02-14-2017 ERMU MIN ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
February 14,2017
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;
Jennie Nelson,Customer Service Manager
Others Present: Cal Fortner,City Administrator;Peter Beck,Attorney;Matt Westgaard,City
Councilmember;Mary Stewart
1.0 CALL MEETING TO ORDER
John Dietz called the February 14,2017 meeting to order at 3:30 p.m.
1.1 Pledge of Allegiance
The Pledge of Allegiance was recited.
1.2 Consider Utilities Agenda
There were no additions or corrections to the agenda.
Daryl Thompson moved to approve the February 14,2017 Utilities agenda. Al Nadeau
seconded the motion.Motion carried 3-0.
John Dietz introduced the two new Commissioners that were appointed by the City Council;
Matt Westgaard and Mary Stewart. The Commissioners,staff and legal counsel introduced
themselves and thanked them for coming. Their terms will officially begin March 1,2017.
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:
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Regular meeting of the Elk River Municipal Utilities Commission
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2.1 January Check Register
2.2 January 10,2017 Regular Meeting Minutes
2.3 Financial Statements
2.4 2017 Tri-County Action Services Agreement
2.5 Elk River Municipal Utilities/Connexus Energy—Joint Request for Minnesota
Public Utilities Commission Modification of Parties'Electric Service Territory
Boundary
2.6 Agreement Resolving Electric Service Territory Loss of Revenue Dispute
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 Governance Manual
Troy Adams presented the proposed core governance policies that had been developed and
shared that these policies were intended to replace the Governance section of the existing
ERMU Policy Book. Ultimately these policies help establish how the Commission will govern,
how management will manage,and are intended to be a guide for ethical leadership.Troy
walked through the governance section of the table of contents and noted that the By-Laws
presented were the current ones and that he hoped to have the new ones completed within the
next few months. Troy also noted that the Delegation to Management Policies have yet to be
developed as they are part of the second phase of the project. Rather than go through each
policy,Troy reached out to Commission to see if they had any questions or comments.John
Dietz asked for further clarification and provided feedback on the following policies:
G.2a—Commission-City Council Relationship and Roles,point 5,in regards to payment in lieu
of taxes(PILOT). John requested that the line item for PILOT be pointed out and discussed
during the budgeting process to ensure that we are complying with this policy.
G.2d—Agenda Planning—John asked for further clarification in paragraph two where it states:
"The Commission will update this agenda annually during the fourth quarter of each fiscal year
by removing the current year,updating the next year,and adding the following year." Troy
Adams explained that this is a high level overview of recurring governance functions that spans
over a two year period;not the monthly operating issues.
G.2e—Commission Member Role,Responsibilities,and Orientation,point 5,in regards to
developing,implementing and maintaining a formal orientation program for new Commission
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Regular meeting of the Elk River Municipal Utilities Commission
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members. John asked is this was something we were going to do. Staff responded yes and
elaborated on what that would involve.
G.2g—Commission Officer Roles,Responsibilities&Succession,last paragraph under
Secretary. John pointed out that item number 2 where it states that"appropriate written records
of Commission meetings are prepared and distributed to all Commission members and the
General Manager within three days of each Commission meeting"should be changed to reflect
that they will be distributed three days prior to the next Commission meeting. Staff will make
that change.
G.2h.1—Wage&Benefits Committee Charter,point 3,in regards to reviewing insurance
policies and evaluating policy renewals. John Dietz recommended that this point be changed to
further specify that it is in relation to employee benefit insurances. Staff agreed and will make
that change.
G.2h.2—Financial Reserves&Investment Committee Charter,point 4.John asked for further
clarification on whether this was the job of the Committee or the Finance&Office Manager.
Staff indicated that it was the responsibility of the Finance&Office Manager. Peter Beck
pointed out that the paragraph began with"On behalf of the Commission and Committee..."the
Finance&Office Manager would perform these duties. Peter suggested that point 4 be kept in
the policy as it provides direction.
G.3b—Delegation of Authority to the General Manager—John Dietz asked if this is something
we are already doing. Troy Adams shared that despite the formality we are doing a majority of
these things and that some things are still in the process of being formally developed; for
example the delegation to management policies.
G.3c—General Manager Accountability,point 1,in regards to the Commission as a body and
the Commission members individually will never give instructions(direct or implied)to anyone
other than the General Manager. John asked for further clarification on this point. Staff
responded.
Peter Beck shared that he would further review the proposed governance policies to ensure the
government statues are properly referenced. Troy Adams requested the Commission approve
the core governance policies that were presented,contingent upon making the revisions
identified by John Dietz and possible changes legal counsel suggests. Troy added that the
fmalized policies,along with the by-laws,would be brought back to the Commission for formal
adoption in March or April.
Daryl Thompson made a motion to approve the proposed governance policies as
presented,contingent upon making the changes identified by Commissioner Dietz and
possible changes legal counsel suggests. Al Nadeau seconded the motion. Motion carried
3-0.
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Regular meeting of the Elk River Municipal Utilities Commission
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5.0 NEW BUSINESS
5.1 2016 Annual Safety Report
Minnesota Rules Chapter 7826 Public Utilities Commission Electric Utility Standards
cover safety,reliability, service, and reporting requirements. Per 7826.0100(A),municipal
utilities are exempt from these requirements. However,the Elk River Municipal Utilities
(ERMU)Commission adopted a number of parts of this chapter as a Distribution
Reliability Standard policy. This policy includes an Annual Safety Report requirement.
The policy requires ERMU to"file an annual safety performance report with its local
governing body. The report will include summaries of all reports filed with OSHA and the
Occupational Safety and Health Division of the Minnesota Department of Labor and
Industry during the calendar year."
In 2016,ERMU only submitted one report that qualifies under this reporting requirement;
the OSHA Form 300A,which is a summary of work related first report of injuries and
illnesses. Troy Adams presented the OSHA Form 300A that had been filed;there was one
recordable case that resulted in 0 days away from work. John Dietz inquired as to whether
this would help our experience modification for our workers compensation insurance. Staff
responded.
Al Nadeau made a motion to receive and file the 2016 Annual Safety Report.Daryl
Thompson seconded the motion. Motion carried 3-0.
5.2 2016 Fourth Quarter Delinquent Items
Theresa Slominski presented the delinquent items for the fourth quarter which included a
delinquent amounts listing report totaling$22,464.89 for all services. Theresa also
presented a color-coded recap comparison with last year, identifying the running totals. The
amount for the fourth quarter write-offs was $3,513.66,with a year-to-date total of
$2,907.33 due to collections on amounts previously written off. Theresa stated that our
2016 budgeted amount for collections and write-offs was $105,000, or .27%uncollectible
accounts per revenue dollar. According to APPA's most recent published standard ratios,
the industry standard is between .18%and .37%. Our totals, excluding and including
Revenue Recapture (RR), for the year are well below the national average, at.013%
excluding RR,and .15%including RR. Theresa stated that these numbers are a very good
representation of all the hard work that the collections and customer service staff put into
holding customers accountable and working to get the dollars collected. The Commission
asked to relay commendations to staff for a job well done. John Dietz had a question
regarding one of the accounts with a large dollar amount that was on the delinquent
amounts listing report. Staff responded.
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Regular meeting of the Elk River Municipal Utilities Commission
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Al Nadeau made a motion to approve the Fourth Quarter Delinquent Amounts
Listing. Daryl Thompson seconded the motion. Motion carried 3-0.
5.3 Load Management Program Moratorium
Tom Sagstetter shared that as part of our transition from Great River Energy(GRE)to
Minnesota Municipal Power Agency(MMPA), staff has been evaluating load management
program changes that are beneficial to the customers and are not subsidized by other
customers not participating in the load management programs. Tom explained that based
on the price signals we're getting from MMPA, and the current and predicted rates in the
Midwest Independent System Operator(MISO)market, it will not be conducive to load
management programs. Tom gave some examples of our current programs and how they
would be impacted. Staff recommended a moratorium on enrolling new customers in any
load management program other than the electric vehicle charging program until such time
as new pricing for the programs can be determined or an exit strategy from load
management can be determined. John Dietz inquired as to how many customers we have
on these programs. Staff responded. There was discussion on other options that were not
tied to load management. There was also discussion on what the potential cost would be for
ERMU to independently continue to support the existing programs once we transition from
GRE to MMPA. Staff responded that once a moratorium is issued,the next step will be
researching some of those options and the risk associated with them. There was further
discussion.
Al Nadeau made a motion to approve a moratorium on all load management
programs,with the exception of the Electric Vehicle Charging Program. Daryl
Thompson seconded the motion.Motion carried 3-0.
6.0 OTHER BUSINESS
6.1 Staff Updates
Troy Adams announced that Mike O'Neill had given his notice and that he could speak more to
that during his staff update. In Troy Adams' staff report he had stated that in late 2016 the
Commission gave staff direction on issuing an early 2017 Power Cost Adjustment(PCA)credit.
As staff is getting ready to process the PCA credit,Troy wanted to talk through the numbers
with the Commission.Troy shared that there is a substantial credit of 18 mils,which equates to
approximately$486,000. Troy shared that in the past we have always passed along the full
credit to our customers,but based on upcoming projects,loss of revenue payments,and buy in
to Minnesota Municipal Power Association,Troy wanted to discuss if it was in the utilities best
interest to pass along the entire credit at this time. After discussion,Commission consensus was
to hold off passing along the PCA credit until further evaluation and discussion could take place.
Staff was directed to add this topic to the March Commission meeting agenda.
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Regular meeting of the Elk River Municipal Utilities Commission
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In Theresa Slominski's staff report,she had stated that two errors had been discovered on the
summary page of the budget presentation for the water department. John Dietz asked Theresa to
elaborate on that point.Theresa explained that the fust error was that approximately$25,000 in
miscellaneous revenue was not included. The second error was the capital projects amount was
added instead of subtracted for showing the net contribution to reserves; instead of the
approximate$900,000 increase shown it should have been an approximate$200,000 increase.
Theresa shared that the errors are in presentation only and do not impact rates or require any
action. Troy Adams reiterated that the rates were designed not taking into account that large of
a net contribution into reserves.
Mike O'Neill shared that Dick Wagner has announced his retirement;his last day will be
February 28,2017. A retirement gathering will be held at the office on February 24 from 2:00
p.m.to 4:00 p.m.to honor Dick's almost 38 years of service.Mike stated that as Troy had
alluded to in his staff report,he will be leaving ERMU to go back to Great River Energy;his last
day will be March 3,2017. Mike also shared that we had been notified by the American Public
Power Agency(APPA)that we have qualified as a third time recipient of the prestigious
Reliable Public Power Provider(RP3)designation.
Tom Sagstetter announced that Jolene Fenn-Jansen has given her notice;her last day will be
March 2,2017. She has taken a position with another company where she will be specializing
in lighting rebates.
Cal Portner shared that based on 2017 projections for new construction and development,it
should be a good year for both the city and Elk River Municipal Utilities.
6.2 Set Date for Next Meeting
The next regularly scheduled Commission meeting will be held on March 14,2017.
6.3 Adiourn Regular Meeting
Daryl Thompson moved to adjourn the regular meeting of the Elk River Municipal
Utilities Commission at 4:35 p.m. Al Nadeau seconded the motion. Motion carried 3-0.
(mutes pre....-d b Michelle Canterbury.
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Regular meeting of the Elk River Municipal Utilities Commission
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