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Elk River <br /> Municipal Utilities COMMISSION POLICY <br /> Section: Category: <br /> Governance Delegation to Management Policies <br /> Policy Reference: Policy Title: <br /> G.4i2 Financial Reserves <br /> PURPOSE: <br /> With this policy,the Commission sets forth its expectations for the General Manager concerning <br /> the maintenance of ERMU's financial reserves. <br /> POLICY: <br /> The General Manager shall ensure that ERMU maintains cash reserves for its electric and water <br /> utility enterprises that are reasonable,prudent and necessary to: <br /> 1. Meet or exceed the requirements of all bond covenants <br /> 2. Demonstrate to rating agencies and investors that ERMU's utility enterprises are credit worthy <br /> 3. Provide liquidity that is adequate, along with other risk-management measures,to ensure <br /> ongoing operation of the utility systems <br /> 4. Stabilize revenue requirements and customer rates <br /> 5. Manage the level of debt by funding a portion of the capital investments <br /> In addition,the General Manager shall prepare for Commission approval and,upon approval, <br /> implement a Management Financial Reserves Policy that sets forth the designated reserve funds <br /> to be maintained, along with their purposes and methods for determining appropriate target levels <br /> and requirements for internal controls,monitoring and reporting. Designated reserve funds may <br /> include,but are not limited to reserves restricted for debt service and unrestricted designated <br /> reserves. <br /> POLICY HISTORY: <br /> Adopted Month, Day, Year <br /> Page 1 of 1 <br /> R1 <br />