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12-12-1977 HUCM158 Regular Meeting December 12, 1977 All Commissioners were present, also Mgr. Alexander, Ruth Hakel, Howard Madsen and Dennis Potter of Madsen Agency and R. L. Fruek and George Wilson of the Home Insurance Company. The meeting was called to order at 2:00 p.m. by President Quade. The minutes of the Regular Meeting of November 9, 1977, were read and approved as read. Howard Madsen and Dennis Potter of Madsen Agency and R. L. Fruek and George Wilson of the Home Insurance Company appeared concerning insurance coverage. Mr. Fruek presented facts and figures concerning coverage and rates. General discussion took place and Mgr. Alexander was instructed to study the rates and coverages and advise the Commission at a near future date. A motion was made by Commissioner Filk, seconded by Commissioner Tracy and carried to pay Associated Consultants for engineering services for September, 1977, in the amount. of $2,893.65 and for October and November, 1977, in the amount of $5,765.06. A motion was made by Commissioner Filk, seconded by Commissioner Tracy and carried to pay Sterling Electric for Estimate #5 in the amount of $10,012.50 and for Estimate #6.in the amount of $4,524.56• A motion was made by Commissioner Tracy, seconded by Commissioner Filk and carried to pay General Electric Company for repair of #4 generator in the amount of $16,359.49. A motion was made by Commissioner Filk, seconded by Commissioner Tracy and carried to pay General Electric Company for repair of unit #8 in the amount of $22,107.14. A motion was made by Commissioner Filk, seconded by Commissioner Tracy and carried to pay Pittsburgh -Des Moines for partial payment on storage tanks in the amount of $3,000.00. Mgr. Alexander presented a need for a 6" gas line starting from Regulating Station on California Street to Highway #7, then west to School Road and south to Roberts Road. After discussion, a motion was made by Commissioner Filk, seconded by Commissioner Tracy giving Mgr. Alexander authority to proceed with getting cost estimates and general information relative to the project. F-1 ANDERSON. LIESER & TH0R6EN CERTIFIED PUBLIC ACCOUNTANTS MINNEAPOLIS September 1, 1976 Mr. Howard P. Quade President Natural Gas Division and Municipal Electric Plant City of Hutchinson Hutchinson, Minnesota 55350 Dear Howard. During our recent review of the Utilities records and conversa- tions with Utility personnel, it has come to our attention that inventory, particularly engine parts, may be overstated for ac- counting purposes. According to generally accepted accounting principles, inventory should be stated at the lower of cost or market value. D To accomplish this we recommend that the commission adapt one of the methods described below. Method I would produce the most precise inventory valuation, but would also require the most amount of employee time. Method III would require the least amount of work and still yield an equitable valuation of the inventory. Inventory that will very likely never be used or that has no sales value for its intended purpose should be 1) written down to the net realizable value and retained, or 2) written off and disposed of. The accounting for this can be done by various methods such as des- cribed below. Under any of the three methods,inventory that will not be used by the Utilities and has no value should be written off as obsolete material and disposed of. Page two September 1, 1976 Howard P. Quads inventory that the Utilities wishes to retain and that which Cat► be sold should be written dart to its estimated value and the difforenco written off as obsolete material. This would require an adjustment to the perpetual inventory records as well as the general ledge' account. Examples Engine part - cast $400 Estimated reali,table value 100 General ledger accounting entryt obsolete material $300 inventory $300 The perpetual record for this part would also be adjusted for $300. A contra account Can be established for inventory that the Utilities wishes to retain and for that which has am* salable value. This would require an evaluation of inventory the same as in the above method, but would require only a notation on the perpetual records as to the differentiae between carrying value and estimated value. The difference would be written off as obsolete inventory and the credit would be to the contra account-obsolete inventory. Under this method the inventory account would be carried at the am* cost as in the past. For statement purposes, the contra account would be offset against the cost, thus presenting the inventory at its realisable value. Example, Engine part - Cost $400 Estimated value 100 A natation on the perpetual records would be that $300 is reserved against this part. The accounting entry would bee obsolete material (expense) $300 Contra account for obsolete material $300 %heft the part is used the entry would bet Contra account for obsolete $300 material Inventory $400 Repairs 100 1 f 1 Page three September 1, 1976 Howard P. 0"" METHOD III Oder this method a specific group of inventory parts would be written down to an estimated amount and carried on the books at that amount on a continuing basis. If parts are sold the amount received would be income, and if the parts are wad, there would be no ayst charged to expense. The accounting entry would be male only to the perpetual records as parts are sold or used and this would be for control purposes only. Examples Engine parts for emits 3 and 6a Valued at- $45,606 at search 31, 1976 Estimated realisable value - $3,000 The entry Mould be: obsolete parts $ 400606 inventory- engines $40,606 Prior to implementation of any of the methods, we suggest that ym review the details of the accounting procedures with us. S inraerely, ANDERSON, LIEBER a 290RSEN Floyd! J. Lehne, C. P. A. FJL,/mr Mgr. Alexander reported on a letter from Hutchinson Industrial concerning outages. An explanation was given to the Commission and a letter had been returned to Hutchinson Industrial. Mgr. Alexander reported on the Curtiss - Wright unit, on unit #7, on transformers used for civil defense sirens and on new limits set by Minnesota concerning bids. A general discussion was held concerning rural rates. Mgr. _ Alexander was instructed to call Willis Miller concerning his findings relative to the present rate in force and how it was established. A motion was made by Commissioner Filk, seconded by Commissioner Tracy and carried to charge off obsolete parts from Units 5 & 6 as per the auditors recommendation - letter attached. The following bills were allowed: MUNICIPAL ELECTRIC PLANT Wes Cornell Construction 7034 75.00 G L W Enterprises 7035 2,259.39 Hutchinson Util. - petty cash 7036 6.47 Minnesota - Wisconsin Truck Line 7037 13.00 Natural Gas Division State Treasurer 7038 7039 5,000.00 4.160.52 Don Meis 7042 34.07 Merle Mangel 7043 19.07 Ellen Kinman 7044 28.19 Gertrude Weissenborn 7045 21.20 Holly Smith 7046 21.30 Mark T. Schmidt 7047 22.50 McLeod County Group Home of Hutch 7048 21.20 Jackie Lohrenz 7049 21.20 E. Christian Hedegard 7050 42.40 Brian Fischer 7051 42.60 Judy Daak 7052 21.20 Thomas A. Barker 7053 21.20 Raymond K. Anderson 7054 21.20 I. B. M. 7055 2,675.00 Sterling Electric Company 7056 16,072.51 Peterson & Gilmer Law Offices 7057 110.00 Hoffman Plumbing & Heating 7C58 43.00 Leef Bros., Inc. 7 6o 150.42 Chicago Tube & Iron Company 7 6l 104.83 Hutchinson Utilities 7c63 452.96 Plaza OK Hardware 7c64 63.75 H. A. Holden, Inc. 7c65 24.86 Sterling Electric Company 7c66 111.81 Controlforms 7c67 495.00 Judd Company 7c68 30.55 United Power Association 7 69 59,621.90 Koch Fuels 7 70 5,025.60 160 Union Oil Company of California 7071 60.29 State Treasurer 7072 2,187.99 Hutchinson Util. - U.B. 7074 20.00 Koch Fuels 7075 2,624.73 Phillips Petroleum Company 7076 327.02 Hutchinson Util. - petty cash 7078 294.81 Blue Cross & Blue Shield 7079 3,125.04 Geraldine Johnson 7080 220.00 The Lindgren Company 7082 900.00 I. B. M. 7083 35,381.00 Gary Oehler 7084 300.00 Minnesota - Wisconsin Truck Line 7085 15.86 Chas. Olson & Sons, Inc. 7086 18.18 Donald J. Dressel 7087 328.28 State Treasurer 7088 2,193.30 Returned Checks 9999 429.70 Allen Office Products, Inc. 937 96.01 American Linen Supply Company 938 31.13 American Public Power Association 939 653.42 Anderson Chemical Company 940 1,109.62 Mrs. Fred Briggs 941 20.00 Burmeister Electric Company 942 155.00 Burroughs Corporation 943 612.57 Calgon Corporation 944 1,210.10 City of Hutchinson 947 3,625.01 Controlforms 950 34.30 Cooper Energy Services 951 191.37 Culligan Water Conditioning 953 13.75 Crane Supply Company 952 801.13 Ray F. Daniel 954 10.18 Data Systems & Operations 955 750.45 Dobratz, Inc. 956 242.30 Electronic Center, Inc. 957 69.30 Erickson & Templin Contracting 958 54.00 Fabricare Cleaners of Hutch 959 66.59 Family Rexall Drug 96o 41.88 Farm & Home Distributing 961 35.68 First National Bank of Mpls. 963 302,175.30 Floor Care Supply Company 964 57.30 John Henry Foster Company 965 160.46 Four Seasons Services, Inc. 966 23.95 G. T. C. Auto Parts 967 73,76 General Electric Company 968 330.65 Goodin Company 969 255,97 Graphic Controls Corporation 970 161.72 Graybar Electric Company Inc. 9 71 662.88 Grinnell ITT Corporation 972 25.76 H & C Electric Supply 973 1,339.60 Helwig Carbon Products, Inc. 974 220.50 Home Bakery 9 ?5 183.92 The Hutchinson Leader 976 15.73 Hutchinson Telephone Company 977 606.29 Hutchinson Util. - utility bills 978 66,004.07 Hutchinson Wholesale Supplies 979 148.00 1 NATURAL GAS DIVISION R. E. Young Hutchinson Util. - petty cash Adams Supply Company State Treasurer First State Federal Savings Circle -Hutch Utility Board 1 2 190.00 166.00 46.12 45,222.12 2.63 10.70 20.00 4.00 32.84 2,544.00 73.80 6o.00 20.80 69.15 184,558.o4 17.30 166,065.50 29.79 91.91 5.32 200.00 4.64 1.00 2,500.00 7.63 393.28 2,970.00 50.72 13.60 4,034.80 52.92 135.06 18.00 86.58 441.12 1,015.00 9.12 8.00 3,094.64 26.96 7.50 170.20 228.4o 9.30 24.00 165.00 96.74 448.77 808.71 500.00 161,722.52 161 I B E W Local 949 Jahnke's Red Owl Kemske Paper Company Koch Fuels Krasen Hardware Hank L. & P. Supply Company Paul Lemke & Son McLeod County Sanitary Landfill McMaster -Carr Supply Company Madsen Insurance Agency Minnesota Mining & Mfg. MN'Municipal Utilities Assn. Minnesota - Wisconsin Truck Line Nalco Chemical Company Natural Gas Division G. F. Nemitz Sons Northwestern National Bank Olson Equipment Company Paper Service Company Don M. Peterson Peterson & Gilmer Law Offices Plowman's, Inc. R. L. Polk & Company Precision Castweld Rockite Silo Inc. Roilgard, Inc. Ross Electric Supply, Inc. The Satterlee Company Simonson Lumber Standard Oil Sterling Electric Company Tippecanoe Press Inc. Treinen Buschel, Inc. United Building Centers United Electric Corporation U. S. Transformers, Inc. Yetzer's Variety House Welders Supply Company W E S C 0 Wigen Chevrolet Company William - Fames Williams Steel & Hardware Zep Manufacturing Company 0. Zernickow, Inc. Zins Machining NATURAL GAS DIVISION R. E. Young Hutchinson Util. - petty cash Adams Supply Company State Treasurer First State Federal Savings Circle -Hutch Utility Board 1 2 190.00 166.00 46.12 45,222.12 2.63 10.70 20.00 4.00 32.84 2,544.00 73.80 6o.00 20.80 69.15 184,558.o4 17.30 166,065.50 29.79 91.91 5.32 200.00 4.64 1.00 2,500.00 7.63 393.28 2,970.00 50.72 13.60 4,034.80 52.92 135.06 18.00 86.58 441.12 1,015.00 9.12 8.00 3,094.64 26.96 7.50 170.20 228.4o 9.30 24.00 165.00 96.74 448.77 808.71 500.00 161,722.52 161 162 McLeod Cooperative Power Assn. 1661 18.13 Circle Pines Utility 1662 41.80 State Treasurer 1664 383.46 First National Bank, 1666 5,000.00 State Treasurer 1668 424.92 American Meter Division 174 659.63 American Welding Supplies Inc. 175 66.75 Commissioner of Revenue 176 385.30 Crane Supply Company 177 21.44 First National Bank 178 4,182.00 Fisher Controls Company 179 158.68 Hutchinson Util. - utility bills 180 988.36 I B E W Local 949 181 17.75 L. & P. Supply Company 182 11.66 Leeds & Northrup 183 151.20 Madsen Insurance Agency 184 7,517.00 Minnesota- Wisconsin Truck Line 185 16.65 Northern States Supply Inc. 186 11.97 State of Minnesota - Social Security 187 390.82 Texgas Corporation 188 4.54 There being no further business, the meeting was adjourned at 4:45 p.m. A Clinton Tracy, Secretary I