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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 10, 20235.2 <br />SUBJECT: <br />2024 Annual Business Plan: Electric and Water Expenses <br />ACTION REQUESTED: <br />None <br />DISCUSSION: <br />In preparation for budget submittal in November, staff continues to work through the 2024 <br />budget process. The first draft of the expense portion of the 2024 budget has been completed <br />for commission review. Items are subject to change as the complete 2024 budget is assembled <br />and the finalized wholesale power costs and revenues are reflected. Revenues and rates, <br />wholesale power costs, and Conservation Improvement Program for 2024 will be presented in <br />November. <br /> <br />Attached is the following information for your review. Additional budget details are available <br />upon request. Please contact staff for additional information. <br /> <br />1. Electric Department Expense Budget – The 2024 budget for electric expenses is a 3.8% <br />increasecompared tothe current year’sbudget (excluding purchased power). It is <br />noteworthy that the 2023 forecast for expenses (excluding purchased power) is a 1.2% <br />decrease compared to budget. Wholesale power costs make up around 70% of the <br />operating budgetandwill be provided in next month’s budget with the revenue <br />projections. Most notable increases are for other operatingexpenses due to the <br />disposal of meters (loss of capital) related tothe Advanced Metering Infastructure <br />projectand estimated pension expense due to GASB68(this entry is prepared at year- <br />end by our auditors). It is planned to bring in contractors again in 2024 for tree <br />trimming. Thesepreliminary expense numbers will likely be adjusted during the next <br />phase ofbudgeting when the 2024 rates are designed. <br />The 2023 budgeted purchased power cost amount was $32,766,025. The 2024 <br />projected wholesale power cost increase has yet to be communicated to ERMU. <br />Preliminarily we are applying last year’s wholesale power rates (may vary slightly when <br />the rate formula is applied to ERMU’s load profile and anticipated growth). When <br />factoring the preliminarywholesalepower cost forecast and the preliminary electric <br />department expense budget, the overall preliminary electric department expense <br />budget increaseis 1.1% compared to 2023 budget. <br />______________________________________________________________________________ <br />Page 1 of 2 <br />62 <br />