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Home > About Us > Company > Board of Directors

May 2012 Board Meeting Minutes

 

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 May 17, 2012, at 10:00 a.m.

Present were Directors M. J. Cavanaugh, N. P. Dodge, A. L. McGuire, L. Scheve, J. R. Thompson, D. D. Weber, and F. J. Ulrich. Also present were W. G. Gates, President and S. M. Bruckner and T. Meyerson, General Counsel for the District. Mr. Dodge, Board Chair, presided, and Ms. Emerson, Corporate Secretary, recorded the minutes. Other members of Management present were D. J. Bannister, T. J. Burke, E. E. Easterlin, M. I. Doghman, J. T. Hansen, S. L. Hutcherson, L. A. Olson, P. E. Lukowski, M. R. Jones, J. W. Thurber, K. A. Morrison, S. M. Andersen, H. J. Johansen, and R. J. Rogers. Others present included A. Muyres, IBEW Local Union member Danny Begley as well as several customer owners.

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 the same in the Omaha World-Herald and Outlets; by displaying such notice on the Arcade Level of Energy Plaza since May 11, 2012; 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 March 2012 Comprehensive Financial and Operating Report and approval of the minutes for the last meeting be approved. The vote was recorded as follows: Cavanaugh – Yes; Green – Absent; McGuire – Yes; Scheve – Yes; Thompson – Yes; Ulrich – Yes; Weber – Yes; and Dodge – 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. Persons wishing to address the Board on all other matters will have an opportunity before the close of the meeting.”

The following resolutions were then read, and upon motion duly seconded, were then placed on roll call. The vote on each resolution is indicated following the description of that resolution.

RESOLUTION NO. 5903 approves the appointment of an Investment Manager for OPPD’s Retirement Plan. Director Cavanaugh reported that in August 2011, the Board approved an updated Statement of Investment Policy (“Policy”) for the OPPD Retirement Plan that included the addition of five new asset classes. In September 2011, the Trust Selection Committee, assisted by Rogerscasey, the District’s investment advisor, established an implementation plan for hiring investment managers in the new asset classes. As part of the implementation plan, a search was conducted for Retirement Plan investment managers in the Global Fixed Income asset class using criteria established by the Board of Directors. The Committee reviewed four leading candidates in the Global Fixed Income universe and interviews were held with Colchester Global Investors Limited (“Colchester”) located in New York, New York, and Rogge Global Partners PLC (“Rogge”) located in New York, New York. Colchester and Rogge both exceed all of the Policy consideration criteria for an investment manager. Their performance has been in the top 25% of all Global Fixed Income investment managers for the past three- and five-year periods. The Committee recommends that the Board of Directors appoint Colchester Global Investors Limited as a Global Fixed Income investment manager for OPPD’s Retirement Plan. Attached is a letter from Segal Rogerscasey, formerly Rogerscasey, outlining the manager search process and concurring with the Trust Selection Committee’s recommendation to appoint Colchester Global Investors Limited as an OPPD Retirement Plan investment manager. Director McGuire indicated this is the first time OPPD has had a Global Fixed Income investment manager, and asked Vice President Easterlin to explain the rational for this decision. Mr. Easterlin said that at the end of last year the District did an extensive risk analysis of our investment portfolio and found that by further diversification, we could increase the expected rate of return and decrease the risk level of our portfolio. When the District looks at other emerging and developed countries, we also see very good risk characteristics, regardless of what we see in the press with some of the European issues. By having a small portion of our money available (approximately 5%) for investment in other economies, the fund has the opportunity to realize higher investment returns when the U.S. economy in not performing as expected. Following the discussion, the vote was recorded as follows: Cavanaugh – Yes; Green – Absent; McGuire – Yes; Scheve – Yes; Thompson – Yes; Ulrich – Yes; Weber – Yes; and Dodge – Yes. The motion carried.

RESOLUTION NO. 5904 approves the District’s Health Plan 2011 Report. Director Cavanaugh reported that in 1991, the Board of Directors authorized the formation of a self-funded Administrative Services Only Health Plan (Health Plan). The Health Plan includes the health insurance programs and dental program offered by the District. The Health Plan is subject to the Political Subdivision Self-Funding Benefits Act, set forth in §13-1601 to §13-1626, Revised Statutes of Nebraska (Benefits Act). In order to comply with the Benefits Act, the District is required to prepare an annual report on the Health Plan and required reserves. Two funded reserves are maintained for the Health Plan in accordance with the Benefits Act. One reserve is to account for timing delays in claims filing and processing which is referred to as an Incurred But Not Presented Reserve. A second reserve ensures that funds will be available during each ensuing month and is called the Monthly Claims and Expenses Reserve. Mr. Cavanaugh also reported the Health Plan Report for 2011 included total expenses for active and retirees plus fees and reserve adjustments of $58,670,900, and a reduction in expenses of $7,866,000 for a total net amount of $50,804,900. He also noted the difference in costs between retirees of $29,511,200 versus $27,368,500 for active employees. Vice President Easterlin added that a portion of the $29,511,200 for retiree costs is current expense plus funding future liabilities on an actuary basis. Following the discussion, the vote was recorded as follows: Cavanaugh – Yes; Green – Absent; McGuire – Yes; Scheve – Yes; Thompson – Yes; Ulrich – Yes; Weber – Yes; and Dodge – Yes. The motion carried.

RESOLUTION NO. 5905 authorizes management to award a contract for maintenance and equipment project services for OPPD’s generating stations. Director McGuire reported that Resolution No. 5884 adopted October 13, 2011, approved the Engineer’s Certification and authorized management to negotiate and enter into a contract for maintenance and equipment project services for OPPD generating stations at an estimated cost of $66.0 million for the first three years. Bids were received from four vendors. Kiewit Power Nuclear Co. provided the bid with the lowest evaluated cost in an amount equal to $64,496,378. This agreement has an initial term of three years with an option to extend the term of the contract for four additional one-year periods. This contract is scheduled to go into effect on July 1, 2012. The estimated aggregate three-year total labor costs for this agreement is $64,496,400 which is based on the estimated scope of work. Ms. McGuire added it is important to note that all bidders had the necessary resources to perform the work; however, the bid by Kiewit was significantly lower, and given the District’s commitment to controlling costs, the cost difference could not be ignored. She also added the contract is not intended to eliminate any contract positions within OPPD, but only to augment OPPD’s staff during peak times. Ms. McGuire asked Vice President Hansen to comment on the transition period between NPS and Kiewit. Mr. Hansen said the fossil stations will be minimally impacted as the majority of the outage work is completed and OPPD will work with NPS at the Fort Calhoun Station to maintain consistency and continuity during the transition period. Following the discussion, the vote was recorded as follows: Cavanaugh – Yes; Green – Absent; McGuire – Yes; Scheve – Yes; Thompson – Yes; Ulrich – Yes; Weber – Yes; and Dodge – Yes. The motion carried.

RESOLUTION NO. 5906 modifies authorization to execute standard easement releases. Director McGuire reported that this is to approve changes in individuals authorized to execute standard easement releases. Revises paragraph 2 of Resolution No. 4478 adopted May 11, 1995, to provide authorization to execute standard easement releases to the Division manager- Substation Operations and the Manager – Transmission Engineering and T&D Land Rights effective May 17, 2012. The change is required due to reassignment of Right-of-Way duties from Facilities Management to Transmission Engineering. Following the discussion, the vote was recorded as follows: Cavanaugh – Yes; Green – Absent; McGuire – Yes; Scheve – Yes; Thompson – Yes; Ulrich – Yes; Weber – Yes; and Dodge – Yes. The motion carried.

Copies of the foregoing resolution are filed in the District’s Corporate Records file.

The next item of business was the J.M. Harding award presentation.

Chairman Dodge said that today we have the special honor of presenting the 29th annual J. M. Harding Award of Excellence 2012 Scholarship Recipient. He also said the vision that Mr. Harding, OPPD’s first chairman, created years ago still stands firm today and that is that OPPD would operate according to the highest standards of business and customer service. President Gates continued the presentation of the award by stating proceeds from the Swigart invitational golf tournament fund the two scholarships. One is given to a student the University of Nebraska at Omaha majoring in engineering or an energy-related field and the other to a student from Creighton University with a business major. The 2012 scholarships, selected by faculty committees, were awarded to David Beberwyk from the University of Nebraska at Omaha College of Engineering and to Abe Muyers from Creighton University College of Business. Mr. Beverwyk was presented with his award on May 7 before he left for a summer internship in Texas. Mr. Gates introduced Abe Muyers and presented him with his award.

The next item of business was the President’s Report. President Gates gave the following report:

Fuel
  Natural Gas Supply Piping to Nebraska City Station
    Request for proposals for gas igniter issued
    Request for proposals for supply of piping issued
    Request for proposals for piping installation is being prepared
    Coordinating land easements with the Nebraska City Utilities for pipe routing
  Updated a 5-Year fuel budget
  Purchased 275 MW on-peak for July and August at an average price of $30 MWH. This compares to $38/MWH for July and August 2011


Generation
  North Omaha and Nebraska City Stations continue to run well
  Renewables are averaging approximately 40% capacity and produced 50,000 MWH
  Renewables account for 6.1% of retail sales
  Fort Calhoun Station
    Plant Status
      Plant remains in a safe condition in cold shutdown with fuel loaded in the reactor
    Flood Recovery Confirmatory Action Letter (CAL) Actions
      Confirmatory Action Letter items approximately 95% complete
      480V Load Center Repair
        Repairs complete and load center restored March 4
        Found mis-wiring on the 480V breaker
        Conducting third party analysis of the 1B4A breaker failure
    Geo-Technical Evaluation
        Initial evaluation has been completed.
        Based upon review, some additional analysis was needed
        Brought in an independent consultant to analyze specific site areas
        Analysis and review completed this month
        Maintenance Shop remediation complete
        Turbine building drain line remediation complete
    Recovery Plan
      Integrated Performance Improvement Plan (I-PIP)
        Plan and schedule have been created and station is working on plan elements – 1/3 complete with discovery
    Regulatory
      NRC Restart Checklist Status
      As a part of 0350 the NRC is creating a restart checklist. Checklist will contain the major areas that will need to be addressed prior to station restart
      We have commented on the NRC’s draft checklist.
      Final Checklist and CAL is to be issued by 5/31. This will be the basis for the inspection plan.
      Working with NRC on inspection methodology (continuous inspection) and our inspection readiness.
    NRC Public Interaction on IMC0350
      NRC will hold an Open House for the public to discuss the recovery actions and inspection activities at the Fort Calhoun Station
      The Open House will be on May 31, from 11:00 a.m. to 2:00 p.m. at the Double Tree Hotel in downtown Omaha
      OPPD will have an area not in the same room, but in the same hotel to also discuss our performance improvement and recovery status with the public


Power Grid and Energy Development (T&D)
  Making significant safety improvement in human performance
  Open safety discussions at all levels -30% better in 2010 and additional 27% improvement in 2011
  Ensuring highly reliable system and firmly in first quartile
  Preparing to serve up to 80 oil wells SE of Humbolt. Scheduled completion is March 2013
  Working with KCP&L on SPP project to build a 175 mile 345kv transmission line from Nebraska City substation to Maryville, MO and on to Sibley, MO. Completion is set for June 2017
  Completed an extensive evaluation of FCS off-site power.


Finance
  Net income for 2012 was budgeted to be $42.9 million.
  The current 2012 financial projection is based on a Fort Calhoun Station restart schedule of September.
  The estimated FCS incremental restart and recovery cost of $32 million will be offset by operation and maintenance budget reductions throughout OPPD.
  A potential insurance reimbursement is assumed to offset a significant portion of the additional purchase power costs.
  The net income projection remains unchanged at $42.9 million.
  We do not anticipate an additional rate increase in 2012.
  OPPD is in the process of updating the documents necessary to issue refunding and/or new construction bonds before the end of 2013.
  Current interest rates combined with projected capital expenditures and cash balances indicate that it may be advantageous to issue debt later this year or early next year.
  The Board will be asked to authorize the future issuance of the proposed bonds during the June Board meeting.
  Senior Management and a team of Division Managers and Managers are currently engaged in developing a new Strategic Plan.


Customers
  Three DART cases to date compared to 11 and 8 cases in 2011 and 2010, respectively
  Nine total cases to date compared to 18 and 17 in 2011 and 2010. Expect to reduce cases by 50% in 2012
  Products and Services
    20,139 IHEPP (In Home Electric Protection Program)
    5,985 Green Power
    23,340 Surge
      408 Commercial Surge - 3-phase
      101 Commercial Surge - Single-phase
    3,200 ACMP (Air Conditioner Management Program)
    There are approximately 40 Omaha builders who build to ENERGY STAR standards.
    In 2011, 493 homes were ENERGY STAR qualified
    Work featured in OPPD’s Flash magazine in 2011 was recognized by Ragan Communications, a leading national resource on corporate and employee communications.
    The coverage of the historic flood won the top honor in the “Best Article Series” category and as a result, OPPD was asked to write about the crisis communication efforts for the Ragan Report July 2012 issue, and the article is the cover story.
    Flash also received honorable mentions in the print employee magazine category and in best article series for tree promotion efforts.


People
  Great effort by all employees who have worked on storm restoration this year
  Power Drive encourages student interest in energy- and automotive-related industries by bringing a practical focus to students' math, science and/or vocational education. They work in teams, under the direction of instructors who have been trained at Power Drive workshops. Instructors report the program boosts academics, school spirit and community interest and support.
  In all, more than 50 cars from 40 high schools participated in the championships. Dozens of OPPD and NPPD employees and retirees run the event

The next item of business was the opportunity for those in attendance to address the Board on any items of District concern.

Mr John Pollack, 1412 N. 35 Street, Omaha, NE 68131, briefed the Board on future weather forecasts.

Mrs. Jane Heinrich, 1019 Stone Creek Drive, Blair, NE 68008, informed the Board of her appreciation for Vice President Bannister’s assistance with her concerns at the April 4 public meeting as well as website information on the Fort Calhoun Station

Mr. Ken Winston, 4905 S. 149 St., Omaha, Ne 68137, voiced his concerns over OPPD’s upcoming financial and environmental challenges with the North Omaha Station. He also encouraged the Board to look at additional opportunities for renewable energy and greater energy efficiencies.

Mr. Laverne Thraen, 4728 Cass St., #12, Omaha, NE 68132, asked for additional clarification on Fort Calhoun Station operations and the clarification was provided by President Gates.

There being no further business, the meeting adjourned at 10:45 a.m.

_____________________________     _______________________________
E.E. Easterlin                                              D. S. Emerson
Assistant Secretary                                   Corporate Secretary

 

Board of Directors

bullet Board Mtg Schedule
bullet Board Mtg Minutes
bullet Committee Mtg Agendas
bullet Board Mtg Agenda
bullet Rules for Public Participation
bullet Approved Board of Directors Redistricting
bullet Preliminary 2014 Corporate Operating Plan
bullet Sustainablity Update March 20 2014
bullet Energy Assistance Program (EAP)/Common Fund

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