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Elk River ,.. <br />Municipal Utilities UTILITIES COMMISSION MEETING <br />TO: <br />FROM: <br />ERMU Commission <br />Mark Hanson — General Manager <br />MEETING DATE: <br />AGENDA ITEM NUMBER: <br />January 9, 2024 <br />5.3 <br />SUBJECT: <br />Transmission Investment Opportunity <br />ACTION REQUESTED: <br />Approve the Transmission Investment Opportunity <br />BACKGROUND: <br />In August 2023, the CapX2020 Brookings Owners submitted applications to the Minnesota PUC <br />to install separate 345 kV circuits on double -circuit -capable structures on the Minnesota <br />portion of the Brookings County to Lyon County (Western Segment) and the Helena to <br />Hampton Minnesota (Eastern Segment) segments of the Original Brookings Line. Elk River <br />Municipal Utilities (ERMU) is a part owner of this line through a coordinated investment with <br />Central Municipal Power Agency/Services (CMPAS). The CMPAS participants have some <br />reserves to fund these projects, but additional financial commitment from current participants <br />for this project and other necessary improvements to the line is necessary. CMPAS has been <br />informed they will be required to start making project payments in early 2024. <br />DISCUSSION: <br />CMPAS is holding approximately $2.5 million dollars of construction reserves from prior <br />borrowings sponsored by the 2007 Brookings Line project agreement participants. To <br />accurately plan, provide funding in a timely manner and prepare for contingencies, however, <br />CMPAS is requesting access to additional funds per the current participation agreement. <br />In anticipation of cash requirements related to the projects listed on the previous slide, CMPAS <br />would like to have commitments from current Brooking's participants of $2.0 million in <br />additional funds. CMPAS is not requiring funds to be deposited in the CMPAS account now, but <br />to be readily available and transmitted to CMPAS within 3 to 5 days upon request. <br />Individual commitments will be proportionally allocated based on original project participation <br />percentages (assuming all participants participate at their original percentage). ERMU's <br />percentage is 18.89%. If the full $2M is requested, then our commitment request would be <br />approximately $378K. If other participants choose not to participate in this opportunity, our <br />commitment request could be higher. Commission direction on a commitment cap is needed. <br />Recent investment returns on our original CapX commitment have been slightly over 10%. <br />CMPAS has advised this funding proposal pertains primarily to the two larger Brookings projects <br />based on the cost estimates available at this time. Additional funding needs related to these <br />projects, or other Brookings projects, may require additional funding requests in the future. <br />Page 1 of 1 <br />