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<br />Page 3 <br />Regular illeetil1g of tIle Elle River Mlullcipal Utilities COll111ussio11 <br />May 16, 2006 <br /> <br />E. \Vages <br />Staffis proposil1g a 3.57% \vage lllcrease across tIle board. Tins is COl1sidered a illetro <br />average based 011 tIle pre\TiOllS \vage SlU\Tey ta1<el1 fiol1111eigllborulg lltilities 3l1d cooperatives. <br /> <br />Motio11 by Jalnes Tralle to approve tile 3.570/0 \vage increase for all elllplo)!ees. JOml Dietz <br />seconded tIle 1110tio11. Motion carried 3-0. <br /> <br />5.3 Revie\v Co Rd 40 Rebuild Proiect <br />At tile MarcIl 2006 Elk River Mlullcipal Utilities 11leetillg, \ve \vere applised of tile <br />llpCOl11i11g COUllty Road 40 road project. Sherblmle COlUlty received federal fUl1ds to rebllild <br />COllnty Road 40 aIld it appears tIns project \vill start late this year alld be cOlllpleted ll12007. <br />Tlus road project \vill reqllire us to relocate and llpgrade tile overhead electric line. To avoid <br />tearillg up tins l1ew road ill a year or 1\YO, a hl111l( \vater lille SI10l1ld also be illstal1ed \vitll tlns <br />road project. Tile q1lestiol1 no"y is \Vl10 is gOlllg to umd tIns project. This disCllssiol1 \vas <br />tabled lUltil LOli JOl111S011, City Adn1inistrator could be presellt. <br /> <br />6.1 Re\rie\v l\/IIVITG Opportunity <br />As a ll11ullcipal electric utility, GlU" goal is to keep Ollr electric rates as cOIllpetitive as <br />possible. OIle oftlle 011tfa11s of electric illdustly restructurillg is tIle segregatioll of distriblltion, <br />tratlSIlllssioll alld geIleratioll pOrtiOllS of OlU" llldllShy. Tralls1llissioll costs are a COlleenl. WitIl <br />tIle forll1atioll of t:r311S1mSsioll as profit cellters for gelleratioll atld tra1lsllllSsioll COll1paJ.nes <br />alollg "vitIl MISO operatlllg tIle transllllssion alld gel1eratioll infi:astruchlre, and tile pelldillg $3 <br />billion oftraIls1nission cOllStrllctioll due to CAPX 2020, trillls1111Ssio1l costs at"e gOlllg to lise. <br />Ho"v can Elk River protect itself fi"0111 these risulg tratlS11llssioll costs? <br />FERC l1as establislled all apprOXlll1ate 12.4% rehu11 011 eqllity for COlllp31UeS O\Vlllllg <br />h8811S11llSsio11S as a \vay to ellcourage O\V11ership investnlellt. ERlvIU's trallSl11ission taliffto <br />GRE \vill lllclllde tlus 12.4%. Becal1se ERMU is 110t all equity l11ell1ber of GRE, \ve are III <br />danger Ofll0t receivlllg bellefit ofpaylllg lugl1er transnnssio11 rates to Co\'er tile 12.40/0 renInl. <br />If GRE reuuTIs tile 12.4% to its ll1embers III tile fOlTIl of equity paynlellts as Ilas been dOlle III <br />tile past, ERMU \villl10t receive bellefit fioln paylllg higller tl8atlsnussioll rates to cover tIle <br />rehml. If GRE 11ses tIle 12.40/0 reM11 to redllce rates, ERMU ,viII tllen receive tIle bellefit of <br />tIle higller rate. FERC guidelines requu"e tIle retrn1l 011 equity llll1st be used to reduce rates <br />however, GRE is 110t lUlder FERC jurisdictiol1. <br />Prese11tly tIlere are l11aI1Y UnknO\VllS about traI1S11llSsion llild Il0\V it "viII affect ERlvIU. <br />ERMU's ClUTent aITIll1al trans11llssion costs are approXllllately $1,600,000. StaffreC01111ne11ds <br />jOirU11g Midvvest Municipal TrallS11llSsion Grollp (MMTG) as a "vay to l<eep OlU. Opti011S opell <br />lUltil \ve k110\V nl0re. TIns grollp \VOllld illvest in tratlS11lissiol1S and receive a 12.4% rehU1.l. <br />TIle dlles \vould be apprOXlll1ately $12,500 for tile year. <br /> <br />Motioll by JaIl1eS Tralle to apply for 11lell1berslup "vitil NIMTG. Jel1.Y Takle seconded the <br />11l0tiol1. JOI111 Dietz voted 11ae. Motioll caIned 2-1. <br />