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3.1.B. MINUTES 11-15-2011ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTHdTIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM October 11, 2011 Members Present: John Dietz, Chair; Daryl Thompson, Vice Chair; Al Nadeau, Trustee ERMU Staff Present: Troy Adams, Utilities Director; Theresa Slominski, Finance Director/Office Manager; Mark Fuchs, Line Superintendent; David Berg, Water Superintendent; Wade Lovelette, Technical Services Superintendent; Judy McSpadden, Recording Clerk; Tom Sagstetter, Conservation & Key Accounts Manager Others Present: Peter Beck, Attorney from Gray Plant Mooty Law Finn; Lynn Peterson, David Martin Insurance Agency; Gary Marx, LTC Financial Partners 1.1 Call meeting to order October 11, 2011 John Dietz called the October 11, 2011 meeting to order at 3:30 p.m. 2.1 Consider Utilities Agenda John Dietz added an item under Other Business. Daryl Thompson moved to approve the October 11, 2011 Utilities Agenda. AI Nadeau seconded the motion. Motion carried 3-0. 3.1 Consider Consent Agenda John Dietz asked about the purchased power PCA and if ERMU was going to pass that cost in to the rate payers. Theresa Slominski responded that some has been passed on. John Dietz asked for a summary of the year on how much ERMU has been billed for PCA and how much was recovered from rate payers. John Dietz asked about the rise in cost of maintenance fees on vehicles compared to last year. Staff responded. John Dietz asked for a summary of maintenance performed year to date. Daryl Thompson moved to approve the Consent Agenda as follows: a. September Check Register b. September 13, 2011 Regular Meeting Minutes c. Financial Reports AI Nadeau seconded the motion. Motion carried 3-0. Page 2 Regular meeting of the Elk River Municipal Utilities Commission October 11, 2011 John Dietz informed Commissioners and staff that at the City Council meetings there is an open mike at the beginning of the meeting. Troy Adams responded it could be added. 4.1 Update on Power Supply Options 1 Resource Planning Troy Adams updated the Commissioners on the Power Supply opportunities, and the developments since the last update. CMMPA is asking for a letter of intent commitment from ERMU. Troy Adams asked for approval to go ahead with the confidentiality contract to be able to share more information and numbers. Consensus was to go ahead. John Dietz voiced his concern of spending more money with CMMPA and would like to check out other entities. Discussion followed. 5.1 Review and Consider Insurance Options and Renewal ERMU's insurance broker has information on Long Term Care insurance. This is an insurance that is an important component of retirement planning and yet is often not recognized unless one has been involved with family members needing this care. Gary Marx of LTC Financial and Lynn Peterson of David Martin Agency gave a presentation to the Commissioners on a Long Term Care (LTC) plan for employees. Consensus was to have a meeting and get staffs opinion to see if there is any interest before deciding to go forward. ERMU has been notified that the health insurance plan rate will decrease by 9.5%. There is consideration of offering a Health Savings Account (HSA) plan alongside the current 100% Coverage Aware Gold (AG) plan. Theresa Slominski reviewed the HSA plan with the $2,400 annual deductible. Discussion followed regarding the pros and cons of offering this optional insurance. John Dietz felt it should be one plan or the other, not both. He went on to say that the employees have a Cadillac plan right now and didn't think the employees would want to change that. There was further discussion regarding the stability of the existing plan if there were fewer employees on it. John Dietz said he couldn't see offering two plans, Daryl Thompson agreed. Al Nadeau said he could not vote for or against right now, he would want more information to base his decision. The HSA plan will nol be considered at this time due to lack of motion. 5.2 Review Wage Survey and Recommendations For the past two decades with the exception of 2009-2011, ERMU has used a survey of a predetermined seven neighboring utilities to gauge the industry for purposes of compensation comparison. For ease of comparing, the lineperson position has typically been used as the benchmark because of job duties, and position requirements are fairly consistent from one utility to another. The utilities that have been used have been agreed upon because of their proximity to ERMU. These are the utilities in which ERMU is in direct labor competition with and their employees would generally experience similar costs of living. Page 3 Regular meeting of the Elk River Municipal Utilities Commission October 11, 2011 In 2010 and 2011, ERMU utilized anew process in evaluating wage increases. This new process for handling wage increase proposals was handled over two separate commission meetings. During the first meeting, management provides industry comparisons, economic trends, and financial impact to ERMU. Included was the metro average survey of the seven predetermined peer utilities that have been used in the past, the Consumer Price hidex (CPI), and benefit survey. The employees have been provided the opportunity to bring suggestions and requests to management. This information was reviewed and considered by management and then included in the presentation to the commission. At the discretion of the commission, employees were afforded the opportunity to address the commission during the first of the two meeting process. The topic would then be tabled until the following utility commission meeting at which the commission would make their decision. Troy Adams discovered during the surveying process that Shakopee Public Utilities has developed a very successful method of addressing wages and benefits. They formed a committee assembled of management and commissioners to assess wages and benefits. Discussion followed. Daryl Thompson recommended John Dietz to be on the committee. John Dietz asked how many meetings, staff responded bi-annual. Daryl Thompson felt it was owed to the employees to be able to voice their opinion. Al Nadeau agreed Troy Adams said the first meeting would be for staff input and the second would be for going over the information and surveys to present to the commission for their decision. Daryl Thompson moved to create a Wage and Benefits Committee consisting of Theresa Slominski, Troy Adams, Mark Fuchs, and John Dietz, with Judy McSpadden as Recording Secretary. Al Nadeau seconded the motion. Motion carried 3-0. 5.3 Review 2012 Expense and Conservation Improvement Program Budgets Year to date, wholesale power costs make up approximately 74% of operating revenue. Ultimately, the wholesale rates set by Great River Energy (GRE) have an enormous impact on ERMU's rates. GRE is still in the process of finalizing their 2012 wholesale power rate. Through recent discussions, the preliminary numbers indicate a wholesale power cost increase to ERMU of 14%. John Dietz asked if this all has to be passed on to the customer, Troy Adams responded not all. John Dietz asked if the data centers are still ramping up on their power consumption, Troy Adams said they continue to add electric load. Discussion followed regarding rates and peak loads. The Target Data Center is on an Interruptible Load Program and it would save GRE and ERMU approximately $1 million in the next year if United Health Group (UHG) was also on the program. Consensus was to pursue getting UHG on the Interruptible Load Program. John Dietz stated he wants to keep rates as minimal as possible and try to stay cost neutral. The water rate analysis conducted in the spring of 2010 established a cash flow plan that resulted in the rates remaining unchanged thru 2012. The 2012 forecast for water sales is slightly down and the water connections are slightly up. There is also the continued revenue from the water Page 4 Regular meeting of the Elk River Municipal Utilities Commission October 11, 2011 tower antenna space leases. John Dietz asked staff to look into the added depreciation in the water department. Troy Adams discussed the Conservation Improvement Program (CIP) Budget and a couple of new programs that are being initiated. One is an AC tune-up program and educating customers on the importance of keeping the air conditioner clean of debris, and another is the LED holiday light program. The Project Conserve program is budgeting $24,000 in additional labor for 2012. Discussion followed. 5.4 Review and Consider 2012 Fee Schedule The 2012 Fee Schedule was presented. The changes recommended for 2012 are the Residential and Commercial WAC fees increasing by 2%, which follows the increase the City of Elk River is implementing for SAC fees. Staff is recommending the bulk water sales and hydrant water sales to increase from $3.50 to $4.00 per 1,000 gallons. The other change is to the billable vehicle and equipment charge to increase from $40 to $50 per hour for Line trucks and from $20 to $25 per hour for pick-ups. Daryl Thompson moved to approve the proposed 2012 Fee Schedule and present to the City Council for adoption into City ordinance. Al Nadeau seconded the motion. Motion carried 3-0. 5.5 Review and Consider Yd Quarter Write -Offs The third quarter write-offs through August 2011 total over $13,016.59. This amount is comprised of $4,768.22 sent to a collection agency for further collection efforts, $95.04 that will be written off, and $8,153.33 that will be assessed this fall for the assessable services of water, sewer, and trash. ERMU has filed $5,968.59 with the Revenue Recapture program that will hopefully be collected as individuals file their taxes. Al Nadeau moved to accept the 2011 third quarter write-offs as presented. Daryl Thompson seconded the motion. Motion carried 3-0. 5.6 Review and Consider Street Liuhtim Policy In 2007 ERMU and the City of Elk River established an agreement regarding the costs associated with replacing or adding new street lights to street rehabilitation and improvement projects. The current agreement is for ERMU to pay for any new street lights and the City of Elk River will pay for material only for replacement street lights. This agreement is only for the projects being completed that year. There are many light fixtures within the City of Elk River that are in serious disrepair and do not fall in the category of a street rehabilitation or improvement project. Page 5 Regular meeting of the Elk River Municipal Utilities Commission October 11, 2011 City staff currently forecasts the cost and implements a maintenance and or replacement plan for street lights. However, there is some efficiency to be gained by having the entity currently responsible for general maintenance also being responsible for the upkeep of current street lights. ERMU has the equipment and is licensed as an electrical contractor to be able to legally perform maintenance to street lights under the National Electric Safety Code and the National Electric Code. Discussion followed. Staff was directed to bring back a memorandum of understanding to be approved by the commission, which will then be submitted to the City Council for their consideration. AI Nadeau moved to accept the proposed Street Light Installation and Maintenance Policy. Daryl Thompson seconded the motion. Motion carried 3-0. 5.7 Minnesota Municipal Utilities Association Safety Management Program Renewal ERMU contracts with Minnesota Municipal Utilities Association (MMUA) to provide safety training through their Safety Management Program and Job Training and Safety (JTS) Program. This program provides the required training for all staff. It covers the topics such as Blood Borne Pathogens and Right to Know. It also covers specific trainings such as Pole Top Rescue and OSHA compliance inspections for water and electric facilities. Daryl Thompson moved to continue with the MMUA Safety Management Program and JTS Program at a cost of $22,950. Al seconded the motion. Motion carried 3-0. 6.1 Staff Updates Troy Adams discussed the ownership and responsibilities of the Elk River dam. It is still in ERMU's name. So far ERMU has operated the dam to maintain the lake level, and the City of Elk River has maintained it. Troy's concern was for future maintenance and inspection issues. Daryl Thompson asked if it could be turned over to the City of Elk River. Troy Adams responded it would have to go to the City Council for approval. Troy asked for a memorandum of understanding with the City. Discussion followed. John Dietz directed Troy Adams to meet with Justin Femrite, the City Engineer, to draft a memo for the agenda and talk to City Council about this. Troy Adams discussed a water issue that was recently discovered. Discussion followed. Elk River Landfill is adding a new incinerator to the Landfill Gas Recovery Plant at their expense. They are asking ERMU for help with the energy cost. Discussion followed. Troy Adams stated he has not received an official request yet. John Dietz said to bring back to the commission when a written request has been received. Theresa Slominski reviewed the Auditor RFP Evaluation results. The current auditor, Abdo, Eick & Meyers received the highest rating. The City of Elk River along with ERMU is recommending staying with Abdo, Eick & Meyers for the annual auditing services. Page 6 Regular meeting of the Elk River Municipal Utilities Commission October 11, 2011 Daryl Thompson moved to go with the auditing company Abdo, Eick & Meyers, for the annual audit. AI Nadeau seconded the motion. Motion carried 3-0. Mark Fuchs said Tony Hubbard is now registered as an electrician for ERMU and is also working on getting Butch Pelarski of the City of Elk River registered also. John Dietz gave an update of the latest proposal for Energy City. He is proposing to put $10,000 of ERMU's contribution to the City of Elk River into the Energy City fund and ask for a $3,500 contribution from Connexus, Centerpoint Energy, and Great River Energy. John Dietz said the Elk River Power Plant doesn't have anything on the building saying what it is. John Dietz directed staff to kook into putting up a sign. 6.2 Set Date for Neat Meeting The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be Tuesday, November 15, 2011, at 3:30 p.m. 6.3 Adiourn Regular Meeting Daryl Thompson moved to adjourn the regular meeting of the Elk River Municipal Utilities Commission meeting at 6:30 p.m. Al Nadeau seconded the motion. Motion carried 3-0. Minutes prepared by Judy McSpadden. John J. Dietz Chair, ERMU Commission Tina Allard City Clerk