December 11, 2008
The regular meeting of the Board of Directors of the Omaha Public Power District was held in the Board Room on the Atrium Level of Energy Plaza East, on December 11, 2008, at 10:00 a.m.
Present were Directors M. J. Cavanaugh, N. P. Dodge Jr., J. K. Green, G. C. Hall, A. L. McGuire, J. R. Thompson, F. J. Ulrich and D. D. Weber. Also present were W. G. Gates, President; M. C. Bodammer, Corporate Secretary; and S. G. Olson and S. M. Bruckner, General Counsel for the District. Mr. Ulrich, Board Chair, presided, and Mrs. Bodammer, Corporate Secretary, recorded the minutes. Other members of Management present were D. J. Bannister, T. J. Burke, A. J. Minks, C. P. Moriarty, D. F. Widoe, G. R. Williams, M. I. Doghman, M. W. Nichols, J. J. Hanson and M. R. Jones. Others present were Neal Moseman from the United States Department of Energy, Nancy Gaarder from the Omaha World-Herald and approximately three customer-owners and employees of the District.
The Corporate Secretary read the following:
“Notice of the time and place of this meeting was publicized by notifying the area news media; by publicizing same in the Omaha World-Herald and Outlets; by displaying such notice on the Arcade Level of Energy Plaza since December 5, 2008; and by mailing such notice to each of the District’s Directors on that same date.
“A copy of the proposed agenda for this meeting has been maintained, on a current basis, and is readily available for public inspection in the office of the District’s Corporate Secretary.
“Additionally, a copy of the Open Meetings Law is available for inspection in the public meeting book located in this meeting room.”
It was moved and seconded that the Board reviewed the October 2008 Comprehensive Financial and Operating Report and that the minutes for the last meeting be approved. The vote was recorded as follows: Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; Green – Yes; Hall – Yes; McGuire – Yes; and Ulrich - Yes. The motion carried.
Thereafter, the Corporate Secretary read the following:
“Persons wishing to address the Board on a particular item are asked to approach the microphone as that agenda item is discussed. Comments will be heard following Board discussion of the item and prior to a vote by the Board.”
The following resolutions were then read, and upon motion duly seconded, were placed on roll call. The vote on each resolution is indicated following the description of that resolution.
RESOLUTION NO. 5742 approves the 2009 Corporate Operating Plan and the 2009 Capital Expenditure Plan. Director Dodge led the discussion stating that in November both plans were reviewed by the Board in detail and were discussed again during the December 2008 Board Committee meetings. He noted that R. W. Beck, the District’s Consulting Engineer, has reviewed the plans in accordance with the requirements of Bond Indenture Board Resolution No. 1788 and recommends their approval. Following discussion, the vote was recorded as follows: Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; Green – Yes; Hall – Yes; McGuire – Yes; and Ulrich - Yes. The motion carried.
RESOLUTION NO. 5743 approves the declaration of anticipated 2009 Capital Expenditure Plan Reimbursement. Director Dodge stated that in accordance with federal tax regulations concerning financing proceeds, the adoption of this resolution allows the District an option to issue tax-exempt debt to reimburse 2009 capital expenditures and maximize the investments. This resolution indicates the District is making an annual declaration of its intent to do so. Following discussion, the vote was recorded as follows: Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; Green – Yes; Hall – Yes; McGuire – Yes; and Ulrich - Yes. The motion carried.
RESOLUTION NO. 5744 approves the 2009 general electric service rate adjustment, effective January 1, 2009. Director Cavanaugh led the discussion indicating his disappointment in proposing the subject rate adjustment but said the District has no other option. He said the reason for the adjustment is strictly due to the significant increases in the cost of coal and coal transportation and the lack of interest by the vendors to reduce their contract proposals. He added the average increase is 14.5 percent and for the District’s single-family residential customers, the increase will be approximately 10.8 percent. Director Hall requested that Vice President Moriarty explain and clarify the fuel and transportation adjustment. Mr. Moriarty stated the increased fuel costs will begin January 1 when the new contracts go into effect. During 2009, the charge to recover those costs will be shown as a separate line item on customers’ electric service statements. Then beginning in 2010, the District will take that component and move it into the regular electric service bill and replace it with a “fuel and purchased power” adjustment which will vary on an annual basis based on 2009 as a base year. This will mandate that changes, either reductions or increases, which occur based on that base year will be passed on to the customers on an automatic basis. Mr. Moriarty affirmed that the transportation contract is a five-year contract and the coal contract may change over time and this “fuel and purchased power” adjustment will assist in responding to those changes.
Director Dodge asked whether the larger part of the increase being considered is due to the locked-in transportation costs rather than the cost of coal. Mr. Moriarty said a very significant portion of the total increase is due to the coal transportation contract. Director Green commented the Board does not underestimate the responsibilities placed upon them by State statute in making an independent determination regarding the appropriateness of the proposed rate adjustment. Thereafter, Board Chair Ulrich restated his extreme disappointment with the rail contract and said the prices are exorbitant and do not reflect a fair sense of competitiveness. He stated the District cannot absorb these costs independent of a rate increase, but also commented that OPPD’s customers will still realize extremely competitive rates both regionally and nationally and also remarked the Board remains diligent to ensure these attractive average rates continue. Director Hall remarked it should go on the record that management and the employees have done much to cut costs and improve efficiencies, but unfortunately the reality is that a rate adjustment is necessary in spite of their efforts.
Director McGuire also noted there is a solid Energy Assistance Program in place, as well as a good OPPD community coordinator, both of which may be utilized by customers needing financial assistance. In addition, the District has a receptive Customer Care Center where financial arrangements may be negotiated. She suggested that customers who anticipate they may encounter problems paying their bills should contact these OPPD resources early to work out arrangements. She then called upon Vice President Burke to explain the disconnect moratorium and company policies related to customer disconnects. Mr. Burke discussed the policies in place and emphasized that disconnection is the absolute last option the District takes but this sometimes happens even though a great amount of effort has been done to prevent it from happening.
Director McGuire commented that beginning this summer LB 1001 should help customers in lower economic levels. Vice President Minks affirmed this and stated the bill was passed in the Legislature during the last session and it allows the District access to some of the state sales taxes paid on electric bills, providing the District matches the amount, to provide some programs that upgrade lower income family homes to become more energy efficient. The intent is to assist these customers so their bills are not so high in the first place. Thereafter, the vote was recorded as follows: Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; Green – Yes; Hall – Yes; McGuire – Yes; and Ulrich - Yes. The motion carried.
RESOLUTION NO. 5745 approves the 2009 Board of Directors meeting schedule. Following discussion, led by Director Cavanaugh, the vote was recorded as follows: Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; Green – Yes; Hall – Yes; McGuire – Yes; and Ulrich - Yes. The motion carried.
RESOLUTION NO. 5746 approves the award of Request for Proposal No. 28954 – 13.8 kV Indoor Metalclad Switchgear – to Harold K. Scholz Co. in the amount of $288,500. Following discussion, led by Director McGuire, the vote was recorded as follows: Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; Green – Yes; Hall – Yes; McGuire – Yes; and Ulrich - Yes. The motion carried.
RESOLUTION NO. 5747 authorizes management to execute long-term power sales agreements with Nebraska Public Power District for a total of 38 megawatts of wind-generated electricity. Director McGuire led the discussion and commented that the District’s participation with this project is consistent with the current Integrated Resource Plan and OPPD’s desire to support cost-effective renewable energy projects. Board Chair Ulrich clarified the District is strictly purchasing electricity and will not operate, own or maintain the wind farms. Director Weber inquired what the anticipated cost will be and Vice President Minks replied the cost will be within the District’s projection for future construction of any generation for the utility and will therefore have no rate impact. She also remarked that, due to a binding nondisclosure agreement, OPPD is prohibited from commenting on the details of the exact contract price. Director McGuire requested an explanation about how transmission and distribution of the electricity generated by the wind farms will be handled. Ms. Minks stated the Nebraska Power Association (NPA) is currently doing a study on transmission requirements for the entire state. Once that study is completed, the utilities participating in the NPA will have a better idea of transmission requirements and what needs to be done to improve the transmission system grid to allow for wind generation. Following the discussion, the vote was recorded as follows: Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; Green – Yes; Hall – Yes; McGuire – Yes; and Ulrich - Yes. The motion carried.
RESOLUTION NO. 5748 approves the Standing Committee Charters and an amendment to the District’s Bylaws to incorporate the new standing committees. Dr. Weber led the discussion and stated that of particular significance is the proposed creation of a new standing committee to be known as the Governance Committee. It is being proposed that the new standing committees and their respective charters will become effective on February 1, 2009. Director Weber stated it is also being proposed in this resolution that the District’s Bylaws be amended to include these standing committee changes. Following discussion, the vote was recorded as follows: Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; Green – Yes; Hall – Yes; McGuire – Yes; and Ulrich - Yes. The motion carried.
RESOLUTION NO. 5749 approves the compensation adjustments for President and Chief Executive Officer W. Gary Gates and Vice President and Chief Financial Officer Charles P. Moriarty. Board Chair Ulrich announced Vice President Moriarty’s impending retirement and commented his salary adjustment is well deserved. Thereafter, the vote was recorded as follows: Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; Green – Yes; Hall – Yes; McGuire – Yes; and Ulrich - Yes. The motion carried.
Copies of the foregoing resolutions are filed in the District’s Corporate Records file.
There being no further business, the meeting adjourned at 10:30 a.m.
A. J. Minks M. C. Bodammer
Assistant Secretary Corporate Secretary