4.2b ERMUSR 04-11-2023Elk River
Municipal Utilities
COMMISSION POLICY
Section:
Governance
Category:
Delegation to Management Policies
Policy Reference:
Policy Title:
GA2
Financial Reserves
PURPOSE:
With this policy, the Commission sets forth its expectations for the General Manager concerning
the maintenance of ERMU's financial reserves.
POLICY:
The General Manager shall ensure that ERMU maintains cash reserves for its electric and water
utility enterprises that are reasonable, prudent and necessary to:
1. Meet or exceed the requirements of all bond covenants
2. Demonstrate to rating agencies and investors that ERMU's utility enterprises are credit worthy
3. Provide liquidity that is adequate, along with other risk -management measures, to ensure
ongoing operation of the utility systems
4. Stabilize revenue requirements and customer rates
5. Manage the level of debt by funding a portion of the capital investments
In addition, the General Manager shall implement a Management Financial Reserves Policy that
sets forth the designated reserve funds to be maintained, along with their purposes and methods
for determining appropriate target levels and requirements for internal controls, monitoring and
reporting. Designated reserve funds may include, but are not limited to reserves restricted for
debt service and unrestricted designated reserves.
POLICY HISTORY:
Adopted December 12, 2017
Revised July 14, 2020
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