4.4b ERMU 12-12-2023Elk River
Municipal Utilities
COMMISSION POLICY
Section:
Governance
Category:
Results Policies
Policy Reference:
Policy Title:
G.5b
Competitive Rates
PURPOSE:
Competitive rates play a critical role in customer satisfaction, economic development
opportunities, and business retention. The organization's Mission includes the statement that the
services provided are "cost effective." And the organization's Fundamentals and Values both
specify "competitiveness." These defining organizational position policies reflect the expectations
of the customers, the consumer -owners. With this policy, the Commission recognizes the
importance of remaining competitive through strategic short-term and long-term planning,
budgeting, and rate design.
Consistent will all Results Policies, the Commission shall establish clear expectations for
producing the right results for the right people in the right way. With this policy the Commission
affirms their commitment to the Organization Fundamentals Policies prioritizing financial and
organization health by establishing reporting requirements regarding the competitiveness of rates.
POLICY:
To provide the Commission with the information needed, in a timely manner, for evaluation of rate
competitiveness, the General Manager annually provides a rate competitive analysis report to the
Commission prior to rate setting for the following budget year. The report shall include the
following information:
1. Electric
a. Report the blended $/kWh effective electric rate data (total revenue collected/total
kWh sold) as available through the U.S. Department of Energy, Energy
Information Administration, Form EIA-861. The report shall include ten-year trend
data graphing ERMU electric rates compared to neighboring competitor electric
utilities. Recognizing that the data release lags one year, the intent of the report
shall be to provide graphical trend data for long term planning rather than short
term comparisons. The report shall be provided to the Commission annually prior
to rate setting for the following budget year.
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61
ERMU Commission Policy — G.5b - Competitive Rates
b. Report customer class rate analysis comparing ERMU electric rates to neighboring
competitor electric utilities. The report shall include ten-year trend data graphing
ERMU electric rates compared to neighboring competitor electric utilities. The
intent of this is to show, from a customer perspective, how rate competitiveness
would be perceived currently. The report shall include all rate classes or other
unique customer types within rate classes.
2. Water
a. Report tiered water rate comparisons, as available locally sourced. The report shall
include data graphing ERMU water rates compared to neighboring water utilities.
The intent of the report shall be to provide trend data for long term planning rather
than short term comparisons.
b. Report customer class rate analysis comparing ERMU water rates to neighboring
communities, as available through regional AE2S survey reports. The report shall
include ten-year trend data graphing ERMU water rates compared to neighboring
competitor water utilities. The intent of this is to show, from a customer
perspective, how rate competitiveness would be perceived currently. The report
shall include all rate classes.
POLICY HISTORY:
Adopted December 13, 2022
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62
Elk River Municipal Utilities
Competitive Rate Comparisons
2013-2022
63
Electric Residential Rates
Electric Residential Retail Rates for the state of Minnesota are represented in the graph below with ten
years of history from 2013 to 2022. All information is obtained from the EIA annual reports. The rate is
represented in cents per kWh and compares the minimum, maximum, 25th percentile, 501h percentile,
and 75th percentile (represented in the line graphs) to Elk River Municipal Utilities (represented in the
vertical bar graphs.) Since 2013 ERMU has been moving from above the 75`h percentile with exception of
2020-2021 moving slightly below the 75th percentile.
22.00
20.00
18.00
16.00
14.0O
12.00
10. 00
8.00
6.00
4.00
2.00
0.00
Residential Retail Rates Mi`J
Ten Year History
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Elk River -Avg Max Min
75th percentile 50th percentile 25th percentile
Electric Residential Retail Rates for peer utilities (selected for population size and meter counts, as well
as the two neighboring Coops and the one IOU) in the state of Minnesota are represented in the graph
below with ten years of history from 2013 to 2022. The rate is represented in cents per kWh and
compares the rates of peer utilities to ERMU. Since 2018 ERMU has been moving from the top of the
rates to more the mid -range of rates.
19. o
17.00
15.00
13.00
11.00
9.00
7.00
5.00
Residential Retail Rates MN
Ten Year History
2013 2014 2015 2016 2017 2018 2019 2020 2021 2,22
Elk River Alexandria Anoka Austin
Chaska Owatonna Shakopee Willmar
Connexus Wright -Hennepin Xcel
65
Electric Commercial Rates
Electric Commercial Retail Rates for the state of Minnesota are represented in the graph below with ten
years of history from 2013 to 2022. All information is obtained from the EIA annual reports. The rate is
represented in cents per kWh and compares the minimum, maximum, 25t" percentile, 501" percentile,
and 75t" percentile (represented in the line graphs) to Elk River Municipal Utilities (represented in the
vertical bar graphs.) ERMU has consistently been just above the 75`" percentile.
30.00
28.00
26.00
2 4. 00
22.00
20.00
18.00
16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
Commercial Retail Rates MN
Ten Year History
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Elk River Avg Max Min
75th percentile 50th percentile 25th percentile
Electric Commercial Retail Rates for peer utilities (selected for population size and meter counts, as well
as the two neighboring Coops and the one IOU) in the state of Minnesota are represented in the graph
below with ten years of history from 2013 to 2022. The rate is represented in cents per kWh and
compares the rates of peer utilities to ERMU. ERMU has consistently been near the top of the rates for
commercial.
�:XIDI
.00
Commercial Retail Rates MN
Ten Year History
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Elk River Alexandria Anoka
Chaska Owatonna Shakopee
Connexus Wright -Hennepin Xcel
Austin
Willmar
67
Electric Industrial Rates
Electric Industrial Retail Rates for the state of Minnesota are represented in the graph below with ten
years of history from 2013 to 2022. All information is obtained from the EIA annual reports. The rate is
represented in cents per kWh and compares the minimum, maximum, 251" percentile, 501" percentile,
and 751" percentile (represented in the line graphs) to Elk River Municipal Utilities (represented in the
vertical bar graphs.) ERMU has consistently been hovering around the 751" percentile.
1019119191
25.00
20.00
15.00
10.00
5.00
WS
Industrial Retail Rates MN
Ten Year History
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Elk River -Avg -Max -Min
75th percentile 50th percentile 25th percentile
Electric Industrial Retail Rates for peer utilities (selected for population size and meter counts, as well as
the two neighboring Coops and the one IOU) in the state of Minnesota are represented in the graph
below with ten years of history from 2013 to 2022. The rate is represented in cents per kWh and
compares the rates of peer utilities to ERMU. Since 2018 ERMU has moved from near the top of the
rates to the middle of the range for industrial.
9.00
7.00
5.00
Industrial Retail Rates MN
Ten Year History
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Elk River Alexandria Anoka
Chaska Owatonna Shakopee
-Connexus Wright -Hennepin =Xcel
Austin
Willmar
Water Rate Tiers
The graph below compares the tiers charged by Metro Cities in the state of Minnesota, with information
gathered internally. The cities represented are St. Louis Park, Eden Prairie, Minnetonka, Maple Grove,
Lakeville, Plymouth, Bloomington, Burnsville, Woodbury, Apple Valley, Edina, Chaska, Shakopee, Anoka,
and Elk River. Some cities have four and five tiers, while ERMU only has three tiers. ERMU is slightly
below average in the first tier and third tiers and above average in the second tier.
ier Comparison with Metro Utik
�9. oo
$8. DO
$7. DO
$6.00
$5.00
$4. DO
$3.00
$2.00
$1.DO
$0.00 I
1
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4J
70
Water Residential Rates
Water Residential Retail Rates for peer utilities (selected for population size and meter counts) in the
state of Minnesota are represented in the graph below with five years of history from 2018 to 2023. All
information is obtained from the Advanced Engineering and Environmental Services (AE2S) annual
survey reports. The rate is represented as the charges for 6,000 gallons of residential water use per
month. ERMU has consistently been near the bottom of the rates.
► rr
Residential Water Rates
Five Year History
VI�1; F:��r1; C�ZryZr�Iryli ��ry�r�Ir3►�l
� Elk Riveir Alexandria Austin
Chaska Willmar Owatonna
71
Water Commercial Rates
Water Commercial Retail Rates for peer utilities (selected for population size and meter counts) in the
state of Minnesota are represented in the graph below with five years of history from 2018 to 2023. All
information is obtained from the Advanced Engineering and Environmental Services (AE2S) annual
survey reports. The rate is represented as the charges for 18,000 gallons of commercial water use per
month. ERMU has consistently been near the bottom of the rates.
Commercial Water Rates
Five Year History
2018 2019 2020 2021 2022 2023
� Elk River Alexandria Austin Owatonna Willmar
72