Regular monthly board meetings are open to members. The following Q & A lists member questions of the board during the public comment period and the responses to them in follow up.
May 7, 2019 Meeting (Raber Township Hall)
Q. What is the cost for having staff attend board meetings?
A. Staff that attend the board meetings are salaried, so there is no incremental cost impact to members. Staff’s attendance is at the discretion of the CEO. The number of staff in attendance varies on a month to month basis depending on topics presented at the meeting.
Q. Does the board receive a stipend for committee meetings?
A. As a matter of policy, dating back to the acquisition of Edison Sault Electric in 2010, the board budgeted funds for committee meeting stipends, but an actual payment amount for attending a committee meeting was never defined. There have been questions as to a $100 stipend that has been or could be paid out for committee meetings. Staff cannot identify where any director has been paid $100 for a committee meeting. As a point of clarification, staff reviewed expenditures since the two organizations merged and could only find a few examples where directors were paid the special meeting rate for executive committee meetings which were human resources related. Since 2018 there have only been two committee meetings and no directors were compensated.
In August 2018 a motion was approved by the board of directors that effective January 2019, director pay will drop from $800 to $600 for regular monthly meetings and from $400 to $200 for special meetings. The chairperson receives an additional $200 for regular board meetings only.
Q. What is the cost to the membership for board travel? Do directors have cost limits for meals?
A. Each year the board approves a budget. In 2016, the amount for board other meetings (training) was $64,298. In 2017, for the same account, the amount spent was $44,445; in 2018, it was $72,068. The budgeted amount for 2019 is $44,500.
If a director has a spouse or a guest accompany him/her on training, it is the director’s responsibility to cover all costs associated with bringing a guest.
The directors do not have a limit for what they can spend on meals. However, the directors must provide detailed receipts for what was purchased. Any alcoholic beverage purchases are considered non-reimbursable expenses.
Q. Does a reduction in the amount spent on tree trimming affect the reliability of the system?
A. Trees have the biggest impact on the reliability of our system as measured by the number and length of service interruptions our members experience. SAIDI is one common metric used to measure the impact of service interruptions and is the total number of minutes of service interruptions experienced by all members on an annual basis divided by the number of members. The table below shows the amount spent on tree trimming and the cooperative’s SAIDI metrics from 2012 through 2018.
Year Expenditures SAIDI
2018 $1,226,922 189.50
2017 $1,092,577 178.50
2016 $1,118,811 324.20
2015 $ 700,923 197.10
2014 $1,528,713 229.70
2013 $1,639,516 239.40
2012 $1,560,000 269.57
Because there is a lagging effect (lack of tree trimming one year has the potential to increase the number and duration of service interruptions in subsequent years), an increase in the SAIDI usually occurs a year or two after a significant decrease in the amount spent on tree trimming. Cloverland has a benchmark SAIDI of 207 minutes and because of decreased spending in some historical years and a higher SAIDI than benchmark, the board authorized an increase in the 2019 tree trimming budget.
Q. Why did the board vote to change the district lines against the recommendation of staff and why did they go into effect immediately in 2019?
A. At the November 2018 regular meeting, the Cloverland Board reviewed the membership districts and the number of members in each district. According to the Cloverland By-laws, a review of the membership districts is to be performed annually, but it had not been done for several years. The board discussed the rationale for including Moran township in District C since many of the members residing there have more of a connection to the St. Ignace area. The board reviewed the number of members included in each district if Moran township was moved to District A and Chippewa and Hulbert townships where moved to District C (from District B). Given that this change did not result in any district having a significant disparity in the number of members, the board voted to amend the districts to allow for Moran township to be included in the district.
Membership Districts (from Cloverland’s Bylaws)
(a) Members shall be grouped into three membership districts based upon location of receipt of electric service.
(b) The Board shall establish membership districts which shall contain approximately the same number of members. Annually, the Board may review the composition of these districts and if it should be found that inequities in representation have developed which can be corrected by a reconstitution of districts, the board shall reconstitute them so that each shall contain approximately the same number of members.
Q. What is the status of the Presque Isle SSR issue?
A. In April 2019 the Presque Isle Power Plant (PIPP) was shut down. Therefore, there will be no further SSR payments for the plant. Cloverland, with other affected entities, have pursued this issue to the U.S. Supreme Court. We are waiting for the U.S. Supreme Court to determine if they will take up the case.
Also, in April 2019 WE Energies filed with the Federal Energy Regulatory Commission to recover the remaining book value of the PIPP and a return on the investment. Cloverland filed a motion to intervene and protest in the case. Regardless of the outcome, any charges for the PIPP plant will be included in the normal capacity rate we pay under the power contract with WE Energies.
Q. What is the purpose of the diesel generators in DeTour if they are not operating to provide power during outages?
A. The current condition of the DeTour facility does not allow Cloverland to operate it as it may have in the past. Significant upgrades are required to return the facility to historic functionality. However, even after the condition of the facility is improved, Cloverland may not be able to operate the facility during outage events as it must consider the safety of its line crews and the specific areas affected by the outage before operating the facility.
Q. When can we expect to receive a distribution of allocated capital credits?
A. In 2018 the Cloverland Board voted unanimously to refrain from making a capital credit distribution because the equity ratio (a measurement of Cloverland’s financial health) was below the minimum threshold of 20% as required by its lenders to be able to make distributions without special permission. Cloverland’s Board has been working to improve the equity ratio to be able to consistently distribute capital credits, but this may take several years. From 2016 through 2018, the equity ratio has improved from 16.30% to 19.98%.
Q. Why doesn’t Cloverland generate more of its energy from renewable resources?
A. In 2018 Michigan required a utility to generate or purchase a minimum of 10% of its retail sales from renewable sources. From an energy requirements perspective, Cloverland generated or purchased almost 50% of its energy needs from renewable resources with over 48.2% from local hydroelectric generation facilities. Admittedly, Cloverland does not generate or purchase much by way of wind and solar generation. Through a purchased power agreement with WE Energies (former parent company of Edison Sault) executed in 2010, Cloverland is prohibited from purchasing capacity and/or energy from any other provider unless WE Energies allows the purchase. While Cloverland is actively looking for options under this contract to enhance the reliability of our service territory and reduce costs, adding wind and solar generation likely won’t be a viable option until the contract terminates in 2029.
Q. Can you provide additional information on the product Cloverland will be using for vegetation management in 2019?
A. Additional information can be found by clicking on this link: https://cloverland.com/reclearing-methods/