3.1.C. ERMUSR FINANCIALS 03-08-2011

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PROFIT AND LOSS NARRATIVE January 2011 Electric P&L To start off the year, January Operating Revenue is better than budgeted numbers and up from the prior year. Within the revenue categories, Residential revenue is very close but down from last year, however Small Commercial and the Large Commercial Data Center revenue categories are up from the prior year. Other Operating Revenue is under the budgeted numbers, but over the prior year. An interesting and welcome change is that the Landfill revenue is over the budgeted numbers, and is up from the prior year. We hope to see this as a trend in this category, and only time will tell if that can be a reality. The Miscellaneous Non-Utility Income is revenue from Charter Communications for renting our poles to hang their wires. Purchased Power is in line with the budget (up by a small margin consistent with revenues) and last year numbers. For other expenses, Landfill Gas is more than last year, both the purchase of the gas (which is good because that means it is producing more) and the maintenance (which we continue to work with Waste Management to control.) Maintenance Expenses are both under budget and the prior year numbers. Other Operating Expenses are in line with budget and prior year numbers. The categories of Donated Electricity and Transfers to the City are up, which is consistent with the increased revenue numbers. Customer Accounts Expense is down from the prior year because there were some accounts written off in January 2010 and there was not in January 2011. Administrative and General Expense is over budget by $18,000. Insurance is up due to some claims payments and an accrual that was not present in 2010. The CIP category is where the largest variance exists with a couple of different contributors: there is labor related to the energy audits of $4,000, a consultant payment of $5,000, updating of brochures for $3,000, and rebates issued of $1750 -all of which were not occurring in 2010 -however, some of these will result in decreased expenses showing in subsequent months. For January, the Electric Department has a Net Income of $90,000 and is ahead of budget by $80,000.