A REGULAR MEETING OF THE PUBLIC UTILITIES COMMISSION OF THE CITY OF VIRGINIA, MINNESOTA, WAS HELD AT THE OFFICE OF THE DEPARTMENT OF PUBLIC UTILITIES ON Monday, MARCH 27, 2006 AT 4:30 P.M.

Commissioner Sipola called the meeting to order at 4:30 p.m.

Present: Commissioners Bloomquist, Muskovitz, Park, and Sipola.

Absent: Commissioner Raukar.

Also Present: Terry Leoni, General Manager; Bill Hafdahl – Director-Finance & Administration; Sue Lalli, Public / Customer Relations Supervisor; Doug Ganoe – Director of Operations Production; City Councilors – Dennis Lindberg, Rob Raplinger, and Carl Baranzelli; Don Rindfuss – Director Operations Distribution – Electric and Gas; Customer, Nancy Quiniones.

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Customer Nancy Quiniones of 1401 11^th Street South addressed the Commission regarding her water service line freezing to her home on or about February 18, 2006. Greg French, Director of Operations – Steam and Water Distribution had met with Ms. Quiniones several times regarding the frozen water line. In accordance with Department policy, Ms. Quiniones requested the Commission authorize a water line freeze prevention system be allowed on the water service line to her home. After discussion, it was determined that Ms. Quiniones would look at having a trickle valve installed on her water line, after the meter, and see if this corrected any future freezing concerns.

Councilor Dennis Lindberg addressed the Commission regarding tailings being used by the Department from the supply kept on hand by the City of Virginia. As the Department has an agreement with the City Engineer regarding use of the tailings, it was determined that the Director of Operations – Production would contact the City Engineer to verify the Department’s agreement on the use of the tailings.

Moved by Park and supported by Muskovitz that financial Resolution No. 5075 authorizing the payroll dated March 16, 2006 in the amount of $88,020.81, checks #44096 through # 44117, and direct deposits #9011 through #9062; and bills dated March 11, 2006 through March 24, 2006 in the amount of $535,039.75, checks #73408 through #73477, and wire and electronic transfers in the amount of $685,294.66 and the minutes of the regular Commission meeting held on March 13, 2006 be approved as amended. Motion carried

Mr. Ganoe and Mr. Leoni updated the Commissioners on the construction underway at the Power Plant in conjunction with the Biomass Project. Some of the concrete for the boiler mat has been poured with the remaining concrete to be in place the week of April 12, 2006. Installation of the steam and mud drums will then begin. Commercial operation is expected to begin by December 31, 2006 with the first firing of the boiler expected during the month of November 2006. Purchase of property for a wood yard in the City of Mt. Iron, Minnesota is underway.

Moved by Park and supported by Muskovitz to adopt Resolution No. 5076 authorizing the amendment to the Laurentian LLC Agreement to indicate that appropriate officers of the Virginia Public Utilities Commission are hereby authorized to execute and deliver the Amendment on behalf of the VPUC to clearly demonstrate the governmental nature of LEA in connection with LEA’s application for approval of Clean Renewable Energy Bond financing. Motion carried.

Moved by Park and supported by Muskovitz to authorize attendance at the Pipeline Safety – 2006 Educational Conference in Brainerd, Minnesota on April 11- 14, 2006 for the Director of Operations Distribution – Electric and Gas and one Engineering Technician at a total estimated cost of $770.88. Motion carried.

carried forward

City of Virginia

Public Utilities Commission

Meeting Minutes

March 27, 2006

Page 2

brought forward

Moved by Muskovitz and supported by Park to authorize attendance at the Northern Minnesota Safety Conference sponsored by the Minnesota Safety Council and Minnesota Department of Labor and Industry in Bemidji, Minnesota on April 5, 2006 for the Director of HR / Safety at a total estimated cost of $122.85. Motion carried.

Moved by Park and supported by Muskovitz to authorize attendance at the League of Minnesota Cities Safety and Loss Control Workshop in Biwabik, Minnesota on April 26, 2006 for the Director of HR / Safety at a total estimated cost of $20. Motion carried.

The General Manager reported that the first meeting on AFSCME contract negotiations is set for Tuesday, March 28, 2006.

Bill Hafdahl updated the Commissioners on the AMR Project. AMR installations continue in the Williams Addition to Virginia and should be completed in that area within the next three weeks. As of Mid-April 2006 six routes should be converted to the new AMR system.

The March 21, 2006 letter from Northeast Technical Services to the Minnesota Department of Health regarding the MDH notification of the EPA’s new Long Term 2 Enhanced Surface Water Treatment and Stage 2 Disinfectants and Disinfection Byproducts Rules and the Virginia system’s responsibility for early implementation of rules monitoring was reviewed. As these Rules cover surface water systems with populations over 10,000, and the census population update of April 1, 2004 done by the U. S. Census Bureau indicates the City of Virginia at a population of 8,953, it is the City’s understanding that the Rules do not cover their current water system and ask for advisement as to the regulatory responsibility at the current population level.

Don Rindfuss, Director of Operations Distribution – Electric and Gas reviewed the Minnesota Power third metering point that will be installed at the old Virginia gas plant location so as to provide better control of the load on the electrical feeds for the City.

The General Manager reported that the final phase of the old gas plant location clean up is almost completed. After completion approximately five acres will be ready for economic development by the City of Virginia.

There being no further business to come before the Commission, Commission President Sipola declared the meeting adjourned at 5:25 p.m.

ATTEST: APPROVED:

_______________________ ___________________________

Jackie Park, Vice President Dr. Don Sipola, President