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10-26-2005 HUCM Regular Meeting October 26, 2005 Members present: President Craig Lenz; Vice President Donald Walser; Secretary David Wetterling; Commissioner Paul Ackland; Commissioner Steven Cook; General Manager Michael Kumm; Attorney Marc Sebora President Lenz called the meeting to order at 3:00 pm. Commissioner Ackland made a motion to approve the minutes of the September 28, 2005 Regular Meeting with a change to the first page, seventh paragraph - making it two paragraphs instead of one. Commissioner Cook seconded the motion and it passed unanimously. R W Beck gave a preliminary presentation on the Cost of Service Study. Four steps are taken to achieve their goals: . Develop Projected Operating Results at Existing Rates This step is completed. Projected a 5-year forecast of cash flow for both the electric and gas divisions. . Analyze Cost-of-Service Will look at each class and compare cost of each class as compared to revenue of that class. . Unbundle Cost Categories Will look at how the costs are being collected - customer charge & energy charge. . Design New Rates Immediately following next month's regular meeting which is at 3:00 pm on November 30,2005, we will hold a joint meeting with City Council at 4:00 pm to discuss the Cost of Service Study. Secretary Wetterling made a motion to hold a Special Commissioners Meeting on November 14, 2005, at 3:00 p.m. to discuss the Cost of Service Study. Vice President Walser seconded the motion and it passed unanimously. Final presentation of the Cost of Service Study will be at the November Regular Commissioners meeting. Commissioner Cook will contact City Council members regarding the joint meeting on November 30, 2005 at 4:00 pm. Budgeted figures were used in the preliminary cost of service study. R W Beck will analyze the actual numbers in the operating revenue and in operating expense. A change in the formula to the cost adjustment clause for both the electric and gas divisions will be looked at and discussed with the cost of service study. R W Beck was asked to combine the two divisions in the summary view of the finalized report. Discussion regarding Contribution to the City of Hutchinson was tabled until the November regular meeting. Will set up a committee consisting of Commissioner Ackland, Commissioner Cook and Manager Kumm to work with City staff. Commissioner Cook made a motion to table the discussion regarding contribution to City of Hutchinson until November regular meeting. Secretary Wetterling seconded the motion and it passed unanimously. A check for Aspen Equipment was a budgeted item in the gas division to service the body of the welding truck. Checks for professional services are pipeline related ie: attorney's fees, testimony. One is for professional services regarding the agreement with Utilities Plus. Registration fees are for six employees who are either in training or have completed first-line supervision training. Manager Kumm will check into payment being made to "Who's Who Directories". The MISO wire transfers are for purchasing power. Commissioner Ackland made a motion to ratify the payment of bills in the amount of $3,272,016.39 (detailed listing in payable book). Secretary Wetterling seconded the motion and it passed unanimously. Manager Kumm reported that a part in the business plan will include Power Supply Planning and Gas Supply Planning. This will be a strategic effort to reduce purchasing power costs. Financial and operational benchmarks are moving in the right direction. After discussion Vice President Walser made a motion to approve the financial statement and budget year to date. Commissioner Ackland seconded the motion and it passed unanimously. All the issues have been resolved regarding the meter reader contract that was tabled from last month. Attorney Sebora has reviewed the contracts and it will be an on-going contract. The contract will pay meter reader $.40 per meter for route #10 as this route is the industrial area and requires more driving from one location to another. We will be working with the meter reader to try and simplify this route. The contract will pay $.30 per meter for all remaining routes. Commissioner Cook made a motion to approve the meter reader labor contracts/agreements with AnneMarie Dammann - two contracts: electric and gas meters; and water meters. Vice President Walser seconded the motion and it passed unanimously. Manager Kumm explained that McLeod Coop is asking to absolve their June 7, 1994 Service Territory Agreement. Currently McLeod Coop receives $800 for every parcel that is annexed into the City. They desire to absolve the contract then enter into a new contract and increase that compensation amount. In re-negotiating a new contract we would ask for assistance from Julie Wischnauk, Director of City Building, Planning & Zoning and Attorney Sebora Secretary Wetterling made a motion giving authorization to Mike Kumm, Julie Wischnauk and Marc Sebora to negotiate new compensation terms to absolve June 7, 1994 Service Territory Agreement with McLeod Cooperative Power Association. Commissioner Cook seconded the motion and it passed unanimously. This agreement might need to go before the City Council. Commissioner Ackland asked that Commissioner Cook be involved in the contract negotiations with McLeod Cooperative. A motion was made by Secretary Wetterling to amend the previous motion and to add Commissioner Cook to the negotiations. Commissioner Cook seconded the motion and it passed unanimously. Manager Kumm explained that New Ulm has asked for a proposal for additional transmission capacity from HUC as well as from Northern Natural Gas. It would be for a 5-year term and any cost for construction and labor would be the responsibility of New Ulm. Revenue for us would be between $500,000 to $700,000 a year. Because the Court of Appeals is deciding if the PUC can regulate HUC's pipeline, New Ulm needs to be aware that HUC does not want to be used as a party against NNG. This is not a problem for the PUC, as their case is already set, facts are in and this proposal is not a part of their decision to regulate HUC pipeline. After further discussion, Vice President Walser made a motion giving authorization for staff to prepare a proposal for New Ulm regarding additional natural gas transportation capacity. Secretary Wetterling seconded the motion and it passed unanimously. Don Merkins reported that a rotor has been sent to Salina, Kansas for repair. We do have a spare rotor that enabled unit #7 to continue to run. The repaired rotor would then be our spare. Commissioner Ackland made a motion to approve requisition #001496 to Turbine Specialties to repair unit #7 turbocharger rotor - reblading for $14,618.95. Commissioner Cook seconded the motion and it passed unanimously. Manager Kumm reported that the BP Marketing Agreement expires December 31, 2005. Re-negotiating a new agreement will be on the November agenda. Division reports: Electric - Don Merkins Electric services installed in the Summerset Development with phone and cable installed at the same time. TransCanada will do bore scope inspections on the LM6000. Business - Jan Sifferath Insurance Planners renewal policies will be on the November agenda. Berkley Risk health insurance policy changes will be on the November agenda. A bag of goodies will be given to each second grader in Hutchinson to promote energy conservation awareness. 2006 CIP programs will be finalized soon and presentation given. 40,000' of wire will be an agenda item in the near future. Gas Division - John Webster We will watch market and when it turns around we will buy. Construction is going well. Legal update: None Commissioner Ackland asked if the PUC could itemize their bills so we could see exactly what we're being billed for. Manager Kumm will check into this. Old Business Change made: added: 'if the energy conservation fund will make a payment for underground conversions as it has done in the past. That will not be a part of the CIP Program for 2006.' See November 30,2005 minutes. ~ Commissioner Cook asked about the energy conservation fund. There's about $100,000 in that fund that will be applied to rate classes in general. New Business None Secretary Wetterling made a motion to adjourn at 5:15 pm. Commissioner Cook seconded the motion and it passed unanimously. David Wetterling, Secretary ATTEST Craig Lenz, President arl Regular Meeting October 26, 2005 Members present: President Craig Lenz; Vice President Donald Walser; Secretary David Wetterling; Commissioner Paul Ackland; Commissioner Steven Cook; General Manager Michael Kumm; Attorney Marc Sebora. President Lenz called the meeting to order at 3:00 pm. Commissioner Ackland made a motion to approve the minutes of the September 28, 2005 Regular Meeting with a change to the first page, seventh paragraph — making it two paragraphs instead of one. Commissioner Cook seconded the motion and it passed unanimously. R W Beck gave a preliminary presentation on the Cost of Service Study. Four steps are taken to achieve their goals: • Develop Projected Operating Results at Existing Rates This step is completed. Projected a 5 -year forecast of cash flow for both the electric and gas divisions. • Analyze Cost -of- Service Will look at each class and compare cost of each class as compared to revenue of that class. • Unbundle Cost Categories Will look at how the costs are being collected — customer charge & energy charge. • Design New Rates Immediately following next month's regular meeting which is at 3:00 pm on November 30, 2005, we will hold a joint meeting with City Council at 4:00 pm to discuss the Cost of Service Study. Secretary Wetterling made a motion to hold a Special Commissioners Meeting on November 14, 2005, at 3:00 p.m. to discuss the Cost of Service Study. Vice President Walser seconded the motion and it passed unanimously. Final presentation of the Cost of Service Study will be at the November Regular Commissioners meeting. Commissioner Cook will contact City Council members regarding the joint meeting on November 30, 2005 at 4:00 pm. Budgeted figures were used in the preliminary cost of service study. R W Beck will analyze the actual numbers in the operating revenue and in operating expense. A change in the formula to the cost adjustment clause for both the electric and gas divisions will be looked at and discussed with the cost of service study. R W Beck was asked to combine the two divisions in the summary view of the finalized report. Discussion regarding Contribution to the City of Hutchinson was tabled until the November regular meeting. Will set up a committee consisting of Commissioner Ackland, Commissioner Cook and Manager Kumm to work with City staff. Commissioner Cook made a motion to table the discussion regarding contribution to City of Hutchinson until November regular meeting. Secretary Wetterling seconded the motion and it passed unanimously. A check for Aspen Equipment was a budgeted item in the gas division to service the body of the welding truck. Checks for professional services are pipeline related ie: attorney's fees, testimony. One is for professional services regarding the agreement with Utilities Plus. Registration fees are for six employees who are either in training or have completed first -line supervision training. Manager Kumm will check into payment being made to "Who's Who Directories ". The MISO wire transfers are for purchasing power. Commissioner Ackland made a motion to ratify the payment of bills in the amount of $3,272,016.39 (detailed listing in payable book). Secretary Wetterling seconded the motion and it passed unanimously. Manager Kumm reported that a part in the business plan will include Power Supply Planning and Gas Supply Planning. This will be a strategic effort to reduce purchasing power costs. Financial and operational benchmarks are moving in the right direction. After discussion Vice President Walser made a motion to approve the financial statement and budget year to date. Commissioner Ackland seconded the motion and it passed unanimously. All the issues have been resolved regarding the meter reader contract that was tabled from last month. Attorney Sebora has reviewed the contracts and it will be an on -going contract. The contract will pay meter reader $.40 per meter for route #10 as this route is the industrial area and requires more driving from one location to another. We will be working with the meter reader to try and simplify this route. The contract will pay $.30 per meter for all remaining routes. Commissioner Cook made a motion to approve the meter reader labor contracts /agreements with AnneMarie Dammann — two contracts: electric and gas meters; and water meters. Vice President Walser seconded the motion and it passed unanimously. Manager Kumm explained that McLeod Coop is asking to absolve their June 7, 1994 Service Territory Agreement. Currently McLeod Coop receives $800 for every parcel that is annexed into the City. They desire to absolve the contract then enter into a new contract and increase that compensation amount. In re- negotiating a new contract we would ask for assistance from Julie Wischnauk, Director of City Building, Planning & Zoning and Attorney Sebora. Secretary Wetterling made a motion giving authorization to Mike Kumm, Julie Wischnauk and Marc Sebora to negotiate new compensation WE terms to absolve June 7, 1994 Service Territory Agreement with McLeod Cooperative Power Association. Commissioner Cook seconded the motion and it passed unanimously. This agreement might need to go before the City Council. Commissioner Ackland asked that Commissioner Cook be involved in the contract negotiations with McLeod Cooperative. A motion was made by Secretary Wetterling to amend the previous motion and to add Commissioner Cook to the negotiations. Commissioner Cook seconded the motion and it passed unanimously. Manager Kumm explained that New Ulm has asked for a proposal for additional transmission capacity from HUC as well as from Northern Natural Gas. It would be for a 5 -year term and any cost for construction and labor would be the responsibility of New Ulm. Revenue for us would be between $500,000 to $700,000 a year. Because the Court of Appeals is deciding if the PUC can regulate HUC's pipeline, New Ulm needs to be aware that HUC does not want to be used as a party against NNG. This is not a problem for the PUC, as their case is already set, facts are in and this proposal is not a part of their decision to regulate HUC pipeline. After further discussion, Vice President Walser made a motion giving authorization for staff to prepare a proposal for New Ulm regarding additional natural gas transportation capacity. Secretary Wetterling seconded the motion and it passed unanimously. Don Merkins reported that a rotor has been sent to Salina, Kansas for repair. We do have a spare rotor that enabled unit #7 to continue to run. The repaired rotor would then be our spare. Commissioner Ackland made a motion to approve requisition #001496 to Turbine Specialties to repair unit #7 turbocharger rotor — reblading for $14,618.95. Commissioner Cook seconded the motion and it passed unanimously. Manager Kumm reported that the BP Marketing Agreement expires December 31, 2005. Re- negotiating a new agreement will be on the November agenda. Division reports: Electric — Don Merkins Electric services installed in the Summerset Development with phone and cable installed at the same time. TransCanada will do bore scope inspections on the LM6000. Business — Jan Sifferath Insurance Planners renewal policies will be on the November agenda. Berkley Risk health insurance policy changes will be on the November agenda. A bag of goodies will be given to each second grader in Hutchinson to promote energy conservation awareness. 2006 CIP programs will be finalized soon and presentation given. 40,000' of wire will be an agenda item in the near future. 30 Gas Division — John Webster We will watch market and when it turns around we will buy. Construction is going well. Legal update: None Commissioner Ackland asked if the PUC could itemize their bills so we could see exactly what we're being billed for. Manager Kumm will check into this. Old Business A Commissioner Cook asked . There's about $100,000 in that fund that will be applied to rate classes in general. Change made: added 'if the energy conservation fund will make New Business a payment for underground conversions as it has done in the past. None That will not be a part of the CIP Program for 2006.' See November 30, 2005 minutes Secretary Wetterling made a motion to adjourn at 5:15 pm seconded the motion and it passed unanimously. Commissioner ,/) Cook ecretary 1 1 rn � rmlpL & o v o o n C n cr C '.. CD_. A b z o V O N O � n cn 'r'' CD � � t 1 0 ----7 1 1 J 1 �J [1. INDEPENDENT CONTRACTOR AGREEMENT THIS AGREEMENT is made by and between Hutchinson Utilities Commission, (hereinafter "HUC "), 225 Michigan St, Hutchinson, MN 55350 and Anne Marie Dammann, 52493 County RD 11, Buffalo Lake, MN 55314 (hereinafter "Contractor ") on the following terms and conditions. 1. INDEPENDENT CONTRACTOR STATUS: The undersigned recognizes that he /she has been retained as an independent Contractor by HUC for the purpose of reading meters. The Contractor recognizes and acknowledges that he /she is not an employee of HUC. 2. TASK: The Contractor acknowledges that he /she has been retained to perform the task of reading electric and natural gas meters for the HUC. This Agreement shall not cover any other or further tasks undertaken by Contractor except as provided in writing and executed by both parties. 3. FEE: The Contractor shall be paid a fee of $0.40 per meter read each month for route #10. The Contractor shall be paid a fee of $0.30 per meter read each month for all remaining routes. 4. HOURS: The Contractor shall set his/her own hours and determine the number of meters read. Contractor shall perform his/her work during the date(s) set forth in Schedule "A ", which will be completed per designated route listing. Said schedule may, from time to time, be altered, amended or modified by HUC. 5. TERM: The Contractor or HUC may terminate, without cause, this Independent Contractor Agreement upon ninety (90) days written notice to the other party. 6. MISCELLANEOUS: Contractor shall provide his/her own transportation and gas. Contractor shall be entitled to utilize HUC meter reading equipment. HUC shall provide I. D. patches and an I. D. badge. HUC shall also provide contractor with identification labels for their vehicles. This agreement may be reviewed on a yearly basis to determine if any changes are needed. Contractor acknowledges that he /she is not an employee of HUC, and therefore, is not entitled to benefits, including but not limited to, vacation pay, sick leave, health insurance, retirement benefits, worker's compensation or unemployment benefits Contractor also acknowledges that he /she is responsible to make sure all meters are read in the time allotted. If contractor cannot complete the task in the time allotted it is the contractors responsibility to have resources available complete this task. 7. INDEMNIFICATION CLAUSE: Contractor hereby agrees to indemnify, defend and hold harmless the HUC, and the City of Hutchinson, from any and all claims of action or damages which arise out of the acts of the Contractor. Dated: /� ,� �° �S HUTCHINSON UTILITIES COMMISSION BY: _ S� �U ) - l� Its: ( Dated: `© 2,3 J 06— AAA in R�1� 1111119UP( )A for L INDEPENDENT CONTRACTOR AGREEMENT THIS AGREEMENT is made by and between Hutchinson Utilities Commission, (hereinafter "HUC "), 225 Michigan St, Hutchinson, MN 55350 and Anne Marie Dammann, 52493 County RD 11, Buffalo Lake, MN 55314 (hereinafter "Contractor ") on the following terms and conditions. 1. INDEPENDENT CONTRACTOR STATUS: The undersigned recognizes that he /she has been retained as an independent Contractor by HUC for the purpose of reading meters. The Contractor recognizes and acknowledges that he /she is not an employee of HUC. 2. TASK: The Contractor acknowledges that he /she has been retained to perform the task of reading water meters for the HUC. This Agreement shall not cover any other or further tasks undertaken by Contractor except as provided in writing and executed by both parties. 3. FEE: The Contractor shall be paid a fee of $0.40 per meter read each month for route #10. The Contractor shall be paid a fee of $0.30 per meter read each month for all remaining routes. 4. HOURS: The Contractor shall set his/her own hours and determine the number of meters read. Contractor shall perform his/her work during the date(s) set forth in Schedule "A ", which will be completed per designated route listing. Said schedule may, from time to time, be altered, amended or modified by HUC. 5. TERM: The Contractor or HUC may terminate, without cause, this Independent Contractor Agreement upon ninety (90) days written notice to the other party. 6. MISCELLANEOUS: Contractor shall provide his/her own transportation and gas. Contractor shall be entitled to utilize HUC meter reading equipment. HUC shall provide I. D. patches and an I. D. badge. HUC shall also provide contractor with identification labels for their vehicles. This agreement may be reviewed on a yearly basis to determine if any changes are needed. Contractor acknowledges that he /she is not an employee of HUC, and therefore, is not entitled to benefits, including but not limited to, vacation pay, sick leave, health insurance, retirement benefits, worker's compensation or unemployment benefits Contractor also acknowledges that he /she is responsible to make sure all meters are read in the time allotted. If contractor cannot complete the task in the time allotted it is the contractors responsibility to have resources available complete this task. 7. INDEMNIFICATION CLAUSE: Contractor hereby agrees to indemnify, defend and hold harmless the HUC, and the City of Hutchinson, from any and all claims of action or damages which arise out of the acts of the Contractor. 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