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3.0 ERMUSR 07-09-2007~~~ ELK RIVER MUNICIPAL UTILITIES S1S REGULAR MEETING OF THE ~ o UTILITIES COMMISSION June 12, 2007 Members Present: Jerry Takle, President; Jerry Gumphrey, Vice Chair; James Tralle, Trustee Staff Present: Bryan Adams, General Manager; Glenn Sundeen, Line Superintendent; David Berg, Water Superintendent; Theresa Slominski, Finance Director/Office Manager; Troy Adams, Engineering Manager; Judy McSpadden, Recording Clerk Other Present: Lori Johnson, City Administrator; Paavo Pyykkonen, NorthStar Access; Ron Black, Attorney 1. Call meeting to order June 12, 2007 President Jerry Takle called the June 12, 2007, meeting to order. 2. Consider Utilities Agenda Bryan Adams added 6.7, Write-offs, to the agenda. James Tralle moved to approve the June 12, 2007, Utilities Agenda as amended. Jerry Takle seconded the motion. Motion carried 3-0. 3. Consider Consent Agenda Jerry Gumphrey moved to approve the Consent Agenda as follows: May Check Register May 10, 2007, Minutes Financial Reports James Tralle seconded the motion. Motion carried 3-0. 5.1 Staff Up-dates Bryan Adams reported the electric consumption was up 10% and water was up 12%, compared to last year. Recently at a CMMPA / CAPX2020 meeting, Bryan Adams was elected Chairperson of Finances. An issue regarding a water leak on Main Street was discussed. Staff was directed to compile a list of contractors that are licensed and bonded to be called for future repairs. GRE will be building the gas turbine on their property along Hwy 169. Glenn Sundeen gave an update on the current projects. County Road 33 rebuild is complete, Lineman are still upgrading Area 17, staff is taking care of issues as they arise for the Irving Street rehabilitation project, and crews are terminating the new feeder for UHG. Troy Adams said the security sales for the month of May were down however, there were a lot of installs. The UHG feeder project is nearing completion. Troy just returned from a tour of the Virginia Transformer plant. The transformer delivery is on schedule. David Berg said half of the hydrants have been flushed. Staff is still in the process of checking water valves, more than expected are in need of replacement or repair. Maintenance Page 2 Regular meeting of the Elk River Municipal Utilities Commission June 12, 2007 on the wells continues and the new water department employee, Angela Hauge, started Monday. Theresa Slominski informed the commission there are between 1200 - 1500 delinquent notices sent per month out of approximately 10,000 customers. Recently there were approximately 100 shut-offs due to non-payment. A majority ofthem were turned back on within a few hours, and only five of those are still off. Elk River Municipal Utilities filed for a Capital Equipment Refund for tax paid on transmission and distribution materials for 2006. Staff recently received notification that a full refund of approximately $260,000 was approved. Bi1lFlash is in the process of implementing a newer and more efficient system. They had some problems so there was a delay in sending out the utility bills. Theresa will be at Bi1lFlash's site for the next billing run. Due to Paavo Pyykkonen of NorthStar Access being present, it was the consensus to address 5.4 at this time. 5.4 Up-date City Wide Internet System A year ago we initiated discussion concerning a community wide intemet service. NorthStar Access was already an intemet provider in our community, and was in the process of starting a program to test a wireless system. Paava Pyykkonen of NorthStar Access discussed the progress of the wireless system with a small beta group. Technical problems continue to arise but are being solved. An additional 30 potential customers were contacted to get connected and have agreed to move forward. NorthStar will be direct mailing information locally regarding this wireless system. Due to Attorney Ron Black being present, 6.3 was considered next. 6.3 Update ISD #728 Irrigation Well Previous correspondence and notes from a June 4, 2007, meeting concerning Twin Lakes School proposed imgation well were reviewed. Current City Ordinance states that if City Water is available the customer must hook-up. MN DNR stated ISD's proposed wells will influence the municipal well. Due to Elk River having only one aquifer, Elk River is correct in being protective of this water source. DNR said Ells River's 10 year appropriation will carry a requirement to monitor Mt. Simon aquifer with test wells. The DNR is somewhat concerned with Mt. Simon aquifer quantity and level of drawdown. MN DNR (Minnesota Departrnent of Natural Resources) and MRW (Minnesota Rural Water) commented on ERMU's requirements of wellhead protection and water conservation efforts. Ron Black feels ERMU is justified in pursuing this matter. The concern of ISD is cost based. Three options were discussed, they are as follows: 1) Do nothing -ISD will get lower water rate ($1.40/1000 gal.) for Twin Lakes Elementary for one year only. Twin Lakes well and Lincoln well to be sealed. Page 3 Regular meeting of the Elk River Municipal Utilities Commission June 12, 2007 2) Let School do as they wish. 3) Allow ISD to utilize well at Twin Lakes Elementary for irrigation purposes only until such time ERMU starts construction of a municipal well adjacent to this elementary site. At this time, ISD will immediately stop use of this well, and properly seal it at their expense. ERMU could take over the well at Lincoln site for a monitoring purposes to satisfy the DNR requirement of a test well. Ron Black said there is one other avenue ISD could look at to help fund the water fees, that being raise recreational fees. James Tralle moved to allow the temporary use of this well until the municipal well is built and to work with ISD regarding fertilization to protect the well. Jerry Gumphrey seconded the motion. Motion carried 3-0. 5.2 Review & Consider Street Light Payment Policy The City started a street rehabilitation program approximately four years ago. These projects often affect the water and electric departments. The issue regarding the street rehabilitation projects where street lighting already exists is who should be paying for upgrading the existing wood street lights to decorative poles. At a previous Commission meeting staff was directed to draft an acceptable policy with the City. The memorandum draft from Lori Johnson discussed the difference between new street lights and existing street light replacement. The Utilities currently installs new street lights where required. The existing street lights that have to be replaced due to a street rehabilitation or improvement project can be costly. The City is offering to pay the cost for replacing the existing poles if the Utilities provide the labor to install them. Lori Johnson stated that the City Council has not seen this memorandum and it would still need to be presented to the Council for their adoption. Jerry Gumphrey moved to adopt the drafted street light reimbursement policy. James Tralle seconded the motion. Motion carried 3-0. 5.3 Security Camera Previously the commission has discussed copper theft problems at our facilities. Staff was directed to investigate the cost of installing security cameras at our facilities. Discussion followed as to the costs and locations of the security equipment. 5.5 Review Well #9 Layout The drawings, plans, and schedules were discussed for the new Well #9 project. The time frame for this project would be to start earthwork and utilities in September 2007 with a completion date of May 2008. The cost of this venture is estimated to be $650,000 which can Page 4 Regular meeting of the Elk River Municipal Utilities Commission June 12, 2007 be spread over 2 years. It is hopeful this can be funded with cash reserves, depending on WAC fees collected in 2007. If this can not be done, MCMU bonds can be utilized in 2008. James Tralle moved to proceed with construction of Well #9. Jerry Gumphrey seconded the motion. Motion carved 3-0. 5.6 LFG Update Last year we experienced premature head and valve failure on the engines at the landfill. The failure was thought to be a result of high hydrogen sulfide from sheet rock in the landfill. Further testing by Waste Management has confirmed our thoughts but the hydrogen sulfide concentration is much higher than anticipated. Waste Management is now pursuing isolating the effected wells with an alternate piping system and installing a candlestick flare for those wells only. This modification requires a revision to the air permit by MPCA, which may take some time. In a related issue, Waste Management has installed additional gas wells and has enough gas to supply two more engines. Our initial intent was to expand the landfill gas electric generation facility when the landfill expands. Waste Management is not hopeful that the landfill will be expanded. The cost of the land to the south is far above what Waste Management desires to pay. Jerry Gumphrey moved to pursue the possibility of adding two more engines. James Tra11e seconded the motion. Motion carried 3-0. 6.1 Review Vehicle Purchases Our current vehicle replacement policy is to trade in vehicles (line trucks and pick-up trucks) at 10,000 hours of operation or 10 years. Our other construction equipment, cable plows, tractor backhoe, front end loader, etc. may be kept over 10 years because of intermittent use. Our 1998 Freightliner with a Holan 42 aerial bucket is approaching 10 years old and is due to be replaced. Delivery for a new electric line truck is approximately nine months. Estimated cost for a replacement line truck is in the $130,000 range. Staff is currently securing bids and will present a bid tabulation with recommendations at the July commission meeting. 6.2 Review Residential Electric Connection Fees A developer of a new addition in Otsego feels our connect fees are too high. Our connect fees are as follows: Developer Cost -With City Water & Sewer $420/living unit Developer Cost -Without City Water & Sewer $520/living unit Builder Cost $800/living unit Page 5 Regular meeting of the Elk River Municipal Utilities Commission June 12, 2007 Between the developer and builder, we will receive $1220 to $1320 per living unit. Depending upon how fast the development is built, it may take years to collect the $800 from the builder. In an effort to satisfy ourselves and the developer that our fees are appropriate, we did an estimate of costs versus connect fees. Besides the initial electric distribution expense in the development, there are also costs to get the infrastructure to the location and to make sure the capacity is there to support it. In the case of this new addition, revenues up front are $420 or $520 per living unit depending on water and sewer availability. The remaining $800 per living unit is not collected until the lot is built on. Elk River Municipal Utilities up front distribution costs are $1648 per living unit plus another $614 per living unit in feeder and substation costs. The difference of $2262 expense versus $1220 per living unit is socialized in electric rates. For commercial accounts, we collect 50% of the distribution expense, but electric use revenue is being received in a few months and not potentially years. MMUA occasionally does surveys of other municipals on line extension and connect fees. The 2006 Line Extension Survey was reviewed. From this survey we can conclude that our connect fees are more aggressive than most. For a community that doesn't grow or grows very little, the connect fees are insignificant. In our case, they make up a significant portion of our capital budget. If we reduce the connect fees, we will need to increase electric rates. This was informational only to verify ERMU was being fair in requiring connect fees up front versus through electric rates. 6.4 Review Suree Protector Program A number of years ago, we started marketing Leviton surge protectors to help protect ERMU customers' electronic equipment from lightning damage. Our marketing effort was never really successful. Staff wishes to discontinue marketing these products. We do have about a dozen customers with the whole house surge protectors. These are installed at the meter base and monitored and replaced if needed for $4.50 per month. None to date have failed. Some customers have called and inquired about purchasing this product to avoid the monthly fee. The customers have basically paid for the device through the monthly fee. Because we installed these devices, we have some ongoing liability if we discontinue this program. One solution is to give these devices to the customer and forgo the monthly charge if they sign an indemnity agreement. The proposed agreement was reviewed. Jerry Gumphrey moved to approve the release of the monthly cost of the whole house surge protector providing the homeowner signs the Indemnity Agreement. James Tralle seconded the motion. Motion carried 3-0. Page 6 Regular meeting of the Elk River Municipal Utilities Commission June 12, 2007 6.5 Review & Consider Personal and/or Credit Use & Security Policy At the last Commission meeting an update was given on a product called Online Utility Exchange (OUE), which allows us to verify social security numbers for potential fraud and credit problems. After the attorney reviewed the agreement from OUE, it was recommended that we create and adopt policies to recognize our fiduciary responsibility to be in compliance with the Fair Credit Reporting Act, and establish repercussions for its misuse. The policy and employee responsibility forms were reviewed. James Tralle asked what happened if the customer had bad credit. Theresa Slominski said a deposit would be requested. Bryan Adams said he would like to adopt a policy regarding the requirement of deposits. James Tralle moved to adopt the Personal and/or Credit Use & Security Policy along with the Employee Responsibility Form. Jerry Gumphrey seconded the motion. Motion carried 3-0. 6.6 Review Pole Removal on Irving Street Proiect (verbal) A customer would like a couple poles that are in his yard moved. The concern staff has is it would set a precedence for future issues. Jerry Gumphrey directed staffto draft a policy regarding this. Glenn Sundeen said this area in question is not scheduled for an upgrade in the near future. No action taken. 6.7 Write-Offs Commission was presented with a listing of write-offs from fall of 2006 through May 2007. Jerry Gumphrey moved to approve the list of write-offs as presented. James Tralle seconded the motion. Motion carried 3-0. Other Business There was no other business. The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be Tuesday, July10, 2007. President Jerry Takle adjourned the regular meeting of the Elk River Municipal Utilities Commission at 5:20 p.m.