CONCORD MUNICIPAL LIGHT BOARD
August 12, 2009
Pursuant to notice duly filed with the Town Clerk, a meeting of the Municipal Light Board was held on Wednesday, August 12, 2009, at 8:00 AM at the Light Plant office. Present were Bob Kusik, Chair; Charles Davis, Arthur Fulman, Hugh Lauer, Sue Miller; Virginia McIntyre, Selectman; Jill Appel and Jack LaMothe, Finance Committee liaisons; Daniel Sack, CMLP Director; Dale Cronan, Assistant Director; Dave Wood, Engineering and Operation Manager; Sherman Chapman, Financial Administrator; Keith Ingram, Telecommunications Coordinator; Mayhew Seavey, Rate Consultant; David Allen; Charlie Parker, Peter Nobile, Eric Gamage, and Brian Crounse(by conference call); and Deborah Mullen, Recording Secretary.
Call to Order
The meeting was called to order at 8:00 AM. Mr. Kusik began with a reminder about meeting etiquette.
First, he explained that speaking in public meetings of boards and committees is a privilege, not a right1, and he asked members of the audience to be concise and to the point.
Second, he asked that comments be constructive, not looking back to assign blame; of course, kudos are always appropriate.
Mr. Kusik recognized two letters of appreciation from a customer regarding CMLP staff member Jeff Cosgrove. He also recognized Dave Wood and the team for bringing power back in West Concord earlier in the month.
The next Light Board meetings are as follows (8:00 AM unless noted):–
August 26, 2009 (6:00 PM, with pizza for a discussion on power supply strategy)
September 9, 2009 (Public Hearing, 7:30 PM in the Town House)
September 17, 2009
Approval of Minutes
The minutes of July 15 were discussed extensively. Most of the discussion surrounded the reporting of the discussion of the Morgan-Stanley contract. Mr. Davis was not satisfied that the minutes had recorded his comments, and he distributed a written statement explaining his position on this matter. It was agreed to enter his written statement into the record and that he would send the Clerk some words to add to this section of the minutes.
Members of the Board and the audience offered other points to include in the record of the discussion of the Power Supply Strategic Plan. It was agreed that the Clerk would incorporate the comments received and circulate a new draft of the minutes of the meeting of July 15 prior to the next meeting.
Financial Report
Mr. Chapman presented the Financial Report for the five months ending May 31, 2009. For this period, CMLP recorded a net profit of $78,600 compared with a budgeted profit of $37,200, for a net variance of $41,400. Taking into account budgeted item that have not yet been spent, the proposed rate increase in October, and other adjustments, he anticipates that the net income for calendar year 2009 will be about $207,380, vs. a planned amount of $314,100.
Mr. Chapman reported that there are 102 participants in the Residential Rate Assistance. He circulated a chart showing the number of participants by month, as requested at the previous meeting.
Energy Purchases on the Futures Markets
Mr. LaMothe asked for five minutes to make some statements regarding lessons learned from the Morgan-Stanley contract and to distribute some supporting charts. He felt that the Light Board has had no strategic role over the past twelve years — years that include the signing of the Constellation, Morgan-Stanley, and Braintree contracts. However, the Light Board is undergoing significant changes and is starting to adopt a strategic role. This role should not be to second guess management but rather to formulate strategy to reduce or manage risk in the purchase of power. He felt that this strategic role must be discussed more fully.
Smart Grid update
Mr. Ingram summarized the application for federal stimulus funding for Concord’s SmartGrid program, and he announced the winning bid for a technology partner in that application. The winner was Intelagrid, with a bid of $399,000. This was not the lowest bid, but it was the best. Intelagrid will purchase components from MuNet, who also submitted a bid, and will add value especially in the areas of user interface and cyber security of the Zigbee mesh networks. The proposed implementation would include about 200 optical network terminals (ONTs) to connect the Zigbee meshes to the fiber optic network.
He and Mr. Sack explained that it had become apparent that the Department of Energy wants to emphasize the collection of data, so they added 1000 Smart Meters to the proposal. These cost $115 each but were not part of the appropriation approved by Town Meeting last spring, so they will be funded from the CMLP depreciation account. These will replace existing Itron meters, which can be sold to other utilities that are just getting into drive-by meter reading.
They also explained that the total dollar value of the federal stimulus application is $4.8 million and includes the meters and “in kind” costs such as the salaries and consulting fees associated with the design and proposal. The application requests support for the full fiber optic network to all transformers, on the grounds that this provides infrastructure for expansion of additional “smart” service and comprehensive “smart” management of all components of the Concord electricity grid.
Mr. Ingram said that they hope for a response from the DOE in October. Mr. Kusik said that he has drafted a letter to Congresswoman Nikki Tsongas to get her support for our application. Mr. Fulman offered to follow up with a telephone call to the Congresswoman’s staff. It was suggested that the letter be a joint one from the Light Board and Board of Selectmen.
Fiber optic pilot project
Mr. Ingram explained that the pilot fiber optic network had been deployed and began operation in July. Following the selection of Intelagrid as our technology partner for Smart Grid, the pilot is being upgraded to provide a test bed for Intelagrid and MuNet components and systems.
Power Supply Strategic Plan
Mr. Kusik asked board members and CMLP staff members whether a special meeting is needed in order to take the next steps in formulating strategy in the purchase of power. It was agreed that the Board would meet on August 26 from 6-9 PM, with pizza to be provided.
Power Purchase Options
Mr. Cronan reported on continued discussions concerning a 3-megawatt base load power plant in Ware using low-BTU gas from a landfill. Their price is now an attractive 7.25¢/kWh, including capacity charges. This is an energy equivalent of about 6.5¢/kWh, which makes it competitive with the Miller Hydro plant in Maine, but higher than the current spot market. The Ware plant would be capable of providing about 24,000 mWh of energy per year from a renewable source.
Regarding the 280 MW base load plant being proposed by Taunton, Mr. Cronan reported that the Wellesley and Hingham municipal utilities are no longer interested in being members of the proposed Co-op to build the plant. They would rather be straight purchasers of power. It is not clear whether their withdrawal from the Co-op would put the project in jeopardy or may cause it to be reduced in capacity. It seems that there are about a dozen utilities still potentially interested in membership. He noted that the plant would have a return of about 8% to Co-op members, so that non-members with 30-year unit contracts would effectively pay a premium of about 8% on debt service to Co-op members.
The Co-op contract is the most important contract of the six required to start the Taunton project. The potential members are in the process of getting a financial advisor to advise the participants whether the Co-op contract as written would be sufficient to float a bond issue for $350 million, the cost of the plant. Board members noted that we really need to understand the risks to the Town if Concord joins the Co-op.
Rate Study
Mr. Mayhew Seavey explained a draft of the presentation to be given at the Rate Hearing on September 9. Some details still need to be resolved, but these have an insignificant impact on the rates. The general increase was targeted at 4% across all classes. However, the introduction of the Residential inverted Block Rate and the steps toward consolidating the Medium and Large General Service classes of customers resulted in an overall rate increase of about 4.9%. Purchased power costs were estimated from the Morgan-Stanley and Braintree contracts and from ISO-NE forecasts for the spot market.
He explained that an earlier proposal to unbundle rates did not work out, so rates will remain bundled, with residential block rates ranging from 14.4¢ to 16.4¢/kWh. The PPA (Purchase Power Adjustment) is targeted at zero, but rebates from the Rate Stabilization Fund will actually provide a credit on the PPA line item for several years. Therefore, 50% of the residential customers will see an increase of less than 3% and another 30% will see an increase of less than 4%. Very small customers will actually see a decrease.
It was noted that the 3¢/kWh surcharge for power from Acton Hydro is not mentioned anywhere. This led to a discussion of whether all customers should pay for the cost of renewable or “green” power. Acton Hydro is a unique situation because it is local and visible. When the project was first proposed, a voluntary surcharge made sense. However, as more sources such as Ware and Miller Hydro are explored, it may become impractical to identify and charge separately for renewable resources. Moreover, we are being required by the state to move toward renewable power, and costs for these sources will necessarily be aggregated into the rates.
The consensus was that we should not retain the 3¢/kW surcharge for Acton Hydro. However, action on this matter was deferred to a future meeting.
Concord Home Solar
Ms. Jill Appel introduced the topic of solar energy in Concord. Mr. Brian Crounse, acting chair of the Comprehensive Sustainable Energy Committee, joined the meeting by conference call.
One issue is how CMLP customers can get state rebates for installing solar panels. Currently, such rebates are available only to customers of investor-owned utilities; these utilities have been paying into a fund dedicated to such purposes for many years. Ms. Appel explained that the state Green Communities Act of 2008 includes a provision for municipal utilities to join the Massachusetts Renewable Energy Trust at a cost of 0.05¢/kWh per year — estimated at $90,000 per year for CMLP. The decision to join is irrevocable; once a municipal utility has joined, it cannot withdraw. It is unclear how program changes, such as increased assessments, might affect Concord. One benefit of joining is that CMLP customers would be eligible for rebates under various renewable energy programs, including the
installation of solar panels.
She also mentioned groSolar, a firm that installs solar panels, and SunRun, a firm that operates them on a leased basis. There was much discussion of the implications of allowing a firm like SunRun to operate and sell electricity in Concord. Also discussed was the possibility of Concord operating its own rebate program with the money that it would have spent on the Renewable Energy Trust.
Members and staff suggested a number of issues that need to be answered, including
What are the pros and cons of joining the Renewable Energy Trust?
Would the program open Concord to sale of power by others, and what would be the effect on CMLP?
How much staff time and resources would be needed to research these ideas?
Technical considerations such as what happens if a customer needs a new roof?
What is the health and stability of companies such as groSolar and SunRun, are there others in the same field, and how often do they come and go?
What kind of policy does CMLP need in order to work with its customers?
It is possible that a vote of Town Meeting could be required to make Concord a “green community.” All Town departments, boards, and committees need to be aware of the implications to CMLP, and there would need to be a lot of discussions.
This topic will be revisited in October, hopefully after staff members have more information.
The meeting adjourned at 11:25 AM.
Respectfully submitted,
Hugh C. Lauer
Clerk
1Except at public hearings, where people do have the right to speak and be heard.
| 
