12-18-2025 ERMU MIN SPECIALELK RIVER MUNICIPAL UTILITIES
SPECIAL MEETING OF THE UTILITIES COMMISSION
HELD AT THE UTILITIES CONFERENCE ROOM
December 18, 2025
Members Present: Chair John Dietz, Vice Chair Mary Stewart, Commissioners Jill Larson -Vito, and
Matt Westgaard
Present via Zoom: Commissioner Nick Zerwas participated in the meeting via interactive
television as he was out of town at the time of the meeting
ERMU Staff Present: Mark Hanson, General Manager
Sara Youngs, Administrations Director
Melissa Karpinski, Finance Manager
Tony Mauren, Governance & Communications Manager
Tom Geiser, Operations Director
Jenny Foss, Communications & Administrative Coordinator
Others Present: Jared Shepherd, Attorney
1.0 GOVERNANCE
1.1 Call Meeting to Order
The special meeting of the Utilities Commission was called to order at 3:30 p.m. by Chair Dietz.
1.2 Pledge ofAllegiance
The Pledge of Allegiance was recited.
1.3 Consider the Agenda
There were no recommended changes to the agenda.
Moved by Commissioner Westgaard and seconded by Commissioner Larson -Vito to approve
the December 18, 2025, agenda. Motion carried 5-0.
2.0 CONSENT AGENDA lApproved By One Motion]
Due to questions about the one item on the agenda, a recommendation was made by
Commissioner Larson -Vito to remove this item from Consent for further discussion.
Moved by Commissioner Stewart and seconded by Commissioner Larson -Vito to remove
Receive Final Electric and Water Cost of Service and Rate Design Studies from the Consent
Agenda for further discussion. Motion carried 5-0.
Elk River Municipal Utilities Commission Meeting Minutes
December 18, 2025
Page 1
3.0 BUSINESS ACTION
2.1 Receive Final Electric and Water Cost of Service and Rate Design Studies
Commissioner Stewart had questions regarding the classification of specific line items within
the final Cost of Service and Rate Design Studies prepared by the ERMU's consultant, Dave
Berg.
Commissioner Stewart stated that the amortization of the Minnesota Municipal Power Agency
(MMPA) membership buy -in cost, valued at approximately $668,000 annually, was classified
under Plant in Service but suggested it would be more appropriately categorized under Power
Supply. It was noted that this reclassification, while not affecting the overall 2% revenue goal,
could impact how costs are allocated across different customer classes.
A second point concerned the description of Other Operating Expense, which referenced the
local power peaking plant. Since the plant is no longer operational for power generation, its
associated costs, including labor for caretaking, may need to be re -categorized from Power
Generation to a more appropriate account, such as Distribution or General Campus
Maintenance.
Staff stated they will work with the consultant to review the classification of the MMPA
amortization and the former peaking plant expenses. An updated report will be brought back
to the Commission in January for final review and filing. No formal action was taken to receive
the report at the time.
3.1 Verizon Water Tower Lease Agreements
Commissioner Zerwas formally recused himself from discussion and voting, due to a
professional relationship with Verizon.
Having received guidance from the Commission in November 2025 to not proceed with
any changes, staff provided an update on the latest unsolicited offers from Verizon to
amend its water tower lease agreements. Verizon is requesting reductions ranging from
26.5% to 32.8% across different towers, citing financial challenges and its analysis of
redundant tower coverage, the potential consequence of which being removal of the
equipment and a loss of revenue for ERMU.
Staff noted that Verizon's actions, such as proposed longer lease durations and recently
upgrading equipment on a tower, seem to contradict their claim that the towers are less
valuable.
Mr. Hanson corrected his memo which was published as stating, "Further reductions
beyond 5% would require reducing the annual payments as needed to achieve the desired
goal," as it should actually state 10% as that threshold.
Elk River Municipal Utilities Commission Meeting Minutes
December 18, 2025
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Mr. Hanson invited the Commission's feedback on whether they were interested in
approving a reduction and what percentage reduction they were comfortable with
accepting.
Commissioners emphasized the importance of maintaining consistency across all lease
agreements with all three carriers (Verizon, AT&T, T-Mobile). It was noted that staff has
worked diligently to standardize terms, such as the 4% annual escalator, and that altering
terms for one carrier could set a difficult precedent.
The Commission felt that the company's claimed financial burden should not be shifted to
the Utilities' consumer -owners, noting the company has publicly reported its intention to
distribute dividends to shareholders.
Mr. Hanson explained that Verizon is able to terminate its contracts at the end of every
five-year renewal cycle without penalty. He added that the next periods start in 2028 and
2029 for the respective tower agreements.
The consensus of the Commission was to maintain the agreement terms and not
renegotiate the existing lease agreements with Verizon. No formal action was requested
or taken. Staff will proceed based on this direction.
3.2 2026 Annual Business Plan — Budget and Schedule of Rates & Fees
Ms. Karpinski presented the final 2026 Annual Business Plan for adoption. The plan
incorporates recommendations from the cost of service studies, proposing a 2% total
revenue increase for electric (a 7.06% margin), and a 4% rate increase for water (3.38%
margin).
Based on discussion at the December regular meeting, Commissioner Stewart asked if
staff had considered adjusting the water rate tiers. Staff responded that after reviewing
neighboring utilities, ERMU's tiers are on the lower end, particularly the threshold
between Tier 2 and Tier 3. Mr. Hanson proposed to hold off on tier adjustments for 2026
to avoid compounding the rate increase.
In response to a question, Ms. Youngs explained that most high -water -bill inquiries come
from new homeowners unfamiliar with their irrigation systems. She added that the
ERMU's new Advanced Metering Infrastructure helps proactively notify customers of
continuous water flow issues to help reduce unnecessary usage.
Moved by Commissioner Larson -Vito and seconded by Commissioner Stewart to adopt
Resolution 25-10 adopting the 2026 Annual Business Plan. Motion carried 5-0
Elk River Municipal Utilities Commission Meeting Minutes
December 18, 2025
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4.0 ADJOURN REGULAR MEETING
Moved by Commissioner Westgaard and seconded by Commissioner Larson -Vito to adjourn
the special meeting of the Elk River Municipal Utilities Commission at 4:00 p.m. Motion
carried 5-0.
Minutes prepared by Tony Mauren.
Joh 6
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mission Chair
Jolene Richter, Deputy City Clerk
Elk River Municipal Utilities Commission Meeting Minutes
December 18, 2025
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