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12-09-2008 ERMU MINELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMIVIISSION HELD AT UTILITIES CONFERENCE ROOM December 9, 2008 Members Present: Jerry TakIe, President; John Dietz, Vice Chair; Jerry Gumphrey, Trustee Staff Present: Vance Zehringer, Interim General Manager; Theresa Slominski, Finance Director/Office Manager; Troy Adams, Engineering Manager; Mark Fuchs, Line Superintendent; David Berg, Water Superintendent; Judy McSpadden, Recording Clerk; Michael Price; Adam Freiberg Others present: Lori Johnson, City Administrator; Terry Maurer, City Engineer; Phil Hals, Street Superintendent 1. Call meeting to order December 9, 2008 President Jerry Takle called the December 9, 2008, meeting to order at 4:55 p.m. 2. Consider Utilities Agenda John Dietz requested 6.1 be addressed after the consent agenda, with an additional item to be discussed under Other Business. Jerry Takle also had another item to be discussed under Other Business. Jerry Gumphrey moved to approve the December 9, 2008, Utilities Agenda. John Dietz seconded the motion. Motion carried 3-0. 3. Consider Consent Agenda Jerry Gumphrey questioned the process for purchasing boots. He stated employees should be buying from a local vendor. Mark Fuchs replied that a majority do. John Dietz informed commission about questions he'd asked regarding the difference in the previous year water financials versus this year. Theresa's responses were, a bond was re-financed, an additional water employee was hired, and the percentage split for sharing costs between the water and electric department is now being recorded monthly. Jerry Gumphrey moved to approve the Consent Agenda as follows: November Check Register November 13, 2008 Minutes Financial Reports John Dietz seconded the motion. Motion carried 3-0. Page 2 Regulaz meeting of the Elk River Municipal Utilities Commission December 9, 2008 6.1 Review & Consider Vehicle Maintenance Well maintained vehicles and equipment aze key components to productivity and safety. ERMU currently uses the City of Elk River for much of their vehicle and equipment maintenance needs. Phil Hals informed the commission that he met with ERMU staff regarding the maintenance possibilities. The City currently uses a card program that monitors gallons of gas used per vehicle that in turn provides a report for when maintenance is needed. John Dietz asked if there was a set fee for oil changes instead of the hourly rate as was billed previously. Terry Maurer said a flat fee has been set for the oil changes. Discussion followed as to the possibility of implementing the card system at the ERMU power plant and the cost involved. Phil Hals shared a quote procured from the company that provides their gas usage recording system. Terry Maurer suggested trying the program at the City prior to purchasing to see if it would fit our needs. Consensus was to assign a couple of trucks to fill at the City pump and try out the card program and revisit the implementation of this program. Mark Fuchs stated Beaudry Oil supplies our tanks and delivers the gas, and possibly they have some type of system available. Phil Hals commented on scheduling concerns that were expressed and said the mechanics will expedite repairs if necessary by scheduling appointments to allow for minimum down time. Currently, the booms on the trucks are being inspected and repaired by a place that is trained and certified in this type of repair. It was asked if the City shop could take on this responsibility. Phil Hats responded it would be possible but not feasible for testing as the equipment is very expensive. Jerry Gumphrey said because of the safety issues he would prefer the boom maintenance remain with the certified repair facility, but feels it is a good idea for the City to perform all other repairs and maintenance on all utility vehicles. This will be revisited at a later date. 5.1 Staff Updates Vance Zehringer said he will be meeting with CMMPA regarding future power supply issues and also with Wright-Hennepin Cooperative on other power alternatives. Vance said if there is another option out there that would be feasible and less expensive, would we want to check into getting out of the Connexus contract prior to the expiration of the current contract. Jerry Gumphrey said the attorney should have a look at the contract with Connexus. Jerry Takle said he doubted there would be anything as he felt we were getting a good deal from Connexus. Vance also talked about his meeting with United Health Group (UHG) regarding energy spikes incurred when they were testing their equipment. Luckily for ERMU they were not testing at the time our November wholesale billing peak was set. Because of the spike in their usage, their demand charges were twice as high as normal for November. Can we forgive these demand charges during their integrity testing as long as it is done late at night? Jerry Gumphrey was concerned it would involve mm~ing their generators. Vance responded it would not. Consensus to approve the forgiveness of the additional demand charge for Page 3 Regular meeting of the Elk River Municipal Utilities Commission December 9, 2008 integrity testing only as long as ERMU has a 24 hour notice of this and that it is performed late at night during non-peak hours. Vance provided a slide show of the reroofing project at the power plant which is now complete. Jerry Gumphrey asked staffto compile a job description for the General Manager duties and bring to the next Commission meeting. Vance said that Jerry Takle has been working with him on a list of duties. Theresa Slominski said the auditors will be here for the pre-audit on January 15~'. In October staff finished collecting all the irrigation meters. After verifying the readings and records it was discovered that 10 meters were under billed in 2008 by approximately $40,000. This affects some accounts by $1,000 and some up to $7,000. A letter will be sent to these accounts describing the error. Discussion followed regarding payment. John Dietz asked if a discount should be offered. Jerry Gumphrey suggested a 20% discount only if the bill was paid within 30 days. Jerry Gumphrey moved to approve a 20% discount for payment made within 30 days on the accounts that were under billed on their water usage. John Dietz seconded the motion. Motion carried 3-0. David Berg said staff is currently doing maintenance on the well filters and checking on any anthracite loss. With the changing of federal government staff, there is a possibility of funds being available for wellhead protection to seal abandoned wells. Some of ERMU wells are not recovering during the winter months and are 10% lower. Connexus has been notifying us of homes that are foreclosed that are on our municipal water system. January 7`~ will be the first meeting with the Soil and Water Conservation group. Lori Johnson stated that Vance Zehringer has been at some recent department head meetings at City hall and that the communication between ERMU and the City has been very good. Mark Fuchs updated Commission on the current projects the electric department has been working on. They are the Waterfront East pole easement issues, the new Feeder 42 out of the 14 Station, MN School of Business site on 193` Avenue, and Otsego Autocare on Parson Avenue. The line extension along County Road 39 in Otsego for the new church is almost complete, and Area 18 is still in progress. Mark brought up the subject of used poles. In the past the poles were given out to whom ever wanted them. Jerry Gumphrey felt it should be available to everyone on a first come first serve basis and that a one time ad in the local paper should be done to let the public know. Troy Adams reported the electric sales were up 6.6% from last year and with water down by 2.5%. A recent inspection of ERMU facilities was performed by AIG Insurance. There were seven Security sales for the month of November. Troy relayed, on a good note, a local RV business had our security technician, Rick Schaust, install some wireless door sensors in some of their RV's. When thieves started breaking into the RV's, the motion sensor was tripped but they couldn't hear the alarm as it was inside the building. The police showed up Page 4 Regular meeting of the Elk River Municipal Utilities Commission December 9, 2008 and caught the thieves and also found merchandise stolen from another RV business. Locates are down for the season so staffhas been assisting the meter department, and doing map updates. A leak was discovered on the Virginia transformer at the Waco Sub and another leak was discovered on the Waukesha transformer at Station 14. These are both under warranty. A complaint was received from Centex Homes at Elk River Station regarding their water consumption. Staff will meet with them to rectify the problem. 5.2 Review & Consider 2009 Utility Budget and Rate Changes At the November 13, 2008, Elk River Municipal Utilities Commission meeting, a revised 2009 budget with an assumed 15% wholesale rate increase from Great River Energy (GRE) was presented. GRE ultimately reduced that increase to a 13.2% overall wholesale rate increase following concerns voiced by several of their distribution co-ops and Elk River Municipal Utilities (ERMU). The ERMU budget and rates for 2009 were reviewed. Vance stated that a lot of work and thought was put into the proposed rate increase and a 10% overall increase was all they wanted to pass on, thus decreasing the amount to be contributed to reserves. Jerry Gumphrey asked staff to meet with Elk River Star News so they could do an article on the rates and reasons behind the rate hike. A bill staffer will also be included in their January bill. Jerry Gumphrey moved to approve the proposed Utility rate increases as presented effective January 2009. John Dietz seconded the motion. Motion carried 3-0. Discussion followed regarding the 2009 Capitol Projects. The electric projects have been numbered as to necessity. If funds are not available for the project in 2009 it will be delayed. John Dietz commented he would like to see an update throughout the year on the status of the projects. John Dietz moved to approve the proposed 2009 Capital Budget as presented. Jerry Gumphrey seconded the motion. Motion carried 3-0. 5.3 Review MMUA Safety Compliance Contract As an update, staff is continuing to work towards contracting a safety compliance program for 2009. ERMU and the City of Elk River have paid MMUA for their safety program services through the end of the year. City staff is continuing to research alternatives to MMUA but no official decision has been made to leave MMUA. Because of this, the MMUA safety compliance contract has not been signed. Discussion followed regarding some of the concerns that have not been addressed in the MMUA safety program. Staff recommends continuing with the MMUA safety compliance program contingent upon Page 5 Regular meeting of the Elk River Municipal Utilities Commission December 9, 2008 MMUA satisfactorily addressing all of the program shortcomings with the ability for ERMU to ternunate the contract if the City decides to make a change. Troy Adams informed the Commission that there would be a new safety instructor from MMUA. Lori Johnson stated Bruce West would meet with MMUA one more time to see if they can address the City's needs for safety compliance classes. John Dietz asked if there was a contract signed. Troy Adams said the contract for 2009 has not been signed so it is month to month right now. Consensus was to readdress this when final decisions are made by the City so final contract negotiations can be made. 6.2 Review & Consider Clothing Policy Recently there have been some questions by staff regarding the ERMU clothing policies pertaining to meter change out and their impact to employee safety. There are currently seven employees who do not qualify for FR clothing under the current Employee Clothing policy. Because these employees are in substations around high voltage and changing out electric meters, it is highly recommended to outfit them in FR clothing for safety purposes. Discussion followed. Jeny Gumphrey moved to remove item 6 in the Arc Flash Assessment and Clothing Requirements policy, remove the last two sentences in the Employee Clothing policy, and to have all outside ERMU employees wear FR clothing. John Dietz seconded the motion. Motion carried 3-0. 6.3 Review & Consider Recommended Changes to Conservation Improvement Program (CIP) The Energy Star Appliance Rebate Program has been an effective CIl' program that warrants continuation. GRE recently increased their rebate in an effort to further promote the most energy efficient heating and cooling system available today. Vance Zehringer recommends rebate changes for Ground-Source Heat Pumps to $400 per ton, Water heaters to $300, and Clothes Washers to a two tiered rate of $50 or $75 depending on the water efficiency. Discussion followed. John Dietz moved to approve the recommended rebate changes as presented. Jerry Gumphrey seconded the motion. Motion carried 3-0. Other Business John Dietz read a statement from Attorney Mark Mathison of Gray Plant & Mooty. Bryan Adams has agreed to a contract. November 30, 2008 was his last day as an employee of ERMU and December 1St is the starting date of his consulting services for ERMU. The Page 6 Regular meeting of the Elk River Municipal Utilities Commission December 9, 2008 consulting agreement is for 4 hours a week. Staff was directed to compile a list of duties for Bryan. Vance Zehringer said Bryan was closely involved with the LFG project and thought that would be one item to have Bryan continue to work on. Jerry Takle provided a Memorandum of Understanding for Interim General Manager. The agreement was reviewed. Jerry Gumphrey moved to approve the Memorandum of Understanding for Interim General Manager. John Dietz seconded the motion. Motion carried 3-0. The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be Tuesday, January 13, 2009, at 4:30 p.m. President Jerry Takle adjourned the regular meeting of the Elk River Municipal Utilities Commission at 6:50 p.m. espectfully bmi d, Judy Mc padde Recor ' g Clerk Vance General Mana er