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02-24-2021 HUCMMINUTES Regular Meeting — Hutchinson, Utilities Commission Wednesday, February 24, 2021 Call to order — 3:00 p.m. President Matt Cheney callled the meeting to order. Members present: President Matt Cheney; Vice President Anthony Hanson; Secretary Don Martinez; Commissioner Monty Morrow; Commissioner Robert Wendorff; GM Jeremy Carter, Attorney Marc Sebora 1. Conflict of Interest 2. Approve Consent Agen a. Approve Minutes bi. Ratify Payment of Billsl Motion by Commissioner Martinez, second by Commissioner Morrow to approve the Consent Agenda. Motion carried unanimously. 3. Approve Financial Statements LollwAtTAIMIPJLTL4e,llllr,liglLTA,4K$;I RIMA 2 Motion by Commissioner Hanson, second by Commissioner Wendortf to appro�M the financial statements. Motion carried unanimously. OOOZTM3= 5. Communication a. City Administrator— Matthew Jaunich —Absent b. Divisions L Dian Lang, Engineering Services Manager — Absent fl. Dave Hunstad, Electric Transmission/Distribution Manager — Abise Randy Blake, Production Manager — Absent John Webster, Natural Gas Division Director — Absent v. Jared Martig, Financial Manager- Absent I c. Human Resources - Brenda Ewing — Absent d. Legal — Marc Sebiora — Recapped conversations that have been held in the past on the General Managers, salary and the effect that the M!N Governor's salary, cap has on the GMs ability to receive increases from the Commission. Currently there is a Sill in the Legislature that has made it through a couple of committees that are proposing to do away of the governor's salary cap all together. Most of the weight is being pulled by MMUA along with the City of Rochester testifying on the effects that the governor's salary cap has had on the ability to retain employees. Mr. Sebora looked to the Commission for any feedback or expression of opinion. Conversations were held on if there are other industries besides MMUA that are involved and voicing support for this bill. Mr. Sebora reviewed the process of how bills are processed and the time frame. After Discussion, the board asked Mr. Sebora to contact local representatives to support the bill being proposed. Mr. Sebora will send letters and contact MMUA to keep HUC in the loop and forthcoming conversations. e. General Manager — Jeremy Carter i. Legislative Rally Update ii. Federal Washington Lobby efforts coming up March 1-3 iii. Natural Gas Market Prices 6. Policies a. Review Policies i. Section 2 of Exempt Handbook ii. Section 2 of Non -Exempt Handbook No changes recommended at this time. 7. Unfinished Business S. New Business a. Review 2020 Annual Distributed Generation GM Carter provided the 2020 Annual Distributed Generation Resources Annual Report information. The report tracks the power generated from the solar systems that is delivered to the customer, what is sold back to HUC, and what is the net charge/credit for the customer. Every year HUC is required by state law to present this report to HUC's governing board. b. Approve Requisition #8676 — Electric Distribution Coordination Study GM Carter presented Requisition #8676 — Electric Distribution Coordination Study. The next few items relate to each other. The last time an in-depth distribution study was performed was in 2004 along with having a high-level study 10 years ago as HUC prepared for an addition of Unit #5 to evaluate how the new generation would affect the distribution system. Now that HUC has updated some of the infrastructure; changed out transformers and equipment in substations, revising Plant #2 substation with a different configuration and the 2 load has changed be beneficial to have a study performed again to make sure the protection systems are performing as they should with all the changes that have occurred. The results of this study will tell I Staff what changes need, to be made, if any, to the relaying and fusing on the feeders and making sure everything is sized correctly. GM Carter noted the timeline for completion would be this summer. After discussion, a motion by Commissioner Hanson, second by Commissioner Morrow to Approve Requisition #866 — Electric Distribubon Coordinafion. Motion carried unanimously. GM Carter presented Requisition #8674 — McLeod Substation RTU, This itern is similar to the Plant #2 RTU project, the Ilex R,T'U at the, McLeod Substation is to be replaced and a new RTU integrated with the ex�istiing protection system relays at the substation. The project dovetails with the capacitor bank project which is scheduled for completion in 2021. A motion by Commissioner Martinez, second by Commissioner Wendorff it Approve Requisition #8674 — McLeod Substation RTU. Motion carried unanimously. it a E F-J nam no GM Carter presented Requisition #8675 — Plant #2 Substation RTU and Relays. Thiis item is specifically for the new Plant 2 transformers that are now on site. An engineering firm will be used to design the protection system scheme for the substation and feeders; specify materials, develop relay settings and commiission the I relays. HUC will procure and install the equipment. Work wil'l start this, Spring and should be complete before the hot season. A motion by Commissioner Hanson, secod'by Commissioner Martinez to Approve Requisition #8675 — Plant #2 Substation RTU and Relays, Motion carded unanimously. GM Carter provided a summary of the 3M's Natural Gas Transportation and Daily Swing Supply Agreement. 3M's current agreement expires on March 1, 2021. This agreement provides transportation rights to 3M on Hutchin'son's, facilities 9 from March 1, 2021 through March 1, 2022. This agreement is identical to the past agreement with the exception that the 'Meter Fee' increase of $145/meter is now $215/meter in accordance with the rate realignment structure that was put in place by this Commission. A motion by Commissioner Wendorff, second by Commissioner Morrow to Approve 3M's Natural Gas Transportation and Daily Swing Supply Agreement. Motion carried unanimously. f. Discussion on Market Prices and Financial Impact with the Severe Weather GM Carter started the discussion on Market Prices and Financial Impact with the Severe Weather. As the Commission recalls a situation happened like this about 3 years ago. HUC has to Nom a certain amount of gas on a Friday for the weekend and the problem is the pricing does not settle until the following Monday but in this case the following Tuesday prices settled due to the President's Day holiday. On Friday Feb 12, the spot gas price was $15/mmbtu and Staff Nom'd just under 4700mmbtu/day for Friday through Monday. Staff returned on Tuesday and the price had settled at $154.91 /mmbtu for those four days. Typically, HUC pays about $3/mmbtu. Over those 4 days HUC spent $725K per day in natural gas purchases. On the Feb 17, Staff lowered the Noms to 3680 mmbtu and the price jumped to $188/mmbtu. Talking with other utilities down south, the prices there settled at $800-$1100/mmbtu. A lot of these utilities have spent 3-4 years of natural gas budgets in 4 days. Other utilities will have depleted cash reserves by 70%. All utilities are in different situations. HUC is estimating $6M in gas purchases for Feb; $3.3M is retail customers and $2.7M is contract customers. To put in perspective $3.5M is HUC's entire budget for the year for retail customers. GM Carter stated that the natural gas is an unregulated industry as far as price caps, there is no ceiling on price particularly in extreme weather events like the electric side. The cold weather event also caused natural gas well hubs in the southern part of the U.S to freeze, limiting the amount of natural gas that could be extracted from the ground and placed into production. Not only did the cold weather impact natural gas pricing, electric costs also increased; particularly in the ERCOT Texas market. ERCOT was not able to get a supply of gas to the generators. There are concerns mounting over inflated natural gas pricing in the markets, people manipulating the markets, and investors making money. FERC and NERC are starting inquiries. GM Carter did note that Minnesota did not have a large reliability issue like some areas down south, even though there were high prices no one went with out heat. Conversations were held on how the market prices are going to affect the customer bills and what HUC can do to minimize the cost impact either by spreading the amount over time or using cash reserves/MRES refund to lessen 4 r.#Ssjzw • ITA to 61 [01111101 9. Adjourn Thiere beings no further business, a motion by Commissioner Martinez, second by Commissioner Hlanson to adjourn, the meeting at 4:0,9p,m. Motion carried unanimously. ATTEST - Matt Cheney, Presidbnt 9 "TY66i Martinez, Secreta,rt/