6.1.A. ERMUSR 12-13-2016 Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
Elk River Municipal Utilities Commission Troy Adams, P.E. — General Manager
John Dietz—Chair
Al Nadeau—Vice Chair
Daryl Thompson—Trustee
MEETING DATE: AGENDA ITEM NUMBER:
December 13, 2016 6.1a
SUBJECT:
Staff Updates—General Manager
DISCUSSION:
• On December 5,the City Council accepted the Utilities Commission expansion legislation and
adopted an ordinance amendment to incorporate that language. The ordinance revision is attached
for reference. The expansion of the Commission will take effect March 2, 2017.
Per the provisions of the expansion language, the City Council may have up to two City Council
members appointed to the ERMU Commission upon expansion to five members. During that
December 5 meeting Councilmember Matt Westgaard was appointed as the second Council
representative on the ERMU Commission to be effective upon the expansion to five members in
March 2017. The other new commission vacancy will be advertised in the Star News along with
other City board and commission vacancies in early 2017.
• The Board of Directors of the Minnesota Municipal Power Agency(MMPA)met on November
22, 2016 in Shakopee, Minnesota.
Construction is nearly complete on MMPA's 46 MW Shakopee Energy Park project.
Commissioning is expected to begin in the next month. The project remains on schedule and on
budget.
The Board discussed the status of MMPA's contract for the output of the Black Oak Wind Farm
and its contract for the output of the Buffalo Solar project.
The Board also discussed several other renewable energy contracts being discussed with
developers.
• The Minnesota Public Utilities Commission filing documentation to update the electric service
territory boundaries to reflect the transfer of Area 2 has been completed,reviewed by Connexus
Energy, and sent to ERMU's legal counsel to file on our behalf. Because it is filed jointly with
Connexus Energy this filing should be non-controversial.
• On November 21, ERMU and City IT staff met with representatives of Power Systems
Engineering(PSE), a national full service electric utility consulting firm with an offices here in
Minnesota. We discussed cyber vulnerability assessment and cyber penetration testing. The need
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for this work is critical. This has been included into the 2017 budget as a line item which will be
discussed in greater detail during the budget adoption agenda item discussion.
• As previously communicated, ERMU and Connexus Energy representatives have identified an
area of dispute regarding Loss of Revenue(LOR) calculations outlined in the Electric Service
Territory Agreement(agreement)dated March 20, 2015. On December 1, Greg Ridderbusch the
Connexus Energy President/CEO provided written notice initiating the alternative dispute
resolution process outlined in the agreement. This action follows previous discussions I have had
with Mr. Ridderbusch as well as discussions between our legal counsels. This alternative dispute
resolution process states that"upon written request of either Party, representatives with settlement
authority for each Party shall meet in person and confer in good faith to resolve the dispute."
Providing written request to initiate the alternative dispute resolution process allows for
Connexus to proceed into formal dispute on the LOR calculation through the Public Utilities
Commission or the courts. The dispute in the LOR calculation is in regards to the definition of
"Municipal Development." Initiation of the alternative dispute resolution process does not freeze
any current or future electric service territory transfers as covered through the agreement.
• On November 16, I participated in a small solar focus group discussion hosted by Minnesota
Rural Elective Association(MREA). The participation was by invitation only and the discussion
panel included six different utility representatives plus MREA's President/CEO. The panel
included three cooperative generation/transmission entities (G&Ts),two metro electric
cooperative distribution utilities, and one municipal utility. We discussed current solar programs,
differences in community opinion on solar/renewables and general industry considerations. The
discussion was robust and beneficial for all. Hopefully this will lead the way to future focus
group discussions expanded to multiple industry business models.
• The 2017 APPA Legislative Rally in Washington D.C. is scheduled for February 26—March 1.
This conference will likely be highly critical for us because of the anticipated changes coming
from the 2016 election. The preliminary travel and training budget reflects one manager and one
Commissioner attending this conference. We will need to know how many and who are attending
as soon as possible.
• Similarly, the 2017 Minnesota Municipal Utilities Association(MMUA) Legislative Rally in St.
Paul will be highly critical due to the changes from the 2016 election. This conference will be
held January 31 —February 1. It is less urgent to identify who will be attending this event prior to
2017.
• I attended the MMUA board of directors meeting on December 6. This meeting is in conjunction
with their T&O Conference in St. Cloud which runs December 6-8.
ATTACHMENTS:
• City of Elk River Ordinance 16-27 Amending, Chapter 2, Article V Regarding Membership of
the Public Utilities Commission of the City of Elk River, Minnesota, City Code dated 12/5/2016
• Connexus Energy email Dispute Resolution—Written Request to Meet dated 12/1/2016
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Ordinance 16 - 27
An Ordinance Amending, Chapter 2, Article V Regarding Membership of the Public
Utilities Commission of the City of Elk River, Minnesota, City Code
The City Council of the City of Elk River does hereby ordain as follows:
SECTION 1. That§2-271, Statutes accepted, of the City of Elk River Code of Ordinances, shall
be amended as follows:
The city hereby accepts the provisions of Minn. Stats. §§ 412.331-412.391.
In addition, the city hereby accepts Laws of Minnesota 2016, Chapter 97 - H.F. No. 2718,signed by
the Governor of Minnesota on May 12,2016,which states: "Notwithstanding Minnesota Statutes,
sections 412.331 and 412.341, subdivision 1, the city of Elk River may increase the membership of
the city's public utilities commission to five members. Upon increasing the members to five
members,no more than two members may also serve as city council members. Terms for the
additional membership shall be staggered and set in accordance with the bylaws governing the public
utilities commission."
SECTION 2.That§2-273,Membership, of the City of Elk River Code of Ordinances, shall be
amended as follows:
Each member of the public utilities commission shall be a resident of the city.The public utilities
commission shall consist of five members,with a minimum of one member and no more than two
members being city council members Terms expire on the last day of February in the appropriate
year.
SECTION 3. That this ordinance shall take effect on March 2, 2017, and be published as provided
by law.
Passed and adopted by the City Council of the City of E ver this i, d. . December, 2016.
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Adams, Troy
From: Greg Ridderbusch <Greg.Ridderbusch@connexusenergy.com>
Sent: Thursday, December 01, 2016 12:52 PM
To: Adams, Troy
Cc: Sara G. McGrane
Subject: Dispute Resolution - Written Request to Meet
Greetings Troy,
At our recently quarterly lunch we discussed the Loss of Revenue calculation and concluded from both our
conversations, and from conversations between our counsels, that Connexus Energy and Elk River Municipal
Utilities are in dispute on several material details. Therefore, we discussed initiating actions under Article 7
(Alternative Dispute Resolution) of the Electric Service Territory Agreement, dated 20 March 2015.
The first step called for is "upon written request of either Party, representatives with settlement authority for
each Party shall meet in person and confer in good faith to resolve the dispute."
Please consider this email Connexus Energy's written request, called for by the contract, that we meet and
attempt to resolve the dispute. I will attend as a representative with settlement authority on behalf of
Connexus Energy. Two other Connexus staff would attend as well. While we certainly could have legal counsel
present for both parties, my understanding from our lunch conversation is that for this first step you would
prefer just utility business leadership be in attendance. That is acceptable to me for this first meeting.
From my office, Kim Vredenburg will make contact and seek to calendar a date/location for us to meet in late
December to early January.
Best wishes,
Greg
Greg Ridderbusch
President/CEO I Connexus° Energy
Phone/Fax:763.323.2720
Greg.Ridderbusch@connexusenergy.com I www.connexusenergy.com
---your most powerful membership---
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