April 11, 2017

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REGULAR MEETING OF THE UTILITIES COMMISSION April 11, 2017, 3:30 P.M. Utilities Conference Room

AGENDA 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7

GOVERNANCE Call Meeting to Order Pledge of Allegiance Commissioner Oath of Office Consider the Agenda Recognition of ERMU’s Tom Bovitz Memorial Scholarship Award Winner Resolution Recognizing 2017 Lineworkers Day Resolution Recognizing 2017 Drinking Water Week

2.0 2.1 2.2 2.3 2.4

CONSENT (Routine items. No discussion. Approved by one motion.) Check Register Special Meeting Minutes – March 13, 2017 Agency Relocation Agreement – State of Minnesota Resolution – Customer Contributions of Account Credits

3.0 OPEN FORUM (Non-agenda items for discussion. No action.) 4.0 4.1 4.2 4.3

POLICY & COMPLIANCE (Policy review, policy development, and compliance monitoring.) 2016 Financial Audit 2016 Year End Reserve Balance 2016 Utilities Performance Incentive Compensation Distribution

5.0 5.1 5.2 5.3 5.4

BUSINESS ACTION (Current business action requests, and performance monitoring reports.) Financial Report – February 2017 Waco #2 Electric Substation Materials Bid Award Legal Counsel Retainer Increase Wage & Benefits Committee Update

6.0 6.1 6.2 6.3

BUSINESS DISCUSSION (Future business planning, general updates, and informational reports.) Staff Updates Future Planning Other Business

7.0 ADJOURN REGULAR MEETING

______________________________________________________________________________ Next Regular ERMU Commission meeting is May 9, 2017.

Page 1 of 1

STATE OF MINNESOTA COUNTY OF SHERBURNE CITY OF ELK RIVER OATH OF OFFICE I, Allan Nadeau, do solemnly swear that I will support the Constitution of the United States and the Constitution of the State of Minnesota, and will discharge faithfully the duties of Utilities Commissioner in the City of Elk River, Minnesota, according to law and to the best of my judgment and ability.

___________________________________ Allan Nadeau

Subscribed and sworn to before me this 13th day of March, 2017.

_________________________________ Commission Chair or Notary Public

13065 Orono Parkway Elk River, MN 55330 Phone: 763.635.1000 www.ElkRiverMN.gov

1

UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Michelle Canterbury – Executive Administrative Assistant MEETING DATE: AGENDA ITEM NUMBER: April 11, 2017 1.5 SUBJECT: Recognition of ERMU’s Tom Bovitz Memorial Scholarship Award Winner ACTION REQUESTED: None BACKGROUND: On January 8, 2013, the Utilities Commission approved ERMU participating in the Minnesota Municipal Utilities Association (MMUA) Tom Bovitz Memorial Scholarship. This award program is offered by MMUA to promote public power and increase goodwill within public power communities. High school seniors that are a customer, or have a legal guardian that is a customer of ERMU are eligible to apply. At that time, the ERMU Utilities Commission also approved annually awarding a local winner a $500 scholarship. DISCUSSION: Staff advertised for the scholarship through local high schools, the Star Newspaper and ERMU’s website. Students were required to submit a 500-750 word essay on the topic “Municipal Utilities: Good for All of Us.” Staff has reviewed the submissions and has chosen the following essay to receive ERMU’s $500 award. This student did their homework and researched ERMU as well as all of the advantages a municipally owned utility provides to its community. This is a testament to the benefit of educating our customers and community about the advantages of public power. The winning essay will now be forwarded on to MMUA judges for a chance to win an additional $500, $1000, $1500, or $2000 through their scholarship program. FINANCIAL IMPACT: $500 budgeted item. ATTACHMENTS:  “Municipal Utilities: Good for All of Us” Scholarship Essay Submission

______________________________________________________________________________ Page 1 of 1 2

“Municipal Utilities, Good for All of Us”

3

Municipal Utilities, Good for All of Us The question arises often, “Are municipal utilities good for the consuming public?” That question can be answered with a simple, “yes!” There are numerous reasons that municipal utilities are good for all of us. Utilities, whether that being electricity, natural gas, or sanitary sewer and water services are a necessity to function as a community. We all need electricity in order to produce goods and services that enable our community to prosper as an Energy City in Minnesota. Our utilities enable us to exist in an environment where we having running water, functioning bathroom facilities and the energy necessary to provide food and shelter for our families. In the City of Elk River, utility services are provided either through the City of Elk River Utility department or larger utility companies like Connexus Energy or CenterPoint Energy. All provide outstanding services, but a locally owned and operated utility service is different in that they serve in the community in which it exists. With that, Elk River Utilities has a personal connection with the people they serve. Most of the employees have either grown up here or fell in love with the community and decided to raise their families here. Having a personal connection to the community you serve tends to bring out the best decisions and results in a more trusting environment. An advantage of a municipally owned utility is that the City and the City Council can govern the decisions of said utility with input from the public it serves. Decision making can be done quickly and efficiently, most times providing a more economic resource. Larger utility companies don’t always have the small community in mind when making decisions as they have a much larger area to serve. The decision making is done to try to do the best for the most population. Often times, those decisions are not good for the smaller communities being served.

4

A municipal utility has a local presence. With a local presence, response time to deal with complaints or issues is minimized. Having a local presence means that the community has the opportunity to discuss things with people that they likely know or have a personal connection. That is a nice alternative to having to go to a state agency or higher to talk about something that may or may not be a big enough issue to discuss. The biggest advantage of having a locally owned municipal utility is the contribution it makes to the community. My municipal utility is always involved with community outreach, whether that being a resource for educational functions, donating labor and materials for projects or just simply being there in a time of need. I am proud of the community that I have grown up in and grateful that my community has a municipal utility providing services necessary for me to excel now and into the future.

5

UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Troy Adams, P.E. – General Manager MEETING DATE: AGENDA ITEM NUMBER: April 11, 2017 1.6 SUBJECT: Resolution Recognizing 2017 Lineworker Appreciation Day ACTION REQUESTED: Adopt Resolution Recognizing Lineworker Appreciation Day, April 18, 2017. BACKGROUND: After the 2015 American Public Power Association Lineworkers Rodeo the ERMU Commission requested staff to research lineworkers appreciation day. In 2016 the Commission adopted a resolution recognizing lineworkers on the nationally recognized lineworkers appreciation day. DISCUSSION: On April 10, 2013, the U.S. Senate recognized a National Linemen Appreciation Day through resolution S Res 95. The resolution recognizes the contributions of these “brave men and women who protect public safety, and expressing support for the designation of April 18, 2013, as National Lineman Appreciation Day.” This is now an official holiday in the United States. Our community would not be what it is today without electricity and other urban services like water and wastewater. And our community owned electric utility has played a significant role in the growth and prosperity of the immediate area. At the heart of that growth has been our lineworkers. These are the individuals, like other emergency service professionals, who run towards the storm rather than seeking shelter so that our customers have continued services. Our lineworkers have done such an excellent job “keeping the lights on” that electric services start to feel like a basic human right or entitlement taking all of the hard work for granted. But the truth is the work that these professionals do is greatly appreciated. FINANCIAL IMPACT: None ATTACHMENTS:  Resolution No. 17-3 – Lineworker Appreciation Day, April 18, 2017

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RESOLUTION NO. 17-3 BOARD OF COMMISSIONERS ELK RIVER MUNICIPAL UTILITIES A RESOLUTION OF THE BOARD OF COMMISSIONERS OF ELK RIVER MUNICIPAL UTILITIES RECOGNIZING LINEWORKERS AND DESIGNATING APRIL 18, 2017, AS LINEWORKER APPRECIATION DAY WHEREAS, the profession of lineworker is steeped in personal, family, and professional tradition; WHEREAS, lineworkers are often first responders during storms and other catastrophic events, working to make the scene safe for other public safety heroes; WHEREAS, lineworkers work with thousands of volts of electricity high atop power lines 24 hours a day, 365 days a year, to keep electricity flowing; WHEREAS, lineworkers must often work under dangerous conditions far from their families to construct and maintain the energy infrastructure of the United States; WHEREAS, lineworkers put their lives on the line every day with little recognition from the community regarding the danger of their work; and WHEREAS, the Board of Commissioners of Elk River Municipal Utilities recognizes the efforts of lineworkers in keeping the power on and protecting public safety. NOW, THEREFORE, BE IT RESOLVED THAT APRIL 18, 2017, BE DESIGNATED LINEWORKER APPRECIATION DAY. This Resolution Passed and Adopted this 11th day of April, 2017.

John J. Dietz, Chair

Troy Adams, P.E., General Manager

7

UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Eric Volk – Water Superintendent MEETING DATE: AGENDA ITEM NUMBER: April 11, 2017 1.7 SUBJECT: Resolution Recognizing 2017 Drinking Water Week ACTION REQUESTED: Adopt Resolution Recognizing Drinking Water Week, May 7-13, 2017 BACKGROUND: For more than 30 years, the American Water Works Association (AWWA) has celebrated Drinking Water Week with its members. In 1988 AWWA brought the event to the attention of our government and formed a coalition along with the League of Women Voters, the Association of State Drinking Water Administrators, and the US Environmental Protection Agency. Representative Robert Roe and Senator Dennis DeConcini subsequently sponsored a resolution to name the first week of May as Drinking Water Week, and an information kit was distributed to the media and to more than 10,000 utilities. Willard Scott, the Today Show weatherman, was featured in public service announcements aired between May 2 and 8. The week-long observance was declared in a joint congressional resolution and signed by then President Ronald Reagan. The following year, AWWA approached several organizations to participate. Through these efforts the National Drinking Water Alliance was formed of 15 nonprofit educational, professional, and public interest organizations. The Alliance dedicated itself to public awareness and involvement in public and private drinking water issues, and continued its work to organize a major annual educational campaign built around Drinking Water Week. The power of the multi-organization Alliance enabled Drinking Water Week to grow into widespread and committed participation throughout the United States and Canada. In 1991, the Alliance launched a national campaign to inform the public about America's drinking water. The group distributed a kit containing ideas for celebrating Drinking Water Week, conservation fact and tip sheets, news release and posters. The theme was "There's a lot more to drinking water than meets the eye." DISCUSSION: Elk River Municipal Utilities’ mission statement specifies: To provide our customers with safe, reliable, cost effective and quality long term electric and water utility service. To communicate and educate our customers in the use of utility services, programs, policies, and future plans. These products and services will be provided in an environmentally and financially responsible manner.

______________________________________________________________________________ Page 1 of 2 8

To be successful in our mission to our customers it is essential that ERMU provide safe and reliable water on a daily basis. It is widely believed that potable water is plentiful. This is not entirely true. Great effort is taken to ensure our domestic water is safe and that our water distribution system is well maintained and reliable. A domestic water system and other urban service like wastewater and electricity drive economic development. Safe and reliable water are an important part of why our community is what it is today. FINANCIAL IMPACT: None ATTACHMENTS:  Resolution No. 17-4 – Recognizing Drinking Water Week, May 7-13, 2017

______________________________________________________________________________ Page 2 of 2 9

RESOLUTION NO. 17-4 BOARD OF COMMISSIONERS ELK RIVER MUNICIPAL UTILITIES A RESOLUTION OF THE BOARD OF COMMISSIONERS OF ELK RIVER MUNICIPAL UTILITIES RECOGNIZING DRINKING WATER WEEK, MAY 7-13, 2017 WHEREAS, water is our most valuable natural resource; and WHEREAS, only tap water delivers public health protection, fire protection, support for our economy and the quality of life we enjoy; and WHEREAS, any measure of a successful society – low mortality rates, economic growth and diversity, productivity, and public safety – are in some way related to access to safe water; and WHEREAS, we are all stewards of the water infrastructure upon which future generations depend; and WHEREAS, each citizen of our community is called upon to help protect our source waters from pollution, to practice water conservation, and to get involved in local water issue; and WHEREAS, the hard work and dedication towards providing safe and reliable drinking water by our water system professionals is truly appreciated by our community.

NOW, THEREFORE, BE IT RESOLVED THAT THE WEEK OF MAY 7-13, 2017, BE DESIGNATD AS DRINKING WATER WEEK. This Resolution Passed and Adopted this 11th day of April, 2017.

John J. Dietz, Chair

Troy Adams, P.E., General Manager

10

Elk River Municipal Utilities 04/03/2017 3:47:07 pm

Payroll/Labor Check Register Totals

Revision: 74512 Page: 1

Pay Date: 03/10/2017 To 03/10/2017 Pays 2 3 4 5 24 25 10 18 104 VAC SICK HOL 1/2S 5-2 PTO 18A 10-3 104A 15 15A

Job Reg Hrly Overtime Double Time On-Call/Stand-by FLSA Rest Time Bonus Pay Commissioner Reimb. - Electric Commission Stipend Vacation Pay Sick Pay Holiday Pay Half Sick Pay On-Call/Stand-by/OT Personal Day Commissioner Reimb. - Water Bonus Pay Overtime Commission Stipend - Water Insurance Opt-out - Electric Insurance Opt-out - Water Pay Total:

25203

Amount 110,811.47 895.71 305.04 1,888.29 43.40 0.00 357.04 600.00 60.00 6,865.86 5,019.58 0.00 0.00 501.78 649.68 150.00 0.00 15.00 380.78 173.10 128,716.73

Hours 3,017.50 16.00 4.00 48.08 0.00 0.00 8.00 0.00 0.00 187.75 127.75 0.00 0.00 8.75 16.00 0.00 0.00 0.00 0.00 0.00 3,433.83

/pro/rpttemplate/acct/2.37.1/pl/PL_CHK_REG_TOTALS.xml.rpt

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KGreenberg25

Elk River Municipal Utilities 04/03/2017 3:47:55 pm

Payroll/Labor Check Register Totals

Revision: 74512 Page: 1

Pay Date: 03/24/2017 To 03/24/2017 Pays 2 3 4 5 24 25 10 VAC SICK HOL 1/2S 5-2 PTO 10-3 15 15A

Job Reg Hrly Overtime Double Time On-Call/Stand-by FLSA Rest Time Bonus Pay Vacation Pay Sick Pay Holiday Pay Half Sick Pay On-Call/Stand-by/OT Personal Day Bonus Pay Overtime Insurance Opt-out - Electric Insurance Opt-out - Water Pay Total:

25203

Amount 102,507.22 5,130.11 0.00 1,668.44 39.73 0.00 1,785.20 18,510.05 4,993.18 0.00 0.00 546.48 271.20 0.00 249.24 166.17 135,867.02

Hours 2,821.25 88.75 0.00 48.08 0.00 0.00 40.00 447.66 129.50 0.00 0.00 10.00 8.00 0.00 0.00 0.00 3,593.24

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KGreenberg25

CHECK REGISTER

March, 2017

APPROVED BY:

John Dietz

Allan Nadeau

Mary Stewart

Daryl Thompson

Matt Westgaard

13

Elk River Municipal Utilities 04/03/2017

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3:45:23 PM

Page 1

03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name 31 03/23/2017 DD

2920

1624 03/01/2017 WIRE 152

BATTERIES PLUS BULBS

IRS - USA TAX PMT (ELECTRONIC)

Amount

MISC PARTS & SUPPLIES MISC PARTS & SUPPLIES Total for Check/Tran - 31:

27.73 -27.73 0.00

Total for Check/Tran - 1624:

-0.68 6,423.65 708.27 5,925.84 331.50 1,502.30 165.63 5,621.52 1,063.80 1,502.30 165.63 6,423.65 708.27 30,541.68

SCHAUST GTL ADJUSTMENT PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA

1625 03/01/2017 WIRE 7463

SELECTACCOUNT

FSA CLAIM REIMBURSEMENTS

1,364.93

1626 03/02/2017 WIRE 8181

AMERICAN EXPRESS

General Manager American Express

303.24

1627 03/02/2017 WIRE 154

MINNESOTA REVENUE (ELECTRONIC) PAYROLL TAXES - STATE PAYROLL TAXES - STATE PAYROLL TAXES - STATE PAYROLL TAXES - STATE

1628 03/07/2017 WIRE 166

25203

Reference

Total for Check/Tran - 1627:

2,576.87 148.40 2,000.73 399.82 5,125.82

Total for Check/Tran - 1628:

263.16 65.79 328.95

ONLINE UTILITY EXCHANGE (ELECTR UTILITY EXCHANGE - FEB 2017 UTILITY EXCHANGE - FEB 2017

1629 03/08/2017 WIRE 7463

SELECTACCOUNT

FSA CLAIM REIMBURSEMENTS

1630 03/10/2017 WIRE 153

PERA (ELECTRONIC)

PERA EMPLOYEE CONTRIBUTION PERA EMPLOYEE CONTRIBUTION PERA CONTRIBUTIONS PERA CONTRIBUTIONS PERA CONTRIBUTIONS PERA CONTRIBUTIONS

/pro/rpttemplate/acct/2.37.1/ap/AP_CHK_REGISTER.xml.rpt

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28.72 7,489.75 823.21 7,489.75 823.21 1,152.27 126.64

Elk River Municipal Utilities 04/03/2017

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03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name

1631 03/10/2017 WIRE 7463

1632 03/13/2017 WIRE 161

1633 03/13/2017 WIRE 160

Reference

SELECTACCOUNT

Amount Total for Check/Tran - 1630:

17,904.83

Total for Check/Tran - 1631:

2,576.70 233.27 2,809.97

Total for Check/Tran - 1632:

3,527.27 256.00 50.00 3,833.27

Total for Check/Tran - 1633:

716.55 126.64 537.99 512.80 1,893.98

HSA EMPLOYEE CONTRIBUTION HSA EMPLOYEE CONTRIBUTION

MNDCP (ELECTRONIC)

HCSP (ELECTRONIC)

MNDCP EMPLOYEE CONTRIBUTIONS MNDCP EMPLOYEE CONTRIBUTIONS MNDCP ROTH EE CONTRIBUTIONS HCSP EMPLOYEE CONTRIBUTIONS HCSP EMPLOYEE CONTRIBUTIONS HCSP EMPLOYEE CONTRIBUTIONS HCSP EMPLOYEE CONTRIBUTIONS

1634 03/13/2017 WIRE 285

JOHN HANCOCK

WENZEL EMPLOYEE CONTRIBUTIONS

1635 03/14/2017 WIRE 152

IRS - USA TAX PMT (ELECTRONIC)

PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA

896.36

Total for Check/Tran - 1635: 1636 03/15/2017 WIRE 7463

SELECTACCOUNT

FSA CLAIM REIMBURSEMENTS

1637 03/16/2017 WIRE 154

MINNESOTA REVENUE (ELECTRONIC) PAYROLL TAXES - STATE PAYROLL TAXES - STATE PAYROLL TAXES - STATE PAYROLL TAXES - STATE

795.53

Total for Check/Tran - 1637: 1638 03/20/2017 WIRE 3936 25203

WORLD VISION

EMPLOYEE CONTRIBUTION /pro/rpttemplate/acct/2.37.1/ap/AP_CHK_REGISTER.xml.rpt

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6,385.18 722.38 5,894.45 272.10 1,493.34 168.96 5,454.30 1,215.97 1,493.34 168.96 6,385.18 722.38 30,376.54

2,576.94 120.48 1,944.87 442.73 5,085.02 36.00

Elk River Municipal Utilities 04/03/2017

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3:45:23 PM

Page 3

03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name

Reference

Amount

EMPLOYEE CONTRIBUTION 1639 03/21/2017 WIRE 174

1640 03/21/2017 WIRE 7463

1643 03/24/2017 WIRE 153

PERA (ELECTRONIC)

PERA EMPLOYEE CONTRIBUTION PERA EMPLOYEE CONTRIBUTION PERA CONTRIBUTIONS PERA CONTRIBUTIONS PERA CONTRIBUTIONS PERA CONTRIBUTIONS

1647 03/27/2017 WIRE 285

Total for Check/Tran - 1640:

70.90 13.50 84.40

PARTICIPANT FEE FOR HSA & FLEX BENE PARTICIPANT FEE FOR HSA & FLEX BENE FSA CLAIM REIMBURSEMENTS

1646 03/27/2017 WIRE 161

25203

SELECTACCOUNT

SELECTACCOUNT

1645 03/27/2017 WIRE 160

Total for Check/Tran - 1639:

127,354.87 1,952.13 129,307.00

MINNESOTA REVENUE SALES TX (ELE SALES AND USE TAX - FEB 2017 SALES AND USE TAX - FEB 2017

1642 03/22/2017 WIRE 7463

1644 03/27/2017 WIRE 160

Total for Check/Tran - 1638:

4.00 40.00

HCSP (ELECTRONIC)

HCSP (ELECTRONIC)

MNDCP (ELECTRONIC)

JOHN HANCOCK

452.66

Total for Check/Tran - 1643:

7,268.16 817.31 7,268.16 817.31 1,118.16 125.74 17,414.84

Total for Check/Tran - 1644:

89.81 4.73 37.65 9.41 3,465.07 182.37 3,789.04

Total for Check/Tran - 1645:

702.89 125.74 483.86 507.98 1,820.47

Total for Check/Tran - 1646:

3,847.01 256.00 50.00 4,153.01

1/2 SICK REMITTED TO HCSP - WAGNER 1/2 SICK REMITTED TO HCSP - WAGNER 1/2 SICK REMITTED TO HCSP - FENN-JANS 1/2 SICK REMITTED TO HCSP - FENN-JANS 1/2 SICK REMITTED TO HCSP - O'NEILL 1/2 SICK REMITTED TO HCSP - O'NEILL HCSP EMPLOYEE CONTRIBUTIONS HCSP EMPLOYEE CONTRIBUTIONS HCSP EMPLOYEE CONTRIBUTIONS HCSP EMPLOYEE CONTRIBUTIONS MNDCP EMPLOYEE CONTRIBUTIONS MNDCP EMPLOYEE CONTRIBUTIONS MNDCP ROTH EE CONTRIBUTIONS WENZEL EMPLOYEE CONTRIBUTIONS

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896.36

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Page 4

03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name 1648 03/24/2017 WIRE 7463

1649 03/28/2017 WIRE 7463

1650 03/28/2017 WIRE 152

SELECTACCOUNT

SELECTACCOUNT

Reference

Amount

HSA EMPLOYEE CONTRIBUTION HSA EMPLOYEE CONTRIBUTION Total for Check/Tran - 1648:

2,526.70 233.27 2,759.97

Total for Check/Tran - 1649:

1,414.31 74.44 1,488.75

Total for Check/Tran - 1650:

6,922.78 716.82 7,657.89 329.89 1,619.03 167.64 5,800.90 1,134.68 1,619.03 167.64 6,922.78 716.82 33,775.90

2017 ER HSA CONTRIBUTION - McLEAN 2017 ER HSA CONTRIBUTION - McLEAN

IRS - USA TAX PMT (ELECTRONIC)

PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA PAYROLL TAXES - FEDERAL & FICA

1651 03/29/2017 WIRE 7463

SELECTACCOUNT

FSA CLAIM REIMBURSEMENTS

1652 03/30/2017 WIRE 154

MINNESOTA REVENUE (ELECTRONIC) PAYROLL TAXES - STATE PAYROLL TAXES - STATE PAYROLL TAXES - STATE PAYROLL TAXES - STATE

2,312.70

Total for Check/Tran - 1652: 72431 03/02/2017 CHK

11

CITY OF ELK RIVER

CIP - LIGHTING REBATE

671.00

72432 03/02/2017 CHK

1

AMERICAN PUBLIC POWER ASSOC

NATIONAL CONF - ADAMS NATIONAL CONF - ADAMS

644.00 161.00 805.00

Total for Check/Tran - 72432: 72433 03/02/2017 CHK

25203

3,164.83 147.64 2,037.48 409.66 5,759.61

6138

BLUE EGG BAKERY

COOKIES FOR MEETING COOKIES FOR MEETING COOKIES FOR MEETING COOKIES FOR MEETING COOKIES FOR MEETING /pro/rpttemplate/acct/2.37.1/ap/AP_CHK_REGISTER.xml.rpt

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16.00 4.00 12.00 3.00 12.00

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03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name

Reference

Amount

COOKIES FOR MEETING Total for Check/Tran - 72433: 72434 03/02/2017 CHK

9

BORDER STATES ELECTRIC SUPPLY

Clamps

72435 03/02/2017 CHK

9654

CARDMEMBER SERVICE

FIRST NATIONAL BANK VISA

72436 03/02/2017 CHK

11

CITY OF ELK RIVER

REVENUE TRANSFER - JAN 2017 FRANCHISE FEE CR - JAN 2017 STORMWATER - JAN 2017 BAGS - JAN 2017 GARBAGE - JAN 2017 ORGANICS - JAN 2017 STICKERS - JAN 2017 SEWER - JAN 2017

72437 03/02/2017 CHK

72438 03/02/2017 CHK

72439 03/02/2017 CHK

72440 03/02/2017 CHK

72441 03/02/2017 CHK

25203

9192

3173

25

8840

23

CUB FOODS ELK RIVER

DELL MARKETING LP

ECM PUBLISHERS INC

ELITE MEDIA DESIGN

ELK RIVER MUNICIPAL UTILITIES

78.15 1,715.53

Total for Check/Tran - 72436:

90,330.28 -975.00 38,008.54 10.50 109,425.46 1,176.00 208.00 155,649.72 393,833.50

Total for Check/Tran - 72437:

2.43 9.72 12.15

Total for Check/Tran - 72438:

1,147.02 67.31 3,182.12 286.76 16.82 795.52 5,495.55

Total for Check/Tran - 72439:

128.40 32.10 160.50

Total for Check/Tran - 72440:

59.60 59.60 29.80 149.00

OFFICE SUPPLIES OFFICE SUPPLIES Dell 23 Monitors Dell USB SoundBars-AC511 OptiPlex 5040SFF Computers Dell 23 Monitors Dell USB SoundBars-AC511 OptiPlex 5040SFF Computers ADVERTISING - LOCATOR ADVERTISING - LOCATOR MONTHLY HOSTING OF WEBSITE MONTHLY HOSTING OF WEBSITE MONTHLY HOSTING OF WEBSITE STREET & TRAFFIC LIGHTS - JAN 2017 STREET & TRAFFIC LIGHTS - JAN 2017 ELECTRICITY:WELL & TOWER - JAN 2017 ELECTRICITY:WELL & TOWER - JAN 2017

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3.00 50.00

975.00 16,968.28 959.91 23.94

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03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name

Reference

Amount

ELECTRICITY:WELL & TOWER - JAN 2017 ELECTRICITY:WELL & TOWER - JAN 2017 ELECTRICITY:WELL & TOWER - JAN 2017 ELECTRICITY:WELL & TOWER - JAN 2017 ELECTRICITY:WELL & TOWER - JAN 2017 ELECTRICITY:WELL & TOWER - JAN 2017 ELECTRICITY FOR PLANT 72442 03/02/2017 CHK

72443 03/02/2017 CHK

72444 03/02/2017 CHK

122

3993

28

ELK RIVER WINLECTRIC CO

EN POINTE TECHNOLOGIES

G & K SERVICES

Total for Check/Tran - 72441:

892.47 16.98 1,425.98 4.25 15,170.89 356.50 1,975.96 38,770.16

Total for Check/Tran - 72442:

6.12 -0.14 2.12 8.10

Total for Check/Tran - 72443:

59.67 14.92 57.98 132.57

Total for Check/Tran - 72444:

117.78 29.44 147.22

MISC PARTS & SUPPLIES MISC PARTS & SUPPLIES MISC PARTS & SUPPLIES ZAGG Keyboard Folio Ipad Pro Case ZAGG Keyboard Folio Ipad Pro Case Ipad Case MATS & TOWELS MATS & TOWELS

72445 03/02/2017 CHK

80

GRAINGER

MISC PARTS & SUPPLIES - OIL FILTER

74.80

72446 03/02/2017 CHK

2923

I-STATE TRUCK CENTER

PARTS & LABOR FOR UNIT #23

88.29

72447 03/02/2017 CHK

353

MELISSA KARPINSKI

MN CPA DUES - KARPINKSKI MN CPA DUES - KARPINKSKI

72448 03/02/2017 CHK

330

METRO SALES

Total for Check/Tran - 72447:

200.00 50.00 250.00

Total for Check/Tran - 72448:

424.74 106.18 530.92

LEASE FOR COPIER AT OFFICE LEASE FOR COPIER AT OFFICE

72449 03/02/2017 CHK

39

MMUA

SUBSTATION SCHOOL - WEBER ROLSTAD

880.00

72450 03/02/2017 CHK

573

NCPERS MINNESOTA

EXTRA LIFE INSURANCE FOR ERMU EMPL EXTRA LIFE INSURANCE FOR ERMU EMPL

176.00 32.00 208.00

Total for Check/Tran - 72450: 72451 03/02/2017 CHK 25203

121

NORTHERN STATES SUPPLY, INC.

MISC PARTS & SUPPLIES - HEADGEAR

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19

56.39

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3:45:23 PM

Page 7

03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name

Reference

72452 03/02/2017 CHK

5079

OFFICE MAX INCORPORATED

OFFICE CHAIR - HAUGE

72453 03/02/2017 CHK

128

RANDY'S SANITATION, INC.

TRASH SERVICE - FEB 2017 TRASH SERVICE - FEB 2017 RECYCLING SERVICE - MARCH 2017 RECYCLING SERVICE - MARCH 2017

72454 03/02/2017 CHK

72455 03/02/2017 CHK

159

6107

SHORT ELLIOTT HENDRICKSON INC.

STUART C. IRBY CO.

Amount 309.93

Total for Check/Tran - 72453:

1,267.87 138.56 29.41 7.35 1,443.19

Total for Check/Tran - 72454:

20,156.17 6,497.20 26,653.37

Total for Check/Tran - 72455:

-34.26 1,022.14 987.88

HWY 10 WATERMAIN REHAB WTP #7 EXPANSION GLOVES & TESTING GLOVES & TESTING

72456 03/02/2017 CHK

2454

WAL-MART 01-3209

CIP - COUPONS

72457 03/02/2017 CHK

1074

WINDSTREAM

OFFICE TELEPHONE OFFICE TELEPHONE

29.00

Total for Check/Tran - 72457: 72458 03/09/2017 CHK

2512

AMARIL UNIFORM COMPANY

EMPLOYEE CLOTHING

72459 03/09/2017 CHK

1253

B & B TRANSFORMER, INC

MISC PARTS & SUPPLIES - TRANSFORMER

72460 03/09/2017 CHK

9

BORDER STATES ELECTRIC SUPPLY

Lg. Clip Direct Connect Lead Locator Leads

72461 03/09/2017 CHK

72462 03/09/2017 CHK

72463 03/09/2017 CHK

25203

8525

3982

11

BPMS SOFTWARE

CITY OF ELK RIVER

287.55 10,030.00

Total for Check/Tran - 72460:

-6.27 97.42 91.15

Total for Check/Tran - 72461:

-3.19 235.19 232.00

Total for Check/Tran - 72462:

3.70 0.92 4.62

Backflow Prevent Mgmt Sftwre Upgrade/Sup BPMS Backflow Software Licenses 1 Yr/Tec

CENTERPOINT ENERGY

1437 MAIN FINAL GAS BILL 1437 MAIN FINAL GAS BILL PARTS & LABOR FOR UNIT #20 PARTS & LABOR FOR UNIT #20 PARTS & LABOR FOR UNIT #4 PARTS & LABOR FOR UNIT #4 PARTS & LABOR FOR UNIT #2

/pro/rpttemplate/acct/2.37.1/ap/AP_CHK_REGISTER.xml.rpt

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355.65 88.91 444.56

-43.14 790.70 -14.80 450.14 -1.16

Elk River Municipal Utilities 04/03/2017

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3:45:23 PM

Page 8

03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name

Reference

Amount

PARTS & LABOR FOR UNIT #2 PARTS & LABOR FOR UNIT #2 PARTS & LABOR FOR UNIT #2 PARTS & LABOR FOR UNIT #1 PARTS & LABOR FOR UNIT #1 PARTS & LABOR FOR UNIT #1 PARTS & LABOR FOR UNIT #1

75.00 -0.06 3.94 -0.69 42.71 -0.17 10.68 1,313.15

Total for Check/Tran - 72463: 72464 03/09/2017 CHK

9997

CURTIS HOLDINGS, LLC

DEP To AP

250.04

72465 03/09/2017 CHK

25

ECM PUBLISHERS INC

ADVERTISING - TRANSFORMER BIDS ADVERTISING - WIRE BIDS

432.00 432.00 864.00

Total for Check/Tran - 72465: 72466 03/09/2017 CHK

122

ELK RIVER WINLECTRIC CO

MISC PARTS & SUPPLIES - WELL #7

3.89

72467 03/09/2017 CHK

3993

EN POINTE TECHNOLOGIES

Apple Ipad Pro-32gb Flash Memory 9.7" Apple Ipad Pro-32gb Flash Memory 9.7" Ipad

600.75 150.18 629.21 1,380.14

Total for Check/Tran - 72467: 72468 03/09/2017 CHK

9997

FIRST NATIONAL BANK

DEP To AP

250.03

72469 03/09/2017 CHK

8949

FS3 INC.

Stop/Slow Signs & Extensions Sign Extentions Stop/Slow Sign Total for Check/Tran - 72469:

-7.24 33.25 79.28 105.29

Total for Check/Tran - 72470:

895.90 895.90 895.90 895.90 -47.07 731.75 4,268.28

72470 03/09/2017 CHK

25203

80

GRAINGER

AIR CIRCULATOR AIR CIRCULATOR - WELL #4 AIR CIRCULATOR - WELL #7 AIR CIRCULATOR MISC PARTS & SUPPLIES MISC PARTS & SUPPLIES

72471 03/09/2017 CHK

9997

GRANITE SHORES

DEP To AP

300.04

72472 03/09/2017 CHK

809

HAWKINS, INC.

WATER CHEMICALS

159.00

72474 03/09/2017 CHK

8605

MARCO

Microphone, cable & installation Comm'l. 22 AWG 2-conductor plenum cable

-20.38 22.49

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Elk River Municipal Utilities 04/03/2017

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Accounts Payable Check Register

3:45:23 PM

Page 9

03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name

Reference

Amount

Marco Professional Services-Installation Microphone-Audio Monitoring Kitc Microphone, cable & installation Comm'l. 22 AWG 2-conductor plenum cable Marco Professional Services-Installation Microphone-Audio Monitoring Kit

658.03 286.27 -5.09 5.62 164.51 71.56 1,183.01

Total for Check/Tran - 72474: 72475 03/09/2017 CHK

188

MARTIES FARM SERVICE INC

CHAIN SHARPENING

72476 03/09/2017 CHK

145

MENARDS

MENARDS-0296

72477 03/09/2017 CHK

9273

METERING & TECHNOLOGY SOLUTION 5/8" meter couplings & 1" D70 meter & ER

735.00

72478 03/09/2017 CHK

119

MINNESOTA COMPUTER SYSTEMS INC OFFICE SUPPLIES

105.27

72479 03/09/2017 CHK

120

NAPA AUTO PARTS

EXHAUST CAP

13.35

72480 03/09/2017 CHK

3321

NORTHSTAR CHAPTER - APA

MARCH MEETING - GREENBERG MARCH MEETING - GREENBERG Total for Check/Tran - 72480:

20.00 5.00 25.00

Total for Check/Tran - 72481:

470.25 117.56 587.81

Total for Check/Tran - 72482:

652.63 163.16 196.00 49.00 1,060.79

Total for Check/Tran - 72483:

39.30 9.82 49.12

72481 03/09/2017 CHK

72482 03/09/2017 CHK

72483 03/09/2017 CHK

106

2377

7462

PERFECTION PLUS, INC.

PIERCE SALES & SERVICE

QUILL.COM

22.23 525.19

MONTHLY CLEANING FOR THE PLANT-M MONTHLY CLEANING FOR THE PLANT-M SERVICE ICE MACHINE SERVICE ICE MACHINE SERVICE ICE MACHINE SERVICE ICE MACHINE OFFICE SUPPLIES OFFICE SUPPLIES

72484 03/09/2017 CHK

3218

RDO EQUIPMENT

MISC PARTS & SUPPLIES

23.00

72485 03/09/2017 CHK

130

RESCO

Custom Wire Harness

417.37

72486 03/09/2017 CHK

6575

ROGERS PRINTING

OFFICE SUPPLIES OFFICE SUPPLIES

168.95 42.24 211.19

Total for Check/Tran - 72486: 72487 03/09/2017 CHK 25203

20

SLACK PAINTING

PAINT WELL #4 /pro/rpttemplate/acct/2.37.1/ap/AP_CHK_REGISTER.xml.rpt

22

54,850.00

Elk River Municipal Utilities 04/03/2017

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3:45:23 PM

Page 10

03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name

Reference

Amount

72488 03/09/2017 CHK

8186

TRANSAMERICA LIFE INS. CO.

LTC FOR ERMU EMPLOYEES

118.78

72489 03/09/2017 CHK

8948

TRYCO LEASING INC.

LEASE FOR COPIER AT PLANT LEASE FOR COPIER AT PLANT

112.19 28.05 140.24

Total for Check/Tran - 72489: 72490 03/09/2017 CHK

3739

US BANK

WATER REV ADMIN FEES - 2-1-17 to 1-31-18

72491 03/09/2017 CHK

125

VERNON COMPANY

Glow in the Dark business card magnets Glow in the Dark business card magnets

450.00

Total for Check/Tran - 72491: 72492 03/09/2017 CHK

8439

ERIC VOLK

AWWA NAT'L CONF FLIGHT

72493 03/09/2017 CHK

2609

WASTE MANAGEMENT

ELECTRICAL ENERGY - FEB 2017 ERMU GAS GENERATOR SERV AGRMNT- F

328.40

Total for Check/Tran - 72493: 72494 03/09/2017 CHK

135

WATER LABORATORIES INC

WATER TESTING - FEB 2017

72495 03/09/2017 CHK

8493

WERNER ELECTRIC SUPPLY

Chargepoint Bollard Concrete Mount'g Kit Chargepoint CPE200 Assure Warranty 2 yr. Chargepoint CPE200T-S-CHD-CMB 50kw Chgr. Chargepoint CT4000 Assure Warranty 2 yr. Chargepoint CT4000 Site Validation Chargepoint CT4021 Dual 208/240-30A Boll Chargepoint Express CPE200 Site Validati Chargepoint Network Service Plan 2 yr. Chargepoint Network Software 2 yr. Plan Chargepoint Station Activate/Config. Fee hargepoint CPE200 Concrete Mount'g Kit

72496 03/09/2017 CHK

25203

610

8607

SHERBURNE COUNTY RECORDER

RECORD HWY 10 WATER EASEMENT

72498 03/15/2017 CHK

367

VAUGHN SMITH

HWY 10 WATER EASEMENT /pro/rpttemplate/acct/2.37.1/ap/AP_CHK_REGISTER.xml.rpt

23

12,600.75 32,761.33 45,362.08 400.00

Total for Check/Tran - 72495:

101.53 2,212.31 37,406.25 790.88 640.18 5,781.94 640.19 1,068.75 1,068.75 745.98 101.53 50,558.29

Total for Check/Tran - 72496:

184.22 569.63 220.46 5,041.44 6,015.75

WRIGHT HENNEPIN COOPERATIVE ELE ELECTRICITY:WELL & TOWER SECURITY PLANT, WELL & TOWER SECURITY PLANT, WELL & TOWER SECURITY PLANT, WELL & TOWER SECURITY

72497 03/15/2017 CHK

1,312.54 328.14 1,640.68

46.00 1.00

Elk River Municipal Utilities 04/03/2017

Revision: 76613

Accounts Payable Check Register

3:45:23 PM

Page 11

03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name

Amount 7,329.60

72499 03/21/2017 CHK

8181

AMERICAN EXPRESS

General Manager American Express

72500 03/23/2017 CHK

11

CITY OF ELK RIVER

2016 Custodian & Bldg Mtc personnel 2016 IT services & support 2016 Cost for plotter 2016 Fuel for vehicles 2016 Operating supplies 2016 Uniform rental/allowance 2016 Utilities 2016 Phone 2016 Travel Conference & School 2016 Building Repair & Mtc 2016 Equipment Repair & Mtc 2016 Equipment replacement charges 2016 Custodian & Bldg Mtc personnel 2016 IT services & support 2016 Cost for plotter 2016 Fuel for vehicles 2016 Operating supplies 2016 Uniform rental/allowance 2016 Utilities 2016 Phone 2016 Travel Conference & School 2016 Building Repair & Mtc 2016 Equipment Repair & Mtc 2016 Equipment replacement charges FUEL USAGE - JAN 2017 FUEL USAGE - JAN 2017

72501 03/23/2017 CHK

72502 03/23/2017 CHK

25203

Reference

572

4048

RAMADA MARSHALL

TROY ADAMS

Total for Check/Tran - 72500:

32,020.54 31,290.38 960.00 356.86 4,654.34 448.30 10,534.88 2,112.78 95.35 5,681.62 381.02 495.60 8,005.13 7,822.59 240.00 89.21 1,163.59 112.07 2,633.72 528.19 23.84 1,420.41 95.26 123.90 1,581.72 555.31 113,426.61

Total for Check/Tran - 72501:

323.64 323.64 107.88 107.88 107.88 970.92

Total for Check/Tran - 72502:

16.00 4.00 20.00

METER SCHOOL HOTEL - SUMSTAD METER SCHOOL HOTEL - SCHWARTZ RODEO CLINIC HOTEL - ROLSTAD RODEO CLINIC HOTEL - GIRTZ RODEO CLINIC HOTEL - SCHWARTZ LEGIS RALLY INCIDENTALS - ADAMS LEGIS RALLY INCIDENTALS - ADAMS

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Elk River Municipal Utilities 04/03/2017

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Accounts Payable Check Register

3:45:23 PM

Page 12

03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name 72503 03/23/2017 CHK

398

Reference

ALTEC INDUSTRIES, INC

Amount

Adapter for drill Socket Adaptor Total for Check/Tran - 72503:

72504 03/23/2017 CHK

522

ALTERNATIVE TECHNOLOGIES, INC

SAMPLING

100.00

72505 03/23/2017 CHK

9997

ALTISOURCE SINGLE FAMILY INC

INACTIVE REFUND

101.55

72506 03/23/2017 CHK

191

AMERICAN PAYMENT CENTERS

DROP BOX CHARGES- MAR to MAY 2017 DROP BOX CHARGES- MAR to MAY 2017 Total for Check/Tran - 72506:

208.00 52.00 260.00

Total for Check/Tran - 72507:

3,464.00 866.00 4,330.00

Total for Check/Tran - 72508:

1,286.94 1,222.73 2,509.67

72507 03/23/2017 CHK

72508 03/23/2017 CHK

1

6

AMERICAN PUBLIC POWER ASSOC

BEAUDRY OIL COMPANY

ACCTG SPRING INSTITUTE-BIORN KARPIN ACCTG SPRING INSTITUTE-BIORN KARPIN DIESEL FUEL UNLEADED GASOLINE

72509 03/23/2017 CHK

9

BORDER STATES ELECTRIC SUPPLY

8/9S Meters

72510 03/23/2017 CHK

8843

CAMPBELL KNUTSON

LEGAL FEES - TRANSFORMER & WIRE BID

72511 03/23/2017 CHK

3982

CENTERPOINT ENERGY

UTILITIES - 1437 MAIN UTILITIES - 1437 MAIN

72512 03/23/2017 CHK

206

CHET'S SHOE STORE

2,000.00 232.50

Total for Check/Tran - 72511:

10.80 2.70 13.50

Total for Check/Tran - 72512:

-18.98 294.98 276.00

EMPLOYEE CLOTHING BOOTS - WARK EMPLOYEE CLOTHING BOOTS - WARK

72513 03/23/2017 CHK

9997

CHOICE HOMES

INACTIVE REFUND

72514 03/23/2017 CHK

11

CITY OF ELK RIVER

SERVICES BILLED - BAGS FEB 2017 SERVICES BILLED - GARBAGE FEB 2017 SERVICES BILLED - ORGANICS FEB 2017 SERVICES BILLED - STICKERS FEB 2017 REVENUE TRANSFER - FEB 2017 STORMWATER BILLED - FEB 2017 SEWER BILLED - FEB 2017

16.70

Total for Check/Tran - 72514: 25203

-16.22 252.11 235.89

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25

7.00 109,862.86 1,188.00 142.00 84,953.99 38,017.90 161,379.87 395,551.62

Elk River Municipal Utilities 04/03/2017

Revision: 76613

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3:45:23 PM

Page 13

03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name 72515 03/23/2017 CHK

264

CNA SURETY

MN RIGHT OF WAY BOND

72516 03/23/2017 CHK

151

CONNEXUS ENERGY

PURCHASED POWER & SUBSTATION CRE PURCHASED POWER & SUBSTATION CRE

72517 03/23/2017 CHK

72518 03/23/2017 CHK

72519 03/23/2017 CHK

72520 03/23/2017 CHK

72521 03/23/2017 CHK

72522 03/23/2017 CHK

25203

Reference

7448

36

9192

212

369

25

CRC

Amount 100.00

Total for Check/Tran - 72516:

-400.00 1,927,624.15 1,927,224.15

Total for Check/Tran - 72517:

1,716.06 429.02 2,145.08

Total for Check/Tran - 72518:

-4.31 66.93 62.62

Total for Check/Tran - 72519:

7.99 2.00 9.99

Total for Check/Tran - 72520:

-13.79 214.35 200.56

Total for Check/Tran - 72521:

2,280.00 210.00 2,490.00

Total for Check/Tran - 72522:

139.77 7.36 147.13

CUSTOMER SERVICE FOR AFTER HOURS CUSTOMER SERVICE FOR AFTER HOURS

CROW RIVER FARM EQUIP CO

CUB FOODS ELK RIVER

DAKOTA SUPPLY GROUP

DIVERSIFIED INSPECTIONS, INC

ECM PUBLISHERS INC

MISC PARTS & SUPPLIES MISC PARTS & SUPPLIES COOKIES FOR MEETINGS COOKIES FOR MEETINGS Impact tool holder Tool Holder Truck #11 Bucket Truck Testing Truck Liners Testing TECH SUPV AD TECH SUPV AD

72523 03/23/2017 CHK

9997

LORETTA EGGERT

INACTIVE REFUND

72524 03/23/2017 CHK

23

ELK RIVER MUNICIPAL UTILITIES

ELECTRIC SERVICES - WELLS & TOWERS ELECTRIC SERVICES - WELLS & TOWERS ELECTRIC SERVICES - WELLS & TOWERS ELECTRIC SERVICES - WELLS & TOWERS ELECTRIC SERVICES - WELLS & TOWERS ELECTRIC SERVICES - WELLS & TOWERS ELECTRIC SERVICES - WELLS & TOWERS ELECTRIC SERVICES - WELLS & TOWERS ELECTRIC SERVICES - 1705 MAIN ELECTRIC SERVICE - TRAFFIC LTS & SIGN

/pro/rpttemplate/acct/2.37.1/ap/AP_CHK_REGISTER.xml.rpt

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60.49 627.12 12.39 677.14 16.98 1,471.35 4.25 13,446.35 367.84 2,040.85 975.00

Elk River Municipal Utilities 04/03/2017

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Accounts Payable Check Register

3:45:23 PM

Page 14

03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name

Reference

Amount

ELECTRIC SERVICE - TRAFFIC LTS & SIGN 72525 03/23/2017 CHK

122

ELK RIVER WINLECTRIC CO

Total for Check/Tran - 72524:

16,239.99 35,879.26

Total for Check/Tran - 72525:

7.78 27.78 28.16 63.72

MISC PARTS & SUPPLIES - WELL #4 MISC PARTS & SUPPLIES - WELL #3 MISC PARTS & SUPPLIES - WELL #4

72526 03/23/2017 CHK

9997

FAITH IN ACTION

INACTIVE REFUND

282.99

72527 03/23/2017 CHK

8949

FS3 INC.

Ox Block Ox Block side swivel Total for Check/Tran - 72527:

496.35 211.75 708.10

Total for Check/Tran - 72528:

117.78 29.44 147.22

72528 03/23/2017 CHK

28

G & K SERVICES

MATS & TOWELS MATS & TOWELS

72529 03/23/2017 CHK

8494

MITCH GIRTZ

RODEO SCHOOL MEALS - GIRTZ

72530 03/23/2017 CHK

91

GOPHER STATE ONE-CALL

LOCATES FOR - FEB 2017 LOCATES FOR - FEB 2017 LOCATES FOR - FEB 2017

72531 03/23/2017 CHK

80

GRAINGER

59.92

Total for Check/Tran - 72530:

84.24 28.08 28.08 140.40

Total for Check/Tran - 72531:

-1.23 19.09 -1.74 27.03 43.15

MISC PARTS & SUPPLIES MISC PARTS & SUPPLIES MISC PARTS & SUPPLIES MISC PARTS & SUPPLIES

72532 03/23/2017 CHK

53

GREAT RIVER ENERGY

MV-90 Training

72533 03/23/2017 CHK

8469

KATHY GREENBERG

APA MTG MILEAGE - GREENBERG APA MTG MILEAGE - GREENBERG

1,846.59

Total for Check/Tran - 72533:

25203

28.25 7.06 35.31

72534 03/23/2017 CHK

9997

VLADINIR GULYY

INACTIVE REFUND

12.54

72535 03/23/2017 CHK

9997

KATHRYN HAWKINS

INACTIVE REFUND

214.06

72536 03/23/2017 CHK

54

HD SUPPLY WATERWORKS, LTD.

MISC PARTS & SUPPLIES

72537 03/23/2017 CHK

9997

JOHN HEPOKOSKI

INACTIVE REFUND /pro/rpttemplate/acct/2.37.1/ap/AP_CHK_REGISTER.xml.rpt

27

97.76 231.59

Elk River Municipal Utilities 04/03/2017

Revision: 76613

Accounts Payable Check Register

3:45:23 PM

Page 15

03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name

Reference

72538 03/23/2017 CHK

9997

TAMMY HOBGOOD

INACTIVE REFUND

72539 03/23/2017 CHK

824

HOME DEPOT CREDIT SERVICES

HOME DEPOT

72540 03/23/2017 CHK

21

HORWITZ NS/I

Install meter at Well #4 Install meter at Well #5 Install meter at Well #6

Amount 327.31 66.69

Total for Check/Tran - 72540: 72541 03/23/2017 CHK

9997

TODD HUBERTY

INACTIVE REFUND

58.35

72542 03/23/2017 CHK

9997

I DO TOO BRIDAL & CONSIGNMENT

INACTIVE REFUND

23.40

72543 03/23/2017 CHK

9259

INDELCO PLASTICS CORPORATION

MISC PARTS & SUPPLIES MISC PARTS & SUPPLIES

72544 03/23/2017 CHK

6836

Total for Check/Tran - 72543:

54.45 146.66 201.11

Total for Check/Tran - 72544:

49.93 12.48 62.41

INNOVATIVE OFFICE SOLUTIONS, LLC OFFICE SUPPLIES OFFICE SUPPLIES

72545 03/23/2017 CHK

9997

J T LAND CO

DEP To AP

150.00

72546 03/23/2017 CHK

297

JACK HENRY & ASSOCIATES, INC

ACH TRANSACTIONS ACH TRANSACTIONS

148.16 37.04 185.20

Total for Check/Tran - 72546: 72547 03/23/2017 CHK

9997

MARIA JOHN

INACTIVE REFUND

72548 03/23/2017 CHK

8083

JT SERVICES

Polywater wax & buff kits Polywater W-1 Wipes Fiberglass poles & mast arms Fiberglass poles & mast arms

29.58

Total for Check/Tran - 72548:

-21.44 333.27 11,732.74 -754.74 11,289.83

72549 03/23/2017 CHK

9997

JARL KNUTSON

INACTIVE REFUND

206.93

72550 03/23/2017 CHK

9169

MICHAEL LANGER

WATER SCHOOL EXPENSES - LANGER

146.61

72551 03/23/2017 CHK

48

LEAGUE OF MN CITIES INS TRUST

4TH QTR INSTALLMENT 4TH QTR INSTALLMENT Total for Check/Tran - 72551:

72552 03/23/2017 CHK 25203

1,416.67 1,416.67 1,416.66 4,250.00

417

LOCATORS & SUPPLIES INC.

Acid Apron Face Shield

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26,793.36 2,564.64 29,358.00 12.89 4.50

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Reference

Amount

Gloves Head gear

10.31 14.18 41.88

Total for Check/Tran - 72552: 72553 03/23/2017 CHK

316

MBI, INC.

WTP #7 EXPANSION - DRAW #10

72554 03/23/2017 CHK

8290

MCGRANN SHEA CARNIVAL STRAUGH LEGAL FEES - JAN 2017

72555 03/23/2017 CHK

119

MINNESOTA COMPUTER SYSTEMS INC LEASE FOR COPIER AT OFFICE LEASE FOR COPIER AT OFFICE

90,128.40 1,344.50

Total for Check/Tran - 72555: 72556 03/23/2017 CHK

7293

MINNESOTA DEPT OF COMMERCE

72557 03/23/2017 CHK

147

MINNESOTA POLLUTION CONTROL AG SYSTEM OP RENEWAL - NINOW

72558 03/23/2017 CHK

39

MMUA

72559 03/23/2017 CHK

72560 03/23/2017 CHK

8081

5,873.28 23.00

2017 LEGIS CONF - SAGSTETTER NW LINEMAN COLLEGE - KOEHLER

MOBOTREX TRAFFIC PRODUCTS

MUNICI-PALS

Total for Check/Tran - 72558:

185.00 812.00 997.00

Total for Check/Tran - 72559:

726.75 -46.75 680.00

Total for Check/Tran - 72560:

20.00 5.00 25.00

LED 16" Traffic LED 16" Traffic MEMBERSHIP RENEWAL - 2017 MEMBERSHIP RENEWAL - 2017

72561 03/23/2017 CHK

9997

NADEAU PROPERTIES

DEP To AP

100.01

72562 03/23/2017 CHK

9215

NIGHTHAWK TOTAL CONTROL

TELEMETRY CHARGES - 4-1-17 to 6-30-17 TELEMETRY CHARGES - 4-1-17 to 6-30-17 Total for Check/Tran - 72562:

-20.88 324.63 303.75

Total for Check/Tran - 72563:

8,871.87 1,451.45 4,994.66 415.53 1,248.67 600.00 522.39 130.60 18,235.17

72563 03/23/2017 CHK

25203

14

4TH QTR CIP INDIRECT ASSESSMENT

486.14 121.53 607.67

9300

NISC

IVUE AGREEMENTS IVUE AGREEMENTS AMS INVOICE - FEB 2017 AMS INVOICE - FEB 2017 AMS INVOICE - FEB 2017 MISC CHARGES - FEB 2017 MISC CHARGES - FEB 2017 MISC CHARGES - FEB 2017

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03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name

Reference

Amount

72564 03/23/2017 CHK

9997

PRIDE OF HOMES LLC

INACTIVE REFUND

48.12

72565 03/23/2017 CHK

7462

QUILL.COM

OFFICE SUPPLIES OFFICE SUPPLIES

64.83 16.21 81.04

Total for Check/Tran - 72565: 72566 03/23/2017 CHK

8897

RALPHIE'S MINNOCO

FUEL FOR TREE TRIMMER

72567 03/23/2017 CHK

3218

RDO EQUIPMENT

MISC PARTS & SUPPLIES - TRENCHER

72568 03/23/2017 CHK

3219

RESOURCE TRAINING & SOLUTIONS/B HEALTH CARE PREMIUMS - APRIL 2017 HEALTH CARE PREMIUMS - APRIL 2017 HEALTH CARE PREMIUMS - APRIL 2017 HEALTH CARE PREMIUMS - APRIL 2017

2.71 211.65

Total for Check/Tran - 72568: 72569 03/23/2017 CHK

289

JARED ROLSTAD

RODEO SCHOOL MEALS - ROLSTAD

72570 03/23/2017 CHK

7972

TOM SAGSTETTER

LEGIS CONF MEAL TIP - SAGSTETTER LEGIS CONF MEAL TIP - SAGSTETTER

69.68

Total for Check/Tran - 72570:

3.20 0.80 4.00

72571 03/23/2017 CHK

9997

BRANDEE SAXON

INACTIVE REFUND

74.74

72572 03/23/2017 CHK

7798

MATT SCHWARTZ

RODEO SCHOOL MEALS - SCHWARTZ

63.77

72573 03/23/2017 CHK

229

SHERBURNE COUNTY ZONING

PROMISSORY NOTE & SECURITY AGREEM

72574 03/23/2017 CHK

2560

SHERWIN- WILLIAMS CO.

MISC PARTS & SUPPLIES - WELL #7

72575 03/23/2017 CHK

227

SHOE MENDERS & SADDLERY

EMPLOYEE CLOTHING BOOTS - LANGER EMPLOYEE CLOTHING BOOTS - LANGER EMPLOYEE CLOTHING BOOTS - STOECKE EMPLOYEE CLOTHING BOOTS - STOECKE EMPLOYEE CLOTHING BOOTS - STOECKE EMPLOYEE CLOTHING BOOTS - STOECKE EMPLOYEE CLOTHING BOOTS - KOEHLER EMPLOYEE CLOTHING BOOTS - KOEHLER

16,268.00 60.05

Total for Check/Tran - 72575: 72576 03/23/2017 CHK

9997

TCF NATIONAL BANK

INACTIVE REFUND

72577 03/23/2017 CHK

331

TRANSUNION

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-11.63 180.78 -13.55 210.58 -0.71 11.08 -13.09 203.49 566.95 141.64

Total for Check/Tran - 72577: 25203

44,139.83 17,711.44 9,615.40 1,433.83 72,900.50

20.00 5.00 25.00

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556

UNITED SERVICES GROUP

Reference

Amount

MAPPLING SERVICES WACO SUBSTATION BANK #2 MAPPING SERVICES

1,093.50 3,404.00 1,363.50 5,861.00

Total for Check/Tran - 72578: 72579 03/23/2017 CHK

9191

UPS

SHIPPING

59.84

72580 03/23/2017 CHK

9997

US BANK HOME MORTGAGE

INACTIVE REFUND

226.89

72581 03/23/2017 CHK

543

USA BLUEBOOK

MISC PARTS & SUPPLIES

295.54

72582 03/23/2017 CHK

8381

VERIFIED CREDENTIALS

BACKGROUND SCREENING - MCLEAN BACKGROUND SCREENING - MCLEAN Total for Check/Tran - 72582:

72583 03/23/2017 CHK

2454

WAL-MART 01-3209

CIP - LIGHTBULB COUPONS

72584 03/23/2017 CHK

9997

D'ARCY WEBBER

INACTIVE REFUND

72585 03/23/2017 CHK

55

WESCO RECEIVABLES CORP.

15KV Insulators

674.32

72586 03/23/2017 CHK

366

YOURMEMBERSHIP.COM, INC

JOB POSTING - TECH SERVICES SUPV JOB POSTING - TECH SERVICES SUPV Total for Check/Tran - 72586:

92.00 23.00 115.00

Total for Check/Tran - 72587:

9.19 17.15 26.34

72587 03/24/2017 CHK

72588 03/30/2017 CHK

25203

57.95 3.05 61.00

8502

11

DARREN WEBER

CITY OF ELK RIVER

100.00 59.15

CONNEXUS MUTUAL AID MEAL - WEBER CONNEXUS MUTUAL AID SNACKS - WEBE PARTS & LABOR FOR UNIT #26 PARTS & LABOR FOR UNIT #26 VINYL MAPS VINYL MAPS IANNOTATE PDF APP DOT INSPECTION - UNIT #47 LABOR FOR UNIT #10 PARTS & LABOR FOR UNIT #49 PARTS & LABOR FOR UNIT #49 PARTS & LABOR FOR UNIT #29 PARTS & LABOR FOR UNIT #29 LABOR FOR UNIT #4 LABOR FOR UNIT #8 LABOR FOR UNIT #40 /pro/rpttemplate/acct/2.37.1/ap/AP_CHK_REGISTER.xml.rpt

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-1.34 60.90 -1.30 20.20 10.68 40.00 40.00 -4.00 162.23 -6.06 214.25 40.00 40.00 40.00

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03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name

72589 03/30/2017 CHK

72590 03/30/2017 CHK

72591 03/30/2017 CHK

102

4531

9

ABDO EICK & MEYERS, LLP

AT & T MOBILITY

Reference

Amount

LABOR FOR UNIT #9 LABOR FOR UNIT #11 PARTS & LABOR FOR UNIT #43 PARTS & LABOR FOR UNIT #43 PARTS & LABOR FOR UNIT #8 PARTS & LABOR FOR UNIT #8 PARTS & LABOR FOR UNIT #33 PARTS & LABOR FOR UNIT #33 PARTS & LABOR FOR UNIT #33 PARTS & LABOR FOR UNIT #33 Total for Check/Tran - 72588:

40.00 40.00 -14.47 304.90 -78.54 1,500.91 -1.50 61.35 -0.08 3.23 2,511.36

Total for Check/Tran - 72589:

11,120.00 2,780.00 13,900.00

Total for Check/Tran - 72590:

59.14 1,261.86 391.26 1,712.26

Total for Check/Tran - 72591:

664.78 136.00 800.78

AUDIT SERVICES - YEAR ENDED 12/31/16 AUDIT SERVICES - YEAR ENDED 12/31/16 CELL PHONE & IPAD BILLING CELL PHONE & IPAD BILLING CELL PHONE & IPAD BILLING

BORDER STATES ELECTRIC SUPPLY

Double Arm Top Tie 4/0 Flat washers

72592 03/30/2017 CHK

9654

CARDMEMBER SERVICE

FIRST NATIONAL BANK VISA

3,093.23

72593 03/30/2017 CHK

3982

CENTERPOINT ENERGY

NATURAL GAS & IRON REMOVAL NATURAL GAS & IRON REMOVAL

2,568.40 301.86 2,870.26

Total for Check/Tran - 72593: 72594 03/30/2017 CHK

9999

CORNERSTONE UTILITY CONSTRUCTI HYDRANT RENTAL DEPOSIT REFUND

72595 03/30/2017 CHK

9192

CUB FOODS ELK RIVER

908.09

SNACKS FOR MEETINGS SNACKS FOR MEETINGS Total for Check/Tran - 72595:

25203

55.45 13.86 69.31

72596 03/30/2017 CHK

212

DAKOTA SUPPLY GROUP

Hasting Hot Stick

399.76

72597 03/30/2017 CHK

122

ELK RIVER WINLECTRIC CO

MISC PARTS & SUPPLIES - WELL #4 MISC PARTS & SUPPLIES - WELL #4 MISC PARTS & SUPPLIES - WELL #4

84.32 16.00 -27.78

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03/01/2017 To 03/31/2017 Bank Account: 1 - ELECTRIC/GENERAL FUND Check / Pmt Tran Date Type Vendor Vendor Name

72598 03/30/2017 CHK

72599 03/30/2017 CHK

28

FS3 INC.

Amount Total for Check/Tran - 72597:

72.54

Total for Check/Tran - 72598:

-7.06 109.69 -51.28 398.60 398.60 848.55

Total for Check/Tran - 72599:

117.78 29.44 147.22

Triple Warning Triangles Emergency triangles Rustoleum marking paint Marking Paint Marking Paint

G & K SERVICES

MATS & TOWELS MATS & TOWELS

72600 03/30/2017 CHK

7492

GENERAL REPAIR SERVICE

MISC PARTS & SUPPLIES - VALVE

72601 03/30/2017 CHK

9997

J & A GLASS INC

Cred Bal Refund

221.71

72602 03/30/2017 CHK

330

METRO SALES

LEASE FOR COPIER AT OFFICE LEASE FOR COPIER AT OFFICE Total for Check/Tran - 72602:

119.70 29.93 149.63

Total for Check/Tran - 72603:

40.86 59.04 24.66 7.46 132.02

Total for Check/Tran - 72604:

176.00 32.00 208.00

72603 03/30/2017 CHK

72604 03/30/2017 CHK

120

573

NAPA AUTO PARTS

NCPERS MINNESOTA

EXTRA LIFE INS FOR ERMU EES-APRIL 201 EXTRA LIFE INS FOR ERMU EES-APRIL 201

43

NORTHERN TOOL

72606 03/30/2017 CHK

6243

PROGRESSIVE BUSINESS PUBLICATION SUPERVISORS LEGAL UPDATE SUPERVISORS LEGAL UPDATE

128

1,902.09

MISC PARTS & SUPPLIES - CHIPPER PARTS & LABOR FOR UNIT #7 MISC PARTS & SUPPLIES - TRANS SHED PARTS FOR PICK-UP TRUCK

72605 03/30/2017 CHK

72607 03/30/2017 CHK

25203

8949

Reference

MISC PARTS & SUPPLIES

RANDY'S SANITATION, INC.

54.68

Total for Check/Tran - 72606:

309.12 77.28 386.40

Total for Check/Tran - 72607:

554.10 138.52 29.42 7.36 729.40

TRASH SERVICE - PLANT TRASH SERVICE - PLANT DOCUMENT DESTRUCTION - APRIL 2017 DOCUMENT DESTRUCTION - APRIL 2017

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Amount

72608 03/30/2017 CHK

159

SHORT ELLIOTT HENDRICKSON INC.

HWY 10 WATER MAIN REHAB

72609 03/30/2017 CHK

3080

SIMPLEXGRINNELL

LFG FIRE ALARM TEST

745.38

72610 03/30/2017 CHK

9997

AARON SPIKE

Cred Bal Refund

192.62

72611 03/30/2017 CHK

4614

SUN LIFE FINANCIAL

DENTAL, LIFE & LTD INSURANCE -APR 20 DENTAL, LIFE & LTD INSURANCE -APR 20 DENTAL, LIFE & LTD INSURANCE -APR 20 DENTAL, LIFE & LTD INSURANCE -APR 20

72612 03/30/2017 CHK

25203

Reference

85

SUPERMATS, INC.

14,135.38

Total for Check/Tran - 72611:

4,167.87 912.44 938.52 99.09 6,117.92

Total for Check/Tran - 72612:

368.72 368.72 737.44

MISC PARTS & SUPPLIES MISC PARTS & SUPPLIES

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Total for Bank Account - 1 :

(210)

3,779,072.27

Grand Total :

(210)

3,779,072.27

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Accounts Payable Check Register PARAMETERS ENTERED: Check Date: Bank: Vendor: Check: Journal: Format: Extended Reference: Sort By: Voids: Payment Type: Group By Payment Type: Minimum Amount: Authorization Listing: Authorization Comments: Credit Card Charges:

25203

03/01/2017 To 03/31/2017 All All All All All GL References/Amounts No Check/Transaction None All No 0.00 No No No

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ELK RIVER MUNICIPAL UTILITIES SPECIAL MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM March 13, 2017 Members Present:

John Dietz, Chair; Daryl Thompson, Trustee; Mary Stewart, Trustee; and Matt Westgaard, Trustee Members Absent: Al Nadeau, Vice Chair ERMU Staff Present: Troy Adams, General Manager; Mark Fuchs, Electric Superintendent; Eric Volk, Water Superintendent; Tom Sagstetter, Conservation & Key Accounts Manager; Michelle Canterbury, Executive Administrative Assistant; Jennie Nelson, Customer Service Manager Others Present: None

1.0

CALL MEETING TO ORDER The special meeting of the Utilities Commission was called to order at 3:30 p.m. by Chair Dietz.

1.1

Pledge of Allegiance The Pledge of Allegiance was recited.

1.2

Commissioner Oath of Office Michelle Canterbury administered the oath of office for Utilities Commissioners Mary Stewart and Matt Westgaard.

1.3

2017 Election of Officers When a new Commissioner starts or an existing Commissioner starts a new term, the officer and committee positions can change by election. The four Commissioners discussed the different office positions. Moved by Commissioner Thompson and seconded by Commissioner Westgaard to reappoint John Dietz as Chair. Motion carried 4-0. Moved by Commissioner Westgaard and seconded by Commissioner Stewart to appoint Daryl Thompson as the Vice-Chair. Motion carried 4-0.

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Special Meeting of the Elk River Municipal Utilities Commission March 13, 2017 36

1.4

2017 Committee Appointments There are currently two committees; the Wage and Benefits Committee and the Financial Reserves and Investment Committee. After discussion the following appointments were made. Moved by Chair Dietz and seconded by Commissioner Stewart to reappoint Chair Dietz, and appoint Commissioner Stewart to the Wage and Benefits Committee. Motion carried 4-0. Moved by Commissioner Thompson and seconded by Commissioner Westgaard to reappoint Chair Dietz, and appoint Commissioner Westgaard to the Financial Reserves and Investment Committee. Motion carried 4-0.

1.5

Consider Utilities Agenda There were no additions or corrections to the agenda. Moved by Commissioner Westgaard and seconded by Commissioner Thompson to approve the March 13, 2017, agenda. Motion carried 4-0.

1.6

Introduction of New Employee Mr. Fuchs introduced Jon McLean the new Locator. The Commission welcomed the new employee.

2.0

CONSENT AGENDA (Approved By One Motion) Chair Dietz had a few questions on the financials. As Ms. Slominski was not present, the questions will be forwarded onto her for her response. Chair Dietz asked if there could be some type of adjusting entry each month to offset the difference between the month the wholesale power bill is reflected to the actual month the revenue is recorded? Chair Dietz also requested further clarification on how the loss of revenue (LOR) will be recorded; as an asset or expense? Both Commissioner Stewart and Westgaard expressed interest in a financial overview/training at a later date. Commissioner Stewart had a few questions on the Grant. Staff responded. Moved by Commissioner Thompson and seconded by Commissioner Stewart to approve the Consent Agenda as follows: 2.1 2.2 2.3 2.4

February Check Register February 14, 2017 Regular Meeting Minutes Financial Statements Grant of Easement Agreement

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Special Meeting of the Elk River Municipal Utilities Commission March 13, 2017 37

2.5

Demonstration of Energy &Efficiency Developments Grant Agreement and Resolution – American Public Power Association

Motion carried 4-0. 3.0

OPEN FORUM No one appeared for open forum.

4.0

OLD BUSINESS

4.1

Load Management Program Moratorium At the February 14, 2017 Commission meeting, the Commission approved a moratorium on all of the load management programs; with the exception of the electric vehicle charging. Staff was tasked to determine the feasibility and costs associated with upgrading and maintaining the load management programs that require direct load control. Mr. Sagstetter went over the estimated costs to continue supporting the programs. He concluded that based on the estimated costs, and the current wholesale power market, staff is recommending closing the existing load management programs to be effective September 30, 2018. In the interim, staff will conduct research and perform analysis to determine transition options for the customers that are currently participating in these programs. The goal would be to offer alternative programs not focused around load control. There was discussion on the exit strategy and how we would communicate that to our customers. There was also discussion on alternative options. Moved by Commissioner Thompson and seconded by Commissioner Westgaard to approve the revised Energy Management Electric Service Tariff reflecting the 2017 rates and reduction to the cycled air conditioning credit. Motion passed 4-0. Moved by Commissioner Thompson and seconded by Commissioner Stewart to approve a termination date of September 30, 2018 for the following load management programs: Dual Fuel, Electric Thermal Water Heat Storage, Electric Thermal Space Heat Storage, and Cycled Air Conditioning. Motion passed 4-0.

4.2

PCA Credits At the February 14, 2017 Commission meeting, it was proposed that we reconsider the direction given at the November 15, 2016 Commission Meeting for giving the PCA credit on the first bill reflecting the rate increase, which would have been the February bill. It was decided to bring it back as an agenda item for discussion this month. Mr. Adams explained what PCA credits were and stated that historically we have passed them through to the

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Special Meeting of the Elk River Municipal Utilities Commission March 13, 2017 38

customers as either a charge or a credit. Currently we have a substantial amount accumulated; approximately $486,000. Mr. Adams shared that although we had communicated to our customers that a PCA credit would be given on the February bill, given that we have two known future bondings, it may be reason to reconsider giving the entire amount back to customers. There was discussion on the pros and cons of retaining some of the PCA credits. It was noted that a con would be that the bonding is for a future use, and the accumulated PCAs are for past/current use. Chair Dietz shared that ERMU has allocated a buffer to help offset the PCA charges; essentially, ERMU will absorb $500,000 before passing along any PCA charges to their customers. After discussion, Commission consensus was to distribute half of the accumulated PCA credits back to the customers, and to retain the other half to be used towards funding the $500,000 buffer for future PCA charges. Commissioner Westgaard suggested drafting a policy relating to PCA credits to include guidelines on the percentage we keep, what it will be used for, and what the ceiling would be on those funds. Moved by Commissioner Westgaard and seconded by Commissioner Stewart to rebate 50% of the accumulated PCAs to customers on the next billing, and to retain the other 50% as an offset to the $500,000 buffer for future PCA charges. Motion carried 4-0. 4.3

Governance Policy Manual Mr. Adams shared that with the exception of the by-laws and legal counsel review, the work associated with Phase 1 has been completed. The policies included in Phase 1 were approved by the Commission during the February 2017 Commission meeting. Mr. Adams presented the Phase 2 scope of work from Collaboration Unlimited which included the development of the delegation to management policies. He explained that after evaluating the work associated with Phase 2, staff has determined that this is something that would be difficult to complete in house. Mr. Adams recommended contracting with Collaboration Unlimited to complete Phase 2 of the governance manual for a fixed fee of $14,500. Commissioner Thompson shared that his understanding was that the whole project was going to be completed for the $25,000. Staff responded that the project was divided into two phases and that the $25,000 only covered Phase 1. The Commission had a few questions on where they money would come from to cover the fee associated with Phase 2 of the project. Mr. Adams responded. After discussion, Commission consensus was to proceed forward with contracting with Collaboration Unlimited to complete the project. Moved by Commissioner Thompson and second by Commissioner Stewart to approve contracting with Collaboration Unlimited to complete Phase 2 of the governance manual for a fixed fee of $14,500. Motion carried 4-0.

5.0

NEW BUSINESS

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Special Meeting of the Elk River Municipal Utilities Commission March 13, 2017 39

5.1

Organizational Growth On February 23, 2017, the ERMU leadership team held an introductory meeting with the two new Commissioners. During that meeting, it became apparent that there were some frustrations among the leadership team regarding the Technical Services Superintendent vacancy, anticipated retirements, and current staffing levels. Mr. Adams shared that he wanted to let the other Commissioners know about these issues that came to the surface so that we can address them with short term actions as well as long term strategic planning. There was lengthy discussion on the open Technical Services Superintendent position, current staffing levels, and succession planning. The Commission offered some suggestions on how to work through some of the more immediate challenges. Commissioner Westgaard shared the importance of determining the right sizing; for a utility of this size, how many people should you have? He suggested trying to benchmark this against one of our peer groups. There was further discussion. Chair Dietz didn’t want staff to panic, and suggested waiting for further analyzation until after the interviews were held. He felt that at that point we’d have a better understanding of what we have to work with and what else we may need. Chair Dietz also noted that there were a lot of unknowns with the territory acquisition and if staff underestimated the amount of work involved, and the manpower it would require, than that should be discussed with the Wage & Benefits Committee. (At 4:55 p.m. Commissioner Thompson excused himself from the remainder of the meeting.)

5.2

Landfill Gas Plant to Electric Generation Facility Performance for 2016 At their discretion, Elk River Municipal Utilities can provide bonus payments to Sherburne County and Waste Management/Elk River Landfill on an annual basis provided the financial means and plant capacity factors are met. The bonus payments are not guaranteed and can change or be eliminated based on certain factors. Mr. Sagstetter shared that 2016 was a challenging year; production was down, expenses were up, therefore no bonus payments were made to Waste Management or Sherburne County.

5.3

2016 Electric Reliability Report Minnesota Rules Chapter 7826 Public Utilities Commission Electric Utility Standards cover safety, reliability, service, and reporting requirements. Per 7826.0100(A), municipal utilities are exempt from these requirements. However, the ERMU Commission adopted a number of parts of this chapter as a Distribution Reliability Standard policy requiring annual reporting on system reliability. Mr. Fuchs presented the APPA eReliability Tracker Annual Report for Elk River Municipal Utilities. In 2016, our reliability numbers remained excellent. Mr. Fuchs went over the reliability indexes and explained how those results tie into our Performance

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Special Meeting of the Elk River Municipal Utilities Commission March 13, 2017 40

Metrics. He noted that the only index that didn’t meet our goal was our Customer Average Duration Index (CADI). There was discussion. Moved by Commissioner Westgaard and seconded by Commissioner Stewart to receive and file the APPA eReliability Tracker 2016 Annual Report for Elk River Municipal Utilities. Motion carried 3-0. 5.4

Bids for 69kV Substation Transformer Approved with the 2017 budget was the addition of a new electric substation to be located adjacent to our existing Waco Substation. One of the larger components of the substation addition is a 69kV transformer. As the cost of the transformer exceeds the threshold amount and is subject to competitive bidding law, it was noticed for formal bids. The bid opening was March 6, 2017. Mr. Adams presented the 69kV substation transformer bid tabulation and noted that although the two lowest responsive bidders are effectively the same price, there is a significant difference in delivery time. Due to the difference in delivery time and the indirect costs association with extending the construction schedule, the GRE engineers have recommended choosing the Waukesha transformer. The engineers also recommended forgoing the short circuit testing that was bid on as the cost greatly exceeds the value. Mr. Adams informed the Commission that after conferring with legal counsel it would be acceptable to award the bid to the second lowest bidder based on best value. Staff recommended awarding the bid for the 69kV substation transformer to MC Sales for the Waukesha transformer with a 22-26 week delivery window for the amount $543,883. Moved by Commissioner Westgaard and seconded by Commissioner Stewart to award the bid for the 69kV substation transformer per the bid package specifications to MC Sales, Inc. for the Waukesha transformer. Motion carried 3-0.

5.5

Bids for Electric Wire The underground electric cable required for the 2017 capital construction projects and maintenance was determined and had been noticed for formal bids. The bid opening was on March 13, 2017 at 9:00 a.m. The bid tabulation was distributed at the meeting. Mr. Adams went over the bid tabulation and explained the difference between firm and escalated pricing. He also noted that there was only a $150 difference between the two lowest bids. However, the delivery lead time varied significantly from 4-7 weeks with Dakota Supply, to 10-12 weeks with Resco. Taking into consideration price, product, and availability, staff recommended awarding the bid to Dakota Supply with firm pricing. Moved by Commissioner Stewart and seconded by Commissioner Westgaard to

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Special Meeting of the Elk River Municipal Utilities Commission March 13, 2017 41

award the electric cable bid to Dakota Supply with firm pricing of $373,745. Motion carried 3-0. 5.6

Seasonal Employee for Water Department Mr. Volk shared that we typically hire a seasonal employee for the Water Department to assist with a variety of duties including hydrant painting and well maintenance. For 2017, Mr. Volk budgeted for hiring seasonal help but failed to have it specifically noted as a line item in the budget. For the sake of transparency, staff wanted to bring this to the Commission for approval before moving forward with the hiring process. The Commission had a few questions on the duration and cost of employing a seasonal worker. Staff responded. Moved by Commissioner Stewart and seconded by Commissioner Westgaard to approve the hiring of a seasonal employee for the Water Department. Motion carried 3-0.

5.7

Employee Handbook Annual Updates Annually, staff and legal counsel review the existing personnel policies incorporated into the ERMU Employee Handbook for compliance with changing labor laws. Mr. Adams presented the revised handbook which included the following changes: removal of language related to the security department as the business line was sold in 2016, updated language regarding meal time breaks, insertion of a Fair Pay Policy per counsel recommendation, clarification on Lead Pay differential calculation, clarification on vacation accrual, and insertion of additional vacation pay for two management positions. Commissioner Stewart suggested the following corrections/changes:     

Page 142 – first paragraph, last sentence – should be: evening at 11:59 p.m. Page 148 – #31 – removal of point f. Security System purchase/time payments. Pages 150-151 – #36 – on the middle column of the chart please add quantifier “days” after each accrual rate per year. Page 151 – third paragraph – update Example: If an employee’s start date was July 1, 2016, the new accrual rate would start, July 1, 2019. Page 36 – #40, point 1c. – change 20 yeast of service to 20 years of service.

Moved by Commissioner Westgaard and second by Commissioner Stewart to adopt the revised ERMU Employee Handbook, to include the additional revisions identified by Commissioner Stewart. Motion carried 3-0.

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Special Meeting of the Elk River Municipal Utilities Commission March 13, 2017 42

6.0 OTHER BUSINESS 6.1

Staff Updates Mr. Adams stated in his staff report that he had attended the American Public Power Legislative Rally held in Washington D.C. February 27 – March 2, 2017. Mr. Adams stated that they had the opportunity to get some one-on-one time with our Senators and Congressmen and that the trip had been very worthwhile. There was discussion. Chair Dietz pointed out that Ms. Slominski had noted in her staff report that April 15 will mark the end of the cold weather rule and staff anticipates high numbers for shutoffs once this comes to an end. It was also noted that occasionally disgruntled customers that have been shut off will reach out to the commissioners. There was discussion. Mr. Fuchs added that we had very few outages due to the storm and tornado activity last week. He shared that as part of our mutual aid agreement with Connexus, we sent two crews up to the Zimmerman area to help out with the outages and the work associated with it. Mr. Volk added that we recently experienced a PLC (Programmable Logic Controller) failure. He explained the alarm notification process and stated that in this case we received notification of the failure from our regular backup dialer and a second notification from an additional alarm we recently added. Based on some of the catastrophic alarm failures we’ve seen in the news recently, Mr. Volk shared that it adds some peace of mind knowing that our alarm systems are doing what they need to do. There was discussion on our requirements for Coliform Bacteria testing. Mr. Sagstetter had nothing additional to add. Chair Dietz asked if Tom had the opportunity to meet the new Environmental Technician at the city. Mr. Sagstetter stated that he had. There was discussion on the cancellation of the 2017 Business Expo.

6.2

Set Date for Next Meeting The next regularly scheduled Commission meeting will be held on April 11, 2017.

6.3

Adjourn Special Meeting Moved by Commissioner Westgaard and seconded by Commission Stewart to adjourn the special meeting of the Elk River Municipal Utilities Commission at 5:45 p.m. Motion carried 3-0.

Minutes prepared by Michelle Canterbury.

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Special Meeting of the Elk River Municipal Utilities Commission March 13, 2017 43

___________________________ John J. Dietz Chair, ERMU Commission ___________________________ Tina Allard City Clerk

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Special Meeting of the Elk River Municipal Utilities Commission March 13, 2017 44

UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Eric Volk – Water Superintendent MEETING DATE: AGENDA ITEM NUMBER: April 11, 2017 2.3 SUBJECT: Agency Relocation Agreement – State of Minnesota ACTION REQUESTED: Adopt resolution authorizing ERMU to enter into an agency agreement with the State of Minnesota BACKGROUND: In response to MnDOT replacing the Highway 10 Bridge over the Elk River, we are relocating our water main that passes within 11’ of the bridge. We will be relocating the water main outside of the Minnesota Department of Transportation (MnDOT) right-of-way (ROW). The construction of the new water main will be bid and completed as part of the MnDot project. DISCUSSION: In order to be part of MnDOT’s contract, we must enter into an agreement with the agency. They will coordinate the installation of the water main in 2018. FINANCIAL IMPACT: The financial impact will be included in the 2018 budget. Preliminary numbers put the project at $362,961.00, this includes the construction costs and MnDOT’s cost for administering the project. ATTACHMENTS:  17-2 Resolution – Authorizing ERMU to enter into an Agency Relocation Agreement with the State of Minnesota  Agency Relocation Agreement MN Department of Transportation

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RESOLUTION NO. 17-2 BOARD OF COMMISSIONERS ELK RIVER MUNICIPAL UTILITIES A RESOLUTION AUTHORIZING THE ELK RIVER MUNICIPAL UTILITIES TO ENTER INTO AN AGENCY RELOCATION AGREEMENT WITH THE STATE OF MINNESOTA WHEREAS, the Minnesota Department of Transportation (MnDOT) plans to let a contract to construct State Project Number 7102-127 (Project) on Trunk Highway Number 10. The Project is located on Trunk Highway 10 on Bridge #5955 and Bridge #71005 over the Elk River (Lake Orono) and from Joplin Street to Xenia Avenue in Elk River; and WHEREAS, Elk River Municipal Utilities (ERMU) owns and operates water mains, their fixtures, and related equipment (Facilities) that are located on property where MnDOT will construct the Project; and WHEREAS, the Project will require the relocation and adjustment of ERMU’s Facilities. If ERMU relocated the Facilities or let a separate contract to relocate them that relocation work would interfere with the Project. ERMU has requested that MnDOT perform the relocation work as part of the Project. Including ERMU’s relocation work in the State’s Construction contract may eliminate duplication of services, facilitate activity coordination, simplify supervision, and expedite Project construction; and WHEREAS, pursuant to Minnesota Statutes, section 161.46, subdivision 5, ERMU appoints MnDOT as its agent to design and construct the relocation work as part of the Project and MnDOT may relocate the Facilities as part of the Project on the trunk highway system; and WHEREAS, state law requires a written agreement between MnDOT and ERMU that describes their separate responsibilities. NOW, THEREFORE, BE IT RESOLVED that Agency Relocation Agreement Number 1027572 between the State of Minnesota, acting through its Commission of Transportation, and ERMU, is hereby approved and the ERMU Chair and General Manager are authorized to execute the Agreement on behalf of ERMU. This Resolution Passed and Adopted by the Board of Elk River Municipal Utilities this 11th day of April, 2017.

John J. Dietz, Chair Troy Adams, P.E., General Manager

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Jennie Nelson – Customer Service Manager MEETING DATE: AGENDA ITEM NUMBER: April 11, 2017 2.4 SUBJECT: Resolution Allowing for Customer Contributions of Account Credits to CAER ACTION REQUESTED: Approve Resolution Allowing for Customer Contributions of Account Credits to CAER BACKGROUND: In 2014, the Commission approved a resolution allowing ERMU customers to request to voluntarily donate their final bill credit balances (over $5) to Salvation Army’s HeatShare program. The resolution also allowed ERMU to remove the small and insignificant credits balances ($5 or less) from customer accounts and remit the aggregate balance to HeatShare. DISCUSSION: Staff would like to present a new resolution to change the receiver of the credits from HeatShare to Community Aid Elk River (CAER). CAER is a local entity that provides heating assistance. Because HeatShare is a statewide program, staff is not confident that the dollars ERMU is remitting are being used with ERMU customers who are in need. As CAER works primarily with local utilities, it will be administratively easier for them to allocate the dollars to customers in need within our service territory. ATTACHMENTS:  Resolution No. 17-2 – Allowing for Customer Contributions of Account Credits to CAER

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RESOLUTION NO. 17-5 BOARD OF COMMISSIONERS ELK RIVER MUNICIPAL UTILITIES A RESOLUTION OF THE BOARD OF COMMISSIONERS OF ELK RIVER MUNICIPAL UTILITIES ALLOWING FOR CUSTOMER CONTRIBUTIONS OF ACCOUNT CREDITS TO COMMUNITY AID OF ELK RIVER (CAER). WHEREAS, CAER is a charitable program that partners with public and private utilities in Elk River to receive private donations that help those in need survive the long Minnesota winters by providing funds for heating bills. WEREAS, Elk River Municipal Utilities customers have requested that their credit balances be donated to a charitable program rather than returned to the customer. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF ELK RIVER MUNICIPAL UTILITIES AS FOLLOWS: Credit balances over $5, if requested by the customer who is entitled to refund of the credit balance, may be donated by the customer to CAER. Elk River Municipal Utilities staff are authorized to transfer credit balances of $5 or less directly to CAER. This Resolution Passed and Adopted this 11th day of April, 2017.

John J. Dietz, Chair

Troy Adams, P.E., General Manager

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UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Theresa Slominski – Finance and Office Manager MEETING DATE: AGENDA ITEM NUMBER: April 11, 2017 4.1 SUBJECT: 2016 Financial Audit ACTION REQUESTED: Receive and file the 2016 Annual Financial Report BACKGROUND: Audit fieldwork was completed March 2nd and 3rd by our auditors, Abdo, Eick & Meyers (AEM). Again this year, AEM completed and compiled the enclosed audit report this year, and issued an opinion letter. Elk River Municipal Utilities staff has reviewed for approval. DISCUSSION: Mr. Andrew Berg of AEM will be at our meeting to present the 2016 audit and answer questions you may have. There was an audit adjustment again this year for GASB 68, Accounting and Financial Reporting for Pensions, that resulted in recognition of an additional liability of $1,647,464, recognition of offsetting Deferred Outflows and Inflows of Resources, and expense of $264,604 (between both funds). These items are discussed in Note 3 of the financials. FINANCIAL IMPACT: None ATTACHMENTS:  AEM Management Letter  ERMU Annual Financial Report For the Year Ended December 31, 2016

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Management Letter Elk River Utilities Elk River, Minnesota For the Year Ended December 31, 2016

66

March 30, 2017

Management and Public Utilities Commission Elk River Municipal Utilities Elk River, Minnesota We have audited the financial statements of the Elk River Municipal Utilities (the Utilities) of the City of Elk River, Minnesota, (the City) as of and for year ended December 31, 2016. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter dated December 9, 2016. Professional standards require that we provide you with the following information related to our audit. Our Responsibility Under Auditing Standards Generally Accepted in the United States of America As stated in our engagement letter, our responsibility, as described by professional standards, is to express an opinion about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States. Our audit of the financial statements does not relieve you or management of your responsibilities. Our responsibility is to plan and perform the audit to obtain reasonable, but not absolute, assurance that the financial statements are free of material misstatement. As part of our audit, we considered the internal control over financial reporting of the Utilities. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures specifically to identify such matters. Significant Audit Findings In planning and performing our audit of the financial statements, we considered the Utilities internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Utilities internal control. Accordingly, we do not express an opinion on the effectiveness of the Utilities internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

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Compliance As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under statutes set forth by the State of Minnesota. Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Utilities are described in Note 1 to the financial statements. The Utilities changed accounting policies during 2016 related to fair market value and application (GASB 72), accounting and financial reporting for pension and related assets not within the scope of GASB 68, including amendments to certain provisions GASB Statement No. 67 and No. 68 (GASB 73), and certain external investment pools and pool participants (GASB 79). We noted no transactions entered into by the Utilities during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were depreciation on capital assets, payroll related expenses, the liability for the Utilities’ Other Post-Employment Benefits (OPEB), and the liability for the Utilities’ pensions. 

Management’s estimate of depreciation is based on estimated useful lives of the assets. Depreciation is calculated using the straight-line method.



Allocations of gross wages and payroll benefits are approved by the Board within the Utilities’ budget and are derived from each employee’s estimated time to be spent servicing the respective functions of the Utility. These allocations are also used in allocating accrued compensated absences payable.



Management’s estimate of its OPEB liability is based on several factors including, but not limited to, anticipated retirement age for active employees, life expectancy, turnover, and healthcare cost trend rate.



Management’s estimate of its pension liability is based on several factors including, but not limited to, anticipated investment return rate, retirement age for active employees, life expectancy, salary increases and form of annuity payment upon retirement.

We evaluated the key factors and assumptions used to develop these accounting estimates in determining that it is reasonable in relation to the financial statements taken as a whole. The disclosures in the financial statements are neutral, consistent, and clear. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole. Management Representations We have requested certain representations from management that are included in the management representation letter dated March 30, 2017.

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Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the governmental unit’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Utilities’ auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We applied certain limited procedures to the required supplementary information (RSI) (Management’s Discussion and Analysis, Schedule of Funding Progress for the Other Postemployment Benefit Plan, the Schedule of Employer’s Share of the Net Pension Liability and the Schedule of Employer’s Contributions), which is information that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the supplementary information (Schedule of Operating Revenues and Expense), which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We were not engaged to report on the introductory section and supplementary information marked unaudited, which accompany the financial statements but are not RSI. We did not audit or perform other procedures on this other information and we do not express an opinion or provide any assurance on them.

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The results of the operations for the Electric Fund in terms of cash flow and the breakdown of the cash balances for the past four years are as follows:

Electric Fund Cash Flows - Excluding Refunding Bonds $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $2013 Receipts

2013 Disbursements

2014 Receipts

2014 Disbursements

Operating costs

2015 Receipts

2015 Disbursements

Debt payments

2016 Receipts

2016 Disbursements

Operating receipts

Electric Fund Cash Balances $16,000,000 $14,000,000 $12,000,000

$13,175,626 $12,057,293

$12,097,110

2013

2014

$14,680,691

$10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $Unrestricted

2015

Restricted for debt service (bond covenents)

2016

Unrestricted designated reserve*

* Unrestricted designated reserve: established to address the short-term financial variability inherent in operations. Potential sources of this variability include risks associated with natural disasters, reduction in overall customer usage, changes in total system usage resulting from the actions of large customers, failure to achieve budgeted levels of net income, changes in interest income, and general operational exposures. The target level for this reserve, included as the red line in the chart above, is the sum of six months operating expenditures less depreciation and less purchase power costs, plus the sum of next year’s total principal and interest payments, plus one month budgeted average purchase power cost. The balance above this target level shall be unrestricted. The cash provided by operating activities has remained strong and was sufficient to cover the amount of capital and debt needs in 2016. The Utilities issued debt to fund a down payment to MMPA. We recommend that the Utilities continue to closely monitor future cash flow with the use of projections and the capital improvement plan.

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The results of the Electric fund are as follows:

Electric Operations Summary 2014

2015 Percent

Total

2016 Percent

Operating income

1,974,562

6

2,655,568

8

2,637,797

8

152,375

-

267,243

1

8,991

-

2,126,937 (797,835)

6 (3)

2,922,811 (824,743)

9 (3)

3 %

$ 34,464,396 31,826,599

2,646,788 330,923 (1,089,287)

Change in net position

$ 1,329,102

Cash and temporary investments

$ 11,606,610

$ 12,685,126

$ 13,683,031

Restricted cash

$

$

$

Bonds and notes payable, net of premium

$ 6,005,432

490,500

$ 2,098,068

100 % 92

Percent

$ 31,366,685 29,392,123

Income before transfers Special item Transfers to City

$ 32,551,722 29,896,154

Total

Operating revenues Operating expenses

Nonoperating revenues (expenses)

100 % 94

Total

6 %

490,500

$ 5,124,743

$ 1,888,424

997,660

$ 14,300,294

$40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $2014

2015 Operating revenues

Operating expenses

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2016 Cash

Bonds

100 % 92

8 1 (3) 6 %

The results of the operations for the Water Fund in terms of cash flow and the breakdown of the cash balances for the past four years are as follows:

Water Fund Cash Flows $3,000,000

$2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

$2013 Receipts

2013 Disbursements

2014 Receipts

2014 Disbursements

Operating costs

2015 Receipts

2015 Disbursements

Debt payments

2016 Receipts

2016 Disbursements

Operating receipts

Water Fund Cash Balances $4,800,000 $4,200,000 $3,600,000

$4,367,165

$4,255,964

2015

2016

$3,681,481

$3,390,879

$3,000,000 $2,400,000 $1,800,000 $1,200,000 $600,000 $2013

2014 Unrestricted

Unrestricted designated reserve*

* Unrestricted Designated Reserve: This reserve is established to address the short-term financial variability inherent in operating a Water Utility. Potential sources of this variability include but are not limited to: risks associated with natural disasters, reduction in overall customer usage, changes in total system usage resulting from the actions of large customers, failure to achieve budgeted levels of net income, changes in interest income, and general operational exposures. The target level for this reserve, included as the red line in the chart above, is 6 months operating expenditures less depreciation plus the sum of next year’s total principal and interest payments. The balance above this target level shall be unrestricted. The cash provided by operating activities has remained strong and was sufficient to cover the amount of capital and debt needs in 2016. As mentioned in the analysis of the Electric fund it is important to continue to monitor future cash need with the use of a projection and capital improvement plan.

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The results of the Water fund are as follows:

Water Operations Summary 2014 Total Operating revenues Operating expenses

2015 Percent

$ 2,148,327 2,350,789

Operating income (loss) Nonoperating revenues (expenses) Income (loss) before contributions and transfers Capital contributions - developer infrastructure and connection fees Capital contributions from City Transfers from City Transfers to City Change in net position

$

100 % 109

Total $ 2,202,537 2,414,295

2016 Percent 100 % 110

Total $ 2,173,521 2,474,141

Percent 100 % 114

(202,462)

(9)

(211,758)

(10)

(300,620)

(14)

57,951

3

136,829

6

164,681

8

(144,511)

(6)

(74,929)

(4)

(135,939)

(6)

375,329 175,091 329,490 (25,000)

17 7 15 (1)

253,934 189,669 94,703 (30,000)

12 8 4 (1)

358,684 73,002 300,000 -

17 3 14 -

710,399

32 %

433,377

19 %

595,747

28 %

$

$

Cash and temporary investments

$ 3,681,481

$ 4,367,165

$ 4,255,964

Bonds payable, net of premium

$ 2,097,677

$ 1,868,859

$ 1,635,113

$5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $2014

2015 Operating revenues

Operating expenses

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2016 Cash

Bonds

Future Accounting Standard Changes The following Governmental Accounting Standards Board (GASB) Statements have been issued and may have an impact on future the Utilities financial statements: (1) GASB Statement No. 74 - Financial Reporting for Postemployment Benefit Plans Other than Pension Plans Summary The objective of this Statement is to improve the usefulness of information about postemployment benefits other than pensions (other postemployment benefits or OPEB) included in the general purpose external financial reports of state and local governmental OPEB plans for making decisions and assessing accountability. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits (pensions and OPEB) with regard to providing decision-useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency. This Statement replaces Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans. It also includes requirements for defined contribution OPEB plans that replace the requirements for those OPEB plans in Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, as amended, Statement 43, and Statement No. 50, Pension Disclosures. Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions, establishes new accounting and financial reporting requirements for governments whose employees are provided with OPEB, as well as for certain nonemployer governments that have a legal obligation to provide financial support for OPEB provided to the employees of other entities. The scope of this Statement includes OPEB plans-defined benefit and defined contribution-administered through trusts that meet the following criteria: 

Contributions from employers and nonemployer contributing entities to the OPEB plan and earnings on those contributions are irrevocable.



OPEB plan assets are dedicated to providing OPEB to plan members in accordance with the benefit terms.



OPEB plan assets are legally protected from the creditors of employers, nonemployer contributing entities, and the OPEB plan administrator. If the plan is a defined benefit OPEB plan, plan assets also are legally protected from creditors of the plan members.

This Statement also includes requirements to address financial reporting for assets accumulated for purposes of providing defined benefit OPEB through OPEB plans that are not administered through trusts that meet the specified criteria. Effective Date and Transition This Statement is effective for financial statements for fiscal years beginning after June 15, 2016. Earlier application is encouraged.

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Future Accounting Standard Changes - Continued How the Changes in This Statement Will Improve Financial Reporting The requirements of this Statement will improve financial reporting primarily through enhanced note disclosures and schedules of required supplementary information that will be presented by OPEB plans that are administered through trusts that meet the specified criteria. The new information will enhance the decision-usefulness of the financial reports of those OPEB plans, their value for assessing accountability, and their transparency by providing information about measures of net OPEB liabilities and explanations of how and why those liabilities changed from year to year. The net OPEB liability information, including ratios, will offer an up-to-date indication of the extent to which the total OPEB liability is covered by the fiduciary net position of the OPEB plan. The comparability of the reported information for similar types of OPEB plans will be improved by the changes related to the attribution method used to determine the total OPEB liability. The contribution schedule will provide measures to evaluate decisions related to the assessment of contribution rates in comparison with actuarially determined rates, if such rates are determined. In addition, new information about rates of return on OPEB plan investments will inform financial report users about the effects of market conditions on the OPEB plan’s assets over time and provide information for users to assess the relative success of the OPEB plan’s investment strategy and the relative contribution that investment earnings provide to the OPEB plan’s ability to pay benefits to plan members when they come due. GASB Statement No. 75 - Accounting and Financial Reporting for Postemployment Benefit Plans Other than Pension Summary The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits (pensions and OPEB) with regard to providing decision-useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency. This Statement replaces the requirements of Statements No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans, for OPEB. Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other than Pension Plans, establishes new accounting and financial reporting requirements for OPEB plans. The scope of this Statement addresses accounting and financial reporting for OPEB that is provided to the employees of state and local governmental employers. This Statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this Statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about defined benefit OPEB also are addressed. In addition, this Statement details the recognition and disclosure requirements for employers with payables to defined benefit OPEB plans that are administered through trusts that meet the specified criteria and for employers whose employees are provided with defined contribution OPEB. This Statement also addresses certain circumstances in which a nonemployer entity provides financial support for OPEB of employees of another entity. In this Statement, distinctions are made regarding the particular requirements depending upon whether the OPEB plans through which the benefits are provided are administered through trusts that meet the following criteria: 

Contributions from employers and nonemployer contributing entities to the OPEB plan and earnings on those contributions are irrevocable.



OPEB plan assets are dedicated to providing OPEB to plan members in accordance with the benefit terms.



OPEB plan assets are legally protected from the creditors of employers, nonemployer contributing entities, the OPEB plan administrator, and the plan members.

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Future Accounting Standard Changes - Continued Effective Date This Statement is effective for fiscal years beginning after June 15, 2017. Earlier application is encouraged. How the Changes in This Statement Will Improve Financial Reporting The requirements of this Statement will improve the decision-usefulness of information in employer and governmental nonemployer contributing entity financial reports and will enhance its value for assessing accountability and interperiod equity by requiring recognition of the entire OPEB liability and a more comprehensive measure of OPEB expense. Decision-usefulness and accountability also will be enhanced through new note disclosures and required supplementary information, as follows: 

More robust disclosures of assumptions will allow for better informed assessments of the reasonableness of OPEB measurements.



Explanations of how and why the OPEB liability changed from year to year will improve transparency.



The summary OPEB liability information, including ratios, will offer an indication of the extent to which the total OPEB liability is covered by resources held by the OPEB plan, if any.



For employers that provide benefits through OPEB plans that are administered through trusts that meet the specified criteria, the contribution schedules will provide measures to evaluate decisions related to contributions.

The consistency, comparability, and transparency of the information reported by employers and governmental nonemployer contributing entities about OPEB transactions will be improved by requiring: 

The use of a discount rate that considers the availability of the OPEB plan’s fiduciary net position associated with the OPEB of current active and inactive employees and the investment horizon of those resources, rather than utilizing only the long-term expected rate of return regardless of whether the OPEB plan’s fiduciary net position is projected to be sufficient to make projected benefit payments and is expected to be invested using a strategy to achieve that return.



A single method of attributing the actuarial present value of projected benefit payments to periods of employee service, rather than allowing a choice among six methods with additional variations.



Immediate recognition in OPEB expense, rather than a choice of recognition periods, of the effects of changes of benefit terms.



Recognition of OPEB expense that incorporates deferred outflows of resources and deferred inflows of resources related to OPEB over a defined, closed period, rather than a choice between an open or closed period.

GASB Statement No. 80 - Blending Requirements for Certain Component Units - an Amendment of GASB Statement No. 14 Summary The objective of the Statement is to improve financial reporting by clarifying the financial statement presentation requirements for certain component units. This Statement amends the blending requirements established in paragraph 53 of Statement No. 14, The Financial Reporting Entity, as amended. This Statement amends the blending requirements for the financial statement presentation of component units of all state and local governments. The additional criterion requires blending of a component unit incorporated as a not-for-profit corporation in which the primary government is the sole corporate member. The additional criterion does not apply to component units included in the financial reporting entity pursuant to the provisions of Statement No. 39, Determining Whether Certain Organizations Are Component Units.

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Future Accounting Standard Changes - Continued Effective Date The requirements of this Statement are effective for reporting periods beginning after June 15, 2016. Earlier application is encouraged. How the Changes in This Statement Will Improve Financial Reporting The requirements of this Statement enhance the comparability of financial statements among governments. Greater comparability improves the decision-usefulness of information reported in financial statements and enhances its value for assessing government accountability. GASB Statement No. 81 - Irrevocable Split-Interest Agreements Summary The objective of this Statement is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. Split-interest agreements are a type of giving agreement used by donors to provide resources to two or more beneficiaries, including governments. Split-interest agreements can be created through trusts - or other legally enforceable agreements with characteristics that are equivalent to split-interest agreements - in which a donor transfers resources to an intermediary to hold and administer for the benefit of a government and at least one other beneficiary. Examples of these types of agreements include charitable lead trusts, charitable remainder trusts, and life-interests in real estate. This Statement requires that a government that receives resources pursuant to an irrevocable split-interest agreement recognize assets, liabilities, and deferred inflows of resources at the inception of the agreement. Furthermore, this Statement requires that a government recognize assets representing its beneficial interests in irrevocable split-interest agreements that are administered by a third party, if the government controls the present service capacity of the beneficial interests. This Statement requires that a government recognize revenue when the resources become applicable to the reporting period. Effective Date The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2016, and should be applied retroactively. Earlier application is encouraged. How the Changes in This Statement Will Improve Financial Reporting This Statement enhances the comparability of financial statements by providing accounting and financial reporting guidance for irrevocable split-interest agreements in which a government is a beneficiary. This Statement also enhances the decisionusefulness of general purpose external financial reports, and their value for assessing accountability, by more clearly identifying the resources that are available for the government to carry out its mission. GASB Statement No. 82 - Pension Issues an Amendment of GASB Statements No. 67, No. 68, and No. 73 Summary The objective of this Statement is to address certain issues that have been raised with respect to Statements No. 67, Financial Reporting for Pension Plans, No. 68, Accounting and Financial Reporting for Pensions, and No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. Specifically, this Statement addresses issues regarding (1) the presentation of payrollrelated measures in required supplementary information, (2) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the classification of payments made by employers to satisfy employee (plan member) contribution requirements.

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Future Accounting Standard Changes - Continued Presentation of Payroll-Related Measures in Required Supplementary Information Prior to the issuance of this Statement, Statements 67 and 68 required presentation of covered-employee payroll, which is the payroll of employees that are provided with pensions through the pension plan, and ratios that use that measure, in schedules of required supplementary information. This Statement amends Statements 67 and 68 to instead require the presentation of covered payroll, defined as the payroll on which contributions to a pension plan are based, and ratios that use that measure. Selection of Assumptions This Statement clarifies that a deviation, as the term is used in Actuarial Standards of Practice issued by the Actuarial Standards Board, from the guidance in an Actuarial Standard of Practice is not considered to be in conformity with the requirements of Statement 67, Statement 68, or Statement 73 for the selection of assumptions used in determining the total pension liability and related measures. Classification of Employer-Paid Member Contributions This Statement clarifies that payments that are made by an employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements should be classified as plan member contributions for purposes of Statement 67 and as employee contributions for purposes of Statement 68. It also requires that an employer's expense and expenditures for those amounts be recognized in the period for which the contribution is assessed and classified in the same manner as the employer classifies similar compensation other than pensions (for example, as salaries and wages or as fringe benefits). Effective Date The requirements of this Statement are effective for reporting periods beginning after June 15, 2016, except for the requirements of this Statement for the selection of assumptions in a circumstance in which an employer's pension liability is measured as of a date other than the employer's most recent fiscal year-end. In that circumstance, the requirements for the selection of assumptions are effective for that employer in the first reporting period in which the measurement date of the pension liability is on or after June 15, 2017. Earlier application is encouraged. How the Changes in This Statement Will Improve Financial Reporting The requirements of this Statement will improve financial reporting by enhancing consistency in the application of financial reporting requirements to certain pension issues.

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Future Accounting Standard Changes - Continued GASB Statement No. 83 - Certain Asset Retirement Obligations Summary This Statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this Statement. This Statement establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred outflow of resources for AROs. This Statement requires that recognition occur when the liability is both incurred and reasonably estimable. The determination of when the liability is incurred should be based on the occurrence of external laws, regulations, contracts, or court judgments, together with the occurrence of an internal event that obligates a government to perform asset retirement activities. Laws and regulations may require governments to take specific actions to retire certain tangible capital assets at the end of the useful lives of those capital assets, such as decommissioning nuclear reactors and dismantling and removing sewage treatment plants. Other obligations to retire tangible capital assets may arise from contracts or court judgments. Internal obligating events include the occurrence of contamination, placing into operation a tangible capital asset that is required to be retired, abandoning a tangible capital asset before it is placed into operation, or acquiring a tangible capital asset that has an existing ARO. This Statement requires the measurement of an ARO to be based on the best estimate of the current value of outlays expected to be incurred. The best estimate should include probability weighting of all potential outcomes, when such information is available or can be obtained at reasonable cost. If probability weighting is not feasible at reasonable cost, the most likely amount should be used. This Statement requires that a deferred outflow of resources associated with an ARO be measured at the amount of the corresponding liability upon initial measurement. This Statement requires the current value of a government's AROs to be adjusted for the effects of general inflation or deflation at least annually. In addition, it requires a government to evaluate all relevant factors at least annually to determine whether the effects of one or more of the factors are expected to significantly change the estimated asset retirement outlays. A government should remeasure an ARO only when the result of the evaluation indicates there is a significant change in the estimated outlays. The deferred outflows of resources should be reduced and recognized as outflows of resources (for example, as an expense) in a systematic and rational manner over the estimated useful life of the tangible capital asset. A government may have a minority share (less than 50 percent) of ownership interest in a jointly owned tangible capital asset in which a nongovernmental entity is the majority owner and reports its ARO in accordance with the guidance of another recognized accounting standards setter. Additionally, a government may have a minority share of ownership interest in a jointly owned tangible capital asset in which no joint owner has a majority ownership, and a nongovernmental joint owner that has operational responsibility for the jointly owned tangible capital asset reports the associated ARO in accordance with the guidance of another recognized accounting standards setter. In both situations, the government's minority share of an ARO should be reported using the measurement produced by the nongovernmental majority owner or the nongovernmental minority owner that has operational responsibility, without adjustment to conform to the liability measurement and recognition requirements of this Statement. In some cases, governments are legally required to provide funding or other financial assurance for their performance of asset retirement activities. This Statement requires disclosure of how those funding and assurance requirements are being met by a government, as well as the amount of any assets restricted for payment of the government's AROs, if not separately displayed in the financial statements. This Statement also requires disclosure of information about the nature of a government's AROs, the methods and assumptions used for the estimates of the liabilities, and the estimated remaining useful life of the associated tangible capital assets. If an ARO (or portions thereof) has been incurred by a government but is not yet recognized because it is not reasonably estimable, the government is required to disclose that fact and the reasons therefor. This Statement requires similar disclosures for a government's minority shares of AROs. Effective Date The requirements of this Statement are effective for reporting periods beginning after June 15, 2018. Earlier application is encouraged.

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Future Accounting Standard Changes - Continued How the Changes in This Statement Will Improve Financial Reporting This Statement will enhance comparability of financial statements among governments by establishing uniform criteria for governments to recognize and measure certain AROs, including obligations that may not have been previously reported. This Statement also will enhance the decision-usefulness of the information provided to financial statement users by requiring disclosures related to those AROs. (1)

Note. From GASB Pronouncements Summaries. Copyright 2016 by the Financial Accounting Foundation, 401 Merritt 7, Norwalk, CT 06856, USA, and is reproduced with permission. * * * * * Restriction on Use This communication is intended solely for the information and use of the Public Utilities Commission, City Council, management, and the Minnesota Office of the State Auditor and is not intended to be and should not be used by anyone other than these specified parties. The comments and recommendations in this report are purely constructive in nature, and should be read in this context. Our audit would not necessarily disclose all weaknesses in the system because it was based on selected tests of accounting records and related data. If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at your convenience. We wish to thank you for the opportunity to be of service and for the courtesy and cooperation extended to us by your staff.

ABDO, EICK & MEYERS, LLP Minneapolis, Minnesota March 30, 2017

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Annual Financial Report Elk River Utilities Elk River, Minnesota For the Year Ended December 31, 2016

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2016

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2016 Page No. INTRODUCTORY SECTION Public Utilities Commission and Administration

5

FINANCIAL SECTION Independent Auditor’s Report Management’s Discussion and Analysis

9 13

Financial Statements Statement of Net Position Statement of Revenues, Expenses and Changes in Net Position Statement of Cash Flows Notes to the Financial Statements

20 23 24 27

Required Supplementary Information Schedule of Employer’s Share of Public Employees Retirement Association Net Pension Liability General Employees Retirement Fund Schedule of Employer’s Public Employees Retirement Association Contributions General Employees Retirement Fund Schedule of Funding Progress for the Other Postemployment Benefit Plan

48 48 48

Supplementary Information Schedule of Operating Revenues and Expenses Electric Fund Summary of Operations and Unaudited Statistics Water Fund Summary of Operations and Unaudited Statistics

54

OTHER REPORT Independent Auditor’s Report on Minnesota Legal Compliance

59

50 52

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INTRODUCTORY SECTION ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA

FOR THE YEAR ENDED DECEMBER 31, 2016

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA PUBLIC UTILITIES COMMISSION AND ADMINISTRATION FOR THE YEAR ENDED DECEMBER 31, 2016 COMMISSION Name

Title

John Dietz Allan Nadeau Daryl Thompson

Chairperson Vice-Chairperson Trustee ADMINISTRATION

Name

Title

Troy Adams Theresa Slominski Eric Volk Mark Fuchs Mike O'Neill Tom Sagstetter Michelle Canterbury Jennie Nelson

General Manager Finance and Office Manager Water Superintendent Line Superintendent Technical Services Superintendent Conservation and Key Accounts Manager Executive Administrative Assistant Customer Service Manager

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FINANCIAL SECTION ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA

FOR THE YEAR ENDED DECEMBER 31, 2016

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INDEPENDENT AUDITOR’S REPORT

Public Utilities Commission Elk River Municipal Utilities Elk River, Minnesota Report on the Financial Statements We have audited the accompanying financial statements of the Elk River Municipal Utilities (the Utilities) of the City of Elk River, Minnesota (the City), as of and for the year ended December 31, 2016, and the related notes to the financial statements, as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Utilities preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Utilities internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Utilities as of December 31, 2016, and the changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1B, the financial statements present only the Electric and Water enterprise funds and do not purport to, and do not present fairly the financial position of the City as of December 31, 2016, the changes in its financial position, its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.

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Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis Page 13 and the Schedule of Employer’s Share of the Net Pension Liability, the Schedule of Employer’s Contributions and the Schedule of Funding Progress for Other Post-Employment Benefit Plan starting on page 48 be presented to supplement the basic financial statements. Such information, although not a part of the financial statements, is required by the Government Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Utilities’ financial statements as a whole. The introductory section and supplemental information listed in the table of contents are presented for the purpose of additional analysis and are not a required part of the financial statements of the Utilities. The supplemental information, except for the portion marked “unaudited” on which we express no opinion, has been subjected to the auditing procedures applied in the audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. The introductory section and the supplemental information marked “unaudited” have not been subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

ABDO, EICK & MEYERS, LLP Minneapolis, Minnesota March 30, 2017

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Management’s Discussion and Analysis This section of the Elk River Municipal Utilities (the Utilities) of the City of Elk River, Minnesota annual financial report presents our analysis of the Utilities’ financial performance during the fiscal year that ended December 31, 2016. Please read it in conjunction with the financial statements, which follow this section. Financial Highlights 

The assets and deferred outflows of resources of the Utilities exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $58,194,958 (net position). Net Position increased by $2,309,080 or 4.1 percent.



The Utilities’ cash balance at the close of the current fiscal year was $18,936,655.



Electric usage overall was up an average of 7.5 percent. Residential usage increased 10.1 percent, Commercial usage decreased 1.9 percent, and Industrial usage increased 8.9 percent.



Water usage overall was down slightly at 1.5 percent from the prior year. Residential usage increased 2.2 percent, and Commercial usage decreased 4.5 percent.

Overview of the Financial Statements This annual report consists of three parts; Management’s Discussion and Analysis, Financial Statements, and Supplementary Information. The Financial Statements also include notes that explain in more detail some of the information in the financial statements. Required Financial Statements The financial statements of the Utilities report information about the Utilities using accounting methods similar to those used by the private sector. These statements offer short-term and long-term financial information about its activities. The Statements of Net Position includes all of the Utilities’ assets and liabilities and provides information about the nature and amounts of investments in resources (assets) and the obligations to Utilities’ creditors (liabilities). It also provides the basis for computing rate of return, evaluating the capital structure of the Utilities and assessing the liquidity and financial flexibility of the Utilities. All of the current year’s revenues and expenses are accounted for in the Statements of Revenues, Expenses and Changes in Net Position. This statement measures the success of the Utilities’ operations over the past year and can be used to determine whether the Utilities’ has successfully recovered all its costs through its user fees and other charges, profitability, and credit worthiness. The final required financial statement is the Statements of Cash Flows. The primary purpose of this statement is to provide information about the Utilities’ cash receipts and cash payments during the reporting period. The statement reports cash receipts, cash payments and net changes in cash resulting from operations, investing and financing activities and provides answers to such questions as where did cash come from, what was cash used for and what was the change in the cash balance during the reporting period.

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Financial Analysis of the Utilities Our analysis of the Utilities begins on page 20 in the Financial Section. One of the most important questions asked about the Utilities’ finances is “Is the Utilities as a whole better off or worse off as a result of this year's activities?” The Statement of Net Position, and the Statement of Revenues, Expenses and Changes in Net Position report information about the Utilities’ activities in a way that will help answer this question. These two statements report the net position of the Utilities and changes in this net position. You can think of the Utilities’ net position (the difference between assets and liabilities) as one way to measure financial health or financial position. Over time, increases or decreases in the Utilities’ net position is one indicator of whether its financial health is improving or deteriorating. However, you will need to consider other non-financial factors such as changes in economic conditions, population growth, zoning, and new or changed government legislation. Net position. To begin our analysis, a summary of the Utilities’ Statements of Net Position is presented in Table A-1. As can be seen from the Table, net position increased $2,309,080 to $58,194,958 in fiscal 2016 up from $55,885,878 in fiscal 2015.

TABLE A-1 Condensed Statement of Net Position

Assets Current and other Capital Total assets Total deferred outflows Liabilities Current Non-current Total liabilities Total deferred inflows Net position Net investment in capital assets Restricted for debt service Unrestricted Total net position

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2016

2015

Increase (Decrease)

$ 23,328,553 59,150,780

$ 21,848,337 48,151,150

$ 1,480,216 10,999,630

82,479,333

69,999,487

12,479,846

1,685,181

360,603

1,324,578

6,355,909 19,156,552

5,408,917 8,557,562

946,992 10,598,990

25,512,461

13,966,479

11,545,982

457,095

507,733

(50,638)

43,266,893 997,660 13,930,405

41,216,712 490,500 14,178,666

2,050,181 507,160 (248,261)

$ 58,194,958

$ 55,885,878

$ 2,309,080

Water and electric rates. Electric - The latest increase in the Utilities’ electric rates was effective January 2017. The monthly base charges are based upon the type of service. The monthly charges are $13.00 for residential, $25.00 for commercial, and $70.00 for industrial customers. In addition to the base charges the residential rate is $.1363/KWh for May-September usage, and $.1209/KWh for October-April usage; the commercial rate is $.1306/KWh for May-September usage, and $.1089/KWh for October-April usage; the industrial rate is $.0658/KWh energy charge year round with a demand charge of $16.94/KW May-September, and $11.99/KW for October-April. Water - The Utilities’ latest increase in residential and commercial rates was effective January 2017. The monthly base charge for residential customers is $8.68 per month. In addition to the base charge, the Utilities currently charges its residential customers $1.77 per 1,000 gallons up to 9,000 gallons, $3.50 per 1,000 gallons between 9,000 gallons and 15,000 gallons, and $4.00 per 1,000 gallons for usage above 15,000 gallons. Commercial customer’s base charges are based upon meter size, and range from $10.63 to $112.27. An irrigation meter is $18.91 per month. There is also a charge per thousand gallons, the same tiers as the residential rates of $1.77, $3.50, and $4.00, except the graduation from the lower tier to the higher tier(s) is calculated based on previous consumption. The Utilities requires payment of all utility bills to be paid by the due date stated on the monthly bill. A ten percent penalty is assessed for payments not received by the due date. The Utility may discontinue service of a customer not complying with the disconnect policy of the Utility after receiving a written disconnect notice. Residential and Commercial/Industrial single phase electric customers that have their service discontinued will be charged a minimum of $50.00 to have their service reconnected. Commercial/Industrial three phase electric customers that have their service discontinued will be charged a minimum of $150.00 to have their service reconnected. Residential and Commercial/Industrial water customers that have their water shut-off will be charged a fee of $100.00 to have their water turned on/reconnected. There are no reconnections after 3:30 pm and payments for reconnection /turn on are not accepted at the property site; payments must be made prior to dispatching reconnection. Customers can come in to the office between the hours of 8:00 am and 4:30 pm to make the payment by cash, money order or credit card; or pay online or by phone with a credit card. The Utilities abides by the Cold Weather Rules. Deposit policy. Per our Deposit Policy, the Utility collects social security numbers from new accounts and utilizes a credit risk assessment tool called “Online Utility Exchange” to determine if a deposit is necessary as a proactive measure to try and reduce uncollectible accounts. The amount of the deposit required will depend on the risk identified with the customer. For residential customers, if there is a 68 percent or higher probability of non-default and no negative history (no disconnection for non-payment or late payments two or more times within 12 months) there is no deposit required. If there is a lower than 68 percent probability of nondefault, a deposit appropriate to the services supplied will be required before utility service will be extended. If the customer chooses not to provide a social security number, the deposit is automatically required. Residential deposit amounts are $100 for apartments, $100 for homes with water and sewer, $150 for homes with electric only services, and $250 for homes with all services (electric, water, and sewer). For commercial and industrial customers, a service agreement would need to be signed. Generally, a deposit of 2 times the estimated highest monthly bill will be required, with a minimum deposit of $250 for non-demand customers, and $1,000 for demand customers. If a personal guarantee is signed, a social security number is provided, and potentially could decrease the deposit to 1 month’s estimated highest bill. The deposit shall be in the form of a cash deposit, or an irrevocable letter of credit. The irrevocable letter of credit will be renewed as required and failure to do so will result in a charge equal to the amount of the letter of credit applied to the monthly utility bill. Deposits will be retained until the account is closed. The deposit will be returned to the customer within 45 days of termination of service, provided that the customer has paid in full all amounts due on the account. The appropriate interest will be applied to the account per state statutes.

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Statements of revenues, expenses and changes in net position. While the Statements of Net Position shows the change in financial assets/deferred outflows and liabilities/deferred inflows, the Statements of Revenues, Expenses and Changes in Net Position, provides answers as to the nature and source of these changes. As can be seen in Table A-2, revenues in excess of expenses was the main source of the increase in net position of $2,309,080 in fiscal 2016. A closer examination of the individual categories affecting the source of changes in net position is discussed below:

TABLE A-2 Condensed Statements of Revenues, Expenses and Changes in Net Position

Revenues Operating Nonoperating Total revenues Expenses Operating Nonoperating Total expenses Income before contributions and operating transfers Capital contributions - developer infrastructure and connection fees Capital contributions of asset from City Transfers from other City funds Transfers to other City funds

2016

2015

Increase (Decrease)

$ 36,637,917 594,123

$ 34,754,259 576,984

$ 1,883,658 17,139

37,232,040

35,331,243

1,900,797

34,300,740 420,451

32,310,449 172,912

1,990,291 247,539

34,721,191

32,483,361

2,237,830

2,510,849 358,684 73,002 300,000 (1,089,287)

2,847,882 253,934 189,669 94,703 (854,743)

(337,033) 104,750 (116,667) 205,297 (234,544)

2,153,248

2,531,445

(378,197)

330,923

-

Change in net position

2,484,171

2,531,445

Net position, January 1

55,885,878

53,354,433

Change in net position before special item Special item

Prior period adjustment (note 7)

(175,091)

Net position, December 31

$ 58,194,958

$ 55,885,878

330,923 (47,274) 2,531,445 (175,091) $ 2,309,080

Revenues. Table A-2 shows that operating revenue increased by 5.4 percent in 2016 for the Electric and Water Departments combined. The Electric Department operating revenue was impacted by the territory acquisition in September and October 2015 adding approximately 800 residential customers and 130 commercial customers, and the territory acquisition in September 2016 adding approximately 200 customers, mostly commercial. Nonoperating revenue is comprised of transmission rebate revenue in the Electric Department, and water tower lease revenue in the Water Department, as well as connection fees in both departments. Regarding transmission rebates, in 2007 the Electric Utility partnered with Midwest Municipal Transmission Group (MMTG) in order to have our transmission assets recognized in the Midwest Independent Transmission System Operator (MISO) market. In doing so, our transmission assets generate a revenue rebate, which in turn helps keep our rates down. In 2016, rebates received from our 2014 filings were approximately $7,000 per month. The Water Department is receiving lease revenue from Sprint and Verizon for antennas on the water towers. In 2016 this amount was approximately $173,000, and will continue for the duration of the multi-year contracts.

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Both Electric and Water Connection Fees each increased approximately $100,000 over the prior year as new construction picked up. Additionally, the security business line was sold in 2016 for a net amount of approximately $331,000. Total expenses. In reviewing total expenses in Table A-2 you will notice that there was an increase of 6.9 percent overall, with the electric department increasing 7.2 percent, and the water department increasing 2.1 percent. Purchased Power is the biggest electric department expense and it was up 8.9 percent. Capital Assets and Debt Administration Capital assets. The Utilities’ investment in capital assets for its business-type activities as of December 31, 2016 amounts to $59,150,780 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements and equipment. A table summarizing the balances by fund follows: 2016 Land Intangible Land improvements Buildings Machinery and equipment Infrastructure Construction in progress

$

Total

444,435 9,804,951 7,065 2,129,112 1,671,535 43,875,332 1,218,350

$ 59,150,780

Increase (Decrease)

2015 $

361,351 8,000 2,015,126 1,626,892 43,949,775 190,006

$ 48,151,150

$

83,084 9,804,951 (935) 113,986 44,643 (74,443) 1,028,344

$ 10,999,630

The total increase in the Utilities’ investment in capital assets for the current fiscal year was 22.8 percent. Major capital asset events during the current fiscal year included the following: 

The Electric Department acquired additional territory that included approximately 200 customers, increasing Infrastructure.



The Electric Department made a down payment on their buy-in to the power contract with MMPA, resulting in the addition of an intangible asset of $9,373,794.



Construction in progress increased as projects started in the current year were not completed and resulted in carryover projects for 2017.

Additional information on the Utilities’ capital assets can be found in Note 2B starting on page 34 of this report. Long-term debt. At year end, the Utilities had $20,481,859 in long-term debt up from $9,846,426 in fiscal 2015. The increase is largely from a new bond issue of $9,755,000 to cover the down payment to MMPA mentioned above. More detailed information about the Utilities’ long-term liabilities can be found in Note 2C starting on page 35 and below:

G.O. revenue bonds Revenue bonds Unamortized premium on bonds Promissory note Compensated absences payable Net pension liability OPEB liability Total

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101

Increase (Decrease)

2016

2015

$ 2,230,000 11,955,000 536,331 1,214,076 351,199 4,124,708 70,545

$ 2,535,000 2,985,000 65,234 1,408,368 312,539 2,477,244 63,041

$

$ 20,481,859

$ 9,846,426

$ 10,635,433

(305,000) 8,970,000 471,097 (194,292) 38,660 1,647,464 7,504

Economic Factors and Next Year’s Budgets and Rates The increased emphasis toward renewable energy and away from coal-based energy, the challenge to reduce energy and water consumption while still maintaining the existing infrastructure and the smart grid developments are all factors that point to potential increased cost in the coming years. It is the Utilities’ goal to not have to rely on increasing rates to meet those increases but continue to look for ways to increase efficiencies and reduce costs, while providing excellent customer service. Elk River Municipal Utilities’ mission is to provide safe, cost-effective, reliable, quality utilities in an environmentally and financially responsible manner. We have met that mission in our customer service delivery and our successful financial results, and will continue to strive to meet that mission in the future. Contacting the Utilities Financial Manager This financial report is designed to provide our citizens, customers, investors and creditors with a general overview of the Utilities’ finances and to demonstrate the Utilities’ accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Theresa Slominski, Elk River Municipal Utilities, PO Box 430, Elk River, Minnesota 55330-0430 or at 13069 Orono Parkway in Elk River, MN.

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102

FINANCIAL STATEMENTS ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA

FOR THE YEAR ENDED DECEMBER 31, 2016

-19-

103

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA STATEMENT OF NET POSITION DECEMBER 31, 2016

ASSETS CURRENT ASSETS Cash and temporary investments Receivables Accrued interest Accounts, net of allowance Special assessments Other receivables Due from other City funds Inventories Prepaid expenses TOTAL CURRENT ASSETS CAPITAL ASSETS Land Intangible Land improvements Buildings Equipment and machinery Infrastructure Construction in progress CAPITAL ASSETS, COST LESS ACCUMULATED DEPRECIATION TOTAL CAPITAL ASSETS, NET OTHER ASSETS Restricted cash TOTAL ASSETS DEFERRED OUTFLOWS OF RESOURCES Deferred charges on refunding Deferred pension resources TOTAL DEFERRED OUTFLOWS OF RESOURCES

The notes to the financial statements are an integral part of this statement. -20-

104

Electric

Water

Total

$ 13,683,031

$ 4,255,964

$ 17,938,995

4,550 2,674,555 1,624 57,025 10,416 793,380 197,439

1,138 93,289 80,499 7,709 429,289 13,004 27,981

5,688 2,767,844 82,123 64,734 439,705 806,384 225,420

17,422,020

4,908,873

22,330,893

331,538 9,804,951 23,389 3,065,866 3,177,803 45,155,721 36,785

112,897 866,867 403,292 33,901,914 1,181,565

444,435 9,804,951 23,389 3,932,733 3,581,095 79,057,635 1,218,350

61,596,053 (23,639,805)

36,466,535 (15,272,003)

98,062,588 (38,911,808)

37,956,248

21,194,532

59,150,780

997,660

-

997,660

56,375,928

26,103,405

82,479,333

41,216 1,485,023

10,304 148,638

51,520 1,633,661

1,526,239

158,942

1,685,181

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA STATEMENT OF NET POSITION - CONTINUED DECEMBER 31, 2016 Electric CURRENT LIABILITIES Accounts payable Salaries and benefits payable Accrued interest payable Due to other City funds Due to other governments Customer deposits payable Unearned revenue Compensated absences - current portion Notes payable - current portion Bonds payable - current portion

$ 2,682,415 100,644 155,971 755,539 113,078 724,770 875 156,874 195,216 706,000

TOTAL CURRENT LIABILITIES

Water 233,076 15,483 23,598 23,596 2,125 109,686 89,746 23,217 244,000

$ 2,915,491 116,127 179,569 779,135 115,203 834,456 90,621 180,091 195,216 950,000

5,591,382

764,527

6,355,909

70,545 152,133 1,018,860 12,380,218 3,749,423

18,975 1,391,113 375,285

70,545 171,108 1,018,860 13,771,331 4,124,708

TOTAL NON-CURRENT LIABILITIES

17,371,179

1,785,373

19,156,552

TOTAL LIABILITIES

22,962,561

2,549,900

25,512,461

415,506

41,589

457,095

23,697,170 997,660 9,829,270

19,569,723 4,101,135

43,266,893 997,660 13,930,405

$ 34,524,100

$ 23,670,858

$ 58,194,958

NON-CURRENT LIABILITIES Net other postemployment benefits liability Compensated absences - less current portion Notes payable - less current portion Bonds payable, net - less current portion Net pension liability

DEFERRED INFLOWS OF RESOURCES Deferred pension resources NET POSITION Net investment in capital assets Restricted for debt service Unrestricted TOTAL NET POSITION

The notes to the financial statements are an integral part of this statement. -21-

105

$

Total

THIS PAGE IS LEFT BLANK INTENTIONALLY

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106

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR THE YEAR ENDED DECEMBER 31, 2016

OPERATING REVENUES Charges for services Security systems LFG project Generation credit Connection maintenance Customer penalties TOTAL OPERATING REVENUES OPERATING EXPENSES Purchased power Production Distribution Depreciation Customer accounts General and administrative TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS)

Electric

Water

Total

$ 33,481,349 177,572 1,087,749 (804,608) 269,197 253,137

$ 2,121,380 34,999 17,142

$ 35,602,729 177,572 1,087,749 (804,608) 304,196 270,279

34,464,396

2,173,521

36,637,917

23,991,069 753,870 1,287,940 2,005,093 534,273 3,254,354

493,385 149,744 1,148,310 75,565 607,137

23,991,069 1,247,255 1,437,684 3,153,403 609,838 3,861,491

31,826,599

2,474,141

34,300,740

2,637,797

NONOPERATING REVENUES (EXPENSES) Interest income Miscellaneous revenue Interest expense and other Gain (loss) on sale of capital assets Bond issuance costs

90,804 281,702 (198,194) (80,126) (85,195)

TOTAL NONOPERATING REVENUES (EXPENSES)

8,991

(300,620)

2,337,177

24,917 196,700 (57,986) 1,050 -

115,721 478,402 (256,180) (79,076) (85,195)

164,681

173,672

INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS

2,646,788

(135,939)

2,510,849

CAPITAL CONTRIBUTIONS DEVELOPER INFRASTRUCTURE AND CONNECTION FEES CONTRIBUTION OF ASSETS FROM CITY TRANSFERS FROM OTHER CITY FUNDS TRANSFERS TO OTHER CITY FUNDS

(1,089,287)

358,684 73,002 300,000 -

358,684 73,002 300,000 (1,089,287)

TOTAL CONTRIBUTIONS AND TRANSFERS

(1,089,287)

731,686

(357,601)

CHANGE IN NET POSITION BEFORE SPECIAL ITEM

1,557,501

595,747

2,153,248

330,923

-

330,923

CHANGE IN NET POSITION

1,888,424

595,747

2,484,171

NET POSITION, JANUARY 1

32,635,676

23,250,202

55,885,878

SPECIAL ITEM

PRIOR PERIOD ADJUSTMENT (NOTE 7)

-

NET POSITION, DECEMBER 31

$ 34,524,100

The notes to the financial statements are an integral part of this statement. -23-

107

(175,091) $ 23,670,858

(175,091) $ 58,194,958

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2016

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users Other operating cash receipts Payments to suppliers Payments to employees NET CASH PROVIDED BY OPERATING ACTIVITIES

Electric

Water

Total

$ 34,621,945 288,497 (27,213,605) (2,243,498)

$ 2,213,416 191,150 (798,435) (487,884)

$ 36,835,361 479,647 (28,012,040) (2,731,382)

5,453,339

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from City Transfers to City (Increase) decrease in due from other City funds Increase (decrease) in due to other City funds Sale of business line

(1,089,287) (396) 96,106 330,923

NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets Proceeds from sale of capital assets Proceeds from connection fees Principal payments on revenue bonds Proceeds of bonds issued, net of issuance costs and premium on bonds Interest paid on revenue bonds Principal payments on promissory note NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments

(662,654)

95,265

300,000 (1,089,287) (205,693) 96,668 330,923

(567,389)

(1,415,644) 1,050 358,684 (233,000)

(13,838,561) 45,268 358,684 (2,460,000)

11,545,329 (119,657) (194,292)

(60,193) -

11,545,329 (179,850) (194,292)

(3,374,319)

(1,349,103)

(4,723,422)

1,505,065

CASH AND CASH EQUIVALENTS, JANUARY 1

300,000 (205,297) 562 -

6,571,586

(12,422,917) 44,218 (2,227,000)

88,699

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

1,118,247

24,390

(111,201)

113,089

1,393,864

13,175,626

4,367,165

17,542,791

CASH AND CASH EQUIVALENTS, DECEMBER 31

$ 14,680,691

$ 4,255,964

$ 18,936,655

RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE STATEMENT OF NET POSITION Cash and temporary investments Restricted cash

$ 13,683,031 997,660

$ 4,255,964 -

$ 17,938,995 997,660

$ 14,680,691

$ 4,255,964

$ 18,936,655

TOTAL CASH AND CASH EQUIVALENTS The notes to the financial statements are an integral part of this statement. -24-

108

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA STATEMENT OF CASH FLOWS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2016

Electric RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by operating activities Other revenue related to operations Bad debt expense Depreciation (Increase) decrease in assets/deferred outflows: Accounts receivable Other receivables Special assessments receivable Inventories Prepaid expenses Deferred pension resources Increase (decrease) in liabilities/deferred inflows: Accounts payable Salaries and benefits payable Net other postemployment benefits liability Unearned revenue Compensated absences payable Due to other governments Customer deposits payable Net pension liability Deferred pension resources

Water

$ 2,637,797

$

281,702 1,963 2,005,093

NET CASH PROVIDED BY OPERATING ACTIVITIES

(300,620)

Total

$ 2,337,177

196,700 1,148,310

478,402 1,963 3,153,403

(83,518) 6,795 4,898 198,183 (18,660) (1,212,074)

23,430 (5,550) (7,623) 1,011 1,044 (120,148)

(60,088) 1,245 (2,725) 199,194 (17,616) (1,332,222)

(95,736) 22,614 7,504 875 25,477 (26,936) 235,294 1,506,308 (44,240)

9,205 1,310 3,455 13,183 (851) 20,633 141,156 (6,398)

(86,531) 23,924 7,504 4,330 38,660 (27,787) 255,927 1,647,464 (50,638)

$ 5,453,339

$ 1,118,247

$ 6,571,586

$

33,681

$

747

$

34,428

Amortization of deferred charges on refunding

$

6,139

$

1,505

$

7,644

Capital assets purchased on account

$

411,157

$

129,747

$

540,904

Contribution of capital assets

$

-

$

73,002

$

73,002

NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES Amortization of bond premium

The notes to the financial statements are an integral part of this statement. -25-

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THIS PAGE IS LEFT BLANK INTENTIONALLY

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Nature of the business The Elk River Municipal Utilities (the Utilities) is a municipal utility established by action of the City of Elk River (the City) pursuant to Minnesota statute 412.321 and consequently it’s Electric and Water funds are enterprise funds of the City. The Public Utilities Commission (the Commission) members are appointed by the City Council. The Commission determines all matters of policy. The Commission appoints personnel responsible for the proper administration of all affairs relating to the Utilities. The Utilities distributes electricity and water to the residents of Elk River, Dayton, Big Lake and Otsego, Minnesota. The Utilities has considered all potential units for which it is financially accountable, and other organizations for which the nature and significance of their relationship with the Utilities are such that exclusion would cause the Utilities’ financial statements to be misleading or incomplete. The Governmental Accounting Standards Board (GASB) has set forth criteria to be considered in determining financial accountability. These criteria include appointing a voting majority of an organization’s governing body, and (1) the ability of the primary government to impose its will on that organization or (2) the potential for the organization to provide specific benefits to, or impose specific financial burdens on the primary government. There are no component units. B. Measurement focus, basis of accounting and basis of presentation The accounts of the Utilities are organized and operated on the basis of funds. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is maintained consistently with legal and managerial requirements. Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. Non-exchange transactions, in which the Utilities receives value without directly giving equal value in return, include property taxes, grants, entitlements and donations. Revenue from property taxes is recognized in the year for which the tax is levied. Revenue from grants, entitlements and donations is recognized in the year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the Utilities must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the Utilities on a reimbursement basis. Grants and entitlements received before eligibility requirements are met are also recorded as unearned revenue. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Proprietary funds are accounted for on the flow of economic resources measurement focus and use the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. Proprietary funds include the following fund type: Enterprise funds account for those operations that are financed and operated in a manner similar to private business or where the Utilities has decided that the determination of revenues earned, costs incurred and/or net income is necessary for management accountability. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Electric and Water enterprise funds are charges to customers for sales and service. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. -27-

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED The Utilities reports the following major proprietary funds: The Electric fund accounts for the electric distribution operations. The Water fund accounts for the water distribution system. C. Assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position Cash and cash equivalents The Utilities’ cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other authorized investments. Earnings from such investments are allocated on the basis of applicable participation by each of the funds. The Utilities may also invest idle funds as authorized by Minnesota statutes, as follows: 1.

Direct obligations or obligations guaranteed by the United States or its agencies.

2.

Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the highest credit rating, rated in one of the two highest rating categories by a statistical rating agency, and have a final maturity of thirteen months or less.

3.

General obligations of a state or local government with taxing powers rated “A” or better; revenue obligations rated “AA” or better.

4.

General obligations of the Minnesota Housing Finance Agency rated “A” or better.

5.

Obligation of a school district with an original maturity not exceeding 13 months and (i) rated in the highest category by a national bond rating service or (ii) enrolled in the credit enhancement program pursuant to statute section 126C.55.

6.

Bankers’ acceptances of United States banks eligible for purchase by the Federal Reserve System.

7.

Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality category by at least two nationally recognized rating agencies, and maturing in 270 days or less.

8.

Repurchase or reverse repurchase agreements and securities lending agreements with financial institutions qualified as a “depository” by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York, or certain Minnesota securities broker-dealers.

9.

Guaranteed Investment Contracts (GIC's) issued or guaranteed by a United States commercial bank, a domestic branch of a foreign bank, a United States insurance company, or its Canadian subsidiary, whose similar debt obligations were rated in one of the top two rating categories by a nationally recognized rating agency.

Broker money market funds operate in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the shares.

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED The Utilities categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The Utilities recurring fair value measurements are listed in detail on page 33 and are valued using a matrix pricing model (Level 2 inputs). Accounts receivable Accounts receivable include amounts billed for services provided before year end. The Utilities has established a reserve for uncollectible accounts which is adjusted annually based on the receivable activity. No substantial losses from present receivable balances are anticipated. A summary of the uncollectible account balances at December 31, 2016 is as follows:

2016 Electric Water

$

109,845 26,250

Total

$

136,095

Interfund receivables and payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “interfund receivables/payables” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds”. Inventories Inventories are stated at lower of average cost or market on the first-in, first-out (FIFO) method. Prepaid items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. Restricted assets The amounts in the restricted cash account are set aside in accordance with the issuing resolution for specific bond issues. They will be used for future debt service. Capital assets Capital assets are stated at cost. Capital assets are defined by the Utilities as assets with an initial individual cost of more than $5,000 and an estimated useful life in excess of two years. Expenditures for maintenance and repairs are charged to operations and expenditures that extend the useful life of the asset are capitalized and depreciated. When assets are retired or sold, the related cost and accumulated depreciation are removed from the accounts and any gain or loss on disposition is included in operations. Major expenditures for improvements or capital asset projects are capitalized as projects are constructed.

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED The Utilities follow the policy of providing depreciation on the straight-line method over the estimated useful lives of the assets, which are as follows: Lives in Years Electric Water

Description Production Transmission Distribution General Machinery, Tools, and Equipment Automobiles

4 - 20 30 10 - 33 10 - 50 5 - 10 3-8

25 - 50 25 - 50 10 - 50 5 - 10 3-8

Deferred outflows of resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The Utility has two items, a deferred charge on refunding and deferred pension resources, which qualify for reporting in this category. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. Deferred pension resources result from actuarial calculation and current year pension contributions subsequent to the measurement date. Long-term obligations Long-term debt is reflected as a liability in the fund issuing the obligation. Bond premiums and discounts are amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as an expense in the period incurred. Compensated absences Vacation: All vacation benefits can be carried over from year to year and will be payable upon termination. Unused vacation carryover is limited to the number of hours accrued during the previous year. Sick Leave: Sick leave can be accumulated to a maximum of 960 hours from year to year. Upon termination or retirement, employees will have 50 percent of unused sick leave, up to a maximum of 960 hours, converted to cash and deposited into their Post Health Care Savings account. The liability for vacation and sick pay is reported as a liability in the respective funds at year end. Postemployment benefits other than pensions Under Minnesota statute 471.61, subdivision 2b., public employers must allow retirees and their dependents to continue coverage indefinitely in an employer-sponsored health care plan, under the following conditions: 1) Retirees must be receiving (or eligible to receive) an annuity from a Minnesota public pension plan, 2) Coverage must continue in group plan until age 65, and retirees must pay no more than the group premium, and 3) Retirees may obtain dependent coverage immediately before retirement. All premiums are funded on a pay-as-you-go basis. The liability was actuarially determined, in accordance with GASB Statement 45, at January 1, 2014.

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Pensions For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions to/deductions from PERA’s fiduciary net position have been determined on the same basis as they are reported by PERA except that PERA’s fiscal year end is June 30. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Performance Metrics and Incentive Compensation Through Utilities Performance Metric-based Incentive Compensation system (UPMIC) the Utilities employees will have an opportunity, as a group, to each earn a maximum of 2 percent of their total gross wage paid during the Measurement Period. The percentage of UMPIC is calculated using a Score Card. The Score Card has three categories: Safety, Reliability and Quality of Utility Services which are divided into various weighted factors. This incentive was created to help the Utilities to become more efficient and successful in meeting strategic goals and mission and deliver improved value to the Utilities customers. The liability at year end is recorded as part of accrued wages. Deferred inflows of resources In addition to liabilities, the statement of net position and fund financial statements will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The Utility has only one type of item which qualifies for reporting in this category. The item, deferred pension resources, is reported only in the statement of net position and results from actuarial calculations. Net position Net position represents the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources. Net position is displayed in three components: a.

Net investment in capital assets - Consists of capital assets, net of accumulated depreciation reduced by any outstanding debt attributable to acquire capital assets.

b.

Restricted net position - Consists of net position restricted when there are limitations imposed on their use through external restrictions imposed by creditors, grantors, laws or regulations of other governments.

c.

Unrestricted net position - All other net position that do not meet the definition of “restricted” or “net investment in capital assets”.

When both restricted and unrestricted resources are available for use, it is the Utilities’ policy to use restricted resources first, then unrestricted resources as they are needed.

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115

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 2: DETAILED NOTES ON ALL FUNDS A. Deposits and investments Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the Utilities’ deposits and investments may not be returned or the Utility will not be able to recover collateral securities in the possession of an outside party. In accordance with Minnesota statutes and as authorized by the Commission, the Utility maintains deposits at those depository banks, all of which are members of the Federal Reserve System. Minnesota statutes require that all Utility deposits be protected by insurance, surety bond or collateral. The market value of collateral pledged must equal 110 percent of the deposits not covered by insurance, bonds, or irrevocable standby letter of credit from Federal Home Loan Banks. Authorized collateral in lieu of a corporate surety bond includes: 

United States government Treasury bills, Treasury notes, Treasury bonds;



Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation service available to the government entity;



General obligation securities of any state or local government with taxing powers which is rated “A” or better by a national bond rating service, or revenue obligation securities of any state or local government with taxing powers which is rated “AA” or better by a national bond rating service;



General obligation securities of a local government with taxing powers may be pledged as collateral against funds deposited by that same local government entity;



Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by written evidence that the bank’s public debt is rated “AA” or better by Moody’s Investors Service, Inc., or Standard & Poor’s Corporation; and



Time deposits that are fully insured by any federal agency.

Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a Federal Reserve Bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. The selection should be approved by the government entity. At December 31, 2016, the Utilities’ carrying amount of deposits was $15,362,053 and the bank balance was $15,400,336. Of the bank balance $354,495 was covered by federal depository insurance, and the remaining balance was covered by collateral held by the pledging financial institution’s agent in the Utilities’ name.

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 2: DETAILED NOTES ON ALL FUNDS - CONTINUED Investments The Utilities’ investment balances were as follows for December 31, 2016:

Types of Investments Pooled investments Broker Money Markets

Credit Quality/ Ratings (1)

Segmented Time Distribution (2)

N/A

less than 6 months

N/A N/A N/A

less than 6 months 6 months to 1 year 1 to 3 years

Non-pooled investments Negotiable certificates of deposits Negotiable certificates of deposits Negotiable certificates of deposits

Amount $

$

3,540,478

Total investments

$

Fair Value Measurement Using Level 2 Level 3

33,324

401,566 813,501 2,325,411

Total non-pooled investments

Level 1

3,573,802

-

$

$

-

401,566 813,501 2,325,411

$

-

3,540,478 $

3,540,478

$

-

(1) Ratings were provided by various credit rating agencies where applicable to indicate associated credit risk. (2) Interest rate risk is disclosed using the segmented time distribution method. N/A Indicates not applicable. A reconciliation of cash and temporary investments as shown in the financial statements for the Utilities follows: 2016 Deposits Investments Cash on hand

$ 15,362,053 3,573,802 800

Total

$ 18,936,655

Cash and temporary investments Unrestricted Restricted

$ 17,938,995 997,660

Total

$ 18,936,655

The investments of the Utility are subject to the following risks: 

Credit Risk. Is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Ratings are provided by various credit rating agencies and where applicable, indicate associated credit risk. Minnesota statutes and the Utilities’ investment policy limit the Utilities’ investments to the list on page 28 of the notes.



Custodial Credit Risk. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. According to their investment policy the Utilities’ portfolio maturities shall be staggered to avoid undue concentration of assets with one broker-dealer or financial institution. -33-

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 2: DETAILED NOTES ON ALL FUNDS - CONTINUED 

Concentration of Credit Risk. Is the risk of loss attributed to the magnitude of a government's investment in a single issuer. According to their investment policy the Utilities’ portfolio maturities shall be staggered to avoid undue concentration of assets in any one type of instrument.



Interest Rate Risk. Is the risk that changes in interest rates will adversely affect the fair value of an investment. According to their investment policy the Utilities’ will stagger maturities to avoid undue concentration of assets at a specific maturity sector.

B. Capital assets Capital asset activity for the year ended December 31, 2016 was as follows: Beginning Balance Capital assets not being depreciated Land Intangible Construction in progress

$

361,351 190,006

Total capital assets not being depreciated Capital assets being depreciated Land improvements Buildings Machinery and equipment Infrastructure Total capital assets being depreciated Less accumulated depreciation for Land improvements Buildings Machinery and equipment Infrastructure Total accumulated depreciation Total capital assets being depreciated, net Business-type activities capital assets, net

Increases

$

83,084 9,804,951 3,468,509

Ending Balance

Decreases

$

(2,440,165)

$

444,435 9,804,951 1,218,350

551,357

13,356,544

(2,440,165)

11,467,736

23,389 3,704,415 3,418,127 76,466,257

228,318 340,101 2,967,590

(177,133) (376,212)

23,389 3,932,733 3,581,095 79,057,635

83,612,188

3,536,009

(553,345)

86,594,852

(15,389) (1,689,289) (1,791,235) (32,516,482)

(935) (114,332) (273,634) (2,764,502)

155,309 98,681

(16,324) (1,803,621) (1,909,560) (35,182,303)

(36,012,395)

(3,153,403)

253,990

(38,911,808)

47,599,793

382,606

(299,355)

47,683,044

$ 48,151,150

$ 13,739,150

$ (2,739,520)

$ 59,150,780

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 2: DETAILED NOTES ON ALL FUNDS - CONTINUED Depreciation expense was charged to functions/programs of the Utilities as follows: 2016 Business-type Activities Electric Water

$ 2,005,093 1,148,310

Total depreciation expense - business-type activities

$ 3,153,403

C. Long-term debt General obligation revenue bonds The City of Elk River issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. The following bonds are to be paid out of Utilities’ revenues and are backed by the full faith and credit of the City. Description G.O. Water Revenue Refunding Bonds of 2008 G.O. Capital Improvement Plan Bonds of 2010A

Authorized and Issued

Interest Rate

Issue Date

Maturity Date

Balance at Year End

$ 3,085,000

2.75 - 3.65 %

02/20/08

02/01/22

$ 1,480,000

2.00 - 4.00

04/21/10

08/01/23

750,000

1,265,000

Total G.O. Revenue Bonds

$ 2,230,000

The annual debt service requirements to maturity for the general obligation revenue bonds are as follows: Year Ending December 31,

Principal

2017 2018 2019 2020 2021 2022-2023

$

Total

Interest

320,000 335,000 340,000 355,000 370,000 510,000

$

74,850 63,948 51,990 39,498 26,270 14,728

$ 2,230,000

$

271,284

Total $

394,850 398,948 391,990 394,498 396,270 524,728

$ 2,501,284

The G.O. revenue bonds were issued to finance capital improvements and are to be repaid from future revenues pledged from the Water and Electric funds and are backed by the full faith and credit of the Utilities. In 2016, annual principal and interest payment on the bonds required about 0.3 percent of revenues from the Electric fund. The principal and interest paid and total customer revenues for the Electric fund were $96,140 and $34,464,396, respectively. In 2016, annual principal and interest payment on the bonds required about 13.5 percent of revenues from the Water fund. The principal and interest paid and total customer revenues for the Water fund were $293,193 and $2,173,521, respectively.

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 2: DETAILED NOTES ON ALL FUNDS - CONTINUED Revenue bonds The following bonds were issued to finance capital improvements in the Electric fund. They will be retired from net revenues of the fund. Description Electric Revenue Refunding Bonds, Series 2014A Electric Revenue Bonds, Series 2016A Electric Revenue Refunding Bonds, Series 2016B

Interest Rate

Authorized and Issued $ 2,030,000 9,755,000 1,370,000

Issue Date

Maturity Date

2.00-4.00 % 2.00-4.00

03/13/14 07/14/16

08/01/18 02/01/36

2.00-4.00

07/14/16

02/01/22

Balance at Year End $

830,000 9,755,000 1,370,000

Total Revenue Bonds

$ 11,955,000

The annual debt service requirements to maturity for the revenue bonds are as follows: Year Ending December 31,

Principal

2017 2018 2019 2020 2021 2022-2026 2027-2031 2032-2036

$

Total

630,000 640,000 635,000 665,000 680,000 2,720,000 2,810,000 3,175,000

$ 11,955,000

Interest $

334,457 307,425 286,375 264,925 242,675 934,750 618,056 240,169

$ 3,228,832

Total $

964,457 947,425 921,375 929,925 922,675 3,654,750 3,428,056 3,415,169

$ 15,183,832

The revenue bonds were issued to finance the acquisition and construction of major capital facilities and are to be repaid from future revenues pledged from the Electric fund. In 2016, annual principal and interest payment on the bonds required about 6.5 percent of revenues from the Electric fund. Principal and interest paid and total customer revenues for the Electric fund were $2,250,517 and $34,464,396, respectively. Promissory note The Utilities has issued a promissory note to provide for construction of a landfill gas generator. The note is to be paid from revenue of the system and is secured by the facility. Description Landfill Generator Note

Authorized and Issued

Interest Rate

$ 3,521,000

-%

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Issue Date

Maturity Date

Balance at Year End

03/19/02

02/19/22

$ 1,214,076

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 2: DETAILED NOTES ON ALL FUNDS - CONTINUED The annual debt service requirements to maturity for the generator note are as follows: Year Ending December 31,

Principal

Interest

Total

2017 2018 2019 2020 2021 2022

$

195,216 198,252 200,916 203,952 206,616 209,124

$

-

$

195,216 198,252 200,916 203,952 206,616 209,124

Total

$ 1,214,076

$

-

$ 1,214,076

Changes in long-term liabilities Long-term liability activity for the year ended December 31, 2016 was as follows: Beginning Balance Business-type activities Bonds payable General obligation revenue bonds Revenue bonds Unamortized premium on bonds Total bonds payable, net Notes payable Compensated absences payable Net pension liability GERF OPEB liability Business-type activity long-term liabilities

$ 2,535,000 2,985,000

Increases

$

Decreases

11,125,000

$

Ending Balance

(305,000) (2,155,000)

$ 2,230,000 11,955,000

Due Within One Year

$

320,000 630,000

65,234

505,525

(34,428)

536,331

-

5,585,234

11,630,525

(2,494,428)

14,721,331

950,000

1,408,368

-

(194,292)

1,214,076

195,216

312,539

182,294

(143,634)

351,199

180,091

2,477,244 63,041

1,884,181 10,559

(236,717) (3,055)

4,124,708 70,545

-

$ 9,846,426

$ 13,707,559

$ (3,072,126)

$ 20,481,859

$ 1,325,307

Current refunding On July 14, 2016 the Utilities issued $1,370,000 of 2016B Electric Revenue Refunding Bonds. The bonds bear an average coupon rate of 2.63 percent and were used to call $1,750,000 of the outstanding principal of the 2007A Electric Revenue Bonds. As a result of the refunding issue, the Utilities will save $121,254 in debt service payments and achieve an economic gain (the present value of the difference between the old and the new debt service) of $94,737.

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 2: DETAILED NOTES ON ALL FUNDS - CONTINUED D. Interfund receivables, payables and transfers The composition of interfund balances at year end is as follows: Receivable Fund Electric Electric Electric Electric

Payable Fund

Amount

City City City City

$

Total Electric fund receivable from City Water Water Water

300,000 439 128,850

Total Water fund receivable from City

Watermain project PERA aid TIF 22 Water Access Charge

429,289

Total receivable from City Electric Electric Electric Electric Electric Electric Electric

$

439,705

$

89,032 5,916 81,292 264,788 165,493 111,086 37,932

Total Electric fund payable to City City City

Sales tax/franchise fees Supplies 4th quarter billings PERA aid

10,416

City City City

City City City City City City City

2,172 4,025 2,464 1,755

Purpose

Shared costs Supplies December transfer of 4% of revenue 4th quarter franchise fees Billed sewer on behalf of City Billed garbage on behalf of City Billed stormwater on behalf of City

755,539

Water Water

22,258 1,338

Total Water fund payable to City

Shared costs Supplies

23,596

Total payable to City

$

779,135

Interfund transfers completed in 2016 are detailed as follows: Transfer from Other City Funds

Transfer out Electric Water Total transfers out

Transfer to Other City Funds

$

300,000

$ 1,089,287 -

$

300,000

$ 1,089,287

The transfer out of the Electric fund was the annual transfer of 4 percent of 2016 revenues to City funds. The transfer into the Water fund was for reimbursement related to the watermain project. -38-

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 3: DEFINED BENEFIT PENSION PLANS - STATEWIDE A. Plan description The Utilities participates in the following cost-sharing multiple-employer defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA’s defined benefit pension plans are established and administered in accordance with Minnesota statutes, chapters 353 and 356. PERA’s defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code. General Employees Retirement Fund (GERF) All full-time and certain part-time employees of the Utilities are covered by the General Employees Retirement Fund (GERF). GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. The Basic Plan was closed to new members in 1967. All new members must participate in the Coordinated Plan. B. Benefits provided PERA provides retirement, disability and death benefits. Benefit provisions are established by Minnesota statute and can only be modified by the state legislature. Benefit increases are provided to benefit recipients each January. Increases are related to the funding ratio of the plan. Members in plans that are at least 90 percent funded for two consecutive years are given 2.5 percent increases. Members in plans that have not exceeded 90 percent funded, or have fallen below 80 percent, are given 1 percent increases. The benefit provisions stated in the following paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. GERF benefits Benefits are based on a member’s highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a step-rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of the first ten years of service and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first ten years and 1.7 percent for each remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For members hired prior to July 1, 1989, a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped at 66. C. Contributions Minnesota statutes chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the state legislature. GERF contributions Basic Plan members and Coordinated Plan members were required to contribute 9.10 percent and 6.50 percent, respectively, of their annual covered salary in calendar year 2016. The Utilities was required to contribute 11.78 percent of pay for Basic Plan members and 7.50 percent for Coordinated Plan members in calendar year 2016. The Utilities contributions to the GERF for the years ending December 31, 2016, 2015 and 2014 were $244,012, $230,074 and $203,953, respectively. The Utilities contributions were equal to the contractually required contributions for each year as set by Minnesota statute.

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 3: DEFINED BENEFIT PENSION PLANS - STATEWIDE - CONTINUED D. Pension costs GERF pension costs At December 31, 2016, the Utilities reported a liability of $4,124,708 for its proportionate share of the GERF’s net pension liability. The Utilities net pension liability reflected a reduction due to the State of Minnesota’s contribution of $6 million to the fund in 2016. The State of Minnesota is considered a non-employer contributing entity and the State’s contribution meets the definition of a special funding situation. The State of Minnesota’s proportionate share of the net pension liability associated with the Utilities totaled $53,908. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The Utilities proportion of the net pension liability was based on the Utilities contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2015 through June 30, 2016 relative to the total employer contributions received from all of PERA’s participating employers. At June 30, 2016, the Utilities proportionate share was 0.0508 percent which was an increase of 0.003 percent from its proportion measured as of June 30, 2015. For the year ended December 31, 2016, the Utilities recognized pension expense of $507,909 for its proportionate share of GERF’s pension expense. In addition, the Utilites recognized an additional $16,074 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota’s contribution of $6 million to the GERF. At December 31, 2016, the Utilities reported its proportionate share of GERF’s deferred outflows of resources and deferred inflows of resources, and its contributions subsequent to the measurement date, from the following sources:

Differences between expected and actual experience Changes in actuarial assumptions Net difference between projected and actual earnings on plan investments Changes in proportion Contributions to GERF subsequent to the measurement date Total

Deferred Outflows of Resources

Deferred Inflows of Resources

$

$

13,409 890,251

348,884 -

473,653 124,523

108,211

131,825

-

$ 1,633,661

$

457,095

Deferred outflows of resources totaling $131,825 related to pensions resulting from the Utility’s contributions to GERF subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2017. Other amounts reported as deferred outflows and inflows of resources related to GERF pensions will be recognized in pension expense as follows: 2017 2018 2019 2020

$

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273,260 184,636 437,860 148,985

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 3: DEFINED BENEFIT PENSION PLANS - STATEWIDE - CONTINUED E. Actuarial assumptions The total pension liability in the June 30, 2016 actuarial valuation was determined using the following actuarial assumptions: Inflation Active member payroll growth Investment rate of return

2.50% per year 3.25% per year 7.50%

Salary increases were based on a service-related table. Mortality rates for active members, retirees, survivors and disabilitants were based on RP-2014 tables for the GERF and RP-2000 tables for the PEPFF for males or females, as appropriate, with slight adjustments. Cost of living benefit increases for retirees are assumed to be: 1 percent per year for all future years for the GERF. Actuarial assumptions used in the June 30, 2016 valuation were based on the results of actuarial experience studies. The most recent four-year experience study in the GERF was completed in 2015. The experience study for PEPFF was for the period July 1, 2004, through June 30, 2009. The following changes in actuarial assumptions occurred in 2016: GERF 

The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2035 and 2.5 percent per year thereafter to 1.0 percent per year for all future years.



The assumed investment return was changed from 7.9 percent to 7.5 percent. The single discount rate was changed from 7.9 percent to 7.5 percent.



Other assumptions were changed pursuant to the experience study dated June 30, 2015. The assumed future salary increases, payroll growth and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth and 2.50 percent for inflation.

The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on a regular basis of the long-term expected rate of return using a building-block method in which best-estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Target Allocation

Asset Class Domestic stocks International stocks Bonds Alternative assets Cash

45.00 % 15.00 18.00 20.00 2.00

Total

100.00 %

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Long-term Expected Real Rate of Return 5.50 % 6.00 1.45 6.40 0.50

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 3: DEFINED BENEFIT PENSION PLANS - STATEWIDE - CONTINUED F. Discount rate The discount rate used to measure the total pension liability was 7.5 percent, a reduction from the 7.90 percent used in 2015. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at rates set in Minnesota statutes. Based on these assumptions, the fiduciary net position of the GERF was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. G. Pension liability sensitivity The following presents the Utilities proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the Utilities proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate:

Utilities Proportionate Share of NPL 1 Percent Decrease (6.50%) GERF

$

5,858,308

1 Percent Increase (8.50%)

Current (7.50%) $

4,124,708

$

2,696,694

H. Pension plan fiduciary net position Detailed information about each pension plan’s fiduciary net position is available in a separately-issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained on the Internet at www.mnpera.org. Note 4: OTHER INFORMATION A. Territorial acquisition agreement In 1991, the Utilities entered into a 20 year agreement to transfer ownership of electric plant and electric service to customers in certain areas receiving electric service from Anoka Electric Cooperative, Inc. (AEC). In 2010 the Utility completed the final purchase under this agreement. The agreed cost of property purchased from AEC is net book value. The Utilities also pays AEC for loss of revenue for each area acquired based on a formula outlined in the agreement. In addition, the Utilities will compensate AEC for the loss of revenue from the future sale of electricity to electric customers in the areas acquired from AEC for a period of ten years from the date of sale of each individual area. The Utilities paid $214 in 2016 for loss of revenues under this agreement. All amounts paid are included in property and equipment. In 2015, the Utilities entered into a 10 year agreement to transfer ownership of electric plant and electric service to customers in eight designated areas receiving service from Connexus Energy. Specific payment terms have been negotiated for 5 years, and if any of the eight areas are not acquired within this timeframe, the payment terms may be renegotiated. The agreed cost of property purchased from Connexus Energy is net book value, integration expenses, and a loss of revenue payment. The loss of revenue payment for each area acquired is based on a formula outlined in the agreement, payable for the subsequent ten years after initial purchase.

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 4: OTHER INFORMATION - CONTINUED The Utilities acquired designated service areas 1 and 2 in 2015 and 2016, respectively, for $877,807 and $663,583, respectively. The first loss of revenue payment was made in 2017 for $411,157 in accordance with the agreement. All amounts paid are included in property and equipment, and loss of revenue payments are included in intangible assets. B. Risk management The Utilities is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters for which the Utilities carries commercial insurance. The Utilities obtains insurance through participation in the League of Minnesota Cities Insurance Trust (LMCIT), which is a risk sharing pool with approximately 800 other governmental units. The Utilities pays an annual premium to LMCIT for its workers compensation and property and casualty insurance. The LMCIT is self-sustaining through member premiums and will reinsure for claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded the Utilities’ coverage in any of the past three fiscal years. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The Utilities’ management is not aware of any incurred but not reported claims. C. Commitments The Utilities has received notice from their power supplier regarding the existing all requirements power contract exercising their right to give ten years notice to cancel the contract. The cancellation date would be effective September 30, 2018. On May 14, 2013 the Utilities signed a new agreement with Minnesota Municipal Power Agency (MMPA). The Utilities entered into an agreement in 2007 with Central Minnesota Municipal Power Agency (CMMPA) to acquire an interest in the CAPX Initiative Brookings Project, a power transmission line in Minnesota. The project is a 250 mile, 345 kV AC transmission line with a rating of 2,300 MW, between Brookings, South Dakota, and the Southeast Twin Cities. In 2011 there was increased opportunity for investment, and subsequent agreements provide the Utilities with an ownership share of $5.6 million or 18.89 percent. The return on this investment through CMMPA is designed to provide approximately $124,000 annually over the 40 year project life. The transmission payments for 2016 were $51,478 of which $7,141 was receivable at December 31, 2016. Note 5: POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS Plan Description. Elk River Municipal Utilities (the Utilities) administers a multi-employer defined benefit healthcare plan (“the Retiree Health Plan”). The plan provides lifetime healthcare insurance for eligible retirees and their spouses through the Utilities group health insurance plan, which covers both active and retired members. Benefit provisions are reviewed intermittently through the relationship with the Utilities’ insurance broker. The Retiree Health Plan does not issue a publicly available financial report. Funding Policy. Contribution requirements are also reviewed at the time changes are made to the plan. The Utility contributes none of the cost of current-year premiums for eligible retired plan members and their spouses. For fiscal year 2016, the Utility contributed $0 to the plan. Plan members receiving benefits contribute 100 percent of their premium costs. In fiscal year 2016, total member contributions were $0. Annual OPEB Cost and Net OPEB Obligation. The Utilities’ annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC). The Utility has elected to calculate the ARC and related information using the alternative measurement method permitted by GASB Statement 45 for employers in plans with fewer than one hundred total plan members. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the Utilities annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the Utilities’ net OPEB obligation to the Retiree Health Plan:

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 5: POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS - CONTINUED Annual required contribution Interest on net OPEB obligation Adjustment to annual required contribution

$

Annual OPEB Cost (expense)

11,682 2,522 (3,645) 10,559

Contributions made Direct (explicit) subsidy Implicit subsidy

(3,055)

Increase in net OPEB obligation

7,504

Net OPEB obligation - beginning of year

63,041

Net OPEB obligation - end of year

$

70,545

The Utilities’ annual OPEB cost, the amount and percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for December 31, 2016 and the preceding two fiscal years was as follows:

Year Ending 12/31/2016 12/31/2015 12/31/2014

Annual OPEB Cost $

10,559 10,260 9,890

Three Year Trend Information Percentage Annual OPEB Employer Contributed Contribution $

3,055 2,151 -

29 % 21 -

Net OPEB Obligation 70,545 63,041 54,932

Funded Status and Funding Progress. As of December 31, 2014, the actuarial accrued liability for benefits was $68,948, all of which was unfunded. The covered payroll (annual payroll of active employees covered by the plan) was $2,810,413 and the ratio of the unfunded actuarial accrued liability to the covered payroll was 2.50 percent. The projection of future benefit payments for an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2016 Note 5: POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS - CONTINUED The following simplifying assumptions were made: Retirement age for active employees - Based on the historical average retirement age for the covered group, active plan members were assumed to retire at age 60, or at the first subsequent year in which the member would qualify for benefits. Participation Rate - It is assumed that 10 percent of active participants continue coverage until age 65. Participants are assumed to continue in their current coverage type (single or family). It is assumed that 100 percent of retirees will continue their current coverage until age 65. Life Expectancy - Life expectancies were based on mortality tables from the National Center for Health Statistics. The 2000 United States Life Tables for Males and for Females were used. Turnover - Non-group-specific age-based turnover data from GASB Statement 45 were used as the basis for assigning active members a probability of remaining employed until the assumed retirement age and for developing an expected future working lifetime assumption for purposes of allocating to periods the present value of total benefits to be paid. Healthcare cost trend rate - The expected rate of increase in healthcare insurance premiums was based on projections of the Office of the Actuary at the Centers for Medicare & Medicaid Services. A rate of 7.5 percent initially, reduced to an ultimate rate of 5.0 percent after eight years, was used. Health insurance premiums - 2014 health insurance premiums for retirees were used per the valuation report. Withdrawal - The probability that an employee will remain employed until the assumed retirement age was determined using non-group specific age-based turnover data provided in Table 1 in Paragraph 35b of GASB 45. Disability - None Actuarial Method - Projected Unit Credit with 30-year amortization of the unfunded liability. Valuation date - January 1, 2014 Based on the historical and expected returns of the Utilities’ short-term investment portfolio, a discount rate of 4.0 percent was used. In addition, a simplified version of the entry age actuarial cost method was used. The unfunded actuarial accrued liability is being amortized as a level dollar amount over an open basis. The remaining amortization period at December 31, 2014 was thirty years. Note 6: SPECIAL ITEM - DISCONTINUED OPERATION The Utilities agreed to a sale of its security business on September 30th, 2016. As a result of the sale of the security business, the Utilities has a gain of $330,293 reported as a special item on the financial statements. The gain includes the price of acquisition less the costs associated with the sale. Note 7: PRIOR PERIOD ADJUSTMENT - WATER FUND A prior period adjustment was recorded in the Water fund to reduce capital contribution of assets from the City recognized in 2015.

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130

REQUIRED SUPPLEMENTARY INFORMATION ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA

FOR THE YEAR ENDED DECEMBER 31, 2016

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2016 Schedule of Employer’s Share of PERA Net Pension Liability - General Employees Retirement Fund Required Supplementary Information

Fiscal Year Ending

Utilities Proportion of the Net Pension Liability

06/30/16 06/30/15

0.0508 % 0.0478

Utilities Proportionate Share of the Net Pension Liability (a)

State's Proportionate Share of the Net Pension Liability Associated with the Utilities (b)

$

$

4,124,708 2,477,244

53,908 -

Utilities Proportionate Share of the Net Pension Liability as a Percentage of Covered Payroll ((a+b)/c)

Total (a+b)

Utilities Covered Payroll (c)

$ 4,178,616 2,477,244

$ 3,151,720 2,811,834

132.6 % 88.1

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 68.9 % 78.2

Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available. Schedule of Employer’s PERA Contributions - General Employees Retirement Fund

Statutorily Required Contribution (a)

Year Ending 12/31/16 12/31/15

Required Supplementary Information Contributions in Relation to the Statutorily Contribution Utilities Required Deficiency Covered Contribution (Excess) Payroll (b) (a-b) (c)

$

244,012 230,074

$

244,012 230,074

$

-

$

3,253,493 3,067,653

Contributions as a Percentage of Covered Payroll (b/c) 7.5 % 7.5

Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available. Schedule of Funding Progress for the Other Postemployment Benefit Plan

Actuarial Valuation Date 12/31/2014 12/31/2011 12/31/2008

Actuarial Value of Assets $

Unfunded Actuarial Accrued Liability (UAAL)

Actuarial Accrued Liability -

$

68,948 42,681 56,892

$

68,948 42,681 56,892

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132

Funded Ratio -

Covered Payroll %

$ 2,810,413 2,286,547 2,300,000

UAAL as a Percentage of Covered Payroll 2.50 % 1.87 2.47

SUPPLEMENTARY INFORMATION ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA

FOR THE YEAR ENDED DECEMBER 31, 2016

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133

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA SUPPLEMENTARY INFORMATION SCHEDULE OF OPERATING REVENUES AND EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2016

OPERATING REVENUES Charges for services Elk River Otsego Big Lake Dayton Security systems LFG Project Generation credit Connection maintenance Customer penalties TOTAL OPERATING REVENUES OPERATING EXPENSES Purchased power Production Supervision and labor Natural gas Supplies and power for pumping Landfill gas expense Maintenance of structures Maintenance of equipment Maintenance of plant Total Transmission and distribution Supervision and labor Maintenance of overhead lines Maintenance of underground lines Maintenance of station equipment Transportation Maintenance of customer service Maintenance of customer meters Miscellaneous Total Services to City Depreciation Customer accounts expense Meter reading Billing and collection Bad debts Total

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134

Electric

Water

Total

$ 30,662,101 2,402,850 188,074 228,324 177,572 1,087,749 (804,608) 269,197 253,137

$ 2,121,380 34,999 17,142

$ 32,783,481 2,402,850 188,074 228,324 177,572 1,087,749 (804,608) 304,196 270,279

34,464,396

2,173,521

36,637,917

23,991,069

-

23,991,069

99,369 38,548 39,827 526,269 23,607 13,925 12,325

53,996 244,942 40,369 154,078 -

153,365 38,548 284,769 526,269 63,976 168,003 12,325

753,870

493,385

1,247,255

37,867 329,124 182,790 48,161 155,756 5,322 113,772 415,148

9,401 10,475 43,041 86,803 24

47,268 329,124 182,790 48,161 166,231 48,363 200,575 415,172

1,287,940

149,744

1,437,684

230,312

-

230,312

2,005,093

1,148,310

3,153,403

31,923 270,075 1,963

7,810 67,755 -

39,733 337,830 1,963

303,961

75,565

379,526

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA SUPPLEMENTARY INFORMATION SCHEDULE OF OPERATING REVENUES AND EXPENSES - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2016 Electric OPERATING EXPENSES - CONTINUED General and administrative Salaries Employee pensions and benefits Dues Office supplies and billing expense Office utilities and maintenance Consulting fees Legal and audit Environmental compliance Conservation improvement project Insurance Telephone Advertising Education and meetings Miscellaneous

$

Total TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS)

Water

717,476 1,694,375 118,544 70,516 28,610 115,129 40,757 21,249 110,839 154,982 22,704 1,776 131,924 25,473

$

885,049 1,980,392 159,021 94,678 37,622 118,580 49,620 21,249 119,780 178,340 28,539 4,863 151,220 32,538

607,137

3,861,491

31,826,599

2,474,141

34,300,740

90,804 281,702 (198,194) (80,126) (85,195)

TOTAL NONOPERATING REVENUES (EXPENSES)

167,573 286,017 40,477 24,162 9,012 3,451 8,863 8,941 23,358 5,835 3,087 19,296 7,065

3,254,354

2,637,797

NONOPERATING REVENUES (EXPENSES) Interest income Miscellaneous revenue Interest expense and other Gain (loss) on sale of capital assets Bond issuance costs

$

Total

8,991

(300,620)

2,337,177

24,917 196,700 (57,986) 1,050 -

115,721 478,402 (256,180) (79,076) (85,195)

164,681

173,672

INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS

2,646,788

(135,939)

2,510,849

CAPITAL CONTRIBUTIONS DEVELOPER INFRASTRUCTURE AND CONNECTION FEES CONTRIBUTION OF ASSETS FROM CITY TRANSFERS FROM OTHER CITY FUNDS TRANSFERS TO OTHER CITY FUNDS

(1,089,287)

358,684 73,002 300,000 -

358,684 73,002 300,000 (1,089,287)

(1,089,287)

731,686

(357,601)

1,557,501

595,747

2,153,248

330,923

-

330,923

CHANGE IN NET POSITION

1,888,424

595,747

2,484,171

NET POSITION, JANUARY 1

32,635,676

23,250,202

55,885,878

TOTAL CONTRIBUTIONS AND TRANSFERS CHANGE IN NET POSITION BEFORE SPECIAL ITEM SPECIAL ITEM

PRIOR PERIOD ADJUSTMENT (NOTE 7)

-

NET POSITION, DECEMBER 31

$ 34,524,100

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135

(175,091) $ 23,670,858

(175,091) $ 58,194,958

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA ELECTRIC FUND SUMMARY OF OPERATIONS AND UNAUDITED STATISTICS FOR THE YEARS ENDED DECEMBER 31, 2008 THROUGH DECEMBER 31, 2016 SUMMARY OF OPERATIONS OPERATING REVENUES Sales of electricity Other operating revenues (expenses)

2008

2009

2010

2011

$ 22,303,994 637,909

$ 23,591,485 636,258

$ 26,060,301 732,261

$ 27,894,341 689,645

22,941,903

24,227,743

26,792,562

28,583,986

14,778,270 2,162,797 409,222 2,057,851 2,196,770

16,161,444 1,937,096 428,508 2,126,794 2,272,917

18,373,386 1,892,212 434,415 2,062,942 2,399,236

19,604,951 1,960,742 474,934 2,041,717 2,350,706

21,604,910

22,926,759

25,162,191

26,433,050

1,336,993

1,300,984

1,630,371

2,150,936

TOTAL OPERATING REVENUES OPERATING EXPENSES Purchased power Distribution Services to the City Depreciation Other operating expenses TOTAL OPERATING EXPENSES OPERATING INCOME TRANSFERS FROM OTHER CITY FUNDS TRANSFERS TO OTHER CITY FUNDS SPECIAL ITEM NONOPERATING REVENUES NET INCOME

(540,636) 249,022 $

PERCENT OF CHANGE Sales of electricity Purchased power PERCENT OF REVENUES Purchased power

1,045,379

(585,141) (146,352) $

569,491

53,741 (657,086) (154,956) $

872,070

(711,415) (105,604) $

1,333,917

16.380%

5.772%

10.465%

7.038%

21.372%

9.360%

13.687%

6.703%

64.416%

66.706%

68.576%

68.587%

UNAUDITED STATISTICS MISCELLANEOUS 2008 KWh's purchased KWh's sold Line loss Percent of line loss

2009

2010

2011

241,837,173 224,226,048

247,595,137 232,772,722

264,642,834 250,711,834

276,026,892 261,235,297

17,611,125

14,822,415

13,931,000

14,791,595

7.282%

5.987%

5.264%

5.359%

REVENUES PER KWh SOLD

$

0.0995

$

0.1013

$

0.1039

$

0.1068

COST PER KWh PURCHASED

$

0.0611

$

0.0653

$

0.0694

$

0.0710

NUMBER OF CUSTOMERS TOTAL CONTRIBUTION/TRANSFERS TO CITY

9,203 $

540,636

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136

9,170 $

585,141

9,207 $

657,086

9,227 $

711,415

2012

2013

2014

2015

2016

$ 30,070,045 188,645

$ 30,978,790 (132,411)

$ 31,514,246 (147,561)

$ 32,704,279 (152,557)

$ 34,569,098 (104,702)

30,258,690

30,846,379

31,366,685

32,551,722

34,464,396

20,499,773 1,909,845 481,907 2,099,594 2,359,193

21,254,950 1,970,341 498,146 2,029,496 2,374,959

21,994,652 2,161,352 530,340 1,914,062 2,791,717

22,034,307 2,330,969 520,727 1,922,359 3,087,792

23,991,069 2,041,810 230,312 2,005,093 3,558,315

27,350,312

28,127,892

29,392,123

29,896,154

31,826,599

2,908,378

2,718,487

1,974,562

2,655,568

2,637,797

(816,864) 28,531 $

2,120,045

(781,162) (30,658) $

1,906,667

(797,835) 152,375 $

1,329,102

(824,743) 267,243 $

2,098,068

(1,089,287) 330,923 8,991 $

1,888,424

7.800%

3.022%

1.728%

3.776%

5.702%

4.564%

3.684%

3.480%

0.180%

8.881%

67.748%

68.906%

70.121%

67.690%

69.611%

2012

2013

2014

2015

2016

287,553,108 273,455,846

290,025,919 273,945,354

288,320,724 274,546,059

294,441,957 282,265,268

311,990,595 305,337,641

14,097,262

16,080,565

13,774,665

12,176,689

6,652,954

4.902%

5.545%

4.778%

4.136%

2.132%

$

0.1100

$

0.1131

$

0.1148

$

0.1159

$

0.1132

$

0.0713

$

0.0733

$

0.0763

$

0.0748

$

0.0769

9,285 $

816,864

9,358 $

781,162

9,449 $

797,835

10,499 $

824,743

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137

10,816 $

1,089,287

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA WATER FUND SUMMARY OF OPERATIONS AND UNAUDITED STATISTICS FOR THE YEARS ENDED DECEMBER 31, 2008 THROUGH DECEMBER 31, 2016 SUMMARY OF OPERATIONS 2008 OPERATING REVENUES Sales of water

$

OPERATING EXPENSES Operating expenses less depreciation Services to City Depreciation TOTAL OPERATING EXPENSES TOTAL OPERATING INCOME (LOSS)

$

PERCENT OF CHANGE Sales of water

2009

2,130,124

$

2010

2,206,429

$

2011

1,913,661

$

1,832,817

1,185,413 974,848

1,102,437 956,993

989,736 955,323

1,008,562 980,197

2,160,261

2,059,430

1,945,059

1,988,759

(30,137)

$

0.80%

146,999

$

3.58%

(31,398)

$

(13.27%)

(155,942)

(4.22%)

UNAUDITED STATISTICS MISCELLANEOUS 2008

2009

2010

2011

WATER PUMPED (gallons)

854,133,000

782,951,000

686,289,000

651,907,000

WATER SOLD (gallons)

727,029,000

708,286,000

627,209,000

599,701,000

14.88%

9.54%

8.61%

8.01%

Percent of line loss Revenues per 1,000 gallons pumped

$

2.48

$

2.81

$

2.79

$

2.81

Revenues per 1,000 gallons sold

$

2.93

$

3.12

$

3.05

$

3.06

Number of customers

4,508

4,467

4,511

4,515

WATER SUPPLIER SERVICES 2008 Flushing hydrants Back washing Fire department use New water main disinfectant and flushing Flushing seasonal well Meter inaccuracy Street and Sewer Maintenance Water tower paint and clean/maintenance Well maintenance Water line and irrigation leaks Frozen pipes bursting in abandoned homes Water Supplier Services

2009

2010

2011

30,000,000 8,400,000 5,000,000 2,000,000 25,000,000

33,000,000 8,400,000 1,000,000 2,000,000 1,300,000 27,000,000

35,000,000 9,000,000 3,000,000 3,000,000 4,000,000 5,000,000

34,000,000 8,000,000 4,000,000 4,000,000 2,000,000 -

70,400,000

72,700,000

59,000,000

52,000,000

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138

2012 $

$

2013

2,265,142

$

2014

2,278,124

$

2015

2,148,327

$

2016

2,202,537

$

2,173,521

1,130,965 1,028,593

1,210,797 1,032,442

1,267,019 1,083,770

1,277,466 5,719 1,131,110

1,325,831 1,148,310

2,159,558

2,243,239

2,350,789

2,414,295

2,474,141

105,584

$

23.59%

34,885

$

0.57%

2012

(202,462)

$

(211,758)

(5.70%)

2013

$

2.52%

2014

(300,620)

(1.32%)

2015

2016

847,283,200

785,377,000

782,110,000

799,974,000

801,603,000

727,912,000

709,760,000

672,760,000

676,842,000

666,656,000

14.09%

9.63%

13.98%

15.39%

16.83%

$

2.67

$

2.90

$

2.75

$

2.75

$

2.71

$

3.11

$

3.21

$

3.19

$

3.25

$

3.26

4,542

Gallons 2012

4,613

2013

4,676

2014

4,672

2015

4,903

2016

46,400,000 30,000,000 16,500,000 9,000,000 3,600,000 6,500,000 7,000,000 -

45,000,000 8,000,000 5,000,000 5,000,000 3,000,000 617,000 2,000,000 7,000,000 -

47,000,000 3,922,000 5,000,000 5,000,000 3,000,000 1,000,000 1,000,000 7,000,000 -

45,000,000 4,000,000 5,000,000 5,000,000 473,400 3,700,000 700,000 -

46,816,000 4,430,000 5,000,000 5,000,000 1,800,000 4,000,000 7,358,000 -

119,000,000

75,617,000

72,922,000

63,873,400

74,404,000

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140

OTHER REPORT ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA

FOR THE YEAR ENDED DECEMBER 31, 2016

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142

INDEPENDENT AUDITOR’S REPORT ON MINNESOTA LEGAL COMPLIANCE

Public Utilities Commission Elk River Municipal Utilities Elk River, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America, the financial statements of Elk River Municipal Utilities (the Utilities) of the City of Elk River, Minnesota (the City) as of and for the year ended December 31, 2016, and the related notes to the financial statements, and have issued our report thereon dated March 30, 2017. The Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minnesota Statute §6.65, contains seven categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing. Our audit considered all of the listed categories, except that we did not test for compliance with the provisions for tax increment financing because the Utilities has not established a tax increment financing district. In connection with our audit, nothing came to our attention that caused us to believe that the Utilities’ failed to comply with the provisions of the Minnesota Legal Compliance Audit Guide for Cities. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the Utilities’ noncompliance with the above referenced provisions. This report is intended solely for the information and use of the Public Utilities Commission, City Council, management and the Office of the State Auditor and is not intended to be and should not be used by anyone other than these specified parties.

ABDO, EICK & MEYERS, LLP Minneapolis, Minnesota March 30, 2017

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UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Troy Adams, P.E. – General Manager MEETING DATE: AGENDA ITEM NUMBER: April 11, 2017 4.2 SUBJECT: 2016 Year End Reserve Balance ACTION REQUESTED: Designate unrestricted reserve balances above target levels for Electric and Water funds. BACKGROUND: The purpose for reserves to a public utility is to meet bond covenants and provide a financial buffer to mitigate unforeseen or volatile operational costs. In 2010, the commission adopted a financial reserves policy that defined the structure and formula on how financial reserves will be calculated for the Electric Utility and Water Utility funds. This provides transparency to the public on the purpose and levels of utility reserves. DISCUSSION: As defined by policy, the year-end reserve balances are to be reviewed after the completion of the audit. These balances, if above their target levels, shall be unrestricted with a defaulting designation as working capital. The commission shall then consider optimal use of these unrestricted reserves. Staff recommends that unrestricted reserve balances above target levels for the Electric Utility fund be designated for electric service territory transfer costs, the demand credit adjustment, and capital infrastructure costs; and for the Water Utility fund be designated for future capital infrastructure costs. FINANCIAL IMPACT: None ATTACHMENTS:  ERMU Policy A.10 – Financial Reserves  Electric Reserves Policy Calculation  Water Reserves Policy Calculation

______________________________________________________________________________ Page 1 of 1 144

A.10 – Financial Reserves Policy

1.0

Purpose and Summary

In order to maintain stable rates and provide reliable services, Elk River Municipal Utilities (ERMU) requires financial buffers in the form of reserves to mitigate changes in costs or operational performance. For ERMU there are two utility funds, the Electric Utility and the Water Utility. These funds shall have separate reserves. Their reserve balances shall be classified as either Restricted for Debt Service or Unrestricted Designated Reserve. The target levels for these reserves shall be determined by the criteria herein. These target levels and target criteria will be reviewed annually, modified by Utilities Commission to support the long-term goals of ERMU, and adopted with the annual budget. Unless otherwise specified by bond covenants, these reserve balances shall be invested consistent with ERMU’s Investment Policy (policy number 8.20a). 2.0

Electric Utility Reserve Classifications

Restricted For Debt Service: This reserve is established to maintain compliance with bond covenants. The target level for this reserve shall be set at the level specified by bond covenants. Unrestricted Designated Reserve: This reserve is established to address the short-term financial variability inherent in operating an Electric Utility. Potential sources of this variability include but are not limited to: risks associated with natural disasters, reduction in overall customer usage, changes in total system load resulting from the actions of large customers, failure to achieve budgeted levels of net income, changes in cost of purchased power, changes in interest income, and general operational exposures. The target level for this reserve shall be set at the sum of 6 months operating expenditures less depreciation and less purchase power costs, plus the sum of next year’s total principal and interest payments, plus one month budgeted average purchase power cost. The balance above this target level shall be unrestricted.

1 145

3.0

Water Utility Reserve Classifications

Restricted For Debt Service: This reserve is established to maintain compliance with bond covenants. The target level for this reserve shall be set at the level specified by bond covenants. Unrestricted Designated Reserve: This reserve is established to address the short-term financial variability inherent in operating a Water Utility. Potential sources of this variability include but are not limited to: risks associated with natural disasters, reduction in overall customer usage, changes in total system usage resulting from the actions of large customers, failure to achieve budgeted levels of net income, changes in interest income, and general operational exposures. The target level for this reserve shall be set at the sum of 6 months operating expenditures less depreciation plus the sum of next year’s total principal and interest payments. The balance above this target level shall be unrestricted. 4.0

Year-end Reserve Balances

If the year-end reserve balances are above their target levels after the completion of the year-end audit, these balances shall be unrestricted with a defaulting designation as working capital. The Utilities Commission shall then consider optimal uses of these unrestricted reserves through any of the following but not limited to: working capital, designated for power costs (electric fund only), debt reduction, retention for reserve fund growth for future needs, or use for rate stabilization or reduction. If the year-end reserve balances are below their target levels after the completion of the year-end audit, the Utilities Commission shall consider the balances and plan for their replenishment to target levels in a timely manner.

Adopted May 11, 2010 Revised May 10, 2011

2 146

Elk River Municipal Utilities - Reserves Policy 4/2017

Proposed

ERMU Electric Fund - 61 Description 2017 Budgeted Expenditures 2017 Budgeted Interest Expense 2017Budgeted Depreciation 2017 Budgeted Purchased Power Cost 2017 Budgeted Pricipal and Interest 2016 Peak Monthly Purchased Power Cost

Annual $ 35,618,478 $ 356,557 $ 2,100,000 $ 25,729,449 $ 1,257,773 $ 2,846,494

2016 Audited Cash Balances

2017 Reserves $ 14,680,691

Average Monthly $ 2,968,207 $ 29,713 $ 175,000 $ 2,144,121 n/a $ 1,835,055 2016 Reserves $ 12,685,126

Unrestricted Designated Reserves

2017 Calculated Reserves 2017 Proposed Calculated Reserves

$ $

7,118,130 7,118,130

$

6,826,186

Restricted for Debt Service

2017 Calculated Reserves 2017 Proposed Calculated Reserves

$ $

997,660 997,660

$

490,500

Unrestricted Reserves

2017 Calculated Reserves 2017 Proposed Calculated Reserves

$ $

6,564,901 6,564,901

$

5,368,441

147

Elk River Municipal Utilities - Reserves Policy 4/2017

Proposed

ERMU Water Fund - 62 Description 2017 Budgeted Expenditures 2017 Budgeted Interest Expense 2017 Budgeted Depreciation 2017 Budgeted Pricipal and Interest

Annual $ 2,848,417 $ 52,750 $ 1,188,000 $ 296,750

2016 Audited Cash Balances

2017 Reserves $ 4,255,964

Unrestricted Designated Reserves

2017 Calculated Reserves 2017 Proposed Calculated Reserves

$ $

Restricted for Debt Service

2017 Calculated Reserves 2017 Proposed Calculated Reserves

$ $

Unrestricted Reserves

2017 Calculated Reserves 2017 Proposed Calculated Reserves

$ $

148

1,100,584 1,100,584

-

3,155,381 3,155,381

Average Monthly $ 237,368 $ 4,396 $ 99,000 n/a 2016 Reserves $ 4,367,165 $

$

$

980,484

-

3,386,681

UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Troy Adams, P.E. – General Manager MEETING DATE: AGENDA ITEM NUMBER: April 11, 2017 4.3 SUBJECT: 2016 Utilities Performance Incentive Compensation Distribution ACTION REQUESTED: Award the Performance Metrics and Compensation Distribution of 1.9% to qualifying employees per the terms of the policy. BACKGROUND: The Commission adopted a Performance Metrics program in December 2012, for implementation January 1, 2013. This program was based on the American Public Power Association’s Reliable Public Power Provider (RP3) program with the addition of financial goals. As defined by policy, this company performance based program designed to incentivize employee commitment towards the company’s success. “The successful performance of ERMU is measured in terms of the Utilities’ ability to meet our strategic goals and mission. By improving our efficiency and level of performance in meeting our strategic goals and mission we can improve the delivery of value to our customers.” Divided into categories representing core values of the company and again into sub-categories that are quantifiable, this program is designed to track goals that require companywide support of the employees to continually achieve. When the employees work together as a team to achieve these goals, the company recognizes a corresponding increase in value to our customers. DISCUSSION: The performance metrics were monitored and provided as updates to the employees and commission on a quarterly basis throughout the year. This allowed for corrective action to be taken in order to meet the targets for the program. The program work exactly as intended as we witness employee motivation and efforts align to improve company performance for deficient criteria. We present to the commission the finalized results of the score card on which the employees have successfully achieved all of the company performance metrics targets, except for one (the CAIDI metric). Per the policy, a multiplier of 95% would be used and qualifying employees would be eligible for a 1.9% distribution. FINANCIAL IMPACT: Budgeted item. ATTACHMENTS:  

ERMU Policy - P.13 - Performance Metrics and Incentive Compensation Policy ERMU Performance Metrics and Incentive Compensation Policy Score Card - 2016

______________________________________________________________________________ Page 1 of 1 149

P.13 – Performance Metrics and Incentive Compensation Policy

1.0

Purpose and Summary

The successful performance of the ERMU is measured in terms of the Utilities’ ability to meet our strategic goals and mission. By improving our efficiency and level of performance in meeting our strategic goals and mission we can improve the delivery of value to our customers. To create incentives for employees to take personal responsibility for accomplishment of the Utilities’ strategic goals and mission, the Utilities has established a Utilities Performance Metrics-based Incentive Compensation system (“UPMIC”). Through UPMIC the employees of ERMU will have an opportunity, as a group, to earn annual incentive compensation for each qualifying employee by contributing individually to the overall success of ERMU on a daily basis. Under UPMIC, either all qualifying employees will earn an incentive compensation distribution in a given year, or none will. And not only will incentive compensation under UPMIC in that sense be an all or nothing proposition each year, but there will be an equal percentage share basis for all on which the incentive compensation will be paid out if earned. This appropriately reflects the reality that we all succeed, or fall short, together as a team. To administer the UPMIC and measure objectively the level of performance that must be achieved for qualifying employees to earn incentive compensation, the attached UMPIC Performance Metrics Policy Score Card (“Score Card”) has been created. The Score Card will be subject to revision annually based on the performance metrics adopted by the Commission annually for the coming year (“Performance Metrics”). By tracking and measuring the Performance Metrics and creating incentive for employees to achieve the goals the Metrics embody, the Utilities believes it will be better able to focus efforts and resources on becoming more efficient and successful in meeting our strategic goals and mission and delivering improved value to our customers. 2.0

Utilities Performance Metrics Score Card

As reflected on the Score Card, the Performance Metrics are divided into the following three categories: Safety, Reliability and Quality of Utility Services; Customer Service and Employee

Page 1 of 3 150

Development; and Financial Goals. These categories are used to characterize the overall strategic goals and mission of ERMU. Under the Performance Metrics, these three main categories are then divided into various weighted factors, or sub-categories. These sub-categories, their percentage weight, and the goal or target for each, shall be established by the Utilities Commission annually. The Performance Metrics as adopted are reflected in the attached Score Card. As discussed above, the Performance Metrics and thus the Score Card are subject to modification and adoption by the Commission annually, which will normally occur during the Utilities’ budgeting process. 3.0

Utilities Performance Incentive Compensation Distribution Criteria

Under the UMPIC a Performance-Based Compensation Incentive, if earned, will be distributed to Qualifying Employees annually. The total amount available to be earned by Utilities employees as a Performance Based Compensation Incentive each year will be an amount up to 2% of the Utilities’ total gross wages paid to Qualifying Employees during the Measurement Period. The measuring period used to calculate how much, if any, of the Performance-Based Compensation Incentive the Utilities employees have earned will be the calendar year (the “Measurement Period”). After the Measurement Period is complete and the Commission has received its audit in the spring of the year following the Measurement Period, the Performance Metrics will be applied to determine whether the Performance-Based Compensation Incentive has been earned for the Measurement Period. In doing so, the performance of the Utilities in each sub-category will be reviewed. If the sub-category performance meets or exceeds the established goal, the sub-category will be scored with the designated percentage that will contribute to a total Performance Metrics Multiplier to be used as a factor in calculating the distribution earned, if any, as shown in the Score Card (“Multiplier”). The Multiplier has a maximum factoring effect of 100%. The Multiplier is used to determine how much, if any, of the amount established by the Commission for the UMPIC Performance-Based Compensation Incentive has been earned in the Measurement Period. (For example if the Multiplier equals 100%, the distribution would equal 2%. If the Multiplier equals 75%, the distribution would equal 1.5%.) In other words, the amount established by the Commission may be earned on an annual basis by the group of Qualifying Employees (as defined below in Section 4.0) in whole, in part, or not at all. After the Multiplier is calculated on the Score Card, the Performance Based Compensation Incentive earned, if any, will be distributed to Qualifying Employees. The total amount to be distributed as the Performance Based Compensation Incentive will be the product of: a) the Multiplier; and b) 2% of the Utilities’ total gross wages paid to Qualifying Employees during the Measurement Period. The percentage of the Performance Based Compensation Incentive awarded to each Qualifying Employee will be based on the gross wages of each Qualifying Employee during the Measurement Period. To each Qualifying Employee, the distribution would be allocated in a lump sum equal to the product of: a) the Multiplier; and b) 2% of that employee’s gross wages

P.13 UTILITIES PERFORMANCE METRICS AND INCENTIVE COMPENSATION POLICY

Page 2 of 3

151

Approved December 12, 2012

paid during the Measurement Period. (For example, if a Qualifying Employee’s gross wages earned during the Measurement Period were equal to $50,000 and the Multiplier was equal to 100%, the total distribution to that employee would be equal to: $50,000 x 2% x 100% = $1,000.) If the Utilities’ margins are negative due to sudden and unforeseen material changes to the industry or customer base, the Commission reserves the right to withhold distribution of the Performance Based Compensation Incentive in any given year. 4.0

Employee Qualifications and Distribution of the Incentive Compensation

An employee of the Utilities will be eligible for participation in the Performance Metrics Incentive Compensation distribution if the employee meets the following eligibility requirements and is therefore a “Qualifying Employee” for purposes of this policy. a. The employee is in good standing with the Utilities. An employee would not be eligible while on disciplinary probation or a performance improvement action plan. b. The employee was a Full Time or Part Time employee during the Measurement Period. Seasonal, and Temporary employees are not eligible. The UMPIC Performance Based Compensation Incentive distribution will be made to Qualifying Employees on the first payroll date after the thirty day period following the date on which the Commission formally receives its annual auditor’s report in an open meeting.

GP:3300714 v4

P.13 UTILITIES PERFORMANCE METRICS AND INCENTIVE COMPENSATION POLICY

Page 3 of 3

152

Approved December 12, 2012

Elk River Municipal Utilities Performance Metrics and Incentive Compensation Policy Score Card - 2016

Category

Safety, Reliability and Quality of Utility Services

Customer Service and Employee Development

Financial Goals

Percent

Sub-Category

Sub-Percent

Goal

Water Quality Standards

15

Meet Requirements

15

CAIDI

5

<120 Min

0

SAIDI

5

<90 Min

5

SAIFI

5

< 0.5

5

Customer Satisfaction

10

> 85%

10

Employee Turnover

10

< 7.5%

Participation in Recommended and Mandatory Trainings

10

> 95%

Score

30

30

40

10

Margins/Net Profit

20

> Budget

20

Reserves

10

> Target

10

Inventory Accuracy

10

> 95%

10

Score Total

Notes as of 4th qtr 2016 Met requirements

Met requirements

150 minutes

Not met requirements

41 minutes

Met requirements

0.273 interruptions

Met requirements

92%

Met requirements

5%

Met requirements

97%

Met requirements

10

Total Multiplier: Approved December 12, 2012

Awarded Multiplier Percentage

95

153

Water and Electric above budget

Met requirements

Water and Electric above required policy levels

Met requirements

Water 100% Electric 99.1%

Met requirements

UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Theresa Slominski - Finance & Office Manager MEETING DATE: AGENDA ITEM NUMBER: April 11, 2017 5.1 SUBJECT: Financial Report – February 2017 ACTION REQUESTED: None DISCUSSION: Electric P&L February’s electric kwh sales (from January consumption) are up from the prior year, 4%. For further breakdown:  Residential usage is up 2%  Small Commercial usage is up 5%  Large Commercial usage is up 5% Electric Operating Revenue for February was $2,672,789, 8% above the prior year and 4% above budget. This includes the pro-forma adjustment to show the demand adjustment credit being funded through reserves. This month the adjustment was $33,289. The adjustment didn’t start being booked in 2016 until August. February’s Operating Revenue would be $2,639,500 without the pro-forma adjustment, which is 7% above prior year and 4% above budget. Other Revenue Total is below the prior year by 16%, which is largely due to the security sale. Other Revenue is only 1% below budget YTD. Overall, Total Revenues of $2,811,683 are above both prior year and prior YTD by 6%. YTD Total Revenues are ahead of budget by 4%. Purchased Power of $1,927,624 is more than the prior year by 3%, but is under the budget by 5%. YTD costs are more than prior year by 4%, but are still under budget by 2%. Administrative Expenses are $200,357, are consistent with the prior year, and 7% under budget. YTD costs are more than prior year by 10%, but are under budget by 2%. The increase over the prior YTD is most notably due to medical and dental insurances, which is $39,760 more than the prior YTD or 33%. The increase in medical is largely driven by the increased participation in the HSA plan, which increased the employer HSA contribution made in January by $21,202 over last year. ______________________________________________________________________________ Page 1 of 2 154

General Expenses are $10,133, 29% more than the prior year, but are 48% under budget YTD. The main driver causing the variance to prior YTD is labor. For expenses, in total they are consistent with the prior year, but are above prior YTD by 4% and under budget YTD by 4%. For February 2017, the Electric Department has a Net Profit of $168,479 and YTD Net Profit of $173,245. This is ahead of the budgeted Net Loss of $136,942, as well as over prior year monthly Net Profit of $14,185, and over prior YTD Net Profit of $40,115. Water P&L February gallons of water sold (from January’s usage) is down 1% from the prior year. For further breakdown:  Residential use down 1%  Commercial use down 1% Water Operating Revenues for February of $112,872 are up from last year by 2% but behind budget by 1%. Other Revenues of $45,169 are up from the prior year by 49%, but behind prior YTD by 25%. The main driver causing the prior YTD variance is connection fees. Other Revenues are ahead of YTD budget by 66%. Overall, Total Revenues of $158,042 are ahead the prior year by 12%, but behind prior YTD by 9%. Again, Connection Fees being the driving force. YTD Total Revenues are ahead of budget by 12%. Expenses are below the prior year by 13%, and are under YTD budget by 13%. For February 2017, the Water Department has a Net Loss of $40,485, which is ahead of last year’s Net Loss of $87,272. February YTD Net Loss is $95,991, which is behind the prior YTD Net Loss of $73,689, but is significantly ahead of the budgeted YTD Net Loss of $195,785.

ATTACHMENTS:  Balance Sheet 2.2017  Electric Statement of Revenues, Expenses and Changes in Net Position – Summary and Detailed 2.2017  Water Statement of Revenues, Expenses and Changes in Net Position – Summary and Detailed 2.2017  Graphs Prior Year and YTD 2017

______________________________________________________________________________ Page 2 of 2 155

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA COMBINED BALANCE SHEET FOR PERIOD ENDING FEBRUARY 2017 ELECTRIC ASSETS CURRENT ASSETS CASH ACCOUNTS RECEIVABLE INVENTORIES PREPAID ITEMS CONSTRUCTION IN PROGRESS TOTAL CURRENT ASSETS

WATER

10,368,478 3,244,581 856,197 220,586 162,799 14,852,641

2,850,188 349,810 14,776 32,745 1,243,760 4,491,280

997,660 2,559,998 38,884 3,596,542

0 1,164,338 113,824 1,278,161

457,733 3,801,373 1,842,806 36,070,240 9,600,745 51,772,897 (23,979,829) 27,793,068

11,704,622 0 0 22,639,522 954,418 35,298,563 (15,464,601) 19,833,962

INTANGIBLE ASSETS POWER AGENCY MEMBERSHIP BUY-IN LOSS OF REVENUE INTANGIBLE LESS ACCUMULATED AMORTIZATION TOTAL INTANGIBLE ASSETS, NET

9,393,794 411,157 0 9,804,951

0 0 0 0

OTHER ASSETS AND DEFERRED OUTFLOWS

1,525,125

158,663

57,572,326

25,762,066

3,223,051 493,452 1,088,040 0 162,680 410,000 9,412 5,386,635

207,301 63,291 23,418 0 0 0 85,337 379,347

1,018,860 0 12,371,751 3,749,423

0 0 1,390,975 375,285

TOTAL LONG TERM LIABILITIES

17,140,034

1,766,260

TOTAL LIABILITIES

22,526,669

2,145,607

415,506

41,589

997,660 0 33,459,245 173,246 34,630,151

0 0 23,670,861 (95,991) 23,574,870

57,572,326

25,762,066

RESTRICTED ASSETS BOND RESERVE FUND EMERGENCY RESERVE FUND UNRESTRICTED RESERVE FUND TOTAL RESTRICTED ASSETS FIXED ASSETS PRODUCTION LFG PROJECT TRANSMISSION DISTRIBUTION GENERAL FIXED ASSETS (COST) LESS ACCUMULATED DEPRECIATION TOTAL FIXED ASSETS, NET

TOTAL ASSETS LIABILITIES AND FUND EQUITY CURRENT LIABILITIES ACCOUNTS PAYABLE SALARIES AND BENEFITS PAYABLE DUE TO CITY DUE TO OTHER FUNDS NOTES PAYABLE-CURRENT PORTION BONDS PAYABLE-CURRENT PORTION UNEARNED REVENUE TOTAL CURRENT LIABILITIES LONG TERM LIABILITIES LFG PROJECT DUE TO COUNTY BONDS PAYABLE, LESS CURRENT PORTION PENSION LIABILITIES

DEFERRED INFLOWS OF RESOURCES FUND EQUITY CAPITAL ACCOUNT CONST COST CONTRIBUTED CAPITAL RETAINED EARNINGS NET INCOME (LOSS) (THROUGH PREVIOUS MONTH) TOTAL FUND EQUITY TOTAL LIABILITIES & FUND EQUITY

156

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR PERIOD ENDING FEBRUARY 2017

Electric Revenue Operating Revenue Elk River Elk River-City Donated Otsego Rural Big Lake Dayton Public St & Hwy Lighting Generation and Sub Station Credit Dispersed Generation Credit Other Revenue/CIP/Rate Increase/AC Credit Total Operating Revenue Other Operating Revenue Interest/Dividend Income Customer Penalties LFG Project Connection Fees Security Misc Revenue Total Other Revenue Total Revenue Expenses Purchased Power Operating & Mtce Expense Landfill Gas Transmission Expense Distribution Expense Maintenance Expense Depreciation & Amortization Interest Expense Security Other Operating Expense Customer Accounts Expense Administrative Expense General Expense Total Expenses(before Operating Transfers) Operating Transfer Operating Transfer/Other Funds Utilities & Labor Donated Total Operating Transfer Net Income Profit(Loss)

2017 FEBRUARY

2017 YTD

2017 YTD BUDGET

2017 ANNUAL BUDGET

2017 YTD Bud Var%

2016 FEBRUARY

2016 YTD

YTD VARIANCE

2016 v. 2017 Actual Var%

2,458,202 0 198,200 16,092 18,994 16,933 400 (69,324) 33,289 2,672,789

5,052,100 0 409,807 34,615 40,608 34,114 800 (134,388) 67,196 5,504,855

4,861,054 0 401,006 33,957 41,364 31,456 800 (134,459) 66,467 5,301,648

32,153,517 0 2,557,710 201,671 242,372 195,715 9,800 (766,124) 384,357 34,979,021

4 0 2 2 (2) 8 0 0 1 4

2,308,042 0 184,568 14,834 18,775 15,528 2,180 (66,630) 0 2,477,299

4,737,802 0 386,444 32,492 39,752 31,080 4,360 (134,232) 0 5,097,699

314,298 0 23,363 2,122 855 3,034 (3,560) (156) 67,196 407,155

7 0 6 7 2 10 (82) 0 0 8

6,486 21,370 87,470 17,904 0 5,660 138,893

14,619 39,652 171,464 23,909 0 11,558 261,204

16,666 41,666 176,000 9,166 0 20,787 264,285

100,000 250,000 1,120,000 55,000 0 108,240 1,633,240

(12) (5) (3) 161 0 (44) (1)

11,113 21,896 87,285 10,810 21,937 13,213 166,257

24,933 39,124 181,923 17,435 43,417 18,252 325,085

(10,314) 528 (10,458) 6,474 (43,417) (6,693) (63,881)

(41) 1 (6) 37 (100) (37) (20)

2,811,682

5,766,059

5,565,933

36,612,261

4

2,643,556

5,422,785

343,273

6

1,927,624 15,029 62,982 837 19,389 69,032 170,018 24,556 0 285 21,724 220,357 10,133 2,541,971

4,048,712 35,648 119,411 1,682 45,278 160,941 340,024 52,074 30 521 44,694 517,134 18,098 5,384,253

4,144,943 61,108 125,441 2,500 53,243 196,998 342,000 52,073 0 2,750 56,882 530,259 34,488 5,602,689

25,734,249 366,652 748,500 15,000 328,100 1,066,000 2,100,000 305,709 0 25,500 347,000 2,976,567 213,000 34,226,278

(2) (42) (5) (33) (15) (18) (1) 0 0 (81) (21) (2) (48) (4)

1,870,053 24,655 57,938 814 28,780 107,951 165,043 8,219 11,798 1,114 21,195 220,172 7,849 2,525,586

3,889,091 53,177 114,500 1,682 46,489 172,071 330,088 17,305 22,741 1,783 44,030 469,384 11,647 5,173,993

159,620 (17,529) 4,910 0 (1,211) (11,129) 9,935 34,769 (22,710) (1,261) 664 47,750 6,451 210,259

4 (33) 4 0 (3) (6) 3 201 (100) (71) 2 10 55 4

84,953 16,277 101,231 168,479

175,284 33,276 208,560 173,245

186,062 36,000 222,062 (258,817)

1,165,000 232,000 1,397,000 988,982

(6) (8) (6) (167)

86,860 16,923 103,784 14,185

173,721 34,955 208,677 40,115

1,562 (1,679) (116) 133,130

1 (5) 0 332

157

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR PERIOD ENDING FEBRUARY 2017

Water Revenue Operating Revenue Water Sales Total Operating Revenue

2017 FEBRUARY

2017 YTD

2017 YTD BUDGET

2017 ANNUAL BUDGET

2017 YTD Bud Var%

2016 FEBRUARY

2016 YTD

YTD VARIANCE

2016 v. 2017 Actual Var%

112,872 112,872

234,574 234,574

237,125 237,125

2,160,950 2,160,950

(1) (1)

110,551 110,551

232,783 232,783

1,790 1,790

1 1

1,621 1,017 23,915 18,615 45,169

3,721 2,065 54,660 37,404 97,851

4,166 2,500 26,666 25,529 58,861

25,000 15,000 160,000 149,060 349,060

(11) (17) 105 47 66

2,778 1,180 10,259 16,198 30,415

6,233 2,228 90,484 31,754 130,700

(2,512) (163) (35,824) 5,650 (32,848)

(40) (7) (40) 18 (25)

158,042

332,425

295,987

2,510,010

12

140,967

363,484

(31,058)

(9)

Expenses Production Expense Pumping Expense Distribution Expense Depreciation & Amortization Interest Expense Other Operating Expense Customer Accounts Expense Administrative Expense General Expense Total Expenses(before Operating Transfers)

1,803 34,616 5,119 96,326 4,142 58 4,944 50,184 1,330 198,527

3,170 76,588 22,564 192,598 8,931 105 10,326 112,248 1,882 428,416

5,000 97,953 48,104 196,000 8,929 1,470 12,249 120,131 1,849 491,688

30,000 587,720 249,280 1,188,000 51,908 11,320 73,000 645,589 11,100 2,847,917

(37) (22) (53) (2) 0 (93) (16) (7) 2 (13)

927 60,431 17,406 94,938 4,788 270 4,637 44,435 403 228,239

2,471 90,197 22,269 189,979 10,170 308 9,230 111,801 744 437,173

698 (13,609) 295 2,618 (1,238) (202) 1,095 447 1,138 (8,756)

28 (15) 1 1 (12) (66) 12 0 153 (2)

Operating Transfer Transfer To City For 99 Bond Utilities & Labor Donated Total Operating Transfer Net Income Profit(Loss)

0 0 0 (40,485)

0 0 0 (95,990)

0 83 83 (195,785)

0 500 500 (338,406)

0 (100) (100) (51)

0 0 0 (87,271)

0 0 0 (73,689)

0 0 0 (22,301)

0 0 0 30

Other Operating Revenue Interest/Dividend Income Customer Penalties Connection Fees Misc Revenue Total Other Revenue Total Revenue

158

Elk River Municipal Utilities Monthly Electrical Demand 70.0 65.0

Demand in MW

60.0

55.0 50.0 45.0 40.0

35.0 30.0

Month

2016

2017

Elk River Municipal Utilities Monthly Energy Purchases 34,000

Energy Purchases in MWH

29,000

24,000

19,000

14,000

Month

2016

159

2017

Elk River Municipal Utilities Monthly Total Electric Load 35,000

Electric Load in MWH

30,000

25,000

20,000

15,000

10,000

Month

2016

2017

Elk River Municipal Utilities Monthly Electric Sales $4,000,000

$3,500,000

Sales in Dollars

$3,000,000

$2,500,000

$2,000,000

$1,500,000

$1,000,000

Month

2016

160

2017

Elk River Municipal Utilities Monthly Residential, Commercial & Industrial Loads 20,000 18,000 16,000

Loads in MWH

14,000

12,000 10,000 8,000 6,000 4,000

2,000 -

Month 2016 Residential

2017 Residential

2016 Commercial

2017 Commercial

2016 Industrial

2017 Industrial

Elk River Municipal Utilities Monthly Residential, Commercial & Industrial Sales $2,000,000 $1,800,000 $1,600,000

Sales in Dollars

$1,400,000

$1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0

2016 Residential

Month 2017 Residential

2016 Commercial

2017 Commercial

2016 Industrial

2017 Industrial

161

Elk River Municipal Utilities Monthly Water Pumpage 120 Pumpage in Million Gal.

100 80 60 40

20 0

Month

2016

2017

Elk River Municipal Utilities Peak Day Pumpage 5 4.5

Peak Day in Million Gal.

4 3.5 3 2.5 2 1.5 1 0.5 0

Month

2016

162

2017

Elk River Municipal Utilities Monthly Water Sales 100

90

Sales in Million Gal.

80 70 60 50

40 30 20

10 0

Month

2016

2017

Elk River Municipal Utilities Monthly Water Sales $350,000

Sales in Dollars

$300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0

Month

2016

163

2017

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR PERIOD ENDING FEBRUARY 2017 2017 FEBRUARY

Electric Revenue Operating Revenue Elk River 440.4411 ELECT SALES/ELK RIVER RES 440.4412 ELECT SALES/ER NON-DEMAND 440.4413 ELECT SALES/ER DEMAND Total For Elk River: Elk River-City Donated 440.4415 ELECT SALES/ER CITY DONATED Total For Elk River-City Donated: Otsego 440.4416 ELECT SALES/OTSEGO RES

2017 YTD BUDGET

2017 YTD

2017 ANNUAL BUDGET

2017 YTD Bud Var%

2016 FEBRUARY

2016 YTD

YTD VARIANCE

2016 v. 2017 Actual Var%

857,317

1,862,992

1,875,093

11,356,268

(1)

830,948

1,793,533

69,459

4

256,421

510,880

462,926

2,867,833

10

226,852

457,392

53,487

12

1,344,463

2,678,227

2,523,035

17,929,415

6

1,250,241

2,486,876

191,351

8

2,458,202

5,052,100

4,861,054

32,153,517

4

2,308,042

4,737,802

314,298

7

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

93,977

205,649

197,136

1,210,254

4

87,528

188,561

17,088

9

440.4417 ELECT SALES/OTSEGO NON-DEM

31,391

62,509

76,267

452,738

(18)

37,039

75,359

(12,850)

(17)

440.4418 ELECT SALES/OTSEGO DEMAND

72,831

141,648

127,602

894,717

11

60,001

122,522

19,125

16

198,200

409,807

401,006

2,557,710

2

184,568

386,444

23,363

6

15,947

34,332

33,696

198,050

2

14,711

32,232

2,099

7

145

282

261

3,620

8

122

259

22

8

16,092

34,615

33,957

201,671

2

14,834

32,492

2,122

7

Total For Otsego: Rural Big Lake 440.4421 ELECT SALES/BIG LAKE RES 440.4422 ELECT SALES/BL NON-DEMAND Total For Rural Big Lake: Dayton 440.4431 ELECT SALES/DAYTON RES

16,228

35,034

35,447

207,505

(1)

15,832

33,906

1,127

3

440.4432 ELECT SALES/DAYTON NON-DEM

2,766

5,574

5,917

34,867

(6)

2,943

5,846

(271)

(5)

Total For Dayton:

18,994

40,608

41,364

242,372

(2)

18,775

39,752

855

2

Public St & Hwy Lighting 440.4414 ELECT SALES/ELK RIVER SEC LTS

16,933

34,114

31,456

195,715

8

15,528

31,080

3,034

10

440.4419 ELECT SALES/OTSEGO SEC LTS

0

0

0

0

0

0

0

0

0

440.4424 ELECT SALES/BIG LAKE SEC LTS

0

0

0

0

0

0

0

0

0

440.4434 ELECT SALES/DAYTON SEC LTS

0

0

0

0

0

0

0

0

0

440.4441 PUBLIC ST & HWY LIGHTING/CIT

0

0

0

0

0

0

0

0

0

16,933

34,114

31,456

195,715

8

15,528

31,080

3,034

10

Generation and Sub Station Credit 440.4550 SUB-STATION CREDIT

400

800

800

4,800

0

400

800

0

0

440.4551 GENERATION CREDIT

0

0

0

0

0

1,780

3,560

(3,560)

(100)

Total For Public St & Hwy Lighting:

164

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR PERIOD ENDING FEBRUARY 2017 2017 FEBRUARY

Electric

2017 YTD BUDGET

2017 YTD

2017 ANNUAL BUDGET

2017 YTD Bud Var%

2016 FEBRUARY

2016 YTD

YTD VARIANCE

2016 v. 2017 Actual Var%

470.4720 GRE GENERATION - PEAKING PLA

0

0

0

5,000

0

0

0

0

0

Total For Generation and Sub Station Credit:

400

800

800

9,800

0

2,180

4,360

(3,560)

(82)

Dispersed Generation Credit 440.4552 DISPERSED GENERATION CREDIT

(69,324)

(134,388)

(134,459)

(766,124)

0

(66,630)

(134,232)

(156)

0

Total For Dispersed Generation Credit:

(69,324)

(134,388)

(134,459)

(766,124)

0

(66,630)

(134,232)

(156)

0

33,289

67,196

66,467

444,357

1

0

0

67,196

0

0

0

0

(60,000)

0

0

0

0

0

33,289

67,196

66,467

384,357

1

0

0

67,196

0

2,672,789

5,504,855

5,301,648

34,979,021

4

2,477,299

5,097,699

407,155

8

Other Revenue/CIP/Rate Increase/AC Credit 440.4554 RATE INCREASE 440.4555 A/C CREDIT Total For Other Revenue/CIP/Rate Increase/AC Credit: Total Operating Revenue Other Operating Revenue Interest/Dividend Income 460.4691 INTEREST & DIVIDEND INCOME

6,486

14,619

16,666

100,000

(12)

11,113

24,933

(10,314)

(41)

Total For Interest/Dividend Income:

6,486

14,619

16,666

100,000

(12)

11,113

24,933

(10,314)

(41)

Customer Penalties 470.4701 CUSTOMER DELINQUENT PENALT

21,370

39,652

41,666

250,000

(5)

21,896

39,124

528

1

Total For Customer Penalties:

21,370

39,652

41,666

250,000

(5)

21,896

39,124

528

1

87,470

171,464

176,000

1,120,000

(3)

87,285

181,923

(10,458)

(6)

Total For LFG Project:

87,470

171,464

176,000

1,120,000

(3)

87,285

181,923

(10,458)

(6)

Connection Fees 470.4702 DISCONNECT & RECONNECT CHA

17,904

23,909

9,166

55,000

161

10,810

17,435

6,474

37

Total For Connection Fees:

17,904

23,909

9,166

55,000

161

10,810

17,435

6,474

37

0

0

0

0

0

21,937

43,417

(43,417)

(100)

0

0

0

0

0

21,937

43,417

(43,417)

(100)

0

0

10,833

65,000

(100)

7,889

7,889

(7,889)

(100)

3,600

7,138

5,834

35,000

22

2,785

5,764

1,374

24

LFG Project 470.4721 LFG PROJECT

Security 470.4700 SECURITY REVENUE Total For Security: Misc Revenue 470.4715 NON-UTILITY OPERATIONS 470.4722 MISC NON-UTILITY 470.4723 GAIN ON DISPOSITION OF PROP 470.4750 RENTAL PROPERTY INCOME

0

0

0

0

0

478

478

(478)

(100)

2,060

4,420

4,120

8,240

7

2,060

4,120

300

7

165

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR PERIOD ENDING FEBRUARY 2017 2017 FEBRUARY

Electric Total For Misc Revenue:

2017 YTD BUDGET

2017 YTD

2017 ANNUAL BUDGET

2017 YTD Bud Var%

2016 FEBRUARY

2016 YTD

YTD VARIANCE

2016 v. 2017 Actual Var%

5,660

11,558

20,787

108,240

(44)

13,213

18,252

(6,693)

(37)

138,893

261,204

264,285

1,633,240

(1)

166,257

325,085

(63,881)

(20)

138,893

261,204

264,285

1,633,240

(1)

166,257

325,085

(63,881)

(20)

2,811,682

5,766,059

5,565,933

36,612,261

4

2,643,556

5,422,785

343,273

6

1,927,624

4,048,712

4,144,943

25,734,249

(2)

1,870,053

3,889,091

159,620

4

1,927,624

4,048,712

4,144,943

25,734,249

(2)

1,870,053

3,889,091

159,620

4

7,695

15,447

25,858

155,152

(40)

7,847

16,037

(589)

(4)

314

1,049

4,166

25,000

(75)

2,020

3,410

(2,360)

(69)

540.5472 NATURAL GAS

2,568

5,678

4,166

25,000

36

0

5,600

77

1

540.5483 STATION PWR & WTR CONSP/PLA

2,667

5,603

5,834

35,000

(4)

6,350

9,532

(3,928)

(41)

540.5484 OTHER EXP/PLANT SUPPLIES-ETC

132

163

1,083

6,500

(85)

298

568

(405)

(71)

540.5491 MISC OTHER PWR GENERATION E

562

1,251

2,500

15,000

(50)

1,062

3,082

(1,831)

(59)

540.5521 MAINTENANCE OF STRUCTURE/P

1,031

2,882

8,333

50,000

(65)

2,024

4,152

(1,270)

(31)

540.5531 MTCE OF ENGINES/GENERATORS-

56

1,199

5,834

35,000

(79)

3,714

7,736

(6,536)

(84)

540.5541 MTCE OF PLANT/LAND IMPROVE

0

2,372

3,333

20,000

(29)

1,335

3,055

(682)

(22)

15,029

35,648

61,108

366,652

(42)

24,655

53,177

(17,529)

(33)

12,600

24,856

28,333

170,000

(12)

12,841

25,504

(647)

(3)

48,761

91,522

91,666

550,000

0

42,838

85,021

6,501

8

12

36

1,666

10,000

(98)

873

1,203

(1,167)

(97)

1,387

2,775

2,776

17,500

0

1,385

2,771

4

0

Total Other Revenue Total For Total Other Revenue:

Total Revenue Expenses Purchased Power 540.5551 PURCHASED POWER Total For Purchased Power: Operating & Mtce Expense 540.5461 OPERATING SUPERVISION 540.5471 DIESEL OIL FUEL

Total For Operating & Mtce Expense: Landfill Gas 550.5050 LFG PURCHASED GAS 550.5051 LANDFILL GAS O&M 550.5052 LFG ADMIN 550.5053 LFG INSURANCE 550.5054 LFG MTCE Total For Landfill Gas: Transmission Expense 560.5620 TRANSMISSION MTCE AND EXPE Total For Transmission Expense:

220

220

1,000

1,000

(78)

0

0

220

0

62,982

119,411

125,441

748,500

(5)

57,938

114,500

4,910

4

837

1,682

2,500

15,000

(33)

814

1,682

0

0

837

1,682

2,500

15,000

(33)

814

1,682

0

0

Distribution Expense

166

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR PERIOD ENDING FEBRUARY 2017 2017 FEBRUARY

Electric

2017 YTD BUDGET

2017 YTD

2017 ANNUAL BUDGET

2017 YTD Bud Var%

2016 FEBRUARY

2016 YTD

YTD VARIANCE

2016 v. 2017 Actual Var%

580.5801 REMOVE EXISTING SERV & METE

0

0

100

2,500

(100)

0

116

(116)

(100)

580.5821 SCADA EXPENSES

0

0

916

5,500

(100)

0

0

0

0

580.5831 TRANSFORMER EX/OVERHD & UN

715

1,642

5,400

32,000

(70)

804

2,061

(419)

(20)

580.5851 MTCE OF SIGNAL SYSTEMS

202

202

160

1,600

26

0

135

66

49

0

0

0

5,000

0

0

0

0

0

580.5861 METER EXP - REMOVE & RESET 580.5871 TEMP SERVICE-INSTALL & REMO 580.5881 MISC DISTRIBUTION EXPENSE Total For Distribution Expense: Maintenance Expense 590.5911 MTCE OF STRUCTURES 590.5921 MTCE OF SUBSTATIONS 590.5922 MTCE OF SUBSTATION EQUIPME

0

0

0

1,500

0

0

0

0

0

18,472

43,433

46,666

280,000

(7)

27,975

44,175

(742)

(2)

19,389

45,278

53,243

328,100

(15)

28,780

46,489

(1,211)

(3)

46

62

1,666

10,000

(96)

(74)

(74)

137

(185)

1,235

2,624

4,166

25,000

(37)

1,463

2,662

(38)

(1)

402

402

5,834

35,000

(93)

16,607

18,052

(17,650)

(98)

590.5931 MTCE OF OVERHD LINES/TREE TR

17,714

31,530

14,000

100,000

125

6,423

6,562

24,968

381

590.5932 MTCE OF OVERHD LINES/STANDB

1,959

4,745

4,999

30,000

(5)

2,839

4,923

(178)

(4)

590.5933 MTCE OF OVERHEAD

2,117

11,892

21,666

130,000

(45)

11,663

20,731

(8,838)

(43)

590.5941 MTCE OF UNDERGROUND/DISTRI

4,548

9,779

14,999

90,000

(35)

9,139

14,717

(4,937)

(34)

590.5943 LOCATE UNDERGROUND PRIMAR

1,798

4,622

5,833

35,000

(21)

1,709

3,260

1,362

42

590.5951 MTCE OF LINE TRANSFORMERS

3,075

6,556

7,999

48,000

(18)

3,087

7,726

(1,170)

(15)

(33)

4,754

6,666

40,000

(29)

3,986

5,872

(1,117)

(19)

47

763

1,666

10,000

(54)

0

106

656

620

6,372

15,232

18,333

110,000

(17)

9,512

17,062

(1,829)

(11)

238

639

1,333

8,000

(52)

459

771

(132)

(17)

590.5981 SALARIES/TRANS & DISTRIBUTIO

2,937

5,887

6,666

40,000

(12)

2,965

6,074

(187)

(3)

590.5985 ELECTRIC MAPPING

590.5961 MTCE OF STREET LIGHTING 590.5962 MTCE OF SECURITY LIGHTING 590.5971 MTCE OF METERS 590.5972 VOLTAGE COMPLAINTS

7,472

15,152

16,666

100,000

(9)

10,563

19,032

(3,880)

(20)

590.5991 MTCE OF OVERHEAD SERVICE/2N

668

1,638

2,500

15,000

(34)

687

1,398

239

17

590.5992 MTCE OF UNDERGROUND ELEC S

3,621

7,934

6,666

40,000

19

2,410

5,225

2,709

52

590.5993 LOCATE UNDERGROUND SECOND

1,137

2,394

3,333

20,000

(28)

610

1,453

941

65

590.5995 TRANSPORTATION EXPENSE Total For Maintenance Expense: Depreciation & Amortization 595.8031 DEPRECIATION Total For Depreciation & Amortization:

13,673

34,328

52,000

180,000

(34)

23,894

36,511

(2,183)

(6)

69,032

160,941

196,998

1,066,000

(18)

107,951

172,071

(11,129)

(6)

170,018

340,024

342,000

2,100,000

(1)

165,043

330,088

9,935

3

170,018

340,024

342,000

2,100,000

(1)

165,043

330,088

9,935

3

Interest Expense

167

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR PERIOD ENDING FEBRUARY 2017 2017 FEBRUARY

Electric 596.8071 INTEREST ON BONDS/LONG TERM

2017 YTD BUDGET

2017 YTD

2017 ANNUAL BUDGET

2017 YTD Bud Var%

2016 FEBRUARY

2016 YTD

YTD VARIANCE

2016 v. 2017 Actual Var%

28,789

60,540

60,540

356,557

0

9,651

20,168

40,371

200

(276)

(552)

(554)

(3,370)

0

(272)

(545)

(7)

1

597.8281 AMORTIZATION OF DEBT DISCOU

(3,956)

(7,912)

(7,913)

(47,478)

0

(1,159)

(2,318)

(5,594)

241

Total For Interest Expense:

24,556

52,074

52,073

305,709

0

8,219

17,305

34,769

201

0

30

0

0

0

11,798

22,741

(22,710)

(100)

Total For Security:

0

30

0

0

0

11,798

22,741

(22,710)

(100)

Other Operating Expense 597.8161 COST & EXP MERCH JOBBING/ELE

0

0

0

0

0

0

346

(346)

(100)

597.8213 LOSS ON DISPOSITION OF PROP (C

0

0

0

7,500

0

0

0

0

0

597.8214 LOSS ON DISPOSITION (NON-CAPI

0

0

1,250

7,500

(100)

0

0

0

0

597.8263 OTHER DONATIONS

0

0

834

5,000

(100)

0

0

0

0

597.8264 DAM MAINTENANCE EXPENSE

0

0

0

0

0

0

140

(140)

(100)

596.8075 INTEREST ON DEFEASED BONDS

Security 597.8172 SECURITY EXPENSE

597.8302 PENSION EXPENSE 597.8341 INTEREST PD ON METER DEPOSIT 597.8400 RENTAL PROPERTY EXPENSE Total For Other Operating Expense: Customer Accounts Expense 900.9021 METER READING EXPENSE 900.9030 COLLECTING EXP DISC/RECONNE 900.9051 MISC CUSTOMER ACCTS EXP-CO

0

0

0

1,500

0

0

0

0

0

58

116

166

1,000

(30)

42

81

35

44

226

404

500

3,000

(19)

1,072

1,216

(811)

(67)

285

521

2,750

25,500

(81)

1,114

1,783

(1,261)

(71)

2,433

5,877

6,666

40,000

(12)

2,831

6,159

(281)

(5)

472

1,410

1,050

12,000

34

463

1,056

354

34

18,878

37,550

41,666

250,000

(10)

18,594

37,324

225

1

900.9061 CUST BLGS NOT PD/SENT FOR CO

(59)

(143)

7,500

45,000

(102)

(693)

(509)

365

(72)

Total For Customer Accounts Expense:

21,724

44,694

56,882

347,000

(21)

21,195

44,030

664

2

Administrative Expense 920.9201 SALARIES/OFFICE & COMMISSION

52,927

109,982

117,999

708,000

(7)

49,103

94,088

15,893

17

0

0

0

4,000

0

0

0

0

0

11,932

17,188

19,250

115,500

(11)

9,202

11,978

5,209

43

2,349

4,653

4,166

25,000

12

1,828

3,065

1,588

52

240

462

584

3,500

(21)

262

481

(18)

(4)

920.9221 LEGAL FEES

2,221

2,624

8,334

50,000

(69)

2,246

3,201

(577)

(18)

920.9231 AUDITING FEES

1,221

2,442

2,442

14,652

0

9,600

9,600

(7,157)

(75)

11,515

22,766

24,166

145,000

(6)

12,811

25,622

(2,855)

(11)

0

0

0

57,000

0

0

0

0

0

920.9205 TEMPORARY STAFFING 920.9211 OFFICE SUPPLIES & EXPENSE 920.9212 LT & WATER CONSUMPTION/OFFI 920.9213 BANK CHARGES

920.9241 INSURANCE 920.9260 UTILITY SHARE DEF COMP

168

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR PERIOD ENDING FEBRUARY 2017 2017 FEBRUARY

Electric

2017 YTD BUDGET

2017 YTD

2017 ANNUAL BUDGET

2017 YTD Bud Var%

2016 FEBRUARY

2016 YTD

YTD VARIANCE

2016 v. 2017 Actual Var%

920.9261 UTIL SH OF MEDICAL/DENTAL/DI

47,259

159,212

147,410

609,464

8

42,157

119,452

39,760

33

920.9262 UTILITY SHARE OF PERA

15,717

33,753

40,834

245,000

(17)

16,865

33,681

71

0

920.9263 UTILITY SHARE OF FICA

14,354

31,033

35,834

215,000

(13)

15,576

31,081

(47)

0

9,676

22,537

16,666

100,000

35

6,940

19,375

3,161

16

26,062

65,795

45,834

275,000

44

21,387

55,661

10,133

18

0

0

14,166

85,000

(100)

0

0

0

0

2,127

3,520

4,500

27,000

(22)

1,771

3,427

93

3

920.9264 EMPLOYEES SICK PAY 920.9266 EMP VACATION/HOLIDAY PAY 920.9291 CONSULTING FEES 920.9301 TELEPHONE 920.9302 ADVERTISING 920.9303 DUES & SUBSCRIPTIONS - FEES 920.9304 TRAVEL EXPENSE

956

956

500

3,000

91

196

628

328

52

7,399

14,306

13,000

78,000

10

8,106

16,672

(2,366)

(14)

163

163

1,000

15,000

(84)

0

948

(785)

(83)

13,687

22,915

29,740

178,450

(23)

22,117

39,762

(16,847)

(42)

920.9321 MTCE OF GEN PLANT/OFF HEATIN

547

2,822

3,833

23,000

(26)

0

654

2,167

331

Total For Administrative Expense:

220,357

517,134

530,259

2,976,567

(2)

220,172

469,384

47,750

10

8,363

14,561

30,834

185,000

(53)

5,877

7,706

6,854

89

1,770

3,537

3,488

27,000

1

1,971

3,940

(403)

(10)

920.9305 SCHOOLS & MEETINGS

General Expense 920.9269 CONSERVATION IMP PROGRAM 920.9281 ENVIRONMENTAL COMPLIANCE 920.9306 MISC GENERAL EXPENSE

0

0

166

1,000

(100)

0

0

0

0

10,133

18,098

34,488

213,000

(48)

7,849

11,647

6,451

55

2,541,971

5,384,253

5,602,689

34,226,278

(4)

2,525,586

5,173,993

210,259

4

Operating Transfer Operating Transfer/Other Funds 597.8262 TRANSFER TO CITY 4% ER REVEN

84,953

175,284

186,062

1,165,000

(6)

86,860

173,721

1,562

1

Total For Operating Transfer/Other Funds:

84,953

175,284

186,062

1,165,000

(6)

86,860

173,721

1,562

1

Total For General Expense: Total Expenses(before Operating Transfers)

Utilities & Labor Donated 597.8261 UTILITIES & LABOR DONATED

16,277

33,276

36,000

232,000

(8)

16,923

34,955

(1,679)

(5)

Total For Utilities & Labor Donated:

16,277

33,276

36,000

232,000

(8)

16,923

34,955

(1,679)

(5)

Total Operating Transfer Total For Total Operating Transfer:

101,231

208,560

222,062

1,397,000

(6)

103,784

208,677

(116)

0

168,479

173,245

(258,817)

988,982

(167)

14,185

40,115

133,130

332

Net Income Profit(Loss)

169

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR PERIOD ENDING FEBRUARY 2017 2017 FEBRUARY

Water Revenue

2017 YTD BUDGET

2017 YTD

2017 ANNUAL BUDGET

2017 YTD Bud Var%

2016 FEBRUARY

2016 YTD

YTD VARIANCE

2016 v. 2017 Actual Var%

Operating Revenue Water Sales 610.6101 WATER SALES COMM & RES/COM

112,872

234,574

237,125

2,160,950

(1)

110,551

232,783

1,790

1

Total For Water Sales:

112,872

234,574

237,125

2,160,950

(1)

110,551

232,783

1,790

1

112,872

234,574

237,125

2,160,950

(1)

110,551

232,783

1,790

1

112,872

234,574

237,125

2,160,950

(1)

110,551

232,783

1,790

1

1,621

3,721

4,166

25,000

(11)

2,778

6,233

(2,512)

(40)

1,621

3,721

4,166

25,000

(11)

2,778

6,233

(2,512)

(40)

Total Operating Revenue Total For Total Operating Revenue: Other Operating Revenue Interest/Dividend Income 460.4691 INTEREST & DIVIDEND INCOME Total For Interest/Dividend Income: Customer Penalties 620.6301 CUSTOMER PENALTIES

1,017

2,065

2,500

15,000

(17)

1,180

2,228

(163)

(7)

Total For Customer Penalties:

1,017

2,065

2,500

15,000

(17)

1,180

2,228

(163)

(7)

Connection Fees 620.6401 WATER/ACCESS/CONNECTION FE

22,281

50,742

25,000

150,000

103

9,605

88,599

(37,857)

(43)

1,634

3,918

1,666

10,000

135

654

1,885

2,033

108

23,915

54,660

26,666

160,000

105

10,259

90,484

(35,824)

(40)

0

20

0

0

0

0

0

20

0

515

1,105

1,030

2,060

7

515

1,030

75

7

620.6402 MISC CONNECTION FEES Total For Connection Fees: Misc Revenue 470.4722 MISC NON-UTILITY 470.4750 RENTAL PROPERTY INCOME 620.6403 MISCELLANEOUS REVENUE 620.6404 HYDRANT MAINTENANCE PROGR 620.6406 WATER TOWER LEASE Total For Misc Revenue:

0

0

0

0

0

642

642

(642)

(100)

896

1,871

1,166

7,000

60

903

1,805

65

4

17,204

34,408

23,333

140,000

47

14,138

28,276

6,132

22

18,615

37,404

25,529

149,060

47

16,198

31,754

5,650

18

45,169

97,851

58,861

349,060

66

30,415

130,700

(32,848)

(25)

45,169

97,851

58,861

349,060

66

30,415

130,700

(32,848)

(25)

158,042

332,425

295,987

2,510,010

12

140,967

363,484

(31,058)

(9)

Total Other Revenue Total For Total Other Revenue:

Total Revenue Expenses

170

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR PERIOD ENDING FEBRUARY 2017

Water Production Expense 700.7021 MTCE OF STRUCTURES Total For Production Expense: Pumping Expense 710.7101 SUPERVISION 710.7181 SUPPLIES & EXPENSE 710.7182 SAMPLING

2017 FEBRUARY

2017 YTD BUDGET

2017 YTD

2017 ANNUAL BUDGET

2017 YTD Bud Var%

2016 FEBRUARY

2016 YTD

YTD VARIANCE

2016 v. 2017 Actual Var%

1,803

3,170

5,000

30,000

(37)

927

2,471

698

28

1,803

3,170

5,000

30,000

(37)

927

2,471

698

28

4,427

8,430

8,203

49,220

3

4,388

8,514

(83)

(1)

13,971

29,996

38,333

230,000

(22)

29,134

44,235

(14,238)

(32)

1,047

2,052

2,666

16,000

(23)

772

1,233

819

67

710.7183 CHEMICAL FEED

159

8,585

5,000

30,000

72

16,832

18,025

(9,440)

(52)

710.7220 MTCE OF WELLS

14,834

27,187

41,666

250,000

(35)

9,131

17,858

9,328

52

177

335

2,083

12,500

(84)

172

330

5

2

34,616

76,588

97,953

587,720

(22)

60,431

90,197

(13,609)

(15)

1,082

1,855

17,916

107,500

(90)

913

1,771

84

5

324

947

1,500

9,000

(37)

423

875

72

8

710.7230 SCADA - PUMPING Total For Pumping Expense: Distribution Expense 730.7301 MTCE OF WATER MAINS 730.7309 LOCATE WATER SVC 730.7310 LOCATE WATER MAIN 730.7312 WATER METER SERVICE 730.7321 MTCE OF CUSTOMERS SERVICE

0

0

0

0

0

0

14

(14)

(100)

218

1,238

1,333

8,000

(7)

347

682

555

81

1,570

3,275

4,166

25,000

(21)

1,581

3,305

(30)

(1)

730.7325 WATER MAPPING

204

278

3,333

20,000

(92)

0

0

278

0

730.7331 MTCE OF WATER HYDRANTS

478

1,133

728

31,000

56

344

693

440

64

730.7341 MISC WATER EXPENSE/INVENTO

191

330

2,000

12,000

(83)

1,020

1,020

(690)

(68)

730.7391 WAGES/WATER

443

859

1,130

6,780

(24)

473

957

(97)

(10)

730.7395 TRANSPORTATION EXPENSE

605

1,247

3,246

15,000

(62)

1,574

2,218

(971)

(44)

0

11,396

12,750

15,000

(11)

10,728

10,728

667

6

5,119

22,564

48,104

249,280

(53)

17,406

22,269

295

1

730.7399 GENERAL EXP/WATER PERMIT Total For Distribution Expense: Depreciation & Amortization 595.8031 DEPRECIATION

96,326

192,598

196,000

1,188,000

(2)

94,938

189,979

2,618

1

Total For Depreciation & Amortization:

96,326

192,598

196,000

1,188,000

(2)

94,938

189,979

2,618

1

Interest Expense 596.8071 INTEREST ON BONDS/LONG TERM

4,211

9,070

9,070

52,750

0

4,856

10,306

(1,236)

(12)

596.8075 INTEREST ON DEFEASED BONDS

(69)

(138)

(140)

(842)

(1)

(68)

(136)

(1)

1

Total For Interest Expense:

4,142

8,931

8,929

51,908

0

4,788

10,170

(1,238)

(12)

Other Operating Expense 597.8213 LOSS ON DISPOSITION OF PROP (C

0

0

0

1,000

0

0

0

0

0

171

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR PERIOD ENDING FEBRUARY 2017 2017 FEBRUARY

Water

2017 YTD BUDGET

2017 YTD

2017 ANNUAL BUDGET

2017 YTD Bud Var%

2016 FEBRUARY

2016 YTD

YTD VARIANCE

2016 v. 2017 Actual Var%

597.8264 DAM MAINTENANCE EXPENSE

0

0

1,300

7,800

(100)

0

0

0

0

597.8302 PENSION EXPENSE

0

0

0

1,500

0

0

0

0

0

597.8341 INTEREST PD ON METER DEPOSIT 597.8400 RENTAL PROPERTY EXPENSE Total For Other Operating Expense: Customer Accounts Expense 900.9021 METER READING EXPENSE 900.9051 MISC CUSTOMER ACCTS EXP-CO

2

4

3

20

67

2

4

0

25

56

101

166

1,000

(40)

268

304

(202)

(67)

58

105

1,470

11,320

(93)

270

308

(202)

(66)

815

1,450

1,166

7,000

24

276

448

1,001

224

4,128

8,530

10,833

65,000

(21)

4,361

8,782

(251)

(3)

900.9061 CUST BLGS NOT PD/SENT FOR CO

0

345

250

1,000

38

0

0

345

0

Total For Customer Accounts Expense:

4,944

10,326

12,249

73,000

(16)

4,637

9,230

1,095

12

Administrative Expense 920.9201 SALARIES/OFFICE & COMMISSION

13,187

26,867

29,333

176,000

(8)

11,539

22,460

4,406

20

0

0

166

1,000

(100)

0

0

0

0

3,329

4,148

4,500

27,000

(8)

2,979

10,126

(5,977)

(59)

586

1,162

833

5,000

39

766

766

396

52

60

115

166

1,000

(31)

65

120

(4)

(3)

920.9221 LEGAL FEES

161

223

833

5,000

(73)

477

716

(493)

(69)

920.9231 AUDITING FEES

305

610

610

3,663

0

2,400

2,400

(1,789)

(75)

1,759

3,519

5,000

30,000

(30)

1,890

3,780

(260)

(7)

0

0

0

4,600

0

0

0

0

0

920.9205 TEMPORARY STAFFING 920.9211 OFFICE SUPPLIES & EXPENSE 920.9212 LT & WATER CONSUMPTION/OFFI 920.9213 BANK CHARGES

920.9241 INSURANCE 920.9260 UTILITY SHARE DEF COMP 920.9261 UTIL SH OF MEDICAL/DENTAL/DI

10,135

33,823

35,596

153,576

(5)

13,692

33,356

466

1

920.9262 UTILITY SHARE OF PERA

3,572

6,993

3,958

23,750

77

1,462

2,868

4,125

144

920.9263 UTILITY SHARE OF FICA

3,323

6,462

4,208

25,250

54

1,404

2,750

3,712

135

920.9264 EMPLOYEES SICK PAY

1,003

3,899

4,291

25,750

(9)

1,597

4,520

(621)

(14)

920.9266 EMP VACATION/HOLIDAY PAY

2,579

11,523

10,000

60,000

15

4,885

12,748

(1,225)

(10)

920.9268 MISCELLANEOUS - WELLHEAD P

0

0

0

1,000

0

0

0

0

0

920.9291 CONSULTING FEES

0

0

3,333

20,000

(100)

0

0

0

0

607

1,036

1,250

7,500

(17)

322

736

300

41

23

23

666

4,000

(97)

49

249

(226)

(91)

8,741

9,449

9,800

38,000

(4)

(2,087)

10,424

(974)

(9)

7

7

500

3,000

(99)

0

3

3

75

920.9305 SCHOOLS & MEETINGS

664

1,676

4,666

28,000

(64)

2,990

3,608

(1,932)

(54)

920.9321 MTCE OF GEN PLANT/OFF HEATIN

137

706

416

2,500

69

0

163

542

330

920.9301 TELEPHONE 920.9302 ADVERTISING 920.9303 DUES & SUBSCRIPTIONS - FEES 920.9304 TRAVEL EXPENSE

172

ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR PERIOD ENDING FEBRUARY 2017 2017 FEBRUARY

Water Total For Administrative Expense: General Expense 920.9269 CONSERVATION IMP PROGRAM 920.9281 ENVIRONMENTAL COMPLIANCE 920.9306 MISC GENERAL EXPENSE Total For General Expense:

2017 YTD BUDGET

2017 YTD

2017 ANNUAL BUDGET

50,184

112,248

120,131

645,589

1,286

1,798

1,666

44

83

100

0

0

1,330

2017 YTD Bud Var%

2016 FEBRUARY

2016 YTD

YTD VARIANCE

2016 v. 2017 Actual Var%

(7)

44,435

111,801

447

0

10,000

8

360

662

1,136

172

600

(16)

42

82

1

2

83

500

(100)

0

0

0

0

1,882

1,849

11,100

2

403

744

1,138

153

198,527

428,416

491,688

2,847,917

(13)

228,239

437,173

(8,756)

(2)

0

0

83

500

(100)

0

0

0

0

0

0

83

500

(100)

0

0

0

0

(40,485)

(95,990)

(195,785)

(338,406)

(51)

(87,271)

(73,689)

(22,301)

30

Total Expenses(before Operating Transfers) Operating Transfer Transfer To City For 99 Bond Utilities & Labor Donated 597.8261 WATER AND LABOR DONATED Total Operating Transfer Total For Total Operating Transfer: Net Income Profit(Loss)

173

UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Troy Adams, P.E. – General Manager MEETING DATE: AGENDA ITEM NUMBER: April 11, 2017 5.2 SUBJECT: Waco #2 Electric Substation Materials Bid Award ACTION REQUESTED: Award bid for the Waco #2 electric substation materials to Border States Electric for the amount of $151,283.65. BACKGROUND: Approved in the 2017 budget was the addition of a new electric substation. This new substation will be located adjacent to our existing Waco Substation on the NW corner of County Road 35 and Zebulon Street NW. The materials required for the new electric substation have been determined and were noticed for formal bids. DISCUSSION: The bid opening was April 4, 2017 and the bid tabulation is attached. We received two bids of which only one was complete. A third bid was receive late which was returned to the bidder. The bid for the materials from the one responsible bidder is consistent with early budgetary estimates. FINANCIAL IMPACT: The cost of the materials package was included in the capital budget as part of this project. ATTACHMENTS:  Waco #2 Electric Substation Materials Bid Tabulation

______________________________________________________________________________ Page 1 of 1 174

Elk River Municipal Utilities Bid Tabulation for Waco #2 Electric Substation Materials Bid Opening: April 4, 2017 @ 1:00 p.m.

Vendors

Border States Electric 105 25th Street N. Fargo, ND 58102

Bid Bond Notarized Bid Complete

Yes Yes Yes

Price

Resco 2250 Pinehurst Dr. Madison, WI 53744

Yes Yes NO Did not bid all Materials $151,283.65 $68,307.22

175

Dakota Supply Group 2601 3rd Ave. N. Fargo, ND 58108 NO NO NO Bid not on Time $0

UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Troy Adams, P.E. – General Manager MEETING DATE: AGENDA ITEM NUMBER: April 11, 2017 5.3 SUBJECT: Legal Counsel Retainer Increase ACTION REQUESTED: Approve a Legal Counsel Retainer for Beck Law Office of $1,500 per month. BACKGROUND: In May 2009 the Utilities Commission approved a legal counsel retainer of $1000 per month for Peter Beck with Gray Plant Mooty. ERMU continues to contract legal services with Peter Beck with a $1000 per month retainer through Beck Law Office. DISCUSSION: According to the Bureau of Labor Statistics, the $1,000 retainer in 2009 is equivalent to a $1,135.48 retainer in 2017. And justifiably, the retainer for legal counsel service should be adjusted. The original quote for legal counsel services in 2009 was higher and the Commission negotiated a lower rate to be reevaluated after establishing history of legal labor hours. The retainer rate had been revisited approximately a year later and it was agreed that the $1,000 per month retainer remain in effect. The billable hours of legal service ERMU receives from Peter Beck under this retainer has always been greater than the amount billed. Peak hours are approximately five times that of the billed retainer, but consistently the hours are greater that two time the monthly retainer rate. Due to inflation since 2009 and due to the normal usage, staff recommends increasing the monthly retainer for legal services from $1,000 per month to $1,500 per month. FINANCIAL IMPACT: This increase of $500 per month for April through December would result in a $4,500 increase in legal expenses for 2017.

______________________________________________________________________________ Page 1 of 1 176

UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Troy Adams, P.E. – General Manager MEETING DATE: AGENDA ITEM NUMBER: April 11, 2017 5.4 SUBJECT: Wage & Benefits Committee Update ACTION REQUESTED: Approve effective immediately the hiring of one apprentice lineworker because of system growth, a second apprentice lineworker to proactively address an upcoming anticipated retirement, and change the part time Meter Reader position to full time status. BACKGROUND: The Wage & Benefits Committee (W&BC) was created to help the Commission develop and maintain a pay plan structure and benefits package. The W&BC also helps the Commission with succession planning and to review pay equity compliance. The W&BC evaluates and recommends to the Commission. The W&BC does not have the authority to act without prior Commission delegation of authority. At the March Commission meeting, staff presented concerns to the Commission regarding staffing levels, current work levels, and system growth rate. The Commission directed staff to take the specific concerns to the W&BC and follow the established process for evaluation. DISCUSSION: The W&BC met on April 5 to receive an update on the recent Technical Services Superintendent interviews, to evaluate current staffing level concerns, and to review the pay equity compliance status. Technical Services Superintend Update: An update on the Technical Services Superintendent was provided. An offer was extended on April 7. Staffing Levels, Organizational Growth, and Succession Planning: The W&BC evaluated staffing levels for the electrical and technical services department. In comparison to pre-2009 recession Full Time Equivalent (FTE) numbers, the Electric Department currently has 0.5 FTE fewer employees excluding previously outsourced work that has since been brought in house. This is a 3.4% reduction in staff sizing. During the recession this reduction was manageable. Even with the 2015 electric service territory transfer agreement these levels were sufficient. That was true until the economy turned around in spring of 2017. Similarly, the Technical Services Department has only grown by 1 FTE when excluding previously outsourced work that has since been brought in house and excluding the sale of the ______________________________________________________________________________ Page 1 of 2 177

security department. This is a FTE growth rate of 0.88%. During this same time period, the number of electric meters has grown by 20%. And with planned future electric service territory transfers, and projected organic customer growth, it is anticipated that the number of electric meters with grow by an additional 12% by 2020. In addition to the system growth, ERMU is anticipating a number of key retirements within that same time period. Also evaluated was the locator position. In 2009 ERMU had two full time locators. During the recession, one of the locators applied for an internal promotion and became a Meter Technician. That second locator position was not backfilled at that time. With the added 12 square miles of electric service territory, and the additional 2,000 customers that will be transferred from Connexus by 2020, ERMU will need to hire that second locator at some time. With the recovery of the economy, the number of locates has increased substantially. The W&BC discussed options and recommend hiring a second locator in 2018. This delay in hiring can be accomplished through utilizing other labor resources temporarily. To do this, the W&BC discussed changing the Meter Reader position from part time to full time as this is going to be needed either way, then monitor the locating work load. Another factor that may change the timing of hiring a second locater is the possibility of performing locating services for the City of Elk River for Wastewater and Storm Water utilities. This will be evaluated for future discussion. The W&BC also discussed the vacant Key Accounts Specialist position. With the sun setting of ERMU’s load management programs and the potential for replacement programs being developed soon, the W&BC discussed delaying the hiring of a Key Accounts Specialist until the position description can be finalized with updated essential job duties and required skills. The W&BC will bring the Conservation & Key Accounts Manager in to evaluate the Key Accounts Specialist position after a plan for the load management programs has been approved by the Commission. The W&BC considered the information and recommend to the Commission that they approve a number of changes in staffing levels. First, the W&BC recommend hiring one additional apprentice lineworker to accommodate the growth in the electric system. Second, the W&BC recommended the hiring of a second additional apprentice lineworker as a proactive measure to prepare for anticipated retirements. Third, the W&BC recommends increasing the Meter Reader position from a part time position to a full time position. Pay Equity Compliance: The W&BC reviewed the requirements and formulaic methodology for calculating and submitting the pay equity reports. It is required to file the pay equity report to the State of Minnesota every three years. ERMU’s next required filing is at the end of 2017. ERMU is currently in compliance. FINANCIAL IMPACT: The additions of the two apprentice lineworkers and the change in job status for the Meter Reader are not directly budgeted. However, the anticipated retirements will create some temporary savings in labor expense through the hiring process. Additionally, there are labor expense savings which have occurred as a result of the other vacant manager and specialist positions. It is anticipated that these factors will net out with minimal financial impact to the 2017 budget. ______________________________________________________________________________ Page 2 of 2 178

UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Troy Adams, P.E. – General Manager MEETING DATE: AGENDA ITEM NUMBER: April 11, 2017 6.1a SUBJECT: Staff Updates – General Manager ACTION REQUESTED: No Action Requested DISCUSSION:  The Board of Directors of the Minnesota Municipal Power Agency (MMPA) met on March 28, 2017 in Shakopee, Minnesota. The Board reviewed the progress of member cities in rolling out the Clean Energy Choice program to residential customers. The Board discussed expanding its renewable product options for commercial and industrial customers. The Board also discussed the status of renewable projects that the Agency is pursuing. 

As previously communicated, I had been nominated and now approved to serve on the American Public Power Association (APPA) Reliable Public Power Provider (RP3) Panel. The RP3 Panel is responsible for decision regarding the RP3 Program including application grading, funding, and policy. This program was created to recognize utilities across the nation that have demonstrated a significant commitment to building their utility’s operational health and culture with an emphasis on supplying safe and reliable power to their communities. ERMU has been recognized with the RP3 distinction since 2012. Only about 20% of the nation’s 2,000 public power utilities hold this designation. The RP3 Panel is made of 18 utility representatives filling specific roles. I have been appointed as the Reliability Representative. For me to be appointed as a subject matter expert in this role out of the nation’s 2000 public power utilities speaks volumes about ERMU, our reputation for excellence, and the commitment from our Commission and employees to serve our community with safe and reliable electric utility service. The upcoming Panel meeting schedule includes the one during the 2017 APPA Lineworkers Rodeo and E&O Conference (which I am already attending), an application screening meeting in mid-October, and an application final grading meeting in early December.



The 2016 APPA Year In Review is attached.

______________________________________________________________________________ Page 1 of 2 179



Minnesota Municipal Utilities Association (MMUA) held a Board Meeting on March 16 at their Plymouth, MN, offices. I am currently the Past President. In addition to regular business, the board received critical Federal and State legislative updates, voted to continue the new MMUA Leadership Academy with a second two-year class starting in 2018, and discussed an upcoming strategic planning session.



On March 27 I met with the Connexus CEO for our quarterly meeting. We’d discussed State and Federal legislative issues, metering, solar, and other industry current topics. The discussion was positive and productive. Also, I will be attending the Connexus Annual Meeting on Wednesday April 12.



Minnesota Pollution Control Agency (MPCA) Air Permit for the Diesel Power Plant as required per Minnesota Rule 7019.3000 was submitted.



Mark Fuchs and I have continued to work with the contract engineer for the City of Otsego regarding their street lights. As you may recall, we had discussion these lights with the Commission a few months ago and had been given the consensus to work with the City of Otsego to negotiate an asset transfer to ERMU and then manage their city lights within the ERMU service territory. We have reached an agreement on terms and now need to draft an agreement for a transfer. Once this agreement is drafted, I will bring this back to the Commission for review.



I have a Midwest Municipal Transmission Group (MMTG) board meeting scheduled for April 27. This meeting will be conducted via conference call. MMTG is the group through which ERMU and Central Municipal Power Agency/Services (CMPAS, formerly CMMPA) purchased an ownership in the CAPX2020 transmission project.



Last month the Elk River Rotary held a strategic planning session in which I participated. I am currently past president. The strategic planning session was held at City Hall. On April 5, we held a Rotary Membership Committee meeting as a follow-up to the strategic planning session and in an effort to align efforts of the Rotary membership towards the strategic goals of the club. I roll off this board in July 2017.

ATTACHMENTS:  2016 American Public Power Association Year In Review

______________________________________________________________________________ Page 2 of 2 180

UTILITIES COMMISSION MEETING TO: ERMU Commission MEETING DATE: April 11,2017 SUBJECT: Staff Update ACTION REQUESTED: None

FROM: Theresa Slominski – Finance & Office Manager AGENDA ITEM NUMBER: 6.1b

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 (MISO) 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

the reporting is due.) CMMPA acts as the collective agent for this reporting and gathers all the information from those municipals participating in the transmission assets opportunity. The report for 2015 that was just filed this year will be used for the calculations of revenues we will receive in 2018.

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UTILITIES COMMISSION MEETING TO: ERMU Commission MEETING DATE: April 11, 2017 SUBJECT: Staff Update ACTION REQUESTED: None

FROM: Mark Fuchs – Electric Superintendent AGENDA ITEM NUMBER: 6.1c

DISCUSSION:  Had eight new services.  Continue working on collecting data with the GPS for our ArcView maps as time permits.  Finished tree trimming for the year.  Continue rebuilding 165th Ave; this is in Area 2 that we acquired from Connexus.  Started ordering material for Waco 2 Substation.  Cargill is upgrading their service for the dairy barn and we replaced the underground three phase primary at the same time we were doing the upgrades.  Built a three phase overhead transformer bank and overhead secondaries for the Leachate Discharge Project that was placed at our west substation site. Waste Management will be at this site for approximately two years or until the landfill gets their Leachate pipe installed to the sewer main.  Working on permits along HWY 10 from Xenia Avenue to Gary Street for the Orono bridge replacement project that will begin this year.  A vehicle hit a street light pole at 11150 179th Avenue that needed to be replaced.  Added a street light pole and changed out the other four fixtures to LED at the Trott Brook Townhouse Association.  The Lineworkers Rodeo is quickly approaching. The event is being held in San Antonio, Texas May 5-6. We have one journeymen team that will be participating at the event. The journeyman team consists of three people; Matt Schwartz, Mitch Girtz, and Jared Rolstad. I will be a judge at the event and will also be attending the Engineering and Operations Technical Conference which immediately follows the rodeo May 7-10.

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UTILITIES COMMISSION MEETING TO: ERMU Commission MEETING DATE: April 11, 2017 SUBJECT: Staff Update ACTION REQUESTED: None

FROM: Eric Volk – Water Superintendent AGENDA ITEM NUMBER: 6.1e

DISCUSSION:  Delivered six new water meters.  Sealed the water meter, and took curb stop ties from seven water services.  Completed 25 BACTI/Total Chlorine Residual Samples o All confirmed negative for Coliform Bacteria. o Bacteriological/Disinfectant Residual Monthly Report submitted to the MDH  Completed 20 routine fluoride samples o All samples met MDH standards. o Completed one mandatory MDH fluoride validation sample o Submitted MDH Fluoride Report  Submitted MPCA Discharge Monitoring Report for the Diesel Generation Plant.  Completed two Radchem samples required by the MDH on WTP #2 and WTP #3.  For the property located at 1437 Main (former MacGibbons property), we’ve completed the asbestos testing and are evaluating quotes for the asbestos abatement. In the coming months, we’ll be moving forward with the ERFD burning down the house, and the subsequent removal of the foundation. In the interim, the ERFD Fire Academy and the ERPD will be utilizing the house for training.  The painters have completed their portion of work at the WTP #7 Expansion. We are moving forward with the punch list and the final grading. The contractor has until June 15 to complete the entire job.  The water operators have completed the upgrades and reinstallation of the equipment at WTP #4. The new well motor is scheduled to be reinstalled on April 13 by EH Renner with assistance from the ERFD.  We have a meeting scheduled with Kodet Architectural Group on May 3 to discuss the next steps for the field services expansion. ATTACHMENTS:  March 2017 Pumping by Well  March 2017 Accumulated Precipitation Graph  March 2017 Daily Temperature Graph

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March 2017 Monthly Pumping By Well Well #9, 0.253, 1% Well #2, 2.108, 5%

Well #7, 0, 0% Well #8, 10.362, 24%

Well #3, 10.683, 25%

Well #6, 6.635, 16% Well #5, 12.416, 29%

Well #4, 0, 0%

Values Are Displayed in Millions of Gallons (Well #, Gallons Pumped, Percentage of Pumping)

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UTILITIES COMMISSION MEETING TO: ERMU Commission MEETING DATE: April 11, 2017 SUBJECT: Staff Update ACTION REQUESTED: None

FROM: Tom Sagstetter – Conservation & Key Accounts Manager AGENDA ITEM NUMBER: 6.1f

DISCUSSION:  Load management program moratorium letter was delivered to building officials in Elk River, Big Lake Township, Otsego, and Dayton.  Staff is drafting a letter that will be sent to all Cycled AC customers notifying them that the monthly credit will be reduced from $9 ($45 annually) to $6 ($30 annually). We are also informing these customers that the other load management programs (dual fuel, storage water heat, and storage space heat are in a moratorium as well. The letter will be mailed out in April.  Working with the City to retrieve results from the Fleet Carma data loggers that are part of the electric vehicle program development and grant from the American Public Power Association (APPA).  The charging station at Ralphie’s is progressing, but the development of the site is taking time and the charging stations cannot be installed until the final location of buildings and parking lots have been determined. Work is beginning on the level two charging station in the HRA parking lot downtown.  Worked with Energy City and Smart Municipals to partner in bringing a foreign exchange intern to the City. The intern is Jonas Scholtz and he is an environmental engineer. He will work with the City and ERMU on waste water, ground water, landfill operations, and education on the environmental impacts of recycling, energy efficiency, and life cycle carbon reductions.  Working closely with Amanda Bednar to get her up to speed on Energy City projects and the long term plan and vision. Exploring the option of an ordinance amendment to open Commission participation to residents and non-energy related businesses in an effort to get more input from the community.  Haubenschild farm will be closed for tours this summer. They are in the process of expanding the operation and due to the heavy construction and equipment being used; there were safety concerns with continuing to offer the tours during the expansion process. ATTACHMENTS:  Notice - City and Township Building Officials  Draft Letter - Cycled AC Customers ______________________________________________________________________________ Page 1 of 1 188

13069 Orono Parkway ● P.O. Box 430 Elk River, MN 55330-0430

Phone: 763.441.2020 www.elkriverutilities.com

IMPORTANT NOTICE REGARDING ELK RIVER MUNICIPAL UTILITIES LOAD MANAGEMENT PROGRAMS The following Load Management Programs are Closed: Cycled Air Conditioning, Dual Fuel, Storage Water Heat, and Storage Space Heat

Dear Sir or Madam: Effective February 14, 2017, the Elk River Municipal Utilities (ERMU) Commission placed direct load control programs (cycled AC, dual fuel, storage water heat, and storage space heat) on moratorium. The programs will be closed to new participation, and October 1, 2018, these programs will be terminated for existing participants. Due to the moratorium, ERMU will no longer be providing equipment or supporting these programs for new construction or remodel projects. Existing participants will continue to participate in the program until the termination date or until the customer account is closed. If there is a transfer in service, the program will be terminated for that address and will not be available for the new customer. In an effort to serve our customers better, ERMU will work to develop new and enhanced conservation and load management programs that will not use direct load control. If you have any questions please feel free to contact ERMU at (763) 441-2020. Sincerely,

Tom Sagstetter Conservation and Key Accounts Manager

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13069 Orono Parkway ● P.O. Box 430 Elk River, MN 55330-0430

Phone: 763.441.2020 www.elkriverutilities.com

IMPORTANT NOTICE REGARDING CYCLED AIR CONDITIONING CREDITS AND TERMINATION Dear Sir or Madam: Effective February 14, 2017, the Elk River Municipal Utilities (ERMU) Commission placed the Cycled Air Conditioning (Cycled AC) on a moratorium. The Cycled AC program as well as the other direct load control programs (dual fuel, storage water heat, and storage space heat), will be closed to new participation. On October 1, 2018, these programs will be terminated for existing participants. Until the program is terminated, the credit that existing participants will receive for participating in this program will be reduced from $45/summer to $30. Customers will receive a $6 credit/month during the billing months of June – October. The reduction in the monthly credit and program moratorium of the cycled AC and other load control programs is a result of changing technology and costs to upgrade existing technology, and the changes in wholesale energy markets. Existing participants will continue to participate in the program until the termination date (October 1, 2018) or until the customer account is closed. If there is a transfer in service, the program will be terminated for that address and will not be available for the new customer. Currently ERMU offers over 20 programs to help customers use energy and water wisely. ERMU will continue to offer efficiency and conservation programs. ERMU will evaluate new and changes to existing programs to continue to provide programs that are cost effective but do not depend on direct load control of customers electrical equipment. If you have any questions please feel free to contact ERMU at (763) 441-2020. Sincerely,

Thomas J. Sagstetter Conservation and Key Accounts Manager

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