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Elk River <br />Municipal Utilities UTILITIES COMMISSION MEETING <br />TO: <br />FROM: <br />ERMU Commission <br />Mark Hanson — General Manager <br />MEETING DATE: <br />AGENDA ITEM NUMBER: <br />December 12, 2023 <br />4.3 <br />SUBJECT: <br />2024 Performance Metrics and Incentive Compensation Policy <br />ACTION REQUESTED: <br />Approve the Performance Metrics and Incentive Compensation Policy and Scorecard for 2024 <br />BACKGROUND: <br />The Commission adopted the Utilities Performance Metrics and Incentive Compensation <br />(UPMIC) Policy in December 2012 along with revisions in 2016, 2019, 2021, and 2022. This is a <br />company -wide performance -based program designed to incentivize employee commitment <br />towards the company's success. <br />DISCUSSION: <br />Per policy, the metrics for measurement of the designated year need to be determined before <br />the start of the designated year. This allows for timely communication of any changes before <br />performance measurement begins. Staff recommends one change to the scorecard for 2024. <br />In 2019, the Commission approved replacing the customer satisfaction survey component with <br />a Clean Energy Choice participation component, with a weight of 5 percent, and a goal of 15 net <br />customers. We netted 29 new participants in 2020, 21 in 2021, and 36 in 2022. Through the <br />third quarter of 2023, we have netted 46 new participants. Last year, staff reviewed increasing <br />the participation goal but determined even a modest increase to 20 new participants may be <br />challenging due to rate increases. With a zero percent rate increase recommended for 2024, <br />staff is comfortable recommending an increase to a goal of 30 net participants for 2024. <br />The proposed UPMIC scorecard is attached for approval for the 2024 measurement year. <br />FINANCIAL IMPACT: <br />No additional financial impact for the 2024 budget year. The potential 3.0% distribution <br />(increased from 2.5% as part of a two-year adjustment approved by the commission in 2022) is <br />budgeted for and accrued throughout the year for audit purposes, and any necessary <br />adjustments are made at year end. The actual distribution will be awarded in 2024. <br />ATTACHMENTS: <br />• ERMU Policy — G.4g1— Performance Metrics and Incentive Compensation Policy <br />• ERMU Policy— G.4g1a — 2024 Performance Metrics & Incentive Compensation Scorecard <br />Page IofI <br />54 <br />