2. SR 06-29-2009 - Laserfiche WebLink

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Connexus and their rates. This impact could be negative because the ERMU load may be required to be served by "new generation" rather than "existing plant" in terms of cost recovery. 4. The City and the ERMU rate payers would lose the benefits of municipal utility ownership (see outlined benefits of a municipal electric utility below). 5. Best/worst case scenario a. Best =low rates, no City responsibility. b. Worst =high rates, poor reliabilitylresponse time, no local control, loss revenue of Payment in lieu of taxes (PILOT), donated electricity and labor. To truly weigh the options and per Council direction, consideration to the sale of the electric utility may help to compare the risks/rewards of entering into the any of the aforementioned power supply scenarios. Outlined for your consideration are some benefits and disadvantages of a municipal owned electric utility: Benefits of a Municipal Electric Utility 1. The utility is tax exempt and so there is no tax revenue stream to the city on our assets. Currently, the City receives 3% of the Elk River electric revenues (Otsego, Dayton, and Big Lake township have never been included) in the form of a payment in lieu of taxes (PILOT). The revenues and related PILOT for the last ten years are attached. The project PILOT for 2009 is $611,000. It is important to note that this contribution grows with the electric utility. The two data centers located in Elk River are not at full capacity yet and a conservative estimate of their addition contribution to the annual 3% revenue contribution after reaching projected capacity is potentially $13 8,000 (refer to attached spreadsheet). If the utility were taxed on our assets, the county and state estimate that the amount provided to the City would be $264,832 (see attached calculation for reference). It is important to note that neither the county nor the state felt that they could confirm these numbers as absolute but it was their best estimate at this time. 2. Donated electricity and labor a. The street lights maintained by the utility total 947 and have a cost of approximately $15,750 per month, $189,000 per year. These are not metered for electric use, but have the electric use component built into the monthly charge that also includes the maintenance of the bulbs and fixtures. May 2009 cost breakdown is included for reference. In addition, there are numerous parks, sirens, buildings, and signal lights that are metered and so the actual usage is recorded as donated electricity. A listing of these accounts is provided for your reference. This amounts to approximately $225,000 per year. b. There is also donated labor with such things as hanging banners and tree trimming. 3. There is the opportunity for equipment sharing between departments. 4. The utility takes its vehicles to the City garage for maintenance and spends approximately $6,000 annually for this service. There are some services related to the booms on the large utility trucks that cannot be provided at the garage and so those are taken elsewhere currently. This may not be a source of revenue for the City because the work is not billed at a rate to generate profit; however, this is money spent supporting jobs within the City that would otherwise be spent elsewhere. Also because of economy of scale, by having more work to spread fixed and overhead costs over, there is a potential benefit to the City.