5.3. ERMUSR 06-12-2012 - Laserfiche WebLink

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In 1977, the City and Township of Elk River consolidated to form what we now know as the City of Elk River. At that time, ERMU did not grow with the new city. In 1991, ERMU entered into a 20 year orderly electric service territory acquisition plan with Connexus Energy for a portion of what was previously the Township of Elk River. The vision of past ERMU governance and staff to invest in territory acquisition helped to build the foundation for a reliably robust and fiscally sound utility. It is hard to imagine ERMU today if that investment had never been made. DISCUSSION: Within the corporate boundaries of the City of Elk River, there are still approximately 1800 properties not within ERMU's electric service territory. Of these properties, over half of them are within the City's Urban Services District where ERMU provides water utilities and the City of Elk River provides sewer utilities. In 2011, the City of Elk River formalized plans for future development with their 1715t Avenue Focused Area STudy (FAST). This area is within the City's corporate boundaries, but outside ERMU's service territory. Within this FAST area the City is moving forward as the developer for the "Nature's Edge Business Center." The City will be expanding the urban services for this area and ERMU will have water service for these lots. Because the City is making the investment and taking the risk of this development, ERMU should service the electric customers. This would increase the PILOT and help mitigate the risk the City takes. This area is not contiguous to ERMU's electric service territory but is contiguous to existing water service territory. This territory has electric service from Connexus Energy. Staff has had informal preliminary discussions with Connexus executives regarding this service territory. With the progress on the City's Nature's Edge Business Center, it is now time to determine whether or not to formally pursue an orderly acquisition of the remaining electric service territory not serviced by ERMU that is within the corporate limits of the City of Elk River. ACTION REQUESTED: Staff recommends the Utilities Commission make a motion in support of developing an offer to acquire remaining electric service territory not serviced by ERMU that is within the corporate limits of the City of Elk River. Staff suggests the Utilities Commission enter into closed session pursuant to Minnesota Statute 13D.05, Sudb. 3(c)(3) "to develop or consider offers or counteroffers for the purchase or sale of real or personal property." ATTACHMENTS: • Minnesota Municipal Utilities Association Position Statement"Municipal Utilities' Right to Grow with their Cities—A State Issue" • Municipal and Co-op Size Comparisons /Growth 1974—2010 • The City and Township of Elk River consolidation map. • Connexus Energy—ERMU Demarcation Line Map—Areas and Year of Service Territory Acquisitions • ERMU Electric and Water Distribution Territory Maps I N P A P O W E R E D B Y •3 INArUPE Reliable Public P r s Power Provider