5.3 ERMUSR 12-12-2017 - Laserfiche WebLink

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Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Troy Adams, P.E. —General Manager MEETING DATE: AGENDA ITEM NUMBER: December 12, 2017 5.3 SUBJECT: 2018 Budget/Business Plan: Budget and Rates ACTION REQUESTED: Adopt the Proposed 2018 Budget and Rates. BACKGROUND: In November the preliminary 2018 budget and rates were presented to the Commission. There have been several changes due to finalizing of projects and expenses, as well as some new accounts created and amounts redistributed. The changes have all been noted on the Revenue and Expense Budgets in the Notes and Explanations,with the prior items presented in November in blue. The proposed 2018 budget is as follows. DISCUSSION: Electric Department Revenue and Expense Budget Wholesale power costs account for 70% of operating expenses for 2018. The rates set by Great River Energy(GRE)result in an impact of less than 1%to ERMU. The transition to MMPA in October is also conservatively accounted for the last two months of the year. The proposed electric rates are an approximate 1% increase as discussed last month. The proposed 2018 budget and rates result in electric fund revenue of$37,952,480 which includes a projected 2.75%margin and a projected$28,144 net to reserves. Notable items in the electric budget for 2018 are: • Up to a 3% COLA for all four pay plan groups; • An estimate of 1.9%growth in usage from data centers, 1% growth for all other customer classes; • Replacement of bucket truck#21 • Delay of digger truck#10 and bucket truck#8 purchases; • Replacement for Pickup Truck#33 and#14 for Technical Services; • Electric Service Territory acquisition plant and reintegration costs for Areas 5 &6 from reserves; • Electric Service Territory acquisition loss of revenue for Areas 1 &2 from reserves; • Consultant costs and Fee costs for MMPA bonding; • Preliminary Field Services Facility expansion planning and site prep; • Budgeting for audit adjustment of GASB required Pension Expense. The proposed 2018 electric rates are: Residential Basic Monthly Electric Charge ... ... ... ... ... ... $13.50/Month Summer Energy Charge(Jun-Oct) ... $0.1370/kWh Winter Energy Charge(Nov-May) ... ... ... ... ... $0.1215/kWh Page 1 of 3 1 02