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 TUESDAY, MAY 27, 2008, AT 4:00 P.M.

Commission President Bloomquist called the meeting to order at 4:00 p.m.

Present: Commissioners Bloomquist, Raukar, Petroskey, and Sipola.

Absent: Lucarelli

Also Present: Terry Leoni – General Manager; Bill Hafdahl – Director-Finance & Administration; Connie Larson -- Director-HR/Safety; Councilor Dennis Lindberg.

Visitors: Keith Hendrickson, Jeffrey Sheff, Ronelle Sakrison

Customer Keith Hendrickson spoke to the Commission and appealed his deposit requirement. He stated that he is currently caught up on his bills and started the Equal Payment Plan (EPP). Mr. Hafdahl noted that Mr. Hendrickson had made the first of five payments toward his deposit, per the Administrative Review Team’s recommendation. The Commission re-reviewed correspondence regarding Mr. Hendrickson’s deposit issue. Mr. Leoni noted that the purpose of the deposit policy is to ensure timely collection and that by participating in the EPP, Mr. Hendrickson is accomplishing this purpose. He also noted that this situation was unique because the option for the EPP was available at the time of Mr. Hendrickson’s deposit requirement. It may not be an option for other customers at different times of the year. Commissioner Raukar made a motion to allow Mr. Hendrickson to participate in the EPP with the caveat that missing one payment would revert him back to requiring a deposit. Commissioner Sipola supported the motion. Motion carried. It was noted that the payment he had made toward his deposit would be applied to his next monthly payment.

Mr. Leoni presented a letter from ArcelorMittal Steel and told the Commission that the water pumping project is moving forward, albeit slowly.

Moved by Petroskey and supported by Raukar that Financial Resolution #5128 authorizing the payroll dated 5/8/08 in the amount of $99,524.88, checks #45513 through #45534 and direct deposits #11983 through #12038 and the payroll dated 5/22/08 in the amount of $103,388.20, checks #45535 through #45559 and direct deposits #12039 through #12096; and bills dated 4/28/08 through 5/27/08 in the amount of $1,990,868.39, checks #78982 through #79196, and wire and electronic transfers in the amount of $543,629.66 be adopted and the minutes of the regular meeting held on April 28, 2008 be approved as presented. Motion carried.

The April Injury Report was presented with no discussion.

The LEA board agenda and minutes were presented. President Bloomquist noted that the LEA Board would be meeting in Hibbing at 6:00 p.m. following the Commission meeting. Mr. Leoni stated that both facilities were now on their “summer run” and producing 21 and 25 mWh each. Commissioner Sipola asked whether the issue of hiring a LEA CEO had been resolved. Commissioner Bloomquist said he is waiting for Larry McGuire to contact him to discuss the issue.

Customer Jeffrey Sheff and Ronelle Sakrison entered the meeting. They explained that they had not been notified of the earlier start time for the meeting. President Bloomquist asked them to present their issue. Ms. Sakrison explained that Mr. Sheff was unable to pay the deposit requested of him. She said it was due to circumstances beyond his control. Another person had to be forcibly removed from the property and they believed this person was also stealing Mr. Sheff’s mail. Ms. Sakrison said Mr. Sheff had not received some utility bills and notices. She noted that one of the payments had been applied wrong to the two accounts (upper and lower) and that bills and notices had been sent to the wrong

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address after they requested a mailing address change. Ms. Sakrison stated that she had been told that only one other person had their deposit waived and that she was unaware that there was an option to appeal to the Commission. Mr. Sheff stated that he had paid one month’s bill at 2:30 pm on the due date and didn’t realize that it was considered late. Ms. Sakrison admitted that Mr. Sheff was still one month behind in payments but was trying to catch up. Mr. Hafdahl explained that the letters Mr. Sheff received outlined the process and that Mr. Sheff had appealed the deposit to the Administrative Review Team. The Team could find no reason to go outside the deposit requirement policy. Mr. Leoni stated that not receiving mail was not a valid issue. Commissioner Sipola stated that bills are issued monthly and the due date is known. He noted that diverted mail is not the sole cause of the magnitude of the problem. No action was taken by the Commission. The Administrative Review Team’s recommendation stands.

Mr. Hafdahl presented a Request for Commission Action regarding the Line of Credit proposal. Wells Fargo had the lowest rates. Moved by Sipola and supported by Petroskey to accept the recommendation to go with Wells Fargo for the Line of Credit. Motion carried.

Mr. Leoni presented a Request for Commission Action regarding the 6^th Avenue Project. He noted that the bids came in higher than budget but it was still a good bid. He recommended that Virginia Public Utilities participates with the City in the 6^th Avenue project and award the bid to Hibbing Excavating Inc. Moved by Raukar and supported by Sipola to accept the recommendation. Motion carried.

Mr. Leoni presented a Request for Commission Action regarding the 2008 Gas Project. He noted that the bids were lower than budget. There was a wide range between the bids and staff even checked with the lowest bidder to make sure that the bid was valid. He recommended that Northern Pipeline be awarded the work. Moved by Sipola and supported by Petroskey to accept the recommendation. Motion carried.

Mr. Leoni presented a Request for Commission Action regarding the Water Tower Reconditioning Project. He noted that the bids were higher than budget due to the project labor agreement. The vendor hasn’t done work for Virginia before but was recommended by other cities. He recommended that Champion Coatings, Inc. be awarded the bid. Moved by Raukar and supported by Petroskey to accept the recommendation. Motion carried.

Mr. Leoni noted that a copy of the final City/Hospital/Utility post-retirement benefits actuarial report was in the Commissioner’s packets. He stated that laws have changed and the value needs to be accounted for or funded. The Utility has been accounting for it. He recommended that no further action be taken until it is known how the City is going to deal with the same issue. Commissioner Sipola noted, “This is going to hurt.”

Mr. Hafdahl presented a letter from MMGA and stated that this was just a follow-up to information he had presented at the last meeting regarding the prepaid gas contract. He said things are improving.

Mr. Leoni noted that the March financials were in the packets and the April financial were on the table. He said things were looking good and commended Mr. Hafdahl for being current on monthly reporting. Commissioner Sipola asked several questions on the steam cost comparison charts. Mr. Hafdahl explained that one chart showed monthly comparisons and the other showed cumulative year-to-date. Discussion was held on the aberration in steam costs last year versus prior years. Mr. Leoni said things

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should be back to normal now. He and Mr. Hafdahl will spend some time analyzing it and come back to the Commission with a better explanation.

Commissioner Petroskey asked the status of the 9^th Avenue Steam Line issue. Mr. Leoni stated that additional meters will be put on it when usage is switched over to the summer run. He stated that supervisors don’t believe the problem is there.

Moved by Petroskey and supported by Raukar to adjourn the meeting. There being no further business to come before the Commission, Commission President Bloomquist declared the meeting adjourned at 5:07 p.m.

ATTEST: APPROVED:

____________________________ ____________________________

Matt Raukar, Secretary Quentin Bloomquist, President