Loading...
11-29-2017 HUCMMINUTES Regular Meeting — Hutchinson Utilities Commission Wednesday, November 29, 2017 Call to Order — 3:00 p.m. President Monty Morrow called the meeting to order at 3:00 p.m. Members present: President Monty Morrow; Vice President Anthony Hanson; Secretary Mark Girard; Commissioner Robert Wendorff; and Commissioner Don Martinez. Others present: General Manager Jeremy Carter; Attorney Marc Sebora. 1. Conflict of Interest There were no conflicts of interest noted. 2. Approve Consent Agenda a. Approve Minutes b. Ratify Payment of Bills Motion by Commissioner Wendorff, second by Commissioner Girard to approve the Consent Agenda. Motion carried unanimously. 3. Approve Financial Statements General Manager Carter and Jared Martig presented the financial statements. General Manager Carter noted that for Combined Divisions we are running similar. October was a mild month. Electric Division was down in usage; 2017 was the lowest it has been in a couple of years. Gas Division on the other hand is up. Transalta through October is running 10% margin on sales compared to 2016 at 12- 13%. HUC also generated more of the sales through October 2017 versus 2016. Power cost adjustment for October was higher than normal. There was a lot of timing issues; higher than normal admin fees, and we had 5 Tuesdays in October which is the weekly day MISO bills HUC. Everything is trending as expected in the Gas Division. General Manager Carter pointed out that on the Cash designation report there is one typo error. The 'Change in Cash Balance' date should be 10/31 and not 9/30. Motion by Commissioner Hanson, second by Commissioner Martinez to approve the financial statements. Motion carried unanimously. 4. Open Forum -none 5. Communication a. City Administrator — Matt Jaunich i. Mr. Jaunich communicated that the City is in the middle of budget. ii. Hotel is still planning to start this year. They are planning on moving dirt this week or next. b. Divisions i. Dan Lang, Engineering Services Manager —nothing to report ii. Dave Hunstad, Electric Transmission/Distribution Manager — all 2017 projects are completed. We are now working on miscellaneous items. iii. Randy Blake, Production Manager — Continuing to work on Generator 6 & 7. On the Work Orders, we decided to push back Plant 1 Alarm Panel Upgrade to add 6 & 7 alarms. Wanted to tell the Commission Board that I really appreciate the Commission recognizing us employees. I have been here for 40 years. President Morrow, Congratulated Randy on his years of service. President Morrow asked Randy how it is to work with CAT. Mr. Blake answered that is going very well and they are easy to work with. HDR has been great to work with also. iv. John Webster, Natural Gas Division Manager -DOT Final Protocol finished this week. Prepaid moving forward, hope to complete in Feb v. Jared Martig, Financial Manager —billing went off well this month. c. Brenda Ewing, Human Resources — Nothing to report d. Legal — Marc Sebora —Update on Pack Gas, I was finally able to make contact with Heartland, and they are having a meeting tomorrow to discuss entering into the agreement. There may be slight verbiage changes but the dollar amount originally discussed would stay the same, hopefully there will be a resolution soon. President Morrow thanked Marc for all the time he has been putting in to this. Commissioner Hanson inquired about City of New Ulm's agreement. Marc replied that agreement is finalized and payment has been received. e. General Manager — Jeremy Carter i. We have been working on our Recognition party for next Friday. ii. Working through Insurance. iii. Following up on Cost of Service study. Should have information next week. Once I have the information I will distribute. Both divisions are looking good from a financial position. iv. When we get in winter months, customers fall in to hard times. We now have 5 agencies in our area to help with assistance. Ladies up front updated the list; Crosspoint is now added to help with assistance. v. Provided Matt Jaunich with revised information on PILOT. He will talk to sub- committee and a follow-up meeting will be scheduled in December. e. Policies a. Review Policies i. Appendix A - Acknowledgement ii. Appendix B — New Employee Acknowledgement iii. Appendix C — Temporary Employee Acknowledgement iv. Appendix D - Acknowledgement v. Landlord Acknowledgement vi. Inserts with Utility Bills vii. Financial Reserve Policy b. Approve Changes 2 After Hours Reconnection Policy —as noted. Commissioner Hanson inquired if our payment options are available on tablets. General Manager Carter confirmed yes. Customers can go to our website and make a payment from any mobile device. Motion by Commissioner Girard, second by Commissioner Martinez, to approve the policy changes as recommended. Motion carried unanimously. f. Unfinished Business a. Update of Pack Gas Discussions General Manager Carter noted there is no new information to report at this time besides what Marc mentioned above. g. New Business a. Approve Charge-offs Mr. Carter and Mr. Martig discussed the Approval of Charge -Offs. This is higher than in past, our collection agency went out of business. We do not feel that we get enough money back to look for a new company. Commissioner Martinez questioned; nothing we could go for businesses to litigate? Mr. Martig replied no. Commissioner Hanson inquired from a collection standpoint is there anything new we should look at. Mr. Carter noted there is Revenue Recapture, if we get personal information, such as social security numbers, however customers are not legally obligated to provide HUC that information. People are getting numb to return calls or calls from collection agencies. Collection agency collections are significantly lower than in years past. We can change our policy with the deposits, and keep deposits on hand longer. However, we may hear customer feedback on that. If customers are good on paying, after a certain period HUC refunds the deposit. However, the policy could be changed to keep a deposit indefinite since we are invoicing and collecting revenue after the fact expenses have already been paid. There are many tenants that skip out on the landlord. Mr. Sebora commented that this has not been our practice but we are able to take people to small claims court, however the commission needs to decide. If we get judgement, we can force people to give us personal information. Mr. Martinez inquired if we normally carry out 8 years. Mr. Martig replied that it is normally 6 years, but some of these have been sitting at collection agencies. Mr. Carter added we keep these on in case money comes in. We can write these off earlier. Mr. Sebora added 6 years is Statute of Limitations. After much discussion, it was decided if there are any other thoughts to please let Mr. Carter know. Mr. Carter noted that we are always willing to look at other options. Motion by Commissioner Martinez, second by Commissioner Wendorff, to approve the Charge-offs. Motion carried unanimously. b. Discuss 2018 Budget 3 Mr. Carter spoke about the 2018 Budget. Mr. Carter highlighted for Combined Divisions, Revenues are at $40.2m with a Net Profit of $1.1 m. Would like to point out that the estimating number for Retail Customer Sales could be a little conservative. We added $200k to our Sales for Resales over the 2017 Budget; this is now at $2.5m. We are reducing our energy contract sales $192k. Mr. Carter continued to highlight that Other Revenues includes late fees, penalties and interest earnings. Commissioner Hanson inquired about the power cost adjustment; is this something you recommend to do again. Mr. Carter replied yes. Mr. Carter asked if there are any questions. We fluctuate on usage and market cost but otherwise consistent. Mr. Carter reviewed the Graphical layout for the Electric Division Revenues. Mr. Carter spoke on the Electric Division Expense Budget Highlights. We did allocate 1 FTE to the production area. There is a lot going on and we are starting to fall behind. We had a few different proposals for insurance. We decided to go with the high deductible and keep HRA the same. The employee will not see a reduction in benefits. For the Pilot, we increased the electric division expense by roughly $200k. The largest increase is paying interest on the new bonds. Mr. Carter reviewed the Graphical layout for the Electric Division Expenses. Everything is fairly consistent. Fuel is a little lower because of the price of gas. Mr. Carter showed the Summary of major areas in the Electric Division. There is an increase in revenues, however overall there is —$1 M in net loss. Commissioner Hanson inquired if the depreciation line trails off. Mr. Carter explained that it is pretty consistent for a few years yet. We have a lot of assets in the plants. Commissioner Martinez inquired when depreciation would start on the new engines. Mr. Carter explained after the engines are added. Mr. Carter spoke on the Gas Division Revenue Budget Highlights. Retail Customer Sales is $7.6m. We are consistently giving fuel cost credits this is why the net decrease in retail customer sales. There is a new company coming in but not a high gas user. There is not a large impact for 2018; we are not seeing a lot of change for growth. Other revenues is at $1.7m. Mr. Carter reviewed the Graphical layout for the Gas Division Revenues. The revenue generated by each class is fairly consistent to 2017 with each class roughly generating 1/3 of the retail sales, which is more evenly spread out then the electric division. Mr. Carter spoke on the Gas Division Expense Budget Highlights. The budget reflects an increase in 1 FTE for a Welder/Service Person. Benefits are the same as electric. Brenda left at 4:07 Mr. Carter reviewed the Graphical layout for the Gas Division Expenses. Purchased gas is largest expense on the pie chart. Mr. Carter showed the Summary of major areas in the Gas Division. There is a decrease in revenues along with a decrease in expenses; overall, there is $2.2M in net profit. There is little growth. Purchase gas will be lower, which means customers will receive benefit. Not a lot is changing- pulled out cost of service. Overall combined looks good. $1.2m this year compared to $1.4m last year. We have a good cash flow. CIP is heavier in 2018; we have new businesses coming in. 4 We have Generators 6 & 7 in there, which is financed with bond proceeds not operational cash. Still cash positive and consistent margins. Mr. Carter asked the Commission if there are any questions. Commissioner Martinez asked if he could relook at depreciation on the electric side. Otherwise, a pretty good forecast. Mr. Carter addressed the Commission Board, we still have couple of weeks before December meeting, please give me a call if any other questions. c. Discuss date for Performance Review of Hutchinson Utilities Commission General Manager. Mr. Carter noted that in the past we have had my review at the end of the Dec meeting. President Morrow asked if he sees a heavy agenda for December. Mr. Carter replied no. It was decided to have the review after the December meeting. d. Declare Employee Recognition Dinner on December 8, 2017 as an Open Meeting Motion by Commissioner Hanson, second by Commissioner Martinez, to approve Declare Employee Recognition Dinner on December 8, 2017 as an Open Meeting. Motion carried unanimously. e. Approve Rescheduling the December Regular Commission Meeting to Wednesday, December 20, 2017 President Morrow will be absent. Motion by Commissioner Girard, second by Commissioner Hanson, to approve Rescheduling the December Regular Commission Meeting to Wednesday, December 20, 2017. Motion carried unanimously. At this time, President Morrow thanked and congratulated Mr. Blake for his years of service. h. Adjourn There being no further business, a motion was made by Commissioner Martinez, second by Commissioner Girard, to adjourn the meeting at 4:24 p.m. Motion carried unanimously. ( * - itVV0A ATTEST: