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COMMISSIONPOLICY <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 ERMUmaintainscash reserves for its electric andwater <br />utility enterprises thatarereasonable, 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 withother 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 fundinga portion of the capital investments <br />In addition, the General Manager shallimplementaManagement Financial ReservesPolicythat <br />sets forth the designated reserve funds to be maintained,along withtheir purposes andmethods <br />for determining appropriate target levelsand requirements for internal controls, monitoring and <br />reporting. Designated reserve funds may include, but are not limited to reserves restricted for <br />debt service and unrestricted designated reserves. <br />POLICY HISTORY: <br />Adopted December 12, 2017 <br />RevisedJuly 14, 2020 <br />______________________________________________________________________________ <br />Page 1of1 <br />228 <br />