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2.2 ERMUSR 01-11-2022ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT THE UPPERTOWN CONFERENCE ROOM December 14, 2021 Members Present: Chair John Dietz, Commissioners Paul Bell, Mary Stewart, and Matt Westgaard Members Absent: Vice Chair Al Nadeau ERMU Staff Present: Theresa Slominski, General Manager Melissa Karpinski, Finance 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 Katy Olson, Lead Water Operator Others Present: Peter Beck, Attorney; and 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 There were no additions or corrections to the agenda. Moved by Commissioner Westgaard and seconded by Commissioner Bell to approve the December 14, 2021, agenda. Motion carried 4-0 1.4 Recognition of Employee Achievement – Katy Olson, Class A Water Operator License Mr. Ninow recognized Lead Water Operator Katy Olson’s achievement in earning a Class A Water Operator License. He went on to share that this licensure demonstrates Ms. Olson’s Elk River Municipal Utilities Commission Meeting Minutes December 14, 2021 Page 1 36 dedication to going above and beyond in her work, as Elk River has a class B system. Mr. Ninow congratulated Ms. Olson. Ms. Olson thanked Mr. Ninow and shared background on setting a personal goal to earn the class A license, highlighting the hard work she put into this accomplishment. Ms. Olson shared her appreciation for the support she received from ERMU. The Commission congratulated Ms. Olson. 2.0CONSENT AGENDA (Approved By One Motion) Moved by Commissioner Bell and seconded by Commissioner Westgaard to approve the Consent Agenda as follows: 2.1 Check Register – November 2021 2.2 Regular Meeting Minutes – November 9, 2021 2.3 Designate 2022 Official Depository and Delegate Authority for Electronic Funds Transfer 2.4 Designate 2022 Official Newspaper 2.5 2022 Utilities Meeting Schedule Motion carried 4-0. 3.0 OPEN FORUM No one appearedfor open forum. 4.0 POLICY & COMPLIANCE 4.1 2022 Governance Agenda Ms. Slominski presented her memo providing a schedule of the Commission’s recurring governance functionsfor 2022. Ms. Slominski explained that having a schedule and making it public creates greater transparency in utilities operations. Commissioner Westgaard asked if there were any changes from last year’s schedule. Ms. Slominski responded that there was not. Moved by Commissioner Stewartand seconded by Commissioner Westgaard to adopt the 2022 Governance Agenda. Motion carried 4-0. 4.2 2022 PerformanceMetrics and Incentive Compensation Policy Elk River Municipal Utilities Commission Meeting Minutes December 14, 2021 Page 2 37 Ms. Slominski presented her memo bringing the2022 Performance Metrics and Incentive Compensation scorecard to the Commission for review and approval. She went on to mention that if there were any desired changes, now would be the time to make them. Ms. Slominski also explained that with the Clean Energy Choice Program Participation sub- category ERMU has exceeded the goal in the past but would like another year to evaluate the appropriate amount to increase the enrollment goal. Commissioner Stewart asked if the enrollment numbers are net totals. Ms. Slominski responded that the totals reflect just the additions to the program. Commissioner Stewart inquired if it would be best to use a net total if the goal is looking to track the growth of the program. There was discussion. Chair Dietz asked how staff has control over this goal. Ms. Canterbury provided details on how staff promotes the program to customers. Ms. Slominski confirmed that Minnesota Municipal Power Agency does pay for printed materials promoting the program when Commissioner Stewart asked. There was consensus among the Commission that the goal to increase enrollment by 15 should be specified as a net increase. Ms. Slominski also highlighted the Water Loss sub-category, explaining that ERMU had not met that goal for two years and that staff had identified some focus points that could improve tracking. There was discussion. Moved by Commissioner Stewart and seconded by Commissioner Bell to approve the Performance Metrics and Incentive Compensation Policy Score Card for 2022 with the specification that the Clean Energy Choice Program Participation sub-category track a net increase to the program. Motion carried 4-0. 5.0 BUSINESS ACTION 5.1 Financial Report – October 2021 Ms. Karpinski presented her memo on the October 2021 financials. Chair Dietz shared that his calculations showed that all other expenses areup 2% while Purchased Power is up 20% and he wondered if there was something that could have been done in the budgeting process to prepare for this increase. Ms. Karpinski highlighted the fact that the Energy Adjustment Clause (EAC) from Minnesota Municipal Power Agency (MMPA) is $2 million higher than the prior year which is the biggest factor along with increased usage. Ms. Slominski added that MMPA’s budget reflects large, unexpected increases that necessitated the EAC. Chair Dietz expressed his concern that there would be a need to utilize reserve funds given expenses planned for 2022. Ms. Slominski noted there would likely be a Power Cost Adjustment passed on to customers for most of 2022. There was discussion. Elk River Municipal Utilities Commission Meeting Minutes December 14, 2021 Page 3 38 Moved by Commissioner Westgaard and seconded by Commissioner Stewart to receive the October 2021 Financial Report. Motion carried 4-0. 5.2 Wage & Benefits Committee Update Ms. Slominski shared that the Wage & Benefits Committee (W&BC) met on November 29 to discuss wage adjustments for 2022. The Committee reviewed the metro average for the Lineworker pay group and the 3% wage adjustment included in the budget. The Committee also discussed plans for benchmarking the other pay groups of Office, Field, and Management in the future. Based on the metro average benchmarking, the W&BC recommended awarding the metro average wage increase of 2.8% for the Lineworker pay group and awarding the 3% wage adjustment included in the budget for the Office, Field, and Management pay groups. Ms. Slominski highlighted future plans for benchmarking the other pay groups which include a thorough review of all position descriptions, participating in an all-position wage benchmarking survey, and determining a compensation review process. Commissioner Westgaard asked if there was information available from Minnesota Municipal Utilities Association. Ms. Slominski responded that there was. Chair Dietz expressed his appreciation for having HR staff to analyze the data. There was discussion. Moved by Commissioner Bell and seconded by Commissioner Stewart to approve the following effective January 1, 2022: 2.8% wage adjustment for the Lineworker pay group 3.0% wage adjustment for the Office, Field, and Management pay groups Motion carried 4-0. 5.3 2022 Annual Business Plan: Budget, Schedule of Rates & Fees Ms. Karpinski presented her memo on the 2022 Annual Budget Plan:Budget, Schedule of Rates & Fees. Ms. Karpinski noted changes from the prior month which include: a doubling in price for transformers, additional cost for a bobcat and a snowblower, water work for the Highway 169 Redefine project, dues and subscriptions, and consulting costs for the Advanced Metering Infrastructure (AMI) project. Chair Dietz asked about four line items from the Electric Budget Summary which are scheduled to be funded from reserves and whether that was a typical amount. Staff said there is variability from year to year but that the amounts are normal/expected. Chair Dietz asked what the $500,000 dedicated to the AMI project will produce. Staff responded that this portion would pay for thenetwork required to run the program and thefirst set of meters. Elk River Municipal Utilities Commission Meeting Minutes December 14, 2021 Page 4 39 Commissioner Stewart asked by how much a capital project would have to exceed budget before it was brought back the Commission for approval. Ms. Slominski responded that she believed the policy set the threshold at $50,000, but that she would need to confirm that and report back to the Commission. There was discussion. Chair Dietz asked ifprojectswere prioritized in case there are not enough funds to complete them all. Ms. Karpinski stated this was done for the electric projects. Moved by Commissioner Stewartand seconded by Commissioner Westgaard adopt the 2022 Annual Business Plan. Motion carried 4-0. 5.4 City of Otsego Electric Franchise Ordinance Ms. Slominskiprovided background on the Otsego Electric Franchise Fee Ordinance and sharedthat ERMU has been working with the City of Otsego to coordinate the rollout and implementation of a franchise fee. Chair Dietz asked if there is an administration fee that ERMU receives for collecting the franchise fee. Ms. Slominski shared that by law the administration of the franchise fee is the utilities’ expense. There was discussion. Moved by Commissioner Bell and seconded by Commissioner Westgaard to accept the City of Otsego Electric Franchise Ordinance. Motion carried 4-0. 5.5 Field Services Facility Expansion Project Update Mr. Kerzman presented his update on the Field Services Facility Expansion project. He shared that crews had finished stormwater piping earlier that day, the north side of the site is at grade level, and roofing materials will be arriving on site, keeping the project relatively on schedule. Mr. Kerzman informed the Commission that there is an additional $150,000 in costs related to foreseen underground conditions. RJM Construction has agreed to use contingency and allowance funds for the excavation work but was looking to have a change order approved by the Commission for the site utilities costs, totaling $57,195.62. Mr. Kerzman explained that this work is related to the Minnesota Department of Labor and Industry requiring a greater slope to the septic line than the civil engineer hadoriginallyplanned for. Moved by Commissioner Belland seconded by Commissioner Stewartto approve Change Order #3 – Site Utilities Changes. Motion carried 4-0. 5.6 2022 General Manager Search Elk River Municipal Utilities Commission Meeting Minutes December 14, 2021 Page 5 40 Ms. Slominski presented her memo on the General Manager Search, sharing that the Search Committee met and reviewed three proposals from search firms and is recommending the Commission approve Baker Tilly as the consultant for this project. There was discussion. Moved by Commissioner Westgaard and seconded by Commissioner Stewart to approve Baker Tilly as the consultant for the general manager search and placement process. Motion carried 4-0. 6.0 BUSINESS DISCUSSION 6.1 Staff Updates Ms. Slominski asked the Commissioners to let her know if they were interested in attending either the American Public Power Association or Minesota Municipal Utilities Association’s legislative conferences. Ms. Slominskishared that sheand Mr. Sagstetter will be the staff members attending those events. Chair Dietz asked Ms. Canterbury about the timeline on receiving communications about the rate increase for the Commission to review prior to distribution. Ms. Canterbury responded that in the interest of providing accurate information to customers, staff is planning to wait until after the Minnesota Municipal Power Agency board meetingwhen there is more information about the 2022 electric rates. Ms. Canterbury explained staff is planning to send an insert that explains the rate change to customers to go along with their February bills which is when the new rates will be seen. Mr. Ninow informed the Commission that Elfering & Associates is still working with the contractor to ensure that ERMU is paying the correct amount in time and materials for the work occurring on County Road 13. Chair Dietz had a question for Mr. Portner about the trail lights along Highway 10. There was discussion. 6.2 City Council Update Commissioner Westgaard provided an update to the Commission on City Council issues that pertain to the utilities. 6.3 Future Planning Chair Dietz announced the following: a. Regular Commission Meeting – January 11, 2022 b. 2021 Governance Agenda 6.4 Other Business Elk River Municipal Utilities Commission Meeting Minutes December 14, 2021 Page 6 41 Commissioner Bell reminded the Commission he would be participating in the January and February meetings remotely. Attorney Beck confirmed that this still meets the Open Meeting Law standard and Ms. Canterbury added that Commissioner Bell would need to be in a public space while participating. 7.0 ADJOURN REGULAR MEETING Moved by Commissioner Bellandseconded by Commissioner Westgaardto adjournthe regularmeeting of the Elk River Municipal Utilities Commission at 4:12p.m. Motion carried 4-0. Minutes prepared by Tony Mauren. ___________________________________ John J. Dietz, ERMU Commission Chair ___________________________________ Tina Allard, City Clerk Elk River Municipal Utilities Commission Meeting Minutes December 14, 2021 Page 7 42