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6.1. ERMUSR 11-12-2013 Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission Troy Adams, P.E.—General Manager John Dietz—Chair Al Nadeau—Vice Chair Daryl Thompson—Trustee MEETING DATE: AGENDA ITEM NUMBER: November 12, 2013 6.1a SUBJECT: Staff Updates—General Manager DISCUSSION: • As a follow-up to the electric assessment agenda item from last month's Commission meeting, the electric assessment ordinance addition was adopted by City Council on October 21, 2013. • The Minnesota Municipal Transmission Group (MMTG) Annual Meeting is scheduled for November 22, 2013. The meeting is held in Mason City, IA. As of now because I am on the MMTG Executive Board of Directors as the Vice President, I am planning on making the day trip for the meeting. • On November 12, there is a CAPX2020 conference call hosted by Central Minnesota Municipal Power Agency (CMMPA) that I will be participating in. The meeting is regarding our current ownership rights and some potential options. • The Minnesota Municipal Utilities Association(MMUA) 2013 Technical & Operations Conference is scheduled for December 10-12, 2013, in St. Cloud, MN. The conference brochure is attached. I am currently the on the MMUA Executive Board of Directors as the Secretary/Treasurer and will be attending their board meeting on the morning of the 10th prior to the conference. Mark Fuchs and Wade Lovelette will also be attending the conference. • The final for the rehabilitation of the Freeport Water Tower has been completed. ERMU, Badger State Inspection(BSI), and Odland Protective Coating(OPC) met to discuss project discrepancies and damages. An agreement was reached with Odland. It was agreed that OPC would be responsible for$13,513, half of the additional engineering/inspections costs due to the project extending beyond the scheduled completion date. • Attached are two articles from American Public Power Association (APPA)regarding Boulder, CO, and their efforts to create a municipal electric utility as well as additional industry articles. e3 Page 1 oft NATURE Powerr Pwide� P OWFREO TO SERVE 81 ATTACHMENTS: • APPA Public Power Daily—Boulder residents to vote today on opposing ballot initiatives on creation of a municipal utility—November 5, 2013 • APPA Public Power Daily— Boulder, Colo., municipalization effort gets big boost from voters—November 7, 2013 • APPA Public Power Daily—Low sales growth challenges utilities' traditional business models, Fitch says—October 30, 2013 • Spectrum IEEE— Fighting Coal to a Draw—July 2013 • Spectrum IEEE—Unclean at Any Speed—July 2013 • MMUA 2013 Technical & Operations Conference Brochure 111% POWERED 1Y 'a Page 2 oft NATURE Peliable Public Power Provider POWERED To SERVE 82 Boulder residents to vote today on opposing ballot initiatives on creation of a municipal u... Page 1 of 2 Public Porn Roily I,ies1I9V.No ember S,2013 Boulder residents to vote today on opposing ballot initiatives on creation of a municipal utility Xcel Energy, the investor-owned utility that serves the city of Boulder, Colo., has contributed half a million dollars in the last two months to a group campaigning for Question 310, a Nov. 5 ballot initiative that would make it more difficult for the city to move forward with its plan to form a municipal electric utility. By today -- the day of the election-- Xcel is expected to have made another contribution of$195,000, bringing the total to $695,000, the local newspaper reported. Meanwhile, Boulder received a report from a consultant affirming that creation of a city-owned electric utility would be a viable way of meeting the community's energy goals. The Boulder Daily Camera reported in late September that the Xcel Energy had made a contribution of$300,000 to the group, called Voter Approval of Debt Limits. The private utility made another contribution of$200,000, the newspaper reported on Nov. 1, noting that Oct. 31 was the last day that groups had to file campaign finance contributions before the election. Boulder voters today will face two conflicting ballot initiatives. Ballot Question 2E was placed on the ballot by the Boulder City Council. It would amend the city charter to put a limit of$214 million on the amount of debt Boulder could issue to acquire Xcel's distribution system(and to pay any stranded costs demanded by Xcel). Ballot Question 310 was placed on the ballot as the result of a citizens'petition backed by Xcel Energy. It would require the city,before it could issue any debt to form a municipal utility, to receive approval from voters; and would stipulate that such an election could be held only in an odd- numbered year. The city said the following three outcomes are possible as a result of today's election: 1. One measure passes and the other one fails; 2. Both measures pass; or 3. Both measures fail. If the City Council-backed measure has the most votes, the petitioned initiative will not take effect, the city said. If the petitioned initiative has the most votes, both measures will be in effect, but where they conflict, the measure with the most votes will prevail. If both measures fail, the City Council would have authority to issue bonds to create a local electric utility, if certain conditions can be met. However, the City Council has said it"would seek to understand the intentions of voters and determine how to proceed at that time." In late July, the Boulder City Council voted to begin condemnation proceedings to acquire the local electricity distribution system from Xcel. In August, the council affirmed that decision, voting again to move forward with efforts to buy Xcel's poles, wires and other facilities. Boulder has been studying options for a more locally controlled, greener energy future for the last two 83 http://www.naylornetwork.com/app-ppd/articles/print-V2.asp?aid=240858 11/5/2013 Boulder residents to vote today on opposing ballot initiatives on creation of a municipal u... Page 2 of 2 years. Residents of the Colorado community approved two ballot measures in November 2011 that authorized the city to continue to explore the possibility of buying Xcel Energy's distribution system and forming a city-owned utility. In July, an independent evaluator said Boulder is likely to be able to offer rate parity with Xcel at the outset and also over a 20-year period. (See Public Power Daily,Aug. 26.) The city received a second report in mid-October from the evaluator, PowerServices Inc., affirming its earlier finding that the city's findings were "sound and thorough." The report is available in the energy section of the city's website. —JEANNINE ANDERSON 84 http://www.naylornetwork.com/app-ppd/articles/print-V 2.asp?aid=240858 11/5/2013 Boulder, Colo., municipalization effort gets big boost from voters Page I of 1 lluusix .Ain oinirc ].2017 Boulder, Colo., municipalization effort gets big boost from voters Boulder, Colo., voters gave a significant boost to efforts to form a municipal electric utility, voting by almost two-to-one for a City Council-backed ballot measure and against a competing debt-limit measure pushed by Xcel Energy. The city has been exploring the feasibility of municipalization for the past two years, with the goal of ensuring local control and access to reliable power that is increasingly clean and competitively priced. Ballot Question 2E, which was placed on the ballot by the Boulder City Council, amends the city charter to put a limit of$214 million on the amount of debt Boulder could issue to acquire Xcel's distribution system (and to pay any stranded costs to Xcel). Ballot Question 310,backed by Xcel Energy, would have required the city,before it could issue any debt to form a municipal utility, to receive approval from voters. If the proposed utility service area extended beyond city limits, Question 310 would have required that affected residents in unincorporated Boulder County be allowed to vote in the debt limit election. The initiative also stipulated that such an election could be held only in an odd-numbered year. Xcel spent some $700,000 on a campaign to support its ballot question. In late July, the Boulder City Council voted to begin condemnation proceedings to acquire the local electricity distribution system from Xcel. In August, the council affirmed that decision, voting again to move forward with efforts to buy Xcel's poles, wires and other facilities. Last month, an independent consultant, PowerServices, Inc., affirmed its earlier conclusion that Boulder is likely to be able to offer rate parity with Xcel at the outset and over a 20-year period. PowerServices said the city's findings were "sound and thorough." More information is available in the energy section of the city's website. ROBERT VARELA 85 http://www.naylometwork.com/app-ppd/articles/print-V2.asp?aid=241171 11/7/2013 Low sales growth challenges utilities' traditional business models, Fitch says Page 1 of 1 ��uJnesJ.n_Oclubt 10 201 Low sales growth challenges utilities' traditional business models, Fitch says U.S. electric utilities face an ongoing period of low sales growth that will challenge their traditional operating profiles and force utilities to broaden their product offerings, according to a Fitch Ratings report. Electricity efficiency gains, demand-side management programs and distributed generation have reduced customer consumption and cannibalized traditional, utility-supplied power, Fitch said. Utilities will have to include efficiency, distributed generation and demand-side management as part of their product portfolio going forward, the credit rating company said. Energy efficiency, whether mandated or promoted by cost savings, continues to play a significant factor in dampening retail sales, as does net metering and distributed generation, the report said. Fitch also noted that the economic recovery and expansion since 2009 has done little for electricity sales growth. The Energy Information Administration recently revised its forecasts for retail U.S. electricity sales growth to 0.7 percent per year through 2040. However, given the trend of declining per capita consumption, EIA's long-term forecasts for electricity sales growth are optimistic, the report said. Per year electricity sales growth of"perhaps just 0.5 percent seems attainable, although further inroads of efficiency likely will prove even 0.5 percent per year electricity sales growth as too optimistic." Fitch said it expects substantial regional variance from the national forecast with growth in the Southeast and Southwest. Low electricity sales growth will pressure unit costs and challenge the economics and benefits of future capital investments and rate design, as costs are allocated over a changing customer profile, the report said. Fitch said the economics of energy efficiency are compelling, as the benchmark levelized cost of electricity used to compare the cost of energy efficiency programs is substantially less than all forms of conventional or renewable power generation. Fitch expects reductions in electricity sales to increase at a rate of approximately 50 percent per year for the foreseeable future from the maturation of state efficiency programs as well as new federal standards on lighting and household appliances. The full report, Power Down II: Efficiency Gains Short Circuit kWh Sales, is available at www.fitchratings.com. ROBERT VARELA 86 http://www.naylornetwork.com/app-ppd/articles/print-V2.asp?aid=240053 10/30/2013 A:4h Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission Theresa Slominski— Finance and Office Manager John Dietz—Chair Al Nadeau—Vice Chair Daryl Thompson—Trustee MEETING DATE: AGENDA ITEM NUMBER: November 12, 2013 6.1 SUBJECT: Staff Update DISCUSSION: We had 2,491 credit card payment transactions in October, compared to 2,266 in September. The fee for October should be $5,604.75. Our employee insurance meetings are scheduled for the first week of November,November 5th and 6th, when we will be bringing in a representative from Blue Cross & Blue Shield and David Martin Agency to review the new HSA plan with staff. We have been providing information in a FAQ presentation to help answer questions and prepare employees for the decision of which insurance plan to participate in. Staff have been asking a lot of great questions, which indicates to me that they are at least considering the HSA plan. I will provide a verbal update at the commission meeting. We currently have $196,784 in PCA credits - through September's billing from our power provider and our distribution of credits in the same month. October's power bill had not been received as of the date this update is being prepared but I will continue to update the commission on this balance. As stated before, we would like to be able to distribute remaining PCA credits in December. We have begun some work with our new financial advisor, Springsted, in reviewing our bonds relative to any potential refinancing and bond arbitrage reporting. They were onsite and met with myself and staff at the City and provided some additional follow-up information. A potential for refunding does exist with our 2006A bond for a savings of approximately $120,000 over the remaining 8 years. We have our go-live dates for our NISC software! The accounting piece of the software will be implemented in August 2014 and the customer billing piece will be implemented in February 2015. This was the soonest we could get on their calendar of work. lam: ewrnto 11 { Page 1 of 1 I1 NATURE Reliable Public Power Provider POWERED To SERVE 98 Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission Mark Fuchs—Electric Superintendent John Dietz—Chair Al Nadeau—Vice Chair Daryl Thompson—Trustee MEETING DATE: AGENDA ITEM NUMBER: November 12, 2013 6.1c SUBJECT: Staff Update DISCUSSION: • Had thirteen new services. • Finished changing out a few of our older rusty live front switchgear. The new switchgear is dead front and safer to work on. • Finished rebuilding Troy and Union Street. We still have to pull some poles when Charter gets their wire off our poles. • Finished the first parts of feeder 94 rebuild. The first part of this job is removing the overhead three phase rear lot line that is located between School St. and Gates Ave. • Continue working on the second part of feeder 94 rebuild. We are installing primary wire to loop the transformers for the businesses east of Gates Ave. • After getting the new substation transformer at the north substation site back on line and the 69kv breaker changed out at the Waco substation, we had to put the feeders back to normal. • Started working on the Triple Deck Feeder rebuild. Underground Piercing got all of the pipe bored in and is now working on getting the wire pulled in the pipe. We have the new poles set along Main St. and are working on getting new wire pulled in. ® Page 1 of I INAJUREI Reliable Public Power Provider P O W E R E D T o S E R V E 99 Elk River M Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission Wade Lovelette—Superintendent of Technical John Dietz—Chair Services Al Nadeau—Vice Chair Daryl Thompson—Trustee MEETING DATE: AGENDA ITEM NUMBER: November 12, 2013 6.1d SUBJECT: Staff Update DISCUSSION: • The Locating department had a total of 403 locate tickets in October; four of them being emergency tickets, five cancelations, seven meets, 346 normal, 40 updated tickets and one boundary survey. The number of locate tickets received are starting to increase now that freeze-up is getting near. • In October, the Security Systems Department had a total of 1 1 1 phone contacts, eight systems quoted, eight system sales made, 15 installs completed, 26 service calls and eight personal visits. • Electric Technicians continue with the meter reading, power bill, substation checks and off-peak issues. They continue to change out the three phase meters to radio read meters. They are taking the annual oil samples from all of the substation transformers. • The power plant staff did the monthly run of the engines. The engines ran good with no problems. • Staff continues to collect data with the GPS for our ArcView maps as time permits. • Steve and Jeff continue directional boring on some of the rebuild projects. • The North Substation and Waco Substation upgrades are completed. We energized the new transformer at North on October 4th and fully loaded on October 7`h. Waco substation had the new circuit switcher installed the week of October 7`h. kalif II it 11 Page 1 of 1 rNA LJR Reliable Public Power Provider POWERED To SERVE 100 Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission David Berg—Water Superintendent John Dietz—Chair Al Nadeau—Vice Chair Daryl Thompson—Trustee MEETING DATE: AGENDA ITEM NUMBER: November 12, 2013 6.1e SUBJECT: Staff Update DISCUSSION: • The water department pulled well#4's pump as it needed maintenance. Eric took some great pictures that really showed how much this maintenance was needed. A meager test was performed on the well motor when it was pulled out. It only measured at .07 and it should be closer to 200, so the motor will be sent to Arizona for repair. The pump will be assessed and repaired by Renner& Sons Inc. The two pipes that are deepest down will also have to be replaced because of holes and bad threads. • Irrigation meters are coming in to be stored over winter. They will be cleaned and tested for flow before they are picked up for spring reinstallation. • Angela has been organizing the water maps to prepare them for scanning them this winter. By scanning them, we will be able to tie the maps to the GPS mapping system. She has also been working with Mike and Gene on the electric department's GPS mapping. • We had an intern from St. Cloud Technical College—Water& Wastewater Program at the end of October. The intern was able to work with each one of the employees on different water tasks throughout his week of job shadowing. • Pete finished working with Bolton-Menk to assist with finding valves to GPS. He also finished installing steel fence posts to mark gate valves. This helps to locate valves faster in the event of a water main break. • The hydrant maintenance is finished for the season, Angela and Pete painted and 252 hydrants. la WERE , IT Page 1 of 2 NATURE Reliable Public Power Provider P O W F R E a T o S E R V E 101 • The Johnson tower has been drained for the winter. We originally were going to take a chance and leave water in it; however after consulting with engineers, we were a little concerned that the tower may not get enough water transition with the lower use through the winter months. Not enough use with a tower can cause ice buildup and not allow enough fresh water to move through the system. With future building we may be able to leave the Johnson Tower active year round. ATTACHMENTS: • Article: "Minnesota's Groundwater: Is our use sustainable?" • Pictures of Well #4's pump as it was being removed R .►W IOEAEO 11 �$ Page 2 of 2AuR� Reliable P O W E E E O T o S E R V E 102 Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission Tom Sagstetter- Conservation and Key Accounts John Dietz—Chair Manager Al Nadeau—Vice Chair Daryl Thompson—Trustee MEETING DATE: AGENDA ITEM NUMBER: November 12, 2013 6.1f SUBJECT: Staff Update DISCUSSION: • Attended a half day seminar sponsored by the Environmental Initiative. The seminar was focused on utility business models and changes that are likely in the next few years to respond to all the different pressures facing the utility industry. The current policy approach seems to be one that is falling away from incentivizing increased sales and shifting to a cost/price transparency and decoupling of rates for utilities. The other trend that was emphasized was smaller community based distributed generation. The distributed generation is at individual customer owned facilities or larger third party generation facilities. This seminar was to educate regulators and utilities as to where public policy is going in terms of utility thinking around the country. The meeting was well attended by the MN Office of Energy Security. Bill Grant, Deputy Commissioner of Energy and Communications, was a key speaker at the event. ERMU will need to pay close attention in the coming years to the impacts of proposed changes to the utility industry to ensure our residential and commercial customers are not negatively impacted from wholesale policy changes at the state level as they relate to regulated utilities, municipals, and cooperatives. • I am drafting a letter for the City Council in support of the proposed solar PV installation that GRE is proposing on behalf of the Energy City Commission. At this time the site on Highway 10 does not look favorable for a site because there is limited southern exposure and the large right-of-way that runs along Highway 10. There is a possibility that GRE could install some at the RDF processing facility, but that has not been talked about in great detail at this time. • The holiday lighting contest applications and LED coupons have been sent out and we are starting to receive them back. It appears that mailing the applications to residents was beneficial for the contest. Residents can also use the new website to submit the application. • I spoke with Cal about Energy City and he communicated to me that Energy City will continue to be supported by Elk River and will most likely be the responsibility of the Economic Development department. y� �'.. 'ra111EeEO r ii J Page 1 of 2 NATURE Powerr lProovder POWERED To SERVE 129 • The landfill expansion is beginning to look more promising. I have had frequent discussions with Waste Management and it appears that the expansion is gaining momentum internally. I am also exploring the addition of combined heat and power (CHP) for electric generation at the facility. The technology would use the waste heat from the engines to boil water to make steam and turn a secondary generator to create electricity. This seems to be very popular with policy makers and could increase production from the existing and new engines. • Energy City tours have been popular. Provided a landfill tour to GRACO and will be giving a tour of the GRE processing and power plant this week. The GRACO tour had 10 engineers that were primarily interested in the operations of the landfill and power plant(specifically pumps and motors). The tour of the processing facility and power plant will be for 35 individuals from Spectrum High School. The class is interested in environmental issues and how technology helps improve the environment. • Billing corrections to Demand Billed customers. The October bills were calculated using an upgraded version of Power Manager. The upgraded software had two unintended changes when applied to the ERMU version of Power Manager. First,the Demand Billed(rate class 15) customers saw an additional line added to their bill that was labeled"Low Load Factor Credit 5". This line rounded the total energy bill up to next whole dollar. The second unintended change was increasing the sales tax charged on the same Demand Billed customers. The only billing errors discovered at this point have been to the Demand Billed customer class and staff is spot checking all rate classes to ensure no other additional charges have occurred with the software upgrade. ATTACHMENTS: • Article: "LES Gas-To-Energy Plant Goes On-Line Nov. 1" Page 2 of 2 IIIIEREI 11 NATURE Reliable Public Power Provider POWERED To SFRVE 130 • • LES gas-to-energy plant goes on line Nov. 1 Page I of 2 �Lnul.q O,iobn-24._Il0 LES gas-to-energy plant goes on line Nov. 1 .tat ft II �S � 5fr jf L� 4. tie From left: LES Administrative Board Chair Marilyn McNabb,Lincoln Mayor Chris Beutler and LES Administrator and CEO Kevin Wailes cut the ribbon for the Landfill Gas to Energy Project.Photo courtesy of Lincoln Electric System The Lincoln Electric System in Nebraska will begin operations at its new Landfill Gas to Energy Project on Nov. 1. The project is a 4.8-megawatt generating facility located at the Nebraska utility's Terry Bundy Generating Station. It is fueled by methane gas produced from decomposing waste at the city's Bluff Road Landfill, located about one mile away. A video of the plant's dedication on Oct. 4 can be viewed from LES's YouTube channel. The project began in April 2008 when the city solicited bids to evaluate the feasibility of capturing the landfill gas, LES said. In November 2011, the city and LES signed a 20-year agreement for the utility to purchase and convert the landfill's methane gas to electricity. Prior to the project, landfill gas was released through vents, LES said. To operate the plant, LES will purchase approximately 300,000 million British thermal units of the gas from the city each year. The project is expected to produce 26,000 megawatt-hours of energy annually. LES expects to pay the city about $337,000 in the first year at a rate of$1.10 per one million Btus. "LES recognized that turning the city's landfill gas into electricity could be a significant part of meeting its customers' future needs and the growing desire for more renewable energy in its power mix," Lincoln Mayor Chris Beutler said during the dedication ceremony. "It's inspiring to know that the landfill's natural byproduct is being captured and burned to create enough energy to power over 2,500 households." LES installed a gas pipeline between the landfill and the Terry Bundy Generating Station, as well as gas cleaning and compression equipment and electrical generating equipment. LES's investment for 131 http://www.naylornetwork.com/app-ppd/articles/print-V2.asp?aid=239797 10/28/2013 LES gas-to-energy plant goes on line Nov. 1 Page 2 of 2 the equipment, including pipeline, construction, engineering and other expenses has totaled $11.32 million. That is about 8.75 percent under the project budget of$12.93 million, LES said. LES's retail sales will be supplied by approximately 12 percent renewable energy with the addition of the project's units, LES Administrator and CEO Kevin Wailes said during the dedication. By 2016, the amount of renewable energy will jump to 23 percent when the utility adds 100 new megawatts of wind-generated energy that was secured through a power purchase agreement earlier this summer, said Wailes (See Public Power Daily, Aug. 6, 2013). This project is unique, compared to the utility's other intermittent renewable energy sources, because the landfill gas units can be dispatched, said Wailes. Most of the time, with renewable energy, "you're somewhat at nature's whim," said Wailes. The landfill gas units, though, "can run all of the time, or we can actually dispatch them to meet certain periods of loads," he said. "That makes them even more valuable." The plant is recovering gas from 60 acres of the 171-acre landfill, LES said. There is potential for 1,600 kilowatts of expansion, which the utility has the first rights to purchase. LES also has a 15-year extension option at the end of the 20-year agreement since the landfill is not expected to reach capacity until 2035, LES said. —FALLON FORBUSH 132 http://www.naylornetwork.com/app-ppd/articles/print-V2.asp?aid=239797 10/28/2013