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Motion carried 4-0. <br /> 3.0 OPEN FORUM <br /> No one appeared for open forum. <br /> 4.0 POLICY& COMPLIANCE <br /> 4.1 2016 Financial Audit <br /> Mr. Berg was present from the auditing company, Abdo, Eick & Meyers, to present the <br /> 2016 financial audit and management letter. He stated that the auditors issued a clean <br /> opinion on the financials and that there were no findings to report. Mr. Berg walked <br /> through the management letter. Chair Dietz had a few questions for Mr. Berg and staff. <br /> Both responded. <br /> Mr. Berg reached out to the Commission to see if they had any additional questions on the <br /> management letter or the annual financial report. Commissioner Stewart inquired as to <br /> whether the auditors look at the PCA that flows through. Typically the PCA credits/debits <br /> are a treated as a pass through, but in 2016 there was a$500,000 PCA credit that was held <br /> onto until 2017, at which time half of it was credited back to the customers. Commissioner <br /> Stewart had pointed out that the $500,000 was left on the 2016 income statement and not <br /> moved to the balance sheet. With it staying on the income statement last year it reduced the <br /> purchase power cost and increased the net margin; by waiting to give it back in 2017 we <br /> are decreasing margin. Ms. Slominski stated that typically it is given back in the same year. <br /> There was discussion on how this should be booked in the future. The Commission <br /> suggested that Mr. Berg and Ms. Slominski take a further look at how this should be <br /> recorded. There was discussion. Chair Dietz requested that hard copies of the audit and <br /> management letter be given in advance of the meeting next year to allow for the markup of <br /> notes and comments. <br /> Moved by Commissioner Thompson and seconded by Commissioner Stewart to <br /> receive and file the Financial Audit for the year ending December 31, 2016. Motion <br /> carried 4-0. <br /> 4.2 2016 Year End Reserve Balance <br /> Mr. Adams provided some background on the financial reserves policy and the purpose <br /> behind it. <br /> Ms. Slominski presented the year-end electric reserve balance and calculations. Staff <br /> recommended that the unrestricted balance above the target level for the Electric Utility <br /> Page 3 <br /> Regular Meeting of the Elk River Municipal Utilities Commission <br /> April 11,2017 <br />