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 29, 2007, AT 4:30 P.M.

Commission President Sipola called the meeting to order at 4:32 p.m.

Present: Commissioners Petroskey, Sipola, Park, Raukar.

Absent: Commissioner Muskovitz.

Also Present: Terry Leoni – General Manager; Bill Hafdahl – Director-Finance & Administration; Sue Lalli, Public / Customer Relations Supervisor; Jesse White – Mesabi Daily News.

Commission President Sipola reviewed the letter of retirement received from Mary Dethloff, Cashier. Moved by Raukar and supported by Park that the letter be received and filed and Management extend thanks to Ms. Dethloff for her many years of service and Management be authorized to post and solicit applications for the position of Billing and Customer Service Specialist. Motion carried.

General Manager Leoni reviewed his May 29, 2007 letter to Technical Loss Adjustment regarding the insurance claim on the #1 turbine stating the Department’s position on the denial of the claim and conveying additional information relevant to the matter.

Moved by Park and supported by Petroskey that financial Resolution #5104 authorizing the payroll dated May 24, 2007 in the amount of $98,387.54, checks #44859 through #44881, and direct deposits #10649 through #10702; and bills dated May 14, 2007 through May 29, 2007 in the amount of $1,026,206.46, checks #76198 through #76276, and wire and electronic transfers in the amount of $361,100.63 and the minutes of the regular meeting held on May 14, 2007 be approved as presented. Motion carried.

Moved by Park and supported by Raukar to authorize attendance for one Management member and one Service Crew member at the Minnesota Rural Water Association meeting on Winterizing Your Water System to be held in Grand Rapids, Minnesota on October 23, 2007 at a total estimated cost of $150. Motion carried.

Moved by Park and supported by Raukar to authorize attendance for one Management member and one Service Crew member at the Minnesota Rural Water Association training meeting on Water Operations and Maintenance to be held in Biwabik, Minnesota on December 5, 2007 at a total estimated cost of $30. Motion carried.

Commission President Sipola requested information from the Director of Finance / Administration pertaining to a bonus payment made to General Manager, Terry Leoni by the LEA Board through the Virginia PUC’s payroll processes. After review of the LEA Board minutes from the November 21, 2006 meeting and the Virginia PUC’s paper trail documenting the transactions, no further discussion ensued. Mr. Hafdahl also pointed out that the Virginia PUC’s auditors were consulted prior to execution of this transaction and they expressed no concerns regarding the legality of these transactions. Subsequently, independent LEA and Hibbing and Virginia Public Utilities Commission audits proved the same. This transaction was done in the public view.

Mr. Leoni reported the #5 turbine experienced vibrations at approximately 6:20 a.m. on May 25, 2007 as it was being taken down that morning. After immediate investigation, water appeared in the oil. Maintenance is underway and, as the issue was discovered early, it is hoped no serious damage occurred. The insurance carrier has been notified of the incident.

Mr. Leoni also reported on the tours of the Plant that took place over a two-week period for over 30 (thirty) invited guests including Legislators, City and County officials, Commissioners, Chamber members, local newspapers and television stations, Minnesota Power, and the Iron Range Rehabilitation and Resource Board.

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City of Virginia, Minnesota page 2

Department of Public Utilities

Commission Meeting Minutes

May 29, 2007

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Mr. Leoni also reported the Virginia School’s eighth-grade science class also toured the plant during the week of May 21, 2007 and prior to that, a class from the Babbitt High School toured the plant.

There being no further business to come before the Commission, Commission President Sipola declared the meeting adjourned at 5:17 p.m.

ATTEST: APPROVED:

_______________________ ___________________________

Matt Raukar, Secretary Dr. Don Sipola, President