3.0 ERMUSR 12-12-2006 ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
November 14,2006
Members Present: Jerry Takle,President;John Dietz,Vice Chair;James Tralle,Trustee
Staff Present: Bryan Adams,General Manager; Glenn Sundeen,Line Superintendent;
Theresa Slominski,Finance Director/Office Manager;
Troy Adams,Engineering Manager;Judy McSpadden,Recording Clerk
Other Present: Lori Johnson,City Administrator;Nick Zerwas,Future City Councilman;
Greg Oxley,MMUA
1. Call meeting to order November 14,2006
President Jerry Takle called the November 14,2006,meeting to order.
2. Consider Utilities Agenda
Bryan Adams added one item for discussion under Other Business. John Dietz moved to
approve the November 14,2006,Utilities Agenda as amended. James Tralle seconded the
motion. Motion carried 3-0.
3. Consider Consent Agenda
John Dietz questioned the purchased power sales difference from last year to this year,
staff responded. John also verified the overtime would stop, Glenn Sundeen responded the
only overtime would be due to outages but much of the ovetime now is in the water
department. Jerry Takle asked about the check verification process, staff responded. John
Dietz moved to approve the Consent Agenda as follows:
October Check Register
October 10,2006,Minutes
Financials
James Tralle seconded the motion. Motion carried 3-0.
5.1 Staff Up-dates
Bryan Adams reviewed the advertising for Security System monitoring. There have been
numerous inquiries from residents that were being monitored by another company and are
now looking into utilizing our monitoring service because their contracts are about to expire.
John Dietz asked if the resident would have to buy a new system or if the existing system in
the home would work. Bryan responded that we could utilize the existing system. Bryan
briefed the Commissioners on the upcoming need to invest in transmission lines,the future
territory takeover within the City limits of Elk River from Connexus,and MMUA discussions
involving renewable energy and the language behind it. Two employees submitted their
resignation,one from the office and one from the line crew. Staff is currently seeking to fill
the office position,but the lineman position won't be filled until after the first of the year.
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Regular meeting of the Elk River Municipal Utilities Commission
November 14,2006
Glenn Sundeen reported on the current projects. The rebuild on County Road 33 is still in
progress. The cable is in place for the Otsego rebuild and staff is currently working on the
conversion process. Station 14-Bank 2 is operational and on line,and staff is also working
on the additional feeder for western Elk River.
Troy Adams is busy updating the maps books due to the numerous projects and rebuilds
completed this year.
Theresa Slominski reported that the Website for Elk River Municipal Utilities is now live
and can be found at: www.elkriverutilities.com . First National Bank now has a website
based program that will alleviate additional software requirements on our end for ACH file
transfers,and offers more secure protection of information. The Health Fair will be on
Thursday for all employees to attend. Theresa also informed the Commission of the letter
received from the auditing company and the changes they were implementing in the auditing
process.
Lori Johnson informed the Commission that the garbage rates will not be changing until
2008. The new sewer rate will be implemented in April of 2007 and the new sewer
connection fee was approved.
5.2 Review Wholesale Electric Rate
Great River Energy's preliminary wholesale electric rates for 2007 were reviewed.
GRE's overall rate increase is 4.8%,Elk River Municipal Utilities costs increase is actually
5.61%due to load factor and the end of the 5%option rate. The rate change is as follows:
Existing Proposed
Summer Demand $19.97/kw $18.75/kw
Spring/Fall Demand $ 8.51 /kw $ 8.25 /kw
Winter Demand $12.33/kw $11.75/kw
Energy $.02682/kwh $.03006/kwh
Growth Demand $12.10/kw $11.98/kw
5%Option Demand $ 6.81 /kw Expired
5%Option Energy $.02797/kwh Expired
There will be approximately$143,000 difference between budgeted and projected amounts.
5.3 Review Electric&Water Financial Projections
Twice annually the electric and financial projections are updated to ensure the necessary
financial resources are available in the future. The electric and water projections reflecting the
2007 budget assumptions were reviewed.
5.4 Review & Consider 2007 Electric&Water Budget
The proposed 2007 Elk River Municipal Utilities budget was reviewed. Some changes
were made to the preliminary budget. Discussion followed regarding the changes and
decreasing rates. John Dietz would like to see a reduction in rates for the demand customers.
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Regular meeting of the Elk River Municipal Utilities Commission
November 14,2006
The$143,000 difference from item 5.2 would allocate half($70,000)in rate reduction for
these customers. Staff will complete the changes and present it at the December meeting for
approval.
5.5 Review&Consider Data Center Service Agreement
The Electric Service Agreement for the United Health Group Data Center was reviewed.
Staff recommends approving this agreement so Elk River Municipal Utilities can move
forward with our phase of the project,which includes engineering for the new electric feeder,
engineering for the additional substation,and material procurement. United Health Group will
sign the agreement on November 21,2006.
Motion by John Dietz to allow Jerry Takle and Bryan Adams execute the contract with United
Health Group once the agreements are signed on November 21 S`. James Tralle seconded the
motion. Motion carried 3-0.
6.1 Review & Consider Bid Tabulation for 69kv Transformer
On October 26,2006,bids were received for a new 69kv transformer. This transformer
will be incorporated into the new Waco Substation that will serve among other entities,the
new United Health Group Data Center. Staff recommends award be given to the lowest
responsive bidder,Virginia Transformer Corp.
Motion by James Tralle to award the 69kv transformer to Virginia Transformer,the lowest
responsive bidder at the price not to exceed. John Dietz seconded the motion. Motion carried
3-0.
6.2 Review& Consider Bid Tabulation for Twin Lakes Watermain
At the August 22,2006,Elk River Municipal Utilities Commission meeting,
authorization was given to prepare plan specifications and secure bids for two watermain
projects along Twin Lakes Road.
The first is from Trott Brook South to 175th Avenue booster station which will loop the
watermain for the Johnson Street water tower. Bids were received on October 31,2006.
The second project was to construct a watermain from Water Treatment Plant#7 to County
Road 12. This project would reduce system pressures so both Wells#7 and#8 could be
operated together. Part way through the engineering phase,it became obvious this would be
an expensive project and well above our initial estimates. This project will eventually be
required,but in the short term we can adjust some control valves at Water Treatment Plant#7
to reduce pressure when the pumps start at Wells#7 and#8. When we construct the Well in
Twin Lakes Estates,this watermain will be constructed. Bid tabulations were reviewed for the
Trott Brook South to 175th Avenue watermain project.
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Regular meeting of the Elk River Municipal Utilities Commission
November 14,2006
Motion by James Tralle to award Ellingson Drainage,the lowest responsive bidder,the Twin
Lakes Watermain project and delay the watermain project from Treatment Plant#7 to County
Road 12. John Dietz seconded the motion. Motion carried 3-0.
6.3 Review& Consider Bid Tabulation for Electric Wire
On November 6,2006,electric wire bids were received for our anticipated 2007 electric
projects. The 1000 KCMIL wire is for the United Health Group Data Center. This was bid
out earlier this year because of the longer lead times. Staff reviewed the recommendations.
Motion by James Tralle to award the 2007 cable bids recommended by staff as follows:
Border States awarded 1000 KCMIL,#1/0 15kv Primary,#2/0 Triplex Converse,and#4/0
Penguin;Resco awarded 1-1/2"Carlon Flex; and Wesco awarded#4/0 15kv Primary and
#336 KCMIL Merlin. John Dietz seconded the motion. Motion carried 3-0.
6.4 Review& Consider Secure Information Policy
Several times a year we write-off bad debts and turn them over to a collection agency. A
good way to find these past customers is through Social Security numbers or Drivers License
numbers. In order to collect these numbers a Customer Privacy Policy is desirable. Staff
recommends adopting the attached Customer Privacy Policy. James Tralle questioned the
validity of the social security numbers and asked if we could get driver's license numbers also.
Bryan Adams said a lot of companies are going back to a deposit,but we would like to avoid
that if at all possible.
Motion by John Dietz to adopt the attached Customer Privacy Policy. James Tralle seconded
the motion. Motion carried 3-0.
Other Business
Bryan Adams introduced Greg Oxley of MMUA. Changes will happen in the transmission
line electrical area. Greg informed the Commission of the predicted substantial rate hikes that
will be implemented in transmission rates for Utilities not owning transmission lines. Greg
strongly advises the Elk River Municipal Utilities invest in the transmission system to lessen
future rate increase hardships. By investing in the transmission system you are investing in
the future. There are initial consulting fees to be paid of$50,000 along with a Certificate of
Need that would be another$300,000 and then bond for$2 to $3 million initial investment.
The rate of return is estimated to be 12%which would offset increase power cost and allow
bond payback. James Tralle asked if the rate of return was guaranteed, Greg responded there
were no guarantees. James Tralle then asked who would be in the group that the Utilities
would be investing in,Bryan responded. Bryan Adams asked the Commissioners if they
could meet next week to go over the financial projections and talk with a few people who
could answer particular questions regarding this venture.
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Regular meeting of the Elk River Municipal Utilities Commission
November 14,2006
A special meeting was scheduled for Tuesday,November 21st at 4:00 p.m. in the Utilities
conference room.
The next regularly scheduled meeting of the Elk River Municipal Utilities Commission
will be Tuesday,December 12,2006.
President Jerry Takle adjourned the regular meeting of the Elk River Municipal Utilities
Commission at 5:45 p.m.
R ectfully s mitt d,
Judy McSpadden
Recording Clerk