April 2008 Board Minutes
YAMPA VALLEY ELECTRIC ASSOCIATION, INC.
REGULAR MEETING OF THE BOARD OF DIRECTORS
The Board of Directors of Yampa Valley Electric Association, Inc. convened at 32 Tenth Street, Steamboat Springs, Colorado at 11:00 a.m. on April 18, 2008 for the regular meeting.
Chairman Pud Stetson reconvened the meeting of February 15, 2008, declared all business was concluded and upon motion being duly made and seconded, the February 15 meeting was adjourned.
Upon calling the roll, it was reported that the following directors were present: Peggy Espy, Bill Haight, Sam Haslem, Scott McGill, Chuck Perry, and Pud Stetson. Directors absent include Dean Brosious, Pat McClelland and Jim Simos. Mr. Covillo and YVEA Attorney Tom Sharp were also in attendance.
A motion was made to approve the minutes of the previous meeting as amended. Upon motion being duly made and seconded, the following resolution was unanimously adopted:
RESOLVED that the minutes of the previous meeting be and are hereby approved as corrected.
There was no comment from the Public.
Director comments were presented. Mr. McGill commented on how much he enjoyed and the amount of information he attained at the Directors Conference. Mr. Haslem said he felt the session on sexual harassment was very informative. Mr. Haight also commented on how informative the conference was. Mr. Perry asked if YVEA should send a letter to retiring Senator Jack Taylor thanking him for his dedication to the Association and its members.
General Manager Larry Covillo distributed the proposed Takeover Policy. Several Directors asked Mr. Sharp to define various paragraphs within the policy. After considerable discussion, the Board directed Mr. Sharp to clarify in writing several sentences within the policy. Mr. Haslem moved and Mr. McGill seconded, the following resolution was unanimously adopted:
RESOLVED that Policy 1-13 Potential Sale of Property be approved as amended.
The meeting was recessed for a lunch break.
Mr. Covillo presented the safety report for the months of February and March. He stated that there were no vehicle accidents and no personal injury accidents reported in the month. Upon being duly made and seconded, the following resolution was unanimously adopted:
RESOLVED that the safety report be accepted as presented.
Mr. Covillo informed the Board that the rate adjustment agreement between Xcel Energy and YVEA has been delayed until all of Xcel Energy’s wholesale customers are in agreement. YVEA and Xcel Energy have agreed that the Association will see an approximate increase of $1.25 million dollars (4.5% increase) in the wholesale power contract effective May 1, 2008. Mr. Haslem asked if Xcel Energy was allowed to increase rates based upon previous agreements. Mr. Covillo stated that previous agreements did not bar future rate adjustments. Mr. McGill moved and Mr. Haslem seconded, that the Association absorb the rate increase and not pass the increase on to the members. The motion passed unanimously.
The Board directed Mr. Covillo to modify all current rate tariffs to realign the fuel cost adjustment charge within the energy charge, keeping the total cost to customers as revenue neutral. The tariff for customers who voluntarily purchase renewable wind energy RECs has decreased. Mr. Covillo will present new tariffs at the May meeting for Board approval.
Mr. Covillo mentioned that he attended the Colorado Rural Electric Association’s Manager Meeting in March. The annual meeting includes a luncheon with state legislators. Several proposed legislative bills were discussed with legislators. Since the luncheon, HB 1107, a bill requiring electric utilities to implement a 2% rate increase to promote energy efficiency has been pulled and is in a state of limbo. HB-1160, a bill requiring statewide net metering passed and YVEA will need to modify its wholesale power agreement with Xcel Energy to accommodate the 10kw residential and 25kw commercial limits.
Mr. Covillo stated that in 2007, the Colorado State Legislature passed HB07-1281 that allows electric utilities to show customers what the legislatively mandated 1% renewable energy charge is costing them. Mr. Haight moved and Mr. McGill seconded that staff be directed to have future bills reflect the state imposed charge. The motion passed unanimously.
The Board directed Mr. Covillo to modify the voluntary “green power” rate to reflect the additional purchase of lower cost Renewable Energy Credits (RECs) from Xcel Energy and present a revised rate schedule for their approval next month.
Mr. Covillo reported that there has been no activity at BTA.
Mr. Stetson served as Chairman of the Audit Committee meeting held earlier in the morning. He noted a clean audit report as described in Schmidt & Company’s Independent Auditor’s Report statement, “In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Yampa Valley Electric Association, Inc. and subsidiary as of December 31, 2007 and 2006, and the results of operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.” Mr. Haight moved and Mr. McGill seconded, the following resolution was unanimously accepted:
RESOLVED that the audit by Schmidt and Company for the period January 1, 2007 through December 31, 2007 be and it hereby approved.
BE IT FURTHER RESOLVED that the Finance Manager and staff be commended for the results achieved in the clean financial audit.
The Board considered a capital credit retirement to be made in 2007. The Finance Committee met earlier in the morning to discuss refund options. Mr. McGill moved and Mr. Haslem seconded, the following resolution was unanimously adopted:
RESOLVED that a refund of patronage capital be made for the purpose of retiring all remaining capital credits accrued for the year 1993 and 55% of 1994 capital credits, such amount to be approximately $2,301,779.
The format for the Annual Meeting of members was considered. Mr. Covillo reported receipt of the three incumbent director petitions and another petition has been taken out, but not returned. Mr. Covillo review previous year’s election procedures. Mr. McGill questioned the need to do this annually, instead establish a procedure for all future board elections. Due to several directors being absent, it was decided to establish a procedure for just the 2008 elections. Mr. Haslem moved and Ms. Espy seconded, the following resolution was unanimously adopted:
RESOLVED that the ballots for the 2008 director election show the incumbent first with an asterisk designating incumbent status and other petitioners be listed in alphabetic order.
Mr. Stetson asked if there were any other comments regarding the Directors Conference. Mr. Covillo reflected upon a rate philosophy discussion he had another with the NRECA Presenter in a breakout session. No additional comments were noted.
The report of Paradigm Services was presented by Mr. Covillo. He reported that the new CEO and CFO have implement new operating procedures to better reflect weekly cash flows. He stated the independent auditor has discovered a shortfall for adjustments in payroll, vacation and damage accruals. The auditor noted that previous year(s) bank reconciliations were not performed and the combination of accruals and reconciliations will amount to a $700,000 adjustment for calendar year 2008. Mr. Stetson questioned to what expense account where the cash disbursements made. Mr. Stetson also asked if the Paradigm Board should consider recourse on the previous management team. Mr. Covillo will discuss this at the next Paradigm Board meeting and report back to the YVEA Board.
Mr. Miller presented the KPA report for the first quarter of 2008. Mr. Covillo updated the Board on worker compensation claims. Mr. Haight felt the Board should review future safety accidents to that of national standards to see where Association employees stand. He noted that the Board is always concerned about the safety of all employees.
Mr. Haslem presented his CREA report. He stated the last meeting was devoted to legislative issues. He presented an update on several legislative issues.
Mr. Haight gave the report on Western United. He noted that there is a 20% decrease in sales due to the slow down in home construction. He said the Western United Board has hired Mr. Mike Prom as the new CEO and he comes from Texas.
Mr. Covillo and Mr. Miller reviewed the financial and statistical reports for the month of March. The report showed the cost of purchased power was nearly $450,000 over budget resulting in margins being less than budget. Mr. Haight moved and Mr. McGill seconded, the following resolution was unanimously adopted:
RESOLVED that the financial and statistical reports be and are hereby approved.
Mr. Stetson called for an unfinished business. Mr. Covillo and Mr. Sharp outlined the procedure for prospective Board Member Qualifications. Mr. Sharp recommended the Board adopt the procedure prior to this year’s annual meeting. Mr. McGill asked if this was new verbiage and Mr. Sharp stated the words were taken verbatim from the Bylaws. Pursuant to some minor changes the Board directed Mr. Covillo and Mr. Sharp to make the changes to Board Policy 1-11. Mr. McGill moved and Mr. Perry seconded, the motion passed. Mr. Stetson and Mr. Haight abstained due to their candidacy in the next Board election. Should it become necessary to question a prospective 2008 Board candidate, a YVEA Board of Director conference call will be held Thursday morning, May 8, 2008 to review the board qualification.
Ms. Espy moved and Mr. Haslem seconded, that the Board direct Mr. Covillo and Mr. Sharp to develop a questionnaire to be signed by all future board candidates. Mr. Stetson and Mr. Haight abstained and the motion passed.
The Chairman called for any new business, but there was none.
There being no further business, the meeting was recessed until such time as may be necessary to reconvene for the purpose of acting on unfinished business as may properly come before the Board.
_______________________________________Secretary
APPROVED:
Chairman of the Board
