06-06-2006 ERMU MINELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
May 16, 2006
Members Present: Jerry Takle, President; John Dietz, Vice Chair; James Tralle, Trustee
Staff Present: Bryan Adams, General Manager; Glenn Sundeen, Line Superintendent;
David Berg, Water Superintendent; Theresa Slominski, Office Manager;
Troy Adams, Engineering Manager; Judy McSpadden, Recording Clerk
Other Employees Present: Wade Lovelette, Mark Fuchs, Richard Wagner, Trevor Gwiazdon
1. Call meeting to order May 16, 2006
President Jerry Takle called the May 16, 2006, meeting to order.
2. Consider Utilities Agenda
James Tralle moved to approve the May 16, 2006, Utilities Agenda as amended. John
Dietz seconded the motion. Motion carried 3-0.
3. Consider Consent Agenda
John Dietz asked for verification of a check, staff responded. John Dietz also noted he
was glad to see the overtime payroll down. Glenn Sundeen replied that the crews are now
starting nine hour days to keep up with projects so there will be more overtime as needed.
James Tralle moved to approve the Consent Agenda as follows:
April Check Register
April 11, 2006, Minutes
Financials
John Dietz seconded the motion. Motion carried 3-0.
5.1 Staff Up-dates
Bryan Adams relayed to the Commission that a 20% renewable energy requirement
passed the State Senate but so far there is no House Companion bill. Representative Jim
Oberstar is pursuing the captive rail shippers issue. Recently he attended an APPA conference
in Minneapolis on transmission markets.
Glenn Sundeen informed the Commission that the Highway 101 and County Road 42
road boring should be done by June 5~'. There will be a scheduled outage for the City of
Dayton to proceed with switching to the new cable for that service extension. The new feeder
for the data center is going well as is the feeder project in Otsego.
David Berg reported there were 11 new security accounts in April. Currently security is
being installed at the wells so they can be monitored via the SCADA system. Water main
maintenance is being done in the areas where they are doing the road overlays.
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Regular meeting of the Elk River Municipal Utilities Commission
May 16, 2006
Theresa Slominski reported being at a conference last week that was very informative.
The tax abatement request is still in the processing stage and full restitution was received from
the County regarding the swindle issue.
5.2 Review 2006 Wage Request
Bryan Adams stated there were five issues in the wage negotiation process this year. The
five issues are as follows:
A. CDL Policy
Bryan Adams explained the proposed CDL policy and asked the Commission for
comments. John Dietz would like to see more investigation into the wording of the CDL
policy. John asked Bryan to check with MN League of Cities, City Attorney, and Lori
Johnson. This issue was tabled to be revisited at a future meeting.
B. Living Distance for On Call Employees
The current living distance required for on call employees is 10 radius miles. Staff
recommends that be changed to 12 radius miles.
Motion by James Tralle to change the living radius of on call employees to 12 miles.
Seconded by John Dietz. Motion carried 3-0.
C. Sick Leave Policy
Staff would like to add "Sick leave may be used for up to five (5) days in a calendar
month for the instances of serious illness or surgery of family members who may not live with
the employee," to the employee handbook, Section 16. James Tralle felt this was a reasonable
request. John Dietz wanted to know if this was what the City had in their handbook and staff
responded yes.
Motion by James Tralle to accept and add to the employee handbook, Section 16, "Sick leave
may be used for up to five (5) days in a calendar month for the instances of serious illness or
surgery of family members who may not live with the employee." Jerry Takle seconded the
motion. John Dietz voted nae. Motion carved 2-1.
D. Funeral Leave Policy
Staff would like to add to Section 20 of the employee handbook titled "Leaves of
Absence" to include step-parents, step-siblings, and step-children.
Motion by James Tralle to add to Section 20 "Leaves of Absence" in the employee handbook,
step-parents, step-siblings, and step-children. John Dietz seconded the motion. Motion carries
3-0.
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Regular meeting of the Elk River Municipal Utilities Commission
May 16, 2006
E. Wages
Staff is proposing a 3.57% wage increase across the board. This is considered a metro
average based on the previous wage stuvey taken from neighboring utilities and cooperatives.
Motion by James Tralle to approve the 3.57% wage increase for all employees. John Dietz
seconded the motion. Motion carried 3-0.
5.3 Review Co Rd 40 Rebuild Proiect
At the March 2006 Elk River Municipal Utilities meeting, we were apprised of the
upcoming County Road 40 road project. Sherburne County received federal funds to rebuild
County Road 40 and it appears this project will start late this year and be completed in 2007.
This road project will require us to relocate and upgrade the overhead electric line. To avoid
tearing up this new road in a year or two, a trunk water line should also be installed with this
road project. The question now is who is going to fund this project. This discussion was
tabled until Lori Johnson, City Administrator could be present.
6.1 Review MMTG Opportunity
As a municipal electric utility, our goal is to keep our electric rates as competitive as
possible. One of the outfalls of electric industry restructuring is the segregation of distribution,
transmission and generation portions of our industry. Transmission costs are a concern. With
the formation of transmission as profit centers for generation and transmission companies
along with MISO operating the transmission and generation infrastructure, and the pending $3
billion of transmission construction due to CAPX 2020, transmission costs are going to rise.
How can Elk River protect itself from these rising transmission costs?
FERC has established an approximate 12.4% return on equity for companies owning
transmissions as a way to encourage ownership investment. ERMU's transmission tariff to
GRE will include this 12.4%. Because ERMU is not an equity member of GRE, we are in
danger of not receiving benefit of paying higher transmission rates to cover the 12.4% return.
If GRE returns the 12.4% to its members in the form of equity payments as has been done in
the past, ERMU will not receive benefit from paying higher transmission rates to cover the
return. If GRE uses the 12.4% return to reduce rates, ERMU will then receive the benefit of
the higher rate. FERC guidelines require the return on equity must be used to reduce rates
however, GRE is not under FERC jurisdiction.
Presently there are many unknowns about transmission and how it will affect ERMU.
ERMU's current annual transmission costs are approximately $1,600,000. Staff recommends
joining Midwest Municipal Transmission Group (MMTG) as a way to keep our options open
until we know more. This group would invest in transmissions and receive a 12.4% return.
The dues would be approximately $12,500 for the year.
Motion by James Tralle to apply for membership with MMTG. Jerry Takle seconded the
motion. John Dietz voted nae. Motion carried 2-1.
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Regular meeting of the Elk River Municipal Utilities Commission
May 16, 2006
6.2 Review Annual URGE Test Results
Elk River Municipal Utilities operates and maintains four diesel generation units at our
power plant. These units are contracted to Great River Energy through a Power Transaction
Agreement at the current price of $2.75/kw/month based upon the proven capacity from the
annual URGE test. The current contact expires October 31, 2006, and is extended on an
"evergreen" basis. Discussion followed regarding this years URGE tests. The capacity results
from this test will result in $346,104 in annual payments from Great River Energy.
6.3 Review 2005 Water Confidence Report
The 1996 amendment to the safe drinking water act requires all community water
systems to deliver an annual water quality report to their customers. The 2005 water quality
report was reviewed and will be included with the May utility bill to all water customers.
6.4 Review McBrady Meter Reading Cost Proposal
McBrady Meter Reading has been doing our meter reading for approximately 18 years.
Staff has met with Pat McBrady and has negotiated a fair contract proposal. Discussion
followed regarding the proposed increase.
Motion by John Dietz to approve the contract for McBrady Meter Reading. James Tralle
seconded the motion. Motion carried 3-0.
6.5 Review Substation 14 Agreement
Connexus Energy and Elk River Municipal Utilities have a substation joint use
agreement for Substation North. Connexus Energy desires to utilize our new Station 14 Bank
#2 Substation for a feeder to feed the North Star Business Park and other loads along Highway
10. The costs associated with the joint use are currently being calculated.
Motion by James Tralle to approve the agreement with Connexus Energy for joint use of
Station 14 Bank 2. John Dietz seconded the motion. Motion carried 3-0.
6.6 Review & Consider Health Plan HIPAA Security Policy
Small businesses were required to be incompliance with security of electronically
protected health information (ePHI) as of Apri120, 2006. There were 18 standards that
needed to be addressed and implemented. Elk River Municipal Utilities has completed an
internal review and has the necessary procedures in place.
Motion by James Tralle to adopt the HIPAA security policy. John Dietz seconded the motion.
Motion carried 3-0.
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Regular meeting of the Elk River Municipal Utilities Commission
May 16, 2006
Other Business
There was no other business.
The next regularly scheduled meeting of the Elk River Municipal Utilities Commission
will be Tuesday, June 6, 2006.
President Jerry Takle adjourned the regular meeting of the Elk River Municipal Utilities
Commission at 5:15 p.m.
espectfully mi ,
Judy Mc adde
Recording Clerk