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UTILITIES COMMISSION MEETING <br />TO:FROM: <br />ERMU Commission Melissa Karpinski –Finance Manager <br />MEETING DATE: AGENDA ITEM NUMBER: <br />October 13, 20205.2 <br />SUBJECT: <br />2021 Annual Business Plan: Electric and Water Expenses and Conservation Improvement <br />Program <br />ACTION REQUESTED: <br />None. <br />DISCUSSION: <br />In preparation for budget submittal in November, staff continues to work through the 2021 <br />budget process. The first draft of the expense portion of the 2021 budget has been completed <br />for commission review. Items are subject to change as the complete 2021 budget is assembled <br />and the finalized wholesale power costs and revenues are reflected. Revenues and rates, and <br />wholesale power costs for 2021 will be presented in November. <br /> <br />Attached is the following information for your review. Additional budget detail is available upon <br />request. <br /> <br />1.Electric Department Expense Budget – The 2021 budget for electric expenses are a 0.3% <br />decrease compared to the current year budget. It is noteworthy that the 2020 forecast <br />for expenses is a 3.7% decrease compared to budget. Wholesale power costs make up <br />around 70% of the operating budget and will be provided in next month’s budget with <br />the revenue projections. Most notable increases are for administrativeexpensedue to <br />the addition of an HR staff memberand expenses related to bonding for the new field <br />services building. These preliminary expense numbers will likely be adjusted during the <br />next phase of budgeting when the 2021 rates are designed. <br /> <br />The 2020 budgeted purchased power cost amount was $25,507,849. The projected <br />wholesale power cost increase is 1% but may vary slightly when the rate formula is <br />applied to ERMU’s load profile and anticipated growth. Preliminarily applying the 1% <br />projected wholesale power cost increase on the 2020 forecasted amount resulted in a <br />preliminary amount of $24,742,487. When factoring the preliminary wholesale power <br />cost forecast and the preliminary electric department expense budget, the overall <br />preliminary electric department expense budget decrease is 2.1% compared to 2020 <br />budget. <br /> <br />______________________________________________________________________________ <br />Page 1 of 2 <br />57 <br />