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04-14-2020 ERMU MIN ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD VIRTUALLY DUE TO COVID-19 PANDEMIC April 14,2020 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 Mark Fuchs,Operations Director 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 Tom Geiser, Electric Superintendent Melissa Karpinski, Finance Manager Chris Kerzman, Engineering Manager Tony Mauren,Communications&Administrative Coordinator Others Present: Peter Beck,Attorney;Cal Portner, City Administrator; and Andrew Berg,CPA with Abdo, Eick&Meyers 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. Chair Dietz conducted a roll call for the commission members. 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 Nadeau and seconded by Commissioner Stewart to approve the April 14,2020,agenda. Motion carried 5-0. Elk River Municipal Utilities Commission Meeting Minutes April 14, 2020 Page 1 1.4 Resolution Recognizing 2020 Drinking Water Week Mr. Ninow provided some background on Drinking Water Week and the importance of safe, reliable drinking water. A resolution designating May 3-9, 2020 as Drinking Water Week was presented. Moved by Commissioner Bell and seconded by Commissioner Westgaard to adopt Resolution No.20-1 recognizing Drinking Water Week, May 3-9,2020.Motion carried 5-0. 1.5 Resolution Recognizing 2020 Lineworker Appreciation Day Mr. Geiser shared the history of this event and explained that every year ERMU joins in this national day of recognition, honoring the important service that lineworkers provide. This year ERMU is designating April 18, 2020 as Lineworker Appreciation Day. Chair Dietz had questions about recognition days for other departments.Staff responded. Moved by Commissioner Stewart and seconded by Commissioner Nadeau to adopt Resolution No.20-2 recognizing lineworkers and designating April 18,2020 as Lineworker Appreciation Day.Motion carried 5-0. 1.6 Recognition of American Public Power Association RP3 Designation Mr.Tietz informed the Commission that ERMU had once again received the Reliable Public Power Provider designation from the American Public Power Association (APPA), noting that ERMU had advanced from gold to platinum level in 2020. Mr.Tietz commented that it takes the collective work of the entire company to achieve this designation. Chair Dietz had questions about the number of times ERMU had achieved the RP3.There was discussion. Moved by Commissioner Nadeau and seconded by Commissioner Bell to receive the APPA RP3 Designation Award. Motion carried 5-0. 1.7 Recognition of American Public Power Association 2019 Certificate of Excellence in Reliability Mr.Tietz announced that ERMU recently received national recognition from the American Public Power Association (APPA)for achieving exceptional electric reliability in 2019. He shared that ERMU was one of 141 public power utilities to receive this honor.According to the numbers for 2019, ERMU's System Average Interruption Duration Index was only 25.41 minutes,compared to the industry average of 143 minutes. Moved by Commissioner Stewart and seconded by Commissioner Westgaard to receive the APPA 2019 Certificate of Excellence in Reliability Award. Motion carried 5-0. Elk River Municipal Utilities Commission Meeting Minutes April 14, 2020 Page 2 2.0 CONSENT AGENDA(Approved By One Motion) Chair Dietz commented that the 2019 annual reliability report numbers did not meet last year's level. General Manager Adams noted wildlife interference and storms were the main cause of outages for the year. Moved by Commissioner Bell and seconded by Commissioner Stewart to approve the Consent Agenda as follows: 2.1 March 2020 Check Register 2.2 March 10,2020 Regular Meeting Minutes 2.3 March 10,2020 Special Meeting Minutes 2.4 Resolution Electing Not to Waive Statutory Tort Limits for Liability Insurance 2.5 Resolution Appointing the Bank Signatories and Designating Authority to Make Financial Transfers 2.6 2019 Annual Distributed Generation&Cogeneration Report 2.7 2019 Annual Reliability Report Motion carried 5-0. 3.0 OPEN FORUM No one appeared for open forum. 4.0 POLICY&COMPLIANCE 4.1 2019 Financial Audit Mr. Berg from the auditing company, Abdo, Eick& Meyers attended the meeting to present the 2019 Financial Audit and Management Letter. He stated that the auditors issued a clean opinion on the financials and that there were no findings to report and no unplanned audit adjustments would be necessary. Mr. Berg walked through the financial statement audit presentation. Chair Dietz had concerns over the portion of electric debt obligation that came from interest, wondering if there would be an opportunity to refinance bonds at lower interest rates. Mr. Berg responded there could be an opportunity to refinance. He also stated that the current ratio of debt to interest is not abnormal. After the presentation, Mr. Berg asked the Commission if they had any additional questions on the management letter or the annual financial report. Chair Dietz asked Mr. Berg how ERMU compares to other similar utilities. Mr. Berg responded that ERMU has positive cash flow which is covering operating costs while also building reserves. Mr. Berg Elk River Municipal Utilities Commission Meeting Minutes April 14, 2020 Page 3 judged that ERMU's cash position trend is a strong indicator of good financial health. Commissioner Stewart had questions for ERMU staff on the unaudited statistics portion of the annual financial report regarding electric line losses and water customer growth. Staff responded. Moved by Commissioner Stewart and seconded by Commissioner Westgaard to receive and file the Financial Audit for the year ending December 31, 2019. Motion carried 5-0. 4.2 2019 Year End Reserve Balance Ms. Karpinski presented the year-end electric reserve balance and calculations. Staff recommended that the unrestricted balance above the target level for the Electric Utility fund be designated for electric service territory costs,future capital infrastructure costs, and the energy adjustment clause to be capped at$500,000. Chair Dietz had questions on terminology and the difference between restricted and unrestricted reserve amounts. Staff responded. Ms. Karpinski presented the year-end water reserve balance and calculations. Staff recommended that the unrestricted balance above the target level for the Water Utility fund be designated for future capital infrastructure costs. Moved by Commissioner Stewart and seconded by Commissioner Bell that$500,000 of the unrestricted reserve balance for the Electric Utility fund be designated for the Energy Adjustment Clause(EAC), and the remaining amount be designated towards electric service territory costs and future capital infrastructure costs; and the unrestricted reserve balance for the Water Utility fund be designated for future capital infrastructure costs. Motion carried 5-0. 4.3 2019 Utilities Performance Incentive Compensation Distribution Ms. Slominski presented the 2019 Utilities Performance Metrics and Incentive Compensation (UPMIC) score card on which the employees had successfully achieved all the company performance metrics targets except for two:The Water Loss and the Employee Turnover metrics. She shared that per the policy, qualifying employees would be eligible for a 1.70%distribution. Chair Dietz had questions about whether the distribution factored in gross wages and overtime, staff responded that it did. Chair Dietz asked Mr. Ninow about water loss exceeding the 12%threshold. Staff responded. Moved by Commissioner Nadeau and seconded by Commissioner Westgaard to award the Utilities Performance Metrics Incentive Compensation distribution of 1.70%to qualifying employees per the terms of the policy. Motion carried 5-0. 5.0 BUSINESS ACTION Elk River Municipal Utilities Commission Meeting Minutes April 14, 2020 Page 4 5.1 Financial Report—February 2020 Ms. Karpinski presented the February 2020 financial report as outlined in her memo. Chair Dietz had questions about February 2020 revenues compared to February 2019, maintenance expense year-to-date 2020 compared to year-to-date 2019, and about water connections fees year-to-date 2020 compared to year-to-date 2019. Staff responded. Moved by Commissioner Stewart and seconded by Commissioner Westgaard to receive the February 2020 Financial Report. Motion carried 5-0. 5.2 COVID-19 Response Mr. Adams presented his memo on ERMU's COVID-19 response plan. Mr. Adams asked for action from the Commission to replenish the sick time used by five employees who self- quarantined prior to the start of the Families First Coronavirus Response Act, which requires certain employers to provide employees with paid sick leave for reasons related to COVID-19.The act does not mandate employers to retroactively replenish sick time taken before April 1, but Mr. Adams stated that ERMU supports employees who self- quarantined to protect others. Mr. Adams noted that this is a budgeted item. Chair Dietz asked City Administrator Portner whether the city had taken similar action. He responded that they had. Moved by Commissioner Nadeau and seconded by Commissioner Bell to approve the replenishment of paid sick time used by employees who self-quarantined prior to April 1,the effective date for the Families First Coronavirus Response Act. Motion carried 5-0. For the second action request, Mr. Adams explained that he made the executive decision prior to the commission meeting to suspend water and electric disconnections, and penalties for nonpayment. He recommended the Commission retroactively approve the action to suspend disconnections and penalties for non-payment, effective March 16 and until further notice. Chair Dietz had questions about how ERMU would return to its normal billing and penalties processes once employment levels return to normal. Mr. Adams and Ms. Nelson responded there will need to be an indefinite period of flexibility and collaboration with customers on payment arrangements. Moved by Commissioner Westgaard and seconded by Commissioner Nadeau to approve the suspension of disconnection for non-payment and suspension of penalties until future notice, retroactively effective March 16, 2020. Motion carried 5-0. Mr. Adams shared that besides the current things that ERMU is doing to help provide relief for customers experiencing financial hardship,there has been discussion among the utility industry about providing other means of relief to customers. Mr. Adams went over some of the ideas that were being considered. Commissioner Stewart shared several options that could be explored, recommending that ERMU join with the City and other Elk River Municipal Utilities Commission Meeting Minutes April 14, 2020 Page 5 members of the community to support customers with financial limitations, enhance communications, and examine operations to cut costs. Commissioner Stewart expressed that she was not in support of refunding deposits as a means to provide for relief. There was discussion. Chair Dietz raised questions about the timeline of getting employees back to work from their on-call status and encouraged Mr. Adams to get them back to their normal workplaces as soon as possible. Staff responded. Chair Dietz asked if we have been able to meet customer service requests in a timely manner. Ms. Nelson responded that our phones are rolled to 24-hour call service and are responded to immediately. Mr. Sagstetter presented an analysis of the projected impacts to electric and water sales as result of COVID-19 response. Chair Dietz had questions on ERMU's deposit policy after receiving a comment from a resident. Chair Dietz asked if ERMU could establish a policy of updating residents' credit scores upon request once every five years so that those who have improved their credit can have their deposit returned. Ms. Nelson provided background on the deposit policy, explaining that it exists to address the fact that financial circumstances can change favorably or unfavorably throughout the time an individual is a customer.The policy is intended to reduce the amount of debt ERMU has to write-off should a customer have an unfavorable financial change. Chair Dietz directed staff to find comparison policies within the industry and report back to the Commission. 6.0 BUSINESS DISCUSSION 6.1 Staff Updates Mr.Sagstetter responded to Chair Dietz's question about how the Stay at Home Order was affecting public electric vehicle charger usage. Mr.Sagstetter responded that usage was down. Ms. Canterbury highlighted from her staff report that Mr.Adams'annual performance evaluation is typically held in May.As the evaluation is conducted at a closed meeting, it presents a challenge due to the method in which we are currently conducting our commission meetings. Ms. Canterbury recommended postponing the General Manager's evaluation until a secure method to conduct the closed meeting can be determined,or until it is feasible to conduct in person meetings again.The Commission agreed. Mr.Geiser shared that Journeyman Josh Shoutz began working for ERMU on April 13,filling an opening in the electric department. Mr.Geiser noted that the ERMU electric department is back to full staff. Elk River Municipal Utilities Commission Meeting Minutes April 14,2020 Page 6 Mr. Ninow updated the Commission on the Auburn Water Tower Rehabilitation Project, stating that ERMU had resolved its issues with the contractor on the project.Classic Protective Coatings agreed to receive payment for work completed,with a$18,530 deduction to offset costs incurred by ERMU due to delayed completion of the project. Mr. Beck noted that this agreement was in accordance with terms laid out at the last commission meeting. Mr. Kerzman responded to Commissioner Stewart's question about the number applications ERMU had received for the IT/OT technician position. Mr. Fuchs stated that he is waiting for a delivery of masks and hand sanitizer,which will be available to employees to use when they are working in close quarters. Mr. Fuchs was asked about the status of the decorative streetlight installation. He responded that the lights in downtown Elk River are complete and that staff would be working on the lights in Otsego this week. Mr. Portner updated the Commission on the status of operations at city hall and throughout the city as a result of the Stay at Home Order. 6.2 Future Planning Chair Dietz announced the following: a. Regular Commission Meeting—May 12, 2020 b. 2020 Governance Agenda 6.3 Other Business There was no other business. 7.0 ADJOURN REGULAR MEETING Moved by Commissioner Bell and seconded by Commissioner Nadeau to adjourn the regular meeting of the Elk River Municipal Utilities Commission at 4:59 p.m.Motion carried 5-0. Minutes prepared by Tony Mauren. Jo J. etz U m fission Chair Tina Allard,City Clerk Elk River Municipal Utilities Commission Meeting Minutes April 14, 2020 Page 7