3.1.B ERMU MINUTES 06-14-2011ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
May 10, 2011
Members Present: John Dietz, President; Daryl Thompson, Vice Chair; Al Nadeau, 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 StaffPresent: Tim Simon, Finance Director; Justin Ferrite, City Engineer;
Cathy Mehelich, Director of Economic Development
Others Present: Peter Beck, Attorney from Gray Plant Mooty Law Firm
1.1 Call meeting to order May 10, 2011
John Dietz called the May 10, 2011 meeting to order at 3:30 p.m.
2.1 Consider Utilities Agenda
Troy Adams requested agenda items 5.5, 5.6, and 5.7 be moved up in consideration for the City
staff present. John Dietz added item 5.8 regarding the Water Tiered Rate System and also had a few
items for discussion under Other Business.
Daryl Thompson moved to approve the revised May 10, 2011 Utilities Agenda. Al Nadeau
seconded the motion. Motion carried 3-0.
3.1 Consider Consent Agenda
Al Nadeau moved to approve the Consent Agenda as follows:
a. April Check Register
b. April 12, 2011 Regular Meeting Minutes
c. Financial Reports
Daryl Thompson seconded the motion. Motion carried 3-0.
5.5 Review and Consider Policy for Water Access Charge Payment Program
Cathy Mehelicb, Director of Economic Development for the City of Elk River, addressed the
Commission on a proposed policy for a Water Access Charge Payment Program. The program is
modeled after the City of Brooklyn Park which offers the financing program as an incentive for new
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Regular meeting of the Elk River Municipal Utilities Commission
May 10, 2011
or expanding full -service restaurants. The program allows the restaurant to pay the Water Access
Charge fee over time through their utility bill versus at the time of the building permit is issued.
Theresa Slominski asked if the wording in the proposed payment program could be changed because
ERMU bills monthly, not quarterly, for water usage. Peter Beek is working on an agreement for this
payment program if passed by the Commission and City Council. Troy Adams stated this should be a
motion contingent upon the City Councils approval of SAC fees.
AI Nadeau moved to approve the Policy for the Water Access Charge Payment Program
contingent upon the City Councils approval of the Sewer Access Charge Payment Program.
Daryl Thompson seconded the motion. Motion carried 3-0.
5.6 Review Water Main Improvements within the Evans Avenue and 2"d Street 2011 Street
Rehabilitation Pro*ect
Justin Femrite, City Engineer, provided a map of the Evans Avenue and 2"d Street area and
explained the need for project. The estimated water main project cost or ERMU is $149,150. John
Dietz asked David Berg the age of the water main that would be replaced and be stated it was installed
in the early 1900's.
Daryl Thompson moved to approve the Water main Improvements within the Evans Avenue
and 2"d Street Rehabilitation Project. Al Nadeau seconded the motion. Motion carried 3-0.
5.7 Gary Street Tower Reconditionine Proiect
On May 3, 2011 at 2:30 p.m. bids were opened for the Gary Street Tower Reconditioning
project. Discussion followed regarding the scope of the project. David Berg said the Manway
Access Tube and Tank Belly could wait another 10 years. After reviewing the bids, Bolten & Menk,
the engineering firm hired to oversee this project, recommends awarding Classic Protective Coatings,
hic., the lowest responsive bidder.
Daryl Thompson moved to award the Gary Street Tower Reconditioning Project to Classic
Protective Coatings, Inc, the lowest responsive bidder, for $234,000. Al Nadeau seconded the
motion. Motion carried 3-0.
5.8 Water Tiered Rate System
John Dietz discussed the tiered water rate system The current requirement is for a two tiered
rate system not three like ERMU has. Other communities have only two tiers. John Dietz asked Tim
Simon to do a water analysis on a two tiered system to aid the large water users. Troy Adams
commented that the three tiered system was put in place per the DNR recommendation. The three
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Regular meeting of the Elk River Municipal Utilities Commission
May 10, 2011
tiers were set up to be budget neutral, not adding more to the funds but changing the rate structure so
only the high users were paying for their excess water and not the low users. There could be a
Commercial rate structure put in place. Further discussion followed.
John Dietz directed Troy Adams work with Tim Simon to come up with a water model on a two
tiered water rate and bring back in 30 to 60 days. Further discussion followed regarding the scope of
water customers this affects.
4.1 Power Supply Options / Resource Planning Update
Troy Adams updated the Commission on "Phase 2" of the Resource Planning Study, which
includes the release of a Request for Proposal (RFP). The Resource Planning Coalition has narrowed
the list of bidders to a short list. From this short list, CMMPA will be developing portfolio options for
each of the Coalition participants and will begin "Phase 2B — Portfolio Risk Analysis for Evaluation".
ERMU's cost for "Phase 2B" is estimated at $10,714.
Daryl Thompson moved to approve entering into "Phase 213" of the Resource Planning study
for the estimated $10,714. Al Nadeau seconded the motion. Motion carried 3-0.
4.2 Well Sealine Cost Share Program Contract
David Berg discussed the funds designated for the Well Sealing Program. The contract and
agreement forms have been finalized.. Information will be available on ERMU's website soon.
ERMU will reimburse the homeowner half the cost up to $400 to seal their well.
AI Nadeau moved to accept the Well Sealing Cost Share Program and associated agreements.
Daryl Thompson seconded the motion. Motion carried 3-0.
4.3 Review and Consider CMMPA Transmission Agreement
In May 2006, the Elk River Municipal Utilities (ERMU) Commission authorized joining the
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. In March 2011, the ERMU Commission and Elk River City Council both
approved Resolutions authorizing ERMU participating in the Brookings Project through CMMPA for
an amount not to exceed $7,140,953 without further action.
Troy Adams discussed the CMMPA Transmission Owner Services and Asset Assignment
Agreement and the Resolution authorizing the agreement. He said it was an umbrella agreement with
CMMPA for which project agreements, like the Brookings Project would fall under. This agreement
would authorize CMMPA to manage ERMU's ownership in this project in aggregate with the other
CMMPA Brookings Project participants.
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Regular meeting of the Elk River Municipal Utilities Commission
May 10, 2011
AI Nadeau moved to accept the CMMPA Transmission Owner Services and Asset Assignment
Agreement. Daryl Thompson seconded the motion. Motion carried 3-0.
Daryl Thompson moved to approve Resolution 11-02 with CMAVA and to present it to the Elk
River City Council with recommendation for approval. A➢ Nadeau seconded the motion.
Motion carried 3-0.
5.1 Review Reserve Balances and Policy
Per the ERMU Reserves policy, annually after the audit the year-end reserve balances shall be
reviewed and the ERMU Commission shall consider any balances above or below target levels.
Theresa Slominski reported that at the conclusion of the 2010 audit, the current reserves balances are
at target levels.
Last year the Electric Department Reserve Policy did not have the purchased power component
included. With looming double digit wholesale power rate increases forecasted by Great River
Energy, the wholesale power cost component of the ERMU budget will continue to grow in
significance. Staff is recommending the revision of the Electric Reserves Policy to include a
component for purchased power.
Al Nadeau moved to modify the Financial Reserves Policy to include a component for
purchased power. Daryl Thompson seconded the motion. Motion carried 3-0.
5.2 Review Annual Water Ouality Report
David Berg updated the Commission on the Water Quality Report that will be sent to ERMU
customers. Consensus was to receive and file the Annual Water Quality Report.
5.3 Review and Consider Off Peak Demand Electric Service Tariff Revision
Troy Adams discussed a revision to the current Off Peak Demand Electric Service tariff. By
changing the start of the On -Peak period from 1:00 p.m. to 2:00 p.m. there is greater opportunity to
utilize this rate for the commercial customers without increasing the wholesale power cost risk
exposure.
AI Nadeau moved to approve the revision of the On -peak time of the Off Peak Demand Electric
Service tariff to be from 2:00 p.m. to 10:00 p.m. Daryl Thompson seconded the motion. Motion
carried 3-0.
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Regular meeting of the Elk River Municipal Utilities Commission
May 10, 2011
5.4 Review Thermal Imaging and System Maintenance Program
Wade Lovelette discussed the importance of the thermal imaging camera and the reports it
generates so they can be reviewed for scheduling maintenance. The thermal imaging camera has
saved ERMU from some major outages. No action taken.
6.1 Staff Updates
Troy Adams updated the Commission on the APPA classes he recently attended, discussed an
upcoming water project between Well #8 and Well #9, and briefed the Commission on the status of a
difficult customer.
David Berg said MN Rural Water has invited him to meet with Michele Bachman in St. Cloud.
Mark Fuchs updated the Commission on the APPA classes he recently attended. The new bore
rig has arrived and will be used in the next week.
John Dietz handed out a League of MN Cities memo titled, `Bill Removing City Well
Authority Does Not Advance". Discussion followed.
John Dietz asked if the newly hired plant employee that is a licensed electrician could be utilized
by the City for some of their electrical projects. Troy Adams stated yes, but he would have to be
licensed through ERMU fast and this will be done after the six month probation period is over.
6.2 Set Date for Next Meeting
The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be
Tuesday, June 14, 2011, at 3:30 p.m.
6.3 Adjourn Regular Meeting
Daryl Thompson moved to adjourn the regular meeting of the Elk River Municipal
Utilities Commission meeting at 4:50 p.m. Al Nadeau seconded the motion. Motion carried 3-0.
Minutes prepared by Judy McSpadden.
John J. Dietz
President, ERMU Commission
Tina Allard
City Clerk
ELK RIVER MUNICIPAL UTILITIES
CLOSED MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
May 10, 2011
Members Present: John Dietz, President; Daryl Thompson, Vice Chair;
Al Nadeau, Trustee
Staff Present: Troy Adams, Director of Operations
1. Call Meeting to Order
John Dietz called the May 10, 2011 Closed Meeting to order at 4:55 p.m.
2. Closed Session
The purpose of the Closed Session is to conduct a performance review of Director of
Operations, Troy Adams pursuant to MN Statute 13D.05, subd. 3(a).
The Commission conducted the annual performance review of the Director of Operations,
Troy Adams.
3. Adiourn Regular Meeting
President John Dietz adjourned the closed meeting of the Elk River
Municipal Utilities Commission at 5:55 p.m.
Minutes prepared by John Dietz.
John Dietz
President, ERMU Commission
Tina Allard
City Clerk