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HomeMy WebLinkAbout2020 Minutes BWL Approved by the Board of Commissioners 07-28-20 Hometown People.Hometown Power: MINUTES OF THE BOARD OF COMMISSIONERS MEETING LANSING BOARD OF WATER AND LIGHT May 26, 2020 Due to public safety concerns resulting from the COVID-19 Pandemic, the Regular Board of Commissioners meeting for the Lansing Board of Water and Light (BWL) was conducted via WebEx Conferencing in Lansing, MI, on Tuesday, May 26, 2020. This meeting was publicly notice for 5:30 p.m. Chairperson David Price called the meeting to order at 5:54 p.m. Present: Commissioners Beth Graham, Deshon Leek, David Lenz, Anthony Mullen, David Price, Ken Ross, Tracy Thomas, and Sandra Zerkle. Non-Voting Commissioners present: Mike Froh (Meridian Township), Douglas Jester (East Lansing), and Larry Merrill (Delta Township). Absent: None. The Corporate Secretary declared a quorum. Commissioner Price led the Pledge of Allegiance. APPROVAL OF MINUTES Motion by Commissioner Thomas, Seconded by Commissioner Mullen, to approve the Regular Board Meeting minutes of January 28, 2020. Motion Carried by the following Roll Call Vote Yeas: Commissioners Price, Graham, Leek, Lenz, Mullen, Ross, Thomas and Zerkle Nays: None PUBLIC COMMENTS None. COMMUNICATIONS Electronic Mail received From or Re: a. Mail from BWL retiree Jerry Burns re: Defined Benefit Pensioners lump sum payment - Referred to Management. Received and Placed on File b. Electronic mail from Mark Lawrence of Mayor Schor's Office re: Street Lighting Style - Referred to Management. Received and Placed on File COMMITTEE REPORTS Commissioner Tony Mullen presented the Committee of the Whole Report: COMMITTEE OF THE WHOLE Meeting Minutes April 28, 2020 Due to public safety concerns resulting from the COVID-19 Pandemic, the Committee of the Whole meeting for the Lansing Board of Water and Light (BWL) was conducted via WebEx Conferencing in Lansing, MI, at 3:00 p.m. on Tuesday, April 28, 2020. Committee of the Whole Chair Tony Mullen called the meeting to order at 3:00 p.m. Present via WebEx: Commissioners Tony Mullen, Beth Graham, Deshon Leek, David Lenz, David Price, Ken Ross, Tracy Thomas, Sandra Zerkle, and Non-Voting Members: Mike Froh (Meridian Township), Doug Jester (East Lansing) and Larry Merrill (Delta Township). Absent: None. A quorum was declared. General Manager Dick Peffley introduced the Board of Water and Light's new Human Resources Executive Director, Lynnette Keller. Ms. Keller provided Commissioners with a quick acquaint of herself. On behalf of the Board of Commissioners, Vice Chair Mullen welcomed Ms. Keller as well as the sign language interpreter, Ms. Rebekah Heinze. Public Comments There was a communication received via email from Mark Lawrence regarding LED and acorn style streetlights.There were no public comments. Approval of Minutes Motion by Commissioner Thomas, Seconded by Commissioner Ross, to approve the Committee of the Whole Meeting minutes of November 5, 2019, February 20, 2020 and February 25, 2020. Motion Carried by the following Roll Call Vote: Yeas: Commissioners Mullen, Graham, Leek, Lenz, Price, Ross,Thomas and Zerkle Nays: None LED Light Replacement Plan General Manager Peffley introduced BWL Electric System Integrity Engineers, Alex Porter and Brian Coots, who presented the LED Light Replacement Plan. of Water& Light LED Lansing B..,d W." W`- W ffl W_ Project ScopeI i .. I _ r I i NEW L161 ;istfeellight ProgramConversion � f t " Commissioner Lenz asked the presenters to provide information regarding the amount of light that is emitted under the new street lamps with the LED lights which cause a high lumen output directly under the lamp. Mr. Porter responded that there is an increase of lumen output with the LED lamps, but the acorn design of the new light fixtures reduces the glare in the area around the lamps. Commissioner Leek asked if both the light fixtures and light bulbs are being replaced and if both are in the budget. Mr. Coots responded that just the fixtures are being replaced and he will follow up for the Commissioners on the budgeting that will be needed for the light bulbs. Commissioner Jester inquired about the controls on the lamps. Mr. Porter responded that most lamps have a three-pin connector for the lamps to be on or off, but the acorn light fixture replacements have seven-pin receptacles which will allow for adjusting the amount of light emitted. Commissioner Froh asked for the source of the LED bulbs that would be placed in the lamps. Mr. Porter responded that most of the fixtures are produced in Ohio and nearby states, and that bids will be reviewed from local distributors. Commissioner Ross inquired about the differences between the several types of lights currently in use. Mr. Porter responded that in the past, most lights installed were mercury vapor lights but in the 1970's, high pressure sodium lights were put into use as those lights were more efficient. After 2012, LED's were put into use, and now BWL is moving toward white light. Commissioner Merrill asked whether the $5 million transition cost incurred per year for the new lighting would be spread across the board for rate payers or would it also include municipalities and special assessment districts. Mr. Porter responded that the rates will be at a reduced cost for customers. Chief Financial Officer (CFO) Heather Shawa responded that a cost to service rate for the street lighting customers was implemented and will be updated with the $5 million transition cost at the time of the cost. Commissioner Zerkle commented that the corridors that recently had new light fixtures installed appeared safer for pedestrians and asked at what locations lights would be shut off at night. Mr. Porter responded that lights would remain on at night unless there was an event, such as the Silver Bells parade, that warranted a dimming of the lights. Return on Equity(ROE) Renewal Agreement GM Peffley and CFO Heather Shawa presented and reviewed the Return on Equity (ROE) Renewal Agreement which is expiring June 30, 2020 and asked for approval of the resolution for the ROE Amendment No. 5. CFO Shawa reported that the amendment asks for a two-year extension of the agreement, including specific dollar amounts for 2021-2022 and a recommended fixed dollar amount for this fiscal year based on what was initially forecasted and budgeted. If forecasted revenues are met and exceeded, the amendment allows for an upward adjustment of 3% of excess revenues. Commissioner Mullen asked whether the 3% adjustment was the 6.2%to 9.2 % change or 3% of the total dollar value. CFO Shawa responded the 3% related to any revenues that would have resulted in a calculated amount in excess of the fixed budgeted amount. Commissioner Price commented that he would support the amendment but would support it cautiously as the recommendations were arrived before the full effect of COVID-19 was known. The agreement provides the city with a certain amount but income from residential and business customers is uncertain. Commissioner Zerkle asked why a straight dollar amount was recommended rather than a percentage and why a two-year rather than one-year extension was requested. CFO Shawa responded that economic development and new industry materializing with an unknown amount supported a two-year agreement with a fixed base amount for both parties. Commissioner Ross commented that the amendment was trading vacillation for certainty and was made based on the scenario that if BWL had a shortfall then the city budget would have a shortfall. GM Peffley responded that negotiations took place regarding the benefits of a flat rate rather than a higher percentage. Motion by Commissioner Price, Seconded by Commissioner Thomas to forward the proposed Resolution for Return on Equity Agreement Renewal Amendment No. 5 dated April 28, 2020 to the full Board for consideration. Motion Carried by the following Roll Call Vote: Yeas: Commissioners Mullen, Graham, Leek, Lenz, Price, Ross, Thomas and Zerkle Nays: None Revised IT Communications Policy Corporate Secretary Griffin noted that a revised redlined version of the Revised IT Communications Policy was received after the posting of the packet. Motion by Commissioner Price, Seconded by Commissioner Thomas to accept the late item redlined IT Policy amendment. Action: Motion Carried CFO Shawa reported that the IT Communications Policy was revised based on recommendations from the IT internal audit performed and asked for acceptance of the resolution for the Revised IT Communications Policy. The intent of the revision is to clarify the purpose of the operational policy and mission of the BWL cyber security steering committee and to promote safe and secure use of all communication for all employees, contractors and clients which access BWL non-public systems. Commissioner Zerkle asked if the duplication in the policy of the phrase "assets include but are not limited to..." was intended. CFO Shawa responded that the late item revised redlined version corrected the duplication. Commissioner Zerkle asked what was considered incidental personal use that would be allowed. GM Peffley responded that incidental use of BWL technology was considered answering a limited phone call or email. Commissioner Zerkle asked if the policy complies with what was requested from the audit review and Internal Auditor Wesley Lewis affirmed. Commissioner Mullen asked if the audits performed by BWL CIO also look for seemingly simple violations. CFO Shawa responded that security system tools scan daily and continuously, and patches are made weekly/monthly or based on a planned schedule. Motion by Commissioner Price, Seconded by Commissioner Thomas to forward the proposed Resolution for Revised IT Communications Policy to the full Board for consideration. Motion Carried by the following Roll Call Vote: Yeas: Commissioners Mullen, Graham, Leek, Lenz, Price, Ross,Thomas and Zerkle Nays: None Human Resources Committee Business Human Resources Committee Chair Tracy Thomas conducted the Human Resources business portion of the committee meeting and introduced CFO Shawa and BWL General Counsel Mark Matus who presented the Retirement Plan Committee Updates. Retirement Plan Committee Updates CFO Shawa reported that there were three information updates from prior delegations to the General Manager and the Retirement Plan Committee (RPC). The new Executive Director of HR, Lynette Keller, has been added to the RPC which consists of the CFO, the Executive Director of HR, and the Manager of Finance. Operating procedures which have been reviewed by the BWL legal department and executives were officially adopted by the RPC. In the Defined Contribution(DC) Plan there is a Plan Coordinator Change that makes the administrative and investment changes on behalf of the DC Plan and who is the person on record with ICMA, the DC Plan administrator. Historically that position was held by an employee in the BWL Payroll and Benefits department but has now been assigned by delegation of the General Manager to the RPC. General Counsel Mark Matus reported that the Trust 2 is a plan that was transitioned out of the Defined Benefit Program and consists of about 25 people who have been in the plan since the 80's. The purpose of the resolution is to remove the potential conflict of the General Manager having authority over the plan with the two board appointed employees in it and give authority to the Commissioners. Commissioner Thomas commented that the implementation of the authority three months ago was to except the three employees. Mr. Matus responded that this resolution is to correct that. Commissioner Zerkle asked whether the HR Committee negotiates with the employee regarding the plan or if the employee is automatically part of the plan if wanted. Mr. Matus responded that the employee is assigned to the plan and the HR Committee has influence on what the terms are. Motion by Commissioner Graham, Seconded by Commissioner Leek to forward the proposed Resolution for Delegation of Authority to the General Manager Retraction and Amendment to Defined Contribution Plan and Trust 2 to the full Board for consideration. Motion Carried by the following Roll Call Vote: Yeas: Commissioners Mullen, Graham, Leek, Lenz, Price, Ross,Thomas and Zerkle Nays: None Mr. Matus stated that the purpose of the resolution to amend plans for compliance was to clarify the administrative duties for compliance. Motion by Commissioner Price, Seconded by Commissioner Graham to forward the proposed Resolution for Delegation of Authority to the General Manager to Amend Plans for Compliance to the full Board for consideration. Motion Carried by the following Roll Call Vote: Yeas: Commissioners Mullen, Graham, Leek, Lenz, Price, Ross,Thomas and Zerkle Nays: None Finance Committee Business Finance Committee Chair Ken Ross conducted the Finance business portion of the committee meeting. March YTD Financial Summary CFO Shawa presented the March YTD Financial Summary. „ .m - .. ......._ ..... { e The financial summary is based on financials going into the COVID-19 pandemic. The impact of the pandemic will be provided in the April and May financial summary. CFO Shawa reported the following: Cash remained steady; Days Cash on hand was at a strong 200; YTD actual revenues was $285.6 million under the budget of $304 million, a majority of which is from wholesale and relates to recent planned and unplanned Belle River outages and the Pegasus Wind project; Net Income YTD was $30 million compared to $14 million budget YTD; the FY 2020 budget of $18 million may be adjusted due to COVID-19; some scheduled projects will be deferred and some will be worked on as planned, and the Return on Assets is expected to be on track. Day sales Outstanding and Bad Debt are expected to be below average due to COVID-19. Employee data, payroll data and benefits cost are consistent with budget. Commissioner Froh asked what models are being used to identify and categorize the potential losses from commercial revenues. CFO Shawa responded that the models are internal financial models and the finance department is looking for decreases in load and is working with Key Account representatives who are keeping in contact with large customers. The modeling involves sensitivity analysis using forecasts of customer load. The current plan is to develop a one-year to two-year best case/worst case scenarios. CFO Shawa stated that continuous updates will be provided to commissioners. Commissioner Jester asked if a change in residential consumption was seen. CFO Shawa replied that a change hasn't been seen in residential, however a 15-20% Commercial and Industrial impact is anticipated. GM Peffley responded that there are plans from history where the budget can be reduced from 5% to 10%. CFO Shawa responded that budget and six-year forecasts will be presented in the May meeting. Commissioner Zerkle inquired about the daily budget regarding residential and commercial income. GM Peffley responded that the BWL will be looking at the revenue that is received when shelter in place restrictions are lifted for businesses, as that is 80%of revenue. Commissioner Ross commented that he asked the General Manager and CFO to look at the financial impact of the pandemic on the BWL and the challenges right now, as the data is evolving. He stated there might be commodity opportunities as the price of oil is decreasing. Capital Project Exceedance Commissioner Ross stated the reason for Capital Project Exceedances is for projects that have an estimate for funding that has an issue requiring an increase in funds. Management is to keep the board aware and discloses to the board any authorizations needed for funding. GM Peffley added that in the past some capital budgets were over-estimated and they didn't hit the threshold to be brought before the board. Chief Financial Officer Heather Shawa provided information on the Capital Project Exceedances. AE- Electric Annual Account Resolution CFO Shawa requested approval of a resolution to increase the funding for the Electric Annual Account from $11.6 million to $14.2 million which is a 22% increase. Two specific line items make up 95% of the request, $1.7 million for increase for extra businesses, and $700, 000 for street light replacement which has been accelerated. Motion by Commissioner Price, Seconded by Commissioner Thomas to forward the proposed Resolution for Capital Project Exceedance AE—Electric Annual Account to the full Board for consideration. Motion Carried by the following Roll Call Vote Yeas: Commissioners Mullen, Graham, Leek, Lenz, Price, Ross,Thomas and Zerkle Nays: None Tainter Gate Trunnion Pin Replacement Resolution Legal Counsel Matus gave a description of the Trunnion Pin. CFO Shawa provided information on the requested increase in the budget for the trunnion pin replacement on the Tainter gate. The length of construction time was under estimated and additional safety measures are being undertaken. Commissioner Zerkle asked for the percentage of renewables that were received from the dam. GM Peff ley responded that about .1-.2%would be received from the dam if power was being generated from it. Commissioner Lenz asked whether there is an error in budgeting when capital project budgets go over budget and what is the average or percentage of projects that are over budget. Commissioner Ross responded that the information would be brought to a later Finance meeting. Motion by Commissioner Price, Seconded by Commissioner Leek to forward the proposed Resolution for Capital Project Exceedance Tainter Gate Trunnion Pin Replacement to the full Board for consideration. Motion Carried by the following Roll Call Vote Yeas: Commissioners Mullen, Graham, Leek, Lenz, Price, Ross,Thomas and Zerkle Nays: None Revised Investment Policy Statements Finance Manager, Mr. Scott Taylor, presented the Revised Investment Policy Statements. The primary purpose for the investment policy statements are to establish the investment objectives, the asset allocation policy, the investment performance standards and the procedures for managing the plan assets. Mr. Taylor reviewed both plans together as they are nearly identical. Changes to the DB and VEBA plans include administrative and language changes, updates to the RPC, a change to the target rate of return, addition of real estate investments, and policies become effective upon approval by the Board. The VEBA plan includes investing a higher percentage in real estate investments. Commissioner Ross commented that the Board of Trustees are responsible for periodic decision making for the plans and authority was delegated to the RPC, for the day to day management of the plans. The resolutions are to update the policies so that the RPC can manage the plans. Motion by Commissioner Ross, Seconded by Commissioner Zerkle to consider and vote on the proposed Resolutions for Statement of Investment Policies, Procedures and Objectives Defined Benefit (DB) and VEBA Plans together and forward both Resolutions to the full Board for consideration. Motion Carried by the following Roll Call Vote Yeas: Commissioners Mullen, Graham, Leek, Lenz, Price, Ross,Thomas and Zerkle Nays: None Internal Audit Update Internal Auditor, Mr. Wesley Lewis, provided the internal audit update. 7� Overview Revised FY 2020 Audit Planand Proaress Other Items Revised FV 2020 Audit Plan and Progress i 'tom:+• ee ^_cY-"-u^>•'�w'•ro^•.•'ur• 1.'Y.2021 R>V Amccsnxnl11- Report vtRx':-F+e.o+.nrrv•as..+.r..,a..x....-a..,v., 2 ainAlesx Rc ws:,I cn Ne AuM Tr Ms m Internal Audit Status Report Other Ites �:14A r'er.NNla•.fa�.r.;..wrra e•ro!..-er..,+>,-•.: Update on Onicna Edaealon antl{ertlka::<n of lA Staff Pfesenled 6y: ..,.....w„•�~' •'•�•..,. We>ley le•,vla,Olrector pf Intelnal Audd Finance Commitlee Nie ing April 28.2020 Commissioners Zerkle and Thomas congratulated Mr. Lewis for obtaining CISA certification. Other Commissioner Mullen stated that an email was received from Mark Lawrence regarding the LED and acorn style streetlights. The correspondence was sent to GM Peffley for a response. Commissioners Price, Zerkle, and Mullen thanked Corporate Secretary, Denise Griffin; IT Analyst, Ben McDonald; and Commissioners Mullen,Thomas, and Ross for a well-run online meeting. Commissioner Ross asked about the scheduling for the next Board meeting and the Return on Equity agreements that are to be sent to City Council. The Corporate Secretary responded that the Board Meeting would be held on Tuesday, May 26, 2020 as set by resolution; the Committee meetings will be scheduled as needed and or requested by the chair of a committee. Commissioner Leek commended GM Peffley on his response to COVID-19, by stopping shutoffs, and donating $5,000 to United Way. Commissioner Leek asked if there was any way to assist low income rate payers during this pandemic by giving them credits. GM Peffley responded that longer times are being allowed to pay amounts due for both residential and commercial rate payers and the Executive Director of Customer Operations and Communications is looking into ways that the BWL can assist customers. Commissioner Jester commended the BWL on their response to the COVID-19 pandemic. GM Peffley expressed his appreciation to the Board, Ron Byrnes, and the BWL employees for working together and for helping to develop a return to work strategy. At the request of a commissioner the following information was provided by General Manager Peffley. BWL FTE Total employees (includes 25 contractors) 700 Employees working remote 320 Employees on stand down (paid to stay home) 115 Employees working on site or in the field 260 Employees on FLMA 5 (Next week, employees who are currently on stand down will begin to return to work) Delta Energy Park Contractors Pre-COVID-19 workers onsite 260 Post-COVID-19 workers onsite 50* Normal staffing at this stage of the project 300-350 *Staffing overtime has increased to 150 as of 4/30/20. Adjourn Motion by Commissioner Price to adjourn the meeting. The meeting was adjourned at 5:32 p.m. Respectfully Submitted Anthony Mullen, Chair Committee of the Whole Commissioner Ken Ross presented the Finance Committee Report: FINANCE COMMITTEE Meeting Minutes May 26, 2020 Due to public safety concerns resulting from the COVID-19 Pandemic, the Finance Committee meeting for the Lansing Board of Water and Light (BWL) was conducted via WebEx Conferencing in Lansing, MI, at 4:00 p.m. on Tuesday, May 26, 2020. Finance Committee Chair Ken Ross, called the meeting to order at 4:00 p.m. and asked Corporate Secretary Griffin for the roll call. Present: Commissioners Ken Ross, Beth Graham, David Lenz, and Tony Mullen. Also, present: Commissioners Deshon Leek, David Price, Tracy Thomas, and Sandra Zerkle, and Non-Voting Commissioners Mike Froh (Meridian Township), Douglas Jester (East Lansing) and Larry Merrill (Delta Township). Absent: None The Corporate Secretary declared a quorum. On behalf of the Board of Commissioners, Chair Ross welcomed the sign language interpreter, Ms. Bonnie Schulz. Public Comments None. Approval of Minutes Motion by Commissioner Price, Seconded by Commissioner Mullen, to approve the Finance Committee meeting minutes of January 14, 2020. Motion Carried by the following Roll Call Vote: Yeas: Commissioners Ross, Graham, Leek, Lenz, Mullen, Price,Thomas and Zerkle Nays: None April YTD Financial Summary Chief Financial Officer (CFO), Ms. Heather Shawa, presented the following Year to Date Financial Review: ��-+�"c�1 civk'�'Cd:a's� a,���'�.C��� �elnancla►summary Ayll zum� ;�' ��.. t sh G,omr 5f t mrnI ATD _. -_. ._ � _ Cash on hand is strong at 206 days and this is a key contributor that will help during the COVID-19 pandemic. The Days Cash on Hand is discussed in the COVID-19 Scenario at the end of the FY21 Budget and Forecast Presentation. The projections due to the pandemic for the FY budgeted net income was a decrease in electric load between 15-17% and a decrease in water of about 10% and that has been validated. 0&M Budget YTD is tracking underspend, and Capital Project YTD and Delta Energy spend have been somewhat impacted by the pandemic. Construction season is just beginning for the Capital Projects which is where the spend would be realized and the budget is expected to be at underspend in the next few months. The Return on Assets of 4.5% currently exceeds budgeted and it will be reviewed in May. Budgeted net income has not been adjusted as the strong financial position prior to the pandemic is expected to be attained. Of the three ratios that are below target, days sales outstanding and bad debt are expected to continue to be off target due to the pandemic. Employee count, payroll data and benefits remain the same as past months. FY21 Operating Budget and Forecast Presentation General Manager Richard Peffley introduced the FY21 Operating Budget and Forecast. Prior to COVID-19 stringent guidelines were put into place to reach competitive rates. CFO Shawa provided information regarding COVID-19 and the FY21-26 Budget and Forecast. Ms. Shawa reviewed BWL Strategic Objectives, Key Budget and Forecast Assumptions, Sales Volume History and Forecast by Utility, Operating Budget and Forecast, Capital Budget and Forecast, and Next Steps. M.�n ..k. u: :.•.. i ,,ry i Forecast •.un . .. eiqa•.ealiW:.rin ay3i-+ftaM Faf aA>fumPdr. - . •;Yei VN+me Hx[onai Faernf Ga L',rvrJ p y _ Cap •B.agna F :+ Y.TWE N w.,.bry•+Ina..4 M..i.,..Mbrw,9F.HYN IMAM .e.tkW'2nM.rmrrAfvft ...'.:,._. ',..w........:.....T,.,..w•,........r... 4Ni..nrn.Pm •- • _ - ...m w...r...n... _ — �..^+. .( • tM.tlytW l�mrotm..y Mtt=y.rm.w F.Mv.�uflkitrin .. e! nwrvn..ynr.w... rv... ....._.. ....... w�a�ar0.yr.npa➢.I.li.o.111•i wm.nn x..tl.a....Hry .i.in++ .+ar n...+. ..... ... ... HTnr+ f.u...n..n«'✓4aua enr,rt H.......w.rrn.r.'n r ... �••. ..�. ..v.t .A.nv,.:N<✓M mm +r rrx.v .. a.nM I — .a ry - " . . x �'- -- _.. �r . mnsNa N�f - rt.e.bn 'w�"ie °4rvMrv.s w...r.x f..... .1....c.<uxnT.rm.«ra.n✓rri.e.v.a.•n�y.Z: e ..r.«n.wxF 4•v s.r�i.f.r.r.. �a�v.NeMr�mrx•xuwC.r[tn.�n.av wuaer Response f.rvkm x xPkr.. N✓eM (frmnw•r vsaMb. u.rNwCn'Y� .�YCWOi. •xMhan M.t.p �i..vTMWp+a uty ev rLfapMrn� •Co+w.mc'e`^�.r hn: .ah.t afr.w MwtAn:ru a.•nxiAn:.rw.J n arr..w.n,wnmrwAyo-pxxh.nx. Commissioner Ross asked for additional information about City Works and what cost strategies will be implemented to improve competitiveness in the next rate strategy. Ms. Shawa stated that City Works is part of the asset management platform and database. Executive Director of Operations, Mr. Dave Bolan, added that it is a computerized maintenance management system which includes asset management information and the work order system. The system is also used by the city of Lansing. Ms. Shawa stated cost strategies being implemented include a recommendation to pool fleet vehicles and consolidation of departments. Commissioner Lenz asked how GIS was being utilized and was the development of the software being done by BWL staff or an outside vendor. Ms. Shawa responded that an outside vendor, SSP, was developing the software and is working with BWL BSmart employees. Commissioner Lenz asked if the software was being utilized to identify assets in the field from the operations and maintenance area. Mr. Bolan responded that there is an application that is on top of the GIS system. When the work orders are cut from the asset information in City Works, the information is sent out to the field. There are horizontal assets which are geographically placed process such as wires. Commissioner Zerkle asked when the vendor has completed the software will BWL be totally responsible for the program. Mr. Bolan responded that BWL's GIS department will be responsible for maintaining the data. Commissioner Zerkle asked about a public relations presentation regarding rates not changing for a year. GM Peffley responded that the competiveness of the rates would be evaluated and that there are plans in place for more efficiencies. Commissioner Merrill asked if there are any established external benchmarks for what an adequate return on assets should be for a municipal utility. Finance Manager Scott Taylor responded that metrics provided by APPA do not include return on assets. He said this is partly due to the requirements being unique for each utility based on their cost of borrowing, expected inflation rate, and debt ratio. Commissioner Ross asked for the difference between the previous and current targets. CFO Shawa responded that the previous target for the current fiscal year was 4.66% and the current target for the next fiscal year and forecast period is 4.14%. Commissioner Ross asked if the cash reserve policy identifies the key items on which money is spent in order that there is money on hand in reserve in case of stress. CFO Shawa affirmed. Commissioner Ross also asked about the downward trending items and the upward trending items. CFO Shawa responded that downward and upward trending items were indicated on the slide to signify downside and upside potential in the budget and the remaining items were stated as facts. Commissioner Jester asked for additional information on the performance expectation of the Erickson plant over the next few years considering lower wholesale market prices. GM Peffley responded that the Erickson plant's official retirement date is 2025 but it will not be generating electricity entirely throughout that time due to the market. Commissioner Leek asked if the Delta Energy Park June 2021 date is not expected to be met how far away is the goal date. GM Peffley responded that commercial operations original target was June 2021 and there could be a minimum of a two-month delay. Commissioner Ross asked what the cost difference would be between the target dates. GM Peffley responded that the capacity has to be purchased for a whole year and the cost difference is $13 million. Commissioner Lenz asked about the difference in the net income for 2026 of$20 million and the net income of $1.5 million for this year. CFO Shawa responded that the net income is impacted in FY2021-2022 due to depreciation of the Delta Energy Plant. Commissioner Merrill asked about the cost of service model for water indicating that there would be an expected increase of 7.25% per year over a three-year period. CFO Shawa responded that there is a cost of service model completed every year and the rate strategy for this year includes, along with electric, a detailed study by rate class for water and updated steam study as well. The rate increase is approximately$0-$3 per month based on an average customer's consumption. Commissioner Zerkle asked how competitive the 21.75% rate increase was. GM Peffley responded that there is a wide variation in water cost due to the quality of treatment and he would follow up and provide the commissioners with the information. Finance Manager, Mr. Scott Taylor, spoke about the Capital Portfolio Budget and Forecast. Commissioner Lenz inquired about the project estimated cost and whether the project is being attuned to meet the first initial cost in the projected capital budget. Mr. Taylor responded that most of the capital budget projects are in the project intake phase. Several multi-year projects will have updated revised numbers due to the phase of the project and each progressive phase is expected to have less variation. GM Peffley responded that the orange line on slide 17 represents the project cost which is brought to the Commissioners for approval and if there is a deviation by 15%the Commissioners will be provided the reasons. Commissioner Zerkle inquired whether a Capital Exceedance approval would be requested every year if there is a multiple year project in which costs go up every year. GM Peffley responded that an updated budget is made to be brought back to the Commissioners one time. CFO Shawa spoke about the scenario that was created for the potential impact of COVID-19 highlighting reduced retail electric lode and water sales for commercial and industrial customers, reducing fuel and purchased power expense for reduced sales to retail customers, increasing bad debt expense, and reducing delayed payment charge (DPC) revenue from waived DPCs. Days cash on hand is the metric most affected by the COVID-19 pandemic economics. Temporary shutdown of the Erickson plant, suspending non-essential travel and training, adjusting fleet and vehicles practices, and detailed cost tracking for future reimbursement have been put into action. Commissioner Zerkle asked if there was an expected date for water shut off for unpaying customers after the stay safe order is lifted. GM Peffley responded that will be decided after the order is lifted. GM Peffley spoke about the COVID-19 economic impact and response, employee protection, customer protection, and employee contribution. He reported that approximately 15% of commercial customers aren't expected to return but some businesses have been restarting operation. Increased bad debt and waived delayed payment charges have brought about the need for the creation of a new policy. The turnoff pool is usually around 600 but has increased to 6,000 and it will take about three weeks for notifications to be sent out after the stay at home order is lifted. GM Peffley reported that a campaign for employees to donate to Pennies for Power will be implemented on June 1, 2020. No BWL employees have tested positive for COVID-19, and there have been no furloughs or layoffs. GM Peffley also stated that all out of state travel, conferences and training have been suspended. Commissioner Price recommended that Commissioners abide by the travel restrictions. Motion by Commissioner Thomas, Seconded by Commissioner Mullen, to forward the Resolution for the FY21 Operating Budget and Forecast to the full Board for consideration. Motion Carried by the following Roll Call Vote: Yeas: Commissioners Ross, Graham, Leek, Lenz, Mullen, Price,Thomas and Zerkle Nays: None Other None. Adiourn Commissioner Ross adjourned the meeting at 5:48 p.m. Respectfully submitted Ken Ross, Chair Finance Committee MANAGER'S RECOMMENDATIONS General Manager Peffley recommended that the Board approve the Resolution for the IT Communications Policy. RESOLUTION#2020-05-01 IT Communications Policy WHEREAS, Internal Audit performed an audit of Cybersecurity Policies and recommended enhancements to the Communications Technologies Policy of 2016; and WHEREAS, management has developed additional operating policies supporting the use of communications technologies and has created a Cyber Security Steering Committee to monitor and maintain those policies since the establishment of the Communications Technologies Policy in November 2016; and WHEREAS, management has proposed a revised Communications Technologies Policy to incorporate these changes in operations as well as recommended enhancements; RESOLVED, that the Board of Commissioners hereby adopts the revised Communications Technologies Policy as recommended by Staff. Motion by Commissioner Mullen, Seconded by Commissioner Thomas, to approve the IT Communications Policy Resolution. Motion Carried by the following Roll Call Vote Yeas: Commissioners Price, Graham, Leek, Lenz, Mullen, Ross,Thomas and Zerkle Nays: None UNFINISHED BUSINESS There was no Unfinished Business. NEW BUSINESS There was no New Business. RESOLUTIONS/ACTION ITEMS RESOLUTION#2020-05-02 Return on Equity(ROE) Renewal WHEREAS, the City of Lansing has expressed a desire to continue the Agreement Between the City of Lansing and The Board of Water & Light dated June 30, 1992 (the Agreement), which has been subsequently extended by means of four Amendments thereto in 2001, 2012, 2013 and 2018, respectively; WHEREAS, the Board of Commissioners Committee of the Whole (COW) considered the City of Lansing's request on April 28, 2020; WHEREAS, the General Manager recommended the Agreement be extended by two (2) years at a specific dollar amount for Fiscal Years 2020, 2021, and 2022, with some limited upward adjustment for FY 2021 and 2022 if the BWL's revenues significantly exceed its forecast, which would be memorialized as Amendment No. 5; WHEREAS, the COW has considered the proposed Amendment#5, agreed with the General Manager's recommendation and approved the Amendment, including authorization for the General Manager to execute the Amendment, and the Amendment shall be forwarded to the Board of Commissioners for approval at the.May 2020 meeting. RESOLVED, the proposed Amendment 5 to the Agreement Between the City of Lansing and The Board of Water& Light dated June 30, 1992 is approved by the COW, including authorization for the General Manager to execute the Amendment, and shall be forwarded to the Board of Commissioners for approval at the May 2020 meeting. Motion by Commissioner Ross, Seconded by Commissioner Leek, to approve the Return on Equity (ROE) Renewal for FY 20. Motion Carried by the following Roll Call Vote Yeas: Commissioners Price, Graham, Leek, Lenz, Mullen, Ross,Thomas and Zerkle Nays: None RESOLUTION#2020-05-03 Delegation of Authority to General Manager Retraction and Amendment to Defined Contribution Plan &Trust 2 WHEREAS, the Board of Water and Light (the "Sponsor") sponsors the Lansing Board of Water and Light Defined Contribution Plan and Trust 2 (the "Plan"); WHEREAS, in Resolution #2019-11-01, the Sponsor delegated authority to the General Manager ("GM") and the Retirement Plan Committee (the "Committee")that permitted the GM and Committee to alter the plan design to address business needs and industry practices for the Plan (the "Delegation") as well as for other plans maintained by the Sponsor; and WHEREAS, the Sponsor wishes to retract the Delegation as it relates to the Plan only and not to any other plans maintained by the Sponsor; and WHEREAS, the Sponsor intends to reserve its authority to amend the Plan, to freeze the Plan, or to terminate the Plan; and WHEREAS, the Sponsor wishes to restate the Plan's Adoption Agreement to alter the Plan's eligibility provisions. THEREFORE, it is: RESOLVED, that the Sponsor hereby retracts the Delegation as it relates to the Plan only and retains its authority to amend the Plan, to freeze the Plan, or to terminate the Plan, unless and until otherwise resolved; and FURTHER RESOLVED, that, after its review, the Sponsor adopts and approves the attached restated Adoption Agreement, effective as stated therein; and FURTHER RESOLVED, that the Chair of the Board is hereby authorized to execute the restated Adoption Agreement and related documents on behalf of the Sponsor; and FURTHER RESOLVED, that the Sponsor indemnifies and holds harmless the GM 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 GM's or the Committee's discharge of its duties relating to the Plan; provided, however, that this indemnification shall not apply with regard to any proceeding in which the GM or a Committee member is found to have been grossly negligent or to have violated a law or committed a crime. Motion by Commissioner Ross, Seconded by Commissioner Thomas, to approve the Delegation of Authority to General Manager Retraction and Amendment to Defined Contribution Plan & Trust 2 Resolution. Motion Carried by the following Roll Call Vote Yeas: Commissioners Price, Graham, Leek, Lenz, Mullen, Ross,Thomas and Zerkle Nays: None RESOLUTION#2020-05-04 Delegation of Authority to the General Manager to Amend Plans for Compliance WHEREAS, the Board of Water and Light (the "Sponsor") sponsors the (a) Lansing Board of Water and Light Defined Contribution Plan and Trust 1; (b) Lansing Board of Water and Light 457 Deferred Compensation Plan and Trust; (c) Lansing Board of Water and Light Defined Benefit Plan and Trust for Employees' Pensions; and (d) Post-Retirement Benefit Plan and Trust for Eligible Employees of Lansing Board of Water and Light (collectively the "Plans"); and WHEREAS, in Resolution #2019-11-01, the Sponsor delegated authority to the General Manager ("GM") and the Retirement Plan Committee (the "Committee")that permitted the GM and Committee to alter the plan design to address business needs and industry practices for the Plans; and WHEREAS, the Sponsor wishes to delegate authority to amend the Plans for compliance purposes due to changes in the law ("Compliance Amendments") to the GM who may further delegate such authority to the Committee or any successor of the Committee performing the same duties; and WHEREAS, the Sponsor intends to reserve its authority to freeze the Plans or to terminate the Plans. THEREFORE, it is: RESOLVED, that the Sponsor expressly delegates to the GM authority to adopt Compliance Amendments for the Plans; and FURTHER RESOLVED, that the Sponsor expressly delegates to the GM the authority to further delegate to the Committee the authority to adopt Compliance Amendments for the Plans; and FURTHER RESOLVED that the Sponsor requires all Compliance Amendments to be communicated to the Board at the next regularly scheduled meeting of the Board; and FURTHER RESOLVED that the Sponsor ratifies all adopted Compliance Amendments that have been adopted by the GM or Committee prior to this delegation; and FURTHER RESOLVED that the Sponsor reserves its authority to freeze the Plans or to terminate the Plans; and FURTHER RESOLVED, that the Sponsor indemnifies and holds harmless the GM 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 GM'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 GM or a Committee member is found to have been grossly negligent or to have violated a law or committed a crime. Motion by Commissioner Ross, Seconded by Commissioner Thomas, to approve the Delegation of Authority to the General Manager to Amend Plans for Compliance Resolution. Motion Carried by the following Roll Call Vote Yeas: Commissioners Price, Graham, Leek, Lenz, Mullen, Ross,Thomas and Zerkle Nays: None RESOLUTION#2020-05-05 Defined Benefit (DB) Investment Policy Statement WHEREAS, the Board of Water and Light (the "Sponsor") sponsors the (a) Lansing Board of Water and Light Defined Contribution Plan and Trust 1; (b) Lansing Board of Water and Light 457 Deferred Compensation Plan and Trust; (c) Lansing Board of Water and Light Defined Benefit Plan and Trust for Employees' Pensions; and (d) Post-Retirement Benefit Plan and Trust for Eligible Employees of Lansing Board of Water and Light (collectively the "Plans"); and WHEREAS, in Resolution #2019-11-01, the Sponsor delegated authority to the General Manager ("GM") and the Retirement Plan Committee (the "Committee")that permitted the GM and Committee to alter the plan design to address business needs and industry practices for the Plans; and WHEREAS, the Sponsor wishes to delegate authority to amend the Plans for compliance purposes due to changes in the law ("Compliance Amendments") to the GM who may further delegate such authority to the Committee or any successor of the Committee performing the same duties; and WHEREAS, the Sponsor intends to reserve its authority to freeze the Plans or to terminate the Plans. THEREFORE, it is: RESOLVED, that the Sponsor expressly delegates to the GM authority to adopt Compliance Amendments for the Plans; and FURTHER RESOLVED, that the Sponsor expressly delegates to the GM the authority to further delegate to the Committee the authority to adopt Compliance Amendments for the Plans; and FURTHER RESOLVED that the Sponsor requires all Compliance Amendments to be communicated to the Board at the next regularly scheduled meeting of the Board; and FURTHER RESOLVED that the Sponsor ratifies all adopted Compliance Amendments that have been adopted by the GM or Committee prior to this delegation; and FURTHER RESOLVED that the Sponsor reserves its authority to freeze the Plans or to terminate the Plans; and FURTHER RESOLVED, that the Sponsor indemnifies and holds harmless the GM 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 GM'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 GM or a Committee member is found to have been grossly negligent or to have violated a law or committed a crime. Motion by Commissioner Ross, Seconded by Commissioner Mullen, to approve the Resolution for the Defined Benefit (DB) Investment Policy Statement. Motion Carried by the following Roll Call Vote Yeas: Commissioners Price, Graham, Leek, Lenz, Mullen, Ross,Thomas and Zerkle Nays: None RESOLUTION #2020-05-06 Voluntary Employees Beneficiary Association (VEBA) Investment Policy Statement WHEREAS, the Lansing Board of Water & Light (the "Sponsor") sponsors the Post-Retirement Benefit Plan and Trust for Eligible Employees of Lansing Board of Water and Light (the "VEBA"); and WHEREAS, the Retirement Plan Committee, established by the Sponsor and delegated certain duties by the Trustees related to the investment of VEBA assets, periodically reviews the target rate of return for each plan and, as the result of its most recent review, recommends the target rate of return for the VEBA be reduced from 7.5%to 7.0%; and WHEREAS, the Retirement Plan Committee also periodically reviews the investment policy statement, formally known as the Statement of Investment Policies, Procedures and Objectives, for the VEBA and, as the result of its most recent review, recommends revisions to language within the VEBA's investment policy statement; and WHEREAS, the Retirement Plan Committee along with the General Manager recommends the Sponsor adopt the revisions which reflect these recommendations in the attached Post- Retirement Benefit Plan and Trust for Eligible Employees of Lansing Board of Water and Light Statement of Investment Policies, Procedures and Objectives; and WHEREAS, the Sponsor wants to adopt the revisions reflected in the attached Post-Retirement Benefit Plan and Trust for Eligible Employees of Lansing Board of Water and Light Statement of Investment Policies, Procedures and Objectives; THEREFORE, it is: RESOLVED, that, after its review, and based on the recommendation from the Retirement Plan Committee along with the General Manager, the Sponsor adopts and approves the attached Post- Retirement Benefit Plan and Trust for Eligible Employees of Lansing Board of Water and Light Statement of Investment Policies, Procedures and Objectives. Motion by Commissioner Thomas, Seconded by Commissioner Ross, to approve the Resolution for the Voluntary Employees Beneficiary Association (VEBA) Investment Policy Statement. Motion Carried by the following Roll Call Vote Yeas: Commissioners Price, Graham, Leek, Lenz, Mullen, Ross,Thomas and Zerkle Nays: None RESOLUTION#2020-05-07 Capital Project Exceedance—AE—Electric Annual Account WHEREAS, Lansing Board of Water & Light's (BWL) Policy 15-02, entitled Capital Project Exceedance Approval necessitates BWL Board of Commission approval for aggregate total budget amounts for electric, water, steam and chilled water "annual" capital projects that are expected to exceed their previously approved budget by both 15%and $200,000 prior to completion of the project; and WHEREAS, the previously approved budget for Capital Project AE— Electric Annual Account was $11,633,349; and WHEREAS, the projected final total cost for Capital Project AE—Electric Annual Account is $14,200,000, should the projects be completed; and WHEREAS, BWL staff and management reviewed the project cost in detail, which includes but is not limited to the rationale and circumstances for the increased budget projection; and WHEREAS, BWL staff and management recommends that the Capital Project AE—Electric Annual Account be completed despite the projected increased cost; and RESOLVED, the BWL Board of Commissioners approve completion of Capital Project AE—Electric Annual Account with a projected final total cost of$14,200,000. Motion by Commissioner Ross, Seconded by Commissioner Graham, to approve the Resolution for the Capital Project Exceedance—AE- Electric Annual Account. Motion Carried by the following Roll Call Vote Yeas: Commissioners Price, Graham, Leek, Lenz, Mullen, Ross,Thomas and Zerkle Nays: None RESOLUTION#2020-05-08 Capital Project Exceedance—Tainter Gate Trunnion Pin Replacement 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 Project PE-20203 MP —Tainter Gate Trunnion Pin Replacement was $1,653,565; and WHEREAS, the projected final total cost for Capital Project PE-20203 MP—Tainter Gate Trunnion Pin Replacement is $2,011,000, should the project be completed; and WHEREAS, BWL staff and management reviewed the project cost in detail, which includes but is not limited to the rationale and circumstances for the increased budget projection; and WHEREAS, BWL staff and management recommends that the Capital Project PE-20203 MP—Tainter Gate Trunnion Pin Replacement be completed despite the projected increased cost; and RESOLVED, the BWL Board of Commissioners approve completion of Capital Project PE-20203 MP— Tainter Gate Trunnion Pin Replacement with a projected final total cost of$2,011,000. Motion by Commissioner Thomas, Seconded by Commissioner Mullen, to approve the Resolution for the Capital Project Exceedance Tainter Gate Trunnion Pin Replacement. Motion Carried by the following Roll Call Vote Yeas: Commissioners Price, Graham, Leek, Lenz, Mullen, Ross,Thomas and Zerkle Nays: None RESOLUTION#2020-05-09 Fiscal Year 2021-2026 Budget and Forecast RESOLVED, that the Annual Operating and Capital Budget covering Fiscal Year 2021 is hereby approved as presented; and RESOLVED, that the Operating and Capital Forecast for the Fiscal Years 2022-2026 is hereby accepted as 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 recommends an operating and maintenance budget of $329.4M and a capital budget of $198.9M for Fiscal Year 2021. The Operating and Capital Forecast for Fiscal Years 2022-2026 includes potential rate increases in Fiscal Years 2022-2026. The potential rate increases are for forecast purposes only and have not been approved through a public rate hearing process. The forecast rate increases are subject to revision and, in any case, prior to implementation, must be subject to the BWL's formal rate setting process as per Lansing City Charter, Section 5-205 which refers to the BWL's authority to set just and reasonable rates and defines the public hearing process. In accordance with the provisions of the Lansing City Charter, Article 5, Chapter 2, Section 5-203.5 and Section 5-203.6, staff recommends the Finance Committee approve the budget and forecast for presentation and adoption by the Board at its May 26, 2020 board meeting. Motion by Commissioner Ross, Seconded by Commissioner Zerkle, to approve the Resolution for the Fiscal Year 2021-2026 Budget and Forecast. Motion Carried by the following Roll Call Vote Yeas: Commissioners Price, Graham, Leek, Lenz, Mullen, Ross,Thomas and Zerkle Nays: None MANAGER'S REMARKS General Manager Peffley informed of the following: 1. GM Peffley provided an update on the Delta Energy Plant with drone footage of construction of the plant. 2. BWL employees are starting to return to work. Field workers, maintenance, Erickson station employees and the line department will have started back to work by next week. Office staff will return within two months. 3. BWL's commercial with the 40+year seniority employees was nominated for a state Emmy. The commercial was rated in the top five commercials in 2019. COMMISSIONER'S REMARKS Commissioner Ross commended GM Peffley and the Financial Team for the extensive financial review of the impacts of COVID-19 on BWL and asked for additional information to be provided at the next Board meeting on how the BWL as employer will transition office-based employees back in. GM Peffley responded that he will provide information at the next Board meeting. Commissioner Price commended how well BWL has dealt with the COVID-19 challenge and that no employees have contracted COVID-19. Commissioner Leek and Commissioner Price commended GM Peffley on Delta Energy Park and the drone footage. Commissioner Thomas commented about the transition time between the meetings and thanked the sign language interpreter for her work. MOTION OF EXCUSED ABSENCE None. PUBLIC COMMENT None. ADJOURNMENT Chair Price adjourned the meeting at 6:29 p.m. M.Denise Griffin,Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk:June 3,2020 Official Minutes filed(electronically)with Lansing City Clerk: July 29,2020 Approved 9-22-2020 Hometown People. Hometown Power: MINUTES OF THE BOARD OF COMMISSIONERS MEETING LANSING BOARD OF WATER AND LIGHT July 28, 2020 Due to public safety concerns resulting from the COVID-19 Pandemic, the Regular Board of Commissioners meeting for the Lansing Board of Water and Light (BWL) was conducted via WebEx Conferencing in Lansing, MI, on Tuesday,July 28, 2020.This meeting was publicly noticed for 5:30 p.m. Chairperson David Price called the meeting to order at 5:30 p.m. The Corporate Secretary, M. Denise Griffin, called the roll. Present: Commissioners David Price, Deshon Leek, David Lenz (arrived at 5:34 p.m.), Tony Mullen, Ken Ross, Tracy Thomas, and Sandra Zerkle. Non-Voting Commissioners present: Douglas Jester (East Lansing), and Larry Merrill (Delta Township). Absent: Commissioner Beth Graham The Corporate Secretary declared a quorum. ELECTION OF OFFICERS FY 2020-2021 Corporate Secretary M. Denise Griffin presented the June 23, 2020 Nominating Committee Report for Nominating Committee Chairperson, Commissioner Beth Graham, who has an excused absence for this meeting. The proposed slate of officers for Fiscal Year 2020-2021 is as such: Commissioner David Price serving as Chairperson; and Commissioner Tracy Thomas serving as Vice Chairperson. There were no further nominations for the officers' positions. Motion by Commissioner Leek, Seconded by Commissioner Zerkle to approve the nominations of Commissioner David Price to serve as the Chairperson and Commissioner Tracy Thomas to serve as the Vice Chairperson of the Board of Commissioners for Fiscal Year 2020-2021., Roll Call Vote: Yeas: Commissioners Deshon Leek, David Lenz, Tony Mullen, David Price, Ken Ross, Tracy Thomas, and Sandra Zerkle. Nays: None. Action: Motion Carried. Chair Price requested approval for the appointment of Commissioner Tony Mullen as the fourth member of the Executive Committee to fill the vacancy created by the appointment of Commissioner Tracy Thomas as Board of Commissioners Vice Chair. Motion by Commissioner Price, Seconded by Commissioner Thomas to approve the appointment of Commissioner Tracy Thomas to serve as the fourth member on the Board of Commissioners Executive Committee. Roll Call Vote: Yeas: Commissioners Deshon Leek, David Lenz, Tony Mullen, David Price, Ken Ross, Tracy Thomas, and Sandra Zerkle. Nays: None. Action: Motion Carried. Chair Price stated that Committee Assignments for the Commissioners would be sent out next week. APPROVAL OF MINUTES Motion by Commissioner Thomas, Seconded by Commissioner Leek, to approve the Regular Board Meeting minutes of May 26, 2020. Action: Motion Carried. Commissioner Price led the Pledge of Allegiance. PUBLIC COMMENTS Mr. Randy Dykhuis of Lansing, MI spoke about the June 30, 2020 COW meeting and expressed favor toward the increased commitment toward clean energy from 40%to 50% by 2030 and attainment of carbon neutrality by 2040 but expressed disappointment that the goals were not more aggressive and that the IRP hasn't been drafted. Mr. Dykhuis commented that it was stated at the meeting that the IRP would not be approved by the Board of Commissioners and therefore there would not be any oversight. He advised the Board to provide public hearings for public input and to work with experts, consultants, and outside energy experts to revise the IRP and to strive for 100% renewables. COMMUNICATIONS Chair Price expressed condolences for the passing of former Mayor Virg Bernero's father and that in lieu of flowers donations can be made to St. Vincent de Paul Society. Electronic Mail received From or Re: a. Electronic mail from Steve Harry re: A FIOA Request -Referred to Management. Received and Placed on File. b. Electronic mail from Heather Douglas re: IRP -Referred to Management. Received and Placed on File. COMMITTEE REPORTS Corporate Secretary M. Denise Griffin presented the Nominating Committee Report for Commissioner Beth Graham: NOMINATING COMMITTEE MINUTES June 23, 2020 Due to public safety concerns resulting from the COVID-19 Pandemic, the Nominating Committee meeting of the Lansing Board of Water and Light (BWL) was conducted via WebEx Conferencing in Lansing, MI, at 4:00 p.m. on Tuesday, June 23, 2020. Nominating Committee Chair, Beth Graham, called the meeting to order at 4:00 p.m. and asked the Corporate Secretary to call the roll. The following committee members were present: Commissioners Beth Graham, Deshon Leek, David Lenz, and Sandra Zerkle. The following Commissioners were also present: Commissioners David Price and Ken Ross (arrived @4:02 p.m.) Absent: None Public Comments There were no public comments. Approval of Minutes Motion by Commissioner Zerkle, Seconded by Commissioner Leek to approve the Nominating Committee meeting minutes of June 20, 2019. Action: Motion Carried Officer& Committee Survey Memorandum and Officer& Committee Survey Results Nominating Committee Chair Beth Graham stated that the Officer Committee Survey Memorandum and Committee Survey Results Forms were included in the Nominating Committee meeting packet for review and asked if there were any questions regarding the documents. There were no questions. Nomination of Board Officer Candidates for Fiscal Year 2020-2021 Chairperson and Vice Chairperson Nominating Committee Chair Graham opened the floor for nominations for the Chairperson for the 2020-2021 fiscal year and for the Vice Chairperson for the 2020-2021 fiscal year. Commissioner Leek inquired about the Administrative Rules of Procedure and questioned if the process was being followed regarding the Commissioners rotating the Officer positions. Nominating Chair Graham asked Corporate Secretary Griffin to respond to the inquiry. Corporate Secretary Griffin stated that the role of the Nominating Committee according to the Rules of Procedure is that the "Board" shall endeavor to rotate the officer positions annually. Upon conclusion of dialogue the following motion was offered: Motion by Commissioner Leek, Seconded by Commissioner Lenz to nominate Commissioner David Price to serve as the Chairperson for the 2020-2021 fiscal year. Roll Call Vote: Yeas: Commissioners Beth Graham, Deshon Leek, David Lenz, and Sandra Zerkle. Nays: None. Action: Motion Carried. Motion by Commissioner Zerkle, Seconded by Commissioner Leek to nominate Commissioner Tracy Thomas as the Vice Chairperson for the 2020-2021 fiscal year Roll Call Vote: Yeas: Commissioners Beth Graham, Deshon Leek, David Lenz, and Sandra Zerkle. Nays: None. Action: Motion Carried. Motion by Commissioner Zerkle, Seconded by Commissioner Lenz to present the slate of Officers for 2020- 2021 to the full Board for consideration as follows: Chair: David Price Vice Chair: Tracy Thomas Roll Call Vote: Yeas: Commissioners Beth Graham, Deshon Leek, David Lenz, and Sandra Zerkle. Nays: None. Action: Motion Carried. Nominating Committee Chair Graham stated that the recommended slate of officers will be presented to the full Board for consideration at the July 28th Board/Annual Organizational meeting. Nominations will also be taken from the floor for the Officer positions at the July Board/Annual Organizational meeting. Excused Absence None Adjourn There being no further business, the meeting adjourned at 4:13 p.m. Respectfully submitted, Beth Graham, Chair Nominating Committee Commissioner Tracy Thomas presented the Human Resources Committee Report: HUMAN RESOURCES COMMITTEE Meeting Minutes June 23, 2020 Due to public safety concerns resulting from the COVID-19 Pandemic, the Human Resources Committee meeting of the Lansing Board of Water and Light(BWL) was conducted via WebEx Conferencing in Lansing, MI, at 4:45 p.m. on Tuesday,June 23, 2020. 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, Deshon Leek, and Sandra Zerkle. Also present: Commissioners David Lenz, Anthony Mullen, David Price, Ken Ross, and Non-Voting Commissioner Larry Merrill (Delta Township) Absent: None Public Comments None Approval of Minutes Motion by Commissioner Zerkle, Seconded by Commissioner Leek, to approve the Human Resources Committee meeting minutes of November 5, 2019. Action: Motion Carried. Memorandum of Understanding (MOU)for Labor Agreement General Manager Peffley spoke about the Labor Agreement MOU which requests, due to COVID 19 budget issues, a one-year extension of the contract from October 31, 2020 to October 31, 2021 to offset labor increases. Bargaining employees will receive a lump sum payment of $641.00 for extending the contract. BWL will save $1.1 million with this agreement. Additionally, bargaining employees will be able to sign up for the Green Plan during the September 2020 open enrollment. It is optional but the more employees that sign up for the Green Plan the lower health costs will be for BWL. GM Peffley recommended forwarding the resolution for the labor agreement to the full board for approval. Commissioner Thomas asked if the lump sum payment would be compounded on the salary of bargaining employees. GM Peffley responded that it is a one-time payment that doesn't go into the employees' base pay. Commissioner Leek asked for a description of the Green Plan. Human Resources Executive Director Lynette Keller described the Green Plan design change. The Green Plan has the same benefits of the Blue Plan but with a different cost structure. The Blue Plan deductible is $250 per individual and $500 per family and there is no co-insurance. The Green Plan deductible is $1000 per individual and $2000 per family and the co- insurance is $1000 per individual and $2000 per family. There is a difference of 90%and 100%coverage in the plans where the 10% difference goes toward the co-insurance. The total out of pocket maximum and prescription program are the same for both plans. The major difference is the cost to the employee which is lower for the Green Plan. Commissioner Ross asked if the Green Plan is an HSA Plan. Ms. Keller responded that it isn't and are standard PPO plans with a very high level of coverage for the employees. The deductible and co-insurance are the major differences. Commissioner Ross also asked about the plan for non-bargaining employees and an HSA for bargaining units. Chief Financial Officer Heather Shawa responded that an HSA plan such as the Green Plan for the bargaining employees is under consideration and currently an FSA plan is in effect. Commissioner Zerkle commented that all employees pay 20% of the premiums and asked if a copy of the Green Plan information can be provided to Commissioner Leek. Corporate Secretary Griffin will send the information to Commissioner Leek. Motion by Commissioner Zerkle, Second by Commissioner Leek to forward the Resolution for the Memorandum of Understanding Extending the 2016-2020 Collective Bargaining Agreement between LBWL and the IBEW, AFL-CIO, Local 352 to the full board for consideration. Roll Call Vote: Yeas: Commissioners Tracy Thomas, Beth Graham, Deshon Leek, and Sandra Zerkle. Nays: None. Action: Motion Carried. FY 2021 Charter Appointed Reappointments Human Resources Chair Tracy Thomas said, "In Accordance with Section 8.1 of our Administrative Rules of Procedure and the City Charter, the Board must appoint or reappoint its 3 Charter Appointed Employees each fiscal year". Chair Thomas explained that usually the reappointment resolutions are considered upon completion of the annual performance reviews, however due to public safety concerns resulting from the COVID-19 Pandemic and the social distancing requirements, the Committee will move forward with the reappointment resolutions today, and reserve the opportunity to conduct in-person performance reviews at a later date. Motion by Commissioner Thomas, Seconded by Commissioner Graham to forward the resolution reappointing M. Denise Griffin to the Charter position of Corporate Secretary, Wesley Lewis to the Charter position of Internal Auditor, and Richard R. Peff ley to the Charter position of General Manager for FY21 to the full Board for consideration. Action: Motion Carried by the following Roll Call Vote: Roll Call Vote: Yeas: Commissioners Tracy Thomas, Beth Graham, Deshon Leek, and Sandra Zerkle. Nays: None. Action: Motion Carried. Subsequent Steps for Board Appointed Employees Contracts Motion by Commissioner Thomas, Seconded by Commissioner Zerkle to charge the HR Chair and the Board Chair with the task of working with the appointed employees on their respective annual merit considerations after the performance reviews have taken place, on behalf of the Board of Commissioners. Roll Call Vote: Yeas: Commissioners Tracy Thomas, Beth Graham, Deshon Leek, and Sandra Zerkle. Nays: None. Action: Motion Carried. Excused Absence None Other None. Adiourn Motion by Commissioner Graham, Seconded by Commissioner Leek, to adjourn the meeting. Action: Motion Carried Meeting adjourned at 5:06 p.m. Respectfully Submitted, Tracy Thomas, Chair Human Resources Committee Vice Chair Tony Mullen presented the Committee of the Whole Report: COMMITTEE OF THE WHOLE June 30, 2020 Due to public safety concerns resulting from the COVID-19 Pandemic, the Committee of the Whole meeting for the Lansing Board of Water and Light (BWL) was conducted via WebEx Conferencing in Lansing, MI, at 5:30 p.m. on Tuesday, June 30, 2020. Committee of the Whole Chair Tony Mullen called the meeting to order at 5:30 p.m. Present via WebEx: Commissioners Tony Mullen, Beth Graham (arrived @ 6:12 p.m.), Deshon Leek, David Lenz, David Price, Ken Ross, Tracy Thomas, Sandra Zerkle, and Non-Voting Members: Michael Froh (arrived @ 5:51 p.m.), Doug Jester (East Lansing), and 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 Zerkle, to approve the Committee of the Whole Meeting minutes of April 28, 2020. Motion Carried by the following Roll Call Vote: Yeas: Commissioners Mullen, Graham, Leek, Lenz, Price, Ross,Thomas and Zerkle Nays: None Integrated Resource Plan (IRP) Update Executive Director of Strategic Planning and Development, Ms. Brandie Ekren, presented the Integrated Resource Planning (IRP) Update. Ms. Ekren introduced Mr. Steve Brennan, Planning and Development Manager, who would be available to answer questions. Ms. Ekren stated a formal report has been made, in addition to the presentation, which includes all the studies, all the modeling results, and all the stakeholder feedback comments. .I AGENDA Hometown People.Hometown Power. INTERGRATED RESOURCE PLANNNG UPDATE .. _... _.. '"OVERVIEW I - IRP STAKEHOLDER ENGAGEMENT SIGNIFICANT auEsnows .. .y "[LEAN ENERGY A - PATH FORWARD Aft BALANCING PERSPECTIVES - CARBON - BBB�� METRIC IMPACT I�.BALANCECiIOURNEY ... E2�BBB�® `:i J'.l.!v F .I ;% N tP .1Y lue Up ntlonll Elc.IBilky _T Nle 1 k [G. .syvrt ro s:,' �atyi S'. 9 If. C t5111 f/ 1. s 9t��� � • -+n 0.st t p tbb Genmllon BlYenlly . . M.r el rnee.nw E,� r..Ppr.+.yuNw ny Ylf.iJix san[rirlp Ox Nq C. .*wTHf./t` ......� •••••••••u•�••••••• ynrp 1:!f1PSN+. j. �dt w S02 Rtdutti" P �9OX Redu[ti— :t^•�.w BALANCEOJOURNEY ... BALANCEOJORNEY ARCBONLEAN EN NE ENERGY U & CA RS RAUTY . + Ale r « vs, a -'• '. u -�.A`J� 11 1 `�J� —ham— WHAT IS CARBON LH-YU�19� GRO CARBON NEUTRALITY WI Ni .�. uts� ti..wWtmm� ,nY.4J+'t� NEXT.STEPS CONT..:, GROWING COMMITMENT F ,�•'NEI[T,STEPS"::, . 'sf-X r 4 .. ii u..., i,G"s�R11M ..f� •. . RECAP Ms. Ekren stated that the main purpose of the IRP Plan is to meet the energy needs of its customers in a manner that is affordable, reliable and environmentally responsible. Ms. Ekren reported on the six main goals of the Board of Water and Light of meeting the energy needs of its customers, focusing on customer interest and perspectives, keeping up with rapidly evolving industry and technological changes, keeping ahead of clean energy goals, increasing clean energy goals, and carbon neutrality as soon as 2040. Commissioner Zerkle asked if the percentage of income was the same as the 87% revenue received from electricity from residential customers and 13% revenue from industrial customers. Ms. Ekren responded that the 87% refers to the number of customers and revenue refers to the two thirds received from industrial customers. Commissioner Zerkle also asked about BWL not being the hub for electrical energy in a few years. Ms. Ekren responded that as more customers express an interest to generate their own energy those customers will be considered energy providers as they will be producing enough energy to serve others. This is called distributed generation by the BWL. Commissioner Ross commended Ms. Ekren for setting specific clean energy and carbon goals, commented about new terms being clearly defined, and asked at what point BWL would be at 100% renewables. Ms. Ekren responded that clean energy is a combination of renewable energy and energy efficiency and gave as an example the 2020 goal of 30% clean energy which includes 20% renewable and 10% energy efficiency. The BWL's goal is to be at 100% renewables but doesn't have a set date yet. Commissioner Price asked whether BWL was proposing using credits. Ms. Ekren responded that energy consists of the energy itself, capacity value and renewable credits, and both energy and renewable credits will be used. Ms. Ekren also responded that carbon offset credits can be used to offset carbon emissions. Commissioner Lenz inquired about forecasting that customers will be contributing to the BWL energy portfolio by their own energy production in the future and whether the BWL has a way to offset lost revenue or generate revenue through those customers. Ms. Ekren responded that there a number of different options being pursued including offering customers that want to participate in the renewable contracts with a longer contract so that they don't have to build their own infrastructure. Commissioner Zerkle asked about the IRP Plan being a 10 to 15-year goal adjustment from the last IRP. Ms. Ekren responded that 20-year projections and re-evaluations are conducted periodically. Commissioner Zerkle asked whether the financial impact on customers was a consideration in the plan projections. Ms. Ekren responded that there is a balance between renewable energy goals, economic needs and financial impacts on customers. Commissioner Ross inquired whether the IRP projections included current generation capacity with no additions. Ms. Ekren affirmed. Commissioner Zerkle asked what consideration had been given to being the supplier and repairer of solar and wind equipment and if it was financially feasible. Mr. Brennan responded that there are a lot of common skill sets with current services provided and although tax incentives aren't in BWL's favor right, it is something that will be checked into. Commissioner Thomas and Commissioner Zerkle commended Ms. Ekren and her team for the strategic plan presentation and new solar program that saved BWL a lot of money. Commissioner Ross asked when the IRP report will be provided to the Commissioners for review. Ms. Ekren responded that additional work is being completed and the goal for publishing the report is after the holiday. Ms. Ekren is planning to provide all data that was reviewed to the stakeholders. The Corporate Secretary Ms. Griffin responded that the information will be provided on the Commissioners' portal. Commissioner Price commented that a way to access the information that is easily accessible to the general public should be provided. Ms. Ekren responded that the information will be provided to the general public on the website by Ms. Griffin and Ms. Amy Adamy. A link can be provided through an email as with the stakeholders. Other There was no other business. Adjourn Motion by Commissioner Price, Second by Commissioner Thomas to adjourn the meeting. The meeting was adjourned at 6:43 p.m. Respectfully Submitted Anthony Mullen, Chair Committee of the Whole Commissioner Tracy Thomas presented the Human Resources Committee Report: HUMAN RESOURCES COMMITTEE Meeting Minutes July 16, 2020 The Human Resources Committee of the Lansing Board of Water and Light (BWL) met via WebEx (BWL Headquarters-REO Town Depot located at 1201 S. Washington Ave., Lansing, MI) at 4:00 p.m. on Thursday, July 16, 2020. 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, Beth Graham, Deshon Leek, Sandra Zerkle. Also present Commissioners David Lenz, Tony Mullen, David Price, Ken Ross, and Non-Voting Commissioner Larry Merrill. Absent: None Public Comments None Approval of Minutes Motion by Commissioner Zerkle, Seconded by Commissioner Leek, to approve the Human Resources Committee meeting minutes of May 21, 2019. Action: Motion Carried. Board Appointee Performance Reviews HR Committee Chair Thomas opened the floor for the Board Appointee Performance Reviews. Corporate Secretary Corporate Secretary M. Denise Griffin requested a closed session via MS Teams for the purpose of receiving her contractual year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Thomas, Seconded by Commissioner Leek, to enter into closed session MS Teams to discuss the contractual year-end performance evaluation of Corporate Secretary M. Denise Griffin. The Human Resources Committee went into MS Teams closed session at 4:05 p.m. Roll Call Vote: Yeas: Commissioners Thomas, Graham, Deshon Leek, and Sandra Zerkle. Nays: None. Action: Motion Carried. Motion by Commissioner Graham, Seconded by Commissioner Leek, to reconvene into open session via WebEx. Action: Motion Carried. The Human Resources Committee reconvened to WebEx open session at 4:30 p.m. General Manager General Manager Richard Peffley requested a MS Teams closed session for the purpose of receiving his contractual year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Thomas, Seconded by Commissioner Graham, to enter into a MS Teams closed session to discuss the contractual year-end performance evaluation of General Manager, Richard Peff ley. Roll Call Vote: Yeas: Commissioners Thomas, Graham, Deshon Leek, and Sandra Zerkle. Nays: None. Action: Motion Carried. The Human Resources Committee went into MS Teams closed session at 4:32 p.m. Motion by Commissioner Zerkle, Seconded by Commissioner Graham, to reconvene into WebEx open session. Action: Motion Carried. The Human Resources Committee reconvened to WebEx open session at 5:17 p.m. Internal Auditor Internal Auditor, Wesley Lewis, requested a MS Teams closed session for the purpose of receiving his contractual year-end performance evaluation as permitted by the Open Meetings Act exemption MCL 15.268(a). Motion by Commissioner Thomas, Seconded by Commissioner Graham, to enter into MS Teams closed session to discuss the contractual year-end performance evaluation of Internal Auditor, Wesley Lewis. Roll Call Vote: Yeas: Commissioners Thomas, Graham, Deshon Leek, and Sandra Zerkle. Nays: None. Action: Motion Carried. The Human Resources Committee went into MS Teams closed session at 5:18 p.m. Motion by Commissioner Graham, Seconded by Commissioner Zerkle, to reconvene into WebEx open session. Action: Motion Carried. The Human Resources Committee reconvened to WebEx open session at 6:28 p.m. Other None Adjourn Motion by Commissioner Leek, Seconded by Commissioner Graham, to adjourn the meeting. Action: Motion Carried Meeting adjourned at 6:32 p.m. Respectfully Submitted, Tracy Thomas, Chair Human Resources Committee Commissioner Ross presented the Finance Committee Report: FINANCE COMMITTEE Meeting Minutes July 21, 2020 Due to public safety concerns resulting from the COVID-19 Pandemic, the Finance Committee meeting for the Lansing Board of Water and Light (BWL) was conducted via WebEx Conferencing in Lansing, MI, at 5:00 p.m. on Tuesday, July 21, 2020. Finance Committee Chair Ken Ross, called the meeting to order at 5:00 p.m. and asked Corporate Secretary Griffin for the roll call. Present: Commissioners Ken Ross, David Lenz, Tony Mullen, and David Price. Also, present: Commissioners Beth Graham, Tracy Thomas (arrived @5:33 p.m.), Sandra Zerkle (arrived @5:33 p.m.) and Non-Voting Commissioners Douglas Jester (East Lansing) and Larry Merrill (Delta Township (arrived at 5:36 p.m.) 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 May 26, 2020. Approval: Motion Carried May YTD Financial Summary Chief Financial Officer (CFO), Ms. Heather Shawa, presented the following Year to Date Financial Review: Flnannal Sumvury-May 20:A ri.J ti vaarv:;.Lly Cln_n.. (".i,lt Ins •tit.il•n.itl YI'LI I:e t;r. I ni;•I ,..•II„I..i (r�. Is I;rl}ntu_ ... -i ..._. v n Total cash decreased by approximately$21.2M from the previous month. This is primarily due to Delta Energy Park (DEP) Pipeline and Construction Manager payments. Restricted construction funds will continue to decrease each month as the 2019A bond proceeds are spent down to pay for the construction of Delta Energy Park and other system improvements. May YTD actual net income of $29M is about $13M over budget, primarily due to under budget expenses. Wholesale revenue is about $12M under budget FYTD. This is primarily due to Belle River's Units 1 and 2 going into an unplanned outage, as well as Erickson transferring offline due to market/economic conditions. These factors will continue to cause wholesale revenues to fall further under budget over the remainder of the year. This, as well as the lower power supply costs, flow through the PSCR and will result in little impact to net income. As the fiscal year progresses, operating expenses have historically trended closer to budget. As noted previously, the VEBA credit adjustment is cumulative and represents $9.5M. Nonoperating income is over budget. This is mostly due to unrealized investment returns FYTD and interest savings from the 2019A and 2019B bond issuances. FY 2020 YTD 0&M spend is about $11.6M under budget. Again, $9.5M of this is due to the VEBA credit adjustment. Although FY 2020 YTD capital spend was 17% below budget in May, current projections indicate we will finish closer to budget, projecting 10% spending variance. Impacts or delays related to COVID-19 are continually being evaluated. FY 2020 YTD DEP spend remains under budget through May. Many of the mechanical bid packages that were scheduled to be awarded in Q1 of FY20 have now been awarded. As work kicked off under these contracts, it was expected that expenses would begin to catch up to budget during Q3- Q4 of FY20; however, delays related to COVID-19 have impacted our ability to catch up as much as previously anticipated. The extent of the impact is still being evaluated; however, construction levels have increased, albeit slowly due to COVID-19 safety restrictions. The actual Return on Assets (RoA) of 4.71% exceeds our budgeted RoA of 3.95%, as YTD net income remains over budget. Three out of five ratios are slightly below the benchmark. Debt to total assets is currently underperforming due to the new debt of issuance of the 2019A bonds. It will increase again slightly as we complete the third phase of financing for Delta Energy Park before decreasing as we pay off outstanding debt. Days Sales Outstanding is not beating its benchmark for May and will continue to increase in June due to customer protections during COVID that have been instituted, including suspension of late fees and a moratorium on shut-offs. The Bad Debt ratio is also likely to increase due to customer protections that have been put in place during COVID. BWL has expanded the payment arrangement program which will help minimize the amount of accumulated balances that will go uncollected. Employee count YTD of 679, while our current FY21 budgeted headcount is 727, a variance of 48. This is being supplemented by 32 full time temporary/contract employees, including summer interns. The budgeted headcount remained higher through May due to the addition of the 12 First Step students and 15 summer interns. The Labor $/Hours Worked metric has continued to decline from last month. This is in line with the prior year's trend; however, much of the decline can be attributed to reduced labor hours, which is comparative to the previous fiscal year. FYTD 2020 Benefits costs remain close to budget, although the underbudget difference did increase slightly from the previous month by about $100K primarily due to under budget dental costs. Internal Audit Open Management Responses Update Finance Manager, Mr. Scott Taylor, introduced new Finance employee, Ms. Elisha Franco, Senior Internal Control Analyst. Mr. Taylor presented the updates to the internal audit management responses. • ..ram. 1k , I� Chair Ross inquired how flagged items on the internal audit are removed from the list. Mr. Taylor responded that meetings are held with the department that has closed an item, he or Ms. Franco will verify that the flagged item has been addressed and completed, forward the item to the Internal Auditor for his confirmation and then forward the item to the Commissioners as completed. Commissioner Mullen asked about succession planning regarding equity and inclusion items. Mr. Taylor responded that he would follow up with an email to Commissioner Mullen Commissioner Lenz asked what the requirements are for sole source procurement in dollar amount or percentage. CFO Heather Shawa responded that, for any purchase over $15,000 that is not an emergent need, a form is completed by the requestor and is reviewed by the department manager, executive director, purchasing manager and CFO. Internal Audit Status Report& Internal Audit Work Plan Internal Auditor, Mr. Wesley Lewis, presented the internal audit status report and internal audit work plan. Overview FY 2020 Audit Plan Progress Report •-- •^ -•• Enaagemenls Completed: Progress Report 1• Cash Management and Treasury FY 2020 Audit Plan Pr � P 2. 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Mr. Lewis responded that a fixed assets report was provided. Mr. Lewis will forward a copy of the report to Commissioner Thomas. Commissioner Merrill asked what audit standards of corporate governance the strategic plan and hotline were measured against. Mr. Lewis responded that policies and procedures would be compared with similar industries and a risk assessment would be conducted. Chair Ross provided the following questions that will be addressed in the presentation of the Internal Audit Charter: • Provide background in some specificity on the vendor management program • The cybersecurity concerns allowing continued access to core data and in what ways the protection of that data is ensured • What is proactive auditing and why is it needed at the BWL • What changes are required by the audit profession • What is required for the program to be immediately implemented and are there consequences if no changes are made to the program • What activities have been implemented toward the program to date • What policies and procedures are needed to implement the program • What other utilities are currently using a similar program • Whether there is a need for additional management resources for the program and what burdens might the program pose on the BWL organization Chair Ross stated that the resolution to approve the changes to the Internal Audit Charter would be tabled until the next scheduled Finance Committee meeting after further discussion and reflection to determine whether this program feature is to be integrated into BWL's internal audit program. Internal Audit Charter and Resolution Internal Auditor, Wesley Lewis, reviewed the proposed changes in the Internal Audit Charter., walking through the document page by page, and each suggested change in turn. Chair Ross commented that the draft changes requested by the internal auditor center on three focal areas. The first is to clarify and reinforce that the internal audit department should have free access to data, books, and records in the organization. The second is to clarify the relationship between the internal auditor/department and the general manager/organization. The third is to create a platform to integrate proactive auditing into our audit program. Chair Ross asked about the standards for the internal audit and general manager relationship. Mr. Lewis responded that the standards indicate that the internal auditor is to report to the board of commissioners. Chair Ross inquired whether the issues about the perceived delays in receiving information and having access were centered around the new program not yet in operation or whether any delays in information requested were for audits outlined in the approved audit plan, and Mr. Lewis confirmed that delayed requests concern information sought for the proactive auditing program. Chair Ross stated that the purpose of the proactive auditing program was to make our internal audit process better and the decisions for the committee would be to determine whether the program will be effective and whether to implement the program. Commissioner Zerkle asked for a definition of a proactive audit and how would the audits be performed differently. Mr. Lewis responded that using the analytics tool will improve the audit process by identifying potential errors or irregularities in information. Commissioner Ross inquired to Mr. Lewis whether if a proactive audit program started tomorrow, would there be a conduit between BWL and the third-party vendor retained and would encrypted data be transmitted to the vendor and processed through the program. Mr. Lewis affirmed but emphasized that the information is processed on an offline server—there would be no direct connection between BWL data systems and the vendor. Mr. Lewis added that the process would be transparent, and information would be reported immediately. Commissioner Graham commented that it appeared that the program would be a good monitoring tool and make the auditing process smoother and more consistent. Commissioner Merrill inquired about ACE Information Analytics monitoring data in the background 24/7 generating a flag for potential risks and whether the logarithm formula is specific to BWL or to a broader model. Mr. Lewis responded that data wouldn't be monitored 24/7 and it isn't specific to BWL, but the enhanced tool would cause work performed to be more timely. Commissioner Mullen inquired whether all required standards are met by the company when the information is sent to the company and taken off line. Mr. Lewis responded that the standards are met and that the company has to go through four processes — vendor vetting process for purchasing, IT and internal audit; master service agreement (MSA) language; legal process; and cyber security process. Commissioner Mullen also asked if a process is in place with the company to ensure data privacy. Mr. Lewis responded that the company will be monitored based on the nondisclosure clause in BWL's MSA with the company. Commissioner Ross asked if the company had gone through BWL's vendor management program and if it received the green light to go forward. Mr. Lewis responded that the vendor management program consists of the four processes and the company met the standards. Commissioner Thomas asked for assurance of BWL data privacy in the cybersecurity process in the proposed program. Mr. Lewis responded that audits of cyber security process and IT vulnerability are in place to be conducted. Commissioner Thomas also asked why references to the General Manager was being removed from the internal audit charter. Mr. Lewis responded that it is to clarify the reporting structure which is indicated in the IAA standards but not to change the interaction between internal audit, the General Manager and the management team. Commissioner Price commented that a review of governance policies was performed and that the General Manager title was found to be inserted in places where fiduciary responsibility and authority didn't apply. Commissioner Price inquired whether the information under the Organization section was necessary in the charter as it appeared to be a job description and the charter should describe function. Mr. Lewis responded that it was provided for more clarity. Commissioner Lenz commented that qualifications for a BWL auditor should be included in order that audit requirements are safeguarded against any nefarious hiring. Commissioner Ross asked whether the auditing method was considered continuous auditing. Mr. Lewis responded that there is continuous access to information but not 24/7 auditing of the information. Commissioner Zerkle asked what the obligation of the audit was to the BWL if the audit program finds an error or discrepancy in the information. Mr. Lewis responded that free audit access to data information would be granted continuously rather than in a case by case scenario. Commissioner Ross commented that there is a need for proper input and advance approval by the Board including prioritization of audit areas, regular reporting updates, and reporting on any findings. and that the reporting of findings is incorporated into the risk rating in the c. A discussion followed regarding extra verbiage in the charter being unnecessary. Commissioner Graham commented that total transparency is necessary and didn't have a problem with the extra verbiage. Commissioner Lenz suggested having General Counsel Mark Matus review the language. Commissioner Mullen asked that if the current process is working what makes the new program better for the BWL. Mr. Lewis responded that maintaining compliance and standards, removing the risk that information could be filtered and having an artificial intelligence component is the reason for the new program even though the current program is effective. Commissioner Jester asked whether proactive auditing could be pursuant to board approved audit topics. Mr. Lewis responded that the new program is to make allowances for unexpected events or changes that may arise. Commissioner Jester asked why three or four topics couldn't be placed in the audit plan. Mr. Lewis responded that some proactive audits are already be conducted — analysis of SAP vendor payments information and a retiree and terminated employees comparison to the active directory. Commissioner Merrill commented that the term proactive is being defined as something new and different and suggested for clarity, that since every audit conducted should be proactive, changing the terminology to ad hoc. Mr. Lewis responded that proactive audits are required in the standards and there will be ad hoc audit requests. Commissioner Ross proposed continuing the discussion at the next Finance Meeting and there was an agreeable consensus. CFO Shawa made a clarification that the access requested is global access to production systems through SAP. When data is requested from IT, the business owner is asked to sign off the request and then a regular IT procedure is followed. CFO Shawa stated that a process on proactive auditing was researched in order to ensure that the process could be maintained and supported by senior leadership and internal control. CFO Shawa wanted the Commissioners to understand that although the data is encrypted when sent out and when returned, it is on an offline server while it is at the third party and there are physical data breach opportunities. Additional security will be required with the offline server when all data is serviced in this manner. Commissioner Zerkle asked whether there were concerns regarding customer or employee information. CFO Shawa responded that employee sensitive data or HIPAA data would need to be approved. Commissioner Thomas asked whether negotiating is necessary with the bargaining unit regarding the audit changes. CFO Shawa responded that transparency is expected and that she wanted management to understand what the program and process of the proactive auditing would be like. General Manager Peffley stated that he wants to see the Internal Audit Charter succeed and has no problem with 24/7 monitoring but would like the monitoring to be transparent and not secretive. GM Peffley commented that there was some concern among employees regarding the employee information that would be audited and the shoulders of employees being looked over, and that transparency in the audit requests is necessary. Commissioner Ross asked whether the audit risk basis, the approval process, the structure for reporting, and the opportunity for management feedback would be the same as current audits. GM Peffley responded that the process would be the same but the main concern of management was the looking over of their shoulders. Commissioner Ross also asked whether there was assurance that there would be definitive answers to data requests and the internal audit process. Commissioner Ross asked if a grid or visual could be developed that identified any management issues with the proactive audit proposal or the vendor so that the finance committee would know what needed to be addressed. GM Peffley responded that could be done and that an internal order would log every request to determine the amount of staffing that would be required for the demand. Motion by Commissioner Price, Seconded by Commissioner Mullen to Table the Internal Audit Charter Resolution, delaying the vote and allowing for further discussion at a future Finance Committee Meeting. Motion Carried Other None. Adjourn Commissioner Ross adjourned the meeting at 8:35 p.m. Respectfully submitted Ken Ross, Chair Finance Committee HUMAN RESOURCES COMMITTEE SPECIAL MEETING MINUTES July 27, 2020 Due to public safety concerns resulting from the COVID-19 Pandemic, the Human Resources Committee Meeting of the Lansing Board of Water and Light (BWL) was conducted via WebEx Conferencing in Lansing, MI, at 5:00 p.m. on Monday,July 27, 2020. Chairperson Tracy Thomas called the meeting to order at 5:00 p.m. Corporate Secretary Denise Griffin called the roll. Present: Commissioners Tracy Thomas, Deshon Leek, Tony Mullen (arrived @5:04 p.m.), and Sandra Zerkle. Also present, Commissioners David Lenz, David Price (arrived @5:05p.m.), Ken Ross and Non-Voting Commissioner Larry Merrill (arrived@5:05 p.m.) Absent: None The Corporate Secretary declared a quorum. PUBLIC COMMENT None. MEETING PURPOSE: Closed Session (Attorney—Client Memorandum)....MCL 15.268 (h) & MCL 15.243 (g). Personnel Issue. Chair Thomas stated that BWL General Counsel Mark Matus has provided the Human Resources Committee with an Attorney Client Privilege memorandum and he is present and available to discuss the contents of that memorandum with us. Motion by Commissioner Zerkle, Seconded by Commissioner Leek to go into closed session for the purpose of reviewing the contents of the attorney-client privileged memorandum as permitted by the Open Meetings Act, specifically MCL 15.268(h) and MCL 15.243(g). Roll Call Vote: Yeas: Commissioners Tracy Thomas, Deshon Leek, and Sandra Zerkle. Nays: None. Action: Motion Carried. The Special Human Resources Committee Meeting went into closed session at 5:04 p.m. Motion by Commissioner Leek, Seconded by Commissioner Mullen, to return to open session. Roll Call Vote: Yeas: Commissioners Tracy Thomas, Deshon Leek, and Tony Mullen. Nays: None. Action: Motion Carried. The Special Human Resources Committee Meeting reconvened to open session at 6:03 p.m. COMMISSIONERS' REMARKS/COMMENTS None EXCUSED ABSENCE Motion by Commissioner Leek, Seconded by Commissioner Mullen, to excuse Commissioner Beth Graham from tonight's meeting. Roll Call Vote: Yeas: Commissioners Tracy Thomas, Deshon Leek, and Tony Mullen. Nays: None. Action: Motion Carried. ADJOURNMENT Motion by Commissioner Leek, Seconded by Commissioner Mullen, to adjourn tonight's meeting. Roll Call Vote: Yeas: Commissioners Tracy Thomas, Deshon Leek, and Tony Mullen. Nays: None. Action: Motion Carried Chair Thomas adjourned the meeting at 6:04 p.m. Respectfully Submitted Tracy Thomas, Chair Human Resources Committee MANAGER'S RECOMMENDATIONS None. UNFINISHED BUSINESS There was no Unfinished Business. NEW BUSINESS There was no New Business. RESOLUTIONS/ACTION ITEMS RESOLUTION #2020-07-01 MOU Extending 2016—2020 Collective Bargaining Agreement between the Lansing Board of Water& Light and the International Brotherhood of Electrical Workers, AFL-CIO, Local 352 WHEREAS, on October 31, 2016 the Lansing Board of Water & Light and the International Brotherhood of Electrical Workers, AFL-CIO, Local 352, the "Parties," executed a Collective Bargaining Agreement effective November 1, 2016 through October 31, 2020, the "2016-2020 Labor Agreement." WHEREAS, having considered the unprecedented circumstances of the COVID-19 pandemic the Parties have agreed to extend, with two amendments, all provisions of the 2016-2020 Labor Agreement until midnight October 31, 2021; RESOLVED, that the Board of Commissioners approve the 2020 Labor Agreement MOU extending the 2016- 2020 Labor Agreement effective November 1, 2020 through October 31, 2021 and authorize the General Manager to execute same. Motion by Commissioner Mullen, Seconded by Commissioner Thomas, to approve the 2020 Labor Agreement MOU extending the 2016-2020 Labor Agreement effective November 1, 2020 through October 31, 2021, and authorize the General Manager to execute same. Roll Call Vote: Yeas: Commissioners Deshon Leek, David Lenz, Tony Mullen, David Price, Ken Ross, Tracy Thomas, and Sandra Zerkle. Nays: None. Action: Motion Carried. RESOLUTION #2020-07-02 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 2020-2021 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 2020's performance. Motion by Commissioner Price, Seconded by Commissioner Zerkle, to approve the reappointment of the Corporate Secretary for Fiscal Year 2020-2021. Roll Call Vote: Yeas: Commissioners Deshon Leek, David Lenz, Tony Mullen, David Price, Ken Ross, Tracy Thomas, and Sandra Zerkle. Nays: None. Action: Motion Carried. RESOLUTION #2020-07-03 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 2020-2021 or until a successor is appointed, whichever last occurs: Richard R. Peff ley, 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 2020's performance. Motion by Commissioner Thomas, Seconded by Commissioner Mullen, to approve the reappointment of the Director and General Manager for Fiscal Year 2020-2021. Roll Call Vote: Yeas: Commissioners Deshon Leek, David Lenz, Tony Mullen, David Price, Ken Ross, Tracy Thomas, and Sandra Zerkle. Nays: None. Action: Motion Carried. RESOLUTION #2020-07-04 Appointment of the Charter Position of Internal Auditor The Board's Rules of Administrative Procedures specify that the Board is to appoint a Director and General Manager, Internal Auditor, and Corporate Secretary, at its first regular meeting following July 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 Internal Auditor for fiscal year 2020-2021 or until a successor is appointed, whichever last occurs. Wesley Lewis, Internal Auditor 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 2020's performance. Motion by Commissioner Lenz, Seconded by Commissioner Leek, to approve the reappointment of the Internal Auditor for Fiscal Year 2020-2021. Roll Call Vote: Yeas: Commissioners Deshon Leek, David Lenz, David Price, Ken Ross,Tracy Thomas, and Sandra Zerkle. Nays: Commissioner Tony Mullen Action: Motion Carried. MANAGER'S REMARKS General Manager Peffley presented the following information: 1. The State of BWL address was recorded Tuesday,July 28, 2020 and will be available for viewing on Wednesday,July 29, 2020. 2. The BWL can now communicate with customers in 250 languages through the call center. 3. BWL reached out to employees to contribute to Pennies for Power and more than $10,000 was collected. BWL employee, Chris Maclennan, collected more than $800 in cans and contributions of cans and donated the amount to Pennies for Power. COMMISSIONERS' REMARKS Commissioner Thomas commended the HR Committee on the preparation for the reappointment of the three employees. Commissioner Ross expressed his wish for a detailed presentation of the IRP in a future meeting and that it is important to discuss, ask questions and make suggestions on what the strategic plan should be. Chair Price stated he agreed even though the Board doesn't act on the IRP. Commissioner Zerkle thanked GM Peffley and the staff for the Pennies for Power donation as she has heard commendations from the community. MOTION OF EXCUSED ABSENCE Motion by Commissioner Thomas, Seconded by Commissioner Ross to excuse Commissioner Beth Graham from tonight's meeting. Action: Motion Carried. PUBLIC COMMENTS None. ADJOURNMENT Chair Price adjourned the meeting at 6:06 p.m. M. Denise Griffin,Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk: 8-7-2020 Official Minutes filed(electronically)with Lansing City Clerk 9-23-20 Approved by the Board of Commissioners 11-17-20 Hometown People.Hometown Power: MINUTES OF THE BOARD OF COMMISSIONERS MEETING LANSING BOARD OF WATER AND LIGHT September 22, 2020 Due to public safety concerns resulting from the COVID-19 Pandemic, the Regular Board of Commissioners meeting for the Lansing Board of Water and Light (BWL) was conducted via WebEx Conferencing in Lansing, MI on Tuesday, September 22, 2020. This meeting was publicly noticed for 5:30 p.m. Chairperson David Price called the meeting to order at 5:30 p.m. The Corporate Secretary, M. Denise Griffin, called the roll. Present: Commissioners David Price, Beth Graham (arrived@ 5:36 p.m.), David Lenz, Tony Mullen, Ken Ross,Tracy Thomas, and Sandra Zerkle. Non-Voting Commissioners present: Stuart Goodrich (Delhi Township) (arrived@ 4:41 p.m.), Douglas Jester (East Lansing), and Larry Merrill (Delta Township) Absent: Commissioner Deshon Leek The Corporate Secretary declared a quorum. Chairperson Price welcomed Commissioner Stuart Goodrich representing Delhi Township. Chairperson Price led the Pledge of Allegiance. APPROVAL OF MINUTES Motion by Commissioner Lenz, Seconded by Commissioner Thomas, to approve the Regular Board Meeting minutes of July 28, 2020. Roll Call Vote: Yeas: Commissioners David Price, Beth Graham, David Lenz, Tony Mullen, Ken Ross, Tracy Thomas, and Sandra Zerkle. Nays: None. Action: Motion Carried. PUBLIC COMMENTS None. COMMUNICATIONS Electronic Mail received From Michael Braem regarding utility rates-Referred to Management. Received and Placed on File COMMITTEE REPORTS Commissioner Tracy Thomas presented the Committee of the Whole Report: COMMITTEE OF THE WHOLE Meeting Minutes September 08, 2020 Due to public safety concerns resulting from the COVID-19 Pandemic, the Committee of the Whole meeting for the Lansing Board of Water and Light (BWL) was conducted via WebEx Conferencing in Lansing, MI,on Tuesday, September 8, 2020. Committee of the Whole Chair Tracy Thomas called the meeting to order at 5:39 p.m. Corporate Secretary Griffin took the roll call to acknowledge attendance. Present: Commissioners Tracy Thomas, Beth Graham (arrived @5:40 p.m.), David Lenz, Deshon Leek, Anthony Mullen,David Price,Ken Ross,and Sandra Zerkle,and Non-Voting Members: Douglas Jester(East Lansing) and Larry Merrill (Delta Township) Absent: None. The Corporate Secretary declared a quorum. Public Comments None. Approval of Minutes Motion by Commissioner Ross, Seconded by Commissioner Graham, to approve the Committee of the Whole meeting minutes of June 30, 2020. A roll call vote was taken: Commissioners Thomas, Graham, Leek, Lenz, Mullen, Price, Ross,Zerkle Action: Motion Carried. Annual Energy Waste Reduction (EWR) Program Update General Manager Dick Peffley introduced Environmental Services and Reliability Compliance Manager, Ms. Lori Myott, who presented the annual energy waste reduction (EWR) program update. Ms. Myott introduced Ms. Aileen Gow, Energy Analyst,and Mr. Patrick Walters, Energy Specialist. Peneviabte Energy t2(1t oal Up alz. a#- -; t S P Re qYl C em aM:.nill P If ,i...a ei Tl veal.. aye��i en:rMnr rEarry FAr[' i5leitvx ,';G )t,rt rrb+a«nnl^SS eP.:rWrnJ lm y +'ir Eluink+5W.+ ^T '�,`j 'I . IynRT,iR51 17.3 I I 1 Irx,re prule<ti ��b � - 4r 1tb W +E t, 1 9 M 1 ]Fnni[rcr%'tnrCli h u•S f. 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Commissioner Ross asked whether the consumers are educated about the solar panel energy program before making the purchase as a customer complained that there wasn't a significant reduction in energy cost. GM Peffley responded that the contractors don't interact with the utility until the solar panel contract is signed by the customer. The customer requests a permit from BWL but that is after the purchase. At energy events BWL encourages prospective solar customers to contact the BWL first. Commissioner Thomas asked about the results for the schools in the energy program and asked why Holt and Waverly schools weren't in the Million kWh Club. Ms. Myott responded that it depends on whether the school's projects meet the kWh amount. Ms. Gow responded that Holt School is under Consumers Power. Commissioner Price asked for an explanation of how BWL works with Michigan Saves and what types of improvements are eligible. Ms. Myott responded that loans are purchased for renovation so that the customer has 0% interest for a four-year period. Michigan Saves promotes the program and works with financial institutions to help finance the projects. Ms. Gow responded that windows, furnaces, air conditioners, and building shell improvements are eligible. Consumers Energy contributes 60/40 with BWL. Ms. Gow also noted that the program may be phasing out as Consumers Energy will no longer be contributing to it. Commissioner Graham asked whether new buildings being built were notified about energy reduction programs. Ms.Gow responded that anyone doing a new build is encouraged to contact BWL's commercial to make sure that what is being installed is the most efficient. Mr. Walters responded that there is a new construction program for commercial buildings. Commissioner Zerkle asked whether Central Methodist Church received one of the grants and, if more difficulty occurs when obtaining contracts, what plans are in place to overcome the issues. Ms. Myott responded that the church received one of the grants and that a five-year plan is being constructed as the next couple of years are expected to be challenging. Commissioner Lenz asked how non-profit grant recipients were selected. Ms. Gow responded that applicants need to be 501c3 organizations and the first applicants that qualify according to the guidelines are selected. There is a $5,000 cap on the grant. Commissioner Ross asked whether a portfolio of 222 MW of renewables by 2022 was correct. Ms. Myott confirmed. Commissioner Ross asked what amount of credit would be taken for the renewables. Ms. Myott responded that solar is 60% credit and wind is low and about 20% credit. GM Peffley responded that initially Pegasus wasn't going to be commissioned, so BWL switched to Ranger Solar. Pegasus was then negotiated for a lower cost and both Ranger Solar and Pegasus were kept. Pegasus started running September 10, 2020 and Ranger is ahead of schedule. GM Peffley will send the exact values to the Commissioners. Commissioner Lenz asked where the BWL stands on the app project that monitors energy usage and when BWL would be rolling out the program to the customers. Ms. Myott responded that she would follow up as there isn't a specific date set yet for the app capability and it is part of the AMI program. BSmart Program Update Corporate Secretary M. Denise Griffin, on behalf of GM Peffley, introduced Enterprise Business Program Manager, Kellee Christensen, who provided information on the BSmart Program. Ms. Christensen highlighted the Advance Metering Infrastructure (AM]), Advanced Distribution Management System (ADMS), Geographical Information System (GIS), Customer Information System (CIS), and Enterprise Service Bus (ESB). What is BSmart? ESb EnlerprlseSystemBus ! FSRIm� !,!, co .u,'-.nmc .n � �'� bone Femall'learaled 6YY.tnlema � � �. cu �N.rar.�MMn vv mQ �.Z l+ _ � ... In... t mom. w.....ma u.wi wcw � ..--.. f—►.1.1� L.i 4W'.: yyV .Li'ilYJ _p AM]Deployment Progress Advanced Distribution /y�'y Advanced Metering All Management System i Infrastructure r •• o. Fra6b frlh a-�Ac'Nyd',Idw axi mcnago F.eub.t ocaivnYn Icn brlwxpn mit flx ulmiv'o I �. m rnaYn ../,. AMI Deployment Progress AMI Deployment Progress CusiometInionmallon System --U6-*PV-A0Wd Info.w1m ,41 -J esn gi ........... cmms CompulerizedMcOnN once ESM ,,l M—g....tsy"'fenn Q91— h-11h E!5 M Engineering S-1—Management nNrmo,on M,d mainhraxo nmay n oroxr w—W s,"—.—cws� d—— cni— iT -11Y -10d OOW. -Y M,,rt Program mnasasofJu'y20"0 cmms E M�Z GM Peffley provided updated renewable portfolio numbers and stated that there will be 225 MW of wind and solar online at close of business next year. The daily average load of energy is 265 MW. Other There was no other business. Adiourn Commissioner Thomas adjourned the meeting at 6:41 p.m. Respectfully Submitted Tracy Thomas, Chair Committee of the Whole Commissioner David Lenz presented the Finance Committee Report: FINANCE COMMITTEE Meeting Minutes September 8, 2020 Due to public safety concerns resulting from the COVID-19 Pandemic, the Finance Committee meeting for the Lansing Board of Water and Light (BWL) was conducted via WebEx Conferencing in Lansing, MI. Finance Committee Chair David Lenz, called the September 8, 2020, 6:00 P.M. Finance Committee meeting to order at 6:51 p.m. Corporate Secretary Griffin took the roll call to acknowledge attendance. Present: Commissioners David Lenz, Beth Graham, David Price, and Ken Ross. Also, present: Commissioners Deshon Leek,Tracy Thomas, and Sandra Zerkle; and Non-Voting Commissioners Douglas Jester(East Lansing) and 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 Ross, to approve the Finance Committee meeting minutes of July 21, 2020. Motion Carried by the following Roll Call Vote: Yeas: Commissioners Lenz, Graham, Price, and Ross Nays: None Tabled Items from July 21, 2020: REMAINED ON THE TABLE 1) Proposed Internal Audit Charter, 2) Redlined Internal Audit Charter, 3) Resolution Baker Tilly External Audit Report and Resolution Chief Financial Officer (CFO) Heather Shawa introduced external auditor Jodi Dobson, Partner at Baker Tilly Virchow Krause, LLP. Ms. Dobson presented and highlighted the external audit report which included an audit overview, observations and recommendations, and required communications to the governing body. BWL received an unmodified or clean opinion which is the highest level of assurance provided. Ms. Dobson's presentation was as follows: Board of WatIx.and Light— ..�r .uo w.�ro.n d6akertllly �lbkeNdy guardof W,t and Lghl-Chyo1Lansing Board of Water and Lghl—C9y of Lansinq l t® , '_ Agenda it "\� Audit olijealive=reasonable risaurance that observodorrs and ✓I'y.finamhll slMemmto bra free from matvlal `� necommmdat ans miWe tement Raquircd Communlwt.on to Flnaniial etalementGbf BWLrecerved 8n r�\LlnmodPkdlpNMn r.vrcminq Body .... 41 MkerVLIY "Obak.11h, 8—d.1 Wahr and Light City of L.Ming 6,.,d,,f W.,N,r and Light-City at U—Ing Fiiancial Awot- i eviewed in siateme II k e.,, �.1 ­­­ 11........................................ %e b)Whchm xiierrmtk, t I ar s a C t Ion Fwl I-TIareas............-................ .................. -pw,rt,. M %,, ddeUcotq inudnd C"j, I'l—t—Ir., ---------- ncp¢•Me­ ................ ..... ...... Q Mk-11hy 8—d ofWtL and Light-City L.Iuny DeardWN'ter and Light-OtyofLancing Ftoii,doIW`,I.and Ivjh1 GlyfLaming U­w I Ert_­F­ ly P—Ili— ca—In'. "q in 2­c; �.r cif Ur)76�.CN -T1,maY.veri (im 11'.—111. hilp"'IfitO('.A'n"S V Baud.%V't,.,d Light-C4y,fLan6r9 n Hoard rw,a,,., rid tight-Crly.f I—irq A— rw,­r-1 Fi_ (Ill V fi.1.0top;..s. 0 tolkiridity "m try Nlrdtly It rdcfWvtt ,,dtignt-tlty afl­,q gaiad of Water WW Light- Lansing Sard of W.I.-d Ltht-Gity of I­inij irl Of 71 51-1 iL'if -"d _IP I-- pic md!a i. 11 W—G, r,AP Discussion Commissioner Ross inquired whether Ms. Dobson would be continuing with the external audits with Baker Tilly for BWL. He also asked for additional detail regarding the upcoming fiduciary responsibility changes and how it will affect BWL pension plans. Ms. Dobson responded that there are 40 individuals that work with municipal utilities and rotation among their staff is an option. Ms Dobson also responded that there isn't a significant affect on BWL's financial statements as the pension plans are already incorporated into them. Commissioner Lenz noted the diverging of income increasingly relying on electric generation, that at some point steam and water would have a zero impact for net income and would cost money to operate, and the role of steam and water is something that needs to be discussed for the strategic plan. Motion by Commissioner Price, Seconded by Commissioner Ross to forward to the Board Meeting for consideration the Acceptance of the Resolution for the 2020 Audited Financial Statements. Motion Carried by the following Roll Call Vote: Yeas: Commissioners Lenz, Graham, Price, and Ross Nays: None July YTD Financial Summary CFO Heather Shawa gave a review of the July 2020 Financial Summary. Ms. Shawa reported the following: revenue was $34.6 million compared to budget of$33.1 million; operating expenses were $21.6 million compared to budget of $25.7 million; and Net Income was positive at $9.3 million compared to budget of$3.5 million. Commissioner Lenz commented that BWL is doing an outstanding job of maintaining revenues as the audited financial statements and July financial summary includes the shutdown of General Motors and COVIDI9. Capital Project Exceedance (CPE) Revision CFO Ms. Shawa presented the Capital Project Exceedance Revision. m..a rnsrs snu t .�A s 7 ivw : mea�lpqr. uar and Cnye 4mw�n war Chair Lenz commented that the resolution is going to change the benchmark point of when projects are monitored, allow the projection of more accurate project budgets, and provide tighter control on project costs. Commissioner Zerkle questioned when the Capital Project Exceedance (CPE) Budget is brought to the Board. She also asked when is staff asked for the ideas for that particular Budget. CFO Shawa responded that the staff is asked for ideas in November and the CPE Budget is presented to the Board in May. Currently a project is brought forward as an exceedance based on the project intake phase. General Manager Peffley responded that during the early phases there may be an overestimate of costs and then the amount requested and received is spent. The resolution will narrow down the project amount requested to ensure capital funds are available for all of the necessary utility priorities. Commissioner Ross commented on the inefficiencies in the CPE budget process. Previously there were transparencies in the budget process of the top 80%of the projects by dollar volume which hasn't carried through this year. Commissioner Ross added that in the amendment of the exceedance approval there are some key terms that are not defined. General Manager Peffley responded that transparency and tracking in the top 80%of the projects can be reinstated at the Chair's request at a Finance Committee meeting. CFO Shawa responded that she can have the capital project information of line items by project sent out to the Finance committee. CFO Shawa also responded that there are guidelines within an operational capitalization policy which defines annual and planned projects and can be sent to the committee. Commissioner Zerkle asked about the procedure included in the resolution regarding the General Manager revising the procedure. Chair Lenz stated the resolution states that the General Manager will report excessive exceedances. Commissioner Ross commented that there should be definitions added and recognition of additional reporting; and the Board should not manage the projects but should be given the necessary tools for effective oversight,and for those reasons he will be voting no. Motion by Commissioner Price, Seconded by Commissioner Graham to forward the Capital Project Exceedance Revision Resolution to the full Board for consideration. Motion Carried by the following Roll Call Vote: Yeas: Commissioners Lenz, Graham, and Price Nays: Commissioner Ross Internal Audit Status Report Internal Auditor, Mr. Wesley Lewis, presented the Internal Auditor Status Report. Overview Status Report � •�� Status Report FY 2020 Audit Enoage—t In P,oarns: • other Items 1.Energy Risk Wnag—nl Internal Audit Status Report FY 2021 Autlll Enn Solvents(aeuinnintl 9lauesl: 1.kIPPA and Ml90 alliings Pr-crated by: 2.IT-Cyb.r.—fty Proce:6 Wesley Lewis,Director of Internal Audit 0.rr-Vuln.rablllty A.....m.nts Finance Committee Meeting A.PGmds September B.2020 }mow Other Items 1.Intamai AW,OtIV—h With Omer B'WL Depanmenls 2.Update on Ongoing Education and Csni0cation of IA SUT Other There was no other business. Adjourn Chair David Lenz adjourned the meeting at 8:08 p.m. Respectfully submitted David Lenz, Chair Finance Committee MANAGER'S RECOMMENDATIONS GM Peffley recommended that management should bring a semi-annual update to the Finance Committee Meeting on the state of the capital projects, with the Chair's permission and as in depth as the Chair prefers at the time. UNFINISHED BUSINESS None. NEW BUSINESS None. RESOLUTIONS RESOLUTION 2020-09-01 Fiscal Year 2020 Audited Financial Statements of the Enterprise Fund and Pension Fiduciary Funds RESOLVED, that the fiscal year 2020 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 2020 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, 2020. FURTHER RESOLVED, that the Corporate Secretary is hereby directed to file a copy of the fiscal year 2020 Audited Financial Statements of the Board of Water and Light with the City of Lansing no later than October 2020. Motion by Commissioner Lenz, Seconded by Commissioner Graham, to accept the 2020 audited financial statements. Roll Call Vote: Yeas: Commissioners David Price, Beth Graham, David Lenz, Tony Mullen, Ken Ross, Tracy Thomas, and Sandra Zerkle. Nays: None. Action: Motion Carried. RESOLUTION 2020-09-02 Capital Project Exceedance Approval Revision RESOLVED, that Board of Water and Light Policy 15-02 "Capital Project Exceedance Approval" is hereby amended as follows: RESOLVED, that any approved capital project that is expected to exceed its total budget amount by both 15% and $200,000 or more must have the exceedance approved by the Commissioners prior to completion of the project; and RESOLVED, that in the case of"planned" capital projects the total budget amount is the project's designed budget amount; and RESOLVED, the General Manager shall report the expected exceedance to the Commissioners as soon as reasonably possible; and RESOLVED, this policy applies to the aggregate total budget amounts for electric, water, steam, and chilled water"annual" capital projects and to the individual total designed budget amounts for "planned" capital projects; and RESOLVED, the General Manager shall establish and implement procedures overseeing capital project costs consistent with this policy. This resolution supersedes Resolutions 200-3-2, 2001-6-16 and 2015-07-05. Staff comments: In the existing Policy, a project's Total Budget Amount can be based on the initiation (Intake) phase of a project. This amount is usually based on historical or industry estimates of similar projects and does not capture issues that can significantly affect the cost of a project. When the capital budget/forecast is developed, a project's cost that is shown in the budget reflects the quality of information know at that time. For any project, it would reflect where the project is in its lifecycle: Initiation (Intake), Feasibility, Design, Construction/Commissioning, or Close-out stage. It is recognized by the Project Management Profession that projects in the Initiation (Intake) phase can have a margin of error that can range from 50%to 200%of the actual completion cost. As a project matures through the design phase, the margin of error reduces to 5 to 15%. The recommendation to use the design cost as the basis for reporting a project's exceedances aligns with the existing BWL policy of reporting an exceedance when a planned project's expected completion cost is in excess of 15%and $200,000 of the designed cost Motion by Commissioner Lenz, Seconded by Commissioner Mullen, to accept the Resolution for the Capital Project Exceedance Approval Revision. Commissioner Ross stated that he would be voting no due to three concerns. The first two concerns are dealt with in the recommendation GM Peffley mentioned earlier, management bringing forward a periodic report and Commissioner Ross is hoping it includes transparency and the budget process -clear indications of what items are being approved, when and in what amount. The third concern is that definitions of planned capital projects and annual capital projects need to be included in the policy so that if the definition is changed the policy will need to be changed. Commissioner Zerkle asked whether the procedures would be presented in a Finance Committee meeting by the end of the year opposed to waiting until March as was discussed in a previous meeting. GM Peffley responded that was still the plan. Roll Call Vote: Yeas: Commissioners David Price, Beth Graham, David Lenz, Tony Mullen, Tracy Thomas, and Sandra Zerkle. Nays: Commissioner Ross Action: Motion Carried. MANAGER'S REMARKS General Manager Dick Peffley provided information on the following items: 1. There are signs placed throughout the city thanking BWL employees and additional signs are available for delivery to those who would like to set one outside. 2. A notification was on social media of emergency steam work being conducted on South Street. It wasn't an emergency problem but that is the name of the REO backup system steam work project as the Eckert plant is closing. COMMISSIONERS' REMARKS Commissioner Ross stated that a member of the public spoke at the recent City Council meeting regarding a sign that was to be placed at the Sunken Garden. Commissioner Ross asked whether BWL committed to place a sign. GM Peffley responded that he would look into whether the commitment was made. Commissioner Ross stated that in a recent meeting there was a presentation on renewable energy and it was said that about 225 MW's worth of renewable power would be on line by 2021. Commissioner Ross stated that at the time of the meeting, the number for the credit value was not provided and Mr. Peffley indicated that he would follow up with the numbers, but Denise built into the minutes a 60%solar credit value and a 20%wind credit value. Commissioner Ross asked what sub-credit would be able to be taken with the creditable amount for wind being 60% and solar power 20%. GM Peffley responded that he would calculate the mix and send it out by the end of the week. Commissioner Ross requested that the Integrated Resource Plan (IRP) process and Strategic Plan process be placed on a future agenda for discussion, examination and for the asking of questions in order to have an effective strategic planning session. Commissioner Ross would also like questions and answers to the process to be posted. With this information the Commissioners will be better equipped to fulfill their role. Commissioner Price responded that a meeting has been scheduled at the end of October with Commissioner Thomas for a discussion on the Strategic Plan, of which the IRP is a part. Commissioner Mullen asked what wasn't being addressed. Commissioner Ross stated that the managements' 60-page IRP was just received, into which several pages of documents of studies, reports, surveys and community engagement summaries feed, and none of this information has been reviewed or discussed regarding what will happen with the IRP. Commissioner Mullen responded that he has received discussion and answers from Ms. Ekren. Chair Price stated that the IRP will be on the agenda at the next Committee of the Whole meeting and questions can be asked with discussion following. Commissioner Zerkle commented that a presentation was given on the IRP a couple months ago. She added that BWL's first responders include the executive staff and they should be included in those to get the vaccines first as soon as it is offered. Commissioner Thomas commented that there was a presentation given on the IRP and also agreed with Chair Price for scheduling additional discussion at the next Committee of the Whole meeting. Commissioner Thomas noted that what has been previously discussed is on the Commissioner dashboard. Commissioner Thomas also thanked GM Peffley and his staff for providing opportunities to tour the Delta Energy Plant. Chair Price congratulated Executive Director Steve Serkaian for being elected as President of the Greater Lansing Arts Council. MOTION OF EXCUSED ABSENCE Motion by Commissioner Ross, Seconded by Commissioner Graham, to excuse Commissioner Deshon Leek from tonight's meeting. Roll Call Vote: Yeas: Commissioners David Price, Beth Graham, David Lenz, Tony Mullen, Ken Ross, Tracy Thomas, and Sandra Zerkle. Nays: None. Action: Motion Carried. PUBLIC COMMENTS Mr. Randy Dykhuus expressed his agreement with Commissioner Ross regarding attention given to and examination of the IRP and requested consideration for ample public input. ADJOURNMENT Chair Price adjourned the meeting at 6:12 p.m. M.Denise Griffin,Corporate Secretary Preliminary Minutes filed(electronically)with Lansing City Clerk 9-25-20 Approved by the Board of Commissioners:11-17-20 Official Minutes filed(electronically)with Lansing City Clerk:11-18-20