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~j <br />Elk River <br />Municipal Utilities <br />13069 Orono Parkway • I?O. Box 430 <br />Elk River, MN 55330-0430 <br />July 27, 2007 <br />To: Elk River Municipal Utilities Commission <br />Jerry Takle <br />Jerry Gumphrey <br />Jim Tralle <br />From: Bryan Adams <br />Subject: 2008 Wholesale Electric Power Costs <br />Phone: 763.441.2020 <br />Fax: 763.441.8099 <br />Great River Energy has just informed us of their proposed 2008 rate structure and it does present <br />some opportunities. Attached are Great River Energy's proposed rates and a large spreadsheet <br />reflecting how it affects us. In summary, the key changes are as follows. <br />a) Rate philosophy change from a two tier base and growth rate structure to a market <br />base time of use and critical peak pricing. <br />b) Proposed 8.5% rate increase. <br />As a point of interest, our 2007 budget power cost is approximately $11,714,000. <br />The estimate 2008 power cost will increase to approximately $14,400,000 due to the <br />8.5% rate increase and 9.25% increase in consumption. <br />c) This is GRE's first cut on the rate design and rate increase. As more discussion takes <br />place, the level of rate increase will change. <br />At our commission meeting, I will cover the details of the new rate design and the <br />implementations for Elk River as shown on the spread sheet. <br />This rate change will require us to address three other issues that are: <br />1) Should we be seriously considering time of use rates? <br />2) We are now in the process of an electric meter replacement program and replacing all <br />electric meters with radio read devices. Should these meters be capable of time of use <br />also? <br />3) Create more news articles and reasons why the increases to prepare our customers for <br />ongoing electric rate increases. <br />