Minnesota Power says Pierz owes $62,000 more

Transformer damage results in faulty readings; rates may have to be increased

By Terry Lehrke, News Editor
terry.lehrke@mcrecord.com

One of three current transformers (CT) in the city of Pierz was damaged, possibly during a lightning storm several years ago. The crack seen above, caused the CT to register less electricity use than was used. The city noticed the error in January 2011, when numbers showed it was billing its customers for more electricity than Minnesota Power was charging the city for. Although the city contacted Minnesota Power in January 2011 and several times after that about the discrepancy, it wasn’t until May that Minnesota Power sent someone to do a field test who immediately saw from the ground the crack in the CT.

When a current transformer (CT) gets hit by lightning, it usually blows up and a problem is immediately evident, it is replaced and the problem solved.

But sometimes, and not often according to Dan Gunderson, meter supervisor with Minnesota Power, that isn’t the case and the CT simply works abnormally.

That’s what happened in Pierz and it could be a costly abnormality for the residents of the city.

Monday night, Gunderson and Dan Travica, account manager with Minnesota Power, told the Pierz City Council why the company says the city owes about $62,000. When tested, the damaged CT was found to be registering at between 30 to 45 percent below what it was supposed to be recording for that phase of energy.

Minnesota Power estimated the problem could go back as far as 2009, but according to its contract with the city, it can back bill for only 12 months, if the date the issue occurred can be pinpointed. The exact date of the damage is not known.

City Administrator Anna Gruber and Public Works Supervisor Bob Otremba have known something was off for several years and have asked Minnesota Power for help. They knew there was an issue because the city was billing its residents for more power than Minnesota Power said the city used.

Trying to rectify the situation, they contacted Minnesota Power several times beginning in January 2011. They were told by Minnesota Power to check the city’s meters for proper operation and the city’s computer software for errors in calculations.

But, after hours and hours spent investigating problems on the city’s end, the two could find nothing.

Minnesota Power’s equipment offsite meter tests didn’t show the discrepancy.

Finally in May, Minnesota Power sent someone to perform a field test. He immediately spotted the problem when he looked up at one of the three CTs in the city and saw a crack, possibly caused by lightning at some point.

Travica and Gunderson said Minnesota Power typically tests meters annually, but not the system transformers. Meter tests will flag a wiring error, but not this type of error, Gunderson said.

Council Member Stephanie Fyten asked why the equipment couldn’t be inspected more often to catch this type of error earlier.

Travica said it is a budget challenge to buy the most updated equipment and when trained people are sent out into the field, using a bucket, the costs for the testing go up as well.

Pierz Mayor Toby Egan asked how the company could charge the city for this error.

“If we use power, we expect to pay for it. But this CT has a hole big enough to throw a cat through it. I don’t understand why it wasn’t caught,” he said. “We’re trying to protect city assets. I can honestly say I’m ticked off about this.”

Egan said Minnesota Power gets paid extra if its “true up” program shows it under-estimated the city’s payment and said now it gets paid for faulty equipment.

“I think the whole Council feels every time there is an issue, Minnesota Power is responsible for nothing,” said Egan. “It gets very frustrating sitting on this side of the table.”

Minnesota Power will allow the city to repay the $62,000 over a 12-month period with no interest — nearly $5,200 each month. The billing in July would include the first installment.

Reluctant to raise electric rates for residents, Council Member Mary Korf pointed out the city would have to make cuts somewhere to come up with the $62,000.

“It’s not good on our end or your end,” said Council Member Mike Menden. “But we brought it to Minnesota Power’s attention and have a lot of staff time in it. We did our due diligence and I think Minnesota Power should knock the price down.”

Egan said he felt that the city should not have to pay for Minnesota Power’s equipment failure, since it is the company’s responsibility to maintain it.

“It’s very poor customer service,” he said. “They kept going back to it’s the city’s problem — our meters, our software. It’s been frustrating because we spent a lot of time on our end only to find out it was not our problem.”

“If it was our problem and it was something to do with the maintenance of our system, we would take responsibility and eat the cost,” said Egan. “It’s only right. How could we go back and tell somebody, we didn’t maintain our system, so you have to pay for it?”

The Council has sent the information to the city attorney for review. “We want him to take a look at it and see exactly what our responsibility is. Obviously we have received electricity we didn’t pay for. The question is actually how much — these are all estimates from them. We want to make sure that what we pay is accurate and fair.”

The Electric Committee will also meet to see whether the city needs to raise residents’ electric rates.

“It’s something we have to take a look at. It really frustrates me, because we just raised rates because Minnesota Power upped their fees again, so we just got done raising the rates,” said Egan. “We won’t know for sure until we sit down and take a closer look at it.”

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