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3.1.B. MINUTES 12-13-2011ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM November 15, 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: Cal Portner, City Administrator; Peter Beck, Attorney from Gray Plant Mooty Law Firm; Gary Marx, LTC Financial Partners 1.1 Call meetine to order November 15, 2011 John Dietz called the November 15, 2011 meeting to order at 3:30 p.m. 2.1 Consider Utilities Agenda John Dietz moved to address 4.3, Review Long Term Care Insurance Option before 4.1. Troy Adams added two items, one being before the Consent Agenda and one under Other Business. Daryl Thompson moved to approve the November 15, 2011 Utilities Agenda as amended. Al Nadeau seconded the motion. Motion carried 3-0. Troy Adams briefed the Commission on the insurance program for private property that was discussed a few months ago. Commission had directed staff to look into other options. Troy Adams informed the Commission of a recent water issue. Peter Beck has looked into the requirements and has found that the property can be assessed as long as the homeowner requests it. The agreements were provided for the Commission to review and recommend to the City Council for approval for Utility work on private property. Daryl Thompson moved to approve the agreements and pass on to the City Council for approval. Al Nadeau seconded the motion. Motion carried 3-0. John Dietz introduced Cal Portner, the new City Administrator. Page 2 Regular meeting of the Elk River Municipal Utilities Commission November 15, 2011 3.1 Consider Consent Agenda Daryl Thompson moved to approve the Consent Agenda as follows: a. October Check Register b. October 11, 2011 Regular Meeting Minutes c. Financial Reports Al Nadeau seconded the motion. Motion carried 3-0. OPEN MIC No one appeared for open mic. 4.3 Review and Consider Long Term Care Insurance Option At the October 11, 2011 ERMU Commission meeting, Gary Marx of LTC Financial Partners gave a presentation on Long Term Care insurance. Staff was directed to determine if employees were interested in this additional type of insurance. Staff had Gary Marx meet with employees to educate them on the advantages and disadvantages of LTC insurance. The employees were presented with a range of $20 to $120 for the possible premium. The employees were interested in the insurance but were hesitant to move forward without better pricing information. The premium is based on age, health status, and plan design. Under the proposed program, the LTC plan is tailored to the financial needs and budget of each individual employee and their family. If accepted, the insurance representative would meet individually with each employee and family to access and develop a plan design and pricing that would fit their individual needs. Theresa Slominski introduced Gary Marx of LTC Financial to talk with Commissioners and answer any questions. Pricing for the LTC insurance was provided. Discussion followed. Daryl Thompson asked if the employees were really interested in this program. Troy Adams responded that there was interest but the employees didn't want this to affect any raise. John Dietz stated he would rather wait until December for the wage and negotiations decision as this would be a part of the benefit package if ERMU paid, but would not be if the employees paid. John Dietz and Al Nadeau both stated they were not ready to decide at this time. Consensus was to wait until the December ERMU Commission meeting to make a decision. No action taken. 4.1 Update on Power Supply Options / Resource Planning Troy Adams updated the Commissioners on what had happened since the last meeting. Confidentiality Agreements have been executed between ERMU and MMPA. Troy Adams said he. has signed a personal confidentiality agreement to be able to sit in on MMPA's meetings and would like a Commissioner to do so also. Al Nadeau offered to do this. John Dietz asked how the private information could be discussed. Troy Adams stated that legal counsel from CMMPA has said that Page 3 Regular meeting of the Elk River Municipal Utilities Commission November 15, 2011 under state statutes a private meeting could be called for when discussing sensitive power contact information. Troy Adams will have Peter Beck look into this. Consensus was to move forward with signing the confidentiality agreement. 4.2 Review and Consider Water Conservation Program At the September 13, 2011 ERMU meeting, the water conservation program was discussed. This program will establish incentives for implementing water efficiency measures for commercial customers in 2012. Discussion followed regarding the options available and how many customers this would affect. A brochure will be sent out to the commercial customers that are in the third tier rate. Al Nadeau moved to approve the pilot program for Water Conservation in 2012. Daryl Thompson seconded the motion. Motion carried 3-0. 4.4 Proposed Street Light Installation and Maintenance Policy Revisions and Memorandum of Understanding with the City of Elk River In 2007 ERMU and the City of Elk River established an agreement regarding costs associated with new and replacement street lights related to street rehabilitation and improvement projects. ERMU and the City of Elk River staff have discussed the issues and believe ERMU is better outfitted to perform all the responsibilities related to street lighting. At the October 11, 2011, ERMU Commission meeting, staff was directed to work with the City on developing a Memorandum of Understanding (MOU) regarding Street Light Installation and Maintenance. Discussion followed regarding the effective date of this agreement. Daryl Thompson moved to approve the Memorandum of Understanding agreement effective January 1, 2012. Al Nadeau seconded the motion. Motion carried 3-0. 5.1 Review 2012 Budget For the Electric department expense budget, 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 has finalized their wholesale power rates for 2012. As the budget stands, there will need to be an increase of 9.12% in revenue recovery. Through the budgeting process the 9.12% increase has been reduced to an approximate overall blended revenue increase of 8.33%. Discussion followed regarding PCA's. Consensus was to pass on the 8.33% rate increase along with the PCA's when they come. The Water department Expense budget has the rates remaining unchanged due to the water rate analysis conducted in the spring of 2010. Page 4 Regular meeting of the Elk River Municipal Utilities Commission November 15, 2011 The Conservation Improvement Program (CIP) budget now has a requirement to show a 1.5% energy reduction instead of spending 1.5% to achieve this. This requirement is not capped at a specific cost and it complicates the process because energy reduction now needs to be quantified. Project Conserve continues to be a very important program in achieving ERMU's state mandated energy reduction. 5.2 Review and Consider Proposed Public Spending Policy Revisions The Commission adopted a Public Purpose Expenditure Policy in 2006, when the City of Elk River adopted theirs. The policy was adopted to be in line with the limitations of public spending and was mirrored to the City of Elk River's policy, yet not reflecting the differences between the two entities. After discussion with legal counsel, changes were made to reflect the practices of the utilities. John Dietz asked if ERMU had an employee recognition program, staff replied no. Discussion followed. Daryl Thompson moved to approve the revised Public Purpose Expenditure Policy. Al Nadeau seconded the motion. Motion carried 3-0. 5.3 Review and Consider Proposed Use and Disposal of Utility Property Policy Revisions hi 2009, a Use and Disposal of Utility Property policy was adopted by the Utilities Commission. The intent of this policy was to regulate the use and disposal of utility property to safeguard against misuse or conflict of interest. The policy allows items, where there is a disposal cost to ERMU, to be given to the general public or employees. In this policy there was specific language that addressed the disposal of items that have become obsolete, damaged or unnecessary. The items were specific to utility poles, cross arms, wood chips, and wood cable reels. From time to time there are other items that have a disposal cost to ERMU, but are not specified under this exemption. A new Use and Disposal of Utility Property policy has been drafted for Commission approval. Daryl Thompson moved to approve the changes to the Use and Disposal of Utility Property policy. Al Nadeau seconded the motion. Motion carried 3-0. 5.4 Review and Consider Conservation Consultant At the October 11, 2011 ERMU Commission meeting, staff was directed to bring back the topic of the Conservation Consultant as an agenda item for discussion on hours and/or end date. For January 1, 2012, through November 15, 2012, there is a total of $24,969 dollars budgeted for the Conservation Consultant. Due to timing and other circumstances, there is an overlap of contracted consulting duties. This comrnitment will see Phase III of the Project Conserve program through to completion and provide the transition to Phase IV. Also included in this total are the Page 5 Regular meeting of the Elk River Municipal Utilities Commission November 15, 2011 energy facility tours for Energy City, rate and sustainability studies, CFL and refrigerator recycling programs, along with load management and training workshops. Discussion followed regarding the overlap of the Conservation Consultant and the newly hired Conservation and Key Accounts Manager. John Dietz stated that this should be a one person job. There was further discussion on the duration of the overlap. Daryl Thompson suggested Troy Adams, Tom Sagstetter, and Vance Zehringer meet to go over the projected duties of the Conservation Consultant to see what could be done in house. Consensus was to revisit this in December. 6.1 Staff Updates Troy Adams said he received a letter asking if there were any issues of efficiencies that ERMU would like the State Representatives to address. The City also received a letter. Consensus was to turn this over to MMUA to represent ERMU's needs. The other item is the Elk River Landfill will be swapping out one of the engines at the Landfill for regular maintenance. This is done every five years. John Dietz asked Mark Fuchs about the issue with the brakes on one of the electric department vehicles. 6.2 Wage and Benefit Committee Update At the recommendation of staff during the October 2011 ERMU Commission meeting, a Wage and Benefits Committee was formed. This committee was comprised of one Commissioner, John Dietz, and three Managers, Troy Adams, Theresa Slominski, and Mark Fuchs. The intent of this committee was to meet with employees, review and analyze wage and benefits information, and ultimately present a recommendation to the ERMU Commission for their consideration. Troy Adams gave a brief summary of the events of the past month. John Dietz said he appreciated being on the committee, then gave his recommendation of how to present the information to the commission for their consideration in December. Discussion followed. Other Business Troy Adams wanted to congratulate Wade Lovelette on 30 years of service with ERMU. 6.3 Set Date for Next Meetin¢ The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be Tuesday, December 13, 2011, at 3:30 p.m. Page 6 Regular meeting of the Elk River Municipal Utilities Commission November 15, 2011 6.3 Adiourn RegularMeetine Daryl 'Thompson moved to adjourn the regular meeting of the Elk River Municipal Utilities Commission meeting at 5:50 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