2.2 ERMUSR 09-11-2018 ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
August 14,2018
Members Present: Chair John Dietz;Vice Chair Al Nadeau; Commissioners Paul Bell,
Mary Stewart,and Matt Westgaard
ERMU Staff Present: Theresa Slominski,Finance and Office Manager;
Mark Fuchs,Electric Superintendent;
Mike Tietz,Technical Services Superintendent;
Tom Sagstetter,Conservation&Key Accounts Manager;
Michelle Canterbury,Executive Administrative Assistant;
Jennie Nelson,Customer Service Manager
Others Present: Cal Portner,City Administrator;Peter Beck,Attorney; and
Amanda Bednar, City Environmental Coordinator
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
Chair Dietz requested that the topic of Solar Picnic Table be added as agenda item 3.1 following
Open Forum.
Moved by Commissioner Bell and seconded by Commissioner Nadeau to approve the
amended August 14,2018,agenda. Motion carried 5-0.
1.4 Recognition of Employee Promotion
Mr.Fuchs introduced Russ Stuhr and announced he had been promoted to the Field Crew
Foreperson position.Russ formerly held the Lead Bore Rig Operator Position.The plan is for Russ
to train with the current Foreperson who will be retiring at the end of 2018.The Commission
congratulated Russ on his promotion.
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2.0 CONSENT AGENDA(Approved By One Motion)
Moved by Commissioner Stewart and seconded by Commissioner Nadeau to approve the
Consent Agenda as follows:
2.1 July Check Register
2.2 July 10,2018 Regular Meeting Minutes
2.3 July 10,2018 Closed Meeting Minutes
2.4 Summary of General Manager Performance Review
2.5 2018 Second Quarter Utilities Performance Metrics Score Card Statistics
2.6 Wage&Benefits Committee Update
Motion carried 5-0.
3.0 OPEN FORUM
No one appeared for open forum.
3.1 Solar Picnic Table
Commissioner Westgaard provided a quick introduction and shared that Ms.Bednar had presented
her budget to the City Council last night.Part of her budget included a capital outlay of$15,000 for
construction and installation of a solar powered picnic table. Commissioner Westgaard shared that
there was some dialog amongst the City Council on whether the Utilities would be interested in
sponsoring a portion of the project.
Ms.Bednar provided some background on the solar picnic table project. She shared that the solar
panels,battery and design were completed via a partnership with Energy City and the University of
St.Thomas.Elk River owns all the panels,batteries,design details and technical drawings.Ms.
Bednar stated that what they need now is the physical structure. The picnic table requires cement
footings strong enough to hold the added weight of the panels.They also need the physical table,
panel installation and electrical connection for the solar panels. Commissioner Bell asked for further
clarification on what the$15,000 included.Ms.Bednar responded.Ms.Bednar distributed a
handout which outlined the project and showed a model of what the physical structure would look
like.There was discussion.
Chair Dietz reached out to the Commission to see if they would be interested in sponsoring half of
the project,to be capped at$7,500.There was discussion on where this expense would be funded
from.As this project wouldn't be taking place until 2019,Ms. Slominski suggested bringing this
back next month for further discussion and consideration.Chair Dietz indicated that he would like to
be able to let the city know in the interim whether the Commission supports sponsoring the$7,500,
for their budgeting purposes.There was consensus from the Committee to do so provided staff
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could work this into the 2019 budget. Staff will add this topic to next month's meeting agenda,at
which time it can be considered for formal approval.
4.0 POLICY&COMPLIANCE
4.1 Energy Management Programs
At the July 10 Commission meeting,the Commission and staff discussed the option of maintaining
the current energy management programs(Dual Fuel,Electric Thermal Storage(ETS)Water,and
ETS Space Heating)for existing customers with a sunset date of 3 to 5 years.During the sunset
period,the rates would be increased to reach parity with the standard general service rate.Based on
the substantial capital investments customers may have in their existing systems,the Commission
and staff had consensus that the 5 year sunset period would be best.
Mr. Sagstetter presented his memo, and shared that to communicate the end of the programs,staff
will provide an annual notification to customers participating in the Dual Fuel,and ETS Water and
Space Heating programs to remind them of the end date of December 31,2023,and the need to
evaluate other options for space and/or water heating needs.Any rate increases would also be
included in this annual notification.He noted that the sunset period will be offered to any person
purchasing or renting a property that is participating in an affected Energy Management program
until the end date of December 31,2023.Attorney Beck stated that the notification letter should
clearly state that the current participants will be responsible for disclosing that this program will be
ending to any potential buyers, should they sell their home.He also made the suggestion that the
initial letter be sent out certified mail. There was discussion.
Mr. Sagstetter shared that staff will continue to research new programs during the sunset period that
will provide benefit to the participating customers and ERMU.Any replacement Energy
Management programs created will be marketed,communicated and made available to all ERMU
residential customers.
Moved by Commissioner Nadeau and seconded by Commissioner Stewart to approve a
sunset date of December 31,2023 for the Dual Fuel,Electric Thermal Storage Water, and
Electric Thermal Storage Space Heating Programs. Motion carried 5-0.
5.0 BUSINESS ACTION
5.1 Financial Report—June 2018
Ms. Slominski presented the June 2018 financial report. For the Maintenance Expense line
item in the Summary Electric Statement, she noted that the significant increase of$44,000
from June this year to last year was the result of an inventory adjustment that was made. Ms.
Slominski shared that last year staff began to identify some of our smaller in size and value
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inventory items that we would be removing from our balance sheet. She explained that in
doing so, it shows up as an expense on your income statement. This is something that staff
planned and budgeted for. It was also noted that although the dollars are no longer part of the
inventory,the quantities are. Chair Dietz had a question on what might be contributing to the
lower administration expenses this year. Staff responded. There was discussion.
Moved by Commissioner Stewart and seconded by Commissioner Westgaard to receive
and file the June 2018 Financial Report. Motion carried 5-0.
5.2 2018 Second Quarter Delinquent Items
Ms. Slominski presented the delinquent items for the second quarter which included a
delinquent amounts listing report totaling $6,946.51 for all services. She also presented the
delinquent items comparisons for 2017/2018, identifying the categories and running totals.
Ms. Slominski shared that our totals for the year for collections and write-offs are well below
the national average, at .01%. The Commission had a few questions. Staff responded.
Moved by Commissioner Nadeau and seconded by Commissioner Bell to approve the
Second Quarter Delinquent Amounts Listing. Motion carried 5-0.
5.3 2019 Business Plan/Budget: Schedule; Travel and Training; Dues, Subscriptions, and Fees
Ms. Slominski gave an overview of the budgeting process schedule and presented the Travel
and Training budget which reflected a 0.6% decrease over the prior year. For the American
Public Power Association(APPA) Legislative Round-up line item, Commissioner Stewart
questioned if the budgeted amount was for two staff members as noted, or for one staff
member and one commissioner. Staff responded that it was for the latter, and that they would
make that correction. There was some discussion on which trainings were optional for
employees and which ones were mandatory. Staff noted that a rotation schedule is used so that
all of our employees can have the opportunity for ongoing training.
The Dues, Subscriptions, and Fees budget had a 7.9%increase, reflecting various known and
projected increases for 2019. This is an increase from the prior year's 1.3%increase, largely
due to our SCADA OSI fee increases.Ms. Slominski provided some background information
and further explanation for the increase to this line item. She also provided the details on the
new line items that had been added for 2019.
6.0 BUSINESS DISCUSSION
6.1 Staff Updates
Ms. Slominski shared the results of the estimated final buy-in amount provided by Minnesota
Municipal Utilities Association(M1vIPA).We had originally anticipated it would be around$20
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million,and the final estimate has come in at$21,325,733. She noted that we wouldn't know the
fmal amount until we begin taking power on October 1,2018.Ms. Slominski provided a breakdown
of the payment we had already made,the credit for interest,and the estimated amount we would get
for the current bonding; based on those figures we're looking at approximately$2.2 million that
would need to be funded from reserves.There was discussion.
Mr. Tietz informed the Commission that we had recently had a situation come up with a customer
who had some concerns with an ERMU employee who was performing locates on their property;
mainly that the locator had not notified the homeowners that he was there to do the locate by
knocking at their front door to tell them.As the meter base was located in a unique area of this
property, seven feet from the transformer versus directly on the home,the locator was doing his due
diligence by walking around all of the structures on the property to ensure the locate was done
properly.This was another cause for concern for the homeowner because he didn't know who was
walking around on his property.Mr.Tietz shared that after speaking with the homeowner about
their concerns,they still weren't satisfied with how the situation was handled. Staff explained that
everything was done according to our standard procedures,and that the locator who was performing
his job was clearly identifiable by his company uniform and truck with the ERMU logo.There was
discussion.
Mr. Sagstetter highlighted from his staff report that CAER was very appreciative of the$14,000
rebate check they received to offset some of the costs of upgrading to a more efficient centralized
HVAC system.He stated that this rebate is part of the conservation improvement programs ERMU
offers that target low-income individuals or organizations.
Mr. Sagstetter also shared a little bit about the Minnesota Municipal Power Agency(MMPA)Clean
Energy Choice Program that we'll be transitioning our existing residential wind customers over to.
The focus will be rolling out the residential program first,and then moving onto the business
program in 2019 as that program is much more involved. It was noted that the city and ERMU are
exploring the option of having all of their energy come from 100%renewables;this would be part of
the Business Clean Energy Choice Program.There was discussion on our switch over to MMPA on
October 1,and how we were going to communicate that to customers.
6.2 Future Planning
Chair Dietz announced the following:
a. Special Commission Meeting—August 29, 2018 at 3:00 p.m.
b. Regular Commission Meeting—September 11, 2018
c. Quorum—MMUA Summer Conference—August 20-22, 2018
6.3 Other Business
There was no other business.
7.0 ADJOURN REGULAR MEETING
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Moved by Commissioner Westgaard and seconded by Commissioner Bell to adjourn the
regular meeting of the Elk River Municipal Utilities Commission at 4:26 p.m.
Minutes prepared by Michelle Canterbury.
John J.Dietz,ERMU Commission Chair
Tina Allard,City Clerk
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ELK RIVER MUNICIPAL UTILITIES
SPECIAL MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
August 29,2018
Members Present: Chair John Dietz;Vice Chair Al Nadeau; Commissioners Paul Bell,
and Mary Stewart
Members Absent: Matt Westgaard
ERMU Staff Present: Troy Adams, General Manager;
Theresa Slominski,Finance and Office Manager;
Mark Fuchs,Electric Superintendent;
Mike Tietz,Technical Services Superintendent;
Tom Sagstetter, Conservation&Key Accounts Manager;
Michelle Canterbury,Executive Administrative Manager
Others Present: None
1.0 CALL MEETING TO ORDER
The special meeting of the Utilities Commission was called to order at 3:00 p.m.by Chair Dietz.
2.0 DISCUSS AND TAKE ACTION ON AWARDING THE SALE OF$10,000,000 ELECTRIC
REVENUE BONDS,SERIES 2018A
At the July 10 meeting,the Commission passed a resolution to proceed with the issuance of
$10,000,000 2018A Electric Revenue Bonds. Given that the City of Elk River is the qualified
entity to issue bonds, the resolution was approved by the City Council at their July 16 meeting.
At that time it was identified that the award of the bonds by the Utility Commission would
come back for a special meeting to be held on August 29 at 3:00 p.m. Proposals for the sale of
the bonds were received this morning, August 29, until 9:30 a.m.
The bid tabulation was distributed at the meeting. Terri Heaton, Springsted Senior Vice
President/Client Representative, was available by phone and presented the market sale
information results which consisted of six bids. Robert W. Baird& Company, Incorporated
came in as the low bidder with a true interest rate of 3.52%. Based on a premium bid, a lower
interest rate, and reduced underwriter fees, the final results of the bonding reflect a savings of
approximately$400,000.
The Moody's bond rating call was conducted on August 6. Based on the information reviewed,
Moody's has assigned an Aa3 rating to ERMU's $10 million Electric Revenue Bonds, Series
2018A. Ms. Heaton spoke to how this high rating contributed to the favorable results for the
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$10,000,000 bonding. She also went over ERMU's credit strengths that Moody's used to
determine the rating which included:
• Monopoly service area with expanding customer base
• Electric commission has sole rate setting authority
• History of operating surpluses with strong financial and coverage ratios
• Transition to membership in Minnesota Municipal Power Agency (MMPA)
will lead to the elimination of coal exposure
Mr. Adams provided some comparisons between our rating and other power agencies.
Based on the bids received,the recommendation was to award the issuance and sale of the
$10,000,000 Electric Revenue Bonds, Series 2018A to the low bidder, Robert W. Baird &
Company, Incorporated, per Resolution No. 10-18.
Moved by Commissioner Stewart and seconded by Commissioner Bell to adopt Resolution
No. 18-10 awarding the issuance and sale of$10,000,000 Electric Revenue Bonds,Series
2018A,per the attached resolution.Motion carried 4-0.
Chair Dietz had a question on our final estimated amount for our buy-in to MMPA and$1.7 million
coming out of reserves versus$2.1 million. Staff explained that based on the approximate$400,000
savings realized on the bonding,we would be able to use that savings towards the buy-in,resulting
in that much less coming out of reserves.
3.0 ADJOURNMENT
There being no further business,Chair Dietz adjourned the special meeting of the Elk River
Municipal Utilities Commission at 3:08 p.m.
Minutes prepared by Michelle Canterbury.
John J.Dietz,ERMU Commission Chair
Tina Allard,City Clerk
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