4.7. SR 12-16-2013 - Laserfiche WebLink

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City of Elk=' Request for Action River To Item Number Mayor and City Council 4.7 Agenda Section Meeting Date Prepared by Consent December 16, 2013 Troy Adams, P.E., ERMU General Manager Item Description Reviewed by CAPX Brookings Project Allocation Increase Cal Portner, City Administrator Reviewed by Action Requested Adopt by motion a resolution to appoint Troy Adams, P.E.,ERMU General Manager, as the Transmission Project Coordinating Committee representative and authorize the appointed representative to vote in favor of the increase in project ownership. Background/Discussion In May 2006, the Utilities Commission authorized ERMU joining Midwest Municipal Transmission Group (MMTG) to explore the potential to obtain ownership in the regional transmission system. This nonpartisan/not-for-profit organization was created to provide service and assistance to the membership for matters relating to the planning, construction, ownership/investment, operation and maintenance, and administration and management of electric transmission and/or power generation facilities. The action to join MMTG represented ERMU's decision to investigate a change in direction towards ownership instead of renting. Ownership in the transmission system essentially works as a hedge to mitigate volatility in transmission costs. ERMU is still a member of MMTG and through proactive participation,represents their investment and their customers. Troy Adams, P.E., ERMU General Manager,is currently the President of the MMTG Board of Directors. This is a unique type of investment opportunity for a municipal utility. Because of a municipal's ability to finance with tax exempt bonds, our cost of money is less than investor-owned and cooperative utilities. With the Federal Energy Regulatory Commission (FERC) approval of a hypothetical capital structure and a guaranteed rate of return on investment, transmission ownership becomes an incredible advantage for municipal utilities to position themselves with very competitive rates compared to the investor-owned and cooperative utilities. At the time of initial research into transmission ownership in 2007, ERMU could invest in approximately$21,000,000 of transmission, be completely hedged against volatility in transmission costs, and still fall under the levels where the bonds would be tax exempt. This amount changes with ERMU's demand and energy usage. In February 2007, ERMU entered into an agreement to participate through Central Minnesota Municipal Power Agency (CMMPA) in the CAPX2020 Brookings-Twin Cities Transmission Project. Initially the municipals were looking to independently fund their share of the project. Because of the number of utilities involved, CMMPA chose to act as the bonding agent for all the municipal utilities investing in this project. Even though CMMPA was the bonding agent,their bond counsel requested resolutions and certifications from all Commissions and Councils. And in March 2011, the Commission and Council P a w E R E U 6 Y NaA f RE]