5.1. ERMUSR 04-13-2010Phone: 7b3,441,2~2~
Fax: 763,44t.8D99
April $, 20 ~ 0
To; Ells ever Municipal Utilities camrnission
Jol1n Dietz
Jerzy Gum.phrey
Daxyl Tlaon~pson
From; Theresa Slorninski
Subject; 2009 Audit Presentation
1VMr, Andrew Berg of Abdo, Eicl~ & Meyers will be at our meeting to present tlae 2009
audit and answer clu.estions you nay have. A cagy is enclosed for your review prior to
tl~e colnn~ission meeting.
ELI RAVER MUNICIPAL UTILITIES
ELI. RIVER, MINNESOTA
MANAGEMENT LETTER
YEAR ENDED
DECEMBER 31, 2009
April ~, 200
~~~il~~l0
l~c~i~7~~, ;1~1V ~,i=~~,'3~
Management and Public Utilities Commission
Elk River Municipal Utilities
Elk River, Minnesota
We have audited the statements of net assets of the Elk River Municipal Utilities the Utilities} of the City of Ells River,
Minnesota, the City} for years ended December 31, 2009 and 2oQ8, and the related statements of revenues, expenses and changes
in net assets and cash flows for the years then ended and have issued our report thereon Apri16, 2010, Professional standards
require that we provide you with the following infoiination related to our audits.
®ur ~,esponsibility Under Auditing ,Standards Generally Accepted in the United States
As stated in our engagement letter, our responsibility, as described by professional standards, is to express an opinion about
whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in
conformity with accounting principles generally accepted in the United States. Gur audit of the financial statements does not
relieve you or management of your responsibilities,
fur responsibility is to plan and perform the audit to obtain reasonable, but not absolute, assurance that the financial statements
are free of material misstatement, As part of our audit, we considered the internal control over financial reporting of the Utilities.
Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning
such internal control. We are responsible far communicating significant matters related to the audit that are, ii1 our professional
judgment, relevant to your responsibilities in overseeing the financial reporting process, However, we are not required to design
procedures specifically to identify such matters,
Significant .Audit Findings
A deficiency in internal control exists when the design or operation of a cantroi does not a11ow management ar employees, ~ the
normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis, A material
weal~less is a deficiency, or combination of deficiencies, hl vlternal cont~•ol such that there is a reasonable possibility that a
material misstatement of the City's financial statements will not be prevented, or detected and corrected on a timely basis.
fur consideration of internal control over financial reporting was for the limited purpose described ha the preceding paragraph and
was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or
material weaknesses and therefore, there can be no assurance that all deficiencies, signif cant deficiencies, or material weaknesses
have been identified, We did not identify any deficiencies in internal controf over financial reporting that we consider to be
material weaknesses, as defn~ed above.
11'lYlti'.Ht;lll{'.~1t1S.C{)tll
Compliance
Elk River Municipal Utilities
April 6, 2410
Page 2
As pa~•t of obtaining reasonable assurance about whether the financial statements are fi•ee of material misstatement, we performed
tests of compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a
direct and material effect on the determination of financial statement amounts.- However, providing an opinion on compliance
with those provisions was not an objective of our audit, The results of our tests disclosed no instances of noncompliance or other
matters that are requll•ed to be reported under statutes set forth by the State of Minnesota,
Summary of Prior Year Findings
200$-~ Control over Year~End Processing
Condition; Atypical expectation for year-processing is that all general ledger accounts are reconciled and in
agreement with supporting schedules, During our audit, adjustments were needed to correct coding
and reclassify amounts in accounts receivable, accounts payable and debt,
Criteria; The Utilities should have intel•nal control procedures that ensure all balance sheet accounts are
reconciled and agreed to the general ledger..
Cur~•ent Yeaf~ Status; The Utilities llnplemented control procedures over the month end and year end closing process and
a complete tie out of all balance sheet accounts was completed at year end, As a result of the steps
taken, this fuading was removed in 2009.
2048-2 Ueclaration far Payment
Condition; Auditing for legal compliance requires a review of the Utilities deposits and investments. Qur
study indicated an instance of noncompliance that we believe is required to be remedied. The
Utilities' vendor checks do not carry a required declaration on the back of the check.
Ct~ite~ia; Minnesota statute 471,38 requires that each declaration far payment be signed to the effect that
such acco~uat, claim, or demand is just and correct and that no part of it has been paid. The statute
is satisfied if on the back of Utilities checks is a declaration as defined in Minnesota statute
471.391 reading "I declare under the penalties of law that this account, claim or demand is just and
correct and that no part of it has been paid."
Cur~~ent Year Status; When management was notified of the noncompliance issue they immediately remediated the issue
by utilizing a stamp with the proper declaration, As a result of the steps taken by management, this
f~.ding was removed in 2009.
Planned Scope and Timing of the .Audit
We performed the audit according to the planned scope and timing,
Qualitative Aspects ag Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used
by the Utilities are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of
existing policies was not changed during the year, Vie noted no transactions entered into by the governmental unit during tlae year
for which there is a lack of authoritative guidance or consensus, All significant transactions have been recog~aized in the frnancial
statements in the proper period,
~.+11~.4.11~l1.f 1~./o , A~i~A ~~7~~.~i~ ~.,3~~7 ~.
11~ I1 ~1K.1~~~i ~~~~~ifG7~.5~~~A11
~ / Ells River Municipal Utilities
Apri16, 2010
I' Page 3
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Accounting estimates are an integral part of the financial statements prepared by management and are based on management's
knowledge and experience about past and current events and assumptions about future events, Certain accounting estimates are
particularly sensitive because of their significance to the fv.~ancial statements and because of the possibility that future events
affecting them may differ significantly tom those expected, The most sensitive estimates affecting the financial statements were
capital asset basis, depreciation, compensated absences and other postemploylnent benefits,
We evaluated the key factors and assumptions used to develop these accounting estimates in determining that it is reasonable ins
relation to the financial staten~ents taken as a whole.
The disclosures in the financial statements are neutz~al, consistent, and clear, Ce~•tain financial statement disclosures are particularly
sensitive because of therl• signif canoe to financial statement users,
Difficulties encountered in performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit,
Corrected and Uncorrected Misstatements
Pz•ofessional standards require us to accumulate all known and likely misstatements identified during the audit, other than those
that are trivial, and communicate them to the appropriate level of management, Management has corrected all such misstatements,
ha addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either
individually or in the aggregate, to each opinion unit's financial statements taken as a whole,
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's
report, We are pleased to report that no such disagreements arose during the course of our audit,
Management 13epresentations
We have requested certain representations from management that are included its the management representation letter dated
Apri16, 2010,
Management Consultations with ether independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters, sinilar to
obtaining a "second opinion" on certain situations, zf a consultation involves application of an accounting principle to the
governmental unit's financial statements or a dete~~nination of the type of auditor's opinion that may be expressed on those
statements, oiu professional standards require tlae consulting accountant to check with us to determine that the consultant has all
the relevant facts, To our knowledge, there were no such consultations with other accountants,
ether Audit Findings or issues
We generally discuss a va1•iety of matters, including the application of accounting principles and auditing standards, with
management each year prior to retention as the Utilities' auditors, However, these discussions occurred in the iaormal course of our
professional relationship and out• responses were not a condition to our retention,
11'tiY1~~,G-lt;El1C:~?uS, C'.C)Ill
~ / Elk River Municipal Utilities
April 6, 2010
Page 4
J k:
• •''
ether Matters
The following sununaa•i~es the Utilities' operations and provides analysis:
Electric Fund
The results of the Electric fund are as follows:
Operating revenues
Operating expenses
Operating income
Nonoperating revenues
expenses)
Income before transfers
Transfers to City
Change in net assets
Cash and
temporary investments
RestrlCted Gash
Bonds and notes payable
$3o,oao,0ao
$25,000,000
$Za,ooo,ooa
$15,000,000
$lo,0oo,00a
$5,000,000
~~
Eiec~ric ~pera~ion~ ~u~n~nary
2007 zoos 2009
Total _ Percent Total Percent Total Percent
$ 19,666,543 100 % $ 22,941,903 100 % $ 24,227,743 100
18,262,805 93 21,b04,910 94 22,926,759 95
1,403,738 7 1,336,993 b 1,300,984 5
710,858 4 249,022 1 146,352 1
2,114,59b 11 1,586,015 7 1,154,632 4
483,000 ~2} 540,636 ~2} 5 85,141 2
~ 1=b31,~5,96 9 % $ 1045 379 % $ 569 491 2
$ 2 806 277
X33,400
$ 1.1,052,804
$ 3,~908,~552
$ 724 Soo
$ 10 555 744
$ 5,366,820
$ 724,500
$ 10,049,64b
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~! Operating revenues }Operating expenses r:~-~ Cash o Bonds ~=~ Change in net assets
952.~,3~i.9Q9(~ ~ 1~~1r {~,7'?.8~3ri.~3'~G1
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The fallowing table gives an indication of the sources and uses of cash for the past five years:
Cash Provided Used) By
Year
2009
2008
2007
2oa6
2005
Elk River Municipal Utilities
April 6, 20 ~ 0
Page 5
Beginning C~erating ~ Non~ca ital Capital ~ Investing End Cash
$ 4,633,052 $ 4,001,073 $ X604,905} $ X2,027,224) $ 59,324 $ 6,091,320
3,539,677 4,394,357 X513,536) X2,933,272} 145,826 4,633,052
2,041,306 4,053,884 (485,851) X2,238,249} 138,587 3,539,677
2,016,433 3,046,671 X378,560} X2,504,163} 160,925 2,041,306
2,361,856 3,059,049 (375,627} X3,063,265} 34,420 2,016,433
c~~~F~ows~~~~~ zoas ~zoo9
$S,oao,ooo
$4,oaa,ooa
$3,aoo,aoa
$Z,aao,oao
$i,o,o0,oao
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$~l,aoo,ooo}
$~2,ooo,aoaj
$~3,0oo,ooa~
$t4,ooa,ooo}
2009
Tlae cash provided by operating activities leas remained strong and was sufficient to cover the amount of capital and debt needs in
2009. The summary above highlights the szgnzficant amount of cash needed each year for the capital activities of the Utilities, The
operations have been able to finance the capital activities for most of the last five years, we recommend that the Utilities continue
to closely monitor future cash flow with the use of projections and the capital impravement plan, This will ensure that any
pe~•rnanent decline in cash flow is addressed quickly,
Zoos 2006 2007 2aa8
Qperating Activities Non-capitalFinancing Activities
_--~'~-~CapitalFinancingActivities ~InvestingActivities
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water Fund
The results of the water fund are as follows;
Total Percent Total
operating revenues $ 2,113,166 100 % $ 2,130,124 1 as % $ 2,206,429 100
Operating expenses 2,112,796 100 2,160,261 101 2,059,430 93
operating income ~1oss} 370 - X30,137} (1} 146,999 7
Nonoperating revenues
expenses) 472,20$ 22 4,875 - 61,060 ~3)}
Income floss) before
contributions and transfers 472,578 22 (25,262} ~1} $5,939 4
Contributions
from developers 292,965 14 w - -
Transfers to City 20,000 ~~ 20,000 _ ,_ ~~} 20,Oaa ~1)
Change in net assets $ 745,543 35 °/f~ $ 45 262 ~2Z% $ 65x939 3 °/a
Cash and investments , $ , _2,394,387 $ 1935,458 _$_ _2,5fl0,960_
Bonds payable _ $ 5,311,250 $ 5,031,25_ ~ $ ~,6a5,0~0 ~`
~ Net of $2,575,000 advance refundi~xg of 2001A bonds.
$6,oa0,000
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$4,aaa,ooa
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Operating revenues o Qperating expenses ~ Cash Q Bonds ~~ Change>n net assets
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water ~perat~on~ summary
2aa7 Zoos
Elk River Municipal Utilities
April 6, 2010
Page 6
2009
Percent Total Percent
• ~ , Elk River Municipal Utilities
Apri16, 2010
Page 7
J t~
~ •''
The following table gives an indication of the sources and uses of cash for the past fve years:
Cash Provided Used} By
Year Beginning Operating Non-capital Capital Investing Ending. Cash
2009 $ 1,935,458 $ 1,389,746 $ X23,165} $ X918,227} $ 117,151 $ 2,500,960
2008 2,394,387 1,086,937 X17,068} X1,609,535} 81,037 1,935,458
2007 2,519,224 1,4$7,526 X259,864} X1,392,434} 39,935 2,394,357
2006 1,754,023 1,861,466 SD,1D2 X1,238,717} 62,35D 2,519,224
2DD5 1,739,439 1,083,049 (16,917} X1,128,375} 76,527 1,754,423
Cash ~~ow Summary X005 ~ 20U9
$2,S0o,a0a
$2,000,000
$1,s0o,000
$1,00o,00a
$500,aao
~-
$(SQa,a00}
$~1,O0a,400}
$~1,50D,404}
$~2,ag0,DOQ}
2405 2006 2aa7 2008
operating Activities ~~Non~capitalFi~lancing Activities
~~=~~:',~~}CapitalFinanci~~gActivities ZnvestingActivities
2Da9
Qverall cash balance has increased for the first time in the last three years as a result of an increase of cash provided by operating
activities and a decrease in capital financing activities fi'om prior year, As mentioned in the analysis of the Electric fund it is
vnpottant to continue to monitor future cash need with the use of a projection and capital improvement plan,
9 i~,$;3~i.909Q I{itr ~ 7.8:3 7,~~3'?ti 1
trs4~~<<,~u,ntc~ttt~.cctttt
r
Elk River Municipal Utilities
April 6, 2414
Page 8
,k
1
~~~~~
This report is intended solely for the information and use of the Public Utilities Commission, City Council,lnanagement, and the
Minnesota office of the State Auditor and is not intended to be and should not be used by anyone other than these specified
parties,
Cur audit would not necessarily disclose all weaknesses in the system because it was based on selected tests of the accounting
records and related data. The comments and recommendations in the report are purely constzuctive in nature, and should be read
in this context,
If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at your
convenience, ~Ve wish to thank you for the opportunity to be of service and for the courtesy and cooperation extended to us by
your staff,
~„u~t, ~YV1~tM~ lL~
April 6, 2010
Mllrneapolis, Minnesota
ASDO, ErCK & MEYERS, LLP
Cert~ed Public Accountants
H' 1ti'11'.fll'lll{!~IIIS.C{VIII
ELK RAVER MUN~C~PAL UT~L~TIES
ELK RYVER, MINNESOTA
ANNUAL FINANCIAL REPORT
YEARS ENDED
DECEMBER 31, 2009 AND 200
THIS PAGE IS LEFT BLANK.
INTENTIGNALLY
ELI. RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
TABLE OF CONTENTS
DECEMBER 31, 2009
Pa e No.
I, INTRODUCTORY SECTION
Public Utilities Commission and Administration 5
II, FINANCIAL SECTION
Independent Auditor's Report 9
Management's Discussion and .Analysis 11
Financial Statements
Statements of Net Assets 18
Statements of Revenues, Expenses and Changes in Net Assets 22
Statements of Cash Flows 24
Notes to Financial Statements ~9
III, REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Funding Progress for the Retiree Health Plan S 1
IV. SUPPLEMENTAL INFORMATION
Schedules of Operating Revenues and Expenses S4
Electric Fund
Summary of Operations and Unaudited Statistics S S
Water Fund
Summary of Operations and Unaudited Statistics b0
V, OTHER REPORT
Report on Minnesota Legal Compliance 65
~1-
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INTENT~~NALLY
_Z~
INTRDUCT.Y SECTION
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
YEAR ENDED
DECEMBER 3I, 209
~3~
THIS PAGE IS LEFT BLANK
INTENTTGNALLY
-4-
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESGTA
PUBLIC UTILITIES COMMISSION AND ADMINISTRATION
DECEMBER 31, 209
PUBL~~ UTILITIES ~®I~IM~SSr~N
Marne
John Dietz
Terry Gumphrey
Daryl Thompson
Title
Chairperson
Vice-Chairperson
Trustee
ADI~ZI~ISTI~ATI~~
Troy Adams
Theresa Slominski
David Berg
Mark Fuchs
Wade Lovelette
Judy McSpadden
Director of Operations
Finance DirectorlOffice Manager
Water Superintendent
Line Superintendent
Technical Services Superintendent
Recording Clerl~
-5-
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INTENT~~NALLY
_~..
FIANCI.AL SECT
ELK. RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
YEARS ENDED
DECEMBER 31, 2009 AND Z00~
~~.
THIS PAGE IS LEFT BLANK
INTENTIONALLY
_~_
~~~~~. ~.af,~t',~l i~l'f,fllif<
.lll~~ ~~
~~
1~t~inG~,1'1 ~ ~r~~~3~~
INDEPENDENT AUDITOR'S REPQRT
Public Utilities Convnission
Elk River Municipal Utilities
Elk River, Minnesota
'We have audited the accompanying statements of net assets of the Elk Rive~• Municipal Utilities the Utilities} of the City of Elk
River, Minnesota the City}, as ofDecember ~ 1, 2009 and 2008 and the related statements of revenues, expenses and changes in
net assets and cash flows for the years then ended, These financial statements are tl~e responsibility of the Utilities' management.
Our responsibility is to express an opinion on these financial statements based on our audits,
we conducted our audits in accordance with audithlg standards generally accepted h1 the United States of America, Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are
flee of material misstatement, An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, An audit also includes assessing the accounting principles used and significant esthnates made by
management, as well as evaluating the overall financial statement presentation, we believe that our audits provide a reasonable
basis for our opinions,
As discussed in Note 1B, the financial statements present only the Electric and water enterprise funds and are not intended to
present fairly the financial position of the City and the results of its operations and cash flows of its proprietary fund types ll~
conformity with accounting principles generally accepted in the United States of America.
hi our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the
Electric and Vl~ater enterrise funds of the City as of December ~ 1, 2009 and 200$ and the results of its operations and its cash
flows for the years then ended inconformity with accounting principles generally accepted in the United States of America,
The Management's Discussion and Analysis on pages 11 through 1 b and Schedule of Funding Progress for Retiree Health Plan on
page 51 are not a required part of the financial statements but are supplementary information required by accounting principles
generally accepted in the United States of America. We have applied cei•taha limited procedures, which consisted principally of
inquiries of management regarding the methods of measurement and presentation of the supplementary information, However, we
did not audit the information and express no opinion on it,
Our audits were conducted for the pui~ose of forming an opinion on the financial statements taken as a whole, The supplemental
information listed h~ the table of contents is presented for the purpose of additional analysis and is not a required part of the
financial statements of the Utilities, Such information, except for that portion marked "unaudited" on which we express no
opinion, has been subjected to the auditing procedures applied in the audits of the financial statements and, in our opinion, is fairly
stated in all material respects in relation to the financial statements taken as a whole,
C~d.~~J,..~,lc~
April 6, 2010
Minneapolis, Minnesota
ABD4, SICK & MEYERS, LLP
Ce~tif red Public Accountants
9•~i~,8,35,90~0 ~ I~itx ~7~,~3,5.~3'?G1 n
1VSti'1~~.~lf;Ctl('.~?tl:i.Ci1t11 9
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INTENTIONALLY
-10-
anaee~~s ~~cu~s~on and Analy~~,~
This section of the Elk River Municipal Utilities the Utilities} annual financial report presents our analysis of the Utilities'
financial performance during t11e f scal year that ended December 31, 2409, Please read it in conjunction with the financial
statements, which follow this section.
~`II~ANC~AL HIGHLIGHTS
The assets of the Utilities exceeded its liabilities at the close of the most recent fiscal year by $46,364,560 ~~et assets},
Net Assets increased by $635,430 or 1.0 percent,
The Utilities' cash balance at the close of the cur~~ent fiscal year was $11,181,181, $2,588,901 ofwh~ch Was cash with
escrow agent, which will be used for the advance refunding of tlae 2001A G.C. Water Revenue bonds in 2010,
The past two years have seen declining construction, 2009 actually had slightly negative growth of 0.3 percent. Tlie
decreased construction activity has allowed for a more pro-active focus on maintenance.
Electric usage was up an average of 3.8 percent, due to large industrial operations. Residential usage was down 1
percent, Commercial usage was down 5.0 percent, and industrial usage was up 8.0 percent,
~ Water usage was up an average of 4.9 percent. Residential usage was up 0,3 percent, and Commercial usage was up 1.5
percent,
®'VER~EW ~F THE F~ANCIAL STATEMENTS
This annual report consists of three parts; Management's Discussion and Analysis, Financial Statements, and Supplementary
fnformation. The Financial Statements also include notes that explain in more detail some of the information in the financial
statements,
REQUIRED FIN~ICIAL STA.TEI~ENTS
The financial statements of the Utilities report info~•mation about the Utilities using accounting methods similar to those used by
private sector companies. These statements offer shol•t- and long-term financial information about its activities, The Statements
of Net Assets includes all of the Utilities' assets and liabilities and provides information about the nature and amounts of
investments in resources bassets} and the obligations to Utilities' creditors liabilities}, 1t 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
Assets. This statement measures the success of the Utilities' operations aver 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 prirnaiy purpose of this statement is to provide
information about the Utilities' cash receipts and cash payments during the reporting period, The statement repo~•ts cash receipts,
cash payments and net changes in cash resulting from operations, investing and financing activities and provides answers to such
questions as where did cash come from, what was cash used for and what was the change in cash balance during the reporting
period,
FINANCIAL .ANALYSIS ®F THE UTILITIES
Qur analysis of the Utilities begins on page 18 in the Financial Section, Cne of the most irnpoztant questions asked about the
Utilities' finances is "Zs the Utilities as a whole better off or worse off as a result of this year's activities?" The Statements of Net
Asset, and the Statements of Revenues, Expenses and Changes in Net Assets report information about the Utilities' activities in a
way that will help answer this question, These two statements repo~•t the net assets of the Utilities and changes in these net assets,
You can thhik of the Utilities' net assets 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 assets are 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.
-11_
Management's Discussion and Analysis -Continued
April 6, 2010
NET ASSET
To begin our analysis, a summary of the Utilities' Statements of Net Assets is presented in Table A-1. As can be seen fiom the
Table, net assets increased $635,430 to $46,364,564 in fiscal 2009 up from $45,729,130 in fiscal 2048.
TALE A.~ 1
Co~ade~~ed ~~a~emen~ of Nei A~se~s
Assets
Current and other
Capital
Total assets
Liabilities
Current
Non-current
Total liabilities
Net assets
Invested in capital assets, net of related debt
Restz•icted for debt service
Unrestricted
Total net assets
Zoos
Increase
(Decrease)
$ 14,948,372 $ 13,326,578 $ 1,621,794
51,626,923 53,336,064 ~ X1,709,141}
66,5?5,295 66,662,642 ~87,347~_
6,547,087 3,559,346 2,987,741
13,663,G48 17,374,166 ~ X3,710,518}
20,210,735 20,933,512 X722,777}
34,397,277 35,174,070 X776,793}
724,500 724,500
11,242,783 9,830,560 1,412,22::
$ 46,364,560 $ 45,729,130 $ 635,430
Looking at Table A~1, you can see that most ofthe change in net assets was realized ll~ the current assets, which increased
$1,621,794 in fiscal 2009, The increase in current assets was due to an increase in cash resulting fi•om implementation of the
following; capital projects were carefully managed to minimize costs with some planned projects being deferred until the
economy revives, inventory levels were kept to a minimum, and a bond was ret11•ed, The Utility has a Reserve goal that it is
working towards for the long term financial health of the organization, The increase in cash moves their closer to that goal,
Water and Electric dates
Electric ~ The latest increase in the Utilities' electric rates was effective January 2010. The monthly base charges are based upon
the type of service, The monthly charges are $9.00 for residential, $16,00 for commercial, and $50.04 for industrial, In addition
to the base charges the residential rate is $.11391Kwh for MaywSeptember usage, and $,10171Kwh for October~April usage; the
commercial rate is $.10971KV~lr for May~September usage, and $0.09101Kwh for October-April usage; the h~dust~•ial rate is
$.05451Kwh energy charge year round with a demand charge of $15.89fKw MaywSeptember, and $11,021Kw~ far 4ctober~April,
2009
..12.
Management's T~iscussion and Analysis -Continued
April d, 2010
water and Electric Rates - ~antinued
water -The Utilities' latest increase in residential and commercial rates was effective January 2009, The rates did not change for
2014, pending a rate study review in the second quarter. The monthly base charge for residential is $7.50 per month. Zn addition
to the base charge, the Utilities currently charges its residential customers $1,50 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's base chal•ges are based upon meter size, from $9,00 to $95,00. An i~•rigation meter is X40.00 for every
month the meter is utilized, There is also a charge per thousand gallons, the same tiers as the residential rate, except the change
from the lower rate to the higher rate is calculated based an previous consumption.
Certain other rates maybe offered for conservation incentive purposes. The Utilities' offer a Senior Citizen rate as well.
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 Utility may discontinue service of a customer not complying with the
disconnect policy of the Utility after receiving a written disconnect notice. Residential and Commercialllndustrialsingle phase
Customers that have their service discontinued will be charged a minimum of $54,00 to have their service reco~~nected.
Commerciallindustrialtbree phase customers that have thell• service discontinued will be charged a minimum of $150.04 to have
their service reconnected. Effective January 1, 2010, there will be no reconnections after 3;30pm. Additionally, payments far
recon~~ection will no longer be accepted at the property site; customers must come into the office between the hours of B,OOam
and 3,30pm to make the payment before service will be restored. The Utilities abides by the Cold Weather Rules,
Deposit Policy
fn Zo07 the Utilities sta~~ted collecting social security numbers fi~om new accounts and also implemented a new deposit policy as a
proactive measure to ~y and reduce uncollectable accounts, A number of years ago deposits were collected fi~om all new
accounts but it became very difficult to manage and so was discontinued. In implementing the new policy it was decided to
collect deposits fi•om new accounts that did not supply a social security number ar were identified as a credit risk, To determine
potential credit risk an assessment tool called "Cnline Utility Exchange" was implemented. This tool was recommended by the
APPA ~Arnerican Public Power Association.} 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 higlxer probability of non default and no negative history ono
disconnection far non-payment or late payments two or mare times within 12 months) there is no deposit required. if there is a
lower than 68 percent probability of non default, a deposit of 2 tunes the estimated average monthly bill will be required before
utility service will be extended.
For commercial and industrial customers, a service agreement would need to be signed that identifies the guarantor of theix
business and the guarantor's social security number. A deposit of 2 times the estimated monthly bill will be required. The deposit
shall be in the form of a cas1~ deposit, personal payment guarantee, 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,
Effective March 9, 2010, deposits will be retained until the account is closed. The deposit will be retu~•ned 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.
-l3_
Management's Discussion and Analysis ~ Continued
April 6, 2010
ST.ATEI~ENTS ®F REVENUES, EXPENSES AND C~A:NGES ~N NET ASSETS
while the Statements ofNet Assets shows the change in financial position of net assets, the Statements of Revenues, Expenses
and Changes in Net Assets, provides answers as to the nature and source of these changes, As can be seen in Table Awl, the
increase in "Operating Revenues" was the main source of the increase in net assets of $635,430 in fiscal 2009. A closer
examination of the individual categories affecting the source of changes in net assets is discussed below;
TABLE A.4Z
Condensed S~a~emen~~ of Revenue,
Expen~e~ and Chan~e~ ~~. Nei Asses
Increase
2009 2008 Decrease
Revenues
Operating $ 26,434,172 $ 25,472,027 $ 1,362,145
Nonoperating 424,659 880,666 (456,007}
Total revenues 26,$58,831 25,952,693 906,138
Expenses
Operath~g 24,986,189 23,765,171 1,221,018
Nonoperating 632,071 626,769 5,302
Total expenses 25,618,260 24,391,940 1,226,320
Income before operating transfers 1,240,571 1,564,753 (320,18:,
Transfers to other City funds (605,141} _ ~560,636~ w (44,505),
Change in net assets 635,430 1,004,117 (364,687)
Net assets, ranuary 1 45,729,130 44,845,990 883,140
Prior period adjustments - (116,977} 116,977
Net assets, December 31 _ $ 46,364,560 , $ 45,729,130 $ 635,430
Revenues
Table A-2 slows that operating revenue increased by 5 percent in 2009 for the water and Electric Depai~nents combined, This
increase was due marnly to the new data Centers m town, Non operating revenue decreased 44 percent as a result of the decrease
in construction this year, and was expected, Between the two departments, Connection Fees were down over $375,000.
Total Expenses
~n reviewi.ng total expenses in Table A~2 you will notice that there was an increase of 5,4 percent overall, The Electric and water
Department's operating expenses remained pretty consistent.
-14~
Management's Discussion and Analysis w Continued
April 6, 2010
C.AP.~TAL A,S~ETS
The Utilities' investment in capital assets for its business-type activities as of December 31, 2009, amounts to $51,626,923 net of
accumulated depreciation), This investment in capital assets includes land, buildings and improvements and equipment. A table
summarising the balances by fund follows:
Increase
2009 2008 Decrease)
Land $ 281,775 $ 281,775 $
Land improvements 23,949 26,476 (2,527}
Buildings 2,401,664 2,448,930 (67,266)
Equipment and machinery 1,159,559 1,23 $,520 (79,261 }
Infrastructure 47,675,328 49,124,458 X1,449,130}
Construction in progress 54,648 195,Ga5 110,957}
Total $ 51,626,923 $ 53 336 064 _ $ • ~170~,141}
The total decrease in the Utilities' investment in capital assets for the current fiscal year was 3.2 percent.
Maj or capital asset events during the current fiscal year included the following;
The depreciation increase for this year offset the smaller increase in assets, resulting in an actual decrease in capital
assets,
Tlae decrease in construction resulted in fewer assets being added, only $1.2 million.
Accumulated depreciation far the year, however, increased $2, 8 million.
Additional information on the Utilities' capital assets can be found in Note 2B start on page 37 of this report.
L®NG-TERM DEBT
At year end, the Utilities had $17,455,814 hr longterm debt down from $18,439,132 in fiscal 200$, More detailed information
about the Utilities' longterm liabilities is presented in the Notes to the Financial Statements on pages 39 ~ 41 and below;
G, ~. revenue bonds
Revenue bonds
Promissory note
Compensated absences payable
OPEB liability
Total
Increase
2009 2008 Decrease}
$ 5,185,000 $ 8,660,000 $ X475,000}
6,520,000 6,$40,000 X280,000}
2,524,646 2,701,994 X177,348)
235,925 2GG,925 X31,000}
20,243 10,213 10,030
$ 17,485,514 $ 18,439,132 $ 953,315}
~15~
Management's Discussion and Analysis -Continued
April 6, 2010
ECC~NG~IC FA.CTGR.S ANI~ NEST YEAR'S BUDGETS ANI~ RATES
The increased emphasis toward renewable energy and away from coalwbased energy, the challenge to reduce energy and water
consumption while still maintaining the existing infi astructure, and the smart grid developments are all factors that point to
potential increased cast in the coming years. ~e don't want to have to rely on increasing rates to meet those increases and
continue to lack for ways to increase efficiencies and reduce costs, fur mission is to provide safe, cost-effective, reliable utilities,
and that will be a challenge in the coming years but it is a challenge we are ready to embrace,
C®NTACTING THE UTILITIES FINANCIAL NIANA.GER
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 far the money it receives, Questions concerning any of the
information provided in this report or requests for additional financial information should be addressed to Theresa Slominski, Eik
River Municipal Utilities, P4 Box 430, Elk River, Minnesota 55330-0430 or stop by at 13469 Orono Parkway in Elk River, MN.
-16-
FINANCIAL ~TATI~IENT~
ELK RIVER MUNZC~PAL UT~L~T~ES
ELK RIVER, MINNESOTA
YEARS ENDED
DECEMBER 3 ~, 209 AND ~~D~
_~~_
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
STATEMENTS aF NET ASSETS
DECEMBER 31, 2409 AND 20x8
Electric
ASSETS
CURRENT ASSETS
Cash and temporary investments
Cash with escrow agent
Receivables
Accrued interest
Accounts, net of allowance
Special assessments
ether receivables
Due from other City fund
Due from other gove~mments
Inventories
Prepaid expenses
TOTAL CURRENT ASSETS
CAPITAL ASSETS
Land
Land improvements
Buildings
Equipment and machinery
Infrastzuctuxe
Constx•uction i~~ progress
CAPITAL ASSETS, COST
LESS ACCUMULATED DEPRECIATION
TOTAL CAPITAL ASSETS, NET
OTHER ASSETS
Rest~•icted cash
Deferred charges
TOTAL OTHER ASSETS
TOTAL ASSETS
The notes to the financial statements are an integral pa~•t of this statement.
2009 2008
$ 5,366,820 $ 3,908,552
26,090 ~ 27,557
2,037,796 1,983,269
23,827 39,919
4,913
37,124 3,161
1,034,829 1,329,459
__ 75,288 61,628
8,606,687 7,353,545
200,236
63,147
2,735,797
3,724,669
43,926,545
84,648
50,735,042
200,236
63,147
2,725,341
3,783,851
42,873,557
144,4y9
49,790,631
21,$64,361 ~ (19,975,453)
28,$70,651 29,815,178
724,500 724,500
117,724 128,894
842,224 853,394
38,319,592 38,022,117
_1g~
Water Total
2009 2008 2409 2008
$ 2,500,960 $ 1,935,458 $ 7,867,780 $ 5,844,010
2,588,901 2,592,D96 2,588,901 2,592,096
27,684 9,188 53,774 36,745
87,125 230,436 2,124,921 2,213,705
10,235 1,015 1D,235 1,018
4,178 57,354 25,OOS 97,273
128,850 128,850 133,763 128,850
- .. 37,124 3,161
28,722 31,611 1,063,551 1,361,070
12,184 8,687 57,472 70,31 S
5,388,839 4,994,698 13,995,526 12,348,243
81,539 81,539 281,775 281,775
- - 63,147 63,147
770,828 738,145 3,506,625 3,463,486
319,309 334,493 4,043,978 4,115,344
30,598,428 30,401,283 74,524,973 73,274,840
- 51,106 84,648 195,605
31,770,104 31,606,566 82,505,146 81,397,197
9,D13,562 8,D85,680 30,875,223 ~ (28,061,133}_
22,756,242 23,52D,886 51,626,923 53,336,064
724,500 724,50D
110,622 124,941 228,346 253,535
110,622 124,941 952,846 978,335
28,255,703 28,640,525 66,575,295 66,662,642
_1g_
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESaTA
STATEMENTS OF NET ASSETS -CONTINUED
DECEMBER 31, 2009 AND 2008
CURRENT LIABILITIES
Accounts payable
Salaries and benefits payable
Accrued interest payable
Due to other City Funds
Due to other gover~.nents
Customer deposits payable
Compensated absences -current portion
Notes payable -current pardon
Bonds payable -current portion
TOTAL CURRENT LLABILITIES
NDN-CURRENT LIABILITIES
Net other pastemployrnent benefits liability
Compensated absences -less current po~•tion
Notes payable -less c~urent po~~tian
Bands payable -less current portion
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
Invested ill capital assets, net oI'related debt
Restricted for debt service
Unrestricted
TOTAL NET ASSETS
The notes to the financial statements are an integral part oI'this statement.
EleCtrlC
2009 2045
$ 1,773,388 $ 1,572,455
60,809 39,723
124,284 131,489
30$,564 323,415
107,997 97,749
155,6oa X39,970
79,840 99,464
179,328 177,348
512,500 328,750
3,332,310 2,910,363
20,243 10,213
87,194 99,359
2,345,318 2,524,646
7,012,500 7,525,000
9,465,255 14,159,215
12,797,565 13,069,581
18, 821,03 5 19,259,434
724,500 724,504
5,976,492 4,965,602
$ 25,522,027 $ 24 952 536
-ZO-
Water Total
2009 2008 2009 Zoos
$ 22,318 $ 39,387 $ 1,795,706 $ 1,611,842
5,515 4,758 66,324 44,481
114,136 119,956 23 8,42D 251,445
14,810 17,978 323,374 341,393
107,997 97,749
7,5oD 7,soo 193,100 147,470
37,998 33,154 117,835 132,618
179,328 177,348
3,012,5oa 426,250 3,s25,ooa 755,000
3,214,777 648,983 6,547,057 3,559,346
20,243 10,213
30,893 34,948 115,087 134,307
2,345,318 2,524,646
4,167,500 7,180,000 11,184,000 14,705,000
4,198,393 7,214,948 13,663,648 17,374,166
7,413,170 7,863,931 20,210,735 20,933,512
15,576,242 15,914,636 34,397,277 35,174,07D
724,500 724,500
5,266,291 4,561,958 11,242,783 9,830,560
$ 20,842,533 ~ $ 24 776 594 $ 46,364,560 $ 45,729~~30 A
_21_
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
YEARS ENDED DECEMBER 31, 2009 AND 2008
Electric
2009 2008
OPERATING REVENUES
Charges far services $ 22,581,803 ~ 21,310,737
Security systems 254,773 227,772
LFG project 1,009,482 993,257
Generation credit 172,421 222,584
Customer penalties 209,064 1$7,553
TOTAL OPERATING REVENUES 24,227,743 22,941,903
OPERATING EXPENSES
Pu~~chased power 16,161,444 14,778,270
Production 862,345 886,515
Distribution 1,074,751 1,276,282
Depreciation 2,126,794 2,057,851
Customer accounts 797,482 G51,585
General and administ~~ative 1,903,943 1,954,407
TOTAL OPERATING EXPENSES 22,926,759 21,604,910
OPERATING INCOME (LOSS} 1,300,984 1,336,993
NONOPERATING REVENUES (EXPENSES}
Interest income 87,857 155,597..:
Connection charges 78,208 300,769
Miscellaneous revenue 30,377 12b,9b9
Interest expense (299,452) (314,775}
Amortization of deferred charges (11,169) (11,1 G9}
Loss ors sale of capital assets ~ 32,173 (8,3G9}
TOTAL NONOPERATING REVENUES (EXPENSES} 146,352 249,022
INCOME (LOSS) BEFORE TRANSFERS 1,154,b32 1,586,015
TRANSFERS TO OTHER CITY FUNDS (585,141) (540,636}
CHANGE IN NET ASSETS 569,491 1,445,379
NET ASSETS, JANUARY 1 24,952,536 24,015,574
PRIOR PERIOD ADJUSTMENTS - _ 108,417}
NET ASSETS, RESTATED, JANUARY 1 24,952,536 23,907,157
NET ASSETS, DECEMBER 31 $ 25,522,027 , $ 24,952,53.6_
The notes to the financial statements are an integral pa~~t of this statement.
-22-
V4~ate~~
2009 2008 2009 2008
$ 2,182,110 $ 2,109,014 $ 24,763,913 $ 23,419,751
- - 254,773 227,772
- - 1,009,682 993,257
- - 172,421 222,584
24,319 21,11D 233,383 208,663
2,206,429 2,130,124 26,434,172 25,072,027
- ~ 16,1 G 1,444 14,778,270
374,417 394,599 1,236,762 1,281,114
1 69,447 182,711 1,244,198 1,458,993
956,993 974,848 3,D83,787 3,032,699
61,405 72,811 858,887 724,396
497,168 535,292 2,401,111 2,489,699
2,D59,430 2,1 60,261 24,986,189 23,765,171
146,999 30137 1447,983 1,346,856
132,452 51,873 220,309 207,470
83,378 236,536 161,586 537,3D5
12,387 8,922 42,764 135,891
(274,958} (279,292} (574,410} (594,467}
(14,319} (13,164} (25,488} (24,333}
- - 32,173 8,369
(61,060) 4,875 207,412} 253,897
.,.
85,939 (25,262} 1,240,571 1,560,753
(20,000} (20,000} (605,141) (560,636
65,939 (45,262} 635,430 1,400,117
20,776,594 20,83D,416 45,729,130 44,845,990
- (8,560} - (116,977
24,776,594 20,821,856 45,729,130 44,729,013
$ 24 842 533 $ 20,776,594 $ 46,364 S60 $ 45,729,130
Total
_23-
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESGTA
STATEMENTS 4F CASH FLGwS
YEARS ENDED DECEMBER 31, 2009 AND 2008
Electric
2009 2008
CASH FLC~VS FROM OPERATING ACTIVITIES
Receipts h•om customers and users $ 24,114,123 $ 23,171,758
tither operating cash receipts 12,506 202,455
Payments to suppliers - ~ 18,793,41 S} (17,617,200)
Payments to employees X1,332,138} ~1,362,656~_
NET CASH PROVIDED
BY aPERATING ACTIVITIES 4,001,073 4,394,357
CASH FLa~VS FRGM
N4NCAPITAL FINANCING ACTIVITIES
Transfer to City X585,141} (540,636}
Increase (decrease} in due to other City funds 19,764 27,100
NET CASH USED BY NONCAPITAL
FINANCING ACTIVITIES 604,905 513,536
CASH FLDwS FRGM CAPITAL
AND RELATED FINANCING ACTIVITIES
Acquisition of capital assets X1,214,469} ~2,119,G77}
Principal payments on reve~lue bonds X328,750} X320,000}
Proceeds of revenue bonds -
Withch•awal b•om escrow fund -
Payment to escraw agent for refunded bond - -
Interestpaid on revenue bonds ~30G,657} X316,535}
Principal payments on promissory note X177,348} - ~177,064~
NET CASH USED BY CAPITAL
AND RELATED FINANCING ACTIVITIES 2,027,224 2,933,272
CASH FLQw~S FROM INVESTING ACTIVITIES
Interest on investments 89,324 145,826
NET INCREASE DECREASE}
IN CASH AND CASH EQUIVALENTS 1,458,268 1,093,375
CASH AND CASH EQUIVALENTS, JANUARY 1 4,633,052 3,539,677
CASH AND CASH EQUIVALENTS, DECEMBER 31 $ 6,091~32~ $ 4L633,052
RECCNCILIATIQN CF CASH AND CASH
EQUIVALENTS Ta THE STATEMENT 4F NET ASSETS
Cash and temporary investments $ 5,366,820 $ 3,908,552
Restricted cash 724,SO0 724,500
TGTAL CASH AND CASH EQUIVALENTS
The notes to the financial statements are an h~tegral part of this statement.
$ 6 o9132a $ 4,633,052
R24_
Water
Total
2009 2oas 2009 2008
$ 2,419,649 $ 2,325,309 $ 26,533,772 $ 25,497,067
65,563 (3,704} 78,Od9 198,751
X718,046} X840,686} (19,511,464} (18,457,886}
377,420) 393,982 (1,709,558 1,756,638}
1,389,744 1,084,937 5,39D,819 5,481,294
(20,000} (20,D00} (605,141} (560,636}
_ 3,168} 2,932 22,932 30,432
^___(23,168} 17,068 628,073 530,604}
(211,199} (1,003,598) (1,425,668} (3,123,275}
(426,250} (790,000) (755,000} (1,110,000}
- 3,026,604 - 3,026,404
- 37,939 ~ 37,939
- (2,630,034} - (2,630,D36}
(280,778} (250,744} (587,435} (567,279}
- - ~, ,,,~~77,348} 177,060
X918,227} _ (1,609,835) (2,945,451} 4,543,107}
117,151 81,D37 244,475 226,863
565,502 (458,929} 2,023,770 634,446
1,935,458 2,394,387 6,568,514 5,934,064
$ 2,500.,960 $ 1935,458 $ 8,592,280 , $ d 548 510
$ 2,500,940 $ 1,935,458 $ 7,847,780 $ 5,844,D10
- 724,500 724,500
$ 2,500,960 $ 1935,458 $ 8 592 280 _ $ 6aS68,510
-25..
ELK RIVER MUNICIPAL UTILITIES
. ELK RIVER, MINNESOTA
STATEMENTS OF CASH FLOWS - CDNTINUED
YEARS ENDED DECEMBER 31, 2009 AND 2008
Electric
2009 2008
RECONCILIATION OF OPERATING INCOME FLOSS} TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income (loss} $ 1,300,984 $ 1,336,993
Adjustments to reconcile operating income floss}
tv net cash provided by operating activities:
Other revenue related to operations 108,585 427,738
Bad debt expense 1$2,931 87,978
Depreciation 2,126,794 2,057,851
(Increase) decrease in assets;
Accounts receivable (237,458} (245,855}
other receivables 16,092 40,212
Special assessments -
Due from other governments X33,963} 35,274
Inventories 294,63D 54,312
Prepaid expenses X13,660} 51,853
Increase decrease} ll~ liabilities;
Accounts payable 200,933 429,G97
Salaries and benefits payable 21,086 16,942
Net other posteinployment benefits liability 10,03D 10,213
Compensated absences X31,789} X17,768}
Due to other governments 10,248 21,954
Customer deposits payable 45,63D 86,9G3
NET CASH PROVIDED
BY OPERA.TTNG ACTIVITIES , $ 4,001,073 , ~ $ 4394,357
NONCASH CAPITAL AND
RELATED FINANCING ACTIVITIES
Amortization of deferred charges $ 11,169 , , $ 11,169
Deferred charges on bonds issued $ - $ -
Prior period adjustment to accumulated depreciation $ - $ 10$,417
Loss on disposal of capital assets $ X32,173}, $ X8,369}
Capital assets purchased on account $ - $ -
Interest payment an revenue bonds from escrow cash $ - $ -
The notes to the financial statements are an integral part of this statement.
_ZG-
Wat~x
2oD9 2oD8
Total
2009 2008
$ 146,999 $ (30,137} $ 1,447,983 $ 1,3x6,856
95,765 245,458 204,350 673,196
4,252 13,379 187,183 101,357
956,993 974,848 _3,083,787 3,D32,699
139,059 (56,212} (98,399} (302,067}
53,176 (12,626} 69,268 27,586
(9,217} (1,D 18} (9,217} (1,018}
(33,963} 35,274
2,889 (4,724) 297,519 49,5 88
(3,497} (3,95D} (17,157} 47,903
1,781 (38,029} 202,714 391,668
757 1,543 21,843 18,485
- - 10,030 10,213
789 (4,D95} (31,000} (21,863}
- - 10,248 21,954
2,500 45,630 89,463
$ 1,389,746 $ 1,086937 $ 5,390,819 $ 5481,294
$ 14,319 $ 13164 $ 25 488 $ 24,333
$ w $ 58 396 $ - $ 58396 ,
$ - $ 8 560 $ - $ 116,977
$ - $ - $ 32173 $ 8 369
$ - $ 18,850 $ - $ 18 850
$ 84,834 $ 37,939 $ .84,834 $ 37 939
~27w
THIS PAGE IS LEFT BLANK
rNTENTIaNALLY
~~~.
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
Date I: SUI~I~A~Y ~~` SZGNXF~CANT AC`C`OUNTING P~LI~YES
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 ~tlae Commission} members are appointed by the City Council, The
Commission deterlnhles all matters of policy, The Commission appoints personnel responsible for the proper
administration of all affairs relating to the Utilities, The Utilities distributes electricity and water to the residents of
Elk River, Dayton, Big Lake and Otsego, Minnesota,
The Utilities has considered all potential units for which it is f~ancially accountable, and other organizations for
which the nature and significance of their relationship with the Utilities are such that exclusion would cause the
Utilities' frnancial 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 govei~unent 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 v~ Accounting a~ad Basis of Presentation
The accow.~ts of the Utilities are organized and operated an the basis of funds. A fund is an independent fscal 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 Iegal and managerial requirements.
Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is
recorded on the accrual basis when the exchange takes place,
Non-exchange transactions, in which the Utilities receives value without directly giving equal value in return, include
property taxes, grants, entitlements and donations. Revenue from property taxes is recognized in the year for which
the taxis levied, Revenue from grants, entitleme~ats and donations is recognized in the year in which all eligibility
requllements have been satisfied, Eligibility requh.~ements include timing requhements, 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 rehnbursement basis,
Grants and entitlements received before eligibility requirements are met are also recorded as unearned revenue.
The preparation of the financial statements inconformity 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,
_2g_
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
NOTES TD FINANCIAL STATEMENTS
DECEMBER 31, 2D09 AND 2DD8
Dote 1: SUMMARY GF SIGN~EICANT ACC®IUNTING PGL~C~ES ~ CG.NTINUED
Pro~rieta~y funds are accounted for on the flow of economic resaurces ~neasurement 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, In accordance with the provisions of the GASB Statement No, 2D, Accounting and Financial
Reporting fog Prap~ieta~~ Funds and other GavernmentaZ Entities that use ~'roprietary Fund Account, the Utilities
applies all applicable GASB pronouncements plus all Financial Accounting Standards Board (FASB} Statements and
Interpretations, Accounting Principles Board opinions, and Accounting Research Bulletins issued on or before
November 30,1989, except for those that conflict with or contradict GASB pronouncements, The Utilities has
elected not to apply FASB Statements and Intei~retatians issued a~ez• November 30,1989. Proprietary fiuads
include the fallowing fund type;
EnteNp~ise 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 andlor net income is
necessary for management accountability.
Proprietary fiu~ds distinguish operating revenues and expenses from nonapet~ating items, Operating revenues and
expenses generally result fi•om providing services and producing and delivering goods in connection with a
proprietary field's principal ongoing operations. The principal operating revenues of the water and Electric
enterprise fiuads are charges to customers far sales and service, 4perathlg expenses for entezprise 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.
The Utilities reports the following maj or proprietary funds;
The Elect~~ic fund accounts for the electric dist~•ibution operations,
The Water fund accounts far the water distribution system,
when both restricted and unrestricted resources are available for use, it is the Utilities' policy to use restricted
resources first, then un~~estricted resources as they are needed.
C. Assets, Liabiiities and Net Assets
Cash and Cash Equivalents
The Utilities' cash and cash equivalents are considered to be cash on hand, demand deposits and sho~•t~terzn
u~vestinents with original maturities of tlnee months or less from the date of acquisition,
Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other
authorized investments, Earnings from such hnvestments are allocated an the basis of applicable pal•ticipation by
each of the fiands,
_3 D.
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
NOTES TD FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
Note ~: SUMN~ARY ®F SIGN~F~CANT ACC~iJNTING P~LXCIES a C~NT1fNUE~
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 thixteen 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,
S, Bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System.
6. 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,
7. Repurchase or reverse repurchase agreements and securities lending agreements with financial institutions
qualified as a "depositary" by the government ezatity, with banks that are members of the Federal Reserve
System with capitalization exceeding $10,000,000, a prhnary repo~•ting dealer in U.S. government securities
to the Federal Reserve Bank ofNew York, ar certain Minnesota securities broker-dealers.
8. Guaranteed investment contracts ~GIC's) issued or guaranteed by a United States camrnercial 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 ofthe top two rating categories by a nationally recognized rating
agency.
Investments for the Utilities are reported at fair value.
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 3I, 2009 and December 31, 2008 is as follows;
Increase
2009 2008 (Decrease)
Electric $ 7$,750 $ 78,750 $
water 26,250 26,250
Total
~ 105,000 ~ X05,000 ~
_~I.
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESDTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2449 AND 2008
Note 1. SUN~I~ARY ~E SIGN~F~CA1~T ACC~UNT~NG POL~C~ES - CC~.~TXN-UED
~nterfund Receivables and Payables
Transactions between funds that are representative of lendinglborrowing arrangements outstanding at the end of the
fiscal year are refex~•ed to as either "interfund receivableslpayables" ~i.e., the current portion of interfund loans} or
"advances tolfrom other funds" ~i,e,, the non-current portion of interfund loans}, All other outstanding balances
between funds are reported as "due tolfrom other funds".
inventories
Inventories are stated at lower of average cost or market on the fnst-in, first-out (FIFO} method,
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are .recorded as prepaid items,
Restricted Assets
The amounts in the restricted cash account are set aside in accordance with the issuing resolution far specific bond
issues, They will be used for future debt service,
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, ~hE~
assets are retired or sold, the related cost and accumulated depreciation are removed from the accounts and any gain
or loss ova disposition is included in operations,
Major expenditures for improvements or capital asset projects are capitalized as projects are constr~~cted. Interest
incurred during the construction phase is reflected in the capitalized value of the asset const~~cted, net of interest
earned on the invested proceeds aver the same period, Interest incurred during the construction phase of capital
assets of business-type activities is included as part of the capitalized value of the assets 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 fallows~
Lives in Years
Description Electric Water
Production 4 - 20 25 - 50
Transmission 34
Distribution 10 - 33 25 - 50
General 10 - 50 10 - 50
Long-term obligations
Long-term debt is reflected as a liability in tl~e fund issuing the obligation. Deferred charges are deferred and
amortized over the life of the bonds using the straight-line method,
-32-
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
NOTES TG FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
Note 1: SUNIMA,RY ®~' S~GNII~ SCANT .ACC`~UNTXNG P~L~C~ES - C~NT~NUED
Compensated Absences
All vacation benefits can be carried over from year to year and will be payable upon termination. Sick leave can be
accumulated to a maximum of 9b0 hours from year to year. Upon terminatian or retirement, employees will have 5D
percent of unused sick leave, up to a maximum of 800 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,
Net .Assets
Net assets represent the difference between assets and liabilities, Net assets are displayed in three components;
a. Invested in capital assets, net of related debt ~ Consists of capital assets, net of accumulated depreciation
reduced by any outstanding debt attributable to acquire capital assets,
b, Restricted net assets w Consist of net assets 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 assets -All other net assets that do not meet the definition of "restricted" or "invested in
capital assets, net of related debt".
Comparative Data and Reclassifications
Comparative total data for the prior year have been presented in the selected sections of the accompanying financial
statements in order to provide an understanding of changes in the Utilities' financial position and operations. Also,
certain amounts presented in the prior year data have been reclassified in order to be consistent with the cu.~•rent
year's presentation.
Note 2: DETAILED NOTES ®N .ALL ~`UND~
A~ Deposits and fnvestments
Custodial credit risk for deposits and investments is the risk that in t1~e event of a bank failure, tl~e Utilities' deposits
and u~vestments may not be returned or the Utility 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 Utility maintains
deposits at those depository banks, all of whicl~ are members of the Federal Reserve System.
Minnesota statutes require that all Utility deposits be protected by insurance, sul•ety band or collateral. The market
value of collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds,
Authorized collateral in lieu of a corporate surety bond includes.
United States gove~~unent Treasury bills, Treasury notes, Treasury bonds;
o Issues of United States government agencies and inst~u~nentalities as quoted by a recognized industry
quotation service available to the govez~am.ent entity;
General obligation securities of any state or local government with taxing powers which is rate "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;
_~~_
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
NGTES TQ FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 200$
Dote 2; DETAILED I~~TES ®l~ ALL FUNDS - ~~.~TINUED
~ General obligation securities of a local gove~~ment with taxing powers may be pledged as collateral aga~rst
hinds deposited by that same local government entity;
Irrevocable standby letters of credit issued by Federal Dome 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 ~i Poor's Corporation; and
Time deposits that are fully insured by any federal agency,
Mhrnesota 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 fnnancial institution furnishing the collateral, The selection should be approved by the
government entity,
At December 31, 2009, the Utilities' carrying amount of deposits was $5,993,647 and the bark balance was
$G,999,949. of the bank balance $5,735,393 was covered by federal depositary insurance, and the remaining
balance was covered by collateral held by the pledging financial institution's agent in the Utilities' name.
At December 31, 2005, the Utilities' carrying amount of deposits was $4,299,559 and the bank balance was
$5,531,879. Of the bank balance $4b7,335 was covered by federal depository insurance, a~ad the ren~aining 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, 2049.
Fair Value
Credit Segmented and
Quality) Tune Carrying
Types of Investments Ratings ~ 1 } Distribution ~2~ Amount
Pooled investments
Broker Money Markets NIA less than G months $ 1,453,828
Non-pooled investments
U. S. Treasuries NIA less than G months 2,5 S 5,901
U.S. Government Agency Securities AAA 1 to 3 years 405,109
Brokered CD's NIA less than G months G4,000
Brokered CD's NIA 6 months to 1 year 42,000
Brokered CD's NIA 1 to 3 years 1,033,296
Total non-pooled il~vestments 4,133,306
Total i~~vest~nents $ .5,157,134__
1. Rating were plrovided by Moody's
2. Interest rate risk is disclosed using the segmented tune distribution method.
NIA Indicates not applicable or available
-34-
ELI RIVER, MINNESOTA
NOTES TG FINANCL41=. STATEMENTS
DECEMBER 31, 2009 AND 2008
Dote 2: DETATLEI~ N~TE~ ®N ALL FUNS - C`~NT~VUED
The Utilities' investment balances were as follows for December 31, 200$;
Fair Value
Credit Segmented and
Quality) Thee Carrying
Types of Investments Ratings ~ 1 } Distribution ~} Amount
Pooled investments
Broker Money Markets NIA less than 6 months $ 220,425
Non-pooled investments
U. S. Treasuries
NIA less than 6 months 2,592,096
U,S, Gove~mment Agency Sec~u~ities
Brokered CD's
Brokered CD's
Brokered CD's
Brokered CD's
AAA 6 months to 1 year
AAA 1 to 3 years
NIA less than 6 months
NlA 6 months to 1 year
NIA 1 to 3 years
NIA more than 3 years
303,843
508,280
2o7,aoo
595,000
335,ooa
96,000
Total non-pooled investments 4,640,219
Total investments $ 4,860647
1. Ratll~gs were provided by Moody's
2. interest rate risk is disclosed using the segmented tune distribution method.
NIA Indicates not applicable ar available,
A reconciliation of cash and temporary Investments as shown h~ the financial statements for the Utilities follows;
2009 2008
Deposits
Investments
Cash on hand
Total
$ 5,993,647 $ 4,299,559
5,187,134 4,$60,647
400 400
$ 11,181, ~ 81 $_ 9,160,606
Cash and investments
Unrestricted
Cash with escrow agent
Restricted
Total
$ 7,867,780 $ 5,844,010
2,588,901 2,592,096
724,500 724,500
$ 11,1 S 1,181 $ 9,160,606
_~~-
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MzNNES~TA
NOTES TD FINANCIAL STATEMENTS
DECEMBER 3I, 2009 AND 2008
Nate 2; DETAILED NOTES QN ALL FUNDS - C~NT~UED
The investments of the Utility 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 3 l
of the notes,
® Custodial Credit Risk, The custodial credit risk for investments is the risk that, in the event of the failure of
the counterpatty to a n•ansaction, 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 braker-
dealer or financial i7.~stitution,
® Concentration of Credit Risk, Is the risk of loss atti•ibuted 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 h~ any one type of instrEUa~ent,
® 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,
_3 ~.,
ELK RISER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
NaTES T4 FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
Dote Z: DETA~LFD Iv®TES ®N ALL FUN1~S a C~NTIwET~
B. Capital Assets
Electric and water fund capital asset activity for the year ended December 31, 2009 was as follows:
Beginning Ending
Balance Increases Decreases Balance
Capital assets not
being depreciated
Land
Const~~ction in progress
Total capital assets
not being depreciated
Capital assets being depreciated
Land improvements
Buildings
Machinery and equipment
Infrast~ructu~•e
Total capital assets
being depreciated
Less accumulated
depreciation for
Land improvements
Buildings
Machinery and equipment
Infrastructure
Total accumulated
depreciation
Total capital assets
being depreciated, net
Business-type activities
capital assets, net
$ 281,775 $ - $ ~ $ 281,775
195,605 1,346,708 (1,417,665) 54,648
477,380 1,30G,7D8 (1,417,665 366,423
63,147 - - 63,147
3,463,486 43,139 - 3,506,625
4,118,344 192,331 (266,697} 4,043,978
73,274,840 1,250,133 - 74,524,973
80,919,817 1,485,403 266,697 82,13 8,723
(36,672) (2,526) ~ (39,195)
(994,556) (110,405) - (1,104,961)
(2,879,523) (271,593} 266,697 (2,884,419)
24,150,382} - . _2,699,263} - (26,549,645)
- (28,061,133}, (3,083,787}
52,558,684 (1,598,184}
- 51,260,500
$ 53,336,064 $ 291476 $ ~1,417,b65) $ 51,626,923
264,697 ~3D,878,223~
-37_
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
NOTES T4 FINANCIAL STATEMENTS
DECEMBER 31, 2409 AND 2048
Node 2; DETAILED NOTES ON .ALL FUNDS ~ C~NTIN-UE~
Elect~~ic and Vi~ater fund capital asset activity far the year ended December 3l, 2448 was as follows:
Reclassifications
and
Beginning Prior Period Ending
Balance ~ Adjustments Increases Decreases Balance
Capital assets not
being depreciated
Land $ 211,236 $ 70,539 $ - $ - $ 281,775
Canstructian in progress 1,834,485 - - W (1,638,880}. 195,605
Tatal capital assets
not being depreciated 2,045,721 70 539 - 1638 880 477 380
Capital assets being depreciated
Land improvements 63,147 - - - 63,147
Buildings 3,454,405 - 9,081 - 3,463,486
Machinery and equipment 3,901,469 - 216,875 - 4,118,344
Infrastructure 68,937,005 ,~ (~ _0_,539}_ 4,408,374 - 73,274,840
Total capital assets
being depreciated ~ 76,356,026 (70539} _ 4,634,330 , - ~ 8~ 919 817
~- -~
Less accumulated
depreciation for
Land improvements (34,146) - (2,526) - (36,672
Buildings (879,983) - (114,573) - (994,556
Machinery a11d equipment (2,569,132) - X310,391) - (2,879,523}
Infrast~•ucture (21,428,196}_ _ (11b,977} (2,605,2Q9) - 24,150,382
Tatal accumulated
depreciation _ _..(24,911,457) (116,977). (3,032,b99)_ - _ (28,061,133)_
Total capital assets
being depreciated, net _ 51,444,569 (187516} 1.,601,63.1__ - ~ _ 52,858,bS4
Business-type activities
capital assets, net _ $ _~3,~94,290 _ $ 116 977 ,~$ _ 1,6Q1,b31__ $ (1,638,880 $ _53,336,064--
_3 gM
ELI RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
NOTES TC FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 200$
Note 2. ~ETA~LED N~TE~ ~N ALL F'UN~S - C~NTINUEI~
Depreciation expense was charged to functionslprograms of the Utilities as follows:
Business-type Activities
water
Electric
Total depreciation expense -business-type activities
C. Long-term debt
G.~. Revenue and Refunding Bonds
2009 2008
$ 956,993 $ 974,848
2,126,794 2,057,851
$ 3 083,787 $ 3,032,69.9
The City of Elk Rivet 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.
Authorized Interest Issue Maturity
Description and Issued Rate Date Date
G,O, '~1Vater Revenue
2009
2008
Refunding Bonds of2008 ~ 3,085,000 2,50-3,65 % 02/20/08 42/01/22 $ 3,020,000 $ 3,085,000
G, 0 V~ater Revenue
Bonds of 2001A 3,590,000 4,55.5.40 10/01/41 02101/22 2,730,000 2,880,040
G.O. City Hall Expansion
Bonds of 2042B 1,695,404 3,75-5.00 09/01/02 02/01/23 1,340,044 1,445,000
G.O, Water Revenue
Bonds of2003B 1,985,000 3.25-3,70 12/09/03 42/01/14 1,095,000 1,290,000
Total G.O, Revenue and Refunding Bonds
$ _ $,185,000 -
$ 8,
664,000_
The annual requirements to amortize the general obligation revenue bonds as of December 31, 2009 are as follows:
Year Ending
December 31, Principal Interest Total
2010 $ 3,065,000 $ 251,053 $ 3,316,053
2011 530,000 174,118 704,118
2012 550,400 157,434 707,436
2013 580,000 139,3$3 719,383
2014 590,000 120,002 710,002
2015-2019 1,600,000 414,327 2,014,327
2020-2023 1,270,000 93,795 1,363,795
Total $ 8,185,000 $ 1350114 $ .9,535,114
December 31,
_3g_
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
Note Z; DETA~LE~ NOTES ~N ,ALL FUSS w C~NT~IUEI~
Revenue Bands
The following bonds were issued to finance capital improvements in the Electric fund, They will be retired from net
revenues of the find.
Authorized Interest Issue Maturity December 31,
Description and Issued Rate Date Date 2009 2008
Electric Revenue
Bonds, Series 2004A $ 944,000 x,00-4,25 % 08/01/04 02/01/15 $ 615,000 $ 700,000
Electric. Revenue
Bonds, Series 2006A 3,595,000 3,35-4.40 03/42/06 08/01/21 3,030,000 3,225,000
Elech~ic Revenue
Bonds, Series 2007A 2,875,000 4,00 03/28/07 02/01/22 2,875,000 2,875,000
Total Revenue 13oz~ds $ 6,520,004 $ 6,800,400
The annual requirements to amortize the revenue bonds as of December 31, 2009 are as follows;
Year Ending
December 31, Principal__ Interest Total
2010 $ 460,000 $ 247,085 $ 707,085
2011 480,000 229,784 709,784_.
2012 495,000 211,434 706,43
2013 520,000 192,358 712,35
2014 545,000 172,221 717,221
20152019 2,585,000 562,517 3,147,517
2020-2022 1,435,000 87,400 1,522,400
Total $ 6 520,000
I $ 1,702,799 $ 8 222 799
-4a-
ELI RIVER MUNICIPAL UTILITIES
ELI RIVER, MINNESOTA
NOTES TQ FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
Note Z: DETAILED NOTES ~N ALL FUNI~~ - C~NTINUE~
Promissory Note
The Utilities has issued a promissory note to provide for construction of a landfill gas generator. The note is to be
paid from revenue of the system and is secured by the facility,
Authorised Interest Issue Maturity December 31,
Description and Issued Rate Date Date 2009 2048
Landfill
Generator Note $ 3,521,000 - % 03/19/02 02/19/22 $ 2 524 64~ $ 2 701994
The annual requirements to amortize the generator note as of December 31, 2009 areas follows;
Year Ending
December 31, Principal ~ntex•est Total
2010 $ 179,328 $ - $ 179,328
2011 152,436 - 182,436
2012 ~ 183,444 - 183,444
2013 186,588 - 186,555
2x14 189,348 - 189,348
2015-2019 980,184 - 980,184
2020-2022 623,318 - 623,315
Total _ $ 2,524,646 $ ~ , $ 2,-524,646
Changes in Long-term Liabilities
Long-term liability activity for the year ended December 31, 2009 Was as follows;
Beginning Ending Due Within
TM . Y ~ ~ . l.. ..._
Business-type activities
Bands payable
General obligation
revenue bonds
Revenue bonds
Total bonds payable
Nates payable
Compensated
absences payable
4PEB liability
Business-type activity
long-term
liabilities
$ 8,660,000 $ -
6,soo,ooo
15,460,000 -
2,701,994 -
266,925 175,781
10,213 la,o3o
$ (475,000} $ 8,185,000 $ 3,065,000
2s0,0oo 6,520,000 460,000
(755,000} 14,705,000 3,525,000
(177,348} 2,524,646 179,328
(206,781} 235,925 117,838
- 20,243
$ 18,439,132 $ 185,811 $ 1139129 ~ 17,485,814 , $ 3,822,166
-41_
ELK RAVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 200$
Note 2: 1~ET.AILEI~ l~®TES ~N ALL EU1~S - C®NTII~UED
D, Interfund Receivables, Payables and Transfers
The composition of interfund balances at December 31, 2009 is as follows:
Electric
Electric
Electric
E1ect~•ic
Payable Fund
City -General fund $
City - Nonmaj or
City M Sewer
City -Garbage
1,426
155
713
2,619
Total Electric fund receivable from City 4,913
Purpose
Electric sales tax paid by City
Electric sales tax paid by City
City share of pro j ect costs
City share of prof eGt costs
Water City -Capital projects fund 128,850 TIF 22 Water Access Charge
Total receivable from City _ $ _ ~ 3.3,_763_--
City -General fund Electric $ 43,494 Shared building ~naint, costs
City -multiple funds Electric 44,031 December transfer of 3% of revenue
City - General fiuld Elect~•ic 1,45 S Electric share of insurance
City - General fiznd Electric 999 Electric sl~are of vehicle mait~t,
City -Sewer Electric 120,13 5 Billed sewer on behalf of City
City -Garbage Electz•iG 98,450 Billed garbage an behalf of City
Total Elect~•ic fund payable to City 30$,564
City -General fund water 312 Water share of insurance
City -General fund water 14,498 Shared building maim, costs
Total Water fund payable to City 14, $10
Total payable to City $ 323,374
Interfiuad transfers completed in 2009 are detailed as follow;
Transfer out;
Electric
Water
Total t~•ansfers out
Transfer to
Other
City Funds ~ Purpose ....., ..r.
$ 585,141 Transfer 3% of revenue
20,000 water share of bonding
$ 605,141
-42-
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
Note 3; DE~`INNED BEI~EI`~T PENSY®N PLA~1S -STATEWIDE
A. Plan description
Allfull-time and certain part-time employees of the Utilities are covered by defined benefit plans administered by
the Public Employees Retirement Association a£ Minnesota OPERA}. PERA administers the Public Employees
Retirement Fund ~PERF}, which is acost-sharing, multiple-employer retirement plan. This plan is established and
administered in accordance with Minnesota statutes, chapters 3 S 3 and 3 5 6.
PERF members belong to either the Coardinated Plan or the Basic Plan, Coordinated Plan members are cavered by
Social Security and Basic Plan members are not, All new members must participate in the Coordinated Plan.
PERA provides retirement benefits as well as disability benefits to members, and benef is to survivors upon death of
eligible Xnembers. Benefits are established by Minnesota statute, and vest after three years of credited service. The
defined ~•etirement benefits are based on a member's highest average salary far 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 and Basic Plan members. The retiring member
receives the higher ofstep-rate benefit accl•ual formula Method 1) or a level accrual formula Method 2}. Under
Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of the first 10
years of service and 2.7 percent far each remaining year. The annuity accrual rate for a Coordinated Plan member is
1.2 percent of average salary for each of the fast 10 years and 1.7 percent for each remaining year. Under Method 2,
the annuity accrual rate is 2.7 percent al' average salary for Basic Plan members and 1.7 percent for Coordinated Plan
members for each yeaz• of service. For all PERF members hired prior to July 1,1989 whose annuity is calculated
using Method 1, a full annuity is available when age plus years of service equal 90. NoX•~nal retll~ement age is 65 for
Basic and Coordinated members hired prior to July 1,1989. Normal retirement age is the age far unreduced Social
Security benefits capped at 66 far Coordinated members hired on or after July 1,1989. A reduced retirement
annuity is also available to eligible members seeking early retirement.
There are different types of annuities available to members upon retirement, A single-life alrnuity is a lifetime
annuity that ceases upon death of the retiz~ee--no survivor annuity is payable, There are also various types of joint
and survivor arnluity options available which will be payable over j oint lives. Members may also leave their
contributions in the fund upon termination of public service, in order to qualify for a deferred annuity at retirement
age. Refunds of cont~•ibutions are available at any time to members who leave public service, but before retirement
benefits begin.
The benefit provisions stated in the previous paragraphs of this section are cul•~~ent provisions and apply to active
plan pa~•ticipants. 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,
PERA issues a publicly available fn~ancial report that includes frnancial statements and required supplementary
infoi~natian far PERF. That report maybe obtained on the Internet at www.rnnpera.org, by w~.~iting to PERA, b4
Empire Drive #200, St. Paul, Minnesota, 55103-2088 or by calling (651} 296-7460 or 1-800-652-9026.
-43 _
ELK RIVER MUNICIPAL UTxLITIES
ELK RIVER, MINNESOTA
NOTES TC FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
Note 3: DE~'~NED BENE~'~T PENSION PLANS - STATEwD]E w C~NT~NUEI~
B. ~`unding Policy
Minnesota statutes, chapter 353 sets the rates for enaployer and employee cont~•ibutions, These statutes are
established and amended by the State legislature. The Utilities makes annual contributions to the pension plans
equal to the amount requhed by Minnesota statutes, PERF Basic Plan members and Caordirlated Plan members
were required to contribute 9,1 percent and 6.0 percent, respectively, of their annual covered salary in 2009. The
Utilities is requhed to contribute the following percentages of annual covered payroll; 11,78 percent far Basic Plan
PERF members and 6,75 percent of Coordinated Plan PERF members. Employer contribution rates for the
Coordinated Plan will increase to 7.00 percent, effective January 1, 2010• The Utilities' contributions to the PERF
for the years ending December 31, 2009, 2008 and 2007 were $145,592, $151,416, and $136,713, respectively. The
Utilities' cont~;ibutions were equal to the eont~•actually required contributions for each year as set by Minnesota
statute,
Nate 4: ®THER INF~R.I~ATI®N
A. Territorial Acquisition Agreement
The Utilities has entered into an agreement to transfer ownership of electric plant and electric service to customers in
certain areas currently receiving electric service fiom Anoka Electric Cooperative, Inc, (AEC},
The cost of prope~•ty purchased from AEC will be net book value, The Utilities will also pay AEC far lass of
revenue for each area acquired based on a fol~nula outlined in the agreement,
In addition, the Utilities will compensate AEC for the loss of revenue from the future sale of electricity to elect~•ic
customers i~7 the areas acquired from AEC for a period of ten years from the date of sale of each h~dividual area,
Durilag 2009 and 20o8, the Utilities paid $9,469 and $248,976, respectively, under this agreement, including $9,469
and $32,835 in 2009 and 2008, respectively, far lass of revenues. All amounts paid are included in property and
equipment,
la. Risk l~[anagement
The Utilities is exposed to various risks of loss related to torts; theft of, damage to and destz•uction of assets; errors
and omissions; injuries to employees; and natural disasters for which the Utilities carries commercial insurance, The
Utilities obtains insurance through pa~•ticipation in the League of Minnesota Cities Insurance Trust (LMCIT}, which
is a risk sharing pool with approximately 500 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 dollaa• 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 clallr~s that have been incurred but not reported ~IBNRs}, The
Utilities' znanagement is not aware of any incurred but not reported claims.
C. Prior Period Adjustments
During the year ended December 31, 2045, the Utilities recorded prior period adjustments h.~ the Electric and water
funds for $108,417 and $8,560, respectively, to co~~ect accumulated depreciation,
-44~
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
Nate 4: ~THE~ II~F~RI~ATI~N - C~NTINUEI~
~. Commitments
The Utilities has received notice from. theiz• power supplier regarding the existing all requirements power contract
exercising their right to give ten years notice to cancel the contract. The cancellation date would be effective
September 3 0, 2018. The process has begun to renegotiate the existing contract, or contract with another power
supplier.
Note 5: P~~TEIV~PL®'YIVIENT BENE~`ZTS ~THEI~ THAN PENS~~N
In 2008, the Utility prospectively implemented the requirements of a new accounting pronouncement, GASB Statement
No. 45, Accounting and Financial Reporting ~y Employers for Pasternploymer~t Benefits ~thcr than Pensions.
Plan Description. Elk River Municipal Utilities (the Utilities} administers amulti-employer defrned benefit healthcare
plan ~"the Retiree Health Plan"}. The plan provides lifetime healthcare insurance for eligible xeti~•ees and their spouses
through the Utilities group health insurance plan, which covers both active and retired members. Benelzt provisions are
reviewed intermittently through the relationship with the Utilities' insurance broker. The Retiree Health Plan does not
issue a publicly available financial report.
.Funding Policy, Contribution requirements also are reviewed at the time changes are made to the plan, The Utility
contributes none of the cost afcurrent-year premiums for eligible retired plan members and their spouses. For Fiscal year
2009, the Utility cant~~ibuted $0 to the plan, Plan members receiving benefits cont~•ibute 100 percent of their premium
costs. In fiscal year 2009, total member contributions were $0.
~4nnual ~PEB Cosh and .I~et ~PEB obligation. The Utilities' a~rnual other postemployment benefit ~OPEB) cost
expense) is calculated based on the annual required contribution of the employer (ARC), The Utility has elected to
calculate the ARC and related information using the alternative measurement method permitted by GASB Statement 45
for employers in plans with fewer than one hundred total plan members, The ARC represents a level of funding that, if
paid on an ongoing basis, is prof ected to cover normal cost each year and to amol•tize any unfiurded actuarial liabilities
for funding excess) over a period not to exceed thirty years. The following table shows the components of the Utilities
annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the Utilities' net OPEB
obligation to the Retiree Health Plan;
Annual required contribution $ 10,213
Interest on net OPEB obligation 409
Adjustment to annual required contribution 592
Annual OPEB Cost expense} 10,030
Contributions made -
Increase in net 4PEB obligation 10,030
Net 4PEB obligation- beginning of year 10,213
Net OPEB obligation- end of year $ 20,243
~45-
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
Nate 5~ P~STlEl1~PL~YI~ENT BENEFITS OTHER THAN PENSI®N - ~~NTINUED
The Utilities' annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB
obligation for December 31, 2009 and the preceding fiscal year was as follows;
Three Year Trend Information
Year
Eliding
Annual
OPEB Cost
Percentage
Annual OPEB
Contributed
Net OPEB
Obligation- _-_
72/31/2009 ~ 10,030 w % $ 20,243
121311200$ 10,213 - 10,213
Funded Status and Funding Progress. As of December 31, 2009, the actuarial accrued liability for benefits was $56,892,
all of which was unfunded. The covered payroll annual payroll of active employees covered by the plan} was $2,271,716
and the ratio of the unfunded actuarial accrued liability to the covered payroll was 2,50 percent,
The pro j ection of future benefit payments far an ongoing plan involves esthates of the value of reported amounts and
assumptions about tl~e probability of occurrence of events far into the future, Examples include assumptions about future
employment, mortality, and the healthcare cost tl•end. Amounts determined regarding the funded status of the plan and the
al~nual required contributions of the employer are subject to continual revision as actual results al•e compared with past
expectations and new estimates are made about the future. The schedule of funding progress, presented as required
supplementary information following the notes to the financial statements, presents multi-year trend information about
whether the actuarial value of plan assets is increasing or decreasing over tune relative to the actuarial accrued liabilities
for benefits,
Nfet~ads and .~ssumptians. Projections of benefits far financial reporting purposes are based on the substantive plan ~th~
plan as understood by the employer and plan members) and include the types of benefits provided at the time of each
valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point, The
methods and assumptions used include techniques that are designed to reduce the effects of shortMtel•m volatility in
actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations,
The following simplifying assumptions were made;
Retu~ement age for active en~pZoyees - Based an the historical average retirement age for the covered group, active plan
members were assumed to retire at age 62, or at the first subsequent year i11 which the member would qualify for benefits.
Participation date - It is assumed that l0 percent of active participants continue coverage until age 65. Participants are
assumed to continue in their current coverage type single ar family}. It is assumed that 100 percent of retirees will
continue their current coverage until age 65.
~rfe .Expectancy -Life expectancies were based on mortality tables from the National Center far Health Statistics, The
2000 United States Life Tables for Males and for Females were used.
Turnover -Non-group-specific age-based tur~lover data fi•om GASB Statement 45 were used as the basis for assigning
active members a probability of rernallahag employed until the assumed retirement age and for developing an expected
future working lifetime assumption for purposes of allocating to periods the present value of total benefits to be paid.
~ea~thcare cost trend rate -The expected rate of increase in healthcare insurance premiums was based on projections of
the Office of the Actuary at the Centers for Medicare & Medicaid Services. A rate of 10.0 percent hritially, reduced to an
ultimate rate of 5.0 percent after ten years, was used.,
_46_
ELI RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
NOTES T4 FINANCIAL STATEMENTS
DECEMBER 3 I, 2009 AND 2008
Note 5: P®STEI~PL®YII~LNT BENEFITS ~T~ER, THAN PENSION - CONTINUED
Health insurance p~enziun~s - 200$ health insurance premiums for retirees were used as the basis for calculation of the
present value of total benefits to be paid.
Withdrawal -The probability that an employee will remain employed until the assumed retirement age was determined
using non-group specific age-based turnover data provided in Table 1 in Paragraph 35b of GASB 45.
Disability -None
Actuarial 1~Iethod -Projected Unit C~•edit with 30-year amortization of the unfunded liability.
Valuation date -January I, 2008
Based on the historical and expected returns of the Utilities' short-term investment po~•tfolio, a discount rate of 4,0
percent was used. In addition, a simpli#"~ed version of the entry age actuarial cost method was used. The unfunded
actuarial accrued liability is being amortized as a level dollar amount over an open basis, The remaining amortization
period at December 31, 2009, was thll•ty years,
~47-
THIS PACE I~ LEFT BLANK
INTENT~~NALLY
_4g_
REQUIRED SUPPLEMENTARY
INFO ATIOI~
ELK RIVER MUN~C~PAL UTILIT~E~
ELK RIVER, MINNE~~TA
YEAR ENDED
DECEMBER 3 ~, 2009
_49_
THIS PAGE IS LEFT BLANK
INTENTIONALLY
~50~
ELK RIVER MUNICIPAL UTrLrTIES
ELK RIVER, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2009 AND 2008
Schedule of Funding Progress for the Retiree Health Plan
Unfunded
Actuarial
Actuarial Actuarial Actuarial Accrued
Valuation Value of Accrued Liability
Date Assets Liabili ~UAAL}
12/31/2009 $ - $ 56,892 $ 56,892
12/31/2008 - 56,892 56,592
UAAL as a
Percentage
Funded Covered oI' Cavered
Ratio Payroll Payroll
- % $ 2,271,71.4 2,50
- 2,300,000 2.47
w51-
THIS PAGE IS LEFT BLANK
INTENTIGNALLY
_~2_
SUPPLENIE~TAL INFO ATI~N
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
YEAR ENDED
DECEMBER 31, 2~~9
_~~_
ELK. RNER MUNICIPAL UTILITIES
ELK. RIVER, MINNESOTA
SUPPLEMENTAL INFaRMATI(]N
SCHEDULES OF OPERATING REVENUES AND EXPENSES
YEARS ENDED DECEMBER 31, 2ao9 AND Zoos
OPERATING REVENUES
Charges for services
Elk Raver
Otsego
Big Lake
Dayton
Security systems
LFG Pro j ect
Generation credit
Customer penalties
Electric
2009
Zoos
$ 20,155,349 $ 19,114,7bS
1,956,109 1,7b2,4b0
266,128 245,179
204,217 188,333
254,773 227,772
1,009,682 993,257
172,421 222,584
209,064 187,553
TQTAL OPERATING REVENUES
GPERATING EXPENSES
Purchased power
Production
Supervision and labor
Natural gas
Supplies and power for pw.nping
Landfill gas expense
Maintenance of st~•uctures
Maintenance of equipment
Maintenance of plant
Total
24,227,743 22,941,903
16,161,444 14,778,270
62,831
2G,54o
59,984
662,289
30,617
10,329
9,755
64,373
38,859
58,430
638,556
24,360
19,428
46,509
862,345 886,515
Transmission and distribution
Supervision and labor 29,307 35,891
Maintenance of overhead lies ZSG,805 338,028
Maintenance of underground lines 156,004 242,980
Maintenance of station equipment 46,560 68,975
Transportation 120,460 147,329
Maintenance of customer service 7,202 42,278
Maintenance of customer meters 74,210 67,459
Miscellaneous 354,203 333,342
Total
Services to City
Depreciation
Customer accounts expense
Meter reading
Billing and collection
Bad debts
Total
1,074,751 1,276,282
4ZS,S08 409,222
2,126,794 2,057,851
95,450 62,372
90,593 92,013
182,931 87,978
368,974 242,3b3
_54_
Water
Total
2009 2008 2009 2008
$ 2,182,110 $ 2,109,014 $ 22,337,459 $ 21,223,779
w M 1,954,109 1,762,460
- - 266,128 245,179
- - 204,217 188,333
- 254,773 227,772
- - 1,009,682 993,257
- _ 172,421 222,584
24,319 21,110 233,3 83 208,463
2,206,429 2,130,124 26,434,172 25,072,027
- - 16,1 d 1,444 14,778,270
14,631 28,189 77,462 88,542
26,540 38,859
245,109 256,672 325,093 .315,102
M µ 662,289 638,556
17,643 ~ 14,236 48,240 38,596
77,034 95,502 87,363 114,930
- - ~ 9,755 46,509
374,417 394,599 1,236,742 1,281,114
19,643 20,025 48,950 55,916
w - 286,805 338,028
- - 154,004 242,980
- - 46,560 68,975
10,31$ 18,584 130,778 165,913
92,032 79,490 99,234 121,768
47,454 64,412 121,644 132,071
- - 354,203 333,342
169,447 182,711 1,244,198 1,458,993
- ~ 428,508 409,222
956,993 974,848 3,083,787 3,032,699
29,818 27,364 125,268 89,736
27,335 32,068 117,928 124,081
4,252 13,379 187,183 101,357
61,405 72,811 430,379 315,174
-55-
ELK RIVER MCNCIPAL UTILITIES
ELK RIVER, MINNESOTA
SUPPLEMENTAL INFORMATION
SCHEDULES OF OPERATING REVENUE AND EXPENSES -CONTINUED
YEARS ENDED DECEMBER 31, 2009 AND 2008
OPERATING EXPENSES -CONTINUED
General and administrative
Salaries
Employee pensions and benefits
Dues
Office supplies and billing expense
Office utilities and maintenance
Consulting fees
Legal and audit
Environmental compliance
Conservation improvement p~•oject
Insurance
Telephone
Advertising
Education and meetings
Miscellaneous
Electric
2009 2008
$ 351,782 $ 372,002
887,545 903,777
141,38G 142,957
73,3G3 59,007
17,077 17,648
5,182 7,7a9
60,G80 66,478
14,005 23,595
104,653 130,705
129,1 G4 119,747
14,180 15,176
1,212 12,798
101,944 79,1ss
1,770 3,650
Total
TOTAL OPERATING EXPENSES
OPERATING INCOME (LOSS}
NONOPERATING REVENUES (EXPENSES}
Interest income
Connection charges
Miscellaneaus revenue
Interest expense
Amortization of deferred charges
Loss on sale of capital assets
TGTAL NONOPERATING
REVENUES (EXPENSES}
INCOME (LOSS} BEFORE TRANSFERS
TRANSFERS TO OTHER CITY FUNDS
CHANGE IN NET ASSETS
NET ASSETS, TANUARY 1
PRIOR PERIOD ADTUSTMENTS
NET ASSETS, RESTATED, JANUARY 1
NET ASSETS, DECEIViBER 31
1,903,943 1,954,407
22,926,759 21,604,910
1,300,984 1,336,993
87,857 155,597
78,208 300,7G9
30,377 126,969
(299,452} (314,775}
(11,169) (11,169)
(32,173) (8,3G9}_
146,352 249,022
1,154,632 1,586,015
585,141), ,~ (540,636}
569,491 1,045,379
24,952,536 24,015,574
- (108,417}
24,952,536 23,907,157
$ 25,522,027 $ 24,952,53G _
-56_
~ate~ Total
__
2009 -
2045 -
2009
2008
$ 119,154 $ 120,086 $ 470,936 $ 492,085
225,538 223,130 1,113,083 1,126,907
36,572 34,907 177,958 177,864
26,669 22,940 100,032 81,947
6,671 7,737 23,748 25,385
9,OG 1 6,377 14,243 14,086
16,176 22,015 76,856 88,493
- - 14,005 23,595
1,670 10,107 106,323 140,512
29,824 36,220 158,985 155,967
4,671 5,036 18,851 20,212
290 1,662 1,502 14,440
19,191 42,101 121,135 121,259
1,681 2,974 3,451 4,624
497,168 535,292 2,401,111 2,489,699
2,059,430 2,160,261 24,986,189 23,7GS,171
146,999 X34,137} 1,447,983 1,306,856
132,452 51,$73 220,309 207,470
83,378 236,536 161,556 537,305
12,387 8,922 42,764 135,891
X274,958} X279,292} (574,410} X594,067}
X14,319} X13,164) X25,488} X24,333}
- - X32,173} 5,369
~, ~ ~d 1,Oda} 4,875 ~ 207,412) 253,597
85,939 (25,242} 1,240,571 1,560,753
X20,000} ~~O,oao} 1605,141} ~560,G36}~
65,939 45,242 635,434 1,000,117
20,776,594 20,830,416 45,729,134 44,545,990
- 8,560 - X116,977}
20,776,594 20,821,$56 45,729,130 44,729,013
$ 20 842 533 ___$_____2__0,776,594___ _ $ 46,364560 $ 45y729,130
_57_
ELI RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
SUPPLEMENTAL INFORMATION
ELECTRIC FUND
SUMMARY OF OPERATIONS AND UNAUDITED STATISTICS
FOR THE YEARS ENDED DECEMBER 31, 2002 THROUGH DECEMBER 31, 2009
SUMMARY ~~ ~PERAT~~NS
OPERATING REVENUES
Sales of elect~~icity
Other operating revenues
TOTAL OPERATING REVENUES
OPERATING EXPENSES
Purchased power
Distribution
Services to the City
Depreciation
Other operating expenses
TOTAL OPERATING EXPENSES
OPERATING INCOME
TRANSFERS FROM OTHER CITY FUNDS
TRANSFERS TO OTHER CITY FUNDS
NONOPERATING REVENUES
NET INCOME
PERCENT OF CHANGE
Sales of electricity
Purchased power
PERCENT OF REVENUES
Purchased power
2002 2003
2004
$ 10,783,277 $ 12,697,258 $ 13,775,332
343,087 299,695 268,140
11,126,364 12,996,953 14,043,472
6,849,629 7,786,921 8,563,298
667,D38 829,051 1,390,414
23 8,372 265,234 294,698
969,913 1,067,063 1,427,091
1,477,574 1,915,081 1,567,309
10,202,526 11,863,350 13,242,810
923,838 1,133,603 804,662
So,Dao
X289,264) X317,918) X340,564}
917,373 766,285 651,934
$ 160 x,947 $ 1,581,970 $ 1,112,03E
12,294% 17,750% $,491%
13.4$1% 13,684°/a 9,97D%
61.562% 59,913% 60,977%
UNAUDITED STATISTICS
MISCELLANEOUS
2002 2003
Kwh's purchased
Kwh's sold
Lll~e 1DSs
Percent of line loss
REVENUES PER Kwh SOLD
COST PER KWh PURCHASED
NUMBER OF CUSTOMERS
TOTAL CONTRIBUTIONITRANSFERS TO CITY
2004
157,594,270 17D,092,937 176,730,416
149,787,670 161,852,054 165,595,414
7,806,600 8,24D,883 11,135,DD2
4.954% 4,845°/a b,301%
$ 0,0720 $ 0.0784 $ O,D832
$ 0,0435 $ 0,0458 $ 0.0455
. 7,002 7,376 7,90x`
$ 527,636 $ 583,152 $ 340,564
_5g_
Zoos 2006 2DO7 2DOS 2oa9
$ 15,276,987 $ 16,495,049 $ 19,164,797 $ 22,303,994 $ 23,591,485
444,579 482,668 501,746 637,909 636,258
15,721,566 16,977,717 19,666,543 22,941,903 24,227,743
9,625,519 10,101,458 12,176,034 14,778,270 16,161,444
1,528,057 1,942,577 1,529,971 2,162,797 1,937,096
331,644 328,148 358,029 409,222 428,508
1,553,663 1,561,096 1,920,798 2,057,851 2,126,794
1,731,317 1,936,275 1,977,973 2,196,770 2,272,917
14,770,200 15,869,554 15,262,805 21,604,910 22,926,759
951,366 1,108,163 1,403,73$ 1,336,993 1,300,984
X388,927} ~420,OD0} X483,000} ~54D,636} (585,141}
700,592 887,803 710,858 249,022 X146,352}
_ 1263,D31
,
1,575,966 _
$ g
1,631,596 , $ 1,045,379 _ $ _ - 569,491_-
10.901% 7.973% 16.155% 16.35D% 5.772%
12.404% 4.945% 20,537% 21,372°/fl 9,360%
61.225% 59.498% 61,912% 64,416% 66.706%
2005 2006 ZDO7 Zoos 2oD9
193,700,295 205,645,631 225,973,086 241,837,173 247,595,137
182,515,644 194,975,53D 211,298,886 224,226,04$ 232,772,722
11,184,654 10,670,101 14,674,200 17,611,125 14,522,415
5.774% 5,189% 6,494°/a 7.282% 5,987%
$ 0.0837 $ 0.0846 $ 0.0907 $ 0,0995 $ 0.1013
$ 0.0497 $ 0.0491 $ 0,0539 $ 0.0611 $ 0.0653
5,306 5,562 8,945 9,203 9,170
$ 388,927 $ 420,OD0 $ 483,DOD $ 540,634 $ 585,141
.5g_
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
SUPPLEMENTAL INFORMATION
WATER FUND
SUMMARY OF OPERATIONS AND UNAUDITED STATISTICS
FOR THE YEARS ENDED DECEMBER 31, 2002 THROUGH DECEMBER 31, 2009
SUN.[I~ARY ~F ®PERAT~~NS
OPERATING REVENUES
Sales of water
OPERATING EXPENSES
Operating expenses less depredation
Depreciation
TOTAL OPERATING EXPENSES
TOTAL OPERATING INCOME FLOSS}
PERCENT OF CHANGE
Sales of water
$ 834,562 $ 1,047,561 $ 1,1b7,955
561,039 849,477 804,831
292,559 585,354 720,444
853,598 1,435,031 1,526,875
$ 19 03,x, ~,$ X387,470} _~ X358,920)_
X1,23%} 25,52% 11,49%
UI~A,UDITED STATISTICS
MISCLLLANE~US
2004
WATER PUMPED gallons} 641,675,000 706,804,000 b51,fl00,000
WATER SOLD gallons} 527,780,000 634,994,000 642,019,000
Percent of line loss 17,75% 10,1 b% 1.3 8%
Revenues per 1,000 gallons pumped $ 1,29 $ 1,47 $ 1,78
Revenues per 1,000 gallons sold $ 1,58 $ 1,45 $ 1,82
Number of customers 3,207 3,513 3,824
UNUSUAL LINL LASS
Gallons
2002 2003 2004
Flushing hydrants 11,500,000 11,500,OD0 11,500,000
Back washing ~ 8,880,000 8,880,000 8,900,000
Fi~•e depar~nent use 5,000,000 5,000,000 4,DOO,D00
New water plain disitafectant and flushing 5,000,000 5,000,OOD 4,000,000
Meter inaccuracy 4,DOD,000 4,00D,000 -
Easteraa Brad maintenaaace 15,000,000 15,000,000 -
Frozenpipes bursting in abandoned homes
Unusual line loss 49,38D,000 49,380,000 , ~ 28,4D0,o00
~60~
Zoos 2006 2007 2008 Z4o9
$ 1,347,542 $ 1,749,932 $ 2,113,166 $ 2,130,124 $ 2,206,429
1,438,035 1,449,988 1,191,346 1,185,413 1,102,437
790,454 790,451 921,450 974,848 956,993
1,828,489 1,560,439 2,112,796 2,164,261 2,059,430
$ ~480~947} a ~ ~110~507} $ 370 _ $ ~34,137~ _ $ 146,999
15.35% 29,56% 20.76% 0.54% 3,58%
ZOOS 2006 2007 2008 2009
705,746,000 812,560,000 873,742,000 854,133,000 782,951,000
632,256,000 726,169,000 783,948,000 727,029,000 708,286,000
10,41% 10.63% 10.2$% 14,$8°/a 9,54°/a
$ 1.90 $ 2.14 $ 2.41 $ 2,48 $ 2.81
$ 2.13 $ 2.41 $ 2,70 $ 2.93 $ 3.12
4,074 4,317 4,413 4,508 4,467
gallons
2005 2006 2047 2008 2009
25,OOO,040 2S,OOO,000 27,000,000 30,000,000 33,000,000
8,400,000 9,000,000 8,440,000 8,440,040 8,400,000
1,ooa,ooo 1,000,000 l,ooo,oo0 5,000,000 1,000,040
5,0oo,ooa 6,500,000 1,000,000 2,000,000 2,000,000
3,100,004 3,000,000 - ~ 1,3ao,ooo
4;~,5UU,UUU 44,~UU,UUU 3`14UU UUU 7U,~4UU,UUU 7Z 7UU~UUU
_61.
THIS PA~rE ~~ LEFT BLANK
INTENTZQNALLY
~~2_
ETHER P~R.T~
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
YEAR ENDED
DECEMBER 3 ~, 2D~9
_~~_
THIS FADE 7S LEFT BLANK
INTENTIONALLY
M64~
,,
:uEIc~~3rQ
I?{li~l~, lFl ~f ,~+3~;36
REPORT ON MINNESOTA LEGAL COMPLIANCE
Public Utilities Commission
Elk River Municipal Utilities
Elk River, Minnesota
We have audited the financial statements of the Elk River Municipal Utilities ~tlae Utilities) as of and for the years ended
December 31, 2DD9 and 2aQ8, and have issued our repo~•t thereon dated April ~, ZD1Q,
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the
provisions of the Minnesota Legal Compliance Audit Guide for Local Government, promulgated by the Minnesota Office of the
State Auditor pursuant to Minnesota statute, section 6,65, Accordingly, the audit included such tests of the accounting records and
such other auditing procedures, as we considered necessary in the circumstances,
The Nfinnesota Legal Compliance Audit Guide for Local Government covers seven main categories of compliance to be tested:
contracting and bidding, deposits and investments, conflicts of h.~terest, public indebtedness, claims and disbursements,
miscellaneous provisions and tax increment financing, Our study included all of the listed categories,
The results of our tests indicate that for the items tested, the Utilities complied with the material terms and conditions of applicable
legal provisions,
This report is intended solely for the information and use of the Public Utilities Commission, City Council, management and the
Office of the State Auditor and is not intended to be and should not be used by anyone other than these specified parties,
f.~Jt.~m~,l~~
April 6, 2D 1 D
Minneapolis, Minnesota
ABDO, EICK ~ MEYERS, LLP
Certr.' red Public Accountants
11'141~`.il{'lil{:[}i15.{',(?Ill "~~"