6.4. ERMUSR 05-10-2007 - Laserfiche WebLink

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l Elk River Municipal Utilities 13069 Orono Parkway F.lk River, MN 55330 April 24, 2007 To: Elk River Municipal Utilities Commission Jerry Takle Jerry Gumphrey Jim Tralle From: Bryan Adams Subject: Cash Flow Projections phone: 763.441.2020 Fax: 763.441.8099 At last months' commission meeting, our auditors presented the results of their annual utility audit. One of their comments was that staff continues the cash flow studies which project future revenues and expenses to ensure we have adequate financial resources to carry on business. Attached for your review are the updated Springstad cash flow studies for both the electric and water departments. These studies are updated twice annually, once after the audit and again during the budgeting process. The result of this study is consistent with past studies, that being; our cash reserve continues to rise with time for both departments. The trend is in the right direction. If this trend is correct, we will be able to start funding from cash reserves for some of our larger projects instead of bonding. Our goal in the electric department is to get our restricted account (line 57) to the $3,500,000 for three months operating reserves. This does not occur until the 2012 to 2014 time frame with a number of critical assumptions which include: 1) Passing on Great River Energy's wholesale rate increases. 2) Customer growth rate of 5%-6% and projected consumption of data centers. 3) No other unexpected large loads requiring large capital expenditures. Our goal in the water department is to maintain a $2,000,000 reserves made up of emergency, unrestricted and cash (line 53). Depending upon the speed of our growth, water production facilities may vary from the assumed three to four year interval. Water main replacements due to the street rehabilitation projects are having a significant influence on future cash reserves and must be watched.