ERMU Misc. 12-13-2005 Ji
Elk River ----
Municipal Utilities
13069 Orono Parkway phone: 763.441.2020
Elk River,MN 55330 Fax.763.441.8099
December 7, 2005
To: Elk River Municipal Utilities Commission
' .ferry Takle
John Dietz
Jim Tralle
From: Bryan Adams •
Subject: Miscellaneous Issues
Enclosed is the packet for the l'ucsday. December 13th, 2005 commission meeting at
4.00pm.
On December 51h 2006 I had an opportunity to attend Association of Minnesota Counties
annual awards banquet with the Sherburne County Commissioners. At this banquet
Sherburne County received an award for our joint LFG project. Attached is a letter to
Sherburne County explaining this LFG project. Also Attached are letters to Sherburne
County and Waste Management addressing the terms and conditions of adding the forth
engine/generator.
' Jerry Takle inquired about the electric output of the wind turbine by the landfill.
Attached is the production report for the 2004 and 2005 with the wind turbine power
' (kw) and energy (kwh) output on a monthly basis, highlighted in yellow. [or your
information the LFG demand and energy output is highlighted in blue.
Included for your review are the investment committees meeting minutes for the
1 1-22-05 meeting.
Attached is the 11-11-05 issue of The Kiplinger Letter addressing a growing interest in
I lealth Savings Accounts (I IAS-s).
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Elk River
Municipal Utilities
13069 Orono Parkway phone: 763.441.2020
Elk River, MN 55330 Fax 763 4418099
September 26. 2005
Mr. David Lucas
' Sherburne County Government Center
13880 Highway 10
Elk River, MN 55330
' Subject• LEG Facility
' Dear David,
M You inquired about the success of our Landfill Gas to Electric Generation facility located
at the Elk River landfill in Elk River, MN. Attached is our brochure reflecting the details
of this facility
This facility has been in operation since November 2002, and has consistently exceeded it
operating goal The facility operates at above name plate rating and its availability factor
' is in the 98% range whit is very high for a facility of this type The operating costs are
also meeting if not slightly exceeding our expatiations The plant was built with a
capacity of 4 engine-generators, with 3 engine-generators initially installed The 4`1' unit
is now being added.
In 2003, this facility' supplied about 15% of Elk Rivers energy needs In 2004 this
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facility was awarded the ACEC of Minnesota Honor Award An environmental learning
center is incorporated in this facility. This learning center is used to host groups from
U of M graduate students, to cub and boy scouts, and other community groups. We
' discuss landfill, recycling, and energy issues This is a great forum to educate the public
about these issues.
' The real success story is how this facility came to be Elk River is designated Energy city
with a ". .geographical focal point to demonstrate energy technologies, services and
products, which must be environmentally friendly, affordable, and repeatable elsewhere."
' The Elk River landfill is a large landfill that produces a large quantity of methane gas
• from the natural decomposition of garbage. This gas was previously be flared or burned
off With Energy Cities focus in mind, why not use the otherwise wasted fuel and
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produce electricity Shei borne County became the driving force behind utilizing this 1
resource Due to Sherburne County initiati‘c, a unique partnership was formed to build
this landfill gas to electric generation facility With Elk River Municipal Utilities as the
owner, Waste Management the operator, and Sherburne Co the financing source, this
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facility was built and is successfully operating An electric utility, county government
and private enterprise working together to utilize an otherwise wasted resource.
C.—
Best r gards, , , I
- /7/4/0);(''.1 . I
B :an Adams. P E
General Manager
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Elk River
' Municipal Utilities
13069 Orono Park\tiay phone: 763.441.2020
Elk River, MN 55330 Fax 763 441 8099
November 23, 2005
' Deb Walters
Elk River Landfill
' 22460 Hwy 169 NW
Elk River, MN 55330
Subject. 4"' Engine/Generator at Elk River Landfill
Dear Deb.
As you are aware, we are proceeding with the installation of the 4`1 engine/generator at
the landfill. The air permitting process is in the final stages. All four contractual parties
N (Elk River Municipal Utilities, Elk River Landfill, Great River Energy and Sherburne
County) have signed letters of intents to pursue the 4 unit. We now need to amend the
contracts before the 401 unit is ordered. Enclosed is the following information for your
' review
1) Amendment to Service Agreement
2) Amendment to Landfill Gas Purchase Contract
In the process of negotiating the purchase power agreement with GRE, GRE is able to
' increase the purchase price based upon certain reservations This increase in purchase
price will allow us to provide you with increased gas purchase pi ice as stated in the
amended Landfill Gas Purchase Contract and as outlined below, based upon the
(allowing conditions or reservations.
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Year Gas Purchased Price Year Gas Purchased Price el
2005 SO 40 2014 • 5050 I
2006 SO 40 2015 SO 51
2006 S0 45 ail coinincic,i<iI ii,ci,li,on c'l 4°i 1.,:IL,Inc
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2007 SO 45 2016 SO 52
2008 SO 47 2017 50.53
2009 SO47 2018 SO54
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2010 SO 48 2019 SO 55
2011 SO 48 2020 SO 56
2012 SO49 2021 SO57
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2013 SO49 2022 SO 57
Conditions:
1 0 Amended Service Agreement and Amended Landfill Gas Purchase Contract
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are executed as presented.
2 0 The Power Purchase Agreement and the specific terms and exact prices contained
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herein are confidential and may not be shared with any person or party other than.
2.1 The Parties' officials, employees, consultants and attorneys who have
agreed to treat these agreements as confidential,
2 2 The Rural Utilities Service, MAPP, MISO and any successor organization
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of these entities and
2.3 As required to comply with applicable law, regulation, court order, I lender or regulatory proceeding
However, the Parties agree that the general structure of these agreements and an
approximate total price ma} be shared publicly and without consent I 3 0 If ownership of the Project is transferred to another party, this Agreement shall
terminate on the day, month, and year that the transfer occurs.
4 0 Either Party may assign this Agreement only with the prior written consent of the
other Party, which shall not be unreasonably withheld Nothwithstanding the I
aforementioned, GRE shall have the unilateral right to assign this agreement to
the Rural Utilities Service or other secured lenders without the consent of ERMU I 5 0 Execution of this Agreement is contingent upon
5.1 ERMU obtaining certification of the Projected as a OF from FERC no
later than May 31. 2006.
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5.2 The fourth engine generator set at the Project beginning Commercial
Operation no later than July 1, 2007
5 3 GRE receiving approval from its Board of Directors,
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5.4 GRE receiving approval from a Dual Percentage of its All-Requirements
Members, and
5 5 GRE obtaining approval from the Rural Utilities Service
OP6 0 This Agreement shall be governed by the laws of the State of Minnesota.
IND
Please reviev, these documents and have the proper authorities execute them Also please
`'erifv price and delivery of Engine Engine Generator so the operation data can be achieved
Best r Bards.
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ryan Adams, P E.
Jencral Manager
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Elk River
I Municipal Utilities
13069 Orono Parkway phone: 763.441.2020
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Elk River, MN 55330 Fax 763 44] 8099
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November 23, 2005
IDave Lucas
Sherburne County Government Center
I 13880 Hwy 10
Elk River, MN 55330
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Subject. 4'1' Engine/Generator at Elk River Landfill
Dear Das e.
IAs you are aware, we are proceeding with the installation '''
1 fr on of the 4 engine/generator at
the landfill The air permitting process is in it's final stages All four contractual parties
PI (Elk River Municipal Utilities, Elk River Landfill, Great River Energy and Sherburne
Counts ) have signed letters of intents to pursue the 4 unit We now need to amend the
contracts before the 4`h unit is ordered Enclosed is the following information for your
Ilevies\ & approval.
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1) Restated Promissory Note
2) Amendment to Security Agreement and Financing Statement
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In the process of negotiating the purchase power agreement with GRE- GRE is able to
mci ease the purchase price based upon certain reservations This increase in purchase
price will allow us to provide you with the following bonus payment based on the
Ifollowing conditions or reservations
YEAR BONUS YEAR BONUS
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2006 $8000 2014 $20,000
2007 $10,000
2015 820,000
2008 $12,000 2016 825,000
2009 $12,000 2017
$25,000
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2010 812,000 2018
2019 $25,000
201 1 $15,000 830,000
2012 $1 5,000 2020 835,000
2013 $15,000 2021 840,000
I 2022 $45,000
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Conditions I
1 0 The Purchase Power Agreement and the specific terms and exact prices contained
hciem are confidential and may not be shared with any person or party other than
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1 1 The Paities' officials, employees, consultants and attorneys who have
agreed to treat these agreements as confidential.
1 2 The Rural Utilities Service. MAPP, MISO and any successor organization
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of these entities and
1 3 As required to comply with applicable law, regulation, court order,
lender or regulatory proceeding.
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However. the Parties agree that the general structure of these agreements and an
approximate total price may be shared publicly and without consent.
2 0 If ownership of the Project is transferred to another party, this Agreement shall
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terminate on the day, month, and year that the transfer occurs
3 0 Either Party may assign this Agreement only with the prior written consent of the
other Party. which shall not be unreasonably withheld. Nothwithstanding the
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aforementioned, GRE shall have the unilateral right to assign this agreement to
the Rural Utilities Service or other secured lenders without the consent of ERMU
4 0 Execution of this Agreement is contingent upon:
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4. 1 ERMU obtaining certification of the Projected as a QF from FERC no
later than May 31, 2006.
4 2 The fourth engine generator set at the Project beginning Commercialel
Operation no later than July 1, 2007.
4.3 GRE receiving approval from its Board of Directors.
4 4 GRE receiving approval from a Dual Percentage of its All-Requirements
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Members, and
4 5 GRE obtaining appio%al from the Rural Utilities Service
5 0 This Agreement shall be governed by the laws of the State of Minnesota
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��---PJ.ease review these documents and have the proper authorities execute them I s
( Best egards, ./)
I/ -1- ., / /<� �ri�
CT ryan Adams, P E
General Manager
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,2005 Electric Purchases&Water Pumped , _ _
L , , ,
p d } Production Report
±---- — — —
Electric L
Energy _ _ Land Fill Gas Wind Tu
2004
— _ r 2005 ,rbina Interruptable
River —
' nbrruptabla
Load
KW I KWH '_Load 4 4 KW KW KW H K W KWH KW KWH KW Total Total Total Load' %KWH GRE Total
Coincident t Factor Meters Meters Coincident 'Non-Coinc' KW Coin KWH Factor Increase Power Cost Unit Cost
January 27,1881 15,038,117'1 076 ' 7574 8140 28,227 28,2.88, 15,896,290 23121 1.732,116 200,1 69,8761 670 28,227' 15,896,290 7715%j 571% $746,118 $00469
February - - 26,162L 13,545,1971 071 7610 8160
26320 26675 13.606,232 2351' 1,556,606 88 68,167 629,1 26,320+ 13,606,232'1 7082% 045% $663,010 500487
4 8 6 - 25,4 �
March 24,5291 13,876,719077 7646 81781 254691 25817{ 14,655,404 2350' 1,700,269 0 84,992 642 25,469 14655,4041 78 82%i 561% $606,903 500414
April 22,3191 13,096,483 080 7670 8202' 235751 26166 13,777,962 2350' 1,677,133 106 76,280 1236 23,575, 13,777,962' 80 06%' 520% $565,684. $00411
May 23,80513,706,793, 0 79 7720 8209' 23544; 28744; 14,612,882 2350' 1,726,999 433 99,243 1211!' 23,544! 14,612,8821 85 02%' 6 61% $567,752 $0 0389
June 35,417' 14,818,399; 057 7831 8398! 40185' 434851 18,004,415 2335 1,673,218 437 69,855 1400', 40,1851 18,004,4151 61 38%-' 21 50% $1,194,334 $0 0663
July 37,838 17,269,173, 063 7881 84301 393314 43192 20,555,344 2345 1,702,776 1 56,8261402' 39,3311.20,555,344! 7159%' 19.03% $1,259,222. SO 0613
August 33,962' 15,695,048, 063 7900 84281 41412! 434581 18,991,319 2317 1,679,730 2004 52,000' 13821 41,412{1 18,991,319 62 82%1 2 1 00% $1,221,361 $00643_
September 1 34,710 15,722, 52 3 062 ' 8038 8471! 34790; 347901 16,459,172 2258 1,617,560 1081 r 77,646 7511 34,7901 16,459,172 6481% 469% $716,884 $00436
October 24,360' 14,299,4641 080 ; 8055 8490; 339231 33884 15,696,280 2206 1,632,389 97 68,500 750 33,923 15,696,280 6338% 977% $647,083 S00412
November 26,343 13,944,863', 073 8089 85411 29219'11 29219': 15,435,161 2173 1,553,662 01 29,219 5621 29,2191 15,435,161+ 7236%' 1069%
December 28,334' 15,717,907 076 f 8100 ' - - ---
Total 177,690,46fi IF-
Total
176,730,4161 0 59 ` - -
to Date1 161,012,509: _ I T I 1 177,690,461
Increase 1 1 530 r 1 1
7 57% j
%Chan9e _ ! - -, 10.36%1 1
-- 1 1-- --- - - --- • -- 1 -- ---
'Water' 1 1
— 2005
Water Peak_ 4 Meters Water j Peak 4 Meters_l%Increased_ ' _ f - `---
Pumped ' Day Pumped Day . Pumped 1
January 31,170,000 1 1219000 , 3524 I 31,208,000 1436000 3842 012% -- Y
F 28,566,000 1189000 1 3556 �- —33 T --
February ------_-0-_ __Y _� 33,686,0.00 fi 1919000 3865 1792% _ L - -' ---
April 40,542,000 2019000 3607
28,566,000 1058000 3556 1
38,328,000 1 1311111 3891 X867%' -
36,9_47,000 j 1658000 ' 3948 1--8 87%
-�-- - --- -- -�---- --�-- 1 -4-
May 68,052,000128000 3633 56,230.000 2014000 3935 -17 37%' _ __J_.
June 73,793,000 4177000 3666 75,258,000 2461000 3949 1 99%1 �T r -'
Ju_ly 100,356,000 1 5136000 , 3696 1 127,658,000 5478000 3967 `27 21% -
1 7--
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August 91,495,000 I 3216000 3696 i 119,887,000 5638000 3991 31 03%! _ 1
Se !ember_ 70,166,00012751000 3722 1 69,068,000 2492000 1 4013 -1 56%' +
October 46,795,000 2003000 3761 I 45,574,000 1921000 4024 -2 61%; _ _ —�
November 32,904,000 -1692000 : 3793 1 34,634,000 2077000 j 4101 526% I 1- --
_December 35,117,000 2,033,000 ' 3834 1
Total 651,253,000 --J 66__.___j
8 478 000 - - 1 --
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9 -- - - - - - ----
Total To Date 616,136,000
Increase 8 50%, -
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%Chane I - J - I —
Investment Committee Meeting 11/22/2005
Members present: John Dietz, Bryan Adams, Theresa Slominski
The broker certificates were reviewed and ERMU will be using the same three that the
City of Elk River utilizes (RBC Dain Rauscher, Smith-Barney, and Piper Jaffray.) All
' brokers have been contacted and the paperwork has been started to obtain the certificates
and open accounts. Theresa Slominski will be able to sign as the official of ERMU on
these forms.
' Current investments and maturity dates were reviewed along with cash flow needs in
2006. With the 2006 bond issuance, there will be excess funds that will be available,
which will lessen the need for borrowing from reserves to cover cash flow demands in
the summer months. Theresa will need to determine what dollar amount of investments
ERMU can be comfortable with maturing in the summer months as a precautionary
measure. The need for diversification of investments was addressed since we currently
have everything invested in CDs and the majority is at The First National Bank of Elk
River.
Two approaches for reserves balances were attached with the agenda. Current reserve
balances were reviewed and discussion was had regarding the goal amount for reserves. It
could be a long time before we would be where we think we should be, but we should
keep working towards the goal.
' Currently, all reserves are classified as construction reserves, and the appropriateness of
this classification was discussed. If the reserves were put in construction reserves, then
' the intent can only be assumed to be used for construction, but it may have been intended
to be the bond reserve too. We can't simply reclassify them as part construction reserve
and part bond reserve, because the intent is hard to determine at this point in time.
It was discussed that we should inquire about obtaining a line of credit with the bank
should we ever need to access additional funds in an emergency situation.
' The amount of$750,000 that was "borrowed" this summer will be reinvested with all
three brokers, at $250,000 each. Theresa will determine what maturity dates will be
necessary and then have the brokers advise suggested investment types.
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Reserves Analysis
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Maximum Electric Water
Construction Reserve $ 1,100,000.00 $ 1,000,000.00
Bond Reserve 10% $ 596,000.00 $ 708,000.00
3 Months Operating Reserve $ 4,000,000.00 $ 500,000.00
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Totals $ 5,696,000.00 $ 2,208,000.00 $ 7,904,000.00
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Minimum
I Construction Reserve $ 1,100,000.00 $ 500,000.00
Bond Principle and Interest $ 226,000.00 $ 575,000.00
Power Bill $ 2,500,000.00 $ 500,000.00
ITotals $ 3,826,000.00 $ 1,575,000.00 $ 5,401,000.00
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I Th
eK.prnger Letter
illFORECASTS FOR MANAGEMENT DECISIONMAKING
1729 H St. NW, Washington, DC 20006-3938 • KiplingerForecasts.com • Vol. 82, No. 45
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Dear Client: Washington, Nov. 11 , 2005
Can your firm save by offering HSAs. . . CURRENT FORECASTS
tax-free Health Savings Accounts for employees?
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_' 'Medicare, Medicaid cuts
HEALTH Growing evidence suggests it can. ��;Action likely by Christmas
CARE Employers are flocking to the programs
and to HRAs, Health Reimbursement Accounts, If Immigration reform
IIa cousin that operates in much the same way. Pressure building,but
consensus yet
Next year, about 25% of firms will offer HSAs,
up from just 4% in 2004 and only 8% this year. ICA
code overhaul
They are part of a broader trend iZl'A lot of talk,but no action
IItoward consumer-driven health care programs, ` �until'07 at the earliest
which give employees a bigger financial stakeEstate tax changes
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in when, how and where they receive health care (.1r.
by Katrina this year
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to encourage more-cost-effective choices. `'"`' !Probably in'06
., ;Tax break extensions
Employees are quick to sign up. t-} R&D tax credit, others
I And it's not just the young and fit who enroll. will pass this fall
Workers like that contributions are tax free, ti10il windfall profits tax
as are payouts when used to cover health costs. ;,Won't make it past hearings
Employees keep HSA money if they change jobs, Telecommunications
1011 and any amounts left at death can go to heirs. INo changes soon
Employers like the lower premiums � 'Overhauling the'96 law will
for the high-deductible plans paired with HSAs. take two to three years
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Though for those that offer HSAs as an option,
any savings are often offset by contributions to workers' accounts. So. . .
IIThe payoff for most firms is likely to come in the long term.
It will take time for employees to become smarter health care consumers.
To encourage enrollment, consider matching employee contributions
Ito HSAs or hike payins to HRAs, which are funded solely by employers .
For example, to lure participants, medical device manufacturer Medtronic
puts $1000 for singles and $2000 for families into HRAs. Health costs
for the firm rose 8% last year, compared with the 12% national average
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for big companies. 24% of Medtronic workers chose HRAs this year.
The average company contribution to HSAs: $550 a year per worker.
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But smalls often put in nothing. The advantage of HSAs for them:
They can offer workers an affordable health care program. For example,
Da Vinci Restaurant in Ohio was about to end health care benefits
for its workers because of soaring costs. Instead, the firm opted
IIto set up HSAs, which is helping them retain valuable employees.
Communication is key to making programs work. Educate staff
lip on the options, and provide the data they need to shop among providers.
And couple HSAs with health management programs. Offer incentives
to promote fitness and healthier lifestyles and help employees
II
with chronic illnesses manage their conditions to avoid complications.
The Keplinger Leber(ISSN 1526 7130)is published weekly for$117/one year,$199/two years,$263/three years Subscription inquiries 800 544 0155 or sub services@kipbegercom
by The Kipltnger Washington Edbors 1729 H St NW Washington,DC 20006 3938 Editorial information Tel,202 887-6462,Fax,202 778 8976,
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Periodicals postage para at Washington DC
POSTMASTER Send address changes to The Keplinger Letter P 0 Box 3295,Harlan,IA 51593 F mad,letters@kiplinger corn,or Web site KiplingerForecasfs com