5.1. ERMUSR 02-09-2010Elk River
Municipd Utilities
13069 Orono Parkway • P.O. Box 430
Elk River, MN 55330.0430
February 1, 2010
To: Elk River Municipal Utilities Commission
John Dietz
Jerry Gumphrey
Daryl Thompson
From: Troy Adams
Subject: Review Annual Report to the City Council
Phone: 763.441.2020
Fax: 763.441.8099
Each year all departments of the City provide annual reports to the City Council. These reports
are also provided in a digital format and placed on the City's website for the general public. The
final format of the presentation will be determined by the City. The presentation date is yet to be
determined, but is scheduled to be in April.
Attached for review are the Elk River Municipal Utilities' 2009 Year in Review and 2010 Goals.
u nJ1(cJiPa1 Utllit1es
2009 YEAR IN REVIEW
The last year has been one of change for Elk River Municipal Utilities (ERMU). This change
occurred in all aspects of our operation affecting the company, the customers, and the provided
commodity. Through all these changes, ERMU has continued to grow while providing safe and
reliable utilities to our customers.
To improve organizational efficiency and to culture an environment needed to successfully
realize our company mission, ERMU implemented an organizational restructuring with changes
in leadership, policy, and procedure. The slowed economy and downturn in the construction
industry reflect the change to our customer base which has resulted in revenue erosion. With this
comes the challenge of cost control through being conservative and financially responsible. The
cost of providing service and the trend in wholesale power continue to climb. Elk River
Municipal Utilities continues to research wholesale power supply options to meet our needs in
the next decade and beyond. This last year, this research into power supply even brought ERMU
to consider, and eventually dismiss, the idea of participation a proposed power plant project.
These challenges have become opportunities and are really a reflection of ERMU's ability to
adapt and evolve in an effort to better serve our customers. Elk River Municipal Utilities serves
a geographically concentrated customer base and is locally governed. This put ERMU in a
unique position to "provide safe, reliable, cost effective and quality long term electric and water
utility service" by being able to quickly adapt to our customer's needs while providing benefit to
the City of Elk River and our customers.
Troy Adams, P.E.
Director of Operations
The following are some of the highlights and accomplishments from the departments of Elk
River Municipal Utilities during 2009.
ADMINISTRATION — Theresa Slominski - Finance Director / Office Manager
Actively supported and participated in Minnesota Municipal Utility Association
(MMUA) and American Public Power Association (APPA) with industry and energy
policy issues.
2. Ongoing review of policy and procedure.
3. Remained active in Energy City activities including Project Conserve.
4. Successfully manage customer needs, monthly billing, and collections. Customer
monthly billing included approximately 9,170 electric, 4,467 water, 4,452 sewer, and
6,751 garbage/organics accounts. Continued focus on providing excellent customer
service.
5. Continued focus on minimizing write-offs through our recently adopted Customer
Deposit Policy and through legal means when necessary.
6. Rebated $139,393 to customers that participated in the Conservation Improvement
Programs (CIP) in 2009. Of these rebates, $109,605 was reimbursed by Great River
Energy. Rebates were paid out on 2,369 CFL's; 144 AC tune-ups; 40 energy star air
conditioners; 1 I heat pumps; 88 energy star dishwashers; 86 energy star refrigerators;
101 energy star clothes washers; 100 AC trees; 10 lighting; 1 motor; 2 VFD; 1 HVAC;
compressed air; and 5 custom rebates.
TECHNICAL SERVICES — Wade Lovelette - Technical Services Superintendent
1. Increased security system accounts from 653 to 749, a 14.7% growth. This is double the
percent growth from a year ago.
2. Added approximately 93 new or upgraded radio controllers for Off -Peak and Cycled AC
customers. ERMU remotely controls over 1,300 customer loads to help reduce wholesale
power costs and customer utility bills. They consist of approximately 178 energy storage
water heaters, 167 dual fuel heating systems, and 1048 cycled air conditioners.
3. Continued meter conversion with installation of approximately 800 electronic radio read
meters.
4. Continued electric and water mapping.
5. Completed approximately 2,633 locates. Once again, locates were completed without
damage claims resulting from workmanship.
6. Maintain and operate the diesel Power Plant. This facility has the ability to start from
compress air (in the case of a transmission outage) and is rated to generate approximately
115 of ERMU's peak electric demand.
WATER DEPARTMENT — David Berg - Water Superintendent
I. Produced 782 million gallons of water for a decrease of 8.4% from 2008. Peak day use
of 5.4 million gallons (same as 2008).
2. Held a 2009 Water Conservation Seminar with the City and County to present to
associations and large water consumers.
3. Added over one mile of new water main in conjunction with the 193rd Avenue road
extension project. Also added new water main connecting new 193`d Avenue water main
with Well #9. Completed changes water hydrants needed to facilitate the Morton road
resurfacing project.
4. Implemented Smart Irrigation System rebates.
5. Continued working on wellhead protection plan.
6. Continued working with communication companies to establish a lease format for
antennas to be located on water towers.
ELECTRIC DEPARTMENT — Mark Fuchs - Electric Superintendent
1. Purchased approximately 247.5 million kWh of energy with a peak day of 50 MW. Even
with the downturn in economy, the energy usage increased 2.3% over last year.
2. ERMU's 2009 reliability indexes are: Average Service Availability (ASAI) = 99.999%,
Customer Average Interruption Duration Index (CAIDI) = 137 min, System Average
Interruption Duration Index (SAIDI) = 5.1 min, System Average Interruption Frequency
Index (SAIFI) = 0.037. These excellent reliability indexes numbers reflect the condition
of our system as well as our superb response time.
3. ERMU's landfill gas electric generating plant produced 26.1 million kWh with a capacity
factor of 98.1%.
4. ERMU sold 438,000 kWs from wind generators in 2010 through our Wind Power
Program.
5. The third party wind generator, which is used by Energy City as a demonstration site,
produced 875,000 kWh in 2009. The annual capacity factor is 15.1%. This is low in
comparison to other wind generators; however, this is due to the lack of sufficient wind
resource available in this part of the State.
6. Added 28 commercial accounts for a total of 1,104. Added 127 residential accounts and
12 load management meters for a total of 8,467.
7. Continued system maintenance and fuse coordination through a systematic program to
change failing cutout and resize system fusing.
8. Constructed a new distribution feeder along County Road I in preparation for an
upcoming 2010 territory acquisition. Constructed a new feeder under Highway 101 in
Otsego.
9. Maintenance work and cable replacement performed in projects on Simonet Drive, Xenia
Avenue, 191 '/z Avenue, and Area 23.
10. Installed street lighting along 193rd Avenue extension.
Municipal Utilities
2010 GOALS
Elk River Municipal Utilities' goals are in part defined by our annual budget. To better serve our
valued customers now and into the future, ERMU will continue to analyze past trends and
forecast future needs to assess the necessary system improvements, financial requirements, and
our labor needs. The goals are then based on maintenance and growth needs balanced by
financial viability such that Elk River Municipal Utilities operates by our mission:
Mission Statement. To provide our customers with safe, reliable, cost effective and quality long
term electric and water utility service. To communicate and educate our customers in the use of
utility services, programs, policies, and future plans. These products and services will be
provided in an environmentally and f nancially responsible manner.
The goals for 2010 are as follows:
1. Satisfy 2010 budget requirements and complete projects started in 2009.
2. Continue to investigate and solve long term physical and financial growth needs while
maintaining existing systems.
3. Increase emphasis on maintenance and continued emphasis on providing excellent
customer service.
4. Explore options and programs for customers to use credit cards to pay utility bills.
5. Review system to streamline and improve accuracy for billing cycle from meter reading
to customer billing.
6. Continue effort in securing a wholesale power supply to meet our future needs.
7. Stay current on electric industry and service territory issues.
8. Continued cooperation with City departments and support of Energy City activities.