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Friday, November 22, 2019

November 26, 2019 Regular EPB Meeting

TENTATIVE REGULAR MEETING AGENDA
GLASGOW ELECTRIC PLANT BOARD
NOVEMBER 26, 2019, 6:00 PM

1. APPROVAL OF AGENDA AND ANY ADDITIONS
2. CONSIDER ENTERING EXECUTIVE SESSION PER KRS 61.810 (1) (g)
3. CONSIDER ENTERING EXECUTIVE SESSION PER KRS 61.810(1)C
4. MINUTES OF OCTOBER 22, 2019 MEETING
5. REPORT ON IN LIEU OF TAX PAYMENTS FOR 2019
6. CONSIDER FORMAL TARIFFS FOR RETAIL RATES APPROVED BY TVA
7. DISCUSS CONSULTANT PROPOSALS
8. CONSIDER TVA LONG TERM PROPOSAL
9. SET DECEMBER MEETING DATE
10. SUPERINTENDENT’S REPORT
A. OCTOBER METRICS AND FINANCIAL METRICS REVIEW
B. DECEMBER FCA
C. CPD LEDGER
D. WINDSTREAM BANKRUPTCY
E. RBG FOUNDATION
F. CHANNEL 9 REPLACEMENT
11. ADJOURN


TO: Members of Glasgow Electric Plant Board
FROM: William J. Ray, PE
DATE: 11/21/2019
SUBJECT: Board Meeting Information
November Main Topics
Ø Report from Ron Bunch (invited) with Barren County EA
Ø Consideration of TVA Approved Retail Rates for January 1
Ø Discussion of Proposals from Consultants
Ø Discussion of TVA Long Term Offer
Ø Reports
📷December 1 FCA
Ø The December 2019 TVA FCA will decrease to 1.747 cents per kWh. This small decrease is actually surprising, since TVA had forced outages to Nuclear units at Watts Bar, and since water reserves were lower, making hydro generation less available. TVA’s explanation is that October sales were in line with predictions, and coal fired generation was low-cost and available, while purchases from neighbors were negligible.
Ø On December 1, the energy component of our retail rates will adjust to reflect this anticipated increase to the wholesale cost of energy.
Action Items
Approval of Agenda and any New Items Desired by Board
Ø The present proposed agenda is attached to this narrative, but, as always, any board member can ask for additional items to be added, or placed in a different order.
Review and Approve Minutes of October 22, 2019 Meeting
Ø This is the customary review and consideration of formally adopting the proposed minutes for the last meeting.
Ron Bunch – Barren County EA to Address Board – Executive Session
Ø Ron Bunch is the Executive Director of the Bowling Green Area Chamber of Commerce, and he is acting as interim Executive Director of the Barren County Economic Authority, until January 1 when the new Executive Director arrives. He has been invited by Chairman Taylor to address the Board in Executive Session, relative to ongoing discussions with an industry that is showing great interest in locating in Glasgow, and what part EPB plays in the efforts to land this business in Glasgow.
Ø You will be asked to consider going into Executive Session under KRS 61.810 (1) (g), which allows “Discussions between a public agency and a representative of a business entity and discussions concerning a specific proposal, if open discussions would jeopardize the siting, retention, expansion, or upgrading of the business.” No action from this report is likely, but it is very important that the Board understand the ongoing discussions.
Second Executive Session
Ø Chairman Taylor will ask for a second Executive Session under KRS 61.810(1)C, which will allow the Board to discuss possible litigation regarding libel, slander, and defamation.
Ø The second session will be, if approved, conducted immediately after the first closed session.
In Lieu of Taxes Report
Ø One of the ways that a municipally owned utility, like Glasgow EPB, is different from investor owned utilities (like KU or LG&E) and cooperatives (like FRECC) is that we are required to make payments to local taxing authorities. These payments are based upon a complicated formula, but mostly the payments are based upon the value of our plant.
Ø This year those payments to local schools, governments, the library, and the ambulance service, total over $412,000. This is money that these local agencies would not receive if Glasgow EPB were not municipally owned.
Ø I will have a detailed report on how much we are sending to each agency at the meeting.
Final Approval of 2020 Retail Electric Rates
Ø A couple of months ago, the Board accepted the results of our 2019 rate effectiveness study and the recommended changes which flowed from the study. These recommendations included continued increases in the Customer Charge and corresponding reductions in kWh and delivery charges, such that EPB continues to progress toward a 100% non-volumetric retail rate architecture.
Ø The Board also directed me to seek the approval of TVA for the rate changes, and that process is now complete. Of course, the process was complicated by the parallel rate change recommendations which were presented due to the possible 3.1% wholesale rate reductions which would flow to EPB customers, if the Board accepted the TVA Long-Term Partnership Agreement. Since the Board has yet to act on that offer, the approved rates are based upon existing TVA wholesale rates, and the modifications we discussed in September.
Ø The tariffs attached to this narrative are mostly identical to those proposed at the earlier meeting, but for a few small changes due to some tweaks requested by TVA in the review process. None of the changes are material.
Ø It should be noted that these changes will result in a net rate decrease, because the increases to Customer Charges are more than offset, in the aggregate, by reductions in delivery charges and kWh charges.
Discussion of Consultant Proposals
Ø At the last meeting there was considerable discussion about the possibility of EPB hiring and independent, yet well qualified, consulting firm to advise EPB on a variety of topics, like rates, the TVA Long Term Partnership Agreement, and other long-range concepts about the future of Glasgow EPB.
Ø Two proposals were submitted at the meeting. One from ICF Resources, LLC and the other from GDS Associates, Inc. A Board committee was appointed to review the proposals, and I was asked to review the proposals and submit my remarks and findings to the Board. I submitted those comments to the Board via email on October 30.
Ø I have not been informed about any deliberations by the committee, but this item is placed on the agenda so that full discussion of the proposals, and the wisdom of accepting either of them, can continue.
The TVA Long Term Partnership Proposal
Ø Depending on the result of the consultant consideration above, this item might need to be on the agenda. If the board elects not to hire a consultant and, instead chooses to authorize me to execute the TVA Long Term Partnership Agreement, we could still enjoy the cost savings that result from the 3.1% wholesale power cost credit, which would become effective immediately.
Ø As I stated last month, this is a very complicated matter, but the simple elements are: TVA is willing to give LPCs a 3.1% credit to their power bills (for Glasgow, that means about $500,000 per year), and they also want LPCs to alter their power contract to make the term a rolling 20-year agreement instead of the rolling 5-year term.
Ø So far, Glasgow has missed three months of the 3.1% wholesale rate credit from TVA, which is a component of executing the Long-Term Partnership Agreement. The approximate money left unclaimed by Glasgow EPB, as a result of not executing the agreement, is $123,000, and that amount will increment again on December 1.
Ø Attached to the narrative is a red-lined version of the agreement, which shows the additional explanatory language TVA agreed to add as a result of conversations with TVPPA. Please review the changes, as I believe the updated document fully addresses any reservations which were expressed earlier.
December Meeting Date
Ø The last action item will be for the Board to set a date for the December meeting.

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