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�i <br /> EOty lk Request for Action <br /> River <br /> To Item Number <br /> Mayor and City Council 6.4 <br /> Agenda Section Meeting Date Prepared by <br /> Presentations, Awards April 20, 2015 Troy Adams, P.E. —ERMU General Manager <br /> and Recognition <br /> Item Description Reviewed by <br /> Electric Service Territory Update Cal Portner, City Administrator <br /> Reviewed by <br /> Action Requested <br /> No action requested. <br /> Background/Discussion <br /> In 1974, the Minnesota legislature established a municipal utility's right to serve their city by acquiring <br /> electrical service territory as the city grew. This historic legislation was supported by both the municipal <br /> utilities as well as the cooperative electric utilities. In 1977, the city and Elk River Township consolidated <br /> to form the City of Elk River. At that time, Elk River Municipal Utilities (ERMU) did not grow with the <br /> new city. In 1991, ERMU entered into a 20-year orderly electric service territory acquisition plan with <br /> Connexus Energy for a portion of what was previously the township. The vision of past ERMU <br /> governance and staff to invest in territory acquisition helped to build the foundation for a reliably robust <br /> and fiscally sound utility. <br /> After the 20-year orderly electric service territory acquisition was completed in 2011, Connexus Energy <br /> still served approximately 12 square miles and 2,000 customers within the City of Elk River. On August <br /> 6, 2012, ERMU requested City Council support, through adoption of a resolution, outlining support for <br /> electric service territory acquisition from Connexus Energy for the remaining service territory. The City <br /> Council unanimously passed the resolution. <br /> After over three years of negotiations, ERMU and Connexus have come to agreement on terms for <br /> service territory transfer without the need for litigation. The two parties did a joint analysis on <br /> reintegration relating to the acquisition and have established a phased approached dividing the service <br /> territory into eight areas. The first area is east down TH10 past the TH169/101 interchange from <br /> County Road 12 south to 165 'Avenue NW. This area will be acquired in fall of 2015. <br /> Financial Impact <br /> There is no direct cost to the city. The initial financial benefits include donation of electricity for non- <br /> enterprise city-owned facilities within the area and maintenance of city-owned streetlights within the area. <br /> Delayed financial benefits include the payment in lieu of taxes after the loss of revenue payments are <br /> completed on the area to Connexus Energy. Immediate non-financial impacts include the ability to <br /> provide unity of services for all Elk River. <br /> Attachments <br /> ■ None <br /> p 0 W I R I I a <br /> ATURE <br />