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a 2.78%increase. For electric,the wholesale power costs make up between 70-75%of the operating budget,and including the power costs,the increase is 2.94%. The expense budget will change as the complete 2016 budget is assembled and the finalized wholesale power costs are reflected. Theresa mentioned that the presentation of the budget is a little different from last year;the budget categories are broken down and notes and explanations are presented if deemed worthy. Theresa reached out to the commission to see if they had any questions on the expense portion of the 2016 budget. John Dietz said that many of the line items in the budget noted an increased cost due to the new territory acquisition.John inquired as to what the approximate increase in expenses would be if you took away all the increased costs from the territory acquisition. Theresa Slominski explained that many of the line items with increases were due to reallocation of labor,and while that line item increased another line item was reduced. Troy Adams added that some of the increases are due to cost, such as increased maintenance costs on the equipment and structures we've recently taken over.John Dietz had some additional questions on a few of the line items. Staff responded. John Dietz inquired as to what percentage of increased revenue we would likely experience as a result of the newly acquired customers. Staff will be presenting 2016 revenues in November where they'll be able to better address this question. Troy Adams shared that staff plans to have a separate calculation for the new territory. The thought is to run the existing customers the way we normally do so we're not changing our formula,and developing a separate formula for the new territory for just next year. They'll calculate the revenue and power cost of areas 1A and 1B separate from our existing,and then add those amounts back into our expenses and revenue as a separate line item. 5.2 2016 Utilities Fee Schedule Troy Adams presented the 2016 Fee Schedule to the Commission. There were just three adjustments to the schedule from 2015 to 2016. Troy proposed opening up for discussion our philosophy we have on how our fees our developed. Troy reviewed our current philosophy, those who create the cost pay for the cost, and gave examples on how that worked. After further discussion the Commission affirmed that philosophy. Staff recommended the Commission approve the 2016 Utilities Fee Schedule for adoption into ordinance by the City Council. Daryl Thompson made a motion to approve the 2016 Fee Schedule. Al Nadeau seconded the motion. Motion carried 3-0. 5.3 Performance Metrics and 3rd Quarter Update Theresa Slominski presented the Performance Metrics third quarter update. Now that we've received the customer satisfaction survey results, we now have numbers to report in each of Page 5 Regular meeting of the Elk River Municipal Utilities Commission October 13,2015