CT Municipal Electric Energy Cooperative CMEEC

SUBJECT TO FINAL BOARD APPROVAL REGULAR MEETING OF THE BOARD OF DIRECTORS OF CONNECTICUT MUNICIPAL ELECTRIC ENERGY COOPERATIVE September 28, 2017 MINUTES The August Regular meeting of the Board of Directors (“Board”) of the Connecticut Municipal Electric Energy Cooperative (“CMEEC”) was held on Thursday, September 28, 2017 at the offices of CMEEC, 30 Stott Avenue, Norwich, CT 06360. The meeting was legally noticed in compliance with Connecticut State law and all proceedings and actions hereafter recorded occurred during the publicly open portions of the meeting. Chairman Kenneth Sullivan called the meeting to order at 10:01 a.m. and determined a quorum was present. The following Member Representatives/Directors Participated: Norwich – John Bilda Jewett City – Louis Demicco; Kenneth Sullivan; Richard Throwe Groton – Ronald Gaudet, Keith Hedrick Bozrah Light and Power Company – David Collard; Richard Tanger; Ralph Winslow South Norwalk – Kevin Barber East Norwalk – David Brown The following Individuals from CMEEC Management Participated: Drew Rankin, CMEEC, Chief Executive Officer Robin Kipnis, CMEEC, General Counsel Edward Pryor, CMEEC, CFO Michael Lane, CMEEC, Controller Justin Connell, CMEEC, Director, Portfolio Management Michael Rall, CMEEC, Director, Asset Management Scott Whittier, CMEEC, Director, Enabling Services Dylan Phillips, CMEEC, Risk Analyst Ellen Kachmar, CMEEC, Manager, Office and Facilities Margaret Job, CMEEC, Administrative II The following invited consultant was in attendance: Dr. Ashley Miles, Ashley Miles Consulting, LLC The following member of the public was in attendance: Mike Boucher, Groton Resident Ms. Job Recorded Chairman Sullivan opened the floor for public comment. There being no public comment, Chairman Sullivan called the meeting to order at 10:01 a.m. Standard Action Item (A) Approve Minutes of the CMEEC Regular August 24, 2017 Board of Directors Meeting A motion was made by Director Bilda, Seconded by Director Barber, to approve the Minutes of the Regular August 24, 2017 Board of Directors Meeting. Motion passed unanimously. (17-09-01) Specific Action Items (B) August 2017 Objective Summary Review Mr. Rankin provided an overview of the exceptions to the summary dashboard report provided to the Board in advance of the meeting, reviewing the line items that reflected a deviation from established target value for the performance month, year to date. Mr. Rankin began by reporting that the Regional Competitiveness TMR View realized a very strong month ending at 32% positive variance with solid underlying Rate 9 Power Cost Only and is projected to end the year at 30%. The Rate 9 Customer View realized a solid month at 14% deviation to benchmark. He added that the Rate 9 Customer View has had a solid performance year to date and is projected for a strong year end. Customer Fulfillment All-In Cost TMR View performed on target with a strong -4% performance year to date, which performance is also projected at year end. Customer Fulfillment Rate 9 view came in slightly over budget for the month at 2% deviation, with strong performance year to date. Mr. Rankin added that a strong performance is also projected for year-end despite lower than budget loads. Mr. Rankin reported the month of August ended with a solid foundation in the Financial Stability metric. Risk Management Energy Policy remains in compliance. Mr. Rankin noted that Current Ratio continued to perform strongly in August, year to date and projected year end. He added that the Budget and Finance Committee is currently working on a comprehensive five year financial plan with the committee, and will be engaging the balance of Board as the review progresses. Equity to debt ratio for the month of August increased 30% and is projected to remain at that level through year end. Mr. Rankin pointed out that in November the potential Distribution Eligible Equity issuance may lower ratio, but it will remain well above minimum target. Days cash on hand continues to solidly perform for the month at 148 days, and is projected to remain solid at the same level through the balance of the year. Net Non Fuel Operating Expense continues with a 3% negative variance for the month of August. Mr. Rankin explained this is due mainly to contemplated, but unbudgeted, outside services expenses. Mr. Rankin discussed asset performance for the month of August by noting that Pierce experienced a significant negative variance of 29% due to actual market rates being lower than budgeted. He noted that recovery is in process for the second half of 2017, but is projected to fall short of budget. Market DG continues with positive variance in August, although still with a negative net benefit. Mr. Rankin noted that positive net benefit will be restored in 2018. MicroGen ended strongly for the month of August at 7% positive variance, benefitting prior period performance. Mr. Rankin added that year to date has a negative variance at 7% with an on-target performance projected for year end. Transmission Project #1 experienced another low network load month in August, which drove the negative variance, with on target performance year to date, and a slight negative variance of 2.7% projected for year end. Hydro-Quebec realized an 8% negative variance resulting from capacity revenues underperforming in the month of August, year to date and continuing through projected year end. CMEEC Margin realized a negative variance of 4% for the month of August. Mr. Rankin explained that this was due to lower than budgeted Lowell loads and MTGA load reduction underperformance. This was partially offset by some sources over performing. Mr. Rankin added that work will continue with the Risk Management Committee. CMEEC Equity continued with a high positive variance with 50% over performance for the month of August. CMEEC investment performance also continued with a high positive variance with 57% over performance, aided by higher investment capital and higher than budgeted yields. Mr. Rankin added that this performance is projected to continue through year end. (C) August 2017 Energy Market Analysis Mr. Connell provided a brief overview of the August 2017 Energy Market Analysis by stating that energy costs were above budget by $1.41 per MWh (or 3.52%). Actual demand was 3,118 MWh lower, and Unit Contingent resources were 1,625 MWh higher than budget. He noted that Henry Hub gas price was $0.17 lower than budget and transportation cost was $0.43 lower than budget, resulting in day ahead LMP being lower than budget. Algonquin transportation price varied between $2.10 and $3.38 per MMBTU and Henry Hub price varied between $2.75 and $3.01 per MMBTU. Mr. Connell explained that average daily LMPs (4000) ranged from a low of $15.59 per MWh to a high of $38.52 per MWh. He added that the August 2017 budget Rate 9 energy cost was $40.17 per MWh and the August 2017 projected Rate 9 energy cost was $41.58 per MWh. He pointed out that had no hedges been in place, the August 2017 Average LMP (CMEEC Load) would have been $27.22 per MWh. (D) Budget Process / 5 Year Financial Plan Process Update Mr. Pryor provided a brief overview of the CMEEC/Transco Budget Process Update. A handout was issued to the Members of the Board. He outlined the meetings scheduled for discussion and review of the budgets. He provided a high level overview of the status of the CMEEC/Transco five-year financial plan update and highlighted stability metrics and business performance targets. (E) Project Thor IRS Declaration of Intent - Resolution Mr. Rankin provided a brief overview discussing the need for approving the resolution. He provided background on Project Thor and included a status report on the potential project. He explained that the need for the resolution was to insure that expenses that have been authorized by the Board for investigating the feasibility of Project Thor can be capitalized and recovered as part of the bond issuance, should there be one in the case of Project Thor. He further explained that although CMEEC Board has not voted to formally approve Project Thor, in the event that the Board does approve the project, CMEEC will most likely be required to issue bonds to finance its share of the project. A motion was made by Director Winslow, Seconded by Director Tanger, to approve the motion for Project Thor IRS Declaration of Intent. Motion passed unanimously. (17-09-02) (F) Customer Request Temporary Contract Suspension - Resolution Mr. Rankin explained that the Town of Tewksbury, Massachusetts requested a temporary suspension of its electric supply contract with CMEEC to maintain regional competitiveness in light of the investor owned utility (IOU) standard service pricing dynamics and the ability to socialize capacity price increases. He further explained that market based circumstances surrounding the customer’s request had changed which may eliminate the need for the suspension, but that even though circumstances have changed, CMEEC is uncertain of the customer’s preference at this time, and it may be beneficial to provide the option to execute the suspension, or not, depending on the customer decision. A motion to amend the Resolution to provide that the suspension must be entered into within fifteen (15) days was moved and passed unanimously. Motion by Director Bilda, seconded by Director Collard to pass the resolution, as amended, authorizing suspension of the Tewksbury electric supply agreement. Motion passed unanimously. (17-09-03) Chairman Sullivan indicated he would entertain a motion to move the meeting into Executive Session to conduct Board Health: Performance and Self-Evaluation and for discussion of legislative body appointments to the CMEEC Board of Directors. A motion was made by Director Demicco, seconded by Director Winslow, to enter into Executive Session with direction to the Board to come back into Public Session upon completion of the discussion in Executive Session. Motion passed unanimously. The basis for going into Executive Session was Conn. Gen. Stat. Secs. 1-200(6)(A). Present during the discussion were the Board Members, Mr. Rankin, Ms. Kipnis, Mr. Pryor, Mr. Whittier and Dr. Miles. The meeting entered Executive Session at 11:01 a.m. The meeting came out of executive session at 12:07 p.m. There being no further business, Chairman Sullivan indicated he would entertain a motion to adjourn the meeting. A motion was made by Director Bilda, seconded by Director Tanger, to adjourn the meeting. Vote passed unanimously. (17-09-04) There being no further business to come before this Board, the meeting was adjourned at 12:07 p.m.