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3.1.B ERMUSR 08-09-2011ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT UTILTTIES CONFERENCE ROOM July 12, 2011 Members Present: John Dietz, Chair, Daryl Thompson, Vice Chair Members Absent: AI Nadeau, Trustee ERMU Staff Present: Troy Adams, Director of Operations; Theresa Slominski, Finance Director/Office Manager; Mazk Fuchs, Line Superintendent; David Berg, Water Superintendent; Wade Lovelette, Technical Services Superintendent; Judy McSpadden, Recording Clerk City Staff Present: Tim Simon, City Finance Director Others Present: Peter Beck, Attorney from Gray Plant Mooty Law Firm 1.1 Call meeting to order July 12, 2011 John Dietz called the July 12, 2011 meeting to order at 3:30 p.m 2,1 Consider Utilities Agenda Troy Adams had an item that he wanted addressed first. Daryl Thompson added he had an item for discussion under other business. Daryl Thompson moved to approve the July 12, 2011 Utilities Agenda. John Dietz seconded the motion. Motion carried 2-0. Troy Adams presented Jerry Gumphrey with an electric meter lamp in recognition of his years as an Elk River Municipal Utilities Commissioner. Jerry Gumphrey was thankful and asked Troy Adams to thank all the employees for him. 3.1 Consider Consent Agenda John Dietz had questions on the check register and financials, staff responded. Daryl Thompson moved to approve the Consent Agenda as follows: a. June Check Register b. June 14, 2011 Regular Meeting Minutes c. Financial Reports d. Water Use Restrictions Resolution 11-04 John Dietz seconded the motion. Motion carried 2-0. Page 2 Regulaz meeting of the Elk River Municipal Utilities Commission July 12, 2011 At this time Bob Thistle, the interim City Administrator, introduced himself. He wanted Commission and staff to know his door was always open. He then excused himself to take care of City business and said he would stop back if time permitted. 4.1 Update on Power Supply Options /Resource Plapnine In September 2008, Connexus Energy terminated the 10-year rolling "all requirements" power contract with ERMU. In Apri12010, the ERMU Commission authorized entering into "Phase 1" of a resource planning study with a coalition which included Central Minnesota Municipal Power Agency (CMMPA) as a participant. In September 2010, the ERMU Commission authorized entering into "Phase 2" of a resource planning study which includes the release of a Request for Proposal (RFP). The RFP was issued on November 15, 2010. ht May 2011, the ERMU Commission authorized entering into "Phase 2b" of the resource planning study which will include risk assessment of the proposals. On July 1~`, Commissioner Al Nadeau participated in a conference call with CMMPA to go over the Resource Planning Coalition and the RFP process to date. On August 18'x, Troy Adams and AI Nadeau will be attending a presentation of bid results at the CMMPA office in Blue Earth, MN. Concurrently, ERMU has been working with R W. Beck, an SAIC Company, on developing a scope of work for a power wntract analysis. This analysis would compare the results of the Resource Planning Coalition RFP and CMMPA recommended portfolio options with the power contract proposal from Connexus and Great River Energy. Troy Adams presented a cost estimate from R W. Beck, an SAIC Company, to do the above mentioned analysis. Discussion followed regarding their estimate. Consensus was to get another bid and revisit at the next meeting or call a special meeting if there are time constraints. 4.2 Update on CAPX2020 Broolrines /Twin Cities Trapsmission Proiect In May 2006, the ERMU Commission authorized joining Midwest Municipal Transmission Group (Mlvl'fG), to explore the potential to obtain ownership in the transmission system. In February 2007, ERMU entered into an agreement to participate through CMMPA in the CAPX2020 Brookings -Twin Cities Transmission Project. 1n March 2011, the ERMU Commission and Elk River City Council both approved Resolutions authorizing ERMU participating in the Brookings Project through CMMPA for an amount not to exceed $7,140,953 without further action. This maximum investment amount was based on CMMPA being awarded an increased project share from 2.2% to 5%. In May 2011 it was finalized that CMMPA would be awarded an increase project share from 2.2% to 3.6%. This results in the ERMU share increasing from $1,993,134 to approximately $4,961,495. Delano Municipal Utilities has made a request to be released from the CAPX2020 Brookings - Twin Cities Transmission Project contract. Six participants investing in this project through CMMPA, including ERMU, have expressed interest in acquiring Delano's share. For ERMU, acquiring a share of Delano's ownership would not cause ERMU to exceed the maximum investment amount of $7,140,953 that was previously approved by the ERMU Commission and Elk River City Council. Troy Adams asked for approval of the Transfer Agreement with the City of Delano and the Resolution regarding the transfer. Page 3 Regular meeting of the Elk River Municipal Utilities Commission July 12, 2011 Daryl Thompson moved to approve the Transfer Agreement of Delano's share and Resolution per legal council approval of the agreement. John Diets seconded the motion. Motion carried 2-0. 5.1 Review and Consider Water Rate Analysis At the May ERMU Commission meeting, Tim Simon, Finance Director for the City of Elk River, was asked to work with ERMU staff to review the tiered water rate structure and explore the option of two tiers versus three, using the model that he created in 2010. Currently there are three tiers for water rates, which were implemented per DNR recommendation, when ERMU asked for a change in appropriations. The actual enforceable requirement is only for two tiers. ERMU made the change in the spirit of water conservation and not revenue enhancement. The change was made "revenue neutral" with the highest water users paying a premium for their excessive water use. By removing the third tier, there would be a revenue shift to other users, or an overall reduction to revenue. Theresa Slominsld presented different scenarios and reviewed the cash flow projections. Discussion followed. Consensus was to not touch the 1 ~` tier water mte. Some of the options discussed were to encourage installation of the Smart System then they would not be chat~ed the 3`~ tier water rate, or possibly a 5% discount to the large commercial users that go into the 3 tier. Theresa Slorninski was directed to run a few more calculations and bring back to the August ERMU Commission meeting when all Commissioners are present. John Dietz thanked Theresa Slominski, Tim Simon, and Lorrie Franz for all their hard work on this water rate analysis. 5.2 Review sud Consider Well #9 Water Main Proiect Bids The 2011 budget contained a project to install additional water mains. The water main additions will improve the ability for ERMU to use Well #9 effectively. On July 6, 2011, bids were opened for this project. Troy Adams informed the Commission that this project could be funded by the City of Elk River from water trunk fees held on account for water main projects. John Dietz asked Tim Simon his opinion, Tim Simon responded there were funds available for water main projects. Staff recommends awarding the project to GM Contracting, Inc., the lowest responsive bidder. Daryl Thompson moved to award the Well #9 Water Main Project to GM Contracting, Inc., the lowest responsive bidder, contingent upon the E~ River City Councils approval of funding it with the water trunk fees. John Dietz seconded the motion. Motion tamed 2-0. 5.3 Review and Consider 2°d Quarter Write-Offs The seconded quarterwrite-offs totaling $22,590.69 were presented for review. They consist of $2,219.84 that are written offas uncollectable, $13,383.25 sent to a collection agency for further collection efforts, and $6,987.60 that will be assessed this fall for the assessable services of water, sewer, and trash. Page 4 Regulaz meeting of the Elk River Municipal Utilities Commission July 12, 2011 Daryl Thompson moved to approve the second quarter write-offs as presented John Dietz seconded the motion. Motion carried 2-0. 5.4 Review and Consider Proposed Pole Attachment Poticv Revisions In Mareh 1997, the ERMU Commission adopted a Pole Attachment Policy. This policy established a rental rate for a third parry to attach communication equipment to ERMU poles. ERMU is currently working with a communication company that desires to enter into an agreement for pole attachments in Elk River. An updated Pole Attachment Agreement has been drafted with the assistance of ERMU legal counsel along with a revised Pole Attachment Policy. Daryl Thompson moved to approve the revised Pole Attachment Policy. John Diets seconded the motion. Motion carried 2-0. 6.1 Staff Updates Troy Adams discussed the upcoming MMUA summer conference. Theresa Slominski discussed the progress on the implementation of the billing information available online via ERMU website. Discussion followed regarding electronic billing. Daryl Thompson recommended having an incentive plan in place for the customers who would like to have electronic billing. Mark Fuchs informed the Commission that a couple crews were sent to assist Connexus with their storm damage. John Dietz asked Mark Fuchs to thank the crew that removed the tattered flags at a vacantlotin Elk River. Daryl Thompson said it was brought to his attention that a couple of linemen have given their notice. He wanted to thank them for their service and to wish them the best on their new ventures. He understands that wages were part of their decision to move on. He wanted the ERMU employees to know that the ERMU Commission understands that wages are important and the Commission will be reviewing that, but the last couple of years have been economically trying for everybody. John Dietz talked about the City Council instituting an employee of the month program for the City of Elk River employees, funded by the City Councfl members, and said he would like to do a similar program for ERMU employees, funded by the ERMU Commissioners. This will be discussed further at the next regulazly scheduled ERMU meeting when all the Commissioners are present John Dietz reminded staff about the upcoming picnic for City and ERMU staff and encouraged everyone to come. 6.2 Set Date for Nezt Meetine The next regulazly scheduled meeting of the Elk River Municipal Utilities Commission will be Tuesday, August 9, 2011, at 3:30 p.m. Page 5 Regulaz meeting of the Elk River Municipal Utilities Commission July 12, 2011 6.3 Adiourn Reeular Meetine John Dietz moved to adjourn the regular meeting of the Elk River Municipal Utilities Commission meeting at 4:55 p.m. Daryl Thompson seconded the motion. Motion carried 2-0. Minutes prepared by Judy McSpadden. John J. Dietz Chair, ERMU Commission Tina Allard City Clerk