2.2 ERMUSR 08-14-2018 ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
July 10,2018
Members Present: Chair John Dietz;Vice Chair Al Nadeau; Commissioners Paul Bell,
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
Others Present: Peter Beck,Attorney; and Terri Heaton, Springsted Senior Vice President/Client
Representative.
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
Mr.Adams requested to move up agenda item 5.1,Bond Sale Resolution to immediately follow the
Consent Agenda.Mr. Sagstetter requested that the topic of Dual Fuel be added as agenda item 6.3a
in Other Business.
Moved by Commissioner Westgaard and seconded by Commissioner Nadeau to approve the
amended July 10,2018,agenda. Motion carried 5-0.
Chair Dietz announced that we lost a former employee a few weeks ago.Dick Wagner,who was
ERMU's longest serving employee with over 37 years of service, lost his battle with cancer. Chair
Dietz asked for a moment of silence in memory of Dick.
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1.4 Recognition of Employee Achievement
Mr. Volk introduced Dave Ninow and announced he had received his Class A Water Operator
License. Mr.Volk shared the steps involved with earning the certification. He also had some kind
words to share about Dave and his accomplishment.The Commission congratulated Dave on his
achievement.
2.0 CONSENT AGENDA(Approved By One Motion)
Ms. Slominski made note that the memo for the renewal premium for property casual insurance had
an incorrect reference in the first paragraph.Where is should have stated the 2018-2019 year,it
incorrectly stated 2017-2018.The renewal information presented for approval was for the 2018-
2019 year.
Moved by Commissioner Nadeau and seconded by Commissioner Stewart to approve the
Consent Agenda as follows:
2.1 June Check Register
2.2 June 12,2018 Regular Meeting Minutes
2.3 June 12,2018 Closed Meeting Minutes
2.4 Renewal Premium for LMCIT Property/Casual Insurance
Motion carried 5-0.
5.1 Bond Sale Resolution
Theresa Slominski shared that staff has been working with our financial consultants, Springsted,for
the bonding for our final payment buy-in to the Minnesota Municipal Power Agency(MMPA). She
shared that due to summer schedules and holidays, it was necessary to start the process a month
earlier to ensure timely funding to MMPA of September 28, 2018. As stated last month, a
projected final buy-in amount will be provided July 12, 2018 from MMPA. To accommodate
for the July 10, 2018 commission meeting, the resolution has been worded for an anticipated
amount of$10 million with an authorization to modify upon receipt of the final numbers July
12, 2018.
Ms.Heaton, Senior Vice President with Springsted,went over the schedule and timing of some of
the key events that will occur relative to the bond issuance. She noted that due to the time constraints
we are working with, a special meeting of the Utilities Commission would need to be held on
August 29 at 3:00 p.m.for consideration and award of the bonds. Ms. Heaton provided a
summarization of the recommendations for issuance of the 2018A bonding for$10 million. Chair
Dietz had a question on what our interest rate was on our prior$10 million dollar bond. Staff stated
that they would need to verify that and report back to the Commission.
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Moved by Commissioner Stewart and seconded by Commissioner Nadeau to adopt
Resolution No. 18-9 providing for the competitive negotiated sale of$10,000,000 Electric
Revenue Bonds,Series 2018A,and request that the City Council sell the 2018A Electric Bonds
in August 2018,per the attached resolution.Motion carried 5-0.
3.0 OPEN FORUM
No one appeared for open forum.
4.0 POLICY&COMPLIANCE
4.1 Service Policies—Conditions for Reconnection of Service
At the June 12,2018 commission meeting,discussion occurred regarding our disconnect/reconnect
fee in comparison to other utilities. Staff was directed to research and survey other utilities on how
much they charge to disconnect/reconnect services resulting from a non-payment situation.Our fee
is$50.If a line crew has to disconnect at a transformer,which is rare,the fee is$150. Staff
surveyed three neighboring utilities and two other municipals in Minnesota.Ms.Nelson presented
the findings as outlined in her memo.Based on the findings,ERMU's$50 fee was very comparable
to neighboring cities,and substantially less than the other Minnesota municipals that were polled.
4.2 Automatic Bill Payment for Budget Customers Policy
Ms.Nelson provided some background on the Automatic Payment for Budget Customers Policy
and the reasoning behind why it was created. She shared that with our former billing software we
had limitations on how late payments and adjustment situations could be handled with budget
customer accounts. Since the change over to the NISC system and billing software,staff has found
that those types of adjustments can be easily accommodated.Based on these improved efficiencies,
staff has determined that the Automatic Bill Payment for Budget Customers Policy is no longer
necessary.Additionally,as the automatic bill payment requirement is also mentioned in the Budget
Plan section of the Service Policies Policy,edits removing that language were also presented.
Moved by Commissioner Westgaard and seconded by Commissioner Stewart to approve the
elimination of the Automatic Bill Payment for Budget Customers Policy.Motion carried 5-0.
Moved by Commissioner Bell and seconded by Commissioner Nadeau to approve the revised
Service Policies Policy.Motion carried 5-0.
5.0 BUSINESS ACTION
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5.2 Financial Report—May 2018
Ms. Slominski presented the May 2018 financial report as outlined in her memo. She also
addressed a question that Commissioner Stewart had regarding the electric departments Gain
on Disposition of Property line item for$16,000 and what that was for. Ms. Slominski
explained that we traded in a bobcat we owned towards the purchase of a newer piece of
equipment, and because it was a fully depreciated item it becomes a gain on the sale for the
trade in value. She stated that we received $20,000 for the trade-in; $16,000 of that being
reflected in the electric departments miscellaneous revenue, and $4,000 in the water
departments. Chair Dietz had a question regarding the water connection fees. Mr. Volk
responded.
Moved by Commissioner Bell and seconded by Commissioner Stewart to receive and file
the May 2018 Financial Report. Motion carried 5-0.
5.3 Wage& Benefits Committee Update
The Wage & Benefits Committee (W&BC)met June 27, 2018. The primary focus for the
meeting was to update on items from the May meeting regarding staffing levels, organizational
growth, and succession planning. Additionally,the committee reviewed proposed policy
language changes needed to comply with state statute for the 457 deferred compensation plan
for the manager group. Ms. Slominski presented the W&BC update along with the proposed
recommendations.
Ms. Slominski talked through the three new discussion points as outlined in the memo. There
was Committee consensus on the following:
Employer Matched 457 Deferred Compensation for the Management Group—Per legal
counsel recommendation,the following proposed language modification was agreed upon by
the Committee: "Employees in the Management Group are eligible for an additional employer
matching contribution up to 2.5% of the manager's annual base salary, conditioned on the
individual providing the Utilities with authorization for the necessary payroll deduction."
Timing of Employer Contributions to 457 Deferred Compensation for all Employees—After
discussing the pros and cons, including the administrative challenges of making the annual
mid-year employer contribution, Committee consensus was to make a policy change to allow
for the employer contribution to be made each payroll rather than once a year on May 31;
effective as soon as administratively feasible.
Award of Annual Personal Leave Day—As this would be the only remaining mid-year item,
W&BC consensus was to make a policy change to allow for this being awarded in January 1
with a December 31 expiration if not used;to be effective January 1, 2019.
The Commission had a few questions. Staff responded.
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Moved by Commissioner Nadeau and seconded by Commissioner Stewart to approve the
following:
• Policy language change for 457 deferred compensation manager contributions to
be a match
• Employer contribution to 457 deferred compensation for all employees to be made
each payroll rather than May 31
• Award of the annual personal leave day to January 1 rather than June 1
Motion carried 5-0.
5.4 Holiday Lighting Contest
Mr. Sagstetter provided some background on the holiday lighting contest. Also provided was a
snapshot of the number of participants we've had over the years; the numbers indicated a
decline in participation. Mr. Sagstetter shared that in addition to the decline in participation, the
educational and energy saving opportunities have decreased as well. He explained that the
lighting market has been transformed and virtually all holiday lights sold today are LED. Due
to this transformation, ERMU no longer provides coupons like they once did for the purchase
of LED holiday lights.
Per Commission direction, staff had researched other holiday lighting contests sponsored by
municipal utilities; only two programs were found. Mr. Sagstetter shared that they were
experiencing decreased participation as well.
As the contest does provide value as a community event through community engagement, staff
has had discussions with other potential program administrators, including the City of Elk
River and Independent School District(ISD) 728 Community Education, to determine whether
they would be interested in assuming the administration and promotion of the holiday lighting
contest. To date, neither has provided staff with an answer regarding assumption of the
program. Regardless, based on declining participation, and the contest no longer providing
energy saving value for ERMU's conservation improvement program, staff recommended
discontinuing the contest. After discussion, Commission consensus was to discontinue the
holiday lighting contest effective immediately.
Moved by Commissioner Nadeau and seconded by Commissioner Bell to discontinue the
holiday lighting contest. Motion carried 5-0.
6.0 BUSINESS DISCUSSION
6.1 Staff Updates
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Mr.Adams announced that he would be out of the office the second full week of August,which
includes the August 14 Commission meeting.He informed the Commission and the management
team that in his absence he was designating Mr. Fuchs as his temporary successor.Mr.Adams also
noted that tomorrow is the 71st anniversary of the ERMU Commission.
In addition to his staff report,Mr.Tietz provided an update on ERMU's reliability statistics for the
first half of 2018.A 2017/2018 comparison was also provided. Overall the numbers looked very
good.
Mr. Sagstetter shared that commercial rebates have been coming in rapidly over the past few weeks.
He added that based on energy savings and spending requirements,the commercial rebate program
has been closed for 2018.There was discussion on how that would be communicated to customers.
Mr.Adams had a comment on the article from the Winona Daily News that Mr. Sagstetter had
included in the packet.He noted that they had incorrectly stated that the city had purchased the
utilities electric vehicle(EV).Mr.Adams also spoke to the name we have given our EV;Eddy,
named for eddy currents,the electrical currents generated by a magnetic field.
Commissioner Stewart asked if there was an update on the open engineer position. Staff responded
that the plan was to post for it tomorrow.
6.2 Future Planning
Chair Dietz announced the following:
a. Regular Commission Meeting—August 14, 2018
b. Special Commission Meeting—August 29, 2018 at 3:00 p.m.
c. Quorum- MMPA Annual Meeting - July 24, 2018
d. Quorum -MMUA Summer Conference -August 20-22, 2018
6.3 Other Business
6.3a Dual Fuel—Mr. Sagstetter shared a situation we recently had where a customer who was on
one of our load management rates (LM) was selling their home, and due to the moratorium on
LM rates, and the new customer not being eligible for that rate, the potential buyer backed out
of the purchase of the home. Due to a majority of our LM programs being in moratorium, staff
reached out to the Commission for discussion and direction on where we are going, and how
we want to handle situations like this. There was discussion on having some type of transition
period for existing customers currently on these programs, including when transfer of
ownership/occupancy takes place. There was also discussion on the communications and
notifications that should take place to customers on these programs.
Based on a soft transition period of five years, the Commission directed staff to outline a plan,
to include the communications that would take place to customers currently on the program,
and to add that as an upcoming agenda item for further discussion and consideration.
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The Commission recessed the regular meeting at 4:37p.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
performance evaluation of Troy Adams, General Manager
The Commission reconvened the regular meeting at 5:17 p.m.
7.0 ADJOURN REGULAR MEETING
There being no further business,Chair Dietz adjourned the regular meeting of the Elk River
Municipal Utilities Commission at 5:18 p.m.
Minutes prepared by Michelle Canterbury.
John J.Dietz,ERMU Commission Chair
Tina Allard,City Clerk
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