3.1.C. ERMUSR FINANCIALS 11-15-2011

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PROFIT AND LOSS NARRATIVE September 2011 Electric P&L September Operating Revenue is up 3% from the prior year. Within the Operating Revenue category, Residential usage is down 9%, Small Commercial usage is up 2%, and Large Commercial usage is up 9%. Other Operating Revenue is down 22% from the prior year. This is due to approximately $11,000 in connect fees and approximately $23,000 MISO revenue received the prior year. Purchased Power is up from the prior year by 10% and includes a Power Cost Adjustment (PCA) of $149,955, the largest to-date. Our yeaz-to-date accumulated PCA total is $501,195.61, and we have collected $ ] 75,660.60. Incidentally, GRE did not pass along any PCA in October, choosing to absorb the cost over-runs. (Detailed information on the PCA is included with my staff updates.) For other expenses, Landfill Gas is up from the prior year as we are recognizing a linear cost throughout the year, rather than recognizing as billed the prior year. Operating expense is increased over the prior year with some additional work on the plant engines, and plant maintenance for repairing a garage door. Maintenance expense is up from the prior year numbers, with the underground maintenance the largest portion. (More information on the maintenance items explanations are included with Mark's staff updates.) Administrative and general expenses are increased over the prior year with Office Supplies a major contributor (a new computer was purchased, and envelopes and statements were ordered this month). In total, this category is less than the prior yeaz-to-date total by 1 %. For August, the Electric Department has a net loss of ($158,887) which is behind the prior year's net loss of ($131,108). The year to date net profit is $421,992 and is ahead of the prior yeaz to date net profit was $328,377. Water P&L The September numbers for Water Operating Revenue are very close between the two years; however, it is under the prior year by 1.2%. The water pumpage is up, however that is due to the work on the Gary Street water tower rather than usage. Other Revenue is increased from the prior year with to the last Sprint lease being recognized for the water towers. Most expenses are very similar for both years. The Distribution Expense is increased over the prior year due to high water meter change-outs this month. It has been a focus all year but is especially noticeable this month. Also, water main maintenance shows an increase this month, although it has been down most of the year. For July, the Water Department has a net profit of $77,274, ahead of last year's net profit of $42,947. The year to date net loss is ($26,88p) which is behind the prior year to date net profit of $171,332. (Remember that we have a budgeted year end net loss for 2011 of ($198,180.))