Delano Municipal Utilities

Valuation Study

The comparative rate and reliability evaluations in this report indicate that the utility is well run, efficient, reliable, and competitive.

The Delano Water Light and Power Commission provides electric power and domestic water services to residents of the City of Delano, Wright County, MN. The Commission operates under the direction of a Board that is independent and separate from the Delano City Council. According to the 2010 directory of the Minnesota Municipal Utilities Association (MMUA), the Delano Electric Utility is one of 125 municipal electric utilities in Minnesota. Founded in 1894, it is also one of the oldest. Also, according to MMUA, during the past 20-25 years, there has been only one sale of a municipal electric utility in MN, and that was a very small utility under very unusual circumstances.

On March 30, 2010, the City Council (City) in cooperation with the Commission issued an RFP in an effort to retain a qualified independent consultant to provide an opinion and study regarding the value of the Commission’s electric utility (hereinafter called Delano Electric Utility or DEU,) along with an opinion regarding the future of the Delano Electric Utility. After a considerable extension of the RFP response deadline, the Minneapolis, MN firm of LLS Resources, LLC (LLS Resources) was selected as the successful respondent to the RFP, and an agreement was executed between LLS Resources and the City and the Commission on December 4, 2010. In addition to Larry L Schedin PE, the firm’s president and owner, the team members assigned to carry out the work include Kavita Maini, a senior rate economist; James Erickson, a utility financial specialist; and Rob Hoerauf PE, a specialist in electric power system operation and design. A further description of the team’s qualifications is included in the RFP response.

 

City of Delano Organizational Study

The Delano Municipal Utilities provides electric power and domestic water services to residents of the City of Delano, Wright County, MN. The Delano Municipal Utilities operates under the direction of Delano Water Light and Power Commission that is independent and separate from the Delano City Council.
The City and Utility were seeking recommendations as to the optimal structure for public works and utility operations. Springsted Incorporated was hired to conduct the study.

The Request for Proposals provided background information on the Public Works/Municipal Utility Organizational Exploration. The purpose of the study was to seek assistance to examine the resources and organizational structures to explore if more efficient and/or effective models exist.

A Committee was formed of two City Council Members and the City Administrator along with two Utility Commissioners and DMU’s General Manager to review and revise the Study for distribution to the public.

Work today is planned, performed and managed separately by the City and Utility respectively. “While crews do work together on a case-by-case basis, planning and operations are managed by each separate entity. Capital improvement and equipment purchasing plans are also developed independently.” The Study identifies that there does not appear that any savings will be significant if purchasing efforts were combined.
The results of the study have identified three options to consider:

• Retain the current business model of separate operational entities. (This can be expanded with identified projects and activities, but not in any formal policy, driven or organized manner.)

• Retain the current organizations, but develop a more formal relationship and partnership for sharing resources.

• Initiate steps to combine the Utility and City under the City’s authority.

The Committee in their meetings and the joint Council/Commission in their meetings did not make any recommendations to the City Council. The Committees task was to make sure the information in the Study was correct and in the format approved by the City Council.
The City Council at its meeting on August 19th voted to go with Option 3 by putting a question on November’s ballot “Shall the City of Delano Water, Light, and Power Commission be abolished?”

Questions regarding this issue can be directed to either to City Hall at (763) 972-0550 or Delano Municipal Utilities at (763) 972-0557. Current information and answers to questions will be posted on the City of Delano’s Web site at www.delano.mn.us.
To review the Summary of the Organizational Report or the Organizational Study, click on the appropriate link below.

Link to Summary

Link to Organizational Study