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~j <br />Elk River <br />Municipal Utilities <br />13069 Orono Parkway • P.O. Box 430 <br />Elk River, MN 55330-0430 <br />December 3, 2008 <br />To: Elk River Municipal Utilities Commission <br />Jerry Takle <br />Jerry Gumphrey <br />John Dietz <br />From: Theresa Slominski <br />Subject: Utility Rate Increases and 2009 Budget <br />Phone: 763.441.2020 <br />Fax: 163.441.8099 <br />At the November 13, 2008, Elk River Municipal Utilities Commission meeting we presented <br />a revised 2009 budget with an assumed 15% wholesale rate increase from Great River <br />Energy. (GRE). GRE ultimately reduced that increase to a 13.2% overall wholesale rate <br />increase following concerns voiced by several of their distribution coops and Elk River <br />Municipal Utilities. ERMU's budget and rates for 2009 are presented for your review and <br />approval. <br />Attached is the following information: <br />1) Revised wholesale rate schedule with changes effective Nov 7, 2008. <br />2) Proposed ERMU 2009 fee and rate schedule (items highlighted in yellow are proposed <br />changes). <br />3) Marked up electric and water tariff sheets. <br />4) Electric sales projections_ <br />5) Water sales projections. <br />6) 2009 projected electric rate comparison. This survey reflects comparisons between <br />ERMU and area electric utilities, which for the most part, border ERMU. In most <br />cases, these rates are still subject to some changes pending adoption. <br />7) 2009 Revenue and Expense Budgets. <br />The proposed rate and fee changes reflect the revenue assumptions contained in the revenue <br />and expense budgets. The following summarizes the overall impact: <br />1) The electric rate increase is 10% overall with an 11 % increase in residential, a 10% <br />increase in small commercial, and a 9% increase in large commercial. This increase <br />results in approximately $1,693,000 additional revenues out of the $1,864,000 needed <br />to balance the proposed budget. The remaining $171,000 comes from reducing the <br />amount contributed to reserves from $489,751 to $329,392. <br />2) The residential rate is fairly comparable to other area utilities. <br />3) The small commercial rate is lower than other area utilities reflecting our commitment <br />to keep rates as low as possible for our small businesses. Increasing this rate would <br />