Greenwood CPW

COMMISSIONERS OF PUBLIC WORKS

Minutes of September 28, 2006

The regular meeting of the Board of Commissioners of Public Works was held on Thursday, September 28, 2006, at 10:00 a.m., in the boardroom at 121 West Court Avenue.

In attendance:

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

Bill Patrick Michael G. Monaghan Denise Giannetti

Vicki Knott Scott Banks Henry O. Watts

Ken Whittle Jeff Meredith Ron Lemon

Curtis Burnett Richard Gentry Stacia May

Jeff Auman Kenneth Barnett

I. Chairman Hancock called the meeting to order and Mr. Barnett gave the invocation.

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 August 24, 2006 regular meeting; and the September 14, 2006 regular meeting. The motion was unanimously approved.

IV. Financial Statement:

Commissioner Watts expressed the desire to meet with Ms. Giannetti and Ms. Gorham at a later date for an explanation of the Setoff Debt Program. Commissioner Monaghan inquired about where principal payments on bonds are shown on the financial report. Ms. Giannetti responded that they would not be reflected in the financial statement itself because they are not an expense; they are basically a decrease in the liability. She stated that the interest payments are reflected in the financials and referred to page 8 showing the principal payments. Commissioner Monaghan noted that Metro shows principal on their bottom line. Ms. Giannetti stated that it would be considered part of cash needs but is not really an income or expense item. Mr. Barnett added that depreciation of assets is taken care of through paying debt over time; principal payment only affects the balance sheet and not the net income statement. Commissioner Monaghan asked about spending for capital improvement and noted that depreciation expense was exactly the same. He added that it would seem that if you approve that you made capital, you would have a different depreciation schedule. Ms. Giannetti stated that they have been estimating depreciation and adjusting it at year end after all of the projects have been completed. Commissioner Monaghan asked where the $250,000 from the sale of the lake property was shown. Ms. Giannetti responded that property sales would not be reflected on the financial statement unless there was a gain or loss from the sale. Commissioner Monaghan noted that there must have been a large gain and Mr. Reeves agreed. Ms. Giannetti stated that they would have posted that to the sale of assets account, probably in the administrative section. She added that would be adjusted and reflected as a gain on a sale. Commissioner Monaghan stated that he thought it would be good to know what we make on property sales to be able to rationalize what is being spent. For instance, if we buy the rest of the administrative building, we could say that we are going to spend $500,000 but we made $300,000 on property sales. Ms. Giannetti stated that sales are accounted for in their own separate account as part of miscellaneous revenue. Ms. Giannetti added that the entire $250,000 would not be shown; only the portion that would be a gain. Commissioner Monaghan then referred to page 12, noting that $151,000 was spent so far this year, and asked if all of this is free piping. Ms. Giannetti responded that it would not be piping inside the customer’s house; it would be anything that we would capitalize on, such as piping service and main lines. Commissioner Monaghan asked if this meant that $26,000 more was spent than was taken in, and Ms. Giannetti responded that was correct. Commissioner Monaghan asked about tracking spending for annexation incentives, and suggested including the information on the same sheet as gas. Ms. Giannetti responded that would be done. Commissioner Monaghan inquired about the Emergis credit card lawsuit. Mr. Auman responded that SC.GOV has indicated that they are pushing the lawyers as hard as they can. Commissioner Monaghan asked about programming the barcode equipment. Mr. Auman responded that a lot is already in place, and the majority of the remaining work remaining should be done the following week. Commissioner Monaghan asked where the adjustments are shown on the financial statement for money made for gas capacity release. He stated that it would be interesting to know how much is made and to have a comparative of what we did before to see if it is worth the risk. Mr. Lemon responded that it should go in the same place as it is now. He added that the risk is less than 2% because we have two interconnects and can buy extra gas to be delivered to the system. Ms. Giannetti stated that right now, it goes against the cost of gas. She stated that it could be shown on a separate spreadsheet for gas inventory. Commissioner Monaghan suggested it could be shown in a note somewhere. Commissioner Monaghan noted there was a study to identify the number of residential units and multi-family structures. He stated that there was some thought about adjusting our billing of our basic charge. Mr. Reeves responded that this information is included in the rate study with Sheree Brown, but he did not know about changing the methodology. Chairman Monaghan stated his desire to look at whether we can eliminate the minimum water use requirement. He added that the same is being done with Metro. Mr. Reeves responded that during a conversation several weeks ago with Richard Coleman, he indicated that Metro was not changing and keeping the same methodology on the minimum charge. Commissioner Monaghan stated that it has changed since that time. Chairman Hancock stated that it is a fairness issue with Metro. Mr. Reeves stated that Mr. Coleman indicated during a recent conversation that the methodology was going to remain the same, based on the minimum consumption of water. Commissioner Monaghan referred to a small shop that opened on Maxwell Avenue where all they have is the bathroom; they are charged $7 for the water and $24 for sewer because sewer is based on 800 cubic feet for commercial. Commissioner Monaghan inquired as to when this information would be reviewed. Mr. Reeves responded that the draft report received from Sheree Brown had not been reviewed; the plan that was discussed previously was to make a presentation to the Commissioners and to offset the increase until possibly late winter or early spring. He added that currently, the rate study is based on the same methodology as before with the minimum water bill based on 400 cubic feet, and Commissioner Monaghan asked Manager Reeves about changing it. Chairman Hancock stated that they want to change Metro’s because of master metering; it makes a lot of difference when you pick up a lot more customers. Commissioner Monaghan stated that we have the same thing here. Chairman Hancock stated that he disagreed. Commissioner Monaghan asked about the basic rate charge for a 200 unit apartment complex. Mr. Reeves responded that the minimum charge is based on the size of the meter. With a 4-in. or 6-in. meter, there is a minimum charge based on the amount that would be expected to flow through that meter. Mr. Patrick suggested that discussion with Sheree Brown take place about the issues associated with having a separate meter and those kinds of costs that are not necessarily directly related to how much water is actually used. Chairman Hancock stated that it is unfair on the sewer side when, for example, all of the apartments at New Haven Apartments are on a master meter and they only pay one $7.85 charge. Each individual unit, just like an individual residence, has to pay the $7.85. The apartment complex only pays one $7.85 and then they pay on their water usage just like any individual. He noted that on the water side, CPW saves money in billing and collections and other things, plus picks up revenue on the demand on the water that goes through that larger meter and line, where Metro loses all of that. Commissioner Watts stated that to simplify, they are talking about paying for what is actually used. Commissioner Monaghan stated that they are also saying that if the basic charge is $7 and you incorporate all of the multi-family individual residential units, the cost might be $4 to everybody rather than $7. Mr. Patrick stated that you do not bill those individuals; if you have a master meter you bill the owner. Chairman Hancock stated that is what they want to change at Metro. Commissioner Monaghan added he would like to change that at CPW as well, and bill it to the same person based on the residential units. Mr. Patrick stated that this is rate-making theory and methodology that has some logic to it, like how much it costs to read the meter, how much it costs to send the bill, etc. He suggested that it may make sense to do this, but they should at least hear Sheree Brown’s analysis. Commissioner Monaghan noted a theory that fixed cost is deferred to a base rate because fixed cost is there no matter how much you use. Then you would have a usage rate and an actual fixed cost rate. Your variable cost is for the usage. You would have to do that equally per residential unit; that is how you do impact fees, for instance, Wal-Mart should not be charged the same base rate as someone living in a mill village, but they are. Mr. Whittle asked if part of that fee was for maintenance of the system. Commissioner Monaghan responded that he was not sure how that was costed. Mr. Whittle stated that if they have a master meter, we do not maintain the services, we just maintain up to the master meter. Commissioner Monaghan stated that in any case, maintenance is a variable cost. Mr. Patrick suggested further discussion at some time during a conference call with Sheree Brown. He added that there are some logical points to how you determine a minimum rate that is based on fixed cost or based on meter reading, billing, etc. For instance, a car wash would have a bigger meter and a bigger minimum. Mr. Barnett stated that the difference on the water side is that if you have a master meter, the meter there is going to be larger than for an individual housing unit and they will pay a larger minimum; whereas, on the sewer side, they are not paying anything different based on meter size or anything. Mr. Reeves stated that where we lose even with the current methodology is you can have a 4-in. meter in one location feeding 100 units, and a 4-in. meter on another project feeding maybe 200 units. Commissioner Watts noted that was what Metro found in their study; there were cases where the same size meter is serving 200 units as with 50 units. Chairman Hancock stated that basically you cannot get all of your fixed charges back in the minimum rates; it has to flow back in the next category. Mr. Patrick again suggested that it might be helpful to have this discussion with Sheree Brown, and not necessarily wait until the entire rate study is done. Mr. Reeves added that this was not changed in the study but Sheree Brown could take a look at it. Chairman Hancock stated that they talked with her at Metro and she was to do it and show them what it would be to do away with the minimum charge, but pick up the apartments and spread out those costs over more folks. Commissioner Monaghan stated that he was more comfortable with an approach where if you use it, you pay for it, if you don’t use it, you don’t pay for it. He noted that if there is a well-crafted base rate, plus over the last couple of months, the meter readers had identified all of the residential units, then the data base is established to implement some changes. Mr. Patrick referred back to the approach Commissioner Monaghan suggested; he stated that it has some degree of logic after a certain point, but you would need something, if not a minimum fee, but maybe some sort of a connection fee base rate that everybody pays, and then you start charging for the water used. Mr. Reeves explained that to calculate the current base rate, all costs should be in that base rate; then divide it by all consumers. In this case, we would have 4,000 more consumers than we would have typically counted if you do it by family unit. Commissioner Monaghan stated that impact fees are based on residential unit; they calculate Fuji as so many REU’s. Mr. Reeves stated that the study was on 300 or so master meters that produced over 3,000 customers. He gave an example of the movie theatre at 14 REU’s commercially. If they pay 14 base rates, that would be equivalent to 14 residences. Mr. Patrick responded that the argument there could be if you are going to charge the apartment owner on that basis. Chairman Hancock stated that it cannot be done on just usage because you have people that might be gone six months out of the year; then six months you are not even getting back your basic charges back for facilities. Mr. Patrick stated that if you have an appropriate base rate, it certainly doesn’t hurt to have a charge just for usage, but the question would be how you would compute the base rate. Mr. Reeves suggested asking Ms. Brown to come by when she is in the area, and the Commissioners agreed.

Commissioner Watts inquired about the status of the Embarq Pole Agreement. Mr. Meredith responded that the agreement is still in Embarq’s legal department, and they are also working on the five-year agreement. He added that there was an issue with an invoice from the beginning of the year that had not been paid. Apparently, it was lost during the time of the changeover from Sprint. Once that is cleared up, they will cut a check for the new one-year amount.

V. New Business:

A. Chairman Hancock presented a recommendation from management for a purchase order in the amount of $88,987.50 to Carolina Meter and Supply Company for 600 residential water meters, the majority to be used for the testing program. This is a budgeted item, and the prices are based on the annual bid process. A motion was made by Commissioner Monaghan, seconded by Commissioner Watts, and unanimously approved.

B. Chairman Hancock noted a recommendation from management to accept the low bid in the amount of $40,835 from Town and Country Construction Company, Inc. to enclose one bay in the open truck shed for housing the new boring machine. Commissioner Monaghan asked what enclosing the bay would entail. Mr. Whittle responded that it would be completely enclosed and heated and with roll-up doors on the ends. Mr. Meredith added that the last truck shed on the property where the electric and gas roll-up doors are already will move over one bay; one side with metal will be closed instead of bricked, and the fronts made to look identical to the existing exposed bay. Mr. Meredith noted that gas heat will be added and the purchase of heating units was not included in the bid. A motion was made by Commissioner Monaghan to accept the low bid from Town and Country Construction Company; the motion was seconded by Commissioner Watts, and unanimously approved.

C. Chairman Hancock presented a recommendation to accept the low bid for lights in the amount of $13,520 from Hughes Electric Supply; and the low bid on poles in the amount of $33,245 from Line Equipment Sales for the new Northside Middle School project. He added that Greenwood School District 50 has approved these poles and lights. A motion to accept the low bid as presented for lights from Hughes Electric Supply was made by Commissioner Watts; the motion was seconded by Commissioner Monaghan, and unanimously approved. A motion to accept the low bid for poles as presented from Line Equipment Sales was made by Commissioner Watts, seconded by Commissioner Monaghan, and unanimously approved.

D. Chairman Hancock presented a recommendation to accept the low bid in the amount of $35,010.15 for a 500-gallon vacuum system to be used in conjunction with the directional boring equipment. He noted that Ditch Witch provided the lowest bid by $2,139; however, the bid did not meet the specifications, and broke down during two demonstrations. Mr. Meredith added that the engine on this particular machine was smaller, and the spoil tank was about half the size of the one recommended. He pointed out that over time, there have been more repair issues with items that have just marginally met the specs. Commissioner Monaghan asked for an explanation of how the equipment will be used. Mr. Meredith explained that first the locators go out and mark the underground utility with spray paint on the ground to show where lines are within a set range. Then this machine will be used to excavate the dirt and make a hole so that we can actually see whatever line is underground, whether it is gas, electric, or water. He explained that typically a post hole digger or backhoe is used and there is always the danger of actually puncturing something. He explained how this machine uses high pressure water and vacuums out the mud into a tank so that there is no dirt at the site, which makes for a much cleaner installation. He added that it can also be used when boring and pulling back because mud fills up in the hole where you are boring, and the mud must be sucked out to be able to get in and do the work. Right now we have to call Metro or scoop it out with a backhoe and a dump truck. Mr. Meredith stated that Metro has been very good about helping, but he noted that we anticipate going to Lodge Grounds in 2007 and cannot call on them every time. Mr. Whittle added that this will leave yards in much better repair. Commissioner Watts asked if the specifications called for a particular engine size and if the Ditch Witch equipment was lacking in power. Mr. Meredith responded that the Ditch Witch equipment was lacking in several areas, and Mr. Patrick reiterated that clearly it did not meet the specs. A motion was made by Commissioner Monaghan to accept the bid from Mid Atlantic in the amount of $35,010.15 for a Vermeer vacuum system, which is the lowest bid meeting specifications; the motion was seconded by Commissioner Watts, and unanimously approved.

E. Chairman Hancock presented a recommendation to accept the lowest bid meeting specifications in the amount of $47,929 including tax from Vermeer Carolina, Inc. for a trencher/backhoe unit in the electric department. This price includes several options that were not included in the base bid. He added that Mr. Meredith had provided an explanation of those options in a memorandum. Commissioner Monaghan asked if this item was budgeted, and Mr. Meredith responded that this was a budgeted item. A motion was made by Commissioner Monaghan, seconded by Commissioner Watts, and unanimously approved to accept the lowest bid meeting specifications as presented.

F. Chairman Hancock presented a recommendation from management to accept the low bid in the amount of $13,734 from KVA, Inc. for an upgrade to the breakers at substation 5. This upgrade will allow for new electronic relays and other improvements to this substation. A motion was made by Commissioner Watts, seconded by Commissioner Monaghan, and unanimously approved.

G. Chairman Hancock presented a recommendation from management to accept the bid from Line Equipment in the amount of $13,000 based on lowest cost of ownership which met the specifications for five (5) 75-KVA mini-pad transformers. Mr. Patrick asked for clarification on the recommended bid; he referred to the bid recommendation form and the column showing extended cost of ownership. He noted that two bids from Hughes Supply and also Line Equipment were lower. Mr. Meredith pointed out that Hughes Supply and Line Equipment Cooper did not meet the specifications because they were quoting on aluminum winding. A motion was made by Commissioner Monaghan, seconded by Commissioner Watts, and unanimously approved to accept the lowest bid meeting specifications from Line Equipment.

H. Chairman Hancock presented a recommendation from staff to accept the low bid in the amount of $16,800 plus tax from Wesco for four (4) electronic relays to be used in substation 5. He added that this is part of the upgrade process. A motion was made by Commissioner Watts to accept the low bid from Wesco; Commissioner Monaghan asked if Wesco was the only vendor. Mr. Meredith responded that they can buy directly from ABB, or through Wesco who is the exclusive distributor. The motion was seconded by Commissioner Monaghan, and unanimously approved.

I. Manager Reeves presented information on the bids received for carpet and tile replacement at the main office. He stated that several bids were received on each item, with the low bid for tile coming in from Carolina Floor Covering at a cost of $4,849.02. He pointed out that two columns on the bid tabulation form must be totaled for the carpet; the column showing transitions and trim must be added to the carpet bid. The low bidder was Whitaker Floor Covering from Newberry with a total bid of $31,546; however, Carolina Floor Covering was the second low bidder at $31,640.20. Mr. Reeves recommended using Carolina Floor Covering as the only vendor to avoid conflicts with having two vendors working at the same time and tying the products together. He gave further justification based on the closeness of the two bids and less than $94 difference on the carpet installation, and Carolina Floor Covering being the low bidder on the tile. Commissioner Monaghan asked for clarification on the comparison of the carpet bids. Mr. Reeves explained that in order to have an amount for a comparison, a total was obtained by adding the transitions and trim column and the carpet column. He noted that there were two types of carpets bid and the recommendation was to go with option two, which was the lesser of the two. Commissioner Monaghan made a motion to approve Carolina Floor Covering for carpet and tile replacement at the main office at a total cost of $36,489.22; the motion was seconded by Commissioner Watts, and unanimously approved.

J. Ms. Giannetti gave an update on a recent expense report from Mr. John Phillips with Medical Claims Management Corporation. She noted a number of large medical claims that are not yet to the level of meeting the $60,000 cap that are eating into the reserve balance. Ms. Giannetti then recommended putting additional funds in the amount of $150,000 into the reserve. She explained that the amount put in monthly is just matching what our basic claims would have been without these larger claims, so there is no way to make up those funds throughout the year. Commissioner Monaghan asked about the level maintained in the reserve, and Ms. Giannetti responded that we try to maintain a balance of $250,000. She added that we are at $96,000 right now. Commissioner Monaghan asked for an explanation as to why we would want to add $250,000 instead of $150,000. Mr. Reeves responded that since monthly claims are averaging around $90,000+ dollars, it requires putting in the $250,000 for the base reserves, plus one month of additional reserve, just to get us past the first month. He added that if we just put in $250,000, within the first month we will have already depleted our reserves by $90,000. Commissioner Monaghan pointed out that someone had said earlier that there is enough coming in to cover the normal claims. Ms. Giannetti responded that will not be the case until we get through these high claims. She added that based on what John Phillips has told us, these claims have not gotten to a type that would meet the cap, and because of privacy issues, John cannot give exact details. Commissioner Monaghan asked about the amount of normal claims, and Ms. Giannetti responded that she would have to get that information. She added that it is higher than $100,000 and more like $300,000 every month. Mr. Barnett stated that the extra $96,000 is basically there to cover the balance of what John Phillips figures these five or six claims are going to have, which are over and above normal claims. If you put just $250,000 in right now, those claims will already have eaten into the $250,000 by about $100,000 in one month. Commissioner Monaghan stated that he did not see the logic with maintaining $250,000 over and above normal claims and asked for further explanation. Ms. Giannetti stated that she was referring to normal claims, excluding the high claims; in looking back at average months over the last three years, and with the additional high claims in the first couple of months of this year, we need the extra funds just to cover the extra claims. Mr. Patrick noted that he thought he heard that normal claims were $96,000 a month one time and $300,000 another, and asked if those are two different amounts. Mr. Barnett asked Ms. Giannetti if she was saying that the other five claims are hitting us at close to $100,000 a month over and above our normal claims. Commissioner Monaghan stated his understanding that we want to maintain $250,000 over and above normal claims, and before these extraordinary claims there was enough to sustain that level, but because of these claims, it ate into the reserve by $150,000. He suggested putting back only $150,000 to get back to $250,000 rather than putting back $250,000. Mr. Barnett responded that those claims have not yet paid out, and it sounds like they are still expecting about another months worth of those extra claims hitting before they hit the cap where it goes into reinsurance. Commissioner Monaghan stated his understanding and asked how they know. Mr. Reeves suggested another option would be to put in $154,000 now to bring us up to $254,000, and then re-address it in a couple of months if it drops back down. Commissioner Monaghan stated his agreement unless there is some empirical data showing that it is going to go up another $100,000. Ms. Giannetti stated that is unknown because of the privacy issues with this information. Mr. Barnett stated that Medical Claims believes that in all likelihood these claims will continue on for the rest of the $100,000 before it gets to the cap, but they can’t say that for sure. Commissioner Monaghan stated that it would be more logical to watch the cash flow and to put in an amount to get back up to the $250,000. If you need it next month, put in another $50,000 or whatever amount is needed. He added that interest can be made off the $100,000 until next month. Commissioner Watts asked if Metro would share in the cost, and Mr. Reeves responded that they would. Mr. Reeves stated that if the Board wishes, they could calculate the exact amount from the current reserves up to $250,000 and that is what would be put in, with Metro’s 25% participation. Ms. Giannetti noted that they suggested this to try to avoid coming back to the Board every month. Commissioner Monaghan suggested giving the General Manager authorization to sustain the medical reserve at $250,000 without coming back to the Board every time. Mr. Patrick agreed that would be the simplest way to do it, and advised the Board to get reports after the fact to keep from getting out of hand. Chairman Hancock agreed that receiving reports would be important with the continuing rise of medical costs. A motion was made by Commissioner Monaghan to authorize the Manager to make additional contributions to the medical account as needed to maintain the reserve at $250,000, and to keep the Board posted after contributions are made; the motion was seconded by Commissioner Watts, and unanimously approved. Mr. Reeves pointed out the need for Metro to understand the language to be able to contribute their share.

VI. Other Business:

1. Manager Reeves reported that Howard Corley is still in favor of annexation. We are still waiting for first reading with the City; the legal documents have not been prepared for that at this time. He added that would have to come from Jeff Fowler’s office. Commissioner Monaghan asked if it could be pushed along, and Mr. Reeves responded that they have been pushing for some time. He stated that the holdup has been the attorney in Columbia who does not see the urgency as we do. Mr. Reeves reported that Sam Zimmerman has already had first reading and we are waiting on a second reading, and Countybank has been squared away as a result of the Zimmerman annexation. We are currently working on annexation out near Westview Middle School for residential development; the City came to us with about 73 to 80 units. Commissioner Monaghan commented on this being one of the benefits of annexing the school. Mr. Reeves stated that Advance Auto looks like they will accept our services. Commissioner Monaghan offered to talk with Mr. Fowler about the holdup with the attorney in Columbia on the Corley annexation. Mr. Reeves stated that Steve Brown was to call April Lucas, the attorney in Columbia. Mr. Barnett informed the Commissioners of a conversation with Steve Brown where he indicated that he would contact the attorney in Columbia about working directly for the City. Mr. Reeves stated that the Partnership works well with us; they just don’t always see the urgency as we do, or their priorities are different. Commissioner Monaghan commended staff for a good job with annexation. Mr. Reeves reported that Piedmont Health Group is still very interested and there would be another meeting. Mr. Reeves stated that nothing has been done with the Timms’ property, and Mr. Barnett added that there is an issue with sewer. Mr. Reeves stated that we will look at the sewer line but we are waiting for a response from Jimmy Brailsford.

2. Mr. Richard Gentry provided information on incentives that have been paid out. He stated that based on some quick calculations, we are paying out approximately $1.25 per month for each new customer over the average of 15 years. He reported that everything is on “go” with Martin Enterprises, the fertilizer company in Donalds. Mark Hamm has requested permits and they are bidding out the building. Mr. Lemon added that we will get about 300 dt per day from this customer; the gas consumption will come from a 70-foot dryer. Mr. Lemon noted that there is a gas line closer to Martin Enterprises, but they have not even contacted them. We are acting as fast as we can to lock them in with an agreement to lay the line. As long as they use the gas, they won’t have to compensate us for the line. Mr. Reeves noted that this falls within the current extension policy. Mr. Lemon noted the possibility of gaining additional propane customers along the route as well. Commissioner Monaghan asked about the response to the “Get Well” cards. Mr. Gentry responded there has been none thus far. Commissioner Monaghan suggested that joining the Association of Realtors might provide some good contacts. Mr. Gentry responded that he would check into it.

3. Chairman Hancock asked if anyone had looked into putting gas ranges in the schools. Mr. Gentry stated that he would check with the schools to see what types of courses are offered; there may not be home economics classes anymore, but it is called something different now. Mr. Meredith noted that the new schools have gas stoves in their kitchens. Mr. Whittle stated that he had sent out a notice to some gas companies but had not gotten a response back yet. He stated that the APGA is supposed to send out a questionnaire. Chairman Hancock asked if anyone had contacted the local businesses that sell gas equipment and appliances. Mr. Gentry responded that he had sent information. He stated that there are not a lot of people selling gas items, other than water heaters. Mr. Whittle added that the appliance stores will be given information to put out in their stores if they are willing. Commissioner Monaghan noted that the sale of gas appliances is not promoted much, and asked about giving the stores an incentive to sell them. Mr. Gentry stated that they are getting a copy of our program, but no incentive has been offered to them to promote the sale of gas appliances. Commissioner Monaghan stated that it would be good if appliance stores had some kind of incentive to push the sale of gas ranges, such as an incentive to inventory certain stoves; or some kind of scheme for selling gas appliances. Mr. Whittle noted other companies have a preferred vendor list they hand out; they don’t promote any individual company but give information out to customers. Chairman Monaghan stated that we may not necessarily see the customer; they may go to somewhere like Steifle’s to buy a stove and gas appliances are not suggested, and in most cases, gas appliances would have to be ordered. Mr. Reeves stated that they could check around and Mr. Gentry stated he would approach some of the stores and also get on the internet. Chairman Hancock noted a display that SCANA had in the Columbia malls at one time with everything in the house on display. Mr. Whittle noted that a lot of companies are going to internet vendors for gas appliances and customers buy straight from the company of their choice. Chairman Hancock stated that there are commercial restaurant supply stores in the area. After a brief discussion of gas logs, Mr. Lemon mentioned a discussion with Mr. Gentry about the possibility of stocking and selling gas generators since no one else sells them in the area. Chairman Hancock stated that at one time, some utilities kept water heaters in their warehouses and would install them at no cost and the customer paid for them over time. Mr. Lemon stated that is still done in Houston with gas grills and gas lights, and they are put on your bill. Mr. Whittle noted that customers would need a good track record with paying their gas bill. He stated that in Augusta, they had a store that sold gas appliances and they kept them in their warehouse until they decided this was no longer profitable; warehousing cost was one of the big reasons. Commissioner Monaghan asked about gas companies financing gas furnaces. Mr. Whittle responded that Augusta had a company that did this for them; they might charge 19% interest and 2% or 3% would go to the gas company. Commissioner Monaghan asked if this was really promoting the use of gas, and Mr. Whittle responded that it actually was because it was convenient to be able to pay for them on their gas bill. Commissioner Monaghan stated that there are a lot of good ideas that need to be explored.

4. Chairman Hancock asked about the price of gas. Mr. Lemon responded that it sold at $4.20 yesterday for October contract. Interestingly, yesterday crude oil rose $1.95 on speculators coming in the market. Gasoline is 15% higher than the five-year average; crude stocks are 5% higher; and heating oil is about 9% higher than the five-year average. Commissioner Monaghan asked if the big hedge fund was out of business. Mr. Lemon responded that they sold their natural gas booked to two folks and are still in business; they are not nearly as big. They had publicly stated to their investors that they were going into a huge natural gas play, then there is some thought that a single trader in this company was running that book and trying to corner the market and did it all over the counter. It did not affect NYMEX whatsoever; none of it was traded on the exchange. They clearly stated what they were going to do and their investors knew; they kept on riding a losing horse. Commissioner Monaghan stated concern that if they are not as big a player as before; we are $4 now, will we be pricing $7 in February. Mr. Lemon stated that they are just one of the top one hundred hedge funds that had this many dollars that are out there playing. It is a lot of money, but not significant in the big picture. Their downfall caused a ripple through the marketplace, but didn’t affect prices at all; in fact, the prices should have run up rather than down because they were short and had to buy it back. They sold their book to two of the players that had the majority of their positions. When they sold the book, one of them was a big bank, they held their position. They were up $2 billion; the guy sells their position to them, nets zero, it’s between two parties, it doesn’t affect the market at all. Commissioner Monaghan asked what made the price go down. Mr. Lemon responded that fundamentally, there is no demand. Walk outside today and it’s going to be 46◦ low and 70◦ high. We’re looking at one of the colder Septembers in history followed by the previous eight months that were the warmest in 112 years. We have gone from a large demand down to virtually no demand; reserves have gone up; demand is down and supply is up. Technically, the market never should have done what it has done, but it did. Mr. Lemon stated that to answer the question about whether we should be buying $7 gas in February, he did not know what February prices were going to be; $7 for a normal February is a good price. Commissioner Monaghan noted that “puts” are $1.50 which means that most people think prices will drop. Mr. Lemon stated that the price of the “put” in the near months would be more indicative of market movement. He stated that there is a chart showing the time out and the volatility of the market will affect it. He added that he has seen different days where there has been high volatility and the prices changed $0.50 and the price hasn’t moved a lot, but the price of the “put” has because of the volatility in the length. If you are going from July to February, the time element affects that. They put the numbers in, and it is a calculated volatility in time and it comes out with a value. It is something that has been developed over time and all of the option traders use. Commissioner Monaghan reminded Mr. Lemon of an e-mail asking for the cost of the “puts” at $9 or whatever the average is in December and January. He stated that he wanted the cost of “puts” today; the cost of the “put” for what he priced. What the price of the “put” is if he wanted to buy a “put” to cover average cost in December. Mr. Lemon stated that he had a spreadsheet showing the cost of the “put” when he made the hedge. Mr. Lemon stated that he would give Commissioner Monaghan the cost of the “put” today for that pricing. Commissioner Monaghan commended Mr. Lemon for a job well done.

5. Manager Reeves informed the Commissioners of a request from Lander University to provide labor to install 80 banners around campus, as we have done in the past.

6. Manager Reeves noted a request from Commissioner Monaghan to reschedule the October meeting because of a trip with Metro. The Commissioners agreed to reschedule the meeting to Tuesday, October 31, at 10:00 a.m.

7. Commissioner Monaghan inquired if anything had been heard from the Prosecutor’s office. Mr. Reeves stated he had called several times with no response and he would call the Solicitor.

8. Chairman Hancock asked about the statute of limitations on an error in billing and how far you can go back to collect. Mr. Patrick responded that there might be a statute of limitations of three years. This would be if someone sues you, not a matter of doing what is right. You can make a claim for going back farther, but this is called an “affirmative defense” so the defendant has got to plead that and prove that they do not owe it back beyond that point because of being able to show that the claim was due as of such a date, and you did not do anything to protect your rights. He added that to his thinking, they should do what is right. It has to be from the time the claim was due and there might be a question about when it was due, particularly if you billed it wrong. Mr. Patrick stated that the one that is taken advantage of has to claim it; you can ask for it farther back. Chairman Hancock stated that customers that are on a septic tank were billed like they were on a sewer line, and it was more than three years. Mr. Patrick responded that Metro could probably plead the statute of limitations and say they did not have to pay but for three years. He added that you would probably want to look at it from a fairness standpoint; there would not be anything that would keep you from making that repayment.

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