2.2. ERMUSR 01-09-2018 ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
December 12,2017
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 Nelson, Customer Service Manager;
Tom Geiser,Assistant Electric Superintendent;
Scott Thoreson,Lead Lineworker;
Zac Johnson,Lead Lineworker
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 Nadeau and seconded by Commissioner Stewart to approve the
December 12,2017,agenda. Motion carried 5-0.
2.0 CONSENT AGENDA(Approved By One Motion)
Moved by Commissioner Westgaard and seconded by Commissioner Thompson to approve
the Consent Agenda as follows:
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2.1 November Check Register
2.2 November 14,2017 Regular Meeting Minutes
2.3 2018 Official Depository
2.4 2018 Official Newspaper
2.5 2018 Utilities Commission Meeting Schedule
2.6 LS Cable&System U.S.A.,Inc.Extended Product Warranty
2.7 Otsego Street Lights
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 remaining Delegation to Management policies that
consultant John Miner had developed: G.4i1 Investments; G.4i2 Financial Reserves; G.4i3
Debt Issuance and Payment; G.4i4 Procurement; G.4j 1 Rates and Charges for Electric Service;
and G.4j2 Rates and Charges for Water Service.
For the Procurement policy, Mr.Adams pointed out the $10,000 threshold that was being
proposed for item number two and three, and reached out to the Commission for further
discussion on whether that dollar value was still appropriate as it had been established quite
some time ago. After discussion, Commissioner Stewart proposed raising the threshold from
$10,000 to $25,000. Attorney Beck recommended the Commission approve the change to the
dollar thresholds by motion.
Moved by Commissioner Stewart and seconded by Commissioner Nadeau to change the
dollar threshold in the Procurement Policy from $10,000 to $25,000 in item number two
and three. Motion carried 5-0.
Moved by Commissioner Westgaard and seconded by Commissioner Thompson to adopt
the Delegation to Management Policies. Motion carried 5-0.
4.2 Performance Metrics and Incentive Compensation Policy
Per our policy, the metrics for measurement of the designated year need to be determined
before the start of the designated year; this allows for changes to be made and communicated
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timely before performance measurement begins. Ms. Slominski presented the proposed
Performance Metrics and Incentive Policy Score Card.No changes were being recommended
for 2018. Ms. Slominski shared that staff has identified a few changes to incorporate and will
be working on those in 2018 to finalize for measurement in 2019.
Moved by Commissioner Thompson and seconded by Commissioner Stewart to approve
the Performance Metrics and Incentive Compensation Score Card for 2018. Motion
carried 5-0.
5.0 BUSINESS ACTION
5.1 Financial Report—October 2017
Ms. Slominski presented the October 2017 financial report. For the Electric Department, Chair
Dietz had a few questions in regards to the increase in expenses for the Landfill Gas Plant,
Distribution, and Maintenance line items. Staff responded.
Moved by Commissioner Thompson and seconded by Commissioner Stewart to receive
and file the October 2017 Financial Report. Motion carried 5-0.
5.2 Wage& Benefits Committee Update
Chair Dietz presented the Wage & Benefits Committee (W&BC)update, as outlined in the
memo, along with the proposed recommendations. On the topic of an adjustment to the 457
deferred compensation employer contribution for the management pay group,the Committee
made a verbal recommendation of 2.5%. Chair Dietz shared that all of the proposed changes
would be effective January 1, 2018, with the exception of the 457 deferred compensation
benefit change for all of the pay groups and the management pay group, as that benefit period
runs from June 1, 2017 to May 31, 2018.
The W&BC had one additional item to add for consideration; the reclassification of the
Inventory Person position from Field Group Pay Grade 6 to Field Pay Grade 8. Chair Dietz
provided some background on the position, and stated that the employee we currently have in
the position has given notice. There was discussion. Mr. Adams shared that after review of the
difference in responsibilities from the origin of this position to current actual practice, and the
impact to pay grade points, the W&BC is recommending the reclassification of the position
from the Field Pay Grade 6 to 8. The financial impacts of the reclassification were discussed.
Moved by Commissioner Nadeau, and seconded by Commissioner Stewart to approve the
following:
• Eliminate the percent criteria of the employer contribution for the 457 deferred
compensation benefit and increase the match cap from $2,000 to$2,500 for all pay
groups
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• 2018 cost of living adjustment of 2.5% for all pay plan groups
• Additional 0.5% market adjustment for the Lineworkers Pay Group
• Additional 2.0% market adjustment for the Customer Service Representative position
• The addition of a 2.5% employer contribution to the 457 deferred compensation benefit
for the Management Pay Group.
• Unused vacation time to be deposited into Health Care Saving Plan upon retirement in
lieu of being paid out
• Reclassify the Lead Bore Rig Operator position from Field Group Pay Grade 8 to
Field Pay Grade 9
• Reclassify the Inventory Person position from Field Group Pay Grade 6 to Field Pay
Grade 8
Motion carried 5-0.
5.3 2018 Business Plan/Budget: Budget and Rates
In November,the preliminary 2018 budget and rates were presented to the Commission. Ms.
Slominski noted that there had been several changes due to finalizing of projects and expenses,
as well as some new accounts created and amounts redistributed. The changes were noted on
the Revenue and Expense Budgets in the notes and explanations section,with the prior items
presented in November in blue. Ms. Slominski presented the 2018 budget and reached out to
the Commission to see if they had any questions.
Commissioner Stewart had a few questions regarding the $50,000 increase to the consulting
fees line item for the new bond's bond counsel and whether it could be amortized over the life
of the bond. Staff responded.
Mr. Adams spoke to the new IT position that was being budgeted for in 2018, and how the
timing of hiring for the position would be tied in with our cyber security audit.Although the
position will most likely not be filled for 3 to 6 months, Mr. Adams stated that staff had
budgeted for the full year. There was discussion on the shared IT services with the city.
Chair Dietz inquired as to how the proposed electric and water increases would impact
customers. Staff responded that the 2018 electric rates result in increases of 1% or less for
typical customers in all rate classes, and water rates result in a blended increase of 1.85%to the
monthly meter charge and first tier water use, and no rate increase to the second and third tier
water use rates. Mr. Sagstetter also touched on the $1/kW demand credit that would be going
away in 2018, and how that would impact customers on the demand electric service rate; the
estimated rate increase for those customers will range from 3 to 6%. There was discussion.
Moved by Commissioner Thompson and seconded by Commissioner Stewart to adopt the
2018 Business Plan/Budget. Motion carried 5-0.
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5.4 2018 Tariffs
Mr. Sagstetter presented the 2018 rates and tariff sheets. Mr. Sagstetter explained that the
tariffs had also been updated to accommodate for the multiple billing cycles beginning in 2018,
specifically the language regarding the timeframe for the summer and winter rates had been
changed to correspond with the monthly billing periods. The Commission had a few questions.
Staff responded.
Moved by Commissioner Westgaard and seconded by Commission Nadeau to approve
the 2018 Rates and Tariff Sheets. Motion carried 5-0.
6.0 BUSINESS DISCUSSION
6.1 Staff Updates
Ms. Slominski stated in her staff report that letters have been created for the four billing cycles we'll
be moving to as we implement multiple billing cycles in January. There are four separate letters,
one for each cycle,that depicts their new billing and due dates,and gives specifics for the first bills
to be received in January. As some cycles will have two weeks in their first bill and some will have
five weeks,we're letting the customers know what to expect. The letters will go out with the
December 20 billing. Chair Dietz inquired as to how the change in due dates will affect people on
automatic bank pay. Staff responded,and shared that specific details relating to this will be covered
in the letters as well.
Mr.Fuchs had nothing additional to add to his staff report. Chair Dietz had a question on when we
would be acquiring Connexus Areas 5&6. Mr.Fuchs stated that that the plan is to acquire Areas
5&6 in September of 2018,Area 7 in 2019,and Area 8 in 2020.
Mr.Tietz indicated in his staff report that the power plant staff performed the monthly engine run on
November 29,and that all engines ran well with no problems. There was discussion on the purpose
of the monthly engine run and the importance of keeping them in good working order should we
need them for emergency purposes only.
At the request of Chair Dietz,Mr.Volk provided a recap on a scheduled water shut-off that recently
took place,and how it affected the commercial businesses in the area.Due to a disgruntled business
owner who voiced concern over the service interruption and notification process for doing so, staff
has been evaluating the process that's currently in place. There was discussion.
Mr. Sagstetter announced the winners of the holiday lighting contest and thanked the Commission
for helping with the final judging.He also acknowledged Customer Service Representative Jessica
Rahn who had put together detailed route directions to aid in finding the homes. The winners along
with the rest of the participants will be published in the December 16 edition of the Star News.
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Attorney Beck announced that he would not be at the January Commission meeting,but would be
available by phone should we need him.
6.2 Future Planning
Chair Dietz announced the following:
a. Regular Commission Meeting—January 9, 2018
b. Quorum—Employee Recognition Luncheon—January 22, 2018, 12:00— 1:00 p.m.
6.3 Other Business
There was no other business.
The Commission recessed the regular meeting at 4:22 p.m. and went into the closed meeting.
6.4 Closing of Meeting: Meeting closed pursuant to MN Statute 13D.05, Subd. 3(a) for the
Second Half of the Performance Evaluation of Troy Adams, General Manager
The Commission reconvened the regular meeting at 5:05 p.m.
Moved by Commissioner Stewart and seconded by Commissioner Nadeau to approve an
additional 5% market adjustment for the General Manager position effective January 1,
2018; and an additional 5% market adjustment effective January 1,2019,with a
provision that the Commission benchmark the General Manager position again prior to
enacting the January 1, 2019, market adjustment. Motion carried 5-0.
7.0 ADJOURN REGULAR MEETING
There being no further business,Chair Dietz adjourned the regular meeting of the Elk River
Municipal Utilities Commission at 5:06 p.m.
Minutes prepared by Michelle Canterbury.
John J.Dietz,ERMU Commission Chair
Tina Allard,City Clerk
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