03-28-2018 HUCMMINUTES
Regular Meeting — Hutchinson Utilities Commission
Wednesday, March 28, 2018
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 Robert Wendorff; Commissioner
Mark Girard; General Manager Jeremy Carter; Attorney Marc Sebora
Absent: Commissioner Don Martinez
Others present: Don Black and Paul Miller from British Petroleum (BP) and Bryan
Smithee from 3M.
Conflict of Interest
At this time, President Morrow stated that Item 8a -BP to present on Prepay Program
under New Business would be discussed now.
Don Black along with Paul Miller from British Petroleum (BP) introduced themselves.
Mr. Black presented the Prepay Program. BP has a benefit that is unique to
municipal systems that can offer a price advantage on natural gas of $0.20cents a
unit. BP would like HUC to be able to participate in this program. Public Energy
Authority of Kentucky (PEAK) will sell 30 -year (maximum maturity) debt and make
an up to $1 Billion prepayment to BPEC to purchase an identical term gas supply
contract. Benefits are larger when there are longer terms. Bonds will be sold with
a 5-10 year initial term and repriced periodically on similar terms over their life until
the final maturity is achieved. Future bond repricings will be for minimum terms of
5 -years. PEAK will have a portfolio of participants reasonably acceptable to BPEC
to purchase and consume the prepaid gas supply. There will be two pricing models:
one model for long-term participants and one model for short-term participants.
Long-term participants would receive a minimum of 20cents a unit. While short-term
participants would receive, a smaller discount. There will also be a Repricing
Reserve funded at $0.05/MMBtu collected during the initial pricing period that will be
available to help fund future minimum discounts. The common features between
both Pricing Models are; 1) Take and pay contracts- only pay for delivered volumes,
2) No connection to municipal conduit issuer debt 3) Changes in delivery points by
mutual consent and 4) Remarketing provisions and sharing of related value. Pricing
Model #1 offers a higher discount of $0.20/MMBtu minimum with a 30 -year total
commitment along with participants will receive 100% of discounts in future pricing
periods.
After some discussion, BP concluded that they are asking for participant approvals
by Mid -May.
GM Carter stated that a follow up meeting is needed to discuss this topic more with
all the Commissioners being present.
BP thanked HUC and Commissioners for their time. BP and 3M personnel left at
3:56 pm.
Staff will coordinate a Special Meeting in the next couple of weeks to discuss further.
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
Jared Martig presented the financial statements. February Cash decreased due to
last month on making two months of payments to BP. For the Electric division, loss
increased in February 2018 by $10K. However, without the new bond interest there
actually would have been an improvement of about $35K. For the Gas division,
increased revenues can be attributed to colder weather as well as no fuel credits
being issued.
In
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GM Carter added the Electric division is running the same as 2017. For the Gas
division, the rate stabilization fund is up to $522K. Credits are issued once it
surpasses $600K.
After discussion, a motion by Commissioner Hanson, second by Commissioner
Girard to approve the financial statements. Motion carried unanimously.
Open Forum
Communication
a. City Administrator — Matthew Jaunich- Nothing to report
b. Divisions
i. Dan Lange, Engineering Services Manager —Nothing to report
ii. Dave Hunstad, Electric Transmission/Distribution Manager —
1 . HUC received `Excellence in Reliability' Award for 2017. HUC's Average
Outage time is 6 minutes a year compared to all of the United States
Electric Utilities of 129 minutes a year
2. An HTI substation switcher blew last month causing an outage in town.
All materials have been ordered and are scheduled to be replaced week
of April 16.
iii. Randy Blake, Production Manager -
1. Currently have an External posting up for an Operations Engineer
position.
iv. John Webster, Natural Gas Division Manager- Nothing to report
v. Jared Martig, Financial Manager -
1. Audit is going slower this year due to BS&A inventory issues. BS&A is
working on the issue and should be completed soon.
At this time, Commission thanked the Staff for the Plant 1 tour along with
congratulating Staff on the Reliability Award.
c. Legal — Marc Sebora — Nothing to report
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d. General Manager — Jeremy Carter — Nothing to report
e. Human Resources — Brenda Ewing - Absent
6. Policies
a. Review Policies
i. Sealing of Meters- Electric
ii. Meter Testing- Electric
iii. Right -of -Way Clearing
iv. Promotions and Transfers
v. Layoffs
vi. Voluntary Leave of Absence
No changes recommended at this time.
b. Approve Changes
i. Electric Meter Placement - as noted, adding clarity
Motion by Commissioner Girard, second by Commissioner Hanson to approve the
policy changes as recommended. Motion carried unanimously.
7. Unfinished Business
a. Update of Pack Gas Discussions
This will be discussed in New Business.
8. New Business
b. Approval of 'Incumbency Certificate' and 'Board Resolution'
At this time, GM Carter recommended to table this Approval for now.
c. Approval of Natural Gas Truck Requisition
John Webster presented Requisition #7499 to replace vehicle #433, 2006
Chevrolet 1500, 4WD w/utility body for a 2018 Chevrolet Silverado 350OHD
4WD Crew Cab w/167.7" wheelbase. It is more effective for HUC to purchase
the new vehicle with the bed/box and then sell the bed/box this summer.
Motion by Commissioner Wendorff, second by Commissioner Hanson to
approve Requisition #7499 to Allow Purchase of 2018 Chevrolet Silverado.
Motion carried unanimously.
d. Approval of Pack Gas Settlement Agreement
GM Carter stated that HUC has received the final settlement agreement. Mr.
Sebora did a good job reviewing and HUC has confirmed the dekatherms of
natural gas paid for but not received or used by Heartland. This will not affect
HUC's 2017 financial statements. Motion by Commissioner Hanson, second by
Commissioner Girard to Approve Pack Gas Settlement Agreement. Motion
carried unanimously.
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At this time, President Morrow thanked Mr. Sebora and Staff for their time.
e. Discussion of COS Rate Track scenarios
GM Carter presented three different glide paths for discussion and
consideration. The three glide path options are 6 -year, 9 -year and 12 -year with
varying +/- bandwidths for both the Electric division and Gas division. These
scenarios are based on revenue neutral. This will give the Board and Staff an
idea about creating equitability between classes. Each option shows how
aggressive the glide path can be. Keep in mind two different glide paths can be
chosen, one for the Electric division and one for the Gas division. Each division
should rely on its own and a different glide path might be a better option to
make that happen. GM Carter continued to explain, if one glide path is chosen
it can always be adjusted in the future. HUC has a good handle on its
financials and will continue to monitor to see if appropriate changes are
needed.
After some discussion, it was decided that the Board would like a more in-depth
conversation with all the Board members.
Staff will coordinate a Special Meeting in the next couple of weeks to discuss
further.
9. Adjourn
There being no further business, a motion by Commissioner Hanson, second by
Commissioner Girard to adjourn the meeting at 4:45p.m. Motion carried
unanimously.
ATTEST:
onty Mo w, President
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