4.5. ERMUSR 04-14-2009Elk River -~
Municipal Utilities
13069 Orono Parkway • P.O. Box 430
Elk River, MN 55330-0430
April 8, 2009
To: Elk River Municipal Utilities Commission
John Dietz
Jerry Gumphrey
Daryl Thompson
From: Troy Adams
Subj: Review staff recommendations on cost savings
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Phone: 763.441.2020
Fax: 763.441.8099
Per Commission direction, staff has prepared a list of budget reduction and cost saving recommendations
for Commission consideration. Attached for review are the 2009 Electrical Distribution Equipment and
Capital Projects budget, Electrical Department Capital Projects Time Schedule spreadsheet, 2009 Water
Distribution Electronic 'T'echnologies & Administration Capital Projects spreadsheet, and the Proposed
Budget Reduction spreadsheet.
In the Electric Department budget there were a number of possible savings identified. With the help of
doing some in house modifications, the actual cost of the new bucket line truck has come in under budget.
The Vactron, although a safety item, could be repaired to postpone the purchase of a new one. However
if the pump would fail this year, it would be an imperative repair. There are three rebuild projects that
could be postponed. The effect of postponing these projects is that it would displace projects in the queue
for next year. Because of the recent reduction in linepersons, delaying these three projects would not
create a shortage of work. In fact, a preliminary look at this year's construction season looks busy with
rebuilds, feeder construction, and road projects. These proposed savings result in a budget reduction of
$264,000 or 15% reduction from the department budget.
In the Electrical Technologies Department budget there were also a couple of possible savings identified.
There was a power quality analysis device that could be postponed. Also, by rebuilding and reusing the
office's old server, the plant can postpone purchasing a new one. These proposed savings result in a
reduction of $7,000 or a 21% reduction in the department budget.
Over all, these proposed savings result in a $271,000 reduction in the budget. These items cannot be
eliminated, but only postponed. Because of that, an ongoing look at the budget and project prioritization
will be needed. Reduction for reduction sake will not directly benefit the ratepayers. But by applying
these proposed saving to offset future power cost adjustments from our wholesale power supplier, this
"tightening of the belt" would make an impressionable positive impact on our ratepayers. Another option
would be to carry these savings forward in reserves to help mitigate the inevitable wholesale power cost
increase looming for next year.
Elk River Municipal Utilities
Proposed Budget Reduction
April 2009
Proposed Elect
$ 14,000
$ 30,000
$ 80,000
$ 70,000
$ 70, 000
;ric Department Cost Savings
Bucket line truck savings from budget amount
Fix Vactron and postpone replacement
Postpone Area 23 rebuild
Postpone Xenia rebuild
Postpone Simonet rebuild
$ Reduction
budgeted elec equip and cap projects
$ 1,716,000 (Dept budgeted equipment and capital projects
15% Reduction dept budgeted equipment and capital projects
Proposed Electical Technologies Department Cost Savings
$ 5,000 Postpone purchase of power quality analysis equipment
$ 2,000 Rebuild used server and postpone purchase of new server
$ 7,000 $ Reduction from budgeted elec equip and cap projects
$ 34,100 Dept budgeted equipment and capital projects
21 % Reduction dept budgeted equipment and capital projects
$ 271,000 Total proposed cost savings
Elk River Municipal Utilities
2009 Electric Distribution Capital Projects
Equipment Needs
$10,000 Replace Tires
$10,000 Replace ropes, slings, & chains
$10,000 Replace fiberglass hotsticks
$10,000 Replace hand tools
$20,000 Add and replace battery operated crimpers & cutters
$2,000 Hand Held Radio, replacements
$10,000 Unknown
$155,000 Replace #4 bucket line truck
$38,000 Trade-in Vactron for new model
$50,000 Trade-in 1996 dump truck for another or Trade-in 960 case plow
$6,000 Laptop for on-call vehicle
$321,000 Total
Normal Distribution Construction, substations & feeders
$250,000 Co Rd 1 new URD feeder from 209` to 194`s Continued from last year (2)
$100,000 Finish looping 500 MCM @HW 101 $ CO Rd 39 in Otsego (3)
$80,000 Cable replace area 21 (So of Co Rd 33, York & Watson) (8)
$35,000 Rebuild and loop Cretex Plant on Hwy 10 (6)
$70,000 Cable replacement & convert to 7200 v on Simonet Dr. (7) -
$80,000 Rebuild taps in Area 23 Co Rd 13 & Co Rd 70 (9)
$70,000 Rebuild and convert to 7200 V Xenia & 6`~ off WH 10 (9),
$100,000 Rebuild 191 lh off Jackson (5)
$120,000 Rebuild 1St & 2nd Gates & Evans So Main St. (4)
$50,000 193rd Road project (1)
$40,000 Payment of growth for acquisition areas, no new territory purchased
$150,000 New development installation
$200,000 Transformers &~meters
$50,000 Miscellaneous. & unknown
$1,395,000 Total
New Developments
River Park
Liberty Heighlls
Jackson Av Villa's
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Elk River Municipal Utilities
2009 Water Distribution, Electronic Technologies & Administration Capital Projects
Water Department Capital Projects
$35,000 Paint or Remove Jackson St. Water Tower
$32,500 Replace hydrants on Norfolk, Lowe113 Street
$86,000 Water Main 193 Av extension along CO Rd 13
$10,000 Upgrade Water Boy @ Well #7
$68,000 Continue water meter replacement program
$2,000 ECO Grass Demonstration
$0 Retire "Fire truck" and replace with office Ranger
X233,500 Total
Electronic Technologies Department Capital Projects
$7,500 Power quality recorder w/ Acc.
$8,000 Thermal Imager Camera
$11,500 Computer up-grade and Software
$3,000 Map book binder -
$2,100 Misc
$2,000 Unknown
X34,100 Total
Administration
$5,000
$2,500
$1,000
$15,000
$5,000
$50,000
Computer and Software upgrades
Miscellaneous Equipment
Office Furniture
Mobile Collector Lite w/ FC200 Handheld
Replace Fax/Color Copier
LFG project Up-front engineering costs (will be reimbursed)
X78,500 Total