5.4. ERMUSR 10-14-2008 - Laserfiche WebLink

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~i Elk River Municipal Utilities 13069 Orono Parkway • P.O. Box 430 Elk River, MN 55330-0430 September 29, 2008 To: Elk River Municipal Utilities Commission Jerry Takle John Dietz Jerry Gumphrey From: Bryan Adams Subject: All Requirements Power Purchase Agreement Phone: 763.441.2020 Fax: 763.441.8099 Since 1990, Elk River Municipal Utilities and Anoka Electric Company, now Connexus Energy has had an all requirements contract where Connexus Energy through Great River Energy supplies all of our power and energy needs. This agreement included a termination clause allowing either party to give 120 month notice to terminate this agreement. Per the attached letter, Connexus Energy has elected to terminate this agreement to be effective September 30, 2018. This is purely a financial decision on Great River Energy's and Connexus' part. They have indicated they can make more money selling power and energy on the open market than selling it to us. If this is true, this is a strategy to lower costs to their members. Due to the difficulty in constructing new power plant in today's uncertain environment, shedding our load buy's Great River Energy possibly more time to decide what type of generation to build. Also, because Great River Energy's upper management no longer lives and works in Elk River, the community tie is gone. We have the following options: 1) Renegotiate our contract with Great River Energy at a higher rate which they are willing to do. This is possibly the easiest solution but possibly not in Elk River's best interest in the king term. Because we do not have an equity share of Great River Energy we will not have any influence in future rates and rate design. 2) Secure another power and energy contract from another entity such as a municipal power agency, private company like Excel. or another generation and transmission co-op. Availability of power and energy and at what price is unknown. Our long term contract will be used as equity to secure loans to construct the necessary generation and transmission facilities.