3.1.B. ERMU MINUTES 01-11-2011ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
December 14, 2010
Members Present: John Dietz, President; Jerry Gumphrey, Vice Chair;
Daryl Thompson, Trustee
ERMU Staff Present: Troy Adams, Director of Operations;
Theresa Slominski, Finance Director/Office Manager;
Mark Fuchs, Line Superintendent;
David Berg, Water Superintendent;
Wade Lovelette, Technical Services Superintendent;
Judy McSpadden, Recording Clerk
City Staff Present: Lori Johnson, City Administrator; Rebecca Haug, Environmental Administrator;
Tim Simon, Finance Director
Others Present: Peter Beck, Attorney from Gray Plant Mooty Law Firm;
Steve Thompson, CEO of CMMPA
1.1 Call meeting to order December 14, 2010
John Dietz called the December 14, 2010 meeting to order at 3:30 p.m.
2.1 Consider Utilities Agenda
John Dietz added 2.1 a for Rebecca Haug to give an update on the Jackson Street water tower.
Jerry Gumphrey added an item for discussion under Other Business.
Daryl Thompson moved to approve the amended December 14, 2010 Utilities Agenda. John
Dietz seconded the motion. Motion carried 2-0.
a. Rebecca Haug updated the commission on the preservation process to date for the Jackson
Street water tower. She then asked the Commission if they would like to nominate the
Jackson Street tower for the 10 most endangered historic places list. John Dietz asked if
the water tower was accepted would the City of Elk River take over ownership and care of
the water tower. Rebecca Haug responded she would foresee it as a partnership with the
City but ERMU would still retain ownership. Theresa Slominski questioned the
requirement of future cost for care and upkeep of the water tower. Rebecca Haug said it
would be the owners' preference on how much if any they spend out of pocket.
Consensus of the commission was for Rebecca Haug to proceed with the nomination of
the Jackson Street water tower for the 10 most endangered historic places.
3.1 Consider Consent Agenda
John Dietz had questions on the check register and financials, staff responded.
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Regular meeting of the Elk River Municipal Utilities Commission
December 14, 2010
Jerry Gumphrey moved to approve the Consent Agenda as follows:
a. November Check Register
b. November 16, 2010 Minutes
c. Financial Reports
Daryl Thompson seconded the motion. Motion carried 3-0.
4.1 Review City Ordinance 78-51 WATER USE RESTRICTIONS and
David Berg discussed the odd even watering ordinance currently in place. Data was collected
from 71 cities, 46 of them have the same water use restriction as ERMU, two have only time of day
restrictions, and 23 have no watering restriction at all. John Dietz stated he did not think there was a
need for watering restrictions at this time and that it should only be implemented in times of an
emergency. Discussion followed regarding the current City Ordinance. Consensus was to revisit the
wording of the City Ordinance 78-51 Water Use Restriction in January.
At the November 16, 2010 ERMU Commission meeting, the City Ordinance 78-26 Private
Wells for Domestic Use was discussed. This Ordinance was brought to the City Council asking to
rename it 78-26 Prohibiting Private Wells for Domestic Use on Properties within the City served by
the City Water System. In October the Ordinance passed 4-1. The concern for ERMU was the
possible loss of their top 20 water use customers if they chose to drill their own well resulting in an
approximate 10% loss in the water business. Last month John Dietz directed Tim Simon to do a water
model on the impact of the revenue loss for ERMU and the steps needed to recoup the estimated
$240,000. Tim Simon reviewed the rate impact and showed the rate would have to increase 16 to 17
percent for all tiers. Discussion followed. John Dietz directed staff to put together a packet with
further information for the City Council and for Attorney Peter Beck to add to the exceptions, to
include wells drilled for heating and cooling with a max draw of 25 gpm or less.
Jerry Gumphrey moved to go forward with the changes to the Ordinance and review again
prior to sending it to the City Council for final approval. Daryl Thompson seconded the
motion. Motion carried 3-0.
4.2 Review and Consider 2011 Wage Proposal
John Dietz gave his reasons for and against this issue. Jerry Gumphrey stated he holds the
employees to the greatest regards and finds it hard not to give them a raise. On the other hand, it is
difficult to pass on a raise to the consumers, so at this time he would only recommend a 1 % raise.
Daryl Thompson said he does not like the metro average survey because he thinks ERMU employees
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Regular meeting of the Elk River Municipal Utilities Commission
December 14, 2010
are superior and they should be getting raises based on the work that they do. Because of the
economic situations he recommends a 1.5% raise.
Jerry Gumphrey moved to adopt the Storm Pay policy contingent upon legal review. Daryl
Thompson seconded the motion. Motion carried 3-0.
Daryl Thompson moved to approve a 1.5% raise increase effective January 1, 2011. Jerry
Gumphrey seconded the motion. Motion carried 2-1. John Dietz voted nay.
4.3 Update on the Midwest Municipal Transmission Group and the CAPX2020 Brookings/
Twin Cities Transmission Project
In May 2006, ERMU authorized joining Midwest Municipal Transmission Group (MMTG) to
explore the potential to obtain ownership in the transmission system. In February 2007, ERMU
entered into an agreement to participate through Central Minnesota Municipal Power Agency
(CMMPA) in the CAPX2020 Brookings — Twin Cities Transmission Project. Through MMTG,
ERMU is currently receiving approximately $4,500 revenue as return on investment in existing
ERMU substation equipment.
Steve Thompson, CEO of CMMPA, provided project updates and options, financial
implications for ERMU, along with the project timeline and critical dates. John Dietz directed staff to
meet with Lori Johnson to go over the financial options and make a recommendation at a future
meeting.
5.1 Review Municipal Utility Benchmarking Analysis
In May 2010, Grand Rapids Public Utilities Commission (GRPUC), in cooperation with the
City of Grand Rapids, hired Collaboration Unlimited, a management consulting firm which
specializes in public utilities, to perform an organization and performance analysis. ERMU assisted
with the study by participating in a survey to establish quantitative benchmarking for the performance
and efficiencies of their utilities. Collaboration Unlimited collected data from 18 Minnesota
municipal utilities of which 13 provided electric and 17 provided water utility services. The survey
population included large and small cities with utilities of geographical diversity. ERMU received a
report highlighting its position compared to the benchmarking. Overall, ERMU is doing more with
less while continuing to "provide safe, reliable, cost effective and quality long term electric and water
utility service".
Consensus of the Commission was this report was a credit to ERMU employees.
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Regular meeting of the Elk River Municipal Utilities Commission
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5.2 Review and Consider Hiring of Replacement Water Operator
At the November 17, 2009 ERMU Commission meeting, the Commission was informed of the
resignation of one of the water operators. At that time the recommendation to the Commission was to
hold -off on replacing the water operator. Due to the work load and maintenance issues, staff now
recommends hiring a replacement water operator.
Jerry Gumphrey moved to approve the hiring of a replacement water operator. Daryl
Thompson seconded the motion. Motion carried 3-0.
5.3 Review and Consider Gary Street Water Tower Engineering Bids
Bids were recently received for engineering services for the painting of the Gary Street Water
Tower. Staff recommends awarding the bid to Bolton & Menk, Inc., the lowest responsive bidder.
Jerry Gumphrey moved to award the bid to Bolton & Menk, Inc, the lowest responsive bidder.
Daryl Thompson seconded the motion. Motion carried 3-0.
5.4 Review and Consider 2011 Budget, Rates, and Fees
The blended wholesale power cost increase to ERMU is approximately 2%. The proposed 2011
rates for residential and non -demand commercial customers is 2.1%, with an increase of 1.8% for
demand commercial customers. Another item for discussion was the 10% late fee being charged to
customers that do not pay their bill on time. Discussion followed. Consensus of the Commission was
to keep this policy as it is a good incentive for customers to pay their bill on time.
As determined by the recent water rate analysis, water rates are proposed to remain unchanged
for 2011. The water access charge is budgeted to increase from $2500 to $3000. This increase was
already approved by the Commission and adopted into City ordinance with the City's fee schedule.
Jerry Gumphrey moved to approve the 2011 budget as presented. Daryl Thompson seconded
the motion. Motion carried 3-0.
5.5 Review and Consider Write -Offs
Write-offs for miscellaneous invoices from Miscellaneous Accounts Receivable totaling
$10,773.34 were reviewed. Discussion followed.
Jerry Gumphrey moved to accept the write-off listing for the miscellaneous invoices as
presented. Daryl Thompson seconded the motion. Motion carried 3-0.
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Regular meeting of the Elk River Municipal Utilities Commission
December 14, 2010
6.1 Staff Updates
Jerry Gumphrey stated he would be resigning as ERMU Commissioner to allow future mayor
John Dietz to remain. He thanked everyone and wanted all the employees to know he thought they
were outstanding. Staff thanked Jerry Gumphrey for his years of service as an ERMU Commissioner.
John Dietz commented on the letter of thanks ERMU received from Connexus. John Dietz
asked Mark Fuchs to thank the lineman for doing a good job helping Connexus restore power to their
customers.
Theresa Slominski informed the Commission that the credit card usage has increased since the
fee was removed and more customers are taking advantage of this payment option.
Mark Fuchs said there will be an intern from an electric line school spending 60 hours with the
line crews. Discussion followed regarding insurance and liability. Staff was directed to check on the
insurance.
6.2 Set Date for Next Meetin¢
The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be
Tuesday, January 11, 2010 at 3:30 p.m.
6.3 Adjourn Regular Meeting
John Dietz moved to adjourn the regular meeting of the Elk River Municipal Utilities
Commission meeting at 5:45 p.m. Daryl Thompson seconded the motion. Motion carried 2-0.
Minutes prepared by Judy McSpadden.
John Dietz
President, ERMU Commission
Tina Allard
City Clerk