6.1a ERMUSR 03-12-2024�i
Elk River --�-
Municipal Utilities UTILITIES COMMISSION MEETING
TO:
FROM:
ERMU Commission
Mark Hanson — General Manager
MEETING DATE:
AGENDA ITEM NUMBER:
March 12, 2024
6.1a
SUBJECT:
Staff Update
ACTION REQUESTED:
None
DISCUSSION:
• ERMU staff continue to meet with city staff and representatives from Vireo Health to
identify and plan for their utility needs. We have been working through several
scenarios regarding the availability of the necessary transformers and recently received
their signed statement of work authorizing us to purchase the two transformers needed
for the project. With an anticipated peak usage of 2.5-3.0 MW, Vireo would be our third
largest customer.
• Chair Dietz, Commissioner Zerwas, and I attended the American Public Power
Association Legislative Rally in Washington DC, February 26-28. The rally offers an
opportunity to network with peers and lobby our MN legislative representatives on
significant issues impacting public power. Our request of the legislative delegates
focused on the need to deliver affordable, reliable, and sustainable public power; the
supply chain crisis (especially transformers); and modernizing various financial tools.
Minnesota Municipal Utilities Association (MMUA) provided the attached reference
guide summarizing our concerns.
• The Board of Directors of the Minnesota Municipal Power Agency (MMPA) met
February 20, 2024, at Chaska City Hall in Chaska, Minnesota and via videoconference.
Commissioner Stewart and I attended. The public summary is below:
o Management reviewed 2023 performance. A summary of the presentation is
attached.
o The Board reviewed the Agency's financial and operating performance for
January 2024.
o Customer penetration for the residential Clean Energy Choice program increased
to 5.3%. There was an increase of 54 customers participating in the residential
Clean Energy Choice program from December to January.
o The Board discussed the current business environment.
o The Board discussed the status of renewable projects the Agency is pursuing.
Page 1 of 2
ATTACHMENTS:
• MMUA Federal Issues 2024
• MMPA 2023 Year in Review
Page 2 of 2
181
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Minnesota Municipal Utilities Association
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Federal Issues
2024 APPA
Legislative Rally
Hometown services. Hometown strengths. Hometown solutions.
182
2024 Federal Legislative Priorities
ENSURE RELIABLE, AFFORDABLE, AND SUSTAINABLE PUBLIC POWER
Municipal utilities pride themselves on being able to provide power that consumers can rely upon to be there at any
moment or to be restored quickly after a rare outage. They recognize the need to provide this power in an eco-
friendly and sustainable manner.
Between 2005 and 2022, public power producers nationwide reduced CO2 emissions by 31 percent. At the
same time, it is important to keep electric rates affordable. Municipal utilities face the threat of physical attacks
on infrastructure, cybersecurity attacks, and work to comply with expensive mandates and regulations. There are
many steps Congress can take to sustain the long history of success of public power.
MMUA asks Congress to:
• Avoid passing unfunded or underfunded mandates
• Avoid redundancy such as the reporting of suspected cybersecurity attacks to multiple entities while
facilitating the sharing of timely and actionable threat information
• Provide regulatory certainty
• Ensure climate policies take into account grid reliability, affordability, and sustainability, and are based on
readily available technology
• Ensure rules are not unnecessarily complex and provide needed flexibility
• Streamline permitting procedures
• Support and invest in local resiliency efforts
• Protect local control over pole attachments and oppose efforts to limit a utility's ability to provide
broadband services
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Minnesota Municipal Utilities Association
183
ALLEVIATE THE SUPPLY CHAIN CRISIS
Critical infrastructure components, particularly distribution transformers, are not
readily available. This has created an unprecedented supply chain crisis for public
power utilities. As many as one in five public power infrastructure projects is
delayed or even cancelled due to a lack of component parts.
In Minnesota, as in other public power states, it is common for lead times on
delivery of distribution transformers to stretch from two to five years. At the same
time, proposed federal rules mandating increased efficiency for transformers
threaten even longer delays. Lead times for other parts have also increased
dramatically.
This supply chain crisis threatens not only the ability to continue the move towards more renewable and carbon -
free power, but reliability of both local power and the electric grid as a whole. It slows down recovery time from
storms and other natural disasters, even affecting mutual aid efforts when one utility hesitates to provide resources
to another over a justified fear the utility may need the items for itself.
MMUA asks Congress to:
• Provide, as appropriated by the Senate, $1.2 billion for the Department of Energy's Office of Electricity
and Grid Development Office to immediately begin addressing this crisis
• Delay new efficiency standards for distribution transformers
• Sign onto and pass H.R. 7171/S.3627 known as the "Distribution Transformer Efficiency and Supply
Chain Reliability Act"
MODERNIZE PUBLIC FINANCE TOOLS
As part of the Inflation Reduction Act (IRA), Congress took a critical step towards
modernizing public finance tools when it authorized or extended several tax credits
and then approved correlated direct payment incentives for local governments.
However, Congress failed to reauthorize advance refunding of bonds, a tool that
could save millions of dollars in financing public power projects. Congress also
failed to increase the threshold under which a lender remains a small issuer, and it
did not permanently exempt Build America Bonds or the funds for grants to public
power providers under the IRA and the Infrastructure Investment and Jobs Act
(IIJA) from sequestration and rescission.
MMUA asks Congress to:
• Restore advance refund bonds
• Increase from $10 million to $30 million the threshold under which a lender remains a small issuer
• Exempt public finance bonds and grant funding from sequestration and rescission
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Minnesota Municipal Utilities Association
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33municipal gas utilities
are MMUA members.
121 municipal electric
utilities serve
Minnesotans.
municipal water utilities
183are MMUA members.
391 ,WO customers served
by municipal electric
Ik utilities.
Connect with the MMUA
Government Relations Team
Karleen Kos
Chief Executive Officer
Kent Sulem
Director of Government
Relations and Senior Counsel
Bill Black
Government Relations Attorney
mmua.org
email: kkos@mmua.org
office: 763.746.0701
cell: 813.675.7589
email:
ksulem@mmua.org
office:
763.746.0703
cell:
612.263.0440
email: bblack@mmua.org
office: 763.746.0708
cell: 651.398.2098
3131 Fernbrook Lane N, Suite 200
Plymouth, MN 55447-5337
50of the 87 county seats
in Minnesota operate
an electric or gas utility.
57customers served by
the smallest municipal
utility, Whalan.
1 �� customers is the
' median amount for a
MN municipal utility.
57,000 customers served by
the largest municipal
utility, Rochester.
NS,
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fit?
763.551.1230
185
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2023 Year in Review Summary
220 South Sixth Street &flte 1300 Min�ieapohs, MN 55402
td. 612.349.6868 fax, 612,349,6108 mNw.r,iirt,ipa,(,)rg
0 Rates 12% Lower than Competitive Benchmark
0 Moody's Upgraded MMPA's Bond Rating from Alto Aa3
• Hometown BioEnergy Renewable Natural Gas Project Placed in Service
0 Net Income of $31.6 Million
0 Unrestricted Cash Increased by $35.4 Million
0 Generated Carbon Free Energy Equal to 44% of Energy Needs
0 2024 Budget Average Rate to Members Equal to 2023
0 January and February 2024 Rates Lower than Budget
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