ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM. February 14, 2017

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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; Jennie Nelson, Customer Service Manager Others Present: Cal Portner, City Administrator; Peter Beck, Attorney; Matt Westgaard, City Councilmember; Mary Stewart 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 corrections to the agenda. Daryl Thompson moved to approve the Utilities agenda. Al Nadeau seconded the motion. Motion carried 3-0. John Dietz introduced the two new Commissioners that were appointed by the City Council; Matt Westgaard and Mary Stewart. The Commissioners, staff and legal counsel introduced themselves and thanked them for coming. Their terms will officially begin March 1, CONSENT AGENDA (Approved By One Motion) John Dietz had a few questions on the financials, staff responded. Daryl Thompson moved to approve the Consent Agenda as follows: Page 1

2 2.1 January Check Register 2.2 January 10, 2017 Regular Meeting Minutes 2.3 Financial Statements Tri-County Action Services Agreement 2.5 Elk River Municipal Utilities / Connexus Energy Joint Request for Minnesota Public Utilities Commission Modification of Parties Electric Service Territory Boundary 2.6 Agreement Resolving Electric Service Territory Loss of Revenue Dispute Al Nadeau seconded the motion. Motion carried OPEN FORUM No one appeared for open forum. 4.0 OLD BUSINESS 4.1 Governance Manual Troy Adams presented the proposed core governance policies that had been developed and shared that these policies were intended to replace the Governance section of the existing ERMU Policy Book. Ultimately these policies help establish how the Commission will govern, how management will manage, and are intended to be a guide for ethical leadership. Troy walked through the governance section of the table of contents and noted that the By-Laws presented were the current ones and that he hoped to have the new ones completed within the next few months. Troy also noted that the Delegation to Management Policies have yet to be developed as they are part of the second phase of the project. Rather than go through each policy, Troy reached out to Commission to see if they had any questions or comments. John Dietz asked for further clarification and provided feedback on the following policies: G.2a Commission-City Council Relationship and Roles, point 5, in regards to payment in lieu of taxes (PILOT). John requested that the line item for PILOT be pointed out and discussed during the budgeting process to ensure that we are complying with this policy. G.2d Agenda Planning John asked for further clarification in paragraph two where it states: The Commission will update this agenda annually during the fourth quarter of each fiscal year by removing the current year, updating the next year, and adding the following year. Troy Adams explained that this is a high level overview of recurring governance functions that spans over a two year period; not the monthly operating issues. G.2e Commission Member Role, Responsibilities, and Orientation, point 5, in regards to developing, implementing and maintaining a formal orientation program for new Commission Page 2

3 members. John asked is this was something we were going to do. Staff responded yes and elaborated on what that would involve. G.2g Commission Officer Roles, Responsibilities & Succession, last paragraph under Secretary. John pointed out that item number 2 where it states that appropriate written records of Commission meetings are prepared and distributed to all Commission members and the General Manager within three days of each Commission meeting should be changed to reflect that they will be distributed three days prior to the next Commission meeting. Staff will make that change. G.2h.1 Wage & Benefits Committee Charter, point 3, in regards to reviewing insurance policies and evaluating policy renewals. John Dietz recommended that this point be changed to further specify that it is in relation to employee benefit insurances. Staff agreed and will make that change. G.2h.2 Financial Reserves & Investment Committee Charter, point 4. John asked for further clarification on whether this was the job of the Committee or the Finance & Office Manager. Staff indicated that it was the responsibility of the Finance & Office Manager. Peter Beck pointed out that the paragraph began with On behalf of the Commission and Committee the Finance & Office Manager would perform these duties. Peter suggested that point 4 be kept in the policy as it provides direction. G.3b Delegation of Authority to the General Manager John Dietz asked if this is something we are already doing. Troy Adams shared that despite the formality we are doing a majority of these things and that some things are still in the process of being formally developed; for example the delegation to management policies. G.3c General Manager Accountability, point 1, in regards to the Commission as a body and the Commission members individually will never give instructions (direct or implied) to anyone other than the General Manager. John asked for further clarification on this point. Staff responded. Peter Beck shared that he would further review the proposed governance policies to ensure the government statues are properly referenced. Troy Adams requested the Commission approve the core governance policies that were presented, contingent upon making the revisions identified by John Dietz and possible changes legal counsel suggests. Troy added that the finalized policies, along with the by-laws, would be brought back to the Commission for formal adoption in March or April. Daryl Thompson made a motion to approve the proposed governance policies as presented, contingent upon making the changes identified by Commissioner Dietz and possible changes legal counsel suggests. Al Nadeau seconded the motion. Motion carried 3-0. Page 3

4 5.0 NEW BUSINESS Annual Safety Report Minnesota Rules Chapter 7826 Public Utilities Commission Electric Utility Standards cover safety, reliability, service, and reporting requirements. Per (A), municipal utilities are exempt from these requirements. However, the Elk River Municipal Utilities (ERMU) Commission adopted a number of parts of this chapter as a Distribution Reliability Standard policy. This policy includes an Annual Safety Report requirement. The policy requires ERMU to file an annual safety performance report with its local governing body. The report will include summaries of all reports filed with OSHA and the Occupational Safety and Health Division of the Minnesota Department of Labor and Industry during the calendar year. In 2016, ERMU only submitted one report that qualifies under this reporting requirement; the OSHA Form 300A, which is a summary of work related first report of injuries and illnesses. Troy Adams presented the OSHA Form 300A that had been filed; there was one recordable case that resulted in 0 days away from work. John Dietz inquired as to whether this would help our experience modification for our workers compensation insurance. Staff responded. Al Nadeau made a motion to receive and file the 2016 Annual Safety Report. Daryl Thompson seconded the motion. Motion carried Fourth Quarter Delinquent Items Theresa Slominski presented the delinquent items for the fourth quarter which included a delinquent amounts listing report totaling $22, for all services. Theresa also presented a color-coded recap comparison with last year, identifying the running totals. The amount for the fourth quarter write-offs was $3,513.66, with a year-to-date total of $2, due to collections on amounts previously written off. Theresa stated that our 2016 budgeted amount for collections and write-offs was $105,000, or.27% uncollectible accounts per revenue dollar. According to APPA s most recent published standard ratios, the industry standard is between.18% and.37%. Our totals, excluding and including Revenue Recapture (RR), for the year are well below the national average, at.013% excluding RR, and.15% including RR. Theresa stated that these numbers are a very good representation of all the hard work that the collections and customer service staff put into holding customers accountable and working to get the dollars collected. The Commission asked to relay commendations to staff for a job well done. John Dietz had a question regarding one of the accounts with a large dollar amount that was on the delinquent amounts listing report. Staff responded. Page 4

5 Al Nadeau made a motion to approve the Fourth Quarter Delinquent Amounts Listing. Daryl Thompson seconded the motion. Motion carried Load Management Program Moratorium Tom Sagstetter shared that as part of our transition from Great River Energy (GRE) to Minnesota Municipal Power Agency (MMPA), staff has been evaluating load management program changes that are beneficial to the customers and are not subsidized by other customers not participating in the load management programs. Tom explained that based on the price signals we re getting from MMPA, and the current and predicted rates in the Midwest Independent System Operator (MISO) market, it will not be conducive to load management programs. Tom gave some examples of our current programs and how they would be impacted. Staff recommended a moratorium on enrolling new customers in any load management program other than the electric vehicle charging program until such time as new pricing for the programs can be determined or an exit strategy from load management can be determined. John Dietz inquired as to how many customers we have on these programs. Staff responded. There was discussion on other options that were not tied to load management. There was also discussion on what the potential cost would be for ERMU to independently continue to support the existing programs once we transition from GRE to MMPA. Staff responded that once a moratorium is issued, the next step will be researching some of those options and the risk associated with them. There was further discussion. Al Nadeau made a motion to approve a moratorium on all load management programs, with the exception of the Electric Vehicle Charging Program. Daryl Thompson seconded the motion. Motion carried OTHER BUSINESS 6.1 Staff Updates Troy Adams announced that Mike O Neill had given his notice and that he could speak more to that during his staff update. In Troy Adams staff report he had stated that in late 2016 the Commission gave staff direction on issuing an early 2017 Power Cost Adjustment (PCA) credit. As staff is getting ready to process the PCA credit, Troy wanted to talk through the numbers with the Commission. Troy shared that there is a substantial credit of 18 mils, which equates to approximately $486,000. Troy shared that in the past we have always passed along the full credit to our customers, but based on upcoming projects, loss of revenue payments, and buy in to Minnesota Municipal Power Association, Troy wanted to discuss if it was in the utilities best interest to pass along the entire credit at this time. After discussion, Commission consensus was to hold off passing along the PCA credit until further evaluation and discussion could take place. Staff was directed to add this topic to the March Commission meeting agenda. Page 5

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