REGULAR MEETING OF THE UTILITIES COMMISSION October 13, 2015, 3:30 P.M. Utilities Conference Room 13069 Orono Parkway, P.O. Box 430, Elk River, MN 55330-0430 763.441.2020 www.elkriverutilities.com @ERMU_MN AGENDA 1.0 CALL MEETING TO ORDER 1.1 Pledge of Allegiance 1.2 Consider the Agenda 1.3 Recognition of Company Achievement a. Resource Training & Solutions Well Workplace Award - Angela Hauge and Michelle Martindale 2.0 CONSENT AGENDA (Routine or noncontroversial items. Approved by one motion.) 2.1 Check Register 2.2 Previous Meeting Minutes 2.3 Financial Statements 3.0 OPEN FORUM (Non agenda items for discussion. No action taken during this meeting.) 4.0 OLD BUSINESS 4.1 Electric Service Territory Update 4.2 Payment in Lieu of Taxes (PILOT) and Other Donations to the City of Elk River 4.3 Expansion of the Elk River Municipal Utilities Board of Commissioners 4.4 Environmental Protection Agency Rules affecting ERMU’s Diesel Generation Facility 5.0 NEW BUSINESS 5.1 2016 Budget: Water & Electric Expenses 5.2 2016 ERMU Fee Schedule 5.3 Performance Metrics and Incentive Compensation Policy 3rd Quarter Score Card Update 6.0 OTHER BUSINESS 6.1 Staff Updates 6.2 Set Date for Next Meeting 6.3 Closing of Meeting: “Meeting to be Closed pursuant to MN Statute 13D.05, Subd. 3(c)(3) to develop or consider offers or counteroffers for the purchase or sale of real or personal property.” a Call Closed Session to Order b Discussion c Adjourn Closed Session 6.4 Adjourn Regular Meeting
110
Embed
REGULAR MEETING OF THE UTILITIES COMMISSION …96bda424cfcc34d9dd1a-0a7f10f87519dba22d2dbc6233a731e5.r41.cf2.… · regular meeting of the utilities commission october 13, 2015, ...
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
REGULAR MEETING OF THE
UTILITIES COMMISSION
October 13, 2015, 3:30 P.M.
Utilities Conference Room
13069 Orono Parkway, P.O. Box 430, Elk River, MN 55330-0430
763.441.2020 www.elkriverutilities.com @ERMU_MN
AGENDA
1.0 CALL MEETING TO ORDER
1.1 Pledge of Allegiance
1.2 Consider the Agenda
1.3 Recognition of Company Achievement
a. Resource Training & Solutions Well Workplace Award - Angela Hauge and Michelle Martindale
2.0 CONSENT AGENDA (Routine or noncontroversial items. Approved by one motion.)
2.1 Check Register
2.2 Previous Meeting Minutes
2.3 Financial Statements
3.0 OPEN FORUM (Non agenda items for discussion. No action taken during this meeting.)
4.0 OLD BUSINESS
4.1 Electric Service Territory Update
4.2 Payment in Lieu of Taxes (PILOT) and Other Donations to the City of Elk River
4.3 Expansion of the Elk River Municipal Utilities Board of Commissioners
CHK69257 09/03/2015 120 NAPA AUTO PARTS 4.70TRUCK #16 SMALL BULB52.37FUSE & FUSE HOLDER
Total for Check/Tran - 69257: 57.07
CHK69258 09/03/2015 186 MIKE O'NEILL 136.80MMUA SUMMER MTG
CHK69259 09/03/2015 106 PERFECTION PLUS, INC. 472.01CONTRACT CLEANING118.00CONTRACT CLEANING
Total for Check/Tran - 69259: 590.01
CHK69260 09/03/2015 45 PETTY CASH 100.00ADD'L CASH FOR DRAWERS
CHK69261 09/03/2015 5056 PLAISTED COMPANIES, INC. 190.64CLASS 5 GRAVEL & BLACK DIRT78.02CLASS 5 GRAVEL & BLACK DIRT
Total for Check/Tran - 69261: 268.66
CHK69262 09/03/2015 71 PRINCIPAL LIFE INSURANCE CO GRAN 4,330.30DENTAL, LIFE & LTD INSURANCE - SEPT 21,183.48DENTAL, LIFE & LTD INSURANCE - SEPT 21,082.58DENTAL, LIFE & LTD INSURANCE - SEPT 2
Total for Check/Tran - 69262: 6,596.36
CHK69263 09/03/2015 32 R&H PAINTING LLC 16,592.0034 Light Poles Painted
CHK69264 09/03/2015 128 RANDY'S SANITATION, INC. 1,019.00WASTE REMOVAL34.28DOC DESTRUCTION0.35DOC DESTRUCTION
Total for Check/Tran - 69264: 1,053.63
CHK69265 09/03/2015 3218 RDO EQUIPMENT 156.56Collar for Drill299.73Drill Statrer Rod181.28Grease for Drill
172.28IVUE HOSTING & SUPPORT300.00IVUE HOSTING & SUPPORT43.07IVUE HOSTING & SUPPORT
Total for Check/Tran - 69356: 17,562.43
CHK69357 09/17/2015 186 MIKE O'NEILL 32.05PORTFOLIOS
CHK69358 09/17/2015 9997 JEANNENE OTTO 10.07INACTIVE REFUND
CHK69359 09/17/2015 9997 SARAH PEDRYS 49.44INACTIVE REFUND
CHK69360 09/17/2015 9997 RENE R PERKINS 64.84INACTIVE REFUND
CHK69361 09/17/2015 9997 PREMIUM REAL ESTATE SOLUTIONS 71.30INACTIVE REFUND
CHK69362 09/17/2015 71 PRINCIPAL LIFE INSURANCE CO GRAN 2,947.49DENTAL, LIFE & LTD INSURANCE - 9172011,380.53DENTAL, LIFE & LTD INSURANCE - 9172013,140.04DENTAL, LIFE & LTD INSURANCE - 917201
CHK69364 09/17/2015 3219 RESOURCE TRAINING & SOLUTIONS/B 16,794.00HEALTH CARE PREMIUMS - OCT7,464.00HEALTH CARE PREMIUMS - OCT5,598.00HEALTH CARE PREMIUMS - OCT
17,748.28HEALTH CARE PREMIUMS - OCT7,888.13HEALTH CARE PREMIUMS - OCT5,916.09HEALTH CARE PREMIUMS - OCT
Total for Check/Tran - 69364: 61,408.50
CHK69365 09/17/2015 9997 DONALD SCHUMACHER 165.33INACTIVE REFUND
CHK69366 09/17/2015 9997 DUSTIN SMITH 32.33INACTIVE REFUND/pro/rpttemplate/acct/2.33.1/ap/AP_CHK_REGISTER.xml.rpt25203
20
Page 1810/02/2015 1:03:23 PMRevision: 76714
Accounts PayableCheck Register
Elk River Municipal Utilities
09/01/2015 To 09/30/2015Bank Account: 1 - ELECTRIC/GENERAL FUND
Mike O’Neill explained that in the original Reciprocating Internal Combustion Engine
Rules, also known as the RICE Rules, it stipulated that an entity could run their engines up
to 100 hours for testing and maintenance. This exception was later deleted by a court’s
decision. Another Petition for Review was submitted and a stay of the earlier ruling was
granted until a final decision could be reached. This stay of issuance of the mandate will
be in place through May 1, 2016. A final decision should be forthcoming prior to the
expiration of the stay. ERMU must decide whether to upgrade the exhaust systems on our
generators to bring them into compliance, at a cost of approximately $400,000, or forgo
placing them on the Midcontinent Independent System Operator (MISO) market with GRE
and keep the engines to be used for emergency purposes only.
The two other factors that come into play are our 2016 contract with Great River Energy
(GRE) and our 2018 contract with Minnesota Municipal Power Agency (MMPA). At this
point we don’t know what MMPA will want to do with these engines. Troy Adams and
Mike O’Neill will be in discussions with MMPA to see what their interest is. In addition,
Mike will be working with vendors to assess the need and cost of retrofitting and upgrading
the exhaust systems for the two engines to bring them into compliance with the new EPA
regulations. Staff will bring back some firmer dollar amounts for the retrofit project should
the Commission choose to move forward with it.
5.4 Payment in Lieu of Taxes and Other Donations to the City of Elk River
On March 20, 2015, an electric service territory transfer agreement was executed between
ERMU and Connexus. The terms of the agreement provide for loss of revenue (LOR)
payments for 10 years. Now that the negotiations have been completed and terms
finalized, the payment in lieu of taxes (PILOT) provisions should be revised to reflect an
exemption for customers that are subject to LOR payment. As these LOR payments
complete their 10 year term, the revenue associated with these customers would then
become subject to a PILOT per the policy. Troy Adams presented the proposed PILOT and
Other Donations to the City of Elk River policy that would reflect these changes.
John Dietz pointed out that the way the proposed policy was worded may cause some
confusion as it doesn’t identify which electric service customers would be subject to the
LOR. John suggested that modifications be made to the proposed policy, to include the
clause “per the March 20, 2015 service territory agreement”, and brought back to the
Commission for consideration and approval.
5.5 Wage and Benefits Committee Update – Health & Dental Insurance
On September 8, 2015 the Wage and Benefits Committee (W&BC) met to review dental,
30
Page 6
Regular meeting of the Elk River Municipal Utilities Commission
September 8, 2015
ancillary, and health insurance renewals; and HSA employer contributions. Theresa
Slominski gave a verbal update on the insurance renewals that were discussed.
Theresa Slominski explained that we currently have both our ancillary and dental insurance
coverage through Principal who we’ve been using for the past three years. After going out
for bids for 2016, we’ve identified that we would recognize a significant savings if we were
to switch over to a three year contract with Assurant; who has very similar coverage, and
who we were with prior to switching over to Principal. There was further discussion.
Theresa Slominski presented the health insurance renewal, which had an 8.3% increase for
our plan. She explained that we participate in an insurance pool with Resource Training &
Solutions, and the range of renewals for their clients came in between -3% to 19.9%. Based
on this reasonable renewal rate, staff would recommend staying with our current plan.
Theresa Slominski went over the 2016 HSA limits and deductibles. Currently the employer
is contributing $1,985 a year towards the family plans and $650 a year towards the
individual plans. John Dietz added that we currently have 13 people on the co-pay plan
and 20 people that have migrated over to the HSA plan. He was in favor of keeping the
company contribution to the HSA plan, and reevaluating it on a year to year basis. There
was further discussion on our current co-pay insurance plan that could potentially be
subject to a “Cadillac Tax”.
Daryl Thompson made a motion to switch our 2016 ancillary services and dental
insurance from Principal to Assurant; to approve the 2016 ancillary services and
dental insurance from Assurant; to approve the 2016 HSA insurance plan employer
contribution of $1,985 for family and $650 for single; and to approve the Blue Cross
Blue Shield Health Insurance Plan with the 8.3% increase. Al Nadeau seconded the
motion. Motion carried 3-0.
5.6 Expansion of the Elk River Municipal Utilities Board of Commissioners
Troy Adams shared that when the territory acquisition discussions began a few years ago,
there was discussion on expanding the commission to provide better representation of the
growing customer base, and based on the newly acquired territory and normal growth,
ERMU will likely experience a 20% growth over the next five years. Troy explained the
steps involved to expand the utility commission from 3 to 5 members. There was further
discussion. The Commission was in favor of expanding the commission membership. John
Dietz suggested that before we request council action, we should bring it to a city council
workshop for discussion to help determine if we have council support and to get their
opinion on two city council members serving on the commission board versus one city
council member. The commission directed staff to prepare a memo on the expansion and
submit it to the city for discussion at an upcoming workshop.
31
Page 7
Regular meeting of the Elk River Municipal Utilities Commission
September 8, 2015
6.0 OTHER BUSINESS
6.1 Staff Updates
Troy Adams’ staff report included a bullet point on the MMPA Board of Directors meeting held
on August 25, 2015 in Shakopee, MN. At the meeting, the Board approved the execution of a
10 MW power purchase agreement for a solar facility to be located in Buffalo, MN. John Dietz
had some questions on the solar facility. Staff responded.
Theresa Slominski had previously shared that with our health insurance we have through
Resource Training & Solutions (RT&S), we participate in a co-op to receive reduced insurance
rates. RT&S has a very advanced wellness program that we participate in. We were recently
selected to receive their Well Workplace Award in the fall of 2015 for the work we did in 2014.
Theresa extended an invitation to the Commission to the Customer Appreciation Event and
Awards Banquet being held on October 7, 2015. Efforts of Michelle Martindale and Angela
Hauge, who serve as our representatives on the committee, will be recognized at the awards
banquet.
6.2 Set Date for Next Meeting
The next regularly scheduled Commission meeting will be held on October 13, 2015.
6.3 Adjourn Regular Meeting
Daryl Thompson moved to adjourn the regular meeting of the Elk River Municipal
Utilities Commission at 4:59 p.m. Al Nadeau seconded the motion. Motion carried 3-0.
Minutes prepared by Michelle Canterbury.
___________________________
John J. Dietz
Chair, ERMU Commission
___________________________
Tina Allard
City Clerk
32
FINANCIAL INDEX
Aug-15 PAGE
P & L NARRATIVE ………….. 34
COMBINED BALANCE SHEET ………….. 36
ELECTRIC INCOME STATEMENT ………….. 37
WATER INCOME STATEMENT ………….. 39
GRAPH #1 ELECTRICAL PURCHASES ………….. 40
GRAPH #2 ELECTRIC SALES ………….. 41
GRAPH #3 ELECTRIC SALES/CUSTOMER CLASS ………….. 42
GRAPH #4 WATER PRODUCTION ………….. 43
GRAPH #5 WATER SALES ………….. 44
DETAILED ELECTRIC INCOME STATEMENT ………….. 45
………….. 46
………….. 47
………….. 48
………….. 49
………….. 50
…………. 51
DETAILED WATER INCOME STATEMENT ………….. 52
………….. 53
………….. 54
………….. 55
33
PROFIT AND LOSS NARRATIVE
August 2015
Electric P&L
August’s electric kwh sales (for July usage) are up from the prior year by 6% overall:
Residential usage is up 10.8%
Small Commercial usage is up 9%
Large Commercial usage is up 3% from the prior year.
August Operating Revenue is up from the prior year by 9.4% for the month, up slightly at
.86% for year-to-date numbers, and over year-to-date budgeted numbers by 1.8%.
August 2014 had a PCA charge to customers of $26,000, impacting the revenue in
August 2014 by less than 1% at .87%.
Other Revenue is above the prior year by 8.5% for August. Connection Fees are a small
component this month at $24,375, but last year was even smaller at $11,150.
Miscellaneous Revenue was significantly more in 2014 due to a gain of $18,000
recognized on the trade-in of our bucket truck, and 2015 does not have an August MISO
payment (it was paid in September this year.)
Overall, Total Revenues of $3,453,830 are above the prior year $3,184,018 by 8.5%,
year-to-date revenues are ahead .63%, and budgeted numbers are increased 1.7%.
Purchased Power is up from the prior year 3.7%, consistent with the increased usage.
Year-to-date the difference in costs for purchased power are 5.6% less than the prior year
due to PCAs in 2014.
For other expenses, there is much consistency from the prior year. Customer Accounts
Expense is inconsistent as it continues to be larger than last year due to the NISC
software costs. Administrative and General Expenses are inconsistent from the prior year
for a couple of reasons: increased approximately $25,000 for supplies and labor with the
Anniversary celebration (as budgeted), increased $22,000 for medical premiums of 8 new
employees hired in May 2015 (billed in arrears for June and July - so a timing difference
but a budgeted expense), and increased $25,000 for consulting fees with our MISO
reporting (again, a timing difference but a budgeted expense.)
Total expenses were $3,179,074, over the previous year for August by 5.3% and under
year-to-date numbers by 2.7%.
The Electric Department has a Net Profit of $142,816, compared to the prior year Net
Profit of $37,160. Year-to-date there is a Net Profit of $1,355,141, compared to the prior
year Net Profit of $698,403.
34
Water P&L
August’s water consumption (for July usage) is down 24% overall from the prior year:
Residential usage is down 27%
Commercial usage is down 21%
Water Operating Revenues are behind last year by 26% at $295,762 however, year-to-
date revenues are ahead by 4%.
Other Revenues are ahead of the prior year at $80,931, compared to $28,296. The
increase over the prior year is due to significant builder Connection Fees of $61,135 in
August, and amendments to water tower leases. Total Revenues of $376,693 are behind
the prior year by 14%, yet year-to-date up by 6%. Year-to-date revenues are ahead of
budget by 15%.
Expenses are very consistent with the prior year. Production Expense is up approximately
$4,000 due to maintenance of the actuators treating the radon at well 2. Distribution
Expense is down due to the water main break in 2014 resulting in approximately $5,000
non-recurring expense.
For August, the Water Department has a Net Profit of $164,517, compared to last year
Net Profit of $216,658. Year-to-date there is a Net Loss of ($29,296), compared to the
prior year Net Loss of ($91,395).
35
COMBINED BALANCE SHEETAUGUST 2015
ELECTRIC WATERASSETSCURRENT ASSETS CASH & TEMPORARY INVESTMENTS 2,600,8368,989,637 ACCOUNTS RECEIVABLE 469,6833,784,559 INVENTORIES 24,6461,221,666 PREPAID ITEMS 27,542136,925 CONSTRUCTION IN PROGRESS 598,262543,150 TOTAL CURRENT ASSETS 3,720,96914,675,938
RESTRICTED ASSETS BOND RESERVE FUND 0490,500 EMERGENCY RESERVE FUND 1,153,5392,516,804 UNRESTRICTED RESERVE FUND 113,82438,884 TOTAL RESTRICTED ASSETS 1,267,3633,046,188
FIXED ASSETS PRODUCTION 11,223,696391,219 LFG PROJECT 03,804,327 TRANSMISSION 0714,482 DISTRIBUTION 21,917,65934,444,512 GENERAL 916,7627,756,404 FIXED ASSETS (COST) 34,058,11747,110,944 LESS ACCUMULATED DEPRECIATION (13,782,021)(21,247,012) TOTAL FIXED ASSETS, NET 20,276,09625,863,932
OTHER ASSETS AND DEFFERED OUTFLOWS (6,133)(65,102)
TOTAL ASSETS 25,258,29543,520,956
LIABILITIES AND FUND EQUITYCURRENT LIABILITIES ACCOUNTS PAYABLE 87,3733,314,269 SALARIES AND BENEFITS PAYABLE 120,200304,128 DUE TO CITY 0559,142 DUE TO OTHER FUNDS 00 BONDS PAYABLE-CURRENT PORTION 00 UNEARNED REVENUE 142,8443,376 TOTAL CURRENT LIABLITIES 350,4184,180,914LONG TERM LIABILITIES LFG PROJECT 01,408,358 DUE TO COUNTY 00 BONDS PAYABLE, LESS CURRENT PORTION 1,850,6423,607,488 TOTAL LONG TERM LIABILITIES 1,850,6425,015,846
TOTAL LIABILITIES 2,201,0599,196,760
FUND EQUITY CAPITAL ACCOUNT CONST COST 0490,500 CONTRIBUTED CAPITAL 00 RETAINED EARNINGS 23,086,53232,478,554 NET INCOME (LOSS) (THROUGH PREVIOUS MONTH) (29,296)1,355,141 TOTAL FUND EQUITY 23,057,23634,324,195
TOTAL LIABILITIES & FUND EQUITY 25,258,29543,520,956
36
ELK RIVER MUNICIPAL UTILITESELK RIVER, MINNESOTA
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITIONFOR PERIOD ENDING AUGUST 2015
Operating Transfer Transfer To City For 99 Bond 0 0 0 0 00 00 0 Operating Transfer/Other Funds 87,007 545,292 530,297 81,325 530,7383 3810,000 14,555 Utilities & Labor Donated 44,934 352,842 336,334 49,092 354,8835 (1)515,000 (2,041)
Total Operating Transfer 131,941 898,134 866,631 130,418 885,6214 11,325,000 12,514 Net Income Profit(Loss) 142,816 1,355,141 277,430 37,160 698,403388 94502,070 656,738
38
ELK RIVER MUNICIPAL UTILITESELK RIVER, MINNESOTA
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITIONFOR PERIOD ENDING AUGUST 2015
Operating Transfer Transfer To City For 99 Bond 0 30,000 30,000 0 25,0000 2030,000 5,000 Operating Transfer/Other Funds 0 0 0 0 00 00 0 Operating Transfer From City 0 0 0 0 00 00 0 Utilities & Labor Donated 1,118 5,719 336 0 01,602 0500 5,719
Total Operating Transfer 1,118 35,719 30,336 0 25,00018 4330,500 10,719 Net Income Profit(Loss) 164,517 (29,296) (278,124) 216,658 (91,395)(89) (68)(37,074) 62,098
39
))
20
25
30
35
40
45
50
55
60
65
De
ma
nd
in
MW
Month
Elk River Municipal Utilities Monthly Electrical Demand
2015
2014
14,000
19,000
24,000
29,000
34,000
En
erg
y P
urc
ha
se
s i
n M
WH
Month
Elk River Municipal Utilities Monthly Energy Purchases
2014
2015
40
10,000
12,000
14,000
16,000
18,000
20,000
22,000
24,000
26,000
28,000
30,000
Ele
ctr
ic L
oad
in
MW
H
Month
Elk River Municipal Utilities Monthly Total Electric Load
2014
2015
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
Sa
les
in
Do
lla
rs
Month
Elk River Municipal Utilities Monthly Electric Sales
2014 2015
41
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Lo
ad
s in
MW
H
Month
Elk River Municipal Utilities Monthly Residential, Commercial & Industrial Loads
Residential
Industrial
Commercial
2015
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
Sale
s i
n D
oll
ars
Month
Elk River Municipal Utilities Monthly Residential, Commercial & Industrial Sales
Residential
Commercial
2014
2015
Industrial
2014
42
0
20
40
60
80
100
120
140
Pu
mp
ag
e i
n M
illio
n G
al.
Month
Elk River Municipal Utilities Monthly Water Pumpage
2015
2014
0
1
2
3
4
5
6
Pe
ak
Da
y i
n M
illi
on
Ga
l.
Month
Elk River Municipal Utilities Peak Day Pumpage
2014
2015
43
0
20
40
60
80
100
120
140
Sa
les
in
Mil
lio
n G
al.
Month
Elk River Municipal Utilities Monthly Water Sales
2014
2015
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
Sale
s i
n D
ollars
Month
Elk River Municipal Utilities Monthly Water Sales
2015
2014
44
ELK RIVER MUNICIPAL UTILITESELK RIVER, MINNESOTA
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITIONFOR PERIOD ENDING AUGUST 2015
2015AUGUST
2014AUGUST
2015YTD
2014YTD
2015 YTD
BUDGET2015 YTDBud Var%
2014 v. 2015Actual Var%
YTDVARIANCE
2015 ANNUALBUDGET
Electric
RevenueOperating Revenue Elk River
ELECT SALES/ELK RIVER RES 997,185 6,386,1071,138,435 6,647,4376,545,157 (2) 2440.4411 9,981,317 159,050
MISC GENERAL EXPENSE 0 440 03 0 (93)920.9306 500 (41)
48,301 397,750 385,575 48,307 342,8293 16Total For Administrative & General Expense: 592,440 54,921
Total Expenses(before Operating Transfers)213,579 1,622,428211,059 1,675,8801,638,794 (2) 12,510,530 16,366
Operating Transfer Transfer To City For 99 Bond
TRANSFER TO CITY FOR 99 BOND 0 25,0000 30,00030,000 0 20597.8260 30,000 5,000 Operating Transfer/Other Funds Operating Transfer From City Utilities & Labor Donated
WATER AND LABOR DONATED 0 01,118 3365,719 1,602 0597.8261 500 5,719 Total Operating Transfer
0 25,0001,118 30,33635,719 0 4330,500 10,719
1,118 35,719 30,336 0 25,00018 43Total For Total Operating Transfer: 30,500 10,719
216,658 (91,395)164,517 (278,124)(29,296) (89) (68) Net Income Profit(Loss) (37,074) 62,098
55
Page 1 of 1
UTILITIES COMMISSION MEETING
TO:
Elk River Municipal Utilities Commission
John Dietz – Chair
Al Nadeau – Vice Chair
Daryl Thompson – Trustee
FROM:
Tom Sagstetter – Conservation and Key Accounts
Manager
MEETING DATE: October 13, 2015
AGENDA ITEM NUMBER: 4.1
SUBJECT:
Electric Service Territory Update
BACKGROUND:
Updates relating to the electric service territory transfer from Connexus Energy.
DISCUSSION:
Area 1a Recap - On September 22, approximately 300 customers were transferred from
Connexus to ERMU. The outage was minimal and went extremely well. Meters were
changed out within the week. Meter reading was done in October and the data migration
and meter reading data looks to very accurate.
Electric Rates – Dave Berg of Dave Berg Consulting, LLC worked with staff to analyze
ERMU’s options to address differences from Connexus Energy in the demand tariff
philosophies. ERMU’s rate is more demand focused and Connexus’ rate is more energy
focus. Dave Berg and staff developed a short term solution and a long term plan. Staff
looks to discuss the proposed short and long term plan and have commission approval for
action.
Area 1b Update – This area is scheduled to be acquired on October 13 at 9:00am.
Approximately 600 customers will be transferred.
ACTION REQUESTED:
Staff requests discussion and action on the proposed temporary demand reduction.
ATTACHMENTS:
Retail Demand Rate Credit Report – Dave Berg Consulting, LLC. – September 22, 2015
56
September 22, 2015
To: Elk River Municipal Utilities From: Dave Berg Consulting Subject: Retail Demand Rate Credit Background Elk River Municipal Utilities (ERMU) is undertaking a series of service territory acquisitions from the surrounding rural electric cooperative. ERMU charges a retail demand and energy rate to all retail customers larger than 50 kW. The cooperative charges retail demand and energy rates to all customers greater than 25 kW. Both ERMU and the cooperative bill demand on a seasonal basis with higher demand rates in the summer. The effective ERMU demand rate based on total demand revenue and retail demand billing units is $13.50/kW. The cooperative’s effective total demand rate is estimated to be $9.00/kW. ERMU is interested in addressing this demand rate differential as these customers transition to becoming ERMU customers. Any rate adjustments made for these new customers would also apply to ERMU’s existing demand and large demand customers. ERMU’s retail demand charge is approximately $4.50/kW higher than the cooperative’s. However, including power cost adjustments, ERMU’s energy rate for demand customers is $0.006/kWh lower than the cooperative’s. This lower energy rate partially compensates for the higher demand rate. An average ERMU demand customer has a 60% monthly load factor. A 60% load factor customer uses 438 kWh per month for each 1 kW of demand. The lower ERMU energy rate would save an average demand customer $2.63 (438 kWh x 0.006) per kW of demand. This reduces the average demand difference between ERMU and the cooperative to $1.87/kW ($4.50 less $2.63). There are two other drivers that need to be considered when determining the rate impacts on the demand billed customers that are being acquired. The first is that ERMU does not charge for power factor correction. The cooperative charges the applicable monthly demand rate on billed kW and not measured kW. The billed kW is used when the customer’s average power factor is less than 90 percent. For customers with a power factor less than 90 percent, their bill under the cooperative’s rate will be adjusted higher but this adjustment does not occur under the ERMU rate. The second driver is some smaller customers will experience a change from the Demand Electric Service customer class to the Non-Demand Electric Service customer class. Customers that have demand between 25 kW and 49 kW will, in general, see energy cost benefits as a result of not having to pay demand or power factor correction charges. ERMU is considering temporarily lowering the demand portion of the demand and large demand retail rates. For example, a $2.00 reduction in the retail demand rate for 2016 would make the effective retail rates for ERMU and the cooperative more comparable for most demand billed customers. Based on current ERMU demand customers, this demand reduction would result in a reduction in annual revenue of approximately $761,500, or 2.4% of ERMU’s total annual revenues. ERMU plans to cover this deficit
57
from existing reserve funds. Any reductions after 2016 would be dependent on overall ERMU financials, continued discrepancies between ERMU and cooperative rates and ERMU sales growth. ERMU currently purchases its wholesale power requirements from Great River Energy (GRE). In 2018, ERMU is transitioning to a new wholesale supplier, the Minnesota Municipal Power Agency (MMPA). MMPA’s wholesale rate structure is different than GRE’s relative to overall demand and energy rates. ERMU is anticipating that overall wholesale costs will be lower and fixed (demand) wholesale costs will also be lower under MMPA service. ERMU is also planning to conduct an electric cost-of-service and rate design study in the near future. The results of a cost-of-service study will help address rate design considerations for all ERMU customers including the demand billed customers. It is anticipated that a cost-of-service analysis will consider both the existing GRE wholesale structure and the planned MMPA wholesale structure to examine how the cost basis for ERMU customers will change with the transition of wholesale providers. The cost-of-service results will also provide useful information relative to continued adjustments to the retail demand rates. Recommendations Elk River Municipal Utilities (ERMU) is evaluating a demand rate adjustment rate mechanism which will utilize a monthly demand adjustment (either a credit or charge) for the demand billed customer class. The demand adjustment mechanism will allow ERMU to make any additional future adjustments that may be warranted without having to change the Demand Electric Service tariff repeatedly to respond to changing conditions. The monthly demand adjustment would be very similar to the Power Cost Adjustment (PCA) mechanism that is currently charged or credited per kWh of energy. The nature of the adjustments and the impact on bills will need to be communicated to existing and acquired ERMU customers in the Demand Electric Service customer classes. It will be important that the customers understand that the demand adjustment will be temporary in nature and part of the transition in the acquisition of service territory and the change to a new wholesale power supplier in 2018. Customers will also need to understand that the rates will be further adjusted as necessary in the future to maintain ERMU’s financial standing and reflect ERMU’s cost basis.
David A. Berg, PE Principal Dave Berg Consulting, LLC
58
Page 1 of 2
UTILITIES COMMISSION MEETING
TO:
Elk River Municipal Utilities Commission
John Dietz – Chair
Al Nadeau – Vice Chair
Daryl Thompson – Trustee
FROM:
Troy Adams, P.E. – General Manager
MEETING DATE: October 13, 2015
AGENDA ITEM NUMBER: 4.2
SUBJECT:
Payment in Lieu of Taxes (PILOT) and Other Donations to the City of Elk River
BACKGROUND:
Minnesota municipal utilities do not pay taxes to their city. It is very typical for the utility to
provide a payment in lieu of taxes (PILOT). ERMU has a policy which outlines the details of the
PILOT and other donations to the City of Elk River. This policy is reviewed at least once every
five years; the last policy changes were made on July 2, 2013.
DISCUSSION:
Delay for PILOT for Electrical Service Territory Transfer
On September 8, the commission reviewed proposed changes to the PILOT Policy that would
delay PILOT for the areas acquired from Connexus Energy through the March 20, 2015,
electric service territory transfer agreement. The PILOT was proposed to be delayed for each
customer acquired until the loss of revenue (LOR) payments that are outlined in the
agreement would complete. These LOR payments are made for 10 years after the acquisition
with a few exceptions for municipal development.
The commission discussed the proposed policy revisions and directed staff to strengthen the
language to be specific to the March 20, 2015, electric service territory transfer agreement.
This would eliminate any confusion regarding PILOT for LOR payments related to previous
acquisitions. The proposed policy has been updated to reflect the commission’s request.
Shift of Policy Mechanics from Donated Electricity to PILOT
The current PILOT Policy outlines in section 3.0 Donated Electricity stating that ERMU
“shall donate all electricity to the City of Elk River for all of their facilities not associated
with enterprise funds of the City of Elk River.” The administrative process associated with
this donation is extremely burdensome. Due to its manual nature, this process is also subject
to human and keying errors.
59
Page 2 of 2
Since the September meeting, staff have had discussions with the City about an option to
maintain the level of donation to the city and reduce the administration burden and risk for
error. ERMU and city staff have been evaluating increasing the PILOT percentage
contribution from 3% to 4%, and eliminating the donated electricity not associated with street
lights and signal lights. An analysis of the donated electricity, less the usage by street and
signal lights, is equivalent to 0.8% of revenue generated from electric sales for Elk River
customers. An increase in the PILOT of 1% with an offsetting reduction for the elimination
of donated electricity (with the exception of street and signal lights) would nearly be a cash
neutral policy change. The city would be seeing an increased expense because they would be
billed the electric usage, but the City would also have an offsetting source of revenue in
excess of the increased expense by approximately $38,000 based on projected 2015 sales
numbers.
For ERMU, this change would eliminate significant staff time to record and post these
donations through the billing system and the general ledger. It would also give a more
transparent representation of the actual costs of the City facilities. As ERMU grows within
the corporate boundaries of the City of Elk River, the additional increase in revenues will be
further increased with the 1% change to the PILOT, resulting in additional funds contributed
to the City. It is extremely likely that ERMU’s growth in sales will be a higher rate than the
growth of city government and the growth in city facility electric usage. This change is near
cash neutral for the City now, but will result in increased PILOT for the future.
Due to the 2016 budget approval process, utilities and city staff agree that a January 1, 2016,
implementation is better. However, to allow city staff to incorporate this proposed change
into their budget, staff looks to get commission approval immediately. This proposed
revision is attached separately and reflects the policy change proposed for October 13, 2015.
ACTION REQUESTED:
Staff recommends the Commission adopt effective immediately the policy revisions to
“ERMU Policy 8.13 – Payment in Lieu of Taxes (PILOT) and Other Donations to the
City of Elk River” which reflects a delay for PILOT related to the March 20, 2015,
electric service territory transfer agreement.
Staff recommends the Commission adopt the second proposed policy language change to
be effective January 1, 2016, which will result in a shift in policy mechanics increasing
the PILOT from 3% to 4% and eliminating the donation of electricity with the exception
of street and signal lights.
ATTACHMENTS:
Proposed October 13, 2015, revision to ERMU Policy 8.13 – Payment in Lieu of Taxes
(PILOT) and Other Donations to the City of Elk River
Proposed January 1, 2016, revision to ERMU Policy 8.13 – Payment in Lieu of Taxes
(PILOT) and Other Donations to the City of Elk River
60
8.13 Payment in Lieu of Taxes
(PILOT) and other Donations to the
City of Elk River
Page 1 of 2 Adopted December 6, 1994
Revised June 6, 2008
Revised July 2, 2013
Proposed Rev Oct 13, 2015
8.13 PAYMENT IN LIEU OF TAXES (PILOT) AND OTHER DONATIONS TO
THE CITY OF ELK RIVER
1.0 Purpose and Summary
The success of ERMU is linked with the success of our community. And the success of our
community is linked with the operation of our city government and ERMU. ERMU was
purchased by the City of Elk River in 1945 and separate governance was created per State
Statute in 1947. Although governed separately, ERMU is still an important component of our
local government and our city services.
It is typical for a municipal utility to provide a Payment in Lieu of Taxes (PILOT) and other
donations to their city, regardless of a separation of governance. Although typical, this
contribution should never inhibit ERMU’s ability to make repayment on debt, cause ERMU to
become non-competitive, or inhibit needed investment in personnel or infrastructure which may
hurt ERMU’s ability to meet the needs of their customers. For these reasons the PILOT and
other donations should be reviewed at least once every five (5) years by the ERMU Commission.
2.0 Payment in Lieu of Taxes (PILOT)
The PILOT transfer from Elk River Municipal Utilities to the City of Elk River shall be three
percent (3%) of the revenues generated by ERMU’s electric customers within the corporate
boundaries of the City of Elk River which are not subject to a loss of revenue payment resulting
from the March 20, 2015, electric service territory transfer agreement with Connexus Energy.
3.0 Donated Electricity
Elk River Municipal Utilities shall donate all electricity to the City of Elk River for all of their
facilities not associated with enterprise funds of the City of Elk River. As an example, this will
include buildings such as City Hall, Police and Fire Departments, Library, Park, Street
61
8.13 Payment in Lieu of Taxes
(PILOT) and other Donations to the
City of Elk River
Page 2 of 2 Adopted December 6, 1994
Revised June 6, 2008
Revised July 2, 2013
Proposed Rev Oct 13, 2015
Department Buildings, street lights, and signal lights; this shall not include such buildings as
Liquor Stores, Wastewater Treatment Plant, Ice Arena, or lift stations.
4.0 Donated Water
Elk River Municipal Utilities shall donate water for use by the Elk River Fire Department
(ERFD) for the purpose of extinguishing fires within the City of Elk River and other cities under
contract with the ERFD.
For the purpose of creating ice rinks for public/ non-enterprise use, ERMU shall donate water for
use by the Elk River Parks Department.
Elk River Municipal Utilities shall donate water for the use by the Elk River Streets Department
for the use of street sweeping.
5.0 Donated Labor
Because of specialized skills and equipment, ERMU may be able to provide a better value to our
community by donating labor to the City of Elk River. For example, ERMU has trained
employees and the equipment to hang banners where the City does not. In this example, ERMU
is able to provide this donated service to the City for less cost than a third party, creating greater
value to our community. For such situations, ERMU shall donate labor to the City of Elk River,
as appropriate, where a greater value is created for our community and where ERMU is not
subjected to undue burden.
In addition to hanging banners, other examples include: maintenance of street lighting, relamping
signal lights, locating underground fiber optics and/or other facilities, administration costs
associated with the billing of city franchise fees, installation of temporary lighting, relamping of
city ball field lighting, installation and/or maintenance of city warning sirens, meter reading for
wastewater, assistance with tree trimming, etc…
62
8.13 Payment in Lieu of Taxes
(PILOT) and other Donations to the
City of Elk River
Page 1 of 2 Adopted December 6, 1994
Revised June 6, 2008
Revised July 2, 2013
*Revised October 13, 2015
Proposed Rev Jan 1, 2016
8.13 PAYMENT IN LIEU OF TAXES (PILOT) AND OTHER DONATIONS TO
THE CITY OF ELK RIVER
1.0 Purpose and Summary
The success of ERMU is linked with the success of our community. And the success of our
community is linked with the operation of our city government and ERMU. ERMU was
purchased by the City of Elk River in 1945 and separate governance was created per State
Statute in 1947. Although governed separately, ERMU is still an important component of our
local government and our city services.
It is typical for a municipal utility to provide a Payment in Lieu of Taxes (PILOT) and other
donations to their city, regardless of a separation of governance. Although typical, this
contribution should never inhibit ERMU’s ability to make repayment on debt, cause ERMU to
become non-competitive, or inhibit needed investment in personnel or infrastructure which may
hurt ERMU’s ability to meet the needs of their customers. For these reasons the PILOT and
other donations should be reviewed at least once every five (5) years by the ERMU Commission.
2.0 Payment in Lieu of Taxes (PILOT)
The PILOT transfer from Elk River Municipal Utilities to the City of Elk River shall be three
percent (34%) of the revenues generated by ERMU’s electric customers within the corporate
boundaries of the City of Elk River which are not subject to a loss of revenue payment resulting
from the March 20, 2015, electric service territory transfer agreement with Connexus Energy.
3.0 Donated Electricity
Elk River Municipal Utilities shall donate all electricity to the City of Elk River for all of their
facilities not associated with enterprise funds of the City of Elk River. As an example, this will
include buildings such as City Hall, Police and Fire Departments, Library, Park, Street
63
8.13 Payment in Lieu of Taxes
(PILOT) and other Donations to the
City of Elk River
Page 2 of 2 Adopted December 6, 1994
Revised June 6, 2008
Revised July 2, 2013
*Revised October 13, 2015
Proposed Rev Jan 1, 2016
Department Buildings, street lights, and signal lights.; this shall not include such buildings as
Liquor Stores, Wastewater Treatment Plant, Ice Arena, or lift stations.
4.0 Donated Water
Elk River Municipal Utilities shall donate water for use by the Elk River Fire Department
(ERFD) for the purpose of extinguishing fires within the City of Elk River and other cities under
contract with the ERFD.
For the purpose of creating ice rinks for public/ non-enterprise use, ERMU shall donate water for
use by the Elk River Parks Department.
Elk River Municipal Utilities shall donate water for the use by the Elk River Streets Department
for the use of street sweeping.
5.0 Donated Labor
Because of specialized skills and equipment, ERMU may be able to provide a better value to our
community by donating labor to the City of Elk River. For example, ERMU has trained
employees and the equipment to hang banners where the City does not. In this example, ERMU
is able to provide this donated service to the City for less cost than a third party, creating greater
value to our community. For such situations, ERMU shall donate labor to the City of Elk River,
as appropriate, where a greater value is created for our community and where ERMU is not
subjected to undue burden.
In addition to hanging banners, other examples include: maintenance of street lighting, relamping
signal lights, locating underground fiber optics and/or other facilities, administration costs
associated with the billing of city franchise fees, installation of temporary lighting, relamping of
city ball field lighting, installation and/or maintenance of city warning sirens, meter reading for
wastewater, assistance with tree trimming, etc…
64
Page 1 of 1
UTILITIES COMMISSION MEETING
TO:
Elk River Municipal Utilities Commission
John Dietz – Chair
Al Nadeau – Vice Chair
Daryl Thompson – Trustee
FROM:
Troy Adams, P.E. – General Manager
MEETING DATE: October 13, 2015
AGENDA ITEM NUMBER: 4.3
SUBJECT:
Expansion of the Elk River Municipal Utilities Board of Commissioners
BACKGROUND:
Shortly after the Village of Elk River purchased Elk River Power & Light, the council by the provision of
Minnesota Statute 412.331 created through resolution the Water, Light, Power and Building Commission.
This commission is now the Elk River Public Utilities Commission with responsibility for the municipal
electric and water departments. The commission’s membership is in accordance with Statue 412.341
“consisting of three members appointed by council.”
At the September 8 utilities commission meeting, staff was directed to present a proposed expansion of
the commission membership to the city council.
DISCUSSION:
A presentation was made at the October 5 city council meeting. Council supported the proposal for
expansion and discussed the number of council membership allowable on the commission. The council
approved action for legislation to expand the utilities commission up to five members; And Upon
expansion to five members, no more than two commissioners could come from council membership.
Minnesota Municipal Utilities Association (MMUA) helped draft language for legislation consistent with
commission and council direction. This language is attached. Contingent upon commission approval, this
language will be taken back to council for approval. Once both governing bodies have reviewed and
approved the attached language, MMUA and staff will work with our local Representative Nick Zerwas
to have the language taken to the Revisor’s office to draft the proposed legislation.
ACTION REQUESTED:
Staff requests Commission approve the proposed language for an expansion of the utilities commission.
ATTACHMENTS:
Proposed – Elk River Public Utilities Commission Expanded to Five Commissioners
65
Elk River Public Utilities Commission Expanded to Five Commissioners
Notwithstanding Minnesota Statutes, section 412.341, subdivision 1, the city of Elk River may
increase the membership of the city’s public utilities commission to five members. Upon expansion to
five members, no more than two members may be chosen from the council membership. Terms for the
additional members shall be staggered and made in accordance with the bylaws governing the utilities
commission.
EFFECTIVE DATE: LOCAL APPROVAL. This section is effective the day after the governing body of
the city of Elk River and its chief clerical officer complete in timely fashion their compliance with
Minnesota Statutes, section 645.021, subdivisions 2 and 3.
61 - Elk River Electric540.5472 NATURAL GAS 25,370.56 38,000.00 40,000.00
61 - Elk River Electric540.5483 STATION PWR & WTR CONSP/PLANT 47,630.87 50,000.00 50,000.00
61 - Elk River Electric540.5484 OTHER EXP/PLANT SUPPLIES-ETC 4,543.29 6,000.00 6,500.00
61 - Elk River Electric540.5491 MISC OTHER PWR GENERATION EXP 11,686.79 13,000.00 14,000.00
61 - Elk River Electric540.5521 MAINTENANCE OF STRUCTURE/PLANT 32,885.75 32,525.00 44,000.00
61 - Elk River Electric540.5531 MTCE OF ENGINES/GENERATORS-PL 6,023.46 43,555.00 35,000.00
61 - Elk River Electric540.5541 MTCE OF PLANT/LAND IMPROVEMENT 30,806.18 32,000.00 30,000.00
Total Operations 237,268.68 327,422.00 395,500.00
Purchased Power 61 - Elk River Electric540.5551 PURCHASED POWER 21,994,651.58 22,577,733.11 23,255,065.00 Amount to be determined with finalization of GRE budget *
Total Purchased Power 21,994,651.58 22,577,733.11 23,255,065.00
Landfill Gas Plant 61 - Elk River Electric550.505 LFG PURCHASED GAS 154,739.00 170,000.00 170,000.00
61 - Elk River Electric550.5051 LANDFILL GAS O&M 445,175.79 500,000.00 500,000.00
61 - Elk River Electric550.5052 LFG ADMIN 21,516.53 10,000.00 10,000.00
61 - Elk River Electric550.5053 LFG INSURANCE 16,671.84 17,500.00 17,500.00
61 - Elk River Electric550.5054 LFG MTCE 3,205.03 20,000.00 20,000.00
Total Landfill Gas Plant 641,308.19 717,500.00 717,500.00
Transmission 61 - Elk River Electric560.562 TRANSMISSION MTCE AND EXPENSE new 0.00 0.00 15,000.00 New account for better recording of transmission expenses for MISO reporting
Total Transmission 0.00 0.00 15,000.00
Distribution 61 - Elk River Electric580.5801 REMOVE EXISTING SERV & METERS 941.25 1,000.00 2,000.00
61 - Elk River Electric580.5821 SCADA EXPENSES 4,718.39 5,000.00 5,500.00
61 - Elk River Electric580.5831 TRANSFORMER EX/OVERHD & UNDERG 13,949.57 11,000.00 32,200.00 Increased costs assumed for new territory acquisition
61 - Elk River Electric580.5851 MTCE OF SIGNAL SYSTEMS 1,324.39 1,500.00 1,500.00
61 - Elk River Electric580.5861 METER EXP - REMOVE & RESET 618.28 4,000.00 4,000.00
61 - Elk River Electric590.5951 MTCE OF LINE TRANSFORMERS 40,452.55 35,000.00 45,000.00 Increased costs assumed for new territory acquisition
61 - Elk River Electric590.5961 MTCE OF STREET LIGHTING 53,148.40 35,000.00 40,000.00 Increased costs assumed for new territory acquisition
61 - Elk River Electric590.5962 MTCE OF SECURITY LIGHTING 9,357.64 12,000.00 12,000.00
61 - Elk River Electric590.5971 MTCE OF METERS 84,972.46 85,515.00 95,000.00 Increased costs assumed for new territory acquisition
61 - Elk River Electric590.5972 VOLTAGE COMPLAINTS 6,873.89 8,000.00 8,000.00
61 - Elk River Electric590.5981 SALARIES/TRANS & DISTRIBUTION 25,235.61 43,575.00 45,000.00 Allocations different for 2016 for Elect Supt, Asst Elect Supt (new), Tech Serv Supt, GM
61 - Elk River Electric590.5985 ELECTRIC MAPPING 57,725.96 67,000.00 105,000.00 Includes increased costs for Engineer position, allocation different for Tech Serv Supt
61 - Elk River Electric590.5991 MTCE OF OVERHEAD SERVICE/2NDRY 10,233.18 13,000.00 11,000.00 Redistribution of labor with new territory acquisition
61 - Elk River Electric590.5992 MTCE OF UNDERGROUND ELEC SERV 9,776.57 37,020.00 37,000.00
61 - Elk River Electric590.5993 LOCATE UNDERGROUND SECONDARY 21,832.81 22,000.00 18,000.00 Redistribution of labor with new territory acquisition
61 - Elk River Electric590.5995 TRANSPORTATION EXPENSE 197,533.68 166,515.00 175,000.00 2014 high - Increased costs assumed for new territory acquisition
Total Maintenance 869,519.68 947,770.00 1,006,000.00
Depreciation 61 - Elk River Electric595.8031 DEPRECIATION 1,914,061.50 2,300,000.00 2,300,000.00
Total Depreciation 1,914,061.50 2,300,000.00 2,300,000.00
Other Exp 61 - Elk River Electric596.8071 INTEREST ON BONDS/LONG TERM 175,122.90 136,360.00 114,540.00 Per bond contracts, lower interest 2016
61 - Elk River Electric596.8075 INTEREST ON DEFEASED BONDS -3,271.20 -3,271.00 -3,370.00 Per bond contracts
61 - Elk River Electric597.8172 SECURITY EXPENSE 198,128.27 215,000.00 215,000.00
61 - Elk River Electric597.8213 LOSS ON DISPOSITION OF PROP 3,475.49 20,000.00 15,000.00
61 - Elk River Electric597.8261 UTILITIES & LABOR DONATED 530,339.75 515,000.00 232,000.00 2016 no longer donate electric services, increase contribution 1% instead
61 - Elk River Electric597.8262 TRANSFER TO CITY 4% ER REVENUE 797,835.34 810,000.00 1,095,000.00 2016 no longer donate electric services, increase contribution from 3% to 4% instead *
61 - Elk River Electric597.8263 OTHER DONATIONS 4,782.25 5,000.00 5,000.00
61 - Elk River Electric597.8264 DAM MAINTENANCE EXPENSE 91.70 7,800.00 0.00 Moved to water budget
61 - Elk River Electric597.8281 AMORTIZATION OF DEBT DISCOUNT -11,591.80 -11,592.00 -14,328.00 Per bond contracts
61 - Elk River Electric597.8341 INTEREST PD ON METER DEPOSITS 431.15 1,000.00 1,000.00
61 - Elk River Electric900.9051 MISC CUSTOMER ACCTS EXP-COMP 244,269.86 162,220.00 240,000.00 2014 incl Paymentus term $78k, Increased costs for full year of NISC software 2016
61 - Elk River Electric900.9061 CUST BLGS NOT PD/SENT FOR COLL 2,926.12 45,000.00 45,000.00
Total Customer Exp 294,526.07 254,220.00 338,700.00
Admin & General 61 - Elk River Electric920.9201 SALARIES/OFFICE & COMMISSION 537,658.20 659,295.17 691,000.00 Increased for staff positions filled in 2015 (addtl CSR, addtl Acct, filled Billing Specialist)
61 - Elk River Electric920.9201 TEMPORARY STAFFING 13,579.68 4,000.00 4,000.00 2014 high for Purchasing Specialist assistance
61 - Elk River Electric920.9261 UTIL SH OF MEDICAL/DENTAL/DISA 407,875.03 525,936.15 555,000.00 Includes employer share of 8.3% increase
61 - Elk River Electric920.9262 UTILITY SHARE OF PERA 179,668.72 192,000.00 275,000.00 2014 low - Increased for staff positions filled in 2015 as well as new Engineer 2016
61 - Elk River Electric920.9263 UTILITY SHARE OF FICA 178,056.22 192,000.00 195,000.00
61 - Elk River Electric920.9269 CONSERVATION IMP PROGRAM 91,675.57 186,454.00 169,444.00 more rebates paid from ERMU funds and not reimbursed from GRE, addtl staff 2015
61 - Elk River Electric920.9281 ENVIRONMENTAL COMPLIANCE 24,766.33 27,000.00 27,000.00
61 - Elk River Electric920.9291 CONSULTING FEES 4,923.68 85,000.00 30,000.00 2015 was higher for territory acquisition
61 - Elk River Electric920.9301 TELEPHONE 21,754.44 22,000.00 26,000.00
61 - Elk River Electric920.9302 ADVERTISING 2,913.51 5,500.00 7,000.00
61 - Elk River Electric920.9303 DUES & SUBSCRIPTIONS - FEES 134,632.92 200,000.00 87,000.00 2014 included MAPP fees that are no longer
61 - Elk River Electric920.9304 TRAVEL EXPENSE 3,212.12 15,500.00 15,000.00
62 - Elk River Water920.9306 MISC GENERAL EXPENSE 1,660.47 500.00 500.00
62 - Elk River Water920.9321 MTCE GEN PLANT/OFF HTG 1,249.63 2,000.00 2,060.00
Total Admin & General 544,448.80 592,440.44 636,485.00
Total Expense Budget 2,541,030.44 2,601,192.00
2.37% increase over current year, total
74
Page 1 of 1
UTILITIES COMMISSION MEETING
TO:
Elk River Municipal Utilities Commission
John Dietz – Chair
Al Nadeau – Vice Chair
Daryl Thompson – Trustee
FROM:
Troy Adams, P.E. – General Manager
MEETING DATE: October 13, 2015
AGENDA ITEM NUMBER: 5.2
SUBJECT:
2016 Utilities Fee Schedule
DISCUSSION:
Typically, the Elk River Municipal Utilities Commission approves the budget in December.
Then in January, the rates and fees are published. Per legal counsel, the Utilities’ ability to
collect on fees would be strengthened by having them adopted into City ordinance after being
approved by the Commission. Although ERMU has not yet been notified of the 2016 wholesale
power costs increase, fees are less impacted by the wholesale power costs and in many cases can
be determined earlier in the budget process.
ACTION REQUESTED:
Staff recommends approving the 2016 Utilities Fee Schedule for adoption into ordinance by the
City Council.
ATTACHMENTS:
Proposed 2016 Utilities Fee Schedule
75
Elk River Municipal Utilities2016 Utilities Fee Schedule
Proposed Fee Schedule
1 New Residential Electric Connection - Developer - Lot with ERMU water service 475.00$ 475.00$ 2 New Residential Electric Connection - Developer - Lot without ERMU water service 575.00$ 575.00$ 3 New Residential Electric Connection - Builder 875.00$ 875.00$ 4 New Wire Footages over 200' (per foot) 4.00$ 4.00$ 5 New Service Frost Trenching (per foot) 5.00$ 5.00$ 6 New Commercial & Industrial Electric Connection 50% 50%7 Service Upgrades or Additions for Existing Customers 100% 100%8 Minimum Temporary Electric Service Fee - Existing Transformer 150.00$ 150.00$ 9 Minimum Temporary Electric Service Fee - Without Existing Transformer 500.00$ 500.00$
10 Street Light - 30' Decorative Pole with 6' Arm and Fixture 1,850.00$ 1,850.00$ 11 Street Light - 23' Decorative Pole with Traditionaire Fixture 1,500.00$ 1,500.00$ 12 Security Light - Wood Pole with Fixture 975.00$ 975.00$ 13 Security Light - Existing Pole 125.00$ 125.00$ 14 Pole Attachment Fee (per pole) 6.50$ 6.50$ 15
16 Water Access Charge = Water Connection Charge + Water Availability Charge 3,325.00$ 3,425.00$ 3.01%17 Water Connection Charge (Per Plumbing Unit) - Builder 3,000.00$ 3,090.00$ 3.00%18 Water Availability Charge (Per Plumbing Unit) - Developer 325.00$ 335.00$ 3.08%19 Abandoned Water Service 2,500.00$ 2,500.00$ 20 Hydrant Water Sales - Rental (per week) $50/week $50/week21 Hydrant Water Sales - Units (per 1000 gallons) 4.00$ 4.00$ 22 Deposit for 5/8" Hydrant Meter 150.00$ 150.00$ 23 Deposit for 2 1/2" Hydrant Meter 1,000.00$ 1,000.00$ 24 Private Hydrant Maintenance Program Monthly Fee 5.00$ 5.00$ 25
26 NSF Fee 30.00$ 30.00$ 27 Red Tag Handling Fee 20.00$ 20.00$ 28 Administrative Fee for Continued Submission of Checks After No-Check Notice Given 20.00$ 20.00$ 29 Penalty Amount 10% 10%30 Electric Service Disconnect Fee - Meter Technician 50.00$ 50.00$ 31 Electric Service Disconnect Fee - Line Crew 150.00$ 150.00$ 32 Water Shut-Off Fee 100.00$ 100.00$ 33 Meter Tampering Fee 250.00$ 250.00$ 34 Meter Testing Fee 50.00$ 50.00$ 35 Energy Audit 50.00$ 50.00$ 36
Inventory Accuracy 10 > 95%on target as of 3rd qtr water (100%), electric (94.5%), security (91.4%)
Total Multiplier:
Approved December 12, 2012
Safety, Reliability
and Quality of
Utility Services
30
Customer Service
and Employee
Development
30
Financial Goals 40
78
Page 1 of 2
UTILITIES COMMISSION MEETING
TO:
Elk River Municipal Utilities Commission
John Dietz – Chair
Al Nadeau – Vice Chair
Daryl Thompson – Trustee
FROM:
Troy Adams, P.E. – General Manager
MEETING DATE: October 13, 2015
AGENDA ITEM NUMBER: 6.1a
SUBJECT:
Staff Updates – General Manager
DISCUSSION:
The Board of Directors of the Minnesota Municipal Power Agency (MMPA) met on
September 22, 2015 in Shakopee, Minnesota. At the meeting, the Board was informed
that the City of Chaska, Minnesota, an MMPA member, priced its refunding bonds
related to the Minnesota River Station. The refunded generated present value savings of
$3.3 million, which will be split equally between the City of Chaska and MMPA.
The Board also received updates on the distributed generation project in Shakopee,
Minnesota, and the solar project in Buffalo, Minnesota.
On October 7 the Midwest Municipal Transmission Group (MMTG) had their annual
meeting Mason City, Iowa. The membership approved the financial report and proposed
dues structure change. The change in dues structure shifts collecting for zonal dues to
general dues. The membership nominated and elected board members for those sits that
had become open.
The MMTG board held a meeting following the annual membership meeting. The board
nominated and elected officers. Wes Hompe, the General Manager of Willmar Municipal
Utilities, was elected 2016 MMTG Chair. The board also approved a memorandum of
understating with CMMPA to engage in transmission investment discussions on
MMTG’s behalf.
The Field Engineer position included in the 2015 budget continues to be on hold due to
the heavy workload associated with this time of year. We will look to post the position
yet this year.
Minnesota Municipal Utilities Association board approved action for a subcommittee to
develop the business plan and scope for a Leadership Development Program. I am on that
committee along with Jack Kegel – MMUA Executive Director, Jerry Williams –
Rochester Public Utilities Commissioner, and Mark Fritch – Owatonna Public Utilities
79
Page 2 of 2
General Manager. The committee will present deliverables to the MMUA board for
approval with a desired MMUA Summer Conference roll out. The core mission for the
program is: “A leadership development program to enhance the competencies necessary
to excel as organizational leaders.”
Elk River Rotary kicks of the 2015-2016 Students Taking a Renewed Interest in the
Value of Education (STRIVE) Program with the Elk River High School on October 13.
The program pairs Rotarians with seniors in jeopardy of not graduating with their class.
This mentorship program takes place at the ERHS during first period approximately a
dozen times throughout the school year. Each mentorship session provides development
on life skills that should help the senior to not only raise their GPA and graduate, but
become successful in life. This will be my second year as a Rotarian mentor in this
program.
On October 5, the city council issued a proclamation declaring October 4-10 as Public
Power Week.
With the potential expansion in membership of the utilities commission, Michelle
Canterbury and I have started working on the governance manual and policy book
revisions that had been presented to the commission in the past.
I attended the October 5 council workshop for their budget discussion. The budget will
include a water trunk fund transfer of $300,000 for the 2016 Well #9 Filter Plant
addition. Tim Simon and Justin Femrite have been working Eric Volk and me over the
past few years on the project planning and water/wastewater trunk fund areas. This has
been a good process that has helped us to coordinate efforts.
ATTACHMENT:
Proclamation designating October 4-10 as Public Power Week
80
81
Page 1 of 2
UTILITIES COMMISSION MEETING
TO:
Elk River Municipal Utilities Commission
John Dietz – Chair
Al Nadeau – Vice Chair
Daryl Thompson – Trustee
FROM:
Theresa Slominski – Finance and Office Manager
MEETING DATE: October 13, 2015
AGENDA ITEM NUMBER: 6.1b
SUBJECT:
Staff Update
DISCUSSION:
In the past, we have presented quarter write-offs in the month immediately following the
calendar quarter, so third quarter write-offs for July through September were presented in
October. With our new software, the process is different and the complete information is not
available in such a short turn-around. The process looks back a full month, and is run at the end
of a month. So July-Sept data is processed at the end of October, and would then be available to
present in November. Moving forward, we will be adjusting our reporting timeline by one
month. The new schedule will be as follows: third quarter presented in November, fourth
quarter presented in February, first quarter presented in May, and second quarter presented in
August.
We had four staff members attend the NISC software Member Information Conference (MIC) in
St. Louis, MO September 28th
– 30th
. Those attending were Jennie Nelson, Customer Service
Manager; Christy Schallock, Customer Service Representative; Jenny Biorn, Staff Accountant;
and Geri Fournier, Purchasing Specialist. They were able to participate in individual classes to
learn more about the software as they use it, ask questions of the experts, and network with other
users. All found it very valuable, and so thanks for allowing them the opportunity to attend.
Their education reports are attached.
I received communication from Assurant that they will be merging with another company,
SunLife Financial, by the end of the first quarter 2016, subject to regulatory approvals. Assurant
will still operate business as usual with employee contracts and we should have no change in our
benefits with them. Per an email from Assurant “This may have come to your attention so I just wanted
to pass along some facts about the acquisition announcement last evening. In short, nothing will change with our work on ERMU, not the offer, service, value adds, etc... All proposals will be issued under Assurant and honored as this merger will not be official for months. Sun has acquired all of our leases too so we’ll still be neighbors
with the same personnel.” I have attached a letter from the company as well.
82
Page 2 of 2
ATTACHMENTS:
Jennie Nelson Education Report
Christy Schallock Education Report
Jenny Biorn Education Report
Geri Fournier Education Report
Assurant Letter
83
84
85
86
87
88
89
Page 1 of 2
UTILITIES COMMISSION MEETING
TO:
Elk River Municipal Utilities Commission
John Dietz – Chair
Al Nadeau – Vice Chair
Daryl Thompson – Trustee
FROM:
Mark Fuchs – Electric Superintendent
MEETING DATE: October 13, 2015
AGENDA ITEM NUMBER: 6.1c
SUBJECT:
Staff Update
DISCUSSION:
Had seven new services.
Continue working on collecting data with the GPS for our ArcView maps as time
permits.
Continue working on changing out some of the rusty junction boxes or removing ones
that are no longer necessary.
Continue working on changing out fuse pads. This has been an ongoing project that had
to be done due to our high fault current.
Put rebuilding River Ranch in Otsego on hold until we have the new feeder from the
Waco substation to the court house area completed.
Continue working on installing a new feeder out of the Waco substation the court house
area.
Started installing wire for 16 new residential lots in Prestigious Woodland Hills Third
Addition.
Changed out a single phase pole and hung a larger transformer to address a voltage
complaint for the cell tower on 205th
Ave.
A driver of a gravel truck that forgot to put his box down hit two single phase taps and
broke a pole after they hit the secondary service.
Working on installation of a pole and blades for the County Road 12 Interconnection with
Connexus. We’ve also begun the process of replacing the stickers and locks on the
equipment with ours. While we’re doing this, we’ll make any necessary changes to the
maps and make notes on what needs to be fixed.
90
Page 2 of 2
Curt Wark, Reid Nelson and Aaron White attended the Minnesota Municipal Utilities
Association (MMUA) Overhead Lineworker School September 15-18 in Marshall, MN.
Their education reports are attached.
ATTACHMENTS:
Curt Wark Education Report
Reid Nelson Education Report
Aaron White Education Report
91
92
93
94
Page 1 of 2
UTILITIES COMMISSION MEETING
TO:
Elk River Municipal Utilities Commission
John Dietz – Chair
Al Nadeau – Vice-Chair
Daryl Thompson - Trustee
FROM:
Mike O’Neill – Technical Services Superintendent
MEETING DATE: October 13
th, 2015
AGENDA ITEM NUMBER: 6.1d
SUBJECT:
Staff Update
DISCUSSION:
The Locating department had a total of 360 locate tickets in September; three of them being
emergency tickets, four cancellations, 13 meetings, 311 normal tickets and 25 updated
tickets.
In September, the Security Systems Department had a total of 107 phone contacts, 11
systems quoted, seven system sales made, seven installs completed, 28 service calls and 11
personal visits.
Electric Technicians continue with the meter reading, power bill, substation checks, hanging
red-tags, meter read-outs, dealing with meter and off-peak issues, as well as delivering and
installing new meters to commercial customers. They continue to change out the three phase
meters with meters that will be read by radio. Preparations have begun for the conversion of
the new service territory in 1B. Meters have been ordered, working on ensuring that all
customers are in database.
The power plant staff did the monthly engine run on September 30th
. All engines ran well
with no problems.
Meter Technicians completed the meter swap out for the newly acquired 1A area in 2 ½
days. This was a great accomplishment and helped to ensure that ERMU would have
accurate and complete meter reads as well as all of the databases being correct in our billing
software.
Jeff Murray and Tony Hubbard attended the Minnesota Electric Meter School September
14-16 in Roseville, MN. Their education reports are attached.
95
Page 2 of 2
ATTACHMENTS:
Security Systems Weekly Update
Security Systems Analysis
Jeff Murray Education Report
Tony Hubbard Education Report
96
13069 Orono Parkway P.O. Box 430Elk River, MN 55330-0430
** April 2014 results exclude correction for 40K overbilling on security services.* Margin calculations exclude depreciation, payroll taxes, benefits coverage and office support
Security Revenue and Margin 2015
Jan Feb Mar April May June July August Sept Oct Nov Dec