4.1. ERMUSR 02-10-2015 i
Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
Elk River Municipal Utilities Commission Troy Adams, P.E. —General Manager
John Dietz—Chair
Al Nadeau—Vice Chair
Daryl Thompson—Trustee
MEETING DATE: AGENDA ITEM NUMBER:
February 10, 2015 4.1
SUBJECT:
Midwest Municipal Transmission Group and Transmission Ownership Update
BACKGROUND:
In May 2006, the Utilities Commission authorized ERMU joining Midwest Municipal
Transmission Group (MMTG)to explore the potential to obtain ownership in the regional
transmission system. This non-partisan/not-for-profit organization was created to provide
service and assistance to the membership for matters relating to the planning, construction,
ownership/investment, operation and maintenance, and administration and management of
electric transmission and/or power generation facilities. The action to join MMTG represented
ERMU's decision to investigate a change in direction towards ownership instead of renting.
Ownership in the transmission system essentially works as a hedge to mitigate volatility in
transmission costs. ERMU is still a member of MMTG and through proactive participation,
represents their investment and their customers. I am currently past chair of the MMTG board of
directors.
This is a unique type of investment opportunity for a municipal utility. Because of a municipal's
ability to finance with tax exempt bonds, our cost of money is less than investor owned and
cooperative utilities. With the Federal Energy Regulatory Commission(FERC) approval of a
hypothetical capital structure and a guaranteed rate of return on investment, transmission
ownership becomes an incredible advantage for municipal utilities to position themselves with
very competitive rates compared to the investor owned and cooperative utilities.
DISCUSSION:
On January 31, 2015, ERMU received its first payment for our share in the CAPX2020
Brookings transmission project in the amount of$72,741. This amount represents the margin
above the bond payments. ERMU will continue to receive payments for our ownership in this
transmission project for the 40 year life of the asset. This is a historic moment in ERMU history.
ACTION REQUESTED:
No action is requested at this time.
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