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Chair Dietz asked if the communications companies can renew their leases and if their <br />rates increase year to year. Ms. Karpinski confirmed they can renew their lease <br />agreements and that there is an annual rate increase. <br />Commissioner Bell asked where the lease income information was reported in the past. <br />Mr. Berg replied it was listed under revenues, and now it shows up as a lease receivable <br />on the balance sheet. <br />Chair Dietz asked for clarification on the interest rate of our outstanding bonds. Mr. Berg <br />replied that they have a variable interest rate over their lifetime. <br />Chair Dietz asked staff to provide the total amount of interest being paid on the building <br />and if there is an opportunity to pay early. Staff provided that information later in the <br />meeting during item 6.1. <br />Moved by Commissioner Westgaard and seconded by Commissioner Stewart to receive <br />and file the 2022 Annual Financial Report. Motion carried 5-0. <br />4.2 2022 Year End Reserve Balances <br />Ms. Karpinski presented her memo on the 2022 Year End Reserve Balances. As in previous <br />years, staff recommended unrestricted reserve balances above target levels for electric be <br />designated for future capital infrastructure costs and electric service territory transfer <br />costs with balances from the water reserves being designated towards future capital <br />projects. <br />Ms. Karpinski noted budgeting to absorb the first $500,000 of the Energy Adjustment <br />clause had been removed, per commission direction. <br />Chair Dietz sought to confirm that ERMU held $16 million in electric reserves currently. <br />Ms. Karpinski confirmed this. <br />Chair Dietz asked for clarification of the calculated reserves numbers. Ms. Karpinski <br />explained that the $9 million listed as Unrestricted Designated Reserves is for operating <br />costs per policy, the $1.8 million listed as Restricted for Debt Service is dedicated for debt <br />service per policy, and the remaining $5.2 million are considered unrestricted reserves <br />which are the funds staff is proposing to be designated towards future capital projects <br />and electric service territory transfer costs. <br />Chair Dietz asked if the roughly $5 million could be applied to any project such as the <br />upcoming Advanced Metering Infrastructure (AMI) plan. Ms. Karpinski said it could <br />Elk River Municipal Utilities Commission Meeting Minutes <br />April 11, 2023 <br />Page 4 <br />43 <br />