07-09-2007 ERMU MINELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
July 9, 2007
Members Present: Jerry Trkle, President; Jerry Gumphrey, Vice Chair; James Tralle, Trustee
Staff Present: Bryan Adams, General Manager; Glenn Sundeen, Line Superintendent;
Theresa Slominski, Finance Director/Office Manager;
Troy Adams, Engineering Manager; Judy McSpadden, Recording Clerk
Staff Absent: David Berg, Water Superintendent
1. Call meeting to order June 12, 2007
President Jerry Takle called the July 9, 2007, meeting to order.
2. Consider Utilities Agenda
James Tralle added an item regarding the Water Survey to be discussed under Other
Business. Jerry Gumphrey moved to approve the July 9, 2007, Utilities Agenda. James Tralle
seconded the motion. Motion carried 3-0.
3. Consider Consent Agenda
Jerry Takle questioned the extra payment to Connexus and staff responded it was from the
recent territory acquisition. Jerry Gumphrey moved to approve the Consent Agenda as
follows:
June Check Register
June 12, 2007, Minutes
Financial Reports
James Tralle seconded the motion. Motion carried 3-0.
5.1 Staff Up-dates
Bryan Adams said the Well #9 building will be going to the planning commission for
approval. The water department recently had a 7 million gallon pumping day. James Tralle
asked if it was time to contact the paper to do an article regarding the high water use and water
conservation. Bryan said he will contact the paper.
Glenn Sundeen reported the Waco feeder was near completion. Glenn also updated on
the other current projects and difficulties with some areas of rebuilds. There was only one
outage due to the storm on Sunday and that was caused by a tree limb on the wires.
Troy Adams said the security sales were down to 11, however service calls were up due
to the changeover of the Alarm Net C systems at the lift stations and wells being obsolete and
having to be upgraded. The Virginia transformer is scheduled to ship this week.
Jerry Takle reported a citizen had complained of water problems. Bryan Adams will
have the water main flushed in the area to see if that will take care of the problem.
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Regular meeting of the Elk River Municipal Utilities Commission
July 9, 2007
Theresa Slominski updated the Bi1lFlash situation. Due to the absence of key staff at
Bi1lFlash, she did not do a site visit at the last mailing, but will try to arrange a visit during this
month's mailing providing the key staff members are present. The mandatory prepayment of
sales tax was also discussed.
5.2 Review & Consider Bid Tabulation for Electric Line Truck
At the June 2007 Elk River Municipal Utilities commission meeting, the vehicle
replacement policy was discussed. Unit #8 is a 1998 Freightliner with a Holan 42 areial
bucket that is used daily, is approaching 10 years old and should be replaced. The chassis is in
fairly good shape but the aerial device is showing its age and is too short for the current and
future tasks it will be performing. Bids were secured for the replacement line truck. Staff
recommends awarding the lowest responsive bidder, Dueco for $143,495 with trade-in. James
Tralle asked about selling the truck ourselves. Staff responded the truck would not be suitable
for a lot of companies, would not be worth the time, and we are receiving a fair value for the
trade-in.
James Tralle moved to award the 2008 Electric Line Truck, Aerial Device and Body to
Dueco, the lowest responsive bidder. Jerry Gumphrey seconded the motion.
Motion carved 3-0.
5.3 Review & Consider PCB Shed
The 2007 electric budget contained a $40,000 item to construct a PCB shed. Electric
transformers that are removed from service are required by USEPA to be non PCB certified.
These transformers must be stored in a contained area until the test results are back.
Transformers that are high in PCB contaminants are held in the contained area until they are
properly disposed of.
The containment area at our 1705 Main Street power plant facility is too small and no
longer adequate. Staff is proposing to construct a 20' x 20' enclosed storage facility at the
West Substation facility at 19002 Elk Lake Road. This facility is directly north of the Elk
River street department facility. The estimated cost of this project is $32,000. Pending the
approval of the City of Elk River Planning department, staff recommends authorization be
given to proceed with this project.
Jerry Gumphrey moved to proceed with the PCB containment building. James Tralle
seconded the motion. Motion carved 3-0.
5.4 Update LFG Capacity Addition
At the June 2007 Elk River Municipal Utilities commission meeting, the possibility of
expanding the LFG facility was discussed. Sherburne County was contacted regarding their
financial support. Preliminary discussions with Sherburne County are very positive. Waste
Management has indicated their desire to again allow us to be the lead on this project and draft
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Regular meeting of the Elk River Municipal Utilities Commission
July 9, 2007
the agreement to mirror the existing agreements. Project costs, funding, and paybacks were
discussed. The issue will be to obtain a modified air permit from MPCA which could take
over a year.
James Tralle moved to proceed with the LFG expansion. Jerry Gumphrey seconded the
motion. Motion carried 3-0.
5.5 Review Deposit Requirement Policv
At the June 2007 Elk River Municipal Utilities Commission meeting, one of the agenda
items was a Personal and/or Credit Use and Security Policy. During that discussion the need
for a Customer Deposit Policy was introduced. A proposed deposit policy was reviewed. On
Line Utility Exchange (OUE) will be utilized for assessing credit scores. The deposit is a
standard two months estimated average utility bill (electric, water, sewer). After three years of
good standing the deposit is returned with interest. For residential accounts with a credit score
above 68%, no deposit is required. Failure to provide a social security number will result in
the required deposit. For commercial accounts, the deposit can be in the form of a personal
guarantee, 2 months deposit or an irrevocable letter of credit. The irrevocable letter of credit
has to be renewed each year. If the letter of credit is not renewed, the utility will penalize the
account the estimated average two months utility bill. In the case of customers that have been
disconnected for non-payment, a two month deposit will need to be collected along with the
past due funds. Municipal utility staff has always worked with the customer as long as they
keep in contact, make arrangements, and follow through with them.
Jerry Gumphrey moved to approve the customer deposit policy as amended and attached to
these minutes. James Tralle seconded the motion. Motion carried 3-0.
5.6 Review Pole Replacement Policv
At the June 2007 Elk River Municipal Utilities Commission meeting, staff was directed
to draft a utility pole move policy. The 10 conditions were discussed and proposed policy was
reviewed. Jerry Gumphrey commended staff on a good job.
James Tralle moved to approve the Elk River Municipal Utilities Pole Move Policy. Jerry
Gumphrey seconded the motion. Motion carried 3-0.
6.1 Review Property Insurance
We maintain two different insurance policies for our power plants. They are boiler and
machine insurance, and property insurance. The boiler and machine insurance through
AIG/Hartford Steam Boiler covers repair costs due to major equipment failure with very high
deductibles. Our substation transformers are also covered under this policy.
The property insurance thru the League of Minnesota Cities Insurance Trust (LMCIT), covers
all of our properties for property damage including vehicle and equipment. An issue that
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Regular meeting of the Elk River Municipal Utilities Commission
July 9, 2007
continues to be a problem is the replacement value of the old generation equipment at our
power plant. If the building was destroyed and generation equipment damaged beyond repair,
what is its value and how would it be replaced. Replacement parts for the old generation
equipment are becoming very difficult to find. LMCIT is proposing using high speed
caterpillar units as replacements if a catastrophe occurs. This will have to be reviewed
annually to keep the values current. Jerry Gumphrey questioned if there would be future
budgeting for engine replacement. Jerry Takle then commented about the decision to invest in
power plants versus engines. Bryan Adams added that if the transmission system failed local
generation could support sections of Elk River via the generation engines at the power plant.
James Tralle questioned the cost of the engines. Bryan Adams replied, per the property
insurance schedule, each engine/generator with auxiliary equipment would be $650,000.
6.2 Review Waco Substation Agreement with GRE
The Interconnection Agreement with GRE was discussed. As additional substations are
constructed, the interconnection agreement is amended to reflect an additional interconnect
point and defines who owns what equipment. Supplement #5 to the Interconnection
Agreement between Elk River Municipal Utilities and Great River Energy was reviewed.
James Tralle asked if there were future plans of renegotiating for additional territory within the
city limits. Bryan Adams responded possibly the East corridor along Hwy 10, and the western
edge along old Meadowvale Road.
Other Business
James Tralle questioned why Elk River was on the low end of the Water survey results.
Bryan Adams responded that the base usage they used was on the low end. The base for this
survey was only 7,500 gallons per month. Based on this survey, the base rate for water could
be raised.
The next regularly scheduled meeting of the Elk River Municipal Utilities Commission
will be Tuesday, August 14, 2007.
President Jerry Takle adjourned the regular meeting of the Elk River Municipal Utilities
Commission at 5:00 p.m.
espectful ubm' d,
Judy padd
Recording Clerk
Elk River Municipal Utilities
Customer Deposit Policy
In order to minimize the risk of collecting payments from customers who default on their accounts, the
Elk River Municipal Utilities (ERMU) has adopted this Customer Deposit Policy. The amount of deposit
required will depend on the risk identified with the customer. To assess this risk, the ERMU will utilize
available known credit history through on -line resources and their applicable nationally recognized
scoring methods (such as FICO or Beacon) and/or ERMU past experience with the customer.
For residential customers, the risk of nonpayment will be assessed as follows:
A: If credit score falls above 68% probability of non default and no negative history (disconnection for
non- payment or late payment 2 times in 12 months) with the ERMU, no deposit is required. Failure to
provide a social security number will result in the required deposit.
B: For all others, a deposit of 2 times estimated average monthly utility bill (electric, water, sewer) will
be required before utility service will be extended. With good credit history for a period of 3 years, the
deposit will be credited to the customer's utility account. The appropriate interest will be applied to the
monetary deposit per State statutes
For commercial and industrial customers, a service agreement would need to be signed that identifies
the guarantor of their business and the guarantor's social security number. A deposit of 2 times the
estimated monthly bill will be required. The deposit shall be in the form of a cash deposit, personal
payment guarantee, or an irrevocable letter of credit. The irrevocable letter of credit will be renewed as
required and failure to do so will result in a charge equal to the amount of the letter of credit applied to the
monthly utility bill. With good payment history for a period of 3 years, the deposit will be credited to the
customer's account or personal guarantee/ letter of credit will be returned to customer.
For residential, commercial or industrial customers who are disconnected for non-payment, a 2 month
estimated utility bill deposit will be required before reconnection.
Adopted 07/09/2007