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01-13-2009 ERMU MINELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM January 13, 2009 Members Present: Jerry Takle, 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 Others present: Lori Johnson, City Administrator; Mark Mathison and Sam Diehl, Attorneys for Gray Plant & Mooty 1. Call meeting to order January 13, 2009 President Jerry Takle called the January 13, 2009, meeting to order at 4:30 p.m. 2. Consider Utilities Agenda John Dietz added an item to be discussed under Other Business. John Dietz moved to approve the January 13, 2009, Utilities Agenda. Jerry Gumphrey seconded the motion. Motion carried 3-0. 3. Consider Consent Agenda John Dietz had questions on the power bill and financials, staff responded. Jerry Gumphrey moved to approve the Consent Agenda as follows: Designate First National Bank official depository for 2009 Designate Elk River Star News official newspaper for 2009 December Check Register December 9, 2008, Minutes Financial Reports John Dietz seconded the motion. Motion carried 3-0. Due to the delay in arrival of Attorney's, 5.2 was addressed at this time. Page 2 Regular meeting of the Elk River Municipal Utilities Commission January 13, 2009 5.2 Staff Uu-dates Vance Zehringer reviewed the letter to be sent out to customers in January regarding the electric rate increase. A proposed Farm Field Irrigation System Seasonal llisconnect/Reconnect policy was reviewed. Stag was directed to contact the customers involved to notify them of this new policy. John Dietz moved to approve the proposed Farm Field Irrigation System -Seasonal Disconnect/Reconnect Fee policy as presented. Jerry Gumphrey seconded the motion. Motion carried 3-0. Vance reviewed with the Commission the memorandum from MMUA updating their various activities. Future service territory negotiations with Connexus were also discussed and the rate comparison project is still being worked on. There was an outage at the Landfill Generation Plant recently. A bearing went out on one of the compressors so a decision was made to purchase another motor to get the plant running again and repair the other for back- up. Vance also reported that another data center has contacted him regarding relocating in this area. John Dietz asked if there would be a lot of cost involved in supplying this new facility. Troy Adams responded it would cost approximately two to three million. John Dietz asked if they have contacted the City for any tax rebates. Lori Johnson responded that she has not heard from anyone. John Dietz asked if ERMU could bond for this project. Theresa Slominski responded if they were up and running right away it would pay for the bond. John Dietz asked where the proposed facility was looking at. Discussion followed regarding supporting the load that would be needed for the new data center and if ERMU could support it. Consensus of Commission was to go ahead with responding affirmative to serving a new data center. Theresa Slominski updated Commission on the water usage issue for Elk River Station, and the irrigation meters that were under-billed as discussed last month. Staff performed an inventory count the end of December and the trucks were also counted. Staff worked well together to get this process done. John Dietz asked if the auditors check the inventory count. Theresa responded that the auditors check every year when they do the audit. Theresa requested authorization to purchase a laptop for the new consultant. Jerry Gumphrey moved to approve the purchase of a laptop for the new consultant. John Dietz seconded the motion. Motion carried 3-0. David Berg said staff continues maintenance of the wells. David informed Commission of the positive response received from the Water Conservation meetings. A lot of people attended the meeting on January 7`~'. There will be another meeting in March and different classes are Page 3 Regular meeting of the Elk River Municipal Utilities Commission January 13, 2009 planned to cover grass types, sprinkling systems, etc. to educate the public on these matters. Jerry Takle asked David if the wells are recovering yet and David responded not as of yet. Mark Fuchs updated the Commission on the projects that have been completed to date. "1-`hey are Waterfront East pole removal, Feeder 42 out of Station 14, Deerfield 1 sc and 2°d in Area 18, and Otsego Auto Care. The Minnesota School of Business on 193`d Avenue and the Church of Later Day Saints in Otsego have their temporary services set. The crews are starting the tree trimming process along with the replacement of the cutouts, testing of the tools, and maintenance issues such as the discovery of a bad regulator on County Road 30. Mark discussed the possibility of purchasing a couple of used gas pumps that were previously used by Hennepin County. The cost of the two units would be $4500 which is considerably less than the new ones that were discussed at the December 2008 ERMU Commission meeting. This would also tie in with the City of Elk River's program. Consensus was to present this at next months meeting for final approval. Troy Adams reported 11 security sales for December. This year there will be an ad in the Elk River Current for security systems. Due. to locating being down, staff is working on mapping, meter replacement, and tree trimming. The meter department has been working on the off peak programs. At the previous meeting it was mentioned that some leaks were found in two of the substation transformers. Waukesha will be here January 20`" to repair their transformer and although contact has been made with Virginia Transformer they have not set a date as of yet. As an update on the safety program, the City of Elk River has chosen to go through the Anoka Tech for their traiiung. The cost of the new contract with MMUA for ERMU was $16,000 a year for two days a month with the option to go to one day a month along with a 30 day cancellation clause. Troy also announced he recently was informed that he did pass his professional engineering exam. Lori Johnson informed the Commission that she appreciates working with ERMU staff. 5.1 Review of Human Resources Function /Closure of Workplace Investigation and Update on Employee Handbook -Attorney's Mark Mathison and Sam Diehl Mark Mathison of Gray Plant & Mooty reported he has the signed agreements for the Consultant, Bryan Adams, and needs the Commissioners approval. The previous resolution was split for better documentation. The new agreements are called Transition and Employment Agreement, and Vacation and Sick Pay Reimbursement Agreement. Jerry Gumphrey moved to adopt the two documents for Bryan Adams employment called Transition and Employment Agreement, and Vacation and Sick Pay Reimbursement Agreement. John Dietz seconded the motion. Motion carried 3-0. Page 4 Regular meeting of the Elk River Municipal Utilities Commission January 13, 2009 The next issue to discuss was the HR Function duties. Mark Mathison reviewed the listing of duties. Discussion followed. Lori Johnson said the City Council was receptive to the idea but felt the time would be minimal therefore there would not be a need to bill at this time for this service. This will be revisited at a later date. John Dietz asked if there was an agreement to sign and Mark Mathison said this was just a document review to make sure the job duties and wording of the document would be acceptable. Sam Diehl informed Commission that if this is adopted it should be expressed to employees the confidentiality of this process. Mark Mathison suggested a list of names be placed in the handbook for employees to go to. John Dietz said someone should explain to the employees how they can utilize this, and how it is available. Jerry Takle remarked that this will be in the handbook, but it would be good for the employees to know who the HR person is and to meet her in person. Jerry Gumphrey authorized Gray Plant & Mooty to make a resolution for the HR function duties for ERMU and bring back for Commission approval. The final issue to be discussed was the policy approvals. Sam-Diehl distributed the policies that have been worked on to date. John Dietz asked when the policy manual will be finished. Sam Diehl responded they were waiting for the HR issue to be approved before finishing the remaining booklet. 5.3 Review Pole Disposal Policv At the December 9, 2008, Elk River Municipal Utilities (ERMU) Commission meeting, the issue of used poles was discussed. Staff was directed to draft a policy and agreement. The proposed policy is as follows: "Occasionally existing overhead electrical distribution is upgraded, relocated, or replaced with underground. This may result in the Elk River Municipal Utilities (ERMLI) reclaiming used utility poles that would need to be disposed of. These poles will be offered to the public and employees at a first come first serve basis. To receive any of these used utility poles, a Utility Pole Agreement waiver must be signed releasing ERMU of liability." The Utility pole agreement was also reviewed. The agreement was drafted by Attorney Ron Black. John Dietz asked how customers would be notified of this policy. Mark Fuchs responded there would be an ad in the paper. John Dietz moved to approve the Pole Disposal Policy and Agreement. Jerry Gumphrey seconded the motion. Motion carried 3-0. 5.4 Review Integrity Testing Policv New large demand customers or existing large demand customers that have installed new production equipment will usually conduct tests to determine the integrity of their production equipment and electrical system at some time during initial startup. This testing can have a Page 5 Regular meeting of the Elk River Municipal Utilities Commission January 13, 2009 negative impact on their power bill and it could coincide with ERMU billing peak resulting in a significant increase in our wholesale power bill for that month. We propose to discourage the practice of performing integrity tests during on-peak hours by offering an incentive to do those tests during ot;t=peak hours instead. A proposed policy was reviewed. Jerry Gumphrey moved to adopt the Integrity Testing Policy for demand customers with usage of 1 megawatt or more. John Dietz seconded the motion. Motion carried 3-0. 6.1 Review Comparable Worth Report The comparable worth report for 2008 was discussed. In June of 2008 ERMU was in compliance. Since that report there have been some changes. Discussion followed regarding the changes and corrections to be made to stay in compliance. John Dietz asked Lori Johnson for her opinion. Lori suggested adjusting the points versus the pay, or filing the report as is. John Dietz moved to have Lori Johnson work with Theresa Slominski to get ERMU in compliance by the end of January without a pay adjustment for any employee. Jerry Gumphrey seconded the motion. Motion carried 3-0. 6.2 Review Annual Report to City Council Each year all departments of the City of Elk River provide annual reports to the City Council. This year ERMU will present their report on March 2"d. These reports are also completed in digital format and placed on the City of Elk River's website. The ERMU 2008 Annual Report was reviewed. Vance Zehringer gave an overview of the ERMU accomplishment for 2008. Theresa Slominski reviewed the Administration/Finance actions for 2008. Troy commended staff on the reliability of locating underground cables, as they were completed without damage claims resulting from workmanship. Troy also added he is working on transformer load analysis and calculating transformer sizes for new commercial customers. Jerry Takle asked about the loss percentage on transformers. Troy responded it was hard to calculate as the transformers we have been buying are reconditioned. David Berg reviewed the water department accomplishments. John Dietz said he would like more financial information in the annual report so customers can understand why the rates are what they are. Mark Fuchs reviewed the year for the electric department. John Dietz said he would like to see a statement on the limited outages for the year showing that ERMU is a good power supplier. Page 6 Regular meeting of the Elk River Municipal Utilities Commission January 13, 2009 John Dietz moved to approve the amended 2008 Annual Report. Jerry Gumphrey seconded the motion. Motion carried 3-0. 6.3 Review Reliability (Outage) Report The Minnesota Energy, Security, and Reliability Act requires electric distribution utilities to file an annual outage report to their governing bodies, which in our case, is the ERMU Commission. John Dietz moved to accept and file the 2008 Outage report and kudos to staff on a good year. Jerry Gumphrey seconded the motion. Motion carried 3-0. 6.4 Review Power Supply Study As a result of the wholesale power contract termination from Connexus Energy, staff has been looking to future alternatives. Discussion followed regarding the current agreement with Connexus, and alternative wholesale power contacts such as Central Minnesota Municipal Power Agency (CMMPA), Wright-Hennepin Cooperative, Xcel Energy, MMPA, SMMPA, and Minnesota Power. A meeting has been scheduled with Connexus for January 26`'' to look into future scenarios. 6.5 Consider Emergency Water Shut-off Policy As more homes are being abandoned or are in foreclosure, our policy dictating electric and water shut-offneeds to be addressed. The current procedure was reviewed. Vance Zehringer showed some pictures taken of homes that are abandoned with obvious water damage. Jerry Gumphrey moved to approve the Emergency Utility Shut-off Policy after it has been reviewed by Attorney's with changes if needed. John Dietz seconded the motion. Motion carried 3-0. 6.6 Consider "Operation Roundup" Other utilities in the region have a mechanism to provide donations to area charities. Connexus Energy and Wright-Hennepin Cooperative have a program called "Operation Roundup". They collect money voluntarily donated by ratepayers derived from rounding up their payment to the nearest whole dollar. The funds are expended to area charities via a volunteer advisory board made up of local citizens. Would the Commission be receptive in Page 7 Regular meeting of the Elk River Municipal Utilities Commission January 13, 2009 starting a fund of this type? Jerry Gumphrey felt this was a good idea but bad timing right now. John Dietz agreed. Consensus was to revisit this subject in April. 6.7 Review General Manager Position Description A draft for the General Manager (GM) duties was presented. John Dietz stated he wants to try restructuring the GM position and keep the duties in house without a GM. John continued by saying the water department would report to Terry Maurer, the public works director at the City of Elk River, Administration department would report to Theresa Slominski, and the Electric Department would report to Troy Adams. The department heads would still have their meetings as usual. Jerry Gumphrey agreed and felt staff could split the current duties of the GM amongst themselves. John Dietz said this was contingent upon the City Council agreeing to have Terry Maurer oversee the water department. Jerry Gumphrey said he thought it was a good idea. Jerry Takle opposes this venture, and said it is not a good idea. Vance Zehringer asked John Dietz and Jerry Gumphrey why they did not want a GM. Vance continued to say that management staff is busy enough already, and that there is a lot involved in GM responsibilities. Jerry Gumphrey commented he feels staff is capable of this, the timing is right and the staff is excellent. He also felt that other people should step up to the plate to assist. Jerry Gumphrey said this would be a good step and ERMU can always go back to a GM. Vance Zehringer asked Commission if the department heads were asked for their opinion of this proposal. Commission responded no. Lori Johnson said this has not been discussed with Ciry Council either. David Berg, Water Superintendent commented he has worked with Terry Maurer for many years. John Dietz said this would need to be discussed with staff first. Theresa Slominski asked how they would assess if this would work or not. John Dietz said it would be revisited monthly. Jerry Gumphrey suggested staff should meet regularly to discuss progress. Troy Adams said taking care of employees and issues is important. Mark Fuchs suggested possibly hiring another department manager if current management gets overwhelmed. John Dietz directed staff to put this on next month's agenda. Jerry Gumphrey suggested staff meet and discuss these issues prior to next months meeting. Other Business John Dietz requested a list of duties for the new consultant to work on. David Berg checked into the tower rental fees and they range from $1000 to $2500 per month. John Dietz suggested tower antenna rental be placed on a future agenda. The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be Tuesday, February 24, 2009, at 4:30 p.m. Page 8 Regular meeting of the Elk River Municipal Utilities Commission January 13, 2009 President Jerry Takle adjourned the regular meeting of the Elk River Municipal Utilities Commission at 7:30 p.m. Minutes prepared by Judy McSpadden. J Takle President, ERMU Commission Tina Allard City Clerk