10-09-2018 ERMU MINELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
October 9, 2018
Members Present: Chair John Dietz; Vice Chair At 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 Manager;
Jennie Nelson, Customer Service Manager
Others Present: Cal Portner, City Administrator; and Peter Beck, Attorney
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
There were no additions or corrections to the agenda.
Moved by Commissioner Nadeau and seconded by Commissioner Stewart to approve the
October 9, 2018 agenda. Motion carried 5-0.
1.4 Recognition of Employee Achievement
Mr. Adams announced that Mr. Volk was recently recognized for his succession to Section Chair of
the Minnesota American Water Works Association (MN AW WA) at their annual Conference held
September 18-21 in Duluth, Minnesota. Mr. Adams commented that it really goes to show his level
of leadership within the water utility community in Minnesota, and his peers' respect to vote him
into this position. The Commission congratulated him on his achievement.
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Regular Meeting of the Elk River Municipal Utilities Commission
October 9, 2018
1.5 Recognition of Transition to Minnesota Municipal Power Agency
On October 1, 2018, ERMU began receiving power from Minnesota Municipal Power Agency
(MMPA). Operationally, the transition to MMPA was seamless and without interruption of power
to the community. Mr. Adams stated that he wanted to take a moment to recognize all the hard
work and many hours that were put in leading up to the transfer. And as outlined in his memo,
he shared that all signs point to a very favorable future with MMPA. Staff noted that an article
on this monumental moment in ERMU's history was featured on the front page of the October
6, 2018 edition of the Star News.
2.0 CONSENT AGENDA (Approved By One Motion)
On page 20 of the check register, Commissioner Stewart asked for further clarification on what
check number 75802 issued to Sherburne County Zoning in the amount of $16,521 was for. Ms.
Slominski responded that it was our monthly payment for an interest free loan we received from
Sherburne County for the Landfill Gas Plant.
Moved by Commissioner Westgaard and seconded by Commissioner Bell to approve the
Consent Agenda as follows:
2.1 September Check Register
2.2 September 11, 2018 Regular Meeting Minutes
Motion carried 5-0.
3.0 OPEN FORUM
No one appeared for open forum.
4.0 POLICY & COMPLIANCE
There was nothing presented for policy & compliance.
5.0 BUSINESS ACTION
5.1 Financial Report— August 2018
Ms. Slominski presented the August 2018 financial report.
Moved by Commissioner Nadeau and seconded by Commissioner Stewart to receive and
file the August 2018 Financial Report. Motion carried 5-0.
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Regular Meeting of the Elk River Municipal Utilities Commission
October 9, 2018
5.2 2019 Business Plan/Budget— Water and Electric Expenses and Conservation
Improvement Program
Ms. Slominski presented the first cut of the 2019 Water and Electric Expense Budget. She
noted that items are subject to change as the complete 2019 budget is assembled and the
finalized wholesale power costs and revenues are reflected. Revenue and rates for 2019 will be
presented in November.
Electric Department Expense Budget — The 2019 forecast for electric expenses reflected a
2.77% increase over the current year budget. The wholesale power costs, which make up
between 70-75% of the operating budget, were estimated using MMPA's rate structure. Ms.
Slominski noted that it is a decrease in spite of an increase in kwh growth of 6% over the prior
year. Commissioner Stewart inquired if staff had factored in an amount for PCA costs. Staff
responded that they had done so and had used a projected average. Ms. Slominski pointed out
that Depreciation and Amortization are increased largely due to the amortization of MMPA's
intangible asset. Currently, staff is estimating a 0% rate increase. The Commission had a few
questions on the electric department expense budget. Staff responded.
Water Department Expense Budget - The 2019 forecast for water expenses reflected a less than
1% increase over the current year budget. Most notable increases were on the administrative
side for increases in health insurance and benefits. Currently, staff is estimating a 2% increase
to the monthly charge and tier 1 rate.
Conservation Improvement Program Budget — Mr. Sagstetter presented the Conservation
Improvement Program (CIP) Budget which included detailed information about the cost of the
specific programs as well as the historic participation numbers; also included was a CIP
summary sheet for reference. Mr. Sagstetter noted that the 2019 forecast for CIP includes
approximately $242,000 for rebates. He explained that in the past these cost have been partially
funded by Great River Energy (GRE), however MMPA doesn't have a similar funding
mechanism, and so these costs will need to be funded by ERMU. There was discussion on state
legislative developments and possible changes to the existing CIP. Commissioner Westgaard
asked for further clarification on whether the proposed budget reflected the rebates ERMU
would be funding. Staff responded that it did.
5.3 2019 Utilities Fee Schedule
Annually ERMU staff reviews its fees for the upcoming year to make sure they are fair,
reasonable, and proportionate to the actual cost of the service for which the fee is imposed. The
addition of any new fees is also considered at this time. Staff is considering the addition of two
new fees; an opt -out fee, and a residential application fee.
Mr. Volk shared that ERMU had recently been approached by a customer that would like to
opt -out of the automated meter reading (AMI) process we currently offer. As ERMU does not
presently offer an opt -out program, there are a few different options we can consider. Mr. Volk
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Regular Meeting of the Elk River Municipal Utilities Commission
October 9, 2018
presented four different options and talked through the pros and cons of each of them. The
Commission questioned why someone would want to opt out of AMI. Staff and Attorney Beck
responded. There was discussion. Staff suggested offering an option that socializes the costs
associated with the meter change out where the customer covers 50% of the cost, and ERMU
covers the other 50%; there would also be a monthly manual meter reading fee that would be
passed along in its entirety to the customer. After further discussion, the Commission
supported the idea of an opt -out program and directed staff to do some further research and
bring back some dollar amounts on the cost to offer the program for both water and electric.
Ms. Nelson shared that staff is considering implementation of a residential application fee to
cover the costs associated with credit checks, meter reading, and account setup. She stated that
this is a standard practice amongst utilities. Ms. Nelson presented what three other utilities
charge for residential application fees; the fees ranged from $15.00 to $21.00. Ms. Nelson also
spoke to the residential application process and how it is currently handled. She shared that in
moving forward we are looking at utilizing an online application process that is being rolled
out by NISC, and that may be an opportune time to implement the fee. The Commission had a
few questions. Staff responded. The Commission was open to the idea of a $15.00 application
fee. Mr. Adams recommended waiting to see how the new online application software operates
before staff formulates a policy and implements the fee. The Commission concurred.
Mr. Adams noted that in 2019 staff will be going through and verifying our philosophy of
allocation of cost, and aid to construction for water and electric fees, and analyzing that for
consideration in the 2020 fee schedule.
5.4 Landfill to Gas Electric Generation Facility
Mr. Sagstetter stated that as part of the ongoing evaluation of the Elk River Landfill Gas Plant
(LFGP) generating facility, staff has been evaluating several different scenarios for operating
the facility. For each scenario, other than closing the facility in 2018, the decisions on future
operations significantly impact the decisions to spend considerable funds on engine
replacements.
ERMU met with Waste Management on October 5 to discuss the operation of the plant after
the current purchased power agreement, gas purchase agreement, and operation and
maintenance contracts expire on October 31, 2022. Mr. Sagstetter provided an overview on the
key questions that were addressed. He stated that based on the discussions, and Waste
Management verbally agreeing to offer ERMU right of first refusal when the contract expires,
staff has moved forward with ordering replacement engine #1. There was discussion. Attorney
Beck stated that we need to get something in writing about the right to first refusal. Staff
indicated that they were already working with Waste Management on that.
6.0 BUSINESS DISCUSSION
6.1 Staff Updates
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Regular Meeting of the Elk River Municipal Utilities Commission
October 9, 2018
Mr. Adams had nothing additional to add to his staff update. Commissioner Westgaard commented
that the new bi-monthly Commission update Mr. Adams has been providing has been very helpful.
Mr. Tietz had one change to his staff report in regards to the System Engineer. The start date for the
new employee has moved from October 22 to October 29.
Mr. Volk highlighted from his staff report that Water Operator Dave Ninow was sought after, and
selected, to hold a position on the St. Cloud Technical & Community College's Water
Environmental Technologies (WETT) Program advisory committee.
Also noted on Mr. Volk's staff report was that the Harley Davidson HOG Chapter recently painted
69 hydrants for ERMU. He shared that they are also on board for shoveling out hydrants this winter
should the need arise. Chair Dietz had a question on how we would recognize them for their efforts.
Staff responded.
6.2 Electric Service Territory Transfer Update
Mr. Adams provided an overview of the areas 5&6 electric service territory transfer that began on
September 13 and completed on September 18. This process was longer than past transfers
primarily because in this transfer Connexus retained ownership of the overhead electric distribution
feeder. He shared that the implementation was well planned, coordinated and executed perfectly.
The department heads that worked on the project shared a little bit about the process and touched on
the highlights and some of the challenges that were associated with the transfer. There was
discussion.
Mr. Adams complimented staff on what an excellent job they did, especially with the coordination
between departments.
6.3 Future Plannine
Chair Dietz announced the following:
b. Regular Commission Meeting — November 13, 2018
6.4 Other Business
There was no other business.
7.0 ADJOURN REGULAR MEETING
Moved by Commissioner Westgaard and seconded by Commissioner Bell to adjourn the
regular meeting of the Elk River Municipal Utilities Commission at 4:46 p.m.
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Regular Meeting of the Elk River Municipal Utilities Commission
October 9, 2018
Minutes prepared by Michelle Canterbury.
John JIAAt ,(FRMU Wmwission Chair
Tina Allard,
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Regular Meeting of the Elk River Municipal Utilities Commission
October 9, 2018