January 2023 Board Meeting Minutes

MOUNTAIN PARKS ELECTRIC, INC

Regular Meeting of the Board of Directors

Granby, Colorado

January 12th, 2023

8:00 A.M.

Attendance

Present: Liz McIntyre, Kristen Taddonio, Mark Volt, Justin Fosha, Mark Johnston, Adam Paulson, Rob Taylor, Adam White, Angie Wallace, Emily Meeks and Attorney Levi Williamson attended in person. Cray Healy, Virginia Harman, and Carl Trick attended remotely by video or telephone.

Call to Order

President Liz McIntyre called the meeting to order at 8:00 a.m.

Determination of Quorum

A quorum was declared.

Minutes

The Board reviewed minutes from the December 8, 2022, meeting.

MOTION: It was properly moved, seconded, and carried to approve the minutes for the December 8, 2022, board meeting as presented.

Attorney Summary Fees Report

The Board reviewed Attorney Williamson’s fees summary report for December 2022.

Manager’s Report

General Manager Johnston presented the Manager’s Report.

Johnston reported that Cloud Break Energy is ready to begin requesting permits for the community solar project. Cloud Break is sticking to its original price. Johnston and Attorney Williamson will work on the PPA with Cloud Break.

Johnston reported on the status of various FERC matters. He reported on pleadings filed by Tri-State, United Power and others in the CTP matter. FERC has not yet ruled on the filings. In the BDP matter, FERC recently rejected the proposed settlement because it was contested. The proceeding was remanded for a hearing before an ALJ. The hearing is scheduled for October 24, 2023 and the initial decision of the ALJ is due in March 2024. The pre-hearing scheduling conference is set for Tuesday January 31, 2023. Tri-State invited MPEI to join a motion to request that FERC reconsider its order rejecting the BDP settlement. Johnston discussed the motion with Tri-State. Johnston believes it is unlikely that FERC will grant the request, but he will review Tri-State’s motion and then determine whether to join the motion.

Johnston reported on the status of FEMA reimbursements. Through December, MPEI has received $2.75 million from FEMA for expenses incurred related to the 2020 East Troublesome and other fires. MPEI has applied for an additional $1.3 million and will request additional reimbursement as costs are incurred. MPEI will request more funds to assist with the re-build of the electricity distribution system in the Trail Creek area.

General Manager Johnston reported on the status of potential leases of MPEI’s fiber backbone.

Johnston introduced MPEI’s new chief financial officer, Emily Meeks.

Tri-State retired $282,520 in capital credits to MPEI. MPEI completed the sale of the Winter Park property over the holidays. MPEI will need to discuss use of the sale proceeds with MPEI’s lenders.

Adam White presented the Safety Report. There were no employee accidents incidents, near misses or damage reports. White reported on vehicle accidents involving MPEI’s poles. MPEI performed very well on the 2022 RESAP evaluation. White reviewed MPEI’s 2023 Safety Improvement Plan.

Discussion & Action Items

Policy C-7 Member Customer Service

Johnston presented a revised Policy C-7, Member Customer Service.

MOTION: It was properly moved, seconded, and carried to approve Policy C-7 as presented.

Policy C-8 Member Privacy and Confidentiality

Johnston presented a revised Policy C-8, Member Privacy and Confidentiality.

MOTION: It was properly moved, seconded, and carried to approve Policy C-8 as presented.

Kremmling Robotics Sponsorship Request

The West Grand High School robotics team asked for financial support for the team’s activities but did not request an amount.

MOTION: It was properly moved, seconded, and carried to donate $500.00 to the West Grand High School robotics team.

The Board discussed re-directing small dollar requests to the Charitable Fund Board, to which the MPEI Board gives approximately $20,000 per year from the Education Fund to administer. The small requests may also go to the General Manger, who has approximately $15,000 per year to distribute.

Tri-State Rate Design Committee

President McIntyre reported on her attendance at the meeting of the Tri-State Rate Design Committee. Tri-State staff prepared two options, a formula rate and a stated rate. The committee also discussed other types of rate designs. The Tri-State staff recommended the formula rate, and the rate design committee will vote on it February 9th. The Tri-State Board will then vote on the rate in March. McIntyre reviewed the major components of the proposed formula rate. The MPEI Board discussed the implications of the change in Tri-State rate design. Formula rates mean that power costs vary depending on a formula that passes through variable costs, such as fuel. This generally shifts risks to the distribution co-op. Formula rates are expected to make it easier for Tri-State to cover its costs. However, if Tri-State goes to a formula rate, it would make it harder for MPEI to predict costs and revenue needs. The MPEI Board also discussed the implications of Tri-State not using contract termination payments from exiting members to reduce debt, which impacts remaining members. The MPEI staff and Board have discussed the implications of changes in rates, including the possibility that MPEI may need to consider developing a formula rate too. It is likely that the rate Tri-State files will be challenged at FERC.

President McIntyre recessed the meeting at 9:32 a.m. and reconvened at 9:46 a.m.

Power Supply

This discussion action item will be discussed in executive session.

New General Manager

The Board welcomed MPEI’s next General Manager, Virginia Harman, and thanked Mark Johnston for his service. Harman is listening to the Board meeting this month via video conference.

District 5 Vacancy

District 5 Director Jeff Hauck sold his home and provided notice that he is no longer eligible to serve as a board member. Therefore, the Board will appoint a member to fill the vacancy for the unexpired portion of Hauck’s term. The vacancy is being advertised. Interested candidates should contact MPEI to express interest by January 27th.

MOTION: It was properly moved, seconded, and carried to establish a committee of the Board of Directors consisting of the MPEI President, Vice President, and Jeff Hauck. The committee is authorized to identify candidates for the vacancy who will be interviewed by the full MPEI Board. Carl Trick voted no.

MOTION: It was properly moved, seconded, and carried to direct the committee to provide the full Board with the names and letters of interest for all interested members. The full Board will select the candidates to interview for the vacancy.

East Grand School District Electric Bus request

President McIntyre presented a donation request from the East Grand School District for the purchase of an electric bus.

East Grand School District was awarded grant funds to purchase electric buses, but the grants do not cover the full cost. The school requested that MPEI help to cover the shortfall in the cost of buses and electric upgrades to install the chargers. McIntyre estimates that the shortfall is $300,000-$350,000. MPEI donated $137,000 to West Grand School District for an electric bus.

MOTION: Kristen Taddonio moved to donate $137,000 to East Grand School District for electric school buses and electric upgrades, and an additional $63,000 contingent on the school providing or obtaining $63,000 in matching funds, for a total MPEI contribution of up to $200,000. Carl Trick seconded.

In discussion, Justin Fosha inquired about what shortfall East Grand was facing and clarified cost estimates. Cray Healey suggested $150,000 and $50,000 to modify for inflation.

MOTION: It was properly moved, seconded, and carried to amend the motion to provide $150,000 for electric school buses and electric upgrades contingent on the school agreeing to energy management, and an additional $50,000 contingent on the school providing or obtaining $50,000 in matching funds, for a total MPEI contribution of up to $200,000.

The motion, as amended, was put to a vote and passed.

Interim CREA Representative

Jeff Hauck was MPEI’s representative on the CREA Board of Directors. Cray Healey is the alternate.

MOTION: It was properly moved, seconded, and carried to appoint Cray Healey as MPEI’s representative on the CREA Board of Directors and Justin Fosha as the alternate.

Rural Energy Savings Program Loan

General Manager Johnston and Attorney Williamson reported that, in order to satisfy its current lenders’ requirements, MPEI must either terminate its RESP loan or amend the loan documents. MPEI has not drawn on the RESP loan. Some Board members expressed hesitation to walk away from 0% interest loan. The Board asked Johnston and Williamson to investigate the requirements necessary to keep the loan.

Trail Creek Rebuild

General Manager Johnston presented the low bid from Altitude Energy, LLC for the Trail Creek rebuild project.

MOTION: It was properly moved, seconded, and carried to approve the contract for the Trail Creek fire reconstruction project to Altitude Energy LLC, contingent upon legal review.

Operations and Engineering Report

Adam Paulson presented the Operations and Engineering Report. Construction season is slowing down. Line crews dealt with some difficult pole change outs in extremely cold conditions due to traffic collisions in December. The Highway 125 rebuild project is 95% complete. It is likely to be completed in spring 2023. The Ford F-150 lightning crew truck (an electric vehicle) was delivered and is available. The employees think it is performing well. The bucket truck was fixed in December. Independent Contractor, ACRT, is now helping MPEI with vegetation management. ACRT helps with services such as obtaining permission from landowners (so tree trimmer contractors can go on properties for instance), conducting a system wide tree audit, implementing a digital dashboard for tracking work, and generally modernizing MPEI’s vegetation management.

Finance Report

General Manager Johnston presented the finance report through November 2022. Revenues and expenses are above budget. Margins are 8.28% of revenue, which is better than budget. Cash balance remains good. Director Kristen Taddonio suggested that MPEI start tracking peak kilowatt use in addition to kilowatt-hour use by customer category in MPEI’s financial reports to assist with preparations for a cost-of-service study.

IT report

Joe Palmer presented the IT report. He reported on the status of the fiber backbone project. There were no questions.

Human Resources & Administration Report

Angie Wallace presented the Human Resources and Administration Report. MPEI is working with a recruiter to help with difficult to fill positions, such as engineering. There were no questions.

Communications and Member Relations Report

Rob Taylor presented the Communications and Member Relations Report. Preparations are underway for the 2023 MPEI annual meeting and elections for District 1, Fraser and part of Winter Park east of Highway 40, and District 7, Jackson county. MPEI announced no rate increase in 2023, but MPEI explained in the February CCL magazine that a rate increase may be necessary if Tri-State increases rates. MPEI staff has been participating in school events to promote the MPEI scholarship programs, including scholarships for both colleges and trade schools. Taylor is considering a program to take the new electric truck to MPEI’s key accounts that own fleets. Director Trick noted that there were comments on the MPEI survey from members that want to utilize the Electrify Everything program to install heat pumps but cannot find an installer. Trick asked if MPEI is any closer to meeting that need. Mark Johnston reported that MPEI is providing referrals and training for local installers but does not plan to install heat pumps. Cray Healy reported that he received good feedback after the December meeting. Kristen Taddonio asked if Winter Park Resort installed EV charges yet. Johnston reported that they were installed in the parking garage and one of the parking lots.

Bills for Payment

The Board reviewed bills for payment in December.

Board Open Forum and Reports

Mark Volt will attend the Western United meeting at the end of the month.

Carl Trick reported on his attendance at the meeting of the Tri-State Board of Directors. Tri-State had a short meeting with no committee meetings. There will be a meeting at Devil’s Thumb Ranch with Chris Hansen about RTO legislation. Duane Highley will be there along with other CEOs. There is a Tri-State CEO meeting next week at Tri-State’s headquarters.

Liz McIntyre encouraged Directors to attend the strategic planning course at the upcoming February CREA meeting.

Kristen Taddonio reported that USDA is holding a round table listening session for cooperative directors on January 26th about how to spend the funds allocated to USDA. Taddonio encouraged the Directors to attend.

New Business

Liz McIntyre asked the Directors to think about how to get the Driver’s Education program started again.

Executive Session

MOTION: It was properly moved, seconded, and carried to go into Executive Session for consideration of attorney fee agreement, personnel matters, including review of General Manager Johnston and hiring of the next General Manager, power supply, and litigation. Director Carl Trick was present for all matters except the portion regarding power supply. The remaining Directors were present for all of the executive session. Attorney Williamson was present for the portion of executive session regarding his fee agreement, hiring of the next General Manager, power supply, and litigation matters. He left the meeting and was not present for the discussion regarding Johnston’s review. General Manager Johnston attended for all matters except the portion regarding his review. Virginia Harman attended only the portion regarding power supply.

MOTION: It was properly moved, seconded, and carried to exit executive session.

Carl Trick entered the meeting via telephone.

MOTION: It was properly moved and seconded to provide Tri-State with notice of MPEI’s intent to withdraw and to authorize General Manager Johnston to sign the notice. Director Carl Trick asked why the Directors want to withdraw from Tri-State. General Manger Johnston summarized the reasons to withdraw from Tri-State. The motion passed, with Director Trick voting no.

Virginia Harman left the meeting.

MOTION: It was properly moved, seconded, and carried to go into Executive Session for consideration of personnel matters, including review of General Manager Johnston and hiring of the next General Manager, power supply, and litigation. All Directors were present. Attorney Williamson was present for the portion of executive session regarding his fee agreement, hiring of the next General Manager, power supply, and litigation matters. He left the meeting and was not present for the discussion regarding Johnston’s review. General Manager Johnston attended for all matters except the portion regarding his review.