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2. ERMUSR AGENDA 05-12-2009ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION AGENDA May 12, 2009 Elk River Utilities Office ITEM NUMBER ACTION TAKEN 1. Call Meeting to Order May 12, 2009, at 4:00 p.m. 2. Consider May 12, 2009, Agenda 3. Consent Agenda 3.1 Check Register 3.2 Previous Meeting Minutes 3.3 Financial Statements OLD BUSINESS 4.1 Review Company Vehicle Take-Home Practice 4.2 Jackson Street Water Tower Update 43 Review and Consider Wholesale Power Supply Options 4.4 Review and Consider City Attorney Contract Rates 4.5 Review and Consider Rebates to Encourage Automatic Sprinkler Controls NEW BUSINESS 5.1 Review and Consider Shared Personnel Agreement of City Public Works Director 5.2 Review Cash Flow Projections 53 Review and Consider Bids for Co Rd 1 Feeder Project 5.4 Review Water Quality Report OTHER BUSINESS 6.1 Staff Updates 6.2 Set Date for Next Meeting *Consent Agenda Items Are Considered To Be Routine and Will Be Approved By One Motion ~/ Elk River Municipal Utilities 13069 Orono Parkway • P.O. Box 430 Elk River, MN 55330-0430 May 5, 2009 To: Elk River Municipal Utilities Commission John Dietz Jerry Gumphrey Daryl Thompson From: Troy Adams Subject: Miscellaneous Issues Phone: 763.441.2020 Fax: 763.441.8099 Enclosed is the packet for the Tuesday, May 12, 2009, regular commission meeting at 4:00 p.in. Please note the time change. Electric usage is up 6.25% year to date. Water usage is down 4.8% year to date. For your reading, please find the attached MMUA Resource and MMUA Capital Tattler. The House voted 100-32 yesterday to approve SF550. the omnibus energy policy bill. This bill includes mostly technical changes to the state's energy policy. One provision that concerns MMUA requires power companies to purchase 200 megawatts of power from small renewable energy projects (less than five megawatts each) by Dec. 31, 2010. An effort to remove this requirement failed on a 58-73 vote. No similar `carve-out' language appears in the Senate version, however, and all reports indicate the House language will be removed during aHouse-Senate conference committee. Rep. Tim Faust (DFL-Hinckley) unsuccessfully offered an amendment that would have repealed the state's prohibition on the construction of new nuclear power plants. The amendment failed on a vote of 60-72. Rep. David Blv (DFL-Northfield) successfully offered an amendment that would protect landowners from utility companies looking to site high-voltage transmission lines on their properties through the use of eminent domain. Though of concern to utilities, this amendment was approved 98-33 The bill now returns to the Senate, where a different version passed 52-15 on April 6. We will continue to lobby these issues as the session progresses toward its scheduled May 18 adjournment date. Many Capitol observers are predicting a special session, however, mainly due to the uncertain future of the tax bill. The full House and Senate April 24-25 narrowly approved their respective tax bills (HF 2323 SF 2074 . Both bills would cut local government aid (LGA) and market value homestead credits (MVHC). The Leaeue of Minnesota Cities reports that the House bill includes $50 million in reductions to LGA and MVHC for 2009, and $78 million in reductions for 2010. The Senate bill makes no further reductions in city aid and credit reimbursements for 2009, but would cut city aids by $16 million in 2010. Both bills include a repeal of levy limits for cities. A provision in the House tax bill (Article 1, Sections 6 and 13) would remove the exemption of interest on Minnesota public entity bond issues. While somewhat in dispute, the Minnesota Institute of Public Finance (MIPF) argues this provision would raise annual borrowing costs for political subdivisions, including cities, and the State of Minnesota itself, by $23.8 million. MIPF argues that by placing a state income tax on the interest income derived from these bonds, interest rates will rise to a level comparable to the national market and Minnesota issuers and taxpayers will be the losers, with the Vol. 12, No. 10 May 1, 2009 burden falling disproportionately on the smallest issuers. MIPF also predicts a reduced demand for these bonds. The bottom line, argues MIPF, is minimal additional revenue to the state and significantly increased borrowing costs for local government. A number of other provisions are also of concern, including a House provision that would complicate the sales tax exemption for energy used for heating purposes, and a Senate provision that would increase utility property taxes. This would directly affect certain power agency property and indirectly affect others through what would likely be increased pass-through costs. Senate tax bill conferees are Bakk, Skoe, Dibble, Moua, Johnson. House conferees are Lenczewski, Marquart, Koenen, Loeffler, Seifert. Capitol observers report the Governor is likely to veto any bill coming out of the conference committee with obvious tax increases. The House and Senate bills both have obvious tax increases. The Governor has the votes in the House Republican caucus to sustain his veto. Some are predicting a long special session. The government shut-down date is July 1. The House and Senate have each completed their budget bills for environmental agencies and, city interests favor the Senate proposal. Both bills, however, continue the trend of increased fees. The House bill, HF 2123, includes collection of $1.7 million of environmental review costs on water- related projects and $2.2 million of water and wastewater training and certification costs collected by the Minnesota Pollution Control Agency (MPCA) for the upcoming biennium. The bill, according to the League of Minnesota Cities, requires that the rest of the agency's water permitting program, excluding compliance and enforcement activities, be funded through fee increases enacted in January 2011, which will amount to an additional $3.6 million per biennium. The bill also includes early adoption of a $6 million per biennium water permit fee increase and the early adoption of current draft permit fee increases so that those fees will go into effect as of July 1 instead of later this year. The Senate budget bill SF 2099) does not include any of the fee increases found in the House bill. The Senate bill does, however, increase the summer surcharge for water appropriations from $20 per million gallons to $30 per million gallons. Both bills call for adding $1,500 to water crossing fees charged for crossing state property and $4,500 to land crossing fees. (Both fees are currently set at $500.) The increased fees would raise approximately $550,000.