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Mr. Hanson invited the Commission's feedback on whether they were interested in <br />approving a reduction and what percentage reduction they were comfortable with <br />accepting. <br />Commissioners emphasized the importance of maintaining consistency across all lease <br />agreements with all three carriers (Verizon, AT&T, T-Mobile). It was noted that staff has <br />worked diligently to standardize terms, such as the 4% annual escalator, and that altering <br />terms for one carrier could set a difficult precedent. <br />The Commission felt that the company's claimed financial burden should not be shifted to <br />the Utilities' consumer -owners, noting the company has publicly reported its intention to <br />distribute dividends to shareholders. <br />Mr. Hanson explained that Verizon is able to terminate its contracts at the end of every <br />five-year renewal cycle without penalty. He added that the next periods start in 2028 and <br />2029 for the respective tower agreements. <br />The consensus of the Commission was to maintain the agreement terms and not <br />renegotiate the existing lease agreements with Verizon. No formal action was requested <br />or taken. Staff will proceed based on this direction. <br />3.2 2026 Annual Business Plan — Budget and Schedule of Rates & Fees <br />Ms. Karpinski presented the final 2026 Annual Business Plan for adoption. The plan <br />incorporates recommendations from the cost of service studies, proposing a 2% total <br />revenue increase for electric (a 7.06% margin), and a 4% rate increase for water (3.38% <br />margin). <br />Based on discussion at the December regular meeting, Commissioner Stewart asked if <br />staff had considered adjusting the water rate tiers. Staff responded that after reviewing <br />neighboring utilities, ERMU's tiers are on the lower end, particularly the threshold <br />between Tier 2 and Tier 3. Mr. Hanson proposed to hold off on tier adjustments for 2026 <br />to avoid compounding the rate increase. <br />In response to a question, Ms. Youngs explained that most high -water -bill inquiries come <br />from new homeowners unfamiliar with their irrigation systems. She added that the <br />ERMU's new Advanced Metering Infrastructure helps proactively notify customers of <br />continuous water flow issues to help reduce unnecessary usage. <br />Moved by Commissioner Larson -Vito and seconded by Commissioner Stewart to adopt <br />Resolution 25-10 adopting the 2026 Annual Business Plan. Motion carried 5-0 <br />Elk River Municipal Utilities Commission Meeting Minutes <br />December 18, 2025 <br />Page 3 <br />