5.02 EMRUSR 11-12-2024��i
Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO:
FROM:
ERMU Commission
Melissa Karpinski — Finance Manager
MEETING DATE:
AGENDA ITEM NUMBER:
November 12, 2024
5.02
SUBJECT:
2025 Annual Business Plan: Rates and Review, Stakeholder Communication
ACTION REQUESTED:
None
DISCUSSION:
In preparation for budget approval in December, staff continue to work through the 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 2025 forecast for electric expenses is a 2.1%
decrease over the current year budget. Wholesale power costs make up about 67% of
the operating budget. Our wholesale power provider, MMPA, is projecting a 0% rate
increase for 2025. Without wholesale power costs, electric expenses are an 8.2%
increase over the current year's budget. Most notable increases are depreciation,
material/labor for maintenance of substation equipment and maintenance of
underground primary, contractors for tree trimming, and for increased labor and benefit
expenses.
The budgeted Payment in Lieu of Taxes (PILOT) amount for 2025 is $1.903 million.
PILOT is comprised of $1.638 million with the 4% of Elk River City's sales calculation, and
$265k in donated utilities and labor.
Currently there is a 0% rate increase proposed. There will more than likely also be a
Power Cost Adjustment (PCA) passed onto our customers throughout 2025. Currently
we are budgeting for a PCA of 15.9 mils which is a very slight increase from the 2024
budget of 15.8 mils.
2. Water Department Expense Budget —The 2025 forecast for water expenses is a 9.4%
increase over the current year's budget. Most notable increases are increased costs for
depreciation, material/labor for maintenance of wells and structures, and for increased
labor and benefit expenses.
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Current proposed rate increase for water:
• Tier 1-1%
• Tier 2 — 2%
• Tier 3 — 3%
• Monthly base rate — 2%
Staff would like to discuss with the Commission the communication plan to the customers for
rates, etc.
ATTACHMENTS:
• Proposed Summary of 2025 Budgets
• Proposed 2025 Electric Revenue and Expense Budget
• Proposed 2025 Water Revenue and Expense Budget
• Proposed 2025 Electric Capital Budget
• Proposed 2025 Water Capital Budget
• Proposed 2025 Administration and Technical Services Capital Budgets
• Proposed 2025 Conservation Improvement Program Budget Summary
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