HomeMy Public PortalAbout04-05-1993 PROCEEDINGS OF THE COMMON COUNCIL OF THE
CITY OF RICHMOND.INDIANA.SERVING AS A BOARD
JN CHARGE OF THE OPERATION OF THE RICHMOND POWER&LIGHT PLANT
MONDAY.APRIL 5.1993
1 The Common Council of the City of Richmond, Indiana, serving as a Board in charge of the operations of the
2 Richmond Power& Light Plant met in regular session at 7 p.m. Monday, April 5, 1993, in the Municipal Building
3 in said City. Chairperson Brookbank presided with the following Councilmembers in attendance:Elstro, Lundy, ,
4 Donat, Parker, Allen, Dickman and Hutton. McBride was absent. The following business was had to-wit:
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6 APPROVAL OF MINUTES OF MARCH 15.1993
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8 Councilmember Allen moved to approve the minutes of the previous meeting as prepared, seconded by
9 Councilmember Parker and on unanimous voice vote the motion was carried.
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11 APPROVAL OF BILLS. INVESTMENTS AND TRANSFERS
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13 Upon recommendation of the Finance Committee,Councilmember Allen moved to approve the following bills for
14 payment,seconded by Councilmember Dickman and by unanimous voice vote the motion carried.
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16 Bills Already Paid
17 Payroll and Deductions 428,743.11
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20 Investments Purchased From:
21. Cash Operating Fund 2,200,000.00
22 Bond Sinking Fund
23 Utiliy Bond Reserve Fund
24 Depreciation Reserve Fund 5,397,008.32
25 Insurance Reserve Fund
26 Consumer Deposit Fund 102,754.96
27 Cash Reserve Fund 1,363,027.91
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29 Group Insurance Fund
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31 Total Investments 9,062,791.19
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34 Transfer to City in Lieu of Taxes:
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36 Transfer from Cash Operating Fund to;
37 Payroll Deduction Fund
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40 Transfers from Depreciation Reserve to:
41 Cash Operating Fund
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43 Transfers from Consumer Deposit to:
44 Cash Operating Fund
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46 Transfers from Utility Bond Reserve Fund to;
47 Band Sinking Fund
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49 Transfers from Cash Operating:
50 Interest and Bond Principal
51 Bond Sinking Fund
52 Cash Reserve Fund 137,500.00 ,
53 Utility Bond Sinking Fund
54 Depreciation Reserve Fund 91,000.00
55 Insurance Reserve Fund
56 Consumer Deposit Fund
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58 Interest and Bond Principal
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60 End of Month Petty Cash
61 Revenue Bonds
62 Interest Coupons Redeemed
63 Bond Coupons
64 Miscellaneous Bills Already Paid 1,745,180.45
65 Total prepaid invoices 11,465,214.75
Total Bills Not Paid 864.942.61
Grand Total 12,330,157.36
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RP&L Minutes Cont'd .
Aprils, 1993
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2 REMARKS BY CHAIRPERSON
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4 None
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6 UNFINISHED BUSINESS
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8 None
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10 STREET LIGHT COMMITTEE REPORT
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12 None
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14 REPORT BY GENERAL MANAGER
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16 General Manager Irving Huffman noted that Chairperson Brookbank had received,per her request,a copy of RP
17 &L's purchasing policies and procedures. He said several other booklets had been presented to all the Board
18 members in the past week,adding that he thought all of the information requested had been distributed.He said
19 he had also given members a copy of the Indiana Municipal Power Agency's 1992 annual report.
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21 Commenting on the bids received for the 1992 mini-van,Huffman said the specificiations did indicate that RP&L
22 was looking for certain sized tires because a considerable amount of weight is carried in those vehicles.The bid
23 was also to include a rear defogger and an air safety bag on the driver's side. He said the bid from Brookbank
24 Chevrolet did not include a quote on the larger tire size requested,the rear defogger nor the air bag.The bid from
25 Studebaker Buick incuded those items but the bid that met the specification and was the lowest and best at
26 $14,877 was from Fred First Ford with a delivery from six to eight weeks. Huffman recommended the Board
27 accept that bid.Councilmember Parker moved for acceptance,second by Councilmember Hutton and the motion
28 was carried by a unanimous voice vote.
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30 Commenting on the articles in the Palladium-Item in recent weeks,Huffman said he had occasion to go through
31 some old RP&L records along with some old newspaper articles and some of the events being reported today
32 are carbon copies of what appeared in the newspapers in 1944, 1954, 1966 and again in 1980. He said in 1944
33 Councilman George Brehm(check spelling)wanted to seek control of the electric utility,giving it back to the
34 mayor and the Board of Works. However,the remaining members,acting as the RP&L Board,refused to go
35 along with him saying it would once again put the utitily back in the political control of the administration in charge
36 at that time. He added that at the root of these events in the years mentioned above was the desire to control RP
37 &L payments to the City or payments made to some other entity. He said the common thread linking all the
38 newspaper articles was to undermine the ability of the Board and the general manager to successfully manage
39 RP& L.However, he said, past history shows that RP& L is most successful and it has become one of the most
40 recognized and successful owned electric companies in the`country.
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42 Huffman said RP&L is an industry leader not just a follower. He added that it has cared over the years for its
43 ratepayers and intends to keep on caring. But,to do that,he said, it must be a financially healthy utility. He said
44 the depreciation reserves are currently$7.8 million and this fund should actually be higher. Being in a very capital
45 intensive business, he said,when looking at just the upgrading and rebuilding of the Unit No. 1 generator,$3.5
46 million alone was spent for that just a couple of years ago. He said if a blade in a turbine would be lost it would
47 wipe out all the blades down the pathway and the damage itself would have to be repaired.That would be rather
48 lengthy and cost a minimum of$1.5 million.And,although it is insured, RP& L wouldn't have the use of that
49 machine and that loss would cost half a million or a million dollars each month it was down.That is how important
50 it is to have reserves, he said.
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52 He gave another example of how important it is to have reserves. He said when Hill's Pet Products came to
53 Richmond the information given to RP&L was that it was going to have to make an initial investment of more
54 than$3 million just to serve that company's needs.As time went on,however, RP&L was able to get by with
55 about a$1.7 million investment.He pointed out that if you have new industry wanting to come to the community
56 you have to have that money.
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58 He noted that RP&L.and the rate payers of Richmond really cannot solve a lot of the city's financial problems it
59 has today. He said he could understand the employees of the City having a good need for a wage increase and
60 they probably had a good need two years ago,but that is something that RP& L necessarily cannot solve. He
61 said every one million dollars transferred to the City is like a two-and-one-half percent rate increase or a hidden
62 tax passed on to RP&L's rate payers. He added that one half of RP&L's revenue comes from its present
63 industrial customers.As a result,they fund one half of the money transferred to the City and the$1,650,000
64 transferred this year represents a 4.125 percent tax on the electric bill He added that RP&L does owe the City a
65 payment in lieu of taxes and should make a payment to the City in the form of some form of profit.
RP&L Minutes Cont'd
April 5, 1993
Page 3
1 He said the present $1.6 million dollar payment is a rather large payment and he feels it is a reasonable one.
2 However, he added,the public service commissioners themselves, not the staff people,may not agree if RP&L
3 was involved in a full blown rate raise.He said what is transferred to the City has never been established by the
4 public service commissioners themselves. Huffman said if you look across the country,many of the municipal
5 systems will transfer funds to the City and the smaller the system,the higher the amount,with some giving as
6 high as 5 percent of revenue.Systems the size of RP&L will transfer roughly about 3 percent. He added that he
7 realizes that somewhere along the way a decision has to be made by the RP& L Board since it does control the
8 finances of RP&L and what money is transferred to the City. He said if members had any questions or need
9 more information he would be very happy to supply it.
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11 NEW BUSINESS
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13 Chairperson Brookbank reminded Councilmembers of the special meeting at 7 p.m. Monday,April 12,on the
14 cable TV funding, adding that the meeting will be in Council Chambers. Huffman requested that the meeting be
15 held at RP&L because he has a team of people coming in to make presentations and also present the financial
16 package.He added that he would like to do that live so they could field telephone questions. Milligan commented
17 that the chairperson has the prerogative to set the meeting place.After a fair amount of discussion about the
18 meeting place, with comments from Councilmembers Elstro,Allen, Donat, Dickman, Hutton and Lundy,
19 Chairperson Brookbank said she would take the matter under advisement and let them know within the next two
20 days where the meeting will be held.
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22 ADJOURNMENT
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25 There being no further business,on a motion duly made,seconded and passed the meeting was adjourned.
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32 Jane Brookbank,Chairperson
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40 ATTEST:
41 Norma Carnes,City Clerk
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