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, JANUARY 11, 1999, AT 5:00 P

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, may 09, 2005, AT 4:30 P.M.

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

Present: Commissioners Marks, Raukar, Park, Bloomquist, and Sipola.

Absent None.

Also Present: Terry Leoni, General Manager; Sue Lalli, Supervisor-Public Relations; Douglas Ganoe, Director-Operations; Lorraine Ilminen, Supervisor-Materials Management; City Councilors Steve Peterson and Rob Raplinger.

The following reports were presented to the Commission for their information:

FINANCIAL OPERATING STATEMENTS AND LIST OF INVESTMENTS

Management presented and reviewed the May 03, 2005, letter sent to the City of Virginia requesting a waiver of building permit fees for the Virginia/Hibbing Joint Biomass Project. It is Management’s belief there is a precedent for waiving of said fees, most recently the Hospital Construction, as well as, Blue Cross and Blue Shield (Building No. 1) and Edgewood Vista (Phase No. 1).

Moved by Park and supported by Marks that financial Resolution #5054 authorizing the second half of April 2005 payroll in the amount of $84,766.61 checks #43505 through #43527 and direct deposits, and bills dated May 10, 2005, in the amount of $1,095,652.21 checks #71355 through #71470, and the first half of May 2005 wire and electronic transfers; and the minutes of the regular meeting held on April 25, 2005, is approved as presented. Motion carried.

Management presented the April 2005 injury summary report. There were no accidents reported.

Mr. Leoni reported that as a requirement of the Virginia/Hibbing Joint Biomass Project (Laurentian Energy Authority) permitting process, the Minnesota Pollution Control Agency (MPCA) is holding a public informational meeting at the Virginia City Hall on May 11, 2005, and a public informational meeting in Hibbing on May 12, 2005.   A meeting of the Laurentian Energy Authority will be held at 6:00 p.m. on May 17, 2005, at the Hibbing Public Utilities.   Mr. Leoni presented the Commission copies of the Minnesota Municipal Utilities Association’s May 6, 2005, issue of The Capitol Tattler and he reviewed the article on the Senate 2005 Omnibus Energy Bill to be enacted.  The bill includes a number of items relating to the Hibbing and Virginia municipal utilities’ joint biomass energy project.

Commissioner Sipola reported that about a year ago, the Commission met with a steam customer disputing his steam billing for the months of December 2003, January 2004, and February 2004, at 218 Chestnut Street. The Commission asked that the customer pay fifty-percent (50%) of the steam consumption bills for the months of December 2003, January 2004, and February 2004. The Utility would review his account for one year (April 2004 through April 2005) from the meter installation date and after review, he may be required to pay the balance of the steam consumption billed for those three months. During recent meter maintenance for that account, the Utility discovered sewage had backed up and went into the steam meter. Utility personnel removed the sludge from the meter and the customer was asked to put in a trap overflow pipe to prevent backup going to the meter. Mr. Ganoe is reviewing the account at this time.

The Water Freeze Prevention / Water By-Pass report for December 2004 through April 2005 was presented and reviewed. Savings is being realized as a result of the change in policy.

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Public Utilities Commission

Meeting Minutes

May 09, 2005

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Discussion was held on staffing. The Material/Clerk Handler position was awarded to Jim Sereno and Management posted the Janitor/Laborer position. The Janitor/Laborer position was awarded to Larry Starkovich, power plant Maintenance Man. Mr. Starkovich will transfer to his new position after completion of the No. 1 turbine project. Serviceman Lowell Jensen is working the Temporary Customer Serviceman position. Fuelhandler/Utilityman John Miladin will be working Seasonal Serviceman during the 2005 construction season. In the meantime, Management is soliciting applications for a Seasonal Fuelhandler/Utilityman position.

Mr. Leoni reported as part of the Utilities’ insurance coverage through the League of Minnesota Cities, the Virginia Public Utilities pays a neutral independent third party engineering firm, Starr Technical Risks Agency, to do inspections on our three steam turbines and three boilers. The Loss Prevention Inspection Report dated April 13, 2005, was presented for the Commission’s review.

Mr. Leoni reported that last week he attended a meeting at the Virginia Regional Medical Center to address issues on the Virginia Public Utilities providing infrastructure for utilities at the new buildings of the Iron Range Rehabilitation Center and St. Mary’s/Duluth Clinic. They came to an understanding that the owner will be responsible for the water line in compliance with the Virginia Public Utilities policy. In addition, they established a cap on the estimated dollar amount and anything over that cap the Owner will pay. Management presented the Commission a list of services the Virginia Public Utilities provides to the City of Virginia and the services the Utility pays to the City of Virginia.

The financial operating statements for December 2004 (post audit final) through April 2005 were reviewed. Commissioner Sipola mentioned that at year-end, natural gas was $50,000 to the black with approximately 2.9 million dollars in sales. Discussion was held on fuel adjustments.

At 5:08 p.m., Commissioner Raukar joined the meeting.

Management reported that for the last three days (since last Saturday), at around 8:30 a.m. the electrical load would reach 3.9 megawatts and the power would go out. On Saturday, from 8:00 a.m. until 7:30 p.m., crews investigated the cause for the outage. Sunday morning personnel found a burnt bushing on the Minnesota Power’s substation. The power was back on at 1:15 p.m. but steam was lost for customer hot water because the steam was used to turn the turbine. Utility personnel believe lightning strikes last Thursday night may be the cause for the damage. This morning, the power went out again. Personnel discovered three burnt wires to a circuit board in the Utilities’ tie switch that connects to the Minnesota Power tie. The circuit board protected the power plant and transformers (located in the coal yard) from any possible overload coming from Minnesota Power. Today the Utility brought in extra Operators to help put No. 7 boiler on line. Until the Utility receives the circuit board replacement, the power plant will operate the switch manually. In the meantime, the Virginia Public Utilities is generating 10 megawatts of the City’s load and purchasing 6 megawatts from Minnesota Power.

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

ATTEST: APPROVED:

___________________________ ______________________________

Jerry Marks, Secretary Dr. Don Sipola, President