Dec. 18, 2009

The LES Administrative Board held its regular monthly meeting Dec. 18, 2009, at the Lincoln Electric Building. Items from the meeting, as well as other pertinent information, include:

Board approves new Vision, Mission statements

New Vision and Mission statements (above) for Lincoln Electric System (LES) were approved by the Administrative Board at its monthly meeting Friday (12/17) that resulted from the collaboration of Board and employees in strategic planning sessions in recent months.

Some might call the Vision, “LES - Striving to be the world’s best energy company,” as audacious, said Administrator & CEO Doug Curry.

“At the very least the bar has been set extremely high – the Vision is bold and challenging, but it is not audacious for LES,” he said. “For us, it makes perfect sense. LES’ status quo is already performance at an enviable, extremely high level. The new Vision statement constitutes LES’ commitment not to be satisfied even though we take great pride in where we are. Striving to become the world’s best energy company is an appropriate objective in the case of LES. Endorsing that objective is an expression of the confidence the Administrative Board and I have in LES employees.”

“The need is great to plot the course of this organization as the importance of energy issues continues to rise,” said Board Chair Dawn Rockey. “Strategic planning is the tool we need to continue to ensure the reliability of our utility, the productivity of our employees and the effectiveness of our overall operation. On behalf of the Board, we are very supportive of the strategic planning process that has been undertaken by LES.”

Dan Sedor with Leadership Resources, the firm assisting with the strategic plan, said what he found unique about LES’ process is that it includes employees on the front lines of customer service, managers, executive staff and Board members.

The planning started with the executive team and Board determining the desired outcomes from the process and then drafting the Vision and Mission statements. That was followed by a meeting of the executive team and managers to structure long-term goals, core values and metrics to measure progress on the goals. Sedor explained that core values reflect the culture of LES and how we behave, act and think in the ideal as we work on goals and with customers.

The executive team and managers identified long-term goals and selected the top three, he said. The intent was to get them on board together to help set the direction of LES. In the next session, the Board joined the group, and long- and short-term goals, core values and key metrics were developed. Ownership of short-term goals was assigned to cross-divisional teams to track progress and work on the goals.

In addition, other employees took part in a divisional health assessment survey, and the results were presented to division employees.

“Most companies I work with involve only the executive team and Board in strategic planning,” Sedor said. “LES didn’t just seek the input of managers, but they went even deeper into the organization, and more than 100 employees provided input. That is unique and speaks very highly of LES.”

Sedor added that he has been very impressed with the professionalism of staff up and down the organization. ”It’s very clear LES has very high quality people. My biggest concern was that working with so many people would be like herding cats, but everyone has been very responsive. There’s a darn good work ethic in LES’ culture.”

Leadership Resources will continue to work through 2010 with staff to ensure the strategic plan continues on course. Part of the process was to identify key metrics, or measurements, to define LES’ health. External metrics will be displayed on LES’ Web site and updated throughout the year for customers to view. This will help to keep the strategic plan alive and operating in the coming year, he said.

Board authorizes moving up to $4 million to Rate Stabilization Fund

With 2009 ending in a positive financial condition, the LES Administrative Board authorized up to $4 million to be transferred to the Rate Stabilization Fund. With this deposit, the fund could be as high as $8 million.

In addition, revisions to the guidelines for the fund were approved, including the following:

• The purpose of the fund is to “help assure consistent, sound financial performance to maintain a stable program of rates for LES customers and high credit rating and confidence of bondholders.”

• The fund should normally contain 10 percent to 15 percent of the annual operating budget in order to provide funds for storms and other operating contingencies not covered by insurance that could have a detrimental impact on financial performance.

• If the fund falls below 6 percent of the annual operating budget, a plan will be recommended to the Board to return it to restore the fund to the desired range.

• If debt service coverage is expected to fall to an unacceptable level, a plan will be recommended to return the fund to acceptable levels.

• In years when the debt service coverage exceeds 1.9, the amount above 1.9 may be added to the fund.

• Funds withdrawn will be used to pay for operation and maintenance, renewals and replacements and any extraordinary expenditure declared by the Board.

• Accrued interest will remain in the fund.

LES response to PURPA Standards given the go-ahead

The Administrative Board agreed on LES’ response to five standards added to the Public Utility Regulatory Policies Act (PURPA) by the Energy Independence and Security Act of 2007. They include the following:

• Integrated Resource Planning – Adopted the standard to integrate energy-efficiency resources into utility, state and regional plans, and adopt policies establishing cost-effective energy efficiency as a priority resource.

• Rate Design Modifications to Promote Energy-Efficiency Investments – LES will hold energy efficiency as a goal of rate design in conjunction with cost of service principles. Personal energy audits will be offered, along with demand response programs, and conservation and energy efficiency will be promoted through consumer education. Smart Grid technology will be deployed, and data will be applied to design rates that promote energy conservation.

• Consideration of Smart Grid Investments – LES will stay abreast of Smart Grid technology development and potential benefits, and evaluate Smart Grid investments versus nonadvanced grid technologies.

• Smart Grid Information – LES will print usage information on bills, make rates available online and in paper form; evaluate Smart Grid investments versus nonadvanced grid technologies; provide information on generation and emissions annually; and as technology is deployed, increase the information available to consumers.

• Waste Energy Recovery Projects – LES will encourage efficient use of waste energy, purchase excess electric power from eligible waste energy recovery projects, and won’t allow direct sales over LES wires or allow private wires within LES’ service area.

While it is not mandatory to adopt and implement the PURPA standards, utilities are required to consider them. LES’ response to the standards will be presented to the Lincoln City Council in January for its consideration.

Nominating Committee forwards 2010 slate of Board officers

Dawn Rockey has been nominated to continue as chair of the LES Administrative Board for 2010. Other Board members proposed by the Nominating Committee as officers are Patrick Beans for vice chair and Richard Evnen for secretary.

Rockey served as chair and Beans as vice chair in 2009. If elected, Evnen will serve his first year as a Board officer in 2010. Officers will be elected at the regular Jan. 15 Board meeting.

Tony Marquez, Jr. praised for service to Board

Tony Marquez, Jr., who is completing his first term on the LES Administrative Board, announced he will not seek to serve another term. The Board passed a resolution expressing its appreciation for his contributions and involvement on behalf of LES and the community.

Other Reports

The following statistics for November were presented to the Board: