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2.2 ERMUS 05-10-2022ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT THE UPPERTOWN CONFERENCE ROOM April 12, 2022 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 Tom Sagstetter, Conservation & Key Accounts Manager Tom Geiser, Operations Director Chris Sumstad, Electric Superintendent Mike Tietz, Technical Services Superintendent Dave Ninow, Water Superintendent Tony Mauren, Executive Administrative Manager Jenny Foss, Communications & Administrative Coordinator Others Present: Peter Beck, Attorney; Andrew Berg, CPA with Abdo OVERNANCE 1.0 G 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. Pledge of Allegiance 1.2 The Pledge of Allegiance was recited. 1.3 Consider the Agenda There were no additions or corrections to the agenda. Moved by Commissioner Nadeau and seconded by Commissioner Stewart to approve the April 12, 2022, agenda. Motion carried 5-0 1.4 Resolution Recognizing 2022 Drinking Water Week Mr. Ninow presented his memo on 2022 Drinking Water Week, occurring May 1-7. Mr. Ninow explained that the event helps the community recognize the vital role water plays in their daily lives and how Drinking Water Week fits well into ERMU’s mission to provide safe, reliable water service. Elk River Municipal Utilities Commission Meeting Minutes April 12, 2022 Page 1 36 Moved by Commissioner Westgaard and seconded by Commissioner Bell to adopt Resolution 22-4 Recognizing Drinking Water Week, May 1-7, 2022. Motion carried 5-0 1.5 Resolution Recognizing 2022 Lineworker Appreciation Day Mr. Sumstad presented his memo on 2022 Lineworker Appreciation Day, noting this event recognizes what lineworkers do to keep the lights on. Moved by Commissioner Bell and seconded by Commissioner Nadeau to adopt Resolution 22-5 Recognizing Lineworkers and Designating April 18, 2022, as Lineworker Appreciation Day. Motion carried 5-0 1.6 APPA Certificate of Excellence in Reliability 2021 Mr. Tietz was pleased to informthe Commission that ERMU had again received the Excellence in Reliability award from the American Public Power Association which is based on ERMU’s System Average Interruption Duration Index score. The average outage time across all ERMU customers in 2021 was 18.88 minutes compared to an industry average of 136 minutes. Mr. Tietz went on to acknowledge the dedicated employees of ERMU who continued to provide exceptional services and value throughout 2021. Chair Dietz had a clarifying question. Staff responded. Moved by Commissioner Westgaard and seconded by Commissioner Nadeau to receive the APPA Certificate of Excellence in Reliability. Motion carried 5-0 CONSENT AGENDA (Approved By One Motion) 2.0 Chair Dietz commented that he thought the scholarship winner wrote an excellent essay. Mr. Mauren shared details about their post-secondary education plans and that he hoped Mr. Schmertman would be able to attend a future commission meeting to be recognized. Moved by Commissioner Westgaard and seconded by Commissioner Bell to approve the Consent Agenda as follows: 2.1 Check Register – March 2022 2.2 Regular Meeting Minutes – March 8, 2022 2.3 Resolution Electing Not to Waive Statutory Tort Limits for Liability Insurance 2.4 ERMU’s Tom Bovitz Memorial Scholarship Award Winner Motion carried 5-0. Elk River Municipal Utilities Commission Meeting Minutes April 12, 2022 Page 2 37 3.0 OPEN FORUM No one appearedfor open forum. 4.0 POLICY & COMPLIANCE Nothing was presented for policy & compliance. 4.1 2021 Financial Audit Mr.Berg presented the 2021 FinancialAudit.He stated that the auditors issued an unmodifiedopinion on the financials, including legal compliance, for a completely clean audit. To Mr. Berg’s comment about an increase in Purchased Power expenses, Chair Dietz asked if that increase was due to higher costs for power or because of greater usage. Staff reported there was a 3.4% increase in kWh from 2020. Chair Dietz asked why water production and distribution increased in 2021. Mr. Ninow responded the drought which occurred the previous summer affected those numbers. Chair Dietz asked if there were opportunities to pay bonds early. Mr. Berg responded that it would depend on the prepayment date of the bond. Chair Dietz asked Mr. Berg for an overall opinion on the utilities’ finances, noting he was concerned that margins were getting cut close due to rising costs. Mr. Berg responded that ERMU having cash balance above target reserves provides a cushion. Mr. Berg added that overall finances are in good shape, but that ERMU should continue to monitor its annual budget process and rates. There was discussion. Moved by Commissioner Nadeau and seconded by Commissioner Stewart to receive and file the 2021 Annual Financial Report. Motion carried 5-0. 1 Year End Reserve Balances 4.2 202 Ms. Karpinski presented her memo on the 2021 Year End ReserveBalances. Chair Dietz asked if there were any large water tower painting projects scheduled in the next few years. Mr. Ninow responded that the Johnson Street Water Tower is scheduled to be painted but is budgeted for 2025. Chair Dietz asked if ERMU budgets for the electric service territory transfer costs. Staff responded that it does. Elk River Municipal Utilities Commission Meeting Minutes April 12, 2022 Page 3 38 Moved by Commissioner Stewart and seconded by Commissioner Nadeauto approve the unrestricted reserve balances above target levels for the Electric Utility fund be designated for electric service territory transfer costs, capital infrastructure costs, and Energy Adjustment Clause (EAC) to be capped at $500,000; and for the Water Utility fund to be designated for future capital infrastructure costs. Motion carried 5-0. 1 Utilities Performance Incentive Compensation Distribution 4.3 202 Ms. Karpinskipresented her memo on the 2021 Utilities Performance Incentive Compensation Distribution. Ms. Karpinski noted that staff met all metrics in 2021 except for one, achieving a Customer Average Interruption Duration Index below 120 minutes. Per the policy, this warrantsa multiplierof 95% making qualifying employees eligible for a 1.9% distribution. Chair Dietz noted improvement in the Employee Turnover category. Moved by Commissioner Bell and seconded by Commissioner Westgaard to award the Performance Metrics and Compensation Distribution of 1.9% to qualifying employees per the terms of the policy. Motion carried 5-0. 5.0 BUSINESS ACTION 5.1 Financial Report – February 2022 Ms. Karpinski presented the Financial Report for February 2022. Ms. Karpinski informed the Commission that ERMU had passed through a six-mill power cost adjustment in January and February to customers due to the increase in the Energy Adjustment Clause from the power provider. She added that it will be increased to eight mills in April to recover costs from 2021 and that staff will have to look at covering costs for 2022. Chair Dietz had a clarifying question. Staff responded. Ms. Karpinski provided the Commission with information they had requested at the previous meeting, explaining that charges averaged out for residential customersin 2022 showeda 5% increase from the Energy Adjustment Clause, along with the 3% rate increaseapproved by the Commission. Chair Dietz askedwhy the interest and dividend incomeshowed anegativenumber. Staff explained that this was due to a market value decrease. Chair Dietz asked about the increase to Administrativeexpensesin the water department. Ms. Karpinski explained that now that thewater department is fully staffed thereis more Elk River Municipal Utilities Commission Meeting Minutes April 12, 2022 Page 4 39 participation in the insurance program and therefore higher costs. Moved by Commissioner Nadeau and seconded by Commissioner Westgaard to receive the February 2022 Financial Report. Motion carried 5-0. Field Services Facility Expansion Project Update 5.2 Ms. Slominski presented the Field Service Facility Expansion Project Update. Chair Dietz asked if the project was still expected to be completed in June. Ms. Slominski responded that it was and added that the project managers had a final deadline in the month ofAugust before they could start to incur additional costs for late delivery. Chair Dietz asked if staff has been able to move materials into the facility. Mr. Geiser responded that theyhad not begun that process yet. 5.3 2021 Annual Reliability Report Mr. Tietz presented his memo on the 2021 Annual Reliability Report, sharing that ERMU had a very good year with reliability numbers. He did note that the number of outage minutes has increased which is at least partially attributable to an increase inconstruction projectsin the service territory. There was discussion. Chair Dietz asked about the plan for publishing the reliability numbers. Mr. Mauren suggested publishing it the data in the summer newsletter. Moved by Commissioner Westgaard and seconded by Commissioner Stewart to receive the 2021 Annual Reliability Report. Motion carried 5-0. 6.0 BUSINESS DISCUSSION 6.1 Staff Updates Commissioner Bell had questions for Ms. Slominski on thenegotiations with Verizon Wireless mentioned in her staff update. There was discussion. Ms. Youngs provided background on the large increase in phone calls regarding trash service. She explained that confusion during the transition from Randy’s Sanitation to Republic Services was causing frustration for some customers which has increased staff time dedicated to fielding those calls. Ms. Youngs explained that there was a meeting scheduled with Republic Services that week to discuss resolutions. There was discussion. Chair Dietz asked Ms. Youngs for details from her staff update on increased calls coming from customers who are having late fees added to their accounts after a five-day grace period. Ms. Elk River Municipal Utilities Commission Meeting Minutes April 12, 2022 Page 5 40 Youngs confirmed that late fees, which were halted due to the COVID-19 pandemic, were reinstituted in January. There was discussion. Mr. Mauren acknowledged that it was Jenny Foss’s first day as the Communications & Administrative Coordinator and invited her to introduce herself to the Commission. Ms. Foss shared her background, including 14 years with ISD 728. The Commission welcomed Ms. Foss. Mr. Mauren invited the Commission to provide their plans for the Minnesota Municipal Utilities Association’s Summer Conference so he could begin registration. Mr. Mauren then gauged the Commission’s interest in increasing the number of possible distribution dates for commissioner stipends. Currently they are only sent with the first payroll distribution in a month. Making it possible to provide stipends along with all payroll distributions would allow them to be sent in a timelier manner for events that Commissioners attend other than the regular meeting. The Commission agreed to increase the number of possible distributions for stipends. Mr. Ninow informed the Commission that the contractors for the County Road 13 project have agreed to the pricing recommended by Elfering & Associates for the water main work associated with the project. Mr. Ninow explained that there have been two change orders submitted to the County. The first for $33,969.40 has been approved, the second for $185,074.13 was yet to be approved at the time of the meeting. Mr. Ninow confirmed Chair Deitz’s question as to whether the agreed amount is below the $261,882 not to exceed limit approved by the Commission in November of 2021. ity Council Update 6.2 C Commissioner Westgaardprovided an update from the City Council including a proposed tax increment financing district for an apartment expansion, and worksessionitems focused on new housing developments, and commercial development along Highway 10. Future Planning 6.3 Chair Dietz announced the following: a. Regular Commission Meeting – May 10, 2022 b. 2021 Governance Agenda 6.5 Other Business Chair Dietz asked Mr. Geiser for an update on the Highway 169 Redefine project. Mr. Geiser informed the Commission there was still work to be done on the Highway 10 westbound/Highway 169 northbound ramp and near the KFC. There was discussion. Elk River Municipal Utilities Commission Meeting Minutes April 12, 2022 Page 6 41 7.0 ADJOURN REGULAR MEETING Moved by CommissionerNadeau and seconded by Commissioner Bell to adjourn the regular meeting of the Elk River Municipal Utilities Commission at 4:24 p.m. Motion carried 5-0. Minutes prepared by Tony Mauren. ___________________________________ John J. Dietz, ERMU Commission Chair ___________________________________ Tina Allard, City Clerk Elk River Municipal Utilities Commission Meeting Minutes April 12, 2022 Page 7 42