ERMUSR MISC. ITEMS 10-15-2003 Ji
Elk River
Municipal Utilities
322 King Avenue phone: 763.441.2020
Elk River,MN 55330 Fax:763.441.8099
October 8, 2003
To: Elk River Municipal Utilities Commission
John Dietz
Jerry Takle
James Tralle
From: Bryan C. Adams
Subject: Miscellaneous Issues
Enclosed is the packet for Wednesday, October 15, 2003, commission meeting at 4:00
p.m.
I apologize for the length of the agenda but a lot of things have happened since our last
meeting, and we need your input on several issues.
At the last Elk River Municipal Utilities Commission meeting, John Dietz inquired about
Vance Zehringers' consulting contract and how much as been paid to date. Vances'
invoice to date for year 2003, total $24,334.50, of which $3,660 is for service rendered in
November and December of 2002. Vance continues to implement the CIP and off peak
programs, do customer visits, and carry out some of the wellhead protection surveys.
Enclosed are the following articles that may be of interest to you.
1.) "We're Not in Kansas Anymore", taken from the July 2003, Minnesota Cities.
2.) "The Wind Blows Across the Coal Fields", taken from the August 2003,
Power Engineering.
3.) "Natural Gas Crisis Revisited", also taken from August 2003, Power
Engineering.
4.) "Electricity Price Trends", by APPA, September 2003.
5.) "Blackout", from September 2003, Electric Light and Power.
As your staff was finalizing the revised electric capital budget, we received the attached
letter dated October 3, 2003, from MNDOT. This letter is informing us of the May 27,
2005, construction start date for four overpasses on TH101 between the Mississippi River
and I94. There will be overpasses installed at CSAH36, CSAH37, CSAH39, and
CSAH42, of which the last two will require us to modify our electrical distribution
system. These overpasses will be similar to CSAH33 and TH169, now under
construction. The majority of our electrical distribution modification will need to happen
in 2004 to be ready for May 2005 construction. Preliminary layouts at these
intersections, will not be available until after the first of next year. Staff is currently
looking at options to modify our electric system in a cost effective manner but cost will
not be available until early 2004.
As a final note,there is a$20,000 dispute arising from the CSAH33 and TH169 project.
We were required to move a primary service line to one of our commercial customers,
due to MNDOT construction and land acquisition. We moved this service line so the
customer would have continuous power. MNDOT is now saying it is the customers
responsibility to pay us and the customer is saying it is MNDOT's responsibility. Our
attorney, Ron Black, is now dealing with this issue.
!............smaa
We're Not in Kansas Anymore
By Jim Miller
ow that the Legislature has j include a significant financial commit- rather because it sensed that was
adjourned, many of us are ment to funding programs at the state consistent with the majority opinion at
reflecting not only on the impacts and local levels. General revenue the time. Likewise, while there may be
of specific decisions, but also on sharing was born, for example, and individual instances to the contrary, I
what this difficult session might cities across the country began to think the debate on local government
portend for the future. Some receive significant funding to be used as aid was as much a manifestation of the
believe it was an aberration and they saw fit. It was perhaps the heyday belief that the state's role should be
that we will return to the good of local control; the president and more limited as it was balancing the
old days as soon as the economy recovers. Congress recognized that priorities and ! budget.
Others argue we are seeing a new and needs varied greatly, and they entrusted Assuming this supposition is correct,
i
fundamentally different relationship I local officials to match the federal and looking at the last century as a
between government and its citizens— I finding with those needs. guide, it seems Likely it will be some
a perspective I share. This philosophy spawned in the time before the country's values shift to
Although most of us might hold out Roosevelt Administration, and expanded expect more involvement by govern-
hope that the state will soon resume its by Presidents Johnson and Nixon, ment. That may come, but not as soon
historical financial commitment to I dominated the political landscape until as recovery from the current recession.
programs like local government aid and the presidency of Ronald Reagan. Congress and state legislators must first
health insurance for low-income work- Besides what many saw as charisma, start again hearing that citizens indeed
ers, I think that is unlikely. I believe the President Reagan was primarily elected value government services. Once that
decisions made during this most recent I because of his espousal that government occurs, it will take some time for that
session were the result of more than a was too big and inefficient and that it sentiment to be reflected in political
lack of money; they were the manifes- should be streamlined and made more decisions.
tation of a now dominant political ; efficient. Privatization and deregulation For local officials, this means they
philosophy predicated on a value of began to have more and more currency. should assume they will be more
more limited government. Moreover, In many respects, the roots that dictated dependent on their own resources and
this more conservative philosophy the outcomes of the most recent legisla- creativity for the foreseeable future. It
about the role of government is not rive session were planted at that time. will mean doing an even better job of
limited exclusively to Minnesota. It can Perhaps, with the exception of the finding efficiencies and showing value
be seen in state after state and at the "Clinton Cops" (community policing) for the more limited dollars expended.
national level as well. program, that move to a more limited It will require engaging the public even
During the last century, I think federal role at the state and local level more in discussions about where and
there were three seminal shifts in the continues to this day. Simultaneously, how to allocate increasingly precious
relationship between government and we have seen a similar evolution in the resources.
its citizens. The first occurred with the political philosophy guiding state The real challenge before us is to
New Deal presidency of Franklin legislatures. What we as local officials re-establish in the minds of our citizens
Roosevelt, when this country agreed tend to see as a session-by-session debate an appreciation for the value of govern-
for the first time that the government '.. over resources or local control is occur- went in their daily lives. That is the
had a responsibility to help its citizens ring on this much larger stage of a first step if we, like Dorothy, are ever
achieve at least a threshold standard dominant belief that less government to return to Kansas.
of living through programs like Social is better.
Security. This was a l80-degree shift It would be easy to blame this change
from the up-to-then dominant belief on the `politicians." Likewise, we
that government's role was generally ought be inclined to believe that they
limited to national defense and a few are out of step with the mainstream of
' other, purely national, responsibilities. society, but I am not so sure. In reality,
The second major shift occurred our representative system of government
with the presidencies of Lyndon Johnson works relatively well, at least at the Jim Miller is executive director of the
and Richard Nixon, when the federal macroscopic level. Congress did not League of Minnesota Cities. Phone: (651)
' government redefined federalism to undo revenue sharing out of spite, but 281-1205. E-mail:jrniller@lnrnc.org.
J u r y 2 0 0 3 M I N N E S O T A C I T I E S 3
TRANSMISSION INFRASTRUCTURE
BY STEVE BLANKINSHIP,
•
ASSOCIATE EDITOR
THE WIND BLOWS ACROSS THE COAL FIELDS
Wind power developers bemoan the fact that abundant wind Webb says transmission outlets added to mine-mouth coal plants
usually exists in regions remote from load centers.where there is in the Illinois basin would produce wholesale cost reductions in
rarely adequate transmission to connect wind-generated electric- TVA and to the south as well as in MISO.
ity to population centers. Developers of new coal-fired projects Many of the potential sites for new coal and wind development in
experience similar frustration because, in many instances,Made- MISO are in congested areas of the system,and transmission expan-
quate transmission hampers delivery of low-cost,coal-fired power sion in these areas can result in improved delivery of the most efficient
to customers who could benefit most. existing and new resources. "Certainly some of the scenarios we
Although most people probably think of coal plants and wind looked at, particularly up in the Northwest where most of our wind
farms as being at opposite ends of the power resource spectrum, potential is,is also the area that includes some additional coal devel-
both coal and wind share the need for expanded and improved opment,"says Webb."We had one scenario that was mostly wind and
transmission infrastructure if customers are going to derive maxi- also had some new coal.I think it is reasonable to expect that there's
mum benefit from the electricity they generate. Coal offers reli- both wind and coal resources up in the constrained transmission areas
able, low-cost base-load power. And wind brings emission-free of the northwest. Transmission that enables one is going to enable
renewable energy at an increasingly competitive cost.These real- both.That's something that's not lost even on the wind folks."
ities are not lost on some generation-neutral entities. Great Northern Power Development and Keiwit Mining Com-
The Midwest Independent Transmission System Operator pany announced in May that they will proceed with a 500 MW lig-
(MISO), the nation's first FERC-approved regional transmission rite/wind project in eastern Montana. The circulating fluidized
organization, is one such asset-neutral entity. MISO's footprint bed design selected is a good example of today's clean coal tech-
spans 15 states and 1.2 million square miles from Canada to Ken- nologies that make the nation's most abundant fuel dramatically
tucky. "Some have noted that the wind blows across the coal cleaner than was once possible.The companies believe that link-
fields," says Jeff Webb, MISO's director of planning. "It's not ing coal and wind provides unique advantages to the project
enough to simply assure reliability. We need to identify transmis- because coal can support the necessary upgrades to the transmis-
sion that must be built so the consumer can reap the benefits of sion grid that would otherwise be difficult for wind to justify,while
existing low-cost generation and new developments. And among wind can improve the environmental performance of the project.
those low-cost resources are coal and renewables." Elected officials in neighboring North Dakota—viewed as a
Several transmission scenarios are under consideration by 'Saudi Arabia"of wind in the U.S.,and with hundreds of years of
MISO,and some are based upon the location of substantial amounts coal reserves—have recognized the need for new transmission for
of coal and wind where enhanced transmission could enable both. both. North Dakota has organized a unique coalition of wind pro-
MISO's coverage area is rich in both coal and wind resources. It ponents, coal developers and transmission providers to address
includes the northern lignite basin in the Dakotas,and the Illinois transmission to markets in need of new,reliable power.
basin in Illinois,Indiana and Kentucky.It also includes some of the "Our governor and elected officials have embraced energy
highest wind potential areas in the world, also in the Dakotas as development in the state,and recognized North Dakota's opportu-
well as in Kansas and other upper-Midwest states. A MISO study nity to contribute to our nation's energy supply and its security,"
shows that between $304 million and $1.6 billion in reduced says Robert Harms, counsel to North Dakota Governor John
annual marginal cost of wholesale energy could result from trans- Hoeven. Harms chairs the coalition formed to help resolve trans-
mission additions together with higher amounts of wind and coal mission constraints to neighboring markets. Governor Hoeven has
capacity,depending on natural gas price projections. been heavily involved in formulating national energy policy among
In the June issue of Power Engineering, Jacob Williams of governors,in an effort to help diversify the energy supply.
Peabody Energy, a company pursuing low fuel-cost mine-mouth "Most people who have looked at the issue recognize the need
coal generation projects in western Kentucky and southern Illinois, for different fuel sources and risk of relying too heavily upon a sin-
noted that many coal facilities are underutilized because the lack gle fuel," says Harms. "We need it all. Energy developers in the
of transmission prevents the flow of low-cost coal-generation to region recognized the need to build alliances and coal and wind
high-demand areas in the Northeast, Florida,Texas and the West. found those alliances that will help both deliver energy in coming
As a result,many electricity markets will be left to float with years. Both energy groups recognized a need for one another,and
the volatile natural gas market,which over the last three years has a greater likelihood of success if they worked together,rather than
wildly fluctuated."It is not surprising that the low-cost areas have going it alone.We know that transmission is the key and the mem-
the coal plants with the lowest capacity factors and the high-cost bers are committed to finding solutions to transmission constraints
areas have coal units with the highest capacity factors," he says. in the upper Great Plains in the coming years." PE
POWER ENGINEERING/AUG'LS 2003 • 8 www.power-eng.com
OPINION
By BOB SMOCK, VICE PRESIDENT,
GLOBAL ENERGY GROUP
NATURAL GAS CRISIS REVISITED
D id you follow the flurry of news reports in June about the U.S.Dept.of Energy Secretary Spencer Abraham wrote a let-
natural gas crisis?Though the media has since moved on to ter to 30 senators in June calling for, among other steps, electri(
newer crises,the underlying problems with gas supply and utilities to switch from natural gas to coal and other energy sources
pricing remain.The situation suggests the following scenario: A House of Representatives energy and commerce committer
The crisis gets worse. Natural gas prices continue to climb hearing on the issue on June 10 featured testimony from federaE
into the winter heating season.Demand exceeds supply and short- reserve chairman Alan Greenspan, who concluded, "...the long-
ages begin to occur.The winter is extra-cold and some homeown- term equilibrium price for natural gas in the United States ha:
era can't get enough gas to heat their homes.The growing number risen persistently during the past six years from approximately$2
of gas-burning power plants is blamed. Congress.feeling the pres- per million Btu to more than $4.50. The perceived tightening of
sure,passes a law.The president signs it.The law bans the use of long-term demand-supply balances is beginning to price somr
gas fuel in new power plants and sets a deadline for phasing out industrial demand out of the market. It is not clear whether thest
gas in existing plants. losses are temporary, pending a fall in price, or permanent:
Sounds crazy? Could never happen? Well, it did happen. In Greenspan did not seem worried about a shortage of natural gas.
the 1970s,this scenario unfolded and in 1978 Congress passed the noting that if the U.S.gas industry did not increase production suf-
Power Plant and Industrial Fuel Use Act. PIFUA prohibited the ficiently, then imports would fill the gap, in the form of liquefied
use of gas as a fuel in new power plants and required existing natural gas if necessary. House committee chairman Billy Tauzin.
plants to stop using gas by 1990. R-La.,was quoted as saying,"We see a storm brewing on the hori-
PIFUA was repealed in 1987-after the federal government zon.We need to prepare for it."
stopped regulating the price of gas at the wellhead and supply By July the"crisis"eased.Large injections of gas into storage
quickly grew to exceed demand - but the ban was in place for relieved fears of a shortage this winter.even though storage levels
nine years. are still significantly below levels of a year ago. Spot prices fel.
The current situation is eerily similar to what led up to back to the$5-6 range, down from the spring peaks but still well
PIFUA, including the threat of Congressional action intended to above year-ago levels.
protect voters with gas-heated homes. Power generators cannot afford to ignore this issue. The
Prices are rising. Demand exceeds supply. Electric power underlying trends in the gas market remain:
generation is at the heart of the issue. Over the past four years
about 200,000 MW of new gas fired generating plants have been •Additional U.S.gas production or imports can meet demand.
built,significantly increasing demand for gas and putting upward but at a much higher long-term price than in the past.
pressure on prices.The build-out of gas plants is still underway,at • The tremendous increase in gas-fired electric power generat-
a lower rate,but still adding to gas demand. ing capacity in the last
The underlying problem is that U.S.gas production is declin- g p Y few years has et n the dominant
mail
ing while demand is rising. Production is less than consumption,
cause of on the demand side of the market and is the main
resulting in a drawdown of gas in storage.Talk of a crisis was trig- • cause of cu ent market strain.
gered by the abnormally low levels of gas in storage this spring, The U.S. has not had an extremely cold winter or a series o>
bottoming at the lowest level since storage amounts started being extremely cold winters since the mid 1970s—but that is cer-
recorded in 1976. Spot market gas prices climbed to above tam to happen again sometime.
$6.00/MMBtu in June,almost double the level of a year ago.
First talk of a crisis came from industrial users who feel the Note Alan Greenspan's use of the word "perceived" in
high price impact first. Industrial consumers asked the president referring to the "tightening" of the -demand-supply balance."
to"declare war on natural gas prices."Representatives from them- Calling the situation a "crisis" may be an emotional over-reac-
ical,fertilizer,and other process industrials that use natural gas as tion,but we must remember that natural gas is a politically Sen-
a feedstock complained that the high prices were making their sitive commodity. In such situations. perceptions have a way of
products noncompetitive in international markets,aggravating the becoming realities.
economic downturn. Look at what happened in 1978. m
www.power-eng.corn POWER ENG A_ERING/AUGUST 2003 • _
Electricity
Price Trends
by
Diane Moody
Director of Statistical Analysis
September 2003
APPAAmerican Public Power Association
Contents
Page
Introduction 1
Long-Term Trends in
Revenue per Kilowatt-Hour 1
Recent Trends in Revenue
Per Kilowatt-Hour 5
Retail Choice and Revenue
Per Kilowatt-Hour 8
Conclusion 9
Electricity Price Trends
Electricity Price Trends
A frequent question asked by the media and other observers
of electricity deregulation is how changes in retail and
wholesale power markets have affected the price of electricity.
This is a brief report on what, if anything, actual data can tell us
about the subject. It is not an analysis or comprehensive treatment
of deregulation and its effects, nor does it address other market
dimensions, such as number of customer switches or number of
players in the market. It simply looks at the available information
on retail prices.
The report shows a relatively steady decline, on average, in the
inflation-adjusted price of end-use electricity. The trend began long
before the introduction of significant market competition, and can
largely be explained by traditional and expected factors, deregulation
not among them.
I
Long-Term Trends in
Revenue per Kilowatt-Hour
The Energy Information Administration (EL-k) collects annual
data on revenue and sales of electricity. From this information it is
possible to calculate the average revenue per kilowatt-hour sold to
consumers. This measure, which can be calculated for the nation as
a whole, a region, state, or individual utility, shows the average rate
level, rather than any actual rate charged by a utility.
FIGURE I shows that rate levels for all customers, as well as for
residential customers, have increased gradually over the last 20 years.
The average annual increase in residential rates between 1982 and
2002 has been about one percent per year, while rates for all types
of customers combined have increased more slowly on average, at
0.8 percent per year.
.'
Figure 1: Average Revenue per Kilowatt-Hour
11.0
10.0
9.0
Residential
N
C
23 8.0
All Customers
7.0 —
i�
6.0
5.0 N
N CO < LLO f0 1� co O] Q)
CO N CO CEO CO CO CO CO OD a) CI O) O) Q) 01 Q) O) CO O) 0 0 0 CO
T CO CO O) CD CO Qf 01 Q) CO O• CO W OI T CAN N
In comparison, inflation—as measured by
...in real terms, the implicit price deflator for gross domestic
the average price product—has grown at an average rate of
Of electricity Is 2.6 percent per year. Thus, in real terms, the
lower in 2002 average price of electricity is lower in 2002
than in 1982. than in 1982. Ii
FIGURE 2 shows that inflation-adjusted prices for electricity declined
virtually every year until 2000.
2 Electricity Price Trends
Figure 2: Average Revenue per Kilowatt-Hour, in 1996 Dollars
11.0 1
10.0
9.0 —
C/)
Residential
11L-1—At\NIA---:_mTh---"s' ar-----s----a_ -
a
;f 8.0
All Customers
7.0 -
6.0 -
5.0
N CO V' in O ^ O0O N CO Q O CO t•••• CO CT)CO CO c0 CO CO CO CO
Cr) Q) Of 0 Of 0 Of 0 Of 0 Cr) CO Of Of Of 0 Of 0 O O O
N
There are numerous factors that contributed to the downward trend
in inflation-adjusted rate levels. These include:
1 Stable or falling rate base values, as capacity growth stalled
in the 1980s and existing base load capacity continued
to depreciate;
I Declining fuel prices;
1 Higher capacity factors at nuclear facilities;
I Introduction of more efficient generating units;
1 State restructuring requirements for rate freezes, rate caps,
or rate reductions; and
I Implementation of cost-cutting measures in anticipation of
competitive markets.
Electricity Price Trends 3
Of all of these, the persistence of stable or falling fuel costs has been
the most significant factor across the whole time period. The cost of
coal deliveries to electric plants fell by 24 percent between 1982 and
2002, or at an average annual rate of 1.4 percent per year. Since coal
accounts for between 70 and 75 percent of fossil-fuel generation, the
cost of all fossil-fuel deliveries combined fell by 18 percent over the
20-year period.
In contrast, oil and natural gas prices are more volatile.FIGURE 3,
which plots the cost of fuel deliveries, shows that both natural gas
and oil prices were significantly higher than average in two different
periods: the early 1980s and since 1999.
Figure 3: Cost of Fuel Deliveries at Generating Plants
500
Oil
400
Natural as
300
2 All•�
ll F w
y
• •
d 200
Coal
100
0
W CO CO CO CO CO CO CO rn CM rn o) CO CO CD CO CO 0) 0 0 0
0) 0) 0) 0) 0) O) 0) O) 0) 0) 0) 0) CO 0) O) 0) 0) 0) N N
4 Electricity Price Trends
Gas has been growing in importance as a generating fuel so the
recent increase in gas prices had a noticeable effect on the average
cost of all fossil-fuel deliveries. Natural gas generation more than
doubled between 1982 and 2002, accounting for 13.6 percent of all
generation in 1982 and almost 18 percent by the end of the 20-year
period. (See TABLE 1 below.)
Table 1: Electric Power Generation—
Coal vs. Natural Gas
Generation, in Million Megawatt-Hours
Percent Change
1982 1987 1992 r 1997 2002 1982 to 2002
Coal 1,192.1 1,463.8 1,621.2 1,845.0 1,926.4 61.6%
Natural Gas 305.3 272.6 404.1 479.4 685.8 124.6%
Total Generation 2,244.4 2,575.3 3,083.9 3,492.2 3,838.6 71.0%
Percent of Total
Coal 53.1% 56.8% 52.6% 52.8% 50.2%
Natural Gas 13.6% 10.6% 13.1% 13.7% 17.9%
Source: Energy Information Administration, Monthly Energy Review
Recent Trends in Revenue
Per Kilowatt-Hour
The major impetus to competition in the electric industry was
the Energy Policy Act of 1992 (EPAct), which allowed unregulated
power producers to enter the market and charge market-based rates.
This section looks at average rate levels between 1995 and 2001, a
time when the effects of EPAct were first being felt.
Electricity Price Trends 5
A measure of the changes that have taken place since 1995 is shown
by the activities of unregulated entities—power marketers and
generators. Wholesale electricity sales by power marketers
increased from 25 million megawatt-hours in 1995 to four billion
megawatt-hours in 2001. Capacity owned by independent power
producers rose from 12 gigawatts in 1995 to 243 gigawatts in 2001.
Most of the capacity increase resulted from regulated investor-
owned utilities divesting generation facilities or transferring them
to an unregulated affiliate.
In regard to retail competition, in August 1996 Rhode Island passed
the first retail choice legislation, and customers were allowed to
choose suppliers beginning one year later. California, Pennsylvania,
Massachusetts, New York, and New Jersey all offered retail choice
prior to 2000. TABLE 2 compares average rates for the nation with
rates in two regions that generally offer retail choice (New England
and Mid Atlantic) and two regions with no retail choice (West North
Central and South Atlantic).'
The only 2002 data published by EIA to date are preliminary and based
on a sample. The sample data are useful on a national level, but
procedures used to estimate revenue for retail choice states are still
relatively new, and the sample estimates for these states have not been
consistent with the final annual data. Thus, the regional analysis
excludes the preliminary 2002 data.
6 Electricity Price Trends
Table 2: Total Revenue per Kilowatt-Hour,
By Census Region, 1995 to 2001
Revenue per Kilowatt-Hour, in Cents
%a
- - Change
1995 1996 1997 i 1998 1999 2000 1 2001 ' 1995-2001
National Totals 6.89 6.86 6.85 6.74 6.64 6.81 7.32 6.2%
Regions with Retail Choice:
New England 10.27 10.28 10.46 10.00 9.71 9.75 10.82 5.4%
Mid-Atlantic 9.71 9.76 9.78 9.49 9.42 9.55 9.70 -0.1%
Regions with No Retail Choice:
West North Central 5.99 5.91 5.89 5.93 5.92 5.92 6.01 0.3%
South Atlantic 6.57 6.54 6.51 6.44 6.37 6.36 6.70 2.0%
Source: Energy Information Administration, Form EIA-861
Notes:
New England = Connecticut, Maine, Massachusetts, New Hampshire, Rhode
Island, and Vermont.
Mid-Atlantic = New Jersey, New York, and Pennsylvania.
West North Central = Iowa, Kansas, Minnesota, Missouri, Nebraska, North
Dakota, and South Dakota.
South Atlantic = Delaware, Florida, Georgia, Maryland, North Carolina, South
Carolina, Virginia, West Virginia, and the District of Columbia.
The data show no clear trends in how retail choice is affecting
average rate levels. Average rates for all four regions and the nation
The data show no as a whole reached their low point in 1999. In retail choice regions a
clear trends in how contributing factor was the mandated rate cuts or caps that many of
retail choice is the states imposed, typically for a limited transition period. The two
affecting average retail choice regions had the highest (New England) and lowest
rate levels. (Mid-Atlantic) rate changes over the six-year time period. Rates in
both of the non-retail choice regions showed the most stability, but
Electricity Price Trends 7
•
these regions did not escape the significant increases experienced
by all regions in 2001.As previously shown, natural gas prices were very
high in 2000-2001, and this is likely an important factor in the increase.
Also in 2001 dysfunctional power markets led to large rate increases
in western states. These increases would affect the 2001 national
rates, but none of the regions shown in the chart. Thus, it is not
surprising that national rates show a larger percentage increase than
the chosen regions.
Retail Choice and Revenue
Per Kilowatt-Hour
ETA began collecting separate information for full-service electric
customers and unbundled (retail choice) customers for the 2000
statistical year. However, ETA has not performed any significant
• analysis of prices in the retail choice environment, most likely
...the data are not
because the data are not detailed enough to draw any conclusions
detailed enough
in regard to the basic question: Are customers better off or worse
to draw any off purchasing power from alternate energy suppliers?
conclusions in
regard to the For unbundled electricity sales, volume and revenue data are
basic question: reported in two parts. The power supplier reports the energy-only
Are customers portion, and the regulated utility reports the delivery-only portion.
better off or Sales are reported on an annual basis, but power suppliers are only
worse off required to aggregate totals by state, not by utility service territory.
purchasing power There is no way of knowing which energy-only sales should be
from alternate combined with a utility's delivery service, and therefore the total price
energy suppliers? paid by a utility's retail choice customers cannot be determined.
For example, in Pennsylvania there were eight utilities providing
delivery-only service to residential customers in 2001, and 21 power
suppliers providing energy to these customers. Pennsylvania's
bundled (full-service) residential customers paid, per kilowatt-hour,
8 Electricity Price Trends
an average of 9.4 cents for electricity in 2001, and retail choice
residential customers paid 11.6 cents. Did the retail choice
customers benefit from leaving bundled service? The EIA data
provide no answer. Retail choice customers in the state paid more,
on average, than full-service customers, but the state average hides
the significant difference in rates charged by individual utilities. The
average bundled residential rate for Pennsylvania investor-owned
utilities ranged from 5.6 to 12.7 cents per kilowatt-hour in 2001, but
since it is not possible to calculate unbundled rates for any utility's
service territory, no effective comparison can be made.
Conclusion
Inn sum, the best credible, available data on electricity prices do
support a hypothesis that deregulation has brought lower
prices. The relatively steady decline, on average, in the inflation-
adjusted price of end-use electricity over the past 20 years can
be largely explained by traditional factors such as declines in
regulated rate base and fuel costs, legislative rate freezes, and
other predictable determinants.
Electricity Price Trends 9
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(DI Minnesota Department of Transportation
or I Office of Technical Support Office Tel:(651) 297-3348
Utility Agreements Unit Fax:(651) 296-9868
Mail Stop 678, 6th Floor
395 John Ireland Boulevard
St. Paul, MN 55155-1899
October 3, 2003
Mr. Bryan C. Adams, General Manager
Elk River Municipal Utilities
322 King Avenue
Elk River, MN 55330 -
In Reply Refer To:
S.P. 8608-21,22,23,24 (T.H. 101)
On T.H. 101 at the intersection with
CSAH 36, CSAH 37, CSAH 42, and CSAH 39
Wright County
Dear Mr. Adams:
A contract for construction of the above referenced projects is scheduled to be let beginning on May
27,2005.
Enclosed are prints of maps along the above referenced trunk highway upon which is indicated areas
outlined in black where the State is doing a fee title search. We are also interested in whether you have
any easements within these areas. If you currently have facilities located within these areas,please
submit copies of any affected easements to this office. If you have transferred ownership of these
facilities to some other Utility,please inform this office of the new owners as soon as possible. This
print is based on limited field data and detailed information is not available at this time.
Please complete and return one copy of the enclosed questionnaire along with copies of any affected
easements by October 31,2003.
Because of time involved in legal procedures, expediency in this matter will assure proper
documentation and prevent possible extinguishing of easement rights which are to be retained by your
Company.
If you have any questions regarding the right of way acquisition,please contact the District Right-of-
Way Engineer, Ms. Jody Martinson at telephone number(218) 828-2549. If you have other questions
regarding the above referenced project,please contact me at telephone number(651) 297-3348.
Sincerely,
Stan Haugen , �\ i 76,
Utility Agreements Unit il_V`-'
I 1-
Enclosure: / //Z//G'E a21 7
Prints °
Questionnaires