6.1a ERMUSR 06-13-2017 Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
ERMU Commission Troy Adams, P.E.—General Manager
MEETING DATE: AGENDA ITEM NUMBER:
June 13, 2017 6.1a
SUBJECT:
Staff Updates—General Manager
ACTION REQUESTED:
No Action Requested
DISCUSSION:
• The Board of Directors of the Minnesota Municipal Power Agency (MMPA)met on May
23, 2017 at the offices of Shakopee Public Utilities in Shakopee, Minnesota.
The Board held a planning session regarding future power generation.
The Board reviewed the progress of member cities in rolling out the Clean Energy Choice
program to residential customers.
The Board also discussed plans for expanding renewable product options for commercial
and industrial customers.
The Board discussed the status of the renewable projects that the Agency is pursuing.
Attached are MMPA's unaudited 1Q2017 income statement and balance sheet.
• On June 7— 8, I attended the Annual MMUA Board Planning Session in Plymouth, MN.
The board worked on SMART Goals for 2017-2018 through the use of an Affinity
Process. The SMART Goals being developed included:
o Continuation of Service - This includes developing a plan to identify key MMUA
positions and plan for succession through recruitment, retention, and/or
development of internal talent.
o Financial Health - This included conducting a detailed cost of service study on
MMUA dues and fees for all of the services. This cost of service study will then
be used going forward as a key component for significant future planning and
decisions.
o Communication -Development of a comprehensive branding, marketing, and
communication plan for both internal and external communication for all MMUA
services.
o Regulatory Guidance - This includes the development of a regulatory compliance
and reporting guide for municipal utilities.
Also, the MMUA financial auditors presented draft audited 2016 financials.
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• I attended the Great River Energy Annual Meeting on June 7, 2017. GRE has now
reduced to two coal power plants within their portfolio and have added a significate
addition of wind energy. Their integrated resource plan includes only wind energy
additions over the next 15 years. Declining sales impact to the bottom line have been
mitigated through business strategy initiatives resulting in a solid financial 2016.
Wholesale power rate increases for the foreseeable future are projected to inline or under
inflation. Overall,the takeaway message was positive.
As usual, while at the GRE Annual Meeting I was also able to network and speak with
many from the GRE leadership team, coop member CEOs, and Minnesota Rural Electric
Association (MREA) leadership. The cooperative electric utilities are strategizing for the
same regulatory, consumer,workforce, and technology issues as the municipal utilities.
With recent successful efforts from cooperative and municipal electric utilities leadership
to partner on regulator issues, the opportunities for communication between the two
business model's leadership have opened up. As a result, I have seven follow up meetings
with various cooperative leaders to discuss issues also affecting ERMU.
• And on a related note,the week prior I had met with new President& CEO of Wright-
Hennepin Cooperative Electric Association. We met to discuss the recent"local control"
legislation which MREA and MMUA were a part of. In addition,we discussed load
growth opportunities, industry technology, and leadership direction for cooperative and
municipal utilities. The overall intention is to develop a"good neighbor" relationship and
work to align cooperative and municipal leadership on common and mutually beneficial
goals.
• On June 6, 2017, ERMU staff held a planning meeting with engineering, operations, and
billing representatives from Connexus for the upcoming electric service territory transfer
in 2017. Similarly to 2015 and 2016, Connexus will be transferring Areas 3 &4 to
ERMU in September of 2017. There are approximately 480 customers with 540 meters in
these areas which are located on the west side of Elk River.
• In conjunction the announced retirement of one of our Forepersons, we held interviews
for Lineworkers the week of May 15;there were approximately 120 applications.
Interviews for a Foreperson successor were held May 31; there were two internal
applicants. And interviews for the resulting vacancy at Lead Lineworker were held on
June 5; there was only one applicant.
• Water Operator interviews for the vacant water operator position is scheduled for June 15
and 16.
• In July 2017, I will roll off of the Elk River Rotary Board.
• While attending the American Public Power Association (APPA)National Conference
this June, I have been asked to be a presenter. I have done this three other times while
attending APPA conferences. I will be speaking on a panel for a session on
Communicating the Value of Reliability. They have requested that I speak specifically on
Using Reliability and RP3 to Communicate Performance to Customers,Employees, and
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your Governing Body. There will be two other speaking on the panel with me. The
conference is June 19-21.
• The City held Substance Abuse in the Workplace mandatory training for their managers
and supervisors on June 1. They opened that opportunity up to ERMU managers and
superiors. It was very much appreciated to be included in the training. Separate from the
importance of the topic and the training, these are great opportunities to learn and
develop the City's and ERMU's leadership together. These opportunities strengthen our
relationship and ultimately help us provide our community with a higher level of service.
• Last month over the week of the May Commission meeting I was in San Antonio, TX,
attending the APPA Lineworkers Rodeo and Engineering& Operations Conference. The
ERMU Rodeo Team will be in attendance to speak about the Rodeo and their experience.
In addition to the Rodeo, the E&O Conference was excellent and maybe the best one I've
attended. Topics were highly relevant and timely for ERMU including:pole attachments,
substation construction, workplace safety and incentive programs, and electric vehicle
charging stations.
While I was attending the E&O, I attended the Reliable Public Power Provider(RP3)
Panel meeting. And at the end of this meeting I officially became a member of the Panel;
however, I was allowed to participate in the meeting. Through participation in the panel I
will have exposure to the best practices and procedures of the top 10% of the municipal
utilities in the nation, will have the opportunity to work with 17 of the brightest minds in
public power, and will work directly with the incredible leadership of APPA. This
exposure will have immeasurable value. The nomination and selection process for the
panel is highly competitive typically resulting in applicants applying multiple times
before being selected. I am humbled and honored to have been selected on my first
nomination. This speaks highly of the reputation of ERMU.
ATTACHMENT:
• MMPA Unaudited 1Q2017 Income and Balance Sheet
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Minnesota Municipal Power Agency
Statement of Net Position
As of March 31,2017-Unaudited
Assets
Current assets:
Cash and cash equivalents $ 45,450,891
Restricted cash and cash equivalents 11,936,428
Short-term investments 1,000,000
Accrued interest receivable 263,036
Power sales and other receivables 8,416,955
Fuel inventory 1,389,564
Plant inventory-spares 2,351,740
Prepaid expenses 1,242,690
Derivative instruments-futures 251,250
Total current assets 72,302,554
Noncurrent assets:
Capital assets:
Electric generation assets 421,429,470
Land 7,066,719
Less accumulated depreciation (102,560,320)
Property and equipment,net 325,935,869
Construction in progress 1,606,479
Total capital assets,net 327,542,348
Investments —
Restricted cash,cash equivalents,and investments 30,982,853
Prepaid expenses 970,395
Future recoverable costs 41,846,697
Total noncurrent assets 401,342,293
Total assets 473,644,847
Deferred Outflows
Deferred outflows of resources 1,252,982
Total assets and deferred outflows of resources $ 474,897,829
Liabilities
Liabilities:
Current liabilities:
Accounts payable and accrued liabilities $ 11,524,295
Accrued interest payable 7,171,429
Long-term debt due within one yeas 9,113,333
Capital lease liability due within one yew 930,629
Derivative instruments-futures —
Total current liabilities 28,739,686
Long-term debt,net 307,079,290
Capital lease liability 18,755,520
Total noncurrent liabilities 325,834,810
Total liabilities 354,574,496
Deferred Inflows
Deferred inflows of resources-rate stabilization 33,071,000
Deferred inflows of resources-other 17,232,257
Total liabilities and deferred inflows of resources 404,877,753
Net Position
Net position:
Net investment in capital assets 29,658,352
Restricted for debt service 11,936,428
Unrestricted 28,425,296
Total net position 70,020,076
Total liabilities and deferred inflows of resources and net position $ 474,897,829
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Minnesota Municipal Power Agency
Statements of Revenues, Expenses and Changes in Net Position
YTD March 31, 2017- Unaudited
Operating revenues–power sales to members $ 24,274,234
Operating revenues–power sales to non-members 290,053
Total operating revenues 24,564,287
Operating expenses:
Power acquisition expense 10,440,903
Transmission 3,562,129
Other operating expenses 5,335,099
Depreciation 3,176,212
Total operating expenses 22,514,343
Operating income(loss) 2,049,944
Nonoperating revenues(expenses):
Amortization of premium on long-term debt,net 282,417
Interest expense (3,274,084)
Investment income 260,521
Net change in the fair value of investments (12,676)
Gain on extinguishment of debt —
Gain on sale of investments
Gain on bond retirement
Total nonoperating revenues(expenses),net (2,743,822)
Change in net position before future recoverable costs (693,878)
Future recoverable costs 918,424
Change in net position 224,546
Total net position,beginning of year 69,795,529
Total net position,March 31, 2017 $ 70,020,076
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