Propane Education & Research Council

Transcription

1 July 24-25, 2003 MINUTES Proceedings for July 24, 2003 Immediate Past Chairman Walter Cressman called the meeting to order and asked President Roy Willis to announce the results of the election of officers. The new officers are: David Lugar, chairman; Tom Nunan, vice chairman marketers; Michael Schwartje, vice chairman producers, John Kamps, treasurer; and John Gawronski, secretary. Mr. Cressman then passed the gavel on to Mr. Lugar as the new chairman. Mr. Lugar welcomed new Council members Rosie Dzanski, Daniel Myers, and Glenn Saunders. Other Council members in attendance were John Ehlers, Tom Nunan, Curtis Donaldson, Dennis Trautman, Tom Jaenicke, David Wunch, Ken Green, Ralph Rooney, John Gawronski, and Rick Paul. John Kamps participated via conference call. C hairman Lugar asked for comments on the minutes from the May Council meeting. Mr. Cressman and Mr. Lugar offered several corrections. A motion was made to accept the minutes with these corrections. The motion was seconded and approved. Chairman s Report Chairman Lugar asked the Council to consider a draft resolution making the Audit Committee a permanent standing committee. Considerable discussion about the draft resolution occurred. The Council then tabled the resolution until changes could be made and brought to the Council the following day. Next, Mr. Lugar asked for approval of the following chairmen to the advisory committees: Paul Culver, Agriculture Advisory Committee (AAC); Daryl McClendon, Consumer Education Advisory Committee (CEAC); Stuart Weidie, Research and Development Advisory Committee (RDAC); and Joe Rose, Safety and Training Advisory Committee (STAC). A motion was made, seconded, and approved. Mr. Lugar also announced the following appointments he made to the advisory committees and requested that they be included in the minutes. The chairmen and appointed members of these committees are as follows: Agriculture Advisory Committee Paul A. Culver, Chairman Cenex Saint Paul, MN Donnie Bullock Ferrellgas Fayetteville, NC George Gomes California Farm Bureau Federation Sacramento, CA Mark Leitman, Council Staff Liaison Bernard Sieracki Illinois Propane Gas Association Springfield, IL Michelle Swertzic Nebraska Propane Gas Association Lincoln, NE Robert Jacobs Stan Teaderman 1

2 Delta Liquid Energy Paso Robles, CA Steve Jaeger Railroad Commission of Texas Austin, TX Allied Propane Service Richmond, CA Claude Zehnder Bleyhl Farm Service, Inc. Grandview, WA COUNCIL MEMBERS: Curtis J. Donaldson Clean Fueling Technologies, Inc Georgetown, TX Consumer Education Advisory Committee Daryl McClendon, Chairman Blue Rhino Corporation Hinsdale, IL Andy Arendt Cenex Propane Partners St. Paul, MN Marty Baker Suburban Propane Owensboro, KY Heather Ball Railroad Commission of Texas (AFRED) Austin, TX Tracy Burleson Len Caric McKnight Cylinder Corporation Ruffs Dale, PA Kate Caskin, Council Staff Liaison Randy Chitty Heritage Propane Jacksonville, FL Phillip Drummond Country Gas of Madison County Inc. Huntsville, AL Al Kerze Star Gas Propane Powell, OH John Ketchum Gas Equipment Company Inc. Earth City, MO Frank Mapel Pacer Propane San Marino, CA Shane McWhorter Sequoia Gas Co. Arcata, CA Tom Nichols Nichols LP-Gas Service Inc. Clifton, TX Charles L. Ory Aero Propane Gas Co. Apache Junction, AZ Rick W. Simpson Manchester Tank Brentwood, TN John C. Taylor Taylor Gas Inc. Fairburn, GA Milford Therrell Squibb-Taylor, Inc. Dallas, TX 2

3 Jim Hitzemann Ray Murray, Inc. Huntersville, NC COUNCIL MEMBERS: Thomas Jaenicke Ferrellgas Flint, MI Thomas Nunan Suburban Propane Oceanside, CA Ralph N. Rooney Suburban Gas Inc. Bessemer, AL George Welch Welch s Cass County Butane Co. Atlanta, TX Randy Wheaton Marshall Gas Controls San Marcos, TX Paula F. Wilson AmeriGas King of Prussia, PA Mark Zimora Blue Rhino Corporation Cobleskill, NY Glenn R. Saunders White Mountain Oil & Propane Inc. North Conway, NH Research and Development Advisory Committee Stuart Weidie, Chairman Blossman Gas, Inc. Asheville, NC Robert S. Blackwell Independent Propane Co. Lockport, NY Pine, CO Jeffre Borton Sherwood Taylor-Wharton Gas Equipment Lockport, NY Ron Brunner Gas Processors Association Tulsa, OK Tony Dotson Conoco Phillips Mont Belvieu, TX Donald C. Fernald Superior Energy Systems Columbia Station, OH Samuel E. McTier McTier Supply Co. Lake Forest, IL Carey Monaghan AmeriGas Propane, Inc. King of Prussia, PA Robert Myers World LP Gas Irvine, CA Robert B. Nicholson Eastern Propane Corp Oak Ridge, NJ Tucker Perkins, P.E. Premier Propane, LLC Richmond, VA Dick Riley Suburban Propane Bridgeport, OH Dan Kelly Kirk Saunders 3

4 Alternative Fuel Research & Education Division, Texas Railroad Commission Austin, TX Gregory Kerr, Council Staff Liason Terry LeClair Williams Energy Marketing & Trading Tulsa, OK COUNCIL MEMBERS: John A. Kamps Kamps Propane Manteca, CA Technical Consultant: Larry D. Osgood Consulting Solutions Monument, CO White Mountain Oil & Propane, Inc. North Conway, NH Bill P. Stewart Blue Star Gas Co. Garberville, CA Bruce Swiecicki National Propane Gas Association Frankfurt, IL Thomas Tarantin Tarantin Tank & Equipment Co. Freehold, NJ Don Tomiello Dynegy Midstream Services, LP Houston, TX Safety and Training Advisory Committee Joseph U. Rose, Chairman Propane Plus Rehoboth, MA Gary A. Bourne Cenex St. Paul, MN Stuart Flatow, Council Staff Liaison Keith Hanchett PERS Ogden, UT Fred Heydenreich Cornerstone Propane Crawford, FL Thomas D. Petru Railroad Commission of Texas (AFRED) Austin, TX Carlton Revere Revere Gas & Appliance Hartfield, VA Russ Rupp Suburban Propane Partners LP Whippany, NJ Valeria Schall Uregas Lebanon, MO Jeff Shaffer Shaffer's Bottled Gas Corp Hooversville, PA Jerry Lucas Heritage Propane Partners Sallisaw, OK David C. McPhillips Don Singleton Blossman Gas, Inc. Ocean Springs, MS Cliff Slisz 4

5 Hillsboro Gas Co Tampa, FL David Meyer Gas Training & Development Aitkin, MN Edwin Miller Star Gas Propane Florence, KY Bruce Montroy Bergquist, Inc. Durand, MI COUNCIL MEMBERS: Walter Cressman Cress Gas Co. Richlandtown, PA Daniel N. Myers The Churchill Centre Ferrellgas Liberty, MO David Slone Blue Rhino Winston-Salem, NC Sue Spear National Propane Gas Association Downers Grove, IL John Steiner Agway Energy Products Syracuse, NY Ron Stover Mutual Liquid Gas & Equipment Co., Inc. Gardena, CA Mike Walters Horizon Propane Westlake, OH Gary Wolf Amerigas Propane Valley Forge, PA Mr. Lugar also announced that Mr. Paul would be the new chairman of the Assessment and Collection Task Force, taking his place. He noted that Mr. Cressman would serve on the Joint NPGA/PERC Oversight Committee. This concluded the chairman s report. Vice Chairman s Report Marketers Mr. Nunan recounted the success of the market development committee and expressed hope that the success of this committee would continue. Vice Chairman s Report Producers Mr. Schwartje did not give a report. Treasurer s Report Mr. Kamps, because he was participating via phone, asked that Mr. Ehlers give the treasurer s report. Mr. Ehlers then reported on the financials of the Council. He reviewed the financial statements that were included for the councilors in their briefing notebooks. Upon conclusion of Mr. Ehlers remarks, a motion was made to accept his report. This was seconded and approved. Counsel s Report Mr. Ed Newberry of the law firm Pa tton Boggs gave the counsel s report. He touched on four topics: trademark issues involving the PROPANE Exceptional Energy theme line; recent court decisions involving check-off programs; proposed amendments to the Propane Education and Research Act; leveraging PERC s funds with state and federal 5

6 funds. He then made a presentation on the duties and responsibilities of councilors, emphasizing the importance of keeping the propane industry s interests first and foremost. A motion to accept the counsel s report was made. This was seconded and approved. President s Report Mr. Willis updated the Council on the preparation of a report from the General Accounting Office (GAO) about propane prices and oversight by the U.S. departments of energy and commerce. He noted that PERC staff had cooperated fully with GAO and submitted a detailed analysis of propane prices in relation to other energy commodity prices. This analysis clearly showed that propane prices did not exceed the statutory limits under the Propane Education and Research Act that would have triggered reduced spending on consumer education activities. He also noted that GAO agreed with PERC s analysis but refused to make this part of its final report. Next, Mr. Willis provided the Council with a progress report on the Market Metrics Task Force. He indicated that the task force had narrowed down the number of prospective contractors to conduct the Market Metrics Initiative to two firms; however, the task force could not agree on a finalist. He said he hoped that a decision on a finalist could be brought to the Council for a vote by the next Council meeting. Mr. Willis also previewed two significant funding requests that would be brought up at this meeting: one dealing with Propane Web Services and the other with a new creative advertising for the consumer education program. He encouraged the councilors to support both of these requests. Mr. Willis also commented on the recent court decision involving the beef check-off program, and indicated that PERC s programs go beyond mere advertising and involve safety and training, rebates to states, and a multi-million dollar R&D portfolio. He said that PERC would explore ways of dealing with any adverse court rulings with its outside counsel. Mr. Lugar asked that the Council accept the Grant Reconciliation report that was included in their briefing books. A motion was made to accept the report. This was seconded and approved. Grants Management Reconciliation Report Grant (Research & Development) Propane Vehicle Council Propane Vehicle Demonstration Grant Program This action de-obligates the remaining balance of $23,428 and reclassifies these funds to the Council s general treasury Grant (Research & Development) Anderson Associates Model Year 2002 Emission Factors for MOBILE 6 This action de-obligates the remaining balance of $ 5 and reclassifies the funds to the Council s treasury Grant (Consumer Education) PERC 2002 Residential Advertising Production 6

7 This action de-obligates the remaining balance of $12,984 and reclassifies these funds to the Council s general treasury Grant (Consumer Education) PERC 2002 Trade Show Initiative This action de-obligates the remaining balance of $868 and reclassifies these funds to the Council s general treasury Grant (Consumer Education) PERC 2002 Propane Industry Outreach This action de-obligates the remaining balance of $14,723 and reclassifies these funds to the Council s general treasury Grant (Consumer Education) PERC 2001 Consumer Education Program PROPANE Exceptional Energy This action de-obligates the remaining balance of $3,745 and reclassifies these funds to the Council s general treasury Grant (Consumer Education) PERC Consumer Education Partnership with States This action de-obligates the remaining balance of $978 and reclassifies these funds to the Council s general treasury Grant (Consumer Education) PERC 2002 Rural Residential Lifestyle This action de-obligates the remaining balance of $214 and reclassifies these funds to the Council s general treasury Grant (Consumer Education) C F Networks LLC dba Clean FUEL USA Propane Vehicle for President Bush's Texas Ranch This action de-obligates the remaining balance of $7,489 and reclassifies these funds to the Council s general treasury. Advisory Committee Reports A griculture Advisory Committee (AAC). Chairman Paul Culver was recognized to give the report of the AAC. Chairman Culver introduced Mark Leitman, PERC s new Agriculture Programs Manager, to the Council and turned the committee report over to him. Mr. Leitman reviewed the progress made thus far on PERC s agriculture outreach activities, including attending major agriculture trade meetings and shows and meeting with the news media covering agriculture issues. Mr. Leitman then asked for approval of Docket A motion was made to approve the docket. This was seconded and approved. 7

8 11117 Applicant: Short Title: Agriculture Oversight and Advisory Committee Support Total Amou nt: $50,000 Approved Mr. Leitman then brought to the Council s attention the need to develop a request for proposals (RFP) on developing an engine in the agriculture sector that would be used initially for irrigation pumps and later would be applicable for other agriculture applications. After some discussion, the Council approved a motion directing the AAC to develop a RFP on agriculture engine technology. Safety and Training Advisory Committee (STAC). Stuart Flatow, vice president, safety and training, was recognized to give the STAC report. Mr. Flatow informed the Council the deadline for delivering the Certified Employee Training Program materials would be extended until August 31 due to the need to conduct further field testing across the country. Secondly, Mr. Flatow reported that more information would be forthcoming on the second phase of the Propane Industry Workplace Injury Study. Next, Mr. Flatow reported that steps had been taken to correct inaccurate information printed on safe grilling material. Among the steps taken were the recall and destruction of this material, and the printing and availability of new, corrected material. Mr. Flatow said that steps also would be taken to put in place a system to ensure that such inaccurate information does not make it into printed safety material again. Mr. Lugar asked that a letter be sent out explaining to customers that the corrected printed material would be re-distributed. Mr. Flatow then asked for approval of Docket After some discussion, a motion was made to approve the docket. This was seconded and approved Applicant: Short Title: CETP e-learning Scoping and Design Committee Total Amou nt: $277,805 Approved Mr. Flatow brought to the Council s attention Docket regarding the Consumer Safety Education Campaign Phase I. Mr. Lugar then asked the Council to defer action on this until after the councilors received the report of the liability task force the following day in executive session. This concluded the STAC report. Industry Programs. Kelley Maierhofer, PERC director of Industry Programs, was recognized to give the report on Industry Programs. Ms. Maierhofer asked that Meg Moss, director of information technology, present the funding request for expanding Propane Web Services Pilot Program for states under Docket Considerable discussion followed the presentation on this docket by Ms. Moss. After this discussion, a motion was made to approve the docket. This was seconded and approved. (Note: This action resulted in an overrun of the budget for Industry Programs of $454,190. The Council authorized this budget overrun, which will be addressed at a subsequent Council meeting later this year.) Applicant

9 Short Title: Industry Programs IT Initiative Phase II Total Amou nt: $461,500 Approved Ms. Maierhofer then presented t he results of the staff review of submissions for the fourth annual Milford Therrell Award, noting that six states made submissions this year. Of those submitting, the PERC staff recommended that Indiana Propane Gas Foundation should receive the Milford Therrell award for (The recipient of this award receives $25,000 in grant money above the state rebate money to use to pay for a state program.) A motion was made to approve this recommendation. This was seconded and approved Applicant Indiana Propane Gas Foundation Short Title: Total Amou nt: 2003 $25,000 Approved This concluded the Industry Programs report. Next, the Council heard a presentation from Brian Feehan, executive director of the Propane Vehicle Council, about progress being made on promoting the development and use of propane-powered vehicles. Mr. Feehan commented that propane-powered buses are starting to roll off the GM assembly line for use in various parts of the country. He also mentioned that several National Parks are operating or will operate shuttle buses that run on propane. He also mentioned that Councilor Curtis Donaldson was recently given the Alternative Fuel Vehicle Hero of the Year award for his work on promoting propane-powered vehicles, including Propane One located on President Bush s ranch in Crawford, TX. Proceedings for July 25, 2003 Safety and Training Advisory Committee (STAC). Following a presentation in executive session by the liability task force, the Council took up consideration of Docket 11046, which had been deferred from the previous day. A motion was made to approve the docket. This was seconded and approved Applicant: Short Title: Consumer Safety Education Campaign Phase 1 Total Amou nt: $220,125 Approved Consumer Education Advisory Comm ittee (CEAC). Kate Caskin, PERC senior vice president, was recognized to give the CEAC report. Ms. Caskin introduced Jean Statler, senior vice president, Wirthlin Worldwide, to present the results of the mid-year assessment of the consumer education campaign. Ms. Statler said the results show that propane is closing the gap with electricity in terms of favorability and that the campaign is on track to achieve this year s metric goals. 9

10 Following this presentation, Ms. Caskin reviewed the ongoing consumer outreach efforts of the campaign. She noted that total media impressions (outreach via media outlets to consumers) at the half-way point this year stood at 60 million, compared to 30 million for all of last year. She also noted that earned media impressions in the trade sectors totaled 1.4 million for only half of this year, the same number that was achieved in all of last year. Ms. Caskin also reported said that the initial launch of the Propane Marketer Locator was scheduled for the following month, with August 22 being the deadline for marketers to register to be part of this initial launch. Considerable discussion followed. Next, Ms. Caskin called upon Andy Ferrin, senior vice president, Porter Novelli, to discuss the development of new creative ads for the consumer education campaign. Following Mr. Ferrin s presentation about the new creative ads, called the Energy Guys, Ms. Caskin asked the Council to consider a no-cost change order request to fund this effort. After considerable discussion, a motion was made to approve the funding request, however not as a no-cost change order. (Note: This action resulted in an overrun of the budget for Consumer Education of $418,500. The Council authorized this budget overrun, which will be addressed at a subsequent Council meeting later this year.) Applicant: Short Title: Advertising Production Total Amoun t: $538,000 Approved Research and Development Advisory Committee (RDAC). Greg Kerr, PERC director of research and development, was recognized to give the RDAC report. Mr. Kerr introduced Mark Alexander, former chairman of the RDAC, to give a presentation about the PERC R&D program. Mr. Alexander reviewed the progress made in R&D, pointing out several key accomplishments since he chaired the committee. He pointed out the development of propane-powered engines, research on cylinder valves, and fuel cell technology among the most promising projects to date. Following this presentation, Mr. Kerr asked the Council to consider Docket A motion was made to approve this docket. This was seconded and approved (Change Order) Applicant: ThermoDrive Technology, Inc Short Title: Propane Fired Heat Pump Pool Heater Total Amoun t: $250,000 Approve Mr. Kerr then asked the Council to table Docket due to the fact that the U.S. Department of Energy had not yet approved the additional funding that was expected for the applicant. A motion to approve this was made, seconded, and approved. Old Business John Gawronski was recognized to g ive the report of the Audit Committee. Mr. Gawronski indicated that the committee chose a new firm, Aronson & Company (Rockville, MD) to perform the 2003 audit for PERC. A motion was made to approve this selection. This was seconded and approved. Mr. Gawronski then turned over the 10

11 presentation to Jack Mallinger, PERC director of finance and administration. Mr. Mallinger provided the Council with an update on the internal controls he was pursuing, indicating that he would like to produce reports showing expenditures against appropriations for each mission area and other reports. In addition, he was moving forward on recommending more dockets for closure after the completion of project activity. He also reported that revenue from the assessment so far this year was $1.6 million in excess of the estimate. Finally, Mr. Mallinger said that he would be providing a mid-year review to look at the Council s revenues coming in and those going out. Mr. Lugar said he would like to see this done on a quarterly basis. Mr. Lugar then asked Mr. Mallinger and Mr. Kerekes to bring forward the revised version of a resolution creating an permanent Audit Committee. The text of the resolution follows: BE IT RESOLVED, that, in accordance with the decision of the Board on July 25, 2003 to amend the Bylaws to create an Audit Committee, Section 7.07 be added to the bylaws as follows: Section 7.07 Audit Committee. "The Audit Committee shall be composed of three members of the Council, one of whom shall be selected by the Council Chairman from among the members of the Executive Committee, excepting the Council Chairman and Treasurer. The Executive Committee member of the Audit Committee shall chair the Audit Committee. Two members of the Committee shall be selected by the Council Chairman from among those Council members who are not members of the Executive Committee. The Audit Committee meet at least two times per year. The Audit Committee shall: Assist the Council in periodically, as needed, to shall its oversight responsibilities by reviewing the financial information provided to stakeholders, the systems of internal control established by management and the Council, and the internal and external audit processes. Provide an open avenue of communication between the outside auditors, management, and the Council. Periodically review and determine that the Council has implemented policies and procedures to identify financial risks and that adequate internal controls are in place to mitigate identified financial risks. Advise the Council of the outside auditor the Audit Committee appointed, the scope of work to be performed, and the applicable fees and charges. The outside auditor is ultimately accountable to the Audit Committee, who has the ultimate authority and responsibility to select, evaluate, and replace this auditor. Oversee the outside auditor, and ensure that the outside auditor does not provide any non-audit services to the Council, including bookkeeping or accounting services, financial information systems design or implementation, appraisal or valuation services, fairness opinions, investment advice or legal counsel. The outside auditor may engage in providing non-audit services to the Council, including tax services, which are not listed above, but only if the activity is preapproved by the Audit Committee. Update the Council periodically on Audit Committee activities and issues, including the reports and findings of the outside auditor. Review and update the Audit Committee s charter fulfill its responsibilities to the Council. 11

12 Assessment and Collections Task Force. Rick Paul, Duke Energy Field Services (Houston, TX, was recognized to give the Assessment and Collections Task Force report. He said the task force had met and were considering a number of options to improve collection of assessments from the industry. Formal recommendations would be made to the Council at the September meeting, he said. C ommercialization Task Force. Denny Trautman, Agway Energy Products LLC (DeWitt, NY) was recognized to give the task force report. He indicated that since the task force was formed after the May 2003 Council meeting, it had met once. At this meeting, the task force discussed a proposed policy to require reimbursement of grant funds for projects that result in a commercial product being developed. Mr. Cressman clarified that the task force was asked to look into market studies being funded that determine the commercial viability of a product, not necessarily the project itself. With this clarification in mind, the task force will continue its discussion. New Business John Kamps, chairman of the Budget and Finance Committee, was recognized to present the 2004 proposed budget. Mr. Kamps deferred to Mr. Ehlers to present the budget, as he was not present but participated by conference call. Following this, a motion to approve the 2004 proposed budget for public and industry comment was made. This motion was seconded and approved. Mr. Willis noted that the proposed budget document would be posted on the PERC website and the formal comment period would begin on August 1 and run until September 2, After receiving these comments, the Council would then be prepared to vote on the 2004 proposed budget at its next meeting. BUDGET SUMMARY REVENUES: 2004 Assessment Collections $ 49,120,000 Interest $ 375,000 Late Payment Fees $ 20,000 Cash Carry Forward $ 2,000,000 Total Revenues $ 51,515,000 EXPENDITURES: Administrative Ex penses: Administrative Expenses $ $ 2,295,018 2,295,018 Other Expenses: Assessment and Coll ections $ 235,100 Other Non-Administrative Exp enses $ - Depreciation Expenses $ 235,000 Total Other Expenses $ 470,100 State Rebates: Rebates (20 percen t of Collections) $ 9,824,000 Reserves $ - Total Reba te Funding $ 9,824,000 Grant Funding: 12

13 Consumer Edu cation $ 26,550,000 Research and Develop ment $ 4,651,000 Safety and Training $ 4,150,000 Agriculture $ 2,456,000 Industry Pro grams $ 1,110,100 Total Grant Funding $ 38,917,000 Total Expenditures: $ 51,506,118 Increase/(Decrease) in Net Assets: $ 8,882 Capital Expenditures: $ 100,000 Finally, the Council considered the 2004 meeting schedule. The following meeting dates and locations were approved: April 1-2 Atlanta, GA June Naples, FL July September National Park Location (to be determined) December 9-10 Houston, TX Mr. Lugar encouraged all the councilors to respond to the Liability Task Force report which they had received in executive session. He also asked that mention be made in PERC communications that councilors do not receive reimbursement for attending Council meetings. Upcoming Meetings. Mr. Lugar reminded councilors that the next meeting would be held on September 18-19, 2003, in Bar Harbor, ME. Mr. Lugar adjourned the meeting at 1:45 p.m. Eastern Daylight Time. 13