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��i <br />Elk River <br />Municipal Utilities UTILITIES COMMISSION MEETING <br />TO: <br />FROM: <br />ERMU Commission <br />Mark Hanson — General Manager <br />MEETING DATE: <br />AGENDA ITEM NUMBER: <br />December 10, 2024 <br />4.3 <br />SUBJECT: <br />2025 Performance Metrics and Incentive Compensation Policy <br />ACTION REQUESTED: <br />Approve the Performance Metrics and Incentive Compensation Policy and Scorecard for 2025 <br />BACKGROUND: <br />The Commission adopted the Utilities Performance Metrics and Incentive Compensation <br />(UPMIC) Policy in December 2012 along with revisions in 2016, 2019, 2021, 2022, and 2023. <br />This is a company -wide performance -based program designed to incentivize employee <br />commitment towards the company's success. <br />DISCUSSION: <br />Per policy, the metrics for measurement of the designated year need to be determined before <br />the start of the designated year. This allows for timely communication of any changes before <br />performance measurement begins. As presented at the November 12 Commission meeting, <br />Staff recommends several changes to the scorecard for 2025: <br />• Reduction of the maximum percentage awarded from 3% down to 2%. <br />• Introduction of more challenging goals for two electric criteria (SAIDI and SAIFI) and the <br />inventory accuracy criteria. <br />• Addition of a Strategic Plan Category, including a Dashboard Progress Sub -Category. <br />• Addition of a Communication/Customer Service Category, including Clean Energy Choice <br />Program Participation and Conservation Improvement Program (CIP) Sub -Categories. <br />• Removal of the Financial Reserves criteria. <br />The proposed UPMIC scorecard for the 2025 measurement year is attached for approval. <br />FINANCIAL IMPACT: <br />No additional financial impact for the 2025 budget year. The potential 2.0% distribution is <br />budgeted for and accrued throughout the year for audit purposes. Any necessary adjustments <br />are made at year end. The actual distribution will be awarded after the 2024 audit is approved <br />in 2025. <br />ATTACHMENTS: <br />• ERMU Policy— G.4g1—Performance Metrics and Incentive Compensation Policy <br />• ERMU Policy— G.4g1a — 2025 Performance Metrics & Incentive Compensation Scorecard <br />Page 1 of 1 <br />50 <br />