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03-14-2023 ERMU MINELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT THE UPPERTOWN CONFERENCE ROOM March 14, 2023 Members Present: Chair John Dietz, Commissioners Paul Bell, Mary Stewart, Matt Westgaard, and Nick Zerwas ERMU Staff Present: Mark Hanson, General Manager Sara Youngs, Administrations Director 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 Chris Kerzman, Engineering Manager Tony Mauren, Governance & Communications Manager Parker Theisen, IT/OT Technician Dan Plude, Inventory & Procurement Foreperson Tony Hubbard, Electrical Technician Others Present: Jared Shepherd, Attorney 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 Oath of office Mr. Mauren administered the oath of office for new commissioner Nick Zerwas and the reappointment of Commissioner Westgaard. 1.4 Consider the Agenda Moved by Commissioner Westgaard and seconded by Commissioner Bell to approve the March 14, 202% agenda. Motion carried 5-0 Elk River Municipal Utilities Commission Meeting Minutes March 14, 2023 Page 1 1.5 Contribution from Zimmerman Fire Relief Association Mr. Plude, who had previously served as a firefighter in the city of Zimmerman, was in attendance on behalf of the Zimmerman Fire Relief Association to present a check for $1,800 to the Commission for the purchase of an automated external defibrillator. Mr. Plude provided background on the association and explained that funds are generated through local gambling operations with proceeds totaling $185,000 being provided to local organizations over the previous year. Mr. Plude then presented the check to the Commission. Moved by Commissioner Bell and seconded by Commissioner Stewart to adopt by motion a resolution acknowledging the contribution from the Zimmerman Fire Relief Association. Motion carried 5-0 1.6 Recognition of Employee Longevity —Tony Hubbard,12 years Mr. Hanson provided background on ERMU's longevity pay program and presented Electrical Technician Tony Hubbard who had reached 12 years of employment, which equates to a distribution of $2,025 through the program. Mr. Hubbard shared his appreciation for working with ERMU, adding his belief that the management cares for staff which is a contributing factor to him remaining with the Utilities. Chair Dietz presented the check to Mr. Hubbard. There was a round of applause. 1.7 2023 Election of Officers — Chair and Vice Chair Mr. Mauren invited the Commission to discuss and appoint the chair and vice chair positions, each for 12-month terms. Moved by Commissioner Westgaard and seconded by Commissioner Zerwas to reappoint Chair Dietz as Chair. Motion carried 5-0. Moved by Commissioner Bell and seconded by Commissioner Westgaard to appoint Commissioner Stewart as the Vice Chair. Motion carried 5-0. Elk River Municipal Utilities Commission Meeting Minutes March 14, 2023 Page 2 1.8 2023 Committee Appointments The Commission discussed previous committee appointments and the chair positions. Moved by Commissioner Zerwas and seconded by Commissioner Stewart to make the following committee and committee chair appointments for 2023: Reappoint Chair Dietz and Commissioner Stewart to the Wage and Benefits Committee with Chair Dietz to continue to serve as committee chair. Reappoint Commissioner Westgaard and appoint Commissioner Zerwas to the Financial Reserves and Investment Committee with Commissioner Westgaard to continue to serve as committee chair. Reappoint Commissioner Stewart to the Information Security Committee. Reappoint Commissioner Westgaard and Commissioner Bell to the Dispute Resolution Committee with Commissioner Westgaard to continue to serve as committee chair. Motion carried 5-0. 2.0 CONSENT 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 — February 2023 2.2 Regular Meeting Minutes— February 14, 2023 2.3 Commission Policy Review — G.1c — Mission Statement 2.4 Memorandum of Understanding with the City of Elk River for Customer and Billing Services Motion carried 5-0. 3.0 OPEN FORUM No one appeared for open forum. 4.0 POLICY & COMPLIANCE 4.1 Annual Commission Orientation Mr. Mauren presented the updates to the policy manual that had occurred over the previous 12 months. They consisted of: Elk River Municipal Utilities Commission Meeting Minutes March 14, 2023 Page 3 G.2a2 — Streetlight Installation and Maintenance Agreement — June 14, 2022 — The agreement was updated to clarify the partnership between the City and ERMU regarding the maintenance of streetlights and trail lights, as well as the cycles for hanging decorations. There were also appendices added to the agreement with maps identifying the specific streetlights, trail lights, and poles involved in the agreement. G.2g1, 3, 4 — Wage & Benefit, Information Security, and Dispute Resolution Committee Charters— February 14, 2023 —The charters were updated to reflect current staff titles and appointment procedures. G.4f1— Employee Handbook — June 14, 2022 — Changes consisted of: • Revision to Section 13, Drug & Alcohol Free Workplace, related to marijuana law updates. • Revision to Section 26 for Remote Work changes. • Addition of Section 28 for Lactation Breaks per law updates. • Addition of Section 34 for the Longevity Pay benefit. • Revision to Section 40 to adjust tiers for vacation. • Revision to Section 47 Health Insurance Coverage, to better reflect the employer - employee premium cost share and add the monthly employee premium amounts. • Revision to Section 65 to reflect changes to Paid Leave Donation, allowing 16 hours of sick and a proration of total donated time amongst contributing employees. G.4g1— Performance Metrics and Incentive Compensation — October 11, 2022 — The potential distribution for the 2023 year of measure was increased from 2.0% to 2.5% with the actual distribution to occur in 2024. There is also a 0.5% distribution increase for the 2024 year of measure which will be paid in 2025. G.4j3 — Customer Deposits — December 13, 2022 — A revision to the policy will require a deposit from any customer who had their account sent to collections by ERMU then left the service territory and returned at a later date. G.414 — Third Party Attachment to Assets — December 13, 2022 - This new policy identifies the circumstances under which ERMU would agree to allow attachments on its assets (poles, water towers, and streetlights) to better protect and preserve those assets. G.Sa — Margins — December 13, 2022 —This new policy provides Commission and staff parameters for determining appropriate margins and rates that are reasonable and justifiable to our customers, taking emotion out of decision making and providing consistency year to year. G.Sb — Competitive Rates — December 13, 2022 - The intent of this new policy is to provide information prior to budget preparation for analysis of ERMU's rates compared to surrounding communities. Elk River Municipal Utilities Commission Meeting Minutes M arch 14, 2023 Page 4 The Commissioner's reference guide received updates to the governance agenda, organizational chart, member listing, meeting schedule, upcoming events, and travel expense guidelines. Chair Dietz asked if legal counsel reviews the employee handbook annually. Staff confirmed that it does. 5.0 BUSINESS ACTION 5.1 Financial Report —January 2023 Ms. Karpinski presented the financial report for January 2023 showing usage being up 1% for water and down 2% for electric compared to the prior year, with both being favorable to budget. Ms. Karpinski highlighted changes she had made to the report including presenting more of the data in dollars rather than percentages. She went on to highlight changes such as adding Power Cost Adjustment revenue accounts in the general ledger, separating the Energy Adjustment Clause charges under purchased power, recognizing water tower lease and lease interest revenue annually instead of monthly, and the removal of the landfill gas operations from revenue and expense ledgers. Ms. Karpinski requested feedback from the Commission on the updates to the report. The Commission expressed their appreciation for the new presentation of the data. Ms. Karpinski provided her expectation that the accrual from the Energy Adjustment Clause in 2022 will be fulfilled by April which would allow for a reduction in Power Cost Adjustments to more closely reflect budgeted amounts for 2023. Ms. Karpinski presented graphs to the Commission showing actual and budget numbers for electric and water departments. In order to offer continuing education to the Commission, Mr. Tietz provided an explanation of the components of the Diesel Oil Fuel line item from the detailed financials, explaining it is the monthly charge for the fuel consumed during monthly test runs of the generators. Mr. Ninow provided an explanation of the Maintenance of Structures line item which accounts for the maintenance of utilities structures. Chair Dietz asked if the amounts factored in labor and if staff logged their hours under the maintenance category. Staff confirmed that they did. Elk River Municipal Utilities Commission Meeting Minutes March 14, 2023 Page 5 Moved by Commissioner Westgaard and seconded by Commissioner Stewart to receive the December 2021 Financial Report. Motion carried 5-0. 5.2 Advanced Metering Infrastructure System Master Agreement — Core & Main Mr. Tietz presented his memo on the agreement between ERMU and Core &Main. Mr. Tietz provided background on the selection of Core & Main to establish ERMU's advanced metering infrastructure (AMI) system. Chair Dietz asked about the payment schedule for the project. Mr. Tietz explained the payment phases laid out in the agreement. Mr. Hanson added that this agreement is for the purchase of meters while a later agreement will focus on the installation of those meters. Chair Dietz asked if any water department reserves would be used to reduce the need for bonded funds. Staff confirmed that this path was approved by the auditors and would be part of the funding package. Mr. Tietz explained how the communication network for the meters would utilize three water towers in the service area. Chair Dietz asked how customers will be notified about the work being done and the change to services. Ms. Youngs explained there would be a communications plan to inform customers of the meter changes particularly with the need to replace water meters which are located within residences. There was discussion about the rollout process. Chair Dietz asked how staff will decide which portions of the service territory will receive AMI meters initially. Mr. Tietz explained that residential electric and water meters will be installed by a contractor; ERMU staff will install commercial electric meters. Staff will work with the contractors on a phased installation cycle. Moved by Commissioner Stewart and seconded by Commissioner Bell to approve AMI System Master Agreement between Elk River Municipal Utilities and Core & Main, LP, subject to commission attorney approval per Commission Policy G.4i4. Motion carried 5- 0. 6.0 BUSINESS DISCUSSION Elk River Municipal Utilities Commission Meeting Minutes M arch 14, 2023 Page 6 6.1 Staff Updates Mr. Hanson provided an update regarding the distributed energy resources agreement with Voltus, Inc. He stated there is a potential challenge related to program requirements, adding that staff is currently working through the details but noted the possibility that ERMU may not be able to move forward with the program until March 1, 2024. There was discussion regarding state legislation requiring utilities to provide their in -state retail customers with 100% carbon -free electricity by 2040. Ms. Karpinski reported the audit is going very well. Chair Dietz asked Tom Sagstetter about the status of the repairs for the electric vehicle charging station at Coborn's. Mr. Sagstetter explained the electric vehicle charging station at Coborn's is not working at this time. Chair Dietz asked if the charging stations in downtown Elk River and at the ERMU offices are working. Mr. Sagstetter replied that they were. Dave Ninow mentioned the City is hosting an open house on Wednesday, March 15 from 4-7 p.m. regarding the street reconstruction project for the School View neighborhood. He added that he will be in attendance since ERMU will be replacing about 4,500 feet of water main in that neighborhood. Chair Dietz asked if there are any other major neighborhood projects ERMU will be involved in. Mr. Ninow responded there are smaller projects but nothing else the size of the School View project. In response to Commissioner Stewart's question about new regulations regarding per- and polyfluoroalkyl substances (PFAS)., Mr. Ninow explained that ERMU already takes part in the Minnesota Department of Health's voluntary PFAS testing program. He added that the system's levels are below the available health -based guidance levels so he is confident ERMU will be on track with the new regulations. Chair Dietz asked Mr. Kerzman where things stand with the building contractor and the concrete flooring issues at the new field services building. Mr. Kerzman responded that RJM Construction is looking into their options with other concrete contractors or potentially using their own laborers for concrete repair work. Elk River Municipal Utilities Commission Meeting Minutes March 14, 2023 Page 7 Mr. Kerzman added crews continue to work through the punch list items and that final dirt work will be completed in April or May depending on when the frost comes out of the ground. Chair Dietz asked about plans for the open house at the new building for the public. Mr. Mauren replied Thursday,. June 1 is the planned date for an open house. Ms. Youngs noted there is an event planning meeting scheduled for March 20. Commissioners requested they be notified of the confirmed date so they can add the event to their calendars. 6.2 City Council Update Commissioner Westgaard provided an update from the City Council meetings which dealt with topics including zone changes, a Highway 10 corridor study, review of land uses, and new employee introductions. 6.3 American Public Power Association Leizislative Rally Update Commissioner Stewart reported on her experience, noting that she attended a session that offered insight from utilities across the country on how legislative decisions are impacting them. Commissioner Stewart also commented on meeting with legislators and that she was particularly impressed with Senator Tina Smith's knowledge of the issues being discussed. Commissioner Stewart shared that overall it was a great opportunity to learn from and network with other people in the industry. Mr. Hanson explained the all -day process of meeting with representatives or their staffers in half-hour increments to discuss the prepared list of asks from Minnesota Municipal Utilities Association. He reported the topic in the forefront of discussions was supply chain issues for transformers, adding that the metals needed for transformers are also used for electric vehicles. He explained the increased demand is creating an even greater slowdown in the supply chain for transformers. 6.4 Future Planning Chair Dietz announced the following: a. Regular Commission Meeting — April 11, 2023 b. 2023 Governance Agenda c. Quorum —Wellhead Protection Plan Amendment Public Hearing —April 11, 2023 6.5 Other Business There was no other business. Elk River Municipal Utilities Commission Meeting Minutes March 14, 2023 Page 8 7.0 ADJOURN REGULAR MEETING Moved by Commissioner Bell and seconded by Commissioner Westgaard to adjourn the regular meeting of the Elk River Municipal Utilities Commission at 4:58 p.m. Motion carried 5-0. Minutes prepared by Tony Mauren. Elk River Municipal Utilities Commission Meeting Minutes March 14, 2023 Page 9