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Ul <br /> >1 -h Elk River <br /> Municipal Utilities UTILITIES COMMISSION MEETING <br /> TO: FROM: <br /> Elk River Municipal Utilities Commission Theresa Slominski —Finance and Office Manager <br /> John Dietz—Chair <br /> Al Nadeau—Vice Chair <br /> Daryl Thompson—Trustee <br /> MEETING DATE: AGENDA ITEM NUMBER: <br /> June 11, 2013 5.1 <br /> SUBJECT: <br /> 2012 Year-End Reserve Balances <br /> BACKGROUND: <br /> Per our Reserves Policy, annually after the audit,the year-end reserve balances shall be reviewed and the <br /> Utilities Commission shall consider any balances above or below target levels. <br /> DISCUSSION: <br /> At the conclusion of our audit, a review of the cash balances of$14,625,194, with $11,370,664 for <br /> Electric and $3,254,530 for Water, determines that our current reserves balances are at target levels. The <br /> three Reserve Classifications and respective calculated amounts for the Electric Department are <br /> Unrestricted Designated Reserves, $5,793,402; Reserve Restricted for Debt Service, $724,500; and <br /> Unrestricted Reserves, $4,852,762. The Reserve Classifications and respective calculated amounts for the <br /> Water Department are Unrestricted Designated Reserves, $1,248,571; Reserve Restricted for Debt <br /> Service, $0; and Unrestricted Reserves, $2,005,959. <br /> Per the policy,the Unrestricted Reserves defaults as working capital. As part of the review process the <br /> Unrestricted Reserve balances shall be considered by the Commission for optimal uses. (This would be <br /> the $4,852,762 for the electric department and the$2,005,959 for the water department.) Per discussion <br /> last year,the electric department was to use $1,000,000 of these reserves to offset Power Cost <br /> Adjustments (PCAs)that were anticipated to be passed along from our power supplier and therefore <br /> provide rate relief to our customers, and $1,000,000 is to be used for the construction of a substation in <br /> 2013. The water department reserves were allocated as $700,000 for the Freeport Water Tower <br /> repainting, and the remaining for future capital projects. These are still very appropriate uses of these <br /> balances. <br /> ACTION REQUESTED: <br /> Per policy, the optimal uses of the Unrestricted Reserves for both departments should be considered by <br /> the Commission. <br /> ATTACHMENTS: <br /> Reserve Balance Calculations for Electric and Water Departments <br /> , <br /> rilflifI Ir <br /> RE 3 Page 1 of 1 NATURE Reliable Public <br /> Power Provider <br />