2.2. ERMUSR 02-10-2015 ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
January 13,2015
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;
Jennie Nelson,Customer Service Manager
Others Present: Cal Portner,City Administrator;Peter Beck,Attorney
1.0 CALL MEETING TO ORDER
John Dietz called the January 13,2015 meeting to order at 3:30 p.m.
1.1 Pledge of Allegiance
The Pledge of Allegiance was recited.
1.2 Consider Utilities Agenda
Troy Adams added agenda item 1.3,Introduction of Promoted Employee.
Al Nadeau moved to approve the amended the January 13,2015 Utilities agenda. Daryl
Thompson seconded the motion.Motion carried 3-0.
1.3 Introduction of Promoted Employee
Mark Fuchs introduced Tom Geiser as the new Assistant Electric Superintendent. The
Commission congratulated him on his promotion.
2.0 CONSENT AGENDA(Approved By One Motion)
Daryl Thompson and John Dietz had a few questions on the financials,staff responded.
Daryl Thompson moved to approve the Consent Agenda as follows:
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2.1 December Check Register
2.2 December 16,2014 Previous Meeting Minutes
2.3 Financial Statements
2.4 2015 Tariffs
2.5 2015 Tri-County Action Program Services Agreement
Al Nadeau seconded the motion. Motion carried 3-0.
3.0 OPEN FORUM
No one appeared for open forum.
4.0 OLD BUSINESS
There was no old business.
5.0 NEW BUSINESS
5.1 2014 4th Quarter Delinquencies
Theresa Slominski presented the delinquent items for the fourth quarter. Our budgeted
amount for collections and write-offs are $105,000 or .32%Uncollectable Accounts per
Revenue Dollar. Our write-offs for the year are well below that number, at a total of
$16,276.79 or.05%. According to APPA's most recent published standard ratios (2012),
the industry standard is between .10%and .41%. Theresa shared that we have a significant
balance with Revenue Recapture and we'll begin to see those amounts coming in the first
quarter of 2015. The Commission had a few questions. Staff responded.
Al Nadeau made a motion to approve the 4th Quarter Delinquencies. Daryl
Thompson seconded the motion. Motion carried 3-0.
5.2 Customer Deposit Policy Review
In 2008 and 2009 the downturn of the economy resulted in a significant increase in utility
customer delinquencies, customer disconnections due to those delinquencies, and then
ultimately bad debt being written off ERMU began addressing this issue through
procedural and policy changes in an effort to minimize risk and limit subsidization of the
bad debt. In March of 2010 the Utilities Commission adopted a Customer Deposit Policy.
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Since this policy was adopted in 2010, the economy has begun to recover and we've added
additional tools to help us collect on bad debt. However, the risk remains even if bad debt
write off has decreased. Troy Adams wanted to review the policy to ensure it adequately
protects our customers, is not too burdensome to administer, and that it is not too restrictive
that it stifles growth and economic development.
Tom Sagstetter had done some research on what others in our industry were doing in terms
of required deposits for commercial accounts. They ranged from two months of their
average projected usage to only requiring a deposit if there is evidence of delinquency.
One of our peers had a policy similar to ours,requiring two months of their average
projected usage with the option of waiving the deposit if they sign up for bill pay. Troy
Adams added that our deposit policy amount was established to cover the risk,but can also
be large enough that it may be a barrier to attracting commercial customers into ERMU
service territory. Jennie Nelson shared that we've had to put more deposits on accounts and
there's been pushback from both residential and commercial customers.
There was discussion on how to reduce the risk without increasing the burden. One idea
was shortening the time between usage and payment by implementing bi-monthly billing
for commercial customers. While this is not possible with our current system, it may be
possible after the transition to our new billing software. Other items of discussion were pre-
pay,bank pay, letter of irrevocable credit and personal guarantee.
John Dietz requested staff look into this further and bring back some options that will help
protect us and reduce our risk even further. Staff will continue to analyze and bring back
ideas as they find ways to reduce risk and improve the process.
5.3 Wastewater SCADA Water Tower Attachments
The City of Elk River Wastewater Treatment Department needs to utilize two of our water
towers to install SCADA antennas to transmit information back to the wastewater treatment
plant from the surrounding lift stations. Eric Volk has been working with Matt Stevens,
Chief Operator of the Wastewater Treatment Department, on the process of getting their
SCADA antennas attached to the Gary and Auburn Street Towers. The plans have been
generated and approved and we're now looking at how to proceed regarding a contractual
agreement between the City of Elk River Wastewater Treatment Plant and Elk River
Municipal Utilities.
Troy Adams explained that we'd like to put together a memorandum of understanding that
would layout notice times. Eric Volk presented three different options for the compensation
part of the agreement. Troy added that with an attachment to a tower there is an opportunity
cost for that space, and as we don't currently have a buyer for that space we wouldn't need
to charge the city to attach to the tower. We're looking at recognizing the value of being
able to attach to the tower for each antenna, and donating that amount back as a pilot. As
the Wastewater Treatment Department is an enterprise fund,they would be financially
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responsible for their electric usage. We're bringing this to the Commission because it's
outside of our policy. Peter Beck and Cal Portner both agreed that it would be wise to get
an agreement in writing so that everyone is on the same page and everyone is being treated
equally. Moving forward utility staff will know one set of rules that applies to everyone.
The Commission was in support of getting the paperwork and an agreement put together.
6.0 OTHER BUSINESS
There was no other business.
6.1 Staff Updates
Troy Adams wanted to highlight the first note in his staff update. Today is a significant day in
ERMU's history. The founder of Elk River Power and Light,Fred Waterman,passed away on
this date in 1921. Stores and business closed during his funeral and two days later to allow all to
pay tribute to the man who had brought power to Elk River. In addition,the power was shut off
for fifteen minutes during his funeral to recognize his passing;that's so significant. Troy asked
what local leader could pass away today where you would shut the town down. That was the
impact that we had at the roots of our company and it really effected our growth. This is such an
important part of our company history.
Theresa Slominski added,that in the interest of full disclosure,when NISC was here last week it
became apparent that they were behind in getting us ready for our live implementation on
February 2nd. One of the main reasons for this is the Project Manager we were working with
from NISC. Since voicing our concerns,they've really stepped up and are doing everything
they can to get us up to speed.We have told them that we have to meet our deadline and that we
need them to do whatever they need to do to make it work. The last thing NISC wants is a failed
implementation. Troy Adams added that we called them last week and gave them an
ultimatum;delaying the live date was not an option. What we had was an issue with a person
and now we're seeing how the company responds to that and steps up.There was further
discussion.
6.2 Set Date for Next Meeting
The next regularly scheduled Commission meeting will be held on February 10,2015.
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
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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 4:14 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
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