5.03 ERMUSR 11-14-2023��i
Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO:
FROM:
ERMU Commission
Melissa Karpinski — Finance Manager
MEETING DATE:
AGENDA ITEM NUMBER:
November 14, 2023
5.03
SUBJECT:
2024 Annual Business Plan: Rates and Review, Stakeholder Communication Plan, CIP Budget
ACTION REQUESTED:
None
DISCUSSION:
In preparation for budget approval in December, staff continues to work through the 2023
budget process. Based on the wholesale power rate and projected expense increases and
capital expenditures, a preliminary balanced budget and rates have been drafted.
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 forecast for electric expenses is a 1.5%
increase over the current year's budget. Wholesale power costs make up about 70% of
the operating budget. Our wholesale power provider, Minnesota Municipal Power
Agency, is projecting a 0% rate increase for 2024. Without wholesale power costs,
electric expenses are a 5.3% increase over the current year's budget. Most notable
increases are pension expense (GASB 68), loss on disposition of capital (for meters due
to Advanced Metering Infrastructure [AMI] implementation), CIP related expenses (due
to increased spending requirements), and increased transportation expense (increased
maintenance labor costs and fuel costs). Additional expenses have also been added as a
placeholder for the compensation study and potential for increased labor expense.
The budgeted Payment in Lieu of Taxes (PILOT) amount for 2024 is $1.974 million.
PILOT is comprised of $1.710 million with the 4% of Elk River City's sales calculation, and
$264,000 in donated utilities and labor.
Currently there is a 0% rate increase proposed. Once again, we are projecting a Power
Cost Adjustment (PCA) passed onto our customer throughout 2024. Currently, we are
budgeting for a PCA of 15.8 mils which is an increase from the 2023 budget of 13.75
mils.
2. Water Department Expense Budget —The 2024 forecast for water expenses area 5.4%
increase over the current year budget. Most notable increases are increased costs for
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material/labor for maintenance of water mains and structures, increased electric & gas
utilities, loss on disposition of capital (for meters due to AMI implementation), and
additional expenses added as a placeholder for the compensation study and potential
for increased labor expense.
Currently there is a 2% rate increase proposed.
Staff would like to discuss with the Commission the communication plan to the customers for
rates, etc.
ATTACHMENTS:
• Proposed Summary of 2024 Budgets
• Proposed 2024 Electric Revenue and Expense Budget
• Proposed 2024 Water Revenue and Expense Budget
• Proposed 2024 Electric Capital Budget
• Proposed 2024 Water Capital Budget
• Proposed 2024 Administration and Technical Services Capital Budgets
• Proposed 2024 Conservation Improvement Program Budget Summary
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