4.3. ERMUSR 12-08-2015 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:
December 8, 2015 4.3
SUBJECT:
2016 Budget
BACKGROUND:
In November the preliminary 2016 budget and rates were presented to the Commission. Based on
feedback and minor changes due to finalizing of projects and expense,the proposed 2016 budget is
as follows.
DISCUSSION:
Electric Department Revenue and Expense Budget
Wholesale power costs account for 72%of operating expenses for 2016. The rates set by Great
River Energy(GRE)have an enormous impact on ERMU's rates. The 2016 wholesale power rate
increase from GRE results in a 2%impact to ERMU. The territory acquisition of Area 1 revenue
and expense impacts were estimated with help of Consultant David Berg(formerly with SAIC and
RW Beck Consulting companies). The margin from the acquisition provides significant additional
revenue to help offset the significant capital construction projects necessary to upgrade the
acquired infrastructure, and hold down rate increases. The proposed 2016 budget and rates result in
electric fund revenue of$36,297,457 which includes a projected 3.42%margin and a projected
$255,394 net to reserves with a 0%rate increase for our customers.
Notable items in the electric budget for 2016 are:
• 2.75%COLA for all four pay plan groups;
• 1.0%Market adjustment for the Lineworkers pay plan group;
• Continued high production and low maintenance for the LFG plant;
• An estimate of 1%growth in usage;
• NISC in-house server implementation costs;
• Addition of new GIS/Mapping Technician position(budgeted for 2015 and delayed);
• Creation of Electrician/Electrical Technician position(to compensate for current license
utilized by ERMU,no additional staff)
• Planned delay of linetruck purchases;
rOIEAE9 or
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• Territory acquisition costs of Area 2 Infrastructure and Area 1 Loss of Revenue payment
paid from transfer from reserves;
• Consultant for architectural design and planning of Field Services Building;
• 2016 APPA Lineworkers Rodeo in Shakopee,MN.
The proposed 2016(unchanged) electric rates are:
Residential
Meter Charge ... $12.00/Month
Summer Energy Charge (May-Sep) ... $0.1360/kWh
Winter Energy Charge (Oct-Apr) $0.1205/kWh
Non-Demand Commercial
Meter Charge ... $20.00/Month
Summer Energy Charge(May-Sep) ... $0.1304/kWh
Winter Energy Charge (Oct-Apr) $0.1087/kWh
Demand Commercial (50kW peak or greater)
Meter Charge ... $60.00/Month
Energy Charge $0.0649/kWh
Summer Demand Charge(May-Sep) ... $16.94/kW
Winter Demand Charge (Oct-Apr) ... ... ... ... $11.99/kW
Water Department Revenue and Expense Budget
The proposed 2016 water budget reflects a 5.4%increase in revenue with a total budget of
$2,603,100. Of that increase, 3.8%is collected through the increase to water rates 1%usage
increase, and the remainder through increased WAC, etc. This water budget results in a .06%
projected margin, and a projected$1,741 net to reserves.
Notable items in the water budget for 2016 are:
• 2.75%COLA for all four pay plan groups;
• Conservative estimate for usage growth;
• NISC in-house server implementation costs;
• Addition of new GIS/Mapping Technician position;
• Construction Filter Plant 9(partially funded from reserves and some trunk funds);
• Well 3 Infiltration Basin;
• New Water Valve Exercising Machine.
In 2013,we implemented a multi-year plan after years of no rate increases in 2010,2011, and 2012
to bring rates and cash flow projections in line with capital improvement plan projections. The
three year plan started in 2013 and ended in 2015 with 4%increases for all three years.As in the
electric rate design,the proposed rate design also continues the direction of shifting to more fixed
cost recovery to mitigate revenue recovery volatility related to weather. The proposed 2016
residential water rates are a 2.5%increase to the first tier and the Meter Charge:
ER1
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Residential(1 Unit= 1000gallons)
1st Tier Unit Cost(0—9,000 gallons) ... ... ... $1.72/Unit
2nd Tier Usage (between 1St Tier and up to 15,000 gallons) ... ... $3.50/Unit
3rd Tier Usage (over 2nd Tier usage) ... ... ... ... ... $4.00/Unit
5/8"Meter Charge ... ... ... ... ... ... $8.64/Month
These rate changes result in a projected 2.07%increase for a typical residential customer. This is
the equivalent to a$5.53 per year increase for these customers.
For commercial customers, it is more difficult to classify typical users. The 1st Tier and meter
charges are increased by 2.5% in the proposed budget. But because the 2nd and 3rd Tiers are not
being increased,the amount of usage will result in commercial customer increases between 2%
and 2.5%. The proposed 2016 commercial water rates are:
Commercial (1 Unit= 1000gallons; Winter=November-March)
1st Tier Unit Cost(less than110%of average winter usage) ... ... $1.72/Unit
2nd Tier Unit Cost(between 1St Tier and an additional 40,000 gallons) $3.50/Unit
3rd Tier Unit Cost(over 2nd Tier usage) ... ... ... ... $4.00/Unit
0.75"Meter Charge ... ... ... ... ... ... ... $10.37/Month
1.00"Meter Charge ... ... ... ... ... ... ... $11.53/Month
1.25"Meter Charge ... ... ... ... ... ... ... $12.69/Month
1.50"Meter Charge ... ... ... ... ... ... ... $13.84/Month
2.00"Meter Charge ... ... ... ... ... ... ... $18.45/Month
3.00"Meter Charge ... ... ... ... ... ... ... $40.35/Month
4.00"Meter Charge ... ... ... ... ... ... ... $55.35/Month
6.00"Meter Charge ... ... ... ... ... ... ... $80.71/Month
8.00"Meter Charge ... ... ... ... ... .... ... $109.53/Month
Seasonally Installed Irrigation Meter Charge ... ... ... ... $46.11/Month
Permanently Installed Irrigation Meter Charge ... ... ... $18.45/Month
ACTION REQUESTED:
• Adopt the proposed 2016 budget and rates.
ATTACHMENTS:
• Proposed Summary of 2016 Budgets
• Proposed 2016 Electric Revenue and Expense Budget(unabridged)
• Proposed 2016 Water Revenue and Expense Budget(unabridged)
• Proposed 2016 Electric Capital Budget
• Proposed 2016 Administration and Technical Services Capital Budgets
• Proposed 2016 Water Capital Budget
• Proposed 2016 Training and Travel Budget
• Proposed 2016 Dues and Subscriptions Budget
• Proposed 2016 Conservation Improvement Program Budget
1-/ MEIEI ST
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ELK RIVER MUNICIPAL UTILITIES
SUMMARY OF YEAR 2016
BUDGETS
ELECTRIC BUDGET SUMMARY 2016
ELECTRIC REVENUE $ 36,297,457 includes an estimated revenue amount Area 1$2,475,248
ELECTRIC EXPENDITURES (35,038,185) includes an estimated power cost amount Area 1$1,491,000
ELECTRIC NET FOR CAPITAL 1,259,272 3.47%
DEBT RETIREMENT (692,000)
PROMISSORY NOTE TO COUNTY (191,508)
LESS DEBT PRINCIPAL PMTS 375,764
CAPITAL EQUIPMENT/CONSTRUCTION (3,490,370)
FUND FROM RESERVES 1,045,000 * Territory acquisition costs
BOND REFUNDING
NET (2,069,606)
DEPRECIATION 2,325,000
NET TO RESERVES 255,394 *
WATER BUDGET SUMMARY 2016
WATER REVENUE $ 2,603,100
WATER EXPENDITURES (2,601,504)
WATER NET FOR CAPITAL 1,596 0.06%
DEBT RETIREMENT (233,000)
GROSS (231,404)
CAPITAL PROJECTS (2,146,855)
FUND FROM RESERVES 940,000
FUND FROM WATER TRUNK FUND 300,000
BONDING -
NET (1,138,259)
DEPRECIATION 1,140,000
NET TO RESERVES 1,741
*Currently,target reserves are met.
2016 BUDGET SUMMARY.xAs2016
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Elk River Municipal Utilities
2016 Electric Department Capital Budget
Capital Construction Projects-Non-Recurring Normal Distribution,Feeders,and Substations
Priority Cost Description
2 $ 100,000 Rebuild River Ranch
$ 100,000 Rebuild Sandpiper Estates
3 $ 300,000 Feeder 42 underbuild
$ 75,000 Presidential Estates
$ 50,000 Country Crossing Ill
1 $ 700,000 Natures Edge Business Park Feeder
Data Center Feeder $ 700,000 Reserves
Waco II Substation $ 1,100,000 Reserves
Subtotal $ 1,325,000
Capital Construction Projects-Recurring
Cost Description
$ 200,000 Transformers and Meters
$ 200,000 New Development Distribution Installation
$ 50,000 Ongoing OH Equip Replacement(Poles,Switches,Cut-Outs)
$ 150,000 Ongoing URD Equip Replacement(Switches,J-Boxes,Fuse Pads)
$ 12,000 Street Lighting Replacement
$ 8,000 Territory Acquisition-Loss of Revenue payment(1991 contract)
$ 345,C60;Territory Acquisition-Loss of Revenue payment(2015 contract-Area 1 first-pmt 2017) Reserves
$< 700,000 Future Territory Acquisition(Area 2 Plant) Reserves
$ 15,000 Painting poles to extend life
$ - Additional Feeders
Subtotal $ 1,680,000
Administration Noteworthy Non-Recurring Expenses
Cost Description
Subtotal $ -
Capital Equipment Needs
Cost Description
$ 8,950 Laptop Computers,Software,Accessories
$ 2,000 SCADA equipment
Replace Digger Truck#10 with new 2017 $ 250,000
Replace Bucket Truck#21 with new 2017 $ 250,000
$ 95,000 Flatbed Truck for Bore Rig
$ 10,000 Plow for Payloader
$ 70,000 Replace VacTron
$ 35,000 Pickup replace Unit#24
$ 35,000 Pickup replace Unit#6
Field Services Building addition ?years 80/20% Bond$5,000,000
$ 229,420 80%share of Administration and Technical Services
Landfill Expansion Project ?2017 $ 240,000
Subtotal $ 485,370
Total $ 3,490,370
72
Elk River Municipal Utilities
2016 Administration and Technical Services Departments Capital Budgets
Administration Capital Equipment Needs
Cost Description
$ 7,000 Computer,Software,Accessories-Upgrades
g, *= New in house server for NISC
Subtotal $ 107,375
Administration Noteworthy Non-Recurring Expenses
Cost Description
$ 5,400 Office Furniture
$ 1,500 printers/scanners
$ 12 City Hall/Utility Fitness Room
Subtotal $ 18,900
Total $ 126,275
Technical Services Capital Equipment Needs
Cost Description
$ 6,500 Computers,Software,Accessories-Upgrades
$ 32,000 Itron MV-90 Software to replace outdated metering data software
Diesel Engines Emission Retrofit $ 400,000 Currently designated as emergency standby,
$ 80,000 Omicron Test Set
$ 35,000 Vehicle for GIS/Mapping Technician
Landfill expansion project $ 240,000 ?2017
Subtotal $ 153,500
Technical Services Noteworthy Non-Recurring Expenses
Cost Description
$ 2,000 tools,etc for new position
$ 5,000 desk for new position
Subtotal $ 7,000
Total $ 160,500
73
Elk River Municipal Utilities
2016 Water Department Capital Budget
Water Capital Construction Needs
Cost Description
$ - Water Main Construction
$ 1,500,000 Construction of Filter Plant 9
$ 140,000 Well 3
$ 100,000 Facility Repair
$ 40,000 Chemical Dosing Upgrades
$ 4,000 Well Dehumidifiers
$ �a ' 'm` $25,000 2017'?
$ 30,000 Asset Management Software
Subtotal $ 1,839,000
Water Noteworthy Non-Recurring Expenses
Cost Description
$ 50,000 Repairs&Maintenance
$ 2,500 Leak Detection Survey
$ 3,000 Computers/GIS/SCADA
$ 10,000 Meters/ERTs
$ 15,000 Miscellaneous Tower Repairs/Maintenance
$ 90,000 Jackson Water Tower
-000101#416111 XIS
Subtotal $ 170,500
Capital Equipment Needs
Cost Description
$ 80,000 New Valve Exercising Machine
$ 57,355 20%share of Administration and Technical Services
Subtotal $ 137,355
Total $ 2,146,855
74
ELK RIVER MUNCIPAL UTILITIES
TRAINING AND TRAVEL BUDGET FOR 2016
Budget Budget Budget
ELECTRIC 2014 2015 2016
MMUA Overhead Hot Line School 3 people 3,075.00 3,111.00 3,165.00
MMUA Underground School 3 people 3,075.00 3,111.00 3,165.00
MMUA Transformer School 3 people 3,075.00 3,111.00 3,165.00
MMUA Substation Workshop 2 people 2,050.00 2,074.00 2,110.00
1st Line Supervision 1 person 250.00 300.00 1,470.00
Apprenticeship 3 people 3,750.00 3,750.00 1,602.00
MMUA Meter School 2 people 970.00 1,940.00 1,940.00
MMUA Locator Workshop 2 people 650.00 650.00 720.00
Regional Workshop 10 people 450.00 450.00 650.00
Infrared Camera training 1 person 525.00 529.00
GPS 1 person 1,500.00 750.00
APPA Linemen Rodeo team 3-5 people 5,500.00 4,340.00
Cross Training School 2 people 555.00
Additional Training 1,000.00 1,000.00 1,000.00
18,870.00 27,026.00 25,032.00
WATER
Water Certification Continuing Educe 3 people 2,700.00 4,000.00 2,000.00 •
Wastewater Certification Continuing 3 people 2,270.00 1,000.00 1,500.00
1st Line Supervision 1 person 250.00 1,200.00 1,470.00
Meter School/Training 1 person 970.00 -
Apprenticeship 1 person
Chamber Leadership Program 1 person
Additional Training 500.00 500.00 1,000.00
6,690.00 6,755.00 5,970.00
TECHNICAL SERVICES
MMUA Locator Workshop 1 person 1,366.00 695.00
MMUA Staking Workshop ' - - 750.00
MMUA Diesel Workshop 1 person 670.00 750.00 755.00
UMMA Meter Workshop 1 person 1,660.00 1,660.00 842.50
CAD Workshops/GPS 1 person - - 750.00
Substation School 780.00
Power Limited classes 1 person 990.00 990.00 292.15
Power Quality training 2 people 400.00 400.00
Infrared Camera training 1 person - - 535.00
Security classes 1 person 400.00 400.00 400.00
UMMA winter and summer mtg 2 people 550.00 850.00
1st Line Supervision 250.00 250.00
Electrical Licensing 1 person 345.00 360.00
Cross Training School 1 person 810.00
Apprentice Meter Program(2) 2 people 1,200.50 2,400.00 2,450.00
Additional Training 1,000.00 1,000.00 1,000.00
8,245.00 9,216.00 10,489.65
ADMINISTRATION
AW WA Water Certification Continuinc Education 1,572.50
MRWA Water Certification Continuing Education 500.00
Wastewater Certification Continuing Education 500.00
MV-RS Meter/Software training 1 person - - 650.00
Wastewater Certification 500.00
Financial
Publishing and Design Software tmg 1 person 1,000.00 `
Engineering
MMUA Annual Summer Meeting 4 staff/1 comm 3,650.00 3,750.00 4,525.00
MMUA Legislative Round-up 4 staff/1 comm 1,630.00 3,200.00 2,650_00
APPA Legislative Round-up 1 staff/1 comm 5,425.00 2,793.88 4,650.50
or Engineering/Operator Workshop
MMUA T&O Conference 4 staff 1,800.00 1,800.00 2,400.00 *
MMUA Legal Seminar 250.00 250.00
GoalsNisioning/Strategic Planning
Clerk's Conference 519.00 519.00 600.00
1st Line Supervision 1,470.00
APPA E&O Conference 2 people 4,030.00 •
APPA Management
APPA Training(Annual,Mgmt,CS,Fin,Eng,CIP,etc) 7,900.00 7,900.00 5,670.00
Management Training 3.000.00 2.25005 2,500.00
Additional Training 1,000.00 1,000.00 1,000.00
33,207.33 31,656.88 34,217.50
OFFICE
Member Information Conf(NISC) 4 staff 2,700.00 6,200.00 6,240.00
Customer Service 3,500.00 3,505.00
Chamber Leadership Program 1 person 350.00 350.00 350.00
6,550.00 6,550.00 9,590.00
SAFETY TRAINING
Safe Driver Training 2,100.00 2,100.00 2,100.00
Hearing Test 485.00 500.00 500.00
MMUA Monthly Safety Meetings 24,950.00 25,250.00 26,600.00
27,535.00 27,850.00 29,200.00
EDUCATION 3,000.00 3,000.00 3,000.00
104 097.33 111 998.88 117,499.15
Page 1
75
ELK RIVER MUNCIPAL UTILITIES
DUES/SUBSCRIPTIONS/FEES BUDGET FOR 2016
Budget Budget Budget Budget
2013 2014 2015 2016
MMUA Membership Dues 26,177.00 26,470.18 27,025.00 27,727.68
CMMPA Associate Member Dues - -
MMTG Dues 13,050.00 15,500.00 15,000.00 16,000.00
APPA Dues 9,606.36 10,567.00 11,000.00 11,000.00
MAPP Joint Membership Fee 800.00 27,000.00 - -
MCMU Membership Dues 250.00 250.00 250.00 250.00
CAPX2020 Brookings Project Assessments - -
CRC Membership 250.00 250.00 250.00 250.00
Rotary 350.00 700.00 250.00 250.00
Drug and Alcohol Random Testing 550.00 550.00 775.00 825.00
Software Support 20,000.00 44,000.00 60,000.00 132,000.00
Bond Administrative&Management Fees 1,300.00 1,300.00 1,300.00 1,300.00
Miscellaneous 1,000.00 1,000.00 1,000.00 1,000.00
SCADA OSI Fee(GRE) 7,150.00 7,150.00 4,874.00
800 Mhz Radio Licensing 1,600.00 2,700.00 2,700.00
Publications 400.00 600.00 600.00 600.00
Quarterly DNR Water Connection Fee 25,281.00 26,039.43 30,200.00 30,200.00
MRWA Annual Fee 235.00 235.00 235.00
AW WA Annual Fee 300.00 300.00 310.00
Annual Report on Water Use-DNR 150.00 150.00 150.00 150.00
1-94 Chamber Membership 450.00 450.00 475.00 475.00
Elk River Chamber Membership 450.00 450.00 500.00 500.00
100,064.36 164,561.61 159,160.00 230,646.68
-29.5% 64.5% -3.3% 112.4%
Page 1
76
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