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6.1 ERMUSR AGENDA 07-02-2013 Page 1 of 2 UTILITIES COMMISSION MEETING TO: Elk River Municipal Utilities Commission John Dietz – Chair Al Nadeau – Vice Chair Daryl Thompson – Trustee FROM: Troy Adams, P.E. – General Manager MEETING DATE: July 2, 2013 AGENDA ITEM NUMBER: 6.1 SUBJECT: Staff Updates – General Manager DISCUSSION: On June 12 I attended the Great River Energy Annual Meeting. The highlights include plans to bring their Spiritwood Station on line in late 2014, earlier than previously planned. This is due to a second steam customer on site. Also, GRE now anticipate they will have a 0% wholesale power cost increase for 2014. This is good news, unless of course costs get passed along in a Power Cost Adjustment (PCA) instead of a base rate increase. Now that a 0% wholesale power cost increase for 2014 has been announced, it would be difficult for GRE to go back to their members with anything different. However, we will not know until their budgets and rates are finalized in late 2013. I continue to spend a significant amount of time working with cellular companies regarding attachment to our water towers. Sprint is finishing up work on upgrades to their equipment at our Auburn Street Water Tower and has begun work on the upgrades at our Gary Street Water Tower. They have revised their plans for the Johnson Street Water Tower upgrades and those plans have been sent out for structural and engineering review. We have also executed Right of Entry agreements with Verizon for the Gary and Johnson Street Water Towers so they can determine if they will want to enter into an agreement with us for attachments. We continue to work through the easement issues associated with the old Hardies property. The property corners have been surveyed and our facilities have been located. On June 25, Commissioner Nadeau and I attended our first Minnesota Municipal Power Agency (MMPA) board of directors meeting as agency members. The MMPA annual meeting will be held on Tuesday July 23 at Hazeltine in Chaska, MN. Invitations have already been sent and the RSVP deadline is July 8. I encourage all of our Commissioners to attend as this will be our first opportunity to be introduced to the agency as new members. Representatives from MMPA attended the June 28 Elk River Rotary meeting to introduce the agency and answer questions. 79 Page 2 of 2 On June 21, the Star Tribune ran an article on ERMU’s decision to join MMPA. The article is attached for your review. I have been asked to speak at the Minnesota Public Utilities Commission (MPUC) on September 27 regarding “micro-grids.” I will be one of three presenters at this workshop. They would like to hear about our diesel generation and our ability to provide local generation during an emergency. On June 26, I went to the MPUC with MMUA for a preliminary meeting on the micro-grid workshop. Just a reminder, the MMUA Annual Summer Meeting is coming up August 19-21 in Brainerd, MN. I encourage all of our Commission to consider attending all or part of the meeting. 80 Rates cost Great River big customer: Elk River Article by: David Shaffer Star Tribune June 21, 2013 - 9:09 PM Great River Energy, the state’s second-largest electric supplier whose rising wholesale rates have come under fire, is losing a large customer that decided it could purchase cleaner, cheaper electricity elsewhere. Elk River Municipal Utilities, which for decades has relied on Great River Energy to generate electricity for its customers, said it has signed a deal to obtain future power from the Minnesota Municipal Power Agency (MMPA) owned by 11 municipal power companies. Troy Adams, general manager of the Elk River utility, said Great River’s rising wholesale rates — up 58 percent since 2006 — are the main reason for making the switch, which takes effect in 2018. “The No. 1 driving reason is we want to remain competitive, and wholesale power rates are 75 percent of our costs,” Adams said in an interview. It is the latest sign of discontent among customers of the Maple Grove-based wholesale power cooperative, which is owned by 28 local co-ops that serve 645,000 homes and businesses across the state. Two ethanol producers recently complained to state regulators that Great River has invested in questionable projects, including a new coal-fired power plant, that drove up rates. Great River Energy has denied that its wholesale rates are out of line with other utilities in the region, and last week, its CEO, David Saggau, said at the co-op’s annual meeting that he expects no rate hike in 2014. Unlike investor-owned utilities, whose rates are set by state regulators, most co-ops can legally set rates on their own. Elk River Municipal Utilities, which has nearly 10,000 customers, purchases about 2 percent of the power Great River generates at times of peak demand in the summer. Adams said the Elk River utility was concerned about Great River’s heavy reliance on coal to generate power. About 45 percent of Great River’s generating capacity is from coal-fired power plants, and they are heavily used, producing 70 percent of the co-op’s electricity last year, according to utility data. Such power plants, which are major greenhouse gas sources, could soon face new regulations from the U.S. Environmental Protection Agency to address climate change. “We were worried about potential rate increases because of all of this coal infrastructure,” Adams said. “MMPA is in a much better position.” The smaller MMPA owns no coal power plants, and its sole contract for coal-generated electricity will soon end because the producer plans to retire its coal units. MMPA, which is managed by Avant Energy of Minneapolis, relies mostly on two natural gas-fired power plants and a wind farm. A small generator fueled by food waste will open this year in Le Sueur, Minn., and more wind power is planned, said Oncu Er, vice president of planning for Avant Energy. “We have expectations of things happening in the carbon and emissions world that don’t look good for a coal resource — we do as much as we can to stay away from it,” he said. Beth Goodpaster, an attorney for the Minnesota Center for Environmental Advocacy, a St. Paul nonprofit that has questioned Great River’s reliance on coal, said the Elk River utility is “accurately assessing the risks that lie ahead, and they are taking steps to protect their customers.” Jon Brekke, vice president of member services for Great River Energy, disagreed. He said the co-op’s three North Dakota coal power plants are efficient and will remain competitive even if carbon dioxide emissions are regulated. “We are not facing major investments to keep that coal fleet running,” he added. “As a result we expect it to be very competitive in the market even if carbon prices become part of the market.” The co-op also owns natural gas generators, including two of its newer units, Brekke said. Natural gas prices have remained low over the past two years because the fracking boom has unlocked significant new sources of natural gas. “Will natural gas prices stay as low as they have been is an open question,” Brekke said. One other advantage of the switch from Great River to MMPA is that the Elk River utility gets a seat on the municipal agency’s board. Elk River didn’t have a vote at Great River, whose board seats are reserved for its co-op members. Instead, Elk River had a long-term contract to purchase power, through Connexus, one of the Great River local co-ops. David Shaffer • 612-673-7090 Twitter: @ShafferStrib © 2013 Star Tribune Page 1 of 1StarTribune - Print Page 6/25/2013http://www.startribune.com/printarticle/?id=21257473181 Page 1 of 1 UTILITIES COMMISSION MEETING TO: Elk River Municipal Utilities Commission John Dietz – Chair Al Nadeau – Vice Chair Daryl Thompson – Trustee FROM: Theresa Slominski – Finance and Office Manager MEETING DATE: July 2, 2013 AGENDA ITEM NUMBER: 6.1 SUBJECT: Staff Update DISCUSSION: In preparing this update, the month of June was not finalized and so I do not have updated numbers for the credit card transaction volume. We had 2,019 credit card payment transactions in May and are on track to surpass that for June. I will provide the actual amounts next month. We have begun the process to look into software options. We will be exploring and researching other software products to see what is out there compared to our current software over the next several months. We may need to go out for bid due to the cost of some of the software, and I will keep you updated as our research continues. To fully and properly implement this conversion we are considering how much IT support we will need and what that budget impact will be as well. We estimate we will need a part time (20 hours per week) dedicated person. There are some additional items that came up with the insurance application this year as the renewal process has been started. 1) The valuation of the replacement cost for a historical water tower is being reviewed by the underwriter and will entail an appraisal site visit to complete. We are told that this usually is a larger premium than a regular water tower. 2) The allocation of the utility portion of the office building at 13069 Orono Parkway is being split out similar to a joint tenant situation and we are updating our contents list valuation for this. There will be a new separate premium for this for ERMU. With the construction of the roundabout on Railroad Drive, the utility drop boxes and the post office boxes were temporarily relocated to the parking lot of the glass shop. The boxes will have to be moved again to the other side of the parking lot as construction progresses. A sign has been placed directing traffic to the new location. Upon completion of the roundabout the drop boxes will not accessible by vehicle. We are working with the Post Office to relocate to a permanent location that will be more accessible for customers. 82 UTILITIES COMMISSION MEETING TO: Elk River Municipal Utilities Commission John Dietz, Chair Allan Nadeau, Vice-Chair Daryl Thompson, Trustee FROM: Mark Fuchs Line Superintendent MEETING DATE: July 2, 2013 AGENDA ITEM NUMBER: 6.1 SUBJECT: Staff Updates DISCUSSION:  Had six new house services.  Continue pulling poles on past projects that communication wires were on the existing poles and now they have transferred onto the new poles.  Continue working on Rawlins Street rebuild. We are removing rear lot overhead wire and installing front lot underground.  Finished changing out a pole and some x-arms on GRE Drive that were bad.  Continue working on changing out rusty junction boxes.  Continue working on changing out fuse pads. This has been an ongoing project that had to be done because of our high fault current.  The three phase transformer at Tescom had to be changed out after it faulted. This was not planned and was done after normal working hours.  Connexus called and asked for mutual aid. We sent four guys for two days.  We hired Tony Ross, the summer help, to a full time apprentice lineman position and we are advertising for a journeyman lineman to replace Grant Orrock. Grant’s last day was June 21st. 83 Page 1 of 1 UTILITIES COMMISSION MEETING TO: Elk River Municipal Utilities Commission John Dietz – Chair Al Nadeau – Vice Chair Daryl Thompson – Trustee FROM: Wade Lovelette – Superintendent of Technical Services MEETING DATE: Date: July 2, 2013 AGENDA ITEM NUMBER: 6.1 SUBJECT: Staff Update DISCUSSION:  The Locating department had a total of 436 locate tickets as of June 27, 2013; four of them being emergency tickets, two cancelations, eight meets, 382 normal, 39 updated tickets and one boundary survey. These numbers do not reflect the end of month numbers because of early commission meeting.  So far in June, the Security Systems Department had a total of 89 phone contacts, 10 systems quoted, eight system sales made, nine installs completed, 18 service calls and 10 personal visits. These numbers are from June 1 to June 27, 2013.  Meter Technicians continue with the meter reading, power bill, substation checks and off- peak issues. They continue to change out the three phase meters to radio read meters. Parker School’s electrical system is being upgraded which required new metering on their transformer to be installed.  The power plant staff did the annual urge (now called GVTC) of the generators. They had a great run with no problems. Previously we were required to do an URGE test on the engines. Typically we’d do this in spring. The term URGE was used during the “MAPP” transmission grid days. Now that we are in MISO, this is no longer called an URGE test. The capacity of the engines are adjusted based on maintenance and availably numbers and reflected in an Unforced Capacity (UCAP) rating. The UCAP is updated and adjusted based on the results of the Generating Availability Data System (GADS) report in respect to an annual Generator Verification Test Capability (GVTC) report. So basically, the “URGE test” is now called a “GVTC report.” 84 Page 1 of 1 UTILITIES COMMISSION MEETING TO: Elk River Municipal Utilities Commission John Dietz – Chair Al Nadeau – Vice Chair Daryl Thompson – Trustee FROM: David Berg – Water Superintendent MEETING DATE: July 2, 2013 AGENDA ITEM NUMBER: 6.1 SUBJECT: Staff Update DISCUSSION: We recently changed over an area of our system from low to high pressure. There were 78 commercial customers and about 30 residential customers that were included in the switch. This will help with future development for our system capacity and pressure. Future commercial customers within the affected area will no longer require the utilization of a booster pump to satisfy fire code, which will save them the additional expense. The Freeport Water Tower’s rehabilitation project is moving along. They just recently finished the inside of the bowl and have moved to the outside. Eric has been working with the painters to make sure that safety and keeping the grounds clean are a priority. Eric has also been working with contractors on Sprint’s new antenna upgrade. Angela and Pete have been working on gate valves and have completed the exercising and cleaning of all the valves for the 2013 City road projects. Angela has also been working with potential SMART irrigation customers and is assisting them with best practices in saving water and money through conservation rebates. 85 Page 1 of 1 UTILITIES COMMISSION MEETING TO: Elk River Municipal Utilities Commission John Dietz – Chair Al Nadeau – Vice Chair Daryl Thompson – Trustee FROM: Name – Tom Sagstetter - Conservation and Key Accounts Manager MEETING DATE: July 2, 2013 AGENDA ITEM NUMBER: SUBJECT: Staff Update DISCUSSION:  On Saturday June 29th ERMU staff provided a tour of the Elk River Landfill Gas to Electricity facility along with the wind turbine to Senator Al Franken and members of his staff.  The rain barrel program was very successful. All the rain barrels have been sold. ERMU staff sold and delivered 23 rain barrels and 9 cisterns. This program will be offered next spring again based on the great success.  The ERMU spending and savings on electric efficiency programs is outlined in the table below. Based on past experience 75% of the rebate spending and savings is submitted in the last quarter of the year so the spending and savings are similar to past years. Budget $  Actual  Spent  % of  Budg  kWh  Savings  Goal  kWh  Actual  Savings  % of  Goal  kW  Savings  Goal  kW  Actual  Savings  % of  Goal Residential  $ 68,445    $ 12,619  18%  452,696     125,387  28%  150    63  42% Commercial  $ 119,221    $ 31,953  27%  1,810,785     716,025  40%  360    163  45% Total ERMU  $ 187,666    $ 44,572 24%  2,263,481     841,412  37%  450    226  50%  Working with large industrial customers on distribution system upgrades that may be looked at in the future to accommodate growth and the customer’s special requests for services. 86