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COMMISSION POLICY <br />Section:Category: <br />GovernanceDelegation to Management Policies <br />Policy Reference:Policy Title: <br />G.4i2Financial Reserves <br />PURPOSE: <br />With this policy, the Commission sets forth its expectations for the General Manager concerning <br />the maintenance of <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 ERMUcredit 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 December 12, 2017 <br />______________________________________________________________________________ <br />Page 1of 1 <br />157 <br />