August 2008

LA PLATA ELECTRIC ASSOCIATION, INC.
Durango, Colorado

The regular monthly meeting of the Board of Directors of La Plata Electric Association, Inc. was held Wednesday, August 20, 2008, in the headquarters building in Durango, Colorado. Jerome Doane led the Board in the Pledge of Allegiance.

President Patton called the meeting to order at 9:00 A.M. She introduced guest Joe Wheeling who will become a director in District 4 replacing Director Zink. She indicated that the Washington Youth Tour students will be present at 11:30 A.M. and the Durango City Council, City Manager, and Assistant City Manager will be arriving for a luncheon discussion.
The following directors were present:

Excused absence: Tom Compton

Also present were:
Greg Munro, Chief Executive Officer
Barry Spear, Attorney
Steve Gregg, Manager of Operations
Ron Meier, Manager of Engineering
Mark Schwantes, Director of Corporate Services
Keith Brant, Controller
Linda Wilsey, Executive Secretary
Indiana Reed, Marketing and Communications Consultant

GUESTS (from sign in sheet)
Joe Wheeling and Conniee Imig

AGENDA
The agenda was addressed. President Patton asked that the directors who made purchases at the two county fairs give a report.

CONSENT BOARD ITEMS
The consent board items were presented and reviewed.

ITEMS REQUIRING BOARD ACTIONS
Director reimbursements were presented and reviewed.

Committee of the Whole 8/18/08

System's Operations & Planning Committee 8/18/08
Davin Montoya    Harry Goff     Harry Cole      Pam Patton

Administration Committee 8/18/08
Terry Alley      Jeffrey Berman     Herbert Brodsky    Tom Compton     Robert Formwalt    

Budget Finance & Audit Committee 8/18/08
John Gardella     Terry Alley      Jerry McCaw      Harry Goff      Herbert Brodsky

Board Meeting 8/20/08

Meetings

APPOINT DELEGATE/ALTERNATE FOR CREA SEMI-ANNUAL AND WESTERN UNITED ANNUAL MEETINGS
The Board was polled as to directors planning to attend the meetings. Directors Formwalt, Montoya, Berman, and Alley anticipate attending plus CEO Munro. Joe Wheeling, upcoming director, has registered to attend a class and a portion of the meetings.

President Patton reminded the Board of Tri-State's membership meeting being held on September 2nd in Denver. Directors Goff and Berman and CEO Munro and Joe Wheeling are planning to attend.

RESOLUTION 2008-12, FINAL APPROVAL OF ELECTRIC SERVICE REGULATIONS
CEO Munro reported that yesterday was the final day for the comment period on the regulations and no comments were received.

CEO REPORT
CEO Munro reviewed highlights of his CEO report. A draft of Tri-State's 2009 Operating Forecast is showing a possible 4% rate increase in 2009. The NRECA residential member satisfaction survey is complete and the results will be presented in September at the Committee of the Whole meeting. CEO Munro explained new rules and regulations by the Federal Trade Commission called the "Red Flags Rules"; these have to do with keeping the customer's identity from being stolen. A policy concerning these rules will be forthcoming.
The topic of the LPEA Board members' email files was addressed. Capacity is getting full on the server so the directors were asked to delete dated information..
A brief review of the Energy Efficiency Conference held August 15th was given.
An Automatic Vehicle Location Pilot project was noted, with the consultant and vendor part of NRTC, and a local Durango based company. CEO Munro pointed out that an LPEA employee's spouse works for the company but there is no conflict of interest.
The monthly financials were sent out via email to the Board. Controller Keith Brant gave a brief presentation on LPEA Internal Controls. He reviewed four processes that he had critiqued: cash/banking, personnel/payroll, accounts payable and work orders. A few adjustments have been made to correct weaknesses but his conclusions are that LPEA is a small company and appropriate internal controls are in place. Keith agreed to include an internal controls report with the quarterly financial report.
Indiana Reed, LPEA's Market and Communication Consultant, gave the Marketing Communications Update. She reviewed her focus to educate the public about LPEA and gave an update on the Public Information Officers Network. She indicated goals accomplished with the Annual Report and is now creating more marketing tools to reach the entire membership.
Mark Schwantes, Director of Corporate Services, gave the Energy Efficiency Report. The presentation included load management, benefits and purpose, growth and success, and planning for the future.

COMMITTEE OF THE WHOLE MEETING
The Committee met on Monday, August 28, 2008

SYSTEMS' OPERATION & PLANNING COMMITTEE
The Committee met in Executive Session to discuss the San Juan Major Agreement between LPEA and a large industrial customer.

ADMINISTRATION COMMITTEE
Director Berman reported on the committee's actions. They considered a request for $50,000 from the Pagosa Mountain Hospital.

The Committee was given a list for a Teller Committee for this year's Annual Meeting. The directors requested that two tellers be added from the Pagosa district. CEO Munro sent out a memo with the new list replacing two La Plata County individuals with Archuleta County tellers.

Revised Board Policy 118 was addressed.

Director Berman requested a more comprehensive policy be drafted in the future on capital credit refunds. President Patton expressed this would be a valuable topic to discuss during the Strategic Planning session.

BUDGET FRINANCE & AUDIT COMMITTEE
Director Gardella reported that the Committee addressed the 2009 Operating Forecast assumptions.

The Committee was also given a presentation by CEO Munro on Capital Credits. Questions were asked and President Patton requested that the discussion on Capital Credit refunds be continued in September.

WASHINGTON YOUTH TOUR PRESENTATION
Ben Southwood from Durango and Megan Lane and Audrey Riegel from Bayfield introduced themselves and shared their experiences in Washington D.C. on the Youth Tour. Megan also narrated a short DVD clip of the Energy Camp she attended in Steamboat Springs.

DURANGO CITY COUNCIL
City Manager Ron LeBlanc, Assistant Manager Greg Caton, Mayor Renee Parson, and Councilors Michael Rendon, Scott Graham, Leigh Meigs, and Doug Lyons, shared lunch with the Board and were given a PowerPoint presentation on LPEA's Green Power Program and on future growth.

LA PLATA ELECTRIC ROUND UP FOUNDATION
Director Alley reported the Foundation is down by 63 members and staff researched the reasons. The Foundation considered 4 Round Up requests for a total of $10,750. One request was tabled and the others were granted for a total of $4100. The Foundation considered 6 educational grants. Two were denied and 4 were funded for a total of $3,500.

FASTTRACK REPORT
Director Zink reported that FastTrack is receiving nearly $2500 a month from the network switch and has passed the $200,000 mark in reoccurring monthly revenue. He explained ongoing discussions concerning another Colorado telecom company.

WESODI REPORT
Director McCaw indicated that the financials had been sent to the directors. July was a down month but staff is optimistic that future months will improve. A job started last winter had a substantial loss which is affecting current financials. There are 81 employees as of August 1st. BWR is bidding several projects.

TRI-STATE REPORT
Director Goff gave the Tri-State report. He noted a long discussion on a payment to Sunflower to keep the Holcomb site current. Tri-State has agreed to an MOU with Excel over inclusion of eastern and southern Colorado transmission routes. A proposed rate increase of 4.1% will be considered for adoption in September.

CREA REPORT
Director Compton gave his report during the Committee of the Whole.

WESTERN UNITED REPORT
Director Formwalt reported that sales are down about 22% from last year. Lead times are about the same as in past months. Western United is seeing an increase in the price of plastic products.

4CORE REPORT
Director Zink stated that staff is busy getting out information. The Board is having a retreat early next month to spend more time on issues. They are beginning to work on finding matching funds which is necessary for some of the current funding.
The question was raised concerning Director Zink representing LPEA on the 4CORE Board since he is leaving the LPEA Board. President Patton suggested having Director Zink come to next month's Board meeting to report on the 4CORE Board retreat and explain the direction of 4CORE. It was a consensus of the Board that LPEA contract with Ed Zink to represent LPEA on the 4CORE Board until 4CORE is a well established entity with approved bylaws, etc.

RESOLUTION 2008-11, CANCELLING BOARD ELECTIONS

ATTORNEY REPORT
Attorney Spear updated the Board on the County Road 318 easement case. Judge Dickinson has not ruled on the new motion filed by the landowner.

FUTURE COMMITTEE OF THE WHOLE MEETINGS AND AGENDA ITEMS
The Committee of the Whole will meet on Monday, September 15th to review the Annual meeting and hear Ed Zink's report on 4CORE. Agenda items will include election of Board officers and representatives to Tri-State, CREA, and Western United, a policy on the Red Flag Rules, awarding a line construction bid for the San Juan Major Project, and appointing a delegate and alternate to the Basin Electric Annual Meeting. Continued discussion will be done on Capital Credit Retirement.

With no further business, the meeting adjourned at 3:25 P.M.

Recorded by Linda Wilsey
Original Signed by Jeffrey A. Berman, Secretary
Original Signed and Approved by Pam Patton, President

La Plata Electric Association, Inc.
Budget, Audit and Finance Committee
8/08/2008
1. Assumption for 2009 Annual Forecast
    A. Project a growth rates as follows - 1.5% Residential, 3% commercial and 2% Industrial.
    B. 5% LPEA inflation rate on payroll and other variable expenses.
    D. Medical insurance expense will increase by 6%.
E. Use current interest rates on current loans to determine interest costs.
CFC Loans
RUS Loans
F. Power production expense will increase 4.1% due to Tri-State increase.
G. Line loss 3.7%
H. Interest earning will be based on current rates
CFC interest earning rates (current earnings rate 2.1%)
Local banks interest earning rates (current average earning rate 2.5%)
2. Financial Goals
A. Equity at Year-End 2008 as a Percent of Assets to be at least 35%.
B. Operating Tier to be above the minimum 1.10 at year-end.
C. Net TIER to be above the minimum of 1.25 at year-end.
D. Debt Service Coverage at End of Year to be above the minimum of 1.25 at year-end.
E. Minimum level of General Funds/Investments to be $5,000,000.00
F. General Capital Credit Retirement to be $3,000,000.00, this will be evaluated during the course of the year.
G. Continue to retire Capital Credits to Estates.

Resolution 2008-11
WHEREAS, La Plata Electric Association, Inc. is scheduled to hold its 2007/2008 annual meeting on September 13, 2008, at which time Article II, Section 5 of the LPEA Bylaws states that an election of certain directors is required; and

WHEREAS, Article III, Section 5 of LPEA's Bylaws provides that, in the event there is only one nominee for a position on the board of directors for a district, the board may cancel the election for that district and by resolution declare the sole nominee elected; and

WHEREAS, for District 2, the sole nominee is Davin Montoya; and
WHEREAS, for District 3, the sole nominee is Jeffrey Berman; and
WHEREAS, for District 4, the sole nominee is Joseph Wheeling ; and

WHEREAS, the board of directors desires to cancel the election for said positions and declare Davin Montoya, Jeffrey Berman, and Joseph Wheeling as deemed elected for the director positions for their respective districts.

NOW, THEREFORE, BE IT RESOLVED by the LPEA board of directors that, in accordance with Article III, Section 5 of the LPEA Bylaws, the annual director elections for Districts 2, 3 and 4 are canceled.

BE IT FURTHER RESOLVED that Davin Montoya is deemed elected as a director from District 2, Jeffrey Berman is deemed elected as a director from District 3, and Joseph Wheeling is deemed elected as a director from District 4.

BE IT FURTHER RESOLVED that the duration of Director Montoya's term, Director Berman's term, and Director Wheeling's term of office shall commence and expire as if they had been elected at the 2007/2008 annual meeting.

Original Signed by Jeffrey A. Berman, Secretary

Resolution 2008-12
WHEREAS, La Plata Electric Association, Inc (LPEA) staff has recommended certain changes to LPEA's Electric Service Regulations, and

WHEREAS, the LPEA Electric Service Regulations changes were reviewed and received preliminary approval by the Board of Directors in June of 2008, and

WHEREAS, proper notice of the proposed changes to the LPEA Electric Service Regulations has been made to the membership,

NOW, THEREFORE BE IT RESOLVED by the Board of Directors of La Plata Electric Association, Inc. that the Electric Service Regulations changes as proposed and noticed, are hereby approved to be effective September 1, 2008.

I, Jeffrey A. Berman, Secretary of La Plata Electric Association, Inc. do hereby certify that the above is a true and correct copy of a resolution adopted by the Board of Directors of La Plata Electric Association, Inc. at a regular meeting held in Durango, Colorado on August 20th, 2008 at which meeting a quorum of Directors was present and voting.

Original Signed by Jeffrey A. Berman, Secretary

Resolution 2008-13
WHEREAS, La Plata Electric Association's Line Extension Policy states the Association will enter into a written contract for electric service for indeterminate services of 10 megawatts or greater; and

WHEREAS, BP America Production Company's San Juan Coal Bed Methane Major Project consists of loading greater than 10 megawatts; and

WHEREAS, La Plata Electric Association, Inc. and BP America Production Company wish to enter into an Agreement for Electric Service; and

WHEREAS, La Plata Electric Association, Inc. and BP America Production Company wish to enter into a Facilities Agreement; and

WHEREAS, LPEA staff has presented the proposed terms and condition of the Agreement for Electric Services and the Facilities Agreement which have been negotiated to the LPEA Board of Directors and the contracts appear to be in the best interest of LPEA,

NOW, THEREFORE, BE IT RESOLVED by the LPEA Board of Directors that the Chief Executive Officer of La Plata Electric Association, Inc. be given authorization to execute said Agreements, upon final legal review.

I, Jeffrey A. Berman, Secretary of La Plata Electric Association, Inc. do hereby certify that the above is a true and correct copy of a resolution adopted by the Board of Directors of La Plata Electric Association Inc. at a regular meeting held in Durango, Colorado on August 20, 2008 at which a quorum of directors was present and voting.

Original Signed by Jeffrey A. Berman, Secretary

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