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He requested commission feedback on the proposed changes outlined in his memo, <br />noting that commission approval is not required because A.10 is a management policy; <br />however, the updates will influence future rate setting. <br />Commissioner Zerwas noted that ERMU's reserves are well below those of its peer utilities <br />and expressed appreciation for the increased transparency the changes provide. He <br />recommended adopting a multi -year approach to increasing reserve balances. <br />Chair Dietz asked a clarifying question regarding the different layers of the current <br />financial reserves policy, prompting further discussion. <br />Commissioner Westgaard agreed with Commissioner Zerwas on a multi -year approach, <br />suggesting a timeline of no more than five years. <br />Commissioners supported the new structure for its transparency and agreed that reaching <br />higher reserve targets should occur gradually over multiple years, with a formal review in <br />four years. <br />Mr. Hanson will present redlined policy revisions in December, and Mr. Berg will <br />incorporate the commission's feedback into his final rate study. <br />5.06 Commission Policy — 5.A — Margins Policy <br />Mr. Hanson noted that the updates to the Management Policy - A.10 - Financial Reserves <br />policy will also require revisions to Commission Policy — 5.A — Margins Policy. He explained <br />that staff is recommending the use of a cap, or maximum margin, as outlined in the <br />memo, rather than the range used in the current policy. <br />Moved by Commissioner Stewart and seconded by Commissioner Larson -Vito to <br />approve Commission Policy G.5a — Margins revisions. Motion carried 5-0. <br />5.07 2026 Utilities Fee Schedule <br />Ms. Youngs presented the proposed 2026 Utilities Fee Schedule for approval. <br />Commissioner Larson -Vito asked for clarification on why certain fees show larger <br />increases than others. <br />Mr. Hanson explained that while the fee schedule is updated annually, some fees require <br />a significant in-depth review to calculate the costs and therefore are not updated as <br />frequently. He noted that staff recognizes the need for more regular updates and staff is <br />working to address this. <br />Elk River Municipal Utilities Commission Meeting Minutes <br />November 12, 2025 <br />Page 5 <br />