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Elk River Municipal Utilities <br />Elk River, Minnesota <br />Notes to the Financial Statements <br />December 31, 2021 <br /> <br />Note 4: Other Information (Continued) <br />C.Commitments <br />The Utilities entered into an agreement in 2007 with Central Minnesota Municipal Power Agency (CMMPA) to acquire an <br />interest in the CAPX Initiative Brookings Project, a power transmission line in Minnesota. The project is a 250-mile, 345 kV <br />AC transmission line with a rating of 2,300 MW, between Brookings, South Dakota, and the Southeast Twin Cities. In 2011 <br />there was increased opportunity for investment, and subsequent agreements provide the Utilities with an ownership share <br />of $5.6 million or 18.89 percent. Revenues have been less than originally projected due to the decrease in Rate of Return <br />(ROE) issued by FERC. The original ROE 12.38% has been reduced to 10.52%. The current return of 10.52% on this <br />investment through CMMPA is designed to provide approximately $80K annually over the 40-year project life. With <br />majority of the distribution once the bonds are paid off. The projected under recovery in 2021 is estimated to be $59K. <br />The bond obligations are satisfied first, distribution to participants is directly affected by under recovery. The under <br />recovery is rolled forward under the true up. However, the under recovery in 2021 (approximately $59K) would be included <br />in the revenue requirements in 2023. The transmission payments for 2021 were $24,048, all of which was a receivable at <br />December 31, 2021. <br />Note 5: COVID-19 <br />- <br />March 11, 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure <br />globally. In response to the pandemic, the State of Minnesota has issued stay-at-home orders and other measures aimed <br />at slowing the spread of the coronavirus. <br />The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. Due to the rapid development <br />and fluidity of this situation, the Utilities cannot determine the ultimate impact that the COVID-19 pandemic will have on <br />its financial condition, liquidity, and future revenue collection, and therefore any prediction as to the ultimate impact on <br />the financial condition, liquidity, and future results of its revenue collections is uncertain. <br />47 <br />119 <br />