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EUC Public Hearing Notice

Notice is hereby given that the Ely City Council will be holding a Public Hearing on Tuesday,
February 21, 2017 at 5p.m. in Ely City Hall, Council Chambers, for the following purpose:

For discussion and to hear public comment on the Ely Utilities Commission's proposed rate
increases on electric, water and sanitary sewer services.

Proposed Water Rate: Increase base rate from $10.25 per month to $12.25 per month with no
change in the usage rate.

Proposed Sewer Rate: Increase base rate from $13.20 per month to $15.20 per month with no
change in the usage rate.

Proposed Electric Rate:


Commercial: Base Rate $17 set charge per month and $0.10 per KWH
Residential: No Change in the Base Rate of $15 per month for first 100KWH, Increase in
usage charge over 100KWH from $0.092 per KWH to $0.095 per KWH.

Information on the proposed rate increases can be found on the City of Ely website at:
www.ely.mn.us under City Departments - City Utilities.

Sample bills are available on the website and at the Public Hearing to compare the proposed
changes to existing charges.

If anyone has any questions feel free to call Harold Langowski at 218-226-5474 or email:
elyod@ely.mn.us

Harold R Langowski
City Clerk/Treasurer
Date: January 24, 2017

To: Ely Utilities Commission

From: Budget and Rate Committee (Nikkola, Langowski, and Soderberg)

Subject: Rate recommendation on 2017 EUC rates

The Budget and Rates Committee has met and is recommending changes in rates for
both Water and Sewer customers, as well as a change in the Electric utility rate
structure that will increase costs for customers.

The primary rate increase recommendation is to increase the monthly fixed or set fee
by $2.00 for each the Water and Sewer customers. Despite increases in the variable
feet over the past few years, the revenue for two utilities has still failed to keep up
with costs and also as the Utilities continue to attempt to keep up with capital project
needs.

Water Rates:
Fixed Fee Variable Fee Net
Change
2016 $10.25 $3.90 Per 100 Cubic
Feet of water
usage
2017 $12.25 $3.90 Per 100 Cubic $2.00 per
Feet of water month
usage

Sewer Rates:
Fixed Fee Variable Fee Net
Change
2016 $13.20 $7.20 Per 100 Cubic
Feet of water
usage
2017 $15.20 $7.20 Per 100 Cubic $2.00 per
Feet of water month
usage

Rationale:

In the past few years, the variable fees have been adjusted based upon the projected
budgets for the year, coupled with the past year's performance. Despite hopes for
more users and increased use of the system, usage in 2016 was lower than 2015,
but we did have a few new water and sewer customers. The primary reason for

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increasing the fixed fee is that the capital needs for the system are not necessarily
based upon usage and therefore should be shared more equitably.

We have budgeted for some increased usage in 2017 over 2016, and a few more
users in the sewer system but if those increases do not materialize the utility must
have dependable revenue to pay for capital and other fixed costs. If use should go
down again, then an increase on the variable fee would not have the desired impact.

In the sewer utility the $2.00 per month increase will allow us to have a small cash
increase by the end of the year, but we are also not making our $60,000 transfer to
the overall capital fund in 2017. The capital project in 2017 is only in the water fund.

In the Water Utility the increase in monthly charges is not projected to produce a cash
surplus at year-end, but the water fund is also stronger than the sewer fund and has
shown larger actual increases over past years.

The attached long-term spreadsheets also show the continued need for rate
adjustments into the future, but none of the increases will be made until evaluated in
that budget cycle

Electrical Rates:
2016 Commercial Set charge 2017 Set Charge
Commercial
First 100 KWH $17 $17 Per
Service
OveMOOKWH $0.1000 per Per KWH $0.1000
KWH
Demand Demand Charge
First 2000 KWH $0.1012 First 2000 KWH $0.1012
Next 8000 KWH $0.0980 Next 8000 KWH $0.0980
Over 10000 KWH $0.0728 Over 10000 $0.0728
KWH
Demand Charge Demand Charge
First 50 KWH $0.0000 First 50 KWH $0.0000
Additional KW $5.0000 Additional KW $5.0000

2016 Residential Set Charge 2017 Set Charge


Residential
First 100 KWH $15 First 100 KWH $15

Next 900 KWH $0.0920 OveMOOKWH $0.095


OveMOOOKWH $0.0860

The Electric Utility has performed admirably, producing revenue beyond costs for
many years, but the equipment and system has aged significantly such that major
expenditures have had to be made on equipment, the downtown commercial feeder

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project, as well as other improvements over the past four years, significantly
changing the cash balance in the electric utility fund. As the utility looks to fully
implement the new automated metering system and a future voltage conversion
project at an estimated cost of $8,500,000, cash balances will only take the utility so
far. Rates need to increase over time to keep a strong cash balance and fund smaller
projects and to allow for sufficient revenue to pay anticipated debt service on the
future capital projects.

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2017,Water and Sewer Rate Calculations

Description Old Rate New Rate


Proposed

Water charge $3.90 /100CF $3.90 /100CF

Billed for all usage no min. bill Billed for all usage no min. bill

$10.25 set charge for each connection $12.25 set charge for each connection

Sewer Charae
$7.20 /100CF $7.20 /100CF

$13.20 set charge for each connection $15.20 set charge for each connection

Franchise Fee
$0.00 /month $0.00 /month

Maintenance Fee
$5.00 /month $5.00 /month

ilectric
Commercial
First 100 KWH $17 1st IOOKWH Min Charge $17 Set Charge for each service
OveMOOKWH $0.1 ooo $0.10 PerKWH

Demand
First 2000 KWH $0.1012 $0.1012
Next 8000 KWH $0.0980 $0.0980
Over 10000 KWH $0.0728 $0.0728

Demand Charge
First 50 KWH $0.0000 $0.0000
Additional KW $5.0000 $5.0000

Residential

First 100 KWH $15 1st 100KWH Min Charge $15 1 st lOOKWHMin Charge
Next 900 KWH $0.0920 $0.095 Per KWH
Over 1000 KWH $0.0860
Bill Examples

Current Bill Proposed Rates


Small Home
Summer Bill

Franchise Fee $0.00 Franchise Fee $0.00


Maintenance Charge $5.00 Maintenance Charge $5.00
Sewer $36.96 330 Sewer $38.96 4.60%
Water $23.12 330 Water $25.12 Increase
Electric $33.58 302 Electric $34.19 W&S only
State tax &2.48 State tax 12.52 6.66%
Total $101.14 Total $105.79

Current Bill Proposed Rates

Winter Bill

Franchise Fee $0.00 Franchise Fee $0.00


Maintenance Charge $5.00 Maintenance Charge $5.00
Sewer $35.74 313 Sewer $37.74 4.27%
Water $22.46 313 Water $24.46 Increase
Electric $71.12 710 Electric $72.95 W&S only
State tax &5.25 State tax 15.38 6.87%
Total $139.56 Total $145.52

Current Bill Proposed Rates

Larger Home
Summer Bill

Franchise Fee $0.00 Franchise Fee $0.00


Maintenance Charge $5.00 Maintenance Charge $5.00
Sewer $39.12 360 Sewer $41.12 4.12%
Water $24.29 360 Water $26.29 Increase
Electric $71.12 710 Electric $72.95 W&S only
State tax 5.25 State tax i5.38 6.31%
Total $144.78 Total $150.74

Current Bill Proposed Rates

Winter Bill

Franchise Fee $0.00 Franchise Fee $0.00


Maintenance Charge $5.00 Maintenance Charge $5.00
Sewer $35.52 310 Sewer $37.52 4.33%
Water $22.34 310 Water $24.34 Increase
Electric $65.60 650 Electric $67.25 W&S only
State tax K.84 State tax $4.96 6.91%
Total $133.30 Total $139.07
Current Bill Proposed Rates

Family of Five
Summer Bill

Franchise Fee $0.00 Franchise Fee $0.00


Maintenance Charge $5.00 Maintenance Charge $5.00
Sewer $71.09 804 Sewer $73.09 3.08%
Water $41.61 804 Water $43.61 Increase
Electric $80.50 812 Electric $82.64 W&S only
State tax &5.94 State fax S6.09 3.55%
$204.14 $210.43

Current Bill Proposed Rates

Winter Bill

Franchise Fee $0.00 Franchise Fee $0.00


Maintenance Charge $5.00 Maintenance Charge $5.00
Sewer $56.98 608 Sewer $58.98 4.97%
Water $33.96 608 Water $35.96 Increase
Electric $150.09 1608 Electric $158.26 W&S only
State tax )11.07 State tax $11.67 4.40%
Total $257.09 Total $269.87

Current Bill Proposed Rates

Commercial 1
Largest Yearly Bill

Franchise Fee $0.00 Franchise Fee $0.00


Maintenance Charge $5.00 Maintenance Charge $5.00
Sewer $949.20 13000 Sewer $951.20 0.82%
Water $517.25 13000 Water $519.25 Increase
Electric $281.10 2741 Electric $291.10 W&S only
State tax State tax &59.76 0.27%
Total $1,811.43 Total $1,826.31

Current Bill Proposed Rates

Winter Bill

Franchise Fee $0.00 Franchise Fee $0.00


Maintenance Charge $5.00 Maintenance Charge $5.00
Sewer $272.40 3600 Sewer $274.40 2.40%
Water $150.65 3600 Water $152.65 Increase
Electric $168.70 1617 Electric $178.70 W&S only
State tax $23.55 State tax ?24,44 0.95%
Total $620.30 Total $635.19
Current Bill Proposed Rates

Commercial 2
Largest Yearly Bill

Franchise Fee $0.00 Franchise Fee $0.00


Maintenance Charge $5.00 Maintenance Charge $5.00
Sewer $877.20 12000 Sewer $879.20 0.80%
Water $478.25 12000 Water $480.25 Increase
Electric $431.00 4240 Electric $441.00 W&S only
State tax &67.06 State tax &67.94 0.30%
Total $1,858.51 Total $1,873.39

Current Bill Proposed Rates

Winter Bill

Franchise Fee $0.00 Franchise Fee $0.00


Maintenance Charge $5.00 Maintenance Charge $5.00
Sewer $373.20 5000 Sewer $375.20 1.59%
Water $205.25 5000 Water $207.25 Increase
Electric $315.00 3080 Electric $325.00 W&S only
State tax &38.37 State tax ?39.25 0.69%
Total $936.82 Total $951.70

Current Bill Proposed Rates

Commercial 3
Largest Yearly Bill

Franchise Fee $0.00 Franchise Fee $0.00


Maintenance Charge $5.00 Maintenance Charge $5.00
Sewer $1,224.46 16823 Sewer $1,226.46 0.65%
Water $666.35 16823 Water $668.35 Increase
Electric $320.60 3136 Electric $330.60 W&S only
State tax 672.79 State tax ?73.67 0.21%
Total $2,289.19 Total $2,304.08

Current Bill Proposed Rates

Winter Bill

Franchise Fee $0.00 Franchise Fee $0.00


Maintenance Charge $5.00 Maintenance Charge $5.00
Sewer $286.66 3798 Sewer $288.66 2.05%
Water $158.37 3798 Water $160.37 Increase
Electric $247.00 2400 Electric $257.00 w&s only
State tax 629.90 State tax ?30.78 0.90%
Total $726.92 Total $741.81
Water Fund
Usacie CF Number of Customers
2007 14,077,030 1949
2008 11,916,426 1966 15%reduction
2009 11,074,360 1851 7% reduction
2010 13,130,470 1840 15% increase
2011 11,063,420 1851 15%reduction, wet and cool summer
Estimated 2012 11,544,231 1867 Estimated usage due to software conversion issue
Estimated 2013 10,684,456 1820 Actual
2014 10,242,320 1872 Actual
2015 10,943,320 1873 Actual
2016 9,908,384 1881
Estimated 2017 10,200,000 1881

Usage OF Number of Customers


Sewer Fun' 2007 13,121,930 1976
2008 11,596,989 1992 12%reduction
2009 10,460,920 1872 3% reduction
2010 12,871,424 1860 5% reduction
2011 10,731,183 1872 16% reduction
Estimated 2012 11,111,915 1876 Estimated usage due to software conversion issue
Estimated 2013 10,452,187 1785 Actual
2014 10,028,678 1827 Actual
2015 10,700,806 1852 Actual
2016 9,699,701 1864
Estimated 2017 9,800,000 1867