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6.2. ERMUSR 02-12-2019 Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Tom Sagstetter—Conservation and Key Accounts Manager MEETING DATE: AGENDA ITEM NUMBER: February 12, 2019 6.2 SUBJECT: Report on Minnesota Municipal Utilities Association 2019 Legislative Rally ACTION REQUESTED: No Action Required BACKGROUND: Annually Minnesota Municipal Utilities Association (MMUA) holds a legislative rally at the State Capitol to inform and educate Legislators about issues that impact their communities. ERMU staff attended this rally with other utilities representing over 100 electric and natural gas utilities. DISCUSSION: Troy Adams and Tom Sagstetter met with Senator Mary Kiffmeyer, Representative Nick Zerwas, and Representative Eric Lucero on January 30th. David Niles from Minnesota Municipal Power Agency (MMPA) accompanied them to each of the meetings.The three meetings focused on the modernization CIP, possible changes to the Renewable Energy Standard (RES), and potential legislation that would erode the defined service territories of electric utilities. The other topics of discussed during the two days included: funding for broad band in outstate Minnesota, bonding for public facilities, salary and pay equity concerns,third party electric sales, beneficial electrification, and small cell pole attachments. With the shift in the house to a Democratic majority, 2019 should be an active year with many changes in committee leadership.The major topics of the rally included modernizing Conservation Improvement Programs (CIP), Modernizing CIP ERMU staff has been working with a number of work groups over the past few months to come to a consensus on the details of modernizing the CIP statutes.The work groups included utilities, regulatory agencies, and other non-governmental organizations.These work groups understand that the energy savings goals and spending requirements are not sustainable moving forward under the existing statutes.The goal of the work groups and the modernization of CIP are to recognize new technologies that continue to promote energy efficiency that is cost effective and benefits the environment through reduced greenhouse gas emissions.These changes are needed to respond to the technological advances, energy efficiency adoption rates, and the electric industry having a much cleaner generation portfolio than in 2007 when CIP was originally passed. Page 1 of 3 101 Renewable Energy Standard The RES was established in 2007 and requires our wholesale power provider to supply 25%of ERMU total energy sales from renewable energy resources by 2025. MMPA is in position to meet the required 25% renewable generation by 2025. On February 4th a bill was introduced (HF 700)that would require MMPA to provide 80%of all electric energy from renewable by 2035. At the time of the legislative rally this Bill was not introduced, but we spoke with each elected official to make sure they knew that mandates of this magnitude need to be studied before implemented. As a point of reference, the highest level of RES analyzed in Minnesota is 40%. At this time there is no information available to know if existing infrastructure (generation and transmission) can even be built to attain the proposed 80% RES. ERMU and other MMUA members are proposing to study the effects and feasibility of a larger RES prior to implementing legislation. Another interesting point about a mandated RES is that electric utilities become price takers.A mandate eliminates the benefits of negotiating more competitive rates from competing developers. We highlighted that MMPA is exceeding the RES and that energy is competitively priced because of the competition between renewable developers. Anecdotal discussions with power suppliers confirm that the first contracts entered into under the RES in 2007 are the more expensive resources in the generation portfolio. A take away from this discussion is that the electric utilities do not need mandates to achieve more renewable generation.The free market is working to provide renewable electricity at a competitive price. Regulatory Compact(Third Party Sales) Each year the concept of third party sales, deregulated utilities, or customer choice is proposed. This concept is circulating again this year in conjunction with the installation of large solar arrays installed on large commercial customer's rooftops.This new approach to bundling solar and third party sales is a creative way to circumvent the statutory authority given to cities to provide electric service back in 1901. ERMU has been discussing this topic for many years and our elected officials understand that customer choice for electric services may not reduce the costs. On average customers in deregulated states pay a price per kilowatt-hour that is above the national average. Our elected officials recognize that ERMU provides value and reliability to Elk River, Otsego, Dayton, and Big Lake Township. Informational Sessions In addition to meeting with our elected state legislators, staff had the opportunity to hear from experts on additional topics of great interest being introduced to the newly appointed Commissioner of the Minnesota Department of Commerce. Page 2 of 3 102 One session focused on Electric Vehicles (EVs) and the potential in Minnesota.Jukka Kukkonen provided an overview of where the EV market currently is and where it will be in the future. He sighted an interesting survey from Triple A(AAA)that suggested 1 out of 5 Americans want to buy an electric vehicle. His major discussion point is that Minnesota does not have access to very many EV options because priority is given to states that have Zero Emission Vehicle (ZEV) standards. As part of the beneficial electrification and the CIP reform electric vehicles are getting a great deal of attention and Minnesota becoming a ZEV has been talked about. The session of the 5G/small Cell issues focused on the inconsistencies between the Federal Communications Commission laws and state laws. Wireless communications companies are very aggressive in some areas, wanting to install the new 5G infrastructure quickly and as cost effectively as possible. The cost of attaching to a pole in the right-of-way is a huge issue for these companies. At this time this issue is in a state of flux because there is pending litigation on the implementation of FCC laws and the inconsistencies with state laws. The Commerce Commissioner, Steve Kelley was introduced to the group and provided some high level comments on initiatives that he believes will be a priority for the new administration. He highlighted the need for reliable, affordable energy in Minnesota that provides customers with flexibility. Summary The 2019 Legislative Rally was a big success. ERMU has very good working relationships with Sen. Kiffmeyer, Rep. Zerwas, and Rep. Lucero. Rep. Zerwas is appreciative of our efforts to keep him informed of issues in energy and commented that if he has questions on proposed legislation that he will reach out to ERMU for information on impacts to the community. Rep. Lucero was also appreciated our visit and offered to draft a Bill's that we many need to provide to address legislative changes. Sen. Kiffmeyer suggested that we schedule a meeting for a time when she is back in the district and we can review all the issues in detail. ATTACHMENTS: • Photos from MMUA Legislative Rally • MMUA 2019 State Position Statements Page 3 of 3 103 MINNESOTA MUNICIPAL UTILITIES ASSOCIATION 2019 LEGISLATIVE RALLY rt Rrti r 1 T" ¢ ir 4 s !...14 '. _ .- _- d 0. t A . ; s/ 0. A -i 1' li Pictured from left to right:Bill Black,MMUA;Troy Adams,ERMU;Theresa Neddermeyer,MMUA;Rod Marshal,New Ulm Public Utilities;David Niles,Avant Energy;and Tom Sagstetter,ERMU. r ` / .,. e _; ,0 } " " w m i 'tar a�, t . . .0., . 1„,- .,..41.. :.:.,... ,,. ....... i . , .i.r- , . 72 A. ' r .tea x Pictured from left to right:Tom Sagstetter,ERMU;Senator Mary Kiffmeyer;Troy Adams,ERMU;Representative Nick Zerwas; Kent Sulem,MMUA;and Bill Black,MMUA 104 ,.., 2019 STATE : 1.7.,,,,, g•u x otto ' ,i',,14,„.,,,, POSITION .344 . .., ) 2... g = TAT E M E N T S ... , "zfe.'A, ":-.4 ,_.'• iN 1/1.11160.„. 010 Association Minnesota Municipal Utilities Association ._ .. ..,p t ,. ........ t ' * '' - t t' ‘....." , ,.. 4 9 Oliiii-1,)fe , , 1 Ihr4.. „..„ , I i i ., ,.." —401111-' 4 , , t a * , ' ''' i , c .• Table of Contents Sustainable CIP Improvements for Consumer-Owned Utilities 3-4 Study Impacts Before Changing Renewable Energy Standard 5 Funding for Border-to-Border Broadband 6 Bonding for PFA 7 Local Government Salary Cap Relief Needed 8 Pay Equity Relief Needed 9-10 Preserve the Regulatory Compact 11 Municipal Electric and Natural Gas Utilities of Minnesota Back page Photo/graphic credits:All photos/graphics by MMUA,except: Page 6 Johnnie Pakington,Wikimedia Commons Page 3 General Electric Page 8 Datei:Stromversorgung,Wikimedia Commons Page 4 Shutterstock Page 11 American Public Power Associaton About MMUA: The Minnesota Municipal Utilities Association is a to municipal utilities and enhancing their position non-profit entity within the industry. MMUA's mission ����„i, representing is to support and serve as a common voice for ,,,,,,,�,g 124 electric, 170 municipal utilities. Its core values: People, Safety, water, and 33 gas Advocacy, Teamwork, Communication, Creativity, utilities owned and Dedication, Integrity, and Environment. For more operated by cities across the State. MMUA strives to about MMUA, its mission and values, visit us online be a recognized leader in advocacy, bringing value at www.mmua.org - �, y _ '-'': 74 1.. 1 6.'. -,.,''Y':..,' . _ . NN irk �� fir, � rf/� \a. 1 A - -F [i MY sT E .' ! U Iq ;, CHAn� 1' xY : 1a . ---a bir. , ra An � E r[ i{.'✓- S y4 !xe ( wb m Municipal utility services and contributions to the community help keep our cities good places to live. 106 DMDMf// //////S/�'► Position Statement Sustainable CIP Improvements for Consumer-Owned Utilities Background diminishing returns on the investment. LED lighting Consumer-Owned Utilities (COUs) are those that are is increasingly not only the preferred option, but either owned and operated by a municipality (city) the only option. People who can afford to buy new or a Rural Electric Cooperative. COUs participate appliances find that most are energy efficient and in Minnesota's Conservation Improvement Program the existence of a rebate has little effect on what (CIP). COUS believe CIP has achieved significant they purchase. Meanwhile, for a low income family success toward reducing Minnesotans'energy that can't afford the new appliance, a rebate is not spending, catalyzing sustainable and renewable that helpful. In fact, utilities are beginning to report energy production in the state, minimizing new that in order to meet their CIP goals, including electric generation construction, and reducing current minimum expenditure requirements, low- greenhouse gas emissions, including carbon dioxide. income customers are actually subsidizing others. From the cooperative and municipal utilities'point Further, the current CIP can have the adverse effect of view, it has helped our members and citizens of discouraging efficient electrification, including use electricity more wisely and has facilitated the expanded use of electric vehicles, because it rewards successful widespread adoption of new efficient reduced use of electricity regardless of the benefits technologies. It is, however, time to update the CIP of expanding production to meet the needs of program so that it continues to be a successful and efficient electrification. CIP in its current form is beneficial operation. unsustainable and increasingly ineffective. Current Status Principles for a new approach CIP in its current form has reached maturity. CIP Municipal utilities have been working closely with needs to be modernized in order to encompass new the electric cooperatives, and consulting with a technologies, meet the evolving views of society number of non-governmental organizations (NGOs), regarding expanded but efficient electrification, and to develop a modernized CIP that recognizes the to take a broader view on overall energy efficiencies, good points of the current program while updating conservation, and carbon reduction. it to meet current demands and expectations. Early in the process, the COUs adopted the following Many of the things CIP currently incentivizes have now been deployed to a point of saturation and thus continued on next page O { i • • . -----• 0,0 l y € r 1 {fe h�'td-s� e ° IIi tlr°i t€ Many of the items the legacy CIP promoted, including efficient appliances, have been deployed to the saturation point. 2019 State Position Statements /3 107 IMDML(p I,,,,Iw principles to guide the process for developing an • �}' - _ updated CIP that: -- `ob tv • Reflects that consumer-owned utilities have a "', - � °`' d'* � valuable role to play in Minnesota energy policy • Expands focus beyond just conservation and ..+'` reduced KWh, and recognizes multiple purposes and ' �• benefits, including but not limited to: end use carbon _ ' ' - emissions reduction, customer cost savings, utility efficiency, energy efficiencies, and economic growth _ • Recognizes efforts that advance any of Minnesota's energy policy priorities, including utility innovation, < distributed generation support, consumer education, The existing CIP program fails to support and advance Minnesota energy sustainability and resiliency emerging green technologies,such as electric vehicles. • Establishes safety and reliability as bedrock concerns • Establishes a separate CIP for COUs and IOUs • Uses reasonable, credible metrics for illustrating success • Repeal current minimum expenditure requirement • Allows multi-year plans with averaging of savings • Allows COUs to develop CIP plans that would towards overall goals cover up to a five-year period during which the utility could average a 1.5 percent savings even if in • Ensures the needs of low-income consumers are some years the savings were less than 1.5 percent effectively addressed while placing an increased focus on multi-family residential buildings • Requires CIP plans, and annual updates as applicable, to be filed with the Department of • Simplifies administration Commerce but does not impose any authority to the Commissioner to approve, deny, or take any similar • Remains flexible and sustainable for the long-term. action regarding an utility's plan Requested Action • Eliminates any differential treatment under CIP of MMUA continues to work closely with the Minnesota utilities with over 45,000 customers Rural Electric Association and their member cooperatives, and NGOs, to develop a sustainable • Clarifies that the 1.5 percent savings goal applies CIP reform effort. MMUA seeks support for passage against fossil-based fuels of CIP reform that reflects the objectives identified above in a viable and cost-effective manner for • Modifies the three current Department of consumer-owned utilities. Specifically, MMUA Commerce imposed assessments utilities currently requests support for a CIP bill that: pay under CIP to more proportionately reflect the benefits to their customers from a utility's assessed • Retains the current 1.5 percent savings goal contribution. • Recognizes, and perhaps incentivizes, efficient MMUA is working with advocates on behalf of low- electrification (including electric vehicles), using a income residents in hopes of being able to enhance kWh equivalent matrix the benefit of the current CIP requirement to have a low-income program as part of any plan. MMUA is • Allows COUs to count efficient electrification and not seeking nor supporting any changes to the size other new approaches for credit towards one-half of utilities subject to CIP, nor the option of certain their CIP goal large consumers to opt out of CIP. 4/2019 State Position Statements 108 1MDMIJ,/ //////V�'► Position Statement Study Impacts Before Changing Renewable Energy Standard Background Minnesota's Renewable Energy \l Standard(RES) requires that by �` 2025, 25 percent of wholesale power sold to municipal and I` cooperative utilities 1 for their customers must come from renewable energy sources such as wind and solar. The same , - standard applies to ® I _ Minnesota Power q� and Ottertail Power. ISM tii �r, `` �r For Xcel Energy ,7* ;�a, the standard is 30 percent by 2020. ,t Some renewable energy advocatest propose increasing Mandating significant alterations to the power supply mix results in the need for extensive the standard so that planning and massive investment. all utilities would have to meet an RES of 50 percent by 2030. While The cost of renewable energy increased immediately municipal utilities and their power agencies support following enactment of the current RES mandate. renewable energy, experience implementing the Similar cost increases could occur with an RES current RES dictates that further study is necessary increase. before stepping up the Standard any further. Requested Action Current Status MMUA recommends that if the Legislature intends All indicators appear to show that the current RES to increase the Renewable Energy Standard, it will be satisfied. should first ensure that a comprehensive study is conducted as to the feasibility, costs and other Increasing the RES to 50 percent by 2030 would possible impacts of doing so. Such a study should require utilities other than Xcel to double their use be designed with extensive input from the utility of renewables in only five years from the current industry and Midcontinent Independent System deadline, and Xcel to increase 67 percent in 10 years. Operator(MISO) to determine required changes to transmission networks, including costs, the time Market factors, including the expectations of required and, who could build it. The State should customers, are moving utilities towards using more also study likely changes that would be caused by renewable energy. an increased mandate in how industry participants would be affected and whether those effects fit with The State has not sought to determine the the full range of relevant Minnesota policies. feasibility, costs and other possible adverse impacts of trying to achieve a 50 percent threshold by 2030. 2019 State Position Statements/5 109 ,VIIVIW11111111111012V Position Statement Funding for Border to Border Broadband Background governments and joint power entities to help offset the Efforts to spur the placing of necessary infrastructure cost of building a border-to-border broadband system. to ensure access to high-speed internet service in all parts of the State has been a long-term, underfunded The number and total value of requests has far effort for several years, dependent on small amounts exceeded the limited resources provided by the State. of State funding to provide matching grants to telecommunication providers willing to invest in Border-to-Border broadband is essential for the providing high-speed broad-band service to unserved economic viability of many rural communities. and underserved communities across the State. It is time to provide on-going and reliable funding for the Requested Action Border-to-Border Broadband program. MMUA supports and recommends the adoption of HF 7, which would create a permanent source of funding Current Status by including border-to-border broadband as an ongoing The House and Senate majority has made long-term budget item under DEED's biennial budget.Additional and sufficient funding for border-to-border broadband revenues should also be made available to enable one of their respective top 10 missions for the 2019 immediate efforts that have languished in recent years legislative session. due to the underfunding of this essential program. For the past several years the Legislature has provided limited bond funds for matching grants to local „ ,Ii1 — . to ' '+G __ ... .. ice MCC. rulwt ` lni,.. . ., .To:::7,t,:;:ii:::::[.........,ir::,friiii,., -.1f.t: r xal 7 . 1 `t ' ! ' it Q gip. 4.;;iq. v Engineer working on Optical Consolidation Rack equipment that brings together thousands of fibre optic cables and helps connect them up to a main arterial network. 6/2019 State Position Statements 110 IhDMIIJJ ,VIIVIWJ Position Statement Bonding for Public Facilities Authority Background in order to finance and issue the grants to waiting local The 2018 Legislature authorized$59 million in entities. appropriation bonds to fund PFA grants to local water treatment facilities. Unlike General Obligation Grants, At least three municipal utilities have major water which are backed by the full taxing and financial upgrades that cannot be completed without the PFA resources of the issuing authority, appropriation grants. grants must specify the source of revenue to be used to repay the bonds. The 2018 Legislature designated Estimates show that the PFA needs additional funding constitutionally dedicated sales tax revenue to finance beyond the $59 million of currently lost bond funds in the bonds. Several environmental groups united in order to truly assist local governments. filing a lawsuit challenging the constitutionality of using the designated funds for paying back the bonds. The November 2018 State Budget forecast indicates the This means that bond counsel cannot issue a clean State will start the 2019 legislative session with a $1.5 opinion on the issuance of the bonds which effectively billion surplus. blocks the issuance of the bonds and thus denies the PFA the revenue to issue the grants that municipal Requested Action utilities and others were counting on to finance MMUA encourages the State Legislature to act quickly important upgrades to their water utilities to either use cash from the surplus to cover the amount of the 2018 appropriation bonds for the PFA, or to take Current Status necessary action to replace the 2018 appropriation Because of the lawsuit, State bond counsel cannot bonds with general obligation bonds. In addition, issue a clean opinion on the valid purpose of the additional funding should be provided to ensure full appropriation bonds, and thus the State cannot issue funding of the PFA's estimated need for the grants it the bonds and provide the PFA with the needed funds oversees. fll . ' 4, / ' ' If'if 1, '' V. k r ,\ ; • r r - ', 1 • ;"004,t,-k iii.of--1,!„ / ,.'''';',::+k:,T,Vi',it:ILI . . -4 *'-'.;:. 'xr.,4,;,',.. , • , yam. _ ';,hx ��mawy �' : `j. .I c 'S ,,„�v s _..., - —'__y � 3 x. " '-� t. _I * 'i.... _ ice'" ��/tom PFA financing is a critical component of many municipal water projects in Minnesota. 2019 State Position Statements/7 111 imams Ap.q IVIIVIU2J Position Statement Local Government Salary Cap Relief Needed Background Minnesota Statutes Section 43A.17 imposes a salary cap on the total wages and compensation most units of local government can pay their employees. =eog rrw 60o.iroo Mw I 1 Municipal utilities are subject to this restriction and Nuclear Plant """ are beginning to encounter challenges in recruiting Coat Plant ` Extra High Voltage =200 AM Irymu-6lectnc Pie and retaining high-level employees, particularly in 265 to 275 RV (mostly AC,somi HVDC1 upper management positions, due to competition from electric cooperatives and investor-owned utilities b =,so Mw whose employees are not subject to statutorily imposed =3G NW Medium sl:ea compensation limits. meuev:al Power Plam Power Plant 110kV sa¢up Current Status Factory The cap is currently set at 110 percent of the Governor's salary, and is adjusted annuallybased on the Consumer Distribution Grid Low ValtageT Price Index(CPI). up to o =,sg rend CD For 2019, the cap is $175,621 based on a 2.5 percent ; ft it 6 6 Power cos,.et increase to the CPI. City Network subst atIIIions :©w IIIYei dliei re.eaners T eD Mil A waiver request can be made to the Department of t, 6 6 6 It I Management and Budget, but theprocess takes time, I) �'` Al g g I Ili I S 11 I F,li offers no certainty, and increases costs for both the ® III 1 ill I' il� Soler FawnState and local governments. o AN U Rural Rehear* The salary cap fails to take into account that municipal Farm kW �` it utilities are responsible directly to their customers, _e j most of whom are the residents of their communities, ® farm and are not directly supported by tax dollars. Many Minnesota municipal utilities are multi-million dollar Municipal electric, gas, and water utilities are complex businesses,and require business, personal and political businesses, requiring special skills to manage, and thus acumen to successfully manage.This graphic only displays there is a limited number of qualified persons to lead the electrical system. Most municipal utilities also provide them. water service,and many others provide a variety of other utility services, including: natural gas,district heating, Highly valued employees sometimes leave for higher wastewater and telecommunications. paying positions with utilities whose employees are not subject to compensation limits. Requested Action Artificially suppressing a top salary results in'wage MMUA calls for the repeal of Minnesota Statutes (2018) compression,' and lower wages for other workers. This Section 43A.17 as it applies to local governments, and can result in other qualified municipal utility employees in particular, municipal utilities. leaving for other opportunities, and making it, in turn, difficult to attract qualified employees to fill that position when higher salaries can be offered by entities not subject to the compensation limit. 8/2019 State Position Statements 112 IIIII1110440 Position Statement Pay Equity Relief Needed Background Minnesota Statutes and Rules require cities to ensure that women in a female-dominated job requiring ' .:,/ essentially the same level of training, skills, and expertise as a male-dominated position, receive ,,-..- equitable compensation to the men's salaries. While h not questioning the appropriateness of pay equity, from time to time situations arise where strict compliance A 1 with the law results in pay suppression that makes it very difficult to recruit and retain employees in a position which is male dominated. J,. Current Status ti Each city is required to adopt a job evaluation system ` that assigns points to each position based on things Lineworkers are a male-dominated class.They often work like the need for specialized training, skill sets, etc.A outside in challenging conditions. city may use the State's system, purchase one from an outside source, or develop its own so long as the system complies with State requirements. "Electric Utility Line-worker"is a highly skilled - y ri, position requiring significant technical training 4 rr"� to become an apprentice line-worker, and four- 111 f """` years' experience and additional training to become a journeyman. Line-workers work in extremely Ple hazardous settings, and often in very challenging - i weather conditions. \ '', Despite the unique training requirements necessary to ' be a line-worker, and the hazardous work environment _'" and conditions, when applying point values assigned to line-worker positions within a municipal utility, it is 1-),,„ not uncommon for the position to be scored equally with - -..74.--,. i 10 )111..— clerical and administrative positions. 1 For most, if not all, municipal utilities, line-workers are a male-dominated class of employees. 41 7 t ,ia— 7' 2a' ,: If the true"market-rate" salaries for a line-worker ' `', , f were to be analyzed, a municipal utility's line-workers' �- salaries would need to be compared to those paidh./!T. t",''> �' by near-by electric cooperatives and investor-owned ; ;."r'` ' 1 utilities, and not other municipal line-workers across j "t the state. „, .f j . continued on next page �� � �� � �, ry Municipal utilities need trained lineworkers to operate successfully. Employee retention is crucial to efficient operation. 2019 State Position Statements/9 113 DMDMIIJ,/ I,II,Iwi State guidance on rating systems used to determine if a male-dominated class of employees is paid a 11 disproportionally higher salary than a similarly scored female-dominated class, states that"...surveying / the "market" ..." should not be used. (Pay Equity: _ The Minnesota Experience, 6th edition.) When taken W 7k in context and historical application, the"should" �- effectively becomes a"shall." 16,,, ikl'S A ' Because the"market"cannot be used to justify �, disproportionally different salaries between a male- ; dominated position and a comparably scored female ® ;' dominated position, publicly-owned utilities frequently -' i feel compelled to pay lower salaries than those offered I by near-by electric cooperatives and investor-owned utilities because the city cannot afford to pay all Municipal utilities all too often train a promising young similarly scored positions at the"market-rate"line- person,only to lose them to a nearby utility that isn't subject worker salary. to pay equity law. A municipal utility unable to offer"market-rate" salaries often finds it is very difficult to attract and retain qualified line-workers, with some municipal - ea utilities reporting jobs remaining open for months with - no applicants. Municipalities invest thousands of dollars training ,1: /' -' -. and developing a skilled line-worker, yet often lose � `� _ that person to a nearby cooperative or investor-owned 4� utility whose salaries are higher than the municipality ., . Iv . , can offer while remaining in compliance with pay equity requirements. ' While pay equity guides imply that recruitment and retention problems can be considered when looking at pay-equity compliance issues, it is not clear as to ; 6,11! exactly when and how a municipality may seek and be granted relief from strict pay equity compliance, nor is , x, it clear as to the scope of relief that may be granted. Requested Action '4 ^ «`;: MMUA seeks administrative, and if necessary, legislative relief from strict pay-equity compliance so 9 , that a municipal electric utility may offer"market- j - ~ 14� • rate" salaries in order to successfully recruit and retain properly skilled line-workers. t»� ':::1::' 1 I : 10/2019 State Position Statements 114 Banal priffrigo,g Preserve the Regulatory Compact Background Many of the 124 municipal Average Revenue per Kilowatt-hour: electric utilities operating today were established Deregulated vs. Regulated States through their city charters well before the state gave 14 cities formal statutory authority to provide electric 12 service beginning in 1901. 10 In 1974 the Legislature y �� authorized the 3 8 establishment of electric c utility service areas. 6 In the 1990s, many states, including Minnesota, v 4 debated whether to allow unregulated companies to 2 sell electricity to end-use customers. This is known in 0 the industry as deregulation N CO CT 0 N m v N 00 CT 0 l N m v' LD m m rn co 0 0 o 0 0 0 or providing retail choice.„ m o c o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N Sixteen states, excluding Minnesota, followed the —Deregulated States -National Average Regulated States deregulation route. The average price per kilowatt- Source:Energy Information Administration,Forms EIA-861 and EIA-826.Information courtesy of American Public Power Association. hour in deregulated states has consistently been above the national average. generation, power lines, poles, substations, water treatment equipment and chemicals, pipes, etc. In 2001, the Legislature established new fundamental Unregulated sales would pass more of these costs service standards and customer protections for all onto a utility's remaining customers through higher utilities in the state, to ensure that all Minnesotans rates. In addition, consumers would be buying from could rely on their provider's service and to ensure companies not subject to the safety regulations reasonable rates. There are no provisions applicable to discussed above. a non-utility provider. MMUA Position Despite the fact that Minnesota consciously rebuffed A regulatory model that ensures all customers pay an the deregulation threat of the '90s, bills continue equitable rate for access to and use of municipal utility to be introduced and heard in committees for such services should be maintained. Persistent pressure ideas as having the state allow unregulated third- from non-regulated third-party business interests, party electricity sales from generators directly to the such as has been seen in the solar community, customer. Some proposals have required municipal threatens to undermine a municipal utility's finances. utilities to"wheel" energy from third parties across Privatizing municipal utilities is not the answer and municipal power lines to retail customers in violation would likely create more expenses. The Legislature of the utility's exclusive service area rights. Third should support and maintain the current regulatory party sales could also occur by selling electricity from compact, and recognize the value of the dependable solar panels or other generating equipment sited on services provided by municipal utilities. The a consumer's own property to retail customers, while legislature should reject giving third-party providers maintaining ownership of those panels or equipment. any advantage over municipal utilities, as well as any Providing reliable municipal utility services comes other effort to weaken the regulatory compact. with certain unavoidable expenses such as electric 2019 State Position Statements /11 115 Municipal Electric and Natural Gas Utilities of Minnesota Roseau •Warroad Hallock ' Baudette• Stephen Argyle Newfolden •Alvarado 'Warren Thief River Falls .East Grand Forks Ely. Grand Marais Clearbrook Mountain Iron Nielsville Fosston •Biwabik 1' Buhl. •Virginia y.Shelly •Bagley a bb:na • 'Gilbert - ';Halstad Keewatin, • j .Ada Cohasset• Nashwauk i Grand Rapids Two Harbor A Hawley Lake Park .Moorhead •Detroit Lakes Dul Bamesville Procto Perham • New York Mills Aitkin •Wadena Moose Lake• ,Breckenridge .Henning Staples •Brainerd Battle Lake Eagle Bend ' •Clarissa •Randall Elbow Lake Pierz Alexandria• Mora, (-\ Sauk Centre Melrose Princetop North Branch' Ortonville Benson Elk River Grove City Buffalo Anoka Delano ,Ciro Pines Madison Willmar 'Litchfield North St.Paul Hutchinson Granite Falls Glencoe. Chaska.Shakopee Olivia' Brownton, Arlington Redwood Falls Winthrop Le Sueur.New Prague Marshall, Fairfax Goodhue Morgan• New Ulm Saint Peter Lake City Tyler .Kenyon' Eye •Kasota Kenyon Westbrook Springfield Lake Crystal Janesville Owatonna Mountain Lake 'Madelia Waseca • . Rochester 'Saint James Kasson • -Saint Chart Dundee .Windom Truman 'Blooming Prairie Peterson Rushfard Brewster, Lakefield Wells Spring Valley y"Jhalan Luveme Adrian Worthington • .Alpha .Fairmont Blue Earth -Austinreston Lanesboro . ledonia Rushm•ore • . Jackson • .Ceylon Harmon ' .Spring Grove Bigelow Round Lake Dunnell y Mabel Eitzen ■ Electric ■ Electric and ■ Natural gas natural gas liM1MIIJJ sinrffsosie Minnesota Municipal Utilities Association 3025 Harbor Lane N.,Suite 400, Plymouth, MN 55447 St.Paul Office:161 St.Anthony Ave.,Suite 800,St.Paul MMUA Training Center:1004 Michigan Rd.,Marshall www.mmua.org 116 \-i,./..„ >-L, Elk River -= Municipal Utilities 2019 GOVERNANCE AGENDA Tuesday, January 8: Tuesday,February 12: • Annual Review of Committee Charters • Review Strategic Plan and 2018 Annual Business Plan results Tuesday, March 12: Tuesday, April 9: • Oath of Office • Annual Commissioner Orientation and Review • Election of Officers Governance Responsibilities and Role • Audit of 2018 Financial Report • Financial Reserves Allocations • Review 2018 Performance Metrics Tuesday,May 14: Tuesday, June 11: • Annual General Manager Performance • Evaluation and Goal Setting Tuesday, July 12: Tuesday,August 13: • Annual Commission Performance Evaluation • Annual Business Plan—Review Proposed 2020 • Review and Update Strategic Plan Travel, Training, Dues, Subscriptions, and Fees Budget Tuesday, September 10: Tuesday, October 8: • Annual Business Plan—Review Proposed 2020 • Annual Business Plan—Review Proposed 2020 Capital Projects Budget Expenses Budget Tuesday,November 12: Tuesday, December 10: • Annual Business Plan- Review Proposed 2020 • Adopt 2020 Official Depository,Newspaper, Rates and Other Revenue and Regular Meeting Schedule • Adopt 2020 Fee Schedule • Adopt 2020 Governance Agenda • 2020 Stakeholder Communication Plan • Adopt 2020 Annual Business Plan 117