Berea Utility Advisory Board
Meeting Minutes
April 24, 2012

Present: Diane Zekind, Rodney Short, Gina Chamberlain, Steve Boyce, Josh Bills, Randy Stone, Ed Fortner

Absent: N/A

The meeting was called to order by Steve Boyce.

Quick Updates and Reports:

  • Ed gave an update on the KWWOA (KY Water and Wastewater Operators Assoc.) conference that he and Kevin Howard attended.  There are new regulations imposed by the Division of Water on WW Lab Certification; which were prompted by the East KY Coal slurry ponds.  Burden: $1500 per year per facility.  BMU Waste Water Treatment plant and a lagoon at the Water Treatment Plant must obtain certification by the end of 2013.  There are some exemptions.  Disinfectant By-Products Stage II is based on locational compliance with regulations at each facility.  Ed also voiced that they took the opportunity at the conference to talk to our vendors about our new products.
  • Student Internship Update – Steve said that all paper work had been completed and they had two good applicants but Steve said he would have had to be the mentor. He decided that it would not be a good idea for him to take that on at this point and, for that reason, decided to pull this project.  Ed voiced they had experienced low feedback for the GIS internship position.
  • Solar Farm – all 120 panels have been installed and three leases remain.  The 2nd array of panels will be energized May 1, 2012.  Josh and Steve are interested in talking to Randy and Ed regarding the possibility of a third 60-panel array at the Waste Water (Sewer) Plant; which is on Blue Grass Energy Electric. There’s reason to believe it will cost less.  Questions raised were: What technical difficulties exist? What is the customer interest? Will the lease fee cover expenses? How to move ahead?
  • Johnson Controls $50,000 foot assessment – Randy talked to Tom Hogan and there are two dates for him to come to the staff meetings.  What sites he might want to study? Can he use Henry Jackson’s data? They will talk to see what the city knows about its buildings.  They have already toured some of the utility facilities.  Ed said we need reliability data about LED streetlights.  There will be further discussions after they gather more information.

EE Subcommittee meeting on 4/10/12 Update (Questions about notes were attached to the agenda) Steve said the Energy Efficiency Working Group discussed On-Bill Financing.  There had been a number of concerns raised.  Henry Jackson and the BEAT EE Work Group will try to address the concerns and come back for further discussion.

2012-2013 BMU Budget – Ed and Terri have been working with Susan Meeks, City Finance and have learned a lot.

There’s nothing in this year’s budget for EE or Water Conservation.

Randy said they already put the $10,000 into the 2012-2013 electric budget for EE or Conservation. Ed suggested there be discussion of using some of those funds for a “Utility Day” with green initiatives in the fall of 2012.  A tent could be set up and it could be a way to reach out.  Gina said it should help customers be proactive.  They could discuss programs BMU has implemented. Diane mentioned that October is National Energy Action Month and that might be a good time to have the Utility Day.  Josh said there’s an annual, area-wide Solar Tour as part of the national Solar Tour on the first Saturday of October and that this might be a good time for a Utility Day.

Electric Rate Increases for 2012-13 and beyond:

Randy said electric fell short by about $600,000, sewer was at +$300,000 and water at +$20,000.  He said there will be an electric increase that will amount to more than the KU 7-8% expected increase.  Much is related to the 2011-2012 winter weather.

There was agreement that it will be necessary to increase electric rates this year for two reasons:  (1) KU has already communicated their intention to raise Berea’s rates 7-8% and will confirm their plans by May 1 and (2) Berea did not recover the budgeted revenue in 2011 and has not for several recent years leaving the electric part of BMU operating at a deficit that is not sustainable.  There was some discussion about how the increase in Berea’s rates would be distributed between energy rates, service charges, and demand rates for the various customer classes, a question that will get more attention over the next several weeks.

Ed and Susan will be attending an APPA (American Public Power Association) Academy four-day training during the week starting May 7 on electric rate structures, and Ed will be meeting with KU shortly after that.  Paul Garcia, formerly of Prime Group, will look at BMU’s electric rate structure with Randy and help develop a plan.  Josh asked if we were going to totally rely on Prime Group.  Randy expressed doubt saying that Prime Group had said the $14.31 service charge was right where BMU should be.

BMU will return to the question of rate changes in its May meetings.

Ed told that KU filed suit against them and is trying to terminate its wholesale power agreement with Benham because it is in the contract the Municipal payments must not be over 30 days late.. Benham defaulted on one (1) monthly payment and failed to provide performance assurance. Benham is current on its account with KU and paid extra amounts to be set aside as assurance.

Next week Paul Garcia will look at our needs with Randy and develop a plan or formula for the rate increase.  To meet the budget BMU has to have an increase.  Randy said after the 13-14 year notes pay off and then things might change.

Ed stressed that the Utility is a service utility and must pass through the wholesale energy use.  We must encourage energy efficiency.

There was some discussion between Gina and Ed about the service charge versus energy charge and its effect on customers. Gina said we’re not against customers but the new reality is that increases are necessary.  She said for the individual consumer it would be best to gradually increase rates.  Randy said the $14.30 service charge wasn’t explained well enough to the customer and council.  The loan, bond and interest don’t touch the operational costs.  He said we still have a number of infrastructure projects and we have a $23 million debt.

Josh asked if we were going to rely on Prime Group. Randy said Prime Group had said the $14.31 service charge was right where we should be.  Randy is sending Ed and Susan to Minneapolis May 6th and Ed will be going to meet with KU Friday of that week.  Relying on Prime Group is questionable.

Ed said he would like for more of BUAB’s focus to be directed to advisory issues on water and sewer and not as much on electric.  He said that energy efficiency isn’t any more important than the other services provided by the utility.  Gina said the biggest issue in the near future was on the electric side but the point was well taken to get back into balance. Steve said due to various board members knowledge that perhaps they had overly focused on electric issues.  He thinks the advisory group needs more help in knowing what water and sewer issues could benefit from their input.  Ed pointed out fee structures, tap fees, impact fees, grease trap fees, and billing capabilities of the new Springbrook software could be the focus.  Steve said he and Ed could get together to discuss the next steps.  Steve, however, will be gone until May 29th.

Rodney briefly brought up On-bill financing.  Ed told him that we don’t have the manpower/staffing and asked Josh about MACED taking up the project.  Josh said it would be a talkable point.

Josh said the EE Subcommittee for May would be moved to the tentative date of May 15, 2012 due to time constraints.  Ed will be working on getting the rate increase to pass through appropriately by June 30th implementation date.

Ed told the group that the conference room would not be available for the next scheduled BUAB meeting due to Springbrook computer software training and that Joyce would not be available to take minutes.  Diane volunteered to take minutes in Joyce’s absence.  Joyce will send out an availability email to have the next BUAB meeting on May 29th.