Wednesday, November 22, 2017
November 28, 2017 EPB Board Meeting
7:46 AM | 
Posted by
Billy Ray |
MEMORANDUM
TO: Members of Glasgow
Electric Plant Board
FROM: William J. Ray, PE
DATE: 11/24/2017
SUBJECT: Board Meeting Information
Preamble
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 $5 customer charge reduction for
some customers. We’re also working on our report to the City Council on EPB
initiatives over the last year. During the meeting, we will begin to go over
some of our customary end-of-year issues as we work to bring 2017 to a close.
December 1
FCA
As we continue the second year of our new retail rates, December 1
will bring us a rare, unchanged FCA for the month. The December FCA will be virtually
identical to the last few months, but still 10% lower than the average for the
last three December periods. Even though October temperatures were mild, TVA
energy sales were slightly higher than normal, which contributed to higher fuel
costs. Nuclear generation was higher than forecasted due to Watts Bar Unit 2
availability. More hydro generation was available due to copious rainfall. The December
2017 FCA is going to remain the same as November’s at 1.863 cents per kWh. On
December 1 the energy component of our retail rates will be adjusted to reflect
this very slight decrease to the wholesale cost of energy.
Contract Labor Bids
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Contractor Bid Results
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Labor Rates
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Service Electric
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Elliott
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Pike Elec.
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Groves*
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10%
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Foreman
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$ 70.73
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$ 75.10
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$ 83.45
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$ 72.24
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$ 79.46
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Journeyman Lineman
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$ 64.63
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$ 69.60
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$ 78.88
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$ 64.99
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$ 71.48
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Apprentice Lineman
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$ 56.53
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$ 62.70
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$ 57.16
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$ 48.67
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$ 53.53
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Ground Man
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$ 37.75
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$ 33.40
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$ 41.15
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$ 41.42
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$ 45.56
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Total
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$ 306.93
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$ 326.00
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$ 347.52
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$ 303.00
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$ 333.48
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Equipment Rates
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Pick Up Truck
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$ 14.00
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$ 13.25
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$ 17.89
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$ 13.65
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Digger Truck
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$ 29.00
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$ 40.00
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$ 33.22
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$ 28.00
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Bucket Truck
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$ 32.00
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$ 38.90
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$ 26.83
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$ 27.50
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Total
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$ 75.00
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$ 92.15
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$ 77.94
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$ 69.15
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Notes: Pike Electric requires us to abide by
their "Hold Harmless Agreement" that they
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are only responsible for their negligent act
or failure to act, in connection with the
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performance of their work. We originally stated they are responsible
for their work
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whether or not negligent.
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Notes:
Groves Construction requires a 10% traffic control fee any time they
have to
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direct traffic. Respectfully asked we accept their $5
million insurance umbrella vs.
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the $10 million we requested in the
specifications.
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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.
Reports
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.
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2017
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2016
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Mary
Wood Weldon Library
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5,680.35
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5,588.09
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Glasgow
Board of Education
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217,791.84
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213,802.12
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City of
Glasgow
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36,819.31
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36,160.39
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Barren
Co Board of Education
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31,142.48
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29,356.62
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Barren
Co Fiscal Court
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37,947.68
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37,323.32
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Kentucky
State Treasurer
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43,865.34
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43,703.19
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ANNUAL TOTAL
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373,247.00
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365,933.73
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