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08-22-2006 ERMU MINELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION July 11, 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 Others Present: Lori Johnson, City Administrator; Bob Pearson, IT Manager for City of Elk River 1. Call meeting to order July 11, 2006 President Jerry Takle called the July 11, 2006, meeting to order. 2. Consider Utilities Agenda James Tralle moved to approve the July 11, 2006, Utilities Agenda. John Dietz seconded the motion. Motion carried 3-0. 3. Consider Consent Agenda John Dietz had questions on the financials, staff responded. He asked for further clarification on the tree trimming expenses. James Tralle moved to approve the Consent Agenda as follows: June Check Register June 6, 2006, Minutes Financials John Dietz seconded the motion. Motion carried 3-0. 5.1 Staff Up-dates Bryan Adams updated the Commission on the Substation projects. Otsego is scheduled to have a mobile sub brought in while conversion is being done. The Station 14 Substation is on schedule. Inspection will be done on the Waukesha transformer for the data center next week. Delivery for this transformer will be mid August. Electric usage is up 7.13% and water usage is up 24.63%. There is currently 5 to 6 millions gallons of water being pumped per day. These percentages do not include the additional 17 commerciaUindustrial buildings currently under construction plus the Data Center. Glenn Sundeen reported the installation of the underground 1000 KCMIL feeder was complete and now the crews would be doing the terminations. This job was difficult but went very well due to good contractors. The Otsego feeder installation is almost complete and project is going well. Page 2 Regular meeting of the Elk River Municipal Utilities Commission July 11, 2006 David Berg said there were 11 new security accounts added in June and most of those were from referrals. Summer staff is painting hydrants. The spin doctor is being utilized for the water valves and recording the GPS coordinates along with the valve operating torque for future reference. Theresa Slominski informed the Commission of the new employee hired to replace the previous employee that decided not to return from maternity leave. Theresa is working with the City regarding a CDL policy and will keep the Commission apprised. R.W. Beck is doing a rate study and in conjunction with this, cash reserves will be addressed. Theresa will be bringing cash reserve information back to the Commission for approval after the investment committee meets. There will be a Minnesota Sales and Use Tax audit the end of July. Several other utilities have been audited and have had to pay monies related to donated utilities not being taxed. 5.2 Review Co Rd 40 Rebuild Project With the Co Rd 40 rebuild project scheduled to start soon, the cost associated with the trunk water main installation has been projected at around $800,000. As in past discussions, the issue has been who would be fmancing this project. After further discussion with Lori Johnson, City Administrator, she indicated that the City would fund the trunk water main. The remaining question is if there will be any interest payments assessed to the utilities. Lori Johnson said the trunk water main issue is a special circumstance and as long as the future development progresses as projected there should not be a long period of time before the trunk water main could be assessed. John Dietz added that this was a unique situation and didn't feel the City would require interest payments on this trunk water main at this time if it remained short term, however, he did feel that Elk River Municipal Utilities should have proper reserves for future instances like this. 5.3 Consider Community Wide Internet System The last couple of commission meetings have included. discussions regarding a community wide broadband internet system. Currently there are three providers in the market in Elk River and they are Qwest, Charter Communications, and Northstar Access. Discussion followed as to the requirements needed if Commission desires to proceed with this service. The 900 Mhz wave is unlicensed and, therefore free but there are other wireless devices that can cause interference, such as baby monitors and garage door openers. Bryan Adams said Northstar Access is waiting for a possible 700 Mhz system to become available. Discussion followed regarding the current 900 Mhz that is being utilized by Buffalo and acknowledging that there are interference problems. There is a possibility of leasing an antenna from GRE for a pilot project covering a 2 to 3 mile directional radius on the north east side of Elk River. Bob Pearson discussed the possibilities and problems involved with the 900 Mhz system. James Tralle felt this should be looked into further and brought back to a future Commission meeting what the costs and probabilities would be. Page 3 Regular meeting of the Elk River Municipal Utilities Commission July 11, 2006 5.4 Consider LFG Engine Maintenance The Elk River Municipal Utilities owns a landfill gas to electric generation facility at the Elk River Landfill. The installation of the 4`'' engine/generator was completed on 6-29-06. The commercial operation date for the 4`" engine is 7-1-06. The other three engines are consuming excessive quantities of oil, which are causing the heads to fail. The Elk River Landfill has tried a number of different solutions but to no avail. Elk River Landfill and Utility staff are recommending the piston rings be replaced on these engines at an approximate cost of $65,000. The repair should get us to the scheduled overhaul in 18 months. Because this is the lowest cost option, staff recommends this repair be completed. Motion by James Tralle to approve the repair of the three engines at the LFG plant. John Dietz seconded the motion. Motion carried 3-0. 5.5 Review & Consider Property Purchase At the March 14, 2006, Elk River Municipal Utilities Commission meeting, the possible sale of the Briggs property was discussed. This property lies directly east of our power plant and contains 6.28 acres with about 40% being in the flood zone. The appraised value of this property is $288,000. To secure room for future facility expansion at our operation center, staff recommends this property be purchased. City planning department is concerned as this is viewed as a residential area. They would prefer the facility be moved elsewhere to a more suitable location. There will also be much resistance to allow some tree removal to make room for future facilities. Another complicating factor is finances. The Elk River Municipal Utilities is very strapped for cash this year. This purchase may possibly incorporate delayed payment or a stepped payment structure. John Dietz asked staff to check on the possibility of the sale price being lower than the appraisal price. Motion by James Tralle to approve the purchase of the Briggs property. John Dietz seconded the motion. Motion carried 3-0. 6.1 Review & Consider 2006 Write-off s The list of accounts sent to collection and added to the yearly write-offs were reviewed. This will be done three times a year instead once at the end of the year. The current write-off totals through Apri12006 were $22,441.88. Motion by James Tralle to approve the write-offs through April 2006. John Dietz seconded the motion. Motion carries 3-0. Page 4 Regular meeting of the Elk River Municipal Utilities Commission July 11, 2006 6.2 Review Electric Utility Issues Bryan Adams updated the Commission on the future of transmission projects. GRE and Excel are going ahead along with Midwest Municipal Transmission Group (MMTG) with plans on transmission ownership. This is very costly but is needed for future electric reliability. Various electric issues were discussed as they relate to MMUA. 6.3 Review Water Service Material Issues (Verbal) ERMU's policy currently requires copper pipe be used for water service lines from the main to the house or building. Copper is becoming very costly. Staff is looking into different types of piping that would be allowed and approved by the state code. A couple different types of polyethylene pipe and connections were displayed. Staff will continue to look into this and will revisit this at a later meeting. Other Business There is a bid due the end of July for a road improvement project in Otsego that should be awarded as soon as possible. Staff asked the Commission for approval to the lowest responsive bidder. Commission unanimously approved. The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be Tuesday, August 22, 2006. The September meeting was also scheduled at this time for Wednesday, September 20, 2006. President Jerry Takle adjourned the regular meeting of the Elk River Municipal Utilities Commission at 5:30 p.m. ectfully s 'tte ,~~.- Judy McS dden Recording Clerk