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09-30-2015 HUCMMINUTES Regular Meeting — Hutchinson Utilities Commission Wednesday, September 30, 2015 Call to order — 3:00 p.m. President Hanson called the meeting to order. Members present: President Anthony Hanson; Vice President Donna Luhring; Commissioner Monty Morrow; Commissioner Dwight Bordson; Attorney Marc Sebora; General Manager Jeremy Carter. Member absent: Secretary Mark Girard. Conflict of Interest 2. Approve Consent Agenda a. Approve Minutes b. Ratify Payment of Bills A motion was made by Commissioner Bordson, seconded by Vice President Luhring to approve the Consent Agenda. Motion was unanimously carried. 3. Approve Financial Statements Jared Martig noted the July 2014 transmission expense was high because HUC paid $75,000 to MMUA for a buyout of an old transmission agreement with a regulatory agency called MAPP. After discussion, a motion was made by Commissioner Morrow, seconded by Commissioner Bordson to approve the financial statements. Motion was unanimously carried. 4. Open Forum 5. Communication a. City Administrator — Matthew Jaunich i. The City Council will vote on the aquatic center next month. b. Divisions i. Randy Blake — 1 . Two power plant employees attended the Wartsila user's conference. They learned about issues Wartsila had with bolting on the engines and catastrophic failures on some units around the country. Upon their return, they checked HUC's unit and found the torque was lower than it should be and repaired it. Randy expressed appreciation for power plant employees being able to attend the user group meetings as they are valuable. ii. Dan Lang — 1. HUC had about 27,000 megawatt hours in power sales which is a lot for September. 2. Experienced a new demand peak for the year due to warmer weather. iii. Dave Hunstad — 1. Finishing up projects before winter. 2. In mid-October, four HUC linemen are assisting in building the rodeo grounds for the future APPA Lineman Rodeo Conference which is in April 2016. iv. Jared Martig - 1. Attending a demonstration next Monday on new software the City has installed to see if HUC should consider implementing it. 2. Meeting with Jackie Penke, Kim Koski and Vivid Image next week regarding the development of HUC's newly designed web site. c. Legal — Attorney Sebora i. Nothing to report. d. General Manager — Jeremy Carter i. Working with staff on the job and compensation evaluation study. The job questionnaires are due this week and will be sent to the consultant. ii. Will be distributing the 2016 preliminary budget to the managers this week for their review. iii. Updating the strategic planning documents. iv. Keeping apprised of the EPA regulatory information. 6. Policies a. Review Policies i. Employee Handbooks — Flextime Program (Exempt Only) ii. Employee Handbooks — Meal Periods iii. Errors in Billing iv. Automatic Bill Payment Plan No changes were recommended at this time. Note in regard to Errors in Billing, there is no state law that limits HUC on the timeframe for overcharges. HUC has a one-year policy in place right now. b. Approve Changes i. Employee Handbooks — Hours & Conditions of Employment Changes were made to clean up redundancy in language within the office hours section. Employee Handbooks — Rest Periods The word "Manager" was added to be consistent with the current organizational structure and past policy changes. iii. Payment of Your Bill Changes were made to clarify the difference between payment locations and payment methods. In addition, the general email address is for billing questions only not for making payments. 2 iv. Disconnection of Residential Services by HUC Changes were made to clarify that Section 9 is referencing a customer using back-up generators on site that may be hazardous or create problems for other HUC customers, versus projects specifically put in place for parallel or distributed generation. v. Disconnection of Commercial Services by HUC Changes were made to clarify that Section 9 is referencing a customer using back-up generators on site that may be hazardous or create problems for other HUC customers, versus projects specifically put in place for parallel or distributed generation. After discussion, a motion was made by Vice President Luhring, seconded by Commissioner Bordson to approve the changes to Employee Handbooks - Hours & Conditions of Employment, Employee Handbooks - Rest Periods, Payment of Your Bill, Disconnection of Residential Services of HUC and Disconnection of Commercial Services by HUC policies. Motion was unanimously carried. (Changes attached.) 7. Unfinished Business None 8. New Business a. Discuss Investment Policy GM Carter has been working with Jared Martig on an investment policy for approval to allow HUC to invest idle cash as the cash balance grows. The investment policy was presented to the Board and has been submitted to HUC's auditors for review. The policy is similar to what the City of Hutchinson has in place. After review from the Board and RUC's auditor's, this policy will be brought back to the Board for approval. b. Discuss Potential Changes to the Missouri River Energy Services (MRES) Base Load Contract GM Carter distributed a handout outlining discussion points related to the consideration of HUC reducing its base load contract from 25 megawatts to 20 megawatts. (Handout attached.) The reason for the discussion was to address the question if HUC could maintain a consistent load in the future, as the current consumption is flat with no prediction of the community growing or consumption increasing. Other causes for HUC to lose load may be due to customer preferences changing and the option for customers to control their own power with distributed generation. GM Carter distributed a handout that Dan Lang developed showing a graph with the lineal relationship between HUC's current base load contract and the market. This plays out HUC's current rate and assumes no increased costs to HUC. (Graph attached.) 3 It was noted that HUC reduced their load from 30 megawatts to 25 megawatts about 10 years ago, due to a load loss from HTI. Natural gas prices were higher back then. HUC's load has been stagnant since 2008. Discussion was held suggesting a transition period may be more agreeable to MIRES giving them time to adjust their budgets and power supply planning. If the base load contract is renegotiated with MIRES, it would need to be approved by the Commission Board no later than the February 2016 commission meeting, as MIRES would need an executed contract by March 1, 2016. After discussion, the Board requested GM Carter pursue conversations with MIRES on renegotiating the base load contract. c. Declare an Open Meeting for HUC's Annual Open House Being Held on Tuesday, October 6 from 4:00 p.m. to 7:00 p.m. A motion was made by Commissioner Morrow, seconded by Commissioner Bordson to declare the HUC Open House scheduled for Tuesday, October 6, as an open meeting. Motion was unanimously carried. 9. Adjourn There being no further business, a motion was made by Vice President Luhring, seconded by Commissioner Bordson to adjourn the meeting at 4:03 p.m. Motion was unanimously carried. 4r Presidanf a Luhring, V ATTEST: 46"K -- Anthony Han on, Presi ent 4 EXEMPT SECTION 3 — HOURS AND CONDITIONS OF EMPLOYMENT Staff Personnel will establish work schedules, subject to the General Manager's approval. The regular work week is five 8 -hour working days with two consecutive days off. The normal work week is Monday through Friday, except as otherwise established by Staff Personnel based on the customers' and Department's needs. The Utilities office hours are ams: O ffiee ho .s aro 7:30 a.m. to 4:00 p.m. Monday through Friday. Non -Exempt SECTION 3 - HOURS AND CONDITIONS OF EMPLOYMENT See Union Contract. NON-EXEMPT REST PERIODS Employees may take one 15 -minute paid rest period during each four-hour work period. Rest periods are taken during the second and third hours and between the sixth and seventh hours of the workday. During the summer, the afternoon rest period shall be taken when the Manager or Director deems it appropriate. Rest periods shall not be cumulative and shall not be utilized to compensate for other absences. EXEMPT REST PERIODS Employees may take one 15 -minute paid rest period during each four-hour work period. One rest period is taken in the morning and the other rest period is taken in the afternoon. Rest periods shall not be cumulative and shall not be utilized to compensate for other absences. Payment of Your Bill Payments are due by the date shown on the statement. PayMontc may be norcnnally presented during nffiGe hours at Payment Locations • 225 Michigan Street Southeast o HUC's business office or drive -up window (during office hours) o Drop box • Drop box at Cash Wise Foods or Hutchinson City Center IOGated at 225 MiGhigaR Street Southeast. Payments are due by the date shown on the statement and may be paid by: Payment Methods • cash • check • money order • VISA/MasterCard/Discover • drop box at Cash Wise Foods, HUtGhinson Gity Center or HUG's bUSORess effiGe • automatic bank payment plan • online at www.hutchinsonutilities.com or HUC;bullffiRQ4-G*.hUtGh*nSOR.rnn.k • phone toll free at 855-820-2288. When paying in any manner other than cash, no change will be given. No second party or post-dated checks will be accepted. Checks will not be held. A dishonored payment is treated as a non-payment. If notification of the dishonored payment is received by HUC, the customer will be charged a $30 processing fee. For billing questions, e-mail HUC customer service at HUCbilling(a)_ci.hutchinson.mn.us. - -- Forma Disconnection of Residential Services by HUC 1. Residential utility service shall be disconnected for any of the following reasons: • Failure to pay by the deadline on a delinquent account or failure to comply with the terms of the budget payment plan. • Failure to contact HUC to gain protection from disconnection under the Cold Weather Rule. • Failure to maintain the payment agreement established under the Cold Weather Rule. • Failure to comply with deposit requirement. • Failure to pay for merchandise or charges for non-utility service billed by HUC. • Payment of bill with a dishonored check. • Failure to provide authorized utility personnel access to utility equipment. • HUC shall disconnect residential utility service, without notice, where service has been reconnected without HUC's authorization. • HUC shall disconnect residential utility service, without notice, where it has reasonable evidence that utility service is being obtained by potentially unsafe devices or potentially unsafe methods that stop or interfere with the proper metering of the utility service. • HUC may disconnect residential utility service, without notice, where a dangerous condition exists for as long as the condition exists. • At the request of the property owner, as long as it's currently in owner's name. • At the request of the realtor/bank, as long as it's currently in their name. • If an account owner or property owner does not notify us, within three (3) business days following disconnection of service for non-payment, a final bill will be processed and the account will be closed. 2. HUC must have a Landlord Agreement on file acknowledging that landlord/owner will be responsible for all utility charges after the read-out date requested by a tenant. Failure of the landlord/owner to execute this form will lead to a shut off of services on the read-out date requested from tenant. 3. For all items mentioned in number 1 and 2 above, a disconnect/reconnect fee shall be applied. The disconnect/reconnect fee is as follows: • A $40 trip charge to disconnect. • A $40 trip charge to reconnect, payment shall be made with cash, money order or credit card during regular business hours. • After hours reconnection will follow the After Hours Reconnection Policy. 4. In the event that the customer pays after the deadline given on the disconnect letter, and the payment is processed before physical disconnection, a $40 Removal from Disconnect List Fee will be applied to their account. 5. If a realtor/bank requests to have service reconnected for one day in order to perform an inspection, a $40 trip charge to reconnect and a $40 disconnect charge will be applied. 6. In the event of unauthorized use of, or tampering with the equipment of HUC, a tampering charge of $100 will be assessed to the customer's account. The appropriate law enforcement agency will be notified. HUC reserves the right to charge the customer for the cost of repairs to the equipment of HUC. 7. A dishonored payment will be assessed a $30 processing fee. 8. A dishonored payment to avoid disconnection, or to get reconnected, will be assessed a $30 processing fee; plus: • A $40 trip charge to deliver a door hanger, giving customer 24 hours to make payment good with cash, money order or credit card. 9. HUC is not required to furnish residential service under conditions requiring operation in parallel with 13�:ic' up generating equipment connected to the customer's system if such operation is hazardous or may interfere with its own operations or service to other customers or operation as a condition or rendering service under such circumstances. Fes;;addotional infnrmatmon coo 1- UG's Parallel Generation FAILURE TO RESPOND TO THE DISCONNECT NOTICE SET FORTH ON THE BILL OR FAILURE TO PAY FOR SERVICES RENDERED BY HUC MAY RESULT IN THE DISCONNECTION OF SERVICES TO THE PROPERTY WITHOUT ANY ADDITIONAL NOTICE TO THE CUSTOMER. IT IS THE CUSTOMER'S RESPONSIBILITY TO PAY FOR SERVICES RENDERED AND TO ADVISE HUC OF ANY CHANGE IN ADDRESS. NEITHER HUC NOR THE CITY OF HUTCHINSON, NOR ANY OF THE AGENTS, EMPLOYEES OR REPRESENTATIVES OF THE CITY OF HUTCHINSON OR HUC, WILL BE RESPONSIBLE FOR ANY DAMAGES OR CLAIMS INCURRED AS A RESULT OF THE DISCONNECTION OF SERVICES. Residential utility service may not be disconnected or refused for any of the following reasons: • Delinquency in payment for services by a previous occupant of the premises to be served. • Failure to pay for a different rate classification of utility service. • Failure to pay the account of another customer as guarantor thereof. • Failure to pay charges arising from any underbilling occurring more than 1 year prior to the current billing and due to any misapplication of rates or faulty metering. • If a customer is on the Budget Payment Plan and has a credit balance on account. Disconnection of Commercial Services by HUC 1. Commercial utility service shall be disconnected for any of the following reasons: • Failure to pay by the deadline on a delinquent account. • Failure to comply with deposit requirement. • Failure to pay for merchandise or charges for non-utility service billed by HUC. • Payment of bill with a dishonored check. • Failure to provide authorized HUC personnel access to utility equipment. • HUC shall disconnect commercial utility service, without notice, where service has been reconnected without HUC's authorization. • HUC shall disconnect commercial utility service, without notice, where it has reasonable evidence that utility service is being obtained by potentially unsafe devices or potentially unsafe methods that stop or interfere with the proper metering of the utility service. • HUC may disconnect commercial utility service, without notice, where a dangerous condition exists for as long as the condition exists. • At the request of the property owner, as long as it's currently in owner's name. • At the request of the realtor/bank, as long as it's currently in their name. 2. HUC must have a Landlord Agreement on file acknowledging that landlord/owner will be responsible for all utility charges after the read-out date requested by a tenant. Failure of the landlord/owner to execute this form will lead to a shut off of services on the read-out date requested from tenant. 3. For all items mentioned in number 1 and 2 above, a disconnect/reconnect fee shall be applied. The disconnect/reconnect fee is as follows: • A $40 trip charge to disconnect. • A $40 trip charge to reconnect, payment shall be made with cash, money order or credit card during regular business hours. • After hours reconnection will follow the After Hours Reconnection Policy. 4. In the event that the customer pays after the deadline given on the disconnect letter, and the payment is processed before physical disconnection, a $40 Removal from Disconnect List Fee will be applied to their account. 5. If a realtor/bank requests to have service reconnected for one day in order to perform an inspection, a $40 trip charge to reconnect and a $40 disconnect charge will be applied. 6. In the event of unauthorized use of, or tampering with the equipment of HUC, a tampering charge of $100 will be assessed to the customer's account. The appropriate law enforcement agency will be notified. HUC reserves the right to charge the customer for the cost of repairs to the equipment of HUC. 7. A dishonored payment will be assessed a $30 processing fee. 8. A dishonored payment made to avoid disconnection, or to get reconnected, will be assessed a $30 processing fee; plus: • A $40 trip charge to deliver a door hanger, giving customer 24 hours to make payment good with cash, money order or credit card. 9. HUC is not required to furnish commercial service under conditions requiring operation in parallel with Backup generating equipment connected to the customer's system if such operation is hazardous or may interfere with its own operations or service to other customers or operation as a condition or rendering service under such circumstances. Fer additional iRfermation see H UG's PaFallel (`eReratinon PeI+Ey. FAILURE TO RESPOND TO THE DISCONNECT NOTICE SET FORTH ON THE BILL OR FAILURE TO PAY FOR SERVICES RENDERED BY HUC MAY RESULT IN THE DISCONNECTION OF SERVICES TO THE PROPERTY WITHOUT ANY ADDITIONAL NOTICE TO THE CUSTOMER. IT IS THE CUSTOMER'S RESPONSIBILITY TO PAY FOR SERVICES RENDERED AND TO ADVISE HUC OF ANY CHANGE IN ADDRESS. NEITHER HUC NOR THE CITY OF HUTCHINSON, NOR ANY OF THE AGENTS, EMPLOYEES OR REPRESENTATIVES OF THE CITY OF HUTCHINSON OR HUC, WILL BE RESPONSIBLE FOR ANY DAMAGES OR CLAIMS INCURRED AS A RESULT OF THE DISCONNECTION OF SERVICES. Commercial utility service may not be disconnected or refused for any of the following reasons: • Delinquency in payment for services by a previous occupant of the premises to be served. • Failure to pay for a different rate classification of utility service. • Failure to pay the account of another customer as guarantor thereof. • Failure to pay charges arising from any underbilling occurring more than 1 year prior to the current billing and due to any misapplication of rates or faulty metering. Base load discussion Should HUC reduce its base load contract from 25MW to 20MW? Talkinq points • In 2014, HUC received 74% of its energy needs from MIRES. (Approximately 20% is derived from MISO "real time" market purchases) • By changing the PPA with MIRES from 25MW to 20MW, HUC's base load energy would decrease to approximately 60%, therefore increasing its exposure (risk) to MISO pricing. • However, HUC benefits by not locking itself into a 40 year contract at a level that may not be desirable if the load served decreases due to economic downturns or customers moving to distributed generation to serve their own load. • Average MISO RT pricing is currently $25-$35/MWh and generally follows the price of natural gas • The amount of money saved by reducing the contract 5MW ($2.6M) would offset the increase in MISO market purchases ($1.1-1.5M). • HUC currently has an energy sale agreement that expires at the end of 2019. When the customer calls on the contract HUC would be short an additional 5MW. This energy would have to be purchased from the MISO market however the difference in this cost shift is insignificant. (This would only occur when HUC's load >45MW. Typically summer.) • If it is later determined that the exposure to MISO RT pricing is too great, an on -peak energy contract could be purchased to replace the 5MW reduction of the base load contract. • An on -peak contract of up to 10MW would fit HUC's daily load profile, regardless of the season. • Contract price of on -peak energy (16 hours/day, 5 days/week) is currently $40-50/MWh. • Reducing the contract amount by 5MW of energy would result in 5MW's less of capacity which is also supplied by the MRES contract. • HUC has a capacity sale agreement which expires on May 31, 2020. The loss of 5MW of capacity will not affect that agreement or HUC's current capacity requirements. Next steps • Suggesting a transition period to the new quantity might be more agreeable to MIRES, giving them time to adjust their budgets and power supply planning. • Stepping down from 25MW to 20MW in what year? 2017? 2020-2021-2022? • A formal letter indicating HUC's request should probably be sent ASAP to allow both parties time to form an agreement prior to the deadline of March 1st, 2016. • HUC Commission would need to act on an agreement no later than the February 2016 meeting. $100.00 $90.00 $80.00 $70.00 $60.00 $ 50.00 $40.00 $30.00 $20.00 $10.00 MISO Real Time LMP vs 25MW PPA ($/MWh) $16.00 $14.00 $12.00 r 1 I i 1 1 $10.00 I 1 1 1 1 I 1 1 1 1 1 1 1 1 1 1 1 1 I I 1 I 1 1 I i 1 1 I 1 1 $8.00 ----- $6.00 — $4.00 $2.00 $0.00 $0.00 V V V V Ln Ln Ln Ln lD l0 lD LO r, n N n 00 00 00 00 Ol Ol Ol 0) O O O O N N ri N IV IV 1i 1- N ei �--� IV 1i N N N N N N N N N O. 7 V Q ^ U Q 7 U C d 7 U Q 7 V C Q 5 u L 7 U C Q j V C Q — O Q O �° Q O 9 Q — O �° Q — O m Q — O �° Q O g Q — O —° MISO PPA Natural Gas — — — MISO (Forecast) — — — PPA (Forecast) — — — Natural Gas (Forecast)