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<br />Elk River <br />Municipal Utilities <br /> <br />13069 Orono Parkway <br />Elk River, MN 55330 <br /> <br /> <br />phone: 763.441.2020 <br />Fax: 763.441.8099 <br /> <br />February 13,2007 <br /> <br />To: <br /> <br />Elk River Municipal Utilities Commission <br />Jerry Takle <br />Jim Tralle <br />Jerry Gumphrey <br /> <br />Elk River City Council <br />Stephanie Klinzing <br />Larry Farber <br />Jerry Gumphrey <br />Paul Motin <br />Nick Zerwas <br /> <br />From: Bryan Adams <br /> <br />Subject: <br /> <br />MMTG Membership and CapX 2020 Investment <br /> <br />The CapX 2020 initiative is a group of electric utilities joining together to identify and <br />construct necessary generation and transmission facilities to meet Minnesota's needs for <br />the year 2020. In short, 6300 MW of new generation capacity and 3300 miles of <br />additional transmission facilities will be required. Transmission costs alone are estimated <br />to be $2.7 billion. Generation and transmission rates will rise to pay for these additional <br />facilities. Elk River Municipal Utilities' charge is to keep our rates as lowas possible for <br />our customers. Municipal utilities in general own very little transmission and tend to rent <br />their transmission needs and therefore are very susceptible to transmission rate increases. <br />This is Elk River's case. One way to reduce transmission costs is to own vs. rent. <br /> <br />In May 2006, the Elk River Municipal Utilities Commission authorized joining Midwest <br />Municipal Transmission Group (MMTG) as a vehicle to explore the potential to buy into <br />the transmission system. Due to the successful negotiating efforts ofMMTG, we now <br />have the opportunity of buying into the transmission system. The first transmission <br />project is a 345 kv line from Brookings to Twin Cities at a cost of approximately $600 <br />million. Elk River's load share is approximately $2 million. <br /> <br />CapX 2020 participants include Wisconsin Public Power Inc. (WPPI), Central Minnesota <br />Municipal Power Agency (CMMP A), Missouri River Energy Services (MRES), <br />Minnesota Power (MP), Otter Tail Power (OTP), Xcel Energy (Xcel), Great River <br />Energy (GRE), Dairyland Power Cooperative (DPC), the City of Rochester (RPU), <br />Southern Minnesota Municipal Power Agency (SMMP A), and Missouri Basin Municipal <br />Power Agency (MBMPA). CMMPA will be executing the agreement on behalf of <br />MMTG and CMMP A members that are participating in the development of the CapX <br />