04-24-2013 HUCMMINUTES
Regular Meeting — Hutchinson Utilities Commission
Wednesday, April 24, 2013
Call to order — 3:00 p.m.
President Bordson called the meeting to order. Members present: President Dwight
Bordson; Vice President Leon Johnson; Secretary Monty Morrow; Commissioner
Anthony Hanson; Commissioner Craig Lenz; Attorney Marc Sebora; General Manager
Michael Kumm.
1. Approve Minutes of: March 27, 2013 Regular Meeting and April 16, 2013
Special Meeting
The minutes of the March 27, 2013 regular meeting and April 16, 2013 special
meeting were reviewed. A motion was made by Secretary Morrow, seconded by
Commissioner Hanson, to approve the March 27, 2013 regular meeting and
April 16, 2013 special meeting minutes. Motion was unanimously carried.
2. Ratify Payment of Bills for March 2013
The March 2013 payables were discussed. A motion was made by Commissioner
Lenz, seconded by Vice President Johnson to ratify the payment of bills in the
amount of $2,931,773.98 (detailed listing in payables book). Commissioner
Hanson abstained from voting because of a conflict of interest. Motion was
unanimously carried.
3. Approve Financial Statements /Budget Year to Date
GM Kumm presented the March 2013 financial statements /budget year -to -date.
After discussion, a motion was made by Commissioner Hanson, seconded by
Commissioner Lenz to approve the financial statements /budget year -to -date.
Motion was unanimously carried.
4. Approve Changes to Policies and Requirements Booklet
GM Kumm presented changes to the policies and requirements booklet, sections:
• Natural Gas Service Requirements & Charges
• Temporary Service — Gas
• Locating Customer's Underground Utilities - Gas
Changes were made to sections: natural gas service requirements & charges; and,
locating customer's underground utilities — gas, for clean -up purposes only. No
changes were recommended for section: temporary service — gas. A motion was
made by Vice President Johnson, seconded by Secretary Morrow to approve
changes to the policies and requirements booklet, sections: natural gas service
requirements & charges; and, locating customer's underground utilities - gas.
Motion was unanimously carried. (Changes attached.)
At this time City Administrator Jeremy Carter arrived: 3:10 p.m.
5. Approve Changes to Exempt and Non - Exempt Handbooks
(Tabled from March 27, 2013 Regular Commission Meeting)
1
GM Kumm presented changes to the exempt and non - exempt handbooks,
sections:
• Conflict of Interest
• Other Employment
• License Requirements for Utility Vehicle Operation
Staff recommended changes to sections conflict of interest and other employment
for clean -up purposes only. After discussion, the Board recommended adding the
verbiage, ", and deemed acceptable by HUC management." to the end of the
paragraph in section conflict of interest.
The proposed changes to section license requirements for utility vehicle operation,
included clarification and verbiage in regard to new hires. After discussion, the
Board recommended striking, "suspension, demotion, or provide reasonable
accommodation" from the last paragraph.
A motion was made by Vice President Johnson, seconded by Commissioner Lenz
to approve the changes to the exempt and non - exempt handbooks, sections:
conflict of interest; other employment; and license requirements for utility vehicle
operation to include the amended changes as stated. Motion was unanimously
carried. (Changes attached.)
Agenda item #6: Rescind Exempt and Non - Exempt Handbooks, Section: Firearms was
moved to agenda item #7; and
Agenda item #7: Approve Exempt and Non - Exempt Handbooks, Section: Violence in
the Workplace was moved to agenda item #6.
6. Approve Exempt and Non - Exempt Handbooks, Section: Violence in the
Workplace
(Tabled from March 27, 2013 Regular Commission Meeting)
In the March 27, 2013 regular commission meeting, Jan Sifferath reported back to
the Board after her further review of the discipline policy and reviewing other
utilities' policies regarding zero tolerance. Jan's recommendation was to rescind
the firearms policy to be replaced with the violence in the workplace policy. The
Board recommended adding firearms verbiage to the violence in the workplace
policy. Therefore, Jan Sifferath and Attorney Sebora made further revisions to the
policy and are recommending approval. After discussion, a motion was made by
Commissioner Lenz, seconded by Commissioner Hanson to approve exempt and
non - exempt handbooks, section: violence in the workplace. Motion was
unanimously carried. (Policy attached.)
7. Rescind Exempt and Non - Exempt Handbooks, Section: Firearms
(Tabled from March 27, 2013 Regular Commission Meeting)
Staff recommended rescinding the firearms policy as it was replaced with the
violence in the workplace policy. A motion was made by Vice President Johnson,
seconded by Secretary Morrow to rescind exempt and non - exempt handbooks,
section: firearms. Motion was unanimously carried. (Rescinded Policy Attached.)
2
8. Approve Changes to Policy on Purchasing
GM Kumm presented changes to the policy on purchasing. These changes include
added verbiage authorizing HUC purchasing agent to create requisitions and
approve purchase orders for recurring purchases with established vendors; adding
the City Attorney as an authorized person for purchases up to $5,000; and
increasing purchase authorizing for managers from $1,000 to $2,000 to streamline
approval process for recurring monthly bills. After discussion, a motion was made
by Commissioner Lenz, seconded by Commissioner Hanson to approve changes
to policy on purchasing. Motion was unanimously carried. (Policy attached.)
9. Approve Change Order M -1 for Unit 5, Plant 1 Building Modifications
Mechanical
Steve Lancaster presented change order M -1 for unit 5, plant 1 building
modifications mechanical. After discussion, a motion was made by Commissioner
Hanson, seconded by Secretary Morrow to approve change order M -1 for unit 5,
plant 1 building modifications mechanical for $34,589.73. Motion was unanimously
carried. (Change order attached.)
10. Additional Discussion on PILOT
Additional discussion held regarding the PILOT. The transfer formula committee
(President Bordson, Secretary Morrow and GM Kumm) is looking for feedback to
frame a range for negotiations with the City of Hutchinson. The Board suggested a
dollar amount not to exceed $1.8- to $2- million. After discussion, the Board
requested the transfer formula committee return with their final recommendations
for Board approval.
11. Discuss Separate Business Unit for Wholesale Business
GM Kumm explained the idea of a separate business unit for wholesale business
was discussed during the last PILOT workshop. Discussion held regarding two
areas of consideration: 1) focus; and 2) allocation and separation of expenses.
GM Kumm will report back to the Board the pros and cons of creating a separate
business unit for wholesale business.
12. Update on Units #5 and #6 Project Plan and Spend Plan
GM Kumm presented the update on units #5 and #6 project plan and spend plan to
include expenditures for 2011 through 2013, noting that with total expenditures,
HUC is 7.23% under budget. GM Kumm also presented actual power cost
comparisons including unit 1 versus not including unit 1.
13. Communication from the City Administrator
City Administrator Carter explained some City projects will be starting soon to
include: Jefferson Street reconstruction; Highway 15 roundabout; Depot site
renovation; and repaving some City, school and Hutchinson Health parking lots.
Other updates included: City budgeting process starting end of April; looking to
replace LOGIS with a different vendor with a potential savings of $80,000 per year- 7
looking to fill vacancy at airport as Life Links is moving to Willmar; considering
refinancing some City debt with lower interest rates.
3
At this time Attorney Sebora left the meeting: 4:30 p.m.
14. Division Reports
Natural Gas — John Webster
• Moving natural gas pipe for the Jefferson Street reconstruction project.
• Continuing to work on the City of Brownton project.
• City of Brownton requested HUC to provide all materials for building distribution
system; met with them on Friday regarding materials.
• Invited to the City of Brownton contractor meeting on May 7 to help answer
questions.
Business — Jan Sifferath
• Will give update in the Unfinished Business.
Finance — Jared Martig
• Attachment O mailed to MISO.
• Distributed 2012 inventory items over $5,000 for commissioner's review.
Electric — Steve Lancaster
• Interviewed 5 of the 15 applicants for the operator position.
GM Kumm reviewed the HUC action plan progress. Also, distributed the revisions staff
recommended to the new commissioner matrix for the Board to review.
15. Legal Update
Attorney Sebora was absent.
Unfinished Business
• Energy Model Patent Update
President Bordson explained GM Kumm is pursuing the patent on his own.
• Succession Plan Update
President Bordson explained the Commissioners received the succession plan
from GM Kumm and requested the Board share any feedback with him.
• Discuss Pre -Pay for Natural Gas
Nothing to report.
• Discuss Credit Card Payments
Jan Sifferath is looking into Infinity.Link as a payment solution for HUC
customers, which will also result in a savings for HUC.
• HUC Adjacent Land
GM Kumm reported after evaluation, there is no interest in the land.
New Business
None
11
There being no further business, a motion was made by Commissioner Lenz, seconded
by Commissioner Hanson to go into closed session at 4:44 p.m. to discuss labor
negotiations. Motion unanimously carried.
ATTEST:
Dwight Bordson, President
5
Monty Morrow, Secretary
MINUTES
Regular Meeting — Hutchinson Utilities Commission
Wednesday, April 24, 2013
Call to order — 3:00 p.m.
President Bordson called the meeting to order. Members present: President Dwight
Bordson; Vice President Leon Johnson; Secretary Monty Morrow; Commissioner
Anthony Hanson; Commissioner Craig Lenz; Attorney Marc Sebora; General Manager
Michael Kumm.
1. Approve Minutes of: March 27, 2013 Regular Meeting and April 16, 2013
Special Meeting
The minutes of the March 27, 2013 regular meeting and April 16, 2013 special
meeting were reviewed. A motion was made by Secretary Morrow, seconded by
Commissioner Hanson, to approve the March 27, 2013 regular meeting and
April 16, 2013 special meeting minutes. Motion was unanimously carried.
2. Ratify Payment of Bills for March 2013
The March 2013 payables were discussed. A motion was made by Commissioner
Lenz, seconded by Vice President Johnson to ratify the payment of bills in the
amount of $2,931,773.98 (detailed listing in payables book). Commissioner
Hanson abstained from voting because of a conflict of interest. Motion was
unanimously carried.
3. Approve Financial Statements /Budget Year to Date
GM Kumm presented the March 2013 financial statements /budget year -to -date.
After discussion, a motion was made by Commissioner Hanson, seconded by
Commissioner Lenz to approve the financial statements /budget year -to -date.
Motion was unanimously carried.
4. Approve Changes to Policies and Requirements Booklet
GM Kumm presented changes to the policies and requirements booklet, sections:
• Natural Gas Service Requirements & Charges
• Temporary Service — Gas
• Locating Customer's Underground Utilities - Gas
Changes were made to sections: natural gas service requirements & charges; and,
locating customer's underground utilities — gas, for clean -up purposes only. No
changes were recommended for section: temporary service — gas. A motion was
made by Vice President Johnson, seconded by Secretary Morrow to approve
changes to the policies and requirements booklet, sections: natural gas service
requirements & charges; and, locating customer's underground utilities - gas.
Motion was unanimously carried. (Changes attached.)
At this time City Administrator Jeremy Carter arrived: 3:10 p.m.
5. Approve Changes to Exempt and Non - Exempt Handbooks
(Tabled from March 27, 2013 Regular Commission Meeting)
1
GM Kumm presented changes to the exempt and non - exempt handbooks,
sections:
• Conflict of Interest
• Other Employment
• License Requirements for Utility Vehicle Operation
Staff recommended changes to sections conflict of interest and other employment
for clean -up purposes only. After discussion, the Board recommended adding the
verbiage, ", and deemed acceptable by HUC management." to the end of the
paragraph in section conflict of interest.
The proposed changes to section license requirements for utility vehicle operation,
included clarification and verbiage in regard to new hires. After discussion, the
Board recommended striking, "suspension, demotion, or provide reasonable
accommodation" from the last paragraph.
A motion was made by Vice President Johnson, seconded by Commissioner Lenz
to approve the changes to the exempt and non - exempt handbooks, sections:
conflict of interest; other employment; and license requirements for utility vehicle
operation to include the amended changes as stated. Motion was unanimously
carried. (Changes attached.)
Agenda item #6: Rescind Exempt and Non - Exempt Handbooks, Section: Firearms was
moved to agenda item #7; and
Agenda item #7: Approve Exempt and Non - Exempt Handbooks, Section: Violence in
the Workplace was moved to agenda item #6.
6. Approve Exempt and Non - Exempt Handbooks, Section: Violence in the
Workplace
(Tabled from March 27, 2013 Regular Commission Meeting)
In the March 27, 2013 regular commission meeting, Jan Sifferath reported back to
the Board after her further review of the discipline policy and reviewing other
utilities' policies regarding zero tolerance. Jan's recommendation was to rescind
the firearms policy to be replaced with the violence in the workplace policy. The
Board recommended adding firearms verbiage to the violence in the workplace
policy. Therefore, Jan Sifferath and Attorney Sebora made further revisions to the
policy and are recommending approval. After discussion, a motion was made by
Commissioner Lenz, seconded by Commissioner Hanson to approve exempt and
non - exempt handbooks, section: violence in the workplace. Motion was
unanimously carried. (Policy attached.)
7. Rescind Exempt and Non - Exempt Handbooks, Section: Firearms
(Tabled from March 27, 2013 Regular Commission Meeting)
Staff recommended rescinding the firearms policy as it was replaced with the
violence in the workplace policy. A motion was made by Vice President Johnson,
seconded by Secretary Morrow to rescind exempt and non - exempt handbooks,
section: firearms. Motion was unanimously carried. (Rescinded Policy Attached.)
2
8. Approve Changes to Policy on Purchasing
GM Kumm presented changes to the policy on purchasing. These changes include
added verbiage authorizing HUC purchasing agent to create requisitions and
approve purchase orders for recurring purchases with established vendors; adding
the City Attorney as an authorized person for purchases up to $5,000; and
increasing purchase authorizing for managers from $1,000 to $2,000 to streamline
approval process for recurring monthly bills. After discussion, a motion was made
by Commissioner Lenz, seconded by Commissioner Hanson to approve changes
to policy on purchasing. Motion was unanimously carried. (Policy attached.)
9. Approve Change Order M -1 for Unit 5, Plant 1 Building Modifications
Mechanical
Steve Lancaster presented change order M -1 for unit 5, plant 1 building
modifications mechanical. After discussion, a motion was made by Commissioner
Hanson, seconded by Secretary Morrow to approve change order M -1 for unit 5,
plant 1 building modifications mechanical for $34,589.73. Motion was unanimously
carried. (Change order attached.)
10. Additional Discussion on PILOT
Additional discussion held regarding the PILOT. The transfer formula committee
(President Bordson, Secretary Morrow and GM Kumm) is looking for feedback to
frame a range for negotiations with the City of Hutchinson. The Board suggested a
dollar amount not to exceed $1.8- to $2- million. After discussion, the Board
requested the transfer formula committee return with their final recommendations
for Board approval.
11. Discuss Separate Business Unit for Wholesale Business
GM Kumm explained the idea of a separate business unit for wholesale business
was discussed during the last PILOT workshop. Discussion held regarding two
areas of consideration: 1) focus; and 2) allocation and separation of expenses.
GM Kumm will report back to the Board the pros and cons of creating a separate
business unit for wholesale business.
12. Update on Units #5 and #6 Project Plan and Spend Plan
GM Kumm presented the update on units #5 and #6 project plan and spend plan to
include expenditures for 2011 through 2013, noting that with total expenditures,
HUC is 7.23% under budget. GM Kumm also presented actual power cost
comparisons including unit 1 versus not including unit 1.
13. Communication from the City Administrator
City Administrator Carter explained some City projects will be starting soon to
include: Jefferson Street reconstruction; Highway 15 roundabout; Depot site
renovation; and repaving some City, school and Hutchinson Health parking lots.
Other updates included: City budgeting process starting end of April; looking to
replace LOGIS with a different vendor with a potential savings of $80,000 per year;
looking to fill vacancy at airport as Life Links is moving to Willmar; considering
refinancing some City debt with lower interest rates.
3
At this time Attorney Sebora left the meeting: 4:30 p.m.
14. Division Reports
Natural Gas — John Webster
• Moving natural gas pipe for the Jefferson Street reconstruction project.
• Continuing to work on the City of Brownton project.
• City of Brownton requested HUC to provide all materials for building distribution
system; met with them on Friday regarding materials.
• Invited to the City of Brownton contractor meeting on May 7 to help answer
questions.
Business — Jan Sifferath
• Will give update in the Unfinished Business.
Finance — Jared Martig
• Attachment O mailed to MISO.
• Distributed 2012 inventory items over $5,000 for commissioner's review.
Electric — Steve Lancaster
• Interviewed 5 of the 15 applicants for the operator position.
GM Kumm reviewed the HUC action plan progress. Also, distributed the revisions staff
recommended to the new commissioner matrix for the Board to review.
15. Legal Update
Attorney Sebora was absent.
Unfinished Business
• Energy Model Patent Update
President Bordson explained GM Kumm is pursuing the patent on his own.
• Succession Plan Update
President Bordson explained the Commissioners received the succession plan
from GM Kumm and requested the Board share any feedback with him.
• Discuss Pre -Pay for Natural Gas
Nothing to report.
• Discuss Credit Card Payments
Jan Sifferath is looking into Infinity.Link as a payment solution for HUC
customers, which will also result in a savings for HUC.
• HUC Adjacent Land
GM Kumm reported after evaluation, there is no interest in the land.
New Business
None
12
There being no further business, a motion was made by Commissioner Lenz, seconded
by Commissioner Hanson to go into closed session at 4:44 p.m. to discuss labor
negotiations. Motion unanimously carried.
Monty Morrow, Secretary
ATTEST: J
Dwigh Bordson, President
5
Natural Gas Service Requirements and Charges
HUC shall not install any facilities until all affected properties are within 6 inches of final
grade.
New Service Installations
Single- family residential service —3/4 inch $200.00
Commercial, Industrial, Multi- family service Time and Material Expense
HUC shall furnish and install the underground service line. The underground service line
to the meter is the property of HUC.
Excess flow valves shall be installed on all new single - family residential services lines.
All new natural gas consumer -owned fuel lines, downstream of the metering facilities,
must be pressure tested, prior to the gas meter being set. The test must be verified by
an approved inspector.
No structures or buildings shall be located over underground natural gas lines. In the
event a service line /distribution main has been built over by a customer, the natural gas
facilities must be relocated to a location approved by HUC. The customer
shall be responsible for all costs involved in relocating these facilities.
No service line valve or any portion of the natural gas metering facilities may be buried.
The customer shall be responsible for all costs incurred in raising all facilities.
Installation of Natural Gas Service Lines — November 1 through March 31
Final determination on installation of natural gas service lines shall be made by HUC.
Locating Customer's Underground Utilities
HUC shall locate all natural gas underground distribution and transmission facilities
up to the meter at no charge to the customer armor landowner.
Exempt & Non - Exempt
Violence in the Workplace
HUC strives to ensure a healthy and productive working environment. In that regard, safety and security
are of the utmost importance. HUC will enforce zero tolerance for any acts of physical assault or threats
of bodily harm in the performance of work duties, wherever those duties are performed.
Policy on Violence
HUC views aggressive and /or violent behavior as disruptive and contrary to the development and
maintenance of a safe, productive and supportive work environment. Such behavior is not tolerated.
Employees who exhibit such behavior will be held accountable under the policy and work rules, as well
as local, state, and federal law.
All threats and acts of aggression or violent behavior should be taken seriously and addressed
immediately. Such threats or acts include, but are not limited to:
• Harming or threatening to harm any employee or visitor;
• Damaging or threatening to damage property or the property of any employee or visitor;
• Unlawfully °^ ` &i +T possessing a daRgece4sfirearm, ammunition, weapon or incendiary
device on HUC property, vehicles, construction sites or while attending HUC business - related
activities off site;
• Engaging in stalking behavior of any employee
Accountability
All personnel are responsible for notifying their immediate supervisor, or in the absence of their
supervisor, another member of the management staff of any threats that they have witnessed, received,
or have been told that another person has witnessed or received. Even without an actual threat,
personnel should also report any behavior they have witnessed which they regard as threatening or
violent, when that behavior is job related or might be carried out on a public site, or is connected to
municipal employment. Employees are responsible for making this report regardless of the relationship
between the aggressor and the individual to whom the threat or threatening behavior was directed.
Directive
Any person who makes substantial threats, exhibits threatening behavior, or engages in violent acts
against employees, visitors, guests, or other individuals while on HUC property shall be removed from
the premises as quickly as safety permits and shall remain off HUC premises pending the outcome of an
investigation. Law enforcement should be utilized to remove individuals who are perceived as a threat.
HUC will initiate an appropriate response which may include, but is not limited to, suspension and /or
termination of any business relationship, reassignment of job duties, suspension or termination of
employment and /or criminal prosecution of the person or persons involved.
Employees and supervisors should work together to identify and report situations or locations where
there is a potential for physical assault or threat of bodily harm.
Employees should record specific incidents, behaviors or conversations that may indicate a potential for
violence. Documentation should be forwarded to their Manager /Director. In instances where their
supervisor is the source of potential violence, documentation should be forwarded to the next level of
management with a copy to the Customer /HR Manager.
Supervisors must carefully review and assess information provided by employees or other sources.
Appropriate precautions should be taken based on the specific situation. For example: If a problem
situation or location is identified, it should be communicated to other employees who are likely to
become involved in the situation or come in contact with the location.
Individuals applying for a restraining order must provide their supervisor and the Customer /HR Manager
with a copy of the petition used to seek the order, and a copy of any temporary and permanent
protective restraining order which is subsequently granted.
The Customer /HR Manager will monitor and evaluate the violence reports on an ongoing basis and will
submit program reports to the General Manager when requested.
EXEMPT & NON - EXEMPT
Fixes
RESCINDED 4 -24 -13
Employees are not permitted to possess firearms or ammunition in any of the Utilities buildings,
vehicles, and construction sites or while attending Utilities business - related activities off site.
Such possession of firearms or ammunition may subject an employee to disciplinary action.
EXEMPT
CONFLICT OF INTEREST
Employees must notify their Director of any direct or indirect financial interest they have in any
contract with the UtilityHUC or any interest they have in a contractor supplying the UtilityHUC.
Any employee with such a financial interest may not work on any TT Tt�HUC project or make
any decision concerning cyan HUC project involving the employee's outside financial
interest, unless the interest has been disclosed ;, and deemed acceptable by HUC management.
OTHER EMPLOYMENT
An employee's position at the UtilityHUC must take precedence over any other job an employee holds.
Employees must inform their Director, Manager or Supervisor of any work they perform for profit
outside of the Wt44yt[UCs position to ensure there is no conflict of interest between the y-HUC Job
and the outside employment. Also, employees are expected to be mentally alert and physically able to
perform their Utility jobs. Employees may not work on their outside employment while on duty with tie
yHUC nor may any y-HUC property or equipment be used to conduct such business at any
time.
LICENSE REQUIREMENTS FOR UTILITY VEHICLE OPERATION
Prior to hire date as an HUC employee, the candidate's driving record is evaluated and must be
approved. This is a condition of employment if operation of a vehicle is an essential part of an
employee's iob.
An employee whose job requires operating a motor vehicle must possess a valid Minnesota Driver's
License with necessary endorsements in order to conduct L461ity -HUC business. If an employee's driver's
license is suspended, revoked, or cancelled during employment with HUC, the employee must
immediately inform the employee's Director, Manager or Supervisor who must inform the General
Manager. The General Manager shall take appropriate action up to and including discharge;
vehicle at' ,
NON- EXEMPT
CONFLICT OF INTEREST
Employees must notify their Director of any direct or indirect financial interest they have in any
contract with the Ti c- utility UC or any interest they have in a contractor supplying the Utili yHUC.
Any employee with such a financial interest may not work on any Utilit HUC project or make
any decision concerning cyan HUC project involving the employee's outside financial
interest, unless the interest has been disclosed ;, and deemed acce tap ble by HUC management.
OTHER EMPLOYMENT
An employee's position at the -Ut4ityHUC must take precedence over any other job an employee holds.
Employees must inform their Director, Manager or Supervisor of any work they perform for profit
outside of thy- WtilityHUC's position to ensure there is no conflict of interest between the t-y-HUC iob
and the outside employment. Also, employees are expected to be mentally alert and physically able to
perform their Utility jobs. Employees may not work on their outside employment while on duty with tie
yHUC nor may any -HUC property or equipment be used to conduct such business at any
time.
LICENSE REQUIREMENTS FOR UTILITY VEHICLE OPERATION
Prior to hire date as an HUC employee, the candidate's driving record is evaluated and must be
droved. This is a condition of employment if operation of a vehicle is an essential part of an
employee's job.
An employee whose job requires operating a motor vehicle must possess a valid Minnesota Driver's
License with necessary endorsements in order to conduct Utility HUC business. If an employee's driver's
license is suspended, revoked, or cancelled_ during employment with HUC, the employee must
immediately inform the employee's Director, Manager or Supervisor who must inform the General
Manager. The General Manager shall take appropriate action up to and including discharge,
vehicle e Fati ,n An acceptable driving r err- AditiG of empll,"meRt if . ratien of chide
A meRded IY Re 30 'fin') n
,
Amended June 29, 2011
Pnl ICIIF.q
POLICY ON PURCHASING
State Statute 471:345
Hutchinson Utilities Commission hereby adopts a general policy on the purchasing of
equipment, supplies and services.
Purchasing Agent is authorized to create requisitions and approve purchase orders for
purchases associated with Hutchinson Utilities' standard inventory part numbers, which
are based on set order points and order quantities.
If requirements exceed current order quantities, either an approved Bill of Materials or
an approved requisition will be required.
All other purchases shall require supervisor permission. Emergency situations may
require a deviation from this policy to insure electric and /or natural gas services to the
customers of the Hutchinson Utilities. Joint purchasing of materials, supplies and
services shall be considered with other departments only when net economic benefits
can be seen. When a tie exists between low bids, preference will be given to a local
supplier.
For purchases when the estimate is more than $100,000:
1. The Hutchinson Utilities Commission will request permission to advertise for bids.
2. Specifications shall be made available to all prospective bidders.
3. Bids will be opened at a public bid opening. Date will be set in the advertisement
for bids.
4. The staff will review bids and recommend to the Hutchinson Utilities Commission
to accept the lowest responsible bidder meeting specifications.
5. Hutchinson Utilities Commission will enter into a contract with the responsible
bidder.
For purchases between $25,000 and $100,000:
1. The Hutchinson Utilities Commission staff will solicit written, informal quotations
from at least three (3) suppliers and tabulate the results.
2. Fuel purchases for electrical generation is an exception, for additional exceptions
refer to Minnesota Statutes 2003, 471.345 Uniform Municipal Contracting Law.
3. Staff will recommend acceptance of the lowest responsible quote.
4. Hutchinson Utilities Commission will approve the quote.
For purchases up to $25,000:
1. General Manager authorized to approve purchases up to $25,000.
2. For purchases of $5,000 - $25,000, the Hutchinson Utilities Commission
staff will solicit written, informal quotations from at least two (2) suppliers
and tabulate the results.
3. Staff will recommend acceptance of the lowest responsible quote to the
General Manager for approval.
For purchases up to $5,000:
Directors and the City Attorney are authorized to approve requisitions via the WIN -STS
System for purchases requiring a purchase order number.
If purchase order numbers are not required each Division may use their assigned credit
card.
1. Division Director will approve all item requests prior to purchasing the item.
2. Receipts will be given to each Division Director as items are purchased to initial,
assign appropriate account number and give a description of the item
purchased; then forward to Accounting.
3. Accounting will keep a file for each Division until monthly credit card statements
are received and reconciled.
For purchases up to $42,000:
Managers are authorized to approve requisitions via the WIN -STS System for
purchases requiring a purchase order number.
If purchase order numbers are not required, each department may use their assigned
credit card.
1. Department manager will approve all item requests prior to purchasing
item.
2. Receipts will be given to each department manager as items are
purchased to initial, assign appropriate account number and give a
description of the item purchased; then forward to accounting.
3. Accounting will keep a file for each department until monthly credit card
statements are received and reconciled.
Petty cash may be used for purchases less than $25.00.
Employees may make local purchases with prior approval from their
Director /Manager. The employee has the option of using a HUC credit card, paying
cash for the item, if less than $25.00, and being reimbursed from petty cash, or
making the purchase at a local retailer with whom we have an account established.
All receipts must to be turned in to the appropriate Director /Manager to initial, assign
appropriate account number and then forward to the financial manager.
CREDIT CARDS
A purchase by credit card must comply with all statutes and rules applicable to
Hutchinson Utilities Commission (HUC) purchases. Credit card purchases must comply
with the following requirements:
Minn. Stat. 412.271, subd. 2 and 471.38, subd.1. Claims presented to HUC for payment
must be in writing and itemized. Bills from credit card companies do not contain the
detail necessary to satisfy these requirements; therefore, HUC must retain invoices and
itemized receipts for items charged to a credit card.
The Office of the State Auditor strongly urges local government units to develop a
comprehensive credit card use policy to avoid misappropriation of funds or other misuse
of the credit card.
The following are authorized to make credit card purchases on behalf of HUC:
General Manager
Electric Division Director
Natural Gas Division Director
Customer /Human Relations Manager
Electric Transmission /Distribution Manager
Production Manager
Engineering Services Manager
Purchasing Agent
Company purchases up to $5,000 are allowed to be made with a credit card. No
personal purchases are to be made with the credit card. Receipts will be given to each
Division Director /Manager as items are purchased to initial, assign appropriate account
numbers and give a description of the item purchased. The receipt then gets forwarded
to the financial manager.
The financial manager will keep a file for each Division until monthly credit card
statements are received and reconciled. The financial manager has the authority to
approve and question all credit card purchases in so far as the policy applies. The full
amount of the statement must be paid each month.
FIXED ASSET CAPITALIZATION
The Hutchinson Utilities Commission (HUC) will regard fixed assets as capitalized when
all of the following criteria are met:
(1) Assets purchased, built or leased have useful lives of one year or
more.
(2) The cost of the asset (including installation) is $5,000 or more. Multiple
assets whose cost is less than $5,000 but the aggregate requestor
total is $5,000 or more are capitalized.
(3) The cost of repairing or renovating the asset is $5,000 or more and
prolongs the life of the asset.
HUC will regard the purchase of software programs as fixed assets subject to the above
capitalization policy, and will amortize over an estimated useful life of 3 years. Costs
associated with software maintenance and customer support are considered
expenditures and will not be capitalized.
Other Considerations:
(1) REPAIR is an expenditure that keeps the property in ordinary efficient
operating condition. The cost of the repair does not add to the value or
prolong the life th
of -. - asset. All repai- expenditures are charged to the
appropriate department and fund.
(2) IMPROVEMENTS are expenditures for additions, alterations and
renovations that appreciably prolong the life of the asset, materially
increase its value or adapt it to a different use. Improvements of the nature
are capitalized.
Examples of Repairs vs. Improvements
Repairs= Expenditures
All items -life less than one year
All items under $5,000
Property maintenance, wall repair
Replacement of machine parts to keep
machine in normal operating condition
Property restoration (rebuilding) for
normal operations
Existing building repairs
Replacement of small sections of wiring,
pipes or light fixtures
Patching walls, minor repairs of floors,
painting, etc.
Patching driveways
Improvements = Capitalized Assets
Life of more than one year
All items $5,000 or more
Property rebuilding
Replacement of machine parts that
prolong the useful life
Property restoration for something
different or better
Building regulation conformity
Major replacement of wiring,
lighting, pipes or sewer
Installation of floor, wall, roof,
wall covering, etc.
New driveway or major repair
Cleaning drapery, carpet, furniture New drapery, carpets, furniture