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cp01-09-2007 (special) c0 JOINT HUC / CITY MEETING AGENDA January 9, 2007 4:00 pm Council Chambers 1. Approve Advertisement for Bids for Service Truck Replacement of Unit 643 2. "Utility Center"— Electric /GaslWater /Sewer • What does outcome based budgeting mean as it relates to the water and sewer utilities? 3. Natural Gas Customers Outside City Limits 4. Presentation of Operational and Financial Benchmarks 5. Discussion on the Following Items: • Alternative Energy • Tree Power Program — uses of money • Highway 7 Project in 2007 • Update on CIP Program • Update on Gas Pipeline Litigation and Condemnations • Update on Gas Purchase Program • Update on Big Stone II • Update on Underground Conversions Advertisement for Bids for Service Truck Replacement of Unit 643 Hutchinson Utilities Commission Hutchinson, Minnesota Notice is hereby given that the Hutchinson Utilities Commission of the City of Hutchinson, Hutchinson, Minnesota, hereinafter referred to as the Owner, will receive sealed Bids at the Hutchinson Utilities office until 11:00 a.m. on the 26 day of January 2007, and will publicly open and read aloud such Bids on the following equipment: " Service Truck Replacement of Unit 643" Proposals shall be properly endorsed and delivered in an envelope marked "Service Truck Replacement of Unit 643" and shall be addressed to: Hutchinson Utilities Commission of the City of Hutchinson, 225 Michigan Street SE, Hutchinson, Minnesota 55350. All proposals shall be submitted in duplicate on the Bidder's own letterhead in facsimile of the Proposal Form enclosed in the Specifications, or by utilizing the Proposal Form enclosed with the Specifications by typing the official name of the Bidder at the top of the form. No Bidder may withdraw his Bid or Proposal for a Period of thirty (30) days after date of opening of Bids. At the aforementioned time and place, or at such latertime and Place as the Owner then may fix, the Owner will act upon Proposals received and with its sole discretion may award Contract(s) for the furnishing of said equipment. Specifications and Plans are available at the Office of the Hutchinson Utilities, 225 Michigan Street, Hutchinson, Minnesota 55350. 0 C ) The Hutchinson Utilities Commission of the City of Hutchinson, Hutchinson, Minnesota reserves the right to reject any and all bids, or bid irregularities. , President 0 Date ATTESTED Secretary 0 0 Date (1) RESOLUTION 151 Adopted August 25, 1996 RESOLUTION OF HUTCHINSON UTILITIES COMMISSION CITY OF HUTCHINSON BE IT RESOLVED, by the Hutchinson Utilities Commission of the City of Hutchinson, Minnesota, that said commission will not provide new natural gas services outside the Hutchinson city limits after August 26, 1996; said Commission will continue to provide natural gas service outside the Hutchinson city limits if service was installed before August 26, 1996. Roger Gilmer, Secretary ATTEST: G. P. Cornell, President • • 302 Cal • Fin ancial/Oaerational Performance Metrics — reviewed monthly Positive Cash Flow —Both Combined Income Statement and Combined Balance Sheet • This is a measurement of how well Utilities Staff manages the budget. This should be reviewed monthly. Realistic cash flow numbers are established at budget time between the Utility Commissioners and Staff of HUC. Gross Margin— Electric Income Statement; Gas Income Statement Electric —this calculation is performed to monitor power acquisition expenses to total revenue. This should be calculated at budget time, and should also be reviewed monthly. Gas—this calculation is performed to monitor gas acquisition expenses to total revenue. This should be calculated at budget time, and should also be reviewed monthly. Operating Income per Revenue Dollar— Electric Income Statement; Gas Income Statement • Electric —this calculation is performed to monitor total operation expenses to total operating revenue. This should be calculated at budget time, and should also be reviewed monthly. • • Gas— this calculation is performed to monitor total operation expenses to total operating revenue. This should be calculated at budget time, and should also be reviewed monthly. Net Income per Revenue Dollar — Electric Income Statement; Gas Income Statement • Electrio -this calculation is performed to monitor total operating and non- operating expenses to total operating and non - operating revenue. This should be calculated at budget time, and should also be reviewed monthly. • Gas— this calculation is performed to monitor total operating and non - operating expenses to total operating and non - operating revenue. This should be calculated at budget time, and should also be reviewed monthly. Current Ratio — Combined Utilities Balance Sheet This benchmark is a measure of the utilities short-term liquidity, that is the ability to pay its bills. This ratio takes a snapshot of the utilities liquidity at a point in time and will vary considerably at other times during the year. This benchmark is useful when establishing a cash management policy. This should be reviewed monthly. • (1) Financial/ Operational Performance Metrics — reviewed annually RONA — Electric Income Statement to Net Electric Utility Assets; Gas Income Statement to Net Gas Utility Assets — useful on an annual basis. This benchmark reflects if rates are sufficiently set. This benchmark should be used with Cash Flow to properly identify if rate increases /decreases are needed. This should be reviewed annually. Revenue (by rate class) per KWHR —this benchmark examines rates of comparable utilities. This should be reviewed annually. Revenue (by rate class) per CF— this benchmark examines rates of comparable utilities. This should be reviewed annually. Debt to Total Assets — Combined Utilities Balance Sheet This benchmark measures the utilities ability to meet its current and long -term liabilities based on the availability of assets. This should be reviewed annually, and also prior to issuing debt. E 0 �4� • W/o Transport. Rev. With Transport Rev. 0 Cash Flow Combined Utilities -2006 Month Year to Date January $ (115,547.50) $ (115,547.50) -- February $ 999,497.53 $ 883,950.03 March $ 299,443.29 $ 1,183,393.32 April $ 464,930.18 $ 1,648,323.50 May $ 290,107.72 $ 1,938,431.22 June $ 153,961.78 $ 2,092,393.00 July $ 512,708.57 $ 2,605,101.57 August $ (699,405.88) $ 1,905,695.69 September $ 758,708.52 $ 2,664,404.21 October $ (308,069.99) $ 2,356,334.22 November $ August $ December $ 30.8% $ Budgeted-2006 25.7% 39.8% $ 1,068,000.00 • W/o Transport. Rev. With Transport Rev. 0 Gross Marain(Cost of Goods Sold) Month - Electric Year to Date - Electric Month -Gas Year to Date -Gas January 25.2% 25.2% 23.0% 22.7% February 29.7% 27.4% 26.0% 24.1% March 23.1% 26.0% 34.2% 27.0% April 29.3% 26.8% 37.5% 28.5% May 28.9% 27.2% 32.5% 28.9% June 28.1% 27.4% 36.4% 29.5% July 16.0% 25.2% 43.6% 30.4% August 29.0% 25.9% 36.2% 30.8% September 24.5% 25.7% 39.8% 31.5% October 27.3% 25.9% 41.9% 32.4% November December Electric -End of Year Gas -End of Year Budgeted -2006 26% 15% 26% • W/o Transport. Rev. With Transport Rev. 0 Electric -End of Year Gas -End of Year 7.9% 15% Month -- Electric Y ear to Date - Electric Month -Gas Year to Date -Gas January 6.1% 6.1% 16.5% 16.5% February 10.1% 8.1% 17.7% 17.1% March 2.4% 6.1% 24.7% 19.4% April 7.0% 6.3% 22.2% 19.8% May 10.8% 7.3% 15.5% 19.4% June 10.4% 7.9% 14.8% 18.9x/, July 2.0% 6.8% 21.3% 19.1% August 16.0% 8.4% 16.0% 18.9% September 5.7% 8.1% 22.5% 19.2% October 9.1% 8.2% 29.4% 20.1% Electric -End of Year Gas -End of Year 7.9% 15% Electric -End of Year Gas -End of Year 5% 5% 7T 0 • 0 Month - Electric Year to Date - Electric Month -Gas Year to Date -Gas January 3.5% 3.5% 16.2% 16.2% February 7.3% 5.4% 11.1% 13.9% March -0.4% 3.4% 17.6% 15.0% April 4.5% 3.7% 11.4% 14.4% May 8.4% 4.7% 1.3% 13.0% June 8.3% 5.4% -0.7% 11.7% July 0.0% 4.4% 4.2% 11.2% August 29.0% 9.4% 0.0% 10.3% September 3.6% 8.8% 9.1% 10.2% October 6.6% 8.6% 19.4% 11.1% Electric -End of Year Gas -End of Year 5% 5% 7T 0 • 0 Current Ratio--A hi nu m ber is better, data is throu 2005, 2006 is projected—this is a measure of a utility to pay its bills.. Flu c is addressin this b increasin Its level of cash. 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 050 1 0 Curre Ratio I 'OP '(P rp lzp r�5 rp 1P re R rp 0 Noe In FW.2W6anb eYG2tralvn(W wu Wp4JwE for WN Vw NeIUeIGYUd Ebdw VYI6W In Jam,vY 20W,O N.luml Gas D'iman bemmere po bk fm III the N P it ftyrom Wft ppAm. In January 2008, tre Eb DN be9Y 46636 a urnn bn dIuWgYpm*wAb41,1W.WB amu*. TIY h*Wl Sbkwmmnd*WS e1 Via Pit pwWIL]Ya18 po" TM wrspoNWnmp.lwewloWtl im the C nIe NYdae . As W Wemm0npm0e.d'.m mmaban eW.w.04617 mll.ndwNq tlwbW W dNe fwW YI01nrYbl.aN IpY4wn%lfud ({}60.000) Nsxalbvibrw .nw9(ammrou.Wwwm(mbWhLle.I.WbaN rnYY2YYlaW. • sv.+IVlmOrewu.w.dl. lam WMrYbYlwmw YaWna4 W0bm1Y 91a0wfmbtllaO47WYYa0450{�Mad NPWt 1MCa31Ylmnbtlr Gyw46pYw6 Yba4HwSY46u5,wIlMYfmPYAT, Summaw 2007 Budoet 61aaYb aY aelefYla6 2pc6 ssp{ ]pui Errlm.rl Mbld 611maM W M i fayN � .S11 wa OPEMTING REVENUES YA62. wm 26ABfAYAO 6 1sA M= L 19346.71= 4 YA62MW i 4ON4.#I A0 Las.: CedgGWW 2..6063 %.46 21.tYA10T1 610.0T).460W £ 04620 =A LIPMLOB1.M 601.80.8019 Ob.- OpeaNg R.ww. "1,761.31 916.00.0 L 1.]6].0%46 L tAWA I W i 1.00.4x49 6 SA1f,0WA9 O.ft Ea 6.04603)141 6bY.i]T.Ot i 1.m..4"48 i siYly p6 i B.H0.]61.N 1 0` 505=246 Iwwn.lmn Opw.Hwm 2.4]].1].1 2,tYA67m ;46%461.4 1.46.16.0 i fA46.9YA1 i 3AYA" °wa.4ro Ymme %a0° 10.10% ?AM 111 f 10.416E IxT" ll 0 OOwrlm6n.(M) f 060W.46 $ 7U=W i MW(A6 L IWAWM S 1.1T0]IT4I L 02k46BA0 IaasWAmp0 g0.b1 S 61M12 f - f mWWIJb f 1111 IMM f I'lux1Ai 6 IAW.16135 Com4uV nb Cpy- Ib°evnY L6AbN i - i - i - i - L f Cowi6ucnb ClP- b2W716bi.nopwaYp eapare+ I' s 716.=.80 i s 906.662.60 i s 1.=.176M i Nm I.rr. $ 3W 201,6 1 6261 M I 421G.W7.07 S f ldlolnlmdwroi CwJrWUw�b Ciy- i'200]bPSymxYNYwgIwbCRY f 116,bIId0 3 7MM1.11 $ 3OG661.i0 S 561.06.96 f 1,042,170.0 f tAn,161.i6 C..buunb CkHn Pry b' -Y Vjmuv(.�IFW wS kW) i - 1 1261P2.05 S i i 6 1262 @W S 716.3 =.W f 600.462= i 061.4x46 L 1.01.174= Ta.IPiLO'f i 666.61046 f lomA x`l OI) e- C..WJI (dxia 6Wtittr -Lgpl s L W.00 s 4467.0 f 1 M s W D.00 Faaaf I1uronRmiucm 17 0 . 1b i 1],af0.10 X. 6 ] W.W £ 1.01.60 f 16.305AW = 10. 11%, 6 M1}0.0 i M W,WOW i- S.elicslT S s NA11.7I f 6MW.m $ 4.31%0 $ 11.30= * W141.0 f 12000.7 I Tree Pmrtig i - L 2z.W.W i i 7.300.0 i f 20=0.0 ToalolWr DpnWlWnnc S IwM1.p f 110A46W f 6A46A6 i K.Wx(Q f INAW. L 1R.Ww Taal Pnr.nux �f,6� S 0=,321.31 $ w131046 f 014,601.96 f 4WA" s 10131MNA2 s I.MA77.01 AwnY flal. e...lflaU) S MAY.]20= L 46.144.174,0 i 39.174.WM i 46.46.71}.0 f 17,016.461.14 i 74AKWM RMOfRrum .4016 6.16% ]. 76% 9.7ft 4. Sn .Wn' Futle DIw.Yp Omm. s 46.40,46 >.46 i 1.656.16.68 0.46,91020 ala &Fun& 0pn Fiywwe i 2.19.6}.46 i 9069.00 x461.10.0 Clhw 6cesMF i BYA 16]0.00 T..I TnmlSwvwo/FUtla i 6 ,04).16.46 T A W 6 4.0.0669 TAY,cYZI U-&Fd C PWI E>y Wb s 2146,176= s 1 i 5AS1A DM Daa Servbefiwtla s - i 1.106.16130 i 2,136.14139 D6w U. &FU i i s TaalU a Fwala i 2.190}}6= 6Af32a34 6Af1.Mm C,nh Fbx 2w9B10. 1w0Y7.Y 1462862.06. Bpwnin,YYrRwmtm FwW: F4w.ENv nam Da pau6 s 246AW.w betllollmualNaFW $ IW.99B.m Pab 6YEYCa6on FUde 6 1,1W.00.W B..laa.q Pry F" $ 216.0010.0 TWIfleWilydFWn S 1,6 MM 1.TMFivWbYYrCWA'wYN.W u.M61YWR Be0'wbg V®rCW In BaNjCaM awYEM bruw7: . S 9.6000ww lla .sp6q.FwYFJOUIabnnilpMbpMivgW Ta.l CaMrtB.pin�hb qY.v 5,180.0000 lwma um b.I.W.. Gu0 Fbw 2W] 1.96206206 Taal c..her 6 gY.v 7,462046.46 2bW6Yb14iY1�yYM .1/tlW.tl6661w11�11YYd fuki EN Vsar Remba.9 FYN.: MM WqW W OubO WYLryvYW].Y9 FlIU. EWa�WxiaN DerebWnw f - mIWW1olYYa11.MY9YbFW KYYrW Y% M14bI1nu.W FUk S 10.0.0 0aaa54aalYYaNYY]'. Bwdantl lmx.d PaymM Fme £ =0.000.0 EW Year CaM In Be CnnM1anYbkfwuetircJiga relesuE. fuN.' BTt .06 Noe In FW.2W6anb eYG2tralvn(W wu Wp4JwE for WN Vw NeIUeIGYUd Ebdw VYI6W In Jam,vY 20W,O N.luml Gas D'iman bemmere po bk fm III the N P it ftyrom Wft ppAm. In January 2008, tre Eb DN be9Y 46636 a urnn bn dIuWgYpm*wAb41,1W.WB amu*. TIY h*Wl Sbkwmmnd*WS e1 Via Pit pwWIL]Ya18 po" TM wrspoNWnmp.lwewloWtl im the C nIe NYdae . As W Wemm0npm0e.d'.m mmaban eW.w.04617 mll.ndwNq tlwbW W dNe fwW YI01nrYbl.aN IpY4wn%lfud ({}60.000) Nsxalbvibrw .nw9(ammrou.Wwwm(mbWhLle.I.WbaN rnYY2YYlaW. • sv.+IVlmOrewu.w.dl. lam WMrYbYlwmw YaWna4 W0bm1Y 91a0wfmbtllaO47WYYa0450{�Mad NPWt 1MCa31Ylmnbtlr Gyw46pYw6 Yba4HwSY46u5,wIlMYfmPYAT, Debt to Total Assets--a lower num bar is better. HUC is addressin thi's b raisin its level of cash, so we reduce our need of borrowin mone This ratio is a measure of utiltys abilit to meet its current and lon term 11abilifies based on its 13 assets. % 45% % 35% 30% 25% 20% 15% 10% 5% % 0 Debt to Total Ass gas r1m, r _tK �47 rN 'e O P N 'q rp Times Interest. Earned, a hi number -is better—in 2006 we will exceed the benchmark. This r . ago m eas ures the abi I j t of a utilit to cover Interest char and Is indicative of the safet mar to lenders. W F4 M41 i VLO A 0 M11 M 1■11mes Interest Fam N 5§1 ZIP $4,500,000.00 $4,OOOtGOO.00 $3,500,000-00 N NaWral Gas 1 .MEkecVlc I i $110500,000.00 $1700:01000-00 $5001000M 411 1999 2000 2dol 2002 2003 2004 2005 2006 2007 Forecast Budget $6 $5,0000000M $4,000,000.00 $3,0004000.00 $ZOM000-00 $1,000,000-00 s(1 t 000 0 000.00) Operatin Income Chart Year ku 0 Operatin Income Natural Gas ■0pemdn Income Electric 0 Fuel /Power Cost Adjustment Year 2006 L 0 Date Gas Electric Jan 2006 $.00099 $.00000 Feb 2006 $.00000 $.00000 Mar 2006 $.00000 $.00000 Apr 2006 $.00000 $.00000 May 2006 ($.00253) $.00000 June 2006 ($.00170) $.00000 July 2006 ($.00291)_ _ $.00000 Aug 2006 ($.00060) $.01062 Sept 2006 $.00000 $.00612 Oct 2006 $.00000 $.00000 Nov 2006 $.00000 $.00000 Dec 2006 $.00000 $.00000 (0) APPENDIX - Definitions System Average Interruption Frequency Index (Sustained Interruptions) — This is defined as the average number of times that a customer is interrupted during a specified time period. It is determined by dividing the total number of customers interrupted in a time period by the average number of customers served. The resulting unit is "interruptions per customer ". SAM = Total Number of Customer Interruptions Total Number of Customers Served System Average Interruption Duration Index — This is defined as the average interruption duration for customers served during a specified time period. It is determined by summing the customer - minutes off for each interruption during a specified time period and dividing the sum by the average number of customers saved during that period, the unit is minutes. Ibis index enables the utility to report how many minutes customers would have been out of service if all customers were out at one time. • SAIDI = E Customer Interruption Du Total Number of Customers Served C'nctomer Average Interruption Duratio — Ibis is defined as the average length of an interruption, lvdgbted by the number of customers affected, for customers interrupted durag a specific time period. h is calculated by summing the customer minutes off during each interruption in the time period and dividing this sum by the number of customers expmiendng one or more sustained interruptions during the timepe nod. The resulting unit is minutes. The index enables utilities to report the average duration of a customer outage for trace customas affected CAIDI = I Customer Interruption Du Total Number of Customer Inte"Vdons E Page 10 of 11 ( 9 • • HUC Reliability Statistics for 2006 Event Event ID 1 111 2 113 3 114 4 124 5 125 6 127 7 128 8 131 9 134 10 _ 136 11 135 12 - 13 138 14 - 15 139 16 179 17 181 18 184 19 - SAIFI = Customers Interrupted Total Customers Served SAIDI = Customer Interruption Duration Total Customers Served CAIDI = Customer Interruption Duration Customers Interrupted Comparison to Public Utilities: Number of Outage Customer Customers Duration Interruption Interrupted (min) Duration 8 39 312 800 7 5600 10 155 1550 1 75 75 4 47 188 1 60 60 200 41 8200 10 105 1050 5 40 200 5 15 75 200 8 1600 100 43 4300 500 16 8000 800 14 11200 200 44 8800 5 90 450 1 20 20 1 53 53 100 60 6000 2951 57733 2951 0.42 I I interruptions per 7092 customer /year 57733 8.14 min /year 7092 57733 19.56 min 2951 2006 200 HUC Midwest Nation SAIFI = 0.42 0.85 3.24 SAIDI = 8.14 50.13 65.09 CAIDI = 19.56 55.64 65.91 CJ SAIFI SAIDI CAIDI 1.19 143.19 120.45 • (Q) 2,006 Investor Owned Reliability Goals Xcel Work Center SAIFI SAIDI CAIDI Metro East 1.19 121.14 101.39 Metro West 1.36 152.86 112.44 Northwest 1.06 106.03 99.68 Southeast 0.96 98.72 103.11 Interstate Work Center SAIFI SAIDI CAIDI Winnebago 0.91 65.27 72.04 — Albert Lea 0.93 67.75 73.17 Otter Tail Work Center SAIFI SAIDI CAIDI Bemidji 1.25 70 56 Crookston 1.55 80 52 Fergus Falls 1.35 80 59.3 Milbank 2.1 115 55 Morris 1.55 90 58 Wahpeton 1.6 90 56.3 MN Power SAIFI SAIDI CAIDI 1.19 143.19 120.45 • (Q)