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<br />amount of variable rate to fixed rate funding one desires. See the attached <br />sheets. The higher percentage of variable rate financing, the more of a <br />projected savings can be achieved, but also more of a risk. If 100% fixed rate <br />MCMU financing is compared to conventional funding, MCMU would be <br />slightly more expensive. <br />ERMU is recommending $1,000,000 of variable rate and $2,500,000 offixed <br />rate financing. Utility Commissioner & City Councilman Dietz is <br />uncomfortable with any variable rate financing. <br /> <br />3) The electric utility industry continues to be in the midst of change. Due to Elk <br />River's lack of equity in ORE's generation or transmission system, our <br />wholesale electric rate is vulnerable to market forces and wi 11 continue to rise. <br />The way to medicate this for Elk River is to invest in the transmission system <br />if and when possible. This investment will take large sums of money. MCMU <br />provides an alternate source of bonding that may \:ie less expensive. This <br />proposed bonding is a way to try an MCMU fixed and variable rate method. <br />Due to only $1,000,000 being of variable rate, the risk for potential gain or <br />loss would be small. <br /> <br />4) We would be supporting our state organization MMUA. <br />