5.3. ERMUSR 04-12-2016 - Laserfiche WebLink

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER,MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31,2015 Note 4: OTHER INFORMATION-CONTINUED B. Risk management The Utilities is exposed to various risks of loss related to torts;theft of,damage to and destruction of assets;errors and omissions;injuries to employees;and natural disasters for which the Utilities carries commercial insurance.The Utilities obtains insurance through participation in the League of Minnesota Cities Insurance Trust(LMCIT),which is a risk sharing pool with approximately 800 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 dollar 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 claims that have been incurred but not reported(IBNRs).The Utilities'management is not aware of any incurred but not reported claims. C. Commitments The Utilities has received notice from their 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 30,2018.On May 14,2013 the Utilities signed a new agreement with Minnesota Municipal Power Agency (MMPA). The Utilities entered into an agreement in 2007 with Central Minnesota Municipal Power Agency(CMMPA)to acquire an interest in the CAPX Initiative Brookings Project,a power transmission line in Minnesota. The project is a 250 mile, 345 kV AC transmission line with a rating of 2,300 MW,between Brookings,South Dakota,and the Southeast Twin Cities. In 2011 there was increased opportunity for investment,and subsequent agreements provide the Utilities with an ownership share of$5.6 million or 18.89 percent. The return on this investment through CMMPA is designed to provide approximately$124,000 annually over the 40 year project life.The transmission payments for 2015 were$42,532 of which$24,353 was receivable at December 31,2015. Note 5: POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS Plan Description. Elk River Municipal Utilities(the Utilities)administers a multi-employer defined benefit healthcare plan ("the Retiree Health Plan").The plan provides lifetime healthcare insurance for eligible retirees and their spouses through the Utilities group health insurance plan,which covers both active and retired members.Benefit 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 of current-year premiums for eligible retired plan members and their spouses.For fiscal year 2015,the Utility contributed$0 to the plan.Plan members receiving benefits contribute 100 percent of their premium costs. In fiscal year 2015,total member contributions were$0. Annual OPEB Cost and Net OPEB Obligation.The Utilities' annual 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 projected to cover normal cost each year and to amortize any unfunded actuarial liabilities(or 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: 142