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6.1. ERMUSR 06-14-2011Elk River~:~ .. Municipal Utilities 1306) Orono Parkway • P.O. Box 430 Elk River, MN 55330-0430 UTILITIES COMMISSION MEETING Phone: 763.441.2020 Fax: 763.441.5099 TO: FROM: Elk River Municipal Utilities Commission Troy Adams, P.E. -Director of Operations John Dietz, Chair Daryl Thompson, Vice Chair Al Nadeau, Trustee MEETING DATE: AGENDA ITEM NUMBER: June 14, 2011 6.1 SUBJECT: Staff Updates -Director of Operations DISCUSSION: 1 attended Great River Energy's (GRE) annual meeting on June 15` as a special guest of Connexus Energy. The general tone of the meeting was that despite the economic downturn, GRE is financially positioned well for the future. They will continue to have modest single digit rate increases during the foreseeable future. Their forecasting of modest rate increases is dependent upon many factors outside of GRE's area of direct influence. The GRE CFO explained that their willingness to raise rates and pass along power cost adjustments (PCAs) have allowed them to achieve a better financial rate which should help reduce their cost of money for capital projects. There have been many organization changes within GRE in an effort to lower costs which have included an early retirement program and also organization restructuring. In generation operations, GRE has been very proactive maintaining and updating their facilities. They have also worked towards creating local partnerships to more efficiently utilize resources and byproducts. Although GRE chose to recently build an estimated $42,000,000 headquarters in Maple Grove (and not in Elk River), at the staff level it appeazs that they understand what it is to be public power. Enclosed for your reading: • The recent MMUA Capitol Tattlers. • Star Tribune article "When water becomes the new oil, he'll be ready" Vol. 14, No. 13 May 26, 2011 On May 24, Gov. Dayton issued vetoes for the eight major omnibus finance bills and the omnibus tax bill, Chapter 38 of Minnesota 2011 Session Laws. The session may be considered a 'train wreck' by many, but far the state's municipal utilities the session was a mixed bag, but generally positive. One of Gov. Dayton's vetoes was the Environment, Energy and Natural Resources Finance Bill (HF 1010). Among the provisions of this bill: • Transfer of $1.3 million from the energy and conservation account (into which all CIP assessments go) to the general fund. • A $500,000 grant to fund Clean Energy Resource Teams from the energy and conservation account. • Suspension of the standard for sulfate for class 4 waters and authority and funding for the MPCA to study a replacement standard. • Requirement for submission to the Legislative Coordinating Commission of all proposed rules related to water quality or water resource protection for review of necessity and consistency with other local, state and federal rules. The Legislature did adopt an omnibus energy policy bill: SF 1197. This Senate bill made less dramatic changes than the House version (HF 1025). With an eye on getting something done, the Senate language was adopted by the House. This bill passed both bodies and was presented to the Governor May 24. He is expected to sign it. The bill does a number of things, including: • Requires all utilities that are subject to the Renewable Energy Standard to file with the Minnesota Public Utilities Commission and the Legislature a report containing an estimation of the rate impact of activities necessary to comply with the RES, including, energy purchases, generation facility acquisition and construction, and transmission improvements. An initial report must be submitted within 150 days of the effective date of the law. After the initial report, a report must be submitted with each integrated resource plan. • Allows the OES to approve CIP plans for cooperative and municipal utilities with energy savings goals of less than the current 1 percent minimum when appropriate. Another water bill of concern died in the session's waning days: HF 135/SF 64, which repeals city authority to regulate private wells. Look for this issue to be back next year. This bill was staved off with a lot of help from municipal utilities and the League of Minnesota Cities. MMUA will again publish a complete legislative report this summer. On a closing note, we may not be done with 2011 yet, but the 2012 session is scheduled to begin Jan 24. The House Commerce Committee, chaired by Representative Joe Hoppe, Wednesday, May 11 heard a HF 1692, a lengthy, freshly-introduced bill that would make comprehensive changes to Chapter 237, Minnesota telecommunications law. The committee simply discussed the bill, which even the chairman referred to as "the AT&T bill." That tag is certainly troubling to municipal interests. The bill appears to restrict municipal provision of video and Internet services. Section 12 of the bill addresses municipal telecommunications services. It retains the 65 percent super-majority required to construct a new telephone exchange but allows municipalities to enter joint ventures with a "telecommunications organization," which is not defined. Section 13 is troubling. It provides that when a municipality decides to acquire an existing plant by condemnation, the Minnesota Public Utilities Commission will fix compensation. This decision can be appealed to district court. Despite occasional concerted efforts dating back to the late 1990s, Minnesota's nearly century-old telecommunications law has resisted efforts to bring it into the digital age. Does HF 1692 signal a new charge to update state telecom law, or is itsimply slate-session curiosity? Time will tell, but we know this: much time will be spent dissecting and examining this bill for possible implications heading into next session. The big news on the energy front is Wednesday's House passage of SF 86, known as the coal moratorium repeal bill. The final bill passed on the House floor on a 76-54 vote. The bill was amended on the floor by its author, Rep. Michael Beard (R-Shakopee) with language that appears to clear the way for Great River Energy to import power into the state from its Spiritwood Station coal-fired plant near Spiritwood, North Dakota. The bill also allows 2,500 megawatts of electric generating capacity, in aggregate, from new large energy facilities or power purchase agreements with new large energy facilities that are fueled by what appears to be, by definition, lignite coal. The 2,500 megawatt provision appears to some observers to be potential trade bait to be used in negotiations with the Governor's office. The bill was approved by the Senate 42-18 on April 14. The Senate is scheduled to take up its omnibus energy bill today. Vol. 14, No. 12 May 13, 2011 With important committee deadlines looming, it was a busy week for MMUA lobbyists at the state capitol. Four issues dominated our attention: three energy proposals and a private well-drilling regulation. A number of separate energy-related bills have been lumped into an omnibus energy bill (HF 1010 SF 1029). MMUA's focus remains on three specific issues: Conservation Improvement Program (CIP), Renewable Energy Standard (RES) and net-metering. The House Environment, Enerey and Natural Resources Policv and Finance Committee Thursday worked on assembling its omnibus energy bill, including CIP. MMUA and the Minnesota Rural Electric Association met with bill author Rep. Michael Beard earlier in the week. The Dayton administration, through the Division of Energy Resources (formerly Office of Energy Security) has said it has serious problems with bill as it stands. The Senate bill differs from the House bill and may be more acceptable to the administration. The Senate Committee on Energy Utilities and Telecommunications Thursday addressed its omnibus bill, including language on CIP. The Senate bill allows the Minnesota Public Utilities Commission to approve utility CIP savings goals of less than 1 percent, something the Dayton administration has said it does not oppose. (Current engrossments of these bills may not be posted yet on the legislative website.) The Senate energy committee Tuesday heard SF 1093 titled the "Public utilities renewable energy standards compliance rate information impact report submission:' This bill has the unusual distinction of being pushed by the Minnesota Chamber of Commerce and supported by a variety of environmental interests. Utilities don't much like it. Municipal power agencies believe the bill is well-intentioned-requiring a report on all of a power supplier's costs relating to implementing the renewable energy standard-but could have unintended consequences, such as encouraging endless questions and second-guessing during resource planning proceedings at the MPUC. MMUA successfully softened the bill from requiring an "analysis' of costs to an "estimation' of costs. MMUA also successfully changed the language to handle future reports Vol. 14, No. 10 April 29, 2011 The 2011 Legislature is approaching the end game and for the first time in several years, in contrast to the big ticket budget items, the list of utility issues has been considerably narrowed down. If things continue that way, this session may well be remembered as the one where MMUA lobbied intensively on water issues. The bill that caused municipal utilities perhaps the most concern this session-HF 135, the private well drilling regulation bill-is dead for the session. It was expected to pass the Senate Local Government Committee last Friday, but after good testimony from the League of Minnesota Cities (LMC), Minnesota Rural Water Association, and Rochester Public Utilities, the bill was tabled. Proponents of the bill said the municipal representatives came well-prepared and deserved their victory. The win culminated hours of support given by MMUA to the LMC on the bill and bodes well for future efforts. The bill could be resurrected as an amendment to another water-related bill. We will be vigilant. A possible vehicle on which to amend the well-drilling bill is HF 562-SF 406, a bill dealing with manufactured home park water sub-metering. Again, municipal organizations have significant concerns on this bill. MMUA testified today in the Senate Judiciary Committee alongside testifiers for LMC and Legal Aid. MMUA testimony focused mainly on retaining city authority to set rates and connection charges in accordance with existing statutes, particularly relating to water and sewer infrastructure cost recovery and conservation rates. An amendment favored by LMC, MMUA and Legal Aid was defeated. However, debate on the amendment produced commitments to work further on the bill to address concerns prior to passage by the full Senate. This session's main energy-related concern has been Minnesota's Conservation Improvement Program law. There has been a lot of discussion and various proposals with the House and Senate taking different paths. Both bodies have cobbled together omnibus energy bills (Hf 1025 SF 1313), with the Senate changes minor compared to the House bill. The Senate Enerev Committee yesterday had a hearing on the House omnibus energy bill, including its CIP provisions. The purpose of the hearing was so that Senate conferees could have a better understanding of the House provisions. The House CIP provisions were drafted by the state's rural electric cooperatives, and they provided in-depth line-by-line testimony. The proposed changes did not seem to gain traction with the Senate committee. Bill Grant of state Division of Enerev Resources (formerly Office of Energy Security) said the House proposal was anon-starter and that the Senate bill made more sense. Grant said regulators already have flexibility to approve plans consistent with a small utility's needs. Look for the Senate version to emerge from conference committee and more discussion on possible CIP changes, including those favored by MMUA, in the interim. Vo1.14, No. 11 May 6, 2011 When water becomes the new oil, he'll be ready Article by: ,Star Tribune Updated: June 7, 2011 - 6:05 PNi It's been said that water-one day may become more valuable than oil in many countries. Some big companies around the world are devoting time and capital to the scarce-water problem. GE is one of them. Joseph Such is the general manager of GE's Water & Process Technologies capital equipment business and is in charge of its Minnetonka facility that employs more than 500 people. The GE water business is part of GE's $38 billion-revenue power and water businesses In 2003, Such led the integration team after GE acquired Minnetonka-based Osmonics for about $265 million in stock. GE sold or spun off Osmonics' smaller consumer and medical-water businesses and focused on its industrial and municipal water systems, which are now more than twice as large as they were in 2003. QWhat do you make here? AWe make components and systems. One of our core components is membranes ... that separate [brackish or waste] water into two streams: a clean stream and a concentrated salt stream. We also make aflat-sheet membrane and sell it to companies that use it in their products. We also roll it into a membrane element that's connected to a housing and high-pressure pumps to pressurize the water through the membrane. We sell components and entire systems, reverse osmosis systems, to bottling companies. The other big application is on the industrial side, to remove all the salts that could foul an industrial process -- a boiler or car wash. QWhat are you shipping this week? AWe export around the world from here. Today, on our factory floor, we probably have 20 reverse osmosis systems going to Africa, two units to the Middle East, Kenya, Ghana, Nigeria. And we also have factories in China, Brazil, Hungary. In 2006 GE purchased Zenon Environmental, which provides water-treatment and water reuse solutions for municipalities and industry. We've got two big systems going to a municipality in North Dakota and for a m QWhy has this plant become a center of excellence? APrimarily because of the master's and Ph.D. chemical engineers out of the University of Minnesota. Most of the R&D on membrane development is done here in Minnetonka. That's hard for me to say, being a Purdue Boilermaker. The employees on the factory floor are dedicated, loyal people willing to go the extra mile and recognize what's right for our business and themselves. They come from local high schools and technical schools. QWhat's a great futuretechnology? AWe own a company call Jenbacher in Germany. [It has] a big engine [that] can use any kind of fuel. Water treatment plants produce a lot of methane gas. We will run that gas through a bioreactor, then through the [Jenbacher J624 GS] natural gas reciprocating engine, which provides the electricity that runs the reverse-osmosis system for the municipal wastewater treatment plant. You end up being very efficient and carbon-neutral. We're working on it now. The process starts with the membrane reactor that speeds up production of methane out the waste stream and which provides the gas for the engine. It will use technology that comes out [of Minnetonka] and Canada. We're going to marry these systems and offer complete wastewater treatment systems to our customers. QYou and your counterparts at nearby GE Fleet do some interesting community work. What's an example? AWe partner with Minneapolis Roosevelt High. We have about 250 mentor-student pairs between us and GE Fleet. We try to get them excited about science, math, engineering and technology. We bring them in here and do experiments. They ask tough questions. They start out with, "What is osmosis and how do you reverse it?" They are ecocentric and want us to take care of the environment. These kids are brilliant. Neal St. Anthony • 612-673-7144 Elk River Municipal Utilities 13069 Orono Parkway • P.O. Box 430 Elk River, MN 55330-0430 UTILITIES COMMISSION MEETING Phone: 763.441.2020 Pax: 763.441.8099 TO: FROM: Elk River Municipal Utilities Commission Theresa Slominski -Finance Director/Office John Dietz Manager Daryl Thompson Allan Nadeau MEETING DATE: AGENDA ITEM NUMBER: June 14, 2011 6.1 SUBJECT: Staff U dates -Finance Director/Office Mana er DISCUSSION: We have hired for our CSR position and Jennie Nelson is our newest staff member. She started June 6th and has a retail background with a degree in journalism. We had 744 credit card payment transactions in May, which is down from 801 in April. May's fee should be $1,674. We will see if the volume climbs back up again now that shut off season has begun. The commission will continue to be updated on the transaction volume and costs with the absorbed fee in place. On June 9th we had approximately 50 shut-offs, which is a much smaller number compared to approximately 80 in years past. This is a result of good work from our Collections Specialist, Michelle, staying in touch with the customers to keep current. There is possibly some impact from the credit card availability, yet it is difficult to identify and quantify that impact for certain. The fact that the number is lower this year is a positive reflection for the utilities. Progress is being made on the implementation of billing information available online at our website. We saw the first glimpse of what the bill would look like online and will move into the testing phase very soon. The goal is to have this completed by the end of June. We have a recent graduate from the Chamber of Commerce Leadership Class on staff. Michelle Martindale graduated June 7th with 9 other classmates from the Elk River area. We are proud of her pursuit of this accomplishment and are looking forward to graduating other staff from this program. Elk River Municipal U UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission David Berg -Water Superintendent John Dietz, Chair Daryl Thompson, Vice Chair AI Nadeau, Trustee MEETING DATE: AGENDA ITEM NUMBER: June 14'", 2011 Staff U dates SUBJECT: Pro a Transfer or Sale Water Conoectioa Polic It would be beneficial to adopt a policy where property transfers or home sales would be required to hook up to city water when connection is available. The connection would be required after the sale is finalized. The infrastructure was constructed for the additional hook-ups. Without proper property surveillance the private wells have a greater risk of contamination. if we seal the well and hook to city water the odds of contamination go down. Elk River: Municipal U UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission David Berg- Water Superintendent John Dietz, Chair Daryl Thompson, Vice Chair AI Nadeau, Trustee MEETING DATE: AGENDA ITEM NUMBER: June J4n', 201] StaffU dates SUBJECT: Wellhead Protection Plan U date Today we held a meeting for our local units of government. We addressed our newly updated delineation of [he wellhead protection area (WHP). The WHP now includes our twenty (20) year plan. This neat month we will gather for our second scoping meeting to plan out Phase II. Phase II will include taking inventory of all private wells within the new WHP delineation. We will also hold several more meetings with our local units of govemment in the coming year. The meetings will help to ensure that our WHP plan suits our community [o our best advantage. The WHP Phase II completion deadline is June of 2012. Elk River Municipal Utilities 13069 Orono Parkway • P.O. Box 430 Elk River, MN 55330-0430 UTILITIES COMMISSION MEETING Yhone: 763.441.2020 Pax: 763.441.8099 TO: FROM: Elk River Municipal Utilities Commission Mark Fuchs John Dietz, Chair Line Superintendent Daryl Thompson, Vice Chair Al Nadeau, Trustee MEETING DATE: AGENDA ITEM NUMBER: June 14, 2011 6.1 SUBJECT: Staff Updates Discussion: • We did ow quarterly inventory count in early May. We pick random inventory items and make swe there aze correct. • We had one of ow trailers sand blasted and painted. When the city mechanics did ow DOT inspections they recommended it get painted. This trailer was pwchased in 1992. The running gear is in good shape and with new paint to keep the rust off it should last a long time. • Started converting lslandveiw Drive from 2400 volts to 7200 volts. The directional bore rig was used to put some single phase overhead lines underground. • Started working on converting the south side of Co. Rd. 30 west of Waco to 7200 volts. • Continue working on 5th Street Rebuild. • Working on changing out gaskets on ow switchgeaz. There was a recall on these gaskets. We have 35 switchgeaz and they have anywhere from one to four gaskets depending on the model of switchgear. • Had one new service. Elk Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission Wade Lovelette-Superintendent of Technical John Dietz, Chair Services Daryl Thompson, Vice Chair Al Nadeau, Trustee MEETING DATE: AGENDA ITEM NUMBER: June 14, 2011 6.1 SUBJECT: Staff U dates - Su erintendent of Technical Services DISCUSSION: In April the Security Systems Department had a total of 60 phone contacts, four new systems quoted, two system sales made, six installs completed, 23 service calls made and four personal visits. The Meter Department continues with the monthly and weekly substation checks, load control issues as they come up and changing out electric meters to ERT'ed meters. They are also helping the Water Department change water meters. The Locating department had a total of 338 locate tickets, seven of them were cancelled, two were voice outs after hours and four were voiced out during daytime. Our power plant operator attended a three day Generation School in Glencoe, MN last month from May 3rd thru May 5`h. His education report is attached. He also manufactured a pole cradle to replace our old one. It was used to support the new siren pole as it was framed and set in eastern Elk River.