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11-25-2020 HUCCP HUTCHINSON UTILITIES COMMISSION AGENDA REGULAR MEETING th November 25, 2020 3:00 p.m. 1. CONFLICT OF INTEREST 2. APPROVE CONSENT AGENDA a. Approve Minutes b. Ratify Payment of Bills 3. APPROVE FINANCIAL STATEMENTS 4. OPEN FORUM 5. COMMUNICATION a. City Administrator b. Divisions c. Human Resources d. Legal e. General Manager 6. POLICIES a. Review Policies i. CIP Rebate Level of Authority ii. Delegation of Authority Policy iii. Financial Reserve Policy iv. Investment Policy v. Purchasing Policy/Credit Cards/Fixed Assets vi. Service Beyond City Limits of Hutchinson b. Approve Changes i. Payments of HUC Payables ii. Surplus Property Policy 7. UNFINISHED BUSINESS a. Approve Bright Energy Choices Program 8. NEW BUSINESS a. Approve Non-Waiver of Tort Liability Limits for General Liability Insurance b. Approve Customer Uncollectable Write-Offs c. Approve Selling of Surplus Vehicles d. Discuss Date for Performance Review of Hutchinson Utilities General Manager e. 2021 Budget Presentation ADJOURN 9. MINUTES Regular Meeting Hutchinson Utilities Commission Wednesday, October 28, 2020 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; 1. Conflict of Interest 2. Approve Consent Agenda a. Approve Minutes b. Ratify Payment of Bills Motion by Commissioner Morrow, second by Commissioner Cheney to approve the Consent Agenda. Motion carried unanimously. 3. Approve Financial Statements GM Carter presented the Financial Statements. Electric Division net profit increased by $18,316 despite lower usage and revenues mostly from a decrease in expenses directly related to providing power including purchased power, transmission and fuels. GM Carter noted the power cost for September 2020 brought in an additional $36K for the month and $500K YTD. For 2019, YTD was $1.5M. Natural Gas Division net profit increased by $30,939, which was due to an increase in customer revenue along with a decrease in operating expenses. Both Electric and Natural Gas Divisions are trending better than last year. Commissioner Hanson inquired about the Electric Division Sales for Resale in September with Rice Lake gain? GM Carter noted HUC has sold out of its current excess capacity through 2030. GM Carter also mentioned market sales are down this year in Sales for Resale because of the low market prices, along with the elimination of the Transalta Contract that ended in 2019. Motion by Commissioner Wendorff, second by Commissioner Hanson to approve the financial statements. Motion carried unanimously. 4. Open Forum 5. Communication a. City Administrator Matthew Jaunich Absent b. Divisions i. Dan Lang, Engineering Services Manager Absent ii. Dave Hunstad, Electric Transmission/Distribution Manager Absent 1 iii. Randy Blake, Production Manager Absent iv.John Webster, Natural Gas Division Director Absent v. Jared Martig, Financial Manager- Absent c. Human Resources - Brenda Ewing Absent d. Legal Marc Sebora i. Nothing to report e. General Manager Jeremy Carter i. Working on Budget, CIP and Fleet ii. MRES area meetings started today- this will be a 4-day virtual meeting. Commissioner Hanson inquired when the division directors would be able to attend the Commission meetings. GM Carter stated right now it would be awhile before all the managers attend in person due to 6 feet spacing. Going forward, the intention is to have each director provide a written recap of the division and that will be included in the monthly packet. Another option for the Commission to consider is to have the directors rotate into the commission room to provide manager reports during the communication section or allow managers to attend the meeting when there are more significant topics or projects to cover. The consensus from the board is to have a written recap from each division or some type of presence from the managers if new business items would warrant. This will be left up to the Staff. 6. Policies a. Review Policies i. Security Light Rental Rate to Furnish and Maintain Fixture ii. Electric Service Requirements & Charges iii. Temporary Service- Electric iv. Temporary Service in Case of Underground Failure v. Electric Meter Placement vi. Sealing of Meters Electric vii. Meter Testing - Electric viii. Right-of-Way Clearing ix. Tree Removal of Trimming x. Locating Electric xi. Natural Gas Service Requirements & Charges xii. Temporary Service Natural Gas xiii. Natural Gas Meter Requirements & Placement xiv. Meter Testing Natural Gas xv. Natural Gas Service Work xvi. s Natural Gas No changes recommended at this time. b. Approve Changes i. Electric-Rate Schedule ii. Natural Gas Rate Schedule 2 GM Carter stated this is more of a formality to reflect the changes that were approved to the rates a couple of months ago. Motion by Commissioner Hanson, second by Commissioner Cheney to approve the policy changes. Motion carried unanimously. 7. Unfinished Business a. None 8. New Business a. Rescind RFP for Ground Mounted Ballasted Utility Interactive Photovoltaic System Advertisement for Bid GM Carter presented rescinding the RFP for Ground Mounted Ballasted Utility Interactive Photovoltaic System Advertisement for Bid. As Staff has proposed this advertisement for bid, the same question kept coming up by many developers; would HUC allow a partial ballasted option? This second option would allow a ground penetrating solar array option that would have poles placed in the ground Natural Gas Pipeline Easement, which would reduce costs. Contractors can bid either option or both options. Since this is a formal bid, Staff needs the Commission to rescind the previous Advertisement for Bid and approve the new Advertisement for Bid. A motion by Commissioner Cheney, second by Commissioner Morrow to Approve rescinding the RFP for Ground Mounted Ballasted Utility Interactive Photovoltaic System Advertisement for Bid. Motion carried unanimously. b. Approve new RFP for Ground Mounted or Ground Mounted Ballasted Utility Interactive Photovoltaic System Advertisement for Bid GM Carter presented approval of new RFP for Ground Mounted or Ground Mounted Ballasted Utility Interactive Photovoltaic System Advertisement for Bid. Staff is recommending approval of the revised RFP and Advertisement for Bid to allow the greatest options on pricing and design. A motion by Commissioner Hanson, second by Commissioner Cheney to approve the new RFP for Ground Mounted or Ground Mounted Ballasted Utility Interactive Photovoltaic System Advertisement for Bid. Motion carried unanimously. c. Discussion/Approval of Rescheduling the November 25, 2020 and December 30, 2020 Regular Commission Meetings if needed. 3 GM Carter initiated the discussion on rescheduling the November 25 and December 30 regular Commission Meetings if needed due to the meetings being so close to the holidays. The Commissioners held discussions on if rescheduling the two meetings is needed. The consensus from the Board was to keep the November 25, 2020 meeting as is and to reschedule the December 30, 2020 meeting to December 16, 2020. A motion by Commissioner Wendorff, second by Commissioner Cheney to approve rescheduling the December 30, 2020 meeting to December 16, 2020. Motion carried unanimously. d. Discussion of reappointment of Robert Wendorff to the Hutchinson Utilities Commission After discussion, Mr. Wendorff is willing to stay on and be re-appointed for another 5-year term. All Commissioners agreed with re-appointment of Commissioner Wendorff. A motion by Commissioner Cheney, second by Commissioner Hanson to re- appoint Commissioner Wendorff to the Hutchinson Utilities Commission. Motion carried unanimously. Mr. Sebora will relay the recommendation to the City Council for reappointment. e. Discussion of Moving 2021 Pay Grid GM Carter recapped information that was sent out to the Board on personnel cost and what the pay grid shift would mean. Not necessarily looking for a formal action today on moving the pay grid but looking for a general consensus from the Board to have an idea on what should be programmed into the budget for the November Review. Discussions were held on the movement of the pay grid in 2020, what that meant for future movement with market and inflation, and having a 2021 Compensation Study. Consensus from the Board is to continue down the path that was set forth last year, receive information from the 2021 Compensation Study and reassess based on the findings. For now, moving the grid based on inflation would be 1.5-2% GM Carter stated he would start at 1.5% and adjust from there. f. Discussion of Bright Energy Choices Program 4 GM Carter recapped information that was sent out to the Board on additional information regarding the Bright Energy Choices Program. Noting this would be a policy decision the Board would need to decide so that staff can market and A significant change from the last discussion held is that the price point on the Renewable have come down from .05 cent to 1/10 of a cent, which is a significant change to the price structure. This know allows the Board to have different options to consider. Predominantly would the Board like to roll out a program that is non-voluntary to do something for the community and cover the consensus from the last discussion held and make this more of a voluntary program at the customer level. If the customer wants to participate with the program, HUC would pass the adder cost on to the customer through the utility bill. Discussions were held on the many options and different ways to roll out the program along with knowing this will need to be addressed every year. Reengagement of this item will be held at the November meeting when a decision will be made. g. Discussion of MRES Power Supply Refund Payment President Martinez initiated the discussion on the MRES Power Supply Refund. The President would like to have the Board discuss this unexpected refund amount coming back from MRES and determine how these dollars should be earmarked. GM Carter noted the amount coming back from MRES is approximately $1.2M, which is 10% of . MRES had refinanced bonds, was under budget with market purchases, spend less on capital projects, and seen changes in baseloads and renewables. With all the positive impacts and the current strong financial position of MRES, MRES decided to provide a one-time refund to its utility members. Discussions were held on the many possibilities of how to earmark or distribute the MRES Power Supply Refund. The Commissioners would like to have input from the department heads on different possibilities on how to earmark the refund before the Commissioners make a final decision. Commissioners will also provide a list to review. 9. Adjourn There being no further business, a motion by Commissioner Cheney, second by Commissioner Wendorff to adjourn the meeting at 4:23p.m. Motion carried unanimously. 5 __________________________ Robert Wendorff, Secretary ATTEST: _________________________ Don Martinez, President 6 HUTCHINSON UTILITIES COMMISSION COMBINED DIVISIONS FINANCIAL REPORT FOR OCTOBER, 2020 October, 2020 MonthYear to Date 83.3% of Year Comp. 20202019Diff.% Chng20202019Diff.% Chng Full Yr Bud% of Bud Combined Division Customer Revenue$ 2,693,890$ 2,723,280 $ (29,390)(1.1%)$ 27,484,279$ 29,313,996$ (1,829,717)(6.2%)$ 35,819,11676.7% Sales for Resale$ 268,437$ 236,561$ 31,876 13.5%$ 2,203,674$ 2,369,004$ (165,330) (7.0%)$ 3,007,25073.3% NU Transportation$ 102,785$ 104,947$ (2,163) (2.1%)$ 875,503 $ 872,101$ 3,4020.4%$ 898,64097.4% Electric Division Transfer$ 55,440$ 54,982$ 4580.8%$ 554,403 $ 549,819$ 4,5830.8%$ 665,28383.3% Other Revenues$ 66,663$ 38,591$ 28,071 72.7%$ 779,848 $ 508,317$ 271,53253.4%$ 466,207167.3% Interest Income$ 27,496$ 52,563$ (25,067)(47.7%)$ 411,756 $ 445,977$ (34,221)(7.7%)$ 383,456107.4% TOTAL REVENUES$ 3,214,711$ 3,210,925 $ 3,7860.1%$ 32,309,462$ 34,059,213$ (1,749,751)(5.1%)$ 41,239,95278.3% Salaries & Benefits$ 492,744$ 484,112$ 8,6311.78%$ 5,407,964$ 5,003,038$ 404,9268.1%$ 6,946,88077.8% Purchased Commodities$ 1,430,375$ 1,358,777 $ 71,598 5.3%$ 15,069,342$ 16,202,080$ (1,132,739)(7.0%)$ 19,252,47778.3% Transmission$ 187,439$ 207,134$ (19,695)(9.5%)$ 1,845,233$ 2,495,345$ (650,112) (26.1%)$ 2,680,00068.9% Generator Fuel/Chem.$ 31,445$ 79,950$ (48,505)(60.7%)$ 477,580 $ 621,681$ (144,101) (23.2%)$ 825,87557.8% Depreciation$ 327,083$ 327,083$ -0.0%$ 3,270,833$ 3,270,833$ - 0.0%$ 3,925,00083.3% Transfers (Elect./City)$ 211,040$ 188,434$ 22,606 12.0%$ 2,110,399$ 1,884,339$ 226,06012.0%$ 2,532,47583.3% Operating Expense$ 137,442$ 197,184$ (59,742)(30.3%)$ 1,791,973$ 2,053,064$ (261,092) (12.7%)$ 2,605,31368.8% Debt Interest$ 89,542$ 97,334$ (7,792) (8.0%)$ 895,422 $ 973,339$ (77,917)(8.0%)$ 1,074,50783.3% TOTAL EXPENSES$ 2,907,109$ 2,940,009 $ (32,899)(1.1%)$ 30,868,745$ 32,503,720$ (1,634,975)(5.0%)$ 39,842,52777.5% NET PROFIT/(LOSS)$ 307,602$ 270,916$ 36,685 13.5%$ 1,440,717$ 1,555,493$ (114,776) (7.4%)$ 1,397,425103.1% Combined Divisions - Financial/Operating Ratios OctoberOctoberYTD YTD 2020HUC 20202019Change20202019ChangeBudgetTarget Gross Margin %37.8%37.7%0.0%33.9%32.8%1.2%34.6%26% - 28% Operating Income Per Revenue $ (%)9.7%9.4%0.3%3.8%5.4%-1.5%4.6%1%-4% Net Income Per Revenue $ (%):9.6%8.4%1.1%4.5%4.6%-0.1%3.4%0%-1% Notes/Graphs: HUTCHINSON UTILITIES COMMISSION ELECTRIC DIVISION FINANCIAL REPORT FOR OCTOBER, 2020 October, 2020 MonthYear to Date 83.3% of Year Comp. 20202019Diff.% Chng20202019Diff.% Chng Full Yr Bud% of Bud Electric Division Customer Revenue$ 1,829,709$ 1,986,081$ (156,372)(7.9%)$ 19,915,368$ 21,232,764$ (1,317,396)(6.2%)$ 25,627,44877.7% Sales for Resale$ 268,437$ 236,561 $ 31,87613.5%$ 2,203,674$ 2,369,004$ (165,330)(7.0%)$ 3,007,25073.3% Other Revenues$ 35,809$ 15,327$ 20,482133.6%$ 495,642$ 219,970 $ 275,672125.3%$ 179,499276.1% Interest Income$ 15,142$ 27,676$ (12,534)(45.3%)$ 219,818$ 237,311 $ (17,493)(7.4%)$ 208,456105.5% TOTAL REVENUES$ 2,149,097$ 2,265,645$ (116,548)(5.1%)$ 22,834,502$ 24,059,049$ (1,224,547)(5.1%)$ 29,022,65378.7% Salaries & Benefits$ 365,050$ 348,847 $ 16,2034.6%$ 4,052,434$ 3,704,379$ 348,0559.4%$ 5,074,75979.9% Purchased Power$ 928,590$ 982,270 $ (53,680)(5.5%)$ 10,806,798$ 11,673,439$ (866,642)(7.4%)$ 13,480,33280.2% Transmission$ 187,439$ 207,134 $ (19,695)(9.5%)$ 1,845,233$ 2,495,345$ (650,112)(26.1%)$ 2,680,00068.9% Generator Fuel/Chem.$ 31,445$ 79,950$ (48,505)(60.7%)$ 477,580$ 621,681 $ (144,101)(23.2%)$ 825,87557.8% Depreciation$ 241,667$ 241,667 $ -0.0%$ 2,416,667$ 2,416,667$ -0.0%$ 2,900,00083.3% Transfers (Elect./City)$ 163,236$ 147,172 $ 16,06410.9%$ 1,632,355$ 1,471,718$ 160,63710.9%$ 1,958,82683.3% Operating Expense$ 93,857$ 136,183 $ (42,326)(31.1%)$ 1,189,469$ 1,437,382$ (247,912)(17.2%)$ 1,654,94371.9% Debt Interest$ 44,471$ 46,555$ (2,083) (4.5%)$ 444,714$ 465,547 $ (20,833)(4.5%)$ 533,65783.3% TOTAL EXPENSES$ 2,055,755$ 2,189,778$ (134,023)(6.1%)$ 22,865,248$ 24,286,158$ (1,420,910)(5.9%)$ 29,108,39278.6% NET PROFIT/(LOSS)$ 93,342$ 75,867$ 17,47523.0%$ (30,747)$ (227,109)$ 196,363(86.5%)$ (85,739) 35.9% October, 2020 MonthYear to Date 83.3% of Year Comp. 20202019Diff.% Chng20202019Diff.% Chng Full Yr Bud% of Bud Electric Division Residential3,705,9383,669,522 36,4160.99%44,631,60342,376,263 2,255,340 5.32% 51,590,88986.5% All Electric187,517172,009 15,5089.02%2,079,4682,037,722 41,746 2.05% 2,545,49781.7% Small General1,367,0161,418,772 (51,756) (3.65%)14,830,86415,768,265 (937,401) (5.94%) 18,956,24878.2% Large General6,511,1306,456,310 54,8200.85%65,729,86067,939,770 (2,209,910) (3.25%) 79,933,58382.2% Industrial9,580,0009,960,000 (380,000)(3.82%)99,253,000101,484,000 (2,231,000) (2.20%) 129,279,66676.8% Total KWH Sold 21,351,601 21,676,613 (325,012)(1.50%) 226,524,795 229,606,020 (3,081,225)(1.34%) 282,305,88380.2% Financial/Operating Ratios OctoberOctoberYTD YTD 2020HUC 20202019Change20202019ChangeBudgetTarget Gross Margin %32.0%30.2%1.9%27.2%25.4%1.8%28.7%24% - 28% Operating Income Per Revenue $ (%)4.2%4.2%0.0%-1.2%-0.3%-0.9%0.8%0%-5% Net Income Per Revenue $ (%):4.3%3.3%1.0%-0.1%-0.9%0.8%-0.3%0%-5% Customer Revenue per KWH:$0.0857$0.0916-$0.0059$0.0874$0.0920-$0.0045$0.0903$0.0903 Total Power Supply Exp. per KWH:$0.0668$0.0721-$0.0052$0.0712$0.0772-$0.0059$0.0728$0.0728 Notes/Graphs: Net Profit increased by $17,475 despite lower usage and revenues mostly from a decrease in expenses directly related to providing power including purchased power, transmission, and fuels. Sales for Resale of $268,437 consisted of $24,187 in market sales, $98,000 in capacity sales to Rice Lake and $146,250 in capacity sales to AEP. October 2019 Sales for Resale of $236,561 consisted of $31,083 in market sales, $36,400 in monthly tolling fees from Transalta, $19,578 in Transalta energy sales, $13,500 in capacity sales to AEP, and $136,000 in capacity sales to SMMPA. October 2018 Sales for Resale of $284,798 consisted of $20,287 in market sales, $35,600 in Transalta tolling fees, $112,911 in Transalta energy sales, and $116,000 SMMPA capacity sales. Overall Purchased Power decreased by $53,680. MRES purchases decreased by $51,081 and market purchases/MISO costs decreased by $2,599. MRES purchases decreased due to no longer having to pay the rate adder of $54,000 going forward. This was a 10 year adder required to join MRES. There was no power cost adjustment for October leaving the total PCA YTD at $500,576. Last year's power cost adjustment for October 2019 generated $126,905 in additional revenue for the month and $1,647,918 YTD. HUTCHINSON UTILITIES COMMISSION GAS DIVISION FINANCIAL REPORT FOR OCTOBER, 2020 October, 2020 MonthYear to Date 83.3% of Year Comp. 20202019Diff.% Chng20202019Diff.% Chng Full Yr Bud% of Bud Gas Division Customer Revenue$ 864,181$ 737,199 $ 126,982 17.2%$ 7,568,911$ 8,081,232$ (512,321)(6.3%)$ 10,191,66874.3% Transportation$ 102,785$ 104,947 $ (2,163) (2.1%)$ 875,503 $ 872,101 $ 3,4020.4%$ 898,64097.4% Electric Div. Transfer$ 55,440$ 54,982$ 4580.8%$ 554,403 $ 549,819 $ 4,5830.8%$ 665,28383.3% Other Revenues$ 30,854$ 23,264$ 7,58932.6%$ 284,207 $ 288,347 $ (4,140)(1.4%)$ 286,70899.1% Interest Income$ 12,354$ 24,888$ (12,534)(50.4%)$ 191,938 $ 208,666 $ (16,728)(8.0%)$ 175,000109.7% TOTAL REVENUES$ 1,065,614$ 945,280 $ 120,334 12.7%$ 9,474,961$ 10,000,165$ (525,204)(5.3%)$ 12,217,29977.6% Salaries & Benefits$ 127,694$ 135,265 $ (7,572) (5.6%)$ 1,355,530$ 1,298,660$ 56,8714.4%$ 1,872,12172.4% Purchased Gas$ 501,785$ 376,507 $ 125,278 33.3%$ 4,262,544$ 4,528,641$ (266,097)(5.9%)$ 5,772,14573.8% Operating Expense$ 43,585$ 61,001$ (17,416)(28.6%)$ 602,503 $ 615,683 $ (13,179)(2.1%)$ 950,37063.4% Depreciation$ 85,417$ 85,417$ -0.0%$ 854,167 $ 854,167 $ - 0.0%$ 1,025,00083.3% Transfers (City)$ 47,804$ 41,262$ 6,54215.9%$ 478,044 $ 412,621 $ 65,42315.9%$ 573,64983.3% Debt Interest$ 45,071$ 50,779$ (5,708) 0.0%$ 450,708 $ 507,792 $ (57,083)(11.2%)$ 540,85083.3% TOTAL EXPENSES$ 851,355$ 750,231 $ 101,124 13.5%$ 8,003,497$ 8,217,562$ (214,066)(2.6%)$ 10,734,13574.6% NET PROFIT/(LOSS)$ 214,259$ 195,049 $ 19,2109.8%$ 1,471,464$ 1,782,602$ (311,138)(17.5%)$ 1,483,16499.2% October, 2020 MonthYear to Date 83.3% of Year Comp. 20202019Diff.% Chng20202019Diff.% Chng Full Yr Bud% of Bud Gas Division Residential32,500,71930,469,319 2,031,4006.67%300,106,414335,371,893 (35,265,479) (10.52%) 422,479,00071.0% Commercial26,743,17023,792,611 2,950,55912.40%233,607,947260,936,240 (27,328,293) (10.47%) 331,731,00070.4% Industrial80,981,82668,215,716 12,766,11018.71%709,940,749688,299,044 21,641,7053.14% 803,079,00088.4% Total CF Sold 140,225,715 122,477,646 17,748,06914.49% 1,243,655,110 1,284,607,177 (40,952,067) (3.19%) 1,557,289,00079.9% Financial/Operating Ratios OctoberOctoberYTD YTD 2020HUC 20202019Change20202019ChangeBudgetTarget Gross Margin %49.6%56.6%-7.0%50.5%51.0%-0.5%49.0%37%-42% Operating Income Per Revenue $ (%)21.1%22.5%-1.3%16.2%19.4%-3.2%13.8%11%-16% Net Income Per Revenue $ (%):21.0%21.7%-0.8%16.4%18.8%-2.4%12.6%6%-11% Contracted Customer Rev. per CF:$0.0038$0.0036$0.0003$0.0037$0.0039-$0.0003$0.0040$0.0040 Customer Revenue per CF:$0.0090$0.0087$0.0002$0.0089$0.0087$0.0002$0.0089$0.0089 Total Power Supply Exp. per CF:$0.0037$0.0032$0.0005$0.0036$0.0037($0.0001)$0.0039$0.0039 Notes/Graphs: September 2020 net profit increased by $19,210 led by an increase in customer revenue along with a decrease in the operating expens category. October 2020 fuel cost credit adjustment was $0.74738/MCF totalling $47,628 for the month and $599,947 YTD. October 2019 credits totalled $67,068 for the month and $763,311 YTD. HUTCHINSONUTILITIESCOMMISSION BALANCESHEET-CONSOLIDATED OCTOBER 31, 2020 ElectricGasTotalTotal Net Change DivisionDivision20202019Total(YTD) Current Assets Cash 6,207,366.70 10,133,776.31 16,341,143.01 15,807,055.10 534,087.91 Petty Cash 680.00 170.00 850.00 850.00 - Capital Expenditures - Five Yr. CIP 2,750,000.00 700,000.00 3,450,000.00 3,450,000.00 - Payment in Lieu of Taxes 1,293,543.00 573,649.00 1,867,192.00 1,601,424.00 265,768.00 Rate Stabilization - Electric 321,230.91 - 321,230.91 372,736.68 (51,505.77) Rate Stabilization - Gas - 651,306.61 651,306.61 651,306.61 - Catastrophic Funds 400,000.00 100,000.00 500,000.00 500,000.00 - Bond Interest Payment 2017 1,680,434.93 - 1,680,434.93 1,585,018.24 95,416.69 Bond Interest Payment 2012 - 1,829,529.20 1,829,529.20 1,805,812.52 23,716.68 Debt Service Reserve Funds 522,335.64 2,188,694.02 2,711,029.66 2,711,029.66 - Total Current Assets 13,175,591.18 16,177,125.14 29,352,716.32 2 8,485,232.81 867,483.51 Receivables Accounts (net of uncollectible allowances) 1,904,168.64 979,125.60 2,883,294.24 2,866,834.16 16,460.08 Interest 57,982.32 57,982.32 115,964.64 47,264.58 68,700.06 Total Receivables 1,962,150.96 1,037,107.92 2,999,258.88 2 ,914,098.74 85,160.14 Other Assets 1,480,811.11 467,420.15 1,792,529.85 Inventory 1,948,231.26 155,701.41 (164,120.57) 28,541.85 138,991.12 Prepaid Expenses (135,578.72) (274,569.84) 115,595.08 - Sales Tax Receivable 115,595.08 66,334.29 49,260.79 Deferred Outflows - Electric 219,249.00 - 219,249.00 494,053.00 (274,804.00) Deferred Outflows - Gas - 73,083.00 73,083.00 164,685.00 (91,602.00) 1,651,534.62 569,045.00 2,220,579.62 2 ,656,593.26 (436,013.64) Total Other Assets Total Current Assets 16,789,276.76 17,783,278.06 34,572,554.82 3 4,055,924.81 516,630.01 Capital Assets Land & Land Rights 690,368.40 3,899,918.60 4,590,287.00 4,590,287.00 - Depreciable Capital Assets 91,543,545.16 42,001,576.49 133,545,121.65 131,891,057.69 1,654,063.96 Accumulated Depreciation (60,317,048.96) (18,019,053.55) (78,336,102.51) (74,528,623.80) (3,807,478.71) Construction - Work in Progress 16,748,903.83 437,517.75 17,186,421.58 16,917,166.18 269,255.40 Total Net Capital Assets 48,665,768.43 28,319,959.29 76,985,727.72 7 8,869,887.07 (1,884,159.35) Total Assets 6 5,455,045.19 4 6,103,237.35 1 11,558,282.54 1 12,925,811.88 ( 1,367,529.34) HUTCHINSONUTILITIESCOMMISSION BALANCESHEET-CONSOLIDATED OCTOBER 31, 2020 ElectricGasTotalTotal Net Change DivisionDivision20202019Total(YTD) Current Liabilities Current Portion of Long-term Debt Bonds Payable 645,000.00 1,455,000.00 2,100,000.00 1,995,000.00 105,000.00 Bond Premium - 185,608.32 185,608.32 185,608.32 - Accounts Payable 1,327,946.51 792,181.97 2,120,128.48 3,153,839.45 (1,033,710.97) Accrued Expenses Accrued Interest 222,356.80 225,354.20 447,711.00 486,669.30 (38,958.30) Accrued Payroll 62,699.83 21,963.71 84,663.54 44,589.68 40,073.86 Total Current Liabilities 2,258,003.14 2,680,108.20 4,938,111.34 5 ,865,706.75 (927,595.41) Long-Term Liabilities Noncurrent Portion of Long-term Debt 2017 Bonds 15,405,000.00 - 15,405,000.00 16,050,000.00 (645,000.00) 2012 Bonds - 11,075,000.00 11,075,000.00 12,530,000.00 (1,455,000.00) Bond Premium 2012 571,556.40 943,508.59 1,515,064.99 1,734,130.27 (219,065.28) Pension Liability - Electric 2,686,985.00 - 2,686,985.00 2,700,290.00 (13,305.00) Pension Liability - Electric OPEB 76,502.00 - 76,502.00 72,192.00 4,310.00 Pension Liability - Nat Gas - 895,662.00 895,662.00 900,097.00 (4,435.00) Pension Liability - Nat Gas OPEB - 25,501.00 25,501.00 24,064.00 1,437.00 Accrued Vacation Payable 380,134.01 146,202.28 526,336.29 477,451.52 48,884.77 Accrued Severance 81,360.39 33,739.79 115,100.18 106,630.34 8,469.84 Deferred Outflows - Electric 550,772.00 - 550,772.00 804,800.00 (254,028.00) Deferred Outflows - Nat Gas - 183,591.00 183,591.00 268,267.00 (84,676.00) Total Long-Term Liabilities 19,752,309.80 13,303,204.66 33,055,514.46 3 5,667,922.13 (2,612,407.67) Net Position Retained Earnings 43,444,732.25 30,119,924.49 73,564,656.74 71,392,183.00 2,172,473.74 Total Net Position 43,444,732.25 30,119,924.49 73,564,656.74 7 1,392,183.00 2,172,473.74 Total Liabilities and Net Position 65,455,045.19 46,103,237.35 111,558,282.54 1 12,925,811.88 (1,367,529.34) Hutchinson Utilities Commission Cash-Designations Report, Combined 10/31/2020 Change in Financial Annual Balance, Balance, Cash/Reserve InstitutionCurrent Interest RateInterestOctober 2020 September 2020 Position Savings, Checking, Investmentsvariesvariesvaries 29,352,716.32 28,930,982.78 421,733.54 Total Operating Funds 29,352,716.32 28,930,982.78 421,733.54 Combined Divisions - Total Funds 29,352,716.32 28,930,982.78 421,733.54 Restricted Funds: Debt Reserve RequirementsBond Covenants - sinking fund 3,509,964.13 3,245,421.93 264,542.20 Debt Reserve RequirementsBond Covenants -1 year Max. P & I 2,711,029.66 2,711,029.66 - Total Restricted Funds 6,220,993.79 5,956,451.59 264,542.20 Excess Reserves Less Restrictions, Combined 23,131,722.53 22,974,531.19 157,191.34 Designated Funds: Operating ReserveMin 60 days of 2020 Operating Bud. 5,981,005.00 5,981,005.00 - Rate Stabalization Funds 972,537.52 912,504.04 60,033.48 PILOT FundsCharter (Formula Only) 1,867,192.00 1,867,192.00 - Catastrophic FundsRisk Mitigation Amount 500,000.00 500,000.00 - Capital Reserves5 Year CIP ( 2020-2024 Fleet & Infrastructure Maintenance) 3,450,000.00 3,450,000.00 - Total Designated Funds 12,770,734.52 12,710,701.04 60,033.48 Excess Reserves Less Restrictions & Designations, Combined 10,360,988.01 10,263,830.15 97,157.86 Financial/Operating Ratios YEYEYEYEYTDHUC 20162017201820192020Target Debt to Asset32.2%40.2%37.7%34.9%34.1%<50% Current Ratio3.063.363.935.115.68>2.0 RONA2.17%1.82%3.16%2.25%1.44%>0% Notes/Graphs: Change in Cash Balance (From 12/31/14 to 10/31/2020) Month End ElectricElec. ChangeNatural GasGas Change TotalTotal Change 10/31/2020 13,175,591 16,177,125 29,352,716 12/31/2019 12,124,142 1,051,450 13,837,040 2,340,085 25,961,181 3,391,535 12/31/2018 15,559,867 (3,435,725) 12,335,998 1,501,042 27,895,864 (1,934,683) 12/31/2017 23,213,245 (7,653,378) 10,702,689 1,633,309 33,915,934 (6,020,070) 12/31/2016 8,612,801 14,600,444 9,500,074 1,202,615 18,112,875 15,803,059 12/31/2015 6,170,790 2,442,011 9,037,373 462,701 15,208,163 2,904,712 12/31/2014 3,598,821 2,571,969 6,765,165 2,272,208 10,363,986 4,844,177 * 2017's Signifcant increase in cash balance is due to issuing bonds for the generator project. Hutchinson Utilities Commission Cash-Designations Report, Electric 10/31/2020 Change in Financial Annual Balance, Balance, Cash/Reserve InstitutionInterestOctober 2020 September 2020 Position Current Interest Rate Operating Funds: Savings, Checking, Investmentsvariesvariesvaries 29,352,716.32 28,930,982.78 421,733.54 Total HUC Operating Funds 29,352,716.32 28,930,982.78 421,733.54 Electric Division - Total Funds 13,175,591.18 12,884,464.82 291,126.36 Restricted Funds: Debt Restricted RequirementsBond Covenants - sinking fund 1,680,434.93 1,582,213.57 98,221.36 Debt Restricted RequirementsBond Covenants -1 year Max. P & I 522,335.64 522,335.64 - Total Restricted Funds 2,202,770.57 2,104,549.21 98,221.36 Excess Reserves Less Restrictions, Electric 10,972,820.61 10,779,915.61 192,905.00 Designated Funds: Operating ReserveMin 60 days of 2020 Operating Bud. 4,367,899.00 4,367,899.00 - Rate Stabalization Funds$400K-$1.2K 321,230.91 261,197.43 60,033.48 PILOT FundsCharter (Formula Only) 1,293,543.00 1,293,543.00 - Catastrophic FundsRisk Mitigation Amount 400,000.00 400,000.00 - Capital Reserves5 Year CIP ( 2020-2024 Fleet & Infrastructure Maintenance) 2,750,000.00 2,750,000.00 - Total Designated Funds 9,132,672.91 9,072,639.43 60,033.48 Excess Reserves Less Restrictions & Designations, Electric 1,840,147.70 1,707,276.18 132,871.52 Financial/Operating Ratios YEYEYEYEYTDAPPA RatioHUC 201620172018201920205K-10K Cust.Target Debt to Asset Ratio (* w/Gen.)16.7%35.4%35.7%34.1%33.6%50.1%<50% Current Ratio3.574.363.635.266.362.43>2.0 RONA-0.4%-0.6%-0.3%-0.4%-0.1%NA>0% Notes/Graphs: Hutchinson Utilities Commission Cash-Designations Report, Gas 10/31/2020 Change in Financial Annual Balance, Balance, Cash/Reserve InstitutionCurrent Interest RateInterestOctober 2020 September 2020 Position Operating Funds: Savings, Checking, Investmentsvariesvariesvaries29,352,716.3228,930,982.78421,733.54 Total HUC Operating Funds 29,352,716.32 28,930,982.78 421,733.54 Gas Division - Total Funds 16,177,125.14 16,046,517.96 130,607.18 Restricted Funds: Debt Restricted RequirementsBond Covenants - sinking fund 1,829,529.20 1,663,208.36 166,320.84 Debt Restricted RequirementsBond Covenants -1 year Max. P & I 2,188,694.02 2,188,694.02 - Total Restricted Funds 4,018,223.22 3,851,902.38 166,320.84 Excess Reserves Less Restrictions, Gas 12,158,901.92 12,194,615.58 (35,713.66) Designated Funds: Operating ReserveMin 60 days of 2020 Operating Bud. 1,613,106.00 1,613,106.00 - Rate Stabalization Funds$200K-$600K 651,306.61 651,306.61 - PILOT FundsCharter (Formula Only) 573,649.00 573,649.00 - Catastrophic FundsRisk Mitigation Amount 100,000.00 100,000.00 - Capital Reserves5 Year CIP ( 2020-2024 Fleet & Infrastructure Maintenance) 700,000.00 700,000.00 - Total Designated Funds 3,638,061.61 3,638,061.61 - Excess Reserves Less Restrictions & Designations, Gas 8,520,840.31 8,556,553.97 (35,713.66) Financial/Operating Ratios YEYEYEYEYTDHUC 20162017201820192020APGA RatioTarget Debt to Asset51.2%47.6%40.7%36.1%34.7%TBD<50% Current Ratio2.592.744.334.965.11TBD>2.0 RONA5.6%5.0%8.3%6.4%3.7%TBD>0% Notes/Graphs: HUTCHINSON UTILITIES COMMISSION Investment Report For the Month Ended October 31, 2020 InterestCurrentDate ofDate ofParCurrentPurchaseUnrealizedPremiumNext InstitutionDescriptionRateYTMPurchaseMaturityValueValueAmountGain/(Loss)(Discount)Call Date Wells FargoMoney Market0.010%0.010%NANA - 43,270.53 - - -N/A Wells FargoFHLMC0.320%0.320%07/20/202010/20/2022 305,000.00 304,844.45 305,000.00 (155.55) -01/20/2021 Wells FargoCD's1.700%1.700%02/21/202002/22/2022 245,000.00 250,203.80 245,000.00 5,203.80 -N/A Wells FargoCD's1.300%1.300%03/31/202009/30/2021 245,000.00 247,775.85 245,000.00 2,775.85 -N/A Wells FargoCD's1.900%1.900%08/21/201908/23/2021 174,000.00 176,613.48 174,000.00 2,613.48 -N/A Wells FargoCD's2.500%2.500%04/02/201904/05/2021 245,000.00 247,609.25 245,000.00 2,609.25 -N/A Wells FargoCD's1.250%1.250%04/08/202004/08/2021 245,000.00 246,296.05 245,000.00 1,296.05 -N/A Wells FargoFHLMC0.325%0.325%08/04/202002/03/2023 467,000.00 466,075.34 467,011.22 (935.88) 11.2202/03/2021 Wells FargoCD's0.300%0.300%09/28/202012/28/2023 245,000.00 245,031.85 245,000.00 31.85 -12/28/2020 Wells FargoCD's0.500%0.698%07/30/202007/30/2025 245,000.00 245,215.60 245,000.00 215.60 -01/30/2021 Wells FargoCD's2.000%2.000%08/29/202008/22/2022 200,000.00 205,416.00 200,000.00 5,416.00 -03/29/2021 Wells FargoCD's0.200%0.200%06/25/202006/23/2021 248,000.00 248,215.76 248,000.00 215.76 -N/A Wells FargoCD's0.200%0.200%06/25/202012/28/2020 74,000.00 74,015.54 74,000.00 15.54 -N/A Wells FargoCD's1.700%1.700%01/31/202005/03/2021 245,000.00 247,053.10 245,000.00 2,053.10 -N/A Wells FargoCD's1.750%1.750%01/29/202007/29/2021 245,000.00 248,082.10 245,000.00 3,082.10 -N/A Broker Total26.6% 3,428,000.00 3,495,718.70 3,428,011.22 24,436.95 11.22 Cetera Investment ServicesMoney Market0.100%0.100%N/AN/A - 11,835.41 - - -N/A Cetera Investment ServicesMunicipal Bonds2.875%2.121%04/29/201609/01/2021 250,000.00 254,880.00 259,467.50 (4,587.50) 9,467.50N/A Cetera Investment ServicesMunicipal Bonds3.751%2.399%04/29/201611/01/2021 250,000.00 255,125.00 267,330.00 (12,205.00) 17,330.00N/A Cetera Investment ServicesMunicipal Bonds3.139%2.190%12/11/201709/01/2021 300,000.00 304,728.00 310,116.00 (5,388.00) 10,116.00N/A Cetera Investment ServicesMunicipal Bonds3.436%3.436%12/20/201812/15/2021 50,000.00 49,338.00 45,155.00 4,183.00 (4,845.00)N/A Cetera Investment ServicesMunicipal Bonds2.655%2.208%12/11/201703/01/2022 300,000.00 307,692.00 305,314.92 2,377.08 5,314.92N/A Cetera Investment ServicesMunicipal Bonds3.000%3.118%12/20/201808/01/2022 50,000.00 51,734.00 50,377.67 1,356.33 377.67N/A Cetera Investment ServicesMunicipal Bonds3.633%3.116%12/20/201809/01/2022 250,000.00 260,860.00 257,217.48 3,642.52 7,217.48N/A Cetera Investment ServicesMunicipal Bonds3.240%3.240%11/17/201702/15/2023 80,000.00 77,972.80 69,633.48 8,339.32 (10,366.52)N/A Cetera Investment ServicesMunicipal Bonds3.650%3.004%12/20/201802/01/2023 250,000.00 260,710.00 256,165.00 4,545.00 6,165.00N/A Cetera Investment ServicesMunicipal Bonds3.075%3.236%12/20/201806/01/2023 50,000.00 52,921.50 49,746.15 3,175.35 (253.85)N/A Cetera Investment ServicesMunicipal Bonds2.500%3.181%12/20/201808/01/2023 35,000.00 36,224.65 34,320.05 1,904.60 (679.95)N/A Cetera Investment ServicesMunicipal Bonds3.400%3.148%12/20/201811/01/2023 125,000.00 135,313.75 126,376.25 8,937.50 1,376.25N/A Cetera Investment ServicesMunicipal Bonds3.400%3.148%12/20/201811/01/2023 65,000.00 70,363.15 65,715.65 4,647.50 715.65N/A Cetera Investment ServicesMunicipal Bonds5.290%2.724%04/18/201906/01/2023 260,000.00 284,401.00 291,059.96 (6,658.96) 31,059.96N/A Cetera Investment ServicesMunicipal Bonds2.854%3.173%12/20/201802/01/2024 100,000.00 105,176.00 99,605.96 5,570.04 (394.04)N/A Cetera Investment ServicesMunicipal Bonds2.977%3.246%12/20/201803/15/2024 250,000.00 268,300.00 248,743.99 19,556.01 (1,256.01)N/A Cetera Investment ServicesMunicipal Bonds1.940%1.821%01/13/202005/01/2024 65,000.00 67,435.55 65,570.70 1,864.85 570.70N/A Cetera Investment ServicesMunicipal Bonds2.528%1.918%01/13/202012/01/2024 100,000.00 104,420.00 102,999.53 1,420.47 2,999.53N/A Cetera Investment ServicesMunicipal Bonds3.922%3.429%12/20/201812/01/2024 204,000.00 226,905.12 208,181.10 18,724.02 4,181.10N/A Cetera Investment ServicesMunicipal Bonds5.742%3.658%04/11/201908/01/2024 355,000.00 396,936.15 464,344.41 (67,408.26) 109,344.41N/A Cetera Investment ServicesMunicipal Bonds4.400%3.221%04/11/201907/01/2025 500,000.00 527,370.00 539,101.11 (11,731.11) 39,101.1107/01/2023 Cetera Investment ServicesMunicipal Bonds5.640%3.007%04/18/201908/15/2025 205,000.00 183,130.60 169,737.95 13,392.65 (35,262.05)N/A Cetera Investment ServicesMunicipal Bonds3.743%2.740%04/18/201909/15/2025 215,000.00 242,698.45 228,334.53 14,363.92 13,334.53N/A Cetera Investment ServicesMunicipal Bonds3.379%1.934%08/19/201910/01/2025 310,000.00 338,439.40 339,739.18 (1,299.78) 29,739.18N/A Cetera Investment ServicesMunicipal Bonds5.600%1.186%07/28/202012/01/2025 45,000.00 53,845.20 55,250.55 (1,405.35) 10,250.55N/A Cetera Investment ServicesMunicipal Bonds4.250%3.258%04/11/201901/01/2026 500,000.00 546,445.00 529,769.03 16,675.97 29,769.03N/A Cetera Investment ServicesMunicipal Bonds2.420%1.175%10/06/202003/01/2026 100,000.00 106,277.00 106,734.28 (457.28) 6,734.28N/A Cetera Investment ServicesMunicipal Bonds1.609%1.124%09/24/202004/01/2026 285,000.00 286,439.25 292,370.10 (5,930.85) 7,370.10N/A Cetera Investment ServicesMunicipal Bonds6.690%3.356%04/18/201904/15/2026 60,000.00 52,579.80 47,545.20 5,034.60 (12,454.80)N/A Cetera Investment ServicesMunicipal Bonds5.900%1.451%07/28/202006/15/2026 75,000.00 91,133.25 93,741.75 (2,608.50) 18,741.75N/A Cetera Investment ServicesMunicipal Bonds0.000%1.415%08/13/202007/01/2026 100,000.00 85,936.00 92,037.00 (6,101.00) (7,963.00)N/A Cetera Investment ServicesMunicipal Bonds3.250%2.903%04/18/201908/01/2026 500,000.00 532,150.00 514,790.69 17,359.31 14,790.69N/A Cetera Investment ServicesMunicipal Bonds1.664%1.150%08/27/202009/01/2026 225,000.00 224,565.75 231,696.00 (7,130.25) 6,696.00N/A Cetera Investment ServicesMunicipal Bonds2.150%2.203%07/01/201912/01/2026 40,000.00 41,289.60 40,150.64 1,138.96 150.64N/A Cetera Investment ServicesMunicipal Bonds2.350%2.191%07/01/201912/01/2026 500,000.00 525,690.00 505,385.00 20,305.00 5,385.00N/A Cetera Investment ServicesMunicipal Bonds2.375%1.816%09/04/201912/01/2026 90,000.00 94,166.10 93,395.70 770.40 3,395.70N/A Cetera Investment ServicesMunicipal Bonds3.000%1.991%08/19/201902/01/2027 50,000.00 54,652.50 53,551.00 1,101.50 3,551.00N/A Cetera Investment ServicesMunicipal Bonds3.150%2.034%08/19/201903/15/2027 100,000.00 110,223.00 109,138.50 1,084.50 9,138.50N/A Cetera Investment ServicesMunicipal Bonds3.332%3.120%04/18/201904/15/2027 500,000.00 560,240.00 507,783.94 52,456.06 7,783.94N/A Cetera Investment ServicesMunicipal Bonds3.553%2.289%08/19/201905/01/2027 55,000.00 60,129.30 60,468.04 (338.74) 5,468.0405/01/2026 Cetera Investment ServicesMunicipal Bonds3.865%2.470%08/19/201905/01/2027 55,000.00 62,454.15 60,986.48 1,467.67 5,986.4805/01/2025 Cetera Investment ServicesMunicipal Bonds3.000%3.101%05/18/202009/01/2027 65,000.00 70,596.50 69,180.58 1,415.92 4,180.5809/01/2025 Cetera Investment ServicesMunicipal Bonds2.817%2.817%09/25/201910/01/2027 35,000.00 28,759.85 27,969.55 790.30 (7,030.45)05/01/2025 Cetera Investment ServicesMunicipal Bonds3.230%1.828%08/19/201905/15/2027 145,000.00 162,623.30 160,827.31 1,795.99 15,827.31N/A Cetera Investment ServicesMunicipal Bonds3.270%2.141%08/19/201903/15/2028 155,000.00 170,371.35 170,805.09 (433.74) 15,805.0909/15/2027 Cetera Investment ServicesMunicipal Bonds2.974%2.574%11/07/201904/01/2028 75,000.00 79,815.00 77,253.00 2,562.00 2,253.00N/A Cetera Investment ServicesMunicipal Bonds3.140%2.004%08/19/201908/01/2028 500,000.00 545,090.00 547,105.00 (2,015.00) 47,105.0008/01/2027 Cetera Investment ServicesMunicipal Bonds3.000%2.199%05/19/202008/15/2028 90,000.00 95,369.40 95,401.80 (32.40) 5,401.8008/15/2025 Cetera Investment ServicesMunicipal Bonds3.000%1.942%08/19/201906/01/2029 115,000.00 131,675.00 125,961.80 5,713.20 10,961.80N/A Broker Total73.4% 9,179,000.00 9,647,426.83 9,625,246.60 10,344.82 446,246.60 TOTAL INVESTMENTS100.0%$ 12,607,000.00$ 13,143,145.53$ 13,053,257.82$ 34,781.77$ 446,257.82 PORTFOLIO BY PRODUCT TYPEMATURITY SCHEDULE 10/31/2020% of9/30/2020% ofMonthlyMaturityCurrent Value% Product TypeTotal ValueTotalTotal ValueTotalChangeLess than 1 year$2,350,375.0717.9% Money Market$55,105.940.4%$42,254.290.3%$12,851.651 - 2 years1,685,213.2512.8% CD's2,436,496.5318.5%2,438,852.8818.5%(2,356.35)2 - 3 years1,178,305.299.0% Government Bonds1,015,951.647.7%1,016,616.417.7%(664.77)3 - 4 years 1,288,556.459.8% Municipal Bonds9,635,591.4273.3%9,697,387.5873.5%(61,796.16)4 - 5 years1,868,179.1714.2% TOTAL$13,143,145.53100.0%$13,195,111.16100.0%($51,965.63)5+ years4,772,516.3036.3% TOTAL$13,143,145.53100.0% aƚƓĻǤ ağƩƉĻƷ/5γƭ υЎͲЉЉЉͲЉЉЉ͵ЉЉ υЍͲААЋͲЎЊЏ Љ͵ЍіЊБ͵Ўі υЍͲЎЉЉͲЉЉЉ͵ЉЉ υЍͲЉЉЉͲЉЉЉ͵ЉЉ υЌͲЎЉЉͲЉЉЉ͵ЉЉ υЌͲЉЉЉͲЉЉЉ͵ЉЉ υЋͲЌЎЉͲЌАЎ υЋͲЎЉЉͲЉЉЉ͵ЉЉ υЊͲБЏБͲЊАВ υЋͲЉЉЉͲЉЉЉ͵ЉЉ υЊͲЏБЎͲЋЊЌ υЊͲЎЉЉͲЉЉЉ͵ЉЉ υЊͲЋББͲЎЎЏ υЊͲЊАБͲЌЉЎ υЊͲЉЉЉͲЉЉЉ͵ЉЉ υЎЉЉͲЉЉЉ͵ЉЉ aǒƓźĭźƦğƌ .ƚƓķƭ DƚǝĻƩƓƒĻƓƷ .ƚƓķƭ АЌ͵Ќі А͵Аі υЉ͵ЉЉ \[Ļƭƭ ƷŷğƓ ЊЊ Ώ Ћ ǤĻğƩƭЋ Ώ Ќ ǤĻğƩƭЌ Ώ Ѝ ǤĻğƩƭЍ Ώ Ў ǤĻğƩƭЎњ ǤĻğƩƭ ǤĻğƩ ELECTRIC DIVISION Operating Revenue October 2020 CLASSAMOUNTKWH$/KWH Street Lights$16.08295$0.05451 Electric Residential Service$389,316.913,705,938$0.10505 All Electric Residential Service$18,938.12187,517$0.10099 Electric Small General Service$135,123.851,367,016$0.09885 Electric Large General Service$574,940.366,511,130$0.08830 Electric Large Industrial Service$711,373.409,580,000$0.07426 Total$1,829,708.72 21,351,896$0.08569 Power Adjustment$0.00000 Rate Without Power Adjustment$0.08569 Electric Division Year-to-Date 2020 $ Amount2019 $ Amount2020 KWH/102019 KWH/10 26,000,000 25,000,000 24,000,000 23,000,000 22,000,000 21,000,000 20,000,000 19,000,000 18,000,000 17,000,000 16,000,000 15,000,000 14,000,000 13,000,000 12,000,000 11,000,000 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Street LightsResidentialAll Elec.Small Gen.Large Gen.LargeFor Resale Total Resid.Srv.Srv.Industrial NOTE: Sales for resale includes capacity sales, market sales and Transalta sales. NATURAL GAS DIVISION Operating Revenue OCTOBER 2020 CLASSAMOUNTMCF$/MCF Residential$302,755.5832,501$9.31527 Commercial$229,744.6626,743$8.59083 Large Industrial$36,575.124,298$8.50980 Large Industrial Contracts$295,106.0676,684$3.84834 Total$864,181.42140,226$6.16278 Fuel Adjustment-$0.75000 Rate Without Fuel Adjustment$6.91278 Natural Gas Division Year-to-Date 2020 $ Amount2019 $ Amount2020 MCF2019 MCF 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Gas ResidentialGas CommercialLarge IndustrialLarge Industrial Total Contracts Electric Division Report: November 18, 2020. New Developments: All of the planned/proposed new developments for this year have been installed or are in the process of being installed. New house services: We have installed 29 new house services with 6 remaining. We anticipate completing them in the next couple of weeks. Re-conductor Projects: We completed some re-conductor work along Clinton Ave from an outage we had earlier this year. Electric Vehicle charger: The EV Charger is installed and operational. People have been using it. Plant 2 Transformer: Plant 2 substation and site work will start late this week and/or early next week. Solar project: Meeting with prospective solar developers to go over any questions from the Request for Bids on our project. We have had contact from 6 developers so far. Both the security camera and card access upgrades were completed last week. Angie was trained in as a backup to do the payroll function and it worked well. Auditors will be here the last week of January again. Commissioners update The production department has performed fairly well considering the situation with the Covid 19 pandemic and having two of our mechanics out for several weeks due to injuries. We have completed 95% of our capital expenditure projects so far and will be 100% by the year-end. In January the commission approved the purchase for two new instrument air compressors for plant 1. With the addition of the Caterpillar engines in 2018, the existing compressor could not keep up with units 5, 6 and 7 running at the same time. The installation went well and we now have redundancy. At the April commission meeting, I was not able to attend due to Covid 19 protocol but in my absence, Jeremy presented a requisition for a new Sauer Starting air compressor. Back in 2013 when the Wartsila engine was installed, that unit came with two starting air compressors. The Caterpillar project added additional air tanks but no compressor. We discovered that there was extended run time on these two compressors to replenish the air supply. The installation went very well and we now have a reliable system. In March, Jeremy approved my requisition to purchase an ultra-sonic filter-cleaning machine for plant 1. Units 5, 6, and 7 all have the same style of candle filters and this machine uses simple green soap as a cleaning solution and works great. The filters in the Caterpillar engines have been fouling after 25-30 hours of operation. These are a duplex filter system so one of the filters can be removed and cleaned while the other is in service. We also purchased and installed some small lifting jib cranes for the safe removal and reinstallation of these filter from their canisters. The ultra-sonic cleaning machine has one as well. The Caterpillar Company has been struggling with our engines that we purchased in 2018. During the commissioning process last winter, the engines ran very well. The emissions guaranty was met along with the capacity and 1,000 operating hours. Both engines are currently at 700 hours. We have been running the engines trying to reach that 1,000 hour mark but have been experiencing several issues. The engines have developed an oil leak at the crankshaft end next to the generator. They have also been tripping off-line due to an oil mist shutdown. All of the issues started at the same time as Covid 19 set in. The engineers from Germany have not been able to travel to give us support. They have been in contact with me via conference calls every two weeks to give updates on how they plan to fix the items mentioned. Ziegler from Shakopee has been assisting them locally but there is only so much that they can do. We are in the process of completing a tiling project at plant 1. When the state reworked highway 7 a few years ago we started noticing some water seeping in at the floor level at the north wall in the basement of plant 1. I had the city test the water to see if it was coming from a water main. The tests showed it was ground water. They figured a tile got broken during the excavation and did not get rth of the plant. We have a purchase order to a company called Basement Water Controlled and they are going to st start the 1 week in December to install some tile inside the plant to direct the water to our existing floor drains. At plant 2 we have installed spray foam insulation to the engine base of unit 1 LM-6000 gas turbine and generator modules. We also installed two more electric heaters in that engine module to assist in cold weather starting. As you may recall we had an event last winter when we could not get the engine started during a very cold snap and MISO had called for emergency assistance. These proactive measures will resolve that issue. The east engine room that houses units 5, 6, and 7 has a new floor and looks very good. We have metric tools on order to work on these new engines. We purchased some software for the unit 5 Wartsila to assist our mechanics in troubleshooting problems with that engine. We also purchased cylinder head tools for the wartsila so our mechanics can service these heads. The production department has two new trucks in the 2020 budget and they have arrived. We have finished the tank farm that was a capital project back in 2019. We now have the ability to drain the oil or glycol from units 5, 6, and 7 into these storage tanks in the basement to service the engines. Hopefully sometime in 2021 things will get back to what we used to call normal so the managers can return to the Commission meetings. Randy Blake Production Manager HUTCHINSON UTILITIES COMMISSION Board Action Form Agenda Item: Review Policies Presenter: Agenda Item Type: Jeremy Carter Review Policies Time Requested (Minutes): 5 Attachments: Yes BACKGROUND/EXPLANATION OF AGENDA ITEM: As part of HUC's standard operating procedures, a continual policy review is practiced. This month, the following policies were reviewed and no changes are recommended on these policies at this time: i. CIP Rebate Level of Authority ii. Delegation of Authority Policy iii. Financial Reserve Policy iv. Investment Policy v. Purchasing Policy/Credit Cards/Fixed Assets vi. Service Beyond City Limits of Hutchinson BOARD ACTION REQUESTED: None Fiscal Impact: Included in current budget: Budget Change: PROJECT SECTION: Total Project Cost: Remaining Cost: Adopted January 27, 2010 Conservation Improvement Program Rebate Level of Authority All commercial and industrial Conservation Improvement Program rebates in the amount of $25,000 or greater shall be reviewed and approved by Hutchinson Utilities Commission prior to the issuance of the rebate to the recipient. Adopted July 31, 2013 Amended June 27, 2018 Delegation of Authority From time to time the General Manager will be absent. In the absence of the General Manager and when the situation warrants, every effort to contact the General Manager will be made. If the efforts are be delegated to the Natural Gas Division Director. If the Natural Gas Director is absent or cannot be contacted and the situation still exists, the collectively to the Department Managers; Transmission and Distribution, Engineering Services, Production, Financial/Customer Service. When authority has been delegated, the General Manager will be informed, as soon as is possible and practical, of any actions taken or decisions made by the respective director or managers. HUTCHINSON UTILITIES FINANCIAL RESERVE POLICY A. PURPOSE: In order to maintain stable rates and provide reliable service, Hutchinson Utilities Commission (HUC) must have various tools in place to deal with changes in costs or operational performance. Maintaining appropriate financial reserves is one such tool that ensures sufficient funding is available for current operating, capital and debt service needs. Financial reserves absorb short-term financial variability resulting from unexpected operational changes or can reduce the need for large amounts of debt. This policy establishes a Capital Reserve (CR), which is used to cover acquisition of capital assets, including replacement of existing assets, and an Operating Reserve (OR), which addresses short-term financial volatility. HUC will establish a Capital Reserve and Operating Reserve for each of the two utilities Electric and Gas. B. DEFINITIONS: Hutchinson Utilities Commission reserves can be classified into three broad categories that include Restri a segregation and reportable. C. GENERAL PROVISIONS In the context of funding future capital equipment or facilities or replacing existing assets with substantial value HUC will analyze the most cost effective and efficient method to finance a project, be it through debt financing, pay-as-you go financing, use of reserves, use of contractual agreements, or through some combination of those various sources or others that may present themselves. At a minimum, reserve balances will be reviewed on an annual basis at, or near, the end of the fiscal year during preparation of the Capital & Operating Spending Plans to ensure adequate compliance with policy and intended funding targets. The minimum funding requirements established for each fund represents the baseline financial condition that is acceptable to the Commission from a risk and long-range financial planning perspective. Maintaining reserves at appropriate levels is a prudent, ongoing business process that consists of an assessment and application of various revenue generating alternatives. These alternatives (either alone or in combination with each other) include, but are not limited to: fees & charges, capital financing, investment of funds, contractual commitments, and levels of capital expenses. I. RESTRICTED RESERVES (RR) - Restrictions on these monies are imposed by an outside source such as creditors, grantors, contributors, laws or regulations governing use. An example of restricted funds is bond reserve covenants required as a part of debt issuance. The funds are legally protected by bond covenants and can only be used in the event of default by HUC or to pay down principal at maturity. A. Funding Amount The bond reserve requirements are established at the time of bond issuance. B. The sources of funds for the (RR) come from the undesignated fund balance of each utility which can change annually based on yearly operating performance and accumulated net revenues and, when appropriate, available short-term liquidity arrangements. LL͵ CAPITAL RESERVES (CR) - This reserve is established by action of the board to fund capital projects including electric and gas distribution & transmission system infrastructure, production facilities, and fleet that are a part of the 5-year capital improvement plan so HUC can avoid issuing bonds to pay for maintaining normal operations. This reserve is not intended to fund large major capital purchases. Λź͵Ļ͵͵͵CƌĻĻƷͲ źƓŅƩğƭƷƩǒĭƷǒƩĻ ƩĻƦƌğĭĻƒĻƓƷ ƚƩ ğĭƨǒźƭźƷźƚƓƭΜ A. Funding Amount Minimum funding shall be targeted at the estimated current replacement costs of assets expected to be replaced within the next five years. B. Funding Sources The sources of funds for the (CR) come from the undesignated fund balance of each utility which can change annually based on yearly operating performance and accumulated net revenues and, when appropriate, available short-term liquidity arrangements. LLL͵ OPERATING RESERVES (OR) This reserve is established by action of the board to address short- term financial risk or variability resulting from unexpected operating results and to address those financial risks that have a more immediate potential impact on the existing organization cost structure. ΛwğƷĻ {ƷğĬźƌźǩğƷźƚƓ wĻƭĻƩǝĻ CǒƓķƭͲ /ğƷğƭƷƩƚƦŷźĭ wĻƭĻƩǝĻ CǒƓķƭͲ tL\[h wĻƭĻƩǝĻ CǒƓķƭͲ hƦĻƩğƷźƓŭ wĻƭĻƩǝĻƭΜ A. Risk Exposures Potential sources of cash flow variability addressed by the (OR) include the following risk exposures: 1. Reductions in overall customer demand, 2. Changes in total system load resulting from the actions of large customers, 3. Failure to achieve the budgeted level of net income, 4. Changes in the costs of purchased power, 5. Catastrophic disasters or community events 6. General operation exposures, such as timing mismatch between revenue receipts and expense payment, unforeseen maintenance costs, regulatory compliance costs, and other unexpected increases in the operating budget B. Funding Amount Target (OR) level has been set at a minimum of 60 days and a maximum of 90 days of total budgeted operating expenses for both the Electric Division and Gas Division. Since the (OR) changes annually for each division based on the following years budget, the (OR) will be adjusted annually. The (OR) target is in addition to the other operating reserve funds listed above. C. Funding Sources The sources of funds for the (OR) come from the undesignated fund balance of each utility which can change annually based on yearly operating performance and accumulated net revenues and, when appropriate, available short-term liquidity arrangements. IV. FINANCIAL RESERVES HIERARCHY OF FUNDING reserves. A. Maintaining Operating Reserves (OR) within a 60 day to 90 day operating range. B. Once the Target (OR) level is achieved, excess cash may be applied to the (CR) or other areas at the discretion of the Hutchinson Utilities Commission. V.FINANCIAL RESERVES REPLENISHMENT The above section describes the hierarchy of funding the reserves. The following describes what actions may be taken to generate cash and replenish the reserves under different scenarios of each of the two utilities. A. If the (OR) and (CR) are at the Target Level: Take no action B. If either the (OR) or (CR) is below the Target Level or if both the (OR) and (CR) are below the Target Level: Take no action during the current year, reevaluate the following year and reduce expenses and/or increase revenues, if necessary, to reach the Target Level within the next three years. VI. FINANCIAL RESERVES FUNDING LEVEL AND FUND BALANCE REVIEWS The Target levels and fund balance are to be reviewed as follows: A. Target Level Review: Although the actual monetary values are reviewed annually and adjusted to reflect target goals when approving budgets, the Target (OR) and (CR) funding levels are to be evaluated every year. For example, the Commission could revise (reduce or increase) the (OR) or (CR) reserves based on future external factors and forward looking cost drivers. B. Financial Reserves Fund Balance Review: The (OR) and (CR) fund balances are to be monitored monthly by the Finance Department and reviewed annually during the budget review process by the Commission or if an event were suddenly to reduce the fund balances. JOWFTUNFOU!QPMJDZ! BEPQUFE!PDUPCFS!39-!3126! ! ! ! ! ! IVUDIJOTPO!VUJMJUJFT!DPNNJTTJPO!JOWFTUNFOU!QPMJDZ! ! I. PURPOSE The purpose of this policy is to establish specific guidelines Hutchinson Utilities Commission will use in the investment of Commission funds. It will be the responsibility of the General Manager and Financial Manager to invest Commission Funds in order to attain the highest market rate of return with the maximum security while meeting the daily cash flow demands of the Commission and protecting the capital of the overall portfolio. Investments will be made in accordance with all state and local statutes governing the investment of public funds. II. SCOPE The General Manager and Financial Manager are responsible for the investing of all financial assets of the Hutchinson Utilities Commission, excluding pension funds. These funds are accounted for in the Information. III. PRUDENCE Investments shall be made with judgment and care, not for speculation, but for investment, considering the probable safety of the capital as well as the probable income to be derived. standard and shall be applied in the context of managing the overall portfolio. Investment officers acting in accordance with this policy, with MN Statutes, Chapter 118A, and exercising market price change, provided that reasonable action is taken to control adverse developments and unexpected deviations are reported in a timely manner. OBJECTIVE A. Safety - Safety of principal is of critical importance to the investment program. Investments of the Commission shall be undertaken in a manner that seeks to ensure the preservation of principal in the overall portfolio. The objective will be to mitigate credit risk and interest rate risk. 1. Credit Risk - the risk of loss due to failure of the security issuer or backer, will be minimized by: - Limiting investments to the types of securities listed in Section VIII of this investment policy. - Pre-qualifying the financial institutions, broker/dealers, intermediaries, and advisors with which the Commission will do business in accordance with Section VII. Ivudijotpo!Vujmjujft!Dpnnjttjpo!Jowftunfou!Qpmjdz!Qbhf!3! IVUDIJOTPO!VUJMJUJFT!DPNNJTTJPO!JOWFTUNFOU!QPMJDZ! - Diversifying the investment portfolio so that the impact of potential losses from any one type of security or from any one individual issuer will be minimized. Insurance or collateral may be required to ensure return of principal. 2. Interest Rate Risk the risk that the market value of securities in the portfolio will fall due to changes in market interest rates will be minimized to: - Provide for liquidity by reviewing cash flow requirements and make investments to meet the shorter cash flow needs, thereby avoiding the need to sell securities in the open market prior to maturity. - Manage the average maturity of the overall portfolio to be consistent with the risk of the Commission. B. Liquidity - The Commission the Commission to meet all operating requirements reasonably anticipated. The portfolio will be structured so that the portfolio emphasizes liquidity and consists largely of securities with active secondary or resale markets (dynamic liquidity). A portion of the portfolio may be placed in money market mutual funds or local government investment pools which offer same day liquidity for short-term funds. C. Yield - The Commissionortfolio shall be designed with the objective of attaining a market rate of return. The core of investments is limited to low-risk securities in anticipation of earning a fair return relative to the risk being assumed. Securities shall generally be held until maturity with the following exceptions: A security with declining credit may be sold early to minimize loss of principal. A security swap would improve the quality, yield, or target duration in the portfolio. Liquidity needs of the portfolio require that the security be sold. IV. DELEGATION OF AUTHORITY Authority to manage the CommissionS 118A which authorizes the Commission to invest any funds not presently needed in obligations in which commission debt service funds may be invested. This law applies to all types of funds not presently needed, including all general, special revenue, permanent, trust or other funds regardless of source or purpose. Under this chapter a Government Entity may invest idle funds in state or national banks, savings and loan associations, or credit unions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the policy. Management responsibility for the investment program is hereby delegated to the General Manager and Financial Manager, who shall be responsible for all transactions. The Financial Manager shall establish procedures for the operation of the investment program, consistent with this policy. Such procedures may include delegation of authority to persons responsible for investment transactions. Ivudijotpo!Vujmjujft!Dpnnjttjpo!Jowftunfou!Qpmjdz!Qbhf!4! IVUDIJOTPO!VUJMJUJFT!DPNNJTTJPO!JOWFTUNFOU!QPMJDZ! V. ETHICS AND CONFLICTS OF INTEREST The General Manager and Finance Staff involved in the investment process shall refrain from conducting personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Investment staff shall annually disclose to the Commission any material financial interests as required by state statute. Investment staff shall subordinate their personal investment transactions to those of the Commission, particularly with regard to the time of purchases and sales, and shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the Commission. VI. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The Commission will annually, by resolution, approve depositories and a list of financial institutions authorized to provide investment services. A. Only approved security broker/dealers, selected by creditworthiness, shall be utilized, with a minimum of $10,000,000 capital and at least five years of operation. B. Hutchinson Utilities Commission; Securities & Exchange Commission Rule 15C3-1 (Uniform Net Capital Rule). C. All investments must be insured, or registered, or securities must be held by the Commission or its agent in the Commission D. No public deposit shall be made except in a qualified public depository, as established by state laws. E. When investments purchased by the Commission are held in safekeeping by a broker/dealer, they must provide asset protection of $500,000 through Securities Investor Protection Corporations (SIPC), and at least another $2,000,000 Supplemental Insurance Protection, provided by the broker dealer. F. Before engaging in investment transactions with the Hutchinson Utilities Commission, the supervising officer at the securities broker/dealer shall submit a certification of certification will state that the broker/dealer has reviewed the investment policies and objectives, as well as applicable state law, and agrees to disclose potential conflicts or risk to public funds that might arise out of business transactions between the securities broker/dealer firm and the Commission. All financial institutions shall agree to undertake reasonable efforts to preclude imprudent transactions involving the Commission VII. AUTHORIZED AND SUITABLE INVESTMENTS It shall be the policy of the Hutchinson Utilities Commission that available funds be invested to the best rates obtainable at the time of investment in conformance with the legal and administrative guideline outlined herein. US Treasury Obligations and Federal Agency Ivudijotpo!Vujmjujft!Dpnnjttjpo!Jowftunfou!Qpmjdz!Qbhf!5! IVUDIJOTPO!VUJMJUJFT!DPNNJTTJPO!JOWFTUNFOU!QPMJDZ! Securities will be given preference when the yields are equal to or greater than alternative investments. The investments of the Hutchinson Utilities Commission will be made in accordance with Minnesota Statutes, section 118A, which lists all permissible investments for Government Entities. COLLATERAL Interest-bearing deposits in authorized depositories must be fully insured or collateralized. Collateralization will be required on Certificates of Deposits (where the dollar amount is in excess of FDIC coverage). In order to anticipate market changes and provide a level of security for all funds, the collateralization level will be 110% of the market value of principal and accrued interest. When the pledged collateral consists of notes secured by first mortgages, the collateral level will be 140% of the market value of principal and accrued interest. Collateral shall be deposited in the name of the Commission, subject to release by the Financial Manager. VIII. SAFEKEEPING AND CUSTODY Securities purchased shall be held in a segregated account for the Commission third party trustee as safekeeping agent. The investment dealer or bank in which the security is purchased shall issue a confirmation ticket to the Commission listing the specific instrument, issuer, coupon, maturity, CUSIP number, purchase or sale price, transaction date, and other pertinent information. The financial service provider which executes the transaction on the Commission the designated third party. Delivery versus payment (DVP) is a way of controlling the risk to which securities market participants are exposed. Delivery of securities (i.e. the change in their ownership) is done simultaneously with payment. This means that neither the buyer nor the seller is exposed to the risk that the other will default. The Commission may not invest in securities that are uninsured. Securities will be held in the Commission Investments, contracts and agreements may be held in safekeeping with: - Any Federal Reserve bank; - Any bank authorized under the laws of the United States or any state to exercise corporate trust powers, including, but not limited to, the bank from which the investment is purchased. - A primary reporting dealer in United States government securities to the Federal Reserve Bank of New York; or - A securities broker-dealer having its principal executive office in Minnesota, licensed under chapter 80A, or an affiliate of it, and regulated by the Securities and Exchange Commission; provided that the government entity's ownership of all securities is evidenced by written acknowledgments identifying the securities by the names of Ivudijotpo!Vujmjujft!Dpnnjttjpo!Jowftunfou!Qpmjdz!Qbhf!6! IVUDIJOTPO!VUJMJUJFT!DPNNJTTJPO!JOWFTUNFOU!QPMJDZ! the issuers, maturity dates, interest rates, CUSIP number, or other distinguishing marks. IX. DIVERSIFICATION The Financial Manager or investment designee will attempt to diversify its investments according to type and maturity. The Commission will attempt to match its investments with anticipated cash flow requirements. Extended maturities may be utilized to take advantage of higher yields. Diversifications strategies shall be determined and revised periodically by the Commission for all funds. A. Institutions Diversity between financial institutions used. a. The Financial Manager or investment designee will attempt to diversify its investments amongst investment companies, keeping in mind that some temporary fluctuations may occur throughout the year (i.e. GO Bonds for projects, etc.) b. No funds may be invested in any one investment company in excess of the amount insured by it. B. Maturities Diversity in length of maturities. a. Investments shall be made to assure that funds are constantly available to meet immediate payment requirements b. No investments shall be made with a term of more than 10 years.. C. Investments The Commission should maintain a diversity of investments. a. Depending on market conditions, with the exception of US Treasury Securities, authorized pools, and Federal Agencies (backed by the full faith and credit of the US Government or its agencies), no more than 50% of the Commission following: Certificates of Deposit or Commercial Paper. X. POOLING OF INVESTMENTS For the purpose of making the maximum amount of funds available for investment, the cash for Commission Funds, as listed in Part II, is pooled in an investment account. Interest earnings are allocated among the various funds based upon their average cash balance. XI. INVESTMENT POLICY ADOPTION The CommissionHutchinson Utilities Commission. The Policy shall be reviewed on an annual basis and any modifications made thereto must be approved by the Hutchinson Utilities Commission. Ivudijotpo!Vujmjujft!Dpnnjttjpo!Jowftunfou!Qpmjdz!Qbhf!7! IVUDIJOTPO!VUJMJUJFT!DPNNJTTJPO!JOWFTUNFOU!QPMJDZ! APPENDIX A MS STATUTE 118A. DEPOSIT AND INVESTMENT OF LOCAL PUBLIC FUNDS. 118A.01 DEFINITIONS. Subdivision 1.Application. The definitions in this section apply to sections 118A.01 to 118A.06. Subd. 2.Government entity. (a) "Government entity" means a county, city, town, school district, hospital district, public authority, public corporation, public commission, special district, any other political subdivision, except an entity whose investment authority is specified under chapter 11A or 356A. (b) For the purposes of sections 118A.02 and 118A.03 only, the term includes an American Indian tribal government entity located within a federally recognized American Indian reservation. Subd. 3.Financial institution. "Financial institution" means a savings association, commercial bank, trust company, credit union, or industrial loan and thrift company. Subd. 4.Public funds. "Public funds" means all general, special, permanent, trust, and other funds, regardless of source or purpose, held or administered by a government entity, unless otherwise restricted. History: 1996 c 399 art 1 s 2; 1999 c 151 s 39 118A.02 DEPOSITORIES; INVESTING: SALES, PROCEEDS, IMMUNITY. Subdivision 1.Designation; delegation. (a) The governing body of each government entity shall designate, as a depository of its funds, one or more financial institutions. (b) The governing body may authorize the treasurer or chief financial officer to: (1) designate depositories of the funds; (2) make investments of funds under sections 118A.01 to 118A.06 or other applicable law; or (3) both designate depositories and make investments as provided in this subdivision. Ivudijotpo!Vujmjujft!Dpnnjttjpo!Jowftunfou!Qpmjdz!Qbhf!8! IVUDIJOTPO!VUJMJUJFT!DPNNJTTJPO!JOWFTUNFOU!QPMJDZ! Subd. 2.Sale; proceeds; immunity, if loss. (a) The treasurer or chief financial officer of a government entity may at any time sell obligations purchased pursuant to this section and the money received from such sale, and the interest and profits or loss on such investment shall be credited or charged, as the case may be, to the fund from which the investment was made. (b) Neither such official nor government entity, nor any other official responsible for the custody of such funds, shall be personally liable for any loss sustained from the deposit or investment of funds in accordance with the provisions of sections 118A.04 and 118A.05. History: 1996 c 399 art 1 s 3 118A.03 WHEN AND WHAT COLLATERAL REQUIRED. Subdivision 1.For deposits beyond insurance. To the extent that funds on deposit at the close of the financial institution's banking day exceed available federal deposit insurance, the government entity shall require the financial institution to furnish collateral security or a corporate surety bond executed by a company authorized to do business in the state. For the purposes of this section, "banking day" has the meaning given in Federal Reserve Board Regulation CC, Code of Federal Regulations, title 12, section 229.2(f), and incorporates a financial institution's cutoff hour established under section 336.4-108. Subd. 2.In lieu of surety bond. The following are the allowable forms of collateral in lieu of a corporate surety bond: (1) United States government Treasury bills, Treasury notes, Treasury bonds; (2) issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation service available to the government entity; (3) general obligation securities of any state or local government with taxing powers which is rated "A" or better by a national bond rating service, or revenue obligation securities of any state or local government with taxing powers which is rated "AA" or better by a national bond rating service; (4) general obligation securities of a local government with taxing powers may be pledged as collateral against funds deposited by that same local government entity; (5) irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by written evidence that the bank's public debt is rated "AA" or better by Moody's Investors Service, Inc., or Standard & Poor's Corporation; and (6) time deposits that are fully insured by any federal agency. Ivudijotpo!Vujmjujft!Dpnnjttjpo!Jowftunfou!Qpmjdz!Qbhf!9! IVUDIJOTPO!VUJMJUJFT!DPNNJTTJPO!JOWFTUNFOU!QPMJDZ! Subd. 3. Amount. The total amount of the collateral computed at its market value shall be at least ten percent more than the amount on deposit at the close of the financial institution's banking day, except that where the collateral is irrevocable standby letters of credit issued by Federal Home Loan Banks, the amount of collateral shall be at least equal to the amount on deposit at the close of the financial institution's banking day. The financial institution may furnish both a surety bond and collateral aggregating the required amount. Subd. 4.Assignment. Any collateral pledged shall be accompanied by a written assignment to the government entity from the financial institution. The written assignment shall recite that, upon default, the financial institution shall release to the government entity on demand, free of exchange or any other charges, the collateral pledged. Interest earned on assigned collateral will be remitted to the financial institution so long as it is not in default. The government entity may sell the collateral to recover the amount due. Any surplus from the sale of the collateral shall be payable to the financial institution, its assigns, or both. Subd. 5.Withdrawal of excess collateral. A financial institution may withdraw excess collateral or substitute other collateral after giving written notice to the governmental entity and receiving confirmation. The authority to return any delivered and assigned collateral rests with the government entity. Subd. 6.Default. For purposes of this section, default on the part of the financial institution includes, but is not limited to, failure to make interest payments when due, failure to promptly deliver upon demand all money on deposit, less any early withdrawal penalty that may be required in connection with the withdrawal of a time deposit, or closure of the depository. If a financial institution closes, all deposits shall be immediately due and payable. It shall not be a default under this subdivision to require prior notice of withdrawal if such notice is required as a condition of withdrawal by applicable federal law or regulation. Subd. 7.Safekeeping. All collateral shall be placed in safekeeping in a restricted account at a Federal Reserve bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. The selection shall be approved by the government entity. History: 1996 c 399 art 1 s 4; 2003 c 51 s 15,16; 2004 c 151 s 1,2; 2004 c 174 s 2; 2007 c 44 s 7; 2007 c 57 art 3 s 39; 2008 c 154 art 10 s 1 Ivudijotpo!Vujmjujft!Dpnnjttjpo!Jowftunfou!Qpmjdz!Qbhf!:! IVUDIJOTPO!VUJMJUJFT!DPNNJTTJPO!JOWFTUNFOU!QPMJDZ! 118A.04 INVESTMENTS. Subdivision 1.What may be invested. Any public funds, not presently needed for other purposes or restricted for other purposes, may be invested in the manner and subject to the conditions provided for in this section. Subd. 2.United States securities. Public funds may be invested in governmental bonds, notes, bills, mortgages (excluding high-risk mortgage-backed securities), and other securities, which are direct obligations or are guaranteed or insured issues of the United States, its agencies, its instrumentalities, or organizations created by an act of Congress. Subd. 3.State and local securities. Funds may be invested in the following: (1) any security which is a general obligation of any state or local government with taxing powers which is rated "A" or better by a national bond rating service; (2) any security which is a revenue obligation of any state or local government with taxing powers which is rated "AA" or better by a national bond rating service; and (3) a general obligation of the Minnesota housing finance agency which is a moral obligation of the state of Minnesota and is rated "A" or better by a national bond rating agency. Subd. 4.Commercial papers. Funds may be invested in commercial paper issued by United States corporations or their Canadian subsidiaries that is rated in the highest quality category by at least two nationally recognized rating agencies and matures in 270 days or less. Subd. 5.Time deposits. Funds may be invested in time deposits that are fully insured by the Federal Deposit Insurance Corporation or bankers acceptances of United States banks. Subd. 6.High-risk mortgage-backed securities. For the purposes of this section and section 118A.05, "high-risk mortgage-backed securities" are: (a) interest-only or principal-only mortgage-backed securities; and (b) any mortgage derivative security that: (1) has an expected average life greater than ten years; (2) has an expected average life that: Ivudijotpo!Vujmjujft!Dpnnjttjpo!Jowftunfou!Qpmjdz!Qbhf!21! IVUDIJOTPO!VUJMJUJFT!DPNNJTTJPO!JOWFTUNFOU!QPMJDZ! (i) will extend by more than four years as the result of an immediate and sustained parallel shift in the yield curve of plus 300 basis points; or (ii) will shorten by more than six years as the result of an immediate and sustained parallel shift in the yield curve of minus 300 basis points; or (3) will have an estimated change in price of more than 17 percent as the result of an immediate and sustained parallel shift in the yield curve of plus or minus 300 basis points. Subd. 7.Temporary general obligation bonds. Funds may be invested in general obligation temporary bonds of the same governmental entity issued under section 429.091, subdivision 7, 469.178, subdivision 5, or 475.61, subdivision 6. Subd. 8.Debt service funds. Funds held in a debt service fund may be used to purchase any obligation, whether general or special, of an issue which is payable from the fund, at such price, which may include a premium, as shall be agreed to by the holder, or may be used to redeem any obligation of such an issue prior to maturity in accordance with its terms. The securities representing any such investment may be sold by the governmental entity at any time, but the money so received remains part of the fund until used for the purpose for which the fund was created. Any obligation held in a debt service fund from which it is payable may be canceled at any time unless otherwise provided in a resolution or other instrument securing obligations payable from the fund. Subd. 9.Broker; statement and receipt. (a) For the purpose of this section and section 118A.05, the term "broker" means a broker-dealer, broker, or agent of a government entity, who transfers, purchases, sells, or obtains securities for, or on behalf of, a government entity. (b) Prior to completing an initial transaction with a broker, a government entity shall provide annually to the broker a written statement of investment restrictions which shall include a provision that all future investments are to be made in accordance with Minnesota Statutes governing the investment of public funds. (c) A broker must acknowledge annually receipt of the statement of investment restrictions in writing and agree to handle the government entity's account in accordance with these restrictions. A government entity may not enter into a transaction with a broker until the broker has provided this written agreement to the government entity. (d) The state auditor shall prepare uniform notification forms which shall be used by the government entities and the brokers to meet the requirements of this subdivision. History: 1996 c 399 art 1 s 5 Ivudijotpo!Vujmjujft!Dpnnjttjpo!Jowftunfou!Qpmjdz!Qbhf!22! IVUDIJOTPO!VUJMJUJFT!DPNNJTTJPO!JOWFTUNFOU!QPMJDZ! 118A.05 CONTRACTS AND AGREEMENTS. Subdivision 1.May enter into. In addition to other authority granted in sections 118A.01 to 118A.06, government entities may enter into contracts and agreements as follows. Subd. 2.Repurchase agreements. Repurchase agreements consisting of collateral allowable in section 118A.04, and reverse repurchase agreements may be entered into with any of the following entities: (1) a financial institution qualified as a "depository" of public funds of the government entity; (2) any other financial institution which is a member of the Federal Reserve System and whose combined capital and surplus equals or exceeds $10,000,000; (3) a primary reporting dealer in United States government securities to the Federal Reserve Bank of New York; or (4) a securities broker-dealer licensed pursuant to chapter 80A, or an affiliate of it, regulated by the Securities and Exchange Commission and maintaining a combined capital and surplus of $40,000,000 or more, exclusive of subordinated debt. Reverse agreements may only be entered into for a period of 90 days or less and only to meet short-term cash flow needs. In no event may reverse repurchase agreements be entered into for the purpose of generating cash for investments, except as stated in subdivision 3. Subd. 3.Securities lending agreements. Securities lending agreements, including custody agreements, may be entered into with a financial institution meeting the qualifications of subdivision 2, clause (1) or (2), and having its principal executive office in Minnesota. Securities lending transactions may be entered into with entities meeting the qualifications of subdivision 2 and the collateral for such transactions shall be restricted to the securities described in this section and section 118A.04. Subd. 4.Minnesota joint powers investment trust. Government entities may enter into agreements or contracts for: (1) shares of a Minnesota joint powers investment trust whose investments are restricted to securities described in this section and section 118A.04; (2) units of a short-term investment fund established and administered pursuant to regulation 9 of the Office of the Comptroller of the Currency, in which investments are restricted to securities described in this section and section 118A.04; Ivudijotpo!Vujmjujft!Dpnnjttjpo!Jowftunfou!Qpmjdz!Qbhf!23! IVUDIJOTPO!VUJMJUJFT!DPNNJTTJPO!JOWFTUNFOU!QPMJDZ! (3) shares of an investment company which is registered under the Federal Investment Company Act of 1940 and which holds itself out as a money market fund meeting the conditions of rule 2a-7 of the Securities and Exchange Commission and is rated in one of the two highest rating categories for money market funds by at least one nationally recognized statistical rating organization; or (4) shares of an investment company which is registered under the Federal Investment Company Act of 1940, and whose shares are registered under the Federal Securities Act of 1933, as long as the investment company's fund receives the highest credit rating and is rated in one of the two highest risk rating categories by at least one nationally recognized statistical rating organization and is invested in financial instruments with a final maturity no longer than 13 months. Subd. 5.Guaranteed investment contracts. Agreements or contracts for guaranteed investment contracts may be entered into if they are issued or guaranteed by United States commercial banks, domestic branches of foreign banks, United States insurance companies, or their Canadian subsidiaries, or the domestic affiliates of any of the foregoing. The credit quality of the issuer's or guarantor's short- and long-term unsecured debt must be rated in one of the two highest categories by a nationally recognized rating agency. Should the issuer's or guarantor's credit quality be downgraded below "A", the government entity must have withdrawal rights. History: 1996 c 399 art 1 s 6; 1997 c 219 s 1; 2000 c 493 s 1; 2005 c 152 art 1 s 2 118A.06 SAFEKEEPING; ACKNOWLEDGEMENTS. Investments, contracts, and agreements may be held in safekeeping with: (1) any Federal Reserve bank; (2) any bank authorized under the laws of the United States or any state to exercise corporate trust powers, including, but not limited to, the bank from which the investment is purchased; (3) a primary reporting dealer in United States government securities to the Federal Reserve Bank of New York; or (4) a securities broker-dealer having its principal executive office in Minnesota, licensed under chapter 80A, or an affiliate of it, and regulated by the Securities and Exchange Commission; provided that the government entity's ownership of all securities is evidenced by written acknowledgments identifying the securities by the names of the issuers, maturity dates, interest rates, CUSIP number, or other distinguishing marks. History: 1996 c 399 art 1 s 7; 2010 c 234 s 2 Ivudijotpo!Vujmjujft!Dpnnjttjpo!Jowftunfou!Qpmjdz!Qbhf!24! IVUDIJOTPO!VUJMJUJFT!DPNNJTTJPO!JOWFTUNFOU!QPMJDZ! 118A.07 ADDITIONAL INVESTMENT AUTHORITY. Subdivision 1.Authority provided. As used in this section, "governmental entity" means a city with a population in excess of 200,000 or a county that contains a city of that size. If a governmental entity meets the requirements of subdivisions 2 and 3, it may exercise additional investment authority under subdivisions 4, 5, and 6. Subd. 2.Written policies and procedures. Prior to exercising any additional authority under subdivisions 4, 5, and 6, the governmental entity must have written investment policies and procedures governing the following: (1) the use of or limitation on mutual bond funds or other securities authorized or permitted investments under law; (2) specifications for and limitations on the use of derivatives; (3) the final maturity of any individual security; (4) the maximum average weighted life of the portfolio; (5) the use of and limitations on reverse repurchase agreements; (6) credit standards for financial institutions with which the government entity deals; and (7) credit standards for investments made by the government entity. Subd. 3.Oversight process. Prior to exercising any authority under subdivisions 4, 5, and 6, the governmental entity must establish an oversight process that provides for review of the government entity's investment strategy and the composition of the financial portfolio. This process shall include one or more of the following: (1) audit reviews; (2) internal or external investment committee reviews; and (3) internal management control. Additionally, the governing body of the governmental entity must, by resolution, authorize its treasurer to utilize the additional authorities under this section within their prescribed limits, and in conformance with the written limitations, policies, and procedures of the governmental entity. If the governing body of a governmental entity exercises the authority provided in this section, the treasurer of the governmental entity must annually report to the governing body on the findings of the oversight process required under this subdivision. If the Ivudijotpo!Vujmjujft!Dpnnjttjpo!Jowftunfou!Qpmjdz!Qbhf!25! IVUDIJOTPO!VUJMJUJFT!DPNNJTTJPO!JOWFTUNFOU!QPMJDZ! governing body intends to continue to exercise the authority provided in this section for the following calendar year, it must adopt a resolution affirming that intention by December 1. Subd. 4.Repurchase agreements. A government entity may enter into repurchase agreements as authorized under section 118A.05, provided that the exclusion of mortgage-backed securities defined as "high-risk mortgage-backed securities" under section 118A.04, subdivision 6, shall not apply to repurchase agreements under this authority if the margin requirement is 101 percent or more. Subd. 5.Reverse repurchase agreements. Notwithstanding the limitations contained in section 118A.05, subdivision 2, the county may enter into reverse repurchase agreements to: (1) meet cash flow needs; or (2) generate cash for investments, provided that the total securities owned shall be limited to an amount not to exceed 130 percent of the annual daily average of general investable monies for the fiscal year as disclosed in the most recently available audited financial report. Excluded from this limit are: (i) securities with maturities of one year or less; and (ii) securities that have been reversed to maturity. There shall be no limit on the term of a reverse repurchase agreement. Reverse repurchase agreements shall not be included in computing the net debt of the governmental entity, and may be made without an election or public sale, and the interest payable thereon shall not be subject to the limitation in section 475.55. The interest shall not be deducted or excluded from gross income of the recipient for the purpose of state income, corporate franchise, or bank excise taxes, or if so provided by federal law, for the purpose of federal income tax. Subd. 6.Options and futures. A government entity may enter into futures contracts, options on futures contracts, and option agreements to buy or sell securities authorized under law as legal investments for counties, but only with respect to securities owned by the governmental entity, including securities that are the subject of reverse repurchase agreements under this section that expire at or before the due date of the option agreement. History: 1996 c 399 art 1 s 8 Ivudijotpo!Vujmjujft!Dpnnjttjpo!Jowftunfou!Qpmjdz!Qbhf!26! IVUDIJOTPO!VUJMJUJFT!DPNNJTTJPO!JOWFTUNFOU!QPMJDZ! 118A.08 NO SUPERSEDING EFFECT. Except as provided in Laws 1996, chapter 399, article 1, section 11, sections 118A.01 to 118A.06 shall not supersede any general or special law relating to the deposit and investment of public funds. History: 1996 c 399 art 1 s 9 Ivudijotpo!Vujmjujft!Dpnnjttjpo!Jowftunfou!Qpmjdz!Qbhf!27! Amended July 25, 2018 POLICY ON PURCHASING State Statute 471:345 Hutchinson Utilities Commission hereby adopts a general policy on the purchasing of equipment, supplies and services. Inventory Agent is authorized to create requisitions and approve purchase orders for are based on set order points and order quantities. If requirements exceed current order quantities, either an approved Bill of Materials or an approved requisition will be required. All other purchases shall require supervisor permission. Emergency situations may require a deviation from this policy to ensure electric and/or natural gas services to the customers of the Hutchinson Utilities. Joint purchasing of materials, supplies and services shall be considered with other departments only when net economic benefits can be achieved. When a tie exists between low bids, preference will be given to a local supplier. For purchases when the estimate is more than $175,000: 1. The Hutchinson Utilities Commission will authorize permission to advertise for bids. 2. Specifications shall be made available to all prospective bidders. 3. Bids will be opened at a public bid opening. Date will be set in the advertisement for bids. 4. The staff will review bids and may recommend to the Hutchinson Utilities Commission to accept the lowest responsible bidder meeting specifications. 5. Hutchinson Utilities Commission will enter into a contract with the responsible bidder. For purchases between $25,000 and $175,000: 1. The Hutchinson Utilities Commission staff will solicit written, informal quotations from at least two (2) suppliers, if possible, and tabulate the results. 2. Fuel purchases for electrical generation is an exception, for additional exceptions refer to Minnesota Statutes 2017, 471.345 Uniform Municipal Contracting Law. 3. Staff will evaluate the quotes and, in its discretion, determine which quotation is most suitable for HUC and make a recommendation thereon to the commission. 4. Hutchinson Utilities Commission will approve the quote. For purchases up to $25,000: 1. General Manager authorized to approve purchases up to $25,000. 2. For purchases of $5,000 - $25,000, the Hutchinson Utilities Commission staff may solicit written, informal quotations from at least two (2) suppliers and tabulate the results or, in the alternative purchase equipment, supplies or services on the open market. 3. Staff will recommend acceptance of purchases of $5,000 - $25,000 to the General Manager for approval. For purchases up to $5,000: Directors, Managers, and the City Attorney are authorized to approve requisitions via the purchasing software for purchases requiring a purchase order number. If purchase order numbers are not required each department may use their assigned credit card. 1. Directors, Managers, or the City Attorney will approve all item requests prior to purchasing the item. 2. Receipts will be given to each Director, Manager, or City Attorney as items are purchased to initial, assign appropriate account number and give a description of the item purchased; then forward to Accounting. 3. Accounting will keep a file for each department until monthly credit card statements are received and reconciled. Petty cash may be used for purchases less than $25.00. Employees may make local purchases with prior approval from their Director/Manager. The employee has the option of using a HUC credit card, paying cash for the item, if less than $25.00, and being reimbursed from petty cash, or making the purchase at a local retailer with whom we have an account established. All receipts must to be turned in to the appropriate Director/Manager to initial, assign appropriate account number and then forward to the financial manager. CREDIT CARDS A purchase by credit card must comply with all statutes and rules applicable to Hutchinson Utilities Commission (HUC) purchases. Credit card purchases must comply with the following requirements: Minn. Stat. 412.271, subd. 2 and 471.38, subd.1. Claims presented to HUC for payment must be in writing and itemized. Bills from credit card companies do not contain the detail necessary to satisfy these requirements; therefore, HUC must retain invoices and itemized receipts for items charged to a credit card. The Office of the State Auditor strongly urges local government units to develop a comprehensive credit card use policy to avoid misappropriation of funds or other misuse of the credit card. The following are authorized to make credit card purchases on behalf of HUC: General Manager Natural Gas Director Electric Transmission/Distribution Manager Production Manager Engineering Services Manager Inventory Agent Company purchases are allowed to be made with a credit card following all HUC spending limit requirements. No personal purchases are to be made with the credit card. Receipts will be given to each department Director/Manager as items are purchased to initial, assign appropriate account numbers and give a description of the item purchased. The receipt then gets forwarded to the financial manager. The financial manager will keep a file for each department until monthly credit card statements are received and reconciled. The financial manager has the authority to approve and question all credit card purchases in so far as the policy applies. The full amount of the statement must be paid each month. FIXED ASSET CAPITALIZATION The Hutchinson Utilities Commission (HUC) will regard fixed assets as capitalized when all of the following criteria are met: 1. Assets purchased, built or leased have useful lives of one year or more. 2. The cost of the asset (including installation) is $5,000 or more, or work order infrastructure assets whose cost is less than $5,000 individually but the aggregate total is $5,000 or more. 3. The cost of repairing or renovating the asset is $5,000 or more and prolongs the life of the asset. Costs associated with purchasing and implementing software, software maintenance and customer support are considered expenditures and will not be capitalized. Other Considerations: 1. REPAIR is an expenditure that keeps the property in ordinary efficient operating condition. The cost of the repair does not add to the value or prolong the life of the asset. All repair expenditures are charged to the appropriate department and fund. 2. IMPROVEMENTS are expenditures for additions, alterations and renovations that appreciably prolong the life of the asset, materially increase its value or adapt it to a different use. Improvements of the nature are capitalized. Examples of Repairs vs. Improvements Repairs=Expenditures Improvements=Capitalized Assets All items-life less than one year Life of more than one year All items under $5,000 All items $5,000 or more Property maintenance, wall repair Property rebuilding Replacement of machine parts to keep Replacement of machine parts that machine in normal operating condition prolong the useful life Property restoration (rebuilding) for Property restoration for something normal operations different or better Existing building repairs Building regulation conformity Replacement of small sections of wiring, Major replacement of wiring, pipes or light fixtures lighting, pipes or sewer Patching walls, minor repairs of floors, Installation of floor, wall, roof, painting, etc. wall covering, etc. Patching driveways New driveway or major repair Cleaning drapery, carpet, furniture New drapery, carpets, furniture Depreciation Method Straight Line over the following useful lives: Buildings 35-60 years Transmission Plant (electric) 20-35 years Distribution Plant (electric) 20-35 years Building Improvement 15-30 years Transmission Plant (gas) 10-45 years Distribution Plant (gas) 10-45 years Generation Plant 10-30 years General Plant 5-10 years Vehicles 5-10 years Office Equipment 3-5 years Computer Equipment 3-5 years HUTCHINSON UTILITIESCOMMISSION Natural Gas Service Beyond the City Limits of Hutchinson Distribution Main Extension Policy This document sets forth the procedures to be observed when extending a natural gas distribution main beyond the city limits of Hutchinson. Hutchinson Utilities Commission Distribution Main Extension Policy Service Beyond City Limits of Hutchinson 1. Definitions Natural Gas Distribution Main Natural gas distribution main is defined as that portion of the intended to provide service to more than a single customer. Such piping is normally located in public streets and its right- of-way or adjacent to property lines. 2. Individual Requests for Gas Main Extension A. Application Prospective customers currently without natural gas service may request such service by submitting a written application to Hutchinson Utilities Commission (HUC). HUC shall investigate the possibility of installing gas main to the customer and shall make an estimate of the costs involved. HUC is under no obligation to extend natural gas service beyond the city limits of Hutchinson, MN. B. Allowances Each customer shall receive a construction allowance based on projected marginal revenue. 1) Residential Customers - $915.00 2) Firm Commercial Customers estimated annual revenue using the following formula (based on seven year recovery): Allowance = $(U x M) x 7 Page 1 of 5 Where: U = Estimated long term annual usage in Mcf M = Applicable margin per Mcf calculating customer allowance as this is a fixed cost to HUC. C. Customer Contributions A contribution shall be required if the estimated construction cost of main exceeds the main allowance(s) for the customer(s) requesting the extension. This payment is due as a single payment prior to the installation of the main. However, if a residential customer, with the approval of HUC, may elect to make a single payment before construction begins or agree to pay the contribution in twelve (12) equal installments, including a financ weighted cost of capital. These installments shall be billed with the utility bill and be payable on the same date as the utility bill. All contributions shall be refundable in accordance with Section 3. of this schedule. 3. Reapportionment and Refunds of Contributions A. Reapportionment of Customer Contribution When additional customers take service from a main extension which had required a customer contribution, the original contribution and any new contribution will be reapportioned among all customers on the extension if the reapportionment does not cause an increase in any ionment contribution, the portion of new main facilities under consideration will be considered as separate and new gas main extension subject to all the gas extension rules. B. Refunds of Customers with No Additional Contribution The HUC shall make refunds to the customer(s) or developer who made the contribution(s) toward the extension of main for a period of five (5) years from the installation date. When the HUC connects new customers to this portion of main extension, the refund shall be equal to the change in the customer contribution value after Page 2 of 5 reapportioning the contribution using the allowance in effect at the time the extension was installed. When the HUC makes an extension of main to subsequent customer(s) that does not require a contribution from the subsequent customer(s), the refund shall be equal to the change in the customer allowance in effect at the time the original extension was installed and the allowance in effect for the new facilities less the construction costs of all main. C. Single Customer Payment of Contribution If an individual customer agrees in writing before the main extension is installed to pay the total required contribution, that customer shall be eligible for all main allowance refunds from all subsequent customers on the extension during the refund period. Such a written agreement will thereby preclude any reapportionment of the contribution among subsequent customers. 1) If a further main extension off the original extension is required to serve a subsequent customer and the main cost is less than the total main allowance available, the unused allowance shall be refunded to the customer who made the single payment contribution outlined above. 2) If a further main extension off the original extension is required to serve a subsequent customer and the main costs exceeds the total main allowance available, the subsequent customers shall pay the contribution for the new facilities. 4. Right to Refund The right to receive a refund of any contribution held hereunder will attach to the ownership of the premises for which the original extension was made. Any refund shall be made to the person who owns such premise(s) at the time the refund is paid unless the contributor has reserved the right to receive such refund in the conveyance of the premise(s) to a subsequent owner and demonstrates that to the HUC. In the case of a developer making a contribution to extend gas into a development, the right to receive a refund shall attach to the owner of the development at the time the refund becomes due, unless, in the conveyance of the development, the developer provides the HUC with a written agreement reserving the right to receive such refunds. Page 3 of 5 In no case shall the total refund(s) exceed the amount of the contribution. 5. Clearing Rights and Costs Customer requesting service shall furnish, without expense to the HUC, right-of-way, easements, permits and additional costs incurred to provide adequate clearing for the main extension to serve the customer along a route approved by the HUC after consulting with the customer. If requested by the customer, the HUC will do the clearing at estimated cost of clearing to be done by the HUC. Costs will be adjusted to actual costs upon completion of the job. 6. Title The title to all distribution main extensions made by the HUC hereunder remains with the HUC. The HUC may at any time add additional customers to or make new extensions to an existing extension without the consent of any customer or customers who contributed to the cost of the existing extension, and without incurring any liability for refunding contributions other than as provided herein. 7. Construction Standards All natural gas distribution system extensions constructed construction, and shall meet the requirements of governmental regulatory bodies having jurisdiction. 8. General Provisions A. customer, customer shall provide HUC with an easement needs an easement or easements over property not owned by customer in order to furnish service to customer, customer shall obtain the easement(s) at no expense to HUC. B. No structures shall be placed over the route of the be used for gardens and other purposes which will not natural gas facilities. C. Properties subject to an easement granted to HUC shall be graded to a level which shall not be above or more Page 4 of 5 than 6 inches below finished grade, prior to the time installation of natural gas facilities is commenced by HUC. The HUC shall be notified in advance of any changes in grade after the natural gas facilities have been installed by HUC, and HUC shall be reimbursed for any and all costs incurred as a result of such change. D. HUC shall not be liable for damage to trees, shrubs, fences, sidewalks, driveways or other obstructions incidental to the installations, maintenance or replacement of natural gas facilities, unless such damage is caused by its own negligence. Page 5 of 5 HUTCHINSON UTILITIES COMMISSION Board Action Form Agenda Item: Approve Policy Changes Presenter: Agenda Item Type: Jeremy Carter Approve Policy Changes Time Requested (Minutes): 5 Attachments: Yes BACKGROUND/EXPLANATION OF AGENDA ITEM: As part of HUC's standard operating procedures, a continual policy review is practiced. The following revisions to the policies below are recommended. i. Payments of HUC Payables ii. Surplus Property Policy BOARD ACTION REQUESTED: Approve Policy Changes Fiscal Impact: Included in current budget: Budget Change: PROJECT SECTION: Total Project Cost: Remaining Cost: Amended November 275, 201920 Policy on Payments of Hutchinson Utilities Commission Payables The Hutchinson Utilities Commission Accountant and Financial Manager are hereby authorized to issue warrant(s) drawn from the proper funds. (Resolution 153 was amended on March 25, 2009 and reads as follows): Resolution 153 authorizes HUC Accountant or HUC Financial Manager to transfer funds by wire or other electronic means. Claims shall be paid upon proper presentation during the year 2020 2021. This policy shall be reviewed on an annual basis. Amended August 29, 2012 November 25, 2020 Policy on Disposal of Surplus Property DISPOSAL OF EXCESS PROPERTY DECLARATION OF SURPLUS; SALE AUTHORIZATION. The General Manager may, from time to time, recommend to the Hutchinson Utilities Commission that certain personal property (chattels) owned by the Hutchinson Utilities Commission is no longer needed for utility purpose and should be sold. By action of the Commission, this property shall be declared surplus, the value estimated and the General Manager authorized to dispose of that property in the manner stated herein. SURPLUS VALUED UNDER $5,000 The General Manager may sell surplus property with a fair market value of less than $5,000 through negotiated sale. Surplus personal computers greater than three years old may be donated directly to public schools in the city. SURPLUS VALUED OVER $5,000 The General Manager shall offer for public sale, to the highest bidder, surplus property with a fair market value over $5,000. Notice of the public sale shall be given stating time and place of sale and generally describing the property to be sold at least ten days prior to the date of sale by publication once in the official newspaper. The sale shall be to the person submitting the highest bid. EXCEPTIONS Surplus property may be transferred or sold to other state agencies or government units or eligible non-profit organizations in accordance with state law without regard to the requirements of this policy. DISPOSITION OF PROCEEDS All receipts from sales of surplus property under this policy shall be placed in the fund from which it was purchased. PERSONS INELIGIBLE TO PURCHASE HUTCHINSON UTILITIES EMPLOYEES No employee of the utilities, a member of the Commission, or an advisor serving the Utilities in a professional capacity, may be a purchaser of property under this policy No Utilities officer, manager, or Commissioner or an advisor serving the Utilities in a professional capacity may be purchaser of property under this policy. Other employees may purchase property of the Utility if the property is sold through a competitive bidding process that is open to the public. PROHIBITED PURCHASES It is unlawful for any person to be a purchaser of property under this policy if that purchase is prohibited by the terms of this policy. HUTCHINSON UTILITIES COMMISSION Board Action Form Agenda Item: Non-WaiverofTortLiabilityLimitsforGeneralLiability Presenter:Agenda Item Type: JeremyCarter NewBusiness Time Requested (Minutes): 2 Attachments: BACKGROUND/EXPLANATION OF AGENDA ITEM: AspartoftheLeagueofMinnesotaCitiesInsuranceTrustgeneralliabilityinsurance renewalfortheperiodJanuary2021throughDecember2021,HUCmustdecidewhether ornottowaivethestatutorymunicipaltortliabilitylimitsfrom$500,000perclaimantand $1,500,000peroccurrence.IfHUCdoeswaivethis,thenHUCmustpurchaseexcess liabilitycoverage.HistoricallyHUChasnotwaivedthemunicipaltortlimitbecauseby doingso,HUCopensitselfuptoclaimsandpotentialpaymentabovethestatutorylimit. Recommendationistonotwaivethetortliabilitylimits. BOARD ACTION REQUESTED: Approvenon-waiveroftortliabilitylimitsforgeneralliabilityfortheupcomingpolicy periodofJanuary2021throughDecember2021 Fiscal Impact: Included in current budget: Budget Change: No PROJECT SECTION: Total Project Cost: Remaining Cost: 0.00 HUTCHINSON UTILITIES COMMISSION Board Action Form Agenda Item: ApproveWrite-Offs Presenter:Agenda Item Type: JeremyCarter NewBusiness Time Requested (Minutes): 2 Attachments: Yes BACKGROUND/EXPLANATION OF AGENDA ITEM: Wearerequestingthatyouapprovethewrite-offsintheamountof$24,998.20asshown ontheattachedspreadsheet.Pastamountswrittenoffarelistedbelow. 2019:$9,603.01 2018:$9,850.78 2017:$31,967.78 2016:$11,350.31 2015:$7,537.92 2014:$41,279.16 2013:$4,316.12 2012:$4,067.15 2011:$9,792.12 BOARD ACTION REQUESTED: ApproveWriteOffs Fiscal Impact: Included in current budget: Budget Change: PROJECT SECTION: Total Project Cost: Remaining Cost: HUTCHINSON UTILITIES COMMISSION Board Action Form Agenda Item: SellingofSurplusVehicles Presenter:Agenda Item Type: NewBusiness Time Requested (Minutes): 1 Attachments: No BACKGROUND/EXPLANATION OF AGENDA ITEM: SellSurplusVehiclesfromthe2020FleetSchedule: #2008(Estimatedvalue$1000.00) (EstimatedValue$00.00) BOARD ACTION REQUESTED: Approvesellingsurplusvehicles Fiscal Impact: Included in current budget: Budget Change: PROJECT SECTION: Total Project Cost: Remaining Cost: