6.1b ERMUSR 04-11-2017 - Laserfiche WebLink

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Elk River Municipal Utilities TO: UTILITIES COMMISSION MEETING FROM: ERMU Commission MEETING DATE: Theresa Slominski—Finance & Office Manager AGENDA ITEM NUMBER: April 11,2017 6.1b SUBJECT: Staff Update ACTION REQUESTED: None DISCUSSION: In my absence from last month's meeting I will attempt to answer the questions brought forward. • Purchased power is recorded in the month that we are invoiced and is the month the power is used. This was a change in 2016. Previously,we had accrued the power bill every month to line up with the customer bills we were sending out. Then at the end of the year we recorded a journal entry to remove the accrued power so that the twelve months of purchased power reflected the activity for those months appropriately for the audit. Making the change we did in 2016 eliminates the monthly accrual and the entry at the end of the year for the audit. As we compare the prior year to the current year for 2017 we will have better comparisons because it will be the same accounting treatment. • Loss of Revenue (LOR)treatment for the newly acquired territory is being accounted for differently than with the prior acquisitions (completed over the 20 year period ending in 2010.) The previous accounting treatment was to capitalize the LOR as a regular plant asset and depreciate over 50 years, same life as the infrastructure. The current accounting treatment will be to capitalize the LOR as an intangible capital asset with an undetermined useful life and therefore, no amortization. We worked closely with the auditors to make this new determination. • With the grant that we were awarded,there is no additional auditing required as the independent audit we have annually has been sufficient. • A"training" meeting was set up for Thursday, April 6th with Matt&Mary to review the financials in more detail. As mentioned last month, April 15th will be the end of the cold weather rule and we anticipate high numbers for shutoffs once this ends. We have been hanging a lot of red tags (the notification during the cold weather rule period of October 15th to April 15th in lieu of shutting power off) and they still have not generated a lot of payment activity or even communication. Sometimes, after being shut off disgruntled customers reach out to the commissioners to vent and so this is just a heads up reminder. The annual Midwest Independent System Operator(MIS 0)reports were filed through Central Minnesota Municipal Association(CMMPA) for 2015. (There is a two year lag in the reporting as audited financial information is not typically available for the most recent year in March when Page 1 of 2 181