PROPOSAL TO SERVE AS FISCAL AGENT
FOR THE VERMONT ENERGY
EFFICIENCY UTILITY FUND
October 24, 2005
Proposal to Serve as Fiscal Agent for the
Vermont Energy Efficiency Utility Fund
Submitted to:
Cynthia Muir, Business Manager
Vermont Public Service Board
112 State Street, Drawer 20
Montpelier, VT 05620-2701
From:
NECA Services, Inc.
President & CEO: John C. Parry
Contact For Clarifying
Proposal Content
Jeff Schnur
Director – Business Development
NECA Services
80 S. Jefferson Rd.
Whippany, NJ 07981
Phone: (973) 884-8383
Fax: (973) 599-6534
Email: jschnur@necaservices.com
Contact For Approving
Agreement/Amendment
Carol C. Kenner
Chief Financial Officer
NECA Services
80 S. Jefferson Rd.
Whippany, NJ 07981
Phone: (973) 884-8502
Fax: (973) 599-6524
Email: ckenner@necaservices.com
Proposed Contract Duration: January 1, 2006, through December 31,
2008, with the Board reserving the
option to renew for an additional three
years.
Date Submitted:
October 24, 2005
Table of Contents
Section
Page No.
A. Introduction ................................................................. 1
B. Project Approach ........................................................... 3
B.1
Collect Funds From Vermont Electric Utilities .................... 3
B.2
Manage Funds .............................................................. 4
B.3
Disburse Funds ............................................................. 5
B.4
Track Annual Fund Receipts and Disbursements................ 6
B.5
Reporting Requirements ................................................ 7
B.6
Independent Audit ........................................................ 7
B.7
Manage Customer-Specific and Competitively Sensitive
Information .................................................................. 8
B.8
Coordination With Contract Administrator ........................ 9
B.9
Additional Responsibilities .............................................. 9
B.10 Meeting in Montpelier, Vermont ..................................... 10
B.11 Disaster Recover/Business Continuity ............................. 10
C. Related Experience ...................................................... 11
D. Staff Qualifications ...................................................... 15
E. References ................................................................. 18
F. Business Organization .................................................. 19
G. Cost Proposal ............................................................. 21
Appendices
Page 1 of 21
Proposal to Serve as Fiscal Agent for the
Vermont Energy Efficiency Utility Fund
A. INTRODUCTION
NECA Services, Inc. (NECA Services) is pleased to submit this proposal to serve
as the Fiscal Agent of the Vermont Energy Efficiency Utility Fund ("VEEUF" or
"Fund").
NECA Services fully understands the requirements of the Request for Proposals
issued by the Vermont Public Service Board ("PSB" or "Board"). As demonstrated by our
success in carrying out our responsibilities as the current VEEUF fiscal agent and in
administering many other state programs, NECA Services adeptly translates statutes,
rules, and requirements into functioning systems and operational procedures that achieve
fund objectives while satisfying time and budgetary constraints. Our in-depth
understanding of procedures and processes, along with our customer-focused interaction
with fund participants, uniquely position NECA Services as a capable and experienced
business partner for the PSB.
Our experience as the current administrator of 15 state fund programs, in addition
to managing multi-billion dollar federal programs, including the Schools & Libraries and
Rural Health Care programs, has taught NECA Services that successful government
program administration requires a multi-disciplinary approach, with demonstrated
expertise in the following areas:












Forecasting
Cash and investment management
Fund performance monitoring and reporting
Billing and collection
Procedures and systems design
Funds distribution
Fund sizing
Accounting
Regulatory support
Customer communications
Auditing
Financial planning
Page 2 of 21
The background and abilities of our personnel encompass a broad range of
demonstrated skill sets, and include financial, regulatory, and information systems
professionals, and specialists with years of experience in handling the intricacies and
challenges of daily operational processing. The PSB will benefit from the selection of
NECA Services to continue to serve as VEEUF Fiscal Agent because:
 We are highly a highly experienced, impartial, and efficient state program
administrator.
 We have knowledgeable and skilled professionals who can be counted upon to
professionally operate state fund programs in accordance with an agreed-upon
work plan, as evidenced by our history of doing so for Vermont and many other
states.
 We only associate with sound, reputable, and experienced financial institutions,
such as Mellon Bank.
 We have proven systems and procedures to administer various types of state funds.
 Independent auditor reviews of our operations have verified the quality of our
procedures, processes, and performance.
 NECA Services does not advocate positions on behalf of clients before the PSB or
any other state commission, nor is it affiliated with any law or consulting firm that
represents clients who may be participants in the VEEUF.
 NECA Services is financially sound, properly insured, and bondable.
 We adhere to our bid price; we have never asked for an interim increase in fees
unless it was justified by a substantial change in our duties.
NECA Services takes great pride in its work and in its reputation as the preeminent
firm in the state fund management/administration business. We believe that NECA
Services is in an exceptional position to meet the requirements of this Request For
Proposals (“RFP”), and we look forward to continuing our close partnership with the
PSB.
Page 3 of 21
B. PROJECT APPROACH
This section contains a description of the major tasks that NECA Services will
continue to perform as VEEUF Fiscal Agent. The section also demonstrates NECA
Services’ understanding of the requirements set forth in the RFP, as well as the
legislation, rules, and regulations governing the Fund.1
NECA Services will use highly experienced state fund personnel to perform daily
Fund operations, thereby minimizing the need for training. Our proposed project
approach is based upon our proven method of fund administration, specifically tailored to
the particular requirements of, and augmented by our experience with, the VEEUF, as
well as by our successful administration of numerous other state funds.
NECA Services will continue to use Oracle PeopleSoft for accounts receivable,
accounts payable, general ledger, and billing functions. We will be using the same
VEEUF database system, which we developed using Microsoft Access running on a
Windows 2003 operating system, with Server Cluster technology for high availability.
The machine types are dual Intel Pentium III CPU 2.80GHz with 4 gigabytes RAM and
dual network interface cards. NECA Services will continue to use Microsoft Excel to
generate VEEUF reports.
B.1 Collect Funds From Vermont Electric Utilities
NECA Services will continue to provide all 21 Vermont electric distribution
utilities with an electronic or paper version of the remittance worksheets to allow them to
self-report, calculate, and certify kilowatt-hours, and to remit the energy efficiency
charge payments to us. NECA Services will continue to work with the distribution
utilities to ensure that we receive completed worksheets and payments in a timely
manner. The capabilities of our collection processing system allow payments to be made
electronically or by check. VEEUF participants will continue to remit their payments and
worksheets (see Appendix 1), based on of the reporting schedule (see Appendix 2)
included in their information package, to a secure lockbox already established
specifically for the Fund at Mellon Bank.
1
Docket 5980 Memorandum of Understanding; Public Service Board Rule 5.300 – Energy Efficiency
Charge Methodology; 30 V.S.A § 209(d)(3); Act 61, enacted July 2005.
Page 4 of 21
NECA Services will continue to identify any delinquent distribution utilities, and
we work with them to bring their accounts into compliance. In the event that a
distribution utility remains delinquent in submitting payments or remittance worksheets
for more than 60 days, or in the event of an appeal to the Board, NECA Services will
provide a written summary of our findings and conclusion to the PSB, the Contract
Administrator, and the distribution utility.
B.2 Manage Funds
NECA Services’ employs a comprehensive program to invest and preserve
undistributed VEEUF monies with the objective of maximizing security, liquidity, and
yield, in that order. (See Investment Policy in Appendix 3.) We have established
relationships with several high-profile institutional investment management firms who,
under our direction and guidance, invest funds in a variety of instruments, including
institutional money market accounts, overnight repurchase agreements, and short-term
government and corporate commercial paper. We have provided a brief synopsis of the
firms currently included on our approved list in Appendix 4. NECA Services will
continue to maintain only minimal cash resources in the bank account established for the
VEEUF to cover outstanding disbursements or while balances await transfer to
short-term investment instruments. During 2004, NECA Services' average daily
investments under management was $203 million.
NECA Services' prudent and secure investment program for undistributed Fund
monies has customarily achieved investment returns equal to or exceeding those of
standard money market measures, such as the Federal Funds Rate. Our Investment
Committee meets at least quarterly to review the performance of all managed funds, and
evaluates the performance of the managers as well as the appropriateness of existing
investment guidelines. Interest earned on undistributed fund balances, net of investment
and banking fees, may be used to offset fund obligations, reduce future funding
requirements, or as otherwise directed by the PSB.
NECA Services understands that only the PSB shall determine the disposition of
undistributed bank balances. Accordingly, we will continue to report monthly Fund
balances and Fund activity to the PSB so that the Board can make timely decisions
regarding the use of these monies. Generally, our investment strategy focuses on using
Page 5 of 21
investment managers who will oversee a portfolio specifically designed for and by our
Investment Committee. In accordance with our guidelines and with the types of
investments permitted by the PSB, these portfolios consist primarily of highly secure
liquid investments with durations of less than twelve months. Our investment managers
are required to continually monitor and analyze market conditions, perform extensive
credit research on potential corporate investments, and canvass the market to determine
the nature and duration of the most appropriate investments to be included in the
portfolio. As stated in our investment guidelines, the overall goal for any government
fund that we administer is to provide maximum yield without compromising the safety
and liquidity of investment principal.
NECA Services will continue to examine and analyze distributions utilities'
monthly remittance worksheets for completeness and accuracy, and we will request an
explanation from any distribution utility whose account contains unusual variances in the
data being reported. We will assist the utilities in reconciling any data entry errors in
financial reporting records. NECA Services will continue to provide a monthly statement
to all providers with a non-zero balance.
B.3 Disburse Funds
NECA Services has developed proven disbursement systems that support the
timely and accurate processing of more than 25,000 programmatic disbursements each
year, exceeding $875 million in annual payments. In order to ensure the integrity of our
disbursement processes, as well as to provide proper control over the billions of dollars in
cash flow managed, NECA Services' disbursements systems are subject to periodic
reviews by both internal and external auditors. The reviews of our systems and processes
have confirmed that we provide substantial levels of internal control, including
appropriate segregation of duties, thereby providing the PSB assurance as to the accuracy
and timeliness of disbursements to all eligible recipients. Furthermore, only authorized
personnel with appropriate executive oversight and approval have access to our systems.
NECA Services will obtain signed disbursement request worksheets (see
Appendix 5) from the Contract Administrator prior to making disbursements to the City
of Burlington Electric Department, the Vermont Energy Efficiency Utility ("EEU"), other
distribution utilities, the Department of Public Service ("DPS"), newspapers, and the
Page 6 of 21
independent auditor of the Fund. To facilitate the process of funding requests, NECA
Services will continue to improve and update disbursement request worksheets.
NECA Services will obtain written approval of the PSB chairman (or Board
designee) prior to making disbursements to the Contract Administrator. NECA Services
will make disbursements for the Home Weatherization Assistance Trust Fund and Gross
Receipts Tax Fund in accordance with 33 V.S.A. § 2503 and 30 V.S.A. §22, respectively.
NECA Services will notify the PSB and the Contract Administrator when Fund
levels are insufficient to satisfy disbursement requests. In such an event, NECA Services
will issue pro-rata payments or proportionate payments to recipients.
Our Accounts Payable group generates disbursements made by check, handing
them off to our Treasury Group for verification, sealing, and mailing. For Electronic
Funds Transfers, we require two authorized individuals with separate passwords to
release the funds.
B.4 Track Annual Fund Receipts and Disbursements
NECA Services will continue to track the annual receipts and disbursement of the
VEEUF using standard fund accounting practices in accordance with GAAP. NECA
Services has installed a state-of-the-art, integrated financial system that performs general
ledger, accounts receivable, accounts payable, and billing functions. This system handles
full accounting and reporting functions for 15 distinct business units.
Our state-of-the-art financial system will continue to serve as the backbone for
electronically recording all VEEUF data and each customer’s financial transactions. Our
Finance Department personnel have role-based access to the system allowing them to
process transactions and produce a variety of financial reports, including VEEUF income
statements, balance sheets, statements of cash flows, customer aging reports, and cash
analyses. The system allocates disbursements among several categories, including core
efficiency services, administrative costs, weatherization taxes, and gross receipt taxes.
NECA Services will monitor receipts and disbursements compared to monthly and annual
projected amounts by tracking accounts receivable and payable as well as the funds spent
in each category.
Page 7 of 21
B.5 Reporting Requirements
NECA Services will continue to provide the PSB and EEU with monthly and
annual status reports. Monthly reports will show receipts and disbursements for the
previous month and a breakdown of disbursements by the categories described in
Section B.4. Monthly reports will also show cumulative receipts by distribution utility
for the fiscal year, cumulative receipts in the fiscal year compared to budget, cumulative
disbursements in the fiscal year compared to budget, current fund balance, budgeted
receipts for the current fiscal year, budgeted disbursements for the current fiscal year, and
a schedule of net assets that shows the Fund's liabilities, including funding set-asides.
Annual reports will show receipts and disbursements for the previous calendar year,
compare actuals with budgeted amounts, and include any additional information that will
assist the Board in its oversight of NECA Services' management functions.
Each September, NECA Services will also provide the PSB, the Contract
Administrator, and the DPS with a report showing distribution utility contributions by
contribution rate class for the preceding Energy Efficiency Charge year, and current
Energy Efficiency Charge receipts to date. A sample annual report and a sample
September report are included in Appendix 6.
NECA Services will quickly respond to all PSB requests for additional periodic
reports and ad-hoc analyses. We will also alert the PSB immediately to any significant
financial problems.
B.6 Independent Audit
Complete and accurate maintenance of financial reports and records, as well as
adherence to Generally Accepted Accounting Principles, make audits a welcome
reflection of quality fund management. Each of our annual external VEEUF financial
audits has resulted in an unqualified opinion, and annual internal audits of our controls
and procedures were issued with no significant findings.
NECA Services will continue to retain an independent accountant to audit our
financial reports for each year of operations. We will provide the audits to the PSB, the
DPS, the Vermont Auditor of Accounts, and we will make audits available to the EEU
and the distribution utilities upon request. Our Cost Proposal (see Section G) includes the
Page 8 of 21
time and materials required for NECA Services to support one external audit per contract
year. As always, NECA Services will fully cooperate with the PSB’s approved auditor,
providing the data and other information reasonably required to support such audit
activities. The fees and other charges billed by external auditors are not included in our
contract price and will be billed to the VEEUF following the Contract Administrators'
review and approval. On our own initiative, NECA Services will continue to periodically
perform internal reviews of state fund processes and procedures to ensure the integrity
and adequacy of our internal controls. To the extent that the PSB may require additional
audits of our operations, we will cooperate fully, and we reserve the right to request
compensation at our daily rates (See Section G – Cost Proposal) plus expenses should the
level of NECA Services’ involvement exceed a reasonable level.
As requested and authorized by the PSB, NECA Services will perform reviews of
VEEUF participants to further validate compliance with rules and regulations by testing
the accuracy and completeness of information reported by Fund participants. At the
Commission's discretion, NECA Services could annually review a random sample of
Fund participants on a rotating basis. Reviews of VEEUF participants, if requested by the
PSB, will be billed at the rates shown in Section G – Cost Proposal.
B.7 Manage Customer-Specific and Competitively Sensitive Information
NECA Services understands the vital importance of protecting the confidentiality
of non-public data entrusted to it for the purpose of managing our responsibilities. We
will continue to provide VEEUF related confidential data only to the PSB, the Contract
Administrator, and to other parties as directed by the PSB. Only authorized NECA
Services staff have access to Fund data. As evidenced by our previous performance in
administering the VEEUF, we will not permit data to be used in any form, by any other
party or unauthorized staff person, for any purpose. Further, the PSB will have exclusive
ownership of any and all data acquired and maintained by NECA Services for the purpose
of administering the VEEUF.
NECA Services is committed to ensuring the confidentiality of all data collected,
used, and maintained in the course of our administrative duties. NECA Services has
developed and will continue to maintain a process with clearly defined standards and
safeguards to govern sharing of information with distribution utilities to ensure that
Page 9 of 21
customer confidentiality is maintained and entities are not provided an unfair competitive
advantage. We utilize several mechanisms to safeguard confidential information,
including physical and data access controls, signed non-disclosure agreements, and
employee education, to ensure that data accumulated from individual companies is
protected
from
unauthorized
disclosure.2
We
foster
employee
awareness
of
confidentiality issues, and each individual who works on the VEEUF is required to sign a
non-disclosure agreement related to the protection of confidential information.
B.8 Coordination with Contract Administrator
NECA Services will continue to work with the Contract Administrator to ensure
that data requested is received in a timely and accurate manner. We will continue to
provide the Contract Administrator, upon request, with information collected from the
distribution utilities. We will also continue to coordinate with the Contract Administrator
regarding the development of new annual distribution utility contribution worksheets,
monthly cash disbursement dates, and possible interim Energy Efficiency Charge rate
changes. We will communicate with the Contract Administrator regarding the selection of
the Independent External Auditor, annual independent audit data requests, and necessary
coordination with the Vermont Auditors of Accounts. If necessary, NECA Services will
request that the Contract Administrator assist us in resolving disputes.
B.9 Additional Responsibilities
NECA Services understand that is expected to perform several other accounting
duties including but not limited to providing current financial statements and account
reports at the request of the PSB or the Contract Administrator, maintaining full historical
fund reports, keeping general ledger and up-to date spreadsheets on projected and actual
collections and disbursements, performing bank reconciliations for the VEEUF accounts,
and providing procedures to handle adjustments, voids, and full and partial credits for all
accounts.
2
In the twenty-two-year history of NECA/NECA Services, we are not aware of any failures in our
controls for protection of proprietary information.
Page 10 of 21
B.10 Meeting in Montpelier, Vermont
NECA Services understands that, as VEEUF Fiscal Agent, we will be meeting
with representatives of the PSB and the Contract Administrator in Montpelier, Vermont,
once during the three-year term of the contract.
B.11 Disaster Recovery/Business Continuity
NECA Services Corporate Disaster Recovery/Business Continuity Plan (see
Appendix 7) ensures that programmatic support services can be quickly recovered and
become operational in the event that a disaster disables any component of our operations.
The plan identifies critical business functions that need to be performed, staff required to
perform those functions, operating procedures to be followed, a communication plan, and
restoration procedures.
Our disaster recovery site is located in Alpharetta, Georgia, and in the event of a
disaster, critical staff will telecommute by accessing this site. All VEEUF data stored on
our servers is backed up nightly and transmitted to the back-up site in Alpharetta. In
addition, all data is synchronized nightly in order to expedite any disaster recovery
process. Periodic tests of disaster recovery and business continuity procedures are
conducted to ensure that systems and procedures function as intended.
Page 11 of 21
C. RELATED EXPERIENCE
Below are descriptions of NECA Services' programs that provide relevant
experience directly related to the duties of the VEEUF Fiscal Agent. For each program,
NECA uses GAAP and GASB 34 rules to account for state funds.
Arizona Universal Service Program
NECA began managing the Arizona Universal Service Fund at its inception in 1997.
Arizona subsequently executed a new USF contract with NECA Services. The
Arizona USF is funded by more than 300 intrastate telecommunications providers to
provide approximately $1 million per year in High Cost support.
Connecticut Telecommunications Relay Service Fund
In August 2002, Sprint/United Management Co. contracted NECA Services to
implement a new funding mechanism and to perform the ongoing Billing &
Collection services to fund Telecommunications Relay Service in Connecticut. The
Connecticut TRS provides more than $2.5 million annually to support the provision
of relay service. NECA Services collects contributions from over 370 intrastate
telecommunications providers and disburses authorized payments as designated by
the Connecticut Department of Public Utility Control.
District of Columbia Universal Service Trust Fund and Telecommunications
Relay Service
The District of Columbia Public Service Commission selected NECA Services to
implement and manage the District’s Universal Service Trust Fund (USTF) and to
administer the telecommunications relay service (TRS) in October 2003. The USTF
provides a mechanism to recover from LECs the cost of supporting lifeline service, a
telephone service subsidy for low-income customers; and TRS, a telephone
transmission service that provides the hearing impaired or speech impaired
individuals the ability to engage in telephone communications with non-impaired
individuals through a third party who converts speech to text and vice-versa. Through
the USTF, NECA Services collects and distributes approximately $1.2 million
annually for the DC-PSC.
The DC Commission also charged NECA Services with developing performance
requirements and criteria for the provision of TRS in the District, to formulate an RFP
for a TRS provider, to evaluate proposals from respondents, and then to monitor
corresponding service levels.
The DC Commission recently renewed NECA Services' UTSF contract.
Hawaii Telecommunications Relay Service Fund
In July 2003, Sprint/United Management Co. contracted NECA Services to
implement a new funding mechanism and to perform the ongoing Billing &
Collection services to fund Telecommunications Relay Service in Hawaii. The
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Hawaii TRS provides more than $2.0 million annually to support the provision of
relay service. NECA Services collects contributions from over 175 intrastate
telecommunications providers and disburses authorized payments as designated by
the Hawaii Public Utilities Commission.
Kansas Universal Service Fund
The Kansas Corporation Commission (KCC) selected NECA to implement and
manage the Kansas Universal Service Fund in 1997. NECA Services now administers
the KUSF on behalf of NECA. The Kansas USF receives contributions from over 500
intrastate telecommunications providers. It provides $65 million in annual support to
four universal service programs including High Cost funding, Lifeline Service to
qualified low income consumers, Dual Party Relay Service (KRSI), Kan-Ed and
specialized telecommunications equipment for persons with physical impediments.
There are approximately 45 monthly disbursements related to these programs.
Maine Universal Service Fund
The Maine Public Utility Commission selected NECA Services to be the
administrator of the Maine Universal Service Fund (MUSF) effective July 2005. The
MUSF provides over $10M in funding to local telephone companies that have a high
cost of delivering service. This assistance allows these companies to keep their rates
affordable. Under its administration of the fund NSI will collect from approximately
80 telecommunications service providers and disburse funds to approximately 16
authorized recipients each quarter.
Maine Telecommunications Education Access Fund
The Maine Public Utility Commission selected NECA Services to be the
administrator of the Maine Telecommunications Education Access Fund (MTEAF)
effective July 2005. The MTEAF provides affordable access to information services
for schools and libraries across the state without regard to geographic location. Under
this fund NSI will collect from approximately 80 contributors and make
approximately 100 disbursements totaling $4.5M annually.
Nevada Universal Service Fund
The Public Utilities Commission of Nevada selected NECA to implement and
administer the Nevada Universal Service Fund in 1999. NECA Services now
administers the Fund on behalf of NECA. More than 420 intrastate
telecommunications service providers contribute to the NUSF, which provides
funding for the High Cost program. As Fund Administrator, NECA Services is
responsible for collecting and disbursing approximately $0.5 million per year on a
quarterly basis. We are also charged with the review and approval of petitions for
support.
Oklahoma Universal Service Fund
The Oklahoma Corporation Commission (OCC) selected NECA to implement and
administer the Oklahoma Universal Service Fund in 1998. Upon renewal, Oklahoma
entered into a OUSF contract with NECA Services. The Oklahoma USF is funded by
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more than 500 intrastate telecommunications providers to provide approximately
$15 million per year in universal service support. The Oklahoma USF provides
funding for Universal Service goals, Lifeline, and discounts for Schools and
Libraries, Rural Health Care providers and county governments.
Oregon Universal Service Fund
Oregon contracted with NECA Services to serve as the Oregon Universal Service
Fund Administrator in 2005. The OUSF provides $48 million in annual support from
500 intrastate telecommunications providers to 30 High Cost providers.
Pennsylvania Universal Service Fund
The Pennsylvania Public Utility Commission contracted with NECA to serve as the
Pennsylvania Universal Service Fund Administrator, following a period during which
we served as the Interim Pennsylvania USF Administrator. Pennsylvania has recently
renewed the Fund contract, this time with NECA Services. The Pennsylvania USF
provides $34 million in annual support to 32 small telephone companies. The fund is
supported by contributions from more than 230 intrastate telecommunications service
providers.
Puerto Rico Universal Service Fund
The Puerto Rico Telecommunications Regulatory Board contracted NECA to
implement and administer the newly established Puerto Rico Universal Service Fund
in May 2000, subsequently renewing the contract with NECA Services. The Puerto
Rico USF was established to guarantee all citizens of Puerto Rico
telecommunications service at a fair, reasonable and affordable price. The PUSF
provides $5 million in annual funding for Telecommunications Relay Services,
Isolated Communities, Lifeline and other future programs. The fund became effective
in July 2001 and currently involves nearly 100 intra-island telecommunications
providers.
Texas Universal Service Fund
NECA was selected to administer the Texas Universal Service Fund in 1998 by the
Public Utility Commission of Texas. In August 2002, after a competitive bidding
process, the Commission selected NECA Services to continue administering the fund
through 2006. The Texas USF is funded by monthly contributions from
approximately 2,200 intrastate telecommunications service providers, including
hotels and motels. The total annual size of the Texas USF is approximately $585
million. NECA Services’ responsibilities include management of several universal
service programs including: High Cost support, small and rural Incumbent Local
Exchange Carrier support, Lifeline, Linkup, Telecommunications Relay Services,
Intralata Support and a Specialized Equipment Distribution voucher program.
Vermont Universal Service Fund
The Vermont Public Service Board originally selected NECA in 1994 to implement
and serve as administrator of the Vermont Universal Service Fund. In July 2003 the
Vermont PSB completed its fourth competitive bidding process and selected NECA
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Services as fiscal agent for an additional three years. The Vermont USF provides
funding of approximately $6 million per year to support the intrastate TRS, Outreach,
Equipment Distribution, Lifeline and E-911 programs. Approximately 350
telecommunications carriers currently contribute to the VUSF with support received
by 15 authorized recipients.
Vermont Energy Efficiency Utility Fund
The Vermont PSB selected NECA to act as the fiscal agent of its first statewide
energy efficiency fund, which became operational in March 2000. The contract was
subsequently renewed with NECA Services. The Vermont Energy Efficiency Utility
Fund is designed to collect and disburse approximately $8 million annually to fund
energy efficiency programs and products.
Page 15 of 21
D. STAFF QUALIFICATIONS
NECA Services' organizational structure is designed to be flexible and totally
responsive to our clients, while achieving all objectives on time and within cost
parameters. This structure fosters first-class performance, schedule adherence, and
cost-effective use of resources through clearly defined duties and responsibilities, short
and direct reporting lines to senior management, and proper management span of control.
NECA Services proposes the following persons, all located in Whippany, New
Jersey, to carry out our responsibilities as VTEEUF Fiscal Agent. NECA Services will
not substitute any personnel assigned to the VEEUF without the prior approve of the
PSB. Staff resumes are contained in Appendix 8.
Overall managerial direction and supervision of VEEUF operations will be the
responsibility of John H. Donovan III, Director of State Program and Product
Operations. Mr. Donovan, who has worked at NECA Services since 2001, is responsible
for overall direction and coordination of all state program operations. His career spans
more than 30 years in the telecommunications industry, most of which was spent in key
regulatory and marketing positions with AT&T and NYNEX. Mr. Donovan holds a B.S.
in Economics from Boston College and an M.S. in Finance from Fairfield University.
Lori Tasca, who has worked for NECA Services since 1998, will serve as
VEEUF Program Manager. Ms. Tasca, who reports directly to Mr. Donovan, will act as
the primary point of contact with the PSB, Contract Administrator, and Vermont electric
distribution utilities. Ms. Tasca has experience administering various state programs,
including the Vermont Energy Efficiency Utility Fund, Vermont USF, Arkansas USF,
Arkansas Extension of Telecommunications Facilities Fund, Arizona USF, District of
Columbia USF, Kansas USF, Oklahoma USF, Oregon USF, Texas USF, and Texas
Specialized Equipment Program. Ms. Tasca develops and implements procedures to
ensure the accurate and timely collection of revenue and disbursement of program funds.
Her responsibilities also include general accounting, budgeting, financial reporting, daily
operational processing, and financial management activities. Ms. Tasca holds an A.S. in
Applied Science-Business Management from County College of Morris, and a B.A. from
Montclair State University.
Frank Garofalo, a highly experienced Associate Manager reporting to
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Ms. Tasca, will perform VEEUF desk operations, including interacting with utilities to
explain and ensure the satisfaction of Fund requirements, processing utility assessments,
and preparing monthly reports and analyses. Mr. Garofalo, who has worked for NECA
Services since 1998, has responsibilities for database management, data analysis,
customer service, and billing and collection procedures. He has experience administering
several state programs, including the Arkansas USF and Arkansas Extension of
Telecommunications Facilities Fund, Arizona USF, District of Columbia USF, Kansas
USF, Oklahoma USF, Oregon USF, and Texas USF.
A NECA Services Data Analyst reporting to Frank Garofalo will be assigned to
the VEEUF team.
NECA Services' Chief Financial Officer is Carol Kenner, CPA. Prior to joining
NECA Services in 1998, Ms. Kenner worked for Alive Hospice, Inc., for three years as
Director of Finance. Ms. Kenner has overseen accounting activities for all state fund
programs, including the VEEUF, since 1998. Ms. Kenner, a Certified Public Accountant,
holds a B.A. in Economics from Tufts University and an M.S. in Accounting from New
York University.
Under the direction of Ms. Kenner, Monique Robinson, CPA, Director of
General Accounting and Revenue Operations, will oversee the daily treasury, cash
management, accounts receivable, risk management, all general accounting and financial
reporting functions for the VEEUF. Ms. Robinson has worked at NECA Services since
1999 and is responsible for daily treasury operations, including financial institution
reconciliation functions, cash forecasting, and fund disbursement processing, and she
actively monitors fund cash flows and ensures that undistributed funds are invested in
accordance with our Investment Guidelines. Ms. Robinson has extensive experience in
cash management operations, such as cash forecasting, money transfer, financial
institution balance reporting, and general accounting. Ms. Robinson also has oversight of
accounts receivable, risk management, all general accounting and financial reporting
functions, general ledger activity, the generation of financial statements, all tax and
accounting research, and the operation of our integrated financial system. Ms. Robinson
is a Certified Public Accountant, and holds a B.S. in Accounting from Rutgers University
and an M.A. in Mathematics Education from Kean University.
Page 17 of 21
Under the direction of Ms. Kenner, Donna Casey, Director of Expense
Operations, will oversee the accounts payable and disaster recovery operations for the
VEEUF. Ms. Casey has more than 25 years of experience in these areas, 20 of them with
NECA Services. Ms. Casey has managed the activity for state fund program
management, which includes VEEUF general accounting and financial reporting
functions, since 2001. From January 2000 to 2005, Ms. Casey managed various state
USFs and other state programs, including the Arkansas USF, Arkansas Extension of
Telecommunications Facilities Fund, Arizona USF, District of Columbia USF, Puerto
Rico USF, Oklahoma USF, Oregon USF, Texas USF, Vermont USF, and the Vermont
Energy Efficiency Utility Fund. Ms. Casey holds an AS in Business Administration from
County College of Morris, and is currently pursuing a BA in Business Administration –
Accounting at the College of St. Elizabeth.
Overall managerial direction and supervision of VEEUF informational technology
operations will be the responsibility of Bradley R. Scott, Director of Information
Technologies and Chief Information Officer. Mr. Scott is responsible for company-wide
IT strategic and tactical planning. His career spans more than 13 years of experience in
the IT and telecommunications industry. Mr. Scott has worked at NECA Services since
1995, and holds a B.S. in Public Accounting from Mesa State College and an M.S. in
Information Systems from University of Colorado.
Christopher Didden, Business Systems Analyst, will manage staff who will
continue to oversee the VEEUF database. Mr. Didden has been with NECA Services
since 2004 and has worked as a systems development professional since 1997. Mr.
Didden holds a B.S. in Management from Virginia Technical University and a Degree
Certificate in Information Systems from Virginia Commonwealth University.
Page 18 of 21
E. REFERENCES
Oklahoma Corporation Commission
Contact Person: Eric Seguin Phone: (405) 522-3765
Fax: (405) 522-1157
Address: Jim Thorpe Building, Suite 580
City: Oklahoma City
State: OK
Zip: 73105
Service provided: Administration of Oklahoma USF
Oregon Public Utility Commission
Contact Person: Cynthia Van Landuyt Phone: (503) 378-6638 Fax: (503) 373-7752
Address: 550 Capitol Street NE, Suite 215
City: Salem
State: OR
Zip: 97301-2551
Service provided: Administration of Oregon USF
Public Utility Commission of Texas
Contact Person: Bob Saathoff
Phone: (512) 936-7065
Address: P.O. Box 13326
City: Austin
State: TX
Zip: 78711
Service provided: Administration of Texas USF
Fax: (512) 936-8058
Page 19 of 21
F. BUSINESS ORGANIZATION
NECA Services, Inc., an independent stock corporation, was founded in the year
2000 to pursue program management opportunities on a for-profit basis. The company
grew out of NECA (National Exchange Carrier Association), a not-for-profit organization
created in 1983 at the direction of the Federal Communications Commission (FCC) to
support the restructuring of the telecommunications industry.
NECA Services initially operated with few employees of its own, securing most
of the resources and skilled personnel necessary to fulfill its contractual obligations
through a services agreement with NECA. On July 4, 2004, 220 of NECA's employees
were transferred to NECA Services, including most of the employees who administer
state fund programs. NECA Services has its own officers and board of directors.
NECA Services’ primary strengths are the experience and expertise of its
personnel, including professionals skilled in project management, accounting, auditing,
information systems design and development, fraud detection and control, government
regulation, as well as banking and investment management. These individuals have
consistently demonstrated their competencies by successfully implementing and
administering numerous support programs at both the state and federal levels during
periods of rapid growth and change, and by professionally managing day-to-day
operational responsibilities with an attention to detail and quality and without cost
overruns. Moreover, our staff is frequently able to offer constructive suggestions for
process improvements learned from our experience administering many other programs.
Possibly the strongest evidence of clients’ satisfaction with our performance is
demonstrated by the renewal of their contractual agreements. Arizona, the District of
Columbia, Kansas3, Nevada4, Oklahoma, Puerto Rico, Texas, and Vermont have each
renewed, on one or more occasions, their initial agreements with us to act as
administrator for their USF program. The Public Utility Commission of Texas (PUCT)
gave NECA Services a strong vote of confidence by retaining us to assist the PUCT in
administering one of the largest and most complex state USFs in the nation. Likewise, the
Nevada PUC agreed to a two-year contract extension, and the Kansas Corporation
3
4
NECA Services administers the Kansas USF on behalf of NECA.
NECA Services administers the Nevada USF on behalf of NECA.
Page 20 of 21
Commission approved a five-year extension. Particularly noteworthy is the fact that the
Oklahoma Corporation Commission (OCC) originally planned to retain NECA for only
an 18-month period and then transition the fund administration responsibilities to its own
staff. As a result of the Commission's high level of satisfaction with our performance, the
OCC instead renewed its contract with us for another two-year period, and, subsequently,
for an additional three years.
Page 21 of 21
G. COST PROPOSAL
NECA Services is pleased to provide this Cost Proposal for its services as
VEEUF Fiscal Agent for a three-year period beginning January 1, 2006.
Costs
Start-Up Cost: –$0–
Ongoing Operational Cost:
1/1/2006 through 12/31/2006: Fixed cost of $42,000.
1/1/2007 through 12/31/2007: Fixed cost of $43,300.
1/1/2008 through 12/31/2008: Fixed cost of $44,600.
Other Costs:
A) Hourly rate to support external audits in excess of one audit per year:
1/1/2006 through 12/31/2006: $144
1/1/2008 through 12/31/2008: $150
1/1/2007 through 12/31/2007: $156
B) Daily rate to conduct reviews of VEEUF participants (at the option of the PSB):
1/1/2006 through 12/31/2006: $1545
1/1/2008 through 12/31/2008: $1625
1/1/2007 through 12/31/2007: $1700
Cost Assumptions
The costs presented in this Cost Proposal are based on the assumptions described
below. If there are material variations to these cost assumptions, NECA Services reserves
the right to renegotiate its cost quotation.

Our Cost Proposal includes a one-day meeting in Montpelier between the Fiscal
Agent and representatives of the Board and Contract Administrator.

The amount to be paid to independent auditors is not included in our Cost
Proposal.

Our Cost Proposal includes support for one external audit per contract year.

Our Cost Proposal includes one mid-year assessment factor change per contract
year.

Our Cost Proposal does not include any additional costs that may result from
decisions made by the Board when it implements Act 61.