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HomeMy WebLinkAbout09/30/1985 Council Minutes116 SPECIAh COUNCIL MEETING September 30, 1985 A special Council meeting was called to order by Mayor Benson at 6:00 P.M., September 30, 1985. Members present: Bohjanen, Reinert. Members absent: Kulaszewicz and Marier. Public Works Director, Don Volk; Engineers, Bob Toddie and John Davidson and City Administrator Randy Schumacher were also present. Mr. Schumacher explained there were two issues to be covered at this meeting regarding the gas utilities. One issue is that he had received some correspondence from the prison which indicated to him and the State Department of Administration that they felt their gas costs were too high and listed several other complaints about the Circle Pines gas utilities. He has written a letter back to the prison saying the Lino Lakes City Council would be happy to work with them to resolve the problem with Circle Pines Gas. About two weeks ago, he met at the prison with the State Department of Administration, the Correctional Facility Administration and Circle Pines. It appears the prison wishes to discontinue use of Circle Pines gas. There were two alternatives proposed by the prison: 1) the Lino Lakes City Council authorize the prison to go to North Central Public Utilities for gas, or 2) use wood chips for fuel. North Central is proposing a rate that Circle Pines claims is unfair and unjust. North Central claims Circle Pines should be more competetive. The Circle Pines staff said if the prison will give them a letter asking that Circle Pines lower its rate, they will go to their supplier to see if they can get =a reduction from their supplier. If the Circle Pines Gas Utility gets a reduction Circle Pines in turn will give the prison a reduction. Mr. Reinert asked what percent of the total volume is the prison. Mr. Schumacher said a significant amount of about 60% of the Lino Lakes system; of the total system he did not know. If the rate is dropped as Circle Pines proposes the Lino Lakes profit would drop from $29,465 to $12,365 a year. It is important to keep the prison on the Lino Lakes gas system. The prison has now sent a letter to Circle Pines saying they would go to an alternative fuel source if they cannot get a better rate. Now Mr. Theil from Circle Pines can take this letter to his supplier and ask for the reduction. Mr. Schumacher also questioned North Central's proposed rate; how long is it for; one year, two years? According to Mr. Theil there are specific regulations on utilities that regulate how much they can charge certain customers. They feel their rates will remain more constant. SPECIAL COUNCIL MEI;T[NG September 30, 1985 Page Two At this point, the prison is saying they will go to fuel oil, North Central, wood chips or something else if Circle Pines does not reduce rates. However, they are in a franchise area and Mr. Schumacher has written to them explaining what their options are. The only way they can get out of the franchise is if Lino Lakes changes the franchise. As far as wood chips is concerned, there is state legislation prohibiting its use. Mr. Reinert said they should not be gouged and suggested working with Circle Pines to reduce the rate. Mr. Schumacher said he does not believe that North Central can profit from the rate they are proposing. He had checked with a similar North Central user and they were paying $4.75 which is much higher than being proposed for the prison. Mayor Benson said what it boils down to is that the Council will have to take a hard look at the gas utility because it may be needed for future revenues. This is the real reason for working with Andy Gibas and the Circle Pines gas commission. He felt this City should get together with Mr. Gibas and question what the operating expenses are and what the administration expenses are. We may find these expenses are not even close to being accurate. No doors should be closed here, but go and find out where these cuts can be made and make this utility more profitable. Mr. Schumacher said the next step in the process is for Circle Pines to contact their supplier. He said the unfortunate thing is Lino Lakes does not have any input, not even a letter from Circle Pines saying how do you feel about this profit or loss. Mr. Bohjanen asked when Lino Lakes will have representation on the Circle Pines Utility Commission. Mr. Schumacher said Mr. Gibas is pushing for a five person commission and Lino Lakes would have one representative and Circle Pines would have the majority. Presently, Mr. Schumacher is proposing a seven member commission, two from Lino Lakes and five from Circle Pines and the membership would change based on the formula of users. Mayor Benson said he wants a full accounting of the gas system including the number of customers each City has, what their gas usage is and what the administrative and operative costs are. The franchise is up for renewal in 1986 and unless this City can look at some profits in the future he would not be in favor of spending a lot of time expanding this utility. 1 117 118 SPECIAL COUNCIL MEETING September 30, 1985 Page Three Mr. Reinert asked who controls this utility from the state level. Mr. Schumacher said probably the State Utilities Service Commission. How do you go about asking them to look at this utility. Mr. Schumacher was not sure, but felt they just look at rate increases. Mr. Reinert felt Circle Pines rates have not been justified or equitable. Mr. Bohjanen questioned if any of Lino Lakes monies were used during the controversy regarding the Circle Pines City Hall. Mayor Benson asked for more accurate accounting as we proceed toward a future utilities so that the Lino Lakes accountants can analyze the account. He asked for the administrative costs, total users, total charge to different concerns and a complete accounting. Mr. Schumacher presented a report prepared by Voto, Reardon, Tautges for the Council to take home and review and discuss at a future meeting. Mr. Reinert wanted to know if there is state or federal control over a gas utility. He said if they are not going to be a little more open why should Lino Lakes help them expand. Mr. Schumacher was asked to check with the public service commission to determine what controls they have in the operation of the Circle Pines gas utility. The meeting was adjourned at 6:50 P.M. These minutes were considered, corrected and approved at a regular meeting of the City Council on October 15, 1985. iX enj am Marilyn' ( Anderson, City Clerk ' G. rison, Mayor 1 1