Southwest Power Pool HUMAN RESOURCES COMMITTEE MEETING August 27 & 28, Southwest Power Pool Corporate Office Little Rock, Arkansas

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1 Southwest Power Pool HUMAN RESOURCES COMMITTEE MEETING Southwest Power Pool Corporate Office Little Rock, Arkansas Summary of Action Items 1. Approved minutes of the April 23, 2018 meeting. 2. Approved a recommendation to the SPP Finance Committee on merit pool funding to be included in the 2019 budget. Summary of Follow-Up Items 1. The Committee requested Mercer consultants conduct some further analysis of the SPP Retirement plans and alternative options. 2. The committee requested staff distribute the HRC self-review document to the committee for final review. Page 1 of 5

2 HUMAN RESOURCES COMMITTEE MEETING Southwest Power Pool Corporate Office Little Rock, Arkansas MINUTES Agenda Item 1 Call to Order Julian Brix called the meeting to order at 1 pm, CDT, on August 27, The following members were in attendance: Mr. Julian Brix, Chair Mr. Mark Crisson Mr. Noman Williams GridLiance High Plains, LLC Mr. John Rhea Oklahoma Gas and Electric Company Mr. Duane Highley Arkansas Electric Cooperative Corporation Mr. Tom Kent Nebraska Public Power District Southwest Power Pool staff in attendance: Mr. Nick Brown Ms. Malinda See Mr. Lanny Nickell Mr. Brian Smith Guests in attendance: Mr. Larry Altembaumer Mr. Josh Martin Ms. Stacy Franklin Chair, SPP Board of Directors Mercer Consultants Agenda Item 2 Approval of Minutes The minutes of the April 23, 2018 meeting were reviewed. Mark Crisson moved that the minutes be approved. The motion was seconded by Noman Williams and approved via unanimous voice vote. Agenda Item 3 Mercer Report on SPP Retirement Plan Design The SPP Finance Committee had requested the SPP Human Resources Committee review the costs of the SPP Retirement Plans and look for any potential savings. Mercer consultants was asked to provide a report on the affordability of SPP Retirement Plans. Malinda introduced Stacy Franklin with Mercer consultants to present the report to the committee. Mercer evaluated the costs associated with current retirement programs as compared to alternative retirement plan designs. Mercer was asked to consider the following as part of the assessment: retirement plans should be competitive to the market, programs should balance affordability with competitive benefit, and goal for any alternative design is to provide similar benefit amounts at retirement. The analysis looked at cash costs for the next 2-5 years as well as years in the future. The analysis concluded that the current SPP retirement plans provide a benefit that is competitive to the market at the lowest costs compared to alternatives examined. In looking years in the future, this conclusion still remained true. The committee discussed the results of the analysis and retirement plan designs with Stacy. The committee requested Stacy perform some additional analysis to complete a thorough review of the SPP retirement plan programs. Page 2 of 5

3 Agenda Item 4 SPP Affirmative Action Plan Report The committee adjourned to executive session to hear a report from Brian Smith, SPP HR Manager, on the SPP Affirmative Action Plan. Agenda Item 5 SPP Benefit Plan Report Malinda See presented a report that primarily focused on the SPP Medical Plan performance results. SPP HR staff recently met with United Healthcare, (UHC), the SPP Third Party Administrator for the SPP medical plan to review plan statistics. The SPP Medical Plan is a partially self-insured plan where the company pays actual claims for medical services, including pharmacy expenses, up to a stop-loss insurance level. In 2018, a Health Savings Account (HSA) option was added to the medical plan. Currently, 12% of SPP Medical Plan participants are enrolled in the HSA option. The goal of offering the HSA option was to make plan participants better consumers of their healthcare dollars which should lower claims expenses for SPP. The SPP Medical Plan three year annualized spend trend is -1.45%. The SPP spend, per member per month, is 37.4% below the norm for utilities enrolled in UHC medical plans. The trend for the first six months of 2018 is flat or 0% increase above costs in UHC reported to SPP HR staff this performance is unusual and that typically partially self-insured medical plans incur a 5% or greater increase annually. UHC estimated changes to the plan to promote generic drug usage saved the plan approximately $400,000 in Data for 2018 will not be finalized until SPP HR staff has conducted education sessions for employees on efficient medical plan usage and made adjustments to the plan itself to assist in achieving these results. Staff will continue to conduct plan participant training and look for ways to decrease plan expenses. The presentation concluded with an overview of staff initiatives on benefit and HR actions that have saved SPP an estimated $300,000 in 2017 and $240,000 in These savings have been realized in the Dental Plan, Retiree Medical Plan, and how SPP pays unemployment taxes. These savings combine for almost $500,000 in ongoing annual savings to SPP. The committee adjourned for dinner. The committee resumed meeting Tuesday morning, August 28 th at a breakfast roundtable discussion with the SPP Human Resources staff. Agenda Item 6 Mid-Year Review of 2018 Accomplishments and Goals The committee adjourned to executive session to hear a report from Nick Brown on the progress of 2018 SPP accomplishments and goals. Agenda Item Merit Pool Funding Recommendation The committee evaluated information gathered by staff, as documented in the Southwest Power Pool Merit Pool Funding Determination process document. This data included the CPI-W index, industry trends from World at Work, and national trends documented by Mercer and the Society for Human Resources Management (SHRM). The committee also discussed SPP member system and RTO trends. SPP staff presented a 2019 merit pool recommendation requesting a compensation adjustment pool of 3.0% of projected 2018 salaries paid to be included in the 2019 budget. Duane Highley moved that the recommendation be approved. The motion was seconded by Mark Crisson and approved via unanimous voice vote. Agenda Item 8 HRC Self-Review In the interest of time, the committee asked Malinda See to send a draft of the self-review to the committee for final review and approval. Agenda Item 9 Other Items Julian requested SPP Board Chairman Larry Altenbaumer discuss with the committee proposed meeting changes for the SPP Board and committees for Larry presented this proposal to the committee and reported that the proposal is not finalized. The SPP Board and Members will discuss the proposal at their October 2018 meeting. These changes include consolidating meetings to reduce travel Page 3 of 5

4 requirements and meeting expenses. This proposal was considered when planning the HRC meeting dates and times for Agenda Item 10 Future Meetings The committee will meet on Monday, October 29, 2018 prior to the SPP Board meeting. Tentative meeting dates and times for 2019 are listed below. These meetings will be finalized at the October 2018 meeting. Monday, October 29, 2018 SPP Corporate Office 8:00am 1:00pm (Day prior to SPP Board meeting) Action: SPP Fraud Prevention Report Action: Report from the Administrative Committee on retirement plan investment manager performance Report from Bruce Rew on Operational metrics in the SPP Employee Performance Compensation Plan Action: Process document review for CEO Compensation Monday, January 14, 2019 New Orleans - 8:00am 3:00pm (Day prior to MOPC meeting) Action: Approve funding for annual Performance Compensation Plan Action: Review SPP President prior year performance and propose current year compensation Review proposed compensation for SPP Officers HR Metrics report Monday, April 29, 2019 Tulsa, Oklahoma 8:00 am 1:00 pm (Day prior to SPP Board meeting) Review Performance Compensation Process/payout Review SPP benefit programs SPP HR programs HR Metrics report Monday July 29, 2019 Denver, Colorado - 8:00 am 1:00 pm (Day prior to SPP Board meeting) Mercer Compensation Survey Report August, 2019 Teleconference Call Time and Date: TBD Agenda Item: Action: Recommend 2020 Merit Pool Funding Monday, October 28, SPP Corporate Office 8:00 am 1:00 pm (Day prior to SPP Board meeting) Breakfast with HR Staff Action: Administrative Committee Report Action: Fraud Prevention Report Affirmative Action Report Annual Review of committee activities and Scope Review Approve 2020 meeting schedule and agendas Page 4 of 5

5 Agenda Item 11 - Adjourn Julian Brix adjourned the meeting at 11:40 am, CDT, on August 28, Respectfully Submitted, Malinda See Secretary Page 5 of 5