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07-02-2013 ERMU MIN ELK RIVER MUNICIPAL UTILITIES SPECIAL MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM July 2,2013 Members Present: John Dietz, Chair; Al Nadeau,Vice-Chair ERMU Staff Present: Troy Adams, General Manager; Mark Fuchs, Line Superintendent; David Berg, Water Superintendent; Tom Sagstetter,Conservation&Key Accounts Manager; Jennie Nelson,Executive Administrative Assistant Others Present: Cal Portner, City Administrator 1.0 CALL MEETING TO ORDER John Dietz called the July 2,2013 meeting to order at 3:30 p.m. 1.1 Pledge of Allegiance The Pledge of Allegiance was recited. 1.2 Consider Utilities Agenda John Dietz requested to move 5.2 to before the Consent Agenda. Troy Adams also has an item for Other Business. Al Nadeau moved to approve the amended July 2,2013 Utilities agenda.John Dietz seconded the motion. Motion carried 2-0. 5.2 Payment in Lieu of Taxes and Other Donations to the City of Elk River Early in 2013,the Utilities Commission directed staff to bring back information on ERMU's PILOT and other donations to the City of Elk River. The current PILOT policy had a requirement to be reviewed in 5 years, which would be this year. Several power associations collect data from utilities on this subject and publish their findings for a comparison. The median in 2010 for Minnesota utilities is 3.9%given to their city, which is right in line with ERMU's contributions.In 2010, ERMU contributed 4.07%of our operating revenue to the City of Elk River. Related to our contributions to the City of Elk River, ERMU is working with Connexus Energy on an electric service territory acquisition that could include approximately 2,000 customers within 12 square miles in the corporate boundaries of Elk River. ERMU staff proposed that instead of Page 1 Regular meeting of the Elk River Municipal Utilities Commission July 2, 2013 paying the PILOT on these customers, ERMU could keep the City of Elk River whole by paying a reduced amount that would be equivalent to what would have been paid by Connexus in city taxes. Tim Simon and Cal Portner from the City of Elk River were there to discuss. They agreed that it would be in the best interest of both parties for ERMU to wait to pay the full PILOT on the acquisition customers. 2.0 CONSENT AGENDA(Approved By One Motion) Al Nadeau moved to approve the Consent Agenda as follows: 2.1 June Check Register 2.2 June 11,2013 Previous Meeting Minutes 2.3 Financial Statements 2.4 2012 Year End Reserve Balances 2.5 Mid-Continent Area Power Pool (MAPP) Membership Withdrawal John Dietz seconded the motion. Motion carried 2-0. 3.0 OPEN MIC No one appeared for open mic. 4.0 OLD BUSINESS There was no old business. 5.0 NEW BUSINESS 5.1 Water Sales, Conservation, and Rate Review Early in 2013, the potential of a summer rate was broached with the preface that there could be DNR restrictions imposed that would affect our water revenue numbers. At the June Commission meeting it was asked if a summer rate were going to be implemented or considered for this year given concerns of revenues being absent should wet weather continue. Staff has determined that in spite of a wet year, our projections are in line with the net budget position we planned for. Although there have not been any restrictions set by the DNR yet, the possibility is always there. During the budget process, staff will determine a reasonable contingency rate in the event that the DNR sets restrictions and will publish the rate within the normal rate setting process. 5.3 Fire Hydrant Use and Maintenance Program Page 2 Regular meeting of the Elk River Municipal Utilities Commission July 2, 2013 The Water Department has always maintained and exercised all of the water hydrants within the City of Elk River whether they are private or owned by ERMU. For cost and liability reasons, staff wanted to define the difference between private or public hydrants. Water Department staff generated a Fire Hydrant Use and Maintenance program to outline the responsibilities of ERMU and the owners of the private hydrants. This program would charge the private hydrant owner an annual maintenance fee of$60 per hydrant and ERMU staff would maintain it. Hydrant owners have the option to opt-in or opt-out, but if they decided to opt-out, they would be responsible for finding a contractor to maintenance their hydrant. This program would be implemented on January 1, 2014. Al Nadeau made a motion to approve the Fire Hydrant Use and Maintenance program. John Dietz seconded the motion. Motion carried 2-0. 5.4 Second Quarter Write-Offs Second quarter delinquent items were presented to the Commission for their review. The report showed four columns: Assessments, Collections, Revenue Recapture (RR) and Write Offs. An explanation was given for each of these categories. The amounts displayed for the Commission covered items through March 15, 2013 as those amounts would be greater than ninety days out. If we have notice of bankruptcies or deaths through June 15, those were also included in the amounts. Discussion followed. 5.5 Diesel Power Plant Operator Call-Out Provisions Over the past year, staff has worked with Great River Energy(GRE)on revisions to the Capacity Contract for our Diesel Power Plant. The contract specifies if Midcontinent Independent System Operator(MISO)called upon GRE for our engines to run, ERMU is required to have them on line within four(4)hours. In the past we have not been called on to run our engines often. The last time was in 2006. Although unlikely that we would have to run, ERMU still has to prepare for the possibility. There is potential for our generation to be called upon afterhours,on a weekend, or on a holiday. Because our power plant is not staffed 24/7,we need to address how we'd meet our requirement to run if we are called upon. The small possibility of us running this year does not justify having an on-call rotation for power plant operators. Instead, staff proposes an incentive program in the form of a call out stipend specific for the running of the diesel generation afterhours, on weekends,or on holidays. The stipend would be equal to twelve(12)hours at the worker's base rate of pay. Discussion followed. Al Nadeau made a motion to approve the Diesel Power Plant Operator stipend.John Dietz seconded the motion. Motion carried 2-0. Page 3 Regular meeting of the Elk River Municipal Utilities Commission July 2,2013 6.0 OTHER BUSINESS Troy Adams wanted to discuss that ERMU has seen a significant turnover of lineman recently. Competing utilities are offering a higher pay for similar positions. Staff recommended bringing this subject to the Wage and Benefits Committee before the August commission meeting to decide how to proceed. Discussion followed. The Wage and Benefits Committee will meet before the next Commission meeting and will make a recommendation in August. 6.1 Staff Updates Troy Adams wanted to mention a few things for Theresa Slominski who was absent. The office staff is looking into a new billing software. The switchover will be very time consuming and we will need additional IT support. The City of Elk River has two full-time IT staff and one part-time. ERMU is looking into paying half towards making the part-time IT employee a full-time employee and using that position to help us with the switch. In 2008 and 2009, ERMU offered an incentive for customers to participate in our Automatic Bank Pay program and would like to do so again this year. The fee that ERMU has to pay for an Automatic Bank Pay customer compared to a credit card payment is significantly lower,therefore we prefer customers are on that program. The Commission agreed to send out the incentive this year. Lastly, Troy Adams mentioned that our drop box on Railroad Dr. has been moved across the street due to road construction. Staff is working to find a new permanent location. Mark Fuchs was asked about the old Hardee's building and if we have worked through an easement issue. Our legal support is drafting an easement for zero dollars to give to the owner and if he will not sign that, we will most likely end up moving our line off of that property. David Berg mentioned that the water tower painting is right on schedule and is likely to be done at the end of July. Tom Sagstetter had an energy tour with Senator Al Franken. He is in favor of expanding the Landfill Gas to Electric facility and would like to see that go forward. 6.2 Set Date for Next Meeting The next regularly scheduled Commission meeting will be held on August 13, 2013. 6.5 Adjourn Regular Meeting Al Nadeau moved to adjourn the special meeting of the Elk River Municipal Utilities Commission at 4:37 p.m. John Dietz seconded the motion. Motion carried 2-0. Page 4 Regular meeting of the Elk River Municipal Utilities Commission July 2,2013 Minutes prepared by Jennie Nelson. AWALAI Jor J. I -tz 7 Chair, U Co r on Tina Allard City Clerk Page 5 Regular meeting of the Elk River Municipal Utilities Commission July 2, 2013