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
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MISO PPA Natural Gas — — — MISO (Forecast) — — — PPA (Forecast) — — — Natural Gas (Forecast)