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07-29-2015 HUCMMINUTES Regular Meeting — Hutchinson Utilities Commission Wednesday, July 29, 2015 Call to order — 3:00 p.m. President Hanson called the meeting to order. Members present: President Anthony Hanson; Vice President Donna Luhring; Secretary Mark Girard; Commissioner Monty Morrow; Commissioner Dwight Bordson; Attorney Marc Sebora; General Manager Jeremy Carter. 1. Conflict of Interest Secretary Girard declared a conflict of interest in voting on the Consent Agenda as he is listed in the payment of bills. 2. Approve Consent Agenda a. Approve Minutes b. Ratify Payment of Bills A motion was made by Commissioner Bordson, seconded by Commissioner Morrow to approve the items listed under the Consent Agenda. Motion was unanimously carried. 3. Approve Financial Statements Jared Martig sent out revised financial statements to the Commission to include the updates to the balance sheet ratios. GM Carter noted changes which were made as some information was lost during the format conversion for the packet. GM Carter noted Dan Lang has benchmarked the 2013 against 2014 numbers for HUC's base load contract which indicate HUC was in a little better position in 2014 than 2013. We will continually watch our base load contract relative to what energy our customers are using. GM Carter recommended not doing a mid -year budget amendment as the trending is close to 50% of the revenue side. As HUC starts entering the upcoming power cost adjustment months, we may be trending right at budget on the revenue side. On the expense side, we are trending below 50%. With the upcoming retirements, the cost savings will be offset by the severance payouts. Overall, HUC is doing better than through June 2014. After discussion, a motion was made by Vice President Luhring, seconded by Commissioner Bordson to approve the financial statements. Motion was unanimously carried. (Changes attached.) 4. Open Forum 5. Communication a. City Administrator — Matthew Jaunich i. The City just completed the yearly audit. ii. Working on the 2016 budget. iii. The Utilities staff is working with City on Christmas lighting at Library Square and helping out at the ball field getting ready for next year's State amateur tournament. iv. The Second Avenue project is close to being finished. v. The Luce Line Trail project will start within the next couple weeks. vi. Working on plans for the aquatic center. b. Divisions i. Randy Blake — 1 . Two of HUC's newest operators passed their Class A Chief license test. They may now operate equipment without being supervised by another chief operator. This will save on overtime costs running Unit 8. 2. Unit 8's 600 amp breaker failed Monday afternoon and the breaker ran the motor control center for all the cooling pumps. The breaker was replaced and is running again. 3. Midwest Overhead Crane installed the new crane last week. The project is complete. Dan Lang — 1. HUC has been generating due to warmer weather and the Transalta contract. HUC hit a new peak for the year of 57.2 megawatts which is just shy from the 2006 peak of 65 megawatts. 2. Calling on the Transalta contract has resulted in about $114,000 in sales so far. iii. Dave Hunstad — 1. Working on repairs from the outage last Friday at 4:30 p.m. 2. On the Second Avenue project, HUC changed the lighting to LED. The lighting for the Golf Course Road project was changed to LED as well. iv. Jared Martig - 1. Attended a Webinar on GASB 68. 2. HUC was selected to be audited by PERA's auditors. Jennifer Tramp and Brenda Ewing have been working on getting information to their auditors. 3. HUC is in the preliminary stages of researching switching software companies to the same company the City of Hutchinson secured. There may be a cost savings of about $70,000 per year after an implementation cost of about $200,000. 4. Two customers turned their electricity back on after being disconnected. HUC charges $100 and another re -disconnect fee of $40 per customer. The police were notified and a report was sent to Attorney Sebora. 2 v. John Webster — 1 . Sent the Greater Minnesota Gas Interconnect and Transportation Agreements to the Commissioners for review and received comments back from two Commissioners. Will send out to Greater Minnesota Gas after today's meeting for their response. 2. Preparing a presentation for this year's MEA conference. 3. Met with Heartland Corn to discuss their interest in working with HUC for transporting natural gas to their plant as they grow. Will be assisting them over the next couple years as they go through the permitting process. They are currently buying out their metering and regulating facilities from the City of Fairfax. They have asked HUC to operate and maintain their facilities for them. 4. Prepared a response to the City of Lafayette's Request for Proposal for natural gas service. 5. Adding new customers on North High Drive and Bluff Street as we had enough response from a group of citizens. 6. Working with Dan Lang watching daily prices for natural gas. Through July, the prices are up 24 cents. We will keep our eye on it. c. Legal — Attorney Sebora i. Received one report so far on the illegal reconnect of power which is a crime so it will be prosecuted. ii. A detachment action occurred earlier this spring, where a land owner on the northeast side of town sought to have his land removed from the city limits of Hutchinson through an administrative proceeding. The update is the Administrative Law Judge ruled against the City of Hutchinson on that proceeding so there was an Order issued allowing the land owner to remove his land from the City limits. The City Council voted earlier this month to appeal that decision. iii. Will be attending a Missouri River Energy Services (MRES) seminar on August 6 in Sioux Falls regarding the proposed changes to their power supply contracts they are going to be considering at their September meeting. These changes are being brought on by consolidations by some of their suppliers — Western Area Power Administration and Southwest Power Pool which will be affecting how MRES gets its power. d. General Manager — Jeremy Carter i. Continuing to work on the capital expenditures model. ii. Starting to work on the general topics for the strategic planning meetings in August and September. iii. Attended the MPCA stakeholder meeting regarding the new Federal regulations coming out. There will be more follow-up meetings after the initial ruling from the Federal Government in August. A lot of work will need to be done in the next year to figure out the best approach in Minnesota. There was a lot of discussion on economic dispatching and price points along with renewable credits and values and how they affect people bidding major generation into the market. 3 6. Policies a. Review Policies i. Employee Handbooks — Solicitation on Utility Premises ii. Employee Handbooks — Employee Gifts iii. Deposit Requirement — Residential iv. Deposit Requirement — Commercial/Industrial No changes were recommended at this time. b. Approve Changes i. Employee Handbooks — Offensive Behavior/Sexual Harassment The Offensive Behavior/Sexual Harassment policy was tabled at the June 24, 2015 regular commission. As directed by the Commission, Brenda Ewing has incorporated language to include Human Resources in the reporting and investigation of employee claims of offensive behavior/sexual harassment. Additional information was also added which clarifies the policy. After discussion, a motion was made by Vice President Luhring, seconded by Secretary Girard to approve changes to the Offensive Behavior/Sexual Harassment policy. Motion was unanimously carried. (Changes attached.) ii. Employee Handbooks — Flowers Changes to the Flowers policy were made to be consistent with other policy updates where the General Manager and/or Managers job titles were added to reflect HUC's current organizational structure. A motion was made by Commissioner Morrow, seconded by Commissioner Bordson to approve changes to the Flowers policy. Motion was unanimously carried. (Changes attached.) iii. Distributed Generation (Greater than 40 kW) Policy and Contract for Parallel Generation Facilities (Greater than 40 kW) Due to both the industry changing and the timing of the City of Hutchinson installing a large-scale 400 kW solar project within RUC's service territory, it was important for HUC staff to review its current policy and interconnect agreement (Greater than 40 kW) and recommend changes where applicable to better fit the language and document structure being used in the industry today. Due to the large scale city project and Xcel Energy requirements, Kaela Brennan from the law firm of McGrann, Shea, Carnival, Straughn & Lamb assisted HUC in reviewing these documents. Additional language of importance was added to provide more flexibility for HUC and more clarity on customer requirements. The intentions of the policy revisions were to create an overarching policy of basic requirements that any type and/or size of Distributed Generation over 40 kW must comply with prior to HUC considering entering into an Interconnect Agreement. E! The intentions of the Agreement/Contract revisions are to create a stand alone document, by which HUC will have as much flexibility as possible to address the various types, sizes, and dynamics of a customers Distributed Generation project. Commissioner Bordson and Commissioner Morrow expressed concerns that this may limit HUC in future opportunities and as rules change. Attorney Sebora commented the new contract language is better than the current language from HUC's standpoint for protection and flexibility. If the changes are not approved, the City of Hutchinson's contract will follow the current policy. GM Carter recommended the Commission approve the amendments. After discussion, a motion was made by Secretary Girard, seconded by Vice President Luhring to approve changes to the Distributed Generation (Greater than 40 kW) Policy and Contract for Parallel Generation Facilities (Greater than 40 kW). Motion was unanimously carried. (Changes attached.) 7. Unfinished Business a. Follow -Up Discussion on Commissioner Candidate Selection Process President Hanson reported that he and Jeremy Carter will meet with Mayor Forcier next week to share the information gathered for consideration in selecting a new commissioner. 8. New Business a. Approve Request for Proposals - Job Evaluation & Compensation System HUC sent out a Request for Proposal to complete a comprehensive Job Evaluation and Compensation System Study that includes all HUC union and non-union positions. Areas of consideration are: 1) what HUC has in place now and if we currently are following all labor laws; and 2) confirm HUC has good internal pay equity within the organization with current job descriptions to stay in compliance with the State. The last full blown study was done in 2007. After discussion, a motion was made by Commissioner Morrow, seconded by Commissioner Bordson to approve the Request for Proposals — Job Evaluation & Compensation System. Motion was unanimously carried. (Request for Proposals attached.) b. Approve Interconnection and Purchase Power Agreement between the City of Hutchinson and Hutchinson Utilities Commission HUC's Policy for Distributed Generation (Over 40 kW) states that a separate contract is required between HUC and the customer concerning the Qualified Facility. The City of Hutchinson is installing a 400 kW solar system located at the City's Waste Water Treatment Plant on Adams Street Southeast. The energy produced by the Solar Array is expected to be used by the Waste Water facility in its entirety, with very little if any of the energy being sold back to HUC. 5 GM Carter recommended the Commission approve the Interconnection and Purchase Power Agreement between the City of Hutchinson and Hutchinson Utilities Commission to fulfill the requirements of Xcel Energy's grant. A motion was made by Vice President Luhring, seconded by Secretary Girard to approve the Interconnection and Purchase Power Agreement between the City of Hutchinson and Hutchinson Utilities Commission. Motion was unanimously carried. (Agreement attached.) c. Setting a Public Joint Meeting with the City GM Carter explained historically there is an annual joint meeting with the City of Hutchinson and HUC to discuss last year's, current and future items. The public joint meeting will be set for Tuesday, August 11 at 7:30 a.m. and will be held at the City Center. A motion was made by Secretary Girard, seconded by Commissioner Morrow to declare a public joint meeting to be held on Tuesday, August 11 at 7:30 a.m. at the City Center. Motion was unanimously carried. 9. Adjourn There being no further business, a motion was made by Commissioner Morrow, seconded by Vice President Luhring to adjourn the meeting at 4:10 p.m. Motion was unanimously carried. C-;� e c arl Girard, Secretary ATTEST: N Anthony Hanson, President n