05-31-2022 HUCM Special MeetingMINUTES
Cost of Service Meeting — Hutchinson Utilities Commission
Held at Hutchinson Event Center
Tuesday, May 31, 2022
Commenced —11:00 a.m.
Members present: Vice President Anthony Hanson; Secretary Don Martinez; Commissioner Robert
Wendorff; Commissioner Kathy Silvernale; GM Jeremy Carter
Others present: John Webster; Dave Hunstad; Mike Gabrielson; Angie Radke.
Historical Overview — Cost of Service Study/Rate Changes
GM Carter recapped the last Cost of Service (COS) Study that started in 2017 and was completed
in 2018 using 2016 audited financial statements, 5 year forecasted CIP, and 2017 & 2018
operating budget numbers. The study's intent was to provide an unbiased look at the utility's cost
structure and revenue requirements. When a company is in a good financial situation, such as
HUC, that is the time to look at the appropriate rate structures and equity between classes. This
provides a proactive approach to maintaining integrity between classes and ensure appropriate
revenue requirement metrics are being achieved. As part of the rate designs for each division, a
glide path was also determined for each division. A 6-year glide path for the Electric Division was
the boards direction to bring the various classifications towards more equitability compared to
the Cost of Service numbers while it was the boards determination a 9-year glide path for Natural
Gas division was appropriate.
COS studies are usually performed every 4-5 years unless something significantly changes in a
utility's customer base. A 5-year forecast is preliminary and could change significantly if some
major items develop. June 8, 2022 is the COS kick off meeting with Utility Financial Services.
Operating/Financial Ratios — Peer Group
• Board and Staff discussed Operational and Financial Ratios and the comparison to peers. Always
keep in mind that HUC is more like an Investor owned utility. HUC's business model is different
than its peer group. HUC has a great deal of assets, more depreciation expense, has a control
center, and is a MISO market participant that provides significant differences compared to the
peer group.
• President Matt Cheney arrived at 11:45
Financial Reserve Policy
GM Carter reviewed the Financial Reserve Policy, This Policy is reviewed every year and
benchmarked in the COS Study
5-Year Operating Budget Forecast
GM Carter and Mr. Hunstad reviewed the load potential of a Bitcoin mining company coming to
Hutchinson. Discussion was held on the type of Rate that would be used: example would be to
consider creating an Interruptible Rate.
• Mr. Hunstad discussed the materials on hand for transformers and conductors along with
the cost of purchasing additional items that may be needed due to supply chain
issues. Currently HUC has sufficient transformers and conductors on hand for 2022 but
may need to add inventory due to long lead times.
• Discussion was held on potential load following arrangements with NextEra and load growth
above an additional increase of 1MW- that is projected for 2026-2028 with Uponor.
• GM Carter discussed options for the Hutchinson Substation upgrade.
• Mr. Gabrielson and GM Carter discussed the various projects that are happening at both plants
which include removal of units 3, 4 and 8, security gate, tuck pointing and ladders.
• Mr. Webster provided an update on the Heartland Corn project, Heartland Corn is continuing to
grow. A couple of other potential projects include an RNG project and 3M.
Various Rates & Rate Classes
• Board and staff discussed the various rate structures that are available which include Stand By
Rate, interruptible Load/Rate/Class, Economic Development Rates and Green Rates, Net
Metering/Distributed Generation.
Adjourn
There being no further business, a motion by Commissioner Martinez, second by Commissioner
Wendorff to adjourn the meeting at 1:46 p.m. Motion carried unanimously.
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Matt Cheney, President