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2.2 ERMU MINUTES 12-17-2013ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM November 12, 2013 Members Present: John Dietz, Chair; Al Nadeau, Vice Chair; Daryl Thompson, Trustee ERMU Staff Present: Troy Adams, General Manager; Theresa Slominski, Finance and Office Manager Wade Lovelette, Technical Services Superintendent; Tom Sagstetter, Conservation & Key Accounts Manager; Jennie Nelson, Executive Administrative Assistant Others Present: Cal Portner, City Administrator; Peter Beck, Attorney 1.0 CALL MEETING TO ORDER John Dietz called the November 12, 2013 meeting to order at 3:30 p.m. 1.1 Pledee of Alleeiance The Pledge of Allegiance was recited. 1.2 Consider Utilities Aeenda John Dietz requested to move 5.1 Wage & Benefits Committee meeting to after Staff Updates. Troy Adams added an item under New Business: CAPX2020 Update. Al Nadeau moved to approve the amended agenda, John Dietz seconded the motion. Motion carried 2-0. 1.3 Introduction of New Employee Troy Adams introduced Ben Elsenpeter, ERMU's new Inventory/Maintenance Person. The commissioners welcomed Ben to ERMU. 2.0 CONSENT AGENDA (Approved By One Motion) John Dietz had a few questions on the financials, staff responded. Al Nadeau moved to approve the Consent Agenda as follows: 2.1 October Check Register 2.2 October 8, 2013 Previous Meeting Minutes Page 1 Regular meeting of the Elk River Municipal Utilities Commission November 12, 2013 13 2.3 Financial Statements 2.4 Assessments 2.5 Employee's Statement of Support for the Guard and Reserve 2.6 Water Tower Attachment Engineering Inspection Quote 2.7 Water Treatment Chemical Bids John Dietz seconded the motion. Motion carried 2-0. 3.0 OPEN MIC No one appeared for open mic. 4.0 OLD BUSINESS There is no old business. 5.0 NEW BUSINESS 5.2 Performance Metrics 3`d Quarter Uadate Theresa Slominski presented the Performance Metrics third quarter update. Staff is meeting all of the goals except for safety trainings. Theresa Slominski was going to try to set up some make-up meetings for employees to attend. John Dietz said that after two years the categories should be reevaluated to make sure they are achievable, but not too easy. Discussion followed. 5.3 2014 Budget: Rates and Review Troy Adams presented the 2014 electric and water rates. He said that the electric rates are preliminary as our wholesale power supplier, Great River Energy (GRE), has not finalized their rate increases yet. The rates will likely be finalized in December prior to the next commission meeting. GRE has been very adamant that they would have a 0% rate increase. The preliminary numbers show, however, that ERMU will have an increase in the off peak energy. This will impact ERMU's budget by .5%. As the budget with preliminary wholesale rates stand, ERMU will need an increase of approximately 1.5% in revenue to recover the increases associated with the wholesale power costs as applied to the forecasted power sales and remaining increased expenses. The water rate increase is part of a three-year plan that was determined in 2012. The plan is to slowly increase the first tier and the base rate by 4% while phasing out the senior citizen rate. The intent is to make the difference between the tiers less significant and to build up reserves to pay for the water towers that need painting. John Dietz asked how this increase would impact a typical residential customer. Troy Adams will bring some scenarios to the commission at the December meeting. Page 2 Regular meeting of the Elk River Municipal Utilities Commission November 12, 2013 14 5.4 Water Superintendent Position David Berg announced his retirement date of January 31, 2014 in a prior commission meeting. Troy Adams requested from the commission that staff post the position internally and hire David Berg's successor as soon as possible so there can be cross -training. There would be no back -filling until after January 31, 2014. Discussion followed. Al Nadeau made motion to post the Water Superintendent position internally. John Dietz seconded the motion. Motion carried 2-0. 5.5 New Website Overview — Verbal Staff formed a website committee to work on the website redesign. The new website went live November 1 st and was presented to the commission. 5.6 CAPX2020 Update In May 2006, the Utilities Commission authorized ERMU joining Midwest Municipal Transmission Group (MMTG) to explore the potential to obtain ownership in the regional transmission system. In February 2007, ERMU entered into an agreement to participate through Central Minnesota Municipal Agency (CMMPA) in the CAPX2020 Brookings -Twin Cities Transmission Project. hi March 2011, the Commission and Council both approved resolutions authorizing the Utilities' participation in the project for an amount not to exceed $7,140,953. The next phase of the project was an extension from Brookings to Big Stone. This is a significantly smaller project yet required all the same amount of legal work associated with the Federal Regulatory Commission (FERC) filings. Because of the size of the project, the CMMPA Board of Directors elected to not extend an invitation to a nonmember like ERMU to invest in their $2.5M eligible share of this project. Because of the amount of work for such a small investment, CMMPA and the other upstream investors have agreed to swap the investment rights for the Big Stone transmission project for an increase in the Brookings project. The decision to swap creates a requirement for CMMPA to offer ERMU the opportunity to increase their Brookings project allocations based on their current entitlement share. Troy Adams said the current project is coming in well below budget. Increasing ERMU's entitlement share would only cost about $500,000, which would still total below the not to exceed amount that was previously decided on. Troy Adams said he is not looking for an answer now, but will bring more information back to the next meeting. 6.0 OTHER BUSINESS There was no other business. 6.1 Staff Updates Theresa Slominski added to her staff update that the Assistant Office Manager, Greg Scherber, will have his 10 year anniversary in a few days. John Dietz asked Theresa Slominski about Power Cost Adjustment credits. It has been procedure to set money aside every year to offset any rate Page 3 Regular meeting of the Elk River Municipal Utilities Commission November 12, 2013 15 increases by ERMU's power supplier. If we haven't used that money this year, could it be given to customers? Troy Adams said he would rather save that money and use it for the territory acquisition to help offset how much bonding will need to be done. Wade Lovelette added to his staff update that the Lead Electrical Technician, Michael Price, had his 15 year anniversary with ERMU last month. Tom Sagstetter wanted to reiterate how much of an eye-opening experience a class he went to was. The class focused on how utilities' business model will change drastically in the next few years. He wanted the commissioners to keep their eyes out for utility related stories when reading trade publications and watching the news. Troy Adams said it is a good opportunity to make sure local officials know what affects us negatively and how they can help during the legislative sessions. Tom Sagstetter also gave an update on the landfill. The second engine has failed so production numbers will be low until that is replaced later in the month. Two other engines will be replaced next year. John Dietz wanted to talk about the new Fire Hydrant Maintenance program ERMU is offering as a service. There are several businesses that have private hydrants and he is concerned that people are not aware that they are private and need to know that this is their responsibility. Staff sent out a letter informing people about the hydrants they own and that we would service them for a fee. Minnesota Fire Code states that hydrants need to be maintained. John Dietz would like to make sure the Fire Chief is enforcing the hydrant maintenance. Troy Adams said that we will have documentation for those that sign up for our maintenance program and we can provide that to the fire department. 5.1 Wase and Benefits Committee Update The Wage & Benefits committee wanted to bring three items to the commission for consideration: the 2014 Cost of Living Adjustment (COLA), Commissioner's compensation, and the clothing policy for non -field employees. There were two options the committee wanted to recommend to the commission for the COLA. The first option was to award a 2.5% increase to all pay groups. The second option was to award a 2.5% increase to the lineman and a 2.1% increase for the rest of the pay groups. John Dietz said that the commission made the decision to divide the company into four pay groups. A mid -year adjustment was made for the lineman to solve a retention problem. His recommendation was that the commission award a 2.5% increase for the lineman and a 2.1 % increase for everyone else as that is what the Consumer Price Index (CPI) is listed at. He pointed out that there have not been any retention problems with any other group and awarding a 2.5% increase for the lineman would keep that pay group at the "metro average." Daryl Thompson asked Troy Adams if the 2.1 CPI is for the year 2012 or 2013. Troy Adams said it is looking backwards. John Dietz wanted to mention that the company is also meeting almost all of the goals for the Performance Metrics Bonus program so it is likely that employees will get a 2% bonus of their wage also. Page 4 Regular meeting of the Elk River Municipal Utilities Commission November 12, 2013 16 John Dietz asked about the commission compensation increase. The committee recommended that the commission implement a $50 stipend for commissioners when they attend extra events or meetings. The committee also recommended that the commissioners change the clothing policy for non -field employees to a flat dollar amount instead of a quantity limit. Al Nadeau asked if that would be for the commissioners as well and Troy Adams said it would. The committee recommended that the annual limit per non -field employee be $75. The money would not carry over from year to year. The commission agreed. Al Nadeau asked how other utilities' pay compares to ERMU's office staff. Troy Adams said that he did benchmark the Customer Service Representative position against other utilities in the area and that position was paid lower than others. He did point out, however, that it is hard to benchmark office positions as they are not always comparing apples to apples. Daryl Thompson said the commission split into four groups to try to get lineman to an area where we would stop depleting our staff. He recommended giving the lineman a 2.7% COLA that would make them competitive among surrounding utilities. The rest of the staff would be given a 2.1% increase based on the CPI and then since that is looking backwards, he would like the commission to wait until the final numbers are released in the spring and reassess given those results. Daryl Thompson supports the commissioner stipend and the clothing allowance for non -field employees. Al Nadeau said he agreed with the stipend and clothing allowance as well. John Dietz did not agree with Daryl Thompson's COLA recommendation, but does support the stipend and clothing allowance. Daryl Thompson made a motion to award a 2.7% COLA to the lineman pay group and a 2.1% COLA to the other pay groups with an evaluation of the CPI when 2013 figures are final. The other pay groups could potentially get an increase, but it would not go lower than a 2.1%. The commission will also implement a $50 stipend for the commissioners and a $75 clothing allowance for non -field employees. Al Nadeau seconded the motion, John Dietz voted nae. Motion carried 2-1. Troy Adams said that at the last commission meeting the commissioners discussed the dental insurance. It was decided that the company would absorb their portion of the increase and the employees would do the same, but this was not included in the motion. Daryl Thompson made a motion to approve that the company would absorb their portion of the dental renewal increase and the employees would do the same. Al Nadeau seconded the motion. Motion carried 3-0. 6.2 Set Date for Next Meetine The next regularly scheduled Commission meeting will be on December 17, 2013. The Commission recessed the regular meeting at 4:28pm. Page 5 Regular meeting of the Elk River Municipal Utilities Commission November 12, 2013 17 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. Adjourn Closed Session 6.5 Adiourn Regular Meeting Al Nadeau moved to adjourn the regular meeting of the Elk River Municipal Utilities Commission at 4:34. Daryl Thompson seconded the motion. Motion carried 3-0. Minutes prepared by Jennie Nelson. John J. Dietz Chair, ERMU Commission Tina Allard City Clerk Page 6 Regular meeting of the Elk River Municipal Utilities Commission November 12, 2013 iu