7.2. SR 09-19-2005
Item # 7. 2 .
MEMORANDUM
TO:
Mayor and City Council
FROM:
Pat Klaers, City Admini~~rator
D~~~
September 19, 2005?' ~ -<
DATE:
SUBJECT:
Utilities Commission Update
Councilmember John Dietz is the City Council representativ"e on tlle Elk River :Nfunicipal Utilities
Commission. .l~t tile September 19, 2005 City Council meeting, J olln is scheduled to pro\ride tlle
Council "vith an update on lJtilities activities. i\ttaclled are the draft minutes from tlle September 13,
2005 Utilities Commission meeting.
s: \ Counci!\Pat \ Updates \ Utilities. doc
ELI( RI\7ER l\ll!I\~ICIP~~L lJTILITIES
RE,GlTL~~I~ I\IEETING OF THE
liTILITIES COrVll\lISSION
Septenlber 13, 2005
fv'1en1bers Present: Jerry "rakle~ Presidenl~ John Dietz~ \,Tjce Chair~ Ja111eS Tralle~ Trustee
Stat1~ Present: Br)~an l\dan1s~ Generall\/lanager; Glelu1 Sundeen~ Line Superintendent;
Da\te Berg~ \\7a1er Superintendent~ 1-heresa Slonlinski~ Officel\ilanager
Others Present: i\.nthony Hedlot: I\'1CI\ilU; Lori Jolulson~ City Financial Director
1. Call meeting to order September ]3~ 2005
President JelTy-rakle called the Septenlber 13~ 2005 111eeting to order at 4:00 p.nl.
2. Consider Utilities i\genda
JiITI Tralle moved to appro\/e the Septenlber 13~ 2005 lJtilities i\genda \vith
additional iteITIS for discussion under Other Business. John Dietz seconded the I11otion.
l\/lotion carried 3-0. JOIUl Dietz added t\VO iten1s to other business.
3. Consider Consent ~~genda
Jill1 Tralles lTIo\'ed to appro\"e the Consent ~L\genda as follo\vs:
./\ugust Check Register
i\ugust 16~ 2005 J\/Iinutes
Financials
JOh11 Dietz seconded the Illation. Ivlotion calTied 3-0.
5.1 Staff Up-dates
Bryan Adarns shared that the grap11s previously discussed sho\\/ed an increase in electric
and \vater conslunption. Electrical outages \vere the result of cars hitting poles. Crevv~s are
preparing for projects before the on slot of \vinter.
Glel1I1 Sundeen affill11ed that recent outages \vere 1110re the result of ve11icles than
an)1hing else. The outage in Otsego on Sunday 1110rning \vas fr0l11 a car hitting a natural gas
facility causing a pole fire and bU111ing do\vn \vires. Recent thunderstorlTIS resulted in SI11311
outages \vitl1lightning strikes~ tree lilnbs falling~ \vind~ and a transfornler flooding.
Page 2
T~egular Ineeting of the Elk River l\'lunicipal LTtilities C0l11l11ission
Septen1ber 13~ 2005
Da\'e Berg responded that SU111111er help is fin.ishcd. Next year \ve \vill need 4 people to llush
h}rdrants in a sho11er period of tinle. They are sta11ing to 111odi1)' \vell #8 to increase operating
efficiencies. 12 security systenls \vere sold \v1th 26 contacts being 111adc.
-rheresa S 10111i115k1 reported that the Po\ver Ivlanager LT sers Group senlinar \-vas this \veek.
Budgets are in full s\ving. The nc\v front clerk starts 9:/] 9/'05 and J ud)' \vill be out due to
111ed icallea\'e until 9/22/05.
5.2 69](\7 Transfornler 13id
Bids \vere received for one 69I(\TTransfornler for the \\7est Substation LJpgrade~ and an
option to purchase a second identical Transfornler for the substation 14 Upgrade Project to
service the proposed Target facility. T \\'0 bids \vere received and staff reconlll1cnded the
\\"aukcsha 1~ransfon11er bid \vith a resistance L Te at a cost of $403~350.
Jinl Tralle rTIotioned to accept \\/aukesha Transformer bid and John Dietz seconded.
I\ilotiol1 calTied 3 -0.
5.3 Target Date Center FaciJitv
Providing that EI~j\-ru receives the go ahead for thel-arget Data Center on Septen1ber 15
2005~ the foIlo\ving iten1S \vere proposed to proceed:
1) i\ \vard contract to purchase another lSi\il\l;L\ substation transfornler
2) .A. \vard engineering contract to USG fl}r S20~OOO to design substation
expansion for Station 14. -[he physical expallsion costs are in the S300~OOO
range.
3) i\ \vard engineering contract to lJSG i\j!" approxilnately $15~OOO for drafting
service to produce construction dra\vings for the t\VO required feeders.
4) Secure bids and avv.ard contract for 120~OOO LF of 1000 }(CJ\ilIL alunlinw11
LTRD conductor. i~pproxin1ate cost is S720~OOO. SpeciJlcations are cOlllpleted
and ready for advertising. -[his \vill be a\varded at the October cOlnn1ission
Ineetlng.
John Dietz 111otioned and Jinl Tralle seconded directing stafl~ to proceed llpon
notification [ron1 Target/Ryan. Discussions \vcre held concerning possible cancellation
charges of 1113terial ordered if l-arget backs out of project.
Page 3
Regular Ineeting of the Elk R.iver 1\/lunicipal Utilities C0I11l11ission
Septenlber 13~ 2005
Proposed 'rariff for a L.arge Denland Electric Cust0111er \vas discussed \\,'ith possible
rate study being conducted in spring of 2006.
5.4 2006 })roposcd Capital Budget
l'he second piece of the 2006 budgeting process \vas presented, The 2006 Capital Budget
tor electric. \valer~ and adnlinistration depa11I11ents \vere presented as follo\\'s:
1) f\dn1inistration Proposed Capital Budget
2) E,lecttic Proposed Capital Budget
Equipnlent
Distribution Construction~ Substations & Feeders
Other
4 th Engine at Landfill to be funded Sherburne Count)/
\\later Proposed Capital Budget
\\1 atcr Dept
Electrol1ic TecI1l1ologies Dept
S53~OOO
$288~OOO
$4~060,OOO
$915~500
5650,000
3)
$422,000
$97 ~500
Details of tIle capital budget \vere discussed and \vill be included in final budget
prese.nted in Novenlber.
Jerry T'akle nloved~ J in1 TraUe seconded to offer up to S I OO~OOO to purchase 3 acres of
land at \\/aco and County Road 35 for possible future substation. rvlotion carried ]-0.
S.S Revie,v ,,~ntennas on \'later To,vers
I)rc\,'ious requests for installing C0I11111U11ication antennas on utility \vater to\vers have been
denied due to cost, safety~ space~ and 111aintenance issues. Elk River City council has
requested the utilities to reconsider due to zOlling issues. i\t the July 25, 2005 City Council
ll1ceting, it \vas the consensus of the council that \ve enter into negotiations \vith the
teleC0l11l11Ullications c0111panies to al1ovv' antelulas on our \vater to\vers instead of building
teleC0111111Ullicatiol1 to\vers. Bryan ..;\dalns recently lnet \vith Nextel and discussed the options
available. Nextel \vas going to look into the height and location requirCI11ents and get bacl< to
us. The concern Elk River Ivlunicipal Utilities has is the securi t}' issues~ the 111anpO\Ver stress
it \vQuld put on the \vater departn1ent and \vhat \\'ould Nextel be \\"j lling to pay for rental. Staff
\vas directed to present to the cOI1unission at a later date conditions of \vhich antellnas could
be placed on \vater to\vers,
Page 4
Reg ular 1l1eeting of the E lIc Ri ver [vI unici pal lJti I ities C0111111i ssion
Septen1ber 13,2005
5.6 Purchase Digger Derricl{ Line '[ruck
The proposed 2006 budget contains a $180..000 itenl for trade-in on existing and purchase
of a nc\v Digger Derrick Line Truck. Staff is proposing to trade-in a 1996 GI\JC Digger
Derrick l~ruck, the last gasoline fueled heavy truck in the fleet. Bids are CUITently~ being
solicited and bid results \\i.ill be presented at the October ll1eeting.
5.7 Joint Boards/Comnlission /Council IVleeting
On October 10, 2005 at 6:30 pnl at the lions Park C"enter, a joint Ineeting bet\veen Elk
River's Board/Col11Jl1issions and City Council \\:ill be held. JOl1l1 Dietz updated the group as
to the council's expectations.
6.1 Pronosed Electric Bond Issue
T'he electric bond issue that \vil1 be necessary for 2006 intl-astructure projects \\'a5
re\'isited. The t\\'O options discussed \\'cre conventional bonding or rvl l'vl Lii\ ~ S l\,.lid\vest
ConsortiU111 oflvlunicipal LJtilities (l\'lCl\/IL1) bond pool. /-\.nthony }-'Iedlofof\lCr\'lU Inade a
presentation. 'fhe benefits of ulilizillg l\/lC\/lLT are the lc)\ver costs. C)ueslions arose
concerning cOlnparil1g conventional bonding torvJCI\JlT bonding frol11 a cost perspective~ and
\vhat are the consequences of not dra\ving do\vn the entire bond issue. ~;\nthony Hedlof \vil1
respond.
6.2 Re\'ic,v 2006 Health Plan Rene,val
l'he rlealth Insurance Rene\val for 2006 \vith Blue Cross Blue Shield reflects an increase
of 20.6~/o. Jodi Berge fr0I11 thcOavid Iv'fa11in i\gency addressed tbe C0111111ission via a letter
stating the increase and providing S0111e inforll1ation regarding our history \vith rate increases.
.<\.5 discussed at earlier ll1eetings, the utilities \vill be forlning a \vork task group of en1ployees
to look at inlplen1enting changes to absorb the increase. '[he conmlission discussed that they
\\:ould like to look at different options \vithin the BeBS 111enu of plans~ ultinlately \vith a
reduced cost to the utilities. Staff needs to research the necessity: to bid the health insurance.
Page 5
Regular meeting of the Elk River lvfunicipal Utilities Conul1ission
Septen1ber 13~ 2005
6.3 Investment Policy
~~n investnlent policy \\ias proposed as there is currently none in place. f\t the audit~ the
suggestion \vas 111ade that \ve eXl)lore other conservative investn1ents that 1113Y offer a
111arginally better return. The city~ s policy \vas acquired and 1110dified for the utilities ~ nan1e~
and to include an investnlent COll1111ittee instead of sole responsibility \vith the r:inance
Director. JOhll Dietz 111otiol1ed to adopt the Investnlent Policy as presented and Jinl Tralle
seconded. l\rlotion passed 3-0.
6.4 Electronic Bill Pavrnent Processing \7 eodol'"
Due to the continued gro\\1h of cust0111erS utilizing bill paynlent ser\'ices through tlleir
respective banl(s~ and the processing tiBle CUITently associated \virh it~ an electronic bill
pa)'l11ent processillg vendor \vas proposed. This \vould be approxinlately 1/3 of the ClllTent
cost of stafftinle utilized to process these paynlents and it could be done llluch faster. This
\vould allo\v staff to have Blare tinle to focus on other aspects of custoll1er service. Theresa
S10111illSki l1lade a presentation 011 the bill pa)'111ent process. Questions \vere asked concel11illg
the tel111S of the agreenlent. Jinl Tralle 1110tioned to adopt the electronic bill paynl.ent
processing ve11dor and] 01111 Dietz seconded. 1\/lotion c3J.Tied 3 -0.
Other Business
J Oh11 Dietz questioned if ell) funds could be used for EIiergy City acti\ritjes. Bry'an
i\danls responded they could ifrhe)/ \vere 111easurably energy saving~ for instance~ energy
savillg equipnlcnt for Energy I-louse III.
John Dietz presented a letter frorTI a fornler enlployee \vhich \vas discllssed and a
response \\'ill be forthcol11ing.
l-he l1ext regularly scheduled 111eeting of the Ell( River rVlunicipallTtilities
C0111.l11issiol1 \vill beTuesday'~ October 11 ~ 2005 at 4:00pn1.
President Jerry Takle adjourned the regular 111eeting of the Elk River i\-1unicipal
LTtilities COllli11ission at 6:45p.111.
Respectfully subn1itted~
Theresa S l0111inskj
OfTi ce l\/lal1ager