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Page 1
To Our Customers
As we Look back on 2014, we also reflect back on our history of servicing our
community. We Look back on the closure of a century of service as we will be
celebrating our 100th anniversary in 2015. In June 1915, F.D. Waterman incorporated
the Elk River Power and Light Company which is now known as Elk River Municipal
Utilities. We are excited to celebrate our anniversary and this century of service
history with our community. In the words of one of our employees, "We are excited
to celebrate the 100 year anniversary of our strong relationship with the community.
Together, we have stood the test of time, and together we face a bright future."
I find this very inspiring because it speaks from the heart of our values. We are public
power and water; we are owned by those we serve; we are governed by members of
our community.
A century of service. A future of growth.
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Page 2
Below: Customer Service Team
Opposite: Customer Service Representative taking customer calls
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Page 3
Providinc Excellent Customer Service
Because of our recent growth and our upcoming growth in electric service territory,
ERMU began exploring new accounting/billing software that would accommodate
the increase in customers as well as offer new and innovative ways to engage our
customers. The first phase of this massive software conversion undertaking took place
in 2014. We are excited about some of the opportunities this new software will bring
and yet at times overwhelmed by the increased workload and process change this
transition has created. Looking ahead, we see improved processes and efficiencies,
paperless mobile workforce, increased customer access and mobile device options,
and much more.
Our professional and talented � . r
office staff provides the ,,
administrative backbone to the
utility services you depend on. kits
They are the friendly voice on -s.6,''''.--.!�'y ,'
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Page 4
Below: Elk River Municipal Utilities' Historic Power Plant
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Page 5
Financials
From time to time our wholesale power provider applies power cost adjustments (PCAs) to
the energy and capacity our customers use. These PCAs are then passed along to ERMU's
customers as either credits or charges on the monthly bills. To Lessen the impact of these
PCAs, ERMU has built in a buffer in the annual budget to absorb some of the PCA charges
effectively mitigating the volatility. In 2014 the PCAs totaled over $680,000. The buffer
built into our budget absorbed $500,000 of those PCA charges.
In early 2014, ERMU went through a Moody's rating call as part of an Electric Revenue Bond
Refunding. Moody's affirmed ERMU's Aa3 rating. Moody's notes ERMU's decision to join
Minnesota Municipal Power Agency in 2018 and to not renegotiate their current wholesale
power contract with their current provider as a contributor to this solid rating. This rating
helps ERMU save $240,000 through this refunding which also included restructuring the
bond term to be paid off sooner. This puts ERMU in a better financial position for buy in to
Minnesota Municipal Power Agency.
The 2014 year end net position of ERMU increased by 3.8% over 2013. A turn in the economy
in 2014 had resulted in an increase in new connections and connection fees. Overall the
electric usage was up slightly by 0.22% but water usage was down by 5.2%. The electric fund
revenues increase in 2014 by 1.7% and the water fund revenues decreased by 5.7%. This was
in line with projection and the 2014 budget because 2013 had been an abnormally hot year.
To see the 2014 financial audit report, please visit our website.
Revenue Trends Over Time Electric Operations Cost Comparison Over Time
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Page 6
Below: West Substation
Opposite: ERMU Technical Services Superintendent receiving RP3 award
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Page 7 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
A Reliable Public Power Provider
Elk River Municipal Utilities is proud to
be a second time recipient of the Experience the Power... ■7n
American Public Power Association's - I%
prestigious resti ious Reliable Public Power Provider /
/ pliable ovider
ver Provider
(RP3) designation. We are one of only � f4 �!
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184 public power utilities, out of more k rce Ueve,opment
'+orovement
than 2,000 nationwide, to receive this
recognition for providing consumers with ` % '
the highest degree of reliable and safe ��\ ,
electric service. The RP3 designation
isw "r,;
recognizes public power utilities that v%
demonstrate proficiency in four key i 0Yf
disciplines: reliability, safety, workforce
P Y Y
development, and system improvement.
Criteria within each category are based on sound business practices and represent a utility-
wide commitment to safe and reliable delivery of electricity.
Consistently ERMU has achieved a top-notch reliability score. Last year, ERMU maintained
a 99.99% Average Service Availability Index (ASAI). What that means is that 99.99% of the
time, ERMU customers had power. That's impressive in comparison to other utilities. And over
time, ERMU has fewer and fewer outages whiles experiencing rapid customer growth and the
addition of electric service territory.
It's an honor for ERMU to be one of the few utilities in the nation to receive this RP3
designation which embodies the fundamentals that make up public power. Reliability,
as well as the other RP3 criteria, fit well with the mission of a publicly owned utility.
Our Loyalty is to our customers, not stockholders.
2014 Electric Department Statistics:
• Peak = 55 MW
• Annual Energy Sales = 274,546,000 kWh
• Number of Customers = 9,449 Page 8
• Miles of Electric Lines = 425 miles
Below: Gary Street Water Tower
Opposite: Worker preparing to install a 1,200 foot section of the new watermain
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2014 Water Department Statistics:
• Peak = 5,000,000 gallons per day
• Annual Water Sales = 782,110,000 gallons
Page 9 • Number of Customers = 4,676
• Miles of Watermain = 105 miles
Water System Improvements
In 2014 Elk River Municipal Utilities added 2,500 feet of watermain along County Road
13 (Twin Lakes Road). This was part of a multiphase project to increase water capacity for
anticipated growth in the southeastern section of Elk River along Highway 10.
The final phase of this project is to add an additional filter plant for removal of iron and
manganese. The filter plant will be designed in 2015 then constructed in 2016. After
completion of the final phase of this project, ERMU will be able to increase water production
by an additional 1,125,000 gallons/day. This additional capacity will help to serve the water
needs resulting from growth including the recent addition of Natures Edge Business Park
Located along Highway 10.
In early 2014, Minnesota was under the polar vortex. We had more frozen water Lines in
those few months that any other year in our history. Thankfully, the winter of 2014/2015
was mild relatively speaking and we didn't experience a repeat.
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Page 10
Energy Efficiency Pays Off in 2014
ELk River Municipal Utilities' residential and commercial
---� customers were able to capitalize on over $160,000 in
• utility rebates in 2014. Residential customers participated
® by buying Energy Star® qualified appliances, heat pumps,
_1 I ,,, _ y ::1,7:-:-.3:7, central air conditioners, and Lighting products. The
® _ — �..- commercial customers took advantage of rebates for
_ Lights, motors, chillers, variable frequency drives, and
• - many other energy efficient
products. In addition to the
— .4 rebate dollars customers
.... mss- .., , .
received, they'll also enjoy �r� /
Lower energy consumption resulting in dollars saved every month for years
to come. Based on the new high efficient equipment they purchased, 'r
residential and commercial customers that participated in the rebate
programs wiLL save an estimated $300,000 on their energy costs in 2015.
. -, : Security Systems
�; Elk River Municipal Utilities has been selling and
installing home security systems since 1990. We have
�— i�' I systems not only in our service territory, but statewide!
l� In addition to the basic security system services, we
;, , , , also offer fire protection systems, video cameras,
environmental controLs, and more. And our monitoring
I ! fees are the Lowest around!
1
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,
We are pub4i,G power and, water;r; We are owvted, h-y f1eio-se
Page 11
Judy McSpadden ( 1960 - 2014)
Judy had a remarkable 28-year career with our Company, serving
as a Customer Service Clerk, Accounts Payable and Inventory
Clerk, Secretary for the Commission, and 15 years as a Purchasing
Specialist. Having worked in these various positions within the �;e '
company for so many years, she seemed to know everything about '
ERMU. She was always one to offer to help whenever needed, no , , $.
matter what the task. ,. 1! ,. '
Two things one would quickly discover about Judy was her love for
cats, and her Love for garage sales. Her entire office was a collection 7
all things cat related - many of these items purchased at a garage i , ,
sale. As an avid garage sale shopper, she took her vacation time . 4
in the spring and summer to "go shopping." She seemed to enjoy ``"
shopping for others more than herself and would very often bring in j .
thoughtful treasures she purchased for people while garage sating. `
In addition to being a dedicated worker, Judy was also a good friend
and a great mentor. She will be greatly missed but never forgotten—
her legacy with our Company and with each of us will live on.
�,�. Retirements
. FAK 1"Yr.
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o In 2014 we saw a number of
u.,.. ;,&_. n . employees retire incLuding Water
�, �J �. Superintendent David Berg. A
I .. , ,IM*- z"' highlight of the retirement party
� , 1 was the special cake employees
made for him in Likeness of the
,iia _ n historic Jackson Street
1 water tower.
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Page 12
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1. Employees participating in Mayday calls during poLe top rescue training
2. New hydrant crane to assist with hydrant installation and removal
Page 13 3. Speaking with Minnesota Legislative Leadership at the Capitol
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4. New bucket truck
5. Locating Technician performing underground utility locates
6. Tom Bovitz Scholarship Winner being recognized by the Utilities Commissioners
7. New trencher attachment for frost trenching Page 14
Elk River �.
Municipal Utilities
13069 Orono Parkway
P.O. Box 430
Elk River, M\ 55330
763.441 .2020
www.elkriverutilities.com
@ERMU_M\