Cordova Electric Cooperative

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Cordova Electric Cooperative

August 2019

CORDOVA ELECTRIC COOPERATIVE, INC.

REGULAR BOARD MEETING

August 28, 2019

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, Cooper, Faulkner, Johnson, and Ranney. Director Srb was absent. Also present were CEO Koplin, Manager of Administration and Finance Merritt, Manager of Generation and Distribution Newlun, Executive Assistant/HR Bailer (Recorder), and Project and Technology Coordinator Kuntz.

MEMBERSHIP PARTICIPATION

Various CEC members were present for the Crater Lake Water and Power Presentation. No comments/questions were asked at this time. Paul Richards with McMillen Jacobs Associates was also present along with Mort McMillan, who participated via teleconference.

APPROVAL OF AGENDA

Faulkner moved and Cook seconded to approve the Agenda with the addition of an information item regarding the electric vehicle charging stations.

Pegau mentioned Director Srb resigned effective today and moved to amend the Agenda to include another information item to discuss how the Board would like to proceed with filling the vacated Director seat, seconded by Cooper.

Voice vote on the amended agenda: Unanimous. Motion carried.

Voice vote on the main motion: Unanimous. Motion carried.

CRATER LAKE WATER & POWER PROJECT PRESENTATION

Koplin conducted a power point presentation outlining the Crater Lake Water and Power Project to date. A question and answer session followed.

CONSENT AGENDA

Johnson moved and Cooper seconded to approve the consent agenda that includes the following:

  • a) Minutes of July 24, 2019 Board Meeting

Voice vote: Unanimous. Motion carried.

MANAGEMENT REPORTS

CEO REPORTS

CEO Written Report

Humpback Creek Penstock Rehabilitation: The work started and progressed well. I will put in a couple of extra slides on the Crater Lake power point to show you progress so far – work started this weekend.

Crater Lake Update and Go/No Go: The presentation is meant to be a stem-to-stern overview of the project to bring the board up to date.

Crater Lake Full Geotechnical Report: Was posted in drop box for the board.

CTC Collaboration: I am still working on a fiber optic ownership and use agreement with CTC that I hope to meet and discuss this week or next. Regarding CEC interest in their building, we do not have a formal or written agreement in place. I merely expressed positive interest in a shared facility to Manager Beckett when he asked to see if there might be any value to CEC customers.

Interest Rates: Rates have dropped nearly 0.5% in the past few weeks with the 20-year rate is the lowest since we began following it closely in 2011. We may place strategic fixes in the coming weeks.

BESS Update: The Battery Energy Storage Project is nearly complete with commissioning – a replacement fire control panel and battery string replacement are the final tasks. We received another $130,000 in grant reimbursements last week, and more are being submitted for payment.

Power Creek Road Repairs: The Alaska Department of Transportation work is approximately 65% complete and may be completed in mid or late September. We will monitor it for performance and hope that it will work well.

Tariff Revisions: We hope to prepare the billing error revisions for public hearing and adoption in September or October.

Orca Boiler Update: Equipment and contractors are in Cordova this week to install the electrical boiler at Orca Diesel Plant.

RADIANCE Project Update: There will be several meetings in September. On September 9/10, in Cordova, to work through our automation system programming and how we might want to change it for various system problems (tsunami, avalanche, earthquake, etc.). On September 16th and 17th a financial/budget meeting in Cordova to review project expenses to date and remaining project budgets and work plans. The technical interchange meeting (TIM) will be later that week, September 19th and 20th in Albuquerque at Sandia National Laboratories for system digital blueprint and modelling demonstrations. I will stay on through the 23rd for the Energy Storage Peer Review presentation required of our BESS grant and return home in time for the September 25th board meeting.

CEC HQ Building Update: We have an asbestos inspection this week and hope to complete water line repairs shortly thereafter. The elevator shaft has deteriorated and will need some work, including removal of the elevator motor and other remnants, and construction of new walls. The Native Village of Eyak has indicated interest in buying the building for a reduced price.

Lake Avenue Outage: Unconventional circuit design and mislabeled wiring contributed to a longer than expected outage. We updated the labels and maps and assessed the response for improvement.

CEO Verbal Report

Koplin answered questions from the Board regarding his report and gave an update on the headquarters building.

ADMINISTRATIVE REPORTS.

Merritt reviewed the following reports, explained her new suggested report formats, and answered questions.

  • Financial Reports 7/31/19 – Handout
  • Revenue Report for July
  • Cash Flow Analysis for July
  • Cash Disbursements for July
  • Purchase Order Report
  • Generation and Sales Statistics

NEW BUSINESS

Resolution 19-02 – Adopting the CEC Equity Management Plan – Cooper moved and Cook seconded to adopt Resolution 19-02 as written.

A RESOLUTION ADOPTING THE CORDOVA ELECTRIC COOPERATIVE

EQUITY MANAGEMENT PLAN

WHEREAS, Cordova Electric Cooperative is a non-profit electric utility organized under AS 10.25 to provide central station electric service to CEC member-owners and guided by Article 7 of the Cooperative’s Bylaws; and

WHEREAS, the Cordova Electric Cooperative Board of Directors is committed to maintaining the financial health of the Cooperative by setting rates sufficient to generate operating margins and build member equity; and

WHEREAS, operating margins should be adequate to fund operations, service debt, build or sustain equity and to drive a sustainable Capital Credit Retirement Program; and

WHEREAS, the Board of Directors of Cordova Electric Cooperative, Inc. desires to develop and sustain a Capital Credit Retirement Program and recognizes the inherent risk of reliance on seasonal revenues to maintain financial health; and

WHEREAS, an Equity Management Plan is the Cooperative’s primary tool to maintain financial strength, meet debt covenants, fund construction and operations and retire capital credits; and

WHEREAS, the Board of Directors of Cordova Electric Cooperative, Inc. desires to adopt a formal policy statement setting forth the major elements of an Equity Management Plan,

NOW THEREFORE BE IT RESOLVED, that The Equity Management Plan shall include the following elements:

  • Comply with all lender-required loan covenants and assurances
  • Maintain an equity range of 40-60%
  • Achieve operating margins of $250,000
  • Maintain cash and cash equivalents of $500,000 and line of credit of $2,000,000
  • Sustain a capital credits program
  • Maintain a diversified portfolio of long-term debt structure
  • Retire long term debt in consideration of the life of the asset

BE IT FURTHER RESOLVED, that the Equity Management Plan policy statement shall be reviewed annually by the Board of Directors of Cordova Electric Cooperative, Inc.

Discussion. Roll call vote: Unanimous. Motion carried.

Insurance Renewals – Johnson moved and Cooper seconded to approve the purchase of insurance coverage from ARECA Insurance Exchange and Parker, Smith & Feek for a total amount not to exceed $343,062.00. Discussion. Voice vote: Unanimous. Motion carried.

Resolution 19-01 – CoBank Loan – Cooper moved and Johnson seconded to approve Resolution 19-01 for approval of a $4,000,000 Multiple Term Loan #22020116T09 from CoBank, ACB, as written.

APPROVAL OF $4,000,000.00 MULTIPLE TERM LOAN #22020116T09

FROM COBANK, ACB

WHEREAS, Cordova Electric Cooperative, Inc., (“CEC”) is authorized by statute and its Articles of Incorporation to borrow money for the operation of the business, and to mortgage or otherwise encumber CEC property as security for borrowed funds;

WHEREAS, CEC is seeking a loan of up to four million dollars ($4,000,000) from CoBank, ACB (“CoBank”) under the terms of the July 25, 2018 Credit Agreement with CoBank in order to finance upcoming capital expenditures related to additional generation and maintenance projects;

WHEREAS, the CEC Board of Directors approved Resolution 18-02 on July 25, 2018, to authorize such loans and to expedite the loan process by authorizing certain CEC managerial personnel to execute loan documents on behalf of CEC;

NOW, THEREFORE, BE IT RESOLVED, that pursuant to CEC Resolution 18-02, the CEC Board of Directors hereby approves CEC borrowing up to four million dollars ($4,000,000) from CoBank in order to finance upcoming capital expenditures related to additional generation and maintenance projects (the ”Loan”), and approves its Chief Executive Officer, Clay Koplin, entering into all such loan documents on behalf of CEC that are necessary, required, and authorized under CEC Resolution 18-02 to fund and complete the Loan.

Pegau moved and Johnson seconded to amend the motion to include all drawdowns from this loan must be approved by the Board of Directors.

Voice vote on the amendment to approve Resolution 19-01 as written with the stipulation that all drawdowns from this loan must be approved by the Board of Directors. Voice vote: Unanimous. Motion carried.

Roll call vote on the original motion: 5-yea, 1-nay (Ranney). Motion carried.

Approval of a $1,000,000 Drawdown From CoBank Multiple Term Loan #22020116T09 – Johnson moved and Cooper seconded to authorize staff to withdraw $1,000,000 from the CoBank Multiple Term Loan #22020116T09. Voice vote: Unanimous. Motion carried.

Resolution 19-03 – Capital Credits – Pegau moved and Cook seconded to approve Resolution 19-03 – Capital Credits, as written for 50% of 1981 and 18% of 2016. Discussion. Pegau moved and Faulkner seconded to postpone the motion on Resolution 19-03 until the Board has a rate discussion. Discussion. Voice vote: Unanimous. Motion carried.

Financial Contribution for City for Second Street Grant Match – Johnson moved and Faulkner seconded to direct CEC staff to draft a letter of support and commitment of not to exceed $150,000 as a grant match for the Second Street renovation. Discussion. Voice vote: Unanimous. Motion carried.

UNFINISHED BUSINESS

Policy 31A – Member Education and Public Relations – Second Reading – Discussion. With the resignation of Director Srb, who was going to review this policy for changes, and no direction from her on edits the Board decided to leave this Policy as is.

Electric Car Charging Stations With Current Water Shortage – Faulkner asked about the charging stations being used during the current water shortage in reference to electric use and charges. Discussion. Board decided with only two electric vehicles currently in town and CEC being the major user of the charging station to keep the charging station available for use.

Director Resignation – Pegau stated with the resignation of Director Srb the Board has options, per the CEC Bylaws, on ways to fill the vacated seat. Discussion. The Board directed Staff to contact Stephen Phillips, who was a nominee at the 2019 Annual Meeting, and ask if he would be willing to fill the vacated seat.

INFORMATION ITEMS

CEO Travel – Noted

Acting CEO – Noted. Memo was included per verbal delegation at July Board meeting.

Policy 9B – Internal Control (Annual Review per Policy) – Discussion.

OTHER ITEMS

Policy Review

  • Policy #37A – Retirement of Patronage Capital – Noted
  • Policy #38D – Comprehensive PCB Policy – Staff will update Policy for next meeting.

PENDING AGENDA

  • Review Board Evaluation Quarterly (January/April/July/October)
  • Customer Appreciation Day – Thursday, August 29, 2019
  • Crater Lake Go / No Go
  • CoBank Sharing Success – September Agenda
  • CFC Director Training, Thursday, November 21, 2019, 1:00-5:00, CEC Boardroom

BOARD PENDING EVENTS CALENDAR

CEC/CTC Customer Appreciation Day is tomorrow from 11:00-2:00 p.m. at the CTC warehouse in front of the Cordova High School.

SUMMARY OF BOARD DIRECTION TO CEO

  • Email Board HBC pictures
  • Email Board the Capital Credit Task Force Report
  • Schedule meeting with new Director to review CLWPP slides and bring up to date on CEC events
  • Update Policy 38D

BOARD COMMENTS

Ranney – No comments

Cook – Attended the APA/ARECA Annual Meeting in Juneau last week where there was a lot of good information and presentations. Cook mentioned the outage, said he was in the CEC office during the outage, and mentioned all the office staff were working together answering phones with good attitudes and smiles while also working with customers coming to the office. Good job staff!

Johnson – Is impressed with the employees and their work during the outage.

Cooper – Appreciates the Crater Lake Water and Power Project (CLWPP) presentation.

Faulkner – Board is good at asking questions, which are important and show we are doing our fiduciary responsibility.

Pegau – Thanks to Director Srb for her service. Pegau likes the new financial report format. Thank you for the CLWPP presentation.

EXECUTIVE SESSION

CEO Contract Renewal (Draft CEO Contract & Educational Agreement handouts) – Pegau moved and Faulkner seconded to go into executive session at 9:00 p.m. to consider matters, the immediate knowledge of which would clearly have an adverse effect on the finances of the cooperative. Staff was excused.

The Board came out of executive session at 9:18 p.m. No action was taken.

The meeting adjourned at 9:19 p.m.

____________________________________

Date Approved Secretary/Treasurer

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