5.2 ERMUSR 10-12-2021 - Laserfiche WebLink

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UTILITIES COMMISSION MEETING TO:FROM: ERMU Commission Melissa Karpinski –Finance Manager MEETING DATE: AGENDA ITEM NUMBER: October 12, 20215.2 SUBJECT: 2022 Annual Business Plan: Electric and Water Expenses and Conservation Improvement Program ACTION REQUESTED: None. DISCUSSION: In preparation for budget submittal in November, staff continues to work through the 2022 budget process. The first draft of the expense portion of the 2022 budget has been completed for commission review. Items are subject to change as the complete 2022 budget is assembled and the finalized wholesale power costs and revenues are reflected. Revenues and rates, and wholesale power costs for 2022 will be presented in November. Attached is the following information for your review. Additional budget detail is available upon request. Please contact staff for additional information. 1.Electric Department Expense Budget – The 2022 budget for electric expenses are a 2.6% increase compared tothe current year budget. It is noteworthy that the 2021 forecast for expenses is a 1.9% increase compared to budget. Wholesale power costs make up around70% of the operating budget and will be provided in next month’s budget with the revenue projections. Most notable increases are for bond interest expense, tree trimming(contractors), and administrativeexpensedue to the addition of anew general managerfor a partial year. These preliminary expense numbers will likely be adjusted during the next phase ofbudgeting when the 2022 rates are designed. The 2021 budgeted purchased power cost amount was $25,546,479. The 2022 projected wholesalepower cost increase is 2.5% but may vary slightly when the rate formula is applied to ERMU’s load profile and anticipated growth. Preliminarily applying the 2.5% projected wholesale power cost increase on the 2021 forecasted amount resulted in a preliminary amount of $27,035,269. When factoring the preliminary wholesale power cost forecast and the preliminary electric department expense budget, the overall preliminary electric department expense budget increase is 4.7% compared to 2021 budget. ______________________________________________________________________________ Page 1 of 2 75