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2016 Minutes BWL
Approved by the Board of Commissioners 1-24-17 JAN3 0 2017 Hometown People. Hometown Power: MINUTES OF THE BOARD OF COMMISSIONERS MEETING LANSING BOARD OF WATER AND LIGHT November 15, 2016 The Board of Commissioners met at the Lansing Board of Water and Light (BWL) Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m. on Tuesday, November 15, 2016. Chairperson David Price called the meeting to order at 5:32 p.m. Present: Commissioners Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Tracy Thomas, and Sandra Zerkle. Non-Voting Commissioners present: Stuart Goodrich (Dehli Township), Bob Nelson (East Lansing) and Bill Long (Delta Township). Absent: Commissioners Mark Alley, Ken Ross and Stuart Goodrich. The Corporate Secretary declared a quorum. Commissioner Tony Mullen led the Pledge of Allegiance. SPECIAL CEREMONY CHECK PRESENTATON A. BWL Chili Cook-Off Check Presentation General Manager Peffley presented checks on behalf of the proceeds from the Chili Cook Off to: Development Coordinator Veronica Klem of the Sparrow Foundation, $5,000.00 Executive Director Justin Sheehan of Lansing Promise, $5,000.00 Executive Director Erik Larson of Impression 5 Science Center, $5,000.00 B. BWL 5K Check Presentation General Manager Peffley presented a check on behalf of the proceeds from the BWL 5k to Executive Director Sarah Spradlin of the McLaren Greater Lansing Healthcare Foundation in the amount of$4,542.65 General Manager Peffley informed the Commissioners that the BWL held a Golf Outing fundraising event that was spearheaded by BWL's Supervisor of Maintenance and Construction Tony Green. The recipients of the proceeds from that event were the Wounded Warriors Project, in the amount of $15,250.00, and the MSU Woman's Basketball Program, in the amount of$2,600.00. 1 APPROVAL OF MINUTES Motion by Commissioner Mullen, Seconded by Commissioner McCloud, to approve the Regular Board Meeting minutes of September 27, 2016. Action: Motion Carried PUBLIC COMMENTS None. COMMUNICATIONS Electronic Mail received from: a. Steve Rall re: Requesting the Commissioners to view a Natural Gas Documentary Referred to Management and Received and Placed on File b. Cody James Forsythe re: Payment difficulties Referred to Management and Received and Placed on File c. Erick White re: Customer Service Referred to Management and Received and Placed on File COMMITTEE REPORTS Board of Water& Light and Lansing City Council Committee of the Whole October 27, 2016 David Price, Chair Judi Brown Clarke, President The Lansing Board of Water and Light Board of Commissioners, and Lansing City Council met at the Lansing Board of Water and Light (BWL) Headquarters- REO Town Depot, located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m. on October 27, 2016. The BWL Commissioners and Administration provided updates or information on: • Timelines for the BWL Substation Project • Future Rate Strategies • And the Annual Audit Report for FY Ending June 30, 2016. The next meeting of these two entities will be hosted by Lansing City Council. Thank you and this concludes my report. 2 HUMAN RESOURCES COMMITTEE Meeting Minutes November 8, 2016 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 5:00 p.m. on Tuesday, November 8, 2016. 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, Mark Alley and Sandra Zerkle. Also present: Commissioners David Price, Ken Ross, Dennis M. Louney (arrived at 5:02), and Tracy Thomas; and Non-Voting Commissioners William Long, Robert Nelson, and Stuart Goodrich. Public Comments None Approval of Minutes Motion by Commissioner McCloud, Seconded by Commissioner Zerkle, to approve the Human Resources Committee meeting minutes of June 21, 2016. Action: Motion Carried. Internal Auditor Salary Adjustment HR Chair Mullen informed the Committee that due to subsequent information on a revised grade and salary structure adopted for non-bargaining employees, Internal Auditor Phil Perkins' salary requires an adjustment to meet the minimum amount for his current grade of Director Level 6. Motion by Commissioner McCloud, Seconded by Commissioner Zerkle to forward the proposed Resolution to adjust Internal Auditor Perkins' salary grade with a retroactive effectiveness of July 1, 2016 to the full Board for consideration. Action: Motion Carried. Collective Bargaining Agreement - BWL and IBEW Executive Director of Human Resources Michael Flowers presented and reviewed the proposed Tentative Bargaining Agreement which extends the Collective Agreement for four years. Mr. Flowers highlighted the changes to the terms and conditions which is in accordance with the direction and authority that was delegated to the Board's negotiating team by General Manager Peffley. Motion by Commissioner Thomas, Seconded by Commissioner Zerkle to forward the proposed Resolution for the Final Tentative Bargaining Agreement dated and signed October 27, 2016 (reflecting the grammatical correction)to the full Board for consideration. Action: Motion Carried. Amendment to 401a Defined Contribution Plan and the 457 Deferred Compensation Plan 3 Executive Director of Human Resources Michael Flowers outlined proposed amendments to the 401A Defined Contribution Plan and the 457 Deferred Compensation Plan. The 401a will be amended such that the Employer Contributions for Bargaining Unit Employees is increased from 8.1% to 9.5% for Employees hired after January 1, 1997. The 457 Deferred Compensation Plan will be amended such that the limit of the Employer Match for Bargaining Unit Employees is increased from $1,250 per year to $1,500 per year. Motion by Commissioner Thomas, Seconded by Commissioner Zerkle to forward Resolutions to the full Board for consideration of approving an amendment to the 401a Defined Contribution Plan and the 457 Deferred Compensation Plan. Action: Motion Carried. PA 152 Employee Contribution to Medical Benefit Plan Executive Director of Human Resources Michael Flowers presented the BWL's options regarding Public Act 152's requirements associated with capping the amount a public employer may pay for health care insurance. In conclusion the recommendation is that the Board exempts itself from the requirements of PA 152 of 2011 for all active employees' medical benefits, effective January 1, 2017 with a continuation of a 14% premium sharing contribution. Motion by Commissioner Zerkle, Seconded by Commissioner McCloud to forward the proposed Resolution for the Amendment to the Contribution to the Medical Benefits Plans, to the full Board for consideration. Action: Motion Carried. Other None Public Comments None Adjourn Motion by Commissioner McCloud, Seconded by Commissioner Zerkle, to adjourn the meeting. Action: Motion Carried Meeting adjourned at 5:36 p.m. Respectfully Submitted, Tony Mullen, Chair Human Resources Committee COMMITTEE OF THE WHOLE Meeting Minutes November 8, 2016 The Committee of the Whole 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 5:40 p.m. on Tuesday, November 8, 2016. 4 Committee of the Whole Chair Mark Alley called the meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Mark Alley, Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Ken Ross, Tracy Thomas and Sandra Zerkle and Non-Voting Members: Stuart Goodrich (Delhi), William Long (Delta Township) and Robert Nelson (East Lansing). The Corporate Secretary declared a quorum. Public Comments None Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Mullen to approve the Committee of the Whole meeting minutes of September 13, 2016. Action: Motion Carried Renewable Energy and Public Comment Review Mr. Stojic, Executive Director of Planning and Development, provided an update of the BWL's renewable energy program and responded to comments that the Board has received over the past several months regarding the Integrated Resource Plan (IRP) process. Mr. Stojic explained that the BWL's renewable energy program takes a long-term view, is based on sound economic, operational and planning considerations, and is designed to complement the balance of the BWL's system. According to Mr. Stojic, the BWL's renewable energy projects will constitute 20% or more of the BWL's retail sales by 2020, which is twice the State standard and conforms to the Citizen Advisory Committee (CAC) recommendation. Mr. Stojic described the BWL's renewable energy acquisition strategy and discussed how the strategy allowed the BWL to take a long-term view of compliance, be selective in terms of projects, and take advantage of favorable cost trends. He noted that the BWL's renewable program is coupled with its environmental compliance planning and will exceed likely future environmental standards, as demonstrated by the IRP recommendation. He explained that despite comments to the contrary during the September 27th Board meeting, many national and international organizations, including the U.S. Congress and the United Nation Framework Convention on Climate Change, include landfill gas as a renewable energy source and that the BWL was the recipient of an award from the U.S. EPA for its participation with Granger in taking advantage of landfill gas. Mr. Stojic noted that the members of the IRP CAC invested 7 months in the IRP process and much effort needed to understand utility operations and planning, arcane regulations, and balanced conflicting goals to make a recommendation. He stated that there have been misleading and incorrect comments made regarding the process and responded to a number of the comments. According to Mr. Stojic, comments made in previous public meetings asserting that the BWL controlled the IRP assumptions and modeling were incorrect. Mr. Stojic reviewed the public meetings and described the 5 opportunity for individuals and groups to address the CAC, to raise questions, offer alternatives, and make recommendations. He provided quotes to demonstrate the BWL staff's efforts to have the CAC members recognize and make assumptions and recommend modeling scenarios. He also demonstrated that assertions that the BWL wrote the IRP report were wrong, that the Sierra Club's complaint that it did not have sufficient information to review the IRP was not true and that several accusations received in public meetings were misleading and untrue. Mr. Stojic also compared the total emissions of the BWL's Erickson and Eckert plants with other Michigan coal plants and noted that the BWL's plants were among the lower emitting plants. Finance Chair Ross stated that the information Mr. Stojic provided is good information and probably should be presented to the Commission on a fairly-regular schedule, at least annually, so the Commissioners can equip themselves with the knowledge of where the BWL stands on these issues. Commissioner Zerkle agreed with Chair Ross's recommendation and further suggested that when the yearly update to the Energy Efficiency Program is given, something should be incorporated into the plan to keep the Commissioners updated on efficiency and clean air issues. 2017 Regular Board Meeting Dates Committee of the Whole Chair Alley presented a proposed Resolution setting the BWL Board of Commissioners 2017 Regular Board Meeting Dates as directed by Section 1.1.2 of the BWL's Rules of Procedure. Motion by Commissioner Ross, Seconded by Commissioner Price to forward the proposed 2017 Regular Board meetings dates Resolution to the full Board for consideration. Action: Motion Carried Cyber Update (Exempt Memo) Pursuant to the Open Meetings Act Exemptions MCL 15.268 (h) and MCL 15.243 (y), the following motion was offered: Motion by Commissioner Mark Alley, Seconded by Commissioner Price, to enter into Closed Session to discuss a security-sensitive Memorandum from General Manager Peffley. Roll Call Vote: Yeas: Commissioners Mark Alley, Stuart Goodrich, William Long, Dennis M. Louney, Anthony McCloud, Tony Mullen, Robert Nelson, David Price, Ken Ross, Tracy Thomas, and Sandra Zerkle. Nays: None. Action: Motion Carried. Committee of the Whole Chair Alley requested the following individuals to join him in the Closed Session meeting: General Manager Peffley and his Executive Staff, BWL's CIO Kim Ingram, all BWL Board Members, Corporate Secretary Griffin, Internal Auditor Perkins and Cyber Attorney Claudia Rast. 6 The Committee of the Whole went into closed session at 6:18 p.m. The Committee of the Whole reconvened to open session at 7:19 p.m. With the Departure of Committee of the Whole Chair Alley, Board Chair Price assumed the role of Chair of the Committee of the Whole. Cyber Incident Report General Manager Peffley reported out the following: • The criminal cyber-attack against the BWL last spring resulted in $2.4 million in costs that were largely covered by insurance. • These costs were mostly used to pay for: o A cyber emergency response them o System, stabilization and restoration efforts, and o Enhanced cyber-security, personnel, and other improvements intended at reducing the chances of a future attack. • Of the $2.4 million in total costs, o We have filed an insurance claim for $1.9 million o Includes $2 million in covered losses less the cyber policy's $100,000 deductible. • This cost included a $25,000 ransom paid to the criminals who launched the attack. • We paid the ransom demanded by the cyber criminals so that we could unlock our administrative systems. • Paying the ransom was distasteful and disgusting but sadly necessary, and it was the only action we could take to 'unlock' our system and free it from the ransom ware. • We've learned in the course of this incident that we are victims, as cyber-threats have impacted many organizations. • It's important to note that: o No electric or water utility services were interrupted, and o There was no evidence that customer or employee information was compromised. Attorney Claudia Rast pointed out that a critical infrastructure entity is unusual as a public body because of the level of security and protection that is necessary and thus the necessity of the Closed Session. Attorney Rast stated there was a ransom-ware attack and measures have been taken to make the system more robust, tools have been implemented, processes have been secured and people are being trained accordingly. Ultimately, the integrity of the control system remained intact and it was mainly an administrative process that was impacted. Chair Price stated that this subject will be on the Internal Auditor's Agenda on a Quarterly Basis and updates will be reported back to the Board. He stated that this issue is being taken seriously at the highest level of the organization. Information Technology Communication Policy General Manager Peffley Introduced CIO Kim Ingram who presented the proposed Resolution that accepts the updates to the Board of Water and Light's Communication Technology Policy. After a lengthy discussion 7 regarding the proposed Policy and the updates Commissioner Ross recommended that "pornographic content" be included as part of the prohibited uses. Motion by Commissioner Thomas, Seconded by Commissioner Mullen to forward the Resolution adoption of the "Communications Technologies Policy" of 2016 to the full Board for consideration (with the inclusion of "pornographic content" in the Prohibited Use Section of the Policy) thereby replacing the use of LBWL Communication Technologies Policy of 2007. Action: Motion Carried Other None Adjourn Meeting adjourned at 7:28 p.m. Respectfully Submitted Mark Alley, Chair David Price, Acting Chair Committee of the Whole FINANCE COMMITTEE Meeting Minutes November 8, 2016 The Finance Committee of the Board of Water and Light (BWL) met at the BWL Headquarters — REO Town Depot, located at 1201 S. Washington Ave., Lansing, MI, at 7:33 p.m. on Tuesday, November 8, 2016. Finance Committee Chair Ken Ross called the meeting to order and asked that roll be taken. Present: Commissioners Ken Ross, Dennis M. Louney and David Price. Also present: Commissioners Tony Mullen and Sandra Zerkle and Non-Voting Commissioners Stuart Goodrich, William Long, and Robert Nelson. Absent: Commissioner Mark Alley The Corporate Secretary declared a quorum. Public Comments None Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Ross, to approve the Finance Committee meeting minutes of September 13, 2016. 8 Action: Motion Carried. September YTD Financial Summary Chief Financial Officer, Heather Shawa-DeCook presented the following: Finwcial Summary-September=6 W - �« wry_ Financial Summary-September 2016 =_ cash Income Statement YTD 4Rati o.+ Dal-a 4A Budget SMWh YTD -� ..,...-,.,,, .....,..... adjusted Net Income Return 0 Capital Project Exceedance Finance Committee Chair Ross along with CFO Heather Shawa-DeCook introduced the Capital Project Exceedance resolution by briefly explaining that the project described in the resolution actually had an original budget in FY 2015 such that the reporting requirement would not have been triggered a reporting. However, due to an administrative error in the preparation of the FY 2016 budget, the change in estimated project cost of the project (radio upgrade) exceeds the reporting threshold. Although the reporting requirement was tripped primarily due to an administrative error, Ms. Shawa-DeCook and the rest of BWL management thought it appropriate to bring the exceedance forward in the form of the resolution seeking approval to complete the project. Motion by Commissioner Price, Seconded by Commissioner Ross, to forward the Resolution for the Capital Exceedance Project radio upgrade (PG-40020-15) to the full Board for consideration. Action: Motion Carried. Revenue Bond Chief Financial Officer, Heather Shawa-DeCook outlined the Fourteenth Supplemental Revenue Bond Resolution which authorizes: • Present Value Savings by refunding all or part of the Series 2008A Bonds and Series 2011A Bonds through issuance of Refunding Bonds; • Future Bond Reserve Requirement modified to be determined at time each series of Bonds is issued; • Future Surety Bond requirement modified to equal the Bond rating; • Appointment of Citigroup Global Markets Inc. as senior managing Underwriter; • Chief Financial Officer to sell Refunding Bonds without further resolution; 9 • Other matters relative to issuance, sale and delivery of the Refunding Bonds. Motion by Commissioner Price, Seconded by Commissioner Ross, to forward a Resolution to the full Board which authorizes the Fourteenth Supplemental Revenue Bond. Action: Motion Carried. Internal Audit Open Management Response Quarterly Report Chief Financial Officer Heather Shawa-DeCook presented management's responses to audits as follows: 5'[.{TT,50F SLiYAGDRST HE40\SES iO{19CI5 T ocrosFa lele rrem,,,,em.etR,...m�.w.a. —..•yam... _ :......p..1y'�:a +eeldlm- f�tL.am� EnH mb.v fr te.J avam7; _ .l:.aast .1�m4b L�l1 6 .g4.cw.�w4..sat.t:.f.-• t )sv .i-`_-:!� '�.�-a ^b•_ixLa=�1Tc�-au hps x'.:_'11 r_4 L��-.`.�ar ircivin -' :!eJnnrc e..4nf�Y e!:'i%li :^.af rSa:Lr a!)laku �Fa Y.is z`�.r:rr. Tr?vl:r rr..c-� rlslvs:��al4�n:izr :) �fcm _ai.L:.x�:a.'d'u:.i--+sx "_•-ccs - �as�e1A='w:IDF.r`:v�f ci:u'c! ,- :Yu'rT-��c..bY� 7:5 TwS�kn �ssl�ivbLLF'-.1C�a.Ltssaf&ifa£J,-ram ;! ��. �-1:.+.:t:.:.�.,si,�:�z:..i_ti:.a :rm:us.a�r�+�.�.:i:.t:�.1�:•,e. Internal Audit Status Report Internal Auditor Phil Perkins presented the following status report: �.: .r Overview • Current Audit Progress Report Internal Audit Status Report • Remaining FY 2017 Audit Plan • Other Items Current Audit Progress Report Remaining FY 2017 Audit Plan Audits: Engagements Completed in FY 17: 1. Surprise Cash Count#1. I. Payroll Management 2. Time Reporting Review tt1. 2. New Service Order Management-Water Engagements in Progress: 3 IT Help/Service Desk Management-to be deferred and replaced with another IT-related audit. 1.Baling Audit(FY 16)-draft audit report Issued for management responses: 4. Follow-up-Hiring Process Audit anticipate final report later this month. 2.Performance EvaluatioruCompensation/rderit Pay Audit(FY 17)-fieldwork Other Engagements: complete,draft audit report to be issued shortly. 3.Collections Audit(FY 17)—In progress,about 3346 complete. Anticipate completion in January 2017. 1. Vehicle Time Reporting Review 4.Post-Cyber Incident Audit(FY 17)-just underway.anticipate completion in 2. Surprise Cash Count=2 February 2017. 3_ Time Reporting Review=2 5.Training Audit Follow-up-lust underway,anticipate completion in January 2017. Other Items Internal Auditor Professional Development: On target to meet professional education requirements for certifications: - CPA - CIA - CISA Preparing for examination to attain Fundamentals of Cybersecurity certification. Quality Assurance Improvement Program: An Internal Quality Review is being performed in preparation for the required 5-year External Peer Review. Anticipate the External Peer Review to occur in April or May 2017. PA95 Low-Income Energy Assistance Fund Chief Financial Officer Heather Shawa-DeCook outlined PA 95 - the Low Income Energy Assistance Fund and presented the following: Background Public Act 95 establishes the legal method to secure funding to replace funds formerly collected by DTE and Consumers Energyexclusively PA 95 Low - Income EnergyF -FuundingndingFactor not to exceed$1 from each OPT IN Assistance Fund utility determined by the State July31 • Applies to all utility classes limit one fee per address -Total Funds in the UEAF shall not exceed$50Million Commissioner Presentation • LIEAF S are distributed by Grant for the Michigan Energy Assistance Program RFP every 2 years) November 4, 2016 -Opt In/Out decision annually on July 1 • However grant cycle is a Two Year Period(7/1/16-7/1/18) -Winter Protection Season November 1-April 15 -Collection starts on Oct 1 and due to the state 30 days after end of month. 11 Background 2016/17MEAP Grants • Staff presented in April 2015 pros/cons of opt in vs.opt out(Recommendation was to opt out) p«anr-, arm+a Ra+^ rK• a • Only6 of the 41 Michigan public utilities opt in cumum.ntytlnarC Company Slns,ou//u,i g P P � can>um„stm�i5ywrnpany sra,vt.oao/ti.:a,,,,:,, niu�s-.,..,, .•..,....w..-�...^:,.,..�,., $ ✓:tio.00aYo • BWL currently provides the following low income Olttn.,ry st✓. /,✓. assistance: flat atur omisalh ftlnl'ffi.,ma. s9t,l�s/vn,:as tijbiho ctnx,5emy smite $vW.000l.':�re•1 M1lih,p.C.......ty A,le,„A&,mty A.i,linn S�,000,OdI/a,ad1,DCA —Pennies for Power via CACS up to$154,274 annually sth/to Energy enCompany stsao,aoot eo.a» eert ca,r.,.uo ip se,:.•e SolSsv,nx+ —COL/St.Vincent MOU minimum$200,000 annually s cKryonl.Vincent de Paul of the nrehdioceseofuatro s+nw,�nr,,xw,uv —Winter electric shut-off protection L,Pr+�,water Me rannerwp s+soa:aap.ugow the Heat anA WmmN Wnd $tlsWAOV(i.l:S.VW —Flexible payment plans Winter Protection Payment 7h 14u,Salvadona,my $11,17$12.6,2s.Wo/:5,'.oa.0 0 P Y P ( Y t��erw,meomm�,nyse,w<e, sta,trs,000/ts,ars,aro Plan in addition to our year around levelized plan) a',,.r.+>> - ^'+ so/ c-=,•aa ,-. _W_a_ Bad Debt Averages Michigan Energy Asst. ................._.............. Program Grant ,��aaav I -- — --- General Timeline I � I IF INI&INt III 0115161616M. ------------ .� >aa r„ y a,,, , • •-,, Current funds committed through Sept 2018 New RFP Out in July 2018 good for 2 years BWL next opt in period July 2018 PROS/CONs .,^�wp_,. Pennies for Power Front a Budget Perspective • BWL funded program that encourages BWL Customers to"Round Up" their bill to the next whole dollar so those"extra"pennies are collected and distributed to BWL customers needing assistance to pay their BWL ® utility bill. • Approximately 5,000 customers currently participate contributing over Awws:r.poo eeima w�aa w,wamaa; $54,000 in 2015.(Oct 2014—Sept 2015) aaaamraa,.rrz.krn�aammu a=. Dollars are collected by the BWL and transferred to Capital Area Community Services,our community partner who administers the ®wwna.emwnaxrmeananan„e..;n,«manor program on behalf of the BWL,monthly. on,.w a,e mt orunant sa,eol u»s«rea,a.nary mnl n,ou ra,nNe na,,-s.w,a,aa zppx am +«mwl Funds are to be used exclusively for BWL Customer bills. ©va ass Izos=1 m amxamem pen6na-manage as,:rrony,sepee,ro«sa,zo:p Impact: ISawWmea•hre [,••rMpn MWmim«wunmiupa::okvb«a%i ® $54,274 Pennies for Power Funds to CACS ®al $100,000 BWL Grant to CACS whn,as a„eamamawtpatamars Total BWL Funded Dollars to CACS$154,274 sea+we,aaawa eo ewtmnanersls,,zm as m.aal..mae+„e�s aaa sasota an over,«:ka) ® t oxr.«.wn,.ha«„aw+aa,.xas�a.awa«,.m,s�m,•aarwpaa,.se.000.roi�ys,ta.,sa: Total dollars received from CACS during same period$280,100 appiws aM mtet tlrn a5[a s1,o,Ja W EenicE x^er,a<feM l,u ak•atry recavM a,CV IaMs. 2019) Cost impacts to BWL overhead impacting customer rate base BWUs policy to not shut off during Winter season — Public perception and risks still need to be addressed with additional protocols and guidelines. BWL Would be required to shut off or risk becoming ineligible for PA 95 — Our current collections focus assists low income customers with more flexible payment plans. Our medical alert/seniors are protected now from shut off — Position to control BWL financial exposure by managing these aCCOlmts once they become delinquent vs.collecting a sur-charge and paying into a statewide fund with no control over shut-offs and funding coming back to our service territory — Benchmarked with other municipalities supports not opting in(o of 41 opt in) Commissioner Long provided a written summary of talking points including "Shut Off Policy for non-payment of bills", "Financial impact on BWL" and "Use of MEAP money received for customers other than BWL customers". Commissioner Long also highlighted some U.S. Census Economic Data. 12 Finance Chair Ross stated that there is a factual question about legal requirements of a notice vs. an actual shut off requirement and suggested that CFO Shawa-DeCook and General Counsel Ekren follow up with an answer on the difference of opinions. He also stated that the reason this conversation is taking place now, disassociated from the actual future rate hearings, is because we want to do some self-education on what the issues are as well as have a better set of information going into an overall bigger rate making case in the future. General Manager Peffley stated that he would be willing to review this matter and can be persuaded either way, providing that the shut off factor does not come into play. He would like to study the numbers as well as have Legal take a look at it. After a lengthy discussion Finance Chair Ross concluded that this matter would be revisited (early next year) once management has had an opportunity to review information and feel comfortable that they able to come back and speak intelligently to the Committee on this matter. Franchise Agreement— E. Lansing Finance Chair Ross said this agenda item is an issue that was talked about earlier this year and the Board referred this matter to the Finance Committee. General Manager Peffley outlined the Resolution requesting that the BWL enter into a Franchise Agreement with the City of East Lansing. The Resolution is as follows: General Manager Peffley stated that there is a concern that this fee could be illegal and that the BWL has been put on notice. Should the Board choose to go forward with the Franchise Fee the BWL would only be the collection agency for the City of E. Lansing. However, the BWL does not want to get in the middle of a law suit, therefore stipulations are being proposed for the commissioners to consider and have the Administration to negotiate on. The recommendations are: 1. East Lansing will need to provide the BWL a legal opinion confirming a franchise fee can be assessed; 2. BWL will need an Agreement with East Lansing to reimburse the BWL for all costs for defending against a third-party claim associated with a franchise fee; 3. East Lansing stated they will be requesting a franchise fee from Consumers Energy so the BWL requests that both agreements should start concurrently; and 4. BWL will require an opportunity to review the legal opinion confirming a franchise fee can be assessed before they will enter into the franchise agreement. 13 Motion by Commissioner Price, Seconded by Commissioner Ross, to give General Manager Peffley authority to move forward with negotiations and bring a final agreement back to the Finance Committee for consideration. Agreements on the terms are: 1. This would only effect the City of E. Lansing Residents 2. Would not become effective until Consumers Power terms become effective 3. City of E. Lansing must agree to indemnify the BWL from any cost associated with defending any potential franchise or payment 4. The BWL would like the opportunity to vet and review what legal opinion the City of E. Lansing submits. Action: Motion Carried. Other None Adjourn On Motion by Commissioner Price, Seconded by Commissioner Louney, the meeting adjourned at 8:53 p.m. Respectfully submitted Ken Ross, Chair Finance Committee SUMMARY REPORT PENSION FUND TRUSTEES MEETING DAVID PRICE CHAIR OF THE BOARD OF TRUSTEES NOVEMBER 15, 2016 The Pension Fund Trustees held its annual meeting earlier this evening, November 15, 2016, to receive the financial statements for the Defined Benefit Pension Plan, Defined Contribution Pension Plan and the Post- Retirement Benefit Plan, also known as VEBA. A Resolution for the Trustees acceptance of those plans is on the agenda this evening for consideration. The Trustees by Resolution Acknowledged Amendment of: • The Pension Trust • The Retiree Medical Benefit Plan and Trust Agreement • And Delegation of Investment Authority for Both aforementioned Plans 14 Thank you and that concludes my report. MANAGER'S RECOMMENDATIONS General Manager Peffley recommended that the Board approve the Capital Budget Correction and Exceedance Approval before the Board that evening. UNFINISHED BUSINESS There was no Unfinished Business. NEW BUSINESS There was no New Business. RESOLUTIONS RESOLUTION 2016-11-01 Capital Proiect Budget Correction and Exceedance Approval: Project PG-40020-15 Radio Upgrades WHEREAS, Lansing Board of Water & Light's (BWL) Policy 15-02, entitled Capital Project Exceedance Approval requires BWL Board of Commission approval for specific capital projects that are expected to exceed their previously approved budget by both 15% and $200,000 prior to completion of the project; and WHEREAS, the original approved budget for the Capital Project PG-40020-15 Radio Upgrades project in FY2015 was $653,447; and WHEREAS, the FY2016 approved budget incorrectly provided a budget of$533,000; and WHEREAS, the projected final total cost for the project is $793,000; and WHEREAS, BWL staff and management reviewed the project cost in detail, which includes but is not limited to the correction of prior fiscal year input error, rationale and circumstances for the increased budget projection; and WHEREAS, BWL staff and management recommends that the Capital Project PG-40020-15 Radio Upgrades be completed despite the projected increased cost; and WHEREAS, BWL staff and management recommends that the Finance committee review and approve with a recommendation of support to the BWL Board of Commissioners at the November 15, 2016 full board meeting. Motion by Commissioner Mullen, Seconded by Commissioner Thomas, to approve the Capital Project Correction and Exceedance for Radio Upgrades. Action: Motion Carried. RESOLUTION 2016-11-02 Salary Adjustment for the Charter Position of Internal Auditor 15 Whereas; Due to subsequent information on a revised grade and salary structure adopted for non-bargaining employees at the Lansing Board of Water and Light; Whereas; The minimum salary for the Internal Auditor at his current grade of Director Level 6 is $139,700; Whereas; The (aforementioned) salary is greater than the amount approved by Resolution #2016-07-04 on July 26, 2016; and Whereas; An adjustment is needed to bring the Internal Auditor's salary up to the minimum identified for his pay grade and director level. Now therefore be it resolved the base pay for Internal Auditor Phil Perkins Director Level 6 for fiscal year 2016-2017 is $139,700. Motion by Commissioner Mullen, Seconded by Commissioner Thomas to approve the Resolution to adjust the Internal Auditor's salary. Action: Motion Carried. RESOLUTION 2016-11-03 Collective Bargaining Agreement between the Lansing Board of Water & Light And the International Brotherhood of Electrical Workers, AFL-CIO, Local 352 WHEREAS, on October 18, 2016 the Lansing Board of Water & Light and IBEW Local 352 entered into a Tentative Agreement to extend the Collective Bargaining Agreement for four years; and WHEREAS, the terms and conditions of the Tentative Agreement are in accordance with the direction and authority that was delegated to the Board's negotiating team by the General Manger; and WHEREAS, the Tentative Agreement was submitted by the IBEW Local 352 negotiating team to the IBEW membership for its approval and was ratified on October 27, 2016. RESOLVED, that the Board of Commissioners approve the "Final Tentative Agreement" (dated and signed October 27, 2016). Motion by Commissioner Price, Seconded by Commissioner McCloud, to approve the resolution for Collective Bargaining Agreement between the Lansing Board of Water & Light and the International Brotherhood of Electrical Workers, AFL-CIO, Local 352. Action: Motion Carried. 16 The official finalized Contract Agreement is on file in the office of the Corporate Secretary and the Lansing Board of Water & Light's Human Resources intranet site. RESOLUTION 2016-11-04 Amendment to 401a Defined Contribution Plan RESOLVED, that the Board of Commissioners hereby amends the Lansing Board of Water & Light 401a Defined Contribution Plan #106696 such that the Employer Contributions for Bargaining Unit Employees is increased from 8.1%to 9.5%, for those Bargaining Unit Employees hired after January 1, 1997. FURTHER RESOLVED, all other provisions of the 401a Defined Contribution Plan #106696 shall remain in full force and effect. FURTHER RESOLVED, that the General Manager and Corporate Secretary are hereby authorized to execute the applicable Adoption Agreement or Plan Document that accurately captures the above noted change in Employer Contributions. Motion by Commissioner Mullen, Seconded by Commissioner Thomas, to approve the amendment to 401a Defined Contribution Plan #106696. Action: Motion Carried. RESOLUTION 2016-11-05 Amendment to 457 Deferred Compensation Plan RESOLVED, that the Board of Commissioners hereby amends the Lansing Board of Water & Light 457 Deferred Compensation Plan #300435 such that the limit of the Employer Match for Bargaining Unit Employees is increased from $1,250 per year to $1,500 per year. FURTHER RESOLVED, all other provisions of the 457 Deferred Compensation Plan #300435 shall remain in full force and effect. FURTHER RESOLVED, that the General Manager and Corporate Secretary are hereby authorized to execute the applicable Adoption Agreement or Plan Document that accurately captures the above noted change in the Employer Match. Motion by Commissioner Mullen, Seconded by Commissioner Thomas, to approve the amendment to 457 Deferred Compensation Plan #300435. Action: Motion Carried. RESOLUTION 2016-11-06 Amend Employee Contribution to Medical Benefit Plans 17 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; WHEREAS, the Board of Commissioners met on July 2015 and passed a resolution (#2015-07-28) to exempt itself from the requirements of Public Act 152 of 2011 and kept the 12% premium sharing through December 31, 2015, and; WHEREAS, the Board of Commissioners met on November 2015 and passed a resolution (#2015-11-17) to exempt itself from the requirements of Public Act 152 of 2011 and kept the 12% premium sharing through December 31, 2016 for Union employees and implement a 14% premium sharing for Non-Union employees effective July 1, 2016, 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 January 1, 2017 through December 31, 2017. FURTHER RESOLVE that the Board desires to continue the 14% premium sharing for all active employees for medical benefits effective January 1, 2017. Motion by Commissioner Mullen, Seconded by Commissioner McCloud, to approve the Amended Employee Contribution to Medical Benefit Plans. YEAS: Commissioners Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Tracy Thomas and Sandra Zerkle 18 NAYS: None ABSTAIN: None Action: Motion Carried. RESOLUTION 2016-11-07 2017 Regular Board Meeting Schedule In accordance with the Lansing 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 Lansing Board of Water & Light's Board of Commissioners are hereby set for calendar year 2017 as follows, unless otherwise notified or as a result of date conflicts with rescheduled City Council meetings: 2017 Lansing Board of Water& Light Board of Commissioners Regular Board Meeting Schedule Tuesday January 24 Tuesday March 28 Tuesday May 23 Tuesday July 25 Tuesday September 26 Tuesday November 14 Meetings will be held in the Lansing Board of Water & Light 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 shall be published in the Lansing City Pulse the week of January 1, 2017. Motion by Commissioner Thomas, Seconded by Trustee Mullen, to approve the 2017 Regular Board Meeting Schedule. Action: Motion Carried. RESOLUTION 2016-11-08 Information Technology Communication Policy RESOLVED, that the Board of Commissioners hereby adopts the 2016 Communications Technologies Policy as recommended by Staff. FURTHER RESOLVED, that the current Policy tiled "Use of LBWL Communication Technologies" from 2007 is no longer operative and is thus replaced with the above referenced Communications Technologies Policy recommended by Staff. 19 Motion by Commissioner Mullen, Seconded by Commissioner Thomas, to adopt the 2016 Communications Technologies Policy. Action: Motion Carried. RESOLUTION 2016-11-09 Fourteenth Supplemental Revenue Bond Resolution A RESOLUTION TO AUTHORIZE: • Present Value Savings by refunding all or part of the Series 2008A Bonds and Series 2011A Bonds through issuance of Refunding Bonds; • Future Bond Reserve Requirement modified to be determined at time each series of Bonds is issued; • Future Surety Bond requirement modified to equal the Bond rating; • Appointment of Citigroup Global Markets Inc. as senior managing Underwriter; • Chief Financial Officer to sell Refunding Bonds without further resolution; • Other matters relative to issuance, sale and delivery of the Refunding Bonds. WHEREAS, from time to time the City of Lansing, acting by and through the Lansing Board of Water and Light, has issued revenue bonds payable from revenues of the water supply, steam, chilled water and electric utility system (the "System") under the provisions of Act 94, Public Acts of Michigan, 1933, as amended, and a Bond Resolution adopted by the Board and amended and restated on October 24, 1989 and further amended and supplemented from time to time (the "Bond Resolution"); and WHEREAS, all terms not defined herein shall have the meanings set forth in the Bond Resolution; and WHEREAS, under the terms of the Tenth Supplemental Revenue Bond Resolution adopted January 29, 2008, the Board issued the Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A dated April 23, 2008 (the "Series 2008A Bonds"); and WHEREAS, under the terms of the Eleventh Supplemental Revenue Bond Resolution adopted May 10, 2011, the Board issued the Utility System Revenue Bonds, Series 2011A dated June 15; 2011 (the "Series 2011A Bonds"); and WHEREAS, the Board's Financial Advisor, Public Financial Management (the "Financial Advisor"), has advised the Board that it may be able to accomplish a net savings of debt service costs by refunding all or a portion of the outstanding Series 2008A Bonds and the Series 2011A Bonds (collectively, the "Prior Bonds") through the issuance of revenue refunding bonds in an aggregate principal amount of not-to-exceed $325,000,000 (the "Refunding Bonds"); and WHEREAS, Section 18(b) of the Bond Resolution authorizes the issuance of Additional Bonds of equal standing and priority of lien with the outstanding Bonds for the purposes of refunding a part of the Outstanding Bonds and paying costs of issuing such Additional Bonds, if after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding; and WHEREAS, in order to take advantage of the most favorable market for sale of the Refunding Bonds and purchase of securities to be escrowed for payment of the Prior Bonds to be refunded, the Board wishes to authorize the Chief Financial Officer to sell the Refunding Bonds at negotiated sale without further resolution of the Board; and 20 WHEREAS, the conditions and requirements of the Bond Resolution for the issuance of Additional Bonds of equal standing and priority of lien with outstanding bonds have been met for the issuance of the proposed Refunding Bonds. NOW, THEREFORE, BE IT RESOLVED THAT: Section 1. Definitions. All terms not defined herein shall have the meanings set forth in the Bond Resolution, and whenever used in this Bond Resolution, except when otherwise indicated by the context, the following terms shall have the following meanings: (a) "Additional Bonds" means any Additional Bonds of equal standing with the Bonds which are issued pursuant to Section 18(a) of the Bond Resolution as amended by Section 13 of the Tenth Supplemental Revenue Bond Resolution. (b) "Bond Resolution" means the Bond Resolution adopted by the Board on September 26, 1989, as amended and restated on October 24, 1989, and supplemented by the First Supplemental Revenue Bond Resolution adopted by the Board on October 26, 1993,the Second Supplemental Revenue Bond Resolution adopted by the Board on January 11, 1994, the Third Supplemental Revenue Bond Resolution adopted on September 2, 1999, the Fourth Supplemental Revenue Bond Resolution adopted October 26, 1999 and amended on August 12, 2008 and June 9, 2009, the Fifth Supplemental Bond Resolution adopted by the Board April 24, 2001, the Sixth Supplemental Revenue Bond Resolution adopted by the Board on July 23, 2002, the Seventh Supplemental Bond Resolution adopted by the Board on July 23, 2002, the Eighth Supplemental Revenue Bond Resolution adopted on August 12, 2003, the Ninth Supplemental Revenue Bond Resolution adopted on July 26, 2005, the Tenth Supplemental Revenue Bond Resolution adopted on January 29, 2008, the Eleventh Supplemental Revenue Bond Resolution adopted on May 10, 2011, the Twelfth Supplemental Revenue Bond Resolution adopted on January 24, 2012, the Thirteenth Supplemental Revenue Bond Resolution adopted by the Board on January 22, 2013, this Fourteenth Supplemental Revenue Bond Resolution, and any other resolution which amends or supplements the Bond Resolution. (c) "Bonds" means the Series 2008A Bonds, the Series 2011A Bonds, the Series 2012A Bonds, the Series 2013A Bonds, the Refunding Bonds, and any Additional Bonds of equal standing hereafter issued. (d) "Chief Financial Officer" means the Board's Chief Financial Officer. (e) "Escrow Agreement" means, for purposes of this Fourteenth Supplemental Revenue Bond Resolution, the Escrow Agreement described in this Resolution to provide for payment of principal of and interest on the Prior Bonds being refunded. (f) "Escrow Fund" means, for purposes of this Fourteenth Supplemental Revenue Bond Resolution, the Escrow Fund or Funds established pursuant to the Escrow Agreement to hold the cash and investments necessary provide for payment of principal of and interest on the Prior Bonds being refunded. (g) "Prior Bonds" means, for purposes of this Fourteenth Supplemental Revenue Bond Resolution, the Series 2008A Bonds and Series 2011A Bonds. (h) "Refunding Bonds" means, for purposes of this Fourteenth Supplemental Revenue Bond Resolution, the refunding bonds issued pursuant to this Fourteenth Supplemental Revenue Bond Resolution to be designated as the "Utility System Revenue Refunding Bonds, Series 21 2017A" or such other series designation as shall reflect the date of sale or delivery of the Refunding Bonds. (i) "Series 2008-2013 Bonds" means the Series 2008A Bonds, the Series 2011A Bonds, the Series 2012A Bonds, and the Series 2013A Bonds. (j) "Series 2008A Bonds" means the Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A. (k) "Series 2011A Bonds" means the Utility System Revenue Bonds, Series 2011A. (1) "Series 2012A Bonds" means the Utility System Revenue Refunding Bonds, Series 2012A. (m) "Series 2013A Bonds" means the Utility System Revenue Refunding Bonds, Series 2013A. (n) "System" means the complete facilities of the Board for the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, including all plants, works, instrumentalities and properties used or useful in connection with the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, and all additions, extensions and improvements thereto existing or hereafter acquired by the Board. Section 2. Conditions Permitting Issuance of Additional Bonds. Pursuant to Section 18(b) of the Bond Resolution, the Board hereby determines that the Refunding Bonds shall be issued as Additional Bonds for the purpose of refunding all or a portion of the Prior Bonds and paying costs of issuance of the Refunding Bonds, only if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. The Board hereby determines that the Board is not in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund. Section 3. Refunding of Prior Bonds; Refunding Bonds Authorized; Applicable Law. If refunding all or a portion of the Prior Bonds will accomplish the required debt service savings, then the City, acting by and through the Board, shall borrow the sum of not-to-exceed Three Hundred Twenty-Five Million Dollars ($325,000,000) as finally determined upon the sale thereof, and issue the Refunding Bonds therefor for the purpose of paying costs of refunding all or a portion of the Prior Bonds, including the payment of the costs of legal, financial, bond insurance (if any), underwriter's discount, and other expenses incident thereto and incident to the issuance and sale of the Refunding Bonds. The Refunding Bonds shall be payable solely out of the Net Revenues of the System. City Council shall not be requested to pledge the full faith and credit of the City for payment of the Refunding Bonds. The Refunding Bonds shall be sold and the proceeds applied in accordance with the provisions of Act 94. Section 4. Refunding Bond Details. The Refunding Bonds shall be designated as the "UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 2017A" or such other series designation as determined at the time of sale by the Chief Financial Officer to reflect the date of sale or delivery of the Refunding Bonds. The Refunding Bonds shall be issued as fully registered bonds registered in the denomination of$5,000 or integral multiples thereof and shall be numbered in consecutive order of registration or authentication from 1 upwards. The Refunding Bonds shall be dated as of the date of delivery thereof or such other date as determined at the time of sale of the Refunding Bonds, shall mature as serial bonds or term bonds on such dates as shall be determined at the time of sale of the Refunding Bonds. 22 The Refunding Bonds shall be subject to optional and mandatory redemption prior to maturity at the times and prices finally determined at the time of sale of the Refunding Bonds, or shall not be subject to redemption prior to maturity, as finally determined at the time of sale of the Refunding Bonds The Refunding Bonds shall bear interest at a rate or rates to be determined on sale thereof, payable on July 1, 2017, or such other date as provided at the time of sale of the Refunding Bonds, and semi-annually thereafter on January 1st and July 1st of each year. The Refunding Bonds shall be executed by the manual or facsimile signature of the Chairperson and the Corporate Secretary of the Board. No Refunding Bond shall be valid until authenticated by an authorized representative of the Transfer Agent. The Refunding Bonds shall be delivered to the Transfer Agent for authentication and be delivered by the Transfer Agent to the purchaser in accordance with instructions from the Chief Financial Officer upon payment of the purchase price for the Refunding Bonds. Section 5. Registration and Transfer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as bond registrar, paying agent and transfer agent (the "Transfer Agent") for the Refunding Bonds. The Chief Financial Officer is hereby authorized to execute one or more agreements with the Transfer Agent on behalf of the Board. The Board reserves the right to replace the Transfer Agent at any time, provided written notice of such replacement is given to the registered owners of record of bonds not less than sixty (60) days prior to an interest payment date. Principal of and interest on the Refunding Bonds shall be payable by check or draft mailed by the Transfer Agent to the registered owner at the registered address as shown on the registration books of the Board maintained by the Transfer Agent. Interest shall be payable to the person or entity who or which is the registered owner of record as of the fifteenth (15th) day of the month prior to the payment date for each interest payment. The date of determination of the registered owner for purposes of payment of interest as provided in this paragraph may be changed by the Board to conform to market practice in the future. The Refunding Bonds may be issued in book-entry-only form through The Depository Trust Company in New York, New York ("DTC"), and the Chief Financial Officer is authorized to execute such custodial or other agreement with DTC as may be necessary to accomplish the issuance of the Refunding Bonds in book-entry- only form and to make such changes in the form of the Refunding Bonds within the parameters of this resolution as may be required to accomplish the foregoing. Notwithstanding the foregoing, if the Refunding Bonds are held in book-entry-only form by DTC, payment of principal of and interest on the Refunding Bonds shall be made in the manner prescribed by DTC. The Refunding Bonds may be transferred upon the books required to be kept by the Transfer Agent pursuant to this section by the person or entity in whose name it is registered, in person or by the registered owner's duly authorized attorney, upon surrender of the bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Transfer Agent. Whenever any bond shall be surrendered for transfer, the Board shall execute and the Transfer Agent shall authenticate and deliver a new bond of the same series in like aggregate principal amount, maturity and interest rate. The Transfer Agent shall require the payment by the bondholder requesting the transfer of any tax or other governmental charge required to be paid with respect to the transfer. Notwithstanding the foregoing, if Bonds are held by DTC in book-entry-only form, the transfer of Bonds shall be made in the manner prescribed by DTC. Section 6. Deposit to Bond Reserve Account. On or prior to the date of delivery of the Refunding Bonds, the Board shall deposit into the Bond Reserve Account any amount necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. 23 Section 7. Refunding Bond Proceeds. From the proceeds of sale of the Refunding Bonds there first shall be immediately deposited in the Redemption Fund an amount equal to the accrued interest and premium, if any, received on delivery of the Refunding Bonds, and the Board may take credit for the amount so deposited against the amount required to be deposited in the Redemption Fund for payment of the next maturing interest on the Refunding Bonds. Notwithstanding the foregoing, at the discretion of the Chief Financial Officer, all or a portion of any premium received upon delivery of the Refunding Bonds may be deposited in the Bond Reserve Account or the Escrow Fund or Funds in consultation with Bond Counsel. There shall next be deposited in the Bond Reserve Account an amount, if any, designated at the time of sale of the Refunding Bonds as necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. There shall next be deposited in the Escrow Fund or Funds from the proceeds of sale of the Refunding Bonds cash and investments in Government Obligations or Municipal Obligations not redeemable at the option of the issuer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as Escrow Agent under the Escrow Agreement. The Escrow Agent shall hold the Escrow Fund or Funds in trust pursuant to the Escrow Agreement which shall irrevocably direct the Escrow Agent to take all necessary steps to call the Prior Bonds being refunded for redemption as specified in the Escrow Agreement. The Chief Financial Officer is hereby authorized to execute and deliver the Escrow Agreement, to transfer any moneys as they may deem necessary from the Redemption Fund, or other fund or account of the Board, to the Escrow Fund or Funds, and to purchase, or cause to be purchased, escrow securities consisting of Government Obligations, including, but not limited to, United States Treasury Obligations — State and Local Government Series (SLGS), or Municipal Obligations, for deposit in the Escrow Fund or Funds. The Chief Financial Officer is directed to deposit to the Escrow Fund or Funds, from Refunding Bond proceeds and other moneys as necessary, an amount which, together with investment proceeds to be received thereon, will be sufficient, without reinvestment, to pay the principal of and interest on the Prior Bonds being refunded as they become due or upon call for redemption. The remaining proceeds of the Refunding Bonds shall be deposited in a fund which may be established in the Escrow Agreement to pay costs of issuance of the Refunding Bonds and the costs of refunding the Prior Bonds. Any moneys remaining after payment of costs of issuance and costs of refunding the Prior Bonds being refunded shall be transferred to the Redemption Fund and used to pay interest on the Refunding Bonds. Section 8. Amendment of Definitions of Government Obligations and Municipal Obligations. After payment or defeasance in full of the Outstanding Series 2008-2013 Bonds, the definitions of "Government Obligations" and "Municipal Obligations" in Section 1 of the Bond Resolution as amended and restated on October 24, 1989 are amended (amendments are shown by strikethrough or underline)to provide: (r) "Government Obligations" means !1 direct obligations of (including obligations issued or held in book entry form on the books of) the United States of America, (ii) obligations the payment on which is guaranteed by the United States of America including but not limited to stripped interest components of obligations issued by the Resolution Funding Corporation (REFCORP) and non-callable non-prepayable debt obligations of the United States Agency for International Development (US AID) which pay principal and interest at least three (3) business days prior to any respective escrow requirement dates, or (iii) non-callable, senior debt obligations of any government-sponsored enterprise or federal agency, corporation, or instrumentality of the United States of America created by an act of congress including, but not limited to, the Federal Home Loan Banks Freddie Mac Federal Farm Credit Banks Funding Corporation, and Fannie Mae; 24 (v) "Municipal Obligation" means any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state (i) which are not callable at the option of the obligor prior to maturity or as to which irrevocable notice has been given by the obligor to call on the date specified in the notice, and (ii) which are fully secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or Government Obligations, which fund may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (iii) which fund is sufficient, as verified by an independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this definition of Municipal Obligation on the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to in subclause (i) of this definition of Municipal Obligation, as appropriate, and (iv) which are rated, based on the escrow, in the highest rating category of either two of the following three ratings agencies: Standard & Poor's Corporation, Fitch Ratings, and Moody's Investors Service, Inc. or any successors thereto; Section 9. Amendment of Reserve Requirement. After payment or defeasance in full of the Outstanding Series 2008-2013 Bonds, Section 11B of the Bond Resolution as amended and restated on October 24, 1989 is amended (amendments are shown by strikethrough or underline) to provide: B. BOND AND INTEREST REDEMPTION FUND: There shall be established and maintained a fund designated BOND AND INTEREST REDEMPTION FUND, the moneys on deposit therein from time to time to be used solely, except for required deposits to the Rebate Fund, for the purpose of paying the principal of, redemption premium, if any, and interest on the Bonds. After provision for the Operation and Maintenance Fund, there shall be set aside on or before the first day of each month, commencing December 1, 1989, in the Redemption Fund a sum proportionately sufficient to provide for the payment when due of the current principal of and interest on the Bonds, less any amount in the Redemption Fund representing accrued interest on the Bonds. Commencing December 1, 1989, The amount set aside each month for interest on the Bonds shall be 1/7 of the interest on the Bonds due July 1, 1990, and commencing July 1, 1990, and thereafter The amount set aside each month for interest on the Bonds shall be 1/6 of the interest on the Bonds next coming due. The amount set aside each month for principal, commencing December 1, 1989, shall be 1/7 of the amount of principal due on the Bonds on July 1, 1990, and commencing July 1, 1990, and thereafter The amount set aside each month for principal of the Current Interest Bonds shall be 1/12 of the total amount of the principal of the Bonds due on the next July 1 and 1/12 of the maturing amount of Capital Appreciation Bonds due one year or less from the 1st day of such month. If there is any deficiency in the amount previously set aside, that deficiency shall be added to the requirements for the next succeeding month. There shall be established a separate account in the Redemption Fund to be known as the BOND RESERVE ACCOUNT. On the date of delivery of any Additional Bonds issued pursuant to Section 18(a) or (c) of this Bond Resolution, the Board shall transfer to the Bond Reserve Account from the proceeds of the Additional Bonds or any other available source the lesser of (a) 10% of the proceeds of the Additional Bonds and (b) the maximum Aggregate Debt Service Requirement on the Additional Bonds for the then current and any subsequent operating year and commencing on the 1st day of the month following delivery of the Additional Bonds and on the 1st day of each month thereafter until the 25 amount in the Bond Reserve Account equals the Reserve Requirement, 1/12 of the difference between the amount deposited on the delivery of the Additional Bonds and the Reserve Requirement. Except as otherwise provided in this Bond Resolution, the moneys credited to the Bond Reserve Account shall be used solely for the payment of the principal of, redemption premium, if any, and interest on Bonds as to which there would otherwise be a default. If at any time it shall be necessary to use moneys credited to the Bond Reserve Account for such payment, then the moneys so used shall be replaced from the Net Revenues first received thereafter which are not required for expenses of administration, operation and maintenance of the system or for current principal and interest requirements on any of the Bonds. The Board may satisfy the Reserve Requirement by a letter of credit, a surety bond, or an insurance policy if the provider or issuer thereof shall be rated by any nationally recognized bond rating agency as high or higher than the Bonds at the time of purchase of the letter of credit, a surety bond, or an insurance policy. If at any time the amount in the Bond Reserve Account exceeds the Reserve Requirement, the excess may be transferred to such fund or account as the Board may direct. The Supplemental Resolution authorizing Additional Bonds may either (i) provide that the Additional Bonds are equally and ratably secured by the Bond Reserve Account funded according to the Reserve Requirement, or (ii) provide for the creation of a separate bond reserve account securing that series of Additional Bonds and a different reserve requirement, or state that no bond reserve account is required. Section 10. Bond Form. The Refunding Bonds shall be in substantially the following form with such revisions, additions and deletions as the Board may deem advisable or necessary to comply with the final terms of the Refunding Bonds established upon sale thereof: BOND NO. R- UNITED STATES OF AMERICA STATE OF MICHIGAN COUNTIES OF INGHAM AND EATON CITY OF LANSING LANSING BOARD OF WATER AND LIGHT UTILITY SYSTEM REVENUE REFUNDING BOND, SERIES 2017A Interest Rate Date of Maturity Date of Original Issue CUSIP Registered Owner: Cede & Co. Principal Amount: The City of Lansing, Counties of Ingham and Eaton, State of Michigan (the "City"), acting through the governing body of the Lansing Board of Water and Light (the "Board"), acknowledges itself to owe and for value received hereby promises to pay to the Registered Owner specified above, or registered assigns, only from the Net Revenues of the System as hereinafter provided, the Principal Amount specified above, in lawful money 26 of the United States of America, on the Date of Maturity specified above, [unless prepaid prior thereto as hereinafter provided,] with interest thereon (computed on the basis of a 360-day year of twelve 30-day months) from the Date of Original Issue specified above or such later date to which interest has been paid, until paid, at the Interest Rate per annum specified above, first payable on [interest payment date] and semiannually thereafter. Principal of this bond is payable at the designated corporate trust office of [transfer agent], or such other transfer agent as the Board may hereafter designate by notice mailed to the registered owner of record not less than sixty (60) days prior to any interest payment date (the "Transfer Agent"). Interest on this bond is payable by check or draft mailed by the Transfer Agent to the person or entity who or which is as of the fifteenth (15th) day of the month prior to each interest payment date, the registered owner of record at the registered address. The Net Revenues of the System are irrevocably pledged for the prompt payment of principal and interest on this bond. The "System" is defined as the water supply and electric utility systems including the steam heat and chilled water distribution systems. The "Net Revenues" are the revenues received by the Board from the operations of the System after provision has been made for reasonable and necessary expenses of operation, maintenance and administration of the System. A statutory lien on the Net Revenues of the System has been created to secure the payment of the principal of and interest on this bond, when due; however, the pledge of Net Revenues and the statutory lien are on a parity with the pledge of Net Revenues and statutory lien in favor of the [Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A], Utility System Revenue Bonds, Series 2011A, Utility System Revenue Refunding Bonds, Series 2012A, and Utility System Revenue Refunding Bonds, Series 2013A. This bond is one of a series of bonds of even Date of Original Issue aggregating the principal sum of $[principal amount]. This bond is issued for the purpose of refunding certain outstanding bonds pursuant to a Bond Resolution adopted by the Board on October 24, 1989, as amended and supplemented from time to time, including by a Fourteenth Supplemental Revenue Bond Resolution adopted by the Board on [date of resolution] (collectively, the "Bond Resolution"). This bond is issued under and in full compliance with the Constitution and statutes of the State of Michigan, including specifically Act 94, Public Acts of Michigan, 1933, as amended ("Act 94"). For a complete statement of the revenues from which and the conditions under which this bond is payable, a statement of the conditions under which additional bonds of equal standing as to the Net Revenues may hereafter be issued, and the general covenants and provisions pursuant to which this bond is issued, reference is made to the Bond Resolution. Reference is hereby made to the Bond Resolution and any and all supplements thereto and modifications and amendments thereof, if any, and to Act 94, for a more complete description of the pledges and covenants securing the bonds of this issue, the nature, extent and manner of enforcement of such pledges, the rights and remedies of the registered owners of the bonds of this issue with respect thereto and the terms and conditions upon which the bonds of this issue are issued and may be issued thereunder. To the extent and in the manner permitted by the teens of the Bond Resolution, the provisions of the Bond Resolution or any resolution or agreement amendatory thereof or supplemental thereto, may be modified or amended by the Board, except in specified cases, only with the written consent of the registered owners of at least fifty-one percent (51%) of the principal amount of the bonds of the System then outstanding. Bonds of this issue [maturing in the years [date], inclusive,] shall not be subject to redemption prior to maturity. [Insert optional and mandatory redemption provisions if applicable] This bond is transferable only upon the books of the Board kept for that purpose at the office of the Transfer Agent by the registered owner hereof in person, or by the registered owner's attorney duly authorized in writing, upon the surrender of this bond together with a written instrument of transfer satisfactory to the Transfer Agent duly authorized in writing and thereupon a new registered bond or bonds in the same aggregate principal amount and of the same maturity shall be issued to the transferee in exchange therefor as provided in the Bond Resolution, and upon the payment of the charges, if any, therein prescribed. [The Transfer Agent 27 shall not be required (i) to issue, register the transfer of, or exchange any bond during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of bonds selected for redemption under the Bond Resolution and ending at the close of business on the date of that mailing, or (ii) to register the transfer of or exchange any bond so selected for redemption in whole or in part, except the unredeemed portion of bonds being redeemed in part.] THIS BOND IS A SELF-LIQUIDATING BOND AND IS NOT A GENERAL OBLIGATION OF THE CITY AND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE CITY WITHIN ANY CONSTITUTIONAL, STATUTORY OR CHARTER LIMITATION, AND IS PAYABLE BOTH AS TO PRINCIPAL AND INTEREST SOLELY FROM THE NET REVENUES OF THE SYSTEM AND CERTAIN FUNDS AND ACCOUNTS ESTABLISHED UNDER THE BOND RESOLUTION. THE PRINCIPAL OF AND INTEREST ON THIS BOND ARE SECURED BY THE STATUTORY LIEN HEREINBEFORE DESCRIBED. The Board has covenanted and agreed, and covenants and agrees, to fix and maintain at all times while any bonds payable from the Net Revenues of the System shall be outstanding, such rates for service furnished by the System as shall be sufficient to provide for payment of the principal of and interest on the bonds of this issue and any other bonds payable from the Net Revenues as and when the same shall become due and payable, to provide for the payment of expenses of administration and operation and such expenses for maintenance of the System as are necessary to preserve the same in good repair and working order, and to provide for such other expenditures and funds for the System as are required by the Bond Resolution. It is hereby certified and recited that all acts, conditions and things required by law to be done precedent to and in the issuance of this bond and the series of bonds of which this is one have been done and perfonned in regular and due time and form as required by law. This bond is not valid or obligatory for any purpose until the Transfer Agent's Certificate of Authentication on this bond has been executed by the Transfer Agent. IN WITNESS WHEREOF, the City, acting through the Board, has caused this bond to be signed in its name by the Chairperson and Corporate Secretary of the Board, and a facsimile of the City's corporate seal to be printed hereon, all as of the Date of Original Issue. LANSING BOARD OF WATER AND LIGHT By David Price Chairperson (City Seal) Countersigned: By M. Denise Griffin Its: Corporate Secretary [INSERT STANDARD FORMS OF CERTIFICATE OF AUTHENTICATION AND ASSIGNMENT] 28 Section 11. Tax Covenant. The Board shall not invest, reinvest or accumulate any moneys deemed to be proceeds of the Refunding Bonds and Prior Bonds pursuant to the Internal Revenue Code of 1986, as amended in such a manner as to cause the Refunding Bonds or Prior Bonds to be "arbitrage bonds" within the meaning of the Internal Revenue Code. The Board hereby covenants that, to the extent permitted by law, it will take all actions within its control and that it shall not fail to take any action as may be necessary to maintain the exclusion of interest on the Refunding Bonds and Prior Bonds from gross income for federal income tax purposes, including but not limited to, actions relating to the rebate of arbitrage earnings, if applicable, and the expenditure and investment of Bond proceeds and moneys deemed to be Bond proceeds, all as more fully set forth in the Non-Arbitrage and Tax Compliance Certificate to be delivered by the Board on the date of delivery of the Refunding Bonds Section 12. Financial Advisor. The Board hereby requests that Public Financial Management serve the Board as Financial Advisor for the Refunding Bonds. d, Paddock and Section 13. Bond Counsel. The Board hereby eba bondsts that counsel forlthe Refunlding Bonds. TheSBoa d P.L.C., Lansing, Michigan, continue to serve the Boa acknowledges that Miller, Canfield, Paddock and Stone, P.L.C. has represented from time to time, and currently represents, Citigroup Global Markets, Inc. and various underwriters, financial institutions, and other potential participants in the bond financing process, in matters not related to the issuance and sale of the Refunding Bonds. Section 14. Negotiated Sale of Bonds Appointment of Senior Managing Underwriter. Based on the terest of the Board to sell the advice of the Financial Advisor, it is hereby determined to be in the best in Refunding Bonds by negotiated sale in order to enable the Board to select and adjust terms for the Refunding Bonds, to enter the market on short notice at a point in time which appears to be most advantageous, and thereby possibly obtain a lower rate of interest on the Refunding Bonds, to achieve sale efficiencies so as to reduce the cost of issuance and interest expense, and to take Bonds dto be refunded antage of the most favorable market for purchase of securities to be escrowed for payment of the Prior Based on the advice of the Financial Advisor, the Board hereby names Citigroup Global Markets, Inc. as senior managing underwriter for the Refunding Bonds. The Board reserves the right to name additional co- managers and/or to develop a selling group, and the Chief Financial Officer is authorized to name additional co-managers and/or to develop a selling group in consultation with the Financial Advisor. By adoption of this resolution the Board assumes no obligations or liability to the underwriter for any loss or damage that may result to the underwriter from the adoption of this resolution, and all costs and expenses incurred by the underwriter in preparing for sale of the Refunding Bonds shall be paid from the proceeds of the Refunding Bonds, if the Refunding Bonds are issued, except as may be otherwise provided in the Bond Purchase Agreement for Refunding Bonds. l officer is by authorized to Section 15. Bond Ratings and Bond Insurance enciesThe hasf deemed aappropriatenine consultation with apply for bond ratings from such municipal bond rating agencies the Financial Advisor. If the Financial Advisor recommends that the Board consider purchase of municipal bond insurance, then the Chief Financial Officer is hereby authorized to negotiate with insurers regarding acquisition of municipal bond insurance, and, in consultation with the Financial Advisor, to select an insurer and determine which bonds, if any, shall be insured, and the Chief Financial Officer is hereby authorized to execute an agreement with the insurer relating to procedures for paying debt service on the insured bonds and notifying the insurer of any need to draw on the insurance and other matters. 29 Section 16. Official Statement. The Chief Financial Officer is authorized to approve circulation of a Preliminary Official Statement describing the Refunding Bonds and, after sale of the Refunding Bonds, to prepare, execute and deliver a final Official Statement. Section 17. Continuing Disclosure. The Chief Financial Officer is hereby authorized to execute and deliver, prior to delivery of the Refunding Bonds, a written continuing disclosure undertaking as necessary in order to enable the underwriter or bond purchaser to comply with the requirements of Securities and Exchange Commission Rule 15c2-12. The continuing disclosure undertaking shall be in substantially the form which she shall, in consultation with bond counsel, determine to be appropriate. Section 18. Sale of Refunding Bonds. The Chief Financial Officer is authorized, in consultation with the Financial Advisor, to accept an offer to purchase the Refunding Bonds without further resolution of this Board, if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. This authorization includes, but is not limited to, determination of original principal amount of the Refunding Bonds; the prices at which the Refunding Bonds are sold; the date of the Refunding Bonds; the schedule of principal maturities and whether the Refunding Bonds shall mature serially or as term bonds; provisions for early redemption, if any, including mandatory redemption of term bonds, if any; the interest rates and payment dates of the Refunding Bonds; and application of the proceeds of the Refunding Bonds. Approval of the matters delegated to the Chief Financial Officer under this resolution may be evidenced by her execution of the Bond Purchase Agreement for the Refunding Bonds or other offer to purchase the Refunding Bonds, or a certificate of award of sale, or the Official Statement. The Refunding Bonds shall not be sold unless there shall be net present value savings equaling not less than 5.00% of the Prior Bonds being refunded after payment of costs of issuance of the Refunding Bonds and costs of refunding the Prior Bonds being refunded. The maximum interest rate of any maturity of the Refunding Bonds shall not exceed 5.50%. The first maturity of principal on the Refunding Bonds shall occur no earlier than July 1, 2017, and the final date of maturity shall occur no later than July 1, 2041. In making such determinations the Chief Financial Officer is authorized to rely upon data and computer runs provided by the Financial Advisor. Section 19. Verification Agent. The Chief Financial Officer is hereby authorized, at her discretion, to select an independent certified public accountant to serve as verification agent to verify that the securities and cash to be deposited to the Escrow Fund or Funds will be sufficient to provide, at the times and in the amounts required, sufficient moneys to pay the principal of and interest on the Prior Bonds being refunded as they become due or upon call for redemption. Section 20. Other Actions. In the event that the Chief Financial Officer is not available at the time that it becomes necessary to take actions directed or authorized under this resolution, then a person designated by the Chief Financial Officer or the General Manager is authorized to take the actions delegated to the Chief Financial Officer by this resolution. The officers, administrators, agents and attorneys of the Board are authorized and directed to take all other actions necessary and convenient to facilitate issuance, sale and delivery of the Refunding Bonds, and to execute and deliver all other agreements, documents and certificates and to take all other actions necessary or convenient in accordance with this resolution, and to pay costs of issuance including but not limited to rating agency fees, bond insurance premiums, transfer agent fees, escrow agent fees, verification agent fees, financial advisor fees, bond counsel fees, costs of printing the preliminary and final official statements, and any other costs necessary to accomplish sale and delivery of the Refunding Bonds. 30 Section 21. Applicability of the Outstanding Bond Resolutions. Except to the extent supplemented or otherwise provided in this resolution, all of the provisions and covenants provided in the Bond Resolution shall apply to the Refunding Bonds issued pursuant to provisions of this resolution, such provisions of the Bond Resolution being made applicable to the Refunding Bonds. Section 22. Conflicting Resolutions. All resolutions and parts of resolutions insofar as they conflict with the provisions of this resolution are hereby rescinded. Section 23. Severability and Paragraph Headings. If any section, paragraph, clause or provision of this resolution shall be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the other provisions of this resolution. The paragraph headings in this resolution are furnished for convenience of reference only and shall not be considered to be part of this resolution. Section 24. Publication and Recordation. In accordance with the provisions of Section 6 of Act 94, this resolution shall be published once in full in the Lansing State Journal, a newspaper of general circulation in the City qualified under State law to publish legal notices, promptly after its adoption, and shall be recorded in the minutes of the Board and such recording authenticated by the signatures of the Chairperson and Corporate Secretary of the Board. Section 25. Effective Date. This resolution is hereby determined to be immediately necessary for the preservation of the public peace, property, health and safety of the City and the users of the System. In accordance with the provisions of Section 6 of Act 94, this resolution shall become effective immediately upon its adoption. g is a true and complete copy of a resolution duly adopted by the We hereby certify that the foregoin Board of Commissioners of the Lansing Board of Water and Light at a Regular meeting held on Tuesday, November 15, 2016, at 5:30 p.m., Eastern Time, and that said meeting was conducted and public notice of said meeting was given pursuant to and in full compliance with the Open Meetings Act, being Act 267, Public Acts of Michigan, 1976, and that the minutes of said meeting were kept and will be or have been made available as required by said Act 267. We further certify that the following Commissioners were present at said meeting: Louney, McCloud, Mullen, Price, Thomas and Zerkle and that the following Commissioners were absent Alley and Ross. We further certify that Commissioner Price moved adoption of said resolution, and that said motion was supported by Commissioner Thomas. We further certify that the following Commissioners voted for adoption of said resolution Louney, McCloud, Mullen, Price, Thomas and Zerkle and that the following Commissioners voted against adoption of said resolution: None. We further certify that said resolution has been recorded in the Resolution Book and that such recording has been authenticated by the signature of the Chairperson and Corporate Secretary. Chairperson Corporate Secretary RESOLUTION 2016-11-10 Acces3tance of 2016 Audited Financial Statements for Defined Benefit Pension Plan Defined Contribution Pension Plan and Retiree Benefit Plan (Veba 31 Resolved, that the Corporate Secretary receive and place on file the Defi ed Begefit, Defined Contribution, and Retiree Benefit Pension reports presented during the Pensionrove the Resolution for the Acceptance Motion by Commissioner Mullen, Seconded by Trustee Thomas,to approve of the 2016 Audited Financial Statements for Defined Benefit Pension Plan, Defined Contribution Pension Plan, and Retiree Benefit Plan (VEBA). Action: Motion Carried. MANAGER'S REMARKS General Manager Peffley stated that Silver Bells in the City is coming up on Friday, November 18th. With ed the prerecord warmer than normal weather expected, he hopes to exce Marine Cos. oys for Tot turnout of 1w0,0a0e 10 local stated that at noon on Friday, the BWL toy mill, supporting U.S. Ma p hi h school bands competing to see who can raise the most unwrapped new toys to be put in the mill. g COMMISSIONERS' REMARKS Chair Price stated that as part of Silver Bells in the City,the bagpipe band that he plays in will be performing from 7:15 to 8:00 inside City Hall. Highland dancers will also be performing. MOTION OF EXCUSED ABSENCE Motion by Commissioner McCloud, Seconded by Commissioner Thomas,to excuse Commissioners Alley, Ross and Goodrich from this meeting. Action: Motion Carried. PUBLIC COMMENTS Anne Woiwode, Conservation Chair, Sierra Club Michigan, spoke to t Boated oard regarding her n erns regard n f its Strategic Plan and the process for the Implementation of that plan. She process for the Eckert Plant retirement. ADJOURNMENT Chair Price adjourned the meeting at 5:58 p.m. M.Denise Griffin,Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City clerk: November 21,2016 official Minutes filed(electronically)with Lansing City Clerk:01-27-17 32 Preliminary Minutes To be approved by the Board of Commissioners 1-24-17 NOT FOR PUBLIC DISTRIBUTION Hometown People. Hometown Power: MINUTES OF THE BOARD OF COMMISSIONERS MEETING LANSING BOARD OF WATER AND LIGHT November 15, 2016 The Board of Commissioners met at the Lansing Board of Water and Light (BWL) Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m. on Tuesday, November 15, 2016. Chairperson David Price called the meeting to order at 5:32 p.m. Present: Commissioners Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Tracy Thomas, and Sandra Zerkle. Non-Voting Commissioners present: Stuart Goodrich (Dehli Township), Bob Nelson (East Lansing) and Bill Long (Delta Township). Absent: Commissioners Mark Alley, Ken Ross and Stuart Goodrich. The Corporate Secretary declared a quorum. Commissioner Tony Mullen led the Pledge of Allegiance. SPECIAL CEREMONY CHECK PRESENTATION A. BWL Chili Cook-Off Check Presentation General Manager Peffley presented checks on behalf of the proceeds from the Chili Cook Off to: Development Coordinator Veronica Klem of the Sparrow Foundation, $5,000.00 Executive Director Justin Sheehan of Lansing Promise, $5,000.00 Executive Director Erik Larson of Impression 5 Science Center, $5,000.00 B. BWL 5K Check Presentation General Manager Peffley presented a check on behalf of the proceeds from the BWL 5k to Executive Director Sarah Spradlin of the McLaren Greater Lansing Healthcare Foundation in the amount of$4,542.65 General Manager Peffley informed the Commissioners that the BWL held a Golf Outing fundraising event that was spearheaded by BWL's Supervisor of Maintenance and Construction Tony Green. The recipients of the proceeds from that event were the Wounded Warriors Project, in the amount of $15,250.00, and the MSU Woman's Basketball Program, in the amount of$2,600.00. 1 APPROVAL OF MINUTES Motion by Commissioner Mullen, Seconded by Commissioner McCloud, to approve the Regular Board Meeting minutes of September 27, 2016. Action: Motion Carried PUBLIC COMMENTS None. COMMUNICATIONS Electronic Mail received from: a. Steve Rall re: Requesting the Commissioners to view a Natural Gas Documentary Referred to Management and Received and Placed on File b. Cody James Forsythe re: Payment difficulties Referred to Management and Received and Placed on File c. Erick White re: Customer Service Referred to Management and Received and Placed on File COMMITTEE REPORTS Board of Water & Light and Lansing City Council Committee of the Whole October 27, 2016 David Price, Chair Judi Brown Clarke, President The Lansing Board of Water and Light Board of Commissioners, and Lansing City Council met at the Lansing Board of Water and Light (BWL) Headquarters - REO Town Depot, located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m. on October 27, 2016. The BWL Commissioners and Administration provided updates or information on: • Timelines for the BWL Substation Project • Future Rate Strategies • And the Annual Audit Report for FY Ending June 30, 2016. The next meeting of these two entities will be hosted by Lansing City Council. Thank you and this concludes my report. 2 HUMAN RESOURCES COMMITTEE Meeting Minutes November 8, 2016 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 5:00 p.m. on Tuesday, November 8, 2016. 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, Mark Alley and Sandra Zerkle. Also present: Commissioners David Price, Ken Ross, Dennis M. Louney (arrived at 5:02), and Tracy Thomas; and Non-Voting Commissioners William Long, Robert Nelson, and Stuart Goodrich. Public Comments None Approval of Minutes Motion by Commissioner McCloud, Seconded by Commissioner Zerkle, to approve the Human Resources Committee meeting minutes of June 21, 2016. Action: Motion Carried. Internal Auditor Salary Adiustment HR Chair Mullen informed the Committee that due to subsequent information on a revised grade and salary structure adopted for non-bargaining employees, Internal Auditor Phil Perkins' salary requires an adjustment to meet the minimum amount for his current grade of Director Level 6. Motion by Commissioner McCloud, Seconded by Commissioner Zerkle to forward the proposed Resolution to adjust Internal Auditor Perkins' salary grade with a retroactive effectiveness of July 1, 2016 to the full Board for consideration. Action: Motion Carried. Collective Bargaining Agreement - BWL and IBEW Executive Director of Human Resources Michael Flowers presented and reviewed the proposed Tentative Bargaining Agreement which extends the Collective Agreement for four years. Mr. Flowers highlighted the changes to the terms and conditions which is in accordance with the direction and authority that was delegated to the Board's negotiating team by General Manager Peffley. Motion by Commissioner Thomas, Seconded by Commissioner Zerkle to forward the proposed Resolution for the Final Tentative Bargaining Agreement dated and signed October 27, 2016 (reflecting the grammatical correction) to the full Board for consideration. Action: Motion Carried. 3 Amendment to 401a Defined Contribution Plan and the 457 Deferred Compensation Plan Executive Director of Human Resources Michael Flowers outlined proposed amendments to the 401A Defined Contribution Plan and the 457 Deferred Compensation Plan. The 401a will be amended such that the Employer Contributions for Bargaining Unit Employees is increased from 8.1% to 9.5% for Employees hired after January 1, 1997. The 457 Deferred Compensation Plan will be amended such that the limit of the Employer Match for Bargaining Unit Employees is increased from $1,250 per year to $1,500 per year. Motion by Commissioner Thomas, Seconded by Commissioner Zerkle to forward Resolutions to the full Board for consideration of approving an amendment to the 401a Defined Contribution Plan and the 457 Deferred Compensation Plan. Action: Motion Carried. PA 152 EmploVee Contribution to Medical Benefit Plan Executive Director of Human Resources Michael Flowers presented the BWL's options regarding Public Act 152's requirements associated with capping the amount a public employer may pay for health care insurance. In conclusion the recommendation is that the Board exempts itself from the requirements of PA 152 of 2011 for all active employees' medical benefits, effective January 1, 2017 with a continuation of a 14% premium sharing contribution. Motion by Commissioner Zerkle, Seconded by Commissioner McCloud to forward the proposed Resolution for the Amendment to the Contribution to the Medical Benefits Plans, to the full Board for consideration. Action: Motion Carried. Other None Public Comments None Adiourn Motion by Commissioner McCloud, Seconded by Commissioner Zerkle, to adjourn the meeting. Action: Motion Carried Meeting adjourned at 5:36 p.m. Respectfully Submitted, Tony Mullen, Chair Human Resources Committee COMMITTEE OF THE WHOLE Meeting Minutes November 8, 2016 The Committee of the Whole 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 5:40 p.m. on Tuesday, November 8, 2016.- - 4 Committee of the Whole Chair Mark Alley called the meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Mark Alley, Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Ken Ross, Tracy Thomas and Sandra Zerkle and Non-Voting Members: Stuart Goodrich (Delhi), William Long (Delta Township) and Robert Nelson (East Lansing). The Corporate Secretary declared a quorum. Public Comments None Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Mullen to approve the Committee of the Whole meeting minutes of September 13, 2016. Action: Motion Carried Renewable Energy and Public Comment Review Mr. Stojic, Executive Director of Planning and Development, provided an update of the BWL's renewable energy program and responded to comments that the Board has received over the past several months regarding the Integrated Resource Plan (IRP) process. Mr. Stojic explained that the BWL's renewable energy program takes a long-term view, is based on sound economic, operational and planning considerations, and is designed to complement the balance of the BWL's system. According to Mr. Stojic, the BWL's renewable energy projects will constitute 20% or more of the BWL's retail sales by 2020, which is twice the State standard and conforms to the Citizen Advisory Committee (CAC) recommendation. Mr. Stojic described the BWL's renewable energy acquisition strategy and discussed how the strategy allowed the BWL to take a long-term view of compliance, be selective in terms of projects, and take advantage of favorable cost trends. He noted that the BWL's renewable program is coupled with its environmental compliance planning and will exceed likely future environmental standards, as demonstrated by the IRP recommendation. He explained that despite comments to the contrary during the September 27th Board meeting, many national and international organizations, including the U.S. Congress and the United Nation Framework Convention on Climate Change, include landfill gas as a renewable energy source and that the BWL was the recipient of an award,from the U.S. EPA for its participation with Granger in taking advantage of landfill gas. Mr. Stojic noted that the members of the IRP CAC invested 7 months in the IRP process and much effort needed to understand utility operations and planning, arcane regulations, and balanced conflicting goals to make a recommendation. He stated that there have been misleading and incorrect comments made regarding the process and responded to a number of the comments. 5 According to Mr. Stojic, comments made in previous public meetings asserting that the BWL controlled the IRP assumptions and modeling were incorrect. Mr. Stojic reviewed the public meetings and described the opportunity for individuals and groups to address the CAC, to raise questions, offer alternatives, and make recommendations. He provided quotes to demonstrate the BWL staff's efforts to have the CAC members recognize and make assumptions and recommend modeling scenarios. He also demonstrated that assertions that the BWL wrote the IRP report were wrong, that the Sierra Club's complaint that it did not have sufficient information to review the IRP was not true and that several accusations received in public meetings were misleading and untrue. Mr. Stojic also compared the total emissions of the BWL's Erickson and Eckert plants with other Michigan coal plants and noted that the BWL's plants were among the lower emitting plants. Finance Chair Ross stated that the information Mr. Stojic provided is good information and probably should be presented to the Commission on a fairly-regular schedule, at least annually, so the Commissioners can equip themselves with the knowledge of where the BWL stands on these issues. Commissioner Zerkle agreed with Chair Ross's recommendation and further suggested that when the yearly update to the Energy Efficiency Program is given, something should be incorporated into the plan to keep the Commissioners updated on efficiency and clean air issues. 2017 Regular Board Meeting Dates Committee of the Whole Chair Alley presented a proposed Resolution setting the BWL Board of Commissioners 2017 Regular Board Meeting Dates as directed by Section 1.1.2 of the BWL's Rules of Procedure. Motion by Commissioner Ross, Seconded by Commissioner Price to forward the proposed 2017 Regular Board meetings dates Resolution to the full Board for consideration. Action: Motion Carried Cyber Update (Exempt Memo) Pursuant to the Open Meetings Act Exemptions MCL 15.268 (h) and MCL 15.243 (y), the following motion was offered: Motion by Commissioner Mark Alley, Seconded by Commissioner Price, to enter into Closed Session to discuss a security-sensitive Memorandum from General Manager Peffley. Roll Call Vote: Yeas: Commissioners Mark Alley, Stuart Goodrich, William Long, Dennis M. Louney, Anthony McCloud, Tony Mullen, Robert Nelson, David Price, Ken Ross, Tracy Thomas, and Sandra Zerkle. Nays: None. Action: Motion Carried. 6 Committee of the Whole Chair Alley requested the following individuals to join him in the Closed Session meeting: General Manager Peffley and his Executive Staff, BWL's CIO Kim Ingram, all BWL Board Members, Corporate Secretary Griffin, Internal Auditor Perkins and Cyber Attorney Claudia Rast. The Committee of the Whole went into closed session at 6:18 p.m. The Committee of the Whole reconvened to open session at 7:19 p.m. With the Departure of Committee of the Whole Chair Alley, Board Chair Price assumed the role of Chair of the Committee of the Whole. Cyber Incident Report General Manager Peffley reported out the following: • The criminal cyber-attack against the BWL last spring resulted in $2.4 million in costs that were largely covered by insurance. • These costs were mostly used to pay for: o A cyber emergency response them o System, stabilization and restoration efforts, and o Enhanced cyber-security, personnel, and other improvements intended at reducing the chances of a future attack. • Of the $2.4 million in total costs, o We have filed an insurance claim for $1.9 million o Includes $2 million in covered losses less the cyber policy's $100,000 deductible. • This cost included a $25,000 ransom paid to the criminals who launched the attack. • We paid the ransom demanded by the cyber criminals so that we could unlock our administrative systems. • Paying the ransom was distasteful and disgusting but sadly necessary, and it was the only action we could take to 'unlock' our system and free it from the ransom ware. • We've learned in the course of this incident that we are victims, as cyber-threats have impacted many organizations. • It's important to note that: o No electric or water utility services were interrupted, and o There was no evidence that customer or employee information was compromised. Attorney Claudia Rast pointed out that a critical infrastructure entity is unusual as a public body because of the level of security and protection that is necessary and thus the necessity of the Closed Session. Attorney Rast stated there was a ransom-ware attack and measures have been taken to make the system more robust, tools have been implemented, processes have been secured and people are being trained accordingly. Ultimately, the integrity of the control system remained intact and it was mainly an administrative process that was impacted. Chair Price stated that this subject will be on the Internal Auditor's Agenda on a Quarterly Basis and updates will be reported back to the Board. He stated that this issue is being taken seriously at the highest level of the organization. 7 Information Technology Communication Policy General Manager Peffley Introduced CIO Kim Ingram who presented the proposed Resolution that accepts the updates to the Board of Water and Light's Communication Technology Policy. After a lengthy discussion regarding the proposed Policy and the updates Commissioner Ross recommended that "pornographic content" be included as part of the prohibited uses. Motion by Commissioner Thomas, Seconded by Commissioner Mullen to forward the Resolution adoption of the "Communications Technologies Policy" of 2016 to the full Board for consideration (with the inclusion of "pornographic content" in the Prohibited Use Section of the Policy) thereby replacing the use of LBWL Communication Technologies Policy of 2007. Action: Motion Carried Other None Adiourn Meeting adjourned at 7:28 p.m. Respectfully Submitted Mark Alley, Chair David Price, Acting Chair Committee of the Whole FINANCE COMMITTEE Meeting Minutes November 8, 2016 The Finance Committee of the Board of Water and Light (BWL) met at the BWL Headquarters — REO Town Depot, located at 1201 S. Washington Ave., Lansing, MI, at 7:33 p.m. on Tuesday, November 8, 2016. Finance Committee Chair Ken Ross called the meeting to order and asked that roll be taken. Present: Commissioners Ken Ross, Dennis M. Louney and David Price. Also present: Commissioners Tony Mullen and Sandra Zerkle and Non-Voting Commissioners Stuart Goodrich, William Long, and Robert Nelson. Absent: Commissioner Mark Alley The Corporate Secretary declared a quorum. Public Comments None 8 Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Ross, to approve the Finance Committee meeting minutes of September 13, 2016. Action: Motion Carried. September YTD Financial Summary Chief Financial Officer, Heather Shawa-DeCook presented the following: ,. Financial Sununua S ptemb�r 2016 -- / Ap n° , Fina,wia!Sum n, }y-S,l t mbor_O16 C asEt Inconi.Stat,r.i, it°TD .:..,,.. Rat;— Employ—Data Eud"et status YTD Adjusted Net Income Return ,a Capital Project Exceedance Finance Committee Chair Ross along with CFO Heather Shawa-DeCook introduced the Capital Project Exceedance resolution by briefly explaining that the project described in the resolution actually had an original budget in FY 2015 such that the reporting requirement would not have been triggered a reporting. However, due to an administrative error in the preparation of the FY 2016 budget, the change in estimated project cost of the project (radio upgrade) exceeds the reporting threshold. Although the reporting requirement was tripped primarily due to an administrative error, Ms. Shawa-DeCook and the rest of BWL management thought it appropriate to bring the exceedance forward in the form of the resolution seeking approval to complete the project. Motion by Commissioner Price, Seconded by Commissioner Ross, to forward the Resolution for the Capital Exceedance Project radio upgrade (PG-40020-15) to the full Board for consideration. Action: Motion Carried. Revenue Bond Chief Financial Officer, Heather Shawa-DeCook outlined the Fourteenth Supplemental Revenue Bond Resolution which authorizes: • Present Value Savings by refunding all or part of the Series 2008A Bonds and Series 2011A Bonds through issuance of Refunding Bonds; 9 • Future Bond Reserve Requirement modified to be determined at time each series of Bonds is issued; • Future Surety Bond requirement modified to equal the Bond rating; • Appointment of Citigroup Global Markets Inc. as senior managing Underwriter; • Chief Financial Officer to sell Refunding Bonds without further resolution; • Other matters relative to issuance, sale and delivery of the Refunding Bonds. Motion by Commissioner Price, Seconded by Commissioner Ross, to forward a Resolution to the full Board which authorizes the Fourteenth Supplemental Revenue Bond. Action: Motion Carried. Internal Audit Open Management Response QuarterlV Report Chief Financial Officer Heather Shawa-DeCook presented management's responses to audits as follows: SiAttiSOt'1LLVAGE}�TRESPO\S£Si0At9IT5 -, ,_ OCTOBER 301! aA1S+\'ru �:u vvsu - z•aw �� _ �eyt„'+[:. � ,:�.:,,:r,•-.,a..a.sv_::z:...r:e,au..ais-ie. av v �.aka:,"...,a.=a�,�,:,— �_ :a _:...,.... •c:< uz,.� ,.... ., :, >:,va.d._:re.�:t.,.tic:�...�m.:.m=aca.n sr :•; ': _ s .S•=xi �:�� k.uL':i.Wi=-^.-i[�:ewt FtTsml:�tiEaafxY-i'Y ^A:—.9au.:::a:.dk:e e�31--:J.l.Ter_r v:,:ealeb]•a-_'v L.ea'ai ilx:ua-aiuvr: .i:L-nl 4oiF e.s!AU.-t`--. a-r<r__ Sw :tom +.La =a =a:ar::a uscn. +civil,u:u'i9 z:1'.:kw x:kzlaa a a � � ]': Tc:lz_: avw - zakna ri�v.a z*s'w =_,'. :Ms.r. ah-.�' u, _ � ^u:k.ry_T.�n:e«.::x.kv,:•_.l.:sa.r..-, Tvivlx;, + tl Tn.•... ' - � rTx i.atiu.'.:.c •.. r.- a^uu'.u:':La:t akx ri.{xL::c...,. +• U y�i^.a -v'.tad'i U+at.....mvg_;T"�.t_:s:��cuumc ::':5 Tuail:T. E.-c^��a�.:.+:E.•a.�i+•v:i_..c.m.q:v'is+=�FG� 10 Internal Audit Status Report Internal Auditor Phil Perkins presented the following status report: � . : Overview • Current Audit Progress Report Internal Audit Status Report • Remaining FY 2017 Audit Plan • Other Items Presented by: Phil Perkins. Director of Internal Audit Finance Committee Meeting November 20"16 �......................... 2 Current Audit Progress Report Remaining FY 2017 Audit Plan Audits: Engagements Completed in FY 17: 1. Surprise Cash Count#1. 2. Time Reporting Review#I. 1. Payrollfvlanagenlent 2. New Service Order Management—bValer Engagements in Progress: 3. IT Helpservice Desk Prlanagenlent—to be deferred and replaced with another IT-related audit. 1.Billing Audit(FY IC)—draft audit report Issued for management responses; 4. Follow-up—Hiring Process Audit anticipate final report later this month. 2.Performance Evaluatl m onrCopensationR�lerh Pay Audit(FY 17)—fieldwork Other Enoaaements: complete;draft aud;t report to be issued shortly. 3.Collections Audit(FY 17)—in progress,about 33%complete. Anticipate completion in January 2017. 1. `vehicle Time Reporting Review 4.Post-Cyber Incident Audit(FY 17)—just underway,anticipate completion in 2. Surprise Cash Count::2 ru Febary 2017. 3. Time Reporting Review#2 5.Training Audit Follow-up—Just underxay;anticipate completion In January 2017. 3 4 Other Items Internal Auditor Professional Development: On target to meet professional education requirements for certifications. — CPA — CIA — CISA Preparing for examination to attain Fwldamentals of Cybersecurity certification. Quality Assurance Improvement Program: An Internal Quality Review is being performed in preparation for the required 5-year External Peer Review. Anticipate the External Peer Review to occur in April or May 2017. 11 PA95 Low-Income Energy Assistance Fund Chief Financial Officer Heather Shawa-DeCook outlined PA 95 - the Low Income Energy Assistance Fund and presented the following: Background • Public Act 95 establishes the legal method to secure funding to replace funds formerly collected by DTE and Consumers E exclusively PA 95 Low - Income EnergyF —Funding Factor not to exceed$1 from each OPT IN Assistance Fund utility determined by the State July 31 •Applies to all utility classes Limit one fee per address -Total Funds in the LIEAF shall not exceed$50Million Commissioner Presentation • LIEAF$are distributed by Grant for the Michigan Energy Assistance Program RFP(every 2 years) November 4, 2016 —opt In/out decision annually on July 1 • However grant cycle is a Two year Period(7/1/16-7/1/18) —Winter Protection Season November 1—April 15 —Collection starts on Oct 1 and due to the state 30 days after end of month. Background M . M r 2016/17MEAP Grants • Staff presented in April 2015 pros/cons of opt in vs.opt out(Recommendation was to opt out) n°r+�=^��f+H•' '•°t'e,.•^t«�,, • Only6 of the 41 Michigan public utilities opt In he:<yf-1i,thda•d:Vny g P p - cu,nunntsEi>rrgycon>psry sta,n'r,tbo/zs,;3�;o-= if31it5-".umr<...mrmr�.w•=,t..t:•;;<..v*n..:x $r,DUr.dW/$73 • BWL currently provides the following low income DIEEntisy $tr,ax,wwyu,wa,uu aSSlStdrCe: nnpFrcrnUnttahrdlnrur6ex,mc. a1,t1t/Js,rov ughtho—Enitrgemy 5—k. SS4W,oW/!VUdxM Muhih.rnfninmw'nty Atlnrn AgrnrY Gb+rn Lrh^n S'f,MY1,11M(7,MS6.fx10 —Pennies for Power via CACS up to$154,274 annually strttOEneigy WaCalryany sasw,»o/zr„Coy. —COL/St.Vincent MOU minimum$200,000 annually WeittyotSI Vinfentde PaUlolthe A,ehdiO(ttet(Dtt/oA $i,1JU,U21/- +t. —Winterelectricshut-off protection 1heHetwA'"Aubaitnd <t,tarOOG; -:cr=,*:r P - rhlxetwsdwarmNwral $xsw,utnf>� rn.srlVwnGrny ua: wv —Flexible payment plans(Winter Protection Payment TIUHHPIRICUn11UU111tySClVlte) sis.trsr„igr Plan in addition to our year around levelized plan) ff..��. Bad Debt Averages Michigan Energy Asst. i�w6o-,°,,.Pral;lr..rw>mrn.,.�,P< ; Program Grant ;x„•,,s< ___._........................................ ...... ._......... ............ .._...._ General Timeline .a?92. A� rt044� Current funds committed through Sept 2018 New RFP Out in July 2018 good for 2 years n« «"•�� ==t :.>or»_ BWL next opt in period July 2018 r.r•m.•r««r vrrtUt•rt ner stx<raw.n i i PROs/CONS PIo6nPwd: Pennies for Power From a Budget Perspective BWL funded program that encourages BWL Customers to"Round Up" their bill to the next whole dollar so those."extia"pennies are collected t. y and distributed to BWL Customers needing assistance to pay their BWL utility bill. • Approximately 5,000 customers currently participate contributing over a oas=s000tzatt<nr^erpt<rrm 554,000 in 2015.(Oct 2014—Sept 2015) :. : .wu« ,� omnr,.iK«w:.,:>« Dollars are collected by the BWL and transferred to Capital Area Community Services,our community partner who administers the wam.rmm,n ae<,•m,,..,ae<.,a.;^,r,^,>ant program on behalf of the BWL,monthly. Bxwrte lMfa4 o!urxarq Sort Mixiemca ierrif^ry ttbt ntOUwiMtN roUKi.+1n:rM'tltSaetWt autaoryi Funds are to be used exclusively for BWL Customer bills. c<su i=ovt :„r•m:,rx p.,,ey-:nr:.«e,:l:rl,t�"y.sp:r,a.,m.msc 12 Impact: $54,274 Pennies for Power Funds to CACS r nssGrl"�.,a1oe��` n $100,000 BWLGrantto CACS y _ Total BWL Funded Dollars to CACS$154,274 IV Recommendation Staff continues to recommend not opting in for future "opt in" periods: • No change.in PA 615(cun ently effective as is through September 2019) Cost impacts to SWL overhead impacting customer rate base • BWUs policy to not shirt off cluiing Winter season — Public perception and risks still need to be addressed with additional protocols and guidelines. BWLviould be required to shut off or risk becoming ineligible for PA 95 — Our current collections focus assists IoW income customers with more flexible payment plans.Our medical alert/seniors are protected now from shut off — Position to control BWL financial exposure by managing these_ accounts once they become delinquent vs.collecting a sur-charge and paying into a statewide fund vAth no control over shui and funding coming back to our service territory — Benchmarked with other municipalities supports not opting in(6 of 41 opt in) Commissioner Long provided a written summary of talking points including "Shut Off Policy for non-payment of bills", "Financial impact on BWL" and "Use of MEAP money received for customers other than BWL customers". Commissioner Long also highlighted some U.S. Census Economic Data. Finance Chair Ross stated that there is a factual question about legal requirements of a notice vs. an actual shut off requirement and suggested that CFO Shawa-DeCook and General Counsel Ekren follow up with an answer on the difference of opinions. He also stated that the reason this conversation is taking place now, disassociated from the actual future rate hearings, is because we want to do some self-education on what the issues are as well as have a better set of information going into an overall bigger rate making case in the future. General Manager Peffley stated that he would be willing to review this matter and can be persuaded either way, providing that the shut off factor does not come into play. He would like to study the numbers as well as have Legal take a look at it. After a lengthy discussion Finance Chair Ross concluded that this matter would be revisited (early next year) once management has had an opportunity to review information and feel comfortable that they able to come back and speak intelligently to the Committee on this matter. Franchise Agreement— E. Lansing Finance Chair Ross said this agenda item is an issue that was talked about earlier this year and the Board referred this matter to the Finance Committee. General Manager Peffley outlined the Resolution requesting that the BWL enter into a Franchise Agreement with the City of East Lansing. The Resolution is as follows: r. .,... e......w,... ......,w,.w....u r..ww w..we ..w..•«. 'n.ar.-rv.4++. #4nN. �e v'+n..'''...`H{e r:x.a.w«r.n...✓w w. 13 General Manager Peffley stated that there is a concern that this fee could be illegal and that the BWL has been put on notice. Should the Board choose to go forward with the Franchise Fee the BWL would only be the collection agency for the City of E. Lansing. However, the BWL does not want to get in the middle of a law suit, therefore stipulations are being proposed for the commissioners to consider and have the Administration to negotiate on. The recommendations are: 1. East Lansing will need to provide the BWL a legal opinion confirming a franchise fee can be assessed; 2. BWL will need an Agreement with East Lansing to reimburse the BWL for all costs for defending against a third-party claim associated with a franchise fee; 3. East Lansing stated they will be requesting a franchise fee from Consumers Energy so the BWL requests that both agreements should start concurrently; and 4. BWL will require an opportunity to review the legal opinion confirming a franchise fee can be assessed before they will enter into the franchise agreement. Motion by Commissioner Price, Seconded by Commissioner Ross, to give General Manager Peffley authority to move forward with negotiations and bring a final agreement back to the Finance Committee for consideration. Agreements on the terms are: 1. This would only effect the City of E. Lansing Residents 2. Would not become effective until Consumers Power terms become effective 3. City of E. Lansing must agree to indemnify the BWL from any cost associated with defending any potential franchise or payment 4. The BWL would like the opportunity to vet and review what legal opinion the City of E. Lansing submits. Action: Motion Carried. Other None Adiourn On Motion by Commissioner Price, Seconded by Commissioner Louney, the meeting adjourned at 8:53 p.m. Respectfully submitted Ken Ross, Chair Finance Committee 14 SUMMARY REPORT PENSION FUND TRUSTEES MEETING DAVID PRICE CHAIR OF THE BOARD OF TRUSTEES NOVEMBER 15, 2016 The Pension Fund Trustees held its annual meeting earlier this evening, November 15, 2016, to receive the financial statements for the Defined Benefit Pension Plan, Defined Contribution Pension Plan and the Post- Retirement Benefit Plan, also known as VEBA. A Resolution for the Trustees acceptance of those plans is on the agenda this evening for consideration. The Trustees by Resolution Acknowledged Amendment of: • The Pension Trust • The Retiree Medical Benefit Plan and Trust Agreement • And Delegation of Investment Authority for Both aforementioned Plans Thank you and that concludes my report. MANAGER'S RECOMMENDATIONS General Manager Peffley recommended that the Board approve the Capital Budget Correction and Exceedance Approval before the Board that evening. UNFINISHED BUSINESS There was no Unfinished Business. NEW BUSINESS There was no New Business. RESOLUTIONS RESOLUTION 2016-11-01 Capital Proiect Budget Correction and Exceedance Approval: Proiect PG-40020-15 Radio Upgrades WHEREAS, Lansing Board of Water & Light's (BWL) Policy 15-02, entitled Capital Project Exceedance Approval requires BWL Board of Commission approval for specific capital projects that are expected to exceed their previously approved budget by both 15% and $200,000 prior to completion of the project; and WHEREAS, the original approved budget for the Capital Project PG-40020-15 Radio Upgrades project in FY2015 was $653,447; and WHEREAS, the FY2016 approved budget incorrectly provided a budget of$533,000; and 15 WHEREAS, the projected final total cost for the project is $793,000; and WHEREAS, BWL staff and management reviewed the project cost in detail, which includes but is not limited to the correction of prior fiscal year input error, rationale and circumstances for the increased budget projection; and WHEREAS, BWL staff and management recommends that the Capital Project PG-40020-15 Radio Upgrades be completed despite the projected increased cost; and WHEREAS, BWL staff and management recommends that the Finance committee review and approve with a recommendation of support to the BWL Board of Commissioners at the November 15, 2016 full board meeting. Motion by Commissioner Mullen, Seconded by Commissioner Thomas, to approve the Capital Project Correction and Exceedance for Radio Upgrades. Action: Motion Carried. RESOLUTION 2016-11-02 Salary Adiustment for the Charter Position of Internal Auditor Whereas; Due to subsequent information on a revised grade and salary structure adopted for non-bargaining employees at the Lansing Board of Water and Light; Whereas; The minimum salary for the Internal Auditor at his current grade of Director Level 6 is $139,700, Whereas; The (aforementioned) salary is greater than the amount approved by Resolution #2016-07-04 on July 26, 2016; and Whereas; An adjustment is needed to bring the Internal Auditor's salary up to the minimum identified for his pay grade and director level. Now therefore be it resolved the base pay for Internal Auditor Phil Perkins Director Level 6 for fiscal year 2016-2017 is $139,700. Motion by Commissioner Mullen, Seconded by Commissioner Thomas to approve the Resolution to adjust the Internal Auditor's salary. Action: Motion Carried. 16 RESOLUTION 2016-11-03 Collective Bargaining Agreement between the Lansing Board of Water & Light And the International Brotherhood of Electrical Workers, AFL-CIO, Local 352 WHEREAS, on October 18, 2016 the Lansing Board of Water & Light and IBEW Local 352 entered into a Tentative Agreement to extend the Collective Bargaining Agreement for four years; and WHEREAS, the terms and conditions of the Tentative Agreement are in accordance with the direction and authority that was delegated to the Board's negotiating team by the General Manger; and WHEREAS, the Tentative Agreement was submitted by the IBEW Local 352 negotiating team to the IBEW membership for its approval and was ratified on October 27, 2016. RESOLVED, that the Board of Commissioners approve the "Final Tentative Agreement" (dated and signed October 27, 2016). Motion by Commissioner Price, Seconded by Commissioner McCloud, to approve the resolution for Collective Bargaining Agreement between the Lansing Board of Water & Light and the International Brotherhood of Electrical Workers, AFL-CIO, Local 352. Action: Motion Carried. The official finalized Contract Agreement is on file in the office of the Corporate Secretary and the Lansing Board of Water & Light's Human Resources intranet site. RESOLUTION 2016-11-04 Amendment to 401a Defined Contribution Plan RESOLVED, that the Board of Commissioners hereby amends the Lansing Board of Water & Light 401a Defined Contribution Plan #106696 such that the Employer Contributions for Bargaining Unit Employees is increased from 8.1%to 9.5%, for those Bargaining Unit Employees hired after January 1, 1997. FURTHER RESOLVED, all other provisions of the 401a Defined Contribution Plan #106696 shall remain in full force'and effect. FURTHER RESOLVED, that the General Manager and Corporate Secretary are hereby authorized to execute the applicable Adoption Agreement or Plan Document that accurately captures the above noted change in Employer Contributions. Motion by Commissioner Mullen, Seconded by Commissioner Thomas, to approve the amendment to 401a Defined Contribution Plan #106696. Action: Motion Carried. 17 RESOLUTION 2016-11-05 Amendment to 457 Deferred Compensation Plan RESOLVED, that the Board of Commissioners hereby amends the Lansing Board of Water & Light 457 Deferred Compensation Plan #300435 such that the limit of the Employer Match for Bargaining Unit Employees is increased from $1,250 per year to $1,500 per year. FURTHER RESOLVED, all other provisions of the 457 Deferred Compensation Plan #300435 shall remain in full force and effect. FURTHER RESOLVED, that the General Manager and Corporate Secretary are hereby authorized to execute the applicable Adoption Agreement or Plan Document that accurately captures the above noted change in the Employer Match. Motion by Commissioner Mullen, Seconded by Commissioner Thomas, to approve the amendment to 457 Deferred Compensation Plan #300435. Action: Motion Carried. RESOLUTION 2016-11-06 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; 18 WHEREAS, the Board of Commissioners met on July 2015 and passed a resolution (#2015-07-28) to exempt itself from the requirements of Public Act 152 of 2011 and kept the 12% premium sharing through December 31, 2015, and; WHEREAS, the Board of Commissioners met on November 2015 and passed a resolution (#2015-11-17) to exempt itself from the requirements of Public Act 152 of 2011 and kept the 12% premium sharing through December 31, 2016 for Union employees and implement a 14% premium sharing for Non-Union employees effective July 1, 2016, 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 January 1, 2017 through December 31, 2017. FURTHER RESOLVE that the Board desires to continue the 14% premium sharing for all active employees for medical benefits effective January 1, 2017. Motion by Commissioner Mullen, Seconded by Commissioner McCloud, to approve the Amended Employee Contribution to Medical Benefit Plans. YEAS: Commissioners Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Tracy Thomas and Sandra Zerkle NAYS: None ABSTAIN: None Action: Motion Carried. RESOLUTION 2016-11-07 2017 Reeular Board Meetine Schedule In accordance with the Lansing 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 Lansing Board of Water & Light's Board of Commissioners are hereby set for calendar year 2017 as follows, unless otherwise notified or as a result of date conflicts with rescheduled City Council meetings: 2017 Lansing Board of Water & Light Board of Commissioners Regular Board Meeting Schedule Tuesday January 24 Tuesday March 28 Tuesday May 23 Tuesday July 25 Tuesday September 26 Tuesday November 14 or 21 19 Meetings will be held1n the Lansing Board of Water & Light 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 shall be published in the Lansing City Pulse the week of January 1, 2017. Motion by Commissioner Thomas, Seconded by Trustee Mullen, to approve the 2017 Regular Board Meeting Schedule. Action: Motion Carried. RESOLUTION 2016-11-08 Information Technology Communication Policy RESOLVED, that the Board of Commissioners hereby adopts the 2016 Communications Technologies Policy as recommended by Staff. FURTHER RESOLVED, that the current Policy tiled "Use of LBWL Communication Technologies" from 2007 is no longer operative and is thus replaced with the above referenced Communications Technologies Policy recommended by Staff. Motion by Commissioner Mullen, Seconded by Commissioner Thomas, to adopt the 2016 Communications Technologies Policy. Action: Motion Carried. RESOLUTION 2016-11-09 Fourteenth Supplemental Revenue Bond Resolution A RESOLUTION TO AUTHORIZE: • Present Value Savings by refunding all or part of the Series 2008A Bonds and Series 2011A Bonds through issuance of Refunding Bonds; • Future Bond Reserve Requirement modified to be determined at time each series of Bonds is issued; • Future Surety Bond requirement modified to equal the Bond rating; • Appointment of Citigroup Global Markets Inc. as senior managing Underwriter; • Chief Financial Officer to sell Refunding Bonds without further resolution; • Other matters relative to issuance, sale and delivery of the Refunding Bonds. WHEREAS, from time to time the City of Lansing, acting by and through the Lansing Board of Water and Light, has issued revenue bonds payable from revenues of the water supply, steam, chilled water and electric utility system (the "System") under the provisions of Act 94, Public Acts of Michigan, 1933, as amended, and a Bond Resolution adopted by the Board and amended and restated on October 24, 1989 and further amended and supplemented from time to time (the "Bond Resolution"); and WHEREAS, all terms not defined herein shall have the meanings set forth in the Bond Resolution; and 20 WHEREAS, under the terms of the Tenth Supplemental Revenue Bond Resolution adopted January 29, 2008, the Board issued the Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A dated April 23, 2008 (the "Series 2008A Bonds"); and WHEREAS, under the terms of the Eleventh Supplemental Revenue Bond Resolution adopted May 10, 2011, the Board issued the Utility System Revenue Bonds, Series 2011A dated June 15, 2011 (the "Series 2011A Bonds"); and WHEREAS, the Board's Financial Advisor, Public Financial Management (the "Financial Advisor"), has advised the Board that it may be able to accomplish a net savings of debt service costs by refunding all or a portion of the outstanding Series 2008A Bonds and the Series 2011A Bonds (collectively, the "Prior Bonds") through the issuance of revenue refunding bonds in an aggregate principal amount of not-to-exceed $325,000,000 (the "Refunding Bonds"); and . WHEREAS, Section 18(b) of the Bond Resolution authorizes the issuance of Additional Bonds of equal standing and priority of lien with the outstanding Bonds for the purposes of refunding a part of the Outstanding Bonds and paying costs of issuing such Additional Bonds, if after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding; and WHEREAS, in order to take advantage of the most favorable market for sale of the Refunding Bonds and purchase of securities to be escrowed for payment of the Prior Bonds to be refunded, the Board wishes to authorize the Chief Financial Officer to sell the Refunding Bonds at negotiated sale without further resolution of the Board; and WHEREAS, the conditions and requirements of the Bond Resolution for the issuance of Additional Bonds of equal standing and priority of lien with outstanding bonds have been met for the issuance of the proposed Refunding Bonds. NOW, THEREFORE, BE IT RESOLVED THAT: Section 1. Definitions. All terms not defined herein shall have the meanings set forth in the Bond Resolution, and whenever used in this Bond Resolution, except when otherwise indicated by the context, the following terms shall have the following meanings: (a) "Additional Bonds" means any Additional Bonds of equal standing with the Bonds which are issued pursuant to Section 18(a) of the Bond Resolution as amended by Section 13 of the Tenth Supplemental Revenue Bond Resolution. (b) "Bond Resolution" means the Bond Resolution adopted by the Board on September 26, 1989, as amended and restated on October 24, 1989, and supplemented by the First Supplemental Revenue Bond Resolution adopted by the Board on October 26, 1993, the Second Supplemental Revenue Bond Resolution adopted by the Board on January 11, 1994, the Third Supplemental Revenue Bond Resolution adopted on September 2, 1999, the Fourth Supplemental Revenue Bond Resolution adopted October 26, 1999 and amended on August 12, 2008 and June 9, 2009, the Fifth Supplemental Bond Resolution adopted by the Board April 24, 2001, the Sixth Supplemental Revenue Bond Resolution adopted by the Board on July 23, 2002, the Seventh Supplemental Bond Resolution adopted by the Board on July 23, 2002, the Eighth Supplemental Revenue Bond Resolution adopted on August 12, 2003, the Ninth Supplemental Revenue Bond Resolution adopted on July 26, 2005, the Tenth Supplemental Revenue Bond Resolution adopted on January 29, 2008, the Eleventh Supplemental Revenue Bond Resolution adopted on 21 May 10, 2011, the Twelfth Supplemental Revenue Bond Resolution adopted on January 24, 2012, the Thirteenth Supplemental Revenue Bond Resolution adopted by the Board on January 22, 2013, this Fourteenth Supplemental Revenue Bond Resolution, and any other resolution which amends or supplements the Bond Resolution. (c) "Bonds" means the Series 2008A Bonds, the Series 2011A Bonds, the Series 2012A Bonds, the Series 2013A Bonds, the Refunding Bonds, and any Additional Bonds of equal standing hereafter issued. (d) "Chief Financial Officer" means the Board's Chief Financial Officer. (e) "Escrow Agreement" means, for purposes of this Fourteenth Supplemental Revenue Bond Resolution, the Escrow Agreement described in this Resolution to provide for payment of principal of and interest on the Prior Bonds being refunded. (f) "Escrow Fund" means, for purposes of this Fourteenth Supplemental Revenue Bond Resolution, the Escrow Fund or Funds established pursuant to the Escrow Agreement to hold the cash and investments necessary provide for payment of principal of and interest on the Prior Bonds being refunded. (g) "Prior Bonds" means, for purposes of this Fourteenth Supplemental Revenue Bond Resolution, the Series 2008A Bonds and Series 2011A Bonds. (h) "Refunding Bonds" means, for purposes of this Fourteenth Supplemental Revenue Bond Resolution, the refunding bonds issued pursuant to this Fourteenth Supplemental Revenue Bond Resolution to be designated as the "Utility System Revenue Refunding Bonds, Series 2017A" or such other series designation as shall reflect the date of sale or delivery of the Refunding Bonds. (i) "Series 2008-2013 Bonds" means the Series 2008A Bonds, the Series 2011A Bonds, the Series 2012A Bonds, and the Series 2013A Bonds. (j) "Series 2008A Bonds" means the Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A. (k) "Series 2011A Bonds" means the Utility System Revenue Bonds, Series 2011A. (1) "Series 2012A Bonds" means the Utility System Revenue Refunding Bonds, Series 2012A. (m) "Series 2013A Bonds" means the Utility System Revenue Refunding Bonds, Series 2013A. (n) "System" means the complete facilities of the Board for the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, including all plants, works, instrumentalities and properties used or useful in connection with the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat, and all additions, extensions and improvements thereto existing or hereafter acquired by the Board. Section 2. Conditions Permitting Issuance of Additional Bonds. Pursuant to Section 18(b) of the Bond Resolution, the Board hereby determines that the Refunding Bonds shall be issued as Additional Bonds for the purpose of refunding all or a portion of the Prior Bonds and paying costs of issuance of the Refunding Bonds, only if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. 22 The Board hereby determines that the Board is not in default in making its required payments to the Operation and Maintenance Fund or the Redemption Fund. Section 3. Refunding of Prior Bonds; Refunding Bonds Authorized; Applicable Law. If refunding all or a portion of the Prior Bonds will accomplish the required debt service savings, then the City, acting by and through the Board, shall borrow the sum of not-to-exceed Three Hundred Twenty-Five Million Dollars ($325,000,000) as finally determined upon the sale thereof, and issue the Refunding Bonds therefor for the purpose of paying costs of refunding all or a portion of the Prior Bonds, including the payment of the costs of legal, financial, bond insurance (if any), underwriter's discount, and other expenses incident thereto and incident to the issuance and sale of the Refunding Bonds. The Refunding Bonds shall be payable solely out of the Net Revenues of the System. City Council shall not be requested to pledge the full faith and credit of the City for payment of the Refunding Bonds. The Refunding Bonds shall be sold and the proceeds applied in accordance with the provisions of Act 94. Section 4. Refunding Bond Details. The Refunding Bonds shall be designated as the "UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 2017A" or such other series designation as determined at the time of sale by the Chief Financial Officer to reflect the date of sale or delivery of the Refunding Bonds. The Refunding Bonds shall be issued as fully registered bonds registered in the denomination of$5,000 or integral multiples thereof and shall be numbered in consecutive order of registration or authentication from 1 upwards. The Refunding Bonds shall be dated as of the date of delivery thereof or such other date as determined at the time of sale of the Refunding Bonds, shall mature as serial bonds or term bonds on such dates as shall be determined at the time.of sale of the Refunding Bonds. The Refunding Bonds shall be subject to optional and mandatory redemption prior to maturity at the times and prices finally determined at the time of sale of the Refunding Bonds, or shall not be subject to redemption prior to maturity, as finally determined at the time of sale of the Refunding Bonds The Refunding Bonds shall bear interest at a rate or rates to be determined on sale thereof, payable on July 1, 2017, or such other date as provided at the time of sale of the Refunding Bonds, and semi-annually thereafter on January 1st and July 1st of each year. The Refunding Bonds shall be executed by the manual or facsimile signature of the Chairperson and the Corporate Secretary of the Board. No Refunding Bond shall be valid until authenticated by an authorized representative of the Transfer Agent. The Refunding Bonds shall be delivered to the Transfer Agent for authentication and be delivered by the Transfer Agent to the purchaser in accordance with instructions from the Chief Financial Officer upon payment of the purchase price for the Refunding Bonds. Section 5. Registration and Transfer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as bond registrar, paying agent and transfer agent (the "Transfer Agent") for the Refunding Bonds. The Chief Financial Officer is hereby authorized to execute one or more agreements with the Transfer Agent on behalf of the Board. The Board reserves the right to replace the Transfer Agent at any time, provided written notice of such replacement is given to the registered owners of record of bonds not less than sixty (60) days prior to an interest payment date. Principal of and interest on the Refunding Bonds shall be payable by check or draft mailed by the Transfer Agent to the registered owner at the registered address as shown on the registration books of the Board maintained by the Transfer Agent. Interest shall be payable to the person or entity who or which is the registered owner of record as of the fifteenth (15th) day of the month prior to the payment date for each interest payment. The date of determination of the registered owner for purposes of payment of interest as provided in this paragraph may be changed by the Board to conform to market practice in the future. 23 The Refunding Bonds may be issued in book-entry-only form through The Depository Trust Company in New York, New York ("DTC"), and the Chief Financial Officer is authorized to execute such custodial or other agreement with DTC as may be necessary to accomplish the issuance of the Refunding Bonds in book-entry- only form and to make such changes in the form of the Refunding Bonds within the parameters of this resolution as may be required to accomplish the foregoing. Notwithstanding the foregoing, if the Refunding Bonds are held in book-entry-only form by DTC, payment of principal of and interest on the Refunding Bonds shall be made in the manner prescribed by DTC. The Refunding Bonds may be transferred upon the books required to be kept by the Transfer Agent pursuant to this section by the person or entity in whose name it is registered, in person or by the registered owner's duly authorized attorney, upon surrender of the bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Transfer Agent. Whenever any bond shall be surrendered for transfer, the Board shall execute and the Transfer Agent shall authenticate and deliver a new bond of the same series in like aggregate principal amount, maturity and interest rate. The Transfer Agent shall require the payment by the bondholder requesting the transfer of any tax or other governmental charge required to be paid with respect to the transfer. Notwithstanding the foregoing, if Bonds are held by DTC in book-entry-only form, the transfer of Bonds shall be made in the manner prescribed by DTC. Section 6. Deposit to Bond Reserve Account. On or prior to the date of delivery of the Refunding Bonds, the Board shall deposit into the Bond Reserve Account any amount necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. Section 7. Refunding Bond Proceeds. From the proceeds of sale of the Refunding Bonds there first shall be immediately deposited in the Redemption Fund an amount equal to the accrued interest and premium, if any, received on delivery of the Refunding Bonds, and the Board may take credit for the amount so deposited against the amount required to be deposited in the Redemption Fund for payment of the next maturing interest on the Refunding Bonds. Notwithstanding the foregoing, at the discretion of the Chief Financial Officer, all or a portion of any premium received upon delivery of the Refunding Bonds may be deposited in the Bond Reserve Account or the Escrow Fund or Funds in consultation with Bond Counsel. There shall next be deposited in the Bond Reserve Account an amount, if any, designated at the time of sale of the Refunding Bonds as necessary to cause the amount on deposit in the Bond Reserve Account to be equal to the Reserve Requirement. There shall next be deposited in the Escrow Fund or Funds from the proceeds of sale of the Refunding Bonds cash and investments in Government Obligations or Municipal Obligations not redeemable at the option of the issuer. U.S. Bank National Association, Lansing, Michigan is hereby appointed to act as Escrow Agent under the Escrow Agreement. The Escrow Agent shall hold the Escrow Fund or Funds in trust pursuant to the Escrow Agreement which shall irrevocably direct the Escrow Agent to take all necessary steps to call the Prior Bonds being refunded for redemption as specified in the Escrow Agreement. The Chief Financial Officer is hereby authorized to execute and deliver the Escrow Agreement, to transfer any moneys as they may deem necessary from the Redemption Fund, or other fund or account of the Board, to the Escrow Fund or Funds, and to purchase, or cause to be purchased, escrow securities consisting of Government Obligations, including, but not limited to, United States Treasury Obligations — State and Local Government Series (SLGS), or Municipal Obligations, for deposit in the Escrow Fund or Funds. The Chief Financial Officer is directed to deposit to the Escrow Fund or Funds, from Refunding Bond proceeds and other moneys as necessary, an amount which, together with investment proceeds to be received thereon, will be sufficient, without 24 reinvestment, to pay the principal of and interest on the Prior Bonds being refunded as they become due or upon call for redemption. The remaining proceeds of the Refunding Bonds shall be deposited in a fund which may be established in the Escrow Agreement to pay costs of issuance of the Refunding Bonds and the costs of refunding the Prior Bonds. Any moneys remaining after payment of costs of issuance and costs of refunding the Prior Bonds being refunded shall be transferred to the Redemption Fund and used to pay interest on the Refunding Bonds. Section 8. Amendment of Definitions of Government Obligations and Municipal Obligations. After payment or defeasance in full of the Outstanding Series 2008-2013 Bonds, the definitions of "Government Obligations" and "Municipal Obligations" in Section 1 of the Bond Resolution as amended and restated on October 24, 1989 are amended (amendments are shown by strikethrough or underline) to provide: (r) "Government Obligations" means ll direct obligations of (including obligations issued or held in book entry form on the books of) the United States of America, (ii) obligations the payment on which is guaranteed by the United States of America including, but not limited to, stripped interest components of obligations issued by the Resolution Funding Corporation (REFCORP) and non-callable, non-prepayable debt obligations of the United States Agency for International Development (US AID), which pay principal and interest at least three (3) business days prior to any respective escrow requirement dates, or (iii) non-callable, senior debt obligations of any government-sponsored enterprise or federal agency, corporation, or instrumentality of the United States of America created by an act of congress including, but not limited to, the Federal Home Loan Banks, Freddie Mac, Federal Farm Credit Banks Funding Corporation, and Fannie Mae; (v) "Municipal Obligation" means any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state (i) which are not callable at the option of the obligor prior to maturity or as to which irrevocable notice has been given by the obligor to call on the date specified in the notice, and (ii) which are fully secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or Government Obligations, which fund may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (iii) which fund is sufficient, as verified by an independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this definition of Municipal Obligation on the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to in subclause (i) of this definition of Municipal Obligation, as appropriate, and (iv) which are rated, based on the escrow, in the highest rating category of either two of the following three ratings agencies: Standard & Poor's Corporation, Fitch Ratings, and Moody's Investors Service, Inc. or any successors thereto; Section 9. Amendment of Reserve Requirement. After payment or defeasance in full of the Outstanding Series 2008-2013 Bonds, Section 11B of the Bond Resolution as amended and restated on October 24, 1989 is amended (amendments are shown by strikethrough or underline) to provide: B. BOND AND INTEREST REDEMPTION FUND: There shall be established and maintained a fund designated BOND AND INTEREST REDEMPTION FUND, the moneys on deposit therein from time to time to be used solely, except for required deposits to the Rebate Fund, for the purpose of paying the principal of, redemption premium, if any, and interest on the Bonds. 25 After provision for the Operation and Maintenance Fund, there shall be set aside on or before the first day of each month, commencing December 1, 1989, in the Redemption Fund a sum proportionately sufficient to provide for the payment when due of the current principal of and interest on the Bonds, less any amount in the Redemption Fund representing accrued interest on the Bonds. Commencing December 1, 1989, The amount set aside each month for interest on the Bonds shall be 1/7 of the interest on the Bonds due July 1, 1990, and commencing July 1, 1990, and thereafter The amount set aside each month for interest on the Bonds shall be 1/6 of the interest on the Bonds next coming due. The amount set aside each month for principal, commencing December 1, 1989, shall be 1/7 of the amount of principal due on the Bonds on July 1, 1990, and commencing July 1, 1990, and thereafter The. amount set aside each month for principal of the Current Interest Bonds shall be 1/12 of the total amount of the principal of the Bonds due on the next July 1 and 1/12 of the maturing amount of Capital Appreciation Bonds due one year or less from the 1st day of such month. If there is any deficiency in the amount previously set aside, that deficiency shall be added to the requirements for the next succeeding month. There shall be established a separate account in the Redemption Fund to be known as the BOND RESERVE ACCOUNT. On the date of delivery of any Additional Bonds issued pursuant to Section 18(a) or (c) of this Bond Resolution, the Board shall transfer to the Bond Reserve Account from the proceeds of the Additional Bonds or any other available source the lesser of (a) 10% of the proceeds of the Additional Bonds and (b) the maximum Aggregate Debt Service Requirement on the Additional Bonds for the then current and any subsequent operating year and commencing on the 1st day of the month following delivery of the Additional Bonds and on the 1st day of each month thereafter until the amount in the Bond Reserve Account equals the Reserve Requirement, 1/12 of the difference between the amount deposited on the delivery of the Additional Bonds and the Reserve Requirement. Except as otherwise provided in this Bond Resolution, the moneys credited to the Bond Reserve Account shall be used solely for the payment of the principal of, redemption premium, if any, and interest on Bonds as to which there would otherwise be a default. If at any time it shall be necessary to use moneys credited to the Bond Reserve Account for such payment, then the moneys so used shall be replaced from the Net Revenues first received thereafter which are not required for expenses of administration, operation and maintenance of the system or for current principal and interest requirements on any of the Bonds. The Board may satisfy the Reserve Requirement by a letter of credit, a surety bond, or an insurance policy if the provider or issuer thereof shall be rated by any nationally recognized bond rating agency as high or higher than the Bonds at the time of purchase of the letter of credit, a surety bond, or an insurance policy. If at any time the amount in the Bond Reserve Account exceeds the Reserve Requirement, the excess may be transferred to such fund or account as the Board may direct. The Supplemental Resolution authorizing Additional Bonds may either (i) provide that the Additional Bonds are equally and ratably secured by the Bond Reserve Account funded according to the Reserve Requirement, or (ii) provide for the creation of a separate bond reserve account securing that series of Additional Bonds and a different reserve requirement, or state that no bond reserve account is required. 26 Section 10. Bond Form. The Refunding Bonds shall be in substantially the following form with such revisions, additions and deletions as the Board may deem advisable or necessary to comply with the final terms of the Refunding Bonds established upon sale thereof: BOND NO. R- UNITED STATES OF AMERICA STATE OF MICHIGAN COUNTIES OF INGHAM AND EATON CITY OF LANSING LANSING BOARD OF WATER AND LIGHT UTILITY SYSTEM REVENUE REFUNDING BOND, SERIES 2017A Interest Rate Date of Maturity Date of Original Issue CUSIP Registered Owner: Cede & Co. Principal Amount: The City of Lansing, Counties of Ingham and Eaton, State of Michigan (the "City"), acting through the governing body of the Lansing Board of Water and Light (the "Board"), acknowledges itself to owe and for value received hereby promises to pay to the Registered Owner specified above, or registered assigns, only from the Net Revenues of the System as hereinafter provided, the Principal Amount specified above, in lawful money of the United States of America, on the Date of Maturity specified above, [unless prepaid prior thereto as hereinafter provided,] with interest thereon (computed on the basis of a 360-day year of twelve 30-day months) from the Date of Original Issue specified above or such later date to which interest has been paid, until paid, at the Interest Rate per annum specified above, first payable on [interest payment date] and semiannually thereafter. Principal of this bond is payable at the designated corporate trust office of[transfer agent], or such other transfer agent as the Board may hereafter designate by notice mailed to the registered owner of record not less than sixty (60) days prior to any interest payment date (the "Transfer Agent"). Interest on this bond is payable by check or draft mailed by the Transfer Agent to the person or entity who or which is as of the fifteenth (15th) day of the month prior to each interest payment date, the registered owner of record at the registered address. The Net Revenues of the System are irrevocably pledged for the prompt payment of principal and interest on this bond. The "System" is defined as the water supply and electric utility systems including the steam heat and chilled water distribution systems. The "Net Revenues" are the revenues received by the Board from the operations of the System after provision has been made for reasonable and necessary expenses of operation, maintenance and administration of the System. A statutory lien on the Net Revenues of the System has been created to secure the payment of the principal of and interest on this bond, when due; however, the pledge of Net Revenues and the statutory lien are on a parity with the pledge of Net Revenues and statutory lien in favor of the [Water Supply, Steam, Chilled Water and Electric Utility System Revenue Bonds, Series 2008A], Utility System Revenue Bonds, Series 2011A, Utility System Revenue Refunding Bonds, Series*2012A, and Utility System Revenue Refunding Bonds, Series 2013A. This bond is one of a series of bonds of even Date of Original Issue aggregating the principal sum of $[principal amount]. This bond is issued for the purpose of refunding certain outstanding bonds pursuant to a Bond Resolution adopted by the Board on October 24, 1989, as amended and supplemented from time to time, including by a Fourteenth Supplemental Revenue Bond Resolution adopted by the Board on [date of resolution] 27 (collectively, the "Bond Resolution"). This bond is issued under and in full compliance with the Constitution and statutes of the State of Michigan, including specifically Act 94, Public Acts of Michigan, 1933, as amended ("Act 94"). For a complete statement of the revenues from which and the conditions under which this bond is payable, a statement of the conditions under which additional bonds of equal standing as to the Net Revenues may hereafter be issued, and the general covenants and provisions pursuant to which this bond is issued, reference is made to the Bond Resolution. Reference is hereby made to the Bond Resolution and any and all supplements thereto and modifications and amendments thereof, if any, and to Act 94, for a more complete description of the pledges and covenants securing the bonds of this issue, the nature, extent and manner of enforcement of such pledges, the rights and remedies of the registered owners of the bonds of this issue with respect thereto and the terms and conditions upon which the bonds of this issue are issued and may be issued thereunder. To the extent and in the manner permitted by the terms of the Bond Resolution, the provisions of the Bond Resolution or any resolution or agreement amendatory thereof or supplemental thereto, may be modified or amended by the Board, except in specified cases, only with the written consent of the registered owners of at least fifty-one percent (51%) of the principal amount of the bonds of the System then outstanding. Bonds of this issue [maturing in the years [date], inclusive,] shall not be subject to redemption prior to maturity. [Insert optional and mandatory redemption provisions if applicable] This bond is transferable only upon the books of the Board kept for that purpose at the office of the Transfer Agent by the registered owner hereof in person, or by the registered owner's attorney duly authorized in writing, upon the surrender of this bond together with a written instrument of transfer satisfactory to the Transfer Agent duly authorized in writing and thereupon a new registered bond or bonds in the same aggregate principal amount and of the same maturity shall be issued to the transferee in exchange therefor as provided in the Bond Resolution, and upon the payment of the charges, if any, therein prescribed. [The Transfer Agent shall not be required (i) to issue, register the transfer of, or exchange any bond during a period beginning at the opening of business 15 days before the day 'of the mailing of a notice of redemption of bonds selected for redemption under the Bond Resolution and ending at the close of business on the date of that mailing, or (ii) to register the transfer of or exchange any bond so selected for redemption in whole or in part, except the unredeemed portion of bonds being redeemed in part.] THIS BOND IS A SELF-LIQUIDATING BOND AND IS NOT A GENERAL OBLIGATION OF THE CITY AND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE CITY WITHIN ANY CONSTITUTIONAL, STATUTORY OR CHARTER LIMITATION, AND IS PAYABLE BOTH AS TO PRINCIPAL AND INTEREST SOLELY FROM THE NET REVENUES OF.THE SYSTEM AND CERTAIN FUNDS AND ACCOUNTS ESTABLISHED UNDER THE BOND RESOLUTION. THE PRINCIPAL OF AND INTEREST ON THIS BOND ARE SECURED BY THE STATUTORY LIEN HEREINBEFORE DESCRIBED. The Board has covenanted and agreed, and covenants and agrees, to fix and maintain at all times while any bonds payable from the Net Revenues of the System shall be outstanding, such rates for service furnished by the System as shall be sufficient to provide for payment of the principal of and interest on the bonds of this issue and any other bonds payable from the Net Revenues as and when the same shall become due and payable, to provide for the payment of expenses of administration and operation and such expenses for maintenance of the System as are necessary to preserve the same in good repair and working order, and to provide for such other expenditures and funds for the System as are required by the Bond Resolution. It is hereby certified and recited that all acts, conditions and things required by law to be done precedent to and in the issuance of this bond and the series of bonds of which this is one have been done and performed in regular and due time and form as required by law. 28 This bond is not valid or obligatory for any purpose until the Transfer Agent's Certificate of Authentication on this bond has been executed by the Transfer Agent. IN WITNESS WHEREOF, the City, acting through the Board, has caused this bond to be signed in its name by the Chairperson and Corporate Secretary of the Board, and a facsimile of the City's corporate seal to be printed hereon, all as of the Date of Original Issue. LANSING BOARD OF WATER AND LIGHT By David Price Chairperson (City Seal) Countersigned: By M. Denise Griffin Its: Corporate Secretary [INSERT STANDARD FORMS OF CERTIFICATE OF AUTHENTICATION AND ASSIGNMENT] Section 11. Tax Covenant. The Board shall not invest, reinvest or accumulate any moneys deemed to be proceeds of the Refunding Bonds and Prior Bonds pursuant to the Internal Revenue Code of 1986, as amended in such a manner as to cause the Refunding Bonds or Prior Bonds to be "arbitrage bonds" within the meaning of the Internal Revenue Code. The Board hereby covenants that, to the extent permitted by law, it will take all actions within its control and that it shall not fail to take any action as may be necessary to maintain the exclusion of interest on the Refunding Bonds and Prior Bonds from gross income for federal income tax purposes, including but not limited to, actions relating to the rebate of arbitrage earnings, if applicable, and the expenditure and investment of Bond proceeds and moneys deemed to be Bond proceeds, all as more fully set forth in the Non-Arbitrage and Tax Compliance Certificate to be delivered by the Board on the date of delivery of the Refunding Bonds Section 12. Financial Advisor. The Board hereby requests that Public Financial Management serve the Board as Financial Advisor for the Refunding Bonds. Section 13. Bond Counsel. The Board hereby requests that Miller, Canfield, Paddock and Stone, P.L.C., Lansing, Michigan, continue to serve the Board as bond counsel for the Refunding Bonds. The Board acknowledges that Miller, Canfield, Paddock and Stone, P.L.C. has represented from time to time, and currently represents, Citigroup Global Markets, Inc. and various underwriters, financial institutions, and other potential participants in the bond financing process, in matters not related to the issuance and sale of the Refunding Bonds. Section 14. Negotiated Sale of Bonds; Appointment of Senior Managing Underwriter. Based on the advice of the Financial Advisor, it is hereby determined to be in the best interest of the Board to sell the Refunding Bonds by negotiated sale in order to enable the Board to select and adjust terms for the Refunding Bonds, to enter the market on short notice at a point in time which appears to be most advantageous, and thereby possibly obtain a lower rate of interest on the Refunding Bonds, to achieve sale efficiencies so as to reduce the cost of issuance and interest expense, and to take advantage of the most favorable market for purchase of securities to be escrowed for payment of the Prior Bonds to be refunded. 29 Based on the advice of the Financial Advisor, the Board hereby names Citigroup Global Markets, Inc. as senior managing underwriter for the Refunding Bonds. The Board reserves the right to name additional co- managers and/or to develop a selling group, and the Chief Financial Officer is authorized to name additional co-managers and/or to develop a selling group in consultation with the Financial Advisor. By adoption of this resolution the Board assumes no obligations or liability to the underwriter for any loss or damage that may result to the underwriter from the adoption of this resolution, and all costs and expenses incurred by the underwriter in preparing for sale of the Refunding Bonds shall be paid from the proceeds of the Refunding Bonds, if the Refunding Bonds are issued, except as may be otherwise provided in the Bond Purchase Agreement for Refunding Bonds. Section 15. Bond Ratings and Bond Insurance. The Chief Financial Officer is hereby authorized to apply for bond ratings from such municipal bond rating agencies as deemed appropriate, in consultation with the Financial Advisor.. If the Financial Advisor recommends that the Board consider purchase of municipal bond insurance, then the Chief Financial Officer is hereby authorized to negotiate with insurers regarding acquisition of municipal bond insurance, and, in consultation with the Financial Advisor, to select an insurer and determine which bonds, if any, shall be insured, and the Chief Financial Officer is hereby authorized to execute an agreement with the insurer relating to procedures for paying debt service on the insured bonds and notifying the insurer of any need to draw on the insurance and other matters. Section 16. Official Statement. The Chief Financial Officer is authorized to approve circulation of a Preliminary Official Statement describing the Refunding Bonds and, after sale of the Refunding Bonds, to prepare, execute and deliver a final Official Statement. Section 17. Continuing Disclosure. The Chief Financial Officer is hereby authorized to execute and deliver, prior to delivery of the Refunding Bonds, a written continuing disclosure undertaking as necessary in order to enable the underwriter or bond purchaser to comply with the requirements of Securities and Exchange Commission Rule 15c2-12. The continuing disclosure undertaking shall be in substantially the form which she shall, in consultation with bond counsel, determine to be appropriate. Section 18. 'Sale of Refunding Bonds. The Chief Financial Officer is authorized, in consultation with the Financial Advisor, to accept an offer to purchase the Refunding Bonds without further resolution of this Board, if, after giving effect to the refunding, the maximum amount of Aggregate Debt Service in each future fiscal ,year shall be less than the Aggregate Debt Service in each future fiscal year prior to giving effect to the refunding. This authorization includes, but is not limited to, determination of original principal amount of the Refunding Bonds; the prices at which the Refunding Bonds are sold; the date of the Refunding Bonds; the schedule of principal maturities and whether the Refunding Bonds shall mature serially or as term bonds; provisions for early redemption, if any, including mandatory redemption of term bonds, if any; the interest rates and payment dates of the Refunding Bonds; and application of the proceeds of the Refunding Bonds. Approval of the matters delegated to the Chief Financial Officer under this resolution may be evidenced by her execution of the Bond Purchase Agreement for the Refunding Bonds or other offer to purchase the Refunding Bonds, or a certificate of award of sale, or the Official Statement. The Refunding Bonds shall not be sold unless there shall be net present value savings equaling not less than 5.00% of the Prior Bonds being refunded after payment of costs of issuance of the Refunding Bonds and costs of refunding the Prior Bonds being refunded. The maximum interest rate of any maturity of the Refunding Bonds shall not exceed 5.50%. The first maturity of principal on the Refunding Bonds shall occur no earlier than July 1, 2017, and the final date of maturity shall occur no later than July 1, 2041. In making such determinations the Chief Financial Officer is authorized to rely upon data and computer runs provided by the Financial Advisor. 30 Section 19. Verification Agent. The Chief Financial Officer is hereby authorized, at her discretion, to select an independent certified public accountant to serve as verification agent to verify that the securities and cash to be deposited to the Escrow Fund or Funds will be sufficient to provide, at the times and in the amounts required, sufficient moneys to pay the principal of and interest on the Prior Bonds being refunded as they become due or upon call for redemption. Section 20. Other Actions. In the event that the Chief Financial Officer is not available at the time that it becomes necessary to take actions directed or authorized under this resolution, then a person designated by the Chief Financial Officer or the General Manager is authorized to take the actions delegated to the Chief Financial Officer by this resolution. The officers, administrators, agents and attorneys of the Board are authorized and directed to take all other actions necessary and convenient to facilitate issuance, sale and delivery of the Refunding Bonds, and to execute and deliver all other agreements, documents and certificates and to take all other actions necessary or convenient in accordance with this resolution, and to pay costs .of issuance including but not limited to rating agency fees, bond insurance premiums, transfer agent fees, escrow agent fees, verification agent fees, financial advisor fees, bond counsel fees, costs of printing the preliminary and final official statements, and any other costs necessary to accomplish sale and delivery of the Refunding Bonds. Section 21. Applicability of the Outstanding Bond Resolutions. Except to the extent supplemented or otherwise provided in this resolution, all of the provisions and covenants provided in the Bond Resolution shall apply to the Refunding Bonds issued pursuant to provisions of this resolution, such provisions of the Bond Resolution being made applicable to the Refunding Bonds. Section 22. Conflicting Resolutions. All resolutions and parts of resolutions insofar as they conflict with the provisions of this resolution are.hereby rescinded. Section 23. Severability and Paragraph Headings. If any section, paragraph, clause or provision of this resolution shall be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the other provisions of this resolution. The paragraph headings in this resolution are furnished for convenience of reference only and shall not be considered to be part of this resolution. Section 24. Publication and Recordation. In accordance with the provisions of Section 6 of Act 94, this resolution shall be published once in full in the Lansing State Journal, a newspaper of general circulation in the City qualified under State law to publish legal notices, promptly after its adoption, and shall be recorded in the minutes of the Board and such recording authenticated by the signatures of the Chairperson and Corporate Secretary of the Board. Section 25. Effective Date. This resolution is hereby determined to be immediately necessary for the preservation of the public peace, property, health and safety of the City and the users of the System. In accordance with the provisions of Section 6 of Act 94, this resolution shall become effective immediately upon its adoption. , We hereby certify that the foregoing is a true and complete copy of a resolution duly adopted by the Board of Commissioners of the Lansing Board of Water and Light at a Regular meeting held on Tuesday, November 15, 2016, at 5:30 p.m., Eastern Time, and that said meeting was conducted and public notice of said meeting was given pursuant to and in full compliance with the Open Meetings Act, being Act 267, Public Acts of Michigan, 1976, and that the minutes of said meeting were kept and will be or have been made available as required by said Act 267. We further certify that the following Commissioners were present at said meeting: Louney, McCloud, Mullen, Price, Thomas and Zerkle and that the following Commissioners were absent Alley and Ross. 31 We further certify that Commissioner Price moved adoption of said resolution, and that said motion was supported by Commissioner Thomas. We further certify that the following Commissions Ilowinedcommis for osioners voteption of d resolution e d against adoption McCloud, Mullen, Price, Thomas and Zerkle and that the fog said resolution: None. We further certify that said resolution has been recorded in the Resolution Book and that such recording has been authenticated by the signature of the Chairperson and Corporate Secretary. �1^r.` �tiuGf Corporate Secretary Chairperson RESOLUTION 2016-11-10 Acceptance of 2016 Audited Financial Statements for 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. Motion by Commissioner Mullen, Seconded by Trustee Thomas, to approve the 2016 Audited Financial Statements for Defined Benefit Pension Plan, Defined Contribution Pension Plan, and Retiree Benefit Plan (VEBA). Action: Motion Carried. MANAGER'S REMARKS General Manager Peffley stated that Silver Bells in the City is coming o o Fridrd turnout November 18th OWHe ith warmer than normal weather expected, he hopes to exceed the Corps. Toys for Tots will have 10 local stated that at noon on Friday, the BWL toy mill, supporting o see who can raise the most unwrapped new toys to be put in the mill. high school bands competing t COMMISSIONERS' REMARKS Chair Price stated that as part of Silver Bells in the City, the bagpipe band that he plays in will be performing from 7:15 to 8:00 inside City Hall. Highland dancers will also be performing. MOTION OF EXCUSED ABSENCE Motion by Commissioner McCloud, Seconded by Commissioner Thomas, to excuse Commissioners Alley, Ross and Goodrich from this meeting. Action: Motion Carried. PUBLIC COMMENTS Anne Woiwode, Conservation Chair, Sierra Club Michigan, spoke to the gtated oard egardihern erns ng the adoptiog the of s Strategic Plan and the process for the implementation of that plan She regard process for the Eckert Plant retirement. 32 ADJOURNMENT Chair Price adjourned the meeting at 5:58 p.m. M.Denise Griffin,Corporate Secretary Preliminary Minutes filed(electronically)with Lansing city Clerk: November 21,2016 official Minutes filed(electronically)with Lansing City Clerk: 33 Approved by the Board of Commissioners on 11-15-16 a � 4 Hometown People. Hometown Power: E-- MINUTES OF THE BOARD OF COMMISSIONERS' MEETING Ja a -� rs; a, LANSING BOARD OF WATER AND LIGHT n) 7 1 c i September 27, 2016 �` t j..�. P L The Board of Commissioners met at the Lansing Board of Water and Light (BWL) Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:30 p.m. on Tuesday, September 27, 2016. Chairperson David Price called the meeting to order at 5:30 p.m. Present: Commissioners Mark Alley, Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Ken Ross (arrived at 5:32), and Sandra Zerkle. Non-Voting Commissioners present: Stuart Goodrich (Dehli Township), Bob Nelson (East Lansing) and Bill Long (Delta Township). Absent: Commissioner Tracy Thomas The Corporate Secretary declared a quorum. Commissioner Dennis M. Louney led the Pledge of Allegiance. APPROVAL OF MINUTES Motion by Commissioner Mullen, Seconded by Commissioner Alley, to approve the Regular Board Meeting minutes of July 26, 2016. Action: Motion Carried PUBLIC COMMENTS Dave Errickson, Lansing, Michigan, spoke to the Board regarding the Strategic Plan's 40% renewable energy by 2030 goal and how General Motors announced its goal was 100% by 2050. He also expressed concerns regarding the Scott Park Substation providing a percentage of the downtown area's power. Regina Strong, Director of the Beyond Coal Campaign, requested that the Board use the Strategic Plan as a baseline, not a goal, and that it continue to strive for higher energy efficiency percentages. 1 Brad van Guilder, Sierra Club, spoke to the Board regarding the terms "clean energy" and "renewable energy" being used interchangeably. He also provided a copy of BWL's 2016 Renewable Energy Annual Report well as a report that projects the cost of carbon. Steve Rall, Lansing, Michigan, spoke to the Board regarding the Community Advisory Committee for Energy Efficiency and whether its input would be included in the Strategic Plan. Anne Woiwode, Conservation Chair, Sierra Club Michigan, spoke to the Board regarding the importance of full disclosure of information when it comes to internal discussions and information that the BWL staff is collecting. She believes the public should be made aware of this information so it can adequately advise the Board accordingly. Kinder Wyde, Registered Nurse and Public Health Advocate, requested that the Board delay their vote on the Strategic Plan until a Health Impact Assessment could be performed and included in the IRP. Sarah Schilio, on behalf of State Representative Sam Singh, discussed a few points from a letter emailed to the Commissioners. The letter encourages the Board to hold additional public hearings on the IRP as well as increasing the energy efficiency standards. He also encourages the Board to utilize on-bill financing for deep retro-fits. He supports having a formal analysis of dollar flows for energy fuel costs as well as a Health Impact Assessment. COMMUNICATIONS a. Petition letters re: The removal of Dry Sorbent Injection (DSI) from the BWL budget. Referred to Management and Received and Placed on File b. Electronic Mail from Kara Gamboa re: Payment arrangements Referred to Management and Received and Placed on File c. Letter from Gridliance re: A business opportunity offering to the Board of Water and Light. Referred to Management and Received and Placed on File d. Electronic Mail from Brad van Guilder re: Request for additional information. Referred to Management and Received and Placed on File e. Michigan Capital Confidential news article titled: Shivering in the Dark? Referred to Management and Received and Placed on File f. Late item-Letter from State Representative Sam Singh regarding the proposed Strategic Plan and the Integrated Resource Plan Received and Placed on File and Referred to Management COMMITTEE REPORTS COMMITTEE OF THE WHOLE Meeting Minutes August 16, 2016 The Committee of the Whole 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 4:00 p.m. on Tuesday, August 16, 2016. Committee of the Whole Chair Mark Alley called the meeting to order and asked the Corporate Secretary to call the roll. 2 Present: Commissioners Mark Alley, Anthony McCloud, Tony Mullen, David Price, Ken Ross and Tracy Thomas, Sandra Zerkle and Non-Voting Members: Stuart Goodrich (Delhi), Bill Long (Delta Township) and Robert Nelson (East Lansing). Absent: Commissioner Dennis M. Louney Corporate Secretary declared a quorum.. Public Comments Dave Errickson of the Sierra Club spoke about his organization's interest in assisting the Board of Water and Light achieve the best energy plan to attain 100% renewable energy by the year 2050 without building numerous natural gas plants. Mr. Errickson said that he believes the BWL can do better by increasing energy efficiency and renewables while relying less on natural gas. Regina Strong of the Sierra Club requested that as the Board of Water and Light move forward with the finalization of the strategic plan, they be obligated to be the best utility by leading the way in innovation and forward thinking. Ms. Strong offered the assistance of the Sierra Club to help identify options to obtain those obligations. Dawn Flemming, Lansing citizen, spoke in opposition of a natural gas facility due to the effects of fracturing (also known as fracking) and how it threatens important resources, specifically water. Sarah Mulkoff, Michigan Environmental Counsel Energy Program Director, stated her concerns regarding the Strategic Plan and cautioned about the use of natural gas as well as the volatilely of fossil fuel prices. Ms. Mulkoff discouraged rushing into natural gas development and encouraged the exploration of all energy efficient and renewable options to be considered. Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner McCloud to approve the Committee of the Whole meeting minutes of May 10, 2016. Action: Motion Carried Closed Session Discussion (Attorney—Client Memo (MCL 15.268 (h), MCL 15.243 (g)) Committee of the Whole Chair Mark Alley stated that the Administration has provided the Board of Commissioners with an Exempt Memorandum and discussion of the content of the Memorandum is most appropriate in closed session. Committee of the Whole Chair Alley queried for a motion to go into closed session for the purpose of discussing the Exempt Memo, as permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL 15.243(g)? Motion by Commissioner Price, Seconded by Commissioner McCloud, to go into closed session. Roll Call Vote: 3 Yeas: Commissioners Mark Alley, Stuart Goodrich (Delhi Township), Bill Long (Delta Township), Anthony McCloud, Tony Mullen, Bob Nelson (E. Lansing), David Price, Ken Ross, Tracy Thomas and Sandra Zerkle Nays: None. Action: Motion Carried. The Committee of the Whole went into closed session at 4:12 p.m. and reconvened to open session at 5:09 p.m. Presentation and Discussion of the Proposed Strategic Plan General Manager Peffley introduced George Stojic, Executive Director of Strategic Planning, who presented and led the discussion of the proposed Strategic Plan. Mr. Stojic stated that the draft being presented today is the beginning of the next phase of strategic planning and getting the BWL positioned to meet the future. There are several important components or functions of the Strategic Plan: • It sets priorities and goals for the Board for the next 4-6 years • It communicates the Board's expectations with respect to their priorities and goals • It aligns the staff, the Board and the stakeholders • It has to be flexible enough to accommodate changes in the future Mr. Stojic said this plan has goals and objectives and measures to track performances. This plan also embraces and assumes policy governance doctrines of ends and means; meaning the Board of Commissioners sets the policies and goals and communicates outcomes. The Board delegates to the General Manager the means by which we get there. Mr. Stojic said this is a working document, and he welcomes any questions or suggestions. The proposed Strategic Plan was presented and explained by Staff and reviewed and discussed by Board members. The presentation and discussion followed the Plan layout, with the first topic being the proposed Mission statement. LANSING ENEIZbY: BWL Strategic Plan 2016-2020 Agenda Strategic Plans Strategic Plans(cont.) :• i7fdlP2it:Piah4 Ormtue« r I$ui�ht4urlaY P1':1GCss ?111':If1'R:I.f't rn!.:I f.115i t1 t.......... 11'tE fpllgWinp yurmarf.±<mYke:u...r<fe�ae Cha€irnFas Y.Cl;;porvuni!as <iue..aiac: . h4 A1i•: r '.+t:i'.r„t i+f .. na .a ih .a.ari ' .Vl nw na<u.lwe+».'.nnrlrti eha raemna'f e...ss ry Sif alegics,voals&OLjtctivas .�n<,v..vuw,.t.w.<..«ix,rY,�. w<F.�wfNm.<arwa Nu«a-,y e,na.w.:q 7�,$ Wn m9 - e rmm( a.io o.pere t.w<.<a 4 Background & Process Challenges& Opportunities •v Preparing for the Strategic Plan 47 Retirement of BWL Eckert Station • Summer lC?5meat:ng,vith community stakeho[der groups :•Changing customer expectations EPIC-1n7RA customer survey; zccaewts:ra.e<<raan >Aging infrastructure • Revfe:•xdstrategicpiansototheruti.a;es }Aging and evolving workforce •:•Interviewed General Manager,Executive Staff,Union Leadership,and subject matter experts to: Evolving environmental and regulatory requirements • Reviewthem.,sicnstatement :•Achieving financial performance targets Review the value statements Conduct Strengths. oppor tunities,tunities,andChallenges ••Water regionalization (SV,'OC)assessment -s Mission Statement Current Revised The mission affh<e BV✓tis to omvide W,nre dedicated to producing and sofe reliable,oral offordsble ub1lry• de;wenng sofe,re$ab,'e,end products and services The 8WL will offardabfe ubliby praduds and Plan far future groh,be serv;ces to the efts-ar Lensing old resoaasfbie environmentwt.;stewo•ds, the GreoLr Loos;ng Region. and beocbYe padicfoon,ts in the Tagethe,the BN'L's Baord, Lansingcommun;ty's cuftuml and monogemen(, mdempfcy—as economic initiatives. committed to ofuture cfsusfainoble growth tr of enhances the averoll _1,-betng of BWL cusfomers and the oom—lib, Commissioner Zerkle stated her concerns about the wording of the revised mission statement and believes the wording "be responsible environmental stewards" should remain in the statement. She also indicated that the Mission statement would be on the website and would not properly convey the Board's commitment to the environment as worded in the proposed Mission statement, Commissioner Alley also noted the change in language and the lack of a connection between the environment and the mission statement. Mr. Stojic explained the adoption of "sustainability" while encompassing environmental stewardship was intended to represent a broader commitment to the community, like the Live Green Lansing program. He also indicated that environmental stewardship or environmental commitment is included in the Values area of the plan, collectively with sustainability. Commissioner Ross stated that he researched sustainability before coming to today's meeting. He said on the Environmental Protection Agency's (EPA) website they define sustainability as "activities that provide services to the community that are in harmony with the environment to provide for reasonable growth for future generations." Commissioner Ross said that explanation or definition satisfied him that sustainability does have an environmental component. Commissioner Ross recommended replacing the City of Lansing with the Greater Lansing area, since the City is within and the BWL provides service to the Greater Lansing area. He indicated that the BWL should not focus only on producing services but that it may be less expensive to services more efficiently, which may be better represented by using "providing services" instead of"producing services". 5 Commissioner Mullen commented that he understood that the concept of sustainable growth enhances the overall well-being of the community not just the utility's bottom line and questioned whether the revised Mission statement conveys that commitment. Commissioner Long stated that his previously written comments were intended to avoid any miss conception by indicating that the word provides allows for both producing and purchasing power, not just producing power. The BWL does both produce and purchase power. Commissioner Zerkle stated in line with Commissioner Long's comments, she also wants to tell people that the BWL is producing power and not just buying and selling it to them at a higher rate and would like to leave the word "produce" in the Statement. Board Chair Price stated that he thinks staff was very deliberate in using the word "produce" because the majority of the power that the BWL provides, it produces. In the future he believes that is a statement that should be made. Exceptional Service Competitive Rates [urran< R.vLLed Cwienr RaruaJ _ fi Nt arocaitvntitQ to f t.r e'itlisdtJl;alfQto ^i)arstarn.;,.t ry.vFJa:rl A,:a:.bli<iy mxwd.•«lit;, frssi3p aerer:ar srnke Mng us rsa:av,ars an! r'• `t.2p is oar 'piry:IJla�(pm�ptlti-.w am{ b hN<uitarhN:0rina11 CUr.'n'+:�t/Ly 4.b•+dL ! U'Kr1P'a"f^r An{mJt .11rMJti'+a rafxs tt ltc a Aw trp,mmdty.ran us, e,nN.r..w,.am,".. .t amity.< ., r., r.L•tnicgiatwt'c VAWE STATEMENTS .aiat�iarlsdexwstctakai ruwrw'a<lwicanJ vdt6wlgvsaaw=vu+�c� v rxiiMnyotiho -' element a?<usu+ler srMrn. L.wiy iey:on. WT� woke. t Safety Current Revised v The safety of our employees h The safetyof its employees and customers is and customers is a priority. paramount. An explanation and discussion of Values followed the Mission statement. Commissioner Ross commented that the difference for him was between paramount and priority and he assumes that on the spectrum of importance, there is no tangible difference between the words. Mr. Stojic agreed. Community Commitment Currant Revised e We will strive to improve i The BWL is committed to the qual ity of life in our active corporate citizenship community. that advances the community's economic and cultural yell-being. 6 Integrity Current Revised {•We believe in interacting 4 The RW L vill Instill v✓ith all parties in an open, community trast by honest and fair manner conducting its business in a manner that is open,honest end fair. Commissioner Price commented that the Integrity portion of the Mission Statement is stated much better in the revised statement because it really gets to what the BWL is all about and that the BWL is the fabric of the community. inclusion and Equity Current Revised ?•We-,-our employees S The BWL values and as diverse individuals,and respectstheIndividuality both expan and reward and diverse background of their excellent performance. nu:cu.atomere and naioyees and considers These an as::ct ro the.HWI. and the connnunity. Mr. Stojic read aloud Commissioner Long's recommended language for the Inclusion and Equity section as follows, "The BWL values and respects the individuality and diversity of our customers and employees, considers these as assets to the BWL and the community and will strive to reflect that diversity in our Board and workplace." Commissioner Ross stated that he had a concern regarding the proposed language relating to Board members, since appointment to the Board is made by Mayor and City Council. He suggested that the "Board" section be left out. After the discussion on Values, Mr. Stojic presented the proposed the Strategic Goals. He began with "Customer Experience". Mr. Stojic indicated that customers are demanding more tailored service and should be provided with tools to manage their energy use. He indicated that new technology investments will drive these opportunities. Ms. Shawa-DeCook described four major technology initiatives being undertaken by the BWL: Advanced Metering Infrastructure (AMI), Advanced Distribution Management System (ADMS), which incorporates Smartgrid initiatives with the Energy Management System (EMS), the Outage Management System (OMS) and the Geographic Information System (GIS). She also indicated that the projects will impact the workforce and that a flexible and adaptive workforce is needed as well the skillset to support the technology. 7 . . Strategic Goals Environmental Stewardship + ^�l M,^ snn�mcsox���~~�� --`--- ��`°�' ��`°` .~~.~ ~._.~ Ylif� Customer Experience �Goal:Enhance the cu,m=°.experience `. "—r~~"—~^~~ ~~ Commissioner Ross asked for some insight on-the Board's role relating to the Strategic Goals. According to Mr. Stoiic, the Board has an important role in both adopting and monitoring management's progress in meeting the Strategic Goals. However, he indicated that there was no systematic or purposeful process by which the Board could monitor progress in meeting the 2008 goals. He proposed developing a process for the purpose of allowing the Board to monitor this Strategic Plan. Commissioner Long suggested doing something at the Committee of the Whole meetings similar to how the Finance committee breaks down issues/topics by sections which would a||ovv Commissioners to understand, review and monitor piece by piece if progress is being made or not being made in particular areas. Executive Director of Communications Steve Serkaian stated that the BVVL has a tradition of giving back to the community and believes this encompasses the BVVL's involvement in home-grown programs like the Chili Cook-off and Silver Bells in the City. Mr. Serkaian said more importantly, the underpinning of this section is reflected in the BVVL's value statement involving integrity. This section of the plan contains the BVVL's willingness to engage the community, be a part of the community, and give back to the community when it is appropriate. Effectively Acquire and Manage Resources ^o~x.At(ju^"=u=^""ge OU'"°"u Ill=efficient "/"alky�e,ViLe"wm"u.*iig"=".Utli* Mr. 5t jiC briefly described the challenges presented by the BVVL's infrastructure program, which is shared by entities throughout Michigan and the United States from utilities to highways and airports. 8 Executive Director of Operations Dave Bolan described the Transmission and Distribution plan needed to retire the Eckert plant. Since the distribution facility at Eckert serves 1/3 of the BWL's load, the plan includes 5 new substations and new transmission lines. The projects related to the first 5 years of the plan are necessary to maintain reliably standards. Mr. Bolan described "Asset Management" as doing the right work at the right time. It is based on the ISO 5500 and the Department of Environmental Quality is requiring that water utilities bring this into their practice by 2018. Ultimately, Asset Management aligns the BWL's activities and assets with the strategic plan and goals of this organization. Mr. Stojic described the objective of replacing the Eckert plant with a balanced portfolio of resources including local generation, more renewable energy, energy efficiency programs, and a demand response program. Commissioner Nelson questioned whether or not to include the Board of Water and Light's objective to reach 40% renewables by 2030, 20% by 2020, or an approximate energy efficiency target or objective. Mr. Stojic in response to Commissioner Nelson that renewables it is expected to be at 20% by 2020 and it is entirely possible that some of the project developers may not be able to bring some of their projects to fruition and it is possible that dates may not be met, so that flexibility was needed in the plan. Commissioner Ross stated that he would like to see a greater commitment to enhancing energy efficiency, having a well-developed and diversified renewable energy portfolio, and seeing annual increases in clean energy. In response, Mr. Stojic stated he believes that is possible to enhance energy efficiency as long as it is realized that there will be some years in which there will be more increases and some in which there will be less, due to the nature of these projects. General Manager Peffley commented that he does not have a problem with putting the 40% in the Strategic Plan but hesitates to do so. He stated, "for example, we are going to construct a thousand panels in East Lansing's solar garden and construction will begin after 700 panels are sold however that has not happened yet." The purchase of panels has been much slower than anticipated and two renewable projects are taking much more time to develop than planned and wind energy is facing new regulations, all factors in Mr. Peffley's hesitation of placing firm numbers in a 5 years plan. Board Chair Price commented that he would be reluctant to say 40% by 2030. This is a 4 year plan and the biggest goal is the decommissioning of the Eckert and the replacement for Eckert. This way the BWL has flexibility in 2020 to look at what's out there. Commissioner Nelson stated that he is in agreement with Commissioner Ross, that it should be indicated that the BWL should do better every year and that way there is always a goal out there that is trying to be reached. Commissioner Ross stated that his other suggestion for consideration is increasing energy efficiency because that would be a longterm benefit. 9 Commissioner Ross commented that as he reads through the Strategic Plan and the objectives, most of the focus seems to be on electrical production, generation, and transmission. He indicated that everyone needs water and if anything ever happened to the water system, it would be heard about immediately and people would be in crisis mode pretty quickly. Commissioner Ross said that he would like to get a sense of the extent to which water is being called out enough in this plan, and if not is there work that needs to be done someplace else? General Manager Peffley stated in response to Commissioner Ross's comments that he thinks the BWL is ahead of the curve on water and that is why there is a little less emphasis on it right now. Both of the BWL's water treatments plants, the Cedar-Dye plant at a 40 million gallon capacity and Wise Road at 10, were completely rebuilt in the last 7-8 years. They have a 30 year lift on them. He said that the company continues to put the capital expenditures in them to extend that life and keep them reliable, and is very comfortable with where the company is in the water area. Mr. Stojic added to the dialogue that there is a component on water distribution in the plan as well as steam distribution. Mr. Stojic pointed out that there have been some additional customers on the chilled water side of the business so they will look into adding capacity as well. Implement New Technologies i Gael:Sup{sun tsar cu110rtretS and engr£nyvey through the enhanced use of technolagy •cN:;en.vea: Chief Financial Officer Heather Shawa-DeCook described the "Implement New Technologies" Goals. She identified two key objectives. The first goal is to support existing and planned projects with IT infrastructure including an update of the IT strategic plan. The second goal is to enhance IT and communications technology. Workforce Goal:Maintain a strong and diverse workforce • Ohjeaives: _. Fttractend rota:nadwerseandh,&ysk:tkds•:crkforce a. Prepare for tranfarmalip flu,svv rkferce Provide Wore oCpar:unites Fvr a Gust^.mrnprk es Pericnce that henefl.ho[h the emp'pyer and employee .. Pursuee.cel:en<e by creatmp a+ kp'acee nm<nt that seeks to enhance current pract ces y::th the intention cF eddong value,mak'.nt improvements,and increas:nge!f:c'.ency Mr. Stojic indicated that there were a number of issues related to Workforce including recruiting and retaining new employees, transition of employees from Eckert to new positions, and loss of human capital through retirements. Executive Director of Human Resources Michael Flowers stated that trying to attract and retain a diverse and highly skilled workforce and continuing to train and develop programs for employees is the goal. He described a comprehensive and diverse set of programs and measures to meet the Workforce goal 10 Commissioner Ross stated as he was looking through the Workforce section of the plan, he was looking for some kind of direct reference to the BWL's pipeline programs to bring people in and he found most of the focus to be in the objective of the existing employees. Commissioner Ross suggested that under Objective 1, number 1, it considers continued investment in training and development programs and should consider the use of "potential and existing employees" versus just "existing employees". He believes there should be a strong pipeline whether it is through LCC or wherever. Financial Stability •-Goal:Mainta n the finandaI stability of tha UWL 3p q- Mr. Stojic indicated that the BWL was undertaking a very aggressive infrastructure replacement program and that it would require funding. Chief Financial Officer Shawa-DeCook stated that the BWL is faced with the challenge of keeping competitive during 5 years of heavy investment while also practicing good financial stewardship. She described preparation for developing a financial plan which includes a multi-year rate strategy that provides financing for the BWL's capital program. She indicated that the BWL was committed to reviewing and achieving its target rate of return to consistently support and maintain the infrastructure we currently have and will be investing in in the future. BWL Leadership •G±jr1:•oes: Mr. Stojic discussed inclusion of the "BWL Leadership" goal and its objectives in the plan. Commissioner Ross stated that one of the strengths at the BWL is a strong senior management team, particularly in the General Manager who has a long history with the utility, and has grown up within the company. He also indicated that it could be a weakness if something were to happen to him tomorrow, so he recommended a succession planning objective. In response to Commissioner Ross's point, General Manager Peffley stated that succession planning is something that is being worked on and that each one of the Executive Directors has worked to identify what individuals can step up at all rank levels. He said they are looking at who can move in if someone retires or moves on, especially unexpectedly, so the business can continue to run without a hitch. Board Chair Price said that the Board just received the Strategic Plan last Wednesday and suggested that the Commissioners take it home and digest it and submit any suggestions, additions, and/or deletions to the 11 Executive Staff. Once any amendments have been incorporated, and if agreeable by all, it could be considered as an agenda item at the next Committee of the Whole meeting. Mr. Stojic stated that he would provide a redline version based on what he heard today. Public Comment David Errickson of the Sierra Club stated that he likes the fact that goals are being set. He also stated his interest in serving on an energy efficiency citizens' advisory committee if there was one. Other General Manager Peffley thanked the staff for all of the hard work that went into the Strategic Plan. He said this is a very busy and exciting time at the BWL and it is currently exploring water regionalization, a complete rebuild of the electric system, and how to generate power for the future. Excused Absence Motion by Commissioner Price, Seconded by Commissioner McCloud, to excuse Commissioner Louney from tonight's meeting. Adiourn Meeting adjourned at 7:22 p.m. Respectfully Submitted Mark Alley, Chair Committee of the Whole COMMITTEE OF THE WHOLE Meeting Minutes September 13, 2016 The Committee of the Whole 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 13, 2016. Committee of the Whole Chair Mark Alley called the meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Mark Alley, Dennis M. Louney, Tony Mullen, David Price, and Sandra Zerkle and Non- Voting Members: Stuart Goodrich (Delhi), William Long (Delta Township) and Robert Nelson (East Lansing). Absent: Commissioners Anthony McCloud, Ken Ross, Tracy Thomas The Corporate Secretary declared a quorum. Public Comments Brad Van Guilder, Sierra Club, stated his concerns about the proposed draft Strategic Plan and suggested that there be an explicit mention of climate change. 12 Approval of Minutes Motion by Commissioner Mullen, Seconded by Commissioner Price to approve the Committee of the Whole meeting minutes of August 16, 2016. Action: Motion Carried Discussion of the Edits to the Proposed Strategic Plan General Manager Peffley introduced George Stojic, Executive Director of Strategic Planning, who led the discussion of the proposed edits to the Strategic Plan. Mr. Stojic reminded the Committee that during the Andertthose meeting, and the dispuoponewasStrategic ht and Plan contained seven goals as well as objectives that fell u g recommendations from the Commissioners were incorporated as a result of the discussion from that meeting. The Committee was provided a redlined version of the document with the changes which also included Commissioner Long's suggestions made prior to the August 16th meeting. Mr. Stojic stated that this meeting will be another opportunity for the Commissioners to ask questions or make recommendations. He indicated that subsequent to the August 16th meeting, recommendations were received from Commissioner Nelson and those recommendations are not incorporated into the redline version but will be discussed during this meeting. Recommendations were also received from commissionerII MLouney Sto cimmediately stated miately prior to is goal the start of a this meeting. Those recommendations will be addressed as J final draft of the Strategic Plan by the end of this meeting to allow the BWL to move forward. Please Note: In the proposed redlined version of the Strategic Plan, Red indicates grammatical changes. Blue indicates commissioner suggested changes. Mr. Stojic reviewed the changes to the Plan page by page and there was dialogue along the way. Page #5 Commissioner Nelson suggested, under the Evolving Environment and Regulatory Requirements section of the Plan, that the section be amended to read: "The BWL faces many new environmental regulations driven by climate change, such as a clean power plant." ich ted to Mr. Stojic said the BWL does have environmental regulations ati dos „Thered, one of BWL faces mhany Inewaenvironcmental limate change, and suggested that the language be amend regulations including those related to concern over climate change, such as a clean power plant." Page #6 Water. regionalization changes proposed by Commissioner Long prior to the August 16th meeting were incorporated into this document. Page #g Mr. Stojic spoke on Objective 3: Provide Customer Focused Rates. He said Commissioner Nelson propose inserting, at the end of that Objective low income assistance" so that it would read: "Review and revise rate structures to respond to changing customer composition and needs such as time of use rates and low income assistance." Mr. Stojic said this section is really intended for rates only. He believes if reference to low income programming is going to be inserted into the Strategic Plan, it should be elsewhere. 13 Commissioner Nelson suggested adding a 4th Objection that stated "Provide low income customers with needed energy assistance".That language was not accepted. Page#g Mr. Stojic reviewed the only change under the Community Involvement Section which was cosmetic. t was hroughout this document since the BWL noted that the term "Greater Lansing Region" was incorporated t participates throughout the region. Pale #9#9 Commissioner Nelson proposed a suggested change to Strategy #2, Objective #2. He believed the wording o subsection 1 implies that we have a partnership with ourselves. Mr• Stojic agreed y a d with co a issioner ramNelson d s suggestion to update the Objective to read the BWL s energy en partnership with the Mayor's Live Green Lansing Program." Page #10 Mr. Stojic said there was substantive discussion at the August 16th meeting regarding Strategy#3, Objective regarding the balanced portfolio. He indicated that item has been addressed in Strategic Goal #7, Objective #5. Page #11 Mr. Stojic said the only change, recommended by Commissioner Ross, was that under Strategy 5, Workforce Objective 1,the language "potential and existing employees" was added to this draft. Page #12 and #13 Cosmetic changes only. Page #14ommissioner Mr. Stojic spoke about the two recommended changes that were ne bmot�tedddbo the Nelson as to the those recommended by Commissioner Louney in the document p start of this meeting. First were the renewable and clean energy goom He d h the L has insertedresourc a goal for 2020 of 30% clean energy with a plan to expand those options as components lio thereafter. The second recommendation was to include distributed generation. Stojic idsaid dthe BWL dinthe g "developing a distributive generation program may be a littleg incentivize solar installations on a customer's premises and have implemented the community's solar programs. se Commissioner Nelson questioned that if we are going to say we encourage that he BWL reaplyndoesogot haveha can't we encourage distributive generation as well. Mr. Stojic sated demand response program, but does have a distributed generation program. ne Commissioner Louney asked if there could be a statement o the things Bhat the shallthat the WL continue sl doing are great, opportunities for distributed generation. He said that some should be stated in this Strategic Plan, and we.should continue on with what we are doing. Mr. Stojic said Objective 7, a recommendation from Commissioner atssome hoist velopment of a potential leadership program and replacement strategy for senior management p The Committee reviewed Commissioner Louney's 7 recommendations for the Strategic Plan: 14 I, Distributed generation I would like to see us consider a statement of a goal to examine distributive generation where st of possible. Among this line of thinking the companies/buildings/services such as city hall, police anddeve fire `e departments, hospitalsment of a critical ` etc.is vital. Locating small co-generation units within some of these facilities while leasing these units with LBWL maintaining ownership and maintenance provides a stronger and more resilient utility. Accepted 11. Greater energy efficiency While our current goal of 30 percent is laudable, I think LBWL should try to achieve a higher c pilot standard. A possible way to achieve this may betolf wecoulddeterm ne the�nedteusagesof specific sector of the city within our service a a energy in this area then contact each energy user (businesses, landlords, tenants, low-income residents, senior citizens, etc.) and determine what energy efficiencies could be achieved we could evaluate the energy usage when completed. Accepted:To State 30% or greater. III, Connectivity with municipalities I think The plan discusses implementing new technologies. ` makes Inadd tion while we ar sense to discuss e rollout of smart meters and when they actually will be turned on working to integrate our technologies with the City of Lansing City works software, we should be working to do the same to all the government entities within our service area. Not Accepted IV. Board of Commissioners The plan discusses LBWL leadership yet there is no mention of strategic goals for the Board of Commissioners. The Commissioners should be mentioned specifically in striving for t greater a transparency such as televising/recording meetings; greater educational o p nd better ways of engagement with our customers. Not Accepted V. Recognition of our status as a public utility nd The plan does an excellent job in discussing t e cus omenstatement et pd ienc discusses ou rcoole as�ta involvement. However, there should be some public utility and citizen/customer engagement. In the Integrated Resource Plan our Citizen Advisory Committee was integral in providing a roadmap for our staff. This should be a consideration in future planning when possible. Already Addressed VI. Transportation i 15 ero ion With the push to convert from combustion engine vehiclesie°pentionedsin the plan. BWL has powered vehicles a statement recognizing this growing trend should been a leader in Michigan in this area and we need to continue in our efforts. Not Accepted VII. Future possible liabilitiesion Because our future power generation being reliant on naturalcosts, etch is worthto dis ocussi .poonbllt environmental effects such as increased methane, rising may not be necessary to mention tills in the plan but a statement acknowledging this may be useful. Not Accepted Motion by Commissioner Price, Seconded by Commissioner Zer{<le to forward forrconsideeation ion for the adoption of the Strategic Plan with the inclusion of tonight's edits to the full B Action: Motion Carried Public Comment Brad Van Guilder, Sierra Club questioned that if the Strategic Plan being voted on passes, does that also mean adoption of the IRP recommendation that was made in May. Other None Excused Absence Motion by Commissioner Price, Seconded by Commissioner Mullen, to excuse Commissioners McCloud, Thomas and Ross from tonight's meeting. Add Meeting adjourned at 6:24 p.m. Respectfully Submitted Mark Alley, Chair Committee of the Whole FINANCE COMMITTEE Meeting Minutes September 13, 2016 BWL met at the BWL Headquarters — REO Town The Finance Committee of the Board of Water and lVllght at 6:35 p.m. on Tuesday, September 13, 2016. Depot, located at 1201 S. Washington Ave., Lansing, Actin Finance Committee Chairperson David Price called the meeting to order and asked that roll be taken. g 16 Present: Commissioners Mark Alley, Dennis M. Louney and David Price. Also, present Commissioners Tony Mullen and Sandra Zerkle. Non-Voting Members Present: Commissioners Stuart Goodrich (Delhi), Bill Long (Delta Township) and Bob Nelson (East Lansing). Absent: Commissioner Ken Ross The Corporate Secretary declared a quorum. Public Comments None. Approval of Minutes Motion by Commissioner Alley, Seconded by Commissioner Louney, to approve the Finance Committee meeting minutes of July 12, 2016. Action: Motion Carried. Baker Tilly External Audit Report- Resolution Heather Shawa-DeCook, Chief Financial Officer (CFO), introduced external auditor ddi do and ,rev Partner the v the Certified Public Accounting Firm, Baker Tilly, Virchow Krause LLP, presented on auditing process, observations and recommendations, and also covered the required se fund and he three to the governing body for the various Board of Water and Light reports. The enterprise ion funds, Defined Contribution Plan (DC Plan), Defined Benefit Plan (DB Plan), and the VEBA Benefit Trust, which all received an unmodified audit opinion. Ms. Dobson's presentation was as follows: ..Board of Water and Light•City of Lansing audit orervfew iAA'LIL TII„LFY Finance Committee Meeting September13,2016 our 201GAudit Presentation Hometown People.Hometown Power: Agenda ..an e r( r .P.I.o.o u,¢a[an toc„r- 9so.J' r1� ti➢ %;. m ,� I$- �� 1i . �— Fnano I A tlllNncM eble Sfeleenta Atana,em+ntewabn e b I Entep 1 k:nena e l.,ll�ato ...._ .... 17 Board of Water and Light-City of Lansing Board of Water and Light-City of Lansing Audit overview Audd ov�rvieiv - dd �yr1KIiR"ILLY ' GAKfR TtLly Controls Disbursements reviewed .................. key transaction Payroll transaction Y _. ..,... _...__. areas Billings "' Cash and investments .... _ Capital assets ........ . f Information technology Financial reporting . ' � .....P. . 77 Board of Water and Light-City of Lansing Board of Water and Light-City of Lansing_ Obiaivau—andmc nle,+darlons FnlnrprlFnrepatr and nv.mn,nenJai + El]le rise Fund 7' se find6AKf0.'rI LLY fY UAKF.R TILLY Operating n >Reported net income of$900,000:after impairment on Revenues- -.... ........ Eckert Power Station of S15,763,000 Four-year ]sue, .... .... _..._. ;f .._.. Comparison s a _._ ........ >Bond coverage was met in 2016 can thousands) s • uman. - ':� >There were no material weaknesses reported l:otm > Combined deficiencies in control related to infomtation technology resulted in a significant deficiency iILll ];11 'J; 3'll s .w s s;�:i s otv s uet >GAS B Statement No.72 disclosures related to fair value rise a• were implemented as required «•�•••- "`_elm '.e.M Viz,.' ;� ..�:�: .�. - Board of Water and Light City of Lansing "`""" Board of Water and Light.City"of Lansing ot, rvanons and recmnmand t ]s Observations artd reCQmmenddfi0ns t r m'Se Furld '' -.VUAK.FR MIN Enterprise Furtd -'VakKFR YlLLY _,,.•,.,,..,,.., ..... .... .................... Operat n9 _....._ .... Operating �. I• - Income F�cpznses _ �A Four year ssva� —_ _ Fou'-Ytar s.� / s,.- comparison Comparison z"'� (n Thousands) ac 9.I- --" .,.•Aw (in thousands) s . s xll •...... au ...z_ •e as au ns - NU "tit s t::s .i,s .3'.]] ale felt •ills .. gin. Board of Water and Light-City of Lansing Observat and ro_en 'auous aTKt0."III.LY � ��- r Board of Water and Light•City of Lansing Future oebt s::a ...,....-....,. service a:u9 Requirements € (n thoasandsl f3"� ) ..t .... pension lmutxlat statama:r5s issued lw each slsn.-' ...._ pension plan t;ASO SIatL.mceM No.72 was imG etlod for all - tnrae M.xns Ati Brice plains feceivorl unmoddied awift ovitsOm - ::ll 5 iler. 1 l.1`a ]l _ LrMwNeta n1f Nn'u.n�t:7;9�".x�uleay,WeN H...a..•s... iA:5,9Ta,Na+nURivr,lGe*mK:,UIIiU.f_4bS ] Board of 1"later and Light-City of Lansing C»,f+rv-v cu•r+n>m�iaain+++fn J�.>se cfi.ayed tar.•.ywwYXrua• Jb.v++4 ..'rt.. nhw.-rw: 0 ' WeLiy AtregeepP J 6Yt+W ( Kaai d+- L cuNrN xuaxa rn.la elTvhNd arcasKrlabA':K 18 ptt VAIf'NUAA aaw7 mMCn n. A Mwr..f.a:N•vnwhrraemor.sxel �.x errx�.el!�m!aetuaw'.ve,�em pty«e»mas ov0.^Ys.NamN Cm'W.AMs wN:Mw We'.*vMf{FvwnLnAt Ewa .Board of Watar and CJg,t city,-a:"tttt h$ ''''Obsarva+loos and recommeridat ons"4 yKcx ru.i.y Future accounting standards G:SS statemanl fm.73 F""n 'Repadina:cr Pes:amp,u,^+e^i 8e1e14 F3110 o;!;u•dare 7ensmn Rl - eReGr,far fiscal year 2017 > GASB Statement M.75 Acceu ding e+d F,rs^usl Re;a^.-9 to-Fostema'ayres;bms!as C6'rer iaan Fensrons- effectN,e for fieca!year 2019 v..F:.x;ad trax:ld Wu rep;z;" rtU rrsxat T-1 pc,v'+0 tti af9 3:3rtt»apr Se YNR1 Discussion Motion by Commissioner Louney, Seconded by Commissioner Alley to forward the Resolution for the acceptance of the Audited Financial Statements and the Enterprise Fund and Pension Fiduciary Fund to the full board for consideration. Action: Motion Carried Preliminary July Financial Highlights Heather Shawa-DeCook, Chief Financial Officer (CFO), reported that the July Financial results are still underway and would be reported at a later date. Ms. Shawa-DeCook informed the Committee that the BWL is taking advantage of an opportunity for an advanced refunding of 2008 A-Bonds, which entails significant interest savings. DB and VEBA Investment Policy Statements-Resolution Chief Financial Officer Heather Shawa-DeCook provided an overview of the revised Investment Policy Statements (documents) in which the Board's approval is necessary. The reviewed documents include: 1. Revised Investment Policy Statement for Lansing Board of Water and Light Defined Benefit Plan for Employees'Pensions (the "Defined Benefit Plan") 2. Revised Investment Policy Statement Post-Retirement Benefit Plan for Eligible Employees of Lansing Board of Water and Light (the "Retiree Medical Benefit Plan") 3. First Amendment to the Pension Plan Trust 4. First Amendment to the Retiree Benefit Plan Trust 5. Resolution which captures the above 4 documents and creates a Retirement Plan Committee. 19 Recommendations as indicated in the Executive Summary: Summary Recommendation Senior Management recommends approval of the Defined Benefit Plan IPS and the Retiree Medical Benefit Plan IPS. Senior Management also recommends approval of the First Amendment to the Defined Benefit Plan Trust, the First Amendment to the Retiree Medical Benefit Plan Trust, and the creation of the Retirement Plan Committee. The proposed Retirement Plan Committee members will consist of the Chief Financial Officer (Chair), Executive Director of Human Resources, and Manager of Finance. After some dialogue regarding the use of the word "Trustee" in the proposed Resolution, the following motion was offered: Motion by Commissioner Louney, Seconded by Commissioner Alley, to forward the proposed resolution with an amendment to state "Trustee(s)" in the document to the full Board for consideration. Action: Motion Carried Public Comment None Other None Excused Absence Motion by Commissioner Alley, Seconded by Commissioner Louney, to excuse Commissioner Ross from tonight's meeting. Action: Motion Carried Adiourn On Motion by Commissioner Alley, Seconded by Commissioner Louney, the meeting adjourned at 7:12 p.m. Respectfully submitted David Price, Acting Chair Finance Committee MANAGER'S RECOMMENDATIONS There were no Recommendations from General Manager Peffley. UNFINISHED BUSINESS There was no Unfinished Business. NEW BUSINESS There was no New Business. 20 RESOLUTIONS RESOLUTION 2016-09-01 STRATEGIC PLAN ADOPTION BE IT RESOLVED; That the Lansing Board of Water and Light Board of Commissioners adopts the Strategic Plan as approved by the Committee of the Whole on September 13, 2016. Motion by Commissioner Zerkle, Seconded by Commissioner Mullen to approve the Resolution adopting the Strategic Plan. Action: Motion Carried RESOLUTION 2016-09-02 FISCAL YEAR 2016 AUDITED FINANCIAL STATEMENTS OF THE ENTERPRISE FUND AND PENSION FIDUCIARY FUND RESOLVED, that the fiscal year 2016 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 2016 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, 2016. FURTHER RESOLVED, that the Corporate Secretary is hereby directed to file a copy of the fiscal year 2016 Audited Financial Statements of the Board of Water and Light with the City of Lansing. Motion by Commissioner Ross, Seconded by Commissioner Alley to approve the Resolution adopting the Fiscal Year 2016 Audited Financial Statements of the Enterprise Fund and Pension Fiduciary Fund. Action: Motion Carried RESOLUTION 2016-09-03 AMENDMENT OF PENSION PLAN TRUST; AMENDMENT OF RETIREE BENEFIT PLAN AND TRUST; REVISED INVESTMENT POLICY STATEMENTS; CREATION OF RETIREMENT PLAN COMMITTEE; AND DELEGATION OF AUTHORITY. WHEREAS, the Board of Water and Light (the "Sponsor") sponsors the Lansing Board of Water and Light Defined Benefit Plan for Employees' Pensions (the "Defined Benefit Plan") and the Post-Retirement Benefit Plan for Eligible Employees of Lansing Board of Water and Light (the "Retiree Medical Benefit Plan"); and WHEREAS, the Sponsor has decided to create a formal committee to which the Sponsor will delegate discretionary authority and responsibility for the discharge of certain of its duties relating to the Defined Benefit Plan and the Retiree Medical Benefit Plan; and WHEREAS, the Sponsor has legal authority pursuant to the Defined Benefit Plan and to the Retiree Medical Benefit Plan to create the committee and to delegate certain duties to the committee; and WHEREAS, the Sponsor wants to amend the Pension Plan Trust relating to the Defined Benefit Plan for the purpose of implementing the terms of the Lansing Board of Water and Light Defined Benefit Plan for Employees' Pensions Statement of Investment Policies, Procedures and Objectives; and 21 WHEREAS, the Sponsor wants to amend the Retiree Benefit Plan and Trust Agreement relating to the Retiree Medical Benefit Plan for the purpose of implementing the terms of the Post-Retirement Benefit Plan for Eligible Employees of Lansing Board of Water & Light Statement of Investment Policies, Procedures and Objectives. THEREFORE, it is: RESOLVED, that the Sponsor approves and adopts the First Amendment to the Pension Plan Trust relating to the Lansing Board of Water and Light Defined Benefit Plan for Employees Pensions effective as indicated therein. FURTHER RESOLVED, that the Sponsor approves and adopts the First Amendment to the Lansing Board of Water and Light Retiree Benefit Plan and Trust Agreement relating to the Post-Retirement Benefit Plan for Eligible Employees of Lansing Board of Water and Light effective as indicated therein. FURTHER RESOLVED, that, after its review, and based on a recommendation from management, the Sponsor adopts and approves: (i) the attached Lansing Board of Water & Light Defined Benefit Plan for Employees' Pensions Statement of Investment Policies, Procedures and Objectives; and (ii) the attached Post-Retirement Benefit Plan for Eligible Employees of Lansing Board of Water & Light Statement of Investment Policies, Procedures and Objectives. FURTHER RESOLVED, that the Sponsor hereby creates a committee effective September 27, 2016 the name of which shall be the "Retirement Plan Committee," and the Sponsor appoints the following individuals to serve on the Retirement Plan Committee: Chief Financial Officer, Executive Director of Human Resources, and the Manager of Finance. The Sponsor appoints the Chief Financial Officer to serve as chair of the Committee. Each Retirement Plan Committee member shall serve on the Committee until his or her resignation or removal from the Committee. The presence of a majority of Committee members shall constitute a quorum and will be sufficient to conduct the business of the Committee. Actions of the Committee shall be authorized by a vote of a majority of the Committee members present at a meeting at which a quorum is present. Any action which may be taken at a Committee meeting may be taken without such meeting if consent to the action in writing (including by electronic mail), setting forth the action so taken, is signed by all of the then-serving members of the Committee. FURTHER RESOLVED, that the Sponsor acknowledges that the Trustee (also known as Trustees) intends to delegate to the Retirement Plan Committee certain duties relating to the investment of Defined Benefit Plan assets and to the investment of Retiree Medical Benefit Plan assets. The Sponsor does not delegate to the Committee authority to amend, freeze or terminate the Defined Benefit Plan or the Retiree Medical Benefit Plan.,, FURTHER RESOLVED, that the Sponsor indemnifies and holds harmless each member of the Committee from and against all liability of any kind, including, without limitation, court costs, attorneys' fees and other expenses that arise from any legal or administrative proceeding of any kind that is brought by any person, entity or government agency in connection with the Committee's discharge of its duties relating to the Defined Benefit Plan and to the Retiree Medical Benefit Plan; provided, however, that this indemnification shall not apply with regard to any proceeding in which a Committee member is found to have been grossly negligent or to have violated a law or committed a crime. 22 Motion by Commissioner Ross, Seconded by Commissioner Mullen to approve the Resolution for Amendment of Pension Plan Trust; Amendment of Retiree Benefit Plan and o Trust; Revised Investment Policy Statements; Creation of Retirement Plan Committee; and Delegation of Authority. Action: Motion Carried MANAGER'S REMARKS General Manager Peffley stated for the record that the Michigan Capital Confidential al lvel of the an interview that was conducted with him prior to his meeting een s.hMrePeffley also stated his Sierra Club and since then there have been for the 7 1 vote onthe Central Substation matter. appreciation to the Lansing City Council COMMISSIONERS' REMARKS There were no Remarks from Commissioners. MOTION OF EXCUSED ABSENCE Motion by Commissioner Mullen, Seconded by Commissioner Zerkle,to excuse Commissioner Thomas from tonight's meeting. Action: Motion Carried PUBLIC COMMENTS r not Dave Errickson, Lansing, Michigan, spoke to the Board regarding eld sooner rather than late having a Health Impact Assessment. He urges the Board to have the assessment perform Brad van Guilder, Sierra Club, spoke about his concerns over not having a Health ewablm because they have less of pact Assessment. He suggests that the Board look at alternative considerations that increase r information request. es a health impact. He also inquired about a response to a previous ADJOURNMENT Chair Price adjourned the meeting at 6:10 P.M. M.Denise Griffin,Corporate Secretary Preliminary Minutes filed(electronically)with Lansing city Clerk: October 4,2016 official Minutes filed(electronically)with Lansing City clerk:November 21,2016 I 23 Approved by the Board of Commissioners on 9-27-16 man vw1ec co G", MINUTES OF THE BOARD OF COMMISSIONERS' MEETING CV i ; LL1 N �i LANSING BOARD OF WATER AND LIGHT �a UZ co July 26, 2016 O:f U-3 The Board of�omlwissioners met at the Board of Water and Light (BWL) Headquarters-REO Town Depot located at 1201 S. Washingion Ave., Lansing, MI, at 5:30 p.m. on Tuesday, July 26, 2016. Chairperson David Price called the meeting to order at 5:30 p.m. Present: Commissioners Mark Alley, Anthony McCloud, Tony Mullen, David Price, Ken Ross, Tracy Thomas and Sandra Zerkle. Non-Voting Commissioners present: Stuart Goodrich (Dehli Township), Bob Nelson (East Lansing) and Bill Long (Delta Township). Absent: Commissioner Dennis M. Louney The Corporate Secretary declared a quorum. Commissioner Mark Alley led the Pledge of Allegiance. Without objection Chairperson David Price amended the agenda to include a Special Ceremony to present General Manager Peffley with a Resolution of Tribute to honor his 40 years of service to the Board of Water and Light. SPECIAL CEREMONY-TRIBUTE TO BWL GENERAL MANAGER RICHARD "DICK" PEFFLEY Chairperson David Price presented General Manager Dick Peffley with a Resolution of Tribute on behalf of his 40 years of service to the BWL. Chairperson David Price announced and introduced a special guest: the Honorable Mayor Virg Bernero, who congratulated General Manager Peffley for his 40 years of service. Motion by Commissioner Zerkle, Seconded by Commissioner Thomas to approve the Resolution of Tribute honoring General Manager Peffley for his 40 years of service to the BWL and the community. Action: Motion Carried ELECTION OF OFFICERS FY 2016-2017 Chairperson David Price recognized Commissioner Anthony McCloud, who chaired the Nominating Committee. Commissioner McCloud presented the June 21, 2016 Nominating Committee Report, from which the proposed slate of officers for Fiscal Year 2016-2017, is as such: Commissioner David Price serving as Chairperson; and Commissioner Mark Alley serving as Vice Chairperson. With no nominations from the floor for the office of Chairperson or Vice Chairperson, the following motion was offered: 1 Motion by Commissioner Mullen, Seconded by Commissioner Thomas, to approve the presented slate of officers for 2016-2017 as proposed by the Nominating Committee as: Commissioner David l"rice serving as the Chairperson Commissioner Mark Alley serving as the Vice Chairperson Action: Motion Carried Chair Price thanked everyone for their vote of confidence and pledged to continue to work hard in his leadership role as he has done the last two years. APPROVAL OF MINUTES Motion by Commissioner Thomas, Seconded by Commissioner Mullen to approve the Regular Board Meeting minutes of May 24, 2016. Action: Motion Carried PUBLIC COMMENTS Regina Strong, Sierra Club, Director of the Beyond the Coal Campaign, spoke about the communication in the Board meeting packet regarding access to information during the IRP process. She thanked General Manager Peffley, George Stojic and Steve Brennan for attending a recent meeting with the Sierra Club to allow items identified in the letter to be addressed. Brad van Guilder, Sierra Club, spoke about the recent meeting with the Sierra Club, General Manager Peffley, George Stojic, Steve Brennan and Sierra Club consultants. Mr. van Guilder said they identified some items for explanations and correction of the modeling. (Mr. van Guilder provided the Board of Commissioners with a copy of the FOIA response received by the Sierra Club from the BWL FOIA Coordinator). Dave Errickson, Sierra Club, spoke regarding the data and assumptions used in the IRP Process, the retirement of Erickson and Eckert plants, and the avoidance of new infrastructure. He also submitted a petition letter in support of removing Dry Sorbent Injection (DSI) from the budget due to what he believes has immediate health side effects signed by the following individuals: Dave Errickson Jordan Priebe Maria Dellacorte Julia O'Connor William Haggerty Emily Haggerty Suzanne Love Joy Torrenga Marites Woodbury Timothy Hagerman Heath Post Debra Wolf Michael Casler Dan Nowiski Loren Clift Stephen Batzer Mark Wright Robert Blanchard Alexis Ray Angie Liberato Phillip Wells Erin Early Christine Barrett Julie Larson Barbara Worgess Stephen Cessna Barbara Schmidt Made Schriner John de Vries Judith Benedict David Devinney Steven Sy Ron Holley Katharine Gabele Cecilia Garcia Douglass Mark Miser Carol Rall Bob Johns Andy Szwejda Liutauras Gedivllas 2 David Bolig Dan Blakely Linda Blodgett COMMUNICATIONS a. Email from Scott Boehme, E. Lansing, MI r,e: The installation of a Geothermal power plant Referred to Management. Received and Placed on File b. Email from Kyle Shumaker, business owner re: A recent power outage Referred to Management. Received and Placed on File c. Letter from Brad van Guilder of the Sierra Club re: Access to the Board of Water and Light's Integrated Resource Planning (IRP) information Referred to Management. Received and Placed on File INTRODUCTION OF NEW COMMISSIONER Chairperson David Price introduced and welcomed BWL's newest Commissioner, Mr. Stuart Goodrich representing Delhi Township. COMMITTEE REPORTS HUMAN RESOURCES COMMITTEE Meeting Minutes May 31, 2016 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, May 31, 2016. 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, Sandra Zerkle, and Anthony McCloud. Also present: Commissioners Dennis M. Louney, David Price and Ken Ross (arrived 5:40p.m.); and Non-Voting Commissioners Bill Long (Delta Township) and Robert Nelson (E. Lansing). Absent: Commissioner Mark Alley Public Comments None Approval of Minutes Motion by Commissioner McCloud, Seconded by Commissioner Zerkle, to approve the Human Resources Committee meeting minutes of March 15, 2016. Action: Motion Carried. FY 2017 Board Appointee Performance Reviews 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 Zerkle, seconded by Commissioner McCloud, to enter into closed session to discuss the contractual year-end performance evaluation of Corporate Secretary M. Denise Griffin. 3 Roll Call Vote: Yeas: Commissioners Anthony McCloud, Tony Mullen, Sandra Zerkle. Nays: None. Action: Motion Carried. The Human Resources Committee went into closed session at 5:33 p.m. The Human Resources Committee reconvened to open session at 5:01 p.m. 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 McCloud, seconded by Commissioner Zerkle, to enter into closed session to discuss the contractual year-end performance evaluation of Internal Auditor, Phil Perkins. Roll Call Vote: Yeas: Commissioners Anthony McCloud, Tony Mullen, Sandra Zerkle. Nays: None. Action: Motion Carried. The Human Resources Committee went into closed session at 6:02 p.m. The Human Resources Committee reconvened to open session at 6:24 p.m. General Manager 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 McCloud, seconded by Commissioner Zerkle, to enter into closed session to discuss the contractual year-end performance evaluation of General Manager, Richard Peffley. Roll Call Vote: Yeas: Commissioners Anthony McCloud, Tony Mullen, Sandra Zerkle. Nays: None. Action: Motion Carried. The Human Resources Committee went into closed session at 5:25 p.m. "The Human Resources Committee reconvened to open session at 6:45 p.m. Upon conclusion of the Closed Sessions, the following motions were offered: Motion by Commissioner McCloud, seconded by Commissioner Zerkle, to forward a resolution reappointing M. Denise Griffin to the Charter position of Corporate Secretary for FY17 to the full Board for the consideration. Action: Motion Carried. Motion by Commissioner McCloud, seconded by Commissioner Zerkle, to forward a resolution reappointing Phil Perkins to the Charter position of Internal Auditor for FY17 to the full Board for consideration. 4 Action: Motion Carried. Motion by Commissioner McCloud, seconded by Commissioner Zerkle, to forward a resolution reappointing Richard (Dick) Peffley to the Charter position of General Manager for FY17 to the full Board for consideration. Action: Motion Carried. HR Chair Mullen stated that the reappointment resolutions will be taken under consideration at the July Regular Board meeting. Subsequent Steps for Board Appointed Employees Contracts Motion by Commissioner Zerkle, seconded by Commissioner McCloud, to charge the HR Chair and the Board Chair with the task of working with the appointed employees, on behalf of the Board of Commissioners, on their respective annual merit considerations. Action: Motion Carried. Excused Absence Motion by Commissioner McCloud, Seconded by Commissioner Zerkle, to excuse Commissioner Alley from tonight's meeting. Action: Motion Carried. Other Human Resources Chair Mullen reminded everyone that June 7th is the cutoff date for submitting the 2016-2017 Officer and Committee Survey forms to the Corporate Secretary. Public Comments None Adjourn Motion by Commissioner McCloud, Seconded by Commissioner Zerkle, to adjourn the meeting. Action: Motion Carried Meeting adjourned at 6:48 p.m. Respectfully Submitted, Tony Mullen, Chair Human Resources Committee HUMAN RESOURCES COMMITTEE Meeting Minutes June 21, 2016 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, June 21, 2016. 5 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 and Sandra Zerkle. Also present: Commissioners Ken Ross (arrived 5:33p.m.) and Tracy Thomas; and Non-Voting Commissioner Bill Long (Delta Township) Absent: Commissioner Mark Alley Public Comments None Approval of Minutes Motion by Commissioner McCloud, Seconded by Commissioner Zerkle, to approve the Human Resources Committee meeting minutes of May 31, 2016. Action: Motion Carried. Discussion re: Salary/Benefit Adiustments for BWL's Charter Appointed Employees HR Chair Mullen and Board Chair Price by motion were charged with the task of working with the Board's appointed employees, on behalf of the Board of Commissioners, on their respective annual merit considerations. HR Chair Mullen informed the Committee that he has had the opportunity to have a discussion with the appointed employees regarding adjustments to their contract. He stated that the Corporate Secretary's contract has now been modeled to be in line with the General Manager's contact which reflects the new charter amendment. (Chapter 4 Section 6-401) Corporate Secretary Corporate Secretary M. Denise Griffin requested to go into closed session for the purpose of discussing proposed contract adjustments as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Zerkle, seconded by Commissioner McCloud, to enter closed session to allow discussion regarding contract adjustments for the Corporate Secretary M. Denise Griffin. Roll Call Vote: Yeas: Commissioners Anthony McCloud, Tony Mullen, Sandra Zerkle. Nays: None. Action: Motion Carried. The Human Resources Committee went into closed session at 5:34 p.m. The Human Resources Committee reconvened to open session at 5:44 p.m. The closed section meeting was not authorized by MCL 15.268(a) and as a result the discussed information must be open: The Corporate Secretary's wages were noted as $94,200. The Severance Package is being removed from the Corporate's contract as required by the Charter Amendments. Internal Auditor Internal Auditor Phil Perkins requested to go into closed session for the purpose of discussing proposed contract adjustments as permitted by the Open Meetings Act exemption MCL 15.268(a). 6 Motion by Commissioner Zerkle, seconded by Commissioner McCloud, to enter closed session to allow discussion regarding contract adjustments for Internal Auditor Phil Perkins. Roll Call Vote: Yeas: Commissioners Anthony McCloud, Tony Mullen, Sandra Zerkle. Nays: None. Action: Motion Carried. The Human Resources Committee went into closed session at 5:45 p.m. The Human Resources Committee reconvened to open session at 5:53 p.m. The closed section meeting was not authorized by MCL 15.268(a) and as a result the discussed information must be open: The Internal Auditor's wages were noted as $135,821. General Manager HR Chair Mullen stated that General Manager Peffley was not in attendance at tonight's meeting, that his contract would be distributed to the Commissioners and, if necessary, there could be a brief meeting at a later date. Excused Absence Motion by Commissioner Zerkle, Seconded by Commissioner McCloud, to excuse Commissioner Alley from tonight's meeting. Action: Motion Carried. Other None Public Comments None Adiourn Motion by Commissioner McCloud, Seconded by Commissioner Zerkle, to adjourn the meeting. Action: Motion Carried Meeting adjourned at 5:58 p.m. Respectfully Submitted, Tony Mullen, Chair Human Resources Committee NOMINATING COMMITTEE MINUTES June 21, 2016 7 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 6!00 p.m. on Thursday, June 21, 2016. Committee Chair, Anthony McCloud called the meeting to order and asked the Corporate Secretary to call the roll. The following committee members were present: Commissioners Anthony McCloud, Tony Mullen, Ken Ross and Tracy Thomas. Also present was Commissioner Dennis M. Louney. Absent: None Approval of Minutes Motion by Commissioner Mullen, seconded by Commissioner Thomas to approve the Nominating Committee meeting minutes of June 23, 2015. Action: Motion Carried Public Comment There were no public comments. Officer & Committee Survey Results & Officer& Committee Survey Memorandum Nominating Committee Chair Anthony McCloud stated that the Officer Committee Survey Results Forms and Committee Survey Memorandum were included in the Nominating Committee meeting packet for review and asked if there were any questions regarding the documents. There were no questions. Nomination of Board Officer Candidates for Fiscal Year 2016-2017 Chairperson Nominating Committee Chair McCloud opened the floor for the Officer position of Chairperson. The following motion was offered: Motion by Commissioner Ross, Seconded by Commissioner Mullen to nominate Commissioner David Price to serve as the Chairperson for the 2016-2017 fiscal year. Action: Carried Unanimously Commissioner Thomas stated for the Record that he has been very impressed with Commissioner Price's leadership and that's why he voted yes for him to serve as the Chairperson, and believes that having him serve a third term is really healthy for the commission. Vice Chairperson Nominating Committee Chair McCloud opened the floor for the Officer position of Vice Chairperson Nominations and the following motion was offered: Motion by Commissioner McCloud to nominate Commissioner Sandra Zerkle to serve in the Officer position of 8 Vice Chairperson. Action: Motion died with no Second. Motion by Commissioner Mullen, Seconded by Commissioner Anthony McCloud to nominate Commissioner Mark Alley to serve in the Officer position of Vice Chairperson. Action: Motion Carried (3/1 Ross dissenting) Motion by Commissioner Mullen, Seconded by Commissioner Thomas to present the slate of Officers for 2016- 2017 to the full Board for consideration is as follows: Chair: David Price Vice Chair: Mark Alley Nominating Committee Chair McCloud stated that nominations would be taken from the floor at the July 26tn Regular Board meeting. Excused Absence None There being no further business, the meeting adjourned at 6:09 p.m. Respectfully submitted, Anthony McCloud, Chair Nominating Committee FINANCE COMMITTEE July 12, 2016 The Finance 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,July 12, 2016. 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 Tracy Thomas. Also, present Commissioners Tony Mullen, Sandra Zerkle and Non-Voting Members Stuart Goodrich (Delhi Township), Bill Long (Delta Township), Bob Nelson (E. Lansing). Absent: None. The Corporate Secretary declared a quorum. Approval of Minutes 9 Motion by Commissioner Thomas, Seconded by Commissioner Price, to approve the Finance Committee meeting minutes of May 10, 2016. Action: Motion Carried. Public Comment None. YTD Financial Overview Chief Financial Officer Heather Shawa-DeCook presented the May 2016 Financial Summary below: " Financial Sunnmary,Ma 2t1 Cash Income Statement YTD }a4WN,lOq.ait :]]off �Sa�:34�y., r.T3sU� lu7ui.4 M Ov�.uxfiw+a i Sr iUs.1N a SMJgara pLMleMI -M a Sa1.L a4110 Ia.rN,ieal -SSI M gs.K�i i >D •S.V l.11tee Z(aleT1JY1 1 ulfSlall Ye. fa�Oe.JDI Budget Status YTD T"CuR S23"g-W, O&M BudW trD(excladtvt[vet) LM 3«..ra ee...y.•e.w rww» Cap3t.a Budget YYD CKdN..wed 3Wew 3px� Adjusted Net income Return `inancial.-Summary-May 20. Sle.w..un.Pewr. Ratios Employee Data t),rcrv6.4Rabo } e ara� n•oSw..[vrtrro �rr...s+�1..�.�r�r�.w.�.ti o...tu.erl• ISn Caaaent Ratlo w.� ~e _ _ 3.>s� r•mw..re per..nn va uWel.. S S.lpu,s.o P.y3v7l Date �,�� aau1� f Wu}r1 Sf;ou•w f ISL.ra1 -1x S uataSal S 1.el,sav t Io"ota Assets Sir-3clnpa 3.K.aLm. S r.yaN iez S aYtllla s .as a,as,,.a � r< r..y e.w liar-M.n �.1rMeu.wvv.tl r�.rs s..a r�a.aea..�.`..�res r•d�..�w.+�r wbr. bags'Sa a Or.hfaa.lrap - m� Hna¢1t5 C®t I....+9..r...y m w^. 45.4. 3 ]L•r.Tr i L3e.N S r u�i¢nS S ILMf�aol ODn. S3,mil"/. 3 }aaid 1 +u.S.n S l.b4na S Ineleel s S welm ad nd.r s. s wi.n3 sera i� s a s IScaPrl sL>owa TLranas -wean mix Six Year Forecast Overview/Resolution Chair Ross suggested reviewing the PowerPoint presentation page by page to address any questions. 10 Chief Financial Officer Heather Shawa-DeCook presented the FY 2017-2022 Financial Plan as follows: FY 2017-2022 Financial Plan • Six-Year Operating Forecast — Financial Goals — Financial Assumptions — Rate of Return • Slx-Year Capital Forecast Already Completed and hiext Steps Financial Goals — Maintain credit quality • BWL Is currently a AA-Rated Utility — Ensure adequate liquidity • Ability to meet near term obligations when due • Target Days Cash on Hand Range 154.249• • Target Debt Service Coverage 2.00.2.49• — Maintain rate competitiveness — 4.81%Rate of Return Chief Financial Officer Heather Shawa-DeCook noted to the Committee the Board of Water and Light's AA- credit rating and the benefits maintaining that status. She stated that there is a cost to having higher top quality ratings; therefore all considerations should be understood. In addition, there was discussion regarding future plans to ensure that the BWL is competitive with regard to rates of other utilities. General Manager Peffley provided a few of his ideas regarding this matter which include having at least a 10% residential rate differential between the BWL and the nearest competitor. Rate of Return • In August 2008.the Board approved a target rate of return of 6.28% • The rate of return was determined using a methodology provided by Utility Financial Solutions and used by rnuntcipat utilltigs whore the Board also indicated that the approach should allow for flexibility to adjust the calculated return upward for large construction projects and other unusual circumstances. • tinder this nvethodology,a rate of return is calculated that blends the utilities borrowing rate with double the inflation rate • This return attows the utility to pay for interest casts and also provides for the replacement of aging Infrastructure as it Is removed from service • The target return in dollars Is calculated by multiptying the rate of return by the utility's rate base which includes net fixed assets and Inventory • The rate of return achieved is calculated with the following formula: Y iNtL InComt—IntK»t MKdnt+iMertit txOM#ti!iNtt idlA Assrts•inventory) • The rate of return has been recalculated using current inflation,debt rate,and rate base Information. With the updated information,the needed return Is calculated at 4.81%. • The forecast presented is based on the updated return calculation of 4.8196. 11 Financial Assumptions e fsroJimod sales levels •- Etectrk-Slight increase in r#Wl sates and dediiw in whaksak soles reflecting tower whattsale market prices and the 2020 removal of generation provided by Men- - water-Retail salts held constant for forecast period. Slight increase in wholes4lq. - Steam-Held constant. Chilled water-Held constant, 4 Operating expenses are forecast to increase from FY 2017 through FY 2022 at an annual 2,4%inflatlottary rate.` + Any potential impact related to Eckert reptitement generation has not been included in this foretasl. e tlpcominglabor contract negotiatlons has not been Included, Chief Financial Officer Heather Shawa-DeCook stated that based on forecasted recommendations at the end of the six year period the BWL will achieve the target 4.81 % Rate of Return. 6$Owl 2017 2on6 I 2019 2020 2021 2022 Rate Iocreer: Electric 0.0% 2A% 2.4% 2.4% 2.4% 2A% Water 0.0% 55% 5.5% 55% 55% 55% Steam 0A% 5.4% 5A% 5.4% SA% 5.4% Chilled Water 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Net Income(Wss): Electric $ 8,015 S 111168 $ 10,812 $ 14,192 $ 13,792 $ 14,721 Water $ 2,288 $ 4,W8 $ 5,933 S 6,997 S 8,356 S 9,666 Steam $ (960) $ 197 $ 465 S 736 S L094 $ 11282 Chilled Water S 770 S L199 S 1244 S 1,229 S 1,340 $ 1,386 Total Net inane S 10,113 S 17,431 $ 18,453 S 23,154 S 241582 $ 27ASS Return on Rate Bus Electric 3.9% 42% 40% 4.5% 4.5% 4A% Water 1.8% 29% 3.2% 3.6% 4.2% 4.2% Seam 15% 35% 3.8% 4.0% 45% 4.8% Chilled Water 4.9% 65% 6.8% 61% 73% 7.6% Total 3.1% 3.3% UM 43% 45% 4.9% Unrestricted Cash balance $ 137,301 S 10ZW $ 88,018 $ U11211 $ 106010 $ 111,473 Days Cub on Hand 167 123 121 116 136 13b Debt Servke Coverage L94 216 L51 L63 Ise L70 7 Finance Chair Ross emphasized that the progression for the Rate on Return Base, for any year between 2017 and 2022 would not actually be achieved, but if the BWL pursued the outlined strategy as indicated in the PowerPoint graph (see above) and if the assumptions are correct, by the end of that 6 year period, the target rate of 4.81 would be met. 12 Annual Net Income by Utility Annual Net Income ZZ \ | emAMM » In response to a question regarding the net income of steam, General Manager Peffey stated that there is an ongoing expense with steam and the BVVL has a plan to replace all steam infrastructures. Revenue in that area continues to decline, mainly as a result of large steam utility customer creating a technology to produce its own steam. However, the Board of Water and Light expects to return to the positive with projected rate increases to hit and support the long-term Rate of Return. Without Forecast Rate Increases Deaft mm 0.0% m" mm *ON wm WSW "o% 04% wm m= mm mw w= w~ 010% ww 0.0% M M CNF*d*SW w" "� wm 04% 010% MO% Not kK._(UK* mecak 5 9X5 * S.Sm , MWv (tuw ^ oOMv /1%uw w"" v zmv X170 : Um , mS ^ ,m ^ uu *um x MO) nuvo DW» (579)$ wm * wMI chow~aw * ,mo 1,1" 5 =wo umS I.wS LM TOW Not°°R" , *40 ^ %7w pw " ���Aawwm De=k 19% mw ux mp �03% .uw WAW mm 11% ux uw `D% wm 50"M ,5% M mm 1.9m ox ^1% cNftdm&w 43% 615% M wm m* mw TOW ,1% LTA LVA x1% *w °2% o~°=*1wm*sa*" ^ W13K , "m" ^ w^39 ^ 44w* ^ mMV ^ wmw mOu�on NNW m, u^ 92 57 M 4 *���CQYWKI L" ww ma +w +n mu » 13 Annual Net Income by Utility Without Forecast Rate Increases Annual Net Income in$000's ^>>-OJord W�Inr -- Total S1mA1ul 2017 1 2011 2019 2020 '2021 1 2022 I-�-_c_�frr_ SeAfs ( Sssxa � Sf�l Sfki2an 5(lo,ovq Slis,iwl '-�-W,trr SL2� Si,fm Saoq SLsts 1 Svin Stni --r-savor SIYs01 H71YI H>l�l 515M1 1 SUOJ! $11,05s1 Chled Watn 5770 SJ,199 SL244 SL229. St,340 S%396 Td.>t SW,IL3 1 5%'138 $4763 U1063) 504449) $04,6161 10 General Manager Peffley stated previously steam and water were heavily subsidized by electric, but the company has worked hard the past years toward having each utility stand on its own. Capital Forecast FY 2017-FY2022 Six Year CAPITAL PROJECTS SUMMARY SIX YEAR FORECAST FY 2017-FY 2022 BOARD OF WATER&LIGHT Dollars In(009s) Six-Year UTILITY 2017 2018 2019 2020 2021 2022 Total ELECTRIC 36,807 69,869 49,M3 37,353 29,042 41,283 263,457 WATER 9,843 12,139 11,040 7,924 5,739 5,922 51,506 STEAM Z901 3.132 S.592 6,039 3,W2 3,011 23,678 CHILLED WATER 180 494 M 162 166 166 1,324 COMMON 1L087 3.8W 4,848 3.985 4,077 3.953 31,837 TOTALBUDGET 601818 88,521 70.741 55,363 42,02S 54,335 371.802 Six-Year LOCATION 2017 2018 ZM 2020 2021 2022 Total ECKERT 3,280 197 208 110 113 113 4,011 ERICKSON L941 3,543 29.917 13,008 1SS 38,S62 RED PLANT 144 35 2,SW 3,025 - - 5,704 T&D 41,643 75,762 40,102 33,857 36,985 49,654 278,202 DYEICEDAR 3,039 4,8M 2,917 1,128 44S 165 12,499 CHILLER PLANT 42 340 - - - - 382 OTHER 20,729 3,949 5 098 4 235 4,327 4,203 32,443 TOTALBUDGET 60,819 M521 70,741 55,363 42,025 S4,335 371,802 Irw 12 Chair Ross questioned if there were items in the Capital Budget listed for next year that the Committee should be made aware of, given the media attention of the Central Substation. In response, General Manager Peffley 14 stated there may be some tree trimming concerns and Ms. Shawa-DeCook added the installation of AMI smart meters may be an area of attention as well. Ms. Shawa;DeCook provided information on the progress of the AMI smart meter implementations. Already Completed and Next Steps - FY 2017 Operating & Capital Budgets — Approved at May 24th Board meeting — Filed with the City Clerk within So days(June 3rd)after adoption in compliance with City Charter • Accept as presented the Capital Forecast for FY 2017-2021 and submit to the Mayor prior to October 1 — City Charter calls for submission of the six year capital Improvements plan to the Mayor prior to October 1 [cam Motion by Commissioner Price, Seconded by Commissioner Thomas to forward he proposed Resolution for the acceptance of the 2017-2022 Forecast to the full Board for consideration. Action: Motion Carried. Proposed Return on Assets Resolution Chief Financial Officer Heather Shawa-DeCook spoke about the rate of return target suggesting that it is both realistic and achievable. She also stated that it is important to work toward achieving it to maintain infrastructure over a period of time. She said the forecast is such that if the key assumptions materialize, we should be able to achieve the target rate of return. The lengthy dialogue continued regarding the Return on Assets. Ms. Shawa-DeCook stated that she felt it is up to management to be fiscally responsible (from on the O&M side). Also, management should be responsible when laying out the budget, the cost control and making sure we are effective and efficient while maintaining our reliability and competitiveness. We want to make sure our efforts to reach our target rate of return include prudently managing our cost structure and not just focusing on rate increases to hit that return. It is important to have the right target number because there are impacts if the number is too low or too high. Commissioner Nelson spoke about discussions from 2008 that involved the previous Chief Financial Officer regarding the Wisconsin Method vs. UFS and the coal inventory being an issue with its dwindling use as a fuel. Commissioner Nelson questioned if there was going to be a change in dynamics with the depleting coal inventory. In response to Commissioner Nelson's question Ms. Shawa-DeCook stated that she would get back to him with additional information. In conclusion Chief Financial Officer Heather Shawa-DeCook stated that this matter would be brought before the Board for a yearly review. Motion by Commissioner Price, Seconded by Commissioner Thomas to forward the proposed Resolution for the Return on Assets to the full Board for consideration. Action: Motion Carried. Finance Chair Ross welcomed and introduced new Board member, Stuart Goodrich. Mr. Goodrich stated that he is looking forward to serving on this Board. 15 Update on Management Responses to Internal Audits Finance Chair Ross informed the new Commissioner that this report is a tracking tool designed to give us transparency and to ensure that everything Internal Auditor Phil Perkins identifies in his internal audits is actually followed up on and completed to the satisfaction of the Board of Commissioners andi Internal Auditor. Chief Financial Officer Heather Shawa-DeCook's update consisted of the following: k Audi[tiame Inuc Descriptiou IMte Respo ible Status 34 Training& Internal Audit supports plats for a new database for Dec Or®m b-31 A nest'"1.,SS"danbue has been implemented and training an it is in the Development tnclang training and use of,.ndud-d criteria for 2015 Training& process ofbeing tolled out,at a slower pace than originally avticipaed. periodic tnimng course rin-and training of trainers, D—Iol—t with completion note espated by 912/16. on an or is tioo-wide basis. 37 Hiring Pmcrn Internal Audit has requested that m.11—om passin on g May Human Am additional Bwrd policy.one which addresses BWL hiring sandards NEW hung policy be documented 2016 Resources rather enluely.will be drafted by 12131/16. 35 Hiring Process Internal Audit Zommeodm updating a hiring dnocHist. May Human Management will update the hiring checklist,doame A miomle for ,NEB` documenting tauonale for selected hues,and storingjob 201(5 Resources selected hires,and storejob files elemixtiolly by 122131/16. files in dectronie form 39 IT mange Intemal Audit recommended 1T change management May Information The 1T chmge management pocess has been refined and a standard ,,I=gemmt policy and protcduva be d—ted. 2016 Technology form and—Mow desxloped A Change Arhiso y Board u following NEW ML guutdeli Further de,elopment of n-nnen guidelines will be c kte by 911116. 41 1T mange Internal Audit recommended specifically addressing May Information IT has dcfined an emergency dnmge and documented apimess Bow.1T Management emergency IT dungy in the 1T change mmagemeut 2016 Technology is also developing a tnmiag plan and written guidelmm expected to be NEW process, complete 9/1116. 42 Selected CRT-The Intemil Auditor reeo®rndel muJ updates to Dlay Erne mxy Annual updates to the Emergency Opmtims Phu will be perli—d. .NTSC-BWL the Emergency Operations Play 2016 Management effective immediately. Recom- mendations NEW 43 Selected CRT- Auditor The Internal recommended formally trxliug May Eme att rgeuy Cecri v Yt,—will be formally tracked.effective immediately. MPSGBWL the comecnvx actions rewdtang fromrestonriom 2016 Management Raom- at.rciscs as sorb mendations NEB' Closed Issues(since April 2016 report): 40 IT Change �lnterual Audit mco®c.'ad a separate database or ?,jay Infomation Additional information identibd as being Deeded is now bong apnued Management listing of IT changes. 2016 Technology in the existing 1T ticketing cyst®used to tact d=m. NEW STATUS OF MANAGEMENT RESPONSES TO INTERNAL AUDITS AS OF 6130116 In Arcordaoce with Bwrd Resolution#2014-07-05 ksue Audit Name Iuue D—ptioa Date Responsrbk Stanu Open Issue: 12 Rtvrd Inremil Aide found tbas rands on hand did not al—ys Mach Human 1-9 forms are on file far all acme empla)—An appropriate retention Rehvrim cmrcp and with the Record Retention Schedule 2014 Reomc>s —b,,b, for the asbesms bilk of lading—deter®�—d t pdut d as namdy,a portion of I-9 forms and some aeb bilk part of the ovmll resi—of the Record Attention Schedule.An updated of lading schedde was appmxd by the Co®inee of the Wbole on 3/8116.Filing for Sbie Administrative Board approval omund m 4/14/16.Cuuently in process is aresp—to the State's second rmmd of grtesti-mg- 13 Record The 1nt®al Auditor d ocdetermi tbat rands am hand in March E terp— Emerpise Content 1lfmagemen has reviewed the-ion Record Retortion �deparrnts did not always coaespood with the Record 2014 Content Retention Schedule with the appopiate dcpvmmrs and oWoged all Ret ration Schedrdc Management propmed—isi—.A.updated xbedule was appmcd by the Commit¢.of th.Wbok on 3/11/16.Filing for Star.Adrinistarive Board appm-I om¢red 4114116.C\..*in pottss is a response to the States second rmmd of que,-ding. 17 Close the The Internal Audimm rern®ended that cousid—lion Augur General A General Accmmting Procedure Manual is being dadoped.with Bool¢ be give to the use of a general accomming manual. 2014 A—mating c W d compktioo by 1 L31/16. 27 Mamgeaznt The Internal Auditor recommended enecr)pting don on Sept LZ.,..wet W.rk on id u&yL g day on any mobile devices in need of enayptiom of Mobile all remaining lapwps and smart phones. 2015 Tahmlogy was able w begin ones the mobile deice¢sage guidelines(rdeaed ten Dnue ode oowclosd issue N26)wire ettablisbed.Completion by 9/3 W16 is 29 I.bmgemmt f—al Aida— m—I d ficther comsid—u—of Sept Infomaatiom Once any data xsssed via mobile devices u det mumed to be in need of of Mobile procrning software with rsmme cloning eg bilities. 2015 Technology ern.yp i-(L._Deus issue#27 is addressed).it an be determined to Desires what nuent p—g and inplernemmg software with remote dotting capabilities would be cast-beneficial.It is anticipated that this issue will addressed by 9130/16. 30 Management Internal Audit recommended disdblmg day porn on Sept Information Any needed Ambling of day ports will be complete by W30/16. of Mobile mobile dc— 2015 Technology D.vica 33 Outage Tb.audit recommended—specific test criteria. Oct fttfermation A succ H stress test wit perfumed April 13.Management is Management testing perfmmd by the oft processing vendor, 2015 Teahmlogy reviewing vendor capacity reporn and modd)'mg documerited pocrdtre Sysum development of tat saipn.and a oarnri-of test to include requaemmn for a..T nvx of test results and formal business resssln. owner acceptance of test uderi sad resuln.CmW ldiou targeted for 729/16. As of 6/30: There are 14 Open issues (6 of which are new) and 1 closed issue. Internal Auditor FY17 Audit Plan Internal Auditor Phil Perkins presented an overview of the following information: Internal Auditor Status Update 16 • FY 2016 Audit Plan Progress Report • Proposed FY 2017 Audit Plan • Other Items FY 2016 Audit Plan Progress Report Engagements Completed: Proposed FY 2017 Audit Plan-Background 1. Traininq&Development Audit Basis for plan; 2. Selected CRT/MPSCBWL Recommendations Audit 3. Hirinq Process Audit 1,Meetings with Executives and Staff to discuss risks and 4, IT Change Management Audit potential audit topics, 5. NERC-CIP Cybersecurity Compliance Audit 2.Risk assessments for each of 100-plus auditable 6. Surprise Cash Counts(2) activities at BWL. 7. Employee Time Reporting Reviews(2) 3,Consideration of rotational audits,audit areas with 8. Vehicle Time Reporting Reviews(2) risk/scoping assessments,first-time audits,etc. Engagement in Progress: Billing Audit(anticipate completion in 4,Identified over 20 potential audits to perform in FY 2017 August 2016) and beyond, Proposed FY2017 Audit Plan - Background Top 12 audits for FY 2017 (as discussed with senior management): 1. Performance Evaluation/Compensation/Merit increases. 2. Collections 3. Past-Cycler incident Review 4. IT-Help/Service Desk 5. New Service Order Mgt—Water 6. Payroll 7. Hiring Process Follow-up & Training Follow-up 9. Planned Projects 10,IT—ID&Access Mgt-New and Terminated Employees 11.Metering Services 12.1T Security Policy—Data Classification&Controls 17 Proposed FY 2017 Audit Plan . Planned Audits. Estimated Hours Performance Evaluation/Compensation 300 Collections 400 Post•Cyber Incident Review 300 IT Help/Service Desk Management 400 New Service Order Management -Water 300 Payroll Management 400 Follow-up— Hiring Process 100 Follow-up—Training & Development 100 Other Engagements; Surprise Cash Counts (2) 50 Time Reporting Reviews (2) 100 Vehicle Time Reporting 50 Other Consulting as Needed 100 Total Estimated Hours 2m Proposed FY 2017 Audit Plan, Cont'd Available Resources: ! U *.9 4 i Phil Perkins Director of Internal 1,500 Audit C. L. Moore &Associates Augmented IA Services 900 Intemal or Extemal IT IT Audit Services 200 Audit Assistance Total Hours UM Finance Chair Ross mentioned the recent security incident and questioned whom Mr. Perkins would draw upon if he or his External Auditors did not have the expertise in conducting in-depth reviews as it relates to cyber. Mr. Perkins stated that he has had some preliminary discussions with outside firms regarding this specialized resource as well as looking to enhance his own limited expertise by taking some additional training in the cyber security arena. Motion by Commissioner Price, Seconded by Thomas, to forward the Internal Auditor's FY 17 Audit Plan to the full board for consideration. 18 Action: Motion Carried. Infernal Auditor Perkins stated that there were no changes to the Auditors Charter and asked that the Board approve the Internal Auditor's Charter as-is. Motion by Commissioner Price, Seconded by Thomas, to forward the Internal Auditor's Charter as-is to the full board for consideration and approval. Action: Motion Carried. Background Discussion: Franchise Agreements Finance Chair Ross cited a request from East Lansing for a franchise agreement and a share of revenue the BWL receives from East Lansing customers to introduce a background discussion on franchises and franchise fees. General Manager Peffley noted that a new request for a franchise fee would be directed to the Board, but a renewal of an existing franchise agreement would be negotiated by BWL staff and not brought to the Board. Mark Matus, Director of Technical Services, provided background information on franchises and franchise fees and distributed a summary of franchise agreements along with franchise fees to the Board for its information. According to Mr. Matus, a franchise is required by the State Constitution and legislation to use the public places and conduct business in a local unit of government. He indicated that the Michigan Constitution limits franchises to 30 years duration. He indicated that a Foote Act franchise is an exception in that it is created by legislation and only applies to areas being served by a utility between 1905 and 1908. He also indicated that a Foote Act franchise could not be reversed by the act of legislation. According to Mr. Matus, water agreements are a little different. Although they are not entitled as franchises, they have the same provisions allowing for the use of public streets, alleys, etc. In response to questions regarding the Foote Act, George Stojic, Executive Director of Strategic Planning indicated that the BWL could demonstrate service to East Lansing between 1905 and 1908 and was, therefore, entitled to a Foote Act franchise, but documentation from other areas was not available. He also indicated that Foote Act franchises do not expire. General Manager Peffley indicated that the BWL needed clarification of East Lansing's request, and that it is seeking assistance from outside counsel to investigate the issue of a franchise with East Lansing. Public Comment Brad van Guilder, Sierra Club, read comments into the record stating his concerns regarding two items included in the 6 Year capital budget, the projection of installation of Dry Sorbent Injection pollution controls and the implementation of Smartgrid technology. Other General Manager Peffley thanked staff for how well the managed this weekend's storm, which was one of the largest summer storms in this area. 90% of customers were restored within 48 hours. He said they really worked hard on press releases and communication in general. Several Commissioners expressed their appreciation for the communication during the recent storm. Chair Ross asked for an update on the homeless hotel shelter's high bill issue due to a lack of meter reading. In response General Manager Peffley acknowledge that there was an error with the homeless hotel not getting their meter read in a timely manner; however the BWL has reached out to make arrangements to work with them to resolve the issue and get them on track. 19 Adjourn On Motion by Commissibner Price, Seconded by Commissioner Thomas, the meeting adjourned at 7:20 p.m. Respectfully submitted Ken Ross, Chair Finance Committee MANAGER'S RECOMMENDATIONS General Manager Peffley recommended that the Board adopt the 2018-2022 Capital Forecast as presented at the July 12, 2016 Finance Committee Meeting. Motion by Commissioner Ross, Seconded by Commissioner Mullen to approve the 2018-2022 Capital Forecast as presented at the July 12, 2016 Finance Committee Meeting. Action: Motion Carried UNFINISHED BUSINESS There was no Unfinished Business. NEW BUSINESS Appointment of Executive Committee Motion by Commissioner Mullen, Seconded by Commissioner McCloud to appoint Commissioner Ken Ross as the fourth member of the 2016-2017 Executive Committee. Action: Motion Carried RESOLUTIONS RESOLUTION-2016-07=0 RICHARD R. PEFFLEY TRIBUTE RESOLUTION WHEREAS, It is with great appreciation that the members of this Board pay tribute and honor Richard "Dick" Peffley for his 40 years of loyal and outstanding service to the Lansing Board of Water and Light; WHEREAS, Dick Peffley began his distinguished career at the Lansing Board of Water and Light in June of 1976; WHEREAS, Dick Peffley has had many achievements over his career with the Lansing Board of Water and Light, having extensive experience in many capacities in the electric and water utilities; WHEREAS, Dick Peffley led the redevelopment effort to sell the former Ottawa Power Station that later became the Accident Fund headquarters; WHEREAS, Dick Peffley was the Project Director of the 20 Million Dollar Chilled Water Plant, named after Dick's 20 father, BWL retiree, Roy E. Peffley; WHEREAS, Dick Peffley was the Project Manager for the 23 Million Dollar repair and refurbishment of the Wise Road Water Conditioning Plant following a chemical accident; WHEREAS, Dick Peffley led the Water Department's efforts that distributed a record-breaking 1 billion gallons of water in a single month to customers during a heat wave in July 2013, and repaired a record number of frozen water lines and water main breaks during that winter's deep freeze; WHEREAS, Dick Peffley was the Project Manager for the 182 Million Dollar REO Cogeneration Plant and Headquarters; WHEREAS, Dick Peffley served as Project Manager for the Redevelopment of the Haco Office facility; WHEREAS, Dick Peffley served as Interim General Manager in 2006/2007 and 2015, and was named General Manager on September 22, 2015; NOW THEREFORE BE IT RESOLVED, that the Lansing Board of Water and Light hereby wishes to express its appreciation for Richard "Dick" Peffley's many efforts and contributions. Thank you for enriching the Lansing Board of Water and Light and the community for the last 40 years. Oa HehaH of the Causing Hoard of Water and Light !r Hound of Commissioners s4 .k,y.2a 2018 ,t ;a Motion by Commissioner Zerkle, Seconded by Commissioner Thomas to approve the Resolution of Tribute honoring General Manager Peffley for his 40 years of service to the BWL and the community. Action: Motion Carried RESOLUTION 2016=0.7,�0 Fiscal Year 2018-2022 Capital Forecast RESOLVED, that the forecast for capital expenditures for the Fiscal Years 2018-2022 is hereby accepted as presented. Motion by Commissioner Ross, Seconded by Commissioner Mullen to approve the Resolution approving Fiscal Year 2018-2022 Capital Forecast. 21 Action: Motion Carried RESOLUTION 2016-07-03 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, at its first regular meeting following July 15t of each year or as soon as practicable thereafter. RESOLVED, That the Board of Commissioners hereby appoints the following individual to the Charter position of Corporate Secretary, with a base salary of $94,200, for fiscal year 2016-2017 or until a successor is appointed, whichever last occurs: M. Denise Griffin, Corporate Secretary Motion by Commissioner Thomas, Seconded by Commissioner Mullen to approve the Resolution approving the Appointment of the Charter Position of Corporate Secretary. Action: Motion Carried ESOL'�JT�ON2016=0790 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, at its first regular meeting following July 15t of each year or as soon as practicable thereafter. RESOLVED, That the Board of Commissioners hereby appoints the following individual to the Charter position of Internal Auditor, with a base salary of $135,000, for fiscal year 2016-2017 or until a successor is appointed, whichever last occurs. Philip Perkins, Internal Auditor Motion by Commissioner McCloud, Seconded by Commissioner Zerkle to approve the Resolution approving the reappointment of the Charter Position of Internal Auditor. Action: Motion Carried RESOLUTION 2016 07-0 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, at its first regular meeting following July 1st of each year or as soon as practicable thereafter. 22 RESOLVED, That the Board of Commissioners hereby appoints the following individual to the Charter position of Director and General Manager, with a base salary of $267,750, for fiscal year 2016-2017 or until a successor is appointed, whichever last occurs: Richard R. Peffley, Director and General Manager Motion by Commissioner McCloud, Seconded by Commissioner Thomas to approve the Resolution approving the reappointment of the Charter Position of General Manager. Action: Motion Carried RESOLUTION 2016=07-0__ Internal Auditor Charter Approval RESOLVED, That the Board of Commissioners hereby approves the Internal Audit Charter, appended to which conforms to the International Standards for the Professional Practice of Internal Auditing, promulgated by the Institute of Internal Auditors. Motion by Commissioner Ross, Seconded by Commissioner McCloud to approve the Resolution approving the Internal Auditor Charter. Action: Motion Carried Tt0 '°6 RESO710 Internal Audit Plan for FY 2017 RESOLVED, that the Board of Commissioners hereby approves the Internal Audit Plan for FY 2017. Motion by Commissioner Mullen, Seconded by Commissioner Ross to approve the Resolution approving the Internal Audit Plan for FY 2017. Action: Motion Carried RESOLUTION 201E1-07;T0$_ Return on Assets Whereas, the Board of Commissioners adopted the use of a modified Utility Financial Solutions (UFS) approach as a standard to calculate the Overall Rate of Return target for the Lansing Board of Water and Light on August 12, 2008; and Whereas, the Staff recommends the continuation of the use of the modified UFS approach where the overall rate of return is applied to net fixed assets plus materials and supplies; and Whereas, the Staff recommends the overall rate of return should be reviewed each year as part of the budgeting process; and Whereas, the Staff recommends that the modified UFS approach should include the flexibility to adjust the calculated return upward for large construction projects and other unusual circumstances as needed. 23 BE IT RESOLVED, that the Board of Commissioners adopt the modified UFS approach for determining an appropriate rate of return target for the Lansing Board of Water and Light, the return should be reviewed eachi year as part of the budgeting process, and should be flexible to allow for upward adjustments to accommodate large construction projects and other unusual circumstances as needed. Motion by Commissioner Ross, Seconded by Commissioner Mullen to approve the Resolution approving the Return on Assets. Discussion was held regarding the move away from coal and its impact on the calculated rate of return and whether the coal inventory is an issue. Action: Motion Carried MANAGER'S REMARKS General Manager Peffley recognized his wife, daughter and future son-in-law who were in attendance at this evenings meeting. General Manager Peffley also informed the Board of the following: • The Lethal Ladies Tapping Team won the Nationals for the third year in a row. The Nationals include teams from the United States, Mexico, and Canada. They have been competing for five years and have placed every year. • The BWL held its company picnic at the Lansing Lugnuts stadium. This year saw over 800 employees, retirees, and family members - a record breaking turnout. • A movie producing company will be filming Transformers 5 at Eckert Station. Payment received for use of the facility will be donated to Pennies for Power. COMMISSIONERS' REMARKS Commissioner Zerkle stated that as the longest standing Commissioner she recognizes that General Manager Dick Peffley's heart and soul are with his employees and that he takes care of them and the company the best he can. Commissioner Thomas congratulated General Manager Dick Peffley for his 40 years at the BWL. He also congratulated General Manager Peffley on his well-articulated State of the BWL Address and the staff for organizing the very nice lunch. He also thanked Human Resources Committee Chair Mullen and Nominating Committee Chair McCloud for their work with their respective committees. He congratulated the returning Chairperson David Price and Vice Chairperson Mark Alley on their Officer positions. He also congratulated General Manager Dick Peffley, Corporate Secretary Denise Griffin and Internal Auditor Phil Perkins on their reappointments. Commissioner Long recommended letting the Sierra Club know about the movie company using Eckert for filming. MOTION OF EXCUSED ABSENCE Motion by Commissioner Thomas, Seconded by Commissioner Mullen, to excuse Commissioner Louney from tonight's meeting. 24 Action: Motion Carried PUBLIC COMMENTS Dave Errickson, Lansing, Michigan, spoke to the Board regarding the Scott Park Substation and the Central Michigan Group's opposition thereto. ADJOURNMENT On motion by Commissioner Thomas, Seconded by Commissioner Mullen the meeting adjourned at 6:05 p.m. M.Denise Griffin,Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk: August 3,2016 Official Minutes filed(electronically)with Lansing City Clerk:September 28,2016 25 BOARD OF WATER AND LIGHT BOARD OF COMMISSIONERS REGULAR BOARD MEETING SCHEDULE In accordance with the Board of Water anlhRe ular Boa d Administrative of he Board of schedule of dates, places, and times for eachg Commissioners for the calendar year shall be adopted in November. ght's Board RESOLVED, That regular meetings of the Beard of 2016 aster and follows, ulnless otherwise Commissioners are hereby set for calendar y notified or as a result of date conflicts with rescheduled City Council meetings: 2016 Board of Water and 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 the Board of Water and Light's Headquarters 5 30 p.m. Town Depot n MI, Facility, located at 1201 S. Washington Ave., g, In the event a special meeting or rescheduled meeting is held, a notice will be posted in the Board of Water and Light Headquarters' lobby,he 1201 of S. meeting.ton Ave, Lansing, Michigan, 48910, at least 18 hours prior THIS NOTICE IS POSTED BY ORDER OF THE BOARD OF WATER AND LIGHT COMMISSIONERS IN CONFORMITY WITH ACT 267,PA 1976. BOARD OF WATER AND LIGHT M. Denise Griffin, Corporate Secretary (517) 702-6033 Approved by the Board of Commissioners 7-26-16 MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT May 24, 2016 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 24, 2016. Chairperson David Price called the meeting to order at 5:31 p.m. Present: Commissioners Mark Alley, Dennis M. Louney, Tony Mullen, David Price, Ken Ross, Tracy Thomas and Sandra Zerkle. Non-Voting Commissioners present: Mike Froh (Meridian Township), Bob Nelson (East Lansing) and Bill Long (Delta Township). ff— Absent: Commissioner Anthony McCloud S2 The Corporate Secretary declared a quorum. E i2 Commissioner Tracy Thomas led the Pledge of Allegiance. APPROVAL OF MINUTES M Motion by Commissioner Thomas, Seconded by Commissioner Zerkle to approve the Regular Board Meeting minutes of March 22, 2016. 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. Speakers: Regina Strong, Sierra Club, Director of Beyond the Coal Campaign Carol Rall, Lansing, MI Steve Rall, Lansing, MI Brad Van Guilder, National Sierra Club The speakers above made the following comments and submitted them in writing: 1 • Lansing is at a crossroads in its energy future,The Board very wisely instructed the utility to undertake a 20-year integrated resource planning process,and rightly asked the utility to have robust,open and transparent public input into that process.The Board rightly recognized that the preferences of the citizens of Lansing of course should drive the shaping of Lansing's energy future. • Unfortunately,the planning process has not lived up to the Board's vision. • Sierra Club hired independent experts with decades of utility planning experience to review the BWL's planning process and proposal.MSB Energy Associates,led by Geoff Crandall,worked for the Michigan Public Service Commission and has been an expert ever since.George Evans is an expert modeler who has testified many times before the MPSC on proposals by DTE and Consumers. • Today,Sierra Club will be releasing a report by these experts that identifies several serious problems with the BWL's planning process that may have led to some large missed opportunities for a cleaner,more reliable,and lower cost energy future. • This expert report says that it is critical these issues be addressed and that the OWL fix its modeling before the Board makes a decision on how it will meet Lansing's energy needs over the next 20 years. • The first big issue identified is that the BWL didn't look at the costs and risks associated with keeping Erickson online through 2030,There are a bunch of environmental regulations that could mean large capital investments would be needed to keep Erickson online that long. • Lansing is at a crossroads in its energy future.The Board very wisely instructed the utility to undertake a 20-year integrated resource planning process,and rightly asked the utility to have robust,open and transparent public input into that process.The Board rightly recognized that the preferences of the citizens of Lansing of course should drive the shaping of Lansing's energy future. • Unfortunately,the planning process has not lived up to the Board's vision. • Sierra Club hired independent experts with decades of utility planning experience to review the BWL's planning process and proposal.MSB Energy Associates,led by Geoff Crandall,worked for the Michigan Public Service Commission and has been an expert ever since.George Evans is an expert modeler who has testified many times before the MPSC on proposals by DTE and Consumers. • Today,Sierra Club will be releasing a report by these experts that identifies several serious problems with the BWL's planning process that may have led to some large missed opportunities for a cleaner,more reliable,and lower cost energy future. • This expert report says that it is critical these issues be addressed and that the BWL fix its modeling before the Board makes a decision on how it will meet Lansing's energy needs over the next 20 years. • The first big issue identified is that the BWL didn't look at the costs and risks associated with keeping Erickson online through 2030.There are a bunch of environmental regulations that could mean large capital investments would be needed to keep Erickson online that long. 2 • We will be making this report public after this meeting.There are other issues it identifies, and all of them should be fixed before this Board makes any decisions about Its future energy needs. Now,to date, the BWL hasn't made any of its underlying data and modeling assumptions available to the public,despite our repeated requests.If our experts could see that data,we could have a lot more useful input into what the revised modeling scenarios should look like.The BWL is keeping everything under lock and key.This Is all information that we have access to when we participate before the Michigan Public Service Commission.There is oven loss reason to deny the public access to that Information here,where the utility Is owned by the people of Lansing_We ask that the BWL make available all of that information to any member of the public who wants to see It, and that the BWL then sit down and run new modeling scenarios that address concerns identified. • This is too important to get wrong_We are talking about the future of this utility during the most critical years for stopping climate Change.Our recent poll showed that the people of Lansing want a clean, responsible plan,and prefer a future that doesn't Include more fossil fuels.The people of Lansing deserve a full and fair consideration of that future. But they won't got it without a truly open and transparent process. In addition, the speakers above presented the Board with copies of the Review of Lansing Board of Water and Light's Integrated Resource Plan, prepared by MSB Energy Associates and Evans Power Consulting, on behalf of the Sierra Club. COMMUNICATIONS a. Proposed Resolution for a Franchise Fee from City of East Lansing Referred to Finance Committee and Management/Received and Placed on File b. Key Information to Make Publically Available, submitted by the Sierra Club Beyond Coal to Clean Energy Referred to Executive Management/Received and Placed on File COMMITTEE REPORTS COMMITTEE OF THE WHOLE May 10, 2016 The Committee of the Whole 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, May 10, 2016. 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, Mark Alley, Anthony McCloud, Tony Mullen, David Price, Ken Ross, Tracy Thomas, Sandra Zerkle and Non-Voting Members: Michael Froh (Meridian Township), Bill Long (Delta Township) and Robert Nelson (East Lansing). Absent: None Corporate Secretary declared a quorum. Committee of the Whole Chair Louney deviated from the printed agenda momentarily to allow additional time for printing of the Integrated Resource Plan (IRP) packets. 3 Committee of the Whole Chair Louney, informed the Commissioners of an invitation that was provided to them at their seating areas regarding the upcoming Vt S.T.E.P. Award Ceremony that is being held on May 16, 2016. Approval of Minutes Motion by Commissioner Ross, Seconded by Commissioner Price, to approve the Committee of the Whole meeting minutes of March S, 2016. Action: Motion Carried Public Comments None Public Act (PA) 295 Annual Energy Optimization Update Sue Warren, Manager of the Energy and Eco Strategies Department, provided the Committee with the Annual Renewable Energy and Energy Optimization Plans/Report. This report is a Public Act requirement imposed by the State of Michigan's Public Service Commission (MPSC). Ms. Warren stated that according to Public Act 295, the BWL is required to provide the governing board with an update on last year's activities for each of those programs. The BWL files an annual report with the MPSC and also provides notice to customers by way of BWL's Connections newsletter. Energy Optimization 2015 Programs Program Highlights • Services for Low Income Customers • Education in the Community • Residential Programs o Attended 31 local events with 7,300 o High Efficiency Lighting attendees o Appliance Turn-in & Recycling o Did 25 presentations to community o Multi-Family Services • Pilot Programs o Energy Star Products/Equipment o Think! Energy (school program with • Business Prescriptive & Custom Consumers Energy) Incentives o Michigan Saves Low Interest Financing • Energy Education Services • Pilot programs Ms. Warren reviewed the Million Kilowatt Hour Club status. The club was established to honor customers that participated in the BWL's efficiency programs and saved a million kilowatt hours. The goal of saving a million kilowatt hours can be accomplished by an accumulation of projects over several years. 4 Million Kilowatt Hour Club New Members for2015 MU Cooley 1,009,599 Sparrow Hospital 1,148,058 Ashley Capital&Peckham 1,197,029 General Motors 10,068,644 BWL 1,325,000 Previous Members State of Michigan DMB Quality Dairy Lansing School District General Motors Peckham Vocational Ind. Ashley Ryder Demmer Properties LLC Annual Renewable Energy Update Ms. Warren conveyed that the BWL Renewable Energy Program has met the Renewable Portfolio Standards (RPS) and due to the ability to carry forward Renewable Energy Credits (REC's), no additional renewable energy is needed until 2020. Ms. Warren stated that the BWL will continue to work with Gro Solar for the utility scale project. Also underway is the development of community solar projects that will be located in East Lansing and Lansing. BWL's current portfolio consists of the purchase of energy and Renewable Energy Credits for landfill gas from Granger, small amounts of hydro from Tower Clever, and wind from Exelon. In addition, the BWL owns a solar array on Cedar Street, a small array located on the roof of the BWL's Reo Headquarters facility and the BWL operates a hydro plant. In conclusion, Ms. Warren stated that the BWL is continuing to look at renewable energy options. One of the things that the Citizens Advisory Committee (CAC) group is looking into through the Integrated Resource Plan (IRP) process is determining how renewable energy fits in with the company's energy needs in the future. Commissioner Ross inquired about being provided an energy optimization comparison in the future in order to determine how the BWL measures up against other municipal utilities. Integrated Resource Plan (IRP) Presentation Steve Transeth, Co-Chair of the IRP Citizen Advisory Committee (CAC), presented the CAC's recommendation. Mr. Transeth began by describing the process followed by the CAC and thanked the Committee members for their work on the Integrated Resource Plan (IRP). Mr. Transeth indicated that the Committee met eight times from October, 2015, to April, 2016, and that the first six meetings were open to the public. He described the public meetings as "grounding" meetings that covered BWL operations, projections of energy needs, modeling assumptions and data, and scenario development. Mr. Transeth stated that the final two meetings were closed meetings to allow for deliberations. The final meetings focused on adopting guiding principles for developing recommendations and reviewing the results of modeling scenarios. He indicated that the Committee also considered the results of the EPIC/MRA survey of BWL customers. The survey and guiding principles indicated that important planning goals include affordability, reliability, clean energy, and economic development. 5 Mr. Transeth stated that the Committee first reviewed three resource portfolios developed by the BWL, but rejected the market based portfolio because of cost, volatility, and the preference of Lansing area customers for local generation. He noted that the Committee members requested the BWL to run five additional resource portfolios, including three with 85MW of wind energy entering service in 2018. Mr. Transeth explained that the Committee considered a recommendation to increase the energy efficiency component of the plan beyond the 1% annual savings amount. However, the Committee did not adopt this recommendation because of the impact on low income customers. According to Mr. Transeth, as sales decline, rates increase. For customers who can take advantage of energy efficiency programs, their bill may be lower because of the energy savings. However, many low income customers rent and landlords are reluctant to invest in more expensive energy efficiency products. As a result, low income customers are required to pay higher rates without benefiting with lower bills. The cost of utility service increases the most for these low income customers. In addition to the resource portfolio, Mr. Transeth stated that the Committee was making additional recommendations, which are: (1) review the IRP at four year intervals, (2) regularly review the cost of renewable energy technology, particularly energy storage, and (3) explore opportunities to expand the BWL's energy efficiency program. After deliberations, the Committee arrived at a recommendation that includes 85MW of wind in 2018, 40MW of solar energy in 2020, 10OMW of natural gas generation in 2020, an additional 140MW of solar energy between 2020 and 2030, an additional 30OMW of natural gas generation in 2030, and a 1% energy savings each year. Although this is not the lowest cost plan, it is not significantly more expensive than the reference (lowest cost) plan and results in a balanced plan that best meets the goals of affordability and clean energy while maintaining electric reliability within the BWL's service territory. Mr. Transeth also indicated that planning flexibility is also important. Following the presentation, Mr. Transeth answered questions regarding the IRP. By order of Committee of the Whole Chair Louney, the meeting recessed at 6:17 p.m. and reconvened at 6:34 p.m. Proposed Strategic Plan Update General Manager Peffley introduced Steve Brennan, Manager of Planning Business Development who presented the Committee of the Whole with the proposed Strategic Plan process. Mr. Brennan stated that the purpose of the strategic plan is to provide guidance for fulfilling the mission of the organization. It affirms the mission and the values; it takes stock of our current situation and its future demands, outlines challenges, identifies potential approaches and recommends strategies for success. Mr. Brennan clarified the following regarding the process and outcome of the new/revised Strategic plan: Purpose The purpose of the strategic plan is to provide guidance for fulfilling the mission of the organization. It affirms the mission and the values; it takes stock of our current situation and its future demands, outlines challenges, identifies potential approaches and recommends strategies for success. 6 Values The values are enduring, passionate, and distinctive core beliefs. They are the guiding principles for the company. Our current values are reliability, environmental stewardship, affordability, community, and health and safety. Mission The mission statement clarifies the purpose of the organization and the values that guide it. It addresses both what the company seeks to accomplish and in which manner the organization will accomplish it. Goals The goals present a big picture of an ideal future condition as the utility desires it. They are a broad aim at what we want to accomplish. In our 2008 Strategic Plan, the goals were: • Provide superior customer service • Assure adequate energy supply • Develop new management strategies • Lead through community involvement. Objectives The objectives are specific measureable outcomes that are steps toward attaining a goal. In our 2008 Strategic Plan the objectives were: • Developing a highly qualified, diverse, and effective work force • Be recognized as a leader in community service • Meet or exceed all environmental standards • Be a good environmental steward Strategies Strategies are action statements that define the steps the company will take to achieve its objectives. Mr. Brennan indicated that the BWL would like to do this in three phases: Implementation —Phase 1 Implementation —Phase 2 1. Start review of industry trends 1. Present to Managers and SMEs o Identify the resources we will use o Purpose, values, mission 2. Present to the Executives— email of o Overview of Executive SWOC individually o Goals and Objectives o The purpose of the Strategic Plan o Overview of Industry Trends o Definition of the Core Values 2. Feedback on "What we are missing" o Current Mission Statement 3. Perform SWOC analysis 3. Executives will: 4. Create Objectives and Strategies o Determine if the current Mission 5. Strategic Planning Team will put Statement reflects the Values together draft o Perform SWOC analysis o Identify Managers and Subject Matter Experts (SMEs) for phase 2 4. Strategic Plan Team will: o Identify Goals and logical Objectives 7 o Present the identified Goals and Objectives to the Executives o Incorporate feedback on Goals, if necessary 5. Executives approve the Goals Implementation — Phase 3 1. Present draft to Executives in June o Gather feedback o Incorporate feedback into draft 2. Present draft to Commissioners in July o Gather feedback o Incorporate feedback into draft 3. Board of Commissioners approve Final Report in September Mr. Brennan answered questions regarding the Strategic Plan. In summary it was stated that the Strategic Plan is a living document and recommendations from the Board's perspective will be incorporated into the plan. Central Substation Project General Manager Peffley provided an update on the Central Substation project. Mr. Peffley informed the Committee that the staff attended the Parks Board hearing a few weeks ago where the Central Substation project received a 5-3 vote in support of the location. The next step is to proceed to the Planning Board and then to the City Council for approval. If approved there is the possibility of construction, beginning in the fall. Other Human Resource (HR) Chair Tony Mullen provided each Commissioner with evaluation documents pertaining to its three appointed employees and indicated that he would also be emailing the documents to the Commissioners before the upcoming HR Committee meeting. Public Comment The following individuals stated their concerns regarding the IRP process: Regina Strong, Sierra Club, Director of Beyond the Coal Campaign Steve Rall, Lansing, MI Dave Erickson, Lansing, MI Lynn Stauff, Lansing, MI Brad Van Guilder, National Sierra Club, in addition to stating his concerns regarding the IRP process, also provided document entitled "Key Information to Make Publicly Available" to the Commissioners and asked that it be addressed. Jim Weeks, Executive Director of the Michigan Municipal Electric Association (MMEA) spoke in support of the IRP process. Excused Absence None Adiourn On Motion by Commissioner Price, Seconded by Commissioner McCloud, the meeting adjourned at 7:15 p.m. 8 Respectfully Submitted Dennis. M. Louney, Chair Committee of the Whole FINANCE COMMITTEE May 10, 2016 The Finance 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 7:20 p.m. on Tuesday, May 10, 2016. 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. Also, present Commissioners Mark Alley, Tony Mullen, and Non-Voting Members Bill Long (Delta Township) and Bob Nelson (E. Lansing). Absent: Commissioner Tracy Thomas The Corporate Secretary declared a quorum. Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Louney, to approve the Finance Committee meeting minutes of March 8, 2016. Action: Motion Carried Public Comment None Internal Auditor Outside Auditing Services Update Internal Auditor Perkins informed the Committee that the BWL has had an ongoing contract for augmented internal auditing services with the firm of Charles Moore & Associates. According to Board policy, contracts need to be re-bid every three years, in which the third year is up-coming. According to Board policy, the contract can be renewed for an additional year with the plan being to re-bid the contact next spring. Update on Open Internal Audit Management Responses 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 provided an update for each: 9 ~~, ~~^�~��`�=�=^~~"~~`^�~ ^='�� ^~~°~~~=..~ "�°�'="�^� |ssue #lI and #13 are concerning Retention Records items; the Record Retention updates have been approved and submitted to the State Administration Board for approval. The approval process is expected to take ninety days. The completion of issue #17 doses the books of the general accounting procedure manual. This is scheduled to be completed by the end of the calendar year. Issues, #27, #29 and #30 is concerning the management of mobile devices. This report needs revisiting and has an extension date of September 3Oth. Issue #33, concerning outage management system is still in process and is currently on schedule for June 3"rt». 26 PimuCerner-, The lntarmJ Auditm noted that 807relnes for rnoWIP clevice sepr:2015 Mrarr'iotion Gtjideline cin L-la lze of mbi.e devices h�a bean cornrictecl. 28 Marw,-:nnent InE-roh Audit qu&,torwd whetFar comxt tignims and seat',1015 rjenefalCounsel Contract term and corditranscw�rirrg data�3=arx!rrirruU'don Deykes ,suggested improvstments to ronlider. Issue number#34, concerning Training & Development is on track and scheduled for a June 30th completion. |ssuo #S1, Outage Management System has updated procurement procedures based on audit recommendations and those are now inplace. Issues #35 and #36, concerning Training & Development is completed. Refresher training included the proper procedures for reporting training time. Finance Chair Ross summarized the report as O outstanding issues, 5 closed issues and no new issues since the last review. 10 March YTD Financial Summary Chief Financial Officer Heather Shawa-DeCook presented the March Year-to-Date Financial Summary. Cash Income Statement YTD Budget Status YTO | Akdjuste riCome eturn ------Heather Shawa-DeCook continued by presenting the March Year-to-Date Financial Summary below: Ratios PB D,1,1 Scott Taylor, Manager of Finance, discussed and reviewed the Employee Data portion of the March Financial Summary: Employee Data zt _ ~ 11 CFO Heather Shawa-DeCook presented a PowerPoint presentation and reviewed the FY 17 FY 2017 Financial Plan as follows: —Sales forecast —Operating expense assumptions —FY 2017 O&M Budget by Category —FY 2017 Budgeted Net Income & Cash Flow —Comparative Financials (FY 2017 vs. FY 2016) Sales Volume Forecast Comparative Income Statement lMM %17G/1�L FTf6B a769dat noen6t �zedan:n.[[::!^:nl��s:<2r'�,• I ma W(NM ! ).27.Li5 MALE A 7.=3 klink-Wsl-.&(NVJ,j M7,7M _7,LAy30G 74RiYi ❑crpt VA S-SA1L 3 atw e tbslCfft� .w-..,..w 'ta•» s+ �MflY kQl tiS}i1:W 9.R3ltS:t ri 9dYri.FB .«. s...ft utn»IMM 7441]fA 76Q9U1 2A w47Rs to lAaa.+wn,dr,i) »aeon :aa>Qan n tlaatom •taN Wn.�nb.��.raw«a•w.'+e�i NWM�r+nin rv:eN,fWaa iM I �� •• a+•� �Asirl}lfm dlmamW npvl...«westnlac .»w c.wN•<r a r..i .inWw«>mae•<wau.rwt.l.J,.O.ewopwM Mneaen)epa 4ara. asr a w •mfnuN{tfs<ffd'+[l..rin.Y.Llrer Gxa/•i•a, n � a.w..aa..w .m i lw.lt •uw�we.w..vwN•.e,a,aN..Nm[sm.ew..w n�..«•.�o.w Mr � I o.....»:..,.a--.• r_.ltu. ,.• �.I tnww lnfwa>wterfwwN f fu,W f sfrtY .s..,w.u...n M.t«.assr/WM••�•..a.v..r..l.•P'+�a n..aa�,amrc]aw. .lwu aw.fs+ofrtar. 4"tt.wH. f wale. bi/wa+aYaa..auat�vMewl�initl4 AypMIMNnt«N vatu uy. �+•�r.n-l.w+. n.w•I if:.cn� rai Comparative Income Statement 0.j(G`i:ra'.tDG 3;•�^m2.",E J.nd 7_vjtr: o,w+Tw/lnssraus s swu /sun spl OHMII O]l Mq]w+rt[n+Kt RH rryl e;SO> t[,tOl won rocvt*.i _I:rn] �..1f.N11 is+i saf].ws s+.]v s+.sn 1 �2f:> title OTMR-Irc1Nt�:t b+Mn .�i .Onf �unMi��umY.rvu N«r,rt ]Tn 3 (i5.W3iGU�tNIYN]tau1M n.,,n. �!K.?In ' rvu�'(fi»41e St:6flt T:Ke:I �tat4wvtnftutfnvYi»t fftf}w /Hato 1w! Ip{[NMKfKONI /M.Nt s IUEf [W, /��{� I N•.n�{9uer nJ.tC) n'.e'l91 A: iRT!J.S!!ES i W»u�4.,r..s'•.�.^..\t•F^W Vtsiul V.Cerl h • Operating Expense Assumptions: Overall FY 2017 O&M decreased by 6% compared to FY 2016 Budget • Budget assumes 754 FTE's—the same as the FY 16 budget. FY Z017 O&M Budget by Category :n SGoas.rx:«des drl:rtsiaVon w ( 1WK FY 2017 income Statement .utility FY 2017 Cash Flow_by_Utility_ netuc w,siw t]wt xata ]aru "----------- 's.uourfwm.lsatw�:.»l.ns /ae.]]3 In— ix:wax t:s:an� iN,ct.sewaou>aruw sew tu» f,iw ..» w,t Mw.M f d I. 1. s I.- �1)1 S 4 tAt i t s.B{si, 'wwfw/stvf]wa wsxs'.wau s]i u s rruu i � .w•t.e:r«... 3 tri««...«+..,s..+,ter..t ♦ t i t . :LyvmtlNn+runt S.I.:.L]:i ti:.SfA tl}Qttl t :11:]: iGY]:f�, [�wa^^`««'axa.-w 3 3?W» t url i •t s f rti aevlTstcwsn{{ smx/sn s a,nn s!sssu] S cmn s nn,se] s»...s s S.N s r 0[WIYNI{fL[f S itfff / lDf S lt]e 5 N�y� Mrw3nlgl:f S]YNn f� 1 L!+O f 1.c'1' _ SP us• w.» I[a c'm 1 ri.oq > it '' sn.»t !u.s.n t nsiw s!v.ni un>_a1n x 1M tar „n �LLtYa. tmre.i.,++.scwa 15?w!.__!....... 12 Ms. Heather Shawa-DeCook presented a PowerPoint presentation and reviewed the FY 17 Capital Budget and Next Steps as follows: FY 2017 Capital Budget—nV ( Projects/Programs eiamwaenwm •[5a1:^Eiman'u^.n SSi1N >.'13`.V ....AMar�r.. (rrgLn LCH]ZC FY Z617 Capita Budget Summary _ _ „„ >xa.xa _ w9M yN. L9.7:YA YAJ vw.w+l4m.,.snt tfnRn (,�i.r•,r.nt'si trw�icatY.onw t i'.�KO ZYL.9GC EtEC�MIi S 3E,517 ELRIRT 5 1.2P0 r..+y.0 wvuentin,.,,.r.nr+wWi� t.vu:W W.17iR S 9.54) PK1CSaM 5 L'N] R,�,tKypy•• STiAM S M RED atA47 5 7S1 i.r.K..rn ve t.-e.uom t...'..w 2IDO.IXa CHLLED' n, S 180 1•wJ 5J6.]G2 3u•rn.x a.tr..srtp ty✓e� �t:L4o 2S.i1.9iA CDNMCN S ]].)T7 CYE/Ctt1RR u,.,.r r.,w,ea.Werm.m *,m.su t:axs Tpl"WY-EI a 4B,B13 pE1LLFA)UAT S 42 CTWR S75,919 wrrtw frawaawaa..u.•..1 3Aw_ S6D.SlS ....a.mw.e..t.*...u.....mNre.' �'�E� mwo:.w raw vx•.i.»v,w.a..,...w n« EE� r.•.p0lletGW r.pn..n4ixrtp�x The Next Steps for the proposed Budget is: • Request the Board to approve the FY 2017 Operating & Capital Budgets at the May 24th Regular Board meeting, in line with the Charter Rule of budget adoption by June 1st • File FY 2017 Operating Budget & Capital Budget with the City Clerk's office within in 10 days after approval. Chief Financial Officer Heather Shawa-DeCook stated that she wanted the Commissioners to be aware of 3 reportable (projects) that are forthcoming. The projects are not scheduled to be completed until later part of this calendar year, however, at the time when the budget was reviewed it was noted that these projects were projected to be 15% over its previously approved budget, and will likely require reporting to the Commissioners. PROPOSED RESOLUTION Fiscal Year 2017 Operating and Capital Budget RESOLVED,that the annual Operating Budget covering Fiscal Year 2017 is hereby approved as presented;and RESOLVED,that the Fiscal Year 2017 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 S, Chapter 2,Section 5-203.5,staff recommends an operating and maintenance budget of$278.3 million and a capital budget of$60.8 million for Fiscal Year 2017. 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 24,2016 Board meeting. Motion by Commissioner Louney, Seconded by Commissioner Price to forward the proposed FY 17 Operating and Capital Budget Resolution to the full Board for consideration. Action: Motion Carried Other 13 Commissioner Nelson raised an issue concerning reporting requirements of PA95—whether Board action was required or whether a simple notice from the BWL would satisfy state law. At the request of Finance Chair Ross, General Manager Peffley assured that the proper filing for this Public Act would take place by July ft. Excused Absence None. Adiourn Meeting adjourned by Finance Chair Ross at 8:02 p.m. Respectfully submitted Ken Ross, Chair Finance Committee MANAGER'S RECOMMENDATIONS No Recommendations from General Manager Peffley. UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS There was no New Business RESOLUTIONS RESOLUTION 2016-OS-01 Fiscal Year 2017 Operating and Capital Budget RESOLVED, that the annual Operating Budget covering Fiscal Year 2017 is hereby approved as presented; and RESOLVED, that the Fiscal Year 2017 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 Ross, Seconded by Commissioner Thomas to approve the Resolution approving Fiscal Year 2017 Operating and Capital Budget. Action: Motion Carried MANAGER'S REMARKS General Manager Peffley stated: That he was named as a member of the Board of Directors of Michigan Municipal Electric Association 14 (MMEA)that represents 40 municipal utilities in the state of Michigan. • The 8th annual Adopt-a-River campaign held on May 14, 2016 was very successful again this year with high participation. COMMISSIONERS' REMARKS Commissioner Ross addressed General Manager Peffley and his staff regarding the public comments made at the May 10, 2016 Committee of the Whole Meeting and earlier in the present Board Meeting. Specifically, Commissioner Ross inquired as to the BWL's energy efficiency rebate program and addressed the transparency allegations brought forth by the Sierra Club. Commissioner Price presented Commissioner Froh with a Certificate of Appreciation for his service to the Board of Water of Light, as his term comes to an end June 30, 2016. MOTION OF EXCUSED ABSENCE Motion by Commissioner Ross, Seconded by Commissioner Thomas, to excuse Commissioner McCloud from tonight's meeting. Action: Motion Carried PUBLIC COMMENTS Joe Dudak, Vice President of Business Development at Gri the alened the BWL and its timely and balanced.staff He also on its Integrated Resource Plan (IRP) and stated that he feels process was op spoke about his company being interested in assisting the BWL with the electric power transmission portion of the IRP. Brad Van Guilder, National Sierra Club, expressed concerns about the public comments portion of the Committee of the Whole meeting minutes of May 10, 2016. In addition he suggested that the Board of Water and Light provide the Sierra Club with its modeling data that was used in the IRP process, to allow what he feels would be more of an equal discussion. ADJOURNMENT On motion by Commissioner Thomas, Seconded by Commissioner Mullen the meeting adjourned at 6:05 p.m. M.Denise Griffin,Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City clerk:June 2,2016 Official Minutes filed(electronically)with Lansing City clerk:July 29,2016 15 Preliminary Minutes To be Approved by the Board of Commissioners 7-26-16 NOT FOR PUBLIC DISTRIBUTION MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT ' May 24, 2016 The Board of Commissioners met at the BWL Headquarters-REO Town Depot located at 12P S.�*asCgton Ave. Lansing, MI at 5:30 m. on Tuesday, May 24 2016. �' �� p• Y, Y � �7 cn Chairperson David Price called the meeting to order at 5:31 p.m. Present: Commissioners Mark Alley, Dennis M. Louney, Tony Mullen, David Price, Ken Ross, Tracy Thomas and Sandra Zerkle. Non-Voting Commissioners present: Mike Froh (Meridian Township), Bob Nelson (East Lansing) and Bill Long (Delta Township). Absent: Commissioner Anthony McCloud The Corporate Secretary declared a quorum. Commissioner Tracy Thomas led the Pledge of Allegiance. APPROVAL OF MINUTES Motion by Commissioner Thomas, Seconded by Commissioner Zerkle to approve the Regular Board Meeting minutes of March 22, 2016. 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. Speakers: Regina Strong, Sierra Club, Director of Beyond the Coal Campaign Carol Rail, Lansing, MI Steve Rail, Lansing, MI Brad Van Guilder, National Sierra Club The speakers above made the following comments and submitted them in writing: 1 • Lansing is at a crossroads in its energy future.The Board very wisely instructed the utility to undertake a 20-year integrated resource planning process,and rightly asked the utility to have robust,open and transparent public input into that process.The Board rightly recognized that the preferences of the citizens of Lansing of course should drive the shaping of Lansing's energy future. • Unfortunately,the planning process has not lived up to the Board's vision. • Sierra Club hired independent experts with decades of utility planning experience to review the BWL's planning process and proposal.MSB Energy Associates,led by Geoff Crandall,worked for the Michigan Public Service Commission and has been an expert ever since.George Evans is an expert modeler who has testified many times before the MPSC on proposals by DTE and Consumers. • Today,Sierra Club will be releasing a report by these experts that identifies several serious problems with the BWL's planning process that may have led to some large missed opportunities for a cleaner,more reliable,and lower cost energy future. • This expert report says that it is critical these issues be addressed and that the BWL fix its modeling before the Board makes a decision on how it will meet Lansing's energy needs over the next 20 years, • The first big Issue identified is that the BWL didn't look at the costs and risks associated with keeping Erickson online through 2030,There are a bunch of environmental regulations that could mean large capital investments would be needed to keep Erickson online that long. • Lansing is at a crossroads in its energy future.The Board very wisely instructed the utility to undertake a 20-year integrated resource planning process,and rightly asked the utility to have robust,open and transparent public input into that process.The Board rightly recognized that the preferences of the citizens of Lansing of course should drive the shaping of Lansing's energy future. • Unfortunately,the planning process has not lived up to the Board's vision. • Sierra Club hired independent experts with decades of utility planning experience to review the BWL's planning process and proposal.MSS Energy Associates,led by Geoff Crandall,worked for the Michigan Public Service Commission and has been an expert ever since.George Evans is an expert modeler who has testified many times before the MPSC on proposals by DTE and Consumers. • Today,Sierra Club will be releasing a report by these experts that identifies several serious problems with the BWL's planning process that may have led to some large missed opportunities for a cleaner,more reliable,and lower cost energy future. • This expert report says that it is critical these issues be addressed and that the BWL fix its modeling before the Board makes a decision on how it will meet Lansing's energy needs over the next 20 years. • The first big issue identified is that the BWL didn't look at the costs and risks associated with keeping Erickson online through 2030.There are a bunch of environmental regulations that could mean large capital investments would be needed to keep Erickson online that long. 2 . We will be making this report public after this meeting_There are other issues it identifies, and all of them should be fixed before this Board makes any decisions about its future energy needs. . Now, to date, the 13WL hasn't made any of its underlying data and modeling assumptions available to the public,despite our repeated requests. If our experts could see that data,we could have a lot more useful input into what the revised modeling scenarios should look like.The BWL is keeping everything under lack and key. This Is all information that we have access to when we participate before the Michigan Public Service CommisMon.There IS"en leis reason to deny the public acccs 6 to that information here,where the utility Is owned by the people of Lansing.We ask that the BWL make available all of that informaticn to:any mcrnber of tht;public who w:tntr.to see It, and that the BWL then sit down and run new modeling scenarios that address concerns identified. . This is too Important to get wrong_We are talking about the future of this utility during the most critical years for stopping climate change.Our recent poll showed that the people of Lansing want a clean, responsible plan,and prefer a future that doesn't Include more fossil fuels.The people of Lansing deserve a full and fair consideration of that future. But they won't get it without a truly open and transparent process. In addition, the speakers above presented the Board with copies of the Review of Lansing Board of Water and Light's Integrated Resource Plan, prepared by MSB Energy Associates and Evans Power Consulting, on behalf of the Sierra Club. COMMUNICATIONS a. Proposed Resolution for a Franchise Fee from City of East Lansing Referred to Finance Committee and Management/Received and Placed on File COMMITTEE REPORTS COMMITTEE OF THE WHOLE May 10, 2016 The Committee of the Whole of the Lansing Board of Water and Light (BWL) met at the BWL Head quarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:00 p.m. on Tuesday, May 10, 2016. 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, Mark Alley, Anthony McCloud, Tony Mullen, David Price, Ken Ross, Tracy Thomas, Sandra Zerkle and Non-Voting Members: Michael Froh (Meridian Township), Bill Long (Delta Township) and Robert Nelson (East Lansing). Absent: None Corporate Secretary declared a quorum. Committee of the Whole Chair Louney deviated from the printed agenda momentarily to allow additional time for printing of the Integrated Resource Plan (IRP) packets. Committee of the Whole Chair Louney, informed the Commissioners of an invitation that was provided to them at their seating areas regarding the upcoming 1st S.T.E.P. Award Ceremony that is being held on May 16, 2016. 3 Approval of Minutes Motion by Commissioner Ross, Seconded by Commissioner Price, to approve the Committee of the Whole meeting minutes.of March 8, 2016. Action: Motion Carried Public Comments None Public Act (PA) 295 Annual Energy Optimization Update Sue Warren, Manager of the Energy and Eco Strategies Department, provided the Committee with the Annual Renewable Energy and Energy Optimization Plans/Report. This report is a Public Act requirement imposed by the State of Michigan's Public Service Commission (MPSC). Ms. Warren stated that according to Public Act 295, the BWL is required to provide the governing board with an update on last year's activities for each of those programs. The BWL files an annual report with the MPSC and also provides notice to customers by way of BWL's Connections newsletter. Energy Optimization 2015 Programs Program Highlights • Services for Low Income Customers • Education in the Community • Residential Programs o Attended 31 local events with 7,300 o High Efficiency Lighting attendees o Appliance Turn-in & Recycling o Did 25 presentations to community o Multi-Family Services • Pilot Programs o Energy Star Products/Equipment o Think! Energy (school program with • Business Prescriptive & Custom Consumers Energy) Incentives o Michigan Saves Low Interest Financing • Energy Education Services • Pilot programs Ms. Warren reviewed the Million Kilowatt Hour Club status. The club was established to honor customers that participated in the BWL's efficiency programs and saved a million kilowatt hours. The goal of saving a million kilowatt hours can be accomplished by an accumulation of projects over several years. 4 Million Kilowatt Hour Club _ New Members for 2015 MU Cooley 1,009,599 Sparrow Hospital 1,148,058 Ashley Capital&Peckham 1,197,029 General Motors 10,068,644 BWL 1,325,000 Previous Members State of Michigan DMB Quality Dairy Lansing School District General Motors Peckham Vocational Ind. Ashley/Ryder Demmer Properties LLC Annual Renewable Energy Update Ms. Warren conveyed that the BWL Renewable Energy Program has met the Renewable Portfolio Standards (RPS) and due to the ability to carry forward Renewable Energy Credits (REC's), no additional renewable energy is needed until 2020. Ms. Warren stated that the BWL will continue to work with Gro Solar for the utility scale project. Also underway is the development of community solar projects that will be located in East Lansing and Lansing. BWL's current portfolio consists of the purchase of energy and Renewable Energy Credits for landfill gas from Granger, small amounts of hydro from Tower Clever, and wind from Exelon. In addition, the BWL owns a solar array on Cedar Street, a small array located on the roof of the BWL's Reo Headquarters facility and the BWL operates a hydro plant. In conclusion, Ms. Warren stated that the BWL is continuing to look at renewable energy options. One of the things that the Citizens Advisory Committee (CAC) group is looking into through the Integrated Resource Plan (IRP) process is determining how renewable energy fits in with the company's energy needs in the future. Commissioner Ross inquired about being provided an energy optimization comparison in the future in order to determine how the BWL measures up against other municipal utilities. Integrated Resource Plan (IRP) Presentation Steve Transeth, Co-Chair of the IRP Citizen Advisory Committee (CAC), presented the CAC's recommendation. Mr. Transeth began by describing the process followed by the CAC and thanked the Committee members for their work on the Integrated Resource Plan (IRP). Mr. Transeth indicated that the Committee met eight times from October, 2015, to April, 2016, and that the first six meetings were open to the public. He described the public meetings as "grounding" meetings that covered BWL operations, projections of energy needs, modeling assumptions and data, and scenario development. Mr. Transeth stated that the final two meetings were closed meetings to allow for deliberations. The final meetings focused on adopting guiding principles for developing recommendations and reviewing the results of modeling scenarios. He indicated that the Committee also considered the results of the EPIC/MRA survey of BWL customers. The survey and guiding principles indicated that important planning goals include affordability, reliability, clean energy, and economic development. 5 Mr. Transeth stated that the Committee first reviewed three resource portfolios developed by the BWL, but rejected the market based portfolio because of cost, volatility, and the preference of Lansing area customers for local generation. He noted that the Committee members requested the BWL to run five additional resource portfolios, including three with 85MW of wind energy entering service in 2018. Mr. Transeth explained that the Committee considered a recommendation to increase the energy efficiency component of the plan beyond the 1% annual savings amount. However, the Committee did not adopt this recommendation because of the impact on low income customers. According to Mr. Transeth, as sales decline, rates increase. For customers who can take advantage of energy efficiency programs, their bill may be lower because of the energy savings. However, many low income customers rent and landlords are reluctant to invest in more expensive energy efficiency products. As a result, low income customers are required to pay higher rates without benefiting with lower bills. The cost of utility service increases the most for these low income customers. In addition to the resource portfolio, Mr. Transeth stated that the Committee was making additional recommendations, which are: (1) review the IRP at four year intervals, (2) regularly review the cost of renewable energy technology, particularly energy storage, and (3) explore opportunities to expand the BWL's energy efficiency program. After deliberations, the Committee arrived at a recommendation that includes 85MW of wind in 2018, 40MW of solar energy in 2020, 10OMW of natural gas generation in 2020, an additional 140MW of solar energy between 2020 and 2030, an additional 30OMW of natural gas generation in 2030, and a 1% energy savings each year. Although this is not the lowest cost plan, it is not significantly more expensive than the reference (lowest cost) plan and results in a balanced plan that best meets the goals of affordability and clean energy while maintaining electric reliability within the BWL's service territory. Mr. Transeth also indicated that planning flexibility is also important. By order of Committee of the Whole Chair Louney, the meeting recessed at 5:17 p.m. and reconvened at 6:34 p.M. Proposed Strategic Plan Update General Manager Peffley introduced Steve Brennan, Manager of Planning Business Development who presented the Committee of the Whole with the proposed Strategic Plan process. Mr. Brennan stated that the purpose of the strategic plan is to provide guidance for fulfilling the mission of the organization. It affirms the mission and the values; it takes stock of our current situation and its future demands, outlines challenges, identifies potential approaches and recommends strategies for success. Mr. Brennan clarified the following regarding the process and outcome of the new/revised Strategic plan: Purpose The purpose of the strategic plan is to provide guidance for fulfilling the mission of the organization. It affirms the mission and the values; it takes stock of our current situation and its future demands, outlines challenges, identifies potential approaches and recommends strategies for success. Values 6 The values are enduring, passionate, and distinctive core beliefs. They are the guiding principles for the company. Our current values are reliability, environmental stewardship, affordability, community, and health and safety. Mission The mission statement clarifies the purpose of the organization and the values that guide it. It addresses both what the company seeks to accomplish and in which manner the organization will accomplish it. Goals The goals present a big picture of an ideal future condition as the utility desires it. They are a broad aim at what we want to accomplish. In our 2008 Strategic Plan, the goals were: • Provide superior customer service • Assure adequate energy supply • Develop new management strategies • Lead through community involvement. Objectives The objectives are specific measureable outcomes that are steps toward attaining a goal. In our 2008 Strategic Plan the objectives were: • Developing a highly qualified, diverse, and effective work force • Be recognized as a leader in community service • Meet or exceed all environmental standards • Be a good environmental steward Strategies Strategies are action statements that define the steps the company will take to achieve its objectives. Mr. Brennan indicated that the BWL would like to do this in three phases: Implementation —Phase 1 Implementation — Phase 2 1. Start review of industry trends 1. Present to Managers and SMEs o Identify the resources we will use o Purpose, values, mission 2. Present to the Executives— email of o Overview of Executive SWOC individually o Goals and Objectives o The purpose of the Strategic Plan o Overview of Industry Trends o Definition of the Core Values 2. Feedback on "What we are missing" o Current Mission Statement 3. Perform SWOC analysis 3. Executives will: 4. Create Objectives and Strategies o Determine if the current Mission 5. Strategic Planning Team will put Statement reflects the Values together draft o Perform SWOC analysis o Identify Managers and Subject Matter Experts (SMEs) for phase 2 4. Strategic Plan Team will: o Identify Goals and logical Objectives o Present the identified Goals and 7 Objectives to the Executives o Incorporate feedback on Goals, if necessary 5. Executives approve the Goals Implementation —Phase 3 1. Present draft to Executives in June o Gather feedback o Incorporate feedback into draft 2. Present draft to Commissioners in July o Gather feedback o Incorporate feedback into draft 3. Board of Commissioners approve Final Report in September Mr. Brennan answered questions regarding the Strategic Plan. In summary it was stated that the Strategic Plan is a living document and recommendations from the Board's perspective will be incorporated into the plan. Central Substation Proiect General Manager Peffley provided an update on the Central Substation project. Mr. Peffley informed the Committee that the staff attended the Parks Board hearing a few weeks ago where the Central Substation project received a 5-3 vote in support of the location. The next step is to proceed to the Planning Board and then to the City Council for approval. If approved there is the possibility of construction, beginning in the fall. Other Human Resource (HR) Chair Tony Mullen provided each Commissioner with evaluation documents pertaining to its three appointed employees and indicated that he would also be emailing the documents to the Commissioners before the upcoming HR Committee meeting. Public Comment The following individuals stated their concerns regarding the IRP process: Regina Strong, Sierra Club, Director of Beyond the Coal Campaign Steve Rail, Lansing, MI Dave Erickson, Lansing, MI Lynn Stauff, Lansing, MI Brad Van Guilder, National Sierra Club, in addition to stating his concerns regarding the IRP process, also provided document entitled "Key Information to Make Publicly Available" to the Commissioners and asked that it be addressed. Jim Weeks, Executive Director of the Michigan Municipal Electric Association (MMEA) spoke in support of the IRP process. Excused Absence None Adiourn On Motion by Commissioner Price, Seconded by Commissioner McCloud, the meeting adjourned at 7:15 p.m. 8 Respectfully Submitted Dennis. M. Louney, Chair Committee of the Whole FINANCE COMMITTEE May 10, 2016 The Finance 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 7:20 p.m. on Tuesday, May 10, 2016. 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. Also, present Commissioners Mark Alley, Tony Mullen, and Non-Voting Members Bill Long (Delta Township) and Bob Nelson (E. Lansing). Absent: Commissioner Tracy Thomas The Corporate Secretary declared a quorum. Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Louney, to approve the Finance Committee meeting minutes of March 8, 2016. Action: Motion Carried Public Comment None Internal Auditor Outside Auditing Services Update Internal Auditor Perkins informed the Committee that the BWL has had an ongoing contract for augmented internal auditing services with the firm of Charles Moore & Associates. According to Board policy, contracts need to be re-bid every three years, in which the third year is up-coming. According to Board policy, the contract can be renewed for an additional year with the plan being to re-bid the contact next spring. Update on Open Internal Audit Management Responses 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 provided an update for each: 9 ~=° �W!° |ssue #lI and #lS are concerning Retention Records items; the Record Retention updates have been approved and submitted to the State Administration Board for approval. The approval process is expected to take ninety days. The completion of issue #17 closes the books of the general accounting procedure manual. This is scheduled to be completed by the end of the calendar year. Issues, #27, #29 and #30 is concerning the management of mobile devices. This report needs revisiting and has an extension date of September 30th. �» Issue #]3, concerning outage nnanagennentsystennis still in process and is currently on schedule for June 3" . |ssuenunnber#34, concerningTra\n|ngQ' Deve|opnnentisontrackandschedu\edfora ]une3/t» cornp|etion. Issue #31, Outage Management System has updated procurement procedures based on audit recommendations and those are now inplace. Issues #35 and #S6, concerning Training & Development |s completed. Refresher training included the proper procedures for reporting training time. Finance Chair Ross summarized the report as 8 outstanding issues, 5 closed issues and no new issues since the last review. 10 March YTD Financial Summary Chief Financial Officer Heather Shawa-DeCook presented the March Year-to-Date Financial Summary. Heather Shawa-DeCook continued by presenting the March Year-to-Date Financial Summary below: Ratios 5cottTaylor, Manager of Finance, discussed and reviewed the Employee Data portion of the March Financial Summary: Employee Data ^�~ ~ ~ 11 CFO Heather Shawa-DeCook presented a PowerPoint presentation and reviewed the FY 17 FY 2017 Financial Plan as follows: —Sales forecast —Operating expense assumptions —FY 2017 0&M Budget by Category —FY 2017 Budgeted Net Income & Cash Flow —Comparative Financials (FY 2017 vs. FY 2016) Sales Volume Forecast Comparative Income Statement •S7 ucbnm 1r1cy,�ma tM1Y W17aW FYI •16&4 A iow a c o t .r,7ursts 2r n 'Ekai/kit.4aSfNWa 137,Yffi y171•'b11 all" ZWL5"3 F]auk-W,l...4{�.Mh) 'E7,7A ]A7Y30fi 7•F95#i >•x+'s. - ana n ,IAzl+f[-iee!(MN+! 7_10un5 AI TJG .,811.rF�! I.. !we.nww sawn .••♦sna>a ''sw,o tlsfl &S}1231 9MR5M -azY �xamG+FH 7,tepNs 764,'m h (' MSS �•.wsws.w '�^"' rl naiWmftr+n) ( 10. R0 loza= 11d SY17 t.✓,.,c`..•.. _y.:7.` ::' •ro.,.wuae:spm.sxw..l.:;.i�a.im„.rkn I i..4«.w�nw,......•...«•.,,•.•r•., sm.o+ .,...., .. •llW rl wliaM wfvw.M.Mmtr,nMm4ue e.9aa.nwnryurrwrrlrx M. .•..r...rr�•• ,�.r,t+. „_'.,,.•, n.; .or•r..Mwa.wn,wM6vrwMd�u!rar.nW.wI.Y•r'�r•••w§KYen s. bM+•tMosswY 1Ml.M. 1 n...M 4+.� >4w 'fwr ;oww..,won•[ona f"1Y..N >>vwa>. 'arty µtia+l,oww,.w..laa a..rr,erJ.scp4nMkawrcueiwre+...w• •_••••,'•w•• 3..UMW.....1."T f!!'.._ bl Comparative Income Statement a;;cr5ercteg:t�,i,;;,mercand R:Jir.� wuunsas.srwua s r�iui s s>�aiss I��nI GKx+nON.NG Wux�tttMKt f.rtK.[ OiKP-!NuJ,.temer., .ISI KUl nro•�u�n+.>n ru+rntrvuwR[nf,U( Y::e.na S:st,vf IFMYxtMl,xGalv'frtl[ '1 WAM ifa>JFn f,.l OsiMn,KIKGMt �f4W 3 llitl ,Mf 11 mm!o n�fAn • Operating Expense Assumptions: Overall FY 2017 0&M decreased by 6% compared to FY 2016 Budget • Budget asssumes 754 FTE's—the same as the FY 16 budget. FY 2017 O&M Budget by Categofy -In S000'c ex:wts dr;sremrrcn FY 2017 Intone'Statement byWilig FY 2017 Cash Flow by Utility _C_C11UG M'AtG tIW(..._...X">"Jt�R•tM_,J � ,ucmc. `. !�!..... 'i�.....�'�. .YlO1hMT iH.MA,xryu].Nr.Ft: Ai4..::�-"fAH L,..:t:�Y .._.. I tvuwaMutIW WM [Ull .>rm f.»f w!t. a.i». wntstrres]rsrnA s x'as:it s .w 1 u s ar s sss,(u s� s 1 ANazr:l Na.rtnr..I 1 i• S.I.C.t 1 .J:] a A'1�•4:�, S y t �OYV.1v.4F,tf1+•l SR%tA3T SRl]]]i iII15fJ1 F pA>3 SRitMF b,wfyy� i!,+,r it,s.i 4)nn a t. IO,YMNGNCM.r 1 153M S 139f S Uf> S UN S WD yume•b 3 iA S l WI F Z, I+M•ar,_>M+n'Iwe) 'C Itul ...._ xy.x. s!n•-3., �1;..<+1. sss 'li.inu s .ss.i•s .> jm>co.swus s sau s vi> s exn s no s W.1!, , 12 Ms. Heather Shawa-DeCook presented a PowerPoint presentation and reviewed the FY 17 Capital Budget and Next Steps as follows: FY 2017 Capital Budget—Maior Projects/Programs fY2017CaZL3 Bud etSgfnrlary .+n.•r.rw,��w .nmr..+r re rcrvrv, .y SM.3%0 �TLIiY t0(ATNN .��rinrrft r...a e,,.. ;1"v:q t;:aaa'. CLCC"IC S 31.517 Ct:KrAl 3,2F0 Grm'rv.vrr�.e i,.r sr n maxim trlx.m Zink S 92t7 DKaoN S L741 rm�hq.m'• ST!AM S L401 AW 17 N' S IA1 rmirn .:.,a3+ 1!PzSn C UKD'.YATIft S 180 150 SY,J(2 ' Gvuicp5rye-r #moo .co-.�+c„lw,.x.r r,.,..o..r„NM. �• COMMON 1 13,371 G1'MJ-Jf 0. S 1." TOTAL SlllJGiT $ 60,219 CHUEA t1A,' 0 C r x Crlda Sli,l10 i.allgtfp.Ns..trYw.rrNrwl ---'•' S W.S1S .,,,,,wr rrMrn.,r y� lil yagC::ttl•rpH pGrerxar3+S n.r✓ The Next Steps for the proposed Budget is: • Request the Board to approve the FY 2017 Operating & Capital Budgets at the May 24th Regular Board meeting, in line with the Charter Rule of budget adoption by June 15t • File FY 2017 Operating Budget & Capital Budget with the City Clerk's office within in 10 days after approval. Chief Financial Officer Heather Shawa-DeCook stated that she wanted the Commissioners to be aware of 3 reportable (projects) that are forthcoming. The projects are not scheduled to be completed until later part of this calendar year, however, at the time when the budget was reviewed it was noted that these projects were projected to be 15% over its previously approved budget, and will likely require reporting to the Commissioners. PROPOSED RESOLUTION Fiscal Year 2017 Operating and Capital Budget RESOLVED,that the annual Operating Budget covering Fiscal Year 2017 is hereby approved as presented; and RESOLVED,that the Fiscal Year 2017 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$278.3 million and a capital budget of$60.8 million for Fiscal Year 2017. 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 May24,2016 Board meeting. Motion by Commissioner Louney, Seconded by Commissioner Price to forward the proposed FY 17 Operating and Capital Budget Resolution to the full Board for consideration. Action: Motion Carried Other 13 Commissioner Nelson raised an issue concerning reporting requirements of PA95—whether Board action was required or whether a simple notice from the BWL would satisfy state law. At the request of Finance Chair Ross, General Manager Peffley assured that the proper filing for this Public Act would take place by July 1st. Excused Absence None. Adjourn Meeting adjourned by Finance Chair Ross at 8:02 p.m. Respectfully submitted Ken Ross, Chair Finance Committee MANAGER'S RECOMMENDATIONS No Recommendations from General Manager Peffley. UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS There was no New Business RESOLUTIONS RESOLUTION 2016-05-01 Fiscal Year 2017 Operating and Capital Budget RESOLVED, that the annual Operating Budget covering Fiscal Year 2017 is hereby approved as presented; and RESOLVED, that the Fiscal Year 2017 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 Ross, Seconded by Commissioner Thomas to approve the Resolution approving Fiscal Year 2017 Operating and Capital Budget. Action: Motion Carried MANAGER'S REMARKS General Manager Peffley stated: That he was named as a member of the Board of Directors of Michigan Municipal Electric Association 14 (MMEA)that represents 40 municipal utilities in the state of Michigan. The 8th annual Adopt-a-River campaign held on May 14, 2016 was very successful again this year with high participation. COMMISSIONERS' REMARKS Commissioner Ross addressed General Manager Peffley and his staff regarding the public comments made at the May 10, 2016 Committee of the Whole Meeting and earlier in the present Board Meeting. Specifically, Commissioner Ross inquired as to the BWL's energy efficiency rebate program and addressed the transparency allegations brought forth by the Sierra Club. Commissioner Price presented Commissioner Froh with a Certificate of Appreciation for his service to the Board of Water of Light, as his term comes to an end June 30, 2016. MOTION OF EXCUSED ABSENCE Motion by Commissioner Ross, Seconded by Commissioner Thomas, to excuse Commissioner McCloud from tonight's meeting. Action: Motion Carried PUBLIC COMMENTS Joe Dudak, Vice President of Business Development at GridLiance, congratulated the BWL and its staff on its Integrated Resource Plan (IRP) and stated that he feels the process was open, timely and balanced. He also spoke about his company being interested in assisting the BWL with the electric power transmission portion of the IRP. Brad Van Guilder, National Sierra Club, expressed concerns about the public comments portion of the Committee of the Whole meeting minutes of May 10, 2016. In addition he suggested that the Board of Water and Light provide the Sierra Club with its modeling data that was used in the IRP process, to allow what he feels would be more of an equal discussion. ADJOURNMENT On motion by Commissioner Thomas, Seconded by Commissioner Mullen the meeting adjourned at 6:05 p.m. M.Denise Griffin,Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk:June 2,2016 Official Minutes filed(electronically)with Lansing city clerk: 15 Approved by the Board of Commissioners 5-24-16 W �m—o..—.e.... MINUTES OF THE BOARD OF COMMISSIONERS' MEETING LANSING BOARD OF WATER AND LIGHT March 22, 2016 The Board of Commissioners met at the BWL Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI, at 5:00 p.m. on Tuesday, March 22, 2016. Chairperson David Price called the meeting to order at 5:00 p.m. Present: Commissioners Mark Alley, Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Ken Ross (arrived at 5:02 p.m.), Tracy Thomas and Sandra Zerkle. Non-Voting Commissioners present: Mike Froh (Meridian Township), Bob Nelson (East Lansing) and Bill Long (Delta Towrtship� p Absent: None —4 ra C") c The Corporate Secretary declared a quorum present. Commissioner Tracy Thomas led the Pledge of Allegiance. C- N r .. APPROVAL OF MINUTES Motion by Commissioner McCloud, Seconded by Commissioner Mullen to approve the Regular Board Meeting minutes of January 26, 2016 with the amendment for the clarification mentioned above. 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. Speakers: None ------------------ COMMUNICATIONS a. Electronic Communication from Angela Sorrells Jones, re: Water Concerns Referred to Management/Received and Placed on File b. Electronic Communication from Lisa Parker, re: Substation Location Referred to Management/Received and Placed on File c. Electronic Communication from Bruce Ardelean, re: Flooded Property Referred to Management/Received and Placed on File d. Electronic Communication from Sparrow Hospital Parking Security, re: Personal Use of a Company Vehicle Referred to Management/Received and Placed on File e. Letter from Jerry Duman, Sparrow Hospital Interim Security and Parking Director, re: Parking Complaint Referred to Management/Received and Placed on File COMMITTEE REPORTS COMMITTEE OF THE WHOLE March 8, 2016 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 8, 2016. 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, Mark Alley, Anthony McCloud, Tony Mullen, David Price, Ken Ross and Tracy Thomas, Sandra Zerkle and Non-Voting Members: Michael Froh (Meridian Township), Bill Long (Delta Township) and Robert Nelson (East Lansing). Absent: None Corporate Secretary declared a quorum. Public Comments None Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Thomas to approve the Committee of the Whole meeting minutes of January 12, 2016. Action: Motion Carried Communication with Local Entities Committee Chair, Louney introduced the discussion regarding communication with local government entities within the BWL service territory. There was an extensive discussion regarding potentially establishing one special meeting per year for local governments within BWL service territory to come to attend. In conclusion, it was decided that Committee Chair will come up with new language and bring it back to the Board for consideration. Records Retention Schedule Update General Manager Peffley introduced Heather Shawa-DeCook, Chief Financial Officer, who provided a brief background on the Records Retention Policy and its five year review process. Ms. Shawa De-Cook also introduced Jerry Fiore, Manager of Enterprise and Content Management, who provided answers to specific questions. In conclusion, Commissioner Ross requested that BWL Management provide a reference of policies that were removed and not replaced in the proposed Records Retention Policy. Motion by Commissioner Price, Seconded by Commissioner McCloud to approve the Records Retention Schedule Update and forward to the full Board for consideration. Action: Motion Carried Safety Presentation Vice President for Marsh, who walked the Board through the Safety Presentation and answered specific questions. Mr. Bellack stated that Marsh was brought in as an outside third party to do a comprehensive review of BWL's safety procedures and to evaluate the holes in the system that were contributing to losses or to unsafe physical environment, and offer recommendations on how we might close those gaps. Mr. Bellack moreover stated that March looked at six major categories and four Key Performance Indicators (KPIs), including how involved is senior leadership, how engaged are the employees, what types of programs there are, what's the foundation of the safety programs that BWL has and, what happens if there's a failure in that system. Mr. Bellack stated that Marsh's report can be interpreted through a color factor: blue means top performing; green means functional; yellow means improvement opportunities, and red means development opportunities. Mr. Bellack furthermore stated that throughout his career, he has performed hundreds of safety audits and has never come across one that does not have red categories, meaning BWL has a system in place, as it returned blue, green and yellow reports throughout all six major categories and four KPIs. OPERATIONAL SAFETY EXCELLENCE GAP ASSESSMENT �E-- IMPROVEMENT (�I MARSH OPPORTUNITIES t. armana engement S.Shcary entl health tfi,Foal odentaW N n N.PeAormnc ae Wgats eaPe.bInnafi— polCCa 2.Safely and health goals I 0.Effective wfey 17.Formal obacen ac aoo 36.Hardee era —th.s hg Process ®appr.pnate 10.&nploYeJ: a.Safely managemcM ®38.Log an and t dafa paniclpa4on rainin repartin and glT sia d'Fropt-wpeMser ®37.Safely and health P rtu ton procesv assessment+ 12.Ergonomlw nak 20 ervlr haaan and asaesamem sa.ctf?mining a.Staff cWimgmt 13.Intluslnal tgpisne risk accourtla assaaamMll 7.OPe:atona 40 P.,ft—ce aeeourtabky management IS.Incident irnesligatvn ONTINUOUS ALIGNMENT PREVENTIONON EDUCATION NO ® OIMPROVEMENT K OVERALL PROGRAM ASSESSMENT In conclusion, Commissioner Ross inquired whether specific steps exist that would take an organization from yellow to green category as a reference road map to get to the next level. Mr. Bellack stated that recommended steps are laid out in the comprehensive report. Flint Water Update General Manager Peffley provided a Flint Water Update and stated that BWL crews went to Flint to train a crew on lead service replacement, and a week later, assisted Flint with their first Lead Service Replacement. The BWL will serve as advisors to Flint after the Flint crews have been trained. Additionally, BWL is tracking all time rendered on Flint matters and will be reimbursed at such time that Flint receives State funding so that BWL rate payers are not burdened by the costs of Flint matters. Central Substation Update General Manager Peffley stated that Lansing Energy Tomorrow is BWL's$101 million T&D project to modernize BWL's T&D system, and part of that is the Central Substation. The Central Substation is part of a plan to replace the Eckert substation prior to its closing in 2020. General Manager Peffley stated that the property on the corner of Malcolm X and Washington is one that is the least cost option. The BWL will put in $4-5 million in developments such as a fishing platform, river walk extension, pathway from Capital Avenue connecting Cooley Gardens, relocating the Sunken Gardens to an area that is ADA The BWL is working with Reo Town Association for the design and artwork for the wall around the substation, and also working with the Sunken Garden group. The BWL is working with Reo Town Association for the design and artwork for the wall around the substation, and also working with the Sunken Garden group. Security Update Committee of the Whole Chair Louney stated that the Administration has provided us with an Exempt Memorandum and discussion of such content is most appropriate in closed session. Is there a motion to go into closed session for the purpose of discussing the Exempt Memo as permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL 15.243(y)?" Motion by Commissioner Alley, Seconded by Commissioner McCloud to go into closed session. Action: Approved by Roll Call Yeas: Commissioners Dennis M. Louney, Mark Alley, Anthony McCloud, Tony Mullen, David Price, Ken Ross and Tracy Thomas, Sandra Zerkle and Non-Voting Members: Michael Froh (Meridian Township), Bill Long (Delta Township) and Robert Nelson (East Lansing). Nays: None. The Committee of the Whole went into closed session at 7:10 p.m. Committee of the Whole reconvened to open session at 8:03 p.m. Public Comment None Other There was discussion regarding BWL's participation in Public Act 95 a low income energy assistance program. It was agreed after much discussion that this matter would be discussed in a Finance Committee meeting at a later date. Excused Absence None Adiourn On Motion by Commissioner McCloud, Seconded by Commissioner Price, the meeting adjourned at 8:15 p.m. Respectfully Submitted Dennis. M. Louney, Chair Committee of the Whole FINANCE COMMITTEE March 8, 2016 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 8:21 p.m. on Tuesday, March 8, 2016. Finance Committee Chairperson Ken Ross called the meeting to order and asked the Corporate Secretary to call the roll. n.- „+. .....,.r,- V-- o...... r%---:- nn i ,.....,,., T...,.., TL......., n-...:.-! n.:, A[-- ------- Mark Alley, Tony Mullen, and Non-Voting Members Michael Froh (Meridian Township), Bill Long (Delta Township). Absent: None 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 January 12, 2016. Action: Motion Carried Financial Update Heather Shawa-DeCook, Chief Financial Officer (CFO) discussed BWL's January 2016 YTD Financial Summary, covering the following: o Cash o Income Statement YTD o Budget Status YTD o Adjusted Net Income Return o Ratios o Employee Data Financial Summary-January F Cash Income Statement YTD bwlttD vtp Adlw �14en. 4tu,l.�v rt0 M..+r+ ..1M 319A:9aAY iSwJ1l11C RluYl a YI.NI,i(! t1.n4lw v.+%.ue utN S L.rxit> �,„J �WJ, -tlt t b3N tlf f ISYM,I sl.,rH,.+l> ivarYt s StlYLlsi tll3.wl3Y ULxfawl eta 11>Sx>.Tri s 1x1aw f. ib+0«.t�,y�•,.n 1:tM61 1 RL.Ot0Y1 t)ISAY •�t\ S IIt.II)]]fj S IS..riAA I no-. 3:d%H.9e! S ytpr.Yr sill;Yl i3n 3 i3w.Mf SS;Ys.SfK Budget Status YTD relifc,.n: s:f:!n',ou OkllBud;anT7T7feuludfn;fuel) N rt rt0 f t51)f4Yt >fL 3 t+.NitY WI„t1ry wN u. \dlgyuwpt�4t fl\Y fh axienv.ea.r.>r.�.,wwzt c,��t,t e,.e�frm .-fur c.....t 3� if vlifOt 1 Mfl.00a tfYwr.151 RSth.fYt Adjusted Net Income Return M 1M.rIsaa4w„.tM.a Mr.et 1m�Yt0 +*D• o.«t...:.t««wuw� � - �x+2mN.emuz�••. ••-,�L�iq .s+a+wwaw.rt..ar> _ rr sY WAR Ike910r1i9eoM.IIMvrOM Ratios Employee Data orrma:q S:Yrm - Irwr..:e„tlno rw n<�w lll.n),119 0.ep,rtP .n ry-.f�+.n::o.nn r.u.a.nw MrlWa.l• 1,� M w...we.e,4 J.er it.r.,ly Oh •,.5...•I rrri:l lt.leu " err in.rti riwrva u.u.ui ...n wv� eMr,r 51t,)(Ti.Ni 514'n 4s 5 IYY S l 195v 5 3 !`4l.91 -59e Snv+n) SnJtzla 5 rtlry ,w 5 NWnY S 41.?wl r a J��n. )� rtG1n )SaeM n ruMauau S:D1Ab95.aO1 I.w,l:av,Nvr,aa Dnr.nt:fnc! �-'•Ps+k+� S ,v.+..n S�ru45o S^ S Ir+tN)! Oon. S I,va S S tMiu S S IT.9.,1>7 Jew S wSW 1 rXroL SSlJ9 D.t.l n`41 nN 3_415.591 :GAgI t I3J,4>1 l� 5+ tYA4i] S INAsi11 N_v-Y.1151 ]]POWR: Prtvltktlal S:R.!lertvet 1N,c 4 tlt wo 5r9,.194 513J4495 Sitt.,91 .+1. CFO Heather Shawa-DeCook stated per board policy 15-02 (Capital Project Approval), any approved capital project that is expected to exceed its total budgeted amount by both 15% and $200,000 or more must have the exceedance approved by the Commissioners prior to completion of the project. Ms. Shawa-DeCook stated that there is a project expected to hit the criteria of the mentioned policy. The project is a video surveillance monitoring system and additional security for the Dye Water Complex. There is a request for supplemental money of$240,000. The supplemental request would authorize a $400,000 project be increased up to $640,000 in order to complete the project this fiscal year. Ms. Shawa-DeCook stated that she would be requesting the Board of Commissioners' approval of a resolution pursuant to the policy and that a resolution would be presented at the upcoming Regular Board meeting on March 22, 2016. Motion by Commissioner Price, Seconded by Commissioner Thomas to support a Resolution to approve a supplemental appropriation request from the Administration in the amount $240,000 for the current fiscal year Capital Budget. Action: Motion Carried General Manager Peffley stated that he has encouraged his staff to review and provide honest estimates on capital project and as a result more exceedance reporting may be forth coming. Budget Process Update CFO Heather Shawa-DeCook reported that the O&M and Capital budgets have been submitted and that department managers and executives will start reviewing those budgets next week with Finance. The management team and the directors have really taken a proactive step at meeting on their own and going through the overall capital budget and working amongst themselves to prioritize for this upcoming fiscal year. Financial Summary Section Overview Scott Taylor, Manager of Finance, provided a detailed review of the Ratios section of the Financial Summary. Mr. Taylor stated that roughly 83% of the operations are attributable to electric service and that the Board of Water & Light (BWL) has found that the American Public Power Association (APPA) ratios provide the best measure for a company-wide perspective. The APPA utilities have other utilities, which provides the BWL with the best picture from an overall view and that is what is seen in most of our comparisons. Mr. Taylor stated that Association (AWWA) and may be included in future reporting if appropriate. Ratios Opera Mig Ra No APPA Median O&M Expense 5 156.296,408 = 0.72 1 0.71 Revenue 5 217,773,319 Measures the proportion atre,en—toe—the operations and maintenance cows 0i reftt Ratio APPA Medlan Curren,Assets $ 206,232,701 = 4,74 1 2.07 Current Liabilities $ 43,494,383 Measures whether current oss-are suffci—to pay Curren[fiabifides wm—one year Debt to Total Assets APPA Mc ion LT Debt+Accrued Liabilities $ 407,062,020 - 0.40 1 0.61 Total Assets $1,016,945,901 Meosures the ability to meer hs current and 1-9-fern fiabilides based on the amdobifiry of assets Days'Sales Outstaadiug Pnar Year Accounts Receivable $ 24,382,174 - 0,801 25 Average Sales $ 30.425,353 %31 2=5 Days Bad Debt APPA Medlan Actual YTD YTD Budget Over/Iunderl %of Revenue $894,196 $1,076,694 -5182,498 0.41'S There was discussion with Commissioners and the staff regarding the Bad Debt portion of the Ratio presentation and what components make up the bad debt. External Audit RFP and Staff Recommendations/Resolution Heather Shawa-DeCook, Chief Financial Officer (CFO) presented the committee with a proposed resolution recommending Accounting and Advisory Firm of Baker Tilly as the new external auditors for fiscal years 2016- 2020. PROPOSED RESOLUTION Lansing Board of Water& Light External Auditor Recommendation WHEREAS, Lansing City Charter Section 3-404.1 requires an independent audit of all accounts of the City government, including the Board of Water and Light (BWL), at the close of each fiscal year, and all such audits shall be made by a Certified Public Accountant designated by the City Council; and WHEREAS, BWL staff engaged in its normal public procurement process for the purpose of soliciting and evaluating proposals from a variety of independent public accounting firms that have municipal utility audit experience to perform an audit of the BWL as required by Lansing City Charter Section 3-404 for fiscal years ending June 30 on the following respective years: 2016, 2017, 2018, 2019, and 2020; and WHEREAS, based on the public procurement evaluation of the proposals received, the BWL staff recommends the firm of Baker Tilly to perform these BWL audits; and RESOLVED, that the Board of Commissioners support BWL staffs recommendation; Baker Tilly to perform the annual financial audit for each of the fiscal years ending June 30 on the following respective years: 2016, 2017, 2018, 2019, and 2020 in accordance with Lansing City Charter 3-404.1; and FURTHER RESOLVED, that the Corporate Secretary is hereby directed to submit this"resolution on behalf of the Board of Commissioners to City Council requesting their approval of Baker Tilly as recommended by the Board of Commissioners. Staff Comments: BWL staff has used their municipal utility industry knowledge and expertise to search for and evaluate qualified firms. Based on the results of this search,staff provides this recommendation for consideration of the Board and, if approved, the City Council. Finance Chair Ross for clarification purposes stated that if the Finance Committee recommended the approval to forward the proposed resolution to the full Board of Commissioner and then the full Board approves it, it would then be forwarded to the Lansing City Council for consideration and approval as well. To recap, we (the BWL) will be switching our independent auditors from Plante Moran, a local firm, to Baker Tilly, a national firm that specializes in the utility industry. We will pay a little more due to travel cost, but will be able to take advantage of their specialized professionals, who possess a much deeper utility focus and expertise. Motion by Commissioner Louney, Seconded by Commissioner Price, to forward the proposed resolution for the External Auditor selection to the full Board for consideration. Action: Motion Carried CFO Heather Shawa-DeCook stated that the BWL has had the same External Auditors for 15 years and that with everything coming down the pipeline (IRP/T&D build-out), it would be very helpful with the utility practice expertise. Internal Audit Status Report Phil Perkins, Internal Auditor, provided the Committee with an overview of the FY 2016 Audit Plan Progress Report and the FY 2017 Audit Planning and Risk Assessment. Mr. Perkins' discussion reflected the following: Engagements Completed: Engagements in Progress: 1. Training & Development Audit 1. IT—Change Management Audit (90% complete) 2. Hiring Process Audit 2. Selected CRT/MPSC/BWL Recommendations (90% 3. Surprise Cash Count#1 complete) 4. Time Reporting Reviews #1 and #2 3. Billing Audit (just underway) 5. Vehicle Time Reporting Review#1 Engagements Remaining: Other: 1. IT Security Policies 1. Annual Risk Assessment/Audit Planning for FY 2017 2. Surprise Cash Count#2 2. Other as needed 2016 3. Vehicle Time Reporting Review#2 Approved FY2016 Audit Plan Planned Audits: Completion Status Follow-up of Selected CRT/MPSCIBWL Recs. 90%complete Billing Started 3116 IT—Information Security Policies Est Start 4/16 Training&Development Complete Hiring Process(replaced Safety Mgt) Complete IT—Manage Changes 90%complete Other Engagements: Surprise Cash Counts(2) 1 of 2 completed Time Reporting Reviews(2) 2 of 2 completed Central Maintenance&Fleet Vehicle Time Reporting 1 of 2 completed Other Consulting(NERC/CIP Compliance,IRP/Strat No engagements to Plan) date FY 2017 Audit Planning& Risk Assessment 1. Meeting with Executives and Staff to discuss risk and potential audit topics. 2. Risk assessment for each 100-plus auditable activities at the BWL. 3. Consideration of rotational audits, audit areas with risk/scoping assessment, first time audits etc. 4. Draft audit plan will be presented at May or July Finance Committee meeting for approval. Board Chair David Price stated that the City Council has reached out to the BWL's Internal Auditor for advice on his job structure as they look to re-evaluate their Internal Auditors position. Board Chair Price thanked Internal Auditor Perkins for the standard that he has set and for the possibility of it being emulated by our city's government. Public Comment None Other None Excused Absence None Adiourn Meeting adjourned by Finance Chair Ross at 9:02 p.m. Respectfully submitted Ken Ross, Chair Finance Committee HUMAN RESOURCESS COMMITTEE March 15,2016 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, March 15, 2016. 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, Sandra Zerkle, Anthony McCloud. Also present: Commissioners Ken Ross and Non-Voting Commissioners Mike Froh (Meridian Township), Bill Long (Delta Township) and Robert Nelson (E. Lansing). Absent: Commissioner Mark Alley None Approval of Minutes Motion by Commissioner McCloud, Seconded by Commissioner Zerkle,to approve the Human Resources Committee meeting minutes of November 10, 2015. Action: Motion Carried. Cafeteria and Post Retirement Benefit Plan Update/Proposed Amendments Resolution General Manager Peffley introduced Brandie Ekren, General Counsel, who provided plan update and the proposed changes on the Cafeteria and Post Retirement Benefit Plan. Proposed Resolution Adoption of the Amendments to the Cafeteria Plan and Post-Retirement Benefit Plan WHEREAS, the Lansing Board of Water and Light (the "BWL") maintains the Lansing Board of Water and Light Cafeteria Plan (the "Cafeteria Plan'1) and the Post-Retirement Benefit Plan for Eligible Employees of Lansing Board of Water and Light (the "Post-Retirement Benefit Plan"), for the benefit of certain of its employees and retirees; and WHEREAS, the BWL desires to amend the Cafeteria Plan (for certain technical regulatory changes) and the Post-Retirement Benefit Plan (for certain plan design changes for consistency with Plan operations and administration). NOW THEREFORE, the BWL does hereby authorize, approve and adopt the following resolutions: RESOLVED, that the Amendment and Restatement of the Cafeteria Plan (as of February 1, 2016, in the form attached hereto) is hereby adopted and approved; and BE IT FURTFTER RESOLVED, that the Amendment and Restatement of the Post-Retirement Benefit Plan (as of February 1, 2016, in the form attached hereto) is hereby adopted and approved; and BE IT FURTHER RESOLVED, that the officers of the BWL, and their designee(s), are hereby authorized and directed to take such actions and to implement and execute such documents and instruments (including the amendments referenced above as well as ancillary documentation) as necessary or desirable to effectuate the intent of these resolutions. Commissioner Ross stated that he submitted some question concerning today's Agenda items. Legal Counsel Ekren advised that she would be immediately providing written responses to the submitted questions. Motion by Commissioner McCloud, Seconded by Commissioner Zerkle, to forward the proposed resolution for Adoption of the Amendments to the Cafeteria Plan and Post-Retirement Benefit Plan to full Board for consideration. Action: Motion Carried. Defined Contribution Plan Update/Proposed Amendment Resolution Brandie Ekren, General Counsel, provided an update to the Defined Contribution Plan for the general employees individuals who are on military leave to accrue Defined Contribution payments, opposed to receiving pension contribution at the time of return from military leave. The second change is concerning the board appointed plan, which removes the General Manager from the plan. Proposed Resolution Restated and Amended Defined Contribution Plan With International City/County Management Association (ICMA) Plan Resolved, that the Board of Commissioners hereby amends and restates the ICMA Retirement Corporation Governmental Money Plan & Trust and any associated amendments provided by the two Plan Adoption Agreements for the Lansing Board of Water & Light (BWL) 401a Defined Contributions for Plan # 106696 and Plan # 108824 respectively. Further Resolved the Plan Adoption Agreements restate the same benefits as previously adopted, with a change to the Plans that for Active duty in the Military the BWL will continue plan contributions while on Active duty. Further Resolved that the General Manager is removed from Plan # 108824. Further Resolved, that the Chair is hereby authorized to execute the above referenced documents on behalf of the Board of Commissioners. Motion by Commissioner McCloud, Seconded by Commissioner Zerkle, to forward the proposed resolution for Restated and Amended Defined Contribution Plan With International City/County Management Association (ICMA) Plan to full Board for consideration. Action: Motion Carried. Other None Excused Absence Motion by Commissioner Zerkle, Seconded by Commissioner McCloud, to excuse Commissioner Alley from tonight's meeting. Action: Motion Carried Public Comments None Adjourn Motion by Commissioner McCloud, Seconded by Commissioner Zerkle,the meeting adjourned at 5:49 p.m. Action: Motion Carried Respectfully Submitted Tony Mullen, Chair Human Resources Committee nnnnlArcDYc ocrnRAR/iCK1nATInA1C Records Retention Policy and Records Retention and Disposal Schedule WHEREAS, Michigan law (MCL 399.5 and 750.491) requires that all public records be listed on an approved Retention and Disposal Schedule that identifies the minimum amount of time that records must be kept to satisfy administrative, legal, fiscal and historical needs; and WHEREAS, the Michigan Freedom of Information Act (FOIA) (MCL 15.231-15.246) defines public records as recorded information "prepared, owned, used, in the possession of, or retained by a public body in the performance of an official function,from the time it is created." RESOLVED, the Board of Water and Light Policy 18-01 "Records, Retention" is hereby amended as follows: The Board of Water and Light (BWL) shall only retain records during the period of their immediate use, unless a longer retention period is required by law or for internal or historical reference. A Records Retention and Disposal Schedule, as approved by this Board and the State of Michigan Records Management Services,the Archives of Michigan and the State of Michigan Administrative Board, shall specify the length of time records are to be retained. Where the BWL has knowledge that some records are or may become relevant to a legal action, such records shall not be destroyed except and until the legal issues have been resolved and with the approval of the General Counsel. FURTHER RESOLVED, that the amended Retention and Disposal Schedule proposed by the General Manager be approved and forwarded to the State of Michigan's Records Management Services, the Archives of Michigan and the State of Michigan Administrative Board for their approval. Motion by Commissioner Louney, Seconded by Commissioner Zerkle to approve the Resolution for the Records Retention Policy and Records Retention and Disposal Schedules. Action: Motion Carried RESOLUTION 2016-03-02 Capital Project Budget Exceedance Approval: Proiect PW-10047 Video Surveillance/Monitoring and Additional Security for Dye Cedar Complex WHEREAS, Lansing Board of Water & Light's (BWL) Policy 15-02, entitled Capital Project Exceedance Approval necessitates the BWL Board of Commissioner's approval for specific capital projects that are expected to exceed their previously approved budget by both 15% and $200,000 prior to completion of the project; and WHEREAS, the previously approved budget for Capital Project PW-10047 Video Surveillance/Monitoring and Additional Security for Dye Cedar Complex was $400,000; and WHEREAS, the projected final total cost for Capital Project PW-10047 Video Surveillance/Monitoring and Additional Security for Dye Cedar Complex is $640,000, should the project be completed; and WHEREAS, BWL staff and management reviewed the project cost in detail, which includes but is not limited to the rationale and circumstances for the increased budget projection; and WHEREAS, BWL staff and management recommends that the Capital Project PW-10047 Video Surveillance/Monitoring and Additional Security for Dye Cedar Complex be completed despite the projected WHEREAS, BWL staff and management recommends that the BWL Board of Commissioners approved the Capital Project PW-10047 Video Surveillance/Monitoring and Additional Security for Dye Cedar Complex to be completed as projected. RESOLVED, the BWL Board of Commissioners approve completion of Capital Project PW-10047 Video Surveillance/Monitoring and Additional Security for Dye Cedar Complex with a projected final total cost of $640,000. Motion by Commissioner Alley, Seconded by Commissioner Mullen to approve the Capital Project Budget Exceedance for the Dye Water Facility. Action: Motion Carried RESOLUTION 2016-03-03; Adoption of the Amendments to the Cafeteria Plan and Post-Retirement Benefit Plan WHEREAS, the Lansing Board of Water and Light (the "BWL") maintains the Lansing Board of Water and Light Cafeteria Plan (the "Cafeteria Plan'1) and the Post-Retirement Benefit Plan for Eligible Employees of Lansing Board of Water and Light (the "Post-Retirement Benefit Plan"), for the benefit of certain of its employees and retirees; and WHEREAS,the BWL desires to amend the Cafeteria Plan (for certain technical regulatory changes) and the Post-Retirement Benefit Plan (for certain plan design changes for consistency with Plan operations and administration). NOW THEREFORE, the BWL does hereby authorize, approve and adopt the following resolutions: RESOLVED, that the Amendment and Restatement of the Cafeteria Plan (as of February 1, 2016, in the form attached hereto) is hereby adopted and approved; and BE IT FURTFTER RESOLVED, that the Amendment and Restatement of the Post-Retirement Benefit Plan (as of February 1, 2016, in the form attached hereto) is hereby adopted and approved; and BE IT FURTHER RESOLVED, that the officers of the BWL, and their designee(s), are hereby authorized and directed to take such actions and to implement and execute such documents and instruments (including the amendments referenced above as well as ancillary documentation) as necessary or desirable to effectuate the intent of these resolutions. Discussion: There was a lengthy discussion regarding at what point the Board gets involved or have dialogue about BWL's pension/retirement plans. In conclusion it was stated that negations for the plans is primarily done by staff, but the Board can have discussions and review the overall benefits packages at it Human Resources, Finance Committee or Committee of the Whole meetings. Motion by Commissioner Mullen, Second by Commissioner McCloud to call the question to end the debate, which is not debatable or amendable. Approved by Roll Call Vote: YEAS: Commissioners Alley, Louney, McCloud, Mullen, Price, Ross, Thomas and Zerkle. NAYS: None . . _ ___�_ �.. i^_...,.....:..�........ 7-Ati- +n onnrnvo thP PPrnliitinn fnr the Amendments to the Cafeteria and Post Retirement Benefit Plans. Action: Motion Carried RESOLUTION 2016-03-05 RESTATED AND AMENDED DEFINED CONTRIBUTION PLAN WITH INTERNATIONAL CITY/COUNTY MANAGEMENT ASSOCIATION (ICMA) PLAN Resolved, that the Board of Commissioners hereby amends and restates the ICMA Retirement Corporation Governmental Money Plan & Trust and any associated amendments provided by the two Plan Adoption Agreements for the Lansing Board of Water & Light (BWL) 401a Defined Contributions for Plan # 106696 and Plan # 108824 respectively. Further Resolved the Plan Adoption Agreements restate the same benefits as previously adopted, with a change to the Plans that for Active duty in the Military the BWL will continue plan contributions while on Active duty. Further Resolved that the General Manager is removed from Plan # 108824. Further Resolved, that the Chair is hereby authorized to execute the above referenced documents on behalf of the Board of Commissioners. Motion by Commissioner Zerkle, Seconded by Commissioner Thomas to approve the Resolution for the Restated and Amended Defined Contribution (ICMA) Plan. Action: Motion Carried *Resolutions numbered out of chronological sequence UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS There was no New Business RESOLUTIONS RESOLUTION 2016-03-04 Lansing Board of Water & Light External Auditor Recommendation WHEREAS, Lansing City Charter Section 3-404.1 requires an independent audit of all accounts of the City government, including the Board of Water and Light (BWL), at the close of each fiscal year, and all such audits shall be made by a Certified Public Accountant designated by the City Council; and WHEREAS, BWL staff engaged in its normal public procurement process for the purpose of soliciting and evaluating proposals from a variety of independent public accounting firms that have municipal utility audit experience to perform an audit of the BWL as required by Lansing City Charter Section 3-404 for fiscal years ending June 30 on the following respective years: 2016, 2017, 2018, 2019, and 2020; and WHEREAS, based on the public procurement evaluation of the proposals received, the BWL staff recommends the firm of Baker Tilly to perform these BWL audits; and RESOLVED, that the Board of Commissioners support BWL staff's recommendation; FURTHER RESOLVED, the Board of Commissioners recommends that Lansing City Council approve and designate Baker Tilly to perform the annual financial audit for each of the fiscal years ending June 30 on the following FURTHER RESOLVED, that the Corporate Secretary is hereby directed to submit this resolution on behalf of the Board of Commissioners to City Council requesting their approval of Baker Tilly as recommended by the Board of Commissioners. Motion by Commissioner Ross, Seconded by Commissioner McCloud to approve the Resolution designating the firm Baker Tilly as the BWL's External Auditors. Action: Motion Carried MANAGER'S REMARKS General Manager Peffley made the following remarks: • The IRP Team met along with George Stojic, Executive Director of Strategic Planning and Development to work on finalizing recommendations that will be presented to the public at a meeting on April 27th at the Depot. Management will then review the recommendations and submit them to the Board. • BWL employees doubled the amount of United Way contributions this year from last year; $30,000 to $60, 0000. COMMISSIONERS' REMARKS Commissioner Mullen thanked the BWL for the support of the Cancer Society Relay for Life; he also thanked General Counsel Brandie Ekren for stepping up to answer questions at tonight's meeting. PUBLIC COMMENTS Ron Byrnes, IBEW Business Manager, spoke about the Post-Retirement Plan. Mr. Byrnes stated that one of the issues is that the benefit cannot be isolated by itself. It is a total compensation issue that the Union has negotiated over a long history of time with the BWL. Some benefits that people may have in the public or private sector are non-existent at this utility, and some benefits may look rich when isolated, but when the benefits are looked at from a total compensation, they are not out of line. There is a long history regarding Retiree health care, and the IBEW would contend that there is an obligation, legal and contractual, to current Retirees with the health care benefits. Joe (Dudak), Vice President of GRIDLIANCE & Blackstone Company, spoke about his company being interested in assisting the BWL with the electric power transmission portion of the Integrated Resource Planning (IRP). ADJOURNMENT On motion by Commissioner Thomas, Seconded by Commissioner Mullen the meeting adjourned at 5:32 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk:3-31-16 Official Minutes filed(electronically)with Lansing City Clerk:5-25-16 Jackson, Brian From: Nicole Evans <nicole.evans007@gmail.com> Sent: Wednesday, May 25, 2016 8:51 AM To: Jackson, Brian Subject: Re: August 2 Election- Are you availabile? Brian, Change of plans. I will not be available for the August 2 election as I will be in New York that week. Sorry for any inconvenience. Take care Nicole Evans On Mon, May 16, 2016 at 6:01 PM, Nicole Evans <nicole.evans007@'gmail.com>wrote: Yes to both dates. Please remove my home phone number from your files. My cellphone is the best way to reach me. Thanks Nicole Evans Sent from my very professional iPhone On May 16, 2016, at 2:12 PM, Jackson, Brian<Brian Jackson 2lansingrni.gov> wrote: Dear Nicole, The City will hold the next election on Tuesday, August 29 2016; are you available to work? It is important that you respond to this email as soon as possible with the following 4 pieces of information in order to be scheduled: 1) Availability— All Day (6am — Precinct Close) AM (6 a.m. — 2 p.m.) PM (1 P.M. — Precinct Close) Receiving (7:30pm - ?) Not Available I no longer wish to be on the list of Election Inspectors 1 Preliminary Minutes To be Approved by the Board of Commissioners 3-22-16 NOT FOR PUBLIC DISTRIBUTION MINUTES OF THE BOARD OF COMMISSIONERS' MEETING �_r j - - LANSING BOARD OF WATER AND LIGHT ro January 26, 2016 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,January 26, 2016. Chairperson David Price called the meeting to order at 5:30 p.m. Present: Commissioners Mark Alley, Dennis M. Louney, Anthony McCloud, Tony Mullen, David Price, Ken Ross, Tracy Thomas and Sandra Zerkle. Non-Voting Commissioners present: Mike Froh (Meridian Township), Bob Nelson (East Lansing) and Bill Long (Delta Township). Absent: None The Corporate Secretary declared a quorum present. Commissioner Tracy Thomas led the Pledge of Allegiance. APPROVAL OF MINUTES Commissioner Ross proposed a clarification to the Committee of the Whole Minutes from January 12, 2016, to reflect that any power outage would be localized to East Lansing, in the event of a storm, if trees that the BWL has not been able to trim in East Lansing knocked the power out. A small percentage of Lansing could be affected. Motion by Commissioner Thomas, Seconded by Commissioner McCloud to approve the Regular Board Meeting minutes of November 17, 2016 with the amendment for the clarification mentioned above. 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. ------------------ COMMUNICATIONS a. Electric Communication from George Overton re: Damages from Cutover Referred to Management and Received and Placed on File General Manager Peffley provided an update to the communication by stating that the Management resolved the issue with Mr. Overton. b. Electric Communication from Lt. Dalvius King, representing the Salvation Army re: A joint strategy for providing assistance to Lansing Residents Referred to Management and Received and Placed on File Non-Voting Commissioner Bob Nelson stated that he is very receptive of Salvation Army to come in and talk about their needs and how they fit with the other recipients of the low-income energy assistance fund. COMMITTEE REPORTS COMMITTEE OF THE WHOLE January 12, 2016 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, January 12, 2016. 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, Mark Alley, Anthony McCloud, Tony Mullen, David Price, Ken Ross and Tracy Thomas, Sandra Zerkle and Non-Voting Members: Michael Froh (Meridian Township) and Bill Long (Delta Township). Absent: Non-Voting Commissioner Robert Nelson (East Lansing). Corporate Secretary declared a quorum. Public Comments None Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Thomas to approve the Committee of the Whole meeting minutes of September 8, 2015. Action: Motion Carried IRP Survey Results Update General Manager, Dick Peffley, introduced George Stojic, Executive Director of Planning and Development, who provided a summary and update of the Integrated Resource Planning (IRP) process. Mr. Stojic reviewed the BWL's IRP public process and outlined the generation planning process. He summarized the four public meetings held to date. The first covered BWL history, its participation in MISO, and the Lansing Energy Tomorrow program. The next three covered forecasts, supply-side generation options, and demand-side generation options respectively. He indicated that the next meeting would cover the modeling program, which brings material covered in the previous meetings together. The modeling program uses sensitivities and scenarios to assess the cost and risk of various resource portfolios. He stated that numerous resource portfolios are possible and that identifvinR coals is an important step to identify a good portfolio. To help identify goals, he report on the survey. Mr. Porn stated that the survey consisted of 400 residential and 300 business customers. He indicated that when asked of different ways about important goals, that BWL customers consistently ranked reliability, affordability, producing power while minimizing environmental impacts, and having enough affordable energy to attract economic development and business as the most important planning goals. Mr. Porn indicated that in order to replace the electric energy lost when Eckert retires, the preferred energy choice is a natural gas plant. He also indicated that there was strong support for more renewable energy, energy efficiency programs, and that most customers were willing to pay more for renewable energy. According to Mr. Porn, BWL customers do not favor relying on the grid to replace the power lost when Eckert retires. He also indicated that most customers favor the installation of smart meters and most are willing to pay more during peak times and less during off-peak times. He concluded by saying 81% of BWL customers gave the BWL a positive rating and 6 in 10 thought the BWL's rates were reasonable. Nearly 3-in-4 residential customers favor installation of smart meters in their homes ❑!,:,_. 3-inn rrsixienrvl cacurnxers f,car ifnfalUxu:n n£x:nnxf mrcexs infheix iuvnrs SU E V'n "foul Yavox'f`.4 T..10oposa_1:< U.d.da.d 5:4 EPIC."RA More than 8-in-10 customers support BWL energy efficiency program currently operating 0:.r..-: 54ong eayyuxr fur BRZ.ereruy efficiency ya gmm of finxricixl axcenrhes: Reeide,uixl Sv.inese .n j .f. y,.nna,.n_.. .n:, x.,.x.Y:a:.. srn,: �-. or,..o•. r.,.a:r,n..a» ;:PIC.\fit More than 6-in-10 said BWL electric rates are reasonable El o a o 0 o a El <' ,ble L• cable C.Sec.d1 r..W tCnw,.. Yle eci S X:PLi7.MRA MPPA Alternate Commissioner Resolution General Manager, Dick Peffley, stated that Lori Pung, Second Alternate Commissioner at Michigan Public Power Agency (MPPA), was recently promoted to in her BWL role to the Manager of Finance, and as such, it is in the best interest of the BWL to name a replacement for the Second Alternate MPPA Commissioner, to wit: Constance Carantza. Motion by Commissioner Ross, Seconded by Commissioner Price to forward the proposed resolution to the full Board for consideration. Action: Motion Carried .Public Comment None Other Commissioner Price stated that he also serves as a Commissioner on a Board for Governor's Commission on Community Service, whose Board of Directors met earlier today at the Depot facility. Commissioner Priced thanked the BWL staff for accommodating the Governor's Commissioners' Board and for extending superb customer service. Commissioner Long inquired about an update on the Commissioner training with Janice Beecher. In addition, Commissioner Long also' inquired on the status of community strategy development. Commissioner Louney stated that he will craft a plan to bring back to the Board for consideration. Commissioner Price stated that the Lansing City Council has elected new leadership and has established a date for the bi-annual joint BWL-City Council Board meeting, which will be held on March 10, 2106. Commissioner Louney stated that the information that was provided to Commissioners and to the public in preparation for the December 28th storm was excellent, however, asked if in the future the Commissioners can receive a summary of preparation that was put in place. General Manager Peffley provided a verbal summary to the Commissioners on the storm preparation, including that the BWL was on Restoration Plan Level 2, as well as ___ _,__-1L_ .r r.-,,, +inn fnr-tha ctnrm_ Commissioner Alley inquired on the East Lansing tree trimming update. General Manager Peffley provided an update by informing the Commissioners that East Lansing Mayor Mark Meadowns expressed cooperation as to working with the BWL related to tree trimming. Additionally, the BWL uncovered easements that the BWL was not previously aware of; therefore, it gives the BWL the more authority to trim. Commissioner Ross asked in the event of a storm, if trees that the BWL has not been able to trim in East Lansing knocked the power out, whether that outage would be a localized outage, or whether the rest of the service area would be at risk. General Manager Peffley stated that the outage would be localized to E. Lansing and a small percent of Lansing could be affected. Commissioner Froh asked for a reference of the BWL Restoration Levels. General Manager Peffley stated that this will be provided to the Commissioners. Commissioner Peffley announced that the Director of Transmission Distribution position was filled by Mr. Wayne Lynn. Excused Absence Motion by Commissioner Ross, Seconded by Commissioner Price, to excuse Commissioners Nelson from tonight's meeting. Action: Motion Carried Adiourn On Motion by Commissioner McCloud, Seconded by Commissioner Mullen, the meeting adjourned at 7:08 p.m. Respectfully Submitted Dennis. M. Louney, Chair Committee of the Whole FINANCE COMMITTEE January 12, 2016 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 7:15 p.m. on Tuesday, January 12, 2016. 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, David Price. Also, present Commissioners Mark Alley, Tony Mullen, Sandra Zerkle and Non-Voting Members Michael Froh (Meridian Township), Bill Long (Delta Township). Absent: Commissioner Nelson (East Lansing). The Corporate Secretary declared a quorum. None Approval of Minutes Motion by Commissioner Louney, Seconded by Commissioner Price, to approve the Finance Committee meeting minutes of November 10, 2015. Action: Motion Carried November YTD Financial Summary Heather Shawa-DeCook, Chief Financial Officer (CFO) discussed BWL's November month-end-close 2015 YTD Financial Summary, covering the following: o Cash o Budget Status YTD o Ratios o Employee Data Financial Summary -November 2015 Cash Income Statement YTD Nnuln» YID Oae:w IYHv+ercs. •t NJa,i RivYYb 1}tmvs •t YX� a 2,L Y z14591�i IY(x.fi) IM $,kt Y%,ilt li,l(<)W IY.Y C ,'flxJe.+a'� G4. SM).SY+ f 9]1L1Y �YYS: 1 I.:k,YIC 5 IW.4ti1 +Y y ,,Y,l£ iR nzxlkmM�e i ..�t+ S+i 9A:s £•SYr.3.,P Y+ 1t;?,O.WY 51$,41,55J II'x Iw+� I <'i.]41,Y?'J: 1258,1G ! SiIJ 1 SM Y b3M fuW SIu{JY0.9R )4^,4u'ume 1 »SY.:Y1 iJ..., ,Ytx 1 - x31:{ f S�Ir,YL pest '�* Budget Status Y I D T-1 k i:: >2?d,f:G f' Ot;bf Sudg.K t7D(exeiudin�foal) -:!.l^.d N:�uIYI» n?&#xt GNelnlwn. r,,x..:�c,•a s u-sYY.ts :•.nwun frtK!.,.ry,._n.:..,c.a.nw,xm•r. G,pieaf B„dr,e}1TD Ji,tlRL.s.I Adjusted Net Income Rr tnrn maa..�a�.�x.,.re.lo..a�n-•,.�•�,. ..wil r:u rloll,:no..a ix:x.e onnwr.er•wa.,.as...�iwk«....-. ._ _ .. ......... .. a,ow,rirrM,-..,•nn:..........-..,.w.......„.....-,_..:._•.-.,., ^•e:nsa.we.r:..ew.�.,wxl �r..uaa:xu,+.....rF, undal Summary .Noveu-Llier 2015 x' mef M ew«n Peope Fa aory Ratios Employee Da C•�m' yA:fn 3: n,...A.. S :1:>M:lt PcVroi7 6::M 'Ma 5:..9afY+i Y::•i:.Lv f is-:.la: L..^a Y ..i 5 Aci.,:a A s.n.„.t»..v,_...r..y>n ...•.v....»..s xn...r..v,a-..re.,wnaW..+.r.a.e+.yn.,,u.w........ s S p D,t Finance Chairperson Ken Ross asked Ms. Shawa-DeCook to clarify the factors contributing to wholesale income being down by almost $5 million dollars for Income YTD, to which Ms. Shawa-DeCook explained that this was due to BWL's Belle River location experiencing unplanned outages, as well as that wholesale sales prices have been lower than budgeted. Additionally Chairperson Ross asked Ms. Shawa-DeCook to expound on the Net Income YTD, to which Ms. Shawa-DeCook explained that BWL is at operating income of$15.4 million, compared to budgeted $6 million, thus beating budget by over$9 million. There was a lengthy discussion regarding the Capital Budget Status YTD, to which General Manager Peffley and CFO Shawa-DeCook answered all presented questions. Commissioner Louney commended Ms. Shawa-DeCook on creating a great synopsis of the financial summary. Finance Chair Ross, asked that the overtime actual to budget be further explained, as it is significantly over budget current year to date. General Manager Peffley explained that one contributing factor is that the BWL has had a hard time staffing Eckert Power Station with trained operators. Operator positions take two years to fully train the operators and while in training we are required to have a fully trained operator side by side. General Manager Peffley also stated that the Line department is experiencing higher OT costs with recent retirements and a competitive recruitment market for journeyman positions. There was a discussion regarding succession planning. Upon conclusion, HR Chair Mullen requested staff provide at a future HR Committee meeting an overview of the BWL's succession plan. General Manager Peffley stated that the increase in Net Income is not a result of cutting staff or cutting safety, but by reaping efficiency of the workforce. FY17 Preliminary O&M/Capital Budgeting Process &Timing Overview Heather Shawa-DeCook, Chief Financial Officer (CFO) provided a high-level overview of the FY 17 Preliminary O&M/Capital Budgeting Process &Timing. Fiscal year 2017 budget process is currently underway. The key items departments forecasts; also, managements and directors are preparing capital budget requests. There was a discussion regarding capital budget, its review process, as well as how it relates to rate increases. Financial Summary Section Overview Scott Taylor, Manager of Finance, discussed the following: •Income Statement •YTD Budget Status •YTD Adjusted Net Income Mr. Taylor stated that the Income Statement YTD provides a high-level view of revenues, expenses, and net income. The budget-to-actual column provides the best information; however, a comparison to the prior year is presented as well to provide another perspective. The revenue and expense sections are each broken into two parts because they have different factors affecting them. This section helps the BWL see where it is and where it may end up at year-end. I - i en Actual Prior Actual YID YTD Budget Difference Y2 YTD Difference 90 Retail $ 142,652,881 $ 142,859,664 (206,783) 0% $ 127,488,131 $15,164,750 12% Wholesale 5 14,269,733 $ 19,590,274 (5,320,541} -27 p $ 144106,930 162,803 1% Total revenue $ 155,927,614 5 162,449,938 (5,527,324} -3% $ 141,595,062 $15,327,553 11`ib operating Expenses $ 127,321,997 $ 141,022.659 (13,700,662) -10% $ 125,047,932 $ 2,274,065 2% Non Operating y (14,184,484) $ (15,36S,700) 1,184,216 -81U $ (13,519,882) $ (664,602) 5`6 Net Income $ 15,416,133 $ 6,058,579 9,357,554 154% 5 3,027,248 512,388,885 4091/. Projected FY 2016 Net Income $ 7,366,605 Mr. Taylor moreover provided highlights on the Budget Status YTD, as it highlights the 0&M Budget. Mr. Taylor stated that in the event, that the financial results are not looking good for the year this is the area the BWL looks at first to make cuts or adjustments to help finish the year better. Fuel is excluded because it is driven by generation needs and cannot be controlled in the same manner as the other costs. The Capital budget has an impact on cash flow for the year and the BWL wants to be able to monitor progress throughout the year on capital spending. Budget Status YTD OAM Budget YTD(excluding fuel) Actual YTD YTD Budget Difference % S 54,685,692 $ 62,422,055 (7,736,363) -12% Capital Budget Y FD Actual YTD YTD Budget Difference °6 { 15.71Q.63n S 74.176.683 (8.457.0531 -35% Furthermore, Mr. Taylor reviewed the Adjusted Net Income Return Section of the budget as it shows how the BWL is doing relative to our overall target of 6.18% approved by the Board. The return has two primary purposes; the first is to cover the cost of bond interest expense and the second is to have funds available to replace fixed assets as they reach the end of their useful life. Adjusted Net Income Return Actual YTD YTD Budget Target 2.94% 1.66% 6.18 0 Adjusled Nct Income Return-Actual YTD Net Income increased for in!erest e.wense Net Fixed Assets+Inventory There was an extensive discussion, with Commissioner Alley concluding that there are lots of ways to get to the 6.18%target rate, as it can be a combination of raising rates and cutting costs. Commissioner Alley expressed interest in continued benchmarking to show whether the BWL is running as efficiently as it should be. There was discussion regarding the established Net Income Rate on Return percentage and the desire to discuss the reassessment of the percentage at a future meeting. Internal Audit Open Management Responses Heather Shawa-DeCook, Chief Financial Officer (CFO) provided an update on the Management's response to Internal Audits. 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' De- 21 m—d I—,^—I�.,N 1�—.1):`�. Ms. Shawa-DeCook stated that Records Retention Open issues numbers 12 and 13 have been extended until end of January, at which time the executive team will receive the same for review, at which time the State of Michigan will review and approve which typically is a 90+ day process. There has been no change on item number 17, Use of General Accounting Manual. Staff is expecting to have this by the end of calendar year 2Ol6. Ms. Shovva'OeCookstated that open issue items 26through ][i are related to management of mobile devices, recommendations were specifically for determining and documenting guidelines for mobile devices. Staff is in process of developing this; however, it is likely that an extension until end of March for completion will be necessary. (]pen issues item numbers 31 and 32 are related to the Outage Management system. Key items recommended were tD update procurement procedures, which are currently inplace; however, an extension to have anupdate is needed until April 1st. Open Issue items 34through 36 are related to Training and Development, with audit recommendations tofully centralize training process, documentation and records. The BVVL is in process of implementing Learning Management System (LK4S), which should be online in March. Additionally, staff is working on proper recording of training time; with refresher training small employees understand requirements. Commissioner Zerk|e raised the question about the 90'day limit for management responses to audit recommendations that she stated is required by Resolution. In response, Internal Auditor Perkins stated that he would research the issue and report to the Commissioner any needed clarifications. Public Comment None Other General Manager Peffley congratulated Ms. Lori Pung on her promotion of Manager of General Accounting. Adiourn On Motion by Commissioner Price, Seconded by Thomas, the meeting adjourned at 8:43 p.m. Respectfully submitted Ken Ross, Chair Finance Committee MANAGER'S RECOMMENDATIONS RESOLUTION 2016-01-01 Amending Appointments to the Michigan Public Power Agency WHEREAS, George Stojic is the Michigan Public Power Agency (MPPA) Commissioner on behalf of the Lansing Board of Water& Light (BWL), along with Robert Lalonde and Lori Pung, who serve as First and Second Alternate Commissioners, respectively; and WHEREAS,the Second Alternate, Lori Pung has been promoted to the position of Manager of General Accounting; and WHEREAS, it is appropriate and in the best interest of the BWL to name a replacement for the Second Alternate MPPA Commissioner position. NOW, BE IT RESOLVED,that George Stojic will remain as the MPPA Commissioner on behalf of the BWL, along with Robert Lalonde as the First Alternate Commissioner. FURTHER RESOLVED, that Constance Carantza is named as the BWL's Second Alternate MPPA Commissioner. Motion by Commissioner Ross, Seconded by Commissioner Mullen, to approve the Manager's Recommendation for Amending Appointments to the Michigan Public Power Agency. Action: Motion Carried UNFINISHED BUSINESS There was no Unfinished Business NEW BUSINESS BWL Chairperson Price stated that due to Mayor's State of the City Address rescheduled for March 22, 2016, the same day as BWL's next Regular Board meeting, he would like to propose an earlier start time for Board meeting. Motion by Commissioner Mullen, Seconded by Commissioner McCloud, to approve a motion to reschedule the start time of the March 22, 2016 Board of Commissioners Regular Board Meeting to 5:00 p.m. Action: Motion Carried RESOLUTIONS ----------------- MANAGER'S REMARKS General Manager Peffley provided an update to the Commissioners on the BWL water standards by stating that BWL drinking water met or exceeded all quality standards issued by the U.S. Environmental Protection Agency (EPA) and the Michigan Department of Environmental Quality (MDEQ). Additionally, the BWL is actively responding to customer and media concerns regarding water quality. The BWL employees are donating water to Union Mission Baptist Church in efforts to help Flint with water crisis. Commissioner Zerkle inquired as to the status of BWL's lead service replacement, to which General Manager Peffley indicated that in 2004, BWL began replacing 14,000 lead service lines, and today, fewer than 500 active lead service lines remain to be replaced. Commissioner Zerkle furthermore inquired whether sensitive population, such as household with young children are deemed a priority in lead replacement, to which General Manager Peffley responded that the BWL verified that no schools in its service territory have lead service lines. In addition, all lead services to licensed day cares have been replaced, as well as households with sensitive populations are moved to top of the list for replacement. Commissioner Ross inquired whether the BWL supplies water to East Lansing Elementary Lanchools,to which sing t of a wholesales General Manager responded that BWL supplies a very small percentage to East Lansng as agreement. COMMISSIONERS' REMARKS Commissioner Nelson noted that Janice Beecher has an annual regulatory conference on Feb 26th 2016 at the Kellogg Center in East Lansing, and encouraged all Commissioners to attend. PUBLIC COMMENTS There was no Public Comment ADJOURNMENT On motion by Commissioner Thomas, Seconded by Commissioner Mullen the meeting adjourned at 5:46 p.m. M. Denise Griffin, Corporate Secretary Preliminary Minutes filed(electronically)with Lansing city clerk official Minutes filed(electronically)with Lansing city clerk: