5.2 ERMUSR 06-12-2018 Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
ERMU Commission Troy Adams, P.E. - General Manager
MEETING DATE: AGENDA ITEM NUMBER:
June 12, 2018 5.2
SUBJECT:
2017 Annual Report
ACTION REQUESTED:
Receive the 2017 Annual Report
BACKGROUND/DISCUSSION:
Historically, staff produces an annual report after the Commission has received the audited financial
report,typically in April. By the time the annual report is created and distributed,the information is
dated.Additionally,the annual report has been produced in book format. The size and cost of this
product makes it not economical for distribution of physical copies by mail to all of the customers.
These two observations bring into question the value of this product,the process in which it is
produced and distributed, and the timing and relevancy of the information.
The leadership team analyzed these concerns earlier this year. The creation of an annual report does
provide value based on the product alone. This report allows for transparency in operations for our
consumer-owners. This report serves as a vehicle for communication for expected and/or timely
messaging. This report provides a concise annual overview of organizational health in an achievable
format. The report on those benefits alone provides value and is a product that should continue to be
produced. The leadership team then analyzed the concerns of: timing of information; and breadth of
distribution and depth of information compared to expense and value.
The timing of this report does not need to wait until after the audited financial are received by the
Commission. In fact, in recent years the annual report didn't include any financial information
because it was redundant to the audited financial report. It is possible to produce the annual report
separate from the audited financial report. And, it is then possible to produce the annual report earlier
in the year so the information is more relevant from a timing perspective. Starting in 2019,the annual
report will be produced earlier in the year as a standalone document from the audited financial report.
The size of the annual report directly impacts the depth and volume of information that can be
included. A larger annual report allows for more information to be communicated while increasing
printing and distribution costs. It is possible to concisely communicate key information and
messaging which provides transparency in operations to our consumer-owners. This would lower
printing costs and make it economically feasible to distribute the report to all customers. This
approach was implemented now for the 2017 annual report. This report will be printed by NISC and
included for distribution to all customers in with the bills.
ATTACHMENTS:
• 2017 Annual Report
Page 1 of 1
69
ANNUAL REPORT
2017
Elk River
Municipal Utilities
WE'RE A HEALTHY, GROWING ORGANIZATION
In 2017, the Elk River Municipal.
Utilities Commission expanded A letter from the commission chair.
from three members to five. Thanks to an electric service territory transfer agreement
As state law only allowed for three commissioners, with Connexus Energy, ERMU's service territory is in a
special legislation from the Minnesota House and period of tremendous growth. Because of this agreement,
Senate was required to expand the commission. ERMU has expanded its customer base to every business
Legislation was passed on May 12,2016,to be and resident within Elk River's city limits.
effective in 2017 The three commission members felt that the large
expansion in customer base warranted more citizen
representation on the ERMU Commission.
The move to a five-member board is working well after a
■ seamless transition.The two new commissioners, Mary
• . f Stewart and Matt Westgaard, have added leadership
capabilities and experience to the board. ERMU's change to
five commissioners has been a positive one on every front,
The newly expanded ERMU Commission(from left to right)-
John Dietz,Chair,and Commissioners Daryl Thompson, and we look forward to continuing to serve our customers.
Mary Stewart,Matt Westgaard,AL Nadeau
-John Dietz, Commission Chair
A letter from the general manager.
Municipal utilities are a type of consumer-owned utility. Specific to ERMU,the citizens of Elk River approved
the authorization to purchase the utility through bonds by vote on a public referendum.Many communities in
Minnesota and across the nation tell a similar story.
With a consumer-owned utility,the user of the commodity is also the shareholder.There are no investors,who
likely live elsewhere,collecting an extraction of profits paid out as dividends. Rather,the consumer-owner receives
all of the value through safe, reliable, cost-effective, quality long-term services. It is not surprising,then,that the
common reason among the nation's 2,000-plus public power utilities for wanting to own their utility is to maintain
local control and local accountability.
To maintain a high level of organizational health,we require highly-trained,dedicated employees,a visionary
leadership team,and governance focused on results and accountability.This past year,the ERMU Commission
completed a monumental task of redeveloping our organization's by-laws and governance policies.As the world
and customer expectations evolve,so must ERMU continue to evolve to meet the needs of our consumer-owners.
The outcome of the governance redevelopment was a results and accountability oriented governance model.At
the core of this model are the operating values that should be evident from any task or initiative and in the heart of
any policy,all of which points toward our mission and vision.
It is not a coincidence that the ERMU Commission worked to complete this project concurrently with the efforts
to expand the commission members from three to five.This was absolutely intentional.The ERMU Commission
recognized that with ERMU's incredible growth,this was the time to grow the commission membership in numbers
and provide an updated governance framework from which to serve our community.
I'm proud to share with you the ERMU Mission,Vision,Values,and Fundamentals.
- Troy Adams, P.E., General Manager
71
STRONG COMMERCIAL & RESIDENTIAL GROWTH
Number of Electric Customers by Year Number of Water Customers by Year
11.5K 5.0K
11K 4.9K
10.5K 4.8K
10K . 4.7K
9.5K 4.6K
9K MI 1111 1111 1111 -1111111111=
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 4.5K
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Number of Electric Customers by Area Type of Water Customers (5,011 Total)
Residential 4417 88%
� � 9%GTSEGO Commercial 594 12%
2%BIG LAKE
Type of Electric Customers(11,448 Total)
Residential 9900 86%
Commercial 1548 14%
OUR MISSION OUR VALUES
To provide our customers with safe, reliable,
INTEGRITY
cost-effective and quality long-term electricLIZ
and water utility services.To communicate Honest,accountable and
united in all that we do.
and educate our customers in the use of
utility services, programs, policies and future
plans.These products and services will be QUALITY
provided in an environmentally and financially 0 Services that reflect excellence,
responsible manner. dependability and expertise.
OUR VISION COMMUNICATION
QRespectful and engaged interactions
Provide exceptional services and value to that are timely and clear.
those we serve.
SAFETY
OUR FUNDAMENTALS I A culture that protects our
customers,employees,and assets.
Safety, Reliability and Quality of Utility Services.
Customer Service and Employee Development.
COMPETITIVE
Competitive Rates,and Financial and Provide the best value for the
Organizational Health. services we deliver.
72
POWER YOUR FUTURE
4 1t t
�1I4 iWWI
..
/"
..,
1' '' r L - " .40.11Z1 / II ' - .4
, . . ._. - .. 7'
lit .47
.imy
1st - - ..i.voim A gg.
riF-
wERI ,a .—
ERMU successfully launched its Electric Vehicle(EV) A new substation with additional capacity was
Charging initiative with two public charging stations as constructed to accommodate electric growth.The new
well as a residential charging rate and rebate program. substation,which is adjacent to the Waco Substation,
The two public charging units are located in downtown will serve electrical system growth on the western
Elk River and at the Coborn's fuel station off 169.This . side of Elk River,including the Sherburne County
initiative was partially funded through a grant from the Government Center expansion.
American Public Power Association(APPA).
OPERATIONAL EXCELLENCE
•
.. ,,
'-=-` ! -
1. 1- 44.! a .
-�II I ille
c
Recognized since 2012 as an APPA Reliable Public The Minnesota Municipal Utilities Association(MMUA)
Power Provider(RP3), ERMU ranks nationally among presented ERMU with their System Innovation Award
the top 10%of public power utilities for efficiency in recognition of their leadership and innovation in
in reliability,safety,workforce development,and developing its water system for the future.The award
system improvement. ERMU earned the Certificate of truly honors responsible governance and dedicated
Excellence in Reliability,and consistently maintains an employees, highlighting years of vision,system
Average System Availability Index(ASAI)of gg.gg%.On planning,maintenance,
average,our customers experience an outage fewer and hard work.
than once every three years.
1306.9 Orono Parkway,P.O Box 430 I Elk River,MN 55330 1763.441.2020 I www.ERMUMN.com I Connect with Us: f If