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6.2 ERMUSR 02-08-2005 II ../i Pe Elk River E I Municipal Utilities 13069 Orono Parkway phone: 763.441.2020 I Elk River, MN 55330 Fax 763 991 8099 IJanuary 28, 2005 I To: Elk River Municipal Utilities Commission Jerry Takle Jim Tralle I John Dietz From: Bryan Adams ISubject: Annual Report I On an annual basis, all of the departments of the City of Elk River provide annual reports to the City Council. Also these reports are provided in digital format and placed on the City's web site so the general public can also view these reports. Attached is the 1111 proposed Elk River Municipal Utilities annual report for your review. We solicit your comments with any additions or deletions. I 2004 was a good year for the Elk River Municipal Utilities. We had a number of significant accomplishments and satisfied our 2004 goals. The continued success of our organization is a direct reflection on the commitment and leadership of you, the Elk River I Municipal Utilities Commission. Your staff thanks you. ICity of Elk River 2004 Annual Report le 111 1 - I/ 1 1 Elk River ........,-„,..,,.., 1unicl aUtilities 1 Annual Report 1 2004 11) Utilities Mission Statement I ITo provide our customers with safe, reliable, cost effective and quality long term electric and water utility service. To communicate and 1 educate our customers in the use of utility services, programs, policies, and future plans. These products and services will be provided in an Ienvironmentally and financially responsible manner. I 1 is IF 1 ICity of Elk River 2004 Annual Report St Cloud students learn more about how we make III electricity from landfill gas and other renewables. I `:`"'' e ME,;*, Free compact fluorescent lamps were a big hit ' at the 2004 Elk River Business Expo! 1 10. 1 • < C,,9I i Y" F, tf I ,, Utility personnel loaded AC trees for 1 ERMU customers R• - ' Y ,C_;; �' +d This was the first of 150 free AC trees planted I ;.4......;,,,.,,,,,,,...,...c.-1,4..v..rl.'1. 41' . , --;,-;:,..?.. .„....r... l'A "igirl _._. I / - rk , ,1 , ,,_,‘ t,,,:,,,,, _ ,r.-,,: ;4 - . % l w.w :ill!lie-,6 II NI k"'"' i' Customers really appreciated receiving I their free AC tree from ERMU 1 • le '1,, - ' ,-....., J1 " ( - I 1 City of Elk River 2004 Annual Report STAFF DIRECTORY Ill IDepartment Staff I Elk River Municipal Utilities Organizational Chart IElectric&Water Customers I Elk River Utility Commission Jerry Takle-President James Tralle-Vice Chairperson I John Dietz-Trustee General Manager iBryan Adams Elec Technologies/Water Superintendent Electric Superintendent Office Manager I David Berg Glenn Sundeen Patricia Hemza rib _ Utility Worker/Water Line Foreman Lead-Lineman Assist Office Manager Scott Nielsen Wade Lovelette Mark Fuchs Vivian Schmidt _ Utility Worker/Water Purchasing Clerk Richard Cline Arthur Gatchell Lloyd Lorenzen Judy McSpadden _ Elec Tech/Security A/P-Payroll Clerk I Michael Price Scott Thoreson Trevor Gwiazdon Theresa Slominski Utility Worker/Meter Clerk/Receptionist _ Adam Freiberg Michael Thiry Thomas Geiser Betty Belanger I _ Utility Worker/Water Apprentice Lineman Apprentice Lineman Clerk/Receptionist Steve Ziemer Jeffrey Henning Troy Seter Ryan Westre I Utility Worker/Security Apprentice Lineman Apprentice Lineman Clerk/Receptionist Rick Schaust Chris Sumstad Corey Wolff Dolores Andreasen I Utility Worker/Locator _ Utility Worker/Gen Clerk/Receptionist Richard Wagner Steve Ziemer Gregory Scherber 3ntradors and Special Vendors: I Marketing Consultant-Vance Zehringer Laborer Utility Worker/Locator Clerk/Receptionist Safety Program-MMUA Christine Holman Jeff Murray Staci Althouse Dispatching-GRE Electric Metering&Relays IMeter Reading-McBrady Meter Reading Computer Support-Saratoga Co. Substation Maintenance nderground Contractors I City of Elk River 2004 Annual Report ' ELK RIVER MUNICIPAL UTILITIES ' YEAR IN REVIEW 2004 Major Accomplishments Bryan Adams, General Manager Administration—Patricia Hemza/Financial Director 1 1) Continued administrating the Connexus/Great River Energy power purchase agreement costing approximately $8,560,000. ' 2) Remained active in MMUA in industry restructuring issues. 3) Remained active in Energy City activities. 4) Completed second year operation of LFG electric generation facility at the Elk River Landfill in partnership with Sherburne County and Waste Management at 102.17% capacity factor which far exceeded expectations. 5) Moved Administration to City Hall facility. 6) Continued to successfully handle the increase in customers and resulting monthly bills and collections. Customer monthly billings include approximately 8100 electric, 3800 water, 3800 sewer,and 5300 garbage. Monthly utility billing consistently exceeded $1,000,000/month. PI) 7) Contributions to the City of Elk River totaled approximately$615,000. 8) Administer second year's CIP Programs for Elk River which entail, Compact Fluorescent Lamps, AC Trees, Appliance Rebates, Cycled Air Conditioning, Commercial Rebates, and Air Conditioning Tune-up. Rebates exceeded$190,000. Water Department—David Berg/Water Superintendent Water&Electric Technologies 1) Complete construction of Well #8, raw water line, and modification to Filter Plant #7. 2) Complete SCADA System field components for Water Department. Computer monitoring will be added to office in 2005. ' 3) Expand water mains to Woodland Hills, Twin Lakes Estates, Elk Ridge Center, Woods of Hillside,Trott Brook Crossing, Kliever Lake Fields and Trott Brook Farms 9 & 10. 4) Connected 321 new water services to the water system. 5) Increase Security System customers by 31 for a total of 307. 6) Produce over 651 million gallons of water with a peak day of 5.13 million gallons, a decrease of 3.31% from the previous year. 7) Secure land for Well #11 along with drilling a test well. City of Elk River 2004 Annual Report 1411 Year in review continued... Electric Department—Glenn Sundeen/Line Superintendent Electric Department 1) Continued territory acquisition from Connexus Energy. Purchased 104 customers. 2) Expanded electrical distribution system into Woodland Hills, Twin Lake Estates, Elk Ridge Center, Prairie Oaks, Woods of Hillside 461, Trott Brook Crossings, and Trott Brook Farms ' 9 & 10. 3) Construct new feed 85 from West Substation to Substation 14. 4) Construct new feed 63 from Substation North to Co. Rd. 13. 5) Added 570 electric meters to electric system. 6) Purchase over 176 million KWH of energy with a peak day of 37.8 MW for a 3.91% increase. ' 7) Replace underground cable at 5th and Dodge. 8) Finish relocating overhead electric lines at Hwy 169& Co. Rd. 33. 1 I 1 City of Elk River 2005 GOALS 2004 Annual Report I Elk River Municipal Utilities' (ERMU) goals are in part reflected in our annual budget which is not included in this report due to its length. It is safe to say this budget requires ERMU to continue to provide reliable, cost effective electric and water utility services in a safe and environmentally friendly fashion. ERMU's staff spends a significant amount of time analyzing past trends and predicting the future for physical plant items, financial requirements and human resource needs to insure we have adequate capacity to successfully carry on our utility business. The goals for 2005 in order of priority are as follows: ' A) Satisfy 2005 Budget requirements and complete projects started in 2004. B) Continue to investigate and solve long term physical and financial growth needs. ' C) The wholesale electric rate from Great River Energy/Connexus is continuing to raise in the next few years. Staff must continue to explore different strategies to offset these increased costs thus minimizing electric rate increases. D) Stay current on Electric Industry Restructuring and Service Territory issues. E) Improve on marketing efforts in Security System sales, CIP Programs and Water Conservation. N F) Continue to support Energy City activities. G) Impliment Global Information System (GIS), Global Position System (GPS), and System Control and Data Acquisition (SCADA) systems. ' H) Secure a water production facility site in Eastern Elk River I rCity of Elk River 2004 Annual Report TABLE OF CONTENTS AND COMMENTS 1 Page Title and Comments 1 2004 Budget Summary. Year-end financials will be available when audit is complete. 2 Elk River Municipal Utilities' Electrical Statistics Graphs. 3 Elk River Municipal Utilities' Power Costs & Security Systems stems graphs. P 4 Elk River Municipal Utilities' Water Statistics graphs. 5 Wind Turbine/LFG output comparisons graphs for Year 2004. 6 Electric Service TerritoryMapof Elk River Municipal Utilities. The dashed block line P indicates the existing service territory boundary. Elk River Municipal Utilities currently provides electric service for parts of Elk River, Otsego, Dayton and Big Lake Town- ship. Contract agreements between Connexus Energy and Elk River Municipal Utilities allows for continued service territory acquisition. The hatched area indicates areas and 1 time frame. 111 7-8 Results of Minnesota Municipal Utilities Associations' 2004 Electric Rate Survey of 126 municipal electric utilities. i 1 r 1 City of Elk River 2004 Annual Report IV ELK RIVER MUNICIPAL UTILITIES I SUMMARY OF YEAR 2004 BUDGETS I IELECTRIC BUDGET SUMMARY 2004 ELECTRIC REVENUE $ 14,612,605 IF:1.ECTRIC EXPENDITURES 13,300,049 IELECTRIC NET FOR CAPITAL 1,312,556 ICAPITAL EQUIPMENT/CONSTRUCTION 2,585,300 NET (1,272,744) I WATER BUDGET SUMMARY leWAl'ER REVENUE 1,202,469 IWATER EXPENDITURES 1,138,965 WATER NET FOR CAPITAL 63,504 IWATER FEES GENERATED (FOR EXISTING& 360,000 FUTURE BOND PMTS) IDEBT RETIREMENT 155,445 IGROSS 268,059 CAPITAL PROJECTS FROM CASH 306,800 INET (38,741) I 1 City of Elk River 2004 Annual Report le Elk River Municipal Utilities Electric Demand I140000 — -- — 120000 I Maxima 100000 c 80000 - SaibsOdon Probable c Casty E 60000 - i I 40000 Mninum 20000 --/—± ' I 0 1985 1990 1995 2000 2005 2010 2015 2020 1 Year I IIIElk River Municipal Utilities Annual Energy Purchases I 700 - 600 I c 500 I E M�irnum c 400 Probable i I i 300 a. V 200 ----""..."°.........< I a **num 100 I1985 1990 1995 2000 2005 2010 2015 2020 Year iv I 111 City of Elk River 2004 Annual Report le Elk River Municipal Utilities Projected Wholesale IPower Costs $0.065 I $0.060 $0.055 Ia $0.050 40 I $0.045 c $0.040 U I $0.035 $0.030 I 1990 1995 20002005 2010 2015 Year I The above graph reflects the unit cost of our wholesale power costs from Connexus Energy PO through Great River Energy. Our power is purchased through a 10 year rolling all requirements contract. In 2004 our total power costs were$8,563,925 including fuel costs adjustments. Fuel cost adjustments at the wholesale level are very commonplace . I Distribution companies like ERMU will pass these costs on to the end user I Elk River Municipal Utilities Security Systems 350 { 300 N 1 250 N N 200 6 1 150 I E 100 Z 50 1990 1992 1994 1996 1998 2000 2002 2004 2006 IL Years milr I The above graph reflects the number of security system customers we serve. Due to the increase in crime in our area,we are placing more emphases on security system marketing. ICity of Elk River 2004 Annual Report 16 Elk River Municipal Utilities Peak Day Pumpage ITo 16000- - ---- — — — 0 14000 I gQ Muaenum 3 12000 S. 10000 8000 Pumehlp topiady P t4• I b. 0 6000 r,n"'.'�+*T� i lanimum G 4000 I 2000 a 0 1985 1990 1995 2000 2005 2010 2015 2020 I Year IThis graph reflects the peak day system usages the water production facilities must satisfy. Growth of the peak day demand dictates when additional water wells,filter plants, and water towers must be added to the Isystem. Pumpage projections in the above graph are a function of both weather and growth. Elk River Municipal Utilities Annual Water Pum page 0 2000 ——— 0 lsoo I 0 00• 1600 u 1400 Maximum I e e 1200 CmaniDeptatMa Mauna Raaaufcus *USW ern* Probable s 1000 is 875mQp00 ped I EL 0.• 800 600 Maknem 3 400 a• 200 1985 1990 1995 2000 I Year 2006 2010 2015 2020 IThis graph reflects the annual water use in Elk River.Water use of 651 million gallons is a 3.31 % decrease from 2003 due to unusual wet weather. IL 1 111 City of Elk River 2004 Annual Report 10 Elk River Municipal Utility-Facility Supply @ Billing Peak I `o700 _ w 600 I I 500 Landfill Gas Facility Output Prorated -1c to 660 KW Facility YCI I ti 400 �, C Wad TurbiM Output o. p 300 6110 KW FadNty O.m I to 200 = 100 al 0 ' , 0�, FNI , OP X47 PJ B. m, ��, pec pec c I 2004 Month Gjb I 110 Elk River Municipal Utilities-Facility Monthly Energy Output I600000 c 500000 I C S �--"' a 400000 t-and6ll©as Facii6y-Output I 0 300000 Prorated to 860 KW Facility E o 200000 Wind Turbins output- ' 680 KW Facility _ 100000 t� u' 0 I act s cep op 0 ve � 1 P0, 1 Gie Of ck„die 0ed. ed. ,a g I2004 Month I City of Elk River 2004 Annual Report I. I MINNESOTA MUNICIPAL UTILITIES ASSOCIATION I 2004 RATE SURVEY RESULTS I I Assignments of the members to groups is an attempt to achieve more clearly valid comparisons. Rates between municipals reflect geographic and other local values which, in most circumstances, are unavoidable or reflect reasonable local decisions. Therefore,use of these rate comparisons should Ireflect care and analysis. I GROUP 1: Those municipals in the northern one-third of the state that do not have WAPA allocations. They are generally winter peaking. IGROUP 2: Those municipals which have federal hydro power available to them. It must be noted that some have PO more hydro power available than others and that the mix of supplemental resources available to them will vary. I GROUP 3: Constitutes the remaining municipals in the state including Elk River. Rate Survey Results are based upon the following. I » Rates are tabulated for the month of November 2003. o Fuel/power cost adjustments are included. Monthly base charges are included. Sales tax is not included. o Large Commercial and Industrial rates are calculated for three phase metering on secondary. In conclusion, Elk River's rates are very comparable to all group statistics and we tend to be lower than Igroup 3 municipals which are our counterparts in the wholesale arena with no Western Area Power Association (WAPA) power allocation. The triangle symbol on the following spread sheet reflects Elk River Municipal Utilities rate position in comparison to 1s` quartile, average,and 3rd quartile. is U ICity of Elk River 2004 Annual Report Ill MMUA 2004 RATE STUDY Residential COST PER KWH I 250 KWH 500 KWH 750 KWH 1500 KWH Total Per KWH Total Per KWH Total Per KWH Total Per KWH All Groups I Minimum 1st Quartile $20.00 0.0800 $33.92 0.0678 $47.52 0.0634 $87.05 0.0580 Average A $22.64 0.0906 . $38.94 0.0779 $54.97 0.0733 $101.54 0.0677 3rd Quartile $25.05 0.1002 $43.23 0.0865 4 $60.83 0.0811 A $112.99 0.0753 I Maximum Elk River $24.83 0.0993 $42.63 0.0853 $60.48 0.0806 $113.95 0.0760 Group 3 I Minimum 1st Quartile $22.08 0.0883 $39.53 0.0791 A $57.09 0.0761 A $107.94 0.0720 Average A $23.96 0.0959 A $42.63 0.0853 $61.04 0.0814 $115.67 0.0771 I 3rd Quartile $25.71 0.1029 $44.60 0.0842 $64.18 0.0856 $123.84 0.0826 Maximum Elk River $24.83 0.0993 $42.63 0.0853 $60.48 0.0806 $113.95 0.0760 I Commercial 500 KWH 1000 KWH 2500 KWH 5000 KWH Total Per KWH Total Per KWH Total Per KWH Total Per KWH I All Groups Minimum 1st Quartile $39.25 0.0785 A $70.46 0.0705 A $163.88 0.0656 A $308.43 0.0617 Pi Average 4 $45.37 0.0907 la $79.95 0.0799 $193.32 0.0773 $343.24 0.0686 3rd Quartile $49.65 0.0993 $87.60 0.0876 $199.50 0.0798 $376.60 0.0753 Maximum Elk River $45.80 0.0916 $76.60 0.0766 $169.00 0.0676 $323.00 0.0646 IGroup 3 Minimum 1st Quartile . $43.74 0.0875 A $76.72 0.0767 • $180.00 0.0720 • $352.98 0.0706 I Average $48.25 0.0965 $86.39 0.0864 $199.21 0.0797 $385.80 0.0772 3rd Quartile $50.97 0.1019 $94.09 0.0941 $220.13 0.0881 $418.25 0.0837 Maximum IElk River $45.80 0.0916 $76.60 0.0766 $169.00 0.0676 $323.00 0.0646 Industrial I 22,300 KWH 67,000 KWH 223,000 KWH 446,000 KWH Total Per KWH Total Per KWH Total Per KWH Total Per KWH All Groups Minimum I 1st Quartile $1,149.94 0.0514 $3,372.00 0.0503 $11,029.00 0.0495 $21,971.00 0.0493 Average . $1,355.91 0.0608 A $3,863.00 0.0577 $12,753.00 0.0572 A$25,452.00 0.0571 3rd Quartile $1,562.10 0.0700 $4,278.00 0.0639 • $13,887.00 0.0623 $28,586.00 0.0641 I Maximum Elk River $1,369.84 0.0614 $4,043.80 0.0604 $13,383.00 0.0600 $26,731.00 0.0599 Group 3 I Minimum 1st Quartile A $1,345.14 0.0603 A $3,884.00 0.0580 $12,707.00 0.0570 A $25,166.00 0.0564 Average $1,477.42 0.0663 $4,142.00 0.0618 • $13,693.00 0.0614 $27,350.00 0.0613 3rd Quartile $1,646.22 0.0738 $4,526.00 0.0676 $15,000.00 0.0673 $29,970.00 0.0642 I Maximum FA River $1,369.84 0.0614 $4,043.80 0.0604 $13,383.00 0.0600 $26,731.00 0.0599 'i City of Elk River 2004 Annual Report Elk River Municipal Utilities Service Territory R 27 W and Proposed Annexation R 26 W 31 32 ... ._.._ 33 S4 35 36 31 / Ir irmilirldgialPil 1992 I — 6 4 i 3 2 L_. 6 - A I. II L:1 ill • # SIL —_._ - ■ 2001 s �� 2004 t'CONNEXUS ...—_,7 8 t' 9' �—= •', 10 '� ft 12 IP' •2003, f + l eV 1▪t rt' �»�r : Q -- � II n 1998'�1 .--' — N it t I 1 4 2006 ¢! 04 � i' � tri ' _ter-1-- —1- / II▪ 2 1 , 1997 I. 2005 ,�lit 1>*; i_. �� 1 42007 ! 1 19 2 _a. __ z2 z ai ) Q ti :-. s�j 4 i I 1999 1 �# 11 • I '2001 ) h- _ t -''�- —__ .1 t• �'e;'- Rata I ,1 i t - 1;60;1r '; 1992 I I 1 4 1, 11993' E }? -, ,t.s,..ii _, '--T' "; ;y hi 27 26 25 30- .,-4 .1 ,. rilI�,� ,„ . *+ 26 25 i A/i f' 4 „,,r4 �, 111 1 }y ONNEXUS ,�...m r t{d1 M1 2 » : ' t y Ii e ) a �; L.1( k _.... ..i -r.f1992 �� I 1y ill L 119931 I! � +r ` s:�! t I ID t 35 36 }t „, _, n �"'i e r _5 36 Pi .1I } 1997 `- F u+; ., r j `' _ I ._ - 'L oo fi1 �L � 14 -.__.. _, .__- _ _w ._., MISSISSIPPI RIVER? "R 4 D -- / 13 �...I 7..MO 17 X4647 1 _ 15 1 1 14 -...._ --------------c _ • c_) Q 1 1 'N j _- 11 12 N 7 1 I _ 24 19 2b 41 I 22 2,� 141 4_�-� _'"'__._- + L. 1, t . 13 19 1, i � 1 • SERVICE AREA BOUNDARY 1' ■ LIMIT OF FUTURE SERVICE TERRITORY99 - ?? 1 26 C\ 9 t_.y....: J �.a�r..• , ELK RIVER CITY LIMITS j `'. DAYTON D 1 ' , YEARS ACQUIRED (1992-2003) __= 1 1 PROPOSED YEARS ACQUIRED (2004-2008) j 1 1 33 34 35 1 36 0 0 DNO SCALE I KEY MAP