All right. Um, this is the Public Utilities Commission meeting October 1st, 2025 at 3:02 p.m. Um, roll call. Charles >> present.
>> Craig is present. Shane is present. Mike and Patrick. um approve agenda and the minutes of our last meeting which was August 5th, 2025.
Um if anybody has any Charles, if you got any questions about the minutes of our last meeting or the agenda we're going to cover today. Um, >> everything seemed to be in order.
>> Everything's good. So, we have a motion to approve the agenda and the minutes. >> I move to approve. >> And I will second that. And moving on to
first item on our uh agenda is the ZEP fast charger agreement which we have got an amended new agreement for the charger and the new company we'll be working with. This is the fast charger, right?
>> Yep. >> The fast charger which is in the same location as it was prior to the construction of city hall. >> Yep. >> Okay. Um, what do we need to discuss on this since we've already uh
>> Yeah, this is more of an update now than an ask because we had to take action. >> This was a result of your meeting, your last meeting that you held. We did talk about this at some length and then Shane >> has been working with >> various companies to get it all negotiated. Details you want to share?
Yeah, we, you know, this agreement is between us and Zeff to put a Chem Power charging station back there, which is a different brand than our current fast charger, Tridium. They went out of business. They've been difficult for
even Ze to work with. So, when Ze approached us about a new charging station, we said, "Sure, but not Tridium. This is Chem Power, different company, still in business, doing very well. So, the agreement is for Zeff to
give us a 50KW Chem Power charging station at no cost to the city. Um, and yeah, there was, I guess, a little bit of cost because we had to go through their legal agreement and mark it up so that it suits the city's needs. And so,
that's what we have in front of you. >> And you've already signed it. Yeah, we've already seen it. But anyway, this was a a grant from MPCA that ZE obtained. >> Yeah, ZE got got money from the MPCA to build out a charging network or to
continue to build out the charging network. And so they gave this same offer to I think six simp cities that were on the MPCA's approved corridors. And Grand Marray being on Highway 61 was an approved corridor. And so they gave
us this offer. >> Okay. >> So >> we don't know if anybody else took them up on it. >> We we do know and others I don't know how many, but I think most of the cities that were offered did take uh Ze up on it. >> Most of the simple cities. >> Yes. >> That had the six
>> previous >> Yeah, >> they got rid of the previous chargers instead. >> That I don't know. >> Okay. Unfortunately, our fast charger, the Tridium one, is one of just a few that broke.
>> Oh, okay. >> So, there are other Tridium chargers in Simple Cities that are still working that are not getting used as much as ours. Maybe that's why ours broke. I don't think it is, but um >> but you can't get them fixed. >> I'm working with Ze to get it fixed.
They think they can obtain the parts and send someone up here. They haven't been able to show that, but I'm still working with them. Like, we're still on their their ticket to fix that fast charger. And if it does get fixed, >> we'll have two. >> We'll have two and we can put them both
right right out there. And so, our charging bank can kind of be there. >> So, right now, we have zero fast chargers. >> We have zero working fast chargers. one broken decorative charger. One decorative thing that looks like a fast
charger but doesn't do anything. >> Right. That's the tricky. >> Yeah, it's still over the campground from when we moved it for the construction. >> Okay. So, we have we have a slow charger at the campground and two slow chargers here. >> Nope. We have Yeah. a level two which
you're calling a slow charger which can charge two cars at once at the campground and then the same here. Two charger two cars at once. >> Yeah. >> Right. which which is you know a level two is slower than a fast charger but it's faster than a level one.
>> Fair. And then uh the tridium then would go here right right by >> if we can get it fixed. >> I mean sorry the the the new >> the new one. >> Yeah the chem power >> the chem power >> chem power. >> It's going here. It's they haven't installed it yet. >> They haven't installed it yet. It must
be installed before December 31st. >> Oh okay. >> They're and it's you know we've given them a site. We've given them power to the site. >> Everything's there. >> They are going to come and they're going to install that. >> They ze. Yep. >> Ze. >> But that's going here. >> Yep. >> And then you say the tridium might also
go here if we can get it fixed or trumium stay down at the wreck part. >> I think the tridium would also come over here because there's a mini sub >> that runs the the charging station. And there's there's space in that mini sub for the tridium and the chem power
>> and the slow charger >> and the slow charger. the medium charger. >> Yep. There's space for all three of those. I think, you know, don't hold your breath on getting that tridium fixed. It's been really, really slow. >> So, you it may or may not get fixed kind
of switch. >> It may not get fixed with a very slight may get fixed. >> I see. >> And that's because of parts. Is that the problem? >> It's because of parts. It's because of we're far away and and Zeph partners
with a third party or a fourth party at this point uh to do their maintenance and so they're not very reliable. So, all right. Well, that's good. We were going with a new charger with a new contract,
which is a good way to go instead of trying to otherwise we'd sit here and bumble around and probably not have a charger because we can't really we don't know when we'd have a fast charger. Right. Really? So, >> what is I don't get what ZE gets out of this deal.
>> They get 10% of our charging >> revenues >> revenues. And you know, they've that's kind of their company. They they distribute chargers. So, um we're just one of many entities they work with.
They may work with other cities or businesses or just, you know, >> the more they get out there the >> Yeah, they distribute chargers and their app is something that EV drivers then, you know, they get here and they download the app because if they haven't used a Zech charger, they
have to download the app and then they have to put money onto their account and then they get to charge. So, yeah, Zeph, just a charging EV charging company. >> Okay. >> They don't make the chargers, right? >> But they distribute them. >> Are they nationwide? >> I think they're just Minnesota. Maybe
maybe a little bit outside of Minnesota. I haven't looked into that. >> Okay. >> So, who um how do you feel about having Ze with which we have had less than optimal uh experience? Yeah. >> How do you feel about them?
>> It's not ideal. maintenance guys for the next five years. >> They're, you know, they're not the best to work with. They they do I have, you know, contacts who will get back to me about things and they, you know, give us the assurance that this charging station will be much less finicky than the last
one. You know, take them at their at their word or not on that. But, um, >> I'm going to go with not. >> Yeah. You know, the only reason we're doing this is because they're offering it to us with at zero cost. >> Zero. Yeah. when they when their first
proposal was, we'll do this and you pay $18,000 and it's another Tridium charger, we just flat out said no, right? And no Simpa city took them up on that offer and they pitched it to the Simpa board and nobody had anything good to say about Zeff.
>> And so they've had to, you know, cut back on their offer until it was so appealing that S of Cities finally did say, "Okay, you're giving us a free charger and it's not a tridium charger. Fine, we'll take it. But we're going to
also edit your contract severely. Yeah. So that it suits our our needs. >> What were the edits? Just curious. Like what were some of the principal things that were were object objectionable from the Grand Marray point of view?
>> I think it was their liability. >> They wanted to limit their liability to the amount of money we paid them. >> Oh. >> Which is kind of a problem when you're not paying them anything. Well, frankly, it's a problem ever to think that they should be limited to even $80,000 if we
paid full price for this thing if they have a problem and due to their negligence burn somebody's $200,000 vehicle to the ground, >> right? >> Or caused some other significant property damage or injury. >> Yeah. >> They should be liable for what their
negligence caused, not limit it to something else. >> Right. Yeah. And what? Yeah. So, so that and that's the thing that you might be worried about, right? That oh, somehow their charger screws up and it
ruins a Tesla something. >> Yeah, that's the biggest thing. >> Yeah, >> there was other stuff in there, too. >> That Yeah. I mean, but you mean besides just the liability? >> Yeah. Okay. Well, everyone will be happy now.
>> We'll see. >> It gets installed. >> If it gets installed, we'll see. It gets installed and it works every time somebody tries to use it and everybody can figure out how to do it, then most people will be happy. >> I guess to to this point though, we've
sunk some of my time and some of Chris's time. >> Um, so some time into this. >> It's not This isn't free. Yeah, >> this isn't free, but it, you know, we haven't paid um for it >> like the device itself. So, >> yeah,
>> we have some investment, but not as much as >> Well, the project cost is 87,000. >> Yeah, the total the to the device cost $87,000. >> Yeah. The MPA grant was 70,000. Now, when the MPCA grants money for stuff like that, do they care about product liability or any of that kind of stuff? They just they're just finding
>> that's between us all. They don't care. They care about do you have access to renewable energy credits for the power that's used, >> right? >> And do you have a deal to maintain it, but they don't care who does it or what the deal is.
>> And from the MPCA side, most of the funding for the state for EV charging grants has come from the VW settlement from when they were, >> you know, cheating cheating on their emissions. there was a settlement and it was distributed to the states and then Minnesota opted to use it to build out the EV charging network. So,
>> okay, >> that's where the money comes from. >> Yeah. And and I noticed in the contract there's a little this there was this little bit about uh it sound like the intent of the legislature was to have these EV charges supported by renewable energy
production, right? Like there's and in lie of that then you could buy these w credits. Is it >> onsite renewable for an EV charging station is pretty unrealistic, >> right? Right. >> I mean, like, come on. >> No. Right. But you could you could say,
well, I don't know, we have this huge community solar garden and uh >> Sure. >> There's >> as long as they charge at 2:00 in the afternoon and it's sunny out, >> right? Right. Or you have a battery or something. Anyway, >> yeah, you it could be possible, but like one of the things we know about EV charging stations just from our
campground versus downtown is that location is absolutely the number one factor. And then number two is how fast is it charge and both of those are not conducive to on-site solar because anywhere you have enough space to put solar >> and then to have that solar be able to
meet the demand of a fast charger. >> Yeah. >> Well, we've got 50KW of solar on the public works garage roof. >> Yeah. >> Yeah. It doesn't produce 50KW. >> Sure. Right. Sure. That's maximum output. Um, so but what what what is can you just explain it just briefly? I know
it's getting off topic just slightly, but but what there was this agreements there somehow like well we're not going to be able to produce supply using renewable energy. So we have to buy these wreck credits. Yeah, we can
provide we Simpa has enough ability to provide Rex for Ze to cover the usage of the charging station. So we like meet that requirement of the grant and Rex are you know they're not you can't
really see it. It's not on site but it's like because a wind turbine got put up and there's renewable energy credit associated to that. can be attributed to the usage here and retired. >> Yeah. >> And so >> accounting rather than physics at this point, that's a better way to put it.
>> Retired meaning uh that portion of the power output from that turbine >> is no longer available to somebody else. >> No one else is able to take credit for it. No one else can take credit for it. That credit is attributed to the charging station usage. >> Yeah. >> So, as long as you trust the
accreditation and like the the accounting, then it's real. >> Yeah. And that's uh that's that's Grand Marray's deal that we have to we have to ensure that that's the case or how I couldn't quite understand in the
contract. It's like cuz somebody has to assure that these WCK credits are in place. >> Yeah. And it's weird because the way the contract's written, it's almost as if they're dealing with a private business who has to also have a side deal with a utility to provide power to the site.
Since we are the utility, we don't want to have to worry about that kind of thing. >> So, I'm not sure how they're going to want to see documentation of, but it's easy enough for us to provide documentation of annually or periodically >> to the PCA or to
>> to ZE if they need it. You know, we don't have any obligation to the PCA because we're we don't have a deal with them. >> ZEF does. >> Ze does. >> I see. >> Yeah. So, the way it's worded here, and this I think is from the grant, is that Zeph can purchase renewable energy
credits from the market on our behalf. >> I think we were going to go with a different option though. >> Are we? >> Yeah. >> Oh, yeah. Option to move any direct tie.
ZE will enroll in the available renewable energy program offered by the utility. >> Yeah. >> So just like you can put put Rex on your utility bill. Ze will just tell us how many wrecks they'd like to purchase and then Simpa just Yeah. So we this is
metered. This >> has its own separate meter that we're measuring. And when a customer on our system wants to have Rex cover their usage, we just handle that based on on their bill. like on their bill, we'll say, "Okay, use this many kilowatts. You
bought this many racks and here's the charge." So, we can just as easily do that on this meter, too. >> Mhm. Well, seems like about as good as it gets. Yeah. And fingers crossed it works out. >> Yeah.
>> Charger works and my brother-in-law is happy, >> right? Yeah. Yeah. I know the people that are looking for a little bit of juice in a short amount of time will be happy. >> Oh, that's nice. >> I wonder if it was like this in like the
20s up here that people drove their cars up here, stopped in at city hall and said, "Where's the gas? You guys really have an obligation to provide us with a tank of gas? We drove all the way up here." >> Yeah, maybe not. >> I wonder. I mean, it's kind of the wild west still on the fringes like us.
It takes a little bit of planning and courage to drive up here, but >> Yeah. Yeah. It's they say my brother-in-law comes up here in electric car from up by ca down by Cambridge and it's all mapped out and where his stops are going to be and how
long he's going to be there and um when the charging can happen and how much left in the in the tank, so to so to speak. >> Yeah, it's complicated. All right. Okay. Moving on to the next item, the
2026 electric draft budget. Um, I guess I'll let Mike >> Yeah. >> brief us on that. Let's see where we're at on this. >> Well, this was a month ago, right? This was on the agenda. >> Yep. And since then, we've learned a few
things. Uh it's confirmed that SIMPA's wholesale rates are down 10% next year. That's been approved by the board. Um that was anticipated in this version of the budget already. It's also confirmed that our health
insurance will be increasing by nothing next year >> and we had built 10% increase into our budget. That's a miracle. >> It's well it's actuary you know >> an actuarial miracle that >> we have our experience rating our usage
has been low enough for a number of years that that's what we get. Yeah. Even in the face of medical uh cost inflation, >> right? >> So it's definitely not uh universal for people on health insurance in 2026.
Feels good. Uh and we know that it's uh as much luck as anything else because it just takes one random difficulty with an employee and then we're really glad that we've got this program, but it's going to cost us in the long run. Uh the
other thing that is um maybe a little different than what's in this version is how much we want to put towards the city hall project. So, we'll talk about that when we get to page two. the, you know, you think the wholesale rates are going down 10% next year. We should
probably decrease our rates, too. And that's an option, but just a quick reminder, they were increased 10% in 2023. And in 2023, we had 3% rate increase and a 2% in 2024. And so, we don't our
strategy is not necessarily to match as closely as possible what happens with our wholesale rates. Some cities like to do that, particularly bigger cities with very large customers that don't care about predictability as much as they care about absolute lowest possible
costs at all time. Um, but I think it serves our customers better to have some predictability and smoothness to rates rather than they go up and down all the time. And so we have the ability to absorb increases
over time. And the way we do that is like this. We have a small increase on a regular basis even when our costs might be going down a little bit. But if we wanted it to be um lower, we could we
could make that happen this year because it's such a significant rate decrease. One of the other things that's going on with SIMPA is last year we started doing an energy cost adjustment on the full-time which is Simpa predicting what their
total energy costs are on a monthly basis and have a base rate that's attached to that or a base cost that's attached to that. And when their costs are above that, they pass that on to us in the wholesale rate as an energy cost
adjustment on a monthly basis. For folks on I believe Arrowhead does this, but a lot of utilities pass that on to their customers as well, and we don't. So, uh, but it did result in um a higher energy cost for us in 2024,
the the energy cost adjustment did. So, even though they they had a no wholesale increase in 2024, they did have this energy cost adjustment that cost us about $80,000 in additional wholesale rates. Uh they've made an adjustment
after 2025 to how they calculate that base cost for their energy. They're including some more things in there that they did than they did before, which will increase that base number, which means there'll be less need to charge us an energy cost adjustment. Now, the
energy cost adjustment works both ways. It's can also be a credit to us when their costs come in less. And it and it's been both, you know, on a month-to-month basis. >> But there you're kind of what you're saying is they're they're they've improved their accounting function so
that the the average cost is going to be closer to the the fluctuations. Well, they looked at 2025 in particular and said we ended in 2024 and said we ended up charging more than we had budgeted in this energy cost adjustment. And we
think it's because we left a few elements out of the base cost, >> particularly hedges that they buy on the market when Shero is going to be shut down for a period of time. >> So now they're going to include that in the
base cost. It doesn't change their wholesale rate to include that in the base cost. The rate is the rate, but it does mean that there's less chance they'll need to collect uh charge from us on the energy cost adjustment. So, that's good news. Um
>> the customer here doesn't feel that, right? That the >> No, we don't pass it on. Now, some some places do. A lot of utilities do. >> And how does it impact the cities? I mean, you could sort of imagine it's like, oh my gosh, this month we owe a lot more than we anticipated.
$80,000 in 2024. That's what the impact was. >> Yeah. >> That we didn't >> budget for. >> We didn't anticipate. Uh I'm not sure we didn't budget for it because I think the the wholesale total costs didn't end up 80,000 higher, but that was 80,000 of it
was this charge. So, we were probably fairly conservative in what we ended up budgeting in our wholesale purchase number. And it's, you know, difficult to predict also because we don't know what our customers are going to buy and we don't know how many customers we're even going to have.
>> And and we've that's been growing too in these past couple years. That's part of our >> budget picture these days, which is kind of nice to to figure out what to do with. So, I'm recommending a small 2% rate increase, but let's keep talking about what's included in that before we
have to ask you to make that consideration. You can see the five year running, three actual years, two budget years um of what's going on. Our our uh personnel costs we actually have just slightly lower in 2026. This
one is really hard to um predict. We don't have a contract for 2026 wages yet. and that includes uh all of our line workers. U and we don't always know which employee is going to take our
insurance package for medical insurance and which one's going to use other options that they have available and that can make a couple tens of thousands of dollars difference depending upon which way they go. And so I think that's part of the reason why this number is down a little bit from the budget of 2025
is because of that calculation. but it's awfully close. Anyway, uh this number includes um two line workers, an apprentice line worker, although we're hoping he'll be a journeyman quite soon. Uh and then 32%
of my salary, Kim's salary, uh Alyssa's salary, and Patrick's salary, and probably about half of Shane's cost as well. the um supplies number, you can see that it
fluctuates pretty wildly in the actuals. When we're talking about supplies, uh the biggest cost item for us is transformers, wire, um poles, equipment like that, which if we buy, um you know,
wire at $6 a foot and we need a few thousand feet of it, it starts to add up pretty fast. And transformers are regularly between5 and $20,000 to buy. So, um, as we get new customers and are
expanding our system, you're going to see those expenses show up here on the supplies side, uh, 2024 was a pretty big purchasing year. And this is also the costs for these items is really dramatically increased
in the past five years, particularly after COVID, but it was really starting before that too with supply chain uh shortages and transformer construction and copper prices getting really crazy and just lots of things like that. So, we
we've got a a robust number in here and we've spent more than that in the past, but we're pretty confident in that. services is paying for um our own utilities, uh accounting services, legal services,
also um construction services when we hire out contractors to assist us with projects. And we do that quite often when we're going to bury a new line, for instance. Sometimes we would dig that in ourselves, but most of the time we'll try to find a contractor to to do a
project like that with us. Um, and that number is again pretty close to what it's been in the past. Purchase power you can see is we're predicting about flat with what the budget was in 2025 and just a little bit more than what it was in 2024. This is with a 10% rate
decrease. Um, I'm not sure whether this number is right. I think SIM is suggesting it's a little lower than that based on their own predictions, but we're expecting there to be noticeable increase in uh kilowatt sales
in 2026 because we've had now we've had, you know, most of a year of a full apartment building and they're going to be mostly full next year. We're going to have a whole heating season with them. Uh there's going to be another apartment building that's going to have most of whole heating season next year and they
have a lot of electric load on those buildings. So that's new customers that help share the cost of the whole system. That's that's good to see. Um miscellaneous costs are just things that don't fit into those
other categories and there's not a whole lot of them. depreciation is you can see it it's staying kind of flat at this 200 basically quarter million dollars and that includes depreciating the assets that we actually put in the electric
department. So that means our power poles and wires and transformers and equipment and buildings particularly the power plant building. Um but as you can see the debt service number was in 2022
75,000 then 40 then 24. What happened there was uh we stopped paying debt service on the power plant after 2023. That was 20 years in to our bonds and we don't have any more payments. So the
debt service usually goes down as you go on in a bond payment because it's only paying the interest is what we're showing in the debt service. So in 2024 that amount the 24,000 is the electric department share of the interest on the public works garage bond. That's the
only debt service that they had left at that point. You can see it's about the same in 2025 and in 2026 now it's increased as we've added in the electric funds share of the debt service on this building.
>> We'll talk more about what this building's impact is on this budget when we look at page two. Just just to go back uh to purchased power. >> Yeah. So the numbers the the dollar amount's about the same, but it sounds like what you're saying is we're going to be
buying more uh kilowatt hours from Sima, but at a lower rate. Is that right? >> That's my expectation. Yeah. >> So that' be kind of interesting to see how that I mean there's sales here, but is is there Oh, no. But Oh, yeah.
Kilowatt hours purchased. Kilowatt hours purchased. Yeah. Okay. >> That's on there. >> Yeah. So we we know that um what our history's been with sales has been we predict one to two percent growth for a long time and then maybe about 10 years
ago noticed it's actually not it's closer to flat >> in terms of what a prediction would look at in a regression analysis of you know 20 years of sales numbers. And then in 2020 happened and there was a big jump down
in 2020 with COVID and all the closures. Um sales were down 8%. That's we thought they might be closer to 10% down for most of the year. So that was really uh tough and they've remained lower through 2024. They didn't really ever come back to the 2023 number. That's the biggest
one we've got. And uh I think we'll probably surpass that in uh if not this year, definitely next year. >> Surpass >> the sales kilowatt sales of of uh 2019 and 18 and the years before.
>> So you think we'll be back up in the 25,000 range. um the utility bills and and fees is the line item in the revenues where we show kind of the results of our kilowatt
sales. I don't know that we've got a um yeah, the millions you're looking at. Yeah, 2019 was about 20 almost 25 million. You can see that 2014 before that was the previous peak at about that same number.
>> And um it's not quite back up to there. 2024 was was still pretty flat at at 23 and >> a.5 million. >> But we're going to get up above 24,000 or 24 million I think this year. And so we're starting to creep back up again in
terms of just total kilowatt sales or purchases. I suppose we're looking at the top of that. You can see there's a gap between the amount of kilowatts that we measure at our substation that we buy from SIMA versus the amount of kilowatts that we measure at everybody's meter combined which is what we sell. There's
a certain amount of line loss on our system just >> Oh, that's that is just inefficiency. You think >> mostly? Yeah. >> It's mostly what it is. >> That's interesting. That's I mean it's probably that little gap is a lot of dollars, right?
Well, it's uh you know a small single digit percentage which is what we kind of just expect. >> Yeah. >> Just from transformer loss and line loss and >> there's slight inefficiency there. >> That's pretty close. I think those two numbers.
>> So what's our uh what do we expect to collect? uh about 2.9 million if we don't change rates at all in 2026 is what we're expecting to collect and a 2% rate increase would then add about $58
more,000 to that. The other big pieces of our budget are simp payments. Although we're done paying our bond payment for the power plant, we still have a deal with Simpa to sell the capacity of the plant for
uh $216,000 a year. This is something that SA has talked about having an appetite for increasing the amount that they buy from their members. Uh I don't think that we've got an ability to add any more >> capacity
>> generation. Yeah. At our site first because we haven't actually used six megawatts of load ever. Uh and that's what we can generate. Uh but secondly because I think it would probably require a transmission study to see whether or not we could put more than
six megawatts on the line and I don't know whether that's worth doing. So uh so simple pays us 216 whether they use the money or not is just it's >> they use um it it's valuable to them to have the capacity which is different
than the power production. >> So just the ability to produce the power is the capacity and they need to show enough capacity to meet their load prediction and actual power production to meet their actual power sales. So
they have to see look at both sides of that >> and the capacity on um on a diesel plant like this they get to use most of the percentage of the actual name plate capacity in the accounting
with the regional uh trans you transmission systems >> which is good um even if they don't ever use it to have the ability to use it that's how valuable these plants are particularly as we're switching over to more renewables which are less
predictable. >> Mhm. >> Uh and the percentage that they get to use on those is really really low, like single digit low. >> You know, you build a 100 megawatts of solar capacity and you only get a couple megawatts of capacity credit for that.
>> Even >> because of its uncertainty. >> Because it's uncertain. Yeah. And because you can't match it up necessarily with when >> there's need. So that means that there needs to be dispatchable power as well that can be just turned on in in quick
fashion when the needs of the customers and the ability for transmission or for uh renewables to meet that don't match. Which is why Simpa is still investing in more dispatchable plants of their own.
couple of large gas turbine plants that they've built in the past 10 years in Otana and and uh where's the other one at Austin? >> I can't remember. >> Yeah. And and they're still looking at another one right now that that's coming online.
And they would, like I said, they'd build more um of these what they call quick start plants, which are memberowned generation that they own the capacity of through contract that I think um
is new adding one. Somebody, one of the c one of us is is adding some more capacity through this. And >> so the prices are are nice. This one is is uh 18,000 a month, which is $3 a kilowatt of 6,000 kilowatts
a month. And uh I think the prices are quite a bit higher that they'll offer now for new construction. But sadly uh so are the costs of putting in new generation. This plant cost us just under $3 million in 20 2003
2002 >> and uh today it would cost I don't know 12 million. So so this turn 16,000 this is um they're that isn't purchased that isn't dollar
amount of of the purchases they made from us uh for electricity coming out that plant. That's that's really a it's like here you will supply us when we need it and and you're you're going to be there as backup. Here's 216,000. Thank you very much.
>> So our contract we have two contracts with Simpa that define our relationship. The first one is the power sales agreement which says we agree to buy all of the power that we need from Simpa. All of it. No exception. >> Grammar does. >> Grammar and all the members do. Each of
us have that. That's the basis of the organization is these power sales contracts that say we will buy all of our power from Simpa. >> Which means even if we own a power plant and we operate it, we can't use it because we have to buy all of our power from Simpa. So we own the plant, but
when we operate it, they own the power and they pay for the fuel. So the kilowatts that are produced there are theirs and we actually have to pay them for the kilowatts that are produced there. because we have to buy our power from them. Now, that's a tiny tiny tiny
percentage of the power we use because it really doesn't run that often. When we put that plant in, the conversation was 500 or,000 hours a year and it's really more like 50 to 100 that we actually run it. >> So, we So, there's two it seems like there' be two circumstances we'd run it.
One is if tree falls in the line coming up from Duth. Now, we don't have power from Simpa. So we have to run it to supply the city. Yes. >> So that's one. The other one would be if Simpa is running out of power because it's hot in Rochester and they need more.
>> Yeah. And it's not it wouldn't be Simpa. It would be MYSO. So the the Midwest >> uh and and uh they look at different demand versus supply in different markets and will call for transmission
to be turned on or generation to be turned on. So do you get do we get revenue in that that instance or Simba gets revenue? >> Definitely does get revenue from that. Yes. >> And uh but this is when we put this power plant in the 216
was paying our most of our capital costs for it. So basically they were paying for the power plant anyway. >> And now we're done paying for it. And so this is all free and clear. >> I see. >> Which is which is a great deal. And it's a good deal for them too. This is still pretty cheap capacity for them to buy on
the market. Reliable. >> Yeah. >> Dispatchable capacity. The third reason why we would turn on the plant and probably the most common reason we actually do just to exercise it. >> So every month we try to run it just to make sure everything's working. >> And that so the second most common is
the market demands it. So simp says turn it on and they can actually turn it on from from Rochester. Mhm. >> And uh then the third reason, least common but most important that we have it is when the transmission lines are down, we can isolate ourselves and run
the whole town. >> Yeah. Yeah. >> Now, that's only when their transmission to town is out. >> When there's an outage in town on our system, it doesn't help to have those plans, >> right? >> Yeah. >> Yeah. >> Uh they actually do pay us other monies,
however. And so this miscellaneous amount is um interest we make on funds we have. That's a big part of it. But the other big part of it is payments from Simpa for other things. So SIMA pays us for fuel for the plant. If it
runs a lot, that number, the miscellaneous number will go up. Simpa pays us for when we make rebates to our customers for energy efficiency things. They they pay us for that. So that's a big chunk of our miscellaneous payments is other things simple might pay to us.
And then you can see this last solar EV line. Uh there is some revenue that we get from operating our solar and EV systems. Um, you know, we we get people pay to use the EV chargers and and we operate
um when when we're doing a deal where we have to give a customer um money for their solar that they have on their building that Simp's paying for that as well because we can't buy the power from the
customer. We have to buy it from Simpa. Our capital budget is supplied by that depreciation number which is money we're planning on collecting in rates but that doesn't have a corresponding cost allocation with it. So it's just going
to get accumulated in our bank account. But we actually do have some ways we're planning to use it. And then this debt service number which is the same thing interest payments that are due. So that's 331,000. Of that 215 is spoken for. And here are
the amounts. The public works facility number. 113976 is the amount that the electric fund is u going to pay next year towards the public works garage debt payments. You
can see how that compares to the 24 $25,000 of uh debt service. That's how much of that is interest. The rest is actually principal payments. So, we're getting to a place where a lot of principal is being paid on those bonds. The interest
is starting to come down. And then the 2024 city hall bond is new. We've been anticipating this. We've talked about this as being one of the things that we're going to use our capital money for in the future, but we didn't know what the payment was. This number at 100,000
might be um a little more than we end up needing to contribute towards. It was my plan in October, but I think uh based on what we talk about next month with water and sewer budgets, this number might need to be
adjusted yet. So because of that, I'm going to say let's hold off on taking action on any rate changes yet because we could still come back and say that's off by 20 and there's 10 or so savings in medical
insurance expenses and we we sharpen our pencil on purchase power and maybe we don't actually need to do a recrease at all. So uh this these debt commitment numbers how do they relate to the debt service
number on the previous page? debt commitment is we're going to write a check for this amount of money. And so that in that's uh includes the capital payment and the interest payment like the principal interest both
>> whereas the debt service number on the expense side is only interest. So we don't expense the principal payments of loans. It doesn't show up on the expense side of things because it's >> kind of like >> being depreciated instead, right? So, we
take the value of that asset and we're depreciating it. We're not expensing the principal payments of it. If you did both, you're double counting that cost. >> Yeah. Yeah. So, there's the 85 288 is is some it's a fraction of this
and the remainder is capital. >> Yeah. 85 288 is 60,000 in interest towards the city hall building and 25,000 in interest towards public works brush. >> I see. And in that last paragraph you talk
about your fund balance. Is that shown anywhere around here? >> We don't have that on here. Uh we do report that. I don't Are you guys getting our monthly financial statements from Kim? I mean, I know you are, Craig, because the council gets them. >> Yeah. >> But
>> I don't think I've seen them. >> Okay. I mean, we'll uh >> we can show you that that I mean that's reported on a monthly basis where all the expenses, all the revenues, and what the balances are for each of the uh
general ledger accounts as well as what's in the bank. >> Mhm. So, our fund balance, when you say that, that's the electrical. Yes. >> Service just just >> just the electric utility has its own separate funds. All of its money is
accounted for separately. >> Um and so I talk a little bit about this rate study. We did a rate study and I don't remember how many years ago now was it five years ago maybe. >> That feels right. And that study uh
suggested that our balance was a little low and needed to increase and and it has like we we've made sure that when we do this calculation particularly here in the capital budget we're collecting 330,000 with plans to
spend 215. The rest of that money is accumulating in the fund balance. So the fund balance has grown. I think it's north of a million right now. Um, and I don't remember what we want it to be, but I think after five years, the
predictive value of that study is probably passed and we should redo it. So, what what the rate study looks at is what are the cost elements in our budget and what should we be charging our customers and and also how should be charging our
customers. So, one of the things that was in the rate study that we have done a little looking at but haven't implemented yet was do we want to do demand billing for our largest customers where right now all of our customers pay the same amount which is a fixed fee
based on their service size and then a per kilowatt hour rate that's the same for everybody for every kilowatt that they buy. And if we were to do a demand billing instead, it would take our largest customers and charge them a
demand rate, which is some amount of money per kilowatt that their highest demand number ends up being over the course of a month and a lower rate for kilowatt hours of energy. So they we just break their bill up into
separate pieces and we collect the same amount of money, but we probably redistribute those costs pretty significantly on those customers for those folks that have um a load chart that goes up and down all the time. uh it's going to cost them more because
they're going to be paying for the peak of their demand and they're not buying enough energy for them to notice a savings in the lowering of the kilowatt rate for those customers that have a real smooth load curve which I don't know if we have any of those um you know
that's an industrial kind of thing >> then uh they would end up probably getting a better rate off of a of a program like that. The reason we would look at doing demand billing is because we pay a demand bill on our
wholesale rate. We pay um a transmission and a demand charge based on our load, our peak load during the month >> and then an on peak and off- peak electric rate. So when we turn around and take our
large customers and charge a demand rate, we're trying to incentivize them keeping that peak as low as possible because it that makes a difference for us too. >> Our our largest customers aren't particularly large in the universe of
what large customers look like. Uh we happen to be at least one of them at the wastewater plant. That's probably one of our better load curve customers in the in the system anyway because it's just a lot of electric motors running pretty constantly.
>> But our other large customers are all um as you can imagine um government and such type customers. So, >> right. >> Yeah. So, we looked at a little bit of that.
We haven't implemented that yet. I think we'll probably look at it again since we've been collecting data on it. We can have our consultant that we used before help us look through that and decide does it make any sense to to charge uh a
demand bill to these folks? So, our last rate study suggested that fund balance should be allowed to increase approximately 50%. And you're saying it is at about 50% of our annual expenses? >> I don't think it's quite there, but I think it's close. Um
>> close, I think. But uh you know we're we're looking again in 2025 that amount should go up and in 2026 we're budgeting for it to go up again. So if we did a study next year, we wouldn't use that to adjust 2026 rates.
We'd use it to think about 2027 and the next five years. >> And that's the the this uh the fund bounce like rainy day fund kind of like like wh why why is that money sitting? I'm not saying it shouldn't be. I'm just What's the
>> Yes. So, uh, we don't have a cash flow type issue in this fund because we're getting monthly collections from customers. So, we probably only need about uh two or three months worth of revenue to feel
good about cash flow. Um, but when we do have things happen, they cost $250,000 or $500,000. If if we need to buy something for the power plant, we we just need to >> Mhm. >> that's what it might cost. It might cost
$5 million, right? So, I mean, there there's that's the reason it is a rainy day fund and and you know, it rains a little bit all the time and sometimes it rains a lot. So, >> that's the reason to have it up where it is. Yeah.
>> So like I don't know 10 transformers go out at once and suddenly it's like oh my gosh that's >> or 10 new customers show up >> and you pick transformers. >> You got to buy stuff. >> Yeah. >> That we didn't plan on buying >> because it's hard to plan on that stuff. We don't necessarily know. We and we do
you know this budget includes money to do what we consider a typical year >> when it comes to that. But >> like things unforeseen. >> Unforeseen. Yeah. Yeah. >> Um projects too. Uh one of the projects
we've had on our books for a little while now that we've been talking about actually now is on Simpa's books and that is to replace the manual switches on our transmission interconnect up at the substation with motorized switches.
So right now meaning uh literally like Frankenstein switches, right? except they're up on a big tall pole where they have to manually move a lever to open a circuit to disconnect our system from the transmission line. And you know that
that's a lot of voltage up there that uh makes a an interesting show when you open and close a a switch. >> Like a lot of sparks. Yeah. And so, and our guys are standing right underneath it >> moving this switch.
>> So, that's it's not uh you know, they're they have protective equipment, but it's still >> be nice to not >> what we've wanted for a while is let's look at at switching that up. And so, when Simpa has been sending their staff up to look through the substation with
us, that's a project that we've talked to them about. And now it's on Simpa's capital plan to do that, to replace that switch probably next year. which should be really nice. Another big project that our guys got pretty much done now this year which was
uh slightly inconvenience to our customers was replacing insulators in the substation itself. So that's work where um and the insulators were all installed in the late 90s 989 that's when the substation was built. Um, and they're
they break and they degrade and they need to be replaced. And we had some that were pretty degraded. So, our guys said, "This is important. We need to get this done." Means they show up in the middle of the night, disconnect the entire city from power so that they can work in the substation
safely and remove old insulators and replace them with new ones. So, it took them a couple of times through to do that, but they have to turn off the power to town to do it. We don't have a way to send power without it going through a substation >> and >> yeah,
>> we can't have the guys in there working on it when it's energized. >> That was these four in the morning outages. >> Yeah. >> Where all my fire alarms off >> even earlier. Yeah. >> Yeah. >> So, thanks for for doing that for our guys for getting up in the middle of the
night and doing that work. >> Yeah. >> So, that's the big picture. what's going on with the electric budget. Like I said, I think there's been enough uh things that's changed in the last month that I'd ask you to wait till next month
to take action on any rates. >> Okay? >> And we'll look at the water and wastewater budgets next month as well and Scott will come in here and we can talk with him about some of the things that are going on there. Quite a few interesting things going on with water
and wastewater. Just a quick preview. Of course, you know this all because you've been touring the plants with us, but >> there's been a lot of action at the water plant this year. >> At the water plant. >> At the water plant. We've been talking about the wastewater plant for a long time because we know that's the big
project that's coming up. But that actually kind of has a chilling effect on doing upgrade work because doesn't make sense to replace that piece if you're going to just replace it again in five years. >> Yeah. >> Uh they've still done quite a bit of
replacing there. But at the water plant, we've done more. Roof's new. The filter materials are cleaned out. The filter basin, which was cracking and leaked, has been grouted and repaired. We've replaced pumps, um, which meant we had to put lifting
eyes in the ceiling before we replaced the roof. There's We've replaced the chemical feed systems and the containment that they're in. We've replaced some of the ways that we're monitoring how to do that. Scott's working on ways to make the chemical
feed system work better so that it feeds based on our volume that we're producing rather than having to be manually operated. So, a lot of kind of we haven't been talking so much about because the wastewater plant's been getting the attention, but a lot of work's going on in the water plant this
year and more to come unfortunately. So, >> we'll have a a fun list to look at there. Is there a there would like seem like that should be there should be a little story on that in the like news herald or I don't know if there was one.
>> I don't know if there is either. We I mean there it'd be easy to put together because we put in the weekly updates Scott's pretty good about putting that stuff in there when we do it. So there's probably 10 things in weekly updates that you could combine into >> one story of our water plants really been >> there should be you know like people
should know that we've been doing these upgrades and it's >> you know it's it's both needed and um contributes to I don't know community well-being. Yeah, >> basically. Yeah, it's it's uh the wastewater plant's the one that people notice, >> right? >> But the water plant's the important one.
>> Well, >> like we just can't we can't get that one wrong, right? It's important, but it's kind of taken for granted, too. Yeah. >> Yeah. We want it to be something that people don't have to think about. >> And so then we don't necessarily >> think to tell that story. >> Yeah. >> As loud as we could,
>> but it should be really. I mean, people should know. So, I don't know if that's communications department or >> His eyes lit up, didn't they? When you said that, >> he nodded his head. >> A new a project. A project for me. I mean, it wouldn't be that hard. I don't
as you say, it wouldn't be that hard. I think the pieces are all there. >> All the information there just >> probably even photos around you could in the weekly update. >> Yes. >> And Brian Larson's always happy to get more stuff for his paper. So, it's a
good idea. >> So, you got to >> I can hear the gears turning already. So, >> yeah, I'm sure it's What's your dead? You >> tell me. >> Two weeks.
be like for your information section. >> He'll come back with an answer and tell you when it'll be done. >> Give him a minute. >> I'm kind of joking, but I mean I think it was a good idea, but I don't know what the deadline would be. >> Yeah, it's
there's no emergency need to do it, but as long as it's fresh in our mind and we got it all there. Yeah. All >> this stuff's been going on. So anyway, so we're going to revisit this next month. >> Yeah. >> Yep. When we talk about sewer water.
>> Yeah. >> Okay. Okay. Well, thanks for all that information. That was good to understand that. Um any other questions?
No. Um, any other items? I don't think so. I don't have any other things. I was just trying to think about if we should Yeah. No, we could probably bring that up the next meeting.
We'd be better. We might be more uh as far as the the tree. When is that? What is that? >> The urban forest plan. Yeah. Yeah. >> Does that incorporate into
the city as a whole for private people or for protecting city lines? When we identify dangerous trees and things like that? >> Yeah. >> There's a grant being worked on. >> Yeah. The grant for removing those trees
that could fall on properties. >> Okay. >> Yeah. Or structures. Yeah. >> That's just that's in a process right now. Yeah, I was with the, you know, I I presented it to the city council and then um
>> Yeah, but utilize that is not available right now. >> There is no grant if that's what you mean. >> Yeah, that's what I mean. >> Yeah, we're >> there won't be one until next year if we finish that and write it right >> and are successful. >> Right. Right.
>> So, yeah. So that's that's something we're looking at preparing for, but it's out in the future yet for >> our original grant was to do that >> and and the DNR who who administered the grant said
>> write a write a plan first >> first >> for your whole city. Write a urban forest management plan >> and then come back and ask for our money. >> So we use that money to get set up to go back to them with Okay. >> Yeah. I'm not sure that it'll affect
what we're doing in the electric department. >> No, I don't think it will either, but I mean it's it's it's I guess it helps to maintain our stuff. I guess
>> it would I mean we already do and and if you look in the plan itself there's >> some pretty big numbers in terms of city maintenance obligations but we're already doing a lot of tree trimming particularly the electric department
>> and they already do remove hazard trees. Anytime one's brought to our attention that we agree is a hazard to the electric system we'll get it taken down. Okay. So, I think that the we're not waiting for any grant opportunity to to keep doing that.
>> No. >> And I don't think there's like a backlog that we would use that for either. >> Okay. >> Um well, with that, I don't have anything more to say. >> Anything any
news on getting a third commissioner? Oh, >> no. could use one. >> This is about the time of year where we put our big push out for all of our board openings. >> But we've been uh quietly and but continuously
advertising for this position for some time now. >> Six months. >> Yeah. >> Has anyone asked you about it? >> Nope. >> Have you asked anyone about it? There's one guy I talked to like no I'm not interested but
but can keep asking. >> We have to up our game a little bit. Should we all uh should we plan a trip to Shero and tour the power plant there while it's still operating? >> You mean just because that would be fun and would attract new commissioners? >> Yes, sure.
>> I'll go. Becker is beautiful this time of year. >> Oh yeah, Becker County. Lovely. >> Spectacular. A lot of good climbing out there. Absolutely fantastic. >> Midstate Midstate climbing. Is there a sister thing? There might >> They probably wouldn't let you go up the
stacks. >> That'd be the only opportunity. >> Yeah, >> you can climb up some boulders, some glacial erratic that's 10 feet high. >> Sure. Yeah. >> Okay. Well, >> thanks, guys. Yeah. Thank you. Meeting
adjourned. Thank you.