VILLAGE OF MORRISVILLE WATER AND LIGHT DEPARTMENT

October 5, 2009

MONDAY 6:15 PM

Water and Light Office

The meeting duly noticed and warned was called to order at 6:04 PM.

PRESENT: Trustees: Tim Sargent, Ed DeBor, Wally Reeve, and Dana Wildes

Staff: Craig Myotte, Jim Fontaine, Penny Jones and Linda Osgood

ABSENT: Trustee Bourne

1) PUBLIC MEETING:

No members of the public were in attendance.

2) CURRENT PRIORITY PROJECTS:

The Board reviewed the status of the current priority projects.

3) MANAGEMENT REPORT:

Generation has returned with the rain. At the WWTF, the control building is almost framed and will soon be ready for a roof. All pipes by the garage have been installed and the final grade of the road has been reached. They will rough pave in a few weeks for the winter. Final paving will be done in the spring after everything has settled. Tatro continues to pour concrete.

There are still approximately five meters left to install. We have found a few that were missed and there is a meeting tomorrow to resolve the issues of checking the first plumber’s work and some non-functioning meters. We are getting good data and hope to have draft rates by the end of the year. We will periodically test to make sure the readings are accurate.

Blasting for the water transmission line to the new reservoir has begun and the pipe is being hauled up from the field to the work site. They want to connect into the existing transmission line next week and plan on working up the slope, not down. They want to get all pipes in the ground and shut down for the winter. All that will be left for next spring is the reservoir itself and the pressure valve pits.

Tatro missed one connection on Congress Street which has now been remedied. They will start the Portland Street water line next week. We received a letter from Steve Benson’s lawyer warning us of the potential hazard of digging around Melben’s so we have slightly relocated the line to avoid that area. Jim has been very satisfied with Tatro’s work.

Penny sent out RFP’s to four banks and got the best response from Union Bank – 4.25% for 20 years. We have begun the paperwork with UB. Penny also met with FA&A to begin mapping out new water and sewer rates.

As Craig is trying to wrap up some transmission wheeling rates, Johnson and Hardwick have expressed an interest is purchasing sections of MW&L’s transmission grid. Craig feels wheeling services may be a better route as we would retain control of the assets.

The CVPS loss settlement will not go away until we have collected all our money by June 30, 2009. The impending implementation of the 115 KV line will require a modification to the existing calculations.

The new IBEW contract set up a safety committee consisting of Craig, Jim, Steve Cutler, and John Tilton to eventually strengthen the safety language in the contract.

4) APPROVE MINUTES OF MEETING HELD SEPTEMBER 28, 2009:

On a motion by Trustee Wildes, seconded by Trustee Reeve and approved by all present, the Board approved the minutes of the September 28, 2009, regular meeting.

5) APPROVE LIENS:

On a motion by Trustee Reeve, seconded by Trustee DeBor and approved by all present, the Board authorized a lien in the amount of $120.76 on the 425 Elmore Street property owned by Mary Jo Salvas and a lien in the amount of $157.87 on the 186 Needles Eye Road property owned by Ralph Jr. & Brenda Bowen.

6) DISCUSS HYDRO REPORT AND FUTURE POWER SUPPLY STRATEGIES:

Trustee Wildes took the Turner report and worked out a simple payback time on their suggestions. The Board was reminded that if we borrow funds from a private bank, we can pay off the loan early from the savings of any given project. We cannot pay back the Bond Bank early. Dana’s analysis did not count any SPEED credits or reduced transmission costs, did not factor in down-time for any construction, and did not include considerations for green loans, LEDC loans, Federal Stimulus funds, or even Efficiency Vermont loans. It also did not factor in engineering. Even without all those considerations, four projects jumped out as feasible – a minimum flow turbine at Green River, replacing the 600 kW generator at Cady’s Falls, and mechanical crest controls at both Dam #1 and #2 to replace the flashboards.

Craig reviewed the handouts from the last power supply task force meeting. Trustee Wildes wants confirmation that VPPSA is keeping their gas prices up-to-date. He then asked what impact we would see on the financials once the Swanton Peaker project is finished. The only impact will be on our purchased power bills. He asked what the value of each planned purchase was. Craig will provide the rate for each one. Craig pointed out that we will see a huge swing in transmission costs in 2010 to negative $6 million only to balloon back out to $23 million in 2011 which is directly related to the Southern Connector. VPPSA and VELCO have offered thoughts on levelizing the costs.

7) RATE MITIGATION STRATEGIES:

Craig is focusing on electric retail wheeling rates. The Turner’s hydro report has finally given us a direction for our hydro generation. Hyde Park did have a meeting in September and they are still considering connecting to our WWTF.

Trustee Wildes wondered if the connection fees for water were adequate. Trustee Wildes pointed out that if you don’t capitalize your models properly you end up constantly looking to rates for stabilization. Penny feels that the Water Department is the only department that is properly capitalized, or at least getting there.

The Chairman wondered, in a worse-case scenario, if it was worth it to sell out to some other entity. Trustee Wildes replied there are plenty of buyers out there but once the Village loses control, it’s gone forever. Trustee DeBor felt an analysis should still be done.

The TSSA is still the best way to stabilize sewer rates. We need to develop several build out scenarios. The Industrial Park will give us some growth as Concept II would likely connect. Trustee Wildes verified that infiltration money from sewer installations goes to MW&L and not ANR. Jim pointed out that the original person who pays infiltration fees should get a rebate from additional hook-ups, along with an allocation fee rebate. A company such as Great Big Graphics is looking at an infiltration fee higher than their allocation fee.

8) OTHER BUSINESS:

There was a lengthy discussion on the rate MW&L is charging VEC for services. It was questioned if we should back-bill VEC for the difference and increase our hourly rates immediately for October. Craig stated we made a good faith offer and we can’t go back on it. Going forward we can look at it differently. When we agreed to the VEC job, it was a win/win situation because it covered our expenses and kept our guys working. Trustee Debor mentioned that when our people go to work for VEC, they’re making more per hour then when they work on our system. Over time, won’t our people feel they are underpaid? Jim pointed out that can happen anyway. He also pointed out that paying them VEC’s wages was set as an incentive to reward an employee for going outside our service territory and is a standard clause in Union Contracts. Trustee DeBor questioned the value of that clause.

The draft survey on the Patnoe property has been completed. Once the survey is finalized, we need to settle with the Patnoe’s. They have been very patient.

The Planning Commission has invited the Trustees to their regular meeting tomorrow night. Craig is not sure how much value we can add at this time but we have sewer services and we have a plan we’re working on so, how can we help. Trustee Wildes volunteered to attend on behalf of the Trustees.

We have begun meeting with FA&A to set up new water/sewer rates. Staff posed a number of questions to the Trustees such as How much do we want as a base rate (customer charge) and how much as a usage charge? Do we want to keep a differential between rates charged in the Village and the Town? Do we want a tiered rate structure based on usage? Do we want different base rates based on meter size because a regular water meter only costs $100 but a 3” compound meter costs $3000? Trustee Wildes would like to see a base rate based on present costs and would prefer to see a lower sewer allocation fee and higher customer charge. Jim suggested not collecting the allocation fee upfront but to place a lien on the property and allow the owner to pay off the allocation fee over time. Trustee Wildes would like to see a fee collected on property transfers for setting up new accounts and transferring meter data. He would also like to see a flat administrative fee for setting up accounts. He wants us to charge more for extra visits, extra connections, safety protection, etc. He likened the charges to the various activation fees you face with cell phones.

9) EXECUTIVE SESSION:

At 8:11 PM, on a motion by Trustee DeBor, seconded by Trustee Wildes and unanimously approved, the Board went into Executive Session to discuss legal issues.

At 8:20 PM, on a motion by Trustee DeBor, seconded by Trustee Reeves and unanimously approved, the Board came out of Executive Session.

10) ADJOURNMENT:

At 8:21 PM, on a motion by Trustee DeBor, seconded by Trustee Wildes and unanimously approved, the Board adjourned the meeting.

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Edward DeBor, Clerk