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Elk River <br /> Municipal Utilities UTILITIES COMMISSION MEETING <br /> TO: FROM: <br /> Elk River Municipal Utilities Commission Troy Adams,P.E.—General Manager <br /> John Dietz—Chair <br /> Al Nadeau—Vice Chair <br /> Daryl Thompson—Trustee <br /> MEETING DATE: AGENDA ITEM NUMBER: <br /> December 8, 2015 4.3 <br /> SUBJECT: <br /> 2016 Budget <br /> BACKGROUND: <br /> In November the preliminary 2016 budget and rates were presented to the Commission. Based on <br /> feedback and minor changes due to finalizing of projects and expense,the proposed 2016 budget is <br /> as follows. <br /> DISCUSSION: <br /> Electric Department Revenue and Expense Budget <br /> Wholesale power costs account for 72%of operating expenses for 2016. The rates set by Great <br /> River Energy(GRE)have an enormous impact on ERMU's rates. The 2016 wholesale power rate <br /> increase from GRE results in a 2%impact to ERMU. The territory acquisition of Area 1 revenue <br /> and expense impacts were estimated with help of Consultant David Berg(formerly with SAIC and <br /> RW Beck Consulting companies). The margin from the acquisition provides significant additional <br /> revenue to help offset the significant capital construction projects necessary to upgrade the <br /> acquired infrastructure, and hold down rate increases. The proposed 2016 budget and rates result in <br /> electric fund revenue of$36,297,457 which includes a projected 3.42%margin and a projected <br /> $255,394 net to reserves with a 0%rate increase for our customers. <br /> Notable items in the electric budget for 2016 are: <br /> • 2.75%COLA for all four pay plan groups; <br /> • 1.0%Market adjustment for the Lineworkers pay plan group; <br /> • Continued high production and low maintenance for the LFG plant; <br /> • An estimate of 1%growth in usage; <br /> • NISC in-house server implementation costs; <br /> • Addition of new GIS/Mapping Technician position(budgeted for 2015 and delayed); <br /> • Creation of Electrician/Electrical Technician position(to compensate for current license <br /> utilized by ERMU,no additional staff) <br /> • Planned delay of linetruck purchases; <br /> rOIEAE9 or <br /> Page 1 of 3 NA E <br /> Reliable PublA <br /> � <br /> Power Provider P O W E a E D T o S E a v E <br /> 63 <br />