5.1. ERMUSR 06-11-2013 Ul
>1 -h Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
Elk River Municipal Utilities Commission Theresa Slominski —Finance and Office Manager
John Dietz—Chair
Al Nadeau—Vice Chair
Daryl Thompson—Trustee
MEETING DATE: AGENDA ITEM NUMBER:
June 11, 2013 5.1
SUBJECT:
2012 Year-End Reserve Balances
BACKGROUND:
Per our Reserves Policy, annually after the audit,the year-end reserve balances shall be reviewed and the
Utilities Commission shall consider any balances above or below target levels.
DISCUSSION:
At the conclusion of our audit, a review of the cash balances of$14,625,194, with $11,370,664 for
Electric and $3,254,530 for Water, determines that our current reserves balances are at target levels. The
three Reserve Classifications and respective calculated amounts for the Electric Department are
Unrestricted Designated Reserves, $5,793,402; Reserve Restricted for Debt Service, $724,500; and
Unrestricted Reserves, $4,852,762. The Reserve Classifications and respective calculated amounts for the
Water Department are Unrestricted Designated Reserves, $1,248,571; Reserve Restricted for Debt
Service, $0; and Unrestricted Reserves, $2,005,959.
Per the policy,the Unrestricted Reserves defaults as working capital. As part of the review process the
Unrestricted Reserve balances shall be considered by the Commission for optimal uses. (This would be
the $4,852,762 for the electric department and the$2,005,959 for the water department.) Per discussion
last year,the electric department was to use $1,000,000 of these reserves to offset Power Cost
Adjustments (PCAs)that were anticipated to be passed along from our power supplier and therefore
provide rate relief to our customers, and $1,000,000 is to be used for the construction of a substation in
2013. The water department reserves were allocated as $700,000 for the Freeport Water Tower
repainting, and the remaining for future capital projects. These are still very appropriate uses of these
balances.
ACTION REQUESTED:
Per policy, the optimal uses of the Unrestricted Reserves for both departments should be considered by
the Commission.
ATTACHMENTS:
Reserve Balance Calculations for Electric and Water Departments
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