ERMUSR Misc Issues 06-06-2006.^~/
Elk River ---~
Municipal Utilities
13069 Orono Parkway
Elk River, MN 55330
May 31, 2006
To: Elk River Municipal Utilities Commission
Jerry Takle
.Tim Tralle
John Dietz
From: Bryan Adams
Subject: Miscellaneous Issues
phone: 763.441.2020
Fax: 763.441.8099
Enclosed is the packet for the Tuesday, June 6, 2006 commission meeting at 4:OOpm.
Our large construction projects continue to go well. Listed below is a quick synopsis of our
major projects.
1) The Otsego substation should be energized soon. We continue to wait for
GRE & W-H for an appropriate time to take an outage.
2) Construction of Otsego's 3 feeders have progressed better then anticipated. We
continue to wait for the padmount switchgear. Completion anticipated by early
August.
3) The underground line at Co Rd 42 & HW 101 are completed & energized. Removal
of overhead lines is in progress.
4) The Target feeder projects is also going very well.
5) The engine/generator addition at the landfill is well underway. Engine/generator is set.
The necessary piping & electrical is underway. Project should be completed by
months end.
6) We have received no other news on the other data center.
7) Station 14 substation construction remains on schedule. Transformer delivery by early
August. GRE's substation construction schedule remains a concern.
Although the construction of the 5 underground feeders is going well, the cost of the material
continues to rise. When we purchase underground cable, we establish a base price for the copper
& aluminum components. The actual price is established at the day of shipment based on market
index prices for aluminum & copper. The attached spread sheet reflects the purchase price,
escalation price, & final price of underground cable. In summary, the total purchase price was
$1,090,460 has escalated to $1,314,250. Attached is a article from Kiplinger titled "Business
Costs" explaining the raising cost of raw materials.
One of our newer employees, Amy Kral, clerk/receptionist recently had a baby girl. She has
decided not to return to work. Attached is her resignation letter. We are in the process of filling
her position. We have received approximately 100 applications.
Attached are the following articles for your information:
1) From AWWA Spring 2006 Breeze titled "Japan's Thirst for Hawaii Deep Seawater
Drives Industry" What is wrong with tap water?
2) From ASCE May 2006 "News" titled "Secretary of Transportation Addresses
Infrastructure Crisis at Summit." Leaders promote innovation and partnerships as
strategies from action.
3) From Mpls Star Tribune May 28, 2006 issue titled "Access to the Internet: Is it a right
or a privilege?" This is a good article as it pertains to our discussion on wireless
internet.
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I N F R A S TRU C'I' UR~E" "S~I1~1ViYT`. ~ ~ ` ~:
(continued from page 1) that the issue of
decaying infrastructure becomes a national
priority. We anticipate task committees,
program management to measure progress,
andjoint leadership in going to the Hill and
to industries to help us move forward."
In his keynote address, Mineta recog-
nized the seriousness of the nation's infra-
structure crisis and the need for the public
and private sectors to work together to find
solutions. "With the growing recognition
that our transportation trust funds are on an
unsustainable course, what we see gather-
ing is the perfect storm," he warned. "This
has prompted some serious thinking and
rethinking about the ways that America
plans, builds, finances, and maintains our
vast and vital transportation network. We
face serious challenges in finding a cleaner,
rnore fuel efficient way to power the trans-
portation system that has made America
the most mobile society in the world. But
we also face challenges in fighting the traf-
fic that chokes our cornmunities and cities.
This troubling phenomenon is not limited
to roads and highways; the pattern is being
repeated in crowded airports and in our
congested skyways and freight backups that
have becorne the weak link in our supply
chain." The 3.5 billion hours each year I
that U.S. motorists spend stuck in traffic
carry a dollar value of more than $63 bil-
lion, according to nsc1:'s 2005 Report Card
for America's Infrastructure. Moreover, air
travel and traffic are expected to increase
by more than 4 percent each year over the
next decade.
The secretary of transportation also
emphasized the importance of establishing
partnerships between the public and private
sectors. "I see the embracing of the private
sector as the future, not just for highways but
for our broader transportation network,"
he said. ""The expanded freedom that fol-
lows the private sector's evolving role is not
a blank check. As of October of last year,
nearly eleven billion dollars' worth of road
projects [had] been completed using public/
private partnerships. States that adopt pub-
lic/private partnerships are getting far more
than an infusion of cash. These partnerships
are also bringing more responsiveness and
consistent users (and arc] helping to direct
investment resources, and in the most criti-
cal projects they are lowering the cost of
repairing and maintaining infrastructure
over time and even accelerating the deploy-
ment of technologies."
Asked what nscs could do to improve
the current state of the nation's transporta-
tion systems, Mineta responded as follows:
"There's no question that nscs has the
capability to develop] new ideas in terms
of what can be done. All of you are not
only idea people, but you're also practical
in the sense of knowing what has to be
done and what works. So nscr: can be part
of the innovative discussion and provoke
new ideas in policy, and I would say nscE
should continue to do what it has been
doing through its committee structures
and state societies."
During an awards lutrcheon that day,
James Glymph, the winner of cEer's 2006
In his April 15 address to attendees at the infra-
structure conference, Felix G. Rohatyn, a former
U.S. ambassador to France and a cochair of the
Center for Strategic and International Studies'
Commission on Public Infrastructure, outlined a
legislative proposal he has been developing that
would create a national investment corporation
for infrastructure.
Henry L. Michel Award for Industry
Advancement of Research, discussed the
benefits of implementing three-dimen-
sional computer modeling in construction
and lauded innovation as an essential factor
in improving the nation's infrastructure.
"What we do in the next ten years will be
the last of what we do with fossil fuels," he
said. "Our infrastructure is in much worse
shape than Europe's, much worse shape
than Japan's, and China is moving very
fast. For us to stay competitive we have to
do something about this problem, but we
do not need to design infrastructure for
the twentieth century; we need to design
it for the twenty-first, and that is going to
be a hard thing to figure out."
Rohatyn, who served as the U.S.
ambassador to France from 1997 to 2000,
seconded Glymph's assessment of infra-
structure in Europe: "Whether it's their
high-speed trains, whether it's their air-
ports, whether it's their roads or the way
they run their cities, European infrastruc-
ture, which is financed by the European
Investment Bank by selling long-term
bonds to the public, is a perfectly won-
derful system," he said. "And yet we are
supposed to be the leaders of the world
in terms of technology and wealth. But if
tomorrow something goes wrong in Long
Beach, you're going to have boats parked
halfway across the Pacific Ocean."
As chairman ofthe Municipal Assistance
Corporation in the late 1970s, Rohatyn
managed the negotiations that enabled
New York City to weather a financial cri-
sis. In his remarks he described a legislative
proposal he has been developing that woulc{
create a national investment corporation for
infrastructure. "We can certainly finance
it if we have the political will and it's prop-
erly constructed," said Rohatyn, who is
the president of Rohatyn Associates, rrc,
of New York City, a cochair of the Cen-
ter for Strategic and International Studies'
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5/18/2006
To Elk River Municipal Utilities,
I would like to take time to thank you for giving me the
opportunity to work for ERMIJ.
I have decided to make a career change. I am giving my written
resignation. Therefore I will not be returning to work after my
maternity leave is done.
Once again thank you for giving me this great opportunity.
Thank you,
Amy Kral
k~z~~
® Soaring prices for raw materials will soon see a correction.
' But don't mistake the price drop for a collapse in commodities.
Dips of 10%-20% the rest of 2006 will take the froth off the market,
erasing much of the recent gains driven by investors seeking big returns.
50 ~.
Global Consumption ~~~
40 of Metals
(In millions of tons) ,~• -°
Aluminum i~
so \~'
-r~~/ Copper
••
20
Zlnc~
o _ ~~~~ T 7 T T T T
'95 '00 'OS '10 '15
Sources'. Global Insight, CRU Analysts, Nip tin qer
in Latin America and an
Latin America and Russia
Demand for metals will keep outpacing su~nly
as industrial growth in the U.S., China, Japan,
South Korea and eastern Europe continues
at a fast clip. China alone will double
its consumption of aluminum, copper, nickel,
zinc and other industrial metals by 2011 or so.
Use of aluminum, copper and zinc won't abate.
Ditto for many other metals. They're needed
by manufacturers of everything from airframes
and autos to electrical and building materials.
The supply chain of kev metals faces more kinks,
a result of high energy costs, political unrest
investment climate in Russia that's iffier now.
produce many key raw materials used worldwide.
An unintended result of new accounting rules taking effect soon:
Higher borrowing costs for many firms. The regulations from FASB,
the Financial Accounting Standards Board, call for pension obligations
to be counted as liabilities, giving a truer reflection of future costs.
Hardest hit: Big manufacturers, mainly makers of airplanes, autos
and steel. These companies have unions and lots of high pension costs.
Many firms will try to renegotiate their loans rather than default.
Rail freight shipping rates will lump again next year...by 7%
following this year's 6% rise. Just finding space is becoming harder.
A 10% increase in import-export freight is filling up railcar capacity.
Many West Coast-bound trains are loaded with scrap metal headed to China.
Expect higher trucking costs, too. They'll climb 4% in 2007.
There's no relief in sight on property insurance rates.
Look for 10% annual hikes for years as insurers base their rates
on risk models that indicate the strong likelihood of catastrophes
at least once every decade. Another factor: Higher prices for cement,
plywood, steel and labor are pushing up the cost of rebuilding.
A mixed bag on worker's comp rates: Despite high medical costs,
employers in most states won't see an increase anytime soon. In Calif.,
Texas and Fla., rates will dip a bit because of tighter claim procedures.
But rates are poised to rise slightly in W.Va., Mont. and Alaska,
where restrictions on worker claims are looser. In S.C., rates will jump
a whopping 33% this year because of red tape and slow claims resolution.
~ Upcoming hotel contract talks will be a big test of union clout.
Unite Here, a part of a new federation known as Change to Win,
which broke from the AFL-CIO last year, plans a new organizing approach
to boosting membership among hotel workers. It will press hotel owners
to recognize a union without an election if a majority of workers
simply sign a card showing interest in becoming unionized. Hotels
will be the guinea pig to see whether the plan can revive union strength.
Remember, your subscription includes The Kiplinger Letter online
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Hoist Your Glasses for a Toast ... to Reve~•se Osmosis! ~1w~a.A~ ~'~,~, ~„;~„~ `3~.~,a~,,~
Japan's Thirst for Hawaii Deep Seawater Drives Industry
S. Water News Online, March 2006
The following article seems to confirm
the ongoing identity crisis of municipal
water supplies and illustrates what
marketing can do for a product.
HONOLULU- Japan's thirst for desali-
nated, bottled Hawaiian deep seawater
is driving a booming industry on the
Big Island, with sales reaching nearly
$17 million last year. Demand for the
water that sells for up to $6 a bottle is
increasing, making it one of the state's
hottest exports.
The water is pumped to the surface via
a pipeline that dips 3,000 feet deep near
the National Energy Laboratory on the
Big Island's Kona Coast.
The water is mainly marketed in Japan
as being exceptionally pure, with possi-
ble health benefits. The salt is removed
through reverse osmosis and electroly-
sis. Bottlers are also trying to develop a
local and mainland U.S. market.
Five years ago, exports of the water
totaled just over $360,000. Last year,
the Foreign Trade Zone Division of the
state Department of Business,
Economic Development and Tourism
recorded $16.8 million in deep seawa-
ter exports.
Ron Baird, head of the National Energy
Laboratory of Hawaii Authority, a state
agency set up to research ocean thermal
energy conversion, says the business
still appears to be in its infancy. Baird
predicted more than $100 million in
investments over the next year or so.
The drinking water operation is a
byproduct of the pipeline used to cool
buildings at the lab and produce energy
using cold water from the depths of the
ocean.
The largest bottler of deep seawater in
Hawaii, Koyo USA Corp., is building a
third plant at the energy laboratory,
increasing its daily capacity from
250,000 to I million bottles a day,
according to Hiroshi Usami, Koyo's
general manager.
Three other companies also are getting
into the business this year, and others
will be setting up operations later, offi-
cials said. One company has announced
plans to set up its own operation off-
shore from Oahu, pumping deep seawa-
ter into a boat for bottling at plants in
Kapolei.
Access to the
Internet:
Is it a right or
a privilege?
• Broadband providers want more
control of the Intemet. Opponents
say a tool of democracy is in peril.
'' Congress is taking up the issue.
By JOHN REINAN o jreinan@startribune.com
Imagine if the Internet were like ca-
ble TV.
You pay $40 a month to Time War-
ner or Comcast, and you get a menu of
80 websites to visit.
Want to go to a site devoted to Japa-
nese anime cartoons? Sorry, that's not
on the menu. Looking for that crazy blog
about the history of matchbook covers?
No longer available - or so slow to load
it's not worth your while.
That scenario could become
real, soma Internet mavens say, unless
Congress acts quickly to preserve free-
dom ofthe Web. A recent U.S. Supreme
Court decision has opened the door to
greater corporate control of the Inter-
net, and big business is ready to walk
through it.
"The small guy is not going to be able
to get his word out," said Elliot Cohen,
a Florida-based media scholar and au-
thor. "If these companies get their way,
content providers with deep pockets
will get optimum bandwidth, and the
rest of us will be spinning slowly in cy-
berspace.
"The gxeatest democratic fonzm that
was ever devised by humanity will go by
the wayside:'
But broadband Internet providers say
they don't want to restrict access to the
Web -they want to offer consumers
more choices.
More video, faster online games,
home teleconferencing -all would be
possible if broadband. providers could
charge different rates for different Inter-
net services, they say.
The debate is over "net neutrality."
It's the subject of at least four proposed
laws in Congress.
Internet continues on A15
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or privilege? Web users debate
~ INTERNET FROM Al
Net neutrality means that
everyone who hooks up to the
Internet is treated equally. The
website for the Phillips Neigh-
borhoodNetwork in Minneap-.
olis gets its traffic routed as ef-
ficiently as CNN.com.
But net neutrality is also
about who pays for the Inter-
net. Cable and phone compa-
nies, which provide the net-
work for broadband Internet
traffic, have watched Google,
Yahoo and other Web business-
esget rich using their "pipes:'
The cable and phone com-
panies think they should get a
bigger piece of the Internet pie.
Rather than just collect month-
lyfees from subscribers, broad-
bandproviders want business-
esthat use the Web to pay them
higher rates for premium ser-
vices, such as faster connec-
tions and higher levels of se-
curity.
They also want the ability
to steer their broadband cus-
tomers tothose premium sites.
In theory, broadband provid-
ers could even block access
to websites that refused to pay
extra fees, although one ma-
jor provider - AT&T -has
pledged not to do that.
Advocates of net neutrality
argue that the Internet is a qua-
si-public service, like the elec-
tric grid or the telephone lines.
Giving preferred treatment
to certain websites, they say,
would be akin to the telephone
company offering better phone
connections to whichever flo-
rist or car dealer paid it the
most money.
Partisans on both sides say
the future of the Internet rides
on how lawmakers settle the
issue.
"Our goal is to ensure that
the Internet is an open sys-
tem for anyone, anywhere to
use," U.S. Sen. Byron Dorgan,
D-N.D., said in an interview
"We're very concerned about
big companies acting as gate-
keepers, charging tolls. We
think that will ruin the Inter-
net:'
Dorgan is co-author of the
Internet Freedom Preserva-
tion Act, which would prohib-
it broadband Internet service
providers from "blocking, de-
grading or prioritizing service
on their networks:'
Broadband providers such
as Comcast, AT&T and Veri-
zon say that without extra fees
from preferred customers, they
won't have money to upgrade
their networks and invest in
new technology.
AT&T, Verizon and Comcast
declined interviews.
"Net neutrality proponents
would actually limit choices
and options for Internet us-
ers," Ed Whitacre, chief exec-
utive officer of AT&T, said in a
statement. "They say it is unfair
for Internet users. and content
x>~r x>~u~.rrY R
For pros and cons on net
neutrality, see www.
savetheinternet.comand
www.netcompetition.org.
providers to pay different pric-
es for different levels of speed,
reliability and security.
"It's like saying we should
add no more lanes to a high- ',
way that is increasingly con-
gested."
No longer a common carrier
Ever since the Internet be-
gansome 30 years ago as a way
of letting computers talk to
one another, net neutrality has
been a key principle. Internet
service providers were consid-
ered common carriers, mean-
ingtheyhad toroute all traffic,
regardless of destination.
Last year, the U.S. Supreme
Court ruled that the Internet
was more like cable TV: aone-
way transmitter of informa-
tion. Just as cable companies
choose what programs they
offer on their channels, broad-
band providers would be al-
lowed to choose what Web
content they transmit.
Ralph Jenson, a Woodbury
technology consultant, was a
founder of Gofast.net, one of
the first Internet service pro-
viders in the Twin Cities. The
broadband companies, he said,
are losing sight of why the In-
ternetwas created.
"It wasn't just for them to
connect to their customers,"
Jenson said. "It was for every-
body to connect to everybody
else. A guy who sets up a new
site and it gets hot, they're go-
ing to come to him and ask for
more money, and he's going to
have to shut down. And there
goes innovation."
Those on the other side
point out that there are already
different service tiers and fi-
nancial deals on the Inter-
net. Some customers pay less
for slow dial-up connections,
while others pay more for fast-
erbroadband service.
And Google, a loud propo-
nent of net neutrality, gives.
priority in its search listings to
companies that pay to be at the
top of the list.
"The common carrier is a
model for 1910, not 2010," said
Douglas Holtz-Eakin, an eco-
nomic fellow at the Coun-
cil on Foreign Relations in
Washington, D.C. "You charge
people based on what they
use.
"My take on the really big
stakes here is, who will build
the Internet capacity of the fu-
tore? And the sad truth is that
no one is going to do that un-
less they have the money,
through pricing, to put it in."
Dorgan said freedom of the
Web is an important tool of de-
mocracy.
"The Internet is changing
the way we communicate and
the way ideas are exchanged
and considered," he said. "We
can't have the Internet become
a proprietary playground:'
John Reinan • 612-673-7402
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