5.4. ERMUSR 10-15-2003 )4*--
Elk River
Municipal Utilities
322 King Avenue phone:763.441.2020
Elk River,MN 55330 Fax:763.4412099
September 24, 2003
To: Elk River Municipal Utilities Commission
John Dietz
Jerry Takle
James Tralle
From: Bryan C. Adams
Subject: Great River Energy's Wholesale Electric Rate
At the July 8, 2003, Elk River Municipal Utilities Commission meeting, we discussed the
two tier rate which Great River Energy will be implementing in 2004. Although the
exact rate structure is still undetermined by Great River Energy, the first cut at the revised
rates are shown on the attached sheet and reflect a 7.3% increase. This large rate increase
is caused in part by the following:
a) Great River Energy is starting the debt service payment for the two
newly constructed peaking units at Pleasant Valley and Lakefield Junction.
b) Because these two peaking units are gas fired (approximately 50% of
Great River Energy's generation is gas fired), Great River Energy is
heavily into the natural gas markets which are now volatile with increasing
prices.
The attached spreadsheet reflects our anticipated power and energy purchases from Great
River Energy. Based on a consumption increase of 6% demand, 5.7% energy, 2004 cost
with 2003 rates is $8,108,680. 2004 cost with assumed 2004 rates is $8,747,641. The
difference is approximately $639,000 which will be the largest portion of our retail rate
increase in 2004.
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