6.4. SR 04-20-2015 �i
EOty lk Request for Action
River
To Item Number
Mayor and City Council 6.4
Agenda Section Meeting Date Prepared by
Presentations, Awards April 20, 2015 Troy Adams, P.E. —ERMU General Manager
and Recognition
Item Description Reviewed by
Electric Service Territory Update Cal Portner, City Administrator
Reviewed by
Action Requested
No action requested.
Background/Discussion
In 1974, the Minnesota legislature established a municipal utility's right to serve their city by acquiring
electrical service territory as the city grew. This historic legislation was supported by both the municipal
utilities as well as the cooperative electric utilities. In 1977, the city and Elk River Township consolidated
to form the City of Elk River. At that time, Elk River Municipal Utilities (ERMU) did not grow with the
new city. In 1991, ERMU entered into a 20-year orderly electric service territory acquisition plan with
Connexus Energy for a portion of what was previously the township. The vision of past ERMU
governance and staff to invest in territory acquisition helped to build the foundation for a reliably robust
and fiscally sound utility.
After the 20-year orderly electric service territory acquisition was completed in 2011, Connexus Energy
still served approximately 12 square miles and 2,000 customers within the City of Elk River. On August
6, 2012, ERMU requested City Council support, through adoption of a resolution, outlining support for
electric service territory acquisition from Connexus Energy for the remaining service territory. The City
Council unanimously passed the resolution.
After over three years of negotiations, ERMU and Connexus have come to agreement on terms for
service territory transfer without the need for litigation. The two parties did a joint analysis on
reintegration relating to the acquisition and have established a phased approached dividing the service
territory into eight areas. The first area is east down TH10 past the TH169/101 interchange from
County Road 12 south to 165 'Avenue NW. This area will be acquired in fall of 2015.
Financial Impact
There is no direct cost to the city. The initial financial benefits include donation of electricity for non-
enterprise city-owned facilities within the area and maintenance of city-owned streetlights within the area.
Delayed financial benefits include the payment in lieu of taxes after the loss of revenue payments are
completed on the area to Connexus Energy. Immediate non-financial impacts include the ability to
provide unity of services for all Elk River.
Attachments
■ None
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