Laserfiche WebLink
5.02 Electric and Water Cost of Service and Rate Design Study <br />Mr. Hanson introduced Dave Berg and distributed a handout to the Commission outlining the <br />preliminary findings from Mr. Berg's rate study analysis. His review replaced the Governance <br />agenda item, Annual Business Plan — Review Proposed 2026 Rates and Other Revenue. <br />Mr. Berg provided the Commission with a comprehensive overview of the electric and water <br />rate structures ahead of the final reports. <br />Highlights from the electric utility analysis included: <br />• Projections assumed no rate changes but a full pass -through of the Minnesota Municipal <br />Power Agency's (MMPA) wholesale energy adjustment clause (EAC) as a power cost <br />adjustment (PCA) to customers. <br />• The current rate structure was found to be logical and well aligned with MMPA <br />wholesale costs. <br />• A key discussion point was the need to increase reserve funds. <br />• The final report will include a four-year rate plan that incorporates anticipated <br />wholesale rate increases from MMPA. <br />Mr. Hanson clarified for the Commission that staff is proposing a 50% pass -through of the EAC <br />to reduce the PCA and to modify the published rate as needed for the remaining 50% of the <br />EAC. <br />Highlights from the water utility analysis include: <br />• The water utility is in a strong financial position; however, discussions regarding reserve <br />funds may impact rates. <br />The preliminary analysis did not include growth in water. <br />The existing tiered rate structure for residential customers was affirmed as effective for <br />encouraging conservation and reflecting the high fixed costs of infrastructure. <br />A final recommendation for both electric and water rates will be presented to the <br />Commission in December. <br />5.03 Payment in Lieu of Taxes to City of Elk River <br />Mr. Hanson provided a detailed review of his memo outlining the adjustments made to <br />the Payment in Lieu of Taxes to the City of Elk River (PILOT) policy following feedback <br />from the October commission meeting. <br />He distributed a revised, redlined PILOT policy to the Commission, which incorporated <br />Commissioner Stewart's request for additional clarifying language related to a <br />catastrophic event. <br />Elk River Municipal Utilities Commission Meeting Minutes <br />November 12, 2025 <br />Page 3 <br />