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 WEDNESDAY, AUGUST 9, 2006 AT 4:30 P.M.

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

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

Absent: Commissioner Muskovitz.

Also Present: Terry Leoni, General Manager; Bill Hafdahl, Director-Finance & Administration; Connie Larson, Director-HR/Safety; Nicole Ayres – Student.

Moved by Park and supported by Raukar that financial Resolution No. 5084 authorizing the payroll dated July 20, 2006 in the amount of $119,264.63, checks #44321 through #44348 and direct deposits #9487 through #9540 and the payroll dated August 3, 2006 in the amount of $104,331.49, checks #44349 through #44377, and direct deposits #9541 through #9594; and bills dated July 24, 2006 through August 9, 2006 in the amount of $902,512.38, checks #74203 through #74344, and wire and electronic transfers in the amount of $198,661.71 and the minutes of the regular Commission Meeting held on July 24, 2006 be approved as presented. Motion carried.

General Manager Terry Leoni updated the Commission on the Biomass Project. He noted that a LEA Board meeting would follow the regular Commission meeting with two major issues facing the LEA Board. The first is a 20-year agreement with Birchem Logging to supply 50% of the fuel supply. The second is a long-term contract for urea, which is used to remove particulates from the air stream. Because a long-term agreement was reached, the cost will be substantially less than expected. He said that he has also been working with the State DNR on using brush lands as a closed loop fuel source at a cost of 50 cents/ton. The Biomass boiler construction is on schedule. Boil out is planned for October with cleaning in November and commercial operation on December 22, 2006. Construction of the wood storage and wood unloading facilities is underway, with conveyors left to be installed. Leoni also stated that he is the lead person on the wood yard construction and that work is on schedule there. Commissioner Park asked about the status of the tree farms. Leoni explained that trees were planted in three separate planting seasons and it would be several years before they can be used. Commissioner Sipola noted that the use of wood versus coal would ramp up over a seven-year period.

General Manager Leoni then updated the Commission on the fire in the Power Plant on July 29, 2006, which caused city-wide power outages. He noted that the support from Minnesota Power, Dale Sundin especially, has been phenomenal. The insurance companies, Sterr Tech, and League of Minnesota Cities have responded quickly with approvals for short-term fixes but are being cautious in approving long-term solutions. Leoni explained in great detail the problems caused by the fire and how they were resolved to restore all power to the community by July 31, 2006. He noted that there are still issues with the pit water pumps, but that arrangements have been made with Eveleth and Mt. Iron for additional water if needed. When asked what caused the fire, Leoni stated that it has not been determined but was contributed to by fatigue on old equipment, heat, and humidity. Leoni remarked that all employees who were asked to help (and many who weren’t even asked), gladly pitched in and did a great job. Minnesota Power supplied assistance to the line crew. Many businesses in the area also were of great assistance. There have been no claims for losses from the community at this time.

Leoni noted that one problem that surfaced was the ability to properly communicate. He asked the Commission for approval to purchase portable radios. Moved by Park and supported by Raukar to authorize the purchase of portable radios, not to exceed $2,500 in total. Commissioner Sipola commented that the radios should be used on a regular basis and not just saved for emergencies. Motion carried.

Commissioner Sipola noted that General Manager Leoni had done an outstanding job during the crisis. He was on the job for 46 hours straight and only got 4 hours of sleep. He made command decisions and kept the communication lines open. He offered thanks from the Commission for a job well done. Leoni noted that he couldn’t have done it without all the support he received from staff and outside agencies. He asked the Commission to consider some sort of appreciation for the employees involved. He also noted that he will be publishing a thank you in the newspaper for those involved.

There being no further business to come before the Commission, Commission President Sipola declared the meeting adjourned at 5:40 p.m.

ATTEST: APPROVED:

_______________________ ___________________________

Matt Raukar, Secretary Dr. Don Sipola, President