City of Elk River Utilities Commission Meeting NOTICE OF ...… · Total for Check/Tran - 2768: 3,489.24 276905/12/2020WIRE 7463 FURTHER ER HSA CONTRIBUTION - 172 1,323.33 277105/04/2020WIRE

City of Elk River

Utilities Commission Meeting

NOTICE OF MEETING BY TELEPHONE OR OTHER ELECTRONIC MEANS

Meeting pursuant to Minn. Stat. § 13D.021

NOTICE IS HEREBY GIVEN that the Elk River Municipal Utilities Commission will hold its regular meeting on Tuesday, June 9, 2020, 3:30 p.m. at Elk River Municipal Utilities, 13069 Orono Parkway, Elk River, MN.

In accordance with the requirements of Minn. Stat. Section 13D.021, Chair John J. Dietz has determined that an in-person meeting is not practical or prudent because of the COVID-19 health pandemic declared under Chapter 12 of the Minnesota Statutes.

Because of the COVID-19 health pandemic, it has been determined that attendance at the regular meeting location by members of the public is not feasible.

Because of the COVID-19 health pandemic, it has been determined that the physical presence at the regular meeting location by at least one member of the body, chief legal counsel or chief administrative officer is not feasible.

Therefore, some or all the Utilities Commission members may be participating by telephone or other electronic means.

Members of the public may monitor the meeting by visiting our website at https://ermumn.com/pages/stream.

Due to the COVID-19 emergency and the closure of utility facilities, public comment will not be taken at the meeting. However, public comment on agenda items can be made by submitting written comment to Interim General Manager Theresa Slominski at [email protected] prior to the meeting. Include “Public Comment” in the subject line, your name and address and the agenda item you are speaking to. Note that all public comment is considered Public Data.

Theresa Slominski, Interim General Manager Posted: June 5, 2020

1

https://ermumn.com/pages/stream

mailto:[email protected]

REGULAR MEETING OF THE UTILITIES COMMISSION June 9, 2020, 3:30 P.M.

Meeting by Telephone or Other Electronic Means

______________________________________________________________________________

Page 1 of 1

AGENDA

1.0 GOVERNANCE 1.1 Call Meeting to Order 1.2 Roll Call 1.3 Consider the Agenda 2.0 CONSENT (Routine items. No discussion. Approved by one motion.) 2.1 Check Register – May 2020 2.2 Regular Meeting Minutes – May 12, 2020 3.0 OPEN FORUM (Non-agenda items for discussion. No action.) 4.0 POLICY & COMPLIANCE (Policy review, policy development, and compliance monitoring.) 5.0 BUSINESS ACTION (Current business action requests and performance monitoring reports.) 5.1 Financial Report – April 2020 5.2 Electric and Water Cost of Service and Rate Design Study 5.3 Leadership Transition - Search Committee Update 5.4 Field Services Facility Expansion Project Architectural Costs 6.0 BUSINESS DISCUSSION (Future business planning, general updates, and informational reports.) 6.1 Staff Updates 6.2 Future Planning (Announce the next regular meeting, special meeting, or planned quorum.)

a. Regular Commission Meeting – July 14, 2020 b. 2020 Governance Agenda 6.3 Other Business (Items added during agenda approval.)

7.0 ADJOURN REGULAR MEETING

2

CHECK REGISTER

May 2020

APPROVED BY:

Paul Bell

John Dietz

Allan Nadeau

Mary Stewart

Matt Westgaard

3

Payroll/LaborCheck Register Totals

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Elk River Municipal Utilities

05/01/2020 To 05/01/2020

Revision: 103608

Pays Job Amount HoursGross Pay

95,010.04 2,540.752 Reg Hourly47,670.58 872.0020 Reg Salary1,822.15 28.753 Overtime

0.00 0.004 Double Time2,100.53 48.085 On-Call/Stand-by

43.16 0.0024 FLSA0.00 0.0025 Rest Time0.00 0.0010 Bonus Pay

600.00 0.0018 Commissioner Reimb - Electric0.00 0.00104 Commission Stipend0.00 0.00105 Perf. Metr. Distr.

3,449.77 70.35VAC Vacation Pay168.41 1.25SICK Sick Pay

0.00 0.00HOL Holiday Pay0.00 0.0078 Retro Earnings

471.82 6.755-2 On-Call/Stand-by/OT150.00 0.0018A Commissioner Reimb. - Water

0.00 0.00104A Commission Stipend - Water0.00 0.00PVT Purchased Vacation Time

228.96 8.00PTOY Personal Day - Year1,961.60 80.00COSL COVID-19 SICK LEAVE

Gross Pay Total: 153,677.02 3,655.93Total Pays: 153,677.02 3,655.93

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05/15/2020 To 05/15/2020

Revision: 103608


91,961.76 2,499.752 Reg Hourly45,483.75 832.0020 Reg Salary1,590.50 29.003 Overtime

0.00 0.004 Double Time2,060.36 48.085 On-Call/Stand-by

36.55 0.0024 FLSA182.74 4.0025 Rest Time

0.00 0.0010 Bonus Pay0.00 0.00105 Perf. Metr. Distr.

3,978.48 82.25VAC Vacation Pay3,678.41 94.00SICK Sick Pay

0.00 0.00HOL Holiday Pay0.00 0.0078 Retro Earnings

467.51 8.505-2 On-Call/Stand-by/OT0.00 0.00PVT Purchased Vacation Time

513.84 16.00PTOY Personal Day - Year0.00 0.00COSL COVID-19 SICK LEAVE

Gross Pay Total: 149,953.90 3,613.58Total Pays: 149,953.90 3,613.58



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05/29/2020 To 05/29/2020

Revision: 103608


85,130.16 2,316.252 Reg Hourly41,597.74 763.5020 Reg Salary

817.07 13.253 Overtime161.52 2.004 Double Time

1,832.74 46.365 On-Call/Stand-by27.38 0.0024 FLSA0.00 0.0025 Rest Time0.00 0.0010 Bonus Pay0.00 0.00105 Perf. Metr. Distr.

5,310.13 116.75VAC Vacation Pay703.49 19.00SICK Sick Pay

14,092.08 344.00HOL Holiday Pay0.00 0.0078 Retro Earnings

345.00 6.005-2 On-Call/Stand-by/OT0.00 0.00PVT Purchased Vacation Time0.00 0.00PTOY Personal Day - Year

380.25 7.50COSL COVID-19 SICK LEAVEGross Pay Total: 150,397.56 3,634.61

Total Pays: 150,397.56 3,634.61


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Accounts PayableCheck Register


05/01/2020 To 05/31/2020Bank Account: 5 - GENERAL FUND WITHDRAWALS

Check /Tran Date

PmtType AmountVendor NameVendor Reference

WIRE2761 05/01/2020 153 PERA (ELECTRONIC) PERA EMPLOYEE CONTRIBUTION 8,474.12PERA EMPLOYEE CONTRIBUTION 1,293.61PERA CONTRIBUTIONS 9,777.83PERA CONTRIBUTIONS 1,492.62

Total for Check/Tran - 2761: 21,038.18

WIRE2762 05/04/2020 161 MNDCP (ELECTRONIC) MNDCP EMPLOYER MGR CONTRIBUTION 882.09MNDCP EMPLOYER CONTRIBUTION 2,495.79MNDCP EMPLOYEE CONTRIBUTIONS 2,995.12MNDCP EE MANAGER CONTRIBUTIONS 779.93MNDCP EMPLOYER MGR CONTRIBUTION 115.69MNDCP EMPLOYER CONTRIBUTION 395.62MNDCP EMPLOYEE CONTRIBUTIONS 309.66MNDCP EE MANAGER CONTRIBUTIONS 110.33MNDCP EE ROTH MGR CONTRIBUTIONS 102.16MNDCP EE ROTH CONTRIBUTIONS 556.66MNDCP EE ROTH MGR CONTRIBUTIONS 5.36MNDCP EE ROTH CONTRIBUTIONS 168.71


WIRE2763 05/07/2020 154 MINNESOTA REVENUE (ELECTRONIC) PAYROLL TAXES - STATE 172.75PAYROLL TAXES - STATE 5,155.88PAYROLL TAXES - STATE 724.22


WIRE2764 05/04/2020 285 JOHN HANCOCK WENZEL MANAGER CONTRIBUTIONS 70.98WENZEL EMPLOYEE CONTRIBUTIONS 1,384.84WENZEL EE ROTH MGR CONTRIBUTIONS 102.38W&A MANAGER CONTRIBUTION 173.36W&A EMPLOYER CONTRIBUTION 499.72WENZEL MANAGER CONTRIBUTIONS 17.74WENZEL EMPLOYEE CONTRIBUTIONS 53.27W&A MANAGER CONTRIBUTION 17.74

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W&A EMPLOYER CONTRIBUTION 53.27DEF COMP ROTH CONTRIBUTIONS W&A 282.23


WIRE2765 05/06/2020 152 IRS - USA TAX PMT (ELECTRONIC) PAYROLL TAXES - FEDERAL & FICA 608.08PAYROLL TAXES - FEDERAL & FICA 422.90PAYROLL TAXES - FEDERAL & FICA 11,830.22PAYROLL TAXES - FEDERAL & FICA 1,604.07PAYROLL TAXES - FEDERAL & FICA 18,007.22PAYROLL TAXES - FEDERAL & FICA 2,716.12


WIRE2766 05/04/2020 160 HCSP (ELECTRONIC) HCSP EMPLOYEE CONTRIBUTIONS 1,826.64HCSP EMPLOYEE CONTRIBUTIONS 225.25


WIRE2767 05/12/2020 160 HCSP (ELECTRONIC) HCSP CONTRIBUTIONS 1,735.97

WIRE2768 05/05/2020 7463 FURTHER HSA EMPLOYEE CONTRIBUTION 3,106.54HSA EMPLOYEE CONTRIBUTION 382.70


WIRE2769 05/12/2020 7463 FURTHER ER HSA CONTRIBUTION - 172 1,323.33

WIRE2771 05/04/2020 8181 AMERICAN EXPRESS General Manager American Express 17.83General Manager American Express 4.46

Total for Check/Tran - 2771: 22.29

WIRE2772 05/06/2020 166 ONLINE UTILITY EXCHANGE (ELECTR UTILITY EXCHANGE REPORT 313.44UTILITY EXCHANGE REPORT 78.36


WIRE2773 05/01/2020 3219 RESOURCE TRAINING & SOLUTIONS/B HEALTH CARE ER PREMIUMS - MAY 2020 50,420.53HEALTH CARE ER PREMIUMS - MAY 2020 11,676.84HEALTH CARE EE PREMIUMS - MAY 2020 18,683.13HEALTH CARE EE PREMIUMS - MAY 2020 2,016.00


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WIRE2775 05/18/2020 160 HCSP (ELECTRONIC) HCSP EMPLOYEE CONTRIBUTIONS 1,813.10HCSP EMPLOYEE CONTRIBUTIONS 239.20


WIRE2776 05/18/2020 161 MNDCP (ELECTRONIC) MNDCP EMPLOYER MGR CONTRIBUTION 882.07MNDCP EMPLOYER CONTRIBUTION 2,489.54MNDCP EMPLOYEE CONTRIBUTIONS 2,988.76MNDCP EE MANAGER CONTRIBUTIONS 779.93MNDCP EMPLOYER MGR CONTRIBUTION 115.71MNDCP EMPLOYER CONTRIBUTION 399.59MNDCP EMPLOYEE CONTRIBUTIONS 316.02MNDCP EE MANAGER CONTRIBUTIONS 110.33MNDCP EE ROTH MGR CONTRIBUTIONS 102.14MNDCP EE ROTH CONTRIBUTIONS 556.77MNDCP EE ROTH MGR CONTRIBUTIONS 5.38MNDCP EE ROTH CONTRIBUTIONS 166.32


WIRE2777 05/18/2020 285 JOHN HANCOCK WENZEL MANAGER CONTRIBUTIONS 70.98WENZEL EMPLOYEE CONTRIBUTIONS 1,380.49WENZEL EE ROTH MGR CONTRIBUTIONS 102.38W&A MANAGER CONTRIBUTION 173.36W&A EMPLOYER CONTRIBUTION 380.49WENZEL MANAGER CONTRIBUTIONS 17.74WENZEL EMPLOYEE CONTRIBUTIONS 57.62


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W&A MANAGER CONTRIBUTION 17.74W&A EMPLOYER CONTRIBUTION 57.62DEF COMP ROTH CONTRIBUTIONS W&A 282.23


WIRE2778 05/18/2020 7463 FURTHER HSA EMPLOYEE CONTRIBUTION 3,084.31HSA EMPLOYEE CONTRIBUTION 384.93


WIRE2779 05/19/2020 152 IRS - USA TAX PMT (ELECTRONIC) PAYROLL TAXES - FEDERAL & FICA 11,396.19PAYROLL TAXES - FEDERAL & FICA 1,789.73PAYROLL TAXES - FEDERAL & FICA 17,665.80PAYROLL TAXES - FEDERAL & FICA 2,989.98


WIRE2780 05/21/2020 154 MINNESOTA REVENUE (ELECTRONIC) PAYROLL TAXES - STATE 5,039.81PAYROLL TAXES - STATE 810.94


WIRE2782 05/21/2020 174 MINNESOTA REVENUE SALES TX (ELE SALES AND USE TAX - APRIL 2020 141,784.99SALES AND USE TAX - APRIL 2020 2,221.01


WIRE2784 05/14/2020 9654 CARDMEMBER SERVICE FIRST NATIONAL BANK VISA 1,690.86FIRST NATIONAL BANK VISA 198.92


WIRE2786 05/22/2020 7463 FURTHER ADMINISTRATIVE FEE INVOICE - MAY 2020 94.25ADMINISTRATIVE FEE INVOICE - MAY 2020 17.85


WIRE2788 05/21/2020 3936 WORLD VISION EMPLOYEE CONTRIBUTIONS 31.93EMPLOYEE CONTRIBUTIONS 8.07


WIRE2789 05/28/2020 7463 FURTHER FSA CLAIM REIMBURSEMENTS - 111 1,680.00


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DD13948 05/08/2020 9169 MICHAEL D LANGER EMPLOYEE CLOTHING - 127 BOOTS 169.99

DD13995 05/22/2020 212 DAKOTA SUPPLY GROUP WIRE 4,905.79WIRE -4,905.79


DD13996 05/22/2020 349 MINNESOTA EQUIPMENT INC GEAR HEAD 205.52GEAR HEAD -205.52


DD14042 05/29/2020 211 JENNY BIORN MN SOCIETY OF CPAs - 133 252.00MN SOCIETY OF CPAs - 133 63.00


CHK79238 05/08/2020 11 CITY OF ELK RIVER FRANCHISE FEE CREDIT - MARCH 2020 -975.002020 FRANCHISE FEE Q1 - WRITE OFF CAHILL -110.002020 FRANCHISE FEE Q1 - WRITE OFF -463.422020 FRANCHISE FEE Q1 - MAR 975.002020 FRANCHISE FEE Q1 - JAN 975.002020 FRANCHISE FEE Q1 - FEB 975.002020 FRANCHISE FEE Q1 237,428.74


CHK79239 05/08/2020 102 ABDO EICK & MEYERS, LLP AUDIT SERVICES 11,280.00AUDIT SERVICES 2,820.00


CHK79240 05/08/2020 2512 AMARIL UNIFORM COMPANY EMPLOYEE CLOTHING - 119 143.97EMPLOYEE CLOTHING - 169 941.18


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EMPLOYEE CLOTHING - 32 317.75EMPLOYEE CLOTHING - 59 38.98EMPLOYEE CLOTHING - 59 740.55EMPLOYEE CLOTHING - 159 1,067.38EMPLOYEE CLOTHING - 149 34.13EMPLOYEE CLOTHING - 149 648.58EMPLOYEE CLOTHING - 152 25.11EMPLOYEE CLOTHING - 152 476.97EMPLOYEE CLOTHING - 156 1,035.92EMPLOYEE CLOTHING - 142 413.75EMPLOYEE CLOTHING - 172 133.00EMPLOYEE CLOTHING - 172 531.98FACE MASKS 244.18


CHK79241 05/08/2020 9422 BOE ELECTRICAL CONTACTORS CONTRACTED SERVICE - JARVIS 4,160.00

CHK79242 05/08/2020 11 CITY OF ELK RIVER LABOR FOR UNIT #21 120.00LABOR FOR UNIT #7 100.00LABOR FOR UNIT #45 80.00LABOR FOR UNIT #39 100.00LABOR FOR UNIT #44 100.00PARTS & LABOR FOR UNIT #20 -1.37PARTS & LABOR FOR UNIT #20 58.66LABOR FOR UNIT #52 80.002020 CERTIFICED SPECIAL ASSESSMENTS 50.002020 CERTIFICED SPECIAL ASSESSMENTS 95.00


CHK79243 05/08/2020 9997 DR HORTON, INC Credit Balance Refund 195.33




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CHK79253 05/08/2020 5249 DRIVER & VEHICLE SERVICES CRASH RECORD REQUEST 5.00

CHK79254 05/08/2020 23 ELK RIVER MUNICIPAL UTILITIES CYCLE 2 - INV GRP 413 - MARCH 2020 100.00CYCLE 2 - INV GRP 413 - MARCH 2020 385.01CYCLE 2 - ACCT 2125 - MARCH 2020 156.43CYCLE 2 - ACCT 41038 - MARCH 2020 4.94CYCLE 2 - ACCT 41038 - MARCH 2020 93.85CYCLE 2 - ACCT 436 - MARCH 2020 1,236.37


CHK79255 05/08/2020 9997 ESTELLE ERALS Credit Balance Refund 52.20

CHK79256 05/08/2020 9997 ANJA ESPINOZA Credit Balance Refund 93.99

CHK79257 05/08/2020 671 FASTENAL COMPANY CLEANING SUPPLIES 21.68CLEANING SUPPLIES 86.68


CHK79258 05/08/2020 8247 FERGUSON WATERWORKS #2516 MISC PARTS & SUPPLIES 99.63MISC PARTS & SUPPLIES -7.27


CHK79259 05/08/2020 80 GRAINGER ELECTRIC WALL HEATER - WACO 158.57

CHK79260 05/08/2020 809 HAWKINS, INC. WATER CHEMICALS 707.44

CHK79261 05/08/2020 9997 KATRINA HORSTMANN Credit Balance Refund 62.08/pro/rpttemplate/acct/2.47.1/ap/AP_CHK_REGISTER.xml.rpt25203

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CHK79262 05/08/2020 9997 JOSHUA HOWARD Credit Balance Refund 6.75

CHK79263 05/08/2020 5381 INSIGHT PUBLIC SECTOR keyboard 477.93keyboard 119.48


CHK79264 05/08/2020 9997 SAMANTHA JUHL Credit Balance Refund 41.60

CHK79265 05/08/2020 9997 JAMES KLINGENBERG Credit Balance Refund 12.52

CHK79266 05/08/2020 9997 KATE KREMER Credit Balance Refund 74.34

CHK79267 05/08/2020 5602 TAMMY LARSON REVENUE RECAPTURE REFUND 32.12REVENUE RECAPTURE REFUND 15.00


CHK79268 05/08/2020 5537 LATHROP GPM LLP LEGAL SERVICES - MARCH 2020 140.40LEGAL SERVICES - MARCH 2020 35.10


CHK79269 05/08/2020 3419 MCDOWALL COMPANY ROOFING CONTRACT - 2020 662.00ROOFING CONTRACT - 2020 938.00


CHK79270 05/08/2020 349 MINNESOTA EQUIPMENT INC HARD HAT 89.40

CHK79271 05/08/2020 120 NAPA AUTO PARTS PARTS FOR UNIT #4 14.41

CHK79272 05/08/2020 811 PRIME ADVERTISING & DESIGN, INC. Marketing Agency Retainer Agreement 1,000.00

CHK79273 05/08/2020 8606 QUADIENT FINANCE USA, INC MAIL MACHINE INK CARTRIDGE 120.58MAIL MACHINE INK CARTRIDGE 30.15


CHK79274 05/08/2020 8897 RALPHIE'S MINNOCO RALPHIE'S MINNOCO 12.10

CHK79275 05/08/2020 3218 RDO EQUIPMENT CO. PARTS FOR UNIT #50 -4.19PARTS FOR UNIT #50 57.34



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CHK79276 05/08/2020 9997 ASHLEY ROSS Credit Balance Refund 47.18

CHK79277 05/08/2020 2927 SHERBURNE COUNTY AUDITOR/TREAS 2020 - 1627 MAIN ST PROPERTY TAXES 2,473.602020 - 1627 MAIN ST PROPERTY TAXES 618.402020 - 1639 MAIN ST PROPERTY TAXES 2,428.802020 - 1639 MAIN ST PROPERTY TAXES 607.20


CHK79278 05/08/2020 159 SHORT ELLIOTT HENDRICKSON INC VERIZON @ JOHNSON TOWER 2,083.68

CHK79279 05/08/2020 9997 DESLYN STANGER Credit Balance Refund 8.45

CHK79280 05/08/2020 327 STONEWORKS ARCHITECTURAL PREC CIP - LIGHTING RETROFIT #2 1,152.00

CHK79281 05/08/2020 327 STONEWORKS ARCHITECTURAL PREC CIP - LIGHTING RETROFIT PLANT #1 1,280.00

CHK79282 05/08/2020 327 STONEWORKS ARCHITECTURAL PREC CIP - NEW CONSTRUCTION REBATE 1,192.00

CHK79283 05/08/2020 4532 TRACTOR SUPPLY CREDIT PLAN WELDER HELMET 64.71

CHK79284 05/08/2020 55 WESCO RECEIVABLES CORP. BUSHING INSERT 400.64

CHK79285 05/08/2020 610 WRIGHT HENNEPIN COOPERATIVE ELE WELL SECURITY - #4 #8 305.39

CHK79286 05/08/2020 3173 DELL MARKETING LP Front counter computers 2,063.32Fron counter computers 515.84


CHK79287 05/08/2020 369 DIVERSIFIED INSPECTIONS INC Inspection 2,880.00

CHK79288 05/08/2020 23 ELK RIVER MUNICIPAL UTILITIES CYCLE 3 - INV GRP 395 - MARCH 2020 10,952.55CYCLE 3 - ACCT 37747 - MARCH 2020 29.97CYCLE 3 - INV GRP 414 - MARCH 2020 175.00CYCLE 3 - INV GRP 414 - MARCH 2020 900.78


CHK79289 05/08/2020 671 FASTENAL COMPANY SANITIZER 4.08SANITIZER 16.30



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CHK79290 05/08/2020 53 GREAT RIVER ENERGY TEST BATTERY BANK 529.00

CHK79291 05/08/2020 167 KODET ARCHITECTUAL GROUP LTD CONSULTING SERVICES 15,776.61

CHK79292 05/08/2020 1001 MINNESOTA MUNICIPAL POWER AGEN PURCHASED POWER - APRIL 2020 1,745,434.90

CHK79293 05/08/2020 128 RANDY'S ENVIRONMENTAL SERVICES RECYCLING SERVICE - MAY 2020 46.22RECYCLING SERVICE - MAY 2020 11.55TRASH SERVICE - APRIL 2020 165.21TRASH SERVICE - APRIL 2020 660.82


CHK79294 05/08/2020 411 SAUBER MFG. CO PARTS FOR UNIT #51 536.00

CHK79295 05/08/2020 6107 STUART C. IRBY CO. GLOVES & TESTING -49.93GLOVES & TESTING 1,180.14


CHK79296 05/08/2020 331 TRANSUNION SKIP TRACING - MARCH 2020 40.00SKIP TRACING - MARCH 2020 10.00


CHK79297 05/15/2020 2512 AMARIL UNIFORM COMPANY EMPLOYEE CLOTHING - 163 1,029.12EMPLOYEE CLOTHING - 121 124.67EMPLOYEE CLOTHING - 165 683.55EMPLOYEE CLOTHING - 171 135.25EMPLOYEE CLOTHING - 135 288.59EMPLOYEE CLOTHING - 142 107.87EMPLOYEE CLOTHING - 19 959.32


CHK79298 05/15/2020 4531 AT & T MOBILITY CELL PHONES & iPAD BILLING 49.65CELL PHONES & iPAD BILLING 1,911.41CELL PHONES & iPAD BILLING 358.83


CHK79299 05/15/2020 2920 BATTERIES PLUS BULBS BATTERIES 4.40/pro/rpttemplate/acct/2.47.1/ap/AP_CHK_REGISTER.xml.rpt25203

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BATTERIES 83.63Total for Check/Tran - 79299: 88.03

CHK79300 05/15/2020 5224 BLUE CROSS BLUE SHIELD OF MINNES VISION PREMIUMS - JUNE 2020 312.23VISION PREMIUMS - JUNE 2020 44.13


CHK79301 05/15/2020 4251 BNSF RAILWAY COMPANY INSPECTION & FLAGGING SERVICES 625.00

CHK79302 05/15/2020 28 CINTAS MATS & TOWELS 33.75MATS & TOWELS 135.01


CHK79303 05/15/2020 11 CITY OF ELK RIVER TRASH BILLED - APRIL 2020 140,407.66STICKERS BILLED - APRIL 2020 10.00


CHK79304 05/15/2020 9997 LEAH CORDER Credit Balance Refund 69.06

CHK79305 05/15/2020 212 DAKOTA SUPPLY GROUP TRANSFORMER BOX PAD 3,585.00

CHK79306 05/15/2020 5604 ENERGY CITY SOLUTIONS, INC CIP - LIGHTING RETROFIT 904.00

CHK79307 05/15/2020 8709 FAIRVIEW HEALTH SERVICES NEW EE DRUG SCREENING - 169 170 171 150.00NEW EE DRUG SCREENING - 169 170 171 41.00


CHK79308 05/15/2020 671 FASTENAL COMPANY MISC PARTS & SUPPLIES 58.52

CHK79309 05/15/2020 9997 HAYLEY GAGNE Credit Balance Refund 43.14

CHK79310 05/15/2020 9997 JOSHUA HAYS Credit Balance Refund 16.98

CHK79311 05/15/2020 9997 WILLIAM HECK Credit Balance Refund 22.41

CHK79312 05/15/2020 173 HREXPERTISEBP LEADERSHIP MEETINGS 560.00LEADERSHIP MEETINGS 140.00


CHK79313 05/15/2020 9997 JP BROOKS HOMES Credit Balance Refund 183.61


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CHK79314 05/15/2020 145 MENARDS OFFICE SUPPLIES - REBATES -12.23OFFICE SUPPLIES 12.99OFFICE SUPPLIES - REBATES -48.93OFFICE SUPPLIES 51.97


CHK79315 05/15/2020 6243 PROGRESSIVE BUSINESS PUBLICATION SUPERVISORS LEGAL UPDATE RENEWAL 380.16SUPERVISORS LEGAL UPDATE RENEWAL 95.04


CHK79316 05/15/2020 9997 BRIANNA SCHNEIDER Credit Balance Refund 5.81

CHK79317 05/15/2020 135 WATER LABORATORIES INC WATER TESTING - APRIL 2020 272.00

CHK79318 05/15/2020 55 WESCO RECEIVABLES CORP. ELBOW 939.76

CHK79319 05/15/2020 1074 WINDSTREAM OFFICE TELEPHONE 67.06OFFICE TELEPHONE 368.02OFFICE TELEPHONE 92.01


CHK79320 05/22/2020 11 CITY OF ELK RIVER REVENUE TRANSFER - APRIL 2020 104,595.51STORMWATER BILLED - APRIL 2020 47,340.60SEWER BILLED - APRIL 2020 198,602.99


CHK79321 05/22/2020 2512 AMARIL UNIFORM COMPANY EMPLOYEE CLOTHING - 172 55.43EMPLOYEE CLOTHING - 172 221.73EMPLOYEE CLOTHING - 168 296.67


CHK79322 05/22/2020 2920 BATTERIES PLUS BULBS BATTERIES 1.13BATTERIES 21.47


CHK79323 05/22/2020 9 BORDER STATES ELECTRIC SUPPLY PADDLE -19.54Paddle 267.64


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UG TRACKER FAULT 6,862.78TRANSFORMER BOX PAD 2,724.30GLOVES - 171 -4.92GLOVES - 171 67.42WIRE 14,789.98WIRE -1,079.68UTILCO COVERS 1,600.84UTILCO COVERS -116.86


CHK79324 05/22/2020 8843 CAMPBELL KNUTSON LEGAL SERVICES - APRIL 2020 105.60LEGAL SERVICES - APRIL 2020 26.40


CHK79325 05/22/2020 11 CITY OF ELK RIVER PARTS & LABOR FOR UNIT #21 -105.01PARTS & LABOR FOR UNIT #21 1,498.35PARTS & LABOR FOR UNIT #19 58.66PARTS & LABOR FOR UNIT #19 -1.37PARTS & LABOR FOR UNIT #32 11.05PARTS & LABOR FOR UNIT #32 -9.78PARTS & LABOR FOR UNIT #32 -0.51PARTS & LABOR FOR UNIT #32 210.01LABOR FOR UNIT #49 100.00LABOR FOR UNIT #60 60.00LABOR FOR UNIT #24 20.00LABOR FOR UNIT #47 100.00PARTS & LABOR FOR UNIT #49 -104.47PARTS & LABOR FOR UNIT #49 2,071.09


CHK79326 05/22/2020 3533 CLASSIC PROTECTIVE COATINGS AUBURN TOWER RECONDITIONING - #2 75,715.00

CHK79327 05/22/2020 54 CORE & MAIN LP MISC PARTS & SUPPLIES 74.07


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CHK79328 05/22/2020 7448 CRC CUSTOMER SERVICE FOR AFTER HRS-APR 2020 3,895.54CUSTOMER SERVICE FOR AFTER HRS-APR 2020 973.88


CHK79329 05/22/2020 9997 LAURA DELUCA Credit Balance Refund 20.40

CHK79331 05/22/2020 8840 ELITE MEDIA DESIGN MONTHLY HOSTING OF WEBSITE 59.60MONTHLY HOSTING OF WEBSITE 29.80MONTHLY HOSTING OF WEBSITE 59.60


CHK79332 05/22/2020 5613 ELK RIDGE MANOR APARTMENTS CIP - WATER CONSERVATION 1,000.00

CHK79333 05/22/2020 23 ELK RIVER MUNICIPAL UTILITIES CYCLE 4 - INV GRP 396 - APRIL 2020 249.03CYCLE 4 - INV GRP 415 - APRIL 2020 175.00CYCLE 4 - INV GRP 415 - APRIL 2020 1,356.58


CHK79334 05/22/2020 122 ELK RIVER WINLECTRIC FUSEHOLDER 407.34FUSEHOLDER -29.74MISC PARTS & SUPPLIES 124.71MISC PARTS & SUPPLIES -9.11LED BULBS 342.51LED BULBS -25.01


CHK79335 05/22/2020 8709 FAIRVIEW HEALTH SERVICES NEW EE DRUG SCREENING - 172 107.91NEW EE DRUG SCREENING - 172 1.09


CHK79336 05/22/2020 671 FASTENAL COMPANY MISC PARTS & SUPPLIES 28.82MISC PARTS & SUPPLIES 39.52


CHK79337 05/22/2020 8949 FS3 INC. Safety Glasses 51.00

CHK79338 05/22/2020 5550 GEARED UP APPAREL EMPLOYEE RECOGNITION - 152 28.50/pro/rpttemplate/acct/2.47.1/ap/AP_CHK_REGISTER.xml.rpt25203

20

Page 1506/01/2020 1:43:51 PMRevision: 96739




Check /Tran Date


EMPLOYEE RECOGNITION - 152 1.50EMPLOYEE CLOTHING - 164 11.20EMPLOYEE CLOTHING - 164 2.80EMPLOYEE CLOTHING - 164 26.60EMPLOYEE CLOTHING - 164 6.65


CHK79339 05/22/2020 91 GOPHER STATE ONE-CALL LOCATES FOR - APRIL 2020 35.10LOCATES FOR - APRIL 2020 666.90


CHK79340 05/22/2020 80 GRAINGER INSULATING VARNISH 6.14TOUCHSCREEN GLOVES 27.30


CHK79341 05/22/2020 5118 GRAND RENTAL STATION CUTTING WHEEL 323.02

CHK79342 05/22/2020 824 HOME DEPOT CREDIT SERVICES HOME DEPOT 293.46HOME DEPOT 59.50


CHK79343 05/22/2020 6836 INNOVATIVE OFFICE SOLUTIONS LLC OFFICE SUPPLIES 142.44OFFICE SUPPLIES 31.48


CHK79344 05/22/2020 297 JACK HENRY & ASSOCIATES, INC ACH TRANSACTIONS 201.28ACH TRANSACTIONS 50.32


CHK79345 05/22/2020 9997 RACHEAL JOHNSON Credit Balance Refund 118.90

CHK79347 05/22/2020 9997 AARON JONES Credit Balance Refund 397.39

CHK79348 05/22/2020 5537 LATHROP GPM LLP LEGAL SERVICES - APRIL 2020 310.00LEGAL SERVICES - APRIL 2020 77.50



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Check /Tran Date


CHK79349 05/22/2020 9997 DYLAN LIBBERT Credit Balance Refund 38.38

CHK79350 05/22/2020 417 LOCATORS & SUPPLIES INC. Safety Glasses 88.73Flags 347.10


CHK79351 05/22/2020 9997 JAKE LUNDSTEN Credit Balance Refund 18.69

CHK79352 05/22/2020 9997 MELINDA MALONE Credit Balance Refund 59.05

CHK79353 05/22/2020 188 MARTIES FARM SERVICE INC GRASS SEED 124.07GRASS SEED -9.07


CHK79354 05/22/2020 8290 MCGRANN SHEA CARNIVAL STRAUGH LEGAL SERVICES - MARCH 2020 296.58

CHK79355 05/22/2020 145 MENARDS MISC PARTS & SUPPLIES 6.42MISC PARTS & SUPPLIES 5.13MISC PARTS & SUPPLIES 35.49MISC PARTS & SUPPLIES 32.96


CHK79356 05/22/2020 330 METRO SALES, INC COPIER MTC CONTRACT 421.14COPIER MTC CONTRACT 105.29


CHK79357 05/22/2020 5610 MIDWEST ONE BANK CIP - LIGHTING RETROFIT 588.00

CHK79358 05/22/2020 9997 MARY MILLER Credit Balance Refund 57.44

CHK79360 05/22/2020 9997 GEORGE MOULDS Credit Balance Refund 213.31

CHK79361 05/22/2020 9300 NISC MONTHLY AGREEMENTS - APRIL 2020 10,516.22MONTHLY AGREEMENTS - APRIL 2020 1,694.36MONTHLY AGREEMENTS - APRIL 2020 53.94MISC INVOICE - APRIL 2020 1,488.81MISC INVOICE - APRIL 2020 81.58AMS INVOICE - APRIL 2020 5,461.10


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Check /Tran Date


AMS INVOICE - APRIL 2020 1,681.99Total for Check/Tran - 79361: 20,978.00

CHK79362 05/22/2020 9997 BRENT ORNDORFF Credit Balance Refund 114.80

CHK79363 05/22/2020 106 PERFECTION PLUS, INC. MONTHLY CLEANING - MAY 2020 255.50MONTHLY CLEANING - MAY 2020 1,462.96


CHK79364 05/22/2020 71 PRINCIPAL LIFE INSURANCE COMPAN LIFE & LTD INSURANCE - JUNE 2020 1,956.80LIFE & LTD INSURANCE - JUNE 2020 363.93


CHK79365 05/22/2020 8850 SAFE-FAST, INC. HAND SANITIZER 124.00HAND SANITIZER -36.22HAND SANITIZER -9.04HAND SANITIZER 496.06


CHK79366 05/22/2020 9161 SHERBURNE COUNTY AREA UNITED W EMPLOYEE CONTRIBUTIONS 72.00EMPLOYEE CONTRIBUTIONS 18.00


CHK79367 05/22/2020 848 SHERBURNE COUNTY PUBLIC WORKS UTILITY PERMIT - 13551 MEADOWVALE 100.00

CHK79368 05/22/2020 229 SHERBURNE COUNTY ZONING PROMISSORY NOTE & SECURITY AGREEMENT 16,996.00

CHK79369 05/22/2020 3360 THE UPS STORE 5093 SHIPPING 10.32SHIPPING - CLOTHING RETURNS 28.70


CHK79370 05/22/2020 8948 TRYCO LEASING INC. LEASE FOR COPIER AT PLANT 85.49LEASE FOR COPIER AT PLANT 21.37


CHK79371 05/22/2020 209 ULINE Tubs 439.99

CHK79372 05/22/2020 3405 US POSTAL SERVICE #38 BULK MAIL PERMIT 192.00


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Check /Tran Date


#38 BULK MAIL PERMIT 48.00Total for Check/Tran - 79372: 240.00

CHK79373 05/22/2020 8381 VERIFIED CREDENTIALS BACKGROUND SCREENING - 172 36.80BACKGROUND SCREENING - 172 9.20


CHK79374 05/22/2020 5035 VISION METERING, LLC Meter 1,525.00

CHK79375 05/22/2020 9997 JAMES R WAGNER Credit Balance Refund 23.69

CHK79376 05/22/2020 2609 WASTE MANAGEMENT LANDFILL GAS PLANT - APRIL 2020 14,558.88ERMU GAS GENERATOR SERV AGRMENT-APR 2020 34,562.67


CHK79377 05/22/2020 55 WESCO RECEIVABLES CORP. ELBOWS 2,716.65Ground Lug 155.155/8" x 12" Machine Bolt 63.505/8" x 10" Machine Bolt 71.50BUSHING INSERT 1,101.76


CHK79378 05/29/2020 3982 CENTERPOINT ENERGY GAS SERVICE - STORAGE GARAGE 3.84GAS SERVICE - STORAGE GARAGE 72.94NATURAL GAS & IRON REMOVAL 251.88NATURAL GAS & IRON REMOVAL 1,795.08


CHK79379 05/29/2020 398 ALTEC INDUSTRIES, INC PARTS FOR UNIT #5 -16.55PARTS FOR UNIT #5 226.67


CHK79380 05/29/2020 2512 AMARIL UNIFORM COMPANY EMPLOYEE CLOTHING - 168 466.62EMPLOYEE CLOTHING - 121 350.06EMPLOYEE CLOTHING - 128 268.27EMPLOYEE CLOTHING - 128 655.13


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Check /Tran Date


EMPLOYEE CLOTHING - 157 100.21EMPLOYEE CLOTHING - 154 34.93EMPLOYEE CLOTHING - 154 663.52EMPLOYEE CLOTHING - 149 15.60EMPLOYEE CLOTHING - 149 296.47EMPLOYEE CLOTHING - 154 5.25EMPLOYEE CLOTHING - 154 99.89


CHK79382 05/29/2020 5615 CHRISTINE'S HALLMARK CIP - LIGHTING RETROFIT 1,168.00

CHK79383 05/29/2020 9997 DON CONNELLY Credit Balance Refund 96.75

CHK79384 05/29/2020 36 CROW RIVER FARM EQUIP CO PARTS FOR UNIT #56 11.95

CHK79385 05/29/2020 212 DAKOTA SUPPLY GROUP WIRE 331.13WIRE -24.16HARDWARE KIT 374.17HARDWARE KIT -374.17


CHK79386 05/29/2020 223 DAVE BERG CONSULTING, LLC CONSULTING FEE - RATE STUDY 8,000.00CONSULTING FEE - RATE STUDY 2,000.00


CHK79387 05/29/2020 3173 DELL MARKETING LP OT/IT 2,096.83OT/IT 524.19Dell Thunderbolt Dock-W19TB CS Mgr 221.60Dell Latitude 5501 for CS Mgr 1,875.23Dell Thunderbolt Dock-W19TB CS Mgr 55.39Dell Latitude 5501 for CS Mgr 468.80


CHK79388 05/29/2020 5019 DELTA DENTAL OF MINNESOTA DENTAL INSURANCE ER - JUNE 2020 2,786.73DENTAL INSURANCE EE - JUNE 2020 1,031.26


Page 2006/01/2020 1:43:51 PMRevision: 96739




Check /Tran Date


DENTAL INSURANCE ER - JUNE 2020 644.12DENTAL INSURANCE EE - JUNE 2020 112.37


CHK79389 05/29/2020 9997 SHAWNTEL DIETZ Credit Balance Refund 298.93



CHK79392 05/29/2020 23 ELK RIVER MUNICIPAL UTILITIES CYCLE 1 - INV GRP 101 - APRIL 2020 26.85CYCLE 1 - INV GRP 101 - APRIL 2020 247.28CYCLE 1 - INV GRP 101 - APRIL 2020 1,053.82CYCLE 1 - INV GRP 101 - APRIL 2020 263.45CYCLE 1 - INV GRP 101 - APRIL 2020 596.54CYCLE 1 - INV GRP 101 - APRIL 2020 454.46CYCLE 1 - INV GRP 325 - APRIL 2020 528.33CYCLE 1 - INV GRP 325 - APRIL 2020 15,076.46CYCLE 1 - ACCT 183 - APRIL 2020 1,403.05CYCLE 1 - INV GRP 421 - APRIL 2020 4,249.86


CHK79393 05/29/2020 122 ELK RIVER WINLECTRIC FUSES 184.64FUSES -13.49


CHK79394 05/29/2020 671 FASTENAL COMPANY White Pop Up 300.64

CHK79395 05/29/2020 9997 PETER HAMMER Credit Balance Refund 154.57

CHK79396 05/29/2020 5341 HUBBARD ELECTRIC CONVERT SERVICE OH TO URD 4,861.00

CHK79397 05/29/2020 82 JERRY'S ELECTRIC INC Transformer 12,400.00TRANSFORMER REPAIR & REBUILD 5,595.00


CHK79398 05/29/2020 9997 JOHNSON HOLDINGS Credit Balance Refund 231.18


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Check /Tran Date


CHK79399 05/29/2020 9997 HEATHER KOMPELIEN Credit Balance Refund 74.29

CHK79400 05/29/2020 145 MENARDS FILL VALVE 10.77

CHK79401 05/29/2020 119 MINNESOTA COMPUTER SYSTEMS INC COPIER MAINTENANCE CONTRACT 80.81COPIER MAINTENANCE CONTRACT 20.20


CHK79402 05/29/2020 9997 TARA NIELSON Credit Balance Refund 250.93

CHK79403 05/29/2020 9997 PINES AT ELK RIVER LLC Credit Balance Refund 220.30



CHK79406 05/29/2020 9997 PROGRESSIVE BUILDERS INC Credit Balance Refund 402.99

CHK79407 05/29/2020 9997 PROGRESSIVE BUILDERS INC Credit Balance Refund 346.26

CHK79408 05/29/2020 130 RESCO Discount -0.29DP 1212 609.13Boot -204.88RUBBER BOOT - RESTOCK FEE 51.22


CHK79409 05/29/2020 8850 SAFE-FAST, INC. DISPOSABLE MASKS 25.87DISPOSABLE MASKS -7.55DISPOSABLE MASKS -1.89DISPOSABLE MASKS 103.47


CHK79410 05/29/2020 9997 PATRICK SCHAUER Credit Balance Refund 90.17

CHK79411 05/29/2020 8141 SPEEDCUTTERS OUTDOOR MAINTENA LAWN MOWING SERVICES - may 2020 1,921.26LAWN MOWING SERVICES - may 2020 267.15


Total for Bank Account - 5 : (199) 3,284,023.02


Page 2206/01/2020 1:43:51 PMRevision: 96739



Grand Total : 3,284,023.02(199)


Page 2306/01/2020 1:43:51 PMRevision: 96739



PARAMETERS ENTERED:

Check Date: 05/01/2020 To 05/31/2020Bank: All

Vendor: AllCheck:

Journal: AllFormat: All GL References/Amounts

Extended Reference: NoCheck/TransactionSort By:

Voids: NoneAllPayment Type:NoGroup By Payment Type:

Minimum Amount: 0.00Authorization Listing: No

Authorization Comments: NoCredit Card Charges: No


Elk River Municipal Utilities Commission Meeting Minutes May 12, 2020

Page 1

ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION

HELD VIRTUALLY DUE TO COVID-19 PANDEMIC

May 12, 2020

Members Present: Chair John Dietz, Vice Chair Al Nadeau, Commissioners Paul Bell, Mary Stewart, and Matt Westgaard ERMU Staff Present: Troy Adams, General Manager Theresa Slominski, Administrations Director Mark Fuchs, Operations Director Mike Tietz, Technical Services Superintendent Dave Ninow, Water Superintendent

Tom Sagstetter, Conservation & Key Accounts Manager Michelle Canterbury, Executive Administrative Manager Jennie Nelson, Customer Service Manager Tom Geiser, Electric Superintendent Melissa Karpinski, Finance Manager Chris Kerzman, Engineering Manager Tony Mauren, Communications & Administrative Coordinator

Others Present: Peter Beck, Attorney; Cal Portner, City Administrator; Debra Englund, HRExpertiseBP; and David Berg, Dave Berg Consulting, LLC.

1.0 GOVERNANCE 1.1 Call Meeting to Order The regular meeting of the Utilities Commission was called to order at 3:30 p.m. by Chair Dietz. 1.2 Roll Call

Chair Dietz conducted a roll call for the commission members. 1.3 Consider the Agenda

Chair Dietz stated that he had an item to add to Other Business. Moved by Commissioner Westgaard and seconded by Commissioner Bell to approve the May 12, 2020, agenda. Motion carried 5-0.

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2.0 CONSENT AGENDA (Approved By One Motion)

Commissioner Stewart requested a correction to the April 14 Regular Commission Meeting Minutes. In the first paragraph on page four, she requested that the "unedited portion of the audit" be changed to "unaudited statistics portion of the annual financial report.”

Moved by Commissioner Bell and seconded by Commissioner Nadeau to approve the

Consent Agenda, with the requested correction to the April 14, 2020 Regular Meeting Minutes, as follows:

2.1 April 2020 Check Register 2.2 April 14, 2020 Regular Meeting Minutes 2.3 April 28, 2020 Special Meeting Minutes 2.4 2020 First Quarter Performance Metrics Scorecard Statistics 2.5 2019 Consumer Confidence Report 2.6 Elk River Municipal Utilities / Connexus Energy – Joint Request for Minnesota Public Utilities Commission Modification of Parties’ Electric Service Territory Boundary Motion carried 5-0.

3.0 OPEN FORUM

No one appeared for open forum.

4.0 POLICY & COMPLIANCE

4.1 Policy Manual Initiative Mr. Adams shared that, per the initiative schedule, there are three remaining policies in this initiative for the commission to address: A.1 Service Policies, E.1 Electric Department Rules, and W.1 Water Department Rules. Mr. Adams noted that due to these policies containing a large amount of procedure, staff worked with legal counsel to develop three new commission policies that will supersede the old policies. Mr. Adams presented the three new proposed governance policies G.4e1 Customer Accounts, G.4e2 Electric Services, and G.4e3 Water Services. With the addition of the three new commission polices outlined above, the three old policies are proposed to be moved to the Management Policy Manual. This action would delegate the authority over these policies to management.

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Mr. Adams recognized Ms. Canterbury for all the hard work she put in to complete this four-year project. Moved by Commissioner Nadeau and seconded by Commissioner Westgaard to approve the following:

• Adopt new governance policies: G.4e1, G.4e2, and G.4e3.

• Delegate authority to management and move the following policies to the Management Policy Manual: A.1, E.1, and W.1.

Motion carried 5-0.

4.2 Deposit Policy At the April 14, 2020 commission meeting, the commission discussed the current Customer Deposit Policy and directed staff to research other utilities polices and bring that information back to the May meeting.

Ms. Nelson provided an update and explained that staff is still in the process of gathering data from Minnesota Municipal Utilities Association, American Public Power Association, and other neighboring utilities. She noted that this will be brought back to the commission at a later date once all the information has been compiled.

5.0 BUSINESS ACTION

5.1 Financial Report – March 2020 Ms. Karpinski presented the March 2020 financial report as outlined in her memo. Ms. Karpinksi noted that usage and revenue were down for March but so were expenses, ultimately leading to a favorable financial month. Ms. Karpinksi stated that year-to-date financials compared to 2019 and budgeted totals were also favorable.

Commissioner Stewart had a question about the relationship between the April purchased power and the April usage on the sales and usage graphs presented. Staff responded.

Chair Dietz had a question about the increase in water connection fees compared to the previous year. Staff confirmed that this was due to the City’s new multipurpose facility. Moved by Commissioner Stewart and seconded by Commissioner Bell to receive the March 2020 Financial Report. Motion carried 5-0.

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5.2 2020 First Quarter Delinquent Items

Ms. Karpinski presented the delinquent items for the first quarter, including a delinquent amounts report totaling $2,707.86 for all services. She also presented the delinquent items comparisons for 2017 – 2020. Ms. Karpinski noted that our percentage of uncollectible accounts, at .029% per revenue dollar, is well below the national average which is between .17% and .40%.

Chair Dietz asked if there was an increase in the number of customers delinquencies due to COVID-19. Ms. Nelson responded that payment arrangement calls have decreased significantly. She added that the Credit & Collections Specialist has stayed in contact with customers to ensure they understand the changes to energy assistance guidelines.

Moved by Commissioner Nadeau and seconded by Commissioner Bell to approve the 2020 First Quarter Delinquent Items. Motion carried 5-0.

5.3 Electric and Water Cost of Service and Rate Design Study ERMU staff has been working with Dave Berg Consulting, LLC on an electric and water cost of service and rate design study. The work was done to evaluate possible changes to the electric and water retail rates and applicable fees. Staff evaluated changes in operating conditions, including but not limited to: monthly fixed costs, additional service fees, bonding for the new field services building, and retail energy and water rates.

Mr. Berg was at the meeting to present the draft reports and answer any questions the commission may have. Mr. Berg walked the commission through the high points of the Water Cost of Service and Rate Design Study draft report which included: Projected Operating Results with Existing Rates, Cost of Service, and Proposed Rates.

For the Projected Operating Results with Existing Rates Section in the water report Chair Dietz asked why the study utilized flat operating revenue for the utilities from 2020 to 2024. Mr. Berg explained that by using flat water and electric sales for the study period it helps creates a conservative baseline for staff to work with.

Commissioner Stewart inquired if the capital improvement data had been updated based on any new information on the Highway 169 Redefine project. Mr. Adams responded that ERMU has not received final plans for the project. Ms. Slominski added that these are the best estimates based on the information available at this time.

For the Cost of Service Section in the water report Mr. Berg noted that when comparing residential water customers to commercial/industrial water customers, the respective costs of service closely matched the percentage of revenue. Based on the overall revenue and cash reserve needs of the water department, and the results of the cost of service analysis, Mr. Berg did not recommend a change in water rates, however he did

33


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recommend an ongoing monitoring of the water department’s cash reserves to ensure they continue to meet commission policy. Mr. Adams advised that the water department has large capital projects scheduled outside of the rate study timeframe that should also be taken into consideration when looking at the numbers. There was discussion on the philosophy of doing steady rate increases over the next five years versus doing one large one at the end of the five-year study period. Mr. Berg also touched on the cost of service analysis for ERMU’s water access charge (WAC) and stated that based on the results he recommended no increase. There was discussion on ERMU’s WAC and the city’s Sewer Access Charge (SAC) fee.

For the Electric Cost of Service and Rate Design Study draft Mr. Berg noted that the preliminary report presented contains financials assuming a 1.5% rate increase each year from 2021-2024. He stated that the final rate recommendations by class will be developed following discussion of these results with the commission. Next, Mr. Berg walked the commission through the high points of the report which included: Projected Operating Results with Existing Rates, Cost of Service, and Proposed Rates.

For the Projected Operating Results with Existing Rates in the electric report, Mr. Berg explained that the study showed a need for additional revenue over the five-year study period, noting that with current rates ERMU could expect a nearly $2,000,000 deficit by 2024, ending up with just 30% of its electric reserves goal.

For the Cost of Service Section in the electric report Mr. Berg stated that based on the preliminary study results, he recommended a 1.5% electric rate increase each year from 2021 to 2024.

Chair Dietz asked how ERMU’s commercial demand and industrial electric rates compared to competitors. Mr. Sagstetter responded that ERMU is within 3% of competitor rates.

After the discussion, the commission instructed Mr. Berg to come back with projections based on a 1.5% increase.

Mr. Adams reiterated this is a conservative estimate that uses flat electric and water revenues across five years, adding it is possible that ERMU could be in a better position should revenues increase.

Commissioner Stewart had a few questions on the study’s supporting documents. For the electric study exhibit 2-A she questioned why the bond issuance costs is shown as a negative number in 2016, and then a positive number in 2020. Ms. Slominski said she would look into the reason for this. Commissioner Stewart also inquired about the specifics of the amortization numbers shown on exhibit 3-A of the electric study. Staff stated they could make breakdown more specific in the final report.

The commission requested that Mr. Berg attend the June commission meeting to present the final reports.

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5.4 Leadership Transition – Search Committee Update

With the recent resignation of the General Manager, the commission acted on several leadership transition action items during a special meeting on April 28. The commission agreed on terms to hire Debra Englund, CEO HRExpertiseBP, as a search consultant. The agreement has since been reviewed by counsel and has been executed by Ms. Englund and Chair Dietz as authorized by the commission. The commission also established a Search Committee, comprised of Chair Dietz and Commissioner Stewart, that is authorized to work with the consultant to make certain candidate screening decisions and prepare a refined list of candidates for the board. The commission gave the search committee direction to develop the following deliverables for the May regular commission meeting: a tentative schedule for the general manager search and selection process for commission review, and a proposed general manager job description for commission approval.

Ms. Englund provided an update to the commission on the timeline for milestones in the process, including a posting date of May 13, an application deadline of June 30, and start date of no later than October 1. The opening will be posted on the ERMU, Minnesota Municipal Utilities Association, Minnesota Rural Electric Association, and The League of Minnesota Cities websites, and with the Star News.

Ms. Englund presented the preferred qualities of a new CEO, which had been prioritized by the Search Committee, the most important quality being an ability to understand the technical and business elements of leading an electric and water utility. Commissioner Nadeau commented that the list looked very thorough.

Ms. Englund presented the job posting language for commission review and comments. Commissioner Bell commented that he thought mentioning that the current general manager was leaving in June might cause concern to applicants over the urgency of the posting. Commissioner Stewart commented that she preferred leaving the date in the posting because leaving it out could cause applicants to assume the previous general manager had been terminated and the opening needed to be filled immediately. After discussion, commission consensus was to keep the June leave date in the job posting. Attorney Beck suggested one minor change to the language that clarified that ERMU serves the city of Elk River and parts of Otsego, Dayton, and Big Lake Township.

Moved by Commissioner Stewart and seconded by Commissioner Westgaard to approve the job posting for the General Manager position. Motion carried 5-0.

Ms. Englund added that she has been working with Mr. Adams and the search committee to update the general manager job description, and noted it was very close to being finalized.

Ms. Englund provided guidance to the commission on how to handle applicants contacting them directly about the job opening. She cautioned the commissioners from accepting

35


Page 7

any application materials, and recommended they direct any interested parties directly to her to ensure that all applications are processed and treated equally. Attorney Beck concurred. As the job posting, along with Ms. Englund’s contact information, will be posted on the ERMU website, it was noted this may be the best place to direct someone for more information on how to apply for the position.

6.0 BUSINESS DISCUSSION 6.1 Staff Updates

As this was Mr. Adams final commission meeting, he took a moment to thank the commission for supporting him throughout his journey at ERMU. He thanked his outstanding leadership team and stated that he knew they would rise up and do awesome things. And finally, he expressed his thanks to Chair Dietz for giving him a chance all those years ago and promoting him to the General Manager.

Mr. Sagstetter provided an update on the Energy Conservation and Optimization (ECO) Act and shared that it had passed on the House level.

Ms. Canterbury highlighted from her staff report that Minnesota Municipal Utilities Association (MMUA) will be holding their Annual Summer Conference August 24-26 at Cragun’s Resort in Brainerd. As room reservations are highly recommend at this time, she reached out to the commission to gauge who had an interest in attending. She noted that should MMUA need to cancel the event due to COVID-19 restrictions, we would be refunded the room deposits. All commission members expressed an interest in attending the conference and suggested staff move forward with making the reservations. On a personal note, Ms. Canterbury shared that Mr. Mauren, and his wife and son, recently welcomed a baby girl into their family. The commission congratulated Mr. Mauren. Mr. Ninow responded to a question that Commissioner Stewart had on the notice that Sprint had given that they were terminating the tower attachment lease agreements for their equipment located on our water towers; the termination of the lease agreements would result in an approximate $130,000 annual loss. Attorney Beck noted that due to the renewal terms and cancellation notification requirements, Sprint will be held to at least one more year of their contractual obligations.

6.2 Future Planning Chair Dietz announced the following:

a. Regular Commission Meeting – June 9, 2020 b. 2020 Governance Agenda

36


Page 8

6.3 Other Business

After announcing the June commission meeting date, Chair Dietz suggested the commission consider going back to conducting their meetings in person. Due to the size of the utilities conference room, and the challenges it may present with social distancing, he recommended that staff look into the option of using the council chambers at City Hall. After consideration, the commission supported going back to in-person commission meetings beginning in June.

There was brief discussion on whether there would be any going away festivities for Mr.

Adams. Staff indicated that based on the current situation with COVID-19, there is nothing currently planned. It was noted that once restrictions are lifted, a date for a get together with Mr. Adams could be set.

Ms. Slominski announced that due to the cancellation of the American Public Power

Association (APPA) Summer Conference, they will be conducting a Virtual Summit & Business Meeting June 8-10, 2020. As the new format allows for virtual attendance, Ms. Slominski noted that we will have significant cost savings and will be able to open this training up to any commissioners who are interested in participating.

7.0 ADJOURN REGULAR MEETING Moved by Commissioner Bell and seconded by Commissioner Nadeau to adjourn the regular

meeting of the Elk River Municipal Utilities Commission at 5:20 p.m. Motion carried 5-0. Minutes prepared by Michelle Canterbury. ___________________________________ John J. Dietz, ERMU Commission Chair

___________________________________ Tina Allard, City Clerk

37

______________________________________________________________________________

Page 1 of 2

UTILITIES COMMISSION MEETING TO: ERMU Commission

FROM: Melissa Karpinski – Finance Manager

MEETING DATE: June 9, 2020

AGENDA ITEM NUMBER: 5.1

SUBJECT: Financial Report – April 2020 ACTION REQUESTED: Receive the April 2020 Financial Report DISCUSSION: Please note that these are the preliminary unaudited financial statements. Electric

April’s electric kWh sales are up from the prior year, 10%. For further breakdown:

• Residential usage is up 29% • Small Commercial usage is up 3% • Large Commercial usage is up 3%

Electric Operating Revenues for April of $2,854,268 are more than prior year by 10% and favorable to budget by 8%. April YTD is behind prior year by 2% and unfavorable to budget by 3%. The prior YTD variance is mainly due to Elk River Commercial Sales. Other Revenues of $177,209 are more than the prior year by 1% and favorable to budget by 4%. Other Revenues YTD are more than the prior year by 16% and favorable to budget by 17%. Overall, Total Revenues of $3,031,477 are more than the prior year by 9% and favorable to budget by 8%. YTD is less than the prior year by 1% and unfavorable to budget by 2%. Purchased Power of $1,745,434 is less than the prior year by 3% but is unfavorable to budget by 1%. YTD is less than prior year by 7% and is favorable to budget by 5%. Administrative Expenses of $250,162 are less than the prior year by 3% and are favorable to budget by 14%. YTD costs are more than the prior year by 3% but are favorable to budget by 11%. The main driver of the prior YTD variance is Insurance. General Expenses of $31,296 are less than prior year by 1% and are favorable to budget by 26%. YTD costs are more than the prior year by 6% but are favorable to budget by 35%.

38

______________________________________________________________________________

Page 2 of 2

Total expenses YTD are 5% less than prior year and are favorable to budget by 6%. The main driver of the prior YTD variance is Purchased Power.

For April 2020, the Electric Department has a Net Profit of $359,579 and YTD Net Profit of $929,765. This is ahead of the budgeted monthly Net Profit of $65,521 and is more than prior year monthly Net Profit of $42,462. YTD is ahead of the budgeted YTD Net Profit of $493,471 and is more than the prior YTD Net Profit of $534,199. Water April gallons of water sold are up from the prior year, 24%. For further breakdown:

• Residential use is up 40% • Commercial use is up 11%

Water Operating Revenues for April of $145,452 are ahead of prior year by 20% and are favorable to budget by 19%. YTD is ahead of prior year by 6% and is favorable to budget by 5%. Other Revenues of $34,031 are behind prior year by 3% and unfavorable to budget by 23%. YTD is ahead of prior YTD by 25% and are favorable to budget by 39%. The main driver causing the prior YTD variance is Connection Fees.

Overall, Total Revenues of $179,484 are ahead of prior year by 15% and are ahead of prior YTD by 11%. YTD Total Revenues are favorable to budget by 14%. Total Expenses of $200,089 are less than prior year by 6% and less than the prior YTD by 7%. YTD is also favorable to budget by 18%. For April 2020, the Water Department has a Net Loss of ($20,604) and YTD Net Loss of ($68,551). This is ahead of the budgeted monthly Net Loss of ($78,687) and is ahead of the prior year monthly Net Loss of ($56,108). YTD is significantly ahead of the budgeted YTD Net Loss of ($347,448) and is ahead of the prior YTD Net Loss of ($211,144). ATTACHMENTS:

• Balance Sheet 04.2020 • Summary Electric Statement of Revenues, Expenses and Changes in Net Position

04.2020 • Summary Water Statement of Revenues, Expenses and Changes in Net Position 04.2020 • Graphs Prior Year and YTD 2020 • Detailed Electric Statement of Revenues, Expenses and Changes in Net Position 04.2020 • Detailed Water Statement of Revenues, Expenses and Changes in Net Position 04.2020

39

ELK RIVER MUNICIPAL UTILITIESELK RIVER, MINNESOTA

COMBINED BALANCE SHEETFOR PERIOD ENDING APRIL 2020

ELECTRIC WATERASSETSCURRENT ASSETS CASH 5,990,43511,231,928 ACCOUNTS RECEIVABLE 274,5162,494,025 INVENTORIES 9,9071,061,093 PREPAID ITEMS 28,188195,522 CONSTRUCTION IN PROGRESS 469,374594,813

TOTAL CURRENT ASSETS 6,772,42015,577,381

RESTRICTED ASSETS BOND RESERVE FUND 01,261,359 EMERGENCY RESERVE FUND 1,322,4522,776,044 UNRESTRICTED RESERVE FUND 00

TOTAL RESTRICTED ASSETS 1,322,4524,037,403

FIXED ASSETS PRODUCTION 13,839,983645,285 LFG PROJECT 03,851,442 TRANSMISSION 02,305,024 DISTRIBUTION 23,042,97141,174,785 GENERAL 1,032,46011,045,569

FIXED ASSETS (COST) 37,915,41459,022,104LESS ACCUMULATED DEPRECIATION (19,133,551)(30,308,949)TOTAL FIXED ASSETS, NET 18,781,86328,713,155

INTANGIBLE ASSETS POWER AGENCY MEMBERSHIP BUY-IN 021,546,212 LOSS OF REVENUE INTANGIBLE 02,567,927

LESS ACCUMULATED AMORTIZATION 0(1,056,730)TOTAL INTANGIBLE ASSETS, NET 023,057,410

OTHER ASSETS AND DEFERRED OUTFLOWS 45,683263,182

TOTAL ASSETS 26,922,41871,648,532

LIABILITIES AND FUND EQUITYCURRENT LIABILITIES ACCOUNTS PAYABLE 310,9763,254,634 SALARIES AND BENEFITS PAYABLE 155,531779,678 DUE TO CITY 926853,440 DUE TO OTHER FUNDS 00 NOTES PAYABLE-CURRENT PORTION 0135,968 BONDS PAYABLE-CURRENT PORTION 0175,000 UNEARNED REVENUE 57,28811,199

TOTAL CURRENT LIABILITIES 524,7205,209,919LONG TERM LIABILITIES LFG PROJECT 0415,740 DUE TO COUNTY 00 BONDS PAYABLE, LESS CURRENT PORTION 602,34920,063,256 PENSION LIABILITIES 418,1552,456,809

TOTAL LONG TERM LIABILITIES 1,020,50422,935,805

TOTAL LIABILITIES 1,545,22428,145,724

DEFERRED INFLOWS OF RESOURCES 88,042520,934

FUND EQUITY CAPITAL ACCOUNT CONST COST 01,261,359 CONTRIBUTED CAPITAL 00 RETAINED EARNINGS 25,357,70440,790,749 NET INCOME (LOSS) (THROUGH PREVIOUS MONTH) (68,552)929,766

TOTAL FUND EQUITY 25,289,15242,981,874

TOTAL LIABILITIES & FUND EQUITY 26,922,41871,648,532

40


STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITIONFOR PERIOD ENDING APRIL 2020

2020APRIL

2019APRIL

2020YTD

2019YTD

2020 YTD

BUDGET2020 YTDBud Var%

2019 v. 2020Actual Var%

YTDVARIANCE

2020 ANNUALBUDGETElectric

RevenueOperating Revenue Elk River 2,598,346 10,196,791 10,554,726 2,371,783 10,372,088(3) (2)33,833,223 (175,297) Otsego 201,834 826,204 856,720 181,701 834,081(4) (1)2,708,979 (7,876) Rural Big Lake 15,388 61,586 62,186 12,900 60,970(1) 1184,467 615 Dayton 17,511 71,942 75,502 15,209 73,115(5) (2)222,712 (1,172) Public St & Hwy Lighting 20,786 81,565 75,065 18,656 74,8269 9225,195 6,738 Other Electric Sales 400 1,600 1,600 400 1,6000 04,800 0 Total Operating Revenue 2,854,268 11,239,690 11,625,801 2,600,650 11,416,683(3) (2)37,179,378 (176,992)

Other Operating Revenue Interest/Dividend Income 30,193 66,663 33,333 12,530 56,901100 17100,000 9,762 Customer Penalties (161) 42,697 61,950 15,489 75,828(31) (44)210,000 (33,131) LFG Project 93,405 386,087 388,914 92,015 364,980(1) 61,166,742 21,106 Connection Fees 7,208 43,923 30,000 19,765 39,40046 11150,000 4,523 Misc Revenue 46,563 243,021 152,746 35,287 135,19959 80438,080 107,821 Total Other Revenue 177,209 782,393 666,944 175,087 672,31017 162,064,822 110,082

Total Revenue 3,031,477 12,022,083 12,292,745 2,775,738 12,088,993(2) (1)39,244,200 (66,909)

Expenses Purchased Power 1,745,434 7,200,308 7,574,624 1,792,410 7,712,910(5) (7)25,507,848 (512,601) Operating & Mtce Expense 18,385 92,324 100,127 18,232 122,588(8) (25)281,513 (30,264) Landfill Gas 58,937 237,594 238,759 62,157 247,1710 (4)751,277 (9,576) Transmission Expense 4,105 15,225 13,000 3,080 9,70417 5739,000 5,520 Distribution Expense 29,349 94,728 127,805 36,569 145,729(26) (35)383,416 (51,000) Maintenance Expense 92,178 442,766 506,147 102,748 394,791(13) 121,319,117 47,975 Depreciation & Amortization 240,093 957,846 961,998 233,792 933,2810 33,030,678 24,565 Interest Expense 50,653 204,728 204,728 53,704 218,2110 (6)606,313 (13,482) Other Operating Expense 1,459 11,100 23,093 14,587 29,850(52) (63)117,439 (18,749) Customer Accounts Expense 27,130 109,888 111,651 28,688 106,056(2) 4338,525 3,831 Administrative Expense 250,162 1,132,476 1,266,875 256,634 1,104,641(11) 33,639,601 27,835 General Expense 31,296 109,340 169,274 31,608 102,936(35) 6510,147 6,403 Total Expenses(before Operating Transfers) 2,549,189 10,608,330 11,298,086 2,634,215 11,127,873(6) (5)36,524,874 (519,543)

Operating Transfer Operating Transfer/Other Funds 104,595 410,465 427,854 82,390 358,028(4) 151,365,000 52,436 Utilities & Labor Donated 18,113 73,521 73,333 16,670 68,8910 7220,000 4,629 Total Operating Transfer 122,709 483,987 501,188 99,060 426,920(3) 131,585,000 57,066 Net Income Profit(Loss) 359,579 929,765 493,471 42,462 534,19988 741,134,325 395,566

41



2020APRIL

2019APRIL

2020YTD

2019YTD

2020 YTD



YTDVARIANCE

2020 ANNUALBUDGETWater

RevenueOperating Revenue Water Sales 145,452 533,559 506,522 121,237 501,6625 62,285,109 31,897

Total Operating Revenue 145,452 533,559 506,522 121,237 501,6625 62,285,109 31,897

Other Operating Revenue Interest/Dividend Income 7,523 16,550 13,000 3,100 14,23527 1639,000 2,315 Customer Penalties 0 3,801 5,000 766 4,931(24) (23)15,000 (1,130) Connection Fees 5,942 141,849 75,000 11,160 96,35689 47225,000 45,493 Misc Revenue 20,566 83,027 83,330 20,093 81,3360 2274,473 1,691

Total Other Revenue 34,031 245,228 176,330 35,120 196,85839 25553,473 48,370

Total Revenue 179,484 778,788 682,852 156,358 698,52114 112,838,582 80,267

Expenses Production Expense 2,219 7,032 20,000 3,489 22,284(65) (68)60,000 (15,252) Pumping Expense 30,471 141,975 175,708 37,280 150,882(19) (6)527,124 (8,906) Distribution Expense 12,132 49,124 102,686 15,596 71,554(52) (31)283,951 (22,430) Depreciation & Amortization 94,905 378,554 396,906 96,492 385,329(5) (2)1,215,839 (6,774) Interest Expense 1,893 8,364 8,364 2,682 11,4770 (27)23,516 (3,112) Other Operating Expense 810 2,425 2,675 96 2,404(9) 111,776 20 Customer Accounts Expense 5,777 21,450 22,620 5,037 20,277(5) 667,861 1,173 Administrative Expense 50,129 234,923 296,889 51,029 241,796(21) (3)897,113 (6,872) General Expense 1,748 3,489 3,907 760 3,660(11) (5)11,724 (170)

Total Expenses(before Operating Transfers) 200,089 847,340 1,029,757 212,466 909,666(18) (7)3,098,905 (62,325)

Operating Transfer Utilities & Labor Donated 0 0 543 0 0(100) 01,630 0

Total Operating Transfer 0 0 543 0 0(100) 01,630 0Net Income Profit(Loss) (20,604) (68,551) (347,448) (56,108) (211,144)80 68(261,953) 142,593

42

30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

70.0

75.0D

em

an

d i

n M

W

Month

Elk River Municipal Utilities Monthly Electrical Demand

2019 2020

14,000

19,000

24,000

29,000

34,000

En

erg

y P

urc

hases i

n M

WH

Month

Elk River Municipal Utilities Monthly Energy Purchases

2019 2020

43

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Ele

ctr

ic L

oad

in

MW

H

Month

Elk River Municipal Utilities Monthly Total Electric Load

2019 2020

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

Sale

s i

n D

oll

ars

Month

Elk River Municipal Utilities Monthly Electric Sales

2019 2020

44

-

5,000

10,000

15,000

20,000

25,000

Lo

ad

s i

n M

WH

Month

Elk River Municipal Utilities Monthly Residential, Commercial & Industrial Loads

2019 Residential 2020 Residential 2019 Commercial

2020 Commercial 2019 Industrial 2020 Industrial

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

Sale

s i

n D

oll

ars

Month

Elk River Municipal Utilities Monthly Residential, Commercial & Industrial Sales

2019 Residential 2020 Residential 2019 Commercial

2020 Commercial 2019 Industrial 2020 Industrial

45

0

20

40

60

80

100

120

140

Pu

mp

ag

e i

n M

illi

on

Gal.

Month

Elk River Municipal Utilities Monthly Water Pumpage

2019 2020

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Peak D

ay i

n M

illi

on

Gal.

Month

Elk River Municipal Utilities Peak Day Pumpage

2019 2020

46

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

0

20

40

60

80

100

120

Sale

s I

n D

oll

ars

Sale

s i

n M

illi

on

Gal.

Month

Elk River Municipal Utilities Monthly Water Sales

2019 MG 2020 MG 2019 $ 2020 $

47



2020APRIL

2019APRIL

2020YTD

2019YTD

2020 YTD



YTDVARIANCE


RevenueOperating Revenue Elk River

ELECT SALES/ELK RIVER RES 783,559 3,811,300980,985 3,878,4513,869,755 0 211,827,244 58,454ELECT SALES/ER NON-DEMAND 222,679 991,468226,501 1,034,321957,472 (7) (3)3,142,880 (33,996)ELECT SALES/ER DEMAND 1,365,544 5,569,3181,390,859 5,641,9525,369,563 (5) (4)18,863,099 (199,755)

2,598,346 10,196,791 10,554,726 2,371,783 10,372,088(3) (2)Total For Elk River: 33,833,223 (175,297)

OtsegoELECT SALES/OTSEGO RES 79,577 386,59897,027 397,183384,206 (3) (1)1,196,336 (2,392)ELECT SALES/OTSEGO NON-DEM 25,896 115,21226,140 120,112108,887 (9) (5)412,758 (6,324)ELECT SALES/OTSEGO DEMAND 76,228 332,27178,666 339,424333,111 (2) 01,099,884 840

201,834 826,204 856,720 181,701 834,081(4) (1)Total For Otsego: 2,708,979 (7,876)

Rural Big LakeELECT SALES/BIG LAKE RES 12,748 60,35415,218 61,50660,937 (1) 1180,370 582ELECT SALES/BL NON-DEMAND 152 616170 680648 (5) 54,097 32

15,388 61,586 62,186 12,900 60,970(1) 1Total For Rural Big Lake: 184,467 615

DaytonELECT SALES/DAYTON RES 12,675 61,87514,818 63,87861,033 (4) (1)186,725 (841)ELECT SALES/DAYTON NON-DEM 2,533 11,2402,692 11,62310,908 (6) (3)35,986 (331)

17,511 71,942 75,502 15,209 73,115(5) (2)Total For Dayton: 222,712 (1,172)

Public St & Hwy LightingELECT SALES/ELK RIVER SEC LTS 18,656 74,82620,786 75,06581,565 9 9225,195 6,738

20,786 81,565 75,065 18,656 74,8269 9Total For Public St & Hwy Lighting: 225,195 6,738

Other Electric SalesSUB-STATION CREDIT 400 1,600400 1,6001,600 0 04,800 0

400 1,600 1,600 400 1,6000 0Total For Other Electric Sales: 4,800 0

Total Operating Revenue2,600,650 11,416,6832,854,268 11,625,80111,239,690 (3) (2)37,179,378 (176,992)

Other Operating Revenue Interest/Dividend Income

INTEREST & DIVIDEND INCOME 12,530 56,90130,193 33,33366,663 100 17100,000 9,76230,193 66,663 33,333 12,530 56,901100 17Total For Interest/Dividend Income: 100,000 9,762

Customer PenaltiesCUSTOMER DELINQUENT PENALT 15,489 75,828(161) 61,95042,697 (31) (44)210,000 (33,131)

(161) 42,697 61,950 15,489 75,828(31) (44)Total For Customer Penalties: 210,000 (33,131)

LFG Project48



2020APRIL

2019APRIL

2020YTD

2019YTD

2020 YTD



YTDVARIANCE


LFG PROJECT 92,015 364,98093,405 388,914386,087 (1) 61,166,742 21,10693,405 386,087 388,914 92,015 364,980(1) 6Total For LFG Project: 1,166,742 21,106

Connection FeesDISCONNECT & RECONNECT CHA 19,765 39,4007,208 30,00043,923 46 11150,000 4,523

7,208 43,923 30,000 19,765 39,40046 11Total For Connection Fees: 150,000 4,523

Misc RevenueMISC ELEC REVENUE - TEMP CHG 0 00 0750 0 00 750STREET LIGHT 6,700 6,7000 3,00013,500 350 1015,000 6,800TRANSMISSION INVESTMENTS 21,119 99,46224,861 100,000117,906 18 19300,000 18,444MISC NON-UTILITY 5,447 19,6163,526 16,66619,459 17 (1)50,000 (157)GAIN ON DISPOSITION OF PROPER 0 00 02,317 0 00 2,317RENTAL PROPERTY INCOME 2,020 9,4201,000 8,0807,060 (13) (25)8,080 (2,360)CONTRIBUTIONS FROM CUSTOME 0 017,174 25,00082,028 228 075,000 82,028

46,563 243,021 152,746 35,287 135,19959 80Total For Misc Revenue: 438,080 107,821

Total Other Revenue175,087 672,310177,209 666,944782,393 17 162,064,822 110,082

177,209 782,393 666,944 175,087 672,31017 16Total For Total Other Revenue: 2,064,822 110,082

2,775,738 12,088,9933,031,477 12,292,745Total Revenue 12,022,083 (2) (1)39,244,200 (66,909)

Expenses Purchased Power

PURCHASED POWER 1,792,410 7,712,9101,745,434 7,574,6247,200,308 (5) (7)25,507,848 (512,601)1,745,434 7,200,308 7,574,624 1,792,410 7,712,910(5) (7)Total For Purchased Power: 25,507,848 (512,601)

Operating & Mtce ExpenseOPERATING SUPERVISION 7,580 34,32310,904 36,50439,571 8 15109,513 5,247DIESEL OIL FUEL 1,688 5,2330 5,6662,213 (61) (58)17,000 (3,019)NATURAL GAS 1,741 11,6571,870 12,10010,359 (14) (11)27,000 (1,298)ELECTRIC & WATER CONSUMPTI 2,419 13,0671,999 14,19010,406 (27) (20)33,000 (2,660)OTHER EXP/PLANT SUPPLIES-ETC 197 1,745857 2,3332,923 25 677,000 1,177MISC OTHER PWR GENERATION E 650 1,634118 2,3331,625 (30) (1)7,000 (9)MAINTENANCE OF STRUCTURE/P 2,481 15,120699 6,3334,306 (32) (72)19,000 (10,814)MTCE OF PLANT ENGINES/GENER 534 10,0151,265 10,66610,861 2 832,000 846MTCE OF PLANT/LAND IMPROVE 938 29,789670 10,00010,057 1 (66)30,000 (19,731)

18,385 92,324 100,127 18,232 122,588(8) (25)Total For Operating & Mtce Expense: 281,513 (30,264)

Landfill Gas49



2020APRIL

2019APRIL

2020YTD

2019YTD

2020 YTD



YTDVARIANCE


LFG PURCHASED GAS 14,756 55,88814,558 60,00058,959 (2) 5180,000 3,070LANDFILL GAS O&M 45,833 183,33342,606 170,425170,425 0 (7)511,277 (12,907)LFG ADMIN 155 1,201156 0625 0 (48)35,000 (576)LFG INSURANCE 1,412 5,6481,525 8,3336,100 (27) 825,000 451LFG MTCE 0 1,09890 01,483 0 350 384

58,937 237,594 238,759 62,157 247,1710 (4)Total For Landfill Gas: 751,277 (9,576)

Transmission ExpenseTRANSMISSION MTCE AND EXPE 3,080 9,7044,105 13,00015,225 17 5739,000 5,520

4,105 15,225 13,000 3,080 9,70417 57Total For Transmission Expense: 39,000 5,520

Distribution ExpenseREMOVE EXISTING SERVICE & M 0 930 5330 (100) (100)1,600 (93)SCADA EXPENSE 2,292 10,7222,731 14,01012,913 (8) 2042,032 2,191TRANSFORMER EX/OVERHD & UN 832 3,5891,139 6,6664,148 (38) 1620,000 558MTCE OF SIGNAL SYSTEMS 0 500 6660 (100) (100)2,000 (50)METER EXPENSE - REMOVE & RE 56 560 400224 (44) 3021,200 168TEMP SERVICE - INSTALL & REM 87 312337 4001,279 220 3091,200 966MISC DISTRIBUTION EXPENSE 33,300 128,48825,140 104,32276,162 (27) (41)312,968 (52,326)INTERCONNECTION CARRYING C 0 2,4160 8050 (100) (100)2,416 (2,416)

29,349 94,728 127,805 36,569 145,729(26) (35)Total For Distribution Expense: 383,416 (51,000)

Maintenance ExpenseMTCE OF STRUCTURES 637 3,0542,023 7,1669,157 28 20021,500 6,103MTCE OF SUBSTATIONS 2,336 6,8871,326 9,3335,689 (39) (17)28,000 (1,198)MTCE OF SUBSTATION EQUIPME 676 1,412900 10,0003,078 (69) 11830,000 1,666MTCE OF OVERHD LINES/TREE TR 18,061 73,5912,629 150,000119,542 (20) 62171,000 45,951MTCE OF OVERHD LINES/STANDB 2,679 9,1952,498 10,33310,276 (1) 1231,000 1,081MTCE OF OVERHEAD 7,725 32,79010,917 39,70842,613 7 30140,000 9,822MTCE OF UNDERGROUND/DISTRI 15,878 32,4768,172 33,03336,374 10 12130,000 3,897LOCATE ELECTRIC LINES 11,028 21,6437,746 22,36718,848 (16) (13)95,000 (2,795)LOCATE FIBER LINES 29 290 33330 (91) 31,000 0MTCE OF LINE TRANSFORMERS 9,039 21,7271,673 17,0006,576 (61) (70)51,000 (15,151)MTCE OF STREET LIGHTING (5,599) 12,13012,800 15,00020,021 33 6545,000 7,891MTCE OF SECURITY LIGHTING 95 885246 4,000920 (77) 412,000 35MTCE OF METERS 4,743 21,9586,427 35,66628,314 (21) 29107,000 6,355VOLTAGE COMPLAINTS 1,055 3,408252 3,3331,880 (44) (45)10,000 (1,528)SALARIES TRANSMISSION & DIST 2,829 12,9204,089 15,20514,902 (2) 1545,617 1,981

50



2020APRIL

2019APRIL

2020YTD

2019YTD

2020 YTD



YTDVARIANCE


ELECTRIC MAPPING 4,845 33,4544,745 38,33334,557 (10) 3115,000 1,103MTCE OF OVERHEAD SERVICE/2N 1,506 4,1844,669 6,6668,114 22 9420,000 3,930MTCE OF UNDERGROUND ELEC S 1,886 7,5186,199 13,66613,500 (1) 8041,000 5,982TRANSPORTATION EXPENSE 23,292 95,52114,859 75,00068,366 (9) (28)225,000 (27,155)

92,178 442,766 506,147 102,748 394,791(13) 12Total For Maintenance Expense: 1,319,117 47,975

Depreciation & AmortizationDEPRECIATION 178,115 710,569184,415 739,286735,135 (1) 32,362,543 24,565AMORTIZATION 55,677 222,71155,677 222,712222,711 0 0668,135 0

240,093 957,846 961,998 233,792 933,2810 3Total For Depreciation & Amortization: 3,030,678 24,565

Interest ExpenseINTEREST EXPENSE - BONDS 57,993 235,36754,942 221,884221,884 0 (6)657,782 (13,482)INTEREST EXPENSE - DEFEASED (276) (1,105)(276) (1,105)(1,105) 0 0(3,317) 0AMORTIZATION OF DEBT DISCOU (4,012) (16,050)(4,012) (16,050)(16,050) 0 0(48,152) 0

50,653 204,728 204,728 53,704 218,2110 (6)Total For Interest Expense: 606,313 (13,482)

Other Operating ExpenseEV CHARGING EXPENSE 380 1,570247 1,6251,046 (36) (33)4,877 (523)LOSS ON DISPOSITION OF PROP (C 0 00 3,15755 (98) 012,630 55OTHER DONATIONS 261 26183 1,368260 (81) 04,104 0MUTUAL AID 11,991 11,9910 00 0 (100)0 (11,991)PENSION EXPENSE 0 00 00 0 060,000 0OPEB EXPENSE 0 00 00 0 03,000 0INTEREST PD ON METER DEPOSIT 1,810 7,9081,056 7,9424,224 (47) (47)23,828 (3,684)RENTAL PROPERTY EXPENSE 144 8,11872 9,0005,514 (39) (32)9,000 (2,604)

1,459 11,100 23,093 14,587 29,850(52) (63)Total For Other Operating Expense: 117,439 (18,749)

Customer Accounts ExpenseMETER READING EXPENSE 2,938 8,7122,847 9,7669,999 2 1529,299 1,286COLLECTING EXP DISC/RECONNE 1,517 3,7100 3,8852,224 (43) (40)15,226 (1,485)MISC CUSTOMER ACCTS EXP-CO 21,431 88,10524,273 93,00092,583 0 5279,000 4,478CUST BLGS NOT PD/SENT FOR CO 2,801 5,5289 5,0005,080 2 (8)15,000 (448)

27,130 109,888 111,651 28,688 106,056(2) 4Total For Customer Accounts Expense: 338,525 3,831

Administrative ExpenseSALARIES OFFICE & COMMISSION 58,246 228,05253,254 251,666227,771 (9) 0755,000 (281)TEMPORARY STAFFING 0 00 1,3330 (100) 04,000 0OFFICE SUPPLIES & EXPENSE 12,226 30,4918,470 65,85625,057 (62) (18)197,570 (5,434)LT & WATER CONSUMPTION/OFFI 2,406 8,9982,017 10,1957,803 (23) (13)30,587 (1,194)

51



2020APRIL

2019APRIL

2020YTD

2019YTD

2020 YTD



YTDVARIANCE


BANK CHARGES 219 828172 1,000705 (30) (15)3,000 (123)LEGAL FEES 2,939 9,8804,349 9,16612,083 32 2227,500 2,202AUDITING FEES 1,340 5,360740 5,7864,880 (16) (9)17,360 (480)INSURANCE 12,068 48,23812,220 58,33367,662 16 40175,000 19,423UTILITY SHARE - DEFERRED COM 10,016 45,0959,616 34,34045,953 34 2103,000 857UTILITY SHARE - MEDICAL/DENT 54,468 271,30959,128 296,551281,103 (5) 4780,000 9,794UTILITY SHARE - PERA 24,552 82,59925,082 85,00086,169 1 4255,000 3,569UTILITY SHARE - FICA 23,356 77,73823,642 80,50080,491 0 4241,500 2,752EMPLOYEE SICK PAY 8,836 48,2005,858 40,32743,383 8 (10)120,983 (4,817)EMPLOYEE HOLIDAY PAY 0 35,3120 35,90237,765 5 7131,643 2,453EMPLOYEE VACATION & PTO PA 14,667 83,07715,929 80,98489,342 10 8224,957 6,264UPMIC DISTRIBUTION 934 15,110(1,825) 16,25012,482 (23) (17)65,000 (2,627)CONSULTING FEES 1,512 10,22812,377 10,00013,689 37 3430,000 3,461TELEPHONE 1,816 7,2792,470 7,8339,664 23 3323,500 2,384ADVERTISING 844 5,0381,540 5,0005,204 4 315,000 165DUES & SUBSCRIPTIONS - FEES 7,354 30,0709,480 54,26636,060 (34) 20162,800 5,990SCHOOLS & MEETINGS 18,373 59,9164,758 114,63241,696 (64) (30)270,360 (18,220)MTCE OF GENERAL PLANT & OFFI 453 1,812877 1,9473,508 80 945,841 1,696

250,162 1,132,476 1,266,875 256,634 1,104,641(11) 3Total For Administrative Expense: 3,639,601 27,835

General ExpenseCIP REBATES - RESIDENTIAL 1,025 8,738947 25,2087,726 (69) (12)75,625 (1,012)CIP REBATES - COMMERCIAL 7,789 18,50216,544 70,06641,252 (41) 123210,200 22,750CIP - ADMINISTRATION 45 30349 240193 (19) (36)720 (109)CIP - MARKETING 2,651 6,219606 14,4664,513 (69) (27)43,400 (1,706)CIP - LABOR 16,817 55,21510,298 45,11244,254 (2) (20)135,338 (10,961)CIP REBATES - LOW INCOME 0 1,7980 1,6660 (100) (100)5,000 (1,798)CIP - LOW INCOME LABOR 925 3,080371 1,5002,508 67 (19)4,500 (571)ENVIRONMENTAL COMPLIANCE 2,353 9,2532,415 9,4139,524 1 330,564 271MISC GENERAL EXPENSE 0 (175)64 1,600(634) (140) (260)4,800 (458)

31,296 109,340 169,274 31,608 102,936(35) 6Total For General Expense: 510,147 6,403

Total Expenses(before Operating Transfers)2,634,215 11,127,8732,549,189 11,298,08610,608,330 (6) (5)36,524,874 (519,543)

Operating Transfer Operating Transfer/Other Funds

TRANSFER TO CITY 4% ER REVEN 82,390 358,028104,595 427,854410,465 (4) 151,365,000 52,43652



2020APRIL

2019APRIL

2020YTD

2019YTD

2020 YTD



YTDVARIANCE


104,595 410,465 427,854 82,390 358,028(4) 15Total For Operating Transfer/Other Funds: 1,365,000 52,436

Utilities & Labor DonatedUTILITIES & LABOR DONATED 16,670 68,89118,113 73,33373,521 0 7220,000 4,629

18,113 73,521 73,333 16,670 68,8910 7Total For Utilities & Labor Donated: 220,000 4,629

Total Operating Transfer122,709 483,987 501,188 99,060 426,920(3) 13Total For Total Operating Transfer: 1,585,000 57,066

42,462 534,199359,579 493,471 Net Income Profit(Loss) 929,765 88 741,134,325 395,566

53



2020APRIL

2019APRIL

2020YTD

2019YTD

2020 YTD



YTDVARIANCE


RevenueOperating Revenue Water Sales

WATER SALES RESIDENTIAL 73,804 304,41889,270 309,000327,009 6 71,242,962 22,591WATER SALES COMMERCIAL 45,994 191,51753,953 190,804199,789 5 4801,361 8,271WATER SALES IRRIGATION 1,437 5,7262,228 6,7176,760 1 18240,785 1,033

145,452 533,559 506,522 121,237 501,6625 6Total For Water Sales: 2,285,109 31,897

Total Operating Revenue121,237 501,662145,452 506,522533,559 5 62,285,109 31,897

145,452 533,559 506,522 121,237 501,6625 6Total For Total Operating Revenue: 2,285,109 31,897

Other Operating Revenue Interest/Dividend Income

INTEREST & DIVIDEND INCOME 3,100 14,2357,523 12,66616,550 31 1638,000 2,315OTHER INTEREST/MISC REVENUE 0 00 3330 (100) 01,000 0

7,523 16,550 13,000 3,100 14,23527 16Total For Interest/Dividend Income: 39,000 2,315

Customer PenaltiesCUSTOMER PENALTIES 766 4,9310 5,0003,801 (24) (23)15,000 (1,130)

0 3,801 5,000 766 4,931(24) (23)Total For Customer Penalties: 15,000 (1,130)

Connection FeesWATER/ACCESS/CONNECTION FE 10,188 88,0605,604 66,666135,904 104 54200,000 47,844CUSTOMER CONNECTION FEES 972 5,554308 6,6663,963 (41) (29)20,000 (1,590)BULK WATER SALES/HYDRANT R 0 2,74229 1,6661,981 19 (28)5,000 (760)

5,942 141,849 75,000 11,160 96,35689 47Total For Connection Fees: 225,000 45,493

Misc RevenueRENTAL PROPERTY INCOME 505 2,355250 2,0001,765 (12) (25)2,000 (590)TRANSFER IN FROM CITY 0 00 00 0 025,000 0MISCELLANEOUS REVENUE 0 39624 024 0 (94)0 (372)HYDRANT MAINTENANCE PROGR 980 4,150940 3,9203,828 (2) (8)11,760 (322)WATER TOWER LEASE 18,608 74,43219,352 77,41077,410 0 4235,713 2,977

20,566 83,027 83,330 20,093 81,3360 2Total For Misc Revenue: 274,473 1,691

Total Other Revenue35,120 196,85834,031 176,330245,228 39 25553,473 48,370

34,031 245,228 176,330 35,120 196,85839 25Total For Total Other Revenue: 553,473 48,370

156,358 698,521179,484 682,852Total Revenue 778,788 14 112,838,582 80,267

54



2020APRIL

2019APRIL

2020YTD

2019YTD

2020 YTD



YTDVARIANCE


Expenses Production Expense

MTCE OF STRUCTURES 3,489 22,2842,219 20,0007,032 (65) (68)60,000 (15,252)2,219 7,032 20,000 3,489 22,284(65) (68)Total For Production Expense: 60,000 (15,252)

Pumping ExpenseSUPERVISION 4,588 16,7715,179 18,33319,092 4 1455,000 2,321ELECTRIC & GAS UTILITIES 17,707 69,98317,958 76,66672,189 (6) 3230,000 2,205SAMPLING 822 3,432570 6,0002,655 (56) (23)18,000 (777)CHEMICAL FEED 1,823 2,633707 9,3337,020 (25) 16728,000 4,387MTCE OF WELLS 12,153 56,0775,675 62,04140,090 (35) (29)186,124 (15,987)SCADA - PUMPING 183 1,983380 3,333926 (72) (53)10,000 (1,057)

30,471 141,975 175,708 37,280 150,882(19) (6)Total For Pumping Expense: 527,124 (8,906)

Distribution ExpenseMTCE OF WATER MAINS 5,525 21,5541,419 29,0735,689 (80) (74)87,220 (15,864)LOCATE WATER LINES 1,098 1,9161,285 5,3331,929 (64) 116,000 12WATER METER SERVICE 2,029 13,1941,505 15,0478,941 (41) (32)45,143 (4,252)BACKFLOW DEVICE INSPECTION 0 00 1,9630 (100) 011,782 0MTCE OF CUSTOMERS SERVICE 1,965 7,6631,885 9,2687,300 (21) (5)27,805 (362)WATER MAPPING 1,491 4,4741,758 5,3332,312 (57) (48)16,000 (2,162)MTCE OF WATER HYDRANTS - PU 478 1,533528 8,333956 (89) (38)25,000 (576)MTCE OF WATER HYDRANTS - PR 416 5980 3,0000 (100) (100)9,000 (598)WATER CLOTHING/PPE 1,153 3,3822,514 3,0004,577 53 359,000 1,194WAGES/WATER 454 2,085656 2,3332,341 0 127,000 256TRANSPORTATION EXPENSE 638 2,658578 5,0002,678 (46) 115,000 20GENERAL EXP/WATER PERMIT 345 12,4930 15,00012,396 (17) (1)15,000 (96)

12,132 49,124 102,686 15,596 71,554(52) (31)Total For Distribution Expense: 283,951 (22,430)

Depreciation & AmortizationDEPRECIATION 96,492 385,32994,905 396,906378,554 (5) (2)1,215,839 (6,774)

94,905 378,554 396,906 96,492 385,329(5) (2)Total For Depreciation & Amortization: 1,215,839 (6,774)

Interest ExpenseINTEREST EXPENSE - BONDS 2,751 11,7531,962 8,6408,640 0 (26)24,345 (3,112)INTEREST EXPENSE - DEFEASED (69) (276)(69) (276)(276) 0 0(829) 0

1,893 8,364 8,364 2,682 11,4770 (27)Total For Interest Expense: 23,516 (3,112)

Other Operating ExpenseLOSS ON DISPOSITION OF PROP (C 0 00 018 0 00 18DAM MAINTENANCE EXPENSE 0 130758 297893 200 582893 76255



2020APRIL

2019APRIL

2020YTD

2019YTD

2020 YTD



YTDVARIANCE


PENSION EXPENSE 0 00 00 0 05,000 0OPEB EXPENSE 0 00 00 0 03,000 0INTEREST PD ON METER DEPOSIT 60 24433 252134 (47) (45)758 (109)RENTAL PROPERTY EXPENSE 36 2,02918 2,1251,378 (35) (32)2,125 (651)

810 2,425 2,675 96 2,404(9) 1Total For Other Operating Expense: 11,776 20

Customer Accounts ExpenseMETER READING EXPENSE 118 521142 587712 21 371,761 190MISC CUSTOMER ACCTS EXP-CO 4,878 19,7145,634 21,70020,738 (4) 565,100 1,023CUST BLGS NOT PD/SENT FOR CO 40 400 3330 (100) (100)1,000 (40)

5,777 21,450 22,620 5,037 20,277(5) 6Total For Customer Accounts Expense: 67,861 1,173

Administrative ExpenseSALARIES OFFICE & COMMISSION 16,490 64,33114,758 70,66663,950 (10) (1)212,000 (381)TEMPORARY STAFFING 0 00 3330 (100) 01,000 0OFFICE SUPPLIES & EXPENSE 2,463 5,9922,032 18,0545,009 (72) (16)54,162 (983)LT & WATER CONSUMPTION/OFFI 601 2,250504 2,4511,950 (20) (13)7,353 (299)BANK CHARGES 47 18443 266191 (28) 3800 6LEGAL FEES 509 1,8411,142 1,8422,810 53 535,526 969AUDITING FEES 335 1,340185 1,4461,220 (16) (9)4,340 (120)INSURANCE 2,145 8,5801,936 8,0007,652 (4) (11)24,000 (928)UTILITY SHARE - DEFERRED COM 1,389 6,7211,169 7,3335,799 (21) (14)22,000 (922)UTILITY SHARE - MEDICAL/DENT 13,152 66,80012,687 77,44660,905 (21) (9)208,455 (5,895)UTILITY SHARE - PERA 3,762 14,1163,798 16,31713,233 (19) (6)48,953 (883)UTILITY SHARE - FICA 3,839 13,1223,555 14,66312,013 (18) (8)43,990 (1,109)EMPLOYEE SICK PAY 1,829 10,764990 10,0006,067 (39) (44)30,000 (4,697)EMPLOYEE HOLIDAY PAY 0 6,4580 7,7114,872 (37) (25)28,274 (1,585)EMPLOYEE VACATION & PTO PA 1,934 13,6481,832 13,32015,032 13 1037,000 1,384UPMIC DISTRIBUTION (1,238) 1,0630 2,7502,455 (11) 13111,000 1,392CONSULTING FEES 238 2,4173,018 6,2003,346 (46) 3834,000 929BOND ISSUANCE COSTS 140 1400 00 0 (100)0 (140)TELEPHONE 446 1,789498 1,8331,927 5 85,500 138ADVERTISING 130 1,282385 2,3331,220 (48) (5)7,000 (62)DUES & SUBSCRIPTIONS - FEES 717 11,6531,070 14,00018,234 30 5652,000 6,580SCHOOLS & MEETINGS 1,981 6,843302 19,2906,154 (68) (10)57,870 (689)MTCE OF GENERAL PLANT & OFFI 113 452219 629876 39 941,889 424

50,129 234,923 296,889 51,029 241,796(21) (3)Total For Administrative Expense: 897,113 (6,872)56



2020APRIL

2019APRIL

2020YTD

2019YTD

2020 YTD



YTDVARIANCE


General ExpenseCIP REBATES - RESIDENTIAL 60 445100 1,535325 (79) (27)4,605 (120)CIP - MARKETING 0 00 15940 (75) 0477 40CIP - LABOR 380 1,466410 1,4961,547 3 64,489 81ENVIRONMENTAL COMPLIANCE 320 6271,239 3341,577 372 1511,003 949MISC GENERAL EXPENSE 0 1,1210 383(1) (100) (100)1,150 (1,122)

1,748 3,489 3,907 760 3,660(11) (5)Total For General Expense: 11,724 (170)

Total Expenses(before Operating Transfers)212,466 909,666200,089 1,029,757847,340 (18) (7)3,098,905 (62,325)

Operating Transfer Utilities & Labor Donated

WATER AND LABOR DONATED 0 00 5430 (100) 01,630 0 Total Operating Transfer

0 0 543 0 0(100) 0Total For Total Operating Transfer: 1,630 0

(56,108) (211,144)(20,604) (347,448) Net Income Profit(Loss) (68,551) 80 68(261,953) 142,593

57

______________________________________________________________________________

Page 1 of 1


FROM: Tom Sagstetter – Conservation & Key Accounts Manager



SUBJECT: Electric and Water Cost of Service and Rate Design Study ACTION REQUESTED: Receive the Electric and Water Cost of Service and Rate Design Study Final Reports BACKGROUND: ERMU staff has been working with Dave Berg Consulting, LLC on electric and water cost of service and rate design studies. The work was done to evaluate possible changes to electric and water retail rates, and applicable fees for each utility. Staff evaluated changes in operating conditions, including but not limited to monthly fixed costs, additional service fees, bonding for the new field services building, and retail energy and water rates. DISCUSSION: At the May meeting, the Commission instructed Mr. Berg to return in June with projections that use a 1.5% increase in electric rates. Mr. Berg will also review the findings and recommendations of the final reports. ATTACHMENT:

• Electric Cost of Service and Rate Design Study – Final Report • Water Cost of Service and Rate Design Study – Final Report

58

ELECTRIC COST OF SERVICE AND

RATE DESIGN STUDY

Final Report

May 27, 2020

59

REPORT OUTLINE

Cover Letter

Section 1 - Introduction

Section 2 – Projected Operating Results – Existing Rates

Section 3 – Cost of Service

Section 4 – Proposed Rates

60

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

May 27, 2020

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.

No increase in electric rates was implemented in January 2020 and no additional increase is

recommended in 2020. Rate increases of 1.5% each year from 2021-2024 are recommended. These

adjustments are necessary to continue meeting ERMU’s reserve level goals and required bond

covenants. 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

61

- 1 -

Section 1

Introduction

The City of Elk River, MN owns a municipal utility providing service to

approximately 12,100 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

2019 utility operations (Test Year). It also includes projected operating results for

2020-2024 (Study Period). As a result of the analyses undertaken and reported

on herein, electric rate recommendations have been developed for consideration

by ERMU.

62

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 2020-2024 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, no increase in sales

during the Study Period beyond the 2019 actual sales has been included in this analysis.

63

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, 2019 and

represented a rate reduction of 5% at that time. 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. These include landfill gas

generation sales, connection charges and customer penalties. 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 2019 Test Year are shown

in Table 2-1.

64

Section 2

- 4 -

Table 2-1

Retail Sales

And Wholesale Requirements

Item 2019

Metered Retail Sales 325,232,320 kWh

Distribution Losses 3.4 %

Wholesale Energy 336,570,637 kWh

Wholesale Peak 72,798 kW

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 landfill gas

generation project and 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 2019 values,

the 2020 budget and are generally estimated to increase by 3% per year after 2020.

65


- 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 and the planned 2021 bonding.

City Transfer

ERMU makes an annual operational transfer to the City’s general fund. The transfer is

assumed to be 4% of electric retail sales revenue for sales in Elk River.

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-

2 below.

Table 2-2


Capital Item 2020 2021 2022 2023 2024

Electric Capital $4,540,700 $15,105,500 $3,406,750 $2,854,000 $3,332,200

66

Section 2

- 6 -

Debt Service

ERMU currently has outstanding electric debt pursuant to a 2010 bond issue related to

the Elk River City Hall expansion, a 2016 electric bond issue and a 2018 electric bond

issue. It is assumed the electric utility will participate with the water utility in a new $13.59

million bond issue in 2021 related to expansion of the ERMU field service facilities. The

debt payments for $12,231,000 of that issue have been allocated to the electric utility.


Based on the assumptions outlined above, the resulting projected operating results

assuming continued application of the existing retail rates are summarized in Table 2-3

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 2-3


Existing Rates

Year 2020 2021 2022 2023 2024

Operating Revenues $37,990,288 $37,990,288 $37,990,288 $37,990,288 $37,990,288

Less Operating Expenses

(35,480,019) (36,070,782) (37,020,347) (37,586,795) (38,141,864)

Plus Non -Operating Revenues (Expenses)

(79,079) (92,791) (679,534) (489,326) (456,653)

Less City Transfers (1,365,000) (1,365,000) (1,365,000) (1,365,000) $(1,365,000)

Change in Net Position $1,066,189 $461,714 $(1,074,594) $(1,450,833) $(1,973,230)

Net Position as Percent of Revenues

2.8% 1.2% -2.8% -3.8% -5.2%

67


- 7 -

Cash Reserves

A summary of the impact of the projected operating results on ERMU’s unrestricted cash

reserves for the Study Period is shown at the end of Exhibit 2-A and in Table 2-4 below.

As shown below, under existing retail rates and estimated revenue requirements over the

Study Period, the unrestricted cash reserves for the electric utility are projected to

decrease from approximately $14.9 million at the end of 2019 to approximately $2.6

million by the end of 2024. Also shown in Table 2-4 is the reserve balance goal based

on ERMU policy. The end of year reserve balance is projected to decrease from 173%

of reserve goal to 31% of reserve goal.

Table 2-4

Projected Unrestricted Cash Reserves

Existing Rates

Year 2020 2021 2022 2023 2024

Beginning Balance $14,881,922 $12,714,089 $10,749,338 $8,067,046 $5,729,322

Plus Change in Net Position 1,066,189 461,714 (1,074,594) (1,450,833) (1,973,230)

Plus Depreciation 3,030,678 3,182,035 3,685,551 3,799,110 3,894,243

Plus Bond Proceeds - 11,250,000 - - -

Less Capital Improvements (4,540,700) (15,105,500) (3,406,750) (2,854,000) (3,332,200)

Less Loss of Revenue Pmts (800,000) (800,000) (800,000) (800,000) (800,000)

Less Debt Principal (924,000) (953,000) (1,086,500) (1,032,000) (966,000)

Ending Balance $12,714,089 $10,749,338 $8,067,046 $5,729,322 $2,552,136

Reserve Goal $7,362,998 $8,212,108 $8,099,589 $8,136,525 $8,275,657

Reserves as % of Goal 173% 131% 100% 70% 31%

68

Exhibit 2-A

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

OPERATING REVENUES

Charges for services 31,629,131$ 33,481,349$ 35,373,472$ 37,910,780$ 36,538,150$ 36,458,746$ 36,458,746$ 36,458,746$ 36,458,746$ 36,458,746$

Security systems 251,488 177,572 - - - - - - - -

LFG project 1,075,148 1,087,749 1,084,589 1,128,793 1,102,835 1,166,742 1,166,742 1,166,742 1,166,742 1,166,742

Generation credit (805,579) (804,608) (814,341) (729,208) 4,800 4,800 4,800 4,800 4,800 4,800

Connection maintenance 163,195 269,197 234,365 269,787 194,295 150,000 150,000 150,000 150,000 150,000

Customer penalties 238,339 253,137 242,739 199,753 254,553 210,000 210,000 210,000 210,000 210,000

Total Operating Revenues 32,551,722$ 34,464,396$ 36,120,824$ 38,779,905$ 38,094,633$ 37,990,288$ 37,990,288$ 37,990,288$ 37,990,288$ 37,990,288$

OPERATING EXPENSES

Purchased Power 22,034,307$ 23,991,069$ 25,402,576$ 26,710,514$ 24,851,301$ 25,069,306$ 25,287,312$ 25,505,317$ 25,723,322$ 25,941,327$

Production 928,923 753,870 873,651 1,002,064 1,020,807 1,032,790 1,063,774 1,095,687 1,128,558 1,162,414

Transmission - - - - - 39,000 40,170 41,375 42,616 43,895

Distribution 1,402,046 1,287,940 1,511,612 1,658,167 1,525,827 1,702,533 1,753,609 1,806,217 1,860,404 1,916,216

Depreciation 1,922,359 2,005,093 2,046,935 2,297,349 2,856,258 3,030,678 3,182,035 3,685,551 3,799,110 3,894,243

Customer accounts 856,076 534,273 469,412 442,701 528,743 455,964 469,643 483,732 498,244 513,191

General and administrative 2,752,443 3,254,354 3,090,285 3,090,611 3,772,150 4,149,748 4,274,240 4,402,468 4,534,542 4,670,578

Total Operating Expenses 29,896,154$ 31,826,599$ 33,394,471$ 35,201,406$ 34,555,086$ 35,480,019$ 36,070,782$ 37,020,347$ 37,586,795$ 38,141,864$

OPERATING INCOME 2,655,568$ 2,637,797$ 2,726,353$ 3,578,499$ 3,539,547$ 2,510,268$ 1,919,506$ 969,941$ 403,493$ (151,577)$

NON-OPERATING REVENUE (EXPENSE)

Interest income 95,533$ 90,804$ 79,543$ 330,110$ 159,014$ 100,000$ 100,000 100,000 100,000 100,000

Miscellaneous revenue 279,487 281,702 344,558 372,253 568,635 438,080 438,080 438,080 438,080 438,080

Interest expense and other (116,676) (198,194) (294,219) (478,814) (643,159) (665,311) (630,871) (1,217,614) (1,027,406) (994,733)

Bond issuance costs - (85,195) - - - 48,152 - - - -

Sale of Security System - - - - - - - - - -

Gain (Loss) on sale of capital assets 8,899 (80,126) 15,152 (4,963) (2,050) - - - - -

Total Non-Operating Revenues (Expenses) 267,243$ 8,991$ 145,034$ 218,586$ 82,440$ (79,079)$ (92,791)$ (679,534)$ (489,326)$ (456,653)$

Income before Contributions and Transfers 2,922,811$ 2,646,788$ 2,871,387$ 3,797,085$ 3,621,987$ 2,431,189$ 1,826,714$ 290,406$ (85,833)$ (608,230)$

Grants -$ -$ 40,000$ -$ 10,000$

Contribution of Assets from City - - 169,051 - -

Contributions from Customers - - - 352,104 125,764

Transfers to Other City Funds (824,743) (1,089,287) (1,113,264) (1,188,664) (1,157,445) (1,365,000)$ (1,365,000)$ (1,365,000)$ (1,365,000)$ (1,365,000)$

Special Item - 330,923 - - -

CHANGE IN NET POSITION 2,098,068$ 1,888,424$ 1,967,174$ 2,960,525$ 2,600,306$ 1,066,189$ 461,714$ (1,074,594)$ (1,450,833)$ (1,973,230)$

As Percent of Revenues 6.4% 5.5% 5.4% 7.6% 6.8% 2.8% 1.2% -2.8% -3.8% -5.2%

UNRESTRICTED CASH RESERVES

Beginning of Year 14,881,922$ 12,714,089$ 10,749,338$ 8,067,046$ 5,729,322$

Plus Change in Net Position 1,066,189 461,714 (1,074,594) (1,450,833) (1,973,230)


Plus New Debt - 11,250,000 - - -


Less Loss of Revenue Payments (800,000) (800,000) (800,000) (800,000) (800,000)


End of Year 14,881,922$ 12,714,089$ 10,749,338$ 8,067,046$ 5,729,322$ 2,552,136$

Reserve goal 7,362,998$ 8,212,108$ 8,099,589$ 8,136,525$ 8,275,657$

Percent of goal 173% 131% 100% 70% 31%

Projected


Electric Operating Results at Existing Rates

Historical

page 1 of 1

69

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 2019 ‘Test Year’ based on actual

2019 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.

70

Cost-of-Service

- 9 -

Table 3-1 below summarizes the functional electric costs for the 2019 Test Year.

The detailed cost functions are shown in Exhibit 3-A.

Table 3-1

Functional Electric Costs

2019 Test Year

Component

Revenue

Requirement

Power Supply $26,438,480

Distribution 6,317,740

Customer 1,068,193

Revenue 2,406,282

Total $36,230,694

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.

71

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.

72

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 2019 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 2019.

73

Section 3

- 12 -

Table 3-2

Electric Cost of Service Results

Comparison of Cost and Revenues

2019 Test Year

Customer Classification

Allocated Cost to Serve

Revenues

Residential $12,664,792 $13,112,952

Commercial Non-demand 3,281,539 3,445,080

Demand 12,924,200 12,647,421

Industrial 7,360,162 7,025,242

Total $36,230,694 $36,230,694

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.

74

Cost-of-Service

- 13 -

Table 3-3

Electric Cost of Service Results

Comparison of % Cost and Revenues

2019 Test Year



Revenues Increase/

(Decrease)

Residential 35.0% 36.2% -3.4%

Commercial Non-demand 9.1% 9.5% -4.7%

Demand 35.7% 34.9% 2.2%

Industrial 20.3% 19.4% 4.8%

Total 100.0% 100.0% 0.0%

75

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.

76

Exhibit 3-A

2019 Power

REVENUE REQUIREMENT Test Year Supply Distribution Customer Revenue Classification Basis

OPERATING EXPENSES

Purchased Power 24,851,301$ 24,851,301$ -$ -$ -$ 100% power supply

Production

OPERATING SUPERVISION 103,807 103,807 - - - 100% power supply

DIESEL OIL FUEL 14,455 14,455 - - - 100% power supply

NATURAL GAS 24,994 24,994 - - - 100% power supply

ELECTRIC & WATER CONSUMPTION 31,289 31,289 - - - 100% power supply

OTHER EXP/PLANT SUPPLIES-ETC 8,368 8,368 - - - 100% power supply

MISC OTHER PWR GENERATION EXP 5,841 5,841 - - - 100% power supply

MAINTENANCE OF STRUCTURE/PLANT 30,631 30,631 - - - 100% power supply

MTCE OF ENGINES/GENERATORS-PL 19,825 19,825 - - - 100% power supply

MTCE OF PLANT/LAND IMPROVEMENT 44,209 44,209 - - - 100% power supply

LFG PURCHASED GAS 172,286 172,286 - - - 100% power supply

LANDFILL GAS O&M 543,448 543,448 - - - 100% power supply

LFG ADMIN 2,450 2,450 - - - 100% power supply

LFG INSURANCE 17,160 17,160 - - - 100% power supply

LFG MTCE 1,172 1,172 - - - 100% power supply

Total Production 1,019,935$ 1,019,935$ -$ -$ -$

Transmission 39,331$ 39,331$ -$ -$ -$ 100% power supply

Distribution

REMOVE EXISTING SERV & METERS 2,080 - 2,080 - - 100% distribution

SCADA EXPENSES 39,704 - 39,704 - - 100% distribution

TRANSFORMER EX/OVERHD & UNDERG 10,794 - 10,794 - - 100% distribution

MTCE OF SIGNAL SYSTEMS 310 - 310 - - 100% distribution

METER EXP - REMOVE & RESET 6,388 - 6,388 - - 100% distribution

TEMP SERVICE-INSTALL & REMOVE 894 - 894 - - 100% distribution

MISC DISTRIBUTION EXPENSE 241,739 - 241,739 - - 100% distribution

INTERCONNECTION CARRYING CHARGE 4,832 - 4,832 - - 100% distribution

MTCE OF STRUCTURES 5,036 - 5,036 - - 100% distribution

MTCE OF SUBSTATIONS 25,431 - 25,431 - - 100% distribution

MTCE OF SUBSTATION EQUIPMENT 26,181 - 26,181 - - 100% distribution

MTCE OF OVERHD LINES/TREE TRIM 106,712 - 106,712 - - 100% distribution

MTCE OF OVERHD LINES/STANDBY 29,072 - 29,072 - - 100% distribution

MTCE OF OVERHEAD 125,153 - 125,153 - - 100% distribution

MTCE OF UNDERGROUND/DISTRIB 132,921 - 132,921 - - 100% distribution

LOCATE ELECTRIC LINES 90,191 - 90,191 - - 100% distribution

LOCATE FIBER LINES 373 - 373 - - 100% distribution

MTCE OF LINE TRANSFORMERS 42,184 - 42,184 - - 100% distribution

MTCE OF STREET LIGHTING 41,748 - 41,748 - - 100% distribution

MTCE OF SECURITY LIGHTING 8,431 - 8,431 - - 100% distribution

MTCE OF METERS 76,866 - 76,866 - - 100% distribution

VOLTAGE COMPLAINTS 9,087 - 9,087 - - 100% distribution

SALARIES/TRANS & DISTRIBUTION 39,247 - 39,247 - - 100% distribution

ELECTRIC MAPPING 91,744 - 91,744 - - 100% distribution

MTCE OF OVERHEAD SERVICE/2NDRY 16,540 - 16,540 - - 100% distribution

MTCE OF UNDERGROUND ELEC SERV 33,347 - 33,347 - - 100% distribution

LOCATE UNDERGROUND SECONDARY - - - - - 100% distribution

TRANSPORTATION EXPENSE 219,760 - 219,760 - - 100% distribution

Total Distribution 1,426,765$ -$ 1,426,765$ -$ -$

Depreciation & Amortization

DEPRECIATION 2,184,824 64,242 2,120,582 - - plant in service

AMORTIZATION 668,135 668,135 - - - 100% power supply

Total Depreciation & Amortization 2,852,959$ 732,377$ 2,120,582$ -$ -$


EV CHARGING EXPENSE 4,528 - - 4,528 - 100% customer

LOSS ON DISPOSITION OF PROPERTY 17,049 - 17,049 - - 100% distribution

OTHER DONATIONS 2,856 - 2,856 - - 100% distribution

MUTUAL AID 29,577 - 29,577 - - 100% distribution

INTEREST PD ON METER DEPOSIT 22,754 - - 22,754 - 100% customer

RENTAL PROPERTY EXPENSE 10,179 299 9,880 - - plant in service

UTILITIES AND LABOR DONATED 210,790 - 210,790 - - 100% distribution

Total Other Operating Expenses 297,733$ 299$ 270,152$ 27,282$ -$

Customer Accounts

METER READING EXPENSE 27,298 - - 27,298 - 100% customer

COLLECTING EXP DISC/RECONNECT 14,521 - - 14,521 - 100% customer


Functionalization of 2019 Test Year Revenue Requirements

Page 1 of 2

77

Exhibit 3-A

2019 Power

REVENUE REQUIREMENT Test Year Supply Distribution Customer Revenue Classification Basis


Functionalization of 2019 Test Year Revenue Requirements

MISC CUSTOMER ACCTS EXP-COMP 264,242 - - 264,242 - 100% customer

CUST BLGS NOT PD/SENT FOR COLL 11,873 - - 11,873 - 100% customer

Total Customer Accounts 317,934$ -$ -$ 317,934$ -$

General & Administrative

SALARIES/OFFICE & COMMISSION 683,037 193,519 412,267 77,251 - non PP operating expenses

TEMPORARY STAFFING - - - - - NA

OFFICE SUPPLIES & EXPENSE 79,344 22,480 47,890 8,974 - non PP operating expenses

LT & WATER CONSUMPTION/OFFICE 29,408 8,332 17,750 3,326 - non PP operating expenses

BANK CHARGES 2,251 638 1,359 255 - non PP operating expenses

LEGAL FEES 26,786 7,589 16,167 3,029 - non PP operating expenses

AUDITING FEES 16,720 4,737 10,092 1,891 - non PP operating expenses

INSURANCE 162,843 46,137 98,289 18,417 - non PP operating expenses

UTILITY SHARE DEF COMP 89,001 25,216 53,719 10,066 - non PP operating expenses

UTIL SH OF MEDICAL/DENTAL 714,622 202,468 431,331 80,823 - non PP operating expenses

UTILITY SHARE OF PERA 241,529 68,430 145,782 27,317 - non PP operating expenses

UTILITY SHARE OF FICA 227,281 64,394 137,182 25,705 - non PP operating expenses

EMPLOYEES SICK PAY 131,695 37,312 79,488 14,895 - non PP operating expenses

EMP HOLIDAY PAY 131,797 37,341 79,550 14,906 - non PP operating expenses

EMPLOYEE VACATION & PTO 222,218 62,959 134,126 25,133 - non PP operating expenses

UPMIC DISTRIBUTION 45,325 12,842 27,357 5,126 - non PP operating expenses

CONSULTING FEES 19,655 5,569 11,863 2,223 - non PP operating expenses

TELEPHONE 22,669 6,423 13,683 2,564 - non PP operating expenses

ADVERTISING 16,686 4,728 10,071 1,887 - non PP operating expenses

DUES & SUBSCRIPTIONS - FEES 97,465 27,614 58,828 11,023 - non PP operating expenses

TRAVEL EXPENSE - - - - - NA

SCHOOLS & MEETINGS 154,224 43,695 93,086 17,443 - non PP operating expenses

MTCE OF GENERAL PLANT & OFFICE 5,436 1,540 3,281 615 - non PP operating expenses

Total General & Administrative 3,119,992$ 883,961$ 1,883,163$ 352,868$ -$

General Expense

CIP REBATES - RESIDENTIAL 35,640 - - 35,640 - 100% customer

CIP REBATES - COMMERCIAL 112,422 - - 112,422 - 100% customer

CIP - ADMINISTRATION 6,606 - - 6,606 - 100% customer

CIP - MARKETING 17,229 - - 17,229 - 100% customer

CIP - LABOR 150,344 - - 150,344 - 100% customer

CIP REBATES - LOW INCOME 8,405 - - 8,405 - 100% customer

CIP - LOW INCOME LABOR 9,661 - - 9,661 - 100% customer

ENVIRONMENTAL COMPLIANCE 29,188 - - 29,188 - 100% customer

MISC GENERAL EXPENSE 614 - - 614 - 100% customer

Total General Expense 370,109$ -$ -$ 370,109$ -$

TOTAL OPERATING EXPENSES 34,296,059$ 27,527,204$ 5,700,662$ 1,068,193$ -$

OTHER OPERATING REVENUES

LFG PROJECT 1,102,835 1,102,835 - - - 100% power supply

DISPERSED GENERATION CREDIT 4,800 4,800 - - - 100% power supply

CONNECTION MAINTENANCE 194,295 - - - 194,295 100% revenue

CUSTOMER PENALTIES 254,553 - - - 254,553 100% revenue

SECURITY LIGHTS 220,881 - - - 220,881 100% revenue

WIND DELIVERY 7,170 - 7,170 - - 100% distribution

TOTAL OTHER OPERATING REVENUES 1,784,534$ 1,107,635$ 7,170$ -$ 669,729$

NON-OPERATING INCOME (EXPENSES)

Interest income 159,014 - - - 159,014 100% revenue

Miscellaneous revenue 568,635 - - - 568,635 100% revenue

Interest expense and other (643,159) (18,911) (624,248) - - plant in service

Gain (Loss) on sale of capital assets (2,050) - - - (2,050) 100% revenue

TOTAL NON-OPERATING INCOME (EXPENSES) 82,440$ (18,911)$ (624,248)$ -$ 725,599$

TRANSFER TO CITY 1,157,445$ -$ -$ -$ 1,157,445$ 100% revenue

MARGIN 2,644,165$ -$ -$ -$ 2,644,165$ 100% revenue

TOTAL REVENUE REQUIREMENT 36,230,694$ 26,438,480$ 6,317,740$ 1,068,193$ 2,406,282$

100% 73% 17% 3% 7%

Page 2 of 2

78

Exhibit 3-B

2019

REVENUE REQUIREMENT Test Year Demand Energy Classification Basis

OPERATING EXPENSES

Purchased Power 24,851,301$ 7,029,514$ 17,821,787$ per power supply

Production

OPERATING SUPERVISION 103,807 29,363 74,444 per power supply

DIESEL OIL FUEL 14,455 4,089 10,366 per power supply

NATURAL GAS 24,994 7,070 17,924 per power supply

ELECTRIC & WATER CONSUMPTION 31,289 8,851 22,438 per power supply

OTHER EXP/PLANT SUPPLIES-ETC 8,368 2,367 6,001 per power supply

MISC OTHER PWR GENERATION EXP 5,841 1,652 4,189 per power supply

MAINTENANCE OF STRUCTURE/PLANT 30,631 8,664 21,967 per power supply

MTCE OF ENGINES/GENERATORS-PL 19,825 5,608 14,217 per power supply

MTCE OF PLANT/LAND IMPROVEMENT 44,209 12,505 31,704 per power supply

LFG PURCHASED GAS 172,286 - 172,286 100% energy

LANDFILL GAS O&M 543,448 543,448 - 100% demand

LFG ADMIN 2,450 2,450 - 100% demand

LFG INSURANCE 17,160 17,160 - 100% demand

LFG MTCE 1,172 1,172 - 100% demand

Total Production 1,019,935$ 644,399$ 375,536$

Transmission 39,331$ 39,331$ -$ 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 -$ -$ -$


DEPRECIATION 64,242 64,242 - 100% demand

AMORTIZATION 668,135 668,135 - 100% demand

Total Depreciation & Amortization 732,377$ 732,377$ -$


2019 Test Year Power Supply Classification

page 1 of 3

79

Exhibit 3-B

2019





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 299 299 - 100% demand

UTILITIES AND LABOR DONATED - - - NA

Total Other Operating Expenses 299$ 299$ -$

Customer Accounts

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 -$ -$ -$


SALARIES/OFFICE & COMMISSION 193,519 57,567 135,952 total revenue requirement

TEMPORARY STAFFING - - - NA

OFFICE SUPPLIES & EXPENSE 22,480 6,687 15,793 total revenue requirement

LT & WATER CONSUMPTION/OFFICE 8,332 2,479 5,853 total revenue requirement

BANK CHARGES 638 190 448 total revenue requirement

LEGAL FEES 7,589 2,258 5,331 total revenue requirement

AUDITING FEES 4,737 1,409 3,328 total revenue requirement

INSURANCE 46,137 13,725 32,412 total revenue requirement

UTILITY SHARE DEF COMP 25,216 7,501 17,715 total revenue requirement

UTIL SH OF MEDICAL/DENTAL 202,468 60,230 142,238 total revenue requirement

UTILITY SHARE OF PERA 68,430 20,356 48,074 total revenue requirement

UTILITY SHARE OF FICA 64,394 19,156 45,238 total revenue requirement

EMPLOYEES SICK PAY 37,312 11,099 26,213 total revenue requirement

EMP HOLIDAY PAY 37,341 11,108 26,233 total revenue requirement

EMPLOYEE VACATION & PTO 62,959 18,729 44,230 total revenue requirement

UPMIC DISTRIBUTION 12,842 3,820 9,021 total revenue requirement

CONSULTING FEES 5,569 1,657 3,912 total revenue requirement

TELEPHONE 6,423 1,911 4,512 total revenue requirement

ADVERTISING 4,728 1,406 3,321 total revenue requirement

DUES & SUBSCRIPTIONS - FEES 27,614 8,215 19,399 total revenue requirement

TRAVEL EXPENSE - - - NA

SCHOOLS & MEETINGS 43,695 12,998 30,697 total revenue requirement

MTCE OF GENERAL PLANT & OFFICE 1,540 458 1,082 total revenue requirement

Total General & Administrative 883,961$ 262,958$ 621,003$

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 27,527,204$ 8,708,878$ 18,818,326$

page 2 of 3

80

Exhibit 3-B

2019





LFG PROJECT 1,102,835 844,860 257,975 per LFG

DISPERSED GENERATION CREDIT 4,800 4,800 - 100% demand

CONNECTION MAINTENANCE - - - NA

CUSTOMER PENALTIES - - - NA

SECURITY LIGHTS - - - NA

WIND DELIVERY - - - NA

TOTAL OTHER OPERATING REVENUES 1,107,635$ 849,660$ 257,975$


Interest income - - - NA

Miscellaneous revenue - - - NA

Interest expense and other (18,911) (5,626) (13,286) total revenue requirement

Gain (Loss) on sale of capital assets - - - NA

TOTAL NON-OPERATING INCOME (EXPENSES) (18,911)$ (5,626)$ (13,286)$

TRANSFER TO CITY -$ -$ -$ NA

MARGIN -$ -$ -$ NA

TOTAL REVENUE REQUIREMENT 26,438,480$ 7,864,844$ 18,573,636$

page 3 of 3

81

Exhibit 3-C

2019 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

LFG PURCHASED GAS - - - NA

LANDFILL GAS O&M - - - NA

LFG ADMIN - - - NA

LFG INSURANCE - - - NA

LFG MTCE - - - NA

Total Production -$ -$ -$

Transmission -$ -$ -$ NA

Distribution

REMOVE EXISTING SERV & METERS 2,080 - 2,080 100% Cust facilities

SCADA EXPENSES 39,704 29,696 10,008 Dist/Cust split

TRANSFORMER EX/OVERHD & UNDERG 10,794 - 10,794 100% Cust facilities

MTCE OF SIGNAL SYSTEMS 310 - 310 100% Cust facilities

METER EXP - REMOVE & RESET 6,388 - 6,388 100% Cust facilities

TEMP SERVICE-INSTALL & REMOVE 894 - 894 100% Cust facilities

MISC DISTRIBUTION EXPENSE 241,739 180,806 60,933 Dist/Cust split

INTERCONNECTION CARRYING CHARGE 4,832 4,832 - 100% Dist demand

MTCE OF STRUCTURES 5,036 5,036 - 100% Dist demand

MTCE OF SUBSTATIONS 25,431 25,431 - 100% Dist demand

MTCE OF SUBSTATION EQUIPMENT 26,181 26,181 - 100% Dist demand

MTCE OF OVERHD LINES/TREE TRIM 106,712 79,814 26,898 Dist/Cust split

MTCE OF OVERHD LINES/STANDBY 29,072 21,744 7,328 Dist/Cust split

MTCE OF OVERHEAD 125,153 93,607 31,546 Dist/Cust split

MTCE OF UNDERGROUND/DISTRIB 132,921 99,417 33,504 Dist/Cust split

LOCATE ELECTRIC LINES 90,191 - 90,191 100% Cust facilities

LOCATE FIBER LINES 373 - 373 100% Cust facilities

MTCE OF LINE TRANSFORMERS 42,184 - 42,184 100% Cust facilities

MTCE OF STREET LIGHTING 41,748 - 41,748 100% Cust facilities

MTCE OF SECURITY LIGHTING 8,431 - 8,431 100% Cust facilities

MTCE OF METERS 76,866 - 76,866 100% Cust facilities

VOLTAGE COMPLAINTS 9,087 - 9,087 100% Cust facilities

SALARIES/TRANS & DISTRIBUTION 39,247 29,354 9,893 Dist/Cust split

ELECTRIC MAPPING 91,744 68,619 23,125 Dist/Cust split

MTCE OF OVERHEAD SERVICE/2NDRY 16,540 - 16,540 100% Cust facilities

MTCE OF UNDERGROUND ELEC SERV 33,347 - 33,347 100% Cust facilities

LOCATE UNDERGROUND SECONDARY - - - NA

TRANSPORTATION EXPENSE 219,760 219,760 - 100% Dist demand

Total Distribution 1,426,765$ 884,297$ 542,468$


DEPRECIATION 2,120,582 1,586,067 534,516 Dist/Cust split

AMORTIZATION - - - NA

Total Depreciation & Amortization 2,120,582$ 1,586,067$ 534,516$


2019 Test Year Distribution Classification

page 1 of 3

82

Exhibit 3-C

2019 Customer





EV CHARGING EXPENSE - - - NA

LOSS ON DISPOSITION OF PROPERTY 17,049 12,752 4,297 Dist/Cust split

OTHER DONATIONS 2,856 2,136 720 Dist/Cust split

MUTUAL AID 29,577 29,577 - 100% Dist demand

INTEREST PD ON METER DEPOSIT - - - NA

RENTAL PROPERTY EXPENSE 9,880 9,880 - 100% Dist demand

UTILITIES AND LABOR DONATED 210,790 - 210,790 100% Cust facilities

Total Other Operating Expenses 270,152$ 54,344$ 215,807$

Customer Accounts

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 -$ -$ -$


SALARIES/OFFICE & COMMISSION 412,267 277,453 134,814 total revenue requirement

TEMPORARY STAFFING - - - NA

OFFICE SUPPLIES & EXPENSE 47,890 32,230 15,661 total revenue requirement

LT & WATER CONSUMPTION/OFFICE 17,750 11,946 5,804 total revenue requirement

BANK CHARGES 1,359 914 444 total revenue requirement

LEGAL FEES 16,167 10,881 5,287 total revenue requirement

AUDITING FEES 10,092 6,792 3,300 total revenue requirement

INSURANCE 98,289 66,148 32,141 total revenue requirement

UTILITY SHARE DEF COMP 53,719 36,153 17,567 total revenue requirement

UTIL SH OF MEDICAL/DENTAL 431,331 290,283 141,048 total revenue requirement

UTILITY SHARE OF PERA 145,782 98,110 47,672 total revenue requirement

UTILITY SHARE OF FICA 137,182 92,323 44,860 total revenue requirement

EMPLOYEES SICK PAY 79,488 53,495 25,993 total revenue requirement

EMP HOLIDAY PAY 79,550 53,537 26,013 total revenue requirement

EMPLOYEE VACATION & PTO 134,126 90,266 43,860 total revenue requirement

UPMIC DISTRIBUTION 27,357 18,411 8,946 total revenue requirement

CONSULTING FEES 11,863 7,984 3,879 total revenue requirement

TELEPHONE 13,683 9,208 4,474 total revenue requirement

ADVERTISING 10,071 6,778 3,293 total revenue requirement

DUES & SUBSCRIPTIONS - FEES 58,828 39,591 19,237 total revenue requirement

TRAVEL EXPENSE - - - NA

SCHOOLS & MEETINGS 93,086 62,646 30,440 total revenue requirement

MTCE OF GENERAL PLANT & OFFICE 3,281 2,208 1,073 total revenue requirement

Total General & Administrative 1,883,163$ 1,267,355$ 615,808$

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 5,700,662$ 3,792,063$ 1,908,599$

page 2 of 3

83

Exhibit 3-C

2019 Customer





LFG PROJECT - - - NA

DISPERSED GENERATION CREDIT - - - NA

CONNECTION MAINTENANCE - - - 100% Cust facilities

CUSTOMER PENALTIES - - - NA

SECURITY LIGHTS - - - NA

WIND DELIVERY 7,170 7,170 - 100% Dist demand

TOTAL OTHER OPERATING REVENUES 7,170$ 7,170$ -$




Interest expense and other (624,248) (466,899) (157,348) Dist/Cust split

Gain (Loss) on sale of capital assets - - - NA

TOTAL NON-OPERATING INCOME (EXPENSES) (624,248)$ (466,899)$ (157,348)$

TRANSFER TO CITY -$ -$ -$ NA

MARGIN -$ -$ -$ NA

TOTAL REVENUE REQUIREMENT 6,317,740$ 4,251,793$ 2,065,947$

page 3 of 3

84

Exhibit 3-D

2019

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

LFG PURCHASED GAS - - NA

LANDFILL GAS O&M - - NA

LFG ADMIN - - NA

LFG INSURANCE - - NA

LFG MTCE - - 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 -$ -$


2019 Test Year Customer Classification

page 1 of 3

85

Exhibit 3-D

2019





DEPRECIATION - - NA

AMORTIZATION - - NA

Total Depreciation & Amortization -$ -$


EV CHARGING EXPENSE 4,528 4,528 100% Customer

LOSS ON DISPOSITION OF PROPERTY - - NA

OTHER DONATIONS - - NA

MUTUAL AID - - NA

INTEREST PD ON METER DEPOSIT 22,754 22,754 100% Customer

RENTAL PROPERTY EXPENSE - - NA

UTILITIES AND LABOR DONATED - - NA

Total Other Operating Expenses 27,282$ 27,282$

Customer Accounts -

METER READING EXPENSE 27,298 27,298 100% Customer

COLLECTING EXP DISC/RECONNECT 14,521 14,521 100% Customer

MISC CUSTOMER ACCTS EXP-COMP 264,242 264,242 100% Customer

CUST BLGS NOT PD/SENT FOR COLL 11,873 11,873 100% Customer

Total Customer Accounts 317,934$ 317,934$


SALARIES/OFFICE & COMMISSION 77,251 77,251 100% Customer

TEMPORARY STAFFING - - NA

OFFICE SUPPLIES & EXPENSE 8,974 8,974 100% Customer

LT & WATER CONSUMPTION/OFFICE 3,326 3,326 100% Customer

BANK CHARGES 255 255 100% Customer

LEGAL FEES 3,029 3,029 100% Customer

AUDITING FEES 1,891 1,891 100% Customer

INSURANCE 18,417 18,417 100% Customer

UTILITY SHARE DEF COMP 10,066 10,066 100% Customer

UTIL SH OF MEDICAL/DENTAL 80,823 80,823 100% Customer

UTILITY SHARE OF PERA 27,317 27,317 100% Customer

UTILITY SHARE OF FICA 25,705 25,705 100% Customer

EMPLOYEES SICK PAY 14,895 14,895 100% Customer

EMP HOLIDAY PAY 14,906 14,906 100% Customer

EMPLOYEE VACATION & PTO 25,133 25,133 100% Customer

UPMIC DISTRIBUTION 5,126 5,126 100% Customer

CONSULTING FEES 2,223 2,223 100% Customer

TELEPHONE 2,564 2,564 100% Customer

ADVERTISING 1,887 1,887 100% Customer

DUES & SUBSCRIPTIONS - FEES 11,023 11,023 100% Customer

TRAVEL EXPENSE - - NA

SCHOOLS & MEETINGS 17,443 17,443 100% Customer

MTCE OF GENERAL PLANT & OFFICE 615 615 100% Customer

Total General & Administrative 352,868$ 352,868$

General Expense

CIP REBATES - RESIDENTIAL 35,640 35,640 100% Customer

CIP REBATES - COMMERCIAL 112,422 112,422 100% Customer

CIP - ADMINISTRATION 6,606 6,606 100% Customer

page 2 of 3

86

Exhibit 3-D

2019




CIP - MARKETING 17,229 17,229 100% Customer

CIP - LABOR 150,344 150,344 100% Customer

CIP REBATES - LOW INCOME 8,405 8,405 100% Customer

CIP - LOW INCOME LABOR 9,661 9,661 100% Customer

ENVIRONMENTAL COMPLIANCE 29,188 29,188 100% Customer

MISC GENERAL EXPENSE 614 614 100% Customer

Total General Expense 370,109$ 370,109$

TOTAL OPERATING EXPENSES 1,068,193$ 1,068,193$


LFG PROJECT - - NA

DISPERSED GENERATION CREDIT - - NA

CONNECTION MAINTENANCE - - NA

CUSTOMER PENALTIES - - 100% Customer

SECURITY LIGHTS - - NA

WIND DELIVERY - - NA

TOTAL OTHER OPERATING REVENUES -$ -$


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 1,068,193$ 1,068,193$

page 3 of 3

87

Exhibit 3-E

Commercial Commercial

Total Residential Non-demand Demand Industrial

Demand Allocation Factors

12 Coincident Peak (kW) 631,217 216,353 60,320 246,455 108,089

12 CP 100.0% 34.3% 9.6% 39.0% 17.1%

1 Coincident Peak (kW) 63,289 23,518 5,926 24,387 9,459

1 CP 100.0% 37.2% 9.4% 38.5% 14.9%

1 Non-coincident Peak (kW) 82,060 34,616 8,346 28,690 10,408

1 NCP 100.0% 42.2% 10.2% 35.0% 12.7%

Energy Allocation Factors

Retail Energy Req. (kWh) 325,232,320 96,153,850 26,797,714 118,410,356 83,870,400

RE 100.0% 29.6% 8.2% 36.4% 25.8%

Customers

Number of Customers 12,080 10,523 1,329 226 2

C 100.0% 87.1% 11.0% 1.9% 0.0%

Customer Facilities Allocation Factor

Weighted Number of Cust 21,299 10,523 1,994 6,782 2,000

CF 100.0% 49.4% 9.4% 31.8% 9.4%

Customer Service Allocation Factor

Weighted Number of Cust 13,667 10,523 1,994 1,130 20

CS 100.0% 77.0% 14.6% 8.3% 0.1%

Revenue Allocator

Sum Other Rev Reqs 33,824,413$ 11,823,653$ 3,063,594$ 12,065,832$ 6,871,333$

R 100.0% 35.0% 9.1% 35.7% 20.3%


2019 Test Year Allocation Factors

page 1 of 1

88

Exhibit 3-F

Commercial Commercial Allocation

Total Residential Non-demand Demand Industrial Factor

Power Supply

Demand 7,864,844 2,695,716 751,574 3,070,788 1,346,765 12 CP

Energy 18,573,636 5,491,234 1,530,386 6,762,277 4,789,740 RE

Total Power Supply 26,438,480$ 8,186,949$ 2,281,960$ 9,833,065$ 6,136,505$

Distribution

Demand 4,251,793 1,793,557 432,437 1,486,529 539,270 1 NCP

Customer Facilities 2,065,947 1,020,689 193,377 657,886 193,995 CF

Total Distribution 6,317,740$ 2,814,247$ 625,813$ 2,144,415$ 733,265$

Customer

Customer Service 1,068,193 822,457 155,820 88,353 1,563 CS

Total Customer Service 1,068,193$ 822,457$ 155,820$ 88,353$ 1,563$

Revenue Component

Other Operating Income (669,729) (234,110) (60,660) (238,905) (136,054) R

Non-Operating Income (725,599) (253,640) (65,720) (258,835) (147,403) R

Transfer to City 1,157,445 404,596 104,834 412,883 235,132 R

Margin 2,644,165 924,294 239,491 943,225 537,155 R

Total Revenue 2,406,282$ 841,139$ 217,945$ 858,368$ 488,829$

Total Revenue Requirements 36,230,694$ 12,664,792$ 3,281,539$ 12,924,200$ 7,360,162$

Total Revenues 36,230,694$ 13,112,952$ 3,445,080$ 12,647,421$ 7,025,242$

Percent Revenue Requirements 100.0% 35.0% 9.1% 35.7% 20.3%

Percent Revenues 100.0% 36.2% 9.5% 34.9% 19.4%

Percent Change 0.0% -3.4% -4.7% 2.2% 4.8%

Revenue Req/kWh 0.111 0.132 0.122 0.109 0.088

Revenue/kWh 0.111 0.136 0.129 0.107 0.084


2019 Test Year Allocation of Revenue Requirements

page 1 of 1

89

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 annual change in net position declines

from 2.8% of revenues in 2020 to negative 5.2% of revenues in 2024 assuming existing

rates are maintained through the Study Period (during 2015-2019 this averaged 6.4%).

It also shows that ERMU’s projected unrestricted cash reserves at current rates decline

from $14.9 million to $2.6 million over the Study Period. The analysis shows ERMU’s

reserve levels dropping below the current policy defined level by the end of 2023. In

order to strengthen ERMU’s financial position including continuing to meet its bond

covenant requirements, it is recommended that a series of rate increases be

implemented in the years 2021-2024. Rates were not increased in January of 2020 and

no additional increase is recommended during 2020. It is recommended that the rates

be raised 1.5% each year from 2021 to 2024 (resulting in an overall increase of 6.1% by

the end of the period) effective on January 1 each year. It is also important to

remember that overall electric rates were reduced 5% on January 1, 2019. Under the

recommended plan, the overall total change in electric rates from 2018 to 2024 would

be an increase of approximately 1%.

90

Section 4

- 16 -

Rate Design Adjustments

Specific rate recommendations for each class to become effective each year from 2021-

2024 are shown in Exhibit 4-A. Also shown on Exhibit 4-A are the rates that were in

effect in 2018. The 2018 rates are listed to provide context around the proposed rate

increases.

For residential and small commercial customers, the 1.5% annual increases have been

generally applied equally to all rate components. This results in all customers

experiencing the same percentage increase in bills, regardless of usage patterns.

For commercial demand and industrial customers, summer demand rates have not

been changed. A small increase in non-summer demand rates has been proposed.

More of the overall increase for these customers is concentrated in the energy charges.

The increases in the overall classes is the same as for residential and small commercial

customers, but different customers may experience increases more or less than the

average class increase based on individual usage patterns.

Projected Operating Results – Proposed Rates

Based on the assumptions outlined above, the resulting projected operating results with

the proposed rates are summarized in Table 4-1. Exhibit 4-B contains a more detailed

presentation of these results.

91

Proposed Rates

- 17 -

Table 4-1


Proposed Rates(1)

Year 2020 2021 2022 2023 2024



(35,480,019) (36,070,782) (37,020,347) (37,586,795) (38,141,864)

Plus Non -Operating Revenues (Expenses)

(79,079) (92,791) (679,534) (489,326) (456,653)

Less City Transfers (1,365,000) (1,384,535) (1,404,310) (1,424,908) (1,445,469)

Change in Net Position $1,066,189 $985,861 $(19,850) $156,612 $185,882


2.8% 2.6% -0.1% 0.4% 0.5%

(1) 1.5% rate increase each year from 2021-2024.

Cash Reserves – Proposed Rates

A summary of the impact of the projected operating results on ERMU’s unrestricted

cash reserves assuming the proposed rate adjustments is shown at the end of Exhibit

4-B and in Table 4-2 below. Assuming the recommended rate adjustments going

forward, the projected unrestricted cash balance at the end of the Study Period

increases by approximately $5.3 million as compared to the projections at existing rates

as contained in Section 2 of this report. However, the reserves still fall slightly below

the policy goal by the end of 2024.

92

Section 4

- 18 -

Table 4-2

Projected Unrestricted Cash Reserves

Proposed Rates(1)

Year 2020 2021 2022 2023 2024


Plus Change in Net Position 1,066,189 985,861 (19,850) 156,612 185,882


Plus Bond Proceeds - 11,250,000 - - -


Less Loss of Revenue Pmts (800,000) (800,000) (800,000) (800,000) (800,000)


Ending Balance $12,714,089 $11,273,484 $9,645,936 $8,915,657 $7,897,583

Reserve Goal $7,362,998 $8,212,108 $8,099,589 $8,136,525 $8,275,657

Reserves as % of Goal 173% 137% 119% 110% 95%

(1) 1.5% rate increase each year from 2021-2024.

Net Metering

Net metering is a billing mechanism where customers with distributed generation (like

rooftop solar) are credited for electricity they deliver back to the distribution system. For

example, if a residential customer has a solar system on the home's rooftop, it may

generate more electricity than the home uses during daylight hours. If the home is net-

metered, the utility pays the customer for the excess generation. The rate paid for the

excess generation varies by state and utility.

The State of Minnesota has a statute governing net metering. Prior to the 2015

legislative session, municipal utilities like ERMU, were required to pay the customer the

‘average retail utility energy rate’. In the statute, "Average retail utility energy rate"

means, for any class of utility customer, the quotient of the total annual class revenue

93

Proposed Rates

- 19 -

from sales of electricity minus the annual revenue resulting from fixed charges, divided

by the annual class kilowatt-hour sales. For ERMU’s residential customers, this would

mean reimbursing customers at the current average annual residential rate of 12.08

cents/kWh. The customer charge is not part of the calculation and is still paid by the

customer regardless of their net metering situation.

During the 2015 legislative session, the statute was revised to include the following

language: ‘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. The cost of service study must be made available for review by a

customer of the utility upon request.’ It is not clear how this may ultimately be

interpreted, it could mean:

• A higher customer charge to reflect more distribution fixed costs

• A different rate such as a retail demand charge structure

• A separate charge based on solar generating capacity

• Other potential interpretations

The table below summarizes calculations performed based on the unbundled cost-of-

service results for the residential class to calculate a cost-based solar access charge for

application to customers installing solar generating capacity at their customer location.

Based on data for the residential class, the average ERMU residential customer has an

average monthly peak demand of 4 kW. The solar access charge calculation is based

on allocated fixed local costs divided by the total residential class estimated annual

billing demands. Based on the calculation, it is estimated that the cost of the local

system for residential customers is $5.56/kW-month. It is proposed that the access fee

be applied to the kW capacity of a customer’s solar generation. One option would be to

apply the fee to all capacity in excess of the average residential monthly demand of 4

kW. For instance, if a customer installs a 6-kW solar facility under a net metering

94

Section 4

- 20 -

arrangement, they would be charged $5.56/kW for 2 kW (the amount in excess of 4 kW)

of the solar capacity equal to $11.12 per month. This charge would be in addition to the

regular bills calculated under ERMU’s regular rate in a net metering arrangement.

Solar Access Charge

2019 Residential Data

Item Rate

Allocated Distribution Costs $2,814,247

Estimated Demand Billing Units 506,521 kW-mo

Access Fee $5.56/kW-mo

95

Exhibit 4-A

Current Proposed Proposed Proposed Proposed 2018

Class Rate 2021 2022 2023 2024 Rates

Residential

Customer (per month) 13.50$ 13.70$ 13.90$ 14.10$ 14.30$ 13.50$

Summer Energy (per kWh) 0.1270$ 0.1291$ 0.1310$ 0.1330$ 0.1350$ 0.1370$

Non-summer Energy (per kWh) 0.1160$ 0.1175$ 0.1192$ 0.1210$ 0.1228$ 0.1215$

Off Peak Storage

Energy (per kWH) 0.0463$ 0.0470$ 0.0477$ 0.0484$ 0.0491$ 0.0463$

Off Peak Dual Fuel

Energy (per kWh) 0.0602$ 0.0611$ 0.0620$ 0.0630$ 0.0639$ 0.0602$

Ground Heat Pump

Energy (per kWh) 0.0909$ 0.0923$ 0.0936$ 0.0951$ 0.0965$ 0.0909$

Electric Vehicle Charging

Summer On -Peak (per kWh) 0.1270$ 0.1291$ 0.1310$ 0.1330$ 0.1350$ 0.1370$

Non-summer On-Peak (per kWh) 0.1160$ 0.1175$ 0.1192$ 0.1210$ 0.1228$ 0.1215$

Off -Peak (per kWh) 0.0602$ 0.0611$ 0.0620$ 0.0630$ 0.0639$ 0.0602$

Commercial Non-Demand


Summer Energy (per kWh) 0.1230$ 0.1249$ 0.1267$ 0.1286$ 0.1305$ 0.1314$

Non-summer Energy (per kWh) 0.1030$ 0.1045$ 0.1061$ 0.1077$ 0.1093$ 0.1095$

Commercial Demand


Energy (per kWh) 0.0651$ 0.0661$ 0.0673$ 0.0690$ 0.0707$ 0.0667$

Summer Demand (per kW) 15.50$ 15.50$ 15.50$ 15.50$ 15.50$ 17.00$

Non-summer Demand (per kW) 11.50$ 11.80$ 12.00$ 12.00$ 12.00$ 12.00$

Off-peak Demand (per kW) 6.25$ 7.00$ 7.50$ 7.50$ 7.50$ 6.50$

Industrial


Energy (per kWh) 0.0644$ 0.0654$ 0.0665$ 0.0678$ 0.0691$ 0.0667$

Summer Demand (per kW) 15.00$ 15.00$ 15.00$ 15.00$ 15.00$ 17.00$

Non-summer Demand (per kW) 11.00$ 11.30$ 11.50$ 11.50$ 11.50$ 12.00$

Security Lights (per month)

Standard Low Output 10.00$ 10.15$ 10.30$ 10.46$ 10.61$ 9.00

Standard Medium Output 16.00$ 16.24$ 16.48$ 16.73$ 16.98$ 15.00

Standard High Output 21.00$ 21.32$ 21.63$ 21.96$ 22.29$ 21.00

Standard Low Ouput w/ Decorative Pole 18.00$ 18.27$ 18.54$ 18.82$ 19.10$ n/a

Decorative Med Ouput w/ Decorative Pole 24.00$ 24.36$ 24.73$ 25.10$ 25.47$ n/a


Existing and Proposed Rates

page 1 of 1

96

Exhibit 4-B

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

OPERATING REVENUES


Security systems 251,488 177,572 - - - - - - - -

LFG project 1,075,148 1,087,749 1,084,589 1,128,793 1,102,835 1,166,742 1,166,742 1,166,742 1,166,742 1,166,742

Generation credit (805,579) (804,608) (814,341) (729,208) 4,800 4,800 4,800 4,800 4,800 4,800




OPERATING EXPENSES

Purchased Power 22,034,307$ 23,991,069$ 25,402,576$ 26,710,514$ 24,851,301$ 25,069,306$ 25,287,312$ 25,505,317$ 25,723,322$ 25,941,327$

Production 928,923 753,870 873,651 1,002,064 1,020,807 1,032,790 1,063,774 1,095,687 1,128,558 1,162,414

Transmission - - - - - 39,000 40,170 41,375 42,616 43,895

Distribution 1,402,046 1,287,940 1,511,612 1,658,167 1,525,827 1,702,533 1,753,609 1,806,217 1,860,404 1,916,216

Depreciation 1,922,359 2,005,093 2,046,935 2,297,349 2,856,258 3,030,678 3,182,035 3,685,551 3,799,110 3,894,243


General and administrative 2,752,443 3,254,354 3,090,285 3,090,611 3,772,150 4,149,748 4,274,240 4,402,468 4,534,542 4,670,578


OPERATING INCOME 2,655,568$ 2,637,797$ 2,726,353$ 3,578,499$ 3,539,547$ 2,510,268$ 2,463,186$ 2,063,994$ 2,070,846$ 2,088,004$


Interest income 95,533$ 90,804$ 79,543$ 330,110$ 159,014$ 100,000$ 100,000 100,000 100,000 100,000


Interest expense and other (116,676) (198,194) (294,219) (478,814) (643,159) (665,311) (630,871) (1,217,614) (1,027,406) (994,733)

Bond issuance costs - (85,195) - - - 48,152 - - - -

Sale of Security System - - - - - - - - - -

Gain (Loss) on sale of capital assets 8,899 (80,126) 15,152 (4,963) (2,050) - - - - -

Total Non-Operating Revenues (Expenses) 267,243$ 8,991$ 145,034$ 218,586$ 82,440$ (79,079)$ (92,791)$ (679,534)$ (489,326)$ (456,653)$

Income before Contributions and Transfers 2,922,811$ 2,646,788$ 2,871,387$ 3,797,085$ 3,621,987$ 2,431,189$ 2,370,395$ 1,384,460$ 1,581,520$ 1,631,351$

Grants -$ -$ 40,000$ -$ 10,000$

Contribution of Assets from City - - 169,051 - -

Contributions from Customers - - - 352,104 125,764

Transfers to Other City Funds (824,743) (1,089,287) (1,113,264) (1,188,664) (1,157,445) (1,365,000)$ (1,384,535)$ (1,404,310)$ (1,424,908)$ (1,445,469)$

Special Item - 330,923 - - -

CHANGE IN NET POSITION 2,098,068$ 1,888,424$ 1,967,174$ 2,960,525$ 2,600,306$ 1,066,189$ 985,861$ (19,850)$ 156,612$ 185,882$

As Percent of Revenues 6.4% 5.5% 5.4% 7.6% 6.8% 2.8% 2.6% -0.1% 0.4% 0.5%



Plus Change in Net Position 1,066,189 985,861 (19,850) 156,612 185,882


Plus New Debt - 11,250,000 - - -


Less Loss of Revenue Payments (800,000) (800,000) (800,000) (800,000) (800,000)


End of Year 14,881,922$ 12,714,089$ 11,273,484$ 9,645,936$ 8,915,657$ 7,897,583$

Reserve goal 7,362,998$ 8,212,108$ 8,099,589$ 8,136,525$ 8,275,657$

Percent of goal 173% 137% 119% 110% 95%

Projected


Electric Operating Results at Proposed Rates

Historical

page 1 of 1

97

WATER COST OF SERVICE AND RATE

DESIGN STUDY

Final Report

May 19, 2020

98

REPORT OUTLINE

Cover Letter

Section 1 - Introduction

Section 2 – Projected Operating Results – Existing Rates

Section 3 – Cost of Service

Section 4 – Proposed Rates

99

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

May 19, 2020

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.

At this time, I am not recommending any changes in the current retail water rates which have been in

place since the beginning of this year.

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

100

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Section 1

Introduction

The City of Elk River, MN owns a municipal utility providing service to

approximately 5,300 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

2019 utility operations (Test Year). It also includes projected operating results for

2020-2024 (Study Period). As a result of the analyses undertaken and reported

on herein, water rate recommendations have been developed for implementation

by ERMU.

101

- 2 -

Section 2


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 2019 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

are included as Charges for Services under Operating Revenues. The existing rates

102


- 3 -

utilized in this analysis will be implemented by ERMU effective for 2020. The 2020 rate

adjustment represented an overall 1.7% increase in retail water rates.

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.

103

Section 2

- 4 -


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 2020 2021 2022 2023 2024

Water capital $1,526,800 $1,985,000 $1,228,000 $1,307,000 $1,662,000

Debt Service

ERMU currently has outstanding water debt pursuant to a 2008 general obligation bond

issue and a 2010 bond issue related to the Elk River City Hall expansion. The 2008 issue

is scheduled to be paid in full in 2022 and the 2010 issue will be paid in 2023. It is

assumed the water utilities will participate with the electric utility in a new $13.59 million

bond issue in 2021 related to expansion of the ERMU field service facilities. The debt

payments associated with $1,359,000 of that issue have been allocated to the water

utility.


Based on the assumptions outlined above, the resulting projected operating results

assuming continued application of the existing retail rates are summarized below in Table

2-2. A summary presentation of the historical and projected operating results is also

shown in Exhibit 2-A.

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Table 2-2

Projected Operating Results-Water

Existing Rates

Fiscal Year 2020 2021 2022 2023 2024



(3,075,390) (3,182,069) (3,305,696) (3,405,814) (3,510,340)

Plus Non -Operating Revenue

269,356 179,293 121,150 145,188 146,987

Plus Fees and Transfers

223,370 198,370 198,370 198,370 198,370

Change in Net Position $(268,783) $(490,525) $(672,295) $(748,374) $(851,101)


-11.6% -21.2% -29.1% -32.3% -36.8%

Cash Reserves

A summary of the impact of the projected operating results on ERMU’s unrestricted cash

reserves for the Study Period is shown at the end of Exhibit 2-A and in Table 2-3 below.

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 $7.7 million to $3.9 million by the end of the Study Period. ERMU has a reserve

policy that sets a minimum target for reserves equal to 6 months operating expenses less

6 months depreciation expense plus the next year’s principal and interest expense. Even

though the overall reserves decrease during the Study Period, they are consistently

above 340% of the ERMU minimum goal.

105

Section 2

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Table 2-3

Projected Unrestricted Cash Reserves-Water

Existing Rates

Fiscal Year 2020 2021 2022 2023 2024


Plus Change in Net Position

(268,783) (490,525) (672,295) (748,374) (851,101)


Plus New Debt Proceeds

- 1,250,000 - - -

Less Capital Improvements

(1,526,800) (1,985,000) (1,228,000) (1,307,000) (1,662,000)

Less Debt Principal (271,000) (282,000) (303,500) (53,000) (29,000)

Ending Balance $6,841,641 $6,600,848 $5,729,952 $4,995,410 $3,870,708

Reserve Goal $1,228,605 $1,336,744 $1,091,551 $1,095,971 $1,126,451

Reserves as % of ERMU Goal

557% 494% 525% 456% 344%

106

Exhibit 2-A

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

OPERATING REVENUES





OPERATING EXPENSES

Production 465,181$ 493,385$ 500,390$ 537,719$ 516,444$ 587,124$ 604,738$ 622,880$ 641,567$ 660,814$

Distribution 168,132 149,744 154,675 232,576 223,547 295,727 304,599 313,737 323,149 332,844

Depreciation 1,131,110 1,148,310 1,191,894 1,193,745 1,147,149 1,215,839 1,266,732 1,332,899 1,373,832 1,417,399


General and administrative 582,385 607,137 896,340 622,275 719,929 908,838 936,103 964,186 993,112 1,022,905


OPERATING INCOME (211,758)$ (300,620)$ (479,744)$ (108,463)$ (366,781)$ (761,509)$ (868,188)$ (991,815)$ (1,091,933)$ (1,196,459)$


Interest income 24,666$ 24,917$ 31,314$ 25,334$ 38,097$ 39,000$ 39,000$ 39,000$ 39,000$ 39,000$


Interest expense and other (65,135) (57,986) (50,354) (41,865) (32,939) (26,618) (16,830) (75,576) (52,153) (50,981)

Gain (Loss) on sale of capital assets - 1,050 2,348 7,425 - - - - - -

Total Non-Operating Revenues (Expenses) 136,829$ 164,681$ 210,714$ 232,310$ 254,118$ 269,356$ 179,293$ 121,150$ 145,188$ 146,987$

Income before Contributions and Transfers (74,929)$ (135,939)$ (269,030)$ 123,847$ (112,663)$ (492,153)$ (688,895)$ (870,665)$ (946,744)$ (1,049,471)$

Developer and Connection Fees 253,934$ 358,684$ 799,223$ 716,810$ 428,662$ 200,000$ 200,000$ 200,000$ 200,000$ 200,000$

Contribution of Assets from City 189,669 73,002 - - - - - - - -

Transfers from Other City Funds 94,703 300,000 - - - 25,000 - - - -

Transfers to Other City Funds (30,000) - - - - (1,630) (1,630) (1,630) (1,630) (1,630)

CHANGE IN NET POSITION 433,377$ 595,747$ 530,193$ 840,657$ 315,999$ (268,783)$ (490,525)$ (672,295)$ (748,374)$ (851,101)$

As Percent of Revenues 19.7% 27.4% 22.8% 33.4% 13.7% -11.6% -21.2% -29.1% -32.3% -36.8%



Plus Change in Net Position (268,783) (490,525) (672,295) (748,374) (851,101)


Plus New Debt - 1,250,000 - - -


Less Debt Principal (271,000) (282,000) (303,500) (53,000) (29,000)

End of Year 7,692,385$ 6,841,641$ 6,600,848$ 5,729,952$ 4,995,410$ 3,870,708$

Reserve goal 1,228,605$ 1,336,744$ 1,091,551$ 1,095,971$ 1,126,451$

Percent of goal 557% 494% 525% 456% 344%

Projected


Water Operating Results at Existing Rates

Historical

page 1 of 1

107

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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 2019 ‘Test Year’ based on actual 2019

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.

108

Section 3

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Table 3-1 below summarizes the functional water costs for the 2019 Test Year.

The detailed cost functions are shown in Exhibit 3-A.

Table 3-1

Functional Water Costs

2019 Test Year

Component

Revenue

Requirement

Plant $1,122,360

Distribution 1,029,888

Customer 96,429

Revenue (11,508)

Total $2,237,169

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.

109

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

110

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

2019 Test Year



Revenues

Residential $1,207,117 $1,232,230

Commercial/Industrial 1,030,052 1,004,939

Total $2,237,169 $2,237,169

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

111

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

2019 Test Year



Revenues Increase/

(Decrease)

Residential 54.0% 55.1% -2.0%

Commercial/Industrial 46.0% 44.9% 2.5%

Total 100.0% 100.0% 0.0%

112

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.

Water Access Charge

ERMU currently charges a Water Access Charge (WAC) for new customers. The

WAC is a combination of the Water Connection Charge and the Water Availability

Charge. The current WAC is $3,764 per WAC unit. A single WAC unit is

equivalent to a single residential customer. Water systems require significant

capital investment, that investment includes excess capacity in anticipation of new

customers. The concept of the WAC is for new customers to buy into the existing

system.

ERMU has 4,647 residential customers and 609 commercial/industrial customers.

The average flow per commercial/industrial customer is 8.3 times as much as the

average residential customer flow. Utilizing a WAC weighting of 8 for

113

Cost-of-Service

- 13 -

commercial/industrial customers yields an equivalent WAC unit count of 4,872

(609 times 8). The total WAC unit count for ERMU is 9,519 (4,647 residential plus

4,872 equivalent commercial/industrial units). As of 12/31/2019 ERMU has a total

capital cost investment in the water system of $37,982,117. Dividing the

investment by the equivalent units yields $3,990 per unit ($37,982,117 divided by

9,519). This compares to the current WAC fee of $3,764.

114

Exhibit 3-A

2019

REVENUE REQUIREMENT TEST YEAR Plant Distribution Customer Revenue Functionalization Basis

OPERATING EXPENSES

PRODUCTION EXPENSE

Maintenance of Structures 57,354 57,354 - - - 100% plant

TOTAL PRODUCTION EXPENSE 57,354 57,354 - - -

PUMPING EXPENSE

Supervision 49,455 49,455 - - - 100% plant

Electric & Gas Utilities 218,681 218,681 - - - 100% plant

Sampling 13,681 13,681 - - - 100% plant

Chemical Feed 18,435 18,435 - - - 100% plant

Maintenance of Electric Pumping - - - - - NA

Maintenance of Wells 144,649 144,649 - - - 100% plant

SCADA - Pumping 3,767 3,767 - - - 100% plant

TOTAL PUMPING EXPENSE 448,668 448,668 - - -

DISTRIBUTION EXPENSE

Maintenance of Water Mains 69,733 - 69,733 - - 100% distribution

Locate Water Lines 15,704 - 15,704 - - 100% distribution

Locate Water Main - - - - - NA

Water Meter Service 41,578 - 41,578 - - 100% distribution

Maintenance of Customers Service 22,143 - 22,143 - - 100% distribution

Water Mapping 12,404 - 12,404 - - 100% distribution

Maintenance of Water Hydrants - PU 18,159 - 18,159 - - 100% distribution

Maintenance of Water Hydrants - PR 2,897 - 2,897 - - 100% distribution

Water Clothing/PPE 7,823 - 7,823 - - 100% distribution

Wages/Water 6,121 - 6,121 - - 100% distribution

Transportation Expense 11,073 - 11,073 - - 100% distribution

General Expense/Water Permit 13,733 - 13,733 - - 100% distribution

TOTAL DISTRIBUTION EXPENSE 221,368 - 221,368 - -

DEPRECIATION & AMORTIZATION

Depreciation 1,146,324 311,930 834,394 - - fixed assets

TOTAL DEPRECIATION 1,146,324 311,930 834,394 - -

OTHER OPERATING EXPENSE

Dam Maintenance Expense 1,442 1,442 - - - 100% plant

Pension Expense - - - - - NA

OPEB Expense - - - - - NA

Interest Paid on Meter Deposit 730 - - 730 - 100% customer

Rental Property Expense 2,544 1,071 1,380 93 - total operating expenses

TOTAL OTHER OPERATING EXPENSE 4,716 2,513 1,380 823 -

CONSUMER ACCOUNTS EXPENSE

Meter Reading Expense 1,334 - - 1,334 - 100% customer

Miscellaneous Customer Accounts Expense 60,461 - - 60,461 - 100% customer

Cust Billings Not Paid - - - - - NA

TOTAL CONSUMER ACCOUNTS EXPENSE 61,795 - - 61,795 -

ADMINISTRATIVE EXPENSE

Salaries Office & Commission 193,488 81,466 104,966 7,056 - total operating expenses

Temporary Staffing - - - - - total operating expenses

Office Supplies & Expense 16,858 7,098 9,145 615 - total operating expenses

LT & Water Consumption 7,355 3,097 3,990 268 - total operating expenses

Bank Charges 542 228 294 20 - total operating expenses

Legal Fees 6,264 2,637 3,398 228 - total operating expenses

Auditing Fees 4,180 1,760 2,268 152 - total operating expenses

Insurance 23,391 9,849 12,690 853 - total operating expenses

Deferred Comp 14,612 6,152 7,927 533 - total operating expenses

Medical/Dental 174,917 73,647 94,892 6,378 - total operating expenses


Functionalization of 2019 Test Year Water Revenue Requirements

page 1 of 2

115

Exhibit 3-A

2019

REVENUE REQUIREMENT TEST YEAR Plant Distribution Customer Revenue Functionalization Basis


Functionalization of 2019 Test Year Water Revenue Requirements

PERA 41,109 17,309 22,301 1,499 - total operating expenses

FICA 38,523 16,220 20,899 1,405 - total operating expenses

Sick Pay 26,370 11,103 14,306 962 - total operating expenses

Holiday Pay 22,245 9,366 12,068 811 - total operating expenses

Vacation & PTO 35,614 14,995 19,320 1,299 - total operating expenses

UPMIC Distribution 6,648 2,799 3,607 242 - total operating expenses

Mescellaneous - Wellhead - - - - - NA

Consulting Fees 4,662 1,963 2,529 170 - total operating expenses

Telephone 5,528 2,328 2,999 202 - total operating expenses

Advertising 6,575 2,768 3,567 240 - total operating expenses

Dues & Subscriptions 43,975 18,515 23,856 1,604 - total operating expenses

Travel Expense - - - - - NA

Schools & Meetings 19,354 8,149 10,499 706 - total operating expenses

Maintenance of General Plant & Office 1,356 571 736 49 - total operating expenses

TOTAL ADMINISTRATIVE EXPENSE 693,566 292,019 376,256 25,291 -

GENERAL EXPENSE

CIP Rebates - Residential 4,005 - - 4,005 - 100% customer

CIP Rebates - Commercial - - - - - NA

CIP - Administration - - - - - NA

CIP - Marketing 210 - - 210 - 100% customer

CIP - Labor 4,226 - - 4,226 - 100% customer

Environmental Compliance 934 393 507 34 - total operating expenses

Misc General Expense 1,234 520 669 45 - total operating expenses

TOTAL GENERAL EXPENSE 10,609 913 1,176 8,520 -

TOTAL OPERATING EXPENSE 2,644,400 - 1,113,397 1,434,575 96,429 -

NON-OPERATING REVENUES (EXPENSES)

Interest income 38,097 - - - 38,097 100% revenue

Miscellaneous revenue 248,960 - - - 248,960 100% revenue

Interest expense and other (32,939) (8,963) (23,976) - - fixed assets

TOTAL NON-OPERATING REV (EXP) 254,118 (8,963) (23,976) - 287,057

OTHER OPERATING REVENUE

Connection maintenance 50,583 - - - 50,583 100% revenue

Customer penalties 17,865 - - - 17,865 100% revenue

TOTAL OTHER OPERATING REVENUE 68,448 - - - 68,448

Developer and Connection Fees 428,662 - 428,662 - - 100% distribution

MARGIN 343,997 - - - 343,997 100% revenue

TOTAL REVENUE REQUIREMENT 2,237,169 1,122,360 1,029,888 96,429 (11,508)

page 2 of 2

116

Exhibit 3-B

FY 2019

REVENUE REQUIREMENT TEST YEAR Demand Commodity Classification Basis

OPERATING EXPENSES

PRODUCTION EXPENSE

Maintenance of Structures 57,354 57,354 - 100% demand

TOTAL PRODUCTION EXPENSE 57,354 57,354 -

PUMPING EXPENSE

Supervision 49,455 33,146 16,309 operating expenses

Electric & Gas Utilities 218,681 - 218,681 100% commodity

Sampling 13,681 - 13,681 100% commodity

Chemical Feed 18,435 - 18,435 100% commodity

Maintenance of Electric Pumping - - - NA

Maintenance of Wells 144,649 144,649 - 100% demand

SCADA - Pumping 3,767 - 3,767 100% commodity

TOTAL PUMPING EXPENSE 448,668 177,795 270,873


Maintenance of Water Mains - - - NA

Locate Water Lines - - - NA

Locate Water Main - - - NA

Water Meter Service - - - 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 311,930 311,930 - 100% demand

TOTAL DEPRECIATION 311,930 311,930 -


Dam Maintenance Expense 1,442 1,442 - 100% demand

Pension Expense - - - NA

OPEB Expense - - - NA

Interest Paid on Meter Deposit - - - NA

Rental Property Expense 1,071 1,071 - 100% demand

TOTAL OTHER OPERATING EXPENSE 2,513 2,513 -


Meter Reading Expense - - - NA

Miscellaneous Customer Accounts Expense - - - NA

Cust Billings Not Paid - - - NA

TOTAL CONSUMER ACCOUNTS EXPENSE - - -


Salaries Office & Commission 81,466 54,600 26,866 operating expenses

Temporary Staffing - - - NA

Office Supplies & Expense 7,098 4,757 2,341 operating expenses


2019 Test Year Water Plant Classification

page 1 of 2

117

Exhibit 3-B

FY 2019

REVENUE REQUIREMENT TEST YEAR Demand Commodity Classification Basis


2019 Test Year Water Plant Classification

LT & Water Consumption 3,097 2,076 1,021 operating expenses

Bank Charges 228 153 75 operating expenses

Legal Fees 2,637 1,768 870 operating expenses

Auditing Fees 1,760 1,180 580 operating expenses

Insurance 9,849 6,601 3,248 operating expenses

Deferred Comp 6,152 4,123 2,029 operating expenses

Medical/Dental 73,647 49,360 24,287 operating expenses

PERA 17,309 11,601 5,708 operating expenses

FICA 16,220 10,871 5,349 operating expenses

Sick Pay 11,103 7,441 3,661 operating expenses

Holiday Pay 9,366 6,277 3,089 operating expenses

Vacation & PTO 14,995 10,050 4,945 operating expenses

UPMIC Distribution 2,799 1,876 923 operating expenses

Mescellaneous - Wellhead - - - NA

Consulting Fees 1,963 1,316 647 operating expenses

Telephone 2,328 1,560 768 operating expenses

Advertising 2,768 1,855 913 operating expenses

Dues & Subscriptions 18,515 12,409 6,106 operating expenses

Travel Expense - - - NA

Schools & Meetings 8,149 5,461 2,687 operating expenses

Maintenance of General Plant & Office 571 383 188 operating expenses

TOTAL ADMINISTRATIVE EXPENSE 292,019 195,717 96,302

GENERAL EXPENSE

CIP Rebates - Residential - - - NA

CIP Rebates - Commercial - - - NA

CIP - Administration - - - NA

CIP - Marketing - - - NA

CIP - Labor - - - NA

Environmental Compliance 393 393 - 100% demand

Misc General Expense 520 520 - 100% demand

TOTAL GENERAL EXPENSE 913 913 -

TOTAL OPERATING EXPENSE 1,113,397 746,222 367,175




Interest expense and other (8,963) (8,963) - 100% demand

TOTAL NON-OPERATING REV (EXP) (8,963) (8,963) -


Connection maintenance - - - NA

Customer penalties - - - NA

TOTAL OTHER OPERATING REVENUE - - -

Developer and Connection Fees - - - NA

MARGIN - - - NA

TOTAL REVENUE REQUIREMENT 1,122,360 755,185 367,175

page 2 of 2

118

Exhibit 3-C

FY 2019 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 - - -


Maintenance of Water Mains 69,733 69,733 - 100% Dist demand

Locate Water Lines 15,704 15,704 - 100% Dist demand

Locate Water Main - - - NA

Water Meter Service 41,578 - 41,578 100% Cust facilities

Maintenance of Customers Service 22,143 - 22,143 100% Cust facilities

Water Mapping 12,404 - 12,404 100% Cust facilities

Maintenance of Water Hydrants - PU 18,159 - 18,159 100% Cust facilities

Maintenance of Water Hydrants - PR 2,897 - 2,897 100% Cust facilities

Water Clothing/PPE 7,823 4,956 2,867 Operating Expense

Wages/Water 6,121 3,877 2,244 Operating Expense

Transportation Expense 11,073 7,014 4,059 Operating Expense

General Expense/Water Permit 13,733 8,699 5,034 Operating Expense

TOTAL DISTRIBUTION EXPENSE 221,368 109,984 111,384


Depreciation 834,394 558,799 275,595 plant

TOTAL DEPRECIATION 834,394 558,799 275,595


Dam Maintenance Expense - - - NA

Pension Expense - - - NA

OPEB Expense - - - NA

Interest Paid on Meter Deposit - - - NA

Rental Property Expense 1,380 874 506 Operating Expense

TOTAL OTHER OPERATING EXPENSE 1,380 874 506


Meter Reading Expense - - - NA

Miscellaneous Customer Accounts Expense - - - NA

Cust Billings Not Paid - - - NA

TOTAL CONSUMER ACCOUNTS EXPENSE - - -


Salaries Office & Commission 104,966 66,492 38,474 Operating Expense

Temporary Staffing - - - NA

Office Supplies & Expense 9,145 5,793 3,352 Operating Expense


2019 Test Year Water Distribution Classification

page 1 of 2

119

Exhibit 3-C

FY 2019 Distribution Customer

REVENUE REQUIREMENT TEST YEAR Demand Facilities Classification Basis


2019 Test Year Water Distribution Classification

LT & Water Consumption 3,990 2,528 1,463 Operating Expense

Bank Charges 294 186 108 Operating Expense

Legal Fees 3,398 2,153 1,246 Operating Expense

Auditing Fees 2,268 1,436 831 Operating Expense

Insurance 12,690 8,038 4,651 Operating Expense

Deferred Comp 7,927 5,021 2,906 Operating Expense

Medical/Dental 94,892 60,110 34,782 Operating Expense

PERA 22,301 14,127 8,174 Operating Expense

FICA 20,899 13,238 7,660 Operating Expense

Sick Pay 14,306 9,062 5,244 Operating Expense

Holiday Pay 12,068 7,644 4,423 Operating Expense

Vacation & PTO 19,320 12,239 7,082 Operating Expense

UPMIC Distribution 3,607 2,285 1,322 Operating Expense

Mescellaneous - Wellhead - - - NA

Consulting Fees 2,529 1,602 927 Operating Expense

Telephone 2,999 1,900 1,099 Operating Expense

Advertising 3,567 2,259 1,307 Operating Expense

Dues & Subscriptions 23,856 15,112 8,744 Operating Expense

Travel Expense - - - NA

Schools & Meetings 10,499 6,651 3,848 Operating Expense

Maintenance of General Plant & Office 736 466 270 Operating Expense

TOTAL ADMINISTRATIVE EXPENSE 376,256 238,343 137,913

GENERAL EXPENSE

CIP Rebates - Residential - - - NA

CIP Rebates - Commercial - - - NA

CIP - Administration - - - NA

CIP - Marketing - - - NA

CIP - Labor - - - NA

Environmental Compliance 507 321 186 Operating Expense

Misc General Expense 669 424 245 Operating Expense

TOTAL GENERAL EXPENSE 1,176 745 431

TOTAL OPERATING EXPENSE 1,434,575 908,745 525,829




Interest expense and other (23,976) (16,057) (7,919) plant

TOTAL NON-OPERATING REV (EXP) (23,976) (16,057) (7,919)


Connection maintenance - - - NA

Customer penalties - - - NA

TOTAL OTHER OPERATING REVENUE - - -

Developer and Connection Fees 428,662 287,078 141,584 plant

MARGIN - - - NA

TOTAL REVENUE REQUIREMENT 1,029,888 637,724 392,164

page 2 of 2

120

Exhibit 3-D

FY 2019

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 - -


Maintenance of Water Mains - - NA

Locate Water Lines - - NA

Locate Water Main - - NA

Water Meter Service - - 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 - - NA

TOTAL DEPRECIATION - -


Dam Maintenance Expense - - NA

Pension Expense - - NA

OPEB Expense - - NA

Interest Paid on Meter Deposit 730 730 100% Customer

Rental Property Expense 93 93 100% Customer

TOTAL OTHER OPERATING EXPENSE 823 823


Meter Reading Expense 1,334 1,334 100% Customer

Miscellaneous Customer Accounts Expense 60,461 60,461 100% Customer

Cust Billings Not Paid - - NA

TOTAL CONSUMER ACCOUNTS EXPENSE 61,795 61,795


Salaries Office & Commission 7,056 7,056 100% Customer

Temporary Staffing - - NA

Office Supplies & Expense 615 615 100% Customer


2019 Test Year Water Customer Classification

page 1 of 2

121

Exhibit 3-D

FY 2019

REVENUE REQUIREMENT TEST YEAR Customer Classification Basis


2019 Test Year Water Customer Classification

LT & Water Consumption 268 268 100% Customer

Bank Charges 20 20 100% Customer

Legal Fees 228 228 100% Customer

Auditing Fees 152 152 100% Customer

Insurance 853 853 100% Customer

Deferred Comp 533 533 100% Customer

Medical/Dental 6,378 6,378 100% Customer

PERA 1,499 1,499 100% Customer

FICA 1,405 1,405 100% Customer

Sick Pay 962 962 100% Customer

Holiday Pay 811 811 100% Customer

Vacation & PTO 1,299 1,299 100% Customer

UPMIC Distribution 242 242 100% Customer

Mescellaneous - Wellhead - - NA

Consulting Fees 170 170 100% Customer

Telephone 202 202 100% Customer

Advertising 240 240 100% Customer

Dues & Subscriptions 1,604 1,604 100% Customer

Travel Expense - - NA

Schools & Meetings 706 706 100% Customer

Maintenance of General Plant & Office 49 49 100% Customer

TOTAL ADMINISTRATIVE EXPENSE 25,291 25,291

GENERAL EXPENSE

CIP Rebates - Residential 4,005 4,005 100% Customer

CIP Rebates - Commercial - - NA

CIP - Administration - - NA

CIP - Marketing 210 210 100% Customer

CIP - Labor 4,226 4,226 100% Customer

Environmental Compliance 34 34 100% Customer

Misc General Expense 45 45 100% Customer

TOTAL GENERAL EXPENSE 8,520 8,520

TOTAL OPERATING EXPENSE 96,429 96,429


Interest income - - NA

Miscellaneous revenue - - NA

Interest expense and other - - NA

TOTAL NON-OPERATING REV (EXP) - -


Connection maintenance - - NA

Customer penalties - - NA

TOTAL OTHER OPERATING REVENUE - -

Developer and Connection Fees - - NA

MARGIN - - NA

TOTAL REVENUE REQUIREMENT 96,429 96,429

page 2 of 2

122

Exhibit 3-E

Commercial/

Total Residential Industrial

Demand Allocation Factors

Peak Day - 1000 gallons 4,426 2,380 2,046

Peak Day 100.0% 53.8% 46.2%

Commodity Allocation Factors

Commodity Sales - 1000 gallons 658,636 314,812 343,824

Commodity 100.0% 47.8% 52.2%

Customers

Number of Customers 5,256 4,647 609

C 100.0% 88.4% 11.6%

Customer Facilities Allocation Factor

Customer Facilities Weight 1 6

Weighted Number of Cust 8,301 4,647 3,654

CF 100.0% 56.0% 44.0%

Customer Service Allocation Factor

Customer Service Weight 1 3

Weighted Number of Cust 6,474 4,647 1,827

CS 100.0% 71.8% 28.2%

Revenue Allocator

Sum Other Rev Reqs 2,248,677$ 1,213,327$ 1,035,350$

R 100.0% 54.0% 46.0%


2019 Test Year Allocation Factors

page 1 of 1

123

Exhibit 3-F

Commercial/ Allocation

Total Residential Industrial Factor

Plant

Demand 755,185 406,119 349,065 Peak Day

Commodity 367,175 175,501 191,674 Commodity

Total Plant 1,122,360$ 581,620$ 540,740$

Distribution

Distribution Demand 637,724 342,952 294,772 Peak Day

Customer Facilities 392,164 219,538 172,626 CF

Total Distribution 1,029,888$ 562,490$ 467,398$

Customer

Customer Service 96,429 69,216 27,213 CS

Total Customer Service 96,429$ 69,216$ 27,213$

Revenue Component

Other Revenue (355,505) (191,821) (163,684) R

Margin 343,997 185,612 158,385 R

Total Revenue (11,508)$ (6,209)$ (5,298)$

Total Revenue Requirements 2,237,169$ 1,207,117$ 1,030,052$

Total Revenues 2,237,169$ 1,232,230$ 1,004,939$

Percent Revenue Requirements 100.0% 54.0% 46.0%

Percent Revenues 100.0% 55.1% 44.9%

Percent Change 0.0% -2.0% 2.5%

Revenue Req/1000 gallons 3.397 3.834 2.996

Revenue/1000 gallons 3.397 3.914 2.923


2019 Test Year Allocation of Revenue Requirements

page 1 of 1

124

- 14 -

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. ERMU recently raised retail water rates effective

in 2020. In Section 2 of this report, Table 2-2 shows that the annual change in net position

for the water utility ranges from minus 11.6% to minus 36.8% of revenues during the

Study Period. Despite the annual operating results, Table 2-3 shows that the estimated

cash reserves fall from $7.7 million to $3.9 million, but the reserve levels remain well

above the ERMU goal for minimum reserves. The cost-of-service results summarized in

Section 3 of this report do not indicate that any changes to rates are necessary to address

class cost issues. The cost-of-service results are within a reasonable range relative to

comparison of revenues and allocated costs by class. Ultimately, the level of capital

improvements and debt will have an impact on resulting levels of reserves. ERMU should

monitor operating results and reserves on an on-going basis to determine when additional

water revenues through a general rate increase are warranted.

125

______________________________________________________________________________

Page 1 of 1

UTILITIES COMMISSION MEETING

TO: ERMU Commission

FROM: ERMU GM Search Committee



SUBJECT: Leadership Transition – Search Committee Update

ACTION REQUESTED: Receive the ERMU General Manager Job Description

BACKGROUND/DISCUSSION: With the recent resignation of the General Manager, the commission has appointed a search committee to work with a search consultant, Debra Englund, CEO HRExpertiseBP. Following last month’s commission meeting, the General Manager job description was finalized. The job description is attached and should be formally received by the commission. Also attached for reference is the general manager selection process dashboard, and a list of the desired qualities in the new General Manager. Debra will provide a verbal update at the commission meeting on the status of the search process and any other pertinent information. The proposed pay range for the position will also be discussed. ATTACHMENTS:

• ERMU General Manager Job Description

• General Manager Selection Process ERMU

• Qualities in the New General Manager ERMU

126

Page 1

General Manager Position Description

Department: N/A

Immediate Supervisor: Elk River Municipal Utilities Commission

Pay Group: Management Pay Grade: N/A

FLSA Status: Exempt

Last Updated: 5/11/2020

Direct Reports: Operations Director, Administrations Director, Engineering Manager, Executive Administrative Manager, Human Resources Manager

Position Summary General Manager of the utilities reporting to the Utilities Commission and accountable for producing the desired results for the intended recipients through acceptable means. As directed by commission policy, oversee all operational and personnel aspects of the organization. Lead a collaborative work environment and leadership team in the strategic planning and implementation of initiatives to achieve results aligned with the organizational mission, vision, and values. Participate in and manage government relations and advocacy activities. Closely work with the city on opportunities and alignment of goals. Serve as external public relations representative. Provide leadership within the organization and community with the highest degree of integrity.

Essential Functions 1. Responsible to the commission; responsible for performance of organization and all

employees. Implement policy and produce results through an acceptable manner. Providecommission with accurate and timely information regarding the utility and industry;advise during decisions and policy development.A. Implement policy and carry out direction from commission.B. Assist the commission in development of policies.C. Participate in commission created committees and workgroups to research issues,

analyze data, and provide focused information for commission decisions.D. Report information needed by commission to govern organization effectively.E. Advise on relevant issues and provide timely legislative and regulatory updates.F. Proactively communicate on potential issues, advise on options for mitigation of

risks, and generally keep commission informed on industry best practices.G. Responsible for all personnel, resources, facilities, and equipment.H. Serve as information officer and spokesperson; publicly represent organization.

2. Ensure successful implementation and communication of organizational goals aligningresources with the organizational mission, vision, values, and fundamentals:A. Oversee leadership team’s execution of commission policies, management

policies, procedures, and legal and regulatory requirements.B. Communicate and support organizational positions and goals with employees.

127

General Manager Page 2 5/11/2020

C. Lead strategic planning and the organization’s alignment with adopted mission, vision, values, and fundamentals.

D. Drive implementation and management of strategic initiatives and projects approved through strategic planning and budgeting process.

E. Oversee scheduled labor and resources for assigned initiatives within the strategic plan to ensure critical and organizational wide initiatives are given priority and are successful.

F. Manage relationship and actively participate in governance of power agency. G. Communicate and coordinate with the city to promote growth and collaborate in

planning financially and structurally for future development.

3. Through a collaborative work environment, lead organization with ongoing development of leadership team: A. Clearly communicate expectations, provide feedback, and hold accountable. B. Perform employee performance evaluations, coaching, and development. C. Delegate and coordinate projects, preparation of information, and data analysis. D. Develop leadership team through collaborative work environment allowing

participation organization strategic planning and policy development.

4. Responsible for oversight of utility operations. Provide leadership for Operations Director. Manages technical aspects of all operations and resources: A. Oversee all aspects of electric distribution, electric generation, water production,

water distribution, and metering ensuring safety and reliability of services. B. Drives organization’s safety culture and industry training. Lead by example. C. Manage equipment specification and procurement objectives. D. Lead system planning and forecasting. Develop short and long-term capital plans. E. Promote environmental responsibility through policy and practice.

5. Responsible for the oversight and management of the Engineering function along with the information and operations technology plan and activities, including cyber security. Provide direction and leadership to the Engineering Manager. A. Oversee all aspects of the engineering function to ensure that engineering work is

sufficient and appropriate to provide the best service and safety throughout our systems.

B. Ensures information, cyber, and physical security policies are strong, effective, and adhered to for the protection of the utility’s information and assets.

6. Responsible for the oversight and management of the communications plan and activities,

including Commission support and social media, by providing direction and leadership to the Executive Administrative Manager.

7. Responsible for organization’s financial health and stability. Provide leadership for

Administrations Director. Act as steward for community owned assets in a fiscal responsible manner: A. Oversee all aspects of the organization’s administrative functions. B. Responsible for billing, customer account, and accounting processes. C. Lead the development of annual business plan, budgets, rates, reports, and key

performance indicators. D. Objectively review forecasting, methodologies, and process employed.

128

General Manager Page 3 5/11/2020

This Position Description is not intended to be all-inclusive. It is within Elk River Municipal Utilities’ discretion to assign additional duties and responsibilities or remove duties and responsibilities at any time.

This Position Description does not constitute a Contract of Employment.

Required Skills and Abilities Strong written and verbal communication skills. Comprehend goals, implement action plans, and produce desired results. Confidentially manage sensitive information. Demonstrate and promote professional behavior consistent with organizational values. Professionally, courteously, and efficiently interact with others. Effectively evaluate and resolve issues. Lead a collaborative team environment. Effectively manage multiple projects and meet deadlines. Make decisions within policy and position parameters. Exercise initiative, discretion, and independent judgement. Efficiently use technology, software, and office equipment. Perform all required physical work which may include sitting, standing, stooping, kneeling,

crouching, walking, crawling, and climbing. Minimum Qualifications

Bachelor’s degree in Engineering, Finance, Business or Public Administration, a closely related degree, or equivalent experience.

Technical and operational knowledge of electric and water distribution. Administration and financial accounting knowledge. Minimum of 10 years of related utility experience. Minimum of 5 years progressive supervisory experience.

Preferred Qualifications

Municipal utility experience. Professional certification in area of discipline.

129

GM Selection Process ERMU

HRExpertiseBP Updated 6-2-2020

Milestone Sub-Date Description Resources Status

Month Day Organizational Effectiveness Survey Debra GM

✓Completed

May 12

Strategic Initiatives Defined Role Definition Candidate Qualifications Defined Performance Measurement Defined

Debra Commission

✓ ✓ ✓ ✓

May 13 Post the position with deadline Resumes directly to HRExpertiseBP

Debra ✓ ✓

May/June 5/18-6/30 Resume submittal and review Debra Selection Committee

July 6-15 Phone Screens begin Debra

July 14 Commission Meeting

July 20-24 Selection of Candidates to interview Debra Selection Committee

July/August 7/27-8/7

Interview Training Full Commission interview of final candidate Selection of final Candidate Approval of the offer range from the Commission

Commission Debra

August 11 Commission Meeting Commission

August 7-14 Initial Offer crafted Offer negotiated Offer Acceptance received

Selection Committee Debra

August 17-19 Background Check Pre-Employment Physical Mandatory Drug Screen

TBD/Debra

September TBD Last date to announce Press Releases

Debra TBD

October TBD Onboarding Debra Commission Chair

October 1st Employment Begins Support from outgoing GM

Commission Chair Outgoing GM

October 1st New GM working on strategic initiatives GM Leadership Team

130

HRExpertiseBP

Updated 5-11-2020

Qualities in the New GM: from the Elk River Commission

• Ability to understand the technical and business elements of leading an electric

and water utility.

• Ability to articulate concepts well (exceptional communication skills)

• Ability to develop leaders and strives for continuous learning (self and others)

• GM that drives forward the organization and the Commission

• Ability to provide vision as Utility enters into a new era of growth and change

• Demonstrated Ethics/Integrity/Honesty

• Exceptional business acumen: Results oriented with a strategic focus

• Strong ability to influence and persuade

• Ability to problem solve: identify and find strategic alternatives with the ability to

motivate the organization to act upon alternative solutions that fall outside of the

status quo.

• Ability to be the voice of Utility and to effectively engage the community,

customers and employees

• Ability to effectively implement strategic change

• Strategic change agent with the ability to create and lead change

• Dynamic and innovative

• Exceptional negotiation skills

• Politically astute

131

______________________________________________________________________________

Page 1 of 1


FROM: Chris Kerzman – Engineering Manager



SUBJECT: Field Services Facility Expansion Project Architectural Costs ACTION REQUESTED: Approve the payment of Architect’s and Engineer’s fees for this year out of reserves, with the intent of replenishing reserves out of bonding in 2021. BACKGROUND: The Field Services Facility Expansion Workgroup has met with Kodet Architectural Group virtually this year to review the design of the field services building expansion. During these meetings, the footprint and budget for the building have been revised to meet field staff needs with consideration for long-term budgeting and coordination with the rate design study. Kodet advises that construction pricing should be favorable if the project is bid with construction to begin in spring 2021. Staff is hopeful that the majority of construction can be completed before the Highway 169 project begins. A preliminary copy of the site plan is attached. DISCUSSION: Staff is looking to move forward with the design of the new field services building and the preparation of bid documents to be completed by the end of the year. FINANCIAL IMPACT: Kodet has estimated that architectural and engineering fees will be $846,050, which includes $776,300 for architectural fees; $9,750 for soils testing; and $60,000 for civil engineering. As it’s estimated that approximately 75% of these costs will be billed this year, staff is requesting approval of up to $846,050 to be paid out of reserves this year, with the intent to replenish the withdrawn amount from bonding in 2021. ATTACHMENTS:

• Field Services Building Preliminary Plans

132

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FUTURE EXPANSION OPTION 1 FUTURE EXPANSION OPTION 2

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133

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838 SF

WORKSHOP

118

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WORKSHOP

117

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WORKSHOP

116

1879 SF

LUNCHROOM

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#24 -

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#25 -

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SCHEME D VEHICLE STORAGE 42,708 SFOFFICE ADDITION 15,490 SFOFFICE REMODEL 2,401 SFEXIST TO REMAIN 4,520 SF

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134

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212

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213

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TOTAL SQUARE FEET:

SCHEME D

135

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Page 1 of 1


FROM: Theresa Slominski – Interim General Manager


AGENDA ITEM NUMBER: 6.1b

SUBJECT: Staff Update ACTION REQUESTED: None DISCUSSION:

• Minnesota Municipal Power Agency’s (MMPA) monthly meeting was held Tuesday, May

26, via WebEx. The summary points of the meeting are: o The Board discussed the coronavirus pandemic and its effect on energy

consumption levels and prices. o The Board discussed the status of the renewable projects the Agency is pursuing. o Participation in MMPA’s residential Clean Energy Choice program increased over

April, with another 61 new customers signing up for the program. Customer penetration of MMPA’s Clean Energy Choice program for residential customers increased to 3.6%.

• I will be virtually attending the American Public Power Association conference June 8-

10. The annual business meeting is immediately before our commission meeting from 2:00-3:15.

• All staff are back to work, with two exceptions. We are exercising safety as per CDC

guidelines and staff are being very careful with social distancing and hygiene. There have been a few questions and concerns voiced and we have responded. We plan on opening to the public when the City is also ready to do so, likely a few weeks yet.

• Midcontinent Independent System Operator’s Return on Equity percentage has been changed again with Opinion 569A issued by the Federal Energy Regulation Committee on May 21, 2020. It is now being increased slightly from 9.88% to 10.02% (previously it was reduced from 12.38% to 9.88%). The refunds that are being calculated will now be slightly less. Previous estimates for the refunds were approximately $7,000 or less per year, for 2016 -2019.

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FROM: Melissa Karpinski – Finance Manager


AGENDA ITEM NUMBER: 6.1c


• All members of the accounting department are back in the office full time as of June 8.

• The Financial Reserves & Investment Committee is planning on having its annual meeting in person before the July commission meeting.

• The Minnesota Department of Revenue Sales and Use Tax Refund Request (ST11) has

been filed in the amount of $24,672.37.

• The COVID-19 Work Order for unproductive time has been closed. It will be expensed on the May financials to a separate General Ledger (G/L) account under the Administrative Expense section. The work order totals $191,346.79 (estimated $160,583.86 for electric and 30,762.93 for water). Potentially there will be some additional expenses that go to this G/L account in the future.

137

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FROM: Jennie Nelson – Customer Service Manager


AGENDA ITEM NUMBER: 6.1d


• The entire customer service department is back in the office and the phones are no longer rolled to Cooperative Response Center.

• Due to COVID-19, we worked with National Information Solutions Cooperative (NISC) to create new reminder notices to send to past due customers referencing energy assistance resources. The first batch of notices went out this week.

• Our bill redesign project is still underway. NISC just notified us that the programming

team is finished, and bills are ready to be reviewed. We will spend one month testing the new format before sending them out to customers.

• Staff is spending a significant amount of time working through AppSuite processes to

determine best practices now that we are more familiar with how the system works.

• We are working through the customer service department’s 2020 initiatives to determine which can be completed in a safe manner.

138

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Page 1 of 2


TO: ERMU Commission

FROM: Tom Sagstetter – Conservation & Key Accounts Manager


AGENDA ITEM NUMBER: 6.1e

SUBJECT: Staff Update

ACTION REQUESTED: None

DISCUSSION:

• In the last 30 days, the level two charger located downtown had 6 sessions and provided customers with 5 kWh. Unfortunately, one of the charging port connections is broken at the downtown station. Staff is working with ChargePoint to get replacement parts and have it fixed as soon as possible. The charger in the ERMU/City Hall parking lot had 8 sessions and provided customers with 25 kWh of green energy. The DC fast charger at the Coborn’s fuel station had 16 sessions and provided 106 kWh. There was a total of charging 30 sessions and 136 kWh of energy provided over the last 30 days.

• The City of Elk River and Minnesota Municipal Power Agency (MMPA) are currently working through the details of the easement for the wind turbine to be installed at the Youth Athletic Complex (YAC). The wind turbine has arrived in Minnesota and is being temporarily stored at an MMPA facility while also being refurbished.

• Staff is developing lists of local electricians and HVAC contractors to provide them with information on efficiency programs that ERMU offers to residential customers. The goal is to have this information to contractors in June.

• Participated in a panel presentation at the American Public Power Association’s Public Power Connect Virtual Summit & Business Meeting on electric vehicles (EV). The presentation focused on ERMU’s partnership with the city, lessons learned on public charging rates, implementation of time-of-use rates, building brand recognition for EV/ER Power Your Future, and educational efforts on EVs.

• Staff is working with the Energy City Commission to review and update the 10-year action plan. The plan is used as a tool to work with the city departments and their sustainability goals.

• Participated in the Elk River Chamber of Commerce government relations Zoom meeting. Senator Mary Kiffmeyer attended and provided an update. Based on the

139

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Page 2 of 2

Senator’s comments we can expect that Governor Walz will extend the emergency order, and there will be a great deal of discussion on the amount of bonding funds and where they should be used.

140

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Page 1 of 2


FROM: Michelle Canterbury – Executive Administrative Manager


AGENDA ITEM NUMBER: 6.1f


• The annual commissioner self-evaluation will be conducted during the July 14 commission meeting. Questions for the evaluation will be sent out in advance via Survey Monkey. Staff will be emailing out a link to the survey towards the end of June.

• Inserts for the June billings include a promotional flyer for Clean Energy Choice for Business, and a Summer Energy Saving Checklist. The Communications Coordinator and Conservation & Key Accounts Manager worked together to develop the new Summer Energy Saving Checklist to help educate customers on the steps they can take to reduce their energy consumption and save money. The flier also spotlights additional ERMU resources that are available for customers wanting to learn more about energy conservation and best practices.

• June social media posts will feature a variety of topics including: summer energy and

conservation tips, the irrigation tune-up rebate, National Hydration Day, completion of the Auburn Street water tower rehabilitation project, planting trees and shrubs wisely near underground utility lines, and celebrating new employees and promotions. A notice will also be posted regarding the June commission meeting being held virtually.

• Administration and Communications staff are in the process of analyzing the effectiveness of our social media communication efforts. Our Communications Coordinator put together a detailed report that tracked likes, reach/impressions, breath of audience, and content performance for each of our platforms over the past year. Based on observations taken from the report, staff has developed action steps and strategies to help increase our audience size. We are pleased to report that the overall average increase in audience size across all platforms for the 12-month period was an impressive 20.7%. Commissioner members are encouraged to follow us on Facebook, Twitter, Instagram, or LinkedIn.

141

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Page 2 of 2

• The ERMU website overhaul initiative continues to progress as planned. We are

currently in stage 3 of the web development process which is the programming stage. As Prime Advertising & Design works through the programming stage, which typically takes between five to eight weeks, ERMU staff will be working concurrently on some of the required copy and images for the new site.

ATTACHMENTS:

• Bill Insert – Clean Energy Choice for Business • Bill Insert – Summer Energy Saving Checklist

142

kWh per Month Approximate Electric Charge

Clean Energy Choice Adder

1,000 $100 $.80

10,000 $1,000 $8.00

100,000 $10,000 $80.00

CLEAN ENERGYCHOICE

CLEAN ENERGYCHOICE

POWERING 100% OF YOUR BUSINESS WITH

RENEWABLE ENERGY

Clean Energy Choice for Business provides Elk River Municipal Utilities customers with the opportunity to have 100% of their electricity come from environmentally friendly,

renewable sources. Commercial electric customers who participate are making a choice to support their community and its future.

Clean Energy Choice for Business gives you a convenient and affordable way to power your business with electricity from 100% renewable sources.

• Be a leader in environmental responsibility.

• Become a more sustainable part of your community for a small increase in your monthly electrical bill.

• Meet your sustainability goals without investing in equipment.

Program FeeThe program adds an incremental charge above your existing electric rate. Examples listed below.

EnrollmentIf you want to enroll in the Clean Energy Choice program or have any questions, please call Elk River Municipal Utilities (763-441-2020).

• Participation is on an annual basis.

• We can help you determine how this program will affect your monthly electric bill.

143

For more information contact Elk River Municipal Utilities at 763-441-2020

How Much Does Clean Energy Choice for Business Cost?• An incremental charge of $0.001 per kilowatt-hour (kWh) above regular retail rates. The charge is applied to all kWh in excess of the Minnesota Renewable Energy Standard (currently 20% of all electric sales).

• As an example, a customer with usage of 10,000 kWh per month would pay a monthly program surcharge of $8.00. [10,000 x (100%-20%) x $0.001]

What is Renewable Energy?Renewable energy is generated from facilities powered by wind, solar, bioenergy, water, and more.

Where Does the Renewable Energy from Clean Energy Choice Come from? The renewable energy for the Clean Energy Choice program is supplied by Minnesota Municipal Power Agency’s renewable resources. MMPA’s renewable resources include: wind, solar, and biomass. For more information please visit http://www.mmpa.org/sustainable-energy/overview/.

Does Renewable Energy Flow Directly to My Business? No, the renewable energy generated enters into the “electric grid.” Therefore, it is impossible to know where the specific electricity supplying your business originated from. However, Renewable Energy Certificates (RECs) provided as part of the Clean Energy Choice program guarantee that your renewable purchases are certified renewable energy in Minnesota.

What Are Renewable Energy Certificates (RECs)? Every kilowatt-hour of renewable energy generated by MMPA is assigned a unique REC number to ensure that each unit of renewable energy is accurately tracked. The State of Minnesota also uses RECs to track renewable energy use. The Clean Energy Choice program utilizes these RECs to ensure that you are helping to support sustainable energy systems for the future.

Am I Committed to a Contract Term? Yes – participation in the Clean Energy Choice for Business program is on a calendar year basis. In return, the per-kWh surcharge is fixed for the same period. You will be informed of any change in the per-kWh surcharge for the upcoming year by November 1, and you have until December 1 to let us know if you want to continue participating for the coming year.

FREQUENTLY ASKED QUESTIONS

144

SUMMER ENERGY SAVING CHECKLIST

Switch outdoor lights to LED bulbs. They use 75% less energy and preform great in all temperatures.

Attach motion sensors, photocells sensors, or timers to outdoor lights.

Schedule an AC tune-up, and clean debris off of your unit while making sure nothing nearby reduces air flow.

Change your furnace filter regularly to reduce the energy required for operation, as well as wear and tear.

Install a programmable thermostat to effectively manage your home’s temperature throughout the day.

Upgrade to energy efficient equipment; ERMU has rebates on everything from kitchen appliances to AC units.

Clean vents (bathroom, dryer, stove, air exchanger, and fresh air) to allow for more efficient operation.

Close window coverings on south-facing windows during the day to cut down on solar heat gain.

Gently remove dust, dirt, and pet hair from the cooling fins and condensers of your refrigerators and freezers.

Check your sprinkler system for leaks and make sure you are not watering streets, sidewalks, or driveways.

Reduce Electric CostsYour energy needs and usage change with

every season, but most customers will see

the greatest increases during the winter

and summer months.

The Summer Energy Saving Checklist was

made to help you and your family save

energy and money.

Customers can also access free publications

from ERMU that will help reduce electric costs.

Your Guide to Home Energy Use is a booklet

available for download from our website, and

while you’re there, be sure to sign up for our

monthly e-newsletter, The Connector.

ERMUMN.COM | 763.441.2020 | 13069 ORONO PARKWAY | PO BOX 430 | ELK RIVER, MN 55330-0430145

The ConnectorCustomers can have energy saving information sent to them directly with

The Connector e-newsletter. This monthly email brings you engaging and

interactive content that will help you conserve energy year round with tips on

best practices and cutting edge technology.

Articles in The Connector are researched and written by industry

professionals to educate readers so they can count on the best information

available, not manufacturer marketing.

The sign-up link for The Connector can be found on our website by clicking

About Us and then Newsletter.

Note: ERMU adheres to consumer privacy practices which restrict the sharing of

customer email information with affiliates.

Your Guide to Home Energy Use This booklet is full of information to help customers understand where they use the most energy and how they can focus their

efforts to reduce consumption. Applying the principles from Your Guide to Home Energy Use also helps customers manage

their environmental impact. Download a copy from the Conservation page on our website.

FREE RESOURCECS

FOR CUSTOMERS

ERMUMN.COM | 763.441.2020 | 13069 ORONO PARKWAY | PO BOX 430 | ELK RIVER, MN 55330-0430146

______________________________________________________________________________

Page 1 of 1


FROM: Mark Fuchs – Operations Director


AGENDA ITEM NUMBER: 6.1g


• Staff has been putting together prices to install infrastructure at Great River Energy’s (GRE) Refuse-Derived Fuel (RDF) Facility for its potential sale. As this facility currently receives electricity from GRE transmission lines, it will need to be switched over to ERMU’s distribution lines. The current voltage feeding the facility is 2400, while distribution voltage is 7200, so the switch requires a transformer to reduce the voltage.

• Staff continues to work with Kodet Architectural Group on the new field services

building. The new power plant substation transformer, which was scheduled to be delivered in late October or early November, may not be delivered until February 2021. We are working with the manufacturer to see what options we have to move up the delivery date.

• Staff continues working with Power Systems Engineering on plans to install electrical

infrastructure to make room for the new field services building.

• Staff is going through construction plans for County State-Aid Highway 12 to see what electric and water infrastructure needs to be moved. This project is scheduled to begin in July.

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FROM: Thomas Geiser – Electric Superintendent


AGENDA ITEM NUMBER: 6.1h


• Installed 12 new residential services, which involves the installation of a secondary line once the customer requests service.

• Staff finished installing a primary underground loop at Cargill Animal Nutrition, which will help reduce the length of outages for their facility.

• The electric department worked with the City and Councilmember Wagner on purchasing banner holders for the downtown streetlights.

• Staff finished installing the primary underground loop on Jarvis Street and is now working on finishing the overhead rebuild to Highway 10.

• Finished the overhead rebuild on Tyler Street and staff is now working on installing the primary underground feeder line that will tie into it. This infrastructure will support the service growth at Miske Meadows.

• The electric department has temporarily upgraded the transformer at the Gary Street Water Tower to one with a greater capacity to serve the dehumidifiers needed to paint the inside of tower.

• Staff relocated a three phase junction box in the Elk River High School parking lot which needed to be moved for the parking lot upgrade project.

• Relocated a streetlight at Holt Street and 8th Street for the placement of a driveway to a new home.

• Moved two power poles south of the railroad tracks for the Proctor Street upgrade.

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• Installed single phase primary underground line and a transformer for the Woodland Trails Park upgrade.

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FROM: Mike Tietz –Technical Services Superintendent


AGENDA ITEM NUMBER: 6.1i


• In May, the locating department had a total of 685 locate tickets consisting of 4 emergency tickets, 595 normal tickets, 3 boundary survey tickets, 58 updated tickets, 11 cancellations and 14 locate meets. This is a 27% increase in volume of tickets from the previous month. The locators continue to stagger start times to minimize exposures and continue to practice social distancing.

• Electrical technicians continue with weekly meter reads, service orders, updating the

power bill, weekly substation checks, dealing with customer meter issues and off-peak concerns. The electrical techs have also begun the process of disconnecting the remaining off-peak radios on the system. These radios were part of the dual fuel & storage water heat programs. As part of the process, the techs are recording what controlled appliances are still being used by the customer so we can reach out to them once we have a load management program in place again. Approximately 25% of the 496 radios have been disconnected. Staff continues to practice social distancing when interacting with others and is still staggering their start times.

• On May 21, staff ran the generators except for engine #3 which needs a repair of the

exhaust system. Final adjustments were made to the cylinder lubrication pumps on #1 & #2. We have also begun replacing injector nozzles that are leaking and sending them in to be rebuilt. Staff will be testing the generators the second week of June.

• Mapping department continues to update points and attributes for our systems assets

within the ESRI ArcView GIS system. We are still working on the ESRI to National Information Solutions Cooperative integration for AppSuite. We have been delayed on this project due to security protocols and hope to have this resolved shortly. Staff has been assisting the water department by being in the on-call rotation temporarily.

• We are getting quotes for some additional grading work to be done at the West

Substation garage site.

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TO: ERMU Commission

FROM: Dave Ninow – Water Superintendent


AGENDA ITEM NUMBER: 6.1j

SUBJECT: Staff Update ACTION REQUESTED: None

DISCUSSION: • Delivered eleven new water meters.• Sealed the water meter, installed an encoder receiver transmitter, and took curb stop

ties from eight water services.• Completed 15 BACTI/Total Chlorine Residual Samples

o All confirmed negative for Coliform Bacteriao Bacteriological/Disinfectant Residual Monthly Report submitted to the MDH

• Completed 20 routine fluoride sampleso All samples met MDH standardso Submitted MDH Fluoride Reporto Completed one MDH validation fluoride sample

• Submitted Discharge Monitoring Report (DMR) for the Diesel Generation Plant to theMinnesota Pollution Control Agency.

• Painting is finished at the Auburn Street Water Tower. It was put back into service onMay 28 after being washed out, disinfected, and passing bacteria sample testing. Whenthe cell phone antenna equipment is reinstalled on the tower, the project will becomplete.

• We discovered that well number 5 had been draining water back into the aquifer whenit was not running, causing air to be pushed into the water system each time it startedpumping again. This contributed to the air issues we experienced in the water system inlate February. E.H. Renner & Sons pulled the submersible well equipment anddetermined that the check valve had failed, and the pipe was in poor condition. Theyinstalled a new check valve and 160 feet of new pipe. The price for this work was quotedat $13,310.

• The Gary Street Water Tower has been taken out of service and drained for therehabilitation project that started June 1. The estimated completion date is July 24,2020.

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• Approximately 600 feet of six-inch cast-iron water main pipe, formerly located betweenSchool Street and the new Multipurpose Facility, has been replaced with new eight-inchductile-iron pipe. This will provide increased reliability and improved water flow for thewater system. The work was done in cooperation with the school district under the highschool parking lot rehabilitation project.

ATTACHMENTS: • May 2020 Pumping by Well

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Values Are Displayed in Millions of Gallons (Well #, Gallons Pumped, Percentage of Pumping)

Well #2, 0.019, 0%

Well #3, 7.569, 10%

Well #4, 25.954, 32%

Well #5, 1.595, 2%

Well #6, 15.336, 19%

Well #7, 19.608, 24%

Well #8, 2.968, 4%Well #9, 7.262, 9%

May 2020 Monthly Pumping By Well

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TO: ERMU Commission

FROM: Chris Kerzman – Engineering Manager


AGENDA ITEM NUMBER: 6.1k

SUBJECT: Staff Update ACTION REQUESTED: None

DISCUSSION:

• Power System Engineering is continuing to design the foundation and oil containment needed to relocate the power plant substation. The transformer manufacturer notified us that delivery is scheduled for February 5, 2021 which is a significant delay from the date quoted. We have reached out to the manufacturer to discuss our options.

• The new IT/OT Technician has been working on several projects to get up to speed with

our systems. These projects include the evaluation of technology upgrades for the commission room, printer upgrades for the office, communications between mapping and NISC software, and updating the license for our email accounts.

• We are continuing our meetings with Kodet about the field services building design. The

next steps involve site verification and design meetings between Kodet personnel and each group of field workers. We will also be working through the inspections and paperwork needed to make the two rental houses on the property available to the fire and police departments for training.

• We will be updating our licensing for Office 365 during the evening of June 16 and expect we will need to re-authenticate any device that receives ERMU email. We are asking commissioners to bring their iPads or other devices that access ERMU email to the office on or after June 17 to update device settings. Please have your email account password ready when we are making these updates.

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Tuesday, January 14:

Annual Review of Committee Charters

Tuesday, February 11:

Review Strategic Plan and 2019 Annual

Business Plan results

Tuesday, March 10:

Oath of Office

Election of Officers

Annual Commissioner Orientation and Review

Governance Responsibilities and Role

Tuesday, April 14:

Audit of 2019 Financial Report

Financial Reserves Allocations

Review 2019 Performance Metrics

Tuesday, May 12:

Annual General Manager Performance

Evaluation and Goal Setting

Tuesday, June 9:

Tuesday, July 14:

Annual Commission Performance Evaluation

Review and Update Strategic Plan

Tuesday, August 11:

Annual Business Plan – Review Proposed 2021

Travel, Training, Dues, Subscriptions, and Fees

Budget

Tuesday, September 8:


Capital Projects Budget

Tuesday, October 13:


Expenses Budget

Tuesday, November 10:

Annual Business Plan - Review Proposed 2021

Rates and Other Revenue

Adopt 2021 Fee Schedule

2021 Stakeholder Communication Plan

Tuesday, December 8:

Adopt 2021 Official Depository, Newspaper,

and Regular Meeting Schedule

Adopt 2021 Governance Agenda

Adopt 2021 Annual Business Plan

2020 GOVERNANCE AGENDA

155

Documents

City of Elk River Utilities Commission Meeting NOTICE OF ...… · Total for Check/Tran - 2768: 3,489.24 276905/12/2020WIRE 7463 FURTHER ER HSA CONTRIBUTION - 172 1,323.33 277105/04/2020WIRE