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2.2. ERMUSR 09-10-2019 ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM August 13,2019 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 Melissa Karpinski,Accountant Jenny Biorn,Accountant Jeff Murray, Electrical Technician 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 There were no additions or corrections to the agenda. Moved by Commissioner Westgaard and seconded by Commissioner Nadeau to approve the August 13,2019,agenda. Motion carried 5-0. 2.0 CONSENT AGENDA(Approved By One Motion) Elk River Municipal Utilities Commission Meeting Minutes August 13, 2019 Page 1 32 Moved by Commissioner Nadeau and seconded by Commissioner Stewart to approve the Consent Agenda as follows: 2.1 July 2019 Check Register 2.2 July 9,2019 Regular Meeting Minutes 2.3 2019 Second Quarter Utilities Performance Metrics Score Card Statistics 2.4 Compensation Study Motion carried 5-0. 3.0 OPEN FORUM No one appeared for open forum. 4.0 POLICY&COMPLIANCE 4.1 Employee Recognition Workgroup Update As a result of feedback from the Organizational Effectiveness Survey conducted in early 2019, an Employee Recognition Workgroup was formed to address recognition within the company. As recognition initiatives that have a financial or benefits impact would need to go through the budgeting process and require Commission approval,the Workgroup is looking for direction from the Commission before moving forward with a specific plan. Ms. Nelson provided some background on the makeup of the Workgroup, and the meetings and discussions that had taken place. She shared that ultimately the group decided to concentrate on a program that affects everyone within the company, while using a universal measurement: the employee anniversaries recognition program. Ms. Nelson went over the current employee anniversary recognition program as outlined in ERMU's Public Purpose Expenditure Policy. Ms. Nelson presented the new ideas the Workgroup had come up with to recognize milestones in employment. She also presented some nominal ways to increase employee recognition within the company.There was discussion. The Commission was receptive to the idea of revamping the current employee anniversaries recognition program. The direction given was to look into some type of employee service award program that offers employees the option to select a gift from a catalog upon their service milestone. Based on this direction, Ms. Nelson stated that the Workgroup would put together a more specific plan to be presented to the Commission for consideration. Elk River Municipal Utilities Commission Meeting Minutes August 13, 2019 Page 2 33 • 4.2 Policy Manual Initiative Implementation Overview Mr. Adams shared that now that staff and the Commission have had a full calendar year of operations and governance under the new Commission policies, staff has reviewed the old policies. A plan has been developed to systematically work through the old policies to separate the things that are clearly operational/procedural from things that are clearly policy/governance. Mr. Adams walked through the color coded overview of the implementation plan. Staff will be working with legal counsel throughout the restructure process and the intent is to bring back multiple items for Commission action every month until the initiative is complete.The Commission was in support of the overview and implementation plan that was presented. 5.0 BUSINESS ACTION 5.1 Financial Report—June 2019 Ms. Slominski presented the June 2019 financial report as outlined in her memo. Chair Dietz had a few questions. Staff responded. Moved by Commissioner Westgaard and seconded by Commissioner Stewart to receive the June 2019 Financial Report. Motion carried 5-0. 5.2 2019 Second Quarter Delinquent Items Ms. Slominski presented the delinquent items for the second quarter which included a delinquent amounts listing report totaling $8,353.19 for all services. She also presented the delinquent items comparisons for 2018/2019, identifying the categories and running totals.The amount for the second quarter write-offs was$3,755.56. Ms. Slominski noted that our total for uncollectable accounts per revenue dollar, .0003%, is well below the national average. Moved by Commissioner Stewart and seconded by Commissioner Nadeau to approve the 2019 Second Quarter Delinquent Items Submitted. Motion carried 5-0. 5.3 2020 Annual Business Plan: Schedule;Travel &Training; Dues,Subscriptions, and Fees Budget Ms. Slominski provided an overview of the budgeting process schedule and presented the Travel and Training budget which reflected a 19% increase over the prior year. She stated that a large part of the increase is due to employee growth, and increased participation with American Public Power Association (APPA). Ms. Slominski and Mr. Adams spoke to the key contributors of the increase. Elk River Municipal Utilities Commission Meeting Minutes August 13,2019 Page 3 34 The Dues, Subscriptions, and Fees budget reflected a 27.5% increase which is also the result of growth. Ms. Slominski and Mr.Tietz provide further details on the proposed increases. Based on the large increase for this portion of the proposed budget, Commissioner Bell had a question on what the desired bottom line is for the overall budget. Mr. Adams responded. Chair Dietz commented that he would reserve judgement until he sees how this fits into the complete budget. 5.4 Wage & Benefits Committee Update Based on Commission direction, the Wage & Benefits Committee (W&BC) met on July 22, 2019 to further analyze the inequities for the following positions: General Manager, Electric Superintendent,Technical Services Superintendent, Finance & Office Manager, and the Assistant Electric Superintendent. Mr. Adams shared that in consideration of the Commission's direction regarding an "apples to apples" comparison, the W&BC used a Muni 7 benchmarking analysis philosophy. At the meeting, the W&BC also reviewed the current organizational chart and looked at proposed changes to the structure that would add an additional level of leadership and improve on succession planning. Mr. Adams presented the W&BC update as outlined in the memo. Mr. Adams walked through the proposed organizational chart and the implementation plan. Also presented were the proposed management pay group revisions and the financial impact of the changes. To address the additional level of leadership, the W&BC had consensus to recommend the creation of two director positions: an Operations Director and an Administrations Director. In the field, the plan to add the director position would be accomplished through the internal promotion of the current Electric Superintendent to the Operations Director, and the internal promotion of the current Assistant Electric Superintendent to the Electric Superintendent. In the office, the plan to add the director position would be accomplished through the internal promotion of the Finance & Office Manager to the Administrations Director. Mr. Adams noted that through action of the Commission the proposed organizational restructuring can be done without the requirement for posting or interviews. For the Technical Services Superintendent position the W&BC determined that the inequity in position pay identified in the Current Compass report was related to the difference in minimum position requirements, therefore the pay for the Technical Services Superintendent did not warrant being adjusted at this time. As the proposed plan for the field would require changes in responsibilities for the Line Crew Foreperson, Field Crew Foreperson, and System Engineer, the W&BC had consensus to recommend a 1% pay increase for these positions. Elk River Municipal Utilities Commission Meeting Minutes August 13, 2019 Page 4 35 Chair Dietz and Commissioner Stewart shared their thoughts on the proposed plan, and concurred that the plan addresses wage inequities, succession planning, and growth. It also creates additional career opportunities for current employees, and recognizes the two employees being promoted into the director positions for all of their contributions to the company. Both Chair Dietz and Commissioner Stewart commended staff for the effort they put into developing a plan to address all of these issues.They also noted that this is what they would have expected from the consultant we had hired to do the benchmarking report. Moved by Commissioner Nadeau and seconded by Commissioner Stewart to approve the following effective August 13, 2019: • The proposed organizational chart and the implementation as outlined • The internal promotion of the current Electric Superintendent to the Operations Director • The internal promotion of the current Finance &Office Manager to the Administrations Director • The internal promotion of the current Assistant Electric Superintendent to the Electric Superintendent • The proposed management pay group revisions • A 1% pay increase for the Line Crew Foreperson, Field Crew Foreperson,and System Engineer positions Motion carried 5-0. 6.0 BUSINESS DISCUSSION 6.1 Staff Updates To help educate on the importance of not planting trees too close to underground utilities,or in the right-of-way, Mr. Fuchs presented a large tree root that had to be removed due to its growing too close to,and eventually encapsulating,our underground secondary wire. Mr. Fuchs provided an update on the status of the installation of the downtown streetlights. Mr.Tietz highlighted from his staff report the licensing issues we're experiencing due to an increased number of users in the Geographical Information System (GIS). He explained that due to the limitations of the current licensing structure, an upgrade to the licensing agreement will be required. Mr.Tietz provided details on the cost of the upgrade,and re-allocation of approved budget funds to cover this unbudgeted expense. Mr.Tietz also provided an update on the West Substation equipment storage building and the construction timeline. Elk River Municipal Utilities Commission Meeting Minutes August 13, 2019 Page 5 36 Mr.Sagstetter called attention to the pictures provided in his staff report of the siloxane buildup that caused damage to the Landfill Gas Plant Engine#1. Mr. Portner shared that the Barn at the Elk River Arena had been demolished,and that underground utility installation from Lions Park to the new Multipurpose Facility is moving along as expected.There was discussion. Mr. Portner noted that the city should have the results from their bond rating tomorrow.The sale of the bonds is scheduled for August 19. As both entities are currently in the budgeting process for the next fiscal year,there was discussion on the Payment in Lieu of Taxes(PILOT) ERMU pays to the city.The Commission determined that if any changes to the current PILOT were to be considered, it should be discussed at a joint meeting with the City Council. Ms. Canterbury highlighted from her staff report that a photo session has been scheduled for individual and group photos to be taken of the Commission on September 10,2019,at 2:30 p.m.,at the utilities office. A reminder email will be sent out a few days prior to the session. 6.2 City of Dayton Franchise Ordinance Ms. Nelson shared that City of Dayton is proposing an Electric Service Franchise Fee Ordinance, similar to the City of Elk River, which would require ERMU to bill franchise fees on behalf of the city to its customers in Dayton. In that planning process, the City of Dayton learned that there is not an Electric Franchise Ordinance on file for ERMU, which is needed to implement the Electric Service Franchise Fee Ordinance. Ms. Nelson stated that our attorney has reviewed drafts of these ordinances and is working with the City of Dayton's Attorney on some minor language revisions. Ms. Nelson shared that the finalized Electric Service Franchise Fee Ordinance and Electric Franchise Ordinance will be presented for acceptance at the September 10 Commission meeting. 6.3 Future Planning Chair Dietz announced the following: a. Regular Commission Meeting—September 10, 2019 b. Quorum—Commission Photo Session —September 10, 2019—2:30-3:30 p.m. c. Quorum—MMUA Summer Conference—August 19 - 21, 2019 d. 2019 Governance Agenda 6.4 Other Business Chair Dietz shared that he had fielded a question from one of the residents at Night to Unite regarding the purpose of the territory transfer from Connexus Energy. Mr. Elk River Municipal Utilities Commission Meeting Minutes August 13, 2019 Page 6 37 Sagstetter who also attended the neighborhood events, stated that he had talked with future customers who had similar questions. Mr. Adams announced that he would be out of the office the remainder of the week and in his absence Mr. Fuchs would be in charge. 7.0 ADJOURN REGULAR MEETING Moved by Commissioner Westgaard and seconded by Commissioner Bell to adjourn the regular meeting of the Elk River Municipal Utilities Commission at 4:53 p.m.Motion carried 5-0. Minutes prepared by Michelle Canterbury. John J. Dietz, ERMU Commission Chair Tina Allard,City Clerk Elk River Municipal Utilities Commission Meeting Minutes August 13, 2019 Page 7 38