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11-09-2021 ERMU MIN ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT THE UPPERTOWN CONFERENCE ROOM November 9, 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; and Kristie Elfering, Elfering&Associates 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. Ninow requested that 5.7 County Road 13 Reconstruction Project Update be moved up to follow Open Forum as Kristie Elfering of Elfering&Associates was in attendance via Zoom for this agenda item. Moved by Commissioner Nadeau and seconded by Commissioner Bell to approve the amended November 9,2021,agenda. Motion carried 5-0 1.4 Recognition of the APPA Smart Energy Provider Designation Elk River Municipal Utilities Commission Meeting Minutes November 9, 2021 Page 1 Mr. Sagstetter informed the Commission that at the American Public Power Association's (APPA)Customer Connections Conference, ERMU had received the Smart Energy Provider designation for the second time. He provided background on the designation which recognizes public power utilities for their focus on energy efficiency, sustainability, renewable energy, and customer relationships. Mr. Sagstetter noted that ERMU's partnership with the Energy City Commission is a benefit to this effort and he thanked the Commission for their support of this designation program. 1.5 Recognition of the APPA Excellence in Public Power Communications Award Mr. Canterbury was pleased to inform the Commission that ERMU was one of 38 utilities nationwide to receive an Excellence in Public Power Communications Award at the APPA Customer Connections Conference.The award was in recognition of a video about pole top rescue training that ERMU had produced and submitted. Moved by Commissioner Stewart and seconded by Commissioner Nadeau to receive the APPA Excellence in Public Power Communications Award. Motion carried 5-0 2.0 CONSENT AGENDA(Approved By One Motion) Moved by Commissioner Westgaard and seconded by Commissioner Bell to approve the Consent Agenda as follows: 2.1 Check Register—October 2021 2.2 Regular Meeting Minutes—October 12,2021 2.3 2021 Third Quarter Utilities Performance Metrics Scorecard Statistics 2.4 Central Minnesota Municipal Power Agency Brookings-Twin Cities Refinance of 2012A Revenue Bonds,Series 2021—Certificate of Utility System Office and Other City Official Motion carried 5-0. 3.0 OPEN FORUM No one appeared for open forum. 5.7 County Road 13 Reconstruction Project Update Mr. Ninow provided the update requested by the Commission on the County Road 13 Reconstruction project. He informed them that contractors discovered that ERMU's water main interfered with the work to be done. Mr. Ninow stated that Ms. Elfering, attorney Peter Beck, and utilities staff had made a great effort to create a plan for the relocation and insulation work that needed to be done while keeping costs close to original estimate. The new plan required Mr. Ninow to request authorization from the Commission for a change order to allow county contractors to perform the work, for which ERMU would then Elk River Municipal Utilities Commission Meeting Minutes November 9, 2021 Page 2 reimburse the County up to an amount not to exceed $261,882. Chair Dietz had a clarification question on the contractor process. Mr. Ninow responded. Chair Dietz expressed concern about communication with County, noting there had been similar issues between them and the City. Chair Dietz asked if Mr. Ninow had been given notice that there were potential infrastructure conflicts in the project. Mr. Ninow explained that although there were planning meetings, the challenge with this project was that ERMU would have needed to know the elevation of the finished road to properly prepare its infrastructure as it normally would. Mr. Ninow shared that there will be updates to the County's administration process with a goal of avoiding future miscommunications. There was discussion. Commissioner Stewart inquired as to whether GPS technology provided the depth of underground infrastructure. Mr. Ninow responded that it did not at this point. There was discussion. Attorney Beck clarified that if the final amount is at or below the authorized amount it will not come back for approval from the Commission. Chair Dietz asked that staff still report the result. Moved by Commissioner Nadeau and seconded by Commissioner Stewart to authorize payment to Sherburne County for a change order not to exceed the agreed upon amount of$261,882 for mater main pipe relocation and insulating work for the CSAH 13 Project. Motion carried 5-0. 4.0 POLICY&COMPLIANCE 4.1 Customer Data Privacy Policy Ms. Canterbury presented her memo on the Customer Data Privacy Policy, providing background and highlighting changes to the policy, which includes a notice to customers that ERMU complies with both federal and state data privacy guidelines. Moved by Commissioner Bell and seconded by Commissioner Westgaard to approve the revised G.4d1 Customer Data Privacy Policy. Motion carried 5-0 5.0 BUSINESS ACTION 5.1 Financial Report—September 2021 Ms. Karpinski presented her memo on the September 2021 financials. Elk River Municipal Utilities Commission Meeting Minutes November 9, 2021 Page 3 Chair Dietz asked for clarification on the energy adjustment clause budget amount. There was discussion about the fact that ERMU absorbs $500,000 of additional expense beyond the amount that is budgeted and built into the rates. Moved by Commissioner Westgaard and seconded by Commissioner Stewart to receive the September 2021 Financial Report. Motion carried 5-0. 5.2 Annual Business Plan: Rates and Review, Stakeholder Communication Plan Ms. Karpinski presented her memo on the Annual Business Plan, highlighting a proposed 5% rate increase for electric rates, due mostly to wholesale power costs. The memo also proposes a 2.5% increase in water rates. Chair Dietz shared his opinion that there needs to be clear communication to customers that, along with the rate increase, they should expect power cost adjustment charges in 2022. Chair Dietz went on to share his belief that transparency is important and that it would be deceptive to customers to present an artificially low rate increase with the intent to make up the difference through large monthly power cost adjustments. Ms. Slominski shared that the numbers presented are based on the wholesale power provider's best estimate and that there has been a substantial increase in costs since the summer. She added that the utilities industry has not been unaffected by increasing inflation.There was discussion. Commissioner Stewart commended Ms. Slominski for utilizing her finance background in asking good questions to the wholesale power provider at its monthly board meeting. Commissioner Stewart explained that it was Ms. Slominski who suggested the provider consider reducing its margins to help curb the increase which the provider ultimately did. Chair Dietz asked if the Commission could receive an email with the communications that will explain the increase to customers before they are distributed. Attorney Beck advised that any comments about the communication be directed to staff and not to other commissioners to be in accordance with Open Meeting Law. 5.3 2022 Utilities Fee Schedule Ms. Canterbury presented the proposed 2022 Utilities Fee Schedule, highlighting changes in electric fees from the previous year, which are: increasing the Minimum Temporary Electric Service Fee from $150 to $220 when an existing transformer is present and increasing it from $500 to $850 when a transformer is not present. Chair Dietz asked if these new prices were based on labor costs. Mr. Geiser confirmed that they were and that these fee levels have been in place for several years and were due for an update. The proposed fees also include the addition of a $20 Meter Installation Fee per individually metered apartment unit. Mr. Elk River Municipal Utilities Commission Meeting Minutes November 9, 2021 Page 4 Tietz explained that the fee covers staff time committed to inspecting multiple meters in an apartment building. Mr.Tietz added that these fees are common in the industry. Ms. Canterbury provided background on changes to water fees, highlighting a less than 2% increase to the Water Access Charge to bring that fee up to the level recommended by ERMU's most recent rate study, and a new Backflow Preventer Noncompliance charge of $100.There was discussion. Attorney Beck asked if it would be a good idea to put a message in the bills to notify people who may not have a backflow preventer registered with the City about the inspection program. Ms. Nelson explained that as staff becomes more familiar with the inspection process there will be an opportunity to reach out to those who may have unregistered devices. There was discussion. Moved by Commissioner Nadeau and seconded by Commissioner Bell to approve the 2022 Utilities Fee Schedule for adoption into ordinance by the City Council. Motion carried 5-0. 5.4 2021 Third Quarter Delinquent Items Ms. Karpinski presented her memo on the 2021 Third Quarter Delinquent Items. Ms. Karpinski commended the customer service department for keeping Write-Offs well below the national average. Chair Dietz noted that they are lower than they have been in the last four years. Ms. Nelson shared that the utilities has been receiving a lot of funds through assistance programs. Moved by Commissioner Bell and seconded by Commissioner Westgaard to approve the 2021 third quarter delinquent items submitted. Motion carried 5-0. 5.5 2021 Assessments Ms. Nelson presented the 2021 Assessments, totaling 13,572.01. Ms. Nelson added that assessments were $2,000 more than last year. She also noted many homeowners sold their properties and title companies paid a portion of these totals. Chair Dietz had a clarification question on the totals. Staff responded. Moved by Commissioner Westgaard and seconded by Commissioner Nadeau to approve the 2021 assessments listing totaling$13,572.01 to take to the City Council for assessment on property taxes. Motion carried 5-0. 5.6 Field Services Facility Expansion Project Update Elk River Municipal Utilities Commission Meeting Minutes November 9, 2021 Page 5 Mr. Kerzman presented his update on the Field Services Facility Expansion Project Update. He notified the Commission that contractors would be installing curbing in the next week as well as a first layer of asphalt. Mr. Kerzman went on to share that the Minnesota Pollution Control Agency would be requiring additional investigation of the soil on the southside of the site. This would include five to six soil borings, costing in the range of$7,500 - $15,000, of which 90%would be reimbursed by the Agency. Mr. Kerzman informed the Commission that roofing contractor had a couple projects canceled and now has extra insulation which could be used to fill the shortage of those materials for this project. The contractor has requested an addition to their contract price citing market increases. It was communicated to the contractor that because there has not been a change to the scope or schedule of the project from ERMU, we do not feel it is appropriate for us to bear those cost increases. At the time of the commission meeting the construction manager had not received a response from the contractor. There was discussion. Mr. Kerzman affirmed that the project is on schedule overall. 5.8 Health Insurance Update Ms. Slominski presented her memo on the Health Insurance Update, pointing out that the Commission was scheduled to review the percentage of deductible funding annually. The proposed contribution for 2022 would not change from the previous year as there had not been a change to the deductible amount. Commissioner Stewart expressed her belief that it was good to continue with last year's percentage for consistency and to aid in recruitment and retention. Moved by Commissioner Westgaard and seconded by Commissioner Stewart to approve a continued 85%employer contribution to HSA deductible funding amounts. Motion carried 4-0. Chair Dietz abstained. 5.9 Financial Reserves & Investment Committee Update Commissioner Westgaard provided an update from the Financial Reserves & Investment Committee. He shared that auditors had recommended that ERMU find ways to grow investments more aggressively. However, the recommendation from the Committee is no change to investments or strategy given the need to have funds available for restricted debt payments and upcoming major capital projects, in particular the field services facility expansion and Highway 169 Redefine. In addition to maintaining cash fluidity, certificates of deposit rates, which is what ERMU is invested in, are generally yielding just 0.5%. Commissioner Westgaard shared that unrestricted cash balances totaled $7.8 million for electric and $7 million for water, with a little over$4.5 million invested. Elk River Municipal Utilities Commission Meeting Minutes November 9, 2021 Page 6 Chair Dietz had a question about the length of the investments ERMU had. Staff responded. 6.0 BUSINESS DISCUSSION 6.1 Staff Updates Ms. Nelson highlighted the item from her update regarding her resignation, with her last day at ERMU being November 29. She thanked the Commission for the opportunities they have provided and the growth she was able to experience with the company. Chair Dietz shared that he was shocked and saddened. Commissioner Stewart thanked Ms. Nelson for doing her job with integrity and exemplifying cooperation among staff.The Commission shared that they would miss her. Ms. Canterbury highlighted the item from her staff update about the APPA Customer Connections Conference and invited Mr. Mauren to share some of his experiences from attending. Mr. Mauren shared his appreciation for the opportunity to attend the conference where he learned a lot from other public power communications staff from around the country. Mr. Mauren and Mr.Sagstetter spoke about their experience in a crisis communications seminar which they found particularly useful. Chair Dietz asked Mr. Geiser when the streetlights on Highway 10 would be turned on. Mr. Geiser said that hopefully that would be done by the end of the week. Chair Dietz asked Mr. Geiser if the City's public works director had contacted him to resolve issues some residents had with the lights that had been installed on the new trail along Highway 10. Mr. Geiser responded that he had spoken with the director about multiple options to resolve the issue. Mr. Sumstad informed the Commission that Journey Lineworker Dave Kollar is no longer with ERMU, and that the position opening would be posted soon. Mr.Tietz shared that leadership team had come to a decision to contract consulting services for the Advanced Metering Infrastructure project with Vass Solutions. Chair Dietz asked for the basis of the decision. Mr.Tietz shared that Vass offered the best value. Chair Dietz asked when staff expects to begin installation. Mr.Tietz laid out a potential timeline culminating in a completion by the end of 2023. 6.2 City Council Update Chair Dietz informed the Commission that the City had received a completed sewer study which showed the City's monthly sanitary sewer user fee that residents are charged was the second lowest in the county while its Sewer Availability Charge (SAC) was one of the highest. Elk River Municipal Utilities Commission Meeting Minutes November 9, 2021 Page 7 However,the consultant did not take into account that many of the comparison cities are a part of the Metropolitan Council district and therefore have an additional fee for sewer availability. Chair Dietz shared that the consultant also encouraged the City to continue to raise rates to build up reserves so it can afford necessary repairs, cover depreciation, and have funds available rather than needing to borrow them. Based on this information the City is proposing a 4.5% increase to the sanitary sewer user fees, and a 2% increase to the SAC for 2022. Ms. Nelson asked if the City had discussed stormwater or franchise fee changes. Chair Dietz said stormwater would increase by 3%and there would be no change to franchise fees. Chair Dietz provided background on the franchise fee system.There was discussion. Chair Dietz provided an update on a presentation Waste Management, Inc. had made to the City about rezoning property for operations.There was discussion. 6.3 Future Planning Chair Dietz announced the following: a. Regular Commission Meeting—December 14, 2021 b. 2021 Governance Agenda 6.4 Other Business There was no other business. 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 4:38 p.m. Motion carried 5-0. Minutes prepared by Tony Mauren. -..,„ A } n J. ' tz, U Commission Chair . / Tina Allard, City Clerk Elk River Municipal Utilities Commission Meeting Minutes November 9, 2021 Page 8