4.5. ERMUSR 04-14-2009 - Laserfiche WebLink

Home Browse Search

Elk River -~ Municipal Utilities 13069 Orono Parkway • P.O. Box 430 Elk River, MN 55330-0430 April 8, 2009 To: Elk River Municipal Utilities Commission John Dietz Jerry Gumphrey Daryl Thompson From: Troy Adams Subj: Review staff recommendations on cost savings 45 Phone: 763.441.2020 Fax: 763.441.8099 Per Commission direction, staff has prepared a list of budget reduction and cost saving recommendations for Commission consideration. Attached for review are the 2009 Electrical Distribution Equipment and Capital Projects budget, Electrical Department Capital Projects Time Schedule spreadsheet, 2009 Water Distribution Electronic 'T'echnologies & Administration Capital Projects spreadsheet, and the Proposed Budget Reduction spreadsheet. In the Electric Department budget there were a number of possible savings identified. With the help of doing some in house modifications, the actual cost of the new bucket line truck has come in under budget. The Vactron, although a safety item, could be repaired to postpone the purchase of a new one. However if the pump would fail this year, it would be an imperative repair. There are three rebuild projects that could be postponed. The effect of postponing these projects is that it would displace projects in the queue for next year. Because of the recent reduction in linepersons, delaying these three projects would not create a shortage of work. In fact, a preliminary look at this year's construction season looks busy with rebuilds, feeder construction, and road projects. These proposed savings result in a budget reduction of $264,000 or 15% reduction from the department budget. In the Electrical Technologies Department budget there were also a couple of possible savings identified. There was a power quality analysis device that could be postponed. Also, by rebuilding and reusing the office's old server, the plant can postpone purchasing a new one. These proposed savings result in a reduction of $7,000 or a 21% reduction in the department budget. Over all, these proposed savings result in a $271,000 reduction in the budget. These items cannot be eliminated, but only postponed. Because of that, an ongoing look at the budget and project prioritization will be needed. Reduction for reduction sake will not directly benefit the ratepayers. But by applying these proposed saving to offset future power cost adjustments from our wholesale power supplier, this "tightening of the belt" would make an impressionable positive impact on our ratepayers. Another option would be to carry these savings forward in reserves to help mitigate the inevitable wholesale power cost increase looming for next year.