10-31-2012 HUCMMINUTES
Regular Meeting — Hutchinson Utilities Commission
Wednesday, October 31, 2012
Call to order — 3:00 p.m.
President Bordson called the meeting to order. Members present: President Dwight
Bordson; Vice President Craig Lenz; Secretary Leon Johnson; Commissioner Monty
Morrow; Attorney Marc Sebora; General Manager Michael Kumm. Member absent:
Commissioner Anthony Hanson.
1. Approve Minutes of September 26, 2012 Regular Meeting
The minutes of the September 26, 2012 regular meeting were reviewed. A motion
was made by Vice President Lenz, seconded by Secretary Johnson to approve the
minutes. Motion was unanimously carried.
At this time, Commissioner Hanson arrived at the meeting: 3:02 p.m.
2. Ratify Payment of Bills for September 2012
The September 2012 payables were discussed. A motion was made by Secretary
Johnson, seconded by Vice President Lenz to ratify the payment of bills in the
amount of $2,664,967.61 (detailed listing in payables book). Motion was
unanimously carried.
3. Approve Financial Statements /Budget Year to Date
GM Kumm presented the September 2012 financial statements /budget year -to-
date. After discussion, a motion was made by Commissioner Hanson, seconded by
Vice President Lenz to approve the financial statements /budget year -to -date.
Motion was unanimously carried.
4. City Update on Solar Project
City Administrator Carter reviewed the history of the solar project the City is
considering. City Council approved the costs to hire a grant writer to write a grant
to help pay towards the potential project.
5. Approve 2013 Health Insurance
GM Kumm presented the comparative analysis Jan Sifferath performed between
Westlund Associates, Associated Financial Group and Wells Fargo. Staff
recommendation is to remain with Westlund Associates for calendar year 2013 as
Westlund negotiated a 2% reduction in the insurance premium. The Board
commended Jan on a job well done with this negotiation. A motion was made by
Commissioner Morrow, seconded by Secretary Johnson to remain with Westlund
Associates for calendar 2013 health insurance. Motion was unanimously carried.
(Comparative Analysis attached.)
6. Approve the Authorization to Negotiate the Capacity Contract with Dairyland
Power Cooperative
GM Kumm presented the annual cash flow of the initial proposal sent to Dairyland
Power Cooperative. HUC made Dairyland's short list. A motion was made by Vice
1
President Lenz, seconded by Secretary Johnson to approve the authorization to
negotiate the Capacity Contract with Dairyland Power Cooperative. Motion was
unanimously carried. (Annual Cash Flow sheet attached.)
7. Approve Capacity Agreement with Southern Minnesota Municipal Power
Agency
GM Kumm presented the Capacity Agreement with Southern Minnesota Municipal
Power Agency. After discussion, a motion was made by Vice President Lenz,
seconded by Commissioner Hanson to approve the Capacity Agreement with
Southern Minnesota Municipal Power Agency. Motion was unanimously carried.
(Capacity Agreement attached.)
8. Communication from the City Administrator
City Administrator Carter provided the following update:
• City working on updating their long -range planning documents
• They are in the early stages of updating the downtown plan in conjunction
with EDA projects to spur City growth
• Working on general fund budget which will be adopted in December
• Water and sewer along with enterprise funds will be discussed at the next
City workshop; most funds are looking stable
• In an effort to control costs, reviewing different vendor software for financial
systems
9. Division Reports
Gas — John Webster
• Meeting with Mike Kumm and Mid Continent regarding natural gas wells.
• Meeting with GRE in a couple weeks regarding mitigation study on pipeline.
Business — Jan Sifferath
• Great turnout at the HUC Open House. Vice President Lenz congratulated all
HUC employees on a job well done during the Open House.
• Working on changing dental and long -term disability from self- insured to fully -
insured plans to reduce premiums.
• Jon Guthmiller and Ryan Ellenson gave presentations to second graders this
week.
• Gone next week at Advanced Utility Systems conference.
Electric — Steve Lancaster
• Firing up unit 5 first week in December
• Emissions performance testing December 13 and 14
Finance — Jared Martig
• Last Monday, LOGIS's software upgrade went "live"
GM Kumm handed out the 2012 Action Plan and explained its significance.
2
10. Legal Update
Nothing to report
Unfinished Business
• Update from City Attorney on Patent for the Real -Time Auto - Suggestion for
Nodal Delivery in Energy Networks
Attorney Sebora reported meeting set up for this Friday with GM Kumm and
Dave Fairbairn to discuss the technical information regarding the patent.
• Discuss Credit Card Payments
Jan Sifferath discussed trying to get utility interchange program going which will
result in a substantial decrease in credit card processing fees. Jan will continue
to work on this.
• Discussion Regarding Pre -Pay for Natural Gas
GM Kumm reported the market started to change again and the previously
interested parties are not interested anymore.
• PILOT
GM Kumm handed out cash flows and combined income statement explaining
there were issues with the 2.75% formula for the transfer in 2008 and
expressed the importance of reviewing these issues and creating solutions
before making any decisions on adjusting the formula.
New Business
The Board discussed consideration of changing the rebate program to a year-
long program. The current program dollars are available on first come, first
serve basis until the funds run out. Jan Sifferath will research and bring
recommendations back to the Board.
There being no further business, a motion was made by Vice President Lenz, seconded
by Commissioner Hanson to go into closed session at 4:20 p.m. to conduct the
performance review of Hutchinson Utilities Commission General Manager.
ATTEST:
Dwight Bordson, President
3
Leon Johnson, Secretary
MINUTES
Regular Meeting — Hutchinson Utilities Commission
Wednesday, October 31, 2012
Call to order — 3:00 p.m.
President Bordson called the meeting to order. Members present: President Dwight
Bordson; Vice President Craig Lenz; Secretary Leon Johnson; Commissioner Monty
Morrow; Attorney Marc Sebora; General Manager Michael Kumm. Member absent:
Commissioner Anthony Hanson.
1. Approve Minutes of September 26, 2012 Regular Meeting
The minutes of the September 26, 2012 regular meeting were reviewed. A motion
was made by Vice President Lenz, seconded by Secretary Johnson to approve the
minutes. Motion was unanimously carried.
At this time, Commissioner Hanson arrived at the meeting: 3:02 p.m.
2. Ratify Payment of Bills for September 2012
The September 2012 payables were discussed. A motion was made by Secretary
Johnson, seconded by Vice President Lenz to ratify the payment of bills in the
amount of $2,664,967.61 (detailed listing in payables book). Motion was
unanimously carried.
3. Approve Financial Statements /Budget Year to Date
GM Kumm presented the September 2012 financial statements /budget year -to-
date. After discussion, a motion was made by Commissioner Hanson, seconded by
Vice President Lenz to approve the financial statements /budget year -to -date.
Motion was unanimously carried.
4. City Update on Solar Project
City Administrator Carter reviewed the history of the solar project the City is
considering. City Council approved the costs to hire a grant writer to write a grant
to help pay towards the potential project.
5. Approve 2013 Health Insurance
GM Kumm presented the comparative analysis Jan Sifferath performed between
Westlund Associates, Associated Financial Group and Wells Fargo. Staff
recommendation is to remain with Westlund Associates for calendar year 2013 as
Westlund negotiated a 2% reduction in the insurance premium. The Board
commended Jan on a job well done with this negotiation. A motion was made by
Commissioner Morrow, seconded by Secretary Johnson to remain with Westlund
Associates for calendar 2013 health insurance. Motion was unanimously carried.
(Comparative Analysis attached.)
6. Approve the Authorization to Negotiate the Capacity Contract with Dairyland
Power Cooperative
GM Kumm presented the annual cash flow of the initial proposal sent to Dairyland
Power Cooperative. HUC made Dairyland's short list. A motion was made by Vice
1
President Lenz, seconded by Secretary Johnson to approve the authorization to
negotiate the Capacity Contract with Dairyland Power Cooperative. Motion was
unanimously carried. (Annual Cash Flow sheet attached.)
7. Approve Capacity Agreement with Southern Minnesota Municipal Power
Agency
GM Kumm presented the Capacity Agreement with Southern Minnesota Municipal
Power Agency. After discussion, a motion was made by Vice President Lenz,
seconded by Commissioner Hanson to approve the Capacity Agreement with
Southern Minnesota Municipal Power Agency. Motion was unanimously carried.
(Capacity Agreement attached.)
8. Communication from the City Administrator
City Administrator Carter provided the following update:
• City working on updating their long -range planning documents
• They are in the early stages of updating the downtown plan in conjunction
with EDA projects to spur City growth
• Working on general fund budget which will be adopted in December
• Water and sewer along with enterprise funds will be discussed at the next
City workshop; most funds are looking stable
• In an effort to control costs, reviewing different vendor software for financial
systems
9. Division Reports
Gas — John Webster
• Meeting with Mike Kumm and Mid Continent regarding natural gas wells.
• Meeting with GRE in a couple weeks regarding mitigation study on pipeline.
Business — Jan Sifferath
• Great turnout at the HUC Open House. Vice President Lenz congratulated all
HUC employees on a job well done during the Open House.
• Working on changing dental and long -term disability from self- insured to fully -
insured plans to reduce premiums.
• Jon Guthmiller and Ryan Ellenson gave presentations to second graders this
week.
• Gone next week at Advanced Utility Systems conference.
Electric — Steve Lancaster
• Firing up unit 5 first week in December
• Emissions performance testing December 13 and 14
Finance — Jared Martig
• Last Monday, LOGIS's software upgrade went "live"
GM Kumm handed out the 2012 Action Plan and explained its significance.
2
10. Legal Update
Nothing to report
Unfinished Business
• Update from City Attorney on Patent for the Real -Time Auto - Suggestion for
Nodal Delivery in Energy Networks
Attorney Sebora reported meeting set up for this Friday with GM Kumm and
Dave Fairbairn to discuss the technical information regarding the patent.
• Discuss Credit Card Payments
Jan Sifferath discussed trying to get utility interchange program going which will
result in a substantial decrease in credit card processing fees. Jan will continue
to work on this.
• Discussion Regarding Pre -Pay for Natural Gas
GM Kumm reported the market started to change again and the previously
interested parties are not interested anymore.
• PILOT
GM Kumm handed out cash flows and combined income statement explaining
there were issues with the 2.75% formula for the transfer in 2008 and
expressed the importance of reviewing these issues and creating solutions
before making any decisions on adjusting the formula.
New Business
The Board discussed consideration of changing the rebate program to a year-
long program. The current program dollars are available on first come, first
serve basis until the funds run out. Jan Sifferath will research and bring
recommendations back to the Board.
There being no further business, a motion was made by Vice President Lenz, seconded
by Commissioner Hanson to go into closed session at 4:20 p.m. to conduct the
performance review of Hutchinson Utilities Commission General Manager.
eon Johnson, Secretary
ATTEST:
D ght rds , President
3
Re: Health Insurance
Date: October 9, 2012
Dear Commissioners:
A comparative analysis has been performed between Westlund Associates, Associated Financial Group
and Wells Fargo.
All three firms provide services that are very similar in nature, with fees that are very similar. Westlund
Associates negotiated a 2% reduction in our insurance premium for calendar year 2013.
For your use we are attaching the comparative analysis.
Our recommendation is to remain with Westlund Associates for calendar year 2013.
Sincerely,
1
Mike Kumm
General Manager
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CAPACITY
CONFIRMATION AGREEMENT
This Confirmation Agreement ( "Agreement ") shall confirm the agreement reached on
October 19, 2012 ( "Transaction date "), by and between Hutchinson Utilities Commission
( "HUC ") and Southern Minnesota Municipal Power Agency ( "SMMPA ") (hereinafter
HUC and SMMPA are sometimes referred to singly as a "Party" and collectively as the
"Parties ") with respect to the purchase and sale of capacity under the terms and
conditions as follows:
Seller: HUC
Buyer: SMMPA
Schedule P Product:
[X] Other: Capacity, which for the purposes of this transaction shall mean
"Zonal Resource Credits" ( "ZRC "), as such term is defined in (i)
the Midwest Independent Transmission System Operator, Inc.
( "MISO ") Open Access Transmission, Energy, and Operating
Reserve Markets Tariff, as may be amended from time to time
( "MISO Tariff'); and (ii) the MISO Resource Adequacy Business
Practices Manual, as may be amended from time to time ( "RA
BPM ", or together with the MISO Tariff referred to as the "MISO
Rules ").
For clarification purposes, the Parties acknowledge and understand
that, in accordance with the MISO Rules, one ZRC represents one
megawatt ( "MW ") of Unforced Capacity from a Planning
Resource that qualifies to satisfy the resource adequacy
requirements of Module E -1 of the MISO Tariff.
Contract Ouantity and Contract Price:
The Quantity of ZRCs and the applicable Local Resource Zone ( "LRZ "), as further
described in Attachment VV of the MISO Tariff, associated with such ZRCs for each
Planning Year (i.e., June 1" of one year through May 31s` of the following year)
encompassed by this Transaction, and the Contract Price(s) associated therewith shall be
as follows:
Planning
Year
Quantity
(# of ZRCs) 1
LRZ Contract Price
($ per ZRC)
Purchase Price
M
2013/2014
40.0
LRZ 1 $4,800
$ 192,000
Total
1
$ 192,000
Seller represents and warrants that with respect to the Product, Seller: (A) Will enter the
ZRCs in the MISO Module E capacity tracking system; and (B) Has not and will not sell
such ZRCs (or the MWs of Unforced Capacity associated with each ZRC) to any other
counterparty.
Special Conditions:
1. Delivery and Receiut:
Seller shall accomplish delivery of the Quantity by submitting the appropriate
transaction(s) in MISO's Module E capacity tracking system, or any successor system
( "MECT ") to electronically assign the Quantity to Buyer. Buyer shall accomplish receipt
of the Quantity by confirming the appropriate transaction(s) submitted by Seller in the
MELT. It is the intention of the Parties that Seller and Buyer shall accomplish delivery
and receipt of the Quantity by submitting and confirming the appropriate transaction(s) in
the MECT not later than ten (10) Business Days prior to each Resource Plan Deadline, as
such term is defined in the MISO Tariff, for the first Planning Year and each subsequent
Planning Year encompassed by this Transaction as is permissible to deliver and receive
in the MECT ( "Transfer Deadline ").
2. Pavment Terms:
The Parties agree that the payment schedule for the Product delivered and received
hereunder shall be governed by the terms and conditions of the North American Energy
Marketers Association ( "NAEMA ") Capacity and Energy Tariff, effective February 22,
2011 (the "NAEMA Tariff'). For the avoidance of doubt, as soon as practicable, after
the end of each electronic delivery for each Planning Year set forth above, Seller will
render to Buyer an invoice for the ZRCs attributable to the delivery.
3. Failures to Deliver and /or Receive:
(a) Seller's Failure to Deliver. In the event that: (i) Seller fails to deliver all or part of the
Product by the Transfer Deadline, and such failure is not excused by Buyer's failure to
perform; (ii) Buyer provides notice of such failure to Seller at least nine (9) Business
Days prior to the Resource Plan Deadline; and (iii) Seller fails to cure such failure within
one (1) Business Day after notice from the Buyer, then Seller shall pay Buyer, within five
(5) Business Days of invoice receipt, all Financial Settlement Charges assessed to Buyer
(either directly or through contractual obligation) resulting directly from Seller's failure
to deliver all or part of the Product. In addition, to the extent that Seller's failure to
deliver all or part of the Product results in Buyer being assessed (i) Financial Settlement
Charges for an amount of MW that is less than the Quantity that Seller failed to deliver,
or (ii) no Financial Settlement Charges for the Quantity that Seller failed to deliver, then
Buyer shall also be entitled to the positive difference, if any, obtained by subtracting the
Contract Price from the Replacement Price and multiplying such positive difference, if
any, by the portion of the Quantity which Seller failed to deliver and for which no
Financial Settlement Charges are assessed to Buyer.
In the event that: (i) Seller fails to deliver all or part of the Product by the Transfer
Deadline, and such failure is not excused by Buyer's failure to perform; and (ii) Buyer
fails to provide notice of such failure to Seller at least nine (9) Business Days prior to the
Resource Plan Deadline, then Seller shall pay Buyer, within five (5) Business Days of
invoice receipt, the positive difference, if any, obtained by subtracting the Contract Price
from the Replacement Price and multiplying such positive difference, if any, by the
Quantity which Seller failed to deliver.
Buyer shall use commercially reasonable efforts to purchase replacement Product for the
Quantity which Seller failed to deliver.
The invoice from Buyer to Seller for any amount owed by Seller to Buyer pursuant to this
provision shall include a written statement explaining in reasonable detail the calculation
of such amount. The Parties acknowledge and agree that with respect to this Transaction
only, Section 2.47 of the NAEMA Tariff shall be amended to delete all references to "at
the Delivery Point" and "to the Delivery Point" contained in such section.
(b) Buyer's Failure to Receive.
In the event that: (i) Buyer fails to receive all or part of the Product by the Transfer
Deadline, and such failure is not excused by Seller's failure to perform; (ii) Seller
provides notice of such failure to Buyer at least nine (9) Business Days prior to the
Resource Plan Deadline; and (iii) Buyer fails to cure such failure within one (1) Business
Day after notice from the Seller, then Buyer shall pay Seller, within five (5) Business
Days of invoice receipt, an amount equal to the Contract Price multiplied by the portion
of the Quantity which Buyer failed to receive.
In the event that: (i) Buyer fails to receive all or part of the Product by the Transfer
Deadline, and such failure is not excused by Seller's failure to perform; and (ii) Seller
fails to provide notice of such failure to Buyer at least nine (9) Business Days prior to the
Resource Plan Deadline, then Buyer shall pay Seller, within five (5) Business Days of
invoice receipt, an amount equal to the positive difference, if any, obtained by subtracting
the Sales Price from the Contract Price and multiplying such positive difference, if any,
by the portion of the Quantity which Buyer failed to receive; provided, however, that if
Seller, after using commercially reasonable efforts, is unable to resell all or a portion of
the Quantity which Buyer failed to receive, the Sales Price with respect to such Quantity
that Seller is unable to resell shall be deemed to be equal to zero (0).
The invoice from Seller to Buyer for any amount owed by Buyer to Seller pursuant to this
provision shall include a written statement explaining in reasonable detail the calculation
of such amount. The Parties acknowledge and agree that with respect to this Transaction
only, Section 2.49 of the NAEMA Tariff shall be amended to delete all references to "at
the Delivery Point" contained in such section.
(c) Limitation of Remedies. The Parties acknowledge and agree that the remedies set
forth herein regarding failures to deliver /receive shall supersede and replace Sections 5.1
and 5.2 of the NAEMA Tariff with respect to this Transaction only.
4. Governing Aueement:
Seller is entering into this Confirmation in accordance with its market -based rate tariff,
which is on file with the Federal Energy Regulatory Commission. The commercial terms
and conditions of the NAEMA Tariff shall apply to this Confirmation; provided,
however, that to the extent that there is an inconsistency between the terms and
conditions of this Confirmation and the NAEMA Tariff, the applicable terms and
conditions of this Confirmation shall govern. Terms used but not defined herein shall
have the meanings ascribed to them in the NAEMA Tariff. Capitalized terms used but not
defined herein or in the NAEMA Tariff shall have the meanings ascribed to such terms in
the MISO Rules.
Hutchinson Utilities Commission
By • �� J. /�" " Date: L ll 1 Z
Name: ilL L_ 1 qkl ..
Title: 0 1%�'�' �\ 4"1—
SOUT MINNESOTA MUNICIPA POWER AGENCY
By: Date:
Name: ITew k
Title: ��