The regular meeting of the Board of Electric Commissioners was convened at 5:30 p.m. on Wednesday,

October 10, 2007 at the McNeil Station, 111 Intervale Road, Burlington, Vermont.

Commissioners Jennifer Wallace-Brodeur, Scott Johnstone, and Bob Herendeen were present.  Commissioners Harris and Judd were absent.  Staff members present included:  Barbara Grimes, Tom Buckley, Daryl Santerre and Charlie Willette. Other staff members present included:  Ken Nolan.  Ken Deon and Heather from KPMG were also present for the presentation of the audit.  Patricia Crowley, Clerk, was present.

Channel 17 was present to tape this meeting.

Commissioner Wallace-Brodeur called the meeting to order at 5:31 p.m.

1.   Agenda

      There were no changes or revisions to the agenda.

2.   Minutes of the September 12, 2007 meeting

Commissioner Johnstone moved to accept the minutes for the September 12, 2007 meeting.  The motion was seconded by Commissioner Wallace-Brodeur and approved by all Commissioners present.

3.   Public Forum

No one was present from the public.

3.5  Commissioners’ Corner

The Commission had nothing to add to the agenda. 

4.     General Manager/Commission Information Items (Oral Update)

Ms. Grimes followed up with the Commission regarding the Integrated Resource Plan (IRP) sub-committee.  As Commissioner Harris showed an interest in being on the sub-committee at a previous meeting, Ken Nolan offered to Ms. Grimes to have our team meet with one other sub-committee.  The IRP group would be first and then have a chance to include Commissioners Harris and Herendeen if they would like to take advantage of this. Ms. Grimes informed the Commission that power supply costs were under what we projected and this is because of the program that Ken Nolan put into place. 

5.      Fiscal-Year 2007 Financial Audit Presentation (KPMG Presentation)

Mr. Santerre was present for the audit report discussion.  Also present for this discussion was Ken Deon, Audit Partner for KPMG; and Heather Kuney, also from KPMG.  Mr. Deon informed the

Commission that the audit opinion was an unqualified ‘clean’ opinion.  He stated that there were no  audit adjustments and that there were no Management Letter comments.  Mr. Deon then walked the Commission through a brief discussion of the three major financial schedules of the Audit Report.  A brief discussion followed.

Commissioner Wallace-Brodeur moved that the Board of Electric Commissioners enter into Executive Session at 6:29 p.m. to discuss agenda item #5, Fiscal Year 2007 Financial Audit Presentation.a contractual matter, the premature disclosure of which could place the Burlington Electric Department at a substantial disadvantage. The motion was seconded by Commissioner Herendeen and approved by all Commissioners present.  The Commission returned to regular session at 6:40 p.m. upon motions of Commissioners Johnstone and Herendeen.

6.      Five-Year Financial Plan (FY’08-12) Presentation

Daryl Santerre was present for the discussion of the Five-Year Financial Plan.  This particular forecast is for the five year period from FY’08 –FY12.  Mr. Santerre began by discussing the differences in financial forecasting vs. budgeting. In general, forecasts are more general in nature, less precise, and viewed in years, not months. They are revised as needed and primarily used by management to help with longer term planning, rates management, etc.  Financial Forecasts are affected by weather, the economy, the natural gas and oil markets, interest rates (investing and borrowing), generating availability, BED’s cost of labor and benefits and many other smaller factors. Any one or more of these factors will have a bearing on the outcome of this and future forecasts.

Mr. Santerre then discussed the major assumptions used in the development of this forecast. On the power supply side, Mr. Santerre discussed the assumptions that were used including market prices, contract expirations and McNeil generating numbers.

Mr. Santerre then walked through each of the major components of the forecast, including sales to customers, other revenues, operating expenses, taxes, other income, interest expense and capital spending. He presented the financial results, including net income, cash flow, debt coverage and revenue (rate) requirements.  FY ’09 is where losses and cash flow concerns become more apparent.

We then reviewed our five-year capital spending plans, identifying the need for long-term financing at some time over the five year plan, in addition to the annual $1M General Obligation Bonds. We then reviewed our cash flow projections, noting that in FY '09 is where we begin seeing cash deficits.

7.      Integrated Resource Plan (IRP) Discussion  

Ken Nolan gave a presentation of the load forecast and Demand Side Management (DSM) scenario assumptions staff is proposing to utilize in the 2008 Integrated Resource Plan (IRP).  The load forecast prior to future DSM implementation is showing slightly lower growth than the 2004 IRP, at a roughly 0.75% annual growth rate.  The level of future DSM effort for BED will be a major decision item for the 2008 IRP and staff has developed three scenarios.  The first “low DSM case” assumes future efforts equal to historic DSM implementation rates.  The second “Base DSM case” assumes future efforts will continue at the present DSM budget levels.  The third “high DSM case” assumes BED increases its DSM efforts to capture all cost effective DSM as identified in analysis completed for the East Avenue Loop project permitting process.  Under the high DSM case, BED loads in 2027 would be 22% less than they were in 2006.  Ken noted that staff would be meeting with Commissioners Harris and Herendeen independently to review the proposals in detail, and to address specific questions they had raised.  The information presented this evening represents the first phase of IRP development.  The next phase, power supply scenarios, will be presented at the next BEC meeting.

8.      ***EXECUTIVE SESSION***

         8.01        Bear Energy Update

Commissioner Johnstone moved that the Board of Electric Commissioners enter into Executive Session at 7:56 p.m. to discuss agenda item #8.01, Bear Energy Update,  contract negotiations; the premature disclosure of which could place the Burlington Electric Department at a substantial disadvantage. The motion was seconded by Commissioner Herendeen and approved by all Commissioners present.  The Commission returned to regular session at 8:36 p.m. upon motions of Commissioners Johnstone and Herendeen.

Attest:

Patricia J. Crowley, Clerk