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12-18-2019 HUCMMINUTES I Wednesday, December 18, 201(, Call to order — 3:00 p.m. President Don Martinez Galled the meeting to order, Members present: President Don 11 11:10 1 A"W"'"411 11-90if 1 . Conflict of Interest 2. Approve Consent Agend,2 a. Approve Minutes b. Ratify Payment of Elill�s Motion by Commissioner Cheney, second by Commissioner Morrow to approve the Consent Agenda. Motion carried unanimously. 3. Approve Financial Statements Mr. Martig presented the Financial Statements. Electric Division shows a net loss of $20K, which was a $64K improvement over 2018. GM Carter noted that IHUC is organizationally on track. Electric Division is trending lower with the seasonal weather, but overall is trackingi fairly well. Fuel consumption and load are down anc transmission costs are running at 80% year to date. Natural Gas Division operating expense is under budget and overall trendiing fairly well. Motion by Commissioner Wendorff, second by Commissioner Hanson to, approve the financial statements. Motion carried unanimously. 5. Communication a. City Administrator — Matthew Jaunich — i. Middle of budgeAs ii. Agreement for Givil Air Patrol. iii. Performing Due diligence on Econo site b. Divisions i. Dan, Lang, Eng neering Services Manager — 1. Bid spec for transformer at plant iii. Dave Hunstad Electric Transmission/Distribution Manager Nothing to report HL Randy Blake, Froduction Manager — 1. Working on 20,20 Plan, 2, Finishing up year end iv, John Webster, Natural Gas Division Manager- Absent v. Jared Martig, Financial Manager- 1 . Working on property and liability 2. Audit at the end of Jianiulary I 11111 111111111,1111 11111:11111111111111 11 I'll lllllli�� e. General Manager — Jeremy Carter i. Finishing up year-end items Conversations are starting on legislative topics Sitting in on APPA & MMUA meetings and working groups on various legislative topics., Will keep the Commissioners updated on topics. 6. Policies a. Review Policies i. k1lone rMT-1112mm- 7. Unfinished Business 8. New Business GM Carter presented for approval the 202,0 Budgets and CIP. At the, November 27, 2019 Commission meeting a high-level overview of the 2020 budgets were reviewed and major changes over 2019 were discussed in detain. Since that time, minor additions were made on the expense side of the 2020 operating budgets to reflect some additional costs for insurance ($9,532), andl the new security system with a network switch ($30,000) that was, originally budgeted for in 2019 that did not happen but will in 2020. On the ClP for 2020, an additional $1 K was added to the high-pressure fillter cleaning machine budget in, the production area to reflect the final cost of the equipment. Everything else that was presented stayed the same. GM Carter noted that the 5 -Year CIP changes from year to year and will be reviewed and updated as needed moving into 2021. M 1­2 lip lg3mHume 1J.-Drerem- M-Inivirmel 11111! 111111 1 1111111pill 1111il 111111 1 1 111 pill Il 1111 11;111111111111111 GM Carter presented the 2020 Non -Union Pay Grid & New Pay Performance Guiide, GM Carter recapped' discussions that were held in previous months with the Commission. Currendy there are Staff employees outside the pay grid 2 receiving a lump sum compensation. Different alternatives were reviewed to have a transition plan mov�ingl forward. Based on feedback from the Board, a transition plan was identified to move the noln-iunion employees to a new Pay for Performance Guide, eliminate! the lump sum wage component of the current compensation plan, and establish new plerformance grading, criteria for which non -union employees v/111 be scored. The recommendation for thiis tranisition is to first move the 2019 pay grid one-time 7% to bring all non -union emplloyees back on the play grid, which will then eliminate the lump s,um: compensation component moving forward. Next, use of the current performance rating criteria in Taleo for year-end 2019 reviews and apply those review scores to the new performance guide, which is attached. Third, in early 2020 HUC needs to develop the new performance rating crit-Iria to be appllied to year-end 20i2O reviews and apply those review scores to the new performance guidle, which is attached. Lastly, in early 2021 HUC needs to do an external/consuiltaint compensation assiessmiienit to the market and make appropriate adjustments if needed, Comprehensive studies need to be done more frequently than what have been done in the N. Commissioners agreed that all questions and concerns have been addressed. It was also noted that 2021 seems to be an appropriate timeto do a comprehensive study. A motion by Commissioner Hanson, second by Commissioner W'endorff to Approve Moving 2020 Pay Grid & New Pay Performance Guidei. Motion carried unanimously. Ms. Ewing presented tne, consideration of approval of Pay Equity Report. Last month it was reported that HUC is required to submit a pay equity report every ihree years, and HUC will be reporting for 2019. Staff is happy to report that HUIC is in compliance with the state requirements. The attached report must be approved by Hutchinson Utilities Commission and submitted to Minnesota Management and Bud get (MMB) Department, The underpayment ratio value of 217.39 included in Section 11 of the Compliance Report is above the minimum ratio of 80 that is reqed to be in compliance. It is requested that the Commission, accept and approve the enclosed report before it can be sent to the State by the end of Jainuary, K d. Approve Supplemental Agreement to the, Transmission Facilities Assignment Agreement GM Carter presented the approval of the Supplemental Agreement to Transmission Facilities Assignment Agreement (ExNbit B-1). In October 2016, HUC entered iinto a Transmission Facilities Assignment Agreement with Missouri River Energy Services (MRES), whiich assigned functional control of HUC's transmission facilities to MRES for the purpose of capturing revenue sharing payments,. Due to the future capacitor bank addition at the McLeod Substation, a supplemental agreement (Exhibit B-1, attached) is necessary to define the, new transmission facilities, along with the roles and responsibilities of each, party. HUC assigns the right for MRES to work with MISO, and GRE, essentially MRES is the intermediary on HUC's behalf, Deadline to complete the agreement is early March, with construction to folilow shortly after. Costs are not eligible for HUC to report on schedule 0 but any future expenses HUC incurs for maintenance and improvements can receive revenue recapture. Mr. Sebora noted this was summarized well. MISO looks at MRES as the regulator. Transmission studies that happen in the region, MIRES is the transmission owner. Commissioner Morrow inquired if there was a specific term tied to this. GM Carter informed the Commission that there lis not. A motion, by Commissioner Hanson, second by Commissioner Cheney to Approve Supplemental Agreement to the Transmission Facilities Assignment I Agreement. Motion carried unanimously. Mr. Lang presented approval of Requisition #8226 — 2020 Chevrolet Pickup. This scheduled replacement was intended to have been done earlier i�n the year but was, delayed., HU'C is looking to replace the 2012 Dodge Durango with a 2020 Chevrolet pickup. This is a 21019 itemi, but will be carried ove020. A motion by Commissioner Hanson, second by, Commissioner Wendorff to Approve Requisition #82261 — 2�0120i Chevrolet P,ickup. Moboin carried unanimously. f. Discussion of possible City Charter Amendment to change the eligibility requirements to serve as, a Hluitchinson Utilities Commissioner. Mr. Sebora discussed the possible City Charter Amendment to change the eligibility requirements to serve as a Hutchinson Utilities Commissioner. There Id have been times throughout the years, the Utilities Commission has struggled to finds qualified candidates to serve as a Utilities Commissioner. Since 20,13, the Utillitlies Commission has periodically discussed possibly changing the eligibility requirements to serve as a Utilities Commissioner. Mr. Sebora noted the requirements to serve as a Utilities Commissioner are, set out in the Hutchinson City Charter and the only requirement is that a person needs to be a "registered voter" in the City of Hutchinson. At a November meeting with the Hutchinson Charter Comm,issi!on, it was, discussed to possibly change the eligibility requirements to be on the Utilities Commission. The Charter discussed making business ownership in the City of Hutchinson an alternative requirement to be eligible to serve on the Utilities Commission. 'The possible change would give the Utilities Commission a larger pool of potential Utilities Commission candidates from which to choose from, and if the person were a business owner located in Hutchinson, the candlidate would also be a customer of the Utility and therefore have a vested interest in the success of the Utility. The Charter Commission tabled the discussion until the next meetings in April 2020 to allow the Utilities Commission to discuss this possible change and provide feedback concerning this topic. agenda for further discussion and possible action on! this, topic. g. Conduct the Performance Review of Hutchinson Utilities Commission General Manager Pursuant to Minnesota Statute 13D.05 ubd. 3(a) President Martinez introduced the agenda item, the General Manager's annual performance review. Presideadvised GM Carter that he has the option to have the performance review conducted as either an open session or a closed session of the Utility Commission. GM Carter indicated his decision to have the review as part of a closed; session. President Martinez entertained a motion to go into closed session to conduct the twelve-month (annual) performance review as permitted under Minnesota Statute 13D.05, Subdivision 3(a). Motion by Commissioner Morrow, second by Commissioner Wendorff to go into closed session to conduct the General Manager's performance review. The motion passed unanimously. The Commission then proceeded into a closed session at 3-58 p.m. 0 Hutchinson Utilities Commission Summary of Closed Meeting Proceedings General' Manager Performance Appraisal Wednesday, December 18, 2019 On December 18, 20,19, the Hutchinson Utilities Commiss,ioln: conducted a closed meeting for the annual performance appraisal for General Manager, Jeremy Carter, Individuals present included General Manager Jeremy Carter, Commission Members Don Martinez, Monty Morrow, Anthony Hanson, Bob Wenclorff, and Matt Cheney, City Attorney Marc Seb,ora, and City of Hutchinson Human Resources Director Brenda Ewing. Mr. Carter exercised hiis right to close the proceedings to the public as permitted under Minnesota Statute 13D.05, Subdivision 3(a). Motion by Morrow, second by Wenclorff to go into, closed' session to conduct the Generail Manager's performance review. The motion passed unanimously. The Commission then proceeded into a closed session at 3:58 p.m, The Commission reviewed Mr. Carter's performance for the current calendar year. The reviiewis required per the terms of the employment contract in place between the Hutchinson Utilities Commission and General Manager Carter. Mr. Carter's performance was evaluated in the following areas: Organizational Management, Fiscal/Business Management, Program Development, Relationship & Communication with the Commission, Long -Range Planning, and Relationships with Public & Outside Organizations, The consensus of the Commission iS that Mr. Carter's cumulative performance, for the review period was found to be 4.10 on the rating scale of 0 — 5, and, per the Hutchinson Utilities Commission, is outstanding on the ratings scale. The employment contract between Hutchinson Utilities and Mr. Carter indicates that salary increases for the General Manager are subject to the provisions of the Compensation Plan section of the Huitchinison Utilities, Commission Exempt Employee Handbook, Motion by Cheney, second by Hanson to close the closed sess,ioini. The motion paissed unanimously. The Commission proceeded into open session at 4p.m. Per the General Manager's review, andl per the HIUC compensation plan, an aggregate score of 4.1 correlates to a, 5% increase. Motion by Hanson, second by Cheney to increase General Manager Jeremy Carter's annual salary 5%. The motion carried unanimously. Motion to adjourn by Wendorff, second by Cheney. The motion, carried una!nimiously, and the meeting adjourned at 4:54 p.m. l�obert Mnd;4, Secr Cron Martinez, Presider�V