4.1b ERMUSR 10-11-2022
COMMISSION POLICY
Section:Category:
Governance Results Policies
Policy Reference: Policy Title:
G.5a Margins
PURPOSE:
Consistent will all Results Policies, the Commission shall establish clear expectations for
producing the right results for the right people in the right way. With this policy the Commission
affirms their commitment to the Organization Fundamentals Policies prioritizing financial and
organization health by setting an annual goal for operational margins.
The annual strategic and business planning, consistent with the Financial Planning and
Budgeting Policy, shall be conducted such the organization has appropriate operating margins. By
establishing clear expectations for operating margins through policy, the Commission creates
clear and consistent direction for the General Manager.
This clear direction provides stability in organizational vision allowing the General Manager,
while developing the annual budget and business plan, to more effectively utilize long range tools,
such as multiple year capital improvement plans, to produce both short term and long term
financial and organizational health. Additionally, this practice helps to avoid inconsistent
direction to the General Manager from year to year such as tight margins one year due to rate
competitiveness concerns and concerns another year about revenues and desiring higher margins.
POLICY:
To promote financial health and organization stability, the General Manager shall develop the
annual business plan and budgets for the following services as follows:
1. Electric – Excluding depreciation, the budget shall be developed with minimum margins
that are at 125% bond convenance. If not required by bond convenance, margins shall be
1.5% of total revenue and margins shall be developed no greater than 2.5% of total
revenue.
2.Water – Excluding depreciation, the budget shall be developed with minimum margins
that are at 105% bond convenance. If not required by bond convenance, margins shall be
1.5% of total revenue and margins shall be developed no greater than 2.5% of total
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ERMU Commission Policy – G.5a Margins
revenue.
POLICY HISTORY:
Proposed October 11, 2022
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