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4.1 ERMUSR 01-09-2024ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT THE UPPERTOWN CONFERENCE ROOM December 12, 2023 Members Present: Chair John Dietz, Vice Chair Mary Stewart, Commissioners Paul Bell, Matt Westgaard, and Nick Zerwas ERMU Staff Present: Mark Hanson, General Manager Sara Youngs, Administrations Director Melissa Karpinski, Finance Manager Tony Mauren, Governance & Communications Manager Tom Geiser, Operations Director Chris Sumstad, Electric Superintendent Mike Tietz, Technical Services Superintendent Dave Ninow, Water Superintendent Chris Kerzman, Engineering Manager Jenny Foss, Communications & Administrative Coordinator Megan Zachman, Human Resources Generalist Others Present: Jared Shepherd, Attorney; 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 Stewart to approve the December 12, 2024, agenda. Motion carried 5-0 2.0 CONSENT AGENDA (Approved By One Motion) Commissioner Bell asked for clarification on the payment structure of the Frontier Energy, Inc. agreement. Mr. Hanson stated the agreement includes a monthly base rate and explained the Elk River Municipal Utilities Commission Meeting Minutes December 12, 2023 Page 1 27 incentive pay is set up to be billed at a per kWh savings rate. Ms. Youngs also noted the base rate includes not only Frontier working with the utility but also working with our commercial customers by providing energy audits. Moved by Commissioner Bell and seconded by Commissioner Zerwas to approve the Consent Agenda as follows: 2.1 Check Register — November 2023 2.2 Regular Meeting Minutes — November 14, 2023 2.3 Designate 2024 Official Depository and Delegate Authority for Electronic Funds Transfer 2.4 Designate 2024 Official Newspaper 2.5 2024 Utilities Meeting Schedule 2.6 Frontier Energy, Inc. Professional Services Agreement Motion carried 5-0. 3.0 OPEN FORUM No one appeared for open forum. 4.0 POLICY & COMPLIANCE 4.1 Commission Policy Review — G.2a3 — Repairs to Private Water Utility Line — MOU Mr. Mauren reviewed policy G.2a3 — Repairs to Private Water Utility Line — MOU and indicated there were recent discussions with the City about this policy. Mr. Hanson noted the original MOU, which sunsetted on December 31, 2015, was created to incentivize those with connection lines in place that were not already connected to do so. Mr. Hanson stated he has talked with City staff to gauge interest in re -opening this program, explaining the current rule only allows assessment for those already connected and incentivizes those that need system repairs to do so in a timely manner. Mr. Hanson asked the Commission for feedback in regard to working with the City to re- open the sunset of the original program that expired in 2015. The commission agreed it is a good idea. 4.2 2024 Governance Agenda Mr. Hanson reviewed the 2024 Governance Agenda highlighting the changes made to the commission self -evaluation process. An update from the previous year comes from commission direction to adapt the Annual Commission Performance Self -Evaluation to now incorporate feedback from management. Staff also received instruction from the Commission to reduce the number of questions and prioritize written responses that Elk River Municipal Utilities Commission Meeting Minutes December 12, 2023 Page 2 W. elaborate on the scores submitted. Staff is working to restructure the survey accordingly and will provide a final draft for commission approval prior to the survey being conducted. Commissioner Stewart suggested moving the Annual Commission Performance Evaluation from July to June. There are currently no agenda items scheduled in June and July is already tasked with the review and update of the strategic plan. There was consensus to move the Annual Commission Performance Evaluation to June. Moved by Commissioner Stewart and seconded by Commissioner Westgaard to adopt the amended 2024 Governance Agenda. Motion carried 5-0 4.3 2024 Performance Metrics and Incentive Compensation Policy Mr. Hanson presented the 2024 Performance Metrics and Incentive Compensation (UPMIC) Policy noting a change to the Residential Clean Energy Choice participation metric from net 15 to net 30 participants to ensure staff is challenged to meet its goals. Mr. Hanson also identified an error in the last line under the financial impact portion of his memo. The actual distribution will be awarded in 2025 not 2024. Chair Dietz asked if there are any other areas that need to be changed to make reaching the UPMIC goals more challenging for staff. The commission agreed no additional changes need to be made at this time. Moved by Commissioner Bell and seconded by Commissioner Stewart to approve Performance Metrics and Incentive Compensation Policy and Scorecard for 2024. Motion carried 5-0 4.4 Competitive Rates Analysis Mr. Hanson reviewed the history of the competitive rate analysis, which began in January 2023 under then General Manager Theresa Slominski. Mr. Hanson noted it will continue to be brought to the commission annually to provide an opportunity to review comparable utilities' rates prior to setting ERMU rates. The information presented includes 10-year data trends for ERMU and similar utilities. Mr. Hanson highlighted that ERMU residential electric rates are trending downward making our rates more competitive. Commissioner Stewart asked if the Power Cost Adjustment (PCA) is part of the calculation when reporting the residential electric rates. Mr. Hanson confirmed that the PCA is included. Elk River Municipal Utilities Commission Meeting Minutes December 12, 2023 Page 3 29 Mr. Hanson noted ERMU commercial electric rates are holding steady around the 751h percentile. Chair Dietz asked if customers have commented about ERMU commercial rates as compared to other utilities. Mr. Hanson replied he hasn't received any comments but plans to talk with City staff to discuss if they have received feedback. Chair Dietz asked Mr. Hanson if the data is simply informational or is it prompting a change. Mr. Hanson replied he is encouraged by the data and that ERMU is currently in a good position. Mr. Hanson reviewed industrial rates noting ERMU is around the 751h percentile. He added that in comparison with its peer group, ERMU is trending towards mid -range in this category. Mr. Hanson presented water rate information and noted ERMU water is doing well based on the tiered rate structure which incentivizes conservation. Chair Dietz asked if the tiered rate structure started as a state mandate. Mr. Hanson could not confirm this but offered it is highly encouraged as part of the Wellhead Protection program. Mr. Ninow also confirmed the Department of Natural Resources highly encourages a tiered rate structure. Mr. Hanson stated ERMU is very efficient in regard to both residential and commercial water rates. Chair Dietz asked if ERMU's comparably low water rates indicate a need to raise them. Mr. Hanson replied ERMU should be proud of our efficiency and noted the recommended two percent increase is to cover large capital expenses to come but will keep ERMU within its margin policy. Moved by Commissioner Stewart and seconded by Commissioner Zerwas to approve the Competitive Rates Analysis. Motion carried 5-0 4.5 Energy Management Programs Ms. Youngs presented ERMU's energy management programs noting that staff is requesting the extension of the sunset date from December 31, 2023, to December 31, 2025. She explained that this will allow time for the installation of all Advanced Metering Infrastructure (AMI) meters, a review of customer usage, and for a rate study to be completed, allowing for the implementation of new energy management programs. Ms. Youngs also noted that ERMU failed to communicate the sunset date with participating customers at the end of 2022. Elk River Municipal Utilities Commission Meeting Minutes December 12, 2023 Page 4 30 4r,;.Z, Elk Riv Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Tony Mauren — Governance & Communications Manager MEETING DATE: AGENDA ITEM NUMBER: January 9, 2024 4.1 SUBJECT: Annual Review of Committee Charters ACTION REQUESTED: None BACKGROUND: ERMU Commission Policy G.2g - Commission Committees, which is attached, states that "The Commission will review the committee charter and performance of any standing committee at least annually to determine if changes are required or if the committee is still required." DISCUSSION: The annual review of the committee charters is an opportunity for the Commission to review the purpose for the committees and whether they are still needed. This is also an opportunity for the Commission to give direction to the committees. The schedule of this annual review is intentionally prior to March when the Commission appoints committee members. There are currently four commission -created committees: Wage & Benefits Committee (W&BC), Financial Reserves & Investment Committee (FR&IC), Information Security Committee (ISC), and Dispute Resolution Committee (DRC). Their committee charters are attached. In February 2023, the Commission approved several updates to charters. The W&BC charter received updates to staff titles. The DRC charter now places the general manager on the Committee as an appointed member along with two commissioners, while the remaining two seats would be filled by the director and the manager most closely related to the dispute. The ISC charter now carries requested updates from the City regarding their appointment process. No changes are recommended this year. ATTACHMENT: • ERMU Policy - G.2g - Commission Committees • ERMU Policy - G.2g1 - Wage & Benefits Committee Charter • ERMU Policy- G.2g2 - Financial Reserves & Investment Committee Charter • ERMU Policy - G.2g3 - Information Security Committee Charter • ERMU Policy - G.2g4 - Dispute Resolution Committee Charter Page 1 of 1 35 Elk River Municipal Utilities COMMISSION POLICY Section: Governance Category: Governance Policies Policy Reference: Policy Title: G.2g Commission Committees PURPOSE: With this policy, the Commission establishes and communicates its purposes and the means by which it creates and empowers committees to assist the Commission in its work. This policy applies to any group formed by Commission action, whether or not it is called a committee and whether or not the group includes Commission members. It does not apply to committees formed under the authority of the General Manager. POLICY: Commission committees, when created, will be used to reinforce the wholeness of the Commission and never to interfere with the delegation of authority from the Commission to the General Manager or to any officer of the Commission. Commission committees will not have direct involvement with current management and staff employee functions. Consistent with this general statement: The Commission will use committees sparingly and only for as long as required to accomplish its purposes. Committees may be appropriate in circumstances where the Commission recognizes the need for more in-depth review of information and issues, and where a committee is the best way to make effective and efficient use of available Commission member expertise and time. Committees may also be appropriate where it is necessary or desirable for the Commission to visibly demonstrate regulatory compliance or accountability to its stakeholders (e.g. Financial Reserves and Investments Committee). 2. Committees ordinarily will assist the Commission in the following specific ways by: a. Monitoring organization performance metrics and related information; b. Preparing policy alternatives and their implications for Commission deliberation and action; Page 1 of 2 36 ERMU Commission Policy — G2g Commission Committees c. Determining the level of compliance with existing Commission policies and evaluating the results of policy compliance or non-compliance. 3. When the Commission creates a committee, it will develop and approve by resolution a written committee charter that sets forth the purposes, duration, expected outcomes, leadership, membership, delegated authority, available resources, and other information needed for the committee to function successfully. The General Manager will designate management/staff committee members if so requested. The Commission, by majority vote, will appoint Commission members to committees and remove or replace them, as appropriate. The Commission, by majority vote, will also appoint, remove, and replace a Committee Chair, Vice -Chair and any other positions of leadership that the Commission determines appropriate. 4. The Commission recognizes that appointments to a Committee provide opportunities for learning and Governance development. Accordingly, the Commission endeavors to appoint Commission members to committee leadership positions who do not already hold a Commission office. 5. The Commission will review the committee charter and performance of any standing committee at least annually to determine if changes are required or if the committee is still required. 6. Commission committees may not convene a meeting that includes a quorum of the Commission. 7. Commission committees may not speak or act for the Commission except when formally given such authority for specific and time -limited purposes. Expectations and authorities will be carefully stated in order not to conflict with authority delegated to the General Manager or Commission Chair. 8. Commission committees may not exercise authority over management and staff employees. The General Manager is accountable to the whole Commission and is not required to obtain approval of any Commission committee before taking an executive action. 9. Commission committees will avoid relating to or identifying with discrete parts of the organization rather than the whole. A Commission committee that has helped the Commission create policy on a particular subject will not be used to monitor organizational performance on that same subject, except with specific Commission approval. POLICY HISTORY: Adopted May 9, 2017 Page 2 of 2 37 4r,;.Z, Elk Riv Municipal Utilities COMMISSION POLICY Section: Governance Category: Governance Policies Policy Reference: Policy Title: G.2g1 Wage & Benefits Committee Charter PURPOSE: The Wage and Benefits Committee exists to help the Commission develop and maintain a pay plan structure and benefits package that are market competitive, help promote employee retention, and to help the Commission make informed decisions which provide value to the customers through fair labor expenses. This Committee also exists to help the Commission with succession planning and review pay equity compliance. MEMBERSHIP: The Committee shall be comprised of two Commissioners, the General Manager, the Administrations Director, and the Operations Director. At no time shall there be a quorum of the Commission on the Committee. The Commission shall appoint Committee members annually following the Commission election of officers during the March Regular Commission meeting. The Commission shall also appoint the Committee Chair at that time. ROLE OF THE COMMITTEE CHAIR: The primary role of the Committee Chair is to run the Committee meetings. The Committee will adhere to the Current edition of Robert's Rules of Order Newly Revised for all situations to which they are applicable and are not inconsistent with ERMU's bylaws, policies, and any special rules of order that the Commission may adopt. The Committee meetings may be open or closed to employees at the discretion of the Committee Chair. AUTHORITY: Except as established in this Committee Charter, the authority of the Committee is limited to the purpose of research and recommendation to the Commission. The Committee, at the discretion and through formal action of the Commission, may be empowered beyond the role of research Page 1 of 2 m ERMU Commission Policy — G2gl Wage & Benefits Committee Charter and recommendation such that it is consistent with the Organizational Core Purpose policies and the Commission Committees policy. SPECIFIC DUTIES: 1. At the request of the Commission, research and analyze topics related to employee compensation and benefits. 2. Annually perform market benchmarking and evaluate wages. The Committee shall present options and make recommendations regarding cost of living adjustments and pay plan structure modifications to the Commission for their consideration. 3. Review insurance policies and evaluate policy renewals related to employee benefit insurances. The Committee shall present options and make recommendations regarding these insurance policies to the Commission for their consideration. 4. Evaluate wage and benefit requests from employees. Present and make recommendations to the Commission as appropriate. 5. Review submittal information pertaining to pay equity compliance requirements and present options and make recommendations to the Commission as appropriate. 6. Record minutes of Committee meetings. Committee meeting minutes shall be subject to applicable data retention law and policies. SCHEDULE: At a minimum, the Committee shall meet on a quarterly basis. TERMINATION: The Committee shall exist until at such time formal action of the Commission is taken to dissolve the Committee. POLICY HISTORY: Adopted May 9, 2017 Revised February 14, 2023 Page 2 of 2 39 Elk River Municipal Utilities COMMISSION POLICY Section: Governance Category: Governance Policies Policy Reference: Policy Title: Financial Reserves & Investment G.2g2 Committee Charter PURPOSE: The Financial Reserves & Investment Committee exists to help the Commission develop and maintain industry appropriate financial reserves and investment policies. MEMBERSHIP: The Committee shall be comprised of two Commissioners, the General Manager, and the Finance Manager. At no time shall there be a quorum of the Commission on the Committee. The Commission shall appoint Committee members annually following the Commission election of officers during the March Regular Commission meeting. The Commission shall also appoint the Committee Chair at that time. ROLE OF THE COMMITTEE CHAIR: The primary role of the Committee Chair is to run the Committee meetings. The Committee will adhere to the Current edition of Robert's Rules of* Order Newly Revised for all situations to which they are applicable and are not inconsistent with ERMU's bylaws, policies, and any special rules of order that the Commission may adopt. The Committee meetings may be open or closed to employees at the discretion of the Committee Chair. AUTHORITY: Except as established in this Committee Charter, the authority of the Committee is limited to the purpose of research and recommendation to the Commission. The Committee, at the discretion and through formal action of the Commission, may be empowered beyond the role of research and recommendation such that it is consistent with the Organizational Core Purpose policies and the Commission Committees policy. Page 1 of 2 W ERMU Commission Policy — G.2g2 Financial Reserves & Investment Committee Charter SPECIFIC DUTIES: 1. At the request of the Commission, research and analyze topics related to financial reserves and investments. 2. On a periodic basis, the Committee will review the Investment Policies, investment balances, and the various investment instruments for return, liquidity, and diversification. The Committee may present options and make recommendations to the Commission for their consideration. 3. Annually, when the Commission designates the official depository for the year, it should provide for the Finance Manager to recommend that additional depositories be designated for the purpose of investing funds. 4. On behalf of the Commission and Committee, new investments will be authorized by the Finance Manager, with the funds actually being transferred via a check produced by the A/P Specialist, and recorded in the check register detail presented at the regular Commission meetings. Investments that mature shall be reinvested by the Finance Manager. All investing will be transacted working with the investment firm(s) or bank(s) for the best rate of return within the constraints of the Management Investment Policy. In the event that the Finance Manager is unable to conduct the above investment responsibilities, the General Manager has the authority to act in his/her absence. 5. On a periodic basis, the Committee will review the Financial Reserves Policies and reserve balances. The Committee may present options and make recommendations to the Commission for their consideration. SCHEDULE: At a minimum, the Committee shall meet on an annual basis. TERMINATION: The Committee shall exist until at such time formal action of the Commission is taken to dissolve the Committee. POLICY HISTORY: Adopted May 9, 2017 Revised July 14, 2020 Page 2 of 2 41 4r,;.Z, EIk Riv Municipal Utilities COMMISSION POLICY Section: Governance Category: Governance Policies Policy Reference: Policy Title: G.2g3 Information Security Committee Charter PURPOSE: Information security is managing risks to the confidentiality, integrity, and availability of information using administrative, physical, and technical controls. The Information Security Committee exists to help develop and maintain industry appropriate information security policies and oversight. Because of shared hardware and resources, there exists an overlap and shared risk for ERMU and the City of Elk River (City) operations. Although governed autonomously, this shall be an advisory Committee to both the ERMU and the City. MEMBERSHIP: This Committee shall be comprised of equal representation from ERMU and the City. From ERMU this committee shall include a Commissioner and the General Manager. The General Manager will appoint three additional members, at least one of whom will be a manager and at least one will be an information technology employee. From the City this committee shall include a Councilmember and the City Administrator. The City Administrator will appoint three additional members, at least one of whom will be a manager and at least one will be an information technology employee. At no time shall there be a quorum of the Commission or the Council on the Committee. The Commission shall appoint ERMU's Committee member representatives annually following the Commission election of officers during the March Regular Commission meeting. The Council shall appoint its member annually. The Committee shall elect a chair annually. The General Manager and the City Administrator shall serve as the authorized reporting representatives for their respective governing bodies. ROLE OF THE COMMITTEE CHAIR: The primary role of the Committee Chair is to run the Committee meetings and act as committee secretary. The Committee will adhere to the Current edition of Robert's Rules of Order Newly Page 1 of 3 ERMU Commission Policy — G.2g3 Information Security Committee Charter Revised for all situations to which they are applicable and are not inconsistent with ERMU's bylaws, policies, and any special rules of order that the Commission may adopt; and similarly, the Committee action shall not be inconsistent with applicable laws and policies which regulate the City of Elk River. The Committee meetings may be open or closed to employees at the discretion of the Committee Chair. AUTHORITY: Except as established in this Committee Charter, the authority of the Committee is limited to the purpose of research and recommendation to ERMU and the City. SPECIFIC DUTIES: Policies and Procedures: Assist ERMU and the City in the development of information security related policies. Review effectiveness of information security policy implementations. Identify and recommend how to handle non-compliance. Assist with the development of information security related procedures, standards, guidelines, and baselines to the ERMU and the City. At least annually, provide timely reports including recommendations regarding effectiveness of polices and procedures to ERMU and City leadership teams. 2. Risk Assessment: Review industry appropriate information security trends to maintain an up- to-date perspective on related risks and industry's best practice risk mitigation methods. Identify significant threats and vulnerabilities. Assess the adequacy and coordination of the implementation of information security controls. Recommend methodologies and processes for information security. Evaluate ongoing related legal and regulatory compliance changes. Review incident information and recommend follow-up actions. At least annually, provide timely reports including recommendation regarding risks assessment to ERMU and City leadership teams. 3. Budget Development: Develop data needed for thorough evaluation of proposed information security initiatives for budget preparation and consideration. Information shall include options, risk evaluation, resource requirements, implementation timelines, and costs. At least annually and coordinating with their respective budgeting process schedules, provide timely reports regarding information security initiatives proposed for consideration to ERMU and City leadership teams. 4. Education and Awareness: Function as an information security program champion providing clear direction and unity in ERMU and City leadership teams' support for approved security initiatives and policies. Develop and implement plans and programs to maintain information security awareness. Promote information security education, training, and awareness throughout ERMU and the City. SCHEDULE: At a minimum, the Committee shall meet on an annual basis. Page 2 of 3 43 ERMU Commission Policy — G.2g3 Information Security Committee Charter TERMINATION: The Committee shall exist as a joint effort between ERMU and the City until at such time either the Commission or Council dissolve the joint nature of the Committee. POLICY HISTORY: Established August 8, 2017 Revised November 12, 2019 Revised February 14, 2023 Page 3 of 3 Elk River Municipal Utilities COMMISSION POLICY Section: Governance Category: Governance Policies Policy Reference: Policy Title: G.2g4 Dispute Resolution Committee Charter PURPOSE: The Dispute Resolution Committee exists to provide customers an alternative dispute resolution option for circumstances which: require action beyond the authority assigned through the Delegation to Management Policies; require policy creation, revision, or exception; have exhausted the established utilities procedures and/or protocol; and involves customer protected data for which the customer prefers addressing the issue through a meeting closed to the public. For qualifying customer disputes, the Committee will provide: a formal hearing in a closed meeting allowing the customers to communicate the concern; recess and reconvene as needed to conduct appropriate research and/or deliberate; make a determination within parameters established through the Commission Policies and within the authorities delegated through this policy; and report and/or make recommendations to the Commission as required. MEMBERSHIP: The Committee shall be comprised of five members, three appointed annually and two which vary with each dispute. The three members appointed annually shall include two Commissioners and the General Manager. At no time shall there be a quorum of the Commission on the Committee. The Committee shall also include the director and the manager most directly involved in the dispute. The Commission shall appoint Committee members annually following the Commission election of officers during the March Regular Commission meeting. The Commission shall also appoint the Committee Chair at that time. ROLE OF THE COMMITTEE CHAIR: The primary role of the Committee Chair is to run the Committee meetings. The Committee will adhere to the Current edition of Robert's Rules of Order Newly Revised for all situations to which they are applicable and are not inconsistent with ERMU's bylaws, policies, and any special rules of order that the Commission may adopt. Page 1 of 3 45 ERMU Commission Policy — G2g4 Dispute Resolution Committee Charter AUTHORITY: Except as established in this Committee Charter, the authority of the Committee is limited to the purpose of dispute resolution within the authorities delegated to management through the Commission Policies, research related to customer disputes or complaints, and recommendations to the Commission. The Committee, at the discretion and through formal action of the Commission, may be empowered beyond the role as outlined in this policy such that it is consistent with the Organizational Core Purpose policies and the Commission Committees policy. SPECIFIC DUTIES: After a formal request is submitted for a qualifying customer dispute, the Committee will schedule a hearing, either in person or virtual, within a reasonable amount of time. 2. Through the hearing, the Committee will allow the customer to communicate relevant information and request dispute resolution which may require policy creation, revision, or exemption. 3. The Committee is required to verify all information and data; and the Committee will review the Customer's account history and other relevant information. 4. And as needed, the Committee shall research industry best practices related to the dispute. 5. The Committee is authorized to engage legal counsel for legal review and recommendations. 6. The Committee will make a determination whether resolution can be provided within the authorities assigned through this policy; and if so, the Committee will provide written summary of the dispute and the authorized resolution for implementation by management. 7. When no action is taken by the Committee toward resolution, the Committee will determine whether the request warrants further consideration by the Commission, in which case the Committee will present a summary of the dispute to the Commission and a make recommendation. In the event that no action is taken by the Committee, and the Committee has determined that the dispute does not warrant further consideration or advancement to the Commission, the Committee shall summarize their finding in a report to be provide to the customer and placed on file. 8. The Committee shall record minutes of all Committee meetings. Committee meeting minutes shall be subjectto applicable data retention law and policies. SCHEDULE: The Committee shall meet on an as -needed basis. Page 2 of 3 ERMU Commission Policy — G2g4 Dispute Resolution Committee Charter TERMINATION: The Committee shall exist until at such time formal action of the Commission is taken to dissolve the Committee. POLICY HISTORY: Adopted January 12, 2021 Revised February 14, 2023 Page 3 of 3 47