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4.2. ERMUSR 09-10-2019 Elk River .. Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Troy Adams, P.E.—General Manager MEETING DATE: AGENDA ITEM NUMBER: September 10, 2019 4.2 SUBJECT: Payment in Lieu of Taxes and Other Donations to the City of Elk River ACTION REQUESTED: None BACKGROUND: As documented in the ERMU Payment in Lieu of Taxes and other Donations to the City of Elk River policy: The success of ERMU is linked with the success of our community. And the success of our community is linked with the operation of our city government and ERMU. ERMU was purchased by the City of Elk River in 1945 and separate governance was created per State Statute in 1947. Although governed separately, ERMU is still an important component of our local government and our city services. It is typical for a municipal utility to provide a Payment in Lieu of Taxes (PILOT) and other donations to their city, regardless of a separation of governance. Although typical, this contribution should never inhibit ERMU's ability to make repayment on debt, cause ERMU to become non-competitive, or inhibit needed investment in personnel or infrastructure which may hurt ERMU's ability to meet the needs of their customers. For these reasons the PILOT and other donations should be reviewed at least once every five (5)years by the ERMU Commission. This policy was last reviewed in late 2015 and updates were made effective January 1, 2016. DISCUSSION: The subject of increasing the overall donation level to the city has been brought up by the council and had subsequently been printed in the Star News. Although earlier than the policy requires, it is in the best interest for the commission to review the current policy, the philosophy behind the policy, how this policy fits in with ERMU's mission/vision/values, and how the donations from ERMU to the city play a role in the big picture of providing value and services to the community we serve.The current policy is attached for review. The total transfer from the electric fund to the city is determined from a number of calculated components and other donations. The philosophy behind the transfer policy was to contribute Page 1 of 3 152 an amount to the city government consistent with industry standards. Historically, ERMU has used data from the American Public Power Association (APPA) to benchmark industry standards for these types of transfers. The reasons for using the APPA report are: consistency of data, size of data pool, availability of report, break out data by revenue class, and both national data and regional data comparisons. Although the practice of transferring funds from a municipal utility electric fund to their city is typical, the methodology to calculate the amount is not at all similar and in fact varies greatly. Even locally, the methodology of other Minnesota municipal utilities is all over the board.The methodology really falls back to local situations which often reflect the political environment, financial strength of the utility, financial strength of the city, and the general state of development and growth rate of the city. So looking at a larger pool of regional data and revenue class data in a report calculated by a third party creates greater stability and reliability in the numbers. And most importantly, this method then avoids the risk of skewing data through comparable pool selection to achieve desired results. This methodology is therefore easier to defend to the public and is a sound business practice. The most recent APPA report on PILOT and donations notes that 5.6% of electric operating revenue is contributed back into the communities they serve. Public power utilities vary drastically in size from large municipal utilities like in Los Angeles, CA, down to small municipal utilities like in Winthrop, MN. Because the size of municipal utilities varies so drastically, this blended national number of 5.6% is not very applicable at a local level. It does, however, give scale to how important public power is to the communities where they serve.The report then has a breakdown of the data to compare apples to apples for revenue class. The median transfer percentage for ERMU's revenue class is 4.5%. Additionally, the report has a breakdown for our geographic region where the median transfer is slightly higher at 4.7%.This report is attached for your reference. The total donations from ERMU to the city for 2018 were 4.7%, consistent with data from our geographic region with a data pool sizable enough to eliminate potential gerrymandering of the data pool to achieve desired results.Year to date, ERMU's transfer to the city is at 4.8%which does not yet include $200,000 plus in donations to upgrade the downtown street lighting. If that donation is added, the 2019 YTD donation to the city would be approximately 6.2%which is well above the benchmarking data including the nationally blended amount. And,this does not reflect donated labor to facilitate the projects funded by the local area sales tax like the multipurpose building or ballpark lighting. These projects are underway in 2019 and will continue in 2020. And of note, avoided cost for these donations to the city often exceed actual cost to the utilities, producing greater value to the community.The 2018 and 2019 YTD electric fund transfer information is indicated in the attached Table 1. Contrary to what was published in the Star News, the current policy, practice, and results are sound. This issue is complex.The greater need of the community might require more from ERMU. The local issue is that, in the short term, the city has a budget shortfall.Their preliminarily budgeted Page 2 of 3 153 needs exceed the projections for the preliminary tax levy passed.The long term outlook for the city does not indicate any change in their situation. They are not faced with a one-time need. And although ERMU has very significant future financial obligations (including electric service territory loss of revenue payments, substation additions, Highway 169 Redefine electric infrastructure relocation costs, a new field services building, and advanced metering infrastructure project), ERMU is financially strong because of recent growth and long term strategic capital and financial planning.Therefore the idea of ERMU increasing the transfer to the city has surfaced as an option to assist the city. The question of increasing the transfer to the city is not one of financial ability; rather it is a philosophical question of values and doing the right thing for the community.The transfer from ERMU to the city is a pass through embedded within electric rates, which unfortunately is not very transparent to our customers. Ultimately, the same community is paying the costs for the benefits they receive. One concern with the collection of revenue to transfer to the city is that those using the services are not then necessarily those paying for the services. In fact, the use of transfer from ERMU to cover the gap in the preliminary 2020 city budget significantly impacts commercial electric customers. Of the transfer, 13%of ERMU's Elk River customers would be paying 67%of the transfer. And, if you look at just the electric demand, or large commercial customers, there are 2% of the customers paying for 58%of the transfer amount. These statistics are indicated in the attached Table 2 and Table 3. There are many municipal utilities that transfer more than ERMU transfers to the city.Their circumstances may be different than Elk River; or their circumstances may be identical. But because others do, doesn't necessarily make it right. This needs to be a local decision based on local circumstances after a discussion with all of the stakeholders. It may not make sense to help balance the city's budget if it just transfers a financial burden to the utility without adding any value the community. But there are ways to create win-win situations where ERMU and the city provide value to the community that exceed the sum of their parts. With all of this under consideration, there is an option to increase the transfer amount to the city while being consistent with the benchmarking data and maintaining consistency with the ERMU mission/vision/values.The solution is to increase the denominator in the calculation for PILOT; when ERMU sells more electricity, the city receives a greater transfer.The successful operation of the electric utility creates an increase in non-tax revenue for the city.This is of intentional design.This is a win-win. Specifically for the immediate issue of the city's budget gap, there is an option to transfer additional money to the city through releasing PILOT from electric service territory transfer areas eight years sooner than agreed upon.This would generate an estimated $169,000 increase in the annual PILOT transfer to the city. Staff would like to discuss the policy, philosophy, politics, and greater duty to the community. ATTACHMENT: • Payment in Lieu of Taxes (PILOT) and Other Donations to the City of Elk River Policy • American Public Power Association 2016 Report—Public Power Pays Back • ERMU PILOT Tables 1, 2, and 3 Page 3 of 3 154 4'*- Elk River Municipal Utilities A.17—Payment in Lieu of Taxes (PILOT) and Other Donations to the City of Elk River 1.0 Purpose and Summary The success of ERMU is linked with the success of our community. And the success of our community is linked with the operation of our city government and ERMU. ERMU was purchased by the City of Elk River in 1945 and separate governance was created per State Statute in 1947. Although governed separately, ERMU is still an important component of our local government and our city services. It is typical for a municipal utility to provide a Payment in Lieu of Taxes (PILOT) and other donations to their city,regardless of a separation of governance. Although typical, this contribution should never inhibit ERMU's ability to make repayment on debt, cause ERMU to become non-competitive, or inhibit needed investment in personnel or infrastructure which may hurt ERMU's ability to meet the needs of their customers. For these reasons the PILOT and other donations should be reviewed at least once every five (5) years by the ERMU Commission. 2.0 Payment in Lieu of Taxes (PILOT) The PILOT transfer from Elk River Municipal Utilities to the City of Elk River shall be four percent(4%) of the revenues generated by ERMU's electric customers within the corporate boundaries of the City of Elk River which are not subject to a loss of revenue payment resulting from the March 20, 2015, electric service territory transfer agreement with Connexus Energy. 3.0 Donated Electricity Elk River Municipal Utilities shall donate all electricity to the City of Elk River for street lights and signal lights. 4.0 Donated Water Elk River Municipal Utilities shall donate water for use by the Elk River Fire Department (ERFD) for the purpose of extinguishing fires within the City of Elk River and other cities under contract with the ERFD. Page 1 of 2 155 For the purpose of creating ice rinks for public/non-enterprise use, ERMU shall donate water for use by the Elk River Parks Department. Elk River Municipal Utilities shall donate water for the use by the Elk River Streets Department for the use of street sweeping. 5.0 Donated Labor Because of specialized skills and equipment, ERMU may be able to provide a better value to our community by donating labor to the City of Elk River. For example, ERMU has trained employees and the equipment to hang banners where the City does not. In this example, ERMU is able to provide this donated service to the City for less cost than a third party, creating greater value to our community. For such situations, ERMU shall donate labor to the City of Elk River, as appropriate,where a greater value is created for our community and where ERMU is not subjected to undue burden. In addition to hanging banners, other examples include: maintenance of street lighting, relamping signal lights, locating underground fiber optics and/or other facilities, administration costs associated with the billing of city franchise fees, installation of temporary lighting, relamping of city ball field lighting, installation and/or maintenance of city warning sirens, meter reading for wastewater, assistance with tree trimming, etc... Adopted December 6, 1994 Revised June 6, 2008 Revised July 2, 2013 Revised October 13, 2015 Revised January 1, 2016 Page 2 of 2 156 ■ u c Power Pays Back Payments and Contributions by Public Power Utilities to State and Local Governments in 2016 'P arP.. xN 5 ,444 sk ,¢ d $ Fd .14W 9 W 1s t aJy�� r 0 PUBLIC POWER UTILITIES GIVE BACK 5.6% OF ELECTRIC OPERATING REVENUES TO THEIR COMMUNITIES AMERICAN PUBLIC p.fliir- II�I(TM ASSOCIATION Powering Strong Communities 157 PubLic over Pays Back Payments and Contributions by Public Power Utilities to State and Local Governments in 2016 Prepared by Paul Zummo,Director,Policy Research and Analysis American Public Power Association PUBLISHED MARCH 2018 AMERICAN PUBLiC P L�'J(TM ASSOCIATION Powering Strong Communities The American Public Power Association is the voice of not-for-profit, community- owned utilities that power 2,000 towns and cities nationwide. We represent public power before the federal government to protect the interests of the more than 49 million people that public power utilities serve, and the 93,000 people they employ. More at www.PublicPower.org. ©2018 American Public Power Association www.PublicPower.org Contact MediaRelations@PublicPower.org or 202.467.2900 158 Executive Summary Public power utilities provide affordable,reliable electricity to Many communities are not fully aware of the total value of the customers they serve.These community-owned utilities contributions made by their public power utilities.Some are not beholden to any shareholders and are driven only by utilities do not quantify all their payments and contributions. the mission to serve customers and the community. The Association conducted a detailed survey of public power utilities to get a more accurate estimate.This report presents In addition to affordable electricity,public power utilities the results of this survey,which focuses on the"rate"and provide a direct benefit to their communities in the form of "type"of payments and contributions made by public power payments and contributions to state and local government. utilities. These contributions come in many forms—property-like taxes,payments in lieu of taxes,transfers to the general fund, The report includes: and free or reduced cost services provided to states and cities.The total value of these contributions is not always I Summaries by revenue size,class,and region of the recognized. country for public power and investor-owned utilities ■ Common types of payments and contributions In 2016,public power utilities contributed 5.6 percent of ■ Typical methods used by utilities to calculate the amount electric operating revenues back to the communities of payments in lieu of taxes or transfers to the city general they serve,according to an American Public Power fund Association study of 188 public power utilities. Use caution in making direct comparisons with our previous In comparison,investor-owned utilities paid a median of 4.4 reports(published every two years),as the utilities included in percent of electric operating revenues in taxes and fees to state each report can change from year to year and local governments in 2016. When all 2016 taxes,tax equivalents,and other contributions to state and local government are considered,the contribution of public power utilities — as a percentage of electric operating revenues — is 27 percent higher than that of investor-owned utilities. 4 Public Power Pays Back 159 Payment and Contribution Rates by Revenue Class Net payments and contributions as a percent of electric Table 1 operating revenue are summarized for public power utilities Net Payments and Contributions by Public Power in seven revenue classes.Medians by revenue class range from Utilities as Percent of Electric Operating Revenue,2016 4.5 percent to 14.5 percent,as compared to the national Revenue Number First Third median of 5.6 percent. (in millions) of Utilities Median Quartile Quartile The median is defined as the value where 50 percent of the Less than$2 13 14.5 7.1 22.4 utilities had greater payment and contribution rates,and 50 $2-$5 18 10.6 4.6 21.0 percent contributed less. $5-$10 16 5.1 2.9 8.5 Quartiles are another common tool used in analysis.By $10-$20 29 4.6 3.5 5.9 definition,half of utilities fall between the first and third $20-$50 48 4.5 2.9 6.6 quartiles.For example,50 percent of the 188 utilities in this report made payments and contributions between 3.2 percent $50-$100 30 5.1 2.9 7.7 and 8.9 percent of electric operating revenue. $100 or more 32 6.2 5.4 8.7 TOTAL 188 5.6 3.2 8.9 Figure 1.Median Net Payments and Contributions by Public Power Utilities as Percent of Electric Operating Revenue,2016 15% -14.5% 10.6% 10% 6.2% 5.1% 5.1% 5% 4.6% 4.5% 0% Less $2-$5 $5-$10 $10-$20 $20-$50 $50-100 $100 than $2 or more REVENUE (in millions) Public Power Pays Back 5 160 Payment and Contribution Rates by Region Regional variations in median net payments and contributions In 2016,investor-owned distribution utilities paid a median of range from 2.8 percent in the Northeast to 12.6 percent in the 4.4 percent of electric operating revenues in taxes and fees to West South Central.Regions are defined in Appendix 2. state and local governments.Utilities in the middle 50 percent Table 2 of contributions made payments ranging from 3.2 to 7.2 Net Payments and Contributions by Public Power percent.In comparison,public power utilities paid a median Utilities as Percent of Electric Operating Revenue,2016 of 5.6 percent in net payments and contributions as a percent of electric operating revenue,with a middle range of 3.2 to Number First Third 8.9 percent. Region of Utilities Median Quartile Quartile Northeast 12 2.8 1.2 5.0 In this study, most IOUs(95 percent)had more Atlantic 19 6.6 2.9 1.5 than$100 million in operating revenues while most public power systems had less than$100 million East North Central 29 3.4 1.7 4.6 (83 percent). East South Central 22 6.0 5.5 6.3 The median percent of taxes paid by IOUs and tax payments West North Central 49 4.7 3.5 7.3 and contributions by publicly owned systems as a percentage West South Central 36 12.6 7.7 21.8 of electric operating revenue varies by utility size. Mountain 7 5.7 Investor-Owned Public Power Pacific Northwest 9 6.6 5.0 9.7 Large Utilities(over$100 million) 4.6% 6.2% Pacific Southwest 5 9.4 Small Utilities(under$100 million) 3.9% 5.2% TOTAL 188 5.6 3.2 8.9 Quartiles not provided for fewer than 9 responses. Figure 2.Median Net Payments and Contributions by Public Power Utilities,as percent of Electric Operating Revenue,2016 14% 12.6% 12% 10% 9.4%- 8% 6.6% 6.6% 6.0% 5.7% 6% 4.7% 4% 3.4% 2.8% 11111 2% 0% NE ATL ENC ESC WNC WSC MTN PNW PSW REGION 6 Public Power Pays Back 161 The median rate for investor-owned systems was the largest in the Northeast and Pacific Northwest,and smallest in the East South Central and Pacific Southwest.Table 3 presents data grouped by geographic region for investor-owned utilities. Table 3 Net Taxes of Investor-Owned Utilities,as Percent of Electric Operating Revenue,2016 Number of First Third Region Utilities Median Quartile Quartile Northeast 23 6.0% 5.2% 8.9% Atlantic 17 4.4% 3.5% 7.4% East North Central 24 4.1% 3.4% 5.0% East South Central 7 2.9% West North Central 15 4.7% 3.9% 7.4% West South Central 11 4.1% 3.1% 5.7% Mountain 2 n/a n/a n/a Pacific Northwest 6 6.8% Pacific Southwest 8 3.0% Total 114 4.4% 3.2% 7.2% `Quartiles not provided for fewer than 9 responses. Figure 3.Median Taxes of Investor-Owned Utilities,as Percent of Electric Operating Revenue,2016 9% 8% 7% 6.8% 6% 6% 4.7% 5% 4.4% 4.1% 4.1% 4% mom - 3% 2.9% 3.0% 2% . IIII % Eno 0% NE ATL ENC ESC WNC WSC MTN PNW PSW REGION Public Power Pays Back 7 162 Summary of Payments and Contributions The study is based on a survey the Association sent to Table 5 all publicly owned utilities.The next two sections of the Types of Payments and Contributions,2016 report summarize results for 171 public power utilities that Percentage Number completed the survey. of Utilities of Surveyed Utilities The summaries exclude 17 Tennessee Valley Authority distribution utilities that completed the survey,because these I.Payments and Contributions Provided utilities'payments and contributions are limited under the Payments in Lieu of Taxes 79.5% 136 terms of their wholesale power contract with TVA. Taxes and Fees 42.7% 73 Gross Receipts Tax 22.2% 38 The 171 utilities made a total of just under$1.1 billion State Public Utility Assessments 18.1% 31 in total payments and contributions to state and local Franchise Fees 13.5% 23 Property Taxes 16.4% 28 government in 2016.Payments in lieu of taxes were the Other 11.7% 20 largest share of payments and contributions,followed by other Free or Reduced Cost Electric Service 42.7% 73 taxes and fees. Streetlighting 38.0% 65 Table 4 Lighting for Municipal Buildings 23.4% 40 Net Payments and Contributions to State and Local Traffic Signals 15.8% 27 Government Recreational Facilities 14.0% 24 Water or Sewer Treatment Facilities 11.7% 20 Amount Percent Water Pumping 10.5% 18 (in Millions) of Total Other 12.9% 22 Payments in Lieu of Taxes $631.9 59.3% Use of Employees 43.9% 75 Installation of Temporary Lighting 24.6% 42 Other Taxes and Fees $220.8 20.7% Putting Up City Signs and Banners 22.2% 38 Gross Receipts Tax $162.2 15.2% Electrical Repair for Other Departments 14.0% 24 Traffic Signal Maintenance 11.7% 20 Free or Reduced Cost Electric Services $42.1 4.0% Tree Trimming for Other Departments 15.8% 27 Use of Employees $7.2 0.7% Other Services 12.9% 22 Non-Utility Locates 3.5% 6 Other,including Equipment and Materials $1.5 0.1% Technical Expertise 4.1% 7 Rewiring Municipal Buildings 2.9% 5 Total $1,065.7 100.0% Reading Water Meters 6.4% 11 Less:Services and Contributions RECEIVED $9.1' Other Resources 24.0% 41 by the Utility FROM the Municipality Use of Vehicles and Equipment 18.1% 31 Use of Materials and Supplies 7.0% 12 Net Payments&Contributions $1,056.6 Other 9.4% 16 The number of utilities making each type of payment or II.Services and Contributions Received 23.4% 40 contribution is detailed in Table 5. Free or Reduced Cost Service 12.9% 22 Use of Vehicles and Equipment 7.0% 12 Use of Materials and Supplies 2.9% 5 Use of Employees 17.0% 29 ' The 171 utilities received$9.1 million in contributions and services from the municipality.This amount does not include any contributions or services for which the city has been reimbursed,either through direct billing or a transfer of funds.Free or reduced cost office space and water are the major services provided,while operations and maintenance,legal services,information technology services,engineering services and financial service employees are the predominant type of employee contributions received by the utility.The$9.1 million in free or reduced cost contributions and services provided by the municipality to the utility is subtracted from the$1,065.7 million in payments and contributions from the utility to state and local govemment.The result is $1,056.6 million in net payments and contributions by the 171 utilities in 2016. 8 Public Power Pays Back 163 Methods Used to Determine Payments in Lieu of Taxes Payments in lieu of taxes are generally thought of as payments The category"assessment of electric utility and city budgets" to local government. However,some utilities make payments includes utilities whose payments are set by the city council, in lieu of taxes to the state government. the mayor,or a utility commission,and utilities that make payments on an as-needed basis.The most common Of the 171 utilities defined earlier,over 79 percent(136 responses in the"other"category are utilities whose payments utilities)made payments in lieu of taxes,also called transfers are based on more than one criterion. to the general fund.The median transfer as a percent of electric operating revenue was 4.1 percent. Tennessee Valley Authority distribution utilities are not included in the data above.State law determines the The most common method used to determine the amount payments in lieu of taxes for utilities in the state of Tennessee. of payments in lieu of taxes was percent of gross electric The calculation is composed of two parts percentage of operating revenue,as shown in Table 6. three-year average operating revenue less power cost,and Table 6 property tax rate applied to net utility plant. Methods Used to Calculate Payments in Lieu of Taxes Percentage Number of Utilities of Utilities Percent of Gross Electric Operating Revenue 26% 35 Assessment of Electric Utility and City Budgets 18% 25 Flat Amount Paid Annually 13% 18 Property Tax Equivalent 10% 13 Charge per Kilowatt-hour Sold 10% 13 Percent of Net Utility Plant in Service 2% 3 Percent of Income,(Net,Operating or Total) 2% 3 Other/Did not Indicate 19% 26 Public Power Pays Back 9 164 APPENDIX 1 METHODOLOGY AND DATA SOURCES FOR STUDY Study results for publicly owned utilities were calculated The value of free or reduced cost services contributed by from two sources: data collected on the American Public the local government to the utility is deducted from total Power Association's"2016 Survey of Local Publicly Owned payments and contributions to arrive at net contributions.The Electric Utilities Tax Payments and Contributions to State net amount is then divided by electric utility revenue. and Local Government,"and data submitted by public power Net taxes for investor-owned utilities include state and local utilities to the Department of Energy's Energy Information Administration on Form EIA-861, `Annual Electric Utility taxes and fees as reported on pages 262-263 of FERC Form Report." 1.Federal taxes,social security taxes,similar contributions to state unemployment insurance,and other payroll taxes are A total of 188 utilities completed the 2016 survey. Form excluded. EIA-861 provided information on electric operating revenue. Payments and contributions for TVA distributors include an amount equal to 5 percent of the estimated cost of power purchased from TVA this payment is made by TVA—plus any payments in lieu of taxes or contributions made by the distribution utility.TVAs wholesale power contracts with municipalities limit payments in lieu of taxes to an amount not exceeding the state and local taxes that the system would pay if privately owned. Study results for investor-owned systems were calculated from data submitted on the 2016 Federal Energy Regulatory Commission Form 1, `Annual Report of Major Electric Utilities,Licensees and Others." The report includes only distribution utilities that are defined here as those with approximately 50 percent or more of their total kilowatt-hour sales going to retail customers.The investor-owned systems included in the study provide 95 percent of all full-service kilowatt-hour sales to investor-owned utility customers,and the public power utilities included in the study provide 25 percent of all kilowatt-hour sales to public power customers. Public power's payments and contributions to state and local governments include taxes and fees such as gross receipts taxes,property taxes(generally on property outside the city limits),franchise fees,payments to state public utility commissions,environmental fees,and licenses.Also included are payments in lieu of taxes or transfers to the general fund and the value of services such as free or reduced cost electricity, the use of electric department employees, and the use of electric department materials and equipment. Federal taxes,social security taxes,similar contributions to state unemployment insurance,and other payroll taxes are excluded. 10 Public Power Pays Back 165 APPENDIX 2 REGIONS The regions specified in Table 2 and Table 3 comprise the states shown below. Hawaii is not included in any of the nine regions, but is included in national totals and in summaries by revenue class. Northeast Connecticut,Maine,Massachusetts,New Hampshire,New Jersey,New York,Pennsylvania,Rhode Island,and Vermont Atlantic Washington,D.C.,Delaware,Florida,Georgia,Maryland,North Carolina,South Carolina,Virginia,and West Virginia East North Central Illinois,Indiana,Michigan,Ohio,and Wisconsin East South Central Alabama,Kentucky,Mississippi,and Tennessee West North Central Iowa,Kansas,Minnesota,Missouri,Nebraska,North Dakota,and South Dakota West South Central Arkansas,Louisiana,Oklahoma,and Texas Mountain Colorado,Montana,New Mexico,Utah,and Wyoming Pacific Northwest Alaska,Idaho,Oregon,and Washington Pacific Southwest Arizona,California,and Nevada Public Power Pays Back 11 166 AMERICAN PUBLiC P�onrarn ASSOCIATION 2451 Crystal Drive Suite 1000 Arlington,Virginia 22202-4803 167 Donations to the City of Elk River 2018 o YTD 2019 % Elk River Electric Revenue $ 29,716,590 - $ 13,635,962 - PILOT(4%of ER Elec Revenue) $ 1,188,663 4.0% $ 545,438 _ 4.0% Other Donations(Labor,St Lights,etc.) $ 215,295 _ 0.7% $ 105,283 0.8% Total Donations to the City of Elk River $ 1,403,958 4.7% $ 650,721 4.8% Table 1 PILOT by Revenue Class 2018 YTD 2019 $ % $ % Residential $ 10,142,169 34.1% $ 4,498,296 33.0% Non-Demand $ 2,635,072 8.9% $ 1,196,250 8.8% Demand $ 16,773,927 56.4% $ 7,857,709 57.6% Security Lights $ 165,421 0.6% $ 83,707 0.6% Table 2 PILOT by Customers 2018 YTD 2019 #of Meters % #of Meters % Residential 8,837 86.1% 9,381 86.6% Non-Demand 1,178 11.5% 1,191 11.0% Demand 214 2.1% 214 2.0% Security Lights 40 0.4% 41 0.4% Table 3 168