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04-26-2017 HUCCPHUTCHINSON UTILITIES COMMISSION AGENDA REGULAR MEETING May 24, 2017 3:00 p.m. 1. CONFLICT OF INTEREST 2. APPROVE CONSENT AGENDA a. Approve Minutes b. Ratify Payment of Bills 3. APPROVE 2016 FINANCIAL AUDIT — PRESENTATION BY PAUL HARVEGO 4. APPROVE FINANCIAL STATEMENTS 5. OPEN FORUM 6. COMMUNICATION a. City Administrator b. Divisions C. Legal d. General Manager 7. POLICIES a. Review Policies i. Natural Gas Requirements and Placement ii. Natural Gas Service Work iii. Locating Customer's Underground Utilities - Gas b. Approve Changes i. Meter Testing - Gas 8. UNFINISHED BUSINESS a. Discussion on proposed Pipeline Imbalance settlement agreement with New Ulm Public Utilities Commission 9. NEW BUSINESS a. RP3 Designation by Hutchinson Utilities Commission b. Consideration of Approval of Requisition #007218 C. Consideration of Approval of the Cost of Service & Rate Design Study d. Consideration of Approval of the General Manager's Contract Renewal 10. ADJOURN MINUTES Regular Meeting — Hutchinson Utilities Commission Wednesday, April 26, 2017 Call to order — 3:00 p.m. President Monty Morrow called the meeting to order. Members present: President Monty Morrow; Vice President Anthony Hanson; Secretary Mark Girard; Commissioner Robert Wendorff; Commissioner Don Martinez; General Manager Jeremy Carter; Attorney Marc Sebora. 1. Conflict of Interest None 2. Approve Consent Agenda a. Approve Minutes b. Ratify Payment of Bills A motion was made by Secretary Girard, seconded by Commissioner Wendorff to approve the Consent Agenda. Motion was unanimously carried. At this time, the Board thanked Kim Koski for her years of service with HUC. 3. Approve Financial Statements GM Carter presented the financial statements. A motion was made by Vice President Hanson, seconded by Commissioner Martinez to approve the financial statements. Motion was unanimously carried. 4. Open Forum 5. Communication a. City Administrator— Matthew Jaunich i. Busy construction season this year. b. Divisions i. Randy Blake — 1. Nothing to report. ii. John Webster - 1 . Had a meeting with contractors regarding steel work being done on School Road. 2. Met with Greater Minnesota Gas and United Natural Gas to discuss their need for additional capacity at the Lafayette Station. 3. Spoke with Heartland Corn this afternoon regarding the settlement and the additional meter module they will need. iii. Dave Hunstad - 1. Started spring projects. 1 iv. Dan Lang - 1. Nothing to report. c. Legal — Attorney Sebora i. GM Carter's contract expires before May's regular commission meeting. A special meeting may need to be set for approval of GM Carter's new contract. d. General Manager — Jeremy Carter i. A joint meeting with the City will take place at 7:30 a.m. tomorrow at the City Center. ii. The BS&A system final data extract is scheduled for tonight with the "go live" date on May 1, 2017. Manager training will be held tomorrow. iii. There will be a notice in the May billing that HUC is moving to a new billing system. iv. May's bill will have 26 days of meter reading versus 30 days and June's bill will have 35 days instead due to the software conversion. v. Attending a few upcoming webinars. vi. Will be reviewing administrative coordinator and account coordinator job applications. 6. Policies a. Review Policies i. Employment of Relatives ii. Tree Removal or Trimming iii. Locating Customer's Underground Utilities — Electric iv. Temporary Service - Gas No changes were recommended at this time. b. Approve Changes i. Natural Gas Service Requirements & Charges The proposed changes were to simplify the process and encourage multi- family, commercial and industrial development in Hutchinson. HUC staff proposes a revised installation fee for multi -family, commercial and industrial service installations and also adding a definition to "Service Line Length". This modification provides for not penalizing a customer in the case when the distribution main is located on the opposite side of the road. Excess flow valve language reflects current Department of Transportation code. After discussion, a motion was made by Vice President Hanson, seconded by Secretary Girard to approve the changes to Natural Gas Service Requirements and Charges. Motion was unanimously carried. (Changes attached.) 2 7. Unfinished Business a. Update on Pack Gas Discussions HUC received the draft settlement agreement and is in the process of reviewing it. 8. New Business a. Certificate of Excellence in Reliability Dave Hunstad explained the Certificate of Excellence received by HUC is recognition for reliability showing HUC consistently outperforms the electric industry national average. b. Discussion on Units 6 and 7 GM Carter discussed two options as project timelines: 1) Traditional - hiring an engineering firm to develop detailed bid specification documents for engine manufacturers to bid on, publically advertising for proposals, opening bids from engine manufacturers for the project, once the engine manufacturer is chosen a second set of bid documents with the engine specifications will be developed and will go out for the projects ancillary services. This option is less risky and has a longer timeline. 2) General Contractor - put preliminary bid specifications out to bid and hire a general contractor responsible for putting together a turnkey project. These bids will be less detailed on the specifications which will result in less accurate bids. This option is more risky but has a more condensed timeline. GM Carter requested feedback from the Board regarding the two options. After discussion, the Board chose the traditional option. c. Approve Capacity Confirmation and Supplementary Agreements GM Carter presented both agreements for approval. These agreements are for the sale of capacity from HUC to Rice Lake Utilities in years 2020 through 2040. After discussion, a motion was made by Vice President Hanson, seconded by Secretary Girard to approve the Capacity Confirmation and Supplementary Agreements. Motion was unanimously carried. (Agreements attached.) d. Approve Agreement with HDR, Inc. GM Carter presented the Agreement between HUC and HDR Engineering, Inc. Hutchinson Utilities Commission has been discussing adding two new units to the downtown facility backed by a significant monetary capacity agreement. The addition of these two new units to HUC's engine fleet will provide added benefits and continued flexibility to HUC's business operations in the near and long-term future. In order to move ahead with a formal bidding process for this type of project an engineering firm will need to be hired that can design bid and specification documents that will be supplied to the various engine manufacturers and ancillary services contractors with which to bid on. In 3 addition, project management and bid document oversight will also be a part of the scope of work provided by the engineering firm HDR. The agreement provides a complete scope of work, cost, and anticipated time -line to complete the engineering services and installation/commissioning of the two new engines. After discussion, a motion was made by Secretary Girard, seconded by Vice President Hanson to approve the Engineering Services Agreement with HDR. Motion was unanimously carried. (Agreements attached.) e. Approve Requisition 7078 to Provide for Purchase of Natural Gas Diaphragm Meters with AMI Modules; John Webster presented Requisition 7078 for approval to provide for purchase of natural gas diaphragm meters with AMI modules. This is to further reduce the lost and unaccounted for natural gas at Hutchinson Utilities. The Natural Gas Division is attempting to replace the oldest six years of active meters in the system. As of April 1, 357 meters remain to be removed from service from the original manufactured years of 1960 through 1965. In order to comply with Hutchinson Utilities' self-imposed meter testing program, 76 additional meters must be removed from the manufactured years 1966 through 2012. In order to replace the 357 oldest meters in service, Hutchinson Utilities is required to purchase 300 additional meters, with AMI modules, for working inventory. A motion was made by Commissioner Martinez, seconded by Commissioner Wendorff to approve Requisition 7078 to provide for purchase of natural gas diaphragm meters with AMI modules. Motion was unanimously carried. (Requisition 7078 attached.) 9. Adjourn There being no further business, a motion was made by Vice President Hanson, seconded by Secretary Girard to adjourn the meeting at 4:03 p.m. Motion was unanimously carried. ATTEST: Monty Morrow, President 0 Mark Girard, Secretary 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # CHECK Payee DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description Account Pag Dept 1/29 Amount Fund: 1 ELECTRIC 04/04/2017 GEN 17040401( MISO PURCHASED POWER 232-000- 00 38,979.53 04/04/2017 GEN 17040402( MISO PURCHASED POWER EXPENSE 232-000- 00 885.64 04/11/2017 GEN 17041101( MISO PURCHASED POWER 232-000- 00 27,377.45 04/11/2017 GEN 17041102( MISO PURCHASED POWER EXPENSE 232-000- 00 845.10 04/11/2017 GEN 63970# AG SYSTEMS INC SALES TAX 186-000- 00 0.32 SALES TAX 186-000- 00 1.69 SALES TAX 186-000- 00 1.69 SALES TAX 186-000- 00 1.69 SALES TAX 186-000- 00 0.15 CLAMPS -RETURN 402-554- 01 (20.82) CLAMPS -WILL BE RETURNED 402-554- 01 20.82 FITTINGS UNIT 1 AIR FILTER PIP 402-554- 01 4.72 CLAMPS UNIT 1 FILTER PIPING 402-554- 01 24.52 CLAMPS UNIT 1 FILTER PIPING 402-554- 01 24.52 CLAMPS UNIT 1 FILTER PIPING 402-554- 01 24.52 HOSE UNIT 1 AIR FILTER 402-554- 01 2.19 CHECK GEN 63970 TOTAL 86.01 04/11/2017 GEN 63971 ALLIED ELECTRONICS INC Generators 107-344- 00 15.46 Sales Tax Receivable - Replace 186-000- 00 4.69 Sales Tax Receivable - Replace 186-000- 00 4.93 Sales Tax Receivable - Replace 186-000- 00 8.47 Generator #1 Material 232-000- 00 68.16 Generator #1 Material 232-000- 00 71.72 Generators 232-000- 00 107.75 CHECK GEN 63971 TOTAL 281.18 04/11/2017 GEN 63972 AMERICAINN ENERGY CONSERVATION REBATE 401-916- 07 405.00 04/11/2017 GEN 63973 ANDERSON ELECTRIC FINAL BILL REFUND 186-000- 00 29.75 04/11/2017 GEN 63974 ANIXTER INC Generators 107-344- 00 115.01 Sales Tax Receivable - Replace 186-000- 00 64.21 Generators 232-000- 00 819.00 CHECK GEN 63974 TOTAL 998.22 04/11/2017 GEN 63975 BASLER ELECTRIC Sales Tax Receivable - Replace 186-000- 00 1,372.94 Sales Tax Receivable - Replace 186-000- 00 2,059.41 Generators 232-000- 00 19,970.00 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Payee Description Account Pag Dept 2/29 Amount Fund: 1 ELECTRIC Generators 232-000- 00 29,955.00 CHECK GEN 63975 TOTAL 53,357.35 04/11/2017 GEN 63976 BLAIR, JENAPHER FINAL BILL REFUND 186-000- 00 81.25 04/11/2017 GEN 63977*# BORDER STATES ELECTRIC SUPPLY Generators 107-344- 00 (0.88) BULB, HPS LU, 250W, 44047 154-000- 00 36.95 ANODES #17, MAG, HIGH POTENTIA 154-000- 00 24.85 Sales Tax Receivable - New 186-000- 00 6.62 Sales Tax Receivable - Replace 186-000- 00 8.19 Generators 232-000- 00 120.00 ANODES #17, MAG, HIGH POTENTIA 232-000- 00 994.62 Materials 232-000- 00 20.48 CHECK GEN 63977 TOTAL 1,210.83 04/11/2017 GEN 63979 BUSINESSWARE SOLUTIONS PRINTER CONTRACT 401-921- 08 411.67 04/11/2017 GEN 63980 CADY, MIKAYKA OR HEIL, ALEXANDER FINAL BILL REFUND 186-000- 00 142.21 04/11/2017 GEN 63981 CARD SERVICES BREAKROOM SUPPLIES 401-926- 08 309.97 04/11/2017 GEN 63982 CARLSON, JOEL OR BREANNA FINAL BILL REFUND 186-000- 00 215.33 04/11/2017 GEN 63984# CENTRAL HYDRAULICS 04/11/2017 GEN 63986 CITI MORTGAGE INC 04/11/2017 GEN 63987*# CITY OF HUTCHINSON SALES TAX SALES TAX SALES TAX SALES TAX SALES TAX SALES TAX UNIT 1 GAS VALVE REPAIRS UNIT 1 GAS VALVE REPAIRS O -RINGS UNIT 1 GAS VALVE O -RINGS UNIT 1 GAS VALVE O -RINGS UNIT 4 GAS VALVE O -RINGS UNIT 4 GAS VALVE FINAL BILL REFUND 1ST QTR PILOT 1E i=IPP�8181 234-000- 00 ** VOIDED ** ** VOIDED ** ** VOIDED ** ** VOIDED ** ** VOIDED ** ** VOIDED ** ** VOIDED ** ** VOIDED ** ** VOIDED ** ** VOIDED ** ** VOIDED ** ** VOIDED ** 102.88 262,236.75 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # Payee Fund: 1 ELECTRIC 04/11/2017 GEN 63988 04/11/2017 GEN 63989 04/11/2017 GEN 63990 04/11/2017 GEN 63991 04/11/2017 GEN 63992 04/11/2017 GEN 63993 CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description COUNTRYSIDE FLAGPOLE DEPARTMENT OF EMPLOYMENT & DORIVAL, JOHN ELJARUSHI, CHARLIE FASTENAL COMPANY FERGUSON ENTERPRISES 0525 04/11/2017 GEN 63994 FIRST CHOICE FOOD & BEVERAGE 04/11/2017 GEN 63995# GE PACKAGE POWER 04/11/2017 GEN 63996*# GOPHER STATE ONE -CALL INC 04/11/2017 GEN 63997# GREAT RIVER ENERGY 04/11/2017 GEN 63998 04/11/2017 GEN 63999 04/11/2017 GEN 64000 04/11/2017 GEN 64002 GROSS, DALE HILLYARD/HUTCHINSON HOFFMAN FILTER SERVICE HUTCHFIELD SERVICES INC Pag 3/29 Account Dept Amount 1ST QTR ROADWAY LIGHTING 234-000- 00 36,846.00 MARCH FUEL 401-550- 01 223.82 MARCH FUEL 401-588- 02 935.48 2ND QTR IT SUPPORT 401-921- 08 23,963.00 2ND QTR LEGAL SUPPORT 401-923- 08 10,500.00 2ND QTR HR SUPPORT 401-923- 08 8,268.75 MARCH FUEL 401-935- 08 157.61 CHECK GEN 63987 TOTAL 343,131.41 FLAGS AND PARTS 401-550- 01 471.85 UNEMPLOYMENT PAYMENT 401-926- 08 5,514.20 ENERGY CONSERVATION REBATE 401-916- 07 80.00 FINAL BILL REFUND 186-000- 00 106.56 HARDWARE 402-598- 02 0.80 Generators 107-344- 00 8.20 Generators 107-344- 00 8.06 Generators 232-000- 00 38.09 Generators 232-000- 00 29.59 CHECK GEN 63993 TOTAL 83.94 BREAKROOM SUPPLIES 401-926- 08 130.00 Generator #1 Material 232-000- 00 12,148.00 Generator #1 Material 402-554- 01 (6,250.95) CHECK GEN 63995 TOTAL 5,897.05 LOCATION EXPENSE 401-581- 02 40.05 PURCHASED POWER -MARCH 401-555- 02 834.00 EVALUATE POWERLINE CARRRIER 402-574- 03 2,208.40 CHECK GEN 63997 TOTAL 3,042.40 ENERGY CONSERVATION REBATE 401-916- 07 250.00 CLEANING SUPPLIES 401-935- 08 256.56 OIL FILTER DISPOSAL 401-550- 01 310.00 APRIL CLEANING SERVICES 401-935- 08 2,023.14 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # Payee Fund: 1 ELECTRIC 04/11/2017 GEN 64003 04/11/2017 GEN 64004 04/11/2017 GEN 64005 04/11/2017 GEN 64006 04/11/2017 GEN 64007 04/11/2017 GEN 64008 04/11/2017 GEN 64009 04/11/2017 GEN 64010 04/11/2017 GEN 64011 CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description HUTCHINSON HEALTH HUTCHINSON LEADER ICMA RETIREMENT TRUST -457 ILIAC INNOVATIVE OFFICE SOLUTIONS KAUFMANN, ANGELA LANDES, JOSEPH OR MELODIE LEMKE, SHAWN LINDELL, SCOTT NEW EMPLOYEE PHYSICAL ADS EMPLOYEE DEF COMP W.H #301229 EMPLOYEE DEF COMP W/H OFFICE SUPPLIES FINAL BILL REFUND FINAL BILL REFUND ENERGY CONSERVATION REBATE ENERGY CONSERVATION REBATE ENERGY CONSERVATION REBATE CHECK GEN 64011 TOTAL 04/11/2017 GEN 64012# LOCAL GOVERNMENT INFO SYSTEMS APPLICATION SUPPORT -UT BILLING APPLICATION SUPPORT -UT BILLING APPLICATION SUPPORT-FIN/HR/PR APPLICATION SUPPORT-FIN/HR/PR NETWORK THRU 3/11 A MALONEY CHECK GEN 64012 TOTAL 04/11/2017 GEN 64013 MAILFINANCE 04/11/2017 GEN 64014# MCG ENERGY SOLUTIONS, LLC 04/11/2017 GEN 64015 MCLEOD COOPERATVIE POWER ASSN 04/11/2017 GEN 64016 MCLEOD COUNTY CHIROPRACTIC CTR 04/11/2017 GEN 64017 MID-CONTINENT SALES H12091330 -LEASE AGRMT-INSERTER N16062641 -LSE AGRMT-POST MACHI CHECK GEN 64013 TOTAL IAM MANAGEMENT FEES IAM USAGE FEES CHECK GEN 64014 TOTAL SINGLE PHASE CONSTRUCTION VISIT N BOHN 03/21/17 VISIT N BOHN 03/31/17 CHECK GEN 64016 TOTAL INDICATOR COCK KIENE V -12A Account Dept 401-923- 08 401-916- 07 242-000- 00 242-000- 00 401-921- 08 186-000- 00 186-000- 00 401-916- 07 401-916- 07 401-916- 07 401-903- 06 401-903- 06 401-921- 08 401-921- 08 401-921- 08 401-921- 08 401-921- 08 401-555- 02 401-556- 03 401-921- 08 401-926- 08 401-926- 08 �I.ZQIPP�1I17 Pag 4/29 Amount 358.10 1,006.00 1,480.00 1,010.00 220.31 34.93 91.51 147.00 50.00 50.00 100.00 5,310.00 5,310.00 2,144.00 2,144.00 57.50 14,965.50 991.74 436.60 1,428.34 3,900.00 3,050.00 6,950.00 480.00 121.00 56.00 177.00 081WAI 05/18/2017 05:07 PM CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES User: JMartig CHECK DATE FROM 04/01/2017 - 05/31/2017 DB: Hutchinson Utili Check Date Bank Check # Payee Description Fund: 1 ELECTRIC 00 155.40 176.11 INDICATOR COCK KIENE V -12A 07 15.00 401-921- CHECK GEN 64017 TOTAL 04/11/2017 GEN 64018 MILLER, LYNETTE ENERGY CONSERVATION REBATE 04/11/2017 GEN 64019 NEOPOST USA INC CHECK ENDORSER MAINTENANCE 186-000- 00 159.88 POSTAGE LABELS 01 51.79 401-921- CHECK GEN 64019 TOTAL 04/11/2017 GEN 64020 NORDIN, TAYLOR FINAL BILL REFUND 04/11/2017 GEN 64022 NORTHERN STATES SUPPLY INC HARDWARE 04/11/2017 GEN 64023 NU TELECOM TELEPHONE 07 50.00 401-916- TELEPHONE 07 50.00 401-921- CHECK GEN 64023 TOTAL 04/11/2017 GEN 64024*# OXYGEN SERVICE COMPANY INC WELDING SUPPLIES 04/11/2017 GEN 64025 PILGRIM, PAULUS ENERGY CONSERVATION REBATE 04/11/2017 GEN 64026 PLATH, JOEL ENERGY CONSERVATION REBATE 04/11/2017 GEN 64027 PREMIUM WATERS INC BOTTLED WATER 04/11/2017 GEN 64028 PSI ENGINEERING LLC FULL FLOW FILTER 402-554- 01 161.42 Sales Tax Receivable - Replace 02 34.73 FULL FLOW FILTER 219.55 402-598- CHECK GEN 64028 TOTAL 04/11/2017 GEN 64029*# QUADE ELECTRIC SALES TAX 402-598- 02 84.80 FUSE UNIT 5 PLANT 1 PARTS LAMP CHECK GEN 64029 TOTAL 04/11/2017 GEN 64030 RDO EQUIPMENT BACKHOE REPAIRS 04/11/2017 GEN 64031*# RUNNING'S SUPPLY INC BOLTS MUD SUCKER/NEW BACKHOSE REPAIR CHECK GEN 64031 TOTAL Account Dept Pag 5/29 Amount 232-000- 00 155.40 176.11 401-916- 07 15.00 401-921- 08 558.03 401-921- 08 44.87 602.90 186-000- 00 159.88 401-550- 01 51.79 401-921- 08 44.75 401-921- 08 1,728.46 1,773.21 402-574- 03 111.95 401-916- 07 50.00 401-916- 07 50.00 401-921- 08 59.07 154-000- 00 25.58 186-000- 00 14.79 232-000- 00 174.96 215.33 186-000- 00 1.50 402-554- 01 21.90 402-554- 01 161.42 402-592- 02 34.73 219.55 402-598- 02 91.68 402-554- 01 0.47 402-598- 02 84.80 85.27 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # Payee Fund: 1 ELECTRIC GEN 04/11/2017 GEN 64032 04/11/2017 GEN 64033 04/11/2017 GEN 64034 04/11/2017 GEN 64035 04/11/2017 GEN 64036 04/11/2017 GEN 64037 04/11/2017 GEN 64038 04/11/2017 GEN 64039 04/11/2017 GEN 64040 04/11/2017 GEN 64041 CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description SHRED RIGHT SMITH, PETER STANDARD PRINTING CO TESSMER, JEANNIE THEIS, MIKKAYLA THOVSON, GAIL UIS/SOURCECORP VERIZON WIRELESS VIDEOTRONIX INC WARTSILA OF NORTH AMERICA, INC 04/11/2017 GEN 64042# WAYTEK 04/11/2017 GEN 64044# WEST CENTRAL SANITATION INC 04/14/2017 GEN 17041401( MISO 04/14/2017 GEN 17041402( MISO 04/14/2017 GEN 17041403( MISO 04/18/2017 GEN 17041801( MISO 04/18/2017 GEN 17041802( MISO 04/19/2017 GEN 17041901( PAYMENTUS (CANADA) CORPORATION Pag 6/29 Account Dept Amount Office Supplies 401-921- 08 15.60 ENERGY CONSERVATION REBATE 401-916- 07 69.76 ENVELOPES 401-921- 08 467.08 ENERGY CONSERVATION REBATE 401-916- 07 250.00 FINAL BILL REFUND 186-000- 00 58.04 ENERGY CONSERVATION REBATE 401-916- 07 14.58 STATEMENTS -MARCH 401-903- 06 785.15 POSTAGE 401-903- 06 3,000.00 INSERT 401-903- 06 208.03 CHECK GEN 64038 TOTAL 3,993.18 MONTHLY CHARGES 401-921- 08 1,395.02 REPAIRS 401-935- 08 325.00 SENSOR, SPEED, DRHORN M12 154-000- 00 77.83 Sales Tax Receivable - Replace 186-000- 00 69.03 SENSOR, SPEED, DRHORN M12 232-000- 00 858.16 CHECK GEN 64041 TOTAL 1,005.02 Maintenance Other - Materials 232-000- 00 117.60 Maintenance Other - Materials 402-554- 01 19.74 CHECK GEN 64042 TOTAL 137.34 REFUSE SERVICES 401-547- 01 85.83 REFUSE SERVICES 401-550- 01 138.34 REFUSE SERVICES 401-930- 08 379.74 CHECK GEN 64044 TOTAL 603.91 SCHEDULE 26 CHARGES 401-565- 03 42,959.51 SCHEDULE 1 & 2 CHARGES 401-565- 03 20,659.20 SCHEDULE 10 CHARGES 401-565- 03 6,571.04 PURCHASED POWER 232-000- 00 30,248.55 PURCHASED POWER EXPENSE 232-000- 00 834.60 CREDIT CARD CHARGES 401-903- 06 3,711.00 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Payee Description Account Dept Pag 7/29 Amount Fund: 1 ELECTRIC 04/20/2017 GEN 17042001( MRES PURCHASED POWER 401-555- 02 940,647.33 04/21/2017 GEN 64045# AIRGAS NORTH CENTRAL SALES TAX 186-000- 00 5.06 EPA GAS CYLINDER RENT 402-554- 01 68.65 CHECK GEN 64045 TOTAL 73.71 04/21/2017 GEN 64046# ALLIED ELECTRONICS INC Generators 107-344- 00 19.82 Sales Tax Receivable - Replace 186-000- 00 9.61 Sales Tax Receivable - Replace 186-000- 00 33.30 Accessory Plant - Materials 232-000- 00 124.14 Generators 232-000- 00 464.52 Accessory Plant - Materials 402-554- 01 15.57 CHECK GEN 64046 TOTAL 666.96 04/21/2017 GEN 64047 BOHN, NORMAN ENERGY CONSERVATION REBATE 401-916- 07 80.00 ENERGY CONSERVATION REBATE 401-916- 07 50.00 CHECK GEN 64047 TOTAL 130.00 04/21/2017 GEN 64048 BORDER STATES ELECTRIC SUPPLY GLOBE, ACORN, WITHOUT CUT-OFF, 154-000- 00 183.30 COUPLING, 3/4", EF, TR10075 154-000- 00 (44.83) COUPLING, 3/4", EF, TR10075 232-000- 00 165.60 GLOBE, ACORN, WITHOUT CUT-OFF, 232-000- 00 1,204.95 CHECK GEN 64048 TOTAL 1,509.02 04/21/2017 GEN 64049# BRANDED SOLUTIONS CLOTHING ORDER 186-000- 00 365.42 CLOTHING ORDER 401-926- 08 1,322.86 CHECK GEN 64049 TOTAL 1,688.28 04/21/2017 GEN 64050 CASE M & I. LLC Generators 107-344- 00 224.63 Generators 232-000- 00 43,772.00 CHECK GEN 64050 TOTAL 43,996.63 04/21/2017 GEN 64051# CENTRAL HYDRAULICS SALES TAX 186-000- 00 11.28 SALES TAX 186-000- 00 0.14 SALES TAX 186-000- 00 0.45 SALES TAX 186-000- 00 0.23 UNIT 1 GAS VALVE SEALS 402-554- 01 164.05 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # Payee Fund: 1 ELECTRIC CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description 04/21/2017 GEN 64052*# CINTAS CORPORATION #470 04/21/2017 GEN 64053# CITY OF HUTCHINSON 04/21/2017 GEN 64054 DAHLKE, AARON 04/21/2017 GEN 64055 DEKOSTER, TOM 04/21/2017 GEN 64056 DELMAR COMPANY 04/21/2017 GEN 64057 DTN 04/21/2017 GEN 64058 FERGUSON ENTERPRISES #525 Pag 8/29 Account Dept Amount O -RINGS UNIT 1 GAS VALVE 402-554- 01 22.10 O -RINGS UNIT 3 AIRE START VALV 402-554- 01 3.33 O -RINGS UNIT 4 GAS VALVE 402-554- 01 6.48 CHECK GEN 64051 TOTAL 208.06 UNIFORMS 401-550- 01 246.62 UNIFORMS 401-550- 01 266.87 UNIFORMS 401-588- 02 220.36 UNIFORMS 401-588- 02 220.36 CHECK GEN 64052 TOTAL 954.21 WATER BILL -MARCH 401-547- 01 74.24 WATER BILL -MARCH 401-547- 01 172.75 WATER BILL -MARCH 401-550- 01 61.49 WATER BILL -MARCH 401-550- 01 355.58 STORM DRAINAGE 400 401-550- 01 450.60 WATER BILL -MARCH 401-930- 08 88.31 STORM DRAINAGE 600 401-930- 08 675.90 WATER BILL -MARCH 401-930- 08 26.48 CHECK GEN 64053 TOTAL 1,905.35 ENERGY CONSERVATION REBATE 401-916- 07 50.00 ENERGY CONSERVATION REBATE 401-916- 07 400.00 FLEX GASKET,2" 600# 154-000- 00 16.66 Sales Tax Receivable - Replace 186-000- 00 3.21 FLEX GASKET,2" 600# 232-000- 00 26.88 CHECK GEN 64056 TOTAL 46.75 SUBSCRIPTION -CANCELLED 401-930- 08 321.00 Generators 107-344- 00 8.78 Accessory Electric Equipment 107-345- 00 15.33 Accessory Electric Equipment 107-345- 00 8.35 Accessory Electric Equipment 232-000- 00 47.91 Generators 232-000- 00 40.63 Accessory Electric Equipment 232-000- 00 19.00 CHECK GEN 64058 TOTAL 140.00 05/18/2017 05:07 PM CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES User: JMartig CHECK DATE FROM 04/01/2017 - 05/31/2017 DB: Hutchinson Utili Check Date Bank Check # Payee Description Fund: 1 ELECTRIC 00 5.60 04/21/2017 GEN 64059# FS3 INC BATTERY PACK, DRILL HEAD 00 37.00 401-588- Sales Tax Receivable - New 02 2,111.58 BATTERY PACK, DRILL HEAD 2,156.72 232-000- 00 TERMINATOR 401-555- 02 834.00 CHECK GEN 64059 TOTAL 04/21/2017 GEN 64060# GREAT RIVER ENERGY TRANSMISSION EXPENSE -FEBRUARY 07 50.00 242-000- PURCHASED POWER -FEBRUARY 57,643.82 402-554- 01 CHECK GEN 64060 TOTAL 04/21/2017 GEN 64061 GREGORY, DAVID ENERGY CONSERVATION REBATE 04/21/2017 GEN 64062 HEALTH PARTNERS 33441 -MEDICAL INSURANCE -MAY 04/21/2017 GEN 64063 HINTZMAN ENVIRONMENTAL SERVICES 1ST QTR CEM DATA & XML 0.64 186-000- 00 4TH QTR CEM DATA & XML -2016 402-554- 01 43.46 CHECK GEN 64063 TOTAL 04/21/2017 GEN 64064*# HUTCHINSON WHOLESALE SUPPLY CO TERMINAL -UNIT 1 02 86.71 402-598- SALES TAX 17.09 SALES TAX 242-000- 00 70.91 HOSE -COOLING SYSTEM UNIT1 00 2,711.26 HEXBIT 2,782.17 242-000- SHOP SUPPLIES 1,480.00 242-000- 00 OIL CAP KIT 401-916- 07 400.00 CHECK GEN 64064 TOTAL 04/21/2017 GEN 64065 I B E W LOCAL 949 UNION DUES W/H 800.00 UNION DUES W/H CHECK GEN 64065 TOTAL 04/21/2017 GEN 64066 ICMA RETIREMENT TRUST -457 EMPLOYEE DEF COMP W.H #301229 04/21/2017 GEN 64067 ILIAC EMPLOYEE DEF COMP W/H 04/21/2017 GEN 64068 JENNINGS, SYBIL ENERGY CONSERVATION REBATE ENERGY CONSERVATION REBATE CHECK GEN 64068 TOTAL 04/21/2017 GEN 64069 MARSHALL, JON ENERGY CONSERVATION REBATE Pag 9/29 Account Dept Amount 154-000- 00 5.60 186-000- 00 2.54 232-000- 00 37.00 401-588- 02 2,111.58 2,156.72 232-000- 00 107,610.74 401-555- 02 834.00 108,444.74 401-916- 07 50.00 242-000- 00 57,643.82 402-554- 01 825.00 402-554- 01 750.00 1,575.00 107-344- 00 9.38 186-000- 00 0.64 186-000- 00 2.99 402-554- 01 43.46 402-596- 02 6.77 402-598- 02 86.71 402-598- 02 17.09 167.04 242-000- 00 70.91 242-000- 00 2,711.26 2,782.17 242-000- 00 1,480.00 242-000- 00 1,010.00 401-916- 07 400.00 401-916- 07 400.00 800.00 401-916- 07 16.00 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # CHECK Payee DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description Account Pag Dept 10/29 Amount Fund: 1 ELECTRIC 04/21/2017 GEN 64070 MCGRAW, DAVID ENERGY CONSERVATION REBATE 401-916- 07 150.00 ENERGY CONSERVATION REBATE 401-916- 07 400.00 CHECK GEN 64070 TOTAL 550.00 04/21/2017 GEN 64072 MINNESOTA POLLUTION CONTROL AGENCY AIR ANNUAL FEE 401-550- 01 775.01 AIR ANNUAL FEE 401-550- 01 5,853.60 CHECK GEN 64072 TOTAL 6,628.61 04/21/2017 GEN 64073 OLSON, BRENDAN OT MEAL EXPENSE 402-594- 02 30.98 04/21/2017 GEN 64074 PLAMANN, ALLISON ENERGY CONSERVATION REBATE 401-916- 07 80.00 ENERGY CONSERVATION REBATE 401-916- 07 50.00 CHECK GEN 64074 TOTAL 130.00 04/21/2017 GEN 64075 RELIANCE STANDARD LIFE -DENTAL MAY DENTAL 242-000- 00 4,167.25 MAY DENTAL-ADJ-APRIL 242-000- 00 36.97 MAY DENTAL -COBRA 242-000- 00 481.15 CHECK GEN 64075 TOTAL 4,685.37 04/21/2017 GEN 64076 RELIANCE STANDARD LIFE -LIFE MAY LTD 242-000- 00 1,539.40 MARCH/APRIL CORRECTION 242-000- 00 (1,533.61) MARCH CORRECTION 242-000- 00 1,533.61 APRIL CORRECTION 242-000- 00 1,512.59 MAY LIFE 242-000- 00 884.97 MARCH/APRIL CORRECTION 242-000- 00 (3,254.80) MARCH CORRECTION 242-000- 00 873.32 APRIL CORRECTION 242-000- 00 868.97 CHECK GEN 64076 TOTAL 2,424.45 04/21/2017 GEN 64077 SHIMANSKI, BOB ENERGY CONSERVATION REBATE 401-916- 07 400.00 04/21/2017 GEN 64078 SMITH, PETER ENERGY CONSERVATION REBATE 401-916- 07 20.00 ENERGY CONSERVATION REBATE 401-916- 07 24.48 CHECK GEN 64078 TOTAL 44.48 04/21/2017 GEN 64080 SYNSTELIEN, STEVE ENERGY CONSERVATION REBATE 401-916- 07 48.00 ENERGY CONSERVATION REBATE 401-916- 07 400.00 ENERGY CONSERVATION REBATE 401-916- 07 400.00 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Payee Description Account Pag Dept 11/29 Amount Fund: 1 ELECTRIC CHECK GEN 64080 TOTAL 848.00 04/21/2017 GEN 64081# TEK MECHANICAL SERVICE SALES TAX 186-000- 00 1.10 UNIT 1 PIPE FITTING 402-554- 01 14.94 CHECK GEN 64081 TOTAL 16.04 04/21/2017 GEN 64082 TOTAL COMPLIANCE SOLUTIONS INC TOTAL COMPLIANCE PROGRAM 401-923- 08 7,500.00 04/21/2017 GEN 64083 TRI -COUNTY WATER CONDITIONING SOFTNER SALT 401-935- 08 11.68 04/21/2017 GEN 64085 ULRICH, RANDY ENERGY CONSERVATION REBATE 401-916- 07 400.00 ENERGY CONSERVATION REBATE 401-916- 07 400.00 CHECK GEN 64085 TOTAL 800.00 04/21/2017 GEN 64086 US BANK FINAL BILL REFUND 186-000- 00 253.26 04/24/2017 GEN 17042401( BP CANANDA ENERGY SOLUTIONS PURCHASED GAS -GENERATION 401-547- 01 368.20 PURCHASED GAS -GENERATION 401-547- 01 28.32 PURCHASED GAS -GENERATION 401-547- 01 28.32 PURCHASED GAS -GENERATION 401-547- 01 56.65 PURCHASED GAS -GENERATION 401-547- 01 99.13 PURCHASED GAS -GENERATION 401-547- 01 177.03 CHECK GEN 17042401(E) 757.65 04/24/2017 GEN 17042402( BP CANANDA ENERGY SOLUTIONS PURCHASED GAS -GENERATION 401-547- 01 105.82 PURCHASED GAS -GENERATION 401-547- 01 357.29 PURCHASED GAS -GENERATION 401-547- 01 1,109.71 PURCHASED GAS -GENERATION 401-547- 01 1,333.06 PURCHASED GAS -GENERATION 401-547- 01 8,725.56 PURCHASED GAS-HUC 401-930- 08 4,769.89 CHECK GEN 17042402(E) 16,401.33 04/30/2017 GEN 10(E)* DELUXE CHECKS Collection - Materials 401-903- 06 10.98 04/30/2017 GEN 11(E) IRS USA TAX PAYMENT Federal Tax Withheld 242-000- 00 18,678.51 Federal Tax Withheld 242-000- 00 18,554.93 Fica Tax Withheld 242-000- 00 22,979.90 Fica Tax Withheld 242-000- 00 22,826.94 CHECK GEN 11(E) TOTAL 83,040.28 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # Payee CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description Fund: 1 ELECTRIC 04/30/2017 GEN 12(E) MINNESOTA REVENUE 04/30/2017 GEN 13(E) PUBLIC EMPLOYEE RETIREMENT 04/30/2017 GEN 14(E) TASC State Tax Withheld State Tax Withheld State Sales Tax City Sales Tax CHECK GEN 12(E) TOTAL PERA W/H PERA EXPENSE PERA W/H PERA EXPENSE CHECK GEN 13(E) TOTAL HRA DEPOSIT Employer HSA Employer HSA Health Care Health Care Dependent Care Dependent Care HSA Withheld HSA Withheld CHECK GEN 14(E) TOTAL Account Dept 242-000- 00 242-000- 00 242-000- 00 242-000- 00 242-000- 00 242-000- 00 242-000- 00 242-000- 00 174-000- 00 242-000- 00 242-000- 00 242-000- 00 242-000- 00 242-000- 00 242-000- 00 242-000- 00 242-000- 00 04/30/2017 GEN 9(E)* CITIZENS BANK BANK CHARGES 401-921- 08 05/09/2017 GEN 64087# AG SYSTEMS INC Sales Tax Receivable - Replace 186-000- 00 PLT 1 PIPE FITTING TO REPAIR COOLING 402-554- 01 CHECK GEN 64087 TOTAL 05/09/2017 GEN 64088* AMERICAN PAYMENT CENTERS INC BOX RENTAL 401-903- 06 05/09/2017 GEN 64089* AMERICAN PUBLIC POWER ASSOCIATION Training - Expense 401-930- 08 05/09/2017 GEN 64090* BORDER STATES ELECTRIC SUPPLY POLE, STANDARD, FIBERGLASS BG WITH 4" x 154-000- 00 POLE, STANDARD, FIBERGLASS BG WITH 4" x 154-000- 00 CONNECTOR, PEDESTAL, 500 MCM 6 PLACE, 154-000- 00 FIXTURE, COBRA, 150 HPS 115- 154-000- 00 FIXTURE, COBRA HEAD, 250W HPS 115 25S 154-000- 00 Pag 12/29 Amount 7,327.40 7,288.54 65,259.00 4,716.00 84,590.94 10,232.10 11,801.60 10,275.31 11,851.44 44,160.45 1,049.00 6,615.59 6,615.59 145.00 186.06 692.31 692.31 2,306.33 2,346.33 20,648.52 134.55 0.39 5.70 6.09 :VA 112 61 19,202.37 0.05 234.90 176.16 263.50 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # Payee Fund: 1 ELECTRIC CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description Account Dept Sales Tax Receivable - New 186-000- 00 CHECK GEN 64090 TOTAL 05/09/2017 GEN 64091* BUSINESSWARE SOLUTIONS OFFICE SUPPLIES 401-921- 08 05/09/2017 GEN 64092* CARR FLOWERS OFFICE SUPPLIES 401-921- 08 05/09/2017 GEN 64093# CENTRAL HYDRAULICS Sales Tax Receivable - Replace 186-000- 00 O-RING FOR UNIT 4 AIR VALVE 402-554- 01 CHECK GEN 64093 TOTAL 05/09/2017 GEN 64095*# CINTAS CORPORATION #470 Uniforms & Laundry 401-550- 01 Uniforms & Laundry 401-550- 01 Uniforms & Laundry 401-550- 01 UNIFORMS & LAUNDRY 401-588- 02 UNIFORMS & LAUNDRY 401-588- 02 UNIFORMS & LAUNDRY 401-588- 02 CHECK GEN 64095 TOTAL 05/09/2017 GEN 64096*# CITY OF HUTCHINSON Vehicle/Equipment Fuel 401-550- 01 Vehicles/Equipment Fuel 401-588- 02 Vehicles/Equipment Fuel 401-935- 08 CHECK GEN 64096 TOTAL 05/09/2017 GEN 64097 COLONIAL SUPPLEMENTAL INS CO APRIL INSURANCE W/H 242-000- 00 05/09/2017 GEN 64098 CREEKSIDE SOILS COMPOST BULK 401-588- 02 05/09/2017 GEN 64099 DAKOTA SUPPLY GROUP ELBOW, FIBERGLASS, 4" IPS, .096" WALL, 154-000- 00 ELBOW, FIBERGLASS, 4" IPS, .096" WALL, 154-000- 00 Sales Tax Receivable - New 186-000- 00 Sales Tax Receivable - New 186-000- 00 CHECK GEN 64099 TOTAL 05/09/2017 GEN 64100* DEPAT OF PUBLIC SAFETY -PIPELINE REGULATORY EXPENSES 401-928- 08 05/09/2017 GEN 64101* DEPT OF PUBLIC SAFETY -PIPELINE REGULATORY EXPENSES 401-928- 08 Pag 13/29 Amount 16.14 19,893.12 255.64 60.12 0.19 2.74 2.93 383.45 270.62 375.41 220.36 220.36 220.36 1,690.56 101.32 1,233.29 65.88 1,400.49 113.76 43.28 960.00 118.76 80.29 9.93 1,168.98 408.65 1,459.45 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # Payee CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description Fund: 1 ELECTRIC 05/09/2017 GEN 64103# FASTENAL COMPANY 05/09/2017 GEN 64104 FERGUSON ENTERPRISES #525 05/09/2017 GEN 64105* FIRST CHOICE FOOD & BEVERAGE 05/09/2017 GEN 64106 GLEWWE DOORS INC 05/09/2017 GEN 64107*# GOPHER STATE ONE -CALL INC 05/09/2017 GEN 64110* HD SUPPLY WATERWORKS LTD 05/09/2017 GEN 64112* HUTCHINSON LEADER 05/09/2017 GEN 64113* NU TELECOM Account Dept Pag 14/29 Amount Sales Tax Receivable - Replace 186-000- 33.56 00 0.90 Sales Tax Receivable - Replace 186-000- 00 0.10 Sales Tax Receivable - Replace 186-000- 4.99 00 1.38 Sales Tax Receivable - Replace 186-000- 00 0.38 GENERATOR #1 MATERIAL -BOLTS AIR HOSE 402-554- 01 13.02 GENERATOR #1 MATERIAL -FILTER HOSE 402-554- 01 1.39 GENERATOR #1 MATERIAL -BOLTS VALVE COVER 402-554- 01 20.00 GENERATOR #1 MATERIAL-CLMP NTS FLTR 402-554- 01 5.56 Maintenance Other - Materials 402-554- 01 11.85 CHECK GEN 64103 TOTAL 54.58 1"FS 3000# SW COUPLING FSS9G 107-345- 00 31.32 1"FS 3000# SW COUPLING FSS9G 107-345- 00 3.06 1" FS 300# SW Coupling FSSCG 107-345- 00 17.59 1" FS 300# SW Coupling FSSCG 107-345- 00 1.72 1"x1/2" FS 3000# SW Reducer - FSSRGD 107-345- 00 50.98 1"x1/2" FS 3000# SW Reducer - FSSRGD 107-345- 00 4.99 1"x1/2" FS 3000# SW Reducer - FSSRGD 107-345- 00 10.20 1"x1/2" FS 3000# SW Reducer - FSSRGD 107-345- 00 13.91 CHECK GEN 64104 TOTAL 133.77 BREAKROOM/RECOGNITION BANQUET 401-926- 08 142.50 SARGENT 10 LINE LVR LOCK #70-10G05LL26D 402-554- 01 332.00 LINE - MATERIALS -LOCATION EXPENSE 401-581- 02 108.44 METER READING - MATERIALS 401-902- 06 705.38 ADS 401-916- 07 136.88 TELEPHONE TELEPHONE CHECK GEN 64113 TOTAL 05/09/2017 GEN 64114*# HUTCHINSON WHOLESALE SUPPLY CO Generators Sales Tax Receivable - Replace CHECK GEN 64114 TOTAL 401-921- 08 33.56 401-921- 08 1,400.62 1,434.18 107-344- 00 4.99 186-000- 00 0.34 5.33 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # Payee Fund: 1 ELECTRIC 05/09/2017 GEN 64115 05/09/2017 GEN 64116 05/09/2017 GEN 64117 CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description ICMA RETIREMENT TRUST -457 ILIAC IRBY TOOL & SAFETY 05/09/2017 GEN 64119 KRANZ LAWN & POWER 05/09/2017 GEN 64120# MCG ENERGY SOLUTIONS, LLC 05/09/2017 GEN 64121 MN NCPERS 05/09/2017 GEN 64123 NORTHERN STATES SUPPLY INC 05/09/2017 GEN 64124*# OXYGEN SERVICE COMPANY INC 05/09/2017 GEN 64125* PREMIUM WATERS INC 05/09/2017 GEN 64126# QUADE ELECTRIC Pag 15/29 Account Dept Amount Deferred Compensation 242-000- 00 1,480.00 Deferred Compensation 242-000- 00 1,010.00 Uniforms & Laundry 401-588- 02 35.38 Uniforms & Laundry 401-588- 02 85.92 CHECK GEN 64117 TOTAL 121.30 Power Equipment - Materials 402-598- 02 67.17 I AM MANAGEMENT FEES 401-555- 02 3,900.00 IAM USAGE FEES 401-556- 03 3,050.00 CHECK GEN 64120 TOTAL 6,950.00 Life Insurance 242-000- 00 80.00 Comb. Blade, 14"x.125"x1" PIT-PIDTSC14P 401-550- 01 107.29 Comb. Blade, 14"x.125"x1" PIT-PIDTSC14P 401-550- 01 6.00 CHECK GEN 64123 TOTAL 113.29 GRINDING WHEEL, 4 1/2" X 1/8" X 7/8" 154-000- 00 52.00 GRINDING WHEEL, 4 1/2" X 1/8" X 7/8" 154-000- 00 3.76 WIRE BUFFING WHEEL. #13106 154-000- 00 159.80 WIRE BUFFING WHEEL. #13106 154-000- 00 11.57 DISC, FLAP, 4 1/2" X 7/8", 60 GRIT, 154-000- 00 77.40 DISC, FLAP, 4 1/2" X 7/8", 60 GRIT, 154-000- 00 5.61 Supplies 401-550- 01 97.66 Materials 402-574- 03 108.34 CHECK GEN 64124 TOTAL 516.14 OFFICE SUPPLIES -BOTTLED WATER 401-921- 08 2.00 UNIT 1 GMV 107-344- 00 876.60 Sales Tax Receivable - Replace 186-000- 00 60.26 Sales Tax Receivable - Replace 186-000- 00 0.68 GENERATOR #8 MATERIAL-CARFLEX 402-554- 01 9.90 Maintenance Other - Materials 402-554- 01 88.70 CHECK GEN 64126 TOTAL 1,036.14 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # Payee Fund: 1 ELECTRIC 05/09/2017 GEN 64127 MRC GLOBAL CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description 05/09/2017 GEN 64128*# RUNNING'S SUPPLY INC 05/09/2017 GEN 64130 TOWMASTER INC 05/09/2017 GEN 64131 TRAFFIC CONTROL CORPORATION 05/09/2017 GEN 64132 TRENCHERS PLUS INC 05/09/2017 GEN 64133* UNITED PARCEL SERVICE 05/09/2017 GEN 64134*# VERIZON WIRELESS 05/09/2017 GEN 64135* ZEE SERVICE COMPANY 05/09/2017 GEN 64136# FORBES AUTO STORE 05/09/2017 GEN 64137 B & C PLUMBING AND HEATING 05/09/2017 GEN 64138*# HASLER Account Dept 1" Extra Heavy Duty pipe 0330-0238 107-345- 00 PIPE TO INSTALL SITE GLASS UNIT 8 107-345- 00 Sales Tax Receivable - Replace 186-000- 00 Sales Tax Receivable - Replace 186-000- 00 CHECK GEN 64127 TOTAL Sales Tax Receivable - Replace 186-000- 00 Sales Tax Receivable - Replace 186-000- 00 Sales Tax Receivable - Replace 186-000- 00 Supplies 401-550- 01 Generator #1 Material 402-554- 01 Generator #5 Material 402-554- 01 Generator #8 Material 402-554- 01 Maintenance Other - Materials 402-554- 01 Line - Materials 401-581- 02 Materials 401-588- 02 Materials 402-574- 03 CHECK GEN 64128 TOTAL Other Equipment - Materials 402-598- 02 SIGNAL, LUMINATION LEDS, RED TINTED 154-000- 00 SIGNAL, LUMINATION LEDS, RED TINTED 154-000- 00 CHECK GEN 64131 TOTAL State Contract Item #W-1960(5) 107-396- 00 MAIL SERVICES - UPS, FEDEX 401-921- 08 TELEPHONE 401-921- 08 MISC OTHER - MATERIALS -MEDICAL SUPPLIES 401-935- 08 Sales Tax Receivable - Replace 186-000- 00 GENERATOR #1 MATERIAL -AIR FILTER HOSES 402-554- 01 CHECK GEN 64136 TOTAL TRANSFORMER REPAIR PLT 2 FURNACE 402-554- 01 COLLECTION - MATERIALS -1/2 55% 401-903- 06 Pag 16/29 Amount 116.76 172.20 11.84 8.03 308.83 0.22 0.16 1.63 83.04 22.07 3.00 2.18 33.28 47.57 5.36 4.61 203.12 111.58 46.00 16.23 62.23 40,371.41 161.93 1,092.79 135.81 83.95 1,138.20 1,222.15 26.40 825.00 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Payee Description Account Pag Dept 17/29 Amount Fund: 1 ELECTRIC POSTAGE -1/2 750 401-921- 08 1,125.00 CHECK GEN 64138 TOTAL 1,950.00 05/09/2017 GEN 64140 BURMEISTER, JASON WIRE STRIPPERS 402-554- 01 26.83 05/09/2017 GEN 64141* HUTCHFIELD SERVICES INC MISC OTHER - MATERIALS -CLEANING 401-935- 08 1,112.73 05/09/2017 GEN 64144 DELMAR COMPANY GENERATORS -SPIRAL WOUND GASKET 107-344- 00 68.67 Sales Tax Receivable - Replace 186-000- 00 5.06 CHECK GEN 64144 TOTAL 73.73 05/09/2017 GEN 64145* INNOVATIVE OFFICE SOLUTIONS OFFICE SUPPLIES 401-921- 08 119.50 OFFICE SUPPLIES 401-921- 08 152.52 CHECK GEN 64145 TOTAL 272.02 05/09/2017 GEN 64146 MN MECHANICAL SOLUTIONS, INC Generators 107-344- 00 525.49 05/09/2017 GEN 64147 JOHN BOUCHA Clearing Account 186-000- 00 87.76 05/09/2017 GEN 64148 SHELLY PARRISH Clearing Account 186-000- 00 80.00 05/09/2017 GEN 64149 DIXIE HERRINGTON Clearing Account 186-000- 00 150.00 05/09/2017 GEN 64150 KEVIN VIESSELMAN Clearing Account 186-000- 00 170.00 05/09/2017 GEN 64151 JIMMY'S PIZZA Clearing Account 186-000- 00 4,000.00 05/09/2017 GEN 64152 MARJORIE JOHNSON Clearing Account 186-000- 00 50.00 05/09/2017 GEN 64153 JAN OR DOUG LAKE Clearing Account 186-000- 00 430.00 05/09/2017 GEN 64154 AMANDA WAKEFIELD Clearing Account 186-000- 00 250.61 05/09/2017 GEN 64155 TED GROF OR ELIZABETH THOMPSON Clearing Account 186-000- 00 300.00 05/09/2017 GEN 64156 #1 NAIL SPA Clearing Account 186-000- 00 108.79 05/09/2017 GEN 64157 KARI HANSEN Clearing Account 186-000- 00 74.07 05/09/2017 GEN 64159 DEBBIE DILLY Clearing Account 186-000- 00 175.00 05/09/2017 GEN 64160 ROBERT KNACKE OR ANNA HARRIS Clearing Account 186-000- 00 60.00 05/09/2017 GEN 64161 MELISSA MAE BERGLUND Clearing Account 186-000- 00 60.00 05/09/2017 GEN 64162 TOMMIE OR DENISSE KIMBALL Clearing Account 186-000- 00 175.00 05/09/2017 GEN 64163 SANDRA STUBER Clearing Account 186-000- 00 50.00 05/09/2017 GEN 64165 TORIN STEVENS Clearing Account 186-000- 00 60.00 05/18/2017 05:07 PM CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES Pag 18/29 User: JMartig CHECK DATE FROM 04/01/2017 - 05/31/2017 DB: Hutchinson Utili Check Date Bank Check # Payee Description Account Dept Amount Fund: 1 ELECTRIC 05/09/2017 GEN 64166 SHANNON BEST Clearing Account 186-000- 00 350.00 05/09/2017 GEN 64167 KIMBERLY IBBITSON Clearing Account 186-000- 00 70.00 05/09/2017 GEN 64168 NATHANIEL BURGE Clearing Account 186-000- 00 130.00 05/09/2017 GEN 64169* BECKY MAYER Cip - Residential 401-916- 07 400.00 05/09/2017 GEN 64170* ABBY DAHLQUIST Cip - Residential 401-916- 07 150.00 05/09/2017 GEN 64171 TINA CLARIN Clearing Account 186-000- 00 70.00 05/09/2017 GEN 64172 JACK BEST Clearing Account 186-000- 00 225.00 05/09/2017 GEN 64173 ALANNAH PRIEVE Clearing Account 186-000- 00 240.00 05/09/2017 GEN 64174 RYAN OR MACHENZIE BUCHHOLZ Clearing Account 186-000- 00 150.00 05/09/2017 GEN 64175 JERRY OR MARLYS POLO Clearing Account 186-000- 00 300.00 05/09/2017 GEN 64176 STEPHEN OR KELSEY WOOD Clearing Account 186-000- 00 315.00 05/09/2017 GEN 64177 CHERYL LOHRENZ OR SARAH NELSON Clearing Account 186-000- 00 13.01 05/09/2017 GEN 64178 VERNON KRENTZ Cip - Residential 401-916- 07 24.00 05/09/2017 GEN 64179 MITCHELL MCLAIN Clearing Account 186-000- 00 235.00 05/09/2017 GEN 64180 SHAYLA OR TAD JOHNSON Clearing Account 186-000- 00 425.00 05/09/2017 GEN 64181 DASSEL MANAGEMENT -JOE SCHULTE Clearing Account 186-000- 00 121.87 05/09/2017 GEN 64182 SUSAN MANTHEY Clearing Account 186-000- 00 15.00 05/09/2017 GEN 64183 JULIE KALIVODA Clearing Account 186-000- 00 190.00 05/09/2017 GEN 64184 BRIAN HALLAHAN OR JESSICA Clearing Account 186-000- 00 125.00 05/09/2017 GEN 64185 MITCH LANG Cip - Residential 401-916- 07 56.00 05/09/2017 GEN 64186 MARISSA ROGOWSKI Clearing Account 186-000- 00 250.00 05/09/2017 GEN 64187 US BANK Clearing Account 186-000- 00 76.48 05/09/2017 GEN 64188 ANN M MCMAHON CPA, LLC Clearing Account 186-000- 00 220.00 05/09/2017 GEN 64189 STEVE PANKAKE Clearing Account 186-000- 00 270.21 05/11/2017 GEN 64190 AARON STAPLES OVERPAYMENTS 142-000- 00 443.10 05/11/2017 GEN 64191*# ACE HARDWARE GENERATORS -UNIT 1 107-344- 00 18.65 Sales Tax Receivable - Replace 186-000- 00 1.28 Sales Tax Receivable - Replace 186-000- 00 0.96 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # Payee Fund: 1 ELECTRIC CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description 05/11/2017 GEN 64192 AUSTIN RUBINK 05/11/2017 GEN 64194 BASLER ELECTRIC 05/11/2017 GEN 64195*# BORDER STATES ELECTRIC SUPPLY 05/11/2017 GEN 64197* BS&A SOFTWARE 05/11/2017 GEN 64198* CARD SERVICES 05/11/2017 GEN 64199 COLIN HACKETT 05/11/2017 GEN 64200 CORTNEY HALLAHAN 05/11/2017 GEN 64201 CROW RIVER GLASS COMPANY 05/11/2017 GEN 64202 05/11/2017 GEN 64203# DELMAR COMPANY DONALDSON COMPANY INC Pag 19/29 Account Dept Amount GENERATOR #3 MATERIAL -PLUGS UNIT 3 402-554- 01 13.95 Maintenance Other - Materials 402-554- 01 26.58 Power Equipment - Materials 402-598- 02 17.36 Grounds - Materials 401-935- 08 35.20 CHECK GEN 64191 TOTAL 113.98 OVERPAYMENTS 142-000- 00 125.52 Basler Electric BE1-64F Ground Det 107-344- 00 2,650.00 PHOTO EYE, 120-480 TWIST LOCK, AREA 154-000- 00 2.79 FUSE HOLDER, SHR BUSS, GOUS 154-000- 00 74.20 PHOTO EYE, 120-480 TWIST LOCK, AREA 154-000- 00 2.38 FUSE, ACORN, 5 AMP, SLR5 154-000- 00 52.25 CONNECTOR, GROUND ROD, BURNDY GCRT1/0 154-000- 00 55.25 ELL, 1/0, 15KV 1STR-1/OSOL, .70-.91, 154-000- 00 501.00 ARRESTOR, ELL, 10KV, 3238018C10M 154-000- 00 320.05 Sales Tax Receivable - New 186-000- 00 60.25 SWEATSHIRT, Heavyweight, new navy 3XL 401-550- 01 39.56 Battery, Size D 401-588- 02 110.88 CHECK GEN 64195 TOTAL 1,218.61 IT ADMIN AND SUPPORT 401-921- 08 1,350.00 IT ADMIN AND SUPPORT 401-921- 08 (375.00) CHECK GEN 64197 TOTAL 975.00 BREAKROOM/RECOGNITION BANQUET 401-926- 08 190.48 OVERPAYMENTS 142-000- 00 210.52 OVERPAYMENTS 142-000- 00 264.99 Labor and Materials to install six 107-341- 00 9,000.00 Sales Tax Receivable - Replace 186-000- 00 618.75 CHECK GEN 64201 TOTAL 9,618.75 PART # TJS050150 401-550- 01 449.33 Sales Tax Receivable - Replace 186-000- 00 227.31 Sales Tax Receivable - Replace 186-000- 00 0.82 Vaccum Breaker - part # 44652-01 402-554- 01 3,070.20 Vaccum Breaker - part # 44652-01 402-554- 01 11.13 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # Payee Fund: 1 ELECTRIC CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description 05/11/2017 GEN 64205 ERICK PORTER 05/11/2017 GEN 64206 FS3 INC 05/11/2017 GEN 64207 HILLYARD/HUTCHINSON 05/11/2017 GEN 64208 HM CRAGG 05/11/2017 GEN 64209 JESSICA MELMBERG 05/11/2017 GEN 64210 KRISTINE REINERT 05/11/2017 GEN 64211 MID-CONTINENT SALES 05/11/2017 GEN 64212*# O'REILLY AUTOMOTIVE INC Pag 20/29 Account Dept Amount CHECK GEN 64203 TOTAL 3,309.46 OVERPAYMENTS 142-000- 00 47.64 Underground Conduit & Manholes 107-366- 00 1,845.00 INTERDUCT, 4", SDR 13.5 BLK/WITH 3 RED 154-000- 00 1,740.00 INTERDUCT, 4", SDR 13.5 BLK/WITH 3 RED 154-000- 00 1,740.00 Sales Tax Receivable - New 186-000- 00 126.84 Sales Tax Receivable - Replace 186-000- 00 119.63 Sales Tax Receivable - Replace 186-000- 00 119.63 CHECK GEN 64206 TOTAL 5,691.10 Supplies 401-550- 01 44.34 Model OPzS-12v-100 10 Ea/6 cells per 107-345- 00 5,271.00 Model OPzS-12v-100 10 Ea/6 cells per 107-345- 00 342.09 EAGLE -16-63 EnviroGuard Cont. System 107-345- 00 460.00 EAGLE -16-63 EnviroGuard Cont. System 107-345- 00 29.85 Sales Tax Receivable - Replace 186-000- 00 340.00 Sales Tax Receivable - Replace 186-000- 00 22.07 CHECK GEN 64208 TOTAL 6,465.01 OVERPAYMENTS 142-000- 00 41.07 Cip - Residential 401-916- 07 50.00 STARTING AIR GASKET 154-000- 00 4.50 STARTING AIR GASKET 154-000- 00 0.39 SEAL, WATER, RUBBER RING CLYLINDER HEAD 154-000- 00 192.00 SEAL, WATER, RUBBER RING CLYLINDER HEAD 154-000- 00 16.74 CHECK GEN 64211 TOTAL 213.63 Sales Tax Receivable - Replace 186-000- 00 0.53 Sales Tax Receivable - Replace 186-000- 00 6.59 Supplies 401-550- 01 25.64 GENERATOR #1 MATERIAL -HOSES COOLING 402-554- 01 89.37 GENERATOR #5 MATERIAL -RUBE REPAIR UNT 5 402-554- 01 7.16 Vehicles - Material 402-554- 01 16.10 Maintenance Other - Materials 402-554- 01 93.07 Power Equipment - Materials 402-598- 02 (84.13) Vehicles - Material 401-935- 08 15.99 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # Payee Fund: 1 ELECTRIC 05/11/2017 GEN 64213 05/11/2017 GEN 64214* CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description Account Dept CHECK GEN 64212 TOTAL GEN 64215*# PRO AUTO & TRANSMISSION REPAIR ORKIN, LLC Labor - Materials to install bird slope 402-554- 64216 01 PLUNKETTS GROUNDS - OUTSIDE SERVICES 401-935- 64217 08 GROUNDS - OUTSIDE SERVICES 401-935- 64218 08 GROUNDS - OUTSIDE SERVICES 401-935- 64219* 08 CHECK GEN 64214 TOTAL GEN 64220* TOTAL COMPLIANCE SOLUTIONS INC 05/11/2017 GEN 64215*# PRO AUTO & TRANSMISSION REPAIR 05/11/2017 GEN 64216 RON CLELAND 05/11/2017 GEN 64217 S AN S PROPERITES LLC 05/11/2017 GEN 64218 SAMANTHA WINGET 05/11/2017 GEN 64219* SHRED RIGHT 05/11/2017 GEN 64220* TOTAL COMPLIANCE SOLUTIONS INC 05/11/2017 GEN 64221* UIS/SOURCECORP Vehicles - Material OVERPAYMENTS OVERPAYMENTS OVERPAYMENTS OFFICE SUPPLIES -SHREDDING SERVICES DRUG TESTING SERVICES COLLECTION - MATERIALS COLLECTION - MATERIALS CHECK GEN 64221 TOTAL 05/11/2017 GEN 64222*# WEST CENTRAL SANITATION INC GENERATOR #1 WATER & SEWER 05/11/2017 GEN 64223 05/18/2017 GEN 3(E)*# Waste Disposal UTILITY EXPENSES - WATER/WASTE 55/45 CHECK GEN 64222 TOTAL WORD OF LIFE OUTREACH CENTER INC OVERPAYMENTS BP CANANDA ENERGY SOLUTIONS PURCHASED GAS -GENERATION PURCHASED GAS -GENERATION PURCHASED GAS -GENERATION PURCHASED GAS -GENERATION PURCHASED GAS -GENERATION PURCHASED GAS -GENERATION PURCHASED GAS -GENERATION PURCHASED GAS -GENERATION PURCHASED GAS -GENERATION 402-598- 02 142-000- 00 142-000- 00 142-000- 00 401-921- 08 401-923- 08 401-903- 06 401-903- 06 401-547- 01 401-550- 01 401-930- 08 I[ IPA018I1�8181 401-547- 01 401-547- 01 401-547- 01 401-547- 01 401-547- 01 401-547- 01 401-547- 01 401-547- 01 401-547- 01 Pag 21/29 Amount 170.32 3,735.28 121.74 122.31 122.31 366.36 609.88 68.12 398.95 24.59 11.70 67.50 179.10 1,540.00 1,719.10 85.96 138.53 209.16 433.65 1,546.59 138.09 24.09 10.62 337.96 10.62 484.31 21.24 5,976.30 37.18 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # Payee CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description Account Dept Pag 22/29 Amount Fund: 1 ELECTRIC PURCHASED GAS -GENERATION 401-547- 01 66.40 PURCHASED GAS-HUC 401-930- 08 1,319.71 CHECK GEN 3(E) TOTAL FOR 8,426.52 05/18/2017 GEN 4(E) MRES Purchased Power 401-555- 02 919,277.25 05/18/2017 GEN 5(E)* PAYMENTUS (CANADA) CORPORATION CREDIT CARD CHARGES 401-903- 06 1,880.45 05/18/2017 GEN 6(E) MISO SCHEDULE 26 CHARGES 401-565- 03 14,785.95 SCHEDULE 26A CHARGES 401-565- 03 27,160.31 SCHEDULE 1 CHARGES 401-565- 03 4,164.01 SCHEDULE 2 CHARGES 401-565- 03 14,332.38 SCHEDULE 11 CHARGES 401-565- 03 514.49 SCHEDULE 26A CHARGES 401-565- 03 244.32 SCHEDULE 10 CHARGES 401-565- 03 5,922.24 CHECK GEN 6(E) TOTAL FOR 67,123.70 05/18/2017 GEN 7(E) MISO PURCHASED POWER 174-000- 00 16,880.77 PURCHASED POWER EXPENSE 174-000- 00 741.25 PURCHASED POWER 174-000- 00 48,490.88 PURCHASED POWER EXPENSE 174-000- 00 734.03 PURCHASED POWER 174-000- 00 36,165.86 PURCHASED POWER EXPENSE 174-000- 00 749.98 CHECK GEN 7(E) TOTAL FOR 103,762.77 05/18/2017 GEN 8(E) MISO Deferred Energy Cost - Miso 174-000- 00 26,652.92 PURCHASED POWER EXPENSE 174-000- 00 749.98 PURCHASED POWER EXPENSE 174-000- 00 (15.09) CHECK GEN 8(E) TOTAL FOR 27,387.81 Total for fund 1 ELECTRIC 3,343,954.49 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # Payee CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description Fund: 2 GAS 04/11/2017 GEN 63969 ACE HARDWARE 04/11/2017 GEN 63977*# BORDER STATES ELECTRIC SUPPLY 04/11/2017 GEN 63978 BROWN COUNTY RURAL ELECTRIC 04/11/2017 GEN 63985 CENTURYLINK 04/11/2017 GEN 63987*# CITY OF HUTCHINSON 04/11/2017 GEN 63996*# GOPHER STATE ONE -CALL INC 04/11/2017 GEN 64001 HUGHES NETWORK SYSTEMS 04/11/2017 GEN 64021 NORTHERN BORDER PIPELINE CO 04/11/2017 GEN 64024*# OXYGEN SERVICE COMPANY INC 04/11/2017 GEN 64029*# QUADE ELECTRIC 04/11/2017 GEN 64031*# RUNNING'S SUPPLY INC 04/11/2017 GEN 64043 WEBSTER, JOHN C 04/21/2017 GEN 64052*# CINTAS CORPORATION #470 Pag 23/29 Account Dept Amount TAPE MEASURE 401-874- 04 04 12.81 SUPPLIES 402-892- 40.05 04 36.80 SUPPLIES 402-895- 401-856- 04 69.99 CHECK GEN 63969 TOTAL 401-856- 05 119.60 Materials 401-874- 04 04 1.41 209132 -MARCH ELECTRIC USAGE 401-856- 6.35 05 140.69 TELEPHONE FAIRFAX 401-856- 401-870- 05 54.68 MARCH FUEL 401-880- 04 796.98 BATTERIES 402-895- 04 04 81.95 CHECK GEN 63987 TOTAL 247.70 402-895- 878.93 LOCATION EXPENSE LOCATION EXPENSE CHECK GEN 63996 TOTAL NEW ULM COMMUNICATIONS INTERCONNECT AGREEMENT WELDING SUPPLIES CGB'S JACK MEETING EXPENSE UNIFORMS UNIFORMS CHECK GEN 64052 TOTAL 04/21/2017 GEN 64064*# HUTCHINSON WHOLESALE SUPPLY CO SPARK PLUG TRAILER REPAIRS CHECK GEN 64064 TOTAL 401-874- 04 40.05 401-856- 05 40.05 80.10 401-856- 05 106.94 401-856- 05 2,000.00 402-895- 04 56.65 402-892- 04 6.35 402-895- 04 53.68 401-870- 04 272.60 401-880- 04 123.85 401-880- 04 123.85 247.70 402-895- 04 2.61 402-895- 04 33.11 35.72 05/18/2017 05:07 PM CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES User: JMartig CHECK DATE FROM 04/01/2017 - 05/31/2017 DB: Hutchinson Utili Check Date Bank Check # Payee Description Account Dept Fund: 2 GAS GEN 64091* BUSINESSWARE SOLUTIONS 05/09/2017 GEN 64092* CARR FLOWERS 05/09/2017 GEN 04/21/2017 GEN 64071 MCLEOD COOPERATVIE POWER ASSN ELECTIC USAGE-MCLEOD SUB 401-856- 05 ELECTIC USAGE -PIPELINE 401-856- 05 CHECK GEN 64071 TOTAL 04/21/2017 GEN 64079 SPRINT 206147518-SCADA COMMUNICATIONS 401-856- 05 04/21/2017 GEN 64084 TWIN CITIES & WESTERN RAILROAD ANNUAL FEE CROSSING PERMIT 401-856- 05 04/24/2017 GEN 17042401( BP CANANDA ENERGY SOLUTIONS PURCHASED GAS -RETAIL 401-807- 04 04/24/2017 GEN 17042402( BP CANANDA ENERGY SOLUTIONS PURCHASED GAS -RETAIL 401-807- 04 PURCHASED GAS -3M 401-807- 04 PURCHASED GAS-HTI 401-807- 04 PURCHASED GAS -UNG 401-807- 04 PURCHASED GAS-BROWNTON 401-807- 04 CHECK GEN 17042402(E) 04/30/2017 GEN 10(E)* DELUXE CHECKS Collection - Materials 401-903- 06 04/30/2017 GEN 9(E)* CITIZENS BANK BANK CHARGES 401-921- 08 05/09/2017 GEN 64088* AMERICAN PAYMENT CENTERS INC BOX RENTAL 401-903- 06 05/09/2017 GEN 64089* AMERICAN PUBLIC POWER ASSOCIATION Training - Expense 401-930- 08 05/09/2017 GEN 64090* BORDER STATES ELECTRIC SUPPLY VALVE, EXCESS FLOW, 1200 SERIES, BF 154-000- 00 VALVE, EXCESS FLOW, 1200 SERIES, BF 154-000- 00 TEE, TAPPING, 2" X 3/4" IPS, SDR 11, 154-000- 00 TEE, TAPPING, 3" X 3/4" IPS, SDR 11, 154-000- 00 TEE, TAPPING, 4" X 3/4" IPS, SDR 11, 154-000- 00 VALVE, SAV -A -VALVE, 3/4" X 3", MUELLER 154-000- 00 TEE, TAPPING, ASBLY, 4" X 3/4" IPS MDPE 154-000- 00 TEE, TAPPING, ASBLY, 4" X 3/4" IPS MDPE 154-000- 00 CHECK GEN 64090 TOTAL Pag 24/29 Amount 35.80 36.59 72.39 141.52 2,659.77 1,386.60 375,926.37 212,856.72 19,122.48 945.64 10,477.25 619,328.46 8.97 44.85 39.15 44.00 67.15 12.51 79.20 47.50 99.00 161.52 1,033.40 0.08 1,500.36 05/09/2017 OFFICE SUPPLIES 401-921- 08 85.21 OFFICE SUPPLIES 401-921- 08 20.04 Utilities (Electric, Satellite 401-856- 05 54.74 GEN 64091* BUSINESSWARE SOLUTIONS 05/09/2017 GEN 64092* CARR FLOWERS 05/09/2017 GEN 64094 CENTURYLINK 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Payee Description Account Pag Dept 25/29 Amount Fund: 2 GAS 05/09/2017 GEN 64095*# CINTAS CORPORATION #470 UNIFORMS & LAUNDRY 401-880- 04 123.85 UNIFORMS & LAUNDRY 401-880- 04 123.85 UNIFORMS & LAUNDRY 401-880- 04 123.85 CHECK GEN 64095 TOTAL 371.55 05/09/2017 GEN 64096*# CITY OF HUTCHINSON Vehicle/Equipment Fuel 401-880- 04 964.42 Vehicles/Equipment Fuel 401-935- 08 53.89 CHECK GEN 64096 TOTAL 1,018.31 05/09/2017 GEN 64100* DEPAT OF PUBLIC SAFETY -PIPELINE REGULATORY EXPENSES 401-928- 08 334.35 05/09/2017 GEN 64101* DEPT OF PUBLIC SAFETY -PIPELINE REGULATORY EXPENSES 401-928- 08 1,194.09 05/09/2017 GEN 64102 ELLENSON, RYAN Training - Expense 401-870- 04 126.26 05/09/2017 GEN 64105* FIRST CHOICE FOOD & BEVERAGE BREAKROOM/RECOGNITION BANQUET 401-926- 08 47.50 05/09/2017 GEN 64107*# GOPHER STATE ONE -CALL INC MATERIALS -LOCATION EXPENSE 401-874- 04 108.47 MATERIALS -LOCATION EXPENSE 401-856- 05 108.44 CHECK GEN 64107 TOTAL 216.91 05/09/2017 GEN 64108 GRAINGER INC WIRE, 30 FOOT ROLL OF SST, BRADY 38091 154-000- 00 14.85 05/09/2017 GEN 64109 GROEBNER & ASSOCIATES INC Natural Gas Inventory 154-000- 00 156.90 Natural Gas Inventory 154-000- 00 19.88 CHECK GEN 64109 TOTAL 176.78 05/09/2017 GEN 64110* HD SUPPLY WATERWORKS LTD METER READING - MATERIALS 401-902- 06 577.12 05/09/2017 GEN 64111 HUGHES NETWORK SYSTEMS Utilities (Electric, Satellite 401-856- 05 106.94 05/09/2017 GEN 64112* HUTCHINSON LEADER ADS 401-916- 07 45.62 05/09/2017 GEN 64113* NU TELECOM TELEPHONE 401-921- 08 11.19 TELEPHONE 401-921- 08 466.87 CHECK GEN 64113 TOTAL 478.06 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # Payee CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description Fund: 2 GAS 05/09/2017 GEN 64114*# HUTCHINSON WHOLESALE SUPPLY CO 05/09/2017 GEN 64118 THE JOURNAL 05/09/2017 GEN 64122 NORTHERN BORDER PIPELINE CO 05/09/2017 GEN 64124*# OXYGEN SERVICE COMPANY INC 05/09/2017 GEN 64125* PREMIUM WATERS INC 05/09/2017 GEN 64128*# RUNNING'S SUPPLY INC 05/09/2017 GEN 64129 ST JAMES PUBLISHING 05/09/2017 GEN 64133* UNITED PARCEL SERVICE 05/09/2017 GEN 64134*# VERIZON WIRELESS 05/09/2017 GEN 64135* ZEE SERVICE COMPANY 05/09/2017 GEN 64138*# HASLER 05/09/2017 GEN 64139 POLZIN, MYRON 05/09/2017 GEN 64141* HUTCHFIELD SERVICES INC 05/09/2017 GEN 64142 TWIN CITY HARDWARE Pag 26/29 Account Dept Amount Power Equipment - Materials 402-895- 04 147.05 Other Equipment - Materials 402-895- 04 227.62 CHECK GEN 64114 TOTAL 374.67 PUBLIC AWARENESS - MATERIAL -CALL 811 401-856- 05 181.00 LINE - OUTSIDE SERVICES -INTERCONNECT 401-856- 05 2,000.00 Materials 401-874- 04 97.66 OFFICE SUPPLIES -BOTTLED WATER 401-921- 08 0.67 Services 107-380- 00 61.76 Materials 401-874- 04 47.56 Materials 401-874- 04 37.53 Power Equipment - Materials 402-895- 04 27.65 CHECK GEN 64128 TOTAL 174.50 Public Awareness - Material 401-856- 05 120.00 MAIL SERVICES - UPS, FEDEX 401-921- 08 53.98 Utilities (Electric, Satellite 401-856- 05 80.04 TELEPHONE 401-921- 08 364.26 CHECK GEN 64134 TOTAL 444.30 MISC OTHER - MATERIALS -MEDICAL SUPPLIES 401-935- 08 111.12 COLLECTION - MATERIALS -1/2 45% 401-903- 06 675.00 POSTAGE- 1/2 250 401-921- 08 374.99 CHECK GEN 64138 TOTAL 1,049.99 Training - Expense 401-870- 04 126.26 MISC OTHER - MATERIALS -CLEANING 401-935- 08 910.41 11B722L, Padlock, Best Access System 401-856- 05 412.74 11B722L, Padlock, Best Access System 401-856- 05 19.64 CHECK GEN 64142 TOTAL 432.38 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # Payee CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description Fund: 2 GAS 05/09/2017 GEN 64143 WEBER, TIM 05/09/2017 GEN 64145* INNOVATIVE OFFICE SOLUTIONS 05/09/2017 GEN 64158 GUS WURDELL 05/09/2017 GEN 64164 JOHN SPLICHAL 05/09/2017 GEN 64169* BECKY MAYER 05/09/2017 GEN 64170* ABBY DAHLQUIST 05/11/2017 GEN 64191*# ACE HARDWARE 05/11/2017 GEN 64193 B & C PLUMBING AND HEATING 05/11/2017 GEN 64195*# BORDER STATES ELECTRIC SUPPLY 05/11/2017 GEN 64196 BROWN COUNTY RURAL ELECTRIC 05/11/2017 GEN 64197* BS&A SOFTWARE 05/11/2017 GEN 64198* CARD SERVICES 05/11/2017 GEN 64204 EMMA DRAHOS Pag 27/29 Account Dept Amount Training - Expense 401-870- 04 127.34 OFFICE SUPPLIES 401-921- 08 39.84 OFFICE SUPPLIES 401-921- 08 50.84 CHECK GEN 64145 TOTAL 90.68 Cip - Residential 401-916- 07 325.00 Cip - Residential 401-916- 07 325.00 Cip - Residential 401-916- 07 325.00 Cip - Residential 401-916- 07 325.00 CHECK GEN 64158 TOTAL 1,300.00 Cip - Residential 401-916- 07 400.00 Cip - Residential 401-916- 07 400.00 Cip - Residential 401-916- 07 400.00 MATERIALS 401-874- 04 6.40 Materials 402-892- 04 37.35 Power Equipment - Materials 402-895- 04 18.77 Other Equipment - Materials 402-895- 04 14.35 Grounds - Materials 401-935- 08 28.80 CHECK GEN 64191 TOTAL 105.67 Services 107-380- 00 574.14 Battery, Size AAA 401-874- 04 19.44 Battery, Szie 9v 401-874- 04 13.32 CHECK GEN 64195 TOTAL 32.76 Utilities (Electric, Satellite 401-856- 05 134.58 IT ADMIN AND SUPPORT 401-921- 08 450.00 IT ADMIN AND SUPPORT 401-921- 08 (125.00) CHECK GEN 64197 TOTAL 325.00 BREAKROOM/RECOGNITION BANQUET 401-926- 08 63.49 Cip - Residential 401-916- 07 400.00 05/18/2017 05:07 PM User: JMartig DB: Hutchinson Utili Check Date Bank Check # Payee CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES CHECK DATE FROM 04/01/2017 - 05/31/2017 Description Fund: 2 GAS 05/11/2017 GEN 64212*# O'REILLY AUTOMOTIVE INC 05/11/2017 GEN 64214* PLUNKETTS Vehicles - Material Power Equipment - Materials Power Equipment - Materials Vehicles - Material CHECK GEN 64212 TOTAL GROUNDS - OUTSIDE SERVICES GROUNDS - OUTSIDE SERVICES GROUNDS - OUTSIDE SERVICES CHECK GEN 64214 TOTAL 05/11/2017 GEN 64215*# PRO AUTO & TRANSMISSION REPAIR Vehicles - Material Other Equipment - Materials CHECK GEN 64215 TOTAL 05/11/2017 GEN 64219* SHRED RIGHT 05/11/2017 GEN 64220* TOTAL COMPLIANCE SOLUTIONS INC 05/11/2017 GEN 64221* UIS/SOURCECORP 05/11/2017 GEN 64222*# WEST CENTRAL SANITATION INC 05/18/2017 GEN 3(E)*# BP CANANDA ENERGY SOLUTIONS 05/18/2017 GEN 5(E)* PAYMENTUS (CANADA) CORPORATION Account Dept 402-895- 04 402-895- 04 402-895- 04 401-935- 08 401-935- 08 401-935- 08 401-935- 08 402-895- 04 402-895- 04 OFFICE SUPPLIES -SHREDDING SERVICES 401-921- 08 DRUG TESTING SERVICES 401-923- 08 COLLECTION - MATERIALS 401-903- 06 COLLECTION - MATERIALS 401-903- 06 CHECK GEN 64221 TOTAL UTILITY EXPENSES - WATER/WASTE 45/55 401-930- 08 PURCHASED GAS -RETAIL 401-807- 04 PURCHASED GAS -RETAIL 401-807- 04 PURCHASED GAS -3M 401-807- 04 PURCHASED GAS-HTI 401-807- 04 PURCHASED GAS -UNG 401-807- 04 PURCHASED GAS-BROWNTON 401-807- 04 PURCHASED GAS-HUC 401-930- 08 CHECK GEN 3(E) TOTAL FOR CREDIT CARD CHARGES 401-903- 06 Total for fund 2 GAS Pag 28/29 Amount 70.64 (84.13) 21.24 13.07 20.82 99.60 100.07 100.07 299.74 172.94 370.71 543.65 3.90 22.50 146.53 1,260.00 1,406.53 171.12 568.30 188,097.73 169,891.35 14,226.84 424.01 4,344.95 879.80 378,432.98 1,538.55 1,027,019.84 05/18/2017 05:07 PM CHECK DISBURSEMENT REPORT FOR HUTCHINSON UTILITIES User: JMartig CHECK DATE FROM 04/01/2017 - 05/31/2017 DB: Hutchinson Utili Check Date Bank Check # Payee Description Account Dept TOTAL - ALL FUNDS '*'-INDICATES CHECK DISTRIBUTED TO MORE THAN ONE FUND '#'-INDICATES CHECK DISTRIBUTED TO MORE THAN ONE DEPARTMENT Pag 29/29 Amount 4,370,974.33 HUTCHINSON UTILITIES COMMISSION HUTCHINSON, MINNESOTA MANAGEMENT LETTER DECEMBER 31, 2016 Conway, Deuth & Schmiesing, PLLP Certified Public Accountants Litchfield, Minnesota This page intentionally left blank HUTCHINSON UTILITIES COMMISSION TABLE OF CONTENTS DECEMBER 31, 2016 PAGE Required Communications 1-3 Comparative Financial Data 4 Graphical Information 5-12 Schedule of Findings on Accounting Issues and Internal Controls 13-14 This page intentionally left blank CDS CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS REQUIRED COMMUNICATIONS May 24, 2017 Members of the Hutchinson Utilities Commission Hutchinson, Minnesota We have audited the financial statements of Hutchinson Utilities Commission, a fund of the City of Hutchinson, Minnesota, as of and for the year ended December 31, 2016. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated December 27, 2016. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Commission are described in Note 1 to the financial statements. The Commission implemented Government Accounting Standards Board Statement No. 72, Fair Value Measurement and Application. Adoption of the provisions of this statement results in additional note disclosures related to fair value measurement as show in Note 2. We noted no transactions entered into by the Commission during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were: Management's estimate of the allowance for doubtful accounts is based on historical electric and natural gas revenues, historical loss levels, and an analysis of the collectability of individual accounts. We evaluated the key factors and assumptions used to develop the allowance in determining that it is reasonable in relation to the financial statements taken as a whole. Management's estimate of depreciation is based on the number of years an asset is in service. We evaluated the key factors and assumptions used to develop the depreciation estimate in determining that it is reasonable in relation to the financial statements taken as a whole. Members: American Institute of Certified Public Accountants, Minnesota Society of Certffied Public Accountants Willmar Office 331 Third St SW, Ste 2 PO Box 570 Willmar, MN 56201 P (320) 235-3311 T (888) 388-1040 Benson Office Morris Office 1209 Pacific Ave, Ste 3 401 Atlantic Ave Benson, MN 56215 Morris, MN 56267 P (320) 843-2302 P (320) 589-2602 www.cdscpa.coan Litchfield Office 820 Sibley Ave N Litchfield, MN 55355 P (320) 693-7975 St. Cloud-Sartetl. Office Ste 110 2351 Connecticut Ave 5arteli, MN 56377 P(320)252-7565 T (800) 862-1337 Management's estimate of pension and other post -employment benefit liabilities is based on actuarial valuations performed by consultants specializing in those areas. We evaluated the key factors and assumptions used to develop those estimates in determining that it is reasonable in relation to the financial statements taken as a whole. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated May 24, 2017. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the Commission's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Commission's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We applied certain limited procedures to Management's Discussion and Analysis and the Schedules of Proportionate Share of the Net Pension Liability and Employer Contributions which is required supplementary information that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the required supplementary information and do not express an opinion or provide any assurances on the required supplementary information. 2 We were engaged to report on the statements and schedules listed in the table of contents as supplementary information, which accompany the financial statements but are not required supplementary information. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We were not engaged to report on the Organizational Data, which accompany the financial statements but are not RSI. We did not audit or perform other procedures on this other information and we do not express an opinion or provide any assurance on it. Restriction on Use This information is intended solely for the use of the Commission and management of Hutchinson Utilities Commission and is not intended to be and should not be used by anyone other than these specified parties. "Tlu4) neer 'I , P1 LP CONWAY, DEUTH & SCHMIESING, PLLP Certified Public Accountants Litchfield, Minnesota May 24, 2017 3 This page intentionally left blank ELECTRIC DIVISION Residential General Service Industrial Street Lighting Resale Total Electric Sales Other Operating Revenues Total Operating Revenues Purchased Power - Electric Other Operating Expenses Total Operating Expenses Net Nonoperating Revenues (Expenses) Change in Net Position GAS DIVISION Residential Commercial Industrial Total Gas Revenues Gas Transportation Total Operating Revenues Purchased Power - Gas Other Operating Expenses Total Operating Expenses Net Nonoperating Revenues (Expenses) Change in Net Position HUTCHINSON UTILITIES COMMISSION COMPARATIVE FINANCIAL DATA 2010 2011 2012 2013 2014 2015 2016 $ 5,107,357 $ 5,255,333 $ 5,202,559 $ 5,176,489 $ 5,162,073 $ 5,080,964 $ 5,269,261 8,990,929 9,075,811 9,264,941 8,903,085 8,787,907 8,763,091 8,567,839 11,471,748 11,692,880 10,763,758 10,375,605 11,001,396 11,399,155 10,941,617 147,248 143,378 148,968 143,002 139,532 146,931 144,641 986,386 1,234,285 1,618,582 891,276 678,293 1,114,918 1,931,859 26,703,668 27,401,687 26,998,808 25,489,457 25,769,201 26,505,059 26,855,217 301,653 306,435 310,828 308,590 304,095 297,007 293,294 27,005,321 27,708,122 27,309,636 25,798,047 26,073,296 26,802,066 27,148,511 15,225,550 15,990,893 15,521,329 14,607,779 15,034,661 15,429,451 14,568,448 9,837,680 9,790,120 11,014,195 12,271,736 12,072,182 11,739,870 12,837,733 25,063,230 25,781,013 26,535,524 26,879,515 27,106,843 27,169,321 27,406,181 (1,082,723) (727,681) (329,483) (529,363) (451,322) (201,467) 52,536 $ 859,368 $ 1,199,428 $ 444,629 $ (1,610,831) $ (1,484,869) $ (568,722) $ (205,134) $ 3,979,581 $ 4,327,788 $ 3,697,538 $ 4,626,722 $ 4,706,388 $ 3,731,066 $ 3,839,034 3,638,751 3,823,161 3,150,925 3,729,790 3,853,504 2,748,161 2,824,329 4,890,551 4,246,780 2,826,424 3,646,509 6,066,290 3,444,273 3,215,714 12,508,883 12,397,729 9,674,887 12,003,021 14,626,182 9,923,500 9,879,077 1,821,218 1,824,187 1,855,472 1,885,149 1,508,575 1,417,997 1,479,135 14,330,101 14,221,916 11,530,359 13,888,170 16,134,757 11,341,497 11,358,212 9,806,771 9,028,704 6,400,838 7,500,621 10,460,268 5,988,821 5,697,867 3,158,859 3,094,567 3,326,558 3,419,575 3,541,750 3,145,695 3,346,056 12,965,630 12,123,271 9,727,396 10,920,196 14,002,018 9,134,516 9,043,923 (930,880) (929,711) (989,164) (992,161) (605,361) (536,019) (269,688) $ 433,591 $ 1,168,934 $ 813,799 $ 1,975,813 $ 1,527,378 $ 1,670,962 $ 2,044,601 HUTCHINSON UTILITIES COMMISSION ELECTRIC DIVISION Operating Revenues & Expenses and Net Nonoperating Revenues (Expenses) $30,000,000 $27005,321 $27,708,122 $27,148,511 $27,309,636 $25,798,047 $26,073,296 $26,802,066 $25,000,000 $25,781,013$26,535,524 $26,879,515 $27106843 27,169,321 $` $25,063,230 $20,000,000 $15,000,000 $10,000,000 , , $5,000,000 $0 $(1,082,723) $(727,681) $(329,483) $(529,363) $(451,322) $(201,467) -$5,000,000 2010 2011 2012 2013 2014 2015 2016 ■Total Operating Revenues NTotal Operating Expenses ■Net Nonoperating Revenues (Expenses) ,406,181 $52,536 Change in Net Position $1,500,000 $1,199,428 $1,000,000 $859,368 $500,000 $444,629 $0 $(205,134) -$500,000 $(568,722) -$1,000,000 -$1,500,000 $(1,484,869) $(1,610,831) -$2,000,000 2010 2011 2012 2013 2014 2015 2016 ■Change in Net Position 5 HUTCHINSON UTILITIES COMMISSION ELECTRIC DIVISION Major Revenue by Source $13,000,000 $12,000,000 $11,000,000 $10,000,000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 2010 2011 2012 2013 2014 2015 2016 ■Residential ■General Service Glndustrial Purchased Power & Fuel Costs Compared to Total Sales $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 2010 2011 2012 2013 2014 2015 2016 OPurchased Power- Electric GTotal Electric Sales F. HUTCHINSON UTILITIES COMMISSION ANALYSIS OF OPERATIONS ELECTRIC DIVISION YEAR ENDED DECEMBER 31, 2016 AND 2015 The Statement of Revenues and Expenses set forth the results of the operations in detail for the years ended December 31, 2016 and 2015. Operating revenues, kilowatt hours (KWH) sold, and average revenue per kilowatt hour sold by class of service are as follows: 7 Year Ended December 31, 2016 Revenue Per Amount KWH Sold KWH CLASS Residential $ 5,029,631 50,847,924 $ 0.0989 All Electric 239,630 2,449,790 0.0978 Small General Service 1,730,236 17,933,482 0.0965 Large General Service 6,837,603 73,932,676 0.0925 Industrial 10,941,617 138,496,000 0.0790 Sale for Resale 1,931,859 23,284,000 0.0830 Street Lighting 144,641 101,656 1.4228 $ 26,855,217 307,045,528 0.0875 7 Year Ended December 31, 2015 Revenue Per Amount KWH Sold KWH CLASS Residential $ 4,844,525 49,467,888 $ 0.0979 All Electric 236,439 2,453,150 0.0964 Small General Service 1,621,751 16,955,897 0.0956 Large General Service 7,141,340 78,054,119 0.0915 Industrial 11,399,155 142,752,000 0.0799 Sale for Resale 1,114,918 13,928,000 0.0800 Street Lighting 146,931 103,976 1.4131 $ 26,505,059 303,715,030 0.0873 7 HUTCHINSON UTILITIES COMMISSION ANALYSIS OF OPERATIONS ELECTRIC DIVISION YEAR ENDED DECEMBER 31, 2016 AND 2015 KWH Sold 23,284,000 Sale for Resale13,928,000 138, 496, 000 Industrial 142, 752, 000 73,932,676 Large General Service 78,054,119 17,933,482 Small General Service 16,955,897 2,449,790 All Electric 2,453,150 50,847,924 Residential 49,467,888 50,000,000 100,000,000 150,000,000 200,000,000 02016 KWH Sold 02015 KWH Sold Average $/KWH $0.0790 Industrial $0.0799 $0.0925 Large General Service $0.0915 $0.0965 Small General Service $0.0956 $0.0978 All Electric $0.0964 $0.0989 Residential $0.0979 $0.07 $0.08 $0.09 $0.10 $0.11 0 201 Revenue Per KWH 02015 Revenue Per KWH ul $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 $2,000,000 2010 2011 2012 2013 2014 2015 2016 NTotal Operating Revenues NTotal Operating Expenses ■Net Nonoperating Revenues (Expenses) HUTCHINSON UTILITIES COMMISSION NATURAL GAS DIVISION Operating Revenues & Expenses and Net Nonoperating Revenues (Expenses) 12 13,923 ,688) Change in Net Position $2,500,000 $1,527,378 $2,044,601 $2,000,000 $1,975,813 $813,799 $1,670,962 $1,500,000 $1,000,000 $500,000 $0 2010 2011 2012 2013 2014 2015 2016et ■Change in N Position $1,527,378 $1,168,934 $433,591 $813,799 HUTCHINSON UTILITIES COMMISSION NATURAL GAS DIVISION Major Revenue by Source $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 2010 2011 2012 2013 2014 2015 2016 ■Residential ■Commercial Olndustrial Purchased Gas Compared to Total Sales $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 2010 2011 2012 2013 2014 2015 2016 ■Purchased Power - Gas ■Total Gas Revenues 10 HUTCHINSON UTILITIES COMMISSION ANALYSIS OF OPERATIONS NATURAL GAS DIVISION YEAR ENDED DECEMBER 31, 2016 AND 2015 The Statement of Revenues and Expenses set forth the results of the operations in detail for the years ended December 31, 2016 and 2015. Operating revenues, cubic feet sold, and average revenue per thousand cubic feet sold by class of service are as follows: Year Ended December 31, 2016 Revenue Per Thousand Amount CF Sold MCF CLASS Residential $ 3,839,034 382,182,736 $ 10.0450 Commercial 2,824,329 287,927,671 9.8092 Large industrial 3,215,714 793,154,339 4.0543 $ 9,879,077 1,463,264,746 $ 6.7514 Year Ended December 31, 2015 Revenue Per Thousand Amount CF Sold MCF CLASS Residential $ 3,731,066 387,205,342 $ 9.6359 Commercial 2,748,161 295,185,902 9.3099 Large industrial 3,444,273 796,959,420 4.3218 9,923,500 1,479,350,664 $ 6.7080 11 Large industrial Commercial Residential HUTCHINSON UTILITIES COMMISSION ANALYSIS OF OPERATIONS NATURAL GAS DIVISION YEAR ENDED DECEMBER 31, 2016 AND 2015 CF Sold ONE L 9w 793,154, 339 796, 959, 420 287, 927, 671 295,185, 902 82,182, 736 387, 205, 342 200 X001300 300 X001300 /�� X001300 500 0 1000 600 Q001300 100 P00131313 800 P001300 900 X00 000 02016 CF Sold 02015 CF Sold Large industrial Commercial Residential $4 Average $/MCF 12 This page intentionally left blank HUTCHINSON UTILITIES COMMISSION SCHEDULE OF FINDINGS ON ACCOUNTING ISSUES AND INTERNAL CONTROLS DECEMBER 31, 2016 We noted certain matters involving the internal control structure and its operation that we consider being deficiencies in internal control under standards established by the American Institute of Certified Public Accountants. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. INTERNAL CONTROL The objective of internal accounting control is to provide reasonable, but not absolute, assurance as to the safeguarding of assets against loss from unauthorized use or disposition, and the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of a system of internal accounting control should not exceed the benefits derived and also recognizes that the valuation of these factors necessarily requires estimates and judgments by management. It should be recognized that within the Commission, an inherent risk is present with certain positions. It is very common for entities such as Hutchinson Utilities Commission, to assign many major responsibilities to a few key individuals in an attempt to operate within limited budgets. The inherent risk is again addressed only to maintain the awareness of the internal control structure and to encourage the Commission's continual review of financial information at monthly meetings. GENERAL RECOMMENDATIONS Throughout the course of the audit, we spoke with management regarding certain items that we see as an opportunity to improve. None of these were considered significant within the scope of the audit. The items discussed requiring action have been resolved or are in the process of resolution. We would like to acknowledge the assistance and courtesies extended to us by the personnel of the Hutchinson Utilities Commission. CROSS -TRAINING In small public entities, it is common for one person to be primarily responsible for handling all financial matters (payroll, disbursements, receiving, recording transactions, etc). This concentration of duties in one person is not desirable for a sound control environment and contingency planning. One measure to help counter this weakness involves training a second person in specific duties related to the entities finances. Cross -training has numerous benefits. It allows a second person to perform the duties when the employee primarily responsible is unavailable. Having someone else perform the job duties also provides a method of detecting errors and/or irregularities created by the person primarily responsible for those duties. Finally, cross -training provides continuity during periods of employee transitions. Cross -training offers advantages from both an accounting and a managerial point of view. We recommend the review of various responsibilities and cross -train other staff to perform non -routine duties on a timely basis in the absence of the individual typically responsible for such duties. Other remedies would be to have an outside source familiar in these specific areas be contracted when deemed necessary to keep the Commission current in the financial area. CAPITAL ASSET ACCOUNTING The Commission maintains its capital asset activity and balances using spreadsheet software (Microsoft Excel). While Excel is an automated software program, it is not the most effective and efficient program for capital asset accounting. A relational database program would operate more effectively and efficiently to manage and account for capital asset inventory. Because the Commission segregates capital assets by activity and function, the complexity of the spreadsheets increases annually and is very susceptible to human error. 13 HUTCHINSON UTILITIES COMMISSION SCHEDULE OF FINDINGS ON ACCOUNTING ISSUES AND INTERNAL CONTROLS DECEMBER 31, 2016 CAPITAL ASSET ACCOUNTING (Cont'd) We recommend the City use relational database software to maintain and account for its capital asset inventory. Implementation of this type of software will strengthen internal controls over capital asset accounting and provide efficiencies in the perpetual maintenance of capital assets. 14 HUTCHINSON UTILITIES COMMISSION AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION DECEMBER 31, 2016 Conway, Deuth & Schmiesing, PLLP Certified Public Accountants Litchfield, Minnesota This page intentionally left blank HUTCHINSON UTILITIES COMMISSION TABLE OF CONTENTS DECEMBER 31, 2016 ORGANIZATIONAL DATA INDEPENDENT AUDITOR'S REPORT REQUIRED SUPPLEMENTARY INFORMATION Management's Discussion and Analysis BASIC FINANCIAL STATEMENTS Statement of Net Position Schedule of Revenues, Expenses and Changes in Net Position Statement of Cash Flows Notes to the Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Schedule of Proportionate Share of Net Pension Liability Schedule of Employer Contributions SUPPLEMENTARY INFORMATION Combining Statement of Net Position Combining Schedule of Revenues and Expenses Statement of Net Position - Electric Division Detailed Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual - Electric Division Statement of Net Position - Natural Gas Division Detailed Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual - Natural Gas Division COMPLIANCE SECTION Independent Auditor's Report on Minnesota Legal Compliance Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 1 2-4 5-9 10 11 12-13 14-31 32 33 34 35 36 37-40 41 42-44 45 46-47 This page intentionally left blank HUTCHINSON UTILITIES COMMISSION ORGANIZATIONAL DATA DECEMBER 31, 2016 A Light and Power Commission was formed under the provisions of an amendment to the Hutchinson City Charter in 1935; the Commission was charged with the operation of the Municipal Electric Plant. Charter amendments approved December 17, 1954, provided for a change in the name to Hutchinson Utilities Commission. Additional duties under that amendment provided for the control and management of a municipal gas distribution system. A revised city charter was adopted at a special election September 17, 1987. Some of the pertinent sections of this new charter are briefly summarized in the following paragraphs. The Commission shall have control and management of the Light Plant, the Light Plant distribution system, the Gas Plant and the Gas Plant distribution system. The Commission shall consist of five persons, qualified voters of the City, who shall be appointed by the Council. A member shall be appointed every year for a term of five years, to fill the place of the member whose term has expired. No member shall be appointed to more than two successive terms. The members of the Commission shall receive compensation for their services as determined annually by the Council. The Commission shall provide for its own organization and rules of procedure and annually shall elect a president and vice president from among its members. It shall also appoint a secretary who may or may not be a member of the Commission. The Commissioners and their official titles were as follows: Donna Luhring Monty Morrow Mark Girard Robert Wendorff Anthony Hanson President Vice President Secretary Commissioner Commissioner This page intentionally left blank CDS CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS INDEPENDENT AUDITOR'S REPORT Members of the Hutchinson Utilities Commission Hutchinson, Minnesota Report on the Financial Statements We have audited the accompanying financial statements of Hutchinson Utilities Commission, a fund of the City of Hutchinson, Minnesota, as of and for the year ended December 31, 2016 and the related notes to the financial statements, which collectively comprise the Commission's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 2 Members: American Institute of Certified Public Accountants, Minnesota Society of Certified Public Accountants Willmar Office 331 Third St SW, Ste 2 PO Box 570 Willmar, MN 56201 P (320) 235-3311 T (888) 388-1040 Benson Office Morris Office 1209 Pacific Ave, Ste 3 401 Atlantic Ave Benson, MN 56215 Morris, MN 56267 P (320) 843-2302 P (320) 589-2602 www.cdscna.corn Litchfield Office 820 Sibley Ave N Litchfield, MN 55355 P(320)693-7975 St. Cloud-SarteR Office Ste 110 2351 Connecticut Ave Sartelt, MN 56377 P(320)252-7565 T (80 0) 862 -13 37 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of Hutchinson Utilities Commission, a fund of the City of Hutchinson, Minnesota, as of December 31, 2016, and the changes in financial position, and cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Report on Partial Comparative Information We have previously audited the Commission's 2015 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated March 30, 2016. In our opinion, the partial comparative information presented herein as of and for the year ended December 31, 2015 is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, the Schedule of Proportionate Share of Net Pension Liability, and the Schedule of Employer Contributions as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Commission's basic financial statements. The statements and schedules listed in the table of contents as supplementary information and the Organizational Data section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The Organizational Data section has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on the information presented. 3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 24, 2017 on our consideration of the Commission's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Hutchinson Utilities Commission's internal control over financial reporting and compliance. PLIS CONWAY, DEUTH & SCHMIESING, PLLP Certified Public Accountants Litchfield, Minnesota May 24, 2017 4 This page intentionally left blank REQUIRED SUPPLEMENTARY INFORMATION This page intentionally left blank HUTCHINSON UTILITIES COMMISSION MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2016 Overview of the Financial Statements Hutchinson Utilities Commission is a fund of the City of Hutchinson, Minnesota, and is responsible for the full operation and management of the electric and natural gas systems of the City. The annual report of Hutchinson Utilities Commission includes the financial statements, the independent auditor's report, and notes detailing the financial statements and this management's discussion and analysis report. The report also includes supplementary information for each of Hutchinson Utilities Commission's divisions. Financial Statements Required The financial statements report information about Hutchinson Utilities Commission using accounting methods similar to those used by private sector companies. These statements offer short-term and long-term financial information about its activities. The Statement of Net Position includes all of the Commission's assets and deferred outflows of resources, liabilities and deferred inflows of resources, and net position and provides information regarding the nature and amount of investments in various assets and obligations to the Commission's creditors. They also provide the basis for computing rate of return, evaluating the capital structure, and determining the liquidity and financial flexibility of the Commission. The Statement of Revenues, Expenses and Changes in Net Position accounts for all the current year's revenues and expenses. This statement measures the success of operations over the past year and can be used to determine whether all costs are recovered through user fees and other charges. This statement measures the Commission's profitability and credit worthiness. The Statement of Cash Flows provides information about the Commission's cash receipts and cash payments during the reporting period. This statement reports cash receipts, cash payments, and net changes in cash resulting in cash balances during the reporting period. Financial Statement Analysis Total gross investment in capital assets increased to $134,904,559 in 2016 from $134,100,290 in 2015. Capital assets increased in 2016 primarily because of upgrades and improvements to the generating plant and distribution systems as well as equipment purchases. Operating revenues and expenses increased from 2015 by $363,160 and $146,267, respectively. Operating income increased from 2015 by $216,893. The primary increase in operating revenues was due to an increase in electric sales in 2016, which increased by $350,158 from 2015 due to volume and pricing. The primary area of the increase in operating expenses was due to an increase in electric production and transmission expenses. Payment in Lieu of Taxes increased by $569,350 due to current agreement with the City of Hutchinson. 5 HUTCHINSON UTILITIES COMMISSION MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2016 Significant Transactions In 2016, the Commission transferred $1,305,256 per agreement to the City of Hutchinson. Condensed Financial Statements A summary of the Statement of Net Position is presented in Table 1 Table 1 Condensed Statement of Net Position Net Capital Assets Restricted Assets Current Assets Total Assets Deferred Outflows of Resources Total Assets and Deferred Outflows of Resources Current Liabilities Long -Term Liabilities Total Liabilities Deferred Inflows of Resources Net Position Increase 2016 2015 (Decrease $ 70,572,991 $ 73,356,625 $ (2,783,634) 2,539,625 2,567,940 (28,315) 20,821,182 17,407,829 3,413,353 93,933,798 93,332,394 601,404 2,328,080 517,600 1,810,480 $ 96,261,878 $ 93,849,994 $ 2,411,884 $ 6,810,428 $ 6,896,623 $ (86,195) 23,401,990 22,974,956 427,034 30,212,418 29,871,579 340,839 759,880 528,302 231,578 1 Net Investment in Capital Assets 51,727,376 53,040,401 (1,313,025) Restricted 2,539,625 2,567,940 (28,315) Unrestricted 11,022,579 7,841,772 3,180,807 Total Net Position 65,289,580 63,450,113 1,839,467 Total Liabilities, Deferred Inflows of Resources and Net Position $ 96,261,878 $ 93,849,994 $ 2,411,884 N. HUTCHINSON UTILITIES COMMISSION MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2016 Condensed Financial Statements (Cont'd) A summary of the Statement of Revenues, Expenses and Changes in Net Position is presented in Table 2. Table 2 Condensed Statement of Revenues, Expenses and Changes in Net Position Increase 2016 2015 (Decrease Operating Revenues Operating Expenses Cost of Operations Depreciation Total Operating Expenses Operating Income (Loss) Nonoperating Revenues (Expenses) Change in Net Position Net Position, Beginning of Year Net Position, End of Year Budgetary Highlights $ 38,506,723 $ 38,143,563 $ 363,160 1 32,627,706 32,479,403 148,303 3,822,398 3,824,434 (2,036) 36,450,104 36,303,837 146,267 2,056,619 1,839,726 216,893 (217,152) (737,486) 520,334 1,839,467 1,102,240 737,227 63,450,113 62,347,873 1,102,240 $ 65,289,580 $ 63,450,113 $ 1,839,467 The Commission adopts an annual Operating Budget and a Capital Improvement Budget. Because of its enterprise nature and in order to comply with Federal Energy Regulatory Commission accounting and reporting requirements, the budgets are not operated as statutory budgets. The Commission and Utilities staff review budget results monthly and the budget is used as a financial management tool. A summary of the 2016 Budget Analysis is presented in Table 3. 7 HUTCHINSON UTILITIES COMMISSION MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2016 Budgetary Highlights (Cont'd) Operating Revenues Operating Expenses Cost of Operations Depreciation Expense Total Operating Expenses Operating Income (Loss) Nonoperating Revenues (Expenses) Change in Net Position Net Position, Beginning of Year Net Position, End of Year Table 3 Condensed Budget Analysis 2016 Budget 2016 Actual Over (U $ 40,100,726 $ 38,506,723 $ (1,594,003) 34,523,901 32,627,706 (1,896,195) 3,756,000 3,822,398 66,398 38,279,901 36,450,104 (1,829,797) 1,820,825 2,056,619 235,794 (487,104) (217,152) 269,952 1,333,721 1,839,467 505,746 63,450,113 63,450,113 $ 64,783,834 $ 65,289,580 $ 505,746 Actual operating revenues were $1,594,003 under budgeted revenues while operating income (loss) was over budget by $235,794. This is mainly due to natural gas sales coming in under budget by $2,311,589. The actual operating revenues for the Commission had a negative variance of approximately 3.97% from budgeted operating revenues. This difference was caused entirely by the gas division, while the electric division had a positive variance of $616,253. Operating expenses were $1,829,797 lower than budgeted. This is mainly due to a decrease of purchased natural gas expenses. In 2016, the Commission entered into agreement for a specific Payment in Lieu of Taxes (PILOT). The agreement requires the Commission to make payments equaling $1,305,256 less $144,535 for specific services provided for a net total of $1,160,721. Starting in calendar year 2007, the Commission reallocated its common expenses between the two divisions. Formulas were developed and used to establish the common expenses between the two utilities, in particular, Customer Service and Collection Accounts and the Administrative and General Accounts. Capital Assets and Long -Term Debt Activity The Commission's investment in capital assets increased to $134,904,559 in 2016. This is an increase of $804,269 from 2015. Refer to Note 4 of the Notes to the Financial Statements for the Commission's 2016 capital asset activity. At year-end, the Commission had $17,005,000 in bonds outstanding. Refer to Note 6 of the Notes to the Financial Statements for a schedule showing the Commission's long-term debt activity. M. HUTCHINSON UTILITIES COMMISSION MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2016 Economic Factors and Next Year's Budget The Commission considered many local community and external energy industry factors when setting the Electric & Gas Division fiscal year 2017 budgets, rates, and fees that will be charged to customers. Of significance was the continual increase in costs associated with purchased electrical wholesale power and transmission fees. Conversely, the Gas Division continues to see favorable prices for the procurement of the natural gas commodity. Both divisions continue to see consistent energy consumption forecasts in the near future. In addition, the Payment in Lieu of Taxes (PILOT) was set for 2017 based on the historical formula used in previous years which had been derived through mutual agreement by the City and Commission. The financial presentation of the PILOT payment continues to show as an expense item above the Operating Income. This practice continued in 2016 and will continue into 2017. The Commission continued to "bundle" its electric wholesale rate to its retail customers. What this means is the operating income the Commission receives from its wholesale KWHR sales is applied to the wholesale rate it charges its retail customers. This "bundling" effect reduces the overall blended cost of wholesale power which aids in retail rate pricing stability. Contact Information Any questions regarding information contained in this report and requests for additional information should be addressed to the Hutchinson Utilities Commission, 225 Michigan Street SE, Hutchinson, MN 55350 or by phone at (320) 587-4746. M This page intentionally left blank BASIC FINANCIAL STATEMENTS This page intentionally left blank HUTCHINSON UTILITIES COMMISSION STATEMENT OF NET POSITION DECEMBER 31, 2016 WITH PARTIAL COMPARATIVE AMOUNTS AS OF DECEMBER 31, 2015 2016 2015 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES 4,597,813 4,590,287 Assets 65,975,178 68,766,338 Current Assets 70,572,991 73,356,625 Cash and Investments $ 15,573,250 $ 12,640,223 Accounts Receivable (Net of Allowance for Doubtful Accounts of 93,933,798 93,332,394 $71,132 and $49,206, Respectively) 3,553,448 3,123,543 Inventory 1,446,575 1,514,693 Sales Tax Receivable 145,586 128,359 Prepaid Items 102,323 1,011 Total Current Assets 20,821,182 17,407,829 Noncurrent Assets Current Liabilities Restricted Assets Current Portion of Long -Term Debt Cash and Investments 2,539,625 2,567,940 Capital Assets Assets Not Being Depreciated 4,597,813 4,590,287 Other Capital Assets, Net of Depreciation 65,975,178 68,766,338 Net Capital Assets 70,572,991 73,356,625 Total Noncurrent Assets 73,112,616 75,924,565 Total Assets 93,933,798 93,332,394 Deferred Outflows of Resources Related to Pensions 2,328,080 517,600 Total Assets and Deferred Outflows of Resources $ 96,261,878 $ 93,849,994 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION Liabilities Current Liabilities Current Portion of Long -Term Debt $ 1,549,555 $ 1,488,409 Accounts Payable 2,855,196 2,993,675 Due To Other Governments 1,757,601 1,757,601 Customer Deposits 456,240 478,305 Accrued Expenses Interest 63,382 67,676 Salaries Payable 128,454 110,957 Total Current Liabilities 6,810,428 6,896,623 Long -Term Liabilities Noncurrent Portion of Long -Term Debt 23,401,990 22,974,956 Total Liabilities 30,212,418 29,871,579 Deferred Inflows of Resources Related to Pensions 759,880 528,302 Net Position Net Investment in Capital Assets 51,727,376 53,040,401 Restricted 2,539,625 2,567,940 Unrestricted 11,022,579 7,841,772 Total Net Position 65,289,580 63,450,113 Total Liabilities, Deferred Inflows of Resources and Net Position $ 96,261,878 $ 93,849,994 See Accompanying Notes to the Financial Statements 10 HUTCHINSON UTILITIES COMMISSION SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION YEAR ENDED DECEMBER 31, 2016 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2015 2016 2015 Electric Energy Sales $ 26,855,217 $ 26,505,059 Natural Gas Sales 9,879,077 9,923,500 Other Operating Revenues 1,772,429 1,715,004 Total Operating Revenues 38,506,723 38,143,563 OPERATING EXPENSES 185,608 185,608 Production (262,972) Operations 2,936,626 2,602,581 Maintenance 450,663 464,183 Purchased Power/Gas 19,219,353 20,695,451 Other Power Supply 368,091 361,553 Transmission (3,646,363) Operations 2,474,137 2,045,208 Maintenance 21,676 27,568 Distribution $ 63,450,113 Operations 1,056,252 1,054,088 Maintenance 494,158 478,999 Customer Accounts Expense 448,412 417,218 Sales Expense 392,888 294,625 Administrative and General 3,460,194 3,299,819 Depreciation 3,822,398 3,824,434 Contribution to City of Hutchinson 1,305,256 738,110 Total Operating Expenses 36,450,104 36,303,837 Operating Income (Loss) 2,056,619 1,839,726 NONOPERATING REVENUES (EXPENSES) Interest Income 8,372 31,956 Merchandise and Contract Work, Net 4,990 6,765 Miscellaneous Income 354,499 158,282 Gain (Loss) on Disposal of Assets 40,758 Bond Premium 185,608 185,608 Amortization of Development Study (262,972) Interest Expense (811,379) (857,125) Total Nonoperating Revenues (Expenses) (217,152) (737,486) Change in Net Position 1,839,467 1,102,240 NET POSITION, BEGINNING OF YEAR, AS ORIGINALLY STATED 63,450,113 65,994,236 PRIOR PERIOD ADJUSTMENT (3,646,363) NET POSITION, BEGINNING OF YEAR, AS RESTATED 63,450,113 62,347,873 NET POSITION, END OF YEAR $ 65,289,580 $ 63,450,113 See Accompanying Notes to the Financial Statements 11 HUTCHINSON UTILITIES COMMISSION STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2016 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2015 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers Payments Received from Other Sources Payments to Suppliers Payments to Employees Net Cash Provided (Used) by Operating Activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Other Noncapital Income Other Noncapital Expenses Net Cash Provided (Used) by Noncapital Financing Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Additions to Utility Plant Principal Payments on Long -Term Debt Proceeds from Sale of Assets Interest Paid on Long -Term Debt Net Cash Provided (Used) by Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES Interest Income Net Increase (Decrease) in Cash and Cash Equivalents CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR RECONCILIATION OF CASH AND CASH EQUIVALENTS Current Assets - Cash and Investments Restricted Assets - Cash and Investments Total Cash and Cash Equivalents See Accompanying Notes to the Financial Statements 12 2016 2015 $ 36,282,324 $ 37,257,602 1,755,202 1,831,428 (28,587,731) (27,252,393) (3,814,264) (4,285,411) 5,635,531 7,551,226 359,489 165,047 (1) (96) 359,488 164,951 (1,038,764) (817,844) (1,285,000) (1,225,000) 40,758 (815,673) (861,112) (3,098,679) (2,903,956) 8,372 31,956 2,904,712 4,844,177 15,208,163 10,363,986 $ 18,112,875 $ 15,208,163 $ 15,573,250 $ 12,640,223 2,539,625 2,567,940 $ 18,112,875 $ 15,208,163 HUTCHINSON UTILITIES COMMISSION STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2016 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2015 RECONCILIATION OF OPERATING INCOME (LOSS) TO CASH FLOWS FROM OPERATING ACTIVITIES Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Depreciation Pension Related Adjustments (Increase) Decrease in Assets Accounts Receivable Inventory Sales Tax Receivable Prepaid Items Increase (Decrease) in Liabilities Accounts Payable Due to Other Governments Customer Deposits Salaries Payable Compensated Absences Net Cash Provided (Used) by Operating Activities See Accompanying Notes to the Financial Statements 13 2016 2015 $ 2,056,619 $ 1,839,726 3,822,398 3,824,434 355,715 64,658 (429,905) 791,933 68,118 16,841 (17,227) 116,424 (101,312) 15,120 (138,479) 399,856 430,125 (22,065) 37,110 17,497 3,508 24,172 11,491 $ 5,635,531 $ 7,551,226 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. REPORTING ENTITY Hutchinson Utilities Commission, a fund of the City of Hutchinson, Minnesota, is governed by five members who are appointed by the Council of the City of Hutchinson, Minnesota. The accompanying financial statements present only the Hutchinson Utilities Commission fund and are not intended to present fairly the financial position of the City of Hutchinson, Minnesota. The financial statements present the Commission and its component units. The Commission includes all funds, organizations, institutions, agencies, departments and offices that are not legally separate from such. Component units are legally separate entities for which the Commission is financially accountable, or for which the exclusion of the component unit would render the financial statements of the Commission misleading. The criteria used to determine if the Commission is financially accountable for a component unit includes whether or not 1) the Commission appoints the voting majority of the potential component unit's governing body and is able to impose its will on the potential component unit or is in a relationship of financial benefit or burden with the potential component unit, or 2) the potential component unit is fiscally dependent on and there is a potential for the potential component unit to provide specific financial benefits to, or impose specific financial burdens on, the Commission. As a result of applying the component unit definition criteria above, the Commission does not have any component units. B. FUND ACCOUNTING The operations of the Commission are recorded as a proprietary fund. The proprietary fund is used to account for operations (a) that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION The financial statements include the operations of the City of Hutchinson Municipal Utilities. The Electric and Natural Gas divisions are treated as a single enterprise fund of the City of Hutchinson, Minnesota. The Utilities are governed by the Hutchinson Utilities Commission, which is appointed by the City Council. No other operations are controlled by the Hutchinson Utilities Commission. The accounts of the Commission are organized on the basis of fund accounting. The operation of the fund is accounted for with a separate set of self -balancing accounts that comprise its assets, liabilities, net position, revenues, and expenses. Government resources are allocated to and accounted for in the individual fund based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Basis of accounting refers to when revenues and expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. 14 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd) C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION (Cont'd) The proprietary fund is accounted for using the accrual basis of accounting and economic resources measurement focus. Revenues are recognized when earned, and expenses are recognized when incurred. Revenue from electricity and gas sales is reflected in the accounts only at the time such revenue is actually billed to customers. Accordingly, no recognition is given in the accounts for revenue from sales between established cycle billing dates. The proprietary fund distinguishes operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation of capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. It is generally the Commission's policy to use restricted resources first, then unrestricted resources as they are needed when an expense is incurred for purposes for which both restricted and unrestricted net position is available. D. DEPOSITS AND INVESTMENTS The Commission's cash and cash equivalents are considered to be cash on hand, deposits and highly liquid debt instruments purchased with original maturities of three months or less from the date of acquisition. The Commission may invest in the following types of investments as authorized by Minn. Stat. §§118A.04 and 118A.05: (1) securities which are direct obligations or are guaranteed or insured issues of the United States, its agencies, its instrumentalities, or organizations created by an act of Congress, except mortgage- backed securities defined as "high risk" by Minn. Stat. §118A.04, subd. 6; (2) mutual funds through shares of registered investment companies provided the mutual fund receives certain ratings depending on its investments; (3) general obligations of the State of Minnesota and its municipalities, and in certain state agency and local obligations of Minnesota and other states provided such obligations have certain specified bond ratings by a national bond rating service; (4) time deposits that are fully insured by the Federal Deposit Insurance Corporation or bankers acceptances of United States bank; (5) commercial paper issued by United States corporations or their Canadian subsidiaries that is rated in the highest quality category by at least two nationally recognized rating agencies and matures in 270 days or less; and 15 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd) D. DEPOSITS AND INVESTMENTS (Cont'd) (6) with certain restrictions, in repurchase agreements, securities lending agreements, joint powers investment trusts, and guaranteed investment contracts. Cash and investments were comprised of a deposit account, a money market account, municipal bonds, agency bonds, and negotiable certificates of deposit. The Commission categorizes its fair value measurements within the fair value hierarchy established by accounting principles generally accepted in the United States of America. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets. Level 2 inputs are significant other observable inputs. Level 3 inputs are significant unobservable inputs. The Commission has an investment policy in place that addresses interest rate risk, credit risk, concentration of credit risk and custodial risk as follows: Custodial Credit Risk - Deposits: For deposits, this is the risk that in the event of bank failure, the Commission's deposits may not be returned to it. Minnesota Statutes requires that all Commission deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110 percent. The Commission's investment policy states the collateralization level will be 110% of the market value of principal and accrued interest. When the pledged collateral consists of notes secured by first mortgages, the collateral level will be 140% of the market value of principal and accrued interest. Authorized collateral includes the obligations of the U.S. Treasury, agencies, and instrumentalities, shares of investment companies whos only investments are in the aforementioned securities, obligations of the State of Minnesota or its municipalities, bankers' acceptances, futures contracts, repurchase and reverse repurchase agreements, and commercial paper of the highest quality with a maturity of no longer than 270 days, as well as certain first mortgage notes, and certain other state or local government obligations. Minnesota statutes require that securities pledged as collateral be held in safekeeping by the Commission treasurer or in a financial institution other than that furnishing the collateral. The Commission does not have a policy that further limits its collateral choices. Interest Rate Risk: This is the risk that market values of securities in a portfolio would decrease due to changes in market interest rates. The Commission's investment policy states the Commission should manage their interest rates based on safety, liquidity and the overall rate of return on the investment. The portfolio should contain both short-term and long-term investments to meet anticipated cash flow requirements. Extended maturities may be utilized to take advantage of higher yields; however, no investment shall be made with a term of more than ten years. Credit Risk: Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State law limits investments in commercial paper and corporate bonds to the top two ratings issued by nationally recognized statistical rating organizations. The Commission's investment policy states it will comply with Minnesota Statutes Chapter 118A. 16 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd) D. DEPOSITS AND INVESTMENTS (Cont'd) Concentration of Credit Risk: This is the risk of loss attributed to the magnitude of an investment in a single issuer. Investments should be diversified to avoid incurring unreasonable risk inherent in over investing in specific instruments, individual financial institutions or maturities. The Commission's investment policy states the Commission will attempt to diversify its investments according to type and maturity. Custodial Credit Risk - Investments: For an investment, this is the risk that in the event of the failure of the counterparty, the Commission will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The Commission's investment policy states when investments purchased by the Commission are held in safekeeping by a broker/dealer, they must provide asset protection of $500,000 through the Securities Investor Protection Corporations (SIPC) and at least another $2,000,000 Supplemental Insurance Protection, provided by the broker dealer. E. RECEIVABLES AND OPERATING REVENUES AND EXPENSES An allowance for doubtful accounts is recorded based on historical electric and natural gas revenues, historical loss levels, and an analysis of the collectability of individual accounts. Meters are read throughout the month and revenues are recognized when utility services are billed to customers. Hutchinson Utilities Commission did not accrue revenues for services provided but not billed at the end of the year. Monthly billings from the wholesale power and natural gas suppliers, which are for power and natural gas costs to the last day of the month, are reflected in the accounts. F. INVENTORY Inventories of materials and supplies are recorded at average cost, which does not exceed market. G. PREPAID ITEMS Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in the financial statements. H. CAPITAL ASSETS Capital assets, both tangible and intangible, are recorded at cost. The cost of additions to capital assets includes contracted work, direct labor, and materials. Repairs, replacement, and the renewal of items determined to be less than units of property are charged to maintenance. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets is included as part of the capitalized value of the assets constructed. During the current period, the Commission did not have any capitalized interest. 17 NOTE 1 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd) H. CAPITAL ASSETS (Cont'd) Depreciation of capital assets is computed using the straight-line method over the estimated service lives of the various assets as follows: Buildings 35-60 years Transmission plant (electric) 20-35 years Distribution plant (electric) 20-35 years Building improvement 15-30 years Transmission plant (gas) 10-45 years Distribution plant (gas) 10-45 years Generation plant 10-30 years General plant 5-10 years Vehicles 5-10 years Office equipment 3-5 years Computer equipment 3-5 years The Commission does not possess any material amounts of intangible assets. I. DEFERRED OUTFLOWS OF RESOURCES In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. Deferred outflows of resources represents a consumption of net position that applies to a future reporting period. During that future period, it will be recognized as an outflow of resources (expense). The Commission has one item that qualifies for reporting in this category on the financial statements which is related to pensions. COMPENSATED ABSENCES The liability for compensated absences reported in the financial statements consists of unpaid, accumulated vacation and sick leave balances. The liability has been calculated using the vesting method, in which leave amounts for both employees who currently are eligible to receive termination payments and other employees who are expected to become eligible in the future to receive such payments upon termination are included. Compensated absences are accrued when incurred in the financial statements. The Statement of Net Position reports both current and noncurrent portions of compensated absences using full accrual accounting. The current portion consists of an amount based on a trend analysis of current usage of vacation and vested sick leave. The noncurrent portion consists of the remaining amount of vacation and total vested sick leave. Both union and nonunion employees can accrue a maximum of 200 hours per year of vacation pay. A nonunion employee may carry over a maximum of one time their annual accrual of vacation into the next year. Each permanent nonunion full-time employee must use at least 40 hours of vacation per year. A union employee may carry over up to forty hours of accrued vacation into the next year. Vacation pay is 100% payable at severance of employment. A maximum of 720 hours can be accrued for sick leave. After accumulation of 720 hours, a payback of one-third of the amount over 720 hours will be made annually. Upon retirement or death before retirement, severance payable is paid back at one-third of the amount over 240 hours will be made. 18 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd) K. PENSIONS For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions to/deductions from PERA's fiduciary net position have been determined on the same basis as they are reported by PERA. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. L. POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS Employees of the Commission pay premiums based on a negotiated schedule. Since the insurance rate is not based on age, the Commission has an implicit rate subsidy factor in postemployment health care expenses. Additionally, Minnesota Statutes require the Commission to allow retired employees to stay on the health care plan with the retiree responsible to pay the entire premium for continuation coverage. The Commission's bargaining agreement and personnel policy do not provide for any contributions upon employee retirement. Any liability for other postemployment benefits is considered immaterial and not recognized in the financial statements. M. LONG-TERM OBLIGATIONS Long-term debt and other long-term obligations are reported as liabilities in the financial statements. Bond discounts and bond premiums are amortized over the terms of the related bond issues. N. DEFERRED INFLOWS OF RESOURCES In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. Deferred inflows of resources represents an acquisition of net position that applies to a future reporting period. During that future period, it will be recognized as an inflow of resources (revenue). The Commission has one item that qualify for reporting in this category on the financial statements which is related to pensions. O. NET POSITION Net position represents the difference between assets plus deferred outflows of resources and liabilities plus deferred inflows of resources in the financial statements. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balance of any long-term debt used to build or acquire the capital assets. Net position is reported as restricted in financial statements when there are limitations on its use through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Unrestricted net position consists of all other net position that does not meet the definition of restricted or net investment in capital assets. P. BUDGETS AND BUDGETARY ACCOUNTING The General Manager is responsible for preparing and submitting an annual budget. Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. 19 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd) Q. USE OF ESTIMATES The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and deferred outflows of resources, and liabilities and deferred inflows of resources and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. R. PRIOR YEAR INFORMATION The basic financial statements include certain prior -year partial comparative information in total but not at the level of detail required for a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the government's financial statements for the year ended December 31, 2015, from which the partial information was derived. NOTE 2. DEPOSITS AND INVESTMENTS A. DEPOSITS In accordance with applicable Minnesota Statutes, Hutchinson Utilities Commission maintains deposits at depository banks authorized by the Commission. Custodial Credit Risk - Deposits: The Commission's bank balances were not exposed to custodial credit risk because they were fully insured through the Federal Deposit Insurance Corporation as well as collateralized with securities held by the pledging financial institution's trust department or agent and in the Commission's name. Deposits in Bank Money Market Accounts Petty Cash Total Deposits B. INVESTMENTS The Commission had the following investments: 13,105,044 9,416 850 $ 13,115,310 20 Interest Rate Risk Fair Value Maturity Date Municipal Bonds $ 2,019,332 2-5 years Agency Bonds 1,757,895 2-7 years Negotiable Certificates of Deposit 1,220,338 1-5 years Total Investments $ 4,997,565 20 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 2. DEPOSITS AND INVESTMENTS (Cont'd) B. INVESTMENTS (Cont'd) The Municipal Bonds were rated A2/AA-. The Agency Bonds were rated Aaa/AA+. The Negotiable Certificates of Deposit were not rated. Investments' fair value measurements are as follows: Fair Value Measuring Unit Fair Level Level Level Value Inputs Inputs Inputs Municipal Bonds $ 2,019,332 $ $ 2,019,332 $ Agency Bonds 1,757,895 1,757,895 Negotiable Certificates of Deposit 1,220,338 1,220,338 Total Investments $ 4,997,565 $ $ 4,997,565 $ The following is a summary total of deposits and investments: Deposits (Note 3.A.) $ 13,115,310 Investments 4,997,565 Total Deposits and Investments $ 18,112,875 Deposits and investments are presented in the basic financial statements as follows: Current Assets Cash and Investments Noncurrent Assets Restricted Assets Cash and Investments Total Deposits and Investments 21 $ 15,573,250 2,539,625 $ 18,112,875 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 3. DEPOSITS AND INVESTMENTS - RESTRICTED Restricted cash and investments are designated by bond covenants for specific purposes. Restricted cash consisted of the following: Public Utility Revenue Bond Sinking Fund - 2003 Funds designated under bond resolution which require monthly deposits of amounts necessary to meet annual principal and interest payments with an escrow agent. $ 350,931 Reserve Accounts Funds required to be held in amount equal to the maximum amount of principal and interest to become due on the bonds during the year. 2,188,694 Total Cash and Investments - Restricted $ 2,539,625 The following items have been designated by the Commission for the following purposes: Rate Stabilization - Electric $ 314,539 Rate Stabilization - Gas 646,058 Payment in Lieu of Taxes 1,196,331 Catastrophic 500,000 Expansion and Development Reserve Account Funds designated for the expansion and development of the utility 2,699,000 Total Cash and Investments - Designated $ 5,355,928 The above Commission designated amounts are included in the Current Assets -Cash and Investments total. 22 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 4. CAPITAL ASSETS Capital asset activity was as follows: Beginning Ending Balance Increase Decrease Balance Capital Assets, Not Being Depreciated Land $ 559,527 $ $ $ 559,527 Easements 4,030,760 4,030,760 Construction in Progress 7,525 7,525 Total Capital Assets, Not Being Depreciated 4,590,287 7,525 0 4,597,812 Capital Assets, Being Depreciated Structures and Improvements 114,121,749 547,065 (38,251) 114,630,563 Equipment 14,909,902 484,174 (196,244) 15,197,832 Software 478,352 478,352 Total Capital Assets, Being Depreciated 129,510,003 1,031,239 (234,495) 130,306,747 Less Accumulated Depreciation for Structures and Improvements 51,673,525 3,375,171 (38,251) 55,010,445 Equipment 8,642,942 445,135 (196,244) 8,891,833 Software 427,198 2,092 429,290 Total Accumulated Depreciation 60,743,665 3,822,398 (234,495) 64,331,568 Total Capital Assets, Being Depreciated, Net 68,766,338 (2,791,159) 0 65,975,179 Net Capital Assets $ 73,356,625 $ (2,783,634) $ 0 $ 70,572,991 23 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 5. INVENTORY Inventory consists of the following: Electric Division Fuel Oil and Lubricants Plant Systems Material Engine Parts Distribution Materials Transformers Total Electric Division Natural Gas Division Fittings Transmission Line Gas Total Natural Gas Division Total Inventory NOTE 6. LONG-TERM DEBT A. COMPONENTS OF LONG-TERM DEBT Interest Rates Public Utility Revenue Bonds, Series 2003B 3.90-4.50% Public Utility Revenue Refunding Bonds, Series 2012A 4.00-5.00% Bond Premium Compensated Absences Net Pension Liability Total Long -Term Debt $ 89,066 6,441 498,121 339,752 107,451 1,040,831 102,174 303,570 405,744 $ 1,446,575 Final Balance Maturity Outstanding 12/01/2021 12/01/2026 $ 590,000 16,415,000 1,840,615 470,994 5,634,936 $ 24,951,545 On March 31, 2003, the Hutchinson Utilities Commission issued Public Utility Revenue Bonds, Series 2003B for $31,725,000. $3,340,000 of the issue was used for the refunding of the Temporary Public Utility Revenue Bonds of 2001, and $28,385,000 was used for the natural gas pipeline project. On July 19, 2012, Hutchinson Utilities Commission issued Public Utility Revenue Refunding Bonds, Series 2012A for $20,720,000, with an interest rate of 4.00% to 5.00%. The Commission issued the bonds to advance refund a portion of the 2013 through 2025 maturities of the Public Utility Revenue Bonds, Series 2003B. The Commission completed the refunding to reduce its debt service payment over the next 14 years by $1,638,277. This results in an economic gain (difference between the present values of the debt service payments on the old and new debt) of $1,245,620. 24 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 6. LONG-TERM DEBT (Cont'd) B. MINIMUM DEBT PAYMENTS Annual debt service requirements to maturity for bonded debt is as follows: C. CHANGES IN LONG-TERM LIABILITIES Beginning Ending Due Within Balance Additions Reductions Balance One Year Revenue Bonds $ 715,000 $ $ (125,000) Revenue Refunding Year Ending Revenue Bonds, Series 2003B Bonds, Series 2012A December 31 Principal Interest Principal Interest 16,415,000 Bond Premium 2017 $ 125,000 $ 25,488 $ 1,220,000 $ 735,100 2018 125,000 20,238 1,295,000 674,100 2019 125,000 14,925 1,370,000 609,350 2020 125,000 9,550 1,455,000 540,850 2021 90,000 4,050 1,565,000 482,650 2022-2026 9,510,000 1,339,400 $ 590,000 $ 74,251 $ 16,415,000 $ 4,381,450 C. CHANGES IN LONG-TERM LIABILITIES Beginning Ending Due Within Balance Additions Reductions Balance One Year Revenue Bonds $ 715,000 $ $ (125,000) $ 590,000 Revenue Refunding Bonds 17,575,000 (1,160,000) 16,415,000 Bond Premium 2,026,224 (185,609) 1,840,615 Compensated Absences 446,822 332,505 (308,333) 470,994 Net Pension Liability 3,700,319 4,074,811 (2,140,194) 5,634,936 Total Long -Term $ 125,000 1,220,000 185,608 18,947 Liabilities $ 24,463,365 $ 4,407,316 $ (3,919,136) $ 24,951,545 $ 1,549,555 25 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 6. LONG-TERM DEBT (Cont'd) D. PLEDGED REVENUES Future revenue pledged for the payment of long-term debt is as follows: Bond Issue/ Percent Remaining Principal Pledged Use of Proceeds/ of Total Term of Principal and Interest Revenue Type Debt Service Pledge and Interest Paid Received Revenue Bonds, Series 2003B Electric Utility Charges 100% 2003-2021 $ 664,251 $ 155,612 $ 26,855,217 Revenue Refunding Bonds, Series 2012A Natural Gas Utility Charges 100% 2012-2026 20,796,450 1,941,500 9,879,077 NOTE 7. RISK MANAGEMENT The Commission purchases commercial insurance coverage through the League of Minnesota Cities Insurance Trust (LMCIT), which is a public entity risk pool currently operating as a common risk management and insurance program, with cities in the state. The Commission pays an annual premium to the LMCIT for its insurance coverage. The LMCIT is self-sustaining through commercial companies for excess claims. The Commission is covered through the pool for any claims incurred but unreported, but retains risk for the deductible portion of its insurance policies. The amount of these deductibles is considered immaterial to the financial statements. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. The Commission's workers' compensation insurance policy is retrospectively rated. With this type of policy, final premiums are determined after loss experience is known. The amount of premium adjustment for 2016 is estimated to be immaterial based on workers' compensation rates and salaries for the year. There are no other claims liabilities reported in the funds based on the requirements of accounting standards, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. 26 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 8. DEFINED BENEFIT PENSION PLANS - STATEWIDE A. PLAN DESCRIPTION The Commission participates in the following cost-sharing multiple -employer defined benefit pension plan administered by the Public Employees Retirement Association (PERA). PERA's defined benefit pension plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERA's defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code. All full-time and certain part-time employees of the Commission are covered by the General Employees Retirement Fund (GERF). GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. The Basic Plan was closed to new members in 1967. All new members must participate in the Coordinated Plan. B. BENEFITS PROVIDED PERA provides retirement, disability and death benefits. Benefit provisions are established by state statute and can only be modified by the state legislature. Benefit increases are provided to benefit recipients each January. Increases are related to the funding ratio of the plan. Members in plans that are at least 90% funded for two consecutive years are given 2.5% increases. Members in plans that have not exceeded 90% funded, or have fallen below 80%, are given 1 % increases. The benefit provisions stated in the following paragraphs are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. GERF Benefits: Benefits are based on a member's highest average salary for any five successive years of allowable service, age and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a step -rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2% of average salary for each of the first ten years of service and 2.7% for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2% of average salary for each of the first ten years and 1.7% for each remaining year. Under Method 2, the annuity accrual rate is 2.7% of average salary for Basic Plan members and 1.7% for Coordinated Plan members for each year of service. For members hired prior to July 1, 1989, a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped at 66. 27 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 8. DEFINED BENEFIT PENSION PLANS - STATEWIDE (Cont'd) C. CONTRIBUTIONS Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the state legislature. GERF Contributions: Basic Plan members and Coordinated Plan members were required to contribute 9.1 % and 6.5% of pay, respectively, in calendar year 2016. The Commission was required to contribute 11.78% of pay for Basic Plan members and 7.5% for Coordinated Plan members. The Commission's contributions to the GERF for the plan's year ended December 31, 2016, were $310,915. The Commission's contributions were equal to the required contributions for each year as set by state statute. D. PENSION COSTS GERF Pension Costs: At December 31, 2016, the Commission reported a liability of $5,634,936 for its proportionate share of the GERF's net pension liability. The Commission's net pension liability reflected a reduction due to the State of Minnesota's contribution of $6 million to the fund in 2016. The State of Minnesota is considered a non - employer contributing entity and the state's contribution meets the definition of a special funding situation. The State of Minnesota's proportionate share of the net pension liability associated with the Commission totaled $73,588. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The Commission's proportion of the net pension liability was based on the Commission's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2015 through June 30, 2016, relative to the total employer contributions received from all of PERA's participating employers. At June 30, 2016, the Commission's proportion was 0.0694% at the end of the measurement period and 0.0714% at the beginning of the period. For the year ended December 31, 2016, the Commission recognized pension expense of $755,109 for its proportionate share of GERF's pension expense. In addition, the Commission recognized an additional $21,942 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota's contribution of $6 million to the General Employees Fund. At December 31, 2016, the Commission reported its proportionate share of GERF's deferred outflows of resources and deferred inflows of resources from the following sources: Differences between expected and actual economic experience Changes in actuarial assumptions Differences between projected and actual investment earnings Changes in proportion Contributions paid to PERA subsequent to measurement date Totals 28 Deferred Outflows of Deferred Inflows Resources of Resources 457,753 1,103,327 1,069,535 302,127 155,218 2,328,080 $ 759,880 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 8. DEFINED BENEFIT PENSION PLANS - STATEWIDE (Cont'd) D. PENSION COSTS (Cont'd) $155,218 reported as deferred outflows of resources related to pensions resulting from Commission contributions to GERF subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2017. Other amounts reported as deferred outflows and inflows of resources related to GERF pensions will be recognized in pension expense as follows: Year ended June 30, Pension Expense Amount 2017 $ 345,025 2018 345,025 2019 519,384 2020 203,548 E. ACTUARIAL ASSUMPTIONS The total pension liability in the June 30, 2016 actuarial valuation was determined using the entry age normal actuarial cost method and the following actuarial assumptions: Inflation 2.50% per year Active Member Payroll Growth 3.25% per year Investment Rate of Return 7.50% per year Salary increases were based on a service -related table. Mortality rates for active members, retirees, survivors and disabilitants were based on RP 2014 tables for the General Employees Plan. Cost of living benefit increases for retirees are assumed to be: one percent per year for all future years for the General Employees Plan. Actuarial assumptions used in the June 30, 2016 valuations were based on the results of actuarial experience studies. The most recent four-year experience study in the GERF Plan was completed in 2015. The following changes in actuarial assumptions occurred in 2016: GFRF- The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2035 and 2.5% per year thereafter to 1.0% per year for all future years. The assumed investment return was changed from 7.9% to 7.5%. The single discount rate was changed from 7.9% to 7.5%. Other assumptions were changed pursuant to the experience study dated June 30, 2015. The assumed future salary increases, payroll growth, and inflation were decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation. 29 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 8. DEFINED BENEFIT PENSION PLANS - STATEWIDE (Cont'd) E. ACTUARIAL ASSUMPTIONS (Cont'd) The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness of the long-term expected rates of return on a regular basis using a building-block method in which best -estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset Class Domestic Stocks International Stocks Bonds Alternative Assets Cash F. DISCOUNT RATE Target Allocation 45% 15% 18% 20% 2% Long -Term Expected Real Rate of Return 5.50% 6.00% 1.45% 6.40% 0.50% The discount rate used to measure the total pension liability in 2016 was 7.50%, a reduction from the 7.90% used in 2015. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at rates set in Minnesota Statutes. Based on these assumptions, the fiduciary net position of the GERF was projected to be available to make all projected future benefit payments of current plan participants. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. G. PENSION LIABILITY SENSITIVITY The following presents the Commission's proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the Commission's proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate: H. PENSION PLAN FIDUCIARY NET POSITION Detailed information about each pension plan's fiduciary net position is available in a separately -issued PERA financial report. That report may be obtained on the Internet at www.mnpera.org. 30 1 % Decrease 1% Increase in Discount Discount in Discount Rate Rate Rate GERF discount rate 6.50% 7.50% 8.50% Commission's proportionate share of the GERF net pension liability $ 8,003,279 $ 5,634,936 $ 3,684,066 H. PENSION PLAN FIDUCIARY NET POSITION Detailed information about each pension plan's fiduciary net position is available in a separately -issued PERA financial report. That report may be obtained on the Internet at www.mnpera.org. 30 HUTCHINSON UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 NOTE 9. DEFERRED COMPENSATION PLAN The Commission offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all Commission employees, permits them to defer a portion of their salary into future years. Participation in the plan is optional. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. Investments are managed by the plan's trustee under one of four investment options, or a combination thereof. The choice of the investment option(s) is made by the participants. NOTE 10. COMMITMENTS The Commission is committed to purchase 25 MW of its power requirements from Missouri River Energy Services pursuant to the Power Sale Agreement dated April 28, 2010. This contract is effective through January 1, 2046. NOTE 11. MAJOR CUSTOMERS For the years ended December 31, 2016 and 2015, the Electric Division derived approximately 52% and 51 % respectively, of utility revenue from the top five major customers. For the years ended December 31, 2016 and 2015, the Natural Gas Division derived approximately 39% and 37% respectively, of its utility revenue from the top five major customers. NOTE 12. NET POSITION Net Investment in Capital Assets Net Capital Assets $ 70,572,991 Revenue Bonds Payable (17,005,000) Bond Premium (Unamortized) (1,840,615) $ 51,727,376 Restricted Cash and Investments Designated by Bond Covenants for Specific Purposes $ 2,539,625 NOTE 13. RECLASSIFICATIONS Certain immaterial prior year financial statement amounts have been reclassified to conform to the current year's presentation. There was no affect on total net position. 31 REQUIRED SUPPLEMENTARY INFORMATION This page intentionally left blank Actuarial Valuation Date Pensions PERA - GERF 6/30/2016 6/30/2015 Employer's Proportion of the Net Pension Liability (Asset) HUTCHINSON UTILITIES COMMISSION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY DECEMBER 31, 2016 Employer's Proportionate Share of the Net Pension Liability (Asset) (a) State's Proportionate Share of the Net Pension Liability (Asset) Associated with the Employer (b) Employer's Proportionate Share of the Net Pension Liability (Asset) and the State's Proportionate Share of the Net Pension Liability (Asset) Associated with the Employer (a+b) Employer's Covered - Employee Payroll (c) 0.0694% $ 5,634,936 $ 73,588 $ 5,708,524 $ 4,334,384 0.0714% 3,700,319 3,700,319 4,241,304 Employer's Proportionate Share of the Net Pension Liability (Asset) as a Percentage of its Covered - Employee Payroll ((a+b)/c) 131.70% 87.24% The City implemented GASB Statement No. 68 for fiscal year ended December 31, 2015. Information for prior years is not available. 32 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 68.90% 78.20% HUTCHINSON UTILITIES COMMISSION SCHEDULE OF EMPLOYER CONTRIBUTIONS DECEMBER 31, 2016 The City implemented GASB Statement No. 68 for fiscal year ended December 31, 2015. Information for prior years is not available. 33 Contributions Contributions in Relation as a Percentage Statutorily to the Statutorily Contribution Covered- of Covered - Required Required Deficiency Employee Employee Year Ended Contribution Contribution (Excess) Payroll Payroll December 31, (a) (b) (a -b) (d) (b/d) Pensions PERA-GERF 2016 $ 310,915 $ 310,915 $ $ 4,145,538 7.50% 2015 327,065 327,065 4,360,868 7.50% The City implemented GASB Statement No. 68 for fiscal year ended December 31, 2015. Information for prior years is not available. 33 SUPPLEMENTARY INFORMATION This page intentionally left blank HUTCHINSON UTILITIES COMMISSION COMBINING STATEMENT OF NET POSITION DECEMBER 31. 2016 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Assets Current Assets Cash and Investments Accounts Receivable (Net of Allowance for Doubtful Accounts of $46,236 and $24,896, Respectively) Inventory Sales Tax Receivable Prepaid Items Total Current Assets Noncurrent Assets Restricted Assets Cash and Investments Capital Assets Assets Not Being Depreciated Other Capital Assets, Net of Depreciation Net Capital Assets Total Noncurrent Assets Total Assets Deferred Outflows of Resources Related to Pensions Total Assets and Deferred Outflows of Resources LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION Liabilities Current Liabilities Current Portion of Long -Term Debt Bonds Payable Bond Premium Accrued Vacation Accounts Payable Due to Other Governments Customer Deposits Accrued Expenses Interest Salaries Payable Total Current Liabilities Long -Term Liabilities Noncurrent Portion of Long -Term Debt Bonds Payable Bond Premium Accrued Vacation Accrued Severance Net Pension Liability Total Long -Term Liabilities Total Liabilities Deferred Inflows of Resources Related to Pensions Net Position Net Investment in Capital Assets Restricted Unrestricted Total Net Position Total Liabilities. Deferred Inflows of Resources and Net Position 34 Natural Electric Gas Division Division Total 8,587,720 $ 6,985,530 $ 15,573,250 1,742,959 1,810,489 3,553,448 1,040,831 405,744 1,446,575 145,586 4,628 145,586 61,943 40,380 102,323 11,579,039 9,242,143 20,821,182 25,081 2,514,544 2,539,625 697,894 3,899,919 4,597,813 39,038,851 26,936,327 65,975,178 39,736,745 30,836,246 70,572,991 39,761,826 33,350,790 73,112,616 51,340,865 42,592,933 93,933,798 1,746,060 582,020 2,328,080 $ 53,086,925 $ 43,174,953 $ 96,261,878 $ 125,000 $ 1,220,000 $ 1,345,000 25,081 185,608 185,608 14,320 4,628 18,947 1,807,467 1,047,729 2,855,196 902,446 855,155 1,757,601 296,556 159,684 456,240 2,124 61,258 63,382 98,837 29,617 128,454 3,246,750 3,563,679 6,810,428 465,000 15,195, 000 15,660, 000 1,655,007 1,655,007 272,071 87,926 359,997 66,478 25,572 92,050 4,226,202 1,408,734 5,634,936 5,029,751 18,372,239 23,401,990 8,276,500 21,935,918 30,212,418 569,910 189,970 759,880 39,146, 745 12, 580,631 51, 727, 376 25,081 2,514,544 2,539,625 5,068,689 5,953,890 11,022,579 44,240,515 21,049,065 65,289,580 $ 53,086,925 $ 43,174,953 $ 96,261,878 HUTCHINSON UTILITIES COMMISSION COMBINING SCHEDULE OF REVENUES AND EXPENSES YEAR ENDED DECEMBER 31, 2016 OPERATING REVENUES Electric Energy Sales Natural Gas Sales Other Operating Revenues Total Operating Revenues OPERATING EXPENSES Production Operations Maintenance Purchased Power/Gas Other Power Supply Transmission Operations Maintenance Distribution Operations Maintenance Customer Accounts Expense Sales Expense Administrative and General Depreciation Contribution to City of Hutchinson Total Operating Expenses Operating Income (Loss) NONOPERATING REVENUES (EXPENSES) Interest Income Merchandise and Contract Work, Net Miscellaneous Income Gain (Loss) on Disposal of Assets Bond Premium Interest Expense Total Nonoperating Revenues (Expenses) Change in Net Position 35 2016 Electric Natural Gas Division Division Total $ 26,855,217 $ $ 26,855,217 9,879,077 9,879,077 293,294 1,479,135 1,772,429 27,148,511 11,358,212 38,506,723 2,936,626 2,936,626 450,663 450,663 13,521,486 5,697,867 19,219,353 368,091 368,091 2,359,403 114,734 2,474,137 16,956 4,720 21,676 606,292 449,960 1,056,252 363,615 130,543 494,158 246,627 201,785 448,412 294,666 98,222 392,888 2,522,306 937,888 3,460,194 2,820,446 1,001,952 3,822,398 899,004 406,252 1,305,256 27,406,181 9,043,923 36,450,104 (257,670) 2,314,289 2,056,619 4,186 4,186 8,372 (24,216) 29,206 4,990 83,272 271,227 354,499 20,379 20,379 40,758 185,608 185,608 (31,085) (780,294) (811,379) 52,536 (269,688) (217,152) $ (205,134) $ 2,044,601 $ 1,839,467 HUTCHINSON UTILITIES COMMISSION STATEMENT OF NET POSITION ELECTRIC DIVISION DECEMBER 31, 2016 WITH PARTIAL COMPARATIVE AMOUNTS AS OF DECEMBER 31. 2015 2016 2015 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES 697,894 690,368 Assets 39,038,851 41,378,082 Current Assets 39,736,745 42,068,450 Cash and Investments $ 8,587,720 $ 6,148,711 Accounts Receivable (Net of Allowance for Doubtful Accounts of 51,340,865 51,239,975 $46,236 and $31,984, Respectively) 1,742,959 1,766,414 Inventory 1,040,831 1,105,204 Sales Tax Receivable 145,586 128,359 Prepaid Items 61,943 758 Total Current Assets 11,579,039 9,149,446 Noncurrent Assets Current Liabilities Restricted Assets Current Portion of Long -Term Debt Cash and Investments 25,081 22,079 Capital Assets Assets Not Being Depreciated 697,894 690,368 Other Capital Assets, Net of Depreciation 39,038,851 41,378,082 Net Capital Assets 39,736,745 42,068,450 Total Noncurrent Assets 39,761,826 42,090,529 Total Assets 51,340,865 51,239,975 Deferred Outflows of Resources Related to Pensions 1,746,060 388,200 Total Assets and Deferred Outflows of Resources $ 53,086,925 $ 51,628,175 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION Liabilities Current Liabilities Current Portion of Long -Term Debt Bonds Payable $ 125,000 $ 125,000 Accrued Vacation 14,320 13,432 Accounts Payable 1,807,467 1,659,295 Due to Other Governments 902,446 902,446 Customer Deposits 296,556 310,898 Accrued Expenses Interest 2,124 2,551 Salaries Payable 98,837 85,355 Total Current Liabilities 3,246,750 3,098,977 Long -Term Liabilities Noncurrent Portion of Long -Term Debt Bonds Payable 465,000 590,000 Accrued Vacation 272,071 255,215 Accrued Severance 66,478 66,869 Net Pension Liability 4,226,202 2,775,239 Total Long -Term Liabilities 5,029,751 3,687,323 Total Liabilities 8,276,500 6,786,300 Deferred Inflows of Resources Related to Pensions 569,910 396,226 Net Position Net Investment in Capital Assets 39,146,745 41,353,450 Restricted 25,081 22,079 Unrestricted 5,068,689 3,070,120 Total Net Position 44,240,515 44,445,649 Total Liabilities, Deferred Inflows of Resources and Net Position $ 53,086,925 $ 51,628,175 36 HUTCHINSON UTILITIES COMMISSION DETAILED SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION BUDGET AND ACTUAL - ELECTRIC DIVISION YEAR ENDED DECEMBER 31, 2016 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2015 OPERATING REVENUES Utility Revenues Residential General Service Industrial Street Lighting Resale Total Utility Revenues Other Operating Revenues Penalties/Fees Security Lights Total Other Operating Revenues Total Operating Revenues OPERATING EXPENSES Production Operations Supervision and Engineering Other Employee Benefits Fuels Station Gas for Generation Transportation Waste Disposal Total Operations Maintenance Structures Generating Units Other Equipment Total Maintenance Total Production Power Costs Purchased Power 2016 2015 Over (Under) Budget Actual Budget Actual $ 5,030,722 $ 5,269,261 $ 238,539 $ 5,080,964 8,657,846 8,567,839 (90,007) 8,763,091 10,511,135 10,941,617 430,482 11,399,155 144,535 144,641 106 146,931 1,907,820 1,931,859 24,039 1,114,918 26,252,058 26,855,217 603,159 26,505,059 270,200 282,041 11,841 285,738 10,000 11,253 1,253 11,269 280,200 293,294 13,094 297,007 26,532,258 27,148,511 616,253 26,802,066 1,084,484 965,917 (118,567) 934,560 99,801 99,801 111,270 30,100 27,247 (2,853) 26,226 129,500 117,788 (11,712) 136,379 1,182,104 1,046,962 (135,142) 722,821 647,166 647,166 641,833 26,000 31,745 5,745 29,492 3,099,354 2,936,626 (162,728) 2,602,581 7,000 9,160 2,160 3,184 461,230 343,228 (118,002) 339,876 40,000 98,275 58,275 121,123 508,230 450,663 (57,567) 464,183 3,607,584 3,387,289 (220,295) 3,066,764 13,875,028 13,521,486 (353,542) 14,706,630 37 HUTCHINSON UTILITIES COMMISSION DETAILED SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION BUDGET AND ACTUAL - ELECTRIC DIVISION YEAR ENDED DECEMBER 31, 2016 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2015 OPERATING EXPENSES (Cont'd) Other Power Supply Supervision and General Salaries Training Professional Services Total Other Power Supply Transmission Operations Transmission Station Total Operations Maintenance Plant and Equipment Total Transmission Distribution Operations Supervision and Engineering Line Meter Territory Service Agreement Other Total Operations Maintenance Station Equipment Underground Lines Lines Transformers Street Lighting Other Equipment Total Maintenance Total Distribution Customer Accounts Expense Meter Reading Collection Other Employee Benefits Uncollectible Accounts Customer Services Meetings and Training Total Customer Accounts Expense 2016 2015 Over (Under) Budget Actual Budget Actual $ 321,198 $ 328,017 $ 6,819 $ 319,855 1,000 424 (576) 36,600 39,650 3,050 41,698 358,798 368,091 9,293 361,553 1,875,000 2,215,298 340,298 1,785,988 145,000 144,105 (895) 144,105 2,020,000 2,359,403 339,403 1,930,093 26,622 16,956 (9,666) 23,231 2,046,622 2,376,359 329,737 1,953,324 630,637 290,367 (340,270) 339,667 67,567 68,027 460 61,641 20,872 45,552 24,680 68,177 25,000 26,187 1,187 29,068 53,000 176,159 123,159 132,145 797,076 606,292 (190,784) 630,698 11,893 13,495 1,602 10,086 118,176 204,974 86,798 100,165 13,411 16,049 2,638 10,571 70,659 63,319 (7,340) 90,272 42,737 65,778 23,041 52,351 256,876 363,615 106,739 263,445 1,053,952 969,907 (84,045) 894,143 21,331 26,057 4,726 23,258 151,260 146,035 (5,225) 141,788 14,497 14,497 9,818 8,250 18,634 10,384 4,658 55,682 41,404 (14,278) 49,517 2,750 (2,750) 431 239,273 246,627 7,354 229,470 38 HUTCHINSON UTILITIES COMMISSION DETAILED SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION BUDGET AND ACTUAL - ELECTRIC DIVISION YEAR ENDED DECEMBER 31, 2016 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2015 OPERATING EXPENSES (Cont'd) Sales Expense Salaries Conservation Total Sales Expense Administrative and General Supervision and General Salaries Office Supplies Outside Services Employed Property Insurance Medical Insurance Other Employee Benefits Regulatory Commissioners Salaries Travel Miscellaneous Maintenance of General Plant Total Administrative and General Depreciation Contribution to City of Hutchinson Payment in Lieu of Taxes Roadway Lighting Total Contribution to City of Hutchinson Total Operating Expenses Operating Income (Loss) 2016 ?n15 Over (Under) Budget Actual Budget Actual $ $ 53,242 $ 53,242 $ 49,768 405,493 241,424 (164,069) 171,201 405,493 294,666 (110,827) 220,969 417,549 433,081 15,532 455,790 222,750 274,966 52,216 248,368 80,306 116,859 36,553 106,060 96,250 77,427 (18,823) 88,869 653,478 653,422 (56) 719,849 651,250 843,656 192,406 635,730 27,500 18,084 (9,416) 23,322 14,517 15,273 756 14,517 9,900 2,668 (7,232) 3,709 85,250 49,976 (35,274) 46,315 42,946 36,894 (6,052) 46,508 2,301,696 2,522,306 220,610 2,389,037 2,700,000 2,820,446 120,446 2,816,301 754,469 754,469 384,391 144,535 144,535 146,739 899,004 899,004 0 531,130 27,487,450 27,406,181 (81,269) 27,169,321 (955,192) (257,670) 697,522 (367,255) 39 HUTCHINSON UTILITIES COMMISSION DETAILED SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION BUDGET AND ACTUAL - ELECTRIC DIVISION YEAR ENDED DECEMBER 31, 2016 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2015 2016 2015 Over (Under) Budget Actual Budget Actual NONOPERATING REVENUES (EXPENSES) Interest Income Merchandise and Contract Work, Net Miscellaneous Income Gain (Loss) on Disposal of Assets Amortization of Development Study Interest Expense Total Nonoperating Revenues (Expenses) Change in Net Position NET POSITION, BEGINNING OF YEAR, AS ORIGINALLY STATED 1,:7[*]:a,=11:7[0]DL391110911NI=1101 NET POSITION, BEGINNING OF YEAR, AS RESTATED NET POSITION, END OF YEAR $ 57,500 $ 4,186 $ (53,314) $ 15,978 (24,216) (24,216) (49,243) 83,272 83,272 129,966 20,379 20,379 (262,972) (33,012) (31,085) 1,927 (35,196) 24,488 52,536 28,048 (201,467) $ (930,704) (205,134) $ 725,570 (568,722) .e 44,445,649 44,445,649 $ 44,240,515 47,749,143 (2,734,772) 45,014,371 $ 44,445,649 HUTCHINSON UTILITIES COMMISSION STATEMENT OF NET POSITION NATURAL GAS DIVISION DECEMBER 31, 2016 WITH PARTIAL COMPARATIVE AMOUNTS AS OF DECEMBER 31, 2015 2016 2015 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Assets Current Assets Cash and Investments $ 6,985,530 $ 6,491,512 Accounts Receivable (Net of Allowance for Doubtful Accounts of $24,896 and $17,222, Respectively 1,810,489 1,357,129 Inventory 405,744 409,489 Prepaid Items 40,380 253 Total Current Assets 9,242,143 8,258,383 Noncurrent Assets Restricted Assets Cash and Investments 2,514,544 2,545,861 Capital Assets Assets Not Being Depreciated 3,899,919 3,899,919 Other Capital Assets, Net of Depreciation 26,936,327 27,388,256 Net Capital Assets 30,836,246 31,288,175 Total Noncurrent Assets 33,350,790 33,834,036 Total Assets 42,592,933 42,092,419 Deferred Outflows of Resources Related to Pensions 582,020 129,400 Total Assets and Deferred Outflows of Resources $ 43,174,953 $ 42,221,819 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION Liabilities Current Liabilities Current Portion of Long -Term Debt Bonds Payable $ 1,220,000 $ 1,160,000 Bond Premium 185,608 185,608 Accrued Vacation 4,628 4,369 Accounts Payable 1,047,729 1,334,380 Due to Other Governments 855,155 855,155 Customer Deposits 159,684 167,407 Accrued Expenses Interest 61,258 65,125 Salaries Payable 29,617 25,602 Total Current Liabilities 3,563,679 3,797,646 Long -Term Liabilities Noncurrent Portion of Long -Term Debt Bonds Payable 15,195,000 16,415,000 Bond Premium 1,655,007 1,840,616 Accrued Vacation 87,926 83,033 Accrued Severance 25,572 23,904 Net Pension Liability 1,408,734 925,080 Total Long -Term Liabilities 18,372,239 19,287,633 Total Liabilities 21,935,918 23,085,279 Deferred Inflows of Resources Related to Pensions 189,970 132,076 Net Position Net Investment in Capital Assets 12,580,631 11,686,951 Restricted 2,514,544 2,545,861 Unrestricted 5,953,890 4,771,652 Total Net Position 21,049,065 19,004,464 Total Liabilities, Deferred Inflows of Resources and Net Position $ 43,174,953 $ 42,221,819 41 HUTCHINSON UTILITIES COMMISSION DETAILED SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION BUDGET AND ACTUAL - NATURAL GAS DIVISION YEAR ENDED DECEMBER 31, 2016 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2015 Other Operating Revenues Gas Transportation Contract - New Ulm 730,636 2016 101,333 2015 Transportation - Electric Division 647,166 647,166 Over (Under) 641,833 Total Other Operating Revenues Budget Actual Budget Actual OPERATING REVENUES 13,568,468 11,358,212 (2,210,256) 11,341,497 Utility Revenues 744,279 580,503 (163,776) 638,944 Residential $ 4,588,522 $ 3,839,034 $ (749,488) $ 3,731,066 Commercial 3,628,501 2,824,329 (804,172) 2,748,161 Industrial 3,973,643 3,215,714 (757,929) 3,444,273 Total Utility Revenues 12,190,666 9,879,077 (2,311,589) 9,923,500 Other Operating Revenues Gas Transportation Contract - New Ulm 730,636 831,969 101,333 776,164 Transportation - Electric Division 647,166 647,166 (7,682) 641,833 Total Other Operating Revenues 1,377,802 1,479,135 101,333 1,417,997 Total Operating Revenues 13,568,468 11,358,212 (2,210,256) 11,341,497 OPERATING EXPENSES 744,279 580,503 (163,776) 638,944 Purchased Natural Gas 7,214,755 5,697,867 (1,516,888) 5,988,821 Transmission 225,187 181,625 (43,562) 181,772 Operations 116,665 116,665 125,150 Supervision and Engineering 66,837 55,556 (11,281) 52,510 Other 62,000 59,178 (2,822) 62,605 Total Operations 128,837 114,734 (14,103) 115,115 Maintenance Supervision and Engineering 1,671 3,902 2,231 3,996 Other 8,500 818 (7,682) 341 Total Maintenance 10,171 4,720 (5,451) 4,337 Total Transmission 139,008 119,454 (19,554) 119,452 Distribution 744,279 580,503 (163,776) 638,944 Operations Supervision and Engineering 225,187 181,625 (43,562) 181,772 Other Employee Benefits 116,665 116,665 125,150 Mains and Services 101,192 107,259 6,067 78,595 Meters 835 966 131 9,497 Other 55,750 43,445 (12,305) 28,376 Total Operations 382,964 449,960 66,996 423,390 Maintenance Mains and Services 148,837 101,887 (46,950) 156,591 Meters 24,228 641 (23,587) 9,322 Other Equipment 188,250 28,015 (160,235) 49,641 Total Maintenance 361,315 130,543 (230,772) 215,554 Total Distribution 744,279 580,503 (163,776) 638,944 42 HUTCHINSON UTILITIES COMMISSION DETAILED SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION BUDGET AND ACTUAL - NATURAL GAS DIVISION YEAR ENDED DECEMBER 31, 2016 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2015 OPERATING EXPENSES (Cont'd) Customer Accounts Expense Meter Reading Collection Other Employee Benefits Uncollectible Accounts Customer Services Meetings and Training Total Customer Accounts Expense Sales Expense Salaries Conservation Total Sales Expense Administrative and General Supervision and General Salaries Office Supplies Outside Services Employed Property Insurance Medical Insurance Other Employee Benefits Regulatory Commissioners Salaries Travel Miscellaneous Maintenance of General Plant Total Administrative and General Depreciation Contribution to City of Hutchinson Payment in Lieu of Taxes Total Operating Expenses Operating Income (Loss) 43 2016 2015 Over (Under) Budget Actual Budget Actual $ 17,453 $ 21,319 $ 3,866 $ 19,029 123,757 119,483 (4,274) 116,008 11,861 11,861 8,033 6,750 15,246 8,496 3,811 45,558 33,876 (11,682) 40,514 2,250 (2,250) 353 195,768 201,785 6,017 187,748 17,747 17,747 16,589 135,164 80,475 (54,689) 57,067 135,164 98,222 (36,942) 73,656 139,183 144,361 5,178 151,930 74,250 91,656 17,406 82,789 26,769 38,953 12,184 35,353 78,750 63,349 (15,401) 72,711 221,159 217,807 (3,352) 239,950 213,750 281,219 67,469 211,910 22,500 14,796 (7,704) 19,082 11,877 12,496 619 11,877 8,100 2,183 (5,917) 3,035 69,750 40,889 (28,861) 44,093 35,137 30,179 (4,958) 38,052 901,225 937,888 36,663 910,782 1,056,000 1,001,952 (54,048) 1,008,133 406,252 406,252 206,980 10,792,451 9,043,923 (1,748,528) 9,134,516 2,776,017 2,314,289 (461,728) 2,206,981 43 HUTCHINSON UTILITIES COMMISSION DETAILED SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION BUDGET AND ACTUAL - NATURAL GAS DIVISION YEAR ENDED DECEMBER 31, 2016 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2015 2016 2015 Over (Under) Budget Actual Budget Actual NONOPERATING REVENUES (EXPENSES) Interest Income Merchandise and Contract Work, Net Miscellaneous Income Gain (Loss) on Disposal of Assets Bond Premium Interest Expense Total Nonoperating Revenues (Expenses) Change in Net Position NET POSITION, BEGINNING OF YEAR, AS ORIGINALLY STATED PRIOR PERIOD ADJUSTMENT NET POSITION, BEGINNING OF YEAR, AS RESTATED NET POSITION, END OF YEAR $ 57,500 $ 4,186 $ (53,314) $ 15,978 27,000 29,206 2,206 56,008 271,227 271,227 28,316 20,379 20,379 185,608 185,608 185,608 (781,700) (780,294) 1,406 (821,929) (511,592) (269,688) 241,904 (536,019) $ 2,264,425 2,044,601 $ (219,824) 1,670,962 19,004,464 19,004,464 $ 21,049,065 18,245,093 (911,591) 17,333,502 $ 19,004,464 This page intentionally left blank COMPLIANCE SECTION This page intentionally left blank CDS CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS INDEPENDENT AUDITOR'S REPORT ON MINNESOTA LEGAL COMPLIANCE Members of the Hutchinson Utilities Commission Hutchinson, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States the financial statements of Hutchinson Utilities Commission, a fund of the City of Hutchinson, Minnesota, as of and for the year ended December 31, 2016, and the related notes to the financial statements, and have issued our report thereon dated May 24, 2017. The Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minn. Stat. § 6.65, contains seven categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing. Our audit considered all of the listed categories, except that we did not test for compliance in tax increment financing because Hutchinson Utilities Commission does not have any tax increment financing. In connection with our audit, nothing came to our attention that caused us to believe that the Commission failed to comply with the provisions of the Minnesota Legal Compliance Audit Guide for Political Subdivisions. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the Commission's noncompliance with the above referenced provisions. The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and not to provide an opinion on compliance. Accordingly, this communication is not suitable for any other purpose. CONWAY, DEUTH & SCHMIESING, PLLP Certified Public Accountants Litchfield, Minnesota May 24, 2017 45 Members: American Institute of Certified Public Accountants, Minnesota Society of Certified Public Accountants Willmar Office 331 Third St SW, Ste 2 PO Box 570 Willmar, MN 56201 P (320) 235-3311 T (888) 388-1040 Benson Office Morris Office 1209 Pacific Ave, Ste 3 401 Atlantic Ave Benson, MN 56215 Morris, MN 56267 P (320) 843-2302 P (320) 589-2602 www.cdscrna.corn Litchfield Office 820 Sibley Ave N Litchfield, MN 55355 P(320)693-7975 St. Ctoud-Sarteil Office Ste 110 2351 Connecticut Ave Sarte(l, MN 56377 P(320)252-7565 T (80 0) 862 -13 37 This page intentionally left blank CDS CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Members of the Hutchinson Utilities Commission Hutchinson, Minnesota We have audited in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Hutchinson Utilities Commission, a fund of the City of Hutchinson, Minnesota, as of and for the year ended December 31, 2016, and the related notes to the financial statements, which collectively comprise the Commission's basic financial statements, and have issued our report thereon dated May 24, 2017. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Commission's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Commission's internal control. Accordingly, we do not express an opinion on the effectiveness of the Commission's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 46 Members: American Institute of Certified Public Accountants, Minnesota Society of Certified Public Accountants Willmar Office 331 Third St SW, Ste 2 PO Box 570 Willmar, MN 56201 P (320) 235-3311 T (888) 388-1040 Benson Office Morris Office 1209 Pacific Ave, Ste 3 401 Atlantic Ave Benson, MN 56215 Morris, MN 56267 P (320) 843-2302 P (320) 589-2602 www.cdscpa.com Litchfield Office 820 Sibley Ave N Litchfield, MN 55355 P(320)693-7975 St. Cloud-SarteR Office Ste 110 2351 Connecticut Ave Sarte(l, MN 56377 P(320)252-7565 T (80 0) 862 -13 37 Compliance and Other Matters As part of obtaining reasonable assurance about whether Hutchinson Utilities Commission's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the Commission's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Commission's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. ", &to. i , PLIs CONWAY, DEUTH & SCHMIESING, PLLP Certified Public Accountants Litchfield, Minnesota May 24, 2017 47 rv�cnixgeN HUTCHINSON UTILITIES COMMISSION Board Action Form �'Tli li54y Agenda Item: Policies Review Presenter: Jeremy Carter Agenda Item Type: Time Requested (Minutes): 5 Review Policies Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: As part of HUC's standard operating procedures, a continual policy review is practiced. This month, the following policies were reviewed: Natural Gas Requirements and Placement, Natural Gas Service Work, and Locating Customer's Underground Utilities - Gas. No changes are recommended on these policies at this time: BOARD ACTION REQUESTED: None Fiscal Impact: Included in current budget: Budget Change: PROJECT SECTION: Total Project Cost: Remaining Cost: Natural Gas Meter Requirements and Placement HUC shall furnish and install the natural gas meter at no charge to the customer. HUC reserves the right to specify the natural gas meter location on all installations. All meters must be located on an external wall of the building, at a horizontal distance of no less than 3 feet from fresh air intakes, windows or door openings. New construction natural gas meters must be located within 10 feet of the electric meter in the event HUC is providing both services. Access to all natural gas meters shall not be obstructed. Natural gas meters shall be located in ventilated spaces readily accessible for examination, reading, replacement or necessary maintenance. Decks, porches, etc. shall not be constructed over a natural gas meter. Natural gas meters shall not be located where they will be subject to damage, such as adjacent to a driveway or other locations subject to vehicular traffic, in public passages, where they will be subject to excessive corrosion or vibration or in areas subject to ice and snow damage. Natural gas meters shall not be installed directly beneath external stairways. Natural gas meters shall not be located where they will be subjected to extreme temperatures or sudden extreme temperature changes (e.g., air ducts, dryer vents). Manufacturer's installation specifications shall be adhered to when installing fresh air intake and exhaust terminations near natural gas metering facilities. Natural gas regulators shall be located - no less than 3 feet from any source of ignition or any source of heat that may damage the facilities. HUC requires a minimum of a 3 -foot clear zone in front of the natural gas meter. Reasonable care must be taken to protect all metering facilities when remodeling, roofing, painting, etc. In the event of damage to the natural gas facilities, the customer shall be responsible for the cost of repairing or replacing the natural gas facilities. Conditions may exist which may require additional restrictions or distances (e.g. multiple meters, etc.). Please contact HUC if you should have any questions regarding your natural gas metering facilities. Modifications made to the customer's metering facilities, necessitated by customer changes, shall be performed by HUC, at the customer's expense. All natural gas service lines retired due to building demolition, overbuilding, etc. shall be retired at the customer's expense. Quotes to be provided when requested by customer. All exceptions require the approval of HUC prior to the start of construction. If violations or deviations are determined, the customer shall be responsible for the cost of the correction. Single Family Dwellings HUC shall provide natural gas to residential customers at the standard delivery pressure of 7 inches of water column, measured at the inlet to the natural gas meter. All residential natural gas metering facilities shall be located on the side of the home within 6 feet of the front building wall. Front building wall is defined as the wall nearest the street of the resident's living space. Multi-Familv Dwellinas/Multiple Business Establishments Delivery pressures greater than 7 inches of water column, for multi -family and multiple business establishments shall only be allowed by the prior approval of HUC. The customer must provide adequate over -pressure protection for all fuel lines subject to increased delivery pressure. The single metering of multiple -family dwellings, apartment buildings or multiple business establishments within a single building is permitted to the extent that each building is centrally heated. Individual metering is required for all individually heated, single-family private residences and each separately heated, owned and/or operated business. Please contact HUC for specifications regarding meter facilities. Commercial/Industrial Facilities Delivery pressures greater than 7 inches of water column, for commercial and industrial applications, shall only be allowed by the prior approval of HUC. The customer must provide adequate over -pressure protection for all fuel lines subject to increased delivery pressure. Please contact HUC for specifications regarding meter facilities. Natural Gas Service Work HUC personnel shall perform leak investigation and carbon monoxide testing at no charge to the customer. HUC does not perform service work on customer owned facilities. Locating Customer's Underground Utilities HUC shall locate all natural gas underground distribution and transmission facilities up to the meter at no charge to the customer or landowner. HUTCHINSON UTILITIES COMMISSION rv�cnixs� Board Action Form Agenda Item: Approve Policy Changes Presenter: Jeremy Carter Agenda Item Type: Time Requested (Minutes): 5 Review Policies Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: As part of HUC's standard operating procedures, a continual policy review is practiced. Meter Testing - The following revisions to the policy are recommended. BOARD ACTION REQUESTED: Approve Changes Fiscal Impact: Included in current budget: Budget Change: PROJECT SECTION: Total Project Cost: Remaining Cost: Meter Testing HUC shall periodically test all natural gas meters for accuracy and sound mechanical condition. Meters that have an average intest accuracy of 10044, mils ^r m1Y1+ 2% shall be considered accurate. Average accuracy is defined as the average of the open and check flow accuracies. Accounts in which the natural gas meter tests in excess of 102% are subject to a refund. This refund shall be based on the "as found average meter accuracy" and the customer's consumption for the previous six month period. Upon request of the customer, HUC shall test the average accuracy of the natural gas meter. A $40 trip charge may be assessed to all accounts in which the "as found average meter accuracy" is determined to be 10004plus „r mini, 2 102% or less. HUTCHINSON UTILITIES COMMISSION Board Action Form Agenda Item: Discussion on Proposed Pipeline Imbalance Settlement Agreement Presenter: Jeremy Carter Agenda Item Type: Time Requested (Minutes): 10 Unfinished Business Attachments: Yes BACKGROUND/EXPLANATION OF AGENDA ITEM: Hutchinson Utilities staff over the past 18 months has been working towards a resolution on the Natural Gas (NG) pipeline imbalance that occurred between the time periods of January 1st, 2013 - July 31st, 2015. Over this time period, several meetings and correspondence have taken place, a significant amount of data has been calculated, analyzed & reviewed, and corrective actions have been implemented. Based on the amount of time put in by all stakeholders involved in resolving the pipeline imbalance and the comfort level of the calculations, numbers, and resolution discussed, NUPUC has provided HUC with a proposed settlement agreement that states the volume and liability owed by HUC, which was based off original calculations and analysis performance by HUC. The proposed settlement agreement for discussion represents the largest portion of the liability owed by HUC in resolving this item. On-going communication with the other stakeholder involved continues and HUC is optimistic another settlement agreement will be presented in the near future to bring the NG pipeline imbalance to conclusion. BOARD ACTION REQUESTED: Discussion Item Only Fiscal Impact: Included in current budget: Budget Change: PROJECT SECTION: Total Project Cost: Remaining Cost: NATURAL GAS PIPELINE IMBALANCE SETTLEMENT AGREEMENT AGREEMENT, entered into this day of , 2017, by and between Hutchinson Utilities Commission of the City of Hutchinson, Minnesota, (hereinafter "Hutchinson'), and the Public Utilities Commission of the City of New Ulm, Minnesota, (hereinafter "New Ulm"). RECITALS: A. Hutchinson and New Ulm are parties to an Interconnect Agreement dated November 25, 2003, pertaining to an intrastate natural gas pipeline from a point on the Northern Border Pipeline near Trimont, Minnesota, to a point of terminus near Hutchinson, Minnesota. B. Hutchinson and New Ulm are also parties to a Natural Gas Firm Transportation Capacity Agreement dated April 27, 2004, which establishes the rights and responsibilities of Hutchinson and New Ulm with respect to the use of the pipeline to provide natural gas to New Ulm and also to the City of Fairfax, Minnesota. C. The gas provided on the pipeline to New Ulm is measured by meters owned and operated by Hutchinson, as measured by the meter at the New Ulm meter station as described on Attachment A of the Capacity Agreement. For a period time between January, 2013, and July, 2015, the conversion of mass to volume of the gas transmitted through the pipeline, as based upon the readings provided by the meter at the New Ulm meter station, was inaccurate because the meter did not take into account the varying composition of the gas flowing through the meter by adjusting the specific gravity of the gas on a regular basis. D. As a result of the foregoing, New Ulm paid for more natural gas than it actually received, and that in turn resulted in surplus unaccounted for gas remaining in the pipeline. E. The undersigned desire to resolve New Ulm's respective claims for overpayment of gas transported through the pipeline as described above during the period between January, 2013, and July, 2015, under the terms and conditions set forth below. NOW, THEREFORE, for good and valuable consideration, including the mutual covenants contained herein, it is hereby stipulated and agreed as follows: 1. The Recitals are incorporated into this Agreement. 2. Hutchinson shall pay to New Ulm the sum of $1,298,645.98, representing 317,404 dekatherms of natural gas paid for but not used by New Ulm. 1 2. Hutchinson shall pay this amount to New Ulm within 60 days from the date the last party signs this Agreement. 3. New Ulm hereby fully and forever releases and discharges Hutchinson from any and all liability, claims and damages for the overpayment by New Ulm for the natural gas delivered to New Ulm, as measured at the New Ulm meter station described on Attachment A of the Natural Gas Firm Transportation Capacity Agreement, for the period between January 1, 2013, through July 31, 2015. 4. The execution of this agreement by the signatories described below confirms the authority of the signatories to sign on behalf of the entity described, and to bind the entity to the terms of this Agreement. Hutchinson Utilities Commission By: Its: Date: City of New Ulm Public Utilities Commission Its: By: Its: Date: Its: Date: Date: 2 a 225 Michigan Street SE Hutchinson Hutchinson, MN 55350-1905 320-587-4746 1 Fax 320-587-4721 Utilitieswww.hutchinsonutilities.com Commission Putting All of Our Energy into Serving You For more information: Jeremy Carter, General Manager Hutchinson Utilities Commission 320-587-4746 Tobias Sellier, American Public Power Association, 202-467-2927, MediaRelations@PublicPower.org HUTCHINSON UTILITIES COMIVHSSION RECOGNIZED AS A RELIABLE PUBLIC POWER PROVIDER Hutchinson Utilities Commission has earned a Reliable Public Power Provider (RP3)® designation from the American Public Power Association for providing reliable and safe electric service. David Lynch, Assistant Director of Utility Operations at Marquette Board of Light and Power, Michigan and chair of the Association's RP3 Review Panel, presented the designations on May 8 during the Association's annual Engineering & Operations Technical Conference held in San Antonio, Texas. The RP3 designation, which lasts for three years, recognizes public power utilities that demonstrate proficiency in four key disciplines: reliability, safety, workforce development and system improvement. Criteria include sound business practices and a utility -wide commitment to safe and reliable delivery of electricity. Hutchinson Utilities joins more than 220 public power utilities nationwide that hold the RP3 designation. "Utilities that have earned an RP3 designation demonstrate public power's emphasis on achieving leading practices and providing a high level of service to communities," said Lynch. "We are proud to welcome all utilities earning this recognition for the first time and to those renewing their designations." "We're honored to be recognized as a Reliable Public Power Provider," said Dave Hunstad, Electric Transmission/Distribution Manager of Hutchinson Utilities. "Our staff works hard to provide reliable service and RP3 recognizes our commitment to serving the community." The American Public Power Association has offered the RP3 designation for 12 years now. The Association is the voice of not-for-profit, community -owned utilities that power 49 million people in 2,000 towns and cities nationwide. The Association advocates and advises on electricity policy, technology, trends, training, and operations. rv�cnix,pr HUTCHINSON UTILITIES COMMISSION Board Action Form Agenda Item: Approve Requisition Number 007218 Presenter: John Webster Agenda Item Type: Time Requested (Minutes): 3 New Business Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: In conjunction with the City road and trail work taking place on School Rd and Roberts Rd, Hutchinson Utilities has a need to replace the existing valves and piping in place at the School Rd/Roberts Rd intersection. The attached drawing shows the existing piping as well as the proposed piping. The existing 4" valves, both north valve and south valve, are not operating properly, requiring two men and a cheater bar to open or close. Both valves require in excess of 6,000 psi of injection pressure to grease. Typical injection pressure for a 4" valve is 4,000 psi. Hot taps and stops must be performed in order to maintain gas flow into the system from the district regulator station located to the north on School Rd. Polyethylene piping and valving were ruled out due to the requirement to maintain cathodic protection on the coated steel pipe in place to the west and south of this intersection. The Natural Gas Division has $45,000 budgeted for system improvements in 2017. This project does exceed the annual budget. If Hutchinson Utilities chooses to perform this project in 2018 when further budget monies are available the cost will be much higher due to replacing segments of the trail and final restoration costs. BOARD ACTION REQUESTED: Approval of Requisition number 007218 Fiscal Impact: $45,084 Included in current budget: Yes Budget Change: No PROJECT SECTION: Total Project Cost: Approx $49,000 Remaining Cost: Approx $3,000 HUTCHINSON UTILITIES a,w•s commission Q3 CONTRACTING INC 3066 SPRUCE ST LITTLE CANADA, MN 55117 Note: PURCHASE REQUISITION HUTCHINSON UTILITIES COMMISSION 225 MICHIGAN ST SE HUTCHINSON, MN 55301 Phone: 320-587-4746 Fax: 320-587-4721 Description: Rebuild Natural Gas Distribution System - School Rd/Roberts Rd Intersection Date Requisition No. 05/16/2017 007218 Required by: 06/05/2017 Requested by: JWebster Item No. part No. Description Qty Unit Due Date Unit Price Ext. Amount NATURAL GAS DISTRIBUTION SYSTEM REBUILD - LABOR AND EQUIPMENT TO INSTALL (1) 3" BALL VALVE, (2) 4" BALL VALVES, (1) 6" 3 -WAY TEE, TAP AND STOP, (2) 4" 3 -WAY TEES, TAP AND STOP, (1) 3" 3 -WAY TEE, TAP AND STOP, (1) 6" STEEL CUT AND CAP, (2) 4" STEEL, CUT AND CAP, (1) 3" 1 000-00000 STEEL, CUT AND CAP AND UP TO 120' OF 6" STEEL PIPE. TEST NEW PIPING FOR 8 1.00 EA 05/16/2017 $45,084.000 $45,084.00 HOURS. PURGE EXISTING RETIRED PIPE, FOAM AND RETIRE IN PLACE. RESTORATION TO INCLUDE LEVELLING ONLY, FINAL RESTORATION BY OTHERS. NDT NOT REQUIRED. PIGGING NOT REQUIRED. ALL MATERIALS TO BE PROVIDED BY HUTCHINSON UTILITIES Total $45,084.00 Date Printed: 05/18/2017 Requisitioned By: JWebster Page: 1/1 _ City of Hutchinson -- School Road Gas Relocation cv.4pOR May 16, 2017 Bid Proposal Scope: The installation/relocation of Gas main and valves in the NW corner of Roberts Road and School Road per drawing (exhibit A). Including testing, tapping of all tees, and four abandonments. All work to be done per Hutchinson Utility Operations and Maintenance Manuals. Pigging has been excluded per the City. Clarifications/Exceptions: • Michels will backfill, tamp and level off excavated area. All final restoration, soft and/or hard surface is to be done by others. • City to supply backfill material to replace that which will be removed via hydro -vac. • Any lost time due to situations beyond our control (i.e. material delivery delays, material shortage, site readiness, construction traffic congestion, etc.) will be completed on a T&E basis. • Our proposal is based on exhibits A & B. • Bid price does not include GPS as built coordinates or survey grade as built documents. • Bid price is based on a single mobilization and demobilization from site. Lump Sum: $47,990.00 t� 'WINK AM FAO; May 15, 2017 John Webster Field Engineer Hutchinson Utilities RE: Steel Valve Replacement Dear Mr. Webster, NPL to mobilize and install new bypass line and valves,@ Roberts Road and School Street. Weld in 1=3", 2=4" and 1=6" stops to replace vales. NPL to tap and stop all except 6" stop will be done by USDI. Crew cost for Project $49,860 USDI Tap $9,890 All materials to be provided by Hutchinson Utilities. Price does not include restoration. Please contact me with any questions. Regards, Michael Theis NPL Construction Company This Proposal Includes: "Labor and equipment to install up to (1) 3" ball valve, (2) 4" ball valves, (1) 6" 3 -way Tee tap and stop, (2) 4" 3 -way tee tap and stop, (1) 3" 3 -way tee tap and stop, (1) 6" steel cut and cap, (2) 4" steel cut and cap, (1) 3" steel cut and cap, and up to 120' of 6" steel pipe. 'Utility exposures. 'Concrete curb removal and disposal. 'Dumping of hard surface at a site provided and designated by Hutchinson Utilities. 'Restoration to include levelling only; final restoration by others. `Test with air for 8 hours. `Traffic Control. `Purge existing pipe, foam, and leave in place. This Proposal Does Not Include: 'Any bonding, licensing, or permits for project. `AII materials, including coating; to be provided by Hutchinson Utilities. "NDT; not required. `Pigging; not required. 'Location or repair of any damaged private underground utilities from system installation not located through the Gopher State One Call System. 'Installation in rock; if rock is encountered, additional pricing will need to be negotiated. 'Soft/Hard surface restoration; provided by Hutchinson Utilities. k to be completed under the provisions of this proposal shall be done in a workmanlike manner according to standard practices. Any alterations or ons from the above specifications resulting in extra costs, will be executed only upon written orders, and shall result in an extra charge over and the estimated cost contained herein. All agreements are contingent upon strikes, accidents, and delays beyond the control of Q3 Contracting. The prices, specifications, and terms and conditions on the front and back of this agreement are hereby accepted. Payment will be made as outlined Name/Title: Date of Acceptance: Q3 Contracting, Inc. 3066 Spruce Street Little Canada, MN 55117 Telephone: 651-365-7390 Primorio Sarvicaa corporation Fax: 651-224-2220 Gla Contracting Quote By: Taylor Schieck Proposal Submitted To: John Webster Proposal Date: 5116117 Hutchinson Utilities 320-583-9323 Jwebster(o)ci.hutchi nson. mn. us Project Location: Hutchinson, MN Any changes will be accompanied by a signed i£ approved Change Order. All payments are Project Description: Steel Tap Work on a net 30 basis. Item # Item Description UniUMeasure I Est. Quantity Total 1 Steel Tap Work Lump Sum 1 $45,084.00 *This proposal is subject to the negotiation of mutually acceptable terms and conditions. This Proposal Includes: "Labor and equipment to install up to (1) 3" ball valve, (2) 4" ball valves, (1) 6" 3 -way Tee tap and stop, (2) 4" 3 -way tee tap and stop, (1) 3" 3 -way tee tap and stop, (1) 6" steel cut and cap, (2) 4" steel cut and cap, (1) 3" steel cut and cap, and up to 120' of 6" steel pipe. 'Utility exposures. 'Concrete curb removal and disposal. 'Dumping of hard surface at a site provided and designated by Hutchinson Utilities. 'Restoration to include levelling only; final restoration by others. `Test with air for 8 hours. `Traffic Control. `Purge existing pipe, foam, and leave in place. This Proposal Does Not Include: 'Any bonding, licensing, or permits for project. `AII materials, including coating; to be provided by Hutchinson Utilities. "NDT; not required. `Pigging; not required. 'Location or repair of any damaged private underground utilities from system installation not located through the Gopher State One Call System. 'Installation in rock; if rock is encountered, additional pricing will need to be negotiated. 'Soft/Hard surface restoration; provided by Hutchinson Utilities. k to be completed under the provisions of this proposal shall be done in a workmanlike manner according to standard practices. Any alterations or ons from the above specifications resulting in extra costs, will be executed only upon written orders, and shall result in an extra charge over and the estimated cost contained herein. All agreements are contingent upon strikes, accidents, and delays beyond the control of Q3 Contracting. The prices, specifications, and terms and conditions on the front and back of this agreement are hereby accepted. Payment will be made as outlined Name/Title: Date of Acceptance: GENERAL TERMS AND CONDITIONS 1. PAYMENT TERMS The Contractor agrees to pay Q3 for satisfactory performance of Contractor's work a sum equal to that found on the opposite side of this document in the project total box or per unit prices listed Said work will be paid by the Contractor net 30 days from receipt of Q3's invoice if Contractor fails to pay Q3 when payment is due, the Contractor shall pay interest to Q3 at the rate of 1.5% per month (18% annually) beginning on the 31st day after payment is due. 2. SCOPE OF WORK. Q3 agrees to furnish all labor, materials, supervision, and other facilities required to do a completely integrated job in accordance with the items described on the opposite side of this document. 3. SCHEDULE OF WORK. Time is of the essence. Q3 shall provide Contractor with any requested scheduling information of Q3's work A Schedule of Work shall be prepared by the Contractor and may be revised as the Work progresses. Q3 recognizes that reasonable changes may be made in the Schedule of Work and agrees to cooperate with the Contractor to accommodate these changes. Q3 shall coordinate its work with all other subcontractors, and suppliers on the Project so as not to delay or damage their performance, work, or the Project. 4. CHANGES. Contractor, without nullifying this Agreement, may request Q3 in writing to make changes to Q3's Work. Adjustments in the scope of work, the negotiated price and/or in contract time resulting from such changes shall be set forth in a Change Order pursuant to the Q3 Proposal. 5. FAILURE OF PERFORMANCE. Should Q3 fail to satisfy contractual deficiencies within ten (10) working days from the receipt of Contractor's written notice, then the Contractor shall have the right to terminate this agreement Neither party will be liable for its failure to perform under this agreement if such failure arises out of causes beyond their control and without fault or negligences of such party. 6. INSURANCE. Prior to the acceptance of this contract, Q3 shall procure and maintain in force for the duration of this contract, Workers Compensation Insurance (at statutory levels), Comprehensive Automobile Liabilty Insurance (not less than $1,000,000 per occurrence) and Comprehensive General Liability Insurance (not less than $1,000,000 per occurrence and not less than $2,000,000 in aggregate). Contractor shall be named as additional insureds on each of these policies, except for Worker's Compensation. 7. INDEMNIFICATION. Each party (the "Indemnifying Party") shall indemnify, defend, and hold harmless the other party and its affiliates and subcontractors of any Ger, and the directors, officers, employees, agents of each from and against any claim, demand, action, fine, penalty, liability, judgment, loss, damage, injury, cost and expense, (including reasonable attorneys fees) resulting from (a) injury to or death of any person, or (b) damage to or loss or destruction of any real or tangible personal property, to the extent such claims are caused by the negligence or intentional misconduct of the Indemnifying Party. 8. WARRANTY. The Contractor warrants its work against deficiencies and defects in workmanship and agrees to satisfy same for a period of twelve (12) months from the date of work completion. 9. MUTUAL WAIVER OF CONSEQUENTIAL DAMAGES. The parties waive all claims against each other for any consequential. ncidental. special, exemplary, or punitive damages (including but not limited to, loss of actual or anticipated profits, revenues or product; loss by reason of shutdown or non -operation; increased expense of manufacturing, operation, borrowing or financing; loss of use, productivity or shop space, or increased cost of capital), and regardless of whether any such claim arises out of breach of contract, guarantee or warranty, tort (including negligence and professional negligence), product liability, indemnity, contribution, strict liability or any other legal theory. 10. SAFETY. Q3, its agents, employees, materialmen, and subcontractors will perform all work on the project in a safe and responsible manner, in particular. Q3 shall comply will all specific safety requirements promulgated by any government authority, including without limitation the requirements of the Occupational Safety and Health Act of 1970. the Construction Safety Act of 1969 and all standards and regulations which have been or shall be promulgated by the party's or agency's employees, materialmen and subcontractors, and shall directly receive, respond to, defend. and be responsible for all citations, assessments. fines or penalties. 11. AGREEMENT TERMINATION. If the Customer should breach any provision of this Agreement, become insolvent, cease doing business, or commit an act of bankruptcy. or if Q3 deems itself insecure, Q3, at its option and in addition to and without prejudice to any other remedies, may terminate the Agreement 12. NO WARRANTIES. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, Q3 MAKES NO OTHER EXPRESS OR IMPLIED WARRANTIES REGARDING THE WORK, AND ANY REPAIR OR REPLACEMENT THEREOF, EXCEPT AS SET FORTH IN SECTIONS. AND THE PARTIES HERBY DISCLAIM ANY IMPLIED WARRANTIES OR WARRANTIESREGARDING THE WORK, AND ANY REPAIR OR REPLACEMENT THEREOF, IMPOSEDBY LAW, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND ALL WARRANTIES ARISING FROM COURSE OF DEALINGOR USAGE OF TRADE, WHICH ARE HERBY DISCLAIMED AND WHICH SHALL HAVE NO EFFECT UNDER THIS AGREEMENT. Correction of nonconformites in the manner and for the period of time provided above consitute Q3's sole and exclusive liability and Contractor's sole and exclusive remedy for defective or nonconforming Work whetherclaims of the Contractor are based in contract, in tort (including negligence and strictliability) or any other theory of recovery 13. ENFORCEMENT AND ATTORNEYS' FEES. Q3's failure at any time to require strict performances by the Customer of any provisions hereof, shall not waive or diminish Q3's right to demand strict compliance therewith or with any other provision. Waiver of any defaults shall not waive any other default Should it become necessary that Q3 employ an attorney to enforce any of the provisions of this Agreement, to take possession of any of the equipment, or to recover any sum of money due hereunder, Q3 shall be entitled to recover such reasonable Attorneys' fees and expenses as shall be incurred in connection therewith. 14. GOVERNING LAW AND VENUE. This Agreement shall be governed by the laws of the State of Minnesota and will be considered performable in - Ramsey County Minnesota for venue purposes. Further, the customer and Q3 stipulate that the exclusive venue for any legal proceeding involving or touching upon the Agreement or the equipment rented shall lie exclusively in - Ramsey County. Minnesota 15. ENTIRE AGREEMENT. This document contains the entire and final agreement between the panties. Q3's rights hereunder are cumulative and not alternative No representations, warranties, promises, guarantees, or agreements, oral or written. express or implied, have been made by either party thereto with respect to this Agreement, except as expressly provided herein. This Agreement may only be modified in writing, signed by the parties. 16. ARBITRATION. All claims, disputes and other matters in question arising out of or relating to this Agreement, or the breach thereof, may, at Q3's sole option, be decided by litigation or arbitration. If Q3 selects arbitration, it shall be conducted in accordance with the construction industry arbitration rules of the American Arbitration Association then in effect and held in Ramsey County, Minnesota QTs election to arbitrate shall be a specifically enforceable agreement to arbitrate. The award rendered by the arbitrators shall be final and conclusive, and judgment may be entered upon it in accordance with the applicable law in the Court having jurisdiction thereof 17. COMPLIANCE WITH LAWS. Customer agrees to comply with and conform to all laws and regulations of any government of public body having jurisdiction relating to the maintenance, use, inspection, operation, storage, erection, dismantling servicing or transportation of Equipment. Customer agrees to assume full responsibility, and indemnify and hold harmless Q3 for any and all losses, damages. expenses, fines. forfeitu as seizures, confiscations, and penalties arising out of the vio ation of any such laws and regulations. In the event that any law or regu ation shall require the installation of any additional Equipment or accessories, inc,udmg but not limited to, safety devices, or if any modification to Equipment is required by law or regulation, Customer agrees to pay the full cost thereof, including installation expenses, and the cost of restoring equipment to its original configuration, if required by Q3. EXHIBIT B THE WEST BOUND LANE OF ROBERTS MOST CERTAINLY BE CLOSED FOR CONSTRUCTION ON A TEMPORARY BASIS I DO NOT SEE A NEED TO DIRECTION BORE UNDER SCHOOL RD AS ALL OF THE WORK CAN BE COMPLETED IN THE NORTHWEST CORNER OF THE INTERSECTION THERE WILL BE NO NEW CONFLICTS IN THE NORTHWEST CORNER OF THE INTERSECTION OPERATING PRESSURE OF NEW FACILITIES WILL BE 25 PSIG NEW FACILITIES TO BE TESTED TO 100 PSIG WITH AIR FOR 8 HOURS PIGGING NOT REQUIRED DUE TO SHORT RUNS OLD PIPE MAY BE PURGED AND FOAMED IN PLACE FINAL RESTORATION WILL BE ACCOMPLISHED BY HUTCHINSON UTILITIES, ONCE INITIAL RESTORATION TAKES PLACE BY CONTRACTOR CONTRACTOR MAY PROVIDE HUTCHINSON UTILITIES WITH APPROPRIATE EXISTING QUALIFICATION, OR MAY QUALIFY TO APPENDIX C AT HUTCHINSON UTILITIES CONTRACTOR TO PROVIDE ANTI-DRUG AND ALCOHOL PROGRAM WITH EVIDENCE THAT EMPLOYEES ON JOB ARE PARTICIPANTS CONTRACTOR TO PROVIDE OPERATOR QUALIFICATION PROGRAMS AND RECORDS FOR EACH EMPLOYEE ON JOB, HUTCHINSON UTILITIES WILL REVIEW FOR COMPLETENESS AND COMPLIANCE COATING ON NEW FACILITIES WILL BE FBE WITH POWERCRETE OVERLAY EXISTING FACILITIES AT SUFFICIENT DEPTH TO ALLOW INSTALLATION OF TD WILLIAMSON 3 -WAY TEES. ALL FOUR 3 -WAY TEES TO BE TAPPED AND STOPPED SAME DAY DO TO DISTRIBUTION PRESSURE NO NDT REQUIRED ALL MATERIALS TO BE PROVIDED BY HUTCHINSON UTILITIES NO CATHODIC PROTECTION INSTALLATION REQUIRED JOB CONSISTS OF INSTALLATION OF ONE THREE INCH AND TWO FOUR INCH WELD X WELD BALL VALVES SITE FOR HARD SURFACE DUMPING AVAILABLE IN HUTCHINSON HUTCHINSON UTILITIES SHALL PROVIDE OPERATIONS AND MAINTENANCE MANUAL TO CONTRACTOR. I HAVE ENCLOSED A REVISED DRAWING OF PROJECT THAT SHOWS LOCATION OF PIPE IN RELATION TO NEW CURB TO BE INSTALLED ON ROBERTS RD. EXHIBIT A Above Remaining Curb Line Ground Structure All materials 4'-0• supplied by Hutchinson Utilities. ry .lL, — — O O 30' 34' S A /U^ I \y l Field Flt v , 3'-0' 3'-11' IS' -I1' 33 i' 3'-0' 9'-7' New Curb Line 5'-]0' Roberts Rd, School Rd South - Roberts Rd. SHEET DATE, 04-28-17 LAYOUT —J,*. C.b. k. HUC-NG017-20 HUTCHINSON UTILITIES Above Remaining Curb Line Ground N Structure Tap and Stop 6" T.D. Williamson 3 -Way Tee Tap and Stop 3" T.D. Williamson n a 3 -Way Tee Cnp 39• Tap and Stop \30, 4" T.D. Williamson rein rpt 3 -Way Tee Cut 3'-11• a Cnp 1s' -v 33• Cut and Cnp 9'-7• O 0 3._0. S New Curb Line U All materials supplied by Hutchinson s•-�o• Utilities. z Roberts Rd, ap and Stop 4" T,D, Williamson 3 -Way Tee School Rd South - Roberts Rd, SHEET DATE 04-28-17 LAYOUT HUC-NG017-20 1 HUTCHINSON UTILITIES SCHOOL RD/ROBERTS RD NATURAL GAS REPLACEMENT PROJECT THE WEST BOUND LANE OF ROBERTS RD MOST CERTAINLY MAY BE CLOSED FOR CONSTRUCTION ON A TEMPORARY BASIS I DO NOT SEE A NEED TO DIRECTIONAL BORE UNDER SCHOOL RD AS ALL OF THE WORK CAN BE COMPLETED IN THE NORTHWEST CORNER OF THE INTERSECTION THERE WILL BE NO NEW CONFLICTS IN THE NORTHWEST CORNER OF THIS INTERSECTION OPERATING PRESSURE OF NEW FACILITIES WILL BE 25 PSIG NEW FACILITIES TO BE TESTED TO 100 PSIG WITH AIR FOR 8 HOURS PIGGING NOT REQUIRED DUE TO SHORT RUNS OLD PIPE MAY BE PURGED AND FOAMED IN PLACE FINAL RESTORATION WILL BE ACCOMPLISHED BY HUTCHINSON UTILITIES, ONCE INITIAL RESTORATION TAKES PLACE BY CONTRACTOR CONTRACTOR MAY PROVIDE HUTCHINSON UTILITIES WITH APPROPRIATE EXISTING WELDER QUALIFICATION, OR MAY QUALIFY TO APPENDIX C AT HUTCHINSON UTILITIES CONTRACTOR TO PROVIDE ANTI-DRUG AND ALCOHOL PROGRAM WITH EVIDENCE THAT EMPLOYEES ON JOB ARE PARTICIPANTS CONTRACTOR TO PROVIDE OPERATOR QUALIFICATION PROGRAMS AND RECORDS FOR EACH EMPLOYEE ON JOB, HUTCHINSON UTILITIES WILL REVIEW FOR COMPLETENESS AND COMPLIANCE COATING ON NEW FACILITIES WILL BE FBE WITH POWERCRETE OVERLAY EXISTING FACILITIES AT SUFFICIENT DEPTH TO ALLOW INSTALLATION OF T.D. WILLIAMSON 3 -WAY TEES. ALL FOUR 3 -WAY TEES TO BE TAPPED AND STOPPED SAME DAY DO TO DISTRIBUTION PRESSURE NO NDT REQUIRED ALL MATERIALS TO BE PROVIDED BY HUTCHINSON UTILITIES NO CATHODIC PROTECTION INSTALLATION REQUIRED JOB CONSISTS OF INSTALLATION OF ONE THREE INCH AND TWO FOUR INCH WELD X WELD BALL VALVES SITE FOR HARD SURFACE DUMPING AVAILABLE IN HUTCHINSON HUTCHINSON UTILITIES SHALL PROVIDE OPERATIONS AND MAINTENANCE MANUAL TO CONTRACTOR. I HAVE ENCLOSED A REVISED DRAWING OF PROJECT THAT SHOWS LOCATION OF PIPE IN RELATION TO NEW CURB TO BE INSTALLED ON ROBERTS RD. $��„��sa' HUTCHINSON UTILITIES COMMISSION Board Action Form e„ r,Vs Agenda Item: Approve Engagement Letter for a Cost of Service & Rate Design Study Presenter: Jeremy Carter Agenda Item Type: Time Requested (Minutes): 10 New Business Attachments: Yes BACKGROUND/EXPLANATION OF AGENDA ITEM: On Monday May 1st HUC submitted a RFP for a Cost of Service and Rate Design Study for the Electric and Gas Divisions to seven firms. Of those seven firms, three declined to submit a proposal because of the current workload already committed to for 2017. On May 8th the sub-committee met to discuss the proposals. Four firms did provide proposals. See the summary below: Firm #1 - Only bid an Electric Cost of Service and Rate Design Study, could meet the time frame in the RFP, Cost $240,335. Firm #2 - Only bid an Electric Division Cost of Service & Rate Design Study, Start time was November 2017 with completion Spring of 2018, Cost - $12,000 plus additional fees for attendance at additional rate hearing meetings. Firm #3 - Bid Both Electric and Gas Cost of Service & Rate Design Study, could meet the time frame in the RFP, Cost - $25,000 plus additional fees for additional requests/services estimated at $500. Firm #4 - Bid Both Electric and Gas Cost of Service & Rate Design Study, could meet the time frame in the RFP, Cost - $34,800, plus additional fees estimated at $2,750. BOARD ACTION REQUESTED: The sub-committee recommends approving Firm #4, Utility Financial Solutions to complete the COS/Rate Design Study. Fiscal Impact: 2017 Budget - $40,000 Included in current budget: Yes Budget Change: PROJECT SECTION: Total Project Cost: $37,550 Remaining Cost: "�Z�a Utility Financial Solutions, LLC May 12, 2017 Mr. Jeremy Carter, General Manager Hutchinson Utilities Commission 225 Michigan Ave, Hutchinson, MN 55350-1905 Dear Mr. Carter, It is a pleasure to submit this engagement letter to provide a cost of service and rate design study for the electric and gas department of Hutchinson Utilities Commission. Scope of Services Summary of Services — Applicable to both Electric and Gas utilities, unless otherwise noted 1. Five Year Financial Projection that includes the following: a. Determination of Revenue Requirements for each year b. Projected operating revenues c. Projected gas & transportation cost/sales d. Development and identification of financial targets related to the following: i. Debt Coverage Ratio ii. Minimum Cash Reserves iii. Operating Income e. Identification of long-term rate track to maintain financial stability of utility and minimize the potential rate impacts on customers 2. Development of Cost of Service Study that identifies the following: a. Comparison of cost to provide service to each class with projected revenues b. Identification of potential new rate classes based on load characteristics c. Monthly customer charges for each class of customers d. Transmission delivery charges — Electric e. Transportation and supply charges - Gas f. Distribution delivery charges g. Power supply charges - Electric h. Seasonality of costs i. Identification of fixed and variable costs including the following broken out by season: i. Total demand related costs - Electric ii. Total energy related costs - Electric iii. Monthly customer related costs j. Identification of costs based on voltage level of customers - Electric i. Transmission level customer ii. Primary metered customer iii. Secondary metered customer Page 1 of 3 3. Rate Design (One year included, additional years if requested) a. Development of rates to move classes closer to cost of service b. Development of rates to move components of rates closer to cost of service c. Identification of Impacts of rate changes by classes considering the following: i. Percentage impacts at various usage levels ii. Dollar impacts at various usage levels iii. Percentage impacts for demand rate classes based on load factors Identification of overall rate impacts on customers 4. Review of Power Cost Adjustment and Fuel Cost Adjustment a. Discuss with staff and Council the positives and negatives of current PCA and FCA b. Discuss a potential recommended changes to each adjustment that achieves two objectives: i. Minimizes month to month or year to year changes in PCA/FCA to reduce potential complaints from customers ii. Maintains the longterm financial strength of electric and gas utilities 5. Presentation to Staff and Commission c. Review results and assumptions d. Development of appropriate financial targets e. Obtain input and feedback on rate track and rate designs including: i. Overall rate change for each year ii. Customer charges iii. Review of seasonality of rates f. Discussion of overall goals and objectives of management and Council including: i. Energy and Gas conservation ii. Economic development iii. Distributed generation customers - Electric iv. Other considerations in rate design 6. Reports g. Executive summary report discussing the following: i. Financial projection results and rate adjustment to achieve financial targets ii. Cost of service results for each rate class iii. Assumptions used in development of study iv. Recommendations on rate track, movement toward cost of service, financial targets, others as identified h. Second report on rate design after input from staff and Commission i. Proposed rate design for each rate class ii. Rate impacts on each customer class iii. Rate impacts at various levels of usage for each rate class Page 2 of 3 Professional Services Agreement Payment will be made through submission of progressive invoices. Electric COS, Financial Projection and One -Year Rate Design $19,900 Gas COS, Financial Projection and One -Year Rate Design $14,900 (*Total above does not include out of pocket travel expenses or travel time) Anticipated Meetings: • Initial meeting — Conference Call to clarify scope of services, expectations of management and preliminary information request • Fieldwork — Conference Call to Deliverables for Gas and Electric: 1) Long-term financial projection and rate track (PDF report) 2) 3) verify data provided 4) • Draft Report with management - Conference 5) call 6) • Final Report at Commission Meeting — On -Site Cost of Service Analysis (PDF report) Minimum cash reserve determination (PDF report) Debt Service Ratio (PDF report) Target operating income — ROR (PDF Report) Review of PCA and FCA— (discussion or PDF report) 7) One-year rate design & revenue proof (PDF re ort) Hourly Rates (travel is discounted at 50%) p Mark Beauchamp $ 295.00 Dawn Lund $ 250.00 Dan Kasbohm $ 230.00 Out of Scope Services — on-site and travel expenses All on-site visits will be billed at actual Mike Johnson $ 230.00 out of pocket expenses — plus travel time Chris Lund $ 195.00 discounted at 50% of regular rates. In addition, Joan Bakenhus $ 135.00 out of scope service work hours are billed at the Support Staff $ 105.00 — 130.00 hourly rates listed on this page. All cost incurred by schedule changes initiated by client after booking will be considered out of pocket. We look forward to exceeding your expectations. Please sign, date, and return to clund@ufsweb.com at your earliest convenience. Sincerely, Date: Dawn Lund Vice -President, Utility Financial Solutions, LLC Acce Date: Acce Page 3 of 3 EMPLOYMENT AGREEMENT This AGREEMENT made and entered into this day of , 2017, by and between Hutchinson Utilities Commission (HUC), an enterprise fund of the City of Hutchinson, a municipal corporation under the laws of the State of Minnesota (herein Employer) and Jeremy J. Carter (herein Employee) and collectively referred to as the Parties. Employee is currently employed by Employer and it is the desire of the Parties to enter into this employment agreement which is a successor to the current agreement between the parties. Therefore, the parties agree as follows: 1. POSITION. Effective , 2017, the Employer does hereby employ Employee as its General Manager to perform all the duties and obligations of the General Manager position as set forth in the job description incorporated herein and attached hereto as Exhibit "A," and in accordance with the HUC by- laws, state statutes, City of Hutchinson Charter, and policies, and to perform such other legally permissible and proper duties and functions as the Employer shall from time to time assign. 2. SALARY. Employer shall pay Employee a salary of $ 5766.00 each bi-weekly pay period or an annual equivalent of $ 149,940.00 as of date of this agreement. The Employer agrees to consider an increase in compensation to the Employee dependent upon the results of an annual performance evaluation. Salary increases are subject to the provisions of the Compensation Plan section of the HUC Exempt Employee Handbook. 3. NON -COMPETE. Employee specifically acknowledges that Employer has a vested interest in protecting the good will Employer has established with its customers within and without the City of Hutchinson. Employee therefore agrees that in order to protect Employer's customers good will, Employee will not accept or engage in any employment that directly or indirectly competes with the products or services of Employer within the service area of the Employer's operations, including Employer's natural gas pipeline, for a period of two (2) years after leaving employment with Hutchinson Utilities Commission. Employee specifically acknowledges that $1,000.00 of his annual salary is designated as consideration for this non -compete provision by initialing here , and that this amount is sufficient consideration to support this provision. 4. PENSION. The Employer and Employee shall contribute to PERA as required by State law for Employee. 5. PERFORMANCE EVALUATION. Performance reviews will be conducted annually or more frequently as determined necessary by the Employer. The process, form, criteria, and format for the evaluation will be mutually agreed upon by Employer and Employee. 6. VACATION LEAVE. Effective on the first day of this agreement, Employee will be granted the current accrued balance of vacation leave he has accumulated with employer. In addition, the Employee shall accrue vacation leave in accordance with the HUC Exempt Employee Handbook and be credited with 10 years employment on the vacation accrual schedule. Employee, at his option, may carry over unlimited hours of accrued vacation from year-to-year. 7. SICK LEAVE. Effective on the first day of this agreement, Employee will be granted the current accrued balance of sick leave he has accumulated with Employer. Employee shall subsequently accrue sick leave, use sick leave, and be eligible for sick leave payback/payout as provided in the HUC Exempt Employee Handbook. 8. OTHER LEAVE. Employee shall be eligible for other leaves as provided by law or as provided in the HUC Exempt Employee Handbook. 9. HOLIDAYS. Employee is eligible for holiday pay per the provisions of the HUC Exempt Employee Handbook. 10. COMPENSATORY TIME. Effective on the first day of this agreement, Employee will be granted the accrued balance of compensatory time he has accumulated with Employer. Employee may earn compensatory time on an hour -for -hour basis for all hours worked in excess of 40 hours per week (Sunday - Saturday). Employee must use accrued compensatory time by December 31 of the year in which it is earned or it will be forfeited. Accrued compensatory time is not paid out to Employee upon termination. 11. GENERAL INSURANCE. Employee shall receive in the same manner health, dental, hospitalization, life, disability insurance, health savings account, and any other insurance benefits, provided to the other exempt HUC employees. 12. DEFERRED COMPENSATION. The Employee may continue to participate in the HUC 457 Deferred Compensation Plan. The Employer will not contribute any funds to the plan on behalf of the employee. 13. INTELLECTUAL PROPERTY. Employee agrees to be bound by the Intellectual Property policy as contained in the HUC Exempt Employee Handbook. 14. HOURS OF WORK. Employee will generally be available during regular business hours. It is understood that the position of General Manager requires attendance at evening and weekend meetings as necessary. In recognition of these work demands, Employee shall be allowed to use reasonable flexibility in setting his office schedule. 15. OUTSIDE ACTIVITIES. Employee shall not become an employee of any other entity or party, nor shall he be self-employed, such as a consultant, without first obtaining the written consent of the Employer. 16. DUES AND SUBSCRIPTIONS. Employer shall budget and pay the professional dues and subscriptions for Employee which is deemed reasonable and necessary for Employee's continued participation in national, regional, state and local associations necessary and desirable for Employee's continued professional participation, growth and advancement. 17. PROFESSIONAL DEVELOPMENT. Employer shall budget and pay necessary and reasonable registration, travel and subsistence expenses of Employee for professional and official travel, meetings and occasions adequate to continue the professional development of Employee and to adequately pursue necessary official and other committees thereof which Employee serves as a member. Employee shall use good judgment in his outside activities so he will not neglect his primary duties to the Employer. 18. EDUCATION ASSISTANCE. Employer will provide financial assistance for successful completion of qualifying programs and courses. Tuition, registration fees and other course -related fees may be reimbursed after successful completion of a course. To apply for education assistance, Employee must submit a request to the Employer no fewer than forty-five (45) days prior to registration. The Employer must approve the course, seminar, or program. Only courses that are job-related and provide potential for career advancement with HUC are eligible for reimbursement. The maximum amount of reimbursement will be $6,000 per calendar year. If coursework or tuition exceeds this amount, then Employee will approach the Employer to request a waiver. To request a waiver, the coursework must be directly related to the General Manager position, or if the Employer deems the degree Employee is seeking is beneficial to the Employer. Reimbursement is contingent on receiving a "pass" or minimum grade of "C". Employee must study on their own time. Use of HUC computers is allowed in accordance with the IT policy. Employee must remain employed at HUC for twenty-four (24) calendar months after completion of a course, or must repay HUC all reimbursements received for the course. 19. CIVIC GROUP MEMBERSHIP. Employer recognizes the desirability of representation in and before local civic and other organizations. Employee is authorized to become a member of such civic groups or organizations as deemed appropriate by Employee and Employer; and at Employer's expense. 20. TRAVEL EXPENSES. Employee is subject to the provisions of the Travel Expenses policy included in the HUC Exempt Employee Handbook. 21. GENERAL CONDITIONS OF EMPLOYMENT. Nothing in this Agreement shall prevent, limit or otherwise interfere with the right of Employer to terminate the services of Employee at any time, for any reason, subject only to the provisions of this Agreement and statutory requirements. Furthermore, nothing in this Agreement shall prevent, limit or otherwise interfere with the right of Employee to resign at any time from his position with Employer, subject only to the provisions of this Agreement. 22. EMPLOYEE DISCIPLINE AND TERMINATION BENEFITS. As an employee of HUC, Employee is subject to the progressive discipline policy adopted by employer in the HUC exempt employee handbook and will only be disciplined in accordance with that document. In the event that Employee is terminated by the Employer during such time that Employee is willing and able to perform the duties of General Manager, then in that event, Employer must provide a thirty (30) day notice of the effective date of the termination to Employee, and Employer agrees to pay Employee at the time of receipt of his last pay check termination benefits in a lump sum cash payment equal to four (4) weeks of salary and the accrued vacation balance as of the termination date. However, in the event Employee is terminated because of his malfeasance in office, gross misconduct, conviction for a felony, or conviction for an illegal act involving personal gain to Employee, then Employer shall have no obligation to pay the termination benefits. At minimum, a super majority of the Commission is required to approve termination of the agreement. If Employee resigns following a formal suggestion by Employer that he resign, then Employee may, at his option, be deemed to be "terminated" on the effective date of Employee's resignation and the Employee shall also be entitled to receive the termination benefits set forth above. If Employee voluntarily resigns his position with Employer, Employee agrees to give the Employer thirty (30) days advance notice. If Employee voluntarily resigns his position with Employer, he is entitled to receive only the vacation termination benefits set forth above. 23. MISCELLANEOUS. A. This Agreement shall be governed and construed in accordance with the substantive and procedural laws of the State of Minnesota. B. This Agreement sets forth the entire agreement of the parties and supersedes and renders null and void any and all prior or contemporaneous oral or written understandings, statements, representations or promises. There are no other oral or written agreements between the parties. C. If any provision of this Agreement is later deemed unenforceable, the remaining provisions will continue to be binding, and the arbitrator(s) making such a determination shall also have the limited authority to modify any clause solely in order to render the provision valid under applicable law. 24. DURATION OF AGREEMENT. This agreement shall be effective as of the effective date noted in Section I and shall remain in force and effect unless otherwise terminated per the provisions of this agreement. IN WITNESS WHEREOF, Employer has caused this Agreement to be signed and executed on its behalf by its President and Vice President, and Employee has signed this Agreement, in duplicate, the day and year first written above. EMPLOYER: EMPLOYEE: HUTCHINSON UTILITIES COMMISSION BY: Its President AND Its Vice President