8.1. SR 08-06-2012 - Laserfiche WebLink

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the utility's ability to negotiate lower wholesale power costs and could result in lower rates for the customers. Many times cities are dependent upon revenue transfers or payments in lieu of taxes (PILOT) from their municipal utilities. These PILOTs are often a percentage of applicable sales and would increase as the municipal utility grows, as is the case in Elk River. So as the city grows, the municipal utility grows resulting in a larger PILOT transfer to the city. The additional amount of PILOT helps to offset expenses that would otherwise be funded through taxes. Also, the ability for a city to borrow from their municipal utility in an emergency can't be overlooked and larger economies of scale strengthen a utilities' ability to assist. There is history of ERMU helping the City of Elk River through smaller forms of assistance. For example, in the mid -1990s ERMU made a number of donations to the city when they were building their Ice Arena. The openness and transparency of the municipal public power business model allows the customers to be informed on the utilities' operations and planning. The open meeting law allows for the public to witness the municipal utilities governance firsthand. The customers, community leaders, and elected officials have the ability to provide feedback and direction for utilities that they own. The local control and local accountability that come with municipal public power are critical pieces for providing long term value for the customers and community. One of the greatest advantages of municipal public power is the ability for collaboration, cooperation, and partnership when working towards common goals. The City of Elk River and ERMU have experienced this time and time again. The two data centers located in Elk River are great examples of this type of partnership. A city and their municipal utility share a symbiotic relationship where both can be mutually successful through growth. These reasons have contributed to the ERMU Commission's decision to move forward with developing an offer for the electric service territory within the city limits of Elk River. Over the past three years, Utilities staff has had informal and preliminary discussions with Connexus executives regarding service territory. Connexus Energy is the only other electric utility that services areas within the City of Elk River. On the three attached area maps, the properties shaded in blue provide a general indication of the properties within the City of Elk River that currently receive electric service from Connexus Energy. The purple line represents the City of Elk River's Urban Services District boundaries through these specific areas. Also attached is an Elk River Land Use Map with the Urban Service District boundary indicated with a purple line. Within the corporate boundaries of the City of Elk River, there are still approximately 1,800 properties not within ERMU's electric service territory. This involves 7,723 acres, or approximately 12 square miles. 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. Within these identified areas the city is moving forward as the developer for the Nature's Edge Business Center, a business park located near US HWY 10 and 171" Ave. The city will expand the urban services for this area including an expansion of ERMU's water distribution system. Without the city making the investment and taking the risk for this development, this area would not likely be developed. This growth will happen because of the city and the taxpayers. There is good justification that ERMU should then service the electric to these customers. This would increase the PILOT and help mitigate the risk the city takes. The Nature's Edge Business Center is not contiguous to ERMU's electric service territory but is contiguous to existing water service territory.