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HomeMy WebLinkAbout2019 Minutes BWL Approved by the Board of Commissioners 1-28-20 Hometown People. Hometown Power. MINUTES OF THE BOARD OF COMMISSIONERS MEETING LANSING BOARD OF WATER AND LIGHT November 19, 2019 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, on Tuesday, November 13, 2018, Chairperson David Price called the meeting to order at 6:23 p.m. Present: Commissioners David Price, Beth Graham, Deshon Leek, David Lenz, Anthony Mullen, Ken Ross, Tracy Thomas and Sandra Zerkle. Non-Voting Commissioners present: Michael Froh (Meridian Township), Douglas Jester (East Lansing), Larry Merrill (Delta Township). Absent: None The Corporate Secretary declared a quorum. Commissioner Leek led the Pledge of Allegiance. APPROVAL OF MINUTES Motion by Commissioner Ross, Seconded by Commissioner Thomas, to approve the Regular Board Meeting minutes of September 24, 2019. Action: Motion Carried PUBLIC COMMENTS None. COMMUNICATIONS Electronic Mail received from or Re: a. Electronic Mail from Violet Polzin re: Smart Meter Program - Referred to Management. Received and Placed on File b. Electronic Mail from Cheryl Haskell re: BWL Service and Payment - Referred to Management. Received and Placed on File c. Electronic Mail from Wendy Larson re: Streetlights - Referred to Management. Received and Placed on File d. Electronic Mail from Steve Rall re: Natural Gas Plant - Referred to Management. Received and Placed on File COMMITTEE REPORTS Commissioner Tracy Thomas presented the Human Resources Committee Report: HUMAN RESOURCES COMMITTEE Meeting Minutes November 5, 2019 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 5, 2019. Human Resources (HR) Committee Chairperson Tracy Thomas called the meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Tracy Thomas, Anthony Mullen, and Sandra Zerkle. Also present: Commissioners David Price and Ken Ross; and Non-Voting Commissioner Doug Jester (E. Lansing) (arrived 5:13 p.m.) and Larry Merrill (Delta Township) (arrived @5:02 p.m.) Absent: Commissioner Beth Graham Public Comments None Approval of Minutes Motion by Commissioner Mullen, Seconded by Commissioner Zerkle, to approve the Human Resources Committee meeting minutes of September 10, 2019. Action: Motion Carried. Delegation of Authority: Retirement Plan Design and Administrative Decisions Mr. Michael Flowers, Executive Director of Human Resources, introduced Mr. Scott Taylor, Finance Manager, who explained the Delegation of Authority for the Administrative Decisions in the Retirement Plan Design, Mr. Taylor stated that there are investment board responsibilities and administrative board responsibilities in the retirement plan. Administrative decisions consist of determining plan qualifications for employees, making and authorizing benefit payments, handling enrollments, authorizing loans, hiring the plan administrator and monitoring performance, hiring the plan actuary, hiring the plan auditor and tax reporting. The proposed resolution is for official delegation for the authority to make the administrative decisions. The resolution also includes authority for benefit design changes and formally calls for any changes to be communicated to the board at the next available meeting. The resolution on the agenda for the lump sum payment for DB plan participants is considered a plan design change. Mr. Taylor noted that the resolution doesn't delegate authority to terminate or freeze the plan. Commissioner Mullen inquired why the finance area was conducting the discussion about the administrative decisions. Mr. Taylor responded that the retirement plan committee, of which he is a spokesperson, advises on the decisions for the management. Proposed Resolution Delegation of Authority: Retirement Plan Design and Administrative Decisions WHEREAS, the Board of Water and Light is the "Sponsor" of the (a) Lansing Board of Water and Light Defined Contribution Plan and Trust 1; (b) Lansing Board of Water and Light Defined Contribution Plan and Trust 2; (c) Lansing Board of Water and Light 457 Deferred Compensation Plan and Trust; (d) Lansing Board of Water and Light Defined Benefit Plan and Trust for Employees' Pensions; and (e) Post-Retirement Benefit Plan and Trust for Eligible Employees of Lansing Board of Water and Light (collectively the "Plans"); and WHEREAS, the Sponsor wishes to delegate certain administrative and plan design authority over the Plans to the General Manager who may further delegate to the Retirement Plan Committee or any successor of the Committee performing the same duties (the "Committee"). THEREFORE, it is: RESOLVED, that the Sponsor expressly delegates to the General Manager, and at the discretion of the General Manager the Committee, authority to perform administrative functions such as the authority to appoint and remove the Plan Administrators; facilitate administration of the Plans and communications to participants and Plan Administrators; engage consultants and services; alter the Plans' design to address changes in business needs and industry practices and take all actions necessary to carry out the terms of the Plans. To the extent the General Manager or Committee has performed such functions prior to this express delegation, those actions are hereby approved. The Sponsor does not delegate to the General Manager or the Committee authority to freeze or terminate the Plans, and all Plan design changes or updates will be communicated to the Board at the next regularly scheduled meeting of the Board. FURTHER RESOLVED, that the Sponsor indemnifies and holds harmless the General Manager and 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 General Manager's or the Committee's discharge of its duties relating to the Plans; provided, however, that this indemnification shall not apply with regard to any proceeding in which the General Manager or a Committee member is found to have been grossly negligent or to have violated a law or committed a crime. Motion by Commissioner Zerkle, Seconded by Commissioner Mullen, to forward the proposed resolution for Delegation of Authority: Retirement Plan Design and Administrative Decisions to the full Board for consideration. Action: Motion Carried. Payment for Eligible Defined Benefit Plan Participants Executive Director of Human Resources, Mr. Michael Flowers, presented the resolution for the payment for eligible defined benefit plan participants. Commissioner Zerkle expressed appreciation for the extra pension that will be given to retirees from long ago with this resolution, General Manager Dick Peffley noted that the payment is less than 1% draw down on the fund. Commissioner Mullen asked why there wasn't a standard cost of living adjustment as the pension amount for the long-ago retirees isn't that much. GM Peffley responded that the benefit plan is reviewed annually and the fund balances are taken into serious consideration. Commissioner Ross provided some key facts regarding the fund balance: the fund balance is currently at 112% and the overall financial impact would be approximately $485,000; the resolution will bring the fund balance to 111%; because there is a taxable issue the payout will be deferred to 2020; and the BWL is not obliged contractually to provide in any given year an extra benefit. Commissioner Zerkle asked for confirmation that the money is being taken from the defined benefit fund which is currently 12% overfunded and GM Peffley affirmed. Proposed Resolution Payment for Eligible Defined Benefit Plan Participants RESOLVED, that a lump sum payment be made to Lansing Board of Water and Light Defined Benefit Plan for Employees' Pensions ("Defined Benefit Plan") participants eligible to receive plan payments as of November 19, 2019, equal to $65 for each year retired prior to July 1, 2019, rounded up to the nearest whole year. Staff Comments: This resolution is intended to exclude participants not currently receiving pension payments such as active participants and terminated vested participants. Motion by Commissioner Zerkle, Seconded by Commissioner Mullen, to forward the proposed resolution for Payment for Eligible Defined Benefit Plan Participants to the full Board for consideration. Action: Motion Carried. Other Motion by Commissioner Mullen, Seconded by Commissioner Zerkle to excuse Commissioner Graham from tonight's meeting. Action: Motion Carried Adiourn Motion by Commissioner Zerkle, Seconded by Commissioner Mullen, to adjourn the meeting. Action: Motion Carried Meeting adjourned at 5:16 p.m. Respectfully Submitted, Tracy Thomas, Chair Human Resources Committee Commissioner Anthony Mullen presented the Committee of the Whole Report: COMMITTEE OF THE WHOLE Meeting Minutes November 5, 2019 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, on Tuesday, November 5, 2019. Committee of the Whole Chair Tony Mullen called the meeting to order at 5:30 p.m, and asked the Corporate Secretary to call the roll. Present: Commissioners Tony Mullen, David Lenz, David Price, Ken Ross, Tracy Thomas, and Sandra Zerkle and Non-Voting Members: Michael Froh (Meridian Township), Douglas Jester (East Lansing), and Larry Merrill (Delta Township) Absent: Commissioner Beth Graham The Corporate Secretary declared a quorum. Public Comments Commissioner Price introduced Mr. Deshon Leek the new anticipated 3rd Ward. Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Thomas, to approve the Committee of the Whole meeting minutes of September 10, 2019. Action: Motion Carried. Corporate Planning: Update on Approved 2016 Strategic Plan General Manager Peffley introduced Strategic Planning & Development Executive Director, Ms. Brandie Ekren who presented an update on the approved 2016 Strategic Plan. Strnc•gy I:Caeuimcr F.xprrlanrr 2016-2020 Strategic Plan Update q 6 Stmtep'l:CUsronsYr ErNt'rlentt• � titrxkpy:klSlt'ntlss•W M1ryuircanJ Atarnge -- - c,er......,m,.,,. r,,,.... �soorcos titrvfepy 2.Cumntnity lnw„trrment I'r'Arc_i �wuo vM ynu-:,:.w,,.n. suti..�»,.-. maas...m-.r w.,._...._...x..—w r_:r,n.,-.0 ,w...:..,•,.,. , •••' - fu4++ ,m„a(,.e'R�.a rim x.e.1..,L,r cuunsy. u-.il,.A:Lwar..n,.....0 � _ � wu......« ..-y.<.r..«„ wv,uwi b.. ra.0 n:x.f•^v.Y^n,Lr .w»sv...:.rv�.. .,.-....»....,.... l 'If-t'Llf t I 1 c,nJ Dlinye YM �l5tr nuyy1.Impp.merttNRrTu.hrlNoplCS � '� N +u.+ ....vv,..•,.,,.::.. n ,a»,..»,»u..._ -.s.,ur..x»,.w.,..w,q flLLat m�d.In:iM:nvror M1er.Tnhm�Afs.a.n. Slf liq•>:LY•. »mx.,. ('mom., 1'rnynx, Ob`avrn .,.....« r..r..,,..,.. r.l�n. .x..x,„cMa•cr,w..r..w ,...., .•. -� A�� n,,.,„,....n,,,i.... s. Strategy i;W6rNfor<e '° 31mmM•U.YtnxmYalatsLNry .gip• n•. ..,.w..ea...,.,-u-.. •'f ,.w u.,„.,,. ,kn Slr Wff 7:OWL Lendanhlp itrlt¢.�y:;UWL L.J—hip `-•' Obhvmr�� Pnho 3n .....:�......�..,,.,...... ....-,..,c_...r.. .,w.. x.-r.« -':..r;>,..:-,x+:a.,x.ws :..,.r.v..,,..M.„, »;..•,,..................:. Ms. Ekren's update included a refresher of the Strategic Plan's strategies, goals and objectives that were designed to address the changing utility industry. For each strategy and goal, Ms. Ekren provided a list of high-level progress bullets. There was brief discussion around the accomplishment of an 86% approval rating, which was in response to the objective of soliciting feedback from our customers. Commissioner Zerkle asked if the 86% customer approval rating was based on the last survey taken and GM Peffley affirmed and another opportunity to capture a customer approval rating will be obtained in the upcoming Integrated Resource Plan survey. Commissioner Jester asked who was formalizing the survey questions. GM Peffley stated that it was a team effort which included Ms. Ekren's division, Mr. Serkaian's division, and a 3rd party consultant/implementer, Mr. Bernie Porn from EPIC MRA. GM Peffley advised that a copy of the questions would be shared with the Commission, following Commissioner Jester's request to receive a copy. There was brief discussion about the BWL's investment in an updated customer information system. Commissioner Jester asked for the schedule for the customer information system. Ms. Ekren and GM Peffley responded that it will be the second quarter in 2021, In response to the request for more details on the Hometown Leaders Campaign and the Greenwise Program, Ms. Ekren noted that the Hometown Leaders Campaign was put together by Communications. It consists of billboards, advertisements, and social media. The Greenwise Program is an opportunity for customers to invest directly into renewable energy. The Greenwise Program came into existence in 2001 and has been updated to be more attractive and marketable to customers. GM Peffley stated that the Hometown Leaders Campaign is one of BWL's most successful campaigns. Commissioner Jester asked Ms. Ekren to address organizational resilience. Ms. Ekren recommended that organizational resilience be presented as a future agenda topic given the depth of information associated with the endeavor. However, work associated with this endeavor involves training, investing in infrastructure, change management, industry trend alignment and updating policies. Commissioner Zerkle inquired about new technology training for the Erickson plant employees transitioning from the Erickson plant to the new plant. GM Peffley responded that the transition will be from the Eckert station and the operating staff are working at REO. At the beginning of the year, the staff will start formal training for the Delta Energy plant. Corporate Planning: BWL's Clean Energy Journey Strategic Planning & Development Executive Director, Ms. Brandie Ekren presented BWL's Clean Energy Journey. Ms. Ekren highlighted three critical points: sustaining the environment and natural resources is foundational to the BWL; the BWL Clean Energy Journey began before it was required by law; and the commitment to the planet and cleaner energy future will continue. �tm>t . ...nvlrn. r _ Ow Cnenmttmtem L"ont.. M6 ffur Grrn:t:tmt+rt: r _ 29 MO Ft r„t Ketu!ru/tnrclp'f.IP�mry k n'p !u xi+..Jln.rty t'nn.rxy AC iNxe , NEW- 1 ......... J r ::. Commissioner Froh asked where BWL stood with the 2016 goals for 20% renewables by 2020. Ms. Ekren responded that BWL is on pace to meet that goal. GM Peffley responded that 20% renewable energy and 10% energy efficiency are the parts of the 30% clean energy goal. GM Peffley added that wind development energy in Tuscola County is expected by the end of the year. Commissioner Ross asked for a definition of the terms future clean energy goals of 20% and 40%, renewable components and efficiency components. Ms. Ekren responded that clean energy is a combination of energy fuel source and the consumption of energy, energy efficiency and waste reduction. The goal for 2020 is 20% renewable and 10% energy efficiency. Commissioner Ross asked if 100 Mega Watt (MW) of power was generated what would 20% entail. GM Peffley responded that 20 MW would be renewable which would be a combination of wind, solar, natural gas and a small piece of hydro. Commissioner Ross asked whether the 20% of generation in the renewable portfolio would be from BWL or purchased. GM Peffley responded that purchase power agreements are made only when the 30% tax credits can't be captured. GM Peffley also responded that Renewable Energy Credits (REC) are not being used, at this time. Ms. Ekren responded that the energy efficiency annual goal is set at investing 1% in qualified programs. GM Peffley responded that 40% in renewable energy by 2030 is scheduled and it will be a mix of renewables and energy efficiency. Commissioner Ross also asked about informing the customers about future intentions and the rate strategy, obtaining feedback, and to see if the BWL is on target for 100% renewable energy. GM Peffley responded that BWL is ahead of the target for 100% renewable energy and that goals are provided to the customers. Commissioner Mullen asked if the BWL was considering insight from commercial customers during the IRP stakeholder engagement given that 80% of revenue is from commercial and residential customers. Ms. Ekren referred the commission to the May, July and September corporate planning updates, which included greater detail on the stakeholder engagement. She also reminded the commission that her team has been meeting with commercial industrial customers, as well as other categorical customers since March 2019. GM Peffley emphasized that the emphasis on commercial industrial customer opportunities are essential to maintaining reasonable residential rates. Commissioner Lenz asked if the commercial industrial customers have the option to buy power from other utilities. GM Peffley responded that commercial industrial customers located within the city limits of Lansing and certain contagious communities are limited to BWL electric service. Commissioner Lenz asked if complementary energy assessments were offered to non-low-income customers and GM Peffley affirmed and stated that the assessments were offered to landlords and informed them of the benefits of investing in the program. Ms. Ekren stated that the energy assessments provide the benefit low income customers by increasing energy efficiency and making utility cost more affordable. Commissioner Zerkle asked if energy assessments were offered to larger or commercial industrial customers. GM Peffley responded that BWL had a full-time engineer at General Motors whose responsibility was to find energy savings for them. Commissioner Zerkle asked if small non-profits could request an energy assessment and GM Peffley responded in the affirmative. Commissioner Jester asked about "on-bill" financing options. Ms. Ekren and CFO, Heather Shaw affirmed that programs such as these are being evaluated. Commissioner Ross asked if installation energy efficient windows would qualify for "on-bill" finance arrangements. Ms. Ekren noted that while "on-bill" financing options are being evaluated, customers are eligible for certain rebates or incentives that is currently available through the BWL. Ms. Ekren explained that on-bill financing is designed to enable customers to invest in renewable generation easier. Commissioner Jester stated that important strategies of "on- bill" financing programs are a split incentive for landlords and tenants, the credit enhancement for people who don't have the credit for a personal loan and the guarantee of a net savings after the energy efficiency benefits. Commercial Zerkle commented that after the Smart meters are installed and customers are educated on how to review and evaluate the data, there will be increased benefits to customer driven energy management Commissioner Ross asked how feedback would be captured during the open house format, given the change from the formal presentation format. Ms. Ekren responded that the open house format designed for customers that do not have an opportunity or are not as comfortable presenting in front of a large audience during public meetings. It also the utility company lecturing to the public prior to all analytical and stakeholder data has been consider. It provides insight into our process as well as what we are consider. It also provides an opportunity to customer to engage in conversation. Each station will give instruction to they encounter to give feedback. Regular Board Meeting Schedule for 2020 Committee of the Whole Chair Mullen presented a proposed Resolution setting the BWL Board of Commissioners 2020 Regular Board Meeting Schedule as directed by Section 1.1.2 of the BWL's Rules of Procedure. Motion by Commissioner Price, Seconded by Commissioner Lenz to forward the 2020 Regular Board Meeting Schedule Resolution to the full board for consideration. Action: Motion Carried Other Motion by Commissioner Price, Seconded by Commissioner Thomas to excuse Commissioner Graham from tonight's meeting. Action: Motion Carried Adiourn Commissioner Mullen adjourned the meeting at 6:36 p.m. Respectfully Submitted Tony Mullen, Chair Committee of the Whole Commissioner Ken Ross presented the Finance Committee Report: FINANCE COMMITTEE Meeting Minutes November 5, 2019 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 on Tuesday, November 5, 2019. Finance Committee Chair Ken Ross called the meeting to order at 6:45 p.m. and asked the Corporate Secretary to call the roll. Present: Commissioners Ken Ross, David Lenz, Tony Mullen, and David Price. Also present: Commissioner Tracy Thomas, and Non-Voting Commissioner Larry Merrill (Delta Township). Absent: None The Corporate Secretary declared a quorum. Public Comments None. Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Mullen, to approve the Finance Committee meeting minutes of September 10, 2019. Action: Motion Carried. September YTD Financial Summary Chief Financial Officer (CFO), Heather Shawa presented the following: 1-01 .,n�nn.r..w" Ca,6 __ _ Incunu•tilnt "r 'It YTD Ratios 17m I. ee Data IfnAl;rt Staut4 l"I'D .......,..._...._...........„......_.„._,..._ ......�. n..y«nn-a......n..<< .... Return o"A"el, 711 Days Cash on hand for YTD is $178 million which is well above the target in the budget, as is the Debt Service Coverage. The Income Statement Q1 results for Total Revenue are under budget $1.3 million. The YTD budgeted Net Income is $8 million and the current actual Net Income is well over that. The FY 2020 Budgeted Net Income of $18.3 million is expected to be achieved or exceeded slightly. The Budget Status YTD for Capital Projects is on track and the Delta Energy Park spend is trending up toward budget. Major equipment will be arriving and will have major vendor payments and that spend will track to budget as well. Return on Assets for quarter one is well over budget as well, trending with Net Income. Ms. Shawa reported that four of the five ratios are on track and that Debt to Total Assets will level out throughout the year. Employee Data is consistent with prior months. Payroll Data and Benefits Cost is tracking in line with budget as well. Commissioner Lenz asked from where the operating expenses savings are realized. Ms. Shawa responded that some of it is timing in budgeting an expense compared to when the expense is realized. Ms. Shawa responded that there was a positive VEBA adjustment that was reported for the last financial summary which has a cumulative effect that will be carried out for the rest of the fiscal year. Ms. Shawa also responded that the Non-Operating Expense/Income under budget is primarily unrealized gains. Commissioner Lenz asked if temporary or full time equivalent employees are budgeted or projected out for the year. Ms. Shawa responded that there is a labor budget and additionally outside services for temporary labor is budgeted. First Supplemental Utility System Revenue Bond Resolution Ms. Shawa reported that due to historical market lows the BWL is in a very good position to refund the 2011a Series bonds for the REO plant. Ms. Shawa introduced bond counsel from Miller Canfield, Mr. Bill Danhof and Mr. Jeff Aronoff. Ms. Shawa turned over the floor to Finance Manager, Mr. Scott Taylor, to go over the bond resolution authorizing the CFO to carry out refunding of the bonds. Mr. Taylor explained the bond issuance process as tax exempt revenue bonds that are 30 years from maturity and have a 10-year call feature. The 10-year call feature means the point at which the bond can be refinanced. Tax exempt means a favorable borrowing rate, and revenue bonds means payment is made by the revenues of our system. In 2011, $250 million in bonds were issued to fund the REO plant and in 2021 these bonds will be 10 years old. Due to a 2017 tax law change, the ability to advance refinance the debt with tax exempt bonds can't be done as has been done in the past, but taxable money is able to be borrowed now and set aside to pay the debt when it is callable in 2021. Mr. Taylor noted that it is not always a good idea to do an advance refunding but the rates are very low right now. The tax savings would be for the remaining 20 years. The plan is for a December bond issuance unless market conditions change or otherwise, which would then lead to a January issuance. Mr. Taylor requested approval of the board of the bond resolution. Commissioner Mullen asked why the BWL wouldn't wait until 2021 to refinance with the tax exempt status and a better interest rate since interest rates are trending down. Mr. Taylor responded that that was taken into consideration, but experts believe there is more room for the rates to go up than down, and there will be a major re-election before the tax exemption refunding would take place. Commissioner Ross asked what the approximate differential basis points between taxable and nontaxable municipal bonds and what is being issued. Mr. Taylor responded that about 30 basis points was reported. Commissioner Ross also asked what the increase in cost would be to customers. Mr. Taylor responded that it will be a net savings to customers as it is to the BWL. Commissioner Ross asked what the difference would be of issuance on a tax-free basis as they used to be. Mr. Taylor responded that savings will be realized as proposed and another 10-year call action will be included which will allow converting to tax exempt debt again. Commissioner Ross noted that there is a trade for a slightly higher premium and the flexibility to choose when to refinance. Commissioner Ross asked what the refinancing bond issuance costs would be and what the return would be over the refinancing period. Mr. Taylor responded that the refinancing bond issuance costs would be approximately $1.5 million and the return would be over $2 million dollars a year in average cash flow savings. Commissioner Mullen asked whether the resolution requires that an action be taken and Ms. Shawa responded that the resolution authorizes a transaction but does not obligate a transaction. Commissioner Ross noted that recently a resolution was passed authorizing Phase Three funding and asked why it doesn't make sense to roll Phase Three into this resolution. Mr. Taylor responded that there were some efficiencies as costs overlapped when combining the resolutions, but one would have to be delayed or the other brought forward and the risk of market rate changes on the one delayed and the additional interest costs on the one brought forward would affect the savings realized. Motion by Commissioner Price, Seconded by Commissioner Mullen, to forward the First Supplemental Utility System Revenue Bond Resolution to the full Board for consideration. Action: Motion Carried. Internal Auditor Status Report Internal Auditor, Mr. Wesley Lewis, presented the Internal Auditor Status Report. Overview FY 2019 Audit Plan Progress Report w� FY 2019 Audit Plan Progress Report Fnmoen+rn bwoorr••: I.Rgµnewt t.Utl-F'4N lull feprt 1 be itiuetl s00n. • Update on FY 2020 Audit Plan Internal Audit Status Report Other Items Presented by: Wesley Lewis,Director of Internal Audit Finance Committee Meeting November 5,2019 WE Update on FY 2020 Audit Plan Other Items + .C�r2Ma:�e^v iamb.Isa„t,:2HatrE:sLL2ePr2e-roawo�� 2 B1enarTrlxlcatta�+.w>�:cL•kr_T)�1-gaeeavm s02,20,9am 1.Current Technology Upgrades pwT Internal Audi(Management Software System a.WaN AUn;r+,+ear nvrn,F.-,:r va,o•I_scneeyee ucaonrs rrzavro. a. a r• ••a -•b i Information Analytics Tool,with Arlifcial GTrc.aienlil{P.u¢r1-=^, :<a.rG h,:r„p:qu. Intelligence Erro.arnnang4e r. qrw+b�wro:or]+_3cnea,r•el,c.ea 2. Stalling � •9' 3. ISO Certification for Internal Audit E.Lr.i'k�R&rti f4:tyA..s:er[T.taL(F.,TSLTre.9,py-scnctlw.e R,:scnu s2v_c_o J.CISA Exam Progress tr rv.vwwN npo.roo.wr Wn Nwe.m.aemnr+n r+i'.rrro soup.. Commissioner Ross asked for an explanation of the information analytics tool with artificial intelligence. Mr. Lewis responded that the information analytics tool is different from data analytics in that it includes artificial intelligence which will look at the data sets, conform to the structure of the data and look for red flags or anomalies. Commissioner Ross asked for a future presentation on the value and return on investment of the software. Commissioner Price inquired when the onboarding date would be for the Internal Auditor Assistant and Mr. Lewis responded mid-December. Commissioner Lenz asked if the technology upgrades for the software are industry standard and is there a change in the way data is being analyzed. Mr. Lewis responded that the software upgrade is enhancing analyzing the data and different companies utilize different tools. Commissioner Thomas asked when and how often the CISA Exam is offered. Mr. Lewis responded that the exam is offered at any time. Other None Adiourn Motion by Commissioner Mullen to adjourn the meeting. Chair Ken Ross adjourned the meeting at 7:20 p.m. Respectfully submitted Ken Ross, Chair Finance Committee Commissioner David Price presented the Trustees Meeting Report: SUMMARY REPORT LANSING BOARD OF WATER & LIGHT PENSION FUND TRUSTEES MEETING MINUTES November 19, 2019 The Pension Fund Trustees of the Lansing Board of Water & 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 19, 2019. Board Chairperson David Price called the meeting to order at 5:01 p.m. Chairperson Price provided some background information on how Commissioners serve as Trustees of the Pension Funds. Commissioner Price welcomed the new 3rd Ward Commissioner, Mr. Deshon Leek, and asked the Corporate Secretary to call the roll. Present: Trustees Beth Graham, Deshon Leek, David Lenz, Tony Mullen, David Price, Ken Ross, Tracy Thomas (arrived at 5:08 p.m.), and Sandra Zerkle (arrived @ 5:15 p.m.) Absent: None The Corporate Secretary declared a quorum. Public Comments None. Approval of Minutes Motion by Trustee Mullen and Seconded by Trustee Ross to approve the minutes from the November 13, 2018 Pension Fund Trustees' Annual Meeting, Action: Motion Carried Pension Fund Chief Financial Officer Shawa reviewed and provided detailed information from the following Memorandum and Dashboard: c�—Y .~° zrwZ ME ~~ ~~ ^~ ^~ X:r== �.� Ms. Ghavva stated that there were no policy or plan document changes this year. Ma. 3havva informed that the memorandum summarized key plan information and the fund line-up changes. The Dashboard consisted of information from the DB Plan and the VEBA Plan. The O8 Plan ended FY2019 with $GO million in assets and funded status held at llZ%. The actual return was 7.3996 which was slightly over the target of7Y6; the expected return of7Y6 is just under the median return of7.2SY6for other plans like this one. The primary reason the expected return is set lower at7Y6 |s due tothe plan being closed with five active participants, the maturity and funded status of the plan, and it is appropriate to be conservative and maintain the plan assets. The VEBA Plan ended FY2019 with $195 million in assets and the funded status increased from 90% last year to 131% this year. The actual return for the VEBA Plan was 6.36% which was slightly below the expected return of 7.5%. Ms. Shawa also provided information on the Defined Contribution 401a Plan and Deferred Compensation 457 Plan. The 401a plan ended FY 2019 with $200 million in assets, and the 457 Plan ended with $112 million. Ms. Shawa noted that there were 304 loans outstanding totaling $6.8 million with an average loan balance of $22,514 included on the dashboard, but an error was found and corrected to 352 outstanding loans totaling $4.1 million with an average loan balance of$11,800. Trustee Mullen asked how many participants are in the Defined Benefit Plan. Ms. Shawa responded that there are 345 participants of which 5 are active. Trustee Ross requested confirmation that the Defined Benefit Plan is a traditional pension plan for any active employee pre-1997; that the Defined Contribution 401a Plan is funded by employees through an annual contribution post-1997 and that, generally, there is a 15% annual contribution for employees pre-1997 and a 9.5% annual contribution for employees post-1997; and that the 457b Plan is a voluntary employee contribution plan which is matched to a certain amount by the BWL. Ms. Shawa confirmed. Trustee Ross asked what the process was for selecting financial advisors, how frequently bidding processes are made, and how reasonable fee charges are set. Ms. Shawa responded that the Retirement Plan Committee (RPC), which consists of herself as Chair, Executive Director of Human Resources, Michael Flowers, and Finance Manager, Scott Taylor, was delegated responsibility for the investment plans. Ms. Shawa responded that the RPC works with BWL General Counsel, BWL Financial Analyst and outside financial advisors to fulfill fiduciary responsibilities. Trustee Ross asked for information regarding the benchmarks and returns of the DB and VEBA Plans and how they are tied to asset indexes. Ms. Shawa responded that there are quarterly reviews and additional information will be provided by Plante Moran, LLC and Asset Consulting Group. Trustee Ross also asked about the 9.5% contributed by post 1997 employees and how additional voluntary contributions were encouraged. Ms. Shawa responded that the process is being reviewed but there is no formal recommendation at this time. David Houser, BWL Finance Supervisor, introduced the financial advisory panel. The Panel provided financial information and engaged in a question and answer session. The Panel consisted of Information: 1) Nathan Burk, Vice President at Asset Consulting Group (ACG); ACG was selected by RFP in 2017 and they provide recommendations for the DB and VEBA Plans including developing, reviewing, and complying with investment policies and portfolios; 2) Mark Miller, Principal and Actuary at Benassist Retirement Consulting, LLC; Benassist was selected by RFP in 2018 and they provide actuarial services for the DB and VEBA Plans which includes employee benefit calculations and annual state filing requirements; 3) Steven Gibson, Relationship Manager and Consultant with Plante Moran Financial Advisors, LLC; Plante Moran Financial Advisors, LLC are co-fiduciaries and DC Plan advisors, which includes plan analysis to ensure the highest benefits to participants, and the preparation and compliance with investment policies; and 4) Lisa Burks-Wilson, Director of Relationship Management from ICMA, the DC Plan administrator, which includes account access, participant communication and participant education. Mr. Nathan Burk gave a market update for the past year. Mr. Burk stated that in the 41h quarter in 2018 the Federal Reserve was committed to raising interest rates resulting in equities being sold and an increase in investing in bonds. In 2019 the Federal Reserve cut interest rates and equities rebounded. Mr. Burk also gave an update on the results for FY 2019 for the DB and VEBA Plans. He stated that the biggest contributor to the lower return on the VEBA Plan was US large cap stocks within the portfolio. The plan had a strategic asset allocation that wasn't quite at full target for the fiscal year but the final funding brought the allocation to its strategic goal YTD. Mr. Burk stated that the DB Plan performed better as it had a more conservative rate of return with a larger bond allocation. Mr. Burk defined the difference between active and passive investment management and when each one should be implemented. Active management is paying an investment manager to actively try to outperform a benchmark after fees and passive management is paying a more modest fee to replicate a benchmark from a return and risk prospective. ACG analyzes 40,000 different products from 10,000 different firms globally in 3-, 5- and 7-year returns evaluating whether a fee should be paid to outperform a benchmark. Trustee Ross asked whether Aristotle in the VEBA plan with an index of 16 basis points (bp) below was a passive investment. Mr. Burk responded that Vanguard was passive and Aristotle was an active manager. Trustee Ross also asked how Atlanta Capital in the DB Plan was able to achieve 1,000 by more than the index. Mr. Burk responded that Atlanta Capital is a concentrated manager who looks for high quality securities in the marketplace and have an excellent track record of finding the right broad-based selection of stocks. Trustee Ross added that since the framework is geared toward maximizing available opportunity for profit for the system are there any filters imposed on the money managers as it relates to social conscionability in investing. Mr. Burk responded that the objective of a public pension is to maximize return per unit of risk without regard to ESG (Environmental, Social and Fair Governance) factors, although this is factored in by many investment managers, and quarterly RFI's are sent out asking how ESG's are incorporated into the investment processes. Trustee Ross asked whether the information collected was placed into an evaluation process. Mr. Burk responded that unless there is a specifically mandated filter request, the entire set is evaluated and socially unacceptable practices would not be considered. Trustee Mullen asked what the cost would be for less agnostic and more socially active investments. Mr. Burk responded that there are socially active investment managers with a specific focus but it depends on whether that would be the direction wanted for the plan. Trustee Mullen asked what kind of return would be obtained in a socially active investment. Mr. Burk responded that it varies depending on the asset class; a long term socially responsible equity manager would be selected and a similar return would be expected. He added that the gaps that would have occurred in the past with the social investments are no longer realized. Mark Miller from Benassist Retirement Consulting, LLC spoke about the significant increase in the VEBA funding status. Mr. Miller stated that the increase in VEBA funding from a low 90% to 130% in the evaluation was attributed to three things: 1) A decrease in the premiums charged by the post-65 insurance company; the plan changed from Hartford to the larger company Humana resulting in the medical premium decreasing from $220 per month to $98 per month per person and the prescription drug decreasing from $305 per month to $213 per month; it is estimated that there would be $2 million in savings per year. 2) The healthcare trend assumption was adjusted down half a percent for each year starting at 9% as it was higher than what it is in industry and it is similar to what is required by Michigan uniform actuarial assumptions. This accounted for about 14% of the increase in funding. 3) Demographic experience due to the death of participants and spouses. Steven Gibson with Plante Moran Financial Advisors, LLC spoke about the fund lineup changes from February and how it benefits participants. Mr. Gibson stated that Plante Moran reviewed the investments, decreased the number of funds from 40—as the best practice amount is 15-25, added passive investments, streamlined the fee structure, and removed the sector or specialty funds but allowed access through the self-directive brokerage option. As a result of the changes made, the average investment expense went down significantly from 51bp and 55bp to 36bp and 41bp representing a cost savings of more than $400,000 per year. Cost savings in a pension plan means a reduced contribution to the BWL, but this cost savings is directly to the participants. Trustee Ross asked for a comparison of plans between BWL and other plans. Mr. Gibson responded that from a contribution standpoint of 250 plans and $6 billion in contribution assets, the company contribution of the BWL is in the top five, and the plan committee is very well designed. Mr. Gibson continued that the next step is the plan design process, which will be determining the average participation rate for the plan, what the participants will receive, if there is a need and the process to meet the need. Automatic enrollment is efficient, but many committees will not force participants into the plan. The ICMA plan is cost efficient and there is a flat per participant fee as there is for Plante Moran. Plante Moran benchmarks fees on an annual basis using an independent third party that looks at other plans of similar size and they have implemented a couple socially responsible plans but the plans aren't as highly used. Lisa Burks-Wilson, Director of Relationship Management from ICMA, the DC Plan administrator, spoke about the new technology that ICMA has provided for participants and how that impacts education. Ms. Burks-Wilson stated that the technology is award winning and that there are two approaches, the human approach and the self-service tools approach—which is also available through smartphones and Alexa. Ms. Burks-Wilson reviewed the tool "Am I on Track" which provides employees with a personalized retirement readiness score, takes into consideration money in the DC plan, DB plan, social security, and spouse's money. The retirement readiness score is determined by reviewing 500 market scenarios and it helps determine the savings rate and the age to retire. Ms. Burks-Wilson also reviewed the Account Aggregation tool which allows participants a comprehensive view of all types of accounts they have, and allows them to budget and fund specific goals. Ms. Burks-Wilson introduced the people that provide the on-sight education for employees, April Rose and Dan Stewart, retirement plan specialists who report to ICMA Regional Manager, Jason Ashline, and Nancy Lange, ICMA Financial Planner. Ms. Shawa brought forward two additional items that the RPC will bring forward to the Commission. Updating the target return in the IPS, or discount rate, is being reviewed for both the DB and VEBA. A recommendation for a 7%-6.5% reduction for the DB plan which would be a 5% funded impact taking the 112%funded status to 107%. A recommendation for 7.5% -7% reduction for the VEBA plan which would be a 7% funded impact taking the 131% funded status to 124%. The two primary reasons for the update is that industry-wide the trend for plans like the BWL's is to lower returns and market experts are reducing expectations for long term investment returns. Ms. Shawa added that a new funding policy recommendation will be worked on for the VEBA plan as there are different options available with the current funding status. Trustee Lenz inquired what the average historical returns for the DB and VEBA types of funds are and if the historical average is higher than to what the expected returns for the future are being reduced, and what is the explanation for the reduction. Mr. Burk responded that it is a forward working analysis and that currently there are historical lows at 1.5% interest. Mr. Burk added that return expectations have come down for building block methods of looking into different asset classes- equity, fixed income, real assets; equity markets have rallied in 2019; valuations are expensive and forward returns are anticipated to be lower; bonds move inversely to rates and if the rates go higher the bond prices will go lower. Trustee Lenz asked if a low return is being protected why the ratio of funds allocated is being changed. Mr. Burk responded that will be reviewed with the committee and it is reasonable to achieve the rate of return with the current allocation. Commissioner Zerkle commended Ms. Burks-Wilson and the BWL for having the ICMA at the BWL on a regular basis and asked how ICMA encouraged employees to put money aside, as it is their pension. Ms. Burks-Wilson responded that employees are instructed that a certain income placement ratio is needed to live on during retirement and that at least 10 years before retirement money should be set aside. Ms. Burkes-Wilson also informed that the plan includes a REA fund that can offer a guaranteed lifetime income. Trustee Leek asked what security provisions were in place for smartphones and Alexa. Ms. Burks- Wilson responded that cyber security is at the forefront at all times and that additional provisions through Amazon are necessary to utilize Alexa and cyber security is comfortable with the vetted provisions. RESOLUTION #2019-11-05 ACCEPTANCE OF 2019 AUDITED FINANCIAL STATEMENTS FOR DEFINED BENEFIT PENSION PLAN, DEFINED CONTRIBUTION PENSION PLAN, AND RETIREE BENEFIT PLAN Resolved, that the Corporate Secretary receive and place on file the Defined Benefit, Defined Contribution, and Retiree Benefit Plan reports presented during the Pension Trustee Meeting. -------------------------- Staff comments: All three Plans received clean audit reports. Motion by Trustee Ross, Seconded by Trustee Mullen, to accept the 2019 Audited Financial Statements for Defined Benefit Pension Plan, Defined Contribution Pension Plan, and Retiree Benefit Plan. Action: Motion Carried Other None. Excused Absences None. Adiourn There being no further business, the Pension Fund Trustees meeting adjourned at 6:19 p.m. MANAGER'S RECOMMENDATIONS There were no Manager's Recommendations. UNFINISHED BUSINESS There was no Unfinished Business. NEW BUSINESS There was no New Business. RESOLUTIONS/ACTION ITEMS RESOLUTION #2019-11-01 Delegation of Authority• Retirement Plan Design and Administrative Decisions WHEREAS, the Board of Water and Light is the "Sponsor" of the (a) Lansing Board of Water and Light Defined Contribution Plan and Trust 1; (b) Lansing Board of Water and Light Defined Contribution Plan and Trust 2; (c) Lansing Board of Water and Light 457 Deferred Compensation Plan and Trust; (d) Lansing Board of Water and Light Defined Benefit Plan and Trust for Employees' Pensions; and (e) Post-Retirement Benefit Plan and Trust for Eligible Employees of Lansing Board of Water and Light (collectively the "Plans"); and WHEREAS, the Sponsor wishes to delegate certain administrative and plan design authority over the Plans to the General Manager who may further delegate to the Retirement Plan Committee or any successor of the Committee performing the same duties (the "Committee"). THEREFORE, it is: RESOLVED, that the Sponsor expressly delegates to the General Manager, and at the discretion of the General Manager the Committee, authority to perform administrative functions such as the authority to appoint and remove the Plan Administrators; facilitate administration of the Plans and communications to participants and Plan Administrators; engage consultants and services; alter the Plans' design to address changes in business needs and industry practices and take all actions necessary to carry out the terms of the Plans. To the extent the General Manager or Committee has performed such functions prior to this express delegation, those actions are hereby approved. The Sponsor does not delegate to the General Manager or the Committee authority to freeze or terminate the Plans, and all Plan design changes or updates will be communicated to the Board at the next regularly scheduled meeting of the Board. FURTHER RESOLVED, that the Sponsor indemnifies and holds harmless the General Manager and 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 General Manager's or the Committee's discharge of its duties relating to the Plans; provided, however, that this indemnification shall not apply with regard to any proceeding in which the General Manager or a Committee member is found to have been grossly negligent or to have violated a law or committed a crime. Motion by Commissioner Thomas, Seconded by Commissioner Ross to approve the Resolution for delegation of Authority to the General Manager, and at the discretion of the General Manager the Committee; and Indemnification. Action: Motion Carried. RESOLUTION #2019-11-02 Payment for Eligible Defined Benefit Plan Participants RESOLVED, that a lump sum payment be made to Lansing Board of Water and Light Defined Benefit Plan for Employees' Pensions ("Defined Benefit Plan") participants eligible to receive plan payments as of November 19, 2019, equal to $65 for each year retired prior to July 1, 2019, rounded up to the nearest whole year. Staff Comments: This resolution is intended to exclude participants not currently receiving pension payments such as active participants and terminated vested participants. Motion by Commissioner Thomas, Seconded by Commissioner Zerkle to approve the Resolution for the Payment for Eligible Defined Benefit Plan Participants. Action: Motion Carried. RESOLUTION #2019-11-03 2020 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 2020 as follows, unless otherwise notified or as a result of date conflicts with rescheduled City Council meetings: 2020 Lansing Board of Water& Light Board of Commissioners Regular Board Meeting Schedule Tuesday January 28 Tuesday March 24 Tuesday May 26 Tuesday July 28 Tuesday September 22 Tuesday November 17 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 a newspaper of general circulation in Ingham County the week of January 1, 2020. Motion by Commissioner Ross, Seconded by Commissioner Mullen to approve the 2020 Regular Board Meeting Schedule Resolution. Action: Motion Carried. RESOLUTION #2019-11-04 Lansing Board of Water and Light FIRST SUPPLEMENTAL UTILITY SYSTEM REVENUE BOND RESOLUTION A RESOLUTION TO AUTHORIZE: • Net present value savings by refunding all or part of the Series 2011A Bonds through issuance of Refunding Bonds; • Chief Financial Officer to sell Refunding Bonds without further resolution; • Other matters relative to issuance, sale and delivery of the Refunding Bonds. WHEREAS, the City of Lansing, acting by and through the Lansing Board of Water and Light, issues 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 an Amended and Restated Utility System Revenue Bond Resolution adopted by the Board on March 27, 2018, as amended on March 26, 2019 (the "Bond Resolution"); and WHEREAS, all terms not defined herein shall have the meanings set forth in the Bond Resolution; and WHEREAS, currently the Board has outstanding the Utility System Revenue Bonds, Series 2011A (the "Series 2011A Bonds"), the Utility System Revenue Refunding Bonds, Series 2013A, the Utility System Revenue Refunding Bonds, Series 2017A, and the Utility System Revenue Bonds, Series 2019A; and WHEREAS, the Board's municipal advisor, PFM Financial Advisors, LLC (the "Municipal 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 2011A Bonds (the "Prior Bonds") through the issuance of one or more series of refunding bonds in an aggregate principal amount of not-to-exceed $270,000,000 (the "Refunding Bonds"); and WHEREAS, the Board's bond counsel, Miller, Canfield, Paddock and Stone, P.L.C., has advised that under existing law, as most recently amended by the Tax Cuts and Jobs Act signed into law on December 22, 2017 (the "2017 Tax Act"), interest on bonds issued to advance refund the Series 2011A Bonds will not be excludable from gross income for federal income tax purposes; and WHEREAS, Section 24(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 refunding bonds as 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 issued pursuant to Section 24 of the Bond Resolution of equal standing with the outstanding Bonds. (b) "Bond Resolution" means the Amended and Restated Utility System Revenue Bond Resolution adopted by the Board on March 27, 2018, as amended on March 26, 2019, and supplemented by this First Supplemental Utility System Revenue Bond Resolution, and any other resolution which amends or supplements the Bond Resolution. (c) "Bonds" or "Senior Lien Bonds" means the outstanding portion of the Utility System Revenue Bonds, Series 2011A, the Utility System Revenue Refunding Bonds, Series 2013A, the Utility System Revenue Refunding Bonds, Series 2017A, and the Utility System Revenue Bonds, Series 2019A, 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 First Supplemental Utility System Revenue Bond Resolution, one or more escrow agreements 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 First Supplemental Utility System Revenue Bond Resolution, one or more escrow 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. (9) "Prior Bonds" means, for purposes of this First Supplemental Utility System Revenue Bond Resolution, the Series 2011A Bonds. (h) "Refunding Bonds" means, for purposes of this First Supplemental Utility System Revenue Bond Resolution, all or any series of refunding bonds issued pursuant to this First Supplemental Utility System Revenue Bond Resolution. (i) "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 24(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 debt service savings, then the City, acting by and through the Board, shall borrow the sum of not-to-exceed Two Hundred Seventy Million Dollars ($270,000,000) as finally determined upon the sale thereof, and issue the Refunding Bonds therefor in one or more series 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" with any additional or revised designations for each series as determined at the time of sale by the Chief Financial Officer to reflect the date of sale or delivery of the Refunding Bonds, to show that the Refunding Bonds are federally taxable bonds, as applicable, and/or to otherwise distinguish the Refunding Bonds from other series of Bonds issued by the Board. 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, and 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, 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, 2020, 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. 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 in consultation with Bond Counsel. There shall next be deposited in the Bond Reserve Account an amount, if any, designated by the Chief Financial Officer at the time of sale. There shall next be deposited in the Escrow Fund 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 trustee (the "Escrow Trustee") under the Escrow Agreement. The Escrow Trustee shall hold the Escrow Fund in trust pursuant to the Escrow Agreement which shall irrevocably direct the Escrow Trustee 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 she may deem necessary from the Redemption Fund, or other fund or account of the Board, to the Escrow Fund, 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. The Chief Financial Officer is directed to deposit to the Escrow Fund, from Refunding Bond proceeds and other moneys as necessary, an amount which, together with investment proceeds to be received thereon, will be sufficient, without reinvestment, to pay the principal of and interest on the 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 7. 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] [FEDERALLY TAXABLE] 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 "Issuer"), 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 Issuer may hereafter designate by notice mailed to the registered owner of record not less than sixty (60) days prior to any interest payment date (the "Transfer Agent"). Interest on this bond is payable by check or draft mailed by the Transfer Agent to the person or entity who or which is as of the fifteenth (15th) day of the month prior to each interest payment date, the registered owner of record at the registered address. For the prompt payment of principal and interest on this bond, the revenues received by the Issuer from the operations of the Issuer's facilities for the supply and distribution of water and the generation and distribution of electricity, steam, chilled water, and heat (the "System") after provision has been made for reasonable and necessary expenses of operation, maintenance and administration of the System (the "Net Revenues"), are irrevocably pledged and a statutory first lien thereon has been created to secure the payment of the principal of and interest on this bond, when due; however, the pledge of Net Revenues and the statutory lien are on a parity with the pledge of Net Revenues and statutory lien in favor of [the Utility System Revenue Bonds, Series 2011A], the Utility System Revenue Refunding Bonds, Series 2013A, the Utility System Revenue Refunding Bonds, Series 2017A, and the Utility System Revenue Bonds, Series 2019A. 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 an Amended and Restated Utility System Revenue Bond Resolution adopted by the Issuer on March 27, 2018, as amended and supplemented from time to time, including by a First Supplemental Utility System Revenue Bond Resolution adopted by the Issuer 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 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 Issuer, except in specified cases, only with the 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 Issuer 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 Issuer has covenanted and agreed, and covenants and agrees, to fix and maintain at all times while any bonds payable from the Net Revenues of the System shall be outstanding, such rates for service furnished by the System as shall be sufficient to provide for payment of the principal of and interest on the bonds of this issue and any other bonds payable from the Net Revenues as and when the same shall become due and payable, to provide for the payment of expenses of administration and operation and such expenses for maintenance of the System as are necessary to preserve the same in good repair and working order, and to provide for such other expenditures and funds for the System as are required by the Bond Resolution. It is hereby certified and recited that all acts, conditions and things required by law to be done precedent to and in the issuance of this bond and the series of bonds of which this is one have been done and performed in regular and due time and form as required by law. This bond is not valid or obligatory for any purpose until the Transfer Agent's Certificate of Authentication on this bond has been executed by the Transfer Agent. IN WITNESS WHEREOF, the City, acting through the Lansing Board of Water and Light, has caused this bond to be signed in its name with the facsimile signatures of the Chairperson and Corporate Secretary of the Lansing Board of Water and Light, 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 [definitive Bond to be signed at delivery] Chairperson (City Seal) Countersigned: By [definitive Bond to be signed at delivery] Its: Corporate Secretary [STANDARD FORMS OF CERTIFICATE OF AUTHENTICATION AND ASSIGNMENT TO BE INSERTED ON BOND] Section 8. Municipal Advisor. The Board hereby requests that PFM Financial Advisors, LLC continue to serve the Board as Municipal Advisor for the Refunding Bonds. Section 9. 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, 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 10. Taxable or Tax-Exempt Bonds; Tax Covenant. The Board anticipates advance refunding all or a portion of the Prior Bonds and therefore issuing the Refunding Bonds on a federally taxable basis in accordance with the current provisions of the 2017 Tax Act. If, due to market conditions and/or changes in law, the issuance of any series of Refunding Bonds on a tax-exempt basis will provide greater net present value savings than the issuance of Refunding Bonds on a federally taxable basis, the Chief Financial Officer is authorized to effectuate the sale and issuance of such series of Refunding Bonds on a tax-exempt basis. In the event that any series of Refunding Bonds is issued on a tax-exempt basis, the Board shall not invest, reinvest or accumulate any moneys deemed to be proceeds of such tax-exempt Refunding Bonds pursuant to the Internal Revenue Code of 1986, as amended, in such a manner as to cause such tax-exempt Refunding Bonds to be "arbitrage bonds" within the meaning of the Internal Revenue Code. The Board hereby covenants that, to the extent permitted by law, it will take all actions within its control and that it shall not fail to take any action as may be necessary to maintain the exclusion of interest on such tax-exempt Refunding Bonds from gross income for federal income tax purposes, including but not limited to, actions relating to the rebate of arbitrage earnings, if applicable, and the expenditure and investment of bond proceeds and moneys deemed to be bond proceeds, all as more fully set forth in the non-arbitrage and tax compliance certificate to be delivered by the Board on the date of delivery of such tax-exempt Refunding Bonds. Section 11. Negotiated Sale of Bonds; Appointment of Senior Managing Underwriter. Based on the advice of the Municipal 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. The Chief Financial Officer is hereby authorized to select a managing underwriter and to name additional co-managers and/or to develop a selling group in consultation with the Municipal 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 issued, except as may be otherwise provided in the Bond Purchase Agreement for Refunding Bonds. Section 12. 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 Municipal Advisor. If the Municipal 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 Municipal 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 13. 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 14. 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 15. Sale of Refunding Bonds. The Chief Financial Officer is authorized, in consultation with the Municipal 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; application of the proceeds of the Refunding Bonds, and, if necessary to meet the requirements of the bond underwriters or purchasers, deposit to the Bond Reserve Account from funds on hand or 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 10% 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 true interest cost of the Refunding Bonds shall not exceed 5.0%. The first maturity of principal on the Refunding Bonds shall occur no earlier than July 1, 2020, 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 Municipal Advisor. Section 16. Verification Agent. The Chief Financial Officer is hereby authorized, at her discretion, to select an independent certified public accountant to serve as verification agent to verify that the securities and cash to be deposited to the Escrow Fund will be sufficient to provide, at the times and in the amounts required, sufficient moneys to pay the principal of and interest on the Prior Bonds being refunded as they become due or upon call for redemption. Section 17. 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 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 Trustee fees, verification agent fees, Municipal 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 18. 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 19. Conflicting Resolutions. All resolutions and parts of resolutions insofar as they conflict with the provisions of this resolution are hereby rescinded. Section 20. 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 21. 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 22. 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 19, 2019, 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 Commissioners David Price, Beth Graham, Deshon Leek, David Lenz, Anthony Mullen, Ken Ross, Tracy Thomas, and Sandra Zerkle and that the following Commissioners were absent none. We further certify that Commissioner Ken Ross moved adoption of said resolution, and that said motion was supported by Commissioner Tracy Thomas. We further certify that the following Commissioners voted for adoption of said resolution Commissioners David Price, Beth Graham, Deshon Leek, David Lenz, Anthony Mullen, Ken Ross, Tracy Thomas, and Sandra Zerkle and that the following Commissioners voted against adoption of said resolution None. We further certify that said resolution has been recorded in the Resolution Book and that such recording has been authenticated by the signature of the Chairperson and Corporate Secretary. Dgltally sgncd by Dawd J. PrIce DrltatysT dty10-N,4w C8Mn j D;le.M19.1121313`.2&73 M. Denise Dft M-M.Dwi.GM.,cl—rg eoaa o1W;1w and ugr,S cc, 111 7Aid71oTly.p 1A 1c1rn7bat vemm: —ac.-vD.I c —ft w,c-us $ Griffin1'w Chairperson Corporate Secretary MANAGER'S REMARKS None. COMMISSIONERS' REMARKS There were no Commissioners' Remarks. EXCUSED ABSENCE None, PUBLIC COMMENTS Anna Fischer from Lansing Environmental Action Team spoke about the acceleration of climate change and the need of the BWL to transfer to renewable energy well before 2050. ADJOURNMENT Chair Price adjourned the meeting at 7:00 p.m. M.Denise Griffin,Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk: 12-9-19 Official Minutes filed(electronically)with Lansing City Clerk:2-05-2020 HommowR rnodR.MaYJ,etown LANSING BOARD OF WARTER & LIGHT PENSION FUND TRUSTEES MEETING MINUTES November 19, 2019 The Pension Fund Trustees of the Lansing Board of Water & 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 19, 2019. Board Chairperson David Price called the meeting to order at 5:01 p.m. Chairperson Price provided some background information on how Commissioners serve as Trustees of the Pension Funds. Commissioner Price welcomed the new 3rd Ward Commissioner, Mr. Deshon Leek, and asked the Corporate Secretary to call the roll. Present: Trustees Beth Graham, Deshon Leek, David Lenz, Tony Mullen, David Price, Ken Ross, Tracy Thomas (arrived at 5:08 p.m.), and Sandra Zerkle (arrived @ 5:15 p.m.) Absent: None The Corporate Secretary declared a quorum. Public Comments None. Approval of Minutes Motion by Trustee Mullen and Seconded by Trustee Ross to approve the minutes from the November 13, 2018 Pension Fund Trustees' Annual Meeting. Action: Motion Carried Pension Fund Chief Financial Officer Shawa reviewed and provided detailed information from the following Memorandum and Dashboard: Wi MEMORANDUM m.:...x n•..a uyknnuon r:.nx.. .w J..J,v rmv+.0 rmr.WaM'W P,.+rl waua�w wa�i��>.n.:u� EJLISL,t' C6'• YGL.J vay.r:.wra, .x.q♦rJ.r.re cy�.M.,u'na^ �x�! .0�Vwi.n nEWl a.i• Y.JYa _'+ e. :,,.,c..:. .J-n ,.a ..,mm,.`�:.': s=.•y rory '_'L4a1.an a::cnn�x,nr auMay .✓.n..v».J...Yn.w.xY�rxnrY.:v :x.nwaJwi .rJa ..eJ. � � ~�~�~- ~ .~ � ~~~ Ms. 5havva stated that there were no policy or plan document changes this year. Ms. Shavva informed that the memorandum summarized key plan information and the fund line-up changes. The Dashboard consisted of information from the DB Plan and the VEBA Plan. The D8 Plan ended FYZ019 with $60 million |n assets and funded status held at1lZY6. The actual return was 7.39Y6 which was slightly over the target of7Y6; the expected return of7Y6 is just under the median return of7.Z596 for other plans like this one. The primary reason the expected return is set lower at 7% is due to the plan being closed with five active participants,the maturity and funded status of the plan, and it is appropriate to be conservative and maintain the plan assets. The VEBAPlan ended FY2019 with $195 million in assets and the funded status increased from 90% last year to 131% this year. The actual return for the VEBA Plan was 6.36% which was slightly below the expected return of7.596. Ms. Shavva also provided information on the Defined Contribution 401a Plan and Deferred Cornpensation4S7 Plan. The4Ola plan ended FYZOl9with $200 rn|||ion in assets, and the 457 Plan ended with $1l2million. Ms. Shavva noted that there were 3O4 loans outstanding totaling $6.8 million with an average loan balance of $33,5l4 included on the dashboard, but an error was found and corrected to35Z outstanding loans totaling $4.1 million with an average loan balance of$I1,8OO. Trustee Mullen asked how many participants are in the Defined Benefit Plan. Ms. Shavva responded that there are 345 participants of which S are active. Trustee Ross requested confirmation that the Defined Benefit Plan is a traditional pension plan for any active employee pre-1997; that the Defined Contribution 401a Plan is funded by employees through an annual contribution post-1997 and that, generally, there is a 15% annual contribution for employees pre-1997 and a 9.5% annual contribution for employees post-1997; and that the 457b Plan is a voluntary employee contribution plan which is matched to a certain amount by the BWL. Ms. Shawa confirmed. Trustee Ross asked what the process was for selecting financial advisors, how frequently bidding processes are made, and how reasonable fee charges are set. Ms.Shawa responded that the Retirement Plan Committee (RPC),which consists of herself as Chair, Executive Director of Human Resources, Michael Flowers, and Finance Manager, Scott Taylor, was delegated responsibility for the investment plans. Ms. Shawa responded that the RPC works with BWL General Counsel, BWL Financial Analyst and outside financial advisors to fulfill fiduciary responsibilities. Trustee Ross asked for information regarding the benchmarks and returns of the DB and VEBA Plans and how they are tied to asset indexes. Ms. Shawa responded that there are quarterly reviews and additional information will be provided by Plante Moran, LLC and Asset Consulting Group. Trustee Ross also asked about the 9.5% contributed by post 1997 employees and how additional voluntary contributions were encouraged. Ms. Shawa responded that the process is being reviewed but there is no formal recommendation at this time. David Houser, BWL Finance Supervisor, introduced the financial advisory panel. The Panel provided financial information and engaged in a question and answer session. The Panel consisted of Information: 1) Nathan Burk, Vice President at Asset Consulting Group (ACG); ACG was selected by RFP in 2017 and they provide recommendations for the DB and VEBA Plans including developing, reviewing, and complying with investment policies and portfolios; 2) Mark Miller, Principal and Actuary at Benassist Retirement Consulting, LLC; Benassist was selected by RFP in 2018 and they provide actuarial services for the DB and VEBA Plans which includes employee benefit calculations and annual state filing requirements; 3) Steven Gibson, Relationship Manager and Consultant with Plante Moran Financial Advisors, LLC; Plante Moran Financial Advisors, LLC are co-fiduciaries and DC Plan advisors, which includes plan analysis to ensure the highest benefits to participants, and the preparation and compliance with investment policies; and 4) Lisa Burks-Wilson, Director of Relationship Management from ICMA, the DC Plan administrator, which includes account access, participant communication and participant education. Mr. Nathan Burk gave a market update for the past year. Mr. Burk stated that in the 4th quarter in 2018 the Federal Reserve was committed to raising interest rates resulting in equities being sold and an increase in investing in bonds. In 2019 the Federal Reserve cut interest rates and equities rebounded. Mr. Burk also gave an update on the results for FY 2019 for the DB and VEBA Plans. He stated that the biggest contributor to the lower return on the VEBA Plan was US large cap stocks within the portfolio. The plan had a strategic asset allocation that wasn't quite at full target for the fiscal year but the final funding brought the allocation to its strategic goal YTD. Mr. Burk stated that the DB Plan performed better as it had a more conservative rate of return with a larger bond allocation. Mr. Burk defined the difference between active and passive investment management and when each one should beimplemented. enae benchmark afteramen is fees and passive an managementinvestment manager to actively try to outperform management is paying a more modest fee to replicatena benchmark0000 different firms globally�nr3k prospective. ACG analyzes 40,000 different products from , 5- and 7-year returns evaluating whether a fee should be paid to outperform a benchmark. Trustee Ross asked whether Aristotle in the VEBA plan with an index of 16 basis points (bp) below was a passive investment. Mr. Burk respondeAtlanta Capitalhat g �n the passive PIan was able toe was an ach eve active manager. Trustee Ross also asked how 1,000 by more than the index. Mr. Burk responded a ketat Atandapital is have anaexcoellent track ncentrated manager who looks for high quality securities in the place record of finding the right broad-based selection of stocks. Trustee Ross added that since the framework is geared toward maximizing available opportunity for profit for the system are there any filters imposed on the money managers as it relates to social conscionability in investing. Mr. Burk responded that the objective of a public pension is to maximize return per unit of risk is without regard to ESG (Environmental, Social and quarterly Governance) are sent out asking how ESG'sl are factored in by many investment managers, and q Y RFI's incorporated into the investment processes. Trustee Ross asked whether the information collected was placed into an evaluation process. Mr. Burk responded that unless there is a specifically mandated filter request, the entire set is evaluated and socially unacceptable practices would not be considered. ly active Trustee Mullen asked what the cost would r active agnostic inve tmentrmanoagelrs with a investments. Mr. Burk responded that thee are socially specific focus but it depends on whether that would be the direction wanted for the plan. Trustee Mullen asked what kind of return would be obtained in a socially active investment. Mr. Burk ally responsible responded that it varies depending on the asset ould be expectedmHe aldded that the gaps that uity manager would be selected and a similar return would have occurred in the past with the social investments are no longer realized. Mark Miller from Benassist Retirement Consulting, LLC spoke about the significant increase in the VEBA funding status. Mr. Miller stated that the increase in VEBA funding from a low 90%to 130% in the evaluation was attributed to three things: 1) A decrease in the premiums charged by then insurance resulting comin pany; mediplan p emu m from Hartford to the larger company Humana decreasing from $220 per month to $98 per month per person and the prescription drug decreasing from $305 per month to $213 per month; it is estimated that there would be $2 million in savings per year. 2) The healthcare trend assumption was adjusted down half a percent for each year starting at 9% as it was higher than what it is in industry and it is similar to what is required by Michigan uniform actuarial assumptions. This accounted for about 14% of the increase in funding. 3) Demographic experience due to the death of participants and spouses. Steven Gibson with Plante Moran Financial Advisors, LLC spoke about the fund lineup changes from February and how it benefits participants. Mr. Gibson stated that Plante Moran reviewed the investments, decreased the number of funds from 40—as the best practice amount is 15-25, added passive investments, streamlined the fee structure, and removed the sector or specialty funds but allowed access through the self-directive brokerage option. As a result of the changes made,the average investment expense went down significantly from 51bp and 55bp to 36bp and 41bp representing a cost savings of more than $400,000 per year. Cost savings in a pension plan means a reduced contribution to the BWL, but this cost savings is directly to the participants. Trustee Ross asked for a comparison of plans between BWL and other plans. Mr. Gibson responded that from a contribution standpoint of 250 plans and $6 billion in contribution assets, the company contribution of the BWL is in the top five, and the plan committee is very well designed. Mr. Gibson continued that the next step is the plan design process, which will be determining the average participation rate for the plan, what the participants will receive, if there is a need and the process to meet the need. Automatic enrollment is efficient, but many committees will not force participants into the plan. The ICMA plan is cost efficient and there is a flat per participant fee as there is for Plante Moran. Plante Moran benchmarks fees on an annual basis using an independent third party that looks at other plans of similar size and they have implemented a couple socially responsible plans but the plans aren't as highly used. Lisa Burks-Wilson, Director of Relationship Management from ICMA, the DC Plan administrator, spoke about the new technology that ICMA has provided for participants and how that impacts education. Ms. Burks-Wilson stated that the technology is award winning and that there are two approaches, the human approach and the self-service tools approach—which is also available through smartphones and Alexa. Ms. Burks-Wilson reviewed the tool "Am I on Track" which provides employees with a personalized retirement readiness score, takes into consideration money in the DC plan, DB plan, social security, and spouse's money. The retirement readiness score is determined by reviewing 500 market scenarios and it helps determine the savings rate and the age to retire. Ms. Burks-Wilson also reviewed the Account Aggregation tool which allows participants a comprehensive view of all types of accounts they have, and allows them to budget and fund specific goals. Ms. Burks-Wilson introduced the people that provide the on-sight education for employees, April Rose and Dan Stewart, retirement plan specialists who report to ICMA Regional Manager, Jason Ashline, and Nancy Lange, ICMA Financial Planner. Ms. Shawa brought forward two additional items that the RPC will bring forward to the Commission. Updating the target return in the IPS, or discount rate, is being reviewed for both the DB and VEBA. A recommendation for a 7%-6.5% reduction for the DB plan which would be a 5% funded impact taking the 112% funded status to 107%. A recommendation for 7.5% -7% reduction for the VEBA plan which would be a 7%funded impact taking the 131% funded status to 124%. The two primary reasons for the update is that industry-wide the trend for plans like the BWL's is to lower returns and market experts are reducing expectations for long term investment returns. Ms. Shawa added that a new funding policy recommendation will be worked on for the VEBA plan as there are different options available with the current funding status. Trustee Lenz inquired what the average historical returns for the DB and VEBA types of funds are and if the historical average is higher than to what the expected returns for the future are being reduced, and what is the explanation for the reduction. Mr. Burk responded that it is a forward working analysis anking d that currently there are historical lows at 1.5% interest. Mr. Burk kdifferentad that return expectations have come down for buildingblots ock methaveh d rallied 2019;valuations are 100 asset classes-equity,fixed income, real assets; equityto rats and expensive and forward returns are anticipated to be lower; bonds asked if a lowove yretu n is being if the rates go higher the bond prices will go lower. Trustee Lenz urk ed protected why the ratio of funds allocated is being changed, e rage of retpond with thet will e reviewed with the committee and it is reasonable to achieve t allocation. e BWL Commissioner Zerkle commended Ms. Burks-Wilson and the BWLforhaving,oev aside,A t as hs heir on a regular basis and asked how ICMA encouraged employees to p intruc that rtain pension. Ms. Burks-Wilson responded that employees are dsthatt at least a10eyears income before placement ratio is needed to live on during retirement retirement money should be set aside. Ms. Burkes-Wilson also informed that the plan includes a REA fund that can offer a guaranteed lifetime income. Trustee Leek asked what security provisions were in place for smartphones and and that additional xa. pro Burks- Wilson responded that cyber security is at the forefront at all times sions throu h Amazon are necessary to utilize Alexa and cyber security is comfortable with the vetted g provisions. RESOLUTION #2019-11-05 ACCEPTANCE OF 2019 AUDITED FINANCIAL r- ATEMENTS FOR R D FINREE BENEFIT BENEFIT P NSION PLAN DEFINED CONTRIBUTION PENSION PLAN A Resolved, that the Corporate Secretary receive and place on file the finednsion Benefit tee, Meet ng. Defined Contribution, and Retiree Benefit Plan reports presented during the De -------------------------- Staff comments: All three Plans received clean audit reports. Motion by Trustee Ross, Seconded by Trustee Mullen, to ac ption Pe0 s on Plan, anthe 219 Audited d Retiree Statements for Defined Benefit Pension Plan, Defined Contri Benefit Plan. Action: Motion Carried Other None. Excused Absences None. Ad_ 12urn There being no further business, the Pension Fund Trustees meeting adjourned at 6:19 p.m. Approved by the Board of Commissioners 11-19-19 i P Hometown People.Hometown Power' MINUTES OF THE BOARD OF COMMISSIONERS MEETING LANSING BOARD OF WATER AND LIGHT September 24, 2019 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 24, 2019. Chairperson David Price called the meeting to order at 5:30 p.m. Present: Commissioners David Price, Beth Graham, David Lenz, Anthony Mullen, Ken Ross,Tracy Thomas, and Sandra Zerkle. Non-Voting Commissioners present: Michael Froh (Meridian Township) and Larry Merrill (Delta Township) Absent: Commissioner Joseph E. Graves and Non-Voting Commissioner Douglas Jester (East Lansing) The Corporate Secretary declared a quorum. Commissioner Thomas led the Pledge of Allegiance. Motion by Commissioner Ross, Seconded by Commissioner Mullen to amend agenda to add a late item communication. APPROVAL OF MINUTES Motion by Commissioner Zerkle, Seconded by Commissioner Mullen, to approve the Regular Board Meeting minutes of July 23, 2019. Action: Motion Carried PUBLIC COMMENTS Mitchell Shapiro, telecom analyst, spoke regarding the Smart Meter Program opt out. COMMUNICATIONS Electronic Mail received From or Re: • Michael Braem regarding the Smart Meter Program-Referred to Management. Received and Placed on File • Mary Patenge regarding the Smart Meter Program-Referred to Management. Received and Placed on File A donation Thank You letter from Safe Haven for Cats in memory of Wendy Ailing-Received and Placed on File. Late Item: Notice of resignation from BWL Commissioner Joseph E. Graves Jr.-Accepted, Received and Placed on File COMMITTEE REPORTS Commissioner Tracy Thomas presented the Human Resources Committee Report: HUMAN RESOURCES COMMITTEE Meeting Minutes September 10, 2019 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, September 10, 2019. Human Resources (HR) Committee Chairperson Tracy Thomas called the meeting to order and asked the Corporate Secretary to call the roll. Present: Commissioners Tracy Thomas, Beth Graham, Joseph Graves Jr. and Sandra Zerkle. Also present: Commissioners Anthony Mullen, David Price, and Ken Ross; and Non-Voting Commissioners Michael Froh (Meridian Township) and Larry Merrill (Delta Township.) Absent: None Public Comments None Approval of Minutes Motion by Commissioner Zerkle, Seconded by Commissioner Graves, to approve the Human Resources Committee meeting minutes of June 25, 2019. Action: Motion Carried. PA152 Health Care Premium Sharing Resolution Human Resource Committee Chairperson Tracy Thomas introduced Michael Flowers, Executive Director of Human Resources. Mr. Flowers reviewed and discussed BWL's options regarding Public Act 152s requirements associated with capping the amount a public employer may pay for health care insurance. PUbIIC Act 152,2011 Alt_„ ,"s UlAling Op,ur131u 0i l0ul of Ad 152.2011_ Affordable Care Act(ACA) Vonoua pro Zen Shming Oplrons Nr rrunr...N.wrn a^� .run, The BWL has three optlans: I N cr' Y J tl aP dlra Mm Nc rnNWc po' tle e.00. oPYexpenditures ,a .M y waA."r•rAwn.rw.�. asr ax pac Kr:uaeaI-xta�uwt. • with PA 152 and Ilmit on •w rrw r" health care cost based on a schedule or dollars xe or .rs r•^'''^' provided in the Act using the Hard Cap as updated annually; Umll expenditures on health care cost based one 50/20 percentage split,requiring a majonty vote; e""' •"'"" '"" •"'•` •"'° "^" "'° "^" "`° _ pr The Uni contract-1.that effecti"a Norc ,1,2012 •^ " •" "" ^'"" "' =a Exempt'tsel/entire) ham the Act d choose premium�ah•rino tar•Ppliable Imuanae Prtmium ror „�.„, „„" 'W�" '•',"" rw^P Y hospital,medial and srylcal, some other percentage of Premium sharing, n..an-plans will be apP d and dim4ed by the Board requiring a 2/3 Vote of Co 1,l ip rr s pl—nbed by Dublic Acct 152.f2011 The recommendation is that the Board select option 3 and exempt itself from the requirements of PA 152 of 2011 for all active employees' medical benefits, effective January 1, 2020 with an increase from 18% to 20% in premium sharing contribution. Mr. Flowers noted that the plan needs to meet the Affordable Care Act (ACA) affordability provision for 1/1/20 where health insurance premiums cannot exceed 9.78% of the employee's income, which it does. The Administration presented a proposed Resolution and asked that the Committee forward the Resolution to the full Board for consideration. Commissioner Zerkle inquired if exempting is necessary and if there won't be an increase beyond 20% as long as the Affordable Care Act is met. Mr. Flowers responded that exempting was necessary for the proposed benefits plan and affirmed the latter. Commissioner Price inquired whether there will be a further need to vote on the plan after the board adopts the increase to 20%. Mr. Flowers responded that it will need to be brought to the board next year also after the contract negotiations with the union to ensure that the affordability under the ACA is met. Proposed Resolution To Amend Employee Contribution to Medical Benefit Plans WHEREAS, Governor Rick Snyder, on September 27, 2011,signed legislation known as the"Public Funded Health Insurance Contribution Act", Public Act 152 of 2011 limiting the amount public employers may pay for government employee medical benefits, and; WHEREAS, Public Act 152 of 2011 took effect January 1, 2012 and applies to all public employers including the Lansing Board of Water & Light, and; WHEREAS, Public Act 152 of 2011 created a "hard cap" for medical benefit plan years beginning January 1, 2012, such that a public employer may not pay more than the statutory caps for medical benefit plans, and; WHEREAS, by a 2/3 vote of its governing body each year, a public employer may exempt itself from the requirements of Public Act 152 of 2011 prior to each benefit plan year, and; WHEREAS, the Board of Commissioners have met each year and passed a resolution exempting the Lansing Board of Water & Light from the "hard cap" of Public 152 of 2011 and established premium sharing amounts for the applicable benefit plan years, as follows: Date Resolution No. Premium Sharing Effective Date July 24, 2012 (#2012-07-01) 10%AII Active Employees January 1, 2013 July 23, 2013 (#2013-07-02) 12%All Active Employees January 1, 2014 September 23, 2014 (#2014-09-03) 12%All Active Employees January 1, 2015 July 28, 2015 (#2015-07-12) 12%All Active Employees January 1, 2015 November 17, 2015 (#2015-11-02) 12%- Union Employees January 1, 2016 - 12% 14%- Non-Union Employees Union July 1, 2016 — 14% Non-Union November 15, 2016 (#2016-11-06) 14%All Active Employees January 1, 2017 September 26, 2017 (#2017-09-01) 16%AII Active Employees January 1, 2018 September 25, 2018 (#2018-09-01) 18%All Active Employees January 1, 2019 RESOLVE that the Board by at least 2/3 vote desires to exempt itself from the requirements of Public Act 152 of 2011 for the upcoming benefit plan year, effective January 1, 2020 through December 31, 2020, FURTHER RESOLVE that the Board desires to increase premium sharing from 18% to 20%for all active employees for medical benefits effective January 1, 2020. Motion by Commissioner Zerkle, Seconded by Commissioner Graves, to forward the proposed resolution for PA 152 Health Care Premium Sharing to full Board for consideration. Action: Motion Carried, Health Care Option for Non-Bargaining Employees Executive Director of Human Resources, Mr. Michael Flowers, presented the health care options for non-bargaining unit employees and highlighted the similarities and differences between the Blue and Green plans. Premium »"r ��F�r HEALTHCARE 101 2020 .,-,.»��.».»d.M,.., NBU,Plan Options, • ... :. trz .te ttras•k Opti- » nun HF,A �H�pE Rat Covered z00% t � HEALTHCARE 101 ® O HEALTHCARE101 Deductible Deductible __ ... Ti­ r , Green Option Green Option"•' �«.tea �75 wa id Commissioner Thomas asked whether the selection of a plan could be changed after the initial choice. Mr. Flowers responded that changes could be made during the open enrollment period. Commissioner Mullen asked whether advice was provided to employees as to which option would be better for their situation. Mr. Flowers responded that information vvuu|d be provided according to each individual situation and the individual could put their information into the calculator provided tn determine which plan would be the most beneficial for them. Mr. Flowers also responded that this plan is not coupled with a health service plan or H5/, but it is eligible for anFSA. [onnnnissionerZerk|e asked whether there are some medications that aren't covered under the plan. Mr. Flowers responded that he wasn't aware of any that weren't available under the plan. Commissioner Ross commented that this plan is step toward HSAs and commended the chair and management. GK4Peff|ey commented that this a beneficial plan for employees. He commented that apossible DO96ofemployees ereover'insured and this may save customers million dollars when it is completely implemented. Mr. Peff|ey introduced General Counsel Mark K4atus to explain the resolution for this plan. Mr. K4atus recommended that a resolution be prepared as a precaution that clearly and unequivocally delegates authority as plan sponsor to the board. Management will also be required to keep the board informed of decisions to attract and maintain employment. Motion by Commissioner Price,Seconded by Commissioner Zerkle,to amend the agenda to allow fora late item which is the resolution for Delegation ofAuthority: Health Care Plan Benefit Design and Administrative Decisions. Action: Motion Carried. Motion by Commissioner Graves, Seconded by CornnnissionerZerWe, to amend the proposed resolution for Delegation of Authority: Health [are Plan Benefit Design and Administrative Decisions to include when the benefit design changes will be communicated to the Board. Action: Motion Carried. ----------- Proposed Resolution Delegation of Authority: Health Care Plan Benefit Design and Administrative Decisions WHEREAS, The Lansing Board of Water & Light /8VVL\ is a municipally owned utility organized under the Lansing City Charter as permitted by the Home Rule Cities Act, K4[L 117.4(f)(c}, and governed by the Board of Commissioners ("Board"). The Lansing City Charter, Article 5, Chapter 2, delegates to the Board administrative, executive and policy-making authority over the operation of the 8VVL, which includes the full and exclusive management of water, heat, steam and electric services and such additional services of the City of Lansing as may be agreed upon by the Board and City Council. WHEREAS, the Lansing City Charter states the Board shall appoint three individuals who report directly to the Board and serve at the Board's pleasure; being a Director (also known as the General Manager), an Internal Auditor (also known as the Director of Internal Audit) and a Secretary (also known as the Corporate Secretary),. The General Manager is also responsible to the Board for carrying out the duties assigned by the Board, which include but are not limited to the operation and management of the BWL. WHEREAS, the Lansing City Charter further outlines the responsibilities and authority of the Board, which includes the compensation and benefits of BWL employees, and by virtue of this responsibility and authority the Board is the Plan Sponsor of the Lansing Board of Water and Light Health Care Plan (the "Plan"). WHEREAS, the Board's role as the governing body for the BWL includes certain fiduciary duties such as acting in the BWL's best interest, protecting and enhancing the BWL for the benefit of its rate payers, exercising reasonable care, loyalty and good faith in actions and decisions, meeting legal and regulatory requirements, and assuring the General Manager, Director of Internal Audit and Corporate Secretary have adequate support and resources to effectuate their roles. WHEREAS, in July of 2017, the Board approved a Governance policy which, among other things, adopted and established the General Manager's principal role to manage and operate the BWL and establish administrative and operational directives, standards guidelines and procedures that support Board approved corporate policies, strategies, projects and budgets. WHEREAS, management of the Plan's benefit design and administration are necessary for the General Manager to manage and operate the BWL by maintaining a qualified workforce. WHEREAS,The Board as Plan Sponsor of the Plan desires to further clarify and delegate authority to the General Manager to oversee and manage the Plan's benefit design and administration on its behalf. RESOLVED, the General Manager is authorized to oversee and manage the Plan's benefit design and administration on behalf of the Board. FURTHER RESOLVED, the General Manager may further delegate this authority for operational efficiency. FURTHER RESOLVED, all benefit plan design changes or updates will be communicated to the Board at the next regularly scheduled meeting of the Board. Motion by Commissioner Zerkle, Seconded by Commissioner Graves, to forward the amended proposed resolution for Delegation of Authority: Health Care Plan Benefit Design and Administrative Decisions to full Board for consideration. Action: Motion Carried. Other None Adjourn Motion by Commissioner Zerkle, Seconded by Commissioner Graves, to adjourn the meeting. Action: Motion Carried Meeting adjourned at 5:42 p.m. Respectfully Submitted, Tracy Thomas, Chair Human Resources Committee Commissioner Tony Mullen presented the Committee of the Whole Report: COMMITTEE OF THE WHOLE Meeting Minutes September 10, 2019 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, on Tuesday, September 10, 2019. Committee of the Whole Chair Tony Mullen called the meeting to order at 5:50 p.m. and asked the Corporate Secretary to call the roll. Present: Commissioners Tony Mullen, Beth Graham, Joseph Graves Jr., David Price, Ken Ross, Tracy Thomas, and Sandra Zerkle and Non-Voting Members: Michael Froh (Meridian Township) and Larry Merrill (Delta Township) Absent: Commissioners David Lenz and Douglas Jester (East Lansing) The 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 July 16, 2019. Action: Motion Carried. Update on BWL's Energy Waste Reduction (EWR) Program General Manager Dick Peffley introduced Environmental Services and Reliability Compliance Manager, Ms. Lori Myott, and Energy Analyst, Ms. Aileen Gow, who oversees BWL's Residential and Non-Profit Energy Waste Reduction Programs. Program Highlights 2018 Annual Update :Education in the Community of PA 295&PA 342 2018 Energy Waste Reduction Programs •uh d6l b[:•vaH 2018 Energy Waste Reduction 5ervi[af for 1.—loeome cmlomem •°'°Mp^1e°"''Onf tp f4"'n'°"ty(1O1p1 a,v...tautpd nzr qx a roBra i,r*al FrertY lunod Mo(ram w,m Cmunrlan fnrrtYl and Renewable Energy a•ro.,aet:[m.,Yn.Yt ,a•• 4 :A[smanruln m, Annual Update P.H'�.xl,v, wi,p.•.me.•aat4 aw 4nar.�•ah• .App4,Ma rom.a(P•<xw,a ',Blot Programs '[x.+•r.+v.•s.aYa G.r,ay.nYtro,yr WaxePey.nimxL. . oil amhie.an •IR.,Prta'a C✓anti Committee of the Whole a,•m•A a,s •la••nk:.rradanuraanmem •An,awbw Hoa,u,(ww4, Septembm l0,2019 s.r�dre min e4�smPvu.nn�flm Marv(awrw4 iBusinef,lin, nptiveg Cu,tom lntentive> •MtN'(anSmslw ln•ertftfwn[atg Lnergy Education—les nPximrv+oxa •.,I.wegr a,M A'IrAKa.+•-•+ [ad�.ttin-,m,u awW.nwwW Pnta u„uuenun;.M :pilot Pmgiam •,n"I'P'^IW.�p'aY t.u,oS bA".1N.minwtot yna I* 1 �Byr,viN.paar in,n+an nYUAwuPfuewtvn ' uNw"n,-a%lur$Mq°$)50.YNblw✓. Million Kilowatt Hour Club Energy Waste Reduction Summary Residential Summary 2009-2018 Business Summary 2009.2018 Vaw hl S for MIS __— ..... .........._ l LW dNtL .,!! x •,..n Kilono..hour 6,ryin91 �If Kilawan Hour SPN+gf� E l sMg Pvtll SduW lanun(MaY it%,e � .tww.em• A Ve(Ppe Ce ror LL[ rw... � •rynavi•.[,ran I .r • i fa aGmimPta WMu[odeyl k1aY •.....,+. .. I C+r•r I la4wntYnrnulth GM Ooaallp t.•a(Puntm. •,�,,,,�,,, „•e ••,u,., „",°,u r,uar �,..�i.-yy1y�. Challenges and Opportunities Low Income 2018 Low Income 2018 Cont. i Two Multifamily Landlords w-paid 513,295 to ,Challenges Y 250 Hometown Help energy assessments replace 94 refrigerators w/Energy Star units •LED hghtlog w—lion In market place ',4 Multifamily properties Y Community Partners New Opportunities i 13,731 items Installed or distributed •Habitat for 14—ty Capital Region •Speelalry LED bulb,mark[t •9,436 LED Bulb, Caoiul Area Ilouzing Pannenhip •5man Memr Pllot •2,266 Energy Kit •Cristo Rey C—riunity Center •1—or whh Comumars Energy on law Iwme •123 P.eh lgLlato,z •Clty of loosing-Baker Netghbvrhood Inlo,lN, and Houses for WIMiP Pt191111 •18 Rm A,Conditioners •Laal nonprofit mganiiatlons the[serve vulnerable pupulalians Renewable Energy 2018 Results 2018 Updates Net Metering Program i PA 342 requires ell elM.k utllitks have l0%in 2018; :pelts Solar Park o 11-wnh 24 MW of solar caPa<•Rv — -+M 12.5%in 2019 and 1S%renawablo,In 2021 i Tho OWL In com liance with bath then blo >Eu Umnig Solar Park(12/18/10181 P andt•Plrafa MS tw ancrBy generation and it,Imnn—y of REC, .hoi•c,it rwrr,4una.n • w. wl;�•r.;mw. %With planned developments and the ability to wrry . forward renewable energy credits,the OWL will not i rbe NM Mtt-g Solar,,non n update need any addinonalrenawabla enereytp meetA,4wsom,.e..,4-awnaLw.... rompllancewlth PA342 I:•td nnWrd.u.wr«v 1f R..w,aW avYa[awnrnur •Iwai Wa 1.11—,N W1.1-1 � Current Renewable Energy Portfolio Planned Projects i Purchase Ener d RECsi5olar Renewable Energy Challenges 8yin •surrentl • yrtvi<wing proposals for utility sal4 Gm,t,landfill Sao— MW �a Community Acceptance •Tower Melia,Hydro-2.2 MW solar •Eaelon Wind in GrafiotCounty-19.2 MW i Pursuing and Evaluating Wind Options ➢Generation Oispatchabllity :OWL Owned ',Goals •Snlar(Cadar strew and RED°flko building) •Achimm.20%ran hle Ib eoa v 2020 '%Storage Limitations Ms. Myott reported that BWL implements its energy waste reduction and renewable energy programs under Public Act 295. Public Act 295 requires that municipal utilities update their governing board every year on their accomplishments for the previous year. Ms. Myott gave an update on BWL's Energy Waste Reduction (EWR) Program. Ms. Myott stated that the BWL offers a variety of programs and highlighted the different programs and information given to the community. Ms. Myott noted that the LED program is the most popular with customers. Commissioner Zerkle inquired whether BWL was still providing seminars in neighborhoods for low income customers and Ms. Myott responded that Ms. Aileen Gow will provide information. Commissioner Ross noted the success in large business in energy reduction and inquired about the opportunities for communities with a lot of rentals and low income, and the challenges of getting landlords to invest in energy saving technology. Commissioner Ross also asked if there is a network of utilities communicating about what programs are working. Ms. Gow responded that the Michigan Public Service Commission, who legislates the energy programs, has a state- wide group just for low income that meets monthly and shares a large amount of information. Ms. Gow also stated that a recent program was started in a high rental area with a copay for landlords and it has been very successful. Refrigerators are replaced for rentals for 25% and homeowners for free. GM Peffley responded that the MMEA also reviews these types of programs. Commissioner Graves commented that it was good that these programs were being implemented in the community especially for low income and stated that it was important to determine whether there was a return on investment. GM Peffley responded that 50% of Lansing's population is rental and landlords observe the investment with the refrigerators and a smaller electric bill. Commissioner Graham commented that she was part of the rental property association and landlords discuss the program positively at the monthly meetings. Commissioner Mullen asked what percentage of renewable energy was in retail sales and Ms. Myott responded that the BWL is currently at 15% and was required to meet 10% by the end of 2018. Commissioner Zerkle inquired whether the BWL could work with the city to get a higher percentage of multi dwellings to participate in the programs as a large amount of low income units could use the energy savings with a new refrigerator. Ms. Gow responded that BWL contractors have worked with almost every property manager they can find and have also worked with the Lansing Housing Commission. Commissioner Ross inquired about the effect of projects in townships currently compared to the past. GM Peffley responded that if wind projects become difficult to license in Michigan more solar projects will be considered. Wholesale Water Service Agreement with Charter Township of Lansing—West Side Water GM Peffley introduced Strategic Planning and Development Executive Director, Ms. Brandie Ekren, who reviewed the updates to the West Side Water Wholesale Water Service Agreement with Charter Township of Lansing. Ms. Ekren reported the following conditions in the agreement: • Most of the general conditions remain the same. • Allows for the full cost of service recovery based on an industry standard methodology. • No requirement that there be a mutual agreement to terminate. • Lansing Township provides the BWL with annual 10-year forecasts of demand. • Provisions for how to handle requests for water in excess of planned demands. • Establishes an operating committee and a contract administration committee. • Language is included that is related to water efficiency and conservation. Commissioner Zerkle asked that when there isn't a requirement for a mutual agreement to terminate is there a time frame of notice that needs to be given. Ms. Ekren responded that a standard notice requirement is required. Ms. Zerkle also asked what percentage Delta customers pay in comparison with what Lansing customers pay for water services. Ms. Ekren replied that she didn't have that information but any adjustments are factored into the cost of service. Commissioner Ross asked whether BWL passed rates which govern the water contracts or do the contracts include a rate schedule. Ms. Brandie responded that there is a difference between a wholesale and retail agreement. In a wholesale agreement BWL negotiates a contract with the township and the Commissioners approve the rates yearly. In retail agreements BWL contracts with individual customers and is handled during the normal rate making process. Commissioner Froh inquired whether, outside of a long-term agreement where the savings would be realized with conservation, there has been any discussion of incentivizing savings for customers for going above and beyond attempts to reduce consumption. Mr. Peffley responded that on a wholesale agreement it is difficult to realize an incentive as the customer could bring on a new subdivision that would increase their water flow. Commissioner Ross commented that this is a water service agreement and not a franchise agreement and therefore the dynamic of adding on fees doesn't apply. Commissioner Mullen asked whether the water service will be billed along with the electric bill and whether water would be provided to communities further west than Lansing Township. Ms. Ekren responded that the township with whom the water service agreement is made will do the metering, invoicing, and billing. GM Peffley responded that Grand Ledge has made an initial contact with BWL but nothing further. Corporate Planning; Industry Updates and Considerations GM Peffley reported that corporate planning will be a reoccurring agenda item to educate the Commissioners on the IRP, sustainability, and strategic planning so that they are able to answer questions out in the public. A flyer will be sent out every couple of weeks to the Commissioners also with updated information. Ms. Ekren presented industry considerations and introduced Planning & Development Manager, Steve Brennan, and Senior Rate Analyst, Paul Eory, to present updates on IRP and modeling. It s IND11,11W T111NDSG CON'.1DF.RJ.TIONi [:1l1:V:4i•1'1'nGl'IL'ITIF:ti t/ ., LI':DFR1N.tY ------------ In[ialstT'g Insi�hc ensE Mond.& In[iusnv Ouigh[C,lurlelin;; QUES'CIUNS TU CONSIDER Wdclini;objectives =-- ,,,I,,. risk vc:oo re,,.,,n w _ I 4,r.n.a ro'apro [ SASE°��� =m�TO CONME" w=throur!I/Oymm Orc «Commissioner« Zerk|einquiredvvh'th'rBVVLisvvorkingvvithotherAPPApub|icpnvverut)|it\es \n Michigan, GM Peffley responded that utilities contribute information through MPPA and MMEA. Commissioner Thomas commented on being able to watch TV with Water & Steam Distribution Manager, Mr. A|ando Chappell with the Boys and Girls Club and Electric Transmission & Distribution Director, Mr. Wayne Lynn on Turning Point and how they are helping inform the community. [onnnnissionerZerk|e inquired whether 8VVLvvou|d need to produce more electricity with the Belle River closing in 2030 or if BVVL would have the capacity of selling more. GM Peff|ey responded that 8VVL has 11% ownership with Belle River which is in the amount of 150 megawatts and BVVL's intent by2O3Oisto have renevvab|esinplace. Commissioner Ross asked what the nnin\rnurn clean energy targets is defined as. Mr. Eory responded that minimum clean energy targets are defined as renewables and energy efficiency which |s respectively 3O96 and 1OY6 |n2OZO. Commissioner Ross asked if3O96of the generation portfolio would be renevxab|eo and l0Y6 would be energy efficiency in 2030. GM Peff|ey affirmed. Commissioner Ross also asked about obtaining additional 1%efficiency every year and if it compounded. GM Peff|ey responded that l% efficiency has been achieved every year and he doesn't have any concerns about meeting the goals for 2O]O and 2O4U. Commissioner Price asked if one of the outputs would be carbon footprint or made to do that. Mr. Eory affirmed. Commissioner Ross inquired about the |RP, modeling and assumptions not being available or transparent, and if the software is standard. Mr. Eory responded that the software is starting to be deployed in Michigan and is mostly used by few larger companies. Commissioner asked about the availability of the information. Mr. Eory responded that assumptions have been bundled and documented and the new nnndel has templates that can be used and turned into white papers. Ms. Ekren responded that this model software allows more granular data and the information is readily visible. Ms. Zerkle also asked about the providing of parking meters and charging stations for an increase in electrical vehicles in the future. GM Peff|ey responded that 8VVL is working with local developers to place charging stations around town. Commissioner Price recommended that Commissioners attend the Strategic Planning meetings that would be held with customers and members of the public. Corporate Secretary Griffin will send an email to Commissioners of the meeting times when they are scheduled. Commissioner Zerk\e recommended that these meetings be held separate from Committee of the Whole meetings to encourage longer discussions and also asked if the Internal Auditor would be contributing input tothese meetings as he may audit some of the processes that are approved. Internal Auditor Mr. Wesley Lewis responded that he and Ms. Ekren discussed the regulatory changes that are taking place and will be attending the meetings. Other Motion by Commissioner Graham, Seconded by Commissioner Ross, to excuse Commissioners David Lenz and Douglas Jester from tonight's meeting. Action: Motion Carried Adjourn Commissioner Mullen adjourned the meeting at 6:47 p.m. Respectfully Submitted Tony Mullen, Chair Committee of the Whole Commissioner Ken Ross presented the Finance Committee Report: FINANCE COMMITTEE Meeting Minutes September 10, 2019 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 on Tuesday, September 10, 2019. Finance Committee Chair Ken Ross called the meeting to order at 7:14 p.m. and asked the Corporate Secretary to call the roll. Present: Commissioners Ken Ross, Tony Mullen, and David Price. Also present: Beth Graham, Joseph Graves Jr., Tracy Thomas, and Sandra Zerkle; and Non-Voting Commissioners Michael Froh (Meridian Township) and Larry Merrill (Delta Township). Absent: Commissioner David Lenz The Corporate Secretary declared a quorum. Public Comments None. Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Mullen, to approve the Finance Committee meeting minutes of July 16, 2019. Action: Motion Carried. Baker Tilly External Audit Report and Resolution Committee Chair Ross introduced external auditor Beth Ryers, Firm Director at Baker Tilly Virchow Krause, LLP. Ms. Ryers presented and highlighted the external audit report which included an audit overview, observations and recommendations, and required government communications. BWL received an unmodified or clean opinion which is the highest level of assurance provided. Ms. Ryers' presentation was as follows: 4 bakemLLY 16 patrertlUy t .,.::,..,.war..w,,,,.<u,,.r...d. [hard of Water and Light-City of tansing Board or Water and Light-City of Lansing City of I ansing A.M oa,vc:w B' Agenda Auditoverwev L- ":'AiidiYaty'eemeY res's"ori66Te esswtiricellisf' Observations and ..-financial statements are free from material Recommendations; "missWtemrnt �r bakerifilly FkrpAred Communication to -Financial statements of BWL received an- (inventing Body tlrxrnditied t')Fwdon bW'mUy ®bakerdify bakerrltty Board of Water and Light-City of Lansing Board of Water and Light-City of Lansing Board of Water and Light-City of Lansing A.A Ornview Natit Dm— 1-10 D-1k. Financial Auditors'report Controls Di bumements Statements , reviewed in payroll men --_--.._.._...... Managet discussion and analysis key Include --.. _......_.._ tyvn�a........ i:rr+. e.aee«e Enterprise fund statements ere W , —J,-meanra.Itµ„rsm transaction Billings __. .__.._ ........... :nyctarn rok mprevivuxg mdncctirg traW and areas Consolidated pension trust statements pr!Atrtinrj Cash end investments rn� a . Capital assets Coeas nata-tue gotedatyecwnoOprtpre,Required supplenerntal information `n � <*'"°r Infornmim wthnok:gy Adds ienal i nfoanaUon p1 Frnanaal reporting `bakertllly, `batmrdlly `bal■lily Board of Water and Light-City of Lansing Board of Water and Light-Ciry of Lansing Board of Water and Light-City of Lansing Olteewninundrt 1—Istil— Observatiansardr—mmcxta- ob—tiom and remrrnedatos r..q=Rad 6dcrpr—Fvd ,.. : .: Fm.rpee tied - - -Reported net income of S32.400,000 Operating _... I Operating Revenues- ( - - Expenses- -Bond coverage was met in 2010 Four-year Y i Fouryeor coverage I- Comparison - : Comparison -There were no material weaknesses reported (in thousands) ...__.___..._ ' ' (in thousands) .. -......, .. ... w r, ,o • I ..w—nr,.w�. .�...,r .r..»- -Implemented GA58 89 .••..,.«••»•""•». � -.- _ LATM baWrtllly, bskertilly r,! Board of Water and Light-City of Lansing Roam of Water and Light-City p(Lansing Bo hsk.rdlty Observations and reaxrrrc+datlons Board of Water and light--City of Lansing Enrarp—R14 Dlrscrcaabrvandmmmndnarao ._ . lltBe vanluu end rerprrr vdalione FNnMfie Fore! _ _... 1'mtr>n!'Imx Oper„Mg -_� Future Dt" - -- t Income- Service - - -Separate Si.Tnciaf statements issued for each Four-year R uiretnenta r- -_ - pensionpan Comparison _. - ..._ _. -'- --'.-_ - Rethousands] (n thousands) - - -NI three plena received unnrodifiad audit opinions AS balanduy .�:1� w•nu. _-_!�_..�_.._.. i, as:s �r SSSw 1 I�Mi Silt.!S:wYu f-v1iG :, �-h�tF+ .vM+n:cN�•�wea�p�.iS -Aw Board of Water and Light-City of Lansing `bNmrclllLansing d!k!!ILLY ol—Alornanlmcar—kainna Board of Water and Light-City of Lansing Board MWriter and Light-City of Lansirng awwr,e end��.mrrdnr,rp Future accounting standards Future accounting standards We sppredata the help of the Board of water and -0-ASS-Statement No.84.FiduciaryAmvilies effective for Ligfil General Acccunting&Finance Teams in fiscal year 2020 -GASB.Sta-1.No.84,nducary Activities ettecaw forr d for and assisting ! fiscal year 2020 P� g in the audit -QASA.Statement No.87,Leases-effecam for fiscal year -W$@statement No.ar,Leases-effective for fiscal year 2021 2D21 -GASDStatemeriI No.91.Ccrndwt Debt Obligations- _GASa Statertxrn Nn.91,G::dl�rzDet4Ob6gaedrs- eflecrve far lisral year 2022 af(aM:ve Iw Leoel year 2022 bakertilly bakertilly Board of Water and Light—City of Lansing Audit summary Jodi Dobson,Partner Bethany Ryers,Firm Director D:608 240 2469 D:608 240 2382 s ..-..-....../ dodilahson=lbaewldly;;cm I9elha ly ny�r•;/rJha4prlilly;;om Jeff Hurda,Senior Accountant Discussion D:508 240 6794 .ieff:.H.�Irs1a�Jzak^rttly,c4m Commissioner Ross inquired about the number of staff that were working onsite. Ms. Ryers responded that 4-5 people were on site. Commissioner Ross congratulated Ms. Shawa and her staff for an audit well done. Motion by Commissioner Price, Seconded by Commissioner Mullen, to forward to the Board Meeting the Acceptance of the Resolution for the 2019 Audited Financial Statements. Action: Motion Carried. July YTD Financial Summary CFO Heather Shawa gave a review of the July 2019 Year-to-date Financial Summary. Ms. Shawa reported the following: operating cash is budgeted at $32.3 million and it is now near $32.1 million; Net Income is budgeted just above $4 million and it is now a little under$8 million. Ms. Shawa noted that as July and August are typically slower months financial factors are typically under budget. Ms. Shawa also reported that credit on VEBA of approximately$1 million was not known at the time of the budget. Internal Audit Report & Revised Internal Audit Work Plan Overview FY 2019 Audit Plan Progress Report • FY 2019 Audit Plan Progress Report endaolmen�camakmd. Background for Revised FY 2020 Audit Plan Proposed FY 2020 Audit Plan o Is win AmurYm o.w<l ronlr c�mp:m.EMa.,ro an+ Internal Audit Status Report • Revised Internal Audit Department Charter hM �• "^"M, "'"' 6. Ablawry 5lnon Pull Other Items �,IMnfr Presented by: A�gym.anrm r.l Wesley Lewis,Director of Internal Audit p 9pmdrn cn,n w.+.m a EmpWyre Tsm Rr(AprSy nrr+wf I] Finance Committee Meeting ,,,gmreaanq PWm•.AWI September 10,2019 I I Proposed,Revised FY 2020 Audit Plan- Proposed,Revised FY 2020 Audit Plan- FY 2019 Audit Plan Progress Report cont'd Background Background Boats Mr Plain Too sla EnasewmfnlA for FY]9]d•lai diAwased aM spread will+SUM, Eno enl in Proureas'. 1.R.Pmdecessrx In.—AlAn Mw medln a.anagomenl,Vwn pA�,r11y_­­by Inla Aud11 h coder o lmponanca orb scam os wral smmr nw+atllman .�malae omelramosl. arm aarc Iq m alsoas nYAs and polenual awn IV-In FY X119 1.PrvarnmonlAWdlfummarcinpaM repining(lapel P.,ou +•Ceslr Mfnaprmmllntl innun Audll yFlnl Hint AUNn awssments wcn M lrw aaxle acovdis�al pw�. �.Cmflderatle. i lowLaaal w*U.audit a 3wlh,,Wscopirq ]-WoM Mfnprmrrrlfwsfl lNlrr PrveMfend Finl Pm•Audlp enuuplmunt pelenad. nlrlle r!$olmre auaitY,NC 1.CuflwnerPrvjecn(LerlAudindm.—h]D15 Andwae lfecundar Te a.IdeMlflpd marp Tan 9U poloMul audrte to perfgm N FY 7J3p and Eo rrw llnrr as tln WY Aedp 4 1.fxpkn Englneervlg 11lk+m .andnw delmredb FY]o]11 �� I.EneryY Aul Mmapemenl(Leff Audlndm Jun•Hrl]l 5.Ader Tc Prme[ pr lnlwn,l AUUuq kttgM lame on d2,rtl TJWy S Ir-VUInenWll Aueffinenn(Elnf Tmr Audi Ef,lmnrd nertM1W 2U19,we bllpu�d up wills Semen MpruFµrne,Y,on llru gopoxd Vl.el.urd H U dClryndnm Tin efnn nl ltle Hein(nl lne Wmnev hm fJlalq]M nnm put ]o]o. irNiul pl.ulwuc prec0 uqn Tlwe auurn lot Caeueflona rnT Sean f.Ci0-FlfMAacrlf(Lrff wNhd inYry Ml]1 Ealimehdafarl if Pl]pia, Mnrurgemenl,wp mpd!scene rMf�om to Tp Indltl plan. •rAlf p4n i•rvE/rer le eM1rnpe.Mmf+lul could ehertpr rEVW fin yrn r,Kr„d..rxn.,u«win.pp.w.m eaen Ifranapr epde•rerre Ir+1Mng,rso p.nmuupn rorMl.mu+Audu..^afp•rlw.ergp.mrnn. i. _.._........_ r Proposed,Revised FY 2019 Audit Plan Hours Proposed,Revised FY 2020 Audit Plan Hours, Proposed Revised FY 2020 Audit Plan,Cont'd Conl'd ....,.,,.-..v..>«....«c .� Available Resources: ^°•"• —Questions? —Recammend Approval of P/2020 Audit Plan svctvucumxaenmwr. T.•ufrwT.w. . x%lUt%% RwG Ltinll,Nnx i.B00 ,n vry r•re+w..rca ru YYYYYY Mmunup lircare 500 rn.,,rrrwr,Vr V.nW .w rNW nay. ..nn nYl lxauYMvaw. f.fov rvaar r `ul Proposed Other Items Revised Internal Audit Department Charter • Adds clarity and eliminates ambiguity regarding t.Curranl Technology Upgrades Internal Audit's rights and responsibilities. Internal Audit Management Software System • Promotes transparency and accountability of the Information Analytic Tad.with Artificial Internal Audit function. 2.Staffing • Meets the requirements of the Institute of Internal 3. ISO Certification for Internal Audit Auditors International Audit Standards We recommend approval of the revised Internal Audit Department Charter. Commissioner Zerkle inquired as to why the plan was revised. Mr. Lewis responded that there were some risks or requirements identified in April that no longer apply. Commissioner Ross summed up that there were three additional factors that created the need to re-evaluate the existing audit plan: • A new internal auditor at mid-year who assessed the existing audit plan and reviewed the risk rating methodology • The number of work hours were decreased in the audit department due to succession and departure of staff • An analysis of risk rate needed to be done to determine which items needed to be addressed first Commissioner Zerkle asked if another Assistant Internal Auditor would be hired and Mr. Lewis affirmed. She commented that Mr. Lewis' goal was to conduct six audits and the usual goal was three or four. Mr. Lewis responded that additional audits have been planned in case circumstances arise where an audit can't be completed Motion by Commissioner Price, Seconded by Commissioner Mullen, to accept the Revised Internal Audit Work Plan for FY 2020 and forward it to the full Board for acceptance. Action: Motion Carried. Internal Audit Charter and Resolution Internal Auditor Wesley Lewis requested approval for the Internal Audit Charter Resolution. Proposed Resolution Internal Audit Charter Approval RESOLVED, That the Board of Commissioners hereby approves the Internal Audit Charter as amended to which conforms to the International Standards for the Professional Practice of Internal Auditing, promulgated by the Institute of Internal Auditors. Commissioner Ross commented that it was the previous Internal Auditor's preference to have a high level but brief document. The new charter is similar but with more detail. Commissioner Zerkle asked if the Principle Internal Auditor would be considered a BWL employee and Mr. Lewis affirmed. Commissioner Ross asked Mr. Lewis to provide an update on his CISA certification process. Mr. Lewis responded he has started studying for the exam and plans to sit for the exam in January or February in 2020. Motion by Commissioner Price, Seconded by Commissioner Mullen, to adopt the Internal Audit Charter by Resolution and forward it to the full Board for consideration. Action: Motion Carried. Other Motion by Commissioner Price, Seconded by Commissioner Mullen, to excuse Commissioner David Lenz from tonight's meeting. Action: Motion Carried Adjourn Chair Ken Ross adjourned the meeting at 8:00 p.m. Respectfully submitted Ken Ross, Chair Finance Committee MANAGER'S RECOMMENDATIONS None. UNFINISHED BUSINESS None. NEW BUSINESS None. RESOLUTIONS RESOLUTION 2019-09-01 To Amend Employee Contribution to Medical Benefits Plan 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 2/3 vote of its governing body each year, a public employer may exempt itself from the requirements of Public Act 152 of 2011 prior to each benefit plan year, and; WHEREAS, the Board of Commissioners have met each year and passed a resolution exempting the Lansing Board of Water & Light from the "hard cap" of Public 152 of 2011 and established premium sharing amounts for the applicable benefit plan years, as follows: Date Resolution No. Premium Sharing Effective Date July 24, 2012 (#2012-07-01) 10%AII Active Employees January 1, 2013 July 23, 2013 (#2013-07-02) 12%All Active Employees January 1, 2014 September 23, 2014 (#2014-09-03) 12%All Active Employees January 1, 2015 July 28, 2015 (#2015-07-12) 12%All Active Employees January 1, 2015 November 17, 2015 (#2015-11-02) 12%- Union Employees January 1, 2016- 12% 14%- Non-Union Employees Union July 1, 2016 — 14% Non-Union November 15, 2016 (#2016-11-06) 14%All Active Employees January 1, 2017 September 26, 2017 (#2017-09-01) 16%All Active Employees January 1, 2018 September 25, 2018 (#2018-09-01) 18%All Active Employees January 1, 2019 RESOLVE that the Board by at least 2/3 vote desires to exempt itself from the requirements of Public Act 152 of 2011 for the upcoming benefit plan year, effective January 1, 2020 through December 31, 2020. FURTHER RESOLVE that the Board desires to increase premium sharing from 18% to 20% for all active employees for medical benefits effective January 1, 2020. Motion by Commissioner Ross, Seconded by Commissioner Thomas, to accept the Resolution to amend the PA 152 Health Care Premium Sharing Resolution. Action: Motion Carried RESOLUTION 2019-09-02 Delegation of Authority: Health Care Plan Benefit Design and Administrative Decisions WHEREAS, The Lansing Board of Water & Light (BWL) is a municipally owned utility organized under the Lansing City Charter as permitted by the Home Rule Cities Act, MCL 117.4(f)(c), and governed by the Board of Commissioners ("Board"). The Lansing City Charter, Article 5, Chapter 2, delegates to the Board administrative, executive and policy-making authority over the operation of the BWL, which includes the full and exclusive management of water, heat, steam and electric services and such additional services of the City of Lansing as may be agreed upon by the Board and City Council. WHEREAS, the Lansing City Charter states the Board shall appoint three individuals who report directly to the Board and serve at the Board's pleasure; being a Director (also known as the General Manager), an Internal Auditor (also known as the Director of Internal Audit) and a Secretary (also known as the Corporate Secretary). The General Manager is also responsible to the Board for carrying out the duties assigned by the Board, which include but are not limited to the operation and management of the BWL. WHEREAS, the Lansing City Charter further outlines the responsibilities and authority of the Board, which includes the compensation and benefits of BWL employees, and by virtue of this responsibility and authority the Board is the Plan Sponsor of the Lansing Board of Water and Light Health Care Plan (the "Plan"). WHEREAS, the Board's role as the governing body for the BWL includes certain fiduciary duties such as acting in the BWL's best interest, protecting and enhancing the BWL for the benefit of its rate payers, exercising reasonable care, loyalty and good faith in actions and decisions, meeting legal and regulatory requirements, and assuring the General Manager, Director of Internal Audit and Corporate Secretary have adequate support and resources to effectuate their roles. WHEREAS, in July of 2017, the Board approved a Governance policy which, among other things, adopted and established the General Manager's principal role to manage and operate the BWL and establish administrative and operational directives, standards guidelines and procedures that support Board approved corporate policies, strategies, projects and budgets. WHEREAS, management of the Plan's benefit design and administration are necessary for the General Manager to manage and operate the BWL by maintaining a qualified workforce. WHEREAS,The Board as Plan Sponsor of the Plan desires to further clarify and delegate authority to the General Manager to oversee and manage the Plan's benefit design and administration on its behalf. RESOLVED, the General Manager is authorized to oversee and manage the Plan's benefit design and administration on behalf of the Board. FURTHER RESOLVED, the General Manager may further delegate this authority for operational efficiency. FURTHER RESOLVED, all benefit plan design changes or updates will be communicated to the Board at the next regularly scheduled meeting of the Board. Motion by Commissioner Zerkle, Seconded by Commissioner Lenz, to accept the Resolution for the Delegation of Authority: Health Care Plan Benefit Design and Administrative Decisions. Action: Motion Carried RESOLUTION 2019-09-03 Fiscal Year 2019 Audited Financial Statements Of the Enterprise Fund and Pension Fiduciary Funds RESOLVED, that the fiscal year 2019 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 2019 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, 2019. FURTHER RESOLVED, that the Corporate Secretary is hereby directed to file a copy of the fiscal year 2019 Audited Financial Statements of the Board of Water and Light with the City of Lansing no later than October 15, 2019. Motion by Commissioner Ross, Seconded by Commissioner Lenz to approve the FY 2019 Audited Financial Statements of the Enterprise Fund and Pension Fiduciary Funds. Action: Motion Carried RESOLUTION 2019-09-04 Internal Audit Charter Approval RESOLVED, That the Board of Commissioners hereby approves the Internal Audit Charter as amended to which conforms to the International Standards for the Professional Practice of Internal Auditing, promulgated by the Institute of Internal Auditors. Motion by Commissioner Mullen, Seconded by Commissioner Graham to approve the Internal Audit Charter. Action: Motion Carried MANAGER'S REMARKS General Manager Dick Peffley provided information on the following items: • The Delta Energy Plant project is on schedule and running smoothly. There are about 250 people working on site, a majority of the ground work is completed and it is expected that steel construction will begin in about a month. • GM Peffley requested that the Finance Department investigate whether it is appropriate to give the DV pensioners an increase which hasn't happened since 12 years ago. • The BWL Golf 4 Charity event held on August 23, 2019 raised money for wounded warriors. There were more than 72 teams that participated. The proceeds go to the Guardian Angels Medical Service Dogs, Inc., Pennies for Power and the Michigan State Women's basketball team. Service dogs cost about$40,000 dollars each and over $100,000 have been raised for the program. Pennies for Power receives 10% of the proceeds from the golf charity event and the Michigan State Women's basketball team receives another 10%of the proceeds. GM Peffley introduced BWL General Counsel Mark Matus to give recent litigation updates. Mr. Matus reported the following: • BWL settled with Lansing Township regarding a matter that began with 2013 assessments. • A settlement was reached with the Environmental Protection Agency (EPA) regarding a notice of a violation that was received in 2015 regarding the Erickson plant. • An amicable resolution was reached with the Environmental Protection Agency regarding a notice of violation that was received in 2018 regarding the Eckert station's mercury monitoring system. Commissioner Ross asked if the contents of the settlements are public. Mr. Matus responded that the information will be available to the public. Mr. Matus added the following: • The settlement with the Lansing Township was for$75,000, and that Lansing Township wanted to offset their drain assessment which would have been in the millions of dollars. • The settlement with the EPA for Erickson was for$175,00 and a transportation electrification mitigation project of support for plugin vehicles and charging stations. • The settlement with the EPA for Eckert was for $17,500 and a renewable energy resource mitigation project for a school. Commissioner Zerkle inquired about GM employees laid off, possible layoff of State of Michigan employees, parts suppliers being laid off and requests for assistance with their bills. GM Peffley responded that BWL Customer Service Representatives have been instructed that if customers call and identify themselves as being laid off or on strike, the customers will be provided an extended payment plan to avoid shutoff and will be directed to areas where they can receive funding. Commissioner Froh commented on the strike issue and large customers asked what is in place in respect to the lost revenue. GM Peffley responded that the Finance Department is putting together a plan for the instance of the strike running long. COMMISSIONERS' REMARKS Commissioner Froh recommended the viewing of an excellent public relations video regarding the 600 years of combined experience among employees that have been at the BWL for a long time. Commissioner Froh also commented on the Smart Meter public comments regarding the transmission times and inquired how many times per day that transpires. GM Peffley responded that in a normal state, about 95% of the time or not during a storm, the meter transmits twice a day for 20 seconds and it is less wattage than a cell phone. Commissioner Zerkle wished Commissioner Graves well. Commissioner Ross commented on the process leading up to the rules and regulations and rates for the upcoming year. The integration of Smart meters into the system and the roll out plan had been discussed and Commissioner Ross suggested the creation of a document or materials that provide facts about the specific type of Smart Meter units provided by BWL. Commissioner Price responded that the information is on the BWL website. MOTION OF EXCUSED ABSENCE Motion by Commissioner Ross, Seconded by Commissioner Thomas, to excuse Commissioner Jester from tonight's meeting. Action: Motion Carried PUBLIC COMMENTS Mary Patenge spoke regarding the Smart Meter Program opt out. ADJOURNMENT Chair Price adjourned the meeting at 6:03 p.m. M.Denise Griffin,Corporate Secretary Approved by the Board of Commissioners:11-19-19 Official Minutes filed(electronically)with Lansing City Clerk:11-20-19 Approved by the Board of Commissioners 09-24-19 Hometown People. Hometown Power. MINUTES OF THE BOARD OF COMMISSIONERS MEETING LANSING BOARD OF WATER AND LIGHT July 23, 2019 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 July 23, 2019. Chairperson David Price called the meeting to order at 5:30 p.m. Chairperson Price welcomed new Commissioners Joseph Graves Jr., representing Lansing's 3rd Ward and Michael Froh, representing Meridian Township. The Corporate Secretary, M. Denise Griffin, called the roll. Present: Commissioners David Price, Joseph Graves Jr., David Lenz, Tony Mullen, Tracy Thomas, and Sandra Zerkle. Non-Voting Commissioners present: Douglas Jester (East Lansing), and Michael Froh (Meridian Township). Absent: Commissioners Beth Graham, Ken Ross and Non-Voting Commissioner Larry Merrill (Delta Township) The Corporate Secretary declared a quorum. Commissioner Graves led the Pledge of Allegiance. ELECTION OF OFFICERS FY 2019-2020 Corporate Secretary M. Denise Griffin presented the June 20, 2019 Nominating Committee Report for Nominating Committee Chairperson, Commissioner Anthony McCloud, whose Board appointment ended June 30, 2019. The proposed slate of officers for Fiscal Year 2019-2020 is as such: Commissioner David Price serving as Chairperson; and Commissioner Anthony Mullen serving as Vice Chairperson. There were no further nominations for the officers' positions. Motion by Commissioner Thomas, Seconded by Commissioner Zerkle to approve the nominations of Commissioner David Price to serve as the Chairperson and Commissioner Mullen to serve as the Vice Chairperson of the Board of Commissioners for Fiscal Year 2019-2020. Action: Carried Unanimously Chair Price requested approval for the appointment of Commissioner Tracy Thomas as the fourth member of the Executive Committee to fill the vacancy created by the departure of Commissioner Anthony McCloud. Motion by Commissioner Price, Seconded by Commissioner Mullen to approve the appointment of Commissioner Tracy Thomas to serve as the fourth member on the Board of Commissioners Executive Committee. Action: Carried Unanimously APPROVAL OF MINUTES Motion by Commissioner Mullen, Seconded by Commissioner Zerkle, to approve the Regular Board Meeting minutes of May 28, 2019. Action: Motion Carried PUBLIC COMMENTS None. COMMUNICATIONS Electronic Mail received From or Re: a. Electronic mail from Dayna Jenkins re Customer Service - Referred to Management. Received and Placed on File b. Thank you care from former Internal Auditor Phil Perkins —Received and Placed on File COMMITTEE REPORTS Corporate Secretary M. Denise Griffin presented the Nominating Committee Report: NOMINATING COMMITTEE MINUTES June 20, 2019 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 4:30 p.m. on Thursday, June 20, 2019. Nominating 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, Beth Graham and Tracy Thomas. Absent: Commissioner David Lenz Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Graham, Seconded by Commissioner McCloud to approve the Nominating Committee meeting minutes of June 28, 2018. Action: Motion Carried. 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. Chair McCloud noted that he received a late request from Commissioner Sandra Zerkle to be removed from consideration as Vice Chair and the request was honored by the committee. Nomination of Board Officer Candidates for Fiscal Year 2019-2020 Chairperson and Vice Chairperson Nominating Committee Chair McCloud opened the floor for nominations for the Chairperson for the 2019- 2020 fiscal year and for the Vice Chairperson for the 2019-2020 fiscal year. Motion by Commissioner Thomas, Seconded by Commissioner Graham to nominate Commissioner David Price to serve as the Chairperson for the 2019-2020 fiscal year and Commissioner Anthony Mullen as the Vice Chairperson for the 2019-2020 fiscal year. Action: Motion Carried Motion by Commissioner Graham, Seconded by Commissioner Thomas to present the slate of Officers for 2019-2020 to the full Board for consideration as follows: Chair: David Price Vice Chair: Anthony Mullen Action: Carried Unanimously Nominating Committee Chair McCloud stated that the recommended slate will be presented to the full Board for consideration and nominations will be taken from the floor at the July 23rd Regular Board/Annual Organizational meeting. Excused Absence Motion by Commissioner Graham, Second by Commissioner Thomas to excuse Commissioner David Lenz from tonight's Meeting. Action: Motion Carried Adiourn There being no further business, the meeting adjourned at 4:33 p.m. Respectfully submitted, Anthony McCloud, Chair Nominating Committee Commissioner Tracy Thomas presented the Human Resources Committee Report: HUMAN RESOURCES COMMITTEE Meeting Minutes June 25, 2019 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 10:00 a.m. on Tuesday, June 25, 2019. Human Resources (HR) Committee Chairperson Tracy Thomas called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Tracy Thomas, Tony Mullen, Sandra Zerkle and Voting Alternate Member David Price. Also, present: Commissioners Beth Graham, David Lenz (via phone) and Ken Ross (via phone). Absent: Commissioner Anthony McCloud Public Comments None Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Mullen, to approve the Human Resources Committee meeting minutes and the Closed Session meeting minutes of May 21, 2019. Action: Motion Carried. Interview Candidates for the Charter Appointed Position of Internal Auditor The Human Resources (HR) Committee Interview two candidates for the Charter Appointed position of Internal Auditor, in accordance with Section 5-202.2 of the Lansing City Charter, which states: "The Board shall appoint an Internal Auditor who shall report directly to the Board. The Internal Auditor shall serve at the pleasure of the Board." The HR Committee members presented the two candidates with hypothetical situation questions as well as questions about previous experiences in particular work areas. At the liberty of HR Committee Chair Thomas, the Human Resources Committee meeting recessed upon conclusion of each interview to allow the interviewing candidate to exit. The meeting reconvened at the arrival of the next interviewing candidate. Upon conclusion of the final interview, the HR Committee completed the Rubrics scoring and deliberated on each candidate. The following motion was offered upon conclusion of deliberations: Motion by Commissioner Price, Seconded by Commissioner Zerkle to submit by Resolution the selected candidate for the Charter appointed position of Internal Auditor, to the full Board for consideration. Action: Motion Carried (3/1 Mullen dissenting) There was a brief discussion regarding a compensation package for offering. The HR Committee directed BWL's Human Resources Executive Director Flowers to extend an offer to the chosen candidate and to finalize the compensation package as discussed on behalf of the Board of Commissioners. Excused Absence Motion by Commissioner Price, Seconded by Commissioner Mullen to excuse Commissioner McCloud from tonight's meeting. Action: Motion Carried Other None Adjourn Motion by Commissioner Price, Seconded by Commissioner Mullen, to adjourn the meeting. Action: Motion Carried Meeting adjourned at 1:27 p.m. Respectfully Submitted, Tracy Thomas, Chair Human Resources Committee Vice Chair Sandra Zerkle presented the Committee of the Whole Report: COMMITTEE OF THE WHOLE Meeting Minutes July 16, 2019 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, on Tuesday, July 16, 2019. Committee of the Whole Chair Sandra Zerkle called the meeting to order at 5:51 p.m. and asked the Corporate Secretary to call the roll. Present: Commissioners Sandra Zerkle, Joseph Graves Jr., Anthony Mullen, David Price, Ken Ross, and Tracy Thomas, and Non-Voting Members: Michael Froh (Meridian Township), Doug Jester (East Lansing), and Larry Merrill (Delta Township). Absent: Commissioner Beth Graham and Commissioner David Lenz The Corporate Secretary declared a quorum. Public Comments None. Chair Zerkle introduced and welcomed Commissioner Joseph Graves Jr. representing the 3rd Ward, Commissioner Michael Froh representing Meridian Township, Commissioner Larry Merrill representing Delta Township, and Internal Auditor Wesley Lewis. Approval of Minutes Motion by Commissioner Thomas, Seconded by Commissioner Graves, to approve the Committee of the Whole meeting minutes of May 14, 2019. Action: Motion Carried. Tree Trimming Update General Manager Dick Peffley gave an update on the tree trimming program which has been in progress for five years and is two months from completion. Outages have significantly decreased since the inception of the program. Colonial Village would like tree stumps that remain to be removed but neither the BWL nor the City of Lansing has funding. Tree stump removal in the city would cost a total of$10 million. Commissioner Mullen asked whether trees were given as replacement for those taken down and GM Peffley responded that trees are given to customers that make a request. Corporate Planning Update/Stakeholder Engagement GM Peffley introduced Brandie Ekren, Strategic Planning & Development Executive Director, who presented the corporate planning process update and briefly reviewed the integrated resource plan (IRP), the strategic plan, Enterprise planning efforts, and strategic management. Ms. Ekren stated that the new Strategic Plan would be updated in 2020. Ms. Ekren stated that the strategic engagement process of the IRP would be reviewed in this meeting and that the stakeholder engagement goal was to acquire insight on needs and interests of customers and constituents. INTFfRATF,R RIiNCHIRCE PIAN DISCUSSIONMAY 2019 ST,1K[IIUIni:K ENfdmll[N'r IletuTK ' �" - 1• Analaha:Jml+de�inrdman i+.dMdualpronpororyanfmdan whnc _._.,__._.._..._.,. rmpn+WkY onr+omr oJllrc 8g7.'r Fnrrgr Pfart+ !N � Strategic Planning&Development mum INTEGRATED RESOURCE PLAN: — - STAKEHOLDFRENGAGEWNT • Stakehol tr Engagement 111911 91116 the _ •b "''o L I1� Valucut PuhIIc Ownt-hIp V 'n«w',w+Nw,.' unriaii$u+ awrrnnrndiw+m.+ % p r.,.a,wwnn.rt«ndu.•rn..w�eY;.namn+ '�„w� r,w«e.r-•mn . ... •lend:r.^ w.w..n„r.n..,u m.na...Jen.Wd �n,.+`°.u�...,"!.,1' �r+m.�.�o...«..-.«..,+u«i.«u"w.«i"x:.+:v:..w J.a"Y� w.rsuurn .«n.-m:rYap�ww•w��.w uesw wwWn •e...ue y METHOD OF SELECTED? We want tO hOOF ENGAGEMENT Vn 1 0 Q :1. s Steps ahead..,_A- tnmpun Npe«er.:ul:ImNrw �rI Wc4nwlwpud .\\M!«U.•r.rtnvrvary 1 runt W.Wy W. .,MA •nya,,r:sM 1AN81 ENtfIGY •uu I "1 ev i ""." .bld+t.unmdWm+rdrM toy rf;rroiry .xn«,wv w,<e wn+n.+ww.,m r«.n wW++ r s� u;u.>uwe...xd«:•yw�dt..n _ c I •,r :u.on.I al Pn t, .n:..tla.nnlm\n:,..+n«+.nn, ,. �; ._...._.. •wrw...,nnn,+ynvwtal..aL.x 'i v>' tx9 .q•ponuu rl«rolw+In.pu,n.r u.denur.rn 7 Questions and conversation regarding the corporate planning process update followed. Commissioner Zerkle asked whether commissioners could provide input and Ms. Ekren responded that the commissioners input was welcome and appreciated and that a meeting could be scheduled with them. wed and Ms. Ekren ed in Commissioner Price asked whether additional public input would be alloaleo reminded Commissioners d that agreement that there will be aditstrategnal pportunities engagementrmodpublic elingand apublic meeting. the IRP consisted of threestages: ng Commissioner Graves commented that there were environmentalists, co f d well logy and citizens that would like the board to hold meetings as an opportunity form thepublic o _ alternative resources. GM Peffley responded that several meetings would be held at different times so that everyone would have the opportunity to provide input. Commissioner Froh asked for clarification on the public meetings. Ms. Ekren stated that the meetings will be held in the fall and notifications will be sent. Other Motion by Commissioner Price, Seconded by Commissioner Mullen to excuse Commissioner Graham an Commissioner Lenz from tonight's meeting. Action: Motion Carried. Adjourn Motion by Commissioner Price, Seconded by Commissioner Thomas to adjourn the meeting. Meeting adjourned at 6:31 P.M. Respectfully Submitted Sandra Zerkle, Chair Committee of the Whole Chair David Price presented the Finance Committee Report for Finance Committee Chair Commissioner Ken Ross: FINANCE COMMITTEE Meeting Minutes July 16, 2019 The Finance Committee of the Board of Water and Light (BWL) met t the 20 9L Headquarters — REO Town Depot, located at 1201 S. Washington Ave., Lansing, MI, on Tuesday, Y 16 Finance Committee Chair Ken Ross called the meeting to order at 5:07 p.m. and asked that roll be taken. mmissioners Joseph Present: Commissioners Ken Ross, Anthony Mullen, and David Price. Also pg reCommCsosioners Michael Froh Graves Jr. (arrived at 5:26 p.m.), Tracy Thomas, Sandra a t 5:07 p.m ) and Lary Merrill (Delta Township). 1n (Meridian Township), Douglas Jester (East Lansing) (arrived Absent: Commissioner Beth Graham. The Corporate Secretary declared a quorum. Public Comments None Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Mullen, to approve the Finance Committee meeting minutes of May 14, 2019. Action: Motion Carried. Chair Ross welcomed new Internal Auditor Wesley Lewis. May YTD Financial Summary& Overview of Committee Reporting Framework Chief Financial Officer (CFO) Heather Shawa introduced Mr. Scott Taylor, Finance Manager, who provided an overview of the financial summary dashboard. Mr. Taylor reviewed the main topics and stated that this report is issued monthly and it is to keep the board informed throughout the year of key financial results. The dashboard consists of a Cash section, critical rating metrics of days cash on hand and debt service coverage, a budget to actual comparison section, and a return on assets section. Commissioner Ross asked which of the above items was the main interest of rating agencies. Mr. Taylor responded that days cash on hand, credit rating and debt service coverage are the most important metrics for the rating agencies. Commissioner Froh inquired about the wholesale numbers and Mr. Taylor responded that a capital project that was delayed and unplanned outages affected the wholesale numbers as native load is served first and wholesale second. Commissioner Ross asked for the main components of retail and wholesale. Mr. Taylor responded that retail sales are for residential, commercial and industrial customers and after they are provided with service any additional power generated, when market prices are favorable, is sold on the wholesale market. Mr. Taylor stated that the dashboard also consists of key ratios that are comparisons with industry peer groups of APPA and employee data which determines operations costs and changes. Ms. Shawa pointed out that APPA ratios are for electric utilities and water benchmarks follow the AWWA. Chief Financial Officer (CFO) Heather Shawa presented the following: y/ 'ra- OJIM y - $ Cash Income Sta—wnt YTD l:alio> L.,d.y-Data Budget Status YFD ......__..u...a......_..,,.«._.. o ... ,,:.. ....:,.. C 1wturn on A.efs ,•, Cash targets are well above income. June preliminary fiscal year end is $30-33 million which is well above the budgeted net income of$20 million. Ms. Shawa noted that VEBA is 100%funded and this will be addressed in the trustee meeting. Revenue tracking is comparable to last year, operating expenses are under budget, $3 million is projected for fiscal year end and 0 & M will be back to YTD budget. Return on Assets will be achieved this fiscal year and three out of five ratios are tracking above benchmarks. For Employee Data there are vacancies for which HR is recruiting. Commissioner Mullen asked about the number of days for days cash on hand and Ms. Shawa responded that the target requirement is set at 155 to maintain infrastructure and rating agencies prefer 160 to 165. Commissioner Price inquired about the employee count YTD. Ms. Shawa responded that there are 34 vacancies which is in the range of the 30-35 consistent average. GM Peffley added that HR is working to fill the vacancies. Additional questions and conversations were brought by the Commissioners and Ms. Shawa and Mr. Taylor gave responses and explanations. Internal Audit Open Management Response Quarterly Report Finance Manager Scott Taylor presented management's responses to audits as follows; STATUS OF NL4N.4GE\IE1N7 RESPONSES TO AUDITS —W I JULY 2019 laArro.dmce mth Bend A-1l e0tdaw5 ham•a;Aadthaae •t Line DetaRhoo P-t— Aesi'canble SUNS NAlanWum7tesWur Date Ana 59 .Smcuswu lalrrml AsvhrssdenerriuE.mixely,aitmsis lilacs H.aen A:ewl(x:oiryuEccice:d pnN.•ae'a%;b-es[.se:ojvd:v.l t±;.�f. Ph—d ss P¢Eh. _'Ole Aetomcr ..c:de^.:act wtllx:sur.:xru ne aL•Se nn:^m1 i!:nt:xl.-!:rises &d by 3s3030 6i Catrut Aadit oo.d.b aced for dipsmem aid do OCNbu LePlSvax amdeav ryr:bat:ei ux mcr.•z7 res:suxs aee!.:d!c cr.;V.elhouttn: 5ipat» [W apa.vem+l ttr¢ffie ffiIkawrasW 7918 nib t5a rewecSaJ.:sls+l[-viceca,rttKwe>+at-o:edwa:.:�\.nos, Audi.y P..,!—, cb—&MOM,and-1-1Y cad Ato ix:Wet:eGuernrvu!or`ueCrmnSerre!zp4s:,;:.rw-- :'"� CmWtiexe o4omadtb Carp¢vteSummry'supatNe m.w:nt'e tenea'ed.ay:swd and dv'ns edbese iu:l a:.^.r.+Ea:.xra G'31:29. 68 Ca , tuvlAMinoted our pvpea ayp:at7 mdtgry¢tied CO Lep75usxet Pctx:''�t�:'gesr=:cz:it:e»z."::m:zl u:duv:ntxIlev r:trsxsatti:s Sipartre d¢uasmratuv vM Nhmfile. 1018 eras)'.5L•sarecxct oil!cm�detz dnelcp�vsc Siaku ce yc�cp.. 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Issue Response Responsible Status of\faa m ageeat Response Audit\acne Audit Issue Descriptic4 Date area -6 Accounts Internal audit recommeuds u accom payable proved ra Jule_Ol9 Genet at \lana^ement Hill review and update all relevant accounts payable Payable .t;E11-which require moait:ring and'of reconciliation activities Accounting procedures by September 30,2019,and annually thereafter. are relieved periodically. 0:v,d re'.ues(-cue Dcrcanber'01S telml): c. COBIT Internal.audit noted that actions should continue cm as February Informauon As a result of tic COBIT Fellotr-lip audit"this items is been closed and has Cosaphance expedited a schedule as pr sable to reach full compliance 2019 TechnoloU b-is replaced with open item=69. mth the adopted IT governance franlea crk. 60 Succession Internal Audit snppetts m iai.ag and development of \Lech kiuuna.•s Candidate assessment and development xv"addressed as pan of the the Plasutuse succession candidates. NIS Resources BWL Leadership Academy Emerging Leaders Prostram conducted April ` 201S to Apri12019. 65 Physical Secant)]mt 1 Audit aq pots a periodic r..eu'of all facility Sept 2018 Industrial Security has completed its fort annual update of futility access per fredbac refers. Health&Saf from manag- 66 Physical Securit)Internal audit recommends controls over security Sept 2Ol S industrial Controls over security personnel authorized to carry Ineamts cis a concealed personnel permitted to carry firearms on a concealed Health&Safer,base have been enhanced. basis be enhanced. kwu+td Mwv.++rtt e.1.rr�r u?dot-Iwa:Jr9 Mr. Taylor reported that the first three items were carried over from the report of the prior period and are on track to be completed. New audits have been initiated with completion dates as noted. Other Commissioner Mullen, to excuse Commissioner Graham from Motion by Commissioner Price, Seconded by tonight's meeting. Action: Motion Carried Adjourn Motion by Commissioner Price to adjourn the meeting. Commissioner Ross adjourned the meeting at 5:43 p.m. Respectfully submitted Ken Ross, Chair Finance Committee MANAGER'S RECOMMENDATIONS None. UNFINISHED BUSINESS There was no Unfinished Business. NEW BUSINESS There was no New Business. RESOLUTIONS/ACTION ITEMS RESOLUTION #2019-07-01 Appointment of the Charter Position of Internal Auditor The Board's Rules of Administrative Procedures specify that the Board is to appoint a Director and General Manager, Internal Auditor, and Corporate Secretary, respectively at its first regular meeting following July 1st of each year or as soon thereafter as may be appropriate. RESOLVED, That the Board of Commissioners hereby appoints the following individual to the Charter position of Internal Auditor for fiscal year 2019-2020, or, until a successor is appointed, whichever last occurs: Wesley Lewis, Internal Auditor FURTHER RESOLVED, That Wesley Lewis shall be extended an es employment ment coot actwhi which skier occurs. eeffective from July 15, 2019, and expire on June 30, 2020, or until a succe appointed, Motion by Commissioner Thomas, Seconded by Commissioner Zerkle, to approve the appointment of the Internal Auditor for Fiscal Year 2019-2020. Action: Motion Carried. RESOLUTION #2019-07-02 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 1st 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 fiscal year 2019-2020 or until a successor is appointed, whichever last occurs: M. Denise Griffin, Corporate Secretary FURTHER RESOLVED, That the Chair of the Board of Commissioners is authorized to execute any and all contractual amendment documents which reflect merit adjustments recommended by the Human Resources Committee for FY 2019's performance. Motion by Commissioner Zerkle, Seconded by Commissioner Lenz, to approve the reappointment of the Corporate Secretary for Fiscal Year 2019-2020. Action: Motion Carried. RESOLUTION #2019-07-03 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. RESOLVED, That the Board of Commissioners hereby appoints the following individual to the Charter position of Director and General Manager for fiscal year 2019-2020 or until a successor is appointed, whichever last occurs: Richard R. Peffley, Director and General Manager FURTHER RESOLVED, That the Chair of the Board of Commissioners is authorized to execute any and all contractual amendment documents which reflect merit adjustments recommended by the Human Resources Committee for FY 2019's performance. Motion by Commissioner Thomas, Seconded by Commissioner Louney, to approve the reappointment of the Director and General Manager for Fiscal Year 2019-2020. Action: Motion Carried. MANAGER'S REMARKS General Manager Peffley presented the following information: 1. The BWL Lugnuts picnic will be held on Thursday, August 8t' and GM Peffley encouraged every employee to attend. 2. The recent outage affected about 20,000 customers, of which about 3,000 needed to reset their clocks and about 16,000 which some BWL action was required. The outage was spread evenly over the BWL service area. Mutual aid was provided by five other cities—Lowell, Grand Haven, Bay City, Hillsdale, and Bowling Green, OH. Everyone had service restored by Sunday evening and GM Peffley commended the workforce. Commercial Zerkle commented about an update that was received with a reminder that the mass was the customer's responsibility and inquired whether it was policy that it could be placed on the customer's bill if the customer was unable to afford it immediately. GM Peffley responded that was correct. Commissioner Graves inquired how the mutual aid agreement operated and whether it was included in the budget. GM Peffley responded that the mutual aid agreement is signed by utilities with established prices and the utilities are required to respond unless they have their own emergency. GM Peffley stated that mutual aid agreements from outside the state are more beneficial during storms as in-state aid is usually in use. Electric T&D Manager, Patrick Hanes, added that the standardized cost is according to the contract rate or union rate. GM Peffley also responded there is a storm line item set aside in the budget. Commissioner Thomas commented that he lost power twice during the storm and power was restored almost immediately afterward and stated that outage map system is very efficient. Commissioner Price asked if it was wind that caused the poles to come down during the storm and GM Peffley responded that it is still being checked. Commissioner Price also inquired about the percentage of customers using the different reporting methods. GM Peffley responded he will obtain the information and send a response to the Commissioners. COMMISSIONERS' REMARKS Commissioner Mullen commented that a call was received regarding a transformer that exploded which turned out to be a lightning arrester or circuit breaker. Commissioner Mullen commended the contractors and employees on the completion of this task during the rain. Commissioner Graves commented he had the opportunity to meet with GM Peffley and will be reaching out to meet with additional staff members to get up to speed and obtain additional information. Commissioner Thomas inquired about the protocol for providing information to all the Commissioners when one Commissioner presents helpful information to the GM. GM Peffley responded that he reports when there is a substantial amount of time spent addressing a topic. MOTION OF EXCUSED ABSENCE Motion by Commissioner Mullen, Seconded by Commissioner Graves to excuse Commissioners Beth Graham, Ken Ross and Larry Merril from tonight's meeting. Action: Motion Carried. PUBLIC COMMENTS None. ADJOURNMENT Motion by Commissioner Graves, Seconded by Commissioner Mullen to adjourn the meeting. Chair Price adjourned the meeting at 6:05 p.m. M. Denise Griffin,Corporate Secretary Preliminary Minutes filed (electronically)with Lansing City Clerk: 9-19-19 Official Minutes filed (electronically)with Lansing City Clerk 9-27-19 Approved by the Board of Commissioners 07-23-19 Hometown, Hometown Power. MINUTES OF THE BOARD OF COMMISSIONERS MEETING LANSING BOARD OF WATER AND LIGHT May 28, 2019 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 May 28, 2019. Chairperson David Price called the meeting to order at 5:30 p.m. Present: Commissioners Beth Graham, David Lenz, Anthony McCloud, Anthony Mullen, Ken Ross, Tracy Thomas, and Sandra Zerkle. Non-Voting Commissioners present: Dion'trae Hayes (Lansing Charter Township), Douglas Jester (East Lansing), and William Long (Delta Township). Absent: None. The Corporate Secretary declared a quorum. Commissioner Beth Graham led the Pledge of Allegiance. Chairperson Price presented Certificates of Appreciation to Commissioner Bill Long (Delta Township) and Commissioner Dion'trae Hayes (Lansing Charter Township) for their contributions as commissioners. APPROVAL OF MINUTES Motion by Commissioner Thomas, Seconded by Commissioner Zerkle, to approve the Regular Board Meeting minutes of March 26, 2019. Action: Motion Carried PUBLIC COMMENTS None, COMMUNICATIONS Electronic Mail received From or Re: a. Electronic mail from Linda Rose re: Smart Meter Opt Out - Referred to Management. Received and Placed on File b. Electronic mail from Debbie Wolf re: Green Energy - Referred to Management. Received and Placed on File c. Electronic mail from Nichole Biber re: New Gas Plant - Referred to Management. Received and Placed on File d. Electronic mail from Aileen Gow re: Recycle Rama BWL Volunteers - Referred to Management. Received and Placed on File e. Thank You Card from BWL Commissioner Ken Ross - Received and Placed on File f. Late item: Electronic Mail from Ricky Anderson re: Tree Trimming matters—Referred to Management COMMITTEE REPORTS Commissioner Tracy Thomas presented the Human Resources Committee Report: HUMAN RESOURCES COMMITTEE Meeting Minutes May 14, 2019 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, May 14, 2019. Human Resources (HR) Committee Chairperson Tracy Thomas called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Tracy Thomas, Tony Mullen, Sandra Zerkle and Voting Alternate Member David Price. Also present: commissioners Ken ss and 5 10 Non-Voting Commissioners William Long (Delta Township), and Douglas Jester (East Lansing) (arrived pm.) Absent: Commissioner Anthony McCloud Public Comments None Approval of Minutes Motion by Commissioner Mullen, Seconded by Commissioner Zerkle, to approve the Human Resources Committee meeting minutes of September 18, 2018, Action: Motion Carried. FY 2020 Board Appointee Performance Reviews HR Committee Chair Thomas opened the floor for the Board Appointee Performance Reviews, Corporate Secretary ed session for the purpose of receiving her contractual Corporate Secretary M. Denise Griffin requested a clos year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Price, Seconded by Commissioner Jester, to enter into closed session to discuss the contractual year-end performance evaluation of Corporate Secretary M. Denise Griffin. Roll Call Vote: Yeas: Commissioners Tracy Thomas, Tony Mullen, Sandra Zerkle, and David Price. Nays: None. Action: Motion Carried. The Human Resources Committee went into closed session at 5:03 p.m. Motion by Commissioner Price, Seconded by Commissioner Mullen,to reconvene into open session. Action: Motion Carried. The Human Resources Committee reconvened to open session at 5:19 P.M. Upon conclusion of the Closed Session,the following motion was offered: Motion by Commissioner Zerkle, Seconded by Commissioner Mullen, orwarthe full Board forthe tion reappointing M. Denise Griffin to the Charter position of Corporate Secretary for FY20 to Action: Motion Carried. General Manager General Manager Richard Peffley requested a closed session or the purpose of s Act exemption MCL 1nghis c) ntractua year- end performance evaluation as permitted by the Open Meetings Motion by Commissioner Price, Seconded by Commissioner Zerkle, to and ntoclosed session to discuss the contractual year-end performance evaluation of General Manager, RichPeffley. Roll Call Vote: Yeas: Commissioners Tracy Thomas,Tony Mullen, Sandra Zerkle, and David Price. Nays: None. Action: Motion Carried. The Human Resources Committee went into closed session at 5:21 P.M. Motion by Commissioner Price, Seconded by Commissioner Mullen, to reconvene into open session. Action: Motion Carried. The Human Resources Committee reconvened to open session at 5:38 P.M. Upon conclusion of the Closed Session,the following motion was offered: the ution Motion by Commissioner Zerkle, Seconded by Commissioner Mullen, to forwarf u I Board ons derat on.g Richard (Dick) Peffley to the Charter position of General Manager for FY19 to the Action: Motion Carried. Internal Auditor ssion for the purpose of receiving his contractual year-en Internal Auditor, Phil Perkins, requested a closed se performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Price, Seconded by Commissioner Mullen, to enter into closed session to discuss the contractual year-end performance evaluation of Internal Auditor, Phil Perkins. Roll Call Vote: as,Tony Mullen, Sandra Zerkle, and David Price. Yeas: Commissioners Tracy Thom Nays: None. Action: Motion Carried. The Human Resources Committee went into closed session at 5:41 p.m. Motion by Commissioner Price, Seconded by Commissioner Mullen, to reconvene into open session. Action: Motion Carried. The Human Resources Committee reconvened to open session at 5:56 P.M. Subsequent Steps for Board A ointed Em Io ees Contracts ir the Motion b Commissioner Thomas, Seconded by Commissioner Mullen, to cage the HR merit cons der Board Mo Y employees on their respe Chair with the task of working with the appointed on behalf of the Board of Commissioners. Action: Motion Carried, Excused Absence None Other HR Committee Chair Thomas recognized Executive Assistant Smiljana Lazic for her hard work with the groundwork of Human Resources evaluation and its process. otion b Commissioner Zerkle, Seconded by Commissioner Price, to excuse Commissioner McCloud from M Y tonight's meeting. Action: Motion Carried Ad_ ourn Motion by Commissioner Price, Seconded by Commissioner Mullen, to adjourn the meeting. Action: Motion Carried Meeting adjourned at 6:03 p.m. Respectfully Submitted, Tracy Thomas, Chair Human Resources Committee Commissioner Sandra Zerkle presented the Committee of the Whole Report: COMMITTEE OF THE WHOLE Meeting Minutes May 14, 2019 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 6:09 p.m. on Tuesday, May 14, 2019. Committee of the Whole Chair Sandra Zerkle called the meeting to order at 6:09 pm and asked the Corporate Secretary to call the roll. Present: Commissioners Sandra Zerkle, Tony Mullen, David Price, Ken Ross, Tracy Thomas and Non-Voting Members: Doug Jester (East Lansing) and Bill Long (Delta Township). Absent: Commissioners Beth Graham, David Lenz, Anthony McCloud, and Non-Voting Member Dion'trae Hayes (Lansing Charter Township). The Corporate Secretary declared a quorum. Public Comments There were no public comments. Approval of Minutes mmissioner Mullen, to approve the Committee of the Whole Motion by Commissioner Price, Seconded by Co Meeting minutes of March 12, 2019. Action: Motion Carried. IT Overview General Manager Peffley introduced CIO Rod Davenport who presented an overview of the IT Department. Mr. Davenport highlighted the four strategies in which IT is most actively involved—Effectively Acquire and Manage Resources, Implementing New Technologies, Workforce, and Financial Stability. y ., Overwew !" •e.rtment ...n•«-. Overview x 6N." � T .,. ... ....,......,... _r \ +, wemsVO Overview Overview ' rm+.•..a...... .Y .ri++».«,,.w .� ....�'w..�ha ......r++•+.— a �' ..t ..n.. ....... goo...»:.u..wr.n ...+i•�wr COD IT Audt R—d.ui-R-dmap CYbers iry PolipY De elppment Roadm —Operabon IP Wide, , WDIV1eV� erg•-��:� � -•G� .,.-._....,,.._ ,..-..�.,.-,:._.,.....M........,....,. o m o o m .orpmutw"CMn 1 High-Level Organizational Structure - Evolutionary Path Porwazd for R } Evolutionary Path Forward for IT Ovattionsf ww,rr..�...+,. ....;�:................. °�r Commissioner Mullen inquired about the third-party penetration testing with the new OMS outage website. Mr. Davenport responded that the testing went well and a few vulnerabilities were addressed before the system went live. Commissioner Mullen asked what protections have been put into place since last year regarding the report of the security system being hooked up to a PC and the system being opened to the public. Mr. Davenport responded that software for network access control can be put into place on devices in addition to the network infrastructure upgrade that is being considered. Commissioner Long inquired about the cyber security steering committee and the input and expertise of the process. Mr. Davenport responded that the committee helps with organizational change management and provides oversight and guidance for cyber security policies and processes. Mr. Davenport also responded that several BWL staff are certified in cyber security and that BWL has advisory services available. Mr. Davenport reported that drafts of the cyber security policies should be completed by the end of July and comprehension of the policies will be put into effect by the end of December. Commissioner Jester inquired whether the documentation addressed in the audit remediation was process documentation or configuration items. Mr. Davenport responded that policy process and procedure was the majority of the audit information addressed, Mr. Davenport also responded that a configuration management database (CMDB) is being created. Commissioner Long asked whether the budget included the elements IT requires to complete the network infrastructure that is planned and Mr. Davenport responded that throughout the forecasted plan leveraging of IT items will result in fulfillment of IT plans. BSmart Update - Presentation GM Peffley introduced Enterprise Business Interim Manager, Kellee Christensen, who provided information on the BSmart Program. Ms. Christensen highlighted the Advance Metering Infrastructure (AMI), Advanced Distribution Management System (ADMS), Geographical Information System (GIS), Customer Information System (CIS), and Enterprise Service Bus (ESB). Ms. Christensen stated that BWL is investing in technology as the infrastructure is aging and there are some compatibility issues. whRt is bs cin--? Why Invest in these Technologies? tn•Irrrrlwl Broewn cwrwrla•dd rw propcf>b nwv of b MufWydM Mrxr: P✓.',t9,,. Ad+ actkaa+rq kuwrx­(Aw) I-Aging Infrastructure/systems V Aawnced a.mt.rlw, Q c•oPaor•cd Ynw an(w(CCm tell). •Mners { ��+• (?n Wupnw rNco Mp(E5r)� •Mainframe p� .comwuedny ,ijt m•m unene•.wmrmw.ebplcalarob brlro F� B'MbEefw w.w bwn arwW wrWloNp! h .PodpmanC< 1 street q program k r:. ►fern stogy Y +* •Gdtlnrcwr<nl V .... aw...,. f •�y.>=t+ .Suykrr amens ••.•'• nr" r ` ` �., r� rUtiUlyhrnds Q-isrn m•✓1 m/1—�\m%14-.-3�mrr ►8ccamnq tM U(Plty N tM,(utu,c •---� ►t Wtw110ra<rptttatbM Enterprise System Bus OeograpWeal Information E 5 ESB lrpnabrmi a tl common cp es data System to w,d ham all tmaprofed BWL swIams. BWL to store and onolyae aphb dalo �►F'ryn>DMut rebled to or ossels br B ut ues. ®Illnl~+ z7 w�(Zj;+Uarc" '`k'=ie.IwF' i = END µ5 Future GIS Releases ' • Advanced Distribution tSystem ' ""Management System VnWA►r Wn to mor etEuonlN d�sfribule and trlaanope �'�rei a.iM 1 �. •Cra• YMdy to d,oWomms. 1 (l F;MAdvanced Metering Benefits of AMI Benefits of AMI Infrastructure Erodes two•way ape Icotion between Brc aafarrxr aad the am. ..w..,....w AMI Deployment Progress �; Customer Information a•r Its Upcoming protect milestones 1 t.wr•. M..r System .D<pin/mrnt of assets CMtinlm ISrz dathbGsrdl [rghb{MpagY canununiMfgn bolwoan customer / •W I ly WA wtwwk inp Vir" and the BWl .( ►W t IMWIAwn etM retrdn VIX01INn<1t/cwnmwlkatkxl s .: st trp i f ►Opt Wt ltegram q.'�r' r Cusue*w porta f;y D r_ ►Network IS­Le.el Agr<emamtsl SLA v<IMatbn r., fe �" ... ... .......... • ..r.+,.a..v. ►VslMalbn.exUmetuq and ednky wer•.SMgf fw laet D to � IS AL gementlMDEtI ��,,.'��}7 o •Comolea Wind data fw large nntm derNepn¢mt III MDM� •� Y erg ` '4L �'t9T •Int•gratlont W ADMSIGIS Agra a-�}•- }- x}--�}-o t Customer Information System =� •m �� _ ►� .mts n 1 t nl nl a amtpstwner Intwmm.<In and Irunlr •� 1 .�, System tthat is current the 1Amnh•me CIS and field rests �_- .-._ ay Automaion sotlware AIM t iEE ii I,We have beph the Discovery Ph—of the,project filth the Ver dw .It will integrate with GIS,MDM+AMf,Au[o YefdCle lucatlnr(AVLI and ADM5101A5 --- .Gn Ilve 6 pnaetled etamxr of 2D21 a.. :M+I .rF is .Saflwere and Idatrwmc'- • •WsovAt Y r<a4M - Commissioner Long inquired if the ESB time frame is on track, specifically going live in 2019. Ms. Christensen responded that the ESB went live in March 2019. Commissioner Zerkle asked out how the advanced distribution management system helps or impacts the customers and Ms. Christensen responded that from the calls received from customers, the system can predict where the outage is occurring and help with restoration planning. Commissioner Long inquired whether electric meters are installed at the same time as water meters are installed and Ms. Christensen responded that the electric meters are on a schedule. Commissioner Zerkle commented that the public relations aspect of providing information on the Smartmeters was very helpful. Commissioner Jester asked about the ease of customer information system working with third parties and Ms. Christensen responded that with this system public information is easier to distribute. Rules and Regulations for Electric, Water, Steam and Chilled Water Utility Services Rules GM Peffley introduced BWL General Counsel Mark Matus who reported on the changes to the Rules and Regulations for Electric, Water, Steam and Chilled Water Utility Services Rules. FY20 RULES AND REGULATIONS Summary of Proposed Changes Subject: Board of Commissioners update of Rules and Regulations for utility services, including fees and charges. Background: The Rules and Regulations set forth the terms and conditions of utility services, and govern issues such as: • General Provisions • Service Conditions • Use of Service • Metering • Application of Rates • Responsibility for Payment of Bills • Dispute and Hearing Procedure • Distribution System Extensions • Services • Fees and Charges • Compliance • Other individual Utility Issues BWL staff periodically review the BWL Rules and Regulations to recommend changes designed to promote clarity and consistency, address change in practice or procedure, address new issues, and ensure that fees and charges are adequate to cover actual costs. Fiscal Year 2020 changes fall into three categories: (1) Changes designed to address grammar, clarity and consistency across utilities, but not to change the meaning, substance or effect of a rule; (2) Substantive changes that may alter the meaning or effect of a rule; and (3) Fee and Charges increases to recover actual costs where they have increased since the last update in FY18. 1. Non-substantive Changes For clarity: Examples: 10.7.A Prior to the installation of any electric distribution system extension, the BWL must be granted on the Customer's premises, and at no expense to the BWL, recordable easements providing right-of-ways suitable for ingress, egress, installation, and maintenance, including, but not limited to, tree trimming or removal, restoration, replacement, construction, and relocation of the electric distribution system extension including any street lighting cables and distribution equipment as designed by the BWL for present and future service. Revision to Rule 5.7, Rate 5 and 8 Meter Installations o Changed heading to "Primary Rate Meter Installations" instead of"Rate 5 and 8 Meter Installations" 2. Substantive Changes Across Utilities - Electric, Water, Steam and Chilled Water: • Revision of Rule 1, Definitions o Added a definition of"Customer Information" as referenced in the new Rule 2.2 regarding Customer information collection and privacy • Revision of Rule 2, General Provisions o 2.2 -Added language to address Customer information collection and privacy • Revision to Rule 6, Property Owner— Rental Agent Agreement for Automatic Leave-On "ALO" Service o Revision to language to clarify that ALO is a requirement, not recommendation o Added language that failure to enroll in ALO may result in application charges and possible service interruptions until enrolled in ALO • Revision to Rule 9 or 10, Easements o Added language to that in the event the required easement could not be reasonably granted onthe Customer's premises, the BWL may require the Customer to assist in negotiation of any necessary easements on other private property. • Revision to Rule 9 or 10, Non-Standard Equipment o Added language to clarify that when the BWL elects to provide and maintain equipment which differs from its normal specifications, the Customer will have to enter into an agreement and pay the BWL for the purchase, maintenance, and replacement costs of the non-standard equipment. ELECTRIC: • Revision of Rule 1, Definitions o Added definition of"Advanced Meter" due to new use of the term. o Added definition of"Advanced Metering Infrastructure (AMI)" due to new use of the term. o Added definition of"Alternate Primary Service" to replace "Second Service" for clarification and to be more descriptive. o Added definition of"Alternate Primary Source" to replace "Second Source" for clarification and to be more descriptive. o Deleted definition of"Second Service" o Deleted definition of"Second Source" • Revision of Rule 3.2.C, Available Voltage o Changed language to eliminate the availability of new three-wire power service which we no Iongerwish to offer due to safety concerns. Existing three-wire power services are grandfathered in. • Revision of Rule 3.2.E, Available Voltage o Added language to allow Customers who require additional or non-standard equipment the BWL is not willing to install to take primary service voltage instead. The BWL does not want the liability of non-standard equipment that we cannot maintain or replace readily. • Revision of Rule 3.2.F, Available Voltage o Added language to clarify the point of delivery. o Revised language to remove voltages that no longer exist. • Revision of Rule 4.5, Power Factor o Added language to allow the BWL to provide notice and require a Customer to submit a mitigation plan for approval when the Customer's power factor is less than 85%for 6 or more months of any 12 consecutive billing periods; and the Customer is subject to disconnection if the power factor is not adjusted. This add is to enforce the minimum power factor requirement. • Revision to Rule 5.3C, Equipment Location o Added language that when an advanced meter is located indoors and is not communicating, the Customer will be required to pay for BWL to install equipment to establish signal for two- way communication. • Revision to Rule 5.4, Multiple Occupancy Buildings o Added language to require the common meter room of multiple occupancy buildings be located on the ground floor or floor closest to ground level above the flood plain. The BWL does not own or maintain metering equipment for multiple floors such as high-rise buildings. • Addition of Rule 5.8, Advanced Meter Opt-Out Program o Added language of eligibility and ineligibility of the Advanced Meter Opt-Out Program • Revision to Rule 6.3, Choice of Rates o Added language to give BWL the authority to change a Customer's rate, without the consent of the Customer, when the customer is on a rate they are not eligible to receive. BWL will notify the Customer prior to such change. • Revision to Rule 6.8A, Cogeneration and Small Power Production Facility o Added Primary High Load Factor Service— Rate 85 to rate schedule list • Deletion of Rule 6.9, Billing Demand o The revision of Rule 6.3 now addresses this point. • Revision to Rule 10.11, Customer Provided Facilities o Added language requiring the Customer to provide outside space for any BWL transformers and other oil- filled equipment which must be accessible by BWL personnel and equipment for purposes of installation, operation and maintenance of BWL equipment to be consistent with current practices. • Revision to Rule 10.21, Distribution System Extensions for Second Source o Revision to use new defined term of alternate primary source in place of second source. o Added language that Customer will be responsible for all operation and maintenance costs. This is a new requirement placed on Customers as currently the BWL is bearing all 0&M costs. o Added language that an alternate primary source does not guarantee capacity on the circuit and related equipment to be able to carry the load of the Customer at all times because the BWL does not have "reserve" capacity agreements or pricing for such an agreement. • Revision to former Rule 11.11, now Rule 10.22, Second Service o Moved to Rule 10 to keep distribution system extensions together. o Revised section heading to be Distribution System Extensions for Alternate Primary Service for clarity o Revision to state the Customer may request an alternate primary service, because is previously read a Customer could automatically have it which is inaccurate; the BWL must approve. o Added language that Customer will be responsible for all operation and maintenance costs. This is a new requirement placed on Customers as currently the BWL is bearing all O&M costs. • Revision to Rule 11.7A, Commercial and Industrial Underground Services o Revision to remove secondary attachment on the pole because the BWL does not want customer-owned facilities on BWL structures. • Revision to Rule 11.76, Commercial and Industrial Underground Services o Revision to language to clarify the Customer, not BWL, will install direct buried electric secondary service conductors and be responsible to maintain because this is the customer's side of the meter and this work is delegated to local electricians. • Deletion to Rule 11.7E, Commercial and Industrial Underground Services o Removed to eliminate BWL doing work on Customer's secondary service conductors as this work is delegated to local electricians. • Revision to Rule 11.7F, Commercial and Industrial Underground Services o Revision to clarify a single secondary service in excess of 2000 Amperes must be installed using a cable bus or bus duct, if approved by the BWL because this is limited by the number of parallel conductors that can be installed. • Revision to Rule 11.8A, Multi-Dwelling Structure Services o Revision to remove secondary attachment on the pole because the BWL does not want customer-owned facilities on BWL structures. • Revision to Rule 11.86, Multi-Dwelling Structure Services o Revision to language to clarify the Customer, not BWL, will install direct buried electric secondary service conductors and be responsible to maintain because this is the customer's side of the meter and this work is delegated to local electricians. • Revision to Rule 13.2, Authorized Attachments o Added language that new non-pole owner permit applications are limited to 50 poles per application. This is a BWL requirement due to limited resources. o Added language that If the BWL concludes the proposed attachment could jeopardize the physical integrity of its distribution poles, the BWL may require certification of the proposed route by a licensed professional engineer. This is a new requirement BWL is placing on attacher. Attacher is altering pole construction so putting requirement on them to verify attachments do not jeopardize the physical integrity of the pole. o Added language that the installation or maintenance of applicant's equipment on poles owned by a third- party, will require an agreement between the pole owner and the BWL, and a separate agreement between the BWL and the applicant to be consistent with current practices. • Revision to Rule 13.6, Payment of Fees o Revision of late fee from 5%to 2% because 2% is what is being used operationally. WATER: • Revision of Rule 1, Definitions o Added definition of"Advanced Metering Infrastructure" due to new use of the term within the rules regarding AMI. o Added definition of"Module" due to new use of the term within the rules regarding AM I. • Addition of Rule 5.7, Advanced Meter Opt-Out Program o Added language of eligibility and ineligibility of the Advanced Meter Opt-Out Program. • Revision to Rule 6.3, Choice of Rates o Added language to give BWL the authority to change a Customer's rate, without the consent of the Customer, when the customer is on a rate they are not eligible to receive. BWL will notify the Customer prior to such change. • Revision to Rule 11.26, Application for Services o Deleted Dewitt Township as a township requiring their customers to apply with the township. They want their customers to contact BWL directly. STEAM: • Revision to Rule 6.3, Choice of Rates o Added language to give BWL the authority to change a Customer's rate, without the consent of the Customer, when the customer is on a rate they are not eligible to receive. BWL will notify the Customer prior to such change. CHILLED WATER: No substantive revisions 3. Fees and Charges Charge Description When Applied FY18 Charge ,Proposed FY20 Charge Pole Attachment Fees: Po''11it.ppli11ti 1I',e-and Posl-Censlruction R1me1,along with all Appl�cablc Englneenng and Each occurrence At cast At cost ;'lake R-dy Canstnicticn Annual Pale Rental Fee Annually $12 per attachment,$300 minimum Per Pole Attachment Rate 43 Directs to applicable Rate 5G Vvireless Antemm Rental Fee On Existing Pole Annual) $50 per antenna with 10%increase New fees per law I ) Y DID NOT EXIST every 5 yrars SG Wi, lesti Aotenna Rental Fce(New Polo Installation) Annoolly DID NOT EXIST $150 per antenna New fees per law Failure to Transfer Each occurrence after the due slate via the agreed upon 3 times annual attachment fee per 3 times annual attachment fee per notification system attachment per month attachment per month Unauthorized Attachment Each occurrence30 days cfte notification via the agreed 3 times annual attachment fee per 5 times annual attachment fee per upon notification,y:tani attachment per month To be consistent with Rate 41 P attachment per month Non-refundable Application Fee Each occurrence $33 per pole,$495 minimum $50 per pole,$500 minimum Adjusted to market rate Map Page Fee Each Request-Electronic DID NOT EXIST $2t1 per request New fee to cover costs Each Request-Per Map Page io Bard Copy DID NOT EXIST S20 per page New fee to cover costs Same-Day Service:By the end of the same calendar day of Connect(Turn-on/turn-off)I�ee the ordenrgr being taken.Service orders taken after 3:00 $150 $165 For consistency with Water p.m.weekdays will be completed by the end of the day, Same-Day Service:By the end of the same calendar day of Reconnection Fee the ordenm„being taken.Service orders taken after 3:00 Non-Pay or other p.m.weekdays or during the weekend will be completed by $150 Slu 5 For consistency with Water the end of the day. Meter Tampering Each occurrence $265 $275 For consistency with Water Interference Fee Each occurrence $265 5275 For consistency with Water One Time-Electric Only-Per Meter DID NOT EXIST $115 One Tin,-Electric&Water DID NOT EXIST 5:190 Advanced Meter Opt-Cut Fee One Time-Electric,Water&Irrigation DID NOT EXIST $315 Added due to language in Rule h4onthly-Electric Only Per Meter DID NOT EXIST $10 5.8 Monthly-Flertric&Water DID NOT EXIST S25 Monthly-Electric,Water&Irrigation DID NOT EXIST S25 Charge Description Win FY18 Charge Proposed FY20 _ en Charge APP Iled Y.of the chargefor either side of street if not previously Water Main Front Footage Recovery collected. On 16" $190/ft $197/ft Adjusted to cover costs of labor,materials and equipment Up to and Incl.1"Water Service Main-to-Curb Box Stub on previously Installed $2,300 per stub plus $2,700 per stub plus Adjusted to cover costs of labor, water mains restoration restoration cost materials and equipment _ cost„ __.. $845 minimum,$18/ft in - - - - - Curb Box-to-Building(Trenched) $810 minimum,$18/ft in excess of 45 feet plus Adjusted to cover costs of labor,materials and equipment excess of 45 feet plus restoration cost restoration cost $1,850 Minimum,$30/ft in --- -- --- - - - CurbBox-to-Building(Bored) $1,550 Minimum,$25/ft in excess of 45 feet plus Adjusted to cover costs of labor, excess restoration cost materials and equipment of 45 feet plus restoration _ _. ..........._. cost _.. $290 _. ... Water Services(Board Installed) Adjusted to cover costs of labor, (Connection Fee applicable) Indoor Meter Set Y"—Standard $270 materials and equipment Indoor Meter Set Y."-With Split Irrigation $375 Adjusted to cover costs of labor, ---- 53,015 materials and equipment Domestic or Irrigation Outdoor%"Meter Set $2,850 Adjusted to cover costs of labor,materials and equipment with Meter pit Outdoor Y.Meter Set with Meter pit—Customer Adjusted to cover costs of labor,materials and equipment Choice $155 Program(labor only) $385 Retrofit of existing service to allow for split $375 Adjusted to cover costs of labor,materials and equipment Domestic or Irrigation Service $180 Charge for setting meter on a split service after $160 Adjusted to cover costs of labor, Initial $.180 materials and equipment installation Service Meter Pit set—Customer Choice Program Adjusted to cover costs of labor,materials and equipment (labor $155 only) When requested by Customer Up to and Including 1"Curb Box-to-Meter Pit $120 5130 Adjusted to cover costs of labor,materials and equipment Service Demolition Up to and including 1"Curb Box-to-Building $235 $245 Adjusted to cover costs of labor,materials and equipment Winter Construction Charge Water Services,2"and under $10/Trench h $11/Trench ft Adjusted to cover costs of labor,materials and equipment Upon occurrence For Services Up to 1" $250 Adjusted to cover costs of labor,materials and equipment Damaged Meter Charge -- - $2B0 For I'Services $320 Adjusted to cover costs of labor, 5330 materials and equipment After a running water order has been issued Thawing Service Charge Up to and Ind,2"and up to 2 hours $235 5245 Adjusted to cover costs of labor, materials ande ul ment Domestic Service Inspection Fee Each Inspection visit for 2"or less diameter Adjusted to cover costs of labor, (Customer Choice Program) services only— $165 5195 materials and equipment no engineering drawings or service evaluation required, Permit Application Adjusted to cover costs of labor, Customer Choice Program) Initial request by contractor seeking qualification$400 $410 materials and equipment BULK WATER PERMIT 1"RPZ backflow device plus $850 $795 Adjusted to cover costs of labor,materials and equipment Temporary Hydrant Usage for construction,festivals and governmental 2"RPZ backflow device plus $1,490 Adjusted to cover costs of labor, special use by special permit. $1,385 materials and equipment Same-Day Service:By the end of the same Adjusted to cover costs of labor,materials and equipment Connect(Turn-on/turn-off)Fee calendar day ofthe ordering being taken. $150 5165 Service orders taken after 3A0 p.m.weekdays will be completed by the end of the day. Same-Day Service: By the end of the same Reconn calendar day of the order being taken.Service $150 $165 Adjusted to cover costs of labor,materials and equipment ection orders taken after 3:00 p.m. weekdays or Fee during the weekend will be completed by the Non- end of the day. pay or other 1st Occurrence $500 $500 Water Theft Penalty Fee 2nd Occurrence Up to$1,500 Up to$1,500 Removed this fee from Bulk Water Permit section and reinserted here so It Is applicable In all Instances,not justto 3rd Occurrence Up to$5,000 and permit Up to$5,000 and bulk water bulk water permit revocation permit revocation,if customers applicable Meter Tampering Each Occurrence $265 $275 Adjusted to cover costs of labor, materials and equipment Customer request meter calibration check Is within plus or Meter Calibration Charge minus 1.S%of accuracy Up to 2"meters $175 $195 Adjusted to cover costs of labor,materials and equipment Interference Fee Each occurrence $265 S27 5 Adjusted to cover costs of labor,materials and equipment One Time-Water Only- DID Sl?$ Per Meter One Tinu•- NOT $190 Advanrcrl Meta Fce Electric&Water EXIST $315 Added due to language in Rule 5.7 Opi-Out One Time-EIr,7ric,Water DID $20 &Irrigation Monthly- NOT $25 Water Only-Per Meter EXIST $25 Monthly-Electrc&Water DID Monthly-Flech-ir.,Water&Irrigation NOT EXIST DID NOT EXIST DID NOT EXIST DID NOT EXIST CHILLED WATER FEES and CHARGES Charge Description When Applied FY18 Charge Proposed FY20 Charge Same-Day Service:By the end of the same calendar day of Connect(Turn-on/uoo-nffj Fee the orderlr+ being taken.Service orders taken after 3:00 $150 $165 For consistency with Water p.m.weekdays will be completed by the end of the day. Same-Day Service:By the end of the same calendar day of Reconnection Fee the orderly;being taken.Service orders taken after 3:00 Non-Pay or other p.m.weekdays or during the weekend will be completed by $150 S105 For consistency with Water the end of the day. Meter Tampering Each occurrence $265 1$7.75 For consistency with Water Interference Fee Each occurrence $265 15215 For consistency with Water STEAM FEES and CHARGES Charge Description When Applied FY 2016 Charge Proposed FY20 Charge Same-Day Service:By the end of the same calendar day of Connect(Tm n-oniturmoff)Fee the ordering being taken.Service orders taken after 3:D0 $150 $165 For consistencywith Water p.m.weekdays will be completed by the end of the day. Same-Day Service;By the end of the same calendar day of Reconnection Fee the ordering being taken.Service orders taken after 3:00 Non-pay or other p.m.weekdays or during the weekend will be completed by $150 $165 For consistency with Water the end of the day. Meter Tampering ]Anytime $265 $275 For consistency with Water Interference Fee lAry time $265 $275 For consistency with Water Meter Calibration Char When Customer requested meter calibration check is within ge plus or minus accuracy $175 5195 For consistency with Water Commissioner Zerkle requested an example of a customer being removed from a billing program and Mr. Matus responded that if a customer is in a flat rate program of equalized payments, the data obtained can be removed to change the program for the customer. Commissioner Long asked about an instance where the customer is no longer eligible for a program and Mr. Matus responded that the system will remove customers from programs for which they are no longer eligible based on data the system obtains. Commissioner Mullen asked why BWL has rules and regulations when there are laws that are applicable and Mr. Matus responded that BWL has policies and procedures in place to conduct BWL operations. Commissioner Long asked about the alternate service and BWL guaranteeing or not that BWL is able to supply power. Mr. Matus responded that BWL guarantees power if BWL provides the alternate service but not if the customer installs the alternate service. GM Peffley responded that capacity cannot be just provided to every business that requests alternate service but an appropriate rate needs to be set. Commissioner Long asked about the fees for customers that wanted to attach to poles and Mr. Matus responded that there are two types of customers, customers that want to attach an antenna and customers that want to put up lines, and contracts are made with these customers. Commissioner Zerkle inquired about the opt out system. GM Peffley responded that the opt out system is a service and the customer can have an electric meter rather than a Smartmeter but the customer will pay the cost for the meter reader. Commissioner Zerkle also asked about the same day re-instatement of service if payment is made by 3:00 pm. Executive Director of Customer Operations and Communications, Steve Serkaian, responded that requests are to be made by 3:00 pm to eliminate overnight service turn-ons. Motion by Commissioner Price, Seconded by Commissioner Thomas to forward the proposed Resolution for Rules and Regulations for Electric, Water, Steam and Chilled Water Utility Services Rules with an amended effective date of July 1, 2019 to the full Board for consideration. Action: Motion Carried BWL Planning Process GM Peffley introduced Executive Director of Strategic Planning and Development, Brandie Ekren, who presented BWL's long-term and strategic goals planning process. Planning Process P4nnfnKlMlunmentScope k -iT.?*.r. >`".L"""m�".i'w�.•"."a.o-. ,..,a'1:. "'r�.uv'..""r Mu.w.,a.«w. .W...wt.w N+.r.�.r... Jz •• .' ... t ..........,.•«.It pxclft rJItl510L6AD0A45 t'ILnPOrCLBLvowtrroan. ko .t w.v«..... r.0 y( ..—.w..u.v.. rr,wr. Awu«w.varr.wi. ..r•u .x+.rurw..•w.«..«yur....xrr { ......w..i-.a`r..rnm..—....r _` uw.-t•...vavw vw�,MM `WoiYnm�—LL..• r . :i Mnn N�u w'.rrw a wn.e r.w....r "• ..........«+u.. �. ..u....,..w rti.vwwnn n....... . ....u. ... .........w...,.. -,..nn...`^,V..........r.......u- VO .�MN••••..N1tr:G19rwp hn I..wxnw+.n van Wt.[:'.ws n.oa.µ�t rcun p. um .vrnlw.wrnp,nYn.navl L.1«rarrWva.l mwa..ut. i�.�Y•trw`ro,-+�-ttrr•.r1..r..rw..nrrr u.. «..n..v........«... MN.✓M++n wA.*r+r 4tr'•W..".. •`.'�1�'��r':C'w.w.r.vsr..�r....r..�,.. •r..ar..r . n w ...r.. ^ .Xrp.w Commissioner Long inquired whether there was a standard education process and what the plans were for communities outside of Lansing. Ms. Ekren responded that there is a standard questionnaire that educates on the integrated resource process and that there are plans to meet with mayors and other people in the community. A sustainability program has also been requested from the communities. Commissioner Ken Ross left the meeting at 7:00 p.m. (No Quorum at this point) New Plant Update GM Peffley gave an update on the new plant. There will be a groundbreaking celebration on Monday, June 3, 2019, Equipment has been procured at favorable costs and BWL is acquiring labor. BWL is working on a GMP, the guaranteed maximum price for the plant and in July 2019, a 60% GMP will be obtained and in January 2020 a 90% GMP will be obtained. Value engineering is being completed and a design is being worked on with Black & Veatch. A gas line is coming in from Consumers Energy and the first stage of the gas line will be online soon so that operations can be completed April 2021. The peaker unit will be brought on by December 2020 to cover the gap of the Eckert plan going offline in December 2020. Amending Appointment to Michigan Public Power Agency (MPPA) Resolution General Manager Peffley stated that the presented Resolution is naming Dave Bolan as the BWL's MPPA Commissioner to replace Robert LaLonde who resigned his position with the BWL effective April 19, 2019 and asked that the Resolution be forwarded to the full Board for consideration. Board Chair Price stated this resolution will be brought forward at the upcoming Board meeting. Other Board Chair Price acknowledged the absences of Commissioner Hayes and Commissioner McCloud as there was not a quorum for an official motion of excused absence. Ad'ourn Motion by Commissioner Price to adjourn the meeting. The meeting was adjourned at 7:58 p.m. Respectfully Submitted Sandra Zerkle, Chair Committee of the Whole Commissioner David Price presented the Finance Committee Report: FINANCE COMMITTEE Meeting Minutes May 14, 2019 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, on Tuesday, May 14, 2019. Finance Committee Acting Chair David Price called the meeting to order at 7:59 pm and asked that roll be taken. Present: Commissioners Beth Graham, Anthony Mullen, and David Price. Also present: Commissioners David Lenz, Tracy Thomas and Sandra Zerkle, and Non-Voting Commissioners Douglas Jester (East Lansing) and Bill Long (Delta Township). Absent: Commissioner Ken Ross The Corporate Secretary declared there was a quorum. Public Comments None. Approval of Minutes Motion by Commissioner Graham, Seconded by Commissioner Mullen, to approve the Finance Committee meeting minutes of March 12, 2019. Action: Motion Carried. March YTD Financial Summary Chief Financial Officer (CFO), Heather Shovva presented the following: x _F-f-t- ----^-----~ ~ Cash on hand is above target and is expected to remain above target the rest of the year. The Income Statement indicates that the total revenue is above budget and operating expenses are 4% under budget with YTD projections expected to end up at budget. Net Income is exceeding the initial budget with just over $30 million being projected at the fiscal year end. Capital Budget is slightly under spend however with construction season arriving it is expected that the approved budget will be spent, along with an extra $3 million for the Central Sub Exceedance. Ms. Shavva stated that the three of the five ratios are being met. Payroll regular labor data is under budget due to vacancies, however, overtime is up, in part due tothe vacancies and capital project work, which were the central substation, the Erickson outage, and e|ectricT&D annuals. FY20 Operating Budget and Forecast Presentation — Resolution CFO Heather5havve presented the FY%O Operating Budget and Finance Manager, Scott Taylor presented the FY 20 Forecast Ms. 3havva noted the forecasted increase in electric-consumption volume after the new plant is placed online. Ms. Shavva pointed out that additional security will be added to Eckert as it is being decommissioned. Mr. Taylor noted the increasing revenues in FY20-I2 due tothe new plant being online and the RC}A key target which will be attained in 2024. Mr. Taylor also noted that one of the key factors of the ROAb the rate increases through 2OZ4 that have been approved, Budget and Forecast FY, .b. —..».« erar.s rni..: wIWMM w,...ti.rM.nyrw.a..Mab a....:......•w.r+<b.vw•....w.W.vw..v.yw.....+.w .....a>.WMr...o...��1�«•W.�.w:..�.[....Nv»» .ram MAN r « •lY.avJirw:.a'��.y..m�NW.I.�•>.I.v....•.:a �—� `- A .=_ .«rw. Commissioner Long inquired about the projected increase in wholesale. In response Ms. Shawa stated that this year the unplanned outage at Belle River and the outage at Erickson power was unable to be supplied. Delta Energy Park and Erickson will also be online at the same time in the future. Commissioner Long requested a comparison of depreciation on existing assets and capital expenditures. Mr. Taylor referred to the 6-Year Income statement and the 6-Year Cash Flow and responded that depreciation is broken down by year and capital expenditures exclude Delta Energy Park. Motion by Commissioner Thomas, Seconded by Commissioner Mullen, to forward for consideration the FY20 Operating Budget and Forecast Resolution as presented to the full Board. Action: Motion Carried Status of Managements' Response to Recommendations of Audit Report 2018-04-Customer Arrangements &Third-Party Payments GM Peffley introduced Steve Serkaian, Executive Director of Customer Operations and Communication, who reviewed a response to a payment arrangement audit that was submitted on July 31, 2018. Recommendations and updates were provided. Commissioner Long asked what percentage of customers that have arrangements are commercial and residential. Mr. Serkaian responded that 88% are residential. Commissioner Long also asked if there is an average amount of what is owed or if there are instances where the amount owed is so high that it will never be paid. Mr. Serkaian responded that extraordinary instances involve only a few customers and longer-term arrangements are made in those circumstances. Other Motion by Commissioner Mullen, Second by Commissioner Thomas to excuse Commissioners Ken Ross and Anthony McCloud from tonight's Meeting. Action: Motion Carried Adiourn Commissioner Price adjourned the meeting at 8:39 p.m. Respectfully submitted David Price, Acting Chair Finance Committee Commissioner Tracy Thomas presented the Human Resources Committee Report: HUMAN RESOURCES COMMITTEE Meeting Minutes May 21, 2019 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 4:30 p.m. on Tuesday, May 21, 2019. Human Resources (HR) Committee Chairperson Tracy Thomas called the meeting to order and asked the Corporate Secretary to call the roll. The following members were present: Commissioners Tracy Thomas, Tony Mullen, Sandra Zerkle and Voting Alternate Member David Price. Also, present: Commissioners Beth Graham, David Lenz. Also present via phone, Commissioner Ken Ross and Non-Voting Commissioner Dion'trae Hayes. Absent: Commissioner Anthony McCloud Public Comments None Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Zerkle, to approve the Human Resources Committee meeting minutes and the Closed Session meeting minutes of May 14, 2019. Action: Motion Carried. Interview Candidates for the Charter Appointed Position of Internal Auditor The Human Resources (HR) Committee Interview three candidates for the Charter Appointed position of Internal Auditor, in accordance with Section 5-202.2 of the Lansing City Charter, which states: "The Board shall appoint an Internal Auditor who shall report directly to the Board. The Internal Auditor shall serve at the pleasure of the Board." The HR Committee members presented the three candidates with hypothetical situation questions as well as questions about previous experiences in particular work areas. At the liberty of HR Committee Chair Thomas, the Human Resources Committee meeting recessed upon conclusion of each interview to allow the interviewing candidate to exit. The meeting reconvened at the arrival of the next interviewing candidate. Upon conclusion of the final interview, the HR Committee completed the Rubrics scoring and deliberated on each candidate. The following motion was offered upon conclusion of deliberations: Motion by Commissioner Price, Seconded by Commissioner Zerkle to submit by Resolution the selection for the Charter appointed position of Internal Auditor, to the full Board for consideration. There was a lengthy discussion regarding a compensation package for offering. The HR Committee directed BWL's Human Resources Executive Director Flowers to extend an offer to the chosen candidate and to finalize the compensation package as discussed on behalf of the Board of Commissioners. Excused Absence Motion by Commissioner Price, Seconded by Commissioner Mullen to excuse Commissioner McCloud from tonight's meeting. Action: Motion Carried Other None Adiourn Motion by Commissioner Price, Seconded by Commissioner Mullen, to adjourn the meeting. Action: Motion Carried Meeting adjourned at 7:55 p.m. Respectfully Submitted, Tracy Thomas, Chair Human Resources Committee MANAGER'S RECOMMENDATIONS General Manager Peffley recommended that the Board approve the Resolution Amending Appointment to Michigan Public Power Agency before the Board that evening. RESOLUTION #2019-05-01 Amending Appointment to Michigan Public Power Agency WHEREAS, Robert Lalonde is the Michigan Public Power Agency (MPPA) Commissioner on behalf of the Lansing Board of Water & Light (BWL), along with James Mitchell and Constance Carantza, who serve as First and Second Alternate Commissioners, respectively; and WHEREAS, Robert LaLonde resigned his position with the BWL effective April 26, 2019; and WHEREAS, David Bolan has served as the BWL's Executive Director of Operations for approximately 4 years; and WHEREAS, it is necessary and appropriate to name a replacement MPPA Commissioner on behalf of the BWL. NOW, BE IT RESOLVED, that Dave Bolan is named the MPPA Commissioner on behalf of the BWL. FURTHER RESOLVED, that James Mitchell will remain as BWL's First Alternate MPPA Commissioner. FURTHER RESOLVED, that Constance Carantza will remain as the Second Alternate Commissioner. Motion by Commissioner Thomas, Seconded by Commissioner Mullen, to approve the Amending Appointment to Michigan Public Power Agency Resolution. Action: Motion Carried. UNFINISHED BUSINESS There was no Unfinished Business. NEW BUSINESS There was no New Business. RESOLUTIONS/ACTION ITEMS RESOLUTION #2019-05-02 Rules and Regulations for Electric, Water, Steam and Chilled Water Utility Services RESOLVED, that Fiscal Year 2019-2020 Rules and Regulations for Electric, Water, Steam and Chilled Water Services be approved as presented,to be effective July 1, 2019. n b Commissioner Zerkle, Seconded by Commissioner Thomas,to approve the Rules and Regulations Motto y for FY 20. Action: Motion Carried. RESOLUTION #2019-05-03 Fiscal Year 2020-2025 Bud et and Forecast LVED that the Annual Operating and Capital Budget covering Fiscal Year 2020 is hereby approved as RESO , presented; and OLVED that the Operating and Capital Forecast for the Fiscal Years 2021-2025 is hereby accepted as RES , presented; and FURTHER RESOLVED, 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: Staff rec ommends an operating and maintenance budget of $331.8M and a capital budget of $295.OM for Fiscal Year 2020. Operating and Capital Forecast for Fiscal Years 2021-2025 includes potential have not been approvedlthroughra The Oper g 2021-2024. The potential rate increases are for forecast purposes bj y an n and, in any case, prior to public rate hearing process. The forecast rate increases are Inubjeo e° as perCity Charter, Section implementation, must be subject to the BWL's formal rate setting p 5-205 which refers to the BWL's authority to set just and reasonable rates and defines the public hearing process. 2, Section _ Section nce with the provisions of the Lansing City Charter, Article 5, Chaand fo ecast for presentationa In accordance 5-203.6, staff recommends the Finance Committee approve the budget adoption by the Board at its May 28, 2019 board meeting. rove the FY 2020-2025 Motion by Commissioner Ken Ross, Seconded by Commissioner David Lenz, to approve Budget and Forecast Resolution. Action: Motion Carried. MANAGER'S REMARKS General Manager Peffley informed of the following: 1. Delta Energy Park groundbreaking will be onsit ati Monday,agents 3, 2019 t 11:300 AA- rating and the 2. Delta Energy Park bond issuance is on track. release of debt reserve fund. CFO Shawa will send out a reanod the POS wi I bece it is epublished Friday,investor relations page is on the BWL external website for viewing 31, 2019. Retail pricing will be June 12, 2019 and institutional market pricing will be June 13, 2019. 3. BWL, EPA, and Consumers Energy hosted a Water and Power Black Sky workshop at the REO Depot on May 16, 2019. The event focused on increasing coordination and ao dness forson a widespread power between water d electric utilities, emergency services and to enhance regional prep outage. More than 60 agencies attended the event. 4. BWL participated in the Safety Patrol picnic with LPD and Lansi Area Safety ece ve annedu ationton what 0 children had an opportunity to learn about careers in skilled trades to do when there is a downed power line. 5. 1st S.T.E.P. graduation ceremony was held on May 15, 2019. It is ore than $100,000 he 11th year of the pro college grant 5 students have graduated from the program since it started and have been given. 6. The Mackinac Policy Conference will be held May 29 through May 31, 2019 and BWL executive staff will be attending. COMMISSIONER'S REMARKS Commissioner Zerkle commented that the Labor Community met them toith the ayor and, in the process of trying eak with GM Peffley and Michael to get interns and skilled trade people,they spent time convincing p Flowers, Executive Director of Human Resources, about the 1st S.T.E.P. program o there was an apprentice M Peffley responded that BWL is willing to work with them and about 6 s a g opening for underground workers and 17 people applied. Commissioner Zerkle also thanked Commissioner Long and Commissioner Hayes for their service. Commissioner Hayes thanked the Board of Commissioners, GM Dick Peffley and Corporate Secretary Denise Griffin for the recognition tonight and her thanks for the opportunity seats bring in the voti g rings commissioner seat. Ms. Hayes suggested that the additional three commissioner he ratepayers should have a voice in the organization. Commissioner Long thanked the Board of Commissioners and staff for the opportunity and that it has been an education process for him. He thanked the Commissioners and staff for quick respo hend dn't seses to re s ques any bons a e concerns and, although he would also like the additional seats to be voting seats,in the responses from staff. ciation to the outgoing Com for their reappo nitments ssioner Thomas also Commissioner Thomas expressed his appre congratulated General Manager Peff rnley and Auditor Phil Perkins a wonderfulporate ary retirement. He also thanked Commissioner Thomas wished Internal Executive Assistant, Smiljana Lazic, for her assistance. MOTION OF EXCUSED ABSENCE None. PUBLIC COMMENT None. ADJOURNMENT :hair Price adjourned the meeting at 5:52 p.m. Denise Griffin,Corporate secretary aiinninary Minutes filed(electronically)with Lansing City Clerk: June 18,2019 iciai Minutes filed(electronically)with Lansing city Clerk: July 24,2019 Approved by the Board of Commissioners 05-28-19 7.. Hometown People. Hometown Power.. MINUTES OF THE BOARD OF COMMISSIONERS MEETING LANSING BOARD OF WATER AND LIGHT March 26, 2019 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 March 26, 2019. Chairperson David Price called the meeting to order at 5:30 p.m. Present: Commissioners David Price, Beth Graham, David Lenz (@5:35 p.m.), Anthony McCloud, Anthony Mullen, Ken Ross, Tracy Thomas, and Sandra Zerkle. Non-Voting Commissioners present: Dion'trae Hayes (Lansing Charter Township), and William Long (Delta Township). Absent: Commissioner Douglas Jester The Corporate Secretary declared a quorum. Commissioner Long led the Pledge of Allegiance. Commissioner Price presented a 10 year service award to Internal Auditor Phil Perkins and announced the Mr. Perkins would be retiring in August 2019, APPROVAL OF MINUTES Motion by Commissioner Mullen, Seconded by Commissioner Thomas, to approve the Regular Board Meeting minutes of January 22, 2019. Action: Motion Carried PUBLIC COMMENTS Claude Beavers, Lansing, MI, asked for a dollar amount of the savings to the Board of Water and Light to contract with a tree service to trim trees in the city as opposed to having BWL employees and equipment to do the trimming. COMMUNICATIONS Electronic Mail received From or Re: a. Electronic mail from Brenda Shedrick re Water Meter Concerns - Referred to Management. Received and Placed on File Commissioner Sandra Zerkle presented the Committee of the Whole Report: COMMITTEE OF THE WHOLE Meeting Minutes March 12, 2019 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, March 12, 2019. Committee of the Whole Chair Sandra Zerkle called the meeting to order at 5:30 pm and asked the Corporate Secretary to call the roll. Present: Commissioners Sandra Zerkle, Beth Graham, David Lenz, Tony Mullen, David Price, Ken Ross, Tracy Thomas and Non-Voting Members: Doug Jester (East Lansing) (arrived at 5:36 p.m.) and Bill Long (Delta Township). Absent: Commissioners Anthony McCloud, and Non-Voting Member Dion'trae Hayes (Lansing Charter Township). The Corporate Secretary declared a quorum. Public Comments Elaine Dierwafischoff spoke regarding the necessity to transition to clean renewable energy sources and BWL's invitation to discuss what should be included in a new IRP. Approval of Minutes Motion by Commissioner Thomas, Seconded by Commissioner Graham, to approve the Committee of the Whole Meeting minutes of January 8, 2019. Action: Motion Carried, Surplus Property to Habitat for Humanity General Manager Peffley spoke about the BWL vehicle that is being donated to community partner Habitat for Humanity. BWL's procurement policy allows for the donation of personal property, although no vehicle has been donated before. Habitat for Humanity is in need of a vehicle and the value of the pickup being donated was determined to be $1500. Commissioner Zerkle commented that the donation is a great idea and is Hometown Power Hometown People taking care of one another. Outage Management Systems (OMS) GM Peffley gave an update on the Outage Management System. OMS went live today, March 12, 2019 The map is available on the BWL app and is transparent for customers. Commissioner Mullen commented on the extensive number of call-ins by customers during the 2013 ice storm and asked if the new system was tested to determine whether 100,000 calls could be taken. GM Peffley responded that the new system has been stress tested and is able to handle that many calls and is user friendly. Commissioner Zerkle commented that during the last outage she experienced as a BWL customer, she received a notification from the system that service had been restored right after restoration. GM Peffley added that the response system was implemented two years ago so that any customer whose power was not restored after a group outage could notify the BWL. Communications Survey Results GM introduced Mr. Stephen Serkaian, Executive Director of Operations and Communications who presented and reviewed the results of the Communications Survey (see below). Mr. Serkaian highlighted where employees receive their internal and external information from the BWL and the HPTV platform. I4v uhm tb Yogi rnJ te,•u•W,Y,^+•o'+•Yenyn!J .�. Ym,t,6r.ueat mlxmxvn va.,a�l.+vtwnK y .. .- why wtAHW.Hww�;wvJ wiu:e lu.na ' .r. ._�� ` r. " it`11 I• •e 1wri •vmr u-ut>H � W..«...w_µ.n..mervwe•.v •t,ivl.mMn,ty vwwiwrot thw ann^c uM Mlxnad J9 YOu tM r,N.n,•d{SO Mp+Je,pnJlc n.mwn d Iµ++BKt t,n vry>,xrl e.M - ,.. ... nr.w..•...;rm.+w..Y••M camn•mratw„t!he BWL1 vtnrMn�on w+tb•.upnan�cwm,nY .-rvxrn Nwga•mJwnmc+vxne,tvn,i N,P, `.....^..«� .,n•n w..w..rn umew.+nw.. _ ..wn.v There was dialogue regarding the implementation of the HPTV's, in which Mr. Serkaian stated, the implementation, was in part, a result of employees' desire to receive regular updates and information from other departments within the company. Commissioner Mullen commented that supervisors are important for communicating and explaining information that is provided for the employees. Commissioner Jester commented that if one department specifically wants information from another department, the information can be provided in a targeted way on the HPTV. Commissioner Price questioned if any thought had been given to the preferred method of communication according to age demographics. In response, Mr. Serkaian stated that, that information could be obtained from the results of the survey and could be provided to the Commissioners. Commissioner Graham questioned if the results of the survey were representative of all employees. GM Peffley responded that every employee was provided access to the survey. General Manager's Updates GM Peffley spoke about the following items: 1. BWL Bottled Water. BWL is considering producing bottled water with BWL's name on it to put BWL water outside of the service territory. BWL is researching environmentally friendly bottles. 2. Introduction of Diversity and Inclusion Committee. GM Peffley introduced Executive Assistant Smiljana Lazic who spoke about the Diversity and Inclusion Committee. The Committee consists of six non- bargaining members and six bargaining members along with Ms. Lazic and Executive Director of Human Resources Michael Flowers. The committee members are spread throughout BWL facilities in order to collect concerns, identify areas for improvement, and to obtain feedback from employees. 3. Union Leadership & BWL Executive Staff Meetings. GM Peffley spoke about the monthly scheduling of meetings between directors that was initiated three months ago and that the meetings have been very productive. 4. Organizational Change Management. Executive Director of Human Resources Michael Flowers spoke about work force initiatives and the Emerging Leaders Program where individuals are selected to participate in a training and development program in order to help them develop into leaders of the future for the BWL. BWL selected 22 employees out of 60 applicants for a 15-month, one day a week, training session. Mr. Flowers also spoke about organizational change management regarding the BSmart project and ADKAR (Awareness, Desire, Knowledge, Ability, Reinforcement.) 5. General Manager Round Table. GM Peffley stated that the General Manager Round Table meetings that are scheduled quarterly with community leaders have been very helpful. Commissioner Long inquired about the community leaders participating in the General Manager Round Table meetings. GM Peffley responded that he will send to the commissioners a list of the group of participants. Other Commissioner Thomas thanked Mr. Flowers and HR Manager Joy Wagner for their work on the organizational change management and the Emerging Leaders Program. He also recognized Commissioner Long's for his grandchildren being in the top ten honor students at Waverly schools. Commissioner Ross informed the Commissioners that questions were asked about a recently issued audit by the Internal Auditor and if there are any expansive questions about any future audits to send him an email and he will place it on the next Finance Committee Meeting agenda for discussion. Motion by Commissioner Ross, Seconded by Commissioner Graham to excuse Commissioner Hayes and Commissioner McCloud from tonight's meeting. Action: Motion Carried Adjourn Motion by Commissioner Price to adjourn the meeting. The meeting was adjourned at 6:18 p.m. Respectfully Submitted Sandra Zerkle, Chair Committee of the Whole Commissioner Ken Ross presented the Finance Committee Report: FINANCE COMMITTEE Meeting Minutes March 12, 2019 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, on Tuesday, March 12, 2019. Finance Committee Chair Ken Ross called the meeting to order at 6:22 pm and asked that roll be taken. Present: Commissioners Ken Ross, Beth Graham, Anthony Mullen, and David Price. Also present: Commissioners David Lenz, Tray Thomas and Sandra Zerkle, and Non-Voting Commissioners Douglas Jester (East Lansing) and Bill Long (Delta Township). The Corporate Secretary declared a quorum. Public Comments None. Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Graham, to approve the Finance Committee meeting minutes of January 8, 2019. Action: Motion Carried. January YTD Financial Summary Chief Financial Officer (CFO), Heather Shawa presented the following: A t���'h�'4Y+�ta��.d'TASSR'YSF�F'RFi.Y.4�" dE9 �` ti (:ash Incom,.Syah.nu NliO Ratios I4u,lyrt tilatuc YID -----•_••-.._,......----.-....- �- �—_- Cash on hand is above target and is expected to remain above target the rest of the year with the possible exception of April. This is due to timing of reimbursement from the bond anticipation note. The Income Statement indicates that the total revenue is slightly above budget by $2.5 million or 1%. Operating expenses are 4% under budget with YTD projections expected to end up at budget. Net Income is exceeding the initial budget with just over $20 million being projected at the fiscal year end. Capital Budget is slightly under spend however with construction season arriving it is expected that the approved budget will be spent, along with an extra $3 million for the Central Sub Exceedance. Ms. Shawa stated that the five ratios are being met. Ms. Shawa noted that the 15t S.T.E.P. program students were included in the employee data. Payroll regular labor data is under budget due to vacancies however overtime is up, in part due to the vacancies and capital project work, which were the central substation, the Erickson outage, and electric T&D annuals. Commissioner Ross commented that financial measures are being tracked throughout the year with the key measures the rating agencies track are debt service coverage and days cash on hand. The rating agencies focus on the last measure of the fiscal year end, June 30. Commissioner Mullen questioned what the $43 million spent to date was for at the Delta Energy Park. Ms. Shawa responded that 10% was put down for the turbines, other OEM equipment, as well as the design engineer, construction manager, and the owners' representative are now in place in addition to the five BWL employees dedicated to the project. Commissioner Lenz asked from what fund would the additional $3 million would be taken. In response CFO Heather Shawa responded the money would be taken from Operating cash. Commissioner Long highlighted the bad debt ratio and reminded of a change that was made from using APPA median benchmark to using BWL prior year comparison. Commissioner Price commented that the APPA number represented only electricity and BWL provides electricity and water. Commissioner Ross commented that if a further presentation was requested regarding the financial dashboard ratios to send him an email and it would be added to a future Finance Committee meeting. Central Sub Capital Exceedance Resolution General Manager Dick Peffley stated that the Central Substation will meet every design criteria and be available for summer load pickup as scheduled. The majority of the $6.6 million cost variance was in two areas, the schedule and also testing and commissioning the substation. There was a fast track design to the schedule which was determined to not be as critical as the budget. Mid-way through the project a financial decision was made to stop production at the Eckert station which had an effect on the Central Substation timing. Equipment problems for the Central Substation also affected the schedule: one of the three transformers which take a year to acquire was dropped at the factory and had to be replaced; the switch gear which takes six to eight months to acquire was in a truck accident; the soil was deemed contaminated with arsenic and had to be hauled to a special landfill. If the schedule wasn't followed Eckert would have had to be brought back online so labor was doubled for testing and commissioning the substation. Commissioner Ross explained that an exceedance resolution is for a cost overrun on a project. GM Peffley and CFO Shawa have been working to reduce excess contingencies in capital budgets which causes the likelihood of cost overruns to increase. Motion by Commissioner Price, Seconded by Commissioner Mullen, to forward for consideration the Central Sub Capital Exceedance Resolution as presented to the full Board. Action: Motion Carried Commissioner Long asked for clarification on the replacement of the distribution system. GM Peffley responded that the distribution system will be the next large project for which crews have been hired. He also stated that there is currently not an ideal way to estimate the amount of good vs. bad cable that is underground until you dig up the concrete. Commissioner Lenz questioned the breakdown cost for the overrun regarding labor and material and whether the labor over-run is a result of BWL buying equipment rather than having subcontractors buy the equipment. GM Peffley responded that 80% of the over-run is labor as the workforce had to be doubled for the testing and commissioning to meet the schedule, and extra labor had to be hired in addition to BWL employees. He also stated that labor costs would have been less to install the transformer and switch gear had the delays not occurred when the labor crew was previously scheduled and on duty. Bond Amendment Resolutions: Amendment to the Fifteenth Supplemental Revenue Bond Resolution to Increase Maximum Aggregate Principal Amount of Notes Manager of Finance, Scott Taylor reviewed the Amendment to the Fifteenth Supplemental Revenue Bond Resolution to Increase the Maximum Aggregate Principal Amount of Notes. Mr. Taylor recognized BWL's bond counsel, Jeff Aronoff from Miller Canfield, who was in attendance at the meeting. Mr. Taylor stated that bond anticipation notes were the first phase of financing and BWL issued $100 million of bond anticipation notes as an initial line of credit. In Phase 2 revenue bonds will be issued. Mr. Taylor explained that when bonds are issued it is to pay for something that will generate revenue in the future but as soon as you issue the bonds they generate interest cost. Usually, additional money called capitalized interest is borrowed to pay for the interest cost during construction of what will generate revenue. The most cost-effective issuance possible is desired and one idea that was suggested was to use additional bond anticipation notes to pay for the interest cost. There were eight variables evaluated and with current market rates there was not an overall advantage for using bond anticipation notes, so additional revenue bonds will continue to be used. If market conditions change it may be more advantageous to use bond anticipation notes. Mr. Taylor stated that, although there are no current plans to use the bond anticipation notes for the capitalized interest, the resolution is requested to be put in place so that when a final decision needs to be made and a final evaluation is done, if it is found that it is more beneficial to the Board and rate payers to use the bond anticipation notes, that is what will be done. Mr. Taylor stated that the resolution asks for an increase in the $100 million originally requested to $120 million. The additional $20 million will be applied toward the capitalized interest cost. Motion by Commissioner Price, Seconded by Commissioner Mullen, to forward for consideration and authorization the Amendment to the Fifteenth Supplemental Revenue Bond Resolution to Increase Maximum Aggregate Principal Amount of Notes. Action: Motion Carried Commissioner Ross explained that what is being considered is the authorization to select the most economical and efficient option for the issuance of the bonds. Amendment to Amended and Restated Utility System Revenue Bond Resolution Mr. Taylor spoke about the Amendment to Amended and Restated Utility System Revenue Bond Resolution which has to do with the debt service reserve fund. The debt service reserve fund is offered by issuers to provide investors additional security on their investment. The debt service reserve fund sets aside the money to pay for one full year of bond and interest payments in case of financial difficulty. Because of the strong credit rating of BWL and because the financial market demand for the debt service reserve fund has changed, issuers don't need to maintain a debt service reserve fund to sell bonds and retain their rating. It is more cost effective to eliminate the fund as it costs money to have $25 million on hand. This resolution asks for additional language to be added to the resolution that previously asked to eliminate the debt service reserve fund. This language now includes clarifying what will happen if BWL's financial strength changes and will give investors assurance that security will be put aside. Motion by Commissioner Price, Seconded by Commissioner Mullen, to accept a friendly amendment to the proposed Resolution that includes grammatical changes, and forward the Resolution as amended to the full Board of consideration. Action: Motion Carried Commissioner Price commented that instead of having a large guarantee fund, BWL is eliminating the need for it and relying on BWL's third party rating agencies to be the assurance for the bond holders. Mr. Taylor responded that money is set aside but because of BWL's strong rating, the investors are going to rely on AA rating, strong cash reserves and strong debt service coverage metrics. He added that money is set aside monthly and that we do not wait until an obligation is due. Commissioner Price added that there is additional assurance of BWL's credit rating and if that drops more money will be put into the reserve. Commissioner Ross commented that if at some time in the future something detrimental happens this issue will need to be revisited. Commissioner Ross requested an explanation regarding previous bond holders, future bond holders and the existing $25 million reserve. Mr. Taylor responded that making an amendment eliminating debt service reserve usually involves the vote of the bond holders because there is a security that is being eliminated. With the new issuance, BWL's outstanding debt will be 51% or more of the total outstanding debt. Through the act of issuing the new debt, there is approval by more than 51% of the bond holders. Commissioner Price stated that by buying the new bonds the bond holders are approving the contingencies on the bonds. Commissioner Ross commented that previous bond holders may have questioned the loss of a security blanket and the benefit of the bond but the investors have been assured that it is a manageable risk. Internal Audit Status Report Internal Auditor Phil Perkins presented the FY 2019 Internal Audit Status Report. Overview FY 2019 Audit Plan Progress Report Engagements Completed Since Previous Presentation, 1. COBITComplience Follow-up Audit 2. Change Management Follow-up Audit • FY 2019 Audit Plan Progress Report 3, Time Reporting Review 42 Internal Audit Status Report • FY 2020 Risk Assessment&Audit Engagements In Progress or Upcoming: Planning 1. Metering Services(80%complete) 2. Vegetation Management(00 h complete) Presented by: • Other 3. Accounts Payable(33%complete) Phil Perkins,Director of Internal Audit 4. Procurement(underway) Finance Committee Meeting - Project Engineering(start in into March) March 2019 0. Cybersecurity PolicierdGovernance(start in early April) - - 2 Other Continuing Professional Education: FY 2020 Risk Assessment&Audit Planning 1.Director of Internal Audit: Participation in CPE as relevant for job,until retirement on 7/1119, Meetings to be held with executive management and 2. Senior Internal Auditor. staffs to discuss current risk areas and potential audit On target to complete annual CPE requirements for CPA topics for FY 2020. designation. Passed Certified Information Systems Auditor(CISA) examination and is submitting relevant experience required Draft audit plan for FY 2020 to be presented for Board to attain certification. approval not later than July 2019. Transition/Continuancy Plan: — A plan has been developed to enable a smooth transition for the incoming been of Internal Audit. — The plan will be updated to include detailed status and remaining items to perform for any engagements still in progress. �/ _dam _,W.:_, + s Commissioner Zerkle inquired whether, in addition to meeting with staff, Mr. Perkins would make recommendations for next year's audit. In response, Mr. Perkins responded that he would contribute his preliminary assessments. Commissioner Long commented that an audit review is scheduled twice a year and asked for clarification on the proper time to bring questions about the audits. Commissioner Ross clarified that the open items list is provided twice a year and audits identify the issues that are placed on the open items list. If the Internal Auditor issues an audit report during the year, a discussion can be held at the next Finance Committee meeting. Ms. Shawa added that the open items list is designated for the January and July Finance Committee meetings. Ms. Shawa stated that CIO Rod Davenport will be invited to speak at the May COW Meeting to provide general IT updates and Kellee Christensen, Interim Enterprise Business Manager, to provide a BSmart program update. Commissioner Price commented that if there is a glaring red flag, it is the Internal Auditor's responsibility to point that out and determine whether it requires immediate discussion or action. Commissioner Ross stated that an individual Commissioners should not press management for a work product, particularly if it takes a lot of resources to answer questions, and that Commissioners should act collectively and direct as a group. Other None. Adjourn Motion by Commissioner Price to adjourn the meeting. Commissioner Ross adjourned the meeting at 7:11 p.m. Respectfully submitted Ken Ross, Chair Finance Committee MANAGER'S RECOMMENDATIONS RESOLUTION 2019-03-01 Capital Project Budget Exceedance Approval: PE-20175 Central Substation and PE-20199 Central Substation - Distribution WHEREAS, Lansing Board of Water & Light's (BWL) Policy 15-02, entitled Capital Project Exceedance Approval necessitates 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 previously approved budget for Capital Projects PE-20175 Central Substation was $25,800,000 and PE-20199 Central Substation Distribution was $1,600,000; and WHEREAS, the projected final total cost for Capital Projects PE-20175 Central Substation is $32,373,029 and for PE-20199 Central Substation Distribution is $2,440,611, upon completion; 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 Projects PE-20175 Central Substation and PE-20199 Central Substation — Distribution projected spending be approved; and RESOLVED, the BWL Board of Commissioners approve projected spending for Capital Projects PE-20175 Central Substation and PE-20199 Central Substation - Distribution with a projected final total cost of $32,373,029 and $2,440,611 respectively. Motion by Commissioner Ross, Seconded by Commissioner McCloud, to accept the Capital Project Budget Exceedance Approval for the Central Substation. Action: Motion Carried. UNFINISHED BUSINESS There was no Unfinished Business, NEW BUSINESS There was no New Business. RESOLUTIONS/ACTION ITEMS RESOLUTION #2019-03-02 Lansing Board of Water and Light Amendment to Fifteenth Supplemental Revenue Bond Resolution to Increase Maximum Aggregate Principal Amount of Notes A RESOLUTION TO AUTHORIZE: • An amendment to increase the maximum aggregate principal amount of bond anticipation notes authorized. WHEREAS, the City of Lansing acting by and through the Lansing Board of Water and Light, has previously issued its utility revenue bonds payable from revenues of the water supply, steam, chilled water and electric utility system under the provisions of Act 94, Public Acts of Michigan, 1933, as amended; and WHEREAS, the Board has previously issued its utility revenue bonds pursuant to the provisions of an Amended and Restated Resolution adopted on October 24, 1989, which has been amended or supplemented by fifteen supplemental resolutions; and WHEREAS, on March 27, 2018, the Board approved the Fifteenth Supplemental Revenue Bond Resolution (the "Fifteenth Supplemental Resolution") authorizing the issuance of bond anticipation notes to finance the costs of the Power Plant Project and System Improvements Project, both as defined in the Fifteenth Supplemental Resolution; and WHEREAS, all terms not defined herein shall have the meanings set forth in the Bond Resolution; and WHEREAS, the Board wishes to increase the maximum aggregate principal amount of bond anticipation notes authorized to be issued pursuant to the Fifteenth Supplemental Resolution; NOW, THEREFORE, BE IT RESOLVED THAT: Section 1. Amending Resolution. The Board hereby adopts this resolution thereby amending and supplementing the Fifteenth Supplemental Resolution to increase the maximum aggregate principal amount of bond anticipation notes authorized to be issued, pursuant to Section 2 below. The adoption of this Resolution provides the Board with the option to issue additional bond anticipation notes, rather than bonds, upon the advice of its financial advisor. Section 2. Amendment to Not-To-Exceed Amount. The principal amount of not-to-exceed amount of One Hundred Million Dollars ($100,000,000) described in the first paragraph of Section 4 of the Fifteenth Supplemental Resolution is hereby increased as follows: In order to pay the costs of the Series 2019 Project which need to be paid before the Board issues the Series 2019 Bonds, the Board shall issue the Notes pursuant to the provisions of Section 413 of Act 34 in the aggregate principal amount of not-to-exceed One Hundred Twenty Million Dollars ($120,000,000) as finally determined by the Chief Financial Officer at the time of sale. Section 3. 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 4. Conflicting Resolutions; Effective Date. All resolutions and parts of resolutions insofar as they conflict with the provisions of this resolution are hereby rescinded. This resolution shall become effective immediately. 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, March 26, 2019, at 5:30 p.m., prevailing Eastern Time, and that said meeting was conducted and public notice of said meeting was given pursuant to and in full compliance with the Open Meetings Act, being Act 267, Public Acts of Michigan, 1976, and that the minutes of said meeting were kept and will be or have been made available as required by said Act 267. We further certify that the following Commissioners were present at said meeting: David Price, Beth Graham, David Lenz, Anthony McCloud, Anthony Mullen, Ken Ross, Tracy Thomas, and Sandra Zerkle and that no Commissioners were absent. We further certify that Commissioner Mullen moved adoption of said resolution, and that said motion was supported by Commissioner McCloud. We further certify that the following Commissioners voted for adoption of said resolution David Price, Beth Graham, David Lenz, Anthony McCloud, Anthony Mullen, Ken Ross, Tracy Thomas, and Sandra Zerkle and that no Commissioners voted against adoption of said resolution. We further certify that said resolution has been recorded in the Resolution Book and that such recording has been authenticated by the signature of the Chairperson and Corporate Secretary. s/David Price s/M. Denise Griffin Chairperson — David Price Corporate Secretary— M. Denise Griffin RESOLUTION #2019-03-03 Lansing Board of Water and Light Amendment to Amended and Restated Utility System Revenue Bond Resolution A RESOLUTION TO AUTHORIZE: • An amendment to the definition of "Reserve Requirement" in the Amended and Restated Bond Resolution. • A corresponding amendment to the establishment of the Bond Reserve Account and amounts held therein set forth in the Amended and Restated Bond Resolution. WHEREAS, the City of Lansing acting by and through the Lansing Board of Water and Light, has previously issued its utility revenue bonds payable from revenues of the water supply, steam, chilled water and electric utility system under the provisions of Act 94, Public Acts of Michigan, 1933, as amended; and WHEREAS, the Board has previously issued its utility revenue bonds pursuant to the provisions of an Amended and Restated Resolution adopted on October 24, 1989, which has been amended or supplemented by fifteen supplemental resolutions; and WHEREAS, on March 27, 2018, the Board approved an Amended and Restated Bond Resolution (the "Bond Resolution") to replace the Amended and Restated Resolution adopted on October 24, 1989 and authorize the issuance of the Utility System Revenue Bonds, Series 2019 (the "Series 2019 Bonds"); and WHEREAS, all terms not defined herein shall have the meanings set forth in the Bond Resolution; and WHEREAS, the Board wishes to revise the definition of "Reserve Requirement" in the Bond Resolution based on certain long-term unenhanced credit ratings of its Outstanding Bonds, and adjust, accordingly, the establishment of the Bond Reserve Account and amounts held therein pursuant to Section 18(B) of the Bond Resolution; and WHEREAS, upon the delivery of the Series 2019 Bonds in an amount sufficient to cause the Registered Owners of the Series 2019 Bonds to equal not less than fifty one percent (51%) in principal amount of the total Utility System Revenue Bonds then outstanding, the Bond Resolution would replace the Amended and Restated Bond Resolution adopted on October 24, 1989. WHEREAS, pursuant to Section 28(a)(iv) of the Bond Resolution, upon written confirmation from each rating agency rating Outstanding Bonds to which the foregoing amendments to the Bond Resolution would apply that the adoption of such amendments will not result in the reduction or withdrawal of any ratings on such Bonds, the Board wishes to amend the Bond Resolution to revise the definition of "Reserve Requirement" and adjust, accordingly the Bond Reserve Account and amounts held therein; NOW, THEREFORE, BE IT RESOLVED THAT: Section 1. Amending Resolution, The Board hereby adopts this resolution thereby amending and supplementing the Bond Resolution upon the consent of not less than fifty one percent (51%) in principal amount of the total Utility System Revenue Bonds then outstanding, in accordance with Section 28(b) of the Resolution. Section 2. Amendment to Definition of Reserve Requirement. The definition of "Reserve Requirement in Section 1(z) of the Bond Resolution is hereby deleted and replaced with the following: (z) "Reserve Requirement" shall mean the following: (i) if the long-term unenhanced credit ratings of the Outstanding Bonds are in at least the A/A2 category without regard to notching factors (or an equivalent rating in at least the third highest category of nationally recognized bond rating agencies), $0, only upon the written direction of the Chief Financial Officer; or (ii) if the long-term unenhanced credit ratings of the Outstanding Bonds are reduced below the "A/A2" category without regard to notching factors (or an equivalent rating in at least the third highest category of nationally recognized bond rating agencies), the lesser of (1) 50% of the maximum annual debt service requirements on the Outstanding Bonds, (2) 62.5% of the average annual debt service requirements on the Outstanding Bonds, or (3) the total of 5% of the original aggregate face amount of each series of the Outstanding Bonds, reduced by the net original issue discount, if any; provided, however, that the Reserve Requirement shall not at any time exceed the amount allowed to be invested at an unrestricted yield pursuant to Treas. Reg. §1.148-2(f)(2) or any successor provision thereto applicable to the Bonds. For purposes of determining the Reserve Requirement, the long-term unenhanced credit ratings of the Outstanding Bonds shall be determined with regard only to the highest two long-term unenhanced ratings of such Bonds. Therefore, subsection (z)(ii) applies only if both such ratings are reduced below the "A/A2" category without regard to notching factors (or an equivalent rating as described above). The Board may rely on the advice of its financial advisor as to which rating category or categories its ratings are within. Section 3. Amendment to Bond Reserve Account. Section 18(B), "BOND AND INTEREST REDEMPTION FUND" of the Bond Resolution is hereby deleted and replaced with the following: 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. Out of the Revenues remaining in the Receiving Fund, after provision for the credit or deposit to the Operation and Maintenance Fund, there shall next be set aside, monthly, in the Redemption Fund a sum proportionately sufficient to provide for the payment shalllpal of,become duendatory and payableesubject mption requirements, if any, and interest on the Bonds as and when the same to any credit therefor as provided in this Section 18(B). 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. If, as a result of a reduction in the long-term unenhanced credit ratings of the Outstanding Bonds to a category below A/AZ without regard to notching factors (or an equivalent rating in at least the third highest category of nationally recognized bond rating agencies) as described in Section 1(z)(ii) (a "Ratings Downgrade Event"), the Reserve Requirement is increased from $0, and amounts then held in the Bond Reserve Account are insufficient to meet the Reserve Requirement, then the Board must satisfy the Reserve Requirement either by: to the Bond Reserve Account from an available source of funds (i) transferring moneys (other than proceeds of Additional Bonds) an amount equal to the Reserve Requirement in six (6) semi-annual installments beginning on the date which is 180 days following the Ratings Downgrade Event; or (ii) purchasing a letter of credit, a surety bond, or an insurance policy within 180 days of the Ratings Downgrade Event; provided, however, 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, surety bond, or insurance policy; or (iii) transferring moneys to the Bond Reserve Account from proceeds of Additional Bonds within 180 days of the Ratings Downgrade Event; or The Board must adopt a plan to satisfy the Reserve Requirement pursuant to either Subsection (i), (ii) or (iii) above within ninety (90) days of the Ratings Downgrade Event. 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 the 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. 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; provided, however, if the excess is allocable to proceeds of tax-exempt Outstanding Bonds (or proceeds of tax-exempt Bonds refunded by the Outstanding Bonds) then such excess shall be transferred to a segregated account to pay the costs of the Power Plant Project or the System Improvements Project, unless it is determined by nationally recognized bond counsel that such transfer is not required to maintain the tax-exempt status of each series of the Outstanding Bonds. 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, if any, 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 4. 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 5. Conflicting Resolutions; Effective Date. All resolutions and parts of resolutions insofar as they conflict with the provisions of this resolution are hereby rescinded. This resolution shall become effective immediately. 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, March 26, 2019, at 5:30 p.m., prevailing Eastern Time, and that said meeting was conducted and public notice of said meeting was given pursuant to and in full compliance with the Open Meetings Act, being Act 267, Public Acts of Michigan, 1976, and that the minutes of said meeting were kept and will be or have been made available as required by said Act 267. We further certify that the following Commissioners were present at said meeting David Price, Beth Graham, David Lenz, Anthony McCloud, Anthony Mullen, Ken Ross, Tracy Thomas, and Sandra Zerkle and that no Commissioners were absent. We further certify that Commissioner Ross 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 David Price, Beth Graham, David Lenz, Anthony McCloud, Anthony Mullen, Ken Ross, Tracy Thomas, and Sandra Zerkle and that no Commissioners voted against adoption of said resolution. We further certify that said resolution has been recorded in the Resolution Book and that such recording has been authenticated by the signature of the Chairperson and Corporate Secretary. s/David Price s/M. Denise Griffin Chairperson —David Price Corporate Secretary— M. Denise Griffin MANAGER'S REMARKS General Manager Peffley remarked about the following items: 1. The City of Lansing will participate in the BWL GreenWise Electric Power program beginning July 1, 2019. There are three other cities in Michigan that have committed to using 100% renewable energy in all of their operations. Grand Rapids will begin in 2020. Mayor Schor held a press conference and submitted the request to participate in the program to the City Council on March 25, 2019. 2. Hometown BWL Leaders Program clips will be placed on local TV stations. The clips will highlight how BWL employees are giving back to the community. COMMISSIONERS' REMARKS Commissioner Ross restated that if any Commissioner would like any matter discussed regarding an audit report that is issued by the Internal Auditor, to send Commissioner Ross an email and he will put the matter for further discussion at the next Finance Committee Meeting. Commissioner Price informed the Commissioners about volunteer opportunities with Adopt A River on Saturday, May 11, 2019. The Adopt A River event is cosponsored by BWL and Impression 5. Commissioner Price also informed the Commissioners about the Recycle Rama event being held on April 13, 2019 that is sponsored by the Mid-Michigan Environmental Action Council. Commissioner Thomas recognized the employees that have over 40 years of service with the BWL that are on the last page of the Hometown BWL Leaders Program packet. General Manager Peffley also noted that there are 120 employees with 30 years of service. MOTION OF EXCUSED ABSENCE Motion by Commissioner Ross, Seconded by Commissioner Thomas, to excuse Commissioner Jester from tonight's meeting. Action: Motion Carried PUBLIC COMMENTS Michael Morofsky, Colonial Village Neighborhood Association, spoke regarding tree trimming and stump removal in Colonial Village. Commissioner Ross stated that the public may not be aware that discussion between the Board and the public is not appropriate during a Board Meeting but is allowed during Committee Meetings. Claude Beavers, Lansing, MI, thanked the Commissioners for the work they do for the Board of Water and Light. ADJOURNMENT Chair Price adjourned the meeting at 5:56 p.m. M.Denise Griffin,Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk: 3-29-19 Official Minutes filed(electronically)with Lansing City Clerk 5-30-19