4.1. ERMUSR 10-11-2011 - Laserfiche WebLink

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Elk River .= Municipal Utilities 13069 Orono Parkway • P.O. Box 430 Elk River, MN 55330-0430 UTILITIES COMMISSION MEETING PDWpEBEB B1 A,~'UR~ P ow [aEO Tu S=^= Phone: 763.441.2020 Fax: 763.441.8099 TO: FROM: Elk River Municipal Utilities Commission Troy Adams, P.E. -Utilities Director John Dietz -Chair Daryl Thompson -Vice Chair Al Nadeau -Trustee MEETING DATE: AGENDA ITEM NUMBER: October 11, 2011 4.1 SUBJECT: Power Su ply Options /Resource Planning Update BACKGROUND: [n September 2008, Connexus Energy terminated the ] 0-year rolling "all requirements" power contract with Elk River Municipad Utilities. In April 2010, the Utilities Commission authorized entering into "Phase 1" of a resource planning study with a coalition which includes Central Minnesota Municipal Power Agency (CMMPA) as a participant. In September 2010, the Utilities Commission authorized entering into "Phase 2" of a resource planning study which includes the release of a Request For Proposal (RFP). The RFP was issued on November 15, 2010. In May 2011, the Utilities Commission authorized entering into "Phase 2b" of the resource planning study which will include risk assessment of the proposals. DISCUSSION: As things progress with CMMPA and the Resource Planning Coalition, other opportunities have presented themselves and other opportunities still need to be explored to do our due diligence in our efforts to secure a future wholesale power provider. In the process of searching for ERMU's future, there is a need to understand what we currently have and what the big picture differences are between the options. The option of renegotiating our current all requirements power contract with Connexus/Great River Energy (GRE) is still a relatively easy solution. The advantages of this option are the simplicity and relatively decision-free nature of the all-requirement type contract and no transmission interconnect issues result from the renegotiation. There are significant disadvantages too. The renegotiation of this contract will focus on limiting ERMU's legal right to acquire service territory within the corporate boundaries of the City of Elk River. The relation of this type of contract would be that of customer and power supplier, meaning ERMU would be a customer and not a "member". Elk River Municipal Utilities would not have any local control to influence or direct the decisions made by Connexus or GRE. When ERMU's and Connexus' and GRE's needs align and the wholesale power rates are good, this is would be a great situation to be in. When our needs do not align or the wholesale power rates are high, ERMU would be trapped with no options to correct the situation. Basically ERMU would be along for the ride.