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Page 1 of 2 <br /> <br /> <br /> <br />COMMISSION POLICY <br /> <br />Section: Category: <br />Governance Results Policies <br />Policy Reference: Policy Title: <br />G.5a Margins <br />PURPOSE: <br /> <br />Consistent with all Results Policies, the Commission shall establish clear expectations for producing the right results for the right people in the right way. With this policy the Commission affirms their commitment to the Organization Fundamentals Policies prioritizing financial and organization health by setting an annual goal for operational net margins. <br /> <br />The annual strategic and business planning, consistent with the Financial Planning and Budgeting Policy, shall be conducted such that the organization has appropriate operating net margins. By establishing clear expectations for operating net margins through policy, the Commission creates clear and consistent direction for the General Manager. <br /> <br />This clear direction provides stability in organizational vision allowing the General Manager, while developing the annual budget and business plan, to more effectively utilize long range tools, such as multi-ple year capital improvement plans, to produce both short term and long term financial and organizational health. Additionally, this practice helps to avoid inconsistent <br />direction to the General Manager from year to year such as tight margins one year due to rate <br />competitiveness concerns and concerns another year about revenues and desiring higher margins.This margins policy should serve as a guide only as extenuating circumstances may require higher margins. POLICY: <br /> To promote financial health and organization stability, the General Manager shall develop the <br />annual business plan and budgets for the following services as follows: <br /> 1. Electric –The budget shall be developed with margins that are a maximum of 10% at least 1.5% of total revenue but no greater than 3.5% of total revenue. <br />2. Water –The budget shall be developed with margins that are a maximum of 15% at least <br />1.5% of total revenue but no greater than 3.5% of total revenue. <br />96