3.1.C. ERMUSR FINANCIAL STATEMENT 06-08-2010

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PROFIT AND LOSS NARRATIVE April 2010 Electric P&L April was another good month for both the Water and Electric Departments. Electric Operating Revenue is again over budgeted numbers (up 2%) and prior year numbers (up 6.5%). It was a warm month, averaging approximately 7 degrees warmer than the prior year. However, even with Che warmer weather, our Residential usage was down from the prior year (we have about 90 fewer customers and even the usage per customer is lower than the prior year, down about 4%), and Commercial usage is about the same. The Industrial usage increased 32%, and related revenues increased ] 1 % over the prior year. This was impacted by the warmer weather and growth at the data centers. Other Operating Revenue is also over budgeted numbers by 9%, and prior year numbers by 12°/u. Connection Fees had an impact of approximately $6,700 from the start of construction of a clinic in Otsego. Other Operating Revenue categories are trending very consistently with the prior year, with Security performing better than trend. Purchased Power is in line with the budget, up by I6% from the prior year which is consistent with revenues. Other expenses are consistent with, or reduced from, the prior year. Maintenance expense is down considerably as the focus this year is infrastructure rebuild/construction, and last year there was a maintenance focus. Administrative Expenses are increased over last year with the biggest increases in Legal Fees and Dues/Subscriptions (Dues/Subscriptions are increased this year as the fees for CAPX and MMTG are being accrued throughout the year rather than all captured in the third and fourth quarter.) Another difference between this year and last year is the 80/20% split in ?010 compared to the 75/25% in 2009. Overall, we are trending very close to budget. The Electric Department has a net profit this month of approximately $27,000, and year-to-date net loss of $60,000. The prior year had a monthly net loss of $9,600, and year-to-date net loss of $185,000. Water P&L Water Operating Revenues are up approximately 3% this month compared to last year and up 6°/o over budget, being impacted somewhat by the warmer weather. However, the revenues are down year-to-date by 5%. Other Revenue is ahead of budget but down from the prior year as there were almost $30,000 in Connection Fees in April 2009 (fiam MN School of Business and GRE.) Expenses are down compared to budget in total, and decreased from the prior year as well. The largest decrease is Interest expense that is down from the prior year due to the bond refunding and escrowed interest payment. Other decreases relate to the 80/20 change (from 75/25) in the electric/water allocations. For April the Water Department has a net loss (which is expected this time of year) of $82,500 for the month, and a net loss of $291,000 year-to-date. This is less than the prior year net loss for the month of $102,800 and net loss year-to-date of $385,000.