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6.1.a. ERMUSR 08-11-2015 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: August 11, 2015 6.la SUBJECT: Staff Updates—General Manager DISCUSSION: • The Board of Directors of the Minnesota Municipal Power Agency(MMPA)met on July 28, 2015 in Le Sueur,Minnesota. At the meeting,the Board was informed that 16 responses had been received to its request for proposals to develop a utility-scale solar power project in the MMPA member community of Buffalo. The Board discussed an expansion of the Agency's energy education program to include grants for solar installations at educational facilities in member communities. The Board approved a resolution authorizing the refunding of bonds issued by the MMPA member community of Chaska to finance the Minnesota River Station,which is leased by MMPA under a long-term contract. At current rates,the projected savings to MMPA from the refunding is approximately$1.5 million over 15 years. The Board received MMPA's 2014 annual report,which is attached and can be found on the Agency's website,www.mmpa.org. Following the Board meeting,Board members, elected officials,and city and utility staff toured the Hometown BioEnergy facility. After the tour,MMPA held its annual dinner meeting with elected officials and city and utility staff. More than 90 people attended the meeting. • Part of the responsibilities of the executive committee for the Minnesota Municipal Utilities Association(MMUA)board of directors is to serve on their Awards and Nominations Committee. On July 27,I met with the others on the Awards and Nominations Committee reviewed the nominations. The winners will be recognized during the banquette at the MMUA Summer Conference later this August. • On July 30,the MMUA board met to preview the 2015-2016 budget. This budget will be approved during the business meeting at the MMUA Summer Conference. • rOWEIIEll 81 Page 1 of 1 NATURE Reliable Public Power Provider P P O W E R E D T o S E R V E 161 Minnesota Municipal Power Agency I Annual Report 2014 the oower of our honnotown The Agency's mission is to provide reliable, competitively-priced energy to its members and to create value for both the Agency and its members. Derick O. Dahlen ' ' t Executive Manager, } y_ `�, MMPA r t 1 President and CEO, 9 !"1"- =t ' Avant Energy,Inc. y e� (left) 4 4 Steve Schmidt �" ti �, `�� a \, Chairman,MMPA ' ? . Board of Directors (right) y¢ 2014 was a year of affirmations and successes for MMPA. During the year,MMPA member communities representing 94%of the Agency's load extended their contracts with MMPA from 2040 to 2050.These extensions are an affirmation of the Agency's successes,plans for the future,and history of consistently delivering on its mission of providing reliable,competitively-priced energy to its members and creating value for the Agency and its members. MMPA's newest generating resource,Hometown BioEnergy,was recognized by POWER magazine as a 2014 Top Renewable Plant Award recipient.The plant was featured on the cover of the magazine's December issue.The award was an affirmation of MMPA's commitment to innovation,value creation,and renewable and sustainable energy. The Hometown BioEnergy facility converts food processing and agricultural waste products into biogas and then electricity and is one of the largest projects of its kind in the United States. In August 2014,Hometown BioEnergy,LLC,a subsidiary of MMPA,received an$8.2 million federal grant for the Hometown BioEnergy project.This grant significantly reduced the Agency's cost of the project. MMPA took advantage of low interest rates to refund bonds twice during 2014.These transactions created more than $17 million in present value savings to the Agency and its members.As a result of these refundings,the Agency's interest expense will be lower than it would have otherwise been for the next twenty years. Moody's Investors Service upgraded its bond rating of MMPA to A2 from A3 in the summer of 2014,citing MMPA's competitive rates,strong financial management and performance,and sound member credit quality.This is an affirmation of the Agency's conservative financial policies and focus on maintaining competitive rates to members. We are pleased to present MMPA's 2014 annual report and look forward to the continued success of MMPA. Sincerely, Qf 42e,a 0. ØJ4. - Derick O.Dahlen Steve Schmidt Executive Manager,MMPA Chairman,MMPA Board of Directors President and CEO,Avant Energy,Inc. Who We Are In 2014, VVPA men oers representing 94% of the Agency's cad extendec their cower supply contracts with V M PA from 2040 to 2050. Our Mission Our Members The Minnesota Municipal Power Agency's mission is MMPA's 12 members are the cities of Anoka, to provide reliable, competitively-priced power to its Arlington, Brownton, Buffalo, Chaska, East Grand members and to create value for both the Agency Forks, Elk River, Le Sueur, North St. Paul, Olivia, and its twelve Minnesota member municipal utilities. Shakopee, and Winthrop. The Agency provides MMPA accomplishes this while being innovative, power to its members under long-term power well-managed, and financially conservative. supply contracts. In 2014, MMPA members The electric utility industry is both highly complex representing 94% of the Agency's load extended and highly competitive. Our members compete their contracts with MMPA from 2040 to 2050. to attract new customers and retain existing Our member communities have a combined customers based on price, reliability, and customer population of nearly 150,000 and provide power service. MMPA's objective is to provide energy to approximately 70,000 residential, commercial, and other services to enable our members to and industrial customers across Minnesota. Two compete successfully. members also have contracts with the Western Area Power Administration (WAPA). Sales to Members Coincident Peak Load in megawatt hours 350 __ in megawatts 1,600,000— 300 — 1,400,000 — 321.3 1,483,077 1,488,033 1,495,981 314.4 308.4 1,200,000 -- MW MWh MWh 250 — MW MW MW 1,000,000 — 200 800,000 600,000 — 100 _ 400,000 — 200,000 — 50 0 — 0 — 2012 2013 2014 2012 2013 2014 2 2014 MMPA Annual Report Who We Are Avant Management Derick 0.Dahlen President and CEO Our Management MMPA is managed under AVA N T 5 long-term contracts by /�E N E R G Y Avant Energy, Inc., an energy management company with over 30 years of experience in the electric oseph v l Vice J PresidentFul,iero power industry. Avant provides a wide range of Operations services to the Agency, including strategic manage- ment, day-to-day energy market operations, power f plant development, energy trading, accounting and finance, and regulatory compliance. Avant's specialized expertise in energy markets, power supply planning and development of power plants t Kelsey E.Dillon is important to MMPA's long-term success. Avant is Vice President, p g �� BioPOwer an innovator, pursuing forward-thinking solutions in the areas of power generation, energy conservation, and renewable energy. Oncu H.Er Vice President, Planning David W. Niles Vice President &Controller 2014 MMPA Annual Report 3 HghHghts i of Our Hstory The timeline below highlights some of MMPA's significant accomplishments and successes over the course of the Agency's history. 1992 2001 2005 MMPA Founded as Minnesota River Buffalo Joins MMPA Political Subdivision of Station Completed the State of Minnesota MMPA adds another Leased from the MMPA member, growing the Eight Minnesota municipal member city of Chaska, the Agency by another 10%. utilities joined together with Minnesota River Station is the goal of developing an a 49 MW gas-fired peaking 2005 economical wholesale power plant. First Phase of Faribault electric supply. Energy Park Completed Anoka Le Sueur Arlington North St.Paul The Agency's first owned Brownton Olivia 2004 and constructed asset, Chaska Winthrop East Grand Forks & Faribault Energy Park, enters Shakopee Join MMPA service as a simple cycle 1995 gas-fired power plant. Began Supplying MMPA grows to ten communities Power to Its Members as it admits two new members, increasing the size of the Agency MMPA began supplying by approximately 50%. power to its members from power supply resources through contracts with other utilities. 4 2014 MMPA Annual Report �Ak 11l.∎' @ Y t r, _ 'JIMA 4 . . 6,,, ::,,-, i w .. 41kg" I re- 1.: 1:! :":ro....... ' ' ' 4,:s.,,,,t, . , ' .,, 0 c MMPA Board of yy(��_ Directors and ++�M((fJw I �"- `, ‘Management E.Nr} f 2007 2011 2014 Faribault Energy Park Oak Glen Wind Farm First Transmission Grand Opening (2nd Completed Line Energized Phase Completed) MMPA completes its first The Agency's first-owned Thousands attend the grand utility-scale wind project, a 44 transmission asset, a 6 mile opening of Faribault Energy MW wind project located in 115kV transmission line in Park, which celebrates the Blooming Prairie, Minnesota the member community of plant's completion as an effi Anoka, is energized. cient combined-cycle facility. 2013 Elk River Joins MMPA 2010 The Agency admits its 12th Hometown WindPower member, which will begin Completed purchasing power from MMPA in 2018, growing The Agency installs 160 kW MMPA by another 20%, wind turbines in member cities, making MMPA the first 2013 municipal power agency with Hometown BioEnergy a turbine in every community. Completed MMPA diversifies its renewable portfolio by adding 8 MW of dispatchable renewable energy. 2014 MMPA Annual Report 5 ,. { ? Financial Highlights 1 I i f ,r V V1 PA comoletec two sonc ' %j, r refuncings in 2014 that / / , ,- , /-,I resultec in a corTloinec i ,. °resent va ue ;; ,. , ; , , 6. savings to Inc-r bers /477/ of more than S17 million. t / i / • , 'r Member Rates /4 . 4 MMPA's average rate to members in 2014 was• t $69.73 per MWh, an increase of 2.2%over 2013's average rate. The Agency's strategic planning and financial focus has resulted in MMPA's rates being competitive with other local power supply y 3� a ,, providers. The Agency's average rate was lower than that of a comparable investor-owned utility, , generation and transmission cooperative, , and municipal power agency in the state of Minnesota for the year. Average MMPA Rate to Members in dollars per megawatt hour 70 o - � 60 — 68.24 69.73 { 65.06 S/MWh S/MWh $/MWh t L , yam. . , 50 _.• . : $ 40 — J.. .:� ` std i= 20 10 --_- - ' o- 2012 2013 2014 �-- � "ter... r Financial Highlights Year-Ending Rate Net Income Stabilization Balance in thousands of dollars in thousands of dollars 35,000 _ 8,000 30,000 ___ 7,000 — $7,434 $30,450 6,000 25,000 -- $29,300 $6,062 5,000 20,000 — $5,200 $21,500 4,000 15,000 3,000 10,000 — i 2,000 5,000 — 1,000 0 — 0 2012 2013 2014 2012 2013 2014 Rate Stabilization Fund Debt Refunding At the end of 2014, MMPA had $30.5 million The Agency completed two debt refundings in its rate stabilization fund. This fund allows in 2014, resulting in a combined present value the Agency to set stable and predictable savings to MMPA of more than $17 million. rates to members based on long-term energy These transactions reduce MMPA's interest price expectations. The goal of MMPA's rate expense over the next twenty years, resulting stabilization fund is to avoid volatile price in lower rates to members. changes to members. Rating Upgrade Strong Cash Position Moody's upgraded its bond rating of MMPA to MMPA had more than $39 million of unrestricted A2 from A3 in the summer of 2014, citing MMPA's cash and cash equivalents at the end of competitive rates, strong financial management 2014, representing more than four months of and performance, and sound member credit operating expenses and interest expense. quality. The Agency also maintained its A rating MMPA also has a $5 million line of credit with from Fitch during the year. U.S. Bank that provides additional liquidity. In 2014, Moody's Investors Service upgraded its rating of MMPA from A3 to A2. 2014 MMPA Annual Report 7 t,. ,, Financial Highlights L p 1 � 1 ! ;. `: f Forward-Looking Energy 'k- 'I it ik v .p• , Adjustment Clause MMPA's rate structure includes a forward- looking energy adjustment clause (EAC). At .: the beginning of each month, the Agency sets 7-"..- ��: rates to members based on projected costs. :r Having a forward looking EAC helps MMPA 1 ' maintain liquidity and cash flow by matching ! ^='r„\ the timing of revenues and expenses. / I , flit - Debt Service Coverage i )' -- In 2013,the MMPA Board of Directors approved 4" f ° D� - a policy of adopting an annual budget that g :. I provides debt service coverage of at least T__� I, . _ `• 7 1. �, 1.20 times debt service. This policy creates a _�r1 i �— 'oi-�._ - - ;0,�I_ '' target in excess of the 1.15 times debt service 1 t . \ .MP coverage that is required by MMPA's bond kil 1, 11 indenture.The policy is intended to provide the �_ ialV ii a worpo■esemarawarsai,,,,......q.,... , --44411 ti i , ;� Agency the flexibility to withstand unexpected events without necessarily having to increase ---- -"Wk N `- r t. rates to members to maintain required debt _0_ ---"1 i 1,' \ I t, lim ' ' t service coverage. The Agency exceeded its 6sss �• _, target in 2014 with a debt service coverage I f 1 11%... ,„- ratio of 1.27 times debt service. ', ., ; - - t � ,- � 3 � ., Debt Service Coverage Ratio ' 1.30- J i��1111111 � ( ill �� ! I 1 '■ 1.25 - 1.27 I . i ' \ 1.20 - -. - , i.. ' ` <,__ 0 ! I, 1.15- III II ' /< . N \\\\ /I 1 4 105 , . lie OC 2012 2013 2014 1 1 VVPAs First Transmission „. ,_ . Asset ._e :5 - . Corn oetec r v llfb The first transmission line owned by MMPA—a 6 mile 115 kV 1; transmission line located in the , MMPA member community of Anoka—was energized in 2014. T Villi_te...-.....;, -, he project was completed at a cost `. \ of approximately $12 million and 1 ', improves the electric reliability of I �; 1 4Tr/ r the Anoka area. `°' � 6 r , MMPA is investing in transmission facilities to � J hedge transmission costs, which are currently \ r , \ , 4 the fastest-growing component of the Agency's , cost structure. t MMPA currently purchases transmission service 4; i from both Xcel Energy and MISO. Beginning -( '" } I in 2016, all of the Agency's transmission \ Imo` purchases are expected to be from MISO. / U 2017 MMPA Annual Repor 9 gio.ii ,Ayedigis'a' „viii:iii,,,. JdF .,, .F.,la i,, ,:Ire a.t.11,oAildot4i ,Jt Iii; •. ; .. rC - hex^ � �� '^«., _ ,r --- -� ,.fig _'...» - `' *' ,, I',7t,'.'-'::'!7-.' s- .-s - '. „�. I .t f�a , O �' r £� re • � ..a ,i ° if�� 1, . e � w� 400111$1. ,. ----,4,-.--,-**' -*.s■ . .'' , -. �`�' d t � r _.. ,...„. , . ,.\\\\\\\\ \\\\\\:,\ \ \\\\:\\\ , \\\,\,,,,,‘ \\,..\\:\,\‘.,\\ , ',-;-' '-'''k' ' ' \\ \\\ , \\\\,\\ ' \\\ \\\\N\\ \ -'' \ '. .- . • til ter. ,. _`� ` \\`\ ,\: \ \\\\��\ ,\\\\,/ .r' t.. « •M'MP ! rte'. \ \\ , `.\`\\_..\-\\\\\\ ,�, ®... ` +ASS-` `�� \\\ \ � -----"...-- ,-..-:-:--::';:= -:--- .. . --...,=...-Al':•:,..:,,--.7;t:`,,T.z„4,,-,-,.-:'.. -., '-, .:-...'2.---„ A \ \s 4i.:41)..'.:\>' ' w— 6 `+ \ ■ i ' 's— a :� C " .:. .`\ K - ;.,---.,.-:•--,:-,.-.2-,!:-.----.-.--,.•fi . c r ., S dg P - � F y ,i � W. u[ yex<S.r s,.- r-' y �6 {W e ,x 1 I ' '..'''; -..--;•.;-„,.,•'..-,,,.:,_ Our Resources MMPA maintains a diverse portfolio of resources to provide electricity to its members. The newest addition to our portfolio is the Hometown BioEnergy facility, which became operational in 2013. Hometown BioEnergy Recipient of POWER Magazine's dried digestate that has a number of uses 2014 Top Renewable Plant Award including boiler fuel, soil amendment, and MMPA's Hometown BioEnergy facility was animal bedding. Anaerobic digestion is recognized by POWER Magazine as a 2014 Top especially well suited to the high moisture Renewable Plant. The 8 MW biomass facility, content of Minnesota's agricultural and food located in the MMPA member community of processing wastes. Le Sueur, provides dispatchable, on-peak Hometown BioEnergy supports the local renewable energy to the Agency. community by collecting and processing Hometown BioEnergy completed its first full local wastes to create a renewable source of year of operations in 2014. The facility uses electricity that flows directly into the Le Sueur anaerobic digestion technology to produce power system. biogas from agricultural and food processing In 2014, Hometown BioEnergy received an $8.2 wastes from a number of local sources. The million grant under the American Recovery biogas is then burned in reciprocating engines and Reinvestment Act (ARRA). This grant was to produce electricity. The facility also creates the result of an innovative financing approach two valuable by-products—a liquid by-product that significantly reduced the Agency's cost of to be used by local farmers as fertilizer and a installing this renewable facility. MMPA's Hometown BioEnergy facility was recognized "" ► by POWER Magazine as a 2014 Top Renewable Plant. R. ewa it lop•Plant Award aryl Winners vow\ -, ,Qt n'a tt asi:G.1 arm! Now 2014 MMPA Annual Report 11 t •it Itt •a- .. •'',".,. - xis\ - ��.. x r .)' te.= LC; i:4 , j . — `��_ IMMO Mill le ' 11111 111 rAlikl it R II I N � 11 � .— ,. , �. �'� + �� era f a a ._.,.� r, fi ,.�.. , _ ...- - i , .., -- - 0.1 , fi w • I , 911 - �' , g ` �'y,rt t^•j .�,� !� J##J � 1D7 �b ,� t �k i•".,,�i t d""?Ya ` 7i"� 1'3 �l4.X xi�x r�.4t>; o z°' j .! �1� r k�, �" a it �� +....1.-1 1 (mil y 1+?`,; ',,,if , t r.ri �,g1 i i r 'i 9h fir'^ ! i? :�, �¢ x es n!� 4x i. ''':.t14'y'+A t + It,,, r , ',,-.• l �.+ .)"� � K t b ti�YYT�n 3 'S'ai7tia!! )x 1. y I?V� e_ ';'1):1; . 4.-ate} irti' 0ti.:c'.-<. w9;iti ��r. t �m to i_; ..�a zCl,r, "y%.-.r u�[, .�,�n 3,A 1`iAI"'. _ u=� +w'lt... �.1!-L..�u t, , Our Resources Our powcrsupoy panning aooroach is to asscmb c a c ivorso oortfolio of conventional and rcncwabc resources that DOSitions the Agency we for the future. Faribault Energy Park Faribault Energy Park (FEP) is the flagship the facility's 35 acres of park-like wetlands as of MMPA's resource portfolio. The 300 MW a recreation area and even drop a fishing line combined cycle facility, located in Faribault, into one of the ponds. Minnesota, is a model of environmental The plant also hosts the Agency's Energy responsibility and innovation. Education Program, which saw approximately Natural gas is the primary fuel for FEP, but 1,600 fourth grade students from MMPA the plant can also use fuel oil as a backup member and project host communities visit fuel source. FEP in 2014. The facility's grounds, including walking trails, Minnesota River Station educational displays, wind turbine, gazebo, The Minnesota River Station (MRS) is a 49 and rainwater collection ponds, are open to MW generating facility located in the MMPA the public during daylight hours. The plant is member community of Chaska, Minnesota. a community resource for those interested in MRS is a natural gas-fired combustion turbine energy—students and residents are welcome that entered service in 2001 and provides to tour the facility and are able to view the peaking power for the Agency. The plant is control room and the steam turbine from the owned by Chaska, who has a long-term lease observation room. Visitors are also able to use with the Agency for the facility through 2031. 2014 MMPA Annual Report 13 ` . E I 1 I L f 4 1 !/, --4%, if A' ' °'l_ � . L s'. • '1 141*.tit.:4-f-fir.-.-e.--- - , '•.- . ',--, -:::p ;TO '' Aiv*ri.0-7lif .,34,-,, . , , „ir- • -• I''' ' "y7 ' . a il .� a it` k . i . s �s• j / q •ems �( �1 :; �� ..J � � l - t, - f ' Y '..+' tit' i# „ ,..k.„', 2 •11 P1 . fc �a== ,, I,, `I.. i .' 6l j Our Resources VVPA met the 12% renewa ale energy sta nc a rc in 2014, Oak Glen Wind Farm Renewable Energy Credits The Oak Glen Wind Farm (OGWF) is a 44 MW MMPA purchases renewable energy credits wind project located near Blooming Prairie, (RECs) from a variety of renewable facilities Minnesota. The project is composed of 24 in Minnesota and the Midwest. These RECs turbines that produce renewable energy for are sourced from a variety of renewable the Agency. OGWF entered service in 2011 and technologies and supplement the Agency's has consistently had a high level of reliability. owned renewable generation. REC purchases The Agency installed a gazebo and educa give MMPA flexibility in meeting the Agency's tional signage about wind energy at a park in annual renewable energy requirements. Blooming Prairie in thanks to the community MISO for hosting the OGWF project. Like other utilities in the region, MMPA buys Hometown WindPower all of its load requirements from and sells all MMPA was the first municipal power agency in of its generation output to the Midcontinent the country with a wind turbine in each member Independent System Operator (MISO). However, community when it completed the Hometown MMPA's physical and contract assets provide WindPower project in 2010. A 160 kW wind caps on market prices. We also purchase both turbine was built in each member community, electricity and natural gas in forward markets. with a turbine also installed at the Agency's These hedging activities promote rate stability FEP facility. In addition to providing local and and manage MMPA's energy price risk. renewable energy, these turbines help community members learn about the benefits and operating characteristics of wind power. Purchases from Other Utilities The Agency purchases capacity from other utilities under short- and medium-term contracts when economic. These purchases allow MMPA to manage the timing of long-term Agency-owned resource additions. 2014 MMPA Annual Report 15 _ \ \ \ \ ,,,N €tom _ ;x"R- '# 'fie �, - ,, x.' �x'r '' _.., ,, ": .n'!• � ° • ^`c". a.•f ey a + .',. C'''. .y ."' r f n 1........ .,^4..1+. a .rs .a .' �' A n' * t P C ., "'1,.f,'a. tf5� (.•Fps-'< ",a .. ,!•,;, ,,1. ` ,...70 ^' ^._ ASS Fh`"n "`. y,f �."�., µjin .4.,.y,�j +h* 'e , ' a . err. . f1 - .° ter; ,.*, 1 111111M Li 9 c`3 0 II ' Y, Our Resources Our Plans for the Future MMPA's members' electric demands are growing. This, combined with Elk River beginning to buy power from MMPA in 2018, creates the need for the Agency to plan for additional generating facilities in the next few years. MMPA's plan is to add efficient resources to the Agency's generating portfolio that help MMPA manage risks related to energy pricing, transmission, and environmental regulation. Distributed Generation Hometown Solar The Minnesota Public Utilities Commission The Agency completed a 15kW solar installation approved MMPA's 2013 Integrated Resource at Faribault Energy Park, and is planning to Plan (IRP) in January 2015. In the IRP, the build small scale solar facilities in member Agency outlined its plan to use Agency-owned communities. This program will demonstrate distributed generation connected with our solar technology in our member communities members' distribution systems to meet MMPA's as well as help support the Agency's Energy near-term capacity needs. Education Program. By interconnecting locally rather than to the Solar high voltage transmission system, the Agency The Agency is investigating a larger-scale solar can avoid transmission interconnection facility, either through direct ownership or via uncertainties, while simultaneously increasing a power purchase agreement, to enhance the reliability of our member communities' and further diversify the Agency's renewable electric systems. resource portfolio. The facility would be The distributed generation facilities would located in a member community. consist of natural gas-fired reciprocating engines. In addition, MMPA intends to include some solar power at each of its distributed generation facilities. Anoka, Chaska, and Shakopee are being evaluated as the first group of MMPA member communities to potentially host distributed generation plants because of their load size. 2014 MMPA Annual Report 17 Our Resources F,; Black Oak Getty • MMPA has a contract with Sempra U.S. Gas & Power for the output of the Black Oak Getty wind project in Stearns County, Minnesota. • Currently under development, major construc- tion of the 78 MW wind project is expected to begin in the spring of 2016. The Agency has a twenty-year contract for the output of the wind farm. Renewable Energy Requirements Minnesota's renewable energy standard (RES) became effective in 2012, requiring all utilities to supply 12% of their energy from renewable resources. The RES increases in 2016, 2020, and 2025. MMPA's approach for renewable resources is to maintain flexibility and resource diversity. Percent Mill/11111'n , >.. _ _ Renewable 25°/ = <. Requirement ° 17% 12% • a:' 1 \ ti :_+{s � '. *3 q $�� 2012 2016 2020 2025 Conservation Conservation MMPA is pursuing a variety of conservation activities, including invest- ments in demand-side management and energy efficiency. The Agency's conservation offerings improve efficiency, put money back into member communities, and help support local economic development. The Agency's conservation program includes Another member partnered with a local a range of offerings to customers, such as hardware store to provide a free LED bulb to residential appliance and lighting rebates, electric customers who presented a coupon. commercial lighting retrofits,energy audits, and This program coincided with the hardware custom projects for commercial and industrial store's 125th anniversary event and over 200 customers. Conservation and demand-side bulbs were given away. management are also important components Three members collaborated with a compa- of MMPA's long-term planning and can help ny that mailed kits containing 3 LED bulbs, a utility defer investment in new generating conservation tips, and information on other assets or additional power purchases. rebate programs to customers who responded MMPA's 2014 conservation program achieved to a postcard mailing. This program was very its 1.5% Conservation Improvement Program popular among customers and over 5,000 kits (CIP) spending requirement and had kWh were distributed. savings of just under 1% of average retail sales. The Agency added efficient freezers to its residential appliance rebate offerings. One member worked with a large industrial customer on a $35,000 custom rebate for an / energy efficient variable speed drive controlled I ` �5 � I I / blower in its waste water treatment plant. The I' r'J,; blower replaced equipment that was more than 20 years old and has projected annual energy ' savings of more than 815,000 kWh. Igrr 2014 MMPA Annual Report 19 .. , _-,••,,•.•..•..!„.■ .-.•.,... ,.•••:::. '••• . 4 ......' . •,,,, ,..„ ■ .. -.'- ',, f', N 2.' / ■ . .... . - d -1 ... — AL .,,,,,,,,....,:':..'' '',:i'r, 71,_. , ,(.-,4''''''---- :' ..„.,,,,„.,_,-.• ..,,,,,,,,;::::-;'''' ' ) s:','''''''' tirt._ , .. L'-' ---'--- 4:-, .-... -..... , , 11111111111■ . • . • ...., __,,,,,,..,,, :... :,...•,■,• .,.. . •"• , • •,•,-,•, •, . ,, ,•, ,; ,• '''..f.' •'*•' ',. dr, 1 ; i.,. , ....... t,4,.:.• 06, ,, , , ,,,, , ,...„ ., A A - ,-,, z, • •,.'s - . .. ... , . rt. '... ' 1 '--Allibit, j • • -„- . ,•-:.•,- if L -I A V •- 41 , , ,,, . ,,, „ L. 141411`.•:' ' A.. 1 V A L I, /• _ % / C - I :,r•-= . • , . . •- _....OP` ---.: '-• -ado" .... .L ,...- •-....,...-:--.. . ..„. _. 1•••"-- - .....- ., ..-- -„,... -...7.72:_-_-•_-__—_--z--- .. ,___"" '-`,,,, ,.1.4160----.'"". „.--- __- ,.- .• -.- ... _ . .. . ..,- ,: ...- „„ __ • _ .L. ,....,, _ . ---- ,-. ••- - --.„ 0 filipitibi 4.'5.. IIW: Energy Education V M PA's Energy Ecucation Program Reaches Over 2400 Stucents MMPA's Energy Education Program demonstrates the Agency's commitment to provide educational resources about energy for schools in its member communities and project host communities. MMPA's Energy Education Program aligns with energy and energy sources to how a power Minnesota's 4th Grade Science Standards and plant, such as FEP, generates electricity and focuses on how energy is generated, transmit- provides power to their homes. ted, and used. Students learn these concepts In 2014, for schools not easily accessible to through MMPA's Energy Education Workbook, the power plant, the Agency expanded the interactive tours, and in-school assemblies. program to include an in-school educational A key component of the Energy Education assembly option. These educational events Program is the Faribault Energy Park Tour help bring interactive energy learning Event. While visiting the 300 MW capacity opportunities to more students throughout natural gas facility, students are able to our member communities. view the control room, steam turbine, and In 2014, MMPA reached over 2,400 students on-site wind turbine. During the month of from 28 schools through its Energy Education May, fourth graders attend the Tour Event, Program. As part of MMPA's commitment to its rotating through educational stations located member communities, the Agency sponsors throughout the facility and its wetlands the program so that all students have an equal park. Each station focuses on a specific opportunity to learn and participate. energy lesson ranging from the concept of "ThanK you for once again inviting us. Each year we come out, we see the adcec implementation of curriculum from the state into your presentation." — Ken Matlashewski (Wilson Elementary, Anoka) 2014 MMPA Annual Report 21 Minnesota Municipal Power Agency Statements of Net Position December 31 December 31 Assets 2014 2013 Current assets: Cash and cash equivalents $ 39,090,296 41,035,465 Restricted cash and cash equivalents 4,299,485 5,633,179 Short-term investments 2,999,556 — Accrued interest receivable 68,420 216,141 Power sales receivables 8,519,502 8,327,246 Other receivable 458,169 2,081,549 Fuel inventory 1,501,063 935,017 Plant inventory—spares 1,843,544 1,610,280 Prepaid expenses 472,878 564,324 Total current assets 59,252,913 60,403,201 Noncurrent assets: Capital assets: Equipment 962,290 765,116 Capital lease asset 29,080,531 29,080,531 Land 4,222,351 1,132,083 Electric plant 310,305,095 303,409,822 Rotable combustion turbine parts 9,844,205 6,063,531 Less accumulated depreciation (75,612,012) (64,035,094) Property and equipment, net 278,802,460 276,415,989 Construction in progress 471,219 4,598,781 Total capital assets, net 279,273,679 281,014,770 Investments 2,000,000 — Restricted cash and cash equivalents 441,405 283,156 Restricted investments 22,206,743 22,072,759 Prepaid expenses 561,243 591,948 Future recoverable costs 32,605,392 30,425,628 Total noncurrent assets 337,088,462 334,388,261 Total assets 396,341,375 394,791,462 Deferred Outflows Deferred outflows of resources 1,788,969 — Total assets and deferred outflows of resources $398,130,344 394,791,462 Liabilities Liabilities: Current liabilities: Accounts payable and accrued liabilities $ 11,985,661 14,033,294 Retainage payable 338,934 1,147,679 Accrued interest payable 2,386,016 3,380,575 Long-term debt due within one year 8,813,334 8,058,334 Capital lease liability due within one year 816,798 770,782 Derivative instruments—futures 81,900 — Total current liabilities 24,422,643 27,390,664 Long-term debt, net 266,657,458 269,381,358 Capital lease liability 20,776,057 21,592,855 Total noncurrent liabilities 287,433,515 290,974,213 Total liabilities 311,856,158 318,364,877 Deferred Inflows Deferred inflows of resources—rate stabilization 30,450,000 29,300,000 Deferred inflows of resources—other 7,179,591 5,915,990 Total liabilities and deferred inflows of resources 349,485,749 353,580,867 Net Position Net position: Net investment in capital assets 9,508,833 9,719,015 Restricted for debt service 6,298,873 5,733,585 Unrestricted 32,836,889 25,757,995 Total net position 48,644,595 41,210,595 Total liabilities and deferred inflows of resources and net position $398,130,344 394,791,462 22 2014 MMPA Annual Report Minnesota Municipal Power Agency Statements of Revenues, Expenses, and Changes in Net Position Year ended Year ended December 31 December 31 2014 2013 Operating revenues: Power sales to members $104,722,737 102,076,404 Power sales to nonmembers 156,123 4,027,415 Total operating revenues 104,878,860 106,103,819 Operating expenses: Power acquisition expense 44,839,029 48,813,970 Transmission 10,444,101 10,787,136 Other operating expenses 21,836,740 19,212,613 Depreciation 11,576,917 10,149,719 Total operating expenses 88,696,787 88,963,438 Operating income 16,182,073 17,140,381 Nonoperating revenues (expenses): Amortization of premium on long-term debt, net 324,833 138,554 Interest expense (14,422,118) (14,186,323) Investment income 980,363 933,084 Net increase in fair value of investments 1,999,388 — Loss on disposition of property — (2,567,317) Gain on sale of investments 102,123 — Grant revenue — 16,568 Total nonoperating revenues(expenses), net (11,015,411) (15,665,434) Change in net position before future recoverable costs 5,166,662 1,474,947 Future recoverable costs 2,267,338 4,587,328 Change in net position 7,434,000 6,062,275 Total net position, beginning of year 41,210,595 35,148,320 Total net position, end of year $ 48,644,595 41,210,595 Visit www.mmpa.org to see complete aucitec financial statements anc learn more about VMPA, __ - ,w— - Financlazs a Reports.u..v■r ..«.,...., _ rte ::P - aa..o..<.+...,r.e.m,.,...w,,.k,..me.-r.e 2014 MMPA Annual Report 23 MMPA Board of Directors VVPA Board of irectors MMPA is governed by a Board of Directors. The Board is responsible for setting policy, for approving investments in new plants, and for overseeing management. Each MMPA member has a representative on MMPA's Board and an alternate representative. MMPA Officers Anoka Elk River Steve Schmidt Troy Adams Councilman Utilities General Manager try G IPA" Ed Evans* Allan Nadeau* Utility Advisory Utilities Commissioner Board Member Le Sueur Arlington . wf Mark Huntington Liza Donabauer Councilman City Administrator Greg Drent* Lisa Tesch* Electric Director Deputy Clerk ol ilk , —d North St. Paul Brownton Brian Frandle 1 Curt Carrigan Director of Councilman Electric Utilities sia `p''`' Jason Ziemer* 4 Buffalo City Manager Merton Auger John Crooks Steve Schmidt City Administrator Olivia Treasurer Chairman Matt Podhradsky Dan Boyce Joseph Steffel* Bernard Johnson Utilities Director Councilman Vice Chairman Secretary Chaska Dan Coughlin* Matt Podhradsky City Administrator Each member community benefits City Administrator Shakopee through representation on MMPA's Board Greg Bo& John Crooks of Directors. The board shapes strategy Councilman Utilities Manager and makes important policy decisions on East Grand Forks Joe Helkamp* Utilities Commissioner energy for its member communities. Dan Boyce General Manager Winthrop Jeff Olson* Peter Machaiek Distribution Superintendent Alderman Jenny Hazelton* City Administrator *Alternate 24 2014 MMPA Annual Report East Grand Forks thó cower of y our n o n crow n Buffalo Brownton Elk River Anoka Winthrop Shakopee Olivia iii • / North St. Paul • • • ■ ■ ■ —\ Chaska Arlington Le Sueur 1 L7/1 12 MMPA Member City Population (2010,U.S.Census) 69 805 Total Retail Customers Served , (2014) MMPA Minnesota Municipal Power Agency 220 South Sixth Street,Suite 1300 612.349.6868 Minneapolis,MN 55402 www.mmpa.org