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10-29-2014 HUCMMINUTES Regular Meeting — Hutchinson Utilities Commission Wednesday, October 29, 2014 Call to order — 3:02 p.m. President Anthony Hanson called the meeting to order. Members present: President Anthony Hanson; Secretary Mark Girard; Commissioner Dwight Bordson; Attorney Marc Sebora; and General Manager Jeremy Carter. Absent: Vice President Monty Morrow and Commissioner Luhring. 1. Approve Minutes of: a. September 24, 2014 Regular Meeting b. October 2, 2014 Special Meeting The minutes of the September 24, 2014 regular meeting and October 2, 2014 special meeting were reviewed. GM Carter explained his recommended changes to the October 2, 2014 special meeting minutes were to add clarification to Scenarios 2 and 3. Also, a word change on page 2 from "blend" to "blended." A motion was made by Secretary Girard, seconded by President Hanson to approve the September 24, 2014 regular meeting and October 2, 2014 special meeting minutes as amended. Motion was unanimously carried. (Changes attached.) 2. Ratify Payment of Bills for September 2014 The September 2014 payables were discussed. After discussion, a motion was made by Commissioner Bordson, seconded by Secretary Girard to ratify the payment of bills in the amount of $2,577,159.60 (detailed listing in payables book). Motion was unanimously carried. 3. Approve Financial Statements/Budget Year to Date GM Carter presented the September 2014 financial statements/budget year-to- date. After discussion, a motion was made by Commissioner Bordson, seconded by Secretary Girard to approve the financial statements/budget year-to-date. Motion was unanimously carried. 4. Review Policies GM Carter presented the policies, section: • Budget Payment Plan No changes were recommended. 5. Approve Changes to Policies GM Carter presented changes to the policies, sections: • Automatic Bill Payment Plan • Explanation of Billing Procedure Changes to section Automatic Bill Payment Plan were made for clarity. Changes to section Explanation of Billing Procedure were made for clarification and it is what HUC currently practices. After discussion, a motion was made by Secretary Girard, seconded by Commissioner Bordson to approve changes to both sections Automatic Bill Payment Plan and Explanation of Billing Procedure. Motion was unanimously carried. (Changes attached.) 6. Review Exempt and Non -Exempt Employee Handbooks GM Carter presented exempt and non-exempt handbooks, sections: • Appendix A • Appendix B • Appendix C • Appendix D (non-exempt only) No changes were recommended. 7. Approve Changes to Exempt and Non -Exempt Employee Handbooks GM Carter presented changes to the exempt and non-exempt employee handbooks, sections: • Section 6 — Health and Safety • Appendix D (exempt only) The change made to Section 6 - Health & Safety was to strike the sentence "All non-exempt employees are required to read the APPA safety handbook" to eliminate redundancy. Appendix D was added to the exempt employee handbook to be consistent with what is in the non-exempt employee handbook. After discussion, a motion was made by Commissioner Bordson, seconded by Secretary Girard to approve changes to the exempt and non-exempt handbooks. Motion was unanimously carried. (Changes attached.) 8. Approve Authorization of Auction Items GM Carter presented Authorization of Auction Items to be approved allowing HUC to auction off three old vehicles. A motion was made by Commissioner Bordson, seconded by Secretary Girard to approve authorization of auction items. Motion was unanimously carried. (Authorization attached.) 9. Communication from the Interim City Administrator Interim City Administrator Sebora reported: • GM Carter presented the proposed industrial rate reduction resolution at the City Council meeting last night. • There are four finalists for the City Administrator position. Public interview sessions with City Council will be this Friday. 10. Division Reports GM Carter reported: • HUC's open house was October 7, 2014 with 412 attendees. Positive feedback was received from citizens. GM Carter commended HUC employees for a successful open house. • The cover stack is complete at Plant 1. 2 • Met with Westlund and Associates last week regarding insurance. Received a quote from Blue Cross Blue Shield at a 5.4% increase from what HUC currently has, but the plan does not exactly match Medica's. Two other insurance carriers declined to quote. Will be requesting Medica reduce their proposed increase. • Attended Missouri River Energy Services (MRES) meeting last week with Jared Martig. The Red Rock Hydroelectric plant is starting to be built. MRES reported they will include a 5 mil rate increase in their 2015 budget, with a proposed zero increase in 2016, a 2 mil rate increase in 2017 and a flat rate in 2018 and 2019. The reasons cited for the increase in the 2015 budget were: o Increased debt service on bonds for the Red Rock Hydroelectric project; o The Laramie plant will be shut down for 13 weeks in 2015 for refurbishing. This will result in MRES having to purchase more power off the market which will increase costs; o MRES will be moving up capital items and making some modifications. Electric — Dan Lang • One of HUC's System Controllers is retiring at end of year. A replacement was hired and starts next month. Human Resources — Brenda Ewing Nothing to report Electric — Dave Hunstad • Finishing capital projects and extending electric service on Bluejay Drive Southwest. • 9 or 10 new house services to complete yet this year with a total of about 21 for 2014. Finance — Jared Martig • Distributed and discussed accounts in collection. (Accounts in Collection attached.) Natural Gas — John Webster • Tracking the long-term gas prices for next purchase of November 2015 through November 2024. Prices have gone down to around $4.75. The long-term market is staying flat. Last purchase HUC made was at $5.08. • Working with BP to purchase base load gas to get an additional discount on gas we purchased. • Unit 8 metering facilities rebuild and Highway 212 interconnect station metering facilities rebuild. 3 11. Legal Update Nothing to report Unfinished Business • Discuss Separate Business Unit for Wholesale Business o Nothing to report • Discuss Compensation Study o Nothing to report • 2015 Budget o Will review budget in November regular meeting with approval of the budget at a special commission meeting. New Business None There being no further business, a motion was made by Commissioner Bordson, seconded by Secretary Girard to adjourn the meeting at 3:47 p.m. Motion was unanimously carried. Mark Girard, Secretary ATTEST: 44*4 'Z A, Ant ony Hanson, President 4 MINUTES Special Meeting — Hutchinson Utilities Commission Thursday, October 2, 2014 Call to order — 7:00 a.m. President Hanson called the meeting to order. Members present: President Anthony Hanson; Vice President Monty Morrow; Commissioner Mark Girard; Commissioner Donna Luhring; General Manager Jeremy Carter; and Attorney Marc Sebora. Member Absent: Commissioner Dwight Bordson. 1. Discussion on Industrial Class Electric Rate Reduction GM Carter presented 7 industrial rate scenarios for discussion with Scenario 1 being the best and Scenario 7 being the worst case scenario in regard to the financial impact to Hutchinson Utilities Commission. The two most viable options for Hutchinson Utilities would be Scenarios 4 and 5. Scenario 1 — No industrial rate reduction and industries maintain status quo. Scenario 2 — Industrial rate reduction. This scenario was made based on the assumption that HUC would have the ability to renegotiate the long-term 25 megawatt base load contract with Missouri River Energy Services (MRES) down to 19 megawatts and/or reallocate the 6 megawatts of excess power to new or existing customers at the current rate. However, in talking with MRES, HUC found out renegotiating the contract is not feasible and no current contract to sell the 6 megawatts of power is currently in place. Scenario 3 - No industrial rate reduction. Industrial class self -generation occurs. This scenario was made based on the assumption that HUC would have the ability to renegotiate the contract with MRES reducing the 25 megawatt base load to 19 megawatts which would reduce capacity sales or MRES purchasing the excess 6 megawatts (lost from industrial class self -generation) back from HUC. However, after talking with MRES, HUC found out renegotiating the contract or selling back the power is not feasible. HUC would be responsible for finding alternative options to sell the excess power previously sold by HUC. if ;nd stroal Glass self geneFatiGR eGGUFs, Tthis scenario would includes an estimated $200,000 increase in natural gas revenues, a back-up charge to the customer of approximately $225,000 and a loss in capacity sales on the electric side of approximately $200,000, if the contract was renegotiated to 19 megawatts. Scenario 4 - No industrial rate reduction. Industrial class self -generation occurs at 6 megawatts of power. GM Carter explained in order for this scenario to come out close to Scenario 5, HUC would need to sell the excess 6 megawatts of power around the clock at approximately $43 per megawatt to the market or other utilities/businesses through some type of contract structure. Due to the current soft market, this is not a realistic option at this time. As in Scenario 3, this scenario includes an estimated $200,000 increase in natural gas revenues and a back-up charge to the customer of approximately $225,000. Scenario 5 — Industrial rate reduction phased in over 3 years to result in a 10 percent less rate per kilowatt hour in 2017. Scenario 6 - Industrial rate reduction all in one year. This would result in HUC losing $1 million in cash flow in one year. Scenario 7 — No industrial rate reduction. Industrial class self -generation occurs, with HUC having no ability to renegotiate the MRES contract or find an alternative option to sell the excess 6 megawatts of power (lost to self -generation). As in Scenario 3, this scenario includes an estimated $200,000 increase in natural gas revenues and a back-up charge to the customer of approximately $225,000. GM Carter pointed out that it would be in HUC's best interest to sell the 6 megawatts of excess power on the market or to other utilities/businesses than to absorb a large portion of the power within HUC's own customer base. By doing so, this would continue to allow HUC greater opportunity to control HUC's overall blend "blended" cost of power by hedging market prices and/or self -generating based on the economic climate at that time. GM Carter concluded out of the scenarios presented, the best option for HUC would fall somewhere between Scenario 4 and Scenario 5. President Hanson and GM Carter recapped why the other scenarios were not in RUC's best interest at this time. Commissioner Girard said the lack of options now to sell the excess power was the reason he favored the phased -in reduction. President Hanson explained GM Carter and Attorney Sebora distributed a draft resolution to the Board which proposed implementing a 10 percent rate reduction for the existing electric industrial class phased in over a 3 year period. The current industrial class rate of .0675 cents per kilowatt hour would fall to .0653 cents January 1, 2015, then .0631 cents January 1, 2016, and .0610 cents January 1, 2017. The resolution changes the energy rate, not the billing structure or the demand charges. Vice President Morrow said short-term, this is something HUC needs to do to protect the business and nothing is "set in stone" by taking the action, with neither side making a commitment. After discussion, a motion was made by Commissioner Luhring, seconded by Secretary Girard to approve the resolution as presented to make the proposed changes to the industrial class electric rate. Motion unanimously carried. (Resolution #1011 attached.) 2 • Attorney Sebora explained the City Council, under the city's charter, has 30 days following Hutchinson Utilities' official notice of the rate change to decide if it wants to veto the change. There being no further business, a motion was made by Secretary Girard, seconded by Vice President Morrow to adjourn the meeting at 7:50 a.m. Motion was unanimously carried. ATTEST: Anthony Hanson, President 3 Mark Girard, Secretary Automatic Bill Payment Plan Payments may be made directly from withdrawals out of a checking/savings account, or from a credit/debit card. These payments are withdrawn on the date the bill is due. The customer must fill out an Authorization for Automatic Payment form supplied by HUC's business office or online. The customer will receive their monthly utility billing statement showing the payment amount to be withdrawn. The customer may contact HUC's Customer Service Department before the amount is withdrawn if they don't agree with the billing or have any questions. The customer will have approximately 10 days to review their bill before the money is withdrawn. If a customer's payment is dishonored for two consecutive months, that customer will be removed from the automatic payment plan. A service charge of $30 will be assessed to the customer's account for each dishonored payment occurrence. Explanation of Billing Procedure A bill for services is sent to the address provided by the customer approximately 3 to 5 days after the meters have been read. The customer then has approximately 10 days to pay the bill in full by the due date. In accordance with state law, the City of Hutchinson and its related entities shall have 35 days to pay bills in full. Bills paid after the due date will incur the following charges: • A 1 % per month late payment charge on any unpaid balance. • A $15 processing fee. A late notice warning of pending disconnection is mailed which allows the customer approximately 10 to 20 days to pay the bill or contact the Customer Service Department to make other arrangements. Examples of other arrangements may include agreement to a budget plan or payments by other agencies. Failure to make payment by the stated date and time will be considered a violation of the notice of pending disconnection. If full payment or other arrangements have not been made by the deadline, HUC personnel are sent to the meter location to disconnect utility services (see disconnection of services section). • A notice will also be on the next month's billing warning of pending disconnection; customer should refer to previously sent disconnection letter for details of date and time of disconnection. IT IS THE CUSTOMER'S RESPONSIBILITY TO PAY BILLS ON TIME AND IN FULL. A dishonored sbe&-payment will be assessed a $30 processing fee. A dishonored GheGk that was w0ttenpayment made to avoid disconnection or to get reconnected will be assessed a $30 processing fee; plus: a. A $40 trip charge to deliver a door hanger, giving customer 24 hours to make sheet -payment good with cash, money order or credit card. b. A $40 trip charge to disconnect if payment is not received with cash, money order or credit card. C. A $40 trip charge to reconnect, payment shall be made with cash, money order or credit card. IT ALSO IS THE CUSTOMER'S RESPONSIBILITY TO KEEP HUC FULLY ADVISED OF ANY CHANGE OF ADDRESS. Exempt SECTION 6 — HEALTH AND SAFETY HUC is very concerned about the safety of its employees and the public HUC serves. All employees are required to follow all HUC safety rules and make the safety of themselves, their co-workers, and the public a priority. To encourage a safe workplace, the Commission has adopted the APPA — Utilities Safety Handbook. All nen exempt empleyees aFe FequiFed te Fead the APPA safety handbeek. Compliance with the APPA is "mandatory and is considered a requirement for employment". ACCIDENTS AND INJURIES Employees must immediately report to a Director, Manager or Supervisor job-related illnesses, all accidents and injuries (regardless how minor) that occur during the course of employment with HUC. The Employee and Supervisor must fill out and sign an accident report. See Customer/Human Relations Manager for form. If a supervisor is not available and the nature of injury or illness requires immediate treatment, the employee is to go to the nearest available medical facility for treatment and, as soon as possible, notify his/her supervisor of the action taken. In the case of a serious emergency, 911 should be called. If the injury is not of an emergency nature, but requires medical attention, the employee will report it to the supervisor and make arrangements for a medical appointment. Worker's compensation benefits and procedures to return to work will be applied according to applicable state and federal laws. HUC contracts with Corvel as the worker's compensation managed care provider. Pursuant to Minnesota Law, HUC has established a labor-management safety committee that investigates or reviews all accidents to identify causes of the accidents and suggest ways to prevent reoccurrence of the accident. The safety committee may request to interview any employee involved in an accident or any employee who may have knowledge of an accident. All employees are required to cooperate with the safety committee. NON-EXEMPT SECTION 6 - HEALTH AND SAFETY HUC is very concerned about the safety of its employees and the public HUC serves. All employees are required to follow all HUC safety rules and make the safety of themselves, their co-workers, and the public a priority. To encourage a safe workplace, the Commission has adopted the APPA — Utilities Safety Handbook. All n9A exempt ,. pleyees .,re r .ed tG Fead the APPA safety handbeek '"ompliance with the APPA is "mandatory and is considered a requirement for employment". ACCIDENTS AND INJURIES Employees must immediately report to a Director, Manager or Supervisor job-related illnesses, all accidents and injuries (regardless how minor) that occur during the course of employment with HUC. The Employee and Supervisor must fill out and sign an accident report. See Customer/Human Relations Manager for form. If a supervisor is not available and the nature of injury or illness requires immediate treatment, the employee is to go to the nearest available medical facility for treatment and, as soon as possible, notify his/her supervisor of the action taken. in the case of a serious emergency, 911 should be called. If the injury is not of an emergency nature, but requires medical attention, the employee will report it to the supervisor and make arrangements for a medical appointment. Worker's compensation benefits and procedures to return to work will be applied according to applicable state and federal laws. HUC contracts with Corvel as the worker's compensation managed care provider. Pursuant to Minnesota Law, HUC has established a labor-management safety committee that investigates or reviews all accidents to identify causes of the accidents and suggest ways to prevent reoccurrence of the accident. The safety committee may request to interview any employee involved in an accident or any employee who may have knowledge of an accident. All employees are required to cooperate with the safety committee. ADD TO EXEMPT HANDBOOK APPENDIX D - ACKNOWLEDGEMENT acknowledge that I have received a copy of the APPA -Utilities Safety Handbook and that I am responsible for being familiar with its contents. I understand I must follow all safety rules and regulations in the APPA Safety Handbook and any other safety rules adopted by Hutchinson Utilities. Date: Employee's Signature AUCTION ITEMS Description 1. 2001 Chevy Silverado 2 WD 2. 2002 Chevy Silverado 2 WD 3. 2003 Ford Explorer 4 WD Authorization Reserve Dollar Amount $2625 $4200 $4725 Date i o 1 s-& i q Accounts in Collection 362.49 31-60 Days Revenue Collection Year Recapture Agency 2008 8,436.04 - 2009 16,219.55 170.75 2010 11,566.30 168.96 2011 17,034.36 2,751.07 2012 9,266.84 4,529.02 2013 12,894.23 508.43 2014 12,255.38 236.40 $ 87,672.70 $ 8,364.63 Finalled Accounts Over 30 Days Due 0-30 Days 362.49 31-60 Days 1,690.10 61-90 Days 754.64 91-120 Days 267.02 120+ Days 1,689.01 Total $4,763.26