4.2. ERMUSR 07/09/2019 Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
ERMU Commission Troy Adams, P.E. —General Manager
MEETING DATE: AGENDA ITEM NUMBER:
July 9, 2019 4.2
SUBJECT:
Annual Strategic Plan Review
ACTION REQUESTED:
Consensus on high level strategic themes and annual business plan budgeting/rates direction.
BACKGROUND
In August 2017, the commission adopted a comprehensive manual of governance policies
based on the Carver Model of governance. Included in those governance policies is Governance
Policy G.2c Agenda Planning. This policy notes that in the first quarter "The Commission and
Management will review ERMU's current Strategic Plan along with the results of the Annual
Business Plan for the preceding fiscal year."This annual review was confirmed and scheduled
through the Commission's adoption of the 2019 Governance Agenda, which is included in the
monthly commission meeting materials, and which is available to the public. This annual review
was conducted during the February commission meeting. Feedback from the commission was
noted by staff.
Per the Governance Policy G4.c Strategic and Business Planning and consistent with Policy G.2c
Agenda Planning and with the 2019 Governance Agenda adopted by the commission in 2018,
the commission and management begin their annual update of the strategic plan and financial
plan for the succeeding five-year period during the July regular commission meeting.
The strategic plan shall provide " strategic direction for a period of not less than five (5) future
fiscal years in terms of high-level elements such as vision, core purpose, core values, mission,
key result areas and broadly stated strategic objectives that are intended to achieve the
organizational outcomes contained in the commission's Authority and Purpose Policies."
Included in the commission's Authority and Purpose Policies are the bylaws, organizational core
purpose, mission, vision, values, fundamentals, and planning themes. These policies are
summarized on the attached mission, vision, fundamentals, values, and planning themes
document.
DISCUSSION:
The purpose for the Strategic Plan is to establish long term direction and goals for an
organization and develop the plan to get there. A good strategic planning process incorporates
assessing risks and developing contingency plans based on risk mitigation in the journey toward
the long term direction and goals.
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Annually in June the leadership team undergoes an in-depth review of the strategic plan
initiatives dashboard, a tool used by the leadership team to track progress on organizational
initiatives and goals. During this in-depth review, the leadership team also reviews the mission,
vision, values, fundamentals, and planning themes. This review is done through either a
Strengths/Weaknesses/Opportunities/Threats (SWOT) analysis or a Critical Success Factors
analysis.This process was conducted this June and the leadership team had consensus that our
Authority and Purpose Policies are sufficiently aligned with the organizational needs looking
forward. The leadership team then underwent a process to identify new initiatives for go/no-go
evaluation for consideration in the annual business plan /budgeting process. These newly
identified initiatives, along with ongoing and incomplete initiatives, then undergo priority
ranking.
All policies, decisions, initiatives, and tasks by ERMU on behalf of our consumer owners should
be in direct line to the ERMU mission, vision, and values. All planning is conducted through a
process which categorizes initiatives under commission adopted planning themes aligned with
our mission, vision, fundamentals, and values.This framework clearly defines how ERMU is
expected to operate. This process is intentionally transparent to our consumer owners.
The following includes highlights from the 2019 initiatives and newly identified initiatives for
go/no-go evaluation. Staff is looking for the commission to discuss high level strategic themes
and initiatives. These high level themes are categorized by the following six planning themes
which the commission adopted into policy. Staff is looking for the commission to have
consensus on these themes leading into the budgeting process. Additionally, the highlighted
initiatives identified below represent work in progress and/or forward looking initiatives. These
initiatives have either already run through the budgeting process or are prioritized for inclusion
in future budgeting. Staff is looking for commission discussion on the initiatives and how these
priorities align with the commission's intended strategic direction for the organization.
Review of the Strategic Plan
Theme 1: Communication —Improve the effectiveness of our communications inside the
organization, with our customers, and with the community.
• Customer Satisfaction Feedback Tools and Bill Presentation—As previously
communicated this past February, in 2018 staff evaluated existing processes for
customer feedback and developed new methods for soliciting usable feedback to
improve services. New methods were implemented concurrent to existing methods for
evaluation. Unfortunately, this initiative did not improve the feedback data. Rather,
overall feedback diminished substantially. And, the data received was in a comingled
format blending feedback for ERMU and city services.The blended feedback made it
nearly impossible to separate ERMU relevant data for evaluation and action.This has led
to a 2019 initiative to develop improved bill presentation clearly identifying ERMU and
city services, and to develop improved customer satisfaction feedback tools which will
separate feedback to the appropriate service buckets. The new bill presentation started
going out to customers in June. Staff will evaluate the customer satisfaction feedback
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tools and make a recommendation to the commission regarding the inclusion of that
data in the Utility Performance Metric-based Incentive Compensation system (UPMIC)
for the 2020 measurement period.
• Disaster Recovery Plan —Staff has established a 2019 initiative to update our disaster
recovery plan and perform a disaster drill tabletop exercise.The work is being
coordinated with the City of Elk River Fire Chief. This plan, and its subsequent annual
review, is a requirement in the American Public Power Association's (APPA) Reliable
Public Power Provider (RP3) designation.
• Website—Staff successfully developed a comprehensive Branding Plan which included a
style standards guide identifying approved fonts, colors, logos, and taglines.The plan is
currently being implemented.Then staff successfully completed a 2019 initiative to
develop a Communication Plan. All of these initiatives build the foundation for a
forecasted 2020 initiative to completely update the ERMU website. Staff is working on a
Request for Proposal (RFP) for the website design. This will be included as a line item in
the 2020 budget.
Theme 2: Personnel and Governance—Develop our most valuable and vulnerable assets...our
commissioners, employees, leaders, and future leaders.
• Governance and Management Policy Manuals—Staff successfully completed the manual
which was approved in 2017 and developed.The successful completion of this initiative
leads into a 2019 initiative to systematically go through the old policies, identify with the
commission and legal counsel what is policy overseen by the commission and what is
procedure overseen by management.Then, establish a plan to work through all of those
old polices and separate governance policy from management procedure. Staff is
tentatively planning to discussion the policy review schedule with the commission
during the August regular commission meeting.
• Future Leaders Training— Identified during our recent organizational effectiveness
survey, there is a critical need to provide leadership training for all levels of leadership
vertically throughout the organization.The leadership team has ranked this initiative
high on the priority list. The scope of the initiative and financial impact will be evaluated
and the initiative will proceed into the budgeting process for potential approval in
December.
• Human Resource Support—Staff has been evaluating current and future human
resource needs to develop a plan for consideration in the 2020 budgeting process.
• Succession Planning Procedure—The initiative to develop a succession planning and
staff addition procedure for use by the Wage & Benefits Committee (W&BC) was not
started in 2018 and had been tabled for 2019 due to leadership bandwidth. Related to
this initiative, the commission directed staff and the W&BC to implement an initiative to
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benchmark the manager pay group with the assistance of a third party consultant. This
initiative will resume after the completion of the benchmarking initiative.
Theme 3: Strategic Thinking—Create a culture of strategic thinking and ensure line of sight from
mission to vision.
• Conservation Improvement Program (CIP) Redevelopment—Staff has been working with
Minnesota Municipal Utilities Association (MMUA) and the Minnesota Rural Electric
Association (MREA) in a joint effort to modernize CIP. The proposed improvements to
CIP would allow for local flexibility to achieve savings mandates while providing
statutory approval to incorporate beneficial and efficient electrification into the
program. The effort produced multi-stakeholder alignment, yet legislative progress
stalled in the 2019 legislative session due to political posturing. In one shape or another,
the process with continue with intentions of legislative action in 2020.
• Load Management Programs—As a side-effect to the transition in wholesale power
provider, ERMU's load management programs were put on hold. ERMU is working with
Minnesota Municipal Power Agency (MMPA) on selecting a vendor for a new load
management (LM) program technical backbone. Implementation of a new LM system
could come as soon as 2Q2020.
• System Forecasting and Water Model —Staff had an initiative to develop improved five
and ten year forecasting models for water and electric system growth and related
resource planning.This project was not started in 2018 and was tabled until 2019.
Related, staff has added a new 2019 initiative to work on updating the water hydrology
model for use in system forecasting and planning.The water department is currently
working on updating the water hydrology model.This work will be complete in 2019.
The system forecasting is on hold until a future date.
• Rate Evaluation— During the leadership team strategic planning sessions on June 20,
staff identified a need to review and evaluate existing rates and fee as a follow up to the
recent transition in wholesale power providers. The intention is to also explore
opportunities for the future with consideration to the evolution in our industry and the
changes in customer expectations.
Theme 4:Technology—Implement the prudent use of technology to improve efficiency and
increase customer choice, communication, and value.
• ESRI GIS Mapping—Staff continues to work on the implementation of the new ESRI
mapping system including GPS data collection.The goal is to transition all field staff over
to the ESRI map. This project has been a work in progress for years and will carry over
through 2019. The goal is to have all field staff using the new mapping system by 2020.
• Cyber & Physical Security and IT/OT Support—Staff has worked with the city and a third
party consultant to evaluate cyber and physical security for ERMU and the city. A joint
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committee was created. A small work group with the third party consultant developed
the framework for a comprehensive cyber, physical, and information security policy.
Progress stopped when the refinement of those policies exceeded staff resources.The
initiative was tabled until the budgeted ERMU Operational Technology Supervisor was
hired. ERMU was unable to fill the position, and staff will re-evaluate the position and
re-post in 2019. The consultant used for the manager group benchmarking provided
feedback regarding this position.The feedback will be used to update this vacant
position's criteria with the intent of filling the vacancy as soon as possible. This initiative
is a high priority for 2019 as many initiatives are dependent upon this vacant leadership
team position.
• 800 MHz Pagers— Identified during the recent leadership team strategic planning
session.This initiative would resolve some critical communication issues with our
current analog pager system used for all field staff.
• NISC Mobile Workforce—Staff has been working with our software provider to
implement the mobile workforce module. Mobile workforce will allow for time report
management to be done remotely, create paperless data sharing and workflow between
departments, and create automation in workflow and task assignments.
Theme 5: Growth—Assess the growth curve to make decisions regarding organizational change.
• Electric Service Territory Expansion Plan—Staff is working with Connexus Energy to
develop and implement a plan to safely transfer approximately 100 customers in Areas
7&8, per our 2015 electric service territory transfer agreement. The processes for these
transfers have become highly refined and efficient. The coordination and
communication with Connexus has exceeded all expectations, making these transfers
safer, quicker, and more cost effective. This will be the final service territory transfer
under this 2015 agreement.
• Well #8 control building project, Auburn Street Water Tower Rehabilitation —These
water system facilities are already in process for completion during 2019. Staff will
oversee the project management of these improvements.
• Field Services Expansion Plan &Site Preparation, West Substation Building—Staff
continues to plan for the future field services expansion.The building construction is
forecasted for 2023. The next sub-initiative is the construction of a tempered storage
building to be located on ERMU land adjacent to ERMU's West Substation and the City
Public Works Facility. This building will begin construction in 2019. Then forecasted for
2020, site preparation work will begin at the Field Service Facility which will include the
relocation of the power plant substation, electrical feeders, and other underground
facilities.
• 169 Redefine &YAC Substation —Improvements to HWY 169 are scheduled to begin in
2023 which will require electric and water system infrastructure changes. Staff has been
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working with city staff, Great River Energy, and Minnesota Municipal Power Association
to locate a new substation in the southeast area of Elk River. In the short term this
substation would provide additional electric system resiliency while 169 Redefine is
under construction. In the long term this substation would provide strategically located
capacity to serve growth in this area of Elk River.
• Otsego & Elk River Main Street Lights—New decorative street lighting is scheduled to be
installed in Elk River in 2019. Staff is currently working with Otsego on schedule and
scope of street light replacement.
Theme 6: Process, Measurement, and Financial Health —Improve processes and measurement
to better determine and report efficiency and effectiveness of organization and to ensure
financial and organizational health.
• City of Elk River Local Option Sales Tax (LOST)—The successful referendum to create a
LOST has an operational and financial impact on ERMU because of our billing system.
The LOST will apply to some, but not all sales through ERMU. To implement this, ERMU
is currently working with our billing system provider to create custom software updates.
Staff has added this as a high priority 2019 initiative.
• American Public Power Association (APPA) Reliable Public Power Provider(RP3)
application—Staff is working on documentation required for the application to renew
ERMU's RP3 designation. The designation is valid for three years.
• Organizational Effectiveness Survey—In 1Q2019 a consultant was used to conduct an
organization effectiveness survey. The survey results identified themes and
opportunities for improvements. The leadership team has established 2019 action items
based on the survey results.
Summary
Staff is looking for commission discussion on the strategic plan and direction. In February when
the commission reviewed the results of the 2018 annual business plan and the strategic plan,
the commission provided the following comments:
• Change comprehensive capital improvement plans from 10-year to 20-year.
• Create a results policy regarding budgeting, rate design, and margins.
• Establish goal of long term planning to produce stability in rates.
• Adopt uniform presentation of annual business plan/ budget components.
• Adopt final presentation of budget in format similar to monthly income statements.
Are there other changes in strategy or direction that should be discussed?
ATTACHMENTS:
• ERMU Mission/Vision/Fundamentals/Values/Themes
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•
Elk River -�-1
Municipal Utilities
OUR OUR
MISSION VALUES
To provide our customers with safe, reliable,
cost-effective and quality long-term electric INTEGRITY
and water utility services.To communicate Honest,accountable and
and educate our customers in the use of united in all that We do.
utility services, programs, policies and
future plans.These products and services
Will be provided in an environmentally and QUALITY
financially responsible manner. 12(...) Services that reflect excellence,
dependability and expertise.
OUR
VISION COMMUNICATION
Respectful and engaged interactions
Provide exceptional services and that are timely and clear.
value to those we serve.
SAFETY
OUR A culture that protects our
FUNDAMENTALS customers, employees,and assets.
Safety, Reliability and Quality of Utility Services.
Customer Service and Employee Development. COMPETITIVE
Competitive Rates,and Financial and Provide the best value for the
Organizational Health. services we deliver.
ERMUMN.COM I 763.441.2,020 I 13069 ORONO PARKWAY I PO BOX 430 I ELK RIVER,MN 55330-0430
Elk River -�-1
Municipal Utilities
OUR
PLANNING THEMES
THEME 1 I COMMUNICATION
Improve the effectiveness of our communications inside the organization,with our customers
and with the community.
THEME 2 I PERSONNEL AND GOVERNANCE
Develop our most valuable and vulnerable assets- our commissioners,employees, leaders,
and future leaders.
THEME 3 I STRATEGIC THINKING
Create a culture of strategic thinking and ensure line of sight from mission to vision.
THEME 4 I TECHNOLOGY
Implement the prudent use of technology to improve efficiency and increase customer choice,
communication and value.
THEME 5 I GROWTH
Assess the growth curve to make decisions regarding organizational change.
THEME 6 I PROCESS, MEASUREMENT AND FINANCIAL HEALTH
Improve processes and measurement to better determine and report efficiency and effectiveness
of organization and to ensure financial and organizational health.
ERMUMN.COM I 763.441.2020 I 13069 ORONO PARKWAY I PO BOX 430 I ELK RIVER,MN 55330-0430