06-14-2016 ERMU SPECIAL MIN ELK RIVER MUNICIPAL UTILITIES
SPECIAL MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
June 14,2016
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
Jennie Nelson,Customer Service Manager
Others Present: Cal Portner,City Administrator;Peter Beck,Attorney;
Terri Heaton,Springsted Senior Vice President/Client Representative
1.0 CALL MEETING TO ORDER
John Dietz called the June 14,2016 meeting to order at 2:30 p.m.
1.1 Pledge of Allegiance
The Pledge of Allegiance was recited.
1.2 Consider Utilities Agenda
Troy Adams requested to move up agenda item 5.1,Award of Bonds 2016A and Refunding of
Electric Bonds 2016B,to immediately follow the 2.0,Consent Agenda.
Daryl Thompson moved to approve the revised June 14,2016 Utilities agenda. Al Nadeau
seconded the motion.Motion carried 3-0.
1.3 Recognition of Employee Achievements
Mike O'Neill introduced Tony Hubbard and Jeff Murray and announced that they both
completed the Metering Apprenticeship Program and are now working on their Substation
Apprenticeship. Tony and Jeff shared some details about the two year program and the benefits
of the training they received. The Commission congratulated Tony and Jeff on their
achievement.
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Special Meeting of the Elk River Municipal Utilities Commission
June 14,2016
2.0 CONSENT AGENDA(Approved By One Motion)
John Dietz had a few questions on the Electric Cost-of-Service and Rate Design Study,staff
responded.
Al Nadeau moved to approve the Consent Agenda as follows:
2.1 May Check Register
2.2 May 10,2016 Previous Meeting Minutes
2.3 Financial Statements
2.4 2015 Consumer Confidence Report
2.5 Wellhead Protection Plan Implementation Evaluation and Work Plan
2.6 Consulting Services for Electric Cost-of-Service and Rate Design Study
Daryl Thompson seconded the motion. Motion carried 3-0.
5.1 Award of Bonds 2016A and Refunding of Electric Bonds 2016B
At the May 10th meeting, the Commission passed a resolution to proceed with the issuance
of$10,000,000 2016A bonds, and the refunding of the bond 2007A issue of$1,460,000
2016B bonds, and the City Council passed it at the May 16th meeting. At that time it was
identified that the award of the bonds by the Utility Commission would come back and be
on the June 14th agenda. Proposals for the sale of the bonds were received this morning,
June 14, until 10:00 a.m.
Terri Heaton from Springsted presented the market sale information results. For the 2016A
Electric Revenue Bonds, subsequent to bid opening,the issue size decreased from
$10,000,000 to $9,755,000 due to a premium with the offer. Terri presented the bids and
announced that the Wells Fargo Bank,National Association came in as the low bidder with
a true interest rate of 2.31%. For the 2016B Electric Revenue Refunding Bonds,
subsequent to bid opening,the issue size decreased from $1,460,000 to $1,370,000. The
Robert W. Baird& Company, Incorporated was the low bidder with a true interest rate of
1.32%. Terri shared that based on the lower interest rate and reduced underwriter fees,the
final results of the bond refunding reflected a total savings of$94,737.
The rating call for both bonds was conducted on May 31St. It was decided to stay to with
Moody's for rating purposes;we currently have an Aa3 rating. Terri shared that ERMU
staff did a fabulous job on the rating call and really represented the utilities well. Teri
pointed out the highlights in Moody's review, which included ERMU's credit strengths and
credit challenges. Based on the information reviewed,Moody's has assigned an Aa3 rating
to ERMU's $11.5 million Electric Revenue Bonds, Series 2016A and Electric Revenue
Refunding Bonds, Series 2016B. There was discussion on the rating. Troy Adams pointed
out that Theresa Slominski and her staff put a great deal of effort into putting together the
packet used for the rating call, and that along with years of good utility decision making is
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Special Meeting of the Elk River Municipal Utilities Commission
June 14,2016
reflected in our high rating. There was further discussion. John Dietz asked a few
questions. Terri Heaton and staff responded.
Al Nadeau made a motion to approve and award the sale of Electric Revenue Bonds,
Series 2016A,to the low bidder. Daryl Thompson seconded the motion. Motion
carried 3-0.
Daryl Thompson made a motion to approve and award the sale of the Electric
Revenue Refunding Bonds, Series 2016B,to the low bidder. Al Nadeau seconded the
motion. Motion carried 3-0.
3.0 OPEN FORUM
No one appeared for open forum.
4.0 OLD BUSINESS
4.1 Landfill Gas Plant Engine Repair and Operational Cost Update
As part of the ongoing evaluation of the Elk River Landfill Gas Plant(LFGP),ERMU met with
Waste Management(WM)and Sherburne County representatives on May 23rd to discuss current
and future operations of the facility.ERMU staff completed a detailed analysis of all of the costs
and revenue for the facility since it became operational in October 2002 through the end of the
contracts in September 2022.Tom Sagstetter explained that although recent operational cost
trends have been concerning,the key findings of the analysis were that the LFGP has not been a
burden to the customers of ERMU,nor will it be in the future based on forecasted costs and
revenues.Tom shared that all of the partners(Sherburne County, Waste Management,and
ERMU)agreed that the future operation and ownership of the LFGP needs to continue to be
evaluated with final changes to be implemented in 2017 for operations,maintenance and
ownership. John Dietz stated that he gave a utilities update to the City Council which included
our concerns about the profitability of the LFGP and some of the steps we're taking to try to
mitigate the risk.
Tom touched on the areas that were discussed at the May 23rd meeting,and noted that Waste
Management has agreed to waive the cost for the gas used to power the plant for the remainder
of 2016 which will help significantly with the overall return.The Commission had a few
questions. Staff responded. Tom stated that the partners have scheduled a meeting for July 21st
to follow-up on action items identified at the previous meeting.ERMU staff will continue to
provide updates as information is gathered and different options are considered.
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Special Meeting of the Elk River Municipal Utilities Commission
June 14,2016
Minnesota, including Cal and Kristin Mroz,will travel to the state of North Rhine-Westphalia in
July,where they will visit climate-smart energy facilities and work with their partner
communities to develop strategies for reducing their energy footprint while boosting the local
economy.The City of Elk River will also have the benefit of working with their twin
community when they visit Minnesota in the fall. Cal will provide a full report when they return
from their trip in July.
6.2 Set Date for Next Meeting
The next regularly scheduled Commission meeting will be held on July 12,2016.
The Commission recessed the regular meeting at 3:55 p.m.
6.3 Closing of Meeting: "Meeting to be Closed pursuant to MN Statute 13D.05, Subd.
3(c) to develop or consider offers or counteroffers for the purchase or sale of real
or personal property."—PID#75-411-0220 and #75-411-0250, also known as
1437 Main Street NW
a. Call Closed Session to Order at 3:55 p.m.
b. Discussion
c. Adjourn Closed Session at 4:10 p.m.
6.4 Closing of Meeting: "Meeting to be Closed pursuant to MN Statute 13D.05, Subd.
3(c) to develop or consider offers or counteroffers for the purchase or sale of real or
personal property."-Valuation of business line.
a. Call Closed Session to Order at 4:11 p.m.
b. Discussion
c. Adjourn Closed Session at 4:29 p.m.
6.5 Adjourn Regular Meeting
Al Nadeau moved to adjourn the special meeting of the Elk River Municipal Utilities
Commission at 4:30 p.m. Daryl Thompson seconded the motion. Motion carried 3-0.
Minutes prepared by Michelle Canterbury.
. � .►_ate
Jo I.Die
Chair,ERMU Co fission
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Special Meeting of the Elk River Municipal Utilities Commission
June 14,2016