Friday, October 20, 2017
October 24, 2017 EPB Board Meeting
3:29 PM | 
Posted by
Billy Ray |
TENTATIVE AGENDA
GLASGOW ELECTRIC PLANT BOARD
OCTOBER 24, 2017
6:00 PM
1. SWEAR IN NEW BOARD MEMBER / MINUTES OF PREVIOUS MEETING
2. ANALYTICS REPORT FOR MONTH OF SEPTEMBER
3. REPORT ON NOVEMBER 2017 FCA
4. CONSIDER AUDIT REPORT
5. DISCUSS PROGRESS ON RECOMMENDED CHANGES FROM ADVISORY COUNCIL
6. CONSIDER VEHICLE BIDS
7. CONSIDER TVA CONTRACT AMENDMENT
8. CONSIDER PERSONNEL FIVE YEAR PLAN
9. REPORT
A. SET PROJECT
B. SAFETY REPORT
C. KIOSK REPORT
D. RETRANSMISSION CONSENT / CABLE RATES
10. NEW/OLD BUSINESS
A. RATIFY PROGRAMMING COMMITTEE ACTIONS
11. ADJOURN
MEMORANDUM
TO: Members of Glasgow
Electric Plant Board
FROM: William J. Ray, PE
DATE: 10/19/2017
SUBJECT: Board Meeting Information
Preamble
October has been an unusually
warm month, relative to weather in Glasgow, which put us back in a summer mode
as we looked for the peak day/hour. As this is written I am quite confident
that we have already successfully predicted the peak hour for October, doing so
easily within the four days we allotted ourselves under the altered rate
schedule. So far this month, we have made only three predictions, and the one peak
that is on the record, occurred on one of those days.
Otherwise, October has
been spent dealing with numbers as we continue to study the effectiveness of
the TRS and TGSA1 rates, as well as considering various configurations of rates
that would allow the $5 customer charge reduction for some customers. We’re
also working on our plans for internet service speed upgrades at year end. During
the meeting, I will present what results are possible from our rate study for
your review . I also hope to find some time to talk about other matters that
are essential to the EPB mission.
November 1
FCA
As we continue the second year of our new retail rates, November 1
will bring us another increase in overall power cost, due to an increase in the
FCA. The November FCA will be higher than the last few months, but still 9%
lower than the average for the last three November periods. Even though
September temperatures were mild, TVA energy sales were slightly higher than
normal, which contributed to higher fuel costs. Nuclear generation was higher
than forecasted due to Watts Bar Unit 2 availability. More gas generation was
used due to forced outages and hydro generation was 17% lower than anticipated
due to dry weather. The November 2017 FCA is going to increase to 1.864 cents
per kWh, which will bring about a 2.2% wholesale kWh cost increase. On November
1 the energy component of our retail rates will be adjusted to reflect this increase
to the wholesale cost of energy.
Independent Audit Report
The professionals with Carr, Riggs &
Ingram will be with us this month to deliver their report on the annual audit
of our finances, procedures, and controls. This report is based on facts
gleaned from having a team of licensed accounting professionals review all of
our financial records over the last year. After your review, this report will
be presented to the City in an upcoming meeting wherein I will report on the
year’s EPB activities. The report will also be posted for all to see on our
website. The report will be delivered by one of the firm’s partners, Lanny
White, and you are encouraged to ask any questions of him that concern you
about EPB’s financial operations.
Progress on Advisory Council Recommendations
Since you all have
already been provided a summary of the findings and recommendations of the
Council, I won’t repeat all here in their entirety, but will use shorter
summary terms for each item. The information presented here will be repeated
and expounded upon at the meeting for your consideration.
1. Tiered Customer Charge Based Upon Usage. This
is the toughest one of the recommendations for us to make progress on, but we
did discuss it enough to target a $5 reduction in the customer charge for the
lowest usage “tier,” as recommended by the Advisory Council. I’m afraid that
this decision has been misinterpreted by some as a promise to lower all
customer charges by $5. The Council asked for a tiered customer charge with
reduction for the lower kWh usage customers. That is the job we are working on
as directed to my team at the August Board meeting. Additionally, TVA is going
to start charging us a new wholesale customer charge, and since our present
rate architecture collects all of the money we need to operate the grid from
the customer charge, the base customer charge will have to cover this new
expense. That is not even recognizing the possible $400,000 annual cost
increase that Kentucky Retirement might saddle us with. A $5 credit would
soften those increases and provide the gradualism, as we slowly reduce that
credit over the next few years, but that credit will have to be funded by an
increase somewhere else. Please remember, the EPB is a non-profit corporation
which does not have the financial resources to simply reduce any charge without
offsetting that reduction with an increase to another charge to balance the
ledger. Our team will continue to develop the specifics of this recommendation
and update you monthly on our progress with the goal to accomplish same as quickly
as possible.
2. Revisions to Infotricity Rate. The requested
revisions have already been implemented, effective August 1. The council asked
us to limit our peak predictions to a maximum of 4 days per month. Accepting
that recommendation causes us to move away from the technically elegant
architecture of the former infotricity rate, wherein everyone pays their
pro-rata share of the monthly peak hour, no matter when it occurs. The new
limitations we accepted create risk of paying TVA for a peak hour which is not
properly predicted and shared among all customers. That risk is monetary and we
must create a fund balance to use when those missed predictions occur, because
TVA must be paid regardless of the accuracy of our predictions. At this month’s
meeting we will have information available to demonstrate the likely cost of
missed predictions and the needed kW markup to fund this change.
3. Alternative Rate Considerations. This is one of
the most unusual recommendations from the Council. The suggestion here is that
we poll our customers (we assume just those actually using the Alternative Rate
- TRS and TGSA1) to ascertain their interest in modifying the rate to introduce
time-of-use elements to the rate. This feels odd because everyone we know that
went to the Alternative Rate, did so because they sought the solace and
simplicity of an old-style kWh rate with fixed kWh charges. We are still
scratching our head about how to approach this, but, when we can be afforded a
little time, we will get this done.
4. Improvement to RoundUp Product. The
recommendation here was quite simple. We were asked to modify the product such
that anyone interested in participating could choose a fixed amount to be
automatically added to their monthly bill and then donated to Community Relief.
The objective here seems to have been to gather more funds for the use of
Community Relief, by increasing the amount donated by a participant beyond the
sub-one dollar amount achieved by simple rounding up of the bill to the next
highest even dollar. We found that the software could easily be adapted to do
this and we have already accomplished this change. We still need to create
marketing to better inform the customers of this change, and that is in
process.
5. Annual Rate Review. The recommendation was that
we conduct an annual review of the effectiveness of all retail rates, and
recommend changes based upon that review. This is a great suggestion that is
already on-going, in fact we are reporting on our progress with that review
this month.
6. Expand Education Initiatives. This
recommendation is the one which surprised us the most. The Council recommended
that we use multiple media outlets and create a speaker bureau which would
allow us to provide energy usage and savings advice to a wide variety of
meetings and groups throughout Glasgow. Honestly, we felt we were already doing
that, and, a lot of the feedback we have been getting has been negative as many
folks feel they do not need to be educated. However, since we accepted this recommendation,
and since you instructed me to redouble our efforts to educate our customers,
we are on the case. We have already conducted, two full blown educational
sessions lead by Jeff Christian, a former director from Oak Ridge National
Laboratory, and someone considered to be an expert in the energy efficiency
field. The event was heavily advertised with special arrangements for
transportation via city bus and individual transport for those with
transportation needs. Mr. Christian did a fantastic job speaking at the two
forums on August 31, however, less than 30 total customers attended. Other
educational efforts will continue.
Vehicle Replacement Bids
A few weeks ago, one of our vehicles was
severely damaged by an oncoming car that turned in front of Bill Anderson.
Thankfully, Bill wasn’t hurt, but the vehicle was totaled. The damaged unit was
a small SUV that is used by several departments for a variety of purposes. We
considered replacing it with an electric vehicle, just so we could start gaining
experience with them, but the likely price differential caused us to pause on
that idea.
Instead, we wrote specs for a standard
vehicle and solicited bids, which were opened and read aloud on October 16.
Here is what we got:
|
Gillie
Hyde
|
19
|
2018
Ford Escape
|
$19,962.00
|
NO
TRADE IN
|
$19,962.00
|
|
Gillie
Hyde
|
19
|
2018
Ford Edge
|
$26,732.00
|
NO
TRADE IN
|
$26,732.00
|
|
Gillie
Hyde
|
19
|
2018
Ford Explorer
|
$26,493.00
|
NO
TRADE IN
|
$26,493.00
|
|
Bailey
Gibson
|
19
|
2018
Buick Encore
|
$22,575.06
|
NO
TRADE IN
|
$22,575.06
|
|
Bailey
Gibson
|
19
|
2018
GMC Terrain
|
$22,810.00
|
NO
TRADE IN
|
$22,810.00
|
|
Goodman
Chevrolet
|
19
|
2018
Chevrolet Trax
|
$19,639.00
|
NO
TRADE IN
|
$19,639.00
|
With vehicles like this it is always tough
to figure out just which one presents the best value per dollar spent, since
the vehicles are not identical. That is certainly the case with this one as the
Ford Escape and the Chevrolet Trax are within $300 of each other
TVA Contract
Amendment
Over the last year TVA’s regulatory folks have taken a great interest in
the way the LPCs, like Glasgow, rent space on their poles to other utilities.
We call this arrangement “joint-use” and it is an old and successful formula
that allows streets to only have to accommodate one set of poles with several
different sets of conductors on those poles. It is economical fiscally and
reduces clutter in front of our homes and businesses.
Though tried and true, TVA feels the need to make sure all LPCs are
consistent with the way they conduct joint-use arrangements with other
utilities. At the meeting you will be asked to consider an amendment to the
power contract between Glasgow EPB and TVA, which clarifies TVA’s regulation of
joint-use agreements and our acceptance of same. A copy of the proposed
amendment is included in your board package and will be available at the
meeting.
2017 - 2025
Staffing Analysis
When time has allowed,
I’ve been working on a new project that really deserves my attention...and
yours. As shown at the last meeting, the report will outline how various
factors, not the least of which is the lack of trust in the Kentucky
Legislature’s willingness to properly address the under-funding of the CERS
retirement plan that we are legally required to participate in, may result in
the retirement of 20 members of our 48 member EPB team over the next six years.
That is a conservative estimate. Many of the projected retirements might come a
lot sooner depending upon the legislature’s actions in the coming months.
This is a matter of
great concern, and it is going to require a lot of attention, and additional
funding, over the next several years to solve. I will provide updates monthly
on this vital issue, which will have to be a part of all of our discussions
regarding rates and budgets. This exodus will take away team members with a
cumulative 500 years of experience at operating Glasgow’s grid and the EPB’s
business. I hope you realize how sobering that is and how sweeping the
implications for the future of our community are should we not do this
correctly.
One opportunity that
will come from this process will be to change the exceedingly flat architecture
of the EPB organizational structure. Over the years, in the interest of lower
operating costs, I have maintained an organizational configuration that
resulted in nine staff members reporting directly to me. While economical, that
is too many direct reports for one Superintendent. One of my first moves as we
look at the retirements in 2018, will be to begin to combine departments and
reduce the number of staff-level folks. We’ll discuss that in more detail in
December as we look at a salary budget for 2018, because some of these changes
need to begin to happen immediately.
Reports
SET Project.
The research portion of the project is going nicely and
we are actively engaged in the preparations of the final report, which is due
in a couple of weeks. One issue that remains is how we are going to handle
controlling the SET hardware post-project. The Virtual Peaker software that we
use to manipulate the devices is not free. We are meeting in the near future
withTVA and TVPPA in hopes of partnering with them to further develop VP such
that it gives feedback to the customers who are enjoying the benefits of the VP
control of their devices. We will report next month on the outcome of that
meeting. Our theory is that, once people have a better understanding of what VP
is doing for them and how much money they are saving, we will be better able to
market the service as a fee based offering.
Kiosk/Night Drop Issues.
IT
IS OPEN FOR BUSINESS AND IT IS BEING USED! Since it’s been in operation, it has
handled 1,956 transactions and taken in a total of $68,419. Within the last
month, it has handled 1,048 transactions totaling $38,002 so it is growing in
popularity very quickly.
Retransmission
Consent/Cable Rates Issue.
Every three years we
are faced with “negotiating” terms with the television broadcast stations that
we carry on our cable service. 2017 is one of those years and we have until
December 31 to decide which stations we can carry based upon their asking price
for retransmission rights.
This is a very
complicated transaction. The stations in Bowling Green are in our Dominant
Market Area (DMA) and they have been granted outrageous powers by the FCC and
our Congress. WBKO and WNKY can force us to either buy their ABC, CBS, NBC and
Fox programming, or not have it at all. That’s right, we cannot even decline
their asking price and buy the programming elsewhere. The laws say we buy it
from them, or we do without.
As we have come to
expect, both WBKO and WNKY are demanding substantial rate increases for the
2018-2020 contract period. The Cable Television Programming Committee is
considering a very tough decision relative to the increases demanded by the
stations within our DMA and the other stations we normally carry from
Louisville and Nashville. It is pretty simple, but still daunting. If we keep
all of the broadcast stations we have right now and combine their rate
increases with the increases already in place for the dozens of other
programmers in our various cable tiers, our programming costs will increase by
nearly $11 per month per subscriber. Of course, we would have to pass that
along to all customers. If we drop all broadcast stations except for those representing
the major networks in Bowling Green, our increase will be $3.50 per month per
subscriber. Neither option is attractive.
The amount of money
Glasgow already sends to broadcast stations is staggering. This year we will
pay right at $1 million to the five broadcast stations we pay for now. With the
increases they are all asking for, if we kept all five we would pay out $5
million over the next three years to those five businesses. Even if we drop the
Louisville and Nashville stations, we will be sending WBKO and WNKY over $1
million per year over the next three years for network programming and local
news programming that can only be described as less than what we are accustomed
to from the Nashville and Louisville stations.
You will face the
Programming Committee’s recommendations in the November and December meetings,
and whatever they recommend, this is going to be tough for our customers to be
happy with.
Subscribe to:
Post Comments (Atom)
0 comments: