5.2 ERMUSR 06-09-2020 - Laserfiche WebLink

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Section 4 Proposed Rates Changes to rates are generally based on the overall need for revenues and results of the cost-of-service analyses. The projected operating results at existing rates as presented in Section 2 of this report outlinesthe overall revenue needs of the electric utility. Section 3 summarizes the cost-of-service results. These factors have been considered in developing the proposed rates summarized in this section of the report. Proposed Rates In Section 2, it shows that ERMU from 2.8% of revenues in 2020to negative5.2% of revenues in 2024assuming existing rates are maintained through the Study Period(during 2015-2019this averaged 6.4%). It also shows that ERMUprojected unrestricted cash reserves at current rates decline from $14.9million to $2.6million over the Study Period. The reserve levels dropping below the current policy defined level by the end of 2023.In includingcontinuing to meetits bond covenant requirements, it is recommended that a series of rate increases be implemented in the years 2021-2024.Rates were not increased in January of 2020 and noadditionalincrease is recommended during 2020.It is recommended that the rates be raised 1.5% each yearfrom 2021 to 2024(resulting in an overall increase of 6.1% by the end of the period) effective on January 1 each year.It is also important to remember that overall electric rates were reduced 5% on January 1, 2019. Under the recommended plan, the overall total change in electric rates from 2018to 2024 would be an increase of approximately 1%. 90