CORDOVA ELECTRIC COOPERATIVE, INC.
REGULAR BOARD MEETING
June 28, 2017
The Regular Meeting of the Board of Directors of Cordova Electric Cooperative, Inc. was called to order at 6:00 p.m. by Chairman Pegau. Members present were Cook, Wooden, Faulkner, Little, and Blackadar. Cooper participated via teleconference. Also present were CEO Koplin, Manager of Administration and Finance Merritt, Manager of Generation and Distribution Newlun, Executive Assistant/HR Coordinator Bailer (Recorder), and Project and Technology Coordinator Kuntz. Andy Leman, Counsel, was also present.
APPROVAL OF AGENDA
It was moved by Faulkner and seconded by Wooden to approve the agenda as presented. Pegau moved and Little seconded to amend the agenda to add Item “I” under New Business for Resolution 17-01 – Change of Registered Agent. Pegau and Leman explained the reason for this Resolution.
Voice vote on the amended Agenda: Unanimous. Motion carried.
Voice vote on the main motion: Unanimous. Motion carried.
LEGAL RESPONSIBILITIES OF DIRECTORS TRAINING by Andy Leman, Counsel, with Kemppel, Huffman & Ellis. Leman conducted training for the Board on the Legal Responsibilities of Directors. He discussed Alaska Statute, statutory duties, fiduciary duties, and conflicts of interest in regard to Directors. Discussions ensued during the training on the various topics.
It was moved by Faulkner and seconded by Wooden to approve the consent agenda that includes the following:
- Minutes of May 24, 2017 Board Meeting
Voice vote: Unanimous. Motion carried.
CEO Written Report
H&K, CTC, and CEC Lease Agreement: I met with John Harvill last week, and we agreed that we should just work on addressing the CEC-H&K agreement, a $1 a year annual lease in exchange for general liability coverage and access to power lines and meters serving customers beyond H&K property boundaries. I will add verbally to this report and seek Board concurrence with the path forward.
Airport Facilities Relocation: The relocation work, both reimbursable by the State/FAA and the upgrade portion of equipment replacement are complete. We met with State Department of Transportation (ADOT) engineers last week to discuss design of culvert replacements at Fleming Spit for construction next summer. This will also be reimbursable relocation (replacement) of CEC facilities. That feeder to Humpback Creek is our #1 priority for replacement, so the timing is fortuitous.
COGUA (Canadian Off Grid Utility Association) Conference Accounting: The Canadian Off Grid Utility Association Meeting was a success, with good attendance and excellent feedback from those attendees. CEC developed a new network from which we can share experiences and practices, and were introduced to new technologies that offer promise for reducing diesel fuel use. We are very interested in the potential of variable speed generation and will be presenting this technology to the Board as we become more familiar with it. The conference proceeds were more than adequate to cover the conference expenses. CEC’s primary contribution will be an unreimbursed portion of staff time.
Website Updates: The new CEC Website has launched at www.cordovaelectric.com
Crater Lake Update: We are proceeding with development of a geotechnical assessment plan, for a not to exceed amount of $20,000. The plan will be used as the basis for bidding out geotechnical assessment work, and for applying for the Army Corp Permits which are necessary for federal grant and loan applications. There is an action item on the agenda for hydrology work, which will cover the 2017 work from the remnants of the budgeted Power Creek Instream Flow hydrology which has a $9,000 balance, and the Snyder Falls Creek hydrology which we expect will only consume $1,000 of the $5,000 budget.
2017 Operating Plan Review: I have attached an updated operating plan summary of progress and changes to date; we are mid-year now. Some of the key highlights:
Deferred: We won’t have the resources or time for Power Creek Penstock coating repairs or for installation of Electric and Fuel oil boilers at the Orca Plant. This is partly due to new projects or opportunities competing for time and resources:
- Unit 4 Fairbanks-Morse Diesel has a cracked cylinder and estimated repairs will be $100,000
- The Line Crew had an Airport line relocation surprise us – reimbursable work
- Communications failed at both hydro’s last week, we are evaluating CEC-owned fiber
- We’re evaluating precise water measuring at hydro’s to improve efficiency
- We are evaluating variable-speed generators, they may be an alternative to grid batteries
I also added brief sections on Crater Lake current status, fundraising, etc. and Energy Storage status.
OPERATIONS REPORT APRIL – June 2017
ORCA Power Plant
- Replaced Orca Plant PLCs and upgraded PLC communications
- Shoreside replaced our main fuel transfer shut-off valve, the existing valve was not rated
- Evaluating a “cold stitch” temporary repair for Unit #4 diesel – Fairbanks Morse
Power Creek Hydro Plant
- Hydraulics motors (VFDs) are being rewired for automatic reboots to reduce failures
- Battery bank at forebay has been replaced, new electric sluice gate was installed
- Communications failed for nearly a week – we are assessing CEC fiber and CTC microwave
Humpback Creek Hydro Plant
- Fiber optic communications lines to humpback Creek failed, permanent fix under consideration
- New 4-wheeler was ordered
- Crane repairs are well underway
CEC Fleet Vehicles
- Regular maintenance and repairs on units 43 and 10
- Maintenance including weed whacking and outdoor cleanup, light plumbing and electrical
- Completed airport relocation work
- New service to new fill lot by PWSSC
- New services on Whitshed and Cabin Ridge Roads
Electric Energy Storage (EES) Project Update:
Sandia Laboratories has not yet provided the final report on energy storage system optimization.
Power Creek Instream Flow Report:
We are working on a scheme for measuring and logging the flow for 1cfs.
Staff Performance Evaluations:
I have completed two staff evaluations with two scheduled for next week
I have an NWPPA strategic planning meeting in Vancouver July 11th and 12th with no other travel or meetings outside Cordova scheduled for June, July, or August.
CEO Verbal Report
Koplin showed a photo of Unit 4’s cracked cylinder and explained repairing it by “stitching” the crack. Koplin explained “stitching” and mentioned it would cost approximately $100,000 to change one cylinder and $9,000 to stitch one cylinder, which is the direction CEC will go with this cylinder. Discussion.
Koplin mentioned the PCS (Professional Computer Systems) IT Support Service Contract was originally on the Agenda but he removed it because the Purchase Order for this service was for one year, and it was included in the 2017 Budget in the amount of $30,000, however, Bailer explained to him the Board approved this for a six-month period, January – June 2017, at the January 2017 Board Meeting. Discussion. Board asked to have this item placed on the July Agenda.
Koplin mentioned the CEO Evaluation process and the compensate model for management personnel, which is due this year per Policy. Board directed staff to have Intandem, LLC, conduct a CEO competency together with an evaluation questionnaire for the Board.
A discussion ensued regarding the Annual Operating Plan (2017) that was included with the CEO Report, and the suggested deletions/additions to the Plan.
Merritt reviewed the following reports:
- Statement of Operations for May
- Cash Flow Analysis for May
- Revenue Report for May
- Cash Disbursements for May
- Bankcard Services Summary of Charge Statement for 5/17/17
- Generation and Sales Statistics
Hydrologist Agreement with Alaska Hydroscience NTE $29,600 for both 2017 and 2018 – Faulkner moved and Wooden seconded to approve the Alaska Hydroscience hydrology contract for a not to exceed amount of $29,600. Discussion on moving ahead with hydrology when the Geotechnical Assessment has not been completed. Voice vote: 6 yea – 1 nay (Blackadar). Motion carried
Purchase Order #1967 to Reluctant Fisherman for $21,480 (COGUA Conference) – Blackadar moved and Faulkner seconded to approve Purchase Order #1967 to the Reluctant Fisherman Inn for $21,480. It was noted this will be reimbursed to CEC from the COGUA account. Voice vote: Unanimous. Motion carried.
Purchase Order #1968 to Alaska Power Association for $10,836.06 (COGUA) – Blackadar moved and Wooden seconded to approve Purchase Order #1968 to Alaska Power Association for $10,836.06. It was noted this will be reimbursed to CEC from the COGUA account. Voice vote: Unanimous. Motion carried.
Appoint CEC Director to Alaska Insurance Exchange Board of Trustees. Review appointment of APA Board of Trustees and ACRE/CARE Committee – Cook, who has been on this Board in the past, explained the duties and meetings involved in being a Director on this Board. Blackadar nominated Cook as CEC’s representative and Cook accepted. There were no other nominations. Blackadar moved and Faulkner seconded to appoint Cook as the CEC Director to the Alaska Insurance Exchange Board of Trustees. Voice vote: Unanimous. Motion carried.
Resolution 17-05 – Authorizing the Amendment of the Adoption Agreements for the NRECA 401(k) & R&S Plans – Faulkner moved and Wooden seconded to approve Resolution 17-05 authorizing the Amendment of the Adoption Agreements for the NRECA 401(k) & R&S Plans as written.
AUTHORIZING THE AMENDMENT OF THE NRECA 401(k) PENSION PLAN
Adoption Agreement “A” and the RETIREMENT SECURITY PLAN
RUS#: 02030-001; 02030-002
WHEREAS, Cordova Electric Cooperative, Inc. is participating in the NRECA sponsored defined contribution 401(k) Pension Plan (the “401(k) Plan”), and the defined benefit Retirement Security Plan (the “RS Plan”), and;
WHEREAS, the Board of Directors of Cordova Electric Cooperative, Inc. (“the Board”) now desires to amend these plans pursuant to Section 18.02 of the RS Plan document and Section 18.2 of the 401(k) Plan document and does hereby authorize the amendment effective August 1, 2017, by executing the appropriate Adoption Agreements, to exclude part-time and/or seasonal employees who have not completed 1,000 hours within one year of employment service;
BE IT RESOLVED, that the amendment to the RS and 401(k) Plan for each applicable subgroup is as follows:
Excluded Class of Employees:
Cordova Electric Cooperative, Inc. shall amend the plan to exclude an additional classification of Employees from participating in the Plan:
- Part-Time, Temporary and/or Seasonal Employees who have not completed 1,000 hours within One Year of Employment Service.
Notwithstanding the foregoing excluded class, any part-time, seasonal or temporary employee who completes at least 1,000 hours of service in any eligibility computation period will be an eligible employee. All other employees who meet the age and service requirements of the afore-mentioned benefit programs will be eligible to participate.
BE IT FURTHER RESOLVED, that the Board recognizes that, in the event of an audit, the IRS or other regulatory authority may take the position that this job classification may have the effect of improperly excluding employees who have already met the age and service requirements and deem this classification to be discriminatory. The correction, due to an audit, might entail additional contributions, earnings and a penalty fee for which the Cooperative will retain liability.
BE IT FURTHER RESOLVED, that the Board recognizes that certain nondiscrimination tests will be required to be performed with respect to this plan amendment. The Board further recognizes that any corrective action necessitated as a result of annual nondiscrimination testing would likely entail additional contributions for which the Cooperative will retain liability.
All other provisions of both Plans shall remain unchanged.
BE IT FURTHER RESOLVED, that the Board does hereby authorize and direct Clay Koplin, the Chief Executive Officer, to execute all necessary documents and to take any and all further actions necessary to carry out the intentions of the Board as indicated in this resolution.
Roll call vote: Unanimous. Motion carried.
Educational Donation – David Harris, Cordova Tidal Energy Project – Pegau excused himself from this New Business item due to a Conflict of Interest and turned the meeting over to Cook. Cook asked if there were any questions. A discussion ensued. Wooden moved and Little seconded to donate $l,000 to the Prince William Sound Science Center to sponsor David Harris’s Cordova Tidal Energy Analysis Presentation. Voice vote: 6 yea 0 nay. Motion carried. Note: Chairman Pegau did not participate in the discussion or vote.
Cooper left the meeting.
Interest Rates – Koplin showed a power point and explained the history of interest rates on CEC loans through CoBank. Koplin said he is considering fixing some loans to target a low blended rate and asked for Board input. Discussion. Peagu moved and Wooden seconded to direct staff to fix 50% of the fixed rates on CEC’s debt. Discussion. Voice vote: Pegau, Faulkner and Cook – Yea – Little, Blackadar and Wooden – Nay. Motion failed. The Board suggested CEO Koplin fix 50% of the CoBank loans and keep 50% at a variable rate.
CoBank Extension of $2,186,100 Line of Credit / Resolution 17-06 (attached) – Pegau moved and Wooden seconded to approve Resolution 17-06 for an extension of Cordova Electric Cooperative’s Line of Credit from CoBank in the amount of $2,186,100. Discussion. Koplin explained CoBank allows extensions four times and CEC is at the limit, which requires a new Resolution and paperwork for CoBank. Roll call vote: 6 yea – 0 nay. Motion carried.
Resolution 17-07 – Change of Registered Agent – Leman said the change of registered agent is to stay in compliance with the State of Alaska in having a registered agent that is an individual resident and not an entity. Leman said the registered agent was K, H & G, Inc. Service Company, Incorporated, an entity, and Resolution 17-07 changes that to John Andrew Leman, General Counsel for the Cooperative at Kemppel, Huffman & Ellis, P.C. to be engaged to serve as CEC’s resident agent. Pegau moved and Faulkner seconded to approve Resolution 17-07 as written.
CHANGE OF REGISTERED AGENT
WHEREAS, the Board of Directors of Cordova Electric Cooperative, Inc., (“the Cooperative”) previously engaged and authorized the following corporation to serve as its registered agent in the State of Alaska:
K, H, & G, Inc. Service Company, Incorporated
WHEREAS the Board of Directors of the Cooperative has been informed by the State of Alaska that the Cooperative’s registered agent must be an individual person in order to comply with A.S. 10.25.460; and
WHEREAS the Board of Directors of the Cooperative is aware that the State of Alaska incorrectly lists the Cooperative’s registered office as 420 L St., Ste. 402, Anchorage, AK 99501, instead of 255 E. Fireweed Lane, Suite 200, Anchorage, AK 99503;
IT IS THEREFORE RESOLVED, that John Andrew Leman, General Counsel for the Cooperative at Kemppel, Huffman & Ellis, P.C. be engaged to serve as the Cooperative’s resident agent;
FURTHER RESOLVED that Cooperative’s registered office be changed to the following:
255 E. Fireweed Lane, Suite 200
Anchorage, AK 99503
FURTHER RESOLVED that pursuant to the above-referenced engagement, John Andrew Leman, Attorney at Kemppel, Huffman & Ellis, P.C. hereby be authorized to accept on behalf of this Cooperative any legal process, orders, demands, notices and other legal documents that may be served upon the Cooperative.
Roll call vote: Unanimous. Motion carried.
Alaska Power Association Annual Meeting – Kodiak, September 12-15, 2017 – Faulkner moved and Wooden seconded to approve authorization for one Board Director to attend the Alaska Power Association Annual Meeting in Kodiak in September 2017. Voice vote: Unanimous. Motion carried.
CEO Travel – Koplin mentioned he would be attending the NWPPA Board of Trustees meeting in Vancouver BC in September.
Board Training – Credentialed Cooperative Director and Leadership Certificate Courses – Board discussed training options and directed staff to work on scheduling training for two Credentialed Cooperative Director’s Certificate Courses for November 6, 7, and 8, 2017.
Customer Appreciation Day – Thursday, August 10, 2017, 11:00 – 2:00 p.m. – Noted
- Policy #50B – Request for Cooperative Information
- Policy #51E – Contributions and Community Participation
- Board Site Visits and Infrastructure Assessment
- Revenue Requirements Study – October
- CEC Scholarships – discussion
- Set Board Performance Elements – evaluation process
- Capital Credits – September (Budget prep for 2018)
BOARD PENDING EVENTS CALENDAR
SUMMARY OF BOARD DIRECTION TO CEO
- Set interest rates
- Add to July Agenda the PCS IT Contract for July-December 2017
- Intandem LLC to conduct a CEO evaluation questionnaire
- Staff to schedule Credentialed Cooperative Directors training for November 6-8, 2017
Wooded thanked Leman for the training saying it was a good refresher. Wooden said there was good discussion tonight and it was a great meeting.
Little said there was good discussion tonight and thanked Leman for his training presentation.
Cook thanked Leman, staff, and the Board.
Faulkner thanked Leman and staff. She thanked Koplin and said to keep up the good work.
Pegau thanked Leman and the Board.
Faulkner moved and Wooden seconded to adjourn at 9:25 p.m.