5.3 ERMUSR 05-09-2017 Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
ERMU Commission Troy Adams, P.E. - General Manager
MEETING DATE: AGENDA ITEM NUMBER:
May 9, 2017 5.3
SUBJECT:
2016 Annual Report
ACTION REQUESTED:
Receive and file the 2016 Annual Report.
DISCUSSION:
Following the completion of the financial audit, staff has produced a retrospective 2016 annual
report. This report highlights organizational activities, statistics, and messaging. The annual
report will available digitally to customers on the ERMU website. It will also be available in
hardcopy at our office or by request. The report is not only used to document ERMU's history, it
is also used as marketing materials. Staff will be available to highlight department
accomplishments and prepared for discussion during the Commission meeting.
ATTACHMENTS:
• 2016 Elk River Municipal Utilities Annual Report
Page 1 of 1
124
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Elk River
2016Munic al Utilities Annual 'ReOrt
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Front Cover: ERMU staff and competitors gathered at the conclusion of the Rodeo competition - photo by MMUA
Below: Employee photo taken at the power plant substation that came online in 1948
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94ission Statement:
To provide our customers with safe, relza6le, cost effective, and quality long term electric and water utility service.
To communicate and-educate our customers in the use of utility services,programs,policies,andfuture plans.
Page 1 These products andservices will6e provided in an environmentally andfznancially responsible manner.
To Our Customers
_ _
As we enter into our second century of service
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` ` as0"1 to our community, we have worked to position ELk
River MunicipaL Utilities (ERMU) strategically for
_
' the future. We continued to experience strong
commercial and residentiaL growth. This growth is
i , mi ,,aa result of new deveLopment and electric service
territory acquisition. To balance this growth in
customer base, we worked to increase community
`. representation in our governance. With the help of
'' { our LocaL Legislators, Representative Nick Zerwas
" � ` " and Senator Mary Kiffmeyer, Legislation was passed
=° which allows the ERMU Commission to expand
'`` Jr its membership from three to five commissioners� " � ��s{ a beginning in 2017. And, we have worked to strengthen
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` Ilk. . ,r, our core governance policy, cLearLy define our
-. company vision and values, and eliminate mission
creep. ALL of this will make ERMU more nimble to
.. ‘11 , ..
trt respond quickly to a rapidly evolving industry while
increasing Local oversight, ensuring transparency, and
-- # .';° deLivering exceptional services and value to those
{. we serve.
,
Troy Adams, P.E., GeneraL Manager
Page 2
Below: Pictures taken at the 2016 Public Power Lineworkers Rodeo - top right photo by APPA
Opposite: Minnesotans gathered for a group photo at the Lineworkers Rodeo banquet - photo by MMUA
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Public Power Lineworkers Rodeo
For the first time ever, Minnesota was host to the Public Power Lineworkers Rodeo.
On an extremely windy and bitterly cold April 2, 2016, well over 2,000 people were
in attendance for this national event held at Canterbury Park in Shakopee, MN. This
American Public Power Association (APPA) event was co-hosted by Minnesota Municipal
Utilities Association (MMUA) and Shakopee Public Utilities (SPU). And ERMU played a
significant role in planning, construction, and helping run this lineworkers rodeo.
As expected on home turf, Minnesota municipal utilities were well represented taking
home a number of awards. From the nearly 360 competitors, 14 Minnesota cities were
represented. ERMU had a team of three journeyman Lineworkers as well as two individual
apprentice lineworkers compete.
This event was more than just the competition; it was also about public power
communities coming together. And in the true spirit of Minnesota Nice, the Minnesota
municipal utility employees and their communities showed up in full force to help run
the event and cheer on their lineworkers.
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Page 4
Opposite: Pictures of Well #7 Water Treatment Plant expansion project and the reconditioned filter at Well #3
Enercy Efficiency
2016 CIP RESIDENTIAL
Energy conservation and the • Rebates $62,000
environment go hand in hand. • Energy Savings $49,000
That's why we offer our residential Total Residential $111,000
and commercial customers a variety
of energy saving programs and
services. In 2016, ERMU Conservation 2016 C1P COMMERCIAL
Improvement Programs (CIP) helped • Rebates $153,000
customers save over $550,000 • Energy Savings $183,000
through rebates and estimated • Demand Savings $103,000
energy savings. Total Commercial $439,000
1$%° °7 ■ Electric Distrioution System
■. .AL
■Iii. :e it 1'�{��¢ ■_° The ERMU electric system continued to experience
'; � ,$ ` � 4 growth in 2016 through an electric service territory
� ' ■ray •�# ;, "�;!°°''" transfer. In September, an area in the south east corner
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;---44",.....;,„ , , of Elk River was safely transitioned from Connexus
IR4A.,,,, ,,_il__.;j0,,-,,,c.,_*,,Airg-ile:stin.7.21.3Energy to ERMU, transferring approximately 200
customers. Of these customers, 67% were commercial.
'4l°r' � "(1 ;� "7, ° There was significant effort by both utilities to plan,
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2016 q`-=1�'�' `e7 coordinate, and execute the transfer. This transfer is
Elk River Municipal Utility ';'1 ` n part of a five year service territory transfer agreement
& Connexus Energy Areal,n:_
Boundary Change ���e �v',4*- 44
running through 2020.
Map Key A'h C°\a
OE s Mu�]nefir` ■'.`:'..
2016 Electric Department Statistics:
• Peak = 64 MW
• Annual Energy Sales = 305,337,641 kWh
Page 5 • Number of Customers = 11,011
• Miles of ELectric Lines = 507 miles
Water Distribution System
In 2016 work continued on a project to ;0K,
expand the capacity of ERMU Well #7 � -
Water Treatment PLant. The $1.5 million -, ,�
dollar project, which included adding as " .
filter and expanding the well house, will
double the plant's capacity from 1.15 million
gallons a day to 2.3 million gaLLons a day.
Unlike compact in-home water filtration
systems, the new filter measures over 44
a
feet, and weighs in at an astounding 40,000 , .�. �� t �i "�
pounds. The filter was so Large that it , '.
needed to be hoisted in and settled into ' ',
place via a crane. The final step involved the ,=;L.
addition of filter media to the inside of the , . 7
_ _i ` i_ _
filter, which helps to remove the iron and ®^ g �;;, ..,=--i"
manganese that naturally occurs in water.
As part of ERMU's ongoing preventive ..._v_ � r ....
maintenance, Water Treatment Plant #3 it
:
* '��fir.
was reconditioned in 2016. The
reconditioning involved: sandblasting, -
painting, and updating the old systems inside r .
the treatment plant. The well and filter .v '
maintenance will help to ensure increased E
reliability and water quality for the future. ' li_an ,�
2016 Water Department Statistics:
• Peak = 4,300,000 gallons per day
• Annual Water Sales = 666,656,000 gallons
• Number of Customers = 4,968 Page 6
• Miles of Watermain = 112 miles
ERMU's 2016 Audited Financial Report is available on our website
''.--.16. t`
- -- Financials
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- -- On June 4, 2013, ERMU became the twelfth
� ,`� ., member of the Minnesota MunicipalPower
r Agency (MMPA). In preparation for when
our purchased power contract with Great
-"� . River Energy (GRE) ends in October 2018,
MMPA was selected as the optimal partner
=�� F.y - for our purchased power contract due to:
\ ,, , their current members being similar in size
s ;g and make-up of ERMU, and because their
portfolio of energy offerings do not include
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coal. It is anticipated that this will result in
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" ) vTii ,-7 more reasonable costs into the future. To
` 11. `�� , become a member, ERMU has to buy-in to
-;,, - , the agency for our proportionate share of
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4 \,nA' the agency; it's estimated that in October
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�' 2018 we will represent approximately 20% of
the agency. ERMU made a significant down
, � .!� p/�i � "` payment in 2016 towards this buy-in, allowing
���4P.'z /.: �. ; : ERMU to obtain Lower interest rates than will
µ
2.*•� ~ / ,�� ' - f 20 whenERMU t
,..?� J /{ likely be present in , 18 starts
is �/- h�,�f/^<<ti . ,V �-- receiving power from MMPA. Ultimately,
'�- ,•11��;11;II �I��y,IL� = bonding this year was pro active financial
/., ,,f planning to take care of our customers
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�, �,1 now and into the future, in the most cost
f s ,4 '-'-''''. ', effective way.
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Page 7
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PMU Exits the Security
Systems Business
On August 22, 2016, the ERMU Commission approved through
resolution the sale of the ERMU security systems sales and installation
department. The sale transferred all of the existing security accounts
and inventory to WH Security. As ERMU had partnered with WH
for many years for security system monitoring services, this made fore ''
seamless transition.
This decision was made after significant consideration following months
tsf
of evaluation of the security alarm system business line. The ERMU
security alarm saLes and installation department operated as a subsidiary
of the ERMU electric utility. The driving force for ERMU to provide .,, ._.
security alarm system saLes and installation originated from a need
for having security systems at ERMU facilities. This service was then
extended to our electric customers and beyond.
Many factors contributed to the final decision. Ultimately, with the rapid
rf�
change in security technology and growing need for electric utility grid % f
physical and cyber security, ERMU's facility security needs had evolved
beyond the services provided through the subsidiary. This change in
internal needs created a misalignment in providing exceptionaL security ,,,. ,
alarm system sales and installation services with the ERMU mission 'to ;ft
•
provide our customers with safe, reliable, cost effective and quality long
term electric and water utility services." This misalignment in mission
along with the fiduciary responsibility to the electric customers were the
primary criteria in the decision to sell.
Page 8
Back Cover: ERMU's journeyman Lineworkers competing at the Lineworkers Rodeo - photo by MMUA
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1. Gary Street Water Tower's mirrored reflection off of Lake Orono
2. ERMU's Commissioners and General Manager/2015-2016 MMUA President at MMUA's summer conference
3. Beautiful morning sunrise provides a great backdrop for ERMU's powerlines east of the Elk River Dam
4. ERMU's customer service representative "out in the field" Learning more about hydrant flushing
Page 9
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5. ERMU staff conducting tours of a water tower and well house to school aged children
6. Kermit the Frog Bucket Truck Float at the Sherburne County Parade; this year's theme - Going Green
7. ERMU's Tom Bovitz Scholarship Award Winner being recognized by the Utilities Commission
8. Our customer service team going above and beyond the call of duty
Page 10
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13069 Orono Par<way • D.O. Sox /30
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wwwel(nverutiities.com
763.//1 .2020 •