1.5. ERMUSR 10-08-2019 - Laserfiche WebLink

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DISCUSSION: The final transfer of customers under this agreement occurred on September 17, 2019, one year ahead of schedule. And although the initiative is not complete, a major milestone has been reached; all of the citizens within the affected areas are now ERMU electric customers. This electric service territory transfer initiative is made of multiple phases and involved nearly every employee as well as many stakeholders outside of ERMU. The support, dedication, and hard work of all those involved contributed to this initiative's success. The first phase involved the alignment in goals of the commission and the city council. In 2012 both the commission and the council unanimously passed resolutions supporting the initiative to serve all customers within the corporate boundaries of Elk River. The second phase involved establishing terms for the transfer with Connexus Energy. Shortly after the completion of the 1991 electric service territory transfer agreement initiative, executive level discussion began between ERMU and Connexus Energy regarding the transfer of the remaining electric service territory within the City of Elk River. Early in those discussions both parties agreed to conduct value based negotiations, looking to achieve an agreeable solution that provided the best value to the members/customers. These efforts for value based negotiations were openly criticized by members of the Minnesota municipal and cooperative families. Throughout the initiative both parties remained true to that commitment.The negotiation of terms was conducted to meet both parties' goals while avoiding the costs of litigation ultimately improving the value delivered to the members/customers. A high priority was placed on preserving the relationship between the two parties, one of the inherent advantages of value based negotiations. The negotiations were successful and resulted in providing added value for both parties. Notable value additions were the development of emergency tie points between the two parties.These tie points allow both utilities to use the other's infrastructure for backup while doing planned maintenance or emergency repairs. This allows both parties to reduce loading and design criteria for disaster preparedness and planning. This value addition has already been used many times by Connexus Energy since 2015. And ERMU was able to receive favorable loss of revenue payment terms for municipally owned and municipally developed properties. The third phase involved planning. Connexus Energy and ERMU employees worked together to identify subdivision "areas" within the total footprint which would reduce reintegration costs to the community. It can't be highlighted enough that the significantly above and beyond effort by Connexus employees in this planning process helped reduce the end costs to the community. Additionally, this collaborative planning effort reduced risk and shorted transfer outage times. The fourth phase was to implement the orderly plan for the transfers. Throughout this multiyear initiative, collaboration between the departments was critical. This initiative involved nearly every employee in the company at one point or another. And those not directly involved contributed by supporting this initiative as a company priority. Multiple departments worked together to address processes for: meter change outs; migration from Connexus Energy rates Page 2 of 3 3