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3.0 ERMUSR 11-12-2003 ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION October 15, 2003 Members Present: John Dietz, President; James Tralle, Vice Chair; Jerry Takle, Trustee Staff Present: Bryan Adams, General Manager; Glenn Sundeen, Line Superintendent; David Berg, Water Superintendent; Patricia Hemza. Office Manager 1. Call meeting to order October 15, 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 Takle seconded the motion. Motion carried 3-0. 3. Consider Consent Agenda 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 the 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 firm 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. Page 2 Regular meeting of the Elk River Municipal Utilities Commission October 15, 2003 5.2 Review Street Light Maintenance Survey 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. ERMU 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 ERMU 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 Bryan 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 Budget The electric capital budget for 2004 was presented at the September 9, 2003. Since that time, Staff has analyzed the need for additional capacity to support further growth. The revised distribution projects, the time schedule for future 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. 6.1 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. Page 3 gular meeting of the Elk River Municipal 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. John 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 trucks, as well as snow removal. The proposed 2004 budget contains an item to purchase another forklift/front end loader to safely carry heavier loads than 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#+ rapacity front end loader for the heavier items. Staff is seeking authorization to purchase the new 3000#+ pacity skid steer with bucket and forks, at this time. In 2004 Staff will 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 3000#+ capacity skid steer with bucket, and forks. James 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 of repairs 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 $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. Page 4 Regular meeting of the Elk River Municipal Utilities Commission October 15, 2003 6.5 Review & Consider Refinancing Water Bonds Staff explained the proposed water bonding, and the associated refinancing of Series 1993B,and Series 1994 D Water Revenue Bonds. John Dietz advised that Elk River City Council approved the issue at their October 13, 2003 meeting. John Dietz moved to approve the refinancing of the Series 1993B, and Series 1994D Water Revenue Bonds. Jerry Takle seconded the 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, n ya Patricia Hemza Office Manager