07-25-2018 HUCMMINUTES
Regular Meeting — Hutchinson Utilities Commission
Wednesday, July 25, 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 Don
Martinez; Commissioner Matt Cheney; General Manager Jeremy Carter; Attorney Marc
Sebora; Peter Mikhail with Kennedy -Graven; Paul Harvego with Conway, Deuth &
Schmiesing Audit Firm
1. Swearing in of New Commissioner - Matt Cheney
Attorney Sebora swore in the newly appointed commissioner, Matt Cheney.
2. Conflict of Interest
Commissioner Cheney declared conflict of interest in voting on agenda item 3b
Ratify Payment of Bills; he recently completed a job for HUC, which is in this month's
payment of bills. Matt will be abstaining.
3. Approve Consent Agenda
a. Approve Minutes
b. Ratify Payment of Bills
Motion by Commissioner Hanson, second by Commissioner Wendorff to approve
the Consent Agenda. Motion carried unanimously.
4. Approve 2017 Financial Audit — Presentation by Paul Harvego
Paul Harvego with Conway, Deuth & Schmiesing audit firm presented the 2017
Hutchinson Utilities Commission independent audit report. The financial statements
of the Commission are presented fairly in the firm's opinion. Mr. Harvego reviewed
the Statement of Net Position. Assets did increase in 2017 along with Noncurrent
liabilities. However, Net Position overall had no significant changes. Cash and
Investment balances show that HUC is covering expenses well, and the operating
balance is stable. Restricted balances included bonded debt.
Electric Division stayed consistent from 2016 with Operating Revenues and
Expenses. Natural Gas Division did increase in 2017 by $1 M in Operating Revenues
and Expenses. The change in Net Position for both Electric and Natural Gas
Division is still consistent.
Mr. Harvego summarized the Communications portion of the report and the general
recommendations that consist of staff cross -training, capital asset accounting and
Authorized signors. Mr. Harvego added that management is doing a fantastic job.
Motion by Commissioner Wendorff, second by Commissioner Martinez to approve
the 2017 Financial Audit. Motion carried unanimously.
5. Approve Financial Statements
Jared Martig presented the financial statements. Electric Division showed an
increase of $45K in interest expense due to the new bonds. Overall purchased
power increased by $61 K. Natural Gas Division was nearly identical to June 2017.
Motion by Commissioner Hanson, second by Commissioner Martinez to approve the
financial statements. Motion carried unanimously.
6. Open Forum
7. Communication
a. City Administrator — Matthew Jaunich
i. City is working on 2017 Audit Report
ii. Continuing to work on Century Ave project
iii. Work on Century Townhomes have started
iv. High Field Apartments are looking to add Units 4 &5.
b. Divisions
i. Dan Lang, Engineering Services Manager — nothing to report
ii. Dave Hunstad, Electric Transmission/Distribution Manager —
1. Had a couple of outages for June, everything has been repaired.
2. Will be working on Uponor electric project in the next couple of weeks.
iii. Randy Blake, Production Manager -
1 . Engines are on pads. Pictures are available on G:Drive
2. Repairing fences and gates that needed to be removed/disassembled to
make room for engines coming in.
3. Tried to go combined cycle last week with Unit 1 and the superheater pipe
between the boiler and steam turbine sprung a leak. Investigation to
repair is active.
iv. John Webster, Natural Gas Division Manager- nothing to report
v. Jared Martig, Financial Manager- Continuing to work with BS&A on inventory.
c. Human Resources - Brenda Ewing — Nothing to Report
d. Legal — Marc Sebora — Nothing to report
e. General Manager — Jeremy Carter
i. Catching up on various tasks.
ii. Received COS Study executive report back last Friday. Will be reviewing
reports.
Commissioner Hanson inquired about the timeline of the COS study. GM Carter
noted these documents are high level and the completed book will include more
detail. Staff is aware of the rate changes and is starting to work on a new rate
code to set up another billable item. The new rate structure will start in Sept
2018 and customers will see the change in October 2018 and then again in
October 2019. Most customers will not notice a significant change.
8. Policies
a. Review Policies
i. Offensive behavior/sexual harassment
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ii. Retirement
iii. Resignation
iv. Solicitation on Utility Premises
v. Employee Gifts
vi. Flowers
vii. Petty Cash
No changes recommended at this time.
b. Approve Changes
i. Purchasing Policy — updating the threshold. At the last Legislative session,
the threshold increased from $100,000 to $175,000. This increase goes into
effect 8/1/2018
ii. Deposit Requirement -Residential — as noted. Updated language and moved
paragraphs around to easier explain and have proper positioning. There
were no changes to context.
iii. Deposit Requirement-Commercial/Industrial — as noted. Updated language
and moved paragraphs around to easier explain and have proper positioning.
There were no changes to context.
Motion by Commissioner Martinez, second by Commissioner Wendorff to
approve the policy changes as recommended. Motion carried unanimously.
9. Unfinished Business
10. New Business
a. Approval of Parallel Generation Contract
Mr. Hunstad presented the Parallel Generation Contract; he noted that there is
a customer in town that is looking to install a 10.72KW Solar "Net Metering"
rooftop system. HUC does have a policy in place that follows State Statute
216b.1638 for Co -generation and small power production for facilities of 40KW
or less. The attached contract is the first step to ensure that all obligations are
met prior to energizing the system.
Commissioner Hanson inquired how this compares to others in town. Mr.
Hunstad informed the Commission that there are two 40KW or less "Net
Metering" Solar parallel generation contracts in place today.
GM Carter added HUC has had a policy in place for this Co -generation and
small power production and Staff is following the policy.
Motion by Commissioner Hanson, second by Commissioner Martinez to
approve Parallel Generation Contract. Motion carried unanimously.
At this time, President Morrow looked to the Commission to entertain a Motion to
go to Closed Session pursuant to Minnesota statute 13d.05, subd. 3(b) under the
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attorney client privilege to discuss litigation strategy involving Corval Constructors,
Inc. vs. City of Hutchinson, Hutchinson Utilities Commission.
Motion by Commissioner Hanson, second by Commissioner Martinez to go into
Closed Session pursuant to Minnesota statute 13d.05, subd. 3(b) under the
attorney client privilege to discuss litigation strategy involving Corval Constructors,
Inc. vs. City of Hutchinson, Hutchinson Utilities Commission at 3:35p.m. Motion
carried unanimously.
Members present for the closed session: President Monty Morrow; Vice President
Anthony Hanson; Secretary Robert Wendorff; Commissioner Don Martinez;
Commissioner Matt Cheney; General Manager Jeremy Carter; Attorney Marc
Sebora; Peter Mikhail with Kennedy -Graven
Motion by Commissioner Wendorff, second by Commissioner Cheney to move
from closed meeting back to open meeting. Motion was unanimously carried. The
meeting was reopened at 4:45p.m.
President Morrow looking to Mr. Sebora on next step. Mr. Sebora suggested
entertaining a motion to table item 10b Approval of Fagen Final Contract to next
Commission meeting.
Motion by Commissioner Hanson, second by Commissioner Martinez to table item
10b Approval of Fagen Final Contract to next Commission meeting. Motion carried
unanimously.
President Morrow added item 10C Rescind Advertising for Bids- Units 6 & 7
Electrical Work.
Motion by Commissioner Martinez, second by Commissioner Wendorff to Rescind
Advertising for Bids- Units 6 & 7 Electrical Work. Motion carried unanimously.
Mr. Sebora asked President Morrow to take action to set a special meeting for next
Wednesday, August 1 at 10a.m. and to include item 10b. President Morrow asked
the Commission if there is a motion to set a special meeting next Wednesday,
August 1 at 10a.m.
Motion by Commissioner Martinez, second by Commissioner Hanson to set a
Special Meeting Wednesday, August 1 at 10a.m. Motion carried unanimously.
11. Adjourn
There being no further business, a motion by Commissioner Hanson, second by
Commissioner Cheney to adjourn the meeting at 4:50p.m. Motion carried
unanimously. ll''�
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ATTEST:1_�11� A-142)
Monty Morrow, PresidenteJ�`� �. 4's ov1 J; cR
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