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2.2 ERMU MINUTES 06-10-2014ELK RIVER MUNICIPAL UTILITIES SPECIAL MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM May 20, 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; Mark Fuchs, Electric Superintendent Wade Lovelette, Technical Services Superintendent Eric Volk, Water Superintendent; Tom Sagstetter, Conservation & Key Accounts Manager; Jennie Nelson, Customer Service Manager Michelle Canterbury, Executive Administrative Assistant Others Present: Cal Portner, City Administrator, Peter Beck, Attorney 1.0 CALL MEETING TO ORDER John Dietz called the May 20, 2014 meeting to order at 3:30 p.m. 1.1 Pledge of Allegiance The Pledge of Allegiance was recited. 1.2 Consider Utilities Agenda Troy Adams requested to pull agenda item 2.4, Verizon Non -Exclusive Tower Attachment Lease Agreements from the Consent Agenda to New Business. Daryl Thompson also wanted to add something under Other Business. Daryl Thompson moved to approve the May 20, 2014 Utilities agenda. AI Nadeau seconded the motion. Motion carried 3-0. 1.3 Recognition of the ERMU "Tom Bovitz Memorial Scholarship" Recipient Ryan Toth is the recipient of the ERMU "Tom Bovitz Memorial Scholarship." He was present at the meeting and the commissioners thanked him for the essay he wrote. Page 1 Special meeting of the Elk River Municipal Utilities Commission May 20, 2014 13 1.4 Introduction of New and Promoted Emulovees Mark Fuchs introduced Russ Stuhr as the new Bore Rig Operator. Troy Adams introduced Michelle Canterbury and told the commission that she was internally promoted to the Executive Administrative Assistant position. Theresa Slominski introduced Jennie Nelson as an internal promotion to the Customer Service Manager position. The commission welcomed all of the new, and existing, employees in their new positions. 2.0 CONSENT AGENDA (Approved By One Motion John Dietz asked Theresa Slominski a few questions about Power Cost Adjustments (PCAs) that have been accruing much faster this year. Theresa Slominski responded that the $500,000 that the commission set aside to offset PCAs has already been surpassed this year. Staff is going to have to start charging for PCAs with the next bill. Troy Adams reached out to the commission to see if they would prefer to see a rolling 6 month PCA plan to recoup costs or charge a PCA as needed. Staff was going to look at the best plan and bring that back to the commissioners at a later date. Daryl Thompson moved to approve the Consent Agenda as follows: 2.1 April Check Register 2.0 April 8, 2014 Previous Meeting Minutes 2.3 Financial Statements 2.5 Agreement Regarding Water and Sewer Access Charges 2.6 Resolution Electing Not to Waive Statutory Tort Limits for Liability Insurance Al Nadeau seconded the motion. Motion carried 3-0. 3.0 OPEN MIC No one appeared for open mic. 4.0 OLD BUSINESS There is no old business. 5.0 NEW BUSINESS 5.1 Verizon Non -Exclusive Tower Attachment Lease A¢reements There are two tower attachment lease agreements with Verizon Wireless. The first lease agreement is for the Johnson Street tower and the second is for Auburn Street tower. There are a few minor typos in the agreements that need to be changed before they are fully executed. Troy Adams reached to the commission to approve him getting the changes made and executing the contracts. Discussion followed. Page 2 Special meeting of the Elk River Municipal Utilities Commission May 20, 2014 14 Al Nadeau made a motion to approve the Verizon contracts. Daryl Thompson seconded the motion. Motion carried 3-0. 5.1 Dispersed Generation (On -Site Generator) / Interruptible Load Program Currently ERMU offers two programs that provide financial incentives for large commercial or industrial customers to avoid using large amounts of energy over the ERMU coincidental billing peak. The first is the Dispersed Generation/Interruptible Program. This program requires that a customer completely disconnect from the distribution system when called on or reduce their load to a Pre -determined Demand Level (PDL). Customers can either reduce demand by using a back-up generator or they can manually decrease load to reach their PDL without a back-up generator. The Dispersed Generation/Interruptible Program is a program that is offered through the ERMU wholesale power provider and is strongly recommended for only customers who have back-up generation. If the customer is not operating when called to shed load, there is no load to provide a monthly billing credit. If the customer is running and does not drop load, they can be financially penalized and removed from the program. The second program is the Off -Peak Program where customers customize their production hours to avoid major energy consumption between the hours of 3:00 p.m. and 10:00 p.m. This program has lower demand costs for the entire month as long as the customer does not run Monday through Friday between the peak hours of 3:00 to 10:00 p.m. Any demand that is recorded during the peak hours is billed at the applicable Demand Rate for that month. Tom Sagstetter said that one of ERMU's commercial customers has requested that a new program be offered or special exceptions be made for them to better align with their business operations. This has led to staff assessing the programs and determining a few different options. He also said that the Dispersed Generation/Interruptible program has been in a state of declining support due to decreasing financial incentives. As ERMU transitions to a new wholesale power supplier that does not offer this type of program, it should be considered that now may be a time to start the transition away from the program. The preferred option would be for the commission to put a moratorium on new participants in this program until further evaluation is done relating to the transition to our new wholesale power supplier. Two other options for the Commission's consideration are to begin to phase out of the program in light of the transition to a new wholesale power supplier or continue to offer the program and approve an updated tariff sheet and contract for the program. Discussion followed. Al Nadeau made a motion to put a moratorium on the Dispersed Generation/Interruptible program. Daryl Thompson seconded the motion. Motion carried 3-0. Al Nadeau made a motion to approve the updated Dispersed Generation/Interruptible program tariff sheet and contract. Daryl Thompson seconded the motion. Motion carried 3-0. Page 3 Special meeting of the Elk River Municipal Utilities Commission May 20, 2014 15 5.2 American Public Power Association's 2014 Reliable Public Power Provider (RP3) Designation Last September staff submitted an application for the RP3 award for the second time. We were awarded the designation in 2014 at the APPA E&O Conference. We receive a scorecard from the submittal and it highlights what was done well and what could be improved. Wade Lovelette reviewed the scorecard with the commissioners. The commissioners had a few questions, staff responded. 5.3 American Public Power Association 2014 Engineering and Operations Technical Conference and Lineworker Rodeo Mark Fuchs and Wade Lovelette attended the 2015 APPA Engineering and Operations Technical Conference and Lineworker Rodeo. They showed the commissioners a video that recapped one of the most recent Lineworker Rodeos. The 2016 Rodeo will be held in Shakopee, Minnesota so staff is trying to learn how to set everything up as it will be likely that ERMU staff will be helping tremendously with that process. The commissioners had questions, staff responded. 5.4 Minnesota Municipal Utilities Association 2014 Legislative Rally As a way to increase municipal utility awareness during the legislative session, the Minnesota Municipal Utilities Association (MMUA) organizes a Legislative Rally at our State Capitol. Packaged with this rally, MMUA also provides a conference with timely and appropriate training sessions targeted at the municipal leadership demographic in attendance. This rally was held April 23-25, 2014. Troy Adams told the commission that this rally was a little different than prior years because there is nothing urgent that needed to be fought for with legislatures. The talking points for the Legislature this year were: laws for utilities can't be made as though "one size fits all," and third -party retail electric sales hurt our communities. Discussion followed. 5.5 First Ouarter Performance Metrics and Incentive Compensation Policv Results Theresa Slominski presented the first quarter results for the Performance Metrics and Incentive Compensation Policy Results. She reviewed the categories and although there are a few deficiencies thus far, she expects that results will be positive by the fourth quarter. Discussion followed. 5.6 Well #5 Motor Replacement and VFD Purchase Eric Volk said that staff discovered that Well #5 would not run last week. Looking at the well further, it was discovered that the motor had burned up. This was a non -budgeted item and Page 4 Special meeting of the Elk River Municipal Utilities Commission May 20, 2014 III since it was urgent, staff did not get two bids for the replacement motor. There is extra money that was allocated for a different project that can be used for this project. Eric Volk also noted that there are only a few wells with a Variable Frequency Drives (VFD) that work more efficiently than what is currently installed. As the motor will be replaced in Well #5, a VFD will be added as well. Al Nadeau made a motion to approve the purchase of a motor and VFD for Well #5. Daryl Thompson seconded the motion. Motion carried 3-0. 6.0 OTHER BUSINESS Daryl Thompson asked about a bid request that was sent out for printing materials. He requested that a recap be given at the next commission meeting. Staff responded. 6.1 Staff Updates Troy Adams got a notice from Great River Energy that they are filing with the Federal Energy Regulatory Commission to get an exemption from a requirement that they purchase power from qualified facilities such as our Landfill Gas plant. They are asking to be exempt from anything over 20MW. Troy Adams has forwarded the notice to legal counsel. Theresa Slominski wanted to make the commissioners aware that we have a three-year contract with our current credit card provider which will not be expiring until April 2016. We are going live with our new software, NISC, in February of 2015. We will be exploring our options to be released from or change our contract with our current provider so we will be able to take advantage of NISC credit card opportunities. John Dietz asked about the Customer Service Representative, Dolores Andreasen's, retirement and when that position will be filled. Theresa Slominski responded. He also gave her feedback about the financial statements and how he would like them presented with NISC. Mark Fuchs said that staff is working to replace an Apprentice Lineworker, who recently put in his notice. 6.2 Set Date for Next Meetin¢ The next regularly scheduled meeting will be on June 10, 2014. The Commission recessed the regular meeting at 4:50 p.m. 6.4 Closing of Meeting: "Meeting to be Closed pursuant to MN Statute 13D.05, Subd 3(a) for Employee Performance Evaluation." a. Call Closed Session to Order b. Discussion Page 5 Special meeting of the Elk River Municipal Utilities Commission May 20, 2014 17 c. Adiourn Closed Session 6.5 Adjourn Reeular Meetine Al Nadeau moved to adjourn the regular meeting of the Elk River Municipal Utilities Commission at 5:02p.m. 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 Special meeting of the Elk River Municipal Utilities Commission May 20, 2014 in FINANCIAL INDEX Apr -14 PAGE P & L NARRATIVE 20 COMBINED BALANCE SHEET .............. 22 ELECTRIC INCOME STATEMENT 23 WATER INCOME STATEMENT .............. 24 CASH FLOW BY MONTH .............. 25 CASH FLOW DETAIL ELECTRIC .............. 26 CASH FLOW DETAIL WATER .............. 27 GRAPH #1 ELECTRICAL PURCHASES .............. 28 GRAPH #2 ELECTRIC SALES 29 GRAPH #3 ELECTRIC SALES/CUSTOMER CLASS .... I......... 30 GRAPH #4 WATER PRODUCTION .............. 31 GRAPH #5 WATER SALES 32 DETAILED ELECTRIC P & L WITH BUDGET INFORMATION....... 33 .............. 34 ..... I........ 35 .............. 36 DETAILED WATER P & L WITH BUDGET INFORMATION.......... 37 .............. 38 .............. 39 .............. 40 19