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07-19-2019 ERMU MIN ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM July 9,2019 Members Present: Chair John Dietz,Vice Chair Al Nadeau, Commissioners Paul Bell, Mary Stewart,and Matt Westgaard ERMU Staff Present: Troy Adams, General Manager Theresa Slominski, Finance& Office Manager Mark Fuchs, Electric Superintendent Mike Tietz,Technical Services Superintendent Dave Ninow, Water Superintendent Tom Sagstetter, Conservation & Key Accounts Manager Michelle Canterbury, Executive Administrative Manager Jennie Nelson, Customer Service Manager Tony Mauren, Communications&Administrative Coordinator Others Present: Mark Fritsch, President of Current Compass 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 Mr.Adams requested to move up agenda item 5.2,Wage& Benefits Committee Update,to immediately follow 3.0, Open Forum. Moved by Commissioner Westgaard and seconded by Commissioner Stewart to approve the amended July 9,2019,agenda. Motion carried 5-0. Elk River Municipal Utilities Commission Meeting Minutes July 9, 2019 Page 1 1.4 Recognition of Employee Achievement After receiving numerous letters of support for Mr.Adams' nomination to the American Public Power Association (APPA) Board of Directors,the membership unanimously voted in support of the nominating committee's recommendation, and officially elected Mr.Adams to the APPA Board of Directors on June 11, 2019.The Commission inquired if Mr.Adams would continue to also serve on the APPA RP3 Panel, and what the terms of service were for the panel and the board. Mr.Adams shared that at this time he would like to continue to serve on both and went over the terms of each of them.The Commission congratulated Mr.Adams on his appointment. 2.0 CONSENT AGENDA(Approved By One Motion) For the check register, Commissioner Stewart had a question on the large volume of inactive refunds. Staff responded. Moved by Commissioner Nadeau and seconded by Commissioner Westgaard to approve the Consent Agenda as follows: 2.1 June 2019 Check Register 2.2 June 11,2019 Regular Meeting Minutes 2.3 Minnesota Municipal Power Agency Distributed Generation Tariff 2.4 Procurement Policy Motion carried 5-0. 3.0 OPEN FORUM No one appeared for open forum. 5.2 Wage&Benefits Committee Update The Wage& Benefits Committee (W&BC) met on June 27, 2019 to review employee benefit requests and receive an update on the benchmarking report from Current Compass. Mr.Adams shared that the W&BC reviewed employee requests regarding benefits. These included numerous requests regarding vacation time, hours of operation,flexible work hours, and work-from-home options. He noted that all of the requests had been previously discussed and evaluated by the W&BC, and unless the Commission has any interest in exploring the requests further,the Committee had consensus to not recommend adoption of any of the requests at this time. Elk River Municipal Utilities Commission Meeting Minutes July 9, 2019 Page 2 Mr. Fritsch with Current Compass was in attendance and provided some background on his experience in the utility business. Mr. Fritsch presented the compensation study as outlined in his report. Current Compass had several recommendations based on findings, analysis, and their experience with utility compensation. Mr. Fritsch walked through each of the recommendations. Following his presentation, Mr. Fritsch asked the Commission if they had any questions or comments. Commissioner Stewart stated that she had a few comments she would like to share. She said that based on her previous work experience and working closely with human resource (HR) individuals and market comparisons, using a top five salary comparison is not typical. She explained the importance of also taking into consideration details such as revenue size, customer size, amount of services, and complexity of job responsibilities, to help ensure an apples to apples comparison. Commissioner Stewart shared that she supported the recommendation of hiring an HR Manager, and noted the benefits of having someone in house. Commissioner Bell agreed that other factors besides salary should be considered for the market comparison; he noted size of utility and geographical location as important factors. Commissioner Bell agreed that the addition of an HR Manager is an excellent idea. He also commented that increasing the compensation on positions that are below market within a two-year time period may be aggressive. Commissioner Westgaard asked for further clarification on the philosophy of using a salary range of 85%to 120%of midpoint; the midpoint being defined as fully qualified. Mr. Fritsch responded. Commissioner Westgaard had some additional questions regarding the top five municipals that were used for benchmarking the positions, and wanted to know if there was any consideration given to length of time in the position or geographical location. He stated if not, it skews the numbers. Mr. Fritch responded that the American Public Power Association (APPA) data did take into account region and population, while the Minnesota Municipal Utilities Association (MMUA) data did not. There was discussion. Chair Dietz stated that in his opinion we really only have issues with five positions;the General Manager, Electric Superintendent,Technical Services Superintendent, Finance&Office Manager, and Assistant Electric Superintendent. As for the compression issue with the Electric Superintendent and the Assistant Electric Superintendent, Chair Dietz thought that it may be a good idea to consider adding the Operations Director(COO) position.There was discussion on how this would impact the current organizational structure, and discussion on succession within that department. Chair Dietz noted that when considering any adjustments in pay to the Technical Services Superintendent position, it would be important to take into consideration that this position typically requires a four-year degree,which the person currently in the position does not have. Elk River Municipal Utilities Commission Meeting Minutes July 9, 2019 Page 3 Per Current Compass' recommendation,John Dietz agreed that Ms. Slominski should have the title of Chief Financial Officer (CFO), and that her pay should be adjusted accordingly. Chair Dietz also voiced his opinion on the Owatonna Public Utilities General Manager(GM) Base Salary data that was used for benchmarking, questioning the two utilities that are paying their GM over$200,000 and whether their duties were similar to those of our GM. He stated if you were to eliminate the salary data from those two utilities,our GM's salary, with the addition of the UPMIC, would be right in line with the others. Commissioner Stewart reiterated that if we are going to benchmark our GM's salary to the top five salaries,we need to also make sure that we're comparing the level of responsibility, size of customers, revenue dollars, and services. The Commission had consensus that the methodology used for analysis should have factored in additional details to ensure an apples to apples comparison. After discussion on ERMU's philosophy, Commissioner Westgaard suggested that this get further vetted through the W&BC, and that a recommendation be brought back to the Commission for consideration. There was further discussion on the addition of a Human Resources Manager and the timeline for filling the Operational Technology Superintendent position. Moved by Commissioner Bell and seconded by Commissioner Westgaard to receive and file the Management Pay Group Compensation Study. Motion carried 5-0. 4.0 POLICY&COMPLIANCE 4.1 Annual Commission Performance Self-Evaluation Per Governance Policy G.2c Agenda Planning, and consistent with the 2019 Governance Agenda adopted by the Commission in 2018,the Commission is to conduct a self-evaluation of their own performance in the third quarter of each fiscal year. Following the evaluation,the Commission, with support from the General Manager, will arrange for governance education for the next fiscal year, including education related to the determination of desired results. Prior to the Commission meeting,the Commissioners had completed an online survey regarding their performance. Mr.Adams presented the survey results and facilitated discussion on each of the points the Commission evaluated themselves on.The survey included five open-ended questions regarding the Commission's performance and what, if anything,they should be doing to be more effective.A few key areas that were identified were: holding a regular joint meeting with Elk River Municipal Utilities Commission Meeting Minutes July 9, 2019 Page 4 the Elk River City Council,and ongoing education for the Commission to include training on terminology unique to our industry. Overall,the Commission felt that the board is functioning extremely well and is doing a great job.They also noted that the change from three to five members has enabled them to better review, discuss, and support decisions made by the group. 4.2 Annual Strategic Plan Review Mr. Adams shared the purpose of the Strategic Plan and provided some background on the process the leadership team goes through to determine organizational goals and initiatives. Mr. Adams commented that if the Commission would like to be more involved in the strategic planning process, we could consider that for next year. Presented for Commission review were highlights from the 2019 initiatives, and newly identified go/no-go initiatives for 2020. Mr. Adams explained that staff is looking for Commission discussion on the high level strategic themes and initiatives that have been identified, and consensus on the themes leading into the budgeting process. Mr. Adams presented the strategic plan as outlined in his memo. Each manager spoke to the initiatives that they were the project lead for. There was discussion. The Commission had consensus to support the high level strategic themes that were presented. 4.3 Disposal of Utility Property Policy Ms. Sominski shared that the current Use and Disposal of Utility Property Policy allows for items to be disposed of when they are no longer of value to ERMU but does not take into account potential donation of those items to another entity. As the Minnesota Municipal Utilities Association (MMUA) training facility, as well as other trade schools, could utilize some of our discarded equipment for training purposes, staff would like to amend the policy to allow for donation options, with the intent to be transparent. Ms. Slominski shared that allowing us this option would benefit our utility as well as other participating MMUA members in the state. The Commission had a few questions. Staff responded. Moved by Commissioner Nadeau and seconded by Commissioner Stewart to approve the revised Disposal of Utility Property Policy. Motion carried 5-0. 5.0 BUSINESS ACTION 5.1 Financial Report— May 2019 Ms. Slominski presented the May 2019 financial report as outlined in her memo. Chair Dietz had forwarded a question prior to the Commission meeting regarding the accrued Elk River Municipal Utilities Commission Meeting Minutes July 9, 2019 Page 5 expense for buy-in to the Minnesota Municipal Power Agency (MMPA) compared to the accrued wholesale power cost savings. He noted that currently the savings are not off- setting the cost of the buy-in. Ms. Slominski explained that this is due to a difference in rate structure from our previous wholesale power provider to our current. Staff noted as we move into the summer months we should begin to see an increase in wholesale power cost savings. Moved by Commissioner Westgaard and seconded by Commissioner Nadeau to receive the May 2019 Financial Report. Motion carried 5-0. 6.0 BUSINESS DISCUSSION 6.1 Staff Updates Mr.Adams highlighted from his staff report the Scope of Work for the ERMU Safety Training Workgroup and Employee Recognition Workgroup. He noted that the two workgroups were created in response to employee feedback provided in the Organizational Effectiveness Survey conducted earlier this year. Mr. Adams had included in his staff report that the Minnesota Municipal Power Agency (MMPA) Board approved a revised load shedding policy that included ERMU, MMPA's newest member, in the rotational order. Commissioner Stewart asked for further explanation on what this meant. Mr. Adams responded. Ms. Slominski had indicated in her staff report that shutoffs thus far have been less eventful compared to last year.There was discussion on what this could be attributed to. Based on the locating department stats, Chair Dietz commented that it looks like they have been busy. Mr.Tietz responded that they have been very busy, and noted that even though they had a slight decrease in the volume of tickets from the previous month,the complexity of the locates has been far greater. Mr. Ninow had nothing additional to add to his staff report.The Commission commented on the news story that WCCO had ran; "It's the Law: Help Firefighters Access your Fire Hydrant." The segment featured, ERMU Water Superintendent Ninow and Elk River Fire Department Deputy Chief Surratt who helped spread the word about proper hydrant clearance throughout all the seasons. Mr. Sagstetter provided an update on the complete shutdown the landfill experienced due to a power outage caused by a vehicle striking an ERMU power pole on June 23. As a result of the amount of time the engines were down, the pistons, rings, and heads on all of the engines were damaged. He added that engine #1 is still down. The estimated cost for repairs is $30,000 to $50,000.There was discussion on what the delay was in getting them back up and running and how that situation could be avoided in the future. Elk River Municipal Utilities Commission Meeting Minutes July 9, 2019 Page 6 Mr. Portner shared that the groundbreaking for the Multipurpose Facility will take place on July 10. He provided an overview of the project and the estimated timeframe for completion. 6.2 Future Planning Chair Dietz announced the following: a. Regular Commission Meeting—August 13, 2019 b. Quorum—MMPA Annual Meeting—July 23, 2019 c. Quorum—MMUA Summer Conference—August 19 - 21, 2019 d. 2019 Governance Agenda 6.3 Other Business There was no other business. 7.0 ADJOURN REGULAR MEETING Moved by Commissioner Nadeau and seconded by Commissioner Bell to adjourn the regular meeting of the Elk River Municipal Utilities Commission at 5:55 p.m. Motion carried 5-0. Minutes •repare y Michelle Canterbury. hn J. ietz, M mmission Chair Tina Allard, City Clerk Elk River Municipal Utilities Commission Meeting Minutes July 9, 2019 Page 7