The Board meets on the first and third Monday of each month. Meetings begin at 1:00 p.m. and are held in the department conference room at 65 Lafayette Ave, Littleton. Board meetings are open to the public and time is allotted for public comments at each meeting.
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The regularly scheduled business meeting of the Littleton Water and Light (LWL) Board of Commissioners (BOC) began at 1:00 p.m. on Tuesday, September 5, 2023 in the LWL conference room. Present were Commissioner Linda MacNeil, Commissioner Ralph Ross, Commissioner Peter Cooper, Director of Finance Lori Hogan and Superintendent Thomas Considine.
MINUTES REVIEW:
The minutes of the August 21, 2023 regularly scheduled Commissioners meeting were reviewed. Commissioner Cooper made a motion to accept the minutes as presented, seconded by Commissioner MacNeil.
The vote was in favor of the motion 2-0-1
Commissioner Ross abstained from the vote as he was not in attendance.
DIRECTOR of FINANCE and HUMAN RESOURCES REPORT:
Mrs. Hogan reviewed several spreadsheets with the BOC that depicted reserve funding schedules as of June 30, 2023 and LWL current on-hand cash position. As a result of LWL’s poor cash position (accumulative losses) for the last several years no capital reserve accounts have been funded and the operating cash reserve (checking) was supplemented by drawing down the cash in the rate stabilization fund and transferring those funds into checking.
From January 2020 through December 2022 LWL spent down its rate stabilization funds by more than $ 1 million to maintain its adequate levels of operating cash and stabilize electric rates. Once rates were adjusted LWL cash flow position stabilized and is currently improving.
Superintendent Considine stated that mild winter temperatures last year and other geopolitical factors have greatly influenced spot market power supply prices regionally as prices have dropped leading to significant savings when compared to budgetary projections and rates. These savings due to the lower than projected power supply costs have been substantial through the first half of 2023 though on average for the period between Jan 2020 to present LWL cash position is trending slightly downward. It is anticipated that when the 2023 third quarter financial results are available the P/L will reflect a slight growth and an upward trending cash flow position through 2024.
The positive cash flow to date has enabled LWL to fund outstanding capital reserves for FY 2021 and FY 2022 and payback rate stabilization accounts which LWL spent down to maintain sufficient operating cash.
There was some discussion as to the proper level of cash reserves that LWL could reasonably maintain. Superintendent Considine stated that LWL is rated by Moody’s Investment service at an investment grade rating of A1. The recommended days of available cash on hand for this type of rating is 250 days to 366 days. For the year ended 2022 LWL had 116 days of available cash on hand. Not all cash in LWL accounts is considered available as several accounts are restricted and those funds are not available for general purpose use.
Mrs. Hogan recommended that the BOC vote in accordance with LWL enabling legislation to transfer the available funds into the respective reserve accounts in accordance with LWL 1903 enabling legislation.
Note: The following motions were made in accordance with the schedule of account balances and values provided by Mrs. Hogan to the BOC dated September 5, 2023:
Motion No. 1 - Commissioner Cooper made a motion to fund the capital water and electric reserve account for the year ended 2021 in the amount of $483,430 from the cash profit and the remainder of the balance shall be transferred as a loan from the rate stabilization account to offset the debt. Seconded by Commissioner Ross.
The vote was in favor of the motion 3-0-0.
Motion No. 2 - Commissioner Cooper made a motion to fund the capital water and electric reserve account for the year ended 2022 in the amount of $467,468 from the cash profit and the remainder of the balance shall be transferred as a loan from the rate stabilization account to offset the debt. Seconded by Commissioner Ross.
The vote was in favor of the motion 3-0-0.
Motion No. 3 - Commissioner Cooper made a motion to transfer the fiscal year 2021 capital water and electric reserve account (less the amount spent) in the amount of $117,699 and $240,013 respectfully for a total transfer from the operating (checking) account of $357,712. Seconded by Commissioner Ross.
The vote was in favor of the motion 3-0-0.
Motion No. 4 - Commissioner Cooper made a motion to transfer the fiscal year 2022 capital water and electric reserve accounts (less the amount spent) in the amount of $120,761 and $135,378 respectfully for a total transfer of funds from the operating (checking) account of $256,139. Seconded by Commissioner Ross.
The vote was in favor of the motion 3-0-0.
Motion No. 5 - Commissioner Cooper made a motion to transfer $1,017,410 from the operating checking account to the rate stabilization account to repay the loan to the capital reserve account, seconded by Commissioner Ross.
The vote was in favor of the motion 3-0-0.
Mrs. Hogan stated that she will provide a schedule of the calculations regarding any payment of surplus to the Town of Littleton which is zero dollars. This schedule satisfies Chapter 389 of the Laws of 1949, Section 4-b, “… any balance of receipts after payment of operating expenses and payment into the reserves funds shall be turned over by the Commissioners to the town of Littleton for general expense of said town…”
SUPERINTENDENT/ GENERAL MANAGERS REPORT:
Geosphere Environmental on behalf of LWL submitted a fifty (50) page document to NHDES on September 1, 2023 to address comments posed by NHDES in their May 30, 2023 correspondence. LWL was required to address NHDES concerns regarding the final Large Well Siting/Large Groundwater withdrawal permit that LWL has applied for pertaining to Well B at Lafayette Ave.
GENERAL/OTHER BUSINESS:
1. The Convergent Energy Storage Project Non-Binding Term Sheet and Shared Savings Agreement dated August 24, 2023 was reviewed and discussed by the BOC.
The BOC agreed that Convergent Energy addressed their concerns adequately and the shared saving ratio was moved slightly in favor of LWL.
Following some discussion Commissioner Cooper made a motion to accept the term sheet as presented dated August 24, 2023 and authorized Superintendent Considine to execute on behalf of LWL.
The vote was in favor of the motion 3-0-0.
2. Superintendent Considine presented the BOC with a power point slide deck that reviewed the electric rates as of June 2023 and the possibility of reducing electric rates by about 17% or about 3.5 cents as early as October 1, 2023 providing cash flow remains positive and expenses remain with budget.
Discussion followed in-line with what was previously discussed earlier regarding LWL positive cash flow position for 2023, a prudent reduction in the electric rates looks promising. The rate reduction, if approved, must take into consideration that the cash flow position overall since January 2020 is still trending slightly downward. Any change should not be too aggressive as there are still many variables going into 2024 that LWL cannot provide an answer to. If operating expenses remain manageable and power supply prices stay where they are in 2024 LWL may be able to reassess its rate structure sometime in 2024 and possibly offer another reduction.
Following some back-and-forth discussion, it was agreed that the BOC would table discussion regarding a potential electric rate reduction until their next meeting (September 18, 2023). At that time more financial data may be available going into 2024.
MEETING ADJOURNMENT:
There being no further business to come before the board Commissioner Ross made a motion to adjourn the meeting, seconded by Commissioner Cooper.
The vote was in favor of the motion 3-0-0.
Meeting adjourned at 2:23 p.m.
The regularly scheduled Commissioner’s meeting is held twice monthly on the first and third Monday, at 1:00 p.m., in the Department’s conference room.