2.2 ERMUSR 01-10-2017 - Laserfiche WebLink

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in an impact of less than 1%to ERMU. As the preliminary budget and rates presented in November were based on a projected 2.5% increase, staff was able to go in and rework the proposed rates which result in increases under 1% for typical customers in all classes. In addition,the budget reflects providing a$1/kW demand reduction for commercial demand customers for all of 2017. For the notable items in the 2017 electric budget, Troy noted that staff had added consultant costs for a cyber and physical security assessment. John Dietz inquired as to how much the $1/kW credit we're giving to demand customers would relate to in dollars. Staff responded that they were anticipating that it would be roughly $500,000. There was discussion. John Dietz brought up the point that it is looking like we are going show a relatively large profit this year and wanted to know what the justification was for not using those funds to avoid a rate increase for 2017. Staff responded that the profits would go into cash reserves to help cover the capital improvement projects and loss of revenue (LOR)payments related to the territory acquisition. There was discussion. The proposed water rate design continues in the direction of shifting to more fixed cost recovery to mitigate revenue recovery volatility related to weather. The proposed 2017 residential water rates reflected a 2.91% increase to the first tier and a 2.55% increase in the basic monthly charge. These rate changes result in a projected 2.35%annual water cost increase for a typical residential customer. It was noted that the consultant costs for a cyber and physical security assessment had also been added to the notable items in the 2017 water budget. The Commission had a few questions. Staff responded. The Commission asked for further clarification on what the timeline was for the preliminary field services facility expansion planning and site prep work, and what the status was with the former MacGibbons property. Staff responded. Al Nadeau made a motion to approve the 2017 Budget. Daryl Thompson seconded the motion. Motion carried 3-0. 4.3 Governance Manual Update Troy Adams shared that based on Commissioner and staff input through surveys and discussion, our consultant John Miner has developed drafts of the first four Governance Manual policies. Provided for review were the following policies: • G-1 Commission Purpose • G-1.1 Commission-City Council Relationship and Roles • G-1.2 Commission Authorities and Responsibilities • G-1.3 Governance Style Troy called attention to section 2 of Policy G1.1 Commission-City Council Relationship and Roles, and shared the benefits of having a utility voice on the City's Economic Development Authority(EDA)to represent ERMU's interests in economic development. Troy noted that while we want to incorporate language into our policy in reference to this, we'll need to work with John Miner to fine tune the language as the city council is the one who would be appointing the Members to the EDA Board. John Dietz commented on Page 4 Regular Meeting of the Elk River Municipal Utilities Commission December 13,2016 27