6.2. ERMUSR 06-12-2007Ji
Elk River
Municip al Utilitie s
13069 Orono Parkway
Elk River, MN 55330
June 6, 2007
To: Elk River Municipal Utilities Commission
Jerry Takle
Jerry Gumphrey
Jim Tralle
From: Bryan Adams
Subject: Residential Connection Fees
phone: 763.441.2020
Fax: 763.441.8089
We have two residential developments under construction in Otsego that require an underground
electric system. The developer of one of these developments feels our connect charges are too
high. Our connect charges are as follows.
Developer Cost -Water & Sewer Lots $420/Living Unit
Developer Cost - No Water or Sewer Lots $520/Living Unit
Builder Cost $800/Living Unit
Between the developer and builder, we will receive $1220 to $1320 per living unit. Depending
upon how fast the development is built out, it may take years to collect the $800 from the
builder.
In an effort to satisfy ourselves and the developer that our fees are appropriate, we did an
estimate of costs vs. connect fees for both of these developments. The results are as follows.
Development Name Wild Flower Mississippi Cove
Sewer & Water Yes No
Number of Living Units
Single Family 112 18
Townhouses 70 0
Re-do existing 0 3
ERMU Distribution and Se condary Services in
Development... $300,000 $35,500
Cost per living unit $1648/ea $1972/ea
Revenue $1220/ea $1320/ea
Other costs generally not considered:
Feeder cost to development (4/5000) $400,000 $320/Living Unit
Substation capacity (4/15,000) $1,100,000 $294/Living Unit
In the case of Wild Flower development, revenues over time are $1220/living unit and up front
expenses are $1648/living unit distribution costs plus another $614/living unit in feeder and
substation cost. The difference of $2262 expense vs. $1220/unit is socialized in electric rates.
For commercial accounts, we collect 50% of the distribution expense but electric use revenue is
being received in a few months and not potentially years.
Connexus connect fees from the best we can tell, are very comparable to ours.
MMUA from time to time does surveys of other municipals on line extension and connect fees.
Attached is MMUA's 2006 study. From this survey we can conclude that our charges are more
aggressive than most. For a community that doesn't grow or grows very little, the connect fees
are insignificant. In our case, they make up a significant portion of our capital budget. If we
reduce the connect fees, we will need to increase electric rates.
2006 Line Extension Survey
Does utility Does utility
Does utility charge charge capitalize new Is the
developers or developers or Does utility construction capitalized
customers for residential charge infrastructure price minus
components that customers commercial/ improvements the developers
make up primary secondary industrial during the current or customers
distribution service from customers year of contribution or
infrastructure If yes, what is charge transformer to If yes, what is charge for service If yes, what is charge construction or total cost of the
City/Utility system based on the customer based on upgrades based one others project
for the current total cost of
Ada No No No
_ vear oroiect
charge for secondary
wire up to the meter
Aitkin
cost of installation Yes
No
construction is
capitalized at the
customer or developer
pays installation from
transformer to
Yes
Alexandria _ _ No Yes customer No time it is complete Total cost
Base on feasibility
study with 10% hurde Customer hires
Austin Yes rate No electrician to install Yes Feasibility study End of year Total cost
Benson _ No No No current year total cost
new developments
have been
underground and
customer is
responsible for the
Utility has contracted service lateral. Utility
out large only does the
developments and the connecting and
developer pays for all charges a connection KVA Charge
Biwabik Yes the cost involved No fee for this. Yes $.30/KVA every month Yes No
customer installs 80% of cost
wiring from associated to
transformer or customer upgrade
pedestal to service on paid by customer and Total cost of
Blooming Prairie No Yes house Yes 20% paid by utilities Current year project
overhead is free,
underground paid by cap in current year
Blue Earth No Yes customer No of construction net cost
customer pays for
underground service Begin
installed from utility's depreciation
secondary to their beginning of year
Detroit Lakes No No home No after construction Minus
Dundee No Yes cost to city No No
No, but do If a change in the
Basic charge of $125 bill a customer's facility Total cost of
for 1st 100 ft of 200 monthly requires relocation of project,
amp underground plus facility existing primary including
$1.25 per foot for each charge to service to transformer design and
ft over 100 ft. This large and it is in a dedicated Capitalized when inspection,
covers a partion of the commercial easement, then may placed into regardless of
cost of the and charge actual cost to commercial the funding
East Grand Forks No Yes under round cable industrial relocate service source
Elbow Lake No No No Yes
$320/lot for developer,
$700/lot for home Included in charge for Total cost of
Elk River Yes builder Yes primary Yes bill for 100% costs when completed project
Fairfax No No No Asset life total cost
flat service charge
plus cost of wire from
property line if
purchased from utility.
Additional charge if
secondaries need to
be extended more during current
than 100 ft to property Service size and year of Total cost of
. airmont No Yes line from transformer Yes volts a required construction the project
yes, during current Developer/cust
year of omer doesn't
Fosston No No No construction contribute
Does utility Does utility
Does utility charge charge capitalize new Is the
developers or developers or Does utility construction capitalized
customers for residential charge infrastructure price minus
components that customers commercial/ improvements the developers
make up primary secondary industrial during the current or customers
distribution service from customers year of contribution or
infrastructure If yes, what is charge transformer to If yes, what is charge for service If yes, what is charge construction or total cASt of the
City/Utility system based on the customer based on upgrades? based one others project
less the
developers or
customers
Granite Falls No No No Yes contribution
Connection charge of connection charge of
H_ armony Yes $500 Yes $500 No Yes total cost
Residential customer
pays $40 hook-up fee.
Customer responsible
for wire from house to
utility connection when project is Total cost - no
Hawley No Yes point. No complete contribution
cost of equipment and
Jackson No No Yes time labor current year total cost
connection fee charge
for all new customer is capitalized in year
responsible to hire
electrician to install
service from
transformer to house/
Lakefield No Yes business No Yes Total cost
charge $100 deposit
which is refunded after
12 months of
Litchfield No No continuous service No Yes Total cost
$1,000 per lot $4 per Customer is
Le Sueur Yes foot after 100 ft No responsible No Yes Total cost
Madelia No No No Yes N/A
underground pay from
Madison No No No point of delivery No No
Less developer
wire and conduit price, or customer
Marshall No No Yes labor char es Yes contribution
Will charge if they are
small load (3-phase)
and we analyze
payback of costs and
need money up front
to recover capital Total cost of
Moorhead No No No costs Yes project
Percentage of
year capitalized Minus the
Minimum of $150 or Minimum of $250 or during curcent developers
actual costs over that actual costs over that year of and customers
Moose Lake No Yes amount Yes amount construction contribution
Nashwauk No No No No None
$350 for installation in
existing development,
$750 in new
development (includes
lot and distribution based on time and Yes, in current
New Ulm No Yes fee) Yes material
year
Yes
Nielswlle No No No No No
$250 per new current year of
Lake Crystal No Yes residential connection Yes Actual costs construction Total cost
City provides wire,
customer pays for Depends on
install trenching what they
Lake Park No Yes hookup meter socket are doing N/A N/A
Homeowner
Does utility Does utility
Does utility charge charge capitalize new Is the
developers or developers or Does utility construction capitalized
customers for residential charge infrastructure price minus
components that customers commercial/ improvements the developers
make up primary secondary industrial during the current or customers
distribution service from customers year of contribution or
infrastructure If yes, what is charge transformer to If yes, what is charge for service If yes, what is charge construction or total cost of the
City/Utility system based on the customer based on up rades~ based one others project
Flat rate for
residential:$200
overhead, $650 end of current total cost of
North St. Paul No _ Yes underground No year payment
Ortonville
No
No during current
No ear NA
Avg. cost. Customer Avg. cost. Customer
pays about 60%. pays about 60%.
Current charge is Current charge is capitalized upon
$SDO, of which $125 is $500, of which $125 is completion of cost less
Owatonna Yes for service portion Yes for service portion No project contribution
Developer
doesn't
Preston
No
No
Yes
cost of upgrade
current year contribute to
costs
If it is known
that a cost will
be directly
billed to the
developer, it
will not be
added to
capitol costs.
Otherwise total
Princeton
Yes
Yes
Yes
current ear cost is
ca italized
Randall No No Yes cost of up rade Burin the year total cost
Differential between customer may have to
what is assumed to be install a concrete
collected via retail transformer pad and
rates for new conduit to the
installations over designated point of Total cost of
assets lifetime and service. If customers capitalize the project
average cost of a wants this done after infrastructure the since GASB
residential service hours, they pay for all year it is placed in 34 came into
Rochester Yes installation No No labor and equipment service effect
200 amp - $250 for 200 amp - $250 for
single phase, 400 amp single phase, 400 amp
- $400 for single - $400 for single Cost of supplies +
Saint James Yes phase Yes phase Yes labor Yes Total cost
On 4-11-06 will start
new Electric Access
Charge of $12D0 to
offset some cost of
new installation. Cost
billed to property
owner when building
Saint Peter No permits are obtained
cost difference _ based on 100% cost
between underground less increased margin
system and overhead secondary services from sales due to
equivalent services to and owned and increased load with a
Total cost of
Capitalized at
service that installed 100% by pay back period over completion of Total cost of
Shakopee Yes development Yes customer Yes 5 years project project
Shelly No No No No
Sleepy Eye No No contractor installed Yes actual costs Yes Cost of project
capitalized
Private contractor price minus
Stephen No Yes does this work No Yes contribution
Thief Rroer Falls No No No Yes Total cost
Does utility Does utility
Does utility charge charge capitalize new Is the
developers or developers or Does utility construction capitalized
customers for residential charge infrastructure price minus
components that
make up primary customers
d commerciaU improvements the developers
di
ib secon
ary industrial during the current or customers
str
ution service from customers year of contribution or
infrastructure If yes, what is charge transformer to If yes, what is charge for service If yes, what is charge construction Or total cost of the
City/Utility system based on the customer based on up rades~ based one other? prolect~
In developments, we
use lot line metering.
Meter to house is
In new additions or customer
newly platted areas responsibility. From
not presently served trans to meter
charge is for all customer pays
material except material & labor over Yes, unless it is
metering, all labor 8 $5,000. Non- construction in
equipment over development areas - progress at 12/31
55,000 unless a
underground is per ft ,
then it is
development charge, overhead is capitalized and
agreement states flat rate for standard depreciated when Total cost of
Two Harbors Yes othervvise _ Yes drop. Yes Time and material complete project
Warroad
No
No
No Only over $5,000
Actual costs. er circuit Total cost
Commerical
customers are
reimbursed initial
Yes for costs to provide
commercial, No for primary distribution
Waseca residential and transformer No Yes Actual costs Current Year Total
pay for wire for
Wells
\A/ 1. L No ___ Yes under round services No Yes Yes
total
uunng the year as
Willmar No No
No project goes into
service N/A
No developer
Windom No No
No
Yes or customer
fee
customer pays for all
material on their
property if it's a
dedicated service and Customer pays for
benefits no other material on their
customers. Utility property. Utility Total cost of
Worthington Yes provides the labor. Yes provides the labor Yes Service size Yes project