5.4. ERMUSR 12-09-2003 - Laserfiche WebLink

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>1*, lk River Municipal Utilities 322 King Avenue phone: 763.441.2020 Elk River,MN 55330 Fax:763.441.8099 November 13, 2003 To: Bryan Adams From: Vance Zehringer Subject: Financial Analysis Cycled AC vs Uncontrolled AC The attached analyses illustrate ERMU's net margin for residential controlled air conditioner vs uncontrolled. These are the same demand assumptions we agreed to use previously. Projected 2004 wholesale and retail rates have been applied. The load control switch cost has been reduced to reflect the $50 per unit rebate GRE pays when used on cycled ACs. There is a noticeable difference between the two analyses. Each year,the uncontrolled AC nets ERMU a$114 loss. The controlled AC nets a loss of$41 per year for the first 7 years, so in effect, ERMU"saves" $73 a year for every controlled AC it has on its system. Because the Controlled AC analysis assumes a 7 year amortization schedule for the load control switch,once the switch and installation is paid for, ERMU"saves" $97 per year in years 8 and beyond. These losses of course, assume a constant wholesale and retail rate which we know will not be the case. I'm wondering if we don't want to get more aggressive in signing our customers up for the Cycled AC Program? Each controlled AC saves ERMU $1287 over its 15 year life, once again assuming a constant wholesale and retail rate. Pretty impressive numbers when you look at the potential. I would guess we have at least 3000 uncontrolled central ACs and if we could sign up 1500 of them,that number becomes 1.93 million dollars over that same 15 year period!