2.2 ERMUSR 12-11-2018 ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
November 13,2018
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 Manager;
Chris Kerzman, System Engineer;Tony Mauren,Communications&
Administrative Coordinator; Scott Thoreson,Lead Lineworker;and
Zac Johnson,Lead Lineworker
Others Present: 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 Westgaard and seconded by Commissioner Stewart to approve the
November 13,2018,agenda. Motion carried 5-0.
1.4 Introduction of New Employees
Mr. Tietz introduced Chris Kerzman as the new System Engineer.Ms. Canterbury introduced Tony
Mauren as the new Communications&Administrative Coordinator. The two new employees shared
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a little bit about their background.The Commission welcomed the new employees.
2.0 CONSENT AGENDA(Approved By One Motion)
Moved by Commissioner Nadeau and seconded by Commissioner Bell to approve the Consent
Agenda as follows:
2.1 October Check Register
2.2 October 9,2018 Regular Meeting Minutes
2.3 2018 Third Quarter Utilities Performance Metrics Score Card Statistics
2.4 Organizational Fundamentals Policy
2.5 License Agreement—Coborn's,Incorporated
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—September 2018
Ms. Slominski presented the September 2018 financial report. Chair Dietz had a few questions
on the financials. Staff responded.
Moved by Commissioner Stewart and seconded by Commissioner Westgaard to receive
and file the September 2018 Financial Report. Motion carried 5-0.
5.2 2019 Business Plan/Budget: Rates and Review
Ms. Slominski presented a high level overview of the conservation improvement program
budget. As noted at last month's Commission meeting, a larger dollar amount is being
budgeted for rebates. Staff explained that previously these costs have been funded by Great
River Energy(GRE), however Minnesota Municipal Power Agency(MMPA) doesn't have a
similar funding mechanism, so these costs will need to be funded by ERMU. There was
discussion.
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Ms. Slominski presented the administrative and technical services capital budgets and noted
the addition of a$15,000 line item for a non-recurring expense in the administrative budget for
a handicap accessibility front entrance.
For the water department capital budget, Ms. Slominski noted that nothing had changed since it
was last presented. Mr. Adams commented on the Jackson Street Water Tower line item, and
shared that he will be working with the city and the attorney to get the asset legally transferred
to the city; at which time ERMU would transfer the $90,000 in reserves over to the city. There
was discussion. Commissioner Westgaard recommended that ERMU staff keep the City
Administrator informed on the intent to transfer the asset as certain policies may need to be
developed on their end regarding the money and what it will be used for.
Ms. Slominski presented the electric department capital budget. Mr. Fuchs provided further
detail on capital construction projects. Chair Dietz had a question on the $5,000 line item for
chairs in the plant breakroom. Staff responded, and explained that the new chairs are long
overdue.
Ms. Slominski presented the water department revenue and expense budget and preliminary
rates. She shared that the water department expenses decreased 2.5%, largely due to a change
in depreciation calculations for a misclassified asset. In order to maintain the financial health
and to plan for the short and long term water capital project projections,the 2019 water budget
reflects an overall 1.8% increase in revenue through water sales. The allocation of the increase
will be collected through an increase in customer charge and 1st tier water use rates. The result
for the proposed rate increase for a typical residential customer would be1.72%, resulting in an
approximate annual increase of$5.00. The finalized 2019 retail water rates will be proposed
for final approval with the 2019 budget in December.
Ms. Slominski presented the electric department revenue and expense budget and preliminary
rates. The electric department expenses increased approximately 3%.As outlined in her memo,
historically wholesale power costs have been within 70% - 75%of operating revenue, and this
is approximately 65%for 2019 with our new wholesale power provider. The proposed budget
represents a 0% increase in ERMU rates, and still has a sizable contribution to reserves. The
2019 retail electric rates will be proposed for final approval with the 2019 budget in December.
Commissioner Stewart pointed out two possible errors in the spreadsheet calculations: one on
page 68 of the electric department revenue section, for the $4,800 line item for the sub-station
credit; and the other on page 69 of the water department revenue section, for the $4,000 line
item for bulk water sales/hydrant rental. She stated that it looks like these two amounts are not
being pulling into the formula for the calculation. Staff responded that they would confirm and
make the correction if needed.
Commissioner Stewart noted the $100,000 that was being budgeted for water connection fees,
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and questioned if staff should consider raising the amount based on the past two years of
significant growth. There was discussion. Staff stated that they would re-evaluate the dollar
amount before bringing the budget back in December.
Ms. Slominski presented the summary budget.
Mr. Adams led a lengthy discussion on the preliminary proposed 0%electric rate increase
versus a rate reduction, and the impact it would have on our financial reserves. After
discussion,the Commission was in support of resetting our electric rates. Staff stated that they
would work to implement the change into the 2019 budget to be presented in December.
5.3 2019 Utilities Fee Schedule
Ms. Canterbury presented the 2019 Fee Schedule to the Commission and went over the two
proposed changes which included a 3.6% increase to the water access charge, and a$10.00
reduction to the NSF fee. Ms. Canterbury also 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
connection fees and analyzing that for consideration for the 2020 fee schedule.
At the October 9 Commission meeting, staff was directed to research and bring back the costs
associated with offering an opt-out program for both electric and water. Mr. Sagstetter
presented the preliminary dynamics of the opt-out program and went over the fees that the
customer would be responsible for. As there were further details that needed to be worked
through before offering the program, staff recommended waiting to add the fees to the fee
schedule until everything is finalized.
Moved by Commissioner Nadeau and seconded by Commissioner Westgaard to approve
the 2019 Utilities Fee Schedule. Motion carried 5-0.
5.4 2018 Third Quarter Delinquent Items
Ms. Slominski presented the delinquent items for the third quarter which included a delinquent
amounts listing report totaling$6,233.11 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 .027%. For security purposes, Commissioner Stewart recommended that the
customer account number on the delinquent items listing be removed. Staff concurred.
Moved by Commissioner Stewart and seconded by Commissioner Nadeau to approve the
2018 Third Quarter Delinquent Items. Motion carried 5-0.
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5.5 2018 Assessments
Ms. Slominski presented a listing of proposed assessments totaling $10,301.48, for customers
with outstanding balances that still remain unpaid for water, sewer, stormwater,trash, and
qualifying electric and franchise fee services. The City Council would need to approve the list
of assessments at their November 19 meeting and take them to the county for the actual
assessment on the property taxes. Ms. Slominski stated moving forward, we would also want to
remove the customer account number from the assessment listing. The Commission had a few
questions. Staff responded.
Moved by Commissioner Bell and seconded by Commission Stewart to approve the 2018
assessments listing totaling $10,301.48 to take to the City Council for assessment on
property taxes. Motion carried 5-0.
5.6 Wage & Benefits Committee Update
On October 9, the Wage &Benefits Committee (W&BC) held an open meeting for employees
to submit wage and benefit suggestions for consideration by the committee. The committee
met on November 2 to review and research topics from the open meeting. The committee also
performed market analysis in preparation for making a cost of living adjustment
recommendation to the commission. The committee also followed up on other miscellaneous
outstanding issues. Mr. Adams presented the W&BC update, as outlined in the memo, along
with the proposed recommendations.
Moved by Chair Dietz, and seconded by Commissioner Stewart to approve the following
effective January 1,2019:
• 2.85% "metro average" adjustment for lineworker pay group
• 3% cost of living adjustment for field,office, and management pay groups
• Purchased Vacation Time Policy allowing for the purchase of 40 hours vacation per
year
• Employee funded vision insurance plan
• Employer contributions to health savings account of$650 for single and $1985 for
single+1 and family plans
Motion carried 5-0.
6.0 BUSINESS DISCUSSION
6.1 Staff Updates
Mr.Adams added that ERMU has been working with the city and the Economic Development
Authority(EDA)to create some incentives for new big businesses coming to town.The incentive
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would work in the form of a temporary rate reduction.Mr.Adams further explained the mechanics
of the program and how it would affect ERMU's Payment in Lieu of Taxes(PILOT)to the city.
There was discussion.
Mr.Adams highlighted from his staff report that throughout 2018 staff has been working on
evaluating the Utilities Performance Metric Incentive Compensation(UPMIC)policy criteria
for the score card, including the customer service satisfaction measurement tools and rate
evaluation tools. He shared that at this time it is unlikely that a recommendation to change any
of the measurement criteria for the 2019 measurement period will be made. The UPMIC score
card will be presented in December for adoption for the 2019 measurement period.
In Ms. Slominski's staff report,she shared that the front counter has been fortified with a bullet
absorbing material and that the bullet proof glass has been placed on order. Chair Dietz inquired as
to when the glass would be installed.Ms. Slominski stated that when we placed the order we were
looking at a 2 to 4 week lead time.
In Mr.Tietz's staff report,he shared that on October 31 staff ran all of the engines without any
issues.As this was the first time in months since engine#4 had been run,Commissioner Stewart
asked for further clarification on how things were coming along with the mechanical issues.Mr.
Tietz responded.There was discussion on the Reciprocating Internal Combustion Engines(RICE)
Rule and the engines being used for emergency use only.
Chair Dietz provided an update on the Great River Energy Resource Processing Plant.There was
discussion.
6.2 Future Planning
Chair Dietz announced the following:
a. Regular Commission Meeting—December 11, 2018
6.3 Other Business
There was no other business.
The Commission recessed the regular meeting at 4:54 p.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
Second Half of the Performance Evaluation of Troy Adams, General Manager
The Commission reconvened the regular meeting at 5:23 p.m.
Moved by Commissioner Stewart and seconded by Commissioner Nadeau to approve an
additional 10% market adjustment,along with the 3% COLA for the General Manager
position effective January 1,2019. Motion carried 5-0.
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Moved by Chair Dietz and seconded by Commissioner Bell to direct the W&BC to
benchmark the Electric Superintendent position. Motion carried 5-0.
As the benchmarking data would need to be collected,Mr. Adams asked for clarification on
whether the Commission wanted just the Electric Superintendent position to be benchmarked,
or the complete management pay group. After discussion, Commission consensus was for the
W&BC to benchmark the management pay group and report back to the Commission at the
December meeting.
7.0 ADJOURN REGULAR MEETING
Moved by Commissioner Westgaard and seconded by Commissioner Nadeau to adjourn the
regular meeting of the Elk River Municipal Utilities Commission at 5:27 p.m.Motion carried
5-0.
Minutes prepared by Michelle Canterbury.
John J.Dietz,ERMU Commission Chair
Tina Allard,City Clerk
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