4.1c ERMUSR 04-11-20230 0
Annual Financial
Report
Elk River, Minnesota
For the year ended December 31, 2022
Edina Office
5201 Eden Avenue, Ste 250
A o4 0 Edina, MN 55436
L�qh(mq the pnO� F, 952 835 9090
Mankato Office
100 Warren Street, Ste 600
Mankato, MN 56001
ll", 507.625 2727
Scottsdale Office
145010 N NwVis�ght Blvd, Ste 233
Scotisdalle, AZ 85260
F, 480 864.5579
MI
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Elk River Municipal Utilities
Elk River, Minnesota
Table of Contents
For the Year Ended December 31, 2022
Page No.
Introductory Section
Public Utilities Commission and Administration 7
Financial Section
Independent Auditor's Report 11
Management's Discussion and Analysis 15
Financial Statements
Statement of Net Position 22
Statement of Revenues, Expenses and Changes in Net Position 25
Statement of Cash Flows 26
Notes to the Financial Statements 29
Required Supplementary Information
Schedule of Employer's Share of Public Employees Retirement Association Net Pension Liability -
General Employees Retirement Fund 50
Schedule of Employer's Public Employees Retirement Association Contributions -
General Employees Retirement Fund 50
Notes to the Required Supplementary Information - General Employees Retirement Fund 51
Supplementary Information
Schedule of Operating Revenues and Expenses 54
Electric Fund
Summary of Operations and Unaudited Statistics 56
Water Fund
Summary of Operations and Unaudited Statistics 58
Other Report
Independent Auditor's Report
on Minnesota Legal Compliance 63
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INTRODUCTORY SECTION
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2022
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Name
John Dietz
Allan Nadeau
Mary Stewart
Matt Westgaard
Paul Bell
Name
Theresa Slominski
Mark Hanson
Melissa Karpinski
Dave Ninow
Chris Sumstad
Tom Geiser
Mike Tietz
Tom Sagstetter
Tony Mauren
Chris Kerzman
Sara Youngs
Elk River Municipal Utilities
Elk River, Minnesota
Public Utilities Commission and Administration
For the Year Ended December 31, 2022
COMMISSION
ADMINISTRATION
Title
Chairperson
Vice -Chair
Commissioner
Commissioner
Commissioner
Title
General Manager
Deputy General Manager
Finance Manager
Water Superintendent
Electric Superintendent
Operations Director
Technical Services Superintendent
Conservation and Key Accounts Manager
Executive Administrative Manager
Engineering Manager
Customer Service Manager
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FINANCIAL SECTION
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2022
W,
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INDEPENDENT AUDITOR'S REPORT
Public Utilities Commission
Elk River Municipal Utilities
Elk River, Minnesota
Report on the Financial Statements
Opinion
We have audited the accompanying financial statements of the Elk River Municipal Utilities (the Utilities) of the City of Elk
River, Minnesota (the City), as of and for the year ended December 31, 2022, and the related notes to the financial
statements, as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of
the Utilities as of December 31, 2022, and the changes in financial position and cash flows thereof for the year then ended
in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America
(GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of
the Financial Statements section of our report. We are required to be independent of the Utilities and to meet our other
ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events,
considered in the aggregate, that raise substantial doubt about the Utilities ability to continue as a going concern for
twelve months beyond the financial statement date, including any currently known information that may raise substantial
doubt shortly thereafter.
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Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions.
Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an
audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are
considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the
judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Utilities internal control. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in ourjudgment, there are conditions or events, considered in the aggregate, that raise
substantial doubt about the Utilities ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit, significant audit findings, and certain internal control -related matters that we identified during the
audit.
Emphasis of Matter
As discussed in Note 1 B, the financial statements present only the Electric and Water enterprise funds and do not purport
to, and do not present fairly the financial position of the Utilities as of December 31, 2022, the changes in its financial
position, its cash flows for the year then ended in accordance with accounting principles generally accepted in the United
States of America. Our opinion is not modified with respect to this matter.
Change in Accounting Principle
As described in Note 5 to the financial statements, the Utilities adopted the provisions of Governmental Accounting
Standard Board (GASB) Statement No. 87, Lease, for the year ended December 31, 2022. Adoption of the provisions of
these statements results in significant change to the classifications of the components of the financial statements. Our
opinion is not modified with respect to this matter.
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Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and
Analysis Page 15 and the Schedule of Employer's Share of the Net Pension Liability, the Schedule of Employer's
Contributions to be presented to supplement the basic financial statements. Such information, although not a part of the
financial statements, is required by the Government Accounting Standards Board, who considers it to be an essential part
of financial reporting for placing the financial statements in an appropriate operational, economic, or historical context.
We have applied certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of management about the
methods of preparing the information and comparing the information for consistency with management's responses to
our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because the limited procedures
do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the
Utilities' basic financial statements. The schedule of operating revenues and expenses is presented for purposes of
additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of
management and was derived from and relates directly to the underlying accounting and other records used to prepare
the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the
basic financial statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic
financial statements themselves, and other additional procedures in accordance with auditing standards generally
accepted in the United States of America. In our opinion, the schedule of operating revenues and expenses are fairly
stated, in all material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the annual report. The other information comprises the
introductory section, summary of operations and unaudited statistics but does not include the basic financial statements
and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and
we do not express an opinion or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other information and
consider whether a material inconsistency exists between the other information and the basic financial statements or the
other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an
uncorrected material misstatement of the other information exists, we are required to describe it in our report.
Abdo
Minneapolis, Minnesota
April 4, 2023
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Management's Discussion and Analysis
This section of the Elk River Municipal Utilities (the Utilities) of the City of Elk River, Minnesota annual financial report
presents our analysis of the Utilities' financial performance during the fiscal year that ended December 31, 2022. Please
read it in conjunction with the financial statements which follow this section.
Financial Highlights
• The assets and deferred outflows of resources of the Utilities exceeded its liabilities and deferred inflows of
resources at the close of the most recent fiscal year by $77,871,365 (net position). Net Position increased by
$2,769,707 or 3.7 percent. The increase is mainly due to revenues in excess of expenses during the year.
• The Utilities' cash balance at the close of the current fiscal year was $26,742,447.
• Electric usage overall was down an average of 2.2 percent. Residential usage decreased 2.0 percent, Commercial
usage increased 2.0 percent, and Industrial usage decreased 2.8 percent.
• Water usage overall was down an average of 7.2 percent from the prior year. Residential usage decreased 8.8
percent, and Commercial usage decreased 5.4 percent.
Overview of the Financial Statements
This annual report consists of three parts: Management's Discussion and Analysis, Financial Statements, and
Supplementary Information. The Financial Statements also include notes that explain in more detail some of the
information in the financial statements.
Required Financial Statements
The financial statements of the Utilities report information about the Utilities using accounting methods similar to those
used by the private sector. These statements offer short-term and long-term financial information about its activities. The
Statement of Net Position includes all of the Utilities' assets and liabilities and provides information about the nature and
amounts of investments in resources (assets) and the obligations to Utilities' creditors (liabilities). It also provides the
basis for computing rate of return, evaluating the capital structure of the Utilities and assessing the liquidity and financial
flexibility of the Utilities. All of the current year's revenues and expenses are accounted for in the Statements of Revenues,
Expenses and Changes in Net Position. This statement measures the success of the Utilities' operations over the past
year and can be used to determine whether the Utilities has successfully recovered all its costs through its user fees and
other charges, profitability, and credit worthiness. The final required financial statement is the Statements of Cash Flows.
The primary purpose of this statement is to provide information about the Utilities' cash receipts and cash payments
during the reporting period. The statement reports cash receipts, cash payments and net changes in cash resulting from
operations, investing and financing activities and provides answers to such questions as where cash came from, what
was cash used for and what was the change in the cash balance during the reporting period.
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Financial Analysis of the Utilities
Our analysis of the Utilities begins on page 22 in the Financial Section. One of the most important questions asked about
the Utilities' finances is "Is the Utilities as a whole better off or worse off as a result of this year's activities?" The
Statement of Net Position, and the Statement of Revenues, Expenses and Changes in Net Position report information
about the Utilities' activities in a way that will help answer this question. These two statements report the net position of
the Utilities and changes in the net position. You can think of the Utilities' net position (the difference between assets and
liabilities) as one way to measure financial health or financial position. Over time, increases or decreases in the Utilities'
net position is one indicator of whether its financial health is improving or deteriorating. However, you will need to
consider other non -financial factors such as changes in economic conditions, population growth, zoning, and new or
changed government legislation.
Net Position. To begin our analysis, a summary of the Utilities' Statements of Net Position is presented in Table A-1. As
can be seen from the Table, net position increased $2,769,707 to $77,871,365 in fiscal 2022 up from $75,101,658 in fiscal
2021.
Assets
Current and other
Capital and other non -current
Total Assets
Total Deferred Outflows of Resources
Liabilities
Current
Non -current
Total Liabilities
Total Deferred Inflows of Resources
Net Position
Net investment in capital assets
Restricted for debt service
Unrestricted
Total Net Position
Table A-1
Condensed Statement of Net Position
2022
$ 32,660,889
94,194,163
126,855,052
2021
$ 39,513,369
81,350,610
120,863,979
Increase
(Decrease)
$ (6,852,480)
12,843,553
5,991,073
1,414,144
1,698,107
(283,963)
9,803,732
10,894,487
(1,090,755)
35,418,139
34,408,284
1,009,855
45,221,871
45,302,771
(80,900)
5,175,960
58,323,263
1,779,016
17,769,086
$ 77,871,365
2,157,657
54,669,744
1,779,016
18,652,898
$ 75,101,658
3,018,303
3,653,519
(883,812)
$ 2,769,707
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Water and Electric Rates. Electric - The latest increase in the Utilities' electric rates was effective January 2023. The
monthly base charges are based upon the type of service. The monthly charges are $15.00 for residential, $32.00 for non -
demand, $77.00 for demand and $115.00 for large industrial demand customers. In addition to the base charges the
residential rate is $.1373/kWh for June -October usage, and $.1255/kWh for November -May usage; the non -demand rate is
$.1330/kWh for June -October, and $.1114/kWh for November -May; the demand rate is $.0704/kWh energy charge year
round with a demand charge of $16.75AW June -October, and $11.75AW for November -May; the large industrial demand
rate is $.0696/kWh energy charge year round with a demand charge of $16.25AW June -October, and $11.25AW
November -May.
Water - The latest increase in the Utilities' water rates was effective January 2023. The monthly base charge for
residential customers is $9.83 per month. In addition to the base charge, the Utilities currently charges its residential
customers $1.98 per 1,000 gallons up to 9,000 gallons, $3.50 per 1,000 gallons between 9,000 gallons and 15,000 gallons,
and $4.00 per 1,000 gallons for usage above 15,000 gallons. Commercial customer base charges are based upon meter
size and range from $11.79 to $124.57. An irrigation meter is $20.98 per month. There is also a charge per 1,000 gallons,
the same tiers as the residential rates of $1.98, $3.50, and $4.00, except the graduation from the lower tier to the higher
tier(s) is calculated based on previous consumption.
The Utilities requires payment of all utility bills to be paid by the due date stated on the monthly bill. A ten percent penalty
is assessed for payments not received by the due date. The Utilities may discontinue service of a customer not complying
with the disconnect policy of the Utilities after receiving a written disconnect notice. Residential and
Commercial/Industrial single phase electric customers that have their service discontinued will be charged a minimum of
$50.00 to have their service reconnected. Commercial/Industrial three phase electric customers that have their service
discontinued will be charged a minimum of $150.00 to have their service reconnected. Residential and
Commercial/Industrial water customers that have their water shut-off will be charged a fee of $100.00 to have their water
turned on/reconnected. There are no reconnections after 3:30 pm and payments for reconnection/turn on are not
accepted at the property site; payments must be made prior to dispatching reconnection. Customers can come into the
office between the hours of 8:00 am and 4:30 pm to make payment by cash, money order or credit card; or pay online or
by phone with a credit card. The Utilities abides by the Cold Weather Rules.
Deposit Policy. Per our Deposit Policy, the Utilities collects social security numbers from new accounts and utilizes a
credit risk assessment tool called "Online Utility Exchange' to determine if a deposit is necessary as a proactive measure
to try and reduce uncollectible accounts. The amount of the deposit required will depend on the risk identified with the
customer. For residential customers, if there is a 68 percent or higher probability of non -default and no negative history
(no disconnection for non-payment or late payments two or more times within 12 months) there is no deposit required. If
there is a lower than 68 percent probability of non- default, a deposit appropriate to the services supplied will be required
before utility service will be extended. If the customer chooses not to provide a social security number, the deposit is
automatically required. Residential deposit amounts are $100 for apartments, $100 for homes with water and sewer, $150
for homes with electric only services, and $250 for homes with all services (electric, water, and sewer).
For commercial and industrial customers, a service agreement would need to be signed. Generally, a deposit of 2 times
the estimated highest monthly bill will be required, with a minimum deposit of $250 for non -demand customers, and
minimum deposit of $1,000 for demand customers. The deposit shall be in the form of a cash deposit, or an irrevocable
letter of credit. The irrevocable letter of credit will be renewed as required and failure to do so will result in a charge equal
to the amount of the letter of credit applied to the monthly utility bill and held by the Utilities as a cash deposit.
Deposits will be retained until the account is closed. The deposit will be returned to the customer within 45 days of
termination of service, provided that the customer has paid in full all amounts due on the account. The appropriate
interest will be applied to the account per state statutes.
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Statements of Revenues, Expenses and Changes in Net Position. While the Statements of Net Position show the change
in financial assets/deferred outflows and liabilities/deferred inflows, the Statements of Revenues, Expenses and Changes
in Net Position, provide answers as to the nature and source of these changes. As can be seen in Table A-2, revenues in
excess of expenses were the main source of the increase in net position of $2,769,707 in fiscal 2022. A closer
examination of the individual categories affecting the source of changes in net position is discussed below:
Table A-2
Condensed Statements of Revenues,
Expenses and Changes in Net Position
Revenues
Operating
Nonoperating
Total Revenues
Expenses
Operating
Nonoperating
Total Expenses
Income Before Contributions and Operating Transfers
Capital Contributions - Developer Infrastructure and Connection Fees
Grants
Contribution from Customers
Transfers from Other City Funds
Transfers to Other City Funds
Change in Net Position
Net Position, January 1
Net Position, December 31
2022
$ 46,811,891
1,174,011
47,985,902
45,579,586
892,147
46,471,733
Increase
2021 (Decrease)
$ 43,881,604
959,409
44,841,013
40,770,940
901,770
41,672,710
$ 2,930,287
214,602
3,144,889
4,808,646
(9,623)
4,799,023
1,514,169
3,168,303
(1,654,134)
2,488,236
1,101,868
1,386,368
-
3,288
(3,288)
298,935
385,316
(86,381)
-
195,245
(195,245)
(1,531,633)
(1,407,734)
(123,899)
2,769,707
3,446,286
(676,579)
75,101,658
71,655,372
3,446,286
$ 77,871,365 $ 75,101,658 $ 2,769,707
Revenues. Table A-2 shows that operating revenue increased by 6.7 percent in 2022 for the Electric and Water
Departments combined.
Nonoperating revenue is comprised of transmission rebate revenue in the Electric Department, and water tower lease
revenue in the Water Department. Regarding transmission rebates, in 2007 the Electric Department partnered with
Midwest Municipal Transmission Group (MMTG) in order to have our transmission assets recognized in the Midwest
Independent Transmission System Operator (MISO) market. In doing so, our transmission assets generate a revenue
rebate, which in turn helps keep our rates down. In 2022, rebates received from our 2020 filings averaged approximately
$51,600 per month. The Water Department is receiving lease revenue from Sprint and Verizon for antennas on the water
towers. In 2022 this amount was approximately $405,882 and will continue for the duration of the multi -year contracts.
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Total Expenses. In reviewing total expenses in Table A-2 you will notice that there was an increase of 11.5 percent overall,
with the electric department increasing 12.5 percent, and the water department being in -line with prior year. Purchased
Power is the biggest electric department expense, and it increased 12.0 percent.
Capital Assets and Debt Administration
Capital Assets. The Utilities' investment in capital assets for its business -type activities as of December 31, 2022
amounts to $89,225,708 (net of accumulated depreciation). This investment in capital assets includes land, buildings,
improvements, and equipment. A table summarizing the balances by fund follows:
Land
Intangible
Land Improvements
Buildings
Machinery and Equipment
Infrastructure
Construction in Progress
Total
Increase
2022 2021 (Decrease)
$ 898,584
$ 858,244
$ 40,340
23,997,909
23,725,578
272,331
10,955
12,604
(1,649)
14,372,796
2,185,398
12,187,398
2,172,446
1,780,778
391,668
45,421,431
45,544,410
(122,979)
2,351,587
7,243,598
(4,892,011)
$ 89,225,708
$ 81,350,610
$ 7,875,098
The total increase in the Utilities' investment in capital assets for the current fiscal year was 9.7 percent.
Major capital asset events during the current fiscal year included the following:
• The Electric Department makes a loss of revenue payment as part of the cost of the territory acquisition
increasing Intangibles.
• A new field services facility was built for both the Electric and Water Department which makes up the majority of
the increase in Buildings.
• The Electric and Water Department purchased new transportation equipment, increasing Machinery and
Equipment, with the main increase due to the purchase of a new Digger Truck for the Electric Department.
• Construction in progress decreased as projects started in the prior year were completed in 2022.
Additional information on the Utilities' capital assets can be found in Note 2C starting on page 37 of this report.
Long-term Debt. At year end, the Utilities had $31,878,720 in long-term debt which decreased from $33,530,262 in fiscal
2021. More detailed information about the Utilities' long-term liabilities can be found in Note 2D starting on page 38 and
below:
G.O. Revenue Bonds
Revenue Bonds
Unamortized Premium on Bonds
Promissory Note
Total
2022 2021
$ 1,565,000 $ 1,885,000
28,875,000 29,930,000
1,438,720 1,506,138
- 209,124
Increase
(Decrease)
$ (320,000)
(1,055,000)
(67,418)
(209,124)
$ 31,878,720 $ 33,530,262 $ (1,651,542)
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Economic Factors and Next Year's Budgets and Rates
The increased emphasis toward renewable energy and away from coal -based energy, the challenge to reduce energy and
water consumption while still maintaining the existing infrastructure and the smart grid developments are all factors that
point to potential increased cost in the coming years. It is the Utilities' goal to not have to rely on increasing rates to meet
those increases but continue to look for ways to increase efficiencies and reduce costs, while providing excellent
customer service. Elk River Municipal Utilities' mission is to provide safe, cost-effective, reliable, quality utilities in an
environmentally and financially responsible manner. We have met that mission in our customer service delivery and our
successful financial results and will continue to strive to meet that mission in the future.
Contacting the Utilities Finance Manager
This financial report is designed to provide our citizens, customers, investors, and creditors with a general overview of the
Utilities' finances and to demonstrate the Utilities' accountability for the money it receives. Questions concerning any of
the information provided in this report or requests for additional financial information should be addressed to Melissa
Karpinski, Elk River Municipal Utilities, PO Box 430, Elk River, Minnesota 55330-0430 or at 13069 Orono Parkway in Elk
River, MN.
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FINANCIAL STATEMENTS
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2022
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Elk River Municipal Utilities
Elk River, Minnesota
Statement of Net Position
December 31, 2022
Assets
Current Assets
Cash and temporary investments
Receivables
Accrued interest
Accounts, net of allowance
Special assessments
Leases
Other receivables
Due from other City funds
Due from other governments
Inventories
Prepaid expenses
Total Current Assets
Non -current Assets
Lease receivable
Capital Assets
Land
Intangible
Land improvements
Buildings
Machinery and equipment
Infrastructure
Construction in progress
Capital Assets, Cost
Less Accumulated Depreciation
Total Capital Assets, Net
Total Non -current Assets
Other Assets
Restricted cash
Total Assets
Deferred Outflows of Resources
Deferred pension resources
Clore+Fire %A/o+or T-+ol
$ 14,895,847 $ 10,067,584 $ 24,963,431
291
43,237
43,528
3,504,762
118,228
3,622,990
4,129
17,112
21,241
-
220,218
220,218
205,158
212,306
417,464
5,530
128,850
134,380
8,263
-
8,263
1,111,835
28,388
1,140,223
256,387
53,748
310,135
19,992,202
10,889,671
30,881,873
-
4,968,455
4,968,455
697,870
200,714
898,584
26,836,332
-
26,836,332
34,081
-
34,081
14,136,802
2,781,847
16,918,649
4,784,056
556,552
5,340,608
53,111,471
40,819,078
93,930,549
1,361,931
989,656
2,351,587
100,962,543 45,347,847 146,310,390
(34,977,181) (22,107,501) (57,084,682)
�_LYAT�LYL7_SA�rYLY, FATLY, r_�-IiTALLilAT-7
65,985,362 28,208,801 94,194,163
1,779,016 1,779,016
87,756,580 39,098,472 126,855,052
1,187,557 226,587 1,414,144
The notes to the financial statements are an integral part of this statement.
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Elk River Municipal Utilities
Elk River, Minnesota
Statement of Net Position (Continued)
December 31, 2022
Current Liabilities
Accounts payable
Salaries and benefits payable
Accrued interest payable
Due to other City funds
Due to other governments
Customer deposits payable
Unearned revenue
Compensated absences
Bonds payable - current portion
Total Current Liabilities
Non -current Liabilities
Bonds payable, net - less current portion
Net pension liability
Total Non -current Liabilities
Total Liabilities
Deferred Inflows of Resources
Deferred pension resources
Deferred lease resources
Total Deferred Inflows of Resources
Net Position
Net investment in capital assets
Restricted for debt service
Unrestricted
Total Net Position
Electric Water Total
$ 4,681,899 $ 406,217 $ 5,088,116
218,805 42,218 261,023
372,065 18,333 390,398
1,021,382 53,535 1,074,917
200,702 2,873 203,575
1,004,694 188,025 1,192,719
- 141,184 141,184
426,995 49,805 476,800
915,000 60,000 975,000
8,841,542 962,190 9,803,732
29,275,124 1,628,596 30,903,720
3,789,381 725,038 4,514,419
33,064,505 2,353,634 35,418,139
41,906,047 3,315,824 45,221,871
54,129 9,723 63,852
- 5,112,108 5,112,108
54,129 5,121,831 5,175,960
36,644,436 21,678,827 58,323,263
1,779,016 - 1,779,016
R r;rn 5na Q )nq 577 177F,Q nRF,
$ 46,983,961 $ 30,887,404 $ 77,871,365
The notes to the financial statements are an integral part of this statement.
23
106
I I I I IS WTTTLI a M 4 11 a I
*1We1OI:l1011110111910filIWA
24
107
Elk River Municipal Utilities
Elk River, Minnesota
Statement of Revenues, Expenses and Changes in Net Position
For the Year Ended December 31, 2022
Operating Revenues
Charges for services
LFG project
Substation credit
Connection maintenance
Customer penalties
Total Operating Revenues
Operating Expenses
Purchased power
Production
Distribution
Depreciation
Customer accounts
General and administrative
Total Operating Expenses
Operating Income (Loss)
Nonoperating Revenues (Expenses)
Interest income (loss)
Miscellaneous revenue
Interest expense and other
Gain/(Loss) on sale of capital assets
Total Nonoperating Revenues (Expenses)
Income (Loss) before Contributions and Transfers
Capital Contributions -
Connection Fees
Contributions from Developers
Contribution from Customers
Transfers to Other City Funds
Total Contributions and Transfers
Change in Net Position
Net Position, January 1
Net Position, December 31
Electric
Water
Total
$ 42,355,712
$ 2,887,276
$ 45,242,988
935,004
-
935,004
4,800
-
4,800
243,088
75,365
318,453
284,452
26,194
310,646
43,823,056
2,988,835
46,811,891
31,544,604
-
31,544,604
793,299
681,079
1,474,378
2,015,665
307,192
2,322,857
31062,751
1,117,357
4,180,108
623,099
81,825
704,924
4,372,187
980,528
5,352,715
42,411,605
3,167,981
45,579,586
1,411,451 (179,146) 1,232,305
(159,502)
(30,592)
(190,094)
906,323
424,994
1,331,317
(851,199)
(40,948)
(892,147)
41,938
(9,150)
32,788
(62,440)
344,304
281,864
11349,011
165,158
1,514,169
-
1,547,930
1,547,930
-
940,306
940,306
298,935
-
298,935
(1,531,633)
-
(1,531,633)
(11232,698)
2,488,236
1,255,538
116,313
2,653,394
2,769,707
46,867,648
28,234,010
75,101,658
$ 46,983,961 $ 30,887,404 $ 77,871,365
The notes to the financial statements are an integral part of this statement.
25
108
Elk River Municipal Utilities
Elk River, Minnesota
Statement of Cash Flows
For the Year Ended December 31, 2022
Cash Flows from Operating Activities
Receipts from customers and users
Other operating cash receipts
Payments to suppliers
Payments to employees
Net Cash Provided
by Operating Activities
Cash Flows from
Noncapital Financing Activities
Transfers to City
(Increase) decrease in due from other City funds
(Decrease) increase in due to other City funds
Net Cash Provided (Used) by Noncapital
Financing Activities
Cash Flows from Capital
and Related Financing Activities
Acquisition of capital assets
Proceeds from connection fees
Proceeds on sale of capital assets
Principal payments on bonds
Principal payments on promissory note
Interest paid
Net Cash Provided (Used) by Capital
and Related Financing Activities
Cash Flows from Investing Activities
Interest on investments
Net Increase (Decrease)
in Cash and Cash Equivalents
Cash and Cash Equivalents, January 1
Cash and Cash Equivalents, December 31
Reconciliation of Cash and Cash
Equivalents to the Statement of Net Position
Cash and temporary investments
Restricted cash
Total Cash and Cash Equivalents
Electric Water Total
$ 43,811,156 $ 3,052,235 $ 46,863,391
626,368 133,014 759,382
(36,350,577) (1,379,029) (37,729,606)
(2,994,598) (747,412) (3,742,010)
5,092,349 1,058,808 6,151,157
(1,531,633) - (1,531,633)
(1,180) - (1,180)
(37,681) (81,912) (119,593)
(1,570,494) (81,912) (1,652,406)
(7,959,560)
(2,816,404)
(10,775,964)
-
1,547,930
1,547,930
56,538
-
56,538
(1,055,000)
(320,000)
(1,375,000)
(209,124)
-
(209,124)
(999,092)
(58,672)
(1,057,764)
(10,166,238) (1,647,146) (11,813,384)
(140,725) (69,062) (209,787)
(6,785,108) (739,312) (7,524,420)
23,459,971 10,806,896 34,266,867
$ 16,674,863 $ 10,067,584 $ 26,742,447
$ 14,895,847 $ 10,067,584 $ 24,963,431
1,779,016 - 1,779,016
$ 16,674,863 $ 10,067,584 $ 26,742,447
The notes to the financial statements are an integral part of this statement.
26
109
Elk River Municipal Utilities
Elk River, Minnesota
Statement of Cash Flows (Continued)
For the Year Ended December 31, 2022
Electric
Water
Total
Reconciliation of Operating Income (Loss) to
Net Cash Provided by Operating Activities
Operating income (loss)
$ 1,411,451
$ (179,146)
$ 1,232,305
Adjustments to reconcile operating income (loss)
to net cash provided by operating activities
Other revenue related to operations
906,323
424,994
1,331,317
Bad debt expense
12,993
28
13,021
Depreciation
31062,751
1,117,357
4,180,108
(Increase) decrease in assets/deferred outflows:
Accounts receivable
(15,019)
56,909
41,890
Other receivables
(56,972)
(202,501)
(259,473)
Special assessments receivable
3,119
6,491
9,610
Lease receivable
-
(5,188,673)
(5,188,673)
Due from other governments
(8,263)
-
(8,263)
Inventories
(218,567)
(6,784)
(225,351)
Prepaid expenses
3,847
(6,130)
(2,283)
Deferred pension resources
243,586
40,377
283,963
Increase (decrease) in liabilities/deferred inflows:
Accounts payable
(450,127)
(98,335)
(548,462)
Salaries and benefits payable
27,233
5,480
32,713
Unearned revenue
(1,067)
(71,559)
(72,626)
Compensated absences payable
57,104
6,131
63,235
Due to other governments
27,903
(758)
27,145
Customer deposits payable
39,605
17,400
57,005
Net pension liability
11810,623
355,050
2,165,673
Deferred pension resources
(1,764,174)
(329,631)
(2,093,805)
Deferred lease resources
-
5,112,108
5,112,108
Net Cash Provided by Operating Activities
Noncash Capital and
Related Financing Activities
Amortization of Bond Premium
Gain (Loss) on Disposal of Capital Assets
Book Value of Disposed Capital Assets
Capital Assets Purchased on Account
Contribution of Capital Assets
$ 5,092,349 $ 1,058,808 $ 6,151,157
$ 60,767
$ 6,651
$ 67,418
14,600
9,150
23,750
45,750
9,150
54,900
1,175,839
111,149
1,286,988
298,935
940306
1,239,241
The notes to the financial statements are an integral part of this statement.
27
110
I I I I IS WTTTLI a M 4 11 a I
*1We1OI:l1011110111910filIWA
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 1: Summary of Significant Accounting Policies
A. Nature of the Business
The Elk River Municipal Utilities (the Utilities) is a municipal utility established by action of the City of Elk River (the City)
pursuant to Minnesota statute 412.321 and consequently it's Electric and Water funds are enterprise funds of the City.
The Public Utilities Commission (the Commission) members are appointed by the City Council. The Commission
determines all matters of policy. The Commission appoints personnel responsible for the proper administration of all
affairs relating to the Utilities. The Utilities distribute electricity to the residents of Elk River and parts of Dayton, Big Lake
and Otsego, Minnesota. The Utilities distributes water to the residents of Elk River, Minnesota.
The Utilities has considered all potential units for which it is financially accountable, and other organizations for which the
nature and significance of their relationship with the Utilities are such that exclusion would cause the Utilities' financial
statements to be misleading or incomplete. The Governmental Accounting Standards Board (GASB) has set forth criteria
to be considered in determining financial accountability. These criteria include appointing a voting majority of an
organization's governing body, and (1) the ability of the primary government to impose its will on that organization or (2)
the potential for the organization to provide specific benefits to or impose specific financial burdens on the primary
government. There are no component units.
B. Measurement Focus, Basis of Accounting and Basis of Presentation
The accounts of the Utilities are organized and operated on the basis of funds. A fund is an independent fiscal and
accounting entity with a self -balancing set of accounts. Fund accounting segregates funds according to their intended
purpose and is used to aid management in demonstrating compliance with finance -related legal and contractual
provisions. The minimum number of funds is maintained consistently with legal and managerial requirements.
Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded
on an accrual basis when the exchange takes place.
Non -exchange transactions, in which the Utilities receives value without directly giving equal value in return, include
grants, entitlements and donations. Revenue from grants, entitlements and donations is recognized in the year in which all
eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year
when the resources are required to be used or the year when use is first permitted, matching requirements, in which the
Utilities must provide local resources to be used for a specified purpose, and expenditure requirements, in which the
resources are provided to the Utilities on a reimbursement basis.
Grants and entitlements received before eligibility requirements are met are also recorded as unearned revenue.
The preparation of the financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
Proprietary funds are accounted for on the flow of economic resources measurement focus and use the accrual basis of
accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are
incurred. Proprietary funds include the following fund type:
Enterprise funds account for those operations that are financed and operated in a manner similar to private business or
where the Utilities has decided that the determination of revenues earned, costs incurred and/or net income is necessary
for management accountability.
29
112
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 1: Summary of Significant Accounting Policies (Continued)
The Utilities reports the following major proprietary funds:
The Electric fund accounts for the electric distribution operations.
The Water fund accounts for the water distribution operations.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with a proprietary
fund's principal ongoing operations. The principal operating revenues of the Electric and Water enterprise funds are
charges to customers for sales and service. Operating expenses for enterprise funds include the cost of sales and
services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this
definition are reported as nonoperating revenues and expenses.
C. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position
Cash and Cash Equivalents
The Utilities' cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments
with original maturities of three months or less from the date of acquisition. The proprietary funds' portion in the
government -wide cash and temporary investments pool is considered to be cash and cash equivalents for purposes of
the statements of cash flows.
Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other
authorized investments. Earnings from such investments are allocated on the basis of applicable participation by each of
the funds.
The Utilities may also invest idle funds as authorized by Minnesota statutes, as follows:
1. Direct obligations or obligations guaranteed by the United States or its agencies.
2. Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the
highest credit rating, rated in one of the two highest rating categories by a statistical rating agency, and have a
final maturity of thirteen months or less.
3. General obligations of a state or local government with taxing powers rated "A" or better; revenue obligations
rated "AA" or better.
4. General obligations of the Minnesota Housing Finance Agency rated "A" or better.
5. Obligation of a school district with an original maturity not exceeding 13 months and (i) rated in the highest
category by a national bond rating service or (ii) enrolled in the credit enhancement program pursuant to statute
section 126C.55.
6. Bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System.
7. Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality
category by at least two nationally recognized rating agencies and maturing in 270 days or less.
8. Repurchase or reverse repurchase agreements and securities lending agreements with financial institutions
qualified as a "depository' by the government entity, with banks that are members of the Federal Reserve System
with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities to the Federal
Reserve Bank of New York, or certain Minnesota securities broker -dealers.
30
113
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 1: Summary of Significant Accounting Policies (Continued)
9. Guaranteed Investment Contracts (GIC's) issued or guaranteed by a United States commercial bank, a domestic
branch of a foreign bank, a United States insurance company, or its Canadian subsidiary, whose similar debt
obligations were rated in one of the top two rating categories by a nationally recognized rating agency.
Broker money market funds operate in accordance with appropriate state laws and regulations. The reported value of the
pool is the same as the fair value of the shares. The Utilities categorizes its fair value measurements within the fair value
hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to
measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs
are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The Utilities' recurring fair value
measurements are listed in detail on page 35 and are valued using a matrix pricing model (Level 2 inputs).
The Utilities has the following recurring fair value measurements as of December 31, 2022:
Negotiable certificates of deposit of $3,576,750 are valued using a matrix pricing model (Level 2 inputs).
Restricted Assets
The amounts in the restricted cash account are set aside in accordance with the issuing resolution for specific bond
issues. They will be used for future debt service.
Accounts Receivable
Accounts receivable include amounts billed for services provided before year end. The Utilities has established a reserve
for uncollectible accounts which is adjusted annually based on the receivable activity. No substantial losses from present
receivable balances are anticipated. A summary of the uncollectible account balances at December 31, 2022 is as
follows:
Electric
Water
Total
Interfund Receivables and Payables
011Yi►i
25,355
250
$ 25,605
Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the
fiscal year are referred to as either "interfund receivables/payables" (i.e., the current portion of interfund loans) or
"advances to/from other funds' (i.e., the non -current portion of interfund loans). All other outstanding balances between
funds are reported as "due to/from other funds".
Inventories and Prepaid items
Inventories of materials and supplies are recorded at average cost, using the first -in, first out (FIFO) method.
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items.
31
114
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 1: Summary of Significant Accounting Policies (Continued)
Lease Receivable
The Utilities' lease receivable is measured at the present value of lease payments expected to be received during the
lease term. Under the lease agreement, the Utilities may receive variable lease payments that are dependent upon the
lessee's revenue. The variable payments are recorded as an inflow of resources in the period the payment is received.
A deferred inflow of resources is recorded for the lease. The deferred inflow of resources is recorded at the initiation of
the lease in an amount equal to the initial recording of the lease receivable. The deferred inflow of resources is amortized
on a straight-line basis over the term of the lease.
Capital Assets
Capital assets are stated at cost. Capital assets are defined by the Utilities as assets with an initial individual cost of more
than $5,000 and an estimated useful life in excess of two years. Expenditures for maintenance and repairs are charged to
operations and expenditures that extend the useful life of the asset are capitalized and depreciated. When assets are
retired or sold, the related cost and accumulated depreciation are removed from the accounts and any gain or loss on
disposition is included as non -operating revenues or expenses. Donated capital assets are recorded at acquisition value
at the date of donation.
Major expenditures for improvements or capital asset projects are capitalized as projects are constructed.
The Utilities follow the policy of providing depreciation on the straight-line method over the estimated useful lives of the
assets, which are as follows:
Description
Production
Transmission
Distribution
General
Machinery, Tools and Equipment
Automobiles
Deferred Outflows of Resources
Lives in Years
Electric Water
4-20
25-50
30
0
10-33
25-50
10-50
10-50
5-10
5-10
3-8
3-8
In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of
resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net
position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure)
until then. The Utilities has one item, deferred pension resources, which qualifies for reporting in this category. Deferred
pension resources result from actuarial calculation and current year pension contributions subsequent to the
measurement date.
Compensated Absences
Vacation: All vacation benefits can carry over from year to year and will be payable upon termination or retirement. Upon
retirement, vacation can also be converted to cash and deposited into their Post Health Care Savings account. Unused
vacation carryover is limited to the number of hours accrued during the previous year.
32
115
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 1: Summary of Significant Accounting Policies (Continued)
Sick Leave: Sick leave can accumulate to a maximum of 960 hours from year to year. Upon termination or retirement,
employees will have 50 percent of unused sick leave, up to a maximum of 960 hours, converted to cash and deposited
into their Post Health Care Savings account.
The liability for vacation and sick pay is reported as a liability in the respective funds at year end.
Postemployment Benefits other than Pensions
Under Minnesota statute 471.61, subdivision 2b., public employers must allow retirees and their dependents to continue
coverage indefinitely in an employer -sponsored health care plan, under the following conditions:1) Retirees must be
receiving (or eligible to receive) an annuity from a Minnesota public pension plan, 2) Coverage must continue in group
plan until age 65, and retirees must pay no more than the group premium, and 3) Retirees may obtain dependent coverage
immediately before retirement. Elk River Utilities has switched to age -based medical premiums and no longer has an
Other Post -Employment Benefits liability. Since medical premiums are age -based, the premiums are equal to the expected
true cost of retiree coverage. As a result, there is no implicit subsidy for these benefits. There is also no explicit subsidy,
since retirees must pay the full premium to remain covered during retirement.
Pensions
For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense,
information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions
to/deductions from PERA's fiduciary net position have been determined on the same basis as they are reported by PERA
except that PERA's fiscal year end is June 30. For this purpose, plan contributions are recognized as of employer payroll
paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms.
Investments are reported at fair value.
The total pension expense for all plans recognized by the Utilities for the year ended December 31, 2022 was $708,795.
The components of pension expense are noted in the plan summaries in Note 3.
Long-term Obligations
Long-term debt is reflected as a liability in the fund issuing the obligation. Bond premiums and discounts are amortized
over the life of the bonds using the straight-line method. Bond issuance costs are reported as an expense in the period
incurred.
Performance Metrics and Incentive Compensation
Through the Utilities Performance Metric -based Incentive Compensation system (UPMIC) the Utilities employees will have
an opportunity, as a group, to each earn a maximum of 2 percent of their total gross wage paid during the Measurement
Period. The percentage of UMPIC is calculated using a Score Card. The Score Card has three categories: Safety, Reliability
and Quality of Utility Services which are divided into various weighted factors. This incentive was created to help the
Utilities to become more efficient and successful in meeting strategic goals and mission and deliver improved value to
the Utilities customers. The liability at year end is recorded as part of accrued wages.
Deferred Inflows of Resources
In addition to liabilities, the statement of net position and fund financial statements will sometimes report a separate
section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources,
represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of
resources (revenue) until that time. The Utilities has two types of items which qualify for reporting in this category. The
items, deferred pension resources and deferred lease resources, are reported only in the statement of net position and
results from actuarial calculations and future lease receipts.
33
116
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 1: Summary of Significant Accounting Policies (Continued)
Net Position
Net position represents the difference between assets and deferred outflows of resources and liabilities and deferred
inflows of resources. Net position is displayed in three components:
a. Net investment in capital assets - Consists of capital assets, net of accumulated depreciation reduced by any
outstanding debt attributable to acquired capital assets.
b. Restricted net position - Consists of net position restricted when there are limitations imposed on their use
through external restrictions imposed by creditors, grantors, laws or regulations of other governments.
c. Unrestricted net position - All other net positions that do not meet the definition of "restricted" or "net investment
in capital assets'.
When both restricted and unrestricted resources are available for use, it is the Utilities' policy to use restricted resources
first, then unrestricted resources as they are needed.
Note 2: Detailed Notes on All Funds
A. Deposits and Investments
Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the Utilities' deposits and
investments may not be returned or the Utilities will not be able to recover collateral securities in the possession of an
outside party. In accordance with Minnesota statutes and as authorized by the Commission, the Utilities maintains
deposits at those depository banks, all of which are members of the Federal Reserve System.
Minnesota statutes require that all Utilities deposits be protected by insurance, surety bond or collateral. The fair value of
collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds, with the exception of
irrevocable standby letters of credit issued by Federal Home Loan Banks as this type of collateral only requires collateral
pledged equal to 100 percent of the deposits not covered by insurance or bonds.
Authorized collateral in lieu of a corporate surety bond includes:
• United States government Treasury bills, Treasury notes, Treasury bonds;
• Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation
service available to the government entity;
• General obligation securities of any state or local government with taxing powers which is rated "A" or better by a
national bond rating service, or revenue obligation securities of any state or local government with taxing powers
which is rated "AA" or better by a national bond rating service;
• General obligation securities of a local government with taxing powers may be pledged as collateral against funds
deposited by that same local government entity;
• Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by
written evidence that the bank's public debt is rated "AA" or better by Moody's Investors Service, Inc., or Standard
& Poor's Corporation; and
• Time deposits that are fully insured by any federal agency.
34
117
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 2: Detailed Notes on All Funds (Continued)
Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a Federal Reserve
Bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or
controlled by the financial institution furnishing the collateral. The selection should be approved by the government entity.
At December 31, 2022, the Utilities' carrying amount of deposits was $23,118,212 and the bank balance was $23,170,843.
Of the bank balance $359,934 was covered by federal depository insurance, and the remaining balance was covered by
collateral held by the pledging financial institution's agent in the Utilities' name.
Investments
The Utilities' investment balances were as follows for December 31, 2022:
Credit
Quality/
Types of Investments Ratings (1)
Pooled Investments
Broker Money Markets N/A
Non -pooled Investments
Segmented
Time
Distribution (2)
Fair Value Measurement Using
Amount Level Level Level 3
less than 1 year $ 46,685 $ $ $
Negotiable certificates of deposits N/A less than 1 year 920,067
Negotiable certificates of deposits N/A 1 - 5 years 2,450,581
Negotiable certificates of deposits N/A 5 years or more 206,102
Total Non -pooled Investments 3,576,750
Total Investments
920,067
2,450,581
206,102
3,576,750
$ 3,623,435 $ - $ 3,576,750 $
(1) Ratings were provided by various credit rating agencies where applicable to indicate associated credit risk.
(2) Interest rate risk is disclosed using the segmented time distribution method.
N/A Indicates not applicable.
A reconciliation of cash and temporary investments as shown in the financial statements for the Utilities follows:
Deposits
Investments
Cash on Hand
Total
Cash and Temporary Investments
Unrestricted
Restricted
Total
2022
$ 23,118,212
3,623,435
800
$ 26,742,447
$ 24,963,431
1,779,016
$ 26,742,447
35
118
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 2: Detailed Notes on All Funds (Continued)
The investments of the Utilities are subject to the following risks:
• Credit Risk. Is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Ratings
are provided by various credit rating agencies and where applicable, indicate associated credit risk. Minnesota
statutes and the Utilities' investment policy limit the Utilities' investments to the list on page 30 of the notes.
• Custodial Credit Risk. The custodial credit risk for investments is the risk that, in the event of the failure of the
counterparty to a transaction, a government will not be able to recover the value of investment or collateral
securities that are in the possession of an outside party. According to their investment policy the Utilities'
portfolio maturities shall be staggered to avoid undue concentration of assets with one broker -dealer or financial
institution.
Concentration of Credit Risk. Is the risk of loss attributed to the magnitude of a government's investment in a
single issuer. According to their investment policy the Utilities' portfolio maturities shall be staggered to avoid
undue concentration of assets in any one type of instrument. As of December 31, 2022 the Utilities has invested
5.0 percent or more of its total investment portfolio in the following issuers: Capital One National Association VA
US (11.6 percent), Bank of China (7.1 percent), Morgan Stanley Bank UT US (6.6 percent), Popular Bank NY US
(6.4 percent), New York Community Bank US (6.3 percent) Goldman Sachs Bank NY US (6.2 percent) Texas
Exchange Bank TX US (6.2 percent), Institution for SV MA US (6.1 percent), Beal Bank Plano TX US (6.1 percent),
Sallie Mae Bank UT US (6.0 percent), BMO Harris Bank NA IL US (6.0 percent), JPMorgan Chase Bank OH US (5.9
percent), Celtic Bank UT US (5.7 percent), Ally Bank UT US (5.3 percent) and Comenity Bank DE US (5.0 percent).
• Interest Rate Risk. Is the risk that changes in interest rates will adversely affect the fair value of an investment.
According to their investment policy the Utilities' will stagger maturities to avoid undue concentration of assets at
a specific maturity sector.
B. Lease Receivable
The Utilities has multiple leases with Verizon and Sprint that allows them to place antennas on water towers. The lease
payments increase yearly. As of December 31, 2022, the Utilities' receivable balance was $5,231,837. This is partially
offset with deferred inflow of lease resources.
Lease
Receivable
Interest
Authorized
Interest
Issue
Maturity
Balance at
Receivable at
Balance at
Description
and Issued
Rate
Date
Date
Year End
Year End
Year End
Sprint Lease on Johnson St.
$ 741,068
1.41 i
06/01/10
05/31/35
$ 696,334
$ 5,748
$ 702,082
Sprint Lease on Gary St.
694,752
1.41
06/01 /10
05/31 /35
652,814
5,388
658,202
Sprint Lease on Auburn St.
694,752
1.41
06/01 /10
05/31 /35
652,814
5,388
658,202
Verizon Lease on Johnson St.
837,781
1.60
09/01 /14
08/31 /39
805,646
4,279
809,925
Verizon Lease on Auburn St.
909,094
1.70
01/01/17
12/31/42
872,594
14,950
887,544
Verizon Lease on Freeport St.
724,310
1.78
10/01 /20
09/30/45
702,825
3,132
705,957
Verizon Lease on Gary St.
837,781
1.59
09/01 /14
08/31 /39
805,646
4,279
809,925
Total Lease Receivable
$ 5, 331,837
36
119
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 2: Detailed Notes on All Funds (Continued)
Future lease receivable payments are as follows:
Year Ending
December 31,
Principal
Interest
Total
2023
$ 220,218
$ 81,781
$ 301,999
2024
235,035
78,407
313,442
2025
250,524
74,806
325,330
2026
266,714
70,966
337,680
2027
283,634
66,879
350,513
2028 - 2032
1,699,668
263,565
1,963,233
2033 - 2037
1,507,025
127,261
1,634,286
2038 - 2042
632,816
34,262
667,078
2043 - 2045
93,039
2,520
95,559
Total
$ 5,188,673
$ 800,447
$ 5,989,120
C. Capital Assets
Capital asset activity for the year ended December
31, 2022 was as follows:
Beginning
Ending
Balance
Increases
Decreases
Balance
Capital Assets not
being Depreciated
Land
$ 858,244
$ 40,340
$
$ 898,584
Intangible
25,895,865
940,467
26,836,332
Construction in progress
71243,598
8,795,778
(13,687,789)
2,351,587
Total Capital Assets
not being Depreciated
33,997,707
9,776,585
(13,687,789)
30,086,503
Capital Assets being Depreciated
Land improvements
34,081
-
34,081
Buildings
4,537,236
12,381,413
16,918,649
Machinery and equipment
4,677,490
856,937
(193,819)
5,340,608
Infrastructure
95,008,180
2,773,811
(3,851,442)
93,930,549
Total Capital Assets
being Depreciated
104,256,987
16,012,161
(4,045,261)
116,223,887
Less Accumulated
Depreciation for
Intangible
(2,170,287)
(668,136)
(2,838,423)
Land improvements
(21,477)
(1,649)
(23,126)
Buildings
(2,351,838)
(194,015)
-
(2,545,853)
Machinery and equipment
(2,896,712)
(419,518)
148,068
(3,168,162)
Infrastructure
(49,463,770)
(2,896,790)
3,851,442
(48,509,118)
Total Accumulated
Depreciation
(56,904,084)
(4,180,108)
3,999,510
(57,084,682)
Total Capital Assets
being Depreciated, Net
47,352,903
11,832,053
(45,751)
59,139,205
Business -type Activities
Capital Assets, Net
$ 81,350,610
$ 21,608,638
$ (13,733,540)
$ 89,225,708
37
120
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 2: Detailed Notes on All Funds (Continued)
Depreciation expense was charged to functions/programs of the Utilities as follows:
Business -type Activities
Electric
Water
Total Depreciation Expense - Business -type Activities
Construction Commitment
The Utilities had the following outstanding construction commitment at December 31, 2022:
Project
Field Service Project - RJM Construction
D. Long-term Debt
General Obligation Revenue Bonds
2022
$ 3,062,751
1,117,357
$ 4,180,108
Spent Remaining
to Date Commitment
$ 11,792,320 $ 466,351
The City of Elk River issues general obligation bonds to provide funds for the acquisition and construction of major capital
facilities. The following bonds are to be paid out of Utilities' revenues and are backed by the full faith and credit of the
City.
Description
G.O. Water Revenue
Bonds, Series 2021 C
Authorized Interest Issue Maturity Balance at
andlssued Rate Date Date Year End
1,615,000 2.00 - 4.00 % 06/10/21 08/01 /41 $ 1,565,000
The annual debt service requirements to maturity for the general obligation revenue bonds are as follows:
Year Ending
December 31,
2023
2024
2025
2026
2027
2028 - 2032
2033 - 2037
2038 - 2041
Total
Principal
Interest Total
$ 60,000
$ 44,000
$ 104,000
60,000
41,600
101,600
65,000
39,200
104,200
70,000
36,600
106,600
70,000
33,800
103,800
395,000
124,400
519,400
450,000
66,900
516,900
395,000
19,900
414,900
$ 1,565,000
$ 406,400
$ 1,971,400
In 2022, annual principal and interest payment on the bonds required about 12.6% percent of revenues from the Water
fund. The principal and interest paid and total customer revenues for the Water fund were $377,444 and $2,988,835
respectively.
38
121
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 2: Detailed Notes on All Funds (Continued)
Revenue Bonds
The revenue bonds were issued to facilitate the membership buy -in with MMPA and construction of major capital
facilities and are to be repaid from future revenue pledged from the Electric fund. They will be retired from net revenues of
the fund.
Authorized
Interest
Issue
Maturity
Balance at
Description
and Issued
Rate
Date
Date
Year End
Electric Revenue Bonds, Series 2016A
$ 9,755,000
2.00 - 4.00 %
07/14/16
02/01 /36
$ 7,995,000
Electric Revenue Bonds, Series 2018A
10,000,000
3.50 - 5.00
09/26/18
08/01 /48
9,225,000
Electric Revenue Bonds, Series 2021 B
11,810,000
2.00 - 5.00
05/13/21
08/01 /51
11,655,000
Total Revenue Bonds
$ 28,875,000
The annual debt service requirements to maturity for the revenue bonds are as follows:
Year Ending
December 31,
2023
2024
2025
2026
2027
2028 - 2032
2033 - 2037
2038 - 2042
2043 - 2047
2048 - 2051
Total
Principal
$ 915,000
955,000
990,000
1,035,000
1,075,000
5,925,000
6,240,000
4,225,000
4,845,000
2,670,000
Interest
$ 885,756
849,381
811,306
774,406
738,256
3,110,300
2,112,463
1,396,156
771,688
140,738
Total
$ 1,800,756
1,804,381
1,801,306
1,809,406
1,813,256
9,035,300
8,352,463
5,621,156
5,616,688
2,810,738
$ 28,875,000 $ 11,590,450 $ 40,465,450
In 2022, annual principal and interest payment on the bonds required about 4.7% percent of revenues from the Electric
fund. The principal and interest paid and total customer revenues for the Electric fund were $2,049,201 and $43,823,056,
respectively.
39
122
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 2: Detailed Notes on All Funds (Continued)
Changes in Long-term Liabilities
Long-term liability activity for the year ended December 31, 2022 was as follows:
Beginning
Ending
Due Within
Balance Increases Decreases
Balance
One Year
Business -type Activities
Bonds Payable
General obligation
revenue bonds
$ 1,885,000 $ - $ (320,000)
$ 1,565,000
$ 60,000
Revenue bonds
29,930,000 - (1,055,000)
28,875,000
915,000
Unamortized premium
on bonds
1,506,138 - (67,418)
1,438,720
-
Total Bonds Payable, Net
33,321,138 - (1,442,418)
31,878,720
975,000
Notes Payable
209,124 - (209,124)
-
-
Compensated
Absences Payable
413,565 469,874 (406,639)
476,800
476,800
Business -type Activity
Long-term
Liabilities
$ 33,943,827 $ 469,874 $ (2,058,181)
$ 32,355,520
$ 1,451,800
40
123
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 2: Detailed Notes on All Funds (Continued)
E. Interfund Receivables, Payables and Transfers
Interfunds
The composition of interfund balances at year end is as follows:
Receivable Fund Payable Fund
Electric City
Electric City
Total Electric Fund Receivable From City
Water City
Total Receivable From City
City
Electric
City
Electric
City
Electric
City
Electric
City
Electric
City
Electric
City
Electric
City
Electric
City
Electric
City
Electric
Electric
Total Electric Fund Payable to City
City
Water
City
Water
City
Water
City
Water
City
Water
City
Water
Total Water Fund Payable to City
Total Payable to City
Transfers
Amount Purpose
$ 2,921 November billings
2,609 December billings
5,530
128,850
TIF 22 Water Access Charge
$ 134,380
$ 114,116
Shared costs
7,962
Supplies and Fuel
1,900
Bond disclosure services
127,568
December transfer of revenue
265,113
4th quarter franchise fees
202,132
Billed sewer on behalf of City
158,352
Billed garbage on behalf of City
51,085
Billed stormwater on behalf of City
90,720
Current portion of 2020B due to City
1,890
Interest accrued of 2020B due to City
544
Parts & Labor
1,021,382
28,529
Shared costs
1,430
Supplies and Fuel
363
Bond disclosure services
22,680
Current portion of 2020B due to City
472
Interest accrued of 2020B due to City
61
Parts & Labor
5J,5J5
$ 1,074,917
During the year ended December 31, 2022, the Utilities made the following transfer:
• The transfer out of the Electric fund was the annual transfer of 4 percent of 2022 Elk River revenues to City funds.
The Electric fund transferred $1,531,633 in 2022.
41
124
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 3: Defined Benefit Pension Plans - Statewide
A. Plan Description
The Utilities participates in the following cost -sharing multiple -employer defined benefit pension plans administered by
the Public Employees Retirement Association of Minnesota (PERA). PERA's defined benefit pension plans are established
and administered in accordance with Minnesota statutes, chapters 353 and 356. PERA's defined benefit pension plans are
tax qualified plans under Section 401(a) of the Internal Revenue Code.
General Employees Retirement Plan
All full-time and certain part-time employees of the Utilities are covered by the General Employees Plan General
Employees Plan members belong to the Coordinated Plan. Coordinated Plan members are covered by Social Security.
B. Benefits Provided
PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statute and can only
be modified by the state Legislature. Vested, terminated employees who are entitled to benefits but are not receiving them
yet are bound by the provisions in effect at the time they last terminated their public service.
General Emolovee Plan Benefits
General Employees Plan benefits are based on a member's highest average salary for any five successive years of
allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for
PERA's Coordinated Plan members. Members hired prior to July 1,1989, receive the higher of Method 1 or Method 2
formulas. Only Method 2 is used for members hired after June 30,1989. Under Method 1, the accrual rate for Coordinated
members is 1.2 percent of the average salary for each of the first 10 years of service and 1.7 percent of average salary for
each additional year. Under Method 2, the accrual rate for Coordinated members is 1.7 percent for average salary for all
years of service. For members hired prior to July 1,1989, a full annuity is available when age plus years of service equal
90 and normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement age is the age for
unreduced Social Security benefits capped at 66.
Benefit increases are provided to benefit recipients each January. The postretirement increase is equal to 50 percent of
the cost -of -living adjustment (COLA) announced by the SSA, with a minimum increase of at least 1 percent and a
maximum of 1.5 percent. Recipients that have been receiving the annuity or benefit for at least a full year as of the
June 30 before the effective date of the increase will receive the full increase. Recipients receiving the annuity or benefit
for at least one month but less than a full year as of June 30 before the effective date of the increase will receive a
reduced prorated increase. For members retiring on January 1, 2024, or later, the increase will be delayed until normal
retirement age (age 65 if hired prior to July 1,1989, or age 66 for individuals hired on or after July 1,1989). Members
retiring under Rule of 90 are exempt from the delay to normal retirement.
C. Contributions
Minnesota statutes chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be
modified by the state Legislature.
General EmoloveeS Fund Contributions
Coordinated Plan members were required to contribute 6.50 percent of their annual covered salary in fiscal year 2022 and
the Utilities was required to contribute 7.50 percent for Coordinated Plan members. The Utilities' contributions to the
General Employees Fund for the years ending December 31, 2022, 2021 and 2020 were $333,178, $312,376 and $289,644,
respectively. The Utilities' contributions were equal to the required contributions for each year as set by state statute.
42
125
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 3: Defined Benefit Pension Plans - Statewide (Continued)
D. Pension Costs
General Employees Fund Pension Costs
At December 31, 2022, the Utilities reported a liability of $4,514,419 for its proportionate share of the General Employees
Fund's net pension liability. The Utilities' net pension liability reflected a reduction due to the State of Minnesota's
contribution of $16 million. The State of Minnesota is considered a non -employer contributing entity and the state's
contribution meets the definition of a special funding situation. The State of Minnesota's proportionate share of the net
pension liability associated with the Utilities totaled $132,415. The net pension liability was measured as of June 30, 2022,
and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that
date. The Utilities' proportionate share of the net pension liability was based on the Utilities' contributions received by
PERA during the measurement period for employer payroll paid dates from July 1, 2021 through June 30, 2022 relative to
the total employer contributions received from all of PERA's participating employers. The Utilities' proportionate share
was 0.0570 percent which was an increase of 0.0020 percent from its proportion measured as of June 30, 2021.
Utilities' Proportionate Share of the Net Pension Liability
State of Minnesota's Proportionate Share of the Net Pension
Liability Associated with the Utilities
Total
$ 4,514,419
132,415
$ 4,646,834
For the year ended December 31, 2022, the Utilities recognized pension expense of $689,009 for its proportionate share of
the General Employees Plan's pension expense. In addition, the Utilities recognized an additional $19,786 as pension
expense (and grant revenue) for its proportionate share of the State of Minnesota's contribution of $16 million to the
General Employees Fund.
At December 31, 2022, the Utilities reported its proportionate share of the General Employees Plan's deferred outflows of
resources and deferred inflows of resources, related to pensions from the following sources:
Differences between Expected and
Actual Economic Experience
Changes in Actuarial Assumptions
Net Difference between Projected and
Actual Earnings on Plan Investments
Changes in Proportion
Contributions paid to PERA subsequent
to the Measurement Date
Total
Deferred Deferred
Outflows Inflows
of Resources of Resources
$ 37,708
986,929
129,693
88,713
$ 46,457
17,395
$ 1,414,144 $ 63,852
43
126
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 3: Defined Benefit Pension Plans - Statewide (Continued)
The $171,101 reported as deferred outflows of resources related to pensions resulting from the Utilities' contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended
December 31, 2023. Other amounts reported as deferred outflows and inflows of resources related to pensions will be
recognized in pension expense as follows:
2023
2024
2025
2026
E. Long -Term Expected Return on Investment
$ 461,892
432,728
(123,690)
408,261
The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on
a regular basis of the long-term expected rate of return using a building-block method in which best -estimate ranges of
expected future rates of return are developed for each major asset class. These ranges are combined to produce an
expected long-term rate of return by weighting the expected future rates of return by the target asset allocation
percentages. The target allocation and best estimates of geometric real rates of return for each major asset class are
summarized in the following table:
Asset Class
Domestic Equity
Private Markets
Fixed Income
International Equity
Total
F. Actuarial Assumptions
Long-term
Target Expected Real
Allocation Rate of Return
33.5 % 5.10 %
25.0 5.90
25.0 0.75
16.5 5.30
100.0 %
The total pension liability in the June 30, 2022 actuarial valuation was determined using an individual entry -age normal
actuarial cost method. The long-term rate of return on pension plan investments used in the determination of the total
liability is 6.5 percent. This assumption is based on a review of inflation and investments return assumptions from a
number of national investment consulting firms. The review provided a range of return investment return rates deemed to
be reasonable by the actuary. An investment return of 6.5 percent was deemed to be within that range of reasonableness
for financial reporting purposes.
Inflation is assumed to be 2.25 percent for the General Employees Plan. Benefit increases after retirement are assumed to
be 1.25 percent for the General Employees Plan.
Salary growth assumptions in the General Employees Plan range in annual increments from 10.25 percent after one year
of service to 3.0 percent after 27 years of service.
Mortality rates for the General Employees Plan are based on the Pub-2010 General Employee Mortality Table. The tables
are adjusted slightly to fit PERA's experience.
44
127
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 3: Defined Benefit Pension Plans - Statewide (Continued)
Actuarial assumptions used in the June 30, 2022 valuation was based on the results of actuarial experience studies. The
most recent four-year experience study in the General Employees Plan was completed in 2019. The assumption changes
were adopted by the Board and become effective with the July 1, 2020, actuarial valuation.
The following changes in actuarial assumptions and plan provisions occurred in 2022:
General Employees Fund
Changes in Actuarial Assumptions
• The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021.
Changes in Plan Provisions
There were no changes in plan provisions since the previous valuation.
G. Discount Rate
The discount rate used to measure the total pension liability in 2022 was 6.50 percent. The projection of cash flows used
to determine the discount rate assumed that contributions from plan members and employers will be made at rates set in
Minnesota Statutes. Based on these assumptions, the fiduciary net position of the General Employees Fund was
projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term
expected rate of return on pension plan investments was applied to all periods of projected benefit payments to
determine the total pension liability.
H. Pension Liability Sensitivity
The following presents the Utilities' proportionate share of the net pension liability for all plans it participates in, calculated
using the discount rate disclosed in the preceding paragraph, as well as what the Utilities' proportionate share of the net
pension liability would be if it were calculated using a discount rate one percentage point lower or one percentage point
higher than the current discount rate:
1 Percent 1 Percent
Decrease (5.50%) Current (6.50%) Increase (7.50%)
General Employees Fund $ 7,130,761 $ 4,514,419 $ 2,368,614
Pension Plan Fiduciary Net Position
Detailed information about each pension plan's fiduciary net position is available in a separately issued PERA financial
report that includes financial statements and required supplementary information. That report may be obtained on the
Internet at www.mnpera.org.
45
128
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 4: Other Information
A. Territorial Acquisition Agreement
In 2015, the Utilities entered into an agreement to transfer ownership of electric plants and electric service to customers
in eight designated areas receiving service from Connexus Energy. Specific payment terms have been negotiated for 5
years, and if any of the eight areas are not acquired within this timeframe, the payment terms may be renegotiated. In
2019, the Utilities acquired the final service areas.
The agreed cost of property purchased from Connexus Energy is net book value, integration expenses, and a loss of
revenue payment. The loss of revenue payment for each area acquired is based on a formula outlined in the agreement,
payable for the subsequent ten years after initial purchase.
The Utilities acquired designated service area 1 in 2015 for $877,807, service area 2 in 2016 for $663,586, service areas 3
and 4 in 2017 for $276,776, service areas 5 and 6 in 2018 for $298,736 and service areas 7 and 8 in 2019 for $78,457. The
loss of revenue payments made were $411,157 in 2017, $570,725 in 2018, $751,860 in 2019, $834,185 in 2020, $857,538
in 2021, $924,187 in 2022, and $940,467 in 2023. All amounts paid are included in property and equipment, and loss of
revenue payments are included in intangible assets.
B. Risk Management
The Utilities are exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and
omissions; injuries to employees; and natural disasters for which the Utilities carries commercial insurance. The Utilities
obtain insurance through participation in the League of Minnesota Cities Insurance Trust (LMCIT), which is a risk sharing
pool with approximately 800 other governmental units. The Utilities pays an annual premium to LMCIT for its workers
compensation and property and casualty insurance. The LMCIT is self-sustaining through member premiums and will
reinsure for claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded the
Utilities' coverage in any of the past three fiscal years.
Liabilities are reported when it is probable that a loss has occurred, and the amount of the loss can be reasonably
estimated. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The Utilities'
management is not aware of any incurred but not reported claims.
C. Commitments
The Utilities entered into an agreement in 2007 with Central Minnesota Municipal Power Agency (CMMPA) to acquire an
interest in the CAPX Initiative Brookings Project, a power transmission line in Minnesota. The project is a 250-mile, 345 kV
AC transmission line with a rating of 2,300 MW, between Brookings, South Dakota, and the Southeast Twin Cities. In 2011
there was increased opportunity for investment, and subsequent agreements provide the Utilities with an ownership share
of $5.6 million or 18.89 percent. Revenues have been less than originally projected due to the decrease in Rate of Return
(ROE) issued by FERC. The original ROE 12.38% has been reduced to 10.52%. The current return of 10.52% on this
investment through CMMPA is designed to provide approximately $80K annually over the 40-year project life. With
majority of the distribution once the bonds are paid off. The projected over recovery in 2022 is estimated to be $25K The
bond obligations are satisfied first, distribution to participants is directly affected by over recovery. The over recovery is
rolled forward under the true up. However,the over recovery in 2022 (approximately $25K) would be included in the
revenue requirements in 2024. The transmission payments for 2022 were $78,165, all of which was a receivable at
December 31, 2022.
46
129
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2022
Note 5: Change in Accounting Principles
For the year end December 31, 2022, the Utilities implemented Governmental Accounting Standards Board (GASB)
Statement No. 87, Leases. GASB Statement No. 87 enhances the relevance and consistency of information of the
government's leasing activities. It establishes requirements for lease accounting based on the principle that leases are
financings of the right to use an underlying asset. A lessee is required to recognize a lease liability and an intangible right
to use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. These
changes were incorporated in the Utilities' 2022 financial statements and had no effect on the beginning net position of
the Governmental Activities.
47
130
I I I I IS WTTTLI a M 4 11 a I
*1We1OI:l1011110111910filIWA
48
131
REQUIRED SUPPLEMENTARY INFORMATION
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2022
49
132
Elk River Municipal Utilities
Elk River, Minnesota
Required Supplementary Information
For the Year Ended December 31, 2022
Schedule of Employer's Share of PERA Net Pension Liability - General Employees Fund
Utilities
State's
Proportionate
Proportionate
Share of the
Utilities
Share of
Net Pension
Proportionate
the Net Pension
Liability as a
Plan Fiduciary
Utilities
Share of
Liability
Utilities
Percentage of
Net Position
Fiscal
Proportion of
the Net Pension
Associated with
Covered
Covered
as a Percentage
Year
the Net Pension
Liability
the Utilities
Total
Payroll
Payroll
of the Total
Ending
Liability
(a)
(b)
(a+b)
(c)
(a/c)
Pension Liability
06/30/22
0.0570 %
$ 4,514,419
$ 132,415
4,646,834
$ 4,272,380
105.7 %
76.7 %
06/30/21
0.0550
2,348,746
71,625
2,420,371
3,957,147
59.4
87.0
06/30/20
0.0540
3,237,547
99,718
3,337,265
3,848,179
84.1
79.0
06/30/19
0.0520
2,874,964
89,329
2,964,293
3,680,233
78.1
80.2
06/30/18
0.0520
2,884,747
94,615
2,979,362
3,494,641
82.5
79.5
06/30/17
0.0540
3,447,324
43,337
3,490,661
3,478,022
99.1
75.9
06/30/16
0.0508
4,124,708
53,908
4,178,616
3,151,720
130.9
68.9
06/30/15
0.0478
2,477,244
-
2,477,244
2,811,834
88.1
78.2
Note: Schedule is intended to show 10 year trend. Additional years will be reported as they become available.
Schedule of Employer's PERA Contributions - General Employees Fund
Year
Ending
Statutorily
Required
Contribution
(a)
Contributions in
Relation to the
Statutorily
Required
Contribution
(b)
Contribution
Deficiency
(Excess)
(a-b)
Utilities
Covered
Payroll
(c)
Contributions as
a Percentage of
Covered Payroll
(b/c)
12/31 /22
$ 333,178 $
333,178
- $ 4,442,376
7.5 %
12/31 /21
312,376
312,376
- 4,165,013
7.5
12/31/20
289,644
289,644
- 3,861,920
7.5
12/31 /19
285,668
285,668
- 3,808,909
7.5
12/31 /18
265,424
265,424
- 3,538,988
7.5
12/31 /17
257,780
257,780
- 3,437,072
7.5
12/31 /16
244,012
244,012
- 3,253,493
7.5
12/31 /15
230,074
230,074
- 3,067,659
7.5
Note: Schedule is intended to show 10 year trend. Additional years will be reported as they become available.
50
133
Elk River Municipal Utilities
Elk River, Minnesota
Required Supplementary Information (Continued)
For the Year Ended December 31, 2022
Notes to the Required Supplementary Information - General Employee Retirement Fund
Changes in Actuarial Assumptions
2022 - The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021.
2021 - The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial
reporting purposes. The mortality improvement scale was changed from Scale MP-2019 to Scale MP-2020.
2020 - The price inflation assumption was decreased from 2.50% to 2.25%. The payroll growth assumption was
decreased from 3.25% to 3.00%. Assumed salary increase rates were changed as recommended in the June 30, 2019
experience study. The net effect is assumed rates that average 0.25% less than previous rates. Assumed rates of
retirement were changed as recommended in the June 30, 2019 experience study. The changes result in more unreduced
(normal) retirements and slightly fewer Rule of 90 and early retirements. Assumed rates of termination were changed as
recommended in the June 30, 2019 experience study. The new rates are based on service and are generally lower than the
previous rates for years 2-5 and slightly higher thereafter. Assumed rates of disability were changed as recommended in
the June 30, 2019 experience study. The change results in fewer predicted disability retirements for males and females.
The base mortality table for healthy annuitants and employees was changed from the RP-2014 table to the Pub-2010
General Mortality table, with adjustments. The base mortality table for disabled annuitants was changed from the RP-
2014 disabled annuitant mortality table to the PUB-2010 General/Teacher disabled annuitant mortality table, with
adjustments. The mortality improvement scale was changed from Scale MP-2018 to Scale MP-2019. The assumed
spouse age difference was changed from two years older for females to one year older. The assumed number of married
male new retirees electing the 100% Joint & Survivor option changed from 35% to 45%. The assumed number of married
female new retirees electing the 100% Joint & Survivor option changed from 15% to 30%. The corresponding number of
married new retirees electing the Life annuity option was adjusted accordingly.
2019 - The mortality projection scale was changed from MP-2017 to MP-2018.
2018 - The morality projection scale was changed from MP-2015 to MP-2017. The assumed benefit increase was
changed from 1.00 percent per year through 2044 and 2.50 percent per year thereafter to 1.25 percent per year.
2017 - The Combined Service Annuity (CSA) loads were changed from 0.8 percent for active members and 60 percent for
vested and non -vested deferred members. The revised CSA loads are now 0.0 percent for active member liability,15.0
percent for vested deferred member liability and 3.0 percent for non -vested deferred member liability. The assumed post -
retirement benefit increase rate was changed from 1.0 percent per year for all years to 1.0 percent per year through 2044
and 2.5 percent per year thereafter.
2016 - The assumed post -retirement benefit increase rate was changed from 1.0 percent per year through 2035 and 2.5
percent per year thereafter to 1.0 percent per year for all future years. The assumed investment return was changed from
7.9 percent to 7.5 percent. The single discount rate was changed from 7.9 percent to 7.5 percent. Other assumptions
were changed pursuant to the experience study dated June 30, 2015. The assumed future salary increases, payroll
growth and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth and 2.50 percent for inflation.
2015 - The assumed post -retirement benefit increase rate was changed from 1.0 percent per year through 2030 and 2.5
percent per year thereafter to 1.0 percent per year through 2035 and 2.5 percent per year thereafter.
51
134
Elk River Municipal Utilities
Elk River, Minnesota
Required Supplementary Information (Continued)
For the Year Ended December 31, 2022
Notes to the Required Supplementary Information - General Employee Retirement Fund — (Continued)
Changes in Plan Provisions
2022 — There were no changes in plan provisions since the previous valuation.
2021 - There were no changes in plan provisions since the previous valuation.
2020 - Augmentation for current privatized members was reduced to 2.0% for the period July 1, 2020 through
December 31, 2023 and 0.0% after. Augmentation was eliminated for privatizations occurring after June 30, 2020.
2019 - The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0
million per year. The state's special funding contribution was changed prospectively, requiring $16.0 million due per year
through 2031.
2018 - The augmentation adjustment in early retirement factors is eliminated over a five-year period starting July 1, 2019,
resulting in actuarial equivalence after June 30, 2024. Interest credited on member contributions decreased from 4.00
percent to 3.00 percent, beginning July 1, 2018. Deferred augmentation was changed to 0.00 percent, effective
January 1, 2019. Augmentation that has already accrued for deferred members will still apply. Contribution stabilizer
provisions were repealed. Postretirement benefit increases were changed from 1.00 percent per year with a provision to
increase to 2.50 percent upon attainment of 90.00 percent funding ratio to 50.00 percent of the Social Security Cost of
Living Adjustment, not less than 1.00 percent and not more than 1.50 percent, beginning January 1, 2019. For retirements
on or after January 1, 2024, the first benefit increase is delayed until the retiree reaches normal retirement age; does not
apply to Rule of 90 retirees, disability benefit recipients, or survivors. Actuarial equivalent factors were updated to reflect
revised mortality and interest assumptions.
2017 - The State's contribution for the Minneapolis Employees Retirement Fund equals $16,000,000 in 2017 and 2018,
and $6,000,000 thereafter. The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund
changed from $21,000,000 to $31,000,000 in calendar years 2019 to 2031. The state's contribution changed from
$16,000,000 to $6,000,000 in calendar years 2019 to 2031.
2016 - There were no changes in plan provisions since the previous valuation.
2015 - On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General Employees Fund,
which increased the total pension liability by $1.1 billion and increased the fiduciary plan net position by $892 million.
Upon consolidation, state and employer contributions were revised.
52
135
SUPPLEMENTARY INFORMATION
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2022
53
136
Operating Revenues
Charges for services
Elk River
Otsego
Big Lake
Dayton
Other
LFG Project
Substation credit
Connection maintenance
Customer penalties
Total Operating Revenues
Operating Expenses
Purchased power
Production
Supervision and labor
Natural gas
Supplies and power for pumping
Landfill gas expense
Maintenance of structures
Maintenance of equipment
Maintenance of plant
Total production
Transmission and distribution
Supervision and labor
Maintenance of overhead lines
Maintenance of underground lines
Maintenance of station equipment
Transportation
Maintenance of customer service
Maintenance of customer meters
Miscellaneous
Total transmission and distribution
Services to City
Depreciation and amortization
Customer accounts expense
Meter reading
Billing and collection
Bad debts
Total customer accounts expense
Elk River Municipal Utilities
Elk River, Minnesota
Supplementary Information
Schedule of Operating Revenues and Expenses
For the Year Ended December 31, 2022
Electric
Water
Total
$ 37,655,380
$ 2,887,276
$ 40,542,656
3,351,689
-
3,351,689
203,559
203,559
249,416
249,416
895,668
895,668
935,004
935,004
4,800
-
4,800
243,088
75,365
318,453
284,452
26,194
310,646
43,823,056
2,988,835
46,811,891
31,544,604
31,544,604
138,045
66,134
204,179
23,611
-
23,611
51,876
326,566
378,442
519,629
-
519,629
20,295
114,397
134,692
11,756
173,982
185,738
28,087
-
28,087
793,299
681,079
1,474,378
28,317
9,341
37,658
600,892
-
600,892
354,968
354,968
135,156
-
135,156
288,625
15,428
304,053
12,849
58,631
71,480
123,165
214,567
337,732
471,693
9,225
480,918
2,015,665
307,192
2,322,857
231,861
540 232,401
3,062,751
1,117,357
4,180,108
49,301
2,347
51,648
328,944
78,910
407,854
12,993
28
13,021
391,238
81,285
472,523
54
137
Elk River Municipal Utilities
Elk River, Minnesota
Supplementary Information
Schedule of Operating Revenues and Expenses (Continued)
For the Year Ended December 31, 2022
Electric
Water
Total
Operating Expenses (Continued)
General and administrative
Salaries
$ 805,290
$ 234,617
$ 1,039,907
Employee pensions and benefits
2,397,318
514,727
2,912,045
Dues
125,052
75,542
200,594
Office supplies and billing expense
71,133
14,866
85,999
Office utilities and maintenance
49,106
11,501
60,607
Consulting fees
54,841
20,055
74,896
Legal and audit
47,585
11,849
59,434
Environmental compliance
31,921
1,578
33,499
Conservation improvement project
375,065
5,949
381,014
Insurance
170,663
30,952
201,615
Telephone
38,141
8,901
47,042
Advertising
12,247
2,933
15,180
Education and meetings
193,041
41,818
234,859
Miscellaneous
784
5,240
6,024
Total general and administrative
4,372,187
980,528
5,352,715
Total Operating Expenses
42,411,605
3,167,981
45,579,586
Operating Income (Loss)
1,411,451
(179,146)
1,232,305
Nonoperating Revenues (Expenses)
Interest income (loss)
(159,502)
(30,592)
(190,094)
Miscellaneous revenue
906,323
424,994
1,331,317
Interest expense and other
(851,199)
(40,948)
(892,147)
Gain/(loss) on sale of capital assets
41,938
(9,150)
32,788
Total Nonoperating
Revenues
(62,440)
344,304
281,864
Income before Contributions and Transfers
1,349,011
165,158
1,514,169
Capital Contributions
Connection Fees
1,547,930
1,547,930
Contributions from Developers
-
940,306
940,306
Contributions from Customers
298,935
-
298,935
Transfers to Other City Funds
(1,531,633)
-
(1,531,633)
Total Contributions and Transfers
(1,232,698)
2,488,236
1,255,538
Change in Net Position
116,313
2,653,394
2,769,707
Net Position, January 1
46,867,648
28,234,010
75,101,658
Net Position, December 31
$ 46,983,961
$ 30,887,404
$ 77,871,365
55
138
Elk River Municipal Utilities
Elk River, Minnesota
Electric Fund
Summary of Operations and Unaudited Statistics
For the Years Ended December 31, 2013 through December 31, 2022
Summary of Operations
Operating Revenues
Sales of electricity
Other operating revenues (expenses)
Total Operating Revenues
Operating Expenses
Purchased power
Distribution
Services to the City
Depreciation
Other operating expenses
Total Operating Expenses
Operating Income
Capital Contributions
Transfers to Other City Funds
Special Item
Nonoperating Revenues
Net Income
Percent of Change
Sales of electricity
Purchased power
Percent of Revenues
Purchased power
Unaudited Statistics
Miscellaneous
kWh's purchased
kWh's sold
Line loss
Percent of line loss
Revenues Per kWh Sold
Cost Per kWh Purchased
Number of Customers
Total Contribution/Transfers to City
$ 30,978,790 $ 31,514,246 $ 32,704,279 $ 34,569,098
(132,411) (147,561) (152,557) (104,702)
30,846,379 31,366,685 32,551,722 34,464,396
21,254,950
21,994,652
22,034,307
23,991,069
1,970,341
2,161,352
2,330,969
2,041,810
498,146
530,340
520,727
230,312
2,029,496
1,914,062
1,922,359
2,005,093
2,374,959
2,791,717
3,087,792
3,558,315
28,127,892
29,392,123
29,896,154
31,826,599
2,718,487
1,974,562
2,655,568
2,637,797
(781,162)
(797,835)
(824,743)
(1,089,287)
-
-
-
330,923
(30,658)
152,375
267,243
8,991
$ 1,906,667
$ 1,329,102
$ 2,098,068
$ 1,888,424
3.022%
1.728%
3.776%
5.702%
3.684%
3.480%
0.180%
8.881 %
68.906%
70.121 %
67.690%
69.611 %
290,025,919
288,320,724
294,441,957
311,990,595
273,945,354
274,546,059
282,265,268
301,838,731
16,080,565
13,774,665
12,176,689
10,151,864
5.545%
4.778%
4.136%
3.254%
$ 0.1131
$ 0.1148
$ 0.1159
$ 0.1145
$ 0.0733
$ 0.0763
$ 0.0748
$ 0.0769
9,358
9,449
10,499
10,816
$ 781,162
$ 797,835
$ 824,743
$ 1,089,287
56
139
$ 36,458,061
$ 39,039,573
$ 37,640,985
$ 37,714,965
$ 39,719,268
$ 42,395,048
(337,237)
(259,668)
453,648
207,542
1,041,676
1,428,008
36,120,824
38,779,905
38,094,633
37,922,507
40,760,944
43,823,056
25,402,576
26,710,514
24,851,301
24,240,440
28,169,146
31,544,604
2,385,263
2,660,231
2,546,634
2,458,699
2,585,796
2,808,964
202,421
215,296
210,791
229,086
224,814
231,861
2,046,935
2,297,349
2,856,258
2,896,839
2,957,685
3,062,751
3,357,276
3,318,016
4,090,102
4,133,940
3,688,401
4,763,425
33,394,471
35,201,406
34,555,086
33,959,004
37,625,842
42,411,605
2,726,353
3,578,499
3,539,547
3,963,503
3,135,102
1,411,451
209,051
352,104
125,764
174,557
385,316
298,935
(1,113,264)
(1,188,664)
(1,157,445)
(1,340,218)
(1,407,734)
(1,531,633)
145,034
218,586
82,440
98,427
(193,410)
(62,440)
$ 1,967,174
$ 2,960,525
$ 2,590,306
$ 2,896,269
$ 1,919,274
$ 116,313
5.464%
7.081 %
-3.582%
0.197%
5.314%
6.737%
5.883%
5.149%
-6.961 %
-2.458%
16.207%
11.983%
70.327%
68.877%
65.236%
63.921 %
69.108%
71.982%
320,349,631
339,917,944
336,570,637
337,016,741
347,974,385
344,137,778
313,952,561
331,124,011
325,981,176
324,469,638
341,047,710
333,644,951
6,397,070
8,793,933
10,589,461
12,547,103
6,926,675
10,492,827
1.997%
2.587%
3.146%
3.723%
1.991 %
3.049%
$ 0.1161
$ 0.1179
$ 0.1155
$ 0.1162
$ 0.1165
$ 0.1271
$ 0.0793
$ 0.0786
$ 0.0738
$ 0.0719
$ 0.0810
$ 0.0917
11,448
11,983
12,244
12,365
12,789
12,955
$ 1,113,264
$ 1,188,664
$ 1,157,445
$ 1,340,218
$ 1,407,734
$ 1,531,633
57
140
Elk River Municipal Utilities
Elk River, Minnesota
Water Fund
Summary of Operations and Unaudited Statistics
For the Years Ended December 31, 2013 through December 31, 2022
Summary of Operations
2013
2014
2015
2016
Operating Revenues
Sales of water
$ 2,278,124
$ 2,148,327
$ 2,202,537
$ 2,173,521
Operating Expenses
Operating expenses less depreciation
1,210,797
1,267,019
1,277,466
1,325,831
Services to City
-
-
5,719
-
Depreciation
1,032,442
1,083,770
1,131,110
1,148,310
Total Operating Expenses
2,243,239
2,350,789
2,414,295
2,474,141
Total Operating Income (Loss)
$ 34,885
$ (202,46?
$ (211,75?
$ (300,620)
Percent of Change
Sales of water
0.57%
(5.70%)
2.52%
(1.32%)
Unaudited Statistics
Miscellaneous
Water Pumped (Gallons)
785,377,000
782,110,000
799,974,000
801,603,000
Water Sold (Gallons)
709,760,000
672,760,000
676,842,000
666,656,000
Percent of Line Loss
9.63%
13.98%
15.39%
16.83%
Revenues Per 1,000 Gallons Pumped
$ 2.90
$ 2.75
$ 2.75
$ 2.71
Revenues Per 1,000 Gallons Sold
$ 3.21
$ 3.19
$ 3.25
$ 3.26
Number of Customers
4,613
4,676
4,672
4,903
Water Supplier Services
2013
2014
2015
2016
Flushing Hydrants
45,000,000
47,000,000
45,000,000
46,816,000
Back Washing
8,000,000
3,922,000
4,000,000
4,430,000
Fire Department Use
5,000,000
5,000,000
5,000,000
5,000,000
New Water Main Disinfectant and Flushing
5,000,000
5,000,000
5,000,000
5,000,000
Meter Inaccuracy
3,000,000
3,000,000
-
-
Street and Sewer Maintenance
617,000
1,000,000
473,400
1,800,000
Water Tower Paint and Clean/Maintenance
2,000,000
1,000,000
3,700,000
4,000,000
Well Maintenance
-
-
700,000
7,358,000
Water Line and Irrigation Leaks
7,000,000
7,000,000
-
-
Water Supplier Services
75,617,000
72,922,000
63,873,400
74,404,000
58
141
2017
2018
2019
2020
2021
2022
$ 2,326,245
$ 2,515,821
$ 2,303,670
$ 2,674,544
$ 3,120,660
$ 2,988,835
1,614,095
1,430,539
1,521,719
1,540,043
2,004,037
2,050,084
-
-
1,583
463
1,259
540
1,191,894
1,193,745
1,147,149
1,133,179
1,139,802
1,117,357
2,805,989
2,624,284
2,670,451
2,673,685
3,145,098
3,167,981
$ (479,744)
$ (108,463)
$ (366,781)
$ 859
$ (24,438)
$ (179,146)
7.03%
8.15%
(8.43%)
16.10%
16.68%
(4.22%)
2017
2018
2019
2020
2021
2022
788,182,000
822,546,000
778,595,000
872,733,000
977,238,000
886,422,000
686,032,000
737,689,000
664,924,000
756,383,000
863,076,000
805,096,000
12.96%
10.32%
14.60%
13.33%
11.68%
9.17%
$ 2.95
$ 3.06
$ 2.96
$ 3.06
$ 3.19
$ 3.37
$ 3.39
$ 3.41
$ 3.46
$ 3.54
$ 3.62
$ 3.71
5,011
5,140
5,256
5,320
5,430
5,551
Gallons
2017
2018
2019
2020
2021
2022
47,470,500
47,894,000
48,240,500
53,779,500
19,850,600
23,831,500
4,125,542
3,823,903
3,850,801
6,441,523
5,967,131
5,130,934
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
2,021,250
1,550,000
1,550,000
1,550,000
1,550,000
1,550,000
1,550,000
4,000,000
4,000,000
4,000,000
5,000,000
4,000,000
4,000,000
7,000,000
7,000,000
7,000,000
7,000,000
7,000,000
7,000,000
74,146,042
74,267,903
74,641,301
83,771,023
48,367,731
48,533,684
59
142
I I I I IS WTTTLI a M 4 11 a I
*1We1OI:l1011110111910filIWA
60
143
OTHER REPORT
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2022
61
144
I I I I IS WTTTLI a M 4 11 a I
*1We1OI:l1011110111910filIWA
62
145
INDEPENDENT AUDITOR'S REPORT
ON MINNESOTA LEGAL COMPLIANCE
Public Utilities Commission
Elk River Municipal Utilities
Elk River, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of America, the financial
statements of the Elk River Municipal Utilities (the Utilities) of the City of Elk River, Minnesota (the City) as of and for the
year ended December 31, 2022, and the related notes to the financial statements which collectively comprises the Utilities
basic financial statements, and have issued our report thereon dated April 4, 2023.
In connection with our audit, nothing came to our attention that caused us to believe that the Utilities failed to comply with
the provisions of the contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims
and disbursements, and miscellaneous provisions sections of the Minnesota Legal Compliance Audit Guide for Cities,
promulgated by the State Auditor pursuant to Minn. Stat. § 6.65, insofar as they relate to accounting matters. However,
our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed
additional procedures, other matters may have come to our attention regarding the Utilities' noncompliance with the
above referenced provisions, insofar as they relate to accounting matters.
This report is intended solely for the information and use of those charged with governance and management of the
Public Utilities Commission, and the State Auditor and is not intended to be, and should not be, used by anyone other than
these specified parties.
Abdo
Minneapolis, Minnesota
April 4, 2023
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