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4.1. SR 10-20-2003Pover MEPIORANDUPI Item 4. I. TO: FROM: DATE: SUBJECT: Mayor and City Council Pat Klaers, City Administrator October 20, 2003 Utilities Commission Update Councilmember Dietz is the City Council representative on the Elk River Municipal Utilities Commission. At the October 20, 2003, City Council meeting, John is scheduled to provide the Council with an update on Utilities activities. Attached for your review are the agenda and the draft minutes from the October 15, 2003 Utilities Commission meeting. S: I CouncillPatl Updates I Utilities. doc ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION AGENDA October 15, 2003 Elk River Utilities Offices ITEM NUMBER ACTION TAKEN 1. Call meeting to order October 15, 2003 at 4:00 p.m. 2. Consider Utilities Agenda 3. *Approval of previous meeting minutes 4. *Check Register OLD BUSINESS 5.1 Staff Updates 5.2 Review Street Light Maintenance Survey 5.3 Review Bulk Water Rate Survey 5.4 Update Great River Energy Wholesale Electric Rate 5.5 Review Revised Electric Capital Budget NEW BUSINESS 6.1 Review & Consider Proposed Expense Budget 6.2 Review Electric & Water Rate Survey 6.3 Review Purchase of Skid Steer 6.4 Review & Consider Water Service Line Insurance 6.5 Review & Consider Refinancing Water Bonds *Financials Other Business *Consent Agenda items are considered to be routine and will be approved by one motion. OCT-I?-ZO03 Og:O5AM FROM-ERMU 763-441-80gg T-830 P.OOZ/OO5 F-43g ELK RIVER M'UNIC~ UTILITIES REGCrLAR MEETING OF TIlE UTILITIES COMMISSION October 15, 2003 Members Present: John Diem, President; James Trallc, Vice Chair; Jerry Takle, Trustcc Staff Present: Bryan Adams, General Manager; Glenn Sundecn, Line Superintendent; David Berg, Water Superintendent; Patrieia Hernza, Office Manager 1. Call meeting to order October..l$~ 2003 President John Dietz called the October 15, 2003 meeting to order. 2. Consider Utilities Agenda John Dietz will have one additional item for Other Business. James Tralle moved to approve the Agenda for October 15, 2003, with one addition. Jerry Talde seconded the motion. Motion carried 3-0. 3. Consider Consent A~enda James Tralle moved to approve the Consent Agenda as follows: September Check Register September 9, 2003 Minutes Financials Jerry Takle seconded the motion. Motion carried 3-0. 5.1 Staff Up-dates Glenn Sundeen reported on thc work being done at sub-stations. He also advised that 41 new services were connected, the downtown street lights have been re-furbished, and other progress. No major outages occurred, and safety training in October has centered on fire safety, and fire extinguisher use. Dave Berg updated the Commission on the winterization of projects, and new services being completed. The bulk station for water service is nearly complete. Pat Hemza remarked on office functions. Bryan Adams reported to the Utility Commission that the Park Commission was not advised of the well being installed on Park property. It appears that there was a lack of communication on the part of the City Engineers, as well as the Utilities. John Dietz responded that the Park Commission is very upset with the work that was done without their knowledge, or consent. He further stated that he wants finn costs that will result from the re-location, and restoration of the site, and added that the blame for the error is spread to several departments. OCT-I?-ZO03 09:05AM FROM-ERMU ?$3-441-8099 T-$30 P.003/005 F-439 Page 2 Regular meeting of the Elk River Municipal Utilities Commission October 15, 2003 5.2 Review Street Light Maintenance S.u. rve¥ At the request of the Commission, Bryan Adams compiled a survey of other communities regarding street light maintenance. There does not appear to be a norm for the maintenance. Discussion followed on the various ways that street light issues are handled. Further discussion of this topic will continue at a future meeting. Staff, and Commission will continue to seek more information, and agreements that may be on file. No action necessary. 5.3 Review Bulk Water Rate Survey Bryan Adams reported on the survey conducted concerning the rates for bulk water sales. It appears that most communities conduct business as the ERMU has been doing. Normal water rates are in the $1.00 to $2.00 per 1000 gallon range. ER.MU charges a flat $10.00 per load. Communities utilizing automatic fill stations charge approximately .25 per 100 gallons, and that appears to be the cost I~RMU will use. John Dietz asked for clarification of the procedures, and discussion continued regarding back flow prevention, and illegal use of hydrants. John Dietz further questions whether or not the Utility will be able to realize any pay back for the cost of the installation of the bulk station, and notes that he believes some administrative charges should be put into place. Discussion will continue at a future meeting. 5.4 Update Great River Energy Wholesale Electric Rate B~an Adams updated the Commission on the first cut at the revised two tier rates being proposed by Great River Energy, resulting in a 7.3% increase to ERMU. The exact rate structure is still undetermined. This item, with associated spread sheet, is for discussion only. James Tralle asked what the driver for the increase in natural gas prices. Staff responded that de-regulation and high demand are the main reasons. No action necessary. 5.5 Review Revised Electric Capital Bad_ggtt The electric capital budget for 2004 was presented at the SepTember 9, 2003. Since that time, Staffha$ analyzed the need for additional capacity to support further growth. The revised distribution projects, the time schedule for furore projects, and the revised 10 year capital project projections were presented, and discussed. Causes for expansion were further reviewed. The load growth is driving the necessary revisions, as well as continued territory acquisition. The probable need for bonding in 2004, for projects was discussed. No action necessary. 6. i Review & Consider Proposed Expense Budget Staff presented the detailed revenue, and expense budget, with overviews, comparisons, and summaries. Revenue, and expense increases on a percentage basis were reviewed. A general discussion between Staff, and Commission continued. No action necessary. Final budget will be presented at the November 2004 meeting. 0CT-17-~003 O~:O~A~ FROI~-ER~U 765-441-8099 %830 P.O04/O0~ F-439 Page 3 Regular meeting of the Elk River Mtmieipal Utilities Commission October 15, 2003 6.2 Review Electric & Water Rate Survey Bryan Adams presented, and explained water rate comparisons with other communities, that was done in 2002. Discussion of the water rates showed our rates are average, and the target of the increase is in the second tier, to encourage conservation. The effect of the increase in wholesale rates from Great River Energy was reviewed. The electric residential and commercial retail rates are competitive, but the electric demand rate is not competitive, and perhaps needs relief. Reasons for Exel Energy not changing their rates in 2004 were discussed. Bryan Adams reviewed the proposed rate increases for Elk River Municipal Utilities. 3'ohn Dietz voiced his concerns with the demand rate. Discussion of lowering the demand rate, and subsidizing with bonding was discussed. Conclusions drawn were, that growth is driving the increase necessary for increased rates, and that wholesale rates cannot be controlled. 6.3 Review Purchase of Skid Steer The 2003 budget contains an item to replace the existing bobcat/skid steer, which is used to load, and unload tracks, as well as snow removal. The proposed 2004 budget contains an item to purchase another forklift/front end loader to safely cany heavier loads thsrt the bobcat can handle. Staff is recommending, purchase of a 3000#+ capacity skid steer to be used for the everyday material handling, and a 10,000~ capacity front end loader for the heavier items. Staff is seeking authorization to purchase the new 3000# + capacity skid steer with bucket and forks, at this time. In 2004 StaffwilI ask for authorization to purchase a used 10,000# capacity front end loader with bucket and forks, and trade in the existing bobcat. Jerry Takle moved to authorize the purchase up to $35,000.00 for a 3000g+ capacity skid steer with bucket, and forks..lames Tralle seconded the motion. Motion carried 3-0. 6.4 Review & Consider Water Service Line Insurance Bryan Adams reviewed the present policy of ownership of water services, and the possibility of adding an insurance program to cover the costs ofrepaixs to customer services. The Utility receives one or two calls per month from customers experiencing leaks of the valve inside the house before the meter. It is necessary for the water service person to disconnect the water, and after the homeowner has the leak repaired by a plumber, return to reconnect the service. Very often it is more efficient for the serviceman to replace the valve, and have the customer replace the valve to our stock. Discussion continued regarding the responsibilities, and the proposal to add a 5;1.00 line item per month to the customer water bills. A survey was proposed to see how customers would react to the insurance. Further discussion between Staff, and Commission reached no conclusion, other than to continue as usual, and replace leaking valves inside the house before the meter. OCT-I?-ZO03 og:O6AM FROI'A"ERMU 763-441-809g T-830 P.005/005 F-43g Page 4 R. cgular meeting of thc Elk River Municipal Utilities Commission October 15, 2003 6.5 Review & Consider Refinancing Water Bonds Staff explained thc proposed water bonding, and the associated refinancing of Series 1993B, and Series 1994 D Water R. evenue Bonds. $ohn Dictz advised that Elk River City Council approved the issue at their October 13, 2003 meeting. John Dictz moved to approve the refinancing of the Series 1993B, and Series 1994D Water Revenue Bonds. Jerry Talde seconded thc motion. Motion carried 3-0 Other Business John Dietz asked Utility Staff if they had received notice of garbage rate increases from the City. Staff responded that no notice of increase was received. The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be Wednesday, November 12, 2003. President Dietz adjourned the regular meeting of the Elk River Municipal Utilities Commission at 6:45 PM. Respectfully submitted, Patricia HemT. a Office Manager