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02-27-2019 HUCMMINUTES Regular Meeting — Hutchinson Utilities Commission Wednesday, February 27, 2019 Call to order — 3:00 p.m. President Don Martinez called the meeting to order. Members present: President Don Martinez; Vice President Matt Cheney; Secretary Robert Wendorff; Commissioner Monty Morrow; Commissioner Anthony Hanson; GM Jeremy Carter; Attorney Marc Sebora: Conflict of Interest 2. Approve Consent Agenda a. Approve Minutes b. Ratify Payment of Bills Motion by Commissioner Wendorff, second by Commissioner Morrow to approve the Consent Agenda. Motion carried unanimously. At this time, President Martinez stated that Item 8a-Approve 3M CIP Rebate for 2018 and Item 8b-2018 Review of Conservation Improvement Program (CIP) under New Business would be discussed now. Nick Nelson, Energy Conservation Administrator presented Item 8a-3M CIP Rebate for 2018. 3M had 27 projects in 2018, which consisted of 11 Gas projects and 25 Electrical projects. 9 of these projects were combined with both Gas and Electric. Total 3M Rebate for 2018 is for $78,018.32. Commissioner Hanson inquired how this compares to other years. Mr. Nelson indicated that 2018 has increased from previous years. Commissioner Wendorff inquired if HUC knows ahead of time what projects 3M will have. Mr. Nelson informed the Commission that at this time HUC does not know but Staff is working with 3M to try to get the projects on a quarterly basis. A motion by Commissioner Cheney, second by Commissioner Hanson to Approve 3M CIP Rebate for 2018. Motion carried unanimously. Mr. Nelson presented Item 8b-2018 Review of Conservation Improvement Program (CIP). The reason for CIP is to 1) Approve awareness and adoption of energy - efficient technologies 2) Save utilities money on infrastructure cost 3) Decrease carbon dioxide emissions and 4) Fulfill Minnesota State requirement of all utilities to offer energy rebates (MN State Statute 2016B.241). Each individual utility shall have an annual energy -savings goal equivalent to 1.5 percent of gross annual retail energy sales unless modified by the commissioner under paragraph (d). Mr. Nelson noted for electric, HUC was 1.4 percent and for gas met the 1.5 percent goal. CIP figures are based on the past three year average financial reports. CIP is under constant review; every year programs are tailored to emphasize the most efficient energy upgrades, which also allow for a larger energy return per rebate. Mr. Nelson summarized expenses vs savings for residential, commercial and industrial; Industrial for this year is based on 3M. Mr. Nelson added CIP Marketing has been through newspaper ads and radio spots. In summary, Staff feels like HUC has a well-rounded rebate for all with many options. 3. Approve Financial Statements Jared Martig presented the financial statements. In the Electric Division, net loss decreased by $13,270 mostly due to lower purchased power as well as fuel to generate to go along with decreased revenue. With Plant 1 being down due to the cooling tower project, HUC could not generate. Salaries and benefits decreased due to a portion of System Control now being allocated between the natural gas division and electric division. In the Natural Gas Division, net income decreased by $114,308, which is mostly due to the credit on customer bills that was absent in 2018. Salaries and benefits increased due to System Control now being allocated between the natural gas division and electric division. Commissioner Hanson inquired about the Electric Division Industrial consumption being down substantially. GM Carter noted there has been a decrease in the past twelve months dependent on how the operations are being ran. Industrial companies are always looking at ways to control energy consumption. Nothing specific as why consumption is down, just normal operations. Motion by Commissioner Morrow, second by Commissioner Cheney to approve the financial statements. Motion carried unanimously. 4. Open Forum 5. Communication a. City Administrator — Matthew Jaunich — i. Street projects being worked on are: 5tn Ave, intersection by Cash Wise on South Grade road, Uponor Road. ii. Looking at cites for new Police Station b. Divisions i. Dan Lang, Engineering Services Manager — 1. Notification from MISO that a capacitor bank at the McLeod Substation may be required due to future wind projects. ii. Dave Hunstad, Electric Transmission/Distribution Manager — 1 . Reviewed outages for the year of 2018. iii. Randy Blake, Production Manager — 1 . Letter from Dale Sturges that he will be retiring April 15. Dale is improving. 2. Cooling tower project has gone well. 3. Overall project is going well. 4. Received an email that the application for HUC's Plant 1 air permit has a final draft. Should go out for public comment soon. 2 iv. John Webster, Natural Gas Division Manager- 1. Looking at purchasing additional gas commodity for the future. Future prices are down significantly. Possibly rolling in the gas that is not under HUC's prepaid contract. v. Jared Martig, Financial Manager- 1. Provided an audit update. BS&A is continuing to work on inventory issues. Planning to have audit completed for March but could be April. c. Legal — Marc Sebora — Nothing to Report d. Human Resources - Brenda Ewing — i. Time of year that HUC is required to report to OSHA and Department of Labor injures from the previous year. Happy to report that there were no recordable injuries for 2018. Wanted to acknowledge the Commission support of the safety program and safety equipment. e. General Manager — Jeremy Carter i. Next week, Dave and I will be attending a meeting on distributed generation. ii. Legislative topics going on, will keep Commission up to date. A topic for discussion is increasing CIP from 1.5 percent to 2 percent or higher. iii. Meet with 3M today, talked about projects coming forth along with rates and Cost of Service. Staying on top of what they are doing along with how it pertains to HUC. iv. Continuing to think about strategic planning. Staff has had its first meeting. Have received a few topics from Commissioners; please let Staff know if there are additional topics. Staff is looking to have an additional meeting next month. Commissioner Hanson inquired about what HUC has been doing on a safety prospective. GM Carter noted that HUC has a very robust safety program. HUC has an in-house safety committee, which include representatives from the various departments along with a safety coordinator from MMUA. HUC has a consistent schedule of what is reviewed monthly. HUC recognizes that employees work in a dangerous environment, so Staff and managers are involved in ways to avoid issues. Staff is flexible to listen to ideas and make changes if needed and have always felt comfortable with bringing things forth. 6. Policies a. Review Policies i. Section 2 of Exempt Handbook ii. Section 2 of Non -Exempt Handbook No changes recommended at this time. b. Approve Changes i. Equal Employment Opportunity; Exempt & Non -Exempt Handbook -as noted. Wording changes and clarification. Need to omit 'membership on a' and add the word 'activity' to both the Exempt and Non -Exempt policy. In the packet, 3 the Commission will notice this change was only in the Exempt policy but needs to also be added to the Non -Exempt policy. Data Practices Advisory; Exempt & Non -Exempt Handbook -as noted. Adding in additional media to stay current with media platform. Motion by Commissioner Hanson, second by Commissioner Cheney to approve the changes as presented in addition to GM Carters additional recommendation to the Non -Exempt Equal Employment Opportunity policy. Motion carried unanimously 7. Unfinished Business 8. New Business c. Approve setting a Committee for Union Negotiations GM Carter noted the current Union Contract is a 3-year contract, which will be expiring at the end of June 2019. As HUC moves forward into the next contract cycle, the customary practice is to set a union negotiation team on the employer's side. The union negotiation team will help negotiate topics and terms. Historically HUC has had two commissioners along with the GM, HR manager and labor attorney. Staff would like the commissioners to consider having two commissioners sit on the team. Along with the union discussions, would also like the committee to take into consideration the non -union side with pay performance. This time around there may be more time from the commissioners to work through some of these topics. Anticipating questions and conversations to start in March or April, so would like to have the union committee set ahead of time. Commissioner Wendorff and Commissioner Hanson would like to volunteer. A motion by Commissioner Morrow, second by Commissioner Cheney to Approve setting a Committee for Union Negotiations with representatives of Commissioner Hanson and Commissioner Wendorff. Motion carried unanimously. d. Approval of Advertisement for Bids on Unit 8 Control System GM Carter presented Approval of Advertisement for Bids on Unit 8 Control System. HUC is asking the commission to approve advertising for bids and hiring a vendor to implement a new control system for unit 8. This is part of HUC's general transition plan to move away from the outdated current system. HUC is anticipating that this will be well above the public bidding threshold at about $270,0004300,000 depending on the vendors. HUC does have $270,000 budgeted in CIP. President Martinez inquired on the length of the project. Mr. Lang indicated the plan is to start the project later this Fall and to have a 4 completion date by end of the year. Commissioner Hanson inquired if there is anything in Cap X for SCADA system for this year. Mr. Lang noted that there is. HUC will be replacing the master station in the system control room and will be working out into the field. That project should be coming out soon for approval, but should be under the state bid threshold. A motion by Commissioner Hanson, second by Commissioner Wendorff to Approve Advertisement of Bids on Unit 8 Control System. Motion carried unanimously. e. Approve Coriolis Meter Transmitter Upgrade Mr. Webster presented the Coriolis Meter Transmitter Upgrade. Currently HUC has eight Coriolis Meters. Five of the eight meters are currently operating with the old 1700 series transmitters and HUC would like to replace those five meters with the new 5700 series transmitters with "Smart Meter Verification". HUC, as a natural gas transmission provider, must ensure that each interconnect meter is accurate at all times. In order to determine meter accuracy, each meter has to be removed from service and tested against a "standard" meter utilizing water as the test medium, which is costly and time consuming. The new 5700 transmitters have an advanced diagnostics system that can be set to run at any interval, providing "pass/fail' details, which detect variances in meter accuracy at any time without incurring further expense. This upgrade was not budgeted for this year but HUC will be pulling money away from a different transmission project. Emerson is also providing a 30% trade in value of the old ones. A motion by Commissioner Wendorff, second by Commissioner Morrow to Approve the Coriolis Meter Transmitter Upgrade. Motion carried unanimously. f. Approve Requisition #7848 for Winter Construction at Hospital GM Carter noted that HUC would like to pull this item off the agenda. Conversations were held with Staff and the contractors and it was determined the contractors are willing to wait until the frost comes out of the ground until HUC does the infrastructure. g. Review 2018 Annual Distributed Generation Mr. Hunstad reviewed the 2018 Annual Distributed Generation. In 2017, the State law changed that allows Municipals and Cooperatives to govern customer generation interconnections that have adopted the appropriate rules, rates and 5 contract forms. HUC has already adopted a Distributed Generation interconnection policy that meets the requirement for both, <40KW and >40KW interconnections. There is one change that is recommended for the review, which is to remove "Parallel" and add "Distributed" to the title of the 40KW or less policy. This change will align with today's terminology and match HUC's existing over 40KW policy. In the packet only the >_40KW was printed out, so provided to the Commissioners today is the <_40KW. Mr. Hunstad reviewed both >_40KW and :540KW charts. As of today, HUC has five systems hooked up on solar. After discussion, a motion by Commissioner Hanson, second by Commissioner Cheney to approve verbiage changes of removing "Parallel" and adding "Distributed". Motion carried unanimously. h. Discussion on Customer Requests to change out AMI Meters to Analog Meters GM Carter reviewed customer requests to change out AMI Meters to Analog Meters. Literature was sent to the Commissioners for review on the meters. A customer has requested that HUC entertain the idea of removing the electric and gas AMI meters that are pinging out frequencies, which is how reads are received. This is not an uncommon request with this type of technology. The piece that is important to think and talk about is the policy decision in where HUC wants to go in the future. HUC has made a significant investment in moving away from the old technology of Analog meters of going out physically reading meters to new advanced technology of AMI, which automatically receives the reads. Utilities are moving to this type of technology for operational efficiency, ability to manage loads, manage costs, and the advancement of overall grid itself by adding sensors. This is where the shift is going. When there is this type of technology used, there are frequencies that are transmitted. There are proponents of that type of technology because of concerns of frequencies that are emitting health concerns. This conversation is not unique to HUC, but it is important for the Board to consider where the Board stands on these types of requests moving forward. If these requests come up in the future, Staff needs to know how these requests should be handled. Currently HUC does not have any more analog meters in inventory. If HUC does need to go back to analog meters, some things to consider are 1) analog meters would have to be purchased and 2) it would create an operational concern, meaning Staff would have to go out and physically read the meters. There are different approaches the Board can take with these types of requests 1) the Board can entertain the idea of meter concern by replacing the meter or 2) Staff would suggest if the meters were to be replaced, they would be at the owner's expense with a type of fee schedule attached. A concern from a management standpoint is now HUC would be going backwards and the precedence that this may be setting. It may only be one meter today but in the future, there may be more. If that were the case, HUC would be managing two types of meters. The other side of the argument is that the Board is not looking at changing out the technology, HUC has moved forward with the AMI system. From 0 a factional standpoint, there has not been any scientific evidence that these types of low frequencies are harmful. Some of the configuration is also important to know, HUC has the Gas and Electric meter running AMI but also the City has the Water meter running AMI. Discussions were held on the customer requests of changing out AMI meters to Analog meters. President Martinez noted that if there is some type of documentation to support a claim then the Board would start from there. In the time being, the Board does not want to change the approach and the policies in that regard. 9. Adjourn There being no further business, a motion by Commissioner Wendorff, second by Commissioner Morrow to adjourn the meeting at 4:11 p.m. Motion carried unanimously. ATTEST: V �� Den-maithlez, President HW& C" , VIG.G'Pre! Kde•-� 7