04-14-2015 ERMU MIN ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
April 14,2015
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;
Tom Geiser,Assistant Electric Superintendent
Others Present: Cal Portner,City Administrator;Peter Beck,Attorney
1.0 CALL MEETING TO ORDER
John Dietz called the April 14,2015 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 5.6, Gravel Mining Area Land Use,Transportation,and Utility
Plan to New Business.John Dietz had three items to add to Other Business.
Daryl Thompson moved to approve the amended April 14,2015 Utilities agenda. Al
Nadeau seconded the motion.Motion carried 3-0.
2.0 CONSENT AGENDA(Approved By One Motion)
John Dietz had a few questions on the financials, staff responded.
Al Nadeau moved to approve the Consent Agenda as follows:
2.1 March Check Register
2.2 March 17,2015 Previous Meeting Minutes
2.3 Financial Statements
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Regular meeting of the Elk River Municipal Utilities Commission
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Daryl Thompson 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 Financial Audit
Andrew Berg was present from the auditing company, Abdo, Eick&Meyers,to present the
2014 financial audit and management letter. The auditors issued a clean opinion on the
financials. There were no findings to be reported. The Commissioners had a few questions
for Andrew Berg and staff. Both responded. Discussion followed.
John Dietz inquired as to whether we were going continue using Abdo, Eick&Meyers to
prepare our reports for the audit. Theresa Slominski thought that we were under contract
with them for another year at which time we would do another RFD and revisit the idea to
determine what would be the best course of action. The Commissioners thanked Theresa
Slominski and her group for a job well done.
Daryl Thompson made a motion to receive and file the 2014 Financial Audit. Al
Nadeau seconded the motion. Motion carried 3-0.
5.2 2014 Year-End Reserve Balances
The purpose for reserves to a public utility is to meet bond covenants and provide a
financial buffer to mitigate unforeseen or volatile operational costs. In 2010,the
commission adopted a financial reserves policy that defined the structure and formula on
how financial reserves will be calculated for the Electric Utility and Water Utility funds.
As defined by policy,the year-end reserve balances are to be reviewed after the completion
of the audit. These balances, if above their target levels, shall be unrestricted with a default
designation as working capital. The commission shall then consider the optimal use of
these restricted reserves.
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Regular meeting of the Elk River Municipal Utilities Commission
April 14,2015
Theresa Slominski presented the year-end reserve balances. The balances above target
levels for the Electric Utility fund could be set aside to pay off debt,pay electric service
territory transfer costs, or to help buy into our purchase power contract. The balances
above target level for the Water Utility fund could be designated for futures capital
infrastructure costs. John Dietz wanted to know how much cash we were going to have to
come up with for the first part of the territory acquisition this fall, and if that money would
come out of the reserves. Staff responded.
5.3 2015 Vehicle Purchases
Approved in the 2015 budget were a F250 pickup truck and a Ford Explorer SUV. For
2015, Midway Ford was awarded the State Bid for Ford. Wade Lovelette presented the
quote from Midway Ford for the 2016 Ford Explorer and distributed the quote he had just
received for the F250 pickup. If the commission would like to keep the purchases of the
vehicles local, staff will request a quote from the local Ford dealer. Staff recommended
approving the purchase of the two vehicles from either Midway Ford with the State
Contract pricing, or the local dealer, Cornerstone Auto Group, if their quote comes in
within$500.00 per vehicle of the state pricing. There was further discussion.
Al Nadeau made a motion to approve the vehicle purchases from Cornerstone Auto
Group if their pricing is within $500.00 per vehicle of the state pricing and if not,
purchase the vehicles from Midway Ford with the state pricing. Daryl Thompson
seconded the motion. Motion carried 3-0.
5.4 Utilities Performance Incentive Compensation Distribution
The Commission adopted a Performance Metrics program in December 2012, for
implementation January 1, 2013. The performance metrics were monitored and provided
as updates to the employees and commission on a quarterly basis throughout the year. This
allowed for corrective action to be taken in order to meet the targets for the program. The
program worked exactly as intended as we witnessed employee motivation and efforts
aligned to improve company performance for deficient criteria.
Troy Adams presented the scorecard showing that employees had successfully achieved all
of the company performance metrics, except for one; the CAIDI metric. Per the policy,
qualifying employees would be eligible for a 95% distribution.
Al Nadeau made a motion to award the 1.9% incentive compensation distribution to
qualifying employees per the policy. Daryl Thompson seconded the motion. Motion
carried 3-0.
5.5 Tom Bovitz Memorial Scholarship Award
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Regular meeting of the Elk River Municipal Utilities Commission
April 14,2015
On January 8, 2013 the Utilities Commission approved ERMU participating in the
Minnesota Municipal Utilities Association(MMUA) Tom Bovitz Memorial Scholarship.
This award program is offered by MMUA to promote public power and increase goodwill
within public power communities. Because ERMU is a MMUA member, high school
seniors that are ERMU customers, or those who have a legal guardian that is an ERMU
customer, are eligible. The Utilities Commission approved awarding a local winner a$500
scholarship.
Michelle Canterbury presented the winning essay of the Tom Bovitz Memorial Scholarship
award. The essay topic was "Municipal Utilities: Good for All of Us." The Commissioners
thought the essay was very well written and wanted to invite the winner to the next
commission meeting for recognition of the achievement.
5.6 Gravel Mining Area Land Use, Transportation, and Utility Plan
Eric Volk shared that the Elk River City Council approved the Gravel Mining Plan last
Monday at the city council meeting. The plan covers two areas which are likely to develop
in the future. The areas will be broken down into three sections; 274 acres for housing, 119
acres for highway business, and 133 acres for industrial. Elk River Municipal Utilities
contributed $8,000 to incorporate the development of the water distribution system into the
plan. Eric went over how the development would impact our current water system and
some of the proposed water upgrades. There was further discussion.
6.0 OTHER BUSINESS
Commission Stipends -John Dietz requested staff conduct a survey as to what other
MMUA members do for commissioner stipends and how often it's reviewed. Troy
recommended establishing some type of plan that would be reviewed annually.
Lineworker Appreciaton-John Deitz shared that he recently wrote an article on the value of
lineworkers for the next city Current newsletter. He said that lineworkers put their lives on the
line every day and he'd like to see some way for us to recognize them;possibly a day of
appreciation. He recommended that staff take a look at this and come up with something,or a
day,to recognize our lineworkers contributions.
Effect of Territory Acquisition on Large Commercial Customers-John Deitz received an
email from a large commercial customer regarding the impact the acquisition would have on
their rates. He was concerned on how this switch was going to impact our large commercial
customers,he encouraged staff to be pro-active and address these issues before the takeover
takes place. There was further discussion. Troy Adams recommended that any concerned
commercial customers contact Tom Sagstetter who would be able to analyze their usage and
rates and address any concerns they may have. There was further discussion.
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Regular meeting of the Elk River Municipal Utilities Commission
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6.1 Staff Updates
Troy Adams shared that he attended the Connexus annual meeting this morning. He wanted to
shake hands and thank their Board for working in a positive manner to come to an agreement on
the service territory. Overall,they seemed very happy that we not only came to an agreement,
but were also able to negotiate an emergency interconnect agreement.
Theresa Slominski didn't have anything to add. John asked if the trip to Mandan was
successful. Theresa shared that we were encouraged by their desire to listen and their feedback
on their commitment to respond to our concerns. The true test will be in the follow-up that
occurs to see if their actions match their words.
Mark Fuchs added that we'll be working with Connexus to get things in order for the first part of
the territory acquisition beginning this September.As this is the largest part of the acquisition,
approximately 50%of the customers in the whole acquisition,we'll be taking it in two separate
chunks.
Wade Lovelette added that Engine 3 is now up and running;it's available to run if GRE requests
us to do so.
Tom Sagstetter said that one of the engines at the landfill is still down due to a breaker problem.
The Expo was this past weekend,and Tom shared that that they had a good turnout and
feedback at the Expo this past weekend. The most common comment we received from
residents was they're happy we got rid of our eco-envelopes.Tom Sagstetter met yesterday with
the city and the county regarding the possibility of a data center coming to town. John Dietz
had a question on where the Landfill Gas expansion was at. Staff responded.
6.2 Set Date for Next Meeting
The next regularly scheduled Commission meeting will be held on May 12,2015.
The Commission recessed the regular meeting at 4:35 p.m.
6.3 Closing of Meeting: "Meeting to be Closed pursuant to MN Statute 13D.05, Subd.
3(a) for Employee Performance Evaluation."
a. Call Closed Session to Order
b. Discussion
c. Adjourn Closed Session
Daryl Thompson made a motion to increase Troy Adams' salary to $129,000 per year.
Al Nadeau seconded the motion. Motion carried 3-0.
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Regular meeting of the Elk River Municipal Utilities Commission
April 14,2015
6.4 Adjourn Regular Meeting
There being no further business,John Dietz adjourned the regular meeting of the Elk
River Municipal Utilities Commission at 5:40 p.m.
Minutes prepared by Michelle Canterbury.
1% , \ 11•40
Air
hn .Dietz 1
Chair,E' Y Commission
Tina Allard
City Clerk
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Regular meeting of the Elk River Municipal Utilities Commission
April 14,2015