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12-28-2005 HUCMRegular Meeting December 28, 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 3:03 pm. Secretary Wetterling made a motion to approve the minutes of the November 30, 2005 Regular Meeting with a change to the second page, eighth paragraph: Vice - President Walser commended them for the thorough presentation that was given and the gh+ e ,+ the ugh gyGGMP'eX, me�del that was applied. Commissioner Ackland seconded the motion and it passed unanimously. Commissioner Ackland made a motion to approve the minutes of the December 12, 2005 Special Meeting with a change to third page, tenth paragraph: Commissioner Walser read the ruling from the City Charter on the process for a rate change. Commissioner Cook seconded the motion and it passed unanimously. Commissioner Cook asked about the payment to RW Beck for professional services and the payment to Wayne Novotny. Manager Kumm explained the payment to RW Beck is for the rate study and the payment to Mr. Novotny is payment for services for the commissioner on the pipeline. Commissioner Ackland asked about the payment to Lindquist & Vennum's professional services. This is for transmission work and it is our share of the payment as we are part of a larger group. President Lenz asked about the payment to City for lawn services. This is billed once a year and covers all the maintenance for our lawns ie: mulch, watering, weeding. Secretary Walser made a motion to ratify the payment of bills in the amount of $3,340,098.14 (detailed listing in payable book). Secretary Wetterling seconded the motion and it passed unanimously. Commissioner Ackland made a motion to close the meeting to discuss condemnation hearings /Public Utilities Commission. Commissioner Wetterling seconded the motion and it passed unanimously. The meeting was closed at 3:13 pm. Commissioner Ackland made a motion to move from closed meeting back to open meeting. Commissioner Cook seconded the motion and it passed unanimously. The meeting was reopened at 5:05 pm. Mark Schnobrich, City Forester and members of the Tree Board were welcomed to the meeting. Mark distributed a printout of the 2005 Energy Tree Planting Report summarizing the savings in energy these trees have provided and will continue to provide our customers in the future. Mark thanked the Commission Board for the 13 years of contributions and even though there will be no contribution for 2006, if the opportunity should arise in the future they would appreciate any consideration for 2007. Commissioner Cook asked if the Tree Board have had conversations with the State on the Utilities funding the program. Mark expressed that the State would not disallow the funding as long as it's not a large amount; they would rather see more direct savings for our customers. Manager Kumm expressed the worthiness of the program but it has been funded for 13 years and the 2006 CIP money has been applied to the various rate classes as per Roberta's presentation back in September of 2005 based on the direction given from the Commission Board. The program is managed the way the Commission Board chooses but modifications can be made. President Lenz asked if the funds for 2005 have been spent. Manager Kumm explained that not all the funds have been spent. Commissioner Cook acknowledges the benefits the trees have provided for the community. Commissioner Ackland asked how many trees had to be removed in 2005. Due to Dutch Elm disease, over 220 trees were lost in 2005. President Lenz expressed that he is an advocate of the program and will try to find some funds, if possible. The time to make any adjustments in 2006 CIP Program would be between March and August. Manager Kumm iterated that the program is run how the Commission Board wants to spend the money. We can make modifications as the Board wants. Commissioner Ackland mentioned that he had received calls from customers who were very happy with the appliance rebate program we ran and he heard from customers who were satisfied with the installation of new windows and doors. Commissioner Cook expressed the worthiness of the tree program and the other programs we have had in the past and questioned if there was room to do all of it. Mark thanked the Board for 13 years of funding and to keep the Tree Board in mind for future funding if it does become available. Manager Kumm explained the financial /operational performance metrics handout. Reviewed monthly would be: cash flow; gross margin; operating income per revenue dollar; net income per revenue dollar; and current ratio. Reviewed annually would be: RONA; revenue (by rate class) per KWHR; revenue (by rate class) per CF; and debt to total assets. After discussion the board agreed this overview of the financials should be a part of the packets each month. President Lenz asked if we obtained auditing quotes for our yearly audit. We did not go out for quotes this year, did not have the time. Secretary Wetterling questioned the medical insurance account. There was a delay in getting information from the hospital. Unfortunately there are still more claims out there. Vice President Walser made a motion to approve the financial statements and budget year to date, and financial /operations benchmarks. Secretary Wetterling seconded the motion and it passed unanimously. Secretary Wetterling made a motion to approve advertisement for bids for electric conductor for stock. Vice President Walser seconded the motion and it passed unanimously. Secretary Wetterling made a motion to approve the services addendum with BP Marketing.The natural gas services addendum is a supplement to the base contract for sale and purchase of natural gas between BP Canada Energy Marketing Corp and HUC. They will be using a piece of our pipeline for storage. Commissioner Ackland seconded the motion and it passed unanimously. Commissioner Cook asked if the engineering technician position is now included in the budget. Manager Kumm indicated that it is and he will be able to help with the easements. The Commission Board is very pleased with the format of the 2006 budget. Secretary Wetterling made a motion to approve the 2006 budget (tabled from December 12, 2005 special meeting). Commissioner Ackland seconded the motion and it passed unanimously. President Lenz asked if City Council ratified our rate change. Commissioner Cook explained that it was not on the agenda and that we need to notify City Council through a formal resolution and it will be on the January 2006 agenda. Secretary Wetterling made a motion to adopt a formal resolution to approve HUC rate change to go before the City Council's meeting on January 10, 2006. Commissioner Cook seconded the motion and it passed unanimously. Manager Kumm asked for approval of the compensation plan /performance review policy, as we have nothing in place to -date. Performance reviews will be done every calendar year. Commissioner Cook mentioned that City Council had just passed their classification plan at their last meeting, and Commissioner Cook has some questions he would like to talk to Manager Kumm about. Commissioner Ackland liked the plan, so in the event there is an issue with an employee we will have documentation of their performance. Commissioner Ackland made a motion to approve the 2006 compensation plan /performance review policy. Secretary Wetterling seconded the motion and it passed unanimously. Insurance renewals with Insurance Planners was tabled until the January 25, 2006 meeting. We have been assured that the League of Minnesota Cities Insurance Trust will have it ready for us by then. In the meantime we are insured. Commissioner Cook made a motion to table the approval of the insurance renewals with Insurance Planners until January 25, 2006. Secretary Wetterling seconded the motion and it passed unanimously. Manager Kumm delivered a power point presentation on the rate stabilization fund for the electric division and the natural gas division. The objective is to have the power cost adjustment clause and fuel cost adjustment clause be reduced to zero on a monthly basis. The base rate will increase so the adjustment clause will be less volatile. The fund would be established by June or July for the electric division and the fund for the natural gas division would be established a little sooner. The Commission Board was very pleased with the simplification of the presentation. Action on the implementation of the two funds will be an agenda item at the January 25, 2006 Commissioners meeting. Division Reports: Jan Sifferath — Business Auditors will be here the last week in January New meter technician will start January 3, 2006 John Webster — Gas Gas leak in the 700 block of Main St & Franklin St SW — poor construction from many years ago Mike Kumm — Electric Generating power in the downtown plant Attorney Sebora gave an update on the 457 Plan. A trustee will be appointed to the plan and that should be completed by January. Old Business: President Lenz was asked to assign a committee to develop a formula regarding the Contribution to City. Paul Ackland, Michael Kumm, Gary Plotz and Steve Cook will be on the committee. The formula will come before the Commission Board for approval before the June 2006 meeting. New Business: Dwight Bordson was welcomed as a new Commissioner to the Hutchinson Utilities Commission Board. Commissioner Ackland was presented with a plaque and congratulated for his ten years of loyal and dedicated service as a member of the Hutchinson Utilities Commission Board. Commission Ackland expressed his thankfulness to the Board and feels that HUC is in good shape with Michael Kumm as its Manager and leader. Vice President Walser made a motion to adjourn at 6:51 pm. Commissioner Ackland seconded the motion and it passed unanimously. ATTEST Craig Lenz, President David Wetterling, Secretary 10, Regular Meeting December 28, 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 3:03 pm. Secretary Wetterling made a motion to approve the minutes of the November 30, 2005 Regular Meeting with a change to the second page, eighth paragraph: Vice - President Walser commended them for the thorough presentation that was given . Commissioner Ackland seconded the motion and it passed unanimously. Commissioner Ackland made a motion to approve the minutes of the December 12, 2005 Special Meeting with a change to third page, tenth paragraph: Commissioner Walser read the ruling from the City Charter on the process for a rate change. Commissioner Cook seconded the motion and it passed unanimously. Commissioner Cook asked about the payment to RW Beck for professional services and the payment to Wayne Novotny. Manager Kumm explained the payment to RW Beck is for the rate study and the payment to Mr. Novotny is payment for services for the commissioner on the pipeline. Commissioner Ackland asked about the payment to Lindquist & Vennum's professional services. This is for transmission work and it is our share of the payment as we are part of a larger group. President Lenz asked about the payment to City for lawn services. This is billed once a year and covers all the maintenance for our lawns ie: mulch, watering, weeding. Secretary Walser made a motion to ratify the payment of bills in the amount of $3,340,098.14 (detailed listing in payable book). Secretary Wetterling seconded the motion and it passed unanimously. Commissioner Ackland made a motion to close the meeting to discuss condemnation hearings /Public Utilities Commission. Commissioner Wetterling seconded the motion and it passed unanimously. The meeting was closed at 3:13 pm. Commissioner Ackland made a motion to move from closed meeting back to open meeting. Commissioner Cook seconded the motion and it passed unanimously. The meeting was reopened at 5:05 pm. Mark Schnobrich, City Forester and members of the Tree Board were welcomed to the meeting. Mark distributed a printout of the 2005 Energy Tree Planting Report summarizing the savings in energy these trees have provided and will continue to provide our customers in the future. Mark thanked the Commission Board for the 13 years of contributions and even though there will be no contribution for 2006, if the opportunity should arise in the future they would appreciate any consideration for 2007. Commissioner Cook asked if the Tree Board have had conversations with the State on the Utilities funding the program. Mark expressed that the State would not disallow the funding as long as it's not a large amount; they would rather see more direct savings for our customers. Manager Kumm expressed the worthiness of the program but it has been funded for 13 years and the 2006 CIP money has been applied to the various rate classes as per Roberta's presentation back in September of 2005 based on the direction given from the Commission Board. The program is managed the way the Commission Board chooses but modifications can be made. President Lenz asked if the funds for 2005 have been spent. Manager Kumm explained that not all the funds have been spent. Commissioner Cook acknowledges the benefits the trees have provided for the community. Commissioner Ackland asked how many trees had to be removed in 2005. Due to Dutch Elm disease, over 220 trees were lost in 2005. President Lenz expressed that he is an advocate of the program and will try to find some funds, if possible. The time to make any adjustments in 2006 CIP Program would be between March and August. Manager Kumm iterated that the program is run how the Commission Board wants to spend the money. We can make modifications as the Board wants. Commissioner Ackland mentioned that he had received calls from customers who were very happy with the appliance rebate program we ran and he heard from customers who were satisfied with the installation of new windows and doors. Commissioner Cook expressed the worthiness of the tree program and the other programs we have had in the past and questioned if there was room to do all of it. Mark thanked the Board for 13 years of funding and to keep the Tree Board in mind for future funding if it does become available. 90 Manager Kumm explained the financial /operational performance metrics handout. Reviewed monthly would be: cash flow; gross margin; operating income per revenue dollar; net income per revenue dollar; and current ratio. Reviewed annually would be: RONA; revenue (by rate class) per KWHR; revenue (by rate class) per CF; and debt to total assets. After discussion the board agreed this overview of the financials should be a part of the packets each month. President Lenz asked if we obtained auditing quotes for our yearly audit. We did not go out for quotes this year, did not have the time. Secretary Wetterling questioned the medical insurance account. There was a delay in getting information from the hospital. Unfortunately there are still more claims out there. Vice President Walser made a motion to approve the financial statements and budget year to date, and financial /operations benchmarks. Secretary Wetterling seconded the motion and it passed unanimously. Secretary Wetterling made a motion to approve advertisement for bids for electric conductor for stock. Vice President Walser seconded the motion and it passed unanimously. Secretary Wetterling made a motion to approve the services addendum with BP Marketing.The natural gas services addendum is a supplement to the base contract for sale and purchase of natural gas between BP Canada Energy Marketing Corp and HUC. They will be using a piece of our pipeline for storage. Commissioner Ackland seconded the motion and it passed unanimously. Commissioner Cook asked if the engineering technician position is now included in the budget. Manager Kumm indicated that it is and he will be able to help with the easements. The Commission Board is very pleased with the format of the 2006 budget. Secretary Wetterling made a motion to approve the 2006 budget (tabled from December 12, 2005 special meeting). Commissioner Ackland seconded the motion and it passed unanimously. President Lenz asked if City Council ratified our rate change. Commissioner Cook explained that it was not on the agenda and that we need to notify City Council through a formal resolution and it will be on the January 2006 agenda. Secretary Wetterling made a motion to adopt a formal resolution to approve HUC rate change to go before the City Council's meeting on January 10, 2006. Commissioner Cook seconded the motion and it passed unanimously. Manager Kumm asked for approval of the compensation plan /performance review policy, as we have nothing in place to -date. Performance reviews will be done every calendar year. Commissioner Cook mentioned that City Council had just passed their classification plan at their last meeting, and Commissioner Cook has some questions he would like to talk to Manager Kumm about. Commissioner Ackland liked the plan, so in the event there is an issue with an employee we will have documentation of their performance. Commissioner Ackland made a motion to approve the 2006 compensation plan /performance review policy. Secretary Wetterling seconded the motion and it passed unanimously. Insurance renewals with Insurance Planners was tabled until the January 25, 2006 meeting. We have been assured that the League of Minnesota Cities Insurance Trust will have it ready for us by then. In the meantime we are insured. Commissioner Cook made a motion to table the approval of the insurance renewals with Insurance Planners until January 25, 2006. Secretary Wetterling seconded the motion and it passed unanimously. Manager Kumm delivered a power -point presentation on the rate stabilization fund for the electric division and the natural gas division. The objective is to have the power cost adjustment clause and fuel cost adjustment clause be reduced to zero on a monthly basis. The base rate will increase so the adjustment clause will be less volatile. The fund would be established by June or July for the electric division and the fund for the natural gas division would be established a little sooner. The Commission Board was very pleased with the simplification of the presentation. Action on the implementation of the two funds will be an agenda item at the January 25, 2006 Commissioners meeting. Division Reports: Jan Sifferath — Business Auditors will be here the last week in January New meter technician will start January 3, 2006 John Webster — Gas Gas leak in the 700 block of Main St & Franklin St SW — poor construction from many years ago Mike Kumm — Electric Generating power in the downtown plant Attorney Sebora gave an update on the 457 Plan. A trustee will be appointed to the plan and that should be completed by January. Old Business: President Lenz was asked to assign a committee to develop a formula regarding the Contribution to City. Paul Ackland, Michael Kumm, Gary Plotz and Steve Cook will be on the committee. The formula will come before the Commission Board for approval before the June 2006 meeting. New Business: Dwight Bordson was welcomed as a new Commissioner to the Hutchinson Utilities Commission Board. Commissioner Ackland was presented with a plaque and congratulated for his ten years of loyal and dedicated service as a member of the Hutchinson Utilities Commission Board. Commission Ackland expressed his thankfulness to the Board and feels that HUC is in good shape with Michael Kumm as its Manager and leader. Vice President Walser made a motion to adjourn at 6:51 pm. Commissioner Ackland seconded the motion and it passed unanimously. 1 ATTEST �I I David WetterTirdgg!Secretary Hutchinson Year 2005 Energy Tree Planting Report Sponsored by: Hutchinson Utilities Commission Hutchinson, Minnesota Summary The Year 2005 was the 13th season that trees have been planted for energy conservation in Hutchinson. Each tree that is planted is added to our tree inventory system, allowing us to monitor the trees over time. Replacements are done for any tree that does not make it through the first year. This program is made available to all residents who have property meeting the requirements for energy trees. Each year some homes are turned down for energy trees due to reasons such as grade levels in their yard not being f inal or their homes already have Buff icient tree coverage. A total of 293 trees were planted this year from the downtown area to new residential developments. We were able to reach 73 homes with energy trees f or an increase of 6 homes f rom the Year 2004 program. If homeowners, especially owners of newly built homes, realized the benefits of trees planted strategically in their landscapes, we could have significant savings in energy over time. The Hutchinson Utilities Commission's support for Year 2005 Energy Tree Planting Project was the catalyst by which the City of Hutchinson has been able to keep at the fore front in community forestry. Cities across the state are coming to realize that carbon fixation through the planting of trees along with the shading of homes and street ways by way of planting trees is a positive local endeavor. The Hutchinson City Tree Board and the Citizens of Hutchinson thank you for your cooperative participation in improving the lives of residents here and statewide, by setting an example of how to do environmental improvement through energy tree planting. The Forestry Department again worked cooperatively with Utility personnel this year by removing trees that required topping every two to three years and working to replace those locations with trees that will grow so as not to require pruning for line clearance, thus eliminating the need for frequent, costly pruning. s SO0Z��a kooe zoo �a 00, e ��a�( 6661'��a (S)ss1.��, 9661'��, s661.)pa 61 � pad C) o 00 (.0 ° � 0 0 N 5002 t00z c00z ZoOz to0z 000(t 666 a 866 L66 966 566 1661 C6o MENEM ME C) o 00 (.0 ° � 0 0 N 5002 t00z c00z ZoOz to0z 000(t 666 a 866 L66 966 566 1661 C6o 1 4m c AW 0 J i 4) c W O L a A# cc irr c o pmt= m mO A em-W ��a O N� �r� ..� � ai j �V �� JC m fr� r�O � and �3 ,� E �-' d CL -19 ` a � E c � EpW r mom' m m ac ri cc •c f c � m � 1° cv m = a X02 12 �U'U Q Est' �.4m� =0 = a a W 3Q- yo¢ C� N M N r N N r N N N N V N d O O O t) M MN o O d p N N N N � "w- w �s N ;CB,, � LC-64 GO to M tp to to t[! �i9 to tp N N r N N N an N N N V N H 0 � (D Z N Ca Z N � co w � CO) Z L Q V- •� y L L 0 LA co CL 3 m c c m Gs ° "' a W M to N to N �Q "�' r co 0) P CO O r O Go It h Go r stop 00 "Col h = r r ew r r m a+ w O m _ al cc m co ° w Z Q d€ C co "C 06 ca = d Z cc Z = J Z U > m Y N C GD W V- pp ��jj pp � p pp 8 O 8 O O O O O 8 fJ © w N N N N N N N N �1 ,N� N ;146 N CA r w tp �p f_p t+ tO t` n h_ O M V N a � a N a iq a a iq m ~� m dg W U) U cc0 E �O Ul � Y o Eui 0 ca m q) N CL C) U o L U. -Yi v3i O N� U-c S mEO��o d C p C c a� °CEO 0) '9 E'`¢�ci�m m E �� E c► wEOWEO Q� //� 3 ci Q gw c* -i 0 tQ+- EQ 8w 8 E cam c co- 9y? 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N r r L F N F- N CO N Z W ( N d W Z L CL a _ L- CO) m o co ca ctl o co 0 m o m cc w co o r .. cc 5 m 5 m 5 m 5 m 3 a i 'c M = c e e f 2 C C M eF N `' C7 d O O CL c c c �+ c �+ a m as _ Ci s m ctl c Y 8 Y E m Z i o W cc cc N m 2 g iGO): Cc c ~ ca x C c ~ c W � c S H t0 h R -0 Q CMG CD m N to b m c t w C) U. g N Q N to 0 �%V N O p G1 N o O eV 0 O N � ?14 Q Q �� '�4 t N r r M r r M O N j • t c Advertisement for Bids For Electric Conductor for Stock 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 2:00 p.m. on the 6th day of February, 2006, and will publicly open and read aloud such Bids on the following material. Electric Conductor for Stock Proposals shall be properly endorsed and delivered in an envelope marked "Conductor' and shall be addressed to: Hutchinson Utilities Commission of the City of Hutchinson, 225 Michigan St 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 Specification 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 sixty (60) days after date of opening of Bids. Conductor Specifications are available at Hutchinson Utilities Commission, 225 Michigan St SE, Hutchinson, Minnesota. Hutchinson Utilities Commission reserves the right to reject any and all bids, or bid irregularities. By Craig R. Lenz, President Date December 28, 2005 ATTESTED David J. Wetterling, Secretary Date December 28. 2005 NATURAL GAS SERVICES ADDENDUM This Natural Gas Services Addendum ( "Services Addendum') supplements, amends and is subject to a Base Contract for Sale and Purchase of Natural Gas between BP Canada Energy Marketing Corp (`BP") and Hutchinson Utilities Commission, City of Hutchinson, Minnesota ( "Hutchinson "), dated January 1, 2004, pursuant to which BP delivers and sells Gas to Hutchinson ( "Base Contract "). Gas Supply Services. 1. BP agrees to deliver and sell and Hutchinson agrees to purchase and receive Firm Gas (baseload) in accordance with the following terms: a. All monthly Firm Gas baseload will be priced based on market conditions at the time Hutchinson makes their monthly Firm Gas baseload purchases. Hutchinson will have the flexibility to purchase monthly firm baseload gas by month or multi -month purchases. b. Hutchinson will have the choice of pricing mechanisms for baseload purchases including but not limited to; monthly index, daily index, fixed price, and various structured products. 2. Except as may otherwise be agreed by the Parties and subject to paragraph 1, provided that Hutchinson advises BP of its requirement for any Day not less than twenty four (24) hours prior to the start of the Day, BP will sell and deliver Firm (Variable Quantity) Gas to Hutchinson from the Northern Natural or Northern Border systems, after taking into account Firm ( Baseload) Quantities delivered pursuant to paragraph 1(a), up to the level of Hutchinson's firm takeaway entitlement from Northern Natural or Northern Border ( "Firm Variable Gas "). Except as otherwise agreed, Hutchinson shall pay for Firm Variable Gas delivered on each Day at the applicable price, as published for the Day by platt's "Gas Daily" in its "Daily Price Survey ($/MMBtu)" for " Northern, Ventura" "Midpoint" ( "Daily Index"), plus $0.01/Dth. If Hutchinson requests that BP deliver Firm Variable Gas less than twenty four (24) hours prior to the start of any Day, BP's obligation to deliver such Gas shall be on a reasonable commercial efforts basis only. Hutchinson shall pay for Firm Variable Gas delivered on each Day at Daily Index for the delivery Day, plus $0.15 /dth. 3. If, not less than twenty four (24) hours prior to the start of any Day, Hutchinson requests that BP repurchase Firm (Fixed quantity) or Firm (Variable Quantity) Gas delivered by BP during that Day that is excess to Hutchinson's requirements, BP shall re- purchase such Gas from Hutchinson. BP shall pay Hutchinson for any such Gas at Daily Index for the delivery Day, minus $0.01 /dth. If, within twenty four (24) hours prior to the start of any Day, Hutchinson requests that BP repurchase Firm (Fixed Quantity) or Firm (Variable Quantity) Gas delivered by BP during that Day that is excess to Hutchinson's requirements, BP will re- purchase such Gas from Hutchinson on a reasonable commercial efforts basis. BP shall pay Hutchinson for any such Gas at Daily Index for the delivery Day, minus $0.15 /dth. 4. Subject to Hutchinson's obligations in paragraph 1, nothing in this Services Addendum precludes Hutchinson from purchasing its Gas requirements from third parties. 5. Except in circumstances where it is not reasonably possible to do so, BP shall confirm each purchase and sale transaction undertaken pursuant to this Services Addendum by sending Hutchinson a Transaction Confirmation in accordance with the confirmation procedure of the Base Contract. Management Services. 6. During the term of this Addendum, BP shall provide the following Gas management services ( "Management Services ") to Hutchinson: (a) acting as agent for Hutchinson in respect of the operation of Hutchinson's Northern Natural TF contracts #21279 and #102733 ( "NN Contracts ") for the remaining term thereof, to include, without limitation, preparing and submitting all daily, monthly and real time change nominations. (b) acting as agent for Hutchinson and in the negotiation of transportation/storage discounts; (c) providing Hutchinson with timely copies of all nominations made or communicated by BP pursuant to (a); monitoring receipts of daily Gas supplies and Hutchinson's daily consumption of Gas and defming related imbalances; (d) providing Hutchinson with confirmation services on NBPL related to third party shippers delivering to the NBPL/Hutchinson Pipeline Interconnect. (e) assisting Hutchinson in managing and optimizing on- system Gas inventories and resolving system imbalances; (f) providing Hutchinson with relevant current and historical Gas industry market information to assist Hutchinson in making cost effective Gas purchasing decisions; (g) as requested by Hutchinson, assisting Hutchinson in analyzing and solving problems relating to supply procurement, transportation, dispatching and accounting; (h) monitoring, reporting and communicating with Hutchinson in respect of Gas market price volatility risks and related risk management procedures and, as agreed to by Hutchinson and subject to credit considerations, providing Hutchinson with financial risk management products; (i) advising Hutchinson in a timely manner of any critical day events on pipeline systems or any other industry developments or circumstances of which BP has become aware that may have a material effect on the supply or transportation of Gas to Hutchinson; (j) providing Hutchinson with 24 -hour, seven days per week toll free 888 telephone access to a BP employee that will receive and implement any supply adjustments requested by Hutchinson and are acceptable to the requirements of the relevant Transporter; and, (k) maintaining ongoing familiarity with the terms of any necessary documentation, including contracts and material amendments that may occur from time to time, relating to the services to be provided hereunder and any pipeline tariffs applicable to the Hutchinson's operations, ( "Supporting Documentation "), and using all reasonable efforts to assist Hutchinson in achieving maximum benefit in respect thereof. Optimization of Linepack on Hutchinson System. 7. BP will optimize any line pack available on the Hutchinson transmission system. The availability of line pack shall be determined in accordance with parameters determined by Hutchinson. Any optimization revenues earned shall be equally shared between the parties. 2 Hutchinson Obligations. 8. Hutchinson shall: (a) as relevant, and as requested by BP, provide BP with required Supporting Documentation, including, without limitation, information, as required, in respect of any third party supply, including, without limitation, the name and particulars of each third party, the third party Duns number and any applicable upstream contract numbers; (b) provide BP with all required information related to third party shippers imbalances on the Hutchinson Pipeline for BP to manage the NBPL OBA and optimize the Hutchinson Pipeline linepack. (c) take all actions in a timely manner required to designate BP as its agent to the extent necessary to enable BP to provide Management Services; and, (d) subject to paragraph 10, be responsible for all demand, commodity and other charges pursuant to the NN Contracts, Service Fees. 9. During the term of this Service Addendum, for each MMBtu of Gas purchased by Hutchinson from a third party supplier and delivered to Hutchinson in a month, Hutchinson shall pay BP a third party supply handling fee of $0.01/MMBtu ( "Supply Handling Fee "). Penalties and Forfeitures. 10. BP and Hutchinson shall work together to minimize any penalties or forfeitures that may arise in respect of Hutchinson transportation for which BP provides Management Services. Each party shall be responsible for Imbalance Charges that result from the actions, errors or omissions of that party. BP shall not be responsible for Imbalance Charges to the extent that BP acts reasonably on information provided by Hutchinson or on instructions from Hutchinson. BP shall be liable for Imbalance Charges incurred as a result of BP failing to nominate, schedule and/or confirm the quantity Gas in accordance with Hutchinson's instructions and published Transporter standards and agrees to pay any unauthorized Gas usage charges incurred by reason of BP's failure to perform Management Services in accordance with the terms of this Services Addendum. Term. 11. This Services Addendum shall be in effect during the period of January 1, 2006 through December 31, 2006, and shall continue on a year by year basis thereafter unless terminated on not less than ninety (90) days prior written notice given by one party to the other, to have effect at the end of any such annual period; provided that any obligation to make payment hereunder shall survive the termination of this Services Addendum. Conflict. 12. In the event of a conflict between the provisions of this Services Addendum and the Base Contract, the provisions of this Services Addendum shall govern. INTENDING TO BE LEGALLY BOUND, the parties have executed this Services Addendum as an addendum to the Base Contract through their duly authorized representatives effective as of the date specified above. BP Canada Energy Marketing Corp. Name: Title: Confirmed as of the date first above written: Hutchinson Utilities Commission Lo Name: Title: n 1 1 Resolution No. 12895 RESOLUTION APPROVING ADJUSTMENT OF HUTCHINSON UTILITIES COMMISSION ELECTRIC AND GAS RATES WHEREAS, the Hutchinson Utilities Commission authorized an electric and gas cost of service study which was conducted by the firm of R.W. Beck; and WHEREAS, based on the findings of the R.W. Beck report, the Hutchinson Utilities Commission has recommended an adjustment in the electric power and gas rates charged by the Hutchinson Utilities Commission; and WHEREAS, it. appeared to the City Council for the City of Hutchinson that such adjustments are justified and in the best interests of the residents of the City of Hutchinson; and WHEREAS, said adjustments will take effect with the February 2006 billing statements for January useage, NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HUTCHINSON THAT, based on the findings of R.W. Beck and the recommendation of the Hutchinson Utilities Commission, the City Council does hereby approve the electric power and gas rate adjustments as outlined in Section 5 of the report prepared by R.W. Beck, said report being on file at the Hutchinson Utilities Commission and the office of the City Administrator. Adopted by the Hutchinson Utilities Commission this 10'' day of January, 2006. Steven W. Cook, ATTEST: W54« , I z0v HUTCHINSON UTILITIES COMMISSION 2006 COMPENSATION PLAN Effective January 1, 2006 The Hutchinson Utilities Commission has considered the existing positions for Hutchinson Utilities and the current economic conditions. For each position there shall be a title; and there shall be shown examples of work which are illustrative of duties of positions, as well as requirements as to knowledge, abilities and skills necessary for performance of the work; and a statement of experience and training desirable for recruitment into a position. This plan covers all regular full -time, non -union positions /employees only. A. Plan Obiectives • To establish and maintain a compensation plan that enables Hutchinson Utilities to be highly competitive within our defined industry. • To lead or exceed the market in attracting and retaining qualified, reliable and motivated employees who are committed to quality and excellence for those we serve. • To ensure, subject to the financial condition of Hutchinson Utilities, that employees receive fair and equitable compensation in relation to their individual contributions to Hutchinson Utilities' success. • To follow the principles of pay equity in establishing and maintaining pay relationships among positions. • To ensure program flexibility necessary to meet changing economic, competitive, technological, and regulatory conditions encountered by Hutchinson Utilities Commission. • To balance compensation and benefit needs with available resources. B. Open Salary Range Hutchinson Utilities Commission shall adopt an Open Salary Range compensation plan that will allow for maximum flexibility since there are not defined or pre - calculated "steps ". Employee movement is based solely on performance. The open salary range - concept rewards good and exceptional performers and advances employees to the market rate more quickly. C. Allocation of New Positions When a new position is created for which no appropriate description exists or when the duties of an existing position are sufficiently changed so that no appropriate description exists, the Commission, after recommendation of the Human Resources Director, shall cause an appropriate job description- specification to be written for said position. D. Pay Grades 1. Exempt Employees Each position will have a nine -month probationary period. After satisfactory completion of the probationary period, an increase may be granted as warranted by the annual performance appraisal. Thereafter, consideration for increases will be given annually at the first of the year. The General Manager reserves the discretion to adjust individual rates as required. The Commission will determine any pay increase for the General Manager. Consideration for market adjustment will be made each January 1. 2. Non - Exempt Employees Each non - represented position will have a nine -month probationary period. Union members will have a six -month probationary period. After satisfactory completion of the probationary period, an increase may be granted as warranted by the annual performance appraisal. Thereafter, consideration for increases will be given annually at the first of the year or by scales determined in the union contract. The General Manager and the Human Resources Director, as directed by the General Manager, shall maintain the discretion to hire at any point based on the qualifications, experience, market conditions or other relevant factors, to secure the best candidate for the position. E. Performance Evaluations 1. For all regular employees, a performance appraisal or evaluation will be made on an annual basis. An evaluation made by the employee's supervisor shall be submitted in writing to the employee and the General Manager. All evaluations will be forwarded to the Business Manager for filing in the employee files. 2. Evaluations shall be based upon the performance of the individual in the position measured against established job performance criteria. Such criteria may include level of knowledge, skills, ability, quality of work, personal work traits, compliance with established Hutchinson Utilities Commission or departmental rules and regulations or any other criteria that is indicative of performance. 3. The performance appraisal process is the application of performance standards to past performance. In appraising an employee, these are the basic levels of performance: 5 Outstanding — Performance is exceptional in all areas and is recognizable as being far superior to others. 4 — Exceeds Job Requirements — Results clearly exceed most positions requirements. Performance is of high quality and is achieved on a consistent basis. 3 — Meets Job Requirements — Competent and dependable level of performance. Meets performance standards of the job. 2 — Needs Improvement — Performance is deficient in certain area(s). Improvement is necessary. 1— Unsatisfactory — Results are generally unacceptable and require immediate improvement. 4. Results The results of the employee's evaluation will normally have the following effect on his/her salary per the following Merit Increase Guide: 0 to 1.0 — 0% 1.1 to 1.99 — 1% 2.0 to 2.75— -1% 2.76 to 3.5 — Union % increase 3.51 to 4.25 — +1% 4.26 to 5.0 — +2% 5. Market Conditions Notwithstanding any language to the contrary, the Hutchinson Utilities Commission retains the right to deviate from the pay plan when, in the sole judgment of the Commission, market conditions or other circumstances dictate such a decision. Eligible employees include all non - represented employees except those who have been subject to disciplinary action per the Hutchinson Utilities Employee Handbook as follows: An additional consequence of disciplinary action more severe than level a — oral reprimand — will be the permanent loss of the January 1 market adjustment in the calendar year following such disciplinary action. This will occur unless the Director in charge and the General Manager decide otherwise. F. Annual Market Adjustment Consideration On an annual basis, a market survey will be reviewed. As a result of the current year marketplace, an additional increase may be deemed necessary. The General Manager and Human Resources Director maintain final approval responsibility for salary increases. Any market adjustment on January 1 of any year shall be separate and apart from the individual merit increases. In determining a recommendation for an annual market adjustment, the General Manager and Human Resources Director shall consider, at least the following information: 1. U.S. and Minneapolis /St. Paul consumer priced index changes (CPIU & CPIW) 2. Social Security calculation of cost of living increase 3. Unemployment rate 4. Employee turnover rate 5. Area wage survey 6. Legislative growth factor constraints 7. Bargaining Unit Increase G. Incentive Evaluations The General Manager and Directors may be eligible for incentive pay pursuant to the recommendation of the Commission and the financial condition of the Utilities. This incentive pay would be a one -time payment at the beginning of the year following the annual performance evaluations. H. Modification of the Plan The Hutchinson Utilities Commission reserves the right to modify any or all of the components or to vary from any of the components of the Compensation Plan at its discretion and at any time. I. Review of the Plan It is recommended that the Hutchinson Utilities Commission hire a consultant to assist in an adoption of a Position Classification Plan, which would be reviewed annually by the Human Resources Director. As deemed necessary, the Human Resources Director would recommend any changes to the Commission. 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