ERMU RES 12-01RESOLUTION No. 12 -1
BOARD OF COMMISSIONERS
ELK RIVER MUNICIPAL UTILITIES
A Resolution Requesting Support from the City Council of the City of Elk River for
Extending the Elk River Municipal Utilities Electric Service Territory within the
City of Elk River
WHEREAS, the Village Council of the Village of Elk River, by resolution adopted on
July 11, 1947, created a Water, Light, Power and Building Commission in and for the
Village of Elk River; and
WHEREAS, the Water, Light, Power and Building Commission in and for the Village of
Elk River became, in 1949, by operation of Minnesota Statutes §§ 412.331- 412.391, a
municipal utility now known as Elk River Municipal Utilities (ERMU); and
WHEREAS, ERMU's original electric service territory included the Village of Elk River
and portions of immediately adjacent communities; and
WHEREAS, ERMU has been authorized since 1974 to provide electric service to all
areas within the city limits of the City of Elk River; and
WHEREAS, in 1977'the town of Elk River and the old city of Elk River consolidated to
form the new city of Elk River; and
WHEREAS, in 1991 ERMU entered into a 20 -year orderly electric service territory
acquisition plan with Connexus Energy to acquire, over a period of 20 years, electric
service territories that were previously within the town of Elk River; and
WHEREAS, the 1991 agreement with Connexus Energy has now expired and there
remain approximately 7,723 acres (1,774 existing properties) of area within the city limits
of the, City of Elk River which are not currently provided electric service by ERMU; and
WHEREAS, approximately 1,807 acres (914 existing properties) of this area are
currently within the City of Elk River's urban service district and have, or are planned to
have, City water service which is provided by ERMU; and
WHEREAS, the Board of Commissioners (Board) of ERMU has determined that it is in
the best interests of the existing customers of ERMU, and believes it is in the best
interests of all the citizens of the City of Elk River, for ERMU to provide electric service
within the corporate boundaries of the City of Elk River, including in particular those
areas within the City of Elk River's designated urban service area, for the following
reasons:
I . As ERMU's electric service territory has grown since 1991 ERMU has realized
increased economies of scale which has helped reduce unit costs and improve the
value of electric services provided to customers. Continued expansion will
further improve these economies of scale and reduce electric costs for all citizens
of the City in the future.
2. The increased customer base and load which ERMU has realized since 1991, and
which would continue to build if ERMU's electric service territory continues to
expand, has improved the City and ERMU's ability to market Elk River as a
desirable location for large power users, such as data centers.
3. Having a uniform service territory for all municipal services will improve
planning by the City and ER AU for future development, facilities and
maintenance for water, wastewater, storm sewer and electric service throughout
the City of Elk River.
4. Having ERMU provide electric service to areas within the City which the City is
promoting for economic development, particularly areas within the City currently
designated for urban services, will create additional opportunities for cooperation
and collaboration between the City and ERMU to promote economic
development.
5. Having uniform municipal services throughout the city limits enhances the ability
of the City and ERMU to provide services with local control and local
accountability and will cause less confusion for electric customers.
6. ERMU, being locally based and serving the bulk of the City of Elk River already,
would be able to provide the expansion areas with reduced dispatch distances and
reductions in response time when electric utility personnel respond to outages,
fires and traffic accidents involving energized electrical utility equipment.
7. As ERMU enters the market over the next six years for a wholesale power
supplier, the increased customer base and load which an expansion of ERMU's
electric service territory within the City would provide would improve ERMU's
marketability to a wholesale power supplier or power agency, therefore
potentially reducing electric costs for citizens within the city limits of the City of
Elk River.
8. Increasing ERMU's customer base and revenues would increase the annual
revenue transfer which ERMU contributes to the City.
9. Expansion of ERMU's electric service territory would be at no cost to the City or
the City's taxpayers.
WHEREAS, in light of these benefits the Board, on June 12, 2012, began the process of
developing an offer or offers to acquire all or portions of the electric service territory
within the corporate limits of the City of Elk River which it does not currently serve; and
WHEREAS, the Board believes it would be beneficial, as the process of developing and
presenting an offer or offers to Connexus Energy proceeds, to have the support of the Elk
River City Council for expansion of ERMU's service territory.
NOW, THEREFORE, the Board of Commissioners of Elk River Municipal Utilities
requests that the City Council of the City of Elk River adopt a resolution, generally in the
form attached as Exhibit A to this resolution, supporting the extension of ERMU's
service territory within the City of Elk River.
Adopted this 17'�' day of July, 2012.
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icffn J. Itietz, dkair
Board of Commissioners
Elk River Municipal Utilities