5.3 ERMUSR 01-09-2024Elk River ,..
Municipal Utilities UTILITIES COMMISSION MEETING
TO:
FROM:
ERMU Commission
Mark Hanson — General Manager
MEETING DATE:
AGENDA ITEM NUMBER:
January 9, 2024
5.3
SUBJECT:
Transmission Investment Opportunity
ACTION REQUESTED:
Approve the Transmission Investment Opportunity
BACKGROUND:
In August 2023, the CapX2020 Brookings Owners submitted applications to the Minnesota PUC
to install separate 345 kV circuits on double -circuit -capable structures on the Minnesota
portion of the Brookings County to Lyon County (Western Segment) and the Helena to
Hampton Minnesota (Eastern Segment) segments of the Original Brookings Line. Elk River
Municipal Utilities (ERMU) is a part owner of this line through a coordinated investment with
Central Municipal Power Agency/Services (CMPAS). The CMPAS participants have some
reserves to fund these projects, but additional financial commitment from current participants
for this project and other necessary improvements to the line is necessary. CMPAS has been
informed they will be required to start making project payments in early 2024.
DISCUSSION:
CMPAS is holding approximately $2.5 million dollars of construction reserves from prior
borrowings sponsored by the 2007 Brookings Line project agreement participants. To
accurately plan, provide funding in a timely manner and prepare for contingencies, however,
CMPAS is requesting access to additional funds per the current participation agreement.
In anticipation of cash requirements related to the projects listed on the previous slide, CMPAS
would like to have commitments from current Brooking's participants of $2.0 million in
additional funds. CMPAS is not requiring funds to be deposited in the CMPAS account now, but
to be readily available and transmitted to CMPAS within 3 to 5 days upon request.
Individual commitments will be proportionally allocated based on original project participation
percentages (assuming all participants participate at their original percentage). ERMU's
percentage is 18.89%. If the full $2M is requested, then our commitment request would be
approximately $378K. If other participants choose not to participate in this opportunity, our
commitment request could be higher. Commission direction on a commitment cap is needed.
Recent investment returns on our original CapX commitment have been slightly over 10%.
CMPAS has advised this funding proposal pertains primarily to the two larger Brookings projects
based on the cost estimates available at this time. Additional funding needs related to these
projects, or other Brookings projects, may require additional funding requests in the future.
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