Greenwood CPW

Minutes of November 30, 2006

A regular meeting of the Board of Commissioners of Public Works was held on Thursday, November 30, 2006, at 12:30 p.m., in the boardroom at 121 West Court Avenue.

In attendance:

Gene P. Hancock Steve D. Reeves, Jr. Vickie Gorham Melinda Bishop

Michael G. Monaghan Jeff Auman Stacia May Ken Whittle

Henry O. Watts Ron Lemon Jeff Meredith Carlos Cometto

Denise Giannetti Richard Gentry Bill Patrick Curtis Burnett

I. Chairman Hancock called the meeting to order.

II. Chairman Hancock gave the statement of compliance with the notification provision of the Freedom of Information Act.

III. A motion was made by Commissioner Monaghan and seconded by Commissioner Watts to approve the minutes of the October 31, 2006 regular meeting. The motion was unanimously approved.

IV. Financial Statement:

Commissioner Monaghan referred to Administrative Expenses on page 5 and asked if the $995,000 shown there was “Unallocated” to departments. Ms. Giannetti responded that the transfer to the City is not allocated. Commissioner Monaghan asked if the $995,000 on page 1 is shown elsewhere. Mr. Reeves and Ms. Giannetti responded that it was under “Other Revenues and Expenses”. Commissioner Monaghan noted there would still be about a $300,000 difference between what is shown as net revenue and electric, gas, and water which is $4,174,000. Ms. Giannetti responded that it is in things like “Depreciation Expense”, in Administrative for the administrative buildings, in “Unallocated Expenses”, “Bond Insurance Expense”, “Depreciation Expense”, and “Unrealized Gains and Losses”. Commissioner Monaghan inquired if that was part of the $995,000 or part of the missing $300,000. Mr. Patrick noted that the $995,000 is just two figures at the bottom of the page. Commissioner Monaghan indicated he understood that the $995,000 is not a total of “ins and outs”. Commissioner Monaghan noted a $230,000 difference in gas recovery cost in one month. Mr. Lemon explained that October was one of the four coldest Octobers on record and they simply underestimated the volume and purchased gas cost. It happened over a very quick period of time where they were taking incrementally about 5,000 to 6,000 per day gas daily gas at over $3/dt more than what the estimated cost would be and under collected by about $188,000 from the underestimation of cost and volume. The remaining $48,000 is for prior month adjustments for storage gas purchased and the fact that there was 100% of October cost in there but only 50% of revenues. Mr. Lemon stated that this was not a surprise; they knew when they did the November PGC going in and made the correction accordingly. They added $0.75 to make up and overestimated significantly gas daily cost in order not to get caught short on a real spike in prices. Mr. Lemon added that they would know exactly where they are on these dollars in three or four days. Commissioner Monaghan commented on the value of adjusting every month rather than quarterly. Mr. Lemon added that the $237,000 would go away over the next couple of months. He pointed out that there would always be some variance because 100% of the cost is in there with only 50% of the collection. Commissioner Monaghan noted the large amount of delinquent accounts shown during October. Ms. Giannetti stated that this amount was a quarterly adjustment, and Ms. Gorham does not do these monthly. Commissioner Monaghan inquired about delinquencies given the relatively warm November. Ms. Gorham responded that they continue to try to collect although many times it might be several years down the road before payment is received. She added that they will see a lot of collections when people start filing for tax returns at the first of the year. Mr. Reeves asked about cutoffs. Ms. Gorham responded that they remain about the same, and with the warm November, hopefully those who were behind can catch up. Commissioner Watts inquired about the number of customers on the Equal Payment Plan. Ms. Gorham responded that there are quite a few. She noted a problem with some “gas only” customers that will leave that balance hanging until cold weather hits again. Commissioner Monaghan asked what is included in the $12 monthly water rate for sprinklers. Mr. Reeves responded that the $12.78 minimum charge is a fixed charge to help pay for system cost of having a tap there. Commissioner Monaghan stated his belief that something should be paid but not for 400 cubic feet of water. He noted that Metro had recently changed; they are getting away from a minimum volume charge and going to a base rate. He stated that low income people who do not use 400 cubic feet of water are subsidizing other rate payers. Chairman Hancock disagreed and stated that is not what is happening; the other people are subsidizing those with zero to 400 cubic feet. Metro has changed it around now; now you are really subsidizing.

V. New Business:

A. Manager Reeves stated that Jeff Fowler was unable to attend the meeting and provided an update on various annexation projects. The Sam Zimmerman and Countybank project is still moving forward; they are waiting on the final documents and Council approval. Mr. Reeves reported that details were finalized with Howard Corley and Advance Auto. It still has to go through the process with the City and County. He reported that after meeting with Piedmont Health Group a second time, they decided against annexation and connected with Duke Power. Annexation appears fairly certain with Ernest Health Care; information on electrical rates and comparisons will be provided to them. Mr. Reeves stated that Steve Brown had indicated that an appeal for smaller lots at a subdivision near Westview Middle School would be granted, but he was not sure if City Council had ruled on it. Commissioner Watts inquired about Jim Timms. Mr. Reeves responded that he was much more receptive than anticipated during a meeting, and Jeff Fowler is to provide a detailed spreadsheet. He reported that both Waffle Houses are in the City. Mr. Reeves reported that the lawyers are still working on the credit card payment issue; it is down to a couple of issues, one on the S. C. Government side and the other with ASI. He added that the attorney checked with the party with the patent; a variance is unlikely but there may be ways to work around it. Mr. Reeves reported that a short-term Pole Attachment Agreement was signed with Embarq for $10 per attachment. Mr. Meredith added the final agreement should be in place by the end of January. Commissioner Monaghan asked Mr. Meredith if they go in underground and lay out a whole network before development with annexations like Corley and Zimmerman. Mr. Meredith responded that with Zimmerman they went in to serve the Countybank and made provisions to continue dependent upon what and how it is sold. For now, since Zimmerman does not know who he is selling to, we serve the Countybank and wait to provide the other infrastructure later. He added that the same is true with Howard Corley; he is not sure who, what, or how the property will be sold later. Commissioner Monaghan stated that he understood the property belonging to Ben Lawrence next to Lowe’s would become a big commercial development and asked if it is in the City and Mr. Reeves responded that it is. Mr. Meredith added that several businesses are to come in there and we should be able to get them. Chairman Hancock noted that the property next to Big Lots is also in the City. Commissioner Monaghan stated that he heard that the old Wal-Mart location will be torn down and something coming in there. Mr. Reeves stated that Starbucks is going in next to the new Verizon and that is in the City. Commissioner Monaghan mentioned the possibility of a fire protection issue there. He added that the complaint is with the fire hydrant requirement of 500 feet; it is across the four-lane highway, and traffic would stop if there was a fire. Mr. Reeves responded that he had not heard anything from the City. Mr. Reeves stated that marketing continues to go well. Mr. Gentry reported on inserts that went out about the Gas Policy in 1,100 Chamber of Commerce newsletter packets. He stated that displays were placed at Sears and Steifle’s for gas grills. Commissioner Monaghan noted $18,000 paid out in gas incentives in one month. Mr. Reeves noted ten electrical conversions to gas; five fuel oil conversions; and 23 new constructions where gas furnaces were installed in the County. Chairman Hancock stated that something should also be placed everywhere gas grills are sold to show how simple it is to convert propane to natural gas. Mr. Gentry and Mr. Lemon commented on a weekend church retreat noting that it probably will not meet the criteria to serve with natural gas because of the small amount of usage. Mr. Lemon mentioned a business found by Mark Hamm adding that he would provide a cost and savings comparison. Commissioner Monaghan asked if gas is furnished to Due West. Chairman Hancock stated that Carolina Pipeline has Due West; Mr. Reeves added that we serve anything on the corridor between here and there. Commissioner Monaghan asked if the gas line goes along Highway 178 and Mr. Patrick pointed out that area is Donalds rather than Due West. Mr. Reeves noted a CPW gas distribution system in Donalds. Mr. Gentry added that they do field marketing in that area.

B. Manager Reeves asked Mr. Auman for an explanation of Items B. and C. Mr. Auman explained a request for annual software maintenance of the ArcView program for GIS based ESRI software. It allows us to go to the web and the different departments to access the GIS. He added that annual upgrades and support during the year are also included. Commissioner Monaghan stated that the purchase order was already signed without approval. Mr. Reeves responded that a copy of the purchase order was included in the packet for their review; it was signed but was still on his desk awaiting approval.

A motion was made by Commissioner Monaghan and seconded by Commissioner Watts to approve a purchase order in the amount of $10,018.72 for annual software maintenance; the motion was unanimously approved.

C. Mr. Auman explained the levels of software that were purchased over time. He stated that the levels changed with the new version just out a month ago. He noted that we did not buy the top level or enterprise version the first time around; now that version has a lot of things built in that we were going to pay GST Consulting or someone else to write and customize. He added that this will cut down on software development cost. Commissioner Monaghan asked about getting an in-house programmer. Mr. Auman responded that we had been using GST Consulting. To get a GIS specific programmer, which is a little different than traditional programming and specialized in nature would probably cost about $90,000 per year. Commissioner Monaghan asked about the cost of a consultant. Mr. Auman responded that the contract last year was $60,000, noting that it included the GPS in addition to the program. Mr. Auman provided an example of a project on the list, pipe breaks and valve maintenance with gas and water, where currently data is scattered everywhere on an Access database or in spreadsheets. The goal is to put the information in one central place on the GIS. He pointed out that many of the functionalities that would have to be custom written are built into the new version. Commissioner Monaghan referred to a question from Mr. Meredith as to whether ESRI was compatible when they made changes and whether it could be integrated without cost. Mr. Meredith stated that he was referring to the other piece; ESRI is the base that we want. Commissioner Monaghan asked if the systems we are considering would be compatible with any ESRI changes. Mr. Auman stated that they would need to stay up with what ESRI is doing. He added that ESRI is like the Microsoft of the GIS world. Mr. Meredith stated that we would not pay the fee every year; we only want to upgrade to a particular level and then the maintenance fee would be paid annually on what was just approved. Mr. Auman added that this is a “one-time” thing to move us to a higher level. A motion was made by Commissioner Monaghan to approve an upgrade to the GIS system at a cost of $20,000; the motion was seconded by Commissioner Watts, and unanimously approved.

D. Chairman Hancock noted a recommendation from staff to approve Service Agreements with Carolina Gas Transmission Corporation, which is in essence SCANA, to allow more flexibility in meeting CPW’s gas supply requirements. He noted that the Agreements would allow CPW to purchase gas from them in the event that our requirements dictate these purchases. A motion was made by Commissioner Watts and seconded by Commissioner Monaghan. Chairman Hancock asked if calls taken at the water plant would be recorded when SCANA calls to interrupt service. Mr. Lemon responded that calls come directly to Greg Moon or whoever happens to be on call during normal working hours; if they cannot get in touch with them, then they get the water plant. Chairman Hancock noted that the water plant is watching the gas signals and also the person on call. He recalled a past experience when he made a $190,000 mistake and a letter had to be written to Carolina Pipeline because we could not afford to pay. He stated that he was in the Reserves at the time and had just returned. Because he was out of the loop he did what he was told and went right on through with it and they didn’t cut the power plant off. He stated that there should always be two people listening in on what is recorded. Mr. Lemon responded that he was not aware of recording capability at this time. Mr. Auman stated that it could be added. Chairman Hancock stated that it was important so that if they misunderstand what is dispatched, they can listen again. Mr. Lemon responded that they would set something up. The motion was unanimously approved. Mr. Lemon added that they upgraded and are connected at Buzzard’s Roost directly to S. C. Pipeline so there is an alternative supply if there are problems with Transco. He added that there is no cost until it is used. Chairman Hancock asked if the station is in running condition. Mr. Lemon responded that it was upgraded and was basically rebuilt except for outside painting and that was budgeted for 2007.

E. Chairman Hancock acknowledged receipt of a proposal from Wyatt Farms showing four designs for a small, self-contained water fountain that would go at the front of the building in the glass enclosure underneath the stairwell. Commissioner Monaghan noted that he did not particularly care for the recommended fountain. Chairman Hancock asked which one he preferred and noted that the recommendation was for the cheapest design. Mr. Patrick pointed out that the fountain that was recommended was not the cheapest, but rather next to the cheapest of the four designs. Manager Reeves noted discussion in 1999 when they moved into the building; the idea at that time was to place something at the front entrance to enhance the building. He stated that this was a fairly inexpensive way to accomplish this. He pointed out that electricity would have to be put in and if that could not be done relatively easily, that could potentially stop

the project. A motion to approve the fountain as recommended at a cost of $1,155.00 was made by Commissioner Monaghan, seconded by Commissioner Watts, and unanimously approved. The Commissioners agreed that Metro should not share in the cost since they could be moving out of the building.

F. Chairman Hancock asked Ms. Gorham to explain a recommendation to change the Water Leak Policy. Ms. Gorham explained that in the current Policy there has to be at least $300 above the normal average consumption to be eligible for a credit for both inside of the City and outside of the City. In looking at rate charts, there would be a lot of difference in consumption for a City customer compared to a rural customer. Ms. Gorham recommended a change to the Policy to $150 for inside and $300 for outside, or $300 for inside and $450 for outside. She added that this would make the Policy fairer to inside and outside customers. Manager Reeves agreed with Ms. Gorham that a differential is needed. He explained that there could be a customer outside of the City limits who hits the $300 limit because of the 80% surcharge and a customer inside could have the exact same leak in volume but would not qualify because the dollars are not there, which is unfair to the inside customer. He added that probably the fairest way would be to base it on volume, but that would not be easy to do. Commissioner Monaghan asked why it could not be based on volume since billing is based on volume. Mr. Patrick stated that it would be easier for the customer to understand based on dollars rather than volume. Commissioner Watts asked if the $300 was above the yearly average. Mr. Reeves responded that it is $300 above the monthly average. A motion was made by Commissioner Monaghan to revise the Water Leak Policy to reduce the $300 amount to $150 for Inside City customers; the motion was seconded by Commissioner Watts, and unanimously approved.

G. Manager Reeves noted six large health insurance claims over a three-month period. He stated that a report came out after the Board package showing a reduction from a credit of $42,221.44 issued to our account. He stated that in order to maintain the $250,000 reserve, a payment of $124,634.66 would have to be sent, and the CPW’s portion would be $90,983.30. Commissioner Monaghan made a motion to transfer $90,983.30 into the Insurance Reserve; Commissioner Watts seconded, and the motion was unanimously approved. Commissioner Watts asked how much had been added over the last six months, and Mr. Reeves responded that it was close to $400,000. Ms. Giannetti added that because of the $60,000 “stop loss”, four of the claims had absolutely capped out and two are at the $30,000 level, and that alone is $300,000.

VI. Other Business:

1. Manager Reeves reminded the Commissioners that a budget work session was scheduled for Thursday, December 7, at 8:30 a.m. at the COC, and that lunch would be provided.
2. Manager Reeves reminded the Commissioners of Christmas parade dates.
3. Manager Reeves informed the Commissioners of the Annual Chamber of Commerce Meeting on January 11 at Lander University. He asked for guidance on a sponsorship, noting that the cost was $800 for a banner and a table the previous year. The Commissioners directed the General Manager to do the same sponsorship as last year.
4. Manager Reeves informed the Commissioners of an invitation to a drop-in at Greenwood Capital on Friday, December 8, between 10:00 a.m. – 4:30 p.m.
5. Manager Reeves stated that the Commissioners had received copies of the proposed budgets. He pointed out about $3 million in projects shown in blue print that were identified for a proposed bond issue. He added that the budget is at a positive $200,000 position right now; however, without a bond issue, the budget would be in a deficit position. Mr. Reeves pointed out a rate increase from Transco of a little over $1 million and a rate filing at FERC. He explained that as usual, the rates were put into effect subject to refund, but in the meantime, we have to pay that at a cost of a little over $1 million. He stated that a line item was included for additional revenues to cover that and they would have decide how to handle this either through a rate increase or throw it in to the PGC and recoup over the year’s time. Commissioner Monaghan noted a net income of over $2 million for this year and pointed out that there would not be a need for a rate increase if that is maintained. Mr. Reeves responded that Ms. Giannetti is working with Sheree Brown to determine why there is $2 million net income this year and why there is a difference for next year with very few changes. Ms. Giannetti explained that one of the bigger reasons is because of the way gas costs are recovered. We budget a dollar amount but will recover on things in January, February, and March through the PGC. That will hit on an income statement on a calendar basis but is really to cover the July through June period for the gas costs. We show big losses in December of last year but pick the money up in January. Commissioner Monaghan noted a $500,000 loss picked up in 2006 but added that was still not all of the $2 million. Mr. Lemon stated that the other $1 million is the Transco; that was in the budget as a cost item but there was no way to recover it without changing rates or making other changes to the PGA. We know that cost is there, they have already filed and we are going to have to collect it. If they find they don’t get all that money three years from now, we do a rebate then. Ms. Giannetti continued with an explanation of salaries and fringe benefits that are budgeted in the operating budget but charged out to some capital items during the year. She stated that you would not necessarily see those on an income statement because they will be capitalized in fixed assets at the end of the year. The budget for next year has all of the salaries and benefits in it, but in actuality we charge some of those things out to capital. Commissioner Monaghan stated that this could be discussed in more detail at the budget work session.

VII. Executive Session

A motion was made by Commissioner Watts, seconded by Commissioner Monaghan, and unanimously approved to go into Executive Session to discuss legal, contractual, and personnel matters.

The meeting returned to open session.

Mr. Patrick noted discussion during Executive Session on the matter of the Grace Street Water Plant property. He stated the sentiments of the Commissioners which are to adopt a motion to approve offering the southern portion of that property consisting of approximately 40 acres to the City of Greenwood on the terms as outlined in a draft letter that the Commissioners had reviewed. A motion was made by Commissioner Watts to approve the offer on the terms and conditions as set forth in the letter; Commissioner Monaghan seconded, and the motion was unanimously approved.

VIII. With no further business, the meeting was adjourned.

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