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Electric Service Territory Growth <br /> After three years of negotiations, ELk River Municipal Utilities and <br /> Connexus Energy executed an agreement that established terms for the <br /> transfer of electric service territory serviced by the cooperative within <br /> the ELk River city limits to ERMU. These terms provide the framework for <br /> an orderly transfer of this service territory over a five year period. This is <br /> truly a historic event for our community and may prove to be one of the <br /> most important accomplishments in the history of ERMU as it is expected <br /> to increase our customer base by 20%. And in late 2015, ERMU welcomed <br /> 950 new customers with the first transfer under these terms. <br /> The transfer of this initial area will allow the City of ELk River and ERMU <br /> to work together in creating economic development opportunities that <br /> enhance the comprehensive growth for the City and ERMU. By mutually <br /> growing together, the City and ERMU are able to provide greater value <br /> to all customers. The transferred areas will allow ERMU to recognize <br /> substantial economies of scale spreading fixed costs over a Larger <br /> customer base. This translates into more competitive electric rates. In <br /> 2016, ERMU was able to keep the electric retail rates at the 2015 Levels. <br /> This was in large part due to the economies of scale recognized with the <br /> first electric service transfer. This was also accomplished despite a 2% <br /> increase in power costs from our wholesale power provider. ELk River is a <br /> thriving community and the addition of the transferred territory will only <br /> add to our "Future of Growth". <br /> 2015 Electric Department Statistics: <br /> • Peak = 55 MW <br /> • Annual Energy Sales = 282,265,268 kWh <br /> Page 5 • Number of Customers = 10,500 <br /> • Miles of Electric Lines = 450 miles <br />