ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM. December 13, 2016

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1 ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM Members Present: John Dietz, Chair; Al Nadeau, Vice Chair; and Daryl Thompson, Trustee ERMU Staff Present: Troy Adams, General Manager; Theresa Slominski, Finance and Office Manager; Mark Fuchs, Electric Superintendent; Eric Volk, Water Superintendent; Mike O Neill, Technical Services Superintendent; Tom Sagstetter, Conservation & Key Accounts Manager; Michelle Canterbury, Executive Administrative Assistant; Tom Geiser; Assistant Electric Superintendent Others Present: Cal Portner, City Administrator; Peter Beck, Attorney; Matt Westgaard, City Councilmember; Stewart Wilson 1.0 CALL MEETING TO ORDER John Dietz called the meeting to order at 3:30 p.m. 1.1 Pledge of Allegiance The Pledge of Allegiance was recited. 1.2 Consider Utilities Agenda There were no additions or changes to the agenda. Al Nadeau moved to approve the Utilities agenda. Daryl Thompson seconded the motion. Motion carried Recognition of Employees with Significant Milestones in Years of Service Troy Adams formally recognized the following employees with significant milestones in years of service: for five years of service, Tony Hubbard, Zac Johnson, Jennie Nelson, Tom Sagstetter and Matt Schwartz; for 10 years of service, Troy Adams; and for 30 years of service, Mark Fuchs and Lloyd Lorenzen. The Commission congratulated the employees and thanked them for their years of service. Page 1

2 2.0 CONSENT AGENDA (Approved By One Motion) John Dietz had a few questions on the financials. Staff responded. For agenda item 2.7, John Dietz questioned why only one company submitted a bid for the 2017 water treatment chemicals. Eric Volk explained that due to our service requirements, the other company listed on the quote tabulation could not meet those requirements; therefore they chose to not submit a quote. Eric Volk presented the quote tabulation and shared that based on Hawkins, Inc. pricing, and our change in chemical needs, we should realize a savings of approximately $370 for Al Nadeau moved to approve the Consent Agenda as follows: 2.1 November Check Register 2.2 November 15, 2016 Special Meeting Minutes 2.3 Financial Statements Official Depository Designation Official Newspaper Designation Regular Utilities Commission Meeting Schedule Chemical Bids 2.8 Data Safekeeping and Access Agreement WH Security, LLC Daryl Thompson seconded the motion. Motion carried OPEN FORUM No one appeared for open forum. 4.0 OLD BUSINESS 4.1 Wage & Benefits Committee Update Cost of Living and Other Considerations On December 2, the W&BC met to review the following: employee request for changes to the employer match for deferred compensation; wage survey data analysis regarding cost of living adjustment (COLA) and specific job position market adjustments; and salary compression issues for the management pay group. Deferred Compensation - John Dietz shared that during the open W&BC meeting in November, employees requested an increase in employer matched contribution for ERMU s 457 Deferred Compensation Plan. The match is currently 2% with a cap at $2,000 annually. The request was made to increase the cap to $3,000. This was researched and discussed at the December 2 W&BC meeting. Data indicated that not all employees utilize this benefit to its full potential. After discussion, the W&BC came to consensus that because this requested benefit would not be equitable for all employees, and because it Page 2

3 would result in a reduction in 2017 COLA, the Committee does not support this benefit addition at this time. COLA and Market Adjustment John Dietz shared that the W&BC had done some wage benchmarking for the lineworkers group. The wage survey results indicated a 2.75% increase trend in lineworker pay for John noted that this is higher for the lineworker group than other benchmarked positions. He shared that after much discussion from the Committee, the consensus of the Committee was to recommend between a 2% to 2.5% COLA for all four pay groups, and a market adjustment in addition to the COLA to bring the lineworker group to a total increase of 2.75%. Salary Compression Due to salary compression from past market adjustments for the lineworker pay group it had been identified last year that the lineworker pay group has been compressed with the manager pay group. John provided some examples specifically related to the lineworker group and the Electric Superintendent and Assistant Electric Superintendent. John shared that the Committee had discussed benefit options for the manager pay group that would help relieve the salary compression. The option they came up with was that the manager pay group receives an additional 40 hours vacation annually which would be separate from the vacation already earned per the existing policy. If unused by the end of the year it was issued, the balance of this additional 40 hours vacation would covered at 100% base rate wage and paid out to the employee. John informed the Commission and the W&BC, that after further consideration he was not in favor of recommending this additional benefit for all of the managers; only the Electric Superintendent and the Assistant Electric Superintendent. John explained the rationale behind his decision. There was discussion on the additional benefit for just the two managers and what the ramifications would be in doing so. Peter Beck recommended running this past the employment attorney to ensure the legality in doing so. Daryl Thompson asked staff if they knew what the cost-of-living was. Staff responded 1.5%. After discussion, consensus of the Commission was a 2.25% COLA for all four pay groups, a.50% market adjustment in addition to the COLA to bring the lineworkers group to total increase of 2.75%, and an additional 40 hours vacation for the Electric Superintendent and Assistant Electric Superintendent. Daryl Thompson made a motion to approve a 2017 COLA of 2.25% for all four pay groups, a.50% market adjustment in addition to the COLA for the lineworker group, and an additional 40 hours vacation annually with an option for an annual payout at 100% if unused during the calendar year for the Electric Superintendent and the Assistant Electric Superintendent; pending review from legal counsel. Al Nadeau seconded the motion. Motion carried Budget and Rates Troy Adams presented the 2017 Budget. Troy shared that we had received favorable news on the 2017 wholesale power rate increase from Great River Energy (GRE) which results Page 3

4 in an impact of less than 1% to ERMU. As the preliminary budget and rates presented in November were based on a projected 2.5% increase, staff was able to go in and rework the proposed rates which result in increases under 1% for typical customers in all classes. In addition, the budget reflects providing a $1/kW demand reduction for commercial demand customers for all of For the notable items in the 2017 electric budget, Troy noted that staff had added consultant costs for a cyber and physical security assessment. John Dietz inquired as to how much the $1/kW credit we re giving to demand customers would relate to in dollars. Staff responded that they were anticipating that it would be roughly $500,000. There was discussion. John Dietz brought up the point that it is looking like we are going show a relatively large profit this year and wanted to know what the justification was for not using those funds to avoid a rate increase for Staff responded that the profits would go into cash reserves to help cover the capital improvement projects and loss of revenue (LOR) payments related to the territory acquisition. There was discussion. The proposed water rate design continues in the direction of shifting to more fixed cost recovery to mitigate revenue recovery volatility related to weather. The proposed 2017 residential water rates reflected a 2.91% increase to the first tier and a 2.55% increase in the basic monthly charge. These rate changes result in a projected 2.35% annual water cost increase for a typical residential customer. It was noted that the consultant costs for a cyber and physical security assessment had also been added to the notable items in the 2017 water budget. The Commission had a few questions. Staff responded. The Commission asked for further clarification on what the timeline was for the preliminary field services facility expansion planning and site prep work, and what the status was with the former MacGibbons property. Staff responded. Al Nadeau made a motion to approve the 2017 Budget. Daryl Thompson seconded the motion. Motion carried Governance Manual Update Troy Adams shared that based on Commissioner and staff input through surveys and discussion, our consultant John Miner has developed drafts of the first four Governance Manual policies. Provided for review were the following policies: G-1 Commission Purpose G-1.1 Commission-City Council Relationship and Roles G-1.2 Commission Authorities and Responsibilities G-1.3 Governance Style Troy called attention to section 2 of Policy G1.1 Commission-City Council Relationship and Roles, and shared the benefits of having a utility voice on the City s Economic Development Authority (EDA) to represent ERMU s interests in economic development. Troy noted that while we want to incorporate language into our policy in reference to this, we ll need to work with John Miner to fine tune the language as the city council is the one who would be appointing the Members to the EDA Board. John Dietz commented on Page 4

5 section 2 of Policy G1.1, which covered the topic of joint meetings to be held with the City Council and the Commission. John stated that he couldn t remember the last time one of these meetings had been held. There was discussion on the benefits of conducting the joint meetings and the frequency in which they should occur. Troy shared that at a minimum the next four policies will be ready for review in January, and the intention is to have the core Governance Manual ready for adoption in early NEW BUSINESS 5.1 Otsego Street Lighting Staff has been contacted by Hakanson Anderson, the City of Otsego s engineering firm, to discuss street lighting in Otsego. The City of Otsego would like to explore options with ERMU to transition/transfer all of the behind the meter street lights they own within the ERMU electric service territory to a similar arrangement as they have with the security lights. Some of the reasons for this are: maintenance, forever changing products, and lack of city staff expertise to effectively manage their street lights. Troy Adams stated that before committing significant time researching options, staff wants to make sure the Commission is in support of it. The Commission had some questions on the financial aspects and the amount of staff time involved in taking on the additional street lights. Staff responded. After discussion, the Commission was open to the idea of working with the City of Otsego, provided it was mutually beneficial to ERMU and would not over-extend our workforce. 5.2 Policy Review Access to Private Property Troy Adams provided an overview of the policies that are in place regarding access to private property where ERMU equipment is located. Troy explained that in accordance with the National Electric Safety Code requirements staff has been conducting audits and physical inspections of all equipment including meters. The audits and inspections of meters are to verify equipment installation for public and employee safety as well as to identify and prevent theft of electricity. It was noted that over 5% of the meters inspected this year indicated signs of meter tampering. Troy shared that we recently had a customer voice their concern regarding an ERMU employee inspecting an electric meter on his property. The electrical technician had attempted to access the ERMU electric meter in the backyard behind a locked gate. The customer has also claimed that the gate was damaged during the attempt to gain access. Troy explained that the employee who inspected the electric meter had followed ERMU s policy regarding access to utility equipment on private property. The Commission had a few questions. Staff and legal counsel responded. Page 5

6 After discussion on the policy s language most specifically relating to gates, fences, and customer notifications, Commission consensus was to uphold the current policy and its intent. The Commission suggested that staff change the internal procedure regarding access to private property when our equipment is located behind a fence. Troy stated that we will work with legal counsel to update our access clause in the electric rules and bring that back to the next meeting for Commission consideration. Staff will also be drafting a letter in response to the customers concerns regarding access to their property and the alleged damage to the gate. 6.0 OTHER BUSINESS 6.1 Staff Updates Troy Adams had a suggestion relating to the 2017 APPA Legislative Rally in Washington D.C. scheduled for February 26 March 1. As the approved travel and training budget reflects one manager and one Commissioner attending the conference, Troy suggested the Commission consider sending Matt Westgaard who was recently appointed as the second Council representative to serve on the ERMU Commission to be effective upon the expansion to five members in March Troy stated that if Matt was interested in attending, it would be a good opportunity for him to get up to speed on things in the industry. At the November Commission Meeting, the final approval of our auditors was completed. The Commission directed staff to come back with actual cuts reflecting a sacrifice made to offset the fees increase from our auditors that results in retaining them. In her staff report, Theresa Slominski identified the two areas in the budget where the sacrifices would be made. John Dietz asked if the decrease in the two items identified were reflected in the 2017 budget. Theresa responded that they were. Mark Fuchs had nothing additional to add to his staff report. John Dietz asked if the utilities were very involved with the Downtown River Edge Commons expansion project. Mark responded that we were not. Mark shared that we have been working with the city on some issues they re having with some of the downtown streetlights. Tom Sagstetter highlighted two items from his staff report relating to the electric vehicle charging stations. First, ERMU has received and accepted the American Public Power Association Demonstration of Energy & Efficiency Developments (APPA DEED) grant for electric vehicle charging stations. Second, staff met with representatives from ChargePoint to discuss the details of the equipment purchases and master sales agreement. Staff has consulted with legal counsel and is working through the details to get the contracts and purchase agreements executed by the end of the year. There was discussion. Tom also shared that the Landfill Gas Plant had experienced some water collection issues last week; the issues have now been resolved and they are almost back to full production. There was discussion. Page 6

ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM. January 10, 2017

ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM Members Present: John Dietz, Chair; and Al Nadeau, Vice Chair Members Absent: Daryl Thompson,