5.2. ERMUSR 04-12-2011u,
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Elk River.;
Municipal Utilities
2010 YEAR IN REVIEW
Even in these times of economic downturn, Elk River Municipal Utilities (ERMU) continues to
grow. In 2010, our purchased energy increased by 6.9%. Based on the most recent data
available, ERMU has moved up to now be the 9`h largest Minnesota municipal electric utility by
number of customers and the 12`h largest by energy sales. This growth helps ERMU, our
customers, and the residents of the City of Elk Rivet. Because ERMU is tax exempt, ERMU
provides to the City of Elk River a fixed percentage of the revenue from Elk River customers'
electric sales. This amount is a Payment in Lieu of Taxes (PILOT). In addition to this
percentage of revenue, ERMU provides donated electricity for non-enterprise City facilities as
well as donated labor. In total, ERMU provided approximately $1,100,000 in 2010. This was up
7.7°I° over the 2009 PII.OT and up 14.9% over 2008. This trend is directly related to the growth
of the ERMU. The ERMU PILOT is a significant contribution to the City which indirectly helps
to keep City taxes lower.
In 2010, ERMU was awarded the System Innovation Award from Minnesota Municipal Utilities
Association. The award was presented to ERMU "in recognition for its leadership and
innovation in customer service, energy efficiency, renewable energy or technology use, which
has improved service to its community and enhanced public power's prestige." Our excellent
reliability was one of the major factors in receiving this award and really reflects the condition of
our robust electrical system as well as the superb response time from our local line crews. This
also reflects the local accountability, long term visioning on system design, and ongoing system
maintenance. ERMU continues to provide very reliable electrical service. In the electric utility
industry, there are a number of indexes used to gauge reliability. One of the most important of
Yhese is the Average Service Availability Index (ASAI). This is a measure of the average
availability of sub-transmission and distribution systems to serve customers; or in other words,
what percent of the time you have power. With a long term focus on system planning, scheduled
system maintenance, and a proactive tree trimming program, ERMU continues to score excellent
numbers in this index as well as the other indexes. Our ASAI for 2010 was 99.985%. This is
exceptional especially when taking into account the damaging weather during 2010. The
weather related outages for ERMU were actually minimal while our neighboring utilities, as well
as utilities throughout Minnesota, suffered more extensive damage. Because ERMU's electric
distribution system was able to withstand much of the damaging weather, ERMU was able to
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provide mutual aid with labor and/or equipment assisting Connexus Energy, Princeton Public
Utilities, Wadena Electric & Water, and Rochester Public Utilities.
In June of 2010, Elk River Municipal Utilities (ERMU) was able to provide another payment
option fox customers -credit cazds! Additionally, customers are now able to make a payment by
phone or online using their credit or debit cazds, and even make a payment from a checking or
savings account. After receiving many requests for credit card options, ERMU is excited to now
be offering it to our customers. Elk River Municipal Utilities will continue to respond to needs
of our customers as part of our ongoing commitment to provide excellent customer service.
The year of 2010 saw a decrease in water usage, mostly due to weather. However, the Water
Department remained fiscally strong by "tightening the belt" and reducing expenses. ERMU
was able to commit to no water rate increase for 2010 or 2011 ! The water department, while
operating short staffed, was able to do more with less and accomplish their maintenance goals
while making a huge push to continue progress in the meter change-out program. And although
this accomplishment is recognized and celebrated, operating short staffed is not maintainable
long term while not compromising service or reliability. So moving into 2011, the Water
Department will be adding the appropriate staffing to position themselves to provide the level of
services required.
The Technical Services Department and Administrative Department underwent the complex and
challenging project of bringing the meter reading services in-house. By bringing these services
in-house, ERMU has seen instant significant savings in meter reading costs and improved
efficiencies through control and staff accountability for the meter reading processes. This
transition was partnered with implementation of new meter reading technology. The transition
continues into 2011, but the process has gone incredibly smooth and we are very optimistic that
ERMU will continue to see a positive trend in meter reading efficiency.
Overall, I am very proud of what we have accomplished during 2010 for our customers and the
residents of Elk River. We have continued to explore and implement ways to reduce expenses,
control the growth of rates, and provide safe, reliable utility services. In the following pages are
some of the 2010 highlights, accomplishments, and key statistics by departments as well as our
goals for 2011.
t
Troy Adams, P.E.
Director of Operations
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ADMINISTRATION -Theresa Slominski -Finance Director /Office Manager
1. Actively supported and participated in Minnesota Municipal Utilities Association
(MMUA) and American Public Power Association (APPA) with industry and energy
policy issues.
2. Ongoing review of policy and procedure to position the Utilities to succeed including: the
Investment Policy, Reserves Policy, Customer Deposit Policy, On-Call Procedures, and
Disconnect Procedures.
3. Remained active in Energy City activities including Project Conserve Phase 2.
4. Successfully manage customer needs, monthly billing, and collections. Customer
monthly billing included approximately 9,207 electric, 4,511 water, 4,471 sewer, and
6,829 garbage/organics accounts. Continued focus on providing excellent customer
service.
5. Continued focus on minimizing write-offs through our administration of our Customer
Deposit Policy and through legal means when necessary.
6. Rebated $78,265 to residential customers that participated in the Conservation
hnprovement Programs (CIP). Of these residential rebates, $75,926 was reimbursed by
Great River Energy (GRE) through ERMU's participation in GRE programs. Rebates
included the following: 1,818 CFL's; 147 AC tune-ups; 83 energy star air conditioners;
16 heat pumps; 105 energy star dishwashers; 122 energy star refrigerators; 119 energy
star clothes washers; 100 AC trees; 10 lighting; 4 motors; 4 VFD; 67 furnace motors
ECMs; 27 dehumidifiers; 3 off-peak water heater controls; and 3 custom rebates.
7. In 2010, Elk River Municipal Utilities added another payment option for customers -
credit cards! Payments can now be made by phone or online.
8. Ongoing review and participation in CAPX2020 Brookings Transmission project
investment with Central Minnesota Municipal Utilities Association (CMMPA) and
Midwest Municipal Transmission Group (MMTG).
9. Ongoing review and participation in the Resource Planning Coalition, a group of utilities
coordinating efforts through a joint power planning and request for proposal process.
TECHNICAL SERVICES -Wade Lovelette -Technical Services Superintendent
1. Increased security system accounts from 749 to 814, an 8.7% growth.
2. Added approximately 63 new or upgraded radio controllers for Off-Peak and Cycled AC
customers. ERMU remotely controls 1,443 customer loads to help reduce wholesale
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power costs and customer utility bills. They consist of approximately 183 energy storage
water heaters, 172 dual fuel heating systems, and 1088 cycled air conditioners.
3. Continued meter conversion with installation of approximately 872 electronic radio read
meters for a total of 11,277 meters converted so faz.
4. Continued electric and water mapping. For the first time, ERMU published our own
maps in-house producing updated electric and water system distribution maps. Staff has
begun work towards producing web based GIS mapping.
5. Completed approximately 2,405 locates. Once again, locates were completed without
damage claims resulting from workmanship.
6. Maintained and operated the diesel Power Plant. This facility has the ability to start from
compressed air (in the case of a transmission outage) and is rated to generate
approximately 1/5 of ERMU's peak electric demand.
7. Staff underwent energy audit training and collaborated with the City in providing energy
audits to participants of Project Conserve Phase 2. In 2010 there were 102 energy audits
conducted.
8. In 2010 ERMU brought meter reading in house which significantly reduced metering
costs and has improved meter reading efficiency.
WATER DEPARTMENT -David Berg -Water Superintendent
1. Produced 686 million gallons of water for a decrease of 8.6% from 2009. Peak day use
of 4.6 million gallons, down from 5.4 million gallons in 2010.
2. Continued Smart Irrigation System rebates.
3. Continued working on wellhead protection plan.
4. Continued working with communication companies to establish a lease format for
antennas to be located on water towers. Antennas were installed on 2 water towers
during 2010.
5. Continued work on installation of remote read water meters.
6. Conducted ongoing water tower and well maintenance. Throughout the course of the
yeaz, a114 water towers and all 8 wells are taken out of service on a scheduled rotation for
their annual maintenance.
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ELECTRIC DEPARTMENT -Mark Fuchs -Electric Superintendent
1. Purchased approximately 264.6 million kWh of energy with a peak day of 53.6 MW.
Even with the downturn in economy, the energy usage increased 6.9% over last year.
2. ERMU's 2010 reliability indexes are: Average Service Availability (ASAI) = 99.985%,
Customer Average Interruption Duration Index (CAIDI) = 94 min, System Average
Interruption Duration Index (SAIDI) = 80 min, System Average Interruption Frequency
Index (SAIFI) = 0.853. These excellent reliability indexes numbers reflect the condition
of our system as well as our superb response time.
3. ERMU's landfill gas electric generating plant produced 25.7 million kWh with a capacity
factor of 96.5%. This is down from 26.1 million kWh and a capacity factor of 98.1% in
2009.
4. ERMU sold over 500,000 kWh of energy from wind generators in 2010 through our
Wind Power Program.
5. The third party wind generator, which is used by Energy City as a demonstration site,
produced approximately 790,400 kWh in 2010. The annual capacity factor is 13.7%.
This is low in comparison to other wind generators; however, this is due to the lack of
sufficient wind resource available in this part of the State.
6. Lost 9 commercial accounts for a total of 1,095. Added 21 residential accounts and 9
load management meters for a total of 8,471.
7. Continued system maintenance and fuse coordination through a systematic program to
change failing cutout and resize system fusing. Changed out rusted electrical equipment,
J-boxes, and switchgear.
8. Completed territory acquisition (Area 22 along County Road 1) from Connexus Energy.
9. Began work on voltage upgrading project changing from 2400 volt to 7200 volt along
County Road 30 west of Waco Street.
10. Rebuilt ls` and 2nd Street, Gates, and Evans Ave south of Main Street. Rebuilt Engers
Addition in Big Lake Township. Rebuilt Watson removing overhead and replacing with
underground electrical distribution.
11. Began work on rebuilding Irving, 4`", 5i°, 6`h, and 7`h Street removing rear lot line
overhead and replacing with underground electrical distribution in the front
easements/BOW.
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Elk Riv
Municipal Utilities
2011 GOALS
Elk River Municipal Utilities' goals are in part defined by our annual budget. To better serve our
valued customers now and into the future, ERMU will continue to analyze past trends and
forecast future needs to assess the necessary system improvements, Financial requirements, and
our labor needs. The goals are then based on maintenance and growth needs balanced by
financial viability such that Elk River Municipal Utilities operates by our mission:
Mission Statement: To provide our customers with safe, reliable, cost effective and quality long
term electric and water utility service. To communicate and educate our customers in the use of
utility services, programs, policies, and future plans. These products and services will be
provided in an environmentally and financially responsible manner.
The goals for 2011 are as follows:
1. Satisfy 2011 budget requirement. Continue to investigate and solve long term physical
and financial growth needs while maintaining existing systems.
2. Continued emphasis on maintenance and continued emphasis on providing excellent
customer service through safe and reliable utility services.
3. Expand online program for customers to view bills and manage payments of accounts
online. Continue to explore methods to improve administrative efficiency while
maintaining excellent customer service. Continued review of systems to streamline and
improve accuracy for billing cycle from meter reading to customer billing.
4. Continue effort in securing a wholesale power supply to meet our future needs. Continue
to work towards improving our cost effectiveness through lowering our wholesale power
costs.
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5. Begin efforts to acquire electrical service territory within our city limits allowing the
Utilities to grow with the city and provide the associated benefits and economy of scale
advantages to our customers and the residents of Elk River.
6. Stay current on electric industry and service territory issues. Participate through our joint
action agencies to represent the interests of our customers and the residents of Elk Rivet
at the legislative level.
7. Continued cooperation with City departments and supporC of Energy Ciry activities.
Coordinate, collaborate, and cooperate to improve efficiencies and control costs.
8. Continue to grow Utilities position as a primazy component in promoting economic
development fox the City of Elk River and the Utilities' service territory. Participate in
City's marketing processes and increase avenues to provide information to commercial
customers. Continue and evolve interactive communication with our customers to better
service the community.
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