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 25, 2006 AT 4:30 P.M.

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

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

Absent: None. Note: Commissioner Park arrived at 4:40 p.m.

Also Present: Terry Leoni - General Manager; Bill Hafdahl - Director-Finance & Administration; Doug Ganoe – Director, Operations Production; Sue Lalli - Supervisor-Public Relations / Customer Service; Don Rindfuss - Director, Operations Distribution (Electric & Gas); Dennis Lindberg and Rob Raplinger, City Councilors.

Moved by Raukar and supported by Bloomquist that financial Resolution No. 5088 authorizing the payroll dated September 14, 2006 in the amount of $102,322.64, checks #44433 through #44457, and direct deposits #9703 through #9756; and bills dated September 12, 2006 through September 25, 2006 in the amount of $456,342.73, checks #74540 through #74602, and wire and electronic transfers in the amount of $233,303.67 and the minutes of the regular Commission Meeting held on September 11, 2006 be approved as presented. Motion carried.

A brief discussion was held on the payment made to Jola & Sopp Excavating for golf course water main replacement work done – Invoice #72240 for $49,700.

The August 2006 Monthly Injury Summary Report was presented and reviewed.

The General Manager, Terry Leoni, reported that the new biomass boiler hydro is scheduled for October 12, 2006. Wood has been secured through a long-term fuel supply contract. Several wood suppliers have been contacted, with one supplier able to provide up to 50,000 pounds of wood per year over eight (8) to ten (10) years. With the closing of Ainsworth in Cook, Minnesota, the cost per ton of wood, as well as brush lands, may come down.

Moved by Muskovitz and supported by Park to accept the resignation of a Power Plant Fuel Handler / Utility man, Mike Kjenaas, due to retirement effective October 17, 2006 and to authorize Management to post for the position of Power Plant Fuel Handler / Utility man. Motion carried.

The General Manager noted a list of surplus equipment Management would like to auction off will be presented at the next regular Commission meeting at which time the Commission would be asked to consider a surplus equipment auction date.

Moved by Park and supported by Raukar that attendance be authorized at a Safety Conference to be held on September 26, 2006 in Duluth, Minnesota for two distribution employees at a total estimated cost of $120. Motion carried.

Mr. Leoni reported that Management is currently reviewing the Department’s Natural Gas Service Policy. Several areas of the policy may need to be revised to possibly include the addition of a number of feet of service pipe to be installed without charge to each service location. Several applications for installation of natural gas have been received. Due to the upcoming cold weather, Management would like to convey to those customers who have made application for service that changes are being considered and how the changes will affect their new installation. Moved by Bloomquist and supported by Park to Grandfather in all customers having an application for natural gas installation submitted to the Department as of this date to indicate that those applications will be covered by the final Policy revisions to be approved by the Commission at a future meeting. Motion carried. New wording of this Policy will be presented at the next regular Public Utility Commission meeting.

Carried forward

City of Virginia

Public Utilities Commission

Meeting Minutes

September 11, 2006

Page 2

Brought forward

Mr. Hafdahl, Director of Finance and Administration, reviewed the financial reports presented along with the process currently in place for calculating the Purchased Natural Gas Adjustment each month. After discussion it was moved by Bloomquist and supported by Park to direct Management to work towards a real-time purchased natural gas adjustment along with monthly adjustments for all commodities, to be effective with the utility billings mailed out the first of November 2006. Motion carried.

Mr. Leoni reported the No. 1 turbine went off-line due to the failure of the governor’s trip mechanism. Once the turbine seals are checked, along with the shaft and alignment, the turbine will be put back on-line. An insurance claim will be filed.

Mr. Leoni reported that the repairs to the indoor bus damaged during the fire that occurred at the Power Plant on July 29, 2006 are near completion.

Mr. Leoni also reported nothing new has been received pertaining to the vandalism to the Department’s Pit Pump location that occurred the night of September 8, 2006.

There being no further business to come before the Commission, Commission President Sipola declared the meeting adjourned at 5:32 p.m.

ATTEST: APPROVED:

_______________________________ _______________________________

Matt Raukar, Secretary Dr. Don Sipola, President