3.0 ERMUSR 07-09-2007 - Laserfiche WebLink

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Page 5 Regular meeting of the Elk River Municipal Utilities Commission June 12, 2007 Between the developer and builder, we will receive $1220 to $1320 per living unit. Depending upon how fast the development is built, it may take years to collect the $800 from the builder. In an effort to satisfy ourselves and the developer that our fees are appropriate, we did an estimate of costs versus connect fees. Besides the initial electric distribution expense in the development, there are also costs to get the infrastructure to the location and to make sure the capacity is there to support it. In the case of this new addition, revenues up front are $420 or $520 per living unit depending on water and sewer availability. The remaining $800 per living unit is not collected until the lot is built on. Elk River Municipal Utilities up front distribution costs are $1648 per living unit plus another $614 per living unit in feeder and substation costs. The difference of $2262 expense versus $1220 per living unit is socialized in electric rates. For commercial accounts, we collect 50% of the distribution expense, but electric use revenue is being received in a few months and not potentially years. MMUA occasionally does surveys of other municipals on line extension and connect fees. The 2006 Line Extension Survey was reviewed. From this survey we can conclude that our connect fees are more aggressive than most. For a community that doesn't grow or grows very little, the connect fees are insignificant. In our case, they make up a significant portion of our capital budget. If we reduce the connect fees, we will need to increase electric rates. This was informational only to verify ERMU was being fair in requiring connect fees up front versus through electric rates. 6.4 Review Suree Protector Program A number of years ago, we started marketing Leviton surge protectors to help protect ERMU customers' electronic equipment from lightning damage. Our marketing effort was never really successful. Staff wishes to discontinue marketing these products. We do have about a dozen customers with the whole house surge protectors. These are installed at the meter base and monitored and replaced if needed for $4.50 per month. None to date have failed. Some customers have called and inquired about purchasing this product to avoid the monthly fee. The customers have basically paid for the device through the monthly fee. Because we installed these devices, we have some ongoing liability if we discontinue this program. One solution is to give these devices to the customer and forgo the monthly charge if they sign an indemnity agreement. The proposed agreement was reviewed. Jerry Gumphrey moved to approve the release of the monthly cost of the whole house surge protector providing the homeowner signs the Indemnity Agreement. James Tralle seconded the motion. Motion carried 3-0.