05-28-2025 HUCM Special MeetingSpecial Meeting MINUTES
Special Meeting — Hutchinson Utilities Commission
Wednesday, May 28, 2025
Call to order — 2:00 p.m.
President Matt Cheney called the meeting to order. Members present: President Matt
Cheney; Secretary Don Martinez; Vice President Troy Pullis; Commissioner Kathy
Silvernale; Commissioner Tom Lambert; GM Jeremy Carter; Attorney Marc Sebora:
Others present: Jared Martig, Dave Hunstad, Dan Lang, Mike Gabrielson, Byron
Bettenhausen, and Angie Radke
GM Carter introduced Byron Bettenhausen — Natural Gas Manager.
Purpose of meeting is to have Cash Flow and Financing Discussion.
GM Carter thanked the Commissioners for coming in and provided an overview of the
meeting. GM Carter started with giving a Willmar Line update and informing the
Commission about the open houses coming soon.
GM Carter discussed the Hutchinson Substation Upgrade along with the different Cash
Flow options and any overlap that may happen with the Willmar Line project. GM Carter
also noted how some of the distribution work at Plant 1 will not be reimbursable as part
of the Willmar Line Project but the transmission costs can be recoverable through
Schedule O. Initial project investment for the Hutch Substation improvements is $14.6M
which did factor in some contingency for a couple more change orders.
GM Carter reviewed the Combined Division Reserves Table for years 2022-2030. The
table shows the beginning year excess/deficit combined cash balance for each year and
does include proposed rate increases but does not include using cash from the electric
or natural gas division to fund the remaining Hutch Sub Station project ($12.6M). The
table represents in the years there is excess cash to cover all the restricted and minimum
designated cash balances approved by the commission or imposed by bond covenants.
Table #2 shows Revised Cash Balance with the 2 projects of Hutch Substation
Transmission Project and Unit #1 purchases. GM Carter noted years 2025 and 2026 is
an interim period where organization cash balance is below forecasted reserves. Table
2 does include rate increases and paying all unit #1 costs and substation project costs
with cash on hand and no infusion of cash financing.
GM Carter reviewed the Electric Reserves tables for years 2022-2030. The excess/deficit
cash balance for each year does include proposed rate increases but does not include
using any additional cash from the electric division to fund the remaining Hutch Sub
Station project costs of $12.6M. Table 1 represents moving forward there is not enough
cash to cover all the restricted and minimum designated cash balances approved by the
Commission or imposed by bond covenants. Table 2 shows the projected YE cash
balance for each year which does not include the remaining Hutch Sub project costs
$12.6M being paid for out of the electric division. Table 3 shows the revision YE cash
balance in the electric division if cash is used from the division to pay for the remaining
Hutch Sub Project costs $12.6M. $6.3M has already been funded out of the electric
division. These tables are to show the Commissioners how the Electric Division cannot
fund this project alone.
GM Carter reviewed the Natural Gas Division Reserves tables for years 2022-2030. The
excess/deficit cash balance for each year includes proposed rate adjustments but does
not include using cash from the gas division to fund the Hutch Sub Station project or Unit
#1 purchase. Table 1 represents in the years there is excess cash to cover all the
restricted and minimum designated cash balances approved by the commission or
imposed by bond covenants. Table 2 shows the projected YE cash balance for each
year. The table does not include the Hutch Sub project or Unit #1 purchases being funded
by gas division cash. Table 3 revises YE cash balance in the gas division if cash is used
from the NG division to pay for the Hutch Sub and Unit #1 purchase. Estimated project
costs are $18.9M. Cash balances include rate increases. The tables show the
Commissioners how the Natural Gas Division can fund the projects.
Focusing on the Overall Combined Division, GM Carter looked at the Commissioners for
questions.
GM Carter reviewed the different Project Cash Flow Options. Option 1 — use cash
balance to fund the remaining Hutch Sub project. GM Carter noted the relevance to the
bond rating and if the Commission would be comfortable with cash reserves dipping
below established reserves. Option 2 — restructure remaining natural gas debt $4.1 M
over a long duration to free up cash over a couple of years. GM Carter noted the call
options available for prepayment without penalty. Option 3 — issue new short-term debt
$3M-$5M to cover cash potentially falling below reserves. GM Carter noted restricted
reserve requirements increase. Option 4 — issue new longer -term debt. GM Carter noted
some interest on long-term debt will not be recoverable through Annual Transmission
Revenue Requirements (ATRR) and restricted reserve requirements increase. Option 5
— explore other financing options.
Discussion was held on the cash flow tables and all the cash flow options along with
issuing bonds with the intent to reimburse HUC for capital related project costs, in which
case a bond resolution is needed, timeframe and several additional steps would need to
take place. Commissioners agreed to use cash as a first option but directed GM Carter
to work on a bond Resolution in case cash balances fall to an unacceptable level, HUC
would then be in a position to issue short-term debt.
Adjourn
There being no further business, a motion by Commissioner Pullis, second by
Commissioner Silvernale to adjourn the meeting at 2:49p.m. Motion carried unanimously..
ATTEST:S� 4,
Matt Cheney, President
K
Neon Martinez, Secretary