6.2. ERMUSR 05-13-2003 i
Elk River
Municipal Utilities
322 King Avenue phone: 763.441.2020
Elk River,MN 55330 Fax:763.441.8099
April 30, 2003
To: Elk River Municipal Utilities Commission
John Dietz
Jerry Takle
James Tralle
From: Bryan C. Adams
Subject: Finance Projections
Our community continues a steady and fast growth. The Elk River Municipal Utilities
needs adequate financial resources to sustain this growth. Staff at budget time in the fall
and after the annual audit in the spring, updates the income statement projection for the
electric and water department. These income statement projection looks at a 10 year
window and projects if we have enough revenue to support our expenses and capital
requirements while maintaining adequate cash reserves. Enclosed is the following
information for your review.
a) Electric income statement projections.
b) Water income statement projections.
c) 10 year capital project projections.
The critical assumptions and conclusions for each department are as follows:
Electric Department
1) Sales growth in KWH (line 4) increase at 5%. This is on the conservative
side.
2) The connect fees (line 7 & 8) reflect a slight slowdown for 2003 & 2004, but
increase thereafter.
3) Retail electric rates (line 11) and wholesale power costs (line 21) remain
constant. As power costs increase, the total dollar amount will be passed on as
a retail rate increase but the combined effect is zero.
4) Rate change (line 13) reflects the difference between the whole rate change
and retail rate change.
5) Great River Energy may possibly be changing their transmission voltage
from 69 kv to 115 kv in the 2010 to 2012 time frame when Elk River's
electric load exceed 70 MW±. This change will effect our substation
transformers. Line 42 reflects $1,000,000 in expenditures in 2010 and
2012 for substation modifications.
Conclusion for Electric Department.
Our goal is to maintain approximately $2,000,000 in cash balance (line 63). This study
shows we can still maintain our desired level of cash reserves while not passing on all of
GRE wholesale rate increases. This is good, for it will allow us to get our demand rate
more competitive. Our residential and non demand rates are competitive, the demand
rate is approximately 10% higher than our competition. This updated study indicates the
same trends as previous versions.
Water Department
1) Water sales increase at 5% to 6% (line 8). This may be conservative
depending upon the weather.
2) The connection fees (line 10 WAC fees) reflect a slight slowdown for
2003, 2004, and 2005 but increase thereafter.
3) Revenue from sales (line 13) include an approximate 3%±rate increase
annually.
4) The second page reflects capital outlays (line 4-11), bond issuance
(line 13-19), and maintenance and repair operational (line 47-56). The
major cost items are highlighted for your convenience.
Conclusion for Water Department.
Our goal is to maintain approximately $2,000,000 in cash balance (line 51) but will be
difficult to achieve. Our debt payments (line 45 of second page) remain very high and
exceed $824,000 in 2007. This study reflects by 2009, we can start paying for some of
our capital outlay without or possibly only partial bonding, instead of bonding for the
entire project. We will be operating close to the "wire" for the next couple of years. This
updated study indicates about the same trends as previous versions except the cash
reserve balance continues to deteriorate . We may need to consider raising water rates
faster than 3% or delay some of the projected capital projects.
It is difficult to predict with any accuracy 10 years in the future particularly with growth
and weather being critical factors. The trends these studies provide are more important
and are a great tool for guiding future decisions.
I
o
1111 III' 1 IIi1 a x e x i iii
mN°N mm b iii;' • ry • m "g'""" m m m o O N N N O N Ea
N ry Iiii I�I f 0
i :
N me N
• p 10 . b O b O rvoJ(V'S NWm" m g t+1 ?j'" 00' N n ii
co 1p� 8 88 pO 88 B8YOoYII Me
bS O011`mm]b OAr0„. ON 0OO . 01� h(�.1m 1: :R N • li
i 8:=F O OO Op °N NN Nb (/1� m �
0 m
O
n
mngS"
N g gsg g2 Io o 4 o
lo Pm , gg " 32280$ $44 22
: Co "m - o� m8�°�mm E ae o '7 " m° ` a (sr,N m V S v r
"
n
a
M g
$
Fr-
i'
o
Q
0 b egg
0300 ag Q m CO 0�n .- o
��A N NSVNN Na 4 b L. SA CA mo x ry o oC co
oo
�MSgmco
o g $ bs g " a e rvr a o o - g g°- - _5g
°
O b
m v
x4 e g o ggm Ii A
2 IT p� g Ilg mm 2n2omb ag2 <V2aA° SO $ "$ "m m r 040N i ym tp 5 h E O m5m V —g N£ N a
22 _ e o
§ S .g8 v _ ry °ry g m ry v m p Ary ep i _tit
_J 0 OO
il co
li g g �g s b �4� �m :::::::::::
—
o g .-bga N nM N
n s sg g o g 'Am
m gg
com
ta . . hma°4sg gN N OS °r m m g N F r O O
S O $
o m r b g I a O b A S V mm p -
b g H a8 N� g c4cg III rO O n O V� mnm Fa„ m me
4bqmSaa m IA
r ss S
b gag
OON -
b m
•r Q m O 28 P g o gg He,n mp O gin a g° s b m °m m ° Nm O N N V og ?U ON ;52 " 0 - °
b m O
N
o
co
N v
N. Co ♦
Q h TD n-
` SUS * *i n°*m °mmzg R `^ $
¢ a a u d
eg o 2 R7T
— m pp �p p pp 'n�`
Co Co A R P» S§Air (t0 N 0 N O ^a O A N N O 1-O^ ^ 8248
O e N Co N�-°I 0.0r-..-0 y N C) W N e N N y CI y VI
° N N-� RAa0 a0°nm-»--(e ( clip Co ;,m �-.C;
Ny «« «» y M_ -
_ �p pp�� N8 y 0m��0p�[p�8 p 8 saga
NNN
N R N�p m S R b�0 pN p N d O O�<O N Ol 0 t°�1 O Co pO n 0) »-.0
d m 0 m b 0 'O O R^R C«O N O N O O m v 0 m 0 O S O
'
get N N M'N y H N N N 0 Y1 - N 0
y 0 N N N (S N q
Q m $� pp a y p� pN (r�
Co RR P^NQR mOm N((1 mO t00NN V ZS C N<71c- (p- (p(y pCm SS Cf OCI ' O0(0n
m t7 N m 6^1(424c4-26 fO °N M fNV N N O Q y yy N
O -� .n'n p �? noon meffiM
N N y y N« N N - -O . 2 O O N
p p y «« N N
— `O O i0Oom `28°eo N' a nmSSA^^m= 0 SA » ^»^ 82°R
I0 N^O N ° R „ 0„0__.“,y� o N e Co to m (rO^
Z !0e 0yary N��NNY]HyNOy yN Co 0m MM
y NN N M N N
R N MA NNE N0 0M Nym N 000 V0 C�
m R -MNA N ONNMN°VINNf-» (S h!- 1§0°NNry
N M M
N (r� p N mN y
—
R § (-�t2A2 pO80e°p A80RSp°A.Am 17 (0 O(0 2 NONN pO VI^N it'll
N T 0 C°N (g O 1,b Yl(7 R P O(O C Q R V ON P p 0O�(gyp-R N
tOOms�0tNo 0aa^SO°ImROPioy� N Ntc1 O Co N OoRh
f m P N e N 0 N 0 N N N 0 N N Cl 0 N NN Co m
«R
N N N N N N
ON N�00 8 N��N!8 ; �N N ^N00 §22s 0 N P o e yl 0
y [ m mn 9(y N 0-O T
0 Co- °P R
S
N m r qua y N -
My; M«NN -b MM 0 N
N CN 0
a N N y
yyN m°l N O S 0 N ° 8p N O 0 s N 0 4 e + M R O NORM Q'" p 4 .
_m8 p Mr ppQ M� iO § Q 00smp°0CtnN ry�mN pp NM � � (S H E_ N N
D Co N N RN NN N
0
— P
-0- - P °. § n0CR o Op CO
NJ N ^$88B8MpS 8A N Co y SSmT N m O^ P m tl °fM 0^ y ^R p N N 0 y N 4 N m � -N a N N N�y ' N O0N1
y N N N y Q Co p p N peal;8 N 0 yR O 0 N°O m N m N N S m °p°VO<QV 4
NMNNg co., My �Owl� t' 000 m ee NCE NO v _ 0 M�MNMM ' ' y d 00
« N
-
P S " 4-'12,28 N N 0 M^0 S m N p R m A O°i 8 rp N N H N 8222
NO 0 0 M N O CD b 0,- NO O pp Ol WON O(O`I § R R N N fp�p N
(� f ,-.0
(D R8NN yN--0N°MNN (^O v0 S T4R T NN°lNO
NNCI NN' N
Y y NN aN-» . N
C ^ « Ny
_ O
ly M F eSN Np N g n°S N g N R ,R C M R§ SQ N -
e
S
R OP No 0 e
a Q m
Y °A0 R R
N N N mm f 0^
N R 9 N N^ N M ^m NO O (C N _N 9
Y N N N N NyVN ( iiP
_ Y N - ae
Y NMNN q V N 8 '.-28;84; OH N0cQ Q Q p N § ^A80 'M
ARV
° ° v »° $ 0-»e (..° a2 wZ N 32 _mm
mtlNN —.0 -.0.0. 0 Co N�N NN ° My � y.ry'C Y N » « n»
_
S C g S
� a0Nn §RYHUral n N mm
osm run
NRP ovrodC Y mm «mrR$orcd ogoe N °s a N »» HM » No N h em^
W3 N
N N
. m
U
N N
m
g »
To pI m
e a ; a
_ m I'm i g a
N o $ a 2 N P c b Y
m 4 Y o i j c u == " •a a ∎d° cnwc l
li 'c o ca ° p 8
ligcli3aaa° aa'oa �w "iiNI € g m S " SF" c.A� 8 °e
y § c - a.2 ° s c a 3 c a 9 w ° Z o
d�iEN�-1asm¢ m1 S== qm mm -w VE $ g 1«� w icg 3cajS `c aea n
aMme tpa°a3So- frAMMM=6UafO Ot 0 2mw wm01-0 s$s - m
a
-1-NFF NI^ImIPI°I-1-1`"W1 421=1�1°�IRI�I�IRINI�I�INI�I�I�ImIm1MI�I I I�I�I�IOI�INI=1PIe1<1<I�IPI�IG
O
cv
O O O O O 00000 O O O O O O N ,t030 C ° M §^ §§ §R
a.
28 g 8 8 m 4 on R,r 'cc"'
- O°§o o § o o§0 0 §§§ !o 0 O°O N N ;0 8 0 0 0 0 0 0°1� 222 O§ (§f Q §O
O ES LSi m C mm m O `§`§ N
§go 8 82 8
m R R^< nu'
R osf cc § o§ oo §§§ no 00ofq e0Foo&0000m § §§ § §�
_ g § Q g 245 225 R $68 R 8 8 a ry N- 4, O
i m
O 00000 o 00000 0 o O o O 000r7,0 N-0 a2 0 0 41 0 0 0 0 m §§0§ §
r mR 8 88 m FN ^ ti °s
- 00§0o g 00000 000 000 000'0 N-0 00S+000O^o §§o§ Q§ §g
J § 2§5 `8 �i n 8 n o 4 ^ 8rA V i6
000°0 0 00000 000 4100 800.-.0 noyooffi+o°o0 8
0 3 a ° § §
Y 00 0 A O 8 N R
m
00000 0 00000 000 000 000NW N0 00w10000N Hi
_ 8Q d
00§00 4§ 00§00 02S S§9 NOtO 4 8 40�00000005 0
§ §§ § §°3 081 °o{'82 8 : N §§
0 00 0 0 00 000 moo 000^Rg nS0 0000000; 5Q2 Q
0840001 § 8 ^ S{"' m ' m .-
s o0§000§ 00000000o 000 e-mmnm ^0000000000^ o§o§ § $§
Yr 0 o'er°°mm °6$ ^ o mn
e S Ien n
m °N8°O8= °°§008§§§ R°3 UUiN§ :00000°oo°$ §88§ § §§
22 8 8 8 8co 8 68482 m ^28 00
—
ryN 020000§ °O O O 000 'goo 0 O O f n°O O O O O o o O 0 r0
W R n 0 04 po § N
U'On Q O N N
N
— °§ p p p
2 2i° m °§°°° §0 0 2°N- (n O 0 N- 0 0 0 0 0 0 0 0 0 0 0 0° § § 82 N
a mo
° g 8M8 m ° §°M° R aa°oO
ocm
§ w Mri m
Q
00000 0 00000 Ooo moo NOO'm 00000000000 40 00 §§ § °o 7i
U y[ D mp OBO v B OO §
d ! °OPm2 8 (my 84 v F.N
SQ y N av°ogg ooa° oo�°j9O FoCo y sN
v • - Ann mmmmmmmm0m • EE
a v a m E s v° t e e• _ g e > > e m i 1 1 o e E p • E E
'cm° E_LL o 0 15 o g ' E ' EE EEEEEEEEEE Qist- <3
m ' E _ _ E '� - U rc rc e re re rc re re rc m¢m ee ce¢ . E r fig t- • m Pk e
- Ey`_' = 0 5y`°_°'� c°S a 9m 99999 9999999 9 • 0R• •- 2 m 0
is E33ad =2 E33<8`i5 �z 33333 q Q 3s3353522 8383333g3° • E3°0' •< pO 3-
"a 03zz2we< ' 3 •J`6ma9 `o' ma Ina FSgAPv 8MFry WWII'. iei3
WU 8 322 W 60 L° i
f 0 m q c t g m C a
< U ° z ° 1°-<'a a ° $ 1 9 al
•
_Inlml-1°Iml^+1 1°11=1=111#1=ImlmI47A ISlMM°ImMISIrlmis1=1=1<I=1=1 1=1=1=14*W���kl*l$
IN O 10'i O QIJ
n OI tl (j O I�IN t7 n CV O 1(1 t{! N 11 co
N
I
N
8 H m u � I pp
555 o ao CO ! Ig bgg n 555 gpnI q I I Q No N I ° ON I I 41 4
0 11 o N al
I NI
Q tp N N N '' `� O O_
N IW Ir.O Pet
r:-..
N N
0 CO pSSS 1:
p 11 p8 O 8p 8p fp
Cei
IN N m 'O Ul IOQ B O OQ N OiO 0:: 1A O O
1 .0NIN N N T O tai N 0 CO
co : N
V. m11 Q .1 Q ° n N f3 ° a
0I 11 'in; l0 N ' 0I N N ml N
O I i , I
N
L 525 jQ� 15�'
of IN Om � 11511 °o� j 8 a' a M len n1rn of
n. 1 i I o
v N N m O tv
U' ',011 n.0) m N 9 ^ ^,I�IN N N �. N O
I L. p I $ g N
4 ,ol 'NIO § 8,,$ Q 8r§ $ � g °I IP 2i ° I N v umi 1' ai n .-:ry in 8'n M gi n i $��{ n o-m n�n N 2S N o �N Pc' CO
y' I tIQ I 1 I p N
41 .1°1 1H O 0I1Ia 'aOQ�8pj S �QO 8 O p I�Bj 8O O° 'iN O ■ SOr O O 10' O
M IN dI0'N t(1N en r� �10 O O'r81 O "' pp O SS p pp ° O
N N.011 O O 81 1 jO ° O
I'i 8 r NI I"I Oli N la 0," m' n. NN N ^ m
70 0- et N ca r $$$���$ �Q$ ,aQ{ }�Qj{ $�$� yaQ{ ,�5YQ�5, `oQ�x' N co
C 1N rN �IN O OOO O 10 OIg.g. _" _" 1 i OI ° q 01 J. tp rp N
2 min CO Cr
or en co gg $ Q Q $I m or s
to
,d'; 8;° 8Si8 m125 ;�IS. a °;$mQyj�I `�aQ s�pj nl ' 'K ps�j N o° o
W' 1 ; n 0 1"f ' I cc n N Qi m. 0O �0 e, CO
8o8p 8888aQp pp p I I ''888 88 Q8p�Qp S p`I 8Ir H
N 1`I'8Ol III In
00O O S 81p18 SI I$ aI 118 O 010. OI'8i0O 1001 OT 'O 8 SO pp ;Of O O
N OO m r 80 O 8 Me *,O 03'm ' N N O O.N V n N
I I 1 N Q n'�r'nI 0� H 'N NI �0 .Q- nl O r e O N
in
m
Y 11 c �IiIIIF I I � I I 1111
1- m w irs m E
'Ti N c o m I U 1 m la 'c I N c a c
�I r, �m' U m rvldm' wl m E @ �?3 E 1 v.l 'I Ei E
• •
-I - s C $ C ] d fA m' E' !0 „, -214)10 m y. 1 bl 21 d K
a u C9 c p c Pc ,0 t J 0 = ;ell Q� alp Ip C y m w
1 W:,06-1_,.., .. .¢ m v vF v o.¢ Q vii c 1 q���; £ �!�- I m m ° O a Eh. ".
0 c, 0 m 3ti ¢:c � Z` ml°Ig B. ce alm:&f - F LLIm1y ! mi ml C. I.-W � v = ..I me my
:I EIr f F2- It — �1LLccl m 9,c0 v >1,II'plm ml I:c u -1E'olm m m = 3 � J— C 81$ m. Nit LL OI� a m s
U y F- A ~ u v n ipi�+
I v m ` 6� y Y g d m F- O 2,0 d u:a a 0 Y ]'.c 2 � ?i vl jl� a d rt a C U I C :: � O w �l r
dmltlu §IEs3 alt 2'2 m EU ; cd u1 aI ,a IE.El! 13 vs 3 -y a 2.2 �I'E a ° I
I-1 a p o "' ,i.2 m if o d `v w v m m $ c z i0 R.E.m e- 31E,I o u a n 1 E
wlmlm m o oIa U U S m` o z ¢ z �i3 Iwlm°O 3_� a'.3 Z1a" zsl2lc°It'I m° 4 0 Q coI I ..r"- - -a]an t)'71 ro
15