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UTILITIES COMMISSION MEETING <br />TO:FROM: <br />ERMU Commission Melissa Karpinski –Finance Manager <br />MEETING DATE: AGENDA ITEM NUMBER: <br />November 9, 2021 5.2 <br />SUBJECT: <br />2022 Annual Business Plan: Rates and Review, Stakeholder Communication <br />ACTION REQUESTED: <br />None <br />DISCUSSION: <br />In preparation for budget approval in December, staff continues to work through the 2022 <br />budget process. Based on the wholesale power rate increase and projected expense increases <br />and capital expenditures, a preliminary balanced budget and rates have been drafted. <br /> <br />Attached is the following information for your review. Additional budget detail is available <br />upon request. Please contact staff for additional information. <br /> <br />1.Electric Department Expense Budget – The 2022 forecast for electric expenses are an <br />8.1% increase over the current year budget. Wholesale power costs make up 68% ofthe <br />operating budget. Our increase from MMPA is about a 14% increaseover 2021(more <br />background information will be discussed at the meeting). Without wholesale power <br />costs, electric expenses are only a 2.3% increaseover the current year budget. Most <br />notable increases are purchase power, interest expense on bonds, tree trimming, and <br />administrative expense due to the addition of an inventory assistant person and the <br />new General Manager for a partial year. <br />The budgeted Payment in Lieu of Taxes (PILOT) amount for 2022 is $1.718million. The <br />PILOT is comprised of $1.488million with the 4% of Elk River City’s sales calculation, and <br />$230,000in donated utilities and labor. <br /> <br />Currentlythere is a 5% rate increase proposed. There will more than likely also be a <br />Power Cost Adjustment (PCA)passed onto our customers throughout 2022. <br /> <br />2.Water Department Expense Budget – The 2022 forecast for water expenses are a 4.5% <br />increaseover the current year budget. Most notable increases are maintenance of <br />water mains, interest expense on bonds, and administrative expense due to the addition <br />of a new General Manager for a partial year. <br /> <br />Currentlythere is a 2.5% rateincrease proposed. <br />______________________________________________________________________________ <br />Page 1 of 2 <br />74 <br />