04-17-2008 ERMU MIN ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
April 17,2008
Members Present: Jerry Talde,President;John Dietz,Vice Chair;Jerry Gumphrey,Trustee
Staff Present: Bryan Adams,General Manager; Glenn Sundeen,Line Superintendent;
David Berg,Water Superintendent;
Theresa Slominski,Finance Director/Office Manager;
Troy Adams,Engineering Manager; Judy McSpadden,Recording Clerk;
Wade Lovelette,Line Foreman; Mark Fuchs,Lead Lineman;
Scott Thoreson,Lead Lineman;Richard Cline,Water Operator;
Angela Hauge,Water Operator
Others present: Lori Johnson,City Administrator; Steve McDonald,Abdo,Eick&Meyers LLP;
Jerry Olsen,Country Crossings Homeowners Association
1. Call meeting to order April 17,2008
President Jerry Talde called the April 17,2008,meeting to order.
Due to the employees present regarding the compensation request, 6.2 was addressed at this time.
6.2 Review compensation request from ER1VIU employees(under separate cover)
Bryan Adams reviewed the 2008 Employee Compensation request including the following:
• 3.66%to keep up with the metro average wage scale.
• Bonus pay for lineman acting as lead lineman during work and after hours.
• Discontinuing the Vision Eyewear program through Outlook Vision.
Commissioners asked for input from employees. Mark Fuchs informed of the need for
documentation on the bonus pay. John Dietz directed staff to survey surrounding businesses on
office positions as he does not necessarily agree with the percent increase for the lineman wage
applied across the board to all employees. Jerry Gumphrey questioned how often bonus pay
occurs. Staff responded it is infrequent and not a large dollar item. John Dietz stated that is
seemed over the last number of years the compensation increase request was done along with
some other request for an additional benefit or increase in a current benefit.He asked it the
linemen felt they would be bringing any future items to the commission or if they felt they had a
good benefit package as it is. Staff responded that they weren't aware of any other benefits out
there now that they should consider. One benefit change that may be presented in the future
would be an increase to the Health Care Savings Plan contribution rates of the employees(this
would not be a company expense.) John Dietz requested that staff bring in an expert to educate
the commission on the practices and implementation of comparable worth requirements.
A motion was made by Jerry Gumphrey to approve a pay increase of 3.66%to staff,to approve
the language presented for the bonus pay policy,and to discontinue the Outlook Vision cost-
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Regular meeting of the Elk River Municipal Utilities Commission
April 17,2008
containment program. John Deitz seconded the motion. Motion carried 3-0.
Since operational staff was present it was decided to discuss agenda item 5.3,Review ARC Flash
Assessment at this time.
5.3 Review ARC Flash Assessment
Staff has completed the ARC Flash Assessment and Clothing Requirements review. This
change will also necessitate a clothing policy change. The proposed policy was reviewed.
Basically,the requirements necessitate providing fire retardant pants to the linemen as well as long
sleeved fire retardant shirts. Bryan Adams commented that,historically,the Utilities provided
shirts for other outside staff as a matter of representation in the community,and there is the
question if they should also be provided the pants. Given the safety requirement of the pants for
the linemen(which does not exist for the other outside staff)it was suggested we not provide pants
to other outside staff. John Dietz questioned the cost of the pants versus the shirts and staff
responded that it would be more,but minimally.John Dietz also questioned the long sleeve
requirement in the summer months and staff responded that the long sleeve shirts would only be
worn in the summer when performing the(potentially hazardous)"hot"work. Staff recommends
adopting the policy as presented.
Jerry Gumphrey moved to approve the policy as presented. John Dietz seconded. Motion carried
3-0.
2. Consider Utilities Agenda
John Dietz has two items to add under Other Business, and Bryan Adams added an item to
discuss under Other Business. John Dietz moved to approve the April 17,2008,Utilities Agenda.
Jerry Gumphrey seconded the motion. Motion carried 3-0.
3. Consider Consent Agenda
John Dietz had some questions on the financials,and also had a question on the check register
as to what the health care reimbursement checks were for. Staff responded it is the flexible
spending accounts reimbursement for health care costs.He questioned if they were handled in
house rather than a third party administrator and staff responded that is correct,they are handled in
house. Jerry Gumphrey moved to approve the Consent Agenda as follows:
March Check Register
March 11,2008,Minutes
Financial Reports
John Dietz seconded the motion. Motion carried 3-0.
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Regular meeting of the Elk River Municipal Utilities Commission
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It was decided to move to item 6.1,Review&Receive the 2007 Financial Audit at this time.
6.1 Review&Receive 2007 Financial Audit
Steve McDonald of Abdo,Eick&Meyers reviewed the 2007 audit and answered questions.
John Dietz asked about the necessity of having separate bank accounts for the payroll and
accounts payable functions. Steve McDonald responded that the interface function of the payroll
system with the general ledger and having separate check stock and check sequences is adequate.
John Dietz also questioned the practice of approving the check register after the checks have been
disbursed in contrast to the city council where all checks are approved and then disbursed. Steve
McDonald responded that it is a common practice with municipals due to timing issues not
coinciding with the frequency of the commission meetings(once a month instead of bi-weekly.)
John Dietz also questioned the debt balances and the increases over the past two years. Steve
McDonald responded that it becomes a matter of taking on the debt or drawing down the reserves.
The utilities have adequate cash flow to be able to make the debt payments and the practice of
projecting the cash flows by utilizing the Springstad Study worksheets is a good one to continually
monitor the best position to take. John Dietz also asked how the auditors had massaged the
numbers to show a decrease in net assets. Steve McDonald responded that it related to the sizable
decrease in contributed infrastructure from 2006 to 2007. It was over$800,000 in 2006 and less
than$300,000 in 2007. At the March Elk River Municipal Utilities Commission meeting,
Commissioner Jerry Gumphrey questioned the check endorsement procedure. This was discussed
as part of management's response to audit items in the Management Letter and the changes that
were implemented to address the concern. Bryan Adams asked if the auditors felt like the utilities
were moving in the right direction and Steve McDonald responded that they did.
Jerry Gumphrey moved to receive and file the 2007 audit. John Dietz seconded. Motion carried
3-0.
Jerry Olsen from the Country Crossings Homeowners Association was asked if he would
like to bring something before the commission. He stated that he was there on behalf of the
Association to represent their concerns related to water rates and the high yearly cost for irrigation.
He also commented that there seems to be a lot of water meter replacement occurring and in
talking with various individuals has found this to be an issue only in Elk River. Jerry Takle
responded that the water in this area comes from the Mt. Simon-Hinkley aquifer and it is very
good water in terms of taste and the low level of treatment necessary. The DNR monitors the
usage of the aquifers and only allows us to take so much out through their permitting process.Part
of the permitting process is demonstration of conservation efforts. We try to encourage
conservation through education, supplying water monitoring devices such as rain gauges,water
meters,and low flow showerheads. We also try to encourage conservation through our rates and
having the various tiers structured so that high users pay the most and adjust their usage
accordingly. The irrigation meters are charged the highest rate with this same end in mind.He also
explained that the aquifer is bowl shaped and the area of Minneapolis and St.Paul sit on top of the
deepest part of that bowl;the area of Elk River is on the shallowest part of that bowl. So it is in
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Regular meeting of the Elk River Municipal Utilities Commission
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our own best interest to be sure that we conserve as much water as possible because we will be the
most heavily impacted when that aquifer is drawn down. Our water then will have to come out of
the river and it won't be as high of quality and will certainly cost more to treat and distribute. Jerry
Gumphrey stated that we are looking towards the future water availability in justifying our rates to
encourage conservation. John Dietz stated that we want to encourage conservation awareness by
charging more,rather than by punishment and citing offenders. Jerry Talde also suggested
looking into drought resistance grasses to reduce the association's water usage. Jerry Olsen
requested some usage information for the past years to be able to analyze the sharp increase as
usage or otherwise. Their association meeting is April 28th at 6:00 at the Library and Bryan
Adams and Jerry Gumphrey stated they would attend the meeting to be able to respond to the
association's concerns and questions.
5.1 Staff Up-dates
Bryan Adams reported that the Business Expo went well and he will be present at the Energy
Expo this weekend.He reported that Theresa was at Twin Lakes School earlier today to give
presentations for their Earth Day event. Northstar Commuter Rail contacted him and desires use
of the Johnson Street Water Tower for an antenna to enhance their rail connection. He will be
meeting with them next week to go over the details.
Troy Adams reported that there were 9 security sales and 13 completed installations for last
month. The substation high side portion of the fuse coordination study has been implemented.
The curb stop tie cards have been scanned and will be integrated into the system map. The safety
committee will be having a speaker give a respect in the workplace presentation to all city staff on
Friday.Also the annual employee lunch/picnic with safety/healthy focus is in the planning for
June. This is an event that is open to all employees of the city and the utilities. John Dietz asked
what we were doing to get the word out regarding our low monitoring fees. Staff responded that
we place advertising in the local paper on a regular basis,and utilize bill staffers to get the word
out.
David Berg reported that the Johnson Street Water Tower is filled and ready to go for this
summer. The footings are in for Well#9 and that project is on schedule. This past fall the water
department took all the irrigation meters out,tested them,and stored them over the winter.Now
they will be placing them for the summer season usage. There are two homes in the Kliever Lake
Fields development that have agreed to be test sites for the Eco-grass.
Theresa Slominski reported that the new stuffing and folding machine will be here next week on
Tuesday. The new printer has already arrived,has been tested,and is working well. As Bryan
stated,she was at Twin Lakes School earlier today working with children in grades 2-6 and felt
this was time well spent to educate the next generation on their responsibility for conservation of
our natural resources. The kids really liked the bike and most were familiar with the compact
fluorescent lamps and their benefit towards conserving energy. The new assistant accountant,
Lorrie,is working out very well. In response to Vivian's retirement announcement, Greg
Scherber will be training to take over her responsibilities as Assistant Office Manager;Patricia
Pope will be training to take over Greg's responsibilities as Office Clerk; and we have hired a new
Clerk Receptionist,Michelle Anderson,who will start May 1st. John Dietz asked if the bills will
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Regular meeting of the Elk River Municipal Utilities Commission
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look the same printing them in-house and staff responded that they would.
Glenn Sundeen reported that tree trimming continues with three crews focusing on that
completely. The issues that were found with the infrared study have now all been completed.
There was some proactive maintenance done to remove several porcelain cutouts and replace
them with polymer cutouts. In doing this many problems were discovered and he estimates that
they saved themselves from at least 6 outages by doing this maintenance. John Dietz stated that
he was out walking one Sunday and noticed that there were some utility employees doing some
work at a customer's place of business and questioned why that was done on a Sunday when we
would have to pay double time wages. Glenn responded that it was at the customer's request as
the only time they had available and we will always try to work with the customers.
5.2 Review Jackson Street Water Tower Issue
At our March 2008 Elk River Municipal Utilities Commission meeting,the future of the
Jackson Street Water Tower was discussed. The tower either has to be painted or removed. The
estimated cost to remove the tower is in the $35,000 range and then the lot can be redeveloped.
The estimated cost of painting is in the$55,000 to$60,000 range with repainting every 10 to 12
years.
Lori Johnson from the city was present to be able to report to the HPC when they meet to
discuss the future of the tower.
John Dietz made a motion that we recommend to the City Council that if someone/organization
shared in the cost of painting the tower,the Elk River Municipal Utilities would move forward
with painting it. Jerry Gumphrey seconded. Motion carried 3-0.
6.3 Review&Consider Bid Tabulation for Electric Cable
On April 9,2008,bids were received to furnish and deliver our electric cable needs for the
2008 planned work. Staff recommends awarding to the lowest responsive bidders,Border States
Electric Company for the primary cable and Resco Electric Utility Supply for the secondary cable.
John Dietz questioned how the escalation cost works. Staff responded.
Jerry Gumphrey made a motion to award the bid to Border States Electric Company for the
primary cable and Resco Electric Utility Supply for the secondary cable. John Dietz seconded the
motion. Motion carried 3-0.
6.4 Review& Consider Bid Tabulation for Install UG Cable
The 2008 electric budget contains a$180,000 item to replace the 30 year±cable in the
Brentwood area. On April 9, 2008,bids were received to install the underground cable. Staff will
be installing the necessary equipment basements,transformers, and cable terminations. Staff
recommends awarding to the lowest responsive bidder,Michels Pipeline Construction. Jerry
Gumphrey questioned the accuracy of the low bid since it was substantially below the others
presented. Staff responded that they did question the bidder and was told they really wanted the
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Regular meeting of the Elk River Municipal Utilities Commission
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business and so had purposely bid very low. They are a good contractor and they have done many
successful projects for us.
John Dietz moved to award the bid to Michels Pipeline Construction for the installation of the
underground cable in the Brentwood area. Jerry Gumphrey seconded. Motion carried 3-0.
6.5 Review and Consider 1st Quarter 2008 Write-Offs
The first quarter of write-offs were reviewed. When these are written off our system they are
turned over to Advantage Collection Agency to further pursue. The collection agency's success
rate is about 21%. Staff started collecting social security numbers and deposits in July of 2007 so
it should become easier to locate for collection in the future. Staff recommends approval of the
write-off list for the first quarter of 2008.John Dietz noted that there were some trash items listed
and thought that the city was able to assess those. Staff responded that is the case and the city is
still given the option to pursue that with these amounts. John Dietz also asked if the utility can
assess any of these. Staff responded that we can for water,but not for electric. A significant
portion of the write-offs are for renters and so we can assess the landlord if we choose. For a
home owner,it needs to be done before the home is sold and we are not always able to identify it
as uncollectible before the parties move out.
John Dietz motioned to approve the write-off listing presented. Jerry Gumphrey seconded.
Motion carried 3-0.
6.6 Review&Consider Cogeneration Agreement
There are a couple of small electric generators on Elk River Municipal Utilities system
that operate intermittently. As the renewable energy fad becomes more popular with other
technologies,we will see more of the smaller electric generators on our system. The Public
Utilities Commission(PUC)has developed a uniform statewide contract for small cogeneration
projects less than 40KW that utilizes net metering. Although Elk River Municipal Utilities does
not fall under the PUC guidelines,we should have a contract for such applications. The PUC
contract was modified with minor corrections including Elk River Municipal Utilities
Commission substituted for Public Utilities Commission. Staff recommends adoption of this
blanket agreement.
Jerry Gumphrey motioned to adopt the blanket agreement as presented. John Dietz seconded.
Motion carried 3-0.
6.7 Review GRE's Power Cost Adjustment
Elk River Municipal Utilities will continue to see some significant PCA(power cost
adjustment)on its power bills from Great River Energy. The Elk River Municipal Utilities keeps
a separate PCA account that is zeroed out annually. As Great River Energy charges or rebates the
PCA,we pass it on to our customers as a positive or negative charge. Bryan Adams explained the
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Regular meeting of the Elk River Municipal Utilities Commission
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PCA in greater detail and stated that he received a phone call from GRE earlier this week and the
original PCA for April was projected to be around$220,000,but is now projected to be closer to
$80,000. This is good news but a PCA charge will most likely continue into the next few months.
We will continue to monitor this and keep you updated.
Other Business
John Dietz thanked the utilities for the donated electricity for the library and questioned whether
we record the contribution at our cost or retail cost. Staff responded that it is the retail cost to cover
the overhead associated with the power usage,just as with our other customers. John Dietz also
stated that he was erecting a flag pole memorial at the library and was told that the utilities will
assist in the installation.
John Dietz had a copy of the recent"Connector"article from the local paper and was wondering if
it could be placed in the city's newsletter and on the websites of both the Utility and the City. Staff
responded that the newsletter is already too full to include our large Connector articles but that
certainly the websites could be utilized to host this information as well.
Bryan Adams stated that we have moved forward with getting a return on our investment in
transmission equity of approximately$65,000 per year with MISO.He presented an agreement
that turns over operational control to MISO through CMMPA and requested authority for himself
and Jerry Takle to execute the contract pursuant to meeting with GRE to ensure that there is no
conflict of interest. He stated that by turning over operational control,it is agreeing to take load
off of our system at MISO's direction, should the need arise.
John Dietz moved to accept the agreement and authorize Jerry Takle and Bryan Adams to execute
the agreement after meeting with GRE. Jerry Gumphrey seconded the motion. Motion carried 3-
0.
The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be
Tuesday,May 13,2008.
President Jerry Takle adjourned the regular meeting of the Elk River Municipal Utilities
Commission at 5:55 p.m.
Respectfully submitted, . A
fA
eresa Sl nski
F.
ce Direct.
l• ice anager
B an Airs
G eral Manager