2.2. ERMU MINUTES 08-13-2012ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
July 17, 2012
Members Present: John Dietz, Chair; Daryl Thompson, Vice Chair; Al Nadeau, Trustee
ERMU Staff Present: Troy Adams, General Manager;
Theresa Slominski, Finance and Office Manager;
Mark Fuchs, Line Superintendent; David Berg, Water Superintendent;
Wade Lovelette, Technical Services Superintendent;
Tom Sagstetter, Conservation & Key Accounts Manager;
Judy McSpadden, Recording Clerk
Others Present: Cal Portner, City Administrator;
Peter Beck, Attorney from Gray Plant Mooty Law Firm;
Greg Oxley, MMUA; Kayla Brennan, McGrahn Shea;
William Herber, Shenehon Company;
Chad Briggs
1.0 CALL MEETING TO ORDER
John Dietz called the July 17, 2012 meeting to order at 3:30 p.m.
1.1 Pledge of Allegiance
The Pledge of Allegiance was recited.
1.2 Consider Utilities Agenda
John Dietz added a couple items under Other Business. Troy Adams added an item to adopt a
resolution after the closed meeting.
Daryl Thompson moved to approve the amended July 17, 2012 Utilities Agenda. Al Nadeau
seconded the motion. Motion carried 3-0.
2.0 CONSENT AGENDA (Approved By One Motion)
Daryl Thompson and John Dietz had questions on the check register and financials, staff
responded.
Daryl Thompson moved to approve the Consent Agenda as follows:
2.1 June Check Register
2.2 June 12, 2012 Regular and closed Meeting Minutes
2.3 Financial Statements
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Regular meeting of the Elk River Municipal Utilities Commission
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Al Nadeau seconded the motion. Motion carried 3-0.
3.0 OPEN MIC
No one appeared for open mic.
4.0 OLD BUSINESS
4.1 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). In April 2010, the ERMU
Commission authorized entering into "Phase 1" of a resource planning study with a coalition
which includes Central Minnesota Municipal Power Agency (CMMPA) as a participant. In
September 2010, the ERMU Commission authorized entering into "Phase 2" of a resource
planning study which includes the 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.
On June 26, 2012, Commissioner Al Nadeau and General Manager Troy Adams attended a
Minnesota Municipal Power Agency (MMPA) board meeting and plans to attend their annual
meeting on July 24h. On July 11, 2012, staff attended a Southern Minnesota Municipal Power
Agency (SMMPA) board meeting with plans to attend a Missouri River Energy Services
(MRES) board meeting in the near future. Staff has previously attended CMMPA annual
meetings.
5.0 NEW BUSINESS
5.1 Second Ouarter Write -Offs
Second quarter write-offs and collection efforts cover items from April through June 2012
and total $41,235.52. These amounts will be submitted for collection by Assessments,
collections, Write -Offs, or Revenue Recapture. The Revenue Recapture (RR) program available
through the state and the majority of this total has been submitted to this program. Discussion
followed.
Daryl Thompson moved to approve the second quarter write-offs as presented. Al Nadeau
seconded the motion. Motion carried 3-0.
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Regular meeting of the Elk River Municipal Utilities Commission
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5.2 Diesel Power Plant Capacity Credit Agreement
Included in the ERMU current interconnection agreement with United Power Association
(UPA), now Great River Energy (GRE), is a power transaction agreement to purchase the
generating capacity from the ERMU Diesel Power Plant. This power transaction agreement has
been modified since the original agreement, with the most recent one on October 31, 2003.
These revisions established the agreement to be on an "evergreen" basis with an October 31 S`
termination date and an April I", termination notice date. The agreement established the
capacity credit at $2.75/kW per month. Typically our agreement with GRE results in capacity
credit payments of approximately $350,000 annually.
On March 28 , ERMU received notice that GRE wanted to re-evaluate the current
agreements fixed capacity credit. Because of the April I" termination notice deadline, a 60 day
extension to the deadline was agreed upon by both parties. The extension will allow ERMU and
GRE to re -negotiate the terms of the agreement within the 60 day extension without either party
losing their ability to provide notice of termination for next year. A 60 day extension in the
termination date was also agreed upon that will guarantee payments through the calendar year
regardless of the results of the agreement negotiation.
Due to continuing and progressive discussions, on May 30"' both parties agreed to an
additional 60 days extension. This additional extension changes the notice of termination date to
August 1, 2012.
GRE is drafting a revised capacity credit agreement for review and consideration.
Discussion followed.
5.3 American Public Power Association 2012 National Conference Update
Al Nadeau, Troy Adams, and Theresa Slominski recently attended the American Public
Power Association (APPA) 2012 National Conference and Pre -Conference Seminars. This
APPA event is public power's largest annual gathering. "The APPA National Conference helps
utility leaders and policymakers connect with industry leaders, partners, and peers while learning
about the complex issued facing public power utilities. The program features leading political,
economic, business, and public policy thinkers addressing the critical issues shaping our
industry's future."
ERMU is known for excellent, safe, and reliable utility services along with being
financially strong and in a great position for future growth. Policies have been adopted and
practices implemented to protect the customers and community now and into the future.
Troy Adams reviewed the top five topics from the APPA National Conference which were
Communication, Strategic Planning, Utilities Commission Governance Policy, Financial
Oversight and Budgeting, and Employee Recruitment, Retention, and Development.
Troy Adams said communication to customers is very important. He played an
informational video regarding electric power that he would like to put on the cable channel.
Discussion followed. Consensus was for the informational video to be played on the cable
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Regular meeting of the Elk River Municipal Utilities Commission
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channel but to have an introduction first. He also discussed strategic planning and its importance
in the long term visioning and goals of ERMU.
Al Nadeau discussed the meeting he attended regarding Utilities Governance Policies and
Employee Recruitment, Retention, and Development. He felt they were good classes and very
important to the organization.
Theresa Slominski gave an overview of the Financial Oversight and Budgeting seminar
she attended.
Troy Adams recommended to the commissioners that a strategic planning course would be
beneficial. The decision was to proceed with this program after the first of the year. Staff was
directed to get strategic plan examples from other utilities for the commissioners to look at.
5.4 Substation Supervisory Control And Data Acquisition Installation Update
In March 2012, ERMU staff met with United Services Group (USG) to go over plans for
installing Supervisory Control and Data Acquisition (SCADA) at each of the substations. This
will give ERMU real-time data and control of switching from remote locations.
ERMU staff has been trenching and pulling the wire and fiber optic to lessen the
installation costs. Wade Lovelette gave an update on the status of this project.
5.5 Discussion Regarding Property Adiacent To Diesel Power Plant
In June 1915, Fred Waterman incorporated the Elk River Power and Light Company. This
private company built a 200 horsepower turbine generator at the Elk River Dam on Lake Orono.
In 1945, the Village of Elk River purchased the Elk River Power and Light Company. And on
July 11, 1947, the Elk River Village Council created statutory authority a "Water, Light, Power
and Building Commission," the birth of a public power and water utility in Elk River. One of the
first capital improvements made by the utilities was to build the Diesel Power Plant next to the
Elk River Dam.
To the east of the power plant and ERMU property is a 6.6 acre lot which has no recorded
easement for access to Main Street and currently accesses the property through the ERMU
property at 1705 Main Street. This resident is trying to secure a loan for improvements to the
property including connecting to the City sewer system and a recorded easement is required.
Discussion followed regarding the options available for an easement to this property without the
need to utilize the ERMU property located at 1705 Main St.
Daryl Thompson moved to work with the property owner at acquiring an easement at a
cost not to exceed $4,000. Al Nadeau seconded the motion. Motion carried 3-0.
6.0 OTHER BUSINESS
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Regular meeting of the Elk River Municipal Utilities Commission
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6.1 Staff Updates
Troy Adams wanted to formally thank the City of Elk River, Cal Portner, and Tim Simon
on their help in getting the information needed for developing an offer for territory acquisition.
Troy Adams updated the Commission on a Wright -Hennepin Electric issue regarding a section
of property in Otsego.
John Dietz commended Mark Fuchs on the recommendation for the installation of fiber
optic cable on an upcoming City project. This will result in a substantial savings for the City of
Elk River. John Dietz asked if a non-utility flyer could be stuffed with the bills, staff responded
it has not been done in the past and it would set a precedence for others to want this service.
The regular meeting of the Elk River Municipal Utilities was recessed at 5:10 p.m.
6.3 Closing of Meeting: "Meeting to be closed pursuant to MN Statute 13D.05, Subd.
3(c)(3) to develop or consider offers or counteroffers for the purchase or sale of real
or personal property."
a. Call Closed Session to Order
b. Discussion
c. Adiourn Closed Session
The Commission reconvened the regular meeting at 5:54 p.m.
Al Nadeau moved to retain Shenehon Company as a consultant for Phase 1 of the territory
acquisition. Daryl Thompson seconded the motion. Motion carried 3-0.
Daryl Thompson moved to adopt a resolution to present to the Elk River City Council for
their support to extend electric territory within the city limits of Elk River. AI Nadeau
seconded the motion. Motion carried 3-0.
Staff was directed to post a quorum notice for the upcoming Minnesota Municipal Power
Agency's annual summer meeting on July 24, 2012 in Shakopee.
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Regular meeting of the Elk River Municipal Utilities Commission
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6.2 Set Date for Neat Meeting
The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be
Tuesday, August 14, 2012, at 3:30 p.m.
6.4 Adjourn Regular Meeting
Al Nadeau moved to adjourn the regular meeting of the Elk River Municipal Utilities
Commission at 6:00 p.m. Daryl Thompson seconded the motion. Motion carried 3-0.
Minutes prepared by Judy McSpadden.
John J. Dietz
Chair, ERMU Commission
Tina Allard
City Clerk