5.2 ERMUSR 10-10-2023UTILITIES COMMISSION MEETING
TO:FROM:
ERMU Commission Melissa Karpinski –Finance Manager
MEETING DATE: AGENDA ITEM NUMBER:
October 10, 20235.2
SUBJECT:
2024 Annual Business Plan: Electric and Water Expenses
ACTION REQUESTED:
None
DISCUSSION:
In preparation for budget submittal in November, staff continues to work through the 2024
budget process. The first draft of the expense portion of the 2024 budget has been completed
for commission review. Items are subject to change as the complete 2024 budget is assembled
and the finalized wholesale power costs and revenues are reflected. Revenues and rates,
wholesale power costs, and Conservation Improvement Program for 2024 will be presented in
November.
Attached is the following information for your review. Additional budget details are available
upon request. Please contact staff for additional information.
1. Electric Department Expense Budget – The 2024 budget for electric expenses is a 3.8%
increasecompared tothe current year’sbudget (excluding purchased power). It is
noteworthy that the 2023 forecast for expenses (excluding purchased power) is a 1.2%
decrease compared to budget. Wholesale power costs make up around 70% of the
operating budgetandwill be provided in next month’s budget with the revenue
projections. Most notable increases are for other operatingexpenses due to the
disposal of meters (loss of capital) related tothe Advanced Metering Infastructure
projectand estimated pension expense due to GASB68(this entry is prepared at year-
end by our auditors). It is planned to bring in contractors again in 2024 for tree
trimming. Thesepreliminary expense numbers will likely be adjusted during the next
phase ofbudgeting when the 2024 rates are designed.
The 2023 budgeted purchased power cost amount was $32,766,025. The 2024
projected wholesale power cost increase has yet to be communicated to ERMU.
Preliminarily we are applying last year’s wholesale power rates (may vary slightly when
the rate formula is applied to ERMU’s load profile and anticipated growth). When
factoring the preliminarywholesalepower cost forecast and the preliminary electric
department expense budget, the overall preliminary electric department expense
budget increaseis 1.1% compared to 2023 budget.
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The budgeted PaymentinLieu of Taxes (PILOT) amount for 2024 is $1.988million. PILOT
is comprised of $1.724millionbased off4% ofthe City ofElk River sales calculationand
$264,000 in donated utilities and labor.Thispreliminary projection will change when
revenue is budgeted for next month.
2. Water Department Expense Budget – The 2024 budget for water expenses is a 4.4%
increasecompared to the current year’s budget. It is noteworthy that the 2023 forecast
for expenses is a 1.7% decrease compared to budget. Most notable increases are
maintenance of water mains and electric & gas utilities (due to increased electric costs
at wells).
ATTACHMENTS:
Preliminary 2024 Electric Expense Budget
Preliminary 2024 Water Expense Budget
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Page 2 of 2
63
ELKRIVERMUNICIPALUTILITIES
ELKRIVER,MINNESOTA
2024ELECTRICBUDGET
2024Annual2023Annual2022Annual
BudgetBudgetActual
Electric
Expenses
Operating&MtceExpense
540.5461OPERATINGSUPERVISION131,000137,000138,044
540.5471DIESELOILFUEL10,00010,0002,980
540.5472NATURALGAS33,00025,00020,631
540.5483ELECTRIC&WATERCONSUMPTIONPLANT66,00034,00032,884
540.5484PLANTSUPPLIES&OTHEREXPENSE15,00013,00013,912
540.5491MISCPOWERGENERATIONEXPENSE8,0008,0005,079
540.5521MAINTENANCEOFSTRUCTUREPLANT21,00020,00020,294
540.5531MTCEOFPLANTENGINES/GENERATORS39,00039,00011,756
540.5541MTCEOFPLANT/LANDIMPROVEMENT46,00035,00028,086
TotalforOperating&MtceExpense:369,000321,000273,666
LandfillGas
550.505LANDFILLGASPLANTPURCHASEDGAS136,879Percontractending10/2022
550.5051LANDFILLGASPLANTOPERATIONS&MTCE337,825
550.5052LANDFILLGASPLANTADMINISTATION25,847
550.5053LANDFILLGASPLANTINSURANCE17,501
550.5054LANDFILLGASPLANTMTCE1,576
TotalforLandfillGas:519,628
TransmissionExpense
560.562TRANSMISSIONMTCEANDEXPENSE72,00070,00063,952
TotalforTransmissionExpense:72,00070,00063,952
DistributionExpense
580.5801REMOVEEXISTINGSERVICE&METERS2,0001,050599
580.5821SCADAEXPENSE45,00044,00042,498
580.5831TRANSFORMEREXPENSEOH&URD15,00015,00013,243
580.5851MTCEOFSIGNALSYSTEMS3,0002,0001,872
580.5861METEREXPENSEREMOVE&RESET1,5001,500582
580.5871TEMPSERVICEINSTALL&REMOVE7,0003,5003,718
580.5881MISCDISTRIBUTIONEXPENSE350,000300,000321,667
580.589INTERCONNECTIONCARRYINGCHARGE2,4172,4162,416
TotalforDistributionExpense:425,917369,466386,595
MaintenanceExpense
590.5911MTCEOFSTRUCTURES50,00046,00030,934
590.5921MTCEOFSUBSTATIONS36,00035,00060,276
590.5922MTCEOFSUBSTATIONEQUIPMENT79,00077,00042,073
590.5931MTCEOFOHLINES/TREETRIM230,000225,000145,876$145kcontractors
590.5932MTCEOFOHLINES/STANDBY40,00040,00033,623
590.5933MTCEOFOHPRIMARY170,000170,000190,502
590.5941MTCEOFURDPRIMARY220,000170,000201,178
590.5943LOCATEELECTRICLINES110,000106,00095,624
590.5944LOCATEFIBERLINES1,5001,000880
590.5951MTCEOFLINETRANSFORMERS60,00060,00043,183
590.5961MTCEOFSTREETLIGHTING50,00045,00066,957
590.5962MTCEOFSECURITYLIGHTING15,00015,00021,799
590.5971MTCEOFMETERS80,00085,00077,069
590.5972VOLTAGECOMPLAINTS12,00010,0009,130
590.5981SALARIESTRANSMISSION&DISTRIBUTION30,00030,50028,316
590.5985ELECTRICMAPPING100,00095,00097,145
590.5991MTCEOFOHSECONDARY25,00025,00021,753
590.5992MTCEOFURDSECONDARY60,00060,00057,283
590.5995TRANSPORTATIONEXPENSE300,000245,000288,624Increasedlaborandfuelcosts
TotalforMaintenanceExpense:1,668,5001,540,5001,512,225
Depreciation&Amortization
595.8031DEPRECIATION2,439,4762,552,7002,394,615
595.8032AMORTIZATION668,136668,136668,135
TotalforDepreciation&Amortization:3,107,6123,220,8363,062,750
InterestExpense
596.8071INTERESTEXPENSEBONDS845,673870,695907,074
597.8281AMORTIZATIONOFDEBTDISCOUNT/PREMIUM(59,863)(59,863)(60,765)
TotalforInterestExpense:785,810810,832846,309
OtherOperatingExpense
597.8165EVCHARGINGEXPENSE3,1007,7316,552
597.8213LOSSONDISPOSITIONOFPROP(CAPITAL)155,80015,50036,600Meters(duetoAMI)
597.8263OTHERDONATIONS3,0003,0003,891
597.8265MUTUALAID40,408
597.8302PENSIONEXPENSE235,00045,000306,643GASB68
597.8311OTHERINTERESTEXPENSE3784,888
597.8341INTERESTEXPENSEMETERDEPOSITS50,0002,5001,995Increasedinterestrates
TotalforOtherOperatingExpense:446,90074,109400,977
CustomerAccountsExpense
900.9021METERREADINGEXPENSE47,00047,00049,300
900.903DISCONNECT/RECONNECTEXPENSE22,00022,00023,150
900.9051MISCCUSTOMERACCOUNTSEXPENSEUTILITY345,000312,500305,794
900.9061BADDEBTEXPENSE&RECOVERY25,00020,00012,993
TotalforCustomerAccountsExpense:439,000401,500391,237
AdministrativeExpense
920.9201SALARIESOFFICE&COMMISSION800,000950,000805,290CIPSpecialist
920.9205TEMPORARYSTAFFING4,0004,000
920.9211OFFICESUPPLIES125,000107,00071,132
920.9212ELECTRIC&WATERCONSUMPTIONOFFICE40,00029,00037,423
920.9213BANKFEES2,5002,5002,002
64
ELKRIVERMUNICIPALUTILITIES
ELKRIVER,MINNESOTA
2024ELECTRICBUDGET
2024Annual2023Annual2022Annual
BudgetBudgetActual
Electric
920.9221LEGALFEES30,00040,00029,545
920.9231AUDITINGFEES22,00018,52018,039
920.9241INSURANCE190,000186,000170,663
920.926UTILITYSHAREDEFERREDCOMP120,000124,000112,637
920.9261UTILITYSHAREMEDICAL/DENTAL/DISABIL870,000858,481809,783
920.9262UTILITYSHAREPERA302,000288,000280,969
920.9263UTILITYSHAREFICA295,000280,000272,892
920.9264EMPLOYEESICKPAY165,000150,000146,800
920.9265EMPLOYEEHOLIDAYPAY172,000157,500139,307
920.9266EMPLOYEEVACATION&PTOPAY275,000250,000256,901
920.9267UPMICDISTRIBUTION101,00091,01567,353
920.929LONGEVITYPAY4,94516,3694,030
920.9291CONSULTINGFEES65,60080,00054,841AE2S,NISC,RateStudy
920.9301TELEPHONE38,00041,00038,140
920.9302ADVERTISING19,00015,00012,246
920.9303DUES&SUBSCRIPTIONSFEES136,820172,675125,051
920.9305SCHOOLS&MEETINGS274,895259,925193,041
920.9321MTCEOFGENERALPLANT&OFFICEHEATING13,0007,60011,682
TotalforAdministrativeExpense:4,065,7594,128,5853,659,767
GeneralExpense
920.9269CIPREBATESRESIDENTIAL100,170100,17060,641Willupdate2024budgetinNovember,currentlyutilizing2023Budgetdata
920.927CIPREBATESCOMMERCIAL189,583189,583109,100Willupdate2024budgetinNovember,currentlyutilizing2023Budgetdata
920.9271CIPADMINISTRATION19,70019,7008,415Willupdate2024budgetinNovember,currentlyutilizing2023Budgetdata
920.9272CIPMARKETING30,03930,03929,024Willupdate2024budgetinNovember,currentlyutilizing2023Budgetdata
920.9273CIPLABOR178,511178,511153,297Willupdate2024budgetinNovember,currentlyutilizing2023Budgetdata
920.9274CIPREBATESLOWINCOME18,00018,0004,185Willupdate2024budgetinNovember,currentlyutilizing2023Budgetdata
920.9275CIPLOWINCOMELABOR9,8879,88710,399Willupdate2024budgetinNovember,currentlyutilizing2023Budgetdata
920.9281ENVIRONMENTALCOMPLIANCE31,00034,21931,920
920.9306MISCGENERALEXPENSE2,5002,500(1,218)
TotalforGeneralExpense:579,390582,609405,763
TotalExpenses(beforeOperatingTransfers)44,725,91344,285,46243,067,5411%
OperatingTransfer
OperatingTransfer/OtherFunds
597.8262TRANSFERTOCITYELKRIVERREVENUE1,723,6941,681,6531,531,632Willchangewhenrevenueandratesarecompleted
TotalforOperatingTransfer/OtherFunds:1,723,6941,681,6531,531,633
Utilities&LaborDonated
597.8261UTILITIES&LABORDONATEDTOCITY264,000240,000231,860
TotalforUtilities&LaborDonated:264,000240,000231,861
TotalOperatingTransfer
1,921,6531,763,493
TotalforTotalOperatingTransfer:1,987,694
TotalExpense 13,947,58313,441,08913,286,430
BudgetChangeYearoverYear3.8%
65
ELKRIVERMUNICIPALUTILITIES
ELKRIVER,MINNESOTA
2024WATERBUDGET
2024Annual2023Annual2022Annual
BudgetActual
WaterBudget
Expenses
ProductionExpense
700.7021MTCEOFSTRUCTURES115,00
090,000114,397
TotalforProductionExpense:115,00090,000114,397
PumpingExpense
710.7101SUPERVISION65,00069,00066,134
710.7181ELECTRIC&GASUTILITIES335,171288,000281,124
710.7182SAMPLING16,00015,00013,093
710.7183CHEMICALFEED53,00050,00032,349
710.722MTCEOFWELLS165,000165,000160,129
710.723SCADAPUMPING8,00016,00013,807
TotalforPumpingExpense:642,171603,000566,684
DistributionExpense
730.7301MTCEOFWATERMAINS175,000120,00091,488
730.7309LOCATEWATERLINES17,25017,25011,045
730.7311MTCEOFWATERSERVICES500897
730.7312WATERMETERSERVICE66,00066,00072,990
730.7316BACKFLOWDEVICEINSPECTION20,00016,00010,765Laborandsoftwareexpense
730.7321MTCEOFCUSTOMERSSERVICE33,00030,50028,317
730.7325WATERMAPPING15,00012,50012,236
730.7331MTCEOFWATERHYDRANTSPUBLIC20,00019,00021,980
730.7332MTCEOFWATERHYDRANTSPRIVATE6,0005,0005,104
730.7341WATERCLOTHING/PPE10,0009,0007,616
730.7391WAGESWATER7,5007,3009,340
730.7395TRANSPORTATIONEXPENSE24,00016,50015,427Increasedlaborandfuelcosts
730.7399WATERPERMIT28,00018,60018,370Increasedsummerwaterusefees
TotalforDistributionExpense:422,250337,650305,583
Depreciation&Amortization
595.8031DEPRECIATION1,148,9881,202,9371,117,356
TotalforDepreciation&Amortization:1,148,9881,202,9371,117,357
InterestExpense
596.8071INTERESTEXPENSEBONDS40,60043,00046,371
597.8281AMORTIZATIONOFDEBTDISCOUNT/PREMIUM(6,651)(6,651)(6,650)
TotalforInterestExpense:33,94936,34939,720
OtherOperatingExpense
597.8213LOSSONDISPOSITIONOFPROP(CAPITAL)14,0005009,150Meters(duetoAMI)
597.8264DAMMAINTENANCEEXPENSE2,0001,7501,555
597.8302PENSIONEXPENSE16,00068,974GASB68
597.8311OTHERINTERESTEXPENSE951,222
597.8341INTERESTEXPENSEMETERDEPOSITS1,26012553Increasedinterestrates
TotalforOtherOperatingExpense:33,2602,47080,954
CustomerAccountsExpense
900.9021METERREADINGEXPENSE2,5002,347
900.9051MISCCUSTOMERACCOUNTSEXPENSEUTILITY89,00081,62078,909
900.9061BADDEBTEXPENSE&RECOVERY25025028
TotalforCustomerAccountsExpense:91,75
084,37081,285
AdministrativeExpense
920.9201SALARIESOFFICE&COMMISSION258,000268,500234,617CIPSpecialist
920.9205TEMPORARYSTAFFING1,0001,000
920.9211OFFICESUPPLIES37,00025,50014,865
920.9212ELECTRIC&WATERCONSUMPTIONOFFICE11,0008,0008,579
920.9213BANKFEES600625516
920.9221LEGALFEES9,0009,0007,339
920.9231AUDITINGFEES6,0004,6304,509
920.9241INSURANCE43,00036,00030,952
920.926UTILITYSHAREDEFERREDCOMP21,00030,50019,528
920.9261UTILITYSHAREMEDICAL/DENTAL/DISABIL220,000215,000209,590
920.9262UTILITYSHAREPERA56,00054,00053,758
920.9263UTILITYSHAREFICA54,00052,00051,807
920.9264EMPLOYEESICKPAY29,00027,00025,671
920.9265EMPLOYEEHOLIDAYPAY32,00030,80024,827
920.9266EMPLOYEEVACATION&PTOPAY52,00044,00046,185
920.9267UPMICDISTRIBUTION21,00018,06913,761
920.929LONGEVITYPAY7303,106620
920.9268WELLHEADPROTECTION2,00010,0004,724
920.9291CONSULTINGFEES37,90035,00020,055AE2S,NISC,RateStudy
920.9301TELEPHONE9,0009,5008,900
66
ELKRIVERMUNICIPALUTILITIES
ELKRIVER,MINNESOTA
2024WATERBUDGET
2024Annual2023Annual2022Annual
BudgetActual
WaterBudget
920.9302ADVERTISING5,0006,5002,933
920.9303DUES&SUBSCRIPTIONSFEES87,94978,32075,541
920.9305SCHOOLS&MEETINGS60,27363,70541,818
920.9321MTCEOFGENERALPLANT&OFFICEHEATING3,10
01,9002,920
TotalforAdministrativeExpense:1,056,5521,032,655904,027
GeneralExpense
920.9269CIPREBATESRESIDENTIAL5,00010,500834
920.927CIPREBATESCOMMERCIAL500500
920.9272CIPMARKETING2,000500613
920.9273CIPLABOR5,0004,7004,502
920.9281ENVIRONMENTALCOMPLIANCE2,50
02,2001,578
920.9306MISCGENERALEXPENSE250250
TotalforGeneralExpense:15,25018,6507,529
TotalExpenses(beforeOperatingTransfers)
3,559,17
03,408,0813,217,536
OperatingTransfer
Utilities&LaborDonated
597.8261WATER&LABORDONATEDTOCITY1,5001,500539
TotalOperatingTransfer
TotalforTotalOperatingTransfer:1,5001,500540
TotalExpense 3,560,6703,409,5803,218,076
BudgetChangeYearoverYear4.4%
67