UTILITY MEETING

DECEMBER 3, 2009

The meeting was called to order at 6:00 p.m. by Utility Committee chair, Cindy Endicott.  Present for the meeting were Chair Endicott; Supervisors Jeff Bachke, Greg Andrews and John Goman; MSA representative Jerome Flogel; Clerk Patti Alander, Deputy Clerk Cammy Hansen; and residents Inge and Darrell Martin, Andi Schmaltz, Mark North, Peg and Skip Buehring, Pat Hashey, Mary and Don Moss and Leonard Hegg.  Cindy began by informing the audience that this meeting is an informational meeting regarding public utilities in Rice Lake Township.  She mentioned the rules for conducting the meeting which are on the agenda and that this meeting is the result of several other utility meetings during which questions and suggestions have arisen.  This meeting is to discuss those items and will not be a “determination” of outcomes, but rather a fact finding discussion.

Summer Watering:  Cammy stated she has asked other clerks in the State how they manage summer watering.  The responses boiled down to two methods (if a summer watering program was used):  1. using a three month winter usage average for the three months of summer.    2.  requiring a second meter installed to monitor outdoor water use.    Jerome stated that this would require some additional plumbing that would be connected to only the outside faucet.  Cammy stated that a disadvantage to this method is the cost; it would require that an additional meter be purchased and installed.  An advantage, however, would be that this would be the most accurate method of calculating the outdoor usage.  Andi asked if the average method would use the average usage from the previous year.  Cammy answered that yes that is how it would be calculated.  Cammy also mentioned that this may be an administrative burden to manage.  Andi asked if Duluth and Hermantown used a set average usage.  Cammy answered that only one of the responses she received used a set average (5,000 gallons) and only used this amount for brand new customers; once a one year history has been recorded, it is based on actual usage.  Patti stated that that would be an issue for many of our customers as they are newly connected.  Cammy stated she would like to try the average usage method to begin with to see if it will work as it will save on out-of-pocket expenses for residents.  If for some reason, it doesn’t work out, we will need to explore other options.  Cindy clarified that the summer watering program would have to be requested by the resident; it would not automatically happen.  The third option is having no summer watering program.    Mark North asked when the decision would be made.  Jeff answered that the Board would make the decision and would be sometime in the spring.  Andi also asked about the possibility of a flat fee for sewer only as this would save on administrative time, etc.  Hermantown charges a flat rate of $23.81 + $2 per month service fee.  Cammy stated we will add that possibility to our list to research and consider for the next meeting.  Cindy made the point that the utility must generate enough revenue to pay the expenses.  At this point, with all of the new connections, we don’t yet have a complete track record to know what those expenses will be; therefore, it would be very difficult to set a flat rate for sewer.  Andi stated that Hermantown bases their flat fee on what they think a family of four would use.  She thinks that many of the homes on W. Calvary are senior citizens and would use less than a family of four would use.   Patti is worried about setting a flat rate because of the WLSSD rate changes that we receive and the significant end-of-year adjustment that they make to our bill.  Andi offered to contact Hermantown to see how they came up with the calculation.  Jerome stated that a major factor in the calculation is that Hermantown has about 5% of customers who receive a flat fee; Rice Lake’s percentage would be more like 20%, which could make a significant difference in absorbing cost differences. 

Sewer Connection Fees:  Cindy said that there have been some questions about what the sewer connection fee pays for.  Cammy has prepared a spreadsheet that compares many area municipalities (attached.)  Cammy stated that from all research gathered, the Town’s fees are very comparable.  Cindy pointed out that many of these municipalities have their own wastewater systems and don’t have to pay a fee to WLSSD like we do.  Even so, our fees are still in the ball park with others.  Cammy also wrote a definition of “Connection Fee” as the question as to what that money is used for has been raised:  The connection fee (currently$800.00 for sewer and $575.00 for water) is for the purpose of paying for the meter, construction, reconstruction, inspection, repair, enlargement, improvement, maintenance and operation of the entire water and/or sewer system of the Town of Rice Lake, be the costs in the present or future. Cammy pointed out that these fees have been the same amount since 1966 for water and 1986 for sewer.  In reality, we are probably way behind what we should be at if inflation is taken into consideration.  Patti also prepared a sheet comparing operating income and expenses for the Utility Fund for the years 2003-year to date 2009 (attached.) 

Monthly minimum rates:  Again, a spreadsheet was referenced (attached) that compares various municipalities.   Patti stated that the Utility Committee meets once per year to 18 months to look at revenue and expenditures for the utility fund and to attempt to forecast expenses for the system.  Most of the water system was built in 1966 and has frequent breaks which are expensive to fix.  The City of Duluth controls the water rate and charges us for the amount we use.  Most other municipalities have their own well and do not purchase water from a larger city.  Greg stated that an engineer has done a rate study on the City of Duluth and found that they are overcharging Hermantown, Proctor and Rice Lake; however, the City chose not to lower rates.  Cindy stated that she has verified this by reading the Duluth City Council meeting minutes.  Cammy pointed out that Hermantown charges higher connection fees and other monthly fees that we don’t, also.  Andi stated that Hermantown charges about ½ per 1000 gallons than we do.  Greg answered that Hermantown has many more users than Rice Lake does and can spread the cost over all of those users.  Andi asked if when more people hook into the Rice Lake sewer system will costs go down?  Jerome doesn’t know that the $10.20 per 1000 gallons will go down, but he doesn’t expect it to increase much; there is no way that the Town will be seeing a big windfall.  The $10.20 per 1000 gallons includes the City of Duluth water charge (which includes City of Duluth overhead) and the Rice Lake expenses.  We have slightly over 100 users to divide our expenses over, so overhead is higher per user.  There was also some discussion regarding the leak at the corner of Kolstad and Arnold and the cost of the water that is leaked vs. the cost of the repair.  Cindy then brought up the topic of “Snowbird rates.”  Patti stated that we had a resident who asked about that and it is something we should discuss to see if that is something we want to implement.  There was some discussion about how this would be handled.  Should we consider a flat fee versus the 1000 gallon minimum fee?  A flat fee would need to cover fixed, ongoing expenses but would not be a per gallon fee.  The committee will further explore this.

E One Runtime Meter:  Cindy explained that there have been previous questions about the use of the runtime meter that is on the E One as a method of measuring sewer use.  Cammy included excerpts from prior meeting minutes that address this issue.  Mark North asked if residents can or cannot use this method.  Cammy answered that no, the runtime meter is not intended to measure water usage therefore is not a valid method of measurement.  Andi asked if the remote readers referenced in the minutes have been installed.  Cindy answered that yes, they have been.

Cindy stated that a separate meeting to discuss utility rates will be set (date not yet determined) and will be posted in the usual manner.

Jerome thanked attendees for their courtesy and cooperation during the meeting.

Having no further business to discuss, the meeting was adjourned.