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3.1.B ERMU MINUTES 04-13-2010ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM March 9, 2010 Members Present: John Dietz, President; Jerry Gumphrey, Vice Chair; Daryl Thompson, Trustee ERMU Staff Present: Troy Adams, Director of Operations; Theresa Slominski, Finance Director/Office Manager; Mark Fuchs, Line Superintendent; David Berg, Water Superintendent; Wade Lovelette, Technical Services Superintendent; Judy McSpadden, Recording Clerk City Staff Present: Tim Simon, Finance Director Others Present: Peter Beck, Attorney from Gray Plant Monty Law Firm 1.1 Call meetin¢ to order March 9, 2010 John Dietz called the March 9, 2010 meeting to order at 4:00 p.m. 2.1 Consider Utilities Azenda John Dietz requested agenda item 4.1 Review and Consider Water Rate Analysis be moved up to accommodate Tim Simon. Jerry Gumphrey added a few items for discussion under Other Business. Daryl Thompson moved to approve the March 9, 2010 amended Utilities Agenda. Jerry Gumphrey seconded the motion. Motion carried 3-0. 4.1 Review and Consider Water Rate Analysis Tim Simon thanked ERMU staff for all the cooperative help he received during the water rate analysis. The water rates and cash flow projections were reviewed with a 3% recommended rate increase. Discussion followed. Commissioners asked Tim Simon to calculate the rate increase needed to achieve the same revenue goals through a meter rate change versus a user rate change and bring back to the next ERMU Commission meeting with a recommendation. 2.1a Election of Officers for 2010 Daryl Thompson recommended the Commissioners positions remain the same. Jerry Gumphrey seconded the motion. Motion carried 3-0. Page 2 Regular meeting of the Elk River Municipal Utilities Commission March 9, 2010 3.1 Consider Consent Agenda John Dietz inquired about some of the checks written in the past month. Staff responded. There was discussion about the reimbursement to employees for their amended 2007 and 2008 tax returns because of an error in calculating taxable income on the Health Care Savings Plan implemented in 2007. This was brought to the Commissioners attention at the February 9, 2010, ERMU Commission meeting. At that meeting John Dietz commented that staff should have brought this issue to the Commission before agreeing to reimburse employees for the amended tax returns. Troy Adams stated that being it was going to be under the $10,000 threshold, ERMU had to make it right with employees. There were two employees who had reimbursements for $400 on the current month check register. John Dietz said he checked with a CPA that thought the $400 figure was on the high side for an amended tax return. Theresa Slominski responded it was all across the board on what people were submitting. Theresa went on to say she did call H & R Block and they responded that the fees depended on each individual return, some have a simple return and some have a number of schedules accompanying them. John Dietz went on to ask if all 35 employees were going to be turning in a bill for this. Theresa responded that some have turned in receipts for only $25 to $50. Jerry Gumphrey questioned the amount of the check to the Landfill. Troy Adams discussed the breakdown and the reason for the higher amount. Troy added he is now meeting with the Landfill staff monthly. Jerry Gumphrey moved to approve the Consent Agenda as follows: a. February Check Register b. February 9, 2010 Minutes c. Financial Reports Darly Thompson seconded the motion. Motion carried 3-0. 4.2 Review and Consider Hydrant Replacement At the October 13, 2009, ERMU Commission meeting, David Berg informed Commissioners of a Waterous Hydrant part recall. After talking with other utilities and staff regarding the pros and cons on the large task of repairing the hydrants, David Berg is recommending a contractor replace the parts for the hydrant recall. There would be no cost to ERMU as Waterous would cover the repairs, and the contractor would also have a warranty. Jerry Gumphrey moved to approve the hiring of a contractor to repair the hydrants that were involved in the recall. Daryl Thompson seconded the motion. Motion carried 3-0. Page 3 Regular meeting of the Elk River Municipal Utilities Commission March 9, 2010 4.3 Review and Consider Phone System Recording Options At the February 9, 2010, ERMU Commission meeting, per Commissioners request, staff provided information on options to implement a phone recording system. One option was to utilize the current phone system with its integral recording abilities. The Commission directed staff to bring back further analysis of this option and associated costs for further discussion at the regularly scheduled ERMU Commission meeting in March. The Inter -Tel phone system currently being used has the ability to manually record a phone conversation at anytime, be saved as a voicemail, and converted to an email and stored electronically. This process is limited by some licensed software. ERMU has one license to do this conversion now. The recording capability and conversion process has been tested on the phone system at the office and plant location. This option works well for our current needs without any additional cost. Staff recommends using the current system and re -addressing the issue at some future date if ERMU outgrows the capabilities of this system. Commission agreed. 5.1 Review and Consider Customer Deposit Policy Practice At the February 9, 2010, ERMU Commission meeting, staff was directed to review the Customer Deposit Policy and related practices and bring an analysis back to the Commission for review. The customer Deposit Policy adopted in July of 2007 was reviewed. In addition to the requirements of this policy, ERMU has also utilized legal counsel to minimize the risk of bad debts from commercial and Industrial customers. Based on this, ERMU requires a copy of the lease when a new commercial customer calls to set up a new account at an existing service where the existing account is delinquent. ERMU has also required court documentation in the case of a court ordered receiver. These examples reflect ERMU's efforts to minimize preventable write-offs. In the process of reviewing this policy and related practices, staff worked with Minnesota Municipal Utilities Association (MMUA) to gather information to use as a local industry reference point on this subject. MMUA conducted a 10 question survey on electric commercial customer deposits. There were 38 Minnesota municipal utilities that participated in the survey, including ERMU. Based on the information collected through MMUA's survey, ERMU's policy is in line with other Minnesota municipal utilities. The legal efforts made by ERMU that extend beyond the policy are also being made by other utilities. Because each situation is often unique, many times these issues are handled case by case with legal counsel. To strengthen the policy and help define the intentions of ERMU, additional language should be added to clearly state ERMU will make every effort to collect on past due accounts. Recent trends have shown that the current policy timeline for returning deposits doesn't always protect our ratepayers from customers who default on their accounts. Staff recommends holding their deposit until their account is closed and in good standing. Also, staff recommends the amount of the deposit for commercial and industrial customers have some flexibility. There is a difference in risk between a commercial customer renting space and a commercial customer Page 4 Regular meeting of the Elk River Municipal Utilities Commission March 9, 2010 owning and operating a data center. Staff has worked with Gray Plant Mooty to incorporate these proposed revisions in the Customer Deposit Policy. Discussion followed regarding the delinquent accounts and what can be assessed on taxes. During this discussion it was noted that Sherburne County will not assess anything under $50. John Dietz asked if garbage could be added to the verbiage in the Customer Deposit Policy, Peter Beck affirmed. Theresa Slominski will look into the possibility of adding a garbage deposit. Jerry Gumphrey moved to approve the proposed Customer Deposit Policy as presented. Daryl Thompson seconded the motion. Motion carried 3-0. A copy of the new Customer Deposit Policy is attached to these minutes. 5.2 Review and Consider Electric Cable Bids On March 4, 2010, bids were received to Famish and deliver the 2010 electric cable needs. Staff recommends awarding the bid to Border States Electric, the lowest responsive bidder. Jerry Gumphrey moved to award the 2010 cable bid to Border States Electric. Daryl Thompson seconded the motion. Motion carried 3-0. 5.3 Review 2009 Annual Safety Report Minnesota Rules Chapter 7826 Public Utilities Commission Electric Utility Standards cover safety, reliability, service, and reporting requirements. Per 7826.0100(A), municipal utilities are exempt from these requirements. However, the Elk River Municipal Utilities Commission adopted a number of parts of this chapter as a Distribution Reliability Standard policy. This policy includes the Annual Reliability Report provided in January, and an Annual Safety Report requirement. The policy requires ERMU to; "File an annual safety performance report with its local governing body. The report will include summaries of all reports filed with OSHA and the Occupational Safety and Health Division of the Minnesota Department of Labor and Industry during the calendar year." In 2009, ERMU only submitted one report that qualifies under this reporting requirement. John Dietz said it is a pretty good record. Jerry Gumphrey stated he would like a letter drafted to the employees thanking them for doing a great job and having a safety conscious year. 5.4 Review and Consider 0 Ouarter Write -Offs The first quarter write-offs cover items from November 2009 thru present totaling $24,826.40. $22,516.14 of the total will be sent to a collection agency for further collection efforts, $1,026.49 will be assessed in the fall of 2010, and $1,283.77 will be written off with no further collection efforts. Staff recommends approval of these write-offs. Page 5 Regular meeting of the Elk River Municipal Utilities Commission March 9, 2010 Jerry Gumphrey moved to approve the 1" quarter write-offs for 2010. Daryl Thompson seconded the motion. Motion carried 3-0. 5.5 Review Budeet Plan / Automatic Bill Payment Requirement At a recent staff meeting, there was some discussion on the budget plan and the challenges of managing that plan. The challenge comes from the individuals who sign up and then don't follow through on their budget payments, or submit different amounts rather than the agreed budget amount. It has been the practice to encourage the customer to enroll in the automatic bill payment (ABP) plan to draft the agreed upon amount each month to keep their budget plan current. Attorney Peter Beck was consulted regarding the possibility of making the ABP a requirement to qualify for the budget plan. It was determined that this could be implemented being the budget plan is an optional plan to customers. To implement this, ERMU will need a policy stating the requirement for budget customers to be ABP customers, and the application form will need to be modified to meet this requirement. Staff recommends adopting this policy. Jerry Gumphrey moved to adopt the Budget Plan Automatic Bill Pay policy. Daryl Thompson seconded the motion. Motion carried 3-0. 5.6 Update from Investment Committee The Investment Committee, consisting of Troy Adams, John Dietz, and Theresa Slominski met with Peter Beck prior to this ERMU Commission meeting. Theresa Slominski said the Investment Committee is in the process of making a formal reserve policy and the changes needed for the investment policy. John Dietz said Troy Adams will be contacting Ehlers & MMUA to acquire their standards on reserves so ERMU will have a template policy to work with This policy will be brought to the Commission on a yearly basis for update. 6.1 Staff Updates Troy Adams updated the Commission on the new program for Project Conserve which was discussed at the Monday night Elk River City Council meeting. If the grant is received it is hoped to have 500 participants in this program. It is hoped to be able to extend the scope of the project to all Elk River residents some of which may have Connexus for their electric service. The Bureau of Management Services (BMS) has given notice of a hearing scheduled for April 2, 2010 at 9:30 at the Sherburne County Courthouse regarding the request for making the field staff one unit for the union vote instead of separating out the lineman from locators, meter technicians, laborers, and water operators. Attorney Mark Mathison and the department heads attending will have to explain the Page 6 Regular meeting of the Elk River Municipal Utilities Commission March 9, 2010 reasoning for requesting all outside field employees to be considered one unit. Troy Adams also talked about CMMPA asking ERMU to participate in a resource planning coalition. He would like Commissioners approval to continue to meet with CMMPA to discuss future power options. Jerry Gumphrey said he thought it would be a good idea for Troy Adams to attend a few of these meetings. Jerry Gumphrey made the motion for Troy Adams to attend a couple CMMPA meetings for studying future power needs. Daryl Thompson seconded the motion. Motion carried 3-0. David Berg presented a quote from four well companies regarding the wellhead protection plan for abandoned wells in the vicinity of Wells #7, #8, and #9. Bolton & Menk. hic., had the lowest bid of $15,000 and is recommended for the Well Head Protection project. Jerry Gumphrey moved to award Bolton & Menk, Inc., the lowest bidder, to proceed with the wellhead protection plan. Daryl Thompson seconded the motion. Motion carried 3-0. 'David Berg informed the Commission of the upcoming Earth Day at the elementary schools and is asking for $200 for trinkets to give out to the kids. Jerry Gumphrey moved to approve spending $200 on PR trinkets for Earth Day. Daryl Thompson seconded the motion. Motion carried 3-0. John Dietz gave an update on the recent audit outcome and commended Theresa Slominski on doing a good job. John Dietz asked Wade Lovelette what the locators do when there are so few locates. Wade responded they are working with the infrared camera to find hot spots, along with updating the maps. They also help with flagging for the line crews, chipping crew, and assist the water deparhnent. Jerry Gumphrey said it is good that they can cross train and help out in other departments. Jerry Gumphrey commented that in conversations with other individuals out there that Troy Adams is doing an excellent job and it reflects on the staff also. At the March 8s' City Council meeting, the Orono Park lights were discussed and in need of replacement. The City is asking ERMU to consider funding or sharing the cost. Troy Adams commented on the possibility of using this as a test site for LED lighting. Another issue Jerry Gumphrey talked about was the possibility of having an incentive program for customers who reduce their electric bill. Troy Adams said that would be something that would have to be worked into the CIP budget. 6.2 Set Date for Next Meetin¢ The next regularly scheduled meeting of the Elk River Municipal Utilities Commission is tentatively scheduled for Tuesday, April 13, 2010, at 4:00 p.m., contingent upon Jerry Gumphrey's schedule. Page 7 Regular meeting of the Elk River Municipal Utilities Commission March 9, 2010 6.3 Adiourn Regular Meeting Daryl Thompson moved to adjourn the regular meeting of the Eliz River Municipal Utilities Commission meeting at 6:15 p.m. Jerry Gumphrey seconded the motion. Motion carried 3-0. Minutes prepared by Judy McSpadden. John Dietz President, ERMU Commission Tina Allard City Clerk