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i <br /> Elk River <br /> Municipal Utilities <br /> 322 King Avenue phone: 763.441.2020 <br /> Elk River,MN 55330 Fax:763.441.8099 <br /> April 30, 2003 <br /> To: Elk River Municipal Utilities Commission <br /> John Dietz <br /> Jerry Takle <br /> James Tralle <br /> From: Bryan C. Adams <br /> Subject: Finance Projections <br /> Our community continues a steady and fast growth. The Elk River Municipal Utilities <br /> needs adequate financial resources to sustain this growth. Staff at budget time in the fall <br /> and after the annual audit in the spring, updates the income statement projection for the <br /> electric and water department. These income statement projection looks at a 10 year <br /> window and projects if we have enough revenue to support our expenses and capital <br /> requirements while maintaining adequate cash reserves. Enclosed is the following <br /> information for your review. <br /> a) Electric income statement projections. <br /> b) Water income statement projections. <br /> c) 10 year capital project projections. <br /> The critical assumptions and conclusions for each department are as follows: <br /> Electric Department <br /> 1) Sales growth in KWH (line 4) increase at 5%. This is on the conservative <br /> side. <br /> 2) The connect fees (line 7 & 8) reflect a slight slowdown for 2003 & 2004, but <br /> increase thereafter. <br /> 3) Retail electric rates (line 11) and wholesale power costs (line 21) remain <br /> constant. As power costs increase, the total dollar amount will be passed on as <br /> a retail rate increase but the combined effect is zero. <br /> 4) Rate change (line 13) reflects the difference between the whole rate change <br /> and retail rate change. <br />