2.2 ERMU MINUTES 05-20-2014ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
April 8, 2014
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;
Eric Volk, Water 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 April 8, 2014 meeting to order at 3:30 p.m.
1.1 PledEe of Alleeiance
The Pledge of Allegiance was recited.
1.2 Consider Utilities Agenda
Troy Adams said that agenda item 6.3 could be removed.
Al Nadeau moved to approve the April 8, 2014 Utilities agenda. Daryl Thompson seconded the
motion. Motion carried 3-0.
2.0 CONSENT AGENDA (Approved By One Motion)
John Dietz had a few questions on the fmancials, staff responded.
Al Nadeau moved to approve the Consent Agenda as follows:
2.1 March Check Register
2.2 March 18, 2014 Previous Meeting Minutes
2.3 Financial Statements
Daryl Thompson seconded the motion. Motion carried 3-0.
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3.0 OPEN MIC
No one appeared for open mic.
4.0 OLD BUSINESS
There is no old business.
5.0 NEW BUSINESS
5.1 2013 Financial Audit
Andrew Berg was present from the auditing company, Abdo, Eick & Meyers, to present
the 2013 financial audit and management letter. The auditors issued a clean opinion on the
utilities. There were no findings to be reported. The commissioners had a few questions for
Andrew Berg and management, staff responded. Discussion followed.
Al Nadeau made a motion to accept the 2013 Financial Audit. Daryl Thompson seconded
the motion. Motion carried 3-0.
5.2 2013 Year -End Reserve Balances
The purpose for reserves to a public utility is to meet bond covenants and provide a
financial buffer to mitigate unforeseen or volatile operational costs. In 2010, the commission
adopted a financial reserves policy that defined the structure and formula on how financial
reserves will be calculated for the Electric Utility and Water Utility funds.
As defined by policy, the year-end reserve balances are to be reviewed after the
completion of the audit. These balances, if above their target levels, shall be unrestricted with a
defaulting designation as working capital. The commission shall then consider optimal use of
these unrestricted reserves.
Staff presented the year-end reserve balances and recommended that the balances above
target levels shall be unrestricted and designated as working capital. John Dietz had a few
questions, staff responded.
Daryl Thompson made a motion to approve the balances as unrestricted for the 2013
audited amounts for 2014. Al Nadeau seconded the motion. Motion carried 3-0.
5.3 First Quarter Delinquent Items
Theresa Slominski presented the delinquent items for the first quarter. The year to date
balance for collections is about $7,000 and only about $350 is being written off. The American
Public Power Association's national statistics show that the industry standard is between .1 and
.241 percent Uncollectible Accounts per Revenue Dollar. ERMU is well below the standard at
.026 percent. John Dietz asked a few questions. Staff responded.
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Al Nadeau made a motion to accept the 2014 first quarter delinquent items. Daryl
Thompson seconded the motion. Motion carried 3-0.
5.4 Utilities Performance Incentive Compensation Distribution
The Commission adopted a Performance Metrics program in December 2012, for
implementation January 1, 2013. The performance metrics were monitored and provided as
updates to the employees and commission on a quarterly basis throughout the year. This allowed
for corrective action to be taken in order to meet the targets for the program. Troy Adams said
the program worked exactly as intended as we witness employee motivation and efforts align to
improve company performance for deficient criteria.
Troy Adams presented the scorecard showing that employees had successfully met each
category's goal. John Dietz asked about the categories and if they could be altered throughout the
year. Troy Adams said that the goals would need to be changed prior to the first of the year,
which would mean that the results would not be available yet. Staff will update the
commissioners regularly so they can assess if the goals would need to be changed.
The commissioners had set a two percent multiplier when the policy was created and if
they wanted to change the percentage they could, however they choose to stay at two percent.
The commissioners congratulated the employees on successfully completing the first
performance metrics program.
Daryl Thompson made a motion to award the two percent incentive compensation
distribution. Al Nadeau seconded the motion. Motion carried 3-0.
5.5 Oreanizational Growth
Elk River Municipal Utilities has seen great growth over the last few years; however,
staff has been operating lean for years. With large projects on the horizon such as the billing
software conversion, staff is seeing a need for more leadership in the office.
Troy Adams proposed that the Assistant Office Manager position, which is a
management position by title but not by responsibility, be eliminated and replaced by a Customer
Service Manager. This position would report to the Finance and Office Manager.
The Customer Service Manager position would supervise the four Customer Service
Representatives providing work direction, performing performance evaluations, providing
coaching, scheduling time off requests, and approving timesheets. This would be in addition to
overseeing the operations of the front. This position would replace the Assistant Office Manager
position and encompass those job duties as well. Troy Adams said the position would be posted
intemally and externally. Discussion followed.
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Daryl Thompson made a motion to eliminate the Assistant Office Manager position and
approve the Customer Service Manager. Al Nadeau seconded the motion. Motion carried
3-0.
5.6 Tom Bovitz Memorial Scholarship Award
Troy Adams presented the winning essay of the Tom Bovitz Memorial Scholarship
award. The essay topic was "Municipal Utilities: Good for All of Us." The commissioners
thought the essay was very well written and John Dietz wanted to invite the writer to the next
commission meeting. Discussion followed.
6.0 OTHER BUSINESS
There was no other business.
6.1 Staff Updates
Troy Adams talked to the head of the American Public Power Association's Reliable Public
Power program and shared that the Performance Incentive Program was based on the award. He was
very excited that staff had taken the award and made something else out of it. Troy Adams also
announced that ERMU was awarded the RP3 award for the second time. The commissioners
congratulated staff on the award.
Theresa Slominski briefed the commission on the ongoing software conversion. The
accounting side of the software is being converted first and as staff is diving into the program more,
they are realizing that the financial statements that the new software presents are not as useful as our
current statements. There will have to be some customization of the software to make the financial
statements more useable to ERMU. She asked the commissioners to start thinking about what they
would like to see the statements look like so they can be customized.
Eric Volk said that the first water line thawed the day before. This line was the first to freeze
and is the first to thaw. He also said that ERMU would be hosting the Minnesota Rural Water
Association class on April 23, 2014.
Tom Sagstetter said that he sent a letter to Sherburne County and Waste Management
informing them that we will not be giving them a bonus for landfill production this year. Because the
landfill engines had several problems throughout the year, the production was not high enough to be
awarded a bonus. John Dietz stated that Tom Sagstetter was elected Chair of the Energy City
Commission.
6.2 Set Date for Next Meeting
John Dietz asked that the next commission meeting be postponed until May 20, 2014. Staff
and the other commissioners agreed.
The Commission recessed the regular meeting at 4:36 p.m.
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6.4 Closing of Meeting: "Meetine to be Closed uursuant to MN Statute
13D.05. Subd. 3(a) for Employee Performance Evaluation."
a Call Closed Session to Order
b Discussion
c Adiourn Closed Session
6.5 Adiourn Regular Meeting
Daryl Thompson moved to adjourn the regular meeting of the Elk River Municipal
Utilities Commission at 5:28 p.m. Al Nadeau seconded the motion. Motion carried 3-0.
Minutes prepared by Jennie Nelson.
John J. Dietz
Chair, ERMU Commission
Tina Allard
City Clerk
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