10-11-2005 ERMU MIN ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
October 11,2005
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
Others Present: Lori Johnson,City of Elk River Finance Director;Jodi Berge,David Martin
Agency;Anthony Hedlof,MCMU; Kathleen Aho, Springsted; Steven
McDonald,Abdo,Eick and Meyers,LLP
1. Call meeting to order October 11,2005
President Jerry Takle called the October 11,2005,meeting to order at 4:00 p.m.
2. Consider Utilities Agenda
James Tralle moved to approve the October 11,2005,Utilities Agenda with the addition
of one item for discussion under Other Business. John Dietz seconded the motion.
Motion carried 3-0.
3. Consider Consent Agenda
John Dietz had a question on the check register, staff responded. John also questioned
what the breakdown was for"Services to the City"line item. Staff will gather the information
for the next meeting.
James Tralle moved to approve the Consent Agenda as follows:
September Check Register
September 13,2005,Minutes
Financials
John Dietz seconded the motion. Motion carried 3-0.
5.1 Staff Up-dates
Bryan Adams talked with the Commissioners regarding the FERC letter to Connexus
informing them that Connexus is no longer considered a public utility within the meaning of
the Federal Power Act. The guidelines for FERC governance apply to electric cooperatives
that sell more than 4,000,000 megawatt hours and Connexus was well below that in 2004.
FERC is no longer approving Connexus's wholesale rate changes to ERMU.
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Regular meeting of the Elk River Municipal Utilities Commission
October 11,2005
Glenn Sundeen informed the Commissioners on the status of the recent storm damage.
Crews were out repairing damages and had power restored by early morning. Projects and
rebuilds are proceeding as planned. James Tralle questioned how much area we service in
Otsego. Staff responded that it is not a large area however most of the new
commercial/industrial along Hwy 101 is our territory.
David Berg reported that the 1St and 2nd Street water looping project is complete. Repairs
are being done on valves and hydrants City wide. The security sales were up to 4 for the
month along with sales calls.
Theresa Slominski relayed to the Commissioners of the possibility of outsourcing the
monthly bills. This would encompass the actual printing,stuffing,and mailing. John Dietz
questioned what the employee would do with the extra time. Staff responded that they would
be able to dedicate more time in proofing the bills prior to the printing process. More
customers are signing up for the auto bill pay program.
5.2 Review Health Insurance Options
Jodi Berg of David Martin Agency gave a presentation concerning health insurance.
Discussion followed regarding the cost of the 2006 insurance and the percentage the
Commissioners are comfortable with paying. An employee task force is looking into the
options. Examples of insurance percentage ratios were presented. John Dietz felt the
percentage ratio should be the same for single versus family coverage. Staff will present to the
Commission at the next meeting,the options and percentage ratios to possibly continue with
the current insurance program.
5.3 Review Electric Bond Options
At the September 13,2005,Elk River Municipal Utilities Commission meeting,we
discussed options for our upcoming electric bond issue. Anthony Hedlof of MMUA and
Kathleen Aho of Springsted were present to answer questions. It was asked what the impact
on communities with outstanding loans would be if not all the monies were spent before the
required time. Anthony Hedlof informed the Commission there would be no ramifications.
Kathleen Aho reviewed a comparison of financial options for fixed versus variable rates.
The actual rate is set at closing and can be fixed or variable. Lori Johnson and Kathleen Aho
will develop cost comparisons of Bond Pool funding versus Conventional Bond funding.
5.4 Review Target Project
Initially Target Data Center was adamant about having two independent sources of
electrical feed to their facility. They were presented with the initial cost and projected billing
for this service. Target ultimately decided they would only require one electrical feed. The
electric service agreement with Target was reviewed.
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Regular meeting of the Elk River Municipal Utilities Commission
October 11,2005
We are currently upgrading the West Substation to meet our normal system growth along
with possibly supplying Target Data Center. The transformer for this project was purchased
last month. Station 14 substation upgrade was originally scheduled for the 2010 time frame
but was moved up to satisfy Targets initial request for two feeds. Now that Target only
requests one feed,staff is still recommending we proceed with Station 14 upgrade being Great
River Energy is allowing it. Approximate cost of this project is$800,000. Staff is also
recommending the new Target feeder will be served by this new Station 14 substation.
Motion by John Dietz to go ahead with the Station 14 upgrade. James Tralle seconded the
motion. Motion carried 3-0.
5.5 Review CIP Budget
Minnesota statutes require municipal utilities to spend a minimum of 1.5%of previous
years gross electric revenues on conservation improvement programs(CIP). For 2006, 1.5%
of 2005 gross electric revenues are approximately$208,500,however, $90,750 will be
received from Great River Energy. The actual ERMU spenditure for the CIP program will be
approximately$120,000.
5.6 Review GRE Wholesale Electric Rate
Commissioner and staff reviewed preliminary rates for 2006 from Great River Energy
which are increasing by approximately 2.54%. Staff is projecting a 6%increase in demand
and a 5.5%increase in energy for 2006 over 2005,which equates to a$252,951 increase using
the 2005 rates with 2006 consumption.
5.7 Review& Consider Bids for Electric Line Truck
At the September Elk River Municipal Utilities Commission meeting,we discussed the
need to trade in and replace a 1996 gas fueled Digger/Derrick electric line truck.
Specifications were drafted and bids were received on October 4,2005.
Motion by James Tralle to award the Digger/Derrick Electric Line Truck to Altec Industries,
the lowest responsive bidder. John Dietz seconded the motion. Motion carried 3-0.
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Regular meeting of the Elk River Municipal Utilities Commission
October 11,2005
5.8 Review and Consider LFG Expansion Project
Elk River Municipal Utilities is in the process of pursuing the installation of the 4th engine
at the Elk River Landfill at a cost of approximately$650,000. The air permit application has
been submitted to MPCA by ERMU while the Elk River Landfill is applying for a landfill
expansion permit. During negotiations with Waste Management,it was apparent they desired
more payment for their gas to cover their increased cost. Great River Energy was asked if the
wholesale purchase power price will increase for the 4th unit. They will increase the payment
for the 4th engine by approximately$1,538,000 over the remaining 16 years of the purchase
power contract. The issue now at hand is how to distribute these extra funds back to the three
parties of Waste Management,Elk River Municipal Utilities,and Sherburne County in an
equitable fashion. John Dietz would like to see the refund ratio calculated in percentage
instead of actual monies.
Motion by James Tralle to approve the distribution of funds by a percentage system using the
suggested monetary rebates as a base to calculate the percentage. John Dietz seconded the
motion. Motion carried 3-0.
5.9 Review and Consider 2006 Expense Budget
The proposed 2005 electric and water budgets were reviewed. Some suggested changes
were addressed and a final draft will be presented at the next Commission meeting.
Other Business
Steve McDonald addressed the Commissioners regarding the recent indictment of a previous
employee for theft by swindle. Letter sent to State Auditor was reviewed in detail regarding
history of events and proposed policy changes. Discussion followed regarding how the issue
was uncovered and what changes have been made to prevent this action in the future. The
changes are: 1)Payroll system is now interfacing with the general ledger,2)The bank
statement is being received unopened by the General Manager who reviews it and then gives it
to the finance department,3)A monthly bank reconciliation verifying the check numbers is
being done,4)Mail is being distributed by the front clerk. All employees W2's were verified
and all contributions were found to be correct.
The next regularly scheduled meeting of the Elk River Municipal Utilities Commission
will be Wednesday,November 9,2005.
President Jerry Talde adjourned the regular meeting of the Elk River Municipal Utilities
Commission at 6:35 p.m.
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