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Elk River <br /> Municipal Utilities UTILITIES COMMISSION MEETING <br /> TO: FROM: <br /> Elk River Municipal Utilities Commission Theresa Slominski—Finance and Office <br /> John Dietz—Chair Manager <br /> Al Nadeau—Vice Chair <br /> Daryl Thompson—Trustee <br /> MEETING DATE: AGENDA ITEM NUMBER: <br /> October 11, 2016 5.2 <br /> SUBJECT: <br /> 2017 Water and Electric Expense Budgets <br /> BACKGROUND: <br /> In preparation for submittal in November, staff continues to work through the 2017 budget <br /> process. The first cut of the expense portion of the 2017 budget has been completed for <br /> commission review. The expense budget will change as the complete 2017 budget is assembled <br /> and the finalized wholesale power costs are reflected. Wholesale power costs, as well as <br /> revenues and rate increases for 2017 will be presented in November. <br /> DISCUSSION: <br /> Attached is the following information for your review. Additional budget detail is available upon <br /> request. Please contact staff for additional information. <br /> 1. Water Department Expense Budget—The 2017 forecast for water expenses are a 7.83% <br /> increase over the current year budget. Most notable are an increase in Maintenance of <br /> Wells where $100,000 was included for additional expenses(as mentioned in October <br /> with the presentation of capital expenses as noteworthy expense items), and Maintenance <br /> of Water Mains is increased for leak detection and repairs, and software licensing costs. <br /> There are notes in the margins to help identify the differences. <br /> Using forecasted revenues from 2016,there would need to be a 1.5%rate increase to <br /> produce a 0%margin. As numbers are finalized, and revenue projected,this will be <br /> brought back in November. <br /> 2. Electric Department Expense Budget—The 2017 forecast for electric expenses are a <br /> 2.18% increase over the current year budget. Wholesale power costs make up between <br /> 70-75%of the operating budget, and are NOT included here as we are still waiting for <br /> final numbers. Early estimates were a 1.88%increase in power costs. The final GRE <br /> board approval of wholesale power rates usually comes by early December. Typically, <br /> there is some adjustment of the rate structure that impacts us more than percent increase <br /> POWERED ® 1 <br /> Page 1 of 2 NATURE <br /> Reliable Public <br /> Power Provider P OW ER ED To S vE <br /> 139 <br />