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<br /> <br /> <br />Page 2 of 2 <br /> <br /> <br />revenue has not changed significantly over the past three years, the contribution has grown. This <br />is a direct relationship and supports the philosophy that there is a symbiotic relationship between <br />ERMU and the City. Our success is linked. <br /> <br /> <br />As required by policy, a review of ERMU’s contributions to the City of Elk River is scheduled <br />for 2013. The policy as revised in 2008 does not accurately reflect the donations currently made <br />to the city. Attached is the policy with revisions noted in red reflecting current contributions. <br />Staff recommends continuing with the status quo and updating our policy to reflect the current <br />practice. <br /> <br />Related to our contributions to the City of Elk River, ERMU is working with Connexus Energy <br />on an electric service territory acquisition which could include approximately 2000 customers <br />within 12 square miles in the corporate boundaries of Elk River. It is proposed for discussion <br />that the PILOT associated with these potential future ERMU customers be handled differently to <br />allow ERMU to be able to pay for the acquisition costs faster. In lieu of paying the 3% PILOT, <br />ERMU could keep the City of Elk River whole by paying a reduced PILOT for these customers <br />that would be equivalent to what would have been paid by Connexus in city taxes. This would <br />allow ERMU to pay for the acquisition faster. After the proposed service territory acquisition is <br />paid in full to Connexus, ERMU could then start paying the full PILOT per our policy. For the <br />City this would not cause a reduction in revenues; it would be a short term delay in additional <br />contributions, and a long term gain. When it is all complete, the City will receive substantially <br />more from ERMU’s PILOT than taxes from Connexus, so it is in the best interest of the City of <br />Elk River to help ERMU with the potential electric service territory acquisition. <br /> <br />ACTION REQUESTED: <br />Staff recommends the Commission adopt policy revisions to “ERMU Policy 8.13 – Payment in <br />Lieu of Taxes (PILOT) and Other Donations to the City of Elk River.” <br /> <br />ATTACHMENTS: <br /> Proposed revision to ERMU Policy 8.13 – Payment in Lieu of Taxes (PILOT) and Other <br />Donations to the City of Elk River <br /> APPA article - Payments and Contributions by Public Power Distribution Systems To <br />State and Local Governments, 2010 Data – February 2012 <br /> <br />ERMU Contributions to the City of Elk River  <br />  2012 2011 2010  <br />Electric Operating Revenues $      30,258,690 $      28,583,986 $    26,792,562  <br />Payment in Lieu of Taxes (PILOT) $            753,553 $           711,415 $          657,086  <br />Donated Electricity and Labor $            481,907 $           474,934 $          434,415  <br />Total Contribution ($) $        1,235,460 $        1,186,349 $       1,091,502  <br />Total Contribution (%) 4.08% 4.15% 4.07%  <br />Table 1  <br />46