2.2 ERMUSR 11-14-2017 ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
October 10,2017
Members Present: Chair John Dietz;Vice Chair Daryl Thompson; Commissioners Al Nadeau,
Mary Stewart,and Matt Westgaard
ERMU Staff Present: Troy Adams,General Manager;
Theresa Slominski,Finance and Office Manager;
Mark Fuchs,Electric Superintendent;
Mike Tietz,Technical Services Superintendent;
Eric Volk,Water Superintendent;
Tom Sagstetter, Conservation&Key Accounts Manager;
Michelle Canterbury,Executive Administrative Assistant;
Jennie Biorn,Accountant;
Melissa Karpinski,Accountant
Others Present: Peter Beck,Attorney
1.0 GOVERNANCE
1.1 Call Meeting to Order
The regular meeting of the Utilities Commission was called to order at 3:30 p.m.by Chair Dietz.
1.2 Pledge of Allegiance
The Pledge of Allegiance was recited.
1.3 Consider the Agenda
There were no additions or corrections to the agenda.
Moved by Commissioner Thompson and seconded by Commissioner Nadeau to approve the
October 10,2017,agenda. Motion carried 5-0.
1.4 Introduction of New Employee
Mr.Tietz introduced Jay Jagerson as the new System Engineer. Mr.Jagerson shared some
information on his background and work experience.The Commission welcomed the new
employee.
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1.5 Recognition of Contributors for the EV-ER Power Your Future Initiative
Mr. Sagstetter introduced Sales Associate Tyler Pinska from Cornerstone Automotive and
announced how the dealership was instrumental in the success of our EV Charging Station Ribbon
Cutting Celebration and the launch of our EV-ER Power Your Future Initiative. Cornerstone
sponsored the ride and drive portion of the event and provided two hybrid vehicles for test drives
which were well received. Mr. Sagstetter announced that Cornerstone will also be working with us
at another electric vehicle event on October 25 at the Elk River YMCA.
Mr. Sagstetter also recognized Elk River resident and EV owner Brian Vasseur for all of his support
promoting the EV-ER initiative. Mr.Vasseur was the first person to test out and use the EV charger
and graciously allowed ERMU to use his photo in all the marketing materials to promote event. In
addition,he took the time to share his story with the Elk River Star News and attendees at the event.
Mr.Vasseur was unable to be at the Commission meeting.
1.6 Recognition of Employee Achievement
Mr. Volk was recognized for being elected as the Minnesota American Water Works
Association(MN AWWA) Section Chair Elect. The announcement was made at the MN
AWWA Annual Conference held September 12-15 in Duluth, Minnesota. Mr. Volk shared
some of the duties and responsibilities the position entailed. The Commission congratulated
him on his achievement.
1.7 Florida Mutual Aid
On September 9, ERMU responded to a request for mutual aid in Florida through the
Minnesota Municipal Utilities Association(MMUA). The call for mutual aid was for
anticipated storm recovery work that would be needed in the wake of Hurricane Irma. ERMU
deployed a crew of two lineworkers who worked to restore power in the areas of Kissimmee
and Lake Worth,Florida. Mr. Fuchs introduced Scott Thoreson and Matt Schwartz the two
ERMU lineworkers who responded. The lineworkers shared some details about the experience.
The Commission thanked them for going to help.
2.0 CONSENT AGENDA(Approved By One Motion)
Moved by Commissioner Nadeau and seconded by Commissioner Westgaard to approve the
Consent Agenda as follows:
2.1 September Check Register
2.2 September 12,2017 Regular Meeting Minutes
2.3 MnDOT Supplemental Agreement Number 1 to Agreement Number 1027572
2.4 Elk River Municipal Utilities/Wright Hennepin Joint Request for Minnesota Public
Utilities Commission Modification of Parties'Electric Service Territory Boundary
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Motion carried 5-0.
3.0 OPEN FORUM
No one appeared for open forum.
4.0 POLICY&COMPLIANCE
4.1 Delegation to Management Policies
Mr. Adams presented for consideration the next three delegation to management policies that
consultant John Miner had developed: G.4o Environmental Stewardship; G.4p External
Communications; and G.4q Community Involvement. Mr. Adams reached out to the
Commission to see if they had any questions. The Commission had none.
Moved by Commissioner Stewart and seconded by Commissioner Nadeau to adopt the
Delegation to Management Policies. Motion carried 5-0.
5.0 BUSINESS ACTION
5.1 Financial Report—August 2017
Ms. Slominski presented the August 2017 financial report. Ms. Slominski reported back on a
question that Chair Dietz had last month in regards to the increase to the electric miscellaneous
distribution expense. She stated that after further investigation, staff determined that a large
part of the increase was due to the recording of lineworkers wages for the lineworkers rodeo to
that expense line item.
There was some discussion on the water department sales and revenue and how those were
impacted by weather and connection fees this year.
Moved by Commissioner Thompson and seconded by Commissioner Westgaard to
receive and file the August 2017 Financial Report. Motion carried 5-0.
5.2 2018 Business Plan/Budget: Water and Electric Expenses
Ms. Slominski presented the first cut of the 2018 Water and Electric Expense Budget and noted
that the expense budget will change as the complete 2018 budget is assembled and the finalized
wholesale power costs are reflected. Wholesale power costs, as well as revenue and rate
increases for 2018 will be presented in November.
Electric Department Expense Budget—The 2018 forecast for electric expenses reflected a 4%
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increase over the current year budget. The wholesale power costs, which make up between 70-
75%of the operating budget, reflected an estimated 1% increase. Currently, staff is estimating
a 1%retail rate increase to customers. Mr.Adams noted that growth through our acquisition is
helping to keep rates down. Chair Dietz asked if staff took into consideration the change in
wholesale power providers the last quarter of 2018, and wanted to know if we would be re-
evaluating our rates at that time. Staff responded that they ran the numbers for the budget based
on Great River Energy(GRE)rates for the entire year and that we would not be changing our
rates when we switch over to Minnesota Municipal Power Agency(MMPA) on October 1,
2018. Chair Dietz stated that when we get to that point, he'd like to see a cash flow analysis
done. The Commission had a few questions on the electric department expense budget. Staff
responded.
Water Department Expense Budget-The 2018 forecast for water expenses reflected a 4%
increase over the current year budget. Most notable were increases on the administrative side,
due to hiring an IT staff person, increases in health insurance, and allocation distributions for
employee related expenses. Currently, staff is estimating a 2%retail rate increase. Mr. Adams
explained how a 2% increase to only the first tier and basic monthly charge would result in a
lower blended increase. Commissioner Stewart questioned whether the interest on the
defeased bonds line item for the water department should be a negative. Staff responded that it
should, and indicated that they would correct the expense budget to reflect that.
5.3 2018 Utilities Fee Schedule
Ms. Canterbury presented the 2018 Fee Schedule to the Commission. There were just three
adjustments to the schedule from 2017 to 2018. The commercial application processing fee,
which was approved in 2016, was also added to the fee schedule in an effort to transition from
fees being published on individual application forms. Mr. Adams added that due to the
significant increase in residential development, staff pulled the numbers together on a few of
the new developments to ensure that our residential developer and builder connection charges
were in line with what they should be; Mr. Adams reported they were. Mr. Adams also
explained the philosophy behind the connection fees and the 50/50 cost share.
It was noted that in keeping in line with the 3%the city is proposing for an increase to their
sewer access charge (SAC),the utilities was recommending a 3% increase to ERMU's water
access charge (WAC). There was discussion on how ERMU has typically followed suit with
the city on the annual increase and how that percentage was arrived at. Chair Dietz expressed
some concern with whether the 3%was still in line with inflation, or should maybe be adjusted
accordingly. He stated that he was going to bring this up for discussion at the city level.
Moved by Commissioner Nadeau and seconded by Commissioner Thompson to approve
the 2018 Fee Schedule. Motion carried 5-0.
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5.4 Wage& Benefits Committee Update
On September 12, 2017 the Wage and Benefits Committee (W&BC)met to review dental,
ancillary, and health insurance renewals, and also discussed some considerations for future
meetings. Ms. Slominski presented the insurance renewals that were discussed and went over
the bids and broker recommendations. The following were the Committee's conclusions and
recommendations:
Dental and Ancillary Insurance—By separating the dental from the ancillary services and
having two separate providers, a significant savings would be recognized. For dental insurance,
Delta provided the best rate option with a 5%decrease from our current rates that also includes
an increase in the annual maximum benefit from $1,500 to $2,000, and a two year rate
guarantee. Ms. Slominski noted that as an added detail,Delta has had very modest rate
increases over the past several years so we should see more stability in our future rates,which
should eliminate the need to switch providers every few years just to keep the rates
manageable. For ancillary insurances of life and long term disability, Principal provided the
best rate option with a 19.06%decrease from our current rates, and a two year rate guarantee.
Health Insurance and Employer HSA Contribution—The health insurance renewal came in
favorably with just a 5% increase. Committee recommendation was to stay with the same
provider, Blue Cross Blue Shield, for 2018. Currently two health insurance plans are offered
to employees,the HSA plan and co-pay plan; based on low enrollment numbers and the
possibility of the plan being eliminated, Committee recommendation was to no longer offer the
co-pay plan. And for the employer HSA contribution, Committee recommendation was to
maintain the same employer contribution for 2018: $650 for the single plan, and $1,985 for the
single+1 and family plans.
Health Insurance Opt-Out Program—Ms. Slominski shared that last year the Commission
approved a health insurance opt-out program of$300 per month for a one year trial period.
Although this was not discussed at the W&BC meeting,this is something that the Commission
will need to consider for approval. Commissioner Stewart asked how many people participated
in the opt-out program. Staff responded.
Moved by Commissioner Thompson and seconded by Commissioner Westgaard to
separate our dental and ancillary service providers, utilizing Delta for dental, and
Principal for ancillary. Motion carried 5-0.
Moved by Commissioner Stewart and seconded by Commissioner Thompson to approve
the Blue Cross Blue Shield health insurance renewal with the 5% increase,to eliminate
the co-pay insurance plan offered to employees, and to approve the 2018 employer HSA
contribution amount of$650 for the single plan,and $1,985 for the single+1 family plans.
Motion carried 5-0.
Moved by Commissioner Nadeau and seconded by Commissioner Westgaard to continue
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the health insurance opt-out program of$300 per month. Motion carried 5-0.
5.5 Landfill Gas Plant
Mr. Sagstetter shared that in preparation for the transition to a new wholesale power provider
in 2018, staff has been working with Great River Energy (GRE) and other stakeholders on
transition options for the landfill gas electric generation plant. He noted that GRE has
expressed concern about the existing Purchased Power Agreement(PPA) for the delivery of
the plant's electric production to GRE's system. As a result,ERMU is currently reviewing the
contract with legal counsel and looking into other options for the facility with existing partners
and other potential partners. There was discussion.
5.6 Jackson Street Water Tower Rehabilitation Update
Last month Mr. Carlton, Planning Manager with the City of Elk River,provided an update to
the Utilities Commission on the restoration status of the Jackson Street Water Tower. At that
time, city staff was still waiting on a written estimate for the restoration and the required
architectural drawings.
Kodet Architectural Group provided an estimate of$210,600 to $320,600 for the restoration,
and$7,850 for the required architectural drawings. Mr. Volk shared that City staff is now in
the process of applying for a grant to fund the preparation of the architectural drawings needed
to move the project forward. The grant does not require a match and will cover the $7,850
estimate to complete the first step. If the grant is awarded, notification will take place within
eight weeks of the October 13 due date. There was discussion. Commissioner Westgaard asked
for further clarification on where the $7,850 would be funded from. Staff responded that once
the grant is approved,the utilities would pay the upfront cost of$7,850, and would later be
reimbursed through the grant once the work is complete. There was further discussion.
6.0 BUSINESS DISCUSSION
6.1 Staff Updates
Mr.Adams highlighted key points from his staff report regarding the electric service territory
transfer that took place on September 19 and noted the magnitude and the complexity of the
transfer. He commended Jennie Nelson and Mike Tietz on the outstanding job they did overseeing
and facilitating multi-department efforts all while encouraging and allowing their staff to develop
ideas for improving the process. He stated that he was very proud of staff and their dedication
towards this major initiative. There was discussion.
Mr.Tietz thanked the Commission for allowing staff the opportunity to attend the NISC Member
Information Conference that was held in St.Louis,Missouri September 25-28.Commissioner
Stewart commented that the summary report he provided for agenda item 6.3 was very nice. There
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was discussion on the volume of locate tickets and the comparison from this year to last.Mr.Tietz
indicated that this is something he's been tracking since he started and anticipated being able to
share those stats in the future. Commissioner Westgaard reminded the Commission that at a recent
meeting staff had pointed out that a year to year comparison may be misleading as they are
measured differently now;historically locate tickets were submitted for one location whereas now
they may include multiple locations for one ticket. He cautioned placing too much emphasis on
ticket count as it's not an apples to apples comparison. Staff concurred.
Mr.Volk highlighted three items from his staff report.He shared that the Zylstra Harley Group
(HOGs)volunteered their time painting 75 hydrants throughout the city this past month. The HOGs
will also be working with the local fire department to identify hydrants they may need to be cleared
from snow this winter. Mr.Volk stated that a meeting has been scheduled with Kodet Architectural
for October 23 from 9:30 to 11:30 a.m.to talk through the design aspects for the Field Services
Facility Expansion Project. As Commissioner Nadeau and Thompson volunteered to be part of the
workgroup associated with the project,staff requested they attend if it works with their schedule.
On a final note,Mr.Volk shared that Lead Water Operator Mike Langer and his wife welcomed a
healthy baby girl into the world today.
Mr. Sagstetter shared that staff is gearing up for the 6th Annual Light Up Your Neighborhood
contest.A flyer promoting the event will be sent out to ERMU electric customers with the October
bills. Mr. Sagstetter indicated that staff would be pre judging all of the participants in order to
narrow it down to a more reasonable amount for the final judging by the Commission. There was
discussion on how to further promote the contest and encourage new people to participate. The idea
of providing a map of the participants to the newspaper or on ERMU's website was suggested.
Consensus was that all of the Commissioners would be part of the final judging.
6.2 Report on Superior Essex Cable Plant Tour
Mr. Fuchs presented his report on the Superior Essex Cable Plant tour. There was discussion.
6.3 Report on NISC Member Information Conference
Mr. Tietz presented his report on the NISC Member Information Conference. There was
discussion.
6.4 Future Planning
Chair Dietz announced the following:
a. Regular Commission Meeting—November 14, 2017
6.5 Other Business
There was no other business.
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7.0 ADJOURN REGULAR MEETING
Moved by Commissioner Thompson and seconded by Commissioner Stewart to adjourn the
regular meeting of the Elk River Municipal Utilities Commission at 4:46 p.m.Motion carried
5-0.
Minutes prepared by Michelle Canterbury.
John J.Dietz,ERMU Commission Chair
Tina Allard,City Clerk
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