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Elk River~~ <br />Municipal Utiliries <br />13069 Orono Parkway • P.O. Box 430 <br />Elk River, MN 55330-0430 <br />UTILITIES COMMISSION MEETING <br />Phone: 763.441.2020 <br />Fax: 763.441.8099 <br />www. elkrive rtilities. com <br />TO: FROM: <br />Elk River Municipal Utilities Commission Troy Adams, P.E. -Utilities Director <br />John Dietz -Chair <br />Daryl Thompson -Vice Chair <br />AI Nadeau -Trustee <br />MEETING DATE: AGENDA ITEM NUMBER: <br />A ril 10, 2012 3.4 <br />SUBJECT: <br />Capacity Credit Agreement Notice of Termination Extension <br />BACKGROUND: <br />Included in our current interconnection agreement with United Power Association (UPA), now <br />Great River Energy (GRE), is a power transaction agreement to purchase the generating capacity <br />from the ERMU's Diesel Power Plant. This power transaction agreement has been modified <br />since the original agreement, most recently in 2003. The revisions to the agreement occurred on <br />October 31, 2003. These revisions established the agreement to be on an "evergreen" basis with <br />an October 31 termination date and an April 1 termination notice date. The agreement <br />established the capacity credit at $2.75/kW month. Typically our agreement with GRE results in <br />capacity credit payments of approximately $350,000 annually. <br />DISCUSSION: <br />On March 28, ERMU received notice that GRE wanted to reevaluate the current agreement's <br />fixed capacity credit. Because of the April 1 termination notice deadline, a 60 day extension to <br />the deadline was agreed upon by both parties. The extension will allow ERMU and GRE to <br />renegotiate the terms of the agreement within the 60 day extension without either party losing <br />their ability to provide notice of termination for next year. A 60 day extension in the termination <br />date was also agreed upon. This extension guazantees the payments through the calendar year <br />regardless of the results of the agreement negotiation. On March 29, ERMU and GRE executive <br />officials executed the Capacity Credit Agreement Notice of Termination Extension letter. <br />ACTION REQUESTED: <br />Staff recommends the Commission receive the executed Capacity Credit Agreement Notice of <br />Termination Extension letter. <br />ATTACHMENTS: <br />Capacity Credit Agreement Notice of Termination Extension Letter <br />PONEREB BI <br />~A~`Ut~E <br />P OWFRE~ TO $E0.VE <br />