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______________________________________________________________________________ <br /> <br />Page 1 of 3 <br /> <br /> <br /> <br /> <br />COMMISSION POLICY <br /> <br />Section: Category: <br />Governance Governance Policies <br />Policy Reference: Policy Title: <br />G.2a1 Payment in Lieu of Taxes and Other <br />Donations to the City of Elk River <br /> <br />PURPOSE: <br /> <br />The success of ERMU is linked with the success of our community. And the success of our <br />community is linked with the operation of our city government and ERMU. ERMU was <br />purchased by the City of Elk River in 1945 and separate governance was created per State <br />Statute in 1947. Although governed separately, ERMU is still an important component of our <br />local government and our city services. <br /> <br />It is typical for a municipal utility to provide a Payment in Lieu of Taxes (PILOT) and other <br />donations to their city, regardless of a separation of governance. Although typical, this <br />contribution should never inhibit ERMU’s ability to make repayment on debt, cause ERMU to <br />become non-competitive, or inhibit needed investment in personnel or infrastructure which may <br />hurt ERMU’s ability to meet the needs of their customers. For these reasons the PILOT and other <br />donations should be reviewed at least once every five (5) years by the ERMU Commission. <br /> <br />POLICY: <br /> <br />The PILOT and other donations to the City of Elk River shall be as follows: <br /> <br />1. Payment in Lieu of Taxes (PILOT); Electric – The electric PILOT transfer from Elk River <br />Municipal Utilities to the City of Elk River shall be four five percent (45%) of the revenues <br />generated by ERMU’s electric customers, except customers qualifying for the Transmission <br />Transformed Service rate, within the corporate boundaries of the City of Elk River. <br /> <br />For the customers that qualify for the Transmission Transformed Service rate, the PILOT <br />transfer from ERMU to the City of Elk River shall be four five percent (45%) of the margin <br />remaining from the evenly split charge per kWh to cover dispatching, billing, and <br />administrative costs incurred by the wholesale power provider and ERMU. <br /> <br />Should a catastrophic event occur, the five percent (5%) revenue transfer shall not be paid on <br />the increased energy adjustment clause (EAC) from our power supplier, Minnesota <br />84