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August 19, 2022

6/24/2022 2:28:00 PM
North Branch Council and Utility Commission meet, again

There was a special session of the Water & Light Commission and the North Branch City Council last week to look over the final version of an “asset purchase agreement”  selling the municipal electric utility.  

Nearly final, that is.

An agreement being negotiated between the involved wholesale power agencies is still pending. City officials heard that not completing this could derail the entire deal.  

East Central Energy is buying North Branch’s electric utility distribution system.  It gets power from Great River Energy (GRE). The municipal utility, however, is a member of the Southern Minnesota Municipal Power Agency.

GRE and SMMPA are congenial from all reports, in coming to terms to take SMMPA out of its multi-year contract with North Branch, but this is a complicated matter.  North Branch City Administrator Renae Fry called it a “critical component” of the ECE sale.

ECE service territory literally surrounds North Branch customers.  ECE President and CEO Justin Jahnz told the council and utility commissioners that ECE is “delighted’ to have been given this opportunity.

What still needs to happen is state Public Utilities Commission approval of revising electric service boundaries.  Up until now the PUC had no regulatory input.  Jahnz added that his ECE Board was scheduled to act on the sale soon, and then it will be ECE’s job to forward the service territory boundary request into the PUC.

It’s expected to take at least until the end of 2022 for everything to shake out— Fry explained.   North Branch  will continue to read electric meters until ECE can swap the meters out.  

Plus, North Branch hangs onto the diesel-powered generators that have provided power to SMMPA on a peak demand basis,  and will continue to operate them as a city function, Fry explained.

Debt owed on two bonds (loans) attached to the electric division of the utility will be processed by a third party that will control proceeds from the $5.3 million sale.

Linemen are identified in the asset agreement as moving into ECE ranks.  

Any inventory remaining, such as electric system surplus parts, older trucks, etc. may or may not be negotiated for purchase by ECE.  

City-owned property that was used by the utility,  will be leased by ECE to have access to things like control panels, or there may be in-kind considerations worked out.

This 25 minute meeting at North Branch City Hall June 14, was the culmination of years of utility commissioners and city council pursuing what they referred to as “winding down” the independent entity.  

ECE Executive Jahnz told the meeting attendees they shouldn’t feel like a “failure” in stepping away from the electric system.   

But, in North Branch’s case, getting rid of the muncipal utility was the desired outcome.

In 2017 North Branch held a referendum and the peoples’ vote was two-to-one NOT to dissolve the independent utility. The effort got underway by various office-holders in 2019 to do exactly the opposite of what voters wanted.

The plan aligned with placing North Branch Water & Light Utility Commissioners Kelly Neider and Peter Schaps, as a majority of what was then a three-person commission.  

A concerted effort was launched to misrepresent the utility. There were unsubstantiated budget anomalies announced in open meetings, the commissioners blamed unpopular water rates on mismanagement,  and in conflict with wage studies and efficiency analysis compiled earlier by a public financial consulting firm, they repeated allegations the utility staff were over-compensated.

The commission quorum of Neider and Schaps hastily convened meetings without notifying the third member—to act on eliminating utility staff and ousting the general manager less than a month shy of his retirement.  (He ultimately got an exit-date certified for benefits, in a costly legal settlement.)  

Multiple requests from the Press for notice of meetings went unanswered. It fell to a utility employee to alert this paper when the two commissioners were observed in the meeting room randomly.

In response to the utility commission’s total disregard  for due process,  the few remaining utility employees organized to adopt a union, which ironically resulted in enhancements to allegedly “over-generous” contracts.
The utility commission expanded to five members.

But, three new-appointees resigned (Terry Smith, Mic Dahlberg and Thomas Hals) when they realized they were expected never to question measures designed to decimate the utility.

Commission and Council action had already facilitated merging the water division into the city public works department.  Officials began to unsuccessfully seek a buyer for the peak demand generators.  ECE talks to acquire the electric distribution assets began and last week this came to head.

Measuring promised savings in pursuing “winding down’ this utility may be impossible and certainly won’t be a simple exercise of comparing before and after bills.  There is a process underway revising what was once a single bill, with the intent of segregating the energy franchise fee, the city stormwater fee, the city’s sewer system charges, and the water usefrom the watts/hours for electric that will eventually be collected by ECE.

After the special combined meeting—
The North Branch City Council convened its regular meeting and was not unanimous in supporting a letter that will go to the MN Housing and Finance Agency. On a 3-1 vote last week Council member Kelly Neider voted no on authorizing the mayor to sign the letter to support the funding application.  

Council member Neider motioned to table first but got no second.  She stated she opposes the location.

The 65-unit project is proposed for the empty lot on Highway 95,  that at one time held the ISD 138 Main Street School.  

A developer is hoping to work with a state housing program that assists in the creation of affordable housing. This project will be geared to families, and the units are larger than the typical one or two bedroom, according to the developer.

Council member Patrick Meacham said he did the math based on what is proposed as qualifying income, and for a single parent with two kids,  the income can be around $25 per hour;  which in his mind is a level where people are starting out, or saving for a house maybe and a comparable wage for businesses that consistently state in surveys,  they need workforce housing in North Branch.  

Council member Meacham added the tax revenue that will be generated from this project has to be considered.  
Mayor Jim Swenson said the letter isn’t committing the city to anything and said he sees “no problem” with supporting this at this point.
Kathy Blomquist also felt it merited seeing how far this gets towards funding.  The city is not being asked to contribute any subsidy.

In other agenda items: City Administrator Renae Fry introduced the search firm for an update on filling the Community Development Director and Finance Director positions. There are several applicants to recommend and the council should see a finalist for Finance Director by next council meeting.   Community Development Director candidates need to be narrowed down some more.

Robert Canada gets vacant council seat
The vacancy created by the resignation of North Branch City Council member Amanda Darwin is filled now by Robert Canada.  The council voted 4-0 June 14 to seat Canada.  His appointment runs to the end of December 2022.
The November election ballot will carry candidates’ names who are vying for the next full council term.

Canada was one of two who applied for the vacant seat, and was the lone option remaining when Sarah Bishop withdrew at the last minute the evening the interviews had been scheduled.

Filing for getting your name on the city ballot for the general election opens in early August.

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