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02-29-2012 HUCMMINUTES Regular Meeting — Hutchinson Utilities Commission Wednesday, February 29, 2012 Call to order — 3:00 p.m. President Bordson called the meeting to order. Members present: President Dwight Bordson, Vice President Craig Lenz; Secretary Leon Johnson; Commissioner Monty Morrow; Attorney Marc Sebora; General Manager Michael Kumm. 1. Thank you to Robert Hantge for Years Served on Commission On behalf of the Hutchinson Utilities Commission, President Bordson presented Robert Hantge with a plaque and meter lamp in appreciation for his years of service to the Commission. 2. Guest — Bruce Kimmel of Ehlers Regarding Presale Report for Bond Refinancing President Bordson welcomed guest, Bruce Kimmel of Ehlers who is the City's financial advisor. Mr Kimmel presented the presale report for the partial refunding of series 2003B public utility revenue bonds for Hutchinson Utilities Commission and discussed the savings benefits of refinancing. Page 5 of the report highlights the potential savings on a per year basis. After discussion, a motion was made by Vice President Lenz, seconded by Secretary Johnson to approve refinancing the 2003B public utility revenue bonds. Motion was unanimously carried. (Report attached.) 3. Swearing In of New Commissioner — Anthony Hanson Attorney, Marc Sebora, swore in the newly elected commissioner, Anthony Hanson. 4. Approve Minutes of January 25, 2012 Regular Meeting The minutes of the January 25, 2012 regular meeting were reviewed. A motion was made by Commissioner Morrow, seconded by Vice President Lenz to approve the minutes. Motion was unanimously carried. 5. Ratify Payment of Bills for January 2012 The January 2012 payables were discussed. A motion was made by Vice President Lenz, seconded by Secretary Johnson to ratify the payment of bills in the amount of $2,636,721.28 (detailed listing in payables book). Motion was unanimously carried. 6. Approve Financial Statements /Budget Year to Date GM Kumm presented the January 2012 financial statements /budget year -to -date. After discussion, a motion was made by Secretary Johnson, seconded by Vice President Lenz to approve the financial statements /budget year -to -date. Motion was unanimously carried. 7. Approve Amended General Manager Employment Agreement President Bordson presented the amended Hutchinson Utilities Commission General Manager Employment Agreement. He explained the language in Section 4: Vehicle Use was amended to read: "Employee shall be entitled to the use of a utilities vehicle for business related purposes." After discussion, a motion was made by 1 Secretary Johnson, seconded by Commissioner Hanson to approve the amended Hutchinson Utilities Commission General Manager Employment Agreement. Motion was unanimously carried. (Amended Agreement attached.) 8. Discuss Proposal from McGrann Shea Carnival Straughn & Lamb to Retain Services President Bordson presented a proposal sent to GM Kumm by McGrann Shea requesting the Commission's consideration in joining MMUA's efforts to retain their services to go before the legislature to secure exemption from the Governor's salary cap for managers' salaries of large municipal utilities. After discussion, the Board recommended GM Kumm report to the MMUA Board Hutchinson Utilities Commission's is interested in joining the coalition provided that MMUA takes a lead role in pursuing exemptions to the Governor's salary cap. (Proposal attached.) 9. Approve Changes to Strategic Plan — Mission, Values and Vision Statements GM Kumm presented Vision Statement One — Community Support of the HUC Strategic Plan Mission, Values and Statements. After discussion, a motion was made by Secretary Johnson, seconded by Vice President Lenz to approve Vision Statement One — Community Support of the HUC Strategic Plan Mission, Values and Statements. Motion was unanimously carried. (Changes attached.) Vision Statement Two — Leadership and Governance will be reviewed and approved in next month's commission meeting. 10. Discuss tenKsolar Project President Bordson presented Mayor Cook's email requesting Hutchinson Utilities Commission's consideration of partnering with the City in the tenKsolar project or taking on the entire project. After reviewing the project analysis, GM Kumm mentioned the tenKsolar project does not fit HUC's mission statement. Incrementally, it increases HUC's costs. After discussion, the Board unanimously decided the tenKsolar project is not a good fit due to three primary reasons: 1) Economics; 2) Existing diversification and amount of renewables in HUC's Integrated Resource Plan; and 3) Anaerobic digestion is a more viable alternative. The Board recommended HUC consider budgeting money in 2013 for an anaerobic digestion feasibility study. (Email and project analysis attached.) 11. Discuss City's Request Regarding Properties in Foreclosure GM Kumm discussed the City of Hutchinson's request for Hutchinson Utilities Commission to collaborate with the City in regards to properties in foreclosure and the issues which may take place after utility shut -offs such as mold and sump pump issues, etc. After discussion, the Board recommended this be an agenda item at a joint City /HUC meeting. 12. Discuss Common Cup GM Kumm explained Bev Bonte of Common Cup approached HUC in December 2011 to request HUC waive the disconnect fees for customers seeking the one -time financial assistance from Common Cup. In exchange for waiving disconnect fees, GM Kumm recommended HUC sponsor the Common Cup Mother's Day Fun Run in the amount of $2,000, which would come out of the CIP budget. After discussion, a motion was made by Commissioner Morrow, seconded by Vice President Lenz to 2 approve a donation of $2,000 to Common Cup for sponsoring the Mother's Day Fun Run. Motion was unanimously carried. 13. Approve Bid Tabulation for Plant 1 Cooling Tower Repair Steve Lancaster handed out the bid tabulation for plant 1 cooling tower repair. This was a budgeted item for $170,000. After discussion, a motion was made by Secretary Johnson, seconded by Commissioner Hanson to approve the bid tabulation for plant 1 cooling tower repair from Midwest Towers for $88,595. Motion was unanimously carried. (Bid tabulation attached.) 14. Approve Bid Tabulation for Unit 5, Plant 1 Building Modification, Phase 1 Overhead Door Steve Lancaster handed out the bid tabulation for unit 5, plant 1 building modification, phase 1 overhead door. This was a budgeted item. After discussion, a motion was made by Vice President Lenz, seconded by Commissioner Morrow to approve the bid tabulation for unit 5, plant 1 building modification, phase 1 overhead door from White Construction for $98,450. Motion was unanimously carried. (Bid tabulation attached.) 15. Approve Change Order No. W -003 to Wartsila Contract Steve Lancaster presented change order No. W -003 to the Wartsila contract for a deduct from the original contract of $8,665. After discussion, a motion was made by Commissioner Hanson, seconded by Vice President Lenz to approve change order No. W -003 to the Wartsila contract for a deduct of $8,665. Motion was unanimously carried. (Change order attached.) 16. Approve 3M Transportation Agreement 2012 John Webster presented the 3M transportation agreement 2012. After discussion, a motion was made by Vice President Lenz, seconded by Commissioner Morrow to approve the 3M transportation agreement 2012. Secretary Johnson abstained from voting because of a conflict of interest. Motion was unanimously carried. (3M transportation agreement 2012 attached.) 17. Approve Requisition #004791 for Installation of Natural Gas Distribution - Plant 1 John Webster presented requisition #004791 for installation of natural gas distribution - plant 1. This project is being done in conjunction with the new engine install this year to bring the line to the south side of the plant. After discussion, a motion was made by Secretary Johnson, seconded by Vice President Lenz to approve requisition #004791 for installation of natural gas distribution - plant 1. Motion was unanimously carried. (Requisition attached.) 18. Review Policies and Requirements Booklet GM Kumm presented policies and requirements booklet, sections: electric meter requirements; electric meter placement; and sealing of meters - electric. This is part of our policy review and no changes are requested at this time. 3 19. Rescind 2006 Compensation Plan Policy GM Kumm presented the 2006 compensation plan policy to be rescinded due redundancy as it is in both the exempt and non - exempt employee handbooks. A motion was made by Vice President Lenz, seconded by Secretary Johnson to rescind the 2006 compensation plan policy. Motion was unanimously carried. (Policy attached.) 20. Approve Changes to Exempt and Non - Exempt Handbooks GM Kumm presented changes to exempt and non - exempt handbooks, section: compensation plan. Changes to verbiage were made for clarity and consistency. After discussion, a motion was made by Secretary Johnson, seconded by Vice President Lenz to approve changes to exempt and non - exempt handbooks, section: compensation plan. Motion was unanimously carried. (Changes attached.) 21. Division Reports Electric — Steve Lancaster • Reviewing applications submitted for the open system controller position. • This morning, McLeod Coop called for HUC's help with their outages and lines down. Gas — John Webster • Minnesota Pipeline Safety closed the inspection submitted September 2011; no issues were found. • Presenting on emergency response at the Midwest Energy Association meeting in two weeks. • Will be working on designing a hedging program for MMGA. • Damage Prevention meeting on March 22 at the Event Center. Business — Jan Sifferath • Received over $8,000 in the last two months from the Revenue Recapture program. • Jon Guthmiller reported the Home Builder's Association Show and the Home & Garden Show were both a huge success. Will continue to promote these shows in the future. Finance — Jared Martig • Finishing up the 2011 audit. Paul Harvego of Conway, Deuth & Schmiesing will be presenting to the commission next month. 22. Legal Update Attorney Sebora reported the City was served with a condemnation lawsuit involving two properties. This is in relation to the CapX 20/20 power line project. The properties are in Sibley County along the HUC pipeline. HUC holds pipeline easements on these properties. HUC will be performing a cathodic protection study to determine if the new power line induces stray voltage /current onto the pipeline. If equipment has to be installed to drain the voltage /current, all costs will be reimbursed by GRE. 12 Attorney Sebora recommended a workshop be held regarding governmental responsibilities for the new commissioners. A motion was made by Secretary Johnson, seconded by Vice President Lenz to schedule a workshop at 2:00 p.m. on Wednesday, March 28 at Hutchinson Utilities Commission regarding governmental responsibilities. Motion was unanimously carried. Attorney Sebora mentioned Jeremy Carter may be sitting in on future Hutchinson Utilities Commission meetings. It was noted regular Hutchinson Utilities Commission meetings are open to the public and Jeremy is welcome to attend. Unfinished Business • GM Kumm presented information on the boiler retrofit for plant 2. • John Webster discussed the United Farmers Cooperative's Natural Gas Firm Transportation Capacity, Interconnect and Natural Gas Commodity Agreements. John will be submitting the three agreements to the Board for approval at the next commission meeting. New Business • GM Kumm discussed a change in notifying commissioners of advertisement for bids for budgeted projects. Currently, the commissioners are notified in commission meetings. GM Kumm proposes in the future the commissioners will be notified via email of HUC advertising for bids. This is to avoid possible delays in projects. • GM Kumm explained HUC wants to take advantage of the natural gas market at its current state. Therefore, GM Kumm and John Webster are researching the purchase of strips of natural gas about six to nine years out to help stabilize future rates. There being no further business, a motion was made by Commissioner Hanson, seconded by Vice President Lenz to adjourn the meeting at 6:06 p.m. Motion was unanimously carried. ATTEST: Dwight Bordson, President 5 Leon Johnson, Secretary MINUTES Regular Meeting — Hutchinson Utilities Commission Wednesday, February 29, 2012 Call to order — 3:00 p.m. President Bordson called the meeting to order. Members present: President Dwight Bordson, Vice President Craig Lenz; Secretary Leon Johnson; Commissioner Monty Morrow; Attorney Marc Sebora; General Manager Michael Kumm. 1. Thank you to Robert Hantge for Years Served on Commission On behalf of the Hutchinson Utilities Commission, President Bordson presented Robert Hantge with a plaque and meter lamp in appreciation for his years of service to the Commission. 2. Guest — Bruce Kimmel of Ehlers Regarding Presale Report for Bond Refinancing President Bordson welcomed guest, Bruce Kimmel of Ehlers who is the City's financial advisor. Mr Kimmel presented the presale report for the partial refunding of series 2003B public utility revenue bonds for Hutchinson Utilities Commission and discussed the savings benefits of refinancing. Page 5 of the report highlights the potential savings on a per year basis. After discussion, a motion was made by Vice President Lenz, seconded by Secretary Johnson to approve refinancing the 2003B public utility revenue bonds. Motion was unanimously carried. (Report attached.) 3. Swearing In of New Commissioner — Anthony Hanson Attorney, Marc Sebora, swore in the newly elected commissioner, Anthony Hanson. 4. Approve Minutes of January 25, 2012 Regular Meeting The minutes of the January 25, 2012 regular meeting were reviewed. A motion was made by Commissioner Morrow, seconded by Vice President Lenz to approve the minutes. Motion was unanimously carried. 5. Ratify Payment of Bills for January 2012 The January 2012 payables were discussed. A motion was made by Vice President Lenz, seconded by Secretary Johnson to ratify the payment of bills in the amount of $2,636,721.28 (detailed listing in payables book). Motion was unanimously carried. 6. Approve Financial Statements /Budget Year to Date GM Kumm presented the January 2012 financial statements /budget year -to -date. After discussion, a motion was made by Secretary Johnson, seconded by Vice President Lenz to approve the financial statements /budget year -to -date. Motion was unanimously carried. 7. Approve Amended General Manager Employment Agreement President Bordson presented the amended Hutchinson Utilities Commission General Manager Employment Agreement. He explained the language in Section 4: Vehicle Use was amended to read: "Employee shall be entitled to the use of a utilities vehicle for business related purposes." After discussion, a motion was made by Secretary Johnson, seconded by Commissioner Hanson to approve the amended Hutchinson Utilities Commission General Manager Employment Agreement. Motion was unanimously carried. (Amended Agreement attached.) 8. Discuss Proposal from McGrann Shea Carnival Straughn & Lamb to Retain Services President Bordson presented a proposal sent to GM Kumm by McGrann Shea requesting the Commission's consideration in joining MMUA's efforts to retain their services to go before the legislature to secure exemption from the Governor's salary cap for managers' salaries of large municipal utilities. After discussion, the Board recommended GM Kumm report to the MMUA Board Hutchinson Utilities Commission's is interested in joining the coalition provided that MMUA takes a lead role in pursuing exemptions to the Governor's salary cap. (Proposal attached.) 9. Approve Changes to Strategic Plan — Mission, Values and Vision Statements GM Kumm presented Vision Statement One — Community Support of the HUC Strategic Plan Mission, Values and Statements. After discussion, a motion was made by Secretary Johnson, seconded by Vice President Lenz to approve Vision Statement One — Community Support of the HUC Strategic Plan Mission, Values and Statements. Motion was unanimously carried. (Changes attached.) Vision Statement Two — Leadership and Governance will be reviewed and approved in next month's commission meeting. 10. Discuss tenKsolar Project President Bordson presented Mayor Cook's email requesting Hutchinson Utilities Commission's consideration of partnering with the City in the tenKsolar project or taking on the entire project. After reviewing the project analysis, GM Kumm mentioned the tenKsolar project does not fit HUC's mission statement. Incrementally, it increases HUC's costs. After discussion, the Board unanimously decided the tenKsolar project is not a good fit due to three primary reasons: 1) Economics; 2) Existing diversification and amount of renewables in RUC's Integrated Resource Plan; and 3) Anaerobic digestion is a more viable alternative. The Board recommended HUC consider budgeting money in 2013 for an anaerobic digestion feasibility study. (Email and project analysis attached.) 11. Discuss City's Request Regarding Properties in Foreclosure GM Kumm discussed the City of Hutchinson's request for Hutchinson Utilities Commission to collaborate with the City in regards to properties in foreclosure and the issues which may take place after utility shut -offs such as mold and sump pump issues, etc. After discussion, the Board recommended this be an agenda item at a joint City /HUC meeting. 12. Discuss Common Cup GM Kumm explained Bev Bonte of Common Cup approached HUC in December 2011 to request HUC waive the disconnect fees for customers seeking the one -time financial assistance from Common Cup. In exchange for waiving disconnect fees, GM Kumm recommended HUC sponsor the Common Cup Mother's Day Fun Run in the amount of $2,000, which would come out of the CIP budget. After discussion, a motion was made by Commissioner Morrow, seconded by Vice President Lenz to 2 approve a donation of $2,000 to Common Cup for sponsoring the Mother's Day Fun Run. Motion was unanimously carried. 13. Approve Bid Tabulation for Plant 1 Cooling Tower Repair Steve Lancaster handed out the bid tabulation for plant 1 cooling tower repair. This was a budgeted item for $170,000. After discussion, a motion was made by Secretary Johnson, seconded by Commissioner Hanson to approve the bid tabulation for plant 1 cooling tower repair from Midwest Towers for $88,595. Motion was unanimously carried. (Bid tabulation attached.) 14.Approve Bid Tabulation for Unit 5, Plant 1 Building Modification, Phase 1 Overhead Door Steve Lancaster handed out the bid tabulation for unit 5, plant 1 building modification, phase 1 overhead door. This was a budgeted item. After discussion, a motion was made by Vice President Lenz, seconded by Commissioner Morrow to approve the bid tabulation for unit 5, plant 1 building modification, phase 1 overhead door from White Construction for $98,450. Motion was unanimously carried. (Bid tabulation attached.) 15. Approve Change Order No. W -003 to Wartsila Contract Steve Lancaster presented change order No. W -003 to the Wartsila contract for a deduct from the original contract of $8,665. After discussion, a motion was made by Commissioner Hanson, seconded by Vice President Lenz to approve change order No. W -003 to the Wartsila contract for a deduct of $8,665. Motion was unanimously carried. (Change order attached.) 16.Approve 3M Transportation Agreement 2012 John Webster presented the 3M transportation agreement 2012. After discussion, a motion was made by Vice President Lenz, seconded by Commissioner Morrow to approve the 3M transportation agreement 2012. Secretary Johnson abstained from voting because of a conflict of interest. Motion was unanimously carried. (3M transportation agreement 2012 attached.) 17.Approve Requisition #004791 for Installation of Natural Gas Distribution — Plant 1 John Webster presented requisition #004791 for installation of natural gas distribution — plant 1. This project is being done in conjunction with the new engine install this year to bring the line to the south side of the plant. After discussion, a motion was made by Secretary Johnson, seconded by Vice President Lenz to approve requisition #004791 for installation of natural gas distribution — plant 1. Motion was unanimously carried. (Requisition attached.) 18. Review Policies and Requirements Booklet GM Kumm presented policies and requirements booklet, sections: electric meter requirements; electric meter placement; and sealing of meters - electric. This is part of our policy review and no changes are requested at this time. 3 19. Rescind 2006 Compensation Plan Policy GM Kumm presented the 2006 compensation plan policy to be rescinded due redundancy as it is in both the exempt and non- exempt employee handbooks. A motion was made by Vice President Lenz, seconded by Secretary Johnson to rescind the 2006 compensation plan policy. Motion was unanimously carried. (Policy attached.) 20. Approve Changes to Exempt and Non - Exempt Handbooks GM Kumm presented changes to exempt and non - exempt handbooks, section: compensation plan. Changes to verbiage were made for clarity and consistency. After discussion, a motion was made by Secretary Johnson, seconded by Vice President Lenz to approve changes to exempt and non - exempt handbooks, section: compensation plan. Motion was unanimously carried. (Changes attached.) 21. Division Reports Electric — Steve Lancaster • Reviewing applications submitted for the open system controller position. • This morning, McLeod Coop called for RUC's help with their outages and lines down. Gas — John Webster • Minnesota Pipeline Safety closed the inspection submitted September 2011; no issues were found. • Presenting on emergency response at the Midwest Energy Association meeting in two weeks. • Will be working on designing a hedging program for MMGA. • Damage Prevention meeting on March 22 at the Event Center. Business — Jan Sifferath • Received over $8,000 in the last two months from the Revenue Recapture program. • Jon Guthmiller reported the Home Builder's Association Show and the Home & Garden Show were both a huge success. Will continue to promote these shows in the future. Finance — Jared Martig • Finishing up the 2011 audit. Paul Harvego of Conway, Deuth & Schmiesing will be presenting to the commission next month. 22. Legal Update Attorney Sebora reported the City was served with a condemnation lawsuit involving two properties. This is in relation to the CapX 20/20 power line project. The properties are in Sibley County along the HUC pipeline. HUC holds pipeline easements on these properties. HUC will be performing a cathodic protection study to determine if the new power line induces stray voltage /current onto the pipeline. If equipment has to be installed to drain the voltage /current, all costs will be reimbursed by GRE. 12 Attorney Sebora recommended a workshop be held regarding governmental responsibilities for the new commissioners. A motion was made by Secretary Johnson, seconded by Vice President Lenz to schedule a workshop at 2:00 p.m. on Wednesday, March 28 at Hutchinson Utilities Commission regarding governmental responsibilities. Motion was unanimously carried. Attorney Sebora mentioned Jeremy Carter may be sitting in on future Hutchinson Utilities Commission meetings. It was noted regular Hutchinson Utilities Commission meetings are open to the public and Jeremy is welcome to attend. Unfinished Business • GM Kumm presented information on the boiler retrofit for plant 2. • John Webster discussed the United Farmers Cooperative's Natural Gas Firm Transportation Capacity, Interconnect and Natural Gas Commodity Agreements. John will be submitting the three agreements to the Board for approval at the next commission meeting. New Business • GM Kumm discussed a change in notifying commissioners of advertisement for bids for budgeted projects. Currently, the commissioners are notified in commission meetings. GM Kumm proposes in the future the commissioners will be notified via email of HUC advertising for bids. This is to avoid possible delays in projects. • GM Kumm explained HUC wants to take advantage of the natural gas market at its current state. Therefore, GM Kumm and John Webster are researching the purchase of strips of natural gas about six to nine years out to help stabilize future rates. There being no further business, a motion was made by Commissioner Hanson, seconded by Vice President Lenz to adjourn the meeting at 6:06 p.m. Motion was unanimously carried. Leon Johnson, Secretary ATTEST: D Bo dson, President 6i Memo To: Board of Commissioners, Hutchinson Utilities Commission From: Bruce Kimmel and Steve Apfelbacher Date: February 29, 2012 Subject: Partial Refunding of Series 2003B Public Utility Revenue Bonds The Hutchinson Utilities Commission (HUC) has expressed mutual interest in refinancing the City's Series 2003B Public Utility Revenue Bonds (the Bonds), to capture the benefit of the current historic low interest rate environment prior to the Bonds' June 2013 call date. The Bonds funded mostly "new money' costs relating to HUC's natural gas pipeline project but also advance refunded the City's Series 2001 B Bonds. Because federal law allows tax - exempt bonds only one advance refunding, the proposed refunding will refinance only the new money portion of the Bonds and leave the 2001 B refunded portion in place. The attached scenario reflects Ehlers' estimate of how HUC and the City might structure this refinancing, and of the potential savings given current rates and the Bonds' Aa2 rating (recalibrated up from Al in 2010). The "Debt Service Comparison" shows total net savings of $1.23 million and average savings of $88,100 in 2012 -2025. Present value savings equal 4.3% of the refunded debt service, exceeding the state's 3% savings minimum. The municipal bond market has largely rebounded and thrived following the financial system crisis of 2009 -2010, but issuers' ability to sell large and /or purely revenue - backed bonds (vs. those with general obligation pledges) via competitive offerings remains limited. We therefore suggest that the City issue this particular refunding via a negotiated sale with a bond underwriter to be selected through a request for proposal (RFP) process. If the HUC Board endorses the refunding, we suggest the following general timeline: March 1 — March 16: Ehlers coordinates bond underwriter RFP; advises City and HUC staff in selection of underwriting firm; solidifies bond issuance timeline. March 19 — April 23: Bond issuance process, including official statement preparation and credit rating analysis; City Council considers bond sale parameters resolution at March 27 meeting, with negotiated pricing to occur on /around April 19. April 24 — 25: City Council and HUC Board receive refunding sale results, with settlement and redemption of 2003B Bonds to occur in late May / early June. I will attend the February 29 HUC Board meeting to discuss the proposed refunding. Please contact me at 651.697.8572 or bkimmel @ehlers - inc.com questions before then, and thank you for the opportunity to advise the Hutchinson Utility Commission. wm,ehlers- inc.com E" N • L E R Minnesota phone 651 -697 -8500 3060 Centre Pointe Drive LEADERS IN PUBLIC FINANCE Offices also in Wisconsin and Illinois fax 651- 697 -8555 Roseville, MN 55113-1122 toll free 800 -552 -1171 Hutchinson, MN $25.410.000 Public Utility RevenugRefunding Bonda. Dated: April 1, 2012 Proposed Partial Net Cash Refunding cf the New Money Portion of Series 2003B Public Utility Revenue Bonds Sources & Uses Dated nwomox| Delivered 04/0112012 Sources Of Funds Uses Of Funds Total Underwritees Discount (0.60 2 541.000.00 Deposit to Net Cash Escrow Fund 22,621,021.26 EHLERmS LEADERS IN PUBLIC FINANCE Hutchinson, MN $25,410,000 Public Utility Revenue Refunding Bonds, Dated: April 1, 2012 Proposed Partial Net Cash Refunding of the New Money Portion of Series 2003B Public Utility Revenue Bonds Debt Service Schedule Date Principal Coupon Interest Total P +1 Fiscal Total 04/01/2012 - - Average Life 8.264 Years 12/01/2012 1,530,000.00 0.600% 372,421.67 1,902,421.67 1,902,421.67 06/01/2013 — 2.6147167% - 274,726.25 274,726.25 12/01/2013 1,370,000.00 0.850% 274,726.25 1,644,726.25 1,919,452.50 06/01/2014 - —� - -' _ 268,903.75 268,903.75 12/01/2014 1,395,000.00 1.100% 268,903.75 1,663,903.75 1,932,807.50 06/01/2015 - 261,231.25 261,231.25 12/01/2015 1,420,000.00 1.250% 261,231.25 1,681,231.25 1,942,462.50 06/01/2016 - 252,356.25 252,356.25 12/01/2016 1,455,000.00 1.50U% 252,356.25 1,707,356.25 1,9591712.50 06/01/2017 - 241,443.75 241,443.75 12/01/2017 1,490,000.00 1.700% 241,443.75 1,731,443.75 1,972,887.50 06/01/2018 - 228,778.75 228,778.75 12/01/2018 1,530,000.00 1.900% 228,778.75 1,758,778.75 1,987,557.50 06/01/2019 .. _....._..__....._......... _. ...... ..._........ _ ............... .. __._.._.._... ........ .. .. ._. ._... 214,243.75 .. ... ...................._......._..._......_.........................._........._.. 214 243.75 x......_...........'-`_............_...... - .._....._........_............. ....... 12/01/2019 1,570,000.00 2.100% 214,243.75 1,784,243.75 1,998,487.50 06/01/2020 - 197,758.75 197,758.75 12/01/2020 1,615,000.00 2.300% 197,758.75 1,812,758.75 2,010,517.50 06/01/2021 - 179,186.25 179,186.25 - 12/O1/2021 W........_......-- _.........._ ............................. 1,705,000.00 ..... ....... 2.550% ...... ................ .... . 1792186.25 ____.... .......... ....... 1_,8841186.25 _ __.__.._..._....__2x063,372.50_ 06/01/2022 - 157,447.50 157,447.50 12/01/2022 1,855,000.00 2.700% 157,447.50 2,012,447.50 2,169,895.00 06/01/2023 - - 132,405.00 132,405.00 12/01/2023 1,905,000.00 2.900% 132,405.00 2,037,405.00 2,169,810.00 06/01/2024 - 104,782.50 104,782.50 - 12/01/2024 1,980,000.00 3.050% 104,782.50 2,084,782.50 21189,565.00 06/01/2025 - 74,587.50 74,587.510 - 12/01/2025 4,590,000.00 3.250% 74,587.50 4,664,587.50 4,739,175.00 Total $25,410,000.00 $5,548,124.17 $30,958,124.17 - Yield Statistics Bond Year Dollars ..........._ .. ............................... ........ ....... ............... ................... $210,000.00 .................................................................................................._.._. ......__._._................... . Average Life 8.264 Years Average Coupon ......................... 2.6419639% Net Interest Cost _(NIC) . _....------_...... ......__......_ 2.7145639% ............._.. .._._ ____._-.--.---- True Interest Cost (TIC) �M u, 2.6975957% Bond Yield for Arbitrage Purposes — —� _ — 2.6147167% All Inclusive Cost AIC _ , 2.7495955% IRS Form 8038 Net Interest Cost ----- ....__.......... .... . _ ... .......... ._........ ... __... . _ 2.6419639% - ..._._._ ..._.._.__...._.. .... ._......._ ._._.._........ _ ..._.. .-- ..__. ....... _........... Weighted Average Maturity 8.264 Years 2010 Ref 03B $31.725 Pub I SINGLE PURPOSE 1 1/13/2012 1 12:09 PM EHLER LEADERS IN PUBLIC FINANCE Hutchinson, MN $31,725,000 Puplic Utility Revenue Bonds, Series 2003B New Money Portion Only Prior Original Debt Service Date Principal Coupon Interest Total P +1 Fiscal Total 06/01/2012 - 460,974.38 460,974.38 12/01/2012 1,045,000.00 3.750% 460,974.38 1,505,974.38 1,966,948.76 06/01/2013 - 441,380.63 441,380.63 12/01/2013 1,100,000.00 3.800% 441,380.63 1,541,380.63 1,982,761.26 06/01/2014 - 420,480.63 420 480.63 - 12/01/2014 1,155,000.00 3.900% 420,480.63 1,575,480.63 1,995,961.26 06/01/2015 - 397,958.13 397,958.13 12/01/2015 1,210,000.00 4.000% 397,958.13 1,607,958.13 2,005,916.26 06/01/2016 - 373,758.13 373,758.13 12/01/2016 _...........__.._.._..._.. __ ......................._...._ 1,275,000.00 .._ ... ....._... 4.100% .. .._ ° _ ..._ 373,758.13 1,648,758.13 ._........__.... 2,022 516.26 06/01/2017 - 347,620.63 347,620.63 12/01/2017 1,340,000.00 4.200% 347,620.63 1,687,620.63 2,035,241.26 06/01/2018 - 319,480.63 319,480.63 12/01/2018 1,410,000.00 4.250% 319,480.63 1,729,480.63 2,048,961.26 06/01/2019 289,518:13 .......... ............— - 289, 518. 13.........._...............__....... ...._..........._ -- -._......... 12/01/2019 1,480,000.00 4.300% 289,518.13 1,769,518.13 2,059,036.26 06/01/2020 - 257,698.13 257,698.13 - 12/01/2020 1,560,000.00 4.400% 257,698.13 1,817,698.13 2,075,396.26 06/01/2021 - 223,378.13 223,378.13 12/01/2021 _._._._. ......_......._.__. .. 1,680,000.00 4.500% 223,378.13 1, 903, 378.13 _2,_126,756.26 06/01/2022 - 185,578.13 185,578.13 12/01/2022 1,860,000.00 4.625% 185,578.13 2,045,578.13 2,231,156.26 06/01/2023 - 142,565.63 142,565.63 12/01/2023 1,950,000.00 4.625% 142,565.63 2,092,565.63 2,235,131.26 06/01 /2024 97,471.88 _97,471.88 .... _ .......... .. - 12/01/2024 2,055,000.00 4.625% 97,471.88 2,152,471.88 2,249,943.76 06/01/2025 - 49,950.00 49,950.00 12/01/2025 2,160,000.00 4.625% 49,950.00 2,209,950.00 2,259,900.00 Total $21,280,000.00 - $8,015,626.38 $29,295,626.38 - Yield Statistics Base date for Avg_ Life & A . Average Life__ _ Avera a Cou n Weighted Average Maturi�Par Basis Refunding Bond Information Refunding Dated Date Refunding Delivery Date Ser 2003B $31.725 Pub Uti 1 SINGLE PURPOSE 1 1/13/2012 1 12:09 PM EHLERS LEADERS IN PUBLIC FINANCE 4/01/2012 8.094 Years -- ..... _............... .... 8.094 Years 4/01/2012 4/01/2012 Hutchinson, MN $25,410,000 Public Utility Revenue Refunding Bonds, Dated: April 1, 2012 Proposed Partial Net Cash Refunding of the New Money Portion of Series 2003B Public Utility Revenue Bonds Debt Service Comparison Date Total P +I DSR Net New D/S Old Net D/S Savings 12/01/2012 1,902,421.67 (16,932.96) 1,884,969.97 Net PV Benefit / $24,379,298.41 PV Refunded Debt Service 1,966,948.76 81,978.79 12/01/2013 1,919,452.50 (25,410.00) 1,894,042.50 1,982,761.26 88,718.76 12/01/2014 1,932,807.50 (25,410.00) 1,907,397.50 1,995,961.26 88,563.76 12/01/2015 1,942,462.50 (25,410.00) 1,917,052.50 2,005,916.26 88,863.76 12/01/2016 -- -_ _— 1,959,712.50 (25,410.00 __ 1,934,302.50 - -- —_ –.. 2,022,516.26 88,213.76 12/01/2017 1,972,887.50 (25,410.00) 1,947,477.50 2,035,241.26 87,763.76 12/01/2018 1,987,557.50 (25,410.00) 1,962,147.50 2,048,961.26 86,813.76 12/01/2019 1,998,487.50 (25,410.00) 1,973,077.50 2,059,036.26 85,958.76 12/01/2020 2,010,517.50 (25,410.00) 1,985,107.50 2,075,396.26 90,288.76 12/01 /2021 2,063,372.50 - ...................._....... (25,410.00) __....._...._.._. 2,0 37,962.50 _.._......_...._....8878 .. 2, 126,756.26 8 3 8,9.7 6 7 88, 79 3.. 6 12/01/2022 2,169,895.00 (25,410.00) 2,144,485.00 2,231,156.26 86,671.26 12/01/2023 2,169,810.00 (25,410.00) 2,144,400.00 2,235,131.26 90,731.26 12/01/2024 2,189,565.00 (25,410.00) 2,164,155.00 2,249,943.76 85,788.76 12/01/2025 4,739,175.00 (2,566,410.00) 2,172,765.00 2,259,900.00 87,135.00 Total $30,958,124.17 (2,888,262.96) $28,069,342.47 $29,295,62638 $1,226,283.91 PV Analvsis Summary (Net to Net Gross PV Debt Service Savings ..................... 8777 ....._...._ _...._..._. _..........._......... 8778. 8777.._ . (1,030,701.59) 8777... EffectsofchangesinDSRinv estlnents ..... ..........._...__...__._.. ....... ....__._ .........._....._ 7788_ _ .....2,0721062.92 Net PV Cashflow Savings @ 2.615 %(Bond Yield)..... L 1,041,361.33 Conpngeency or Rounding Amount .................... _�_ _.. _.____._.. - -. 518.74 ._ __ 8787.. 8788.._ 7778 ............ .. ...._._...._—..._ -- Net Present Value Benefit __._.....__ ................. . 7787. .. ._......__ 7777.. 8777.. .__._._. _......... _ $1,041,880.07 _ _......_._. _.. Net PV Benefit / $24,379,298.41 PV Refunded Debt Service 4.274% Net PV Benefit / $21,280,000 Refunded Principal._. 8787 _....... _ ............... _ _.... 8777 ......... 8777. _ ... _. _ . _.. ..........7777.. ... 4.896% Net PV Benefit / $25,410,000 Refunding Principal.: 8777. 4.100% Refunding Bond Information Refunding Dated Date 4/01/2012 Refunding Delivery Date 4/01/2012 2010 Ref 03B $31.725 Pub I SINGLE PURPOSE 1 1/13/2012 1 12:09 PM EHLERS LEADERS IN PUBLIC FINANCE Hutchinson, MN $31,725,000 Puplic Utility Revenue Bonds, Series 2003B New Money Portion Only Debt Service To Maturity And To Call Total $21,280,000.00 $1,363,32939 $22,643,32939 $21,280,000.00 Refunded Refunded Yield Statistics Base date for Avg. Life & Avg_Co�o11 Calculation 4/01 /2012 Average Life .._ _....... . _. . ....... .. ... ....... . _.... _ Date Bonds Interest D/S To Call Principal Coupon Interest Refunded DIS Fiscal Total 06/01/2012 - 460,974.38 460,974.38 - 460,974.38 460,974.38 ...___ _....__...... 4/01/2012 12/01/2012 1,045,000.00. 460,974.38 1,505,974.38 1,045,000.00 3.750% 460,974.38 1,505,974.38 1,966,948.76 06/01/2013 20,235,000.00 441,380.63 20,676,380.63 - 441,380.63 441,380.63 12/01/2013 - 1,100,000.00 3.800% 441,380.63 1,541,380.63 1,982,761.26 06/01/2014 _ mm ...... - _ 42.' 0,480,63 _ 420,480.63 12/01/2014 1,155,000.00 3.900% 42,480.63 1,575,480.63 1,995,961.26 06/01/2015 - 397,958.13 397,958.13 12/01/2015 1,210,000.00 4.000% 397,958.13 1,607,958.13 2,005,916.26 06/01/2016 - 373,758.13 373,758.13 12/01/2016 ------ -- 1,275OOOAO_ 4100% 373,7A -I 1,648.,758.13,_ 2,022,516,26__ 06/01/2017 347,620.63 347,620.63 12/01 /2017 1,340,000.00 4.200% 347,620.63 1,687,620.63 2,035,241.26 06/01/2018 - 319,480.63 319,480.63 12/01/2018 1,410,000.00 4.250% 319,480.63 1,729,480.63 2,048,961.26 06/012019 - 289,518.13 289,518.13 12/01 /2019 1,480,000.00 4.300% 289,518.13 1,769,518.13 2,059,036.26 06/01 /2020 - 257,698.13 257,698.13 12/01 /2020 1,560,000.00 4.400% 257,698.13 1,817,698.13 2,075,396.26 06/012021 - 223,378.13 223,378.13 12/01 /2021 - 1680,000.00 4.500% 223,378.13 1,903,378.13 2,126,756.26 06/01 /2022 - 185,578.13 185,578.13 12/01 /2022 1,860,000.00 4.625% 185,578.13 2,045,578.13 2,231,156.26 06/01 /2023 - 142,565.63 142,565.63 - 12/01/2023 1,950,000.00 4.625% 142,565.63 2,092,565.63 2,235,131.26 06/01 /2024 ............................................ ............................... ..............I...... ....- — - .. .......... . ..... ...... 97,471-88 .......... 97,471.88 - 12/01 /2024 2,055,000.00 4.625% 97,471.88 2,152,471.88 2,249,943.76 06/01/2025 - 49,950.00 49,950.00 12/01/2025 2,(60,000.00 4.625% 49,950.00 2,209,950.00 2,259,900.00 Total $21,280,000.00 $1,363,32939 $22,643,32939 $21,280,000.00 $8,015,626.38 $29,295,626.38 Yield Statistics Base date for Avg. Life & Avg_Co�o11 Calculation 4/01 /2012 Average Life .._ _....... . _. . ....... .. ... ....... . _.... _ 8.094 Years Average Coupon .................... . _................ ... ... ................ ....._... ........... 4.6538443 % Weighted Average Maturity {Par Basis) ............ 8.094 Years Refunding Bond Information Refunding Dated Date _ _ __. _....._ . _._ . _..._ _._. _. __. _. _. _ -- __. _.______. -.._...._.__.._-_-------.....__.........._ .._._.__....._._....._...__.... _ 4/01/2012 Kefunding Delivery Date...- ... ....... .. ... . ......... ._ ........... ...___ _....__...... 4/01/2012 Ser 20038 $31.725 Pub Uti I SINGLE PURPOSE 1 1113/2012 1 12:09 PM EHLERS LEADERS IN PUB LIC FINANCE Hutchinson Utilities Commission General Manager Employment Agreement Introduction This Agreement, made and entered into this 1st day of December, 2011, by and between the Hutchinson Utilities Commission, a Minnesota Municipal Corporation, (hereinafter called "Employer ") and Michael L. Kumm, (hereinafter called "Employee ") both of whom agree as follows: Section 1: Term The term of this agreement shall be for an initial period of one (1) year from December 1, 2011, to November 30, 2012. For a period of three months after the date of this agreement, Employee and Employer shall have the right to request modifications to this agreement, subject to approval of the other party. Section 2: Compensation The Employer agrees to pay Employee an annual base salary of $167,000.00 as conditioned upon any leave credit in lieu of compensation policy enacted by the Commission. Section 3: Vacation, Sick Leave and Compensatory Time Whereas the Employee, at the time of signing this agreement, was a regular full time employee of the Employer and had accrued vacation and compensatory time, he shall be allowed to carry over 250 hours of vacation time and 100 hours of compensatory time into this contract term. Employee shall continue to accrue vacation, compensatory time and sick time pursuant to Employer's policies. Employee's current accrual of sick time is not affected by this contract. Section 4: Vehicle Use Employee shall be entitled to the use of a utilities vehicle for business related purposes. Section 5: Employer's Policies Except as set out in this agreement, Employee shall abide by all of Employer's rules, regulations and policies. In a like manner, Employee shall be entitled to all other benefits available to Employers' exempt employees. Hutc 'nson Utilities Commission Dwigfft Bordson, President Attest: Leon Johnson, Secretary & -1 �/ ), klA�� Michael L. Kumm, General Manager McGRANN SHEA CARNIVAL STRAUGHN & LAMB, CHARTERED ATTORNEYS AT LAW VILLIAM R. MCGRANN IOUGLAS M. CARNIVAL ROBERT O. STRAUGHN PETER L. COOPER KATHLEEN M. LAMB JOHN R. SCHULZ COREY J. AYLING DEBRA E. YERIGAN SCOTT B. CROSSMAN TIMOTHY J. NOLAN CARLA J. PEDERSEN JOSEPH T. BAGNOLI ROGER T. STELLJES JEFFREY C. URBAN KATHLEEN MICHAELA BRENNAN JENNIFER A. JAMESON CARL S. WOSMEK February 7, 2012 Mike Kumm General Manager Hutchinson Utilities 225 Michigan Street SE Hutchinson, MN 55350 -1940 Re: Governor's Salary Cap Dear Mike: CHRISTINE L. MENNEN JASON H. THOMAS AMY L. COURT EMILY J. PIPER MARK D. MEANEY MICHAEL P. ELDRIDGE JOELLE M. LESTER OF COUNSEL ANDREW J. SHEA VIA E -MAIL AND U.S. MAIL As all of you have recognized in the last few years, the Minnesota Governor's Salary Cap has prevented municipal utilities, along with other local government entities, from providing proper salary levels for their managers. This problem is particularly acute for managers of larger municipal electric utilities. This situation has interfered with recruitment of municipal utility executives and has even resulted in the loss of managers, who have left for other, more lucrative, opportunities. A review of the compensation of the executive officers from the other customer owned utilities in the state, the electric cooperatives, shows that municipal utility manager salaries- are far lower than those of co -op managers. The disparity is particularly striking in view of the fact that a co -op manager's responsibilities are limited to managing a electric distribution system. A municipal utility manager, on the other hand, may be responsible for generation and transmission, as well as other utility enterprise operations such as gas, water and wastewater. In addition, by the best indicators available, the executive compensation problem seems to be getting worse. Most of you were present at a special meeting of municipal utility managers held during the MMUA summer meeting at which the compensation problem was discussed. At that time, the group asked 'rime to investigate the feasibility of pursuing individual exemptions to the Governor's salary cap through administrative review. U.S. BANCORP CENTER - 800 NICOLLET MALL • SUITE 2600 - MINNEAPOLIS, MINNESOTA 55402 -7035 TELEPHONE (612) 338 -2525 - FACSIMILE (61 2) 339 -2386 - WWW.MCGRANNSHEA.COM February 7, 2012 Page 2 Our staff at McGrann Shea Carnival has investigated this option, per your request. We have determined that pursuit of this issue along these lines would be difficult and uncertain. Applications to exempt local government managers from the salary cap have simply not been approved in the last few years and cases involving municipal utility managers man meet a similar fate. The waiver approach is cumbersome with each municipal utility applying separating. In addition, the waiver process would have to be undertaken for each future salary increase, resulting in further administrative burden on individual municipal utilities with no guarantee of success. Although, we do not feel this approach is futile, the most promising recourse open to us seems to be legislative action. An effort by MMUA to secure legislation exempting all municipal utility managers from the salary cap, in my view, would be unwise. It would expose municipal utilities to criticism from fiscal hawks and would put MMUA in the position of supporting an effort that would affect some utilities at the expense of the others. Therefore, I believe that the only way to secure the needed legislative change is through the action by the state's largest municipal utilities acting in concert. I would very much like for you consider joining in a coalition to retain McGrann Shea Carnival to represent this legislative coalition before the legislature to secure an exemption from the Governor's salary cap for mangers' salaries of large municipal utilities. In our view, such an effort would take two legislative sessions. The cost for each of your utilities would be somewhere between $7,000 and $10,000 for each session. Please consider this proposal and contact me to discuss this issue at your earliest convenience. If feasible, I would like to organize a conference call to discuss this issue further and begin the effort. I look forward to hearing from you. Thank you for your consideration of this matter. McGrann Shea Carnival Straughn & Lamb, Chtd 547756.DOCX Mission The Hutchinson Utilities Commission will provide economical, reliable electric and natural gas service within our service territory and the Midwest, while contributing to the economic vitality of the City of Hutchinson and our customers. Values We value the concepts of local control, innovativeness, flexibility in our decision making, and conduct our business in an environmentally responsible manner. We value our community our customers and our employees. We value an employee friendly workplace, provide skills training, and provide a safe work environment. Vision Statement One — Community Support As we move into the next decade, Hutchinson Utilities Commission will continue to be a locally owned public utility that anticipates and meets the community's utility needs at the lowest achievable rates. Hutchinson Utilities Commission, as a publicly owned enterprise, is vital to the community to maintain and enhance the quality of life, the economy, and the environment. Performance Metrics: 1. Track number of passive media activities each year. 2. Track number of promotional media activities each year. We will aim for one a month, or twelve per year. 3. Track the number of visits to schools and other civic organizations. We will aim for six per year. 4. Track participation in activities as they relate to community events. 5. Track statistics as to the number of hits on HUC web -site. 6. Keep list of Hutchinson Utilities Commission/City of Hutchinson Shared Services spreadsheet up to date. This will be updated on an annual basis. 7. Keep the list of Financial Contributions to the City of Hutchinson up to date. This will be updated annually. 8. Track outside organization involvement. 9. Develop and maintain a sponsorship list. Strateeic Objective 1: Reach out to the community. Improve your community through service programs and projects with employee -wide involvement. Demonstrate a deep commitment to the community. Be sure the public is aware of the unique qualities of local ownership, understands the value of the utility asset, knows about its direct and indirect contributions to the community and is informed about issues facing the utility. Strategy 1: Continue performing the following tasks. Tasks: 1. Continue accepting donations for local food shelf during the Holidays. 2. Continue participating in Hunters Ridge Carnival 3. Continue with the Halloween "Light Stick" package 4. Continue to support the volunteer fire department 5. Continue providing treats to dogs for payment at the Drive -up window 6. Continue providing a `treat' to children where the parents are making their payment in the lobby 7. Continue providing plant tours for school age children 8. Continue participating in "Big Rig" Event at the High School. 9. Continue to participate in Water Carnival. 10. Continue to provide money in the budget for monetary contributions to non - profit organizations. 11. Continue conducting annual United Way Fund drives. 12. Continue providing information to customers in need of financial support. 13. Sponsor Common Cup Mothers Day Fun Run 14. Promote an employee community servant event, for example cleaning up a city park. Strategy 2: Identify what is permitted, as it relates to the Law, as far as sponsoring different Non- profit organizations, and participating in different events. Following is a listing of tasks that should be investigated for possible implementation. Tasks: 1. Investigate sponsoring a blood drive at HUC. Strateizic Objective 2: Educate our entire community. Educate citizens about utility services and energy issues and how to participate in the decision - making process. A variety of media targeted to a diverse public, using print, audiovisual and electronic tools, should be part of each utility's tool kit. School children —the consumers and voters of tomorrow —are a key audience for information about energy supplies, efficiency, the environment and local ownership. Strategy 1: Identify the message(s) we want to send to the public, and identify public relations issues. Tasks: Promote commission meetings • Advertise the meeting in HUC lobby • Advertise meeting using HCVN • Advertise meeting using HUC Calendar • Advertise meeting in break room • Advertise meeting on HUC web -site • Advertise meeting on City's web -site 2. Promote HUC Commission meetings to the Government Students. Visit with Government teacher at High School, and advise him of meeting times and dates. 3. Promote Auto -pay and budget billing programs using the following formats: • Promote in lobby • Promote at Open House • Ensure a bill stuffer is scheduled to ensure this is done on an annual basis. • Promote Web -store payments via HUC Web -site 4. Continue to inform where crews will be working in the field to affected customers 5. Continue with slogan for HUC — "Conserve Energy, Save Money" 6. Promote front line employees on HUC web -site, try to do five per month. 7. Promote underground conversion project, this should be done using web -site, newspaper articles, and economic development. 8. Promote Power Plant 1 beautification project 9. Publish Annual Rate Surveys— residential only 10. Publish service response times and reliability statistics via the lobby, lunch room, economic development, and joint meeting. 11. Communicate benefits and things HUC is doing as it relates to Green Power and Bio- fuels 12. Rate stabilization funds – creation, how they are working, affect on the bills. 13. Pipeline completion status, how it is working, affect on our financials, annually update cost savings and post to web -site. 14. Reliability and quality comparison statistics. 15. A general explanation of our plant, generation facilities and other items we have done or are in the process of doing, or will be doing. This should be communicated to all employees via `training programs.' 16. MRES membership – what it means, reason why we did it, benefits. 17. Bundling. 18. Our PILOT to the City and other contributions the Utilities makes to the City through roadway lighting, sharing attorney, sharing IT, sharing HR. 19. Cost of service study. 20. Prepay gas organization. 21. Ensure we communicate the amount of energy —both electricity and also natural gas this community uses, and also communicate the methods of procurement, this includes the timing model for natural gas, and also the integrated resources plan. Develop pie charts for sources of energy, percentage provided from those sources, and also the monetary value of each procured source. The pie charts should be posted on the HUC web -site, in lobby, etc. Emphasize alternative energy /green power – things we have looked at, election for our customers to receive alternative energy power. Strategy 2: Identify methods of communicating the HUC message. Tasks: 1. Continue with activities for Public Power Week. • Continue improving the open house during Public Power Week • Continue inviting Local, State and Federal elected officials to open house for Public Power Week. 2. Have a booth at the Home Shows 3. Continue having Public Service Announcements on the radio and also use HCVN. 4. Ensure we have energy conservation comments on all utility bills. • Prepare schedule for items to be placed in bill stuffers 5. Maintain HUC web -site. Streamline web -site for customer friendliness. 6. Continue advertising what we do for the community in the Leader 7. Sponsor media bits on radio 8. Hire High School Students, College Students, and interns during summer months. Examples of items we could hire students for are painting crews, and distribution crews. 9. Continue to conduct facility tours 10. Give presentations to different civic organizations 11. Send employees to the Chamber Leadership Program 12. Educate public about HUC through the Chamber Leadership Program 13. Advertise in the Quarterly Park and Recreation Newsletter. 14. Provide college scholarships, and participate in MMUA scholarships and MRES scholarship. 15. Use MMUA to ensure development of newsletter 16. Prepare brochure that would be distributed by the Welcome Neighbor, Chamber of Commerce, etc. 17. Investigate establishing a social media site about HUC. 18. Post HUC Commission meeting and packet on HUC web site. 19. Develop video —air on HCVN during public power week, post video on web -site and also display video during public power week. 20. Provide an informal update at the City Council meeting two times per year. 21. Present Natural Gas and Electric Utility vocations at Ridgewater College 22. Present Natural Gas and Electric Utility vocations at Intro. To Careers at High School. 23. Advertise in Guide to Hutchinson, include map to HUC. 24. Advertise on Chamber Table Tent—specifically Public Power Week. 25. Promote web -site via projects HUC is performing. 26. Investigate hosting a Chamber after hours event. 27. Include an explanation of bill on Web -site. Strategy Maintain mechanisms to determine if our efforts are working. Tasks: 1. Continue Tracking activity regarding community events on an annual basis 2. Continue Tracking visits to schools and other civic organizations with reference to educating the public on HUC activities. 3. Continue with one person to record HUC outside involvement regarding community events. Strategic Objective 3: Ouantify and communicate benefits. Constantly articulate the history, mission and values of public power and quantify its benefits to all customers and the community, including information about payments in lieu of taxes and shared - service efficiencies. Every communication provides an opportunity for a message about our utility, from the logo on our vehicles, to our customer newsletter, to each employee's interaction with a customer. Strategy 1: Ensure HUC staff keeps current all items that we do jointly with the City to ensure a detailed account of the combined activities can be communicated to HUC Board and also City Council. Tasks: 1. Update and quantify the shared services list then provide the updated and quantified list to the City Council, HUC, and also to the Leader, so as to inspire the City Council and the Leader to make positive comments about HUC. 2. Continue to place a line item on customers' bills specifying PILOT and also roadway lighting PILOT. 3. Maintain Street Lighting policy and procedures. As issues arise with the policy and/or procedure address them. This includes the PILOT for roadway lighting. 4. Continue with shared IT, HR and Legal Services, at the governing level define whether all three are shared services, or labor agreements(contract labor). 5. Maintain the formula approach for the General Funds Transfer, by using a formula approach. As this relates to HUC it is a PILOT (in accordance with HUC by- laws). In addition, continue to track the PILOT given to the City. In addition, correct the pitfalls with the system. 6. Utility Commission and City Council initiate discussion regarding a Utility Center —{does anything else need to take place in this regard? For example, joint billing? 7. Ensure that joint billing is thoroughly evaluated and also place a timeline on completing its analysis. This would include an implementation plan and its associated time table. Strategy Educate management staff, HUC Commissioners, and the City Council as to the historical events of the HUC, and how those events are being repeated through our present day mission and value statements. Tasks: 1. Publish historical events in the HUC newsletter 2. Assist in maintaining the exhibit at the Historical Society. 3. Maintain and update the history book about HUC. 4. Better utilization of annual joint meeting between City Council and HUC Commission Strategy 3:. Ensure HUC mission and values are reflected by involvement in outside organizations to assist us in shaping our future. Tasks: 1. Staff /employees should maintain their presence in trade organizations, legislative groups at a national, state, and local level. This includes our present level of involvement with the City. Items includes with the City are: One stop shop, City Planning Commission staff meetings, and continued involvement with Shared Services interdepartmentally, Community Leadership Programs and with the City. Michael Kumm From: Steve Cook sent: Saturday, February 18, 2012 8:05 AM 'o: Dwight Bordson.; Craig Lenz; Igjohnson @mmm.com; montymorrow @nu - telecom.net; Anthony Hanson Cc: Michael Kumm; Jeremy Carter; Kent Exner; John Paulson; Marc Sebora Subject: Solar Energy Project Attachments: ten Ksolar_system_scope_summary= _Hutchinson_MN[1 j.pdf Importance: High Dear HUC Commissioners, I am emailing to ask that HUC consider partnering with the city or even taking on the entire tenK solar project as a way to diversify our local energy mix, increase our percentage of renewable energy and enable us to have a direct renewable energy presence within the city. To give a brief recap, tenK solar heard that the city had recently completed a renewable energy suitability study and approached us about doing a project that would be able to take advantage of the expiring 30% renewable tax credit/grant program. In addition, since this would be tenK's first major ground based system and it would be a demonstration unit for future customers, tenK was willing to put another 10% into the project. The end result is that the city would be receiving a 518 KW project for a 40% discount that would provide power at $0.0606 kWh, or $0.06761 kWh when estimated lifetime O &M costs are factored in. The proposed project would supply power to the city's waste water plant, which was attractive because of its higher and fairly consistent load. The project was sized with the intent that almost all, if not all, of the energy would be used on site by the plant. after reviewing the numbers and staff talking to Mike Kumm, we realize that for the city to do this project the simple payback period is simply too long to justify from a pure cost/benefit perspective (16 -19 years based on projected energy fl Wx - %). In addition, we feel that the funds we have available right now for such a project would be better used for some higher priority projects such as partnering with the EDA to construct a business incubator /spec building that would help create new jobs in the community or some other community projects that would provide more immediate benefits. However, I believe the project is still appealing from a long term and renewable energy perspective. It would also offer some possible secondary community value through positive public relations, visits by potential customers to the community, potential future economic development opportunities that could possibly be spawned, and learning opportunities for area schools. Because of that I would like to ask if HUC would consider partnering with the city or doing the project on your own? While I understand that the above cost is higher than what our energy is purchased for now and higher than energy costs are projected to be when the new generation system is fully operational, I would ask you to consider the value of increasing our percentage of renewable energy and the overall effect of blending that power with the other power we currently have and will have in the future. I would also ask that the value of further diversifying our energy source and the potential value that renewable energy may have locally or on the market, now and in the future, be considered. Personally, it seems to me like we are putting a lot of our eggs in one basket with the natural gas generation. While modeling may show that based on current assumptions it makes sense, I would ask you to consider what will happen if something changes and some of those assumptions don't pan out? For instance what if regulations change concerning natural gas fracking or world demand for natural gas increases significantly. Both could drive gas prices considerably higher. Carbon credits and cap & trade are other possibilities that we may see in the future. .ovally we have seen how the energy market can change over time. For example over the years several investments vere made in new gas generation equipment. The last was in 1994 when the GE LM6000 turbine was brought on line. the HUC history book said the following "This contemporary unit was to be the focal point of the second plant site for HUC. Once the new plant was operating, HUC felt it would be in a terrific selling position because there were only a limited number of plants being built in the region in the foreseeable future; Utilities management conjectured that its second plant could fill the regional void." As recently as 1999 we used to generate about 46% of our local power. However, run time decreased over time due to changes in the energy market to the point where locally we were only generating about 6% of our power by 2003. Now gas is almost becoming a base load source of power again because of new sources of natural gas. We have also seen how usage and demand can change due to the economy and conservation measures, both short term and long term. The point is that the markets change for a variety of reasons and often we have little control over that. As a result it would seem that diversifying our local energy mix would be of value in the long run and since solar would provide a stable price of energy over 25 years or more that it would be an option worth considering. With its discounted price and other technology advances the tenK project in particular would seem to be worth seriously considering. In the future other renewable sources may be looked at as well such as plasma, anaerobic digesters and /or wind, and each could provide additional energy diversification. I understand that about 14% of our power is currently renewable through our power purchase contracts, but I would ask why shouldn't we try to increase that percentage and do as much of that locally as we can? If we blend our 25 MW of base load at $50 /MW with 518 KW at $67.61 the resulting combined power cost would be $50.357, and increase of just .7 %. Additionally, if we sell some of that solar or use it at peak times in the hot summer when our peak demand and energy costs are higher then it would seem that opportunities for greater value are presented. Since in the end this is a decision of the commission I would ask that you consider participating in this project, or at least seriously investigate it further, from the context of long term, sustainable energy diversification and being a municipal power renewable energy leader. Attached you will find an updated version of tenK's proposal. Sincerely, Steve NOTICE: Unless restricted by law, e-mail correspondence to and from the City of Hutchinson or Hutchinson Utilities may be public data subject to the Minnesota Data Practices Act and /or may be disclosed to third parties. d Y n N Y� V1 A � J � a O V O E O v O Q .ti 6 O O V N N N C ryj o ,n c b y N X N o° O � u O � O O � `w w A C a` v O10 u b N O � o ;o 'c a N N n � o � o 'o a` 'c `w o. N � M � o 0 `w w 'C a x N v 0 Y W N O A „M C— v v 0 a` c 7 d a N N b n « b O � V O O d C 1 N O O a N O O O 'c v v v O 41 O. 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No Bid Opened By: Date 2/23/2102 a Unit 5 -Plant 1 Building Modifications, Phase 1 Overhead Door Company Name Bid Price Bond White Construction '' ��Dv Qv 0 ,;C> Cj p Marcy Construction Co. X00.00 �� S Larson Builders Schatz Construction Inc. No Bid Louie C;amman Construction No Bid Witnesses By: Date 2/27/2012 CHANGE ORDER No. W -003 Date of Issuance: 9 February 2012 Effective Date: Project: Engine Generator Set Owner: Hutchinson Utilities Owner's Contract No.: Procurement Commission Wartsila Project: P0803765 Quotation— Q0801707A4R Effective Date of Contract: September 14, 2011 Contractor: Wartsila North America, Inc. Engineer's Project No.: 155503 -002 The Contract Documents are modified as follows upon execution of this Change Order: Delete: 1 x 3500 Gallon lubricating oil service tank including auxiliary systems and equipment(Ladders, rails, and flanged connections, manhole, heater and heater control panel, level indicators and switches), as presented in Paragraphs A2.3 of Exhibits A & B. Provide: Neutral Grounding Reactor to replace Neutral Grounding Resistor System (No Cost Change). Attachments (list documents supporting change): E -mail pricing information from Wartsila Dated February 14, 2012 CHANGE IN CONTRACT PRICE: CHANGE IN CONTRACT TIMES: Original Contract Price: 'h�s gmal Contract Times: g ❑ Working days ❑ Calendar ys ta ntial completion (days or date): $8,290,024.00 Rea for final payment (days or date): [ Increase} [Decrease] from previously approved [Increase] [ crease] from previously approved ange Orders Change Orders No. W -001 thru No. W -002 No. N/A to No. /A: Substantial com etion (days): $443,100.00 Ready for final pa nt ( Contract Price prior to this Change Order: Contract Times pAY e Order: Substantial comr date): $7,846,924.00 Ready for final s o ate): [Iae-rease] [Decrease] of this Change Order: [Increase] [Decreange Or r: Substantial com or date): $8,665.00 Ready for fi payment (days or date): Contract Price incorporating this Change Order: Contract mes with all approved Change Orders: Sub tial completion (days or date): $7,838,259.00 ady for final payment (days or date): N/A RECOMMENDED: ACCEPTED: ACCEPTE , By: - -_, By: � By: E weer (Authorized Signature) Owner (Authorized Signature) Co r for (Authorized ignature) Date: 9 February 2012 Date: � ' �% ' / Date: Eg k,6 t 2012„ Approved by Funding Agency (if applicable): N/A Date: - -- HUC EG Set Procurement Page 1 of 1 From: Anna.Jarowicz @wartsila.com [ mailto :Anna.Jarowicz @wartsila.com] Sent: Tuesday, February 14, 2012 1:26 PM To: Booty, Jim Cc: SLancaster @ci.hutchinson.mn.us; Gary.Groninger @wartsila.com Subject: RE: HUC - Deletion of Oil Service Tank Jim and Steve, The credit of deletion of lube oil tank and instrumentation is $8665 Change of scope: Neutral Grounding Resistor to Neutral Grounding Reactor Replace one Neutral Grounding Resistor (200A, 10s, Temp. Rise 80C, insulation class 8kV, system voltage 13.8kV, installed in NEMA 3 enclosure and two current transformers (single phase) for earth fault, C200 with one Neutral Grounding Reactor (244A, 10s, Temp. Rise 115C, insulation class 220 C, system voltage 13.8kV, installed in a indoor /outdoor fiberglass enclosure) Best Regards, Anna Jarowicz Wartsila north america, inc. W Tel: +1 281 233 6214 t Mob: +1713 304 6522 lil E -mail: anna.iarowicz@ artsila.com This email (including attachments) is confidential, maybe legally privileged, and is intended solely for the use of the intended addressee. If you suspect that you have received this email by mistake, please promptly notify the sender by telephone or by return email and destroy all copies of this email. Please note that reading, disclosing, or any other kind of processing of this email by anyone else but the intended addressee is strictly prohibited and may also be unlawful. From: Booty, Jim fmailto:Jim. Boot @hdrinc.com] Sent: Wednesday, February 08, 2012 7:50 AM To: Jarowicz, Anna Cc: SLancaster (&ci.hutchinson.mn.us: Groninger, Gary Subject: HUC - Deletion of Oil Service Tank Anna Please see attached. This is the template for CO W -003 to delete the oil services tank and recognize the change of low resistance grounding to a grounding reactor. Please review and provide the appropriate costs for insertion (see highlighted areas). Please contact me with questions or concerns. jwb 0 Hutchinson Utilities Commission 225 Michigan Street SE Hutchinson, Minnesota 55350 -1905 Dwight Bordson President Craig Lenz Vice President Leon Johnson Secretary Monty Morrow Commissioner Michael Kumm General Manager Tel 320 - 587 -4746 Fax 320 - 587 -4721 AGREEMENT THIS AGREEMENT IS MADE BY AND BETWEEN HUTCHINSON UTILITIES COMMISSION, HEREINAFTER "HUC" AND MINNESOTA MINING AND MANUFACTURING CO., HEREINAFTER "3M ", ON THE FOLLOWING TERMS AND CONDITIONS. WHEREAS, 3M DESIRES TO PURCHASE, AND HUC SHALL PROVIDE, FIRM GAS FOR USE AT 3M'S HUTCHINSON NORTH AND SOUTH PLANTS; AND, WHEREAS, 3M DOES ACKNOWLEDGE THAT HUC WILL, IN RELIANCE UPON THIS AGREEMENT, ENTER INTO AN AGREEMENT TO PROVIDE FIRM GAS AND TRANSPORTATION. WHEREAS, THE PURCHASE PRICE OF THE CONTRACT QUANTITIES SHALL BE BASED ON THE MONTHLY INSIDE FERC VENTURA INDEX, AS PUBLISHED BY PLATT'S "GAS DAILY ", PLUS /MINUS THE NNG VENTURA TO NBPL VENTURA MONTHLY PREMIUM. NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES MAKE THE FOLLOWING AGREEMENT: HUC SHALL PROVIDE, AND 3M SHALL ACCEPT, FIRM GAS COMMENCING MARCH 1, 2012, AT 9:00 A.M. AND TERMINATING ON JANUARY 1, 2013, AT 9:00 A.M. PAGE 1 OF 4 I . 3M SHALL PAY HUC BY THE FOLLOWING SCHEDULE DURING THE TERM OF THIS AGREEMENT: FLOW THROUGH ALL NATURAL GAS METERS COMMODITY INDEX TRANSPORTATION $0.36 /DTH MONTHLY PEAK DAY DEMAND $9.00 /MCF 2. HUTCHINSON AGREES TO PROVIDE DAILY SWING SUPPLY TO 3M AT THE APPLICABLE PRICE, AS PUBLISHED FOR THE DAY BY PLATT'S "GAS DAILY" IN ITS "DAILY PRICE SURVEY ($ /DTH)" FOR "NORTHERN, VENTURA" "MIDPOINT" ( "DAILY INDEX ") PLUS /MENUS $0.01. SWING SUPPLY IS DEFINED AS SUPPLY INCREASES OR DECREASES, FROM CONTRACTED LEVELS, NOMINATED AT LEAST 24 HOURS PRIOR TO THE START OF THE GAS DAY. 3. HUTCHINSON SHALL PROVIDE 3M WITH REAL -TIME BALANCING, BASED ON THE FOLLOWING: BEST EFFORTS REALTIME SWING NOMINATED LESS THAN 24 HOURS PRIOR TO THE END OF THE GAS DAY ON A BEST EFFORTS BASIS, PRICED AT THE APPLICABLE PRICE, AS PUBLISHED FOR THE DAY BY PLATT'S "GAS DAILY" IN ITS "DAILY PRICE SURVEY ($ /DTH)" FOR "NORTHERN, VENTURA" "MIDPOINT" ( "DAILY INDEX "), PLUS /MINUS $0.15. 4. 3M SHALL PROVIDE To HUC. BY THE END OF THE 1511-1 DAY OF THE MONTH PRIOR TO GAS FLOW THE BASE LOAD LEVEL OF NATURAL GAS_ REQUIRED FOR THE FOLI -OWING MONTH. IN THE EVENT HUC HAS NOT RECEIVED THE BASE LOAD NOMINATION FROM 3M BY THE END OF THE 15TH DAY OF THE MONTH PRIOR TO THE GAS FLOW PAGE 2 OF 4 HUC SHALL NOMINA'T'E THE CURRENT MONTH'S BASE LOAD LEVEL FOR THE FOLLOWING MONTH 5. DURING THE TERM OF THIS AGREEMENT, HUC SHALL NOT BE LIABLE FOR STOPPAGE OF FLOW ON THE PIPELINE, NORTHERN BORDER PIPELINE COMPANY EQUIPMENT FAILURE, OR ANY OTHER FORCE MAJEURE WHICH AFFECTS THE FLOW OF GAS TO THE HUC BORDER STATIONS, OR ANY ACT OF GOD WHICH INTERRUPTS FLOW OF GAS ON THE PIPELINE. 6. PAYMENT IS DUE FROM 3M ON OR BEFORE THE TENTH DAY FOLLOWING THE DATE THE BILL IS ISSUED BY HUC. PAGE 3OF4 THIS AGREEMENT SETS FORTH ALL TERMS AGREED UPON BETWEEN THE PARTIES, AND NO PRIOR ORAL OR WRITTEN AGREEMENTS SHALL BE BINDING. THIS AGREEMENT SHALL NOT BE ALTERED, AMENDED OR MODIFIED EXCEPT AS IN WRITING AND EXECUTED BY BOTH PARTIES. HUTCHINSON UTILITIES COMMISSION BY: NAME: TITLE: PRESIDENT DATE: ('Ll vim-? �rj1 or MINNESOTA MINING & MANUFACTURING I..; NAME: �N�c t�• lr,c�t:� TITLE: �vtV — DATE: d5 PAGE 4OF4 G O LL Z O F— M LLB w Z ''CO ^ V/ C O U _W J_ F- M O Z U r ti C) CD O z c 0 6 a� Z O N O U CD W M H � � J PF -Z�°� U) �C'4 ZaZ`r`r bo N y N � L? Z = Z N N M M O Lc) C O X _ � _ EL LL O F- U) It > U-) Q LO a Y Z ° 00 04 V N M Z J YJ cn Lo � rnrn W J o Y o X Z N J a- ti .Q CL '0 V/ — o O H o LO E c- 0 r V L N CL L � co w (D 0 o 'C a O cn w � c �- 4t O c° CD N_ O C) 0 Qo M O w m 0 N_ 0 (D O N 3 _ cr N O O 0) 'O c O (n D _° = : co p o cc @ U n c oEo O it c ° T ° z d O lA y C XO C .0 O (6 ca. E d 3 co w co y z o L N C - !6 C c 7 ° E '' c c d +-� v c co O O cLo (n J Q :rt a? Q to O co co c C co O O E O d N 5 X 0 p o 0. N ° c .c Q c CZ) O J m O) O Ci E PI 0 o p o O O N O 2) co X L co F- m aNi � m f6 d O W W H N C) r O N O r N N O � f6 d (D O (o C6 z m O w F- U) m W G T m a T CD c m o -° m > O Q a w Q REQUISITION 004791 INSTALLATION OF NATURAL GAS DISTRIBUTION LINE - PLANT # 1 MICHELS PIPELINE CONSTRUCTION - $42,900.00 Q3 CONTRACTING - $45,931.87 NORTHERN PIPELINE CONSTRUCTION (NPL) - $41,450.00 RECOMMENDATION IS TO APPROVE REQUISITION NO. 004791 TO NORTHERN PIPELINE CONSTRUCTION (NPL) IN THE AMOUNT OF $41,450.00. RESCIND Revised 1/17/06 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- specifications 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 annul 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 an` -' 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 - 1.1 to 1.99 - 2.0 to 2.75 - 2.76 to 3.5 - 3.51 to 4.25 4.26 to 5.0 - 5. Market Conditions 0% Straight 1 % increase 1 % of Union % increase Union % increase +1% of Union % increase +2% of Union % increase 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. Market conditions are defined as the availability of a particular position. For example: Electrical Engineer. If the market is experiencing a low number of electrical engineers, we would pay our engineer more in an attempt to keep him employed with us. 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 Adiustment 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 Resource 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. It is further recommended that a comprehensive review be completed every three years. EXEMPT COMPENSATION PLAN The Hutchinson Utilities Commission HUC has considered the existing positions for HtAei.;„s„„ T t lk HUC and the current economic conditions. For each position there shall be a title; and a job description. This plan covers all regular full -time, non - union -exe empt positions /employees only. Plan Objectives To establish and maintain a compensation plan that enables lAttehinsen UtilitiesHUC 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 Hutehinsen r fiht' HUC, that employees receive fair and equitable compensation in relation to their individual contributions to Hutehi „„ Ufil .; 'HUC's 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 Hutehinsen— Utilities cefffinission UC. To balance compensation and benefit needs with available resources. Open Salary Range Hutehinsen Utilities UC 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. 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 Htffnan v Diree ustomer /HR Manager, shall cause an appropriate job description- specification to be written for said position. Pay Grades 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. 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. Performance Evaluations For all regular full -time employees, a performance appraisal or evaluation will be made on an annual basis. An evaluation made by the employee's director, manager or supervisor shall be submitted in writing to the employee and the General Manager. All evaluations will be forwarded to the Business Customer/HR Manager for filing in the employee files. 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 Hutehinsen UC or departmental rules and regulations or any other criteria that is indicative of performance. 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. Results - The results of the exempt 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 — Straight I% increase 2.0 to 2.75 — 4% of Union % increase 2.76 to 3.5 — Union % increase 3.51 to 4.25 — +l% of Union % increase 4.26 to 5.0 — +2% of Union % increase Market Conditions Notwithstanding any language to the contrary, the 14 *„Mine„ r 4ili es C,.,..,... issi nHUC 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. Market conditions are defined as the availability of a particular position. For example.: Eleetrie 'ineer if t� an attempt to keep him empleyed with-us.- Eligible employees include all non - represented employees except those who have been subject to disciplinary action per the u„t, .rose„ r TtilitiesHUC Employee Handbook as follows: An additional consequence of disciplinary action more severe than 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. 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 maintains 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 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 Modification of the Plan The u„t, .rose utilities C HUC 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. Review of the Plan It is recommended that the Hueh11JV1 V tllltly Commissien uUC hire a consultant to assist in an adoption of a Position Classification Plan, which would be reviewed annually by the Human n eseurees— Bir-eeterCustomer /HR Manager. As deemed necessary, the Httm Pesetffees— Bir-eeterCustomer/HR Manager would recommend any changes to the Commission. It is further recommended that a comprehensive review be completed every three years. NON - EXEMPT COMPENSATION PLAN Performance Evaluations For all regular full -time employees, a performance appraisal or evaluation will be made on an annual basis. An evaluation made by the employee's director, manager, or supervisor will be submitted in writing to the employee and the General Manager. All evaluations will be forwarded to the lnes�Customer /HR Manager for filing in the employee files. 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 Hutehi-nsen Utilities Commissi HUC or departmental rules and regulations or any other criteria that is indicative of performance. 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.