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PROFIT AND LOSS NARRATIVE <br />Electric P&L <br />The Operating Revenue is up 12.9% over the prior year with demand services seeing the <br />biggest increases. The second Data Center is the driver here. Again this month there is <br />not a Power Cost Adjustment (PCA) charge being applied to customer bills. (We have <br />approximately $190,000 PCA charges that ERMU has been billed and accumulated, but <br />not passed on, and we actually expect a credit of $35,000 for June. We will continue to <br />update the commission on the PCA charges incurred.) <br />Other revenues are down slightly from a year ago. Interest/Dividend income is down due <br />to a lowered return on investments. Connection Fees are down from the prior year, as was <br />expected through the fall of this year. Miscellaneous Revenue is also down from last <br />year and includes scrap metal returns, and miscellaneous fees collected for returned <br />checks and red tags. <br />Purchased power continues to be the largest operating expense variance over last year, up <br />9%. While the increased usage accounts for some of the increase, the PCA billed to us <br />this month was approximately $117,000. Transportation and Maintenance expenses are <br />down from last year. Last year there was additional maintenance done that had been <br />delayed from prior years due to unplanned priority projects. Other operating expenses are <br />higher than last year with the increases being in the transfers to the city and donated <br />electricity, as well as Loss on Disposition of Property. The Loss on Disposition of <br />Property is from the removal of old outdated inventory that was either scrapped or sold. <br />This is anon-budgeted item but will have some offset on the revenue side (Miscellaneous <br />Revenue) from the scrap metals salvaged, and credits from suppliers where they have <br />"repurchased" surplus items.. <br />Administrative and General Expenses are down this month compared to last year, and yet <br />exceed the year to date in total. The largest increases are Legal, Insurances, and Dues and <br />Subscriptions expenses. Dues and Subscriptions include MMTG (Minnesota Municipal <br />Transmission Group) payments for the transmission rights through MISO. <br />Net Income is $158,000 higher this month compared to last year, year to date we still <br />have a loss of approximately $50,000. This is in line with budget projections and on <br />target for the year. We typically have lower margins preceding the summer months. <br />l ~I <br />