Okay. Okay. Welcome to the Public Utilities Commission. a meeting that was rescheduled um from December December 3rd at 3:00 to today's date, December 9th at 3 p.m. Um
present members Shane, um Mike, uh Charles and Scott, and myself, Craig. Um there's the roll call. Um,
looking through the agenda and the previous minutes, are there any questions on those items from Charles? >> No, >> I don't have any questions. So, we have a an approve a motion to approve the
agenda and minutes. I'll make a motion to approve them. I vote to approve. >> Second. Okay. All right. So, the first item on discussion uh of discussion today is a uh a grant that we
obtained um called the ETIP grant. Basically, what it is is energy technology innovation partnership grant. And what it does is it helps us to audit our distribution
system of electricity that we have. Um, a little background on that. Um, I guess I'll just read what the background is so people can understand it better. The city power is currently served by a substation with four current
circuit outlets, two of which we are using. And what this grant will enable us to do is to study what it takes to distribute a power um how it's being distributed over those two circuits and maybe we can utilize a third circuit. Um
this is something that our uh employees at the pe at the electrical department uh it'll help them out on how to um maintain equipment and power outages and things like that or to head off any um
issues of overloading certain circuits. circuits, especially if we bring on more sizable loads of electricity through could be apartment buildings that are all electrical heated or a new uh
building that the solid waste company is building and how much of that's going to be electrified as far as um plugging in vehicles if they go to do things like that. That's just an example of that. Um,
this grant is managed by the Energy Technology Innovation Partnership and I guess the only question I have on that is uh um it's a national re renewable energy laboratory and what they do is they provide
technical assistance to help towns like what we have um coastal remote Island Communities um will be working with Slipstream
Incorporated, which is somebody I do not know who they are. >> So, I'll have Shane. >> Yeah, I So, amazing what can be already outdated in in just a couple of weeks here. So, wrote this on the 26th >> and uh in that time, the National
Renewable Energy Lab is now the National Lab of the Rockies. They've renamed >> Wow. and they've kind of expanded their scope from renewable energy to just energy. So, they're still a national lab. Uh they're based in Golden,
Colorado. And yeah, they have this program called ETIP. And it, like you said, it helps coastal rural coastal remote communities uh around the nation and territories with energy resilience. And I put up here um
the communities that they selected for this. So, you know, the whole country, right? And and it's coastal, but like Grand Marray was selected um alongside these these different communities from Puerto Rico, a lot in Alaska, Hawaii. Um
but yeah, the in the Great Lakes region, there are five communities that were selected and and we're one of them. Um, we met today. We had a kickoff meeting today with with our folks from Slipstream and
>> and the National um National Laboratory of the Rockies. And so, just to get a little more clear about what this is. So it's yeah the department of energy and there's the four national labs and then because the national labs are they're
they're mostly based you know mountains or west they have regional partners that they have selected to work in the different regions of the country and ours is of course the Midwest and so Slipstream is just a an engineering firm
in the in Madison and >> they're working with all the Midwest Midwest, Great Lakes cities. And so, yeah, we we want to learn more about our distribution system
and if a third circuit's necessary and um this program, you know, we'll be working with some researchers that this is what they do. They study electrical distribution and we've already we we met with them today and answered bunch of questions kind of gave them an overview
of who Grand Marray is and um you I'd like to say like oh yeah we're probably the smallest community they've ever worked with but um if I go back a slide one of the communities they worked with oh it's not on this slide. Well, one of the communities I worked with in a
previous cohort was was an island in Lake Michigan and I was like 600 people, you know. So, >> that's the whole point of this is to Yeah. is to get to get to those rural communities that need help with Yeah.
their electric infrastructure. So, >> we are on the deep dive track of this project, which is this track. um they're going to work with us for up to two years. And right now we're just we just did the
first meeting. So we're in that onboarding like the first month or two we're going to kind of get the the official documents in place so that we can proceed to you know developing the scope of work and what what questions they're going to answer and specifically
what they're going to deliver for the project. Uh, and that's going to take a couple months. And so probably through the spring, we'll just kind of be figuring out the parameters of the project. And then and then for, you know, another year after that. So now we're, you know, let's just say June,
they start actually sinking into the meat of the project. It'll be a full year more before we really have um the first like deliverables and and results. So, it's a pretty in-depth study of our entire system and kind of how it needs
to adapt to whether a third circuit or just yeah more electrical load. >> So, do they actually come up at some point in time they actually have to >> do they actually have to come here?
>> They reference the site visit. So, they may they may show up. Um, and you know, we've got people from the Berkeley lab that were in the meeting today and there's there's people from the um, National Lab of the Rockies and there was slipstream folks. So, yeah, they
would be coming from kind of all over and didn't say officially like we will come up and visit, but they they did reference that it's it's a possibility. >> They probably don't have to come visit. They get information from our our
as far as how our loads are being distributed. We feed we feed that information to them. >> I suspect that's what it'll be is that we'll just use customer data and system maps and things that we have to give them information to work with because we
haven't really deeply developed the scope work yet. We're not exactly sure what all those things are going to be. >> Right. >> Yeah. >> Yeah. But this is just kind of a introduction to this project and you know we're still getting introduced to it as well. It was it was an opportunity
that came up and and so I applied for it uh with Mike's help and kind of like okay let's put together something and then here we're awarded the the chance to have this work done for us. And
it's I think it's pretty exciting to to be, you know, one of those few cities in the whole country that gets to take advantage of this. >> Yeah. Congrats. Good work. >> Yeah. >> And do what's so I saw in the in the memo that uh it's a $50,000 grant. So
what >> Right. >> So what what where does that get us or how much does that get us? >> We actually don't know how big the grant is. We're not going to get paid. Oh, I thought it said >> the 50 is what we can get to be reimbursed for our own expenses. >> Oh, so yeah.
>> So that's not paying the slipstream or any of the federal employees. They have their own budget that we're really not aware of. So I suspect it's quite a bit bigger than that. >> So our own expenses would be what you're and Shane and electoral staff time. Yeah. That you just bill them for work on this particular project. Is that how
that goes? >> Yeah. So, we're we the way it works with the Department of Energy is, you know, we would be a subcontractor to the Department of Energy and that's like that's how they have to officially like >> yeah, >> structure it. Um just we would be a
subcontractor for them and any hours that we put into this project, we can we can >> put them on an expense report and they will reimburse us up to $50,000. So I think at the time I wrote this I thought we were awarded 50,000 for the study but
it's it's definitely bigger than 50 for the study. This is just our time for the year. >> And so who do who do you imagine from Grand Ray will be working on this project. >> I'll be the point person. >> Yeah. >> And Mike will be definitely in on a lot
of it. Um, and then >> Kim, Alyssa, the line workers, probably everybody. >> Okay. >> Okay. As as we figure out what data they need and where we're going to get it. >> Yeah. >> The actual analysis side of things is
really not we're not going to be deeply involved in that. Just guiding it, making sure it's answering questions we're interested in. >> Yeah. >> Feeding them information. >> Yeah. >> And then Joe Hoffman from Simple was in on the meeting. I was going to say SIMA have some involvement. >> They do and there may be other local
partners we we bring in to deal with specific questions. Probably Arrowhead and Gary at some point. >> Y >> and what do we know about Slipstream? They're the they're the principal partner in this like do you think or or they're just that's just one name among many? They're they're our regional
partner but um they are >> so the research is being done in the national lab um Berkeley and and and I keep saying ENL in my head but it's National Laboratory the Rockies they're the ones doing the actual research and
then Slipstream is kind of the like local um affiliate like working being the conduit between us and the researchers and helping us organize the the project
the the work that's being done. >> So it's slipstream probably that will produce the report. >> Not sure the in our kickoff meeting most of the pointed questions were coming from the national lab employees. So I they might be doing the
>> the heavy lifting on the analysis, >> but Slipstream may be the coordinator for the for the researchers, kind of keeping the researchers >> uh organized and and setting up the meetings and stuff. But then we also have like an a like a national lab
handler who's working with just the um the Great Lakes projects, >> kind of a project manager for a few of them. Yeah, they use the term um electrification scenarios today. So that's how I'm currently kind of picturing the project
is they're going to develop a few what if this is how the system is built out in different whether it's load or whether it's renewables or whether it's a lot more electric heat or electrification of other things. Mhm.
>> So that is exactly what we've been uh talking about and thinking about and this is really quite an opportunity to get some help. >> Yeah, seems great. >> Yeah. So, we'll keep you up to date and as as the project progresses, I'll put in weekly update and and we'll we'll be
back here. I don't know when, but uh to talk about this again, maybe when we have a full full scope of work flushed out. >> When's your next meeting? >> Uh two weeks on the 18th of December. And then we'll meet in a couple times in January, February, and we'll go monthly
from there. >> Great. Well, congrats. I think it's really >> good opportunity and we should be really helpful in trying to figure out, you know, what we're what we need to be doing. >> Yeah.
Yeah. the original project, like where it came from was a different grant, a smaller grant that, you know, we just had this opportunity come across and let's let's see if this fits. And they that original grant, they liked it. They said it's way beyond our scope. We can't
we can't possibly take it on because of that. and they they kept it in their kind of pool of ideas and then I think had passed it off to uh Great Plains Institute and said do you know anybody who could work on this and so that's how we got connected to to the ETIP program.
>> Cool. >> Yeah. So, the money actually comes from the US Department of Energy. Okay. Okay. Anything else, Ch? Thank you, Shane. >> Thanks.
Um, moving ahead, the next item would be the 2026 draft budgets concerning I guess the first thing we can talk about would be the uh water fund
or water sewer or do you want to do go back and finish up the electrical or do that whatever? >> Let's let's circle back to that at the end. >> Okay. >> So, we've got our water fund >> Yep. budget up first in the packet. >> And
>> okay, >> it's probably worth talking about a few higher level trends before we dip into the what we're actually recommending for a rate increase here. You can see the the level the line item level we're looking at this budget's
pretty high in this report, right? But it helps understand where we spend our money and personnel is pretty predictable number. We have the same folks we had the year before. Um the increase is programmed in. Uh it's not
uh the driver of our expenses. Supplies you can see has kind of gone up and down. Um was a pretty big year in 2024 and it's a fairly decentsized number in 2026. and supplies pays for
uh we're talking about things we use both in the field and in the treatment plant to to distri to treat and distribute the water. So, chemicals for the treatment, uh, pipe hydrants, all
those things. >> And because, uh, when Scott came on, we really ramped up, I think, the amount of maintenance that we were doing, that number's gone up a little bit. services pays for
um both internal services like our own utility bills um but also external services hiring contractors and we've done quite a bit more of that recently too. So Scott had provided a list of all the projects that he's done
in the past year and I think if you remember when we toured the water plant this year we talked about a lot of those projects. Uh we've only dipped our toe in the water there. It's a lot of great work has been done by Scott, his team, and and the folks he's brought in, but we know there's more to come. And so
maybe this is a good time, Scott, for you to just talk a little bit about what we're going to be doing next when it comes to the water department. >> I'll bring it to you. Okay. So, in the in 2026, uh
we're going to have the uh the Department of Health is requiring us to uh inspect the uh the moose tower, the twin reservoirs up by the hospital and the inspect the clear well at the water plant and also the intake pipes or
intake pipe, excuse me, going out from the water plant into Lake Superior where we actually get our raw water And that's that's going to be uh you know somewhere in that 25 to $30,000 range to inspect all of that. Uh we've got a number of
different companies that will bring in a essentially an underwater drone that will actually uh run around the tank and it'll look at the uh any of the structure members inside of the tank, the outside walls,
etc. and they can tell us the condition of the concrete is appropriate. Uh the uh uh the paint coating like the moose tower that's painted steel and so you know somewhere in that 20 to 25 year
mark is uh when uh water plants or excuse me water towers often need a uh a rehab. And so we're going to see how the how the moose tower is doing. >> That's on the inside of the
>> That's inside and outside. >> Inside and outside. >> Inside and outside. Yeah. >> It's not been 20 years yet, but we're getting closer. >> We're getting Yeah, we're getting close. >> Last time we did this, we had a diver do it. Just to give you an idea of technology-wise where we were at. >> So, but but uh it has a coating on the
inside that's Yes. needs to be inspected. >> Yeah. It's it's a it's an epoxy coating. Yeah. two-part epoxy coating. Uh it's a very strong industrial coating. Uh the uh things that really influence the coating are uh how much ice buildup we
have. And so we're trying to operate the the towers as uh the tanks essentially uh as efficiently as we can. So that way we keep the water as warm as we can. And then uh so that usually t typically means that we run the the tanks a little
bit lower so that way we can have a greater percentage turnover so that way we can you know granted the water's coming out of Lake Superior at you know we're lucky if it's you know in the mid30s >> right >> and you know if we hit a stretch of two weeks three weeks where we're minus 15
minus 20 uh that's a good possibility for ice to form and and there are some there's some equipment that uh could be added to the the the tanks uh for for mixing to uh make sure we do you know as
good a job as we can do. Those are those are things that will eventually come up. Uh they they would really make operations better and then that way would allow us to to keep the towers at a a higher level for better system
pressure plus uh fire protection volume. Alrighty. Uh we are we've got at least a dozen hydrants, if not two dozen hydrants that are going to need repairs. So that's that's a big thing that we're going to be doing out in the uh the distribution
system. U we got a bunch of uh curb stops that have been hit over the years by, you know, private snowplow drivers uh that have been buried. We're going to try to bring those up to the surface. Uh things that have just been damaged over
time and there's probably two or three dozen of those that that are on that list. I know we've got one valve that when you open it up, water comes to the surface and in in significant quantities and
that valve was put in in the 80s and they used steel bolts to hold the bonnet on top of it. So when it's a big gate belt, so when you slide that gate down, it pushes that bonnet up and that causes
a uh break in the seal. And so it's it'll open up and we'll leak a lot of water. And so as long as we don't have to close the valve, we're okay. But that's one of the things that we're going to be digging up. Um it's just uh just a couple blocks up the hill from
the dentist office. >> There's a fire hydrant valve. >> I'm sorry. >> That's a fire hydrant valve. No, it's actually a mainline valve. >> Mainline valve. Okay. >> Although we do have a we're suspecting a couple of uh fire hydrant valves as
well. And then we uh we just had a sanitary survey by the Department of Health and that's uh the the letter was out too late for us to include it in the uh in the packet,
but I'm going to be working with uh engineers and potentially vendors to try to come up with some solutions to uh uh meet what the Department of Health wants us to do. What's on their list?
>> They have they they want us to do a couple of real minor things which which staff and I can take care of. But some of the other things they want us to do is uh for instance they want alarms if the turbidity of the water gets to a certain
point. So if if the water is coming in, normally lake water's pretty clear, but every now and then we get the wind in the right direction and that stirs up a bunch of silt and so that water comes real cloudy. Well, we want to make sure we're treating the raw water well enough
so that way we don't have a solids overwhelming our sand filters. So that way the solids continue going on into the finished water. And then if the finished water turbidity gets to be above.3
and then that's still you can kind of see a little bit of cloudiness but once we start getting over that.3 range uh we have a legitimate possibility of not disinfecting it well enough. And so if we get to a c they want us to have
alarms so that if the turbidity gets to a certain point then uh we uh will get an alarm. it'll call us and tell us, hey, something is something's wrong. Well, the big problem is that uh
our PLC's are no longer programmable and that system was put in four years ago. Quality flow uh out of New Prague, uh which whom I've worked with in previous lives, um has been very good to work with. Um, however, in this point in
time, they're saying that there's nothing they can do, and they want to charge us somewhere in that 70 to $100,000 range to update the control system. And so, that's that's something that I'm pursuing. Uh I'm asking the department of health if
they've got any clout to uh cause uh quality flow or one of the engineering outfits if they've got any clout to say hey uh quality flow you know you're not really giving them good customer service by forcing them to uh replace relatively new equipment.
>> Yeah. Yeah. It's pretty new. >> And so we'll see if anything happens out of that out of out of those conversations. But uh then some of the other things that they want us to do is is evaluate the the whole water filters uh evaluate
all the pump conditions. Um evaluate the rest of the sensors. Uh they want to evaluate if uh we're actually meeting the the newer styles of disinfection that uh that are out there. So, what
that means is, okay, how do I I'm going to try to try to explain this simply. There is a there's a bunch of engineering stuff that they do to make sure that you've got enough
uh contact time to eliminate viruses, you know, like, you know, viruses that cause dysentery. No, you know, nobody wants that. And so, uh, there's there's engineering calculations that
can be done that I I don't know what they are, but I know they're they're fairly involved calculations, uh, regarding temperature, pH, water clarity, and there's a number of other factors that, uh, if you don't meet these certain requirements,
uh, you have to do something to increase the contact time of the disinfectant. And worst case scenario, I'm not saying that that's what we need to do, but worst case scenario is uh uh increasing the
size of the clear well, which means construction, but we're going to do what we can to avoid that. And then the engineers may end up having to help us. We may be able to use other vendors. Uh Minnesota Raw Water, for instance, might be able to help us out
on that on on some of those calculations. But uh well, like I said, a lot of this is just so new that we really haven't had the opportunity to digest it and really understand what what all is going to be
involved in this assessment analysis of the the water plant. >> So is that contact time prior to the water getting pushed to the holding tanks? >> Yes, >> it's contact time within that plant >> in the plant itself. Yes. >> Where the sand filters are. Yep.
>> Okay. >> Yep. >> I think it's important to remember the Department of Health is literally looking at the worst case scenarios here. >> Yeah, >> we want to do that when it comes to water treatment. This isn't an issue that's a current problem. We're passing all of our tests. Our treatment works
fine. We haven't had any issues, but we don't ever want to get it wrong with water treatment. So, it's okay for us to be extra sensitive to the whatifs. In this case, uh, we had already been working on most of the things that Scott
brought up that the Department of Health is talking about. Replaced a lot of pumps recently, looking at our filters, rehabbed even some of our filters, have plans to do more work to do some work in the filters just to make sure they stay functioning at the level that they need
to. And then the stuff we didn't get to really this last year is more about the controls and the sensors and things that Scott's already had on his plans and has wanted to do and it's just been a matter of budget really to get us to that place. And so those had to wait and
they're kind of the next thing we're going to start looking at. And he's giving you a little preview of some of the costs we might be thinking about. That's part of what's driving this budget here. and this budget. Um, we're not talking about raising enough money
in 2026 from rateayers to pay for all this work. Just like we didn't do that in 2025, when it comes to these types of long-term repairs, long-term improvements, these are things that we pay for over time that will depreciate that we gather cash and put in a cash
balance and then spend that to make the improvements. So, if you look at the depreciation line, >> that's 191,000 of a $533,000 budget just paying for depreciation, which means we're not writing checks to anybody.
That's just money we're collecting to use for capital replacements. Some of that money we use to pay out debt for things we've already replaced. Some of that money accumulates in our fund balance and we use it as we need to pay for the things that Scott's talking
about. It's a big number and it's bigger than it's been. You can see uh that we thought for 2025 it would be 175 because that's what it was in 2023. And if you'll recall, we got kind of a two-year delay on these numbers because we only
have 2024 actuals. Even though we're almost to the end of 2025, we don't have all of our numbers in and and the particularly the capital side and the depreciation side. A lot of that happens after the year is done when we do our audit. So, we don't have it, but it's
gone up a little bit. And why is that? Because we've made significant improvements to the system. Fifth Avenue, for instance, we reconstructed Fifth Avenue um to the tune of a million dollars of of water
pipe replacement that we're paying for with debt payments, but get that immediately gets added to the value of our assets and depreciated as well. So, when we make a million dollar improvement, this number goes up and we need to collect that money to continue
to pay for improvements. That's one of the reasons why this is uh this budget's gone up a little bit faster than we had hoped. Debt service is the same thing. You can see it was down to 20,000 in 2023, meaning we were really getting close to
being done paying debt. Uh there was most of our debt payments were the capital side. There wasn't a lot of interest, but now there's pretty fresh payments with some of those new improvements. And so that number's gone up again. Uh that's an actual number we'll write in a check right there. This
is the interest on our debt. And the capital reserve item, this last one I'll mention in 2026, I'm suggesting uh even at a 10% rate increase that we're going to spend down our reserves $23,000 rather than increase them like
we had hoped. Um I'll circle back to that when we look at page two because there's other places where we're talking about maybe not spending that down, but that when we use the $23,000 reduction in our reserves, that means we
have an expense budget of 533,000. We need to look at the revenue side to understand why rates might need to go up. You can see in 2024 we collected $47,000 in utility bills,
monthly water utility bills to all of our customers. $47,000 That was only 5,000 more than we collected in 2023. >> Yep. >> Um and that was with a 3% rate increase.
So a 3% rate increase and we didn't increase 3%. We increased a little over 1% in the total collections for 2025. We had a budget of 430,000. That's basically the $47,000
that we collected in 2024 plus a 3% rate increase. except we thought that 2024 number was going to be more like 415 or 420 just wasn't because our sales are not as high as they used to be. Uh
sales for water uh have been historically decreasing for 30 plus years almost 40 years of the records that we've got. It's a pretty clear trend. >> Why? >> Because efficiency. Because it used to be six gallons of
flush and now it's 1.8. toilets >> because faucets and showers and washing machines and everything, >> dishwashers, >> things that use water are much more efficient these days. >> So although the rates going up fast,
most customers over the past 20 years have found ways to use quite a bit less water, which is why our sales are down. But it's hard to run a business that way >> with decreasing sales. even with decreasing users getting decreasing
sales. That's another reason why the rate increase is necessary. So if you look at the 2026 budget, we're saying, well, 2025 budget, we thought we'd get $430 plus a 3% rate increase, which really would have been
$443,000 in total collections. And now we're saying, well, it's coming in low, so it's probably only going to get to about 430. That's our baseline. We have uh some other sources of income,
but not a lot. Part of one of the debt payments for one of the capital projects that was a replacement of water manes, I believe, in the downtown. Uh there is a levy that the city made to make that payment. So, we show it on the books of
the water fund, but it really isn't being paid for by the water fund. So there's that special assessment and debt levy revenue line item is outside money coming in fees are look at the difference between 23 and 26 that's the
difference in uh whether we collect the facility fees from our permites or not. So it's not a huge number but it's it's a noticeable number. So not collecting facility fees from new customers means
five to 10,000 a year potentially that we have to collect in rates instead. >> You change that. >> We did that. >> Yeah. >> Yeah. >> Then uh there's some miscellaneous money which is mostly interest on what we have in the bank. Uh which has been pretty
healthy these past few years, but it's not the rates aren't as high as they've been. We don't have as much money because we've been spending quite a bit of it. If you look in 2022 and 2023, those miscellaneous numbers were really high. We had other money coming in, whether it was grant money, um, other
things. We and we will have that in the 2025 actuals as well. We're going to give ourselves a credit for some of the grant money that we got from IT RB for one of our projects. We're also going to give ourselves a credit for some money that Mindot returned to us after the end
of the Highway 61 project. So, that just went into our reserves and we spent it on projects. Uh, if we manage to get $430,000 in utility billing in 2025, which we feel pretty good about now, a 10% rate
increase is $43,000. and add that add those line items up and we're at 533 which is exactly where the expense side is with a $23,000 deduct
there's no way to calculate well I guess you have to play out the year because of these new apartments being built >> so we've seen the new apartments in play >> that one yeah not the other one yet and That's the bigger one up the hill. >> Yeah.
>> The I think it's hard for us to see water sales there because I think it's been really gradual growth in usage up there. Plus, I'm sure they're very efficient with their water fixtures. >> Uh and the water meters, they only have one for the building. They don't have individual water meters.
>> With with the water uh with the electric side, we've seen an increase with the just the meter fixed fees because each of those units has its individual meter. >> They have their own electric meter. >> Yeah. So, that's one of the things that I think we're going to have to start looking a little more seriously at on
the water and wastewater side is our rate structure, too, rather than just charging uh the same type of fixed fee based on the meter size. Maybe that's not adequate if we're going to have customers like that that are significant users and they're really 50 units, not
one. Even if it's a 3-inch meter that we charge a big >> You're not getting a you're not getting the fee. It's maybe not really covering our expenses for administering >> usual house is what's that fee for water right now? 20 >> Yeah. 20 some dollars per h per
>> meter >> maybe 30 something with water and wastewater both in there 35 40 >> right >> so that >> wait so we don't we we're not charging individual uh like fixed monthly fees to those
>> I see because >> individual apartments >> because there's only one meter and there's one customer so they're not paying for water and waste water in those apartments they have an electric bill that they pay us but the apartment building itself pays the water bill,
>> right? Yeah. >> So, they pay one meter fee, which is based on the size of that. >> Mhm. >> So, it's quite a bit more than a typical residential meter fee. Significantly higher and yet still it's not 50 times higher. >> No, it's not $1,000 a month. >> Yeah. >> Right.
>> So, here we are in the conversation about facility fees. We knew we were making a sacrifice in rates and it was to serve a different goal which was to try and make it more affordable to build housing. This is the same conversation. We if we want to increase the rates,
what we're doing is making it more expensive to have housing. And yet when it comes to utilities, we're trying to treat all of our customers fairly. And our customers are the ones that are in the houses already. So it makes that
conversation back and forth really difficult. >> Tough questions. >> Well, you want to be fair, but you also want to, you know, do what we did. I understand that. But >> how do other cities run apartment buildings that hook up to water? Do they
force them to have a separate meter for each apartment or? >> No. No. They do it like we do. That's very common. Okay. >> And the rate structures are different. They might have different fixed fees. they might have more options for fixed fees. I think looking into that question is is on our list for this next year,
just are there different ways to handle this where we can make sure it's fair and it could very well be that the way we're doing it right now is the right way to do it. But what we're not seeing is significant growth because of this new customer. It's pretty marginal
growth. So, I was hoping that we'd see instead of less sales at least flat with new customers and I'm not sure that's happened yet. >> So, growth industry here doesn't mean we can pay for more stuff like because the
sales are always going down. It's tough and apartment dwellers and they're not wanting their lawns. They're not. It's probably maybe laundry expenses are lower than a, you know,
>> yeah, >> two people living in a house, you know. I don't know. >> You wouldn't want to charge them the same as you'd charge a single family home. That wouldn't be fair either, >> right? I'm just saying it's understandable that the water use per residence there is going to be smaller, likely to be smaller than that of a
somebody who has their own house. >> And here's the great news about it. That's 50 new customers buying water, even if it's not as much as we'd hoped. But we didn't have to build any new pipes. We don't have to maintain any more pipes to make that happen. >> Yeah,
>> that's infield development. That's good stuff. >> Yeah. >> But I still think it's going to be growth for usage. It has to be. It's not going to be a, you know, >> do we tell me increase?
I would >> over what it would have been otherwise. >> So this $533,000 on both sides of the ledger on the expense side includes this big old depreciation number which is not a check we're writing to anybody and this debt service number which is a check we're
writing but we do the math for us. That's $250,000. That's almost half of the budget. That makes sense. It should cost us about half to take care of our capital stuff and about half to do our
operating. That makes sense. How are we spending that money right now? Well, we have $228,000 of bills to pay, debt payments to make. With that $250,000, you can see the remaining is about
$23,000. And so we're not actually spending down our reserves. What we're doing is not collecting that additional money and putting it in our reserve. So although we're showing it as a negative on the front end, we're planning on our
reserves basically staying even with this operating budget. But with the list of projects that Scott has lined up for us, we're going to be spending our reserves to do a lot of that work. And depending upon the answers, we get to
some of these questions. If there's a large capital project that needs to be done at the water plant, you may have to talk about borrowing again. So, that's the big picture at the water department. Uh there's a lot going on. Uh great great progress was made this
year on work in in the in the water plant itself and uh there's a lot of good plans in place for that to continue. So, I'm feeling good about it, but it comes at a price. Yeah.
10%. Yeah. And that 10% number is just It seems like that may be shocking to people, you know, paying their water bills. It's like, wait, where did this come from? Um
it yes it's understandable when you go through all the numbers and try to figure out we need we need to pay for all these things but at the same time especially in a year where it seems like people are hyper conscious of
affordability it's going to it's going to be I think a little hard as well. >> Yeah. Well, we've got options. We don't have to make all the repairs. I
mean, we did that this year, too. Like, that's not a, you know, a trap, right? We decide how quickly we're going to fix these things. >> Yeah. >> We're going to spend the money. >> And, uh, if we don't think that that's a number that you're willing to put out there, then
tell us what it is and we'll work with that. Yeah. I mean I mean at some point you can't you can't defer maintenance forever. It's not a great idea. It's you want to have a system that's reliable and functioning properly. And so I'm I'm
not a fan of like putting off maintenance. Eventually you pay for it and a lot of times you pay for it. It becomes more expensive than had you taken care of the problem earlier. So >> yeah, >> it's not great. And we've been, our strategy has been to
try and stay consistent on our rate increases and make sure that our plan includes all the work that needs to be done. And that's worked for us for a very long time. >> I just think we're finding a few things
we didn't anticipate. We had a couple of projects show up that weren't on our plans, but we needed to take advantage of >> and that's just caught us behind a little bit. >> Yeah. So suppose you say well okay we do this 10% rate increase this year
uh what I mean it's hard to predict but would that would that also imply that maybe next year the rate increase the rate increase is zero or minimal or that is to say you
know if we sort of swallow take this big gulp right now do we >> do we avoid uh that kind of a thing for next year or how >> that's the sort of thing we've been trying to avoid with regular smaller
rate increases is 10 0 10 0g3 you know >> and yet that's on the table like what if the water sales increase and between water sales and a rate increase we find that we've collected more than we need and we've built up our reserves again
then the math looks very different and absolutely we could talk about. We wouldn't suggest a big rate increase. This is more of a quick correction, a one-time correction to get us back to maybe a new level, slightly more sustainable with higher amount of
maintenance happening. Yeah. And you wouldn't really expect that sales suddenly are going to blossom. But you might say, well, we take care of all these deferred maintenance items in 2026 or a lot of
them. Maybe there's much less to be done the following year. And so, yeah, you have less need for the infusion resulting from the cash or from the rate increase. So, one thing we have heard,
um, the county is starting to talk about Broadway downtown. No problem. All of our pipes are in great condition. We don't have to worry about that. Above Highway 61, if they reconstruct Broadway, we're going to have to reconstruct our water pipes
there. They're they're the sort of pipes we've had to fix brakes on already. So, we wouldn't let them reconstruct the road and not do the pipes at the same time. >> Yep. Hopefully that won't be happening in next two or three years because we don't want to have to swallow that bill.
Also, First Street though, that's the project we do have on our plan and we will have to make a debt payment. So, back to this list of current debt commitments. The 2007 MMUA loan is a 20-year loan, which means we're almost
done paying it. 2008 improvements, same way. 20-year loan, almost paying it. Only a couple years left on those. And so that was always the plan and still is the plan that we're going to take those off the books before we add another payment for another big project. So we're not looking at a giant rate
increase to pay for our planned street reconstruction projects. >> Yeah. But that Fifth Avenue is big number. >> Right. Right. And it affects both the depreciation and the debt service,
right? >> Yeah. >> Let's talk about sewer. It's mostly the same story, but there's a couple of uh things on the sewer budget that are worth pointing out. Um if you look again, personnel, we're right there.
That's easy, predictable, not increasing a lot. Supplies, same thing. This is paying for chemicals. It's paying for pipe. It's paying for stuff like that. Um Scott's actually made some improvements there where I think we're we might be conservative on this number.
We might actually be able to find some savings here next year, but it's hard to count on. It's this next line item that's the big one, right? Services. Uh it was at 250 in 2022, then went down a little bit and stayed down and we
thought maybe it was going to stay down again. That budget of $257,000 for this year included just over a hundred for sludge hauling and and processing fees at WLSSD.
And uh we're in at about 175 right now on that in 2025. So it's quite a bit higher than we have budgeted. And uh mostly that's due to operational changes. We're just handling it differently and I think we because we have to because that's the way it should
be done. >> Mh. And so we tried a few things and found that they weren't sustainable and now we're back to this and we have to build that back into the budget. So you can see that's a big chunk of the increases there. That's going from where
we were at which was closer to 100 or 120 up to 180 in the sledge hauling number that offset somewhat by some revenues. But there it is. Uh that's the biggest change in this one. Depreciation is up a
little bit. Debt service is up a little bit for the same reasons as water, but just at a lower amount because it costs less to reconstruct sewer pipes than it does to reconstruct water pipes. They're easier to build. They don't go
as deep. They don't have to be pressure tight. So, but we're doing the same thing. We're looking at this capital reserve uh use rather than putting money in to get us down to a budget of 854.
That's only uh 16,000 more than we actually spent in 2024. So that's keep that in mind. Our budget for 2025 was uh I think a little too optimistic and we ended up doing more
maintenance work than we had planned in the budget and I think we want to keep doing that. So here we're at when we looked at the wastewater plant itself, you know, we do have a nice engineering study on it. We are working diligently to get funded a major reconstruction
project to the tune of$10 million. And even then, if we're going to be stepping up with our own share of that, that's a double digit or multiple double-digit rate increase. And so, this is not something that was unanticipated in the next five years. But I think we want to
maybe do it part of it now. And the reason is the revenue side because all that stuff we said about water is the same thing on sewer. We don't have sewer meters. We only charge sewer based on water usage. >> Yeah. So when the water sales are down,
sewer revenue is down, too. We had $633,000 collected in utility bills in 24. We thought we were going to get close to 660 in this year, and it's not going to be that at all. It's going to be significantly less, maybe even less than
we collected in 24. Um, so there there we are. um that we've got a a higher number in the graywater leech sludge hauling revenue side of things here. Uh it's possible that this 10%
increase is a little more conservative. And so I'd feel a lot more comfortable if this number needed to get shaved that we could find some ways to deal with it than the water side of things. But we know we're going to need to do this anyway because of the wastewater plant
reconstruction. We know we're going to need to do what? Probably 25% rate increase over in the next couple years >> cumulative >> to Yeah. to to make enough room to pay for say 2 or3 million of our own share
of a $10 million project. >> Yeah. The depreciation and debt service generates about 205,000. Uh we're planning on that uh
178 of that is being spent on actual debt payments and the remaining 27 is in the budget as uh a reduction in our expenses. And so we're taking a credit in our expenses for all of the depreciation and debt
service money that we know we're not writing a check for, just like we did in the water fund. And that gets us to 854 in expenses. And you can see if we only collect 620 next year based on this year's sales or
even a little bit lower, then a 10% rate increase only gets us to 854. So how could this turn out better? If the water sales are up and we end up more like 640 and then a 10% rate increase gets us
closer to 870 or something, then that's extra money in the bank. And it's the same conversation like we can think about we don't need to do a big increase next year. Greywater leech sludge revenue could go up. Uh but I'm actually a little nervous
about this line item. It's a big part of our revenue and our partnership with G&G is great. They have a plant in town, so that feels like a very solid long-term relationship that they're going to continue to haul to their plant and that we're going to
continue to have that as a revenue source. But Gaywater and Leech is a different story. This are coming from facilities that don't exist anymore or that have other options. And I just don't know how to feel in terms of counting on that as a long-term structural part of our revenue stream.
Um so I think where wait so where where is that how does that revenue uh so so G&G they collect um
they collect out of uh people's people's >> holding tanks tanks >> and they bring it to us and and they pay They take it. >> So, but what's the part that you say >> the leech is from ponds that are from
Tachinite Harbor >> industrial? Yeah. >> And that, you know, it's mostly just water, right? So, it's actually great for us to treat because it's not there really nothing in it to treat. >> Uh, so it's a good business um for us to be in,
>> but they're not in the business anymore, right? Tech Harvard isn't there. They still have ponds and they're going to have to deal with those ponds for a long time, I think. But I I guess I just not sure with the ownership of that changing and all the changes that are going on
and looking at that the land use planning for that part of the county. Seems like it I mean it's I'm not worried about it in 2026 or 2027 or 2028, but to think about for the next five or 10 years, is that going to be a
solid number? I it's hard to imagine that it won't change in some way. >> So that's where I think a conservative approach might still be in our best interest in the wastewater side of things too. >> So what can we do to help? We started
with a maybe we should do a 2% increase in electric when we talked about the electric budget a few months ago. Uh, I think we don't want to do that anymore. I think instead we should not do an increase in the electric and that
we know we're getting a 10% reduction in wholesale rates from Simpa. Um, we're not looking at a trend, a downward trend of electric sales. It's not a real upward trend either, but even at a flat or slightly upward trend, we
don't have those same pressures on the revenue side that we do. Uh so we I think we can definitely make that work in the electric department. Even if it's a temporary thing and we need to come back and and add a little more than we wanted to in the future, maybe that's
this is the time that's the one that's going to have to just carry it a little bit. Have you um done any analysis of the typical I don't know if there is such a thing but a typical residential
uh utility bill and so water sales are down meaning I guess that people aren't using that much water so maybe a 10% increase in water is less than results in a less a lower increase
in the prisons cost than a 2% increase in electricity. Do you do you have any sense of that? >> Um, it no, it's an unanswerable question because you can't create the typical, >> right? So, everybody's individual
experience is what it is and they're they're uh going to pay 10% more than they did last year >> because they're not likely to change their behavior individually. It's really more of a gradual over time as fixtures change, as as new construction is added, that's that's more efficient. So, I
don't I don't think that's an easy analysis to do in a way that people are going to be very accepting of. >> Yeah. >> And it's like property tax. It's the same way like our we're going to increase our levy 3%. But the property
values went up more than that. And so really if you know you're not we're not our property tax rate is going to go down based on a value but what do people pay? If your property value went up then you're going to pay >> right
>> a little bit more and that so it's really hard to come up with a decent analysis that fits enough people's individual scenarios. >> Yeah. And we usually look at water sales. Um,
it depends on the audience, right? When we're doing the analysis on whether we want to say the typical user uses 1,800 gallons or 3,000 or 5,000 gallons a month. It's like what's a typical user? It's really hard to say. Here's the maybe the best we can do. >> Well, water well, we know sewer is
double your water. >> It's not quite double, but it's a little more calculated >> roughly. >> It the rates are a little bit. They're not quite double, but they're they're you know 50% higher. >> Yeah. >> Yeah. The um
what do we collect in in actual in 2024? 407,000. What are we hoping to collect in actual in 2025? 430 maybe. So that was about
2 3%. um you know if we're >> water yeah >> and and so that's what the actual increase was that's what we wanted to collect and it's pretty close to that um
I think the best way to talk about it is that if we're doing a 10% rate increase people should expect their bill to be 10% higher >> really because that that the water part of it is is uh Well,
it wouldn't be 10% higher because you still have the base fee and that's not changing. >> No, it is changing. We'll change the entire rate. We'll change everything 10%. >> So, not just the usage, everything. >> Oh. >> Um where I'm That's one of the things I'm suggesting is we'll we'll need to go
back and start to look at that split between what's the fixed and what's the volume based fee. And I think we want to do that next year. Uh just look at some alternate scenarios. But that's really not that's not going to change the typical users's experience. If you look
at the whole bill overall with electric, water, and sewer, I think the electric is is often about half of that. So if we don't increase electric at all, we increase water and sewer 10%. A typical customer's utility monthly bill is
probably going to be about 5% higher. And if you're an electric heat person, won't be won't be 5% higher. Yeah, you can't really compare that because I mean I understand what you're doing but not everybody heats with electricity. A lot of people heat with propane. So,
>> you know, uh a big rate increase in electricity affects those people may not affect those people. >> Yeah. >> Whereas sewer water >> is affecting you know everybody. Your usage is your usage.
>> Yep. >> Okay. So, a question I have on utility bills. So, when you when you have utility bill revenue, >> y >> you're that's usage plus fixed rates. >> That's all of everything that's on the monthly bill we send to somebody.
>> Okay. And same for sewer. >> Yep. Now, on the sewer revenue side of it, where do you break out the commercial user that's dumping into our system?
Where is the revenue from that? >> If they have a water meter and they're just connected to our sanitary system, it's in utility bills. >> Okay. So, the sewer utility bill
includes G&G septic? >> No, they don't have it's not they don't have a water meter up there that >> No, but I'm talking about sewer. >> Yeah. If you That's the third line item is G&G septic dumping there. That's the only, you know, they they haul
everything that is not utility bill into the system. So, that's revenue that they pay us. >> The 17 the 135. >> Yeah. for 2025. >> Well, that's the budget. I think we'll beat that, but which is why we've bumped
it up. >> Okay. So, my question then, if we're spending, how do you calculate how do you arrive at a fee for them? If we're spending 177,000 or whatever
we're spending to um haul yes sludge or to remove product from that facility that we have to remove, what percentage of that is actually produced by the city of Grammaray? What percentage is produced by what he dumps into the system over the course of a
year? And are we are we recouping um are we charging what we need to charge? Yeah. For that usage b versus what >> other people pay on a I guess a per gallon rate or whatever however you calculate that.
>> Well, I think the answer is we believe so. uh we charge them quite a bit more per gallon than a typical customer in the city because we understand what they're dumping is not the same thing is what a typical customer dumps. >> Well, I'm thinking
for for the city I'm thinking it's probably more of a product we have to manage than our stuff that comes from the city. >> I'm not sure whether that's true. I think that we have looked at that
question like okay what can we calculate you know how many of these solids that we end up dealing with are would we have to deal with if we didn't do this side of things and are we collecting enough money I understand the question you're trying to ask >> and and I also understand the the way you approached it because I kind of
thought about it the same way for many years it's nice to see a balanced revenue source that goes with the hauling but they're actually two different things >> and the hauling we have always had to do before they were here. >> Yeah. >> Uh and so it's not it's not like half of
it is their responsibility. >> Well, maybe it is frankly half of it is their responsibility. It's hard to say. >> But what we know is it's built into our rates for all of our customers, including them. And they pay a higher rate per gallon than the folks that are
in town because they're bringing something that's stronger. So that's not to say we shouldn't always ask oursel that question. which is are our rates that we're charging them the appropriate are they the right ones. So for this instance if we're going to
increase our rates 10% we're increase their rates too. So just a process question are we are you needing from us today approval or not approval of these rate increases?
>> I'm asking for it. Um, if you don't do it, we won't change the rates until you do it. >> I'm just kind of scheduling thing. Is that is that supposed to be happening at this meeting today or is there a subsequent meeting? >> Um, we don't have anything scheduled to do it at a later date. So, if for any
reason you decide you need some more time with this, we'll have to pick it up at a let's talk about that and pick pick a date and come back and do it. >> We have to have another date. >> Yeah. >> Before the first of the year. >> Well, it would doesn't have to be, right? Because we don't have to change rates annually. We can change them whenever we want.
>> It's good practice to do it that way. >> And you know, we're going to send out a utility bill for December usage >> in early January. >> So even if we waited and came back and did these rates in early January,
>> it's only it's only December usage that would be affected by that, >> right? >> But it's January revenue. >> Yeah. >> So >> Yeah. Yeah. And and I'm asking partly because I have another obligation I need to get out to and seems like there's
there's um uh there may be further discussion warranted here. >> Well, one option for you because I also have another um is we could continue this meeting to a different time when
it's convenient for you to in December. >> Anytime is fine with me. you know, work around whatever I got to work around. >> Yeah. >> Okay. >> And I could I could be back also. >> What do you think about coming back on Friday? >> Um,
that there's potentially a conflict for me on Friday afternoon. >> Okay. >> But in the morning, it's better. Or >> be fine with me, too, in the morning, I guess. Uh, how about 9:00? That's good.
>> Okay. Could do that. And then what I would ask of you is digest and then email me things that if there's other materials you want to see for that meeting. If you could send me a request tomorrow, then we'll put some stuff together.
>> Okay. And if you don't need anything, that's fine. >> Uh I need maybe one thing. Yeah. >> Okay. Well, then I guess we're continued until 9:00 on Monday.
>> That's fine with me. We can uh >> continue the meeting Friday at 9:00 a.m. The what is that? 9th 12th. >> Yeah. 12. >> Friday the 12th at 9:00 a.m. Continue the meeting. Um
I guess that's all I have. If you motion to adjourn. >> Well, we'll just recess until 9. >> We were just re re Okay. Yeah. Well, we'll end this meeting continue at Friday at 9:00 a.m. where we left off. If you got any other questions,
um I should give you I don't know if you have my phone number or not. You can call me if you got any questions. Okay. >> I know I have an email for you. >> Yeah. All right. Thanks, guys. Thank you. All right. >> Thanks.