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12-13-2005 ERMU MIN ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION December 13,2005 Members Present: Jerry Takle,President;John Dietz,Vice Chair;James Tralle,Trustee Staff Present: Bryan Adams,General Manager;Glenn Sundeen,Line Superintendent; David Berg,Water Superintendent; Theresa Slominski,Office Manager; Judy McSpadden,Recording Clerk Others Present: Lori Johnson,City of Elk River Finance and Administrative Services Director 1. Call meeting to order December 13,2005 President Jerry Takle called the December 13,2005,meeting to order at 4:00 p.m. 2. Consider Utilities Agenda James Tralle moved to approve the December 13,2005,Utilities Agenda. John Dietz seconded the motion. Motion carried 3-0. 3. Consider Consent Agenda John Dietz questioned the depreciation costs on the financials, staff responded. John Dietz moved to approve the Consent Agenda as follows: November Check Register November 9,2005,Minutes Financials Jerry Takle seconded the motion. Motion carried 3-0. 5.1 Staff Updates Bryan Adams reported on the Shakopee Utilities tour with the department heads. Their community is growing like Elk River and is a few years ahead of us in growth. They met with staff and viewed their procedures. Bryan will be meeting with Connexus regarding the territory agreement. The current agreement expires the end of 2008. The question asked is do we want to negotiate a new contract for future territory take-overs? The consensus was yes. There will be a supervisor added in 2006 to oversee the metering department along with the CAD operator. At this time the qualifications for this position were reviewed. Glenn Sundeen reviewed the jobs in progress. There were an estimated 50 new services in November. Crews will be starting tree trimming. James Tralle asked if there was a housing projection for 2006. Glenn responded that it would depend on the developers as some developments are platted but not being built on. David Berg said staff is currently doing maintenance on the wells. The security department had 29 calls and 9 installs in November. A security system is being donated to the new energy home being built in Elk River. Page 2 Regular meeting of the Elk River Municipal Utilities Commission December 13,2005 Theresa Slominski relayed to the Commission that she has not received notice on the tobacco settlement. The sales tax abatement from 2004 is still unresolved but will check later this month. With the outsourcing of bills that will be in affect for the January mailing,the bills will look different and also have some added features. Samples of the new bill design were handed out. Steve McDonald recently did the pre-audit and everything was fine. He will be back in March of 2006 for the fmal audit. 5.2 Review Wholesale Electric Rate GRE's 2006 wholesale electric rate increase reflects$251,000 or a 2.51%increase. Our 2006 budget required a$251,000 retail rate increase to cover the costs of the wholesale rate increase. Jerry Takle reported that Connexus is looking into the possibility of"time of use meters". This would be one rate for 10:00 p.m.to 2:00 p.m. and another rate for the 2:00 p.m. to 10:00 p.m.time slot. The future availability of power was discussed. This wholesale rate discussion was informational only,no action taken. 5.3 Review& Consider 2006 Electric&Water Rate Due to the wholesale rate increase of approximately 2.51%staff is recommending a overall rate increase of 2.3%or 346,000. Recommendations are as follows: ELECTRIC Winter Summer Residential from$0.0727 from$0.0872 kwh increase$0.00132 to$0.07402 to$0.08922 Commercial from$0.063 from$0.0849 kwh increase$0.00132 to$0.06432 to$0.08622 Demand Power from$8.50 from$11.25 to$9.25 to$13.00 Energy from$0.0418 from$0.0418 to$0.0406 to$0.0406 There were also some changes recommended to the other rate classes including off peak, street lights,and security lights. WATER 1st step from$1.30/1000 gallons to$1.35/1000 gallons 2"d step from$2.50/1000 gallons to $3.00/1000 gallons Bulk water rate from$0.055/200 gallons to$0.60/200 gallons WAC fee from$1750/unit to$2000/unit Page 3 Regular meeting of the Elk River Municipal Utilities Commission December 13,2005 James Tralle questioned the competitiveness of the new rates. Bryan Adams responded that the residential and commercial rates are similar to Connexus,Wright Hennepin,and Excel however the industrial rates still need to be reviewed in the future for they continue to be 7% to 10%higher. Motion by James Tralle to approve the rates for the 2006 usage as presented. John Dietz seconded the motion. Motion carried 3-0. 5.4 Review&Consider LFG Power Purchase Agreement The GRE proposed Amended and Restated Power Purchase Agreement was reviewed. This agreement revises upwardly the price GRE will pay us to incorporate the 4th engine/generator at the LFG plant. The increase is approximately$1,538,000 over the life of this agreement. Staff recommends authorization is given to execute this document. Motion by James Tralle to approve authorization to execute the GRE Amended and Restated Power Purchase Agreement. John Dietz seconded the motion. Motion carried 3-0. 5.5 Review& Consider Water Tower Antenna Policy At previous Elk River Municipal Utilities Commission meetings allowing antennas on our water towers were discussed. Staff was asked to draft a policy to allow antennas on our water towers. Discussion followed regarding the principals to be addressed in the agreement. Bryan Adams asked Lori Johnson what the City charges for this type of arrangement, she responded approximately$1500 plus revenue from additional antennas placed by third parties. John Dietz felt that each contract should be negotiated separately depending on their needs. John Dietz asked that City Council get a copy of the principals that need to be addressed in these agreements. Motion by John Dietz to approve the policy for antennas on water towers. James Tralle seconded the motion. Motion carried 3-0. 6.1 Review& Consider Budgeted Equipment Purchase The 2006 budget has two pieces of equipment staff desires to pursue. The first is a Valve and Vac Exerciser machine to do maintenance on water gate valves in the street. The budget allocated$42,000 for a new machine,National Waterworks has a demo unit for$39,856. The other piece of equipment to replace is a 17 year old brush chipper which due to its age is often broken down and requires excessive maintenance. Staff is currently securing trade in price and is asking authorization to spend up to$30,000 to replace this unit. John Dietz asked Glenn Sundeen what percentage of tree trimming we do. Glenn Sundeen responded that we do about 50%of the tree trimming ourselves January through March. John Dietz also asked if the City's chipper was utilized. Glenn Sundeen responded that when our chipper was broke down the City chipper was unavailable. Motion by James Tralle to approve the purchase of a Valve and Vac Exerciser and a brush chipper. John Dietz seconded the motion. Motion carried 3-0. Page 4 Regular meeting of the Elk River Municipal Utilities Commission December 13,2005 6.2 Review Alternative Deferred Compensation Options Currently there is only one 457 plan offered to the employees. It was asked if there could be another plan offered that would allow the employee to have a financial advisor oversee their investment. Wenzel and Associates is a private sector business and is affiliated with 1NG. This could be an option for employees,however,they would pay a slightly higher cost for this service. John Dietz verified that this would not cost the utilities,Theresa Slominski responded that the employee would pay. Motion by James Tralle to approve the 457 option with Wenzel and Associates. John Dietz seconded the motion. 6.3 Consider Performance Evaluation of GM John Dietz would like a performance evaluation of the General Manager. Discussion followed as to the procedure and employees who would be filling out the performance evaluation. It was also suggested that this be done for all employees yearly. Motion by John Dietz to approve a performance evaluation of the General Manager. James Tralle seconded the motion. Motion carried 3-0. Other Business There was no other business. The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be Tuesday,January 10,2006. President Jerry Takle adjourned the regular meeting of the Elk River Municipal Utilities Commission at 5:15 p.m. Respectfully su.mi •, 111111k Judy McS a den` Recording Clerk