5.3 ERMUSR 02-13-2024��i
Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO:
FROM:
ERMU Commission
Mark Hanson — General Manager
MEETING DATE:
AGENDA ITEM NUMBER:
February 13, 2024
5.3
SUBJECT:
Strategic Plan and 2023 Annual Business Plan Results
ACTION REQUESTED:
Discussion on the effectiveness of the Strategic Plan and the Annual Business Plan as
organizational health assessment tools; discussion on progress toward organizational goals.
BACKGROUND:
In August 2017, the Commission adopted a comprehensive manual of governance policies
based on the Carver Model of governance. Included in those governance policies is Governance
Policy G.2c Agenda Planning. This policy notes that in the first quarter "The Commission and
Management will review ERMU's current Strategic Plan along with the results of the Annual
Business Plan for the preceding fiscal year." This annual review was confirmed and scheduled
through the Commission's adoption of the 2024 Governance Agenda.
DISCUSSION:
The Strategic Plan consists of Governance Policies G.1c-g. These policies are summarized in the
attached planning themes handout. The Strategic Plan also includes a dashboard of initiatives, a
management tool to track project preparation for budget consideration, oversee implemented
projects, track initiative prioritization, and manage overall productivity and resource utilization.
The Strategic Plan establishes long-term goals and provides a roadmap to get there.
The Annual Business Plan consists of the budget and the schedule of rates. It is a tool used to
measure organizational performance, analyze risks, and provide actionable information. It
provides short-term data for evaluating potential adjustments as an organization moves toward
the long-term goals established by its strategic plan.
Review of the 2023 Strategic Plan:
All policies, decisions, initiatives, and tasks should be in direct line with ERMU's Mission. All
planning is conducted through a process which categorizes initiatives under commission -
adopted planning themes aligned with our mission, vision, fundamentals, and values. This
framework clearly defines how ERMU is expected to operate.
As an all -encompassing, multi -year plan, not every initiative will be completed each year. Some
initiatives are simply too large and complex to complete in a year. Others were put on hold so
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focus could be put on higher priority issues. A list of highlights, challenges, and results from the
2023 initiatives is attached.
Review of the 2023 Annual Business Plan:
The purpose of reviewing the 2023 Annual Business Plan is to evaluate the budget itself as a risk
management tool in addition to a financial performance tool. By evaluating the budget as a risk
management tool, staff will be better able to provide monthly information and reports to help
the commission evaluate the organization's health, direction, and risks.
Overall electric utility performance for 2023 was positive. Unaudited financials indicate that
revenues were unfavorable to budget by 3% but expenses were favorable to budget by 4%
(mostly due to purchased power costs), for a 4% margin overall. With capital projects, reserve
uses, bonding, and depreciation, we outperformed budgeted reserves contributions.
Overall water utility performance for 2023 was very positive. Unaudited financials indicate that
revenues were favorable to budget by 10% and expenses were favorable to budget by 6%, for a
16% margin overall. With capital projects, reserve uses, bonding, and depreciation, we
outperformed budgeted reserves contributions.
An overview of 2023 budget versus actual (unaudited) for both electric and water is provided in
the attached summary.
Summary:
The results and progress from the organization's 2023 strategic and annual business plans were
very positive. While it is good to recognize our successes, the discussion should not end there.
These two plans also serve as tools for the Commission to use in providing governance,
establishing policy, and managing risk. They should evolve with the Commission's informational
needs to effectively evaluate and govern the organization.
DISCUSSION QUESTIONS:
Staff desires commission feedback regarding the results of our 2023 Strategic and Annual
Business Plans and the effectiveness of these tools in providing meaningful information. Are
these tools providing the information needed to effectively:
• Lead the organization toward our mission, vision, and goals?
• Evaluate the organization's health and take corrective action when needed?
• Manage the strategic and financial risks to the organization?
ATTACHMENTS:
• ERMU Mission/Vision/Fundamentals/Values/Themes
• Highlights, Challenges, and Results from the 2023 Strategic Plan Initiatives
• ERMU Summary Comparison 2023 Budget vs Actual (Unaudited)
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