10-31-2018 HUCMMINUTES
Regular Meeting — Hutchinson Utilities Commission
Wednesday, October 31, 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; GM Jeremy Carter; Attorney Marc Sebora:
Conflict of Interest
2. Approve Consent Agenda
a. Approve Minutes
b. Ratify Payment of Bills
Motion by Commissioner Martinez, second by Commissioner Cheney to approve the
Consent Agenda. Motion carried unanimously.
3. Approve Financial Statements
Jared Martig presented the financial statements. Similar to month past. Electric
Division MRES purchased power decreased by $8,293. Gas Division showed a
decrease in revenue by $35K due to a calculated fuel error.
GM Carter added in the Electric Division all classes are up through the first three
quarters with the exception of Industrial class, which is down due to HTI load and
transition of building to Uponor. Right now Uponor is in the Large General customer
class. All the classes in the Gas Division are up.
Motion by Commissioner Wendorff, second by Commissioner Hanson to approve
the financial statements. Motion carried unanimously.
4. Open Forum
5. Communication
a. City Administrator — Matthew Jaunich - Absent
b. Divisions
i. Dan Lang, Engineering Services Manager — Nothing to Report
ii. Dave Hunstad, Electric Transmission/Distribution Manager — Nothing to
Report
iii. Randy Blake, Production Manager -
1. Moving into General Contract Mode, busy the next couple of months
iv. John Webster, Natural Gas Division Manager-
1. Was at the Emerson Global Exchange in San Antonio, Texas at the
beginning of the month to give a presentation and it went very well.
GM Carter thanked the Commission for allowing and supporting the Staff attending
these conferences.
The Commissioners congratulated John.
v. Jared Martig, Financial Manager-
1. HUC will be receiving a 3% decrease next year with MRES
c. Human Resources - Brenda Ewing — Absent
d. Legal — Marc Sebora — Nothing to report
e. General Manager — Jeremy Carter
i. Working on the Budget. Would like to schedule a preliminary discussion next
week to allow the Commissioners six weeks to ask questions.
ii. Had the MRES Area meeting in Alexandria last week. Looking at a $380K
decrease with MRES for next year however, transmission will be increasing
by $750K.
iii. After the MRES Area meeting a Round Table discussion was held. Topics
included customer service, late fees, and billing cycles.
iv. Conversations are being held on a new Affordable Clean Energy (ACE) Plan,
which would take the place of the Clean Power Plan.
v. Working on Medical Insurance and General Liability.
6. Policies
a. Review Policies
i.
Budget Payment Plan
ii.
Explanation of Billing Procedure
iii.
Disconnection of Residential Services by HUC
iv.
Disconnection of Commercial Services by HUC
v.
Vacation
vi.
Holidays
vii.
Life Insurance
viii.
Health/Dental Insurance
ix.
Disability Insurance
x.
Family & Medical Leave
A.
Pregnancy & Parental Leave
xii.
Sick Leave
xiii.
Sick/Vacation Leave Donation
No changes recommended at this time.
b. Approve Changes
No changes made to the policies under review.
7. Unfinished Business
8. New Business
a. Approve Requisition #007746 — 2019 Ford F550 Chassis
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Mr. Hunstad presented Requisition #007746. The truck Chassis was ordered
with Requisition #007482 in March 2018 for $53,007.85. HUC was notified that
the 2018's are no longer available. The State Bid price for the 2019 is
$53,410.27, an increase of $402.42.
A motion by Commissioner Hanson, second by Commissioner Cheney to
Approve Requisition #007746 — 2019 Ford F550 Chassis. Motion carried
unanimously.
b. Approve HCP Reservation Agreement
Mr. Webster presented the Heartland Corn Products (HCP) Reservation
Agreement. HCP would like to reserve firm natural gas capacity on the
Hutchinson pipeline in the amount of 15,000 Dth/Day starting on November 1,
2018 through November 1, 2024. HCP shall have the right to elect to convert
the reserved capacity to firm transportation capacity to transport on the
Hutchinson pipeline up to 15,000 Dth/day on or before November 1, 2024.
HCP will be paying HUC $125K annually to reserve the capacity.
Commissioner Hanson inquired how the price was established. As part of the
rate study, UFS was charged with determining a transportation rate for the
natural gas pipeline. HUC shall review this information and develop a
transportation rate for all transporters on the pipeline in 2019.
Discussions were held if this amount of capacity would hinder HUC or someone
else from using the pipeline. Mr. Webster noted that a software model was ran
multiple times and the pipeline will still flow; HUC does have a lot of capacity.
HCP is very committed to HUC and is looking into the future.
GM Carter added as HUC moves forward with these types of agreements a
policy may have to be adopted. Staff wants to establish what a market
completive rate would be that still gives HUC a fair rate of return. There are
different risks with different customers. Rates may consist of one single rate or
a range may need to be created.
After discussion, a motion by Commissioner Martinez, second by
Commissioner Hanson to approve HCP Reservation Agreement. Motion
carried unanimously.
c. Approve Rescheduling the December Regular Commission Meeting to
Wednesday, December 19, 2018.
A motion by Commissioner Cheney, second by Commissioner Hanson to
Approve Rescheduling the December Regular Commission Meeting to
Wednesday, December 19, 2018. Motion carried unanimously.
d. Award the Electrical Installation Bid to Quade Electric for Units 6 & 7
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GM Carter discussed awarding the Electrical Installation Bid to Quade Electric
for Units 6 & 7. Two contractors attended the mandatory pre -bid meeting on
October 15. Of the two contractors, one contractor pulled out because the
company would not have been competitive with their bid. Quade Electric came
in with a bid of $396,730.00; this is an increase from their original bid in
September by $68,490.00. Quade Electric increased the bid to compensate for
overtime.
After discussion, a motion by Commissioner Wendorff, second by
Commissioner Cheney to Award the Electrical Installation Bid to Quade Electric
for Units 6&7.
e. EDA Incubator Building Discussion
GM Carter provided an overview of the EDA Incubator Building discussion.
When the incubator building was built, the EDA inquired if there was any help
that HUC could provide with cost sharing some of the construction work for the
building. In addition, the EDA would like to know if the Commission would
consider covering a portion of the electric and gas utilities for the office portion
of the building. HUC is legally able to provide help to government entities
however; HUC cannot provide help to non -government entities. The Board
needs to consider what path this action would go in the future. Different boards
may have different views. Financially there is not a real major impact either
way.
Questions were raised on what happens when there are changes within the
EDA building; people moving in and out and open spaces. GM Carter noted
the covered portion would only be the EDA office and conference room.
Discussions were held on which other types of government entities may
request a portion of the utilities to be covered. In addition, there seems to be
many intangibles and unknowns.
President Morrow thanked the Commission for the discussion with good points
made on both sides. It was asked of the Board to continue to think about and
ask GM Carter questions so this topic can be revisited at a later date.
f. Performance Pay Matrix Discussion
GM Carter opened the discussion of the Performance Pay Matrix by recapping
the conversations that started in 2016. Every pay grade was evaluated by the
compensation study to make sure HUC was being market competitive along
with legally having internal pay equity. At that time, HUC had multiple
employees outside the approved salary ranges for each position. If HUC has
modest pay grid moves in the future, some employees hourly rates may move
or already be at the top of their respective range and be capped. In addition,
there were conversations about changing the performance -based system and
having a different % increase associated at various intervals on a job positions
pay scale. Currently, performance pay for non -union employees has correlation
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to the union contract. Part of the discussion is to gauge the Commissioners on
whether moving down a different path is something the Commission would like
to explore. The past conversations have centered on a regressive pay system
as employees get to the top of their pay range.
GM Carter added his view from 2 years ago has changed. First, half of the
non -union employees are already at or near the top of their current pay range,
which reduces the monetary impact an employee will receive under a new pay
system. So the performance -based system discussed may not mean as much
as it once did. Second, the conferences and training held lately are expressing
how the energy industry is losing employees and recognizes what it takes to
run an organization by retaining its employees. HUC has made many changes
in the last five years. If their needs to be a change to the non -union employees
pay system, the commission needs to keep the union employees and future
union contracts in mind to maintain internal pay equity and a correlation
between job positions.
After much discussion, it was decided that this topic deserves time and due
diligence. GM Carter was asked by the Commission to sit and talk with Staff on
the topic and more discussion and consideration will be taken at a Special
Meeting coming up.
9. Adjourn
There being no further business, a motion by Commissioner Cheney, second by
Commissioner Wendorff to adjourn the meeting at 4:34p.m. Motion carried
unanimously.
Robert Wendorff, Secre
ATTEST
Monty rrow, President
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