4.3 ERMU 12-12-2023Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO:
FROM:
ERMU Commission
Mark Hanson — General Manager
MEETING DATE:
AGENDA ITEM NUMBER:
December 12, 2023
4.3
SUBJECT:
2024 Performance Metrics and Incentive Compensation Policy
ACTION REQUESTED:
Approve the Performance Metrics and Incentive Compensation Policy and Scorecard for 2024
BACKGROUND:
The Commission adopted the Utilities Performance Metrics and Incentive Compensation
(UPMIC) Policy in December 2012 along with revisions in 2016, 2019, 2021, and 2022. This is a
company -wide performance -based program designed to incentivize employee commitment
towards the company's success.
DISCUSSION:
Per policy, the metrics for measurement of the designated year need to be determined before
the start of the designated year. This allows for timely communication of any changes before
performance measurement begins. Staff recommends one change to the scorecard for 2024.
In 2019, the Commission approved replacing the customer satisfaction survey component with
a Clean Energy Choice participation component, with a weight of 5 percent, and a goal of 15 net
customers. We netted 29 new participants in 2020, 21 in 2021, and 36 in 2022. Through the
third quarter of 2023, we have netted 46 new participants. Last year, staff reviewed increasing
the participation goal but determined even a modest increase to 20 new participants may be
challenging due to rate increases. With a zero percent rate increase recommended for 2024,
staff is comfortable recommending an increase to a goal of 30 net participants for 2024.
The proposed UPMIC scorecard is attached for approval for the 2024 measurement year.
FINANCIAL IMPACT:
No additional financial impact for the 2024 budget year. The potential 3.0% distribution
(increased from 2.5% as part of a two-year adjustment approved by the commission in 2022) is
budgeted for and accrued throughout the year for audit purposes, and any necessary
adjustments are made at year end. The actual distribution will be awarded in 2024.
ATTACHMENTS:
• ERMU Policy — G.4g1— Performance Metrics and Incentive Compensation Policy
• ERMU Policy— G.4g1a — 2024 Performance Metrics & Incentive Compensation Scorecard
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