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<br /> <br /> <br />Page 1 of 2 <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br />UTILITIES COMMISSION MEETING <br /> <br />TO: <br />Elk River Municipal Utilities Commission <br />John Dietz – Chair <br />Al Nadeau – Vice Chair <br />Daryl Thompson – Trustee <br />FROM: <br />Troy Adams, P.E. – General Manager <br /> <br />MEETING DATE: <br />July 2, 2013 <br />AGENDA ITEM NUMBER: <br />5.2 <br />SUBJECT: <br />Payment in Lieu of Taxes (PILOT) and Other Donations to the City of Elk River <br /> <br />BACKGROUND: <br />Early in 2013 the Utilities Commission directed staff to bring back information on ERMU’s <br />PILOT and other donations to the City of Elk River. The ERMU policy outlining these <br />contributions to the City was last revised in June 2008 and had a requirement to be reviewed in 5 <br />years. <br /> <br />DISCUSSION: <br />Information on these types of contributions is compiled annual by the American Public Power <br />Association (APPA) and locally by Minnesota Municipal Utilities Association (MMUA). <br />American Public Power Association (APPA) and MMUA have both use data collected by the <br />U.S. Energy Information Administration (EIA). Because of this, the data used in the current <br />reports is somewhat dated, but gives a place to start a discussion. <br /> <br />In 2010, the national median for total contributions by a municipal utility to their city is 5.2%. <br />Our region, the West North Central (WNC), includes: Iowa, Kansas, Minnesota, Missouri, <br />Nebraska, North Dakota, and South Dakota. The 2010 WNC median for total contributions by a <br />municipal utility to their city is 4.6%. And as calculated by MMUA, the 2010 Minnesota median <br />for total contributions by a municipal utility to their city is 3.9%. <br /> <br />In 2010, ERMU had a total contribution of $1,091,502, which was 4.07% of our operating <br />revenue. This is above the MN median. One factor that affects this percentage for ERMU in <br />comparison to other MN municipal utilities is our wholesale power costs. ERMU’s wholesale <br />power costs are greater than our peer municipal utilities. This causes our contribution percentage <br />to appear smaller than if it were to be compared based on number of customers. <br /> <br />Because of ERMU’s continued growth, the total contributions to the City of Elk River have <br />grown as well. As you can see from Table 1 – ERMU Contributions to the City of Elk River, as <br />ERMU grows so does the contribution to the City. Even through the overall percent to operating <br />45