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07-27-2005 HUCM Regular Meeting July 27, 2005 Members present: Vice President Donald Walser; Secretary David Wetterling; Commissioner Paul Ackland; Commissioner Steve Cook; General Manager Michael Kumm. Members absent: President Craig Lenz; Attorney Marc Sebora Vice President Walser called the meeting to order at 3:00 pm. Secretary Wetterling made a motion to approve the minutes of the June 29, 2005 Regular Meeting. Commissioner Cook seconded the motion and it passed unanimously. Commissioner Ackland made a motion to ratify the payment of bills in the amount of $3,242,192.14 (detailed listing in payable book). Secretary Wetterling seconded the motion and it passed unanimously. Manager Kumm discussed the positive relationship with MISO and the corrective measures that are in place to recapture the energy bills. Commissioner Ackland made a motion to approve the financial statement and budget year to date. Secretary Wetterling seconded the motion and it passed unanimously. The current position of meter reader is a contracted position and will be vacant in the near future. HUC can bring the position back in-house in conjunction with City and share the cost of reading all HUC's electric and gas meters, and City's water meters. Commissioner Wetterling made a motion to authorize the hiring of a meter reader, upon staff reviewing the economics of hiring a meter reader. Commissioner Cook seconded the motion and it passed unanimously. Commissioner Ackland made a motion to table the approval of the change in language in the 0 & M Maintenance Agreement with GRE. Commissioner Cook seconded the motion and it passed unanimously. Manager Kumm discussed the fuel cost adjustment clause. The imbalances caused by Northern Border Pipeline, New Ulm, and HUC's nominations vs. sold-on-system, have been minimized and/or eliminated. We still need to perform a cost of service study; negotiate contract with largest gas customer; establish a fuel cost adjustment stabilization fund to correct the customer service imbalance; and modify spreadsheets. Manager Kumm discussed the need for a cost of service study for both the electric and gas divisions. It's been several years since the last study was performed. This will also benefit the fuel cost adjustment clause. Commissioner Ackland made a motion to approve the proposal from R W Beck for an electric and natural gas rate study. Secretary Wetterling seconded the motion and it passed unanimously. The amendments to the by-laws were discussed. Each commissioner's term shall expire on December 31 st of the last year of that Commissioner's appointed term. Commissioner Cook made a motion to approve the amendments to the By-Laws. Commissioner Ackland seconded the motion and it passed unanimously. Division reports: Business division - Jan Sifferath Working on cash-flow analysis 5-year forecast study Panic button for account coordinators - purchase agreement signed - installed next week Electric division - Don Merkins Conversions still going well Services are going in Projects started Gas division - John Webster Construction caught up - waiting for developers Pipeline easements being signed 1 st condem nation hearing scheduled for August 16, 2005 in St. James Digital camcorder recording of pipeline - visual survey of crops Dustin Cross wants to do crop yield analysis Legal reports: None Commissioner Ackland met with Manager Kumm for a performance review. Because of President Lenz' absence, that review will be presented at the August meeting. Old Business None New Business None Commissioner Ackland made a motion to adjourn the meeting at 5:20 pm. Commissioner Cook seconded the meeting and it passed unanimously. David Wetterling, Secretary ATTEST Craig Lenz, President /% Regular Meeting July 27, 2005 Members present: Vice President Donald Walser; Secretary David Wetterling; Commissioner Paul Ackland; Commissioner Steve Cook; General Manager Michael Kumm. Members absent: President Craig Lenz; Attorney Marc Sebora. Vice President Walser called the meeting to order at 3:00 pm. Secretary Wetterling made a motion to approve the minutes of the June 29, 2005 Regular Meeting. Commissioner Cook seconded the motion and it passed unanimously. Commissioner Ackland made a motion to ratify the payment of bills in the amount of $3,242,192.14 (detailed listing in payable book). Secretary Wetterling seconded the motion and it passed unanimously. Manager Kumm discussed the positive relationship with, MISO and the corrective measures that are in place to recapture the energy bills. Commissioner Ackland made a motion to approve the financial statement and budget year to date. Secretary Wetterling seconded the motion and it passed unanimously. The current position of meter reader is a contracted position and will be vacant in the near future. HUC can bring the position back in -house in conjunction with City and share the cost of reading all RUC's electric and gas meters, and City's water meters. Commissioner Wetterling made a motion to authorize the hiring of a meter reader, upon staff reviewing the economics of hiring a meter reader. Commissioner Cook seconded the motion and it passed unanimously. Commissioner Ackland made a motion to table the approval of the change in language in the O & M Maintenance Agreement with GRE. Commissioner Cook seconded the motion and it passed unanimously. Manager Kumm discussed the fuel cost adjustment clause. The imbalances caused by Northern Border Pipeline, New Ulm, and HUC's nominations vs. sold -on- system, have been minimized and /or eliminated. We still need to perform a cost of service study; negotiate contract with largest gas customer; establish a fuel cost adjustment stabilization fund to correct the customer service imbalance; and modify spreadsheets. Manager Kumm discussed the need for a cost of service study for both the electric and gas divisions. It's been several years since the last study was performed. This will also benefit the fuel cost adjustment clause. Commissioner Ackland made a motion to approve the proposal from R W Beck for an electric and natural gas rate study. Secretary Wetterling seconded the motion and it passed unanimously. 0 The amendments to the by -laws were discussed. Each commissioner's term shall expire on December 31St of the last year of that Commissioner's appointed term. Commissioner Cook made a motion to approve the amendments to the By -Laws. Commissioner Ackland seconded the motion and it passed unanimously. Division reports: Business division — Jan Sifferath Working on cash -flow analysis 5 -year forecast study Panic button for account coordinators — next week Electric division — Don Merkins Conversions still going well Services are going in Projects started purchase agreement signed — installed Gas division — John Webster Construction caught up — waiting for developers Pipeline easements being signed 1 st condemnation hearing scheduled for August 16, 2005 in St. James Digital camcorder recording of pipeline — visual survey of crops Dustin Cross wants to do crop yield analysis Legal reports: None Commissioner Ackland met with Manager Kumm for a performance review. Because of President Lenz' absence, that review will be presented at the August meeting. Old Business None New Business None Commissioner Ackland made a motion to adjourn the metiiqg at 5:20 pm. Commissioner Cook seconded the meeting and it passed unanim usl . /-I ATTE� GI [1 F u �l "IULAHVED JUL U 6 2005 July 5, 2005 Mr. Mike Kumm General Manager Hutchinson Utilities Commission 225 Michigan St. SE Hutchinson, MN 55350 Subject: Proposal for Electric and Natural Gas Rate Study Dear Mike: In response to your request, we are sending you this letter proposal to perform a cost -of- service and rate design study for the Electric and Gas Divisions (Divisions) of Hutchinson Utilities (Hutchinson). The design of new retail electric and gas rates will be based on two principal components of the study. The first is the examination of the revenue requirements for both Divisions. This will be performed to determine any overall revenue adjustments that are necessary. The second component of the study, the cost of service analysis, is performed to determine the allocated cost of providing service to each class of customers in the two Divisions. The results of the cost of service study are used to determine the relative levels of revenues collected from each class of customers as well as for designing individual components of the retail rates. These components will be utilized in the electric and gas rate design. Our proposal also includes performing an analysis to unbundle the costs of each Division. In this analysis, costs will be broken into components to reflect such cost categories as gas /power supply, transmission, distribution and customer services, or other categories as will be determined. These unbundled costs will provide utility management with information that is useful in assessing how changes in the industry could potentially affect Hutchinson. R. W. Beck personnel involved in this project will primarily include Mr. David Berg, Project Manager, and Ms. Theresa Kervin, Rate Analyst. Kevin Favero, who has been working with Hutchinson over the past year, and Ms. Catherine Elder, R. W. Beck's most senior natural gas expert, will also be available as technical consultants to the project. We look forward to the prospect of continuing our working relationship with Hutchinson. Please do not hesitate to call me if you have any questions regarding this proposal. Scope of Services R. W. Beck, upon authorization from Hutchinson Utilities Commission (Commission), will perform a cost of service and unbundled rate study for the Electric Division and the Gas Division. The services provided in connection with this assignment will include the following tasks for both Divisions: analysis of historical operating results, development of future revenues and revenue requirements, a cost -of- service analysis, an evaluation of the unbundled cost of serving each customer classification and the design of proposed new rates. The proposed Study Period for this project is 2005 -2009. 00-00000-60407-53111 000022 1 PA004712 Hutchinson \Gas & Elec Rate Study Proposal\B 1586- Proposal letterl.doc 1380 Corporate Center Curve, Suite 305 St. Paul, MN 55121 Phone (651) 994 -8415 Fax(651)994-8396 0 Mr. Mike Kumm July 5, 2005 Page 2 Task 1 Data Compilation At the end of this Section, we have provided an initial list of data necessary to develop a projection of revenue requirements and to perform the analysis to determine allocation factors, cost of service and rate design. This list will allow Hutchinson staff to begin locating and compiling the necessary data to move the Study along smoothly. Upon receipt of this data, R. W. Beck will organize the material and create computer files that will be used in the various types of analyses needed in this study. Revenue Requirements. Development of the revenue requirements will include review of annual historical and budgeted operating expenses, the cost of additions to the system anticipated by the Division and any other financial obligations of the Commission, such as return on investment and dividend and the impact on transfers to the City. The data, to be provided by the Divisions and reviewed by the Project Team, shall cover the most recent five years (the most recent year is considered the "Test Year "). Allocation Data. The data required to complete the study includes monthly billing and accounting data related to the Divisions' retail electric and natural gas operations: peak demand, monthly sales volumes by class (kWh or MCF) and number, size and type of customers for each retail rate class and data related to any contract customers. Task 2 Project Kick -Off Meeting and Data Review R. W. Beck will spend one day in Hutchinson at its office to participate in a project kick -off meeting. During this meeting, R. W. Beck and Hutchinson staff will discuss: • The goals of both Divisions for their services and retail rates. • Information provided to R. W. Beck from Task 1. • Project approach to meet each Division's goals regarding philosophy of service offerings, overall pricing, large customer issues and Fuel Cost or Power Cost Adjustment calculations. • Terms of gas service to 3M Corporation and how best to reflect this gas service in the cost -of- service analysis, rate design and other aspects of this study. Task 3 Develop Pro Forma R. W. Beck will develop pro forma operating results and cash reserves showing each Division's forecasted revenues and expenses for a 5 year study period ( "Study Period "). These pro formas will reflect our forecast of purchased gas or purchased/generated power and transportation expenses, which will be based on our forecast of retail sales. We will also forecast other operating expenses and capital improvements, based on historical expenses and discussions with Hutchinson staff. Revenues will reflect forecasted sales at current rates plus revenues anticipated under the Gas Division's Fuel Cost Adjustment or the Electric Division's Power 00-00000-60407-53111000022 1 PA004712 Hutchinson \Gas & Elec Rate Study Proposal\B 1586- Proposal letterl.doc Mr. Mike Kumm July 5, 2005 Page 3 Cost Adjustment rates. The pro formas will be created to examine each Division's return on net assets. Task 4 Review 3M Corporation Gas Service Contract R. W. Beck will review the current contract for gas service provided by Hutchinson to 3M Corporation. Based on the Gas Division's goals and concerns discussed in Task 2, R. W. Beck will provide recommendations on renegotiation of the contract terms. Task 5 Perform Cost -of- Service Analysis For each Division, R. W. Beck will analyze Test Year expenses and classify them into appropriate categories. The service characteristics of the customer classes will be used as the basis for allocating the classified costs to each class. Allocated costs by class will be compared to the Test Year revenues by class to determine the adjustments needed to match revenues from each class to the costs of providing service to that class. Task 6 Develop Unbundled Costs and Revenues For each Division, Test Year expenses by class will be unbundled into different functional categories. Typical functional categories are: gas or power supply, transmission, distribution and customer services. Functional categories most appropriate for each Division will be determined after discussion with Division staff. Examination of unbundled costs will provide additional information as we work with the Divisions to design new rates. Task 7 Prepare Initial Report R. W. Beck will prepare an initial report of the findings to date and submit it to Hutchinson staff for review. Task 8 Planning Meeting with Staff R. W. Beck will meet with Hutchinson staff to review the study results to date and to identify what, if any, changes are to be made to existing retail electric and gas rates. Task 9 Design Rates and Rate Comparison Based on the results of the above meeting, R. W. Beck will design proposed new electric and gas rates for each customer rate class and prepare a presentation comparing typical monthly bills under existing and proposed rates for customers in each rate class. R. W. Beck will identify changes that enhance each Division's financial integrity and recover costs in an equitable manner. Consideration will be given in the gas rate design to the gas service provided to 3M Corporation. Street light rates will be developed that recover the cost of supplying electricity to the City owned street lights. The Fuel Cost Adjustment base rate and methodology will be 00-00000-60407-53111000022 1 PA004712 Hutchinson \Gas & Elec Rate Study Proposal\B 1586- Proposal letterl.doc Mr. Mike Kumm July 5, 2005 Page 4 ■ reviewed and updated, and the benefits of establishing a Gas Rate Stabilization Fund will be discussed. The Power Cost Adjustment will be examined in a similar manner. Task 10 Prepare Preliminary Report R. W. Beck will prepare a written report describing the planning and analyses undertaken in the study. The report will include recommended new rates for each rate class in the Electric and Gas Divisions, as necessary. Estimated operating results at proposed rates will be shown for each Division. R. W. Beck will provide an electronic copy (pdf form) of this preliminary report to Hutchinson for review and comment. Five hard copies will also be provided, if requested. Task 11 Present Preliminary Report To Utilities Commission R. W. Beck will meet with representatives of Hutchinson and the Utilities Commission and, if requested, participate at the same time in a Public Informational Meeting to present the preliminary report and to answer any questions regarding the study. Task 12 Submit Final Report Based on comments received from Hutchinson staff and from the meeting with the Utilities Commission, R. W. Beck will finalize the report and submit 10 copies to Hutchinson. Task 13 Present Final Report To Utilities Commission R. W. Beck will meet with representatives of Hutchinson and the Utilities Commission to present the final report and to answer any questions regarding the study. Task 14 Present Final Report To City Council R. W. Beck will meet with the City Council and, if requested, participate at the same time in a Public Informational Meeting to present the final report and to answer any questions regarding the study. Meetings This scope includes five meetings in Hutchinson with the two Divisions: • Task 2 —Project Kick -Off with Hutchinson personnel • Task 8 — Planning Meeting with Hutchinson personnel • Task 11— Preliminary Study Presentation to Utilities Commission • Task 13 — Final Study Presentation to Utilities Commission • Task 14 — Final Study Presentation to City Council 00-00000-60407-53111000022 1 PA004712 Hutchinson \Gas & Elec Rate Study ProposaW31586- Proposal letterl.doc Mr. Mike Kumm July 5, "" Page 5 Additional Services R. W. Beck is available to provide assistance in planning contract negotiations with 3M Corporation or to participate in actual contract negotiations. These and any other requested services not included in the Scope of Services described above will be provided based on the actual cost of labor and expenses. Schedule A chart outlining the tasks to be completed has been included on the following page. The schedule is assumed to begin July 18. Based on our discussions, we plan to complete the study and present the results to the City Council in early October. If a more expedited schedule is needed, we can adjust our project schedule to accommodate your needs, providing the information we need to complete the study is made available on an expedited basis. Project Milestones Kick -Off Meeting July 18, 2005 Planning Meeting August 25, 2005 Submit Preliminary Report September 14, 2005 Present Preliminary Report to Commission September 21, 2005 Present Final Report to Commission September 28, 2005 Present Final Report to City Council October 10, 2005 Compensation We propose that, upon submission of monthly invoices, Hutchinson pay R. W. Beck, Inc. an amount equal to the actual hours of services furnished multiplied by R. W. Beck's current hourly rates. Additionally, Hutchinson will reimburse R. W. Beck monthly, at cost or then current rates for all expenses directly chargeable to services furnished. R. W. Beck proposes to provide the scope of services outlined above for a total compensation not to exceed $46,000. 00-00000-60407-53111000022 1 PA004712 Hutchinson \Gas & Elec Rate Study Proposal\B 1586 - Proposal letterl.doc Mr. Mike Kumm July 5, 2005 Page 6 Information to Be Furnished By Hutchinson Electric Division The Electric Division will assist R. W. Beck by providing the following: 1. Power Cost Adjustment (PCA): base rate, method of calculation, PCA rate for each month in 2004 and year -to -date 2005, PCA revenues for each month in 2004 and year -to -date 2005. 2. For 2000 through year -to -date 2005, the following items: a. Annual electric consumption by rate schedule b. Monthly electric consumption by rate schedule, 2004 and YTD 2005 only c. Annual billing demand by rate schedule for each demand billed class d. Monthly billing demand by rate schedule, 2004 and YTD 2005 only e. Average number of customers by rate schedule f. Total system retail kWh sales, including all rate schedules g. Total electric system requirements and losses h. Monthly system peak demands i. Annual revenues by rate schedule, segregated by demand and energy billing, where appropriate. 3. Copies of all rate schedules covering 2000 through 2005. 4. Scheduled capital expenditures for 2005 through 2009, and the intended method of funding such expenditures. 5. Annual Division financial reports for 2000 -2004 and YTD 2005 actual expenses. 6. Annual Division budgets for 2005 — 2009, as available. 7. A list of electric service provided free of charge or at a discount for 2004. 8. Copies of monthly electric bills during 2004 for each of the Division's 10 largest customers. 9. A detail of any special allocations of Division capital or operating expenditures to individual customers or customer classes, and the basis for such allocations. 10. Identification of any anticipated major load additions for 2005 through 2009. 00-00000-60407-53111000022 J PA004712 Hutchinson \Gas & Elec Rate Study Proposal\131586- Proposal letterl.doc Mr. Mike Kumm July 5, 2005 Page 7 11. Method of determining transfers to the City. 12. Copies of monthly bills from Hutchinson's wholesale electric provider(s) for 2004. 13. Copies of current contracts covering wholesale electric purchases. 14. Copies of the wholesale electric rate schedules. 15. Listing of Division plant -in- service and 2004 depreciation schedule. 16. Information on current debt service for the Division and any planned debt for 2005- 2009. 17. Identification of any customer receiving service at the primary level or receiving a discount for transformer ownership. 18. Number of street light fixtures for each wattage. Information to Be Furnished By Hutchinson Gas Division The Gas Division will assist R. W. Beck by providing the following: 1. Fuel Cost Adjustment (FCA): base rate, method of calculation, FCA rates for each month in 2004 and year -to -date 2005, FCA revenues for each month in 2004 and year -to -date 2005. 2. For 2000 through year -to -date 2005, the following items: a. Annual natural gas consumption by rate schedule b. Monthly natural gas consumption by rate schedule, 2004 and YTD 2005 only c. Contract demand by rate schedule d. Annual billing demand by rate schedule, if available e. Monthly billing demand by rate schedule, 2004 and YTD 2005 only f. Average number of customers by rate schedule g. Total natural gas system sales h. Total natural gas system requirements and losses i. Annual revenues by rate schedule. 00-00000-60407-53111000022 1 PA004712 Hutchinson \Gas & Elec Rate Study Proposal\B1586- Proposal letterl.doc Mr. Mike Kumm July 5, 2005 Page 8 3. Copies of all rate schedules covering 2000 through 2005. 4. Scheduled capital expenditures for 2005 through 2009, and the intended method of funding such expenditures. 5. Annual Division financial reports for 2000 -2004 and YTD 2005 actual expenses. 6. Annual Division budgets for 2005 — 2009, as available. 7. A list of natural gas service provided free of charge or at a discount for 2004. 8. Copies of monthly gas bills during 2004 for each of the Division's 10 largest customers. 9. A detail of any special allocations of Division capital or operating expenditures to individual customers or customer classes, and the basis for such allocations. 10. Identification of any anticipated major load additions for 2005 through 2009. 11. Method of determining transfers to the City. 12. Copies of monthly bills from Hutchinson's wholesale gas provider(s) for 2004 covering all commodity, transportation and storage expenses. 13. Copies of current contracts covering purchase of natural gas commodities, transportation and storage services. 14. Copies of the wholesale natural gas rate schedules. 15. Listing of Division plant -in- service and 2004 depreciation schedule. 16. Information on current debt service for the Division and any planned debt for 2005- 2009. 17. Current contract terms and at least two years of historical sales to 3M Corporation L---J 00-00000-60407-53111000022 1 PA004712 Hutchinson \Gas & Elec Rate Study Proposal\B1586- Proposal letterl.doc Mr. Mike Kumm July" "" Page 9 If this proposed scope of services meets with your approval, we can perform these services under the signed Professional Services Agreement (PSA) between Hutchinson Utilities and R. W. Beck, dated July 7, 2004. There is an approval signature block below for you to authorize R. W. Beck to provide these services. Please return one signed copy of this authorization to me. Please contact me if you have any questions. Sincerely, R. BECK David A. Berg, P.E. Principal and Senior Approved: &4 Hutchinson Utilities Commission 00-00000-60407-53111000022 1 PA004712 Hutchinson \Gas & Elec Rate Study Proposal\B1586- Proposal letterl.doc Mr. Mike Kumm July 5, 2005 Page 9 If this proposed scope of services meets with your approval, we can perform these services under the signed Professional Services Agreement (PSA) between Hutchinson Utilities and R. W. Beck, dated July 7, 2004. There is an approval signature block below for you to authorize R. W. Beck to provide these services. Please return one signed copy of this authorization to me. Please contact me if you have any questions. Sincerely, OVINE David A. Berg, P.E. Principal and Senior Approved: Hutchinson Utilities Commission Michael L. Kumm, General Manager 00-00000-60407-53111000022 1 PA004712 Hutchinson \Gas & Elec Rate Study Proposal\B1586- Proposal letterl.doc Resolution 170 As per resolution #1000 adopted 11 -29 -06 Numbering resolutions from 1936 — 2006 For search purposes only A RESOLUTION AMENDING ARTICLE III, SECTIONS 9 AND 10 OF THE HUTCHINSON UTILITIES COMMISSION BY -LAWS TO DEFINE THE TERMS OF SERVICE OF COMMISSION MEMBERS WHEREAS, the Hutchinson City Charter contains provisions for the appointment of the Commissioners of the Hutchinson Utilities Commission and sets for the duration of the fiscal year of the Hutchinson Utilities Commission as the calendar year; and, WHEREAS, the By -laws of the Hutchinson Utilities Commission require a reorganization meeting of the Hutchinson Utilities Commission in September of each year; and, WHEREAS, the appointments of all,other City officers, boards and commissions occur in January of each year; and, WHEREAS, to bring the By -laws and practices of the Hutchinson Utilities Commission into conformity of the schedule of appointments with the remainder of the City of Hutchinson, NOW, THEREFORE, BE IT RESOLVED BY THE HUTCHINSON UTILITIES COMMISSION: THAT the amendments to Article III, Sections 9 and 10 of the Hutchinson Utilities Commission Bylaws, as attached as Exhibit A hereto, are hereby adopted. Adopted by the Hutchinson Utilities Commission this 27th day of July, 2005. ATTEST: Vice President C BY -LAWS OF HUTCHINSON UTILITIES COMMISSION HUTCHINSON, MINNESOTA ARTICLE I Office of Commission SECTION - 1 The office of the Hutchinson Utilities Commission is located at 225 Michigan Street, Hutchinson, Minnesota. ARTICLE II Meetings Section - 1 Regular meetings of the Hutchinson Utilities Commission will be held at 3:00 p.m. on the last Wednesday of each month at the utility office. Section - 2 Special and emergency meetings of the Hutchinson Utilities Commission may be called at any time by the President or by any two Commissioners to be held at the Commissioner's room or at such place or places as the Commissioners may from time to time designate. 1 Section - 3 Notice of all special and emergency meetings of the Hutchinson Utilities Commission shall comply with public meeting laws and each Commissioner shall be notified by telephone or by letter. Section - 4 A majority of the Commissioners shall constitute a quorum for the transaction of business, and the votes of a majority of the Commissioners present, shall be sufficient to adopt any motion or resolution. The votes of members on any action shall be taken by ayes and nays and recorded in the minutes. ARTICLE III Commissioners, Officers and Employees SECTION - 1 The Hutchinson Utilities Commission, by resolution, shall appoint a General Manager and such other employees as it shall deem necessary, who shall hold their offices for such term and shall exercise such powers and perform such duties as shall be determined from time to time by the Commission. SECTION - 2 The Hutchinson Utilities Commission, upon recommendation of the General Manager and the filing of applications, shall appoint all staff employees of the Hutchinson Utilities. 2 SECTION - 3 Each member of the Hutchinson Utilities Commission shall be entitled to be reimbursed for his actual and necessary traveling and hotel expenses incurred whenever it shall be necessary for him to travel outside the City of Hutchinson in carrying out his duties, which travel may be required of him by law or by vote or resolution of the Commission. The compensation of members and amounts due them as reimbursement for expenses shall be paid at the end of each month upon itemized statements duly verified. SECTION - 4 Any officer, agent or employee elected or appointed by the Commission may be removed at any time by the Commission. SECTION - 5 The salaries of all officers, agents and employees of the Commission shall be fixed by the Commission. SECTION - 6 The President shall preside at all meetings at which he is present. In the absence of the President, the Vice President shall assume all of his duties. He shall make such reports to the Council as are required of the Commission and shall perform such other duties as are incident to his office or are properly required of him. SECTION - 7 The Secretary shall sign, execute or acknowledge with the President, all instruments authorized by the Commission and shall perform such other duties as prescribed from time to time by the Commission or as are incident to his office. SECTION - 8 OFFICERS The officers of the commission shall be a President and Vice President. SECTION - 9 ELECTION AND TENURE The Commission shall annually elect the officers of the commission at its January meeting. Such elected officers will assume their offices the first day of February. Each officer shall hold office for a one -year term and until such officer's successor is elected. There shall be a limit of two successive terms that an officer may serve. SECTION - 10 TERMS OF COMMISSIONERS The appointment and length of service of each Commissioner shall be set forth in the Hutchinson City Charter. Each Commissioner's term shall expire on December 31St of the last year of that Commissioner's appointed term. Commissioners shall continue in office until their successor has been appointed and qualified. ARTICLE IV Appointive Officers of Hutchinson Utilities Commission SECTION - 1 GENERAL MANAGER A. The General Manager shall be the chief executive officer of Hutchinson Utilities Commission. He /she shall be chosen by the Commission on the basis of their executive and administrative qualifications for the supervision and direction of all operations and business of Hutchinson Utilities properties. All other things being equal, the Commission shall appoint as General Manager a person with experience in construction, operation and management of public utilities, No member of the Commission shall, during the time for which appointed or within two years thereafter, be chosen as General Manager. In case of absence or disability of the General Manager, the Commission shall designate an appropriate replacement to perform the duties of the office during such absence or disability. B. The General Manager shall have full charge and control of the construction of all work under the jurisdiction of the Commission, the maintenance and operation thereof, and the administration of the business affairs of the Commission. The powers of the General Manager shall be: 5 1. To see that these By -Laws and all rules and regulations of the Commission are enforced. 2. To see that the operation, construction and maintenance of the Hutchinson Utilities properties conform to all provisions of the City Charter. 3. To see that all supplies and materials are purchased according to the policies on purchasing. 4. To attend all meetings of the Hutchinson Utilities Commission, to submit reports of the affairs of the Hutchinson Utilities Commission and to participate in the discussion of all matters coming before the Commission. 5. To keep the Commissioners advised as to the financial condition and future needs of the department, and to prepare and submit an annual budget, and to furnish quarterly budgets to the Commission. 6. To prepare or cause to be prepared, all plans and specifications for the construction of the works of the Commission. 7. To devote his entire time to the business of the Commission. 8. To prepare or have prepared for presentation to the Commission for its consideration, approval, rules and regulations as follows: A. Information and requirements for electrical service. 6 LJ B. C. D. 9. To Co Information and requirements for natural gas service. Management policy in relation to employees compensation. Manual of accounting instructions. perform such other and additional duties as the emission may require. SECTION - 2 The duties of all other appointees and employees shall be prescribed from time to time by the General Manager with approval of the Commission. ARTICLE V Certain Rules, Regulations and Procedures of Hutchinson Utilities Commission SECTION - 1 ACCOUNTING A. The books and accounts of the Commission shall be kept in so far as practicable in conformity with the uniform system of accounts as prescribed by the Federal Energy Regulatory Commission and so as to facilitate the annual reporting of all transactions of the Commission funds. 1. The present value of the electric system shall be taken as the actual historical cost of the property in use and 7 0 useful in the production and distribution of electrical energy. 2. The present value of the natural gas system shall be taken as the actual historical cost of the property in use and useful in the distribution of natural gas. SECTION - 2 RATES General - The Commission shall fix rates for electrical energy and natural gas service to the ultimate consumer without discrimination between consumers of same class, and no rate shall be charged or practice adopted which will grant a discriminatory rate, rebate or other special concession to any consumer served by the Hutchinson Utilities Commission. It is specifically understood that the City is a consumer within the meaning of this section and further it is specifically understood that the natural gas division is a consumer of the electric department within the meaning of this section. B. Electric Rates - The Commission shall fix such rates for electricity furnished to consumers as will secure revenues sufficient to pay all salaries and wages of all officers and employees in the electric department; to cover the cost of all material and supplies used in the operation of 8 the plant; to cover the cost of all repairs; to cover all miscellaneous expenses; to pay all interest charges upon all indebtedness of the Commission created for the purpose of purchasing, improving or extending the electric system, to provide for a contribution to the City in lieu of taxes, and to provide a sinking fund sufficient for the purpose of paying off such indebtedness at maturity and establish restricted funds based on aood business judgement. C. Natural Gas Rates - The Commission shall fix such rates for natural gas furnished to consumers as will secure revenues sufficient to pay all salaries and wages of all officers and employees in the natural gas division; to cover the cost of all repairs; to cover all miscellaneous expenses; to pay all interest charged upon all indebtedness of the Commission created for the purpose of purchasing, improving, or extending the natural gas system, and to provide a sinking fund sufficient for the purpose of paying off such indebtedness at maturity and establish restricted funds based on good business judgement. 0 SECTION - 3 ELECTRIC RATES AND REGULATIONS The Commission shall adopt and amend, from time to time, rules and regulations pertaining to electric service to consumers and customer relations. SECTION - 4 NATURAL GAS RULES AND REGULATIONS The Commission shall adopt and amend, from time to time, rules and regulations pertaining to natural gas service to consumers and customer relations. SECTION - 5 POLICY AS TO EMPLOYEES The Commission shall adopt and amend, from time to time, rules and regulations in respect to labor and employment policy. In the selection of staff employees, information shall be submitted to the Commission prior to consideration for employment by the Commission. 10