5.3. ERMUSR 11-18-2014 - Laserfiche WebLink

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Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission Troy Adams, P.E.—General Manager John Dietz—Chair Al Nadeau—Vice Chair Daryl Thompson—Trustee MEETING DATE: AGENDA ITEM NUMBER: November 18, 2014 5.3 SUBJECT: 2015 Budget: Rates and Review BACKGROUND: In preparation for budget approval in December, staff continues to work through the 2015 budget process. Based on the preliminary rate increase notifications and projected expense increases and capital expenditures, a preliminary balanced budget has been drafted. DISCUSSION: Electric Department Budget Wholesale power costs makes up a considerable portion of the required operating revenue, approximately 70% for 2015, and the wholesale rates set by Great River Energy(GRE)have an enormous impact on ERMU's rates. The 2015 wholesale power rates have been approved by the GRE board which results in a projected 3% impact to ERMU. This increase in wholesale power costs are passed through in ERMU's retail rates. The proposed ERMU budget reflects a projected 3% increase. There are still a number of variables to be analyzed prior to the budget being approved in December. Staff is working to get accurate growth projections from our larger commercial customers as well as new residential growth. And as in the past, an analysis of the proposed rate increase will be done for a number of usage patterns within the different rate classes. This analysis will be provided to the Commission in December with the proposed budget. Notable items in the electric budget: • Continued current efficiency with the LFG plant in terms of higher production and lower maintenance • An estimate of 1%growth in usage • ERMU's 100th year anniversary in 2015 • New NISC software and implementation costs • Consulting for Territory Acquisition POWERED BY Page 1 of 3 NALURE Reliable Public Power Provider P O W E R E D T O S E R V E 67