5.2 ERMUSR 10-10-2017 Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
ERMU Commission Theresa Slominski—Finance & Office Manager
MEETING DATE: AGENDA ITEM NUMBER:
October 10, 2017 5.2
SUBJECT:
2018 Business Plan/Budget: Water and Electric Expenses
ACTION REQUESTED:
None
BACKGROUND:
In preparation for submittal in November, staff continues to work through the 2018 budget
process. The first cut of the expense portion of the 2018 budget has been completed for
commission review. The expense budget will change as the complete 2018 budget is assembled
and the finalized wholesale power costs are reflected. Wholesale power costs, as well as
revenues and rate increases for 2018 will be presented in November.
DISCUSSION:
Attached is the following information for your review. Additional budget detail is available upon
request. Please contact staff for additional information.
1. Water Department Expense Budget—The 2018 forecast for water expenses are a 4%
increase over the current year budget. Most notable are increases on the administrative
side, due to hiring an IT staff person, increases in health insurance, and allocation
distributions for employee related expenses.
Currently we are projecting a 2%rate increase to produce near 0%reserve impact.As
numbers are finalized, and revenue projected, this will be brought back in November.
2. Electric Department Expense Budget—The 2018 forecast for electric expenses are a 5%
increase over the current year budget. Wholesale power costs make up between 70-75%
of the operating budget, and are estimated here at 1%. Typically,there is some
adjustment of the rate structure that impacts us more than percent increase provided by
GRE.
The budgeted Payment in Lieu of Taxes (PILOT) amount for 2018 is approximately$1.4
million. The PILOT is comprised of$1.16 million with the 4%of Elk River City's sales
calculation, and$232,000 in donated utilities and labor.
Currently, we are estimating a 1%rate increase to produce near 0%reserve impact.
Growth through our acquisition is helping to keep the rates down. We will have more
information with the presentation of the revenue projections in November.
Page 1 of 2
70
ATTACHMENTS:
• Proposed 2018 Electric Expense Budget
• Proposed 2018 Water Expense Budget
Page 2 of 2
71
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