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06-09-2020 ERMU MIN ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD VIRTUALLY DUE TO COVID-19 PANDEMIC June 9,2020 Members Present: Chair John Dietz,Vice Chair Al Nadeau,Commissioners Paul Bell, Mary Stewart,and Matt Westgaard ERMU Staff Present: Theresa Slominski, Interim General Manager Melissa Karpinski, Finance Manager Jennie Nelson,Customer Service Manager Tom Sagstetter,Conservation &Key Accounts Manager Michelle Canterbury, Executive Administrative Manager Mark Fuchs,Operations Director Tom Geiser, Electric Superintendent Mike Tietz,Technical Services Superintendent Dave Ninow,Water Superintendent Chris Kerzman, Engineering Manager Tony Mauren, Communications&Administrative Coordinator Others Present: Peter Beck,Attorney;Cal Portner,City Administrator; Debra Englund, HRExpertiseBP;and David Berg, Dave Berg Consulting, LLC. 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 Roll Call Chair Dietz conducted a roll call for the commission members. 1.3 Consider the Agenda There were no additions or corrections to the agenda. Moved by Commissioner Westgaard and seconded by Commissioner Stewart to approve the June 9,2020,agenda. Motion carried 5-0. 2.0 CONSENT AGENDA(Approved By One Motion) Moved by Commissioner Bell and seconded by Commissioner Westgaard to approve the Consent Agenda as follows: Elk River Municipal Utilities Commission Meeting Minutes June 9, 2020 Page 1 2.1 May 2020 Check Register 2.2 May 12,2020 Regular Meeting Minutes Motion carried 5-0. 3.0 OPEN FORUM No one appeared for open forum. 4.0 POLICY&COMPLIANCE Nothing was presented for policy&compliance. 5.0 BUSINESS ACTION 5.1 Financial Report—April 2020 Ms. Karpinski presented the April 2020 financial report as outlined in her memo. Chair Dietz had a question about the variance between sales and purchased power in the report. Staff responded that the cycles for tracking sales and}purchased power do not exactly correspond. Ms. Karpinski noted that financials for May should bring the totals closer. Moved by Commissioner Stewart and seconded by Commissioner Nadeau to receive the April 2020 Financial Report. Motion carried 5-0. 5.2 Electric and Water Cost of Service and Rate Design Study 'Mr. Berg returned, after appearing before the commission in May, to present the final reports for the Electric and Water Cost of Service and Rate Design Studies. As the Water Cost of Service and Rate Design Study final report had no changes from the preliminary report presented in May, Mr. Berg asked if there were any questions or further clarifications needed for the water study.There were none. Mr. Berg presented the Electric Cost of Service and Rate Design Study final report which included projections based on a 1.5%annual electric rate increase from 2021 to 2024. At last month's commission meeting, Commissioner Stewart requested that the amortization numbers shown on exhibit 3-A of the electric study be broken down in more detail related to actual contracts in existence, rather than estimates. In response to Elk River Municipal Utilities Commission Meeting Minutes June 9,2020 Page 2 Commissioner Stewart's request, Mr. Berg shared that after working with staff it was determined that all of the amortization should be classified under power supply as a part of the Minnesota Municipal Power Agency buy-in, while the majority of depreciation moved to distribution. Mr. Berg explained that this clarification improved the cost of service results by reducing the subsidization across customer classifications. Mr. Berg thanked Commissioner Stewart for her astute review of the information. Mr. Berg also noted that differences between the allocated cost to serve and revenues for all four classes of customers is less than 5%, which is a very reasonable result in a cost of service analysis. Mr. Berg presented the existing and proposed rates as outlined in Exhibit 4-A. Mr. Berg pointed out that with ERMU's electric rate decrease of 5% in 2019, and a 0% increase in 2020, his recommended 1.5% increase each year from 2021-2024 would result in a 1% overall total change in electric rates from 2018 to 2024. Commissioner Stewart asked if staff would have access to the spreadsheets for future analysis. Mr. Berg responded that it is not standard practice to do so and explained the reasoning behind it. He stated that he would be more than willing work with staff to adjust elements of the study should circumstances change that would warrant doing so. Moved by Commissioner Stewart and seconded by Commissioner Westgaard to receive the Electric and Water Cost of Service and Rate Design Study Final Reports. Motion carried 5-0. 5.3 Leadership Transition—Search Committee Update Ms. Englund returned, after appearing before the commission in May, to provide an update on the status of the leadership search and selection process. Ms. Englund provided an update to the commission and noted that based on the quantity and quality of applications received to date, the search process would now be shifting to a passive recruitment model. This involves gathering contact information for key individuals and organizations, emailing them a letter announcing our search process, and inviting them to apply for the position or share the posting with others that may be interested. Ms. Englund also noted there seems to be a misunderstanding of the term "General Manager" amongst applicants. Ms. Englund requested that the posting add the clarification that this a chief executive position. After discussion, there was commission consensus that for the purpose of advertising for the position opening, the title of "General Manager (CEO)" could be used. Chair Dietz stated he was made aware of questions about the pay range for the position. Ms. Slominski responded that although it wasn't included in the job posting, there is an established pay range for this position that could be shared to help in the recruitment Elk River Municipal Utilities Commission Meeting Minutes June 9, 2020 Page 3 process.There was discussion. Ms. Slominski stated she would email over details on the pay range to Ms. Englund. The ERMU General Manager job description was presented for the commission to receive. Moved by Commissioner Westgaard and seconded by Commissioner Bell to receive the ERMU General Manager Job Description. Motion carried 5-0. 5.4 Field Services Facility Expansion Project Architectural Costs Mr. Kerzman presented the preliminary plans for the field services facility expansion project produced by Kodet Architectural Group, as well as a general schedule to complete the design, construction documentation, and bid preparation so that construction can begin in the spring of 2021. Chair Dietz had questions about the need to remodel the current facility. Mr. Kerzman responded that the existing power plant will not be remodeled but the existing office and garage area will be remodeled. Chair Dietz asked about the timeline for the removal of the two houses currently on the property. Mr. Kerzman responded that they will be made available to the police and fire departments for training this year and removed next year. Moved by Commissioner Nadeau and seconded by Commissioner Stewart to approve up to$846,500 of architectural and engineering fees for the Field Services Facility Expansion Project to be paid out of this year's reserves,with the intent of replenishing reserves from bonding in 2021. Motion carried 5-0. 6.0 BUSINESS DISCUSSION 6.1 Staff Updates In her staff update, Ms.Slominski had reported that,with the exception of two employees,all employees are back in the office working.Chair Dietz asked for further clarifications on when the two exceptions would be back. Ms.Slominski responded that one of the two employees returned to work this week and the other will continue to work from home. Chair Dietz inquired about the ST-11,Sales and Use Tax Refund Request that had been filed and wanted to know what it was for. Ms. Karpinski responded that it was mainly related to the Landfill Gas Plant.Chair Dietz also asked for clarification on the COVID-19 Work Order item from Ms. Karpinski's staff update. Ms. Karpinski responded. Commissioner Stewart had a question on the agenda for the Financial Reserves&Investment Committee meeting that is scheduled for July.Staff responded. Mr.Sagstetter shared that the easement needed to place the turbine being provided through Minnesota Municipal Power Agency's Hometown WindPower program is almost complete. Elk River Municipal Utilities Commission Meeting Minutes June 9, 2020 Page 4 Chair Dietz had a question on business development initiatives being conducted by the Agency. Staff responded. Ms.Canterbury highlighted from her staff report the annual commissioner self-evaluation will be conducted during the July 14 commission meeting and provided further details on the survey and the timeline for receiving and completing it. Chair Dietz noted that the locators in Mr.Tietz's department have seen a considerable increase in calls for location. Mr. Fuchs responded to a question to clarify his staff update item on the Great River Energy Refuse-Derived Fuel Facility. Mr. Kerzman noted that with the Office 365 email transition staff would need some of the commissioners to bring their tablets into the office to be updated. 6.2 Future Planning Chair Dietz announced the following: a. Regular Commission Meeting—July 14, 2020 b. 2020 Governance Agenda 6.3 Other Business Chair Dietz noted that the commission was planning to return to in person meetings in July, which will require the use of the City Council Chambers to have enough space for adequate social distancing. Ms. Slominski asked if the Commission would be open to allowing staff members to participate electronically if they requested it later. Chair Dietz said that could be an option. Chair Dietz had a question on the status of MMUA Summer Conference. Ms. Canterbury responded that the event is still scheduled to take place. 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 4:28 p.m.Motion carried 5-0. Minutes p ared b Tony Mauren. J n J. Di E M mmission Chair Tina Allard, i y Clerk Elk River Municipal Utilities Commission Meeting Minutes June 9, 2020 Page 5