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June 13, 2021

6/4/2021 2:12:00 PM
Water and Light loses its attorney and Commissioner Hals

North Branch city leaders lobbied state lawmakers for years to get special authority to expand to a five-person utility commission, finally  getting a special enabling piece of legislation passed, and the group has now shrunk back to its former three person make-up.  

The Water and Light Commission accepted yet another resignation June 2.  Thomas Hals reportedly notified the Chair on that afternoon, he’d be stepping down immediately.  

In the past few weeks Commissioners Mic Dahlberg and Terry Smith also resigned from the approximately one-year-old five person group.  

Nathan Keech is the current Chair and presided over the regular meeting June 2 with three remaining appointees. Tom Hals’ resignation was a blow, compounded by the notice provided from Water and Light Commission Attorney Chelsie Troth that she too was resigning as of June 25.
The vote was 2-1 to immediately start a search for law firm services to replace Troth.  Commissioner Peter Schaps voted no asking, “...what’s the rush?”

IUOE business agent Chris Chantry, Local 49, spoke to the three commissioners at open mic.  

He said he would be remiss in his duties;  if he didn’t remind the utility commissioners that their disparaging and unfounded comments related to utility employees must stop.  Future public comments will be responded to by the union, he stated, adding the utility staff  take great pride in what they do.

Chair Keech read a prepared statement containing a veiled apology for violating Open Meeting Law when he was the vice-chair. Keech said he is “not polished when it comes to procedure.” He asked for patience and “grace” from the commission members and public.

There is a call out now for applicants to fill former Chair Terry Smith’s seat, which emptied May 19.

These applications are due June 18 at city hall (see the city website.) There was no action to fill Hals’ vacated seat at the utility commission meeting, as appointments are a city council responsibility and go through council.

Part of a big puzzle
The three remaining utility leaders then received a tutorial about the electric side of the utility. Rumors are swirling, promoting the idea the city should takeover the water operations under the assumption government can provide service cheaper.  There is a work group reviewing what would need to happen for North Branch  public works department  to absorb the water division.  Currently the city runs only the wastewater portion of infrastructure. Keech said the work group had met once and there was a session scheduled for what would be this week.

Action promoted by some city and utility commission members officials informally (there’s been no official discussion or debate) is to abandon or liquidate the electric division,  because the city reportedly has no expertise nor desire to takeover electric.

The COO and Chief of External Affairs for SMMPA were on the commission agenda to advise about the utility’s relationship with the cooperative.   
Basically, contractural and operational hurdles restrict divesting of Water & Light’s electrical division.   SMMPA is a Minnesota based power cooperative of 18 utility members.  The executives advised that North Branch has some serious obligations to the co-op.

Mark Mitchell, Chief Operations Officer, said Water and Light has reserve and peak demand commitments through generation agreements forged in 2002 and 2010 that don’t expire until 2035.  North Branch’s system has the ability to generate power as well as distribute power in the grid and Water & Light is integral to grid reliability, Mitchell explained.

Also, should another agency or entity takeover or buy the electric division they will be required to purchase power from SMMPA.  There is a contract for power purchase in place until 2050, that was approved in 2010, according to Christopher Schoenherr, SMMPA Public Affairs.  

Anything in the Water and Light service territory now is affected.  In addition there must be staff and equipment in North Branch’s service area to operate and maintain services when called upon, Mitchell stressed.

In addition the tax exempt status of the cooperative’s debt also restricts what type of entity can step in and acquire the utility.  

The relationship with the cooperative works both ways, the men cautioned.  SMMPA pays the North Branch utility $360,000 annually for generated power and to have cooperative energy distributed.  (The coop owns transmission facilities.)

Schoenherr said these conditions are not in place to be obstacles, but exist to protect the cooperative as a whole, its members and fiscal needs.  The assurances inform investors or lenders there will be cash flow for debt service,  for either individual utilities and/or the cooperative’s debt load.

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