5.3. SR 03-14-2011 - Laserfiche WebLink

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r~/ Elk River REQUEST FOR ACTION 'r0 ITEM NUMBER Ci Council and Utilities Commission 5.3. AGENDA SECTION MEETING DATE PREPARED BY Worksession March 14, 2011 Troy Adams, P.E. - ERMU Director of O erations ITEM DESCRIPTION REVIEWED By Elk River Municipal Utilities' CAPX2020 Brooking-Twin Cities Transmission Project Investment Options REVIEWED BY ACTION REQUESTED Review of the option for Elk River Municipal Utilities (ERMU) to increase investment allocation into CAPX2020 Brookings-Twin Cities Transmission Project with Midwest Municipal Transmission Group (MMTG) through Central Minnesota Municipal Power Agency (CMMPA). Per CMMPA bonding requirements, Utilities Commission resolution and City Council resolution is required for either the original investment amount or the optional increased investment amount. Decision by the Utilities Commission and the City Council as to whether or not to increase the investment allocation amount will need to be made at the March 14`h joint City Council and Utilities Commission meeting. Staff requests the Utilities Commission and City Council to each adopt the attached respective resolutions for the CAPX2020 Brooking Project for the investment amount approved. The resolutions will need to be adopted for a minimum of the original investment amount approved in 2007. BACKGROUND/DISCUSSION In May 2006, the Utilities Commission authorized joining MMTG to explore the potential to obtain ownership in the transmission system. In February 2007, ERMU entered into an agreement to participate through CMMPA in the CAPX2020 Brooking-Twin Cities Transmission Project. This represents ERMU's direction to own instead of rent. This investrnent provides revenue to mitigate transmission costs and help to lower ERMU electric rates. FINANCIAL IMPACT The original $1,993,134 investment in direct costs that ERMU is currently under agreement for results in $2,246,896 in total debt supported. The return on this investment through the CMMPA bonding is designed to provide approximately $45,770 annually over the 40 year project life. The option for increasing the investment allocation would have a maximum direct cost of $6,265,278 and result in $7,140,953 in maximum total debt supported. The return on this increased allocation investment through CMMPA bonding is designed to provide approximately $124,102 annually over the 40 year project life. A representative from CMMPA will be available to answer questions for the City Council and Utilities Commission at the joint meeting.