5.3. SR 03-14-2011r~/
Elk
River
REQUEST FOR ACTION
'r0 ITEM NUMBER
Ci Council and Utilities Commission 5.3.
AGENDA SECTION MEETING DATE PREPARED BY
Worksession March 14, 2011 Troy Adams, P.E. - ERMU Director
of O erations
ITEM DESCRIPTION REVIEWED By
Elk River Municipal Utilities' CAPX2020 Brooking-Twin Cities
Transmission Project Investment Options REVIEWED BY
ACTION REQUESTED
Review of the option for Elk River Municipal Utilities (ERMU) to increase investment allocation into
CAPX2020 Brookings-Twin Cities Transmission Project with Midwest Municipal Transmission Group
(MMTG) through Central Minnesota Municipal Power Agency (CMMPA). Per CMMPA bonding
requirements, Utilities Commission resolution and City Council resolution is required for either the
original investment amount or the optional increased investment amount. Decision by the Utilities
Commission and the City Council as to whether or not to increase the investment allocation amount will
need to be made at the March 14`h joint City Council and Utilities Commission meeting. Staff requests
the Utilities Commission and City Council to each adopt the attached respective resolutions for the
CAPX2020 Brooking Project for the investment amount approved. The resolutions will need to be
adopted for a minimum of the original investment amount approved in 2007.
BACKGROUND/DISCUSSION
In May 2006, the Utilities Commission authorized joining MMTG to explore the potential to obtain
ownership in the transmission system. In February 2007, ERMU entered into an agreement to participate
through CMMPA in the CAPX2020 Brooking-Twin Cities Transmission Project. This represents
ERMU's direction to own instead of rent. This investrnent provides revenue to mitigate transmission
costs and help to lower ERMU electric rates.
FINANCIAL IMPACT
The original $1,993,134 investment in direct costs that ERMU is currently under agreement for results in
$2,246,896 in total debt supported. The return on this investment through the CMMPA bonding is
designed to provide approximately $45,770 annually over the 40 year project life.
The option for increasing the investment allocation would have a maximum direct cost of $6,265,278 and
result in $7,140,953 in maximum total debt supported. The return on this increased allocation investment
through CMMPA bonding is designed to provide approximately $124,102 annually over the 40 year
project life.
A representative from CMMPA will be available to answer questions for the City Council and Utilities
Commission at the joint meeting.
ATTACHMENTS
^ CAPX2020 Brookings-Twin Cities Transmission Project -Commission Resolution
CAPX2020 Brookings-T~~in Cities Transmission Project -Council Resolution
Action Motion by Second by Vote
Follow Up
RESOLUTION I I -
A RESOLUTION OF THE ELK RIVER MUNICIPAL UTILITIES
A RESOLUTION AUTHORIZING PARTICIPATION IN THE BROOKINGS-TWIN
CITIES TRANSMISSION PROJECT AND THE FINANCING WITH CMMPA
BE IT RESOLVED by the Elk River Municipal Utilities Commission, hereinafter
"Commission", as the governing body of the Elk River Municipal Utilities, a Minnesota municipal
utility, of the City of Elk River, Minnesota as follows:
Section 1. It was previously determined that it was in the best interest of the Commission
to utilize the resources and services of the Central Minnesota Municipal Power Agency "CMMPA"
to participate in the development and investment in the acquisition, construction, ownership and
operation of high voltage electrical transmission including negotiation of contracts, planning,
transmission needs studies, transmission arrangements, engineering and technical assistance.
Section 2: The Commission now wishes to properly update and supplement its relationship
with CMMPA and also authorize the Commission's participation in the following project:
Brookings -Twin Cities Transmission Project
Section 3: The Commission does hereby approve Participation in the Brookings-Twin Cities
Transmission Project and the financing thereof, if any, with the Central Minnesota Municipal Power
Agency with its participation amount not to exceed $ ,without the further action
of the Commission.
Section 4: The CMMPA Brookings-Twin Cities Transmission Project Agreement is hereby
approved. The President (Chairman) and the Secretary are hereby authorized and directed to
execute the Brookings-Twin Cities Transmission Project Agreement for and on behalf of the
Commission, such execution to be final and conclusive evidence of the Commissions' authorization
thereof.
Adopted this 14`h day of March, 2011.
John J. Dietz, Mayor
ATTEST:
Tina Allard, City Clerk
RESOLUTION I I -
A RESOLUTION OF THE CITY OF ELK RIVER
A RESOLUTION AUTHORIZING PARTICIPATION IN THE BROOKINGS-
TWIN CITIES TRANSMISSION PROJECT AND THE FINANCING WITH
CMMPA
BE IT RESOLVED by the City Council of the City of Elk River, Minnesota (hereinafter
referred to as "City"), as follows:
Section 1. Through the City's prior approval and execution of the Brookings-Twin
Cities Development Project Agreement between the Central Minnesota Municipal Power
Agency ("CMMPA") and the City (the "Development Project Agreement"), it was
previously determined that it is in the best interests of the City to utilize the resources and
services of CMMPA to participate in the development and investment in the acquisition,
construction, ownership and operation of high voltage transmission of electrical energy and
capacity, negotiation of contracts, planning, including transmission needs studies,
transmission arrangements, engineering and technical assistance.
Section 2: As contemplated by the terms of the Development Project Agreement,
the City now wishes to properly update and supplement its relationship with CMMPA and
also authorize the City's paxticipation in the following project:
Brookings -Twin Cities Transmission Project.
Section 3: The City has received and reviewed a signature ready draft of the
Brookings-Twin Cities Transmission Project Agreement dated February 14, 2011 and finds
such draft to be acceptable.
Section 4: The City Council hereby authorizes participation in the Brookings-Twin
Cities Transmission Project and the financing thereof, if any, with CMMPA, with its
participation amount related to construction of the Brookings -Twin Cities Transmission
Project not to exceed $ ,without the further action of the City.
Section 5: The Mayor and are hereby
authorized and directed to execute the Brookings -Twin Cities Transmission Project
Agreement for and on behalf of the City, such execution to be final and conclusive evidence
of the City's authorization thereof.
Passed and adopted this 14t" day of March, 2011.
ATTEST:
John J. Dietz, Mayor
Tina Allard, City Clerk