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 THURSDAY, JuLY 28, 2005, AT 4:30 P.M.

Commissioner Sipola called the meeting to order at 4:35 p.m.

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

Absent: None.

Also Present: Terry Leoni, General Manager; Sue Lalli, Public Relations Supervisor; Bill Hafdahl, Director – Finance & Administration; Customer, Mrs. Randy Sowers; City Councilors, Rob Raplinger and Steve Peterson.

Mrs. Randy Sowers, Utility Account 50315351, addressed the Commission with a request, as a property owner, she be allowed to use a portion of her deposit to apply to the unpaid portion of her billings. After discussion, the Commission held to the current Department Policy on deposits as it pertains to property owners. The Commission would like Mrs. Sowers to meet with the Public Relations Supervisor regarding her billings.

An amendment was made to page two of the July 11, 2005 Commission meeting minutes presented for approval regarding a request for reimbursement of automobile repair costs incurred while on VPUC company business on July 6, 2005.

After discussion, the Commission requested Management meet with the Director of Human Resources / Safety to make revisions to the Department’s current Travel Request / Expense Reimbursement Policy & Procedure, Personnel Number 300-9. The Commission requested that any future travel expense reimbursements be made by check and issued through the Department’s Accounts Payable process. Management will have the revised Policy in draft form for the Commission at their next regular meeting scheduled for August 22, 2005, with the second reading and final policy approval at the first meeting in September 2005. The Commission directed Management to operate from today forward under the proposed changes to be incorporated into the new Policy & Procedures on Travel Request / Expense Reimbursement and all payments are to be made by check.

Moved by Parks and supported by Marks that financial Resolution No. 5060 authorizing the payroll dated July 7, 2005 in the amount of $84,537.76, checks #43632 through #43658 and the payroll dated July 21, 2005 in the amount of $90,570.85, checks #43659 through #43686 and direct deposits; and bills dated July 12, 2005 through July 28, 2005 in the amount of $938,070.83, checks #71886 through #71967, and wire and electronic transfers in the amount of $185,066.29 be adopted and the minutes of the regular meeting held on July 11, 2005 be approved as amended. Motion carried.

The Laurentian Energy Authority (LEA) received approval from the Minnesota Public Utilities Commission on July 21, 2005 to provide electric power pursuant to an agreement between LEA and NSP/Excel Energy. As a result several financial arrangements needed to be implemented and the Virginia Mayor and City Council were requested to authorize the Utility’s pledging up to $2,000,000.00 of Virginia Public Utility’s securities to secure both the Line of Credit and Letter of Credit as covered in a letter dated July 22, 2005 from the Director of Finance and Administration.

The General Manager will be visiting the Mizpah, Minnesota tree planting site on Monday, August 1, 2005 where 828 acres of trees will be planted in conjunction with the LEA Biomass Project.

carried forward

Public Utilities Commission

Meeting Minutes

July 28, 2005

Page 2

brought forward

The possibility of the Utility setting up a bill-payment program where customers could opt to have their billings rounded up to the nearest dollar and the difference contributed to a local organization on behalf of the customer was discussed at the last Commission meeting. After reviewing the matter with the City Attorney and the Utility’s independent auditor, Walker, Giroux, and Hahne, their finding was this type of program does not meet the Public Purpose Test. It was Management’s recommendation not to undertake such a venture at this time.

As only one Commission meeting will be held in August 2005, on August 22, 2005, it was moved by Marks and supported by Park to authorize payment of bills to be processed for the August 10, 2005 time period at this time. Motion carried.

Management recommended the position of EDP Operator be offered to Mary Johnson, contingent upon a background check and passing a pre-employment physical to include a drug screen. Ms. Johnson indicated that she has to give a thirty-day notice (30-day notice) to her current employer. Moved by Marks and supported by Raukar that Mary Johnson be hired to fill the position of EDP Operator, contingent upon a background check and the passing of a pre-employment physical to include a drug screen. Motion carried.

General discussion was held on the certified letter mailed on July 14, 2005 to eight customers as notification of abandonment of steam service to their property as adopted by the Commission at their April 25, 2005 meeting. Customers have been asked to complete conversion of the primary heat source by October 15, 2005. Customers who contact the Utility to request additional time to complete the conversation are to be extended additional time with the understanding that all conversions will be completed by January 1, 2006.

The owner of 619 3^rd Street South has contacted the General Manager and will be meeting with him during the week of August 1, 2005 to discuss the possible sale of this property to the Utility Department. Purchase of the property will assist with the Department’s long-term goals to purchase property surrounding the current office building in an effort to improve the facility and meet needed space requirements. Management will check with the City Assessor for the assessed valuation of this property.

The owner of 629 3^rd Street South has been notified to contact the Virginia City Attorney regarding all matters pertaining to the transfer of this property to the Utilities.

There being no further business to come before this meeting, it was moved by Marks and supported by Raukar that the meeting be adjourned. Motion carried. Adjournment at 5:55 p.m.

ATTEST: APPROVED:

_________________________________________ ____________________________________

Jerry Marks, Secretary Dr. Don Sipola, President