5.2. ERMUSR 12-13-2011 - Laserfiche WebLink

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By design, the net to reserves is intended to be negligible because the Utilities electric department is in compliance with the Reserve Policy reserve levels. Also, there is approximately $1 million which the Utilities Commission designated as unrestricted reserves. After ERMU revisited the Reserves Policy last year, it was determined that the electric reserve fund was over the newly established reserve level criteria. This amount was to be held in unrestricted reserves for future use. At the last Commission meeting, there was discussion about this unrestricted reserves amount. The direction of the Commission was to set the 2012 rates as required to balance the budget and allocate half of the approximate $1 million unrestricted reserves to management for the specific used of mitigating wholesale power costs and power cost adjustments. The balance would remain in unrestricted reserves for possible rate stabilization in 2013 or the future. Over the past few years, ERMU has been working to bring the Commercial Demand rate down to be more competitive and help attract and retain commercial business. This direction was also applied to the proposed 2012 rates design. The proposed 2012 rates aze: Residential Basic Monthly Chazge $9.50 Summer Energy Chazge (May-Sep) $0.1249/kWh Winter Energy Chazge (Oct-Apr) $0.1116/kWh (This results in an increase for a typical residential customer of 7.1 %) Non-Demand Commercial Basic Monthly Chazge $16.00 Summer Energy Chazge (May-Sep) $0.1199/kWh Winter Energy Chazge (Oct-Apr) $0.0995/kWh (This results in an increase for a typical non-demand commercial customer of 6.9%) Demand Commercial Basic Monthly Chazge $50.00 Summer Demand Chazge (May-Sep) $15.89/kW Winter Demand Charge (Oct-Apr) $11.27/kW Energy Charge $0.0598/kWh (This results in an increase for a typical demand commercial customer of 4.0%) One other topic that has been brought to management's attention by customers is the amount ERMU charges for a late fee. Elk River Municipal Utilities has a 10% late fee. It has been azgued that 10% is too high for those that aze already having difficulty paying their bills. From the most recent survey data available, 43% of the responding Minnesota municipal utilities Chazge a 10% late fee, 28% Chazge a 5% fee, and 29% did something other than 10% or 5%. Thus, the vast majority of municipal utilities aze doing the same as ERMU. For way of compazison, Connexus chazges $1.50 plus 1.334% for their late fee and Xcel chazges 1.5%. In this time of economic downturn, reducing the late fee from 10% to 5% may help those customers who have fallen behind to get caught up more quickly. By changing the late fee from 10% to 5% would have an approximate $100,000 negative impact on the 2011 budget which would be socialized over all customers. A change to the proposed rates would be required to make a change to the late fee.