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2.2. ERMUSR 12-17-2019ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM November 12, 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, Administrations Director Dave Ninow, Water Superintendent Tom Sagstetter, Conservation & Key Accounts Manager Michelle Canterbury, Executive Administrative Manager Jennie Nelson, Customer Service Manager Tom Geiser, Electric Superintendent Melissa Karpinski, Finance Manager Tony Mauren, Communications & Administrative Coordinator Zac Johnson, Lead Lineworker Scott Thoreson, Lead Lineworker Nick Hommerding, Lineworker Matt Zipp, Lineworker Eric Jean , Water Operator Others Present: Cal Portner, City Administrator; and Peter Beck, Attorney 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 Bell to approve the November 12, 2019, agenda. Motion carried 5-0. Elk River Municipal Utilities Commission Meeting Minutes November 12, 2019 Page 1 31 1.4 Recognition of Minnesota Municipal Utilities Association Lineworker Rodeo Participants Minnesota Municipal Utilities Association (MMUA) held their annual Minnesota Lineworker Rodeo on October 15 in Marshall, MN. Mr. Geiser introduced and recognized the three lineworkers who competed at the event: Zac Johnson, Nick Hommerding, and Matt Zipp. It was noted that Zac placed in two of the three events. Mr. Geiser shared that Lead Lineworker Scott Thoreson also attended and served as a judge for the rodeo events. The Commission had a few questions. The lineworkers responded. 1.5 Mr. Sagstetter announced that Elk River Municipal Utilities (ERMU) recently received the American Public Power Association (APPA) Smart Energy Provider (SEP) designation. ERMU is one of sixty public power agencies in the nation to receive the two year designation. He shared that the designation recognizes public power utilities for leadership in four key areas: smart energy program structure, energy efficiency and distributed energy programs, environmental and sustainability initiatives, and the customer experience. Mr. Sagstetter also talked about the environmentally sustainable initiatives ERMU and the City of Elk River have worked on together, and how that relationship contributed to receiving the designation. 1.6 Recognition of Employee Promotion Ms. Slominski introduced Melissa Karpinski and announced that she had been internally promoted to the Finance Manager position. The Commission congratulated Ms. Karpinski on her promotion. 2.0 CONSENT AGENDA (Approved By One Motion) Ms. Slominski addressed two questions the Commission had on the check register. Moved by Commissioner Nadeau and seconded by Commissioner Stewart to approve the Consent Agenda as follows: 2.1 October 2019 Check Register 2.2 October 8, 2019 Regular Meeting Minutes 2.3 2019 Third Quarter Utilities Performance Metrics Score Card Statistics 2.4 2019 Third Quarter Delinquent Items 2.5 2019 Assessments Motion carried 5-0. 3.0 OPEN FORUM Elk River Municipal Utilities Commission Meeting Minutes November 12, 2019 Page 2 32 As Water Operator Eric Jean was in attendance to address the Commission. Eric shared that the only reason he is leaving is that he has been offered a job in Alaska, which is ultimately where he has always wanted to live. Eric expressed his gratitude for his time of employment at ERMU, and stated it was great place to work and that he had learned a lot. The Commission congratulated Eric and wished him luck. 4.0 POLICY & COMPLIANCE 4.1 Policy Manual Initiative Mr. Adams shared that per the initiative schedule, the items for consideration in November are from the Administration section. This section contains 21 policy documents with action requests for consideration. As outlined in the initiative overview, there are four policy documents in the Administration section which are proposed to be eliminated. There are six policy documents in the Administration section which are proposed to be direct authority over these documents as they will become part of the Commission Policy Manual. There are 11 policy documents in the Administration section which are proposed to be moved to the Management Policy Manual. This action would delegate the authority over these policies to management. The six remaining polices in the Administration section were created as management policies under the authority delegated to management through the new commission policies. These polices were placed within the existing policy book framework until the time when the policy book was split. These policies do not require Commission action but are included for reference. These will become a part of the Management Policy Manual. Mr. Adams reached out to the Commission to see if there were any questions. There were none. Moved by Commissioner Bell and seconded by Commissioner Westgard to approve the following: Remove the following policies from the ERMU Policy Manual: A.3, A.7, A.16, and A.22. Move the following policies to the Commission Policy Manual: A.6, A.17, A.18, A19, A.20, and A.24a. Elk River Municipal Utilities Commission Meeting Minutes November 12, 2019 Page 3 33 Delegate authority to management and move the following policies to the Management Policy Manual: A.4, A.5, A.8, A.9, A.10, A.11, A.12, A.13, A.14, A.15, and A.23. Motion carried 5-0. 4.2 Public Purpose Expenditure Policy At the October 8, 2019 Commission meeting, the Commission had consensus to support the concept of the Years of Service Award Plan and directed staff to move forward with the language changes to the Public Purpose Expenditure Policy. The Commission also instructed the Employee Recognition Workgroup to report back the budgetary impact, including the tax gross-up. Ms. Nelson presented the edited policy. She shared that the proposed changes to the Employee Years of Service Award Program would result in a $654.66 impact to the 2020 budget. Moved by Commissioner Nadeau and seconded by Commissioner Stewart to approve the changes to the Public Purchase Expenditure Policy. Motion carried 5-0. 5.0 BUSINESS ACTION 5.1 Financial Report September 2019 Ms. Slominski presented the September 2019 financial report. For the benefit of the Commission, Ms. Slominski addressed a few questions Commissioner Stewart had forwarded to her in advance regarding the way the mutual aid expense is booked, and the significant increase in revenue to the Bulk Water Sales/Hydrant Rental line item. There was discussion on the impact the weather has had on electric and water sales in 2019. Moved by Commissioner Westgaard and seconded by Commissioner Bell to receive the September 2019 Financial Report. Motion carried 5-0. 5.2 Wage & Benefits Committee Update On October 8, the Wage & Benefits Committee (W&BC) held an open meeting for employees to submit wage and benefit suggestions for consideration by the Committee. The Committee met on October 28 to review and research topics from the open meeting. The Committee also performed a market analysis in preparation for making a cost-of- living adjustment (COLA) recommendation to the Commission and followed up on other miscellaneous outstanding issues. Mr. Adams and Chair Dietz presented the W&BC update, as outlined in the memo, along with the proposed recommendations. Commissioner Stewart thanked the employees for coming to the open W&BC meetings and sharing their input. She said that she hopes they understand that the Committee Elk River Municipal Utilities Commission Meeting Minutes November 12, 2019 Page 4 34 makes their recommendation based employees, the company, and the rate payers. Attorney Beck had some concerns with the volunteerism paid time off policy that was being proposed, and suggested further legal review. It was recommended that the Commission approve the concept as presented, contingent upon legal review. Based on legal approval, the language would be drafted and incorporated into the employee handbook. In addition to the annual legal review of the Employee Handbook, the Committee had discussed a few other changes that were needed for the handbook. Chair Dietz recapped the items that would be updated for future Commission approval with the handbook. of the Human Resources Manager position until 2021, the position has been removed from the 2020 budget. Moved by Westgaard, and seconded by Commissioner Stewart to approve the following effective January 1, 2020: 3% COLA for the Office, Field and Management pay groups 4.2% adjustment (COLA plus market adjustment) for the Lineworker pay group Annual HSA employer contribution levels of $650 for single, and $1985 for single +1 and family plans Offering four hours of paid time off annually, per employee, for approved volunteerism; contingent upon legal review. Motion carried 5-0. 5.3 2020 Annual Business Plan: Rates and Review, Stakeholder Communication Plan Ms. Slominski presented the preliminary balanced budget and rates. For the Electric Department Expense Budget the 2020 forecast for electric expenses is a .5% increase over the current year budget. At this time there is a 0% rate increase proposed. Ms. Slominski explained that the necessary goal of a 2.83% margin to cover 110% of our annual average debt service is narrowly obtained with a conscientious trimming of expenses and conservative growth and usage estimates for revenues based . There was discussion on the 2.83% margin needed to meet our debt covenant and the contingency plan, shoul Elk River Municipal Utilities Commission Meeting Minutes November 12, 2019 Page 5 35 For the Water Department Expense Budget the 2020 forecast for water expenses is a 2.7% increase over the current year budget. At this time a 2% rate increase is proposed for the customer charge and the first tier of usage. The result for the proposed rate increase for a typical residential water customer would be a blended increase of 1.73%. In an effort to accommodate for a 0% electric rate increase, Mr. Adams spoke to some of the items that had been cut from the Travel & Training Budget. That budget, along with the others with proposed cuts will be presented at the December commission meeting. Chair Dietz suggested keeping track of the items that are being cut, to allow for the option of adding them back in mid-year should a financial evaluation warrant doing do. As part of the governance agenda requirements, staff reached out to the Commission to discuss the communication plan to customers for the 2020 rates approved. Ms. Canterbury and Mr. Mauren shared some of the ways the 2019 rate reduction had been communicated and marketed with much success. There was discussion. Chair Dietz suggested we include something on the bill print message if possible, and contact the Star News to see if they will publish something. Commissioner Stewart commented on the conservative $225,000 that was budgeted for water connection fees for 2020, in relation to 2019 year-to-date dollar amount which is significantly higher. There was discussion on the impact this would have on the proposed increase to the 2020 water rates. Chair Dietz expressed a concern regarding staff recommendation to not increase the Water Access Charge (WAC) at this time, considering the city is proposing an increase to their Sewer Access Charge (SAC) for 2020. Mr. Adams explained that staff will be working with a consultant to conduct a cost of service and rate design study in the first quarter of 2020, and based on those results will determine if an increase to the WAC is warranted. 5.4 2020 Utilities Fee Schedule and Street/Security Light Service Rate Ms. Canterbury presented the 2020 Fee Schedule and went over the proposed changes which include a price of two new street light offerings. Mr. Adams spoke to the pricing of the street lights and shared that a detailed cost analysis had been performed. He noted that as a result of the new street light offerings, the rate sheet for the Street/Security lights has been revised to include the rate for these items. Moved by Commissioner Stewart and seconded by Commissioner Nadeau to approve the 2020 Utilities Fee Schedule and the revised Street/Security Light Service Rate sheet. Motion carried 5-0. Elk River Municipal Utilities Commission Meeting Minutes November 12, 2019 Page 6 36 6.2 Future Planning Chair Dietz announced the following: a.CANCEL Regular Commission Meeting December 10, 2019 b.Special Commission Meeting December 17, 2019 @ 3:30 p.m. c.Joint City Council Meeting November 18, 2019 @ 6:00 p.m. d.2019 Governance Agenda 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 5:02 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 November 12, 2019 Page 8 38