|
Projected Operating Results – Existing Rates
<br />- 7 -
<br />Cash Reserves
<br />A summary of the impact of the projected operating results on ERMU’s cash reserves for
<br />the Study Period is shown at the end of Exhibit 2-A and in Table 2-5 below.
<br />As shown below, under existing retail rates and estimated revenue requirements over the
<br />Study Period, the cash reserves for the electric utility are projected to decrease from
<br />approximately $13.8 million at the end of 2025 to approximately $10.5 million by the end
<br />of 2029. ERMU has a newly revised reserve policy that sets a minimum target for
<br />reserves equal to 2 months operating expenses plus $3.5 million catastrophic reserve
<br />plus a capital reserve equal to average annual capital expenses plus the next year’s
<br />principal and interest expense. Based on this revised policy, the reserves decrease from
<br />75% of reserve goal to 56% of reserve goal by the end of the Study Period.
<br />
<br />Table 2-5
<br />Projected Cash Reserves
<br />Existing Rates
<br />Year 2025 2026 2027 2028 2029
<br />Beginning Balance $13,800,000 $11,573,843 $12,030,728 $10,722,575
<br />Plus Change in Net Position 2,395,085 2,676,350 1,982,117 1,303,478
<br />Plus Depreciation 3,533,136 3,801,373 3,955,671 4,107,101
<br />Plus Interfund Borrowing 1,400,000 - (1,400,000) -
<br />Less Capital Improvements (8,047,103) (4,628,954) (4,542,896) (4,381,166)
<br />Less Loss of Revenue Pmts (472,275) (316,884) (198,046) (100,816)
<br />Less Debt Principal (1,035,000) (1,075,000) (1,105,000) (1,140,000)
<br />Ending Balance(1) $13,800,000 $11,573,843 $12,030,728 $10,722,575 $10,511,172
<br />Reserve Goal $18,392,897 $18,432,831 $18,623,699 $18,769,766 $18,924,065
<br />Reserves as % of Goal 75% 63% 65% 57% 56%
<br />(1) 2025 EOY reserve balance estimated by ERMU staff based on 2025 YTD actual results
|