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, SEPTEMBER 22, 2008, AT 4:30 P.M.

Commission President Bloomquist called the meeting to order at 4:30 p.m.

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

Absent: None

Also Present: Terry Leoni – General Manager; Bill Hafdahl – Director-Finance & Administration; Sue Lalli – Public Relations / Customer Service Supervisor; Dennis Lindberg – Councilor; Tom Berringan and Don Tekautz – Iron Range Veterans’ Memorial Representatives.

Tom Berringan and Don Tekautz, on behalf of the Iron Range Veterans’ Memorial, addressed the Commission on the bill for $75.91 for water used in construction of the Iron Range Veterans’ Memorial Park in Virginia. It was their request the Commission would waive the charges for the water used. After discussion it was moved by Lucarelli and supported by Sipola that the $75.91 bill sent to the Iron Range Veterans’ Park Committee for water used during construction of the Veterans’ Park be waived. Motion carried.

Mr. Leoni noted there was an article in the recent issue of the Minnesota Municipal Utilities Association on awards presented to member Utilities. A portion of the article covered the System Innovation Award presented to the Virginia and Hibbing Utilities at the annual MMUA meeting recognizing both Utilities for their leadership and innovation in Customer service, Energy Efficiency, Renewable Energy or Technology Use.

Moved by Sipola and supported by Lucarelli that financial Resolution #5132 authorizing the payroll dated August 28, 2008 in the amount of $108,927.27, checks #45728 through #45755, and direct deposits #12445 through #12502; and the payroll dated September 11, 2008 in the amount of $111,063.90, checks #45756 through #45779 and direct deposits #12503 through #12558; and bills dated August 26, 2008 through September 22, 2008 in the amount of $1,530,516.93, checks #79806 through #80004, and wire and electronic transfers in the amount of $399,278.15 be adopted; and the minutes of the regular meeting held on August 25, 2008 be approved as presented. Motion carried.

The Agenda for the September 23, 2008 LEA Meeting; Minutes from the August 25, 2008 LEA Meeting; and LEA Cash Flow Reports included in the Commissioners’ packets were reviewed. Mr. Leoni presented a copy of LEA financial through July 2008. Current production schedules show the percent of biomass being used to produce electricity at both the Hibbing and Virginia locations. Almost 41% of electricity is being produced with biomass at the two locations.

The August 2008 Monthly Injury Summary Report was reviewed. The August 2008 report shows no injuries during the August 2008 time period.

A new policy on demand metering was presented to the Commission for the first reading. Staff would like to institute a policy whereby an electrical demand meter will be installed on a utility account when a small commercial customer receives commercial electric service at one location for general power and lighting purposes as 60 hertz single and/or three-phase service through one meter at the secondary voltage available at the customer’s location and usage exceeds 2,500 kwh/month for three consecutive months. Because the cost of electricity to the Utility is increasingly dictated by the demand, it becomes ever more important to capture demand revenues from those customers who, by the height of their peak usage, are impacting our costs. This policy will increase revenues to the Utility by an undeterminable

Carried forward

City of Virginia

Public Utilities Commission Page 2

Minutes of September 22, 2008 Meeting

Brought Forward

amount and it will more equitably match the Department’s charges to the customers with the behaviors that impact the costs. After discussion on the effect of this Policy change to small commercial customers it was moved by Lucarelli and supported by Sipola to authorize a new policy on demand metering for small commercial customer as presented. Motion carried. This is the first reading of this policy and the second reading will be at the next regular Commission meeting to be held on October 27, 2008.

Mr. Leoni reviewed the Customer Newsletter that will be mailed to all customers with their utility bills the first week of October 2008. An article in the Newsletter will cover 2009 utility rates. Mr. Leoni will also be meeting with Mr. Bill Hanna at the Mesabi Daily News on September 23, 2009 to review 2009 utility rates. Copies of the proposed rate increases have been sent to all members of the City Council.

Mr. Leoni noted the next LEA meeting is on Tuesday, September 23, 2008 at the Hibbing Public Utilities business office.

Mr. Leoni asked the Commissioners to plan on a Finance Committee Meeting, a meeting of the Committee of the Whole, some time in late November or early December 2008 to review the 2009 Budget for the Department.

There being no further business to come before the Commission, Commission President Bloomquist declared the meeting adjourned at 5:12 p.m.

ATTEST: APPROVED:

____________________________ ____________________________

Matt Raukar, Secretary Quentin Bloomquist, President