5.1. ERMUSR 10-12-2010 - Laserfiche WebLink

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Elk River -~-- 1VlunicipalUtilities 13069 Orono Parkway • P.O. Box 430 Elk River, MN 55330-0430 UTILITIES COMMISSION MEETING Phone: 7(,3. Fax: ?63.4 Tu: FROM: I Elk River Municipal Utilities Commission Troy Adams, P.E. - Director of Operations John Dietz, Chair Jerry Gumphrey, Vice Chair Daryl Thom son, Trustee MEETING DATE: AGENDA ITEM NUMBER: October 12, 2010 5.1 (SUBJECT: 2011 and CIP BACKGROUND: In preparation for submittal in November, staff continues to work through the 2011 budget process. llISCUSSION: Electric Department Expense Budget "The wholesale power costs makes up approximately 73.9% of operating revenue. Great River Energy is still in the process of finalizing their 2011 wholesale power rates. Through discussions, the preliminary numbers indicate a wholesale power cost increase of 4%. This is a very preliminary number as GRE is going through an extensive process of budget cuts to be able to achieve this number. The final board approval of wholesale power rates from GRE may be delayed this year due to the budget cutting process. This may delay finalization of 2011 ERMU rates and budget. It is projected that the GRE rates will be approved in early December. So far this year, electric sales reflect approximately a 4% growth for residential, 4% growth for small commercial, and a 1.5% reduction for industrial (excluding data centers). Looking at the recent trends in energy usage and weather normalizing, the 2011 budget reflects mostly a static change in consumption for these groups. Connections are also expected to remain stagnant. The overall approach for this year's budget was to control costs and pass on the wholesale power cost rate increases. Here are some of the early assumptions used to develop the 2011 electric department expense budget: