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01-12-1999 ERMU MIN ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE ELK RIVER UTILITIES COMMISSION HELD AT THE ELK RIVER MUNICIPAL UTILITIES OFFICE JANUARY 12, 1999 Members Present: President, George Zabee; Vice Chairman, James Tralle; Trustee, John Dietz Staff Present: Bryan Adams, General Manager; Glenn Sundeen, Line Superintendent; Robert McCartney, Water Superintendent; Patricia Hemza, Office Manager Others Present: Pat Klaers, City Administrator; Andrew Tralle 1. Call meeting to order at 4:00 P.M. January 12, 1999 2. Consider Utilities Agenda John Dietz has two additions, and Bryan Adams one addition, to be discussed under Other Business. James Tralle moved to approve the Utilities Agenda, with the three additions. John Dietz seconded the motion. Motion carried 3-0. 2 a. Election of officers for 1999 Motion by George Zabee, seconded by John Dietz to nominate the following slate of officers for 1999. James Tralle President John Dietz Vice Chairman George Zabee Trustee Motion carried 3-0. James Tralle, as 1999 President of the Elk River Municipal Utilities Commission took over the chair of the 1-12-99 meeting. 2b Designate First National Bank official depository for 1999 John Dietz moved to designate First National Bank of Elk River as the official depository of the Elk River Municipal Utilities for 1999. George Zabee seconded the motion. Motion carried 3-0. Page 2 Regular meeting of the Elk River Municipal Utilities Commission January 12, 1999 2c Designate Elk River Star News official newspaper for 1999 John Dietz moved to designate the Elk River Star News official newspaper of the Elk River Municipal Utilities for 1999. George Zabee seconded the motion. Motion carried 3-0. 3. *Consider Consent Agenda George Zabee questioned the amount of payment due the City of Elk River for mowing services in 1998. No further discussion of Consent Agenda items. John Dietz moved to approve the Consent Agenda as follows: 12-8-98 minutes December Check Register Abbreviated Financials George Zabee seconded the motion. Motion carried 3-0. 5.1 Review and consider GRE/Connexus Wholesale Power Rate to ERMU Bryan Adams reported to the Commission on the progress of the wholesale power rate negotiations. Discussion of the Demand costs were questioned and responded to. An overall 7% +/- wholesale rate decrease can be expected from GRE/Connexus for 1999. Wholesale rates will be expected to start rising in the following year. In general, ERMU will receive the same rates, programs and rebates, except capitol credits, that Connexus Energy receives from GRE on the same time frame. This means that rates and programs will change annually, and ERMU will no longer be required to re-negotiate every other year through FERC. Further, Bryan Adams is directed by Commission to return to Connexus with the request for receiving all programs. 5.2 Review and consider changes to Demand and Non-Demand Meter Rate Commission reviewed the present electrical rates, as well as comparing them to Connexus and Wright-Hennepin rates. It appears that no change in the residential rates is indicated at this time. However, it appears that a decrease for Non- Demand would be appropriate at this time. Discussion of the Demand Rate was centered on the demand rather than the energy component. The recommended rate change will be cash neutral since the demand will be off-set by the decrease in energy. Further discussion of options for demand customers, especially those with high low-load factors followed. James Tralle questions whether or not customers understand the ramifications of a low-load factor. Page 3 Regular meeting of the Elk River Municipal Utilities Commission January 12, 1999 John Dietz moved to approve the non-demand rate as follows, to be effective with the February billing. Summer Winter $0.073 $0.073 First 2500 KWh/month $0.073 $0.066 Over 2500 KWh/month George Zabee seconded the motion. Motion carried 3-0. George Zabee moved to approve the demand rate as follows, effective with the February billing. Summer Winter Demand Charge $8.50 $8.50 in KW/month Energy Charge $0.036 $0.036 in KW/month John Dietz seconded the motion. Discussion followed of the change in the demand rate, with the possibility of other options. Customer types regarding high/low peaks were scrutinized. Motion carried 2-0, with John Dietz abstaining. 5.3 Up-date on GRE/ERMU Gas Turbine Project The ERMU is proceeding with contract work to allow us to proceed more efficiently if the right equipment is found. The original units considered have become to costly. Currently other generation equipment options are being researched. 5.4 Eastern Area Expansion Funding levels for Electric and Water Expansion Pat Klaers, City Administrator appeared to explain progress by the City regarding East Elk River Public Improvement Project. It appears that the project is moving slowly forward. The funding of the shortfall for Water was considered. James Tralle questioned whether the option of creating a special WAC/SAC district could be created if funding becomes a problem. George Zabee indicates that he is in favor of some TIF financing of the water short- fall. Page 4 Regular meeting of the Elk River Municipal Utilities Commission January 12, 1999 After further discussion of the issues it became apparent that three options are available to the Commission of the Elk River Municipal Utilities Commission. a. No decision at this time. b. Funding of the entire shortfall. c. Request TIF involvement. Revenue projections were discussed,particularly in regard to the Springstead Study contained in the 1999 Budget Appendix. George Zabee moved to fund the Water shortfall to a minimum of$500,000.00 to the projected $800,000.00; with the contingency that up to $300,000.00 be reserved by the City in TIF funds, should the Utility become unable to make bond payments without raising rates,based upon the above referenced study John Dietz seconded the motion. Motion carried 3-0. 5.5 Up-date Well#6 (verbal) Robert McCartney updated the Commission on the progress of Well#6, explaining the problems with cold weather, equipment and that drilling has increased in footage. Construction on a building will probably not begin until sometime in March. 6.1 Review and consider Part-time Customer Service Person A part-time contract customer service person was budgeted for 1999. Benefits of this service were addressed. The need for special attention to Demand customers was addressed, as well as the need for making the Utility more accessible to all our customers, keeping in mind that restructuring will happen in the future. The contract customer service person would assist the Utility, as well as help with load management and managing our electrical peaks. Compensation and hours spent working for ERMU were discussed. James Tralle stressed that we need to be pro-active, and the hiring of this person would help accomplish the task. John Dietz moved to offer part-time Contract Customer Service work for one day per week, at a cost not to exceed $12,000.00 annually. George Zabee seconded the motion. Motion carried 3-0. Page 5 Regular meeting of the Elk River Municipal Utilities Commission January 12, 1999 6.2 General discussion of Priorities for 1999 The list of priorities that Staff and Commission have been working on and considering for the past two years was presented. All items have either been accomplished at this time or are on-going projects that have been established and now require regular up-dates. Staff requested any additions that Commission would like added to the list. Discussion will continue at future meetings regarding priorities. Other Business John Dietz up-dated the ERMU Commission of Council action regarding residency requirements for persons serving on Boards and Commissions. John Dietz requested information on the costs of lighting for the ball-fields and discussed the costs with the Commission. The subject of donation of ball-field lighting will be added to the February, 1999 Agenda. Bryan Adams advised the ERMU Commission that the U.S. Environment Protection Agency Landfill Methane Outreach Program named as 1998 Project of the Year, Power Strategies for the Elk River Landfill Gas-to-Electricity Project. The next scheduled meeting of the Elk River Municipal Utilities Commission will be February 16, 1999. John Dietz moved to adjourn the January 12, 1999 meeting of the Elk River Municipal Utilities Commission. George Zabee seconded the motion. Motion carried 3-0. The January 12, 1999 Regular Meeting of the Elk River Municipal Utilities Commission adjourned at 6:15 P.M. Respectfully submitted, 6 aJ Patricia Hemza Office Manager