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Page 2 <br />Regulaz meeting of the Elk River Municipal Utilities Commission <br />August 9, 2011 <br />of the options and the fmancial impact. Discussion followed regarding conservation efforts such as <br />the SMART Irrigation system, rain gardens, and project conserve. Consensus was to implement an <br />incentive program for the commercial customers only. Peter Beck was asked if this was possible, he <br />affinned. One example discussed was the requirement for future irrigation services to have the <br />SMART Irrigation system and existing irrigation services could stay out of the third tier if they <br />installed the SMART Irrigation system. John Dietz directed staff to come back with a proposal and <br />requirements. <br />5.1 Review and Consider Homeowner Water Service Insurance Program <br />The water line from the water main to the building is currently the responsibility of the property <br />owner. If there is a problem or leak, the average cost of repair for a residential service ranges <br />anywhere from $900 to $4000. There have been occasions where the customer has known about the <br />leak but has not fixed it due to the cost and it is before their water meter so they are not being chazged <br />for the excess water leaking. The hesitation in repair puts the water system, the customer, and their <br />neighbors in danger of cross contamination, structural damage, waterline bacteria and sediment <br />intrusion. <br />Rochester Public Utilities has a Water Service Insurance Policy in place for repairs that may <br />arise. John Dietz asked if this would be required of all customers or customer's choice, David Berg <br />responded it would be the customer's choice. Discussion followed. Peter Beck commented about a <br />recent decision from the State Court of Appeals that would give ERMU more authority regarding <br />abatement assessments. Consensus was to check on the abatement possibility before moving forward <br />with any water service insurance policy. <br />5.2 Review Study of NESHAP-RICE Re¢ulations and Their Impact on the <br />ERMU Power Plant <br />Under the current administration, the Environmental Protection Agency (EPA) has imposed <br />National Emissions Standazds for Hazardous Air Pollutants for Reciprocating Internal Combustion <br />Engines (NEST IAP-RICE) which will impact ERMU and the operation of our diesel Power Plant. <br />Currently these new regulations would require ERMU to install emission upgrades by 5/3/2013 to our <br />four diesel engines to continue to operate under our current contract with Great River Energy (GRE). <br />These regulations are designed to reduce pollutants related to the generation of electricity from <br />reciprocating internal combustion engines. The ERMU Power Plant is for all practical purposes an <br />"emergency backup" facility for GRE. The engines are maintained and exercised, but only run a few <br />hours a year. There is an exemption in the rules for emergency facilities, but ERMU would not <br />qualify because of the compensation received from the Power Transaction agreement with GRE. <br />Troy Adams commented that there has been much outcry from Midwest utilities dealing with similaz <br />concerns of these rules, so they are currently being reconsidered by the EPA. A study was conducted <br />