2025-12-18 - ERMU - Special Commission MeetingNOTICE OF PUBLIC MEETING
MEETING OF THE
ELK RIVER MUNICIPAL UTILITIES COMMISSION
Thursday, December 18, 2025, 3:30 p.m.
Elk River City Hall
13069 Orono Parkway
Elk River, Minnesota
Notice is Hereby Given that the Elk River Municipal Utilities Commission will hold a
special meeting on December 18, 2025, at 3:30 p.m., at the Elk River Municipal Utilities
Conference Room, 13069 Orono Parkway, Elk River, MN.
One commissioner may participate via interactive television at the following locations,
which shall be open and accessible to the public during the meeting:
The Hotel Crosby
232 Main Street N
Stillwater, MN 55082
I HEREBY CERTIFY, that this notice has been posted and that I have served this notice
upon the members of the Elk River Municipal Utilities Commission by mail at least one
day prior to the above-called Elk River Municipal Utilities Commission meeting.
____________________________ ____________________
Mark Hanson, General Manager Date
12/16/25
SPECIAL MEETING OF THE
UTILITIES COMMISSION
December 18, 2025, 3:30 P.M.
Utilities Conference Room
______________________________________________________________________________
Page 1 of 1
AGENDA
1.0 GOVERNANCE
1.1 Call Meeting to Order
1.2 Pledge of Allegiance
1.3 Consider the Agenda
2.0 CONSENT
2.1 Receive Final Electric and Water Cost of Service and Rate Design Studies
3.0 BUSINESS ACTION
3.1 Verizon Water Tower Lease Agreements
3.2 2026 Annual Business Plan – Budget and Schedule of Rates & Fees
3.0 ADJOURNMENT
______________________________________________________________________________
Page 1 of 1
UTILITIES COMMISSION MEETING
TO:
ERMU Commission
FROM:
Mark Hanson - General Manager
MEETING DATE:
December 18, 2025
AGENDA ITEM NUMBER:
2.1
SUBJECT:
Receive Final Electric and Water Cost of Service and Rate Design Studies
ACTION REQUESTED:
Receive Final Cost of Service and Rate Design Studies
BACKGROUND:
ERMU staff have been working with Dave Berg Consulting, LLC to complete the Electric and
Water Cost of Service and Rate Design Studies. The purpose of this work is to evaluate potential
updates to ERMU’s electric and water retail rates, as well as applicable utility fees. Staff
evaluated changes in operating conditions, including but not limited to monthly fixed costs,
additional service fees, potential changes to the financial reserve policy, and new data from the
Advance Metering Infrastructure project related to electric and water usage.
At the November 2025 meeting, the Commission instructed Mr. Berg to return in December
with electric and water rate projections that account for higher reserve balances, increased
Payment in Lieu of Taxes payments to the City, and an expected 3% increase in purchased
power costs. Mr. Berg reviewed the findings and recommendations of the final cost of service
reports for electric and water at the December 9, 2025, commission meeting.
DISCUSSION:
Dave Berg has submitted a final draft of the Electric Cost of Service and Rate Study Studies. The
attached December 10 draft incorporates minor typo corrections to the electric report
identified by staff. The previously submitted December 9 draft of the Water Cost of Service and
Rate Study remains unchanged.
Staff request the Commission receive and file the final drafts of the Cost of Service and Rate
Studies.
ATTACHMENTS:
• ERMU Draft Final Electric Study, December 10
• ERMU Draft Final Water Study, December 9
ELECTRIC COST OF SERVICE AND
RATE DESIGN STUDY
Final Report
December 10, 202 5
REPORT OUTLINE
Cover Letter
Section 1 - Introduction
Section 2 – Projected Operating Results – Existing Rates
Section 3 – Cost of Service
Section 4 – Proposed Rates
Dedicated to providing personal service to consumer-owned utilities
Dave Berg Consulting, LLC | 15213 Danbury Ave W, Rosemount, MN 55068 | 612-850-2305
www.davebergconsulting.com
December 10, 2025
Elk River Municipal Utilities Commission
13069 Orono Parkway
PO Box 430
Elk River, MN 55330
Subject: Electric Rate Study
Commission Members:
Dave Berg Consulting, LLC has undertaken a study of the retail rates Elk River Municipal Utilities (ERMU)
charges its customers for electric service. This report summarizes the analyses undertaken and the
resulting recommendations for changes to the existing rates.
Average annual increases of 2% in electric rates for the period 2026-2029 are recommended.
Additionally, a new approach to calculation of the retail Purchased Cost Adjustment (PCA) has been
made. These adjustments are necessary to make progress in meeting ERMU’s new reserve level goals.
Specific rate adjustments for each year are provided for each rate class.
Thank you for the opportunity to be of service to ERMU through the conduct of this study. I wish to
express my appreciation for the valuable assistance I received from ERMU staff relative to the execution
of this study.
Sincerely,
Dave Berg Consulting, LLC
David A. Berg, PE
Principal
- 1 -
Section 1
Introduction
The City of Elk River, MN owns a municipal utility providing service to
approximately 13,700 retail electric customers. The electric utility is operated by
Elk River Municipal Utilities (ERMU) and is under the direction of the Elk River
Municipal Utilities Commission. This report has been prepared by Dave Berg
Consulting, LLC to examine the rates and charges for electric service in Elk River.
The study includes an examination of the allocated cost of service based on actual
2024 utility operations (Test Year). It also includes projected operating results for
2025-2029 (Study Period). As a result of the analyses undertaken and reported
on herein, electric rate recommendations have been developed for consideration
by ERMU.
Section 2
Projected Operating Results
Existing Rates
The rates charged for electric service by ERMU, combined with other operating and non-
operating revenues, must be sufficient to meet the cost of providing services to ERMU’s
retail customers. This is necessary in order to ensure the long-term financial health of
ERMU. The cost of providing electric service consists of normal operating expenses such
as production and purchased power, transmission and distribution functions, customer
and administrative functions, system depreciation expenses, capital improvements,
payments on outstanding debt and contributions to the City of Elk River and other non-
operating expenses.
An analysis of the operating results for ERMU during the 2025-2029 Study Period has
been performed assuming the current retail rates and charges remain in effect for the
electric utility through the Study Period. This analysis has been done to determine the
overall need, if any, for additional revenue through rates to meet projected revenue
requirements. The analyses and assumptions utilized in these projections are explained
below.
Estimated Revenues – Existing Rates
Retail Sales
ERMU sells retail power and energy to residential, commercial and industrial customers.
ERMU has recently been experiencing growth in total retail sales to its electric customers,
primarily associated with the acquisition of additional electric service territory. During the
Study Period, ERMU does not anticipate acquiring any additional new service territory
areas. Based on a conservative assumption regarding sales growth, limited growth in
residential sales during the Study Period (1% per year) beyond the 2025 actual sales has
been included in this analysis. No growth in non-residential sales has been assumed.
Projected Operating Results – Existing Rates
- 3 -
Exhibit 2-A is a summarized listing of ERMU’s historical and projected electric operating
results at existing rates. The existing ERMU retail rates went into effect Jan. 1, 2025.
The historical and projected revenues from retail sales of power and energy to different
groups of customers are included as Charges for Services at the beginning of the exhibit
under Operating Revenues.
Other Operating Revenues
ERMU also receives revenue from other normal operating procedures. These revenues
are shown in Exhibit 2-A below the charges for services. Utility Revenues combined with
Other Operating Revenues results in ERMU’s Total Operating Revenues.
Revenue Requirements
Generation and Purchased Power
ERMU currently meets its wholesale power requirements through purchases from the
Minnesota Municipal Power Agency (MMPA). Projections of wholesale power expenses
are based on anticipated MMPA rate increases during the Study Period.
ERMU’s actual retail sales and wholesale requirements for the 2024 Test Year are shown
in Table 2-1.
Table 2-1
Retail Sales
And Wholesale Requirements
Item 2024
Metered Retail Sales 320,012,952 kWh
Distribution Losses 2.7 %
Wholesale Energy 328,891,814 kWh
Wholesale Peak 70,907 kW
Section 2
- 4 -
Power Cost Adjustment (PCA)
ERMU includes a Power Cost Adjustment (PCA) on its retail bills to customers. In the
current projections under existing rates, the assumed PCA is based on the Energy
Adjustment Clause (EAC) that MMPA includes as part of its wholesale bill to ERMU. The
wholesale PCA changes every month. The average assumed MMPA EAC and assumed
ERMU PCA for each year are shown in Table 2-2 below. As currently assumed, ERMU
will increase its retail PCA to match the wholesale EAC by 2027. Further discussion and
recommendations regarding the retail PCA are included in Section 4 of this report.
Table 2-2
Assumed Wholesale EAC and Retail PCA
($/kWh)
Item 2025 2026 2027 2028 2029
Wholesale EAC 0.02365 0.02263 0.02263 0.02263 0.02263
Retail PCA 0.01640 0.01927 0.02263 0.02263 0.02263
Other Operating Expenses
ERMU incurs other operating expenses associated with local electric system operations.
Transmission and distribution operating and maintenance expenses are related to the
substations, overhead and underground lines and customer facilities located in ERMU.
Operating expenses also include production related expenses for the local peaking power
plant. ERMU also has customer account expenses related to serving retail electric
customers. Administrative and general expenses are required for utility management,
employee benefits, training and other administrative costs. Non-wholesale power related
expenses are based on 2024 values, the 2025 and 2026 budgets and are generally
estimated to increase by 3% per year after 2026.
Projected Operating Results – Existing Rates
- 5 -
Depreciation
ERMU has annual depreciation costs based on its system investments. Depreciation
during the Study Period is based on budgeted ERMU amounts and future capital
improvements. Depreciation is a funded non-cash expense that generates monies
available for annual capital improvements and reserves.
Non-operating Revenue (Expenses)
ERMU’s non-operating revenue is primarily associated with investment income and
miscellaneous revenues. Non-operating expenses are related to interest expense for
existing debt.
City Transfer
ERMU makes an annual operational transfer to the City’s general fund. The transfer is
assumed to be 5% of electric retail sales revenue for sales in Elk River only.
Capital Improvements
ERMU makes annual normal capital investments in its electric system. Annual electric
capital improvements for the Study Period, as budgeted by ERMU, are shown in Table 2-
3 below.
Table 2-3
Capital Improvements
Capital Item 2025 2026 2027 2028 2029
Electric Capital $7,455,754 $8,047,103 $4,628,954 $4,542,896 $4,381,166
Section 2
- 6 -
Debt Service
ERMU currently has outstanding electric debt pursuant to bonds issued in 2016, 2018
and 2021. No additional bond issues assumed for the electric utility through the Study
Period.
Interfund Borrowing
It is assumed that the water utility will make a $1.4 million loan to the electric department
in 2026 which will be repaid in 2028.
Projected Operating Results – Existing Rates
Based on the assumptions outlined above, the resulting projected operating results
assuming continued application of the existing retail rates are summarized in Table 2-4
for the electric utility. A summary presentation of the operating results is shown in Exhibit
2-A. The results below are provided as an indication of revenue needs in the future.
Table 2-4
Projected Operating Results
Existing Rates
Year 2025 2026 2027 2028 2029
Operating Revenues $47,893,140 $49,217,147 $49,432,238 $49,649,040
Less Operating
Expenses (44,210,400) (45,215,511) (46,121,914) (47,047,707)
Plus Non -Operating
Revenues (Expenses) 468,457 489,744 496,394 536,394
Plus Fees and Transfers (1,756,111) (1,815,029) (1,824,601) (1,834,249)
Change in Net Position(1) $3,800,000 2,395,085 2,676,350 1,982,117 1,303,478
Net Position as Percent
of Revenues 5.0% 5.4% 4.0% 2.6%
(1) 2025 EOY change in net position estimated by ERMU staff based on 2025 YTD actual results
Projected Operating Results – Existing Rates
- 7 -
Cash Reserves
A summary of the impact of the projected operating results on ERMU’s cash reserves for
the Study Period is shown at the end of Exhibit 2-A and in Table 2-5 below.
As shown below, under existing retail rates and estimated revenue requirements over the
Study Period, the cash reserves for the electric utility are projected to decrease from
approximately $13.8 million at the end of 2025 to approximately $10.5 million by the end
of 2029. ERMU has a newly revised reserve policy that sets a minimum target for
reserves equal to 2 months operating expenses plus $3.5 million catastrophic reserve
plus a capital reserve equal to average annual capital expenses plus the next year’s
principal and interest expense. Based on this revised policy, the reserves decrease from
75% of reserve goal to 56% of reserve goal by the end of the Study Period.
Table 2-5
Projected Cash Reserves
Existing Rates
Year 2025 2026 2027 2028 2029
Beginning Balance $13,800,000 $11,573,843 $12,030,728 $10,722,575
Plus Change in Net Position 2,395,085 2,676,350 1,982,117 1,303,478
Plus Depreciation 3,533,136 3,801,373 3,955,671 4,107,101
Plus Interfund Borrowing 1,400,000 - (1,400,000) -
Less Capital Improvements (8,047,103) (4,628,954) (4,542,896) (4,381,166)
Less Loss of Revenue Pmts (472,275) (316,884) (198,046) (100,816)
Less Debt Principal (1,035,000) (1,075,000) (1,105,000) (1,140,000)
Ending Balance(1) $13,800,000 $11,573,843 $12,030,728 $10,722,575 $10,511,172
Reserve Goal $18,392,897 $18,432,831 $18,623,699 $18,769,766 $18,924,065
Reserves as % of Goal 75% 63% 65% 57% 56%
(1) 2025 EOY reserve balance estimated by ERMU staff based on 2025 YTD actual results
Exhibit 2-A
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
OPERATING REVENUES
Charges for services 36,573,483$ 39,473,717$ 42,355,712$ 43,986,269$ 42,557,925$ 46,622,070 47,328,340$ 48,652,347$ 48,867,438$ 49,084,240$
LFG project 1,141,482 1,019,097 935,004 - - - - - - -
Generation credit 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800
Connection maintenance 160,186 263,330 243,088 151,296 317,234 150,000 255,000 255,000 255,000 255,000
Customer penalties 42,556 - 284,452 308,374 295,143 285,000 305,000 305,000 305,000 305,000
Total Operating Revenues 37,922,507$ 40,760,944$ 43,823,056$ 44,450,739$ 43,175,102$ 47,061,870$ 47,893,140$ 49,217,147$ 49,432,238$ 49,649,040$
OPERATING EXPENSES
Purchased Power 24,240,440$ 28,169,146$ 31,544,604$ 31,232,788$ 28,590,698$ 31,019,478$ 31,596,071$ 32,060,510$ 32,532,005$ 33,017,341$
Production 963,858 1,002,631 793,299 315,057 266,783 341,000 321,993 331,653 341,602 351,850
Transmission and Distribution 1,494,841 1,583,165 2,015,665 2,224,113 2,437,569 2,742,000 2,605,000 2,683,150 2,763,645 2,846,554
Services to City 229,086 224,814 231,861 253,564 229,359 265,000 - - - -
Depreciation 2,896,839 2,957,685 3,062,751 3,177,120 3,317,829 3,339,552 3,533,136 3,801,373 3,955,671 4,107,101
Customer accounts 346,090 337,760 391,238 433,553 430,396 470,000 435,000 448,050 461,492 475,336
General and administrative 3,787,850 3,350,641 4,372,187 4,421,557 4,718,264 5,906,049 5,719,200 5,890,776 6,067,499 6,249,524
Total Operating Expenses 33,959,004$ 37,625,842$ 42,411,605$ 42,057,752$ 39,990,898$ 44,083,079$ 44,210,400$ 45,215,511$ 46,121,914$ 47,047,707$
OPERATING INCOME 3,963,503$ 3,135,102$ 1,411,451$ 2,392,987$ 3,184,204$ 2,978,791$ 3,682,739$ 4,001,636$ 3,310,324$ 2,601,333$
NON-OPERATING REVENUE (EXPENSE)
Interest income 134,468$ 52,514$ (159,502)$ 158,310$ 338,157$ 350,000$ 350,000 350,000 350,000 350,000
Miscellaneous revenue 547,009 635,764 906,323 928,553 925,800 712,500 793,000 793,000 793,000 793,000
Interest expense and other (606,313) (836,474) (851,199) (811,210) (773,748) (735,069) (699,543) (678,256) (671,606) (631,606)
Gain (Loss) on sale of capital assets 23,263 (45,214) 41,938 59,556 (16,154) 25,000 25,000 25,000 25,000 25,000
Total Non-Operating Revenues (Expenses)98,427$ (193,410)$ (62,440)$ 335,209$ 474,055$ 352,431$ 468,457$ 489,744$ 496,394$ 536,394$
Income before Contributions and Transfers 4,061,930$ 2,941,692$ 1,349,011$ 2,728,196$ 3,658,259$ 3,331,222$ 4,151,196$ 4,491,379$ 3,806,718$ 3,137,727$
Contributions from Customers 174,557$ 385,316$ 298,935$ 489,452$ 690,934$ 225,000$ 350,000$ 350,000 350,000 350,000
Transfers to Other City Funds (1,340,218) (1,407,734) (1,531,633) (1,620,378) (1,527,629) (1,908,429)$ (2,106,111)$ (2,165,029)$ (2,174,601)$ (2,184,249)$
Special Item - - - - -
CHANGE IN NET POSITION 2,896,269$ 1,919,274$ 116,313$ 1,597,270$ 2,821,564$ 1,647,793$ 2,395,085$ 2,676,350$ 1,982,117$ 1,303,478$
As Percent of Revenues 7.6%4.7%0.3%3.6%6.5%3.5%5.0%5.4%4.0%2.6%
CASH RESERVES
Beginning of Year 13,014,941$ 13,800,000$ 11,573,843$ 12,030,728$ 10,722,575$
Plus Change in Net Position 1,647,793 2,395,085 2,676,350 1,982,117 1,303,478
Plus Depreciation 3,339,552 3,533,136 3,801,373 3,955,671 4,107,101
Plus Interfund Borrowing - 1,400,000 - (1,400,000) -
Less Capital Improvements (7,455,754) (8,047,103) (4,628,954) (4,542,896) (4,381,166)
Less Loss of Revenue Payments (935,000) (472,275) (316,884) (198,046) (100,816)
Less Debt Principal (990,000) (1,035,000) (1,075,000) (1,105,000) (1,140,000)
End of Year(1)13,014,941$ 13,800,000$ 11,573,843$ 12,030,728$ 10,722,575$ 10,511,172$
Existing Reserve goal 18,392,897$ 18,432,831$ 18,623,699$ 18,769,766$ 18,924,065$
Percent of goal 75%63%65%57%56%
(1) 2025 EOY reserve balance estimated by ERMU staff based on 2025 YTD actual results.
Projected
Elk River Municipal Utilities
Electric Operating Results at Existing Rates
Historical
page 1 of 1
Section 3
Cost-of-Service
A cost-of-service analysis was performed to determine the allocated cost to serve
each of ERMU’s customer groups within the electric utility. Customer classes
exist, in part, because the cost to serve various kinds of customers varies. The
cost-of-service analysis has been performed on a 2024 ‘Test Year’ based on actual
2024 financials, operations and sales. The results of the cost-of-service study give
an indication of the degree of revenue recovery warranted for each class of
customers. A comparison of the allocated cost to serve a group of customers and
the actual revenues received from those customers is taken into consideration
during rate design.
Functionalization of Costs
ERMU’s Test Year electric revenue requirements have been divided into four
functional categories. These categories are described below.
Power Supply – the power supply function is related to the cost of ERMU
purchases of wholesale power through MMPA and costs related to local generating
units.
Distribution – the distribution expenses are related to the ERMU system for
delivering power and energy to ERMU customers. They include substation and
distribution system costs. It also includes the fixed costs associated with the
service facilities utilized to deliver electric power and energy directly to customers.
Customer – these include items such as meter reading, billing, collections and
dealing with customers by customer service representatives.
Revenue – revenue related costs include certain non-operating revenues and
utility margin.
Cost-of-Service
- 9 -
Table 3-1 below summarizes the functional electric costs for the 2024 Test Year.
The detailed cost functions are shown in Exhibit 3-A.
Table 3-1
Functional Electric Costs
2024 Test Year
Component
Revenue
Requirement
Power Supply $29,098,388
Distribution 8,879,618
Customer 1,720,514
Revenue 2,449,632
Total $42,148,152
Classification of Costs
Within each function, the revenue requirements have been divided into distinct cost
classifications. These cost classifications are described below.
Demand Related – demand related costs are fixed costs that do not vary with
hourly consumption. Demand related costs are required to meet the overall
demand of the system as expressed in kW.
Energy Related – energy related costs vary based on hourly consumption in kWh.
Customer Related – costs related to serving, metering and billing of individual
customers.
Revenue Related – revenue related costs vary by the amount of revenue received
by the utility.
Exhibits 3-B through 3-D show the detailed classification of revenue requirements
within the power supply, distribution and customer functions.
Section 3
- 10 -
Allocation of Costs
Based on an analysis of customer class service characteristics, the classified costs
summarized above were allocated to the major ERMU customer classes.
Allocation of costs was performed on a fully-distributed, embedded cost allocation
basis. Specific allocation factors were utilized in each of the cost classification
categories as described below. Exhibit 3-E contains a summary of the
development of the various allocation factors.
Demand Allocations
Customer class demands on a system can be reflected in various ways. Two
primary demand allocation types were utilized in this analysis. Coincident peaks
(‘CP’) represent a class’ share of the overall system peak. A 12 CP method,
reflecting each class’ estimated contribution to each month’s system peak, was
employed for allocating the power supply demand portion of the wholesale
purchased power and production expenses. Non-coincident peaks reflect a class
maximum demand regardless of when it occurs. The non-coincident peak is an
indication of the amount of fixed local system required to serve individual groups
of customers. A 1 NCP method, an estimate of each class’ maximum annual
demand on the system, was utilized for allocating local system demand related
costs.
Energy Allocations
Each class’ share of energy requirements was used to allocate energy related
costs. The predominant energy related costs are the energy portions of the
purchased power and local generation expenses.
Cost-of-Service
- 11 -
Customer Allocations
Two separate customer allocators were utilized. The customer facilities allocator
was used to allocate costs associated with the physical facilities required to serve
individual customers such as service transformers, service drops and meters. The
customer service allocator is for allocation of costs associated with customer
service – meter reading, billing, collections and customer inquiries. For both the
customer facilities and customer service allocators, a weighted customer allocation
factor is developed. Weighting factors are developed to represent the difference
in service configurations between customer classifications. For instance, a larger
customer facility is required for a single large power customer than for a single
residential customer, or a single large power customer requires more customer
service than a single residential customer.
Revenue Allocations
Revenue related costs were allocated based on each class’ share of total demand,
energy, customer facility, customer service and direct costs.
Cost of Service Results
Based on the classifications and allocations described above, the estimated cost
to serve each major class of customers for the 2024 Test Year was determined.
Exhibit 3-F presents this analysis in detail. Table 3-2 below summarizes the total
allocated electric costs for each class compared to the total electric revenues
received from the class during 2024.
Section 3
- 12 -
Table 3-2
Electric Cost of Service Results
Comparison of Cost and Revenues
2024 Test Year
Customer
Classification
Allocated
Cost to Serve Revenues
Residential $16,283,647 $16,583,227
Commercial Non-demand 4,166,924 4,401,535
Demand 14,258,918 13,875,362
Industrial 7,438,663 7,288,029
Total $42,148,152 $42,148,152
The revenue requirements and revenues as allocated to each class and
summarized above are shown on a total dollars basis. Table 3-3 below makes the
comparison based on percentages of total cost to serve and total revenues. The
charts following Table 3-3 show a graphical comparison between allocated cost to
serve and revenues as a percentage of the totals. The percentage
increase/(decrease) in each class’ revenue shown in Table 3-3 is the adjustment
necessary to produce revenues from each class in accordance with the allocated
cost to serve. The percentage adjustments do not represent the recommended
change in each class’ rates. The cost-of-service results are one item for
consideration in rate design. It is important to note also that the adjustments shown
in the table below would not change the total revenue received by the utility and
are not indicative of overall revenue needs of the utility going forward.
Recommendations regarding rate design are included in Section 4 of this report.
Cost-of-Service
- 13 -
Table 3-3
Electric Cost of Service Results
Comparison of % Cost and Revenues
2024 Test Year
Customer
Classification
Allocated
Cost to Serve Revenues Increase/
(Decrease)
Residential 38.6% 39.3% -1.8%
Commercial Non-demand 9.9% 10.4% -5.3%
Demand 33.8% 32.9% 2.8%
Industrial 17.6% 17.3% 2.1%
Total 100.0% 100.0% 0.0%
Section 3
- 14 -
As indicated above, ERMU’s existing class revenues do not exactly match the
allocated cost to serve each class. Cost based rates are one of several goals in
establishing rates. The relationship between allocated costs and revenues for
each class should be considered, in addition to other rate related goals, in
developing recommended rates.
Exhibit 3-A
2024 Power
REVENUE REQUIREMENT Test Year Supply Distribution Customer Revenue Classification Basis
OPERATING EXPENSES
Purchased Power 28,590,698$ 28,590,698$ -$ -$ -$ 100% power supply
Production
OPERATING SUPERVISION 137,835 137,835 - - - 100% power supply
DIESEL OIL FUEL 159 159 - - - 100% power supply
NATURAL GAS 21,926 21,926 - - - 100% power supply
ELECTRIC & WATER CONSUMPTION 58,033 58,033 - - - 100% power supply
OTHER EXP/PLANT SUPPLIES-ETC 9,756 9,756 - - - 100% power supply
MISC OTHER PWR GENERATION EXP 640 640 - - - 100% power supply
MAINTENANCE OF STRUCTURE/PLANT 13,914 13,914 - - - 100% power supply
MTCE OF ENGINES/GENERATORS-PL 4,177 4,177 - - - 100% power supply
MTCE OF PLANT/LAND IMPROVEMENT 20,339 20,339 - - - 100% power supply
Total Production 266,779$ 266,779$ -$ -$ -$
Transmission 48,622$ 48,622$ -$ -$ -$ 100% power supply
Distribution
REMOVE EXISTING SERV & METERS 352 - 352 - - 100% distribution
SCADA EXPENSES 51,049 - 51,049 - - 100% distribution
TRANSFORMER EX/OVERHD & UNDERG 17,031 - 17,031 - - 100% distribution
MTCE OF SIGNAL SYSTEMS 2,223 - 2,223 - - 100% distribution
METER EXP - REMOVE & RESET 466 - 466 - - 100% distribution
TEMP SERVICE-INSTALL & REMOVE 650 - 650 - - 100% distribution
MISC DISTRIBUTION EXPENSE 353,049 - 353,049 - - 100% distribution
INTERCONNECTION CARRYING CHARGE 2,416 - 2,416 - - 100% distribution
MTCE OF STRUCTURES 90,596 - 90,596 - - 100% distribution
MTCE OF SUBSTATIONS 26,504 - 26,504 - - 100% distribution
MTCE OF SUBSTATION EQUIPMENT 88,541 - 88,541 - - 100% distribution
MTCE OF OVERHD LINES/TREE TRIM 245,908 - 245,908 - - 100% distribution
MTCE OF OVERHD LINES/STANDBY 43,616 - 43,616 - - 100% distribution
MTCE OF OVERHEAD 174,965 - 174,965 - - 100% distribution
MTCE OF UNDERGROUND/DISTRIB 284,922 - 284,922 - - 100% distribution
LOCATE ELECTRIC LINES 100,233 - 100,233 - - 100% distribution
LOCATE FIBER LINES 3,182 - 3,182 - - 100% distribution
MTCE OF LINE TRANSFORMERS 65,534 - 65,534 - - 100% distribution
MTCE OF STREET LIGHTING 83,909 - 83,909 - - 100% distribution
MTCE OF SECURITY LIGHTING 24,067 - 24,067 - - 100% distribution
MTCE OF METERS 57,807 - 57,807 - - 100% distribution
VOLTAGE COMPLAINTS 6,937 - 6,937 - - 100% distribution
SALARIES/TRANS & DISTRIBUTION 31,044 - 31,044 - - 100% distribution
ELECTRIC MAPPING 134,998 - 134,998 - - 100% distribution
MTCE OF OVERHEAD SERVICE/2NDRY 21,933 - 21,933 - - 100% distribution
MTCE OF UNDERGROUND ELEC SERV 58,324 - 58,324 - - 100% distribution
LOCATE UNDERGROUND SECONDARY - - - - - 100% distribution
TRANSPORTATION EXPENSE 303,891 - 303,891 - - 100% distribution
Total Distribution 2,274,147$ -$ 2,274,147$ -$ -$
Utilities & Labor Donated
UTILITIES & LABOR DONATED TO CITY 229,359 - - - 229,359 100% revenue
Total Utilities & Labor Donated 229,359 - - - 229,359
Depreciation & Amortization
DEPRECIATION 2,649,693 1,385 2,648,308 - - plant in service
AMORTIZATION 668,135 349 667,786 - - plant in service
Total Depreciation & Amortization 3,317,828$ 1,734$ 3,316,094$ -$ -$
Other Operating Expenses
EV CHARGING EXPENSE 2,661 - - 2,661 - 100% customer
LOSS ON DISPOSITION OF PROPERTY - - - - - NA
OTHER DONATIONS - - - - - NA
MUTUAL AID 54,540 - 54,540 - - 100% distribution
INTEREST PD ON METER DEPOSIT 57,582 - - 57,582 - 100% customer
RENTAL PROPERTY EXPENSE - - - - - NA
PENSION EXPENSE (196,662) - (196,662) - - 100% distribution
Total Other Operating Expenses (81,879)$ -$ (142,122)$ 60,243$ -$
Customer Accounts
METER READING EXPENSE 47,697 - - 47,697 - 100% customer
COLLECTING EXP DISC/RECONNECT 11,844 - - 11,844 - 100% customer
MISC CUSTOMER ACCTS EXP-COMP 355,651 - - 355,651 - 100% customer
Elk River Municipal Utilities
Functionalization of 2024 Test Year Revenue Requirements
Page 1 of 2
Exhibit 3-A
2024 Power
REVENUE REQUIREMENT Test Year Supply Distribution Customer Revenue Classification Basis
Elk River Municipal Utilities
Functionalization of 2024 Test Year Revenue Requirements
CUST BLGS NOT PD/SENT FOR COLL 15,202 - - 15,202 - 100% customer
Total Customer Accounts 430,394$ -$ -$ 430,394$ -$
General & Administrative
SALARIES/OFFICE & COMMISSION 885,000 39,753 682,932 133,564 28,751 non PP operating expenses
TEMPORARY STAFFING - - - - - NA
OFFICE SUPPLIES & EXPENSE 95,725 4,300 73,869 14,447 3,110 non PP operating expenses
LT & WATER CONSUMPTION/OFFICE 24,245 1,089 18,709 3,659 788 non PP operating expenses
BANK CHARGES 2,845 128 2,195 429 92 non PP operating expenses
LEGAL FEES 35,361 1,588 27,287 5,337 1,149 non PP operating expenses
AUDITING FEES 18,880 848 14,569 2,849 613 non PP operating expenses
INSURANCE 183,582 8,246 141,665 27,706 5,964 non PP operating expenses
UTILITY SHARE DEF COMP 111,229 4,996 85,833 16,787 3,613 non PP operating expenses
UTIL SH OF MEDICAL/DENTAL 829,167 37,245 639,847 125,138 26,937 non PP operating expenses
UTILITY SHARE OF PERA 308,017 13,836 237,689 46,486 10,006 non PP operating expenses
UTILITY SHARE OF FICA 300,170 13,483 231,633 45,302 9,751 non PP operating expenses
EMPLOYEES SICK PAY 496,745 22,313 383,325 74,969 16,138 non PP operating expenses
EMP HOLIDAY PAY 179,076 8,044 138,188 27,026 5,818 non PP operating expenses
EMPLOYEE VACATION & PTO 331,860 14,907 256,088 50,084 10,781 non PP operating expenses
UPMIC DISTRIBUTION 112,540 5,055 86,844 16,985 3,656 non PP operating expenses
LONGEVITY PAY 6,963 313 5,373 1,051 226 non PP operating expenses
CONSULTING FEES 40,307 1,811 31,104 6,083 1,309 non PP operating expenses
TELEPHONE 30,987 1,392 23,912 4,677 1,007 non PP operating expenses
ADVERTISING 14,071 632 10,858 2,124 457 non PP operating expenses
DUES & SUBSCRIPTIONS - FEES 123,647 5,554 95,415 18,661 4,017 non PP operating expenses
TRAVEL EXPENSE - - - - - NA
SCHOOLS & MEETINGS 199,541 8,963 153,981 30,115 6,482 non PP operating expenses
MTCE OF GENERAL PLANT & OFFICE 10,072 452 7,772 1,520 327 non PP operating expenses
Total General & Administrative 4,340,030$ 194,950$ 3,349,089$ 654,998$ 140,992$
General Expense
CIP REBATES - RESIDENTIAL 92,938 - - 92,938 - 100% customer
CIP REBATES - COMMERCIAL 111,001 - - 111,001 - 100% customer
CIP - ADMINISTRATION 180,070 - - 180,070 - 100% customer
CIP - MARKETING 44,739 - - 44,739 - 100% customer
CIP - LABOR 98,214 - - 98,214 - 100% customer
CIP REBATES - LOW INCOME 3,762 - - 3,762 - 100% customer
CIP - LOW INCOME LABOR 9,264 - - 9,264 - 100% customer
ENVIRONMENTAL COMPLIANCE 31,460 - - 31,460 - 100% customer
MISC GENERAL EXPENSE 3,431 - - 3,431 - 100% customer
Total General Expense 574,879$ -$ -$ 574,879$ -$
TOTAL OPERATING EXPENSES 39,990,857$ 29,102,783$ 8,797,208$ 1,720,514$ 370,351$
OTHER OPERATING REVENUES
LFG PROJECT - - - - - NA
DISPERSED GENERATION CREDIT 4,800 4,800 - - - 100% power supply
CONNECTION MAINTENANCE 317,234 - - - 317,234 100% revenue
CUSTOMER PENALTIES 295,143 - - - 295,143 100% revenue
SECURITY LIGHTS 260,837 - - - 260,837 100% revenue
CONTRIBUTIONS FROM CUSTOMERS 690,934 - 690,934 - - 100% distribution
TOTAL OTHER OPERATING REVENUES 1,568,948$ 4,800$ 690,934$ -$ 873,214$
NON-OPERATING INCOME (EXPENSES)
Interest income 338,157 - - - 338,157 100% revenue
Miscellaneous revenue 925,800 - - - 925,800 100% revenue
Interest expense and other (773,748) (404) (773,344) - - plant in service
Gain (Loss) on sale of capital assets (16,154) - - - (16,154) 100% revenue
TOTAL NON-OPERATING INCOME (EXPENSES)474,055$ (404)$ (773,344)$ -$ 1,247,803$
TRANSFER TO CITY 1,527,629$ -$ -$ -$ 1,527,629$ 100% revenue
MARGIN 2,672,669$ -$ -$ -$ 2,672,669$ 100% revenue
TOTAL REVENUE REQUIREMENT 42,148,152$ 29,098,388$ 8,879,618$ 1,720,514$ 2,449,632$
100%69%21%4%6%
Page 2 of 2
Exhibit 3-B
2024
REVENUE REQUIREMENT Test Year Demand Energy Classification Basis
OPERATING EXPENSES
Purchased Power 28,590,698$ 7,343,889$ 21,246,809$ per power supply
Production
OPERATING SUPERVISION 137,835 137,835 - 100% demand
DIESEL OIL FUEL 159 - 159 100% energy
NATURAL GAS 21,926 - 21,926 100% energy
ELECTRIC & WATER CONSUMPTION 58,033 - 58,033 100% energy
OTHER EXP/PLANT SUPPLIES-ETC 9,756 9,756 - 100% demand
MISC OTHER PWR GENERATION EXP 640 640 - 100% demand
MAINTENANCE OF STRUCTURE/PLANT 13,914 13,914 - 100% demand
MTCE OF ENGINES/GENERATORS-PL 4,177 4,177 - 100% demand
MTCE OF PLANT/LAND IMPROVEMENT 20,339 20,339 - 100% demand
Total Production 266,779$ 186,661$ 80,118$
Transmission 48,622$ 48,622$ -$ 100% demand
Distribution
REMOVE EXISTING SERV & METERS - - - NA
SCADA EXPENSES - - - NA
TRANSFORMER EX/OVERHD & UNDERG - - - NA
MTCE OF SIGNAL SYSTEMS - - - NA
METER EXP - REMOVE & RESET - - - NA
TEMP SERVICE-INSTALL & REMOVE - - - NA
MISC DISTRIBUTION EXPENSE - - - NA
INTERCONNECTION CARRYING CHARGE - - - NA
MTCE OF STRUCTURES - - - NA
MTCE OF SUBSTATIONS - - - NA
MTCE OF SUBSTATION EQUIPMENT - - - NA
MTCE OF OVERHD LINES/TREE TRIM - - - NA
MTCE OF OVERHD LINES/STANDBY - - - NA
MTCE OF OVERHEAD - - - NA
MTCE OF UNDERGROUND/DISTRIB - - - NA
LOCATE ELECTRIC LINES - - - NA
LOCATE FIBER LINES - - - NA
MTCE OF LINE TRANSFORMERS - - - NA
MTCE OF STREET LIGHTING - - - NA
MTCE OF SECURITY LIGHTING - - - NA
MTCE OF METERS - - - NA
VOLTAGE COMPLAINTS - - - NA
SALARIES/TRANS & DISTRIBUTION - - - NA
ELECTRIC MAPPING - - - NA
MTCE OF OVERHEAD SERVICE/2NDRY - - - NA
MTCE OF UNDERGROUND ELEC SERV - - - NA
LOCATE UNDERGROUND SECONDARY - - - NA
TRANSPORTATION EXPENSE - - - NA
Total Distribution -$ -$ -$
Utilities & Labor Donated
UTILITIES & LABOR DONATED TO CITY - - - NA
Total Utilities & Labor Donated - - -
Depreciation & Amortization
DEPRECIATION 1,385 1,385 - 100% demand
AMORTIZATION 349 349 - 100% demand
Total Depreciation & Amortization 1,734$ 1,734$ -$
Other Operating Expenses
EV CHARGING EXPENSE - - - NA
LOSS ON DISPOSITION OF PROPERTY - - - NA
OTHER DONATIONS - - - NA
MUTUAL AID - - - NA
INTEREST PD ON METER DEPOSIT - - - NA
RENTAL PROPERTY EXPENSE - - - NA
PENSION EXPENSE - - - NA
Total Other Operating Expenses -$ -$ -$
Customer Accounts
METER READING EXPENSE - - - NA
Elk River Municipal Utilities
2024 Test Year Power Supply Classification
page 1 of 2
Exhibit 3-B
2024
REVENUE REQUIREMENT Test Year Demand Energy Classification Basis
Elk River Municipal Utilities
2024 Test Year Power Supply Classification
COLLECTING EXP DISC/RECONNECT - - - NA
MISC CUSTOMER ACCTS EXP-COMP - - - NA
CUST BLGS NOT PD/SENT FOR COLL - - - NA
Total Customer Accounts -$ -$ -$
General & Administrative
SALARIES/OFFICE & COMMISSION 39,753 10,420 29,333 total revenue requirement
TEMPORARY STAFFING - - - NA
OFFICE SUPPLIES & EXPENSE 4,300 1,127 3,173 total revenue requirement
LT & WATER CONSUMPTION/OFFICE 1,089 285 804 total revenue requirement
BANK CHARGES 128 33 94 total revenue requirement
LEGAL FEES 1,588 416 1,172 total revenue requirement
AUDITING FEES 848 222 626 total revenue requirement
INSURANCE 8,246 2,162 6,085 total revenue requirement
UTILITY SHARE DEF COMP 4,996 1,310 3,687 total revenue requirement
UTIL SH OF MEDICAL/DENTAL 37,245 9,763 27,483 total revenue requirement
UTILITY SHARE OF PERA 13,836 3,627 10,209 total revenue requirement
UTILITY SHARE OF FICA 13,483 3,534 9,949 total revenue requirement
EMPLOYEES SICK PAY 22,313 5,849 16,465 total revenue requirement
EMP HOLIDAY PAY 8,044 2,108 5,935 total revenue requirement
EMPLOYEE VACATION & PTO 14,907 3,907 10,999 total revenue requirement
UPMIC DISTRIBUTION 5,055 1,325 3,730 total revenue requirement
LONGEVITY PAY 313 82 231 total revenue requirement
CONSULTING FEES 1,811 475 1,336 total revenue requirement
TELEPHONE 1,392 365 1,027 total revenue requirement
ADVERTISING 632 166 466 total revenue requirement
DUES & SUBSCRIPTIONS - FEES 5,554 1,456 4,098 total revenue requirement
TRAVEL EXPENSE - - - NA
SCHOOLS & MEETINGS 8,963 2,349 6,614 total revenue requirement
MTCE OF GENERAL PLANT & OFFICE 452 119 334 total revenue requirement
Total General & Administrative 194,950$ 51,101$ 143,850$
General Expense
CIP REBATES - RESIDENTIAL - - - NA
CIP REBATES - COMMERCIAL - - - NA
CIP - ADMINISTRATION - - - NA
CIP - MARKETING - - - NA
CIP - LABOR - - - NA
CIP REBATES - LOW INCOME - - - NA
CIP - LOW INCOME LABOR - - - NA
ENVIRONMENTAL COMPLIANCE - - - NA
MISC GENERAL EXPENSE - - - NA
Total General Expense -$ -$ -$
TOTAL OPERATING EXPENSES 29,102,783$ 7,632,007$ 21,470,777$
OTHER OPERATING REVENUES
LFG PROJECT - - - NA
DISPERSED GENERATION CREDIT 4,800 4,800 - 100% demand
CONNECTION MAINTENANCE - - - NA
CUSTOMER PENALTIES - - - NA
SECURITY LIGHTS - - - NA
CONTRIBUTIONS FROM CUSTOMERS - - - NA
TOTAL OTHER OPERATING REVENUES 4,800$ 4,800$ -$
NON-OPERATING INCOME (EXPENSES)
Interest income - - - NA
Miscellaneous revenue - - - NA
Interest expense and other (404) (106) (298) total revenue requirement
Gain (Loss) on sale of capital assets - - - NA
TOTAL NON-OPERATING INCOME (EXPENSES)(404)$ (106)$ (298)$
TRANSFER TO CITY -$ -$ -$ NA
MARGIN -$ -$ -$ NA
TOTAL REVENUE REQUIREMENT 29,098,388$ 7,627,313$ 21,471,075$
page 2 of 2
Exhibit 3-C
2024 Customer
REVENUE REQUIREMENT Test Year Demand Facilities Classification Basis
OPERATING EXPENSES
Purchased Power -$ -$ -$ NA
Production
OPERATING SUPERVISION - - - NA
DIESEL OIL FUEL - - - NA
NATURAL GAS - - - NA
ELECTRIC & WATER CONSUMPTION - - - NA
OTHER EXP/PLANT SUPPLIES-ETC - - - NA
MISC OTHER PWR GENERATION EXP - - - NA
MAINTENANCE OF STRUCTURE/PLANT - - - NA
MTCE OF ENGINES/GENERATORS-PL - - - NA
MTCE OF PLANT/LAND IMPROVEMENT - - - NA
Total Production -$ -$ -$
Transmission -$ -$ -$ NA
Distribution
REMOVE EXISTING SERV & METERS 352 - 352 100% Cust facilities
SCADA EXPENSES 51,049 36,784 14,265 Dist/Cust split
TRANSFORMER EX/OVERHD & UNDERG 17,031 - 17,031 100% Cust facilities
MTCE OF SIGNAL SYSTEMS 2,223 - 2,223 100% Cust facilities
METER EXP - REMOVE & RESET 466 - 466 100% Cust facilities
TEMP SERVICE-INSTALL & REMOVE 650 - 650 100% Cust facilities
MISC DISTRIBUTION EXPENSE 353,049 254,392 98,657 Dist/Cust split
INTERCONNECTION CARRYING CHARGE 2,416 2,416 - 100% Dist demand
MTCE OF STRUCTURES 90,596 90,596 - 100% Dist demand
MTCE OF SUBSTATIONS 26,504 26,504 - 100% Dist demand
MTCE OF SUBSTATION EQUIPMENT 88,541 88,541 - 100% Dist demand
MTCE OF OVERHD LINES/TREE TRIM 245,908 177,191 68,717 Dist/Cust split
MTCE OF OVERHD LINES/STANDBY 43,616 31,428 12,188 Dist/Cust split
MTCE OF OVERHEAD 174,965 126,072 48,893 Dist/Cust split
MTCE OF UNDERGROUND/DISTRIB 284,922 205,303 79,619 Dist/Cust split
LOCATE ELECTRIC LINES 100,233 - 100,233 100% Cust facilities
LOCATE FIBER LINES 3,182 - 3,182 100% Cust facilities
MTCE OF LINE TRANSFORMERS 65,534 - 65,534 100% Cust facilities
MTCE OF STREET LIGHTING 83,909 - 83,909 100% Cust facilities
MTCE OF SECURITY LIGHTING 24,067 - 24,067 100% Cust facilities
MTCE OF METERS 57,807 - 57,807 100% Cust facilities
VOLTAGE COMPLAINTS 6,937 - 6,937 100% Cust facilities
SALARIES/TRANS & DISTRIBUTION 31,044 22,369 8,675 Dist/Cust split
ELECTRIC MAPPING 134,998 97,274 37,724 Dist/Cust split
MTCE OF OVERHEAD SERVICE/2NDRY 21,933 - 21,933 100% Cust facilities
MTCE OF UNDERGROUND ELEC SERV 58,324 - 58,324 100% Cust facilities
LOCATE UNDERGROUND SECONDARY - - - NA
TRANSPORTATION EXPENSE 303,891 303,891 - 100% Dist demand
Total Distribution 2,274,147$ 1,462,761$ 811,386$
Utilities & Labor Donated
UTILITIES & LABOR DONATED TO CITY - - - NA
Total Utilities & Labor Donated - - -
Depreciation & Amortization
DEPRECIATION 2,648,308 1,908,259 740,049 Dist/Cust split
AMORTIZATION 667,786 481,178 186,607 Dist/Cust split
Total Depreciation & Amortization 3,316,094$ 2,389,438$ 926,656$
Other Operating Expenses
EV CHARGING EXPENSE - - - NA
LOSS ON DISPOSITION OF PROPERTY - - - NA
OTHER DONATIONS - - - NA
MUTUAL AID 54,540 54,540 - 100% Dist demand
INTEREST PD ON METER DEPOSIT - - - NA
RENTAL PROPERTY EXPENSE - - - NA
PENSION EXPENSE (196,662) (141,706) (54,956) Dist/Cust split
Total Other Operating Expenses (142,122)$ (87,166)$ (54,956)$
Customer Accounts
Elk River Municipal Utilities
2024 Test Year Distribution Classification
page 1 of 2
Exhibit 3-C
2024 Customer
REVENUE REQUIREMENT Test Year Demand Facilities Classification Basis
Elk River Municipal Utilities
2024 Test Year Distribution Classification
METER READING EXPENSE - - - NA
COLLECTING EXP DISC/RECONNECT - - - NA
MISC CUSTOMER ACCTS EXP-COMP - - - NA
CUST BLGS NOT PD/SENT FOR COLL - - - NA
Total Customer Accounts -$ -$ -$
General & Administrative
SALARIES/OFFICE & COMMISSION 682,932 448,412 234,520 total revenue requirement
TEMPORARY STAFFING - - - NA
OFFICE SUPPLIES & EXPENSE 73,869 48,502 25,367 total revenue requirement
LT & WATER CONSUMPTION/OFFICE 18,709 12,284 6,425 total revenue requirement
BANK CHARGES 2,195 1,442 754 total revenue requirement
LEGAL FEES 27,287 17,917 9,370 total revenue requirement
AUDITING FEES 14,569 9,566 5,003 total revenue requirement
INSURANCE 141,665 93,017 48,648 total revenue requirement
UTILITY SHARE DEF COMP 85,833 56,358 29,475 total revenue requirement
UTIL SH OF MEDICAL/DENTAL 639,847 420,122 219,724 total revenue requirement
UTILITY SHARE OF PERA 237,689 156,066 81,623 total revenue requirement
UTILITY SHARE OF FICA 231,633 152,090 79,543 total revenue requirement
EMPLOYEES SICK PAY 383,325 251,691 131,634 total revenue requirement
EMP HOLIDAY PAY 138,188 90,734 47,454 total revenue requirement
EMPLOYEE VACATION & PTO 256,088 168,147 87,941 total revenue requirement
UPMIC DISTRIBUTION 86,844 57,022 29,822 total revenue requirement
LONGEVITY PAY 5,373 3,528 1,845 total revenue requirement
CONSULTING FEES 31,104 20,423 10,681 total revenue requirement
TELEPHONE 23,912 15,700 8,211 total revenue requirement
ADVERTISING 10,858 7,129 3,729 total revenue requirement
DUES & SUBSCRIPTIONS - FEES 95,415 62,649 32,766 total revenue requirement
TRAVEL EXPENSE - - - NA
SCHOOLS & MEETINGS 153,981 101,103 52,877 total revenue requirement
MTCE OF GENERAL PLANT & OFFICE 7,772 5,103 2,669 total revenue requirement
Total General & Administrative 3,349,089$ 2,199,007$ 1,150,082$
General Expense
CIP REBATES - RESIDENTIAL - - - NA
CIP REBATES - COMMERCIAL - - - NA
CIP - ADMINISTRATION - - - NA
CIP - MARKETING - - - NA
CIP - LABOR - - - NA
CIP REBATES - LOW INCOME - - - NA
CIP - LOW INCOME LABOR - - - NA
ENVIRONMENTAL COMPLIANCE - - - NA
MISC GENERAL EXPENSE - - - NA
Total General Expense -$ -$ -$
TOTAL OPERATING EXPENSES 8,797,208$ 5,964,039$ 2,833,169$
OTHER OPERATING REVENUES
LFG PROJECT - - - NA
DISPERSED GENERATION CREDIT - - - NA
CONNECTION MAINTENANCE - - - NA
CUSTOMER PENALTIES - - - NA
SECURITY LIGHTS - - - NA
CONTRIBUTIONS FROM CUSTOMERS 690,934 690,934 - 100% Dist demand
TOTAL OTHER OPERATING REVENUES 690,934$ 690,934$ -$
NON-OPERATING INCOME (EXPENSES)
Interest income - - - NA
Miscellaneous revenue - - - NA
Interest expense and other (773,344) (557,239) (216,105) Dist/Cust split
Gain (Loss) on sale of capital assets - - - NA
TOTAL NON-OPERATING INCOME (EXPENSES)(773,344)$ (557,239)$ (216,105)$
TRANSFER TO CITY -$ -$ -$ NA
MARGIN -$ -$ -$ NA
TOTAL REVENUE REQUIREMENT 8,879,618$ 5,830,344$ 3,049,274$
page 2 of 2
Exhibit 3-D
2024
REVENUE REQUIREMENT Test Year Customer Classification Basis
OPERATING EXPENSES
Purchased Power -$ -$ NA
Production
OPERATING SUPERVISION - - NA
DIESEL OIL FUEL - - NA
NATURAL GAS - - NA
ELECTRIC & WATER CONSUMPTION - - NA
OTHER EXP/PLANT SUPPLIES-ETC - - NA
MISC OTHER PWR GENERATION EXP - - NA
MAINTENANCE OF STRUCTURE/PLANT - - NA
MTCE OF ENGINES/GENERATORS-PL - - NA
MTCE OF PLANT/LAND IMPROVEMENT - - NA
Total Production -$ -$
Transmission -$ -$ NA
Distribution
REMOVE EXISTING SERV & METERS - - NA
SCADA EXPENSES - - NA
TRANSFORMER EX/OVERHD & UNDERG - - NA
MTCE OF SIGNAL SYSTEMS - - NA
METER EXP - REMOVE & RESET - - NA
TEMP SERVICE-INSTALL & REMOVE - - NA
MISC DISTRIBUTION EXPENSE - - NA
INTERCONNECTION CARRYING CHARGE - - NA
MTCE OF STRUCTURES - - NA
MTCE OF SUBSTATIONS - - NA
MTCE OF SUBSTATION EQUIPMENT - - NA
MTCE OF OVERHD LINES/TREE TRIM - - NA
MTCE OF OVERHD LINES/STANDBY - - NA
MTCE OF OVERHEAD - - NA
MTCE OF UNDERGROUND/DISTRIB - - NA
LOCATE ELECTRIC LINES - - NA
LOCATE FIBER LINES - - NA
MTCE OF LINE TRANSFORMERS - - NA
MTCE OF STREET LIGHTING - - NA
MTCE OF SECURITY LIGHTING - - NA
MTCE OF METERS - - NA
VOLTAGE COMPLAINTS - - NA
SALARIES/TRANS & DISTRIBUTION - - NA
ELECTRIC MAPPING - - NA
MTCE OF OVERHEAD SERVICE/2NDRY - - NA
MTCE OF UNDERGROUND ELEC SERV - - NA
LOCATE UNDERGROUND SECONDARY - - NA
TRANSPORTATION EXPENSE - - NA
Total Distribution -$ -$
Utilities & Labor Donated
UTILITIES & LABOR DONATED TO CITY - - NA
Total Utilities & Labor Donated - -
Depreciation & Amortization
DEPRECIATION - - NA
AMORTIZATION - - NA
Total Depreciation & Amortization -$ -$
Other Operating Expenses
EV CHARGING EXPENSE 2,661 2,661 100% Customer
LOSS ON DISPOSITION OF PROPERTY - - NA
OTHER DONATIONS - - NA
MUTUAL AID - - NA
INTEREST PD ON METER DEPOSIT 57,582 57,582 100% Customer
RENTAL PROPERTY EXPENSE - - NA
PENSION EXPENSE - - NA
Total Other Operating Expenses 60,243$ 60,243$
Customer Accounts -
Elk River Municipal Utilities
2024 Test Year Customer Classification
page 1 of 2
Exhibit 3-D
2024
REVENUE REQUIREMENT Test Year Customer Classification Basis
Elk River Municipal Utilities
2024 Test Year Customer Classification
METER READING EXPENSE 47,697 47,697 100% Customer
COLLECTING EXP DISC/RECONNECT 11,844 11,844 100% Customer
MISC CUSTOMER ACCTS EXP-COMP 355,651 355,651 100% Customer
CUST BLGS NOT PD/SENT FOR COLL 15,202 15,202 100% Customer
Total Customer Accounts 430,394$ 430,394$
General & Administrative
SALARIES/OFFICE & COMMISSION 133,564 133,564 100% Customer
TEMPORARY STAFFING - - NA
OFFICE SUPPLIES & EXPENSE 14,447 14,447 100% Customer
LT & WATER CONSUMPTION/OFFICE 3,659 3,659 100% Customer
BANK CHARGES 429 429 100% Customer
LEGAL FEES 5,337 5,337 100% Customer
AUDITING FEES 2,849 2,849 100% Customer
INSURANCE 27,706 27,706 100% Customer
UTILITY SHARE DEF COMP 16,787 16,787 100% Customer
UTIL SH OF MEDICAL/DENTAL 125,138 125,138 100% Customer
UTILITY SHARE OF PERA 46,486 46,486 100% Customer
UTILITY SHARE OF FICA 45,302 45,302 100% Customer
EMPLOYEES SICK PAY 74,969 74,969 100% Customer
EMP HOLIDAY PAY 27,026 27,026 100% Customer
EMPLOYEE VACATION & PTO 50,084 50,084 100% Customer
UPMIC DISTRIBUTION 16,985 16,985 100% Customer
LONGEVITY PAY 1,051 1,051 100% Customer
CONSULTING FEES 6,083 6,083 100% Customer
TELEPHONE 4,677 4,677 100% Customer
ADVERTISING 2,124 2,124 100% Customer
DUES & SUBSCRIPTIONS - FEES 18,661 18,661 100% Customer
TRAVEL EXPENSE - - NA
SCHOOLS & MEETINGS 30,115 30,115 100% Customer
MTCE OF GENERAL PLANT & OFFICE 1,520 1,520 100% Customer
Total General & Administrative 654,998$ 654,998$
General Expense
CIP REBATES - RESIDENTIAL 92,938 92,938 100% Customer
CIP REBATES - COMMERCIAL 111,001 111,001 100% Customer
CIP - ADMINISTRATION 180,070 180,070 100% Customer
CIP - MARKETING 44,739 44,739 100% Customer
CIP - LABOR 98,214 98,214 100% Customer
CIP REBATES - LOW INCOME 3,762 3,762 100% Customer
CIP - LOW INCOME LABOR 9,264 9,264 100% Customer
ENVIRONMENTAL COMPLIANCE 31,460 31,460 100% Customer
MISC GENERAL EXPENSE 3,431 3,431 100% Customer
Total General Expense 574,879$ 574,879$
TOTAL OPERATING EXPENSES 1,720,514$ 1,720,514$
OTHER OPERATING REVENUES
LFG PROJECT - - NA
DISPERSED GENERATION CREDIT - - NA
CONNECTION MAINTENANCE - - NA
CUSTOMER PENALTIES - - NA
SECURITY LIGHTS - - NA
CONTRIBUTIONS FROM CUSTOMERS - - NA
TOTAL OTHER OPERATING REVENUES -$ -$
NON-OPERATING INCOME (EXPENSES)
Interest income - - NA
Miscellaneous revenue - - NA
Interest expense and other - - NA
Gain (Loss) on sale of capital assets - - NA
TOTAL NON-OPERATING INCOME (EXPENSES)-$ -$
TRANSFER TO CITY -$ -$ NA
MARGIN -$ -$ NA
TOTAL REVENUE REQUIREMENT 1,720,514$ 1,720,514$
page 2 of 2
Exhibit 3-E
Commercial Commercial
Total Residential Non-demand Demand Industrial
Demand Allocation Factors
12 Coincident Peak (kW)620,577 227,688 62,420 227,471 102,998
12 CP 100.0%36.7%10.1%36.7%16.6%
1 Coincident Peak (kW)70,882 32,483 6,457 22,861 9,080
1 CP 100.0%45.8%9.1%32.3%12.8%
1 Non-coincident Peak (kW)85,306 36,913 8,940 28,878 10,575
1 NCP 100.0%43.3%10.5%33.9%12.4%
Sum of Max Demands (kW)1,170,110 574,671 146,492 331,325 117,621
SMD 100.0%49.1%12.5%28.3%10.1%
Energy Allocation Factors
Retail Energy Req. (kWh)320,012,952 105,768,831 29,858,418 113,698,503 70,687,200
RE 100.0%33.1%9.3%35.5%22.1%
Customers
Number of Customers 13,365 11,690 1,450 223 2
C 100.0%87.5%10.8%1.7%0.0%
Customer Facilities Allocation Factor
Weighted Number of Cust 22,555 11,690 2,175 6,690 2,000
CF 100.0%51.8%9.6%29.7%8.9%
Customer Service Allocation Factor
Weighted Number of Cust 15,020 11,690 2,175 1,115 40
CS 100.0%77.8%14.5%7.4%0.3%
Revenue Allocator
Sum Other Rev Reqs 39,698,520$ 15,337,248$ 3,924,744$ 13,430,196$ 7,006,331$
R 100.0%38.6%9.9%33.8%17.6%
Elk River Municipal Utilities
2024 Test Year Allocation Factors
page 1 of 1
Exhibit 3-F
Commercial Commercial Allocation
Total Residential Non-demand Demand Industrial Factor
Power Supply
Demand 7,627,313 2,798,434 767,187 2,795,776 1,265,917 12 CP
Energy 21,471,075 7,096,496 2,003,332 7,628,532 4,742,715 RE
Total Power Supply 29,098,388$ 9,894,929$ 2,770,519$ 10,424,308$ 6,008,632$
Distribution
Demand 5,830,344 2,522,847 611,038 1,973,727 722,732 1 NCP
Customer Facilities 3,049,274 1,580,404 294,044 904,440 270,386 CF
Total Distribution 8,879,618$ 4,103,250$ 905,082$ 2,878,167$ 993,118$
Customer
Customer Service 1,720,514 1,339,069 249,142 127,721 4,582 CS
Total Customer Service 1,720,514$ 1,339,069$ 249,142$ 127,721$ 4,582$
Revenue Component
Operating Expenses 370,351$ 143,083 36,614 125,292 65,363 R
Other Operating Income (873,214) (337,360) (86,329) (295,412) (154,112) R
Non-Operating Income (1,247,803) (482,080) (123,362) (422,138) (220,223) R
Transfer to City 1,527,629 590,189 151,027 516,804 269,609 R
Margin 2,672,669 1,032,567 264,230 904,176 471,695 R
Total Revenue 2,449,632$ 946,399$ 242,180$ 828,722$ 432,332$
Total Revenue Requirements 42,148,152$ 16,283,647$ 4,166,924$ 14,258,918$ 7,438,663$
Total Revenues 42,148,152$ 16,583,227$ 4,401,535$ 13,875,362$ 7,288,029$
Percent Revenue Requirements 100.0%38.6%9.9%33.8%17.6%
Percent Revenues 100.0%39.3%10.4%32.9%17.3%
Percent Change 0.0%-1.8%-5.3%2.8%2.1%
Revenue Req/kWh 0.132 0.154 0.140 0.125 0.105
Revenue/kWh 0.132 0.157 0.147 0.122 0.103
Elk River Municipal Utilities
2024 Test Year Allocation of Revenue Requirements
page 1 of 1
Section 4
Proposed Rates
Changes to rates are generally based on the overall need for revenues and results of
the cost-of-service analyses. The projected operating results at existing rates as
presented in Section 2 of this report outlines the overall revenue needs of the electric
utility. Section 3 summarizes the cost-of-service results. These factors have been
considered in developing the proposed rates summarized in this section of the report.
Proposed Rates
Revenue Needs
In Section 2, it shows that ERMU’s projected cash reserves at current rates decline from
$13.8 million to $10.5 million over the Study Period. The analysis shows ERMU’s
reserve levels staying below the new reserve policy level through the Study Period. In
order to strengthen ERMU’s financial position, it is recommended that a series of rate
increases be implemented in the years 2026-2029. The combination of the rate levels
recommended combined with the new PCA approach described below result in average
overall increases of 2% per year.
Rate Design Adjustments
Specific rate recommendations for each class to become effective each year from 2026-
2029 are shown in Exhibit 4-A. Also shown on Exhibit 4-A are the rates currently in
effect for 2025.
Power Cost Adjustment (PCA) Formula
ERMU utilizes its Power Cost Adjustment (PCA) to adjust retail power bills to reflect
certain aspects of the wholesale power costs from MMPA. Historically, the PCA has
Section 4
- 16 -
been tied to the wholesale Energy Adjustment Clause (EAC) included on MMPA’s
wholesale power bill. Linking the retail PCA and the wholesale EAC only adjusts retail
bills for a portion of changes in the wholesale bill. Other wholesale changes, such as
wholesale rate changes need to be addressed through published retail rate changes. It
is recommended that ERMU move to a retail PCA that adjusts retail bills for all
components of the wholesale bill. Shown below is a proposed formula for monthly
calculation of a new PCA to include on ERMU retail bills.
Proposed formula:
PCA = ( 𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊 𝑥𝑥 0.9711 - 0.07896)
Where:
• PCA is the power cost adjustment per kWh.
• WPC is the wholesale power cost in dollars.
• WE is the wholesale energy in kWh.
• 0.9711 is a loss adjustment
• 0.07896 is the new base dollars per kWh.
An example calculation for estimated costs in 2026 is as follows:
PCA = ( $31,596,071 340,372,265𝑥𝑥 0.9711 - 0.07896) = $.01663/kWh
The calculation shown above is shown on an annual basis, but the calculation would
actually be done monthly to calculate the appropriate PCA based on monthly wholesale
power costs. Based on billing cycles, the PCA charge would lag the monthly wholesale
bill by two months.
It is important to recognize that the proposed rates in this report are designed to work
with this PCA approach. If a different PCA approach is adopted, the rate
recommendations would need to change to match the altered PCA. The PCA formula
Proposed Rates
- 17 -
base amount, the projected wholesale power costs per retail kWh and the resulting
projected PCA charges for the Study Period are shown in Table 4-1.
Table 4-1
PCA Projections
($/kWh)
Year
Projected Wholesale $ per
Retail kWh
Less PCA Formula
Base
Resulting Retail PCA
2026 0.09559 0.07896 0.01663
2027 0.09667 0.07896 0.01771
2028 0.09777 0.07896 0.01881
2029 0.09889 0.07896 0.01993
Projected Operating Results – Proposed Rates
Based on the assumptions outlined above, the resulting projected operating results with
the proposed rates are summarized in Table 4-2. Exhibit 4-B contains a more detailed
presentation of these results.
Section 4
- 18 -
Table 4-2
Projected Operating Results
Proposed Rates
Year 2025 2026 2027 2028 2029
Operating Revenues $48,369,482 $49,833,918 $50,961,806 $51,824,827
Less Operating
Expenses (44,210,400) (45,215,511) (46,121,914) (47,047,707)
Plus Non -Operating
Revenues (Expenses) 468,457 489,744 496,394 536,394
Plus Fees and Transfers (1,777,308) (1,842,476) (1,892,667) (1,931,071)
Change in Net Position(1) $3,800,000 2,850,230 3,265,675 3,443,620 3,382,442
Net Position as Percent
of Revenues 5.9% 6.6% 6.8% 6.5%
(1) 2025 EOY change in net position estimated by ERMU staff based on 2025 YTD actual results
Cash Reserves – Proposed Rates
A summary of the impact of the projected operating results on ERMU’s cash reserves
assuming the proposed rate adjustments is shown at the end of Exhibit 4-B and in Table
4-3 below. Assuming the recommended rate adjustments going forward, the projected
cash balance at the end of the Study Period increases by approximately $4.6 million as
compared to the projections at existing rates as contained in Section 2 of this report.
The total reserves reach a level of 80% of the ERMU reserve goal.
Proposed Rates
- 19 -
Table 4-3
Projected Cash Reserves
Proposed Rates
Year 2025 2026 2027 2028 2029
Beginning Balance $13,800,000 $12,028,988 $13,075,198 $13,228,547
Plus Change in Net Position 2,850,230 3,265,675 3,443,620 3,382,442
Plus Depreciation 3,533,136 3,801,373 3,955,671 4,107,101
Plus Interfund Borrowing 1,400,000 - (1,400,000) -
Less Capital Improvements (8,047,103) (4,628,954) (4,542,896) (4,381,166)
Less Loss of Revenue Pmts (472,275) (316,884) (198,046) (100,816)
Less Debt Principal (1,035,000) (1,075,000) (1,105,000) (1,140,000)
Ending Balance(1) $13,800,000 $12,028,988 $13,075,198 $13,228,547 $15,096,108
Reserve Goal $18,392,897 $18,432,831 $18,623,699 $18,769,766 $18,924,065
Reserves as % of Goal 75% 65% 70% 70% 80%
(1) 2025 EOY reserve balance estimated by ERMU staff based on 2025 YTD actual results
Competitive Analysis
ERMU is interested in how its rates compare to neighboring utilities. Table 4-4 below
shows monthly electric bills for various typical customers in the residential and
commercial classes. Bills are shown based on existing ERMU rates, proposed ERMU
rates in 2026 and the rates for Buffalo, Shakopee, Wright Hennepin Cooperative and
Xcel Energy. Buffalo and Shakopee’s rates are based on their new 2026 rates. An
important consideration in this table is what may happen to Wright Hennepin and Xcel
rates in the future. There is no information available regarding Wright Hennepin rate
plans. The Xcel Energy charges include Xcel’s 7.14% interim rate increase but the final
determination on Xcel’s last rate case has not been determined by the MPUC yet.
Section 4
- 20 -
Table 4-4
Monthly Bill Comparisons
Customer Type and Usage ERMU
Present
2026 ERMU
Proposed
Wright Hennepin
Coop
City of
Buffalo
City of
Shakopee
Xcel
Energy
Residential
300 kWh $59.42 $61.10 $61.83 $62.46 $56.45 $59.02
Residential
700 kWh 118.66 121.89 117.73 122.42 117.52 125.41
Residential
1200 kWh 192.70 197.89 187.60 197.36 193.84 208.41
Commercial
1000 kWh 167.18 171.89 159.65 174.78 161.39 162.32
Commercial
2000 kWh 302.35 310.79 299.40 327.06 308.56 312.42
Commercial
5000 kWh 707.88 727.47 718.65 783.91 750.09 762.72
Solar Grid Access Charge
Minnesota State Statute 216B.64 Subdivision 3 provides that relative to net metering
and distributed generation: “A cooperative electric association or municipal utility may
charge an additional fee to recover the fixed costs not already paid for by the customer
through the customer's existing billing arrangement. Any additional charge by the utility
must be reasonable and appropriate for that class of customer based on the most
recent cost of service study”.
This additional charge is often referred to as a Solar Grid Access Charge for the solar
array customer. Based on the size of the solar generation installation, a separate
distribution access fee is charged to a customer. This charge is levied on a $/kW basis
to reflect the fixed expense of the distribution system. The charge is generally
assessed on the total generation size less the average demand of a typical residential
customer. For ERMU, the average residential customer is estimated to have an
average monthly peak demand of 4 kW. As an example, a solar customer with a 10-kW
system, they would be charged for 6 kW (10 kW generator capacity less the 4 kW
average customer demand). This option is self-regulating from a size of generator
Proposed Rates
- 21 -
perspective. Larger solar installations pay more for utilizing the benefits of the fixed
distribution system. Customers still receive retail credit for energy generated. This
option also does not require any additional metering requirements. Customers are
billed a fixed amount every month based on the installed capacity. The calculation of
this charge for BMU based on this cost-of-service study is shown below. The values in
this analysis are taken from Exhibits 3-E and 3-F in this report.
Allocated Residential Distribution and Customer costs - $5,442,319
($4,103,250 plus $1,339,069) (Exhibit 3-F)
Allocated Residential Revenue cost - $729,199 (Exhibit 3-F)
Residential Revenue adjustment - $729,199/$5,442,319 = 13.4%
Allocated Residential Distribution Demand cost - $2,522,847 (Exhibit 3-F)
Adjusted Resid. Distribution Demand cost - $2,522,847 x 1.134 = $2,860,908
Residential Sum of Maximum Demands – 574,671 kW (Exhibit 3-E)
Residential Distribution Demand Cost/kW - $2,860,908/574,671 = $4.98/kW
The revenue adjustment shown in the calculation above is calculated to adjust local
operating costs to account for revenue-allocated cost items. This adjustment is utilized
to adjust the allocated distribution system demand cost. The adjusted distribution
demand cost is divided by the total estimated sum of maximum demands for the
Residential class. The rate calculated above is $4.98/kW based on 2024 costs. This
rate has been rounded up to $5.20/kW to adjust for future costs beginning in 2026. This
represents a decrease from the current $5.56/kW charge in effect for ERMU.
Exhibit 4-A
Current Proposed Proposed Proposed Proposed
Class Rate 2026 2027 2028 2029
Residential ER012/ERA13
Customer (per month)15.00$ 15.50$ 16.00$ 16.50$ 17.00$
Summer Energy (per kWh)0.13734$ 0.14106$ 0.14456$ 0.14467$ 0.14505$
Non-summer Energy (per kWh)0.12548$ 0.12911$ 0.13251$ 0.13262$ 0.13277$
Off Peak Storage ERSW1
Energy (per kWH)0.05010$ 0.05343$ 0.05500$ 0.05617$ 0.05647$
Off Peak Dual Fuel Space Heating ERDF1
Energy (per kWh)0.06510$ 0.06858$ 0.07055$ 0.07164$ 0.07170$
Ground Heat Pump EGSH
Energy (per kWh)0.09830$ 0.10212$ 0.10576$ 0.10587$ 0.10605$
Dual Fuel/ETS ERDSW
Energy (per kWh)0.05010$ 0.05343$ 0.05500$ 0.05617$ 0.05647$
Cycled AC/RAC24
Energy (per kWh)0.04630$ 0.04960$ 0.05155$ 0.05190$ 0.05225$
Electric Vehicle Charging EEVOF/EEVON
Summer On -Peak (per kWh)0.13733$ 0.14106$ 0.14456$ 0.14472$ 0.14505$
Non-summer On-Peak (per kWh)0.12548$ 0.12911$ 0.13251$ 0.13256$ 0.13277$
Off -Peak (per kWh)0.06510$ 0.06858$ 0.07055$ 0.07164$ 0.07170$
Commercial Non-Demand ECN16/ECNAE
Customer (per month)32.00$ 33.00$ 34.00$ 36.00$ 38.00$
Summer Energy (per kWh)0.13304$ 0.13673$ 0.13826$ 0.13979$ 0.14002$
Non-summer Energy (per kWh)0.11141$ 0.11494$ 0.11636$ 0.11777$ 0.11801$
Commercial Non-Demand Heat Pump ECGSH
Customer (per month)32.00$ 33.00$ 34.00$ 36.00$ 38.00$
Energy (per kWh)0.09830$ 0.10212$ 0.10576$ 0.10587$ 0.10603$
Commercial Demand ECD15/EDG38
Customer (per month)77.00$ 80.00$ 83.00$ 86.00$ 89.00$
Energy (per kWh)0.07035$ 0.07353$ 0.07476$ 0.07599$ 0.07650$
Summer Demand (per kW)16.75$ 17.00$ 17.25$ 17.50$ 17.75$
Non-summer Demand (per kW)11.75$ 12.00$ 12.25$ 12.50$ 12.75$
Commercial Demand On/Off Peak ECOP1/ECOP2
Customer (per month)77.00$ 80.00$ 83.00$ 86.00$ 89.00$
Energy (per kWh)0.07350$ 0.07643$ 0.07744$ 0.07845$ 0.07900$
Summer Demand (per kW)16.75$ 17.00$ 17.25$ 17.50$ 17.70$
Non-summer Demand (per kW)11.75$ 12.00$ 12.25$ 12.50$ 12.70$
Off-peak Demand (per kW)6.30$ 6.50$ 6.70$ 6.90$ 7.00$
Large Industrial (Target/United Health)
Customer (per month)115.00$ 125.00$ 135.00$ 145.00$ 155.00$
Energy (per kWh)0.06962$ 0.07293$ 0.07429$ 0.07565$ 0.07632$
Summer Demand (per kW)16.25$ 16.50$ 16.75$ 17.00$ 17.20$
Non-summer Demand (per kW)11.25$ 11.50$ 11.75$ 12.00$ 12.20$
PCA Formula Base Amount/kWh n/a 0.07896$ 0.07896$ 0.07896$ 0.07896$
Estimated PCA/kWh 0.01640$ 0.01663$ 0.01771$ 0.01881$ 0.01993$
Security Lights (per month)
Standard Low Output w/ Wood Pole 10.00$ 10.20$ 10.40$ 10.61$ 10.82$
Standard Low Output 12.00$ 12.24$ 12.48$ 12.73$ 12.99$
Standard Medium Output 17.00$ 17.34$ 17.69$ 18.04$ 18.40$
Standard High Output 22.00$ 22.44$ 22.89$ 23.35$ 23.81$
Standard Low Ouput w/ Decorative Pole 24.00$ 24.48$ 24.97$ 25.47$ 25.98$
Decorative Med Ouput w/ Decorative Pole 33.00$ 33.66$ 34.33$ 35.02$ 35.72$
Elk River Municipal Utilities
Existing and Proposed Electric Rates
page 1 of 1
Exhibit 4-B
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
OPERATING REVENUES
Charges for services 36,573,483$ 39,473,717$ 42,355,712$ 43,986,269$ 42,557,925$ 46,622,070 47,804,682$ 49,269,118$ 50,397,006$ 51,260,027$
LFG project 1,141,482 1,019,097 935,004 - - - - - - -
Generation credit 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800 4,800
Connection maintenance 160,186 263,330 243,088 151,296 317,234 150,000 255,000 255,000 255,000 255,000
Customer penalties 42,556 - 284,452 308,374 295,143 285,000 305,000 305,000 305,000 305,000
Total Operating Revenues 37,922,507$ 40,760,944$ 43,823,056$ 44,450,739$ 43,175,102$ 47,061,870$ 48,369,482$ 49,833,918$ 50,961,806$ 51,824,827$
OPERATING EXPENSES
Purchased Power 24,240,440$ 28,169,146$ 31,544,604$ 31,232,788$ 28,590,698$ 31,019,478$ 31,596,071$ 32,060,510$ 32,532,005$ 33,017,341$
Production 963,858 1,002,631 793,299 315,057 266,783 341,000 321,993 331,653 341,602 351,850
Transmission and Distribution 1,494,841 1,583,165 2,015,665 2,224,113 2,437,569 2,742,000 2,605,000 2,683,150 2,763,645 2,846,554
Services to City 229,086 224,814 231,861 253,564 229,359 265,000 - - - -
Depreciation 2,896,839 2,957,685 3,062,751 3,177,120 3,317,829 3,339,552 3,533,136 3,801,373 3,955,671 4,107,101
Customer accounts 346,090 337,760 391,238 433,553 430,396 470,000 435,000 448,050 461,492 475,336
General and administrative 3,787,850 3,350,641 4,372,187 4,421,557 4,718,264 5,906,049 5,719,200 5,890,776 6,067,499 6,249,524
Total Operating Expenses 33,959,004$ 37,625,842$ 42,411,605$ 42,057,752$ 39,990,898$ 44,083,079$ 44,210,400$ 45,215,511$ 46,121,914$ 47,047,707$
OPERATING INCOME 3,963,503$ 3,135,102$ 1,411,451$ 2,392,987$ 3,184,204$ 2,978,791$ 4,159,082$ 4,618,407$ 4,839,893$ 4,777,120$
NON-OPERATING REVENUE (EXPENSE)
Interest income 134,468$ 52,514$ (159,502)$ 158,310$ 338,157$ 350,000$ 350,000 350,000 350,000 350,000
Miscellaneous revenue 547,009 635,764 906,323 928,553 925,800 712,500 793,000 793,000 793,000 793,000
Interest expense and other (606,313) (836,474) (851,199) (811,210) (773,748) (735,069) (699,543) (678,256) (671,606) (631,606)
Gain (Loss) on sale of capital assets 23,263 (45,214) 41,938 59,556 (16,154) 25,000 25,000 25,000 25,000 25,000
Total Non-Operating Revenues (Expenses)98,427$ (193,410)$ (62,440)$ 335,209$ 474,055$ 352,431$ 468,457$ 489,744$ 496,394$ 536,394$
Income before Contributions and Transfers 4,061,930$ 2,941,692$ 1,349,011$ 2,728,196$ 3,658,259$ 3,331,222$ 4,627,539$ 5,108,151$ 5,336,286$ 5,313,513$
Contributions from Customers 174,557$ 385,316$ 298,935$ 489,452$ 690,934$ 225,000$ 350,000$ 350,000 350,000 350,000
Transfers to Other City Funds (1,340,218) (1,407,734) (1,531,633) (1,620,378) (1,527,629) (1,908,429)$ (2,127,308)$ (2,192,476)$ (2,242,667)$ (2,281,071)$
Special Item - - - - -
CHANGE IN NET POSITION 2,896,269$ 1,919,274$ 116,313$ 1,597,270$ 2,821,564$ 1,647,793$ 2,850,230$ 3,265,675$ 3,443,620$ 3,382,442$
As Percent of Revenues 7.6%4.7%0.3%3.6%6.5%3.5%5.9%6.6%6.8%6.5%
CASH RESERVES
Beginning of Year 13,014,941$ 13,800,000$ 12,028,988$ 13,075,198$ 13,228,547$
Plus Change in Net Position 1,647,793 2,850,230 3,265,675 3,443,620 3,382,442
Plus Depreciation 3,339,552 3,533,136 3,801,373 3,955,671 4,107,101
Plus Interfund Borrowing - 1,400,000 - (1,400,000) -
Less Capital Improvements (7,455,754) (8,047,103) (4,628,954) (4,542,896) (4,381,166)
Less Loss of Revenue Payments (935,000) (472,275) (316,884) (198,046) (100,816)
Less Debt Principal (990,000) (1,035,000) (1,075,000) (1,105,000) (1,140,000)
End of Year(1)13,014,941$ 13,800,000$ 12,028,988$ 13,075,198$ 13,228,547$ 15,096,108$
Existing Reserve goal 18,392,897$ 18,432,831$ 18,623,699$ 18,769,766$ 18,924,065$
Percent of goal 75%65%70%70%80%
(1) 2025 EOY reserve balance estimated by ERMU staff based on 2025 YTD actual results.
Projected
Elk River Municipal Utilities
Electric Operating Results at Proposed Rates
Historical
page 1 of 1
WATER COST OF SERVICE AND RATE
DESIGN STUDY
Final Report
December 10, 202 5
REPORT OUTLINE
Cover Letter
Section 1 - Introduction
Section 2 – Projected Operating Results – Existing Rates
Section 3 – Cost of Service
Section 4 – Proposed Rates
Dedicated to providing personal service to consumer-owned utilities
Dave Berg Consulting, LLC | 15213 Danbury Ave W, Rosemount, MN 55068 | 612-850-2305
www.davebergconsulting.com
December 10, 2025
Elk River Municipal Utilities Commission
13069 Orono Parkway
PO Box 430
Elk River, MN 55330
Subject: Water Rate Study
Commission Members:
Dave Berg Consulting, LLC has undertaken a study of the retail rates Elk River Municipal Utilities (ERMU)
charges its customers for water service. This report summarizes the analyses undertaken and the
resulting recommendations for changes to the existing rates.
Annual overall rate increases of 4% per year for 2026-2029 are recommended. These increases are
recommended to enhance the level of cash reserves for the water utility.
Thank you for the opportunity to be of service to ERMU through the conduct of this study. I wish to
express my appreciation for the valuable assistance I received from ERMU staff relative to the execution
of this study.
Sincerely,
Dave Berg Consulting, LLC
David A. Berg, PE
Principal
- 1 -
Section 1
Introduction
The City of Elk River, MN owns a municipal utility providing service to
approximately 5,700 retail water customers. The water utility is operated by Elk
River Municipal Utilities (ERMU) and is under the direction of the Elk River
Municipal Utilities Commission. This report has been prepared by Dave Berg
Consulting, LLC to examine the rates and charges for water service in Elk River.
The study includes an examination of the allocated cost of service based on actual
2024 utility operations (Test Year). It also includes projected operating results for
2025-2029 (Study Period). As a result of the analyses undertaken and reported
on herein, water rate recommendations have been developed for implementation
by ERMU.
- 2 -
Section 2
Projected Operating Results
Existing Rates
The rates charged for water service by ERMU, combined with other operating and non-
operating revenues, must be sufficient to meet the cost of providing services to ERMU’s
retail water customers. This is necessary to ensure the long-term financial health of the
ERMU water utility. The cost of providing utility service consists of normal operating
expenses such as production, pumping, distribution, customer and A&G functions,
system depreciation expenses, capital improvements and other non-operating expenses.
An analysis of the operating results for the ERMU water utility during the 2020-2024 Study
Period has been performed assuming the current retail rates and charges remain in effect
through the Study Period. This analysis has been done to determine the overall need, if
any, for additional revenue through rates to meet projected revenue requirements. The
analyses and assumptions utilized in these projections are explained below.
Estimated Revenues – Existing Rates
Operating Revenues
ERMU sells water to residential, commercial and industrial customers. Total sales to
ERMU retail customers for the Study Period are based on ERMU’s actual 2024, YTD
2025 water sales and discussions with ERMU staff. For this analysis, sales are estimated
to remain flat during the Study Period.
Exhibit 2-A is a summarized listing of ERMU’s historical and projected water operating
results at existing rates. The historical and projected revenues from retail sales of water
Projected Operating Results – Existing Rates
- 3 -
are included as Charges for Services under Operating Revenues. The existing rates
utilized in this analysis are those implemented January 1, 2025 by ERMU.
Other Operating Revenues
ERMU also receives other miscellaneous operating revenue from other normal operating
procedures. These other operating revenues include net revenues from connection
maintenance and penalties. Charges for services combined with other operating
revenues results in ERMU’s Total Operating Revenues.
Revenue Requirements
Operating Expenses
Operating expenses for the water utility are shown in Exhibit 2-A. A more detailed listing
of operating expenses is included in Exhibit 3-A following section 3 of this report. The
operating expenses are associated with production, pumping, distribution, customer-
related, administrative and general expenses. Projected operating expenses have been
based on ERMU projections and are assumed to increase an average of 3% per year.
Depreciation
ERMU has annual depreciation costs associated with water system investments.
Depreciation during the Study Period is based on budgeted ERMU amounts and future
capital improvements. Depreciation is a funded non-cash expense that generates monies
available for annual capital improvements, debt principal payments and reserves.
Non-operating Income (Expenses)
ERMU’s non-operating income and expenses are primarily associated with investment
income, interest payments on outstanding debt and miscellaneous revenue. ERMU also
has income from developer and connection fees.
Section 2
- 4 -
Capital Improvements
ERMU makes annual normal capital investments in its water system. Annual water
capital improvements for the Study Period, as budgeted by ERMU, are shown in Table 2-
1 below.
Table 2-1
Capital Improvements- Water Utility
Fiscal Year 2025 2026 2027 2028 2029
Water capital $1,442,789 $3,399,500 $1,435,330 $9,938,650 $1,062,650
Debt Service
ERMU currently has outstanding water debt pursuant to a 2021 water general obligation
bond issue. This bond issue matures in 2041. It is assumed the water utilities will issue
an additional $8.3 million bond issue in 2028 to provide $8 million for ongoing capital
improvements.
Interfund Borrowing
It is assumed that the water utility will make a $1.4 million loan to the electric department
in 2026 which will be repaid in 2028.
Transfer to City
It is assumed that ERMU will begin making an annual transfer to the City of Elk River in
2026 based on 2% of operating revenue for the water utility.
Projected Operating Results – Existing Rates
Based on the assumptions outlined above, the resulting projected operating results
assuming continued application of the existing retail rates are summarized below in Table
Projected Operating Results – Existing Rates
- 5 -
2-2. A summary presentation of the historical and projected operating results is also
shown in Exhibit 2-A.
Table 2-2
Projected Operating Results-Water
Existing Rates
Fiscal Year 2025 2026 2027 2028 2029
Operating Revenues $3,153,746 $3,153,746 $3,153,746 $3,153,746
Less Operating
Expenses (4,127,970) (4,322,616) (4,454,230) (4,871,800)
Plus Non -Operating
Revenue 574,568 567,013 412,725 239,366
Plus Fees and Transfers 304,925 438,925 438,925 438,925
Change in Net Position(1) $500,000 $(94,732) $(162,932) $(448,833) $(1,039,762)
Net Position as Percent
of Revenues -3.0% -5.2% -14.2% -33.0%
(1) 2025 EOY change in net position estimated by ERMU staff based on 2025 YTD actual results
Cash Reserves
A summary of the impact of the projected operating results on ERMU’s cash reserves for
the Study Period is shown at the end of Exhibit 2-A and in Table 2-3 below. The 2025
end of year reserve balance is as estimated by ERMU staff based on 2025 YTD results.
As shown below, under existing retail rates and estimated revenue requirements over the
Study Period, the unrestricted cash reserves for the water utility are projected to decrease
from $10.5 million to $6.8 million by the end of the Study Period. ERMU has a newly
revised reserve policy that sets a minimum target for reserves equal to 2 months operating
expenses plus $8 million catastrophic reserve plus a capital reserve equal to average
annual capital expenses plus the next year’s principal and interest expense. Based on
Section 2
- 6 -
this revised policy, the reserves decrease from 86% of the goal amount to 52% of the
goal by the end of the Study Period.
Table 2-3
Projected Cash Reserves-Water
Existing Rates
Fiscal Year 2025 2026 2027 2028 2029
Beginning Balance $10,500,000 $6,950,768 $6,810,823 $7,324,501
Plus Change in Net Position (94,732) (162,932) (448,833) (1,039,762)
Plus Depreciation 1,415,000 1,528,317 1,576,161 1,907,449
Interfund Borrowing (1,400,000) 1,400,000
Plus Debt Proceeds - - 8,000,000 -
Less Debt Principal (70,000) (70,000) (75,000) (75,000)
Less New Debt Principal - - - (279,400)
Less Capital Improvements (3,399,500) (1,435,330) (9,938,650) (1,062,650)
Ending Balance(1) $10,500,000 $6,950,768 $6,810,823 $7,324,501 $6,775,137
Reserve Goal $12,216,671 $12,247,579 $12,448,620 $12,913,356 $12,984,951
Reserves as % of ERMU
Goal 86% 57% 55% 57% 52%
(2) 2025 EOY reserve balance estimated by ERMU staff based on 2025 YTD actual results
Exhibit 2-A
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
OPERATING REVENUES
Charges for services 2,613,812$ 3,049,140$ 2,887,276$ 3,305,148$ 2,803,602$ 3,053,746$ 3,053,746$ 3,053,746$ 3,053,746$ 3,053,746$
Connection maintenance 56,931 71,520 75,365 55,733 72,409 63,500 65,000 65,000 65,000 65,000
Customer penalties 3,801 - 26,194 23,118 31,102 28,000 35,000 35,000 35,000 35,000
Total Operating Revenues 2,674,544$ 3,120,660$ 2,988,835$ 3,383,999$ 2,907,113$ 3,145,246$ 3,153,746$ 3,153,746$ 3,153,746$ 3,153,746$
OPERATING EXPENSES
Production 502,748$ 674,815$ 681,079$ 667,881$ 780,844$ 807,150$ 793,000$ 816,790$ 841,294$ 866,533$
Distribution 251,259 412,534 307,192 321,566 462,083 520,410 498,125 513,069 528,461 544,315
Services to City 463 1,259 540 - - 2,000 2,000 2,000 2,000 2,000
Depreciation 1,133,179 1,139,802 1,117,357 1,174,752 1,223,033 1,325,866 1,415,000 1,528,317 1,576,161 1,907,449
Customer accounts 66,509 72,213 81,285 88,640 96,615 105,250 104,250 107,378 110,599 113,917
General and administrative 719,527 844,475 980,528 943,138 1,006,969 1,211,950 1,315,595 1,355,063 1,395,715 1,437,587
Total Operating Expenses 2,673,685$ 3,145,098$ 3,167,981$ 3,195,977$ 3,569,544$ 3,972,626$ 4,127,970$ 4,322,616$ 4,454,230$ 4,871,800$
OPERATING INCOME 859$ (24,438)$ (179,146)$ 188,022$ (662,431)$ (827,380)$ (974,224)$ (1,168,870)$ (1,300,483)$ (1,718,054)$
NON-OPERATING REVENUE (EXPENSE)
Interest income 33,454$ 24,677$ (30,592)$ 57,360$ 104,286$ 151,000$ 126,000$ 123,463$ 132,775$ 122,816$
Miscellaneous revenue 262,311 292,330 424,994 418,451 429,016 418,100 473,350 473,350 473,350 473,350
Interest expense and other (23,516) (65,296) (40,948) (36,444) (33,949) (31,466) (28,782) (33,800) (31,000) (28,000)
New debt interest - - - (166,400) (332,800)
Gain (Loss) on sale of capital assets 3,507 (662) (9,150) 2,940 (5,090) 8,000 4,000 4,000 4,000 4,000
Total Non-Operating Revenues (Expenses)275,756$ 251,049$ 344,304$ 442,307$ 494,263$ 545,634$ 574,568$ 567,013$ 412,725$ 239,366$
Income before Contributions and Transfers 276,615$ 226,611$ 165,158$ 630,329$ (168,168)$ (281,746)$ (399,657)$ (601,857)$ (887,759)$ (1,478,688)$
Connection Fees 595,482$ 548,948$ 1,547,930$ 253,341$ 477,998$ 255,000$ 366,000$ 500,000$ 500,000$ 500,000$
Contributions from Developers 477,194 552,920 940,306 - -
Contributions from Customers - - - - 21,910 - - - - -
Transfers from/(to) Other City Funds - 195,245 - 1,348,943 - - (61,075) (61,075) (61,075) (61,075)
Grants - 3,288 - - - - - - - -
CHANGE IN NET POSITION 1,349,291$ 1,527,012$ 2,653,394$ 2,232,613$ 331,740$ (26,746)$ (94,732)$ (162,932)$ (448,833)$ (1,039,762)$
As Percent of Revenues 50.4%48.9%88.8%66.0%11.4%-0.9%-3.0%-5.2%-14.2%-33.0%
UNRESTRICTED CASH RESERVES
Beginning of Year 10,500,000$ 6,950,768$ 6,810,823$ 7,324,501$
Plus Change in Net Position (94,732) (162,932) (448,833) (1,039,762)
Plus Depreciation 1,415,000 1,528,317 1,576,161 1,907,449
Interfund Borrowing (1,400,000) 1,400,000
Plus Debt Proceeds - - 8,000,000 -
Less Debt Principal (70,000) (70,000) (75,000) (75,000)
Less New Debt Principal - - - (279,400)
Less Capital Improvements (3,399,500) (1,435,330) (9,938,650) (1,062,650)
End of Year(1)9,961,189$ 10,500,000$ 6,950,768$ 6,810,823$ 7,324,501$ 6,775,137$
Reserve goal 12,719,919$ 12,750,828$ 12,951,869$ 13,416,604$ 13,488,199$
Percent of goal 83%55%53%55%50%
(1) 2025 EOY reserve balance estimated by ERMU staff based on 2025 YTD actual results.
Projected
Elk River Municipal Utilities
Water Operating Results at Existing Rates
Historical
page 1 of 1
- 7 -
Section 3
Cost-of-Service
A cost-of-service analysis was performed to determine the allocated cost to serve
ERMU’s customer classes within the water utility. Customer classes exist, in part,
because the cost to serve different kinds of customers varies. The cost-of-service
analysis has been performed on a 2024 Test Year’ based on actual 2024
financials, operations and sales. The results of the cost-of-service study give an
indication of the degree of revenue recovery warranted for each class of
customers. A comparison of the allocated cost to serve a class of customers and
the actual revenues received from that class is taken into consideration during rate
design.
Functionalization of Costs
ERMU’s Test Year water revenue requirements have been divided into four
functional categories. These categories are described below.
Plant – costs associated with ERMU’s source of supply and pumping.
Distribution – distribution expenses are related to the ERMU system for delivering
water to ERMU customers over the local pipeline system.
Customer – these costs are fixed costs associated with the service facilities
utilized to deliver water directly to customers. They also include items such as
meter reading, billing, collections and dealing with customers by customer service
representatives.
Revenue – revenue related costs include certain non-operating revenues and
utility margin.
Section 3
- 8 -
Table 3-1 below summarizes the functional water costs for the 2024 Test Year.
The detailed cost functions are shown in Exhibit 3-A.
Table 3-1
Functional Water Costs
2024 Test Year
Component
Revenue
Requirement
Plant $1,374,402
Distribution 1,594,954
Customer 139,845
Revenue (298,198)
Total $2,811,004
Classification of Costs
ERMU’s Test Year revenue requirements have been divided into distinct cost
classifications. The water cost classifications are described below.
Demand Related – demand related costs are costs required to meet the overall
maximum demand on the system. Demand related costs are predominately
associated with facility fixed costs.
Commodity Related – commodity costs tend to vary with the annual quantity of
water produced.
Customer Related – costs related to serving, metering and billing of individual
customers.
Revenue Related – revenue related costs vary by the amount of revenue received
by the utility or are associated with other operating and non-operating revenues.
Exhibits 3-B through 3-D show the detailed classification of revenue requirements
within the plant, distribution and customer functions.
Cost-of-Service
- 9 -
Allocation of Costs
Based on an analysis of customer class service characteristics, the classified costs
summarized above were allocated to the major ERMU customer classes.
Allocation of costs was performed on a fully-distributed, embedded cost allocation
basis. Specific allocation factors were utilized in each of the cost classification
categories as described below. Exhibit 3-E contains a summary of the
development of the various allocation factors.
Demand Allocations
Customer class demands are based on each class’ estimated contribution to the
utility’s system peak day usage.
Commodity Allocations
Each class’ share of test year commodity requirements was used to allocate
commodity related costs.
Customer Facilities Allocations
The customer facilities allocator was used to allocate costs associated with the
physical facilities required to serve individual customers. For the customer facility
allocators, a weighted customer allocation factor is developed. Weighting factors
are developed to represent the difference in service configurations between
customer classifications. For instance, a larger customer facility is required for a
single industrial demand customer than for a single residential customer.
Customer Service Allocations
The customer service allocator is for allocation of costs associated with customer
service – meter reading, billing, collections and customer inquiries. As with the
customer facilities allocators, weighted customer service allocators are developed
Section 3
- 10 -
to represent the different levels of customer service required by different size
customers.
Revenue Allocations
Revenue related costs were allocated based on each class’ share of total demand,
commodity, customer facility and customer service costs.
Cost of Service Results
Based on the classifications and allocations described above, the estimated cost
to serve each major class of customers for the 2019 Test Year was determined.
Exhibit 3-F presents this analysis in detail. Table 3-2 below summarizes the total
allocated costs for each class compared to the total adjusted revenues received
from the class during 2019.
Table 3-2
Water Cost of Service Results
Comparison of Cost and Revenues
2024 Test Year
Customer
Classification
Allocated
Cost to Serve Revenues
Residential $1,507,470 $1,564,571
Commercial/Industrial $1,303,534 $1,246,433
Total $2,811,004 $2,811,004
The revenue requirements and revenues as allocated to each class and
summarized above are shown on a total dollar basis. Table 3-3 below makes the
comparison based on percentages of total cost to serve and total revenues. The
charts following Table 3-3 show a graphical comparison between allocated cost to
serve and revenues as a percentage of the totals. The percentage
increase/(decrease) in each class’ revenue shown below is the adjustment
Cost-of-Service
- 11 -
necessary to produce revenues from each class in accordance with the allocated
cost to serve. The percentage adjustments do not represent the recommended
change in each class’ rates. The cost-of-service results are one item for
consideration in rate design. It is important to note also that the adjustments shown
in the table below would not change the total revenue received by the utility and
are not indicative of overall revenue needs of the utility going forward.
Recommendations regarding rate design are included in Section 4 of this report.
Table 3-3
Water Cost of Service Results
Comparison of % Cost and Revenues
2024 Test Year
Customer
Classification
Allocated
Cost to Serve Revenues Increase/
(Decrease)
Residential 53.6% 55.7% -3.6%
Commercial/Industrial 46.4% 44.3% 4.6%
Total 100.0% 100.0% 0.0%
Section 3
- 12 -
As indicated above, ERMU’s existing class revenues do not exactly match the
allocated cost to serve each class. Cost based rates are one of several goals in
establishing rates. The relationship between allocated costs and revenues for
each class should be considered, in addition to other rate related goals, in
developing recommended rates.
Exhibit 3-A
2024
REVENUE REQUIREMENT TEST YEAR Plant Distribution Customer Revenue Functionalization Basis
OPERATING EXPENSES
PRODUCTION EXPENSE
Maintenance of Structures 118,774 118,774 - - - 100% plant
TOTAL PRODUCTION EXPENSE 118,774 118,774 - - -
PUMPING EXPENSE
Supervision 69,969 69,969 - - - 100% plant
Electric & Gas Utilities 256,685 256,685 - - - 100% plant
Sampling 21,964 21,964 - - - 100% plant
Chemical Feed 38,920 38,920 - - - 100% plant
Maintenance of Electric Pumping - - - - - NA
Maintenance of Wells 260,692 260,692 - - - 100% plant
SCADA - Pumping 13,837 13,837 - - - 100% plant
TOTAL PUMPING EXPENSE 662,067 662,067 - - -
DISTRIBUTION EXPENSE
Maintenance of Water Mains 161,765 - 161,765 - - 100% distribution
Locate Water Lines 13,728 - 13,728 - - 100% distribution
Locate Water Main - - - - - NA
Water Meter Service 100,494 - 100,494 - - 100% distribution
Backflow Device Inspection 19,532 - 19,532 - - 100% distribution
Maintenance of Customers Service 33,583 - 33,583 - - 100% distribution
Water Mapping 25,858 - 25,858 - - 100% distribution
Maintenance of Water Hydrants - PU 22,736 - 22,736 - - 100% distribution
Maintenance of Water Hydrants - PR 4,990 - 4,990 - - 100% distribution
Water Clothing/PPE 9,528 - 9,528 - - 100% distribution
Wages/Water 7,617 - 7,617 - - 100% distribution
Transportation Expense 18,310 - 18,310 - - 100% distribution
General Expense/Water Permit 26,255 - 26,255 - - 100% distribution
TOTAL DISTRIBUTION EXPENSE 444,396 - 444,396 - -
DEPRECIATION & AMORTIZATION
Depreciation 1,223,033 208,365 1,014,668 - - fixed assets
TOTAL DEPRECIATION 1,223,033 208,365 1,014,668 - -
OTHER OPERATING EXPENSE
Dam Maintenance Expense 444 444 - - - 100% plant
Pension Expense (13,068) (13,068) - - - 100% plant
OPEB Expense - - - - - NA
Interest Paid on Meter Deposit 967 - - 967 - 100% customer
Rental Property Expense - - - - - total operating expenses
TOTAL OTHER OPERATING EXPENSE (11,657) (12,624) - 967 -
CONSUMER ACCOUNTS EXPENSE
Meter Reading Expense 5,549 - - 5,549 - 100% customer
Miscellaneous Customer Accounts Expense 91,045 - - 91,045 - 100% customer
Cust Billings Not Paid 19 - - 19 - 100% customer
TOTAL CONSUMER ACCOUNTS EXPENSE 96,613 - - 96,613 -
ADMINISTRATIVE EXPENSE
Salaries Office & Commission 258,534 99,580 148,778 10,175 - total operating expenses
Temporary Staffing - - - - - total operating expenses
Office Supplies & Expense 23,419 9,020 13,477 922 - total operating expenses
Electric & Water Consumption 6,061 2,335 3,488 239 - total operating expenses
Bank Charges 726 280 418 29 - total operating expenses
Legal Fees 5,708 2,199 3,285 225 - total operating expenses
Auditing Fees 5,266 2,028 3,030 207 - total operating expenses
Insurance 40,122 15,454 23,089 1,579 - total operating expenses
Deferred Comp 18,628 7,175 10,720 733 - total operating expenses
Elk River Municipal Utilities
Functionalization of 2024 Test Year Water Revenue Requirements
page 1 of 2
Exhibit 3-A
2024
REVENUE REQUIREMENT TEST YEAR Plant Distribution Customer Revenue Functionalization Basis
Elk River Municipal Utilities
Functionalization of 2024 Test Year Water Revenue Requirements
Medical/Dental 202,666 78,062 116,628 7,976 - total operating expenses
PERA 59,326 22,851 34,140 2,335 - total operating expenses
FICA 58,185 22,411 33,484 2,290 - total operating expenses
Sick Pay 69,538 26,784 40,017 2,737 - total operating expenses
Holiday Pay 34,537 13,303 19,875 1,359 - total operating expenses
Vacation & PTO 59,901 23,072 34,471 2,358 - total operating expenses
UPMIC Distribution 23,571 9,079 13,564 928 - total operating expenses
Miscellaneous - Wellhead - - - - - NA
Longevity Pay 836 322 481 33 - total operating expenses
Consulting Fees 16,316 6,284 9,389 642 - total operating expenses
Telephone 7,024 2,705 4,042 276 - total operating expenses
Advertising 3,632 1,399 2,090 143 - total operating expenses
Dues & Subscriptions 78,200 30,121 45,002 3,078 - total operating expenses
Travel Expense - - - - - NA
Schools & Meetings 42,421 16,339 24,412 1,670 - total operating expenses
Maintenance of General Plant & Office 2,518 970 1,449 99 - total operating expenses
TOTAL ADMINISTRATIVE EXPENSE 1,017,135 391,774 585,330 40,031 -
GENERAL EXPENSE
CIP Rebates - Residential 1,090 - - 1,090 - 100% customer
CIP Rebates - Commercial - - - - - NA
CIP - Administration - - - - - NA
CIP - Marketing 1,117 - - 1,117 - 100% customer
CIP - Labor - - - - - 100% customer
Environmental Compliance 683 263 393 27 - total operating expenses
Misc General Expense - - - - - total operating expenses
TOTAL GENERAL EXPENSE 2,890 263 393 2,234 -
TOTAL OPERATING EXPENSE 3,553,251 - 1,368,619 2,044,787 139,845 -
NON-OPERATING REVENUES (EXPENSES)
Interest income 104,286 - - - 104,286 100% revenue
Miscellaneous revenue 429,016 - - - 429,016 100% revenue
Interest expense and other (33,949) (5,784) (28,165) - - fixed assets
Gain (Loss) on sale of capital assets (5,090) - - - (5,090) 100% revenue
TOTAL NON-OPERATING REV (EXP)494,263 (5,784) (28,165) - 528,212
OTHER OPERATING REVENUE
Connection maintenance 72,409 - - - 72,409 100% revenue
Customer penalties 31,102 - - - 31,102 100% revenue
TOTAL OTHER OPERATING REVENUE 103,511 - - - 103,511
Developer and Connection Fees 477,998 - 477,998 - - 100% distribution
MARGIN 333,525 - - - 333,525 100% revenue
TOTAL REVENUE REQUIREMENT 2,811,004 1,374,402 1,594,954 139,845 (298,198)
page 2 of 2
Exhibit 3-B
FY 2024
REVENUE REQUIREMENT TEST YEAR Demand Commodity Classification Basis
OPERATING EXPENSES
PRODUCTION EXPENSE
Maintenance of Structures 118,774 118,774 - 100% demand
TOTAL PRODUCTION EXPENSE 118,774 118,774 -
PUMPING EXPENSE
Supervision 69,969 44,400 25,569 operating expenses
Electric & Gas Utilities 256,685 - 256,685 100% commodity
Sampling 21,964 - 21,964 100% commodity
Chemical Feed 38,920 - 38,920 100% commodity
Maintenance of Electric Pumping - - - NA
Maintenance of Wells 260,692 260,692 - 100% demand
SCADA - Pumping 13,837 - 13,837 100% commodity
TOTAL PUMPING EXPENSE 662,067 305,092 356,975
DISTRIBUTION EXPENSE
Maintenance of Water Mains - - - NA
Locate Water Lines - - - NA
Locate Water Main - - - NA
Water Meter Service - - - NA
Backflow Device Inspection - - - NA
Maintenance of Customers Service - - - NA
Water Mapping - - - NA
Maintenance of Water Hydrants - PU - - - NA
Maintenance of Water Hydrants - PR - - - NA
Water Clothing/PPE - - - NA
Wages/Water - - - NA
Transportation Expense - - - NA
General Expense/Water Permit - - - NA
TOTAL DISTRIBUTION EXPENSE - - -
DEPRECIATION & AMORTIZATION
Depreciation 208,365 208,365 - 100% demand
TOTAL DEPRECIATION 208,365 208,365 -
OTHER OPERATING EXPENSE
Dam Maintenance Expense 444 444 - 100% demand
Pension Expense (13,068) (13,068) - 100% demand
OPEB Expense - - - NA
Interest Paid on Meter Deposit - - - NA
Rental Property Expense - - - 100% demand
TOTAL OTHER OPERATING EXPENSE (12,624) (12,624) -
CONSUMER ACCOUNTS EXPENSE
Meter Reading Expense - - - NA
Miscellaneous Customer Accounts Expense - - - NA
Cust Billings Not Paid - - - NA
TOTAL CONSUMER ACCOUNTS EXPENSE - - -
ADMINISTRATIVE EXPENSE
Salaries Office & Commission 99,580 63,190 36,390 operating expenses
Temporary Staffing - - - NA
Office Supplies & Expense 9,020 5,724 3,296 operating expenses
Elk River Municipal Utilities
2024 Test Year Water Plant Classification
page 1 of 2
Exhibit 3-B
FY 2024
REVENUE REQUIREMENT TEST YEAR Demand Commodity Classification Basis
Elk River Municipal Utilities
2024 Test Year Water Plant Classification
LT & Water Consumption 2,335 1,481 853 operating expenses
Bank Charges 280 177 102 operating expenses
Legal Fees 2,199 1,395 803 operating expenses
Auditing Fees 2,028 1,287 741 operating expenses
Insurance 15,454 9,806 5,647 operating expenses
Deferred Comp 7,175 4,553 2,622 operating expenses
Medical/Dental 78,062 49,535 28,527 operating expenses
PERA 22,851 14,500 8,351 operating expenses
FICA 22,411 14,221 8,190 operating expenses
Sick Pay 26,784 16,996 9,788 operating expenses
Holiday Pay 13,303 8,441 4,861 operating expenses
Vacation & PTO 23,072 14,641 8,431 operating expenses
UPMIC Distribution 9,079 5,761 3,318 operating expenses
Miscellaneous - Wellhead - - - NA
Longevity Pay 322 204 118 operating expenses
Consulting Fees 6,284 3,988 2,297 operating expenses
Telephone 2,705 1,717 989 operating expenses
Advertising 1,399 888 511 operating expenses
Dues & Subscriptions 30,121 19,113 11,007 operating expenses
Travel Expense - - - NA
Schools & Meetings 16,339 10,368 5,971 operating expenses
Maintenance of General Plant & Office 970 615 354 operating expenses
TOTAL ADMINISTRATIVE EXPENSE 391,774 248,605 143,169
GENERAL EXPENSE
CIP Rebates - Residential - - - NA
CIP Rebates - Commercial - - - NA
CIP - Administration - - - NA
CIP - Marketing - - - NA
CIP - Labor - - - NA
Environmental Compliance 263 263 - 100% demand
Misc General Expense - - - 100% demand
TOTAL GENERAL EXPENSE 263 263 -
TOTAL OPERATING EXPENSE 1,368,619 868,475 500,144
NON-OPERATING REVENUES (EXPENSES)
Interest income - - - NA
Miscellaneous revenue - - - NA
Interest expense and other (5,784) (5,784) - 100% demand
Gain (Loss) on sale of capital assets - - - NA
TOTAL NON-OPERATING REV (EXP)(5,784) (5,784) -
OTHER OPERATING REVENUE
Connection maintenance - - - NA
Customer penalties - - - NA
TOTAL OTHER OPERATING REVENUE - - -
Developer and Connection Fees - - - NA
MARGIN - - - NA
TOTAL REVENUE REQUIREMENT 1,374,402 874,259 500,144
page 2 of 2
Exhibit 3-C
FY 2024 Distribution Customer
REVENUE REQUIREMENT TEST YEAR Demand Facilities Classification Basis
OPERATING EXPENSES
PRODUCTION EXPENSE
Maintenance of Structures - - - NA
TOTAL PRODUCTION EXPENSE - - -
PUMPING EXPENSE
Supervision - - - NA
Electric & Gas Utilities - - - NA
Sampling - - - NA
Chemical Feed - - - NA
Maintenance of Electric Pumping - - - NA
Maintenance of Wells - - - NA
SCADA - Pumping - - - NA
TOTAL PUMPING EXPENSE - - -
DISTRIBUTION EXPENSE
Maintenance of Water Mains 161,765 161,765 - 100% Dist demand
Locate Water Lines 13,728 13,728 - 100% Dist demand
Locate Water Main - - - NA
Water Meter Service 100,494 - 100,494 100% Cust facilities
Backflow Device Inspection 19,532 - 19,532 100% Cust facilities
Maintenance of Customers Service 33,583 - 33,583 100% Cust facilities
Water Mapping 25,858 - 25,858 100% Cust facilities
Maintenance of Water Hydrants - PU 22,736 - 22,736 100% Cust facilities
Maintenance of Water Hydrants - PR 4,990 - 4,990 100% Cust facilities
Water Clothing/PPE 9,528 5,396 4,132 Operating Expense
Wages/Water 7,617 4,314 3,303 Operating Expense
Transportation Expense 18,310 10,369 7,941 Operating Expense
General Expense/Water Permit 26,255 14,868 11,387 Operating Expense
TOTAL DISTRIBUTION EXPENSE 444,396 210,440 233,956
DEPRECIATION & AMORTIZATION
Depreciation 1,014,668 615,835 398,833 plant
TOTAL DEPRECIATION 1,014,668 615,835 398,833
OTHER OPERATING EXPENSE
Dam Maintenance Expense - - - NA
Pension Expense - - - NA
OPEB Expense - - - NA
Interest Paid on Meter Deposit - - - NA
Rental Property Expense - - - Operating Expense
TOTAL OTHER OPERATING EXPENSE - - -
CONSUMER ACCOUNTS EXPENSE
Meter Reading Expense - - - NA
Miscellaneous Customer Accounts Expense - - - NA
Cust Billings Not Paid - - - NA
TOTAL CONSUMER ACCOUNTS EXPENSE - - -
ADMINISTRATIVE EXPENSE
Salaries Office & Commission 148,778 84,254 64,525 Operating Expense
Temporary Staffing - - - NA
Office Supplies & Expense 13,477 7,632 5,845 Operating Expense
LT & Water Consumption 3,488 1,975 1,513 Operating Expense
Elk River Municipal Utilities
2024 Test Year Water Distribution Classification
page 1 of 2
Exhibit 3-C
FY 2024 Distribution Customer
REVENUE REQUIREMENT TEST YEAR Demand Facilities Classification Basis
Elk River Municipal Utilities
2024 Test Year Water Distribution Classification
Bank Charges 418 237 181 Operating Expense
Legal Fees 3,285 1,860 1,425 Operating Expense
Auditing Fees 3,030 1,716 1,314 Operating Expense
Insurance 23,089 13,075 10,014 Operating Expense
Deferred Comp 10,720 6,071 4,649 Operating Expense
Medical/Dental 116,628 66,047 50,581 Operating Expense
PERA 34,140 19,334 14,806 Operating Expense
FICA 33,484 18,962 14,522 Operating Expense
Sick Pay 40,017 22,662 17,355 Operating Expense
Holiday Pay 19,875 11,255 8,620 Operating Expense
Vacation & PTO 34,471 19,521 14,950 Operating Expense
UPMIC Distribution 13,564 7,682 5,883 Operating Expense
Miscellaneous - Wellhead - - - NA
Longevity Pay 481 272 209 Operating Expense
Consulting Fees 9,389 5,317 4,072 Operating Expense
Telephone 4,042 2,289 1,753 Operating Expense
Advertising 2,090 1,184 906 Operating Expense
Dues & Subscriptions 45,002 25,485 19,517 Operating Expense
Travel Expense - - - NA
Schools & Meetings 24,412 13,825 10,587 Operating Expense
Maintenance of General Plant & Office 1,449 821 628 Operating Expense
TOTAL ADMINISTRATIVE EXPENSE 585,330 331,475 253,855
GENERAL EXPENSE
CIP Rebates - Residential - - - NA
CIP Rebates - Commercial - - - NA
CIP - Administration - - - NA
CIP - Marketing - - - NA
CIP - Labor - - - NA
Environmental Compliance 393 223 170 Operating Expense
Misc General Expense - - - Operating Expense
TOTAL GENERAL EXPENSE 393 223 170
TOTAL OPERATING EXPENSE 2,044,787 1,157,972 886,815
NON-OPERATING REVENUES (EXPENSES)
Interest income - - - NA
Miscellaneous revenue - - - NA
Interest expense and other (28,165) (17,094) (11,071) plant
Gain (Loss) on sale of capital assets - - - NA
TOTAL NON-OPERATING REV (EXP)(28,165) (17,094) (11,071)
OTHER OPERATING REVENUE
Connection maintenance - - - NA
Customer penalties - - - NA
TOTAL OTHER OPERATING REVENUE - - -
Developer and Connection Fees 477,998 290,112 187,886 plant
MARGIN - - - NA
TOTAL REVENUE REQUIREMENT 1,594,954 884,954 710,000
page 2 of 2
Exhibit 3-D
FY 2024
REVENUE REQUIREMENT TEST YEAR Customer Classification Basis
OPERATING EXPENSES
PRODUCTION EXPENSE
Maintenance of Structures - - NA
TOTAL PRODUCTION EXPENSE -
PUMPING EXPENSE
Supervision - - NA
Electric & Gas Utilities - - NA
Sampling - - NA
Chemical Feed - - NA
Maintenance of Electric Pumping - - NA
Maintenance of Wells - - NA
SCADA - Pumping - - NA
TOTAL PUMPING EXPENSE - -
DISTRIBUTION EXPENSE
Maintenance of Water Mains - - NA
Locate Water Lines - - NA
Locate Water Main - - NA
Water Meter Service - - NA
Backflow Device Inspection - - NA
Maintenance of Customers Service - - NA
Water Mapping - - NA
Maintenance of Water Hydrants - PU - - NA
Maintenance of Water Hydrants - PR - - NA
Water Clothing/PPE - - NA
Wages/Water - - NA
Transportation Expense - - NA
General Expense/Water Permit - - NA
TOTAL DISTRIBUTION EXPENSE - -
DEPRECIATION & AMORTIZATION
Depreciation - - NA
TOTAL DEPRECIATION - -
OTHER OPERATING EXPENSE
Dam Maintenance Expense - - NA
Pension Expense - - NA
OPEB Expense - - NA
Interest Paid on Meter Deposit 967 967 100% Customer
Rental Property Expense - - NA
TOTAL OTHER OPERATING EXPENSE 967 967
CONSUMER ACCOUNTS EXPENSE
Meter Reading Expense 5,549 5,549 100% Customer
Miscellaneous Customer Accounts Expense 91,045 91,045 100% Customer
Cust Billings Not Paid 19 19 100% Customer
TOTAL CONSUMER ACCOUNTS EXPENSE 96,613 96,613
ADMINISTRATIVE EXPENSE
Salaries Office & Commission 10,175 10,175 100% Customer
Temporary Staffing - - NA
Office Supplies & Expense 922 922 100% Customer
LT & Water Consumption 239 239 100% Customer
Elk River Municipal Utilities
2024 Test Year Water Customer Classification
page 1 of 2
Exhibit 3-D
FY 2024
REVENUE REQUIREMENT TEST YEAR Customer Classification Basis
Elk River Municipal Utilities
2024 Test Year Water Customer Classification
Bank Charges 29 29 100% Customer
Legal Fees 225 225 100% Customer
Auditing Fees 207 207 100% Customer
Insurance 1,579 1,579 100% Customer
Deferred Comp 733 733 100% Customer
Medical/Dental 7,976 7,976 100% Customer
PERA 2,335 2,335 100% Customer
FICA 2,290 2,290 100% Customer
Sick Pay 2,737 2,737 100% Customer
Holiday Pay 1,359 1,359 100% Customer
Vacation & PTO 2,358 2,358 100% Customer
UPMIC Distribution 928 928 100% Customer
Miscellaneous - Wellhead - - NA
Longevity Pay 33 33 100% Customer
Consulting Fees 642 642 100% Customer
Telephone 276 276 100% Customer
Advertising 143 143 100% Customer
Dues & Subscriptions 3,078 3,078 100% Customer
Travel Expense - - NA
Schools & Meetings 1,670 1,670 100% Customer
Maintenance of General Plant & Office 99 99 100% Customer
TOTAL ADMINISTRATIVE EXPENSE 40,031 40,031
GENERAL EXPENSE
CIP Rebates - Residential 1,090 1,090 100% Customer
CIP Rebates - Commercial - - NA
CIP - Administration - - NA
CIP - Marketing 1,117 1,117 100% Customer
CIP - Labor - - NA
Environmental Compliance 27 27 100% Customer
Misc General Expense - - NA
TOTAL GENERAL EXPENSE 2,234 2,234
TOTAL OPERATING EXPENSE 139,845 139,845
NON-OPERATING REVENUES (EXPENSES)
Interest income - - NA
Miscellaneous revenue - - NA
Interest expense and other - - NA
Gain (Loss) on sale of capital assets - - NA
TOTAL NON-OPERATING REV (EXP)- -
OTHER OPERATING REVENUE
Connection maintenance - - NA
Customer penalties - - NA
TOTAL OTHER OPERATING REVENUE - -
Developer and Connection Fees - - NA
MARGIN - - NA
TOTAL REVENUE REQUIREMENT 139,845 139,845
page 2 of 2
Exhibit 3-E
Commercial/
Total Residential Industrial
Demand Allocation Factors
Peak Day - 1000 gallons 4,107 2,121 1,986
Peak Day 100.0%51.6%48.4%
Commodity Allocation Factors
Commodity Sales - 1000 gallons 766,124 376,299 389,825
Commodity 100.0%49.1%50.9%
Customers
Number of Customers 5,705 5,087 618
C 100.0%89.2%10.8%
Customer Facilities Allocation Factor
Customer Facilities Weight 1 6
Weighted Number of Cust 8,795 5,087 3,708
CF 100.0%57.8%42.2%
Customer Service Allocation Factor
Customer Service Weight 1 3
Weighted Number of Cust 6,941 5,087 1,854
CS 100.0%73.3%26.7%
Revenue Allocator
Sum Other Rev Reqs 3,109,202$ 1,667,386$ 1,441,816$
R 100.0%53.6%46.4%
Elk River Municipal Utilities
2024 Test Year Allocation Factors
page 1 of 1
Exhibit 3-F
Commercial/Allocation
Total Residential Industrial Factor
Plant
Demand 874,259 451,526 422,732 Peak Day
Commodity 500,144 245,657 254,487 Commodity
Total Plant 1,374,402$ 697,183$ 677,219$
Distribution
Distribution Demand 884,954 457,050 427,904 Peak Day
Customer Facilities 710,000 410,662 299,338 CF
Total Distribution 1,594,954$ 867,712$ 727,242$
Customer
Customer Service 139,845 102,491 37,354 CS
Total Customer Service 139,845$ 102,491$ 37,354$
Revenue Component
Other Revenue (631,723) (338,777) (292,946) R
Margin 333,525 178,861 154,664 R
Total Revenue (298,198)$ (159,916)$ (138,282)$
Total Revenue Requirements 2,811,004$ 1,507,470$ 1,303,534$
Total Revenues 2,811,004$ 1,564,571$ 1,246,433$
Percent Revenue Requirements 100.0%53.6%46.4%
Percent Revenues 100.0%55.7%44.3%
Percent Change 0.0%-3.6%4.6%
Revenue Req/1000 gallons 3.669 4.006 3.344
Revenue/1000 gallons 3.669 4.158 3.197
Elk River Municipal Utilities
2024 Test Year Allocation of Revenue Requirements
page 1 of 1
- 1 -
Section 4
Proposed Rates
Changes to rates are generally based on the overall need for revenues and results of the
cost-of-service analyses. The projected operating results at existing rates as presented
in Section 2 of this report outline the overall revenue needs of the water utility. Section 3
summarizes the cost-of-service results for the water utility. These factors have been
considered in developing the proposed rates summarized in this section of the report.
Proposed Rates
Revenue Needs
In Section 2, it shows that ERMU’s projected annual change in water net position,
assuming continuation of the existing retail rates drops from 86% of the reserve goal to
52% of the reserve goal by 2029. ERMU’s projected cash reserves decline from $10.5
million to $6.8 million by the end of the Study Period. This is a decrease in reserves of
35%.
Recommended Rates
Exhibit 4-A shows the existing and recommended rates for water for each year from 2026-
2029.
Based on discussions with ERMU management, a goal was set to increase overall
reserve levels by $1.3 million dollars at the end of the Study Period as compared to the
projections at current rates. To meet this goal, annual rate increases of 4% each year
are recommended through 2029.
Section 4
- 2 -
Projected Operating Results – Proposed Rates
Based on the proposed rates outlined above, the resulting projected operating results are
summarized below in Table 4-1. A summary presentation of the operating results is
shown in Exhibit 4-B.
Table 4-1
Projected Operating Results-Water
Proposed Rates
Year 2025 2026 2027 2028 2029
Operating Revenues $3,145,246 $3,276,063 $3,399,836 $3,532,811 $3,668,850
Less Operating
Expenses (3,972,626) (4,127,970) (4,322,616) (4,454,230) (4,871,800)
Plus Non-Operating
Income 545,634 574,568 571,433 423,804 259,977
Plus Fees and
Transfers 255,000 302,479 434,003 431,344 428,623
Change in Net Position $(26,746) $25,139 $82,656 $(66,271) $(514,350)
Net Position as
Percent of Revenues -0.9% 0.8% 2.4% -1.9% -14.0%
Cash Reserves
A summary of the impact of the projected operating results at proposed rates on ERMU’s
cash reserves is shown at the end of Exhibit 4-B and in Tables 4-2 below.
As mentioned above, a goal of increasing overall reserve levels by $1.3 million through
rate adjustments was set in discussions with ERMU management. The 2029 end of year
unrestricted reserve level shown below is $8.0 million. This represents an increase of
$1.3 million over the $6.8 million projection under existing rates as shown in Section 2 of
this report.
Proposed Rates
- 3 -
Table 4-2
Projected Cash Reserves-Water
Proposed Rates
Year 2025 2026 2027 2028 2029
Beginning Balance $10,500,000 $7,070,639 $7,176,282 $8,072,522
Plus Change in Net Position 25,139 82,656 (66,271) (514,350)
Plus Depreciation 1,415,000 1,528,317 1,576,161 1,907,449
Interfund Borrowing (1,400,000) 1,400,000
Plus Debt Proceeds - - 8,000,000 -
Less Debt Principal (70,000) (70,000) (75,000) (75,000)
Less New Debt Principal - - - (279,400)
Less Capital Improvements (3,399,500) (1,435,330) (9,938,650) (1,062,650)
Ending Balance(1) $10,500,000 $7,070,639 $7,176,282 $8,072,522 $8,048,571
Reserve Goal $12,216,671 $12,750,828 $12,951,869 $13,416,604 $13,488,199
Reserves as % of ERMU Goal 86% 55% 55% 60% 60%
(1) 2025 EOY reserve balance estimated by ERMU staff based on 2025 YTD actual results
Competitive Analysis
ERMU is interested in how its rates compare to neighboring utilities. Table 4-3 below
shows monthly water bills for a typical customer in the residential class with 4,000; 10,000;
and 16,000 gallons of consumption. Bills are shown based on existing ERMU rates,
proposed ERMU rates in 2026 and 2027 and the proposed 2026 rates for Buffalo and
Shakopee.
Section 4
- 4 -
Table 4-3
Monthly Water Bill Comparisons
Residential Monthly Usage
Utility 4,000
Gallons
10,000
Gallons
16,000
Gallons
ERMU current $18.39 $32.23 $54.63
ERMU prop 2026 $19.12 $33.51 $56.83
ERMU prop 2027 $19.87 $34.81 $59.05
Buffalo 2026 $44.25 $92.45 $158.45
Shakopee 2026 $20.54 $43.12 $73.37
Exhibit 4-A
2026 2027 2028 2029
Current Proposed Proposed Proposed Proposed
Class Rate Rate Rate Rate Rate
Residential
Customer (per month)10.23$ 10.64$ 11.07$ 11.51$ 11.97$
Usage
Tier 1 ($/1000 gallons) 0-9000 gallons 2.04$ 2.12$ 2.20$ 2.29$ 2.38$
Tier 2 ($/1000 gallons) 9000-15,000 gallons 3.64$ 3.79$ 3.94$ 4.10$ 4.26$
Tier 3 ($/1000 gallons) over 15,000 gallons 4.20$ 4.37$ 4.54$ 4.72$ 4.91$
Commercial
Customer (per month)
3/4 inch 12.27$ 12.76$ 13.27$ 13.80$ 14.35$
1 inch 13.65$ 14.20$ 14.77$ 15.36$ 15.97$
1 1/4 inch 15.02$ 15.62$ 16.24$ 16.89$ 17.57$
1 1/2 inch 16.38$ 17.04$ 17.72$ 18.43$ 19.17$
2 inch 21.83$ 22.70$ 23.61$ 24.55$ 25.53$
3 inch 47.75$ 49.66$ 51.65$ 53.72$ 55.87$
4 inch 65.48$ 68.10$ 70.82$ 73.65$ 76.60$
6 inch 95.49$ 99.31$ 103.28$ 107.41$ 111.71$
8 inch 129.60$ 134.78$ 140.17$ 145.78$ 151.61$
Irrigation 21.83$ 22.70$ 23.61$ 24.55$ 25.53$
Usage
Tier 1 ($/1000 gallons)2.04$ 2.12$ 2.20$ 2.29$ 2.38$
Tier 2 ($/1000 gallons)3.64$ 3.79$ 3.94$ 4.10$ 4.26$
Tier 3 ($/1000 gallons)4.20$ 4.37$ 4.54$ 4.72$ 4.91$
Tiers adjust based on winter usage
Elk River Municipal Utilities
Existing and Proposed Water Rates
Exhibit 4-B
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
OPERATING REVENUES
Charges for services 2,613,812$ 3,049,140$ 2,887,276$ 3,305,148$ 2,803,602$ 3,053,746$ 3,176,063$ 3,299,836$ 3,432,811$ 3,568,850$
Connection maintenance 56,931 71,520 75,365 55,733 72,409 63,500 65,000 65,000 65,000 65,000
Customer penalties 3,801 - 26,194 23,118 31,102 28,000 35,000 35,000 35,000 35,000
Total Operating Revenues 2,674,544$ 3,120,660$ 2,988,835$ 3,383,999$ 2,907,113$ 3,145,246$ 3,276,063$ 3,399,836$ 3,532,811$ 3,668,850$
OPERATING EXPENSES
Production 502,748$ 674,815$ 681,079$ 667,881$ 780,844$ 807,150$ 793,000$ 816,790$ 841,294$ 866,533$
Distribution 251,259 412,534 307,192 321,566 462,083 520,410 498,125 513,069 528,461 544,315
Services to City 463 1,259 540 - - 2,000 2,000 2,000 2,000 2,000
Depreciation 1,133,179 1,139,802 1,117,357 1,174,752 1,223,033 1,325,866 1,415,000 1,528,317 1,576,161 1,907,449
Customer accounts 66,509 72,213 81,285 88,640 96,615 105,250 104,250 107,378 110,599 113,917
General and administrative 719,527 844,475 980,528 943,138 1,006,969 1,211,950 1,315,595 1,355,063 1,395,715 1,437,587
Total Operating Expenses 2,673,685$ 3,145,098$ 3,167,981$ 3,195,977$ 3,569,544$ 3,972,626$ 4,127,970$ 4,322,616$ 4,454,230$ 4,871,800$
OPERATING INCOME 859$ (24,438)$ (179,146)$ 188,022$ (662,431)$ (827,380)$ (851,907)$ (922,780)$ (921,419)$ (1,202,950)$
NON-OPERATING REVENUE (EXPENSE)
Interest income 33,454$ 24,677$ (30,592)$ 57,360$ 104,286$ 151,000$ 126,000$ 127,883$ 143,854$ 143,427$
Miscellaneous revenue 262,311 292,330 424,994 418,451 429,016 418,100 473,350 473,350 473,350 473,350
Interest expense and other (23,516) (65,296) (40,948) (36,444) (33,949) (31,466) (28,782) (33,800) (31,000) (28,000)
New debt interest - - - (166,400) (332,800)
Gain (Loss) on sale of capital assets 3,507 (662) (9,150) 2,940 (5,090) 8,000 4,000 4,000 4,000 4,000
Total Non-Operating Revenues (Expenses)275,756$ 251,049$ 344,304$ 442,307$ 494,263$ 545,634$ 574,568$ 571,433$ 423,804$ 259,977$
Income before Contributions and Transfers 276,615$ 226,611$ 165,158$ 630,329$ (168,168)$ (281,746)$ (277,340)$ (351,347)$ (497,615)$ (942,973)$
Connection Fees 595,482$ 548,948$ 1,547,930$ 253,341$ 477,998$ 255,000$ 366,000$ 500,000$ 500,000$ 500,000$
Contributions from Developers 477,194 552,920 940,306 - -
Contributions from Customers - - - - 21,910 - - - - -
Transfers from/(to) Other City Funds - 195,245 - 1,348,943 - - (63,521) (65,997) (68,656) (71,377)
Grants - 3,288 - - - - - - - -
CHANGE IN NET POSITION 1,349,291$ 1,527,012$ 2,653,394$ 2,232,613$ 331,740$ (26,746)$ 25,139$ 82,656$ (66,271)$ (514,350)$
As Percent of Revenues 50.4%48.9%88.8%66.0%11.4%-0.9%0.8%2.4%-1.9%-14.0%
UNRESTRICTED CASH RESERVES
Beginning of Year 10,500,000$ 7,070,639$ 7,176,282$ 8,072,522$
Plus Change in Net Position 25,139 82,656 (66,271) (514,350)
Plus Depreciation 1,415,000 1,528,317 1,576,161 1,907,449
Interfund Borrowing (1,400,000) 1,400,000
Plus Debt Proceeds - - 8,000,000 -
Less Debt Principal (70,000) (70,000) (75,000) (75,000)
Less New Debt Principal - - - (279,400)
Less Capital Improvements (3,399,500) (1,435,330) (9,938,650) (1,062,650)
End of Year(1)9,961,189$ 10,500,000$ 7,070,639$ 7,176,282$ 8,072,522$ 8,048,571$
Reserve goal 12,719,919$ 12,750,828$ 12,951,869$ 13,416,604$ 13,488,199$
Percent of goal 83%55%55%60%60%
(1) 2025 EOY reserve balance estimated by ERMU staff based on 2025 YTD actual results.
Projected
Elk River Municipal Utilities
Water Operating Results at Proposed Rates
Historical
page 1 of 1
______________________________________________________________________________
Page 1 of 2
UTILITIES COMMISSION MEETING
TO:
ERMU Commission
FROM:
Mark Hanson - General Manager
MEETING DATE:
December 18, 2025
AGENDA ITEM NUMBER:
3.1
SUBJECT:
Verizon Water Tower Lease Agreements
ACTION REQUESTED:
None
BACKGROUND:
At the November 2025 commission meeting, staff reviewed Verizon’s request to amend their
current leases (attached). After discussion, the Commission directed staff to decline the offers.
DISCUSSION:
After the Commission’s decision, Verizon submitted a revised offer for the Johnson Tower. Staff
expects to receive similar offers for the other two towers. As before, the lump sum offer is
contingent upon granting a perpetual easement on the property (no end date).
Tower Current Lease
Terms Expires Future
Payments
Lump Sum
Offer
New Lease
Terms Expires Future
Payments
1st Offer $30,000/year
4% / year 2039 $798,603 $745,000 $30,000/year
3% / year 2056 $1,427,262
2nd Offer $30,000/year
4% / year 2039 $798,603 $800,000 $38,200/year
3% / year 2059 $2,054,269
Additionally, although the longer proposed terms may seem promising, nothing in the current
offers prevent Verizon from seeking future lease reductions.
Similar to last month’s report, the table below lists the reduction in revenue if the proposed
lease terms were used throughout the remainder of the current lease periods.
Each of our four water towers has antennas attached from two cellular carriers with Verizon on
all four towers. Staff’s goal is to negotiate consistent lease terms across all carriers for their
Tower Expires Existing Lease
Future Payments
Proposed Lease
Future Payments
Reduction
in Revenue
Percent
Reduction
1st Offer 2039 $798,603 $468,534 $330,069 41.3%
2nd Offer 2039 $798,603 $587,241 $211,362 26.5%
______________________________________________________________________________
Page 2 of 2
respective agreements. Consequently, reducing Verizon’s lease agreement by the amounts
shown in the above table is not recommended.
If the Commission is interested in reducing Verizon’s lease payments, Staff recommend
selecting a target percent reduction. Staff would then negotiate revised lease terms with
Verizon to achieve that goal. For example, reducing the annual escalator from 4% to 3% would
result in an approximately 5% reduction in total future lease payments through the existing
expiration periods. Reducing the escalator from 4% to 2% would result in an approximate 10%
reduction. Further reductions beyond 5% would require reducing the annual payments as
needed to achieve the desired goal.
For reference, Verizon’s total current annual lease payments on all four towers are
approximately $170K.
ATTACHMENTS:
• Staff Memo - 2025-11 - 5.11 - Verizon Water Tower Lease Agreements
• Verizon’s initial offer for Johnson Street Tower, Site ID 123332 – December 4, 2025
• Verizon’s revised offer for Johnson Street Tower, Site ID 123332 – December 7, 2025
______________________________________________________________________________
Page 1 of 2
UTILITIES COMMISSION MEETING
TO:
ERMU Commission
FROM:
Mark Hanson - General Manager
MEETING DATE:
November 12, 2025
AGENDA ITEM NUMBER:
5.11
SUBJECT:
Verizon Water Tower Lease Agreements
ACTION REQUESTED:
None
BACKGROUND:
ERMU currently has four water tower attachment lease agreements with Verizon Wireless, LLC,
one on each of the four water towers. Two were executed in 2014 (Gary and Johnson towers),
one in 2016 (Auburn tower), and one in 2020 (Freeport tower). Each lease agreement had an
initial five-year term with four additional five-year renewal periods. All four lease agreements
started with first-year lease amounts of $30,000. The first three lease agreements include an
annual escalator of 4%. Freeport tower has a 2% escalator with a provision that if Verizon
removes their equipment from any of the other three towers the annual rent amount for the
Freeport tower shall increase by 20% of the then current lease amount.
DISCUSSION:
Staff have received multiple requests from Verizon representatives to either buy out our
current lease agreements for a lump sum amount or renegotiate the current lease terms to
lower both the annual rent payment and the annual escalator. The lump sum offer is also
contingent on granting a perpetual easement on the property (no end date).
Verizon states they are offering these options in lieu of potentially terminating the existing
lease agreements. According to Verizon, their current lease agreement costs on a national level
are not sustainable. The following table presents Verizon’s offers to date (no offer has been
made for the Freeport tower):
Tower Current
Lease Terms Expires Future
Payments
Lump
Sum Offer
New Lease
Terms Expires Future
Payments
Auburn $30,000/year
4% / year 2041 $1,106,346 $700,000 $30,000/year
15% / 5 years 2050 $1,011,357
Gary $30,000/year
4% / year 2039 $798,603 $900,000 $33,600/year
15% / 5 years 2041 $583,380
Johnson $30,000/year
4% / year 2039 $798,603 $745,000 $30,000/year
3% / year 2056 $1,427,262
______________________________________________________________________________
Page 2 of 2
While the lump sum offer may appear attractive, granting a perpetual easement on the
property poses significant long-term risks due to the many unknowns that the future may bring.
Most importantly, the water towers are distribution system assets, so granting a perpetual
easement, which may limit future options, is very dangerous.
Similarly, it is unwise to renegotiate any of the current lease agreements since the proposed
terms offer a lower escalator and a lower annual rent. To illustrate this point, the table below
lists the reduction in revenue if the proposed lease terms were used throughout the remainder
of the current lease periods. Additionally, while the longer duration of the proposed terms may
seem promising, there is nothing preventing Verizon from requesting additional reductions to
the lease agreements at some point in the future.
Tower Expires Existing Lease
Future Payments
Proposed Lease
Future Payments
Reduction in
Revenue
Auburn 2041 $1,106,346 $566,501 $539,845
Gary 2039 $798,603 $494,508 $304,095
Johnson 2039 $798,603 $468,534 $330,069
Staff are presenting Verizon’s offers to maintain transparency with the Commission and our
customers but recommend against accepting them. If the Commission is interested in pursuing
any of Verizon’s offers, staff will engage with Verizon in pursuit of the desired option(s). The
results of any negotiated terms would be presented at a future commission meeting.
ATTACHMENTS:
• Verizon’s offer for Auburn Street Tower, Site ID 162187
• Verizon’s offer for Gary Street Tower, Site ID 123107
• Verizon’s offer for Johnson Street Tower, Site ID 123332
October 7, 2025
Elk River Municipal Utilities
Site Name: Min Vieths Site ID: 123332
Dear Landlord,
I am following up with you regarding our recent telephone conversation setting forth Verizon
Wireless’s Lease Optimization Program. As discussed during our conversation, Verizon Wireless is
interested in making certain modifications to the cell site lease regarding the Verizon Wireless
communications facility on your property. These lease modifications will allow the cell site on your property
to better meet Verizon Wireless’s current operational needs and enhance its long-term value to the overall
network.
Criteria for Cell Site Retention
As we discussed, Verizon Wireless would like to include this site in its long -term portfolio under the
following terms:
● New Rent Amount: $30,000.00 per year, commencing on (8/1/2026)
● New Rent Escalator: Three Percent (3%) every year (next increase on 8/1/2027)
● Additional Renewal Terms: Five (5) additional five (5) year renewal terms
● Lump Sum Payment Option: Provide a one-time lump sum payment of $745,000.00. In
return, you will grant a perpetual easement on your property.
Additionally, in order to maintain long-term operational flexibility, Verizon Wireless requires that the
following language, substantially in the form of the following, be added to the Lease:
Right of First Refusal. Notwithstanding anything contained in the [Lease] to the contrary, if at any time after the Effective Date,
[LESSOR] receives an offer or letter of intent, from any person or entity that is in the business of owning, managing or oper ating
communications facilities or is in the business of acquiring landlord interests in agreements relating to communications facilities, to
purchase fee title, an easement, a lease, a license, or any other interest in the [Property] or any portion ther eof or to acquire any
interest in the [Lease], or an option for any of the foregoing, [LESSOR] shall provide written notice to [LESSEE] of said off er
(“[LESSOR]’s Notice”). [LESSOR]’s Notice shall include the prospective buyer’s name, the purchase price being offered, and any
other consideration being offered, the other terms and conditions of the offer, a description of the portion of and interest in the [Property]
and/or the [Lease] which will be conveyed in the proposed transaction, and a copy of any letters of intent or form agreements presented
to [LESSOR] by the third-party offeror. [LESSEE] shall have the right of first refusal to meet any bona fide offer of sale or transfer on
the terms and conditions of such offer or by effectuating a transaction with substantially equivalent financial terms. If [LESSEE] fails
to provide written notice to [LESSOR] that [LESSEE] intends to meet such bona fide offer within 60 days after receipt of [LESSOR]’s
Notice, [LESSOR] may proceed with the proposed transaction in accordance with the terms and conditions of such third-party offer,
in which event the [Lease] shall continue in full force and effect and the right of first refusal described in this Section shall survive any
such conveyance to a third party. If [LESSEE] provides [LESSOR] with notice of [LESSEE]’s intention to meet the third party offer
within 60 days after receipt of [LESSOR]’s Notice, then if [LESSOR]’s Notice describes a transaction involving greater space than the
[Premises], [LESSEE] may elect to proceed with a transaction covering only the [Premises] and the purchase price shall be prorated
on a square footage basis. Further, [LESSOR] acknowledges and agrees that if [LESSEE] exercises this right of first refusal, [LESSEE]
may require a reasonable period of time to conduct due diligence and effectuate the closing of a transaction on substantially equivalent
financial terms of the third-party offer. [LESSEE] may elect to amend the [Lease] to effectuate the proposed financial terms of the third
party offer rather than acquiring fee simple title or an easement interest in the [Premises]. For purposes of this Section, any transfer,
bequest or devise of [LESSOR]'s interest in the [Property] as a result of the death of [LESSOR], whether by will or intestate succession,
or any conveyance to [LESSOR]’s family members by direct conveyance or by conveyance to a trust for the benefit of family members
shall not be considered a sale for which [LESSEE] has any right of first refusal.
The foregoing proposal does not constitute a binding offer to amend the lease. No legal obligation
is created by this letter or any other written or oral communications until a written amendment to the lease
has been signed by both Landlord and Verizon Wireless. Verizon Wireless will continue to abide by the
terms of the current lease until an amendment has been executed or the existing lease has been terminated
or expires. Verizon Wireless values its affiliation with you and hopes that you choose to secu re your site(s)
to continue a long and mutually profitable relationship in the years to come. After having reviewed this
proposal, please contact me prior to October 13,2025.
Sincerely,
Mark Gillaspy
Mark Gillaspy
Lease Consultant
Lease Optimization - CENREV
O (469) 833-2965
180 Washington Valley Road, Bedminster, NJ 07921
December 4, 2025
Site Name: Min Vieths Site ID: 123332
Dear Landlord,
I am following up with you regarding our recent telephone conversation setting forth Verizon
Wireless’s Lease Optimization Program. As discussed during our conversation, Verizon Wireless is
interested in making certain modifications to the cell site lease regarding the Verizon Wireless
communications facility on your property. These lease modifications will allow the cell site on your property
to better meet Verizon Wireless’s current operational needs and enhance its long-term value to the overall
network.
Criteria for Cell Site Retention
As we discussed, Verizon Wireless would like to include this site in its long -term portfolio under the
following terms:
● New Rent Amount: $38,200.00 per year, commencing on (8/1/2029)
● New Rent Escalator: Three Percent (3%) every year (next increase on 8/1/2030)
● Additional Renewal Terms: Six (6) additional five (5) year renewal terms
● Lump Sum Payment Option: Provide a one-time lump sum payment of $800,000. In
return, you will grant a perpetual easement on your property.
Additionally, in order to maintain long-term operational flexibility, Verizon Wireless requires that the
following language, substantially in the form of the following, be added to the Lease:
Right of First Refusal. Notwithstanding anything contained in the [Lease] to the contrary, if at any time after the Effective Date,
[LESSOR] receives an offer or letter of intent, from any person or entity that is in the business of owning, managing or oper ating
communications facilities or is in the business of acquiring landlord interests in agreements relating to communications facilities, to
purchase fee title, an easement, a lease, a license, or any other interest in the [Property] or any portion ther eof or to acquire any
interest in the [Lease], or an option for any of the foregoing, [LESSOR] shall provide written notice to [LESSEE] of said off er
(“[LESSOR]’s Notice”). [LESSOR]’s Notice shall include the prospective buyer’s name, the purchase price being offered, and any
other consideration being offered, the other terms and conditions of the offer, a description of the portion of and interest in the [Property]
and/or the [Lease] which will be conveyed in the proposed transaction, and a copy of any letters of intent or form agreements presented
to [LESSOR] by the third-party offeror. [LESSEE] shall have the right of first refusal to meet any bona fide offer of sale or transfer on
the terms and conditions of such offer or by effectuating a transaction with substantially equivalent financial terms. If [LESSEE] fails
to provide written notice to [LESSOR] that [LESSEE] intends to meet such bona fide offer within 60 days after receipt of [LESSOR]’s
Notice, [LESSOR] may proceed with the proposed transaction in accordance with the terms and conditions of such third-party offer,
in which event the [Lease] shall continue in full force and effect and the right of first refusal described in this Section shall survive any
such conveyance to a third party. If [LESSEE] provides [LESSOR] with notice of [LESSEE]’s intention to meet the third party offer
within 60 days after receipt of [LESSOR]’s Notice, then if [LESSOR]’s Notice describes a transaction involving greater space than the
[Premises], [LESSEE] may elect to proceed with a transaction covering only the [Premises] and the purchase price shall be prorated
on a square footage basis. Further, [LESSOR] acknowledges and agrees that if [LESSEE] exercises this right of first refusal, [LESSEE]
may require a reasonable period of time to conduct due diligence and effectuate the closing of a transaction on substantially equivalent
financial terms of the third-party offer. [LESSEE] may elect to amend the [Lease] to effectuate the proposed financial terms of the third
party offer rather than acquiring fee simple title or an easement interest in the [Premises]. For purposes of this Section, any transfer,
bequest or devise of [LESSOR]'s interest in the [Property] as a result of the death of [LESSOR], whether by will or intestate succession,
or any conveyance to [LESSOR]’s family members by direct conveyance or by conveyance to a trust for the benefit of family members
shall not be considered a sale for which [LESSEE] has any right of first refusal.
The foregoing proposal does not constitute a binding offer to amend the lease. No legal obligation
is created by this letter or any other written or oral communications until a written amendment to the lease
has been signed by both Landlord and Verizon Wireless. Verizon Wireless will continue to abide by the
terms of the current lease until an amendment has been executed or the existing lease has been terminated
or expires. Verizon Wireless values its affiliation with you and hopes that you choose to secu re your site(s)
to continue a long and mutually profitable relationship in the years to come. After having reviewed this
proposal, please contact me prior to December 11,2025.
Sincerely,
Mark Gillaspy
Mark Gillaspy
Lease Consultant
Lease Optimization - CENREV
O (469) 833-2965
180 Washington Valley Road, Bedminster, NJ 07921
______________________________________________________________________________
Page 1 of 2
UTILITIES COMMISSION MEETING
TO:
ERMU Commission
FROM:
Melissa Karpinski – Finance Manager
MEETING DATE:
December 18, 2025
AGENDA ITEM NUMBER:
3.2
SUBJECT:
2026 Annual Business Plan (Budget, Schedule of Rates & Fees)
ACTION REQUESTED:
• Adopt Resolution No. 25-10 for the 2026 Budget and Schedule of Rates and Fees
BACKGROUND:
In previous months, the preliminary 2026 Annual Business Plan was presented to the
Commission. There have been some changes due to finalizing of projects and expenses. The
final highlights are discussed below.
DISCUSSION:
Electric Budget and Rates
As discussed in December, we are proposing a 2% total revenue increase to our rates for 2026
as presented in the Cost of Service/Rate Study report.
Notable items in the electric budget for 2026 are:
• 3.34% wage adjustment.
• 2% Utilities Performance Metric Incentive Compensation.
• Conservative estimate for usage and growth.
• Filling of vacant engineer position and adding an IT/OT position.
• 3% rate increase for wholesale power.
• Electric service territory acquisition loss of revenue for Areas 3&4, 5&6, and 7&8 from
reserves.
• East substation construction from reserves.
• Streets/Security light service rate will have no rate increase as proposed in rate study.
Water Budget and Rates
As discussed in December, we are proposing a 4% rate increase for 2026.
Notable items in the water budget for 2026 are:
• 3.34% wage adjustment.
• 2% Utilities Performance Metric Incentive Compensation.
• Conservative estimate for usage and growth.
• Adding an IT/OT position.
______________________________________________________________________________
Page 2 of 2
• Water main construction from reserves (increased from prior estimate).
• Re-routing of Well #8 to Treatment Plant #7 project added to 2026.
• Meadowvale booster station from reserves.
• Residential monthly charge will be $10.69 not $10.64 as proposed in the rate study due
to the Safe Drinking Water Fee increase.
Summary
Submitted for approval is the 2026 Annual Business Plan which includes the 2026 Budget and
the 2026 Schedule of Rates & Fees. The 2026 fees were approved by the Commission in
November and are being presented here with two changes. The adoption of the 2026 Schedule
of Rates & Fees through the adoption of the Annual Business Plan shall supersede and replace
all previously adopted tariffs, rates, and fees.
FINANCIAL IMPACT:
Notable items discussed above. As previously discussed, we are proposing a rate increase of 2%
total revenue for electric and 4% for water.
ATTACHMENTS:
• Proposed 2026 Annual Business Plan
o 2026 Budget
o 2026 Schedule of Rates & Fees
• Resolution No. 25-10 Adopting ERMU 2026 Budget and Schedule of Rates and Fees
2026 Annual Business Plan
TABLE OF CONTENTS
2026 BUDGET
•Summary of Budgets
•Electric Revenue and Expense Budget
•Water Revenue and Expense Budget
•Electric Capital Budget
•Administration and Technical Services Capital Budgets
•Water Capital Budget
•Training and Travel Budget
•Dues and Subscriptions Budget
•Conservation Improvement Program Budget
2026 SCHEDULE OF RATES & FEES
•Residential All Electric Service Rate
•Residential Electric Service Rate
•Residential Clean Energy Choice Program Rate
•Non-Demand All Electric Service Rate
•Non-Demand Electric Service Rate
•Demand All Electric Service Rate
•Demand Electric Service Rate
•Large Industrial Demand Electric Service Rate
•Transmission Transformed Service Rate
•Commercial Clean Energy Choice Program Rate
•Off-Peak Demand Electric Service Rate
•Commercial All Electric with Ground Source Heat Pump Service Rate
•Ground Source Heat Pump Program Rate
•Electric Vehicle Charging Rates
•Energy Management Program Rates
•Street/Security Light Service Rate
•Water Service Rates
•Fee Schedule
2026 Budget
ELK RIVER MUNICIPAL UTILITIES
SUMMARY OF YEAR 2026
BUDGETS
ELECTRIC BUDGET SUMMARY 2026
ELECTRIC REVENUE $50,684,426
ELECTRIC EXPENDITURES (47,108,326)
ELECTRIC NET FOR CAPITAL 3,576,100 7.06%Margin 110% annual avg debt svc 0.00%
#REF!#REF!
DEPRECIATION 3,533,136
CAPITAL EQUIPMENT/CONSTRUCTION (8,029,452)
DEBT RETIREMENT (1,035,000)
TOTAL IMPACT TO CASH RESERVES (1,955,217)
WATER BUDGET SUMMARY 2026
WATER REVENUE $4,310,428
WATER EXPENDITURES (4,164,879)
WATER NET FOR CAPITAL 145,550 3.38%Margin 105% debt svc
#REF!#REF!
DEPRECIATION 1,415,000
CAPITAL EQUIPMENT/CONSTRUCTION (3,925,550)
DEBT RETIREMENT (70,000)
TOTAL IMPACT TO CASH RESERVES (2,435,000)
Electric
2026 Annual
Budget
2025 Annual
Budget
2024 Annual
Actual
Revenue
Operating Revenue
Elk River
440.4411 ELECT SALES - ELK RIVER RESIDENTIAL 14,974,097 14,008,158 13,251,717
440.4412 ELECT SALES - ELK RIVER NON-DEMAND 3,713,891 3,561,585 3,380,961
440.4413 ELECT SALES - ELK RIVER DEMAND 19,613,601 18,661,634 18,070,331
440.4461 PCA SALES REVENUE - ELK RIVER RESIDENTIA 1,606,960 1,522,422 1,025,603
440.4462 PCA SALES REVENUE - ELK RIVER NON-DEMAND 438,601 423,422 281,655
440.4463 PCA SALES REVENUE - ELK RIVER DEMAND 2,959,444 2,908,507 1,970,023
Total for Elk River:43,306,594 41,085,728 37,980,291
Otsego
440.4416 ELECT SALES - OTSEGO RESIDENTIAL 1,703,416 1,546,756 1,507,482
440.4417 ELECT SALES - OTSEGO NON-DEMAND 552,105 499,327 502,612
440.4418 ELECT SALES - OTSEGO DEMAND 1,716,440 1,587,578 1,506,463
440.4464 PCA SALES REVENUE - OTSEGO RESIDENTIAL 182,804 168,103 115,206
440.4465 PCA SALES REVENUE - OTSEGO NON-DEMAND 49,894 46,753 42,531
440.4466 PCA SALES REVENUE - OTSEGO DEMAND 249,654 225,212 163,551
Total for Otsego:4,454,313 4,073,730 3,837,844
Rural Big Lake
440.4421 ELECT SALES - BIG LAKE RESIDENTIAL 208,507 199,360 184,523
440.4422 ELECT SALES - BIG LAKE NON-DEMAND 4,675 4,811 4,256
440.4467 PCA SALES REVENUE - BIG LAKE RESIDENTIAL 22,376 21,667 14,318
440.4468 PCA SALES REVENUE - BIG LAKE NON-DEMAND 6,107 6,026 297
Total for Rural Big Lake:241,665 231,863 203,394
Dayton
440.4431 ELECT SALES - DAYTON RESIDENTIAL 222,309 212,064 196,738
440.4432 ELECT SALES - DAYTON NON-DEMAND 41,376 40,466 37,667
440.4469 PCA SALES REVENUE - DAYTON RESIDENTIAL 23,857 23,047 14,964
440.447 PCA SALES REVENUE - DAYTON NON-DEMAND 6,512 6,410 2,789
Total for Dayton:294,054 281,987 252,159
Public St & Hwy Lighting
440.4414 ELECT SALES - SEC LTS 280,000 261,000 260,838
Total for Public St & Hwy Lighting:280,000 261,000 260,838
Other Electric Sales
440.455 SUB-STATION CREDIT 4,800 4,800 4,800
440.4554 RATE INCREASE - - -
Total for Other Electric Sales:4,800 4,800 4,800
Total for Operating Revenue:48,581,426 45,939,108 42,539,326
Other Operating Revenue
Interest/Dividend Income
460.4691 INTEREST & DIVIDEND INCOME 350,000 350,000 338,144
Total for Interest/Dividend Income:350,000 350,000 338,144
Customer Penalties
470.4701 CUSTOMER DELINQUENT PENALTIES 305,000 285,000 295,143
Total for Customer Penalties:305,000 285,000 295,143
Connection Fees
470.4702 DISCONNECT & RECONNECT CHARGE 255,000 150,000 317,234
Total for Connection Fees:255,000 150,000 317,234
Misc Revenue
470.4703 MISC ELEC REVENUE - TEMP CHG 3,000 2,500 2,830
470.4704 STREET LIGHT 25,000 10,000 23,400
470.4715 TRANSMISSION INVESTMENTS 680,000 600,000 625,244
470.4722 MISC NON-UTILITY 110,000 110,000 219,986
470.4723 GAIN ON DISPOSITION OF PROPERTY 25,000 25,000 8,600
470.4739 PERA PENSION REVENUE - - 77,740
470.477 CONTRIBUTIONS FROM CUSTOMERS 350,000 225,000 690,934
470.478 CONTRIBUTIONS FROM GRANTS - - -
Total for Misc Revenue:1,193,000 972,500 1,648,734
Total Other Revenue
Total for Total Other Revenue:2,103,000 1,757,500 2,599,256
Total Revenue 50,684,426 47,696,608 45,138,582
Expenses
Purchased Power
540.5551 PURCHASED POWER 24,051,075 23,315,291 22,154,018
540.5553 ENERGY ADJUSTMENT CLAUSE 7,608,286 7,284,338 6,436,680
Total for Purchased Power:31,659,362 30,599,628 28,590,698 3%
Operating & Mtce Expense
540.5461 OPERATING SUPERVISION 160,783 150,000 137,836
540.5471 DIESEL OIL FUEL - - 160
540.5472 NATURAL GAS 27,501 30,000 21,926
540.5483 ELECTRIC & WATER CONSUMPTION - PLANT 65,208 65,000 58,033
540.5484 PLANT SUPPLIES & OTHER EXPENSE 12,000 15,000 9,756
540.5491 MISC POWER GENERATION EXPENSE 1,000 1,000 641
540.5521 MAINTENANCE OF STRUCTURE - PLANT 15,000 20,000 13,914
540.5531 MTCE OF PLANT ENGINES/GENERATORS 500 5,000 4,177
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
2026 ELECTRIC BUDGET
Electric
2026 Annual
Budget
2025 Annual
Budget
2024 Annual
Actual
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
2026 ELECTRIC BUDGET
540.5541 MTCE OF PLANT/LAND IMPROVEMENT 40,000 55,000 20,340
Total for Operating & Mtce Expense:321,993 341,000 266,782
Transmission Expense
560.562 TRANSMISSION MTCE AND EXPENSE 70,000 76,000 48,623
Total for Transmission Expense:70,000 76,000 48,623
Distribution Expense
580.5801 REMOVE EXISTING SERVICE & METERS 2,000 2,000 353
580.5821 SCADA EXPENSE 65,000 60,000 51,050
580.5831 TRANSFORMER EXPENSE OH & URD 25,000 25,000 17,031
580.5851 MTCE OF SIGNAL SYSTEMS 3,000 3,000 2,224
580.5861 METER EXPENSE - REMOVE & RESET 1,500 1,500 467
580.5871 TEMP SERVICE - INSTALL & REMOVE 8,500 10,000 650
580.5881 MISC DISTRIBUTION EXPENSE 440,000 420,000 353,049
580.589 INTERCONNECTION CARRYING CHARGE - - 2,416
Total for Distribution Expense:545,000 521,500 427,240
Maintenance Expense
590.5911 MTCE OF STRUCTURES 90,000 92,000 90,596
590.5921 MTCE OF SUBSTATIONS 40,000 45,000 26,505
590.5922 MTCE OF SUBSTATION EQUIPMENT 112,000 150,000 88,541
590.5931 MTCE OF OH LINES/TREE TRIM 175,000 300,000 245,908
590.5932 MTCE OF OH LINES/STANDBY 50,000 50,000 43,617
590.5933 MTCE OF OH PRIMARY 195,000 190,000 174,966
590.5941 MTCE OF URD PRIMARY 300,000 300,000 284,922
590.5943 LOCATE ELECTRIC LINES 125,000 125,000 100,234
590.5944 LOCATE FIBER LINES 4,000 2,500 3,182
590.5951 MTCE OF LINE TRANSFORMERS 95,000 75,000 65,535
590.5961 MTCE OF STREET LIGHTING 70,000 69,000 83,910
590.5962 MTCE OF SECURITY LIGHTING 25,000 25,000 24,067
590.5971 MTCE OF METERS 60,000 80,000 57,808
590.5972 VOLTAGE COMPLAINTS 10,000 12,000 6,937
590.5981 SALARIES TRANSMISSION & DISTRIBUTION 37,000 36,000 31,045
590.5985 ELECTRIC MAPPING 162,000 155,000 134,999
590.5986 FIBER MAPPING 10,000 15,000 -
590.5991 MTCE OF OH SECONDARY 30,000 23,000 21,933
590.5992 MTCE OF URD SECONDARY 80,000 75,000 58,325
590.5995 TRANSPORTATION EXPENSE 320,000 325,000 303,892
Total for Maintenance Expense:1,990,000 2,144,500 1,846,921
Depreciation & Amortization
595.8031 DEPRECIATION 2,865,000 2,671,416 2,649,694
595.8032 AMORTIZATION 668,136 668,136 668,135
Total for Depreciation & Amortization:3,533,136 3,339,552 3,317,829
Interest Expense
596.8071 INTEREST EXPENSE - BONDS 759,406 794,932 833,610
597.8281 AMORTIZATION OF DEBT DISCOUNT/PREMIUM (59,863) (59,863) (59,862)
Total for Interest Expense:699,543 735,069 773,748
Other Operating Expense
597.8165 EV CHARGING EXPENSE 1,250 1,400 2,661
597.8213 LOSS ON DISPOSITION OF PROP (CAPITAL)25,000 160,000 24,754
597.8263 OTHER DONATIONS 2,000 2,000 -
597.8265 MUTUAL AID - - 54,540
597.8302 PENSION EXPENSE 280,000 259,000 (196,662) GASB 68
597.8311 OTHER INTEREST EXPENSE 56,000 - -
597.8341 INTEREST EXPENSE - METER DEPOSITS 50,000 60,000 57,583
Total for Other Operating Expense:414,250 482,400 (57,124)
Customer Accounts Expense
900.9021 METER READING EXPENSE 25,000 35,000 47,698
900.903 DISCONNECT/RECONNECT EXPENSE 5,000 10,000 11,844
900.9051 MISC CUSTOMER ACCOUNTS EXPENSE UTILITY 380,000 400,000 355,651
900.9061 BAD DEBT EXPENSE & RECOVERY 25,000 25,000 15,203
Total for Customer Accounts Expense:435,000 470,000 430,396
Administrative Expense
920.9201 SALARIES OFFICE & COMMISSION 1,085,000 1,085,000 885,001
920.9205 TEMPORARY STAFFING 4,000 4,000 -
920.9211 OFFICE SUPPLIES 125,000 135,000 95,726
920.9212 ELECTRIC & WATER CONSUMPTION - OFFICE 28,552 32,000 24,246
920.9213 BANK FEES 3,000 3,000 2,846
920.9221 LEGAL FEES 25,000 30,000 35,362
920.9231 AUDITING FEES 22,500 20,640 18,880
920.9241 INSURANCE 143,000 195,000 183,582 Plant de-commissioned
920.926 UTILITY SHARE - DEFERRED COMP 125,000 128,500 111,230
920.9261 UTILITY SHARE - MEDICAL/DENTAL/DISABIL 945,000 942,322 829,167
920.9262 UTILITY SHARE - PERA 348,500 321,500 308,017
920.9263 UTILITY SHARE - FICA 342,500 315,500 300,171
920.9264 EMPLOYEE SICK PAY 233,450 204,000 496,745
920.9265 EMPLOYEE HOLIDAY PAY 197,402 194,100 179,077
920.9266 EMPLOYEE VACATION & PTO PAY 344,308 325,000 331,860
920.9267 UPMIC DISTRIBUTION 86,000 86,000 112,541 2%
920.929 LONGEVITY PAY 8,040 9,945 6,964
Electric
2026 Annual
Budget
2025 Annual
Budget
2024 Annual
Actual
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
2026 ELECTRIC BUDGET
920.9291 CONSULTING FEES 55,800 239,000 40,307 NISC (appsuite), IT
920.9301 TELEPHONE 31,000 38,000 30,987
920.9302 ADVERTISING 20,000 20,000 14,071
920.9303 DUES & SUBSCRIPTIONS - FEES 141,879 152,009 123,647
920.9305 SCHOOLS & MEETINGS 291,482 292,333 199,542
920.9321 MTCE OF GENERAL PLANT & OFFICE HEATING 11,000 11,000 10,073
Total for Administrative Expense:4,617,413 4,783,849 4,340,041
General Expense
920.9269 CIP REBATES - RESIDENTIAL 90,758 90,758 92,938
920.927 CIP REBATES - COMMERCIAL 112,000 112,000 111,002
920.9271 CIP - ADMINISTRATION 181,840 182,965 180,071
920.9272 CIP - MARKETING 54,864 51,235 44,740
920.9273 CIP - LABOR 136,078 133,822 98,215
920.9274 CIP REBATES - LOW INCOME 29,760 18,720 3,762
920.9275 CIP - LOW INCOME LABOR 10,000 10,000 9,264
920.9281 ENVIRONMENTAL COMPLIANCE 37,000 35,000 31,461
920.9306 MISC GENERAL EXPENSE 5,000 5,300 3,431
Total for General Expense:657,300 639,800 574,884
Total Expenses (before Operating Transfers)44,942,997 44,133,298 40,560,038
Operating Transfer
Operating Transfer/Other Funds
597.8262 TRANSFER TO CITY ELK RIVER REVENUE 2,165,330 1,643,429 1,527,629 5% of Elk River Sales
Total for Operating Transfer/Other Funds:2,165,330 1,643,429 1,527,629
Utilities & Labor Donated
597.8261 UTILITIES & LABOR DONATED TO CITY - 265,000 229,359
Total for Utilities & Labor Donated:- 265,000 229,359
Total Operating Transfer
Total for Total Operating Transfer:2,165,330 1,908,429 1,756,988
Net Income Profit(Loss)3,576,100 1,654,881 2,821,556
Water
2026 Annual
Budget
2025 Annual
Budget
2024 Annual
Actual
Revenue
Operating Revenue
Water Sales
610.6101 Water Sales Residential 1,821,516 1,779,997 1,556,933
610.6102 Water Sales Commercial 1,039,960 1,000,092 967,172
610.6103 Water Sales Irrigation 364,603 350,383 279,497
Total for Water Sales:3,226,078 3,130,471 2,803,602
Total Operating Revenue
3,226,078 3,130,471 2,803,602
Total for Total Operating Revenue: 3,226,078 3,130,471 2,803,602
Other Operating Revenue
Interest/Dividend Income
460.4691 Interest & Dividend Income 125,000 150,000 104,294
460.4692 Other Interest/Misc Revenue 1,000 1,000 1,117
Total for Interest/Dividend Income:126,000 151,000 105,411
Customer Penalties
620.6301 Customer Penalties 35,000 28,000 31,102
Total for Customer Penalties:35,000 28,000 31,102
Connection Fees
620.6401 WATER/ACCESS/CONNECTION FEES 366,000 255,000 477,998
620.6402 Customer Connection Fees 50,000 32,500 44,470
620.6407 Bulk Water Sales/Hydrant Rental 30,000 31,000 27,939
Total for Connection Fees:446,000 318,500 550,407
Misc Revenue
470.4722 Misc Non-Utility 100 100 96
470.4739 Pera Pension Revenue - - 14,974
470.477 Contributions from Customers - - 21,910
620.6403 Miscellaneous Revenue 1,000 500 717
620.6323 Gain On Disposition Of Property 4,000 8,000 -
620.6404 HYDRANT MAINTENANCE PROGRAM - PRIVATE 11,000 15,000 13,375
620.6405 Contributions from Developers - - -
620.6406 Water Tower Lease 386,250 327,500 327,431
620.6416 Lease Interest Revenue 75,000 75,000 71,306
Total for Misc Revenue:477,350 426,100 449,808
Total Other Revenue
1,084,350 923,600 1,136,729
Total for Total Other Revenue:1,084,350 923,600 1,136,729
Total Revenue 4,310,428 4,054,071 3,940,330
Expenses
Production Expense
700.7021 MTCE OF STRUCTURES 125,000 135,000 118,775
Total for Production Expense:125,000 135,000 118,775
Pumping Expense
710.7101 SUPERVISION 80,000 76,000 69,969
710.7181 ELECTRIC & GAS UTILITIES 300,000 310,000 256,685
710.7182 SAMPLING 24,000 24,150 21,965
710.7183 CHEMICAL FEED 50,000 50,000 38,920
710.722 MTCE OF WELLS 200,000 200,000 260,693
710.723 SCADA - PUMPING 14,000 12,000 13,837
Total for Pumping Expense:668,000 672,150 662,069
Distribution Expense
730.7301 MTCE OF WATER MAINS 175,000 175,000 161,765
730.7309 LOCATE WATER LINES 25,000 20,000 13,729
730.7311 MTCE OF WATER SERVICES - 500 -
730.7312 WATER METER SERVICE 50,000 70,000 100,494
730.7316 BACKFLOW DEVICE INSPECTION 23,000 23,160 19,532
730.7321 MTCE OF CUSTOMERS SERVICE 36,000 35,000 33,583
730.7325 WATER MAPPING 25,000 17,000 25,858
730.7326 FIBER MAPPING 10,000 15,000 -
730.7331 MTCE OF WATER HYDRANTS - PUBLIC 22,000 22,000 22,736
730.7332 MTCE OF WATER HYDRANTS - PRIVATE 6,000 6,000 4,990
730.7341 WATER CLOTHING/PPE 15,000 15,000 9,529
730.7391 WAGES WATER 9,500 10,000 7,618
730.7395 TRANSPORTATION EXPENSE 24,000 24,000 18,311
730.7399 WATER PERMIT 27,000 27,000 26,255
Total for Distribution Expense:447,500 459,660 444,400
Depreciation & Amortization
595.8031 DEPRECIATION 1,415,000 1,325,866 1,223,033
Total for Depreciation & Amortization:1,415,000 1,325,866 1,223,033
Interest Expense
596.8071 INTEREST EXPENSE - BONDS 35,433 38,117 40,600
597.8281 AMORTIZATION OF DEBT DISCOUNT/PREMIUM (6,651) (6,651) (6,651)
Total for Interest Expense:28,782 31,466 33,949
Other Operating Expense
597.8213 LOSS ON DISPOSITION OF PROP (CAPITAL) - 16,000 5,090
597.8214 LOSS ON DISPOSITION OF PROP (NONCAPITAL) - - 16,272
597.8264 DAM MAINTENANCE EXPENSE - - 444
597.8302 PENSION EXPENSE 50,000 44,000 (13,068) GASB 68
597.8341 INTEREST EXPENSE - METER DEPOSITS 625 750 967
Total for Other Operating Expense:50,625 60,750 9,706
Customer Accounts Expense
900.9021 METER READING EXPENSE 5,000 7,000 5,550
900.9051 MISC CUSTOMER ACCOUNTS EXPENSE UTILITY 99,000 98,000 91,045
900.9061 BAD DEBT EXPENSE & RECOVERY 250 250 20
Total for Customer Accounts Expense:104,250 105,250 96,615
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
2026 WATER BUDGET
Water
2026 Annual
Budget
2025 Annual
Budget
2024 Annual
Actual
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
2026 WATER BUDGET
Administrative Expense
920.9201 SALARIES OFFICE & COMMISSION 333,000 288,000 258,534
920.9205 TEMPORARY STAFFING 1,000 1,000 -
920.9211 OFFICE SUPPLIES 30,000 30,000 23,419
920.9212 ELECTRIC & WATER CONSUMPTION - OFFICE 6,500 7,000 6,061
920.9213 BANK FEES 708 700 727
920.9221 LEGAL FEES 6,000 5,000 5,708
920.9231 AUDITING FEES 7,000 6,700 5,266
920.9241 INSURANCE 43,000 44,000 40,123
920.926 UTILITY SHARE - DEFERRED COMP 25,000 24,100 18,628
920.9261 UTILITY SHARE - MEDICAL/DENTAL/DISABIL 251,110 269,977 202,667
920.9262 UTILITY SHARE - PERA 71,500 68,500 59,327
920.9263 UTILITY SHARE - FICA 70,500 66,000 58,186
920.9264 EMPLOYEE SICK PAY 53,000 35,000 69,539
920.9265 EMPLOYEE HOLIDAY PAY 43,000 41,525 34,538
920.9266 EMPLOYEE VACATION & PTO PAY 72,000 66,000 59,902
920.9267 UPMIC DISTRIBUTION 19,000 18,500 23,571 2%
920.929 LONGEVITY PAY 1,260 2,130 836
920.9268 WELLHEAD PROTECTION 1,500 2,000 -
920.9291 CONSULTING FEES 26,200 57,400 16,317 NISC (appsuite), IT
920.9301 TELEPHONE 8,600 7,500 7,024
920.9302 ADVERTISING 5,000 5,000 3,633
920.9303 DUES & SUBSCRIPTIONS - FEES 111,475 89,961 78,201
920.9305 SCHOOLS & MEETINGS 62,897 60,957 42,421
920.9321 MTCE OF GENERAL PLANT & OFFICE HEATING 2,700 2,750 2,518
Total for Administrative Expense:1,251,950 1,199,700 1,017,146
General Expense
920.9269 CIP REBATES - RESIDENTIAL 2,000 5,000 1,090
920.927 CIP REBATES - COMMERCIAL 1,000 500 -
920.9272 CIP - MARKETING 1,500 2,000 1,117
920.9273 CIP - LABOR 500 2,500 -
920.9281 ENVIRONMENTAL COMPLIANCE 2,000 2,000 684
920.9306 MISC GENERAL EXPENSE 250 250 (0)
Total for General Expense:7,250 12,250 2,891
Total Expenses (before Operating Transfers)4,098,357 4,002,092 3,608,585
Operating Transfer
Operating Transfer/Other Funds
TRANSFER TO CITY ELK RIVER REVENUE 64,522 - - 2% of Elk River Sales
Total for Operating Transfer/Other Funds:64,522 - -
Utilities & Labor Donated
597.8261 WATER & LABOR DONATED TO CITY 2,000 2,000 -
Total for Utilities & Labor Donated:2,000 2,000 -
Total Operating Transfer
Total for Total Operating Transfer:66,522 2,000 -
Net Income Profit(Loss)145,550 49,979 331,745
Elk River Municipal Utilities Business Plan/Budget
2026 Electric Department Capital Budget
Capital Construction Projects
Cost Description
1 125,000$ Cty Rd 44 Rebuild
2 300,000$ Rebuild: Ogden, 196th
3 250,000$ Rebuild: Zebulon and Xerxes
4 250,000$ Unidentified Projects
5 50,000$ Otsego Street Lights
Subtotal 975,000$ *in order of priority
Capital Construction Substations
Cost Description
1,818,000$ East Substation Construction Reserves
150,000$ North Recloser Tank Replacement
1,280,120$ Otsego Transformer Replacement
28,000$ Otsego Recloser Controller Replacement
120,000$ Otsego Recloser Tank Replacement
20,000$ 14-4 Relay Panel Replacement
50,000$ SCADA Network Upgrades
Subtotal 3,466,120$
Capital Construction Feeders
Cost Description
175,000$ Feeder 65 Rebuild OH from Landfill to North Sub
200,000$ East Sub Feeders #11, 13, 14
250,000$ Unidentified Feeders
Subtotal 625,000$
Capital Construction System
Cost Description
425,000$ Transformers and Meters
70,607$ AMI
350,000$ New Development Distribution Installation
50,000$ Street Lighting
75,000$ Ongoing OH Equip Replacement (Poles, Switches, Cut-Outs)
900,000$ Ongoing URD Equip Replacement (Switches, J-Boxes, Fuse Pads)
50,000$ Fault Indicators Replacements
Subtotal 1,920,607$
Capital Equipment Needs
Cost Description
65,000$ Replace Truck new foreperson
50,000$ Hot Arms
152,200$ Electric share of Administration
303,250$ Electric Share of Technical Services
Subtotal 570,450$
Capital Facilities & Misc Needs
Cost Description
472,275$ Territory Acquisition - Loss of Revenue Pmt (2015 Contract - Area 1&2, 3&4, 5&6, 7&8)Reserves
Subtotal 472,275$
Total Capital 8,029,452$
Electric Noteworthy Non-Recurring Expenses
Cost Description
3,500$ Computers, iPads, Software, Accessories
10,000$ Paint Transformers/Switchgear
10,000$ Paint Street Lights
10,000$ Tools
30,000$ Contractor Testing and Inspections
12,240$ Electric share of Administration
23,275$ Electric share of Technical Services
Total 99,015$
Elk River Municipal Utilities Business Plan/Budget
2026 Administration and Technical Services Departments Capital Budgets
Administration Capital Needs
Cost Description
40,000$ Hallway Display and Branding
15,000$ Server upgrades (city shared)
5,000$ Network Switches/Misc (ERMU)
6,000$ Domain Controller
18,000$ Microsoft server upgrade (city shared)
5,000$ Server Backup System (city shared)
18,000$ OMS
5,000$ Office Furniture
8,000$ Team's Room - FS Building
10,000$ Security Camera System Replacement - Admin
40,000$ OT Security
10,000$ Phone System (city shared)
5,000$ Misc Office Equipment
Subtotal 185,000$
Administration Noteworthy Non-Recurring Expenses
Cost Description
15,300$ Computers, iPads, Software, Accessories, Scanners, Printers - Upgrades
Subtotal 15,300$
Total Administration 200,300$
Technical Services Capital Needs
Cost Description
10,000$ GIS Enterprise version update
20,000$ VOLT/VAR Implementation
125,000$ Fiber Extension - Otsego Sub
25,000$ Substation Security
20,000$ Acoustic Camera
15,000$ Locator
25,000$ Communications Cap Bank VR Controllers
65,000$ Trucks (Capital)#17
Subtotal 305,000$
Technical Services Noteworthy Non-Recurring Expenses
Cost Description
14,500$ Computers, iPads, Software, Accessories - Upgrades
10,000$ Tools
Subtotal 24,500$
Total Technical Services 319,500$
Total Capital Items 490,000$
Total Non-Recuring Expenses 39,800$
Elk River Municipal Utilities Business Plan/Budget
2026 Water Department Capital Budget
Water Capital Construction Needs
Cost Description
50,000$ Well #5 Rehabilitation
100,000$ Facility Repair (Capital)
400,000$ Freeport Booster Station
150,000$ Meadowvale Booster Station Reserves
240,000$ SCADA upgrades
15,000$ Well Security
185,000$ Hwy 169 Redefine Reserves
2,100,000$ Water Main Construction (City Rd project)Reserves
434,000$ Re-route well 8 to treatment plant 7
100,000$ Cat Walks
10,000$ Chlorine Analyzers
12,000$ Hi-E Dry Dehumidifiers
15,000$ Placeholder for undetermined projects
Subtotal 3,811,000$
Capital Equipment Needs
Cost Description
65,000$ Trucks #3
15,000$ GPS locating equipment
32,800$ Water share of Administration
1,750$ Water Share of Technical Services
Subtotal 114,550$
Total Capital 3,925,550$
Water Noteworthy Non-Recurring Expenses
Cost Description
-$ Computers, iPads
10,000$ Meters/ERT
10,000$ Tools
5,580$ Water share of Administration
825$ Water share of Technical Services
Total 26,405$
ELK RIVER MUNCIPAL UTILITIES
TRAVEL & TRAINING BUDGET FOR 2026
1.04
Budget Budget Budget
# Attending 2026 2025 2024 Comments
Electric
Advanced Staking Workshop 1 staff - - 1,900
APPA Linemen Rodeo team 4 staff 9,000 7,000 4,500 1 team - Huntsville, AL
Apprenticeship 2 staff 1,250 625 625
Chippewa Valley Tech - Electric Training Non-Lineman 2 staff 2,800 2,800 2,800
Commercial Driving School 1 staff - - 3,000
Competent Person training 2 staff - 1,300 1,220
Cross Training School 2 staff - - 1,960
Midwest User Group GIS 3 staff 3,000 - -
Member Information Conf (NISC)1 staff 2,500 2,500 2,500 Inventory attending
MMUA Emergency Preparedness 1 staff 700 - -
MMUA Locator Workshop 1 staff 365 350 720
MMUA Meter School 2 staff 1,980 1,900 1,830
MMUA Overhead Hot Line School 2 staff 2,704 2,600 2,575
MMUA Stepping Into Leadership - 3,600 3,600 not offered anymore
MMUA Substation Workshop 2 staff 2,600 2,500 2,240
MMUA T&O Conference 2 staff 520 500 460 Inventory Foreperson and Assistant attending partial
MMUA T&O Conference 1 staff 730 - -
MMUA Transformer School 2 staff 2,500 2,400 2,370
MMUA Underground School 2 staff 2,700 2,600 2,575
PCB Training 2 staff 2,500 1,250 1,250
Regional Workshop 8 staff 1,000 1,000 920
Tree Trimming/Chainsaw Workshop 2 staff 1,030 1,030 2,060
Leadership Training 5,543 7,500 6,900
Additional Training 3,000 3,000 3,000
11%46,422 41,655 46,205
Water
APWA Underground Utilities Inspector School 1 staff 700 - -
AWWA National Conference 0 staff - - 2,000 June 21-24, 2026 in Washington, D.C.
AWWA MN 2 staff 500 500 -
Backflow Tester Certification Class 0 staff - 1,125 1,125
Backflow Tester Re-Certification Class 1 staff 700 1,000 1,000 Every 3 years
Commercial Driving School 0 staff - 3,400 6,000
MMUA Electrical Skills 1 staff 700 - 1,000
MMUA Competent Person Training 1 staff 1,000 - -
Professional Operator and Development 0 staff - - 750
Public Works Certificate Program 0 staff - - 2,350
Staking University 0 staff - - 2,000
Unlicensed Electrician Continuing Education 1 staff 60 60 60
Wastewater Certification Continuing Education 4 staff 2,000 2,000 2,000
Water Certification Continuing Education 5 staff 4,000 3,000 2,668
Leadership Training 1,630 2,500 1,725
Additional Training 3,000 3,000 2,500
-14%14,290 16,585 25,178
Technical Services
Advanced Staking Workshop 1 staff 1,900 1,900 -
Commercial Driving School 1 staff - 3,400
Engineering MPSYCON 1 staff 700 500 -
ESRI User Conference 1 staff 2,000 2,000 2,000
Infrared Camera training 1 staff 2,200 2,200 2,200
Midwest ESRI User Group 1 staff 1,000 1,000 800
MMUA Generation School 2 staff - - 1,850
MMUA Locator Workshop 1 staff 365 - -
MMUA Stepping Into Leadership - - 3,100
MN Electric Meter School 1 staff 700 700 700
Power Quality training 2 staff 1,100 1,100 1,100
Staking University 1 staff - - 1,100
Substation School 1 staff 1,250 1,250 1,000
UMMA summer mtg 1 staff 800 800 800
UMMA winter mtg 1 staff 750 750 750
Xylem Reach Conference 1 staff 3,000 3,000 5,300 AMI
Leadership Training 1,304 2,500 2,150
Additional Training 2,500 2,500 2,500
-17%19,569 23,600 25,350
General Ledger Account
Schools & Meetings
920.9305
ELK RIVER MUNCIPAL UTILITIES
TRAVEL & TRAINING BUDGET FOR 2026
Budget Budget Budget
# Attending 2026 2025 2024 Comments
Management/Commission
Advanced Training 1 staff - - 1,900
APPA Customer Connections Conference 1 staff - 3,000 3,000
APPA E&O Conference 3 staff 6,000 6,500 6,000 Huntsville, AL
APPA Legal & Regulatory Conference 1 staff 4,000 4,000 -
APPA Legislative Round-up 4 staff/comm 9,000 9,000 8,600
APPA National Conference 4 comm 3,000 5,000 9,150
APPA Rodeo 2 staff 2,500 2,500 2,500 Huntsville, AL
APPA Training (Mgmt, CS, Fin, Eng, CIP, etc)2 staff 10,000 7,000 7,000
AWWA 1 staff 1,500 3,000 3,000 Water Certification Continuing Education
AWWA National Conference 1 staff/ 1 comm 5,000 5,000 2,000 D.C
Clerk's Conference 1 staff 500 - 800
CPA CPE 1 staff 1,500 1,500 1,500
Engineering MPSYCON 1 staff 700 500 1,000
Engineering seminar 1 staff - - 2,000
JTS Spring and Fall Meeting 1 staff 500 500 500
Kentucky Equipment Show 2 staff - 3,000 - odd year
Member Information Conf (NISC)5 staff 10,000 5,000 4,850 Las Vegas, NV
MMUA Annual Summer Meeting 3 staff/ 5 comm 7,800 7,500 7,500
MMUA DUEL 1 staff 3,725 - -
MMUA Emergency Preparedness 2 staff 1,400 2,000 1,365
MMUA Legislative Round-up 1 staff/1 comm 1,040 1,500 1,400
MMUA Stepping Into Leadership - - 3,600 not offered anymore
MMUA T&O Conference 5 staff 3,640 3,500 3,325
MRWA 2 staff 1,000 1,000 1,000 Water Certification Continuing Education
PCB Workshop 1 staff 2,500 1,250 -
Project Management Certification Training 1 staff - - 1,400
SHRM Conference 1 staff 4,000
UMMA Summer Workshop 1 staff 800 450 435
UMMA winter mtg 1 staff 750 750 750
Wastewater Certification Continuing Education 1 staff 500 500 500
Xylem Reach Conference 1 staff 3,000 3,000 -
Management Training 5,000 5,000 10,000
Leadership/Mgmt Training 2,609 5,000 5,000
Additional Training 3,000 3,000 3,000
2%94,964 92,750 95,875
Office
APPA Customer Connections Conference 1 staff - 3,000 3,000 Communications
APPA Cybersecurity Summit 1 staff 1,500 1,500 1,500 IT
Chamber Leadership Program 1 staff 600 600 475
Clerk's Conference 1 staff - 800 - Communications
IT SCCP Online Education 1 staff 500 500 500 IT
Member Information Conf (NISC)3 staff 7,500 7,500 7,250 IT, Comms, and CS
MMUA Stepping Into Leadership - 3,600 - not offered anymore
MRA Employment Law Update 1 staff 250 250 250
SHRM Conference 1 staff 4,000 3,000 3,000 HR
Customer Service 6,000 3,000 3,000 DUEL, Fred Pryor, NISC, Misc
Communications Training 1 staff 3,000 1,000 1,000 Government Social Media, Misc
Financial/Accounting (APA, NISC & Misc)3,000 3,000 3,000 APA Continuing Ed, Misc PR, Excel, Accounting Misc
IT Training (NISC/Misc)1 staff 5,000 1,000 1,000 IT
Xylem Reach Conference 1 staff 3,000 3,000 - AMI
Leadership Training 11 staff 3,913 5,000 5,175
Additional Training 1,000 1,000 1,000
4%39,263 37,750 30,150
Safety Training
Safe Driver Training 6 staff 2,070 2,350 2,100 2026 cost increased $10/student to $315
Additional Training 1,000 1,000 1,000
Hearing Test 800 600 550
Labor 133,000 134,000 106,560
-1%136,870 137,950 110,210
Education
3,000 3,000 3,000
3,000 3,000 3,000
Total 354,379 353,290 335,968
Total Change 0%
General Ledger Account
Schools & Meetings
920.9305
ELK RIVER MUNCIPAL UTILITIES
DUES & SUBSCRIPTIONS - FEES BUDGET FOR 2026
Budget Budget Actual
Description 2026 2025 2024
accessiBe 500 500 490
Adobe Products 8,000 8,000 1,149 Includes creative cloud, pro and sign
AMI - 11,000 -
Annual Water Quality Report - 3,500 3,359 Moved to advertising in 2025
APPA DEED Program Dues 4,000 3,820 3,593
APPA Dues 19,000 18,630 17,964
AWWA Annual Fee Dues 2,400 2,300 2,256
AWWA Partnership Safe Water Treatment/Distribution - 100 -
Bond Administrative & Management Fees 4,900 6,500 4,260 City (Disclosure Fees), Moody's, Ehlers
Citizen Serve 4,000 4,000 -
Drug and Alcohol Random Testing 1,500 2,000 - Annual Random Pool Employee Participant Fee
Elk River Chamber Membership 650 650 630
ESRI Small Govt Enterprise agreement 32,578 31,000 29,727
Government Jobs - 1,000 -
Homeland Security (Hazardous Chemical Fee)700 700 700 MN Dept of Public Safety Hazardous Material Fee Wells
HR professional membership(s)1,500 1,500 1,398 SHRM and MRA
MMUA Membership Dues 38,000 36,500 35,403
MMUA Monthly Safety Meetings 35,703 40,000 35,020
MPCA Permit Fee - Engines 25 370 25 Air annual fee and wastewater fee 1705
MPCA Permit Fee - WTP - 350 -
MRWA Annual Fee 400 400 400
Quarterly MN Dept of Health Water Connection Fee 88,550 57,000 55,715 2026 increase of $5.50/ connection from $9.72 to $15.22
Rotary 300 300 -
Survey Monkey 500 500 468
SUSA Membership 125 250 -
Miscellaneous 10,022 11,100 9,292 Detail can be provided
Bond Underwriter's Discount - - - Water Bonding 2028
Bond Service Professional Fee - - - Water Bonding 2028
Total 253,353 241,970 201,848
-
Budget Change 5%
Budget Change without Bonding Expenses 5%
General Ledger Account
Dues & Subscriptions - Fees
920.9303
Required Spending and Savings Goals per State of MN
Total Spending Level 1.5% of GOR 652,000$
Low Income Requirement .2% of Residential GOR 29,760$
Energy Savings Goal (kWh)4,994,857
Possible Distributed Renewable Generation Funds 8,000$
Possible Research and Development Funds 18,000$
Proposed CIP Budget 2024
Direct Labor 146,078$
General & Administration 181,840$
Advertising (Marketing)54,864$
Equipment
Contract (Includes $34,219 MN PUC Assessment)37,000$
Total 419,782$
ERMU Rebates 232,518$
Total all Expenses and Rebates 652,300$
Total Estimated kWh Savings 4,994,857
Total Operating CIP Budget No Rebates Only Direct Costs
Direct Labor 146,078$
General & Administration 181,840$
Advertising (Marketing)54,864$
Contract 37,000$
Total ERMU Operating Expenses 419,782$
Total Rebate Budget
ERMU Self Funded (spend is dependant on kWh savings)232,518
Total Requested Budget
Direct Labor 146,078$
General & Administrations 181,840$
Advertising (Marketing)54,864$
Contract (Includes MN PUC Assessment)37,000$
ERMU Self Funded Rebates 232,518$
Total Requested 2024 Budget 652,300$
2026 CIP Operating Budget
12/15/202512:34 PMN:\Office\Finance\Accounting\Budget\2026\2026 Budget Book.xlsb.xlsx2026 Budget Book.xlsb.xlsx2026
CIP Budget Summary
2026 Schedule of Rates & Fees
Page 1 of 2
RESIDENTIAL ALL ELECTRIC SERVICE RATE
Available: Within Elk River Municipal Utilities (ERMU) established service territory.
Applicable to: Single-family residences and individually metered apartments for all domestic purposes
with electric energy as a sole source of heating, and when all service is supplied through a single meter,
provided ratings of individual single-phase motors do not exceed five (5) horsepower.
Character of Service: AC, 60 cycles, 120/240 volt, three wire, single-phase.
Special Conditions: Residential service to a multiple dwelling or apartment house through a single meter
is allowed for existing services only. Service under this rate schedule shall not be sub-metered and
resold to the individual tenants on the basis of usage and the cost of electric service to the tenant must
be furnished without specific charge or price which varies with the quantity of energy used.
Any apartment or dwelling unit which has separate permanent kitchen facilities shall be considered as
one single family private residence.
Meter equipment must be accessible to our service department at any time.
Residential All Electric Service Rate:
Basic Monthly Electric Charge: $15.00 15.50 per month
Summer Winter
$0. 13734 0.14106/ kWh / month $0. 12548 0.12911/ kWh / month
Summer Rate: Applicable during the five monthly billing periods of June – October.
Winter Rate: Applicable during the seven monthly billing periods of November – May.
Rates are subject to application of Power Cost Adjustment (PCA).
Federal, state, and local taxes may apply.
Minimum Bill: The Basic Monthly Electric Charge.
Billing and Terms of Payment: See ERMU Service Policies Policy (Billing Due Dates, and Penalties and
Delinquent Notices.)
Residential All Electric Service Rate
Page 2 of 2
Terms and Conditions:
1. Usage may be fractionalized on the actual days of service for application of a change in rate or
changing from summer to winter or from winter to summer rates.
2. Service will be furnished pursuant to ERMU’s rules.
3. Extensions made for service under this schedule are subject to the provisions of ERMU’s rules
governing Extension of Service and Facilities.
4. The rates set forth herein may be modified by the amount of any governmental changes
imposed and levied on transmission, distribution, production, or the sale of electrical power.
5. Exceptions by management approval only.
Adopted December 10, 2024December 18, 2025
Effective January 1, 202526
Page 1 of 2
RESIDENTIAL ELECTRIC SERVICE RATE
Available: Within Elk River Municipal Utilities (ERMU) established service territory.
Applicable to: Single-family residences and individually metered apartments for all domestic purposes
when all service is supplied through a single meter, provided ratings of individual single-phase motors
do not exceed five (5) horsepower.
Character of Service: AC, 60 cycles, 120/240 volt, three wire, single-phase.
Special Conditions: Residential service to a multiple dwelling or apartment house through a single meter
is allowed for existing services only. Service under this rate schedule shall not be sub-metered and
resold to the individual tenants on the basis of usage and the cost of electric service to the tenant must
be furnished without specific charge or price which varies with the quantity of energy used.
Any apartment or dwelling unit which has separate permanent kitchen facilities shall be considered as
one single family private residence.
Meter equipment must be accessible to our service department at any time.
Residential Electric Service Rate:
Basic Monthly Electric Charge: $15.00 15.50 per month
Summer Winter
$0.13734 0.14106 / kWh / month $0.12548 0.12911 / kWh / month
Summer Rate: Applicable during the five monthly billing periods of June – October.
Winter Rate: Applicable during the seven monthly billing periods of November – May.
Rates are subject to application of Power Cost Adjustment (PCA).
Federal, state, and local taxes may apply.
Minimum Bill: Basic Monthly Electric Charge.
Billing and Terms of Payment: See ERMU Service Policies Policy (Billing Due Dates, and Penalties and
Delinquent Notices.)
Residential Electric Service Rate
Page 2 of 2
Terms and Conditions:
1. Usage may be fractionalized on the actual days of service for application of a change in rate or
changing from summer to winter or from winter to summer rates.
2. Service will be furnished pursuant to ERMU’s rules.
3. Extensions made for service under this schedule are subject to the provisions of ERMU’s rules
governing Extension of Service and Facilities.
4. The rates set forth herein may be modified by the amount of any governmental changes
imposed and levied on transmission, distribution, production, or the sale of electrical power.
5. Exceptions by management approval only.
Adopted December 10, 2024December 18, 2025
Effective January 1, 202526
Page 1 of 1
RESIDENTIAL CLEAN ENERGY CHOICE PROGRAM RATE
Available: Within Elk River Municipal Utilities (ERMU) established service territory.
Applicable to: ERMU customers receiving service under another residential electric rate.
This Program is available to residential customers choosing to purchase renewable energy. Customers
will have the option to purchase 50, 75 or 100 percent of the monthly energy consumption from
renewable energy sources.
ERMU customers receiving service under the electric vehicle charging rate will be automatically enrolled
in the Residential Clean Energy Choice Program Rate at the 100 percent participation level at no
additional monthly charge.
The customer shall agree to:
1. Complete an application - through the online registration process, or by returning a printed copy
to ERMU.
2. Clearly indicate the participation level and the additional monthly charge applicable to the 50,
75 or 100 percent subscription level desired.
3. Provide notice to ERMU to cancel participation.
ERMU shall provide:
1. Monthly billing statement with the Clean Energy Choice participation level clearly identified.
2. The applicable incremental cost per participation level will be identified and added to the billing
statement.
Participation Level % Monthly Charge
50 $1
75 $2
100 $3
Federal, state and local taxes may apply.
Adopted December 10, 2024 December 18, 2025
Effective January 1, 202526
Page 1 of 2
NON-DEMAND ALL ELECTRIC SERVICE
Available: Within Elk River Municipal Utilities (ERMU) established service territory.
Applicable to: Non-residential customer accounts. Existing or new Customer accounts with electric
energy as a sole source of heating, and with actual or projected demands of less than 50 kW for the
previous 12 consecutive months if applicable. When the Customer achieves an actual maximum
demand of 50 kW or greater, the Customer will be placed on the Demand Electric Service rate in the
next billing cycle. The Customer accounts shall be in compliance with all policies, procedures, and safety
requirements, and shall be taken through one meter. Rating of individual single-phase motors and other
single-phase power and heating units served under this schedule shall not exceed ten (10) horsepower
(or 7.355 kW) except by special permission. (Not applicable to resale, standby or auxiliary service.)
Character Of Service: AC, 60 cycles, 120 volts or 120/240 volts, single-phase; 120/208 volts, or 277/480
volts, three-phase. Four wire, 240 volts three phase will only be applicable to existing customers now
being served by this voltage. A Customer requiring voltages other than that already established by
ERMU shall be required to provide suitable space and location for ERMU’s’ transformers, metering and
associated equipment.
Special Conditions: One meter shall be installed to service one class of business. If additional buildings
are required for a given business, they shall be interconnected by the customer to obtain one meter. If
additional meters and services are requested by the customer, each shall be treated as a separate
customer and billed individually.
Meter equipment must be accessible to our service department at any time.
Installation of Demand Meter: At the option of ERMU, a demand meter may be installed on any
customer whose monthly usage exceeds 15,000 kWh.
Non-Demand All Electric Service Rate:
Basic Monthly Electric Charge: $32.00 33.00 per month
Summer Winter
$ 0.13304 0.13673 / kWh / month $ 0.11141 0.11494 / kWh / month
Summer Rate: Applicable during the five monthly billing periods of June – October.
Winter Rate: Applicable during the seven monthly billing periods of November – May.
Rates are subject to application of Power Cost Adjustment (PCA).
Non-Demand All Electric Service Rate
Page 2 of 2
Federal, state, and local taxes may apply.
Minimum Bill: The Basic Monthly Electric Charge plus $1.00 per kW per month of excess transformer
capacity requested by customer.
In case of equipment having abnormally low annual utilization factors or unusual operating
characteristics, special minimum charges may be prescribed by ERMU.
Power Factor Adjustment: The rates set forth in this schedule are based on the maintenance by the
Customer of a power factor of not less than 98% at all times. If the power factor, as measured by the
electric department, is lower than 98%, the monthly demand charge may be multiplied by the ratio 98%
divided by the measured power factor, or at ERMU’s option, the power factor may be corrected at the
Customer’s expense.
Fluctuating Loads: Customers operating equipment having a highly fluctuating or large instantaneous
demand, such as welders and X-ray machines, shall be required to pay all non-betterment costs of
isolating the load from the balance of ERMU’s lines. No motor larger than ten (10) HP (or 7.355 kW) will
be allowed to be across-the-line started without notification and written authorization from ERMU. In
addition, Customers who fail to provide adequate corrective equipment shall be required to own and
maintain their own transformers.
Billing and Terms of Payment: See ERMU Service Policies Policy (Billing Due Dates, and Penalties and
Delinquent Notices.)
Terms and Conditions:
1. Usage may be fractionalized on the actual days of service for application of a change in rate
or changing from summer to winter or from winter to summer rates.
2. Service will be furnished pursuant to ERMU’s rules.
3. Extensions made for service under this schedule are subject to the provisions of ERMU’s rules
governing Extension of Service and Facilities.
4. The rate set forth herein may be modified by the amount of any governmental changes
imposed and levied on transmission, distribution, production, or the sale of electrical power.
5. Exceptions by management approval only.
Adopted December 10, 2024 December 18, 2025
Effective January 1, 202526
Page 1 of 2
NON-DEMAND ELECTRIC SERVICE RATE
Available: Within Elk River Municipal Utilities (ERMU) established service territory.
Applicable to: Non-residential customer accounts, including privately-owned public electric vehicle
chargers. Existing or new Customer accounts with actual or projected demands of less than 50 kW for
the previous 12 consecutive months if applicable. When the Customer achieves an actual maximum
demand of 50 kW or greater, the Customer will be placed on the Demand Electric Service rate in the
next billing cycle. The Customer accounts shall be in compliance with all policies, procedures, and safety
requirements, and shall be taken through one meter. Rating of individual single-phase motors and other
single-phase power and heating units served under this schedule shall not exceed ten (10) horsepower
(or 7.355 kW) except by special permission. (Not applicable to resale, standby or auxiliary service.)
Character Of Service: AC, 60 cycles, 120 volts or 120/240 volts, single-phase; 120/208 volts, or 277/480
volts, three-phase. Four wire, 240 volts three phase will only be applicable to existing customers now
being served by this voltage. A Customer requiring voltages other than that already established by
ERMU shall be required to provide suitable space and location for ERMU’s transformers, metering and
associated equipment.
Special Conditions: One meter shall be installed to service one class of business. If additional buildings
are required for a given business, they shall be interconnected by the customer to obtain one meter. If
additional meters and services are requested by the customer, each shall be treated as a separate
customer and billed individually.
Meter equipment must be accessible to our service department at any time.
Installation of Demand Meter: At the option of ERMU, a demand meter may be installed on any
customer whose monthly usage exceeds 15,000 kWh.
Non-Demand Service Rate:
Basic Monthly Electric Charge: $32.00 33.00 per month
Summer Winter
$0.13304 0.13673/ kWh / month $0.11141 0.11494 / kWh / month
Summer Rate: Applicable during the five monthly billing periods of June – October.
Winter Rate: Applicable during the seven monthly billing periods of November – May.
Rates are subject to application of Power Cost Adjustment (PCA).
Non-Demand Electric Service Rate
Page 2 of 2
Federal, state, and local taxes may apply.
Minimum Bill: The Basic Monthly Electric Charge plus $1.00 per kW per month of excess transformer
capacity requested by customer.
In the case of equipment having abnormally low annual utilization factors or unusual operating
characteristics, special minimum charges may be prescribed by ERMU.
Power Factor Adjustment: The rates set forth in this schedule are based on the maintenance by the
Customer of a power factor of not less than 98% at all times. If the power factor, as measured by the
electric department, is lower than 98%, the monthly demand charge may be multiplied by the ratio 98%
divided by the measured power factor, or at ERMU’s option, the power factor may be corrected at the
Customer’s expense.
Fluctuating Loads: Customers operating equipment having a highly fluctuating or large instantaneous
demand, such as welders and X-ray machines, shall be required to pay all non-betterment costs of
isolating the load from the balance of ERMU’s lines. No motor larger than ten (10) HP (or 7.355 kW) will
be allowed to be across-the-line started without notification and written authorization from ERMU. In
addition, Customers who fail to provide adequate corrective equipment shall be required to own and
maintain their own transformers.
Billing and Terms of Payment: See ERMU Service Policies Policy (Billing Due Dates, and Penalties and
Delinquent Notices.)
Terms and Conditions:
1. Usage may be fractionalized on the actual days of service for application of a change in rate or
changing from summer to winter or from winter to summer rates.
2. Service will be furnished pursuant to ERMU’s rules.
3. Extensions made for service under this schedule are subject to the provisions of ERMU’s rules
governing Extension of Service and Facilities.
4. The rate set forth herein may be modified by the amount of any governmental changes imposed
and levied on transmission, distribution, production, or the sale of electrical power.
5. Exceptions by management approval only.
Adopted December 10, 2024December 18, 2025
Effective January 1, 202526
Page 1 of 2
DEMAND ALL ELECTRIC SERVICE RATE
Available: Within Elk River Municipal Utilities (ERMU) established service territory.
Applicable to: Non-residential customer accounts. Existing or new Customer accounts with electric
energy as a sole source of heating, and with actual or projected demand greater than or equal to 50 kW.
A Customer account with a billing demand of less than 50 kW for 12 consecutive months will be given
the option of switching to the Non-Demand rate. The Customer accounts shall be in compliance with all
policies, procedures, and safety requirements, and shall be taken through one meter. (Not applicable to
resale, standby or auxiliary service.) A Customer on this rate may qualify for integrity testing.
Character Of Service: AC, 60 cycles, 120 volts or 120/240 volts, single-phase; 120/208 volts, or 277/480
volts, three-phase. Four wire, 240 volts three-phase will only be applicable to existing customers now
being served by this voltage. A customer requiring voltages other than that already established shall be
required to provide suitable space and location for ERMU’s transformers, metering and associated
equipment.
Special Conditions: One meter shall be installed to service one class of business. If additional buildings
are required for a given business, they shall be interconnected by the customer to obtain one meter,
unless an exception is approved by management. If additional meters and services are requested by the
customer, each shall be treated as a separate customer and billed individually.
Meter equipment must be accessible to our service department at any time.
Demand Service Rate:
Basic Monthly Electric Charge: $ 77.00 80.00 per month.
Summer Winter
Demand Charge: $ 16.75 17.00 $ 11.75 12.00 in kW / month
Energy Charge: $ 0.07035 0.07353 $ 0.07035 0.07353 in kWh / month
Summer Rate: Applicable during the five monthly billing periods of June – October.
Winter Rate: Applicable during the seven monthly billing periods of November – May.
Rates are subject to application of Power Cost Adjustment (PCA).
Federal, state and local taxes may apply.
Minimum Bill: Maximum billing demand during previous twelve months times 3.0% of the demand
Demand All Electric Service Rate
Page 2 of 2
charge, or the actual demand multiplied by the demand charge, whichever is greater plus $1.00 per kW
per month of excess transformer capacity requested by customer.
Determination of Billing Demand: The billing demand shall be the highest measured demand (corrected
for power factor if required) during any fifteen (15) minute period occurring in the current billing period.
But in no month shall the billing demand be greater than the value in kW determined by dividing the
kWh sales for the billing month by 75 hours per month. This billing adjustment applies only if the
customer’s peak demand DOES NOT occur between the hours of 3:00 p.m. and 10:00 p.m.
Fluctuating Loads: Customers operating equipment having a highly fluctuating or large instantaneous
demand, such as welders and X-ray machines, shall be required to pay all non-betterment costs of
isolating the load from the balance of ERMU’s system so that the load will not unduly interfere with
service on ERMU's lines. In addition, Customers who fail to provide adequate corrective equipment shall
be required to own and maintain their own transformers. No motor larger than ten (10) HP (or 7.355
kW) will be allowed to be across-the-line started without notification and written authorization from
ERMU.
Power Factor Adjustment: For loads of 50 kW or more, or at the option of ERMU for loads of less than
50 kW, power factor adjustments may be made in the billing demand, when the power factor, as
determined by test, at the time of the Customer’s maximum use is less than 98%. If the power factor, as
measured by ERMU’s electric department, is lower than 98%, the monthly demand charge may be
multiplied by the ratio 98% divided by the measured power factor, or at ERMU’s option, the power
factor may be corrected at the Customer’s expense.
Billing and Terms of Payment: See ERMU Service Policies Policy (Billing Due Dates, and Penalties and
Delinquent Notices.)
Terms and Conditions:
1. Usage may be fractionalized on the actual days of service for application of a change in rate.
2. Service will be furnished pursuant to ERMU’s rules.
3. Extensions made for service under this schedule are subject to the provisions of ERMU’s rules
governing Extension of Service and Facilities.
4. The rates set forth herein may be modified by the amount of any governmental changes
imposed and levied on transmission, distribution, production, or the sale of electrical power.
5. Exceptions by management approval only.
Adopted December 10, 2024 December 18, 2025
Effective January 1, 202526
Page 1 of 2
DEMAND ELECTRIC SERVICE RATE
Available: Within Elk River Municipal Utilities (ERMU) established service territory.
Applicable to: Non-residential customer accounts, including privately-owned public electric vehicle
chargers. Existing or new Customer accounts with actual or projected demand greater than or equal to
50 kW. A Customer account with a billing demand of less than 50 kW for 12 consecutive months will be
given the option of switching to the Non-Demand rate. The Customer accounts shall be in compliance
with all policies, procedures, and safety requirements, and shall be taken through one meter. (Not
applicable to resale, standby or auxiliary service.) A Customer on this rate may qualify for integrity
testing.
Character Of Service: AC, 60 cycles, 120 volts or 120/240 volts, single-phase; 120/208 volts, or 277/480
volts, three-phase. Four wire, 240 volts three-phase will only be applicable to existing customers now
being served by this voltage. A customer requiring voltages other than that already established shall be
required to provide suitable space and location for ERMU’s transformers, metering and associated
equipment.
Special Conditions: One meter shall be installed to service one class of business. If additional buildings
are required for a given business, they shall be interconnected by the customer to obtain one meter,
unless an exception is approved by management. If additional meters and services are requested by the
customer, each shall be treated as a separate customer and billed individually.
Meter equipment must be accessible to our service department at any time.
Demand Service Rate:
Basic Monthly Electric Charge: $77.00 80.00 per month.
Summer Winter
Demand Charge: $ 16.75 17.00 $ 11.75 12.00 in kW / month
Energy Charge: $ 0.07035 0.07353 $ 0.07035 0.07353 in kWh / month
Summer Rate: Applicable during the five monthly billing periods of June – October.
Winter Rate: Applicable during the seven monthly billing periods of November – May.
Rates are subject to application of Power Cost Adjustment (PCA).
Federal, state and local taxes may apply.
Demand Electric Service Rate
Page 2 of 2
Minimum Bill: Maximum billing demand during previous twelve months times 3.0% of the demand
charge, or the actual demand multiplied by the demand charge, whichever is greater plus $1.00 per kW
per month of excess transformer capacity requested by customer.
Determination of Billing Demand: The billing demand shall be the highest measured demand (corrected
for power factor if required) during any fifteen (15) minute period occurring in the current billing period.
But in no month shall the billing demand be greater than the value in kW determined by dividing the
kWh sales for the billing month by 75 hours per month. This billing adjustment applies only if the
customer’s peak demand DOES NOT occur between the hours of 3:00 p.m. and 10:00 p.m.
Fluctuating Loads: Customers operating equipment having a highly fluctuating or large instantaneous
demand, such as welders and X-ray machines, shall be required to pay all non-betterment costs of
isolating the load from the balance of Elk River Muni cipal Utilities’ system so that the load will not
unduly interfere with service on Elk River Municipal Utilities’ lines. In addition, Customers who fail to
provide adequate corrective equipment shall be required to own and maintain their own transformers.
No motor larger than ten (10) HP (or 7.355 kW) will be allowed to be across-the-line started without
notification and written authorization from ERMU.
Power Factor Adjustment: For loads of 50 kW or more, or at the option of ERMU for loads of less than
50 kW, power factor adjustments may be made in the billing demand, when the power factor, as
determined by test, at the time of the Customer’s maximum use is less than 98%. If the power factor, as
measured by ERMU’s electric department, is lower than 98%, the monthly demand charge may be
multiplied by the ratio 98% divided by the measured power factor, or at ERMU’s option, the power
factor may be corrected at the Customer’s expense.
Billing and Terms of Payment: See ERMU Service Policies Policy (Billing Due Dates, and Penalties and
Delinquent Notices.)
Terms and Conditions:
1. Usage may be fractionalized on the actual days of service for application of a change in rate.
2. Service will be furnished pursuant to ERMU’s rules.
3. Extensions made for service under this schedule are subject to the provisions of ERMU’s rules
governing Extension of Service and Facilities.
4. The rates set forth herein may be modified by the amount of any governmental changes
imposed and levied on transmission, distribution, production, or the sale of electrical power.
5. Exceptions by management approval only.
Adopted December 10, 2024December 18, 2025
Effective January 1, 202526
Page 1 of 2
LARGE INDUSTRIAL DEMAND ELECTRIC SERVICE RATE
Available: Within Elk River Municipal Utilities (ERMU) established service territory.
Applicable to: Non-residential customer accounts. Existing or new Customer accounts with actual or
projected demand greater than or equal to 1 MW. A Customer account with a billing demand of less
than 1 MW for 12 consecutive months may be switched to the Demand Electric Service Rate. The
Customer accounts shall be in compliance with all policies, procedures, safety requirements, and shall
be taken through one or more meters. Not applicable to resale, standby or auxiliary service.
Character Of Service: 3-Phase Primary, 7,200/12,470 volt, AC, 60 cycles.
Special Conditions: Customer must provide a location suitable for the installation of a utility metering
cabinet(s). Customer will be responsible for providing suitable wire and connection in the utility owned
metering cabinet(s). The primary meter(s) and cabinet(s) shall be installed to service one class of
business. If additional buildings are required for a given business, they shall be interconnected by the
customer to the existing meter(s), unless an exception is approved by management. If additional meters
and services are requested by the customer, each shall be treated as a separate customer and billed
individually. A customer on the rate may qualify for integrity testing.
ERMU equipment and metering must be accessible to ERMU 24 hours per day.
Demand Service Rate:
Basic Monthly Electric Charge: $115.00 125.00per month.
Summer Winter
Demand Charge: $ 16.25 16.50 $ 11.25 11.50 in kW / month
Energy Charge: $ 0.06962 0.07293 $ 0.06962 0.07293 in kWh / month
Summer Rate: Applicable during the five monthly billing periods of June – October.
Winter Rate: Applicable during the seven monthly billing periods of November – May.
Rates are subject to application of Power Cost Adjustment (PCA).
Federal, state, and local taxes may apply.
Minimum Bill: Maximum billing demand during previous twelve months times 3.0% of the demand
charge, or the actual demand multiplied by the demand charge, whichever is greater plus $1.00 per kW
per month of excess transformer capacity requested by customer.
Large Industrial Demand Electric Service Rate
Page 2 of 2
Determination of Billing Demand: The billing demand shall be the highest measured demand (corrected
for power factor if required) during any fifteen (15) minute period occurring in the current billing period.
Fluctuating Loads: Customers operating equipment having a highly fluctuating or large instantaneous
demand, such as welders and X-ray machines, shall be required to pay all non-betterment costs of
isolating the load from the balance of ERMU’s system so that the load will not unduly interfere with
service on ERMU’s lines. No motor larger than ten (10) HP (or 7.355 kW) will be allowed to be across-
the-line started without notification and written authorization from ERMU.
Power Factor Adjustment: Power factor adjustments may be made in the billing demand, when the
power factor, as determined by test, at the time of the Customer’s maximum use is less than 98%. If the
power factor, as measured by ERMU’s electric department, is lower than 98%, the monthly demand
charge may be multiplied by the ratio 98% divided by the measured power factor, or at ERMU’s option,
the power factor may be corrected at the Customer’s expense.
Billing and Terms of Payment: See ERMU Service Policies Policy (Billing Due Dates, and Penalties and
Delinquent Notices.)
Terms and Conditions:
1. Usage may be fractionalized on the actual days of service for application of a change in rate.
2. Service will be furnished pursuant to ERMU’s rules.
3. Extensions made for service under this schedule are subject to the provisions of ERMU’s rules
governing Extension of Service and Facilities.
4. The rates set forth herein may be modified by the amount of any governmental changes
imposed and levied on transmission, distribution, production, or the sale of electrical power.
5. Exceptions by management approval only.
Adopted December 10, 2024 December 18, 2025
Effective January 1, 202526
Page 1 of 3
TRANSMISSION TRANSFORMED SERVICE RATE
Available: Within Elk River Municipal Utilities (ERMU) established service territory.
Applicable to: Non-residential Customer accounts with projected demand greater than or equal to 10
MW. The Customer must maintain an annual load factor greater than or equal to 75%. A Customer
account with a monthly billing demand of less than 10 MW for 12 consecutive months or an annual load
factor less than 75% may be switched to another electric rate schedule (additional charges may apply to
recover stranded costs). The Customer owned equipment must be in compliance with all policies,
procedures, safety requirements, and applicable electrical codes.
Character of Service: 3-Phase Transmission Transformed 7,200/12,470-volt, AC, 60 cycles.
Special Conditions: The Customer must execute a contract with the utility that commits to a minimum
term of service, identifies the annual peak demand and load factor, agrees to the requirements for
registering generation with Midcontinent Independent System Operator (MISO) if applicable, and
accepts the certain risks that include fluctuating market-based rates and prices established by MISO.
The Customer must connect directly to the Utility’s distribution substation(s) and provide the location
suitable for the installation of the utility owned transformer(s) and metering equipment on the
Customer’s property. Customer will be responsible for providing suitable wire and connection in the
utility owned metering equipment. The metering equipment shall be installed to service one class of
business. If additional buildings are required for a given business, they shall be interconnected by the
customer to maintain one metered account, unless an exception is approved by management. If
additional meters and services are requested by the customer, each shall be treated as a separate
customer and billed individually.
ERMU equipment and metering must be accessible to ERMU 24 hours per day.
Transmission Demand Charge:
Transmission Demand charges are determined by monthly maximum metered 15-minute Customer
demand, adjusted for applicable MISO zone transmission losses. All applicable MISO transmission
charges, including but not limited to the below, shall apply to all transmission demand quantities:
A. Schedule 1
B. Schedule 2
C. Schedule 9
D. Schedule 26
Transmission Transformed Service Rate
Page 2 of 3
Capacity Charge:
Capacity charges are determined by Customer selection of one of the options below:
A. If customer has its own generation, then the capacity billing determinant shall be the maximum
metered 15-minute demand in excess of Customer’s registered generation in a given month. To
qualify for this billing determinant, Customer’s generation must be registered with MISO and
comply with all MISO requirements for capacity resources.
B. If Customer does not have its own generation, or if Customer fails to register its generation with
MISO or fails to comply with all MISO requirements for capacity resources, then the capacity
billing determinant shall be monthly maximum metered 15-minute Customer demand.
The capacity billing determinants defined above are pass-through costs.The following charges shall
apply to all capacity quantities. The above-defined billing determinant multiplied by:
A. $10.90 per kW-month for all capacity quantities during the months of June through September.
B. $3.60 per kW-month for all capacity quantities during the months of October through May.
Energy Charge:
Energy billing is determined by actual hourly usage. The following charges shall apply to all energy (kWh)
quantities:
A. MISO Real-Time Locational Marginal Price at the applicable MISO Node.
B. All applicable MISO Ancillary Services Charges.
C. MISO Multi-Value Project Charges.
D. A charge of $0.002 per kWh for the cost of compliance with the State of Minnesota’s Renewable
Energy Standard.
E. A charge of $0.01 per kWh to cover all dispatch, billing, and administrative costs. This charge
shall be inclusive of all regulatory charges collected by Utility on all customers.
City fees, such as franchise and storm water, will apply.
Federal, state, and local taxes may apply.
Failure to Generate: If Customer has registered generation that does not perform as registered when
requested by utility, utility’s wholesale supplier, or MISO, Customer shall be responsible for:
A. Any financial or other penalties imposed by MISO related to the generation’s failure to perform.
B. All costs of utility or utility’s wholesale supplier to acquire replacement capacity to replace
registered generation that did not perform.
Transformation Charge: Customer shall pay a monthly transformation charge based on the cost of
providing transmission transformed service to Customer, including recovery of costs for any new
substation or related facilities.
Transmission Transformed Service Rate
Page 3 of 3
Minimum Bill: Charges for failure to meet minimum peak demand and load factor requirements shall be
outlined in the contract between Customer and Utility.
Power Factor Adjustment: Power factor adjustments may be made in the billing demand, when the
power factor, as determined by test, at the time of the Customer’s maximum use is less than 98%. If the
power factor, as measured by ERMU’s electric department, is lower than 98%, the monthly demand
charge may be multiplied by the ratio 98% divided by the measured power factor, or at ERMU’s option,
the power factor may be corrected at the Customer’s expense.
Billing and Terms of Payment: See ERMU Service Policies Policy (Billing Due Dates, and Penalties and
Delinquent Notices.)
Terms and Conditions:
1. Service shall comply with all applicable ERMU Policies and rules.
2. Extensions made for service under this schedule are subject to the provisions of ERMU’s rules
governing Extension of Service and Facilities.
3. Customer is responsible for any new charges or fees imposed by MISO or any new regulatory or
legislative action that results in increased costs to provide power supply to Customer.
4. All rates in this electric rate schedule are subject to change with commission approval.
5. Exceptions by management approval only.
Adopted December 10, 2024December 18, 2025
Effective January 1, 202526
Page 1 of 1
COMMERCIAL CLEAN ENERGY CHOICE PROGRAM RATE
Available: Within Elk River Municipal Utilities (ERMU) established service territory.
Applicable to: ERMU customers receiving service under another commercial electric rate.
This Program is available to commercial customers choosing to purchase renewable energy. Customers’
will be required to participate for one calendar year and the applicable Clean Energy Choice incremental
charge will apply to all energy sold in the calendar year.
The customer shall agree to:
1. Contact ERMU staff to discuss program participation.
2. Sign a contractual agreement for one calendar year prior to December 1 for participation in the
upcoming year.
3. Continue to participate in the program annually until customer provides written notice of
cancelation to ERMU.
4. Provide written notice of cancelation in the program to ERMU prior to December 1 of a given
year for the upcoming year.
ERMU shall provide:
1. Estimate of annual incremental charge for participating in program.
2. Clean Energy Choice incremental charge per kWh is $0.002.
3. The incremental charge applies to all kWh purchases in excess of the Wholesale Renewable
Energy Standard.
4. The incremental charge will be calculated based on actual kWh consumed in the billing period.
5. The incremental charge will be calculated as follows:
[kWh consumed X (100% - Wholesale Renewable Energy Standard) X $0.002]
6. Monthly billing statement with the Clean Energy Choice incremental charge identified.
7. Program price changes by November 1 for the coming year.
Federal, state and local taxes may apply.
Adopted December 10, 202 4December 18, 2025
Effective January 1, 202526
Page 1 of 2
OFF-PEAK DEMAND ELECTRIC SERVICE RATE
Available: Within Elk River Municipal Utilities (ERMU) established service territory.
Applicable to: Non-residential customer accounts. Existing or new Customer accounts with actual or
projected demand greater than or equal to 50 kW. A Customer account with a billing demand of less
than 50 kW for 12 consecutive months will be given the option of switching to the Non-Demand rate.
The Customer accounts shall be in compliance with all policies, procedures, and safety requirements,
and shall be taken through one meter. (Not applicable to resale, standby or auxiliary service.)
Character Of Service: AC, 60 cycles, 120 volts or 120/240 volts, single-phase; 120/208 volts, or 277/480
volts, three-phase. Four wire, 240 volts three-phase will only be applicable to existing customers now
being served by this voltage. A customer requiring voltages other than that already established shall be
required to provide suitable space location of ERMU’s transformers, metering and associated
equipment.
Special Conditions: One meter shall be installed to service one class of business. If additional buildings
are required for a given business, they shall be interconnected by the customer to obtain one meter,
unless an exception is approved by management. If additional meters and services are requested by the
customer, each shall be treated as a separate customer.
Meter equipment must be accessible to our service department at any time.
Off Peak Demand Service Rate:
Basic Monthly Electric Charge: $77.00 80.00 per month.
Summer Winter
Demand Charge:
On-Peak $ 16.75 17.00 $ 11.75 12.00 in kW / month
Off-Peak $ 6.30 6.50 $ 6.3050 6.50 in kW / month
Energy Charge: $ 0.07350 0.07643 $ 0.07350 0.07643 in kWh / month
On-Peak Demand: Actual demand during On-Peak Periods
On-Peak Period: 3:00 PM -10:00 PM weekdays
Off-Peak Demand: Actual demand during Off-Peak Periods less On-Peak Demand
Off-Peak Period: All non On-Peak Periods
Summer Rate: Applicable during the five monthly billing periods of June – October.
Winter Rate: Applicable during the seven monthly billing periods of November – May.
Rates are subject to application of Power Cost Adjustment (PCA).
Federal, state, and local taxes may apply.
Off-Peak Demand Electric Service Rate
Page 2 of 2
Minimum Bill: Maximum billing demand during previous twelve months times 3.0% of the demand
charge, or the actual demand multiplied by the demand charge, whichever is greater plus $1.00 per kW
per month of excess transformer capacity requested by customer.
Determination of Billing Demand: The billing demand shall be the highest measured demand (corrected
for power factor if required) during any fifteen (15) minute period occurring in the current billing period.
But in no month shall the billing demand be greater than the value in kW determined by dividing the
kWh sales for the billing month by 75 hours per month. This billing adjustment applies only if the
customer’s peak demand DOES NOT occur between the hours of 3:00 p.m. and 10:00 p.m.
Fluctuating Loads: Customers operating equipment having a highly fluctuating or large instantaneous
demand, such as welders and X-ray machines, shall be required to pay all non-betterment costs of
isolating the load from the balance of ERMU’s system so that the load will not unduly interfere with
service on ERMU’s lines. No motor larger than ten (10) HP (or 7.355 kW) will be allowed to be across-
the-line started without notification and written authorization from ERMU.
In addition, Customers who fail to provide adequate corrective equipment shall be required to own and
maintain their own transformers.
Power Factor Adjustment: For loads of 50 kW or more, or at the option of ERMU for loads of less than
50 kW, power factor adjustments will be made in the billing demand, when the power factor, as
determined by test, at the time of the Customer’s maximum use is less than 98%. If the power factor, as
measured by ERMU’s electric department, is lower than 98%, the monthly demand charge may be
multiplied by the ratio 98% divided by the measured power factor, or at ERMU’s option, the power
factor may be corrected at the Customer’s expense.
Billing and Terms of Payment: See ERMU Service Policies Policy (Billing Due Dates, and Penalties and
Delinquent Notices.)
Terms and Conditions:
1. Usage may be fractionalized on the actual days of service for application of a change in rate.
2. Service will be furnished pursuant to ERMU’s rules.
3. Extensions made for service under this schedule are subject to the provisions of ERMU’s rules
governing Extension of Service and Facilities.
4. The rates set forth herein may be modified by the amount of any governmental changes
imposed and levied on transmission, distribution, production, or the sale of electrical power.
5. Exceptions by management approval only.
Adopted December 10, 2024 December 18, 2025
Effective January 1, 202526
Page 1 of 2
COMMERCIAL ALL ELECTRIC WITH GROUND SOURCE HEAT PUMP SERVICE RATE
Available: Within Elk River Municipal Utilities (ERMU) established service territory.
Applicable to: Commercial customers having a single meter that includes a ground source heat pump
(GSHP) in excess of 50 kW but no more than 150 kW in aggregated name plate capacity of the GSHP
equipment (condensers and pumps).
Character of Service: AC, 60 cycles, 120/240 volts, three wire, and three-phase.
Special Conditions: This Program is available to commercial customers. A GSHP will be the only central
heating and/or cooling system for the commercial workspaces. Commercial structures that are
classified as Utility and Miscellaneous Group U by the International Code Council are not eligible for this
rate. GSHPs that qualify for this program will not be interrupted. A GSHP paired with another heating
source such as natural gas, fuel oil, or propane may qualify for the Dual Fuel Program.
To qualify for the special rate, the customer shall provide:
1. The GSHP is the only heat source. Only closed loop GSHPs are eligible for this rate beginning
September 1, 2016.
2. ERMU and the customer will agree on a meter location prior to the meter socket installation.
3. Commercial customers may have a separate meter to determine the energy and demand of the
GSHP. Electric usage for the non-heating/cooling energy use of the building may be metered and
priced using the appropriate rate (demand, or non-demand) schedule.
4. Accommodations for a meter and associated wiring installed according to the applicable
electrical codes and will be installed by a qualified electrician.
5. Inspection by a State certified inspector and representative of ERMU.
6. Customers on this rate will not be eligible for the Dual Fuel Program.
Meter equipment must be accessible to our service department at any time.
Ground Source Heat Pump Service Rate:
Basic Monthly Electric Charge: $ 30.50 33.00 per month
Energy Charge: $0. 0983 0.10212 / kWh
Rates are subject to application of Power Cost Adjustment (PCA).
Federal, state, and local taxes may apply.
Minimum Bill: Basic Monthly Electric Charge.
Commercial All Electric with Ground Source Heat Pump Service Rate
Page 2 of 2
Billing and Terms of Payment: See ERMU Service Policies Policy (Billing Due Dates, and Penalties and
Delinquent Notices.)
Terms and Conditions:
1. Usage may be fractionalized on the actual days of service for application of a change in rate, or
changing from summer to winter or from winter to summer rates.
2. Service will be furnished pursuant to ERMU’s rules.
3. Extensions made for service under this schedule are subject to the provisions of ERMU’s rules
governing Extension of Service and Facilities.
4. The rates set forth herein may be modified by the amount of any governmental changes
imposed and levied on transmission, distribution, production, or the sale of electrical power.
5. Exceptions by management approval only.
Adopted December 10, 2024 December 18, 2025
Effective January 1, 202526
Page 1 of 1
GROUND SOURCE HEAT PUMP PROGRAM RATE
Available: Within Elk River Municipal Utilities (ERMU) established service territory.
Applicable to: Single family residences, non-demand and demand customers receiving service under
another rate, who add a second meter for any of the following controlled loads:
Ground Source Heat Pump Rate: This Program is available to residential and commercial customers. A
ground source heat pump (GSHP) is a central heating and/or cooling system for residential living spaces
or commercial workspaces. Residential living spaces will meet all the applicable Minnesota state
building codes. Commercial structures that are classified as Utility and Miscellaneous Group U by the
International Code Council are not eligible for this rate. This program is available to residential or
commercial customers with a GSHP as their sole heat source.
To qualify for the special rate, the customer shall provide:
1. The GSHP is the only heat source. Only closed loop GSHPs are eligible for this rate beginning
January 1, 2016.
2. ERMU and the customer will agree on a meter location prior to the meter socket installation.
3. Commercial customers may have a separate meter to determine the load of the heat pumps.
Electric usage for the remainder of the building will be metered and priced using the
appropriate rate (Demand or Non-Demand).
4. Accommodations for a meter and associated wiring installed according to the applicable
electrical codes and will be installed by a qualified electrician.
5. Inspection by a State certified electrical inspector and a representative of ERMU.
ERMU shall provide:
1. All electric energy consumed by the primary electric heating system at $0. 0983 0.10212per
kWh.
2. A meter socket to accommodate the meter in a mutually agreed to location.
3. A meter to measure electricity consumed by the electric heating system.
Rates are subject to application of Power Cost Adjustment (PCA).
Federal, state, and local taxes may apply.
Adopted December 10, 2024December 18, 2025
Effective January 1, 202526
Page 1 of 2
ELECTRIC VEHICLE CHARGING RATES
Residential and Commercial Electric Vehicle Charging Rate
Available: Within Elk River Municipal Utilities (ERMU) established service territory.
Applicable to: Single family residences, non-demand and demand customers receiving service under
another rate (does not include privately-owned public chargers).
Electric Vehicle Charging Rate: This Program is available to all customers of ERMU that own an
electrically powered vehicle used for on road transportation. Charging of the vehicle can occur any time
but will be subject to on-peak and off-peak energy charges per hour daily. On-peak hours are Monday
through Friday between 10 AM and 10 PM. Off-peak hours are Monday through Friday between 10 PM
and 10 AM, Saturdays, Sundays, and the following holidays (New Year’s Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day).
To qualify for the special rate, the customer shall provide:
1. Electric vehicle charging station that is used for the sole purpose of charging electric vehicles.
This charging station must be 240 volt.
2. Customer is responsible for installation of the additional meter socket in a mutually agreed upon
location.
3. Inspection by a State Certified electrical inspector of all metering equipment and provide an
affidavit to ERMU when completed.
ERMU shall provide:
1. All on-peak electric energy consumed by the electric vehicle charging equipment will be at the
summer rate of $0.137334 0.14106 /kWh for the five monthly billing periods of June – October,
and the winter rate of $0. 12548 0.12911/kWh for the seven monthly billing periods of
November – May.
2. All off-peak electric energy consumed by electric vehicle charging equipment will be at the rate
of $0.0651 0.06858/kWh.
3. This equipment will be available for charging at applicable rates 24 hours per day and is not
subject to any load control strategies.
4. All electric energy provided to an account that participates in this rate will be automatically
enrolled in the Clean Energy Choice Program at the 100 percent participation level at no
additional monthly charge.
5. All electric energy provided for the electric vehicle charging equipment will be 100 percent
renewable.
6. Electric meter.
Electric Vehicle Charging Rates
Page 2 of 2
7. Final inspection prior to meter activation to ensure only qualified loads are being supplied
through the electric vehicle charging equipment.
Rates are subject to application of Power Cost Adjustment (PCA).
Federal, state, and local taxes may apply.
Public Electric Vehicle Charging Rate: This rate is available to anyone charging an electric vehicle or
plugin electric vehicle at a public electric vehicle charging station owned and operated by ERMU within
the ERMU service territory. All persons must have an active ChargePoint account or have the capability
to create a ChargePoint account prior to utilizing the charging equipment for an electric vehicle or plug-
in hybrid electric vehicle.
To charge at the public charging stations customers shall:
1. Utilize their existing ChargePoint account or create a new account using a credit or debit card
prior to charging the electric vehicle or plug-in hybrid.
ERMU shall provide:
1. Access to public electric vehicle charging stations located in the ERMU service territory.
2. The chargers will be either level two (240 volt) or DC Fast Charging (480 volt) charging
equipment.
3. Electric energy consumed at the level two charging stations will be at a rate of $0.20 per kWh at
all times.
4. Electric energy consumed at the DC Fast Charging station will be at a rate of $0. 25 per kWh at
all times.
5. Electric energy provided at the public electric vehicle charging stations will be 100 percent
renewable.
Federal, state, and local taxes may apply.
Adopted December 10, 2024December 18, 2025
Effective January 1, 202526
Page 1 of 3
MORATORIUM EFFECTIVE FEBRUARY 14, 2017 ON THE FOLLOWING LOAD CONTROL PROGRAMS
ENERGY MANAGEMENT PROGRAM RATES
Available: Within Elk River Municipal Utilities (ERMU) established service territory.
Applicable to: Single family residences, non-demand and demand customers receiving service under
another rate, who add a second meter for any of the following controlled loads:
Dual Fuel Space Heating Rate: This Program is available to residential customers only. A dual fuel space
heating system consists of an electric heating system and a secondary non-electric space heating system
both capable of heating the living space at design conditions. Interruptions of the electric heating
system will usually occur for up to 12 hours daily on peak winter days and a maximum of 400 hours per
heating season.
To qualify for the special rate, the customer shall provide:
1. An electric space heating system which can be interrupted by a single 5 amp rated relay.
2. A secondary non-electric space heating system capable of automatic start-up and continuous
operation upon interruption of the electric heating system.
3. Obtain a load control device furnished by ERMU.
4. Accommodations for a meter and load control device and associated wiring installed according
to the applicable electrical codes, and installed by a qualified electrician.
5. Inspection by a State certified electrical inspector and a representative of ERMU.
6. Radiant heat in the slab of the building qualifies for dual fuel, not electric thermal storage.
7. Dual Fuel is not allowed in garages, pole sheds, or any structure that does not confirm to the
residential building code.
8. Exceptions by management approval only.
ERMU shall provide:
1. All electric energy consumed by the primary electric heating system at $0.06516858 per kWh.
2. During peak load conditions, ERMU will turn customer controlled electrical heat off for extended
periods of time as stated above.
3. A meter to measure electricity consumed by the electric heating system.
4. A load control device and meter socket to accommodate the meter.
Rate is subject to application of Power Cost Adjustment (PCA).
Federal, state and local taxes may apply.
MORATORIUM EFFECTIVE FEBRUARY 14, 2017 ON THE FOLLOWING LOAD CONTROL PROGRAMS
Energy Management Program Rates
Page 2 of 3
Electric Thermal Storage (ETS) Space Heating Rate: This Program is available to all ERMU customers.
An ETS space heating system is designed to store heat produced by electricity generated during eight
off-peak hours for use in heating during the remaining on-peak hours daily. Off-peak hours typically
occur between 11 PM and 7 AM. Qualifying ETS configurations may be central storage furnaces, room
storage heaters or slab (deep heat) systems including combinations of same.
To qualify for the special rate, the customer shall provide:
1. An ETS space heating system listed by UL or some other nationally recognized testing agency
which can be interrupted by a single 5 amp rated relay.
2. Obtain a load control device from ERMU.
3. Accommodations for a meter and load control device and associated wiring installed according
to the applicable electrical codes, and installed by a qualified electrician.
4. Inspection by a State certified electrical inspector and a representative of ERMU.
ERMU shall provide:
1. All electric energy consumed by this ETS system at $0.05015343 per kWh.
2. This equipment will be energized only for 8 off peak hours daily. Additional on-time is provided
on weekend days and holidays.
3. A meter to measure electricity consumed by the ETS space heating system.
4. A load control device which will automatically control ETS space heating system during on-peak
hours.
Rate is subject to application of Power Cost Adjustment (PCA).
Federal, state, and local taxes may apply.
Electric Thermal Storage (ETS) Water Heating Rate: This Program is available to all ERMU customers.
An ETS water heater is designed with extra storage capacity to provide total domestic hot water needs
from electricity consumed only during eight off-peak hours daily. Off-peak hours typically occur between
11 PM and 7 AM. Qualifying ETS configurations may be a large single tank, dual tanks plumbed in series,
or an electric and non-electric tank plumbed in series with the electric placed on the cold water side.
Electric water heater must have an energy factor of .91 or more and a minimum of 80 gallons of storage
capacity.
To qualify for the special rate, the customer shall provide:
1. An ETS water heating system which can be interrupted directly by a single 30 amp rated relay.
2. Obtain a load control device from ERMU.
3. Accommodations for a meter and load control device and associated wiring installed according
to the applicable electrical codes, and installed by a qualified electrician.
4. Inspection by a State certified electrical inspector and a representative of ERMU.
5. This rate is not available for hot water use in any production process for Commercial and
Industrial users.
MORATORIUM EFFECTIVE FEBRUARY 14, 2017 ON THE FOLLOWING LOAD CONTROL PROGRAMS
Energy Management Program Rates
Page 3 of 3
ERMU shall provide:
1. All electric energy consumed by the ETS water heater at $0.05015343 per kWh.
2. This equipment will be energized only for 8 off-peak hours daily.
3. A meter to measure electricity consumed by the ETS water heater.
4. A load control device and meter socket to accommodate the off-peak meter.
Rate is subject to application of Power Cost Adjustment (PCA).
Federal, state, and local taxes may apply.
Adopted December 10, 2024December 18, 2025
Effective January 1, 202526
Page 1 of 2
STREET/SECURITY LIGHT SERVICE RATE
Available: To any customer meeting Elk River Municipal Utilities (ERMU) criteria for service under this
schedule, and whose lighting needs are not being furnished under any other schedule. Installation costs
will be determined by ERMU per the Utilities Fee Schedule or on a time and materials basis.
Applicable: As determined by ERMU, but generally to non-metered roadway and area lighting.
Character Of Service: 120/240 volts, AC, as available.
Street/Security Light Service
Federal, state, and local taxes may apply.
Ownership of Equipment: ERMU will install, own, and operate the lights, including fixtures and control
equipment, unless otherwise agreed upon by ERMU and the Customer.
Lamp Replacements: Lamp replacements will be made by ERMU.
Billing and Terms of Payment: See ERMU Service Policies Policy (Billing Due Dates, and Penalties and
Delinquent Notices.)
General Terms and Conditions Applicable To Non-Metered Lighting Service:
1. Area lighting installed on ERMU poles shall not be of the type that interferes with climbing
room, work space, or wire clearance as defined by the National Electrical Safety Code and is to
be installed below the secondary line and service drops, all per ERMU’s specification.
2. All area lights installed under this schedule shall be equipped with a photo-electric control which
will limit the hours of illumination from dusk to dawn (approximately 4,400 hours per year).
Type Monthly Rate Per
Fixture
Standard Low Output with Wood Pole (<249 Watt HPS, <74 Watt LED) $10.00
Standard Low Output (<249 Watt HPS, <74 Watt LED) $12.00
Standard Medium Output (250-399 Watt HPS, 75-124 Watt LED) $17.00
Standard High Output (400 Watt or larger HPS, 125 Watt or larger LED) $22.00
Standard Low Output with Decorative Pole (<74 Watt LED) $24.00
Decorative Medium Output with Decorative Pole (75-124 Watt LED) $33.00
Street/Security Light Service Rate
Page 2 of 2
3. The rates set forth herein may be modified by the amount of any governmental changes
imposed and levied on transmission, distribution, production, or the sale of electrical power.
4. Exceptions by management approval only.
Adopted December 10, 2024December 18,2025
Effective January 1, 202526
Page 1 of 2
WATER SERVICE RATES
Available to: All customers who have municipal water service available at their property, lying within
the corporate limits of the City of Elk River.
Special Conditions: Each customer served by one meter. Multiple living entities, such as apartments,
may be served by a combined meter upon approval of the Elk River Municipal Utilities (ERMU) and
acceptance of applicable charges.
Special Charges: A basic monthly water charge shall be applied to each meter based on the meter size
according to the schedule below, and is separate from any water use. Included in the basic monthly
water charge is $0.81$1.27 that is collected on a monthly basis from each service connection (excluding
irrigation only accounts) to recover the total annual cost of $9.72 $15.22 for the State of Minnesota Safe
Water Testing Program (Minnesota Statutes 144.3831).
Water Rates:
METER TYPE
BASIC MONTHLY
CHARGE
1st TIER
Cost per
1000 gallons
2nd TIER
Cost per
1000
gallons
3rd TIER
Cost per
1000 gallons
Residential $10.23$10.69 $2.04$2.12 $3.64$3.79 $4.20$4.37
Commercial ¾ $12.27$12.76 $2.04$2.12 $3.64$3.79 $4.20$4.37
Commercial 1 $13.65$14.20 $2.04$2.12 $3.64$3.79 $4.20$4.37
Commercial 1 ¼ $15.02$15.62 $2.04$2.12 $3.64$3.79 $4.20$4.37
Commercial 1 ½ $16.38$17.04 $2.04$2.12 $3.64$3.79 $4.20$4.37
Commercial 2 $21.83$22.70 $2.04$2.12 $3.64$3.79 $4.20$4.37
Commercial 3 $47.75$49.66 $2.04$2.12 $3.64$3.79 $4.20$4.37
Commercial 4 $65.48$68.10 $2.04$2.12 $3.64$3.79 $4.20$4.37
Commercial 6 $95.49$99.31 $2.04$2.12 $3.64$3.79 $4.20$4.37
Commercial 8 $129.60$134.78 $2.04$2.12 $3.64$3.79 $4.20$4.37
Commercial Irrigation
Seasonally or
Permanently Installed
$21.83$22.70
$3.64$3.79 $4.20$4.37
Federal, state, and local taxes may apply.
Water Service Rates
Page 2 of 2
Residential Rate Tier Definition:
First Tier Rate = 0 – 9,000 gallons per month.
Second Tier Rate = Between 9,000 and 15,000 gallons per month.
Third Tier Rate = Above 15,000 gallons per month.
Commercial Rate Tier Definition:
First Tier Rate = 0 – 1.1 X previous year’s winter measurement period average monthly consumption.
Second Tier Rate = Between 1.1 X previous year’s winter measurement period average monthly
consumption to 1.1 X previous year’s winter measurement period average monthly consumption +
40,000 gallons.
Third Tier Rate = Above 1.1 X previous year’s winter measurement period average monthly
consumption + 40,000 gallons.
Winter Measurement Period Definition: December – April billing cycles.
For new customers, if a minimum of 3 winter months previous year’s history is not available to establish
the Tier amount, the First Tier rate shall be utilized until a minimum of 3 months history is established.
Commercial irrigation is not eligible for First Tier Rate as there is no winter use.
Minimum Bill: Basic monthly water charge plus any charges applicable to multiple living entities.
Billing and Terms of Payment: See ERMU Service Policies Policy (Billing Due Dates, and Penalties and
Delinquent Notices.)
Adopted December 10, 2024 December 18, 2025
Effective January 1, 20252026
New Residential Electric Connection - Developer - Lot with ERMU water service $975.00
New Residential Electric Connection - Developer - Lot without ERMU water service $1,475.00
New Electric Connection (standard)$900.00
New Electric Connection - Non Standard Loads (i.e seasonal cabin, RV panel, Billboards, electric fence, etc.)100%
New Wire Footages over 200' (per foot)$5.00
New Service Frost Trenching (per foot) $6.00
New Commercial & Industrial Electric Connection 50%
Service Upgrades or Additions for Existing Customers 100%
Minimum Temporary Electric Service - Existing Transformer $350.00
Minimum Temporary Electric Service - Without Existing Transformer $1,000.00
Non-Standard Temporary Electric Service - (Additional infrastructure needed to install service to customer)100%
Grid Access Fee 5.20/kW
Street Light - 30' Decorative Pole with 6' Arm and Cobra Fixture $3,400.00
Street Light - 23' Decorative Pole with Cobra Fixture $2,400.00
Street Light - 14' Decorative Pole with Cobra Fixture $5,500.00
Street Light - 14' Decorative Pole with Acorn Fixture $7,500.00
Security Light - Wood Pole with Fixture $975.00
Security Light - Existing Pole $350.00
Pole Attachment Fee (per pole) $15.00
Meter Installation Fee (per individually metered apartment unit)$25.00
Water Access Charge = Water Connection Charge + Water Availability Charge $3,990.00
Water Connection Charge (Per Plumbing Unit) - Builder $3,600.00
Water Availability Charge (Per Plumbing Unit) - Developer $390.00
Abandoned Water Service (minimum)$6,000.00
Backflow Preventer Device Non-Compliance (per month)$100.00
Deposit for 5/8" Hydrant Meter $175.00
Deposit for 2 1/2" Hydrant Meter $1,500.00
Hydrant Water Sales - Rental (per week)$50.00
Hydrant Water Sales - Units (per 1000 gallons)3rd Tier Water Rate
Hydrant Wrench $40.00
Private Hydrant Maintenance Program Monthly Fee $5.00
Administrative Fee for Continued Submission of Checks After No-Check Notice Given $20.00
Administrative Fee for Continued Submission of payment on a closed account $20.00
Billable Cost of Materials Markup 15%
Billable Labor Markup 58%
Billable Vehicle / Equipment (per hour)$50.00
Commerical Application Fee $20.00
Electric Service Disconnect/Trip Fee - Meter Technician $50.00
Electric Service Disconnect/Trip Fee - Line Crew $150.00
Water Service Disconnect/Trip Fee - Water Operator $100.00
Manual Meter Reading Fee (per month)$50.00
Additional Meter Reading Fee (per month) $10.00
Meter Tampering Fee $250.00
Meter Testing Fee $50.00
NSF Fee $30.00
Penalty Amount 10%
Photocopies (per page)$0.25
Red Tag Handling Fee $20.00
Federal, state, and local taxes may apply
Adopted by the Utilities Commission on November 13, 2025 under authority per Minnesota Statute 412.361
ELECTRIC
WATER
ADMINISTRATIVE
Elk River Municipal Utilities
2026 Utilities Fee Schedule
238040v2
RESOLUTION NO. 25-10
BOARD OF COMMISSIONERS
ELK RIVER MUNICIPAL UTILITIES
A RESOLUTION ADOPTING THE ELK RIVER MUNICIPAL UTILITIES 2026 BUDGET AND
2026 SCHEDULE OF RATES AND FEES
WHEREAS, Elk River Municipal Utilities staff has presented the preliminary 2026 budget,
and the 2026 Schedule of Rates and Fees as contained in the 2026 Annual Business Plan,
to the Commission;
WHEREAS, the Commission has reviewed the budget and made modifications that
reflect the desired service level; and
WHEREAS, the budget represents a reasonable estimate of the spending required to
provide the desired service level; AND
WHEREAS, the schedule of rates and fees is reasonable and necessary to support our
2026 budget.
NOW, THEREFORE, BE IT HEREBY RESOLVED BY THE BOARD OF COMMISSIONERS OF
ELK RIVER MUNICIPAL UTILITIES, BASED UPON THE FOREGOING RECITALS
INCORPORATED HEREIN, AS FOLLOWS:
1. The Elk River Municipal Utilities 2026 budget is hereby adopted as presented.
2. The Elk River Municipal Utilities 2026 Schedule of rates and fees is hereby
adopted as presented.
This Resolution Passed and Adopted this 18th day of December, 2025.
John J. Dietz, Chair
Mark Hanson, General Manager