11-13-2018 ERMU MIN - Laserfiche WebLink

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Ms. Slominski presented the administrative and technical services capital budgets and noted the addition of a$15,000 line item for a non-recurring expense in the administrative budget for a handicap accessibility front entrance. For the water department capital budget,Ms. Slominski noted that nothing had changed since it was last presented. Mr. Adams commented on the Jackson Street Water Tower line item, and shared that he will be working with the city and the attorney to get the asset legally transferred to the city; at which time ERMU would transfer the$90,000 in reserves over to the city. There was discussion. Commissioner Westgaard recommended that ERMU staff keep the City Administrator informed on the intent to transfer the asset as certain policies may need to be developed on their end regarding the money and what it will be used for. Ms. Slominski presented the electric department capital budget. Mr. Fuchs provided further detail on capital construction projects. Chair Dietz had a question on the $5,000 line item for chairs in the plant breakroom. Staff responded, and explained that the new chairs are long overdue. Ms. Slominski presented the water department revenue and expense budget and preliminary rates. She shared that the water department expenses decreased 2.5%, largely due to a change in depreciation calculations for a misclassified asset. In order to maintain the financial health and to plan for the short and long term water capital project projections,the 2019 water budget reflects an overall 1.8% increase in revenue through water sales. The allocation of the increase will be collected through an increase in customer charge and 1st tier water use rates. The result for the proposed rate increase for a typical residential customer would be 1.72%,resulting in an approximate annual increase of$5.00. The finalized 2019 retail water rates will be proposed for final approval with the 2019 budget in December. Ms. Slominski presented the electric department revenue and expense budget and preliminary rates. The electric department expenses increased approximately 3%. As outlined in her memo, historically wholesale power costs have been within 70%- 75%of operating revenue, and this is approximately 65%for 2019 with our new wholesale power provider. The proposed budget represents a 0% increase in ERMU rates, and still has a sizable contribution to reserves. The 2019 retail electric rates will be proposed for final approval with the 2019 budget in December. Commissioner Stewart pointed out two possible errors in the spreadsheet calculations: one on page 68 of the electric department revenue section, for the $4,800 line item for the sub-station credit; and the other on page 69 of the water department revenue section, for the $4,000 line item for bulk water sales/hydrant rental. She stated that it looks like these two amounts are not being pulling into the formula for the calculation. Staff responded that they would confirm and make the correction if needed. Commissioner Stewart noted the $100,000 that was being budgeted for water connection fees, Page 3 Regular Meeting of the Elk River Municipal Utilities Commission November 13,2018