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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 13, 2016 4.2 <br /> SUBJECT: <br /> 2017 Budget and Rates <br /> BACKGROUND: <br /> In November the preliminary 2017 budget and rates were presented to the Commission. Based on feedback <br /> and minor changes due to finalizing of projects and expense,the proposed 2017 budget is as follows. <br /> DISCUSSION: <br /> Electric Department Revenue and Expense Budget <br /> Wholesale power costs account for 72% of operating expenses for 2017. The rates set by Great River <br /> Energy (GRE)have an enormous impact on ERMU's rates. The 2017 wholesale power rate increase from <br /> GRE results in an impact of less than 1%to ERMU. The proposed electric rates are designed to pass <br /> through the wholesale power costs as evenly as possible to the rate classes while implementing some of the <br /> concepts from the cost of service rates study received by the Commission last month. This includes a <br /> minimal shift towards fixed cost recovery through the basic monthly charge. The proposed 2017 budget and <br /> rates result in electric fund revenue of$36,607,462 which includes a projected 2.7%margin and a projected <br /> $245,968 net to reserves. <br /> Notable items in the electric budget for 2017 are: <br /> • Up to a 2.5% COLA for all four pay plan groups; <br /> • Additional market adjustment for the Lineworkers pay plan group for a total increase of 2.75%; <br /> • An estimate of 0%growth in usage from data centers, 1% growth for all other customer classes; <br /> • Planned delay of bucket truck#21 and digger truck#10 purchases; <br /> • Replacement for Pickup Truck#31; <br /> • Electric Service Territory acquisition plant and reintegration costs for Areas 3 &4 from reserves; <br /> • Electric Service Territory acquisition 9/15 - 12/16 loss of revenue for Areas 1 & 2 from reserves; <br /> • Consultant costs for cyber and physical security assessment; <br /> • Preliminary Field Services Facility expansion planning and site prep. <br /> • Construction of new 28MVA Waco2 Substation; <br /> • NISC iVue Connect and Mosaic applications; <br /> POWERED U1 <br /> Page 1 of 3 NATURE <br /> Pub <br /> PowerRel �Providider POWERED To SEAVE <br /> 75 <br />