George Stojic, Executive Director of Planning and Development, who provided a
more in depth update on the IRP process, as well as information on what each held meeting focused on. Mr.
Stojic stated that the next meeting is scheduled for December 9th 2015, and will focus on Hometown Energy
Savings program, energy efficiency programs, onsite generation and such. The last meeting is tentatively
scheduled for January 6th 2016, and will focus on the integration, the need for generation as well as options to
determine trade-offs between resources and goals that the Citizens Advisory Committee will be adopting for the
Plan. Mr. Stojic also stated that it is possible a 6th meeting would be necessary. It is anticipated that this process
will be completed by the first week of March, with a goal to have the report due from the Citizens Advisory
Committee by mid-April of 2016. The report will be presented to the Board in May of 2016.
Commissioner Ross furthermore asked whether the Citizens Advisory Committee is equipped enough to guide
the discussion when synthesizing information and goals for the adoption of the IRP plan, and whether the
management and/or consultants will be engaged. In response, Mr. Stojic stated that Public Sector Consultants
would be engaged.
Chairperson Price stated that Committee of the Whole Chair, Louney confirmed that the Committee will devote
two meetings to receiving recommendations on the IRP process.
Commissioner Nelson thanked the staff for addressing his concerns regarding the BWL Connections publicizing PA95; and
he hopes to revisit the matter in the future.
EXCUSED ABSENCE
On motion by Commissioner Mullen, Seconded by Commissioner Thomas to excuse Commissioner Zerkle and
Non-Voting Member Long from tonight's meeting.
PUBLIC COMMENTS
Chairperson Price gave a reminder that on Thursday, November 17, 2015 at 5:30 P.M., the Community Review
Team (CRT) will hold a final report.
ADJOURNMENT
On motion by Commissioner Thomas, Seconded by Commissioner McCloud the meeting adjourned at 6:22 p.m.
M. Denise Griffin, Corporate Secretary
Preliminary Minutes filed(electronically)with Lansing City Clerk: 12-7-15
Official Minutes filed(electronically)with Lansing City Clerk:1-28-16
Approved bylhe Board or Commissioners November 17,2075
MINUTES OF THE BOARD OF COMMISSIONERS' MEETING
LANSING BOARD OF WATER AND LIGHT
September 22, 2015
The Board of Commissioners met at the BWL Headquarters-REO Town Depot located at 1201 S. Washington
Ave., Lansing, MI, at 5:30 p.m. on Tuesday, September 22, 2015.
Chairperson David Price called the meeting to order at 5:30 p.m.
Present: Commissioners Dennis M. Louney, Anthony McCloud, Tony Mullen, David Prick,-.Xeh-_Ross,-;Tracy
Thomas, Sandra Zerkle. Non-Voting Commissioners Mike Froh (Meridian Township), BiU_long,(iDelta
Township), Bob Nelson (East Lansing),
ca . ,
Absent: None - '•
The Corporate Secretary declared a quorum present. r —'
Commissioner Nelson led the Pledge of Allegiance.
APPROVAL OF MINUTES
Motion by Commissioner Ross, Seconded by Commissioner Mullen to approve the Regular Board Meeting
minutes of July 28, 2015.
Action: Motion Carried
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.
------------------
Calvin Jones, Director of Governmental Affairs, Community Service and Public Affairs stated his support for the
appointment of Richard R. Peffley to the Charter Position of General Manager.
COMMUNICATIONS
a. Email from Bill Conner Re: Assessment of Convenience Fee
Received and Placed on File
b. Email from William Zimmerlee Re: Timeline for Pole Usage Permit
Received and Placed on File
Commissioner Nelson spoke about the email regarding the pole usage permit. He stated his concerns about
the delay of usage permits in the East Lansing area for light speed service and suggested that the BWL Legal
Counsel review the matter to determine if there is any anti-trust exposure on BWL's part.
Regular Board Mtg.
September 22,2015
Page 2 of 11
Commissioner Froh posed a question on whether the BWL can acquire information on what the permitting
process entails in its entirety, and whether such standards are reasonable in comparison to standards of other
carriers.
COMMITTEE REPORTS
FINANCE COMMITTEE
September 8, 2015
The Finance Committee of the Board of Water and Light met at the BWL Headquarters — REO Town Depot
located at 1201 S. Washington Ave., Lansing, MI, at 7:10 p.m. on Tuesday,September 8, 2015.
Finance Committee Chairperson Ken Ross called the meeting to order and asked the Corporate Secretary to
call the roll.
Present: Commissioners Ken Ross, Dennis M. Louney, Tracy Thomas and David Price. Also, present
Commissioners Tony Mullen and Non-Voting Member: Bill Long (Delta Township).
Absent: None
The Corporate Secretary declared a quorum.
Public Comments
None
Approval of Minutes
Motion by Commissioner Thomas, Seconded by Commissioner Price, to approve the Finance Committee
meeting minutes of July 14, 2015.
Action: Motion Carried
External Audit Communication Presented by Plante & Moran
Heather Shawa-DeCook, Chief Financial Officer (CFO) introduced external auditor Doug Rober, Partner with
Plante Moran (P&M) and Marie Stiegel, CPA with P&M, who reviewed and presented the External Auditing
Communication.
Mr. Rober said that Plante Moran audited the enterprise fund and the three pension trust funds, which make
up the Defined Contribution Plan (DC Plan), Defined Benefit Plan (DB Plan), and the VEBA Benefit Trust. In
each of the audits, P&M's opinion of the audits is Unqualified.
Marie Stiegel reviewed Audit PowerPoint Presentation that including the following:
• Operating Revenue— Four Year Comparison
• Operating Expenses— Four Year Comparison
• Operating Income
• Sales of Kilowatt Hours— Five Year Trend
• Kilowatt Hours Generated Versus Produced— Five Year Trend
• Significant Power Cost
• Projected Principal and Interest Payments— Five year Projection
• Revenues, Expense and Net Income by Utility
• Enterprise fund Balance sheet
Regular Board Mtg.
September 22,2015
Page 3 of 11
Ms. Stiegel covered the required communication for those charged with governance,the end-out-audit letter,
which outlines best practices, recommendations and upcoming accounting standards and recommendations.
Ms. Stiegel noted that there were no significant changes to the audit plan from what was previously
communicated.
Concluding the Auditors report there was a questions and answers session with the auditors responding to a
series of questions concerning the audit findings as well as confirmation of complete cooperation exemplified
by Board of Water & Light's management.
Motion by Commissioner Price, Seconded by Commissioner Thomas to forward the proposed resolution for
the acceptance of the FY 2015 audited financial statements,to the full Board for consideration.
Action: Motion Carried
July Preliminary Financial Highlights
Heather Shawa-DeCook, Chief Financial Officer (CFO) presented preliminary financial numbers to the Board as
such: revenue 31.6 million; net income, 5 million; cash at hand, 82.7 million; cash position at 8/28, 87.6
million.
Review of Audit Quarterly Open Issues List
Heather Shawa-DeCook, Chief Financial Officer (CFO) reported the open issues list from BWL's internal audits
to the Board.
STATIIS OF AL-k\AGEME\T RESPONSES TO AUDIT REPORTS AS OF 73M,;
Open Issues
#12 Records Rettntion Marugernent Audit(March 1014)-hntemal Audit found that records on htd did not always
eorespeud with the Record Retention Schedule:nuuely,a portion of E9 fomrs uhd some asbestos bills of lading.
Slams:Regarding I-9 forms.the Hntan Resources Dep:uvnau is in line process of eustviug that they are mi tilt for all
active eruployees.Thin praecl is ongoing with an expected compleiion date of 12,3 U15.During jury.44%of ueeded I-9
focus wire collected.Cou—irrg the appropriate rtterltiou schedule for the ast—tog bills of ladury(a.k a.asbestos
utanifcsts).it will be reviewed and updated as part of the overall review of The Record Retention Schedule.Enterprise
Content',rusagernent anticipates m updated maaef docuuleni will be sent for exrcl live ntaragemeut review by October
1_015.Approval by the State of fichigm is expected in early M16.
=13 Rec ids Retention Mmageruew Audit(Mardi 2014)—The luternal auditor determined that records on hmrd in
departuierus did not alwn's correspond with the Record Reteulimn Schedule.
Slaau:Eurrpnse C'autrnt\fuaganenl is retiew'ing tit exlsnue Record Retention Schedule with the appropriate
departments and cataloging all proposed rc.isions.Enterprise Conieut Nimageunem anticipates an updated mister
doevn mr will be sent for executive muagemem review by Ocobef 2015.Approval by the Slate of\richigart is
expected in early 2016.
=15 Accounts Pmable Aurdit(4pri12014)-Tlm audit revealed the existentt ofmorc thin l4,000 t-nhdot master<tries.
Within these entries are duplicates and vendors that have been blocked.Further review and aualysis was re monevdtd,
Status:Accounts Payable(AP)is focusing Their efforts ou confirming infomiatim for current pryers(including AV-9
forms)and workun¢;uintly with Rurchasurg i u identifying new cndors to soup as new payees only'when wairruued.
AP is also wo kirgpinlly with the IT Deparbreru in deternuuive which veador unities s6outd be retained or blocked wh
SAP due to inactivity.
316 Accounts Payable Audit(April 2014)-The Goods Reccipt-hv:oice Receipt account balance is higher Ilan previous
years.fnterral Audit reconmtnds that rruna¢ement focus on resolving misuatdud hruw in(Iris account arrd clear
unresolved utocumenis oldef Tyro a pariculu nec.
Status:To redact the rr'lurreact of Iftest tyyts otisnes,Acenunts Payable.(AP)has developrst a refresher trairhing
course on hie system rectitiuo(rnction for presentation to all users and,also,aru:icipnes automated email notification
beconning available ur FY16.Also,to address the currerur account balance mid clear older item.AP is working with
departrlicals to resolve goods and invoice receipts olderthau 13 moulhs and on reducing the occurrence of svvices 45
days,or older.B_v their raNre,the occrnence of These event,and the resulting efforts to address Ihem will be outgoing
wiih no specific,frual cou pIlion date.aldhoulh it is mlicipaled that any increase in frequency or mrovtt will be related
Ie norual seasonal aclivity and not to a lackof oversight and effort to resolve them
=17 Close the Bcok:s Audit(Autgust 2014)-The hrcnal Auditor deiennlued that aaonnting procedures should be upd1led
mud stored in a central localion,with cowidandon given to the use of a general accounting nauual.
Snnrs:General Actouvting is continuiug'o:vicek an centralizing mud updating all current yroceduhres.L'pdare ro s the
general a—murrg mmual are approxunatelp 50%complete.however.G—at AccounlinR s work efforts on these
pro;aa.s have been ddayeddue to fiscal.year and work deueuhds,along with urrunlicipated staffing changes.Changes are
rxpeded to be complr(e by 3:3 U I G.
=20 hfatrrials hhvrntotti•Afanagerinn[Audit(January 2015)-Tlne Iutrma7 Auditor forma access to rao iuvcntr rtlalecl
SAP system trausaclion(,yes lobe excessive.
i
Regular Board Mtg.
September 22, 2015
Page 4 of 11
Stahu:The remosal of unnecessary access has been requested of the IT Department by Purclasing&Warehousing
(PW).PW bas also Liken it upon thevselves to develop an additional control,in the form of a periodic report run to
nwndtor apauncular situation where duties cannot always be adequately seggeeated due to baited availability of backup
persom:d in non-routine instances.hn addition PIV,is ith the assistance from Intenal Control.is developing a process to
ensure that mucLted and inappropriate user access is identified and corrected on in ongoing basis.To date a draft report
has been developed by luterml Control mid is being reviewed by PW.Once finalized,this review:will be conducted
semi.annually.
r23 Annual Projects-\management Audit(Judy 2015)YETI%Iutenal Audit determined that the project close-our process did
not always include a docrutieveed narrative explaining why actual costs exceeded esrinates.
Stains:The project close-out process is being enhanced by consistentlypro,idine a narrative expkanztion when project
costs exceed estinates by a tlreshold of 13°6 and 850,000.Iniplenlenhtioa by the C'iistouxr Projects mid Electrical
Systems Integrity areas is complete.The tVater Distribotion area eslinates an iupleinent tiou date of loQ'15.
=23 AnnualAojecls's4anageuuent Audit(Jtily'_'Oli)YErV-luiemal Audit determined that ilic project close-out process did
not ahvays idaitih use of confiugrnc7 auoums.
Stains:The project close-out process is being enhanced by consisrenlly identifying use of contingency annonts when
protect costs exceed estinutes by a threshold of 151.and S50,000.Iniplemevtatiou by the Customer Projects and
Electrical Sstnu hmtegriry areas is complete.The Water Distribution area estinates auiuipleuientmion date of 10:1.15.
Closed Issues(since last report of 3,131.!15)
'18 Materials Inventory Jhauagenunt Audit(January 2O15)-Lteroal Au dit's pliysical inentory counts at the vain
w:veheuse revealed sonic difCereuces from book balances.
Stam:Purchasing&Warehousing(PW has,and continues to,emphasize to PW sta'S-aud user depamuents time
ingxmrtauLe and crilicality it completing the proper paperwork and fonts.PW has also initialed relationship-building
efforts witb Their user depa aiieuts,to enhance connnnnications and accountability,and explored mid implemented other
options to enhance control over im-enrory.PW tontines to count high-dollar,fast moavng inventory items more
frequently than once a year and will begin to count yard items on a monthly basis.Within the past year,sonic yard
iteuts,such as transformers.have been moved to a secured offsite warehouse.Possible future teclnoloev evlanceuieuts
to further improve the process will be supported with a business justification and subject to the capital project approval
process.
ri9 ltlaierials Inventory?,Janagnuent Audit(Janwiry 2015)-Internal Audit noted issues at two satellite inventory locations
and recoi mended tighter controls it satellite inventory locations in general-tiring the alteniaflve of consolidation of
inventories at Lie central warehouse.
Status:Satellite inventory is no longer be412 uainained al the REO and Eckert locations.Incxntory nt the Dye and
Erickson plants has been reduced to a fear critical items.
r21 Special BOC Requested Audit(April 2015)-The Internal Auditor found that more clarity is needed in Board policy
regrading.the rciontiig of capital budget yadmicr<.Specifically-with regard to a carifiaiiou Lam the Board of
Corm issioners as to when,for a mulli-year project in particular.a budget variance exceeding the defined threshold
should be icpomed to mid approved by the Board
Stains:Board Policy 15-0a_was amended by Board Resolution 2015-07-05.ixhicb pro-,ides the necessary clarification.
=22 Special BOC Requested kudit(April 2015)-The Internal Auditor found that the foriter General Miniver s
procurement card expenses were not adequately reaaeweci or supported:and that requirements could be clarified.
Status:Board Policy 7-05 w•as amended by Board Resolution 2015-07-04,which pro-ndes the necessay clarification.
There was a lengthy discussion after each reported open issue.
Internal Audit Process/2015-16 Audit Plan Modification
Internal Auditor Phil Perkins, presented an overview of the following information:
• Process Events/Milestones
o Preliminary Risk Assessment and Scoping o Closing Conference
o Audit Announcement/Opening Conference o Audit Reporting
o Field work Phase o Audit Follow-up
o Pre-closing Meeting
FY2016 Audit Plan- Request for Change Approval
Follow-up of Selected CRT/MPSC/BWL Recs. 3W
Billing "00
IT-Information Security Policies 300
Training&Development 3iH)
Safety mml"ement Alhinn?roeesr. 400
IT-Manage Changes 4Ot)
Other Engagement.:
`surprise Cash Crnmts(ls 40
Time Avporti,%RWvivw,(2) 160
f.Nnual Mginruna-o Y.Floor Ti, N/Rasnu o Reporting 100
Other Cotisulung fNEHQUI(onipfiance,IRP/Strat Plan) I
Total fistinntod Hews 40D
Regular Board Mtg.
September 22,2015
Page 5 of 11
Motion by Commissioner Price, Seconded by Commissioner Louney to accept the change the Internal
Auditor's FY 2016 Audit Plan to include the Hiring Process.
Action: Motion Carried
Public Comment
None
Other
Commissioner Louney congratulated Commissioner Ross on doing a good job as a new Finance Chair
Adiourn
On Motion by Commissioner Price, Seconded by Louney, the meeting adjourned at 8:53 p.m.
Respectfully submitted
Ken Ross, Chair
Finance Committee
COMMITTEE OF THE WHOLE
September 8, 2015
The Committee of the Whole of the Lansing Board of Water and Light met at the BWL Headquarters-REO
Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m. on Tuesday, September 8, 2015.
Committee of the Whole Chair Dennis M. Louney called the meeting to order and asked the Corporate
Secretary to call the roll.
Present: Commissioners Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Ken Ross and Tracy
Thomas and Non-Voting Member: Bill Long (Delta Township)
Absent: Commissioner Sandra Zerkle, Non-Voting Commissioners Michael Froh (Meridian Township) and
Robert Nelson (East Lansing).
Corporate Secretary declared a quorum.
Public Comments
None
Approval of Minutes
Motion by Commissioner McCloud, Seconded by Commissioner Mullen to approve the Committee of the
Whole meeting minutes of July 14, 2015.
Action: Motion Carried
North American Electric Reliability Corporation (NERC) Update
Interim General Manager, Dick Peffley, introduced Robert Lalonde, Manager of Bulk Power, who provided the
Commissioners with a North American Electric Reliability Corporation (NERC) update. Mr. Lalonde provided
historical information on the formation of NERC and how it led to mandatory compliance with developed
Regular Board Mtg.
September 22,2015
Page 6 of 11
standards approved by the Federal Energy Regulatory Commission (FERC). He stated that NERC is an authority
assigned with ensuring the reliability of the bulk electric system.
Mr. Lalonde's presentation included information on the responsibilities for the Internal Compliance Program,
developed to measure and maintain compliance to standards applicable to the Board of Water & Light, as well
as information on upcoming changes to the Critical Infrastructure Protection standards that require greater
adherence on the part of the BWL.
Air Regulation Update
Interim General Manager, Dick Peffley, introduced Mark Matus, Manager of Environmental Services, who
provided the Committee with an Air Regulation update. Mr. Matus explained that Mercury and Air Toxics
Standards (MATS) is a 2011 rule from Environmental Protection Agency (EPA), in which the BWL has been
working to become compliant by the deadline of April 2016.
Mr. Matus stated that in June of 2015, the U.S. Supreme Court ruled that the EPA has missed a critical step in
the promulgation process of the MATS rule and as such, it has been remanded back to the Circuit Court of
Appeals, who will decide whether to vacate the rule. In the meantime, Mr. Matus stated that BWL would use
this time to complete the installation of equipment needed to comply with the MATS rule. Erickson station
already has an activated carbon injection (ACI) system, which is a major component for mercury compliance,
and the BWL is in the process of installing an ACI system at Eckert station to become MATS compliant with
testing of the system expected to begin in January of 2016.
There was a lengthy discussion regarding whether the installation of the said system is reasonable considering
Eckert station is nearing its useful life. Mr. Matus stated that it is reasonable to install the system because the
Eckert station is needed to manage the BWL's distribution for the next 5 years. Commissioner Ross noted that
the outcome of installing the equipment needed for compliance, whether the BWL is actually required to
install it by the MATS rule, or not, is that we have cleaner air. Additionally, Mr. Matus explained that with the
said system in place, the BWL will achieve 90% removal of mercury when the system is operating.
Community Review Team (CRT) Update
Interim General Manager Dick Peffley stated that he, Chair Price, Commissioner Long and George Stojic,
Executive Director of Strategic Planning and Development, met to form a plan of how to wrap up the
Community Review Team's (CRT) Recommendations. Mr. Peffley stated that his team suggested to hold a
special board meeting in October; and to extend an invitation to the media, customers, General McDaniel and
his review team, to attend the meeting with the intent of the BWL highlighting what has been accomplished
since the ice storm and how the CRT's recommendations have been implemented with the intent of, or a way
to officially conclude the CRT matter.
There was lengthy discussion regarding the CRT matter, with Commissioner Chair Price concluding by stating
that the suggested meeting is a great idea and is a very good way to get closure on the CRT matter, that the
BWL has done a good job with implementing the CRT recommendations and is the BWL is a different
organization today because of it.
Educational training for the Board of Commissioners
Committee of the Whole Chair Louney discussed the subject of exploring different educational options for the
Board of Commissioners. He presented the Commissioners with a brochure containing information on Janice
Beecher, a professor at Michigan State University (MSU), and a nationally noted authority, who teaches the
"Basics of Utility Regulation and Ratemaking" onsite.
Regular Board Mtg.
September 22,2015
Page 7 of 11
Commissioner Chair Price stated that he finds the presented information to be a great idea and stated that
this would be something to explore and consider for future educational training.
Community Strategy for outside governmental agencies
Interim General Manager, Dick Peffley, introduced Calvin Jones, Director of Governmental Affairs, and
Community Services, who informed the Board of his daily roles and responsibilities with communicating with
county, local, state and federal officials. Mr. Jones said that he is aware of their (governmental entities)
concerns, and works hard to keep lines of communications open on the latest developments of what the BWL
does and vice versa. Mr. Jones stated that it is his pleasure to stay proactive in his communication with other
governmental agencies so that good working relationships are established.
There was a lengthy discussion regarding Commissioner's communication with other respected surrounding
government entities. It was suggested the BWL Board visit and rotate meeting in surrounding communities
and invite all entities to attend the rotating meetings, as this would provide a platform for them to discuss
matters and issues affecting their specific areas.
Committee of the Whole Chair Louney stated that he would discuss this matter with Regional Representatives
and draft proposed procedures for communicating. The proposed procedures would then be presented to the
entire Board at a future Committee of the Whole meeting.
Joint Work Meeting Resolution BWL/Lansing City Council
Board Chair Price stated that recently the Board of Water & Light Board of Commissioners and Lansing City
Council had a great joint meeting. Presented at the joint meeting was a resolution establishing yearly
meetings between the two entities. Board Chair Price asked that the Committee of the Whole forward the
resolution to the full Board for consideration.
Motion by Commissioner Price, Seconded by Commissioner Thomas to forward the proposed resolution to the
full Board for consideration.
Action: Motion Carried
Public Comment
None
Other
Interim General Manager Dick Peffley discussed an email that was sent to the Commissioners regarding the
Groesbeck area, where a new light speed is being installed. A customer questioned why the process takes 6
months to complete. Mr. Peffley explained that BWL's procedures require 90 days to design and another 90
days to implement.
Excused Absence
Motion by Commissioner Mullen, Seconded by Commissioner Price, to excuse Commissioners Froh, Nelson
and Zerkle from tonight's meeting.
Action: Motion Carried
Adiourn
On Motion by Commissioner Price, Seconded by Commissioner Thomas,the meeting adjourned at 6:58 p.m.
Regular Board Mtg.
September 22, 2015
Page 8 of 11
Respectfully Submitted
Denis. M. Louney, Chair
Committee of the Whole
HUMAN RESOURCESS COMMITTEE
September 15, 2015
The Human Resources Committee of the Lansing Board of Water and Light (BWL) met at the BWL
Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m. on Tuesday,
September 15, 2015.
Human Resources (HR) Committee Chairperson Tony Mullen called the meeting to order and asked the
Corporate Secretary to call the roll. The following members were present: Commissioners Tony Mullen,
Anthony McCloud, Alternate Member Dennis M. Louney and Alternate Member Tracy Thomas. Also present:
Commissioners David Price, Non-Voting Commissioners Mike Froh (Meridian Township), Bill Long (Delta
Township) and Robert Nelson (E. Lansing).
Absent: Commissioner Sandra Zerkle.
Public Comments
None
Approval of Minutes
Motion by Commissioner McCloud, Seconded by Commissioner Louney,to approve the Human Resources
Committee meeting minutes of July 28, 2015.
Action: Motion Carried.
Charter Position Appointment for General Manager— Resolution
HR Committee Chair Mullen introduced the resolution for the appointment of Richard R. Peffley as the BWL
General Manager, removing Interim from his current title.
Motion by Commissioner McCloud, Seconded by Commissioner Louney, to forward the proposed resolution
appointing Richard Peffley (Dick) to the Charter Appointed Position of General Manager to the full Board for
consideration.
There was a lengthy discussion regarding the hiring and appointment process for the General Manager.
Action: Motion Carried.
Commissioner Price disseminated a proposed employment contract agreement for the General Manager to
the Commissioners and introduced Attorney Melissa Jackson, of Foster Swift, who reviewed the details of the
proposed employment contract.
Motion by Commissioner McCloud, Seconded by Commissioner Louney, to forward the proposed/draft
employment contract of the General Manger to full Board for consideration.
Action: Motion Carried.
Excused Absence
Motion by Commissioner McCloud, Seconded by Commissioner Louney, to excuse Commissioner Zerkle from
tonight's meeting.
Regular Board Mtg.
September 22,2015
Page 9 of 11
Action: Motion Carried
Public Comments
None
Adiourn
Motion by Commissioner McCloud, Seconded by Commissioner Thomas, the meeting adjourned at 6:33 p.m.
Action: Motion Carried
Respectfully Submitted
Tony Mullen, Chair
Human Resources 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
RESOLUTION 2015-09-01
JOINT WORK RESOLUTION OF THE LANSING CITY COUNCIL
AND THE BOARD OF WATER AND LIGHT COMMISSIONERS
WHEREAS, the Lansing City Charter delegates to the Board of Commissioners (Board) of the Board of Water
and Light (BWL) the responsibility for the administrative, executive, and policy-making authority over the
operation of those City utility services assigned to.it, and
WHEREAS, the Lansing City Charter recognizes that the Board is responsible to the Mayor and to the City
Council for the provisions of those City Utility services in a manner consistent with best practices, and
WHEREAS, the City Council and the Board desire to develop a more formal cooperative relationship between
each other, and
WHEREAS, the cooperation between the City Council and the Board would lead to better communication and
more beneficial coordination between the City Council and the Board.
BE IT RESOLVED, that the City Council and the Board shall hold two joint work meetings per year. The
President of the Council and the Chair of the Board shall schedule the meetings. The first meeting will be held
after January following the election of Council Leadership, the second meeting will be held after July following
the election of the Board of Water & Light's Officers (with additional meetings scheduled as necessary).
FURTHER RESOLVED, that the agenda of each of the aforementioned meetings shall include recommendations
from both entities.
Regular Board Mtg.
September 22, 2015
Page 10 of 11
FURTHER RESOLVED, that the Chair of the Board and the President of the Council shall, on a regular basis,
communicate to each other issues that are beneficial for the Council members and the Board members to
discuss with their respective counterparts in their one-to-one interaction.
Motion by Commissioner Thomas, Seconded by Commissioner Ross to approve the Resolution for Joint Work
Meetings with the Lansing City Council.
Action: Carried Unanimously
RESOLUTION 2015-09-02
Fiscal Year 2015 Audited Financial Statements
of the Enterprise Fund and Pension Fiduciary Funds
RESOLVED, that the fiscal year 2015 Audited Financial Statements of the Board of Water and 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 2015
Audited Financial Statements of the Board of Water and Light and the report on auditing procedures with the
State Treasurer as required by the Uniform Budgeting and Accounting Act (Public Act 2 of 1968, as amended)
no later than December 31, 2015.
FURTHER RESOLVED, that the Corporate Secretary is hereby directed to file a copy of the fiscal year 2015
Audited Finance Statements of the Board of Water and Light with the City of Lansing.
Motion by Commissioner McCloud, Seconded by Commissioner Mullen, to accept the Audited Financial
Statements for FY 15.
Action: Carried Unanimously
RESOLUTION 2015-09-03
Appointment of Richard R. Peffley to the Charter Appointed Position of General Manager
WHEREAS, on January 13, 2015 the Lansing Board of Water & Light's (BWL) Board of Commissioners
appointed Richard R. Peffley to serve as the BWL's Interim General Manager;
WHEREAS, the current Employment Agreement between Interim General Manager Richard R. Peffley and the
BWL will terminate automatically once a permanent General Manager has been hired.
WHEREAS, the BWL Board of Commissioners desire to retain Mr. Peffley as the BWL's General Manager until
otherwise determined by the BWL Board of Commissioners, effectively removing the "interim" title.
RESOLVED, Richard R. Peffley is hereby appointed to serve as the BWL's General Manager.
FURTHER RESOLVED, the term of the Employment Agreement between Mr. Peffley and the BWL shall begin
September 22, 2015 and expire on July 31, 2016.
Motion by Commissioner Mullen, Seconded by Commissioner Ross to approve the Resolution appointing
Richard R. Peffley to the Charter appointed position of General Manager.
Regular Board Mtg.
September 22,2015
Page 11 of 11
Action: Carried Unanimously
--------------------
MANAGER'S REMARKS
General Manager Peffley thanked all of the BWL employees for their contribution and support with the funeral
fallen firefighter Dennis Rodeman. Mr. Peffley specifically thanked Trent Atkins, BWL's Director of Emergency
Management for his help with logistic planning for the funeral.
General Manager, Dick Peffley also informed the Board that the BWL recently demonstrated a regional
leadership day-long training of Emergency Responders at the East Lansing Public Library.
COMMISSIONERS' REMARKS
Commissioner Louney congratulated Dick Peffley on his appointment of General Manager. He stated that the
BWL has the right person leading the BWL and the utility company will be better because of his leadership.
Commissioner Thomas congratulated General Manager Peffley on his appointment and thanked him for his
humbleness.
Chair Price stated that he is looking forward to working with Mr. Peffley and that he is confident that his
leadership will bring even more stability to the BWL.
EXCUSED ABSENCE
None
PUBLIC COMMENTS
Mike Hamel, Assistant Fire Chief, thanked the Lansing Board of Water& Light, and its entire staff for coming
together with the Lansing Fire Department to honor the fallen firefighter, Dennis Rodeman.
Brad VanGuilder, of Sierra Club asked the Board that transparency be reflected in the Integrated Resource
Process (IRP).
ADJOURNMENT
On motion by Commissioner McCloud, Seconded by Commissioner Mullen the meeting adjourned at 6:01 p.m.
M. Denise Griffin, Corporate Secretary
Official Minutes filed(electronically)with Lansing City Clerk:November 20,2015
APPLICATION FOR A SHOW LICENSE
The undersJgned hereby applies for a license to sponsor, operate, exhibit, perform I
or cause to be operated, exhibited or performed a "SHOW,within the limits of the
City of Lansing, Michigan. Show means any circus, menagerie or other exhibition,
entertairiment, carnival or show, of any nature and name for which money cr any
other consideration is in any way demanded or received far admission.
Name ofAppiicant
Address ofAppl'tcant AIdG
Phone Number of Applicant 5l 9'2arl, f rDate of B rth r ,
Email Address_ �ey ke(AllG�,
Nam,eofOwner(s) ketw H0410 'r
Address ofOwner(s} A4- Ys'U /j1�v
Narne of Operator(s) C
Address ofOperator(s)AJA S�"tl Gd Srr 1/✓!''t,r (n��i a✓1�,., Utt /� All
Name of Sp`6ft6r(s) I —Hein Li Pixbf4t, lord
Address of 5 onsor s ,��5 U
Location of Show ( (A c• G t O / SITE PLAN REQUIREDShow Date(s)_
Description of Show
Expected Attendance SECURITY PLAN MAY BE REQUIRED
Admission Charges � �G � 1.U -�,
Insured By �� .�.eS�� ;',r� _:r a P i'ISi: ✓��v� �v
1POf ub is ua Illty in 109 amaun!OiS90%000 t0 m80 ,D00And Propedy.0arroge In the 81110VAL pf SM.000,
7'hp CI(y Uf 4p��sblg mull Appeal ae an addlfhxtal b�leuryd and receive a Yd•dpy�anceNaUnn nonce,)
Polley 1(.'1 1 I` gate Issued&
Bonded
~ �� �n the Penal 8Wn OT sl,0 )
mats Issued 1 !r.r pate 5viresrr�G��1 G
I understand that a falser statement on this application may result in either a denial of this
application or subsequent revocation if this license Is granted,
Has the apploant, owner, or sponsor; or any person with ,an ownership interest in the
applicant,owner, orsponsor, or any person whowIll mana.gelhe show had eny citatlan or
conviction for, or guilty plea to,a vlolation ofthe laws of the United"Z.Itates,any State or any
local unit of government regulating the operation of a show?
0-Ye�s 0 No If yes, disdiose detalis:
APPLICANT IGNATURE,
Subscribed and sworn to before me ibis-.r� day ofQe.(Y) _ _20j s-
Notary Public, Ing am bounty, Michigan Cornmlaslol?ExplPes
.y
APPROVED BY:
13uI g Saf Divisiolx Date
Fire Marshal Date
Chief of Police Date
FEE: $250,00 Per Day/Per Location. Notto axcai�d$1000.00 Per Year/Per Location/Non-
rofundable
(REV 2/�2) RLCKM STRUT
NOT'AAY pU-BLTC--S-TA7V 6 MTCIRaAN
CO[JNTy On INGHAM
MY COTAM1uSI0N>?Xl�.t19.1iL�9,2020
ACt1ag In er coolity
Approved by the Board of Commissioners on September 22,2015
MINUTES OF THE BOARD OF COMMISSIONERS' MEETING
LANSING BOARD OF WATER AND LIGHT
July 28, 2015 ='
l
The Board of Commissioners met at the BWL Head qua rters-REO Town Depot located at d0:1 Sc-'-1
Washington Ave., Lansing, MI, at 5:30 p.m. on July 28, 2015.
FTI
Chairperson David Price called the meeting to order at 5:30 p.m. r'
Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony
Mullen, David Price, Ken Ross, Tracy Thomas, and Sandra Zerkle. Non-Voting
Commissioners present: Michael Froh, William Long and Robert Nelson.
Absent: None
The Corporate Secretary declared a quorum present.
Commissioner Louney led the Pledge of Allegiance.
Special Ceremony-Tribute to Former BWL Commissioner Cynthia Ward
Chairperson David Price presented Cynthia Ward with a Resolution of Tribute on behalf of her
service to the BWL Commission.
ELECTION OF OFFICERS FY 2015-2016
Commissioner Chair David Price recognized Commissioner Mullen, who chaired the Nominating
Committee.
Commissioner Mullen read the Nominating Committee Report, in which the proposed slate of
officers for Fiscal Year 2015-2016 is as such: Commissioner David Price serving as Chairperson;
and Dennis M. Louney serving as Vice Chairperson. There were no nominations from the floor
for the office of Chairperson or Vice Chairperson.
Motion by Commissioner Thomas, Seconded by Commissioner McCloud to approve the
presented slate of officers for 2015-2016.
Action: Motion Carried
APPROVAL OF MINUTES
Motion by Commissioner Bossenbery, Seconded by Commissioner McCloud to approve the
Regular Meeting Minutes of May 26, 2015.
Action: Motion Carried
LATE ITEMS
• Proposed Resolution to Amend Employee Contribution to Medical Benefit Plan
• Letter from Darnell Early of Delta Township re:The Sale of the Board of Water & Light
• Letter from the Sierra Club re:The Integrated Resource Planning (IRP) Process
PUBLIC COMMENT
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.
------------------
Ann Woiwode, of the Sierra Club spoke about the planning process for the Integrated Resource
Planning (IRP). She expressed that it was important to spell out the process and to have public
participation and transparency to help shape the direction of the utility moving forward.
Chuck Hallman, Vice President of the Genesee Neighborhood Association, spoke about the
resolution up for consideration regarding the Lansing Board of Water and Light. Mr. Hallman
stated that he wanted to emphasize the importance of the Commission's support to maintain
the BWL as a publicly owned utility.
Elaine Wambo, Facilitator for Rejuvenating South Lansing and Coordinator for Neighborhood
Watch, spoke about the sale of the BWL. She stated her concerns with the proposed
amendments to the resolution "Directing Interim General Manager to Prepare a Business Case."
She stated that it is time for the Board of Commissioners to show their belief in the BWL.
Phil Hassler, Former Commissioner of the Lansing Board of Water and Light, and Chair Person
for 11 years stated that the Commission's most important responsibility is to the ratepayers,
therefore the Commission's decision making should be based on that responsibility alone. He
stated that ratepayers have voiced their opinion via the survey, administered by the IBEW,
which indicated that 85% of those that responded did not want the BWL sold.
Claude Beavers, Lansing Resident, urged the Board of Commissioners to consider the first
resolution that was initially proposed at the last Committee of the Whole meeting, opposed to
the amended resolution being proposed tonight because he believes it is a better deal for
everyone including the company and the environment.
Emily Heart, Lansing Resident, asked that the Commissioners endorse the original resolution
that supported keeping the BWL as a public utility.
Lansing City Councilmember Jody Washington stated her disappointment with the proposed
amended resolution being presented this evening regarding the BWL. She stated that citizens
are looking for a Board to fight for the utility and a Board who will find a way to support what
the citizens want.
COMMUNICATIONS
a. Email from Thomas Melton RE: Information Requirements for Starting Service
Received and Placed on File
b. Dennis Williams RE: Damage to Trailer
Received and Placed on File
c. Email from Suellen Hozman RE: Proposed Sale of Board of Water & Light
Received and Placed on File
d. Email from Lisa Crumley RE: Retaining the Board of Water & Light
Received and Placed on File
Late Item Communications
1. Letter from: Darnell Early re: Sale of the Board of Water & Light
Received and Placed on File
2. Email/Paper Communication submitted from the Sierra Club re: The Integrated
Resource Planning (IRP) Process
Received and Placed on File
COMMITTEE REPORTS
NOMINATING COMMITTEE
June 23, 2015
The Nominating Committee of the Lansing Board of Water and Light met at the BWL
Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m.
on Thursday,June 23, 2015.
Committee Chair, Cynthia Ward called the meeting to order and asked the Corporate Secretary
to call the roll. The following committee members were present: Commissioners Tony Mullen,
Anthony McCloud and Cynthia Ward.
Absent: Tracy Thomas
Approval of Minutes
Motion by Commissioner McCloud, seconded by Commissioner Mullen to approve the
Nominating Committee meeting minutes of June 26, 2014.
Action: Motion Carried
Public Comment
There were no public comments.
Officer & Committee Survey Results & Officer & Committee Survey Memorandum
Nominating Chair Ward stated that the Officer and Committee Survey Results Forms and
Committee Survey Memorandum were included in the meeting packet for review.
Nominating Committee Chair Cynthia Ward stated the following:
"Before I ask whether there is any discussion, I did receive an email from a Board member who
had expressed some concerns, I believe that everyone was copied on the email from
Commissioner Bossenbery, and I would like to include her email as part of the record please.
There are a couple of questions that Commissioner Bossenbery has for the Nominating
Committee to consider. But I think she was really asking the Board to consider in addition to.
The two questions being asked are, one, why are there deadlines in place if the Board does not
intend to adhere to, and two, should a Board member be considered a candidate if their
materials are not submitted by the deadline. I responded to Commissioner Bossenbery
yesterday by thanking her for her emails, for expressing her concern and told her that I would
respond in the context of this open meeting. Commissioner Bossenbery is not here to receive
the response but I will share my thoughts with the Nominating Committee members. With
respect to deadlines, we have deadlines imposed by law and deadlines imposed by
administrative role, and we also have deadlines that are courtesy and convenient deadlines.
The deadlines that are referenced here is the Survey form, which has the deadline date of May
291h, by when those materials should be submitted to the Corporate Secretary. I deemed this
date as a courtesy deadline; it is not a deadline that was imposed by law. I checked our
Administrative procedures, and our Rules of Procedure; there was not a deadline imposed
relative to that. The reason why it is viewed in my opinion as a courtesy deadline, and I asked
the Corporate Secretary the same question, is because I wanted to be guided by facts. I said 'is
this deadline imposed, what is the purpose of this deadline? Is this a deadline so that you can
compile the information that you need to send to the Commissioners?' And the response that I
received from the Corporate Secretary was 'yes.' That is the deadline that allows her to receive
the information in such a way to compile the information; the information that we received,
reviews all of the surveys, and compile it in a way that's easy for us to read. But it also allows
the Chair to appoint the Nominating Committee. As you know, the Chair appoints the
Nominating Committee from those members who are not seeking, or interested in any position.
So this is in my opinion, strictly a courtesy/convenient deadline. Please do not take my
comments to suggest that courtesy or convenience of our Corporate Secretary is not of
paramount importance. Having to serve 8 individuals and soon to be 11 individuals is a very
significant undertaking and having just completed some evaluations where I needed to receive
7 times 3 forms from individuals and also considering my own, I understand how it can be a
little frustrating not to receive the information in a timely way. But, I will just add that we are a
volunteer community service, and I have been impressed by quite frankly, the attendance rate
of very busy people. We attend meetings; we miss them for work commitments very few and
far in between. Things come up as it did for Commissioner Thomas today, in traveling and
trying to get back. Sometimes we are out of town for work commitments. We are a volunteer
board comprised of members who are juggling full time employment, other community
involvement, personal interests, and family interest and quite frankly, if a board member of
mine fails to meet a courtesy deadline that is the least of my worries. If they are present in all
other ways in all other aspects, that is the least of my worries and I will extend to that board
member a professional courtesy. Those are my comments on the first part of the question. I
will hear from colleagues."
Commissioner Tony Mullen stated the following:
"My only issue is that we need to be fair. If we extend the courtesy to one Commissioner who
happens to be a few days late, as long as we extend that same courtesy to all Commissioners
who may happen to be a few days late, that is the most important thing. It is not, we don't
want to be slaves to be perfect. We are not ever going to be perfect. It is more important that
we are fair and I think that any one of us, if we were late, then the Corporate Secretary would
still allow us to turn our paperwork in a little bit late. I think that she has been treating us fairly.
And like you said, we are trying to make it as easy as we can on her but at the same time things
happen. I really do believe that the most important thing here is fairness and I think all of us
would have been able to turn in our paperwork in late if necessity forced us to be late. Thank
you.
Commissioner McCloud stated that he is in agreement with the comments of Commissioners
Ward and Mullen.
Commissioner Ward stated the following:
"I am glad that you raised the question of fairness, I also did consider, was anyone advantaged
or disadvantaged by submission, and as far as I can tell there was no one advantaged by it or
disadvantaged by it. Was someone inconvenienced by it? I am certain, our Corporate
Secretary. However, the information got out and in compliance with the Open Meetings Act in
a timely manner. We all received the information at the same time. So as far as I am
concerned, no one was advantaged or disadvantaged by the submission."
"The second question is should Board members be considered as a candidate if their materials
are not submitted by the deadline. I think that question is moot, given that we discussed it but
will say this, I view the surveys as informational; it is just a way for us to know as a Nominating
Committee, when we look to try to identify whom the best candidate to put forth for Chair, and
the best candidate to put forth for Vice Chair. Whether they would be willing to serve or
whether we have to do some arm-twisting because we deem them the best candidate. Those
forms are informational, so that is all that I have on the second question."
Commissioner McCloud stated that he had nothing additional to add.
Commissioner Mullen stated that he was in agreement with Nominating Chair Ward.
Commissioner Ward thanked Commissioner Mullen and stated that she was glad that she and
Commissioner Mullen we were able to agree on something at least for once, as it relates to the
Nominating Committee.
There were no additional comments or discussion regarding documents received.
Nominate Board Officer Candidates for Fiscal Year 2015-2016
Nominating Committee Chair Ward stated that she believes the task of the Nominating
Committee is to propose a slate of officers, one Chair and one Vice Chair and that is what she
would like to accomplish this evening.
Nominating Committee Chair Ward opened the floor for nominations and the following motion
was offered:
Motion by Commissioner Mullen, Seconded by Commissioner McCloud that the Nominating
Committee forward a slate of officers to the full Board for consideration of David Price to serve
as the Chairperson and Dennis M. Louney to serve as the Vice Chairperson for 2015-2016 FY.
Action: Motion Carried
The recommended slate of officer candidates for FY 2015-2016 will consist of:
Chair: David Price
Vice Chair: Dennis M. Louney
Excused Absence
Motion by Commissioner McCloud, seconded by Commissioner Mullen, to excuse Commissioner
Thomas from tonight's meeting.
Action: Motion Carried
There being no further business, the meeting adjourned at 5:46 p.m.
Respectfully submitted,
Cynthia Ward, Chair
Nominating Committee
COMMITTEE OF THE WHOLE
July 14, 2015
The Committee of the Whole of the Lansing Board of Water and Light met at the BWL
Head quarters-REO Town Depot, located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m.
on Tuesday, July 14, 2015.
Committee of the Whole Chair, Margaret Bossenbery, called the meeting to order and asked
that roll be taken.
Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Tony Mullen, David Price,
Ken Ross,Tracy Thomas and Sandra Zerkle.
Absent: Commissioner Anthony McCloud
Non-Voting Members Present: Commissioners Mike Froh (Meridian Township), Bill Long (Delta
Township) and Bob Nelson (East Lansing).
Committee of the Whole Chair Bossenbery welcomed newly appointed member Ken Ross and
Commissioners Mike Froh, representing Meridian Township; Robert Nelson, representing East
Lansing, and William Long, representing Delta Township,to their first official meeting.
Additional Agenda Item
At the request of Board Chair David Price, a resolution directing the Interim General Manager to
prepare a business case for keeping the Board of Water and Light as a community asset, owned
by the City of Lansing was added to the Agenda for consideration.
Public Comments
None
Approval of Minutes
Motion by Commissioner Price, Seconded by Commissioner Zerkle to approve the Minutes of
May 12, 2015 with grammatical amendments.
Action: Motion Carried
Resolution FRIB Agreement
George Stojic, Executive Director of Strategic Planning and Development, provided the
Committee with a proposed agreement between the Board of Water and Light and Consumers
Energy, intended to resolve issues related to electric service to the facility for isotope beams, or
FRIB, on the campus of MSU, as well as resolve issues related to the rights to serve on the
campus. The Committee of Whole received a resolution in which the Board of Water and Light
seeking approval of the agreement. Mr. Stojic stated that this agreement is the product of
about five years of solicitations, proposals, negotiations, research and hard work from many
people at the Board of Water and Light. He stated that two additional sentences will be added
to the final agreement to define "net margin" and grant BWL the right to review calculations
and supporting data.
Mr. Stojic explained that there are two major components to this agreement; economic and
legal. The economic one entities the BWL to 50% of the net revenue from sales of electricity to
the facility for rare isotope beams; the second component is the right to serve on campus. Mr.
Stojic stated that from the very beginning of this project Consumers has asserted an exclusive
right to serve on campus and asserted that the Board of Water and Light did not have the right
to serve. That was a point of contention that required a lot of research on the BWL's part to
rebut.
Mr. Stojic and attorney Pete Ellsworth, from Dickinson and Wright, briefly explained that the
agreement states that both the BWL and Consumers Energy are providing consent to the other
to serve if, and when, called upon by Michigan State University. Mr. Ellsworth informed the
Committee that pursuant to the agreement, the campus is a customer choice zone, only the
campus, and no other parts of East Lansing or the townships, are involved.
There was a lengthy conversation regarding the proposed contract and resolution. Upon
conclusion of the conversation and the questions and answer session, the following motion was
offered:
Motion by Commissioner Price, seconded by Commissioner Mullen to forward the resolution
for the approval of the agreement to resolve electric service to MSU, entered into between the
Board of Water & Light and Consumers Energy to the full Board for consideration.
Action: Motion Carried
Employee Survey/EPIC MRA Presentation
Human Resources Director, Michael Flowers, and Bernie Porn, of Epic MRA, presented the
Committee of the Whole with the results of the Employee Satisfaction Survey that was recently
conducted with the BWL employees. This survey was based on overall attitudes, opinions,
concerns, and employee satisfaction regarding their jobs, management teams, organizational
diversity, hiring practices and communications. About 395 employees participate in the survey,
a 54% participation rate, which is very good, and 69% responding online and 31% responding by
mail. The survey was anonymous and confidential.
The following results from the employee satisfaction survey were presented to the Committee
in a PowerPoint presentation:
Employee Rate their Specific Work Area as 'Positive'
• 77% offered "positive rating";
• 23% offered "negative rating"
Employees Rate BWL Programs and Services as 'Positive'
• 84% offered "positive rating"
14% offered "negative rating"
BWL Employees Satisfaction with Leadership Somewhat Mixed
• 68% "satisfied" with Executive Team;
• 51% "satisfied" with Intermediate Level Management/Supervisors;
30% "dissatisfied"
Employees Feel Comfortable Asking Questions of their Immediate Supervisors/Directors
• 78%feel "comfortable" asking questions of immediate Supervisor/Director
• 21% DO NOT feel "comfortable" asking questions of immediate Supervisor/Director
Employees Feel Comfortable Receiving Feedback from their Immediate Supervisors/Directors
• 79%feel "comfortable" receiving feedback from their immediate Supervisor/Director
• 21% DO NOT feel "comfortable" receiving feedback from their immediate
Supervisor/Director
Employees Frequently Receive Feedback from their Immediate Supervisors/Directors
• 64% "frequently" receive feedback from their immediate Supervisor/Director
• 35% DO NOT "frequently" receive feedback from their immediate Supervisor/Director
Employees Feel They are a Partner in the BWL's Vision
• 59%feel they are "made a partner" in BWL Vision;
• 19% DO NOT feel they are "made a partner" in the BWL Vision
Employees Rank Aspects of the BWL's Vision Statement
• Safe—32%Agreed Somewhat; 59%Agreed Strongly
• Cultural Activities—32%Agreed Somewhat; 59%Agreed Strongly
• Economic Initiatives—36%Agreed Somewhat; 54%Agreed Strongly
• Environmental Steward—40%Agreed Somewhat; 49%Agreed Strongly
• Affordable—32%Agreed Somewhat; 53%Agreed Strongly
• Reliable—33%Agreed Somewhat; 48%Agreed Strongly
• Planning Future Growth—38%Agreed Somewhat; 40%Agreed Strongly
Employees Rank Statements About Common Principles on a 0 to 10 Scale— by Mean Score of
Importance
• Safety—7.706
• Community Leadership—7.511
• Environmental Stewardship—7.358
• Superior Service—7.286
• Competitive Rates—7.256
• Integrity—6.761
• Diversity—6.755
Employees Rate Work Environment as 'Positive'
• 67% offered "positive rating"
• 31% offered "negative rating"
Communication within BWL as a Whole Could Improve
• 49% offered "positive rating"
• 47% offered "negative rating"
Communication within Employee's Work Area at BWL Considered Comparatively Better
• 62% offered "positive rating"
0 35% offered "negative rating"
BWL Employees' Overall Job Satisfaction High
• 75% "satisfied" with their jobs;
• 14% say they are "not satisfied" with their jobs
Feelings Toward Opportunities for Advancement are Mixed Among BWL Employees
• 53% "satisfied" with opportunities for advancement;
• 28% "not satisfied" with opportunities
Feelings toward 'Diversity' Mixed Among Employees
• Doing Too Little— 11% (8% Somewhat; 3% Much)
• Doing Enough—46%
• Doing Too Much—39%
Top Areas within BWL that Employees Feel Need the Most Improvement
• 13% "Communication"
• 9% "Better Management"
• 8% "Hire/Promote Qualified Employees"
51% Report Using Social Media at Least Once a Week
• Facebook—65%
• Instagram—4%
• Twitter—2%
• None—27%
In conclusion, Mr. Flowers stated that recently, employee performance evaluations have been
performed on an annualized basis and the Administration's thought is that evaluations should
be done on a more frequent basis because, the younger generation desire more feedback on a
regular basis.
CRT/MPSC Communications to Community
Board Chair David Price stated that the BWL is over a year and a half past the ice storm, and a
little over a year past receiving the Community Review Team (CRT) report. It seems that with
all the progress that has been made implementing the CRT's suggestions, that it might be time
for closure on the report. He reported that most of the suggestions and changes have become
part of the infrastructure of the organizations.
Commissioner Bill Long stated that there has been a lot of progress made relative to work that
has been done by the BWL on the recommendations received from the CRT, the Michigan
Public Service Commission (MPSC), as well as the Internal Report. He suggests that the actions
taken on the recommendations, be compiled so that the Commission and the Board could use
that document as a presentation tool to report to the community and the government officials
to say, this is what we have done, this is what we have learned and this is how we have
responded. Mr. Long mentioned that after a discussion with Chair Price, he had extended an
invitation to General McDaniel, the Chairperson of the CRT, to be involved in a presentation if
the Board sees fit.
There was a lengthy conversation regarding this matter and in conclusion, it was suggested that
Board Chair Price and Commissioner Long meet to discuss a course of action to bring this before
the community, but would first bring it to the board for their consideration.
Resolution Directing Interim GM to Prepare a Business Case
Proposed Resolution Directing Interim GM to Prepare a Business Case
Whereas, the Lansing Board of Water and Light has been a publicly owned utility since 1885;
Whereas, the vision of the Lansing Board of Water and Light is to partner with our customers,
community, and employees to make Lansing the most attractive community in Michigan in
which to live, raise a family, work, and operate a business;
Whereas, the mission of the Lansing Board of Water and Light is to provide safe, reliable, and
affordable utility products and services and to plan for future growth, be responsible
environmental stewards, and be active participants in the Lansing Community's cultural and
economic initiatives;
Whereas, the Lansing Board of Water and Light customers have enjoyed significant savings on
their utility bills in comparison to their neighbors that are served by privately owned utility
companies;
Whereas, should the Lansing Board of Water and Light be sold to a private utility company
customers will likely see an increase in their monthly utility bills and;
Whereas, the employees of the Lansing Board of Water and Light are among the best and the
most highly skilled utility workers in the nation and a sale of the utility would lead to internal
reorganization and unknown layoffs of BWL employees;
Whereas, the Lansing Board of Water and Light plays a significant role in our region's business
development efforts providing guaranteed savings to companies looking to locate or expand in
this area;
Whereas, the Lansing Board of Water and Light works to make our community a great place to
live supporting programs like Pennies for Power and Adopt-a-River and helping to sponsor the
BWL Chili Cook Off, Silver Bells in the City, the Common Ground Festival, and our own home
town professional sports franchise the Lansing Lugnuts;
Whereas, the Lansing Board of Water and Light employees contribute many hours volunteering
at community events, greatly enhancing the quality of life in the Lansing region; and
Whereas, if the Lansing Board of Water and Light were sold to a private company, many of
these community assets and benefits would be lost; and now therefore, be it
Resolved, that the commission of the Lansing Board of Water and Light directs the Interim
General Manager to prepare a business case for keeping the Lansing Board of Water and Light a
community asset owned by the City of Lansing.
Discussion:
Board Chair Price stated that procedurally, if the Committee approves to forward the proposed
resolution at tonight's Committee of the Whole meeting, there are two weeks until the full
board meeting for its passage, at which time it can be explained further, and amended.
Motion by Commissioner Price, Seconded by Commissioner Mullen, to forward the proposed
resolution to the full Board for consideration.
Action: Motion Carried (6 - 1 Vote, Ross dissenting)
Open Meetings Act Update
Brandie Ekren, General Counsel, provided an Open Meetings Act (OMA) reminder for the new
Commissioners to refrain from group emailing, to avoid potential violation of the OMA.
FOIA Update
Brandie Ekren, General Counsel, provided a Freedom of Information (FOIA) status update that
the Board of Water and Light (BWL) has an outstanding question to the Lansing City Attorney
regarding whether or not the Commissioners must still approve their own FOIA Policies and
Procedures. In the meantime, Ms. Ekren advised that the BWL will continue to follow guidelines
as approved by the City Council until further direction from the Lansing City Attorney is given.
Commissioners Report from APPA Conference
Board Chair David Price stated that this was his first time attending the American Public Power
Association (APPA) National Conference and that he was grateful to go. One of the things of
particular interest to him was the whole idea of community value. A public utility from
Wisconsin did a presentation that attached a dollar value to the community investment of their
employees in volunteering, and doing many of the things mentioned in the resolution brought
forward today. His thought was that the same could be something to look at as we talk more
about the idea of selling the BWL utility; with emphasis on what else would be given up, besides
the tangible assets. He stated all of the general sessions at the conference were good and
thinks that every Commissioner should attend, so to take the pulse of the whole public power,
and it's a significant industry.
Commissioner Dennis M. Louney distributed information that he brought back from the
conference. He stated that excellent information was provided in the reports.
Commissioner Tony Mullen stated that one of the things that was interesting to him about the
APPA Conference, which ties into the conversation about selling the BWL, is the information
that he received after sitting in on a couple of presentations from various bonding agencies. It is
astounding how much the new Environmental Protection Agency (EPA) regulations coming
down the pike are going to affect the worth of this company because the BWL has coal-fired
plants.
groSolar Update
George Stojic, Executive Director of Strategic Planning and Development, updated the Board on
the status of the BWL's solar programs. Mr. Stojic indicated that a Power Purchase Agreement
with groSolar has been completed and that the power generated would fulfill the BWL's PA 295
compliance requirement. Additionally, Mr. Stojic stated that the price would be $59.00 per
megawatt hour, which is a very good price for this part of the country, and that it would be the
only utility scale solar project in Michigan. According to Mr. Stojic, a site has not yet been
selected, however, once it is selected, it will determine the project size, between 15 and 30
megawatts. Mr. Stojic also stated that the BWL was previously working with a developer on a
smaller, 300 kilowatt, community solar project. This would allow the BWL customers to buy
into the project and receive a credit on their bills. Mr. Stojic also mentioned the BWL's
distributed solar program provides incentives to businesses and residential customers to place
solar energy on their facilities and homes with the option of participating in the BWL's net
metering program. He stated that collectively, these projects constitute Michigan's most
extensive solar program, which is particularly appropriate based on the BWL's summer demand
and transmission configuration.
Chili Cook-Off update
Steve Serkaian, Director of Communications provided an update of this year's Chili Cook Off.
Mr. Serkaian said this year was the 20th anniversary of the BWL Chili Cook Off. The event was
held at Adado Riverfront Park on June 5, 2015. This year's presenting sponsor was Tripp's Auto
Shop and Collision Centers. More than one hundred BWL employees volunteered thousands of
hours of their own time to put on this community event. There were 40 chili vendors, giving
away nearly all of their chili to 4,000 attendees. This year's honorary chair was TV 6 news'
anchor, Sheri Jones. For the first time, a used car donated by University Motor Mall, was raffled
off.
After collecting sponsor checks, the BWL will be able to contribute approximately $5,000 dollars
to each of our three designated charities, Impression 5 Science Center, Sparrow Foundation and
the Lansing Promise Hope Scholarship fund. For next year's event, the BWL is exploring the
possibility of holding the Chili Cook off at another location.
Public Comment
Anne Woiwode, Conservation Director for the Sierra Club, spoke about the BWL solar program
as well her eagerness to learn more about the BWL's Integrated Resource planning process.
Brad Van Guilder, Ph.D., Organizing Representative Beyond Coal Campaign, spoke about
preparing for the closure of coal-powered plants. He questioned the difference between a
strategic plan and an IRP.
Elaine Wambo, of South Lansing, stated that she was the facilitator of a group called
Rejuvenating South Lansing. She asked that the Board Water and Light Commissioners do
everything in their power to prevent the selling of the Board Water and Light. She stated that
the Board Water and Light is the public facility that supports our residents and our
neighborhoods.
Ron Byrnes, representing IBEW, spoke in support of the resolution that was presented and
voted on tonight. He stated that it is important for the city residents and employees to know
where the Board of Commissioners stands on this issue.
Other
Interim General Manager Peffley welcomed the new commissioners and said that he is looking
forward to working with them, announced that BWL's Director of Public Relations, Calvin Jones,
received the Rotarian of the year award from the Delta Waverley Rotary, and reminded
everyone about the State of the BWL Address that is being held Tuesday, July 215L at the Line
Garage in Building G. He stated that the speech will begin at 11:00 a.m. and lunch will
immediately follow.
Excused Absence
Motion by Commissioner Price, seconded by Commissioner Mullen, to excuse Commissioner
McCloud from tonight's meeting.
Action: Motion Carried
Adiourn
On Motion by Commissioner Price, Seconded by Commissioner Mullen, the meeting adjourned
at 7:59 p.m.
Respectfully Submitted
Margaret Bossenbery, Chair
Committee of the Whole
FINANCE COMMITTEE
July 14, 2015
The Finance Committee of the Board of Water and Light met at the BWL Headquarters — REO
Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 7:08 p.m. on Tuesday, July 14,
2015.
Finance Committee Chairperson Dennis M. Louney called the meeting to order and asked that
roll be taken.
Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Tony Mullen and Sandra
Zerkle. Also, present Commissioners David Price and Ken Ross. Non-Voting Members Present:
Commissioners Mike Froh (Meridian Township), Bill Long (Delta Township) and Bob Nelson
(East Lansing)
Absent: None.
The Corporate Secretary's Executive Assistant declared a quorum.
Public Comments
None
Approval of Minutes
Motion by Commissioner Bossenbery, Seconded by Commissioner Mullen, to approve the
Finance Committee meeting minutes of April 4, 2015.
Action: Motion Carried.
External Audit Communication to the Board—Presented by Plante & Moran
Heather Shawa-DeCook, Chief Financial Officer (CFO) introduced external auditor Doug Rober,
Partner with Plante Moran (P&M) and Marie Stiegel, CPA with P&M, who reviewed and
presented the Auditing Process.
Mr. Rober said this is the beginning of the annual audit process for the various BWL pension
trust funds. Part of that process is to meet and present governance with a projected audit
process summary and have dialogue regarding any concerns.
Marie Stiegel reviewed Management's responsibility in the Audit process as well as 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
Board Chair David Price was indicated as the appropriate contact person for questions or
concerns.
Mr. Rober asked the Board of Commissioners if there were any areas of concern that warrant
attention or additional procedures. There were no responses.
Internal Audit Update
Internal Auditor Phil Perkins, presented an overview of the following information:
Internal Auditor Status Update
• FY 2015 Audit Plan Progress Report
• Proposed FY 2016 Audit Plan
• Other Items
FY 2015 Audit Plan Progress Report
Engagements Completed:
1. Materials Inventory Audit
2. BOC Independent Audit
3. IT— PCI Compliance Audit
4. Health and Prescription Drugs Plan Management Audit
5. Surprise Cash Counts (2)
6. Time Reporting Reviews (2)
Engagements in Progress:
1. Engineering—Annual Projects Audit—fieldwork complete; final report to be issued
in July 2015.
2. Outage Management System Audit—fieldwork about complete; report to be issued
in August.
3. IT—Management of Non-PC Devices Audit—fieldwork about complete; report to be
issued in August or September.
Proposed FY2016 Audit Plan - Background
Basis for plan:
1. Meetings with Executives and Staff to discuss risks and potential audit topics.
2. Risk assessments for each of 100-plus auditable activities at BWL.
3. Consideration of rotational audits, audit areas with risk/scoping assessments, first-
time audits, etc.
4. Identified over 20 potential audits to perform in FY 2016 and beyond.
Proposed FY2016 Audit Plan —Background
Top 10 audits for FY 2016 (as discussed with senior management):
1. Follow-up of Selected CRT/MPSC/BWL Recommended Actions
2. Billing
3. IT— Information Security Policies
4. Training & Development
5. Safety Management
6. IT—Manage Changes
7. Hiring Process
8. Performance Evaluation/Compensation
9. Payroll
10. Facility Security
Proposed FY2016 Audit Plan
Planned Audits Estimated Hours
Follow-up of SelectedCRT/MPSC'BWL Recs. 300
Billing 500
IT—Information Security Policies 300
Training&Development 300
Safety Management 400
IT—Manage Changes 400
Other Engagements
Surprise Cash Counts(2) 40
Time Reporting Reviews(2) 160
Central Maintenance&Fleet Time/Resource 100
Reporting
Other Consulting(NERCICIP Compliance,IRPOrat ion
Plan)
Total Estimated Hours 2.600
_.1 7
Proposed FY2016 Audit Plan, ont'd
Available Resources:
Phil Perkins Director of Internal 1,E00
Audit
C.L.Moore&Associates Augmented IA Services 900
Internal or External IT IT Audit Services 200
Audit Assistance
Total Hours 2.fi00
Motion by Commissioner Bossenbery, Seconded by Zerkle, to forward the Internal Auditor's
Audit Plan to the full board for consideration.
Action: Motion Carried
Internal Auditor, Phil Perkins presented two proposed changes to the Internal Audit Charter: (1)
language changes to emphasize the mandatory nature of complying with the definition of
Internal Auditing, Code of Ethics, and Institute of Internal Auditors' Standards, and (2) addition
of requirements to present to the Board the annual audit plan for approval and other periodic
updates to inform the Board of Internal Audit's efforts on quality assurance, continuous
improvement, and the results of internal and external peer reviews.
Motion by Commissioner Bossenbery, Seconded by Mullen, to forward the Internal Audit
Charter to the full board for consideration.
Motion by Commissioner Bossenbery, Seconded by Commissioner Zerkle, to forward the
Internal Auditor Charter with amendments to clarify the presented plan to the full Board for
consideration. Amended by inserting the text highlighted in yellow:
INTERNAL AUDIT PLAN:
At least annually, the Director of Internal Audit will submit to the General Manager and the
Board, an internal audit plan for review and Board approval. The internal audit plan will be
developed using a risk-based methodology, including input of the General Manager and the
Board. Any significant deviation from the approved internal audit plan will be communicated to
the General Manager and the Board through periodic activity reports.
PERIODIC ASSESSMENT:
The Director of Internal Audit will communicate annually to the General Manager and the
Board on the internal audit activity's quality assurance and improvement program, including
results of ongoing internal assessments and external assessments conducted at least every five
years.
Motion Carried on the amendment by unanimous consent.
The question being the motion to forward the Internal Auditor's Audit Charter as amended to
the full board for consideration.
Action: Motion Carried
Charles L. Moore, CPA of Charles Moore and Associates provided an overview of his firm that
performs augmented internal auditing services for BWL, including his contracted
responsibilities in assisting the BWL Internal Auditor with audit planning and execution.
April and May 2015 Financial Highlights
Heather Shawa-DeCook, Chief Financial Officer (CFO), provided an update to the Committee on
the Board of Water and Light's (BWL) credit rating. The Board of Water & Light's credit rating
since August of 2003 is 'AA-'. This rating is in the top third of S&P investment-grade for public
utilities and is deemed a very solid rating.
Ms. Shawa-DeCook provided the Committee with a brief overview of the BWL's April and May
month-end financials by reporting the following information:
Ms. Shawa-DeCook noted that BWL's April cash flow was slightly over target of 80 million for
cash on hand, and May's financial summary in month-end reported 10 million over target, due
to [BWL's] bi-annual obligation for return on equity payment. Additionally, Ms. Shawa-DeCook
stated that [BWL's] June year-end is expected to be more in line with our target of 80 million.
Moreover, Ms. Shawa-DeCook stated that [BWL's] revenue is still tracking under budget, to wit:
May reported at 15 million, or 4% under budget. However, she stated that the [BWL] did gain a
percent between April and May; in February, the [BWL] had a variance of 7%, the same has
reported at 4% in May. Ms. Shawa-DeCook expressed that she expects June year-end to be
around 4%variance overall. According to Ms. Shawa-DeCook, in lieu of the variance of revenue,
the [BWL] is tracking positive variance from net income, which directly contributes to [BWL's]
0&M budget, which was set to be reduced by 3%. The [BWL] has exceeded that number and is
now tracking at approximately 7% under 0&M budget. Ms. Shawa-DeCook stated that this has
not been an easy task for the management team, and that they all have done a great job at
having full oversight on their budget and managing it. Additionally, Ms. Shawa-DeCook has
stated that this has not been at an expense of safety, storm preparedness and operational
needs. She applauded the management team for doing a great job.
In closing, Ms. Shawa-DeCook stated that we are still finalizing preliminary unaudited June fiscal
year-end statements and have to perform due-diligence and reviews of our estimates, reserves
and accruals. The same unaudited June financials will be provided to the Board at the next
meeting.
Six Year Forecast Overview/Resolution
officer (CFO), reviewed the Six Year Financial Plan,
Heather Shawa-DeCook, Chief Financial O
including the following information:
■ Financial Goals
■ Financial Assumptions
■ Rate of Return
o Annual Net Income by Utility
o Without Forecast Rate Increases
o Annual Net Income by Utility Without Forecast Rate Increases
■ Capital Forecast
■ Capital Budget—Major Projects/Programs
■ Already Completed and Next Steps
Ms. Shawa-DeCook stated that BWL's financial goals, in addition to maintain an AA- credit
rating is to ensure adequate liquidity so that the BWL can meet near-term obligations when
due. According to Ms. Shawa-DeCook, BWL's cash on hand for fiscal year 2016 is forecasted at
135 days, however, Ms. Shawa-DeCook noted that the BWL is keeping an eye on this matter
because the median day's cash for AA- rating is 180 days. Another financial key goal for [BWL] is
to maintain rate competitiveness, and this Six Year Forecast Overview has factored in the 6.18%
rate of return.
Ms. Shawa-DeCook stated that [BWL] projects a modest increase in residential and industrial
sales, and a conservative decline in wholesale sales. As Eckert nears the end of its useful life,
[BWL] projects slight decline in water sale and slight increase in wholesale. With respect to
steam and chilled water, the [BWL] is not assuming any significant growth.
Ms. Shawa-DeCook noted that in terms of operating expenses, 2.3% inflationary rate is
forecasted, including general cost and 5% for employee benefit. Ms. Shawa-DeCook further
noted that in August of 2008, the Board approved a target rate of return of 6.18% and that the
Board's approach was to allow for flexibility to adjust the calculated return upward for large
construction projects and other unusual circumstances. As such, Ms. Shawa-DeCook noted that
the Six Year Forecast is being presented for acceptance based on achieving previously
calculated rate of 6.18% by the end of the 6th year. Additionally, Ms. Shawa-DeCook noted that
it may be best to update the return in conjunction with the IRP process to ensure the calculated
return target considers the direction dictated by the findings of the IRP.
Ms. Shawa-DeCook presented BWL's total budget over the next 6 years as well as high-level
summary of BWL's major projects and programs.
There was a lengthy conversation regarding the proposed contract and resolution. Upon
conclusion of the conversation and the questions and answer session, the following motion was
offered:
Motion by Commissioner Louney, Seconded by Commissioner Mullen, to accept the capital
expenditures forecast for fiscal year 2017 through 2012.
Action: Motion Carried
Credit Card Policy Resolution
Heather Shawa-DeCook, Chief Financial Officer (CFO), stated that per the request of the
Commissioners, Internal Auditor, Phil Perkins' special internal audit findings recommendation
was to have the P-cards, receipts and reconciliation of the three Board-appointed employees,
be reviewed and approved by the Board of Commissioners. Ms. Shawa-De-Cook reiterated the
Resolution with emphasis that the Board-appointed employees shall sign, date and present
their reconciliation report to the Chair of the Finance Committee at the close of each cycle and
thereafter, the Chair of the Finance Committee shall review, sign, date and return the
reconciliation report to the employee.
There was a lengthy conversation regarding the proposed contract and resolution. Upon
conclusion of the conversation and the questions and answer session, the following motion was
offered:
Motion by Commissioner Bossenbery, Seconded by Commissioner Zerkle, to forward the
Resolution for the approval of the Credit card Policy.
Action: Motion Carried
Capital Proiect Exceedance Approval
Heather Shawa-DeCook, Chief Financial Officer (CFO), stated that per the request of the
Commissioners, Internal Auditor, Phil Perkins' special internal audit findings, the
recommendation was that any approved capital project that is expected to exceed its total
budget amount by both 15% and $200,000 must have the exceedance approved by the
Commissioners prior to the completion of the project.
Commissioner Ross suggested amending the Resolution so it says '$200,000 or more.'
Motion by Commissioner Bossenbery, Seconded by Commissioner Zerkle, to move the
resolution with amendment.
Action: Motion Carried
Other
Interim General Manager Peffley thanked Internal Auditor, Phil Perkins for his work. Mr. Peffley
furthermore assured the Commissioners that the technical issues that were experienced during
the meeting regarding the microphones will be rectified, hopefully prior to the next meeting.
Adiourn
On Motion by Commissioner Louney, Seconded by Commissioner Bossenbery, the meeting
adjourned at 9:38 p.m
Respectfully submitted
Dennis M. Louney, Chair
Finance Committee
HUMAN RESOURCES COMMITTEE
July 28, 2015
The Human Resources Committee of the Lansing Board of Water and Light met at the
Head quarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 4:30 p.m.
on Tuesday, July 28 2015.
The Human Resources Ex-Officio Chair, David Price, called the meeting to order and asked the
Corporate Secretary to call the roll. The following members were present: Commissioners
Anthony McCloud, Tony Mullen and David Price. Also present: Commissioners Ken Ross and
Sandra Zerkle. Non-Voting Commissioners Present: Commissioners Mike Froh and Bill Long.
Absent: None.
Public Comments
None.
Approval of Minutes
Motion by Commissioner McCloud, seconded by Commissioner Mullen, to approve the Human
Resources Committee meeting minutes of May 19, 2015.
Action: Motion Carried.
PA 152/Amend Employee Contribution to Medical Benefit Plans/Resolution
Michael Flowers, Executive Director of Human Resources, presented the Commission with the
Public Employer Contributions to Medical Benefits Plan, which included the following
information:
• Public Act 152— Publicly Funded Health Insurance Contribution Act
• Public Act 152, 2011
• Board Resolution #2012-07-01
• Board Resolution #2013-7-02 and Board Resolution #2014-9-03
• Increase Employee Cost Per Pay Period if Hard Cap Requirement of Act is Implemented
• Increase Employee Cost Per Pay Period if 80/20 Cap is Implemented
• Alternatives Utilizing Option 3 to Opt-Out of Act 152, 2011 — Various Premium Sharing
Options
• Affordable Care Act (ACA)
Salary Adiustments for Contract/Appointed Employees
a) Corporate Secretary, Denise Griffin
Motion by Commissioner Mullen, seconded by McCloud to recommend a five percent base
salary increase.
Action: Motion Carried
a) Internal Auditor, Phil Perkins
Motion by Commissioner Price, seconded by Commissioner McCloud to recommend a two
percent base salary increase and two additional vacation days.
Action: Motion Carried
Excused Absence
None.
Public Comments
None.
Adiourn
On Motion by Commissioner Price, seconded by Commissioner McCloud, the meeting
adjourned at 5:00 p.m.
Respectfully Submitted
David Price, Ex-Officio Chair
Human Resources Committee
MANAGER'S RECOMMENDATIONS
RESOLUTION 2015-07-02
APPROVING THE AGREEMENT TO RESOLVE ELECTRIC SERVICE TO MICHIGAN STATE
UNIVERSITY ENTERED INTO BY THE LANSING BOARD OF WATER AND LIGHT AND CONSUMERS
ENERGY COMPANY
WHEREAS, Michigan State University ("MSU") is seeking an outside source of electric
power for its new Facility for Rare Isotope Beams ("FRIB");
WHEREAS, both the Lansing Board of Water and Light ("") and Consumers Energy
Company ("Consumers Energy") assert the right to supply electric power to the FRIB;
WHEREAS, and Consumers Energy have agreed to resolve this dispute by entering into
an Agreement to Resolve Electric Service ("Agreement") under which Consumers Energy will
construct facilities and provide service to the FRIB with the net margin from this service (less a
10% administrative fee charged by Consumers Energy) to be divided equally between the two
utilities for a 20 year period commencing with the initiation of service to the FRIB and further
providing that after the effective date of the Agreement neither utility will assert that it has the
exclusive right to provide electric service to the MSU campus;
WHEREAS, it is the intention of and Consumers Energy to seek approval of the
Agreement from the Michigan Public Service Commission ("MPSC") pursuant to MCL 460.10y
(4) and MCL 460.54; and
WHEREAS, pursuant to MCL 460.10y (4) the Agreement may not become effective
unless approved by the MPSC and the governing body of;
NOW, THEREFORE BE IT RESOLVED that the Board of Water and Light of the City of
Lansing, Michigan hereby approves the Agreement.
Motion by Commissioner McCloud, Seconded by Commissioner Mullen to approve the
resolution for the agreement to resolve electric service to Michigan State University entered
into by the Lansing Board of Water & Light and Consumers Energy Company for the new Facility
for Rare Isotope Beams ("FRIB").
Action: Motion Carried (7-1, Bossenbery dissenting)
RESOLUTION 2015-07-03
FISCAL YEAR 2017-2021 CAPITAL FORECAST
RESOLVED, that the forecast for capital expenditures for the Fiscal Years 2017-2021 is hereby
accepted as presented.
Motion by Commissioner Mullen, Seconded by Commissioner Louney, to approve the FY 2017-
2021 Six Year Capital Forecast.
Action: Motion Carried
RESOLUTION 2015-07-04
CREDIT CARD POLICY
RESOLVED, that Board of Water and Light Policy 7-05 "Credit Card" is hereby amended to add
the following:
RESOLVED, that all Board appointed employees, including the General Manager, Corporate
Secretary, and Internal Auditor shall complete, sign, and date a reconciliation report for their
credit card also referred to as procurement card or P-card, after each cycle.
RESOLVED, that the reconciliation report shall include itemized receipts and a description of the
business purpose of the transaction. Transaction description of meal expenses shall include the
name and organization of the meal guest(s).
RESOLVED, that the Board appointed employee shall sign, date, and present their reconciliation
report to the Chairperson of the Finance Committee after the close of each cycle. The
Chairperson of the Finance Committee shall review, sign, date, and return the reconciliation
report to the employee. The Board appointed employee shall retain the signed reconciliation
report as directed by the Record Retention Policy.
FURTHER RESOLVED, that this policy may not be waived or overridden, except by Board
resolution.
This resolution supersedes resolution 2001-1-3.
Motion by Commissioner Bossenbery, Seconded by Commissioner Mullen to approve the
resolution for the Credit Card Policy.
Action: Motion Carried
RESOLUTION 2015-07-05
CAPITAL PROJECT EXCEEDANCE APPROVAL
RESOLVED, that Board of Water and Light Policy 15-02 "Capital Project Approval" is hereby
amended as follows:
RESOLVED, that Board of Water and Light Policy 15-02 "Capital Project Approval" is renamed
"Capital Project Exceedance Approval"; and
RESOLVED, that any approved capital project that is expected to exceed its total budget amount
by both 15% and $200,000 or more must have the exceedance approved by the Commissioners
prior to completion of the project; and
RESOLVED, the General Manager shall report the expected exceedance to the Commissioners
as soon as reasonably possible; and
RESOLVED, this policy applies to the aggregate total budget amounts for electric, water, steam,
and chilled water "annual" capital projects and to the individual total budget amounts for
"planned" capital projects; and
RESOLVED, the General Manager shall establish and implement procedures overseeing capital
project costs consistent with this policy; and
FURTHER RESOLVED, item 5 under the Board of Commissioners' Responsibility as part of Policy
19-08 "Line Extensions and Service Territory Expansion" shall be removed from this Policy to
eliminate redundant information as contained within Policy 15-02.
This resolution supersedes resolutions 2000-3-2 and 2001-6-16.
Staff Comments: This change to capital project approval is needed to provide clarity regarding
Board approval and reporting requirements for capital budget variances.
Motion by Commissioner McClould, Seconded by Commissioner Ross to approve the resolution
for the Capital Project Exceedance.
Action: Motion Carried (7, 1 Mullen dissenting)
UNFINISHED BUSINESS
There was no Unfinished Business
NEW BUSINESS
ELECTION OF THE EXECUTIVE COMMITTEE
Motion by Commissioner David Price, Seconded by Commissioner Zerkle to elect Tracy Thomas
as the fourth member of the Executive Committee.
Action: Motion Carried.
RESOLUTION/ACTION ITEMS
RESOLUTION 2015-07-01
LANSING BOARD OF WATER AND LIGHT
RESOLUTION HONORING CYNTHIA WARD
WHEREAS, it is indeed a pleasure to extend this expression of our thanks and best wishes to
Cynthia Ward for the time, energy, and talent she contributed as a Commissioner of the
Lansing Board of Water and Light; and
WHEREAS, Cynthia was appointed to the Board of Commissioners in October of 2010, as an
At-Large Commissioner. Cynthia's dedication and commitment allowed her to become an
invaluable and highly respected member of the Board of Commissioners; and
WHEREAS, Cynthia was appointed Chair of the Human Resources Committee for Fiscal
Year 2014 through July 2015 and also served as the Chair of the Nominating Committee for
2015; and
WHEREAS, On behalf of her colleagues, employees of the Lansing Board of Water and
Light and the citizens of Lansing, we offer our sincere gratitude for the knowledge, skills and
abilities she utilized and contributed as a Commissioner of the Lansing Board of Water and
Light.
RESOLVED, That the members of this Board hereby honor and commend Cynthia Ward
for her years of distinguished service in the Regular Board Meeting on this 28th day of July 2015.
We wish Cynthia enormous success in all her future endeavors.
David Price , Chair Margaret Bossenbery, Vice Chair
Dennis M. Louney Anthony McCloud
Tony Mullen Ken Ross
Tracy Thomas Sandra Zerkle
Motion by Commissioner McCloud, Seconded by Commissioner Bossenbery to approve the
resolution of tribute honoring former Commissioner Cynthia Ward.
Action: Motion Carried
RESOLUTION 2015-07-06
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 2015-2016, or, until a successor is
appointed, whichever last occurs with a five percent salary adjustment:
M. Denise Griffin, Corporate Secretary
----------------
Motion by Commissioner McCloud, Seconded by Commissioner Mullen to amend the
resolution to include a five percent salary adjustment and approve the resolution as amended.
Action: Motion Carried
RESOLUTION 2015-07-07
APPOINTMENT OF THE CHARTER POSITION OF INTERNAL AUDITOR
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 2015-2016, or, until a successor is appointed,
whichever last occurs with a two percent salary adjustment and two additional vacation days:
Philip Perkins, Internal Auditor
----------------
Motion by Commissioner Mullen, Seconded by Commissioner McCloud to amend the
resolution to include a two percent salary adjustment and two additional vacations days and
approve the resolution as amended.
Action: Motion Carried
RESOLUTION 2015-07-08
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 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 Director and General Manager for fiscal year 2015-2016, or, until a
successor is appointed, whichever last occurs:
Richard R. Peffley, Interim Director and General Manager
---------------
Motion by Commissioner Mullen, Seconded by Commissioner McCloud to reappoint Richard
Peffley as the Interim Director and General Manager.
Action: Motion Carried
RESOLUTION 2015-07-09
INTERNAL AUDITOR CHARTER APPROVAL
RESOLVED, That the Board of Commissioners hereby approves the Internal Audit Charter,
appended to which conforms to the International Standards for the Professional Practice of
Internal Auditing, promulgated by the Institute of Internal Auditors.
Motion by Commissioner Louney, Seconded by Commissioner Bossenbery to approve the
resolution for the Internal Audit Charter.
Action: Carried Unanimously
RESOLUTION 2015-07-10
INTERNAL AUDIT PLAN FOR FY 2016
RESOLVED, That the Board of Commissioners hereby approves the Internal Audit Plan for FY
2016.
Motion by Commissioner Zerkle, Seconded by Commissioner Bossenbery to adopt the Internal
Audit Plan for FY 16.
Action: Carried Unanimously
RESOLUTION 2015-07-11
SUPPORTING THE BWL A PUBLIC UTILITY
Whereas the Lansing Board of Water and Light has been a publicly owned utility since 1885;
Whereas the vision of the Lansing Board of Water and Light is to partner with our customers,
community, and employees to make Lansing the most attractive community in Michigan in
which to live, raise a family, work, and operate a business;
Whereas the mission of the Lansing Board of Water and Light is to provide safe, reliable, and
affordable utility products and services and to plan for future growth, be responsible
environmental stewards, and be active participants in the Lansing Community's cultural and
economic initiatives;
Whereas the Lansing Board of Water and Light Customers have enjoyed significant savings on
their utility bills in comparison to their neighbors that are served by privately owned utility
companies;
Whereas should the Lansing Board of Water and Light be sold to a private utility company
customers will likely see an increase in their monthly utility bills and;
Whereas the employees of the Lansing Board of Water and Light are among the best and the
most highly skilled utility workers in the nation and a sale of the utility would lead to internal
reorganization and unknown layoffs of employees;
Whereas the Lansing Board of Water and Light plays a significant role in our region's business
development efforts providing guaranteed savings to companies looking to locate or expand in
this area;
Whereas the Lansing Board of Water and Light works to make our community a great place to
live supporting programs like Pennies for Power and Adopt a River and helping to support
helping to sponsor the Chili Cook-Offs, Silver Bells in the City, Common Ground music festival,
and our own home town professional sports franchise the Lansing Lugnuts;
Whereas the Lansing Board of Water and Light employees contribute many hours volunteering
at community events, greatly enhancing the quality of life in the Lansing region; and
Whereas if the Lansing Board of Water and Light were sold to a private company, many of these
community assets and benefits would be lost; and now therefore, be it Resolved that the
commission of the Lansing Board of Water and Light support keeping the a community asset
owned by the City of Lansing.
Motion by Commissioner Bossenbery, Seconded by Commissioner McCloud to approve the
resolution directing the Interim General Manager to Prepare a Business Case for keeping the
Lansing Board of Water& Light a community owned asset owned by the City of Lansing.
Motion to amend the proposed resolution by Commissioner Louney, Seconded by
Commissioner Mullen to Amend the proposed resolution as follows:
"Resolved, that the Commissioners of the Lansing Board of Water & Light (striking out 'directs
the Interim General Manager to prepare a Business Case for keeping the Lansing Board of
Water and Light a community based asset owned by the City of Lansing'), (inserting) 'SUPPORTS
KEEPING THE LANSING BOARD OF WATER AND LIGHT A COMMUNITY ASSET, OWNED BY THE
CITY OF LANSING, AND BE IT FURTHER "RESOLVED THAT THE COMMISSION DIRECTS THE
INTERIM GENERAL MANAGER TO WORK COOPERATIVELY WITH THE LANSING FINANCIAL
HEALTH TEAM TO EXPLORE AND DETERMINE THE VALUE AND COSTS OF PUBLIC POWER TO
THE RATE PAYERS AND CITIZENS OF THE GREATER LANSING AREA."
Action: Motion Defeated (2 Louney, Mullen, 6 dissenting)
Motion to amend the resolution by Commissioner Bossenbery, Seconded by Commissioner
Ross to support the resolution with the first Resolved clause ending at:
"SUPPORT KEEPING THE BOARD OF WATER AND LIGHT A COMMUNITY ASSET OWNED BY
THE CITY OF LANSING" and striking the last Resolved paragraph and changing the title of
resolution to state, "RESOLUTION SUPPORTING THE A PUBLIC UTILITY".
Action: Motion Carried (6, 2 Louney, Mullen dissenting)
RESOLUTION 2015-07-12
Amend Employee Contribution to Medical Benefit Plans
WHEREAS, Governor Rick Snyder, on September 27, 2011, signed legislation known as the
"Public Funded Health Insurance Contribution Act", Public Act 152 of 2011 limiting 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 years beginning
January 1, 2012, such that a public employer may not pay more than the statutory caps for
medical benefit plans, 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;
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, the Board of Commissioners met on July 24th 2012 and passed a resolution (#2012-
07-01) to exempt itself from the requirements of Public Act 152 of 2011 and implemented a
10% premium sharing, and;
WHEREAS, the Board of Commissioners met on July 23rd 2013 and passed a resolution (#2013-
07-02) to exempt itself from the requirements of Public Act 152 of 2011 and implemented a
12% premium sharing, and;
WHEREAS, the Board of Commissioners met on September 2014 and passed a resolution
(#2014-09-03) to exempt itself from the requirements of Public Act 152 of 2011 and kept the
12% premium sharing, 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, 2015 through
December 31, 2015.
FURTHER RESOLVE that the Board desires to continue the 12% premium sharing for all active
employees for medical benefits effective September 1, 2015.
Motion by Commissioner Mullen, Seconded by Commissioner McCloud to approve the
resolution for the 12% premium sharing for employees.
Action: Carried Unanimously
--------------------
MANAGER'S REMARKS
Interim General Manager Peffley, spoke about the success of employee appreciation night that
was held July 23'd at Cooley Law School (Lugnuts) Stadium and thanked everyone for attending.
COMMISSIONERS' REMARKS
Chair Price announced that committee assignment would be forthcoming.
Commissioner Bossenbery declared her resignation from the Board of Commissioners.
Chair Price stated his respect for BWL resigning Commissioner Bossenbery.
Commissioner Nelson stated the following: I want to thank the Chair for the concerns of the
three non-noting members regarding the now stricken, second 'resolve' clause because, initially
it was written to say that it would affect the rate payers of the citizens of Lansing. That was
amended to include the citizens of Greater Lansing Area. This would have a significant impact
on all communities within the service territory, and we thank you for that now, stricken
amendment."
Commissioner Zerkle stated that she respects Commissioner Bossenbery's decision to resign;
she also respects her honesty and integrity.
Commissioner Thomas thanked Cynthia Ward for her presidential like service to the Board. He
also congratulated Vice-Chair Louney and Chair Price on their leadership roles. Commissioner
Thomas also gave Interim General Manager Peffley accolades on his State of the BWL Address.
Commissioner Louney thanked both Commissioner Ward and Commissioner Bossenbery for
their service to the BWL Commission.
Commissioner Ross requested a briefing of the status of the Strategic Plan and the Integrated
Resource Process (IRP).
Interim General Peffley stated that an RFP has been issued to hire a firm to assist direction and
to set a plan and once that has been accomplished, that information will be brought before the
Commission. The chosen company will be charged with helping the BWL answer the questions
that the Sierra Club has submitted. This process will be receptive to what the ratepayers,
owners and regional partners have to say.
Commissioner Louney stated that the Commission definitely plans to engage the public in the
IRP process, not just in commenting but being a part of the planning process.
PUBLIC COMMENTS
Councilmember Jessica Yorko thanked the Board of Commissioners and the Executive Staff for
the IRP process. She stated that it is very important to engage the community as the BWL
moves into the phase of what will replace the generation at the Eckert station. Councilmember
Yorko presented the Commission with information on community engagements in similar IRP
planning processes around the state, specifically the P-21 decision in Holland.
Brad Van Guilder, Sierra Club Organizing Representative, spoke to the Commission regarding
the retirement of the Eckert power plant. Mr. Van Guilder also expressed the importance of the
Commission engaging the public with the IRP process.
ADJOURNMENT
On motion by Commissioner Mullen, Seconded by Commissioner McCloud the meeting
adjourned at 7:02 p.m.
M. Denise Griffin, Corporate Secretary
Preliminary Minutes filed(electronically)with Lansing City Clerk:August 10,2015
Official Minutes filed(electronically)with Lansing City Clerk:September 24,2015
Approved by the Board of Commissioners on 7.28-75
RECEIVED
2 ,ivi J 1 G MgJUTES OF THE BOARD OF COMMISSIONERS' MEETING
0L E „<<t LANSING BOARD OF WATER AND LIGHT
May 26, 2015
The Board of Commissioners met at the BWL Headquarters-REO Town Depot located at 1201
S. Washington Ave., Lansing, MI, at 5:30 p.m. on Tuesday, May 26, 2015.
Chairperson David Price called the meeting to order at 5:30 p.m.
Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony
Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle.
Absent: None
The Corporate Secretary declared a quorum present.
Commissioner Cynthia Ward led the Pledge of Allegiance.
APPROVAL OF MINUTES
Motion by Commissioner McCloud, seconded by Commissioner Ward to approve the Special
Board Meeting minutes of February 17, 2015.
Action: Motion Carried
Motion by Commissioner Mullen, seconded by Commissioner McCloud to approve the
Regular Board Meeting minutes of March 31, 2015.
Action: Motion Carried
Motion by Commissioner Ward, seconded by Commissioner McCloud to approve the Special
Board Meeting minutes of May 19, 2015.
Action: Motion Carried
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.
------------------
None
COMMUNICATIONS
None
Regular Board Mtg.
May 26,2015
Page 2 of 26
COMMITTEE REPORTS
COMMITTEE OF THE WHOLE
April 14, 2015
The Committee of the Whole of the Lansing Board of Water and Light met at the BWL
Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 6:00 p.m.
on Tuesday, April 14, 2015.
Committee of the Whole Chair Margaret Bossenbery called the meeting to order and asked
the Corporate Secretary to call the roll.
Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Anthony McCloud, Tony
Mullen, David Price,Tracy Thomas, Cynthia Ward and Sandra Zerkle.
Absent: None
Public Comments
None
Regional Customer Input
None
Approval of Minutes
Motion by Commissioner Price, Seconded by Commissioner McCloud to approve the
Committee of the Whole meeting minutes of March 10, 2015.
Action: Motion Carried
FRIB Update
George Stojic, Executive Director of Strategic Planning and Development, provided the
Committee with a brief history on the Facility for Rare Isotope Beams (FRIB), a nuclear
accelerator that is being built on the campus of MSU in E. Lansing, MI. On three occasions,
the Board of Water & Light submitted requested bids to service the FRIB area. After the third
solicitation, MSU decided not to accept any bids, however since then the BWL has been
negotiating with Consumers Energy to have a 50/50 FRIB net revenue split. Mr. Stojic stated
that the BWL currently does not have an agreement for the split, but does have framework
for a proposal for service to the FRIB.
CRT Update
George Stojic, Executive Director of Strategic Planning and Development, stated that the
Administration is currently reviewing the Community Review Team's Report (CRT) and is
conducting a quality assurance check to identify tasks that have and have not been
completed.
Interim General Manager Peffley stated that a report was sent to the Commissioners
providing an update on the Outage Management System (OMS), and that a more detailed
report would be provided at the May Committee of the Whole meeting, which will indicate
what tasks have been addressed and completed, as well as a list of tasks that need to be
completed. This report will make it easy for the Commissioners to see exactly what changes
have been incorporated.
Regular Board Mtg.
May 26,2015
Page 3 of 26
Committee of the Whole Chair Bossenbery stated that the Committee should review the
suggested recommendations from the CRT Report for,the Board of Commissioners.
PA95 Update
CFO Heather Shawa-DeCook provided an update on Public Act 95 (PA95), which is an Act that
creates a low-income energy assistance fund. The Board of Water& Light has the option to
opt into or out of the fund on an annual basis. CFO Shawa-Decook stated that the BWL's staff
is recommending exempting out of this Act for the upcoming period. Ms. Shawa-DeCook
stated that the BWL currently has several projects that are in progress and it may not be cost
effective to implement this Act in the middle of changing and implementing a new billing
system.
CFO Shawa-Decook stated that the BWL is reconciling and reviewing the funds currently paid
to the Department of Human Services (DHS) and St. Vincent via Capital Area Community
Services (CACS) and comparing data from previous year's to better understand the impact of
opting out versus not opting out.
The Board of Commissioners and Executive Staff participated in a lengthy conversation
regarding PA95 and agencies that the BWL donates to, how the money is distributed and if it
is beneficial for the BWL to participate in the Act. That conversation included comments from
Robert Nelson of E. Lansing who provided information regarding the Act and grants that were
issued during the last cycle. He informed the Board that the Public Service Commissioner
(PSC) may no longer be handling this account because of a new Energy Agency being created
by the Governor. Mr. Nelson reiterated to the Board that if they do not opt in, that a shut off
policy is mandatory. He stated he believes the best thing to do is to look to next year for
applying and to prepare for the 2016 cycle.
Board Chair Price stated as part of the analysis, it should be taken in to consideration that if
there is no grant and we are not being reimbursed for the no shut offs, that considered with
what it would cost us to opt in, obviously, if those numbers are fairly equal then it makes
sense to opt in. If there is a large gap and it costs significantly more to opt in, then the Board
has to make other decisions.
Electric Transmission and Generator Plan
Interim General Manager Peffley presented and reviewed the following Electric Transmission
and Generation Plans PowerPoint presentation,which included:
• Historic Perspective -Role of the Eckert Generating Station,•Reliability Standards
• Recommended Changes to the BWL System •Implementations Issues
Historic Perspective
• Beginning in the 1920's, the BWL Electric System was primarily built around and
supported by the Ottawa and Eckert Power Plants
• In the 1950s through the mid 1970s more generation was added to Eckert, in
1973 Erickson was completed and in the late 1970's the 138 kV transmission
system was constructed
• Since the 1970's, one interconnection has been added to the ITC system, the
BWL contracted for power and transmission from the Belle River power plant
and the REO Town plant was placed in service
Regular Board Mtg.
May 26,2015
Page 4 of 26
• The majority of our electric assets have been in operation for more than 45
years, some for up to 60 years
• Major portions of the BWL's service territory are still supported by the Eckert
generating plant
Issues Driving Development of Transmission Plan
• Eventual retirement of Eckert plant
— Air/Water regulations
— Mandatory federal electric reliability standards
— Age and condition of facilities
• Eckert generation is needed to support electric reliability for a major portion of
the BWL's load
• Eckert cannot be removed from service without additional generation or
transmission infrastructure
• Since a major, new generation plant cannot be built where Eckert now stands,
transmission needs to be constructed to meet electric reliability requirements
Role of the Eckert Generating Station
Eckert is a Major Generating Station
• Eckert has been the site of a power plant since the early 1920's
— Until recently, it was capable of producing 420 Mw's of electric generating
capacity
— It is currently capable of producing 290 Mw's
— Because of its strategic location, Eckert is very important to maintaining and
meeting electric reliability standards
— As the plant ages, operations and maintenance costs have been increasing
while generation reliability has been decreasing
— Compliance with stricter air and water regulations will add to the cost of
maintaining Eckert:
• Pending greenhouse gas regulations may limit the amount of CO2
emitted by BWL facilities
• The recently released Mercury and Air Toxics rule will result in Eckert
units 1 and 3 being retired March, 2016
• Additional regulations are pending or will be implemented within the
next 10 years
Eckert is the Site of Major Transmission and Distribution Facilities
— The Eckert electric distribution plant feeds 68 circuits and nearly 0 of the BWL's peak
load including critical parts of the BWL's service territory
— Without electric generation at Eckert, electric service to downtown Lansing is one
contingency from failure
— Distribution circuits originating at Eckert are in need of replacement
• Circuits feeding downtown are located in duct banks that are failing
• Transmission and distribution facilities at Eckert are located in the 100 year flood
plain
Reliabilitv Standards
Regular Board Mtg.
May 26,2015
Page 5 of 26
NERC Contingency Planning Requirements
• System planning requirements (N-1-1 Criteria) —The system must be designed to be
able to sustain its operation when two elements (e.g. transmission line, breaker, bus,
generator) are simultaneously out of service; commonly called the N-1-1 criteria.
• Operations (N-1) - Preparing System for the next contingency
— The T&D Supervisor is to operate (in real-time) the system such that if a
contingency were to occur, the system would continue to deliver power to the
remaining load centers; commonly called the N-1 criteria. If no options are
available, the T&D Supervisor is authorized to shed load (i.e. cut service to
some customers) until the contingency is relieved.
— Without the Eckert generating plant,the BWL cannot meet these NERC
contingency requirements with its current transmission configuration and it
would violate these standards.
• This would jeopardize reliability to the BWL's system
• It would also expose the BWL to substantial fines or other penalties
BWL Electric System
BWL Electric System
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Recommended changes to BWL System
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Transmission Plan Investments
• Construct new transmission lines
• Construct or rebuild six substations
• Reduce number of circuits and the amount of customer demand at the Eckert
distribution facility
0 Add capacitor banks at Erickson and Northeast substations
Regular Board Mtg.
May 26,2015
Page 6 of 26
BWL Electric Transmission Plan
BWL Electric Transmission Plan
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Summary of Issues
• Aging Infrastructure
— Failing duct lines under railroad
— Facilities at Eckert are over 50 yrs. old
— Regulation Compliance
— EPA Clean Air Act (Unit retirements)
— NERC reliability compliance requirements (Design T&D system for
contingencies)
— Diversify substations serving downtown and GM-LGR. (Eckert substation serves
30%of BWL customers)
• Limited capability of cables to serve new customers and no room in duct banks for
new cables
• Removal of infrastructure from the flood plain exposure (Eckert facility is in the 100
yr.flood zone)
Implementation Issues
Work load Issues
— Unprecedented level of work for the next 7 to 10 years
— Challenge to human resources, for existing work load and managing
consultants and contractors
— Prepare and train technical resources to replace retiring employees
— Coordination of work while maintaining system reliability
Other Significant Issues
— Ability to get the property
— Availability and timeliness of equipment/ contractors Funding
— 4.160 voltage level customers' ability to be moved to 13.2 kV
— Modify transmission service to increase import capability
Proiect Conceptual Costs
Project Conceptual Costs :Capital Budget
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Regular Board Mtg.
May 26,2015
Page 7 of 26
Generation Plan
• Eckert supplies both electric energy and capacity to meet BWL's requirements
• Additional generation will be needed when Eckert is removed from service
• The BWL can acquire the electric energy and capacity from a number of sources
— Construct additional generation
— Acquire more renewable energy
— Implement demand-side measures
— Invest in smart grid options
— Rely on market purchases
• The BWL is beginning an IRP process that will involve the community on the best
way to acquire additional electric energy and capacity
Following the PowerPoint presentation Interim General Manager Peffley concluded by stating
more information will be brought forward regarding the transmission regulations but wanted
to make sure that the Board understood that the transmission matters as stated in the
PowerPoint are necessary and mandated. Mr. Peffley stated as Eckert nears the end of its life,
the reliability of the three units that are left 4, 5, and 6 is basically down in the 75% range,
which means 25% of the time, the plant is down. Mr. Peffley stated that money is being put
into the plant now, and is trying to balance with how much to spend keeping in mind the
plant will be shut down in the future.
Construction Plans for Dais
There was a lengthy discussion amongst Commissioners regarding the cost of extending the
dais and other accommodations for the incoming Advisory Board members. Upon conclusion
of the discussion, the following motion was offered.
Motion by Commissioner Price, Seconded by Commissioner Zerkle, to bring the seating
accommodations subject back to the May Regular Board meeting for consideration.
Action: Motion Carried (6/2 Mullen, Ward dissenting)
Upcoming APPA Conference
Committee of the Whole Chair Bossenbery spoke about the upcoming American Public Power
Association (APPA) National Conference that is taking place in June. Ms. Bossenbery stated
that she finds the conference to be very beneficial and a good opportunity for Commissioners
to learn about best practices in the utility industry. She encouraged anyone who is interested
in attending this year to contact Corporate Secretary as soon as possible.
Public Comment
None
Other
Commissioner Cynthia Ward, Human Resources Chair, stated that at the last Human
Resources (HR) Committee meeting she had suggested that the HR Committee get a Gmail
account specifically for the HR Committee and as part of that discussion, Commissioner
Mullen asked the HR Committee to also consider individual email addresses for the
Commissioners. Ms. Ward stated that she believes that matters warrants some discussion
Regular Board Mtg.
May 26,2015
Page 8 of 26
and should be agenda item for the Committee of the Whole or the Executive Committee. Ms.
Ward stated concerns regarding the responsibilities of multiple email accounts.
After some discussion regarding email addresses for the Commissioners, Chair Price
suggested that the matter be addressed at a future Committee of the Whole meeting.
Commissioner Dennis M. Louney said after meeting with the new Advisory Commissioners, it
was suggested that some sort of check list of ideas, suggestions, task or assignments that are
discussed at meetings be created and put together in one document versus reviewing
minutes to see what has been requested or suggested. Mr. Louney said this check list would
also make it easier for Commissioner to see if task has been addressed and followed through
on.
Board Chair Price suggested a tracking system, something below the level of a Resolution that
would be presented to the Board. After some discussion regarding this matter it was
determined that Ms. Griffin would create a tracking system/action Items document.
Closed Session discussion(Attorney-Client Memo)(MCL 15.268(h);MCL 15.243 (g
Committee of the Whole Chair Bossenbery stated that attorneys have provided the Board of
Commissioners with an Attorney Client Privilege memorandum and it is appropriate to
discuss the contents of that memorandum in closed session.
Motion by Commissioner Price, Seconded by Commissioner Ward to go into close session for
the purpose of consulting with Legal Counsel on the contents of the attorney-client privileged
memorandum as permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL
15.243(g).
Roll Call Vote:
Yeas: Commissioners Bossenbery, Louney, McCloud, Mullen, Price, Thomas, Ward and Zerkle
Nays: None
The Committee of the Whole went into closed session at 7:07 p.m.
On Motion by Committee Price, Seconded by Commissioner Mullen and supported by all
Commissioners, the Committee of the Whole returned to Open Session at 8:08 p.m.
Excused Absence
None
Adjourn
On Motion by Commissioner McCloud, Seconded by Commissioner Louney, the meeting
adjourned at 8:09 p.m.
Respectfully Submitted
Margaret Bossenbery, Chair
Committee of the Whole
COMMITTEE OF THE WHOLE
May 12, 2015
Regular Board Mtg.
May 26,2015
Page 9 of 26
The Committee of the Whole of the Lansing Board of Water and Light met at the BWL
Head quarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 6:00 p.m.
on Tuesday, May 12, 2015.
Committee of the Whole Chair Margaret Bossenbery called the meeting to order and asked
the Corporate Secretary to call the roll.
Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Anthony McCloud, Tony
Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle.
Absent: None
Public Comments
None
Regional Customer Input
Bob Nelson of East Lansing spoke about the possibility of including in the future Rules and
Regulations a credit for outages like the Public Service Commission offers. Also, this credit
suggestion was recommended by the Public Service Commission last year as part of their
review.
After a brief conversation regarding outage credit, it was determined that this matter would
be brought back to a Committee for further conversations.
Approval of Minutes
Motion by Commissioner Price, Seconded by Commissioner McCloud to approve the
Committee of the Whole meeting minutes of April 14, 2015.
Action: Motion Carried
CRT Update
George Stojic, Executive Director of Strategic Planning and Development, provided a
Community Review Team (CRT) update. Mr. Stojic stated that there were about 187
recommendations all together from the CRT, the Public Service Commission (PSC) and the
Board of Water and Light's own recommendations, and of the recommendations, 173 of
those were assigned to the BWL staff and of those there are 16 remaining. Most of the
remaining
recommendations are scheduled for completion by mid-June. Mr. Stojic stated that he has
undertaken a quality assurance program that will review what recommendations and
implementations have been completed and are working. This program is simply to confirm
the completion of those items that the Administration said were complete.
After some discussion regarding the completion of the recommendations from the CRT and
PSC it was suggested that a matrix be availed to the public and that it be presented to the
City Council and the PSC, to show a finalization, or a summary of the tasks that have been
implemented and completed. This matrix would also be recognition of the efforts of the
BWL's Management.
RpviPw of the CRT's Recommendations the Board of Commissioners
Regular Board Mtg.
May 26,2015
Page 10 of 26
There was discussion regarding CRT's recommendation#71 which states "Recommend to the
City a "Best Practice" for recruiting new board members. Not only those that may represent
certain areas that they serve, but recruit to needs of expertise, including, as examples only, an
engineering background, business background or security background". Board Chair Price
stated that it makes sense to have this conversation with the Mayor's office, because those
appointments begin in the Mayor's office. Commissioner Ward stated that she felt the Board
should represent the diversity of the City of Lansing as far as background and socioeconomic
status.
The Board had a lengthy discussion regarding the CRT recommendations. Committee of the
Whole Chair Bossenbery, suggested that maybe the Board's Internal Auditor could share his
thoughts from the research that he did regarding an Operational Auditor with the City
Council and the Mayor's Office, to give them a variety of options and maybe suggest where
and how they could conduct the audit that the Council recently approved. Committee of the
Whole Chair Bossenbery stated that Recommendation #71 would be marked as pending.
Rules and Regulations
Nick Burwell, Director of Customer Projects, Planning & Development reviewed the 2016
Fiscal Year Rules and Regulations.
RULES AND REGULATIONS UPDATE
For Fiscal Year 2016
Electric Water Steam and Chilled Water
• Revision of Rule 2, General Provisions, General Provisions
o Address change to current location at Haco Drive
• Revision of RuleS.2, Dispute and Hearing Procedure, Hearings
o Address change to current corporate location at S. Washington Ave.
• Revision of Rule 10.2 (Chilled Water &Steam) & 11.2 (Electric & Water), Services,
Application for
Service
o Address change to current location at Haco Drive
• Revision of Rule 12 (Chilled Water &Steam) & 15 (Electric &Water),
Schedule of Fees & Charges
Electric
• Revision of Rule 7.1, Responsibility for Payment of Bills, General
o Date change to coincide with PA95 dates
• Revision of Rule 11.3, Services, Temporary Service
o Temp service can be included in construction costs
• Revision of Rule 11.7, Services, Commercial and Industrial Underground Services
o Clarify who provides terminal lugs for underground service
• Revision of Rule 13.2, Use of Board Equipment,Authorized Attachments
o Pole attachment process to be outlined in new 3rd party joint use permit
policy
Water
Regular Board Mtg.
May 26,2015
Page 11 of 26
• Revision of Rule 5.5, Metering, Meter Calibration Request
o Clarification of existing rule
Steam
• Revision to Rule 5.2, Metering, Sizing/Installation/Ownership
o Deleted and master trap to eliminate conflict with previous sentence
o Addition of language allows BWL to continue to provide accurate steam
metering
Chilled Water
• Revision of Rule 3.2, Service Conditions, Description of Service
o Service parameters are variable, depending on location and loads. Each
new service must be engineered individually, and the existing rule restricts
the BWL's ability to do so.
Motion by Commissioner Price, seconded by Commissioner Ward to present a resolution for
the acceptance of the proposed changes to the FY 2016 Rules and Regulations to full Board
for consideration.
Action: Motion Carried
Energy Optimization and Renewable Energy Annual Update
Aileen Gow, Senior Analyst of Energy Optimization program, presented the Committee of the
Whole with an Energy Optimization and Renewable Energy Update. Ms. Gow stated that the
State of Michigan Public Service Commission (MPSC) under PA 295 requires the Board of
Water & Light to provide the Governing Board an annual update on their Renewable Energy
Plans. PA 295 also requires the Board of Water & Light to report to customers annually.
Ms. Gow presented the following PowerPoint presentation: Energy Optimization Program for
2014.
Energy Optimization 2014 Programs Program Highlights
❑ Services for Low Income Customers ❑ Education in the Community
❑ Residential Programs Attended 26 local events with 3,391 attendees
■ High Efficiency Lighting Did 20 presentations to community groups
■ Appliance Turn-in & Recycling with 500 customers
■ Multi-Family Services Conducted 1 Solar Array tour for an LCC class
■ Energy Star Products/Equipment of 20 students
❑ Business Prescriptive &Custom Incentives ❑ Pilot Programs
❑ Energy Education Services ■ Think! Energy (school program with
❑ Pilot programs Consumers Energy)
■ Michigan Saves Low Interest Financing
o Partnership with Consumers Energy and
Michigan Saves
o Residential-2.99%for$1,000-$30,000 loans
for up to 10 years
o Business—2.99%for$2000-$250,000 for 2-5
years
Regular Board Mtg.
May 26, 2015
Page 12 of 26
Ms. Gow stated that the Million Kilowatt Hour Club is businesses who exceed in savings as a
result of participating in the BWL efficiency programs.
Million Kilowatt Hour Club
Peckham Vocational Ind. 1,206,316
Demmer Properties LLC 1,007,592
State of Michigan DMB 2,787,976
General Motors 7,171,042
Quality Dairy 1,387,195
Lansing School District 2,243,169
Ashley/Ryder 4,011,057
George Stojic, Executive Director of Strategic Planning and Development reviewed the Energy
Optimization Summary, Renewable Energy 2014, Results 2014 Updates and the Current
Renewable Energy Portfolio as well as other options that the BWL is continuing to evaluate.
Energy Optimization Summary
Renewable Energy 2014 Results
> We are on track to meet the RP55tandards
2014 Gaak—� 2014 Actual
> RPS standards(based on percent of retail sales)are: 13,m Fira Brosa Firrt
Program Ptxtidro Program Program
• 2012 2% Y—'kWh Budge[ Yaar kLYh B�dgu
Savings Savings
• 2013 3.3%
• 2014 5.0"yo LmvincomeS—i as 1,015,814 5280,69a 802,794 $187,713
• 2015 10% Residential Prcg— 4,972,787 51,392,689 7,055,62S 5959,936
:Th a BWL has ab out 5.2%o n an annua I bas is as of Decem b er 2014 a.sinzssservfcrs 12,022,697 52,48350B 15,235,950 $1,930,250
i Th a BWL I s in comp)is nce with both re newabl e e nergy generation T..]Progr—Prtf k 1s,o11;9a 5qu7,o9s z3,csa,3 $3,077,899
and itsinventoryofRECS sc1 5255,795
Program Adminirtmtion 525 i,
> Due to the abilityto carry-forward renewable energy creditsthe
BWL will not need any additional renewable energy until 2020for
EaluadmlEtdaV} 530fi,019 9203,800
compliance withPA295 ANNIIALTOTALS 18,011,298 5d,680,615 23,09.1,369 53,s37,M
2014 Updates
• Began commercial operation of solar at REO in June
• Added 104 kWh to the Cedar Street array in July Current Renewable Energy Portfolio
• Started receiving wind energy from the 8 turbines in >Purchase Energy and RECS
Gratiot County in December •Granger landfill gas
•Tower Kleber Hydro
• Issued and awarded RFPfor up to 20 MW of solar .Wind from Exelon Wind in Gratiot County
• Started development of a community solar project >BWL Owned
• Launched an incentive program for customers who •solar
install solar at their home or business •Hydro
• Reduced RE surcharges for all customer classes
Continue to evaluate RE options
i wind
Exploring additional wind resources
>Biomass
continue to look for biomass products that can
be co-fired vvith coal in our existing generating
plants or as stand-alone projects
y Renewable energy will be included in IRP
Haco Update
Regular Board Mtg.
May 26,2015
Page 13 of 26
Interim General Manager Peffley provided a brief update on the newly renovated Haco
Facility. Mr. Peffley stated that this is update is a wrap-up of Haco. He said the facility
opened on time, and was slightly under budget. The 120 plus employees that moved over to
the facility are settling in. Mr. Peffley stated the big success is the customer service center,
which was tested on the busiest day of the week, a Friday and the first of the month and all
went well.
Table Top Exercise Update
Trent Adkins, Director, Emergency Management, Risk Management and Safety, presented an
update on the Table Top Exercise that was held on April 30th. Mr. Atkins stated that this was
the third time an Exercise has been presented at the BWL. Mr. Atkins stated that the 54
participants were broken up into tables, representing different areas of the Board's
organization that would be functioning during an emergency or during a disaster of some
type. The exercise itself was about 2 hours long and consisted of a simulated tornado that
came through the City of Lansing's 496 corridor. The participants walked through the
simulations and thought about continuity of operations. He stated this Table Top Exercise
was well received.
Board Chair Price and Commissioner Zerkel stated how impressive and effective the Table
Top Exercise was.
Crisis Communication Plan Update
Steve Serkaian, Executive Director of Public Affairs, provided the Committee with an updated
Crisis Communications Plan. Mr. Serkaian said this update is to reflect the new
reorganization plan implemented by Interim General Manager Peffley. Mr. Serkaian read the
following from the document's preamble page, "The purpose of a crisis communications plan
is to ensure a constant and consistent line of reliable information from the LBWL to its
customers. This includes instances of crises and non-crises events. This document will
continue to evolve and grow and is meant to be updated and improved as team members of
the BWL evaluate its effectiveness." Mr. Serkainan stated, this is a living, breathing document
that will continue to evolve. He said this document included the expansion of the Nixel
emergency communications contract. This expansion is important because the Nixel
emergency communications contract will provide the ability to communicate with all
customers in a crisis via email, text, social media, and phone.
Commissioner Email Account
Commissioner Cynthia Ward stated during the last HR Committee meeting she suggested that
the there be a designated Gmail account to facilitate the newly developed employee
evaluation process, and at that time Commissioner Mullen stated that he would like to see
the commissioners have an BWL personal email account. Commissioner Ward stated that she
felt that suggestion or idea warranted a discussion for the Committee of the Whole.
Commissioner Mullen stated his support for the establishment of personal email accounts for
the Board of Commissioners. He said that he believes it would much easier way for
customers to contact the Commissioners directly. Commissioner Mullen said having a
personal email account during the ice storm would have been very helpful.
Regular Board Mtg.
May 26, 2015
Page 14 of 26
There was a lengthy discussion stating concerns about the Commissioners having a personal
email accounts at the BWL. In conclusion, it was stated that the Board of Water & Light has
things that are in place now that were not in place prior to the ice storm that may suffice
regarding this email proposal.
There was some questions regarding the Commissioners email page site and it was suggested
that Corporate Secretary Griffin and the IT Department review the site and maybe make
some improvement or changes to the area.
Public Comment
Rosemary Sullivan, no address give, expressed her appreciation for the Board of Water &
Light Board of Commissioners professionalism.
Other
Bill Long of Delta Township commended the staff and the Board of Commissioners on their
efforts in regards to the CRT Report.
Chair Price stated that he would like to invite the members of the CRT to have a conversation
regarding the Report and the implementations and changes that have taken place since the
ice storm.
Excused Absence
None
Adjourn
On Motion by Commissioner Price, Seconded by Commissioner McCloud, the meeting
adjourned at 7:07 p.m.
Respectfully Submitted
Margaret Bossenbery, Chair
Committee of the Whole
FINANCE COMMITTEE
APRIL 14, 2015
The Finance Committee of the Board of Water and Light met at the BWL Headquarters — REO
Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m. on Tuesday, April
14, 2015.
Finance Committee Chairperson Dennis M. Louney called the meeting to order and asked the
Corporate Secretary to call the roll.
Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Tony Mullen and Sandra
Zerkle. Also, present Commissioners McCloud, Thomas, Price and Ward.
Absent: None
Regular Board Mtg.
May 26,2015
Page 15 of 26
The Corporate Secretary declared a quorum.
Public Comments
There was no Public Comment
Approval of Minutes
Motion by Commissioner Mullen, Seconded by Commissioner Bossenbery to approve the
Finance Committee meeting minutes of March 10, 2015 with a motion correction to include
the seconded motion on page #4 of the minutes.
Action: Motion Carried
February 2015 Financial Highlights
Chief Financial Officer (CFO) Heather Shawa-DeCook provided the Committee with a brief
overview of the BWL's February financials based on current or year to date information. CFO
Heather Shawa-DeCook reported the following information:
• Cash balance days on hands, at the end of February is under our target, however as of
April 10th, we are above target.
• Revenue year to date is 6% under budget; however, that is a 1% improvement over
January.
• Net Income and Return on Assets year to date, is exceeding the budget even with
revenues being under.
FY15 Update Year End Proiections
CFO Heather Shawa-DeCook provided highlights from the recent review of the BWL's Fiscal
Year End Projections. The highlighted information reported included:
• Cash balance days on hands is projected to be under target by the end of the fiscal
year primarily due to Quarter 4 being heavy with annual projects and capital projects
cash outflow.
• Revenue is projected at year end to be at a 5% shortfall from the original budget and
as a result, the revenue is projected to be $350 million versus an original revenue
budget projection of$369 million.
• Net Income Return on Assets is looking to exceed the initial budget and are projected
currently at a $4.8 million net income versus an initial budget net income of $2.5
million. These numbers are based on key assumptions of 8 months of actual revenue
and expenses and the remaining 4 months, factoring in a 3% reduction to the
revenues that were budgeted originally and then the reductions that were put in
place 2"d quarter from across the board from a management stance.
There was discussion regarding the goal set of a 6.18% return on assets and if it was
reasonable. Commissioner Ward questioned if this subject could be revisited. After a
conversation regarding the set return rate, Finance Committee Chair Louney stated that the
Finance Committee could bring this issue up for discussion at a future Finance Committee
meeting and take a comprehensive look and review the policy to explore and examine a
better proposal to see what percentage amount the Board could establish and actually
achieve.
Regular Board Mtg.
May 26,2015
Page 16 of 26
IPS Amendment Resolution
Chief Financial Officer (CFO) Heather Shawa-DeCook presented the Committee with a
proposed Resolution for the Investment Policy Statement for Operating Funds (IPS). Ms.
Shawa-DeCook stated that this Resolution is being proposed due to organizational and title
changes as well as to reflect updated industry practices.
Motion by Commissioner Mullen, Seconded by Commissioner Zerkle to forward the proposed
Resolution to the full Board for consideration.
Action: Motion Carried
Other
Commissioner Mullen spoke about the staffing needs of the Board's appointed employees.
He stated that he has had discussions with various people as to how to accomplish fulfilling
the appointed employee's needs under the City of Lansing Charter confines. Commissioner
Mullen stated that this can be accomplished by authorizing money specifically in the
Corporate Secretary's and Internal Auditor's budget and they can hire the help they need, as
they know best what is needed. This need can be accomplished and implemented through
the budget process and the Board can vote, as to whether or not to accept this action when
voting on the budget. Board Chair Price stated that, as part of this dialogue there needs to be
discussion as to whether or not there is internal capacity that is currently underutilized within
the BWL that can be inserted to assist the employees, as an option.
Adiourn
On Motion by Commissioner Mullen, seconded by Commissioner Zerkle, the meeting
adjourned at 5:49 p.m.
Respectfully submitted
Dennis M. Louney, Chair
Finance Committee
FINANCE COMMITTEE
May 12, 2015
The Finance Committee of the Board of Water and Light met at the BWL Headquarters — REO
Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 7:08 p.m. on Tuesday, May
12, 2015.
Finance Committee Chairperson Dennis M. Louney called the meeting to order and asked the
Corporate Secretary to call the roll.
Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Tony Mullen and Sandra
Zerkle. Also, present Commissioners Price and Ward.
Absent: None.
The Corporate Secretary declared a quorum.
Diihlir rnrrmmnntc
Regular Board Mtg.
May 26,2015
Page 17 of 26
None.
Approval of Minutes
Motion by Commissioner Bossenbery, Seconded by Commissioner Mullen to approve the
Finance Committee meeting minutes of April 4, 2015.
Action: Motion Carried.
March 2015 Financial Highlights
Chief Financial Officer (CFO) Heather Shawa-DeCook provided the Committee with a brief
overview of the BWL's March financials month end. CFO Heather Shawa-DeCook reported
the following information:
o Operating and Maintenance Cash Fund on hand, is above our target goal and as of
May 8th we are well above our goal at Just under $90 million, our target goal is $80
million for our operating fund.
o Hit revenue budget for March (first time this fiscal year).
o Year to date variance to budget is-5% (gaining another percent this past month).
o As reported last month from a net income stance, we are projecting well above
budget as of March month-end. However, by the end of the fiscal year for 4th quarter,
we will beat our budget, which is still projecting about $4.5M for net income.
FY16 O&M and Capital Budget Resolution
CFO Heather Shawa-DeCook presented a PowerPoint presentation and reviewed the FY 16
O&M Capital Budget that included:
• FY 2016 Financial Plan
—Sales forecast —Operating expense assumptions —FY 2016 0&M Budget by Category
—FY 2016 Budgeted Net Income & Cash Flow —Comparative Financials (FY 2016 vs. FY 2015)
Sales Volume Forecast
'.
ctllin '- F)IdBudgdBudge mssll,l4 Hudpfm 1 Operating Expense Assumptions
Flee trio-Reta2l(nmh} 'J41,49D 2,189,661 -22':
El'tric-11Tolm ale(rtm6) 1M4306 871199 r_S'
F.leitric-UA(n I.) 3J6E796 3,061,060 3.4% Overall FY2016 O&M increaseof 2.2%
lymer('co 9J)981538 9,460,006 -3.811 compared to FY 2015 Budget.This
Steam(odh) 764,969 730,936 increaseis primarily attributable to
Chilled lyuer tnhr. 10 9"00 10 01.100 -r0;t
inflationary pressure.
.x.,a.r«wr.•.ryw.,,..��.�..a�+eae.,..�m�wcn:ouaenw: .
awr
Forecasted CPI Index 2.3%inflation'
.n.�n,.a.wf,ee.y.ma.anee.y.e.sy.,cr.n�te:...mar�.a�,mw
.�.RT:bWuEe,aSan LceJ1-?!•nMeJ:.er.:aanxu.3.re'ouof,Yna3oa
• Budget assumes 754 FTEs—an increase of
S"`•s m ;.k d ,.w a�n,. .e./..r. .o-..6..s 1.1%over the FY 2015 budget
odf.2 u,v
ry)ors
I ncameSwemem W Utility
I,utr•unannr ...v u.,z o:u .,w....
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Regular Board Mtg.
May 26,2015
Page 18 of 26
Comparative Income Statement
Based w Initial P•trluan P,1or
to S:ra::gk.Vignn>"nt.vld V--M
,�• Nlitt M1fl:l Vr
FY 22016 Cash Flow by Utility
a y 1 xai��r� is i �"1`t,�p 1"•aT.LigauL�ILiuii»> Iz.b n.:,. ..
ibmi ow i'vn�'Ril i i v tt n,
s v.a a
�'...........>ti..,:.�.r.».:'PCs :7`r"°...w..w.....•«w _...._ >.. e_....s..,.. n _.n.
Comparative Income Statement
After Strategic Aiignment and Review
L,aafo•.
fYNtf Il':ifi {wa.c
Eak+3 !Wa �ssa.J
oemaTna m>ru�ieux<LLtrciL
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F.xi•N'A TFACiS:3KA2LL AVf:S IN,^� 1fiDC ar
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Cox\..i:rr+e•...n.r..:>c,+.:: I3;961 :4l:, -3.•
• FY 2016 Capital Budget
FY 2016 Capital Budget Summary
Dollars in 100asy
UTILITY LOCATION
ELECTRIC 5 ",962 ECKERT S 8,0.26
WATER 5- 8,106 ERICK SOP] S 1,600
ST-EAM 5 4,506 TaD S 40,008
C HILL ED WAT ER 5 300 DVE/CEDAR S 1,355
COMMON S 13.197 OTHER S 14.081
TOTAL BUDGET S 65,072E 65,DT2
Regular Board Mtg.
May 26, 2015
Page 19 of 26
FY 2016 Capital Budget—Maior Projects/Programs
—.1—,
Pfajecc Tlde Total "2a16
5''L P CRB tCA RE) 14,923.000 fi 907.0w
Erlckam to WOk—138kV Llne F—ml r 20.100.000 334P,000
Moors.Park Dam t3ate Fbistand Phase 2Dam Repairs 4,160."D
abulki T&D Syct— 3,010,000
ESIA-1 R 19,175;984 3,OD2,b00
FY 7..Lead Servic¢Repbc-¢m¢rA 42,812;060 2,700.D
Sm.art{3rid kn plemen Eatian 36,950,046 2.5m.a00
Str¢¢t.BwldingandOAdoor P--ive Lighting 16,258$50 2,260.DOD
Servicesand Lk—Extanslons M927.844 2,200,OOD
VViza Sutra.btion doubtaom Endng 7.190-000 2.050.D00
For
th East Static VA R p—n for 10,ODO,0O0 2,060.000
Fert t khdt 4.5,and 5/4a rc vy C—ACI Syt tam. .2.243,441 1.917.441
A—,P mtih s¢i Sc Mp Tran slams r s Reg ulatars 8,847,01'3 1,3&5,0m
Fran do r Ova Arad A 160V Sub Cutova r and Retlm aunt 1,375,400 1,350.00Q
Mie hig—Ave Stm Tram Wash tntp A lley 6 1,328.600 1.326.6D0
Substation Modemi—tion-EOPS 1,894500 1;294,500
Forbes 416DV Substation Ratirem¢.nt 2,823,9DD 1Z30 0W
FY 2616.Budget Lk—31:Anrwa.11tanhola Rplont 7.67A 223 1.186,41G
Eckert Steam S,M-Out 1,0S0,060 1,030, 00
000
1Msa Bus 2 Dhtrdxatkut 3.00a,a00 1.000,0
JA11Wr 8320 Cut— 1.SS00.000 1,000,000
ADIdS 2.0 0.000 1100D.I Cw
^ Thes¢projects are part ofthe El¢ctricTra nsmiszron.$..DistrO H—Pion
Interim General Manager Peffley presented and reviewed a list of requested Capital Projects
that would not be funded, as well as a list of Capital Projects planned for FY16. Interim
General Manager Peffley stated that these two lists were well thought out and prioritized and
it was a struggle to get this point. However, it is important to him that the BWL revenue is
built on bringing businesses and residents to this region, not on the backs of the people.
Finance Chair Louney said this current budget would not be based on any rate increases.
Motion by Commissioner Bossenbery, Seconded by Commissioner Mullen to forward a
Resolution for the approval of the FY 2016 Operating and Capital Budget.
Action: Motion Carried.
Other
None.
Adiourn
On Motion by Commissioner Bossenbery, seconded by Commissioner Mullen, the meeting
adjourned at 7:53 p.m.
Respectfully submitted
Dennis M. Louney, Chair
Finance Committee
HUMAN RESOURCESS COMMITTEE
May 19, 2015
The Human Resources Committee of the Lansing Board of Water and Light met at the BWL
Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m.
on Tuesday, May 19, 2015.
The Human Resources Committee Chairperson Cynthia Ward called the meeting to order and
asked the Corporate Secretary to call the roll. The following members were present:
Commissioners Cynthia Ward, Anthony McCloud, Tony Mullen and David Price. Also present:
Commissioners Margaret Bossenbery, Dennis M. Louney, Tracy Thomas and Sandra Zerkle.
Absent: None.
Public Comments
None.
Regular Board Mtg.
May 26,2015
Page 20 of 26
Approval of Minutes
Motion by Commissioner Mullen, seconded by Commissioner McCloud to approve the
Human Resources Committee meeting minutes of March 17, 2015.
Action: Motion Carried.
FY 15 Board Appointee Performance Reviews
a) Corporate Secretary
Corporate Secretary M. Denise Griffin requested a closed session for the
purpose of, receiving her contractual year-end performance evaluation as
permitted by the Open Meetings Act exemption MCL 15.268(a).
Motion by Commissioner Price, seconded by Commissioner Mullen to go into closed session.
Action: Motion Carried.
Roll Call Vote:
Yeas: Commissioners Cynthia Ward, Anthony McCloud, Tony Mullen, David Price.
Nays: None.
Action: Motion Carried.
The Human Resources Committee into closed session at 5:33 p.m.
The Human Resources Committee reconvened to open session at 5:51 p.m.
Upon conclusion of the Closed Session,the following motion was offered:
Motion by Commissioner McCloud, seconded by Commissioner Mullen to reappoint M.
Denise Griffin to the Charter position of Corporate Secretary for FY16.
Action: Motion Carried.
Human Resources Chair Ward stated that a resolution for Ms. Griffin's reappointment will be
presented at the July regular Board meeting. The goals that were reflected in Ms. Griffin's
evaluation will be the goals that the Board will identify going forward for the next evaluation
period.
b) Internal Auditor
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 Price, seconded by Commissioner McCloud to go into closed
session.
Action: Motion Carried.
Roll Call Vote:
Yeas: Commissioners Cynthia Ward, Anthony McCloud, Tony Mullen, David Price
Nays: None.
Action: Motion Carried.
Regular Board Mtg.
May 26,2015
Page 21 of 26
The Human Resources Committee into closed session at 5:52 p.m.
The Human Resources Committee reconvened to open session at 6:14 p.m.
Upon conclusion of the Closed Session,the following motion was offered:
Motion by Commissioner Price, seconded by Commissioner McCloud to reappoint Phil
Perkins to the Charter position of Internal Auditor for FY16.
Action: Motion Carried.
Human Resources Chair Ward stated that a resolution for Mr. Perkins's reappointment will be
presented at the July regular Board meeting. The goals that were reflected in Mr. Perkin's
evaluation will be the goals that the Board will identify going forward for the next evaluation
period.
c) Interim General Manager
Interim General Manager Richard Peffley 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 Price, seconded by Commissioner Mullen to go into closed session.
Action: Motion Carried.
Roll Call Vote:
Yeas: Commissioners Cynthia Ward, Anthony McCloud,Tony Mullen, David Price.
Nays: None.
Action: Motion Carried.
The Human Resources went into closed session at 6:16 p.m.
The Human Resources Committee reconvened to open session at 6:31p.m.
Upon conclusion of the Closed session, the following motion was offered:
Motion by Commissioner McCloud, seconded by Commissioner Mullen to reappoint Richard
Peffley to the Charter position of General Manager for FY16.
Action: Motion Carried.
A resolution for Mr. Peffley's reappointment will be presented at the July regular Board
meeting. The goals that were reflected in Mr. Peffley's evaluation will be the goals that the
Board will identify going forward for the next evaluation period.
Feedback on New Performance Evaluation Forms/Process
Board Chair David Price stated that he thought the evaluation process went very well. The
form was succinct and it was nice to have it done online. He said his one concern is that there
is not an area to indicate "I don't know or I don't have enough information", which was
particularly true when evaluating the Interim General Manager, who has been on the job a
short period of time.
Commissioner Zerkle questioned how the score is affected if there is a no response from a
Commissioner and if the score would be based on seven answers. In response, FIR Chair
Regular Board Mtg.
May 26,2015
Page 22 of 26
Ward stated the score would be based on seven answers or based on the number of
Commissions who responded.
Commissioner Mullen thanked Commissioner Ward for the idea of having the electronic
version of the evaluation. Commissioner Mullen suggested having a read only access as an
option,to make it easier to read finished reviews online.
Commissioner Bossenbery thanked Commissioner Ward for all of her efforts on the
evaluation process. Commissioner Bossenbery questioned if there might be an easier way to
compile all of the comments to identify who made which comment, because it does not seem
to flow across. She suggested that this may be formatting issue.
HR Chair Ward stated one question that was on the Internal Auditor's form but was not on
the Corporate Secretary's and Interim General Manager's form was regarding goals. HR Chair
Ward stated that she would make the next HR Chair aware that the question regarding goals
should be included in all of the Appointed Employees evaluation forms moving forward.
Board Chair Price mentioned that goals should be stated on the evaluation and the goals
rated. (Incomplete, Progress made, Completed, etc.)
The three Board Appointees agreed that this was a nice form and is relevant to evaluate job
responsibilities and duties.
In conclusion, HR Chair Ward stated that she would try to incorporate suggested changes and
pass it along to the next HR Chair.
Next Steps Regarding Contracts
After a discussion regarding the next steps for preparing the Appointed Employees contract
for the next fiscal year, the following motion was offered:
Motion by Commissioner Price, Seconded by Commissioner Mullen to allow HR Chair Ward
the opportunity to prepare the contracts in a way that is consistent with the BWL work force.
Action: Motion Carried.
HR Chair Ward stated that the contracts would be presented to the full Board for review and
to vote on in July.
Excused Absence
None.
Public Comments
None.
Adjourn
On Motion by Commissioner Price, seconded by Commissioner McCloud, the meeting
adjourned at 6:49 p.m.
Respectfully Submitted
Cynthia Ward, Chair
Human Resources Committee
MANAGER'S RECOMMENDATIONS
RESOLUTION 2015-05-02
Regular Board Mtg.
May 26,2015
Page 23 of 26
Rules and Regulations for Electric, Water, Steam and Chilled Water Utility Services
RESOLVED, that Fiscal Year 2015-2016 Rules and Regulations for Electric, Water, Steam and
Chilled Water Services be approved as presented, to be effective July 1, 2015.
Motion by Commissioner Ward seconded by Commissioner Zerkle, to approve the Resolution
for the FY 16 Rules and Regulations.
Action: Carried Unanimously
RESOLUTION 2015-05-03
ADOPTION OF INVESTMENT POLICY STATEMENT FOR OPERATING FUNDS
WHEREAS, the BWL's Investment Policy Statement for Operating Funds was last approved by the
Board in July 2009 (Resolution 2009-07-1); and
WHEREAS, the Investment Policy Statement should be reviewed periodically to revise as needed
and in accordance with industry practices; and
WHEREAS, the Investment Policy Statement delegates authority by specific title, including a title
no longer held by any BWL staff;
RESOLVED, that the Finance Committee approve the proposed attached Investment Policy
Statement for Operating Funds and forward the policy to the Board for adoption.
Motion by Commissioner Louney, Seconded by Commissioner McCloud to approve the
Resolution for adoption of the Investment Policy Statement for Operating Funds.
Action: Carried Unanimously
RESOLUTION 2015-05-04
Fiscal Year 2016 Operating and Capital Budget
RESOLVED, that the annual Operating Budget covering Fiscal Year 2016 is hereby approved as
presented; and
RESOLVED, that the Fiscal Year 2016 Capital Budget is hereby approved as presented; and
RESOLVED FURTHER, that the Corporate Secretary be directed to make the appropriate filings
with the Lansing City Clerk's office in accordance with the Lansing City Charter regarding the
above actions.
--------------------
Motion by Commissioner Louney, Seconded by Commissioner Mullen to approve the
Resolution for the FY 16 Operating and Capital Budget.
Action: Carried Unanimously
UNFINISHED BUSINESS
There was no Unfinished Business
Regular Board Mtg.
May 26,2015
Page 24 of 26
NEW BUSINESS
There was no New Business
RESOLUTIONS
RESOLUTION 2015-05-05'
Advisory Non-Voting Commissioners Seating Accommodations
RESOLVED, that the General Manager is directed to implement necessary construction and/or
remodeling actions that will address the seating needs for the three additional
commissioners, who will serve as Advisory Non-Voting Representative Members.
Motion by Commissioner Zerkle, Seconded by Commissioner McCloud to approve the
Resolution directing Interim General Manager to implement construction for seating
arrangement for incoming Commissioners.
Action: Motion Carried (5/3 Vote-Dissenting Commissioners Mullen, Thomas and Ward)
RESOLUTION 2015-05-06
. ...:._...
RULES OF PROCEDURES—TECHNICAL AMENDMENT
TO ADDRESS NON-VOTING ADVISORY MEMBERS OF THE BOARD
WHEREAS, in 2014, the Lansing City Charter was amended to add Subsection 12 to Article 15,
Section 5-103, which reads as follows:
5-103.12 The Board of Water and Light Board Members shall include three non-voting
advisory members representing utility customer communities outside the City of
Lansing. Each non-voting advisory member shall be a Board of Water and Light
customer, shall reside in and be appointed by the governing body of the municipality.
One member shall represent the City of East Lansing and shall serve a term of four (4)
years commencing July 1. One member shall represent Delta Township and shall serve
a term of four (4) years commencing July 1. One member shall be at-large and shall
represent the remaining municipalities and shall serve a term of one (1) year
commencing July 1. The at-large representative shall serve on a rotating annual basis
and be appointed by the governing body of the following municipalities in succession:
Meridian Township, Delhi Township, DeWitt Township and Lansing Township. Except
as provided herein, Section 2-103, Section 5-105, or State law, the provisions of this
charter shall not apply to the non-voting advisory members of the Board of Water &
Light.
WHEREAS, in consideration of the addition of three (3) non-voting advisory members to the
Lansing Board of Water& Light Commissioners ("Board") desires to clarify their Rules of
Administrative Procedure to distinguish between Members of the Board and non-voting
advisory members of the Board.
NOW, THEREFORE, BE IT RESOLVED, the Rules of Administrative Procedure are amended as
set forth in Attachment A.
Motion by Commissioner Mullen, Seconded by Commissioner McCloud to approve the
Resolution for the Technical Amendment the Administrative Rules of Procedures.
Regular Board Mtg.
May 26,2015
Page 25 of 26
Action: Motion Carried
--------------------
MANAGER'S REMARKS
Interim General Manager Peffley informed the Board of the following:
• Be a Tourist in your own Town is this Saturday and the BWL Headquarters and Cedar
Dye Water plant will be open to the public.
• Friday,June 5th is the BWL Chili Cook-Off and hopes to see everyone there.
• The BWL hosted a crisis Manager Seminar on May 215t, under the leadership of Trent
Adkins, BWL's Emergency Manager.
Trent Adkins, Director of Emergency Management provided information on the Regional
Crisis leadership seminars that was hosted by the BWL and facilitated by Texas A&M
Engineering Extension Service (TEEX). The seminars were well attended by public, political
and private sector representative. TEEX brought in a Harvard case study on the 2001
Baltimore train tunnel fire and talked about lessons learned from the incident as well as
action plans that can be implemented and useful in this region in the case of an emergency
crisis.
COMMISSIONERS' REMARKS
Members of the Board of Commissioners thanked Commissioner Ward for her time served on
the Board and said that she will be missed.
Commissioner Thomas thanked Commissioner Ward for her service on the Board and
appreciated that she was always presidential. Commissioner Thomas also thanked Interim
General Manager Peffley for expeditiously handling some customer concerns. Commissioner
Thomas thanked BWL employees (Michael Flowers, Dallas Burdick, Tansay Carter) for their
work on the 1"Step recognition event that took place last week.
Commissioner Dennis M. Louney thanked CFO Heather Shawa-DeCook and her staff for the
outstanding job they did to put a tough and fair budget together, with no rate increase as
insisted by Interim General Manager Peffley. Commissioner Louney also thanked
Commissioner Ward for her honesty and work on the Board, as it was outstanding. He said it
was a pleasure to work with her.
Chair Price said this concludes his first term as Chair of this Board and could not be more
proud of his colleagues that sit at the dais with him. He said it has been an unusual and
stressful year at times and it has also been a potentially divisive year at times, but we have
gotten through it and we have moved forward.
Chair Price stated that he thinks the BWL is stronger today than ever before, it is more stable.
He said that Interim General Manager Peffley brings sense of stability and calmness in spite
of what could happen with weather and emergencies. He said that there is a good feeling
with his colleagues about the organization and the strength of the organization and what it
has been able to survive, and now we have to go forth and flourish.
Chair Price stated that we have a budget that does not increase the rates. We will bring in
new customers and that is how we will increase revenue, not on the backs of our current
customers. He thanked Interim General Manager Peffley for the fine job that he and his staff
Regular Board Mtg.
May 26,2015
Page 26 of 26
is doing and he also thanked his fellow Commissioners for getting the company and Board
through a tough year and moving on to what he thinks will be a great year.
EXCUSED ABSENCE
Motion by Commissioner McCloud, Seconded by Commissioner Ward to excuse
Commissioner Thomas from tonight's meeting.
PUBLIC COMMENTS
Brad Van-Gilder of the Sierra Club, spoke about the Board of Water & Light's budget and said
that he is encouraged by what he has seen over the last few months. He stated that he
noticed in the budget the possibility of a activated carbon injection system being planned for
units 4, 5 and 6 at Eckert and suggest that if it technically feasible, to only install that system
for two out of the three units being considered for this installment and bring the other unit
offline. Mr. Van-Gilder stated also mentioned in the budget was the possibility of having two
additional transmission lines in which he believes is a smart move, to improve the stability of
the entire system. Mr. Van-Gilder also spoke about public planning and transparency of
municipal utilities, a subject addressed at a previous Board meeting. In response, Chair Price
and Interim General Manager Peffley indicated that a formal strategic planning process that
includes public representatives in actively being work on.
ADJOURNMENT
On motion by Commissioner Ward, seconded by Commissioner McCloud the meeting
adjourned at 6:03 p.m.
M. Denise Griffin, Corporate Secretary
Preliminary Minutes filed(electronically)with Lansing City Clerk:June 16,2015
Official Minutes filed(electronically)with Lansing City Clerk:August 7,2015
Offid lyApp—d-5.26.15
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MINUTES OF THE BOARD OF COMMISSIONERS' MEETING
LANSING BOARD OF WATER AND LIGHT
March 31, 2015
The Board of Commissioners met at the BWL Headquarters-REO Town Depot located at 1201
S. Washington Ave., Lansing, MI, at 5:30 p.m. on Tuesday, March 31, 2015.
Chairperson David Price called the meeting to order at 5:30 p.m.
Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony N4.0Clo d, Tn ,y
:71 `—: —._r
Mullen, David Price, Cynthia Ward and Sandra Zerkle. ��,=;, fJ
c i"7
Absent: Commissioner Tracy Thomas
The Corporate Secretary declared a quorum present.
Commissioner Tony Mullen led the Pledge of Allegiance.
APPROVAL OF MINUTES
Motion by Commissioner Mullen, seconded by Commissioner Bossenery to approve the
Regular Board Meeting minutes of January 27, 2015.
Action: Motion Carried
Chair Price Pulled item 10c from the Agenda and referred it back to the Committee of the
Whole.
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.
Brad Van-Gilder of the Sierra Club, provided additional copies of forms letters generated by
the Sierra Club Campaign
------------------
COMMUNICATIONS
105 Form Letters generated by the Sierra Club Campaign
Received and Placed on File
Regular Board Mtg.
March 31,2015
Page 2 of 22
COMMITTEE REPORTS
COMMITTEE OF THE WHOLE
February 17, 2015
The Committee of the Whole of the Lansing Board of Water and Light met at the BWL
Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m.
on Tuesday, February 17, 2015.
Committee of the Whole Chair Margaret Bossenbery called the meeting to order and asked
the Corporate Secretary to call the roll.
Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Anthony McCloud, Tony
Mullen, Tracy Thomas, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle.
Absent: None
Public Comments
None
Approval of Minutes
Motion by Commissioner Price, Seconded by Commissioner Mullen to approve the
Committee of the Whole meeting minutes of November 11, 2014.
Action: Motion Carried
Regional Customer Input
Bob Nelson of E. Lansing spoke about a company that is trying to provide fiber optic service
to the residents of Lansing and E. Lansing and his concern with the amount of time it is taking
to get this service to the residents. He also expressed his disagreement with the permission
requirements that has to be granted to competing third party attachments.
Mike Froh of Meridian Township elaborated on the fiber optic service and spoke in support of
the new technology and the importance of expediting this service to the community. He also
stated this technology would benefit the Board of Water & Light in reverence to the use of
their utility poles and for participating in this particular service.
There was some dialogue regarding the fiber optic service and the company that is providing
the service. Interim General Manager Peffley said this matter will be looked into.
Commissioner Louney sated that this technology was a game changer and encourage that it
be explored at as soon as possible.
Smart Meter Update
Interim General Manager Peffley introduced Dave Bolan, Executive Director of Operations for
the Board of Water and Light, who provided an update on Smart Metering. Mr. Bolan stated
that with Smart Meters you can sectionalize the outage area and restore customers through
remote sources or decreased voltage on the system. This is a very expensive technology, $25
million to $30 million to add to our system. He stated that the Board of Water & Light has
decided to do a pilot program of the technology utilizing 140 smart meters. Meters were
installed last December in a small area in E. Lansing and are in the process of finishing our
Regular Board Mtg.
March 31,2015
Page 3 of 22
systems acceptance test. Mr. Bolan said that we want to evaluate and make sure that we
fully understand the capabilities of this technology and from that look at other pilots to test
the distribution automation technology and then from there move on to how we implement
within our financial means. Realistically it could take up to 7 years to roll out this plan.
There was dialogue regarding what other companies in Michigan are doing in regards to
Smart Metering. In response to questions, regarding this matter Mr. Bolan stated that in
Michigan both Consumers Energy and DTE has Smart Meter Program. Commissioners Louney
and Bossenbery indicated that the implementation of Smart Metering was a
recommendation from the CRT Report and strongly suggest and support that we proceed
with the technology.
Haco Update
Interim General Manager Peffley informed the Commissioners that the Haco project is
currently on schedule for completion at the end of March, and will close out at the approved
budget amount. He stated that the main reason he brought this matter to the
Commissioners was to offer a sneak preview or a walk-through of the facility. He said that a
very nice area has been designed for people to come in and pay their bills. Board of Water &
Light employees will start to move to the renovated facility sometime in April.
CRT Update
George Stojic, Executive Director of Planning and Development provided an update on the
CRT Report. He stated three items have been completed since the last update. Those include
National Incident Management system communications training for BWL managers and
senior staff and a couple of recommendations that deal with coordination and consolidation
of emergency plans and procedures with city and regional plans and procedures. There were
a total of 187 CRT/PSC/BWL recommendations and 155 of those have now been completed
or become an ongoing part of the BWL's practices and procedures. Ten recommendations
were originally allocated to the Board and the City, leaving 22 for the staff to complete and
these are expected to be completed by the end of this fiscal year. Since the last report we
have completed the last of the BWL's 54 recommendations by adding a text messaging
option to the 877 number as an alternative way for customers to communicate outages. Mr.
Stojic stated that the BWL has begun to work with customers that have critical facilities and
might be eligible for onsite generation to help create a more robust distribution system and
that BWL staff is continuing to work with the Red Cross on train the trainer. BWL is also
working with Do 1 Thing to extend programing to local business. On April 15th, Do 1 Thing will
be conducting emergency preparedness training to downtown Lansing businesses. Mr. Stojic
also commented on Trent Adkins role as Emergency Director, noting that he has taken the
lead on helping to build local and regional resiliency. Friday, Mr. Atkins will be hosting a
meeting of regional emergency managers, including a session on cyber security.
Commissioner Louney engaged in dialogue with Mr. Peffley and Mr. Stojic regarding the
CRT's suggestions such as, the reporting of OMS implementations and maintenance, the
funding of the City of Lansing for tree trimming where the City has already engaged in
vegetation management. He also questioned the Boards responsibility on completing some of
the CRT's recommendations.
Environmental Regulatory Update
Regular Board Mtg.
March 31,2015
Page 4 of 22
George Stojic, Executive Director of Planning and Development noted that during the
November Committee of the Whole meeting that he planned to undertake both strategic
plan and integrated resource plan updates this year. He state that regulatory requirements,
especially environmental, have a major influence on utility planning and the need to update
the BWL's plans.. He said that he wanted to begin providing the Board with some of the
concepts, and issues that are involved, particularly on the environmental side. Mr. Stojic
explained four major environmental regulations and mentioned the BWL's compliance
strategy for each.
• The Cross State Air Pollution Rule (CSPAR)
This rule issued in 2005 was a result of areas in the eastern part of the United States not
meeting air quality standards for ozone and fine particulates and a major contributor to that
were emissions from power plants in upwind states like Michigan. The initial rule was
overturned in 2008 but I was reissued in 2014 and it is now a law. The Cross State Air
Pollution Rule reduces sulfur dioxide and oxides of nitrogen from electric generating power
plants. The compliance period started January 1st and further reductions are required in
2017. CSAPR is a Cap and Trade program. One allowance is required for every ton of SOX
and NOX emitted from an electric power plant. Each state has a limited, or capped, number
of allowances that it allocates to electric generating units. An electric generator has the
option of using the allowance, selling or "banking" unneeded allowances, or purchasing
allowances, if needed for generation. The BWL has sufficient allowances to cover expected
generation through 2020.
• Mercury and Air Toxics Rule (MATS)
This rule was also issued by the EPA in 2005 as the Clean Air Mercury rule. In 2006 Michigan
proposed its own mercury regulations. In 2008, the federal rule was vacated by the courts.
In 2009, Michigan formally adopted its proposed rule. In 2012, the EPA reissued its rule as
MATS, and Michigan suspended its rule. MATS has been challenged, and it is currently before
the Supreme Court. The rule is intended to regulate mercury, fine particulates (PM), and
hydrochloric acid gas. The BWL's compliance date is April 2016, unless delayed or vacated by
the Supreme Court. Compliance costs for units 1 and 3 are considerable, and these units
were planned to be replaced by REO Town, so units 1 and 3 will need to be retired if the rule
is affirmed by the Court. The remaining BWL units can comply without major investment.
• Coal Combustion Rule or The Coal Ash Rule (CCR)
This Rule became effective in 2008 when a dike at a coal fired power plant in Tennessee
failed and released approximately one billion gallons of coal ash slurry onto joining property
and into the clinch at Emory Rivers. Those are major tributaries to the Tennessee River from
which couple million people get their drinking water, causing the EPA to consider regulating
coal ash installations. In 2010, the EPA decided to issue a draft regulation and finally adopted
a final rule in December of last year. In its final rule, the EPA chose to regulate coal as a non-
hazardous substance, instead of a hazardous substance. The rule adopts standards for the
structural integrity and inspection of coal ash facilities, adopts operating and notification
criteria, requires monitoring wells, and regulates locations of new coal ash installations. The
BWL has three potential sites affected by this rule. The north Lansing landfill, Comfort Street,
and the Erickson Ash pond. The BWL has previously removed approximately 850,000 cubic
yards of ash from Comfort Street and 700,000 cubic yards from Erickson. Because of these
projects, the BWL does not anticipate additional requirements beyond those currently
effective for each site.
0 Clean Power Plant Rule (CCP).
Regular Board Mtg.
March 31,2015
Page 5 of 22
This rule regulates carbon dioxide emissions from existing electric generating plants. The
goal is to reduce CO2 emissions 30 percent by 2030 from existing generating facilities.
There is no economical way to remove and sequester CO2 from existing plants. As a
result, the EPA requires a statewide compliance plan. The CO2 reductions are to take
place in two phases, the first in 2020 and the second in 2030. The EPA specified four
building blocks by which could be used for compliance: unit performance improvements,
unit redispatch, renewable energy, and energy efficiency. The EPA has received over 2
million comments on the rule, and the final rule is due mid-summer 2015.
Strategic Plan Framework
George Stojic, Executive Director of Strategic Planning and Development stated that he
planned to undertake two planning initiatives in 2015. The first one being a strategic plan
followed by an integrated resource plan later on. Mr. Stojic explained the difference in the
plans noting that the integrated resource plan is much more narrowly focused than the
strategic plan. He explained that he would plans to undertake the strategic plan in phases.
The first phase involves a draft update prepared by BWL employees. The second phase
involves the public, allowing our customers to provide comments and recommendations.
Changes to the draft plan may be made based upon the public input. Then the draft, along
with the public comments and recommendations will be provided to the Board for its
consideration. A final plan will be prepared based upon the Board's review of the draft and
public input and the Board will be requested to adopt the plan by resolution.
Other
Board Chair Price spoke about an email received from Rory Neuner who is representing
Michigan Air-Michigan Health, a statewide coalition of health groups working to educate
health professionals about the negative effects of burning coal. In the e-mail, she is
requesting to address the Board of Commissioners individually regarding this matter. Chair
Price suggested that she attend the next Committee of the Whole meeting and allow her to
address the entire Board as an agenda item. The Board of Commissioners agreed.
Commissioner Louney conveyed the following information:
• Request that the HR Committee address the issue of long term contracts and
prohibiting excessive severance payments for the General Manager and top
Management.
• Request that the HR Committee explore setting at a time line regarding a search
committee, a search process or a job posting for the GM position so the public is
aware.
• Internal Auditor Perkins will be presenting his finding from his independent audit at
the March Finance Committee meeting
• Talked with the new CFO regarding a possible separate Finance Committee meeting to
be held in either March or April with the agenda subject to include detailed
information about the functions of each department and it cost.
Public Comment
None
Closed Session discussion(Attorney-Client Memo)[MCL 15.268(h);MCL 15.243 (g)l
Regular Board Mtg.
March 31,2015
Page 6 of 22
Committee of the Whole Chair Bossenbery stated that our attorneys have provided us with
an Attorney Client Privilege memorandum and they are present and available to discuss the
contents of that memorandum with us.
Motion by Commissioner Price, Seconded by Commissioner Mullen to go into closed
session for the purpose of reviewing the contents of the attorney-client privileged
memorandum as permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL
15.243(g).
Roll Call Vote:
Yeas: Commissioners Bossenbery, Louney, McCloud, Mullen, Price, Thomas, Ward and Zerkle
Nays: None
The Committee of the Whole went into closed session at 7:00 p.m.
The Committee came out of closed session to discuss the recording of closed session minutes
at 7:10 p.m.
Motion by Commissioner Ward, Seconded by Commissioner Mullen to go back into closed
session for the purpose of reviewing the contents of the attorney-client privileged
memorandum as permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL
15.243(g).
Roll Call Vote:
Yeas: Commissioners Bossenbery, Louney, McCloud, Mullen, Price, Thomas, Ward and Zerkle
Nays: None
The Committee of the Whole went into closed session at 7:11 p.m.
Closed Session concluded at 8:07 p.m.
Excused Absence
None
Adiourn
On Motion by Commissioner Ward, Seconded by Commissioner Mullen, the meeting
adjourned at 8:08 p.m.
Respectfully Submitted
Margaret Bossenbery, Chair
Committee of the Whole
COMMITTEE OF THE WHOLE
March 10, 2015
The Committee of the Whole of the Lansing Board of Water and Light met at the BWL
Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m.
on Tuesday, March 10, 2015.
Regular Board Mtg.
March 31,2015
Page 7 of 22
Committee of the Whole Chair Margaret Bossenbery called the meeting to order and asked
the Corporate Secretary to call the roll.
Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Anthony McCloud, Tony
Mullen, Tracy Thomas, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle.
Absent: None
Public Comments
None
Approval of Minutes
Motion by Commissioner Price, Seconded by Commissioner McCloud to approve the
Committee of the Whole meeting minutes of February 17, 2015.
Action: Motion Carried
Regional Customer Input
Bob Nelson of E. Lansing spoke about Public Act 95 of 2013, a low-Income Energy Assistance
Fund (LIEAF) Section 9(t), which provides that money from LIEAF be expended by the State of
Michigan's Human Services Department. Mr. Nelson explained that on July 15t of every year
each utility in the state has to make an election as to whether or not they will surcharge their
customers based on a factor that is set by the Public Service Commission and apply amount
throughout the next year. The other option is to agree not to shut off customers throughout
the winter months, the Board initially chose the second option. At this point, the BWL can
elect another option by this July and if that happens, various agencies could apply for money
that is raised by that fund and then that money would be distributed to various agencies. He
stated that the BWL has concerns about keeping that money within the Board of Water &
Light territory and believes that a good effort can be made to accomplish that. Mr. Nelson
introduced Mr. Ivan Love, Director of Capital Area Community Services who addressed that
issue.
Mr. Love stated that he wanted to start conversations and make an offer to help the Board
regarding PA95. He stated if the Board of Water & Light decided to opt into PA95 where a
surcharge could be added to the customer's bill, he would be willing to put forth a request to
the State of Michigan to administer the fees that are collected.
After a lengthy discussion regarding this matter, Chair Price suggested that staff prepare
something for the Committee to review at the next or a future Committee of the Whole
meeting. Maybe a review of the different options, the cost of those options and then the
Committee can have an informed discussion and move forward.
MI Air, MI Health Coalition Presentation
Rory Nuener a Representative for the Michigan Air, Michigan Health Coalition presented the
Committee of the Whole with a presentation about the impacts of health and energy polices.
The MI Air MI Health Coalition has existed since 2012 and works to ensure the message of
their mission, which is to ensure healthy air for Michigan communities by assessing the
health effects of air quality and advocating for the enforcement of policy to address air
quality issues. Ms. Neuner stated that the organization connects with professional people to
have conversations about how air pollution is affecting health and how energy policy
Regular Board Mtg.
March 31,2015
Page 8 of 22
connects to that. Ms. Neuner stated that the BWL is going through a hiring process for a new
General Manager and suggested that now is the time to start thinking about how health, air
pollution, BWL's policies and the way business is done every day and the impact on the
health of the residents of the greater Lansing region. She encouraged the Commissioners to
hire a General Manager who has credentials as well as leader who can be responsible for the
protection of the health of the people across Greater Lansing.
David Erickson, Lansing Resident, (Registered Nurse) provided information on health impacts
of our current energy. He stated the BWL has two coal-fired power plants that affect our
health. Particle matter and smog have a particularly serious impact on children and we need
to reduce the external factors that cause asthma exacerbations. Mr. Erickson elaborated on
public health illnesses due to poor air quality, such as cancer, cardiovascular disease and
asthma. He stated that outdoor air pollution, has also been recognized by the CDC and other
leading organizations as a trigger for asthma attacks and believes that coal burning plants in
Mid-Michigan contributes to asthma exasperations.
Jocelyn Hayward, Lansing Resident (Nurse & hold a Masters' Degree in Public Health),
provided statistical information on asthma in the State of Michigan. Ms. Hayward also
provided information on asthma health disparities and social determinants of health. She
stated that Michigan's asthma rate is higher than the national rate for hospitalizations and
coal-fired plants are a large reason for asthma attacks and premature deaths.
Ms. Neuner concluded by stating that health in all policies is a growing movement about
approach to decision making development. It is acknowledging that the decision you make as
a Board have impact on the health of the people of greater Lansing; also, it is the BWL
creating some kind of interdepartmental team that is going to take a broad look at health and
how the organization makes decisions about health. She again stated the importance of
including health related questions to the interview portion of the GM hiring process, as well
as the importance of exploring ways to incorporate health decision making in all policies.
Frozen Water Pipe Update
Interim General Manager Peffley provided an update on frozen water pipes. Mr. Peffley
informed the Board that the company is experiencing another year of an enormous amount
of frozen water services. In a typical year, the BWL may deal with 30 frozen house water
pipes and this year we are at 500 and counting. Because of this issue, staff is working 7 days
a week because our policy is, we will not go home until you have water. We are also
experiencing a high number of main breaks associated with this winter.
Lead Service Replacement
Interim General Manager Peffley stated that about 10 years ago the BWL undertook an
aggressive schedule to change all of the lead service replacements out in the city of Lansing.
Previously Mr. Peffley stated that by year-end 2017 all lead pipe replacements would be
complete. However, there are 20 homes on Moore's River Drive that are due to have the
replacement service; and the city has asked the BWL to push the completion date from 2017
to 2018 because they are going to rebuild the road at that time and it would save them
thousands of dollars in asphalt costs if we wait 1 year.
Discussion re: Seating Options for New Advisory Commissioners
Board Chair Price stated that when the amendment passed to amend the city charter to add
3 new Advisory Board members to the Board, the Corporate Secretary questioned what to do
Regular Board Mtg.
March 31,2015
Page 9 of 22
regarding the seating arrangement with the new incoming Commissioners. Board Chair Price
stated that although the new Commissioners are non-voting is it very important to
accommodate them and to be inclusive and make them feel welcomed. With that, being
said Corporate Secretary Griffin worked with engineering and Mr. Peffley to get some ideas
and cost info to accommodate the three new Commissioners seating situation and that
information is being presented this evening in the form of scenarios.
Interim General Manager Peffley reviewed the scenarios.
There was a lengthy discussion amongst Commissioners regarding the presented scenarios.
At the conclusion of the dialogue, the following motion was offered.
Motion by Commissioner Zerkle, Seconded by Commissioner Price to bring seating
arrangement scenario #3 to the full Board for consideration.
Discussion: Commissioner Thomas stated that if the seating situation task is not completed
by July 1st the Board will not be in violation of any kind and therefore this is not a crisis.
Action: Motion Carried (7/1 Ward dissenting)
Seating Arrangement Scenarios for new Advisory Board Members
Scenario #1
Move Phil Perkins to the back of the dais area and locate the three new Advisory
Commissioners at the dais. The cost of a table 48" wide by 25.25" deep for Mr. Perkins is
approximately $4,500 if we match the wood grain and color already in place. This would also
require the purchase of three new high back chairs at a cost of approximately $4,500. In
addition, a matching table for the COW meetings is required, estimated cost $5,500. Total
cost is approximately $14,500. Scenario #1 is not recommended because the spacing
between the chair arms at the desk is very tight, approximately 5.5" vs. the nearly 11" which
exists today.
Scenario#2
Locating a new table down in front of the dais, which you and I both talked about and
decided that this may not make the new Commissioners feel included. In addition, there is
the line of sight issue for the Advisory Commissioners during presentations. Estimated cost
for that table would be at least $5,500 and would require the purchase of three new high
back chairs at a cost of approximately $4,500. In addition, a matching table for the COW
meetings is required, estimate cost $5,000.00. Total cost approximately$15,000.
Scenario#3
Add an extended dais area that would match the existing Commissioner sitting area. The cost
from the Christman Constructors, Inc. for building the dais is extension is $15,900. In
addition, three raised chairs for the Advisory Commissioners for the new dais are estimated
at $4,500. To that, we will need to add a matching table for the COW meetings estimated at
$5,500 plus three additional high back matching chairs, estimated at $4,500.00. Total cost
Scenario#3 $30,400.
Closed Session discussion(Attorney-Client Memo)(MCL 15.268(h)•MCL 15.243 (g))
Regular Board Mtg.
March 31,2015
Page 10 of 22
Committee of the Whole Chair Bossenbery stated that our attorneys have provided us with
an Attorney Client Privilege memorandum and they are present and available to discuss the
contents of that memorandum with us.
Motion by Commissioner Price, Seconded by Commissioner McCloud to go into close session
For the purpose of reviewing the contents of the attorney-client privileged memorandum as
permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL 15.243(g).
Roll Call Vote:
Yeas: Commissioners Bossenbery, Louney, McCloud, Mullen, Price, Thomas, Ward and Zerkle
Nays: None
The Committee of the Whole went into closed session at 6:49 p.m.
The Committee came out of closed session to discuss the recording of closed session minutes
at 7:03 p.m.
Motion by Commissioner Price, Seconded by Commissioner McCloud to go back into close
session for the purpose of reviewing the contents of the attorney-client privileged
memorandum as permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL
15.243(g).
Roll Call Vote:
Yeas: Commissioners Bossenbery, Louney, McCloud, Mullen, Price, Thomas, Ward and Zerkle
Nays: None
The Committee of the Whole went back into closed session at 7:04 p.m.
Upon Closed Session at 7:13 p.m., the following motion was offered:
Motion by Commissioner Price, Seconded by Commissioner McCloud to authorize the Interim
General Manager to resolve the insurance claim with FM Global as recommended by and
discussed with legal counsel.
Action: Motion Carried
Motion Commissioner Zerkle, Seconded by Commissioner Price to authorize the engagement
of Denenberg Tuff ley to represent the BWL against JCI Jones Chemicals Inc. contingent on the
approval of Lansing City Counsel.
Action: Motion Carried
Other
Commissioner Louney stated that he reviewed the CRT recommendations and notices some
things that were not been updated. He suggested that the Board might want to consider
having a year after the storm meeting to review all of the recommendations and get a
summary of where we are and what has been completed. He stated that he believes that it is
the Board's due diligence to come back to the public and tell them that we as a Board have
Regular Board Mtg.
March 31,2015
Page 11 of 22
tasked ourselves with making sure the CRT's and PSC's recommendations are complete and
we have reviewed them.
Commissioner Price stated that there is some value in a one year report, specifically to report
out what we have done to prepare for the next time and to remind the public that we took
this seriously and that the staff continues to take this seriously and we will continue to
monitor these things.
Committee of the Whole Chair Bossenbery suggested that Interim General Manager Peffley
provide an updated report in the next month and then the Board could have discussion at the
May Committee of the Whole meeting.
Public Comment
None
Excused Absence
None
Adiourn
On Motion by Commissioner Ward, Seconded by Commissioner Mullen, the meeting
adjourned at 7:14 p.m.
Respectfully Submitted
Margaret Bossenbery, Chair
Committee of the Whole
FINANCE COMMITTEE
March 10, 2015
The Finance Committee of the Board of Water and Light met at the BWL Headquarters — REO
Town Depot located as 1201 S. Washington Ave., Lansing, MI, at 7:14 on Tuesday, March 10,
2015
Finance Committee Chairperson Dennis M. Louney called the meeting to order and asked the
Corporate Secretary to call the roll.
Present: Commissioners Dennis Louney, Margaret Bossenbery, Tony Mullen and Sandra
Zerkle; Also present, Commissioner Price
Absent: None
The Corporate Secretary declared a quorum.
Public Comments
There was no Public Comment
Approval of Minutes
Regular Board Mtg.
March 31,2015
Page 12 of 22
Motion by Commissioner Zerkle, Seconded by Commissioner Bossenbery to approve the
Finance Committee meeting minutes of November 11, 2014.
Action: Carried Unanimously
Internal Audit Status update
Internal Auditor Phil Perkins presented:
• FY 2015 Audit Plan Progress Report
• Independent Audit Results
• Requested Changes
FY 2015 Audit Plan Progress Report
Engagements Completed or in Progress:
1. Surprise Cash Count#1—completed
2. Time Reporting Review#1 - completed
3. Material Inventory Audit
Engagements Planned:
1. Health & Drug Benefit Programs Audit (95% complete)
2. Engineering- Annual Projects Audit (75% complete)
3. Board of Commissioners Independent Audit of Previous Administration (complete,
audit report in progress)
4. IT-PCI Compliance Audit (25% complete)
5. Time Reporting Review#2 (50% complete)
Engagements Remaining:
1. IT— Management of Non-Desktop Field Devices (Spring 2015)
2. Audit of Outage Management System (OMS) —pending Finance Committee approval
3. Follow-up of Post-Outage Recommendations—recommended deferral of all but OMS-
related until FY 2016
4. Surprise Cash Count #2
Independent Audit Results
Internal Auditor Perkins reported the results of the requested Audit. The Areas reviewed
included:
• Major purchases and expenditures approved by the previous administration, including
sole source and emergency contracts
• Handling of CEO Holtline complaints and incidents
• Review and approval of previous General Manager's Procurement Card (P-Card)
expense, and appropriate support for business expenses
Mr. Perkins stated that there is a P-Card manual which is basically the Board of Water &
Light's P-Card policy, and is the tool used for appropriate guidance. Mr. Perkins stated, there
are two reportable issues that he would like to inform the Board about. The first issue is,
Regular Board Mtg.
March 31,2015
Page 13 of 22
after looking at some of the bigger projects. There is need for more clarity regarding what
management needs to do to comply with Board policy regarding the need to report
anticipated budget variances that exceed predefined thresholds that are laid out in that
Board policy. Mr. Perkins cited a recent project. Mr. Perkins said the Haco renovation is as an
example where there was a placeholder budget estimate that was in place and used to
originally approve the project in fiscal year 2014. The costs incurred in 2014 were
considerably less than the budgeted amount and that is because the project was just getting
under way. The updated budget that was submitted for fiscal year 2015 a lot more was
known about how much the project would actually cost, and it was higher than the original
FY14 budget amount by a percentage and as a result exceeded the threshold that is outlined
in the Board policy. The board as part of the overall capital budget approved the larger
amount. Mr. Perkins said the question here is whether management should have made a
specific comment in its capital budget presentation to inform the board or the finance
committee at least that the new budget amount requested exceeded the placeholder
amount an amount that exceeds the Board Policy threshold. As the Internal Auditor Mr.
Perkins recommended it be made clear as to when a reportable event has occurred and that
is should be reported to the Board via the finance committee and the projected increase
must be approved by the board.
The second issue is with the former General Manager's purchasing card or P-Card expenses.
They were not reviewed or approved as they should have been based again on the Board P-
Card policy or adequately supported that they were for a business purpose. Example of that
is with the meal expenses, along with any other expense, the P-Card manual specifically
states that a receipt is to be provided and it is to be itemized in nature. A good deal of the
time the itemized receipt was not turned in and that does not conform with the Policy. The
other piece of that regarding these P-Card meal expenses is that the specific party and
organization that former General Manager dined with was not indicated. So, based on the
fact that we are looking roughly at an average of $100 a month in P-Card expenses, the
Internal Auditor certainly saw no evidence that would point him toward any type of abuse,
but by the same token, the Policy should have been complied with obviously. As the Internal
Auditor Mr. Perkins recommended that the General Manager's P-Card expenses be reviewed
and approved by either a Board member such as the finance chair or another designated and
approved official and that again the itemized receipts are provided. This is a thing that needs
to be reemphasized at least for this particular finding and to specifically indicate for meals
and the other participants and the organizations that they belong to, so that it is clear that
there is a business purpose to it.
Requested Changes
Internal Auditor Perkins stated that his last item that he would like to address the Board
about his requested changes. Mr. Perkins stated that he would like to add an audit of OMS to
the fiscal 2015 audit plan and defer the follow up on the post outage recommendation's
audit (except the OMS) until fiscal 2016. The final request change is to authorize the hiring of
an experienced IT auditor for the Internal Audit Department.
After dialogue regarding the hiring process for an experience IT employee, Finance Chair
Louney suggested that himself, CFO Heather Shawa-DeCook and Internal Auditor Perkins
meet to discuss a course of action as well as cost and bring the findings back to the Finance
Committee.
Regular Board Mtg.
March 31,2015
Page 14 of 22
Motion by Commissioner Zerkle, Seconded by Commissioner Mullen to accept the presented
Independent Audit.
Action: Motion Carried
Financial Overview for the Year to Date End January 2015
CFO Heather Shawa-DeCook provided the Committee with a brief overview of the BWL's
January financials as of the month end. (Year to Date) Ms. Shawa-DeCook stated that revenue
year to date as of January month end was at 7% under budget and expects revenue to
continue at that rate through the remainder of fiscal year end. As far as Net income update,
Ms. Shawa-DeCook said that we are even with revenues and are above net income
projections and there are two key contributing factors of that. One factor is that last
December, the finance team put together an O&M budget reduction of 3.5% overall in which
they worked with the management team and as of the 2"d quarter review it is looking like we
will be able to maintain that at year end. The other contributing factor on the net income is
decreased fuel cost, which is a key one. We will have 3rd quarter budget reviews by late April
at which time an updated year-end projection will be provided to the Committee. Ms.
Shawa-DeCook stated that the company is currently under budget in head count, which we
would expect to be with our revenues down, however please note that we are projecting at
year end to be at or slightly over budget. Finance is currently planning for fiscal year 2016
and the 6-year overall 0&M and Capital Budget. This concludes the financial overview.
Signature of Authority Resolution
Chief Financial Officer (CFO) Heather Shawa-DeCook presented the Committee with a
proposed Resolution for check signing signature authority, which is due to organizational and
title changes. The proposed Resolution would specifically grant authority to sign checks,
replacing Chief Administrative Officer with Chief Financial Officer.
Motion by Commissioner Zerkle, Seconded by Commissioner Bossenbery to forward the
proposed Resolution to the full Board for consideration.
Action: Motion Carried
Authority to Invest Operating and Pension Funds Resolution
CFO Heather Shawa-DeCook presented the Committee with a proposed Resolution, which is
specific to the title Chief Administrative Officer and updating it to reflect Chief Financial
Officer.
Motion by Commissioner Zerkle, Seconded by Commissioner Mullen to accepted amended
resolution.
Action: Motion Carried
Motion by Commissioner Zerkle, Seconded by Commissioner Mullen to accept the proposed
Resolution and forward it to the full Board for consideration.
Action: Motion Carried
Other
Regular Board Mtg.
March 31,2015
Page 15 of 22
Finance Chair Louney stated that all Commissioners should have received a copy of the
Board's proposed budget. There needs to be discussion regarding the budget
(Ipads/additional work load/conference/all other cost) to accommodate for the new Advisory
Board members coming in July. After reviewing the numbers, it breaks down to roughly
$5000 per Commissioner, which may be an additional $15,000 to $16,000 that may have to
be added to the Commissioner's budget. Finance Chair Louney said that there is time for
formal discussion regarding this matter but felt it was important to get those numbers out
there for everyone to see that. He stated that although the Commissioner's do not receive a
stipend, there is a cost for governing.
Board Chair Price stated that in interest of transparency, he is sure that the general public has
no idea of what it costs for the Commissioners to be here and believes it is very healthy to
have an open discussion about that.
Finance Chair Louney thanked CFO Heather Shawa-DeCook and Director of Finance Gennie
Eva and all of the Finance staff for all of their efforts.
Commissioner Bossenbery thanked Board of Water & Light's Engineer Dan Flynn for all of his
help on getting the information together regarding the proposed dais renovations.
Adiourn
On Motion by Commissioner Zerkle, seconded by Commissioner Bossenbery, the meeting
adjourned at 8:10 p.m.
Respectfully submitted
Dennis M. Louney
Chair Finance Committee
HUMAN RESOURCE COMMITTEE
March 17, 2015
The Human Resource Committee of the Lansing Board of Water and Light met at the BWL
Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m.
on Tuesday, March 17, 2015.
The Human Resource Committee Chairperson Cynthia Ward called the meeting to order and
asked the Secretary to call the roll. The following members were present: Commissioners
Cynthia Ward, Anthony McCloud, Tony Mullen and David Price. Also present: Commissioners
Margaret Bossenbery, Tracy Thomas and Sandra Zerkle.
Absent: None
Public Comments
There were no public comments
Approval of Minutes
Motion by Commissioner McCloud, seconded by Commissioner Price to approve the Human
Resource Committee meeting minutes of January 20, 2015.
Regular Board Mtg.
March 31,2015
Page 16 of 22
Action: Motion Carried
General Manager Search/Timeline
Human Resources (HR) Chair Cynthia Ward opened the floor for discussion regarding
establishing a time line to begin the process for hiring a General Manager.
After a lengthy discussion regarding when the search process should begin and what the
process should entail the following motion was offered:
Motion by Commissioner Price, Seconded by Commissioner Mullen that by January 1 of 2016,
the Board of Water and Light Commissioners will have a process in place to begin the search
for the next General Manager.
Action: Motion Carried
Annual Appointment/long-term contract/severance Payments
HR Chair Ward opened the floor up for discussion regarding the Board Appointee process as
well as the allowance of a binding long-term contract. Ms. Ward stated that there may be a
legal opinion that states, a current or a siting board cannot bind a future board and that may
suggest that the Board cannot set contracts beyond one year. Ms. Ward also stated implicit
or explicit in the appointments process is an annual appointment, and in her opinion that
implies a one-year contract.
There was discussion about the possibility of this subject being a moot point if a Charter
Amendment is passed, but deserves some dialogue.
Commissioner Thomas stated for the record that before he was the HR chair, the general
manager had a multiyear contract; therefore, the multiyear contract was inherited when he
became Chair of HR.
HR Chair Ward stated that there might be some legal questions that need to be asked. One
legal question would be about the concept of binding the board. Chair Ward questioned if
the current Board can pass a resolution today that binds next year's or a future board. After a
lengthy discussion regarding the matter, the following motion was offered:
Motion by Commissioner Mullen, Seconded by Commissioner Price, that the Chair of the HR
Committee meet with legal representation to discuss what the Board of Commissioner's legal
responsibilities and opportunities are in reference to multiyear contracts.
Action: Motion Carried
There was no discussion regarding Severance payments.
Revisions to Performance Evaluation Forms for the General Manager and Internal Auditor
HR Chair Ward stated that sample of the revisions to the General Manager (GM) and Internal
Auditor's (IA) evaluation forms have been provided to Commissioners. She said before the
Commissioners today is a Google Form, which will allow you to complete the evaluation form
and submit it electronically at which time a percentage summary is automatically calculated.
Regular Board Mtg.
March 31,2015
Page 17 of 22
This format would also remove the possibility of any inaccurate transfer of information. Chair
Ward stated that her hope is that the Commissioners would try this process.
• General Managers Performance-Evaluation Form
HR Chair Ward stated that she did use the APPA format but implemented some changes to
the evaluation form, for example the inclusion of the Commissioner's names on the form and
a question pertaining to diversity.
The Commissioners reviewed some of the evaluation questions and the wording of those
questions. In addition, there was dialogue regarding the Google format and how the
inputted information would automatically calculate a percentage to the questions asked.
HR Chair Ward said that she would finalize the General Manager Performance-Evaluation
form after incorporating recommended changes and then recirculate the form again.
• Internal Auditor Performance-Evaluation Form
HR Chair Ward asked Internal Auditor Perkins to express his opinion on the Evaluation form
that was presented in the packet. Mr. Perkins spoke particularly about the area regarding
audit project skills and technical knowledge. He stated that the rating form in his opinion is
too specific as it is measuring performance at the individual audit level. Based on their
limited interaction with the Internal Auditor, it is Mr. Perkins' opinion that the Board
members are not set up to assess his performance at such a detailed level.
After some dialogue regarding the Internal Auditor Performance-Evaluation form, HR Chair
Ward took Commissioner Zerkle up on her offer to work with Mr. Perkins to review and
modify the form and set criteria to match up with the task the Board has charged him to
complete with the ability of judging the aspects of the completion of those tasks.
• Corporate Secretary Performance Evaluation Form
HR Chair Ward circulated the Corporate Secretary's evaluation form around and asked that
feedback be forwarded to her and she would work with Ms. Griffin to finalize the form.
HR Chair Ward stated that all Evaluation Forms should be completed by April 15, 2015. There
was dialogue regarding the security of putting the evaluation form on the web and the
establishment of a HR BWL email account for this purpose.
Commissioner Mullen stated having this on Google Docs would speed things up dramatically.
He said that he has been asking for something like this since he has been on the Board. To
have some sort of an email account set up with the ability for customers to direct contact the
Commissioners, rather than having to take extra steps to get a message to a Commissioner,
maybe, now would be the time to address that. Commissioner McCloud pointed out that in
order to accomplish Commissioner Mullen's request you would have to be on the Board of
Water & Light's server.
Chair Ward requested for the IT Department to contact her so that they could explore the
possibility and or options of placing the evaluation form on the web.
Regular Board Mtg.
March 31,2015
Page 18 of 22
Other
Commissioner Mullen spoke about the Board ability to hire help for the Internal Auditor and
the Corporate Secretary. He said the Board cannot hire someone because the Charter is
committed. After speaking with legal he was informed that, the Appointed employees
themselves can hire someone if we put it in the budgetary process and authorize a certain
amount of dollars for that purpose. Commissioner Mullen suggested that the HR chair, and
legal representation sit down and decide what we can do as a commission, to authorize our
employees to have the support they need to do their jobs.
Excused Absence
None
Public Comments
Steven Reed, LSJ Reporter questioned if the structure of the previous general manager's
contracts and reviews coincided with the BWL fiscal year, and because of the effects of the
review process, by which the Board is bound, with Mr. Peffley being given a one-year
contract in January, how will that effect his (one year contract) ending six months down the
line be?
In response to Mr. Reed's question HR Chair Ward stated in Mr. Peffley's contract under the
Termination Section it states that the Interim General Manager's Employment Agreement
may be terminated by either party at any time with or without cause and with or without
reason.
Ms. Ward was reminded that the Board does not usually respond to questions during public
comment.
Board Chair Price congratulated Commissioner Ward on her new employment position.
Adjourn
On Motion by Commissioner Price, seconded by Commissioner McCloud, the meeting
adjourned at 6:46 p.m.
Respectfully Submitted
Cynthia Ward, Chair
Human Resource Committee
MANAGER'S RECOMMENDATIONS
RESOLUTION 2015-03-01
Authority to Invest Operating and Pension Funds
RESOLVED, that Board of Water and Light Policy 7-01 "Authority to Invest Operating and
Pension Funds" is hereby amended as follows:
RESOLVED, that the General Manager and the Chief Financial Officer shall be authorized to
establish all necessary cash and investment accounts and to enter into all necessary
transactions and agreements required to provide for the investment of operating and
pension funds in the name of the Board of Water and Light (BWL), in such securities as
Regular Board Mtg.
March 31,2015
Page 19 of 22
permitted by law. Allowable transactions include, but are not limited to, the purchase, sale,
and endorsement for transfer of certificates representing said securities. All transactions
must also be in compliance with the then current BWL Pension and Operating Fund
Investment Policies.
RESOLVED, that the General Manager and the Chief Financial Officer may further delegate
their full or limited investment authority to other specified BWL staff respectively. The
General Manager and Chief Financial Officer shall document the extent of authority
delegated as well as the specific BWL staff receiving said authority. Only employees with
actual, documented authority may be permitted to execute investment activities.
The Revenue Bond Act of 1933 (PA 94 of 1933, MSA5.2731), as amended, Act 20 of 1943, as
amended, and BWL Bond Resolution 89-10-3 govern and restrict the investment of BWL
operating funds. Pension funds are governed by the Public Retirement System Investment
Act (MCL 38.1132 et seq.), as amended.
This resolution supersedes Resolution 2014-11-4
Staff Comments: Due to organizational and title changes, this resolution is necessary to
incorporate the new title and position of Chief Financial Officer.
Motion by Commissioner Zerkle seconded by Commissioner Mullen Ward, to approve the
Resolution for the Authority to Invest Operating and Pension Funds to reflect organizational
changes.
Action: Carried Unanimously
RESOLUTION 2015-03-02
AUTHORITY TO SIGN CHECKS
RESOLVED, That Board of Water and Light Policy 1-01 "Authority to Sign Checks" is hereby
amended as follows:
The signatures of not less than two (2) of the following officers shall be required to issue
checks from any general checking account held by the BWL.
1. General Manager
2. Chief Financial Officer
3. Corporate Secretary
This resolution supersedes Resolution 2009-12-07.
Motion by Commissioner Ward seconded by Commissioner Mullen Ward, to approve the
Resolution for Signature Authority to reflect organizational changes.
Action: Carried Unanimously
Regular Board Mtg.
March 31,2015
Page 20 of 22
UNFINISHED BUSINESS
There was no Unfinished Business
NEW BUSINESS
There was no New Business
RESOLUTION FOR ACTION
RESOLUTION 2015-03-03
ENGAGEMENT OF DENENBERG TUFFLEY
WHEREAS, FM Global, the Lansing Board of Water & Light (LBWL)'s insurance carrier, has
filed a subrogation claim against JCI Jones Chemicals, Inc. for the recovery of insured losses
associated with the July 2011 Wise Road Incident;
WHEREAS, the LBWL has an opportunity to pursue recovery of its uninsured losses directly
from JCI Jones Chemicals, Inc. through a joint representation arrangement with FM Global
whereby the LBWL would engage FM Global's attorney, Denenberg Tuffley represent the
LBWL directly;
WHEREAS, as recommended by staff and supported by the Board of Commissioners, the
LBWL would like to engage Denenberg Tuffley to represent the LBWL directly in a joint
representation arrangement in pursuit of recovering the LBWL's uninsured losses associated
with the July 2011 Wise Road Incident;
WHEREAS, Deneberg Tuffley is not on the LBWL's Special Counsel List approved by the
Lansing City Council; and
WHEREAS, Section 4-304 of the Lansing City Charter prohibits a board or officer from
retaining legal counsel which has not been approved by City Council.
RESOLVED, the Board of Commissioners authorizes the engagement of Denenberg Tuffley to
represent the LBWL against JCI Jones Chemical, Inc., contingent upon the approval of Lansing
City Council.
Motion by Commissioner Bossenbery seconded by Commissioner Mullen, to approve the
Resolution for the retention of the Denenberg Tuffley Law Firm.
Action: Carried Unanimously
RESOLUTION 2015-03-04
AUTHORITY TO RESOLVE INSURANCE CLAIM
Regular Board Mtg.
March 31,2015
Page 21 of 22
RESOLVED, that the Board of Water & Light Board of Commissioners authorize Interim
General Manager Richard Peffley to resolve the insurance claim with FM Global for the July
2011 Wise Road incident as recommended by and discussed with legal counsel.
Motion by Commissioner Zerkle seconded by Commissioner Ward,to approve the Resolution
authorizing the Interim General Manager to resolve the insurance claim with FM Global.
Action: Carried Unanimously
PULLED FROM THE AGENDA AND REFERRED BACK TO THE COW
Proposed Resolution: Advisory Non-Voting Commissioner Seating Accommodations
WHEREAS, on November 4, 2014 the Lansing City Charter was amended such that section.5-
103.12 was added;
WHEREAS, section 5-103.12 of the Lansing City Charter provides for 3 additional
Commissioners for the Board of Water & Light representing municipalities outside the City of
Lansing of which are non-voting Commissioners;
WHEREAS, the addition of the 3 additional Commissioners require certain physical and
operational considerations to address meeting attendance needs;
WHEREAS, the Corporate Secretary, together with operational staff have investigated and
presented the Board of Commissioners with a seating arrangement options at the March 10,
2015 Committee of the Whole meeting;
WHEREAS, the Committee of the Whole passed a motion to recommending Scenario#3,
which would physically extend the current dais to accommodate the 3 additional
Commissioners new members; and
WHEREAS, Scenario#3 would also include the purchase of new chairs and a matching table
for regular committee meetings.
RESOLVED, that the Board of Water & Light Board of Commissioners authorize and direct the
Corporate Secretary, together with operational staff to proceed with effectuating Scenario
#3 for the purposes accomplishing necessary seating accommodations for the 3 additional
Commissioners.
--------------------
MANAGER'S REMARKS
Interim General Manager Peffley informed the Board of the following:
• The Board of Water & Light was a $2000.00 Sponsors for the Red Wings Spartan
Alumni Hockey game that was held at Munn Arena on March 15, 2015. This donation
helped the Steadfast Foundation raise money for local charities that focuses on cures
for children with cancer.
Regular Board Mtg.
March 31,2015
Page 22 of 22
The Board of Water & Light is in the process of responding to an employee Safety
Training Program RFP that was requested by the City of E. Lansing. The BWL is well
known for its safety record and has good program. Interim General Manager Peffley
believes this a great partnership between the BWL and City of E. Lansing and will
further support regionalization.
Directly following tonight is meeting, Interim General Manager Peffley will conduct a
tour of the newly renovated Haco facility for the Commissioners and staff.
COMMISSIONERS' REMARKS
There were no Commissioner's Remarks
EXCUSED ABSENCE
Motion by Commissioner McCloud, Seconded by Commissioner Ward to excuse
Commissioner Thomas from tonight's meeting.
PUBLIC COMMENTS
Paul Matuka, a resident of E. Lansing, MI, spoke about stockholder input.
Closed Session Discussion (Attorney—Client Memo)............MCL 15.268 (h); MCL 15.243 (g)]
Board Chair Price stated that our attorneys have provided us with an Attorney Client Privilege
memorandum and they are present and available to discuss the contents of that
memorandum with us.
Motion by Commissioner Bossenbery, Seconded by Commissioner Zerkle to go into closed
session for the purpose of reviewing the contents of the attorney-client privileged
memorandum as permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL
15.243(g).
Roll Call Vote:
Yeas: Commissioners Bossenbery, Louney, McCloud, Mullen, Price, Ward and Zerkle
Nays: None
Absent: Commissioner Thomas
The Committee of the Whole went into a Closed Session meeting at 5:47 p.m.
The Committee returned to the Open Session meeting at 6:23p.m.
ADJOURNMENT
On motion by Commissioner Bossenbery, seconded by Commissioner McCloud the meeting
adjourned at 6:26 p.m.
M. Denise Griffin, Corporate Secretary
Preliminary Minutes filed(electronically)with Lansing City Clerk:April 9,2015
official Minutes filed(electronically)with Lansing City Clerk:June 9,2015
Officially Approved May 26,2015
Hometown Nopte.HOML11OWn Pmver,
LANSING BOARD OF WATER AND LIGHT
BOARD OF COMMISSIONERS
SPECIAL MEETING MINUTES
FEBRUARY 17, 2015
The Board of Commissioners met at the BWL Headquarters-REO Town Depot located at 1201
S. Washington Ave., Lansing, MI, at 6:00 p.m. on Tuesday, February 17, 2015.
Chairperson David Price called the Special Board meeting to order at 6:05 p.m.
Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud,'-Tbny
Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle.
Absent: None �" .`r� C,�
The Secretary declared a quorum present.
Commissioner Mullen led the Pledge of Allegiance. ca
Meeting Purpose:
1. Review and Approve the Employment Contract for Lansing Board of Water & Light's
Interim General Manager
2. Closed Session Discussion (Attorney—Client Memo) FMCL 15.268 (h); MCL 15.243 (g)
PUBLIC COMMENT
CHAIR PRICE INVITED MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON THE AGENDA
SUBJECTS.
No Public Comments.
Purpose#1:
Review and Approve the Employment Contract for Lansing Board of Water& Light's
Interim General Manager
Commissioner Cynthia Ward stated as the Human Resource (HR) Committee Chair, she was
tasked with finalizing the terms of the Interim General Manager's contract. HR Chair Ward
stated that the proposed contract was presented in the committee-meeting packet, which
provided the opportunity for everyone to review.
Motion by Commissioner Cynthia Ward, Seconded by Commissioner Tony Mullen to approve
the Interim General Manager's contract.
Special Board Mtg.
February 17,2015
Page 2 of 2
Action: Motion Carried
Chair Price took the privilege to rearrange the Agenda to place the Closed Session as the
last item on the Agenda.
Commissioner's Remarks
Commissionner Thomas thanked Commissioner Ward for her good inclusive work in regards
to working out the details of the Interim General Manager's contract.
Motion of Excused Absence
None
Purpose#2
Closed Session Discussion (Attorney—Client Memo) (MCL 15.268 (h); MCL 15.243 kgl
Chair Price stated that attorneys have provided the Board with an Attorney Client Privilege
memorandum and they are present and available to discuss the contents of that
memorandum with us.
Motion by Commissioner Ward, Seconded by Commissioner McCloud to go into closed
session for the purpose of reviewing the contents of the attorney-client privileged
memorandum as permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL
15.243(g).
Roll Call Vote:
Yeas: Commissioners Bossenbery, Louney, McCloud, Mullen, Price, Thomas, Ward and Zerkle
Nays: None
The Special Board meeting went into closed session at 6:22 p.m.
The Special Board meeting returned to open session at 7:10 p.m.
Adjournment
Meeting adjourned at 7:11 p.m.
Filed with Lansing City Clerk
May 18,2015
Final Filing June 9,2015
ORciallyAppromd on 5-26-15
r
MINUTES OF THE BOARD OF COMMISSIONERS' MEETING
LANSING BOARD OF WATER AND LIGHT
March 31, 2015
The Board of Commissioners met at the BWL Headquarters-REO Town Depot located at 1201
S. Washington Ave., Lansing, MI, at 5:30 p.m. on Tuesday, March 31, 2015.
Chairperson David Price called the meeting to order at 5:30 p.m.
Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony
Mullen, David Price, Cynthia Ward and Sandra Zerkle.
Absent: Commissioner Tracy Thomas r� c
tIs C'm
The Corporate Secretary declared a quorum present. ;
D
Commissioner Tony Mullen led the Pledge of Allegiance. 1-77
APPROVAL OF MINUTESCD
�-
a�i
Motion by Commissioner Mullen, seconded by Commissioner Bossenery to approveg4ie
Regular Board Meeting minutes of January 27, 2015.
Action: Motion Carried
Chair Price Pulled item 10c from the Agenda and referred it back to the Committee of the
Whole.
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.
Brad Van-Gilder of the Sierra Club, provided additional copies of forms letters generated by
the Sierra Club Campaign
------------------
COMMUNICATIONS
105 Form Letters generated by the Sierra Club Campaign
Received and Placed on File
Regular Board Mtg.
March 31,2015
Page 2 of 22
COMMITTEE REPORTS
COMMITTEE OF THE WHOLE
February 17, 2015
The Committee of the Whole of the Lansing Board of Water and Light met at the BWL
Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m.
on Tuesday, February 17, 2015.
Committee of the Whole Chair Margaret Bossenbery called the meeting to order and asked
the Corporate Secretary to call the roll.
Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Anthony McCloud, Tony
Mullen, Tracy Thomas, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle.
Absent: None
Public Comments
None
Approval of Minutes
Motion by Commissioner Price, Seconded by Commissioner Mullen to approve the
Committee of the Whole meeting minutes of November 11, 2014.
Action: Motion Carried
Regional Customer Input
Bob Nelson of E. Lansing spoke about a company that is trying to provide fiber optic service
to the residents of Lansing and E. Lansing and his concern with the amount of time it is taking
to get this service to the residents. He also expressed his disagreement with the permission
requirements that has to be granted to competing third party attachments.
Mike Froh of Meridian Township elaborated on the fiber optic service and spoke in support of
the new technology and the importance of expediting this service to the community. He also
stated this technology would benefit the Board of Water & Light in reverence to the use of
their utility poles and for participating in this particular service.
There was some dialogue regarding the fiber optic service and the company that is providing
the service. Interim General Manager Peffley said this matter will be looked into.
Commissioner Louney sated that this technology was a game changer and encourage that it
be explored at as soon as possible.
Smart Meter Update
Interim General Manager Peffley introduced Dave Bolan, Executive Director of Operations for
the Board of Water and Light, who provided an update on Smart Metering. Mr. Bolan stated
that with Smart Meters you can sectionalize the outage area and restore customers through
remote sources or decreased voltage on the system. This is a very expensive technology, $25
million to $30 million to add to our system. He stated that the Board of Water & Light has
decided to do a pilot program of the technology utilizing 140 smart meters. Meters were
installed last December in a small area in E. Lansing and are in the process of finishing our
Regular Board Mtg.
March 31,2015
Page 3 of 22
systems acceptance test. Mr. Bolan said that we want to evaluate and make sure that we
fully understand the capabilities of this technology and from that look at other pilots to test
the distribution automation technology and then from there move on to how we implement
within our financial means. Realistically it could take up to 7 years to roll out this plan.
There was dialogue regarding what other companies in Michigan are doing in regards to
Smart Metering. In response to questions, regarding this matter Mr. Bolan stated that in
Michigan both Consumers Energy and DTE has Smart Meter Program. Commissioners Louney
and Bossenbery indicated that the implementation of Smart Metering was a
recommendation from the CRT Report and strongly suggest and support that we proceed
with the technology.
Haco Update
Interim General Manager Peffley informed the Commissioners that the Haco project is
currently on schedule for completion at the end of March, and will close out at the approved
budget amount. He stated that the main reason he brought this matter to the
Commissioners was to offer a sneak preview or a walk-through of the facility. He said that a
very nice area has been designed for people to come in and pay their bills. Board of Water &
Light employees will start to move to the renovated facility sometime in April.
CRT Update
George Stojic, Executive Director of Planning and Development provided an update on the
CRT Report. He stated three items have been completed since the last update. Those include
National Incident Management system communications training for BWL managers and
senior staff and a couple of recommendations that deal with coordination and consolidation
of emergency plans and procedures with city and regional plans and procedures. There were
a total of 187 CRT/PSC/BWL recommendations and 155 of those have now been completed
or become an ongoing part of the BWL's practices and procedures. Ten recommendations
were originally allocated to the Board and the City, leaving 22 for the staff to complete and
these are expected to be completed by the end of this fiscal year. Since the last report we
have completed the last of the BWL's 54 recommendations by adding a text messaging
option to the 877 number as an alternative way for customers to communicate outages. Mr.
Stojic stated that the BWL has begun to work with customers that have critical facilities and
might be eligible for onsite generation to help create a more robust distribution system and
that BWL staff is continuing to work with the Red Cross on train the trainer. BWL is also
working with Do 1 Thing to extend programing to local business. On April 15th, Do 1 Thing will
be conducting emergency preparedness training to downtown Lansing businesses. Mr. Stojic
also commented on Trent Adkins role as Emergency Director, noting that he has taken the
lead on helping to build local and regional resiliency. Friday, Mr. Atkins will be hosting a
meeting of regional emergency managers, including a session on cyber security.
Commissioner Louney engaged in dialogue with Mr. Peffley and Mr. Stojic regarding the
CRT's suggestions such as, the reporting of OMS implementations and maintenance, the
funding of the City of Lansing for tree trimming where the City has already engaged in
vegetation management. He also questioned the Boards responsibility on completing some of
the CRT's recommendations.
Environmental Regulatory Update
Regular Board Mtg.
March 31,2015
Page 4 of 22
George Stojic, Executive Director of Planning and Development noted that during the
November Committee of the Whole meeting that he planned to undertake both strategic
plan and integrated resource plan updates this year. He state that regulatory requirements,
especially environmental, have a major influence on utility planning and the need to update
the BWL's plans.. He said that he wanted to begin providing the Board with some of the
concepts, and issues that are involved, particularly on the environmental side. Mr. Stojic
explained four major environmental regulations and mentioned the BWL's compliance
strategy for each.
• The Cross State Air Pollution Rule (CSPAR)
This rule issued in 2005 was a result of areas in the eastern part of the United States not
meeting air quality standards for ozone and fine particulates and a major contributor to that
were emissions from power plants in upwind states like Michigan. The initial rule was
overturned in 2008 but I was reissued in 2014 and it is now a law. The Cross State Air
Pollution Rule reduces sulfur dioxide and oxides of nitrogen from electric generating power
plants. The compliance period started January 15Y and further reductions are required in
2017. CSAPR is a Cap and Trade program. One allowance is required for every ton of SOX
and NOX emitted from an electric power plant. Each state has a limited, or capped, number
of allowances that it allocates to electric generating units. An electric generator has the
option of using the allowance, selling or "banking" unneeded allowances, or purchasing
allowances, if needed for generation. The BWL has sufficient allowances to cover expected
generation through 2020.
• Mercury and Air Toxics Rule (MATS)
This rule was also issued by the EPA in 2005 as the Clean Air Mercury rule. In 2006 Michigan
proposed its own mercury regulations. In 2008, the federal rule was vacated by the courts.
In 2009, Michigan formally adopted its proposed rule. In 2012, the EPA reissued its rule as
MATS, and Michigan suspended its rule. MATS has been challenged, and it is currently before
the Supreme Court. The rule is intended to regulate mercury, fine particulates (PM), and
hydrochloric acid gas. The BWL's compliance date is April 2016, unless delayed or vacated by
the Supreme Court. Compliance costs for units 1 and 3 are considerable, and these units
were planned to be replaced by REO Town, so units 1 and 3 will need to be retired if the rule
is affirmed by the Court. The remaining BWL units can comply without major investment.
• Coal Combustion Rule or The Coal Ash Rule (CCR)
This Rule became effective in 2008 when a dike at a coal fired power plant in Tennessee
failed and released approximately one billion gallons of coal ash slurry onto joining property
and into the clinch at Emory Rivers. Those are major tributaries to the Tennessee River from
which couple million people get their drinking water, causing the EPA to consider regulating
coal ash installations. In 2010, the EPA decided to issue a draft regulation and finally adopted
a final rule in December of last year. In its final rule, the EPA chose to regulate coal as a non-
hazardous substance, instead of a hazardous substance. The rule adopts standards for the
structural integrity and inspection of coal ash facilities, adopts operating and notification
criteria, requires monitoring wells, and regulates locations of new coal ash installations. The
BWL has three potential sites affected by this rule. The north Lansing landfill, Comfort Street,
and the Erickson Ash pond. The BWL has previously removed approximately 850,000 cubic
yards of ash from Comfort Street and 700,000 cubic yards from Erickson. Because of these
projects, the BWL does not anticipate additional requirements beyond those currently
effective for each site.
0 Clean Power Plant Rule (CCP).
Regular Board Mtg.
March 31,2015
Page 5 of 22
This rule regulates carbon dioxide emissions from existing electric generating plants. The
goal is to reduce CO2 emissions 30 percent by 2030 from existing generating facilities.
There is no economical way to remove and sequester CO2 from existing plants. As a
result, the EPA requires a statewide compliance plan. The CO2 reductions are to take
place in two phases, the first in 2020 and the second in 2030. The EPA specified four
building blocks by which could be used for compliance: unit performance improvements,
unit redispatch, renewable energy, and energy efficiency. The EPA has received over 2
million comments on the rule, and the final rule is due mid-summer 2015.
Strategic Plan Framework
George Stojic, Executive Director of Strategic Planning and Development stated that he
planned to undertake two planning initiatives in 2015. The first one being a strategic plan
followed by an integrated resource plan later on. Mr. Stojic explained the difference in the
plans noting that the integrated resource plan is much more narrowly focused than the
strategic plan. He explained that he would plans to undertake the strategic plan in phases.
The first phase involves a draft update prepared by BWL employees. The second phase
involves the public, allowing our customers to provide comments and recommendations.
Changes to the draft plan may be made based upon the public input. Then the draft, along
with the public comments and recommendations will be provided to the Board for its
consideration. A final plan will be prepared based upon the Board's review of the draft and
public input and the Board will be requested to adopt the plan by resolution.
Other
Board Chair Price spoke about an email received from Rory Neuner who is representing
Michigan Air-Michigan Health, a statewide coalition of health groups working to educate
health professionals about the negative effects of burning coal. In the e-mail, she is
requesting to address the Board of Commissioners individually regarding this matter. Chair
Price suggested that she attend the next Committee of the Whole meeting and allow her to
address the entire Board as an agenda item. The Board of Commissioners agreed.
Commissioner Louney conveyed the following information:
• Request that the HR Committee address the issue of long term contracts and
prohibiting excessive severance payments for the General Manager and top
Management.
• Request that the HR Committee explore setting at a time line regarding a search
committee, a search process or a job posting for the GM position so the public is
aware.
• Internal Auditor Perkins will be presenting his finding from his independent audit at
the March Finance Committee meeting
• Talked with the new CFO regarding a possible separate Finance Committee meeting to
be held in either March or April with the agenda subject to include detailed
information about the functions of each department and it cost.
Public Comment
None
Closed Session discussion(Attorney-Client Memo)[MCL 15.268(h);MCL 15.243 (g))
Regular Board Mtg.
March 31,2015
Page 6 of 22
Committee of the Whole Chair Bossenbery stated that our attorneys have provided us with
an Attorney Client Privilege memorandum and they are present and available to discuss the
contents of that memorandum with us.
Motion by Commissioner Price, Seconded by Commissioner Mullen to go into closed
session for the purpose of reviewing the contents of the attorney-client privileged
memorandum as permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL
15.243(g).
Roll Call Vote:
Yeas: Commissioners Bossenbery, Louney, McCloud, Mullen, Price, Thomas, Ward and Zerkle
Nays: None
The Committee of the Whole went into closed session at 7:00 p.m.
The Committee came out of closed session to discuss the recording of closed session minutes
at 7:10 p.m.
Motion by Commissioner Ward, Seconded by Commissioner Mullen to go back into closed
session for the purpose of reviewing the contents of the attorney-client privileged
memorandum as permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL
15.243(g).
Roll Call Vote:
Yeas: Commissioners Bossenbery, Louney, McCloud, Mullen, Price, Thomas, Ward and Zerkle
Nays: None
The Committee of the Whole went into closed session at 7:11 p.m.
Closed Session concluded at 8:07 p.m.
Excused Absence
None
Adiourn
On Motion by Commissioner Ward, Seconded by Commissioner Mullen, the meeting
adjourned at 8:08 p.m.
Respectfully Submitted
Margaret Bossenbery, Chair
Committee of the Whole
COMMITTEE OF THE WHOLE
March 10, 2015
The Committee of the Whole of the Lansing Board of Water and Light met at the BWL
Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m.
on Tuesday, March 10, 2015.
Regular Board Mtg.
March 31,2015
Page 7 of 22
Committee of the Whole Chair Margaret Bossenbery called the meeting to order and asked
the Corporate Secretary to call the roll.
Present: Commissioners Dennis M. Louney, Margaret Bossenbery, Anthony McCloud, Tony
Mullen, Tracy Thomas, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle.
Absent: None
Public Comments
None
Approval of Minutes
Motion by Commissioner Price, Seconded by Commissioner McCloud to approve the
Committee of the Whole meeting minutes of February 17, 2015.
Action: Motion Carried
Regional Customer Input
Bob Nelson of E. Lansing spoke about Public Act 95 of 2013, a low-Income Energy Assistance
Fund (LIEAF) Section 9(t), which provides that money from LIEAF be expended by the State of
Michigan's Human Services Department. Mr. Nelson explained that on July I" of every year
each utility in the state has to make an election as to whether or not they will surcharge their
customers based on a factor that is set by the Public Service Commission and apply amount
throughout the next year. The other option is to agree not to shut off customers throughout
the winter months, the Board initially chose the second option. At this point, the BWL can
elect another option by this July and if that happens, various agencies could apply for money
that is raised by that fund and then that money would be distributed to various agencies. He
stated that the BWL has concerns about keeping that money within the Board of Water &
Light territory and believes that a good effort can be made to accomplish that. Mr. Nelson
introduced Mr. Ivan Love, Director of Capital Area Community Services who addressed that
issue.
Mr. Love stated that he wanted to start conversations and make an offer to help the Board
regarding PA95. He stated if the Board of Water & Light decided to opt into PA95 where a
surcharge could be added to the customer's bill, he would be willing to put forth a request to
the State of Michigan to administer the fees that are collected.
After a lengthy discussion regarding this matter, Chair Price suggested that staff prepare
something for the Committee to review at the next or a future Committee of the Whole
meeting. Maybe a review of the different options, the cost of those options and then the
Committee can have an informed discussion and move forward.
MI Air, MI Health Coalition Presentation
Rory Nuener a Representative for the Michigan Air, Michigan Health Coalition presented the
Committee of the Whole with a presentation about the impacts of health and energy polices.
The MI Air MI Health Coalition has existed since 2012 and works to ensure the message of
their mission, which is to ensure healthy air for Michigan communities by, assessing the
health effects of air quality and advocating for the enforcement of policy to address air
quality issues. Ms. Neuner stated that the organization connects with professional people to
have conversations about how air pollution is affecting health and how energy policy
Regular Board Mtg.
March 31,2015
Page 8 of 22
connects to that. Ms. Neuner stated that the BWL is going through a hiring process for a new
General Manager and suggested that now is the time to start thinking about how health, air
pollution, BWL's policies and the way business is done every day and the impact on the
health of the residents of the greater Lansing region. She encouraged the Commissioners to
hire a General Manager who has credentials as well as leader who can be responsible for the
protection of the health of the people across Greater Lansing.
David Erickson, Lansing Resident, (Registered Nurse) provided information on health impacts
of our current energy. He stated the BWL has two coal-fired power plants that affect our
health. Particle matter and smog have a particularly serious impact on children and we need
to reduce the external factors that cause asthma exacerbations. Mr. Erickson elaborated on
public health illnesses due to poor air quality, such as cancer, cardiovascular disease and
asthma. He stated that outdoor air pollution, has also been recognized by the CDC and other
leading organizations as a trigger for asthma attacks and believes that coal burning plants in
Mid-Michigan contributes to asthma exasperations.
Jocelyn Hayward, Lansing Resident (Nurse & hold a Masters' Degree in Public Health),
provided statistical information on asthma in the State of Michigan. Ms. Hayward also
provided information on asthma health disparities and social determinants of health. She
stated that Michigan's asthma rate is higher than the national rate for hospitalizations and
coal-fired plants are a large reason for asthma attacks and premature deaths.
Ms. Neuner concluded by stating that health in all policies is a growing movement about
approach to decision making development. It is acknowledging that the decision you make as
a Board have impact on the health of the people of greater Lansing; also, it is the BWL
creating some kind of interdepartmental team that is going to take a broad look at health and
how the organization makes decisions about health. She again stated the importance of
including health related questions to the interview portion of the GM hiring process, as well
as the importance of exploring ways to incorporate health decision making in all policies.
Frozen Water Pipe Update
Interim General Manager Peffley provided an update on frozen water pipes. Mr. Peffley
informed the Board that the company is experiencing another year of an enormous amount
of frozen water services. In a typical year, the BWL may deal with 30 frozen house water
pipes and this year we are at 500 and counting. Because of this issue, staff is working 7 days
a week because our policy is, we will not go home until you have water. We are also
experiencing a high number of main breaks associated with this winter.
Lead Service Replacement
Interim General Manager Peffley stated that about 10 years ago the BWL undertook an
aggressive schedule to change all of the lead service replacements out in the city of Lansing.
Previously Mr. Peffley stated that by year-end 2017 all lead pipe replacements would be
complete. However, there are 20 homes on Moore's River Drive that are due to have the
replacement service; and the city has asked the BWL to push the completion date from 2017
to 2018 because they are going to rebuild the road at that time and it would save them
thousands of dollars in asphalt costs if we wait 1 year.
Discussion re: Seating Options for New Advisory Commissioners
Board Chair Price stated that when the amendment passed to amend the city charter to add
3 new Advisory Board members to the Board, the Corporate Secretary questioned what to do
Regular Board Mtg.
March 31,2015
Page 9 of 22
regarding the seating arrangement with the new incoming Commissioners. Board Chair Price
stated that although the new Commissioners are non-voting is it very important to
accommodate them and to be inclusive and make them feel welcomed. With that, being
said Corporate Secretary Griffin worked with engineering and Mr. Peffley to get some ideas
and cost info to accommodate the three new Commissioners seating situation and that
information is being presented this evening in the form of scenarios.
Interim General Manager Peffley reviewed the scenarios.
There was a lengthy discussion amongst Commissioners regarding the presented scenarios.
At the conclusion of the dialogue, the following motion was offered.
Motion by Commissioner Zerkle, Seconded by Commissioner Price to bring seating
arrangement scenario #3 to the full Board for consideration.
Discussion: Commissioner Thomas stated that if the seating situation task is not completed
by July I"the Board will not be in violation of any kind and therefore this is not a crisis.
Action: Motion Carried (7/1 Ward dissenting)
Seating Arrangement Scenarios for new Advisory Board Members
Scenario#1
Move Phil Perkins to the back of the dais area and locate the three new Advisory
Commissioners at the dais. The cost of a table 48" wide by 25.25" deep for Mr. Perkins is
approximately $4,500 if we match the wood grain and color already in place. This would also
require the purchase of three new high back chairs at a cost of approximately $4,500. In
addition, a matching table for the COW meetings is required, estimated cost $5,500. Total
cost is approximately $14,500. Scenario #1 is not recommended because the spacing
between the chair arms at the desk is very tight, approximately 5.5" vs. the nearly 11" which
exists today.
Scenario#2
Locating a new table down in front of the dais, which you and I both talked about and
decided.that this may not make the new Commissioners feel included. In addition, there is
the line of sight issue for the Advisory Commissioners during presentations. Estimated cost
for that table would be at least $5,500 and would require the purchase of three new high
back chairs at a cost of approximately $4,500. In addition, a matching table for the COW
meetings is required, estimate cost $5,000.00. Total cost approximately$15,000.
Scenario#3
Add an extended dais area that would match the existing Commissioner sitting area. The cost
from the Christman Constructors, Inc. for building the dais is extension is $15,900. In
addition, three raised chairs for the Advisory Commissioners for the new dais are estimated
at $4,500. To that, we will need to add a matching table for the COW meetings estimated at
$5,500 plus three additional high back matching chairs, estimated at $4,500.00. Total cost
Scenario#3 $30,400.
Closed Session discussion(Attorney-Client Memo)[MCL 15.268(h);MCL 15.243 (g)1
Regular Board Mtg.
March 31,2015
Page 10 of 22
Committee of the Whole Chair Bossenbery stated that our attorneys have provided us with
an Attorney Client Privilege memorandum and they are present and available to discuss the
contents of that memorandum with us.
Motion by Commissioner Price, Seconded by Commissioner McCloud to go into close session
For the purpose of reviewing the contents of the attorney-client privileged memorandum as
permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL 15.243(g).
Roll Call Vote:
Yeas: Commissioners Bossenbery, Louney, McCloud, Mullen, Price, Thomas, Ward and Zerkle
Nays: None
The Committee of the Whole went into closed session at 6:49 p.m.
The Committee came out of closed session to discuss the recording of closed session minutes
at 7:03 p.m.
Motion by Commissioner Price, Seconded by Commissioner McCloud to go back into close
session for the purpose of reviewing the contents of the attorney-client privileged
memorandum as permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL
15.243(g).
Roll Call Vote:
Yeas: Commissioners Bossenbery, Louney, McCloud, Mullen, Price,Thomas, Ward and Zerkle
Nays: None
The Committee of the Whole went back into closed session at 7:04 p.m.
Upon Closed Session at 7:13 p.m., the following motion was offered:
Motion by Commissioner Price, Seconded by Commissioner McCloud to authorize the Interim
General Manager to resolve the insurance claim with FM Global as recommended by and
discussed with legal counsel.
Action: Motion Carried
Motion Commissioner Zerkle, Seconded by Commissioner Price to authorize the engagement
of Denenberg Tuff ley to represent the BWL against JCI Jones Chemicals Inc. contingent on the
approval of Lansing City Counsel.
Action: Motion Carried
Other
Commissioner Louney stated that he reviewed the CRT recommendations and notices some
things that were not been updated. He suggested that the Board might want to consider
having a year after the storm meeting to review all of the recommendations and get a
summary of where we are and what has been completed. He stated that he believes that it is
the Board's due diligence to come back to the public and tell them that we as a Board have
Regular Board Mtg.
March 31,2015
Page 11 of 22
tasked ourselves with making sure the CRT's and PSC's recommendations are complete and
we have reviewed them.
Commissioner Price stated that there is some value in a one year report, specifically to report
out what we have done to prepare for the next time and to remind the public that we took
this seriously and that the staff continues to take this seriously and we will continue to
monitor these things.
Committee of the Whole Chair Bossenbery suggested that Interim General Manager Peffley
provide an updated report in the next month and then the Board could have discussion at the
May Committee of the Whole meeting.
Public Comment
None
Excused Absence
None
Adiourn
On Motion by Commissioner Ward, Seconded by Commissioner Mullen, the meeting
adjourned at 7:14 p.m.
Respectfully Submitted
Margaret Bossenbery, Chair
Committee of the Whole
FINANCE COMMITTEE
March 10, 2015
The Finance Committee of the Board of Water and Light met at the BWL Headquarters— REO
Town Depot located as 1201 S. Washington Ave., Lansing, MI, at 7:14 on Tuesday, March 10,
2015
Finance Committee Chairperson Dennis M. Louney called the meeting to order and asked the
Corporate Secretary to call the roll.
Present: Commissioners Dennis Louney, Margaret Bossenbery, Tony Mullen and Sandra
Zerkle; Also present, Commissioner Price
Absent: None
The Corporate Secretary declared a quorum.
Public Comments
There was no Public Comment
Approval of Minutes
Regular Board Mtg.
March 31,2015
Page 12 of 22
Motion by Commissioner Zerkle, Seconded by Commissioner Bossenbery to approve the
Finance Committee meeting minutes of November 11, 2014.
Action: Carried Unanimously
Internal Audit Status update
Internal Auditor Phil Perkins presented:
• FY 2015 Audit Plan Progress Report
• Independent Audit Results
• Requested Changes
FY 2015 Audit Plan Progress Report
Engagements Completed or in Progress:
1. Surprise Cash Count#1—completed
2. Time Reporting Review#1 - completed
3. Material Inventory Audit
Engagements Planned:
1. Health & Drug Benefit Programs Audit (95%complete)
2. Engineering-Annual Projects Audit (75%complete)
3. Board of Commissioners Independent Audit of Previous Administration (complete,
audit report in progress)
4. IT-PCI Compliance Audit (25% complete)
5. Time Reporting Review#2 (50% complete)
Engagements Remaining:
1. IT— Management of Non-Desktop Field Devices (Spring 2015)
2. Audit of Outage Management System (OMS)—pending Finance Committee approval
3. Follow-up of Post-Outage Recommendations— recommended deferral of all but OMS-
related until FY 2016
4. Surprise Cash Count#2
Independent Audit Results
Internal Auditor Perkins reported the results of the requested Audit. The Areas reviewed
included:
• Major purchases and expenditures approved by the previous administration, including
sole source and emergency contracts
• Handling of CEO Holtline complaints and incidents
• Review and approval of previous General Manager's Procurement Card (P-Card)
expense, and appropriate support for business expenses
Mr. Perkins stated that there is a P-Card manual which is basically the Board of Water &
Light's P-Card policy, and is the tool used for appropriate guidance. Mr. Perkins stated, there
are two reportable issues that he would like to inform the Board about. The first issue is,
Regular Board Mtg.
March 31,2015
Page 13 of 22
after looking at some of the bigger projects. There is need for more clarity regarding what
management needs to do to comply with Board policy regarding the need to report
anticipated budget variances that exceed predefined thresholds that are laid out in that
Board policy. Mr. Perkins cited a recent project. Mr. Perkins said the Haco renovation is as an
example where there was a placeholder budget estimate that was in place and used to
originally approve the project in fiscal year 2014. The costs incurred in 2014 were
considerably less than the budgeted amount and that is because the project was just getting
under way. The updated budget that was submitted for fiscal year 2015 a lot more was
known about how much the project would actually cost, and it was higher than the original
FY14 budget amount by a percentage and as a result exceeded the threshold that is outlined
in the Board policy. The board as part of the overall capital budget approved the larger
amount. Mr. Perkins said the question here is whether management should have made a
specific comment in its capital budget presentation to inform the board or the finance
committee at least that the new budget amount requested exceeded the placeholder
amount an amount that exceeds the Board Policy threshold. As the Internal Auditor Mr.
Perkins recommended it be made clear as to when a reportable event has occurred and that
is should be reported to the Board via the finance committee and the projected increase
must be approved by the board.
The second issue is with the former General Manager's purchasing card or P-Card expenses.
They were not reviewed or approved as they should have been based again on the Board P-
Card policy or adequately supported that they were for a business purpose. Example of that
is with the meal expenses, along with any other expense, the P-Card manual specifically
states that a receipt is to be provided and it is to be itemized in nature. A good deal of the
time the itemized receipt was not turned in and that does not conform with the Policy. The
other piece of that regarding these P-Card meal expenses is that the specific party and
organization that former General Manager dined with was not indicated. So, based on the
fact that we are looking roughly at an average of $100 a month in P-Card expenses, the
Internal Auditor certainly saw no evidence that would point him toward any type of abuse,
but by the same token, the Policy should have been complied with obviously. As the Internal
Auditor Mr. Perkins recommended that the General Manager's P-Card expenses be reviewed
and approved by either a Board member such as the finance chair or another designated and
approved official and that again the itemized receipts are provided. This is a thing that needs
to be reemphasized at least for this particular finding and to specifically indicate for meals
and the other participants and the organizations that they belong to, so that it is clear that
there is a business purpose to it.
Requested Changes
Internal Auditor Perkins stated that his last item that he would like to address the Board
about his requested changes. Mr. Perkins stated that he would like to add an audit of OMS to
the fiscal 2015 audit plan and defer the follow up on the post outage recommendation's
audit (except the OMS) until fiscal 2016. The final request change is to authorize the hiring of
an experienced IT auditor for the Internal Audit Department.
After dialogue regarding the hiring process for an experience IT employee, Finance Chair
Louney suggested that himself, CFO Heather Shawa-DeCook and Internal Auditor Perkins
meet to discuss a course of action as well as cost and bring the findings back to the Finance
Committee.
Regular Board Mtg.
March 31,2015
Page 14 of 22
Motion by Commissioner Zerkle, Seconded by Commissioner Mullen to accept the presented
Independent Audit.
Action: Motion Carried
Financial Overview for the Year to Date End January 2015
CFO Heather Shawa-DeCook provided the Committee with a brief overview of the BWL's
January financials as of the month end. (Year to Date) Ms. Shawa-DeCook stated that revenue
year to date as of January month end was at 7% under budget and expects revenue to
continue at that rate through the remainder of fiscal year end. As far as Net income update,
Ms. Shawa-DeCook said that we are even with revenues and are above net income
projections and there are two key contributing factors of that. One factor is that last
December, the finance team put together an 0&M budget reduction of 3.5% overall in which
they worked with the management team and as of the 2"d quarter review it is looking like we
will be able to maintain that at year end. The other contributing factor on the net income is
decreased fuel cost, which is a key one. We will have 3rd quarter budget reviews by late April
at which time an updated year-end projection will be provided to the Committee. Ms.
Shawa-DeCook stated that the company is currently under budget in head count, which we
would expect to be with our revenues down, however please note that we are projecting at
year end to be at or slightly over budget. Finance is currently planning for fiscal year 2016
and the 6-year overall O&M and Capital Budget. This concludes the financial overview.
Signature of Authority Resolution
Chief Financial Officer (CFO) Heather Shawa-DeCook presented the Committee with a
proposed Resolution for check signing signature authority, which is due to organizational and
title changes. The proposed Resolution would specifically grant authority to sign checks,
replacing Chief Administrative Officer with Chief Financial Officer.
Motion by Commissioner Zerkle, Seconded by Commissioner Bossenbery to forward the
proposed Resolution to the full Board for consideration.
Action: Motion Carried
Authority to Invest Operating and Pension Funds Resolution
CFO Heather Shawa-DeCook presented the Committee with a proposed Resolution, which is
specific to the title Chief Administrative Officer and updating it to reflect Chief Financial
Officer.
Motion by Commissioner Zerkle, Seconded by Commissioner Mullen to accepted amended
resolution.
Action: Motion Carried
Motion by Commissioner Zerkle, Seconded by Commissioner Mullen to accept the proposed
Resolution and forward it to the full Board for consideration.
Action: Motion Carried
Other
Regular Board Mtg.
March 31,2015
Page 15 of 22
Finance Chair Louney stated that all Commissioners should have received a copy of the
Board's proposed budget. There needs to be discussion regarding the budget
(Ipads/additional work load/conference/all other cost) to accommodate for the new Advisory
Board members coming in July. After reviewing the numbers, it breaks down to roughly
$5000 per Commissioner, which may be an additional $15,000 to $16,000 that may have to
be added to the Commissioner's budget. Finance Chair Louney said that there is time for
formal discussion regarding this matter but felt it was important to get those numbers out
there for everyone to see that. He stated that although the Commissioner's do not receive a
stipend,there is a cost for governing.
Board Chair Price stated that in interest of transparency, he is sure that the general public has
no idea of what it costs for the Commissioners to be here and believes it is very healthy to
have an open discussion about that.
Finance Chair Louney thanked CFO Heather Shawa-DeCook and Director of Finance Gennie
Eva and all of the Finance staff for all of their efforts.
Commissioner Bossenbery thanked Board of Water & Light's Engineer Dan Flynn for all of his
help on getting the information together regarding the proposed dais renovations.
Adjourn
On Motion by Commissioner Zerkle, seconded by Commissioner Bossenbery, the meeting
adjourned at 8:10 p.m.
Respectfully submitted
Dennis M. Louney
Chair Finance Committee
HUMAN RESOURCE COMMITTEE
March 17, 2015
The Human Resource Committee of the Lansing Board of Water and Light met at the BWL
Head quarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m.
on Tuesday, March 17, 2015.
The Human Resource Committee Chairperson Cynthia Ward called the meeting to order and
asked the Secretary to call the roll. The following members were present: Commissioners
Cynthia Ward, Anthony McCloud, Tony Mullen and David Price. Also present: Commissioners
Margaret Bossenbery,Tracy Thomas and Sandra Zerkle.
Absent: None
Public Comments
There were no public comments
Approval of Minutes
Motion by Commissioner McCloud, seconded by Commissioner Price to approve the Human
Resource Committee meeting minutes of January 20, 2015.
Regular Board Mtg.
March 31,2015
Page 16 of 22
Action: Motion Carried
General Manager Search/Timeline
Human Resources (HR) Chair Cynthia Ward opened the floor for discussion regarding
establishing a time line to begin the process for hiring a General Manager.
After a lengthy discussion regarding when the search process should begin and what the
process should entail the following motion was offered:
Motion by Commissioner Price, Seconded by Commissioner Mullen that by January 1 of 2016,
the Board of Water and Light Commissioners will have a process in place to begin the search
for the next General Manager.
Action: Motion Carried
Annual Appointment/long-term contract/severance Payments
HR Chair Ward opened the floor up for discussion regarding the Board Appointee process as
well as the allowance of a binding long-term contract. Ms. Ward stated that there may be a
legal opinion that states, a current or a siting board cannot bind a future board and that may
suggest that the Board cannot set contracts beyond one year. Ms. Ward also stated implicit
or explicit in the appointments process is an annual appointment, and in her opinion that
implies a one-year contract.
There was discussion about the possibility of this subject being a moot point if a Charter
Amendment is passed, but deserves some dialogue.
Commissioner Thomas stated for the record that before he was the HR chair, the general
manager had a multiyear contract; therefore, the multiyear contract was inherited when he
became Chair of HR.
HR Chair Ward stated that there might be some legal questions that need to be asked. One
legal question would be about the concept of binding the board. Chair Ward questioned if
the current Board can pass a resolution today that binds next year's or a future board. After a
lengthy discussion regarding the matter, the following motion was offered:
Motion by Commissioner Mullen, Seconded by Commissioner Price, that the Chair of the HR
Committee meet with legal representation to discuss what the Board of Commissioner's legal
responsibilities and opportunities are in reference to multiyear contracts.
Action: Motion Carried
There was no discussion regarding Severance payments.
Revisions to Performance Evaluation Forms for the General Manager and Internal Auditor
HR Chair Ward stated that sample of the revisions to the General Manager (GM) and Internal
Auditor's (IA) evaluation forms have been provided to Commissioners. She said before the
Commissioners today is a Google Form, which will allow you to complete the evaluation form
and submit it electronically at which time a percentage summary is automatically calculated.
Regular Board Mtg.
March 31,2015
Page 17 of 22
This format would also remove the possibility of any inaccurate transfer of information. Chair
Ward stated that her hope is that the Commissioners would try this process.
• General Managers Performance-Evaluation Form
HR Chair Ward stated that she did use the APPA format but implemented some changes to
the evaluation form, for example the inclusion of the Commissioner's names on the form and
a question pertaining to diversity.
The Commissioners reviewed some of the evaluation questions and the wording of those
questions. In addition, there was dialogue regarding the Google format and how the
inputted information would automatically calculate a percentage to the questions asked.
HR Chair Ward said that she would finalize the General Manager Performance-Evaluation
form after incorporating recommended changes and then recirculate the form again.
• Internal Auditor Performance-Evaluation Form
HR Chair Ward asked Internal Auditor Perkins to express his opinion on the Evaluation form
that was presented in the packet. Mr. Perkins spoke particularly about the area regarding
audit project skills and technical knowledge. He stated that the rating form in his opinion is
too specific as it is measuring performance at the individual audit level. Based on their
limited interaction with the Internal Auditor, it is Mr. Perkins' opinion that the Board
members are not set up to assess his performance at such a detailed level.
After some dialogue regarding the Internal Auditor Performance-Evaluation form, HR Chair
Ward took Commissioner Zerkle up on her offer to work with Mr. Perkins to review and
modify the form and set criteria to match up with the task the Board has charged him to
complete with the ability of judging the aspects of the completion of those tasks.
• Corporate Secretary Performance Evaluation Form
HR Chair Ward circulated the Corporate Secretary's evaluation form around and asked that
feedback be forwarded to her and she would work with Ms. Griffin to finalize the form.
HR Chair Ward stated that all Evaluation Forms should be completed by April 15, 2015. There
was dialogue regarding the security of putting the evaluation form on the web and the
establishment of a HR BWL email account for this purpose.
Commissioner Mullen stated having this on Google Docs would speed things up dramatically.
He said that he has been asking for something like this since he has been on the Board. To
have some sort of an email account set up with the ability for customers to direct contact the
Commissioners, rather than having to take extra steps to get a message to a Commissioner,
maybe, now would be the time to address that. Commissioner McCloud pointed out that in
order to accomplish Commissioner Mullen's request you would have to be on the Board of
Water & Light's server.
Chair Ward requested for the IT Department to contact her so that they could explore the
possibility and or options of placing the evaluation form on the web.
Regular Board Mtg.
March 31,2015
Page 18 of 22
Other
Commissioner Mullen spoke about the Board ability f hire someone hire help for he Internal becausethe Auditor
the Corporate Secretary. He said the Bo Appointed employees
is
committed. After speaking with legal he was informed that, the
themselves can hire someone if we put it in the budgetary process
and that the Hzeca certain
ir, and
amount of dollars for that purpose. Commissioner Mullen suggested
legal representation sit down and decide what we can do as a commission, to authorize our
employees to have the support they need to do their jobs.
Excused Absence
None
Public Comments
Steven Reed, LSJ Reporter questioned if the structure of the previous general manager's
contracts and reviews coincided with the BWL fiscal year, and because of the effects of the
review process, by which the Board is bound, with Mr. Peffley being given a one-year
contract in January, how will that effect his (one year contract) ending six months down the
line be?
In response to Mr. Reed's question HR Chair Ward stated in Mr. Peffley's contract under the
Termination Section it states that the Interim General Manager's Employment Agreement
may be.terminated by either party at any time with or without cause and with or without
reason.
Ms. Ward was reminded that the Board does not usually respond to questions during public
comment.
Board Chair Price congratulated Commissioner Ward on her new employment position.
Adiourn
On Motion by Commissioner Price, seconded by Commissioner McCloud,the meeting
adjourned at 6:46 p.m.
Respectfully Submitted
Cynthia Ward, Chair
Human Resource Committee
MANAGER'S RECOMMENDATIONS
RESOLUTION 2015-01-01
UNFINISHED BUSINESS
There was no Unfinished Business
NEW BUSINESS
There was no New Business
Regular Board Mtg.
March 31,2015
Page 19 of 22
RESOLUTIONS
RESOLUTION 2015-03-01
Authority to Invest Op grating and Pension Funds
RESOLVED, that Board of Water and Light Policy 7-01 "Authority to Invest Operating and
Pension Funds" is hereby amended as follows:
RESOLVED, that the General Manager and the Chief Financial
nand officer
er shall bo alit orizedsa o
establish all necessary cash and investment accounts
transactions and agreements required to provide for the investment of operating
erat ges a
pension funds in the name of the
Board incl include, but aer dreLnottlimBited,to, the purchase, sale,
permitted by law. Allowable transactions
and endorsement for transfer of certificates representing securties. All
Operating Fund
must also be in compliance with the then current
Investment Policies.
gate
RESOLVED, that the General Manager and the Cheef specified
Financial
f edl BWL staff respectivelyofficer may further le The
their full or limited investment authority to oth p
General Manager and Chief Financial Officer shall e extent of authority
Only employees with
delegated as well as the specific BWL staff receiving said authority.
actual, documented authority may be permitted to execute investment activities.
The Revenue Bond Act of 1933 (PA 94 of 1933, 5n and)I as restrict thedinvestmentlof BWL
943, as
amended, and BWL Bond Resolution 89 10 3 gove
operating funds. Pension funds are governed by the Public Retirement System Investment
Act (MCL 38.1132 et seq.), as amended.
This resolution supersedes Resolution 2014-11-4
Staff Comments: Due to organizational and title changes,
this resolution is necessary to
incorporate the new title and position of Chief Financial
r.
Motion by Commissioner Zerkle seconded by Commissioner Mullen Ward,to approve the
Resolution for the Authority to Invest Operating and Pension Funds to reflect organizational
changes.
Action: Carried Unanimously
RESOLUTION 2015-03-02
AUTHORITY TO SIGN CHECKS
RESOLVED,That Board of Water and Light Policy 1-01 "Authority to Sign Checks" is hereby
amended as follows:
The signatures of not less than two (2) of the following officers shall be required to issue
checks from any general checking account he by the BWL
Regular Board Mtg.
March 31,2015
Page 20 of 22
1. General Manager
2. Chief Financial Officer
3. Corporate Secretary
This resolution supersedes Resolution 2009-12-07.
Motion by Commissioner Ward seconded by Commissioner Mullen Ward, to approve the
Resolution for Signature Authority to reflect organizational changes.
Action: Carried Unanimously
RESOLUTION 2015-03-03
ENGAGEMENT OF DENENBERG TUFFLEY
WHEREAS, FM Global,the Lansing Board of emical`s LlnctfoBthe)Irecovery of nsured losses
nce carrier, has
filed a subrogation claim against JCI Jones Ch
associated with the July 2011 Wise Road Incident;
WHEREAS, the LBWL has an opportunity to pursue recovery of its uninsured losses directly
from JCI Jones Chemicals, Inc. through a joint representation arrangement with FM Global
whereby the LBWL would engage FM Global's attorney, Denenberg Tuffley represent the
LBWL directly;
WHEREAS, as recommended by staff and supported by the Board of Commissioners,the
LBWL would like to engage Denenberg Tuffley to represent the LBWL directly in a joint
representation arrangement in pursuit of recovering the LBWL's uninsured losses associated
with the July 2011 Wise Road Incident;
WHEREAS, Deneberg Tuffley is not on the LBWL's Special Counsel List approved by the
Lansing City Council; and
WHEREAS, Section 4-304 of the Lansing City Charter prohibits a board or officer from
retaining legal counsel which has not been approved by City Council.
RESOLVED, the Board of Commissioners authorizes the engagement of Denenberg Tuffley to
represent the LBWL against JCI Jones Chemical, Inc., contingent upon the approval of Lansing
City Council.
Motion by Commissioner Bossenbery seconded by Commissioner Mullen,to approve the
Resolution for the retention of the Denenberg Tuffley Law Firm.
Action: Carried Unanimously
RESOLUTION 2015-03-04
AUTHORITY TO RESOLVE INSURANCE CLAIM
Regular Board Mtg.
March 31,2015
Page 21 of 22
RESOLVED,that the Board of Water & Light Board of Commissioners authorize Interim
General Manager Richard Peffley to resolve the insurance claim with FM Global for the July
2011 Wise Road incident as recommended by and discussed with legal counsel.
Motion by Commissioner Zerkle seconded by Commissioner Ward, to approve the Resolution
authorizing the Interim General Manager to resolve the insurance claim with FM Global.
Action: Carried Unanimously
PULLED FROM THE AGENDA AND REFERRED BACK TO THE COW
Proposed Resolution: Advisory Non-Voting Commissioner Seating Accommodations
WHEREAS, on November 4, 2014 the Lansing City Charter was amended such that section 5-
103.12 was added;
WHEREAS, section 5-103.12 of the Lansing City Charter provides for 3 additional
Commissioners for the Board of Water& Light representing municipalities outside the City of
Lansing of which are non-voting Commissioners;
WHEREAS, the addition of the 3 additional Commissioners require certain physical and
operational considerations to address meeting attendance needs;
WHEREAS, the Corporate Secretary,together with operational staff have investigated and
presented the Board of Commissioners with a seating arrangement options at the March 10,
2015 Committee of the Whole meeting;
WHEREAS, the Committee of the Whole passed a motion to recommending Scenario#3,
which would physically extend the current dais to accommodate the 3 additional
Commissioners new members; and
WHEREAS, Scenario #3 would also include the purchase of new chairs and a matching table
for regular committee meetings.
RESOLVED, that the Board of Water & Light Board of Commissioners authorize and direct the
Corporate Secretary,together with operational staff to proceed with effectuating Scenario
#3 for the purposes accomplishing necessary seating accommodations for the 3 additional
Commissioners.
--------------------
MANAGER'S REMARKS
Interim General Manager Peffley informed the Board of the following:
The Board of Water & Light was a $2000.00 Sponsors for the Red Wings Spartan
Alumni Hockey game that was held at Munn Arena on March 15, 2015. This donation
helped the Steadfast Foundation raise money for local charities that focuses on cures
for children with cancer.
Regular Board Mtg.
March 31.2015
Page 22 of 22
• The Board of Water & Light is in the process of responding
E. to an Lansing.employee
is I
Training Program RFP that was requested by the City o
known for its safety record and has good program. Interim General Manager Peffley
believes this a great partnership between the BWL and City of E. Lansing and will
further support regionalization.
• Directly following tonight is meeting, Interim General Manager Peffley will conduct a
tour of the newly renovated Haco facility for the Commissioners and staff.
COMMISSIONERS' REMARKS
There were no Commissioner's Remarks
EXCUSED ABSENCE
Motion by Commissioner McCloud, Seconded by Commissioner Ward to excuse
Commissioner Thomas from tonight's meeting.
PUBLIC COMMENTS
Paul Matuka, a resident of E. Lansing, MI, spoke about stockholder input.
Closed Session Discussion (Attorney—Client Memo)............MCL 15.268 (h); MCL 15.243 (g)]
ent
riv
Board Chair Price stated that our attorneys have provided
rl dtos with an discuss Attorney
conteints Pof ithat
lege
memorandum and they are present and a
memorandum with us.
Motion by Commissioner Bossenbery, Seconded by Commissioner Zerkllient pro go into
closed
session for the purpose of reviewing the contents of
ed
memorandum as permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL
15.243(g).
Roll Call Vote:
y, Louney, McCloud, Mullen, Price, Ward and Zerkle
Yeas: Commissioners Bossenber
Nays: None
Absent: Commissioner Thomas
The Committee of the Whole went into a Closed Session meeting at 5:47 p.m.
The Committee returned to the Open Session meeting at 6:23p.m.
ADJOURNMENT
On motion by Commissioner Bossenbery, seconded by Commissioner McCloud the meeting
adjourned at 6:26 p.m.
M. Denise Griffin, Corporate Secretary
Preliminary Minutes filed(electronically)with Lansing city clerk:April 9,2015
official Minutes filed(electronically)with Lansing city clerk:June 9,2015
ORciallyApproved on 3-37-15
Hamneani�oplr.Nvmwnn N.e..
MINUTES OF THE BOARD OF COMMISSIONERS'MEETING
LANSING BOARD OF WATER AND LIGHT
—.r L:1
January 27, 2015 C, ,
The Board of Commissioners met at the BWL Headquarters-REO Town Depot located at-120V
S. Washington Ave. Lansing, MI at 5:30 m. on Tuesday, January 27 2015.
g g, p• Y, Y
Chairperson David Price called the meeting to order at 5:30 p.m.
Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud, Tony
Mullen, David Price, Cynthia Ward and Sandra Zerkle.
Absent: Commissioner Tracy Thomas
The Corporate Secretary declared a quorum present.
Commissioner Anthony McCloud led the Pledge of Allegiance.
Chair Price acknowledge and welcomed the newly designated Board of Water & Light non-
voting members Mike Froh from Meridian Township and Robert Nelson from E. Lansing.
APPROVAL OF MINUTES
Motion by Commissioner Ward, seconded by Commissioner Mullen to approve the Regular
Board Meeting minutes of November 18, 2014.
Action: Motion Carried
Motion by Commissioner Ward, seconded by Commissioner McCloud to approve the Special
Board Meeting minutes of January 13, 2015.
Action: Motion Carried
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
------------------
Regular Board Mtg.
January 27,2015
Page 2 of 7
COMMUNICATIONS
TO BWL COMMISSIONERS:
Lansing's City Charter allows for a distinct separation of the Board of Water and Light and the
Lansing City Government. This separation needs to be maintained with BWL Commissioner's
leadership in order to oppose Mayor Bernero's plan to have BWL Management reporting as a
City Department. The Board of Water and Light Commission is not like any other Lansing
Board which comes under the Mayor's purview.
The current structure of the BWL is absolutely the correct one, as it allows the Mayor's
political input by appointing Lansing residents as proposed BWL Comissioners and then
allows City Council input by approving or disapproving each proposed Commissioner.
Th BWL should maintain it's current structure under the 2014 revised Charter to allow it to
conduct it's business by following city, state and federal regulations that it is required to abide
by as a municiple utility.
R Byrnes, BWL Retiree-Electronic Mail
Referred and Forwarded to All Commissioners
Received and Placed on File
COMMITTEE REPORTS
HUMAN RESOURCE COMMITTEE
January 20, 2015
The Human Resource Committee Chairperson Cynthia Ward called the meeting to order and
asked the Secretary to call the roll. The following members were present: Commissioners
Cynthia Ward, Anthony McCloud, Tony Mullen and David Price. Also present: Commissioners
Margaret Bossenbery, Dennis Louney, Tracy Thomas and Sandra Zerkle.
Absent: None
Public Comments
There were no public comments
Human Resources (HR) Committee Chair Ward thanked all of the Commissioners who are not
part of the HR Committee for attending this evening and welcomed Interim General Manager
Dick Peffley to this meeting. As the Chair of the HR Committee Commissioner Ward took
privilege to move Agenda item #2(Draft Contract for Interim General Manager) down on the
Agenda to become item #4. There is a legal memo associated with the mentioned item
therefore the Committee will go into Closed Session pursuant to Michigan Law as well as go
into a separate Closed Session for Agenda item #5.
Approval of Minutes
Motion by Commissioner Mullen, seconded by Commissioner Price to approve the Human
Resource Committee meeting minutes of September 16, 2014.
Action: Motion Carried
Resolution Designating Commissioners to work with Legal Counsel
HR Chair Ward stated there was a Resolution put forth last week at the Special Board
Meeting that included designees for working with legal counsel pertaining to the termination
of J. Peter Lark. The purpose of this Resolution is to clarify that it is the Board Chair and the
Regular Board Mtg.
January 27,2015
Page 3 of 7
HR Chair to serve as the point persons to resolve or work with legal counsel to resolve any
disputes or to finalize the termination of J. Peter Lark. This resolution clarifies that language;
this resolution also makes it clear that any final discussion or terms relative to finalizing the
termination of J. Peter Lark is to be presented to the Full Board for consideration and for a
vote.
At the request of Commissioner McCloud, HR Chair Ward read the following Resolution into
the record.
Proposed Resolution
BE IT RESOLVED, That the official point of contact for the purpose of working with legal
counsel to finalize the termination of J. Peter Lark's contract will be Chair David Price and
Human Resources Chair Cynthia Ward; and
BE IT FINALLY RESOLVED, That the full Board of Commissioners will be kept appropriately
updated by Commissioners Ward and Price of developments; and any proposals for final
resolution will be presented to the full Board of Commissioners for consideration and
approval.
Motion by Commissioner Price, Seconded by Commissioner McCloud to forward the
proposed Resolution to the Full Board for consideration.
Action: Motion Carried
Sample Performance Evaluation Forms
HR Chair Ward stated that at a prior Human Resources committee meeting there was some
discussion about making changes to the instrument that is used to evaluate the Board's three
appointed employees. Ms. Ward stated that she contacted the American Public Power
Association (APPA) and they shared several evaluation samples. She said the evaluations
included in the meeting packet is primarily for information and welcomes any thoughts on
the documents. Chair Ward stated that she is partial to the APPA evaluation form because
the areas that they tend to address would be appropriate in the areas that this Board would
want to address in our evaluation form. She said that the samples included is just for the
General Manager and is still trying to secure sample evaluations for the Internal Auditor and
the Corporate Secretary.
Chair Price said the sample is nice and is in favor of it. It narrows down the choices and the
scale is much more reflective of what is being used in many personnel evaluations today. He
said that we need different evaluations for our different employees because the questions
that need to be asked are significantly different for each of the appointed employees.
HR Chair Ward said that she would like to include on the appointed employee's evaluation
forms an area that explicitly indicates goals and objectives going forward in the next year.
She stated that she would follow up with the APPA to see if their form can be used due to
their copyright status.
Commissioner Mullen said that he would like to have an opportunity to sign the evaluation
forms. HR Chair Ward stated that the Board needs to think about whether it makes since to
put forth eight separate evaluations or one Board evaluation. After more discussion
regarding this matter, HR Chair Ward stated that she will make sure that Commissioner
Mullen's concerns are addressed.
Regular Board Mtg.
January 27,2015
Page 4 of 7
Draft Contract for Interim General Manager
HR Chair Ward stated that the Committee is being provided with an Attorney Client Privileged
Memorandum. Considering such a discussion is most appropriate in Closed Session.
Motion by Commissioner Mullen, Seconded by Commissioner McCloud to go into closed
session for the purpose of reviewing the contents of the attorney-client privileged
memorandum as permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL
15.243(g).
Roll Call Vote: Yeas: Commissioners Ward, McCloud, Mullen and Price
Nays: None
The Human Resource Committee meeting went into closed session at 5:14 p.m.
Motion by Commissioner Price, seconded by Commissioner McCloud that the Human
Resource Committee returned to open session. (6:25 p.m.)
HR Chair requested Members of the HR Committee, All Board of Commissioners and the
Board's Attorneys to be include in the Closed Session.
Upon conclusion of the closed sessions, the following motion was made.
Motion by Commissioner McCloud, Seconded by Commissioner Mullen to allowing HR Chair
Ward and Board Chair Price to work with the attorneys and Mr. Peffley in finalizing the terms
of his contract and said contract to be brought back to the Full Board for review and
approval.
Action: Motion Carried
Closed Session Discussion (Attorney-Client Memo)................................... (DISCUSSION ONLY)
[MCL 15.268(h) and MCL 15.243(g)]
Motion by Commissioner Price, Seconded by Commissioner McCloud to go into Closed
Session for the purpose of reviewing the contents of the Attorney-Client Privileged
Memorandum as permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL
15.243(g).
Roll Call Vote: Yeas: Commissioners Ward, McCloud, Mullen and Price
Nays: None
The Human Resource Committee meeting went into closed session at 6:29 p.m.
Motion by Commissioner McCloud, seconded by Commissioner Price that the Human
Resource Committee returned to open session. (7:40 p.m.)
Other
None
Excused Absence
None
Public Comments
None
Regular Board Mtg.
January 27,2015
Page 5 of 7
Adiourn
On Motion by Commissioner Price, seconded by Commissioner McCloud, the meeting
adjourned at 7:41 p.m.
Respectfully Submitted
Cynthia Ward, Chair
Human Resource Committee
MANAGER'S RECOMMENDATIONS
Interim General Manager Peffley had no Manager's Recommendations.
UNFINISHED BUSINESS
There was no Unfinished Business
NEW BUSINESS
Commissioner Bossenbery stated her intent to schedule Committee of the Whole meetings
every month because she feels it is important during this transitional period.
Finance Committee Chair Louney informed the Board of Commissioners that Internal Auditor
Perkins would be performing a review of the books as the new management takes over.
There was a question and discussion period regarding the difference between what the
Internal Auditor regularly reports to the Board of Commissioners opposed to the requested
review of the books. There was also discussion regarding the way in which the decision to
undertake this task was put before the Board without going to the committee first. Finance
Chair Louney stated that he wanted to make it very clear that there is nothing wrong,just felt
it was important to start this new management off with a fresh slate, which is common when
there is a change in leadership. Mr. Louney also stated that there was not time to have a
committee meeting and this matter would not have been before the committee until late
February.
Internal Auditor Perkins stated that this audit would be more focused and targeted toward
the type of transactions that were approved at the General Manager level. The more major
expenditures or investments and so forth that we might touch into some of the other audits
but certainly would not have focused on that particular type of expenditure investment
necessarily that we would have going into this audit where that is going to be our central
focus. Mr. Perkins anticipated that the audit would take about six weeks.
Motion by Commissioner Louney, Seconded by Commissioner Mullen to authorize Internal
Auditor, Phil Perkins, to do a general audit, which he will define for us on some specifics in
regards to our financial structure and report back to the finance committee and the full
Board.
Discussion: Commissioner Bosssenbery stated her disappointed that this matter did not come
before the Finance Committee.
Action: Motion Carried
Regular Board Mtg.
January 27,2015
Page 6 of 7
RESOLUTIONS
RESOLUTION 2015-01-02
BE IT RESOLVED, That the official point of contact for the purpose of working with legal
counsel to finalize the termination of J. Peter Lark's contract will be Chair David Price and
Human Resources Chair Cynthia Ward; and
BE IT FINALLY RESOLVED, That the full Board of Commissioners will be kept appropriately
updated by Commissioners Ward and Price of developments; and any proposals for final
resolution will be presented to the full Board of Commissioners for consideration and
approval.
Motion by Commissioner McCloud seconded by Commissioner Mullen Ward, to approve the
schedule for the 2015 Regular Board Meeting Dates.
Action: Motion Carried
MANAGER'S REMARKS
Interim General Manager Peffley introduced new CFO, Heather Shawa-DeCook. He stated
that Heather comes with a wealth of executive management experience in leadership,
budgeting and organizational development that will help guide the Board of Water & Light
into the future. He asked that everyone welcome her aboard.
Commissioner Bossenbery presented Interim General Manager Peffley with a series of
questions regarding his decision to hire the new CFO and potential interest in the merging or
consolidation of certain departments with the City of Lansing. Mr. Peffley responded to all
questions and noted that the Board of Commissioners would be inform and made aware of
any merger or consolidation considerations.
COMMISSIONERS' REMARKS
Commissioner Zerkle thanked Interim General Manager Peffley for immediately responding
to the issue regarding tennis shoes being wrapped around electrical wires.
Commissioner Ward announced that each Commissioner was provided with a contact
information/assignment list at their sitting area for review and to please submit any changes
or corrections to Corporate Secretary Griffin.
EXCUSED ABSENCE
Motion by Commissioner Mullen, Seconded by Commissioner McCloud to excuse
Commissioner Thomas from tonight's meeting.
PUBLIC COMMENTS
Robert Nelson of E. Lansing stated the he is looking forward to working with the Board of
Commissioners come July 1st. He stated that he believes regional representation is a critical
element of the reports by the public service commission and the community review team to
provide adequate service to the adjoining communities outside the city of Lansing.
Max Zimmer, no address given, stated that this city does not need a politician running the
Board of Water and Light. It is not good for the Board of Water of Light, ratepayers,
Regular Board Mtg.
January 27.2015
Page 7 of 7
most
industrial, small business, residential or anyone.o Inottwantta politician cian to erunni g the tBoa d of
of the people here are here to say that we d
Water and Light.
Joe Wolf of Lansing, MI stated that he served for 20 years as the Assistant General Manager
of the Board of Water and Light. He said the Board of Water and Light is a great organization
and it has been successful for 130 years in its current structure, since 1885. The city father's
at that time realized how important it was to have this business of the city to be run by
business oriented people and not by politicians from City Hall. One of your biggest jobs will
be to appoint a new General Manager and you don't need it to be a lawyer or an accountant
to run the Board of Water and Light you need somebody with electric utility experience.
Somebody that knows and understands the business and the business is not just dollars and
cents.
rd
Ronald Burns, Business Manager for the IBW, Local 352, stated that he cw'thytheaMayorrrs
many employees and customers alike that are very pet and concerned
plan to take over the BWL. The City charter is very specific. It designates the BWL as
Administrative Board to be operated in the best interest of its customer/owners. The charter
gives you, the Commission the authority to approve the utilities budget and rates, which gets
reinvested back into the electric and water infrastructure,
lch maks us the writtene with thetBWg aslan
that it has been so many years. The Charter Is
and
independent autonomous board that keeps the changing winds of s the reasontwhy be havetbeen
politics separated from the utility operations here. That
successful for so many years. He asked that this Board stand up for customers in this regard
and oppose the Mayor's plan to take over the BWL. This current
structure
would h servedhas to
customers well with affordable rates and reliable service for many years
see that change.
according
Jan Simpson, President of the Board of Water and Li of Business,
ght the differences Association, dbetween a
to a research study done by Stanford University school
truly exceptional company and a less successful company is their home grown management
by a factor of more than 6 times. Giving a politician the reigns to the BWL without
knowledge of its workings is not the answer. She said it is time to
lasok within t 3 generalhe BWL itself
managers at
for a CEO to stimulate fundamental change since the tenure of the
the BWL were brought in from outside the organization and or community.
Chair Price thanked everyone for coming out and showing support. He said that on behalf of
all of the Commissioners, we do not get a chance
men and to say Is very often women who literally ly put the
ut we deeply
appreciate the work that all of you do. You are th
rubber to the road and the wires to the pole and we thank you for going out there every day
and serving the citizens of this community.
ADJOURNMENT
On motion by Commissioner Bossenbery, seconded by Commissioner McCloud the meeting
adjourned at 6:04 p.m.
M. Denise Griffin, Corporate Secretary
Preliminary Minutes filed(electronically)with Lansing city clerk:February 4,2015
official Minutes filed(electronically)with Lansing city clerk:April 3,2015
Approved January 27,2015
MW,
H.,-tawn Pftpfe.Hffrilttarcn Puwnr.
LANSING BOARD OF WATER AND LIGHT
BOARD OF COMMISSIONERS
SPECIAL MEETING MINUTES
JANUARY 13, 2015
The Board of Commissioners met at the BWL Head quarters-REO Town Depot located at
1201 S. Washington Ave., Lansing, MI, at 5:30 p.m. on Tuesday, January 7, 2014.
Chairperson David Price called the meeting to order at 5:30 p.m.
v7
Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McClciutl, --�
Tony Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkl(k '
t C7
Absent: None _
The Secretary declared a quorum present.
Commissioner Louney led the Pledge of Allegiance.
Meeting Purpose:
Review the Employment of the Lansing Board of Water& Light's General Manager
PUBLIC COMMENT
THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO
THE BOARD ON THE AGENDA SUBJECT.
Don Hillman, no address given, spoke about the dangers of having electricity.
Chair Price stated that the only agenda item subject to public comment at this time is
the "Review of the General Manager Lark'; as it is the only item on the agenda and
reason for the Special Board meeting.
Councilmember Carol Wood stated that she was disappointed with the Board of
Commissioners. She stated that we have gone through this process before and was
assured at the last Committee of the Whole meeting that the Board would be open and
forth coming with talking with the Council. She said finding out the information in the
newspaper again, about this particular meeting and the fact that the Board did not
communicate and provide the Council with an update or where they were going with
this matter. Again, this Board had repeatedly indicated that they thought that Mr. Lark
was doing a good job and even renewed his contract; I find it disconcerting that again,
Special Board Mtg.
January 13,2015
Page 2 of 4
the lack of communication with the governing board that actually appoints the
Commissioners is where we are today.
Alice Dragger, E. Lansing, stated that she was out of power for nine days. She stated
that government is a wonderful thing when it works; democracy is a beautiful thing
when it works, but it still feels like it is not working here. We are getting our
information in strange ways from a group that is supposed to be representing us. We
have had a bad experience here. We were without power much longer than we needed
to be because of failure to hire crews. We had Mr. Lark in New York and we had a
Commissioner wishing him a good vacation, we had destruction of records afterwards
so that we could not find out what had happened. We then proceeded to the point
where we had Board members yelling at people in the public, she included. Now we
have had many instances of the Board of Water & Light actually attacking its own
customers. This is not working yet, I am glad that you are going to consider today
getting rid of Mr. Lark because I think it is time to acknowledge that this has been an
unbelievable failure of leadership. If this had occurred in any normal corporation, he
would have been gone and if this had occurred in any normal employee position he
would have been gone and anyone much further down the chain, would never have
been allowed to go through this many mistakes. Ms. Dragger stated that one of her
neighbors said Mr. Lark said that he fixed a hundred things, what he is basically pointing
to is that there was a hundred things that he was doing wrong and we needed two
Boards and Commissions to tell him that and I do not want to go through this again.
Please function like a democratic organization and be more transparent, prohibit the
destruction of records in particular and represent us.
No name given, spoke about the Open Meetings Act and was hoping not to witness an
attempt to verbalize an agenda item to the first speaker when this is supposed to be an
open meeting. He said that he had to admit freely that he did not keep up on this issue,
except for the first several days of the early hearings and witnessed a choreographed
effort on someone's part to avoid the real issue. He spoke about the previous meetings
and stated that the majority of speakers that spoke were employees and a local disc
jockey who talked about how great the company and how the ice storm situation was
being remedied. I really hope that you open up tonight and listen to the real issues
because when push comes to shove, unless you are willing to listen, you are in the
wrong place in the wrong time.
Review the Employment of the Lansing Board of Water& Light's General Manager
Commissioner Louney, stated that he called for this Special meeting to review the
General Manager's employment and would like to put forward a Resolution. Chair
Louney read the proposed 3-part Resolution aloud. The resolution was read out-loud
and adopted as follows:
RESOLUTION #2015-01-01
1) Approve the Termination of Director and General Manager Peter Lark of the
Lansing Board of Water and Light for Cause for the failure to render and perform
Special Board Mtg.
January 13,2015
Page 3 of 4
services to the Employer according to his obligations under his designated
Employment Agreement.
2) Allow the contracting of an employment/labor attorney to represent the Lansing
Board of Water and Light Commission in determining legal arrangements under
this termination with supervision of this matter by the Board Chair and Chair of
the Board's Human Resource Committee.
3) Appoint Richard Pefley to serve as interim Director and General Manager of the
Lansing Board of Water and Light until a permanent General Manager is
appointed and approved by the Board of Commissioners.
Motion by Commissioner Louney, Seconded by Commissioner Mullen to approve stated
Resolution.
Discussion: Commissioner Zerkle questioned if Mr. Lark would be given an opportunity
to request a closed session because this is an employment issue.
Mr. Lark stated that he absolutely preferred for this discussion to take place in open
session.
Chair Price called for a Roll Call vote on motion before the Board.
Yeas: Commissioners Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price
and Cynthia Ward (5)
Nays: Commissioners Margaret Bossenbery, Tracy Thomas, Sandra Zerkle (3)
REMARKS/COMMENTS
Good Afternoon Members of the Board, I would like to begin today by thanking the
Commissioners for the opportunity to serve as General Manager, I appreciated that very
much. I also wanted to thank the employees of the Board of Water & Light who have
worked so hard to make this the great utility that it is. Particularly in the last year
following the ice storm, this company has made great strides that are well documented
and will get people's power back faster. Finally, I want to thank our customers for their
patience and their support over the last year. After all that has been accomplished
together, I am surprised and disappointed at the Board's sudden and unexpected
unilateral decision to end my employment. I have had absolutely no formal indication
or notification from the Board of any cause for my dismissal, nor can I think of anything
that would have contributed to the Board's actions today. After all of the progress
which has been made during the last 12 months by this company. With that said, while I
am disappointed in the Board's decision, I look forward to full resolution of this matter
as outlined in our contract. Thank you very much Mr. Chair.
Commissioner Bossenbery, stated that she would like to know, how we will resolve this
and how we will move to honor the contract that Mr. Lark has.
Special Board Mtg.
January 13,2015
Page 4 of 4
Chair Price, stated that it is his understanding that as part of the motion made, the
Board will retain legal counsel and that the Chair of the Human Resources Committee
and himself will work with that legal counsel as well as Mr. Lark's legal counsel to
resolve the matter going forward.
Commissioner Zerkle, stated for the last several years Peter has had a contract that said
without cause, he get a full contract, so I do not know what we would have to dispute or
disagree about with that because that contract has been in effect, every one of the
Commissioners have seen it, agreed to it and signed off on it, and I am just not sure that
if we are going to do this action, why we would not complete it by honoring Mr. Lark's
contract that we agreed to as close as 6 months ago.
Chair Price in response stated that he was not an attorney but it is his understanding
that there are some questions of interpretation of the contract that are unresolved
which is why we will be retaining legal counsel to work with Mr. Lark's counsel.
Commissioner Zerkle, reminded everyone that she is the only one here other than our
legal counsel that was involved in the last General Managers departure and it cost us
every single dime of that contract plus. It was several hundred thousands of dollars of
legal content and it ended up in that manner, so the concern is why we are not just
honoring his contract and maybe have a couple of meetings about the disputed
interpretation. She said that she wanted to remind everyone that this is going to cost us
a lot of money to take care of this and some of us have not gotten any positive reasons
of why Mr. Lark should be let go.
EXCUSED ABSENCE
None.
OTHER
Motion by Commissioner Mullen, Seconded by Commissioner Ward to reschedule the
Committee of the Whole and Finance Committee meetings that were originally
scheduled to immediately take place following this Special Board meeting.
Action: Motion Carried
ADJOURNMENT
Meeting adjourned at 6:01 p.m.
Filed with Lansing City Clerk
February 3, 2015
Approved January 27,2015
Hometown Peapte.Hornrtown Paver.
LANSING BOARD OF WATER AND LIGHT
BOARD OF COMMISSIONERS
SPECIAL MEETING MINUTES ; %� r
JANUARY 13, 2015 (71
The Board of Commissioners met at the BWL Headquarters-REO Town Depot located at - FTI
co -�
1201 S. Washington Ave., Lansing, MI, at 5:30 p.m. on Tuesday,January 7, 2014. r -
�. cn
Chairperson David Price called the meeting to order at 5:30 p.m.
Present: Commissioners Margaret Bossenbery, Dennis M. Louney, Anthony McCloud,
Tony Mullen, David Price, Tracy Thomas, Cynthia Ward and Sandra Zerkle.
Absent: None
The Secretary declared a quorum present.
Commissioner Louney led the Pledge of Allegiance.
Meeting Purpose:
Review the Employment of the Lansing Board of Water& Light's General Manager
PUBLIC COMMENT
THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO
THE BOARD ON THE AGENDA SUBJECT.
Don Hillman, no address given, spoke about the dangers of having electricity.
Chair Price stated that the only agenda item subject to public comment at this time is
the "Review of the General Manager Lark'; as it is the only item on the agenda and
reason for the Special Board meeting.
Councilmember Carol Wood stated that she was disappointed with the Board of
Commissioners. She stated that we have gone through this process before and was
assured at the last Committee of the Whole meeting that the Board would be open and
forth coming with talking with the Council. She said finding out the information in the
newspaper again, about this particular meeting and the fact that the Board did not
communicate and provide the Council with an update or where they were going with
this matter. Again, this Board had repeatedly indicated that they thought that Mr. Lark
was doing a good job and even renewed his contract; I find it disconcerting that again,
Special Board Mtg.
January 13,2015
Page 2 of 4
the lack of communication with the governing board that actually appoints the
Commissioners is where we are today.
Alice Dragger, E. Lansing, stated that she was out of power for nine days. She stated
that government is a wonderful thing when it works; democracy is a beautiful thing
when it works, but it still feels like it is not working here. We are getting our
information in strange ways from a group that is supposed to be representing us. We
have had a bad experience here. We were without power much longer than we needed
to be because of failure to hire crews. We had Mr. Lark in New York and we had a
Commissioner wishing him a good vacation, we had destruction of records afterwards
so that we could not find out what had happened. We then proceeded to the point
where we had Board members yelling at people in the public, she included. Now we
have had many instances of the Board of Water & Light actually attacking its own
customers. This is not working yet, I am glad that you are going to consider today
getting rid of Mr. Lark because I think it is time to acknowledge that this has been an
unbelievable failure of leadership. If this had occurred in any normal corporation, he
would have been gone and if this had occurred in any normal employee position he
would have been gone and anyone much further down the chain, would never have
been allowed to go through this many mistakes. Ms. Dragger stated that one of her
neighbors said Mr. Lark said that he fixed a hundred things, what he is basically pointing
to is that there was a hundred things that he was doing wrong and we needed two
Boards and Commissions to tell him that and I do not want to go through this again.
Please function like a democratic organization and be more transparent, prohibit the
destruction of records in particular and represent us.
No name given, spoke about the Open Meetings Act and was hoping not to witness an
attempt to verbalize an agenda item to the first speaker when this is supposed to be an
open meeting. He said that he had to admit freely that he did not keep up on this issue,
except for the first several days of the early hearings and witnessed a choreographed
effort on someone's part to avoid the real issue. He spoke about the previous meetings
and stated that the majority of speakers that spoke were employees and a local disc
jockey who talked about how great the company and how the ice storm situation was
being remedied. I really hope that you open up tonight and listen to the real issues
because when push comes to shove, unless you are willing to listen, you are in the
wrong place in the wrong time.
Review the Employment of the Lansing Board of Water& Light's General Manager
Commissioner Louney, stated that he called for this Special meeting to review the
General Manager's employment and would like to put forward a Resolution. Chair
Louney read the proposed 3-part Resolution aloud. The resolution was read out-loud
and adopted as follows:
RESOLUTION#2015-01-01
1) Approve the Termination of Director and General Manager Peter Lark of the
Lansing Board of Water and Light for Cause for the failure to render and perform
Special Board Mtg.
January 13,2015
Page 3 of 4
services to the Employer according to his obligations under his designated
Employment Agreement.
2) Allow the contracting of an employment/labor attorney to represent the Lansing
Board of Water and Light Commission in determining legal arrangements under
this termination with supervision of this matter by the Board Chair and Chair of
the Board's Human Resource Committee.
3) Appoint Richard Pefley to serve as interim Director and General Manager of the
Lansing Board of Water and Light until a permanent General Manager is
appointed and approved by the Board of Commissioners.
Motion by Commissioner Louney, Seconded by Commissioner Mullen to approve stated
Resolution.
Discussion: Commissioner Zerkle questioned if Mr. Lark would be given an opportunity
to request a closed session because this is an employment issue.
Mr. Lark stated that he absolutely preferred for this discussion to take place in open
session.
Chair Price called for a Roll Call vote on motion before the Board.
Yeas: Commissioners Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price
and Cynthia Ward (5)
Nays: Commissioners Margaret Bossenbery, Tracy Thomas, Sandra Zerkle (3)
REMARKS/COMMENTS
Good Afternoon Members of the Board, I would like to begin today by thanking the
Commissioners for the opportunity to serve as General Manager, I appreciated that very
much. I also wanted to thank the employees of the Board of Water & Light who have
worked so hard to make this the great utility that it is. Particularly in the last year
following the ice storm, this company has made great strides that are well documented
and will get people's power back faster. Finally, I want to thank our customers for their
patience and their support over the last year. After all that has been accomplished
together, I am surprised and disappointed at the Board's sudden and unexpected
unilateral decision to end my employment. I have had absolutely no formal indication
or notification from the Board of any cause for my dismissal, nor can I think of anything
that would have contributed to the Board's actions today. After all of the progress
which has been made during the last 12 months by this company. With that said, while I
am disappointed in the Board's decision, I look forward to full resolution of this matter
as outlined in our contract. Thank you very much Mr. Chair.
Commissioner Bossenbery, stated that she would like to know, how we will resolve this
and how we will move to honor the contract that Mr. Lark has.
Special Board Mtg.
January 13,2015
Page 4 of 4
Chair Price, stated that it is his understanding that as part of the motion made, the
Board will retain legal counsel and that the Chair of the Human Resources Committee
and himself will work with that legal counsel as well as Mr. Lark's legal counsel to
resolve the matter going forward.
Commissioner Zerkle, stated for the last several years Peter has had a contract that said
without cause, he get a full contract, so I do not know what we would have to dispute or
disagree about with that because that contract has been in effect, every one of the
Commissioners have seen it, agreed to it and signed off on it, and I am just not sure that
if we are going to do this action, why we would not complete it by honoring Mr. Lark's
contract that we agreed to as close as 6 months ago.
Chair Price in response stated that he was not an attorney but it is his understanding
that there are some questions of interpretation of the contract that are unresolved
which is why we will be retaining legal counsel to work with Mr. Lark's counsel.
Commissioner Zerkle, reminded everyone that she is the only one here other than our
legal counsel that was involved in the last General Managers departure and it cost us
every single dime of that contract plus. It was several hundred thousands of dollars of
legal content and it ended up in that manner, so the concern is why we are not just
honoring his contract and maybe have a couple of meetings about the disputed
interpretation. She said that she wanted to remind everyone that this is going to cost us
a lot of money to take care of this and some of us have not gotten any positive reasons
of why Mr. Lark should be let go.
EXCUSED ABSENCE
None.
OTHER
Motion by Commissioner Mullen, Seconded by Commissioner Ward to reschedule the
Committee of the Whole and Finance Committee meetings that were originally
scheduled to immediately take place following this Special Board meeting.
Action: Motion Carried
ADJOURNMENT
Meeting adjourned at 6:01 p.m.
Filed with Lansing City Clerk
February 3, 2015
BOARD OF WATER AND LIGHT
REO Town Depot
1201 S. Washington Ave. - Lansing, Michigan
May 26, 2015 - 5:30 p.m.
BOARD MEETING AGENDA
1. Roll Call
2. Pledge of Allegiance
3. Approval of Minutes
a. Special Board Meeting-February 17, 2015
b. Regular Board Meeting-March 31, 2015
c. Special Board Meeting-May 19, 2015
4. Public Comments _
Members of the public are welcome to speak to the Board on any agenda subject. Anyone:,wistrir;g
to comment on any matter not on the agenda may do so immediately prior to adjou me#p.
F 2
5. Communications
6. Committee Reports
a. Committee of the Whole Minutes (April 14, 2015)— Margaret Bossenbery, Chair
b. Committee of the Whole Minutes (May 12, 2015)— Margaret Bossenbery, Chair
c. Finance Committee Meeting (April 14, 2015) —Dennis M. Louney, Chair
d. Finance Committee Meeting (May 12, 2015)— Dennis M. Louney, Chair
e. Human Resources Meeting Report (May 19, 2015)—Cynthia Ward, Chair
7. Manager's Recommendations
a. Resolution: Rules and Regulations FY16
b. Resolution: Adoption of Investment Policy Statement for Operating Funds
C. Resolution : FY16 Operating and Capital Budget
8. Unfinished Business
9. New Business
10. Resolutions/Action Items
a. Resolution: Dias Seating
b. Resolution : Technical Amendment to the Administrative Rules of Procedure Addressing the
Participation of the 3 New Non-Voting Members
11. Manager's Remarks
12. Commissioners' Remarks
13. Motion of Excused Absence
14. Public Comments
Members of the public are welcome to speak to the Board on any Board of Water and Light subject.
15. Adjournment
Lansing Board of Water and Light
1201 S.Washington Avenue
Lansing, MI 48910
Hometown People. Hometown Power:
June 3, 2015
Electronic Delivery
Mr. Chris Swope, City Clerk
City of Lansing
124 W. Michigan Avenue, 9th Floor
Lansing, MI 48933
Re: Budget for Fiscal Year Ending June 30, 2016
Dear Mr. Swope:
In accordance with provisions of the Lansing City Charter, Article 5, Chapter 2, Section 5-203.5,
a copy of the Lansing Board of Water and Light's Budget for Fiscal year ending June 30, 2016, is
officially being filed with your office.
The Board of Commissioners adopted the budget at the regular board meeting held fV.Y 2�;
2015.
c.._
i� :7z n
Respectfully submitted, �., i C;
Jun 32015
X
`3CoSign@
M. Denise Griffin
Corporate Secretary
Attachment:
cc: Interim General Manager Peffley
Chief Financial Officer Heather Shawa-DeCook
Virgil Bernero, Mayor City of Lansing
i�� 1
i� I ��
-3
FY 2016 `` ' `' (
` L�,`
Income Statement by Utility ` L ;
CHILLED
$(000) ELECTRIC WATER STEAM WATER TOTAL
SALES (mwh, ccf, mlb, ton-hrs) 3,127,275 9,098,538 764,969 10,098,000
Retail $ 277,182 $ 36,516 $ 13,187 $ 5,782 $ 332,667
Wholesale $ 40,471 $ 3,537 $ - $ - $ 44,008
OPERATING REVENUE $ 317,653 $ 40,053 $ 13,187 $ 5,782 $ 376,675
Operation & Maintenance Expense $ (256,399) $ (26,760) $ (9,133) $ (2,331) $ (294,623)
Depreciation Expense $ (32,000) $ (7,042) $ (2,669) $ (1 ,514) $ (43,225)
TOTAL OPERATING EXPENSE $ (288,399) $ (33,802) $ (11,802) $ (3,845) $ (337,848)
OPERATING INCOME (LOSS) $ 29,255 $ 6,250 $ 1,385 $ 1,937 $ 38,827
Return on Equity $ (19,144) $ (2,408) $ (794) $ (353) $ (22,699)
Other Non-Operating Income $ 262 $ 779 $ (173) $ 45 $ 913
Other Non-Operating Expense $ (10,318) $ (1,928) $ (1 ,920) $ (614) $ (14,781)
NET INCOME/ (LOSS) $ 55 $ 2,693 $ (1,502) $ 1,015 $ 2,261
RATE OF RETURN 2.3% 2.0% 0.6% 5.9% 2.2%
_W
Hometown People.Hometown Power.
FY 2016 Cash Flow byUtfl-rity3
CHILLED
$(000) ELECTRIC WATER STEAM WATER TOTAL
BEGINNING OPERATING CASH $ 58,092 $ 12,932 $ 5,384 $ 3,718 $ 80,126
Sources of Cash
Net Income $ 55 $ 2,693 $ (1,502) $ 1,015 $ 2,261
Depreciation $ 32,000 $ 7,042 $ 2,669 $ 1,514 $ 43,225
Loss on Sale of Assets $ 711 $ 371 $ 260 $ - $ 1,342
Reserve for Future Construction $ 18,573 $ 4,135 $ 1,721 $ 1,189 $ 25,617
Net Environmental $ 3,513 $ - $ 114 $ - $ 3,627
Pipeline Refund 2,390 $ 455 $ - 2,845
SOURCES OF CASH $ 57,241 $ 14,241 $ 3,717 $ 3,718 $ 78,917
Uses of Cash
Debt Principal $ (5,364) $ (1,694) $ (1) $ (1,425) $ (8,484)
Net Capital Expenditures $ (47,841) $ (11,304) $ (5,249) $ (677) $ (65,072)
Renewable Energy Plan $ (1,000) $ - $ - $ - $ (1,000)
Other Uses of Cash (3,431) $ (40) $ (17) $ (12) $ (3,500)
USES OF CASH $ (57,637) $ (13,038) $ (5,267) $ (2,114) $ (78,055)
Net Cash Increase/(Decrease) $ (396) $ 1,204 $ (1,549) $ 1,604 $ 862
ENDING OPERATING CASH $ 57,696 $ 14,136 $ 3,835 $ 5,322 $ 80,988
Beginning Operating Cash includes O&M Fund and Receiving Fund only, Designated funds and Restricted Bond Funds
W 2
not included, ($91.3 and$40.2 million respectively as of March 31, 2015)
Hometown People.Hometown Power:
RECEIVED
FY 2016 Capital Budget Summil ; _3ri, k, 1;
�f itti �!`Z3 CI �}. +Liil
Dollars in (000's)
UTILITY LOCATION
ELECTRIC $ 38,962 ECKERT $ 81026
WATER $ 8,106 ERICKSON $ 11600
STEAM $ 41506 T&D $ 40,009
CHILLED WATER $ 300 DYE/CEDAR $ 11355
COMMON $ 13,197 OTHER $ 14,081
TOTAL BUDGET $ 65,072 $ 65,072
Hometown people.Hometown Power: s
Lansing Board of Water and Light
1201 S. Washington Avenue
q
Lansing, MI 48910
Hometown People. Hometown Power:
October 7, 2015
Mr. Chris Swope, City Clerk
City of Lansing
124 W. Michigan Avenue, 9th Floor
Lansing, MI 48933
Re: Annual Audit for Fiscal Year Ending June 30, 2015
Dear Mr. Swope:
Attached please find the Board of Water and Light's electronic consolidated financial
statements for the fiscal year ending June 30, 2015.
C�
Sincerely,
Oct 6 2015
X
,`Cosign@
M. Denise Griffin
Corporate Secretary
Attached PDF's
Electronically Copied: Mayor Virg Bernero
Lansing City Council
City of Lansing Finance Director Angela Bennett
City of Lansing Internal Auditor Jim Deline
BWL CFO Heather Shawa-DeCook
BWL General Manager Dick Peffley
Plante Plante&Moran,PLLC
Suite 100
1111 Michigan Ave.
moran East Lansing,M1 48823
,6200
Tnl:517.332.5200
Fax:517.332.8502
plantemoran.com
August 31, 2015 �-
- �y
To the Board of Commissioners
Lansing Board of Water and Light
We have audited the following financial statements (collectively referred to as the "BWL") of�
and for the year ended June 30, 2015 and have issued our report thereon dated as noted,bek w:
• Board of Water and Light - City of Lansing, Michigan - report dated August 31, 2015
• Lansing Board of Water and Light Retiree Benefit Plan and Trust - report dated August
28, 2015
• Lansing Board of Water and Light Employees' Defined Contribution Pension Plan -
report dated August 28, 2015
• Plan for Employees' Pension of the Board of Water and Light - City of Lansing, Michigan -
Defined Benefit Plan - report dated August 28, 2015
Professional standards require that we provide you with the following information related to our
audit which is divided into the following sections:
Section I - Required Communications with Those Charged with Governance
Section II - Informational Items
Section I includes information that current auditing standards require independent auditors to
communicate to those individuals charged with governance. We will report this information
annually to the Board of Commissioners at the BWL.
Section II contains updated informational items that we believe will be of interest to you.
We would like to take this opportunity to thank the BWL's staff for the cooperation and
courtesy extended to us during our audit. Their assistance and professionalism are invaluable.
This report is intended solely for the use of the Board of Commissioners and management of the
BWL and is not intended to be and should not be used by anyone other than these specified
parties.
The BWL's written response to the significant deficiencies identified in our audit has not been
subjected to the auditing procedures applied in the audit of the financial statements and,
accordingly, we express no opinion on it.
Free
1 Trrt
GU)6At.VA.1:U;GE Of,
INVU,('il.NiDENT Fi11 C1'>
To the Board of Commissioners August 31, 2015
Lansing Board of Water and Light
We welcome any questions you may have regarding the following communications and we
would be willing to discuss any of these or other questions that you might have at your
convenience.
Very truly yours,
Plante & Moran, PLLC
1
Douglas D. Rober, CPA
Partner
2
To the Board of Commissioners August 31, 2015
Lansing Board of Water and Light
Section I - Required Communications with Those Charged with Governance
Our Responsibility Under U.S. Generally Accepted Auditing Standards
As stated in our engagement letter dated July 6, 2015, our responsibility, as described by
professional standards, is to express an opinion about whether the financial statements prepared
by management with your oversight are fairly presented, in all material respects, in conformity
with U.S. generally accepted accounting principles. Our audit of the financial statements does
not relieve you or management of your responsibilities. Our responsibility is to plan and perform
the audit to obtain reasonable, but not absolute, assurance that the financial statements are free
of material misstatement.
As part of our audit, we considered the internal control of BWL. Such considerations were solely
for the purpose of determining our audit procedures and not to provide any assurance
concerning such internal control.
We are responsible for communicating significant matters related to the audit that are, in our
professional judgment, relevant to your responsibilities in overseeing the financial reporting
process. However, we are not required to design procedures specifically to identify such
matters.
Planned Scope and TiminjZ of the Audit
We performed the audit according to the planned scope and timing previously communicated to
you in our meeting about planning matters on July 14, 2015.
SijZnificant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. In
accordance with the terms of our engagement letter, we will advise management about the
appropriateness of accounting policies and their application. The significant accounting policies
used by the BWL are described in Note I to the financial statements. As described in Note 16,
the BWL adopted GASB No. 68 during the fiscal year ended June 30, 2015. GASB No. 68
required the measurement of the net pension asset associated with the Plan for Employees'
Pension of the Board of Water and Light - City of Lansing, Michigan - Defined Benefit Plan to be
recorded within the BWL's financial statements. In addition, the disclosures within Note 8 have
changed considerably along with the related schedules in the required supplemental information.
3
To the Board of Commissioners August 31, 2015
Lansing Board of Water and Light
We noted no transactions entered into by the BWL during the year for which there is a lack of
authoritative guidance or consensus other than the income statement reporting related to the
change in certain regulatory assets from year to year. The BWL board approved in prior
reporting years regulatory assets/liabilities for the BWL's energy cost adjustment (ECA), fuel cost
adjustment (FCA), and power cost adjustment (PCA) which impact the amounts billed to
customers to reflect the difference between the BWL's actual material costs and the amounts
incorporated into rates. The BWL records the year-to-year change in the ECA, FCA, and PCA
within revenue. GASB 62 paragraph 480 indicates that a regulated entity should capitalize
incurred costs that would otherwise be charged to expense if it is probable that "future revenue"
equal to the capitalized cost will result from inclusion of that cost for rate-making purposes, and
that future revenue will permit recovery of the previously incurred cost. The standard is not
explicit in the schematics of the accounting for such transactions on the income statement side
(whether the adjustment to the capitalized cost from one year to the next should be recorded
to revenue or expense). The BWL's position, largely based on what they have indicated is
industry practice, is that the adjustment should be recorded to revenue, as the additional costs
over and above the amounts built into rates relate to service already provided and therefore
amounts earned, even if the billing rate does not reflect the additional costs until the following
period.
Accounting estimates are an integral part of the financial statements prepared by management
and are based on management's knowledge and experience about past and current events and
assumptions about future events. Certain accounting estimates are particularly sensitive because
of their significance to the financial statements and because of the possibility that future events
affecting them may differ significantly from those expected.
The most sensitive estimates affecting the financial statements were unbilled accounts
receivable, environmental remediation, capitalized indirect costs, and the use of regulatory
assets and liabilities.
Management's estimate of unbilled accounts receivable is based on the number of days unbilled
and the average daily usage from the previous month's meter readings. We evaluated the key
factors and assumptions used to develop unbilled accounts receivable in determining that it is
reasonable in relation to the financial statements taken as a whole.
Management's estimate of the environmental remediation valuation is based on studies
performed by the BWL's environmental engineers and third-party consultants. We evaluated the
key factors and assumptions used to develop the environmental remediation valuation in
determining that it is reasonable in relation to the financial statements taken as a whole.
Capitalized indirect costs are based on budgetary information estimated by finance and
accounting personnel. We evaluated the key factors and assumptions used to develop the
capitalized indirect costs in determining that they are reasonable in relation to the financial
statements taken as a whole.
4
To the Board of Commissioners August 31, 2015
Lansing Board of Water and Light
Management's use of regulatory assets and liabilities is based on board approval for these types
of transactions. We ensured all transactions for which regulatory accounting was applied had
board approval in a prior year and there were no new items approved for the current year. We
evaluated the key factors and assumptions used to calculate the balances related to the
regulatory assets and liabilities in determining that they are reasonable in relation to the financial
statements taken as a whole.
The disclosures in the financial statements are neutral, consistent, and clear. Certain financial
statement disclosures are particularly sensitive because of their significance to financial statement
users. The most sensitive disclosures affecting the financial statements were recoverable costs
(see Note 6) and commitments and contingencies (see Note 9).
The disclosures in the financial statements are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and
completing our audit.
Disagreements with Management
For the purpose of this letter, professional standards define a disagreement with management as
a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction,
that could be significant to the financial statements or the auditor's report.
We are pleased to report that no such disagreements arose during the course of our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified
during the audit, other than those that are trivial, and communicate them to the appropriate
level of management. Management has corrected all such misstatements.
Significant Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, business conditions affecting the organization, and business plans and
strategies that may affect the risks of material misstatement with management each year prior to
retention as BWL's auditors. However, these discussions occurred in the normal course of our
professional relationship and our responses were not a condition of our retention.
Management Representations
We have requested certain representations from management that are included in the
management representation letter dated as of the August 31, 2015.
5
To the Board of Commissioners August 31, 2015
Lansing Board of Water and Light
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation
involves application of an accounting principle to the BWL's financial statements or a
determination of the type of auditor's opinion that may be expressed on those statements, our
professional standards require the consulting accountant to check with us to determine that the
consultant has all the relevant facts. To our knowledge, there were no such consultations with
other accountants.
6
To the Board of Commissioners August 31, 2015
Lansing Board of Water and Light
Section II - Informational Items
Excel Audit Schedules
During the performance of audit procedures, two adjusting journal entries were identified
resulting from formula errors within Excel audit schedules. These errors were not identified
during the BWL's review process. The first Excel formula error identified required a reduction
to the workers' compensation IBNR liability of $500,000. The second Excel formula error
identified required an adjustment to the Retiree Benefit Plan and Trust benefit payments and
contributions of $525,000. The use of Excel audit schedules provides a risk of manual errors,
which if not caught during the review process could lead to misstatement of the financial
statements.
Inventory Procedures
It was noted that store inventory items with a value totaling approximately$936,000 at June 30,
2015 was not subject to cycle counting during the fiscal year. In the absence of a year-end
physical inventory count, cycle counting of all inventory items during the year is important to
ensure valuation at year-end is appropriate. In addition, there were a higher number of errors
noted during the June 30, 2015 audit inventory counts than in previous years. Although the value
of items not subject to cycle counting or the errors noted in audit inventory counts were not
material, we recommend that the BWL attempt to include all store inventory items in their cycle
counting procedures. In addition, there were certain non-inventory items being stored within
the warehouse without proper identification. We recommend that non-inventory items be
identified as such.
New Other Post-Employment Benefits Standards
In June 2015, the GASB issued two new standards addressing accounting and financial reporting
by state and local governments for postemployment benefits other than pensions (OPEB). GASB
Statement No. 74, Financial Reporting for Postemployment Benefit Plans other than Pension
Plans, addresses reporting by OPEB plans whereas GASB Statement No. 75, Accounting and
Financial Reporting for Postemployment Benefits Other Than Pensions, addresses accounting
and reporting by employer governments that provide OPEB benefits to their employees.
Along with the currently required statement of fiduciary net position and statement of changes in
fiduciary net position, OPEB plans will now be required to include in the financial statement
more extensive footnote disclosures and required supplementary information related to the
measurement of the OPEB liabilities for which assets have been accumulated. In addition, the
BWL will, after adoption of GASB 75, recognize on the face of the financial statements its net
OPEB liability. The BWL is currently evaluating the impact these standards will have on the
financial statements when adopted. GASB 74 is effective for fiscal years beginning after June 15,
2016 (the BWL's year end of June 30, 2017) whereas GASB 75 is effective one year later.
As of the most recent actuarial valuation dated February 28, 2015, the unfunded actuarially
accrued liability within the VEBA plan was $42.6 million.
7
To the Board of Commissioners August 31, 2015
Lansing Board of Water and Light
New Rules Governing Management of Federal Proggrams
The Office of Management and Budget (OMB) has issued significant reforms to the compliance
requirements that must be followed by non-federal entities receiving federal funding. All entities
receiving federal dollars will need to understand the changes made as a result of these reforms
and may be required to make changes to internal procedures, processes, and controls.
These reforms impact three key areas of federal grants management:
I. Audit Requirements - For fiscal years beginning on or after January 1, 2015, the threshold
for obtaining a federal awards audit will increase from the current threshold of$500,000 of
annual federal spending to $750,000. There will also be significant changes to the criteria for
qualifying as a low-risk auditee and a reduction in the number of major programs required to
be tested for some clients.
The BWL has been below the current $500,000 threshold in recent years. However, from
time to time, depending upon the level of federal spending, the BWL may still be subject to
an audit requirement even at the new higher$750,000 threshold.
2. Cost Principles - Effective for all federal awards received on or after December 26, 2014,
the grant reforms related to cost principles go into effect. Not only were certain changes
made to allowable costs under this new guidance, but there were significant changes in the
area of time and effort reporting and indirect costs.
3. Administrative Requirements - Also effective for all federal awards received on or after
December 26, 2014, non-federal entities receiving federal funding must adhere to new rules
related to administering federal awards. Most notably, these requirements may impact the
BWL's procurement systems, including maintaining written conflict of interest policies and
disclosures.
These revisions are clearly the most significant change to occur to federal grants management in
recent history. Entities receiving federal funding will need to carefully digest these changes.
Plante & Moran, PLLC has been on the cutting edge of these reforms, offering our clients free
webinars, implementation checklists and other tools to aid in implementation. The
implementation date is already upon us and the BWL will need to ensure that the
implementation of the new regulations occurs in a timely and complete manner. Plante &
Moran, PLLC has many experts in this area and welcome any questions or needs you may have.
8
_! n
C i g Fri
^a
M
Lansing Board of Water and Light L
Employees-$ Defined Contribution
Pension Plan
Financial Report
with Supplemental Information
June 30, 201 S
Lansing Board of Water and Light
Employees' Defined Contribution Pension Plan
Contents
Report Letter 1-2
Management's Discussion and Analysis 3-4
Basic Financial Statements
Statement of Net Position 5
Statement of Changes in Net Position 6
Notes to Financial Statements 7-12
Supplemental Information 13
Statement of Changes in Net Position by Fund 14-19
Plante Plante&Moran, PLLC
Suite 100
1111 Michigan Ave.
moranEast Lansing,Tel:517.33332.6200.6200
Fax:517.332.8502
plantemoran.com
Independent Auditor's Report
To the Honorable Mayor, Members of
the City Council, and Commissioners
of the Board of Water and Light
Lansing Board of Water and Light Employees'
Defined Contribution Pension Plan
City of Lansing, Michigan
Report on the Financial Statements
We have audited the accompanying financial statements of Lansing Board of Water and Light Employees'
Defined Contribution Pension Plan (the "Plan") as of and for the years ended June 30, 2015 and 2014 and
the related notes to the financial statements, which collectively comprise the Plan's basic financial
statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Praxity :
MEMBER
GLOBAL ALLIANCE OF
INOEPENOENT FIRMS
To the Honorable Mayor, Members of
the City Council, and Commissioners
of the Board of Water and Light
Lansing Board of Water and Light Employees'
Defined Contribution Pension Plan
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the net
position of Lansing Board of Water and Light Employees' Defined Contribution Pension Plan as of June
30, 2015 and 2014, and the changes in its net position for the years then ended in accordance with
accounting principles generally accepted in the United States of America.
Other Matters
Required Supplemental Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis on pages 3 and 4 be presented to supplement the basic financial statements. Such
information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board, which considers it to be an essential part of financial reporting for placing
the basic financial statements in an appropriate operational, economic, or historical context. We have
applied certain limited procedures to the required supplemental information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information for
consistency with management's responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise Lansing Board of Water and Light Employees' Defined Contribution Pension Plan's basic
financial statements. The statement of changes in net position by fund is presented for the purpose of
additional analysis and is not a required part of the basic financial statements.
The statement of changes in net position by fund is the responsibility of management and was derived
from and relates directly to the underlying accounting and other records used to prepare the basic
financial statements. Such information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and certain additional procedures, including comparing and reconciling
such information directly to the underlying accounting and other records used to prepare the basic
financial statements or to the basic financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America. In our opinion,
the statement of changes in net position by fund is fairly stated in all material respects in relation to the
basic financial statements as a whole.
August 28, 2015
2
Lansing Board of Water and Light
Employees' Defined Contribution Pension Plan
Management's Discussion and Analysis
Using this Annual Report
This annual report consists of two parts: (1) management's discussion and analysis (this section)
and (2) the basic financial statements. The financial statements also include notes that explain
some of the information in the financial statements and provide more detailed data.
Condensed Financial Information
The table below compares key financial information in a condensed format between the current
year and the prior two years:
2015 2014 2013
Assets held in trust:
Mutual funds $ 136,010,607 $ 130,442,786 $ 109,882,178
Stable value 31,844,948 33,607,203 32,243,585
Participant notes receivable and other 5,265,081 5,229,750 4,768,679
Net position $ 173,120,636 $ 169,279,739 $ 146,894,442
Changes in plan assets:
Net investment income $ 7,317,020 $ 23,453,570 $ 16,035,621
Employer and participant contributions 6,893,841 6,521,703 7,889,794
Benefits paid to participants (10,451,713) (7,645,1 16) (9,097,209)
Loan defaults and other increases 81,749 55,140 45,192
Changes in net position $ 3,840,897 $ 22,385,297 $ 14,873,398
During fiscal year 2015, net investment income was $7.3 million.
Investment Objectives
The principal purpose of the Plan is to provide benefits at a normal retirement age. The Plan's
funds are selected to optimize return on a risk-adjusted basis within each asset class, to provide
an opportunity to create a well-diversified portfolio, to control administrative and management
cost, and to comply with relevant Michigan and federal law.
3
Lansing Board of Water and Light
Employees' Defined Contribution Pension Plan
Management's Discussion and Analysis (Continued)
The Plan allows each participant to direct the investment of the funds in his or her plan accounts.
The Lansing Board of Water and Light (the "BWL") will offer various investment options
(consistent with the investment policy statement), among which participants may choose to
invest their respective interests in the Plan. The BWL periodically reviews the performance of
investment options available to participants to ensure that each such option is meeting its
investment objectives.
Investment Results
The fiscal year ended June 30, 2015 saw a net investment income of $7.3 million. Total assets
held in trust at the end of the fiscal year were$173.1 million.
Future Events
The BWL has no current plans to revise the terms of its defined contribution pension plan.
Contactine the Plan's Management
This financial report is intended to provide a general overview of the Plan's finances and to show
accountability for the money it receives. If you have questions about this report or need
additional information, we welcome you to contact the office of Heather Shawa-Decook, Chief
Financial Officer, at P.O. Box 13007, Lansing, Michigan 48901-3007.
4
Lansing Board of Water and Light
Employees9 Defined Contribution Pension Plan
statement of Net Position
June 30
2015 2014
Assets
Participant-directed investments (Note 1):
Mutual funds:
Money market $ 228,799 $ 117,793
Bond and equity funds 17,657,647 16,556,877
Stock funds 64,962,538 60,617,315
Balanced funds 30,214,407 29,495,580
Growth funds 6,269,076 6,144,760
International funds 16,678,140 17,510,461
Total mutual funds 136,010,607 130,442,786
Stable value 31,844,948 33,607,203
Self-directed brokerage account 1,376,730 1,147,041
Total participant-directed investments 169,232,285 165,197,030
Participant notes receivable 3,888,351 4,082,709
Net Position $ 173,120,636 $ 169,279,739
See Notes to Financial Statements. 5
Lansing Board of Water and Light
Employees' Defined Contribution Pension Plan
Statement of Changes in Net Position
Year Ended June 30
2015 2014
Increase
Investment income:
Net appreciation in fair
value of investments $ 21,201 $ 17,907,856
Dividend income 7,295,819 5,545,714
Total investment income 7,317,020 23,453,570
Employer contributions (Note 1) 5,548,360 5,467,824
Participant rollover contributions 1,345,481 1,053,879
Interest from participant notes receivable 155,010 155,997
Other 152,128 114,992
Total increase 14,517,999 30,246,262
Decrease
Benefits paid to participants 10,451,713 7,645,1 16
Loan defaults 125,254 119,694
Participants' note and administrative fees 100,135 96,155
Total decrease 10,677,102 7,860,965
Change in Net Position 3,840,897 22,385,297
Net Position
Beginning of year 169,279,739 146,894,442
End of year $ 173,120,636 $ 169,279,739
See Notes to Financial Statements. 6
Lansing Board of Water and Light
Employees' Defined Contribution Pension Plan
Notes to Financial statements
June 30, 2015 and 2014
Note 1 - Description of the Plan
The following description of Lansing Board of Water and Light Employees' Defined
Contribution Pension Plan (the "Plan") provides only general information. Participants
should refer to the plan agreement for a more complete description of the Plan's
provisions.
General - The Plan was established by the Lansing Board of Water and Light (the
"BWL") in 1997 under Section 5-203 of the City Charter. Prior to its establishment, the
BWL sponsored a defined benefit plan (Plan for Employees' Pensions of the Board of
Water and Light - City of Lansing, Michigan - Defined Benefit Plan) in which substantially
all employees of the BWL were participants. Effective December 1, 1997, all active
participants of the defined benefit plan were required to make an irrevocable choice to
either remain in the defined benefit plan or move to the newly established defined
contribution plan (Lansing Board of Water and Light Employees' Defined Contribution
Plan). Those participants who elected to move to the defined contribution plan received
lump-sum distributions from the defined benefit plan, which were rolled into their
accounts in the new defined contribution plan. Of the 760 active participants who were
required to make this election, 602 elected to convert their retirement benefits to the
newly established defined contribution plan. As a result of this action, effective
December 1, 1997, the board of commissioners transferred $75,1 16,470 to the newly
established defined contribution plan, reflecting the plan participants' accumulated
benefits as of said date.
ICMA-RC performs administrative duties associated with the Plan in its role as plan
administrator.
Contributions - For employees hired before January 1, 1997, the BWL is required to
contribute 15 percent of the employees' compensation. For employees hired on or after
January 1, 1997, the BWL is required to contribute 8.1 percent of the employees'
compensation. In addition, the BWL is required to contribute an additional 3.0 percent
of the employees' compensation for all employees who are not eligible to receive
overtime pay and 0.5 percent of the employees' compensation for all nonbargaining
employees. The board of commissioners of the Board of Water and Light - City of
Lansing may amend the Plan's provisions and contribution requirements.
7
Lansing Board of Water and Light
Employees' Defined Contribution Pension Plan
Notes to Financial Statements
June 30, 201 S and 2014
Note 1 - Description of the Plan (Continued
Participant Accounts - Each participant's account is credited with the participant's
rollover contributions and withdrawals, as applicable, and allocations of the BWL's
contributions and plan earnings. Allocations are based on participants' earnings or
account balances, as defined in the plan document. Forfeited balances of terminated
participants' nonvested accounts are used to reduce future BWL contributions. The
benefit to which a participant is entitled is the benefit that can be provided from the
participant's account.
As of June 30, 2015, there were 878 participants in the Plan, of which 725 were active
employees. As of June 30, 2014, there were 822 participants in the Plan, of which 628
were active employees.
Vesting - Participants become vested in the BWL contribution and related earnings
after completing three years of service, at a rate of 25 percent each year. Participants
become fully vested after six years of service.
Investment Options - Participants may direct contributions in any of the following
investment options, which are administered by ICMA-RC. Since ICMA-RC is the
custodian as defined by the Plan, transactions in the ICMA funds qualify as transactions
with parties in interest.
Stable Value - Seeks safety of principal, adequate liquidity, and returns superior to
shorter maturity alternatives by actively managing a diversified portfolio of assets issued
by highly rated financial institutions and corporations as well as obligations of the U.S.
government or its agencies.
Balanced - Seeks both current income and capital appreciation by investing in a
combination of stocks, bonds, and money market instruments.
Growth - Seeks long-term capital appreciation by investing primarily in equity securities
of companies with above-average growth prospects. Current income is a secondary
concern.
8
Lansing Board of Water and Light
Employees' Defined Contribution Pension Plan
Notes to Financial Statements
June 30, 2015 and 2014
Note 1 - Description of the Plan (Continuecl)
International - Seeks long-term capital appreciation by investing primarily in equity
securities of issuers located outside of the U.S.
Stock Funds - Seeks long-term growth through capital gains, although historically,
dividends have been an important source of total return. These funds primarily invest in
the common stocks of companies based in the United States. There are many options
for diversification within this category.
Bond and Equity Funds - Seeks to maximize current income with capital appreciation as a
secondary consideration by investing primarily in debt securities issued by the U.S.
government or its agencies and domestic and foreign corporations. They are not fixed-
income investments. Even when a mutual fund's portfolio is composed entirely of bonds,
the fund itself has neither a fixed yield nor a contractual obligation to give investors back
their principal at some later maturity date -the two key fixed characteristics of individual
bonds.
Self-directed Brokerage Account - Participants with a minimum account balance of
$35,000 may transfer from their fund accounts a minimum of $5,000 to a self-directed
brokerage account. Eligible investments are equity securities traded on U.S. exchanges
valued at greater than $5 and over 400 mutual funds from 18 investment management
companies. Participants pay a one-time set-up fee of$50.
Participant Notes Receivable - Participants may borrow from their fund accounts a
minimum of $1,000 up to a maximum of the lesser of $50,000 or 50 percent of their
account balances. Notes receivable are treated as transfers between the investment
fund and the notes receivable fund. Note terms range from one to five years or up to 20
years for the purchase of a primary residence. The notes receivable are secured by the
balance in the participant's account and bear interest at a rate commensurate with
prevailing rates as determined periodically by the plan administrator. Principal and
interest are paid ratably through payroll deductions.
Payment of Benefits - Upon termination of service, a participant may elect to receive
either a lump-sum amount equal to the value of the participant's vested interest in his or
her account, or choose from a variety of periodic payment options.
9
Lansing Board of Water and Light
Employees-$ Defined Contribution Pension Plan
Notes to Financial Statements
June 30, 201 S and 2014
Note 2 - Summary of Significant Accounting Policies
Basis of Accounting - The financial statements of the Plan have been prepared using
the accrual method of accounting in accordance with Governmental Accounting
Standards Board (GASB) Statement No. 67, Financial Reporting for Pension Plans.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of additions and deductions during the
reporting period. Actual results could differ from those estimates.
Valuation of Investments and Income Recognition - The investments are stated at
market value based on closing sales prices reported on recognized securities exchanges
on the last business day of the year, or for listed securities having no sales reported, and
for unlisted securities, upon the last reported bid prices on that date. The mutual funds
are valued at quoted market prices, which represent the net asset values of shares held
by the Plan at year end.
Purchases and sales of investments are recorded on a trade-date basis. Interest income
is accrued when earned. Dividend income is recorded on the ex-dividend date.
Participant Notes Receivable - Participant notes receivable are recorded at their
unpaid principal balances plus any accrued interest. Participant notes receivable are
written off when deemed uncollectible.
Expenses - The Plan's expenses are paid by the BWL as provided by the plan
document.
Regulatory Status - The Plan is not subject to the reporting requirements of the
Employee Retirement Income Security Act of 1974 (ERISA) as it has been established for
the benefit of a governmental unit.
10
Lansing Board of Water and Light
Employees' Defined Contribution Pension Plan
Notes to Financial Statements
June 30, 201 S and 2014
Note 3 - Investments
The pension trust fund is authorized by Michigan Public Act 314 of 1965, as amended, to
invest in certain reverse repurchase agreements, stocks, diversified investment
companies, annuity investment contracts, real estate leased to public entities,
mortgages, real estate, debt or equity of certain small businesses, certain state and local
government obligations, and certain other specified investment vehicles.
The Plan's deposits and investment policies are in accordance with PA 196 of 1997 and
has authorized the investments according to Michigan PA 314 of 1965, as amended.
Risks at lune 30, 2015
Custodial Credit Risk of Bank Deposits - At the end of the year, the Plan has no
bank deposits.
Credit Risk - State law limits investments in commercial paper to the top two ratings
issued by nationally recognized statistical rating organizations. The Plan has no
investment policy that would further limit its investment choices. As of year end, the
credit quality ratings of debt securities (other than the U.S.government) are as follows:
Rating
Investment Fair Value Rating Organization
Mutual funds $ 136,010,607 Not rated Not rated
Stable value 31,844,948 AA S&P
Risks at June 30, 2014
Custodial Credit Risk of Bank Deposits - At the end of the year, the Plan has no
bank deposits.
Credit Risk - State law limits investments in commercial paper to the top two ratings
issued by nationally recognized statistical rating organizations. The Plan has no
investment policy that would further limit its investment choices. As of year end, the
credit quality ratings of debt securities (other than the U.S. government) are as follows:
Rating
Investment Fair Value Rating Organization
Mutual funds $ 130,442,786 Not rated Not rated
Stable value 33,607,203 AA S&P
II
Lansing Board of Water and Light
Employees' Defined Contribution Pension Plan
Notes to Financial Statements
June 30, 201 S and 2014
Note 4 - Plan Termination
Although it has not expressed any intention to do so, the BWL has the right under the
Plan to terminate the Plan subject to the provisions set forth in Article 12 of the Plan. In
the event of any termination of the Plan, or upon complete or partial discontinuance of
contributions, the accounts of each affected participant shall become fully vested.
Note S - Tax Status
The Plan is a prototype plan. The prototype plan has received a favorable opinion letter
from the Internal Revenue Service (IRS) indicating that the prototype plan, as designed,
is qualified for federal income tax-exempt status. The Plan has not individually sought its
own determination letter.
Note 6 - Upcoming Accounting Pronouncements
In February 2015, the Governmental Accounting Standards Board issued GASB
Statement No. 72, Fair Value Measurement and Application. The requirements of this
statement will enhance comparability of financial statements among governments by
requiring measurement of certain assets and liabilities at fair value using a consistent and
more detailed definition of fair value and acceptable valuation techniques. This statement
will also enhance fair value application guidance and related disclosures in order to
provide information to financial statement users about the impact of fair value
measurements on a government's financial position. GASB Statement No. 72 is required
to be adopted for years beginning after June 15, 2015. The Plan is currently evaluating
the impact this standard will have on the financial statements when adopted, during the
Plan's 2016 fiscal year.
12
Supplemental Information
13
Lansing Board of Water and Light
Employees' Defined Contribution Pension Plan
Statement of Changes in Net Position by Fund
Money Market Bond Funds
Year Ended June 30 Year Ended June 30
2015 2014 2015 2014
Increase
Investment income:
Net appreciation (depreciation)
in fair value of investments $ 410 $ 485 $ (845,789) $ 449,026
Interest income - - - -
Dividend income - - 813,414 555,414
Employer contributions 13,977 13,731 477,593 487,362
Participant rollover contributions - - 25,541 33,403
Loan repayments 21,638 4,550 197,715 173,174
Interest from participant notes receivable - - - -
Other - - (2,216) 13
Total increase, net of
realized and
unrealized gains
and losses 36,025 18,766 666,258 1,698,392
Decrease
Benefits paid to participants 150,217 64,086 660,545 536,673
Loans to participants 2,210 3,572 197,409 169,585
Loan defaults - - - -
Participants' note and
administrative fees 327 972 24,358 21,360
Total decrease 152,754 68,630 882,312 727,618
Net(Decrease) Increase Prior to
Interfund Transfers (116,729) (49,864) (216,054) 970,774
Interfund Transfers 227,735 (250,764) 1,316,824 (852,733)
Net Increase(Decrease) 1 1 1,006 (300,628) 1,100,770 118,041
Net Position
Beginning of year 1 17,793 418,421 16,556,877 16,438,836
End of year $ 228,799 $ 117,793 $ 17,657,647 $ 16,556,877
14
Lansing Board of Water and Light
Employees' Defined Contribution Pension Plan
Statement of Changes in Net Position by Fund (Continued)
Stock Funds Balanced Funds
Year Ended June 30 Year Ended June 30
2015 2014 2015 2014
Increase
Investment income:
Net appreciation(depreciation)
in fair value of investments $ 530,586 $ 9,532,529 $ (81,064) $ 3,198,720
Interest income - - - -
Dividend income 5,067,314 3,874,276 972,450 558,296
Employer contributions 1,689,400 1,752,951 1,652,808 1,375,608
Participant rollover contributions 246,359 100,790 643,541 197,557
Loan repayments 635,470 602,678 426,321 349,248
Interest from participant notes receivable - - - -
Other 87 5 40,575 65
Total increase, net of
realized and
unrealized gains
and losses 8,169,216 15,863,229 3,654,631 5,679,494
Decrease
Benefits paid to participants 3,269,915 2,539,594 1,658,124 996,083
Loans to participants 496,175 634,522 353,843 367,726
Loan defaults - - -
Participants' note and
administrative fees 29,869 31,744 14,930 12,891
Total decrease 3,795,959 3,205,860 2,026,897 1,376,700
Net(Decrease)Increase Prior to
Interfund Transfers 4,373,257 12,657,369 1,627,734 4,302,794
Interfund Transfers (28,034) (3,657,845) (908,907) 4,798,682
Net Increase (Decrease) 4,345,223 8,999,524 718,827 9,101,476
Net Position
Beginning of year 60,617,315 51,617,791 29,495,580 20,394,104
End of year $ 64,962,538 $ 60,617,315 $ 30,214,407 $ 29,495,580
15
Lansing Board of Water and Light
Employees' Defined Contribution Pension Plan
Statement of Changes in Net Position by Fund (Continued)
Growth Funds International Funds
Year Ended June 30 Year Ended June 30
2015 2014 2015 2014
Increase
Investment income:
Net appreciation(depreciation)
in fair value of investments $ 115,442 $ 1,053,965 $ (279,065) $ 3,063,853
Interest income - - - -
Dividend income - - 432,105 397,037
Employer contributions 568,790 588,556 514,289 535,453
Participant rollover contributions 71,130 9,045 44,996 31,217
Loan repayments 235,807 138,956 201,380 168,865
Interest from participant notes receivable - - - -
Other - - 50 22
Total increase, net of
realized and
unrealized gains
and losses 991,169 1,790,522 913,755 4,196,447
Decrease
Benefits paid to participants 160,1 16 266,068 605,388 712,842
Loans to participants 280,581 355,677 205,341 154,955
Loan defaults - - - -
Participants'note and
administrative fees 3,972 4,010 15,306 14,078
Total decrease 444,669 625,755 826,035 881,875
Net(Decrease) Increase Prior to
Interfund Transfers 546,500 1,164,767 87,720 3,314,572
Interfund Transfers (422,184) (756,292) (920,041) (1,080,852)
Net Increase(Decrease) 124,316 408,475 (832,321) 2,233,720
Net Position
Beginning of year 6,144,760 5,736,285 17,510,461 15,276,741
End of year $ 6,269,076 $ 6,144,760 $ 16,678,140 $ 17,510,461
16
Lansing Board of Water and Light
Employees' Defined Contribution Pension Plan
Statement of Changes in Net Position by Fund (Continued)
Total Mutual Funds
Year Ended June 30
2015 2014
Increase
Investment income:
Net(depreciation)appreciation
in fair value of investments $ (559,480) $ 17,298,578
Interest income - -
Dividend income 7,285,283 5,385,023
Employer contributions 4,916,857 4,753,661
Participant rollover contributions 1,031,567 372,012
Loan repayments 1,718,331 1,437,471
Interest from participant notes receivable - -
Other 38,496 105
Total increase, net of
realized and
unrealized gains
and losses 14,431,054 29,246,850
Decrease
Benefits paid to participants 6,504,305 5,1 15,346
Loans to participants 1,535,559 1,686,037
Loan defaults - -
Participants'note and
administrative fees 88,762 85,055
Total decrease 8,128,626 6,886,438
Net(Decrease) Increase Prior to
Interfund Transfers 6,302,428 22,360,412
Interfund Transfers (734,607) (1,799,804)
Net Increase(Decrease) 5,567,821 20,560,608
Net Position
Beginning of year 130,442,786 109,882,178
End of year $ 136,010,607 $ 130,442,786
17
Lansing Board of Water and Light
Employees' Defined Contribution Pension Plan
Statement of Changes in Net Position by Fund (Continued)
Stable Value Fund Brokerage Account
Year Ended June 30 Year Ended June 30
2015 2014 2015 2014
Increase
Investment income:
Net appreciation
in fair value of investments $ 580,681 $ 609,278 $ - $ -
Interest income - - 10,536 160,691
Dividend income - -
Employer contributions 631,503 714,164 -
Participant rollover contributions 313,914 681,866 - -
Loan repayments 177,673 233,842 - -
Interest from participant notes receivable - - -
Other 113,632 114,887 -
Total increase, net of
realized and
unrealized gains
and losses 1,817,403 2,354,037 10,536 160,691
Decrease
Benefits paid to participants 3,947,408 2,529,770 - -
Loans to participants 136,331 122,602 -
Loan defaults - -
Participants' note and
administrative fees 1 1,373 11,100 -
Total decrease 4,095,1 12 2,663,472 -
Net(Decrease) Increase Prior to
Interfund Transfers (2,277,709) (309,435) 10,536 160,691
Interfund Transfers 515,454 1,673,053 219,153 126,751
Net Increase(Decrease) (1,762,255) 1,363,618 229,689 287,442
Net Position
Beginning of year 33,607,203 32,243,585 1,147,041 859,599
End of year $ 31,844,948 $ 33,607,203 $ 1,376,730 $ 1,147,041
18
Lansing Board of Water and Light
Employees' Defined Contribution Pension Plan
Statement of Changes in Net Position by Fund (Continued)
Participant Notes Receivable Total
Year Ended June 30 Year Ended June 30
2015 2014 2015 2014
Increase
Investment income:
Net appreciation $
_ $ _ 21,201 $ 17,907,856
in fair value of investments $ - 10,536 160,691
Interest income -
- - 7,285,283 5,385,023
Dividend income
- 5,548,360 5,467,825
Employer contributions -
1,345,481 1,053,878
Participant rollover contributions - - -
Loan repayments (I,896,004) (1,671,3 13)
155,997
Interest from participant notes receivable 155,010 152,1128 114,992
Other
Total increase, net of
realized and
unrealized gains
and losses (1,740,994) (1,5 15,3 16) 14,517,999 30,246,262
Decrease
Benefits paid to participants - 10,451,713 7,645,116
(1,671,890)
Loans to participants (I,808,639) -
125,254 119,694 125,254 119,694
Loan defaults
Participants' note and - 100,135 96,155
administrative fees -
Total decrease (1,546,636) (1,688,945) 10,677,102 7,860,965
Net(Decrease) Increase Prior to
(194,358) 173,629 3,840,897 22,385,297
Interfund Transfers
Interfund Transfers -
Net Increase(Decrease) (194,358) 173,629 3,840,897 22,385,297
Net Position
4,082,709 3,909,080 169,279,739 146,894,442
Beginning of year
End of year $ 3,888,351 $ 4,082,709 $ 173,120,636 $ 169,279,739
19
Plan for Employees-9 Pension of the Board of
Water and Light - City of Lansing, Michigan -
Defined Benefit Plan
Financial Report
with Required Supplemental Information
June 30, 201 S
Cn
; 1 CD
s� CO
CD
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Contents
Report Letter 1-2
Management's Discussion and Analysis 3-5
Basic Financial Statements
Statement of Plan Net Position 6
Statement of Changes in Plan Net Position 7
Notes to Financial Statements 8-19
Required Supplemental Information 20
Schedule of Changes in the BWL's Net Pension Asset and Related Ratios 21
Schedule of Employer Contributions 22
Note to Required Supplemental Information 23
Schedule of Investment Returns 24
Plante Plante&Moran,PLLC
Suite 100
1111 Michigan Ave.
East Lansing,MI 48823
moran Tel:517.332. 0
Fax:517.332.858502
plantemoran.com
Independent Auditor's Report
To the Honorable Mayor, Members of
the City Council, and Commissioners
of the Board of Water and Light
Plan for Employees' Pension of the Board of Water and Light-
City of Lansing, Michigan - Defined Benefit Plan
City of Lansing, Michigan
Report on the Financial Statements
We have audited the accompanying basic financial statements of the Plan for Employees' Pension of the
Board of Water and Light - City of Lansing, Michigan - Defined Benefit Plan (the "Plan") as of and for the
years ended June 30, 2015 and 2014 and the related notes to the financial statements, which collectively
comprise the Plan's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity's internal control. Accordingly,we express no such opinion. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
Praxitty
MEMBER,
GLOBAL ALLIANCE OF
INOEPMEN,FIRMS
To the Honorable Mayor, Members of
the City Council, and Commissioners
of the Board of Water and Light
Plan for Employees' Pension of the Board of Water and Light-
City of Lansing, Michigan - Defined Benefit Plan
Opinion
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the
plan net position of the Plan for Employees' Pension of the Board of Water and Light - City of Lansing,
Michigan - Defined Benefit Plan as of June 30, 2015 and 2014 and the changes in its plan net position for
the years then ended in accordance with accounting principles generally accepted in the United States of
America.
Other Matters
Required Supplemental Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis on pages 3-5 and the schedule of changes in the BWL's net pension asset and
related ratios, schedule of employer contributions, and schedule of investment returns on pages 21-24
be presented to supplement the basic financial statements. Such information, although not a part of the
basic financial statements, is required by the Governmental Accounting Standards Board,which considers
it to be an essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic, or historical context. We have applied certain limited procedures to the required
supplemental information in accordance with auditing standards generally accepted in the United States
of America, which consisted of inquiries of management about the methods of preparing the information
and comparing the information for consistency with management's responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements.
We do not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
PLLC
August 28, 2015
2
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Management's Discussion and Analysis
Using this Annual Report
This annual report consists of two parts: (1) management's discussion and analysis (this section)
and (2) the basic financial statements. The financial statements also include notes that explain
some of the information in the financial statements and provide more detailed data.
Condensed Financial Information
The table below compares key financial information in a condensed format between the current
year and the prior two years:
2015 2014 2013
Assets held in trust:
Money market collective trust fund $ 2,321,310 $ 3,192,936 $ 3,209,522
U.S, government obligations 6,659,203 7,354,686 8,301,126
Corporate bonds and notes 1 1,312,551 11,844,906 12,168,664
Mutual funds 925,065 1,260,129 1,171,547
Common stock 52,356,437 56,770,168 50,459,178
Interest and dividend receivable 104,768 120,156 113,980
Total assets held in trust $ 73,679,334 $ 80,542,981 $ 75,424,017
Liabilities -Accrued liabilities $ - $ 13,000 $ -
Net position restricted for pension 73,679,334 80,529,981 75,424,017
Total liabilities and net position $ 73,679,334 $ 80,542,981 $ 75,424,017
Changes in net position:
Net investment income $ 1,771,423 $ 14,243,164 $ 10,169,847
Benefit payments (8,045,948) (8,541,275) (7,777,260)
Administrative fees (576,122) (595,925) (535,567)
Net change in net position $ (6,850,647) $ 5,105,964 $ 1,857,020
During fiscal year 2015, net investment income was $1.8 million. We believe this performance is
consistent with the experience of similarly situated employee benefit funds.
Employer contributions were $0 in fiscal year 2015 according to the Board of Water and Light -
City of Lansing, Michigan's (the "BWL") annual required contribution (ARC) as determined by
the BWL's actuary.
3
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Management's Discussion and Analysis (Continued)
Benefit payments in fiscal year 2015 decreased by$0.5 million to $8.0 million. This was due to a
decrease in funds distributed in the form of lump-sum payouts upon retirement in fiscal year
2015 as compared to fiscal year 2014.
The BWL reimburses itself for the cost of retiree healthcare benefits pursuant to Internal
Revenue Code Section 420. Reimbursement from the defined benefit pension plan assets is
allowed to the extent that excess funds are available for transfer. In fiscal years 2015, 2014, and
2013, there were no excess funds available for transfer.
Investment Objectives and Asset Allocation
The Plan's assets shall be invested in accordance with sound investment practices that
emphasize long-term investment fundamentals. In establishing the investment objectives of the
Plan, the BWL has taken into account the time horizon available for investment, the nature of
the Plan's cash flows and liabilities, and other factors that affect the Plan's risk tolerance.
In consideration of the Plan's investment goals, demographics, time horizon available for investment,
and the overall risk tolerance of the BWL, a long-term investment objective of income and growth
has been adopted for the Plan's assets. The primary objectives of the Plan's assets are to fund all
disbursements as they are due to meet the actuarial rate of return of 7.5 percent, and to earn
returns in excess of a passive set of market indexes representative of the Plan's asset allocation.
Consistent with the advice of the investment advisor, the BWL has selected the following target
asset allocation strategy:
Domestic Large Capitalization Stocks 45.0%
Domestic Small Capitalization Stocks 10.00/0
International Stocks 14.2%
U.S. Core Fixed Income 30.8%
Investment Results
The fiscal year ended June 30, 2015 saw a net investment income, net of administrative
expenses, of$1.2 million. We believe that this gain is in line with the level of gains experienced
by other employee benefit funds during this period.
Future Events
The Plan is currently overfunded, with a funded ratio (actuarial asset value divided by actuarial
accrued liability) of 113 percent. This funding level results in an annual pension cost of$0 for fiscal
year 2015. The board does not expect to make contributions to the trust in fiscal year 2016.
The Plan expects to make annual withdrawals of approximately $7,000,000 to cover participant
benefits.
4
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Management's Discussion and Analysis (Continued)
Contacting the Plan's Management
This financial report is intended to provide a general overview of the Plan's finances and to show
accountability for the money it receives. If you have questions about this report or need
additional information, we welcome you to contact the office of Heather Shawa-DeCook, Chief
Financial Officer, at P.O. Box 13007, Lansing, Michigan 48901-3007.
5
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Statement of Plan Net Position
June 30
2015 2014
Assets
Investments at fair value:
Cash and money market trust fund $ 2,321,310 $ 3,192,936
U.S.government obligations 6,659,203 7,354,686
Corporate bonds and notes 1 1,312,551 1 1,844,906
Mutual funds 925,065 1,260,129
Common stocks 52,356,437 56,770,168
Total investments at fair value 73,574,566 80,422,825
Receivable- Investment interest receivable 104,768 120,156
Total assets 73,679,334 80,542,981
Liabilities -Accrued liabilities - 13,000
Net Position Restricted for Pensions $ 73,679,334 $ 80,529,981
See Notes to Financial Statements. 6
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
statement of Changes in Plan Net Position
Year Ended June 30
2015 2014
Additions
Investment income:
Net appreciation in fair
value of investments $ 215,209 $ 12,570,312
Interest and dividend income 1,556,214 1,672,852
Total investment income 1,771,423 14,243,164
Deductions
Retiree benefits paid 8,045,948 8,541,275
Administrative expenses 576,122 595,925
Total deductions 8,622,070 9,137,200
Net (Decrease) Increase in Fiduciary Net Position (6,850,647) 5,105,964
Fiduciary Net Position
Beginning of year 80,529,981 75,424,017
End of year $ 73,679,334 $ 80,529,981
See Notes to Financial Statements. 7
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Notes to Financial Statements
June 30, 2015 and 2014
Note 1 - Summary of Significant Accounting Policies
Reporting Entity
The Board of Water and Light - City of Lansing, Michigan (BWL) sponsors the Plan for
Employees' Pension of the Board of Water and Light - City of Lansing, Michigan -
Defined Benefit Plan (the "Plan"), which is a noncontributory single-employer defined
benefit, public employee retirement system established and administered by the BWL
under Section 5-203 of the City Charter. An employee becomes a participant of the
Plan when hired. A participant's interest shall be fully vested when the participant has
been credited with seven years of vesting service. The Plan was established in 1939 and
has been amended several times, with the latest amendment taking effect on July 1,
2010. Participants should refer to the plan agreement for a more complete description
of the Plan's provisions.
Accounting and Reporting Principles
The Plan follows accounting principles generally accepted in the United States of
America (GAAP) as applicable to governmental units. Accounting and financial reporting
pronouncements are promulgated by the Governmental Accounting Standards Board.
Basis of Accounting
Fiduciary funds use the economic resources measurement focus and the full accrual
basis of accounting. Revenue is recorded when earned and expenses are recorded when
a liability is incurred, regardless of the timing of related cash flows. Plan member
contributions are recognized in the period in which the contributions are due. Employer
contributions to the plan are recognized when due pursuant to legal requirements.
Benefits and refunds are recognized when due and payable in accordance with the terms
of the plan.
Report Presentation
This report includes the fund-based statements of the Plan.
Investment Valuation and Income Recognition - Investments are reported at fair
value. Securities traded on a national or international exchange are valued at the last
reported sales prices. Investments that do not have an established market are reported
at estimated fair value.
Purchases and sales of securities are recorded on a trade-date basis.
Appreciation or depreciation of investments is calculated based on the beginning of year
fair value of investments.
8
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Notes to Financial Statements
June 30, 201 S and 2014
Note 1 - Summary of Significant Accounting Policies (Continue
Expenses - Substantially all costs and expenses incurred in connection with the
operation and administration of the Plan are paid by the BWL, the plan sponsor. The
Plan does pay all expenses incurred in connection with the custodial safekeeping account
and investment advisor fees, which have been netted with interest and dividend income.
Beginning in fiscal year 2008, the Plan began to pay the fees associated with the actuarial
evaluation.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements. Actual results could differ
from those estimates.
Regulatory Status - The Plan is not subject to the reporting requirements of the
Employee Retirement Income Security Act of 1974 (ERISA) as it has been established for
the benefit of a governmental unit.
Note 2 - Plan Description
Plan Administration - The BWL Pension Board administers the Plan - a
noncontributory single-employer defined benefit pension plan for employees of the
BWL. The benefit terms were established by the BWL and may be amended by future
BWL actions.
Management of the Plan is vested in the BWL, which consists of eight members
appointed by the mayor of the City of Lansing, Michigan.
Plan Membership - At February 28, 2015 and 2014 (the most recent actuarial
valuation for funding purposes), plan membership consisted of the following:
2015 2014
Inactive plan members or beneficiaries
currently receiving benefits 398 413
Inactive plan members entitled to but not
yet receiving benefits 8 9
Active plan members 14 17
Total 420 439
9
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Notes to Financial statements
June 30, 2015 and 2014
Note 2 - Plan Description (Continued)
The Plan, by resolution of the board of commissioners, was closed to employees hired
subsequent to December 31, 1996, and a defined contribution plan was established for
employees hired after December 31, 1996. Effective December 1, 1997, all active
participants in this plan were required to make an irrevocable choice to either remain in
this plan (defined benefit) or move to the newly established defined contribution plan.
Those participants who elected to move to the defined contribution plan received lump-
sum distributions from this plan, which were rolled into their accounts in the newly
established defined contribution plan. Of the 760 employees who were required to
make this election, 602 elected to convert their retirement benefits to the newly
established defined contribution plan. As a result of this action, effective December 1,
1997, the board of commissioners transferred $75,1 16,470 to the newly established
defined contribution plan, reflecting the plan participants' accumulated benefits as of said
date.
Benefits Provided - The Plan provides retirement, early retirement, disability,
termination, and death benefits. The Plan provides for an annual benefit upon normal
retirement age equal to the product of the total number of years of credited service
multiplied by a percentage equal to 1.80 percent of the highest annual pay during the last
10 years of service, paid in equal monthly installments.
Payments will either be nonincreasing or increase only as follows: (a) by an annual
percentage increase that does not exceed the annual percentage increase in a cost-of-
living index that is based on prices of all items and issued by the Bureau of Labor
Statistics; (b) to the extent of the reduction in the amount of the employee's payments
to provide for a survivor benefit upon death, but only if the beneficiary whose life was
being used to determine the distribution period described in subsection 8 dies or is no
longer the employee's beneficiary pursuant to a qualified domestic relations order within
the meaning of Internal Revenue Code Section 414(p); (c) to provide cash refunds of
employee contributions upon the employee's death; or (d) to pay increased benefits that
result from a plan amendment.
Contributions - Article 9, Section 24 of the State of Michigan constitution requires that
financial benefits arising on account of employee service rendered in each year be
funded during that year. Accordingly, the BWL Pension Board retains an independent
actuary to determine the annual contribution. The actuarially determined rate is the
estimated amount necessary to finance the costs of benefits earned by plan members
during the year, with an additional amount to finance any unfunded accrued liability.
There was no contribution required for the years ended June 30, 2014 and 2015. Plan
documents do not require participant contributions.
10
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Notes to Financial Statements
June 30, 2015 and 2014
Note 3 - Cash, Investments, and Fair Disclosure
The pension trust fund is also authorized by Michigan Public Act 314 of 1965, as
amended, to invest in certain reverse repurchase agreements, stocks, diversified
investment companies, annuity investment contracts, real estate leased to public
entities, mortgages, real estate, debt or equity of certain small businesses, certain state
and local government obligations, and certain other specified investment vehicles.
The Plan's deposits and investment policies are in accordance with PA 196 of 1997; the
Plan has authorized the investments according to Michigan PA 314 of 1965, as amended.
Risks at lune 30, 2015
Custodial Credit Risk of Bank Deposits - Custodial credit risk is the risk that in the
event of a bank failure, the Plan's deposits may not be returned to it. The Plan requires
that financial institutions must meet minimum criteria to offer adequate safety to the
Plan. The Plan evaluates each financial institution with which it deposits funds and only
those institutions meeting minimum established criteria are used as depositories.
Custodial Credit Risk of Investments - Custodial credit risk is the risk that, in the
event of the failure of the counterparty, the Plan will not be able to recover the value of
its investments or collateral securities that are in the possession of an outside party. The
Plan does not have a policy for custodial credit risk. At year end, all investments of the
Plan were held in the name of the Board of Water and Light and are therefore not
subject to custodial credit risk.
Interest Rate Risk - Interest rate risk is the risk. that the value of investments will
decrease as a result of a rise in interest rates. The Plan's investment policy does not
restrict investment maturities, other than commercial paper, which can only be
purchased with a 270-day maturity. At year end, the average maturities of investments
are as follows:
Weighted
Investment Fair Value Average Maturity
U.S. government or agency bond $ 6,659,203 12.97 years
Corporate bonds 11,312,551 14.59 years
Money market trust fund 1,906,792 Less than I year
II
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Notes to Financial statements
June 30, 201 S and 2014
Note 3 - Cash, Investments, and Fair Disclosure (Continued)
Credit Risk - State law limits investments in commercial paper to the top two ratings
issued by nationally recognized statistical rating organizations. The Plan has no
investment policy that would further limit its investment choices. As of year end, the
credit quality ratings of debt securities (other than the U.S. government) are as follows:
Rating
Investment Fair Value Rating Organization
U.S. government or agency bond $ 6,659,203 Not rated Not rated
Corporate bonds 1,040,057 AAA S&P
Corporate bonds 4,637,184 AA+ S&P
Corporate bonds 261,047 AA S&P
Corporate bonds 118,461 AA- S&P
Corporate bonds 488,182 A+ S&P
Corporate bonds 927,872 A S&P
Corporate bonds 1,296,826 A- S&P
Corporate bonds 892,810 BBB+ S&P
Corporate bonds 698,087 BBB S&P
Corporate bonds 333,191 BBB- S&P
Corporate bonds 10,250 BB S&P
Corporate bonds 105,867 BB+ S&P
Corporate bonds 17,786 BB- S&P
Corporate bonds 38,325 B+ S&P
Corporate bonds 390,595 CCC S&P
Corporate bonds 56,013 D S&P
Money market trust fund 1,906,792 Not rated Not rated
Concentration of Credit Risk - The board of commissioners places no limit on the
amount the Plan may invest in any one issuer. As of year end, the Plan does not hold
more than 5 percent of its investments in any one issuer.
Risks at lune 30, 2014
Custodial Credit Risk of Bank Deposits - Custodial credit risk is the risk that in the
event of a bank failure, the Plan's deposits may not be returned to it. The Plan requires
that financial institutions meet minimum criteria to offer adequate safety to the Plan. The
Plan evaluates each financial institution with which it deposits funds and only those
institutions meeting minimum established criteria are used as depositories.
12
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Notes to Financial statements
June 30, 2015 and 2014
Note 3 - Cash, Investments, and Fair Disclosure (Continued)
Custodial Credit Risk of Investments - Custodial credit risk is the risk that, in the
event of the failure of the counterparty, the Plan will not be able to recover the value of
its investments or collateral securities that are in the possession of an outside party. The
Plan does not have a policy for custodial credit risk. At year end, all investments of the
Plan were held in the name of the Board of Water and Light and are therefore not
subject to custodial credit risk.
Interest Rate Risk - Interest rate risk is the risk that the value of investments will
decrease as a result of a rise in interest rates. The Plan's investment policy does not
restrict investment maturities, other than commercial paper, which can only be
purchased with a 270-day maturity. At year end, the average maturities of investments
are as follows:
Weighted
Investment Fair Value Average Maturity
U.S. government or agency bond $ 7,354,686 12.79 years
Corporate bonds 11,844,906 14.26 years
Money market trust fund 3,104,927 Less than I year
13
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Notes to Financial statements
June 30, 201 S and 2014
Note 3 - Cash, Investments, and Fair Disclosure (Continued)
Credit Risk - State law limits investments in commercial paper to the top two ratings
issued by nationally recognized statistical rating organizations. The Plan has no
investment policy that would further limit its investment choices. As of year end, the
credit quality ratings of debt securities (other than the U.S. government) are as follows:
Rating
Investment Fair Value Rating Organization
U.S. government or agency bond $ 7,354,686 Not rated Not rated
Corporate bonds 1,097,382 AAA S&P
Corporate bonds 4,590,886 AA+ S&P
Corporate bonds 217,542 AA S&P
Corporate bonds 193,884 AA- S&P
Corporate bonds 612,123 A+ S&P
Corporate bonds 952,508 A S&P
Corporate bonds 1,483,155 A- S&P
Corporate bonds 780,999 BBB+ S&P
Corporate bonds 640,981 BBB S&P
Corporate bonds 544,851 BBB- S&P
Corporate bonds 98,555 BB S&P
Corporate bonds 78,154 BB+ S&P
Corporate bonds 32,325 BB- S&P
Corporate bonds 26,250 B S&P
Corporate bonds 495,311 CCC S&P
Money market trust fund 3,104,927 Not rated Not rated
Concentration of Credit Risk - The board of commissioners places no limit on the
amount the Plan may invest in any one issuer. As of year end, the Plan does not hold
more than 5 percent of its investments in any one issuer.
14
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Notes to Financial statements
June 30, 2015 and 2014
Note 4 - Net Appreciation or Depreciation of Investments
The net appreciation (depreciation) of the Plan's investments is as follows:
2015 2014
Investments at fair value as determined by
quoted market price:
U.S. government obligations $ 119,270 $ 90,724
Corporate bonds and notes (192,596) 195,217
Mutual funds (133,224) 200,285
Common stocks and mutual funds 332,467 12,031,656
Alternative investments 89,292 52,430
Total $ 215,209 $ 12,570,312
Note S - 401(h) Account
Effective July 1, 1999, the Plan was amended to include a medical-benefit component, in
addition to the normal retirement benefits, to fund a portion of the postretirement
obligations for certain retirees and their beneficiaries in accordance with Section 401(h)
of the Internal Revenue Code (IRC). A separate account has been established and
maintained in the Plan for the net assets related to the medical-benefit component
401(h) account. In accordance with IRC Section 401(h), the Plan's investments in the
401(h) account may not be used for, or diverted to, any purpose other than providing
health benefits for retirees and their beneficiaries. Employer contributions or qualified
transfers to the 401(h) account are determined annually and are at the discretion of the
plan sponsor. At June 30, 2015 and 2014, there were no excess pension plan assets
available for transfer.
Note 6 - Tax Status
The Plan obtained its determination letter dated November 4, 2011, in which the
Internal Revenue Service stated that the Plan, as then designed, was in compliance with
the applicable requirements of the Internal Revenue Code. Management believes the
Plan continues to operate as a qualified plan.
15
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Notes to Financial Statements
June 30, 201 S and 2014
Note 7 - Plan Investments - Policy and Rate of Return
Investment Policy - The Plan's policy in regard to the allocation of invested assets is
established and may be amended by the BWL by a majority vote of its members. It is the
policy of the board to pursue an investment strategy that manages risk through the
prudent diversification of the portfolio across a broad selection of distinct asset classes.
The Plan's investment policy discourages the use of cash equivalents, except for liquidity
purposes, and aims to refrain from dramatically shifting asset class allocations over short
time spans. The following was the BWL's adopted asset allocation policy as of June 30,
2015 and 2014:
Target
Asset Class Allocation
Fixed income 30.80%
Domestic equity 55.00%
International equity 14.20%
Rate of Return - For the year ended June 30, 2015, the annual money-weighted rate of
return on plan investments, net of plan investment expense, was 1.55 percent. For the
year ended June 30, 2014, the annual money-weighted rate of return on plan
investments, net of plan investment expense, was 19.18 percent. The money-weighted
rate of return expresses investment performance, net of investment expense, adjusted
for the changing amounts actually invested.
Note 8 - Net Pension Asset of the BWL
The components of the net pension asset of the BWL at June 30, 2015 and 2014 were
as follows (in thousands):
2015 2014
Total pension liability $ 65,395 $ 69,341
Plan fiduciary net position 73,679 80,530
Plan's net pension asset $ 8,284 $ I I,189
Plan fiduciary net position, as a percentage of
the total pension liability 1 12.67% 1 16.13%
16
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Notes to Financial Statements
June 30, 2015 and 2014
Note 8 - Net Pension Asset of the BMIL (Continued
Actuarial Assumptions - The June 30, 2015 total pension liability was determined by
an actuarial valuation as of February 28, 2015, which used update procedures to roll
forward the estimated liability to June 30, 2015. The June 30, 2014 total pension liability
was determined by an actuarial valuation as of February 28, 2014, which used update
procedures to roll forward the estimated liability to June 30, 2014. The valuations used
the following actuarial assumptions, applied to all periods included in the measurements:
Inflation 3.00%
Salary increases 6.440/6-10.26%
Investment rate of return 7.50%
The most recent experience review was completed in 2014. Since the Plan covered 14
active participants in fiscal year 2015 and 17 active participants in fiscal year 2014,
assumptions like termination, retirement, and disability have an immaterial impact on the
results and have not been changed.
Mortality rates were based on the RP-2014 mortality table projected generationally with
scale MP-2014.
Discount Rate - The discount rate used to measure the total pension liability was 7.5
percent. The projection of cash flows used to determine the discount rate assumed that
BWL contributions will be made at rates equal to the actuarially determined
contribution rates.
Projected Cash Flows Section - Based on those assumptions, the pension plan's
fiduciary net position was projected to be available to make all projected future benefit
payments of current active and inactive employees. Therefore, the long-term expected
rate of return on pension plan investments was applied to all periods of projected
benefit payments to determine the total pension liability.
17
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Notes to Financial statements
June 30, 2015 and 2014
Note 8 - Net Pension Asset of the BWL (Continuecn
The long-term expected rate of return on pension plan investments was determined
using a building-block method in which best-estimate ranges of expected future real
rates of return (expected returns, net of pension plan investment expense and inflation)
are developed for each major asset class. These ranges are combined to produce the
long-term expected rate of return by weighting the expected future real rates of return
by the target asset allocation percentage and by adding expected inflation. Best
estimates of arithmetic real rates of return as of June 30, 2015 and 2014 for each major
asset class included in the pension plan's target asset allocation, as disclosed in Note 7,
are summarized in the following table:
Long-term
Expected Real
Asset Class Rate of Return
Fixed income 2.00%
Domestic equity 6.40%
International equity 6,80%
Sensitivity of the Net Pension Asset to Changes in the Discount Rate - The
following presents the net pension asset of the BWL at June 30, 2015, calculated using
the discount rate of 7.5 percent, as well as what the BWL's net pension asset would be if
it were calculated using a discount rate that is I percentage point lower (6.5 percent) or
I percentage point higher (8.5 percent) than the current rate:
Current
I% Decrease Discount Rate I% Increase
(6.50 %) (7.50 %) (8.50%)
Net pension asset of the BWL
(in thousands) $ (3,053) $ (8,284) $ (13,128)
18
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Notes to Financial statements
June 30, 2015 and 2014
Note 8 - Net Pension Asset of the BWL (Continued
The following presents the net pension asset of the BWL at June 30, 2014, calculated
using the discount rate of 7.5 percent, as well as what the BWL's net pension asset
would be if it were calculated using a discount rate that is I percentage point lower (6.5
percent) or I percentage point higher (8.5 percent) than the current rate:
Current
I% Decrease Discount Rate I% Increase
(6.50%) (7.50%) (8.50%)
Net pension asset of the BWL
(in thousands) $ (5,315) $ (11,189) $ (16,603)
Note 9 - Upcoming Accounting Pronouncements
In February 2015, the Governmental Accounting Standards Board issued GASB
Statement No. 72, Fair Value Measurement and Application. The requirements of this
Statement will enhance comparability of financial statements among governments by
requiring measurement of certain assets and liabilities at fair value using a consistent and
more detailed definition of fair value and acceptable valuation techniques. This
Statement also will enhance fair value application guidance and related disclosures in
order to provide information to financial statement users about the impact of fair value
measurements on a government's financial position. GASB Statement No. 72 is required
to be adopted for years beginning after June 15, 2015. The Plan is currently evaluating
the impact this standard will have on the financial statements when adopted during the
Plan's 2016 fiscal year.
19
Required Supplemental Information
20
Plan for Employees' Pension of the Board of Water and Light - City of
Lansing, Michigan - Defined Benefit Plan
Schedule of Changes in the BWVs
Net Pension Asset and Related Ratios
Last Ten Fiscal Years
(in thousands)
2015 2014 2013 2012* 2011* 2010* 2009* 2008* 2007* 2006*
Total Pension Liability
Service cost $ 274 $ 349 $ 407 $ - $ - $ - $ - $ - $ - $ -
Interest 4,919 4,751 5,085 - - -
Changes in benefit terms - - -
Differences between expected and actual experience (1,093) 964 (1,716) - - - -
Changes in assumptions** - 4,538 - - - - - -
Benefit payments,including refunds (8,046) (8,541) 7,77 - -Net Change in Total Pension Liability (3,946) 2,061 (4,001) - - -
Total Pension Liability-Beginning of year 69,341 67,280 71,281 - - - - -
Total Pension Liability-End of year 65,395 69,341 67,280 - - - -
Plan Fiduciary Net Position
Contributions-Employer - - -
Contributions-Member - - -
Net investment income 1,771 14,243 10,170 - - - -
Administrative expenses (576) (596) (536) - - -
Benefit payments,including refunds (8,045) (8,541) (7,777) - - -
Other - - - - -
Net Change in Plan Fiduciary Net Position (6,850) 5,106 1,857 - - -
Plan Fiduciary Net Position-Beginning of year 80,529 75,424 73,567 - - -
Plan Fiduciary Net Position-End of year 73,679 80,530 75,424 - - - -
BWL Net Pension Asset-Ending $ (8,284) $ (I 1,189) $ (8,I44) $
Plan Fiduciary Net Position as a%of Total Pension Liability 1 12.67% 1 16.14% 1 12.10% - % - % - % % - % % - %
Covered Employee Payroll 1,018 1,225 1,684 - - - - -
BWL's Net Pension Asset as a%of Covered Employee Payroll (814%) (913%) (484%) - % - % - % % - % - % - %
*GASB Statement No.67 was implemented as of June 30,2014. Information from 2006-2012 is not available and this schedule will be presented on a prospective basis.
**Related to change in the mortality assumption from the RP2000CH table projected to 2018 with Scale AA to the RP-2014 table projected generationally with Scale MP-2014
See Note to Required Supplemental Information. 21
Plan for Employees' Pension of the Board of Water and Light - City of
Lansing, Michigan - Defined Benefit Plan
Schedule of Employer Contributions
Last Ten Fiscal Years
(in thousands)
2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
Actuarially determined contribution $ - $ - $ - $ - $ 86 $ 2,109 $ _ $ - $ $
Contributions in relation to the actuarially determined contribution - - - - 86 2,109
Contribution Deficiency(Excess) $ " $ - $ � $ $ $ $ $ $ $
Covered Employee Payroll 1,018 1,225 1,684 2,101 2,398 2,660 3,089 3,162 3,391 3,942
Contributions as a Percentage of Covered Employee Payroll - % - % - % - % 3.59% 79.29%
See Note to Required Supplemental Information. 22
Plan for Employees' Pension of the Board of Water and
Light - City of Lansing, Michigan - Defined Benefit Plan
Note to Required supplemental Information
Year Ended June 30.9 2015
Actuarial valuation information relative to the determination of contributions:
Valuation date June 30, 2015, based on roll-forward of March 1, 2015 valuation
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age method
Amortization method Level dollar over a 15-year period
Remaining amortization period 15 years
Asset valuation method Market value of the assets
Inflation 3.0 percent
Salary increases 6.44 percent-10.26 percent per year, depending on age
Investment rate of return 7.5 percent per year compounded annually
Mortality RP-2014 Mortality Table projected generationally
with scale MP-2014
Plan for Empto yees-$ Pension of the Board of Water and Light - City of
Lansing, Michigan - Defined Benefit Plan
Scher�e Of Investment Returns
Last Ten Fiscal Years
2015 2014 2013* 2012
* 2011* 2010* 2009* 2008* 2007* 2006*
%- -
Annual money-weighted rate of return, 1.55% 19.18% - % - % - % _ % -
% -
net of investment expense
SB 67 was implemented as of June 30,2014. Information from 2006-2013 is not available and this schedule will be presented on a prospective basis.
GA
24
� Water and Light
Lansing Board d Trust
Retiree Benefit Plan an
Financial RePort ration
With Required supp1emental Info
June 309 2015
� N
.L
•n Board of Water and Light
1.ansi g d Trust
Retiree Benefit plan co,�ents
I-2
Report Letter 3-4
Management's Discussion and Analysis
Financial Statements 5
Statement of Trust Net Position 6
Statement of Changes in Trust Net Position 7-17
Notes to Financial Statements 18
Required Supplemental Information 19
Schedule of Funding Progress 20
Schedule of Employer Contributions
Plante&Moran,PLLC
suite 100
1111 Michigan Ave.
East Lansing,MI 4BB23
Plante Tel:517.332. 0
Fax:517.332.858502
rmoran plantemoran.com
Independent Auditor's Report
To the Honorable Mayor, Members of
the City Council, and Commissioners
of the Board of Water and Light
Lansing Board of Water and Light Retiree Benefit
Plan and Trust
City of Lansing, Michigan
Report on the Financial Statements
d June 30, 2015 and 2014 and the
an in basic financial statements of the Lansing Board of Water andLight
We have audited the accomp Y g of and for the years end )
Retiree Benefit Plan and Trust (the"Plan") as
'al statements,which collectively comprise the Plan's basic financial statements
related notes to the finance
as listed in the table of contents.
Management's Responsibility for the Financial Statements
the reparation and fair presentation States of these f America;statement,
iincludes
Management is responsible for P
accordance with accounting principles generally accepted in the Unite
on an
the design, implementation, and maintenance of internal control relevant mint whetheP due►to fraud oer
presentation of financial statements that are free from material misstatement,
error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements
accepted in the United States of
require that we plan and perform the audits et o obtain reasonable assurance
conducted our audits in accordance with auditing standards gene
America. Those standards r q
about whether the financial statements are free from material misstatement.
about the amounts and disclosures ie
procedures to obtain audit eved ud mint, including
An audit involves performing p rocedures selected depend on the auditor's judgment,
the financial statements. The p
internal control relevant to the entity's
assessment of the risks o considers en f material misstatement of the financial s ctatements, whether due to tau o
error. In making those risk assessments, the auditor consi an opinion procedures
the effectiveness
tion of the financial statements in orders n design andit procedures that are
preparation and fair presenta
ccordingly,we express no such opinion•a ess ofalso s significant saccoevaluating
unt accounting
appropriate in the circumstances, but not for the purpose o expres I
of the entity's internal control. A olicies used and the reasonableness
the appropriateness of accounting p
mint, as well as evaluating the overall presentation of the financial statements.as for
estimates made by manage to proved
We believe that the audit evidence we have obtained is sufficient and appropriate
our audit opinions.
Praxi;tMEMBEv;:
ItIUEpENUE IITt'F 111 y
I
To the Honorable Mayor, Members of
the City Council, and Commissioners
of the Board of Water and Light
Lansing Board of Water and Light Retiree Benefit
Plan and Trust
City of Lansing, Michigan
Opinion
In our opinion, the basic financial statements referred to fabReti Retiree Benefitove present Ian and Trust ly, in all aas of
P June 30
trust net position of the Lansing Board oustLight net position for the merica.hen ended, in accordance with
2015 an
d 2014 and the changes in its tr
accounting principles generally accepted in the United States of
Other Matters
Required Supplemental Information
n principles generally accepted in the United States of heduleaof require
employer the
cont ibuti ns,nas
Accounts g p P
discussion and analysis, schedule of funding progress, and schedule
nt
identified
in the table of contents, be presented to ial statements,
ta a ents ei basic required red by the Governmental
information, although not a part of the basic financial statem
cing
Accounting Standards Board which con siders it to be ti ealeeconomic,ntial part or historical context. Wel have
Ac g
the basic financial statements in an appropriate operation ,
app
ted
standards
lied certain limited procedures to the required supplemental information
formwhon i accordance
of with
auditing
i og
standards generally accepted in the United States o
manage
ment about the methods of preparing the information bald comparing cial statemenor and other
consistency mation for
with management's responses to our inquiries,
we obtained during our audit of the basic financiallimited statements.procedures es do not provide us'nion
with
knowledge
or provide any sto exprancress an opin on the ion orl provide any assurance.
sufficient evidence
Alt& P 4
August 28, 2015
2
Lansing sin Board of Water and Light Retiree Benefit Plan and Trust
Management's Discussion and pnalYsis
this Annual Report y this section)
Using P
discussio
This annual report
consists of two parts: (I) management's statements also ninclude notes that explain
and (2) the basic financial statements.ial statementThe s alnd provide more detailed data.
some of the information in the
Condensed Financial Information
key financial information in a condensed format between the Curren
The table below compares y
year and the prior two years:
2014 2013
2015
5,71 1,439 $ 8,498,919
Assets held in trust: $ 61243,203 $ 20,713,869 19,321,385
Cash and money market trust funds 21,269,571 16 284,339 13,019,316
Corporate bonds and notes 15,462,341 86,128,263
Government bonds and notes 1 1 1,1 12,369 108,540537, 41 1,950,935
Equities 1,894,929 2,259,641
Mutual funds and other 200,805
211,625 185,624
Interest and dividend receivable 153,721,450 $ 129,104,442
$ 156,183,218 $
Total plan assets
25,667,779 $ 15,711,575
Changes in net position: $ 3,614,695 $ 9 266529 14,045,204
Net investment income 9,670,794 , 0)
Employer contributions (9,670,794) (9,266,529) (9,524,120)
1
Retiree benefits paid 1 52 927 I,050,77 I
561)
Administrative fees $ 2461,768 $ ,008 24,617 $ 19,434,098
Net change in net position
,
investment income was $3.6 million.We believe t his performance is
During fiscal year 2015, net invest a increase in the Board of Water
with the over level of returns experienced by simil�orl�n situated in
in line 0.4 million due
Michigan's (the "BWL") annual healthcare costs.
The employer contributions were up by
and Light - City of Lansing,
3
Lansing Board of Water and Light
Retiree Benefit Plan and Trust �Ya sis (Continued)
Management2s Discussion and An
in accordance with sound investment practices that
Investment Objectives and Asset Allocation ent objectives o be invested f the
The Plan's assets shall
the natu
e horizon available for investment, tolerance.
emphasize long-term inves he time
fundamentals. h. In establishing the inves re of
Plan, the BWL has taken into account t
the investment objective is income and
Consistent with this, the BWL has determined that
the Plans cash flows and liabilities, and other factors that affect the Pans risk
objective is a balanced approach that emph
growth. This investment 1asizes a stable an
appreciational over the long term.
substantial source of current income and some cap r,the BWL has selected the following target
Consistent with the advice of the investment a
isO
asset allocation strategy: 43.2%
Domestic large capitalization stocks 10.00/0
Domestic small capitalization stocks 10 7%
International stocks 31 1%
U.S. core fixed income 5.00/0
Private equity
Investment Results
net of
ve
The fiscal year ended June 30, 2015 saw a net investment innem li with the overall nll yell of
P
ex enses, of $2.5 million. We believe bond markets.ante is inrecovery experienced by the stock an
Future Events
ostemployment benefits (OPEBs) and is intending to meet its annual
The BWL is funding its other p
' ontributions into the VEBA Trust Fun .
required contributions (ARC) in part by malting c
Contacting the Plan's Management
to provide a general overview of the Plan's finances
rep rt to
need
show
This financial report is intendedp uestions about
accountability for the money it receives. If you have q
ou to contact the office of Heather Shawa-DeCook, Chief
additional information, we welcome Y
Financ
ial Officer, at P.O. Box 13007, Lansing, Michigan 48901-3007.
4
• Board of Water and Light wwwwomNow
Lansing Trust
Benefit plan Statement Trust Net Position
Retiree
June 30
2015 2014
Assets 6,243,203 $ 5,71 1,439
Investments - Fair value: $ 21 269,571 20,713,869
Cash and money ana�ommerc alt trust dpaper 16,284,339
Corporate bonds 15,462,341
108,540,537
Government bonds and notes 1 1 1,1 12,369 2,259,641
Equities 1,894,929
Mutual funds ►55,982,413 153,509,825
Total investments at fair value 21 1,625
200,805
Investment interest and dividend receivable � 156,183,218 $
153,721,450
Trust Net Position
5
r� Financial Statements.
Lansing Board of Water and Light
Retiree Benefit Plan and Trust Net position
statement of Changes in Trust
Year Ended June 30
2015 2014
Increase
Investment income: 650,079 $ 22,774,150
Net appreciation in fair value of investments $ 2,964,616 2,893,629
Interest and dividend income
3,614,695 25,667,779
Total investment income 9670,794 9,266,529
,
Employer contributions
Total increase
13,285,489 34,934,308
Decrease 9,670,794 9,266,529
Retiree benefits paid 1,152,927 1,050,771
Administrative expenses 10,823,721 10,317,300
Total decrease
Net Increase in Trust Net position
2,46 I,768 24,6 17,008
Net position 153,721,450 129,104,442
Beginning of year 153,721,450
$ 156,183,2 18 $
End of year
- crarPments. 6
Lansing Board of Water and Light
Retiree Benefit Plan and Trust
Notes to Financial statements
June 30.9 201 S and 2014
Note 1 - Description of the Plan
The following description of the Lansing Board of Water and Light Retiree Benefit Plan
and Trust (the "Plan"), a trust fund of the Board of Water and Light - City of Lansing,
Michigan (the "BWL"), provides only general information. Participants should refer to
the plan agreement for a more complete description of the Plan's provisions.
General - The Plan was established on October 20, 1999, effective as of July 1, 1999, to
constitute a voluntary employee beneficiary ssociation (VEA)amended. The Plan under Section
forlmed 0forc)the
of the Internal Revenue Code of 1986,
purpose of accumulating assets sufficient to fund retiree healthcare insurance costs in
future years.
The Plan is a single-employer defined benefit healthcare plan. The Plan provides
medical, dental, and life insurance benefits in accordance with Section 5-203 of the City
Charter. Substantially all of the BWL's employees may become eligible for healthcare
benefits and life insurance benefits if they reach normal retirement age while working
for the BWL. There were 725 participants eligible to receive benefits at June 30, 2015
and 698 participants eligible at June 30, 2014.
Contributions to the Plan are a combination of amounts contributed by the BWL to the
Plan and the direct cost of benefits p 30 to participants
and 20 4o the cost general
he BWL of
flow. During the years ended June
maintaining the Plan was $9,670,794 and $9,266,529, respectively, all of which was
incurred as direct costs of benefits.
Benefits - Benefits shall not be paid from this Plan to participants or their beneficiaries
during a plan year in which there has been a "qualified transfer" pursuant to Internal
Revenue Code Section 420(e)(1)(8) from the Lansing Board of Water and Light Defined
Benefit Plan for the Employees' Pensions, except that once the "qualified transfer" has
been exhausted for the purpose of paying qualified current retiree health liabilities,
benefit payments may be made under this Plan consistent with Internal Revenue Code
Section 420(e)(I)(B). After "qualified transfers" have
ebeen
the relevant se benefits
sfitof paid he
under this Plan shall be those benefits n
Postretirement Benefit Plan for Eligible Employees of the Lansing Board of Water and
Light.
Trustees - Each member of the Lansing Board of Water and Light board of
commissioners is a trustee during the term of office as a commissioner. The trustees
have appointed Merrill Lynch, Pierce, Fenner & Smith Incorporated as custodian of the
Plan's assets.
7
Lansing Board of Water and Light
Retiree Benefit Plan and Trust
Notes to Financial Statements
June 30, 201 S and 2014
Note 1 - Description of the Plan (Continuecn
Contributions - The Lansing Board of Water and t ibtio s
Light
u received, together w th the kes contributions '
n such a
manner and at such times as appropr te. All con
income thereon, are held, invested, reinvested, and administered by the trustees
s are
pursuant to the terms of the plan agree ent. No emplee e and when thenamountlto be
under this Plan. Contributions are recognized when du
contributed is committed by the BWL.
Participation - Participation in this Plan is determined in accordance with the terms of
the Postretirement Benefit Plan for Eligible Employees of the Lansing Board of Water
and Light. At June 30, 2015, there were 725 active participants (not eligible to receive
benefits), 80 disabled participants, 485 retired participants, 491 active spouses (not
eligible to receive benefits), and 152 surviving spouses participating in the Plan. At June
30, 2014, there were 698 active participants (not eligible to receive benefits), 80
disabled participants, 476 retired participants, 473 active spouses (not eligible to receive
benefits), and 140 surviving spouses participating in the Plan.
Vesting - Benefits become payable in accordance with the terms of the Postretirement
Benefit Plan for Eligible Employees of the Lansing Board of Water and Light. At no time
will benefits of the Postretirement Benefit
BWLPlan
may reduce Eligible
or eliminate any the
or ail planLansing
Board of Water and Light be vested.
benefits at any time, subject to the requirements of any collective bargaining agreement.
Termination - In the event of plan termination, all plan assets shall be used to purchase
additional eligible benefits in accordance with the terms of the plan agreement. In the
event of dissolution, merger, consolidation, or reorganization of the BWL, the Plan shall
terminate and liquidate in a manner consistent with the plan agreement unless the Plan
is continued by a successor to the BWL.
Note 2 - Summary of Significant Accounting Policies
Accounting and Reporting Principles
tates of
The Plan follows accounting principles generally
aAc counting and financial ted in the United Seporting
America (GAAP) as applicable to governmental units.
pronouncements are promulgated by the Government Accounting Standards Board.
Basis of Accounting
Fiduciary funds use the economic resources en earned and expenses are recorded when
basis of accounting. Revenue is recorded
a liability is incurred, regardless of the in whichtiming the thelated cash flows. Plan member
contributions are dues Employer
contributions are recognized in the period
contributions to the Plan are recognized when due pursuant to legal requirements.
8
Lansing Board of Water and Light
Retiree Benefit Plan and Trust
Notes to Financial statements
June 30, 201 S and 2014
Note 2 - summary of significant Accounting Policies (continue
Benefits and refunds are recognized when due and payable in accordance with the terms
of the Plan.
Report Presentation
This report includes the fund-based statements of the Plan.
Investment Valuation and Income Recognition - Plan investments are reported at
fair value. Securities traded on a national or international exchange are valued at the last
reported sales price.
Purchases and sales of investments are recorded on a trade-date basis.
Appreciation or depreciation of investments is calculated based on the beginning of the
period's fair value of investments.
Expenses - Substantially all costs and expenses incurred in connection with the
operation and administration of the Plan are paid by the BWL, the plan sponsor. The
Plan pays all transaction expenses incurred in connection with the investment accounts,
which are netted with investment income.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions statements. Actualesul
affect the reported t could d ffer
assets and liabilities at the date of the financial
from those estimates.
Funding Policy - The BWL adopted a process for funding the retiree benefits using
both a VEBA trust and, to the extent permitted by law, excess pension assets in the
Defined Benefit Pension Plan. Additional contributions to the VEBA trust from the BWL
operating funds to supplement Section 420 transfers will not exceed the recommended
annual contribution amount required to cover current service of active participants and
amortize the unfunded accrued liability over 30 years. The required contribution is
based on a projected pay-as-you-go financing requirement with an additional amount to
prefund benefits.
The BWL's annual other postemployment benefit (OPEB) cost is calculated based on
the annual required contribution (ARC),e 45. ThetARCllrepresents ad in level of fundingd nce
with the parameters of GASB Statemnt N
that, if paid on an ongoing basis, is projected to cover normal costs each year and
amortize any unfunded actuarial liabilities over a period of 30 years.
9
Lansing Board of Water and Light
Retiree Benefit Plan and Trust
Notes to Financial Statements
June 30.9 2015 and 2014
Note 2 - summary of significant Accounting Policies (continued)
Contribution trend information is as follows (in thousands):
Percentage of
Annual OPEB
Fiscal Year Annual OPEB Annual OPEB Cost
Ended Cost Contributed Contributed
6/30/2013 $ 13,994 $ 14,045 100%
6/30/2014 9,202 9,268 101%
6/30/2015 5,765 9,671 168%
Funded Status and Funding Progress - Actuarial valuations of an ongoing plan
involve estimates of the value of reported amounts and assumptions about the
probability of occurrence of events far into the future. Significant actuarial assumptions
used in determining the annual OPEB cost at June 30, 2015 and 2014 include (a) rate of
return on the investments of present and future assets of 7.5 percent, compounded
annually, (b) projected healthcare trend rates ranging from 5.0 percent to 9.0 percent,
and (c) amortization method level dollar over an open 30-year period.
Funding status and funding progress trend information is as follows (in thousands):
Unfunded AAV as a
Actuarial Actuarial Accrued Actuarial Percentage
Valuation Date Asset Value Liability Accrued Liability of AAL
2/28/2013 $ 123,195 $ 207,864 $ 84,669 59.27%
2/28/2014 148,307 194,365 46,058 76.30%
2/28/2015 157,565 200,196 42,632 78.71%
Lansing Board of Water and Light
Retiree Benefit Plan and Trust
Notes to Financial Statements
June 30, 2015 and 2014
Note 2 - Summary of Significant Accounting Policies (Continued)
Actuarial Assumptions - Actuarial valuations of an ongoing plan involve estimates of
the value of reported amounts and assumptions about the probability of occurrence of
events far into the future. Examples include assumptions about future employment,
mortality, and the healthcare cost trend. Amounts determined regarding the funded
status of the plan and the annual required contributions of the employer are subject to
continual revision as actual results are compared with past expectations and new
estimates are made about the future. The schedule of funding progress, presented as
required supplemental information following the notes to the financial statements,
presents multiyear trend information about whether the actuarial value of plan assets is
increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
Projections of benefits for financial reporting purposes are based on the substantive plan
(the plan as understood by the employer and the plan members) and include the types
of benefits provided at the time of each valuation and the historical pattern of sharing of
benefit costs between the employer and plan members to that point. The actuarial
methods and assumptions used include techniques that are designed to reduce the
effects of short-term volatility in actuarial accrued liabilities consistent with the long-
term perspective of the calculations.
The Plan has calculated the accrued actuarial liability and required contribution using
certain methods and assumptions. Benefit payments have been computed using the
individual entry age normal method. The assets have been valued in the actuary report
using the fair market value. The healthcare cost trend rates used range from 5.0 to 9.0
percent for the years ended June 30, 2015 and 2014.
Note 3 - Cash, Investments, and Fair Disclosure
The Lansing Board of Water and Light Retiree Benefit Plan and Trust has adopted GASB
No. 40, Deposit and Investment Risk Disclosures. The modified disclosures required by
GASB No. 40 are reflected below.
The Plan is authorized through Public Act 149 of 1999 to invest in accordance with
Public Act 314. Public Act 314 of 1965, as amended, allows the Plan to invest in certain
reverse repurchase agreements, stocks, diversified investment companies, annuity
investment contracts, real estate leased to public entities, mortgages, real estate, debt
or equity of certain small businesses, certain state and local government obligations, and
certain other specified investment vehicles.
The Plan's deposits and investment policies are in accordance with PA 196 of 1997 and
have authorized the investments according to Michigan PA 314 of 1965, as amended.
Lansing Board of Water and Light
Retiree Benefit Plan and Trust
Notes to Financial Statements
June 30.9 2015 and 2014
Note 3 - Cash, Investments, and Fair Disclosure (Continued)
The Plan's cash and investments are subject to several types of risk, which are examined
in more detail below:
Risks at lune 30, 2015
Custodial Credit Risk of Bank Deposits
Custodial credit risk is the risk that in the event of a bank failure, the Plan's deposits may
not be returned to it. The Plan requires that financial institutions must meet minimum
criteria to offer adequate safety to the Plan. The Plan evaluates each financial institution
with which it deposits funds and only those institutions meeting minimum established
criteria are used as depositories.
Custodial Credit Risk of Investments
Custodial credit risk is the risk that, in the event of the failure of the counterparty, the
Plan will not be able to recover the value of its investments or collateral securities that
are in the possession of an outside party. The Plan does not have a policy for custodial
credit risk. At year end, all investments of the Plan were held in the name of the Board
of Water and Light and are therefore not subject to custodial credit risk.
Interest Rate Risk
Interest rate risk is the risk that the value of investments will decrease as a result of a
rise in interest rates. The Plan's investment policy does not restrict investment
maturities. At year end, the average maturities of investments are as follows:
Weighted Average
Investment Fair Value Maturity
Government bonds and notes $
15,462,341 11.46 years
Corporate bonds and notes 21,269,571 13.89 years
Money market trust funds 6,051,856 Less than I year
Lansing Board of Water and Light
Retiree Benefit Plan and Trust
Notes to Financial statements
June 30, 2015 and 2014
Note 3 - Cash, Investments, and Fair Disclosure (Continued)
Credit Risk
State law limits investments in commercial paper to the top two ratings issued by
nationally recognized statistical rating organizations. The Plan has no investment policy
that would further limit its investment choices. As of year end, the credit quality ratings
of debt securities (other than the U.S. government) are as follows:
Investment Fair Value Rating Rating Organization
Corporate bonds $ 2,469,542 AAA S&P
Corporate bonds 7,891,448 AA+ S&P
Corporate bonds 448,070 AA S&P
Corporate bonds 323,354 AA- S&P
Corporate bonds 936,680 A+ S&P
Corporate bonds 1,686,646 A S&P
Corporate bonds 2,216,285 A- S&P
Corporate bonds 1,666,828 BBB+ S&P
Corporate bonds 1,284,231 BBB S&P
Corporate bonds 861,822 BBB- S&P
Corporate bonds 156,369 BB+ S&P
Corporate bonds 98,900 BB S&P
Corporate bonds 261,306 BB- S&P
Corporate bonds 63,744 B+ S&P
Corporate bonds 141,348 B S&P
Corporate bonds 574,676 B- S&P
Corporate bonds 117,710 CCC S&P
Corporate bonds 70,612 D S&P
Money market trust funds 6,051,856 Not rated Not rated
Concentration of Credit Risk
The Board of Commissioners places no limit on the amount the Plan may invest in any
one issuer.
Lansing Board of Water and Light
Retiree Benefit Plan and Trust
Notes to Financial Statements
June 30, 2015 and 2014
Note 3 - Cash, Investments, and Fair Disclosure (Continued)
Risks at June 30, 2014
Custodial Credit Risk of Bank Deposits
Custodial credit risk is the risk that in the event of a bank failure, the Plan's deposits may
not be returned to it. The Plan requires that financial institutions must meet minimum
criteria to offer adequate safety to the Plan. The Plan evaluates each financial institution
with which it deposits funds and only those institutions meeting minimum established
criteria are used as depositories.
Custodial Credit Risk of Investments
Custodial credit risk is the risk that, in the event of the failure of the counterparty, the
Plan will not be able to recover the value of its investments or collateral securities that
are in the possession of an outside party. The Plan does not have a policy for custodial
credit risk. At year end, all investments of the Plan were held in the name of the Board
of Water and Light and, therefore, are not subject to custodial credit risk.
Interest Rate Risk
Interest rate risk is the risk that the value of investments will decrease as a result of a
rise in interest rates. The Plan's investment policy does not restrict investment
maturities. At year end, the average maturities of investments are as follows:
Weighted Average
Investment Fair Value Maturity
Government bonds and notes $ 16,284,339 11.46 years
Corporate bonds and notes 20,713,869 13.89 years
Money market trust funds 5,388,690 Less than I year
Lansing Board of Water and Light
Retiree Benefit Plan and Trust
Notes to Financial statements
June 309 2015 and 2014
Note 3 - Cash, Investments, and Fair Disclosure (Continued)
Credit Risk
State law limits investments in commercial paper to the top two ratings issued by
nationally recognized statistical rating organizations. The Plan has no investment policy
that would further limit its investment choices. As of year end, the credit quality ratings
of debt securities (other than the U.S. government) are as follows:
Investment Fair Value RatingRating Organization
2,592,281 AAA S&P
Corporate bonds � S&P
Corporate bonds 7,599,714 AA+
881 AA S&P
Corporate bonds 409, S&P
814,828 A+ S&P
Corporate bonds 325,014 AA-
Corporate bonds S&P
Corporate bonds 1,459,545 A
235,470 A- S&P
14
Corporate bonds
Corporate bonds I,519,586 BBB+ S&P
I 243,225 BBB S&P
,
Corporate bonds S&P
139,359 BB+ S&P
Corporate bonds 847,165 BBB-
Corporate bonds S&P
Corporate bonds 217,310 BB
619 BB- S&P
Corporate bonds 171, S&P
Corporate bonds 48,487 B+
750 B S&P
Corporate bonds 36, S&P
645,767 CCC S&P
Corporate bonds 142,363 B-
Corporate bonds S&P
Corporate bonds 65,505
Money market trust funds
5,388,690 Not rated Not rated
Concentration of Credit Risk
The Board of Commissioners places no limit on the amount the Plan may invest in any
one issuer.
IS
Lansing Board of Water and Light
Retiree Benefit Plan and Trust
Notes to Financial Statements
June 30, 2015 and 2014
Note 4 - Net Appreciation of Investments
The net (depreciation) appreciation of the Plan's investments is as follows:
2015 2014
Investments at fair value as determined by
quoted market price: $ (257,174) $ 451,415
Corporate bonds and notes 160,377 188,304
Government bonds and notes 970,370 21,775,370
Equities 24,418 40,441
Alternative investments (247,912) 318,620
Mutual funds
$ 650,079 $ 22,774,150
Total
Note 5 - Tax Status
ceived an
The Plan is exempt under Internal Revenue Code Section
01 Plan has been eamended
exemption letter as of February 9, 2000.
Management believes the Plan continues to operate as a qualified plan.
Note 6 - Upcoming Accounting Pronouncements
In February 2015, the Governmental Accounting Standards Board issued GASB
Statement No. 72, Fair Value Measurement and App�atements amongation. The ugovernmentsnts of this by
Statement will enhance comparability of financial
requiring measurement of certain assets and liabilities at fa rvalu valueon using a consistent and
more detailed definition of fair value and acceptable
es. This
es in
Statement also will enhance fair value application guidance sersaboutt he imps relatedtlof fairrvalue
order to provide information to financial statement
measurements on a government's financial position. 5p`Th Statement Plan s No. 72 i evau i ng
to be adopted for years beginning after June 15, 20
the impact this standard will have on the financial statements when adopted, during the
Plan's 2016 fiscal year.
Lansing Board of Water and Light
Retiree Benefit Plan and Trust
Notes to Financial statements
June 30, 2015 and 2014
Note 6 - upcoming Accounting Pronouncements (continued)
GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than
ng
Pension Plans, was issued in June 2015. This than new
accounting
(OPEB) that addresses
administeredef pled
by postemployment benefit plans other pensions
benefit OPEB benefits on behalf of governments. Along with the currently required
statement of fiduciary net position and statement of changes in fiduciary net position,
OPEB plans will now be required to include in the financial statements more extensive
footnote disclosures and required supplemental information related to the measurement
of the OPEB liabilities for which assets have been accumulated. The provisions of this
new standard are effective for the Plan's June 30, 2017 year end.
1-7
Required Supplemental Information
IR
Lansing Board of Water and Light
Retiree Benefit Plan and Trust
Schedule of Funding progress
(in thousands)
Funded
Valuation Actuarial
AAL UAAL Ratio
Date Asset Value
2/29/2008 $ 57,246 $ 236,102 $ 178,856 24.25%
45,320 256,888 211,568 17.64%
2/28/2009 252,142 176,025 30.19%
2/28/2010 76,117
2/28/2011 100,604 260,097 159,493 38.68%
2/28/2012 110,029 245,418 135,389 44.83%
2/28/2013 123,195 207,864 84,669 59.27%
148,307 194,365 46,058 76.30%
2/28/2014 42,632 78.71%
2/28/2015 157,565 200,196
AAL - Actuarial accrued liability (entry age normal level dollar)
UAAL - Unfunded actuarial accrued liability and negative UAAL indicate a funding excess.
19
Lansing Board of Water and Light
Retiree Benefit Plan and Trust
Schedule of Employer contributions
(in thousands)
Employer Contributions Percentage
of ARC
Fiscal Year
Actual
Ended Required Contra
6/30/2008 $
14,797 $ 14,962 101 6/30/2009 18,132 17,866 99%
6/30/2010 21,291 21,318 1000/0
6/30/20 I I
17,300 17,236 1000/0
6/30/2012 15,744 15,854 101%
6/30/2013 13,994 14,045 1000/0
6/30/2014 9,200 9,268 101%
6/30/2015 5,762 9,671 168%
ARC - Annual required contribution
�n
: = t
1 1
17,
Hometown People. Hometown Power'. .
Board of Water and Light -
C" of Lansing, Michigan
Financial Report
with Additional Information
June 30, 201 S
Board of Water and Light - City of Lansing, Michigan
Contents
Report Letter 1-2
Management's Discussion and Analysis 3-5
Basic Financial Statements
Statement of Net Position 6-7
Statement of Revenues, Expenses, and Changes in Net Position 8
Statement of Cash Flows 9-10
Pension Trust Funds - Statement of Net Position I I
Pension Trust Funds - Statement of Changes in Net Position 12
Notes to Financial Statements 13-55
Required Supplemental Information 56
Defined Benefit Plan Schedules 57-58
Retiree Benefit Plan and Trust Schedule 59
Additional Information 60
Income Available for Revenue Bond Debt Retirement 61
Detail of Statement of Revenues and Expenses 62-63
Detail of Statement of Changes in Net Position 64
Pension Trust Funds - Detail of Statement of Net Position 65
Pension Trust Funds - Detail of Statement of Changes in Net Position 66-67
Plante&Moran,PLLC
Suite,o0
plante
1111 Michigan Ave.
moran East Lansing,MI 48823
Tel:517.332.6200
.6200
Fax:517.332.8502
plantemoran.com
Independent Auditor's Report
To the Honorable Mayor, Members of
the City Council, and Commissioners
of the Board of Water and Light
City of Lansing, Michigan
Report on the Financial Statements
We have audited the accompanying financial statements of the Enterprise Fund and Pension Fiduciary
Funds of the Board of Water and Light - City of Lansing, Michigan (the "BWL") as of and for the years
ended June 30, 2015 and 2014, and the related notes to the financial statements, which collectively
comprise the BWL's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity's internal control. Accordingly,we express no such opinion.An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the Enterprise Fund and Pension Fiduciary Funds of the BWL as of June
30, 2015 and 2014 and the respective changes in its financial position and cash flows for the years then
ended, in accordance with accounting principles generally accepted in the United States of America.
r,q yity
To the Honorable Mayor, Members of
the City Council, and Commissioners
of the Board of Water and Light
City of Lansing, Michigan
Emphasis of Matter
As discussed in Note 16 to the financial statements, in 2015, the BWL adopted GASB Statement No. 68,
Accounting and Financial Reporting for Pensions - an Amendment of GASB Statement No. 27. Our opinion is
not modified with respect to this matter.
Other Matters
Required Supplemental Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis and other required supplemental information as identified in the table of contents,
be presented to supplement the basic financial statements. Such information, although not a part of the
basic financial statements, is required by the Governmental Accounting Standards Board, which considers
it to be an essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic, or historical context. We have applied certain limited procedures to the required
supplemental information in accordance with auditing standards generally accepted in the United States
of America, which consisted of inquiries of management about the methods of preparing the information
and comparing the information for consistency with management's responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements.
We do not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the BWL's basic financial statements. The accompanying additional information, as identified in
the table of contents, is presented for the purpose of additional analysis and is not a required part of the
basic financial statements.
The additional information, as identified in the table of contents, is the responsibility of management and
was derived from and relates directly to the underlying accounting and other records used to prepare
the basic financial statements. Such information has been subjected to the auditing procedures applied in
the audit of the basic financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to prepare the
basic financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of America. In
our opinion, the additional information, as identified in the table of contents, is fairly stated in all material
respects in relation to the basic financial statements as a whole.
August 31, 2015
Board of Water and Light - City of Lansing, Michigan
Management's Discussion and Analysis
This section explains the general financial condition and results of operations for the Lansing
Board of Water and Light (the "BWL"). The BWL includes the consolidated operations of the
electric, water, steam, and chilled water utilities. The notes to financial statements following this
section are essential reading for a complete understanding of the financial and operational results
for fiscal year 2015.
Overview of Business
The BWL owns and operates an electric system which generates, purchases, and distributes
electric power and energy and provides electric service to over 96,000 residential, commercial,
and industrial customers in the greater Lansing area. The BWL generated 63 percent of its retail
and wholesale sales from existing generation assets and purchased additional electric generation
through its participation in the MISO markets, membership in the Michigan Public Power
Agency, which includes the BWL's partial ownership of Detroit Edison's Belle River Plant, and
through its landfill gas renewable energy purchase agreement with Granger Electric of Lansing.
The BWL owns and operates water wells, a raw water transmission system, water conditioning
facilities, and an extensive water distribution system serving potable water to over 55,000
residential, commercial, and industrial customers in the greater Lansing area.
The BWL owns and operates steam generation boilers, a steam transmission and distribution
system serving over 164 customers, and a chilled water facility and distribution piping system
serving 19 customers in the City of Lansing.
Capital Expenditures
Capital expenditures are driven by the need to replace, expand, or maintain the generation,
transmission, and distribution systems of the BWL to meet customer utility needs and to
maintain a satisfactory level of service reliability. The BWL invests essentially all revenues not
paid out for operations and maintenance expense, nonoperating expenses, or debt service back
into capital improvements for the water, electric, steam, and chilled water systems. Gross
capital expenditures were $65.9 and $59.1 million in fiscal years 2015 and 2014, respectively.
The BWL generally pays the major portion of the cost of its capital improvements from internally
generated funds and a lesser portion from the proceeds of revenue bonds that are issued from
time to time.
Detailed financial information for the separate utilities of water, electric, steam, and chilled
water can be found in the additional information section beginning on page 60.
Board of Water and Light - City of Lansing, Michigan
Management's Discussion and Analysis (Continued)
Condensed Financial Information (dollars in millions)
June 30 %Change
2015 2014 2013 2014to 2015
Assets
Utility plant $ 715.0 $ 699.3 $ 684.1 2.2
Other assets 337.9 360.8 372.9 (6.3)
Total assets 1,052.9 1,060.1 1,057.0 (0.7)
Deferred Outflows of Resources 1.0 1.2 1.7 (16.7)
Liabilities
Long-term liabilities 368.6 383.2 403.4 (3.8)
Other liabilities 65.2 69.5 71.4 (6.2)
Total liabilities 433.8 452.7 474.8 (4.2)
Deferred Inflows of Resources 24.9 26.1 8.1 (4.6)
Net Position
Net investment in capital assets 354.7 342.7 342.1 3.5
Restricted for debt service 77.7 76.0 69.7 2.2
Unrestricted 162.8 163.8 163.9 (0.6)
Net position $ 595.2 $ 582.5 $ 575.7 2.2
Note: GASB 68 was implemented in FYI 5, but was not reflected retroactively in FYI in the table above.
Utility plant increased by $55 million due to normal construction; however, this was offset by
depreciation, thus net plant only increased by$15.7 million.
Other assets decreased by $22.9 million. The decrease is largely attributable to the
disbursement of revenue bond funds during the year to pay for costs of capital improvements.
Board of Water and Light - City of Lansing, Michigan
Management's Discussion and Analysis (Continued)
Condensed Financial Information (dollars in millions) (Continued)
Year Ended June 30 %Change
2015 2014 2013 2014 to 2015
Results of Operations
Operating revenues $ 353.5 $ 348.0 $ 331.7 1.6
Operating expenses 309.0 310.9 295.7 (0.6)
Nonoperating expense- Net 31.9 38.4 (17.3) 16.9
Changes in Net Position $ 12.6 $ (1.3) $ 18.7 (1,069.2)
*Note: GASB 68 was implemented in FYI 5, but was not reflected retroactively in FYI in the table above.
Operating revenues increased over last year's due to utility rate increases.
Nonoperating expenses decreased by $6.6 million from fiscal year 2014. In 2014, a loss on
disposal of assets associated with the reconstruction of our Haco customer service facility was
recognized, which caused the decrease in expenses in 2015.
Budget - The BWL commissioners approved a $288.4 million operating expense budget
(excluding depreciation and impairment) for fiscal year 2015. Actual expenses (excluding
depreciation) were $269.8 million or 6.4 percent less than budget. The net capital improvement
budget was $65.4 million for fiscal year 2015 and actual net capital expenditures were
approximately$58.5 million.
Financing Activities - During fiscal year 2015, there were no significant financing activities.
Board of Water and Light - City of Lansing, Michigan
statement of Net Position
June 30
2015 2014
Assets
Current Assets
Restricted cash and cash equivalents (Notes 4 and 1 1) $ 52,752,941 $ 51,773,756
Cash and cash equivalents (Notes 4 and 1 1) 55,925,376 51,545,956
Investments(Notes I and 1 1) 91,585,641 91,030,822
Accounts receivable- Net(Note 1) 22,014,605 23,602,383
Estimated unbilled accounts receivable (Note 1) 18,280,777 17,157,806
Inventories (Note 1) 25,860,743 23,474,266
Other 3,344,122 3,617,737
Total current assets 269,764,205 262,202,726
Other Assets
Recoverable energy asset(Note 6) 4,652,068 2,797,695
Recoverable revenue of Central Utilities
Complex(Note 6) (7,241,153) (4,255,372)
Recoverable environmental remediation (Note 6) 18,616,005 23,626,61 1
Special deposit 11,380,000 14,225,000
Net pension asset (Note 8 and 16) 8,284,230 11,188,702
Other 8,123,949 4,220,485
Total other assets 43,815,099 51,803,121
Noncurrent Restricted Assets (Investments) (Notes 4 and 1 1) 24,263,950 46,828,045
Utility Plant (Note 1)
Water 296,802,952 288,627,287
Electric 804,947,799 773,262,520
Steam 67,510,134 64,685,056
Chilled water 33,622,140 32,917,461
Common facilities 87,132,519 75,026,577
Central Utilities Complex 76,079,000 76,079,000
Total 1,366,094,544 1,310,597,901
Less accumulated depreciation 665,849,130 624,749,51 1
Net 700,245,414 685,848,390
Construction in progress (Note 3) 14,781,967 13,439,221
Total utility plant 715,027,381 699,287,61 1
Total assets 1,052,870,635 1,060,121,503
Deferred Outflows of Resources-
Bond refunding loss being amortized 1,032,273 1,228,706
Board of Water and Light - City of Lansing, Michigan
Statement of Net Position (Continued)
June 30
2015 2014
Liabilities and Net Position
Current Liabilities
Accounts payable $ 32,695,192 $ 32,120,138
Current portion of long-term debt(Note 5) 13,299,345 17,824,253
Accrued payroll and related taxes 2,756,033 3,725,544
Customer deposits 2,678,145 2,674,858
Unearned revenue 1,127,500 -
Accrued compensated absences (Note 1) 4,092,441 3,916,658
Accrued interest 8,547,591 9,261,217
Total current liabilities 65,196,247 69,522,668
Compensated Absences- Less current portion (Note 1) 6,916,286 7,182,984
Other Long-term Liabilities
Workers'compensation 2,200,000 2,000,000
Environmental remediation liability(Note 9) 10,172,203 10,356,249
Other 2,314,711 2,327,615
Total other long-term liabilities 14,686,914 14,683,864
Long-term Debt- Less current portion (Note 5) 347,044,294 361,310,213
Total liabilities 433,843,741 452,699,729
Deferred Inflows of Resources
Regulated operations- Revenue intended to cover
future costs (Note 6) 22,667,354 18,944,163
Net pension asset deferrals (Notes 8 and 16) 2,201,407 7,143,206
Total deferred inflows of resources 24,868,761 26,087,369
Net Position
Net investment in capital assets 354,683,742 342,717,240
Restricted for debt service (Note 4) 77,016,891 76,037,706
Unrestricted 163,489,773 163,808,165
Total net position $ 595,190,406 $ 582,563,1 1 1
Board of Water and Light - City of Lansing, Michigan
statement of Revenues, bpenses, and Changes in Net Position
Year Ended June 30
2015 2014
Operating Revenues(Note 1)
Water $ 37,910,106 $ 37,246,939
Electric 295,047,904 289,154,465
Steam 14,959,212 16,324,128
Chilled water 5,568,287 5,397,411
Total operating revenues 353,485,509 348,122,943
Operating Expenses
Production:
Fuel, purchased power, and other operating expenses 163,336,653 165,199,058
Maintenance 24,415,690 17,045,140
Transmission and distribution:
Operating expenses 7,006,002 11,829,786
Maintenance 13,864,024 11,262,716
Administrative and general 61,297,460 66,583,248
Depreciation and impairment (Note 1) 39,104,343 38,997,186
Total operating expenses 309,024,172 310,917,134
Operating Income 44,461,337 37,205,809
Nonoperating Income (Expenses)
Investment income 1,351,006 1,866,462
Other income (expense) 1,534,922 (5,974,385)
System capacity fee 9,223,075 9,222,989
Bonded debt interest expense (14,995,574) (15,334,915)
Amortization - Central Utilities Complex (8,057,715) (7,642,715)
Return on equity(Note 7) (20,840,065) (20,608,093)
Other interest expense (49,691) (41,555)
Total nonoperating expenses- Net (31,834,042) (38,512,212)
Net Income (Loss) (Changes in Net Position) 12,627,295 (1,306,403)
Net Position - Beginning of year-As restated (Note 16) 582,563,1 1 1 583,869,514
Net Position - End of year $ 595,190,406 $ 582,563,1 1 1
Board of Water and Light - City of Lansing, Michigan
Statement of Cash Flows
Year Ended June 30
2015 2014
Cash Flows from Operating Activities
Cash from customers:
Water $ 38,932,520 $ 37,669,771
Electric 293,138,1 1 1 296,772,164
Steam 15,71 1,107 14,041,374
Chilled water 5,425,898 4,960,008
Total cash from customers 353,207,636 353,443,317
Cash paid to suppliers:
Suppliers of coal,freight, and purchased power (140,537,274) (134,722,274)
Other suppliers (69,814,422) (85,526,501)
Total cash paid to suppliers (210,351,696) (220,248,775)
Cash paid to employees (63,947,564) (51,598,018)
Return on equity(Note 7) (20,840,065) (20,608,093)
Cash from customer deposits 3,287 301,524
Interest on customer deposits (49,691) (41,555)
Net cash provided by operating activities 58,021,907 61,248,400
Cash Flows from Capital and Related Financing Activities
Proceeds from new borrowings - 208,084
Planned, bonded, and annual construction (59,916,047) (59,277,580)
Principal payments on debt (18,594,394) (18,031,042)
System capacity fees 9,223,075 9,222,989
Interest on debt (15,709,200) (15,380,966)
Net cash used in capital and
related financing activities (84,996,566) (83,258,515)
Cash Flows from Noncapital Financing Activities
Proceeds from the sale of emissions allowances 36 25,826
Proceeds from the Belle River Project and other 8,972,944 6,676,122
Net cash provided by noncapital financing activities 8,972,980 6,701,948
Cash Flows from Investing Activities
Proceeds from the sale and maturity of investments 160,938,876 160,1 16,297
Interest received 2,003,345 3,696,174
Purchase of investments (139,581,937) (142,564,173)
Net cash provided by investing activities 23,360,284 21,248,298
Net Increase in Cash and Cash Equivalents 5,358,605 5,940,131
Cash and Cash Equivalents- Beginning of year 103,319,712 97,379,581
Cash and Cash Equivalents- End of year $ 108,678,317 $ 103,319,712
Board of Water and Light - City of Lansing, Michigan
statement of Cash Flows (Continued)
Year Ended June 30
2015 2014
Balance Sheet Classifications
Restricted cash and cash equivalents $ 52,752,941 $ 51,773,756
Cash and cash equivalents 55,925,376 51,545,956
Cash and Cash Equivalents-End of year $ 108,678,317 $ 103,319,712
Reconciliation of Operating Income to Net Cash from Operating Activities:
Year Ended June 30
2015 2014
Operating income $ 44,461,337 $ 37,205,809
Adjustments to reconcile operating income to net cash from
operating activities:
Payment in lieu of taxes (Note 7) (20,840,065) (20,608,093)
Depreciation and impairment 39,104,343 38,997,186
Sewerage collection fees 1,088,442 977,373
Interest on customer deposits (49,691) (41,555)
Decrease(increase) in assets:
Accounts receivable(Note 1) 1,61 1,029 (276,896)
Unbilled accounts receivable(Note 1) (1,122,971) (1,062,563)
Inventories (2,386,479) (728,273)
Customer deposits 3,287 301,524
Special deposit 2,845,000 -
Net pension asset 2,904,472 4,098,930
Other (5,484,222) 5,511,475
Decrease in liabilities and deferred inflows of resources:
Accounts payable and other accrued expenses (218,674) (2,771,029)
Net pension asset deferrals (4,941,799) -
Other 1,047,898 (355,488)
Total adjustments 13,560,570 24,042,591
Net cash provided by operating activities $ 58,021,907 $ 61,248,400
Board of Water and Light - City of Lansing, Michigan
Pension Trust Funds - statement of Net Position
June 30
2015 2014
Assets
Receivable- Investment interest receivable $ 305,573 $ 331,781
Investments at fair value:
Money market collective trust fund 8,564,513 8,904,375
U.S.government obligations 22,121,544 23,639,025
Corporate bonds and notes 32,582,122 32,558,775
Mutual funds 138,830,601 133,962,556
Stable value 31,844,948 33,607,203
Equities 163,468,806 165,310,705
Current liability - (13,000)
Self-directed brokerage account 1,376,730 1,147,041
Participant notes receivable 3,888,351 4,082,709
Total investments 402,677,615 403,199,389
Net Position - Held in trust for pension
and other employee benefits $ 402,983,188 $ 403,531,170
Board of Water and Light - City of Lansing, Michigan
Pension Trust Funds - Statement of Changes in Net Position
Year Ended June 30
2015 2014
Increases
Investment income:
Net appreciation in fair
value of investments $ 886,489 $ 53,252,318
Interest and dividend income 11,816,649 10,1 12,195
Net investment income 12,703,138 63,364,513
Employer contributions 15,219,154 19,539,305
Participant rollover contributions 1,345,481 2,395,693
Other 307,138 249,450
Total increases 29,574,911 79,423,734
Decreases
Benefits paid to participants 28,168,455 26,398,589
Loan defaults 125,254 120,280
Participants' note and administrative fees 1,829,184 1,742,851
Total decreases 30,122,893 27,315,465
Net (Decrease) Increase in Net Position Held in Trust (547,982) 52,108,269
Net Position Held in Trust for Pension
and Other Employee Benefits
Beginning of year 403,531,170 351,422,901
End of year $ 402,983,188 $ 403,531,170
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note 1 - Significant Accounting Policies
The following is a summary of the significant accounting policies used by the Board of
Water and Light (the "BWL"):
Reporting Entity - The BWL, a related organization of the City of Lansing, Michigan
(the "City"), is an administrative board established by the City Charter. The City Charter
grants the BWL full and exclusive management of the electric, water, steam, and chilled
water services of the City. The commissioners of the governing board are appointed by
the mayor with approval of the City Council. The BWL provides water, steam, chilled
water, and electric services to the City and surrounding townships. The governing board
(Board of Commissioners) has the exclusive authority to set rates for the services
provided. The financial statements include the financial activities of the electric, water,
steam, and chilled water operations of the BWL. The financial statements also include
the financial activities of the BWL Pension Trust Funds. The BWL is exempt from taxes
on income because it is a municipal entity.
Fund Accounting - The BWL accounts for its activities in two different fund types, in
order to demonstrate accountability for how we have spent certain resources - separate
funds allow us to show the particular expenditures that specific revenues were used for.
The funds are aggregated into two fund types:
Proprietary fund includes the enterprise fund (which provides goods or services to users
in exchange for charges or fees).
Fiduciary funds
• The Defined Contribution Plan and Defined Benefit Plan, which accumulate
resources for benefit payments to retirees
• The VEBA, which accumulates resources for future retiree health care payments to
retirees
Basis of Accounting - Proprietary funds and fiduciary funds use the economic
resources measurement focus and the full accrual basis of accounting. Revenue is
recorded when earned and expenses are recorded when a liability is incurred,
regardless of the timing of related cash flows. In addition, the utilities meet the criteria
and, accordingly, on July 1, 2012, the BWL adopted the accounting and reporting
requirements of GASB 62, paragraphs 476-500.
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note 1 - Significant Accounting Policies (Continue
The BWL follows the accounting and reporting requirements of GASB 62, paragraphs
476-500, which require that the effects of the ratemaking process be recorded in the
financial statements. Such effects primarily concern the time at which various items
enter into the determination of net income in order to follow the principle of matching
costs and revenues. Accordingly, the BWL records various regulatory assets and
liabilities to reflect the regulator's actions (see Note 6). Management believes that the
BWL meets the criteria for continued application of GASB 62 paragraphs 476-500, but
will continue to evaluate its applicability based on changes in the regulatory and
competitive environment.
System of Accounts - The BWL's accounts are maintained substantially in accordance
with the Uniform Systems of Accounts of the Federal Energy Regulatory Commission
for its electric and steam systems and in accordance with the Uniform Systems of
Accounts of the National Association of Regulatory Utility Commissioners for the water
and chilled water systems. The chart of accounts dictates how the BWL classifies
revenue and expense items in the statement of revenues, expenses, and changes in net
assets as operating and nonoperating.
Operating Classification - Operating revenues and expenses generally result from
providing services and producing and delivering goods in connection with the principal
ongoing operations. The principal operating revenues are charges to customers for sales
and services. Operating expenses include the cost of sales and services, administrative
expenses, and depreciation on capital assets. All revenues and expenses not meeting this
definition are reported as nonoperating revenues and expenses.
Report Presentation - This report includes the fund-based statements of the BWL. In
accordance with government accounting principles, a government-wide presentation
with program and general revenues is not applicable to special purpose governments
engaged only in business-type activities.
Specific Balances and Transactions
Cash and Cash Equivalents - The BWL considers demand deposits and current
restricted funds, which consist of cash and highly liquid investments with an original
maturity of 90 days or less, as cash and cash equivalents for financial statement
purposes.
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note 1 - Significant Accounting Policies (Continued)
Investments - The BWL has established special purpose funds designated to meet
anticipated operating requirements. In addition, BWL management has established a
future construction fund designated to meet future construction requirements. These
funds consist principally of commercial paper and United States government securities
and are segregated as follows:
Carrying Value
2015 2014
Designated purpose:
Coal inventory fluctuation $ 4,598,714 $ 4,529,062
Litigation, environmental, and uninsured losses 18,589,552 18,306,887
Future water facilities 3,745,990 3,688,651
Subtotal 26,934,256 26,524,600
Special purpose - Future construction 64,651,385 64,506,222
Total $ 91,585,641 $ 91,030,822
Accounts Receivable - Accounts receivable are stated at net invoice amounts. A
general valuation allowance is established based on an analysis of the aged receivables
and historical loss experience. All amounts deemed to be uncollectible are charged to
expense in the period that determination is made. Accounts receivable are not deemed
uncollectible until they are approximately 270 days past due and have remained
completely unpaid throughout the BWL's collection policy. The components of accounts
receivable for 2015 and 2014 are as follows:
2015 2014
Customer receivables $ 18,491,745 $ 20,102,775
Sewerage collections 2,159,867 2,545,497
Combined sewer overflow - City of Lansing (944,583) (944,583)
Miscellaneous 4,307,576 3,898,694
Less allowance for doubtful accounts (2,000,000) (2,000,000)
Net $ 22,014,605 $ 23,602,383
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 2015 and 2014
Note 1 - Significant Accounting Policies (Coutinuecl)
Special Deposit - The BWL contracted with Consumer's Energy to install a new gas
pipeline in 2011 and funded construction of this pipeline and incurred $15,900,000 at
that time. The BWL will subsequently be reimbursed for all but $1,675,000 of those
costs provided minimum consumption requirements are met over the subsequent five-
year period beginning in 2015. During the year ended June 30, 2015, the BWL received
the first refund in the amount of $2,845,000 after meeting minimum consumption
requirements. The remaining $1 1,380,000 has been recorded as a long-term other asset
which is anticipated to be refunded over the next four years based on current
projections indicating that actual consumption will be much larger than minimum
requirements.
Inventories - Inventories are stated at weighted average cost and consist of the
following at June 30:
2015 2014
Coal $ 11,275,408 $ 8,234,376
Gas 936,671 1,162,717
Materials and supplies 13,648,664 14,077,173
Total $ 25,860,743 $ 23,474,266
Utility Plant - The utility plant is stated on the basis of cost, which includes
expenditures for new facilities and those which extend the useful lives of existing facilities
and equipment. Expenditures for normal repairs and maintenance are charged to
maintenance expense as incurred.
Depreciation of the utility plant is computed using the straight-line method based on
estimated useful lives, except for depreciation related to the Central Utilities Complex,
which is computed in accordance with GASB 62 paragraphs 476-500. The resulting
provisions for depreciation in 2015 and 2014, expressed as a percentage of the average
depreciable cost of the related assets, are as follows:
Average Rate (Percent)
Life (Years) 2015 2014
Classification of utility plant:
Water 4-100 1.8 1.9
Electric 4-50 3.4 3.5
Steam 5-50 3.5 3.3
Chilled water 5-50 3.4 3.5
Common facilities 4-50 4.1 5.7
Central Utilities Complex 15 6.7 6.7
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note 1 - Significant Accounting Policies (Continue
When units of property are retired, their costs are removed from the utility plant and
charged to accumulated depreciation.
The tables below reflect the capital asset activity of the utility plant categories for the
years ended June 30, 2015 and 2014:
Capital Asset Activity for Year Ended June 30,2015
Capital Assets Capital Assets
FY Start Transfers Acquisition Retirement FY End
Water $ 288,627,287 $ 25,014 $ 9,096,693 $ (946,042) $ 296,802,952
Electric 773,262,520 51,658 34,925,022 (3,291,401) 804,947,799
Steam 64,685,056 - 3,136,196 (31 1,1 18) 67,510,134
Chilled 32,917,461 - 704,679 - 33,622,140
Common 75,026,577 (76,672) 12,628,678 (446,064) 87,132,519
CUC 76,079,000 - - - 76,079,000
Total $ 1,310,597,901 $ $ 60,491,268 $ (4,994,625) $ 1,366,094,544
Accumulated Depreciation for Year Ended June 30,2015
Deprc./Amort.
Accum.Deprc. Depreciation and Impairment Depreciation Accum.Deprc.
FY Start Transfer for Year Retirement FY End
Water $ (84,984,612) $ (25,014) $ (5,147,689) $ 522,729 $ (89,634,586)
Electric (420,474,747) 3,099 (27,158,634) 2,254,187 (445,376,095)
Steam (12,551,842) - (2,313,839) 88,162 (14,777,519)
Chilled (7,887,640) - (1,140,043) - (9,027,683)
Common (37,987,471) 21,915 (3,344,139) 211,580 (41,098,1 15)
CUC (60,863,199) (5,071,933) - (65,935,132)
Total $ (624,749,511) $ - $ (44,176,277) $ 3,076,658 $ (665,849,130)
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 2015 and 2014
Note 1 - Significant Accounting Policies (Continued)
Capital Asset Activity for Year Ended June 30,2014
Capital Assets Capital Assets
FY Start Transfers Acquisition Retirement FY End
Water $ 263,328,526 $ (1,348) $ 27,554,400 $ (2,254,291) $ 288,627,287
Electric 758,023,493 (6,830,315) 27,644,816 (5,575,474) 773,262,520
Steam 61,507,777 (1,653,867) 5,302,400 (471,254) 64,685,056
Chilled 32,798,019 - 119,442 - 32,917,461
Common 70,715,557 8,485,530 4,784,103 (8,958,613) 75,026,577
CUC 76,079,000 - - - 76,079,000
Total $ 1,262,452,372 $ - $ 65,405,161 $ (17,259,632) $ 1.310,597,901
Accumulated Depreciation for Year Ended June 30,2014
Accum.Deprc. Depreciation Deprc./Amort. Depreciation Accum.Deprc.
FY Start Transfer for Year Retirement FY End
Water $ (81,568,989) $ (460) $ (5,154,328) $ 1,739,165 $ (84,984,612)
Electric (398,329,070) (1,599) (26,428,251) 4,284,173 (420,474,747)
Steam (10,489,756) 14,807 (2,092,601) 15,708 (12,551,842)
Chilled (6,751,047) - (1,136,593) - (7,887,640)
Common (38,418,953) (12,748) (4,185,413) 4,629,643 (37,987,471)
CUC (55,791,266) - (5,071,933) - (60,863,199)
Total $ (591,349,081) $ - $ (44,069,119) $ 10,668,689 $ (624,749,511)
Accrued Compensated Absences - The BWL records a liability for estimated
compensated absences that are attributable to services already rendered and that are
not contingent on a specific event that is outside the control of the BWL and its
employees. This liability is accrued as employees earn the rights to such benefits. The
BWL estimates the total current and noncurrent portions of the liability to be
$1 1,008,727 and $1 1,099,642 as of June 30, 2015 and 2014, respectively.
Capital Contributions - Capital contributions represent nonrefundable amounts
received for the purpose of construction for the utility plant. These contributions are
from third parties, including amounts from customers, grant programs, and insurance
proceeds from damage. Electric, water, and steam contributions are credited against the
related assets or recorded as a separate regulatory liability and will offset the
depreciation of the related assets over the estimated useful lives. This treatment is
consistent with the BWL's ratemaking policy and is thus permitted under GASB 62
paragraphs 476-500.
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note 1 - Significant Accounting Policies (Continued
Deferred Outflows/Inflows of Resources - In addition to assets, the statement of net
position will sometimes report a separate section for deferred outflows of resources.
This separate financial statement element, deferred outflows of resources, represents a
consumption of net position that applies to a future period and so will not be recognized
as an outflow of resources (expense/expenditure) until then. The BWL has one item that
qualifies for reporting in this category. The deferred outflows of resources relates to
deferred losses on refunding.
In addition to liabilities, the statement of net position will sometimes report a separate
section for deferred inflows of resources. This separate financial statement element,
deferred inflows of resources, represents an acquisition of net position that applies to a
future period and so will not be recognized as an inflow of resources (revenue) until that
time. The BWL has the following items that qualify for reporting in this category: the
deferred inflows of resources related to costs that have been incurred and will be billed
to customers in the future related to the renewable energy plan and energy optimization,
chiller plant, and Wise Road items described in Note 6, and deferred inflows of resources
related to the net pension asset described in Note 8.
Net Position - Equity is classified as net position and displayed in three components:
• Net Investment in Capital Assets (net of related debt) - Consists of capital
assets, net of accumulated depreciation, and reduced by the outstanding balances of
any bonds that are attributable to the acquisition, construction, or improvement of
those assets.
• Restricted for Debt Service - Consists of net position with constraints placed on
their use by revenue bond resolution.
• Unrestricted - All other net position that does not meet the definition of
"restricted" or "net investment in capital assets."
Net Position Flow Assumption - Sometimes the BWL will fund outlays for a particular
purpose from both restricted (e.g., restricted bond) and unrestricted resources. In
order to calculate the amounts to report as restricted net position and unrestricted net
position in the proprietary fund financial statements, a flow assumption must be made
about the order in which the resources are considered to be applied. It is the BWL's
policy to consider restricted net position to have been depleted before unrestricted net
position is applied.
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note 1 - Significant Accounting Policies (Continued)
Unbilled Accounts Receivable and Revenue - Unbilled accounts receivable at
June 30, 2015 and 2014 represents the estimated amount of accounts receivable for
services that have not been billed as of the balance sheet date. The amounts are a result
of a timing difference between the end of the financial statement cycle (month end) and
the billing cycle (various dates within the month for each billing period). Accordingly, the
current year revenue from customers whose billing period ends after June 30 for
services rendered prior to June 30 will be recognized in the current period.
Interutility Transactions - The water, electric, steam, and chilled water operations of
the BWL bill each other for services provided and these services are reported as
revenue to the generating operation and expense to the consuming operation. Such
internal billings aggregated $7,956,814 and $9,037,781 in 2015 and 2014, respectively,
and are not eliminated in the statement of revenues, expenses, and changes in net
assets.
Emissions Allowance - The Environmental Protection Agency has granted emission
allowances to the BWL related to the emission of certain pollutants. No amounts are
recorded at the date of the grant. The BWL estimates the allowances needed for future
years. As appropriate, the BWL may purchase additional allowances or sell the
estimated future excess allowances. The purchase and sale of allowances by emission
type are accounted for separately and are not offset against transactions involving
allowances of different emission types. Purchased allowances net of proceeds from the
sale of related allowances are recorded as an asset and will be expensed during the
applicable period. Proceeds from the sale of allowances are recognized as income at the
time of sale.
The BWL recognized a gain of $36 and $25,826 as of June 30, 2015 and 2014,
respectively, from the sale of allowances and has recorded an intangible asset of$0 as of
June 30, 2015 and 2014 for purchased allowances related to future periods.
Significant Customers - The BWL has one customer which accounts for
approximately 8 percent and 9 percent of the BWL's total revenue for the years ended
June 30, 2015 and 2014, respectively.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 201 S and 2014
Note 1 - Significant Accounting Policies (Continued)
Reclassifications - Certain amounts presented in the prior year data have been
reclassified in order to be consistent with the current year's presentation. See Note 16
for further information.
Note 2 - Rate Matters
Rates charged to customers are established solely by the governing board. The BWL has
agreed to set rates sufficient to meet certain requirements of the bond resolutions for
the outstanding revenue bonds.
Note 3 - Construction in Progress
Construction in progress consists of projects for expansion or additions to the utility
plant. The estimated additional cost to complete various projects is approximately
$75,074,000 and $52,122,000 at June 30, 2015 and 2014, respectively, including
commitments on existing construction contracts approximating $9,173,000 and
$19,257,000 at June 30, 2015 and 2014, respectively. These projects will be funded
through operational cash flow, including the project funds reported as other assets.
There are additional commitments on projects in the process of being constructed that
are not included above. Refer to Note 9 for these commitments.
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note 4 - Restricted Assets
Restricted assets are required under the 2005A, 2008A, 201 1 A, 2012A, and 2013A
Revenue Bond resolutions and the related Nonarbitrage and Tax Compliance
Certificates. These assets, which consist of cash, commercial paper, and United States
government securities, are segregated into the following funds:
Carrying Value
Required at
June 30, 2015 2015 2014
Current:
Operations and Maintenance Fund $ 33,195,350 $ 88,301,618 $ 80,126,021
Bond and Interest Redemption Fund 19,557,591 19,689,041 23,193,691
Total current 52,752,941 107,990,659 103,319,712
Noncurrent:
201 IA Construction Fund - - 22,564,095
Bond Reserve Fund 24,263,950 24,951,608 24,263,950
Total noncurrent 24,263,950 24,951,608 46,828,045
Total $ 77,016,891 $ 132,942,267 $ 150,147,757
The carrying value in excess of the required value for the current portion is reported as
cash and cash equivalents or investments for the year ended June 30, 2015.
The restrictions of the various funds are as follows:
• Operations and Maintenance Fund - By the end of each month, this fund shall
include sufficient funds to provide for payment of the succeeding month's expenses.
0 Bond and Interest Redemption Fund - Restricted for payment of the current
portion of bond principal and interest on the 2005A, 2008A, 2009A, 201 [A, 2012A,
and 2013A Revenue Bonds.
• 201 1 A Construction Fund - Restricted for payment of costs of the bonded
projects and costs of issuance of the bonds.
• Bond Reserve Fund - Shall include sufficient funds to cover the maximum annual
principal and interest requirements of the 2005A, 2008A, 2011 A, 2012A, and 2013A
Revenue Bonds. The Nonarbitrage and Tax Compliance Certification stipulates that
the amount in the fund shall be valued at amortized cost to meet this requirement.
As of June 30, 2015, the cost basis in the fund was$25,302,514.
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 2015 and 2014
Note S - Longterm Debt
Long-term debt as of June 30 consists of the following:
2015 2014
Water Supply, Steam, Chilled Water, and Electric Utility
System Revenue Bond, Series 2013A, due in annual principal
installments beginning July 1, 2013 through July 1, 2026, plus
interest at rates ranging from 2.00%to 5.00% $ 20,830,000 $ 21,085,000
Water Supply, Steam, Chilled Water, and Electric Utility
System Revenue Bond, Series 2012A, due in annual principal
installments beginning July 1, 2013 through July 1, 2018, plus
interest at rates ranging from 2.00%to 5.00% 16,355,000 16,960,000
Water Supply, Steam, Chilled Water, and Electric Utility
System Revenue Bond, Series 201 IA, due in annual principal
installments beginning July I, 2015 through July I, 2041, plus
interest at rates ranging from 3.00%to 5.50% 250,000,000 250,000,000
Water Supply, Steam, Chilled Water, and Electric Utility
System Revenue Bond, Series 2009A, due in annual principal
installments due serially through July 1, 2016, plus interest at
a rate of 5.34% 11,215,000 18,985,000
Water Supply Utility System Revenue Bonds, Series 2008A,
due serially beginning July I, 2012 and continuing through
July I, 2032, plus interest at rates ranging from 3.00% to
5.00% 39,985,000 39,990,000
Water Supply, Steam, and Electric Utility System Revenue
Bonds, Series 2005A, due serially beginning July 1, 2011 and
continuing through July 1, 2014, plus interest at rates ranging
from 4.00%to 5.00% - 5,520,000
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note S - Long-term Debt (Continue
2015 2014
Promissory note, due to the City of Lansing in semi-annual
installments through October 1, 2024, plus interest at a rate
of 2.50% $ 9,554,048 $ 10,173,301
Township contract water service obligation with interest
due semiannually at 6.00% and portions of principal due
annually,with final payment in May 2015 - 40,000
Granger III Corporation for ash hauling services due in
monthly installments ranging from $150,000 to$250,000 1,650,712 4,650,712
City of Lansing agreement for the enhancement of the flood
warning system, $10,000 annually with final payment in 2016 10,000 20,000
Total 349,599,760 367,424,013
Less current portion (13,299,345) (17,824,253)
Plus current portion of premium on bonds 966,576 966,576
Plus unamortized premium 9,777,303 10,743,877
Total long-term portion $ 347,044,294 $ 361,310,213
The fair value of the long-term debt based on the quoted market prices for similar issues
for debt of the same remaining maturities is estimated to be $425,756,849 and
$423,049,941 at June 30, 2015 and 2014, respectively.
The unamortized premium and deferral on refunded bonds is being amortized over the
life of the bonds, using the effective-interest method.
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 2015 and 2014
Note 5 - Long-term Debt (Continued)
Aggregate principal and interest payments applicable to long-term debt are as follows:
Principal Interest Total
2016 $ 13,299,345 $ 16,875,993 $ 30,175,338
2017 11,523,300 16,224,949 27,748,249
2018 8,860,005 15,765,701 24,625,706
2019 9,244,935 15,491,004 24,735,939
2020 7,712,842 15,334,272 23,047,1 14
2021-2025 43,951,859 71,043,958 114,995,817
2026-2030 55,673,602 59,709,787 115,383,389
2031-2035 69,163,872 44,957,340 1 14,121,212
2036-2040 88,030,000 26,085, 125 1 14,1 15,125
2041-2042 42, 140,000 3,507,625 45,647,625
Total $ 349,599,760 $ 284,995,754 $ 634,595,514
The 2008A, 201 IA, 2012A, and 2013A bonds require the BWL to establish a reserve
account equal to the highest annual principal and interest requirements of such issues.
As of June 30, 2015, the balance of this reserve account was $24,951,608 (see Note 4).
The 2009A bonds were a private placement issue and have no reserve requirement.
All Water Supply and Electric Utility System Revenue Bonds were issued by authority of
the BWL. Except for the Series 2009A Subordinate Lien Revenue Refunding Bond, all
bonds were issued on a parity basis and are payable solely from the net revenue of the
combined water, electric, chilled water, and steam operations of the BWL.
The 2013A Bond is payable in annual installments in the years 2015 to 2027, inclusive,
and shall not be subject to optional redemption prior to maturity. The bonds, or
portions of the bonds in multiples of $5,000 maturing in the years 2025 and thereafter
shall be subject to redemption prior to maturity at the option of the BWL in any order
of maturity as the BWL may determine and within any maturity by lot, on any date on
after July 1, 2023 at the redemption price of par plus accrued interest to the date fixed
for redemption.
�5
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note S - LongAerm Debt (Continued)
The 2012A Bond is payable in annual installments in the years 2013 to 2018, inclusive,
and shall not be subject to optional redemption prior to maturity.
The Series 201 IA Bond is payable in annual installments in the years 2015 to 2022,
inclusive, and shall not be subject to optional redemption prior to maturity. The Bonds
maturing on or after July 1, 2022 shall be subject to redemption at the option of the
BWL as a whole or in part at any time and by lot within a maturity at par plus interest
accrued to the redemption date.
The Series 2009A Bond is payable in annual installments in the years 2010 to 2016,
inclusive, and shall not be subject to optional redemption prior to maturity.
The Series 2008A Bonds maturing in the years 2012 to 2028, inclusive, shall not be
subject to optional redemption prior to maturity. The bonds, or portions of bonds in
multiples of $5,000 maturing in the years 2019 to 2032, inclusive, shall be subject to
redemption at the option of the BWL in such order of maturity as the BWL shall
determine and within a single maturity by lot on any date on or after July 1, 2018, at par
plus accrued interest to the date fixed for redemption.
The BWL may redeem certain outstanding Water Supply and Electric Utility System
Revenue Bonds prior to maturity. The Series 2005A Bonds were redeemed at maturity
during the year ended June 30, 2015.
76
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note S - Long-term Debt (Continued)
The long-term debt activity for the year ended June 30, 2015 is as follows:
Revenue Other
Bonds Notes Total
Beginning balance $ 364,250,463 $ 14,884,003 $ 379,134,466
Additions - - -
Reductions (15,121,594) (3,669,233) (18,790,827)
Ending balance $ 349,128,869 $ 11,214,770 $ 360,343,639
Due within one year $ 11,010,000 $ 2,289,345 $ 13,299,345
The BWL has pledged substantially all revenue, net of operating expenses, to repay the
revenue bonds. Proceeds from the bonds provided financing for the construction of the
utility plant. The bonds are payable solely from the net revenues of the BWL. The
remaining principal and interest to be paid on the bonds total $634,595,514. During the
current year, net revenues of the BWL were $66,776,903 compared to the annual debt
requirements of$29,150,574.
Note 6 - Costs/Credits Recoverable in Future Years
Central Utilities Complex
The BWL accounts for amortization of its Central Utilities Complex (CUC), which is a
separate operating unit of the BWL, under the regulatory basis of accounting as per
GASB 62. The BWL has recorded recoverable (revenue) amortization of $(7,241,153)
and $(4,255,372) at June 30, 2015 and 2014, respectively. Under an agreement with a
BWL customer, the bonded debt related to the construction of the CUC will be
reimbursed through payments to be received from this customer through 2017. The
recoverable (revenue) amortization balance represents the difference between
calculated straight-line amortization expense and the reimbursement payments received
from the customer at year end.
Environmental Remediation
The GASB 49 environmental remediation liability related to a landfill site operated by
the BWL was approved for regulated entity accounting under GASB 62 during the year
ended June 30, 2004. As of June 30, 2015 and 2014, $20,848,000 in total costs has been
recoverable as a regulatory asset.
97
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 2015 and 2014
Note 6 - Costs/Credits Recoverable in Future Years (Continued)
As of June 30, 2015 and 2014, the amounts remaining to be recovered in rates were
$37,756 and $1,470,035, respectively. The BWL reviews the adequacy of its rates to
recover its cost of service on an annual basis.
During the year ended June 30, 2006, the GASB 49 environmental remediation liability
related to a second landfill was approved for regulated entity accounting under GASB
62. The balance of the regulatory asset at June 30, 2015 and 2014 was $14,176,684 and
$17,793,606 respectively. The BWL reviews the adequacy of its rates to recover its cost
of service on an annual basis. During the year ended June 30, 2009, regulatory
accounting as per GASB 62 was authorized by the Board of Commissioners to collect
rates for all environmental remediation sites. The balance as of June 30, 2015 and 2014
for additional sites was $4,401,565 and $4,362,970, respectively.
Recoverable Cost Adjustments
During the year ended June 30, 2005, the Board of Commissioners approved the use of
regulatory accounting as per GASB 62 in accounting for the BWL's energy cost
adjustment (ECA), power chemical adjustment (PCA), and fuel cost adjustment (FCA).
These affect the amount to be billed to retail electricity, water, and steam customers to
reflect the difference between the BWL's actual material costs and the amounts
incorporated into rates. This resulted in recoverable assets of $4,652,068 and
$2,797,695 at June 30, 2015 and 2014, respectively. This amount represents costs to be
billed to customers in future years because actual costs of providing utilities were higher
than the costs incorporated into the BWL's rates.
Renewable Energy Plan (REP) and Energy Optimization (EO)
During the year ended June 30, 2010, the Board of Commissioners approved the
implementation of regulatory accounting as per GASB 62 to account for Public Act 295
of 2008 (PA. 295). PA. 295 set forth requirements for all Michigan utilities to meet the
new renewable energy standards and undertake energy optimization programs. As a
municipally owned electric utility, the BWL was required to file a proposed energy plan
with the Michigan Public Service Commission (MPSC) and this plan was approved on
July 1, 2009. These changes will affect the amount to be billed to electric customers.
This resulted in deferred inflow of resources of $6,953,049 and $6,421,464 as of June
30, 2015 and 2014, respectively.
28
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note 6 - Costs/Credits Recoverable in Future Years (Continued)
Chiller Plant
During the year ended June 30, 2010, the BWL chose to use regulatory accounting as
per GASB 62 to recognize the contribution in aid of construction (CIAC) for the
development of a new chilled water plant. This resulted in recoverable inflow of
resources of$2,202,716 and $2,422,987 as of June 30, 2015 and 2014, respectively. The
BWL will recognize this as revenue monthly over the life of the new chilled water plant
to offset depreciation expense.
Wise Road
During the year ended June 30, 2012, the BWL chose to use regulatory accounting as
per GASB 62 to recognize the insurance proceeds for the damaged equipment at the
Wise Road Water Conditioning Plant (see Note 14). This resulted in recoverable inflow
of resources of $13,51 1,589 and $10,099,712 as of June 30, 2015 and 2014. The BWL
will recognize this as revenue monthly over the life of the new equipment to offset
depreciation expense.
Note 7 - Transactions with the City of Lansing, Michigan
Operations - The BWL recognized revenue of$9,834,276 and $8,075,705 in 2015 and
2014, respectively, for water, electric, and steam services provided to the City. The
BWL incurred expenses for sewerage services purchased from the City of$964,302 and
$924,809 in 2015 and 2014, respectively.
Additionally, the BWL bills and collects sewerage fees for the City. In connection with
these services, the BWL received sewerage collection fees of $1,087,668 and $968,545
in 2015 and 2014, respectively, included in other income.
Payment in Lieu of Taxes - Effective July 1, 1992, the BWL entered into an agreement
with the City to provide an annual payment of a return on equity in accordance with a
formula based on net billed retail sales from its water, steam heat, and electric utilities
for the preceding 12-month period ending May 31 of each year. Effective March 1, 2002,
the formula to calculate the amount owed to the City for payment in lieu of taxes will
also include wholesale revenue generated from the BWL's electric, water, steam, and
chilled water utilities for the preceding 12-month period ending May 31 of each year.
Subject to the provisions of Act 94 Public Acts of 1933, as amended, and the BWL's
various bond covenants, this amount is payable to the City no later than June 30 of each
year. Under terms of this agreement, the BWL paid to the City$20,840,065 in 2015 and
$20,608,093 in 2014 of operational cash flow in excess of debt service requirements.
29
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note S - Retirement Plans
The BWL has three retirement plans. The BWL administers a tax-qualified, single-
employer, noncontributory, defined benefit public employee retirement pension plan
(the "Defined Benefit Plan"), and the BWL has a tax-qualified, single-employer,
noncontributory, defined contribution public employee retirement pension plan (the
"Defined Contribution Plan"). The BWL also has a tax-qualified, single-employer,
defined benefit plan to administer and fund retiree healthcare benefits (the "Retiree
Benefit Plan and Trust").
Defined Benefit Plan
Plan Description - The BWL Board of Commissioners administers the Defined Benefit
Plan - a noncontributory single-employer defined benefit pension plan for employees of
the BWL. The benefit terms were established by the BWL and may be amended by
future BWL actions.
The Plan for Employees' Pensions of the Board of Water and Light - City of Lansing,
Michigan - Defined Benefit Plan issues a publicly available financial report that includes
financial statements and required supplementary information. That report may be
obtained by writing to the Board of Water and Light, Chief Financial Officer, P.O. Box
13007, Lansing, Michigan 48901-3007.
Management of the Plan is vested in the BWL, which consists of eight members
appointed by the mayor of the City of Lansing, Michigan.
Effective July 1, 1999, the Defined Benefit Plan was amended to include a medical
benefit component, in addition to the normal retirement benefits, to fund a portion of
the postretirement obligations for certain retirees and their beneficiaries. The funding of
the medical benefit component is limited to the amount of excess pension plan assets
available for transfer, as determined by the actuary. No medical benefits were paid by
the Defined Benefit Plan during the years ended June 30, 2015 and 2014.
Employees Covered by Benefit Terms - At February 28, 2015 and 2014 (the most
recent actuarial valuation for funding purposes), Defined Benefit Plan membership
consisted of the following:
2015 2014
Inactive plan members or beneficiaries 398 413
currently receiving benefits
Inactive plan members entitled to but not 8 9
yet receiving benefits
Active plan members 14 17
Total 420 439
30
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 2015 and 2014
Note 8 - Retirement Plans (Continue
The Defined Benefit Plan, by resolution of the board of commissioners, was closed to
employees hired subsequent to December 31, 1996, and a defined contribution plan was
established for employees hired after December 31, 1996. Effective December 1, 1997,
all active participants in this plan were required to make an irrevocable choice to either
remain in this plan (defined benefit) or move to the newly established defined
contribution plan. Those participants who elected to move to the defined contribution
plan received lump-sum distributions from this plan that were rolled into their accounts
in the newly established defined contribution plan. Of the 760 employees who were
required to make this election, 602 elected to convert their retirement benefits to the
newly established defined contribution plan. As a result of this action, effective
December 1, 1997, the board of commissioners transferred $75,1 16,470 to the newly
established defined contribution plan, reflecting the plan participants' accumulated
benefits as of said date.
Benefits Provided - The Defined Benefit Plan provides retirement, early retirement,
disability, termination, and death benefits. The Plan provides for an annual benefit upon
normal retirement age equal to the product of the total number of years of credited
service multiplied by a percentage equal to 1.80 percent of the highest annual pay during
the last 10 years of service, paid in equal monthly installments.
Payments will either be non-increasing or increase only as follows: (a) By an annual
percentage increase that does not exceed the annual percentage increase in a cost-of-
living index that is based on prices of all items and issued by the Bureau of Labor
Statistics; (b) To the extent of the reduction in the amount of the employee's payments
to provide for a survivor benefit upon death, but only if the beneficiary whose life was
being used to determine the distribution period described in subsection 8 dies or is no
longer the employee's beneficiary pursuant to a qualified domestic relations order within
the meaning of Internal Revenue Code Section 414(p); (c) To provide cash refunds of
employee contributions upon the employee's death; or (d) To pay increased benefits that
result from a plan amendment.
Contributions - Article 9, Section 24 of the State of Michigan constitution requires that
financial benefits arising on account of employee service rendered in each year be funded
during that year. Accordingly, the BWL Pension Board retains an independent actuary to
determine the annual contribution. The actuarially determined rate is the estimated
amount necessary to finance the costs of benefits earned by plan members during the
year, with an additional amount to finance any unfunded accrued liability. There was no
contribution required for the years ended June 30, 2014 and 2015. Plan documents do
not require participant contributions.
31
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note 8 - Retirement Plans (Continued)
Investment Policy - The Plan's policy in regard to the allocation of invested assets is
established and may be amended by the BWL by a majority vote of its members. It is the
policy of the board to pursue an investment strategy that manages risk through the
prudent diversification of the portfolio across a broad selection of distinct asset classes.
The Plan's investment policy discourages the use of cash equivalents, except for liquidity
purposes, and aims to refrain from dramatically shifting asset class allocations over short
time spans. The following was the BWL's adopted asset allocation policy as of June 30,
2015 and 2014:
Target
Asset Class Allocation
Fixed income 30.80%
Domestic equity 55.00%
International equity 14.20%
Net Pension Asset - The components of the net pension asset of the BWL at June 30,
2015 and 2014 were as follows (in thousands):
2015 2014
Total pension liability $ 65,395 $ 69,341
Plan fiduciary net position 73,679 80,530
BWL's net pension asset $ (8,284) $ (11,189)
Plan fiduciary net position, as a percentage of 1 12.67% 1 16. 14%
the total pension liability
The BWL has chosen to use June 30, 2015 as its measurement date for fiscal year 2015.
The June 30, 2015 reported net pension asset was determined using a measure of the
total pension liability and the pension net position as of June 30, 2015. The June 30, 2015
total pension liability was determined by an actuarial valuation as of February 28, 2015,
which used update procedures to roll forward the estimated liability to June 30, 2015.
The BWL has chosen to use June 30, 2014 as its measurement date for fiscal year 2014.
The June 30, 2014 reported net pension asset was determined using a measure of the
total pension liability and the pension net position as of June 30, 2014. The June 30, 2014
total pension liability was determined by an actuarial valuation as of February 28, 2014,
which used update procedures to roll forward the estimated liability to June 30, 2014.
32
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
Jane 30, 2015 and 2014
Note 8 - Retirement Plans (Continuecl)
Changes in the net pension asset during the measurement years were as follows (in
thousands):
Increase (Decrease)
Total Pension Plan Net Net Pension
Changes in Net Pension Asset Liability Position Liability(Asset)
Balance at June 30, 2013 $ 67,280 $ 75,424 $ (8,144)
Changes for the year:
Service cost 349 - 349
Interest 4,751 - 4,751
Differences between expected 964 - 964
and actual experience
Changes in assumptions 4,538 - 4,538
Net investment income - 14,243 (14,243)
Benefit payments, including refunds (8,541) (8,541) -
Administrative expenses - (596) 596
Net changes 2,061 5,106 (3,045)
Balance at June 30, 2014 $ 69,341 $ 80,530 $ (11,189)
Changes for the year:
Service cost 274 - 274
Interest 4,919 - 4,919
Differences between expected (1,093)
and actual experience (1,093)
Net investment income - 1,771 (1,771)
Benefit payments, including refunds (8,046) (8,046) -
Administrative expenses - (576) 576
Net changes (3,946) (6,851) 2,905
Balance at June 30, 2015 $ 65,395 $ 73,679 $ (8,284)
33
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note 8 - Retirement Plans (Continue
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of
Resources Related to Pensions - For the year ended June 30, 2015, the BWL
recognized a pension expense of ($2,037,327). At June 30, 2015, the BWL reported
deferred outflows of resources and deferred inflows of resources related to pensions
from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Net difference between projected and actual earnings
on pension plan investments $ - $ (2,201,407)
For the year ended June 30, 2014, the BWL recognized pension expense of$4,098,930.
At June 30, 2014, the BWL reported deferred outflows of resources and deferred
inflows of resources related to pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Net difference between projected and actual earnings
on pension plan investments $ - $ (7,143,206)
Amounts reported as deferred inflows of resources related to pensions will be
recognized in pension expense as follows:
Years Ending
June 30
2016 $ 996,802
2017 996,802
2018 996,802
2019 (788,999)
34
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 2015 and 2014
Note S - Retirement Plans (Continueel
Actuarial Assumptions - The total pension liability in the June 30, 2015 and June 30,
2014 actuarial valuation was determined using the following actuarial assumptions,
applied to all periods included in the measurement:
Inflation 3.00%
Salary increases 6.44%-10.26%
Investment rate of return 7.50%
Mortality rates were based on the Healthy and Disabled, RP-2014 Mortality Table with
MP-2014 Improvement scale.
The most recent experience review was completed in 2014. Since the Defined Benefit
Plan covered 14 active participants in fiscal year 2015 and 17 active participants in fiscal
year 2014, assumptions like termination, retirement, and disability have an immaterial
impact on the results and have not been changed.
Discount Rate - The discount rate used to measure the total pension liability was 7.5
percent. The projection of cash flows used to determine the discount rate assumed that
BWL contributions will be made at rates equal to the actuarially determined
contribution rates.
Projected Cash Flows
Based on those assumptions, the Defined Benefit Plan's fiduciary net position was
projected to be available to make all projected future benefit payments of current active
and inactive employees. Therefore, the long-term expected rate of return on the
Defined Benefit Plan investments was applied to all periods of projected benefit
payments to determine the total pension liability.
35
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 2015 and 2014
Note 8 - Retirement Plans (Continue
The long-term expected rate of return on Defined Benefit Plan investments was
determined using a building-block method in which best-estimate ranges of expected
future real rates of return (expected returns, net of pension plan investment expense
and inflation) are developed for each major asset class. These ranges are combined to
produce the long-term expected rate of return by weighting the expected future real
rates of return by the target asset allocation percentage and by adding expected
inflation. Best estimates of arithmetic real rates of return as of June 30, 2015 and 2014
for each major asset class included in the Defined Benefit Plan's target asset allocation, as
disclosed in the Defined Benefit Plan's financial statements, are summarized in the
following table:
Long-term
Expected Real
Asset Class Rate of Return
Fixed income 2.00%
Domestic equity 6.40%
International equity 6.80%
Sensitivity of the Net Pension Asset to Changes in the Discount Rate - The
following presents the net pension asset of the BWL at June 30, 2015, calculated using
the discount rate of 7.5 percent, as well as what the BWL's net pension asset would be if
it were calculated using a discount rate that is I percentage point lower (6.5 percent) or
I percentage point higher (8.5 percent) than the current rate:
I% Decrease Current Discount 10/6 Increase
(6.50 %) Rate (7.50 %) (8.50%)
Net pension asset of the BWL
(in thousands) $ (3,053) $ (8,284) $ (13,128)
36
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 2015 and 2014
Note 8 - Retirement Plans (Continue
The following presents the net pension asset of the BWL at June 30, 2014, calculated
using the discount rate of 7.5 percent, as well as what the BWL's net pension asset
would be if it were calculated using a discount rate that is I percentage point lower (6.5
percent) or I percentage point higher (8.5 percent) than the current rate:
I% Decrease Current Discount I% Increase
(6.50 %) Rate (7.50 %) (8.50%)
Net pension asset of the BWL
(in thousands) $ (5,315) $ (11,189) $ (16,603)
Defined Benefit Plan Fiduciary Net Position - Detailed information about the
Defined Benefit Plan's fiduciary net position is available in the separately issued financial
report. For the purpose of measuring the net pension asset and deferred inflows of
resources related to pension and pension expense, information about the Defined
Benefit Plan's fiduciary net position and addition to/deduction from fiduciary net position
has been determined on the same basis of accounting as they are reported by the
Defined Benefit Plan. The Defined Benefit Plan uses the economic resources
measurement focus and the full accrual basis of accounting. Investments are stated at fair
value. Contribution revenue is recorded as contributions are due, pursuant to legal
requirements. Benefit payments and refunds of employee contributions are recognized
as expense when due and payable in accordance with the benefit terms.
Defined Contribution Plan
The Defined Contribution Plan was established by the BWL in 1997 under Section 5-203
of the City Charter. The Defined Contribution Plan covers substantially all full-time
employees hired after December 31, 1996. In addition, 602 employees hired before
January 1, 1997 elected to convert their retirement benefits from the Defined Benefit
Plan effective December 1, 1997.
The Plan for Employees' Pensions of the Board of Water and Light - City of Lansing,
Michigan - Defined Contribution Plan issues a publicly available financial report. That
report may be obtained by writing to the Board of Water and Light, Chief Financial
Officer, P.O. Box 13007, Lansing, Michigan 48901-3007.
The Defined Contribution Plan operates as a money purchase pension plan and meets
the requirements of Sections 401(a) and 501(a) of the IRC of 1986, as amended from
time to time.
37
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 2015 and 2014
Note 8 - Retirement Plans (Continue
For employees hired before January 1, 1997, the BWL is required to contribute 15.0
percent of the employees' compensation. For employees hired after January 1, 1997, the
BWL is required to contribute 8.1 percent of the employees' compensation. In addition,
the BWL is required to contribute 3.0 percent of the employees' compensation for all
employees who are not eligible to receive overtime pay and 0.5 percent of the
employees' compensation for all nonbargaining employees. No participant contributions
are required.
During the years ended June 30, 2015 and 2014, the BWL contributed $5,548,360 and
$5,467,824, respectively. The BWL's contributions are recognized in the period that the
contributions are due.
Basis of Accounting - The Defined Contribution Plan's financial statements are
prepared using the accrual method of accounting in accordance with Governmental
Accounting Standards Board (GASB) Statement No. 67, Financial Reporting for Pension
Plans.
Valuation of Investments and Income Recognition - The Defined Contribution Plan
investments are stated at market value based on closing sales prices reported on
recognized securities exchanges on the last business day of the year, or, for listed
securities having no sales reported and for unlisted securities, upon the last reported bid
prices on that date. The mutual funds are valued at quoted market prices, which
represent the net asset values of shares held by the Defined Contribution Plan at year
end.
Purchases and sales of investments are recorded on a trade-date basis. Interest income
is accrued when earned. Dividend income is recorded on the ex-dividend date.
Regulatory Status - The Defined Contribution Plan is not subject to the reporting
requirements of the Employee Retirement Income Security Act of 1974 (ERISA) as it has
been established for the benefit of a governmental unit.
38
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 2015 and 2014
Note S - Retirement Plans (Continued)
Retiree Benefit Plan and Trust
The Retiree Benefit Plan and Trust (the "Plan") is a single-employer defined benefit
healthcare plan. The Plan provides medical, dental, and life insurance benefits in
accordance with Section 5-203 of the City Charter. Substantially all of the BWL's
employees may become eligible for healthcare benefits and life insurance benefits if they
reach normal retirement age while working for the BWL. There were 725 participants
eligible to receive benefits at June 30, 2015 and 698 participants eligible at June 30,
2014.
In October 1999, the BWL formed a Voluntary Employee Benefit Administration (VEBA)
trust for the purpose of accumulating assets sufficient to fund retiree healthcare
insurance costs in future years. During the years ended June 30, 2015 and 2014, the cost
to BWL of maintaining the Retiree Benefit Plan was $9,670,794 and $9,266,529, of
which respectively, was incurred as direct costs of benefits.
The Retiree Benefit Plan and Trust of the Board of Water and Light - City of Lansing,
Michigan issues a publicly available financial report. That report may be obtained by
writing to the Board of Water and Light, Chief Financial Officer, P.O. Box 13007,
Lansing, Michigan 48901-3007.
Basis of Accounting - The plan statements are prepared using the accrual basis of
accounting.
Investment Valuation and Income Recognition - Plan investments are reported at
fair value. Securities traded on a national or international exchange are valued at the last
reported sales price. Purchases and sales of investments are recorded on a trade-date
basis. Appreciation or depreciation of investments is calculated based on the beginning
of the period's fair value of investments.
39
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 2015 and 2014
Note 8 - Retirement Plans (Continue
Funding Policy - The BWL adopted a process for funding the retiree benefits using
both a VEBA trust and, to the extent permitted by law, excess pension assets in the
Defined Benefit Pension Plan. Additional contributions to the VEBA trust from BWL
operating funds to supplement Section 420 transfers will not exceed the recommended
annual contribution amount required to cover current service of active participants and
amortize the unfunded accrued liability over 30 years. The required contribution is
based on a projected pay-as-you-go financing requirement with an additional amount to
prefund benefits. No participant contributions are required.
The Plan's annual other postemployement benefit (OPEB) cost is calculated based on
the annual required contribution (ARC), an amount actuarially determined in accordance
with the parameters of GASB Statement 45. The ARC represents a level of funding that,
if paid on an ongoing basis, is projected to cover normal costs each year and amortize
any unfunded actuarial liabilities over a period of 30 years.
Actuarial Assumptions - Actuarial valuations of an ongoing plan involve estimates of
the value of reported amounts and assumptions about the probability of the occurrence
of events far into the future. Examples include assumptions about future employment,
mortality, and the healthcare cost trend. Amounts determined regarding the funded
status of the plan and the annual required contributions of the employer are subject to
continual revision as actual results are compared with past expectations and new
estimates are made about the future. The schedule of funding progress, presented as
required supplementary information following the notes to the financial statements,
presents multiyear trend information about whether the actuarial value of plan assets is
increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
Projections of benefits for financial reporting purposes are based on the substantive plan
(the plan as understood by the employer and the plan members) and include the types
of benefits provided at the time of each valuation and the historical pattern of sharing of
benefit costs between the employer and plan members to that point. The actuarial
methods and assumptions used include techniques that are designed to reduce the
effects of short-term volatility in actuarial accrued liabilities, consistent with the long-
term perspective of the calculations.
40
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 2015 and 2014
Note 8 - Retirement Plans (Continue
The Plan has calculated the accrued actuarial liability and required contribution using
certain methods and assumptions. Benefit payments have been computed using the
individual entry age normal method. The assets have been valued in the actuary report
using the fair market value. The healthcare cost trend rates used range from 5.0 to 9.0
percent for the years ended June 30, 2015 and 2014.
Contribution trend information is as follows (in thousands):
Percentage of
Annual OPEB
Fiscal Year Annual OPEB Annual OPEB Cost Net OPEB
Ended Cost Contributed Contributed Obligation
6/30/2012 $ 15,744 $ 15,854 101% $ (150)
6/30/2013 13,994 14,045 100% (201)
6/30/2014 9,202 9,268 101% (267)
6/30/2015 5,765 9,671 168% (4,173)
Funded Status and Funding Progress - Actuarial valuations of an ongoing plan
involve estimates of the value of reported amounts and assumptions about the
probability of the occurrence of events far into the future. Significant actuarial
assumptions used in determining the annual OPEB cost include (a) rate of return on the
investments of present and future assets of 7.5 percent, compounded annually, (b)
projected healthcare trend rates ranging from 5.0 percent to 9.0 percent, and (c)
amortization method level dollar over a 30-year period.
Funding status and funding progress trend information is as follows (in thousands):
Unfunded
Actuarial Actuarial
Actuarial Accrued Accrued Funded
Valuation Date Asset Value Liability Liability Ratio
2/28/2012 $ 110,029 $245,418 $ 135,389 44.83%
2/28/2013 123,195 207,864 84,669 59.27%
2/28/2014 148,307 194,365 46,058 76.30%
2/28/2015 157,565 200,196 42,631 78.71%
AI
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 201 S and 2014
Note 8 - Retirement Plans (Continued)
Other Postretirement Benefits
The BWL offers its employees a deferred compensation plan, created in accordance
with IRC 457, which is administered by a trustee, the ICMA Retirement Corporation.
The BWL makes contributions of $1,000 annually for the employees as of January I of
each year, during the month of January. The BWL also will match employee
contributions at one dollar for every one dollar up to $1,250 in a calendar year.
Note 9 - Commitments and Contingencies
At June 30, 2015 and 2014, the BWL has two letters of credit in the amounts of
$1,000,000 and $817,220 issued to the Michigan Department of Natural Resources. The
letters of credit were issued to satisfy requirements of the Michigan Department of
Natural Resources to provide financial assurance to the State of Michigan for the cost of
closure and postclosure monitoring and maintenance of a landfill site operated by the
BWL.
Through monitoring tests performed on the landfill sites operated by the BWL, it has
been discovered that the sites are contaminating the groundwater. The contamination
does not pose a significant health risk, but does lower the quality of the groundwater.
The BWL is currently in the process of applying for approval from the State of Michigan
to remediate the sites. The BWL has estimated the total cost for remediation, including
closure and postclosure cost of the landfills, and has recorded a liability of $10,128,442
and $10,312,492 for the years ended June 30, 2015 and 2014, respectively. Certain
remediation activities have commenced and are in progress. The landfill sites are no
longer receiving waste products. Landfill closure and postclosure requirements are
associated with the Michigan Department of Environmental Quality. Annual postclosure
costs of these landfill sites are not expected to exceed $380,000 annually and are
included in the liability above. Estimates will be revised as approvals are received from
the State. In accordance with the regulatory basis of accounting as per GASB 62 (see
Note 1), the BWL recorded a corresponding regulatory asset (see Note 6).
The BWL previously announced a program to upgrade existing lead pipes throughout
the BWL service area. The program is scheduled to be complete in two years at an
estimated remaining cost of $1 1,367,000. There is no legal obligation to replace the
pipes, therefore no liability has been recorded.
d�
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note 9 - Commitments and Contingencies (Continued)
The BWL is subject to various laws and regulations with respect to environmental
matters such as air and water quality, soil contamination, solid waste disposal, handling
of hazardous materials, and other similar matters. Compliance with these various laws
and regulations could result in substantial expenditures. The BWL has established a
Designated Purpose Fund (see Note 1), of which one of the purposes of the fund is to
meet extraordinary expenditures resulting from responsibilities under environmental
laws and regulations. Management believes that all known or expected responsibilities to
these various laws and regulations by the BWL will be sufficiently covered by the
Designated Purpose Fund and the environmental remediation liability.
The BWL is involved in various other legal actions which have arisen in the normal
course of business. Such actions are usually brought for claims in excess of possible
settlement or awards, if any, that may result. After taking into consideration legal
counsel's evaluation of pending actions, management has recorded an adequate reserve
as of June 30, 2015 and 2014 in regard to specific pending legal cases.
The BWL has entered into contracts to purchase coal totaling $1 1 ,841,667 through
December 31, 2017. In addition, the BWL has entered into contracts for the rail services
related to shipping the coal. Commitments for future rail services to be purchased are
approximately$9,639,000 through December 2016.
Note 10 - Power Supply Purchase
In 1983, the BWL entered into 35-year power supply and project support contracts with
the Michigan Public Power Agency (MPPA), of which the BWL is a member. Under the
agreement, the BWL has the ability to purchase power from MPPA, will sell power to
MPPA at an agreed-upon rate, and will purchase 64.29 percent of the energy generated
by MPPA's 37.22 percent ownership in Detroit Edison's Belle River Unit #I (Belle
River), which became operational in August 1984.
A 7
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note 10 - Power Supply Punccase (Continued)
Under the terms of its contract, the BWL must make minimum annual payments equal
to its share of debt service and its share of the fixed operating costs of Belle River. The
estimated required payments presented below assume no early calls or refinancing of
existing revenue bonds and a 3.0 percent annual inflation of fixed operating costs, which
include expected major maintenance projects.
Estimated
Debt Fixed Total
Year Service Operating Costs Required
2016 $ 26,515,502 $ 12,521,064 $ 39,036,566
2017 23,720,173 13,603,908 37,324,081
2018 18,257,255 14,732,532 32,989,787
Total $ 68,492,930 $ 40,857,504 $ 109,350,434
In addition to the above required payments, the BWL must pay for fuel, other operating
costs, and transmission costs related to any kilowatt hours (KWHs) purchased under
these contracts.
The BWL recognized expenses for 2015 and 2014 of $53,051,047 and $52,549,164,
respectively, to purchase power under the terms of this contract. The price of this
power was calculated on a basis, as specified in the contracts, to enable MPPA to
recover its production, transmission, and debt service costs.
In connection with the Belle River purchase, in December 2002, MPPA issued
$280,180,000, principal amount, of its Belle River Project Refunding Revenue Bonds,
2002 Series A, with rates ranging from 2.125 percent to 5.25 percent to advance refund
$330,850,000 of outstanding 1993A and B bonds.
The BWL has entered into agreements with Granger Electric Company to purchase
power generated from landfill gases. The agreements will expire as of June 30, 2028 and
September 30, 2028. The minimum power to be purchased in the contract is 3.2
megawatts, with the option to purchase up to 12 megawatts depending on capacity. The
price of the electricity is based on the BWL's cost of electricity generation. The total
amount of electricity expected to be purchased from these contracts is estimated at
$140,000,000.
AA
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 201 S and 2014
Note 1 1 - Cash, Investments, and Fair Value Disclosure
Michigan Compiled Laws Section 129.91 (Public Act 20 of 1943, as amended) authorizes
local governmental units to make deposits and invest in the accounts of federally insured
banks, credit unions, and savings and loan associations that have offices in Michigan. A
local unit is allowed to invest in bonds, securities, and other direct obligations of the
United States or any agency or instrumentality of the United States; certificates of
deposit, savings accounts, deposit accounts, or depository receipts of an eligible financial
institution; repurchase agreements; bankers' acceptances of United States banks;
commercial paper rated within the two highest classifications, which matures not more
than 270 days after the date of purchase; obligations of the State of Michigan or its
political subdivisions, which are rated as investment grade; and mutual funds composed
of investment vehicles that are legal for direct investment by local units of government in
Michigan.
The operating cash investment policy adopted by the BWL in accordance with Public
Act 20, as amended, and the Lansing City Charter has authorized investment in bonds
and securities of the United States government, certificates of deposit, time deposits,
and bankers' acceptances of qualified financial institutions, commercial paper rated AI by
Standard & Poor's and P I by Moody's, repurchase agreements using bonds, securities,
and other obligations of the United States or an agency or instrumentality of the United
States, and liquid asset accounts managed by a qualified financial institution using any of
these securities. The BWL's deposits and investment policies are in accordance with
statutory authority.
The BWL's cash and investments are subject to several types of risk, which are
examined in more detail below:
Risks at lune 30, 2015
Custodial Credit Risk of Bank Deposits - Custodial credit risk is the risk that in the
event of a bank failure, the BWL's deposits may not be returned to it. The BWL requires
that financial institutions must meet minimum criteria to offer adequate safety to the
BWL. At year end, the BWL had $I,666,654 of bank deposits that were uninsured and
uncollateralized. The BWL evaluates each financial institution with which it deposits
funds and only those institutions meeting minimum established criteria are used as
depositories.
A C
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 2015 and 2014
Note 1 1 - Cash, Investments, and Fair Value Disclosure (Continued)
Custodial Credit Risk of Investments - Custodial credit risk is the risk that, in the
event of the failure of the counterparty, the BWL will not be able to recover the value of
its investments or collateral securities that are in the possession of an outside party. The
BWL does not have a policy for custodial credit risk. At year end, the following
investment securities were uninsured and unregistered, with securities held by the
counterparty or by its trust department or agent, but not in the BWL's name:
Type of Investment Cost Basis How Held
U.S. government or agency bond or notes $ 91,596,540 Counterparty
Interest Rate Risk - Interest rate risk is the risk that the value of investments will
decrease as a result of a rise in interest rates. The BWL's investment policy restricts
investments to a maximum maturity of five years unless matched to a specific cash flow.
At year end, the average maturities of investments are as follows:
Investment Fair Value Less than I year 1-5 years 6-10 years
Pooled investment funds (if not 2a-7) $ 71,850,969 $ 71,850,969 $ - $ -
U.S.government or agency
bond or note $ 91,435,063 29,617,760 $ 61,817,303 $ -
Interest Rate Risk - Pension Trust Funds
Weighted Average
Investment Fair Value Maturity(in years)
U.S. government or agency bond $ 22,121,544 11.91
Money market trust funds 7,958,648 Less than I year
Corporate bonds 32,582,122 14.13
A[
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 2015 and 2014
Note 1 I - Cash, Investments, and Fair Value Disclosure (Continued)
Credit Risk - State law limits investments in commercial paper to the top two ratings
issued by nationally recognized statistical rating organizations. As of year end, the credit
quality ratings of debt securities (other than the U.S. government) are as follows:
Rating
Investment Fair Value Rating Organization
Pooled investment funds $ 71,850,969 AAA S&P
Concentration of Credit Risk - As of year end, no more than 5 percent of the BWL's
investments are invested in any one commercial paper issue.
A-7
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note 1 1 - Cash, Investments, and Fair Value Disclosure (Continued)
Credit Risk - Pension Trust Funds
Rating
Investment Fair Value Rating Organization
Mutual funds $ 138,830,601 Not Rated Not Rated
Government or agency bond 22,121,544 Not Rated Not Rated
Stable value 31,844,948 AA S&P
Corporate bonds - Not Rated Not Rated
Corporate bonds 3,509,599 AAA S&P
Corporate bonds 12,528,632 AA+ S&P
Corporate bonds 709,117 AA S&P
Corporate bonds 441,815 AA- S&P
Corporate bonds 1,424,862 A+ S&P
Corporate bonds 2,614,518 A S&P
Corporate bonds 3,513,1 1 1 A- S&P
Corporate bonds 2,559,638 BBB+ S&P
Corporate bonds 1,982,318 BBB S&P
Corporate bonds 1,195,013 BBB- S&P
Corporate bonds 262,236 BB+ S&P
Corporate bonds 109,150 BB S&P
Corporate bonds 279,092 BB- S&P
Corporate bonds 102,069 B+ S&P
Corporate bonds 141,348 B S&P
Corporate bonds 574,676 B- S&P
Corporate bonds - CCC+ S&P
Corporate bonds 508,305 CCC S&P
Corporate bonds 126,625 D S&P
Foreign Currency Risk - The BWL does not hold investments in foreign entities,
currency, or debt.
AO
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 2015 and 2014
Note 1 I - Cash, Investments, and Fair Value Disclosure (Continued)
Risks at June 30, 2014
Custodial Credit Risk of Bank Deposits - Custodial credit risk is the risk that in the
event of a bank failure, the BWL's deposits may not be returned to it. The BWL requires
that financial institutions must meet minimum criteria to offer adequate safety to the
BWL. At June 30, 2014, the BWL had $12,590,239 of bank deposits that were uninsured
and uncol lateral ized. The BWL evaluates each financial institution with which it deposits
funds and only those institutions meeting minimum established criteria are used as
depositories.
Custodial Credit Risk of Investments - Custodial credit risk is the risk that, in the
event of the failure of the counterparty, the BWL will not be able to recover the value of
its investments or collateral securities that are in the possession of an outside party. The
BWL does not have a policy for custodial credit risk. At year end, the following
investment securities were uninsured and unregistered, with securities held by the
counterparty or by its trust department or agent, but not in the BWL's name:
Type of Investment Cost Basis How Held
U.S. government or agency bond or notes $ 102,168,958 Counterparty
Interest Rate Risk - Interest rate risk is the risk that the value of investments will
decrease as a result of a rise in interest rates. The BWL's investment policy restricts
investments to a maximum maturity of five years unless matched to a specific cash flow.
At year end, the average maturities of investments are as follows:
Less than
Fair Value I Year 1-5 Years 6-10 years
Pooled investment funds (if not 2a-7) $ 59,126,052 $ 59,126,052 $ - $ -
U.S. government or agency
bond or note 101,633,888 5,753,547 94,780,419 1,099,922
Commercial paper 29,003,071 29,003,071 - -
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note 1 1 - Cash, Investments, and Fair Value Disclosure (Continued)
Interest Rate Risk - Pension Trust Funds
Weighted Average
Investment Fair Value Maturity (in years)
U.S. government or agency bond $ 23,639,025 11.87
Money market trust funds 8,662,335 Less than I year
Corporate bonds 32,558,775 14.02
Credit Risk - State law limits investments in commercial paper to the top two ratings
issued by nationally recognized statistical rating organizations. As of year end, the credit
quality ratings of debt securities (other than the U.S. government) are as follows:
Rating
Investment Fair Value Rating Organization
Pooled investment funds $ 59,126,052 AAA S&P
Commercial paper 1,365,956 AI/PI S&P
4,994,396 AI +/PI S&P
2,996,083 Al/PI S&P
4,993,739 AI/PI S&P
1,313,050 AI/PI S&P
3,246,733 AI/PI S&P
4,098,924 Al +/P I S&P
2,997,393 AI +/PI S&P
2,996,798 A 1/P I S&P
Concentration of Credit Risk -As of year end, no more than 5 percent of the BWL's
investments are invested in any one commercial paper issue.
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 2015 and 2014
Note 1 1 - Cash, Investments, and Fair Value Disclosure (Continued)
Credit Risk - Pension Trust Funds
Rating
Investment Fair Value Rating Organization
Mutual funds $ 133,962,556 Not Rated Not Rated
Government or agency bond 23,639,025 Not Rated Not Rated
Stable value 33,607,203 AA S&P
Corporate bonds - Not Rated Not Rated
Corporate bonds 3,689,662 AAA S&P
Corporate bonds 12,190,600 AA+ S&P
Corporate bonds 627,423 AA S&P
Corporate bonds 518,898 AA- S&P
Corporate bonds 1,426,951 A+ S&P
Corporate bonds 2,412,053 A S&P
Corporate bonds 3,918,625 A- S&P
Corporate bonds 2,300,585 BBB+ S&P
Corporate bonds 1,884,206 BBB S&P
Corporate bonds 1,392,016 BBB- S&P
Corporate bonds 217,513 BB+ S&P
Corporate bonds 315,865 BB S&P
Corporate bonds 171,619 BB- S&P
Corporate bonds 80,813 B+ S&P
Corporate bonds 63,000 B S&P
Corporate bonds 142,363 B- S&P
Corporate bonds - CCC+ S&P
Corporate bonds 1,141,078 CCC S&P
Corporate bonds 65,505 CC S&P
Foreign Currency Risk - The BWL does not hold investments in foreign entities,
currency, or debt.
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 201 S and 2014
Note 12 - Estimated Liability for Excess Earnings on Water Supply and
Electric Utility System Revenue Bonds
In accordance with Section 148(f)(2) of the IRC of 1986, as amended, the BWL is
required on each anniversary date (July 1) of the Water Supply, Electric Utility, and
Steam Utility System Revenue Bonds, Series 2008A, 201 IA, 2012A, and 2013A to
compute amounts representing the cumulative excess earnings on such bonds. That
amount essentially represents a defined portion of any excess of interest earned on
funds borrowed over the interest cost of the tax-exempt borrowings. Expense is
charged (credited) annually in an amount equal to the estimated increase (decrease) in
the cumulative excess earnings for the year. On every fifth anniversary date and upon
final maturity of the bonds, the BWL is required to remit to the Internal Revenue Service
the amount of any cumulative excess earnings computed on the date of such maturity
plus an amount equal to estimated interest earned on previous years' segregated funds.
The estimated liability for excess earnings was $0 at June 30, 2015 and 2014. In
accordance with the requirements of the bond indenture, the BWL is required to set
aside any current year additions to this estimated liability in a rebate fund within 60 days
of the anniversary date of the bonds.
Note 13 - Risk Management and Insurance
The BWL is exposed to various risks of loss related to property loss, torts, errors and
omissions, and employee injuries (workers' compensation), as well as medical benefits
provided to employees. The BWL has purchased commercial insurance for certain
general liability, business auto, excess liability, property and boiler and machinery, public
officials and employee liability claims, specific excess health insurance claims, and specific
excess workers' compensation claims, subject to policy terms, limits, limitations, and
deductibles. The BWL is self-insured for most workers' compensation and health
insurance claims. The BWL has various levels of stop loss coverage that limits the BWL's
exposure as it relates to self-insured claims. Settled claims relating to the commercial
insurance have not exceeded the amount of insurance coverage in any of the past three
fiscal years.
rn
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note 13 - Risk Management and Insurance (Continued)
The BWL estimates the liability for self-insured workers' compensation and health
insurance claims that have been incurred through the end of the fiscal year, including
claims that have been reported as well as those that have not yet been reported.
Changes in the estimated liability for the past two fiscal years were as follows:
Workers'Compensation Health Insurance
2015 2014 2013 2015 2014 2013
Unpaid claims-
Beginning of year $ 2,000,000 $ 2,000,000 $ 2,000,000 $ 1,637,276 $ 1,590,814 $ 1,606,994
Incurred claims,
incurred but not
reported 554,773 864,854 1,077,383 20,853,299 18,340,955 18,644,371
Claim payments (354,773) (864,854) (1,077,383) (21,302,403) (18,294,493) (18,660,551)
Unpaid claims-
End of year $2,200,000 $2,000,000 $2,000,000 $ 1,188,172 $ 1,637,276 $ 1,590,814
Note 14 -Wise Road Reconstruction Project
In July 2011, the Wise Road water treatment plant was damaged by a chemical spill. The
piping and electrical systems were damaged and are being replaced or repaired. The
estimate to replace or repair the damaged equipment is approximately $21.1 million, of
which $17.5 million has been recouped from our insurance carrier.
Note 1 S - Upcoming Pronouncements
In February 2015, the Governmental Accounting Standards Board issued GASB
Statement No. 72, Fair Value Measurement and Application. The requirements of this
Statement will enhance comparability of financial statements among governments by
requiring measurement of certain assets and liabilities at fair value using a consistent and
more detailed definition of fair value and acceptable valuation techniques. This
Statement also will enhance fair value application guidance and related disclosures in
order to provide information to financial statement users about the impact of fair value
measurements on a government's financial position. GASB Statement No. 72 is required
to be adopted for years beginning after June 15, 2015. The BWL is currently evaluating
the impact this standard will have on the financial statements when adopted during the
BWL's 2016 fiscal year.
Board of Water and Light - City of Lansing, Michigan
Notes to Financial statements
June 30, 201 S and 2014
Note 1 S - Upcoming Pronouncements (Continued)
In June 2015, the GASB issued two new standards addressing accounting and financial
reporting by state and local governments for postemployment benefits other than
pensions (OPEB). GASB Statement No. 74, Financial Reporting for Postemployment
Benefit Plans other than Pension Plans, addresses reporting by OPEB plans whereas GASB
Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other
Than Pensions, addresses accounting and reporting by employer governments that
provide OPEB benefits to their employees. Along with the currently required statement
of fiduciary net position and statement of changes in fiduciary net position, OPEB plans
will now be required to include in the financial statement more extensive footnote
disclosures and required supplementary information related to the measurement of the
OPEB liabilities for which assets have been accumulated. In addition, the BWL will, after
adoption of GASB 75, recognize on the face of the financial statements its net OPEB
liability. The BWL is currently evaluating the impact these standards will have on the
financial statements when adopted. GASB 74 is effective for fiscal years beginning after
June 15, 2016 whereas GASB 75 is effective one year later.
[A
Board of Water and Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2015 and 2014
Note 16 - Change in Accounting
During the current year, the BWL adopted GASB Statement No. 68, Accounting and
Financial Reporting for Pensions. As a result, the statements now include an asset for our
overfunded defined benefit plan legacy costs. Some of the changes in this net pension
asset will be recognized immediately as part of the pension expense measurement, and
other changes will be deferred and recognized over future years. Refer to the Defined
Benefit Plan section of Note 8 for further details.
As a result of implementing this statement, the following line items have been added to
the statement of Net Position:
As of June 30, As of June 30,
Item 2015 2014
Deferred inflows of resources - Net
pension asset deferrals $ 2,201,407 $ 7,143,206
Net Pension Asset 8,284,230 11,188,702
As this statement is applied retroactively, the financial statements for the year ended June
30, 2014 have been restated to apply the changes noted associated with the net pension
asset.
The effect of this change is as follows:
Net Position-June 30, 2013, as originally reported $ 575,725,088
GASB 68 adjustment to record net pension asset as of June 30, 3013 8,144,426
Net Position-June 30, 2013, as restated $ 583,869,514
Net Income-June 30, 2014,as originally reported $ 2,792,527
GASB 68 adjustment to record net pension expense for the year ended June 30, 2014
(included in administrative and general expense) (4,098,930)
Net Loss-June 30, 2014, as restated $ (1,306,403)
Required Supplemental Information
Board of Water and Light - City of Lansing, Michigan
Required Supplemental Information
Defined Benefit Plan - Schedule of Changes in the
BWL Net Pension Asset and Related Ratios
Last Ten Fiscal Years
(in thousands)
2015 2014 2013 2012* 2011* 2010* 2009* 2008* 2007* 2006*
Total Pension Liability
Service cost $ 274 $ 349 $ 407 $ - $ - $ - $ - $ - $ _ $ -
Interest 4,919 4,751 5,085 - - - - -
Changes in benefit terms - _ _
Differences between expected and actual experience (1,093) 964 (1,716) - - - - - -
Changes in assumptions'* - 4,538 - - - - - -
Benefit payments,including refunds (8,046) (8,541) (7,77 - - - -Net Change in Total Pension Liability (3,946) 2,061 (4,001) - - - - - -
Total Pension Liability-Beginning of year 69,341 67,280 71,281 - - - - -
Total Pension Liability-End of year 65,395 69,341 67,280 - - -
Plan Fiduciary Net Position
Contributions-Employer - - -
Contributions-Member - - -
Net investment income 1,771 14,243 10,170 - - -
Administrative expenses (576) (596) (536) - - -
Benefit payments,including refunds (8,046) (8,541) (7,777) - - - -
Other - - -
Net Change in Plan Fiduciary Net Position (6,850) 5.106 1,857 - -
Plan Fiduciary Net Position-Beginning of year 80,529 75,424 73,567 - - -
Plan Fiduciary Net Position-End of year 73,679 80,530 75.424 - - -
BWL Net Pension Asset-Ending $ (8,284) $ (1 1,189) $ (8,144) $ - $ - $ - $ - $ _ $ _ $
Plan Fiduciary Net Position as a%of Total Pension Liability 1 12.67% 1 16.14% 1 12.10% % % - % - % - % % - %
Covered Employee Payroll 1,018 1,225 1,684 - - -
BWL's Net Pension Asset as a%of Covered Employee Payroll (814%) (913%) (484%) % % - % - % - % % - %
*GASB Statement No.68 was implemented as of June 30,2015. Information from 2006-2012 is not available and this schedule will be presented on a prospective basis.
**Related to change in the mortality assumption from the RP2000CH table projected to 2018 with Scale AA to the RP-2014 table projected generationally with Scale MP-2014
57
Board of Water and Light - City of Lansing, Michigan
Required Supplemental Information
Defined Benefit Plan - Schedule of Employer Contributions
Last Ten Fiscal Years
(in thousands)
2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
Actuarially determined contribution $ - $ $ $ $ 86 $ 2,109 $ - $ - $ - $
Contributions in relation to the actuarially determined contribution - 86 2,109 - - - -
Contribution Deficiency(Excess) $ - $ - $ - $ - $ - $ - $ - $ - $ - $
Covered Employee Payroll 1,018 1,225 1,684 2,101 2,398 2,660 3,089 3,162 3,391 3,942
Contributions as a Percentage of Covered Employee Payroll - % - % - % - % 3.59% 79.29% - % - % - % - %
58
Board of Water and Light - City of Lansing, Michigan
Required Supplemental Information
Retiree Benefit Plan and Trust Schedule
Years Ended June 30, 2015 and 2014
The schedule of funding progress is as follows:
Unfunded
Actuarial Actuarial
Actuarial Accrued Accrued Funded
Valuation Date Asset Value Liability Liability Ratio
2/28/2012 $ 110,029 $245,418 $ 135,389 44.83%
2/28/2013 123, 195 207,864 84,669 59.27%
2/28/2014 148,307 194,365 46,058 76.30%
2/28/2015 157,565 200, 196 421631 78.71 %
CO
Additional Information
Ar)
Board of Water and Light - City of Lansing, Michigan
Income Available for Revenue Bond Debt Retirement
Year Ended June 30
2015 2014
Income - Before capital contributions per statement
of revenues, expenses, and changes in net assets $ 12,627,295 $ (1,306,403)
Adjustments to Income
Depreciation and impairment 39,104,343 38,997,186
Interest on long-term debt:
Notes 49,691 41,555
Revenue bonds 14,995,574 15,334,915
Total additional income 54,149,608 54,373,656
Income Available for Revenue Bonds and Interest
$ 66,776,903 $ 53,067,253
Redemption
Debt Retirement Pertaining to Revenue Bonds
Principal $ 14,155,000 $ 13,385,000
Interest 14,995,574 15,334,915
Total $ 29,150,574 $ 28,719,915
Percent Coverage of Revenue Bonds and Interest
Requirements 229 185
Board of Water and Light - city of Lansing, Michigan
Detail of statement of Revenues and Expenses
Years Ended June 30.9 2015 and 2014
Combined Water
2015 2014 2015 2014
Operating Revenues $
37,910,106 $ 37,246,939 $ 37,910,106 $ 37,246,939
Water
Electric: 266,878,053 257,333,075 - -
Retail -
Sales for resale 28,169,851 31,821,390 - -
Steam 14,959,212 16,324,128
5,568,287 5,397,41 I
Chilled water
Total operating revenues 353,485,509 348,122,943 37,910,106 37,246,939
Operating Expenses
Production:
Fuel,purchased power,and
other operating expenses 163,336,653 165,199,058 8,104,909 8,957,388
24,415,690 17,045,140 3,134,979 2,981,167
Maintenance
Transmission and distribution:
Operating expenses 7,006,002 11,829,786 1,419,800 1,478,877
Maintenance 13,864,024 11,262,716 3,582,512 3,554,104
61,297,460 66,583,248 10,875,024 11,709,798
Administrative and general
39,104,343 38,997,186 6,155,947 6,529,406
Depreciation and impairment
Total operating expenses
309,024,172 310,917,134 33,273,171 35,210,740
Operating Income 44,461,337 37,205,809 4,636,935 2,036,199
Nonoperating Income(Expenses)
Investment income 1,351,006 1,866,462 219,281 279,183
1,534,922 (5,974,385) 921,168 199,915
Other income
System capacity fee 9,223,075 9,222,989 807,942 807,934
(14,995,574) (15,334,915) (1,858,926) (2,299,249)
(8,0
Bonded debt interest expense 669,502
57,715) (7,642,715) (705,856)
Amortization-Central Utilities Complex
Payment in lieu of taxes (20,840,065) (20,608,093) (2,248,922) (2,230,811)
Other interest expense
(49,691) (4 I,555) (4,366) (4,039
)
Total nonoperating expense (31,634,042) (38,512,212) (2,869,679) (4,316,399)
$ 12,627,295 $ (1,306,403) $ 1,767,256
Net Income(Loss) $ (2,280,200)
62
Detail of Statement of Revenues andExpenses 201 S and 20 4
Years Ended June
Electric Steam Chilled Water
2015
2014 2015 2014 2015 2014
266,878,053 257,333,075
28,169,851 31,821,390 _
- 14,959,212 16,324,128 -
_ - 5,568,287 5,397,411
295,047,904 289,154,465 14,959,212 16,324,128 5,568,287 5,397,411
147,658,997 145,645,050 6,103,489 9,019,050 1,469,258 1,577,570
20,499,896 13,322,981 544,181 548,042 236,634 192,950
5,235,380 10,057,156 350,822 293,753 306 25,039
9,979,670 7,262,321 301,536 421,252
49,245,600 53,414,153 984,240 1,190,697 192,596 268,600
29,178,160 28,887,165 2,451,617 2,200,476 1,318,619 1,380,139
261,797,703 258,588,826 10,735,885 13,673,270 3,217,413 3,444,298
33,250,201 30,565,639 4,223,327 2,650,858 2,350,874 1,953,1 13
1,023,221 1,386,482 58,070 030 8 2140 03,713 (7,06)
586,071 (2,846,705) (186,030) (2 920, 59)
7,712,335 7,712,263 702,798 702,7 2 (347,158) (778,004)
(10,744,870) (1 1,828,91 1) (2,044,620)
(6,737,861) (6,390,838) (613,998) (582,375)
(17,386,779) (17,200,740) (871,399) (849,248) (332,965) (327,294)
(45,153) (37,516) (172) -
(25_593_036) (29,205,965) (21955,351) (3,953,901) (415,976) 1,035,947
$ 7,657,165 $ 1,359,674 $ 1,267,976 $ (1,303,043) $ 1,934,898 $ 917,166
63
Board of Water and Light - City of Lansing, Michigan
Detail of statement of Changes in Net Position
Combined Water Electric Steam Chilled Water
Net Position -June 30,2013,as originally reported $ 575,725,088 $ 94,250,278 $ 486,560,920 $ (4,003,088) $ (1,083,022)
GASB 68 adjustment to record net pension asset
as of June 30,2013(Note 16) 8,144,426 1,677,752 5,991,040 452,830 22,804
Net Position-June 30,2013,as restated 583,869.514 95,928,030 492,551,960 (3,550,258) (1,060,218)
Income(loss),as restated (1,306,403) (2,280,200) 1,359,674 (1,303,043) 917,166
Net Position-June 30,2014,as restated 582,563,1 1 1 93,647,830 493,91 1,634 (4,853,301) (143,052)
Income(loss) 12,627,295 1,767,256 7,657,165 1,267,976 1,934,898
Net Position-June 30,2015
$ 595,190,406 $ 95,415,086 $ 501,568,799 $ (3,585,325) $ 1,791,846
64
Board of Water and Light - City of Lansing, Michigan
Pension Trust Funds - Detail of Statement of Net Position
tine 30.2015
Defined Defined Benefit
Contribution Plan
Plan VEBA Total
Assets $ 104,768 $ 200,805 $ 305,573
Receivable-Investment interest receivable $
Investments at fair value: - 2,321,310 6,243,203 8,564,513
Money market collective trust fund 6,659,203 15,462,341 22,121,544
U.S.government obligations - 11,312,551 21,269,571 32,582,122
Corporate bonds and notes 925,065 1,894,929 138,830,601
3 I
Mutual funds 131,844,948 _ 31,844,948
Stable value , 44, 48
_ 52,356,437 111,112,369 163,468,806
Equities _ _ -
Current liability 1,376,730
Self-directed brokerage account 1,888,351 - _ 3,888,351
Participant notes receivable 3, 88, 51 '
Total investments 173,1201636 73,574,566 155,982,413 402,677,615
Net Position-Held in trust for pension $ 73,679,334 $ 156,183,218 $ 402,983,188
and other employee benefits 173,120,636 $
June 30,2014
Defined Defined Benefit
Contribution Plan
Plan VEBA Total
Assets - $ 120,156 $ 211,625 $ 331,781
Receivable-Investment interest receivable $
Investments at fair value: - 3,192,936 5,71 1,439 8,904,375
Money market collective trust fund 7,354,686 16,284,339 23,639,025
U.S.government obligations
Corporate bonds and notes - 11,844,906 20,713,869 32,558,775
130,442,786 1,260,129 2,259,641 133,962,556
Mutual funds _ 33,607,203
Stable value 33,607,203
56,770,168 108,540,537 165,310,705
Equities - (13,000) - (13,000)
Current liability _ 1,147,041
Self-directed brokerage account 1,147,041 _ - 4,082,709
Participant notes receivable 4,082,709
169,279,739 80,409,825 153,509,825 403,199,389
Total investments
Net Position-Held in trust for pension 80,529,981 $ 153,721,450 $ 403,531,170
and other employee benefits $
169,279,739 $
65
Board of Water and Light - City of Lansing, Michigan
Pension Trust Funds ' Deta
il
Changes In Met Position
Year Ended June 30.9 201 S
Defined Defined
Contribution Plan Benefit Plan
VEBA Total
Increases
Investment income:
Net appreciation in 215,209 $ 650,079 $ 886,489
$ 21, $
fair value of investments 7,295,819 1,556,214 2,964,616 11,816,649
Interest and dividend income
Net investment income
7,317,020 1,771,423 3,614,695 12,703,138
5,548,360 - 9,670,794 15,219,154
Employer contributions _ 1,345,481
Participant rollover contributions 307,138 -I,345,481 _ 307,138
Other
Total increases 14,517,999
1,771,423 13,285,489 29,574,911
Decreases 6,045,948 9,670,794 28,168,455
10,451,713
Benefits paid to participants125,254 - _ 125,254
Loan defaults 576,122 1,152,927 1,829,184
Participants'note and administrative fees
100,135
Total decreases 10,677,102
8,622,070 10,623,721 30,122,893
Net Increase(Decrease)in Net Position 6,850,647 2,461,768 (547,982)
Held in Trust 3,840,897 ( )
Net Position Held in Trust for Pension
and Other Employee Benefits 169,279,739 80,529,981 153,721,450 403,531,170
Beginning of year
$ 173,120,636 $
73,679,334 $ 156,183,218 $ 402,983,188
End of year
66
Board of Water and Light - City of Lansing, Michigan
Pension Trust Funds ' Detail Changes InMet Position
Year Ended June 309 2014
Defined Defined
Contribution Plan Benefit Plan
VEBA Total
Increases
Investment income:
Net appreciation in 12,570,312 $ 22,774,150 $ 53,252,318
$ 17,907,856 $ 893,629 10,1 12,195
fair value of investments 5,545,714 1,672,852 2
Interest and dividend income
Total investment income
23,453,570
14,243,164 25,667,779 63,364,5 13
9,266,529 14,734,353
5,467,824 - _ I,053,879
Employer contributions I,053,879
Participant rollover contributions _ 270,989
270,969
Other 79,423,734
Total increases
30,246,262 14,243,164 34,934,308
Decreases 7,645,116 8,541,275 9,266,529 25,452,920
Benefits paid to participants _ 119,694119,694
Loan defaults 595,925 1,050,771 1,742,851
Participants'note and administrative fees
96,155
9,137,200 10,317,300 27,315,465
Total decreases 7,860,965
Net Increase in Net Position Held in Trust
22,385,297
5,105,964 24,617,008 52,108,269
Net Position Held in Trust for Pension
and Other Employee Benefits 146,894,442 75,424,017 129,104,442 351,422,901
Beginning of year
$ 169,279,739 $
80,529,98 I $ 153,721,450 $ 403,531,170
End of year
67