3.1.C. ERMUSR 02-15-2011 - Laserfiche WebLink

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YEAR END NARRATIVE These financial statements are year-end unaudited amounts, and so are preliminary and should be viewed as such. The summary statements include adjustments for year-end accruals of payables, receivables, and capitalized items, as well as some items that are estimated at this time, but not finalized yet. Items still to be 5nalized are accrued wages, accrued sick and vacation time, final inventory adjustments, and due to/from City. The auditors will be here February 28'r through March 4`~ to perform fieldwork on our 2010 year. Preliminary results are discussed below. Electric Overall, a conservative 2010 budget compares very favorably with the ac[ua12010 results, showing increases in almost all revenue categories. The electric operating revenues preliminary numbers ended up better than budget by 6% or $1,443,643, and other revenues better by 10% or $167,713. The economy affected us much less than we anticipated, and a warm summer this year did help. Residential sales were flat line, and small commercial sales were up only slightly. The biggest contributor to sales performance was the second data center coming on line and very steadily increasing their load -much more significantly than we predicted. The first data center performed according to expectations and increased their load only marginally. Security Sales performed better than budget this year as well, by $16,647. Investment income performed better than budget by almost $30,000 and $2,000 over last year, helped along by the rebound in the economy as investor confidence increased. The landfill came in slightly under budget, 2% or $18,500, due to the acidic content of the gas affecting engine performance. Miscellaneous sales reflect the MISO tariff remittances that we have been receiving which were unbudgeted. Purchased power ended up being a total of 73% of the Operating Revenue, up from last year of 71%. This is reflective of operating on a smaller margin this year and is over budget as expected, following the increased sales. Other expense categories of the preliminary numbers that are over budget are highlighted here. Landfill Gas expenses had a lot of additional engine maintenance expense with the high sulfur content in the gas coming out of the landfill, amounting to $128,000 this year. This continues to be monitored and Troy has been very proactive on meeting with the landfill group and being informed on its operations and performance. The bonus payment related to output is approximately $7,000 for 2010, less than half of what it was last year. Other Operating expense is over by $20,414 and is a result of an unbudgeted loss on trade in of machinery and unbudgeted disposition of obsolete inventory. Services to the City expense is over budget due to the revenues being up -the 3% that is paid to the Ci[y for the Electricity sold in Elk River. Administrative and General expense is over budget by 1% or $13,388 resulting from the combined areas of legal fees, insurances, and CAPX expenses. There will be some additional expense here with the recognition of amounts due to the city for shared building maintenance and IT costs. All other expense items show a decrease in actual versus budgeted numbers. This is a result of implementing efficiencies and operating conservatively. Also, there were many projects where system infrastructure was upgraded and resulted in capitalized items rather than maintenance expense. The electric department ended the year significantly ahead of budget and outperformed the prior year as well.