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11-17-2009 ERMU MINELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM November 17, 2009 Members Present: John Dietz, President; Jerry Gumphrey, Vice Chair; Daryl Thompson, Trustee ERMU Staff Present: Troy Adams, Director of Operations; Theresa Slominski, Finance Director/Office Manager; Mark Fuchs, Line Superintendent; David Berg, Water Superintendent; Wade Lovelette, Technical Services Superintendent; Judy McSpadden, Recording Clerk; Michael Price, Art Gatchell, Scott Thoreson, Shane Defeyter, Tom Geiser, Kim Sandstrom City Staffpresent: Lori Johnson, City Administrator; Terry Maurer, City Public Works Director; Rebecca Haug, Environmental Administrator Others Present: Peter K. Beck, Attorney from Gray Plant Mooty Law Firm; Joni Astrup, Elk River Star News 1. Call meeting to order November 17, 2009 John Dietz called the November 17, 2009 meeting to order at 4:00 p.m. 2. Consider Utilities Agenda Troy Adams and John Dietz added items for discussion under other business. Daryl Thompson moved to approve the November 17, 2009 Utilities Agenda. Jerry Gumphrey seconded the motion. Motion carried 3-0. 3. Consider Consent Agenda Jerry Gumphrey had some questions on the check register. Staff responded. Discussion followed regarding boot purchases for outside workers. John Dietz directed staff to compile a list of past boot purchases to be revisited at a future meeting. Daryl Thompson moved to approve the Consent Agenda as follows: October Check Register October 13, 2009, Regular Meeting Minutes Financial Reports Jerry Gumphrey seconded the motion. Motion carried 3-0. Page 2 Regular meeting of the Elk River Municipal Utilities Commission November 17, 2009 4.1 Review and Consider Jackson Street Water Tower Rebecca Haug, Environmental Administrator for the City of Elk River spoke to the Commissioners regarding the Jackson Street water tower. Michael Koop from the MN State Historic Preservation Office informed the City staff that during the last Highway 10 study, it was determined the water tower on Jackson Street was eligible to be on the National Register of Historic Places. Rebecca Haug informed the Commission of a "Fast Track" Legacy grant that is available through the State Historic Preservation Office. This "Fast Track" Legacy grant would not cost ERMU anything, and the City of Elk River would file the paperwork applying for the grant that would pay for hiring a consultant to prepare the National Register nomination form. Once the Jackson Street tower is listed on the National Register, there are additional grant funds available (some may require matching funds) to cover the costs to restore the Jackson Street water tower through the Legacy Grant and the Minnesota Historical Society. Rebecca Haug asked for the Commissioners approval to proceed with applying for the grant. Jerry Gumphrey moved to proceed with applying for the "Fast Track" Legacy grant. Daryl Thompson seconded the motion. Motion carried 3-0. 4.2 Review Project Conserve Update (verbal) Rebecca Haug, Environmental Administrator for the City of Elk River gave an update of the Project Conserve program she has been working on with Vance Zehringer. She went onto say the project has far exceeded the expectations they had when this program was first started. In the first year the participants have recognized reductions of 14.2% on electric and 18% on their water charges. In the first year there were only 35 applicants chosen out of the 180 that applied. This next year they hope to have closer to 500 participants. Jerry Gumphrey asked how much the average person saves. Rebecca Haug responded that the data is still being gathered. 4.3 Review and Consider Pay Request for 2009 At the October 13, 2009 ERMU Commission meeting, management provided an industry comparison survey of seven predetermined peer metro utilities. At this meeting the Commission will decide on the pay request. John Dietz read a prepared statement regarding his stand on the 2009 pay raise increase. He began by saying he believes the Commission appreciates all the employees for everything they do for the company and are compensated well for their work. But considering ones employment you have to consider more than wages; benefits and working conditions are also two important factors. ERMU's benefits are as good as anyone's. Technically staff is receiving a 4.5% benefit already with the health insurance increase. Economic conditions and profitability are also a part of this decision. The City of Elk River and Sherburne County have frozen wages for 2010. At this time he proposed a 1.5% increase effective January 1, 2010. Page 3 Regular meeting of the Elk River Municipal Utilities Commission November 17, 2009 Daryl Thompson said it is difficult looking at the governmental agencies in the area taking cuts. Daryl Thompson added he was inclined to go with the 1.5% increase but would like to begin it now as opposed to January. Jerry Gumphrey commented on the financial status of ERMU and the need for passing on a rate increase, but adding wages to it he didn't feel was right. Jerry Gumphrey thought 1.5% was too much. Jerry Gumphrey moved to approve a 1.5% increase effective January 1, 2010, and to revisit this in December 2010. John Dietz seconded the motion. Motion carried 3-0. 4.4 Review and Consider After-hours Electric Reconnects At the October 13, 2009 ERMU Commission meeting, the Commission voted to eliminate the after-hours electric reconnect stipend. 'The employee on call would be compensated per the existing call-out policy. Troy Adams reviewed the surveys and liabilities of the after-hours reconnects. Discussion followed. Art Gatchell, Lead lineman, spoke of instances he has had with reconnects and the many calls that are received from customers on the on-call phone. Consensus was to change the on-call phone number. John Dietz moved to discontinue after hours reconnects effective January 1, 2010 for customers that are turned off for non-payment. Customers turned off for non-payment will have to pay their bill and reconnect fee at the office between the hours of 8:00 a.m. and 3:30 p.m. Monday thru Friday. Emergency after-hours service will still be provided for extenuating circumstances but not for customers that are turned off for non-payment. Minimum 2 hour call out pay per existing policy will apply. Customer will be assessed $50 up to $150 based on management discretion. Jerry Gumphrey seconded the motion. Motion carried 3-0. 5.1 Review and Consider 2010 Budget Troy Adams reviewed the proposed 2010 budget. Last year ERMU received a 13.2% rate increase and not all of it was passed onto the customers. John Dietz commented on the financial aspect and that ERMU could not afford to keep carrying rate increases without passing them on to the customer. Consensus was to pass on the rate increase from GRE. No action taken. This will be revisited at the December 2009 ERMU Commission meeting when staff will have the final number for the rate increase. Terry Maurer presented a survey of SAC and WAC rate fees. The survey shows ERMU is about $1,000 below surrounding communities. The recommendation was to raise the WAC fee by $500 in 2010 and another $500 in 2011. Terry Maurer said he preferred to keep the water rates the same for 2010, until a water rate survey can be done. David Berg said due to the repairs needed on some of the Page 4 Regular meeting of the Elk River Municipal Utilities Commission November 17, 2009 structures for the water department, he would like to see a small rate increase now instead of a larger increase later. Discussion followed regarding the rate increase possibilities. John Dietz moved to delay a water rate increase until a financial analysis of the water department is received and Commission requires this by Apri12010. Daryl Thompson seconded the mofion. Motion carried 3-0. Jerry Gumphrey moved to increase the WAC fee by $500 effective January 1, 2010, and another $500 on January 1, 2011. Daryl Thompson seconded the motion. Motion carried 3-0. 5.2 Review and Consider Demand Electric Service Tariff Revision At the October 13, 2009 ERMU Commission meeting, the possibility of implementing an economic development rate and a low load factor demand customer rate was discussed. The businesses this would affect are the ones that have a very large load but only run for short periods of time. Through research of these customers on our system, 12 were identified as low load factor customers. Connexus Energy and Xcel Energy currently have low load factor exemptions and they both have the same demand adjustment factor (DAF) in their demand customer rate schedule. Staff recommends implementing a DAF on the demand electric service tariff for low load factor customers with the requirement to not peak between 2:00 p.m. and 10:00 p.m. Jerry Gumphrey moved to approve the implementation of DAF on the demand electric service tariff for low load factor customers and to revisit this in December 2010. Daryl Thompson seconded the motion. Motion carried 3-0. 5.3 Review and Consider Health Care Savings Plan Revision At the Apri110, 2007 ERMU Commission meeting, the commission voted to adopt a Health Care Savings Plan (HCSP) administered by the Minnesota State Retirement System (MSRS). This HCSP allows employees to contribute to a tax free savings plan for future use paying medical expenses. The current allocation is 1 % of gross wages. This plan requires participation by all employees and is employee funded. Discussion followed as to how the groups can be split to allow more contributions to this plan. Jerry Gumphrey moved to change the current Health Care Savings Plan policy and split into two divisions, the office and field staff, to allow for a three tiered contribution structure effective January 1, 2010. Daryl Thompson seconded the motion. Motion carried 3-0. Page 5 Regular meeting of the Elk River Municipal Utilities Commission November 17, 2009 5.4 Review and Consider Water Assessments A list of proposed water assessments for customers with outstanding balances was reviewed. The Elk River City Council met last night and approved the assessments pending the ERMU Commission approval. Daryl Thompson moved to approve the Water Assessments as presented. Jerry Gumphrey seconded the motion. Motion carried 3-0. Terry Maurer addressed the Commission about a situation regarding a contractor that repaired a water service in the street and has not been paid by the property owner. This contractor is asking if the fee could be assessed on the taxes for that property. This water leak was in the right of way and if the contractor was not called, ERMU would have been informed of the leak and then would have hired a contractor to repair the leak. Peter Beck discussed the situation and notified the Commission it is an assessable situation if the owner signs a waiver. Daryl Thompson moved to approve the assessment to the property owner of the water line repair if the waiver is signed. Jerry Gumphrey seconded the motion. Motion carried 3-0. 6.1 Staff Updates Troy Adams showed Commissioners a map of some tax forfeited land under a transmission line. It is approximately 1.8 acres and would be worth looking at. Commissioners agreed. John Dietz asked Theresa Slominski about the information she provided regarding the water and electric shared fees. Discussion followed. John Dietz moved to change the shared fees between the electric and water department from 75/25 to 80/20 effective January 1, 2010. Daryl Thompson seconded the motion. Jerry Gumphrey voted nay. Motion carried 2-1. John Dietz voiced his concern regarding a threat that was recently received from a disgruntled customer. Discussion followed. David Berg reported on an abandoned well that was found and he believes there are several more out there. Jerry Gumphrey questioned why the property owners are not assessed. Terry Maurer said he thought it would be a Health Department issue. Jerry Gumphrey directed staff to look into a grant for capping abandoned wells but also look into other avenues to get the property owner to take care of their own problem. Terry Maurer asked for Commission approval to do an analysis for Water on-call and bring back full analysis for the December ERMU meeting. Peter Beck informed commissioners of a debt that is unresolved. Discussion followed regarding the circumstances. Page 6 Regular meeting of the Elk River Municipal Utilities Commission November 17, 2009 Jerry Gumphrey moved to have Peter Beck draft a notice to pay within seven days or the power would be shut off. Daryl Thompson seconded the motion. Motion carried 3-0. John Dietz directed staff to think outside the box. He encouraged staff to look at past practices for improvement. That just because it has always been done this way doesn't mean there isn't a better way. He encouraged staff to ask themselves if this is the best way to do it. 6.2 Set Date for Next Meeting The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be Tuesday, December 15, 2009, at 4:00 p.m. 6.3 Adiourn ReEUlar Meeting President John Dietz adjourned the regular meeting of the Elk River Municipal Utilities Commission at 6:30 p.m. Minutes prepared by Judy McSpadden. Dietz resident, )/RMU Commission j ~ /~~ ~~~ ( ; ,, ~_ Tina Allard City Clerk