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UTILITIES COMMISSION MEETING <br />TO:FROM: <br />ERMU Commission Troy Adams, P.E. –General Manager <br />MEETING DATE: AGENDA ITEM NUMBER: <br />February 11 2020 6.1a <br />SUBJECT: <br />Staff Update <br />ACTION REQUESTED: <br />None <br />DISCUSSION: <br /> TheBoard of Directors of the Minnesota Municipal Power Agency (MMPA) met on <br />January 21, 2020 at Shakopee Public Utilities in Shakopee, Minnesota. I was able to <br />attend,but Commissioner Mary Stewartwas not. <br />The Board reviewed 2019 performance. Management’s presentation is attached. <br /> <br />The Board discussed the status of the renewable projects the Agency is pursuing. <br /> <br />Participation in MMPA’s residential Clean Energy Choice program increased over <br />December, with a market penetration that is at 3.3%. <br /> <br /> In May 2006, the Utilities Commission authorized ERMU joining Midwest Municipal <br />Transmission Group (MMTG) to explore the potential to obtain ownership in the <br />regional transmission system. This non-partisan/not-for-profit organization was created <br />to provide service and assistance to the membership for matters relating to the <br />planning, construction, ownership/investment, operation and maintenance, and <br />administration and management of electric transmission and/or power generation <br />facilities. The action to join MMTG represented ERMU’s decision to investigate a change <br />in direction towards ownership instead of renting. Ownership in the transmission <br />system essentially works as a hedge to mitigate volatility in transmission costs. ERMU is <br />still a member of MMTG and through proactive participation with representation on the <br />MMTG board of directors, represents their investment and their customers. <br /> <br />This is a unique type of investment opportunity for a municipal utility. Because of a <br />municipal’s ability to finance with tax exempt bonds, our cost of money is less than <br />investor owned and cooperative utilities. With the Federal Energy Regulatory <br />Commission (FERC) approval of a hypothetical capital structure and a guaranteed rate of <br />return on investment, transmission ownership becomes an incredible advantage for <br />municipal utilities to position themselves with very competitive rates compared to the <br />______________________________________________________________________________ <br />Page 1 of 2 <br />100 <br />