02-12-2019 ERMU MIN a
ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
February 12,2019
Members Present: Chair John Dietz; Commissioners Mary Stewart and Matt Westgaard
Present via Skype: Commissioner Paul Bell
Members Absent: Commissioner Al Nadeau
ERMU Staff Present: Troy Adams,General Manager;
Theresa Slominski, Finance and Office Manager;
Mark Fuchs, Electric Superintendent;
Mike Tietz,Technical Services Superintendent;
Eric Volk,Water Superintendent;
Tom Sagstetter,Conservation &Key Accounts Manager;
Michelle Canterbury, Executive Administrative Manager;
Mike Langer, Lead Water Operator;
Tony Mauren, Communications&Administrative Coordinator
Others Present: Cal Portner,City Administrator
1.0 GOVERNANCE
1.1 Call Meeting to Order
The regular meeting of the Utilities Commission was called to order at 3:30 p.m. by Chair Dietz.
1.2 Pledge of Allegiance
The Pledge of Allegiance was recited.
1.3 Consider the Agenda
Chair Dietz requested to add an agenda item, Lake Orono Dam Platform,to Other Business.
Moved by Commissioner Stewart and seconded by Commissioner Westgaard to approve the
amended February 12,2019,agenda. Motion carried 4-0.
2.0 CONSENT AGENDA(Approved By One Motion)
Moved by Commissioner Westgaard and seconded by Commissioner Stewart to approve the
Consent Agenda as follows:
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February 12, 2019
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2.1 January Check Register
2.2 January 8,2019 Regular Meeting Minutes
Motion carried 4-0.
3.0 OPEN FORUM
No one appeared for open forum.
4.0 POLICY&COMPLIANCE
4.1 Customer Requested Manual Meter Reading
Mr. Sagstetter shared that in response to customer requests, and a growing trend in the
industry, ERMU has been exploring the possibility and costs associated with manual meter
readings. After evaluation, staff has determined that manual meter readings for electric and
water meters can be provided as long as the requesting customer pays the additional costs
for the metering equipment and monthly manual meter reading fee(s).
Mr. Sagstetter went over the details of the manual meter reading program as outlined in the
Service Policies Policy and the fees associated with it. He also pointed out that a customer
requesting a manual meter reading would be required to do so for both electric and water if
they had both services.The commission had a few questions. Staff responded.
Moved by Commissioner Stewart and seconded by Commissioner Westgaard to approve
the revised Service Policy Policies and the amended 2019 Fee Schedule. Motion carried 4-0.
5.0 BUSINESS ACTION
5.1 Financial Report—December 2018
Ms. Slominski presented the December 2018 financial report. She noted that they were the
preliminary unaudited financial statements and that one outlier would be anything relating to
GASB 65 for the mandatory reporting of assets and liabilities relating to our pension plan.
Ms. Slominski addressed some questions the Commissioners had forwarded to her regarding
the Water Statement Total Operating Expenses; and Customer Accounts Expense, Bad Debt
line items; and the Electric Statement Pension Expense; Miscellaneous Revenue,
Contributions from Grants; and General Expenses, CIP line items.
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February 12, 2019
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At the last Commission meeting Chair Dietz had asked for a further breakdown of the Electric
Maintenance Expenses. Chair Dietz distributed a handout of the information that finance
department had compiled.There was discussion.
Chair Dietz stated that he wanted to have a discussion on ERMU's net margins. He had asked
Ms. Slominski to compile some statistics, going back 15 years, on ERMU's margins. A handout
of the data was distributed. Chair Dietz shared his concerns about what the public perception
may be with us having such a large net margin. Mr. Adams stated that this is exactly the
conversation that we would like to have in the Strategic Plan and 2018 Annual Business Plan
section of the commission meeting, and asked if we could table this discussion until that
section of the meeting.The commission concurred.
Moved by Commissioner Westgaard and seconded by Commissioner Stewart to receive and
file the December 2018 Financial Report. Motion carried 4-0.
5.2 Bids for Electric Cable
The underground electric cable required for the 2019 capital construction projects and
maintenance was determined and had been noticed for formal bids.The bid opening was on
February 11, 2019 at 9:00 a.m.The bid tabulation was distributed at the meeting. Mr. Fuchs
went over the bid tabulation and explained the difference between firm and escalated
pricing. He also explained the benefit of having reel disposal. Taking into consideration price,
product, and availability, staff recommended awarding the bid to Border States, the lowest
responsible bidder with firm pricing of$350,182.16.There was discussion on the advantages
of firm pricing versus escalated.The commission had a few questions. Staff responded.
Moved by Commissioner Westgaard and seconded by Commissioner Stewart to award the
electric cable bid to Border States with firm pricing of$350,182.16. Motion carried 4-0.
5.3 2018 Fourth Quarter Delinquent Items
Ms. Slominski presented the delinquent items for the fourth quarter which included a
delinquent amounts listing report totaling $10,292.97 for all services. She also presented the
delinquent items comparisons for 2017/2018 and provided a high level overview of the year
end totals. Ms. Slominski pointed out that the amount for the fourth quarter write-offs of
$3,206.46 included $2,919.87 in revenue recapture items that had met the six year maximum
amount of time they could be collected on. Ms. Slominski shared that our totals for the year
for collections and write-offs are well below the national average, at .035%.
Moved by Commissioner Stewart and seconded by Commissioner Westgaard to approve
the 2018 Fourth Quarter Delinquent Items. Motion carried 4-0.
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5.4 2018 Safety Report
In 2018 ERMU submitted one report that qualifies under this annual safety reporting
requirement; the OSHA Form 300A which is a summary of work related first report of injuries
and illnesses. Ms. Slominski presented the OSHA Form 300A that had been filed; there was
one recordable case which resulted in 0 days away from work. Ms. Slominski also provided
the 2017 filing for comparison.
5.5 Landfill Gas Plant Update
Mr.Sagstetter provided an overview on the landfill gas plant to electric generation facility
performance for 2018. He reported that based on operational efficiency and overall performance,
Sherburne County will be receiving a bonus payment of$25,000,and Waste Management will be
receiving$1,043.99.Commissioner Stewart inquired if the$25,000 bonus payment to Sherburne
County was accrued in 2018. Ms.Slominski responded that it had been.
Mr.Sagstetter also provided an update on the steps that were being taken to determine our future
partnership and operations of facilities beyond the 2022 contract agreement.There was discussion
on the financial implications of having to replace three engines in 2020 without knowing the future
of the partnership.
5.6 Wage& Benefits Committee Update
At the December 11, 2018 commission meeting, the Wage & Benefits Committee (W&BC)
recommended contracting with a third party to perform the management group
benchmarking.The commission supported the committee's request and directed staff to
research potential consultants and report back to the commission in January.
Mr. Adams shared that the W&BC met earlier today to review three proposals. After initial
review, the committee has selected two that they would like to interview. Mr. Adams shared
that the meeting to conduct the interviews has been set for March 12 just prior to the
commission meeting. Mr. Adams stated that based on the timing of the interviews, it will not
be necessary for the commission to authorize the committee to select the consultant prior to
the March commission meeting for an amount not to succeed $10,000; instead the W&BC will
make their recommendation to the commission at the March meeting.
5.7 Strategic Plan and 2018 Annual Business Plan Results
Mr. Adams provided some background on the Strategic Plan and explained that the purpose
of the plan is to establish the long term direction and goals for our organization and a plan of
how to get there. He stressed that the Strategic Plan is a long term forward looking tool. Mr.
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Adams presented the highlights, challenges, and results from the 2018 initiatives as well as
forward looking initiatives and goals.
Next, Mr. Adams provided an overview of the 2018 Annual Business Plan. He explained that
the Annual Business Plan is a short term forward looking tool dependent upon backwards
looking data analysis as provided in the form of our financial statements.The 2018 budget
versus actual (unaudited) summary statement reflected that the electric and water margins
significantly outperformed budget. Mr. Adams noted that this would be an ideal time to
discuss margins and referred to the handout that Chair Dietz had provided.The handout
contained a summary of ERMU's net margins from 2003 to 2017.After review of the margins,
Mr. Adams stated that it would be a good idea to develop a commission policy that defines
margins and the acceptable amounts.
Mr. Adams reached out to the commission for feedback on the tools they need to effectively
monitor and evaluate the organization.After discussion the commission identified the
following for consideration:
• Long term planning for stability of rates
• 20 year Comprehensive Capital Improvement Plan
• Uniform presentation of budget components
• Final presentation of budget in a similar format as the monthly income statements
Based on the feedback provided, Mr. Adams stated that staff would work on the refinement
of it before we begin the budgeting process. He anticipated bringing it back for further
discussion in July.
As there were a number of recurring areas of discussion on our financial statements over the
past year, Commissioner Stewart suggested setting some target levels for items that would
require further explanation on the commentary/narrative that's provided.
Commissioner Bell excused himself from the meeting at 5:00 p.m. due to time constraints
on the room he was using to Skype from.
6.0 BUSINESS DISCUSSION
6.1 Staff Updates
Mr.Adams highlighted from Minnesota Municipal Power Agency(MMPA)2018 Year End Review,
that MMPA's board has set a goal for 100%renewable energy. Mr.Adams further explained the
importance of this and how it relates to the recent bill that has been presented requiring
renewable energy standards of 80%by 2035,and 100%clean energy by 2050.
Mr.Adams also shared that Minnesota Municipal Utilities Association (MMUA) had contacted him
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February 12, 2019
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in regards to them wanting to nominate him for the American Public Power Association (APPA)
board.As the nomination needed to be submitted prior to this commission meeting, Mr.Adams
stated that he had reached out to Chair Dietz to discuss the nomination.As the only concern was
the additional time commitment, Mr.Adams shared that he would be step down from the APPA
RP3 panel if he was chosen for the board. Mr.Adams shared that the nomination had been
submitted and thanked Chair Dietz for his letter of support.
6.2 Report on Minnesota Municipal Utilities Association 2019 Legislative Rally
Mr.Sagstetter presented his report on the Minnesota Municipal Utilities Association (MMUA)
Legislative Rally as outlined in his memo.Some of the key talking points at the conference
included:
• Modernizing Conservation Improvement Program
• Renewable Energy Standard
• Regulatory Compact and Third Party Sales
• 5G/Small Cell Solar
• Electric Vehicles
Mr.Sagstetter shared that he and Mr.Adams had the opportunity to meet with Senator Mary
Kiffmeyer, Representative Nick Zerwas, and Representative Eric Lucero.The outcome of those
meetings were Representative Lucero's offer to author a bill addressing legislative changes should
we need it,and Senator Kiffmeyer's suggestion to schedule a meeting time to review all the issues
in detail.
6.3 Future Planning
Chair Dietz announced the following:
a. Regular Commission Meeting—March 12, 2019
b. 2019 Governance Agenda
6.4 Other Business
Lake Orono Dam Platform
Chair Dietz shared that a resident that lives near the Lake Orono Dam had contacted him
regarding the platform on the north side of the dam structure.The resident wanted to know
if they could place a donated picnic table on the concrete platform for public use.There was
discussion on the ramifications of allowing this. As ERMU owns the land and the city owns the
dam, staff stated that they would work together, along with the attorney, to respond to the
request.
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February 12, 2019
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The Commission recessed the regular meeting at 5:18 p.m. and went into the closed meeting.
6.5 Closing of Meeting: Meeting closed pursuant to MN Statute 13D.05, Subd. 3(c)to develop
or consider offers or counteroffers for the purchase or sale of real or personal property -
PID#75-128-4305 and#75-128-4206.
The Commission reconvened the regular meeting at 5:22 p.m.
7.0 ADJOURN REGULAR MEETING
Moved by Commissioner Westgaard and seconded by Commissioner Stewart to adjourn the
regular meeting of the Elk River Municipal Utilities Commission at 5:23 p.m.Motion carried 4-0.
Minutes prepared by Michelle Canterbury.
J J. D. z, ER Commission Chair
Tina Allard,City Clerk
Elk River Municipal Utilities Commission Meeting Minutes
February 12, 2019
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