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03-29-2006 HUCM Regular Meeting March 29,2006 Members present: President Craig Lenz; Vice President Donald Walser; Commissioner Steven Cook; Commissioner Dwight Bordson; General Manager Michael Kumm; Attorney Marc Sebora. Member absent: Secretary David Wetterling President Lenz called the meeting to order at 3:00 pm. Vice President Walser made a motion to approve the minutes of the February 22, 2006 Regular Meeting. Commissioner Cook seconded the motion and it passed unanimously. Vice President Walser made a motion to close the meeting to discuss litigation proceedings. Commissioner Bordson seconded the motion and it passed unanimously. The meeting was closed at 3:02 p.m. Commissioner Cook made a motion to move from closed meeting back to open meeting. Commissioner Bordson seconded the motion and it passed unanimously. The meeting was reopened at 3:50 p.m. Manager Kumm discussed the accounts payables. The payment to Lighthouse Energy Trading Co. for purchased power expense is the last payment to them. President Lenz asked Manager Kumm to prepare of list of the number of tile repairs that were made by the Eiden Farm Drainage Company on the pipeline. Commissioner Cook questioned the payment to Culver Company - CIP homeshow hand out material. They are a publishing company and items were purchased from them to give out to people at the Hutchinson Home & Garden Show. Commissioner Cook thought the payments to Heartland Community Action Agency and Habitat for Humanity were very good things that we're doing through the Energy Conservation Program. Commissioner Cook asked about the payment for truck maintenance. Jan Sifferath said the maintenance we needed could not be performed by the HATS Facility. Jay Malone Motors was able to do the work. Vice President Walser asked about the wire transfer for the Visa/Master Card charges. This is a processing payment for customers making payments by credit card. This will likely go up each month as more and more customers are making their payments this way. We do get a break on this fee as we use the same software with City. The highest processing fee are the on-line payments, next is making payment by telephone, and the lowest fee is if customer comes in with their credit card and we swipe it through the credit card encoder. Vice President Walser made a motion to ratify the payment of bills in the amount of $3,281,804.63 (detailed listing in payable book). Commissioner Cook seconded the motion and it passed unanimously. Manager Kumm explained the financial statements/budget year-to-date. Our auditors have asked us to add two new line items to our balance sheet: deferred energy cost - MISO and accounts payable - MISO. These general ledger entries are to reconcile a timing difference. Manager Kumm explained that the cash flow sheet has two figures that are supposed to be date entries. The computer converted the date entries to currency. Commissioner Cook asked what the 'proceeds from sale of assets' were in the cash flow sheet. This is natural gas inventory that was sold on the pipeline. Jan Sifferath explained the medical insurance account. Our large claims should be coming to an end. But because of the deficit we may want to evaluate our insurance plan options. There's one of two things we can do: continue on with the medical insurance account with a running total or do a one-time journal entry adjustment and zero it out at the end of the year. There are a few claims that were charged to our insurance account that the hospital mistakenly took as our employees. Once they are removed the deficit will be less. Because the money has already been spent, President Lenz suggested we wait and see what impact there will be once the claims that aren't ours are removed. Commissioner Bordson made a motion to approve the financial statement and budget year to date. Vice President Walser seconded the motion and it passed unanimously. The policy on disposal of excess property and rescind policy on used poles, that was tabled from February 22, 2006, has been reworded and portions highlighted to emphasize the Commission declares property surplus and the Genera Manager then has authorization to dispose of that property. Vice President Walser made a motion to approve the Policy on Disposal of Excess Property and Rescind Policy on Sale of Used Poles. Commissioner Cook seconded the motion and it passed unanimously. Manager Kumm explained the purpose of the policy on parallel generation. Customers will have the availability of generating their own electricity in parallel with HUC and approved by HUC. We need to have a policy in place when this happens. We will need to fine-tune the policy, but for now we're just explaining the reasoning for establishing a policy. President Lenz asked what MRES can do for us regarding parallel generation. Manager Kumm will check into this. This is work that is in progress. Commissioner Cook will talk to Manager Kumm about sharing resources and governmental issues regarding the Vision, Mission & Value Statements, Section 1 of the Strategic Management Process. Commissioner Cook made a motion to table the adoption of the Vision, Mission & Value Statements, Section 1 of the Strategic Management Process. Commissioner Bordson seconded the motion and it passed unanimously. Manager Kumm presented the Leadership & Governance, Section 2 of the Strategic Management Process, tabled from the February 22, 2006 meeting, with the required changes. Commissioner Cook asked about the possibility of HUC having a booth at the County Fair, but because of the length of the fair, it might not be financially feasible to do that. Commissioner Bordson asked to include the Hutchinson Community Leadership Development Program into the section under 'active in the community'. President Lenz asked to change/add: "General Manager/CEO" to the report. Commissioner Cook made a motion to approve the Leadership & Governance, Section 2, Strategic Management Process with the noted changes. Vice President Walser seconded the motion and it passed unanimously. Manager Kumm presented the Community Support - Key Result Area, Section 4 of the Strategic Management Process. This section was developed to form an understanding of how HUC works with the City of Hutchinson and shares services with the City of Hutchinson to help benefit the ratepayers and taxpayers of the City. Strategies are in place to implement a good working/sharing relationship with City. A formula is being developed for general funds transfer. Commissioner Cook asked to make a change to the wording of 'limits' to 'formula' as it pertains to the general funds transfer information. And to add an item to the strategies as it relates to working with the City of Hutchinson on combining efforts with regards to pubic relations. After discussion, motion was made by Commissioner Cook to approve the Community Support - Key Result Area, Section 4 Strategic Management Process with the noted changes. Vice President Walser seconded the motion and it passed unanimously. Manager Kumm asked to change the date of the April 26th Commissioners meeting because MRES has invited us to attend their annual meeting on April 26th and 2ih in Sioux Falls, South Dakota as they will be introducing HUC as their newest member and they will be presenting us with a membership plaque. After discussion it was decided to reschedule the April 26, 2006 meeting to April 28, 2006 at 1 :00 p.m. Vice President Walser made a motion to reschedule April's commissioners meeting to April 28, 2006 at 1 :00 p.m. Commissioner Bordson seconded the motion and it passed unanimously. Manager Kumm will contact MRES for a copy of their meetings calendar. Requisitions #001711 and #001712 were presented for approval. These are two 2006 Ford F150 pickups for the gas division. They are a budgeted item and are replacements for two 8-year old trucks. These are being purchased through state bids. They are not leases. Vice President Walser made a motion to approve requisitions #001711 and #001712 for two 2006 F150 Ford trucks for the gas division from Owatonna Motor Company for $20,964 each. Commissioner Bordson seconded the motion and it passed unanimously. Commissioner Cook had a concern with the energy conservation rebate program. The program went into effect on March 1, 2006 and Jan Sifferath reported that 233 residential customers have been guaranteed funds and as of March 14, 2006, there are 147 customers on a waiting list. Customers were notified of the rebate program by a letter with their monthly utility bill, advertisements on the local radio station, advertisements in the Hutchinson Leader newspaper, and we had it on our web site. Commissioner Cook asked if we had offered less money would more people take advantage of the program and why the restrictions on residential to only buy locally when commercial can buyout of town. This same program has been run before and it was a success then so to offer less money would not be as much of an incentive for people to purchase the more expensive energy conservation appliances. Attorney Sebora commented that HUC can set the rules of the program as we want, that it's our money and our decision as to how we're going to fund it. Jan explained that some items ie: high efficiency motors, are not supplied locally, so for these items commercial customers could purchase them out of town. President Lenz asked how can there be an argument with the success of a program. In two weeks the allotted money was spoken for. There have been more compliments than criticism by far. There is no need to support businesses out of town when most of the items can be purchased locally. Jan also explained that it's easier to track the installation of items by local reputable persons who we know are certified. Commissioner Cook stated he had talked with someone who wanted the choice of buying locally or buying out of town. Manager Kumm explained that the PUC wants us to pay their legal bills as it relates to their attempt to regulate HUC's pipeline. Our attorney suggests we pay the bill and lodge another complaint with a letter contesting payment. Vice President Walser made a motion to pay the PUC bill and send a letter contesting payment. Commissioner Bordson seconded the motion and it passed unanimously. Division Reports Electric - Don Merkins None Gas None Business - Jan Sifferath Wants update on 457 plan - there is no update at this time Legal Update None Old Business President Lenz asked how we are securing our property in light of our recent break-ins and robberies. Hutchinson Polices Services have made suggestions on video camera locations and additional doors and locks will be installed. Videotronics have been here to assist us. President Lenz commented on the process in calling special meetings. He felt awkward with the last special meeting that was called and then subsequently cancelled. If special meetings are to be called, the rest of the Commission Board should know about it before its called. Was today's discussion on the energy conservation rebate program the reason for calling then canceling that special meeting? Respect needs to be given for all the work involved in calling a special meeting. We need to follow our procedures that are in place for calling a special meeting. Commission Cook felt that if a change is needed, it should be done right away. If a situation comes up again, it will be handled differently. President Lenz wants to follow the By-Laws that are in place for HUC. The criteria was not enough to call a special meeting. We have a General Manager/CEO who presented the budget and it was approved by the whole board. We don't need to be micromanaging. Commissioner Cook felt he needed a better understanding of the program. President Lenz remarked that it was the same program as 2002. Commissioner Cook said he has no problem with the program, but he'd like it to be presented more specifically for awareness and feels it should have been presented for approval. President Lenz reiterated that we follow our By-Laws and utilize our personnel to issue notices of special meetings. Commissioner Cook asked Manager Kumm if he could highlight the areas of the mid-month report that are new from the previous month. Manager Kumm said he will try to do that. New Business None Vice President Walser made a motion to adjourn at 6:03 p.m. Commissioner Bordson seconded the motion and it passed unanimously. David Wetterling, Secretary ATTEST Craig Lenz, President Regular Meeting March 29, 2006 Members present: President Craig Lenz; Vice President Donald Walser; Commissioner Steven Cook; Commissioner Dwight Bordson; General Manager Michael Kumm; Attorney Marc Sebora. Member absent: Secretary David Wetterling President Lenz called the meeting to order at 3:00 pm. Vice President Walser made a motion to approve the minutes of the February 22, 2006 Regular Meeting. Commissioner Cook seconded the motion and it passed unanimously. Vice President Walser made a motion to close the meeting to discuss litigation proceedings. Commissioner Bordson seconded the motion and it passed unanimously: The meeting was closed at 3:02 p.m. Commissioner Cook made a motion to move from closed meeting back to open meeting. Commissioner Bordson seconded the motion and it passed unanimously. The meeting was reopened at 3:50 p.m. Manager Kumm discussed the accounts payables. The payment to Lighthouse Energy Trading Co. for purchased power expense is the last payment to them. President Lenz asked Manager Kumm to prepare of list of the number of tile repairs that were made by the Eiden Farm Drainage Company on the pipeline. Commissioner Cook questioned the payment to Culver Company — CIP homeshow hand out material. They are a publishing company and items were purchased from them to give out to people at the Hutchinson Home & Garden Show. Commissioner Cook thought the payments to Heartland Community Action Agency and Habitat for Humanity were very good things that we're doing through the Energy Conservation Program. Commissioner Cook asked about the payment for truck maintenance. Jan Sifferath said the maintenance we needed could not be performed by the HATS Facility. Jay Malone Motors was able to do the work. Vice President Walser asked about the wire transfer for the Visa /Master Card charges. This is a processing payment for customers making payments by credit card. This will likely go up each month as more and more customers are making their payments this way. We do get a break on this fee as we use the same software with City. The highest processing fee are the on -line payments, next is making payment by telephone, and the lowest fee is if customer comes in with their credit card and we swipe it through the credit card encoder. Vice President Walser made a motion to ratify the payment of bills in the amount of $3,281,804.63 (detailed listing in payable book). Commissioner Cook seconded the motion and it passed unanimously. Manager Kumm explained the financial statements /budget year -to -date. Our auditors have asked us to add two new line items to our balance sheet: deferred energy cost — MISO and accounts payable — MISO. These general ledger entries are to reconcile a timing difference. Manager Kumm explained that the cash flow sheet has two figures that are supposed to be date entries. The computer converted the date entries to currency. Commissioner Cook asked what the `proceeds from sale of assets' were in the cash flow sheet. This is natural gas inventory that was sold on the pipeline. Jan Sifferath explained the medical insurance account. Our large claims should be coming to an end. But because of the deficit we may want to evaluate our insurance plan options. There's one of two things we can do: continue on with the medical insurance account with a running total or do a one -time journal entry adjustment and zero it out at the end of the year. There are a few claims that were charged to our insurance account that the hospital mistakenly took as our employees. Once they are removed the deficit will be less. Because the money has already been spent, President Lenz suggested we wait and see what impact there will be once the claims that aren't ours are removed. Commissioner Bordson made a motion to approve the financial statement and budget year to date. Vice President Walser seconded the motion and it passed unanimously. The policy on disposal of excess property and rescind policy on used poles, that was tabled from February 22, 2006, has been reworded and portions highlighted to emphasize the Commission declares property surplus and the Genera Manager then has authorization to dispose of that property. Vice President Walser made a motion to approve the Policy on Disposal of Excess Property and Rescind Policy on Sale of Used Poles. Commissioner Cook seconded the motion and it passed unanimously. Manager Kumm explained the purpose of the policy on parallel generation. Customers will have the availability of generating their own electricity in parallel with HUC and approved by HUC. We need to have a policy in place when this happens. We will need (9 to fine -tune the policy, but for now we're just explaining the reasoning for establishing a policy. President Lenz asked what MRES can do for us regarding parallel generation. Manager Kumm will check into this. This is work that is in progress. Commissioner Cook will talk to Manager Kumm about sharing resources and governmental issues regarding the Vision, Mission & Value Statements, Section 1 of the Strategic Management Process. Commissioner Cook made a motion to table the adoption of the Vision, Mission & Value Statements, Section 1 of the Strategic Management Process. Commissioner Bordson seconded the motion and it passed unanimously. Manager Kumm presented the Leadership & Governance, Section 2 of the Strategic Management Process, tabled from the February 22, 2006 meeting, with the required changes. Commissioner Cook asked about the possibility of HUC having a booth at the County Fair, but because of the length of the fair, it might not be financially feasible to do that. Commissioner Bordson asked to include the Hutchinson Community Leadership Development Program into the section under'active in the community'. President Lenz asked to-change /add: "General Manager /CEO" to the report. Commissioner Cook made a motion to approve the Leadership & Governance, Section 2, Strategic Management Process with the noted changes. Vice President Walser seconded the motion and it passed unanimously. Manager Kumm presented the Community Support - Key Result Area, Section 4 of the Strategic Management Process. This section was developed to form an understanding of how HUC works with the City of Hutchinson and shares services with the City of Hutchinson to help benefit the ratepayers and taxpayers of the City. Strategies are in place to implement a good working /sharing relationship with City. A formula is being developed for general funds transfer. Commissioner Cook asked to make a change to the wording of `limits' to `formula' as it pertains to the general funds transfer information. And to add an item to the strategies as it relates to working with the City of Hutchinson on combining efforts with regards to pubic relations. After discussion, motion was made by Commissioner Cook to approve the Community Support - Key Result Area, Section 4 Strategic Management Process with the noted changes. Vice President Walser seconded the motion and it passed unanimously. Manager Kumm asked to change the date of the April 26th Commissioners meeting because MRES has invited us to attend their annual meeting on April 26th and 27th in Sioux Falls, South Dakota as they will be introducing HUC as their newest member and they will be presenting us with a membership plaque. After discussion it was decided to reschedule the April 26, 2006 meeting to April 28, 2006 at 1:00 p.m. Vice President Walser made a motion to reschedule April's commissioners meeting to April 28, 2006 at 1:00 p.m. Commissioner Bordson seconded the motion and it passed unanimously. Manager Kumm will contact MRES for a copy of their meetings calendar. Requisitions #001711 and #001712 were presented for approval. These are two 2006 Ford F150 pickups for the gas division. They are a budgeted item and are replacements for two 8 -year old trucks. These are being purchased through state bids. They are not leases. Vice President Walser made a motion to approve requisitions #001711 and #001712 for two 2006 F150 Ford trucks for the gas division from Owatonna Motor Company for $20,964 each. Commissioner Bordson seconded the motion and it passed unanimously. Commissioner Cook had a concern with the energy conservation rebate program. The program went into effect on March 1, 2006 and Jan Sifferath reported that 233 residential customers have been guaranteed funds and as of March 14, 2006, there are 147 customers on a waiting list. Customers were notified of the rebate program by a letter with their monthly utility bill, advertisements on the local radio station, advertisements in the Hutchinson Leader newspaper, and we had it on our web site. Commissioner Cook asked if we had offered less money would more people take advantage of the program and why the restrictions on residential to only buy locally when commercial can buy out of town. This same program has been run before and it was a success then so to offer less money would not be as much of an incentive for people to purchase the more expensive energy conservation appliances. Attorney Sebora commented that HUC can set the rules of the program as we want, that it's our money and our decision as to how we're going to fund it. Jan explained that some items ie: high efficiency motors, are not supplied locally, so for these items commercial customers could purchase them out of town. President Lenz asked how can there be an argument with the success of a program. In two weeks the allotted money was spoken for. There have been more compliments than criticism by far. There is no need to support businesses out of town when most of the items can be purchased locally. Jan also explained that it's easier to track the installation of items by local reputable persons who we know are certified. Commissioner Cook stated he had talked with someone who wanted the choice of buying locally or buying out of town. 4�9/ Manager Kumm explained that the PUC wants us to pay their legal bills as it relates to their attempt to regulate HUC's pipeline. Our attorney suggests we pay the bill and lodge another complaint with a letter contesting payment. Vice President Walser made a motion to pay the PUC bill and send a letter contesting payment. Commissioner Bordson seconded the motion and it passed unanimously. Division Reports Electric - Don Merkins None Gas None Business - Jan Sifferath Wants update on 457 plan - there is no update at this time Legal Update None Old Business President Lenz asked how we are securing our property in light of our recent break -ins and robberies. Hutchinson Polices Services have made suggestions on video camera locations and additional doors and locks will be installed. Videotronics have been here to assist us. President Lenz commented on the process in calling special meetings. He felt awkward with the last special meeting that was called and then subsequently cancelled. If special meetings are to be called, the rest of the Commission Board should know about it before its called. Was today's discussion on the energy conservation rebate program the reason for calling then canceling that special meeting? Respect needs to be given for all the work involved in calling a special meeting. We need to follow our procedures that are in place for calling a special meeting. Commission Cook felt that if a change is needed, it should be done right away. If a situation comes up again, it will be handled differently. President Lenz wants to follow the By -Laws that are in place for HUC. The criteria was not enough to call a special meeting. We have a General Manager /CEO who presented the budget and it was approved by the whole board. We don't need to be micromanaging. Commissioner Cook felt he needed a better understanding of the program. President Lenz remarked that it was the same program as 2002. Commissioner Cook said he has no problem with the program, but he'd like it to be presented more specifically for awareness and feels it should have been presented for approval. President Lenz reiterated that we follow our By -Laws and utilize our personnel to issue notices of special meetings. Commissioner Cook asked Manager Kumm if he could highlight the areas of the mid -month report that are new from the previous month. Manager Kumm said he will try to do that. New Business None Vice President Walser made a motion to adjourn at 6:03 p.m. Commissioner Bordson seconded the motion and it passed unanimously. I_ 'J ■ David -We rling, SMecretary 1-1 Adopted March 29, 2006 Policy on Disposal of Surplus Propert y DISPOSAL OF EXCESS PROPERTY DECLARATION OF SURPLUS; SALE AUTHORIZATION. The General Manager may, from time to time, recommend to the Hutchinson Utilities Commission that certain personal property (chattels) owned by the Hutchinson Utilities Commission is no longer needed for utility purpose and should be sold. By action of the Commission, this property shall be declared surplus, the value estimated and the General Manager authorized to dispose of that property in the manner stated herein. SURPLUS VALUED UNDER $100. The General Manager may sell surplus property with a fair market value of less than $100 through negotiated sale. Surplus personal computers greater than three years old may be donated directly to public schools in the city. SURPLUS VALUED OVER $100. The General Manager shall offer for public sale, to the highest bidder, surplus property with a fair market value over $100. Notice of the public sale shall be given stating time and place of sale and generally describing the property to be sold at least ten days prior to the date of sale by publication once in the official newspaper. The sale shall be to the person submitting the highest bid. DISPOSITION OF PROCEEDS. All receipts from sales of surplus property under this policy shall be placed in the fund from which it was purchased. PERSONS INELIGIBLE TO PURCHASE HUTCHINSON UTILITIES EMPLOYEES; EXCEPTION. No employee of the utilities who is a member of the administrative staff, department head, a member of the Commission or an advisor serving the Utilities in a professional capacity, may be a recipient of property under this policy. Other utility employees may be recipients if they are not directly involved in the sale, if they are the highest responsible bidder and if at least one week's published or posted notice of sale is given. PROHIBITED PURCHASES. 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