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• <br /> 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 /> November 15, 2016 5.1 <br /> SUBJECT: <br /> 2017 Budget: Rates and Review <br /> BACKGROUND: <br /> In preparation for budget approval in December, staff continues to work through the 2017 budget <br /> process. Based on the preliminary rate increase notifications and projected expense increases and <br /> capital expenditures, a preliminary balanced budget has been drafted. <br /> DISCUSSION: <br /> Electric Department Budget <br /> Wholesale power costs makes up a considerable portion of the required operating revenue, <br /> approximately 72% for 2016, and the wholesale rates set by Great River Energy (GRE) have <br /> an enormous impact on ERMU's rates. The 2017 wholesale power rates are expected to have <br /> between a 2.0% and 2.5% impact to ERMU. This increase in wholesale power costs are <br /> passed through in ERMU's retail rates. <br /> The preliminary projected need for ERMU electric revenue increase is between 2.5% and <br /> 2.8%which is based on a 2.5% increase in wholesale power costs. We anticipate receiving the <br /> approved GRE wholesale rates for 2017 prior to the December Commission meeting and will <br /> adjust the budget accordingly for consideration by the Utilities Commission. <br /> The retail rate classes will be designed incorporating the results of the cost of service study, <br /> feedback and direction from the Commission, and finalized wholesale rates. The ERMU rate <br /> classes will then be included with the budget in December for Commission adoption. <br /> Water Department Budget <br /> In order to maintain the financial health and to plan for the short and long term water capital <br /> project projections the 2017 water budget reflects an overall 2% increase in revenue. The <br /> allocation of the increase will be collected through an increase in customer charge and 1St tier <br /> water use rates. The rate design will be presented with the budget in December for <br /> Commission adoption. <br /> POWERED BY <br /> Page 1 of 2 NATURE <br /> Reliable�roer P OWERED To SERVE <br /> 95 <br />