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In response to a question, Mr. Berg explained that a 4% water increase will result in an <br />increase of less than $2 per month for an average residential customer. <br />There was discussion about the potential rate increases from the power provider. At <br />that time staff estimated it could be an increase of approximately 2.9-3%. <br />In discussing best practices for reserve levels, Mr. Berg explained that ERMU's reserve <br />goal is approaching 50% of operating revenue, which is appropriate for a utility its size. <br />The Commission directed staff to bring back a presentation of Mr. Berg's <br />recommendation of a 2% electric revenue increase and a 4% water rates increase for <br />approval at the special meeting. Per Commission request, staff stated they would <br />research the water rate tier structures of comparable utilities and provide a <br />recommendation to the Commission as well. <br />5.2 Financial Report— October 2025 <br />Ms. Karpinski presented her report which showed the Utilities had a profitable month <br />with a net profit position of $3.9 million or 8.67%. This performance is favorable <br />compared to both the budget and the prior year. <br />There was discussion about Verizon water tower attachment lease negotiations. Mr. <br />Hanson explained there has been ongoing discussion with the vendor since the November <br />meeting when the Commission directed staff to take no action on adapting the leases in <br />either manor proposed by the vendor. He explained that after the recent conversations, <br />staff still does not recommend the full buyout option while renegotiated terms on leases <br />warrant some future discussions. <br />A majority of the Commission, excepting Commissioner Zerwas, directed staff to prepare <br />a financial analysis showing the revenue impact of the different lease options. During staff <br />updates, Commissioner Zerwas shared that he would be recusing himself from discussions <br />and votes on the issue due to his professional relationship with the vendor. <br />Moved by Commissioner Westgaard and seconded by Commissioner Larson -Vito to <br />receive the October 2025 Financial Report. Motion carried 5-0. <br />5.3 Management Policy — A.10 — Financial Reserves <br />Mr. Hanson presented an updated draft of the Financial Reserve policy, incorporating <br />feedback from the November meeting. The Commission expressed consensus that the <br />updates accurately reflected their previous discussion. <br />No formal motion was required as this is a management policy presented for transparency <br />and due to the policy's impact to rate setting and budgeting. <br />Elk River Municipal Utilities Commission Meeting Minutes <br />December 9, 2025 <br />Page 4 <br />