Herald Journal - Enterprise Dispatch - Delano Herald Journal
Electric agreement sparks discussion
March 8, 2010

By Starrla Cray
Staff Writer

DELANO, MN – Issues regarding an agreement with Central Minnesota Municipal Power Agency (CMMPA) in Delano sparked lengthy discussion at the city council meeting Tuesday.

Bob Schulte, CEO for the CMMPA, addressed the city’s concerns, but no official agreement was reached.

The council plans to make a decision regarding the agreement at its next regular meeting Tuesday, March 16.

Delano signed the CMMPA’s original agreement in 1987, and this year will be the agency’s fourth revision.

“The electric industry is very complex, and is getting more so,” Schulte said, explaining the need for the revisions.

The CMMPA is comprised of 12 communities in central/southern Minnesota. So far, eight communities have approved the revision. Legally, only seven votes are required, but Schulte said it is important that the other cities, including Delano, approve the agreement, as well.

In July 2009, when the fourth revision was being drafted, Delano had considerable input, Schulte said.

“We made a lot of changes to the original draft, and the agreement is a lot better because of it,” Schulte said. “A lot of the improvements that were made are because of Delano.”

The Delano water, light, and power commission (DMU) recommended approval of the agreement, but the city council voiced remaining concerns.

Five-year termination
The most significant issue appeared to be the advent of a five-year termination period. Previously, the CMMPA agency agreement required a 60-day notice of withdrawal from the agency.

“It’s a little disheartening, to be honest,” Mayor Joe McDonald said of the five-year termination period.

According to Schulte, the time period is non-negotiable, however.

“Unfortunately, times have changed, and it’s requiring a higher level of commitment from our members,” he said.

The five-year agreement provides CMMPA employees with a greater level of job security, and it is consistent with other five-year agreements the city has already approved.

“It’s a very modest agreement compared to other agencies,” Schulte said, explaining that some require 40-year agreements.

The only way to get out of the five-year agreement is through a buy-out. If a city sells its municipal utility completely, the agreement is no longer binding.

This option is currently being considered by two of the cities in the CMMPA, Kenyon and Janesville.

Delano is planning to conduct a study to determine the value of its electric utility. City staff will be soliciting a proposal to determine the cost of the study.

“We need to decide if we want to be in the electric business,” council member Brad Hotchkiss said.

Bonding issue
A second point of contention raised at the meeting was the CMMPA’s bonding authority. According to the agreement, cities and power commissions must charge rates sufficient to cover bonding obligations, with the exception of major projects that require separate city approval.

Delano’s staff raised concerns that this puts the city’s electric payers at risk.

According to Schulte, CMMPA would not realistically be able to bond for more than $750,000, because of the value of the agency’s assets, he said.

Because the amount is divided amongst all the members, the risk for Delano is not very high, Schulte added.

According to Schulte, the CMMPA provides cities with more purchasing power and helps them accomplish things they wouldn’t be able to do on their own.

“It’s our commitment to continue that effort,” he said.

Odds and ends
In other business, the council:

• approved a public facility lease between the City of Delano and the American Cancer Society’s Relay for Life of Delano.

• approved the purchase of a card reader for the city hall/lobby entrance door with wireless exit request remote and wireless panic remote devices, for a total cost of about $2,100. With this equipment, authorized people will have access to that door, which is currently kept locked.

• approved the community garden for the 2010 growing season. There are still some plots available, council member Betsy Stolfa said.

• accepted a $1,000 donation to the Delano Fire Department from Marilyn Running, and a $100 donation from Residential Mortgage group through the efforts of Markus Hinrichs.

• proclaimed March as “Minnesota Food Share” month.

• reviewed and approved an amendment to the city’s ordinance regarding dangerous dogs. Wright County’s ordinance will now be enforced instead, at no cost to the city. Delano has had no certified dangerous dogs in the past nine years, city clerk Marlene Kittock said.


 

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