3.2. ERMU MINUTES 01-10-2012ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
December 13, 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;
Others Present: Cal Porkier, City Administrator;
Peter Beck, Attorney from Gray Plant Mooty Law Finn;
Kyle Haemig and Shankar Karki of Central Minnesota Municipal Power Agency
1.1 Call meeting to order December 13, 2011
John Dietz called the December 13, 2011 meeting to order at 3:30 p.m.
2.1 Consider Utilities Agenda
Al Nadeau moved to approve the December 13, 2011 Utilities Agenda. Daryl Thompson
seconded the motion. Motion carried 3-0.
3.1 Consider Consent Agenda
Daryl Thompson moved to approve the Consent Agenda as follows:
a. November Check Register
b. November 15, 2011 Regular Meeting Minutes
c. Financial Reports
Al Nadeau seconded the motion. Motion carried 3-0.
OPEN MIC
No one appeared for open mic.
4.1 Update on Power Supply Options / Resource Planning
In September 2008, Connexus Energy terminated the 10 -year rolling "all requirements" power
contract with Elk River Municipal Utilities (ERMU). ERMU Commission authorized entering into
"Phase I" of a resource planning study in April of 2010, with a coalition which includes Central
Minnesota Municipal Power Agency (CMMPA) as a participant. In September 2010, ERMU
Commission authorized entering into "Phase 2" of a resource planning study which includes the
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Regular meeting of the Elk River Municipal Utilities Commission
December 13, 2011
release of a Request For Proposal (RFP). The RFP was issued on November 15, 2010. In May 2011,
the ERMU Commission authorized entering into "Phase 2b" of the resource planning study which
will include risk assessment of the proposals. In addition to working with the Resource Planning
Coalition, staff continues to explore other power supply options.
The RFP analysis has been completed by CMMPA as well as the building of participant specific
resource portfolios. Kyle Haeming of CMMPA gave a presentation. Discussion followed.
4.2 Review and Consider 2012 Waae and Benefits
At the recommendation of staff during October 11, 2011, ERMU Commission meeting, the
Commission formed a Wage and Benefits Committee. The committee was comprised of
Commissioner, John Dietz; Utilities Director, Troy Adams; Finance and Office Manager, Theresa
Slominski; and Electric Superintendent, Mark Fuchs. The intent of this committee was to be able to
review and analyze wage and benefits information, receive comments and questions from employees
relating to wage and benefits, function as a forum for discussion, and ultimately present wage and
benefit information to the ERMU Commission for their consideration.
Troy Adams presented new information regarding the dental insurance plan. Discussion
followed.
John Dietz reviewed the options and gave his recommendations. This year the health insurance
decreased but previous years were an increase so this will be a savings for both ERMU and
employees. The clothing issue is best resolved by installing a washer and dryer at the plant. As for
the comp day, John Dietz stated he was willing to do that but would not be in favor of them getting a
stipend also. For wages, John Dietz said he has thought long and hard on this. His recommendation is
for a 2.3% increase which would not lose any ground on the metro average at this point. This would
be the largest increase over the last four years and hopefully as things keep recovering we can start to
make up the difference. As for the Long Term Care (LTC) insurance, the presentation did not seem to
agree with many people and for right now this should be a voluntary insurance for the employees to
get on their own through the LTC group if they choose.
Al Nadeau agreed with John Dietz on the LTC insurance. Al Nadeau said he would like to see a
guideline plan as to what will be done with the wages on an annual basis to show the younger
employees or future employees that ERMU is a great place to build a career and raise a family. Al
Nadeau said he doesn't feel that 2.3% is enough and to start making ground up he is recommending
3% minimal. Al Nadeau said it is important to keep good, trained employees and he knows the
economy isn't pretty but ERMU does make a profit.
Daryl Thompson agreed with John Dietz and Al Nadeau on the LTC insurance. Daryl
Thompson agrees with John Dietz on the holiday comp day, giving an extra day is a cost to ERMU.
Daryl Thompson said Theresa Slominski has done a good job presenting the best Dental, Long Term
Disability (LTD), and Life Insurance plans for the employees. Daryl Thompson wanted the
employees to know they are appreciated for the hard work that they do day in and day out. The
economy has been a real stickler and he is willing to compromise on a 2.75% wage increase.
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Regular meeting of the Elk River Municipal Utilities Commission
December 13, 2011
John Dietz asked if the commissioners were in favor of purchasing a washing machine for the
plant. Consensus was to get the washer and dryer for the plant. Al Nadeau volunteered to locate a
good one that would stand up to their needs and install it. Discussion followed regarding the comp
day. Consensus was if a comp day was given the employee would not get the stipend.
Daryl Thompson moved for a pay increase of 2.75%, the comp day for the holidays without
stipend, the insurance as stated, the washer and dryer for the plant not to exceed $3000, and the
LTC to be left up to the employees. Al Nadeau seconded the motion. Motion carried 3-0.
4.3 Review and Consider Conservation Consultant
At the November 2011 ERMU Commission meeting, staff was directed to bring back a revised
scope of work for the Conservation Consultant. For January through October 2012, the Conservation
Budget is $16,400 or 400 hours. The major components of this position are Project conserve and
competitive rate analysis for large commercial customers. Troy Adams discussed the projects. Vance
Zehringer commented on the work load for the rebates, rate studies, and counseling with commercial
accounts. Project Conserve can be labor intensive at certain times of the year.
John Dietz said he was willing to compromise on 200 hours. Daryl Thompson said he thought
that with the hiring of Tom Sagstetter, Vance Zehringer would be done at year end and agrees with the
200 hours. Al Nadeau said he agrees with the 200 hours. Daryl Thompson said Vance Zehringer has
done a great job for ERMU. Al Nadeau stated 200 hours may be too hard lined and what if Vance
Zehringer is needed after the 200 hours has been met. John Dietz responded the Commission would
have to revisit.
Daryl Thompson moved to approve the Conservation Consultant budget for 2012 not to exceed
200 hours at $41.00 per hour and for any additional hours will need to come back to the
Commission for approval. Al Nadeau seconded the motion. Motion carried 3-0.
5.1 Review and Consider Water Treatment Chemical Bids
On December 1, 2011, bids were opened for 2012 water treatment chemicals. Staff is
recommending the lowest bidder, Hawkins, Inc.
AI Nadeau moved to award Hawkins, Inc., the lowest responsive bidder. Daryl Thompson
seconded the motion. Motion carried 3-0.
5.2 Review and Consider 2012 Budget and Rates
Wholesale power costs make up approximately 74% of ERMU operating costs. Ultimately the
wholesale power rates, set by Great River Energy (GRE), have an enormous impact of ERMU's rates.
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Regular meeting of the Elk River Municipal Utilities Commission
December 13, 2011
The GRE budget has been approved and their wholesale rate increase results in a power cost increase
to ERMU of approximately 8.33%. The proposed ERMU 2012 electric rate increases are being held
as low as possible with passing along the power cost increase.
The proposed 2012 electric rates are:
Residential
Basic Monthly Electric Charge $9.50
Summer Energy Charge (May -Sep) $0.1249/kWh
Winter Energy Charge (Oct -Apr) $0.1116/kWh
(This results in an increase for a typical residential customer of 7.1%)
Non -Demand Commercial
Basic Monthly Electric Charge
$16.00
Summer Energy Charge (May -Sep) $0.1199/kWh
Winter Energy Charge (Oct -Apr) $0.0995/kWh
(This results in an increase for a typical non -demand commercial customer of 6.9%)
Demand Commercial
Basic Monthly Electric Charge $50.00
Summer Demand Charge (May -Sep) $15.89/kW
Winter Demand Charge (Oct -Apr) $11.27/kW
Energy Charge $0.0598/kWh
(This results in an increase for a typical demand commercial customer of 4.0%)
John Dietz asked how customers would be notified. Staff responded there would be an
article in the newsletter. Discussion followed on the power cost adjustments (PCA's). Daryl
Thompson asked if the PCA could be put on the customer bills even if ERMU will be absorbing
the fee. John Dietz asked if the fee could be charged and then credited out so the customer can
see what ERMU is absorbing.
Another item for discussion was the 10% penalty charged to customers who pay late.
Discussion followed. Consensus was to work with the companies when the fees are over $1000.
The 2012 water rates are proposed to remain unchanged for the third consecutive year. The
WAC fees will increase from $3000 to $3060 to match the City of Elk River's 2% increase for SAC
fees.
John Dietz said staff did a good job in compiling all the information for the budget. Theresa
Slominski informed the Commission that the City of Elk River is looking at changing the deductible
for the property insurance which would result in considerable premium savings.
Daryl Thompson moved to approve the 2012 Electric and Water budget as presented. Al
Nadeau seconded the motion. Motion carried 3-0.
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Regular meeting of the Elk River Municipal Utilities Commission
December 13, 2011
6.1 Staff Updates
Troy Adams said he has worked with Sherburne County on a property for a Data Center. Troy
Adams met with the interested party and gave them the tariff sheets. Discussion followed regarding
the infrastructure.
Theresa Slominski said the customers should be able to go on line and access their bill in
January.
Mark Fuchs informed the Commission of an explosion in a switchgear cabinet. John Dietz said
from everything he has heard, Mark Fuchs and the crews did an outstanding job. Troy Adams said in
emergencies you really see your true leaders and Mark Fuchs did an awesome job keeping people
calm, directing work, and seeing through the problem.
6.2 Set Date for Next Meeting
The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be
Tuesday, January 10, 2012, 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 at 5:40 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