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11-25-2009 HUCMRegular Meeting November 25, 2009 Members present: President Dwight Bordson; Vice President Robert Hantge; Secretary David Wetterling; Commissioner Craig Lenz; Commissioner Donald H. Walser; Attorney Marc Sebora; General Manager Michael Kumm President Bordson called the meeting to order at 3:00 p.m. The minutes of the October 28, 2009 regular meeting were reviewed. A motion was made by Commissioner Walser, seconded by Vice President Hantge to approve the minutes as written. Motion was unanimously carried. The October 2009 payables were discussed. A motion was made by Commissioner Lenz, seconded by Secretary Wetterling to ratify the payment of bills in the amount of $2,718,097.58 (detailed listing in payables book). Motion was unanimously carried. GM Kumm presented the October 2009 financial statements /budget year -to -date. After discussion, a motion was made by Commissioner Walser, seconded by Secretary Wetterling to approve the financial statements /budget year -to -date. Motion was unanimously carried. President Bordson discussed the Governor's salary cap. There is a lobbying group leveraging with MMUA to discuss the dollar limit on salaries. President Bordson made a motion, seconded by Secretary Wetterling to establish a sub - committee to work with MMUA and the lobbying group to explore our options and to report back with the recommendations from that group. Motion was unanimously carried. Commissioner Lenz made a motion, seconded by Commissioner Walser to appoint Robert Hantge to work with MMUA and the lobbying group to improve laws to meet our goals. Motion was unanimously carried. President Bordson discussed GM Kumm's annual review. Congratulatory comments and praises were given for a job well done. A motion was made by President Bordson, seconded by Vice President Hantge to approve the annual review with a 6% salary increase and to increase car allowance to $750 a month. Motion was unanimously carried. GM Kumm presented the preliminary 2010 budget. After discussion GM Kumm said he will have the final draft next week. He will be in his office if any Commissioner has any further questions or need additional explanation of any items in the 2010 budget. GM Kumm discussed the sick leave policy from the exempt employee handbook. At last month's meeting a discussion was held as to whether or not an employee could work from home in case of sickness in the family or employee themselves. Past practice, GM Kumm has turned down this request as there is no way to monitor the work being done at home. He asked to continue the way we're doing it; if employee or family member is sick, just stay home. However, in reviewing our current sick leave policy, we want to put it in the same format as the labor contract, making it easier to read and understand. We will bring it back to the board for approval. John Webster presented changes to the policies and requirements booklet, gas side, sections: Meter Testing; Natural Gas Service Work and; Locating Customer's Underground Utilities. These are the last sections to the booklet for review. There is no change to these sections operationally, just a clean -up in wording. A motion was made by Secretary Wetterling, seconded by Vice President Hantge to approve the changes to the policies and requirements booklet, gas side, sections: Meter Testing; Natural Gas Service Work and; Locating Customer's Underground Utilities. Motion was unanimously carried. (Policies attached.) GM Kumm presented the items of agreement regarding territory negotiations. HUC, Glencoe Utilities and McLeod Coop Boards have all agreed on a contract. Our attorneys will review the contract and we should have it next week. GM Kumm asked for authorization to sign the contract pending the attorney's review. A motion was made by Commissioner Lenz, seconded by Secretary Wetterling to grant GM Kumm authorization to sign the contract pending the attorney's review. Motion was unanimously carried. (Items of Agreement attached.) HUC's recognition /holiday party has been scheduled for December 18, 2009. A motion was made by Commissioner Walser, seconded by Secretary Wetterling to approve the recognition /holiday party on December 18, 2009 as an open meeting. Motion was unanimously carried. Discussion was held for the date of the HUC /City joint meeting. After discussion it was decided to hold the HUC /City joint meeting on January 27, 2010 at 4:30 p.m. to be held at the Event Center, following HUC's regularly scheduled monthly meeting on the same date at 3:00 p.m. GM Kumm will put together an agenda for the joint meeting. Division reports Accounting — Jared Martig • Safety committee completed a walk -thru of the new inventory building • Construction crew will be starting the office remodeling • Trane Heating is offering a new software for our heating system Gas — John Webster • Next week will be visiting a city that is using the AMI system — going with Steve Lancaster and Tom Kloss • Will be asking for the AMI bid approval at the special meeting on December 16th • Working with a customer on natural gas marketing firm transportation on our system Business — Jan Sifferath • Jennifer Tramp accepted the position of accountant and Teri Hofineister accepted the position of account supervisor • Have received over 400 applications for the two open positions of account coordinator • Dental insurance for 2010 has increased 5 %; health insurance for 2010 has increased 10.5% for both plans (HSA and the 300 -15 plan) Legal Update City Council has appointed Paul Nordin to the HUC Commission Board replacing out -going Commissioner David Wetterling. Unfinished Business None New Business None There being no further business, a motion was made by Secretary Wetterling, seconded by Commissioner Lenz to adjourn the meeting at 4:50 p.m. Motion was unanimously carried. ATTEST: Dwight Bordson, President David Wetterling, Secretary Regular Meeting November 25, 2009 Members present: President Dwight Bordson; Vice President Robert Hantge; Secretary David Wetterling; Commissioner Craig Lenz; Commissioner Donald H. Walser; Attorney Marc Sebora; General Manager Michael Kumm President Bordson called the meeting to order at 3:00 p.m. The minutes of the October 28, 2009 regular meeting were reviewed. A motion was made by Commissioner Walser, seconded by Vice President Hantge to approve the minutes as written. Motion was unanimously carried. The October 2009 payables were discussed. A motion was made by Commissioner Lenz, seconded by Secretary Wetterling to ratify the payment of bills in the amount of $2,718,097.58 (detailed listing in payables book). Motion was unanimously carried. GM Kumm presented the October 2009 financial statements /budget year -to -date. After discussion, a motion was made by Commissioner Walser, seconded by Secretary Wetterling to approve the financial statements /budget year -to -date. Motion was unanimously carried. President Bordson discussed the Governor's salary cap. There is a lobbying group leveraging with MMUA to discuss the dollar limit on salaries. President Bordson made a motion, seconded by Secretary Wetterling to establish a sub - committee to work with MMUA and the lobbying group to explore our options and to report back with the recommendations from that group. Motion was unanimously carried. Commissioner Lenz made a motion, seconded by Commissioner Walser to appoint Robert Hantge to work with MMUA and the lobbying group to improve laws to meet our goals. Motion was unanimously carried. President Bordson discussed GM Kumm's annual review. Congratulatory comments and praises were given for a job well done. A motion was made by President Bordson, seconded by Vice President Hantge to approve the annual review with a 6% salary increase and to increase car allowance to $750 a month. Motion was unanimously carried. GM Kumm presented the preliminary 2010 budget. After discussion GM Kumm said he will have the final draft next week. He will be in his office if any Commissioner has any further questions or need additional explanation of any items in the 2010 budget. GM Kumm discussed the sick leave policy from the exempt employee handbook. At last month's meeting a discussion was held as to whether or not an employee could work from home in case of sickness in the family or employee themselves. Past practice, GM Kumm has turned down this request as there is no way to monitor the work being done at home. He asked to continue the way we're doing it; if employee or family member is sick, just stay home. However, in reviewing our current sick leave policy, we want to put it in the same format as the labor contract, making it easier to read and understand. We will bring it back to the board for approval. John Webster presented changes to the policies and requirements booklet, gas side, sections: Meter Testing; Natural Gas Service Work and; Locating Customer's Underground Utilities. These are the last sections to the booklet for review. There is no change to these sections operationally, just a clean -up in wording. A motion was made by Secretary Wetterling, seconded by Vice President Hantge to approve the changes to the policies and requirements booklet, gas side, sections: Meter Testing; Natural Gas Service Work and; Locating Customer's Underground Utilities. Motion was unanimously carried. (Policies attached.) GM Kumm presented the items of agreement regarding territory negotiations. HUC, Glencoe Utilities and McLeod Coop Boards have all agreed on a contract. Our attorneys will review the contract and we should have it next week. GM Kumm asked for authorization to sign the contract pending the attorney's review. A motion was made by Commissioner Lenz, seconded by Secretary Wetterling to grant GM Kumm authorization to sign the contract pending the attorney's review. Motion was unanimously carried. (Items of Agreement attached.) HUC's recognition /holiday party has been scheduled for December 18, 2009. A motion was made by Commissioner Walser, seconded by Secretary Wetterling to approve the recognition /holiday party on December 18, 2009 as an open meeting. Motion was unanimously carried. Discussion was held for the date of the HUC /City joint meeting. After discussion it was decided to hold the HUC /City joint meeting on January 27, 2010 at 4:30 p.m. to be held at the Event Center, following HUC's regularly scheduled monthly meeting on the same date at 3:00 p.m. GM Kumm will put together an agenda for the joint meeting. Division reports Accounting — Jared Martig • Safety committee completed a walk -thru of the new inventory building • Construction crew will be starting the office remodeling • Trane Heating is offering a new software for our heating system Gas — John Webster • Next week will be visiting a city that is using the AM[ system — going with Steve Lancaster and Tom Kloss • Will be asking for the AMI bid approval at the special meeting on December 16th • Working with a customer on natural gas marketing firm transportation on our system Business — Jan Sifferath • Jennifer Tramp accepted the position of accountant and Teri Hofineister accepted the position of account supervisor • Have received over 400 applications for the two open positions of account coordinator • Dental insurance for 2010 has increased 5 %; health insurance for 2010 has increased 10.5% for both plans (HSA and the 300 -15 plan) Legal Update City Council has appointed Paul Nordin to the HUC Commission Board replacing out -going Commissioner David Wetterling. Unfinished Business None New Business None There being no further business, a motion was made by Secretary Wetterling, seconded by Commissioner Lenz to adjourn the meeting at 4:50 p.m. Motion was unanimously carried. David Wetterling, Secretary i ATTEST: `' s_ Dwi t rdson, President METER TESTING HUC wi# shall periodically test all natural gas meters peFiediGall y for accuracy and sound mechanical condition. Meters that have an average accuracy of 100 %, plus or minus 2 %, will shall be considered accurate. Average accuracy is defined as the average of the open and check flow accuracies. These "^^cce'unts Accounts in which the whose natural gas meter tested tests in excess of 102% are subject to a refund. This refund wifl shall be based on the "as found average meter accuracy" and the customer's consumption for the previous six month period. Upon request of the customer, HUC shall test the average accuracy of the natural gas meter. A $40 trip charge wi4 shall be assessed to all accounts in which the "as found average meter accuracy" is determined to be 100 %, plus or minus 2 %. NATURAL GAS SERVICE WORK HUC Natural Gas Division personnel w-41 shall perform leak investigation and carbon monoxide testing at no charge to the customer. HUC Natural Gas Division does not perform natural igas service work on customer owned facilities. LOCATING CUSTOMER'S UNDERGROUND UTILITIES HUC shall locate and mark all natural gas underground distribution and transmission facilities at no charge to the customer or landowner. HUC shall not locate customer owned facilities. Items of Agreement November 10, 2009 1. Any settlement should consider the actual customers of both the cooperative and the municipal, who are ultimately paying the bill, and should treat both fairly. 2. McLeod Cooperative Power agrees not to contest municipal growth in service territory, either at the state or federal level. 3. Hutchinson Utility Commission, and Glencoe Utilities agrees to pay for bare ground. 4. Price of existing facilities: Original cost of facilities, less depreciation at time of transfer. This depreciation schedule should be generally recognized and follow GAAP. 5. Expenses resulting from integration of facilities: Hutchinson Utility Commission and Glencoe Utilities, when acquiring cooperative territory, will pay for reasonable, identifiable distribution facility integration expenses. 6. Obligation to serve: Transfers to Hutchinson, and Glencoe at date of annexation. Arrangements or exception agreements are permitted for situations where extenuating circumstances prevent the transfer of service for a period of time. 7. Start of Compensation (the compensation period): a.) Existing customers: 10 years -- electric customers existing as of the date a municipal annexation is approved by the City of Glencoe and /or City of Hutchinson b.) Future customers: 10 years beginning at date of service to the first electric customer in an annexed area (where the electric customer is other than street lighting). 8. Amount of compensation: Hutchinson Utility Commission and Glencoe Utilities will annually pay 15 mills per kwh sold to customers in the annexed area during the compensation period for future and existing customers. The mill rate will apply throughout the term of the compensation period. In the event an individual customers' annual retail electric energy useage exceeds 15 GWH, then Hutchinson Utility Commission and Glencoe Utilities will annually pay 7.5 mills for each kwh of retail electric energy beyond 15 GWH that it sold to a customer in the acquired area. 9. Municipal Development: For land owned and developed by the municipality, the municipal utility will pay 10 mills per kwh during the 10 years following the date of annexation, capped at 250,000 kwh in sales per customer total lifetime. 10. Term: The term of this agreement is for 10 years from the date of signature, either party may terminate the agreement by providing six months written notice to the other party. This agreement will also be terminated in the event territory legislation is enacted by the State of Minnesota. 11. Prior Agreements: This agreement is intended to supersede all agreements between the parties relating to the subject matter. However, it is understood that properties currently developed or in development will follow the agreements that were in place at time of annexation. 12. Please refer to Exhibit A for a sample calculation. Exhibit A HUC Information from Audited Financial Statements $ 1,287.33 Number of meters at End of year residential Average annual Monthly Years end of year electric useage useage Useage 2004 5,744 46,107,858 8,027 669 2005 5,685 49,867,604 8,772 731 2006 5,741 49,931,627 8,697 725 2007 5,754 51,088,707 8,879 740 2008 5,787 49,397,391 8,536 711 Average 8,582 715 Hutchinson Utilities Commission, Glecoe Municipal Utilities, and McLeod Co -op have agree to a .015 mill rate. Sample Calculation (mill rate x KWHR annual useage = compensation per year): $ 0.0150 Mill rate 8.582 KWHR average annual useage $ 128.73 Compensation per year Number of vears 10 $ 1,287.33 9 $ 1,158.60 8 $ 1,029.86 7 $ 901.13 6 $ 772.40 5 $ 643.67 4 $ 514.93 3 $ 386.20 2 $ 257.47 1 $ 128.73 Example 1. Assume a parcel of property is annexed into the city, and a new home is constructed immediately, then McLeod Co -op will receive $128.73 per year from the municipality for the next 10 years for a total of $1287.33 2. Assume a second home is constructed in the same parcel in the second year, then McLeod Co -op will receive $128.73 per year from the muncipality for the next 9 years for a total of $1,158.60