AGENDA Public Utilities Commission Study Session #2 – 2019 ...1E9156B6-EE87-4ADE-9… · 09/11/2018 · PUC Study Session – October 31, 2018 2 Water fund: “Misc Revenue”

AGENDA

Public Utilities Commission Study Session #2 – 2019 PUC Budget Review

City of New Ulm PUC Conference Room 310 First North Street

New Ulm, Minnesota 56073

Friday, November 9, 2018 – 1 p.m. 1. Minutes from the October 31, 2018 study session

2. Preliminary review of the 2019 Annual Budget

3. Discussion

PUC Study Session – October 31, 2018 1

Public Utilities Commission Study Session #1 – Financial Reports

October 31, 2018 – 1 p.m. Meeting Minutes

A study session of the Public Utilities Commission began at 1 p.m. Wednesday, October 31, 2018, in the Public Utilities Conference Room, 310 1st North St., New Ulm, Minnesota. Present were Public Utilities Commissioners Shannon Hillesheim, Mary Ellen Schanus and William Swan. Absent were Public Utilities Commissioners Linda Heine and Sean Fingland. Also present were Utilities Director Rod Marshall, Assistant Finance Director-Utilities Kris Manderfeld, Assistant City Manager Chris Dalton, Finance Director Nicole Jorgensen, Electric Distribution Department Supervisor Larry Botten and Clerical Assistant Maria Hughes. Utilities Director Marshall explained the intended purpose of the study sessions, which is to provide information to the commissioners in support of transparent utility operations, planning and maintenance. Mr. Marshall explained that the study sessions are not mandatory and are open to any subject the Commission would like more information about. Paper copies of two financial documents were included in the agenda packet and distributed to those present:

Revenues/Expenditures and Commodities Summary Report for nine months ended September 30, 2018

Statement of Revenue and Expenses for the period ending September 30, 2018

1. Review of the Revenues/Expenditures and Commodities Summary Report

Assistant Finance Director-Utilities Manderfeld explained the different components listed in the reports for each of the seven funds (Electric, District Energy, Natural Gas, Water, Wastewater, Administration and Information Technology).

Electric fund: “Misc Revenue” includes revenue collected for meter shut-offs and electric services such as overhead to underground conversions. “Commodity-Purchased Power” includes power we purchase from Heartland Consumers Power District and on the MISO market. “Commodity-Fuel” includes natural gas purchased to run the Power Plant boilers and fuel oil purchased to run the No. 5 and 7 combustion turbines. “Production” expenses include Power Plant operations. “Transmission” expenses include the 69 kV line that runs from Xcel Energy to New Ulm’s substations. “Distribution” expenses include the secondary service lines from the substations to the streets and electric meters. Commissioner Schanus asked why the “Meters” line item under expenditures was blank. Ms. Manderfeld explained that meter reading falls under the Administration fund.

District Energy fund: “Production” expenses include amounts paid to the Power Plant for steam production.

Natural Gas fund: “Utilities Revenue” includes natural gas sales from our residential, commercial and industrial customers. “Outside Utility Revenue” includes capacity sales from the Heartland Corn Products ethanol plant and revenue from sale of gas and services to Fairfax, Morgan and Tyler. “Misc Revenue” includes bad debt adjustments from unpaid utility billings.


Water fund: “Misc Revenue” includes the monthly rental fees paid by cell phone providers to place their antennas on our two water towers (Airport and Nehls Park). “Production” expenses include anything from the wells to the Water Filter Plant, including the plant. “Distribution” expenses include anything from the Water Filter Plant to the system mains and reservoirs. The existing bond payment in the Water fund is for the Nehls Park water tower.

Wastewater fund: There are no “Transmission” expenses. The City Street Department maintains the sewer lines. “Distribution” expenses include the sewer lines and the jetter truck.

Administration fund: This fund receives contributions from the five funds: 49 percent Electric, 26 percent Gas, 12 percent Wastewater, 10 percent Water and 3 percent District Energy. The Administration fund includes meter reading, customer service (Energy Services), Conservation Improvement Programs (CIP), the storeroom (Material Distribution Center), Drafting/GIS, and Administration (salaries and training for PUC Administration staff and Finance Department staff). Finance Director Jorgensen explained that the PUC funds a portion of the salaries of specific City Administration and Finance personnel but not their benefits.

Information Technology fund: This fund is split roughly 50/50 by the PUC and City. Expenses are allocated to all departments.

Other items noted on the report:

The “Year-to-Date Actual” column on these reports has been color coded to indicate if the amount is under 100 percent of the annual budgeted amount (green) or over 100 percent of the annual budgeted amount (red). Commissioner Swan pointed out that a red cell under the revenue section is a good thing.

Ms. Jorgensen explained the “Interest Revenue” and “Grants” line items that appear under the revenue section for each fund.

Ms. Manderfeld explained how depreciation is determined for capital items (facility improvements, vehicles, equipment, etc.) valued at more than $5,000.

Five (5) percent of gross revenue goes to the City in lieu of property taxes for each fund except Administration and Information Technology because they do not technically have revenue.

Water and District Energy funds split their expenditures with a 90 percent and 10 percent split, respectively.

Commissioner Hillesheim asked if the budgeted amounts for capital projects are carried over to the next year if incomplete. Ms. Manderfeld replied that yes, those amounts are carried over to the next year.

Mr. Swan asked what happens if we don’t expend our required 1.5 percent of revenue toward Conservation Improvement Programs (rebates) in a given year. Ms. Manderfeld replied that we could be asked by the State to send a check for the remaining balance that has not been expended.


Mr. Marshall pointed out that Electric and Water funds have seen a loss of load due to customers’ use of energy-efficient appliances and water-saving plumbing fixtures. Mr. Swan stated that the new LED street lights use about one-tenth of the energy of the old bulbs.

Ms. Manderfeld stated that the furnace installation and furnace cleaning rebates are funded through the Gas Department.

2. Review of the Statement of Revenue and Expenses

Ms. Manderfeld explained this report. Ms. Jorgensen pointed out that the PUC’s payroll is split up differently from the City’s payroll. Ms. Manderfeld stated that Electric’s payroll is split between salary accounts for supervisory staff and multiple service/project accounts for salaries for the line crew. Electric Distribution Department Supervisor Botten stated that the reason it is set up this way is so that staff can determine labor costs for work orders for projects and then bill out labor and materials for those services.

3. Discussion

Mr. Marshall stated that he is open to suggestions for topics to cover during these informal study sessions. Mr. Swan replied that he would like to learn more about storm sewer system and would like to see a map of capacity of the city’s west end.

Meeting was adjourned at 2:05 p.m. Prepared by Clerical Assistant Maria Hughes

All Public Utilities FundsCity of New Ulm/Public Utilities Commission

Revenues/Expenditures and Commodities Summary ReportFor Nine Months Ended September 30, 2018

Year-to-Date Annual % of Year-to-DateActual Budget Annual Budget Previous Year Description

Revenue29,480,971$ 37,293,239$ 79.1% 28,289,052$ Utilities Revenue

972,684 1,085,000 89.6% 881,882 Outside Utility Revenue3,080,201 4,744,719 64.9% 3,361,539 Misc Revenue

7,662 15,320 50.0% 7,671 Grants529,229 344,400 153.7% 328,110 Interest Revenue

34,070,747 43,482,678 78.4% 32,868,254 Total Revenue

Expenditures11,105,675 13,777,219 80.6% 10,534,721 Commodity-Purchased Power

4,434,016 5,889,435 75.3% 3,959,532 Commodity-Fuel2,614,585 3,433,870 76.1% 2,549,665 Production

308,343 452,500 68.1% 330,314 Transmission3,468,755 4,466,610 77.7% 3,272,288 Distribution

82,179 104,775 78.4% 82,061 Meters54,814 85,500 64.1% 53,756 Disposal

1,633,790 1,996,550 81.8% 1,472,689 Treatment98,930 116,734 84.7% 85,964 Customer Service

146,281 253,000 57.8% 156,153 Conservation Improvement Programs172,609 267,995 64.4% 200,131 Storeroom

87,508 121,415 72.1% 97,910 Drafting6,330,757 9,338,994 67.8% 6,283,295 Administration

30,538,242 40,304,597 75.8% 29,078,479 Total Expenditures

3,532,505 3,178,081 111.2% 3,789,775 Net Margin before in Lieu of Taxes

1,455,357 1,940,475 75.0% 2,180,243 Less Transfers in Lieu of Taxes

2,077,148$ 1,237,606$ 167.8% 1,609,532$ Net Margin after in Lieu of Taxes

3,234,600 4,300,000 75.2% 3,097,275 Depreciation(1,854,037) (4,949,165) 37.5% (7,000,434) Capital Projects

- (804,000) 0.0% - Bond Proceeds & Principal Payments

3,457,711 (215,559) -1604.1% (2,293,627) Net Change in Cash

Electric FundCity of New Ulm/Public Utilities Commission



Commodities in Units (MWH)37,444 45,743 81.9% 34,235 Residential sales20,302 26,700 76.0% 19,192 Small Commercial sales26,882 35,001 76.8% 28,412 Large Commercial sales62,596 79,434 78.8% 59,441 Industrial sales

8,917 10,754 82.9% 8,287 Municipal PUC/City sales156,141 197,632 79.0% 149,567 Total Sales156,766 199,469 78.6% 155,115 Total Purchases

Revenue

17,957,152 22,863,185 78.5% 17,360,144 Utilities Revenue303,750 405,000 75.0% 303,750 Outside Utility Revenue609,951 801,000 76.1% 1,041,961 Misc Revenue

3,077 6,315 48.7% 3,158 Grants97,030 57,000 170.2% 54,478 Interest Revenue

18,970,960 24,132,500 78.6% 18,763,491 Total Revenue

Expenditures11,105,675 13,777,219 80.6% 10,534,721 Commodity-Purchased Power

724,993 1,299,247 55.8% 809,295 Commodity-Fuel1,574,318 2,238,400 70.3% 1,574,672 Production

308,343 452,500 68.1% 330,314 Transmission1,294,775 1,623,500 79.8% 1,140,337 Distribution

- - - - Meters- - - - Disposal- - - - Treatment- - - - Customer Service- - - - Conservation Improvement Programs- - - - Storeroom- - - - Drafting

2,398,284 3,475,896 69.0% 2,369,503 Administration17,406,388 22,866,762 76.1% 16,758,842 Total Expenditures

1,564,572 1,265,738 123.6% 2,004,649 Net Margin before in Lieu of Taxes

868,126 1,157,500 75.0% 850,500 Less Transfers in Lieu of Taxes

696,446 108,238 643.4% 1,154,149 Net Margin after in Lieu of Taxes

1,368,750 1,825,000 75.0% 1,295,250 Depreciation(779,932) (1,349,555) 57.8% (1,782,108) Capital Projects


1,285,264 373,683 343.9% 667,291 Net Change in Cash

District Energy FundCity of New Ulm/Public Utilities Commission

Period Revenues/Expenditures and Commodities Summary ReportFor Nine Months Ended September 30, 2018


Commodities in Units (MLB.)102,471 112,007 91.5% 102,650 Plant Sendout

716 730 98.1% 731 Residential sales11,480 11,084 103.6% 12,010 Small Commercial sales

9,049 11,305 80.0% 8,647 Large Commercial sales63,844 84,652 75.4% 69,123 Industrial sales

2,188 2,127 102.9% 1,762 Municipal PUC/City87,277 109,898 79.4% 92,273 Total sales

Revenue720,351 906,917 79.4% 760,754 Utilities Revenue

- - - - Outside Utility Revenue2,528 2,700 93.6% 2,063 Misc Revenue

57 95 60.0% 46 Grants41,820 35,200 118.8% 33,261 Interest Revenue

764,756 944,912 80.9% 796,124 Total Revenue

Expenditures- - - - Commodity-Purchased Power- - - - Commodity-Fuel

577,783 590,170 97.9% 477,946 Production- - - - Transmission

137,262 157,530 87.1% 121,970 Distribution- - - - Meters- - - - Disposal- - - - Treatment- - - - Customer Service- - - - Conservation Improvement Programs- - - - Storeroom- - - - Drafting

83,791 172,868 48.5% 182,076 Administration798,836 920,568 86.8% 781,992 Total Expenditures

(34,080) 24,344 -140.0% 14,132 Net Margin before in Lieu of Taxes

35,626 47,500 75.0% 799,681 Less Transfers in Lieu of Taxes

(69,706) (23,156) 301.0% (785,549) Net Margin after in Lieu of Taxes

92,100 110,000 83.7% 82,500 Depreciation(26,892) (516,000) 5.2% (85,144) Capital Projects

- - 0.0% - Bond Proceeds & Principal Payments

(4,498) (429,156) 1.0% (788,193) Net Change in Cash

Natural Gas FundCity of New Ulm/Public Utilities Commission



Commodities in Units (dtherms)383,204 414,000 92.6% 326,401 Residential sales

3,849 3,610 106.6% 2,661 Small commerical sales168,595 171,100 98.5% 138,687 Large commercial sales323,826 325,800 99.4% 290,368 Industrial sales

22,151 20,790 106.5% 19,256 Municipal PUC/City901,625 935,300 96.4% 777,373 Total sales229,242 337,044 68.0% 246,065 Power plant gas transported

Revenue5,918,458 6,937,833 85.3% 5,231,042 Utilities Revenue

668,934 680,000 98.4% 578,132 Outside Utility Revenue93,844 81,500 115.1% 39,505 Misc Revenue

974 1,900 0.0% 946 Grants142,195 94,400 150.6% 88,721 Interest Revenue

6,824,405 7,795,633 87.5% 5,938,346 Total Revenue

Expenditures- - - - Commodity-Purchased Power

3,709,023 4,590,188 80.8% 3,150,237 Commodity-Fuel- - - - Production- - - - Transmission

789,896 1,084,100 72.9% 777,027 Distribution- - - Meters- - - - Disposal- - - - Treatment- - - - Customer Service- - - - Conservation Improvement Programs- - - - Storeroom- - - - Drafting

872,737 1,332,046 65.5% 899,960 Administration5,371,656 7,006,334 76.7% 4,827,224 Total Expenditures

1,452,749 789,299 184.1% 1,111,122 Net Margin before in Lieu of Taxes


1,161,000 400,299 290.0% 838,121 Net Margin after in Lieu of Taxes



1,273,454 302,799 420.6% 981,241 Net Change in Cash

Water FundCity of New Ulm/Public Utilities Commission


Year-to-Date Annual % of Year-to-DateActuals Budget Annual Budget Previous Year Description

Commodities in Units (KGAL)175,366 243,534 72.0% 186,392 Residential sales

26,038 37,509 69.4% 27,649 Small Commercial sales77,750 111,705 69.6% 83,506 Large Commercial sales

144,697 159,730 90.6% 144,681 Industrial sales19,736 32,425 60.9% 23,896 Municipal PUC/City sales

443,587 584,903 75.8% 466,124 Total sales


- - - - Outside Utility Revenue99,287 348,674 28.5% 77,400 Misc Revenue

749 1,500 49.9% 747 Grants54,201 35,600 152.3% 34,036 Interest Revenue

2,294,028 3,246,578 70.7% 2,347,095 Total Revenue

Expenditures- - - - Commodity-Purchased Power- - - - Commodity-Fuel

462,484 605,300 76.4% 497,047 Production- - - - Transmission

1,060,635 1,304,280 81.3% 1,015,793 Distribution- - - - Meters- - - - Disposal- - - - Treatment- - - - Customer Service- - - - Conservation Improvement Programs- - - - Storeroom- - - - Drafting

537,542 868,523 61.9% 541,360 Administration2,060,661 2,778,103 74.2% 2,054,200 Total Expenditures

233,367 468,475 49.8% 292,895 Net Margin before in Lieu of Taxes


120,493 317,975 37.9% 176,646 Net Margin after in Lieu of Taxes

611,250 815,000 75.0% 600,000 Depreciation(519,565) (1,161,000) 44.8% (244,458) Capital Projects


212,178 (213,025) -99.6% 532,188 Net Change in Cash

Wastewater Treatment FundCity of New Ulm/Public Utilities Commission


Year-to-Date Annual % of Year-To-DateActual Budget Annual Budget Previous Year Description


- - - - Outside Revenue108,385 345,974 31.3% 97,404 Misc Revenue

983 2,000 49.2% 1,014 Grants141,624 85,700 165.3% 80,240 Interest Revenue

2,996,211 4,158,174 72.1% 2,880,858 Total Revenue

Expenditures- - - - Commodity-Purchased Power- - - - Commodity-Fuel- - - - Production- - - - Transmission

186,187 297,200 62.6% 217,161 Distribution- - - - Meters

54,814 85,500 64.1% 53,756 Disposal1,633,790 1,996,550 81.8% 1,472,689 Treatment

- - - - Customer Service- - - - Conservation Improvement Programs- - - - Storeroom- - - - Drafting

802,304 1,185,611 67.7% 724,161 Administration2,677,095 3,564,861 75.1% 2,467,767 Total Expenditures

319,116 593,313 53.8% 413,091 Net Margin before in Lieu of Taxes


172,134 397,338 43.3% 272,279 Net Margin after in Lieu of Taxes

750,000 1,000,000 75.0% 712,500 Depreciation(197,740) (777,110) 25.4% (4,661,557) Capital Projects

- (409,000) 0.0% Bond Proceeds & Principal Payments

724,394 211,228 342.9% (3,676,778) Net Change in Cash

Administration FundCity of New Ulm/Public Utilities Commission


Year-to-Date Annual % of Year-to-DateActuals Budget Annual Budget Previous Year Description

Revenue- - - - Utilities Revenue- - - - Outside Utility Revenue

1,776,974 2,645,921 67.2% 1,832,733 Misc Revenue1,625 3,100 52.4% 1,556 Grants

43,499 30,700 141.7% 31,503 Interest Revenue1,822,098 2,679,721 68.0% 1,865,792 Total Revenue

Expenditures- - - - Commodity-Purchased Power- - - - Commodity-Fuel- - - - Production- - - - Transmission- - - - Distribution

82,179 104,775 78.4% 82,061 Meters- - - - Disposal- - - - Treatment

98,930 116,734 84.7% 85,964 Customer Service146,281 253,000 57.8% 156,153 Conservation Improvement Programs172,609 267,995 64.4% 200,131 Storeroom87,508 121,415 72.1% 97,910 Drafting

1,253,583 1,785,100 70.2% 1,247,860 Administration1,841,090 2,649,019 69.5% 1,870,079 Total Expenditures

(18,992) 30,702 - (4,287) Net Margin before in Lieu of Taxes

- - - - Less Transfers in Lieu of Taxes

(18,992) 30,702 - (4,287) Net Margin after in Lieu of Taxes



(4,008) (415,298) 1.0% 15,778 Net Change in Cash

Information Technology FundCity of New Ulm/Public Utilities Commission

Period Revenues/Expenditures and Commodities Summary ReportFor Nine Months Ended September 30, 2018


Revenue- - - - Utilities Revenue- - - - Outside Utility Revenue

389,232 518,950 75.0% 270,473 Misc Revenue197 410 48.0% 204 Grants

8,860 5,800 152.8% 5,871 Interest Revenue398,289 525,160 75.8% 276,548 Total Revenue

Expenditures- - - Commodity-Purchased Power- - - Commodity-Fuel- - - Production- - - Transmission- - - Distribution- - - Meters- - - Disposal- - - Treatment- - - Customer Service- - - Conservation Improvement Programs- - - Storeroom- - - Drafting

382,516 518,950 73.7% 318,375 Administration382,516 518,950 73.7% 318,375 Total Expenditures

15,773 6,210 254.0% (41,827) Net Margin before in Lieu of Taxes

- - - - Less Transfers in Lieu of Taxes

15,773 6,210 254.0% (41,827) Net Margin after in Lieu of Taxes



(29,073) (45,790) 63.5% (25,154) Net Change in Cash

Documents

AGENDA Public Utilities Commission Study Session #2 – 2019 ...1E9156B6-EE87-4ADE-9… · 09/11/2018 · PUC Study Session – October 31, 2018 2 Water fund: “Misc Revenue”