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��i <br />Elk River , <br />Municipal Utilities UTILITIES COMMISSION MEETING <br />TO: <br />FROM: <br />ERMU Commission <br />Melissa Karpinski — Finance Manager <br />MEETING DATE: <br />AGENDA ITEM NUMBER: <br />October 8, 2024 <br />5.2 <br />SUBJECT: <br />2025 Annual Business Plan: Electric <br />and Water Expenses <br />ACTION REQUESTED: <br />None. <br />DISCUSSION: <br />In preparation for budget submittal in November, staff continues to work through the 2025 <br />budget process. The first draft of the expense portion of the 2025 budget has been completed <br />for commission review. Items are subject to change as the complete 2025 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 2025 will be presented in <br />November. <br />Attached is the following information for your review. Additional budget details are available <br />upon request. Please contact staff for additional information. <br />Electric Department Expense Budget —The 2025 budget for electric expenses is a 4.4% <br />increase compared to the current year's budget (excluding purchased power). It is <br />noteworthy that the 2024 forecast for expenses (excluding purchased power) is a 0.3% <br />decrease compared to budget. Wholesale power costs make up around 70% of the <br />operating budget and will be provided in next month's budget with the revenue <br />projections. Most notable accounts are for other operating expenses due to the disposal <br />of meters (loss of capital) for the Advanced Metering Infrastructure (AMI) project and <br />estimated pension expense due to GASB 68 (this entry is prepared at year-end by our <br />auditors). It is planned to bring in contractors again in 2025 for tree trimming. There will <br />also be a focus on mapping in 2025. Additionally, there is an expected 12.55% increase <br />to health insurance premiums. These preliminary expense numbers will likely be <br />adjusted during the next phase of budgeting when the 2025 rates are designed. <br />The 2024 budgeted purchased power cost amount was $32,756,447. The 2025 <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 preliminary wholesale power cost forecast and the preliminary electric <br />Page 1 of 2 <br />62 <br />