3. Public Forum

No one from the public was present.

3.5 Commissioners’ Corner

Commissioner Wallace-Brodeur welcomed our new Commissioner, Robert Herendeen, to our meeting. Mrs. Grimes stated that Commissioner Herendeen has already been to BED and had a meeting with Barb and the managers. Commissioner Herendeen asked where the methane building is in Burlington and was told that it is on the right on the beltline next to the bike path.

4. General Manager/Commission Information Items

Ms. Grimes informed the Commission of two employee recognitions for different accomplishments. Mrs. Grimes stated that Bill Samal, one of our 4 McNeil Station Foresters, was recognized and read from the following note from Bill Kropelin, Chief Forester at the McNeil Station: ‘I’d like you to know that Bill Samal, along with three other Vermont foresters, was awarded the Integrity and Conservation Award by the New England Society of American Foresters at their meeting at the Lake Morey Inn in March. The award recognizes ‘individuals who demonstrated adherence to principles and high standards in the face of adversity". We understand that you and others were recognized for your work in 1997 creating a coalition of conservationists who developed legislation to control liquidation harvesting in Vermont woodlands. The law, known as the "Heavy Cut Law", sets measurable standards to define a heavy cut, and a procedure to determine the legitimacy of each heavy cut larger than 40 acres. Mrs. Grimes stated that she remembers this as a controversial piece of legislation that divided conservationists, environmentalists and foresters. That you and the three others persevered and ultimately got legislation passed that protected the State is very worthy of recognition.’

Mrs. Grimes informed the Commission that Seth Brownell, another BED employee, just completed his apprenticeship program and received his Associate’s Degree and congratulated Seth for his accomplishment.

4.01 Department of Public Service (DPS) Public Engagement Proces (Discussion)

Mrs. Grimes informed the Commission that last year’s legislature passed a bill that directed the Department of Public Service (DPS) to do a public engagement process to develop their energy plan. She stated that the Commission may recall that the Department had taken two shots at developing an energy plan under this administration and when the first one was rejected, they came back with another one but it was pretty much a history of electricity in Vermont and not a lot of guidance or vision to the utility. Mrs. Grimes stated that when VELCO proposed the Northwest Reliability Project (NRP) and folks who felt that Vermont’s electric needs could be met without upgrading its transmission sources, found that where Vermont stood at that particular time to even be able to convey the savings from efficiency programs, there needed to be upgrades to the transmission system. The legislature, DPS and the PSB felt that there needed to be broader public awareness of what these big projects were going to be going forward so that the public could be engaged and better understand the need with the hope that with a lot of public input, we could meet some of Vermont’s load growth other than with just transmission upgrades. She stated that the legislature put in the bill a holding place for $50,000 and legislators knew that it would be more expensive than this – approximately around the $200,000-$250,000 mark. Mrs. Grimes stated that through the E-23 process, which is the group of 23 utilities that get together and meet and help plan, they found that the public engagement process was going to cost a lot more money – around $520,000. There was no money other than the $50,000 that was budgeted. Steve Wark, the communications person for the department, stated that the department was looking for voluntary contributions to make up the difference. Mrs. Grimes indicated at the time that the PSB has a process where they can open a docket, indicate what they want us to do and then it is done. Mr. Wark stated that they really didn’t desire to open a docket but would be willing to support us when we go in for our next rate increase that this expenditure was a good thing. Mrs. Grimes stated that this wasn’t going to work and that the opening of a docket is the best solution. A lengthy discussion ensued and the Commission directed BED not to pay the allocated amount. It was further stated that if BED could not reach an accommodation with the DPS, then it was decided that BED would go ahead and pay the allocated amount but under protest.

5. ***CONSENT AGENDA***

5.01 January & February Financial Reports

Upon no discussion of the Consent Agenda items, this item was passed with the approval of the agenda at the beginning of the meeting.

6. Integrated Resource Plan Presentation (Discussion)

Ken Nolan was present to discuss the Integrated Resource Plan (IRP) with the Commission. A PowerPoint presentation was given. Ken gave a presentation of staff’s proposed process structure for #9;BED’s 2008 IRP development including an itemization of key IRP tasks, timeline, and critical BEC decision points. Ken explained that staff expected to begin work in May, and that the IRP must be filed with the Public Service Board in May 2008. There was substantial discussion around the appropriate #9;scenarios to use in determining viable efficiency program investment, as well as the public participation #9;process. The Commission decided to hold sub-committee meetings with staff to explore the efficiency #9;program issue in greater detail, with the sub-committee meetings to be scheduled prior to the next BEC meeting. Ken informed the Commission that staff would be back in front of them at the May meeting to #9;get final input on the proposed scenario structure concepts, and the public participation process, before #9;beginning detailed development of the underlying IRP assumptions.

7. EnerNOC Memorandum of Understanding for Load Response (Discussion)

Ken Nolan briefed the Commission on staff efforts to expand BED’s Demand Response programs. Staff initially began the evaluation of BED programs in response to changes in the EEU funding level proposed by the Public Service Board. Through the staff review, it became clear that the best approach would be to #9;utilize outside services. Tom Buckley explained that Energy Services would be directly involved with the #9;program, and would insure that efficiency improvements remained a key aspect of the program going #9;forward. Ken explained that staff had talked to all fourteen vendors providing these types of services in #9;New England, and had interviewed the three most viable firms. Based on the interviews, EnerNoc provided the best match for BED’s desired approach. BED Staff checked EnerNoc’s references, and was impressed with the responses. The proposed MOU would delineate the relationship between BED and EnerNoc, and establish protocols for dealing with customer contacts. However, there is no commitment required by BED, and no financial obligation. The Commission expressed its support for the concept, and thanked staff for moving it forward.

8. Fiscal Year 2008 Budget Presentation

Daryl Santerre presented the Fiscal Year ’08 budget to the Commission with a Power Point presentation.  He stated that Fiscal Year 2007 has been a good year, thus far, for the Department. The rate adjustment from last year has helped stabilize the financial picture, in the short term. For that reason, and power supply costs budgeted to be somewhat stable through FY’08, we have not projected a revenue adjustment (through rates) for FY ’08. We do, however, implement Phase II of the rate design order, effective July 1 of the new budget year. This does not increase revenues to the Department, but reallocates costs, and thus revenues, within customer classes.

Mr. Santerre then discussed the Key Assumptions used in the budget development. As mentioned earlier, revenues would be relatively stable with no rate adjustments other than the Phase II Order implementation. We always assume normal weather and growth trends based upon market and other data. On the expense side, we assumed that operating costs would increase by 2.7% from the FY’07 budget. We also assumed that "controllable costs" (some discretion by management) would only increase 1/2 % or less over FY’07 numbers. On the power supply side, by far the largest impact on the budget with a budget of $27,000,000, costs would be relatively stable, with an increase of 1.7% over the FY ’07 budget. Mr. Santerre continued by stating to the Commission that since Fiscal Year 1998, "controllable costs" are up only $1,000,000 (an average of 0.9% per year, not including inflation). This was accomplished during a period of major increases in healthcare and pension costs (up $1,000,000 annually since ’03) and major increases in capital improvements to the distribution system.

On the Capital side we assumed our minimum investment in VT Transco (there are discussions about raising our investment levels considerably, but none were suggested at this time) and normal levels for Distribution and Generation spending. We assumed no new generation projects or emission equipment upgrades at this time until we were further along and more certain of the outcomes.

On the Financing side, we assumed the annual $1,000,000 General Obligation Bond through the City, but no other long-term financing. With some of our major Capital plans being discussed, but not yet certain, we do not have the corresponding capital financing in this budget, but deferred until things are more certain. We did, however, increase our short-term borrowing (a line of credit of $5 million was approved by the City Council) by $2.5 million. Our long- term debt continues to decline, with the year end ’08 balance projected to be at $59.9M, down from $100M in FY ’95.

Mr. Santerre then walked through the detailed schedules of the FY’08 budget, followed by the summary schedules of Net Income, Debt Coverage and Cash Flows.  Net income is projected to be a healthy $1.8M (last year’s budget was $1.3M), debt coverage is 1.59 (1.25 required) and cash balances are much improved.

Mr. Santerre reiterated to the Commission that BED believes this budget is just and reasonable. It allows us to continue to pay down debt and improve reliability, customer service and safety. This budget is based on some major assumptions, especially on the power supply side. Should any one or more of those assumptions change, the projected year end outcomes would change considerably.

The complete budget package has been forwarded to the Chief Administrative Officer for inclusion in the City-wide Budget.

Upon no further discussion, Commissioner Harris recommended the approval of the Fiscal Year 2008 Budget and that this item be forwarded to the Board of Finance and the City Council for final approval. The motion was seconded by Commissioner Judd and approved by all Commissioners present.

There being no further business to discuss, Commissioners Harris and Wallace-Brodeur moved to adjourn at 8:12 p.m. which was approved by all Commissioners present.

Attest:

________________________________

Patricia J. Crowley, Clerk