2.2 ERMUSR 12-08-2020 - Laserfiche WebLink

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For the Electric Department Expense Budget the 2021 forecast for electric expenses is a .6% increase over the current year budget. Most notable increases are for administrative expense due to the addition of an HR person, and expenses related to bonding for the new field services building. At this time there is a 0% rate increase proposed. For the Water Department Expense Budget the 2021 forecast for water expenses is a .3% reduction over the current year budget. Most notable increases are for administrative expense due to the wellhead protection plan amendment, the addition of an HR person, and expenses related to bonding for the new field services building. At this time there is a 0% rate increase proposed. Ms. Karpinski noted that staff had consulted with Dave Berg, who completed a rate study for ERMU earlier in the year, and his opinion was that a 0% rate increase would be possible. Chair Dietz had questions about how competitors were handling rates in 2021. There was discussion. Chair Dietz acknowledged that the fee schedule to be presented later in the meeting reflected a 6% increase for the Water Access Charge (WAC). He expressed concerns about that large of an increase, as ERMU has implemented a 3% annual increase from 2015 - 2019, and a 0% increase in 2020. Chair Dietz proposed spreading the increase across the next two years. Ms. Slominski commented that with no rate increase the previous year, the proposed increase would be in line with trends. Commissioner Stewart added that the rate study completed by Dave Berg suggested raising the WAC fee so it would better represent the true cost of accessing the water system and to avoid forcing other customers to absorb the cost. Commissioner Bell shared his concern about the practice of making up ground with a larger rate increase following a 0% increase. Commissioner Nadeau expressed his belief that 6% would be a challenging increase. Chair Dietz provided background that the City is projecting a 3.5% increase for the Sewer Access Charge in 2021. Commissioner Stewart asked the Commission if they would consider a 4-4.5% increase to make up part of the difference. There was discussion. Chair Dietz stated that 4% would be the maximum increase he would vote for. As part of the governance agenda requirements, Ms. Slominski asked the Commission to provide topics they would like to communicate to stakeholders regarding the 2021 rates once they areapproved. Recommended topics included: the importance of providing low rates to customers during a challenging year, how effective accounting and budget management were key elements, that a rate reduction in 2019 and a 0% increase in 2020 means ERMU is holding its reduced rate in 2021, and provider to Minnesota Municipal Power Agency helped make it possible. Elk River Municipal Utilities Commission Meeting Minutes November 10, 2020 Page 3 31