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Elk River <br /> Municipal Utilities <br /> 13069 Orono Parkway <br /> P.O. Box 430 <br /> Elk River,MN 55330 <br /> (763) 441-2020 <br /> UTILITIES COMMISSION MEETING <br /> TO: FROM: <br /> Elk River Municipal Utilities Commission Troy Adams, P.E. —General Manager <br /> John Dietz—Chair <br /> Daryl Thompson—Vice Chair <br /> Al Nadeau—Trustee <br /> MEETING DATE: AGENDA ITEM NUMBER: <br /> June 12, 2012 2.8 <br /> SUBJECT: <br /> Capacity Credit Agreement Notice of Termination Extension <br /> BACKGROUND: <br /> Included in our current interconnection agreement with United Power Association (UPA), now <br /> Great River Energy (GRE), is a power transaction agreement to purchase the generating capacity <br /> from the ERMU's Diesel Power Plant. This power transaction agreement has been modified <br /> since the original agreement, most recently in 2003. The revisions to the agreement occurred on <br /> October 31, 2003. These revisions established the agreement to be on an "evergreen"basis with <br /> an October 31 termination date and an April 1 termination notice date. The agreement <br /> established the capacity credit at $2.75/kW month. Typically our agreement with GRE results in <br /> capacity credit payments of approximately $350,000 annually. <br /> On March 28, ERMU received notice that GRE wanted to reevaluate the current agreement's <br /> fixed capacity credit. Because of the April 1 termination notice deadline, a 60 day extension to <br /> the deadline was agreed upon by both parties. The extension will allow ERMU and GRE to <br /> renegotiate the terms of the agreement within the 60 day extension without either party losing <br /> their ability to provide notice of termination for next year. A 60 day extension in the termination <br /> date was also agreed upon. This extension guarantees the payments through the calendar year <br /> regardless of the results of the agreement negotiation. On March 29, ERMU and GRE executive <br /> officials executed the Capacity Credit Agreement Notice of Termination Extension letter. <br /> DISCUSSION: <br /> Due to continuing and progressive discussions with GRE, both parties agreed to an additional 60 <br /> days extension to the extension executed on March 29. <br /> aka ,, l'a POWERED D" I <br /> Reliable Public P O W E R E D T o S E R V E <br />