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2.2 ERMUSR 11-09-2021ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT THE UPPERTOWN CONFERENCE ROOM October 12, 2021 Members Present: Chair John Dietz, Vice Chair Al Nadeau, Commissioners Paul Bell, Mary Stewart, and Matt Westgaard ERMU Staff Present: Theresa Slominski, General Manager Melissa Karpinski, Finance Manager Jennie Nelson, Customer Service Manager Tom Sagstetter, Conservation & Key Accounts Manager Michelle Canterbury, Executive Administrative Manager Tom Geiser, Operations Director Chris Sumstad, 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; Justin Rice, Senior Project Manager at RJM Construction; Cal Portner, City Administrator 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 Pledge of Allegiance The Pledge of Allegiance was recited. 1.3 Consider the Agenda Mr. Kerzman requested that item 5.3 Field Services Facility Expansion Project Update be moved toimmediately follow Open Forum. CommissionerStewart noted that she would have a question to raise in 6.3 Other Business. Moved by Commissioner Westgaard and seconded by Commissioner Bell to approve the amended October 12, 2021, agenda. Motion carried 5-0. 2.0 CONSENT AGENDA (Approved By One Motion) Elk River Municipal Utilities Commission Meeting Minutes October 12, 2021 Page 1 33 Chair Dietz requested a summary of item 2.3. Ms. Slominski provided background on the partnership with Central Minnesota Municipal Power Agency (CMMPA) that provides them the bonding credit to purchase transmission infrastructure while providing ERMU a portion of the revenue. The certificate is a requirement for CMMPA as they are in the process of refinancing the bond and ERMU is a “major participant,” with a 15% share of CMMPA’ 5%. Commissioner Stewart noted a misspelling of City Administrator Portner’s name on page 38. Commissioner Bell had a question regarding the $1,500 payment to Holiday Stationstores in the check register. Mr. Ninow and Attorney Beck explained that it was related toan easement for the Highway 169 Redefine Project. Moved by Commissioner Bell and seconded by Commissioner Nadeau to approve the Consent Agenda as follows: 2.1 Check Register – September 2021 2.2 Regular Meeting Minutes – September 14, 2021 2.3 Central Minnesota Municipal Power Agency Brookings-Twin Cities Refinance of 2012A Revenue Bonds, Series 2021 – Certificate of Utility System Officer and Other City Official Motion carried 5-0. 3.0 OPEN FORUM No one appearedfor open forum. 5.3 Field Services Facility Expansion Project Update Staff passed out a Field Services Facility Expansion Project financial update from RJM Construction.Mr. Kerzman provided the Commission an opportunity to ask questions about the update. Chair Dietz asked if the items contained in the Changes Being Priced line were to come to fruition, would they be paid for with contingency funds? Mr. Rice responded that a portion of it would, and another portion would come from subcontractor allowances. There was discussion. Chair Dietz asked Mr. Rice his opinion as to whether a Remaining Contingency Amount of $153,380.06 would be sufficient for the remainder of the work to be done. Mr. Rice stated that with the building’s straight forward design and with most of the footprint being an open storage bay, he and his staff felt that there was minimal future risk for major, unexpected expenses. There was further discussion. Elk River Municipal Utilities Commission Meeting Minutes October 12, 2021 Page 2 34 Chair Dietz asked about plans for the mounds of dirt currently on site. Mr. Kerzman explained that any dirt that is still on site will be used in establishing the correct foundation levels. There was discussion. Chair Dietz had a question on the status of the insulation for the project in reference to an industrywide shortage. Mr. Rice explained that he is working with a contractor to locate surplus insulation from other projects. There was discussion. 4.0 POLICY & COMPLIANCE 4.1 Use and Disposal of Utility Property Policy Ms. Canterbury presented her memo on the Use and Disposal of Utility Property Policy and providedbackground on the creation of the policywhich sets out guidelines to regulate the use and disposal of utility property to safeguard against misuse or conflict of interest. A new release of liability and indemnification agreement to be used when utility property is disposed of was also presented. Chair Dietz asked Mr. Geiser what major items the utilities would typically look to dispose of. Mr. Geiser explained ERMU regularly needs to dispose of wire reels, poles, and wood chips. There was discussion. Moved by Commissioner Nadeau and seconded by Commissioner Stewart to approve the revised G.4l1 Use and Disposal of Utility Property Policy. Motion carried 5-0. 4.2 Backflow Prevention Program Update Ms. Nelson presented her memo on the Backflow Prevention Program. Ms. Nelson noted that in 2019 the City designated ERMU as the administrative authority for the backflow prevention program, as plumbing code requires all backflow prevention devices be tested annually. Ms. Nelson pointed out that there will be a penalty for noncompliance on the 2022 fee schedule which will be presented to the Commission at the November meeting. In response to a question from Chair Dietz, Mr. Ninow confirmed customers are complying with the program. Mr. Ninow went on to explain that the program has offered the chance to educate customers about their backflow preventer while ensuring they are working properly. There was discussion. Commission Stewart asked if this new initiative is overwhelming staff. Mr. Ninow responded that it wasn’t,but it was part of these reason ERMU increased a seasonal staff member’s hours to full time. Chair Dietz asked ifpeople are awarethat backflow preventer testing is necessary. Mr. Ninow explained it is a new concept for quite a few people. There was discussion about the notification process. Elk River Municipal Utilities Commission Meeting Minutes October 12, 2021 Page 3 35 5.0 BUSINESS ACTION 5.1 Financial Report – August 2021 Ms. Karpinski presented her memo on the August 2021 Financial Report. Chair Dietz had a clarifying question about the Energy Adjustment Clause. There was discussion. Chair Dietz asked, should ERMU miss its budgeted revenue level, if it would require cutbacks on projects. Ms. Karpinski explained that ERMU capitalizes many projects and therefore the full expense does not depend on one annual budget. There was discussion. Moved by Commissioner Westgaard and seconded by Commissioner Stewart to receive the August 2021 Financial Report. Motion carried 5-0. 5.2 2022 Annual Business Plan: Water and Electric Expenses; and Conservation Improvement Program Ms. Karpinski presented her memo on the 2022 Annual Business Plan: Water and Electric Expenses; and Conservation Improvement Program. She highlightedthe most notable increases which includeadministrative expenses related to theaddition of anew general manager for a partial year and the addition of a full-time inventory assistant, bond interest for the field services facility, contracted tree trimming, and water main expenses related to Highway 169 Redefine project. Chair Dietz asked why ERMU would be contracting tree trimming which typically happens in winter, normally a slower work season for staff. Mr. Sumstad explained that there is increased workload related to the Highway 169 project. There was discussion. Chair Dietz had a few clarifying questions. Ms. Karpinski responded. Commissioner Stewart asked for clarification as to why there was no loss on disposition of property in the water expense budget. Ms. Karpinski confirmed thatthe previous system of accounting for assets did not make it possibleto identify and accurately account for asset removal. As ERMU can now do this accounting with the National Information Solutions Cooperative system, Ms. Karpinski suggested she could include an estimated amountbased on an average from prior years. Chair Dietz asked if there were any adjustments to the Conservation Improvement Program (CIP) budget that resulted from changes to legislation. Mr. Sagstetter responded that the 2022 budget was created using the previous standard but future budgets will be in accordance with the Energy Conservation and Optimization (ECO) Act, which was passed after ERMU created its CIP budget. Future budgets under the ECO Act will include the removal of a spending requirements upon meeting the energy savings requirement. There was discussion Elk River Municipal Utilities Commission Meeting Minutes October 12, 2021 Page 4 36 on the challenges of ERMU meeting their 2021 energy saving requirements and the consequence of not meeting them. 6.0 BUSINESS DISCUSSION 6.1 Staff Updates Chair Dietz asked for an update on the statusoffranchise fees being developed by the City of Otsego. Ms. Nelson shared her opinionthatthe Cityseems to bemoving forward with implementing the fees. Mr. Beck added that ERMU has reached agreed upon terms with the Cityof Otsego’sattorney. There was discussion. Commissioner Stewart referred to an item from Ms. Nelson’s update about the shift in recycling pick up days for 750 homes due to staffing issues, asking if this would be an ongoing issue. Ms. Nelson stated her understanding is that it was a onetime issue, but that the company is still experiencing staffing issues. In reference to Mr. Sumstad’s update, Chair Dietz noted that he has seen the bases for streetlights retuning to Highway 10 following the rehabilitation project, he wondered if this work was being completed by ERMU. Mr. Sumstad confirmed that it was and provided a schedule for the work to be done. 6.2 Future Planning Chair Dietz announced the following: a. Regular Commission Meeting – November 9, 2021 b. 2021 Governance Agenda 6.3 Other Business Commissioner Stewart requested that one of the commission members who also serve on the City Council provide relevant updates from that body at utilities commission meetings. She noted this is a customary practice for other commissions. There was discussion. Chair Dietz and Commissioner Westgaard agreed they could provide the update. 7.0 ADJOURN REGULAR MEETING Moved by Commissioner Westgaard and seconded by Commissioner Bell to adjourn the regular meeting of the Elk River Municipal Utilities Commission at 4:19 p.m. Motion carried 5-0. Minutes prepared by Tony Mauren. Elk River Municipal Utilities Commission Meeting Minutes October 12, 2021 Page 5 37 ___________________________________ John J. Dietz, ERMU Commission Chair ___________________________________ Tina Allard, City Clerk Elk River Municipal Utilities Commission Meeting Minutes October 12, 2021 Page 6 38