On March 12th, the city held a joint meeting with the Shakopee Public Utilities Commission that largely dealt with the long-standing concern expressed to the council over the years from developers, members of the business community, and residents regarding SPUC fees. (Agenda attached).

This joint meeting was scheduled after Council directed staff find a solution to the problems posed by SPUC to the general community following complaints by the developer of the Willy McCoy's restaurant in Southbridge earlier in the year. In the past, staff has not been involved in the frequent complaints directed towards SPUC other than to respond that “this is not a city issue. This is a SPUC issue. You should address SPUC issues with SPUC directly.”

Following the joint meeting, city staff reviewed the information presented per council direction. A request for further information (RFI) was drafted and reviewed by Council. Input was solicited from Council and Council provided with a final draft for review and comment. After incorporating Council’s comments, this RFI was sent to SPUC on June 7. (Attached).

This letter asked for information regarding multiple areas including:

1. How the SPUC Capital Improvement Plan (CIP) is funded;

2. Where funds collected are detailed in the SPUC budget;

3. Why consultant advice was not followed repeatedly over the years;

4. Where the two water treatment plants (which have been used to justify rate increases since 2003) were in the CIP;

5. Study or other reports used to justify the multiple increases to the SPUC water connection charge over the years;

6. Specific information for the 23% increase in 2008 – and the addition of a 2% kicker per year – which also was against the advice of SPUC’s consultant who noted that increasing fees had significant issues because “to fund the projected short-term fund deficits the current charges and fees would have to be substantially increased. Even with increased rates the long collection period could still result in fund deficits in the short term, depending on the size of the increase and a large surplus in the long term.”;

7. Study and other reports supporting the 2018 “one-time fee” of $500 per acre and the subsequent 2019 additional “one-time fee” of $500 in 2019;
   
   

8. Reasoning for failure to have a rate study since the last one expired in 2015, and inquiry into when the residents of Shakopee could expect a new rate study;

9. Inquiry regarding economic development efforts akin to that provided by Xcel Energy and other providers;

10. Inquiry regarding the current contribution provided to the city general fund (to help offset property taxes) based upon the city’s study of similar utilities;

11. Council membership on SPUC; and

12. The stunning $211,365 charge to connect a donated splash pad to a water source.

At their June 17^th meeting, SPUC discussed the RFI. Mr. Crooks stated that he believes that SPUC has already answered the City's questions on these issues, noting that SPUC had received a letter in March which the organization had answered. That is factually incorrect. The March 25^th letter (attached) was an outline of the errors of SPUC’s Comprehensive Water System Plan and Water Supply Plans – that were submitted for approval without coordination or review by the City of Shakopee – and which were an offshoot of the issues surrounding SPUC fees. To suggest that the SPUC response to this letter in any way answers the larger issues outlined above is misguided.

A review of the June 17^th meeting finds multiple issues of concern. But none speaks as loud as SPUC’s dismissal of the City’s June 7^th letter. These are important issues that should be resolved to restore the Council’s faith in the Commission and its operations. All public bodies should be accountable. Shakopee Public Utilities accountability rests almost solely in the Shakopee Public Utility Commission unlike private energy companies that are regulated by the state.

Per Council direction, city staff is reviewing the process for bringing the utility back under the jurisdiction of the City. The Shakopee City Council has the responsibility to appoint members to the Commission. Per request we are also looking at the ability to remove commissioners as well.

Undetermined.