A SPECIAL 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, MARCH 01, 2005, AT 5:00 P.M.

Commissioner Sipola called the meeting to order at 5:00 p.m.

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

Absent None.

Also Present: Douglas Ganoe, Director-Operations; Sue Lalli, Supervisor-Public Relations; Jeff Marwick, Manager-Electric Generation; David VanDeventer, Special Projects Coordinator; Lorraine Ilminen, Supervisor-Administration.

Mr. Ganoe reported the Utility received three bids for the Automated Meter Reading (AMR) installation contract. After engineering analyzed the proposals, the Utility’s AMR Group (consisting of an Engineer Technician, a Meter Reader, a Meter Repair person, and Management staff) reviewed the proposals. The AMR Group eliminated Datamatic’s proposal because it was not cost effective. The group decided to prepare a list of questions and meet with the other two suppliers (RMR and Hydro Supply). The questions were presented and reviewed at the meeting and both suppliers were given time to respond in writing. Although RMR has the lowest proposal cost, further analysis has determined they are light in installation expertise and product support. The main difference between the RMR and Hydro Supply prices is the installation method. RMR proposes to utilize local labor and pay them minimum wage for installation. Hydro Supply proposes to utilize a professional installer with documented AMR installation expertise.

At 5:05 p.m., Commissioner Park took her chair.

After careful review, it is the AMR Group’s recommendation that the Commission consider awarding the installation contract for Automated Meter Reading (AMR) to Hydro Supply at a total bid cost of $177,475.81 with the GPS system (a $4,000 option) included. AMR ready electric meters with the ERT’s installed are being purchased separately from a meter supplier. The electric meter purchase cost is $36,706.50 (the Utility’s cost is $58.50 each electric meter in lieu of Hydro Supply’s cost of $74.00 each electric meter). The approved 2005 Capital Improvement Budget allocated $287,500 for Automated Meter Reading. The AMR installation and meter purchase will be within the budget. Moved by Marks and supported by Raukar to award the installation contract for Automated Meter Reading (AMR) to Hydro Supply at a total bid cost of $177,475.81 with the GPS option included. Motion carried.

Bid specifications for the 2005 natural gas projects were solicited. The 2005 natural gas projects contract is to replace some of the old steel gas lines in Ridgewood and further increase the reliability of its gas infrastructure in Virginia. The steel lines in use today average 35 years plus. The 2005 gas project budget (including gas materials and installation cost) is $66,452. On February 24, 2005, three bids were received and opened. InfraSource (Mueller Pipeliners) bid $47,345.00, Northern Pipeliners bid $73,227.00, and Quality Underground Services bid $50,580.00. InfraSource’s bid did not supply their anti-drug program and operator qualifications per bid specifications. It is the recommendation of the Engineering Department to award the 2005 gas project bid to Quality Underground being the lowest qualified bidder at $50,580. Quality Underground has done gas projects for the Utility in the past and they have shown to be very dependable and conscientious. The quality of their work meets or exceeds our expectations and the workers and management staff at Quality Underground have been very good to work with. Moved by Marks and supported by Park to award the 2005 natural gas projects contract to Quality Underground Services at a total bid cost of $50,580. Motion carried.

Moved by Park and supported by Raukar that financial Resolution #5049 authorizing the first half of February 2005 payroll in the amount of $81,279.85, checks #43390 through #43412 and direct deposits, and bills dated February 25, 2005, in the amount of $1,662,065.87 checks #70864, and checks #70952 through #71042, and the second half of February 2005 wire and electronic transfers. Motion carried.

carried forward

Public Utilities Commission

Special Meeting Minutes

March 01, 2005

Page 2

brought forward

The Commissioner reviewed and discussed a customer’s steam system violations (account #30648023). After further discussion, the Commission requested Management make another attempt to discuss with the customer ways to accomplish compliance with the Virginia Public Utilities steam policy.

The Laurentian Chamber of Commerce’s letter dated February 14, 2005, requesting volunteer assistance with the Lakes Beautification Committee was discussed. Commissioner Sipola suggested since their main project for 2005 is a public awareness campaign on maintaining the water quality of Bailey and Silver Lakes, it would be nice to have volunteers from the Virginia Public Utilities go to door-to-door to hand out the informational brochures. Mrs. Lalli will suggest this item for the next Utility employee newsletter to encourage volunteers to assist with the Lakes Beautification Committee on the public awareness campaign.

Mr. Marwick reported the No. 1 turbine overhaul project has begun. Because of poor readings, No. 1 turbine’s exciter and rotor will be sent to Duluth for cleaning and testing.

There being no further business to come before this meeting, Commissioner Sipola declare this special meeting adjourned.

Adjournment at 6:16 p.m.

ATTEST: APPROVED:

___________________________ ______________________________

Jerry Marks, Secretary Dr. Don Sipola, President