HomeMy Public PortalAbout04-06-2017 4.
MEETING OF RICHMOND COMMON COUNCIL
AS BOARD OF DIRECTORS OF RICHMOND POWER AND LIGHT
April 6, 2017
The Board of Directors of Richmond Power and Light met Thursday,April 6, 2017 in the
conference room at the Service Building. Chairperson Ron Oler called the meeting to order at
6:04 p.m. Member's present was Misty Hollis, Jeffrey Locke, Bruce Wissel, Gary Turner, Clay
Miller, Doug Goss, and Chairman Oler. Board members' Jamie Lopeman and Kelley Cruse-
Nicholson were absent. Also attending from Richmond Power and Light were Rich Cody and
General Manager Randy Baker. Otto"Buzz"Krohn, from O.W Krohn&Associates,Mike
Cracraft, from Ice Miller, AJ Sickmann, City Attorney,Rachel Sheeley from the Palladium and
Rebecca LuVere from WKBV/WFMG Radio were also in attendance.
1. Telecommunications discussion.
General Manager Randy Baker introduced Mr. Krohn to the Board of Directors. At that
time, Mr. Krohn made a presentation to the board titled"Beyond the Balance Sheet".
In his presentation,Mr. Krohn pointed out that the best means of assessing the value that
Parallax Systems adds to the city are: Asset valuation—balance sheet; Business valuation—
balance sheet, income statement, cash flow;Value to RP&L and City(annual savings)—offers
significant"below market"user rates; Savings to residents and business taxpayers—customer
savings are not reflected on financials and off the balance sheet,the value added is significant.
Mr. Krohn told the Board that Parallax's real value to the City goes beyond the balance sheet.
He also pointed out that larger users' of Parallax benefit from below market user rates, an
estimated$886,366 for the top ten users. Mr. Krohn also pointed out that residential and small
customers also pay less than prevailing market rates with totals approximately at a 1 million
dollar annual benefit.
Mr. Krohn told the Board that the long term debt(loan from RP&L to Parallax) at the end of
2016 was $3.2 million, which includes accrued interest of$590K. He then proposed to the
Board loan forgiveness from RP&L. It is his opinion that RP&L has a vested interest in
ownership of the fiber system and the new sophisticated electric metering requires fiber. Loan
forgiveness would eliminate any ownership issues with respect to the fiber network and would
clean up the inter-fund loan that distorts the real financial benefits of Parallax. Replacement
costs of the fiber exceeds the loan payable,therefore, in consideration of the actual financial
benefits derived from Parallax, it makes sense to offset the loan and accrued interest from
Parallax by transferring ownership of the fiber system back to RP&L,was his final opinion.
There was discussion as to whether Parallax should remain a division of RP&L or become a
department of RP&L. When Parallax was started, telecommunications were regulated,which
required separate bookkeeping from RP&L. That is now not the case since telecom has been de-
regulated.
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Board member Doug Goss and General Manager Randy Baker said that securing the fiber optic
system is important. Mr. Goss said it's crucial to the infrastructure of the community, city
government, RP&L, and Wayne County's 911 services.
Parallax continues to provide services at a lower cost than its competition,which is a benefit that
doesn't show up on the financial statements. Board President Ron Oler stated that comparatively
RP&L's use of Parallax's fiber optic system as part of its daily operations throughout the city
saves ratepayers about$250,000 when compared to market values. Board member Bruce Wissel
stated that costs 40%below the market are too rich. He suggested bringing Parallax rates to
within 25%of its competitors. Mr. Wissel said more discussion is needed.
Board member Misty Hollis recommended, and other board members agreed,to have further
discussions and reach a decision about Parallax's future by the time RP&L board members
review budgets in the fall.
With no further business to discuss,board member Gary Turner made a motion to
adjourn with Jeffrey Locke seconding the motion. All were in favor and the meeting was
adjourned at 7:25 p.m.
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