Public Utilities Commission
Regular MeetingOwatonna, MN · November 22, 2022
Minutes
Owatonna Public Utilities Commission November 22, 2022 4:00 p.m.
The Owatonna Public Utilities Commission met in regular session in the Morehouse Conference Room
at the Owatonna Public Utilities. Present were Commissioners Johnson, Zirngible, Kottke, Rossi and Doyal.
Also present were General Manager Warehime; City Administrator Busse; Director, Finance & Administration
Olson; Director, Engineering & Field Operations Fenstermacher: Director, Information Technology & Metering
Baum; Manager, Facilities, Gas & Water Engineering & Operations Prokopec; Supervisor, Accounting Linders;
Executive, Communications & Administration Coordinator Schmoll; Key Account and Energy Conservation
Officer Hendricks; and OPU employees Lori Jerpbak, Shanda Meier, Samuel Bahl, and Lance Diderrich.
Virtual attendee included Rick Naymark, Q Market Research.
President Johnson opened the meeting by asking for approval of the agenda and the consent agenda
items. The consent agenda items consisted of the Minutes from the special budget meeting of November 7,
2022; the regular Commission meeting of October 25, 2022 and the Contributed Services report as of October
31, 2022. Commissioner Doyal moved to approve the agenda and consent agenda. Commissioner Zirngible
seconded the motion. All members voting Aye, the motion passed.
Committee Reports
Personnel Committee – Commissioner Rossi reported the Personnel Committee did not meet.
Finance Committee Update – Commissioner Kottke reported the Finance Committee met, reviewed, and
approved Vouchers totaling $4,961,657.96. He further noted 4 work orders were closed coming in more than
10% under budget. 43 work orders remain open and $6.2M has been spent of $10.8 approved. With interest
rates rising about $1.5M of reserves was invested in new CD’s with rates above 4%. All three utilities have net
incomes higher than budget and are doing well.
City Administrator’s Report
City Administrator Busse reported the final budget and levy is scheduled to be acted upon by the City
Council on December 20th. The budget included a $1.6 million upgrade to the Council Chambers.
Customer Satisfaction Survey
Rick Naymark from Q Market Research discussed the results and the key findings of the most recent
customer satisfaction survey. He noted, the Net Promoter Score is the one most looked at and currently
OPU’s is 57.4 which is in the excellent range.
2023 Budget, 2024-2027 Forecast
Director, Finance & Administration Olson presented the 2023 Budget and 2024-2027 Forecast to the
Commission. Commissioner Kottke noted he feels there are some things in the budget that qualify as “nice to
have” versus “need to have”. With the increase in fixed costs Mr. Kottke feels now is not the time to do some
of the “nice to have” projects. One of the projects that Mr. Kottke feels should be put on hold is the new AV
system for the Morehouse Room. Mr. Kottke also asked for a 5-7 year technology outlook based on the
Technology budget going from $30,000 to $500,000. The Commission needs a better understanding of what is
included in these dollar amounts. Director, Information Technology and Metering Baum noted, beginning in
January, the IT department will bring more information to the Commission regarding IT projects.
The other item the Commission voiced concerns about is the increased dollar amount for the Corridor
Beautification project. They noted, in previous years, $100,000 was set aside for Corridor Beautification
beginning with Oak Ave. being the main focus to help encourage development in the south part of town. Then,
we decided to shift some of those dollars into the Streetscape project. While the Commission understands
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Owatonna Public Utilities Commission November 22, 2022 4:00 p.m.
there are specific projects these dollars are assigned to, they do not feel the amount needed for these projects
should quadruple. Director, Engineering & Field Operations Fenstermacher discussed the two different
components associated with the projects in the budget. He noted there is the street light component that
comes into play regarding parking lots and streets and then there is the underground component whereby
OPU tries to coordinate with the City projects so streets only have to be opened up one time which leads to
less inconvenience for our customers. The majority of this budget item is infrastructure which about $150,000
being set aside for corridor restructure. After more discussion on the Riverfront project, Commissioner Kottke
moved to approve the presented budget with a cap of $200,000 on the corridor beautification item, and the
removal of some of the information technology items previously discussed. Commissioner Zirngible seconded
the motion. Four Commissioners voted approval, one Commissioner voted against. The motion passed.
Director, Finance and Administration Olson noted the discussed changes will be made and work orders
will be brought to the next Finance Committee meeting.
Rate Policies
Director, Finance and Administration Olson presented the rate policies to the Commission. The policies
included:
501.81 ER99 Residential Electric Rates
501.82 EC99 Commercial Electric Rates
501.33 EM05 TOU Electric Rates – Secondary Meters
501.34 EMP5 TOU Electric Rates – Primary Meters
501.83 ES05 TOU Electric Rates – Secondary Meters – Winter Peaking
501.84 ESP5 TOU Electric Rates – Primary Meters – Winter Peaking
501.80 EM6 TOU Electric Rates – Municipal Water Pumping
Residential, Commercial and Industrial Water Rates
503.10 GR99 Residential Gas Rates
503.20 GC99 Commercial Gas Rates
503.51 GB50 Small Industrial Gas Rates
503.52 GB60 Medium Industrial Gas Rates
503.53 GB70 Large Industrial Gas Rates
503.30 GB98 Large Industrial Hedged Gas Rates
503.90 GC07 Crop Drying Gas Rates
After discussion regarding reserves and the purchased gas adjustment, Commissioner Kottke moved to
approve the rate policies as presented with the understanding the Commission will review the impact on rates
on a monthly basis and will make adjustments, as necessary. Commissioner Zirngible seconded the motion.
All Commissioners voting Aye, the motion passed.
General Manager/Staff Report
General Manager Warehime introduced lineworkers Samuel Bahl and Lance Diderrich who presented
to the Commission on their mutual aid trip to Florida. They recapped Hurricane Ian, their drive to Florida, the
work they performed while there, and how the crew met OPU’s core values while there including coming home
safely with NO injuries.
Director, Engineering & Field Operations Fenstermacher updated the Commission on supply chain
issues. He noted, product prices are beginning to soften but lead times on transformers continues to be an
issue. On the 70 single phase and 12 3-phase transformers we have ordered, the lead time is 31 to 75 weeks.
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Owatonna Public Utilities Commission November 22, 2022 4:00 p.m.
Mr. Fenstermacher also updated the Commission on how the data being collected from the AMI system
is helping to better size our existing transformers to better utilize the transformer stock we have.
Director, Finance & Administration Olson updated the Commission on the Feasibility Study. He noted,
after Leo A. Daly reported to the Commission in September, the take aways from that meeting were passed
along and they have been asked to come up with other options including leaving building #4 intact with a
possible repurpose. The new report will be shared with the Commission once it is received.
General Manager Warehime encouraged the Commissioners to attend the State of the Utility meeting
on December 9th.
Commission Roundtable
Commissioner Rossi expressed appreciation for the conversation surrounding the budget.
Commissioner Kottke thanked the linemen for their work in Florida and for their presentation, the team
that supported the decision for them to go, as well as the ones who stayed behind to cover the work here. He
noted, it reinforces the Owatonna Proud mentality.
Commissioner Zirngible complimented OPU on the customer service survey and encouraged them to
keep up the good work.
Commissioner Doyal expressed how proud he is of OPU and its employees. The presentation on the
hurricane mutual aid was impressive.
President Johnson added, great job on the customer service survey, noting it is very impressive. He
thanked the linemen for their presentation on the hurricane mutual aid and for going there to perform the work.
He concluded by thanking staff for the budget and all the work that went into it.
Adjournment
There being no further business to come before the Commission, the meeting adjourned at 5:36 p.m.
Respectfully submitted,
Tammy Schmoll,
Executive, Communications & Administration Coordinator
Agenda
OPU COMMISSION MEETING
November 22, 2022
4:00 P.M.
Location: OPU Morehouse Meeting Room
1. Open meeting, Pledge of Allegiance and Agenda
Approval
2. Consent Agenda
Minutes from October 25, 2022
Minutes from November 7, 2022 (special Budget Page 4
session)
Contributed Services as of October 31, 2022
AGENDA
** 3. Committee Reports Page 13
** 4. City Administrator’s Report
** 5. Customer Satisfaction Survey
** 6. 2023 Budget, 2024-2027
7. Rate Policies Page 51
** 8. General Manager/Staff Report
Hurricane Ian Mutual Aid Recap Page 90
Supply Chain
** 9. Commission Roundtable
** 10. President’s Report
** 11. Audience Comments
(Please state name and address, and limit comments to
five (5) minutes and to items not on the agenda)
** 12. Adjournment
** - Presented at meeting
Owatonna Public Utilities Commission November 7, 2022 4:00 p.m.
The Owatonna Public Utilities Commission met in special budget session in the Morehouse Conference
room at the Owatonna Public Utilities. Present were Commissioners Johnson, Zirngible, Kottke, Rossi and
Doyal. Also present were General Manager Warehime; City Administrator Busse; Director, Finance &
Administration Olson; Director, Engineering & Field Operations Fenstermacher; Director, Information
Technologies & Metering Baum; Manager, Facilities, Gas & Water Engineering & Operations Prokopec;
Manager, Electric Operations Deering; Supervisor, Information Technology Trom; Supervisor, Meter Services
Johnson; Supervisor, Accounting Linders; Supervisor, Customer Care Van Esch; Executive, Communications
& Administration Coordinator Schmoll; Energy Conservation/Key Accounts Offices Hendricks; Accountant Lori
Jerpbak and Brad Meier, President/CEO Owatonna Area Chamber of Commerce and Tourism.
Director, Finance & Administration Olson opened the meeting by discussing the agenda. He noted, he
and Supervisor, Accounting Linders will discuss notable changes, rates, revenues and expenses, capital, and
net income and reserves. Staff members will discuss their respective departments non-operating budgets
including non-labor and capital budgets, as well as operating budgets including non-labor and capital
expenses.
Notable changes included in the 2023 budget include Generator #7 revenue and expense. SMMPA’s
anticipates its costs to upgrade the unit will be recovered so normal capacity revenue and expenses will
resume mid-year. Other notable changes include the cancellation of SMMPA’s planned distribution of reserves
for the second half of 2022 and all of 2023.
Changes not included in the budget yet include the natural gas forward pricing curves and expenses
related to recently announced natural gas bonus rebates.
Mr. Olson discussed electric, water and natural gas rate histories and proposed 2023 adjustments. He
noted staff is proposing an increase of 13.9% in electric, 5% in water and 29.2% in natural gas. Overall, the
average residential customers will see an increase of approximately $28 per month. Commissioner Rossi
inquired if OPU gives customers ideas on how to reduce their usage to lessen the impact of these increases.
The answer is yes, there are several tips discussed in the newsletter, on social media and on our website.
Commissioner Kottke would like to see us put off the water increase if possible. Commissioner Johnson
inquired about the budgeting for the PGA. Mr. Olson replied, we have a forecasting graph.
Supervisor, Accounting Linders discussed commodity revenue and three-year cost trends for each of
the three utilities, controllable and non-controllable costs, non-commodity revenues, and other expenses.
Labor and benefits, as well as history and forecasts for the capital budget, net income and reserves were also
discussed. Commissioner Kottke inquired if we could use reserves even more to help less the impact to
customers. Mr. Olson replied, we could, but we would have to raise rates in 2024 to recover the costs. We
could use a phased approach as well, but again, the costs would have to be recovered somehow.
Commissioner Rossi inquired as to what the reserves are for. Mr. Olson replied, capital projects are one use;
however, we try to keep enough in reserves to use as operating revenues in the event of a major disaster. The
reserve levels are set by current policy, however, that policy could be reviewed.
Non-operating budgets were presented next with Information Technology starting first. After
discussion, it was determined Security for OPU facilities will be pulled out of the budget and more review and
information will be provided to the Commission at a later date. In the Accounting area, the electric rate study
scheduled for the summer of 2023 will be pushed back to 2024.
In the operating budget part, Commission asked for a layout of all the studies that are required
including the arc flash study, rate studies, system feasibility and expansion studies, etc.
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Owatonna Public Utilities Commission November 7, 2022 4:00 p.m.
In the water area, City Street projects are anticipated to double for 2023. City Administrator Busse
confirmed, the numbers in the budget are pretty close to what the City projects for projects.
Adjournment
The Commission did not have any other questions for staff. The meeting adjourned at 8:02 p.m.
Respectfully submitted,
Tammy Schmoll
Executive, Communications & Administration Coordinator
Owatonna Public Utilities Commission October 25, 2022 4:00 p.m.
The Owatonna Public Utilities Commission met in regular session in the Morehouse Conference room
at the Owatonna Public Utilities. Present were Commissioners Johnson, Zirngible, Kottke, and Doyal. Absent
was Commissioner Rossi. Also present were General Manager Warehime; City Administrator Busse; Director,
Finance and Administration Olson; Director, Engineering & Field Operations Fenstermacher; Director,
Information Technologies and Metering Baum; Manager, Facilities, Gas & Water Engineering and Operations
Prokopec; Manager, Human Resources Madson; Supervisor, Accounting Linders; Executive, Communications
& Administration Coordinator Schmoll; employees Lori Jerpbak, Shanda Meier and Brian Riggleman. City
Council Members Dan Boeke, Doug Voss, Dave Burbank, Greg Schultz and Brent Svenby.
President Johnson opened the meeting by asking for approval of the agenda and the consent agenda
items. The consent agenda items consisted of the Minutes from the September 27, 2022 Commission
meeting, as well as the Contributed Services as of September 30, 2022. Commissioner Doyal moved to
approve the agenda and consent agenda. Commissioner Kottke seconded the motion. All Commissioners
voting Aye, the motion passed.
Committee Reports
Personnel Committee – Commissioner Zirngible reported the Personnel Committee met and received a staffing
update. He highlighted the open positions and noted the position of IT Systems Administrator has been filled
by Brian Riggleman. Mr. Zirngible introduced Mr. Riggleman to the Commission. He further noted, through
October 24, 2022 OPU has gone 108 days without an OSHA recordable.
Finance Committee – Commissioner Kottke reported the Finance Committee met, reviewed and approved
Vouchers totaling $5,088,245.04. He further noted 3 work orders were closed coming in under budget. Year
to date work orders are 7% under budget with 49 remaining open. Past due Account Receivable balances
continue to trend downward and all three utilities are doing well.
City Administrator’s Report
City Administrator Busse reported the work at the Fire Hall has been completed, and they had the
ribbon cutting for the Streetscape project. She noted the City Council has had study sessions, sessions on
park planning and finances. The Wastewater Treatment plant expansion is underway with an anticipated
completion date by the end of next year.
System Health Reports
Director, Engineering and Field Operations Fenstermacher presented an electric system health report.
He provided a system overview, reliability indices and recognition, 2023 budget including operations,
maintenance and capital costs and concluded with ongoing major projects. The ongoing major projects
consisted of the streetlight conversion to LEDs, the OH to UG conversion project, Circuit E34 upgrade,
Territory Acquisition, Substation expansion and upgrades and System Planning and Operations studies.
Commissioner Zirngible inquired if the grid stability issue has gotten better. Mr. Fenstermacher replied we
have a plan in place if rolling blackouts get called, however, we are hopeful we won’t get called upon to
implement then. Transmission capacity is the biggest issue and we may get called upon to drop load to allow
generation to catch up.
Manager, Facilities, Gas & Water Engineering & Operations Prokopec presented system health reports
for the gas and water systems. In water, he discussed system overall health, budgets including operating,
maintenance and capital projects and costs, 2022 completed projects, the Lead Copper Rule revision and how
it affects OPU and concluded with 2023 projects. In the gas utility, he discussed the system overview, gas line
response and incidents, budgets including operating, maintenance and capital costs, recently completed
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Owatonna Public Utilities Commission October 25, 2022 4:00 p.m.
projects and future projects including the 5 to 50 lb. system conversion and other continued system
improvements.
Director, Information Technologies and Metering Baum presented a Technology system health report.
He reviewed 2022 projects including AMI, IT restructuring, security and a water system switch upgrade; the
2023 budget including non-labor expenses and capital projects and concluded with 2023 projects and
initiatives including security, Cloud VPN, technology and OPU’s systems roadmap.
General Manager/Staff Reports
General Manager Warehime thanked Mr. Fenstermacher, Mr. Prokopec and Mr. Baum for their
presentations and expressed his appreciation for the City Council members being present. Mr. Warehime
concluded by noting the natural gas prices are starting to soften so we are hopeful the prices won’t be as bad
as originally anticipated.
Director, Finance & Administration Olson reported the preliminary budget packet is ready and will be
emailed soon. He further noted that information will be covered at the special budget session of November 7th.
Commission Roundtable
Commissioner Kottke expressed his gratitude to the linemen who helped in Florida in the aftermath of
Hurricane Ian.
President Johnson thanked staff for the system health reports.
Audience Comments
City Council Member Boeke inquired if the previously reported 40% anticipated natural gas rate hike
was still being considered. General Manager Warehime reported he will be attending the City Council’s work
session to provide more information on the anticipated rate increase. He also noted, the rate increase is
concerning, however, it looks better than originally anticipated. OPU has purchased some natural gas ahead
of the winter season to help soft the prices and we are taking other steps to minimize the risk to our customers.
Mr. Fenstermacher noted OPU is offering double natural gas rebates and we are putting out energy
conservation tips to help customers reduce their usage.
Adjournment
There being no further business to come before the Commission, the meeting adjourned at 5:31 p.m.
Respectfully submitted,
Tammy Schmoll
Executive, Communications & Administration Coordinator
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