03-15-2016 ERMU MIN• ELK RIVER MUNICIPAL UTILITIES
SPECIAL MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
March 15, 2016
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;
Mike O'Neill, 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 March 15, 2016 meeting to order at 3:30 p.m.
• 1.1 Pledee of Alleeiance
•
The Pledge of Allegiance was recited.
1.2 Commission Oath of Office, Election of 2016 Commission Officers, and 2016 Committee
Appointments
Michelle Canterbury administered the oath of office for Utilities Commissioner John Dietz.
When a new commissioner starts or an existing commissioner starts a new term, the officer and
committee positions can change by election. The three commissioners discussed the different
office and committee positions.
Daryl Thompson made a motion to reappoint John Dietz for Chair, Al Nadeau as the
Vice -Chair, and Daryl Thompson as the Trustee. Al Nadeau seconded the motion.
Motion carried 3-0.
Daryl Thompson made a motion to reappoint John Dietz as Chair to the Wage and
Benefits Committee and Financial Reserves and Investment Committee. Al Nadeau
seconded the motion. Motion carried 3-0.
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Special meeting of the Elk River Municipal Utilities Commission
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• 1.3 Consider Utilities Agenda
There were no additions or corrections to the agenda.
Daryl Thompson moved to approve the March 15, 2016 Utilities agenda. Al Nadeau
seconded the motion. Motion carried 3-0.
1.4 Introduction of New Employee
Eric Volk introduced Nick Adams the new Water Operator. Nick shared a little about himself
and his background. The Commission welcomed the new employee.
1.5 Recognition of Employee Achievement
Troy Adams announced that Tom Sagstetter was reelected as Chair to the Energy City
Commission. The Commission congratulated Tom on his achievement.
2.0 CONSENT AGENDA (Approved By One Motion)
John Dietz had a few questions on the financials, staff responded.
Daryl Thompson moved to approve the Consent Agenda as follows:
• 2.1 February Check Register
2.2 February 9, 2016 Previous Meeting Minutes
2.3 Financial Statements
2.4 Comments of the Minnesota Department of Commerce, Division of Energy
Resources; Notice of Minnesota Public Utilities Commission Meeting
2.5 Short Elliott Hendrickson Agreement for Professional Services — WTP #7 Expansion
2.6 Water Treatment Plant #7 Expansion Conformed Contract
2.7 Verizon Non -Exclusive Lease Agreement and Memorandum of Tower Lease
Agreement - Auburn Street Water Tower
2.8 New NISC Software and Service Agreement
2.9 2015 Annual Safety Report — Revised
•
Al Nadeau seconded the motion. Motion carried 3-0.
3.0 OPEN FORUM
No one appeared for open forum.
4.0 OLD BUSINESS
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Special meeting of the Elk River Municipal Utilities Commission
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0 4.1 Jackson Street Water Tower Rehabilitation Update
Last July Zack Carlton, Planning Manager with the City of Elk River, gave an update to the
Utilities Commission on the restoration status of the Jackson Street Water Tower. At that
time Collaborative Design Group (CDG) had submitted the final draft of the Jackson Street
Water Tower Conditions Assessment. The draft included a preliminary estimate of $85,000
to restore the structure; of which $5,500 was for additional architectural drawings and
specs that would needed. City staff was going to evaluate grant opportunities to aid in the
restoration.
Zack Carlton was present, and provided an update on where they were at in the grant
application process. He explained that they were ineligible for the first grant they applied
for. However, there are two or three other grant opportunities they are looking at. Zach
shared that the first step in the process would be getting the additional architectural
drawings and specs completed, which would cost approximately $5,500. Zack went over
the three different grants and the timing of them. He explained that because of the grant
application deadlines we would only be able to apply for two of the grants. It may be in our
best interest to pay the $5,500 up front to get the drawings completed in time to apply for
the May 27 Minnesota Historical and Cultural Heritage Grant which would cover 100% of
the remaining $80,000 of work, and if we don't receive that grant we would still have time
to apply for the State Capital Project Grant the end of July that would offer a 50% match of
the remaining $80,000 of work. There was further discussion. As ERMU currently has
• money set aside for this project, John Dietz asked if we could proceed forward with the
project and reimburse ERMU once we receive the grant. Zach Carlson responded that the
work can't begin before you receive approval of the grant. There was further discussion.
The Commission was in consensus to move forward with ERMU paying the $5,500 out of
pocket in order to be able to meet the application deadlines of the two other grants.
•
4.2 American Public Power Association 2016 Public Power Lineworkers Rodeo Update
The American Public Power Association (APPA) Lineworkers Rodeo is quickly approaching.
Mark Fuchs shared that registration, judges meetings, and apprentice written testing takes place
on Friday, April 1, and the actual rodeo is held April 2, at Canterbury Park in Shakopee, MN.
The opening ceremony and flag raising will take place at 8:00 am. Mark stated that we
currently have one journeymen team participating; which consists of three people for each
event, and two apprentice lineworkers that will compete in individual events. Mark explained a
little bit about the events and how they will be judged. John Dietz asked if there were many
employees planning on attending the event. Staff responded that there are quite a few people that
want to attend, and there will also be a few opportunities to work at the event. Troy Adams
shared that we'll have a few of our employees working at our informational booth and others
that will be judging, greeting and auditing at the event. There was further discussion. Daryl
Thompson recommended reaching out to the local government cable access contact to see if
they would be willing to come cover the event. Troy Adams shared a few other details about the
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• event including our lineworkers working with a tattoo artist to come up with a design to be used
on the t -shirts and hats they wear at the event. Troy added that anyone who competes or works
at the event will receive a shirt, and any other employees will have the opportunity to purchase
one. As more than one commissioner may attend the rodeo, staff will notice of a possible
quorum.
5.0 NEW BUSINESS
5.1 American Public Power Assoication 2016 Legislative Rally Update
Troy Adams and Tom Sagstetter provided an update on the American Public Power
Association (APPA) Legislative Rally that they recently attended in Washington D. C.
Troy shared that three of the big topics this year were: the push for federal standards on
solar gardens, EPA's clean power plan, and transmission. Troy added that the networking
and knowledge he gained in regards to the definitions of what we can put into our CAPX
and attachment O, made the time spent to attend the rally well worth it. This was Tom
Sagstetters first time attending and he thought it was pretty impressive. The big
conversation points for him were: community solar and keeping it local, and too much
regulation too fast. There was further discussion.
• 5.2 Landfill Gas Plant 2015 Operational Results
Each year Elk River Municipal Utilities (ERMU) can provide bonus payments to
Sherburne County and Waste Management/Elk River Landfill provided the financial means
and plant capacity factors are met. Tom Sagstetter shared that the landfill gas plant (LFG)
had a capacity factor of 95.49% in 2015, and measured production of approximately 25.5
million kWh. Based on the exceeding the production standards for 2015, Waste
Management/Elk River Landfill received a bonus payment of $2,584.59, and Sherburne
County received a bonus payment of $20,000. Tom noted that the bonus payment to Waste
Management/Elk River Landfill was lower than usual due to mechanical issues with a worn
circuit breaker and finding replacement equipment that resulted in an extended period of no
production from one unit. These issues have been resolved and moving forward there
should not be any major sourcing problems for replacement equipment.
•
5.3 Electric Vehicle Charging Opportunities
Clean and renewable energy are two areas that are very important in today's energy market.
The City of Elk River, Energy City Commission, and ERMU have been evaluating the
possibilities of adding clean electric vehicles to the city fleet and the charging possibilities
for the fleet and the Elk River community. The focus of the research so far has been on
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possible vehicle types, partnership opportunities, and funding options that include tax
credits and grants.
The benefits of electric vehicles are numerous, but one of the biggest barriers in this market
is range anxiety. The main factors to range anxiety are the type of vehicle being used and
the network of acceptable charging stations. Tom Sagstetter went over the different types
of vehicles and their charging requirements. He also gave some background on the vehicle
charging equipment and the three different levels that are available. Daryl Thompson asked
how the electric vehicles contribute to the road tax. Staff responded that at the present time
they don't. There was further discussion. Troy Adams added that by supporting and
marketing this green initiative we would also strategically capture load growth. There was
further discussion. Staff will continue to keep the Commission informed on the research
being conducted and the potential of electric vehicles and programs that may be provided
to the City of Elk River and surrounding community.
5.4 MMPA Buy -In; Bond Refunding Options
Theresa Slominski shared that when our purchase power contract was negotiated with
MMPA to be our power provider in 2018, it was noted that ERMU would have to buy -in to
the agency for its proportionate share of the infrastructure and assets in order to be a
member and receive power. As interest rates are currently lower and will most likely be
• higher in 2018, staff met with Springsted to discuss options for an early payment towards
our buy -in. The discussions with Springsted centered around being able to take advantage
of the current low interest rates, and the timing of the bonding so as not to jeopardize any
bonding the City would be doing.
•
In recent conversations with David Niles from MMPA, it was determined that Elk River
Municipal Utilities' buy -in today is estimated to be just under $14,000,000, and projected
to be as high as $18,000,000 in 2018 when we actually become a power purchasing
member. It's important to note that this is greater than originally projected in 2014 because
of two factors: first, ERMU has grown in load and customer size faster than other members
effectively increasing our load ratio; second, MMPA continues to have growing reserves.
Since the City is not bonding this year, ERMU is considering a bond amount for the
maximum of $10,000,000. In addition to any payment made this year, in 2018 there would
need to be a "true -up" of the buy -in amount that would need to be made with cash or
additional bonding. Theresa shared that they are working on setting up a meeting with
Springsted for later this month to look at bond refunding options for our 2007A Electric
Revenue Bonds. The commission had a few questions. Staff responded. John Dietz
expressed some concern with what the public perception will be when the rate payers hear
that it's going to cost $18,000,000 million dollars to join MMPA. It will be important to
relay what this means for them and how they will benefit from it. Staff responded that there
will be a significant cost savings for our purchased power once we are with MMPA; the
projections now are approximately $2,000,000 per year. While this cost savings margin
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• could be different in 2018, we should still be able to re -coup our buy -in investment within
5-10 years, keep rate increases very minimal, and have better rates for our customers over
the long term. John Dietz said that based on the low interest rates and the city not bonding
this year, we might as well use the $10,000,000. Staff noted that the bond would be
structured to pay interest only until 2018.
6.0 OTHER BUSINESS
6.1 Staff Updates
Troy Adams stated that the 2016 American Public Power (APPA) National Conference is being
held in in Phoenix, Arizona this June. Based on some additional expenses associated with the
Lineworkers Rodeo, and that he may have the need to attend the National Information Solutions
Cooperative (NISC) conference this fall, he proposed that we hold off on sending anyone to the
APPA National Conference this year. The Commission was in agreement. Troy shared that
April is typically the month his annual review is held. In preparation of the review, staff will be
sending out the electronic survey and will be adding a closed meeting for the performance
evaluation to the April commission meeting agenda. Troy gave an update on the expansion of
the Commission and shared that there are two hearings scheduled for it tomorrow at the State
Capitol. Troy will be testifying at the hearings and reached out to the Commissioners to see if
any of them would like to attend. Last, Troy shared that the Minnesota Public Commission
Meeting (MPUC) hearing to approve the electric service boundary change has been scheduled
• for next Thursday, March 24. Troy plans to attend that hearing as well.
Theresa Slominski let the Commission know that moving our hosted server from the NISC
location to our own local server here has proven to be very valuable. A few of the things we've
already benefited from are increased speed and reliability. John Dietz asked how everything
went with the auditors. Theresa responded that everything went well and that she expects to
receive the first draft sometime next week.
Mark Fuchs' staff report indicated that the City shop is in the process of doing the annual DOT
vehicle inspections for our bucks and trailers. John Dietz inquired as to whether the city does
the inspections on all of our vehicles; including the lineworker trucks. Staff responded. There
was further discussion.
John Dietz asked if Mike O'Neill was going to have the information he requested on the security
department at the next commission meeting. Mike O'Neill shared that staff has been working
on a cost analysis of the security department and should be able to provide that information at
the April commission meeting.
Eric Volk wanted to thank the City Parks Department who came out and performed some tree
and brush removal around Well #3. The work, which would have taken us days, was completed
in just one morning. John Dietz wanted to know what the timing was on the Water Treatment
Plant #7 Expansion Project. Eric shared that we anticipate groundbreaking around June 1 st.
•
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C
Eric also gave a breakdown of the entire timeline of the project which will likely be completed
mid -year 2017.
Tom Sagstetter added that there has been lot of interest from residential customers who are
evaluating the possibility of Solar PV on their roof tops in 2016. With the increasing interest,
ERMU staff is working with City staff to draft a Solar PV ordinance that meets the needs of
both the City and ERMU. Tom stated that we should have no problem spending our solar PV
rebate for 2016. There was further discussion on solar gardens. Tom Sagstetter also announced
that the annual Business and Job Expo will be held at the Elk River High School, Sunday, April
3, 2016. As more than one commissioner may be attending the event, Peter Beck recommended
noticing of a possible quorum.
6.2 Set Date for Next Meeting
The next regularly scheduled Commission meeting will be held on April 12, 2016.
The Commission recessed the regular meeting at 4:42 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. Adiourn Closed Session
6.4 Adiourn Regular Meeting
Al Nadeau moved to adjourn the regular meeting of the Elk River Municipal Utilities
Commission at 4:49 p.m. Daryl Thompson seconded the motion. Motion carried 3-0.
Minutes prepared by Michelle Canterbury.
Tina Allard
City Clerk
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