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2.2. ERMUSR 12-16-2014 ELK RIVER MUNICIPAL UTILITIES SPECIAL MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM November 18,2014 Members Present: John Dietz,Chair;Al Nadeau,Vice Chair;and Daryl Thompson,Trustee ERMU Staff Present: Troy Adams,General Manager; Theresa Slominski,Finance and Office Manager; Mark Fuchs,Electric Superintendent; Eric Volk,Water Superintendent; Wade Lovelette,Technical Services Superintendent; Tom Sagstetter,Conservation&Key Accounts Manager; Michelle Canterbury,Executive Administrative Assistant Others Present: Cal Portner,City Administrator 1.0 CALL MEETING TO ORDER John Dietz called the November 18,2014 meeting to order at 3:30 p.m. 1.1 Pledge of Allegiance The Pledge of Allegiance was recited. 1.2 Consider Utilities Agenda Al Nadeau moved to approve the November 18,2014 Utilities agenda. Daryl Thompson seconded the motion.Motion carried 3-0. 2.0 CONSENT AGENDA(Approved By One Motion) John Dietz had a few questions on the new financials,staff responded. Daryl Thompson moved to approve the Consent Agenda as follows: 2.1 October Check Register 2.2 October 21,2014 Previous Meeting Minutes 2.3 Financial Statements 2.4 Assessments 2.5 2015 Water Treatment Chemical Bids Al Nadeau seconded the motion. Motion carried 3-0. Page 1 Special meeting of the Elk River Municipal Utilities Commission November 18,2014 21 3.0 OPEN FORUM No one appeared for open forum. 4.0 OLD BUSINESS There is no old business. 5.0 NEW BUSINESS 5.1 Performance Metrics 3rd Quarter Update Theresa Slominski presented the Performance Metrics third quarter update. Staff is on target for all metrics except one; the CAIDI reliability metric. CAIDI is the average outage duration, or average restoration time. The goal is 2 hours or less and we are just under 3 hours for the metric calculation. This is certainly not indicative of our capability,but rather a factor of the increased"critter activity"that has plagued us this year. Noting these items indicates that the metrics goals are probably not set too low for easy achievement,but offer some challenge to meet them. An update was also given on the employee turnover metric which is currently on target,but has the possibility of falling below the benchmark if we were to lose one more employee in the fourth quarter. 5.2 Wage and Benefits Committee Update—Cost of Living Adjustment On November 6, the Committee reviewed cost of living adjustments(COLA)numbers from our market. Although some numbers were still preliminary, the comparable sample indicates some market stability with all samples falling within a very tight range; the average being 2.75%. John Dietz shared that the Committee also discussed the recently created pay plan groups which were created to allow flexibility for the adjusting to multiple workforce markets. Because of the recent corrective adjustments made, the Committee felt that the pay plan is currently providing market equality for all four groups. The Committee believes that because of this current equality, the 2015 COLA should be applied equally to all four pay plan groups this year. Because of the work that went into recent pay plan group adjustments, the Committee discussed maintaining pace with the comparable market trend. This would result in a COLA of 2.75%. Troy Adams reached out to the Commission to see if they would like any additional information or would like the Committee to research any additional issues before next Page 2 Special meeting of the Elk River Municipal Utilities Commission November 18,2014 22 month. If not,the Committee will bring back the proposed COLA to the December Commission meeting for approval in the 2015 budget. 5.3 2015 Budget: Rates and Review Troy Adams presented the 2015 electric and water rates. The 2015 wholesale power rates have been approved by the GRE board which results in a projected 3% impact to ERMU. This increase in wholesale power costs are passed through in ERMU's retail rates. The proposed ERMU budget reflects a projected 3%rate increase in electric. There are still a number of variables to be analyzed prior to the budget being approved in December. Staff will be working to get accurate growth projections from our larger commercial customers as well as new residential growth. An analysis of the proposed rate increase will be done for a number of usage patterns within the different rate classes and will be provided to the Commission in December with the proposed budget. Troy also went over some of the noteworthy items in the electric budget including the delayed vehicle purchase. There was further discussion. The water increase is part of a three year plan that was implemented in 2013. The plan included slowly increasing the first tier and the base rate by 4%while phasing out the senior citizen rate. The plan was also designed to make the difference between the tiers less significant and to build up reserves to pay for capital improvement projects. The 2015 budget is based on implementing the 3rd year of the three year plan. John Dietz had a few questions. Staff responded. A more detailed analysis of the proposed rate increase will be provided to the Commission in December with the proposed budget. John Dietz had a question on how we arrived at our anticipated water revenue for next year. Staff responded. EricVolk shared that some of the numbers in his 2015 expense budget may look a little different than this year's numbers. Eric went over a few examples. Eric explained that some of the accounts have been condensed which results in either a higher dollar amount or a zero dollar amount being reflected. Eric Volk had one other item; commercial irrigation rates. Currently we have a commercial irrigation rate that covers irrigation meters when they're in service. This rate was established for commercial customers that turn their irrigation meters into us each fall. As we have a few customers that keep their meters year round versus turning them in,we want to add a new annual irrigation rate that would be used for those customers. There was further discussion. The new rate will be added to the 2015 tariff sheet and brought to the Commission for approval in January. Theresa Slominski commented on the $76,000 line item in the administration capital budget for the new company-wide software. She explained that we had budgeted$100,000 last year for the purchase of the software and based on the implementation timeline, it has been broken up in different quantities than we expected. The ABS portion that was implemented in 2014 was a significantly smaller portion of the $100,000 that was budgeted, and the Customer Care &Billing(CC&B) is three quarters of the expense which Page 3 Special meeting of the Elk River Municipal Utilities Commission November 18,2014 23 will be reflected in 2015. We have also budgeted$45,000 for our share of the new phone system. John Dietz commented that the electric department has a very small margin. Troy Adams said that staff could take a look at cutting some things out of our expenses and also look at what we can do to grow that margin. Troy Adams also elaborated on the electric budget summary fund from reserves and how that relates to our one time capital expenditures. There was further discussion. There was extensive discussion on the training and travel budget; in particular the APPA Legislative Rally held in Washington, D.C. The Commission was leaning towards having just one person attend every other year. Troy Adams commented that if the Commission were to establish an every other year policy for attending the rally, it may be worth taking a looking at the schedule of national elections to try to figure out which years would the best ones to attend. After further discussion, the Commission was in consensus to have one person attend the rally in 2015, and in moving forward consider it on a year by year basis. 6.0 OTHER BUSINESS There was no other business. 6.1 Staff Updates Troy Adams added that the property north of the utilities plant,located at 1437 Main Street,had a fire the other day. If the fire prompts the owners to sell,we may have the potential to purchase the property. Troy also shared that we'll be having an employee recognition luncheon on December 1st at 11:30 a.m.to recognize significant milestones in years of service. The Commissioners were invited to attend the event. Theresa Slominski received notice that the pay equity report will be due January 31,2015. We've been monitoring that throughout the year and don't anticipate having problems with being in compliance. John Dietz had a question on whether we anticipated any other PCA's this year. Staff responded.There was further discussion on when we would give back the PCA credit to our customers. Eric Volk gave an update on the Twin Lakes water main project. The contractor had until October 31St to finish the project,after which they would start to incur liquidated damages of $500.00 per day. As they were not going to be able to finish on time,we gave them a week extension provided they cover any incidentals that came up throughout the project. As the contractor failed to get the project completed by the new deadline,they started incurring liquidated damage on November 8th. The contractor still needs to pass a pressure test and conduct two days of bacteria testing. Eric Volk informed the Commission that a perpetual plaque to recognize our volunteers has been ordered and we anticipate having it for our Page 4 Special meeting of the Elk River Municipal Utilities Commission November 18,2014 24 December Commission meeting. We'll be inviting the Harley Davidson Owners Group (HOGS)to that meeting for formal recognition. Tom Sagstetter said that the$12,000 energy rebate we were able to give to CAER was a good one to be able to give. He explained that each year we need to spend a percentage of our gross operating revenue from residential retail sales on low income,and in the past we've had a hard time delivering these low income programs to clients. In this case we were actually able to apply that spending requirement to CAER's rebate. Tom also shared that he gave a presentation at the Annual American Institute of Architects Convention. It was a national audience for Energy City and Elk River Municipal Utilities and was attended by approximately 120 architects. 6.2 Set Date for Next Meeting The next regularly scheduled Commission meeting will be cancelled due to a scheduling conflict,and a special meeting will be held on December 16,2014. The Commission recessed the regular meeting at 4:12 p.m. 6.3 Closing of Meeting: "Meeting to be Closed pursuant to MN Statute 13D.05, Subd. 3(c)(3) to develop or consider offers or counteroffers for the purchase or sale of real or personal property." a. Call Closed Session to Order b. Discussion c. Adjourn Closed Session 6.4 Adjourn Regular Meeting Al Nadeau moved to adjourn the regular meeting of the Elk River Municipal Utilities Commission at 4:23 p.m. Daryl Thompson seconded the motion. Motion carried 3-0. Minutes prepared by Michelle Canterbury. John J.Dietz Chair,ERMU Commission Tina Allard City Clerk Page 5 Special meeting of the Elk River Municipal Utilities Commission November 18,2014 25