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Elk River- <br />Municipal Utilities <br />13069 Orono Parkway • p.0. Box 430 <br />Elk River, MN 55330-0430 <br />PONEAEO BI <br />~~~V~~ <br />p~•.r=oFn To Soave <br />Pho~e:763.4412020 <br />Fax: 763.441.8099 <br />UTILITIES COMMISSION MEETING <br />TO: <br />Elk River Municipal Utilities Commission <br />John Dietz -Chair <br />Daryl Thompson -Vice Chair <br />Al Nadeau -Trustee <br />MEETING DATE: <br />October 11 20] 1 <br />SUBJECT: <br />2012 Expense and Conservation <br />FROM: <br />Troy Adams, P.E. -Utilities Director <br />AGENDA ITEM NUMBER: <br />5.3 <br />BACKGROUND: <br />In preparation for submittal in November, staff continues to work through the 2012 budget <br />process. <br />DISCUSSION: <br />Electric Denartment Expense Budeet <br />Year to date, wholesale power costs makes up approximately 74% of operating revenue. <br />Ultimately, the wholesale rates set by Great River Energy have an enormous impact on <br />ERMU's rates. GRE is still in the process of finalizing their 2012 wholesale power rates. <br />Through discussions, the preliminary numbers indicate a wholesale power cost increase to <br />ERMU of 14%. This is a very preliminary number as GRE is looking to reduce this number. <br />The final GRE board approval of wholesale power rates may be delayed this year due to the <br />budget cutting process. This may delay finalization of 2012 ERMU rates and budget. It is <br />projected that the GRE rates will be approved in early December. Because of this, it is not <br />expected that ERMU will be able to make final budget approval until the December <br />Commission meeting. <br />Water Denartment Expense Budeet <br />The water rate analysis conducted in spring of 2010 established a cash flow plan that results in <br />the rates remaining unchanged for 2012. The 2012 forecast for water sales is slightly down <br />and the connections are slightly up. There is also the continued revenue from the recent water <br />tower antenna space leases. <br />