6.1a2 ERMUSR 05-09-2023 - Laserfiche WebLink

Home Browse Search

Minnesota Municipal Power Agency Notes to Financial Statements December 31, 2022 and 2021 Note 1: Organization and Significant Accounting Policies - Continued Investments and Investment Income The Agency's investments in money market accounts are carried at cost, which approximates fair value. All other investments are reported at fair value based on quoted market prices. Investment income consists of interest and dividend income, the net change for the year in the fair value of investments carried at fair value, and realized gains and losses from sales and maturities of investment securities. Regulated Operations Future Recoverable Costs Rates charged to members include amounts sufficient to pay levelized principal and interest payments on long-term debt. For financial reporting purposes, the Agency recognizes depreciation and amortization pertaining to capital and lease assets and other assets financed by long-term debt in addition to interest paid on such debt. As permitted by the application of GASB Codification Section Re10, Regulated Operations, the Agency defers the current depreciation, amortization, and interest costs in excess of levelized principal and interest costs on long-term debt for assets placed into service prior to September 24, 2013 and after December 15, 2015. These costs will be recovered through rates charged to members in future periods when the levelized costs of principal and interest on long-term debt exceed the then current depreciation and amortization and interest costs related to such issues. In December 2020, the Agency's Board of Directors approved amortizing these remaining deferred costs, which amounted to approximately $50 million at December 31, 2020, over a seven-year period beginning in 2021. In accordance with GASB Codification Section ReIO, Regulated Operations, this amortization is factored into the Agency's rate -setting process. For financial reporting purposes, the Agency also reports investments and restricted investments at fair value. As permitted by the application of GASB Codification Section ReIO, Regulated Operations, the Agency defers changes in the fair value of investments and restricted investments that the Agency intends to hold to maturity. Deferred Inflows of Resources Rate Stabilization In setting rates, the Agency has from time to time deferred revenues from a current period to a future period to support the Agency's goal of providing stable long-term rates to members. These deferred revenues are reported as deferred inflows of resources — rate stabilization on the Agency's statements of net position. The Agency's Board of Directors approved the use of $4.4 million of the rate stabilization fund to cover higher energy costs related to the extreme cold weather event that occurred in February 2021. 16 154