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3.0 ERMU MINUTES 05-13-2008ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM April 17, 2008 Members Present: Jerry Takle, President; John Dietz, Vice Chair; Jerry Gumphrey, Trustee Staff Present: Bryan Adams, General Manager; Glenn Sundeen, Line Superintendent; David Berg, Water Superintendent; Theresa Slominski, Finance Director/Office Manager; Troy Adams, Engineering Manager; Judy McSpadden, Recording Clerk; Wade Lovelette, Line Foreman; Mark Fuchs, Lead Lineman; Scott Thoreson, Lead Lineman; Richard Cline, Water Operator; Angela Hauge, Water Operator Others present: Lori Johnson, City Administrator; Steve McDonald, Abdo, Eick & Meyers LLP; Jerry Olsen, Country Crossings Homeowners Association 1. Call meeting to order April 17, 2008 President Jerry Takle called the April 17, 2008, meeting to order. Due to the employees present regarding the compensation request, 6.2 was addressed at this time. 6.2 Review compensation request from ERMU employees (under separate cover) Bryan Adams reviewed the 2008 Employee Compensation request including the following: • 3.66% to keep up with the metro average wage scale. • Bonus pay for lineman acting as lead lineman during work and after hours. • Discontinuing the Vision Eyewear program through Outlook Vision. Commissioners asked for input from employees. Mark Fuchs informed of the need for documentation on the bonus pay. John Dietz directed staff to survey surrounding businesses on office positions as he does not necessarily agree with the percent increase for the lineman wage applied across the board to all employees. Jerry Gumphrey questioned how often bonus pay occurs. Staff responded it is infrequent and not a large dollar item. John Dietz stated that is seemed over the last number of years the compensation increase request was done along with some other request for an additional benefit or increase in a current benefit. He asked it the linemen felt they would be bringing any future items to the commission or if they felt they had a good benefit package as it is. Staff responded that they weren't aware of any other benefits out there now that they should consider. One benefit change that may be presented in the future would be an increase to the Health Care Savings Plan contribution rates of the employees (this would not be a company expense.) John Dietz requested that staff bring in an expert to educate the commission on the practices and implementation of comparable worth requirements. A motion was made by Jerry Gumphrey to approve a pay increase of 3.66% to staff, to approve the language presented for the bonus pay policy, and to discontinue the Outlook Vision cost- Page 2 Regular meeting of the Elk River Municipal Utilities Commission April 17, 2008 containment program. John Deitz seconded the motion. Motion carried 3-0. Since operational staff was present it was decided to discuss agenda item 5.3, Review ARC Flash Assessment at this time. 5.3 Review ARC Flash Assessment Staff has completed the ARC Flash Assessment and Clothing Requirements review. This change will also necessitate a clothing policy change. The proposed policy was reviewed. Basically, the requirements necessitate providing fire retardant pants to the linemen as well as long sleeved fire retardant shirts. Bryan Adams commented that, historically, the Utilities provided shirts for other outside staff as a matter of representation in the community, and there is the question if they should also be provided the pants. Given the safety requirement of the pants for the linemen (which does not exist for the other outside staff) it was suggested we not provide pants to other outside staff. John Dietz questioned the cost of the pants versus the shirts and staff responded that it would be more, but minimally. John Dietz also questioned the long sleeve requirement in the summer months and staff responded that the long sleeve shirts would only be wom in the summer when performing the (potentially hazardous) "hot' work. Staff recommends adopting the policy as presented. Jerry Gumphrey moved to approve the policy as presented. John Dietz seconded. Motion carried 3-0. 2. Consider Utilities Agenda John Dietz has two items to add under Other Business, and Bryan Adams added an item to discuss under Other Business. John Dietz moved to approve the April 17, 2008, Utilities Agenda. Jerry Gumphrey seconded the motion. Motion carried 3-0. 3. Consider Consent Agenda John Dietz had some questions on the financials, and also had a question on the check register as to what the health care reimbursement checks were for. Staff responded it is the flexible spending accounts reimbursement for health care costs. He questioned if they were handled in house rather than a third party administrator and staff responded that is correct, they are handled in house. Jerry Gumphrey moved to approve the Consent Agenda as follows: March Check Register March 11, 2008, Minutes Financial Reports John Dietz seconded the motion. Motion carried 3-0. Page 3 Regular meeting of the Elk River Municipal Utilities Commission April 17, 2008 It was decided to move to item 6. 1, Review & Receive the 2007 Financial Audit at this time. 6.1 Review & Receive 2007 Financial Audit Steve McDonald of Abdo, Eick & Meyers reviewed the 2007 audit and answered questions. John Dietz asked about the necessity of having separate bank accounts for the payroll and accounts payable functions. Steve McDonald responded that the interface function of the payroll system with the general ledger and having separate check stock and check sequences is adequate. John Dietz also questioned the practice of approving the check register after the checks have been disbursed in contrast to the city council where all checks are approved and then disbursed. Steve McDonald responded that it is a common practice with municipals due to timing issues not coinciding with the frequency of the commission meetings (once a month instead of bi-weekly.) John Dietz also questioned the debt balances and the increases over the past two years. Steve McDonald responded that it becomes a matter of taking on the debt or drawing down the reserves. The utilities have adequate cash flow to be able to make the debt payments and the practice of projecting the cash flows by utilizing the Springstad Study worksheets is a good one to continually monitor the best position to take. John Dietz also asked how the auditors had massaged the numbers to show a decrease in net assets. Steve McDonald responded that it related to the sizable decrease in contributed infrastructure from 2006 to 2007. It was over $800,000 in 2006 and less than $300,000 in 2007. At the March Elk River Municipal Utilities Commission meeting, Commissioner Jerry Gumphrey questioned the check endorsement procedure. This was discussed as part of management's response to audit items in the Management Letter and the changes that were implemented to address the concern. Bryan Adams asked if the auditors felt like the utilities were moving in the right direction and Steve McDonald responded that they did. Jerry Gumphrey moved to receive and file the 2007 audit. John Dietz seconded. Motion carried 3-0. Jerry Olsen from the Country Crossings Homeowners Association was asked if he would like to bring something before the commission. He stated that he was there on behalf of the Association to represent their concerns related to water rates and the high yearly cost for irrigation. He also commented that there seems to be a lot of water meter replacement occurring and in talking with various individuals has found this to be an issue only in Elk River. Jerry Takle responded that the water in this area comes from the Mt. Simon -Hinkley aquifer and it is very good water in terms of taste and the low level of treatment necessary. The DNR monitors the usage of the aquifers and only allows us to take so much out through their permitting process. Part of the permitting process is demonstration of conservation efforts. We try to encourage conservation through education, supplying water monitoring devices such as rain gauges, water meters, and low flow showerheads. We also try to encourage conservation through our rates and having the various tiers structured so that high users pay the most and adjust their usage accordingly. The irrigation meters are charged the highest rate with this same end in mind. He also explained that the aquifer is bowl shaped and the area of Minneapolis and St. Paul sit on top of the deepest part of that bowl; the area of Elk River is on the shallowest part of that bowl. So it is in Page 4 Regular meeting of the Elk River Municipal Utilities Commission April 17, 2008 our own best interest to be sure that we conserve as much water as possible because we will be the most heavily impacted when that aquifer is drawn down. Our water then will have to come out of the river and it won't be as high of quality and will certainly cost more to treat and distribute. Jerry Gumphrey stated that we are looking towards the future water availability in justifying our rates to encourage conservation. John Dietz stated that we want to encourage conservation awareness by charging more, rather than by punishment and citing offenders. Jerry Takle also suggested looking into drought resistance grasses to reduce the association's water usage. Jerry Olsen requested some usage information for the past years to be able to analyze the sharp increase as usage or otherwise. Their association meeting is April 28b at 6:00 at the Library and Bryan Adams and Jerry Gumphrey stated they would attend the meeting to be able to respond to the association's concerns and questions. 5.1 Staff Up -dates Bryan Adams reported that the Business Expo went well and he will be present at the Energy Expo this weekend. He reported that Theresa was at Twin Lakes School earlier today to give presentations for their Earth Day event. Northstar Commuter Rail contacted him and desires use of the Johnson Street Water Tower for an antenna to enhance their rail connection. He will be meeting with them next week to go over the details. Troy Adams reported that there were 9 security sales and 13 completed installations for last month. The substation high side portion of the fuse coordination study has been implemented. The curb stop tie cards have been scanned and will be integrated into the system map. The safety committee will be having a speaker give a respect in the workplace presentation to all city staff on Friday. Also the annual employee lunch/picnic with safety/healthy focus is in the planning for June. This is an event that is open to all employees of the city and the utilities. John Dietz asked what we were doing to get the word out regarding our low monitoring fees. Staff responded that we place advertising in the local paper on a regular basis, and utilize bill stuffers to get the word out. David Berg reported that the Johnson Street Water Tower is filled and ready to go for this summer. The footings are in for Well #9 and that project is on schedule. This past fall the water department took all the irrigation meters out, tested them, and stored them over the winter. Now they will be placing them for the summer season usage. There are two homes in the Kliever Lake Fields development that have agreed to be test sites for the Eco -grass. Theresa Slominski reported that the new stuffing and folding machine will be here next week on Tuesday. The new printer has already arrived, has been tested, and is working well. As Bryan stated, she was at Twin Lakes School earlier today working with children in grades 2-6 and felt this was time well spent to educate the next generation on their responsibility for conservation of our natural resources. The kids really liked the bike and most were familiar with the compact fluorescent lamps and their benefit towards conserving energy. The new assistant accountant, Lome, is working out very well. In response to Vivian's retirement announcement, Greg Scherber will be training to take over her responsibilities as Assistant Office Manager; Patricia Pope will be training to take over Greg's responsibilities as Office Clerk; and we have hired a new Clerk Receptionist, Michelle Anderson, who will start May 1'. John Dietz asked if the bills will Page 5 Regular meeting of the Elk River Municipal Utilities Commission April 17, 2008 look the same printing them in-house and staff responded that they would. Glenn Sundeen reported that tree trimming continues with three crews focusing on that completely. The issues that were found with the infrared study have now all been completed. There was some proactive maintenance done to remove several porcelain cutouts and replace them with polymer cutouts. In doing this many problems were discovered and he estimates that they saved themselves from at least 6 outages by doing this maintenance. John Dietz stated that he was out walking one Sunday and noticed that there were some utility employees doing some work at a customer's place of business and questioned why that was done on a Sunday when we would have to pay double time wages. Glenn responded that it was at the customer's request as the only time they had available and we will always try to work with the customers. 5.2 Review Jackson Street Water Tower Issue At our March 2008 Elk River Municipal Utilities Commission meeting, the future of the Jackson Street Water Tower was discussed. The tower either has to be painted or removed. The estimated cost to remove the tower is in the $35,000 range and then the lot can be redeveloped. The estimated cost of painting is in the $55,000 to $60,000 range with repainting every 10 to 12 years. Lori Johnson from the city was present to be able to report to the HPC when they meet to discuss the future of the tower. John Dietz made a motion that we recommend to the City Council that if someone/organization shared in the cost of painting the tower, the Elk River Municipal Utilities would move forward with painting it. Jerry Gumphrey seconded. Motion carried 3-0. 6.3 Review & Consider Bid Tabulation for Electric Cable On April 9, 2008, bids were received to furnish and deliver our electric cable needs for the 2008 planned work. Staff recommends awarding to the lowest responsive bidders, Border States Electric Company for the primary cable and Resco Electric Utility Supply for the secondary cable. John Dietz questioned how the escalation cost works. Staff responded. Jerry Gumphrey made a motion to award the bid to Border States Electric Company for the primary cable and Resco Electric Utility Supply for the secondary cable. John Dietz seconded the motion. Motion carried 3-0. 6.4 Review & Consider Bid Tabulation for Install UG Cable The 2008 electric budget contains a $180,000 item to replace the 30 year + cable in the Brentwood area. On April 9, 2008, bids were received to install the underground cable. Staff will be installing the necessary equipment basements, transformers, and cable terminations. Staff recommends awarding to the lowest responsive bidder, Michels Pipeline Construction. Jerry Gumphrey questioned the accuracy of the low bid since it was substantially below the others presented. Staff responded that they did question the bidder and was told they really wanted the Page 6 Regular meeting of the Elk River Municipal Utilities Commission April 17, 2008 business and so had purposely bid very low. They are a good contractor and they have done many successful projects for us. John Dietz moved to award the bid to Michels Pipeline Construction for the installation of the underground cable in the Brentwood area. Jerry Gumphrey seconded. Motion carried 3-0. 6.5 Review and Consider Vt Quarter 2008 Write -Offs The first quarter of write-offs were reviewed. When these are written off our system they are turned over to Advantage Collection Agency to further pursue. The collection agency's success rate is about 2 t%. Staff started collecting social security numbers and deposits in July of 2007 so it should become easier to locate for collection in the future. Staff recommends approval of the write-off list for the fust quarter of 2008. John Dietz noted that there were some trash items listed and thought that the city was able to assess those. Staff responded that is the case and the city is still given the option to pursue that with these amounts. John Dietz also asked if the utility can assess any of these. Staff responded that we can for water, but not for electric. A significant portion of the write-offs are for renters and so we can assess the landlord if we choose. For a home owner, it needs to be done before the home is sold and we are not always able to identify it as uncollectible before the parties move out. John Dietz motioned to approve the write-off listing presented. Jerry Gumphrey seconded. Motion carried 3-0. 6.6 Review & Consider Cogeneration Agreement There are a couple of small electric generators on Elk River Municipal Utilities system that operate intermittently. As the renewable energy fad becomes more popular with other technologies, we will see more of the smaller electric generators on our system. The Public Utilities Commission (PUC) has developed a uniform statewide contract for small cogeneration projects less than 40KW that utilizes net metering. Although Elk River Municipal Utilities does not fall under the PUC guidelines, we should have a contract for such applications. The PUC contract was modified with minor corrections including Elk River Municipal Utilities Commission substituted for Public Utilities Commission. Staff recommends adoption of this blanket agreement. Jerry Gumphrey motioned to adopt the blanket agreement as presented. John Dietz seconded. Motion carried 3-0. 6.7 Review GRE's Power Cost Adjustment Elk River Municipal Utilities will continue to see some significant PCA (power cost adjustment) on its power bills from Great River Energy. The Elk River Municipal Utilities keeps a separate PCA account that is zeroed out annually. As Great River Energy charges or rebates the PCA, we pass it on to our customers as a positive or negative charge. Bryan Adams explained the Page 7 Regular meeting of the Elk River Municipal Utilities Commission April 17, 2008 PCA in greater detail and stated that he received a phone call from GRE earlier this week and the original PCA for April was projected to be around $220,000, but is now projected to be closer to $80,000. This is good news but a PCA charge will most likely continue into the next few months. We will continue to monitor this and keep you updated. Other Business John Dietz thanked the utilities for the donated electricity for the library and questioned whether we record the contribution at our cost or retail cost. Staff responded that it is the retail cost to cover the overhead associated with the power usage, just as with our other customers. John Dietz also stated that he was erecting a flag pole memorial at the library and was told that the utilities will assist in the installation. John Dietz had a copy of the recent "Connector" article from the local paper and was wondering if it could be placed in the city's newsletter and on the websites of both the Utility and the City. Staff responded that the newsletter is already too full to include our large Connector articles but that certainly the websites could be utilized to host this information as well. Bryan Adams stated that we have moved forward with getting a return on our investment in transmission equity of approximately $65,000 per year with MISO. He presented an agreement that turns over operational control to MISO through CMMPA and requested authority for himself and Jerry Takle to execute the contract pursuant to meeting with GRE to ensure that there is no conflict of interest. He stated that by turning over operational control, it is agreeing to take load off of our system at MISO's direction, should the need arise. John Dietz moved to accept the agreement and authorize Jerry Takle and Bryan Adams to execute the agreement after meeting with GRE. Jerry Gumphrey seconded the motion. Motion carried 3- 0. The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be Tuesday, May 13, 2008. President Jerry Takle adjourned the regular meeting of the Elk River Municipal Utilities Commission at 5:55 p.m. Respectfully submitted, "4Q ' (Jeresa S1 inski i ance Direct�ce anager B A s G eral Manager