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• <br />• <br /> <br />2011 City of Elk River General & <br />Equipment Replacement Funds <br />Sources (Reflecting avoided cost of <br />ERMU donated electricity and labor) <br />Because ERMU is tax exempt, the Utilities <br />provides a fixed percentage of the revenue from <br />Elk River customer's electric sales to the City of '° <br />Elk River. This amount is a Payment in Lieu of <br />Taxes (PILOT). In addition to this percentage <br />of revenue, ERMU provides donated electricity <br />for non-enterprise City facilities as well as (`~ii <br />7 A4~~ <br />donated labor. In total, ERMU provided <br />approximately $1,186,000 in 201 I . This was up <br />- -- - -_- <br />7.8% over the 2010 PILOT and up 16.8% over <br />2009. The ERMU PILOT is a significant contribution to the City which <br />indirectly helps to offset both property taxes and debt issuance. Of this <br />PILOT, the cash transfer was over $71 1,500. This trend in our PILOT is <br />directly related to the growth of the ERMU. The City of Elk River directly <br />benefits from the growth of ERMU and ERMU grows when the City grows. <br />This is one of the reasons why ERMU has focused on collaborating with the <br />City to promote economic development. The Utilities looks to also <br />promote economic development in the other cities we serve. <br />ERMU Payment in Lieu <br />of Taxes <br />Other Sources <br />4~ <br />• <br />Electrical transmission related costs are forecasted to <br />significantly increase in the coming decades. This raised <br />concerns for municipal utilities for their ability to remain <br />cost competitive. In 2006, the Utilities Commission <br />authorized joining Midwest Municipal Transmission Group <br />(MMTG) to explore the potential to obtain ownership in <br />the transmission system. In 2007, ERMU entered into a <br />development agreement with Central Minnesota Municipal <br />Power Agency (CMMPA) to participate in the CAPX2020 <br />Brookings-Twin Cities Transmission Project. This <br />represents ERMU's direction to own instead of rent. This <br />investment of approximately $6 million will provide <br />revenue to mitigate transmission costs and help to lower <br />ERMU electric rates. In March 201 I, the Utilities <br />Commission and the City Council approved resolutions to <br />execute the project agreement for participation and also <br />established the contractual framework for possible future <br />transmission investments. <br />Courtesy of CapX2020 <br />