5.3 ERMUSR 02-09-2021______________________________________________________________________________
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UTILITIES COMMISSION MEETING
TO:
ERMU Commission
FROM:
Theresa Slominski – General Manager
MEETING DATE:
February 9, 2021
AGENDA ITEM NUMBER:
5.3
SUBJECT:
Strategic Plan and 2020 Annual Business Plan Results
ACTION REQUESTED:
Discussion on effectiveness of the Strategic Plan and the Annual Business Plan as organizational
health assessment and planning tools; discussion on ongoing improvement and progress
toward organizational mission and goals.
BACKGROUND:
In August 2017, the commission adopted a comprehensive manual of governance policies
based on the Carver Model of governance. Included in those governance policies is Governance
Policy G.2c Agenda Planning. This policy notes that in the first quarter “The Commission and
Management will review ERMU’s current Strategic Plan along with the results of the Annual
Business Plan for the preceding fiscal year.” This annual review was confirmed and scheduled
through the Commission’s adoption of the 2021 Governance Agenda, which is included in the
monthly commission meeting materials, and which is available to the public.
DISCUSSION:
The Strategic Plan consists of Governance Policies G.1c-g. These policies are summarized on the
attached mission, vision, fundamentals, values, and planning themes handout. Additionally, the
Strategic Plan includes a dashboard of initiatives, a management tool used to: track project
preparation for consideration in the budget, oversee the status of currently implemented
projects, track future priorities currently on hold, and track overall productivity and
organizational resources. The Annual Business Plan consists of the budget and the schedule of
rates.
The purpose for the Strategic Plan is to establish the long-term direction and goals for an
organization and develop the plan to get there. The Strategic Plan is a long-term forward-
looking tool. The purpose of the Annual Business Plan is that of a tool used to measure
organizational performance and provide usable information to take corrective actions to move
the organization toward the long-term direction and goals established by the Strategic Plan.
The Annual Business Plan is a short-term forward-looking tool dependent upon backwards
looking data analysis.
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Review of the Strategic Plan
All policies, decisions, initiatives, and tasks by ERMU on behalf of our consumer owners should
be in direct line with ERMU’s Mission. All planning is conducted through a process which
categorizes initiatives under commission-adopted planning themes aligned with our mission,
vision, fundamentals, and values. This framework clearly defines how ERMU is expected to
operate. This process is intentionally transparent to our consumer owners.
The following include highlights, challenges, and results from the 2020 initiatives as well as
forward-looking initiatives and goals:
Theme 1: Communication – Improve the effectiveness of our communications inside the
organization, with our customers, and with the community.
• Website – A request for proposal was developed and a vendor selection process was
completed in 2019. The website update initiative was budgeted as a 2020 project and
was completed when we went live November 4, 2020.
• Customer Satisfaction Feedback Tools – In the past, we have utilized an in-house
developed customer survey to evaluate our customers’ satisfaction with our service.
There was very low participation in these surveys and data was usually skewed by
recent complaints rather than a true representation of our total customer base. This
initiative was developed to research, evaluate and revise customer satisfaction feedback
processes and tools for better utilization and data.
• Disaster Recovery Plan – Staff established a 2019 initiative to develop a utility specific
Disaster Recovery (DR) plan that would complement the existing City of Elk River
Emergency Operations Plan. While the existing city plan is focused more on emergency
restoration efforts following a disaster, the utilities DR plan will be comprehensive,
identifying all-hazards facing the utilities, utilizing best practices found within the
National Incident Management System (NIMS), and following Incident Command System
(ICS) structures. Included as part of this plan will be a component addressing Business
Continuity throughout the recovery effort. This work is being coordinated with the Fire
Chief’s efforts to update the City of Elk River Emergency Operations Plan. The ERMU DR
plan development continued into 2020 and will be a continuously evolving document as
it is tested during annual exercises and real incidents.
• Jackson Street Water Tower – This initiative was created to complete the water tower
asset transfer to the City, along with funds for the painting and restoration of the water
tower. A grant has been approved for the rehabilitation in 2021. We will also need to
create an MOU for future tower inspections, and plan to partner with the city/ERFD for
a kiosk at the tower also.
Theme 2: Personnel and Governance – Develop our most valuable and vulnerable assets, our
commissioners, employees, leaders, and future leaders.
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• Human Resources – This initiative was created to evaluate and retain dedicated human
resources either through hire or contract services. With the delay in filling the
Administrative Director position, this was identified as being an immediate need and we
hired an HR Generalist in November of 2020.
• Develop Succession Plan for Operations Director Retirement – This initiative was created
to be proactive with the replacement of the Operations Director for either an internal or
external transition. As an internal candidate emerged, we were able to allow for the
transfer of knowledge and ensure a smooth transition in filling this position and the
resulting positions that became available with internal promotions.
• Governance Policy Manual – There was significant progress completed during 2020 in
the continuation of this multiyear initiative. The three remaining polices completed
were: A.1 Service Policies, E.1 Electric Department Rules, and W.1 Water Department
Rules. Additionally, the Dispute Resolution Committee was created and adopted in
January 2021. There are now two smaller policies to be created relating to evaluation of
the mission and values of the organization with competitive rates and margins. These
policies will likely be presented in Q2 of 2021.
• Management Policy Manual- This is a multiyear initiative that follows the Governance
Policy initiative. All Management Policies need to be reviewed and revised as necessary
and this will be worked on throughout the next two years.
• Future Leader Training – As a result of the organizational effectiveness survey action
item, this initiative was created to provide training to employees to prepare and
develop them as future leaders. An organization-wide training was started in 2020 and
will continue through 2021 called Everyday Leadership. Additionally, we are working
with a consultant to provide training specific to those positions that are non-
management yet provide some employee direction (such as leads, forepersons and
specialists) so they are better prepared to be successful in these roles and ready for the
next steps in leadership. This is slated to be implemented in 2021.
• Succession Planning Procedure – The initiative to develop a succession planning and
staff addition procedure for use by the Wage & Benefits Committee (W&BC) was not
started in 2019, was tabled for 2020 due to leadership bandwidth, and is now on the list
for completion in 2021.
• Safety Manual and Training – This initiative calls for the review and revision of safety
procedures and practices with our Minnesota Municipal Utilities Association (MMUA)
safety coordinator, as well as align the American Public Power Association, MMUA, and
ERMU Safety Manuals together. This was started in 2020 and will continue through
2021.
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Theme 3: Strategic Thinking – Create a culture of strategic thinking and ensure line of sight from
mission to vision.
• Landfill Gas Plant – As the current Landfill Gas Plant contracts expire in 2022, the future
of this project is being evaluated with this initiative. Staff has worked with Waste
Management and other stakeholders to determine the possibilities of future operations
of the facility past 2022 and has had positive feedback. Staff is currently working with
legal counsel on new contracts and the transition process.
• Volt/VAR Control – This initiative was created to investigate methods to identify and
predict peak usage times and implement Volt/Volt-Amps Reactive (VAR) control
strategies to reduce peak usage. Information gathering started in 2020 and will continue
into 2021.
• Conservation Improvement Program (CIP) Redevelopment – This was an initiative
started in 2019 with the legislative efforts to modernize CIP and stalled due to
misalignment of goals between the Senate, House, and the Executive branch. For 2020,
the focus shifted to the Governor’s Clean Energy First and then the Energy Conservation
and Optimization Act which also stalled and has now been reintroduced in 2021. We will
continue to work with MMUA and other organizations to advocate for effective
conservation efforts and energy policy.
Theme 4: Technology – Implement the prudent use of technology to improve efficiency and
increase customer choice, communication, and value.
• ESRI GIS Mapping – Work continued on the transition from paper maps to electronic
mapping for all ERMU field staff. The original thought was to utilize ESRI’s Portal platform
to accomplish this, however the decision to add on mPower Innovations Integrator
software was made in an effort to streamline and simplify the user interface with
training and implementation to follow early in 2021. This project will integrate the GIS
models with NISC software databases to provide additional map functionality and
efficiencies as well as make GIS data available to all ERMU employees. The future
roadmap will include transitioning from a geometric network to ArcGIS Utility Network
which is the next evolution of GIS.
• Cyber & Physical Security – With the hiring of our IT/OT Technician, this initiative is back
on track, after stalling last year due to lack of IT resources. The goal of this initiative is to
evaluate all cyber and physical security and then develop comprehensive policy as
needed, working with a joint committee. ERMU IT and the City of Elk River IT have
reviewed the individual policies that came out of the analysis from a third-party
consultant and will be meeting with the full committee in June 2021 to review.
• ERMU Fiber Backbone Buildout Plan – This initiative seeks to plan for having a fiber
network to all our facilities. In 2021 we have budgeted for extensions to the North and
Waco substations.
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• Commission Meeting Room Upgrade – This has been an initiative for a number of years
and was finally completed in 2020 with the hire of our IT/OT Technician. The wallpaper
was removed, and the walls were painted; the white board was removed, and large TV
screens were installed in their place. There was also a camera and microphones installed
for phone calls, remote meetings, and teleconferencing capabilities. There are some
minor additional changes still coming with a cabinet and refrigeration unit along the
east wall.
• Mosaic Utilization – This initiative was created to take advantage of an NISC tool for
interactive displays and graphs to help present financial and other detailed information.
We have not been successful in carving out time for the training and implementation of
this module but hope to in 2021.
• Advanced Metering Infrastructure (AMI) and Smart Grid Analysis – Staff continues to
move forward with analysis on this multi-year initiative. The actual metering equipment
upgrade will not occur until after the construction of the new field services building. The
plan that staff developed includes a list of three potential equipment vendors, identified
the need for an outside consultant to develop the request for proposal for the project,
estimated a project budget of $2 to $3 million, and developed an implementation
timeframe of late 2022 to early 2023.
• iVUE Connect – This is a new initiative to determine how the NISC customer service
platform, iVUE Connect, will work for us. It is likely NISC will discontinue supporting the
current platform at some point and we will be forced to utilize iVUE Connect. This
platform was not designed well for multi-service accounts in the beginning so we
haven’t been training with it as we normally would. As we train this year, we should be
able to identify the shortcomings we will need to work through with NISC.
• NISC Module Integration – There are many modules in NISC that staff is exploring
including: Meter Data Management System (MDMS) which is required to implement
Advanced Metering Infrastructure (AMI), Outage Management Systems (OMS), Mobile
Workforce and AppSuite, etc. Analysis for these modules for potential future
implementation is based on need, return on investment, and other delivered value. NISC
conducted a technology roadmap analysis for ERMU in 2018. The result of that analysis
showed that Mobile Workforce and AppSuite was the foundation and needed to be first.
The initiative to implement Mobile Workforce and AppSuite went live February 3, 2020.
Staff and NISC have been working on improving the process and other items relating to
the implementation. The module at full implementation allows for employees to work
paperlessly and share and access data from the field improving workflow and efficiency.
Theme 5: Growth – Assess the growth curve to make decisions regarding organizational change.
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• Backflow Prevention Program – With the delegation of authority to ERMU for testing
backflow prevention devices on the system, this initiative was created to develop the
policy and implementation plan to track and test the backflow prevention devices
including Reduced Pressure Zones and Pressure Vacuum Breakers. We have partnered
with HydroCorp to track and report testing and have hired a Water Utility Worker to
help perform residential irrigation device testing. The certifications necessary for this
testing will be completed once the state resumes the classes, post-COVID.
• Highway 10 Rebuild – This initiative was created to plan for the work of coordinating
water and electric utility infrastructure changes to accommodate this project. Work is
expected to begin in April 2021.
• Highway 169 Redefine – This initiative was created to plan for the work of coordinating
water and electric utility infrastructure changes to accommodate the Highway 169
project. It is expected the road project will begin in 2022 but there is much preparation
to do in 2021.
• Evaluate Water Model – Our current water model has been maintained by a consultant
and it is on outdated software. The water model needs to be updated and converted to
modern software and this initiative was created to research and evaluate this option.
• Field Services Facility Expansion Plan & Site Preparation – Staff continued to plan for the
future field services expansion that is now budgeted for completion in 2021. Site
preparation work including the relocation of the power plant substation, electrical
feeders, and other underground facilities has been started, and the rental properties
will be removed early 2021. Staff is working with the architectural firm and a
construction manager on final drawings and bid documents.
• New Substation – This initiative was created to help identify land and construction
options for a future substation to serve growth in the southeastern part of Elk River
along Highway 10, and to help facilitate the Highway 169 Redefine project.
• Gary Street Water Tower Rehabilitation – This initiative was completed in 2020 with the
reconditioning of the Gary Street Water Tower. Inspections of the Gary Street Water
Tower indicated that the paint coating was failing in the interior immersion (wet area) of
the tank. Elevation Coating was awarded the bid to perform a complete rehabilitation of
the tank’s interior. The water tower was drained, and the project began on June 1. The
rehabilitation went very well with few complications. The tower was put back in service
August 21, 2020.
Theme 6: Process, Measurement, and Financial Health – Improve processes and measurement
to better determine and report efficiency and effectiveness of organization and to ensure
financial and organizational health.
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• Paperless Initiative Evaluation – This initiative was created to research options to move
to a paperless business environment. There are multiple areas to review for this and
some things have already been put into place without any research done because they
were efficiencies already built into our software that we just needed to incorporate into
our work processes. Payroll Timecards became paperless when we moved to NISC five
years ago. Purchase Order approvals and Accounts Payable processing became
paperless in 2020, with no cash outlay costs involved, only time for implementation
analysis and training.
• Organizational Effectiveness Survey – This will be an ongoing initiative over multiple
years. The first survey was done in 2018 and produced eight initiatives. Several
initiatives were started in 2019, some were completed in 2020 and some additional
ones were started in 2020. We have Employee Training that will continue through 2021,
and Leadership Development will start in 2021 and continue through the next two
years. The standard work will continue in 2021 as well. Many of these initiatives are
going to integrated into ERMU processes and budgets indefinitely. We will conduct
additional surveys to gauge our effectiveness in years to come and evaluate the changes
that we are making along the way.
Review of the 2020 Annual Business Plan
The purpose of reviewing the 2020 Annual Business Plan is to evaluate the budget as a tool in
addition to performance. By evaluating the usefulness of the tool, staff will be better able to
provide monthly information and reports to help the commission evaluate the organization
health and direction. Understanding and exploring the areas of risk and sensitivity factors
improves the governing body’s ability to set policy redirecting an organization toward the short
term and long-term goals. The Annual Business Plan review should help the commission identify
areas of higher risk, evaluate options to mitigate risk, establish their comfort level with risk, and
help the commission clearly communicate expectation in handling the risk.
Overall Electric Utility performance for 2020 was positive on a year where sales were down
compared to our projections due to COVID. Expenses were also down due to COVID, and some
capital projects were not completed, thus resulted in favorable performance. Unaudited
financials indicate that electric margins significantly outperformed budget ($1,134,325 budget,
$2,870,130 actual). Revenue performance was 1% lower than budgeted due to COVID, the
annual expenses were 6% lower than budget. And net to reserve was higher than budgeted (-
$689,453 budget, $2,546,230 actual).
Overall Water Utility performance for 2020 was positive as well. Unaudited financials indicate
that water margins outperformed budget (-$261,954 budget, $833,996 actual). Revenue was up
26% ($2,838,582 budget, $3,568,276 actual) while annual water expenses were down by 12%
($3,100,536 budget, $2,734,280 actual). And net to reserves was higher than budgeted
($386,385 budget, $1,037,770 actual).
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An overview of 2020 budget verses actual (unaudited) for both electric and water is provided in
the attached summary.
Summary
The Strategic Plan and the Annual Business Plan are long-term and short-term tools for the
commission to use in governing the organization, establishing policy to clearly communicate
goals, and helping the commission lead ERMU toward the organizational vision. These tools
should evolve with the commission’s needs to effectively evaluate and govern. It is important to
annually discuss these tools for their function; separate from the review of the data they
contain.
The results and progress from the organization’s 2020 initiatives were positive, and it is good to
recognize our successes.
An important component to organizational health is communication. Communication is critical
in all areas of an organization, both external and internal. This includes communication
between the commission and management, communication between management and staff,
and communication between departments. Specific to communication between the
commission and management, does the commission have what they need to govern ERMU to
sustainable success? Are these tools providing the information the commission needs to
effectively evaluate the organization? Are these tools clearly identifying the areas of highest
risk, enabling the commission to effectively monitor, evaluate, and take corrective action when
needed? Are these tools providing the information needed for the commission to effectively
lead the organization toward our mission and vision? Staff looks for commission discussion
regarding the 2020 results and for discussion regarding the effectiveness of the tools used to
provide the commission with meaningful and timely information.
ATTACHMENTS:
• ERMU Mission/Vision/Fundamentals/Values/Themes
• ERMU Summary Comparison 2020 Budget vs Actual (Unaudited)
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ERMUMN.COM | 763.441.2020 | 13069 ORONO PARKWAY | PO BOX 430 | ELK RIVER, MN 55330-0430
OUR
MISSION
OUR
VISION
OUR
VALUES
OUR
FUNDAMENTALS
To provide our customers with safe, reliable,
cost-effective and quality long-term electric
and water utility services. To communicate
and educate our customers in the use of
utility services, programs, policies and
future plans. These products and services
will be provided in an environmentally and
financially responsible manner.
Provide exceptional services and
value to those we serve.
Honest, accountable and
united in all that we do.
Services that reflect excellence,
dependability and expertise.
Respectful and engaged interactions
that are timely and clear.
A culture that protects our
customers, employees, and assets.
Provide the best value for the
services we deliver.
Safety, Reliability and Quality of Utility Services.
Customer Service and Employee Development.
Competitive Rates, and Financial and
Organizational Health.
INTEGRITY
QUALITY
COMMUNICATION
SAFETY
COMPETITIVE
69
ERMUMN.COM | 763.441.2020 | 13069 ORONO PARKWAY | PO BOX 430 | ELK RIVER, MN 55330-0430
OUR
PLANNING THEMES
Improve the effectiveness of our communications inside the organization, with our customers
and with the community.
Develop our most valuable and vulnerable assets - our commissioners, employees, leaders,
and future leaders.
Create a culture of strategic thinking and ensure line of sight from mission to vision.
Implement the prudent use of technology to improve efficiency and increase customer choice,
communication and value.
Assess the growth curve to make decisions regarding organizational change.
Improve processes and measurement to better determine and report efficiency and effectiveness
of organization and to ensure financial and organizational health.
THEME 6 | PROCESS, MEASUREMENT AND FINANCIAL HEALTH
THEME 1 | COMMUNICATION
THEME 2 | PERSONNEL AND GOVERNANCE
THEME 3 | STRATEGIC THINKING
THEME 4 | TECHNOLOGY
THEME 5 | GROWTH
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ELECTRIC BUDGET SUMMARY 2020 Budget 2020 Actual
ELECTRIC REVENUE 39,244,200$ 38,794,759$
ELECTRIC EXPENDITURES (38,109,875) (35,924,629)
ELECTRIC NET FOR CAPITAL 1,134,325 2.89%2,870,130 7.40%
DEBT RETIREMENT (924,000) (924,000)
PROMISSORY NOTE TO COUNTY (203,956) (203,952)
NET LESS DEBT PRINCIPAL PMTS 6,369 1,742,178
CAPITAL EQUIPMENT/CONSTRUCTION (5,578,360) (3,834,141)
FUND FROM RESERVES 1,000,000 *Field Services Building Site Prep 907,171 *
851,860 *Area 1&2, 3&4 5&6 Loss of Revenue 834,185 *
NET (3,720,131) (350,608)
DEPRECIATION 3,030,678 2,896,838
NET TO RESERVES (689,453)$ *2,546,230$ *
WATER BUDGET SUMMARY 2020 Budget 2020 Actual
WATER REVENUE 2,838,582$ 3,568,276$
WATER EXPENDITURES (3,100,536) (2,734,280)
WATER NET FOR CAPITAL (261,954) -9.23%833,996 23.37%
DEBT RETIREMENT (271,000) (271,000)
NET LESS DEBT PRINCIPAL PMTS (532,954) 562,996
CAPITAL EQUIPMENT/CONSTRUCTION (736,500) (976,241)
FUND FROM RESERVES 440,000 *Gary St Tower 317,836 *
NET (829,454) (95,409)
DEPRECIATION 1,215,839 1,133,179
NET TO RESERVES 386,385$ *1,037,770$ *
* Currently, target reserves are met.
ELK RIVER MUNICIPAL UTILITIES SUMMARY OF YEAR 2020
BUDGET vs ACTUAL (UNAUDITED)
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