Blog Archive

Wednesday, November 22, 2017

November 28, 2017 EPB Board Meeting

TO:                       Members of Glasgow Electric Plant Board                 
FROM:                  William J. Ray, PE                 
DATE:                  11/24/2017  
SUBJECT:            Board Meeting Information                                          

November has been an unusually mild month, with little in the way of predictable peaks (as this is written). So far, we’ve only predicted one potential peak day and the month is more than half over, but we did set a peak on that day, and the weather forecast shows a couple more likely peak days before end of month.    

Otherwise, November has been spent dealing with normal business issues, and we are very happy to be able to do that. We are still gathering billing data in order to analyze 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 report to the City Council on EPB initiatives over the last year. During the meeting, we will begin to go over some of our customary end-of-year issues as we work to bring 2017 to a close.  

December 1 FCA
As we continue the second year of our new retail rates, December 1 will bring us a rare, unchanged FCA for the month. The December FCA will be virtually identical to the last few months, but still 10% lower than the average for the last three December periods. Even though October 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 hydro generation was available due to copious rainfall. The December 2017 FCA is going to remain the same as November’s at 1.863 cents per kWh. On December 1 the energy component of our retail rates will be adjusted to reflect this very slight decrease to the wholesale cost of energy.

Contract Labor Bids
Contractor Bid Results

Labor Rates

Service Electric

Pike Elec.


 $ 70.73

 $ 75.10

 $ 83.45

 $ 72.24
 $ 79.46

Journeyman Lineman
 $ 64.63

 $ 69.60

 $ 78.88

 $ 64.99
 $ 71.48

Apprentice Lineman
 $ 56.53

 $ 62.70

 $ 57.16

 $ 48.67
 $ 53.53

Ground Man
 $ 37.75

 $ 33.40

 $ 41.15

 $ 41.42
 $ 45.56

 $  306.93

 $  326.00

 $    347.52

 $  303.00
 $  333.48

Equipment Rates

Pick Up Truck
 $ 14.00

$ 13.25

 $ 17.89

 $ 13.65

Digger Truck
 $ 29.00

$ 40.00

 $ 33.22

 $ 28.00

Bucket Truck
 $ 32.00

$ 38.90

 $ 26.83

 $ 27.50


 $ 75.00

$ 92.15

 $ 77.94

 $ 69.15

Notes: Pike Electric requires us to abide by their "Hold Harmless Agreement" that they
are only responsible for their negligent act or failure to act, in connection with the
performance of their work.  We originally stated they are responsible for their work
whether or not negligent.

Notes:  Groves Construction requires a 10% traffic control fee any time they have to
direct traffic.  Respectfully asked we accept their $5 million insurance umbrella vs.
the $10 million we requested in the specifications. 

At the meeting, I will go over these bids for labor services to enhance and accelerate our reliability improvement projects. Service Electric Company has provided these services for most of 2017 and has done a fantastic job for us. I will be recommending that we accept their bid for continuing these labor services for a portion of 2018.

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 Variable 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.

            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. Still, we agreed to pursue each of the recommendations, and we are presently sending out a letter to each customer on the TRS/TGSA1 rates to ask them for input on this question.

            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.

Programming Committee Retransmission Consent Issues
When you review the minutes of the Cable Television Programming Committee, you will see that they took a stand on the retransmission consent costs associated with the broadcast channels. Their recommendation to you is that EPB drop the Nashville and Louisville stations, while retaining the Bowling Green stations since this is the only viable way for us to retain full access to ABC, NBC, CBS, and Fox, as well as CW networks. Speaking for the Programming Committee, I can assure you that they would have liked to have maintained the present array of Nashville and Louisville stations, but the required $11/month rate increase, compared to a $3.50/month increase won the day.

Of course, the Programming Committee does not have the final say on this issue, but they are a good way to ascertain the feelings of the average EPB cable television customer, and, in their opinion, most customers would go for the reduced monthly cost at the expense of losing the Louisville and Nashville local news, weather, and other local programming. This move would only affect local programming from these broadcasters, as network programming from ABC, NBC, etc. would still be available from the Bowling Green affiliates.

As we discussed and demonstrated last month, much of the local programming is available using streaming services like Roku. But, as we also discussed, many customers will deem the learning curve for using these services too steep. At the meeting, you will need to make a final decision on this matter so that we can give our customers timely notice on whatever changes you decide to make.

December Meeting Date
Since our regular meeting date is the fourth Tuesday of the month, each December we seem to have a conflict with Christmas. Everyone’s holiday schedule is packed, and family should come before a board meeting, so I am placing this on the agenda so that you all can coordinate your calendars and come up with a December date that works for all. I wish our business was such that we could simply avoid this conflict by skipping the December meeting, but we always have some essential business to do in the last meeting of the year.

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.


            SET Project.
            The final report is submitted and the project is in wind up and close-out phase. 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 on December 7 with TVA 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.
            Kiosk/Night Drop Issues.
So far, there have been 3,453 transactions. The kiosk has taken in a total of $123,988.95. On average, 58% of our payments are credit and debit cards; the other 42% are cash and checks. We remove the cash and checks every business day (it also has a night drop built in). I believe the utilization of the kiosk is growing at a rate that will make our decision to install it a clearly good one.   

            Payments In Lieu of Taxes.
            Each year we get to demonstrate just how different Glasgow EPB is from our competitors, when we write checks to local governments, schools, and even the local library for significant amounts, based upon the value of our plant. While the phone companies have used legislative fiat to keep from making these payments, Glasgow EPB has made them every year, without fail, since its creation. As a result, local government and schools have a big financial interest in the success of Glasgow EPB, though that interest is commonly overlooked. The chart below shows how much we paid each agency last year and what we just sent them a check for this year.

            It should also be noted that Glasgow EPB also provides non-cash services to some of these agencies, in particular, the City of Glasgow, in the form of free fiber-optic circuits and internet bandwidth services to each city facility, worth over $32,000 per year, effectively doubling the cash payment shown below.


Mary Wood Weldon Library
Glasgow Board of Education
City of Glasgow
Barren Co Board of Education
Barren Co Fiscal Court
Kentucky State Treasurer
Tuesday, November 21, 2017

Coincident Peak Notice

E.P.B. Electric Customers on the Variable Price Rate- We predict the POSSIBILITY for November's peak electric demand to occur on Wednesday, November 22nd between 7am & 1pm. This is only a prediction based upon our best guess as to what the combination of all customers in Glasgow will demand from T.V.A. A peak demand hour can occur during any of the maximum of 24 hours of each month during one of our predicted peaks. This is our forecast which is provided as a convenience for E.P.B. customers who wish to receive forecasts. If you want to move to a fixed energy rate without coincident peak demand charges, please contact us at 270-651-8341.
Friday, November 17, 2017

Coincident Peak Notice

E.P.B. Electric Customers on the Variable Price Rate- We predict the POSSIBILITY for November's peak electric demand to occur on Monday, November 20th between 7am & 1pm. This is only a prediction based upon our best guess as to what the combination of all customers in Glasgow will demand from T.V.A. A peak demand hour can occur during any of the maximum of 24 hours of each month during one of our predicted peaks. This is our forecast which is provided as a convenience for E.P.B. customers who wish to receive forecasts. If you want to move to a fixed energy rate without coincident peak demand charges, please contact us at 270-651-8341.