4.1. ERMUSR 05-10-2016 - Laserfiche WebLink

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Second and as previously discussed, the change in billing software in 2015 had great effect on the security department and how revenue was booked, specifically relating to our annually billed customers. This change resulted in the recognition of revenue relating to annually billed customers amortized over the year as opposed to the past method of recognizing that revenue in the month it was received. This has resulted in a$45,000 swing. This is not a factor going forward. Security System Total Margins Description 2013 2014 2015 2016 Actual Actual Actual Projected Revenue $ 282,502 $ 241,919 $ 251,488 $ 297,000 Expense $ 274,246 $ 271,495 $280,538 $ 285,000 Net $ 8,256 $ (29,576) $ (29,050) $ 12,000 Table 2 The security department was created out of a need for security services which was fulfilled by bringing that work internal to the Utilities. The Commission then decided to extend those services to our customers as a benefit to the community since ERMU was performing that work for their own security needs. The security department operated with negative net margins for years and only in 2008 began to realize positive net margins. The business philosophy had been to provide the service not to generate revenue to subsidize the electric utility,but rather to support its own operation. As indicated by the projected total net margins for 2013 —2015, the security department was to realize minimal yet positive margins. Because of the billing error of 2014 and the software change in 2015 these minimal positive margins were not achieved. Currently and intentionally, 2016 is projected to realize minimal yet positive margins. P„ONEOEO OY Page 2 of 2 NATURE Reliable Public' Power Provider P O W E R E D T O S ER VE 121