2.2 ERMUSR 11-14-2017 - Laserfiche WebLink

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increase over the current year budget. The wholesale power costs, which make up between 70- 75%of the operating budget, reflected an estimated 1% increase. Currently, staff is estimating a 1%retail rate increase to customers. Mr.Adams noted that growth through our acquisition is helping to keep rates down. Chair Dietz asked if staff took into consideration the change in wholesale power providers the last quarter of 2018, and wanted to know if we would be re- evaluating our rates at that time. Staff responded that they ran the numbers for the budget based on Great River Energy(GRE)rates for the entire year and that we would not be changing our rates when we switch over to Minnesota Municipal Power Agency(MMPA) on October 1, 2018. Chair Dietz stated that when we get to that point, he'd like to see a cash flow analysis done. The Commission had a few questions on the electric department expense budget. Staff responded. Water Department Expense Budget-The 2018 forecast for water expenses reflected a 4% increase over the current year budget. Most notable were increases on the administrative side, due to hiring an IT staff person, increases in health insurance, and allocation distributions for employee related expenses. Currently, staff is estimating a 2%retail rate increase. Mr. Adams explained how a 2% increase to only the first tier and basic monthly charge would result in a lower blended increase. Commissioner Stewart questioned whether the interest on the defeased bonds line item for the water department should be a negative. Staff responded that it should, and indicated that they would correct the expense budget to reflect that. 5.3 2018 Utilities Fee Schedule Ms. Canterbury presented the 2018 Fee Schedule to the Commission. There were just three adjustments to the schedule from 2017 to 2018. The commercial application processing fee, which was approved in 2016, was also added to the fee schedule in an effort to transition from fees being published on individual application forms. Mr. Adams added that due to the significant increase in residential development, staff pulled the numbers together on a few of the new developments to ensure that our residential developer and builder connection charges were in line with what they should be; Mr. Adams reported they were. Mr. Adams also explained the philosophy behind the connection fees and the 50/50 cost share. It was noted that in keeping in line with the 3%the city is proposing for an increase to their sewer access charge (SAC),the utilities was recommending a 3% increase to ERMU's water access charge (WAC). There was discussion on how ERMU has typically followed suit with the city on the annual increase and how that percentage was arrived at. Chair Dietz expressed some concern with whether the 3%was still in line with inflation, or should maybe be adjusted accordingly. He stated that he was going to bring this up for discussion at the city level. Moved by Commissioner Nadeau and seconded by Commissioner Thompson to approve the 2018 Fee Schedule. Motion carried 5-0. Page 4 Regular Meeting of the Elk River Municipal Utilities Commission October 10,2017 23