5.1. ERMUSR 10-21-2014 - Laserfiche WebLink

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01 Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission Troy Adams, P.E. — General Manager John Dietz — Chair Mark Fuchs — Electric Superintendent Al Nadeau — Vice Chair Daryl Thompson — Trustee MEETING DATE: AGENDA ITEM NUMBER: October 21, 2014 5.1 SUBJECT: Frost Trenching DISCUSSION: Over the past five years ERMU has been evaluating operations. Processes that were once efficient and economical to perform in -house no longer make sense with our growth; for example, our billing and inventory software. With other processes we have found great gains in efficiencies, quality, and value by bringing them in- house; for example: meter reading, tree trimming, directional bore rig operations, conservation and key accounts, water main repair, etc... This process of evaluating operations is ongoing and has been beneficial. More than two decades ago ERMU stopped doing frost trenching for new services and outsourced this work to local contractors. This was due to the retirement of equipment, system growth, and company priorities. With the addition of an experienced Lead Bore Rig Operator this year, we have discovered we can do more in -house than we had imagined. All signs indicate that the economy is on the rise and we have seen an upward trend in new services. It would be an ideal time to bring frost trenching back in- house. ERMU has the personnel to perform this work during the winter. This year ERMU purchased a new Vermeer RTX550 cable plow that can do this work, but does not have the trenching attachment. This attachment will cost $15,000. This was not a budgeted equipment purchase for 2014. Last season ERMU outsourced 1152 feet of frost trenching for a total of 21 new homes for an approximate cost of $7,500 which was passed on to those customers. If this process were to be brought in -house and based on the market rate for frost trenching, management would propose a frost trenching rate of $5 1ft. This rate would be less that what our customers were paying when ERMU outsourced this work. The number of new service installations requiring frost trenching is projected to increase. The equipment approved on the 2014 capital budget has been purchased at a better value than estimated back in 2013. The new plow came in at $104,000 which was $4,000 under budget. The new wire trailer came in at just under $9,000 when it was budgeted for $15,000. The new Reliable Publics Power Provider Page I of 2 W P0WEOEI 01 NATUREI P O W E R E D To S E R V E