Virtual - Traverse City Light and Power - Home

A REGULAR MEETING

Of The

TRAVERSE CITY LIGHT AND POWER BOARD

Will Be Held On

Tuesday, January 12, 2021

At

5:15 PM

In The

VIRTUAL MEETING

Meeting to be Held Remotely due to Coronavirus Outbreak and in the Interest of the Public, Health

Safety and Welfare

Anyone wishing to give public comment will need to call in and wait in a "virtual waiting room" where

their microphones will be muted until they are called upon. Directions to participate are below and

located at the following link https://www.tclp.org/Display/itemDetails/Item/424

Participating Members of the Public: Members of the public that wish to give public comments have

several options. Attendees joining the meeting will be muted by default and will not have the ability to

unmute. Muting and Unmuting Attendees will be handled by the Host and Co-Host. Public Comment is

limited to three minutes. The following options are available for Public Comment:

Option 1: Attendee can utilize the ZOOM application by downloading on their smartphone, tablet or

computer. The ZOOM Webinar ID for the meeting is: 498-915-060. The ZOOM link is:

https://zoom.us/j/498915060. Upon attendance through ZOOM they can utilize the Zoom “Raise Hand”

feature to indicate they have a public comment. The Host of the meeting will mute/unmute the Attendees

microphones as necessary during Public Comment.

Option 2: Attendees can direct dial into the meeting by utilizing the following Toll-Free Numbers: 877 853

5257 or 888 475 4499. There are two options for Attendee’s that directly dial in to give Public Comment as

follows:

Option 2a: The Attendee can send a text or email to [email protected] prior or during the meeting.

[email protected] is the method for the public to contact Board members. Attendee should provide

their phone number and name in the text or email along with the item they would like to give Public

Comment on. This information will allow the Host to select that Attendee to unmute their microphone for

Public Comment. After the Public Comment, the Host will re-mute the microphone again.

Option 2b: The Host will announce that all microphones for remaining Attendee’s that have not yet given

Public Comment will be unmuted to allow for Public Comment. We ask that you remain respectful and

attempt to go in an ordered fashion and to only unmute your microphone to speak and re-mute your

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https://zoom.us/j/498915060

mailto:[email protected]


microphone after you are done speaking or your time has passed. When you are speaking, you will be asked

to must provide your Name and Address an if you are a TCL&P customer before proceeding with Public

Comment; however, it is not required to make public comment.

Due to the high number of users utilizing remote meeting platforms, you may experience delays or difficulties

in calling in or accessing the online meeting platform. TCL&P will make reasonable efforts to ensure the

platform is open and accessible before conducting a remote meeting. Please contact TCL&P by phone or

email if you experience any difficulty in accessing the conference call meeting.

Non-Participating Members of the Public (Audio Only): Members of the public that do not wish to give

Public Comment are advised to tune in and listen to the meeting either on local Channel 191 or streaming

online here at https://www.tacm.tv/govtvnow.asp.

Compliance with American Disabilities Act: Traverse City Light and Power will provide necessary

reasonable auxiliary aids and services, such as signers for the hearing impaired and audio tapes of printed

materials being considered at the meeting, to individuals with disabilities at the meeting/hearing upon notice

to Traverse City Light & Power. Individuals with disabilities requiring auxiliary aids or services should

contact the Light and Power Department by writing or calling the following:

Jennifer St. Amour

Administrative Assistant

1131 Hastings Street

Traverse City, MI 49686

(231) 932-4543

Posting Date:

01/08/2021

3:00 P.M.

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https://www.tacm.tv/govtvnow.asp

Light & Power Board January 12, 2021

Regular Meeting

AGENDA

Page 1. Roll Call 2. Disclosure of Recusal 3. General Public Comment 4. Consent Calendar

The purpose of the consent calendar is to expedite business by grouping non-

controversial items together to be dealt with by one Board motion without discussion.

Any member of the Board, staff or the public may ask that any item on the consent

calendar be removed therefrom and placed elsewhere on the agenda for full

discussion. Such requests will be automatically respected. If an item is not removed

from the consent calendar, the action noted in parentheses on the agenda is approved

by a single Board action adopting the consent calendar

a. Approval of Agenda b. Consideration of approving minutes of the regular meeting of December 8,

2020 and Customer Survey Ad Hoc meeting minutes of December 4, 2020.

(Approval recommended) Regular Board Meeting Minutes - 12.8.20

Customer Survey Ad Hoc Committee Meeting Minutes 12.4.20

5 - 9

c. Consideration of approving Board Rules introduced at the December 8, 2020

board meeting. (Approval recommended) (Arends) Board Rules

10 - 15

d. Consideration of approving a purchase order for electric meters. (Approval

recommended) (Menhart) Electric Meter Procurement

16 - 21

e. Consideration of approving a purchase order for transformers. (Approval

recommended) (Myers-Beman) Transformer Purchase

22 - 23

f. Consideration of approving a Priority Home Repair Project funding request

from Habitat for Humanity under the Community Investment Fund Policy.

(Approval recommended) (Arends) Community Investment Fund - Habitat for Humanity Priority Home Repair

Request

24 - 27

g. Consideration of approving a construction agreement to service Munson

Medical Center. (Approval recommended) (Menhart) Munson Medical Center Construction

28

5. Unfinished Business 6. New Business

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a. 2019-20 Financial Audit Presentation (Myers-Beman/Vredeveld Haefner LLC) 2019-20 Financial Audit Presentation

29 - 101

7. Reports and Communications a. From Legal. b. From Staff. 1. Presentation of the OPEB Report (Myers-Beman/Lauterbach-Amen

LLP) OPEB Report

102 - 128

2. Strategic Plan Presentation. (Arends)

Strategic Plan Presentation

129 - 137

3. Customer Survey - Question Review. (Schroeder)

Customer Survey - Question Review

138 - 147

4. MyMeter Update (Menhart)

MyMeter Update

148 - 153

5. Franchise Agreements. (Dixon - verbal) 6. Report on Electric Vehicle Charging Stations. (Dixon/Hardy)

Report on Electric Vehicle Charging Stations

154 - 159

7. Barlow Switch Station Project close-out report. (Myers-

Beman/Dixon/Chartrand) Barlow Switch Station Project Close-out Report

160 - 162

8. FTTP Update. (Menhart/Myers-Beman)

FTTP Update

163 - 167

c. From Board. 1. Chairman's Report. 8. Public Comment a. General Public Comment 9. Adjournment

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TRAVERSE CITY

LIGHT AND POWER BOARD

Minutes of the Regular Board - Virtual Meeting

Held at 5:15 p.m.

Tuesday, December 8, 2020

Board Members Present: Patrick McGuire, Elysha Davila, Ross Hammersley, Amy Shamroe, Tim

Werner, Paul Heiberger, John Taylor

All Board members were physically located in Traverse City, Grand

Traverse County, and the State of Michigan for the remote meeting.

Board Members Absent:

Ex Officio Member: Marty Colburn, City Manager

Others: Tim Arends, Daren Dixon, Karla Myers Beman, Scott Menhart, Kelli

Schroeder, Tony Chartrand, Jacob Hardy, Karrie Zeits (Legal Counsel)

1. Roll Call

2. Disclosure of Recusal

None.

3. General Public Comment

None.

4. Consent Calendar a. Approval of Agenda b. Approved minutes of the Regular meeting of November 10, 2020. c. Approved the 2021 Six-Year Capital Improvements Plan.

That the Board authorizes the Executive Director to submit the Six Year Capital

Improvements Plan - 2021 as presented to the City Manager for review and approval of the

City Commission and City Planning Commission. d. Approved a three-year contract with Hurst Mechanical for HVAC Preventative

Maintenance.

That the Board approve a three-year contract with Hurst Mechanical for a not to exceed

amount of $5,480.00 annually for HVAC preventative maintenance. e. Approved the Downtown Development Authority Banner Attachment Agreement.

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That the Board authorizes the Chairman to execute an Attachment Agreement with the

Downtown Development Authority for banners, signs and decorations, subject to review as

to substance by the Executive Director and as to form by General Counsel. f. Approved a revised resolution establishing rules for remote attendance as currently

allowed by Public Act 228 of 2020.

That the Board approve a revised resolution establishing rules for remote attendance in

accordance with Public Act 228 of 2020. g. Approved introduction of the proposed Board Rules Amendment.

Patrick McGuire moved that the following actions, as recommended on the Consent

Calendar portion of the Agenda, be approved. Amy Shamroe seconded the motion.

Yes: Patrick McGuire, Elysha Davila, Ross Hammersley, Amy Shamroe,

Tim Werner, Paul Heiberger, and John Taylor

Absent: None

Carried 7 to 0.

5. Unfinished Business a. Consideration of applying for grant/financing with USDA for Smart Grid.

The following individuals addressed the Board:

Tim Arends, Executive Director

Ross Hammersley moved that the Resolution in support of applying for USDA financing

under the Power Sustainable Rural Communities Program be approved and forwarded onto

the City Commission for its consideration of approval. Amy Shamroe seconded the motion.

Yes: Elysha Davila, Ross Hammersley, Amy Shamroe, Tim Werner, Paul

Heiberger, and John Taylor

No: Patrick McGuire

Absent: None

Carried 6 to 1.

6. New Business

None.

7. Reports and Communications

a. From Legal.

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b. From Staff. 1. Presentation by the Grand Traverse Regional Community Foundation.


John Taylor, Chairperson


Dave Mengebier, Grand Traverse Regional Community Foundation

2. Presentation of renewable energy goal update and options for incremental

increases through various solar projects.



Karla Myers-Beman, Controller

Karrie Zeits, General Counsel 3. FTTP Update.


Scott Menhart, Chief Information Officer

Chris Kohl, Fujitsu 4. September 30, 2020 Financial Statements.



c. From Board. 1. Chairperson's report.

8. Public Comment a. General Public Comment

None.

9. Adjournment

There being no objection, Chairperson Taylor moved to adjourn the meeting at 6:52 p.m.

Yes: Ross Hammersley, Elysha Davila, Amy Shamroe, Tim Werner,

Paul Heiberger, Pat McGuire and John Taylor

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Absent:

Carried 7 to 0.

Tim Arends, Secretary


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TRAVERSE CITY


Minutes

Customer Survey Ad Hoc Committee

A meeting was called to order remotely as authorized by Senate Bill No. 1108

Friday, December 4, 2020

Committee Members:

Present: Elysha Davila (Ad Hoc Chair), Paul Heiberger, Tim Werner

Traverse City, Grand Traverse County, Michigan

Absent: None

Others: Tim Arends, Kelli Schroeder, Emily Recine, Dan Quatrocelli, Taylor Foss

The meeting was called to order at 9:05 a.m. by Elysha Davila.

1. Initial General Public Comment.

None.

2. Project Kickoff Meeting.

Discussion with Great Blue Research team regarding expectations and next steps.

3. Final Public Comment

No one from the public commented.

There being no objection, Elysha Davila declared the meeting adjourned at 9:39 a.m.

Elysha Davila, Chairperson


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To:

Traverse City Light and Power Board

From: Tim Arends - Executive Director Meeting: Regular Board - Virtual - Jan 12 2021 Subject:

Board Rules

At the last board meeting, the following addition to the board rules was introduced: 14. Remote Meetings. The Light and Power Board may hold meetings remotely or members of the Light and Power Board may participate in meetings remotely as set forth in a current resolution authorizing remote meeting or remote attendance by Board members adopted by the Light and Power Board and consistent with the Open Meetings Act. Included in the packet are the final changes for your review. This item is appearing on the Consent Calendar as it is deemed a non-controversial item by staff. Approval of this item on the Consent Calendar means you agree with staff’s recommendation. If any member of the Board

or the public wishes to discuss this matter, other than clarifying questions, it should be placed on the “items

removed from the consent calendar” portion of the agenda for full discussion. If after the Board discussion you

agree with staff’s recommendation the following motion would be appropriate MOVED BY________________________, SECONDED BY __________________________, THAT THE BOARD AUTHORIZES THE ADDITION OF BOARD RULE NUMBER 14 TO THE BOARD RULES.

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RULES OF THE TRAVERSE CITY LIGHT AND POWER BOARD

Adopted July 28, 1998Amended February 8, 2011, Rule 11

Amended July 22, 2014, Rule 2Amended November 11, 2014, Rule 1

Amended March 14, 2017, Rule 1Amended October 10, 2017, Rule 2

Amended May 12, 2020 Rule 2, 5, and 11Amended January ___, 2021, Addition of Rule 14

1. Regular Meetings. Regular meetings of the Light and Power Board shall be held on the second Tuesday of every month with the fourth Tuesday of every month reserved for potential Special Meetings at 5:15 P.M. in the Commission Chambers of the Governmental Center, 400 Boardman Avenue, Traverse City.

2. Order of Business and Agenda for Regular Meetings. The order of business and agenda for regular meetings of the Board shall be as follows:

1. Roll Call2. General Public Comment (only during remote participation meetings)3. Disclosure of Recusal4. Consent Calendar

a. Approval of the Agenda

4. Unfinished Business

5. New Business

6. Reports and Communications

7. Board and Public Comment

Unless there is an objection by a Board member, the Chairman may alter the order of business.

3. Agenda and Packets. A written agenda and a packet of supporting materials shall be prepared by the Executive Director for every regular meeting, and shall be completed and released for delivery to the members of the Board not later than 5:00 P.M. on the Monday immediately preceding the date of said regular meeting.

4. Special Meetings and Special Business. Special meetings may be called by the Chairman or any two (2) Board members, or by the Executive Director, upon 18 hours posting and advance written notice to all Board members. Special meetings shall consider only such matters as are specified in the notice of the meeting, unless all voting members are

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present and a motion is passed pursuant to these Rules. Unless there is an objection by a Board member, the Chairman may alter the order of business.

The Board may direct by a majority vote that any matter may be made the special business of a future meeting and the same shall have precedence over all other business at such meeting.

5. Consent Calendar.

A. When the Executive Director determines that any item of business requires action by the Light and Power Board, but is of a routine and non-controversial nature, the Executive Director may cause such item to be presented at a regular meeting of the Light and Power Board as part of a Consent Calendar.

B. The Consent Calendar shall be introduced by a motion to approve the Consent Calendar, and shall be considered by the Light and Power Board as a single item.

C. There shall be no debate or discussion by any member of the Light and Power Board, regarding any item on the Consent Calendar, beyond asking questions for simple clarification.

D. On request by any Light and Power Board member, staff or member of the public present to inclusion of any item on the Consent Calendar, that item shall be removed from the Consent Calendar. During remote participation by members of the public, members of the public may not remove items from the Consent Calendar. Such request may be recorded at any time prior to the taking of a vote on the motion to approve the Consent Calendar. All such items shall be considered individually at a place, on the agenda, determined by the Presiding Officer.

E. Approval of the motion to approve the Consent Calendar shall be fully equivalent to approval, adoption, or enactment of each motion, resolution, ordinance, or other item of business thereon, exactly as if each had been acted upon individually.

6. Presiding Officer. The Chairman shall preside at all meetings, and in the absence of the Chairman, the Vice-Chairman shall preside. If both the Chairman and the Vice-Chairman are absent, the Secretary shall call the Board to order and shall preside until a presiding officer is chosen. If the Secretary is absent, a majority of the Board then present shall select a Presiding Officer.

7. Rules of Order. The most current and authorized edition of Robert’s Rules of Order shall govern the conduct of meetings unless modified by these Rules. The Presiding Officer shall decide all questions arising under these Rules and general parliamentary practice subject to appeal, which appeal shall be determined by a majority of the members present. In the event an appeal is taken by any member from the ruling of the Presiding Officer, the member of the Board desiring to appeal shall state that he claims an appeal from the ruling of the Presiding Officer and shall state briefly what, in his opinion, the ruling should have been. If this appeal is seconded, the Presiding Officer shall state clearly the question at issue, and shall then call for the vote of the Board on the question:

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“Shall the decision of the Presiding Officer be sustained?” The Presiding Officer shall preserve order and decorum and may speak to points of order in preference to other questions. The Presiding Officer may express an opinion on any subject under debate without the substitution of another Presiding Officer.

8. Motions. Every motion or resolution shall require a second before being put to a vote, and it shall not be debated until it shall be reduced to writing if requested by the presiding officer or any member, but it may be withdrawn at any time by the movant with consent of the second before decision or amendment. No motion to reconsider shall be entertained unless made by a member voting with the majority.

9. Amendment of Agenda at Regular Meetings. At a regular meeting, and as the first item after Roll Call, any official or officials of the Department, acting as such, may ask, orally or in writing, that a certain matter or matters be added to the agenda for consideration by the Board at that meeting. By motion that the matter or matters in question be added to the agenda of that meeting, passed by the concurring vote of not less than four (4) Board members, the matter or matters may be added to the agenda under an appropriate order of business and may be considered at that regular meeting.

10. Amendment of Agenda at Special Meetings. At a special meeting, and as the first item after Roll Call, any official or officials of the Department, acting as such, may ask, orally or in writing, that a certain matter or matters not appearing in the notice of that meeting as posted and released for delivery to the members of the Board be considered by the Board at that meeting. By motion that the matter or matters in question be considered at that meeting, passed by the concurring vote of not less than five (5) Board members, any such matters may be considered at that special meeting.

11. Public Comment. The Light and Power Board welcomes public comment and has prescribed the following to facilitate the conduct of public business.

A. Public Comment during Agenda Items. At any regular or special meeting, any interested person may address the Board on any agenda item if recognized by the Presiding Officer or upon request of any Board member. Except during meetings in which members of the public are meeting remotely. For any agenda item requiring action of the Board at that meeting other than the Consent Calendar, the Presiding Officer shall, before any final vote is taken, ask for and conduct public comment on that agenda item. Any interested person may address the Board on any matter of Department concern during the agenda item designated Public Comment. The comment of any member of the public or any special interest group may be limited in time as provided in subsection (E). As part of its deliberation, the Board may clarify, answer questions and ask questions as a result of public comment.

B. Public Comment during the designated Public Comment Section – Reserved. Any interested person or special interest group wishing to address the Board for a reserved time shall submit a written request to the Executive Director no later than Tuesday, 5:00 P.M. the week immediately preceding the date of said regular meeting. The communication shall (1) identify the writer’s name and address and

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(2) identify with reasonable specificity the subject matter. The same shall appear on the written agenda under the designated “Public Comment” section for said regular meeting as made available to the news media and released for delivery to the Board. All persons must identify themselves and will be asked their address and to direct their comments to the Board. The comment of any member of the public or special interest group may be limited to 15 minutes except as provided in subsection (E). Questions posed may be answered at the meeting or may be referred to staff for response at a later time.

Reserved time shall be limited to one (1) per meeting and shall appear on the written agenda. A TCL&P ratepayer or city taxpayer shall take precedence over a non-TCL&P ratepayer or non-city taxpayer request. In such case, the non-TCL&P ratepayer or non-city taxpayer request shall be postponed and placed on the written agenda of a future meeting as selected by the non-TCL&P ratepayer/non-city taxpayer. In no case shall the non-TCL&P ratepayer/non-city taxpayer request be postponed more than one time in favor of a TCL&P ratepayer or city taxpayer. If more than one (1) request is received per meeting the requests shall be considered in the order they were received; subject to the above procedure.

C. Public Comment during the designated Public Comment Section – General. Any interested person wishing to address the Board regarding other matters may do so under the designated Public Comment section. All persons must identify themselves and will be asked their address and to direct their comments to the Board. The comment of any member of the public or any special interest group may be limited in time as provided in subsection (E).

D. Public Comment during the designated Public Comment Section – Board Chair and Board Members. The Board Chair and other Board Members interested in making a public comment may do so under the designated Public Comment section. Further, the Board Chair and Board Members may briefly respond for clarification purposes as a result of public comment.

E. Order and Duration of any Public Comment. The comment of any member of the public or special interest group may be limited in time by the Presiding Officer. The Presiding Officer shall have the authority to limit and terminate any public comment that becomes disruptive, unduly repetitive, or impedes the orderly progress of the meeting. The Presiding Officer shall control the order and duration of any public comment, subject to appeal.

12. Suspension of Rules. The Rules may be suspended on the vote of five (5) members. The Rules may be amended by a majority vote of the members elect at a meeting held after the meeting at which the amendment was proposed.

13. Executive Director Spending Authority. The Executive Director shall have authority to expend up to one-tenth of one percent (0.1%) of current budget year total expenses, per transaction, involving the acquisition and disposal of personal property pursuant to City Charter Section 179(a) without the necessity of Board approval or securing competitive

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bids. Such authority shall also supply to the acquisition of services in furtherance of Light and Power activities.

14. Remote Meetings. The Light and Power Board may hold meetings remotely or members of the Light and Power Board may participate in meetings remotely as set forth in a current resolution authorizing remote meetings or remote attendance by Board members adopted by the Light and Power Board and consistent with the Open Meetings Act.

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To:


From: Scott Menhart - Chief Information Technology Officer Meeting: Regular Board - Virtual - Jan 12 2021 Subject:

Electric Meter Procurement

As TCL&P moved to an advanced metering infrastructure (AMI), the lead time to meter procurement has increased drastically resulting in changes to TCL&P's meter procurement practices. Previously, the meter delivery time was very short period that allowed TCL&P to order meters in smaller batches throughout the year. However, the extra installation steps of adding in the electronics to make the meter advanced has caused significant delays when procuring meters. As a result, TCL&P will move to calendar year meter ordering for the upcoming season, which will align with the calendar year. In the future, these requests will be on a fall agenda to ensure meters arrive in time for the start of the spring construction season. Working directly with the Metering Department, TCL&P has attached a quote for the anticipated meter needs for the 2021 calendar year for both construction and O&M in the amount of $240,236.52. These meters are the same type of meters that were procured through our AMI project and are now the TCL&P standard meter. This item is appearing on the Consent Calendar as it is deemed a non-controversial item by staff. Approval of this item on the Consent Calendar means you agree with staff’s recommendation. If any member of the Board



agree with staff’s recommendation the following motion would be appropriate MOVED BY _______________________, SECONDED BY ________________________, THAT THE BOARD AUTHORIZES THE PURCHASE ORDER IN THE TOTAL AMOUNT OF $240,236.52, MORE OR LESS, TO PROCURE ELECTRIC METERS. FURTHERMORE, THE BOARD AUTHORIZES THE EXECUTIVE DIRECTOR TO ADD METERS AS NECESSARY TO FULFILL ONGOING TCL&P BUSINESS OPERATIONS.

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THIS DOCUMENT INCORPORATES AND IS SUBJECT TO THE ATTACHED TERMS AND CONDITIONS._____________________________________________________________________________

Item Quantity UOM Description Material No Price Ext. Value_____________________________________________________________________________

Cust.item Catalog Number _____________________________________________________________________________

Cust.Material Number_____________________________________________________________________________

10 100 EA RFN 500LG FOCUS AXeSD 2S CL200 240V LBL 520-LGAX02SH091H01 198.00 19,800.00

520-LGAX02SH091H01

LG 0CT4

Commodity code 9028300000 100.000 Country of origin US Z913

Lead Time is 20 Weeks, ARO

20 450 EA RFN 500LG FOCUS AXeSD 12S CL200 120V Lbl 520-LGAX12SH121H01 222.00 99,900.00

520-LGAX12SH121H01

LG 0CT4



30 80 EA RFN 430ELA3R 2S CL200 PQM Lbl 430-ELA3S2SD781510 320.00 25,600.00

430-ELA3S2SD781510 ZDC310000L1 PQM

Commodity code 9028300000 80.000 Country of origin MX Z913



430-ELA3S2SD791510 ZDC410000L1 PQM



50 24 EA RFN 430ELA3R 12S CL200 PQM Lbl 430-ELA312SD741510 320.00 7,680.00

430-ELA312SD741510



Sold-to addressCITY OF TRAVERSE CITY400 BOARDMAN AVENUETRAVERSE CITY MI 49684-2595US

01/07/2021

13:31:45

Price are freight prepaid and billed at a cost of 2% of the total value of the transaction (5% if specialAir Freight). If requested, Cannon Technologies, Inc. will ship freight collect.Orders are accepted subject to Cooper Power Systems terms and conditions

of sale which are included or have been provided previously to buyer.

Cannon Technologies, Inc.3033 Campus Drive - Suite 350NMinneapolis, MN 55441Phone: (763)-595-7777Fax: (763)-543-7777

Incoterms: Pre-Paid FOB PLANTPayment Terms: Net 30 Days

Quotation Number Date 22642782 01/06/2021 Cust. purchase order no. Cust. no. 01062021 RMF 61297 Prepared By Rochelle Filiowich Validity period 01/06/2021 to 02/06/2021 Sales Representative 900007966 / DAN SCRIMA Customer Service Contact ROCHELLE FILIOWICH 763-543-7796

Ship-to addressTRAVERSE CITY LIGHT & POWER1131 HASTINGSTRAVERSE CITY MI 49686-4318US

Customer QuotationPage 1 of 5

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_____________________________________________________________________________

Item Quantity UOM Description Material No Price Ext. Value_____________________________________________________________________________

Cust.item Catalog Number _____________________________________________________________________________

Cust.Material Number_____________________________________________________________________________

60 60 EA RFN 430ELA3R F16S CL200 PQM Lbl 430-ELA316SC21151 320.00 19,200.00

430-ELA316SC21151




430-ELA316SD751510

Commodity code 9028300000 40.000 Country of origin



430-ELA3S4SD801510 ZDC210000L1 PQM




430-ELA309SD711510




430-ELA3S2SD791510 ZDC410000L1 PQM



110 100 EA RFN500LG FOCUS AXe or AXeSD RETRO KIT 520-LGAXRET0051JRX 90.00 9,000.00

520-LGAXRET0051JRX RETROFIT KIT FOR AXE AND SD



120 26 EA RFN430EL A3 UC5 for retrofit kit 430-ELA3RET0001500 211.00 5,486.00

430-ELA3RET0001500


Lead Time is 20 Weeks, ARO_____________________________________________________________________________

Product Subtotal 235,526.00 Cannon Frt Chg 2.000 % 4,710.52 _____________________________________________________________________________

Final amount in USD 240,236.52 _____________________________________________________________________________

01/07/2021

13:31:45



Quotation no./Date22642782 / 01/06/2021

Customer Quotation

Page 2 of 5

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Sales Contact: JIM KHOURY / 2487984062

01/07/2021

13:31:45



Quotation no./Date22642782 / 01/06/2021

Customer Quotation

Page 3 of 5

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1. Applicable Terms and Conditions(a) These terms and conditions of sale establish the rights,

obligations, and remedies of Buyer and Seller that apply to any order issued byBuyer for the purchase of Seller’s products and/or services (“Products”). Noadditional or different terms or conditions, whether contained in Buyer’spurchase order form or in any other document or communication pertaining toBuyer’s order, will be binding on Seller unless accepted in writing by anauthorized representative of Seller. Seller expressly objects to and rejects anyadditional or different terms and conditions, which shall be ineffective.

(b) If Seller’s order acknowledgement, invoice, other document, orelectronic transmittal including or attaching these terms and conditions is foundto be an acceptance of an offer, acceptance is expressly made conditionalupon Buyer's assent solely to these terms and conditions, and acceptance ofany part of Products delivered by Seller shall be deemed to constitute suchassent by Buyer. If the order acknowledgement, invoice, other document, orelectronic transmittal including or attaching these terms and conditionsconstitutes an offer, Buyer's acceptance of the offer is hereby limited to theterms of the offer.

2. Price, Payment Terms, and Title(a) All prices represent those in effect at the time of quotation and

are subject to change without notice. Unless prices are bid or quoted as "firm,"Seller reserves the right to invoice at prices in effect at the date of shipment,regardless of any prior bid and whether notice was received by Buyer. Unlessotherwise indicated, prices are stated in United States dollars and areexclusive of shipping, handling, shipping insurance, duties, and sales, use,excise or similar taxes. Export packaging or any other special handlingrequested by Buyer will be at Buyer’s expense. A service charge of $25 will beassessed for any order less than $250. Seller requires a minimum $100emergency handling charge for all orders that require shipment the same dayor next day.

(b) Buyer acknowledges that the pricing of the Products has beenset based on the agreed allocation of risks contained in these terms andconditions. If, notwithstanding the provisions of these terms and conditions, acourt of competent jurisdiction determines that Buyer’s terms and conditionsapply to an order, then Seller shall have the right to either (i) modify the prices(including retroactively) according to the additional level of risk andresponsibility that Buyer’s terms and conditions require Seller to undertake; or(ii) cancel the order any time after such a determination without liability for thetermination other than for the Products already delivered on these terms andconditions.

(c) Unless different credit terms have been extended to Buyer inwriting by Seller, payment terms are net 30 days after delivery or date ofinvoice, whichever first occurs, in the currency invoiced. Seller reserves theright to modify or withdraw credit terms at any time without notice. If Buyerfails to fulfill the terms of payment, Seller may defer further shipments to Buyeror, at its option, cancel the unshipped portions of Buyer's orders. Buyeragrees to pay interest on all past due invoices at the lesser of 18% per annum,compounded monthly, or the highest contractual rate allowable under the law.

(d) Until full payment of all obligations of the Buyer for an order,Seller reserves the title (but not the risk of loss) to all Products furnished underthat order. If the Buyer defaults in payment or performance or becomessubject to insolvency, receivership or bankruptcy proceedings or makes anassignment for the benefit of creditors, or without the consent of Sellervoluntarily or involuntarily sells, transfers, leases or permits any lien orattachment on the Products, Seller may treat all amounts then or thereafterowing by Buyer to be immediately due and payable and Seller at its electionmay repossess Products for which Buyer has not paid in full. In the event ofrepossession of Products under this section or under the section entitled"Security Interest," Buyer agrees that Seller may enter the premises where theProducts may be located and remove them without notice and without beingliable to Buyer for such repossession. Buyer will not set off invoiced amountsor any portion thereof against sums that are due or may become due fromSeller, its parents, affiliates, or subsidiaries. Buyer grants Seller a securityinterest in Products for which title has passed to Buyer, products in whichProducts are incorporated, and Products that Seller sells (including allProducts acquired hereafter from Seller, and all accessions, substitutions,replacements, and additions, and any proceeds from sale or disposition ofProducts), as security for performance by Buyer of all of its paymentobligationsunder these terms and conditions (including obligations regarding futureadvances). Buyer consents to Seller’s execution of any documents to evidenceand perfect this security interest, and agrees to execute the same if requestedby Seller.

3. Delivery and Risk of Loss(a) Unless otherwise agreed in writing, all deliveries of Products

will be EXW (Incoterms 2000) Seller’s facility. Products will be packed inSeller’s standard commercial shipping packages. Charges for shipping maynot reflect net transportation costs paid by Seller. Buyer shall reimburseSeller for all costs of storage and handling incurred by Seller after the date thatSeller is prepared to make shipment.

(b) Delivery and shipping dates are approximate and representSeller’s best estimate of the time required to make delivery or shipment. Timeis not of the essence with respect to the transactions covered by these termsand conditions, except with respect to Buyer’s obligation to make all related

payments. Seller’s obligations under these terms and conditions will bedependent upon Seller’s ability to obtain necessary raw materials andcomponents. Seller shall have the right to make partial deliveries and to shipup to forty (40) days in advance of shipping date.

4. AcceptanceAcceptance shall occur, if not before, when Buyer fails to reject

within ten (10) days after delivery of the Products. Buyer may rightfully rejectonly when a reasonable inspection shows that the Products fail to conformsubstantially to the specifications for the Products. Buyer waives any right torevoke acceptance. Buyer's remedies for any nonconformity detected afteracceptance are limited to those expressly provided in these terms andconditions for breach of warranty.

5. Limited Warranty(a) Seller warrants to each original Buyer of Products that

Products are, at the time of delivery to the Buyer, in good working order andconform to Seller’s official published specifications, provided that no warrantyis made with respect to any Products, component parts, or accessoriesmanufactured by others but supplied by Seller.

(b) Seller's obligation under this warranty for any Product provednot to be as warranted within the applicable warranty period is limited to, at itsoption, replacing the Product, refunding the purchase price of the Product, orusing reasonable efforts to repair the Product during normal business hours atany authorized service facility of Seller. All costs of transportation of anyProduct claimed not to be as warranted and of any repaired or replacementProduct to or from such service facility shall be borne by Buyer.

(c) Seller may require the return of any Product claimed not to beas warranted to one of its facilities as designated by Seller, transportationprepaid by Buyer, to establish a claim under this warranty. The cost of laborfor removing a Product and for installing a repaired or replacement Productshall be borne by Buyer. Replacement parts provided under the terms of thiswarranty are warranted for the remainder of the warranty period of theProducts in which they are installed to the same extent as if such parts wereoriginal components. Warranty services provided under these terms andconditions do not assure uninterrupted operations of Products; Seller shall notbe liable for damages caused by any delays involving warranty service.

(d) The warranty period for Products is the shorter of twelve (12)months from the date of installation or eighteen (18) months from the date ofshipment unless otherwise agreed by Seller in writing.

(e) EXCEPT FOR THE EXPRESS WARRANTY SET FORTHABOVE, SELLER PROVIDES PRODUCTS AS-IS AND MAKES NO OTHERREPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,STATUTORY OR OTHERWISE, REGARDING THE PRODUCTS, THEIRFITNESS FOR ANY PARTICULAR PURPOSE, THEIR MERCHANTIBILITY,THEIR QUALITY, THEIR NONINFRINGEMENT, OR OTHERWISE. IN NOEVENT SHALL SELLER BE LIABLE FOR THE COST OF PROCUREMENTOR INSTALLATION OF SUBSTITUTE GOODS.

6. LIMITATION OF LIABILITYIN NO EVENT WILL SELLER BE LIABLE FOR ANY SPECIAL

DAMAGES, CONSEQUENTIAL DAMAGES, INDIRECT DAMAGES,INCIDENTAL DAMAGES, STATUTORY DAMAGES, EXEMPLARY ORPUNITIVE DAMAGES, LOSS OF PROFITS, LOSS OF REVENUE,LIQUIDATED DAMAGES, OR LOSS OF USE, EVEN IF INFORMED OF THEPOSSIBILITY OF SUCH DAMAGES. SELLER’S LIABILITY FOR DAMAGESARISING OUT OF OR RELATED TO A PRODUCT SHALL IN NO CASEEXCEED THE PURCHASE PRICE OF THE PRODUCT FROM WHICH THECLAIM ARISES. TO THE EXTENT PERMITTED BY APPLICABLE LAW,THESE LIMITATIONS AND EXCLUSIONS WILL APPLY WHETHERSELLER’S LIABILITY ARISES OR RESULTS FROM BREACH OFCONTRACT, BREACH OF WARRANTY, TORT (INCLUDING BUT NOTLIMITED TO NEGLIGENCE, GROSS NEGLIGENCE, MALICE, ORINTENTIONAL CONDUCT), STRICT LIABILITY, BY OPERATION OF LAW,OR OTHERWISE.

7. Cancellation and Return of ProductsOrders shall not be subject to cancellation or modification either in

whole or in part without Seller's written consent and then only with terms thatwill reimburse Seller for reasonable termination charges, including all progressbillings and all incurred direct manufacturing costs. Seller's written consentmust be given in advance of Buyer's return of Products for credit. Sellerreserves the right to cancel any sale of Products without liability to Buyer(except for refund of monies already paid), if the manufacture or sale of thegoods is or becomes technically or economically impractical.

8. Force MajeureSeller shall not be liable for any failure to perform or delay in

performing its obligations resulting directly or indirectly from or contributed toby any acts of God, acts of Buyer or those under Buyer’s control, acts ofgovernment or other civil or military authorities, priorities, strikes, or other labordisputes, fires, accidents, floods, epidemics, war, riot, embargoes, delays intransportation, lack of or inability to obtain raw materials, components, labor,fuel or supplies, or other circumstances beyond Seller's reasonable control("Force Majeure Event"). If Seller elects, the time for performance shall beextended by a period of time equal to the time lost because of any delayscaused by reasons of a Force

Terms and Conditions

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Majeure Event. Should Seller be prevented from completing Buyer’s order orany part thereof because of any Force Majeure Event, then Buyer agreespromptly upon request and upon receipt of invoice therefor, to pay Seller forany Product or Products then completed.

9. Work Product"Work Product" shall include, without limitation, all designs,

discoveries, creations, works, devices, masks, models, work in progress,service deliverables, inventions, products, special tooling, computer programs,procedures, improvements, developments, drawings, notes, documents,business processes, information and materials made, conceived or developedby Seller alone or with others that result from or relate to the Products. AllWork Product shall at all times be and remain the sole and exclusive propertyof Seller. Buyer hereby agrees to irrevocably assign and transfer to Seller anddoes hereby assign and transfer to Seller all of its worldwide right, title andinterest in and to the Work Product including all associated intellectual propertyrights. Buyer hereby waives any and all moral and other rights in any WorkProduct or any other intellectual property created, developed or acquired inrespect of the Products. Seller will have the sole right to determine thetreatment of any Work Product, including the right to keep it as trade secret,execute and file patent applications on it, to use and disclose it without priorpatent application, to file registrations for copyright or trademark in its ownname or to follow any other procedure that Seller deems appropriate. All toolsand equipment supplied by Buyer to Seller shall remain the sole property ofSeller.

10. Confidentiality(a) Buyer may acquire knowledge of Seller Confidential

Information (as defined below) in connection with Products and/or itsperformance hereunder and agrees to keep Seller Confidential Information inconfidence during and following termination or expiration of this Agreement."Seller Confidential Information" includes but is not limited to all information,whether written or oral, in any form, including, without limitation, informationrelating to the research, development, products, methods of manufacture,trade secrets, business plans, customers, vendors, finances, personnel data,Work Product, and other material or information considered proprietary bySeller relating to the current or anticipated business or affairs of Seller that isdisclosed directly or indirectly to Buyer. In addition, Seller ConfidentialInformation means any third party's proprietary or confidential informationdisclosed to Buyer in the course of providing Products to Buyer.

(b) Buyer agrees not to copy, alter or directly or indirectly discloseany Seller Confidential Information. Additionally, Buyer agrees to limit itsinternal distribution of Seller Confidential Information to Buyer‘s employeeswho have a need to know, and to take steps to ensure that the disseminationis so limited. In no event will Buyer use less than the degree of care andmeans that it uses to protect its own information of like kind, but in any eventnot less than reasonable care to prevent the unauthorized use of SellerConfidential Information. Buyer may disclose Seller Confidential Informationthat is required to be disclosed pursuant to a requirement of a governmentagency or law but only after Buyer provides prompt notice to Seller of suchrequirement and gives Seller the opportunity to challenge or limit the scope ofthe disclosure. (c) Buyer further agrees not to use Seller Confidential Informationexcept in the course of performing hereunder and will not use such SellerConfidential Information for its own benefit or for the benefit of any third party.All Seller Confidential Information is and shall remain the property of Seller.Upon Seller’s written request, Buyer shall return, transfer or assign to Seller allSeller Confidential Information, including all Work Product, and all copiescontaining Seller Confidential Information.

11. Patent IndemnityIn the event any Product is made in accordance with drawings,

samples or manufacturing specifications designated by Buyer, Buyer agrees toindemnify, defend, and hold Seller harmless from any and all damages, costsand expenses (including attorney's fees) relating to any claim arising from orrelating to the design, distribution, manufacture, marketing, sale, or use of theProduct or arising from or relating to a claim that such Product furnished toBuyer by Seller, or the use thereof, infringes any claim of any patent, foreign ordomestic, and Buyer agrees at its own expense to undertake the defense ofany suit against Seller brought upon such claim or claims.

12. Changes in Product Design or ManufactureSeller shall have the right to change, discontinue or modify the

design and construction of any of its products and to substitute material equalto or superior to that originally specified.

13. Software LicenseSoftware, if included with a Product, is hereby licensed and not

sold. The license is nonexclusive, and is limited to use with the Product withwhich it is included. No other use is permitted and Seller retains for itself (or, ifapplicable, its suppliers) all title and ownership to any software deliveredhereunder, all of which contains confidential and proprietary information andwhich ownership includes without limitation all rights in patents, copyrights,trademarks and trade secrets. Buyer shall not attempt any sale, transfer,sublicense, reverse compilation or disassembly (save to the extent expresslypermitted by law) or redistribution of the software. Buyer shall not copy,disclose or display any such software, or otherwise make it available to others.

14. Compliance with LawsBuyer shall comply with all laws and regulations applicable to

Products including all applicable import and export laws and regulations.Buyerand Buyer’s Agent shall provide all information requested by Seller relating toSeller’s voluntary or mandatory compliance with any law or regulation, andBuyer shall indemnify Seller for any losses incurred by Seller arising fromBuyer’s or Buyer’s Agent’s failure to provide the information requested bySeller.

15. WaiverNo waiver of any provision of these terms and conditions (or any

right or default hereunder) shall be effective unless in writing and signed by anauthorized representative Seller. Any such waiver shall be effective only forthe instance given, and shall not operate as a waiverwith respect to any otherrights or obligations under these terms and conditions or applicable law inconnection with any other instances or circumstances.

16. LanguageThe parties have expressly required that these terms and

conditions beprepared in the English language. Les parties aux présentes ontexpressément exigé que les présents termes et les bons de commandesémisaux termes des présentes soient rédigés en langue Anglaise.

17. Choice of Law and Dispute ResolutionExcept as set forth below, these terms and conditions shall be

governed by and construed in accordance with the laws of the State of Texas,without reference to its choice of law rules. If both Seller andBuyer areincorporated under the laws of Canada or a province of Canada,these termsand conditions shall be governed by and construed in accordance with thelaws of the Province of Ontario and the federal lawsof Canada. If Buyer isincorporated in the United States, any claim or litigation arising out of orrelating to Products shall be brought exclusively in a court of competentjurisdiction in Harris County, Texas. If Buyer is incorporated outside of theUnited States, any dispute will be resolved by arbitration in Houston, Texas, bythree arbitrators and under the International Chamber of Commerce Rules ofArbitration. The language of the arbitration will be English. In all cases, Buyerand Seller expressly exclude from application the United Nations Conventionon Contracts for the International Sale of Goods.

18. AssignmentBuyer may not assign, transfer or subcontract the performance of

its services, or any of its rights and/or obligations hereunder, without Seller’sprior written consent.

19. SeverabilityIf any provision of these terms and conditions is determined to be

illegal, invalid, or unenforceable, the validity and enforceability of the remainingprovisions of these terms and conditions will not be affected and, in lieu ofsuch illegal, invalid, or unenforceable provision, there will be added, as part ofthese terms and conditions, one or more provisions as similar in terms as maybe legal, valid and enforceable under applicable law. CPS 0409202020. EpidemicSeller shall not be responsible for any failure to perform, or delay inperformance of, its obligations resulting from the COVID-19 pandemic or anyfuture epidemic, and Buyer shall not be entitled to any damages resultingthereof.

Terms and Conditions

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To:


From: Karla Myers Beman - Controller Meeting: Regular Board - Virtual - Jan 12 2021 Subject:

Transformer Purchase

The combination of longer lead times for transformers along with the amount of jobs requiring new transformers made it beneficial for the utility to do a sealed bid process for the purchase of transformers. The results of the transformer is subsequent to this memo. The low bid was Emerald Transformer, however they do not comply with Department of Energy Standards, which causes the transformers to be more costly to operate resulting in no savings. Staff is recommending RESCO, the next low bidder for the purchase of the transformers. This item is appearing on the Consent Calendar as it is deemed a non-controversial item by staff. Approval of this item on the Consent Calendar means you agree with staff’s recommendation. If any member of the Board



agree with staff’s recommendation the following motion would be appropriate. If the Board agrees with the changes the following motion would be appropriate: MOVED BY________________________, SECONDED BY __________________________, THAT THE BOARD AUTHORIZES A PURCHASE ORDER TO BE ISSUED TO RESCO IN THE AMOUNT OF $132,209 FOR PURCHASE OF VARIOUS TRANSFORMERS.

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Project Name: Transformer Procurement

BIDDER:

Qty Unit Cost Extended Cost Lead Time Unit Cost Extended Lead Time Unit Cost Extended Cost Lead Time

Single Phase, 120/240V, Pad Mount

9 1,177.00$ 10,593.00$ 14-16 Wks 1,694.00$ 15,246.00$ 22-23 Wks 1,711.00$ 15,399.00$ 18-20 Wks

8 1,586.00$ 12,688.00$ 14-16 Wks 2,505.00$ 20,040.00$ 22-23 Wks 2,236.00$ 17,888.00$ 18-20 Wks

Three Phase, 120/208V, Pad Mount

1 5,467.00$ 5,467.00$ 14-16 Wks 9,321.00$ 9,321.00$ 19 Wks 6,671.00$ 6,671.00$ 18-20 Wks

1 7,091.00$ 7,091.00$ 14-16 Wks 10,422.00$ 10,422.00$ 19 Wks 8,856.00$ 8,856.00$ 18-20 Wks

3 9,320.00$ 27,960.00$ 14-16 Wks 14,313.00$ 42,939.00$ 19 Wks 10,725.00$ 32,175.00$ 18-20 Wks

2 11,907.00$ 23,814.00$ 14-16 Wks 15,151.00$ 30,302.00$ 19 Wks 13,715.00$ 27,430.00$ 18-20 Wks


2 9,320.00$ 18,640.00$ 14-16 Wks 14,859.00$ 29,718.00$ 19 Wks 10,461.00$ 20,922.00$ 18-20 Wks

1 11,907.00$ 11,907.00$ 14-16 Wks 15,902.00$ 15,902.00$ 19 Wks 13,723.00$ 13,723.00$ 18-20 Wks

121,660.00$ Incl. trans cost 173,890.00$ 143,064.00$

98,379.00$ Incl. trans cost 138,604.00$ 109,777.00$

BIDDER:

Qty Unit Cost Extended Cost Lead Time Unit Cost Extended Cost Lead Time Unit Cost Extended Cost Lead Time

Single Phase, 120/240V, Pad Mount

9 No Quote -$ NA 1,675.00$ 15,075.00$ 26-28 Wks 23,445.42$ 211,008.78$ 12-18 Wks

8 No Quote -$ NA 1,400.00$ 11,200.00$ 26-28 Wks 23,479.64$ 187,837.12$ 12-18 Wks


1 8,944.00$ 8,944.00$ 32-34 Wks 6,555.00$ 6,555.00$ 18-20 Wks 29,959.02$ 29,959.02$ 12-18 Wks

1 10,918.00$ 10,918.00$ 32-34 Wks 7,839.00$ 7,839.00$ 18-20 Wks 31,215.72$ 31,215.72$ 12-18 Wks

3 15,624.00$ 46,872.00$ 32-34 Wks 10,640.00$ 31,920.00$ 18-20 Wks 35,099.10$ 105,297.30$ 12-18 Wks

2 12,235.00$ 24,470.00$ 32-34 Wks 14,075.00$ 28,150.00$ 18-20 Wks 40,809.12$ 81,618.24$ 12-18 Wks


2 10,411.00$ 20,822.00$ 32-34 Wks 10,005.00$ 20,010.00$ 18-20 Wks 33,932.08$ 67,864.16$ 12-18 Wks

1 7,390.00$ 7,390.00$ 32-34 Wks 11,460.00$ 11,460.00$ 18-20 Wks 39,341.20$ 39,341.20$ 12-18 Wks

122,916.00$ Incl. trans cost 132,209.00$ 754,141.54$

122,916.00$ Incl. trans cost 105,934.00$ 355,295.64$

By:


Shermco

300

500

TOTAL EXTENDED COST

THREE PHASE ONLY

RESCO

Traverse City Light & Power

25

50

500

75

150

300

Power Line Supply - WEG

KVA

25

50

75

150

300

500

TOTAL EXTENDED COST

THREE PHASE ONLY

300

500

*Cost does not include transportation costs of $3,500.00

Emerald Transformer*

KVA

Power Line Supply - Eaton Power Line Supply - Howard

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To:



Community Investment Fund - Habitat for Humanity Priority Home Repair Request

In December 2019, TCL&P received a request from Habitat for Humanity-Grand Traverse Region to support their Priority Home Repair initiative to contribute up to $10,000 towards completed projects that would assist low-income TCL&P customers who are in immediate need of critical home repairs. At that time, TCL&P’s

Community Investment Fund Policy had not been active for many years and no funds had been budgeted. However, for the 2020-2021 budget, $75,000 was approved under the Community Investment Fund line item and staff notated the request received from Habitat for Humanity, with release of funds done on a case-by-case basis, and only for customers of TCL&P. TCL&P recently received it’s first request for reimbursement for the replacement of a malfunctioning HVAC condenser unit on a home and reconnection of the interior heating and cooling equipment in the amount of $2,825. Staff is seeking approval for funding up to $10,000 towards completed priority home repair projects requested through Habitat for Humanity. Included in your packet is Habitat for Humanity’s 2019 submission for its

Priority Home Repair initiative. This item is appearing on the Consent Calendar as it is deemed a non-controversial item by staff. Approval of this item on the Consent Calendar means you agree with staff’s recommendation. If any member of the Board


removed from the consent calendar” portion of the agenda for full discussion. If after the Board discussion you agree with staff’s recommendation the following motion would be appropriate MOVED BY______________, SECONDED BY______________, THAT THE BOARD APPROVE FUNDING UP TO $10,000 FOR FISCAL YEAR 2020-2021 FROM THE APPROVED COMMUNITY INVESTMENT FUND BUDGET LINE ITEM FOR COMPLETED PRIORITY HOME REPAIR PROJECTS FOR TCLP CUSTOMERS SUBMITTED BY HABITAT FOR HUMANITY - GRAND TRAVERSE REGION.

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Traverse City Light & Power Sponsorship Request 12/13/19

Organization Name/Address/Phone: Habitat for Humanity-Grand Traverse Region 1129 Woodmere Ave. Suite F Traverse City, MI 49686 Federal ID#: 38-275383 Yes; non-profit organization. Contact Name/Phone/Email/Website: Wendy Irvin, Executive Director 231-941-4663, Ext. 123 [email protected] habitatgtr.org Traverse City Light & Power Customer? Yes. Event Date/Time/Duration: Priority Home Repairs (PHR) (annually) What is the purpose of your event? The purpose of this request is to seek $10,000 for Priority Home Repair dollars to assist homeowners who are in immediate need of critical home repairs to make their home livable once again. Priority Home Repairs are repairs that are critical to the health and safety of people that are living in the home, such as needing to repair/replace leaking roofs, inefficient furnaces and water heaters, broken windows, and insufficient insulation, etc. Cherryland Electric Co-Operative (Cherryland) has chosen to partner with Habitat for Humanity-Grand Traverse Region (HFH-GTR) to work together to tackle the issue of homeowners living in substandard housing in our community. We would welcome Traverse City Light & Power to partner with us as well. We are working with low-income homeowners who live in Grand Traverse, Leelanau, and Kalkaska counties making exterior and/or interior priority home repairs that are alleviating critical health, life, and safety issues. The goal of this program is to provide our neighbors in need with “livable” housing; a greatly improved quality of life. These homeowners have not “chosen” to live in substandard, unhealthy, and unlivable housing, but are low-income and unable to afford or have the resources to make the needed repairs to their home. According to Cherryland’s 2018 customer survey, approximately 4% (approximately 3,000) of their homeowners are in need of critical home repairs. This does not account for the other organizations in our county and surrounding counties that have waiting lists for people that are in need of critical home repairs. This funding from Traverse City Light & Power would allow us to work in partnership assisting in a solution to this astronomical call for help for Priority Home Repairs that many Traverse City Light & Power low-income customers may need.

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What is the purpose of your organization? Habitat for Humanity-Grand Traverse Region’s mission is “Seeking to put God’s love into action, Habitat for Humanity brings people together to build sustainable homes, communities, and hope.” For 33 years, we have built 114 homes for people in need in Grand Traverse, Leelanau, and Kalkaska counties. Partner families must be low-income and qualify (30-60% area median income) and if chosen, complete 275 “sweat equity” hours building their home side-by-side with our Habitat team. For the last 5 years, Habitat for Humanity has had a successful Priority Home Repair Program assisting low-income families with priority home repairs to make their home livable again. The purpose of our organization is to help build homes for low-income people in need and perform critical home repairs to be part of the solution for safe, healthy, affordable homes in our community. What other organizations are you seeking funding from? We are seeking funds from these grantors: Rotary Charities Assets and Thriving Grant, The Presbyterian Church Grant; Rotary, MSHDA, Consumers Energy and FHLBI. Please see attached detailed budget. Has TCL&P supported the organization/event in the past? Last year, Traverse City Light & Power was a sponsor for our Building Homes and Hope Dinner, and supported us with our Depot Neighborhood project as well. What are the benefits and exposure that TCL&P will receive for this sponsorship? Traverse City Light & Power would be recognized/promoted/tagged on all our social media and also on our website with your logo. How will these funds be used and timeline for this project? Our strategic goal is to increase our capacity for Priority Home Repairs to help meet the need. For 2019, our goal is to serve 5 families for PHR; Year 2020-serve 20 families; Year 2021 serve 60 families, and Year 2022 serve 80 families in need of critical home repairs. If funding is received from Traverse City Light & Power, it will be used immediately for the current or next Priority Home Repair, depending on the status of funding for the PHR at the time. Two local references for our organization: Tony Anderson, General Manager Cherryland Electric Cooperative 5930 US 31 Grawn, MI 49637 231-486-9200 Doug DeYoung, Public Affairs Manager Consumers Energy 821 Hastings Street Traverse City, MI 49686 231-649-4096 cell 21-929-6234 office

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2020 Home Repair Budget

Revenue Source

Committed Revenue

Projected Revenue

Cherryland Pilot Program

$100,000

HFHM PHR (14) 105,000 FHLBI $10,000

Beneficiaries Payback (5)

$24,300

Rotary $50,000 Presbyterian

Church $5000

TC Light and Power

$10,000

Total $150,000 $154,300 $304,300

Expenses Budgeted

Expenses

Costs of Priority Home Repairs-

(Roof, HVAC, Hot Water,

Accessibility, Carbon

Monoxide) (20)

$200,000

Home Repair Site Supervisor/Family

Service-Salary and Mileage

$79,000

Priority Home Repair

Inspections (20)

$8000

Home Repairs Application

processing costs (20)

$2500

Operating Costs (10%)

$14,800

Total $304,300 $304,300

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To:



Munson Medical Center Construction

Munson Medical Center is seeking to add dark fiber to an additional site within its current agreement with TCL&P. In order to proceed an extension of fiber must be built out along US-31 to connect the site. Staff procured estimates for this additional work with the lowest amount coming to $29,166.85. While this is within the Executive Director's spending authority, the amount came in higher than $25,000 which requires sealed bids in accordance with the purchasing policy. The higher than anticipated cost was due to the adding in materials within the estimate that normally would come from TCL&P inventory, or procured separately, in which case the actual construction portion of the agreement comes in at $24,740.45. Therefore, combining the materials and construction cost into a single quote put the total amount above the sealed bid limit. Because of the time sensitive needs of Munson to connect this site, and because the costs are fully reimbursable to the utility, the Executive Director authorized the construction agreement. This item is appearing on the Consent Calendar as it is deemed a non-controversial item by staff. Approval of this item on the Consent Calendar means you agree with staff’s recommendation. If any member of the Board



agree with staff’s recommendation the following motion would be appropriate MOVED BY______________, SECONDED BY______________, THAT THE BOARD WAIVE THE SEALED BIDDING REQUIREMENT WITHIN THE PURCHASING POLICY AND AUTHORIZES STAFF TO ISSUE A CONSTRUCTION AGREEMENT FOR FIBER CONSTRUCTION TO CONNECT AN ADDITIONAL DARK FIBER SITE FOR MUNSON MEDICAL CENTER.

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To:



2019-20 Financial Audit Presentation

The TCL&P Financial Audit for the fiscal year ended June 30, 2020 will be presented by the audit firm of Vredeveld Haefner LLC. A copy of the audit is included along with the PowerPoint presentation. The public will be able to view the audit on-line at TCL&P’s web page: www.tclp.org. If after the Board’s questions have been answered and it is satisfied with the report, the following motion would

be appropriate: MOVED BY ________________________, SECONDED BY __________________________, THAT THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 BE ACCEPTED.

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http://www.tclp.org/

VREDEVELD HAEFNER LLCCPAS AND CONSULTANTS

TRAVERSE CITY LIGHT & POWERYEAR ENDED JUNE 30, 2020

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LIGHT & POWER FUNDOPERATING REVENUES AND EXPENSES

$28,000,000

$29,000,000

$30,000,000

$31,000,000

$32,000,000

$33,000,000

$34,000,000

$35,000,000

$36,000,000

Operating Revenues Operating Expenses

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LIGHT & POWER AND FIBER FUNDSOPERATING EXPENSES

64%

12%

1%5%

10% 3%

4% 1%

Purchase Power

Distribution

Transmission

City Fee

Depreciation

Administration

Other

Fiber

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LIGHT & POWER AND FIBEROPERATING EXPENSES

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

2016 2017 2018 2019 2020

Generation Distribution Transmission City Fee Depreciation Other Fiber fund of 167

LIGHT & POWER FUNDCHANGE IN NET POSITION

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

$5,000,000

2015 2016 2017 2018 2019 2020

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LIGHT & POWER FUNDNET ASSETS

$-

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

2016 2017 2018 2019 2020

Invested in Capital Assets Unrestricted

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LIGHT & POWER FUNDUTILITY SALES AND PURCHASE POWER COSTS

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

2016 2017 2018 2019 2020

Utility Sales Purchase Power Costs

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LIGHT & POWER FUNDNET PENSION AND OPEB LIABILITIES

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

2016 2017 2018 2019 2020

Pension

OPEB

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LIGHT & POWER FUNDPURCHASE POWER PORTFOLIO

Coal96.41%

Renewable0.10%

Natural Gas3.49%

TCL&P Generation MixFor the Fiscal Year Ending

June 30, 2010Natural

Gas, 4%Renewable,

13%

Coal, 32%

Market (Various),

51%

TCL&P Generation MixFor the Fiscal Year Ending

June 30, 2020

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LIGHT & POWER FUNDPURCHASE POWER PORTFOLIO

$-

$0.02

$0.04

$0.06

$0.08

$0.10

$0.12

$0.14

2016 2017 2018 2019 2020

Cost per kWh for Purchase Power Sourcesincluding average cost excluding Combustion Turbine

Bilateral Contracts Campbell Coal Plant Belle River Coal Plant Landfill Gas

Pegasus Market Stoney Corners Wind Farm M-72 Wind Turbine

M-72 Solar M-72 Solar II Average Cost

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Douglas J. Vredeveld, CPA, CGFM

Partner

(616) 446-7474

[email protected]

Peter Haefner, CPA

Partner

(616) 460-9388

[email protected]

Vredeveld Haefner LLC

CONTACT US!

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Vredeveld Haefner LLC CPAs and Consultants Douglas J. Vredeveld, CPA

10302 20th Avenue (616) 446-7474 Grand Rapids, MI 49534 Peter S. Haefner, CPA Fax (616) 828-0307 (616) 460-9388

Specializing in services to governmental and nonprofit entities

December 23, 2020

Honorable Chairman and Members Traverse City Light and Power Traverse City, Michigan

We have audited the financial statements of the governmental activities and each major fund of the Traverse City Light and Power, a Component Unit of the City of Traverse City, Michigan, for the year ended June 30, 2020. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated July 31, 2020. Professional standards also require that we communicate to you the following information related to our audit.

Significant Audit Results

Qualitative Aspects of Accounting Practices

Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by Traverse City Light and Power are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year. We noted no transactions entered into by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.

Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were:

Management’s estimate of the useful lives of capital assets is based on previous history and future expectations and the estimate of pension and OPEB plan obligations are based on actuarial valuations of the plans. We evaluated the key factors and assumptions used to develop the estimates in determining that they are reasonable in relation to the financial statements taken as a whole.

Difficulties Encountered in Performing the Audit

We encountered no significant difficulties in dealing with management in performing and completing our audit.

Corrected and Uncorrected Misstatements

Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. We did not detect any misstatements as a result of audit procedures the required correction by management that were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole.

Disagreements with Management

For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.

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Management Representations

We have requested certain representations from management that are included in the management representation letter dated December 23, 2020.

Management Consultations with Other Independent Accountants

In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the governmental unit’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Other Audit Findings or Issues

We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the governmental unit’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

Other Matters

We applied certain limited procedures to the required supplementary information (RSI), as itemized in the table of contents, that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.

Restriction on Use

This information is intended solely for the use of Traverse City Light and Power Board of Directors and the City Commission of the City of Traverse City and management of Traverse City Light and Power and the City of Traverse City and is not intended to be and should not be used by anyone other than these specified parties.

Sincerely,

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Vredeveld Haefner LLC CPAs and Consultants

Traverse City Light and Power

(A Component Unit of the

City of Traverse City, Michigan)

Financial Statements

For the Fiscal Year Ended June 30, 2020

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TRAVERSE CITY LIGHT AND POWER (A Component Unit of the City of Traverse City, Michigan) TABLE OF CONTENTS

Independent Auditor’s Report 1-2 Management’s Discussion and Analysis 3-6

Basic Financial Statements for the Year Ended June 30, 2020

Statement of Net Position 7

Statement of Revenues, Expenses and Changes in Net Position 8

Statement of Cash Flows 9 Statement of Fiduciary Net Position 10 Statement of Changes in Fiduciary Net Position 11 Notes to Financial Statements 12-31

Supplementary Information

Required Supplementary Information

Schedule of Changes in Net Pension Liability and Related Ratios 32 Schedule of Pension Employer Contributions 33 Schedule of Changes in Net OPEB Liability and Related Ratios 34-35 Schedule of OPEB Employer Contributions 36 Schedule of OPEB Investment Returns 37 Other Supplementary Information

Schedule of Capital Assets and Depreciation 38-39

Schedule of Revenues and Expenses - Budget and Actual 40-46

Internal Control and Compliance Independent Auditor’s Report on internal control over financial reporting, and other matters based on an audit of financial statements and on compliance performed in accordance with Government Auditing Standards 47-48

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INDEPENDENT AUDITORS’ REPORT

December 23, 2020

Honorable Chairman and Members Traverse City Light and Power Traverse City, Michigan

Report on the Financial Statements

We have audited the accompanying financial statements of Traverse City Light and Power, a Component Unit of the City of Traverse City, Michigan, as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise Traverse City Light and Power’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Traverse City Light and Power as of June 30, 2020, and the changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 3 through 6 and the information on pages 32 through 37 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Traverse City Light and Power financial statements as a whole. The schedule of capital assets and depreciation and the schedule of revenues and expenses – budget and actual are presented for purposes of additional analysis and are not a required part of the financial statements.

The schedules have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 23, 2020 on our consideration of Traverse City Light and Power's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance.

That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Traverse City Light and Power’s internal control over financial reporting and compliance.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

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TRAVERSE CITY LIGHT AND POWER

Management’s Discussion and Analysis As management of the Traverse City Light and Power (the “Department”), we offer readers of the Department’s financial statements this narrative overview and analysis of the financial activities for the fiscal year ended June 30, 2020. We encourage readers to consider the information presented here in conjunction with additional information that is furnished in the financial statements and notes to the financial statements. Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to the Department’s financial statements. The Department’s financial statements comprise three components: 1. Financial statements 2. Notes to the financial statements 3. Supplementary information Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Department, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The activity of the Department is accounted for in two proprietary funds (Enterprise Funds) and a fiduciary fund. The Light and Power and the Fiber enterprise funds, are both considered major for reporting purposes. Enterprise funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing electrical and dark fiber services to customers. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the statement of net position statement because the resources of those funds are not available to support the Department’s own programs. The accounting used for fiduciary funds is much like that used for enterprise funds. The Statement of Net Position presents information on all of the Department’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Department is improving or deteriorating.

The Statement of Revenues, Expenses and Changes in Net Position presents information showing how the Department’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in past or future fiscal periods (for instance, depreciation expense associated with capital assets).

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The Department is principally supported by charges for providing electrical and dark fiber services to customers in Traverse City and Townships within the franchise area. The financial statements include only the Department itself. The Department has no legally separate component units for which the Department is financially accountable. The Department adopts an annual appropriated budget for its funds as required by City Charter. Budgetary comparison schedules have been provided herein to demonstrate compliance with that charter provision. The Department does not maintain any governmental funds. Notes to the financial statements. The notes provide additional information that is essential to gain a full understanding of the data provided in the Department’s financial statements. Supplementary information. In addition to the financial statements and accompanying notes, this report also presents certain supplementary information, which includes this management discussion and analysis and benefit plan schedules following the notes to the financial statements. The Department’s Financial Analysis

As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the Department, assets exceeded liabilities by $ 78,057,530 at the close of the most recent fiscal year, June 30, 2020. The largest portion of net position for the Department is its investment in capital assets (primarily land, construction in progress, buildings, distribution system and equipment). The Department uses these capital assets to provide services to customers. The remaining Department net position is unrestricted and available for Department activity.

Traverse City Light and Power’s Net Position

June 30

Business-type Activities 2020 2019

Current and other assets $22,732,827 $22,314,254 Capital assets 71,152,266 68,151,757

Total assets 93,885,093 90,466,011

Deferred outflows 3,674,549 4,108,177

Long-term liabilities outstanding 14,057,856 14,260,995 Other liabilities 3,545,208 3,538,363

Total liabilities 17,603,064 17,799,358

Deferred inflows 1,899,048 1,528,533

Net position Invested in capital assets 69,537,891 68,151,757 Unrestricted 8,519,639 7,094,540 Total net position $78,057,530 $75,246,297

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Traverse City Light and Power’s Changes in Net Position

June 30

Business-type Activities 2020 2019

Operating revenue $33,404,981 $34,611,240

Operating expenses (30,630,857) (33,400,527) Nonoperating revenue (expense) 557,213 789,204 Special Item - (1,034,859)

Increase in net position 3,331,337 965,058 Net position – beginning of year, as restated 74,726,193 74,281,289

Net position – end of year $78,057,530 $75,246,297

Business-type activities

The overall financial position of the Department remained strong in 2019-2020. There are no outstanding debt obligations except for the commitments through the power supply contracts with Michigan Public Power Agency (“MPPA”) to reimburse MPPA for operating and/or debt service costs relating to the Campbell, Belle River and Kalkaska generation plants.

Revenue Overall, the Electric Fund’s revenues were under budget by approximately $2,019,800. Electric operating revenues were under budget by $2,221,000 relating to less kilowatt hours sold than what was budgeted caused by the COVID-19 pandemic. Other operating revenues, more specifically, MISO income came under budget relating to the book-value of transmission assets declining more than expected. Reimbursements under nonoperating revenues exceeded budget relating to storm assistance payments from other electric utilities. Expenses In fiscal year 2019-20, Electric Funds operating expenses was under budget by approximately $4.2 M. There were many fluctuations within the departments but overall the most significant related to salaries and wages, payroll taxes and fringes, and purchase power expense. There were many factors that impacted salaries and wages and payroll taxes and fringes. These include vacancies, amortization of interest earnings related to the pension system, change in deferred inflows/outflows relating to the OPEB liability, and increase in the amount of work capitalized. Purchase power costs are under budget because of less kilowatt hours sold caused by the COVID-19 pandemic.

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Capital asset and debt administration

Traverse City Light and Power Capital Assets (net of depreciation)

June 30

2020 2019

Land and land improvements $ 1,071,410 $ 1,105,070 Construction in progress 3,671,515 2,061,270 Buildings and improvements 5,836,798 5,833,125 Equipment and distribution system 94,188,326 90,520,655

Accumulated depreciation (33,615,783) (31,368,363)

Total $71,152,266 $68,151,757

Additional information about capital assets is provided in Note 3 to the financial statements. Debt of the Department consists of amounts outstanding for accrued compensated absences. Additional information can be found in Note 4 to the financial statements.

Economic Factors and Next Year’s Budgets and Rates Overall the budget remains similar to past years. A rate increase of 2.5% was budgeted, but currently has been deferred. In addition to this rate increase, a slight increase in sales was budgeted based on load growth while taking into consideration the impacts of energy waste reduction. Additionally, a slight increase in purchase power costs are expected going from $58.49 to $62.80 per MWh, which will be passed on to the customer through the utility’s variable power service cost recovery rate. The utility is continuing with an accelerated amortization schedule on the utility’s unfunded pension liability to increase the overall pension funding percentage. Additionally, the utility has incorporated into the Fiber Fund Budget the deployment of Phase 1 Smart Grid Expansion/Fiber to the Premise Project (internet and phone services) to the utility’s commercial and residential customers. Requests for Information

This financial report is designed to provide a general overview of the Department’s finances. Questions concerning any of the information provided in this report or requests for additional financial information, should be addressed to Karla Myers-Beman, Controller, Traverse City Light and Power, 1131 Hastings Street, Traverse City, MI 49686.

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FINANCIAL STATEMENTS

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ASSETS

Light and PowerFund

Fiber Fund

Business-typeActivities

Total

Current assetsCash and cash equivalents 2,574,006$ 151,654$ 2,725,660$ Receivables

Customer, less allowances of $384,116for uncollectible accounts (Light and Power Fund) 3,294,162 5,910 3,300,072

Accrued interest 20,882 - 20,882 Taxes 1,604 - 1,604 Other 218,754 - 218,754

Due from other funds - 461,197 461,197 Inventories 1,491,888 8,928 1,500,816 Prepaid expenses 127,925 - 127,925

Total current assets 7,729,221 627,689 8,356,910

Non-current assetsInvestments 10,993,555 - 10,993,555 Accounts receivables 1,605,966 - 1,605,966 Long-term advances - Due from Fiber Fund 1,614,375 - 1,614,375 Long-term advances - Due from Primary Government 162,021 - 162,021 Land and land improvements 1,071,410 - 1,071,410 Construction in progress 1,922,423 1,749,092 3,671,515 Capital assets being depreciated, net 65,375,078 1,034,263 66,409,341

Total non-current assets 82,744,828 2,783,355 85,528,183

Total assets 90,474,049 3,411,044 93,885,093

Deferred outflowsDeferred outflows of resources - Pensions 3,396,088 - 3,396,088 Deferred outflows of resources - OPEB 278,461 - 278,461

Total deferred outflows of resources 3,674,549 - 3,674,549


(A Component Unit of the City of Traverse City, Michigan)

STATEMENT OF NET POSITIONJUNE 30, 2020

The accompanying notes are an integral part of these financial statements.

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Light and PowerFund

Fiber Fund

Business-typeActivities

Total

Current liabilitiesAccounts payable 2,225,894$ 451,817$ 2,677,711$ Accrued expenses and other liabilities 243,296 25,695 268,991 Customer deposits 92,431 - 92,431 Compensated absences 11,081 - 11,081 Unearned revenue 22,867 10,930 33,797 Due to other funds 461,197 - 461,197

Total current liabilities 3,056,766 488,442 3,545,208

Long-term liabilitiesCompensated absences 204,635 1,688 206,323 Long term advances - Due to Electric Fund - 1,614,375 1,614,375 Net pension liability 11,058,994 - 11,058,994 Net other post employment benefit liability 1,178,164 - 1,178,164

Total liabilities 15,498,559 2,104,505 17,603,064

Deferred inflowsDeferred inflows of resources - Pensions 1,469,462 - 1,469,462 Deferred inflows of resources - OPEB 429,586 - 429,586

Total deferred inflows of resources 1,899,048 - 1,899,048

Net positionInvested in capital assets 68,368,911 1,168,980 69,537,891 Unrestricted 8,382,080 137,559 8,519,639

Total net position 76,750,991$ 1,306,539$ 78,057,530$


STATEMENT OF NET POSITIONJUNE 30, 2020


LIABILITIES AND NET POSITION


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Light and Business-typePower Fiber ActivitiesFund Fund Total

Operating revenuesCharges for services 29,553,746$ 446,598$ 30,000,344$ MISO income 3,067,430 - 3,067,430 Other 337,207 - 337,207

Total operating revenues 32,958,383 446,598 33,404,981

Operating expensesPurchase power 19,600,773 - 19,600,773 Distribution 3,530,427 - 3,530,427 Transmission 424,522 - 424,522 Customer accounting 525,865 - 525,865 Public service 448,795 - 448,795 Information systems 226,247 - 226,247 General administration 797,949 - 797,949 Fiber - 135,454 135,454 WIFI - 25,490 25,490 Other 70,713 763 71,476 City fee 1,656,483 22,136 1,678,619 Depreciation 3,018,147 147,093 3,165,240

Total operating expenses 30,299,921 330,936 30,630,857

Operating income 2,658,462 115,662 2,774,124

Nonoperating revenues (expenses)Rental income 114,841 - 114,841 Reimbursements 226,005 33,347 259,352 Interest income 251,430 - 251,430 Change in fair value of investments 45,003 - 45,003 Loss on sale of assets (113,413) - (113,413)

Total nonoperating revenue 523,866 33,347 557,213

Income before transfers 3,182,328 149,009 3,331,337

TransfersTransfers in 200,000 - 200,000 Transfers out - (200,000) (200,000)

Total transfers 200,000 (200,000) -

Change in net position 3,382,328 (50,991) 3,331,337

Net position, beginning of year, as restated 73,368,663 1,357,530 74,726,193

Net position, end of year 76,750,991$ 1,306,539$ 78,057,530$



STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION

FOR THE YEAR ENDED JUNE 30, 2020


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Cash flows from operating activitiesCash received from customers 32,903,010$ 527,251$ 33,430,261$ Cash payments to employees (9,225,554) (74,871) (9,300,425) Cash payments to suppliers for goods and services (18,736,171) (111,062) (18,847,233) Cash payments of City fee (1,729,419) (43,450) (1,772,869)

Net cash provided by operating activities 3,211,866 297,868 3,509,734

Cash flows from noncapital financing activitiesCash payments to primary government (7,824) - (7,824) Cash payments to/from other funds 200,000 (200,000) - Customer deposits paid (3,075) - (3,075) Rental income received 114,841 - 114,841 Reimbursements received 226,005 33,347 259,352

Net cash provided by (used in) noncapital financing activities 529,947 (166,653) 363,294

Cash flows from capital and related financing activitiesInterfund loan (1,153,178) 1,153,178 (2,306,356) Purchase of capital assets (4,556,756) (1,308,023) (5,864,779) Sale of property 25,000 - 25,000

Net cash (used in) capital financing activities (5,684,934) (154,845) (8,146,135)

Cash flows from investing activitiesSale of investments 3,827,777 - 3,827,777 Interest 338,606 - 338,606

Net cash provided by investing activities 4,166,383 - 4,166,383

Net increase/decrease in cash and cash equivalents 2,223,262 (23,630) (106,724)

Cash and cash equivalents, beginning of year 350,744 175,284 526,028

Cash and cash equivalents, end of year 2,574,006$ 151,654$ 2,725,660$




STATEMENT OF CASH FLOWS


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STATEMENT OF CASH FLOWS

Cash flows from operating activitiesOperating income 2,658,462$ 115,662$ 2,774,124$ Adjustments to reconcile operating income to net cash

provided by operating activitiesDepreciation 3,018,147 147,093 3,165,240 Changes in operating assets and liabilities which

provided (used) cashReceivables (78,240) 84,538 6,298 Inventories (1,346) 6,274 4,928 Prepaid expenses (30,631) - (30,631) Deferred outflow 433,628 - 433,628 Accounts payable 128,677 (35,884) 92,793 Due to other governments (72,936) (21,314) (94,250) Accrued expenses and other liabilities (886,155) 5,384 (880,771) Unearned revenue 22,867 (3,885) 18,982 Compensated absences 35,186 - 35,186 Deferred inflow/outflow (149,589) - (149,589) Net pension liability (1,141,966) - (1,141,966) Other post employment liability (724,238) - (724,238)

Net cash provided by operating activities 3,211,866$ 297,868$ 3,509,734$

Non cash transaction: The cash flow includes the change in fair market value of investments in the amount of $45,003.


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OtherPost employment

Benefit FundsAssets

Investments, at fair valueMERS total market fund 3,805,358$

Accounts receivable 30,770

Total assets 3,836,128

Net PositionHeld in trust for other post employment benefits 3,836,128$



STATEMENT OF FIDUCIARY NET POSITIONFIDUCIARY FUND

JUNE 30, 2020


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OtherPost employment

Benefit FundsAdditions

Employer contributions 164,442$

Investment earningsInterest and dividend income 64,798 Investment advisor fees (5,048)

Net investment earnings 59,750

Total additions 224,192

Net position held in trust, beginning of year 3,611,936

Net position held in trust, end of year 3,836,128$



STATEMENT OF CHANGES IN FIDUCIARY NET POSITIONFIDUCIARY FUND



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NOTES TO FINANCIAL STATEMENTS

12

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Under provisions of the City of Traverse City (the “City”) Charter, the Light and Power Board (the “Board”) was created having jurisdiction and control of Traverse City Light and Power (the “Department”). The Board consists of seven members (two of which are City Commissioners) and one ex-officio member (the City Manager). The Department’s annual budget is approved by the City Commission. The Department is required to pay 5% of its gross revenue annually to the City’s General Fund as a City fee. For fiscal 2020, the City fee was $1,678,619. Reporting Entity The Department is a discretely presented component unit of the City because the City appoints the Department’s Board of Directors, it has the ability to significantly influence the Department’s operations and it is financially accountable for the Department as defined under GASB Statement No. 14, The Financial Reporting Entity, as amended by GASB Statements 39 and 61. Accordingly, the Department is an integral part of that reporting entity. As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the Department. There are no component units to be included. The criteria for including a component unit includes significant operational or financial relationships with the Department. Basis of Accounting

The Department uses the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.

Cash and Cash Equivalents

For purposes of the Statement of Cash Flows, the Department considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Investments

Investments are stated at fair value. The change in fair value of the investments from the beginning of the year to the end of the year is reported in the “Nonoperating revenues” section of the Statements of Revenues, Expenses and Changes in Net Position”. State statutes and City policy authorize the Department to invest in: a. Bonds, securities, other obligations and repurchase agreements of the United States or an agency

or instrumentality of the United States. b. Certificates of deposit, savings accounts, deposit accounts, or depository receipts of a qualified

financial institution. c. Commercial paper rated at the time of purchase within the two highest classifications established

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13

by not less than two standard rating services and that matures not more than 270 days after the date of purchase.

d. Bankers acceptances of United States banks. e. Obligations of the State of Michigan and its political subdivisions that at the time of purchase are

rated as investment grade by at least one standard rating service. f. Mutual funds registered under the Investment Company Act of 1940 with the authority to

purchase only investment vehicles that are legal for direct investment by a public corporation. g. External investment pools as authorized by Public Act 20, as amended. h. Long-term or perpetual trust funds consisting of money and royalties or money derived from oil

and gas exploration on property or mineral rights owned by the Department has the same authority to invest the assets as is authorized by Public Act 314, as amended.

Receivables/Payables

All receivables are reported at their gross value and, where appropriate, are reduced by the estimated portion that is expected to be uncollectible. Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either due to/from other funds (i.e. the current portion of interfund loans) or advance to/from other funds (i.e. the non-current portion of interfund loans). All other outstanding balances between funds are reported as due to/from other funds. Any residual balances outstanding between the funds are reported in the Statement of Net Position. Inventories

Inventories consist of materials to be used in the electric system and are valued at cost (first-in, first-out) not in excess of market. Maintenance and office supplies (immaterial at year end) are charged to expenses upon purchase. Prepaid Expenses

The Department made payments prior to year-end for services that will be performed in the next fiscal year. In these situations, the Department records an asset to reflect the investment in future services. Capital assets

Capital assets are defined by the government as assets with an initial individual cost of more than $2,500 and an estimated useful life in excess of two years. Capital assets are stated at cost. Depreciation is computed using the straight-line method over the estimated lives of the related assets as follows:

Years Transmission and distribution plant 30-50 General plant 10-50

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Compensated Absences

Compensated absences consist of accumulated unpaid vacation, short-term leave and sick pay. Accumulated unpaid vacation and short-term leave are accrued when earned. Sick pay is frozen for employees but upon death or retirement 50% of accumulated sick leave shall be paid to a maximum of 120 days. Two choices for sick pay cash out are available to employees with more than 30 days of sick leave and 10 years of service. Employees can use sick leave as allowing under the Short-Term Leave Plan or cash out all amounts of sick leave in excess of 30 days up to 120 days at the rate of 50% of employee’s current pay rate. Days in excess of 120 will be added to the 30 day bank. This choice must be made as a one-time selection at any time after the employee reaches 10 years of service. Deferred Outflows/Inflows of Resources

In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense) until then. The Department has items that qualify for reporting in this category related to the pension plan which is discussed in Note 7 and the OPEB plan as discussed in Note 10. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows or resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The Department has items that qualify for reporting in this category related to the pension plan which is discussed in Note 7 and the OPEB plan as discussed in Note 10. Pensions For purposes of measuring the Net Pension Liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense; information about the fiduciary net position of the Municipal Employees Retirement System (MERS) of Michigan and additions to/deductions from MERS’ fiduciary net position have been determined on the same basis as they are reported by MERS. For this purpose, benefit payments (including refunds or employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Operating Revenue versus Nonoperating Revenue

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Department are charges to customers for sales and services and “MISO” revenue. Operating expenses for the Department include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

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Funds

The Department reports the following major proprietary funds:

The Light and Power Enterprise Fund is used to account for the operations of the Department’s electric utility that provides electric service to customers on a user charge basis. The Fiber Enterprise Fund is used to account for the operations of the Department’s fiber optic utility that provides services to customers on a user charge basis and WIFI system located in the downtown area. The Fiber Fund was created in 2008 with an initial capital contribution from the Light and Power Enterprise Fund.

Restricted resources

When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first, then unrestricted resources as they are needed.

2. CASH DEPOSITS AND INVESTMENTS

The Department’s cash and cash equivalents, and investments at June 30, 2020 are composed of the following: Enterprise

Funds Fiduciary

Fund

Total Cash and cash equivalents $ 2,725,660 $ - $ 2,725,660

Investments 10,993,555 3,805,358 14,798,913

Total $13,719,215 $3,805,358 $17,524,573

The cash and investments making up the above balances are as follows:

Deposits $5,696,251 Investments 8,022,964 OPEB - investments 3,805,358

Total $17,524,573

Deposits consist of various interest bearing cash accounts and certificates of deposit, held by the City of Traverse City Treasurer. The insured and uninsured bank balances for the Department’s deposits are not available as these deposits are held in pools with other City funds. The Department is authorized by Michigan Public Act 20 of 1943 to invest surplus monies in U.S. bonds and notes, certain commercial paper, mutual funds and investment pools that are composed of authorized investment vehicles.

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The Department chooses to disclose its investments by specifically identifying each. As of June 30, 2020, the Department’s Michigan CLASS investment and the U.S. Treasury notes are rated by Standard and Poor’s and/or Moody’s. The Department also maintains a post employment benefit trust fund where investments are maintained separately from the City’s pooled cash and investments and are subject to the Michigan Public Employees Retirement System’s Investment Act, Public Act 314, 1965, as amended, authorizes pension and post employment benefit trusts to invest in stocks, government and corporate securities, mortgages, real estate, and various other investment instruments, subject to certain limitations. The investments are managed by the Michigan Employees Retirements System (“MERS”) and are in the MERS Total Market Fund. The Department had the following investments:

Investment Maturity Fair Value Rating US Treasury Note 08/20/2020 $ 999,820 Aaa/AA+ US Treasury Note 09/24/2020 999,660 Aaa/AA+ US Treasury Note 11/19/2020 999,360 Aaa/AA+ FHLB Bond 02/05/2025 1,001,060 Aaa/AA+ FHLB Bond 03/25/2025 1,000,540 Aaa/AA+ FHLB Bond 06/02/2026 1,000,050 Aaa/AA+ FHLB Bond 06/04/2027 999,010 Aaa/AA+ FHLB Bond 03/10/2031 268,724 Aaa/AA+ FHLB Bond 02/12/2035 500,555 Aaa/AA+ FHLB Bond 04/02/2024 250,948 Aaa/AA+ Michigan CLASS NA 3,237 AAAm $ 8,022,964

Investment and deposit risk Interest Rate Risk. State law limits the allowable investments and the maturities of some of the allowable investments as identified in Note 1. The Department’s investment policy does not have specific limits in excess of state law on investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The maturity dates for each investment are identified above for investments held at year-end. Credit Risk. State law limits investments to specific government securities, certificates of deposits and bank accounts with qualified financial institutions, commercial paper with specific maximum maturities and ratings when purchased, bankers acceptances of specific financial institutions, qualified mutual funds and qualified external investment pools as identified above. The Department’s investment policy does not have specific limits in excess of state law on investment credit risk. The ratings for each investment are identified above for investments held at year end.

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Custodial Credit Risk – Deposits. Custodial credit risk is the risk that in the event of a bank failure, the Department’s deposits may not be returned. State law does not require and the Department does not have a policy for deposit custodial credit risk. The insured and uninsured bank balances for the Department deposits are not available as these deposits are held in pools with other City funds. Custodial Credit Risk – Investments. For investments, custodial credit risk is the risk that, in the event of the failure of the counterparty, the Department will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. State law does not require and the Department does not have a policy for investment custodial credit risk. Of the above $8,022,964 of investments at June 30, 2020, the Department has a custodial credit risk exposure of $8,019,727 because the related securities are uninsured, unregistered and held by the government’s brokerage firm which is also the counterparty for these particular securities. The Department’s custodial credit risk exposure cannot be determined for the above Michigan CLASS investment pool because the Department does not own specifically identifiable securities. Concentration of Credit Risk. State law limits allowable investments but does not limit concentration of credit risk as identified above. The Department’s investment policy does not have specific limits in excess of state law on concentration of credit risk. None of the investments held by the Department, excluding government obligations explicitly guaranteed by the U.S. government and mutual fund investments, exceed 5% of the Department’s investments.

Fair Value Measurements. The Department categorizes its fair value measurements of investments within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. Investments that are measured at the fair value using the net asset value per share (or its equivalent) as a practical expedient are not classified in the fair value hierarchy below.

The Department has the following recurring fair value measurements as of year-end.

• MERS Total Market Fund, US Treasury Notes, and FHLB Bonds are valued using quoted market prices in active markets (Level 1 Inputs)

• The Department does not have any investments that report fair value based on significant unobservable inputs (Level 3 Inputs)

Investments in Entities that Calculate Net Asset Value per Share

The Department holds interests in an external investment pool whereby the fair value of the

investments are measured on a recurring basis using net asset value per share.

Fair Value

Michigan Class $ 3,237

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3. CAPITAL ASSETS

At June 30, 2020, capital assets consist of the following:

Beginning Balance

Additions &Transfers

Deletions & Transfers

Ending Balance

Capital assets not being depreciated Land and land improvements $1,105,070 $ 6,105 $ 39,765 $1,071,410 Construction in progress 2,061,270 6,305,354 4,695,109 3,671,515

Total capital assets not being depreciated 3,166,340 6,311,459 4,734,874 4,742,925

Capital assets being depreciated Buildings and improvements 5,833,125 3,673 - 5,836,798 Equipment and distribution system 88,137,249 4,684,146 1,016,475 91,804,920 Fiber System 1,881,543 - - 1,881,543 WiFi System 501,863 - - 501,863

Total capital assets being depreciated 96,353,780 4,687,819 1,016,475 100,025,124

Less accumulated depreciation for Buildings and improvements 2,125,437 176,595 - 2,302,032 Equipment and distribution system 28,040,876 2,841,552 917,820 29,964,608 Fiber System 976,262 96,905 - 1,073,167 WiFi System 225,788 50,188 - 275,976

Total accumulated depreciation 31,368,363 3,165,240 917,820 33,615,783

Total capital assets being depreciated, net 64,985,417 1,522,579 98,655 66,409,341

Total capital assets, net $68,151,757 $7,834,038 $4,833,529 $71,152,266

4. INTERFUND RECEIVABLES AND PAYABLES

Fund

Interfund

Receivables

Fund

Interfund

Payables

Fiber $ 461,197 Light & Power $ 461,197

Light & Power 1,614,375 Fiber 1,614,375

Total $ 2,075,572 Total $ 2,075,572

Interfund receivables and payables are established to cover financing of projects and to match receivables with payables. A current portion of the advance to/from will be established once construction is complete.

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5. LONG-TERM LIABILITIES

Long-term debt at June 30, 2020, consists of the following:

Beginning Balance Additions Reductions

Ending Balance

Due

Within One Year

Accrued compensated absences $182,107 $328,161 $292,864 $217,404 $11,081

6. POWER SUPPLY PURCHASE

The Department, along with other Michigan municipal utilities, is a member of the MPPA. The agency was formed to acquire interest in certain electric generating plants and related transmission lines to service its members. MPPA has acquired a 4.8% undivided interest in the Consumers Energy Campbell 3 plant, an 18.6% undivided interest in the Detroit Edison Belle River project, and 100% undivided interest in the Kalkaska Combustion Turbine project.

In 1983, the Department entered into a 35-year power supply and project support contract with MPPA. Under the agreement, the Department will purchase 26.35% of the energy generated by MPPA’s 4.8% interest in the Campbell 3 plant and 4.53% of the energy generated by MPPA’s 18.6% interest in the Belle River plant. In 2002, the Department entered into a 25-year power supply and project support contract with MPPA. Under the agreement, the Department will purchase 75.9% of the energy generated by MPPA’s 100% interest in the Kalkaska Combustion Turbine. In 2009, the Department entered into a power supply contract with MPPA. Under the agreement, the Department will purchase 8.13% of the energy generated in the MPPA’s renewable energy contract with Grainger Electric of Michigan, LLC. In 2011, the Department entered into a power supply contract with MPPA. Under the agreement, the Department will purchase 8.13% of the energy generated in the MPPA’s renewable energy contract with Northern American Natural Resources of Michigan. In 2014, the Department entered into an Energy Services Agreement with MPPA for the objective of accessing third party marketers in MISO for the purpose of reducing exposure to MISO market during volatile seasons. This is accomplished through MPPA soliciting bids and subsequently entering into contracts on behalf of the Department for firm priced energy supply. In 2017, the Department entered into a commitment with MPPA for 5.80% of energy generated from the Pegasus Wind Farm.

For the year ended June 30, 2020, Traverse City Light and Power recognized expenses totaling $16,064,496 to purchase power under the terms of all contracts with MPPA. The price of the power was calculated on a basis, as specified in the contracts, to enable MPPA to recover its production, transmission and debt service costs. Under the terms of the contracts, the Department must make minimum annual payments to cover their share of annual debt service requirements and fixed operation costs of the Campbell 3, Belle River, and Combustion Turbine projects (based on the percentage of power purchased). Future operating costs are estimated based on 2019 costs adjusted for inflation and calculated until the time of project’s debt retirement.

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The total estimated future operating costs, which do not include the annual debt payments, are as follows:

Year Ended December 31

Operating Costs

2021 $ 5,247,117 2022 5,404,531 2023 2,711,600 2024 2,792,948 2025 2,876,736

2026-2027 6,014,968

Total $25,047,900

The estimated total annual debt payments (assuming no early calls or refinancing) are as follows:

Year Ended December 31 Principal Interest Total

2021 $ 2,376,923 $ 558,816 $ 2,935,739 2022 1,909,168 469,061 2,378,229 2023 1,426,920 394,680 1,821,600 2024 1,499,025 323,334 1,822,359 2025 1,574,925 248,383 1,823,308

2026-2027 3,392,730 256,542 3,649,272

Total $12,179,691 $2,250,816 $14,430,507

In December 2009, the Department entered into a 20-year purchase power agreement with Heritage Stoney Corners Wind Farm I, LLC to purchase up to 10 megawatts of electric energy and all associated renewable energy credits. For the year ended June 30, 2020, the Department recognized expenses totaling $3,007,159 under this agreement. In December 2014, the Department entered into a 20-year purchase power agreement with options to terminate on January 1, 2025 and January 1, 2030 upon ninety-day notice. The Agreement is with Heritage Sustainable Energy, LLC to purchase up to .6 MW of electric energy from the M-72 wind turbine. For the year ended June 30, 2020, the Department recognized expenses totaling $34,367 under this agreement. In August 2017, the Department amended the Heritage Sustainable Energy, LLC contract to purchase and additional 1MW of electric energy from the M-72 solar array. It was amended again on July 11, 2019 to include an additional 2MW of electric energy through an expansion of the M-72 1MW solar array. The contract will terminate December 31, 2038. For the year ended June 30, 2020 the Department recognized expenses totaling $209,768 under this agreement.

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7. RETIREMENT PLAN

General Information about the Pension Plan

Plan Description. The employer’s defined benefit pension plan provides certain retirement, disability and death benefits to plan members and beneficiaries. The employer participates in MERS of Michigan. MERS is an agent multiple-employer, statewide public employee pension plan established by the Michigan Legislature under Public Act 135 of 1945 and administered by a nine member Retirement Board. MERS issues a publicly available financial report that includes financial statements and required supplementary information. This report may be obtained accessing the MERS website at www.mersofmich.com. Benefits Provided

01 - Non Union – closed to new

hires, linked to Division 11

2019 Valuation

Benefit Multiplier: 2.25% Multiplier (80% max) Normal Retirement Age: 60 Vesting: 10 years Early Retirement (Unreduced): 55/25 Early Retirement (Reduced): 50/25 55/15 Final Average Compensation: 5 years COLA for Current/Future

Retirees: 2.50% (Non-Compound) Member Contributions: 0% Act 88: No

10 - Union closed to new hires,

linked to Division 12

2019 Valuation

Benefit Multiplier: 2.25% Multiplier (80% max) Normal Retirement Age: 60 Vesting: 6 years Early Retirement (Unreduced): 50/25 Early Retirement (Reduced): 55/15 Final Average Compensation: 5 years COLA for Current/Future Retirees: 2.50% (Non-Compound) Member Contributions: 0% Act 88: No

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11 - Non-union hired after

7/1/2017, linked to Division 01

2019 Valuation

Benefit Multiplier: 1.5% Multiplier (80% max) Normal Retirement Age: 60 Vesting: 6 years Early Retirement (Unreduced): 55/25 Early Retirement (Reduced): 55/15 50/25 Final Average Compensation: 5 years COLA for Future Retirees: 2.50% (Non-Compound) Member Contributions: 0% Act 88: No

12 - Union hired after 7/1/2012, linked to Division 10

2019 Valuation Benefit Multiplier: 1.5% Multiplier (80% max) Normal Retirement Age: 60 Vesting: 6 years Early Retirement (Unreduced): 55/25 Early Retirement (Reduced): 55/15 50/25 Final Average Compensation: 5 years COLA for Future Retirees: 2.50% (Non-Compound) Member Contributions: 0% Act 88: No

13 - Union lineworkers pre

7/1/2012, closed to new hires

2019 Valuation Benefit Multiplier: 2.25% Multiplier (80% max) Normal Retirement Age: 60 Vesting: 6 years Early Retirement (Unreduced): 50/25 Early Retirement (Reduced): 55/15 Final Average Compensation: 5 years COLA for Future Retirees: 2.50% (Non-Compound) Member Contributions: 0% DC Plan for New Hires: 2/1/2019 Act 88: No

• Benefits provided include plans with multipliers ranging from 1.5 to 2.25.

• Vesting periods range from 6 to 10 years.

• Normal retirement age is 60 with early retirement at 55 and 50 with 25 years of service.

• Final average compensation is calculated based on 5 years.

• There are no member contributions.

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Employees covered by benefits terms. At the December 31, 2019 valuation date, the following employees were covered by the benefit terms:

Inactive employees or beneficiaries currently receiving benefits 61 Inactive employees entitled to but not yet receiving benefits 7 Active employees 29

97

Contributions. The employer is required to contribute amounts at least equal to the actuarially determined rate, as established by the MERS Retirement Board. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer may establish contribution rates to be paid by its covered employees. Employer minimum contributions range from 6.91 to 9.16% based on annual payroll for open divisions. There are two divisions that are closed to new employees that require an annual employer contribution amount of $44,373 and $142,008. Net Pension Liability. The employer’s Net Pension Liability was measured as of December 31, 2019, and the total pension liability used to calculate the Net Pension Liability was determined by an annual actuarial valuation as of that date. Actuarial assumptions. The total pension liability in the December 31, 2019 annual actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation: 2.5%

Salary Increases: 3.00% in the long-term Investment rate of return: 7.35%, net of administrative and investment expenses, including inflation.

Mortality rates used were based on RP-2014 Group Annuity Mortality Tables, with rates multiplied by 105%, RP 2014 Employee Mortality Tables, and RP 2014 Juvenile Mortality Tables of a 50% Male and a 50% Female blend. For disabled retirees, the rates were based on RP-2014 Disabled Retiree Mortality Table of a 50% Male and a 50% Female blend.

The actuarial assumptions used in the valuation were based on the results of the most recent actuarial experience study in 2020. The long-term expected rate of return on pension plan investments was determined using a model method in which the best-estimate ranges of expected future real rates of return (expected returns, net of investment and administrative expenses and inflation) are developed for each major asset class.

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These ranges are combined to provide the long-term expected rate of return by weighting the expected future real rates of return of the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset Class Target Allocation Long-Term Expected Real Rate of Return

Expected Money

Weighted Rate of Return

Global Equity 60.0% 7.75% 3.15%

Global Fixed Income 20.0% 3.75% .25%

Real Assets 20.0% 9.75% 1.45%

Inflation 2.50%

Administrative fee .25%

Investment rate of return 7.60%

Discount rate. The discount rate used to measure the total pension liability is 7.6%. The projection of cash flows used to determine the discount rate assumes that employer and employee contributions will be made at the rates agreed upon for employees and the actuarially determined rates for employers. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to pay all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

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Changes in Net Pension Liability

Calculating the Net Pension Liability Changes in Net Pension Liability Increase (Decrease)

Balances at 12/31/18

Total Pension

Liability (a)

Plan Fiduciary Net

Position (b)

Net Pension

Liability (a) – (b)

Changes for the Year $30,763,609 $18,562,649 $12,200,960

Service Cost 264,001 - 264,001

Interest on Total Pension Liability 2,386,419 - 2,386,419 Difference between expected and actual experience (12,114) - (12,114)

Changes in assumption 1,104,897 - 1,104,897

Employer contributions - 2,403,450 (2,403,450)

Net investment income - 2,532,811 (2,532,811)

Benefit payments, including employee refunds (2,130,738) (2,130,738) -

Administrative expense - (43,690) 43,690

Other 7,402 - 7,402

Net Changes 1,619,867 2,761,833 (1,141,966)

Balances as of 12/31/19 $32,383,476 $21,324,482 $11,058,994

Sensitivity of the Net Position Liability to changes in the discount rate. The following presents the Net Pension Liability of the employer, calculated using the discount rate of 7.60%, as well as what the employer’s Net Pension Liability would be using a discount rate that is 1 percentage point lower (6.60%) or 1% higher (8.60%) than the current rate.

1% Decrease

Current Discount Rate

1% Increase

Net Pension Liability at 12/31/19

$11,058,994 $11,058,994 $11,058,994 Change in Net Pension Liability (NPL)

3,568,337 - (3,010,146)

Calculated NPL $14,627,331 $11,058,994 $8,048,848

Note: The current discount rate shown for GASB 68 purposes is higher than the MERS assumed rate of return. This is because for GASB purposes, the discount rate must be gross of administrative expenses, whereas for funding purposes, it is net of administrative expenses.

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Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources

Related to Pensions

For the year ended June 30, 2020 the employer recognized pension and amortization expense of $1,721,381. The employer reported deferred outflows and inflows of resources related to pensions from the following sources:

Deferred

Outflows of Resources

Deferred

Inflows of Resources

Excess (Deficit) Investment Returns $1,375,767 ($1,276,374)

Change in Experience 90,779 ($193,088)

Change in Assumption 736,598 -

Contributions subsequent to the measurement date* 1,192,944 -

Total $3,396,088 ($1,469,462)

*The amount reported as deferred outflows of resources resulting from contributions subsequent to the measurement date will be recognized as a reduction in the Net Pension Liability for the year ending 2021. Amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows:

Year ended 2021 $ 341,699 2022 348,849 2023 250,862 2024 (207,728)

$733,682

8. DEFERRED COMPENSATION

The Department participated in the City’s Deferred Compensation Plan created in accordance with

the Internal Revenue Code Section 457. The City has ICMA Retirement Corporation and Mass Mutual as administrators for the Plan. Participants may contribute zero to six percent of covered payroll based on the employee’s employment or labor union contract. The employer provides for the administrative group a 100% match up to 6% of the employee’s gross pay and for the union group contributes 6% if the employees contributes 1.5% to the program. Plan provision and contribution requirements can only be amended by authorization of the Traverse City Light and Power Board. In the current fiscal year, the Department contributed $214,065 and employees contributed $226,736.

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9. DEFINED CONTRIBUTION PLAN

Effective February 1, 2019, the Department eliminated the defined benefit pension plan for line

workers hired after July 1, 2012 and replaced it with a MERS defined contribution plan. The employer contributes six percent of base wage only and there is no employee contribution requirement. The plan requires a one-year vesting period. In the current fiscal year, the Department contributed $32,071 to this plan.

10. POST-EMPLOYMENT BENEFITS

Plan Description. The Department maintains a single employer defined benefit healthcare plan (the “Plan”). In addition to the retirement benefits described in Note 7, the Plan provides health insurance benefits to certain retirees and their beneficiaries, which are advance funded on a discretionary basis. The Plan is included as another post-employment benefits trust fund in the Department’s financial statements; a stand-alone financial report of the Plan has not been issued. Benefits provided. The plan provides health insurance premiums paid at 100% for the retiree only. If a retiree receives a reduced benefit pension as calculated by MERS, the Board will reduce the retiree health payment by the same percentage. Effective July 1, 2017 for all new hires who become eligible for a pension benefit, the Board will pay the retiree’s health insurance premium until the retiree is Medicare eligible. If a retiree receives a reduced benefit pension as calculated by MERS, the Board will reduce the retiree health payment by the same percentage. Membership of the Plan consisted of the following at the date of the latest actuarial valuation (June 30, 2020):

Active plan members 26 Retirees and beneficiaries receiving benefits 45

Total 71

Contributions. The Plan was established and is being funded under the authority of the Traverse City Light and Power Board. Employees are not required to contribute to the plan. The Plan’s funding policy is that the employer will contribute any required amounts as determined by an annual actuarial valuation. There are no long-term contracts for contributions to the Plan. The plan has no legally required reserves. Net OPEB Liability. The total OPEB liability in the June 30, 2020 annual actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation: 2.25% Salary Increases: 2.50% Investment rate of return: 7.5%

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Healthcare cost trend rates: -10.51% to 6.50% per year Mortality rates used MP-2019 Combined Annuitant Mortality Table for males and females.

The actuarial assumptions used in the valuation were based on the results of the most recent actuarial experience study. The long-term expected rate of return on OPEB plan investments was determined using a model method in which the best-estimate ranges of expected future real rates of return (expected returns, net of investment and administrative expenses and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset Class Target Allocation

Long-Term

Expected Real Rate of Return

Global Equity 60% 7.75% Global Fixed Income 20% 3.75% Private Investments 20% 9.75% Total 100.0%

The City, as the investment fiduciary, has chosen for the Plan an asset mix intended to meet or exceed a long-term rate of return of 7.5%. Concentrations. 100% of the Plan’s investments are invested in the MERS total market portfolio. Discount rate. The discount rate used to measure the total OPEB liability is 7.5%. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

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Changes in the Net OPEB Liability

Calculating the Net OPEB Liability Increase (Decrease)

Total

OPEB Liability

(a)

Plan

Fiduciary Net

Position

(b)

Net OPEB Liability

(a)-(b)

Balances at 6/30/2019

Changes for the Year

$5,514,338 $3,611,936 $1,902,402

Service cost 3,615 - 3,615

Interest on total OPEB liability 400,451 - 400,451

Differences between expected and actual experience (104,468) - (104,468)

Changes in assumption (449,662) - (449,662)

Employer Contributions - 514,424 (514,424)

Net investment income - 64,798 (64,798)

Benefit payments, including employee refunds (349,982) (349,982) -

Administrative expense - (5,048) 5,048

Net changes (500,046) 224,192 (724,238)

Balance as of 6/30/2020 $5,014,292 $3,836,128 $1,178,164

The employer contribution was recognized in other changes since it was not transferred to the retiree health funding vehicle trust. Sensitivity of the Net OPEB Liability to changes in the discount rate. The following presents the net OPEB liability of the employer, calculated using the discount rate of 7.5%, as well as what the employer’s net OPEB liability would be using a discount rate that is 1 percentage point lower or higher than the current rate.

1% Decrease

Current Discount rate

1% Increase

Net OPEB liability $1,706,246 $1,178,164 $735,171

Sensitivity of the Net OPEB Liability to changes in the healthcare cost trend rates. The following presents the net OPEB liability of the employer, calculated using the healthcare cost trend rate of -10.51% to 6.5%, as well as what the employer’s net OPEB liability would be using a healthcare cost trend rate that is 1 percentage point lower or higher than the current rate.

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30

1% Decrease

Current

healthcare cost trend

rate

1% Increase

Net OBEB liability $702,328 $1,178,164 $1,745,592

OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB Plan

For the year ended June 30, 2020 the employer recognized OPEB expense of $(395,213). The employer reported deferred outflows and inflows of resources related to pensions from the following sources:

Deferred Outflows

of Resources

Deferred Inflows of

Resources Differences in experience

$ -

$ 80,998

Changes in assumptions 6,484 348,598 Excess (deficit) investment returns 271,977 -

Total $278,461 $429,586

Amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized in OPEB expense as follows:

2021 $ (39,483) 2022 (45,968) 2023 (50,936) 2024 (14,738)

Total $(151,125)

11. CONTINGENCIES

In the normal course of business, the Department becomes a party in various legal actions and claims, some of which are uninsured. The outcome of these actions and claims is not expected to have a material effect on the financial position of the Department.

12. RISK OF LOSS

The Department is exposed to various risks of losses related to torts; theft of, damage to, and destruction of assets; errors and omission; injuries to employees; and natural disasters. The Department is covered for these losses through the City via the Michigan Municipal Liability and Property Pool, Michigan Municipal Workers Compensation Self Insurance Fund and commercial health insurance. The Department has had no settled claims resulting from these risks that exceeded their coverage in any of the past three years.

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13. DESIGNATIONS OF CASH

The following are designations of cash balances established by the Board and City Charter:

June 30, 2020

Emergencies $ 100,056 Minimum Cash Reserve 9,118,000

Total $9,218,056

14. COMMITMENTS

The utility has agreements with the MPPA committing it to purchase of up to 2MW of renewable energy from Granger Electric of Michigan, LLC, .65MW of renewable energy from North American Natural Resources, Inc., and 29.6 MW of all energy, capacity, and environmental attributes for solar renewable energy located in Michigan. Additionally, through the MPPA Energy Service Committee, the utility has base energy bilateral contracts for the fiscal year beginning July 1, 2020 through December 31, 2022 in the amount of $4,793,602, and capacity transaction bilateral contracts for the fiscal year beginning July 1, 2020 through December 31, 2030 in the amount of $3,448,020.

15. SUBSEQUENT EVENT

At the August 11, 2020 board meeting, the Board approved executing the USDA commitment letter acknowledging and accepting the approval of $1.8M financing for the On-Bill Program. Concurrently, the City Commission approved the commitment letter and issued a notice of intent for this loan commitment. On October 1, 2020 TCL&P launched Phase One of the Fiber to the Premise/Smart Grid deployment. This initial phase is being financed through an interfund loan from the Light & Power Fund.

16. PRIOR PERIOD ADJUSTMENT

Beginning net position was decreased by $520,104 to reflect a change in other post employment benefit deferred inflows/outflows based on the most recent actuary report.

17. UPCOMING PRONOUNCEMENTS

GASB has approved Statement No. 84 Fiduciary Activities, Statement No. 87 Leases, Statement No.

97 Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans – an amendment of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32.

The statements listed above through Statement No. 93 had their required effective dates postponed by

one year with the issuance of Statement No. 95, Postponement of Effective Dates of Certain Authoritative Guidance, with the exception of Statement No. 87 which was postponed by one and a half years.

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REQUIRED SUPPLEMENTARY INFORMATION

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Total pension liability 2014 2015 2016 2017 2018 2019Service cost 313,020$ 295,317$ 300,475$ 310,387$ 285,497$ 264,001$ Interest 2,083,781 2,142,935 2,276,465 2,292,239 2,370,497 2,386,419 Differences between expected and actuarial experience - 363,835 (509,997) 363,115 (370,024) (12,114) Changes in assumptions - 1,444,054 - - - 1,104,897 Benefit payments, including refunds (1,626,244) (1,715,604) (1,818,642) (1,930,810) (2,021,640) (2,130,738) Other changes - (759) - 1,448 (300) 7,402

Net change in total pension liability 770,557 2,529,778 248,301 1,036,379 264,030 1,619,867

Total pension liability, beginning of year 25,914,564 26,685,121 29,214,899 29,463,200 30,499,579 30,763,609

Total pension liability, end of year 26,685,121 29,214,899 29,463,200 30,499,579 30,763,609 32,383,476

Plan fiduciary net positionContribution - employer 773,230 858,331 1,564,302 2,253,396 2,395,423 2,403,450 Net investment income (loss) 1,000,478 (234,339) 1,686,136 2,200,228 (760,557) 2,532,810 Administrative expenses (36,578) (34,767) (33,363) (34,750) (37,098) (43,690) Benefit payments, including refunds (1,626,244) (1,715,604) (1,818,642) (1,930,809) (2,021,640) (2,130,737)

Net change in plan fiduciary net position 110,886 (1,126,379) 1,398,433 2,488,065 (423,872) 2,761,833

Plan fiduciary net position, beginning of year 16,115,516 16,226,402 15,100,023 16,498,456 18,986,521 18,562,649

Plan fiduciary net position, end of year 16,226,402 15,100,023 16,498,456 18,986,521 18,562,649 21,324,482

Department's net pension liability 10,458,719$ 14,114,876$ 12,964,744$ 11,513,058$ 12,200,960$ 11,058,994$

Plan fiduciary net position as a percent of total pension liability 60.81% 51.69% 56.00% 62.25% 60.34% 65.85%

Covered employee payroll 2,862,491$ 2,736,729$ 2,728,607$ 2,883,420$ 2,679,680$ 2,412,833$

Department's net pension liability as a percent of covered employee payroll 365.37% 515.76% 475.14% 399.28% 455.31% 458.34%

Notes to ScheduleThe data presented above is based on a December 31 measurement date. The schedule is being accumulated prospectively until 10 years of information is presented.


December 31,


REQUIRED SUPPLEMENTARY INFORMATIONMERS DEFINED BENEFIT PENSION PLAN

SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS

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2015 2016 2017 2018 2019 2020Actuarially determined contribution 770,572$ 891,939$ 944,388$ 1,110,648$ 1,113,276$ 2,382,248$ Actual contribution (770,572) (891,939) (2,202,960) (2,356,392) (2,428,720) (2,382,248) Contribution deficiency (excess) -$ -$ (1,258,572)$ (1,245,744)$ (1,315,444)$ -$

Covered employee payroll 2,880,960$ 2,866,124$ 2,862,491$ 2,837,222$ 2,680,970$ 2,412,833$

Contribution as a percentage of covered employee payroll 26.75% 31.12% 32.99% 39.15% 41.53% 98.73%

Notes to scheduleActuarial cost method Entry AgeAmortization method Level percentage of payroll, openRemaining amortization period 15 yearsAsset valuation method 5 year smoothed (10 year smoothing 2014)Inflation 2.5% (3.5% 2014)Salary increases 3.75 to 14.5% (4.50% in 2014)Investment rate of return 7.35% (8.25% 2014)Retirement age Varies depending on plan adoptionMortality RP-2014 mortality tables of a 50% Male and 50% Female blend

(50% female/50% male 1994 group annuity mortality table 2014)

Note to ScheduleThe schedule is being accumulated prospectively until 10 years of information is presented.


REQUIRED SUPPLEMENTARY INFORMATIONDEFINED BENEFIT PENSION PLAN

MERS SCHEDULE OF EMPLOYER CONTRIBUTIONSFOR THE YEAR ENDED JUNE 30, 2020

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Total OPEB liability 2018 2019 2020Service cost 2,852$ 3,363$ 3,615$ Interest 406,878 390,609 400,451 Differences between expected and actuarial experience (269,497) - (104,468) Changes in assumptions 28,187 - (449,662) Benefit payments, including refunds (342,038) (350,628) (349,982) Other changes (38,996) 87,555 -

Net change in total OPEB liability (212,614) 130,899 (500,046)

Total OPEB liability, beginning of year 5,596,053 5,383,439 5,514,338

Total OPEB liability, end of year 5,383,439 5,514,338 5,014,292

Plan fiduciary net positionContribution - employer 229,388 - 514,424 Net investment income 191,582 78,435 64,798 Differences between expected and actuarial experience - (161,940) - Benefit payments - - (349,982) Other changes - 357,118 Administrative expenses (6,221) (5,561) (5,048)

Net change in plan fiduciary net position 414,749 268,052 224,192

Plan fiduciary net position, beginning of year 2,929,135 3,343,884 3,611,936

Plan fiduciary net position, end of year 3,343,884 3,611,936 3,836,128

Department's net OPEB liability 2,039,555$ 1,902,402$ 1,178,164$

Plan fiduciary net position as a percent of total OPEB liability 62.11% 65.50% 76.50%

Covered employee payroll 2,837,222$ 2,680,970$ 2,198,312$

Department's net OPEB liability as a percent of covered employee payroll 71.89% 70.96% 53.59%

Notes to ScheduleTCL&P Plan was included within the City's Plan for fiscal year end June 30, 2017.The schedule is being accumulated prospectively until 10 years of information is presented.


REQUIRED SUPPLEMENTARY INFORMATIONOTHER POST EMPLOYMENT BENEFIT TRUST FUND

SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOSFOR THE YEAR ENDED JUNE 30, 2020

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2017 2018 2019 2020Total OPEB liability 5,596,053$ 5,383,439$ 5,514,338$ 5,014,292$ OPEB fiduciary net position 2,929,135 3,343,884 3,611,936 3,836,128

Net OPEB liability 2,666,918 2,039,555 1,902,402 1,178,164

OPEB fiduciary net position as a % of totalOPEB liability 52.34% 62.11% 65.50% 76.50%

Covered employee payroll 2,862,491$ 2,837,222 2,680,970 2,198,312 NET OPEB liability as a percentage of covered

employee payroll 93.17% 71.89% 70.96% 53.59%




SCHEDULE OF NET OPEB LIABILITY, FIDUCIARY NET POSITION AND RELATED RATIOSFOR THE YEAR ENDED JUNE 30, 2020

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2017 2018 2019 2020Actuarially determined contribution 229,556$ 175,757$ 175,757$ 164,442$ Actual contribution 229,556 229,388 175,757 164,442

Contribution deficiency (excess) -$ (53,631)$ -$ -$

Covered employee payroll 2,862,491$ 2,837,222$ 2,680,970$ 2,198,312$

Contribution as a percentage of covered employee payroll 8.02% 6.19% 6.56% 7.48%

Notes to ScheduleActuarial cost method Entry Age NormalAmortization method Straight LineRemaining amortization period 4.45Asset valuation method Market ValueInflation 2.25%Salary increases 2.50%Investment rate of return 7.50%Retirement age Varies depending on retirement planMortality MP-2019 Combined Annuitant Mortality Table for males and femalesHealth Care Trend rates -10.51 to 6.50%

State of Michigan PA 202 information

Actuarially recommended contributions in accordance with State PA 2 164,442$

Minimum required contribution under PA 202 164,442

Actual contribution 164,442

Contribution for employees hired after June 30, 2019 3,363

State of Michigan PA 202 assumptions, if different from GASB:Mortality - Public Employee and Police, headcount weighted, MP-2018Expected asset return - 7.0%Expected salary increase - 3.5%Effective discount rate - 7.0%Medical trend - Pre-medicare: 8.5% graded down to 4.25% by .25% per year, Post-medicare 7.0% graded to 4.5% by .25% per year





SCHEDULE OF CONTRIBUTIONS

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2017 2018 2019 2020Annual money-weighted rate of return,

net of investment expense 20.50% 5.90% 2.60% 1.83%




SCHEDULE OF INVESTMENT RETURNSFOR THE YEAR ENDED JUNE 30, 2020

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OTHER SUPPLEMENTARY INFORMATION

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Balance at Additions/ Deletions/ Balance atJune 30, 2019 Transfers Transfers June 30, 2020

Land and land improvementsLand 1,073,535$ -$ 39,765$ 1,033,770$ Land improvements 31,535 6,105 - 37,640

Total land and land improvements 1,105,070 6,105 39,765 1,071,410

Buildings and improvementsService center 5,667,299 3,673 - 5,670,972 Office structures 97,149 - - 97,149 Other buildings 68,677 - - 68,677

Total buildings and improvements 5,833,125 3,673 - 5,836,798

Equipment and distribution systemUnion St. Dam 24,010 - - 24,010 Keystone plant 390 - - 390 Wind generation unit 20,850 - - 20,850 Transmission and distribution 86,188,311 4,658,098 1,010,826 89,835,583 General 1,903,688 26,048 5,649 1,924,087

Total equipment and distribution system 88,137,249 4,684,146 1,016,475 91,804,920

Construction in progress 2,059,590 4,557,942 4,695,109 1,922,423

Total 97,135,034$ 9,251,866$ 5,751,349$ 100,635,551$

Capital Assets - Cost




SCHEDULE OF CAPITAL ASSETS AND DEPRECIATION (UNAUDITED)LIGHT AND POWER FUND

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Capital Assets- Net

Balance at Current Balance at Balance atJune 30, 2019 Depreciation Deletions June 30, 2020 June 30, 2020

-$ -$ -$ -$ 1,033,770$ - - - - 37,640

- - - - 1,071,410

2,088,590 173,405 - 2,261,995 3,408,977 16,184 1,226 - 17,410 79,739 20,663 1,964 - 22,627 46,050

2,125,437 176,595 - 2,302,032 3,534,766

24,010 - - 24,010 - 390 - - 390 -

3,439 626 - 4,065 16,785 27,012,249 2,651,707 912,171 28,751,785 61,083,798 1,000,788 189,219 5,649 1,184,358 739,729

28,040,876 2,841,552 917,820 29,964,608 61,840,312

- - - - 1,922,423

30,166,313$ 3,018,147$ 917,820$ 32,266,640$ 68,368,911$

Accumulated Depreciation

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Balance at Additions/ Deletions/ Balance atJune 30, 2019 Transfers Transfers June 30, 2020

Equipment and distribution systemOverhead 1,104,684$ -$ -$ 1,104,684$ Underground 308,228 - - 308,228 Termination boxes 367,282 - - 367,282 Wireless equipment 51,725 - - 51,725 WIFI system 501,863 - - 501,863 Other property 49,624 - - 49,624

Total equipment and distribution system 2,383,406 - - 2,383,406

Construction in progress 1,680 1,747,412 - 1,749,092

Total 2,385,086$ 1,747,412$ -$ 4,132,498$

Capital Assets - Cost




SCHEDULE OF CAPITAL ASSETS AND DEPRECIATION (UNAUDITED)FIBER FUND

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Capital Assets- Net

Balance at Current Balance at Balance atJune 30, 2019 Depreciation Deletions June 30, 2020 June 30, 2020

565,546$ 55,582$ -$ 621,128$ 483,556$ 138,874 15,411 - 154,285 153,943 194,983 18,364 - 213,347 153,935 28,446 2,586 - 31,032 20,693

225,788 50,188 - 275,976 225,887 48,413 4,962 - 53,375 (3,751)

1,202,050 147,093 - 1,349,143 1,034,263

- - - - 1,749,092

1,202,050$ 147,093$ -$ 1,349,143$ 2,783,355$

Accumulated Depreciation

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PositiveAmended (Negative)

Budget Actual Variance

Operating revenues - salesResidential 6,161,000$ 6,108,225$ (52,775)$ Commercial 15,265,000 13,869,720 (1,395,280) Industrial 9,571,000 8,853,328 (717,672) Public authority 315,000 294,385 (20,615) Street lighting 225,000 237,499 12,499 Green energy 16,000 72,433 56,433 Yard lights 125,000 118,156 (6,844)

Total operating revenues - sales 31,678,000 29,553,746 (2,124,254)

Other operating revenuesForfeited discounts 55,000 49,187 (5,813) Merchandise and jobbing 145,000 169,678 24,678 Sale of scrap 30,000 22,950 (7,050) Recovery of bad debts 200 14 (186) MISO income 3,220,000 3,067,430 (152,570) Miscellaneous 51,100 95,378 44,278

Total other operating revenues 3,501,300 3,404,637 (96,663)

Nonoperating revenuesRental income 57,500 57,232 (268) Pole rental income 52,000 57,609 5,609 Reimbursements 53,000 226,005 173,005 Interest income 200,000 251,430 51,430 Change in fair market value of investments - 45,003 45,003 Gain/(Loss) on sale of assets - (113,413) (113,413)

Total nonoperating revenues 362,500 523,866 161,366

Total revenues 35,541,800 33,482,249 (2,059,551)

SCHEDULE OF REVENUES AND EXPENSES - BUDGET AND ACTUAL (UNAUDITED)



FOR THE YEAR ENDED JUNE 30, 2020LIGHT AND POWER FUND

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Budget Actual VariancePurchase power expense

Salaries and wages 64,000$ 59,372$ 4,628$ Payroll taxes and fringes 91,800 45,772 46,028 Purchased power 21,442,200 19,315,937 2,126,263 Professional and contractual 128,500 141,979 (13,479) Professional development - 6,920 (6,920) Operation supplies 3,600 3,761 (161) Communications 300 115 185 Safety 3,600 3,751 (151) Transportation 7,000 1,172 5,828 Equipment rental 13,100 21,791 (8,691) Miscellaneous 600 203 397

Total purchase power expenses 21,754,700 19,600,773 2,153,927

Continued




SCHEDULE OF REVENUES AND EXPENSES - BUDGET AND ACTUAL (UNAUDITED)LIGHT AND POWER FUND

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Budget Actual VarianceDistribution expense

Salaries and wages 1,815,400$ 1,509,931$ 305,469$ Payroll taxes and fringes 1,714,200 980,449 733,751 Substation 122,050 131,340 (9,290) Overhead lines 222,800 219,831 2,969 Underground lines 26,500 36,299 (9,799) Storm work 50,000 4,014 45,986 Customer installation - 4,782 (4,782) Electric meters 4,000 11,080 (7,080) Street lighting 236,700 218,037 18,663 Traffic signals 10,000 26,555 (16,555) Plant and structures 109,000 80,177 28,823 Load and dispatching contractual services 38,000 34,290 3,710 Professional services 182,500 9,375 173,125 Professional development 57,000 31,110 25,890 Operation supplies 117,500 115,057 2,443 Utilities 92,400 95,027 (2,627) Safety 31,000 26,803 4,197 Transportation 29,500 25,512 3,988 Equipment rental 15,200 (13,320) 28,520 Inventory adjustment 10,000 (24,586) 34,586 Miscellaneous 10,300 8,664 1,636

Total distribution expense 4,894,050 3,530,427 1,363,623

Transmission expenseSalaries and wages 227,900 196,778 31,122 Substation 84,000 65,960 18,040 Overhead lines 23,000 18,644 4,356 MISO 36,500 47,501 (11,001) Load and dispatching 15,000 10,710 4,290 Equipment rental 1,000 2,047 (1,047) Inventory adjustment - 15,174 (15,174) Miscellaneous 78,000 67,708 10,292

Total transmission expense 465,400 424,522 40,878

Continued




SCHEDULE OF REVENUES AND EXPENSES - BUDGET AND ACTUAL (UNAUDITED) LIGHT AND POWER FUND

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Budget Actual VarianceCustomer accounting expense

Salaries and wages 163,100$ 182,153$ (19,053)$ Meter reading 82,800 66,966 15,834 Payroll taxes and fringes 153,700 55,476 98,224 Office supplies 4,500 6,979 (2,479) Postage 28,000 24,806 3,194 Communications 46,200 46,200 - Stationary and printing 1,000 128 872 Professional and contractual 34,000 65,578 (31,578) Uncollectible accounts 3,500 53,392 (49,892) Collection expense 4,500 1,097 3,403 Data processing 18,000 6,076 11,924 Professional development 4,500 - 4,500 Transportation 5,000 1,464 3,536 Equipment rental 12,300 10,807 1,493 Miscellaneous 8,200 4,743 3,457

Total customer accounting expense 569,300 525,865 43,435

Public service expenseSalaries and wages 105,400 91,636 13,764 Payroll taxes and fringes 71,900 3,392 68,508 Office supplies 1,000 5 995 Communications - 474 (474) Public service information 456,300 353,288 103,012

Total public service expense 634,600 448,795 185,805

Continued





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PostiveAmended (Negative)

Budget Actual VarianceInformation Systems

Salaries 123,700$ 73,940$ 49,760$ Payroll taxes and fringes 149,100 12,135 136,965 Professional development 6,800 299 6,501 Professional and contractual 50,000 17,093 32,907 Office supplies 1,000 755 245 Operation supplies 5,000 2,549 2,451 Communication 9,000 4,702 4,298 Software 122,000 113,262 8,738 Hardware 15,000 504 14,496 Uniforms 500 543 (43) Printing and publishing - 143 (143) Miscellaneous 500 322 178

Total information systems 482,600 226,247 256,353





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PostiveAmended (Negative)

Budget Actual VarianceGeneral administration expense

Salaries 379,500$ 380,661$ (1,161)$ Payroll taxes and fringes 330,400 219,131 111,269 Professional development 18,520 7,578 10,942 Professional and contractual 52,400 51,729 671 Office supplies 10,000 4,249 5,751 Fees and per diems 70,000 61,596 8,404 Special services 7,000 6,322 678 Legal fees 80,000 56,436 23,564 Utilities 5,000 3,624 1,376 Printing and publishing 7,000 4,696 2,304 Transportation 1,000 - 1,000 Miscellaneous 2,500 1,927 573

Total general administration expense 963,320 797,949 165,371

Other expensesInsurance - general 77,625 70,713 6,912 City fee 1,773,000 1,656,483 116,517 Depreciation 2,850,000 3,018,147 (168,147)

Total other expenses 4,700,625 4,745,343 (44,718)

Total operating expenses 34,464,595 30,299,921 (4,164,674)

TransfersTransfer in 200,000 200,000 -

Change in net position 1,277,205$ 3,382,328$ 2,105,123$





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Budget Actual Variance

Operating revenues - salesCharges for services - dark fiber 448,000$ 446,598$ (1,402)$ Residential sales - lit fiber 165,700 - (165,700) Commercial sales - lit fiber 251,800 - (251,800) VOIP sales 31,900 - (31,900)

Total operating revenues 897,400 446,598 (450,802)

Non-operating revenuesReimbursements 34,000 33,347 (653) Interest income 500 - (500)

Total non-operating revenues 34,500 33,347 (1,153)

Total revenues 931,900 479,945 (451,955)

Fiber expensesSalaries and wages 120,000 42,596 77,404 Payroll taxes and fringes 105,500 37,659 67,841 Operation supplies 2,000 621 1,379 Software and hardware 5,800 290 5,510 Professional and contractual 12,500 33,371 (20,871) Lit fiber contract 386,200 - 386,200 Professional development 2,500 60 2,440 Transportation 10,000 2,508 7,492 Pole attachment fees 10,900 9,994 906 Repair and Maintenance 5,500 6,895 (1,395) Miscellaneous - 1,460 (1,460)

Total fiber expenses 660,900 135,454 525,446

WIFI expensesOperation and maintenance 27,000 25,490 1,510

Other expensesInsurance and bonds 5,000 763 4,237 City fee 44,900 22,136 22,764 Depreciation 248,600 147,093 101,507

Total other expenses 298,500 169,992 128,508

Total operating expenses 986,400 330,936 655,464

TransfersTransfers out 500 200,000 (199,500)

Change in net position (55,000)$ (50,991)$ 4,009$




SCHEDULE OF REVENUES AND EXPENSES - BUDGET AND ACTUAL (UNAUDITED)FIBER FUND

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INTERNAL CONTROL AND COMPLIANCE

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INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT

OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

December 23, 2020 Honorable Chairman and Members Traverse City Light and Power Traverse City, Michigan

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Traverse City Light and Power, a Component Unit of the City of Traverse City, Michigan, as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise Traverse City Light and Power’s basic financial statements, and have issued our report thereon dated December 23, 2020.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Traverse City Light and Power's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Traverse City Light and Power’s internal control. Accordingly, we do not express an opinion on the effectiveness of Traverse City Light and Power’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of Traverse City Light and Power’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Traverse City Light and Power's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

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Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Traverse City Light and Power’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Traverse City Light and Power’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

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To:



OPEB Report

The Other Post Employment Benefit Actuary Report for the fiscal year ended June 30, 2020 will be presented by Todd Schroeder from the firm of Lauterbach Amen LLP. A copy of the report and Power Point presentation is included for your review.

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Traverse City Light & Power (A Component Unit of the City of Traverse City, Michigan)

GASB 74/75 ReportingFor the Contribution Year Ending June 30, 2021for Funding PurposesFor the Fiscal Year Ending June 30, 2020 for Financial Statement Reporting

Presented by:Todd Schroeder, Director, Enrolled Actuary

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Net OPEB LiabilityPage 12 in Report

2

Total OPEB Liability OPEB Plan Net Position Net OPEB Liability

(a) (b) (a) - (b)

Service Cost $3,615 $0 $3,615

Interest $400,451 $0 $400,451

Balances Beginning at 7/1/2019 $5,514,337 $3,611,936 $1,902,401

Balances Ending at 6/30/2020 $5,014,291 $3,836,128 $1,178,163

Actuarial Experience ($104,468) $0 ($104,468)

Benefit Payments from the Plan ($349,982) ($349,982) $0

Assumptions Changes ($449,662) $0 ($449,662)

Plan Changes $0 $0 $0

Contributions - Other $0 $0 $0

Contributions - Employer $0 $514,424 ($514,424)

Contributions - Employee $0 $0 $0

Net Investment Income $0 $64,798 ($64,798)

Administrative Expenses $0 ($5,048) $5,048

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Changes to Total OPEB LiabilityPages 3-4 in Report

• Expected Increase – $54,000

• Demographic Experience Decrease – $104,000• 45 Retirees Current vs. 38 Retirees Previously• 26 Actives Current (3 waiving) vs. 34 Actives Previously (0 waiving)• Net Medical Costs to Employer Lower than Anticipated

• No Plan Changes

• Assumption Changes Decrease – $450,000• New MERS Experience Study

3

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Total OPEB ExpensePage 15 in Report

4

6/30/2020

Total OPEB Expense ($395,213)

Recognition of Outflow/(Inflow) of Resources due to Assets $78,576

Recognition of Outflow/(Inflow) of Resources due to Liabilities ($106,141)

Administrative Expense $5,048

Plan Changes $0

Contributions - Employee $0

Other Changes ($505,867)

Contributions - Other $0

Expected Investment Income ($270,895)

$3,615 Service Cost

Interest $400,451

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Deferred Outflows and Inflows of ResourcesPage 14 in Report

5

($269,497)

($354,004)

5.00

5.00

5.00

4.00

1.16

3.00

0.17

0.17

($853)

($21,279)

($27,565)

$206,097

($449,662)

($104,468)

$161,940

$87,555

$24,840

($10,809)

$41,220

($101,064)

($23,480)

$32,388

$40,535

$4,968

4.45

4.45

5.00

2.16

5.00

2.17

OPEB Expense SourceDate

EstablishedInitial Period

Initial Balance

Remaining Period

6/30/2020 Expense Recognized

6/30/2020 Deferred Balance

Total ($151,124)

Asset Loss $9,936

Change in Assumptions Gain $0

Actuarial Gain $0

6/30/2018

6/30/2018

6/30/2018 2.17

Actuarial Gain ($80,988)

Asset Loss $97,164

Change in Assumptions Loss $6,486

6/30/2020

6/30/2019

6/30/2019

Asset Loss $164,877

Change in Assumptions Gain ($348,598)

6/30/2020

6/30/2020

5.00

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Five-Year Employer Contribution HistoryPage 30 in Report

6

5 - Year Average 107.63%

Fiscal Year End Employer ContributionActuarially Determined

Contribution (ADC)% of ADC

6/30/2017 $229,556 $229,556 100.00%

6/30/2016 N/A N/A N/A

6/30/2019 $175,757 $175,757 100.00%

6/30/2018 $229,388 $175,757 130.51%

6/30/2020 $164,442 $164,442 100.00%

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Contribution Recommendation & Funded PercentagePages 3 in Funding Report

7

62.8%

$38,943

$185,143

$224,086

Recommended Assumptions State Assumptions

$6,109,252

$3,836,128

$3,836,128

$2,273,124

Normal Cost Component (Includes Interest) $24,167

Amortization Component (Includes Interest) $114,251

Actuarially Determined Contribution $138,418

Unfunded Actuarial Accrued Liability $1,008,503

Percent Funded (Actuarial Value of Assets) 79.9%

Actuarial Accrued Liability $5,014,291

Market Value of Assets $3,836,128

Actuarial Value of Assets $4,005,788

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Assumptions Different Between State & RecommendedPage 4 in Funding Report

8

2.50% 3.50%

Health Care Trend Rates (Pre-65) 6.50% - 5.00% over 8 Years 8.25% - 4.50% over 16 Years

Health Care Trend Rates (Post-65)5.00% First Year, 4.00% All

Future Years6.50% - 4.50% over 9 Years

Recommended Assumptions State Assumptions

Investment Rate of Return 7.50% 7.00%

Discount Rate 7.50% 7.00%

Total Payroll Increases

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Actuarial Certification

• The valuation results summarized in this presentation are from the July1, 2020 GASB 74/75 and OPEB Funding Actuarial Valuation Reportsdated December 15, 2020 and December 18, 2020, respectively, whichhave been reviewed and signed by Actuarial Consultants that meet theQualification Standards of the American Academy of Actuaries.

• The GASB 74/75 report is not intended for purposes other than to assist in thepreparation of the Annual Financial Report.

• The OPEB Funding report is not intended for purposes other than thedetermination of the recommended funding contribution and to comply withthe Public Act 202 of 2017.

• This report contains the full description of the data, assumptions, methods, andprovisions used to produce these actuarial results.

9

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Lauterbach & Amen, LLP 668 N. River Road Naperville, IL 60563

Actuarial Valuation as of July 1, 2020


Utilizing Data as of June 30, 2021

For the Contribution Year July 1, 2020 to June 30, 2021

LAUTERBACH & AMEN, LLP

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Actuarial Valuation – OPEB Funding Recommendation


Contribution Year Ending: June 30, 2021 Actuarial Valuation Date: July 1, 2020

Utilizing Data as of June 30, 2020

Submitted by: Lauterbach & Amen, LLP 630.393.1483 Phone www.lauterbachamen.com Contact: Todd A. Schroeder December 18, 2020


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TABLE OF CONTENTS


Table of Contents

ACTUARIAL CERTIFICATION .............................................................................................................. 1

MANAGEMENT SUMMARY .................................................................................................................. 2 Contribution Recommendation ............................................................................................................................................ 3 State Assumptions ............................................................................................................................................................... 4

VALUATION OF PLAN ASSETS ............................................................................................................ 5 Fair Market Value of Assets ................................................................................................................................................ 6 Market Value of Assets (Gain)/Loss .................................................................................................................................... 7 Development of the Actuarial Value of Assets .................................................................................................................... 8 Actuarial Value of Assets (Gain)/Loss ................................................................................................................................ 8

ACTUARIAL FUNDING POLICIES – RECOMMENDED ASSUMPTIONS ........................................ 9 Actuarial Cost Method ....................................................................................................................................................... 10 Financing Unfunded Actuarial Accrued Liability.............................................................................................................. 10 Actuarial Value of Assets .................................................................................................................................................. 10

ACTUARIAL FUNDING POLICIES – STATE ASSUMPTIONS ......................................................... 11 Actuarial Cost Method ....................................................................................................................................................... 12 Financing Unfunded Actuarial Accrued Liability.............................................................................................................. 12 Actuarial Value of Assets .................................................................................................................................................. 12

GLOSSARY OF TERMS ......................................................................................................................... 13 Glossary of Terms .............................................................................................................................................................. 14

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Traverse City Light and Power Page 1

ACTUARIAL CERTIFICATION This report documents the results of the actuarial valuation of Traverse City Light and Power’s Other Postemployment Benefits (OPEB) Plan. The purpose is to report the actuarial contribution requirement for the contribution year July 1, 2020 to June 30, 2021. Determinations for purposes other than meeting the employer’s actuarial contribution requirements may be significantly different from the results herein. The results in this report are based on information and data submitted by Traverse City Light and Power. We did not prepare the Actuarial Valuations for the years prior to July 1, 2020. Those valuations were prepared by other Actuaries whose reports have been furnished to us. An audit of the information was not performed, but high-level reviews were performed for general reasonableness as appropriate, based on the purpose of the valuation. The accuracy of the results is dependent upon the precision and completeness of the underlying information. The results of the Actuarial Valuation and these supplemental disclosures rely on the information provided. The valuation results summarized in this report involve actuarial calculations that require assumptions about future events. Traverse City Light and Power selected certain assumptions, while others were the result of guidance and/or judgment. We believe that the assumptions used in this valuation are reasonable and appropriate for the purposes for which they have been used. To the best of our knowledge, all calculations are in accordance with the applicable funding requirements, and the procedures followed and presentation of results conform to generally accepted actuarial principles and practices. The undersigned of Lauterbach & Amen, LLP, with actuarial credentials, meets the Qualification Standards of the American Academy of Actuaries to render this Actuarial Opinion. There is no relationship between Traverse City Light and Power and Lauterbach & Amen, LLP that impairs our objectivity. The information contained in this report was prepared for the use of Traverse City Light and Power in connection with our actuarial valuation. It is not intended or necessarily suitable for other purposes. It is intended to be used in its entirety to avoid misrepresentations.

Respectfully Submitted,


Todd A. Schroeder, ASA, FCA, EA, MAAA

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MANAGEMENT SUMMARY

Contribution Recommendation State Assumptions

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MANAGEMENT SUMMARY


CONTRIBUTION RECOMMENDATION

The results shown above using the recommended assumptions are based on the data, assumptions, and plan provisions used in the GASB 74/75 Actuarial Valuation completed for the Fiscal Year ended June 30, 2020. The results shown above using the State Assumptions comply with the uniform actuarial assumptions of retirement systems required under the Public Act 202. These assumptions are disclosed on the following page. The data and plan provisions are based on the GASB 74/75 Actuarial Valuation completed for the Fiscal Year ended June 30, 2020.

Recommended Assumptions

State Assumptions

Actuarial Accrued Liability $5,014,291 $6,109,252

Market Value of Assets 3,836,128 3,836,128

Actuarial Value of Assets 4,005,788 3,836,128

Unfunded Actuarial Accrued Liability $1,008,503 $2,273,124

Percent Funded

Market Value of Assets 76.5% 62.8%

Actuarial Value of Assets 79.9% 62.8%

Normal Cost $22,481 $36,226

Interest on Normal Cost 1,686 2,717

Normal Cost Component $24,167 $38,943

Annual Amoritization $106,280 $173,031

Interest on Amortization Payment 7,971 12,112

Amortization Component $114,251 $185,143

Normal Cost Component $24,167 $38,943

Amortization Component 114,251 185,143

Actuarially Determined Contribution $138,418 $224,086

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MANAGEMENT SUMMARY


STATE ASSUMPTIONS The below assumptions are the uniform actuarial assumptions required under the Public Act 202. All other assumptions not disclosed below are based on the GASB 74/75 Actuarial Valuation completed for the Fiscal Year ended June 30, 2020.

Mortality Rates Follows the Sex Distinct Raw Rates as developed in the PubS-2010(G) Study. Mortality Improvement uses MP-2019 Improvement Rates applied on a fully generational basis.

MP-2019 Improvement Rates were used based on the MERS experience study

dated February 14, 2020 which is compliant with the State Treasurers’ uniform assumption set for Fiscal Year 2020.

Actuarial Assumptions (Economic)

Investment Rate of Return 7.00%

Discount Rate 7.00%

Salary Increase 3.50%

Health Care Trend(FY = Fiscal Year) Period Under 65 65+

FY 20 to FY 21 8.25% 6.50%FY 21 to FY 22 8.00% 6.25%FY 22 to FY 23 7.75% 6.00%FY 23 to FY 24 7.50% 5.75%FY 24 to FY 25 7.25% 5.50%FY 25 to FY 26 7.00% 5.25%FY 26 to FY 27 6.75% 5.00%FY 27 to FY 28 6.50% 4.75%FY 28 to FY 29 6.25% 4.50%FY 29 to FY 30 6.00% 4.50%FY 30 to FY 31 5.75% 4.50%FY 31 to FY 32 5.50% 4.50%FY 32 to FY 33 5.25% 4.50%FY 33 to FY 34 5.00% 4.50%FY 34 to FY 35 4.75% 4.50%Ultimate 4.50% 4.50%

All Plans

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VALUATION OF PLAN ASSETS

Fair Market Value of Assets Market Value of Assets (Gain)/Loss

Development of the Actuarial Value of Assets Actuarial Value of Assets (Gain)/Loss

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FAIR MARKET VALUE OF ASSETS Statement of Assets

Statement of Changes in Assets

The return on investments shown has been determined as the Return on Assets from the statement of changes in assets, as a percent of the average of the beginning and ending Market Value of Assets. Return on Investment is net of the Other Expenses as shown. The Return on Investments has been excluded from the Total Market Value of Assets at the end of the year for this calculation. The assets have been reviewed for reasonableness, but we make no representation as to the accuracy of the measurement of the fair market value of the investments or the designation as an irrevocable Trust used solely for the purpose of paying OPEB benefits.

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MARKET VALUE OF ASSETS (GAIN)/LOSS Current Year (Gain)/Loss on Market Value of Assets

The (Gain)/Loss on the Market Value of Assets has been determined based on expected returns at the actuarial rate.

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DEVELOPMENT OF THE ACTUARIAL VALUE OF ASSETS

ACTUARIAL VALUE OF ASSETS (GAIN)/LOSS

The Actuarial Value of Assets incorporates portions of gains and losses over multiple years.

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ACTUARIAL FUNDING POLICIES – RECOMMENDED ASSUMPTIONS

Actuarial Cost Method Financing Unfunded Accrued Liability

Actuarial Value of Assets

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ACTUARIAL FUNDING POLICIES: RECOMMENDED ASSUMPTIONS


ACTUARIAL COST METHOD The actuarial cost method allocates the projected obligations of the plan over the working lifetimes of the plan participants. The actuarial cost method for the recommended contribution basis is Entry Age Normal (Level Percent of Pay). The Entry Age Normal Cost Method is a method under which the actuarial present value of the projected benefits of each individual included in an actuarial valuation is allocated on a level basis over the earnings or service of the individual between entry age and assumed exit age. The portion of this actuarial present value allocated to a valuation year is called normal cost. The portion of the actuarial present value not provided at a valuation date by the actuarial present value of future normal costs is called the actuarial liability. FINANCING UNFUNDED ACTUARIAL ACCRUED LIABILITY The Unfunded Actuarial Accrued Liability may be amortized over a period either in level dollar amounts or as a level percentage of projected payroll. The payment towards Unfunded Liability is amortized by level dollar contributions to a 100% funding target over the remaining 15 future years. ACTUARIAL VALUE OF ASSETS The OPEB Plan is an ongoing plan. The employer wishes to smooth the effect of volatility in the market value of assets on the annual contribution. The Actuarial Value of Assets is equal to the Market Value of Assets with unanticipated gains/losses recognized over five years. The asset valuation method is intended to create an Actuarial Value of Assets that remains reasonable in relation to the Market Value of Assets over time. The method produces results that can fall above and below the Market Value of Assets. The period of recognition is short. It is intended that the period of recognition is short enough to keep the Actuarial Value of Assets within a decent range of the Market Value. The employer has not placed a specific corridor around the Market Value of Assets.

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ACTUARIAL FUNDING POLICIES – STATE ASSUMPTIONS

Actuarial Cost Method Financing Unfunded Accrued Liability

Actuarial Value of Assets

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ACTUARIAL FUNDING POLICIES: STATE ASSUMPTIONS


ACTUARIAL COST METHOD The actuarial cost method allocates the projected obligations of the plan over the working lifetimes of the plan participants. In accordance with the Public Act 202 Uniform Assumptions, the actuarial cost method for the recommended contribution basis is Entry Age Normal (Level Percent of Pay). The Entry Age Normal Cost Method is a method under which the actuarial present value of the projected benefits of each individual included in an actuarial valuation is allocated on a level basis over the earnings or service of the individual between entry age and assumed exit age. The portion of this actuarial present value allocated to a valuation year is called normal cost. The portion of the actuarial present value not provided at a valuation date by the actuarial present value of future normal costs is called the actuarial liability. FINANCING UNFUNDED ACTUARIAL ACCRUED LIABILITY The Unfunded Actuarial Accrued Liability may be amortized over a period either in level dollar amounts or as a level percentage of projected payroll. In accordance with the Public Act 202 Uniform Assumptions, the payment towards Unfunded Liability is amortized by level dollar contributions to a 100% funding target over the remaining 29 future years. ACTUARIAL VALUE OF ASSETS The Public Act 202 Uniform Assumptions for Fiscal Year 2020 does not specify an Asset Valuation Method. Therefore, the Actuarial Value of Assets is equal to the Market Value of Assets with unanticipated gains/losses recognized immediately.

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GLOSSARY OF TERMS

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GLOSSARY OF TERMS


GLOSSARY OF TERMS Actuarial Accrued Liability –The actuarial present value of future benefits based on employees’ service rendered to the measurement date using the selected actuarial cost method. It is that portion of the Actuarial Present Value of plan benefits and expenses allocated to prior years of employment. It is not provided for by future Normal Costs. Actuarial Cost Method – The method used to allocate the projected obligations of the plan over the working lifetimes of the plan participants. Actuarial Value of Assets – The value of the assets used in the determination of the Unfunded Actuarial Accrued Liability. The Actuarial Value of Assets is related to Market Value of Assets, with adjustments made to spread unanticipated gains and losses for a given year over a period of several years. Actuarial Value of Assets is generally equally likely to fall above or below the Market Value of Assets, and generally does not experience as much volatility over time as the Market Value of Assets. Asset Valuation Method – A valuation method designed to smooth random fluctuations in asset values. The objective underlying the use of an asset valuation method is to provide for the long-term stability of employer contributions. Funding Policy – A set of procedures for a Plan that outlines the “best practices” for funding the OPEB benefits based on the goals of the plan sponsor. A Funding Policy discusses items such as assumptions, Actuarial Cost Method, assets, and other parameters that will best help the sponsor meet their goal of working in the best interest of the plan participant. Market Value of Assets – The value of the cash, bonds, securities and other assets held in the OPEB Trust as of the measurement date. Normal Cost –The present value of future benefits earned by employees during the current fiscal year. It is that portion of the Actuarial Present Value of benefits and expenses which is allocated to a valuation year by the Actuarial Cost Method. Unfunded Actuarial Accrued Liability – The excess of the Actuarial Accrued Liability over the Actuarial Value of Assets. The Unfunded Actuarial Accrued Liability is amortized over a period either in level dollar amounts or as a level percentage of projected payroll.

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To:



Strategic Plan Presentation

Staff has included a recap of the 2020 Strategic Plan goals moving forward along with showing new goals for the 2021 Strategic Plan showing the four overarching strategic issues with one newly revised that is italicized – Financial Stability, Sustainability through Power Supply Strategy, Enhancing Operational Excellence, and Customer Satisfaction. Each strategic issue spreadsheet lists the detailed goals and action items along with the assigned staff, goal date, percentage complete and related notes. Staff is presenting this to provide information as to the status of each strategic plan goal while concurrently asking for feedback from the Board on the overarching strategic issues and related goals. Staff is requesting this feedback to assist in the development of the 2021 Strategic Plan, which is expected to be presented no later than the February board meeting. The goals and action items have been color coded to show goals that are not completed and/or on-going and new or substantially changed goals. Light green denotes goals that have not yet been completed or are on-going and will continue into the next strategic plan. Light gray are new goals proposed to be included in the strategic plan. Staff is looking forward and welcomes feedback to assist in the development of the 2021 Strategic Plan.

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GOALS ACTION ITEMSASSIGNED

STAFF

ACTION

ITEM DATEPERCENTAGE COMPLETE NOTES

1. Develop and implement rate

structures to promote financial stability

while keeping in mind the impacts of

federal and state regulations, increased

energy efficiency and distributed

generation.

1A. Explore time of use pilot rate to

obtain knowledge of the demand and

nature of service and provide information

on a rate strategy session with the Board

and Utility Financial Consultant to

further discuss the implementation and

best practices of time of use rates and/or

residential demand rates and their

implications.

Karla 6/30/2021 Time of use pilot rate for residential customers was presented to

the Board in November. Looking to revise the proposed rate with

the same monthly charge, remove the demand rate for

simplification and provide different options for onpeak and

offpeak times. It will incorporate EV Time of Use Rate. It will be

presented to the Board in the 1st/2nd quarter of the calendar

year. Following will be a development of a Commercial TOU

Rate.

1B. Continue to progress with the five

year rate plan presented to the Board to

correct subsidies between rate classes,

correct the cost of service categories

within each rate class and to simplify the

rate structure.

Karla 6/30/19-6/30/23 Implemented first and second year of five year plan. Deferring

the third year until improvement of economic conditions.

1C. Monitor the FTTP rates established

in the Cost Benefit Analysis to determine

if they are meeting established financial

goals. Along with establishing alternative

rates such as low income to allow the

essential service to be provided to all

customers witin the service territory.

Karla/Scott On-going

2. Continue to enhance internal

controls over financial accounts by

improving current procedures and

processes along with identifying costs

savings.

2A. Develop, maintain and monitor

internal controls for the new Fiber to the

Premise operations and On-Bill Finance

System to ensure safeguard of assets and

accurate financial reporting.

Karla/Scott On going Will begin once OLA is established by Fujitsu. Reviewing the

internal control documentation with Fujitsu after a couple

months of implementation, which will be first of the year.

Questionnaires has been provided. Planning final steps of

inventory improvement process. Inventory reorganization is

planned for January.

Traverse City Light and Power2021 Strategic Plan

Financial Stability

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STAFF

ACTION



Financial Stability

3. Commit to monitor performance

measurements as it relates to industry

standards as compared to other utilities.

3A. Continue to update the performance

measurements on an annual basis that are

presented through the annual report.

Discuss with the executive administration

team the progression of these

performance measurements over the past

several years and identify additional

performance measurements that should

be reported quarterly within the

administration team for the purpose to

effectively and efficiently manage

operations.

Karla/Daren 6/30/2021 Staff is continuing to report the performance measurement

included in the annual report and has indentified key

performance indicators to be presented to the Executive Admin

team. Plan on presenting to the Executive Admin team a revised

performance measurement dashboard in the next quarter and

report on these indicators going forward.

4. Maintain an above average bond

rating for municipal utilities.

4A. Monitor financial results and cash

flows of both operations including

financial forecasts with measurements

used for bond ratings to ensure utility

remains healthy which will lead to low

interest rate borrowings benefiting the

utility and its rate payers.

Karla On going Completed through the budget process with the cash flow

forecast and monitored through the monthly financial statements.

5. Continue to work with Michigan

Public Power Agency on understanding

the financial impacts of generation

sources decommissioning.

5A. Work closely with MPPA on

understanding the future financial

impacts on decomissioning of the coal

plants.

Karla On going Keeping in contact with MPPA Accounting Department as they

progress through this process.

Not completed or on-going

New or substantially change

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STAFF

ACTION


1. Traverse City Light & Power commits

to setting a goal of providing 100%

renewable power to its customers in a

fiscally sound manner. The utility intends

to meet this goal by progressing from its

current renewable portfolio of roughly

12% (wind, landfill gas and solar) by

achieving the following interim goals.

1A. Continue to work toward the goal

approved by the Board.

Tim

a. First, TCL&P will obtain new

generation capacity from clean energy

to meet or exceed the statutory mandate

of 15% from clean & renewable energy

sources by 2021;

Tim 2021 Commitments have been entered into reach this goal.

b. Second, TCL&P intends to obtain

sufficient generation to fulfill at least

40% of its energy portfolio

requirements from clean & renewable

energy by 2025;

Tim 2021 Currently at 28%, a conservative measurement. New MPPA

purchase power commitment expected to come in

January/February 2021 the utility will meet the goal.

c. Third, the utility will strive to

obtain 100% of its generation with

renewable energy by or before 2040.

Tim 2040

(Modify the goal to include carbon free

goals?)

1B. Develop an integrated resource plan

to develop a strategy for the utility's

100% renewable energy purchase power

goal while providing transparency to

consumers and the ability to comment on

the strategy.

Tim/Karla 2021


Sustainability through Power Supply Strategy

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STAFF

ACTION



Sustainability through Power Supply Strategy

2. Utilizing technology such as AMI

to implement additional tools that are

in the best interest of the utility and its

customers to achieve energy savings

that manage load growth and are aimed

at reducing on-peak demand and

customer bills.

2A. Review AMI metering information

and industry best practices as data

becomes available and seek to create and

implement mechanisms to curb demand.

Scott/Daren 2020

Perpetual

This will tie into the Smart Grid Strategic Plan.

3. Develop a long-term plan for the

energy waste reduction program that

strives to achieve an additional 1%

above the State mandate.

3A. Update rebate program to increase

incentives for residential customers (heat

pumps, etc.)

Daren/Jake 2021

4. Creating an electric vehicle charging

station network.

4A. Develop a tariff rate for electric vehicle charging stations.Karla 2021 Vendor will assist with this process.

4B. Develop request for proposals for

materials and installation.

Daren/Jake 2021



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STAFF

ACTION


1. Annually review, enhance and

develop system mainteannce programs

ensuring System Average Interruption

Duration Index remains below 52.4

minutes.

1A. Report on completion of identified

conditions requiring correction.

Daren 9/1/2021

2. Review current workplace flows for

efficient and effective improvements that

will provide for proper planning, review,

approval and execution of utility projects.

2A. Complete full joint use system

inventory and update GIS and implement

processes to ensure data integrity for

accruate joint use billings.

Daren/Scott 11/20/2021 Joint use inventory bids pushed out until April 17

2B Create process for identification of

material requirements and proactive

picking of materials for Line Crews.

Karla/Daren 9/1/2021 Need to continue working on data. Vendor says $1K

3. Completion of Phase 1.1 of the FTTP

project.

3A. Create a strategy for onboarding the

services from the vendor to the utility.

Scott 5/31/2021 Part of the Managed Take Over (MTO) Plan.


Enhancing Operational Excellence

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STAFF

ACTION



Enhancing Operational Excellence

4. Continue to enhance and modify

recruitment and retention efforts that

attract and retain a qualified, competent

and professional workforce.

4A. Negotiate a new collective bargaining

agreement.

Kelli 6/30/2021 Postponed due to COVID to the following year.

4B. Creating a plan for succession that

identifies critical positions throughout the

utility and outlines both short-term

solutions in the event of uplanned

extended absences as well as long term

strategies involving potential successor

candidates or recruitment initiatives.

Kelli 6/30/2021

4C. ACT Compensation and Benefits

Study.

Kelli 5/31/2022

5. Continue to promote employer and

employee awareness of, commitment to,

and involvement with safety for

employees and the public through

cooperative efforts and strong leadership.

5A. Develop the framework for an

independent safety audit. Action steps

would include identifying audit areas,

auditor identification, and how to

implement the information following

completion and timeframe.

Daren/Kelli 6/30/2021 On hold because of COVID


New or substantially change of 167


STAFF

ACTION


1. Maintain and improve the level of

service to meet customer expectations.

1A. Develop a Time of Use Estimator for

website as a tool for customers to see the

impact of electing to be on the Time of

Use Rate based on their current

consumption patterns.

Scott/Karla/Kelli 9/30/2021

1B. Working with vendor on new utility

billing software to enhance operational

efficiencies.

Scott/Karla 6/30/2021 FTTP project acquired a new billing system and vendor indicates

that it will work for both electric and telecom. As TCLP owns

this system, TCLP will audit its feasibility for use on electric as it

may suit those needs without the need for acquiring another new

system. Created a business requirements list with the City

Treasurer. Completed first demo with Elations on the software

platform.

1C. Work with the Treasurer's office to

issue and implement an online payment

platform that meets customer

expectations yet meet the operational

needs of the City Treasurer's office.

Scott/Karla/Kelli 6/30/2021 Waiting on finding out new utility billing system and will propose

resolution of absorption of credit card fees.


Customer Satisfaction

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STAFF

ACTION



Customer Satisfaction

2. Enhance the utility’s communications

efforts and community involvement.

2A. Redesign of TCL&P website Kelli/Scott 12/31/2021

2B. Develop marketing and educational

materials for programs such as Time of

Use Rate Pilot Program, EV Charging

Stations and AMI.

Kelli On going

2C. Create a Strategic Communications

Plan.

Kelli 6/30/2021

2D. Create electric service rules of

operation.

Karla 6/30/2021 Substantially completed the rule book. Need to format and do

final review. Next step is to meet with the City Treasurer office to

review the document for any comments or suggestions and start

the formal final review process.

Daren 6/30/2019Jake makes efforts to contact/visit with every Key Account

3. Continually evaluate and implement

services focused on assisting the unique

needs of the utility’s key account and

critical service customers.

3A. Provide education on AMI Customer

Portal.

Daren/Jake 3/31/2021



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To:


From: Kelli Schroeder - Manager of Human Resources and Communications Meeting: Regular Board - Virtual - Jan 12 2021 Subject:

Customer Survey - Question Review.

The Customer Survey Ad Hoc Committee met with GreatBlue Research on December 4, 2020. Subsequent to that meeting, a draft survey instrument was created following feedback from members of the Ad Hoc. The Ad Hoc Committee and staff are now bringing before you the attached survey instrument for the full Board’s review. Additionally, I have also attached the timeline provided by GreatBlue Research.

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1

TRAVERSE CITY LIGHT & POWER :: TCL&P RESIDENTIAL AND COMMERCIAL & INDUSTRIAL SATISFACTION TELEPHONE/DIGITAL SURVEY 2020 Survey DRAFT (1/6/2020) Hello! You are receiving this survey from GreatBlue Research. We are conducting an opinion survey on behalf Traverse City Light & Power. Please be assured that your responses will remain confidential and be treated in accordance with data protection laws. All analyses will be conducted anonymously on an aggregated level. Thank you very much for participating! A. Are you at least eighteen years of age or older and a customer of TCL&P?

01 Yes (Continue) 02 No (Thank and terminate)

Rating TCL&P 1. Overall, how satisfied are you with the services provided by TCL&P?

01 Very satisfied 02 Satisfied 03 Undecided 04 Dissatisfied 05 Very Dissatisfied 06 Don’t know/unsure

2. How important would you say the cost of electricity is to your household or business?

01 Very important 02 Somewhat important 03 Undecided 04 Somewhat unimportant 05 Very unimportant

3. How would you rate TCL&P on providing electricity at low cost?

01 Excellent 02 Above average 03 Average 04 Below average 05 Poor 06 Don’t know/unsure

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2

4. Our records indicate that your business is identified as a high electricity user. Prior to today, how aware would you say you were that your business utilizes more energy than the average commercial customer at TCL&P? (Only ask to customers who are tagged as high users) 01 Very aware (Go to Q6) 02 Somewhat aware (Go to Q6) 03 Somewhat unaware (Go to Q7) 04 Not at all aware (Go to Q7)

5. Our records indicate that your business is identified as a low electricity user. Prior to today, how

aware would you say you were that your business utilizes less energy than the average commercial customer at TCL&P? (Only ask to customers who are tagged as low users) 01 Very aware 02 Somewhat aware 03 Somewhat unaware (Go to Q7) 04 Not at all aware (Go to Q7)

6. How would you say you were aware of this?

____________________________________________________________________________________________________________________________________________________________________

7. How important would you say providing reliable electric service with fewer outages and surges is to

you? 01 Very important 02 Somewhat important 03 Undecided 04 Somewhat unimportant 05 Very unimportant

8. What types of consequences does your business experience as a result of a power outage? (Only ask

to commercial customers) __________________________________________________________________________________________________________________________________________________________________________

9. How would you rate Traverse City Light & Power on providing reliable electric service?

01 Excellent 02 Above average 03 Average 04 Below average 05 Poor 06 Don’t know/unsure

10. How important would you say responsiveness to restoring power after outages is to you?

01 Very important 02 Somewhat important 03 Undecided 04 Somewhat unimportant 05 Very unimportant

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3

11. How would you rate Traverse City Light & Power on responsiveness to restoring power after outages? 01 Excellent 02 Above average 03 Average 04 Below average 05 Poor 06 Don’t know/unsure

12. If you have had contact with a TCL&P Customer Service Representative within the past year, either on

the phone, in person or by email, how satisfied were you with the outcome of this most recent contact? 01 Very satisfied (go to Q14) 02 Satisfied (go to Q14) 03 Undecided (go to Q14) 04 Dissatisfied 05 Very dissatisfied 06 No contact (go to Q14)

13. What is the primary reason you were dissatisfied?

01 Length of time between request/response 02 Problem/request not resolved at all 03 Unfriendly/discourteous employees 04 Other: _________ 05 Don’t know/unsure

14. If you have had contact with a TCL&P Field Representative (meter reader, tree trimmer, lineman)

within the past year, how satisfied were you with the outcome of this most recent contact? 01 Very satisfied 02 Satisfied 03 Undecided 04 Dissatisfied 05 Very dissatisfied 06 No contact

15. How willing would you say you are to pay more for electricity that is locally generated?

01 Very willing 02 Somewhat willing 03 Not very willing 04 Not at all willing 05 Don’t know/unsure

Communication 16. What is the best way for TCL&P to successfully communicate information to you?

01 Television 02 Record Eagle 03 Bill Insert 04 Direct Mail 05 Radio

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06 E-mail 07 Facebook 08 Twitter 09 E-Newsletter 10 Website 11 Other: ________

17. Would you be interested in utilizing a TCL&P Smart Phone Application that would provide pertinent utility information? 01 Yes 02 No 03 Don’t know/unsure

18. Would you be interested in receiving a text message notifying you of an outage, phone scam, or

inclement weather? 01 Yes 02 No 03 Don’t know/unsure

19. How do you pay your utility bill?

01 Online 02 Mail 03 Telephone 04 In person 05 Automatic bank draft 06 Other: _______ 07 Don’t know/unsure

20. Have you visited the TCL&P website, in the last 6 months?

01 Yes 02 No (Go to Q22) 03 Don’t know/unsure (Go to Q22)

21. How often do you visit the website?

01 Daily 02 Weekly 03 Monthly 04 Other: ______ 05 Don’t know/unsure

22. For what purpose do you visit the TCL&P website? (Select all that apply)

01 Bill payment information 02 Board information 03 News updates 04 Electric rate information 05 Information on energy efficiency rebates 06 Utility outage map 07 Other: ________ 08 Don’t know/unsure

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5

How would you rate your interest level in each of the following types of information that could be made available on the website? (Randomize)

Item… Very

interested Somewhat interested

Not at all interested

Don’t Know

23. Information on TCL&P Projects 01 02 03 04 24. Information on rates 01 02 03 04 25. Online reporting of service problems 01 02 03 04 26. Information on energy news and issues 01 02 03 04 27. Information on renewable energy 01 02 03 04 28. Information on ways to improve efficiency in

homes and businesses 01 02 03 04

Energy Efficiency and Initiatives 29. How interested would you be in Traverse City Light & Power upgrading its metering infrastructure to

assist customers with real-time monitoring of energy consumption? 01 Very interested 02 Somewhat interested 03 Not at all interested 04 Don’t know/unsure

30. How aware are you that TCL&P has an energy efficiency program that provides rebates for recycling

older refrigerators? (Only ask if residential customer) 01 Very aware 02 Somewhat aware 03 Somewhat unaware 04 Not at all aware

31. How aware are you that TCL&P has incentives for buying energy efficient appliances and lighting?

(Only ask if residential customer) 01 Very aware 02 Somewhat aware 03 Somewhat unaware 04 Not at all aware

32. How aware are you that TCL&P has an energy efficiency program that provides financial incentives for

installing more energy efficient lighting and equipment at your business? (Only ask if commercial customer) 01 Very aware 02 Somewhat aware 03 Somewhat unaware 04 Not at all aware

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33. How aware are you that customers can opt-in to a voluntary green rate to ensure that 100% of your electrical power from TCL&P is from renewable energy? 01 Very aware 02 Somewhat aware 03 Somewhat unaware 04 Not at all aware

34. Have you participated in any of the following energy efficiency programs? (Select all that apply)

01 Recycling Rebate Program 02 Energy Saver Rebate Program 03 Voluntary Green Pricing Program 04 On-Bill Financing Program 05 Other: ________ 06 Don’t know/unsure

35. For larger energy efficiency upgrades, would you be interested in the utility offering On-Bill financing

for those types of improvements? 01 Yes 02 No 03 Don’t know/unsure 04 I would like more information on this topic

36. How important is it for your utility to consider climate change as part of its energy strategy?

01 Very important 02 Somewhat important 03 Not very important 04 Not at all important 05 Don’t know/unsure

37. Do you currently have an Electric Vehicle or are you thinking about purchasing one in the next three

years? 01 Yes, I currently own an electric vehicle 02 Yes, I plan on owning one in the next three years 03 No, I do not own an electric vehicle

38. What would encourage you to switch to utilizing more electric technologies such as electric heat

pumps, cars, water heaters, and more? ____________________________________________________________________________________________________________________________________________________________________

39. Do you see TCLP as a place to get reliable equipment or contractor recommendations?

01 Yes 02 No 03 Don’t know/unsure

40. How aware are you aware that TCL&P has recently launched high speed fiber internet service?

01 Very aware 02 Somewhat aware

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03 Somewhat unaware 04 Not at all aware

41. And how interested would you be in using TCL&P as your internet provider?

01 Very interested 02 Somewhat interested 03 Not at all interested 04 Don’t know/unsure

Demographics The following questions will be used for statistical purposes only. 42. How long have you been a TCL&P customer?

01 Less than 1 year 02 1 to 5 years 03 6 to 10 years 04 Over 10 years 05 Don’t know/unsure 06 Prefer not to say

43. Which of the following categories best describes your age?

07 18 to 24 08 25 to 34 09 35 to 44 10 45 to 54 11 55 to 64 12 65 or older 13 Prefer not to say

44. Do you identify as:

01 Female 02 Male 03 Not listed:________ 04 Prefer not to say

45. Which of the following categories best describes your total family gross income before taxes?

01 Under $9,999 02 $10,000 to less than $25,000 03 $25,000 to less than $40,000 04 $40,000 to less than $50,000 05 $50,000 to less than $60,000 06 $60,000 to less than $75,000 07 $75,000 to less than $100,000 08 $100,000 to less than $125,000 09 $125,000 to less than $150,000 10 $150,000 to less than $175,000 11 $175,000 to less than $200,000

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12 $200,000 to less than $300,000 13 $300,000 to less than $400,000 14 $400,000 to less than $500,000 15 $500,000 or more 16 Prefer not to say

46. How many people currently reside in your household?

01 1 (myself) 02 2 03 3 04 4 05 5 or more 06 Prefer not to say

47. Do you currently own or rent your place of residence?

01 Own 02 Rent 03 Prefer not to say

48. Is your residence in Traverse City your permanent residence or a seasonal home?

01 Permanent residence 02 Seasonal home 03 Prefer not to say

Thank you for taking the time to participate in this survey. Your opinions and responses are very valuable and important to us.

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Project Timeline: 2020-2021 Customer Satisfaction Survey

12/18/2020 - Initial survey outline draft due to client

12/28/2020 - Survey outline edits/comments due from client

1/4/2021 - Survey draft due to client

1/8/2021 - Survey edits due from client

1/8/2021 - Customer records due from client

1/11/2021 - Second draft to client for Board review

1/15/2021 - Previous studies data sets due from client if able

1/15/2021 - Survey approval

1/25-2/22 - Residential Fielding – phone

1/25-2/22 - Commercial Fielding – online

2/23-3/9 - Residential Fielding – online

2/23-3/9 - Commercial Fielding – phone

3/10-3/19 - Data Processing & Analysis

3/19-4/2 - Report - building

4/2 - Report due to client

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To:



MyMeter Update

Staff has been working on launching a customer portal for detailed meter usage for both electric and water utilization. This customer portal includes data derived from the utility's advanced metering infrastructure (AMI) and utility billing systems that couples usage statistics alongside historical billing statics to help break down energy and water usage pattern for customers in an easily readable format. In addition, it also gives the customer service representatives (CSRs) a new tool to utilize when discussing items with customers such as high bill complaints. Currently, all files are uploaded daily to the system, which will contain payment details by transactions, including historical transaction details, coupled with fifteen minute electric consumption data and hourly water consumption data. All of this is laid out in a graphical format and a sample of this layout is included in the packet. These graphs also import temperature data so customers can see usage patterns as temperatures fluctuate within the area. As this is a new application that consumes and processes a lot of data from different systems on a daily basis, there are bound to be potential hiccups in the initial release as not all of the data from the exports and imports of the 20,000+ water and electric customer's data from different systems could be manually validated for consistency during the automated processes that were developed for this application. Therefore, on the initial release, Staff will be reaching out to Board members and other targeted accounts that may be interested in the application to get signed in and to assist with utilization of the application to garner feedback on the consistency of the data within the application. Following positive feedback and validity checks, Staff will begin marketing the application to all customers through various methods as identified in the updated TCL&P strategic plan that puts focus on customer adoption and utilization of the application throughout the year. In addition, TCLP's website will be updated to reflect the tool and a how-to documentation will be published alongside the access link to the application for all customers to access as desired.

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Main Login Screen

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Sample Initial Electric Landing Page

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Sample Hover Functionality

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Detail Electric Sample

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Water Sample

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To:


From: Daren Dixon - Operations Manager, Jacob Hardy - Energy Technician Meeting: Regular Board - Virtual - Jan 12 2021 Subject:

Report on Electric Vehicle Charging Stations

Equipment RFP: In late November 2020, a request for proposal (RFP) went out to bidders for pricing of 12 dual port level 2 and 2 DC fast charging electric vehicle (EV) charging stations to be located within TCL&P’s

service area. The request was for the equipment, O&M and networking contract costs, but did not include installation costs; that RFP will be done separately. To be successful, it is important to purchase quality products at a reasonable price from vendors that will be around to support them, as well as to support TCL&P in an EV charging program. In order to accomplish this goal, a robust weighting and rating methodology was used to short-list the potential vendors in the following areas: 1) Pricing, 2) Product Specs, 3) Support, and 4) Company Strength. Three vendors were short-listed with a follow up question and answer session, with one vendor, Blink, being selected. Pricing from the successful vendor was very favorable compared to the return on investment numbers provided to the Board during the June 23, 2020 study session. Additional Steps: Staff has taken additional steps to prepare for an eventual recommendation to the Board, including:

• Determined charger locations with the County • Discussed potential locations with DDA • Discussed locations with private entities where public parking is involved • Discussed potential for funding contributions with these entities • Review of other charging programs and rates

Next Steps:

• Staff is meeting with the Michigan Department of Environment, Great Lakes and Energy (EGLE) on January 6 to discuss their grant programs for EV charging stations.

• Staff is meeting January 8 with the DDA to further discuss charging locations. • RFP for installation will go out once locations are finalized (targeting later in January). • Once all costs & funding sources are determined, staff will bring a recommendation/project approval to

the Board (targeting early spring). Note that the EV charging station quantities recommended will depend upon the results of discussions with EGLE, DDA and private entities.

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2 Chargers Level II (future)

2 Chargers Level II

2 Chargers Level II 1 DCFC


2 Chargers Level II


Additional 2 Level II Chargers to go in at Civic Center

2 Level II Chargers to go in at new CommonGround building (future)

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Marina Drive 2 – Level 2 Chargers (4 parking spots) 1 – DC Fast Charger (1 parking spots)

Lot C 2 – Level 2 Chargers (4 parking spots) 1 – DC Fast Charger (1 parking spot)

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Lot E 2 – Level 2 Chargers (4 parking spots)

Lot X 2 – Level 2 Chargers (4 parking spots) 1 – DC Fast Charger (1 parking spots)

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Civic Center Lot (Non-Metered) 2 – Level 2 Chargers (4 parking spots) Suggested by GT County

Lot N 2 – Level 2 Chargers (4 parking spots)

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Lot J - Future

2 – Level 2 Chargers (4 parking spots) Exact spots TBD

CommonGround - Future

2 – Level 2 Chargers (4 parking spots) Exact spots TBD

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To:



Barlow Switch Station Project Close-out Report.

The Barlow Switch Station Project has been completed and is enclosed for your review, which includes the capital plan amount, budget, contracts and cash outlay. Overall the project came in under budget by $454,124 and was lower than contractual amounts by $19,331. There is still one remaining outstanding invoice from GRP Engineering expected to be less than $1,000. Staff wanted to move forward with the close out as the outstanding cost was minimal. Differences based on categories are as follows:

Engineering, Administrative and Construction Inspections – came in under budget with the function of the construction management and oversight moving from a third party to being performed internally by the System Engineer. Contracted Labor & Equipment – came in over budget based on the demand of work for electrical contractors. Materials – came in under budget due to directly bidding items.

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Traverse City Light and PowerBarlow Switch Station Project Close out ReportJanuary 5, 2021

Project Name Barlow Switch Station Project

Sum of Amount Column Labels Over (Under) Over (Under)Row Labels Capital Plan Budget Contract Cash outlay Budget Contract

Engineering, Administrative & Construction Inspections 254,000.00 146,000.00 116,458.02 (137,541.98) Contract 146,000.00 116,458.02 (29,541.98)

(blank) 146,000.00 116,458.02 (blank) 254,000.00

(blank) 254,000.00 Contracted Labor & Equipment 516,000.00 846,164.00 853,584.00 337,584.00

Contract 822,677.00 822,677.00 - (blank) 822,677.00 822,677.00

Contract Change Order 12,102.00 12,102.00 - (blank) 12,102.00 12,102.00

(blank) 516,000.00 (blank) 516,000.00

8706 11,385.00 18,805.00 7,420.00 Note 1Electrical Testing 11,385.00 18,805.00

Materials 1,174,000.00 741,196.50 755,560.77 (418,439.23) Direct Purchase 1,327.65

(blank) 1,327.65 Inventory 10,245.65

(blank) 10,245.65 (blank) 1,174,000.00

(blank) 1,174,000.00 8492 46,886.00 46,886.00 -

69KV Potential Transformers 46,886.00 46,886.00 8494 63,755.00 63,755.00 -

Steel Structures 63,755.00 63,755.00 8497 336,426.00 339,157.00 2,731.00

Control Building and Panels 336,426.00 339,157.00 8495 129,000.00 129,000.00 -

69 kv Circuit Switchers 129,000.00 129,000.00 8496 69,700.00 69,700.00 -

69 kv Circuit Breakers 69,700.00 69,700.00 8560 49,563.00 49,563.00 -

Switch Operators 49,563.00 49,563.00 8549 18,880.00 18,880.00 -

Reclosers 18,880.00 18,880.00 8534 26,986.50 27,046.47 59.97

Wire 26,986.50 27,046.47 Contingency 254,000.00 (254,000.00)

(blank) 254,000.00 (blank) 254,000.00

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Traverse City Light and PowerBarlow Switch Station Project Close out ReportJanuary 5, 2021

Project Name Barlow Switch Station Project

Sum of Amount Column Labels Over (Under) Over (Under)Row Labels Capital Plan Budget Contract Cash outlay Budget Contract

Internal Labor & Equipment 18,137.34 18,137.34 636 and 3294 18,137.34

(blank) 18,137.34 Legal 136.00 136.00

(blank) 136.00 (blank) 136.00

(blank) 2,198,000.00 - (blank) 2,198,000.00

(blank) 2,198,000.00 Grand Total 2,198,000.00 2,198,000.00 1,733,360.50 1,743,876.13 (454,123.87) (19,331.01)

454,123.87

Note 1 - Extra costs were reimbursed by Siemens.

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To:


From: Karla Myers Beman - Controller, Scott Menhart - Chief Information Technology Officer

Meeting: Regular Board - Virtual - Jan 12 2021 Subject:

FTTP Update

Included in your packet is update on active/prospective customers, projected annual revenue, comparison of budget to actual, and update on construction costs.

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Fiber to the Premise Project

January 6, 2021

January 6, 2021

Active

Customers

Provision

and

Scheduled

Customers

Prospective

Customers

Deferred

Customers Total

CBA

Take Rate

Total

Customer

Percentage of

CBA Take

Rate Goal

Active and

Prospective

Projected

Annual

Revenue

CBA

Projected Annual

Revenue

Percentage

of CBA

Annual

Revenue Goal

Residential

200 MB 36 7 9 16 68 - 48,951.84$ -$

500 MB 55 7 8 11 81 - 68,030.28$ -$

1 GIG 29 7 7 8 51 402 55,073.88$ 435,799.00$

Subtotal Residential 120 21 24 35 200 402 49.75% 172,056.00$ 435,799.00$ 39.48%

Commercial

500 MB 14 2 3 3 22 - 26,397.36$ -$

1 GIG 6 1 3 1 11 378 19,798.68$ 662,256.00$

Subtotal Commercial 20 3 6 4 33 378 8.73% 46,196.04$ 662,256.00$ 6.98%

VOIP

Residential (number of lines) 10 - 8 - 18 3,237.84$

Commercial (number of lines) 3 - 6 - 9 2,698.92$

Subtotal VOIP 13 - 14 - 27 219 12.33% 5,936.76$ 83,785.00$ 7.09%

Bundle Discounts

Residential 10 - 8 - 18 (1,077.84)$

Commercial 3 - 6 - 9 (538.92)$

Subtotal Bundle Discounts 13 - 14 - 27 - (1,616.76)$ -$

Total 153 24 44 39 260 999 26.03% 222,572.04$ 1,181,840.00$ 18.83%

Notes

Active Customers - Customers who are receiving service.

Provision and Scheduled Customers - Customers equipment is provisioned and customers are scheduled to be installed.

Prospective Customers - Customers who have signed up for service, been contacted and are in the que to be scheduled and installed.

Deferred Customers - Customers who have signed up for service, but cannot be installed until spring because of frost law not allowing installations or customer is out of state.

CBA stands for Cost Benefit Analysis

CUSTOMER TAKE RATE - Phase 1 REVENUE

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January 6, 2021

January 6, 2021

Pre-Order

Customers

CBA

Take Rate

Total

Customer

Percentage of

CBA Take

Rate Goal

Active and

Prospective

Projected

Annual

Revenue

CBA

Projected Annual

Revenue

Percentage

of CBA

Annual

Revenue Goal

Residential

200 MB 8 - 5,759.04$ -$

500 MB 9 - 7,558.92$ -$

1 GIG 7 389 7,559.16$ 279,889.34$

Subtotal Residential 24 389 6.17% 20,877.12$ 279,889.34$ 7.46%

Commercial

500 MB - - -$ -$

1 GIG - 20 -$ 23,517.65$

Subtotal Commercial - 20 0.00% -$ 23,517.65$ 0.00%

VOIP

Residential (number of lines) 1 179.88$

Commercial (number of lines) - -$

Subtotal VOIP 1 143 0.70% 179.88$ 25,740.00$ 0.70%

Bundle Discounts

Residential 1 (59.88)$

Commercial - -$

Subtotal Bundle Discounts 1 - (59.88)$ -$

Total 25 552 4.53% 20,997.12$ 329,146.99$ 6.38%

Notes

Pre-Order Customers - customers who have signed up for service for Phase 1.1.

CBA stands for Cost Benefit Analysis

CUSTOMER TAKE RATE - Phase 1.1 REVENUE

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Fiscal Year End June 30, 2021 Budgeted Revenues and Expenses

January 6, 2021

FY20/21

Recommended

Fiscal Year to date

January 6, 2021 Difference

OPERATING REVENUES

Lit Fiber System

Residential 435,800.00$ 26,973.53$ (408,826.47)$

Commercial 662,200.00$ 5,309.02$ (656,890.98)$

VoIP 83,700.00$ 529.67$ (83,170.33)$

Forfeited Discounts -$ 161.69$ 161.69$

Total Operating Revenues 1,181,700.00$ 32,973.91$ (1,148,726.09)$

OPERATING EXPENSE

Salaries and wages 101,000.00$ -$ 101,000.00$

Fringe benefits 54,000.00$ -$ 54,000.00$

Operating expenses -$ 864.60$ (864.60)$

Communications -$ 154.50$ (154.50)$

Professional services - Lit Fiber 697,000.00$ 57,908.29$ 639,091.71$

Printing and publishing -$ 419.00$ (419.00)$

Miscellaneous expense -$ 652.56$ (652.56)$

Total Operating Expenses 852,000.00$ 59,998.95$ 792,001.05$

Change in net position 329,700.00$ (27,025.04)$ (356,725.04)$

Notes:

2. Expenses represent charges invoiced to date.

1. Excerpt from the Fiber Fund Budget where activity was added to reflect the Lit Fiber operations. Revenues and costs

reflected only represent additional revenue and expense to the Fiber Fund.

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Summary of Construction Costs

January 6, 2021

Program

Management OSP Engineering ISP Equipment

ISP Test and

Turn Up

Data Center

Build OSP Construction Discount Drop Cost Total

Invoice Date Invoice Number 546,715.00$ 138,210.00$ 275,551.00$ 68,041.00$ 233,382.00$ 1,400,295.00$ (40,000.00)$ 561,455.00$ 3,183,649.00$

8/20/2019 91851996 30,275.00$ 30,275.00$

10/17/2019 91855721 86,073.00$ 86,073.00$

10/31/2019 91857444A 86,073.32$ 86,073.32$

12/11/2019 91862041 86,073.00$ 14,289.00$ 100,362.00$

1/10/2020 91864950 86,073.00$ 86,073.00$

2/24/2020 91868915 86,073.00$ 44,250.00$ 275,551.00$ 229,179.00$ 635,053.00$

3/13/2020 91872816 43,037.00$ 65,003.00$ 108,040.00$

4/20/2020 91876607 43,037.00$ 43,037.00$

8/31/2020 91892349 4,203.00$ 167,104.00$ 171,307.00$

8/31/2020 91892350 68,041.00$ 271,650.00$ 339,691.00$

9/29/2020 91895254 119,302.00$ 119,302.00$

10/21/2020 91897405 141,770.00$ 141,770.00$

10/30/2020 91898734 93,918.00$ 93,918.00$

12/21/2020 91904366 499,603.00$ (40,000.00)$ 459,603.00$

Total Expended 546,714.32$ 123,542.00$ 275,551.00$ 68,041.00$ 233,382.00$ 1,293,347.00$ (40,000.00)$ -$ 2,500,577.32$

Balance left on contract 0.68$ 14,668.00$ -$ -$ -$ 106,948.00$ -$ 561,455.00$ 683,071.68$

Program

Management ISP Equipment

OSP Engineering/

Construction Total

Invoice Date Invoice Number 191,122.00$ 50,421.00$ 556,405.00$ 797,948.00$

11/30/2020 91901778 25,432.00$ 25,432.00$

-$

-$

-$

Total Expended 25,432.00$ -$ -$ 25,432.00$

Balance left on contract 165,690.00$ 50,421.00$ 556,405.00$ 772,516.00$

Note: The above only reflects the contract with Fujitsu and does not include internal labor and equipment along with miscellaneous costs.

TRAVERSE CITY LIGHT & POWER

Fujitsu - Phase 1

TRAVERSE CITY LIGHT & POWER

Fujitsu - Phase 1.1

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