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Mr. Mauren presented his memo and opened a discussion on any potential changes or <br />comments on Commission Policy — G.2a1— Payment in Lieu of Taxes (PILOT) and Other <br />Donations to the City of Elk River. <br />Mr. Mauren noted that although PILOT programs are typical among cities with a municipal <br />utility the services provided by ERMU to the City must bring value and should never <br />inhibit ERMU's ability to make repayment on debt, cause ERMU to become non- <br />competitive, or inhibit needed investment in personnel or infrastructure which may hurt <br />ERMU's ability to meet the needs of their customers. <br />Chair Dietz asked for clarification regarding the Transmission Transformed Service Rate. <br />Mr. Hanson explained that this is a Minnesota Municipal Power Association (MMPA) rate <br />structured for very high use sites such as large data centers. Mr. Hanson stated that the <br />developers of such projects would contract directly with MMPA and each business who <br />meets the criteria of this specialized rate would have its own unique contract. Mr. Hanson <br />further explained that ERMU would operate at a loss paying 4% on the use for this level of <br />consumption, therefore the rate was established so that payment is 4% on the margin. <br />Chair Dietz asked if ERMU has ever had a business in its service area that met the <br />Transmission Transformed Service rate criteria. Mr. Hanson replied that it has not. <br />5.0 BUSINESS ACTION <br />5.1 Financial Report —August 2023 <br />Ms. Karpinski presented the August 2023 Financial Report. <br />Chair Dietz asked for confirmation that the significant increase to the interest and <br />dividend income from the prior year is accurate. Ms. Karpinski confirmed it was. <br />Commissioner Stewart asked if the increase was in relation to the federal government <br />increasing interest rates. Ms. Karpinski said it was. <br />Chair Dietz asked if the interest rate change affects only the short-term investments. Ms. <br />Karpinski explained that ERMU books accrued interest based on the market value per the <br />Governmental Accounting Standards Board (GASB). <br />Chair Dietz asked for clarification on the $140K increase to administrative expenses from <br />the prior year. Ms. Karpinski explained the main drivers were office supplies, insurance, <br />and holiday pay with the addition of the Juneteenth holiday. There was also a past <br />unemployment claim that was delayed for an unknown reason. <br />Elk River Municipal Utilities Commission Meeting Minutes <br />October 10, 2023 <br />Page 3 <br />35 <br />