5.3 ERMUSR 09-12-2017 Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
ERMU Commission Theresa Slominski—Finance & Office Manager
MEETING DATE: AGENDA ITEM NUMBER:
September 12,2017 5.3
SUBJECT:
2018 Business Plan/Budget: 10-Year Capital Project Projections, Capital Purchases and
Equipment, and the Conservation Improvement Program
ACTION REQUESTED:
None
BACKGROUND:
In preparation for submittal in November, staff continues to work through the 2018 budget
process. The first cut of the capital budget portion of the 2018 budget has been completed for
commission review. The capital budget may change as the complete 2018 budget is assembled
and when the wholesale power costs, rate changes, and cash flow become more definite.
DISCUSSION:
The following information is submitted for your review:
1. Electric Department Capital Budget—This includes large non-recurring capital
construction projects, recurring capital construction projects and asset preservation, and
capital equipment purchases.Notable items for 2018 are Territory Acquisition costs,
replacing bucket truck#21, a new trailer, and construction/renovation prep for the field
services facilities.
2. Electric Department Projects Time Schedule 10-year Projection—This highlights large
non-recurring capital construction projects, recurring capital construction projects, and
asset preservation.
3. Water Department Capital Budget—This includes large non-recurring capital
construction projects, recurring capital construction projects and asset preservation, and
capital equipment purchases.Notable items for 2018 are the MNDot Project,the filter for
well#5,well#9 rehabilitation, and construction/renovation prep of the field services
facilities.
4. Water Department Project Time Schedule—This highlights large non-recurring capital
construction projects, recurring capital construction projects, and asset preservation.
5. Technology Services and Administrative Capital Budgets—This includes capital
equipment purchases as well as some noteworthy non-recurring expenses.
Page 1 of 2
76
6. Conservation Improvement Program (CIP)Budget—This includes detailed information
about the cost of the specific programs as well as the historic participation numbers.A
notable item for 2018 is the increase in ERMU's portion of the rebates.
Additional information on the vehicle evaluations is available upon request.
FINANCIAL IMPA
The 2018 Electric DepartCT:ment Capital Budget is significantly lower than the prior year because
of the Waco 2 substation in 2017, a$1.1 million item, otherwise the year to year capital
investment is consistent. As in years past, we will use reserves to pay for the territory expansion
costs, approximately$800,000 for 2018.
The 2018 Water Department Capital Budget is increased 5%over the prior year due to the water
main MNDot project, otherwise the year to year capital investment is consistent.
ATTACHMENTS:
• 2018 Electric Department Capital Budget
• 2018 Electric Department Capital Projects Time Schedule
• 2018 Water Department Capital Budget
• 2018 Water Department Capital Projects Time Schedule
• 2018 Administration and Technical Services Departments Capital Budgets
• 2018 Conservation Improvement Program Budget Summary
• 2018 Conservation Improvement Program Budget Detail
Page 2 of 2
77
Elk River Municipal Utilities Business Plan/Budget
2018 Electric Department Capital Budget
Capital Construction Projects-Non-Recurring Normal Distribution,Feeders,and Substations
Labor Priority Cost Description
4 $ 75,000 OH and URD 197th to GRE Transmission
5 $ 35,000 Otsego Street Lights
2 $ 50,000 Area 3&4 rebuild
1 $ 600,000 Area 5&6 prep
3 $ 50,000 Highway 10 Bridge
Subtotal $ 810,000
Capital Construction Projects-Recurring
Cost Description
$ 200,000 Transformers and Meters
$ 350,000 New Development Distribution Installation
$ 50,000 Ongoing OH Equip Replacement(Poles,Switches,Cut-Outs)
$ 100,000 Ongoing URD Equip Replacement(Switches,J-Boxes,Fuse Pads)
$ 20,000 Street Lighting Replacement
$ 500 Territory Acquisition-Loss of Revenue payment(1991 contract)
$ 443,430 Territory Acquisition-Loss of Revenue payment(2015 contract-Area 1 &2) Reserves
$ 350,000 Future Territory Acquisition(Area 5&6 Plant) Reserves
$ - Additional Feeders
Subtotal $ 1,513,930
Administration Noteworthy Non-Recurring Expenses
Cost Description
Subtotal $ -
Capital Equipment Needs
Cost Description
$ 7,500 Laptop Computers,Software,Accessories
$ 2,000 SCADA equipment
Replace Digger Truck#10 with new 2020 $250,000
$ 250,000 Replace Bucket Truck#21 with new
Replace Bucket Truck#8 with new 2019 $250,000
$ 45,000 Replace Bobcat
$ 70,000 550 Truck
$ 8,500 Replace tracks on bore rig
$ 35,000 Triple-bunk self loading trailer
$ 270,000 Field Services Building addition ?years 80/20% Bond$5,000,000
$ 119,200 80%share of Administration and Technical Services
Subtotal $ 807,200
Total $ 3,131,130
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Elk River Municipal Utilities Business Plan/Budget
2018 Water Department Capital Budget
Water Capital Construction Needs
Cost Description
$ 240,000 Water Main Construction MNDot Project
$ 70,000 Well 5 Filter Sandblast/Paint
$ 40,000 Well 9 Rehabilitation
$ 100,000 Facility Repair
$ 15,000 Auburn Tower Engineering Documents prep for 2019
Subtotal $ 465,000
Water Noteworthy Non-Recurring Expenses
Cost Description
Repairs&Maintenance (moved to expense budget)
$ - Computers
$ 10,000 Meters/ERT
$ 15,000 Miscellaneous Tower Repairs/Maintenance
$ - Jackson Water Tower $90,000 Reserves
Subtotal $ 25,000
Capital Equipment Needs
Cost Description
$ - Trucks
$ 5,000 Trailer
$ 29,800 20%share of Administration and Technical Services
$ 30,000 Field Services Facility site work
Subtotal $ 64,800
Total $ 554,800
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Elk River Municipal Utilities Business Plan/Budget
2018 Administration and Technical Services Departments Capital Budgets
Administration Capital Equipment Needs
Cost Description
$ 7,000 Computer, Software,Accessories-Upgrades
Subtotal $ 7,000
Administration Noteworthy Non-Recurring Expenses
Cost Description
$ 15,000 Office Furniture carried forward 2017
$ 500 printers/scanners
Subtotal $ 15,500
Total $ 22,500
Technical Services Capital Equipment Needs
Cost Description
$ 7,500 Computers, Software,Accessories-Upgrades
Diesel Engines Emission Retrofit $ 350,000 Currently designated as emergency standby,
Diesel Plant to run on Natural gas. $ 20,000 Deferred until MMPA transition
$ 45,000 Electric vehicle? #33 Meter Reading
$ 45,000 Pickup trucks #14 Locating
Subtotal $ 97,500
Technical Services Noteworthy Non-Recurring Expenses
Cost Description
$ 10,000 ?Mobile Access Software
$ 1,000 Operating Software for server blade
$ 18,000 ARC GIS Enterprise
Subtotal $ 29,000
Total $ 126,500
82
2018 CIP Operating Budget
Required Spending and Savings Goals
Total Spending Requirement 1.5% of GOR $ 502,220.24
Low Income .2% of Residential GOR $ 22,711.64
Minimum Conservation Spending Requirement $ 251,110.12
Maximum Load Management Spending Requirement $ 251,110.12
Customer Side of the Meter Savings Goal (kWh) 2,547,256
Distribution Savings Goal (kWh) 1,273,628
Total CIP Budget 2018
Direct Labor $ 105,069
General &Administration $ 50,445
Advertising $ 32,600
Equipment $ 2,500
Contract(Includes$139,500 LM Transition) $ 177,500
Total $ 368,114
ERMU Rebates $ 121,250
Great River Energy Rebates (Estimated) $ 164,887
Total all Expenses and Rebates $ 654,251
Total Estimated kWh Savings 2,623,672
Total Operating CIP Budget No Rebates Only Direct Costs
Direct Labor $ 105,069
Advertising $ 32,600
Equipment $ 2,500
Contract(Includes$139,500 LM Transition) $ 177,500
Total ERMU Operating Expenses $ 317,669
Total Rebate Budget
ERMU Self Funded $ 121,250
Great River Energy $ 164,887
$ 286,137
Total Requested Budget
Direct Labor $ 105,069
Advertising $ 32,600
Equipment $ 2,500
Contract(Includes$139,500 LM Transition) $ 177,500
ERMU Self Funded Rebates $ 121,250
Total Requested 2017 Budget* $ 438,919
*No General and Administrative Included
N:\Office\CIP and Key Accounts\GRE Rebates\2018 Budget\2018 Rebate and Operating Budget.xls2018 Rebate
and Operating Budget.xls2018 CIP Summary
83
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