GRAND RAPIDS PUBLIC UTILITIES COMMISSION1569E8A2-964F... · Grand Rapids Public Utilities...
Transcript of GRAND RAPIDS PUBLIC UTILITIES COMMISSION1569E8A2-964F... · Grand Rapids Public Utilities...
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
A Component Unit of the City of Grand Rapids, Minnesota
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Fiscal Years Ended December 31, 2010 and 2009
Prepared by: Accounting and Finance Department
GRAND RAPIDS PUBLIC UTILITIES COMMISSION A Component Unit of the City of Grand Rapids, Minnesota
INTRODUCTORY SECTION
Letter of Transmittal
Certificate of Achievement
Organization
Organization Chart
FINANCIAL SECTION
Independent Auditors' Report
TABLE OF CONTENTS December 31,2010 and 2009
Management's Discussion and Analysis
Basic Financial Statements
Statements of Net Assets
Statements of Revenues, Expenses, and Changes in Net Assets
Statements of Cash Flows
Notes to Financial Statements
Supplemental Information
Combining Schedules of Revenues and Expenses
Electric Department - Detailed Schedule of Revenues and Expenses
Water Department - Detailed Schedule of Revenues and Expenses
Wastewater Collection Department - Detailed Schedule of Revenues and Expenses
Wastewater Treatment Facility - Detailed Schedule of Revenues and Expenses
Screen House - Schedule of Expenses
Industrial Waste Treatment Facility - Schedule of Expenses
Sludge Disposal
Secondary Treatment Facility - Schedule of Expenses
Combined Schedule of Administrative, General and Customer Accounts Expense
Schedule of Changes in Utility Plant
Schedule of Changes in Accumulated Depreciation
Schedule of Contributions to the City of Grand Rapids
3 - 11
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17 -18
19 - 27
30 - 31
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36- 58
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GRAND RAPIDS PUBLIC UTILITIES COMMISSION A Component Unit of the City of Grand Rapids, Minnesota
STATISTICAL SECTION
Financial Trends
Changes in Net Assets
TABLE OF CONTENTS (cont.) December 31,2010 and 2009
Operating Revenues by Source Operating Expenses by Source Nonoperating Revenues and Expenses Annual Capital Contributions by Source
Revenue Capacity
Electric Production and Distribution kWh Sold or Accounted for by Customer Class Number of Electric Customer Meters by Type Electric Rates - City Customers Electric Rates - Rural Customers Water Production and Distribution Water Distribution by Customer Class Number of Water and Wastewater Collection Customer Meters by Type Water and Wastewater Collection Rates - City Customers Water and Wastewater Collection Rates - Rural Customers Ten Largest Customers Wastewater Collection and Treatment
Debt Capacity
Ratios of Outstanding Debt by Type Pledged Revenue Coverage
Demographic and Economic Information
Demographic and Economic Statistics Principal Employers
Operating Information
Full-Time Equivalent Commission Employees by Function Operating and Capital Indicators - Electric Operating and Capital Indicators - Water and Wastewater Selected Financial Operating and Operating Ratios - Electric
Auditors' Report on Legal Compliance
79 80 81 82 83 84
85 86 87 88 89 90 91 92 93 94 95 96
97 98
99 100
101 102 103
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GRAND RAPIDS PUBLIC UTILITIES COMMISSION
INTRODUCTORY SECTION
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June 17, 2011 Members of the Commission Grand Rapids Public Utilities Commission 500 SE 4th Street Grand Rapids, Minnesota 55744 The Comprehensive Annual Financial Report of the Grand Rapids Public Utilities Commission (GRPUC) for the year ended December 31, 2010 is hereby submitted. This report was prepared by the Accounting and Finance Department, with the assistance of our independent auditing firm, Baker Tilly Virchow Krause, LLP. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the GRPUC. To the best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a manner designed to present fairly the financial position, results of operations, and cash flows of the GRPUC. All disclosures necessary to enable the reader to gain the maximum understanding of the financial activities of the GRPUC have been included. More information regarding the financial activities of the GRPUC can be found in Management’s Discussion and Analysis found in the Financial Section of this report. The GRPUC is a component unit of the City of Grand Rapids, Minnesota. Management of the GRPUC is responsible for establishing and maintaining an internal control structure designed to ensure that assets are protected from loss, theft, or misuse, and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. An independent audit of the GRPUC is performed each year to provide some assurance to the members of the Commission that accounting principles are correctly and consistently applied, and that assets are properly safeguarded. The certified public accounting firm of Baker Tilly Virchow Krause, LLP conducted this year’s audit. Based on the audit, Baker Tilly Virchow Krause, LLP issued an unqualified opinion on the financial statements for the years ended December 31, 2010 and 2009. The auditor’s opinion accompanies this report.
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GENERAL INFORMATION The City of Grand Rapids is situated on the banks of the Mississippi River, in north central Minnesota. The city is located approximately 175 miles north of the Minneapolis-St. Paul metropolitan area, and is the county seat of Itasca County. On March 30, 1910, the Grand Rapids Village Council adopted a resolution establishing a Water, Light, Power and Building Commission for the Village of Grand Rapids. In 1949, in accordance with state statutes, the Water, Light, Power and Building Commission was changed to a Public Utilities Commission. The Grand Rapids Public Utilities Commission is a branch of the City government charged by Section 412.321, Minnesota Statutes with full control, operation and management of the electrical power distribution system, the water production, treatment and distribution systems, and the wastewater collection and treatment systems. The area served by the GRPUC includes the Cities of Grand Rapids, LaPrairie, Cohasset and certain other outlying areas. The GRPUC distributes electrical power to 5,433 city customers, 1,151 rural customers (including the City of LaPrairie), and 352 off-peak customers. One industrial customer is also served. Minnesota Power provides wholesale electric service under a contract that expires in 2013, with no minimum requirement for power purchased. The contract provides that the GRPUC may purchase or lease generation capacity and/or install and operate its own generation capacity to address native load requirements in excess of 16 MW. The contract also provides the GRPUC the ability to purchase a portion of its electric service requirements as renewable and/or high-efficiency energy. Power is received at 115 kV and transformed to 22.9 kV for distribution to 4 major substations, 5 rural step-down stations, or directly transformed to consumer applicable voltages. The main 115 kV to 22.9 kV substation was constructed in 2005 at a cost of $2.3 million dollars, and financed through reserves. The electrical distribution system consists of 169 overhead and 159 underground circuit miles. The GRPUC is responsible for all construction, operation, and maintenance of the electric distribution system. The GRPUC provides potable water for 3,094 city customers and 1 industrial customer, the City of LaPrairie, and Itasca Community College. The source of water is five wells with a combined pumping capacity from 1,600 to over 2,500 gallons per minute. The GRPUC owns one water treatment facility capable of treating 3.24 million gallons of water per day. Water treatment consists of aeration, gravity filtration, and zeolite softening. Treated water is stored in a .5 million gallon underground water reservoir and pumped to the distribution system using high service pumps. The distribution system includes three .5 million gallon elevated storage reservoirs and 79 miles of cast and ductile iron distribution mains consisting mostly of 6”, 8” and 12” pipe. The GRPUC is responsible for the construction, operation, and maintenance of the production and treatment facilities and the replacement of the distribution system assets. Wastewater collection and treatment services are provided to 3,100 city customers and 17 rural customers. The GRPUC also provides treatment for one industrial customer, the City of Cohasset, the City of LaPrairie, and Itasca Community College. Wastewater collection is provided through a 69-mile system of gravity and force mains. The system includes 11 sewage lift stations located throughout the City. The Wastewater Treatment Facilities consist of the Industrial Screening/Pumping Station, the Industrial Treatment Plant, and the Secondary Treatment Plant. These facilities treat an average of 7.5 million gallons of waste effluent per day; 6.0 million gallons from UPM/Blandin Paper Company and 1.5 million gallons from domestic users. The Grand Rapids Wastewater Treatment Facilities are the fifth largest in the State of Minnesota and is the second largest bio-solids generator. The GRPUC is responsible for the replacement, operation, and maintenance of the wastewater collection system and the construction, operation and maintenance of the wastewater treatment facilities.
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GENERAL INFORMATION (cont.) In 1996, the Grand Rapids Public Utilities Commission constructed a new service center building to house the Utilities’ business office and the Electric, Water Distribution, and Wastewater Collection Departments. The City of Grand Rapids leases a portion of the building that is used by the City’s Public Works Department. The combined service center facility has allowed the GRPUC and the City to combine certain functions, in order to provide better and more efficient services to their constituents. The GRPUC adopts an annual, non-appropriated budget that includes both capital outlays and operating revenues and expenses. The budget is based on the overall financial plan for the GRPUC, taking into consideration the results of various rate studies that project anticipated revenues and required expenditures over a five to seven year period. Budget-to-actual comparisons are made on a quarterly basis, with appropriate action taken at that time.
FACTORS AFFECTING FINANCIAL CONDITION
LOCAL ECONOMY The City of Grand Rapids is located in the heart of a prime resort and recreational area in north central Minnesota and is a major commercial and industrial center for the area. The tourism industry also contributes heavily to the local economy. Recent annexations have increased the City’s population from 8,543 in 2005 to 10,869 in 2010. Forestry and its related products and activities are a major element of the economy of the area. The Blandin Paper Company operates a large paper mill in the City, and is a major employer with approximately 450 employees. Another major employer is the Grand Itasca Clinic and Hospital with about 600 employees. In 2005, Grand Itasca completed construction of a $62 million health care campus. The City is a regional headquarters for the Minnesota Department of Natural Resources. Other major employers are the City and County government, Independent School District #318, and Wal-Mart Stores, Inc. Iron mining and taconite pellet processing are located in nearby communities and contribute to the employment opportunities for City residents and to the area economy. LONG-TERM FINANCIAL PLANNING In September 2007, the GRPUC contracted with Collaboration Unlimited to assist with the development of a Strategic Business Plan (SBP). Input for the plan came from employees, customers, representatives of the City of Grand Rapids and other stakeholders. The GRPUC also formed a Community Advisory Panel which contributed ideas, opinions and information, as well as reviewed and provided comments on the planning documents. The SBP communicates the overarching Strategic Framework that provides broad and enduring guidance. The more focused Annual Business Plan consists of operational goals, financial goals, and resource requirements. The Plan begins with a vision to the year 2015. Strategic Objectives have been prepared for a five-year implementation period from 2008-2012. In 2000, the GRPUC contracted with R.W. Beck, Inc. to complete a 10-year comprehensive capital improvement plan for the electric distribution system. The GRPUC also hired R. W. Beck, Inc. to perform a management and operation review of the electric department which was completed in March 2001. The recommendations of that study are being reviewed and implemented when deemed beneficial to the Utilities. TKDA Engineers were hired in 2002 to complete a Comprehensive Water System Study applicable to the next ten years. The study addressed water production, treatment and pumping capacities, as well as distribution and fire flow capabilities. Water production, treatment and pumping capacities were found to be adequate. Several of the distribution/fire flow system improvements identified in the study have been implemented. The remainder of the recommendations, whose implementation is based on growth, will be phased in as required to meet demand for service.
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FACTORS AFFECTING FINANCIAL CONDITION (cont.) LONG-TERM FINANCIAL PLANNING (cont.) In 2009, the GRPUC authorized construction of the $31.0 million Wastewater Treatment Facility (WWTF) Phase 1 Improvement Project. GRPUC received $4.5 million in state and federal grants and a low interest loan for up to $28.5 million from the Minnesota Public Facilities Authority (PFA) to complete the financing of the project. To ensure ratepayers and city taxpayers were not liable in the event of a default, the facilities’ largest user backed 90% of the PFA loan with an irrevocable draw letter of credit. The facility came on line April 2011. The GRPUC also contracted with Kaeding and Associates in 2001 to design and assist in the implementation of a Supervisory Control and Data Acquisition (SCADA) System for its Water Production and Treatment Facilities (WPTF). The SCADA system selected for the Water Treatment Facility is the standard that will be deployed throughout the utility. The system has also been installed in portions of the Wastewater Treatment Facility, the Electric Distribution System, and is currently being implemented as part of the Phase 1 WWTF Improvements project. Recently, the GRPUC contracted with an outside consultant to benchmark the operations of the Utility. The comparison, using generally accepted industry measures of productivity, efficiency and service levels, showed that GRPUC performs better than average in almost all categories when compared to other municipal utility operations. According to the published report, GRPUC also compared favorably when benchmarked with standard national industry data as reported by the American Water Works Association, and the American Public Power Association. RELEVANT FINANCIAL POLICIES Utility rates are reviewed annually and adjusted as needed. In addition to the cost of service and rate design studies conducted for each of the utilities, ancillary charges and special service charges, applicable to each utility, are also reviewed and updated as needed. In 1997, the GRPUC entered into a payment-in-lieu-of-tax (PILOT) agreement with the City of Grand Rapids and amended the agreement in December 2009. The PILOT agreement provides the terms and conditions under which the GRPUC will make payments in-lieu of taxes to the City and how the City will pay for Utility supplied services. Terms of this agreement may be modified by the GRPUC after meeting and conferring with the City Council. Currently, the GRPUC transfers 4.84 mills (one mill equals one-tenth of a cent) per kilowatt hour sold at retail to the City as an in-lieu of tax payment, with a minimum annual PILOT of $823,000. MAJOR INITIATIVES The following major projects were undertaken in 2010:
Electric Department Converted the overhead electric distribution system between Veteran’s Park and NE
3rd Ave to an underground system and added new switches to increase system flexibility, redundancy and reliability.
Completed conversion of the Stoeke Maxwell Addition 7.2 kV overhead system to a 23kV underground system.
Built a new overhead line from Hwy 76 to the Itasca Eco Industrial Park substation in anticipation of receiving electricity from Minnesota Power at this site.
Added a new padmounted switch at River Road and SE 8th St. to serve loads off the main feeder loop.
Re-configured feeds to the Secondary WWTP and added a new 23kV underground loop to feed the new Primary WWTP.
Converted the overhead electric distribution system on River Road from SE 7th Ave to SE 10th Ave to an underground system to make way for the City’s multi-use trail.
Purchased a spare 23kV to 4160V transformer as a backup for GRPUC substation transformers and the Secondary WWTP transformer.
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FACTORS AFFECTING FINANCIAL CONDITION (cont.)
MAJOR INITIATIVES (cont.)
Water and Wastewater Collection Department
Replaced the security system at the GRPUC Service Center. Replaced the flooring in the hallway and employee break room at the GRPUC Service
Center. Utilized City Staff to update the GIS Mapping System including all new water and
wastewater infrastructure installed since 2009. Upgraded the SCADA system Delta-V application workstations due to a Delta-V
software upgrade. Developed a preliminary cost estimate and design for the replacement of the 3rd Street
NW Lift Station #2 and the Clinic lift station #1 utilizing a submersible pump station.
Wastewater Treatment Department Continued construction of Phase 1 Improvement Project to the Wastewater Treatment
Facilities. Completed the Final Cover construction project on Phases 1 – 4 of the Industrial
Sludge Landfill. Purchased new Sludge Dump Truck.
Systems/Customer Service Engineer
Updated the feasibility study for an Automated Meter Reading System / Automated Utility Management System
Continued the upgrade and implementation of the GRPUC main office and satellite building’s telecommunications system – installed late 2009 and continued through early 2010.
Purchased two additional ARMER radios for continued integration with Itasca County’s new 800 MHz emergency communications system.
Continued to implement energy conservation programs for commercial, industrial, and residential customers.
Continued to promote customer participation in the OFF-Peak Heating and Cooling Programs currently offered by the utility, with the goal to achieve control of 33% of the municipal electrical load.
Continued to implement the Vegetation Control Programs for maintaining the power line right-of-ways.
Installed a 48 strand single mode fiber optic trunk from the GRPUC Service Center to the new WWTP Service Center.
Re-routed the existing 24 strand multi-mode fiber optic truck from the GRPUC Service Center to City Hall in order to accommodate the City of Grand Rapids’ Canal Street renovation project
Accounting and Finance Upgraded the iSeries hardware operating system to OS400 V5R4 in preparation for
Lotus Domino/Notes and Client Access upgrades for compatibility with Windows 7. Replaced the CISCO 3725 router which served as the main network firewall. Upgraded the Cogsdale Customer Service Management software to version 9.00.24. Tracked and recorded major changes to the accounting records and financial
statements due to the WWTF Phase 1 Improvements project. Continued development and enhancement of the GRPUC website.
Administration Developed new electric rate tariffs based on the wholesale electric cost of service and
the proposed 2010 electric department budget.
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FACTORS AFFECTING FINANCIAL CONDITION (cont.) MAJOR INITIATIVES (cont.)
Administration (cont.)
Developed new wastewater collection and treatment rates based on the costs reflected in the adopted 2010 wastewater collection and treatment budget.
Members of the Northeast Minnesota Municipal Electric Association initiated wholesale electric service agreement negotiations with Minnesota Power.
Conducted an independent evaluation of the proposed conceptual Workforce Merger proposal and utilizing empirical evidence disproved the hypothesis of the proposal. The evaluation included benchmarking the GRPUC against other Minnesota utilities and national averages for electric, water and wastewater utilities.
Acquired electric service territory in the City of La Prairie from Lake Country Cooperative Electric and entered into an agreement, with Minnesota Power allowing GRPUC to serve the former Ainsworth property with retail electric service allowing an opportunity for GRPUC to develop a second 115kV electric feeder.
Completed updating the employee Succession Plan Framework identifying current employee education and skill levels for promotion consideration.
Completed the hiring process necessary to fill two authorized vacancies; Warehouse and Purchasing Clerk and Water/Wastewater Collection positions. The WTP/WW Collection position was modified to provide a position that allowed both an operator as well as maintenance worker.
Implemented a PERA Phased Retirement Option and utilized the option in filling the Warehouse and Purchasing Clerk position.
Contracted with HR Survey to conduct an employee opinion survey. Initiated the process to allow Deer River Hired Hands, Inc. the opportunity to develop
the idled primary treatment dewatering building into an enclosed consumer products recycle center.
Implemented a credit card use policy to reduce accounting costs, provide for more efficient purchasing and cost tracking.
Developed a Customer Service Follow-up Survey process, implementation was put on hold.
As a component of the critical incident review process, developed an Emergency Reference Manual for use by employees.
Implemented programs and events to recognize GRPUC’s centennial anniversary including drafting a one hundred year history of events.
Initiated the concept of a Master Services Agreement and provided an accompanying example of a Service Order, i.e. cost recovery, performance standards etc. to formalize the sharing of services between the City of Grand Rapids and the GRPUC.
Projects for 2011 include:
Electric Department Add a 23kV transformer and recloser to the Itasca Eco Industrial Park substation. This
will provide a second feed to the City which will increase reliability and provide voltage support at the west end of Grand Rapids.
Install faulted circuit indicators at switching points along Main Feeder Circuits 320, 327 and 328. This will allow for quicker isolation of faulted sections of underground cable and thus shorten outage durations.
Relocate multiple poles and a portion of the overhead line on Isleview Road and Horseshoe Lake Road for the City’s road and trail construction.
Convert South Sub Circuit 10 from 4160V to 23kV. This will be done to move lines in anticipation of Itasca County’s Golf Course Road project and will remove load from the South Substation while increasing system efficiencies.
Replace multiple sections of old XLP type underground cable on Feeder 327.
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FACTORS AFFECTING FINANCIAL CONDITION (cont.) MAJOR INITIATIVES (cont.)
Water and Wastewater Collection Department
Install new gate operators for the north and south gates at the GRPUC Service Center. Utilize City Staff to update the GIS Mapping System which includes all new water and
wastewater infrastructure installed since 2010. Demolish the old house located on the Water Treatment Plant property and remove all
asbestos material. Replace the anthracite coal in all three iron filters. Replace the NW 3rd St. Lift Station #2 and convert to a submersible pump station.
Wastewater Treatment Department
Complete construction of the WWTF Phase 1 Improvement Project. Draft specifications and purchase a new sludge hauling dump truck. Construct Phase 8 of the Industrial Sludge Landfill. Replace the vertical airlines in Aeration Basin #1
Systems/Customer Service Engineer
Continue to investigate the feasibility of an Automated Meter Reading System / Automated Utility Management System. Implement a partial deployment of an AMI system in order to accommodate the Water Department’s initiative to replace or upgrade water meters on the system.
Continue the integration and implementation of the new office telephone system. The telephone system will tie into the customer information database in order to increase efficiencies in providing customer service.
Continue to implement energy conservation programs for commercial, industrial, and residential customers.
Continue to promote customer participation in the OFF-Peak Heating and Cooling Programs currently offered by the utility. The goal of the promotional programs is to achieve control of 33% of the municipal electrical load.
Continue to implement the Vegetation Control Programs for maintaining power line right-of-ways. Transition management of the Vegetation Control Programs to the new Electrical Distribution Engineer.
Prepare for the transition to a new utility-wide radio system with interconnectivity to the Itasca County ARMER Radio and the new office telephone system. Transition to the new radio system must occur before December 31, 2012, when the FCC implements a ban on all wide band VHF two-way radio use.
Assist the construction management team with the construction of the WWTF Phase 1 Improvement Project, including the integration of the SCADA and related systems.
Accounting and Finance
Replace main network switches to accommodate new networks installed as part of the WWTF Phase 1 Improvement Project.
Provide notebook computers to field crews for access to distribution system maps. Modify accounting records and procedures to accommodate changes due to the new
WWTF Improvements. Upgrade the Lotus Domino server and Notes clients for compatibility with Windows 7. Upgrade Client Access for use on Windows 7 work stations. Upgrade GP Dynamics and Cogsdale application software from version 9 to version
11, for compatibility with Windows 7 work stations. Upgrade Cogsdale application software to Customer Web2 and complete the
development of a customer web portal for access to utility account information.
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FACTORS AFFECTING FINANCIAL CONDITION (cont.)
MAJOR INITIATIVES (cont.)
Accounting and Finance (cont.)
Replace/install additional equipment and revise disaster recovery procedures in response to the critical incident review.
Continue implementation of the Cogsdale business application software including the financial and work management systems.
Review staffing requirements in customer service and related areas. Participate in the Internal Service Team reviewing possibilities for collaboration with the
City in the areas of Information Technology, Finance, and Human Resources. Administration
Review retail electric tariffs and adjust the tariffs to reflect the cost of service model developed by the Minnesota Public Utilities Commission.
Conduct a cost of service study in the water department and use the results in rate development to reflect the Minnesota Department of Natural Resources to mandate all water utilities to develop conservation based rates effective January 1, 2012.
Conduct a cost of service study in the wastewater collection and treatment department and if required adjust the tariffs to reflect the results of the study.
Review and update all non-current position descriptions and make proposed changes available to all employees.
Research and develop a formal wage/salary classification and administrative system. Update the 5 year capital improvement plan including prorated revenue and
expenditure statements to determine financing requirements (rates or debt) Continue the development of tactical plans to meet the goals for each of the strategic
objectives identified as a priority in the Strategic Business Plan. Consider development of a utility bill “round-up” program to help fund identified non-
profit community oriented services. Develop an agreement to recover investment in funded physical assets and relieve
ongoing financial obligations of assets utilized by a third party entity, which has been provided a capacity component of the wastewater treatment facilities.
Develop and implement a Master Services Agreement to formalize the sharing of services between the City of Grand Rapids and the Public Utilities Commission.
Complete the Employee Succession Plan and draft report for consideration by GRPUC. Evaluate the cost to acquire electric service territory within the borders of the City of
Grand Rapids and if feasible, initiate discussions with Lake Country Power to establish the terms of acquisition.
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AWARDS AND ACKNOWLEDGEMENTS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Grand Rapids Public Utilities Commission for its comprehensive annual financial report for the fiscal year ended December 31, 2009. This was the twelfth consecutive year that the government has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report on a timely basis could not have been accomplished without the efficient and dedicated services of the accounting and administration staffs of the GRPUC. We would also like to extend our appreciation to the independent auditors who contributed to the preparation of this report and to thank the members of the Commission for their interest and support in planning and conducting the financial operations of the GRPUC in a responsible and progressive manner. Respectfully submitted, Tyanne Betts Accounting and Finance Manager
Certificate of Achievement for Excellence
in Financial Reporting
Presented to
Grand Rapids Public Utilities Commission, Minnesota
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
December 31, 2009
ACertificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers
Association of the United States and Canada to government units and public employee retirement
systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in goverpment accounting
and financial reporting.
Executive Director
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GRAND RAPIDS PUBLIC UTILITIES COMMISSION
ORGANIZATION DECEMBER 31,2010
The Grand Rapids Public Utilities Commission, Grand Rapids, Minnesota was established in 1910 by City Council resolution. The members of the Commission are appointed to three year terms by the City Council. The Commission manages and controls the electric, water and wastewater collection and treatment of the City.
COMMISSION Term
Position Name Expires
President Stephen Welliver 3/1/2011
Secretary Glen Hodgson 3/1/2012
Commission Member Dale Adams 1/1/2013
Commission Member June Johnson 3/1/2013
Commission Member Greg Chandler 3/1/2011
ADMINISTRATION
General Manager ............................................................. , .......... . Anthony T. Ward
Accounting and Finance Manager. ............... '" ................................ . Tyanne L. Betts
Electric Distribution Manager. .............................................. , ......... . Ryan M. Patton
Systems/Customer Service Engineer .............................................. . Daniel E. Chase
Wastewater Operations Manager. .................................................. . James R. Ackerman
WaterIWastewater Collection Manager ................................. , .......... . Dennis M. Doyle
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CSR WTP
- Lineman - Operators (1) (3)
Electrician W/wwC
'- (1 ) Labor (2)
Meter W/wwC Reader Foreman
(2) (1)
Customer Service! W/WWCDept
~
System's '---- Manager Engineer
( ) Number in Position
---- Support
CUSTOMER
Truck Stores Drivers Clerk
(3) (1)
Maintenance Labor 1, 2
WWTP Data Customer
(3) Operators - Processing Service
(4) Clerk(1) Rep (3)
I WWTP Laboratory Accounting Lead Customer
Maintenance Operations Assistant Service Supervisor Director (1) (1) Rep (1)
I I Accounting! WWTPDept
Manager Finance Manager
I General
1-- - Manager I
I Attorney f----j I
Public I Utilities ~---
Commission
I Mapping
Tech!Locator (1)
I Project
- Coord. (1 )
Linemen (7)
I Electric
- Line Supervisor
Elec Dist. '-- Manager
L ______
Grand Rapi
Administrative Human
Resource Assistant
----- ______ 1
Public Utilities Co ds mmission
hart Organization C
Effective 2006
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GRAND RAPIDS PUBLIC UTILITIES COMMISSION
FINANCIAL SECTION
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Baker Tilly Virchow Krause, LLP Ten Terrace Ct, PO Box 7398 Madison, WI 53707-7398 tel 608 249 6622 fax 608 249 8532 bakertilly.com
INDEPENDENT AUDITORS' REPORT To the Grand Rapids Public Utilities Commission Grand Rapids Public Utilities Grand Rapids, Minnesota We have audited the accompanying statements of net assets of Grand Rapids Public Utilities Commission, a component unit of the City of Grand Rapids, Minnesota as of December 31, 2010 and 2009, and the related statements of revenues, expenses, and changes in net assets and cash flows for the years then ended. These financial statements are the responsibility of the utilities' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 1, the financial statements present only the Grand Rapids Public Utilities Commission and are not intended to present fairly the financial position City of Grand Rapids, and the changes in its financial position and its cash flows in conformity with accounting principles generally accepted in the United States of America. In our opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of Grand Rapids Public Utilities Commission as of December 31, 2010 and 2009, and the changes in its financial position and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we will also issue a report on our consideration of Grand Rapids Public Utilities Commission’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audits.
The Management’s Discussion and Analysis enclosed in this report is not a required part of the financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, consisting principally of inquiries of management, regarding methods of measurement and presentation to this information. However, we did not audit the supplemental information and express no opinion on it.
To the Grand Rapids Public Utilities Commission Grand Rapids Public Utilities
Our audits were conducted for the purpose of forming opinions on the financial statements. The supplemental information as identified in the table of contents is presented for purposes of additional analysis and is not a required part of the financial statements. Such information 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 "Letter of Transmittal" and "Statistical Section" listed in the accompanying table of contents are presented for the purposes of additional analysis and are not a required part of the financial statements of Grand Rapids Public Utilities Commission. The information has not been audited by us and, accordingly, we express no opinion on such information.
Madison, Wisconsin June 17, 2011
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GRAND RAPIDS PUBLIC UTILITIES COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS December31,2010,2009,and2008
(UNAUDITED)
The management of the Grand Rapids Public Utilities Commission (GRPUC) offers readers of the GRPUC's financial statements this narrative overview and analysis of the financial activities of the GRPUC for the years ended December 31, 2010, 2009, and 2008. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on page 3 - 11 of this report. The GRPUC implemented Governmental Accounting Standards Board Statement No. 34 - Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments - for the first time in 2003.
FINANCIAL HIGHLIGHTS
> The GRPUC's net assets grew by $4,496,618 or 12.19%, from 2009 to 2010. Increases in capital assets of $18,250,429 and increases in current and other assets of $15,994,067 were partially offset by increases in liabilities of $29,747,878. A majority of the increases in assets and liabilities were related to the Wastewater Treatment Facility (WWTF) Phase 1 Improvements Project currently under construction.
> Total operating revenues increased $2,687,076, or 13.42%, between 2009 and 2010. Electric revenues exceeded the prior year by $1,626,577, and were related to higher electric sales and an increase in rates. An increase in water revenues of $29,369 was due to a state petrofund reimbursement, which was partially offset by reduced water sales due to cooler summer weather and poor economic conditions. Although Wastewater collection revenues rose by $146,111, this was solely due to a rate increase, as sales volumes were actually lower than 2009, also due to the cooler weather and economic conditions. Wastewater treatment revenues were $885,019 higher than in 2009, and were associated with the fees charged for increases in industrial costs.
> Total operating expenses increased $1,710,679, or 8.88%, over the prior year. Much of the increase was related to higher purchased power costs, which increased $744,136, or 8.61 %, and higher industrial wastewater treatment costs which increased $708,310, or 15.00%. Higher electric distribution expenses also contributed to the overall cost increase.
> Water department expenses increased $61,980, or 4.50%, in 2010. A large increase in distribution costs related to removal of contaminated soils was partially offset by reduced expenses in other areas. Wastewater collection department expenses increased by $2,973. Reductions in domestic treatment costs at the Secondary Treatment Plant offset an increase in expenses related to the removal of contaminated soils. Total operating expenses in the Wastewater Treatment department rose 13.08%, or $676,408. Increased chemical costs and costs related to the closure of a portion of the sludge landfill, contributed to the increases in wastewater treatment expenses.
> Investment income decreased $20,188 or 27.30% in 2010, due to the persistence of extremely low interest rates.
OVERVIEW OF THE FINANCIAL STATEMENTS
The GRPUC provides electric distribution, water production, treatment and distribution and wastewater collection and treatment services to the City of Grand Rapids and certain outlying areas.
The GRPUC is a component unit of the City of Grand Rapids. The GRPUC's financial information is presented similar to enterprise funds, which are used to account for operations that are financed and operated in a manner similar to private business or where the governing body has decided that the determination of revenues earned, costs incurred and net income is necessary for management accountability.
Page 19
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS December31,2010,2009,and2008
(UNAUDITED)
OVERVIEW OF THE FINANCIAL STATEMENTS (cont.)
An analysis of the GRPUC's financial position begins with a review of the Statement of Net Assets, and the Statement of Revenues, Expenses, and Changes in Net Assets. These two statements report the GRPUC's net assets and changes therein. The net assets - the difference between assets and liabilities - is key to measuring the financial health of the GRPUC. Over time, increases or decreases in the net asset value are an indication of whether the financial position is improving or deteriorating. However, it should be noted that the financial position might also be affected by other non-financial factors, including economic conditions, customer growth, climate conditions, and changing regulations.
FINANCIAL ANAL YSIS
The Statement of Net Assets includes information on all of the GRPUC's assets and liabilities, with the difference between the two reported as net assets. This statement provides the basis for evaluating the capital structure and assessing the liquidity and financial flexibility of the GRPUC.
Change Change 2010 2009 2008 2010-2009 2009-2008
Current and Other Assets $ 44,355,194 $ 28,361,127 $ 20,020,437 $ 15,994,067 $ 8,340,690 Capital Assets 62,829,664 44,579,235 35,665,516 18,250,429 8,913,719
Total Assets 107,184,858 72,940,362 55,685,953 34,244,496 17,254,409
Long-Term Debt Outstanding 27,887,597 10,952,835 6,909,400 16,934,762 4,043,435 Other Liabilities 37,900,547 25,087,431 11,882,303 12,813,116 13,205,128
Total Liabilities 65,788,144 36,040,266 18,791,703 29,747,878 17,248,563
Invested in Capital Assets, Net of Related Debt 36,404,067 35,968,821 31,303,516 435,246 4,665,305
Restricted 222,141 474,207 370,895 (252,066) 103,312 Unrestricted 4,770,506 457,068 5,219,839 4,313,438 (4,762,771)
Total Net Assets $ 41,396,714 $ 36,900,096 $ 36,894,250 $ 4,496,618 $ 5,846
As shown in the above table, net assets increased by $4,496,618 or 12.19%, to $41,396,714 in 2010. The increase was mainly related to increases in current assets and capital assets.
In 2009, net assets increased to $36,900,096, which was a small increase of $5,846 or .02%. Increases in capital and other assets were almost completely offset by increases in long-term debt and other liabilities.
Page 20
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2010, 2009, and 2008
(UNAUDITED)
FINANCIAL ANALYSIS (cant.)
The specific nature or source of these changes becomes more evident in the Statement of Revenues, Expenses, and Changes in Net Assets as shown in Table 2.
The Statement of Revenues, Expenses, and Changes in Net Assets provides an indication of the GRPUC's financial health.
Table 2 Condensed Statement of Revenues,
Expenses, and Changes in Net Assets Change Change
2010 2009 2008 2010-2009 2009-2008 OPERATING REVENUES
Electric $ 14,853,521 $ 13,226,944 $ 12,369,743 $ 1,626,577 $ 857,201 Water 1,432,994 1,403,625 1,412,272 29,369 (8,647) Wastewater collection 1,293,227 1,147,116 1,112,009 146,111 35,107 Wastewater treatment 5,134,947 4,249,928 4,491,325 885,019 (241,397)
Total Operating Revenues 22,714,689 20,027,613 19,385,349 2,687,076 642,264
OPERATING EXPENSES Production 428,559 440,656 444,077 (12,097) (3,421 ) Purchased power 9,388,255 8,644,119 8,116,273 744,136 527,846 Distribution/collection 1,547,516 1,126,678 1,432,753 420,838 (306,075) Customer accounts 406,041 414,286 401,624 (8,245) 12,662 Administrative and general 1,541,125 1,621,733 1,528,307 (80,608) 93,426 Service center 134,560 113,533 126,367 21,027 (12,834) Communications 1,206 2,293 532 (1,087) 1,761 Domestic wastewater treatment 432,049 479,378 378,338 (47,329) 101,040 Industrial wastewater treatment 5,431,186 4,722,876 4,697,490 708,310 25,386 Depreciation 1,655,531 1,689,797 1,623,296 (34,266) 66,501
Total Operating Expenses 20,966,028 19,255,349 18,749,057 1,710,679 506,292
NON-OPERATING REVENUES (EXPENSES) Investment income 53,770 73,958 189,462 (20,188) (115,504) Investment income - demand payment 664,955 314,380 310,068 350,575 4,312 Landfill Contribution 260,000 165,000 155,000 95,000 10,000 Gain (loss) on property disposition 13,914 25,924 8,749 (12,010) 17,175 Interest expense (791,102) (437,618) (429,542) (353,484) (8,076) Capitalized Interest 33,417 33,417 Bond fees (1,053) (1,675) (1,601) 622 (74) Amortization of debt issuance costs (16,315) (8,514) (6,684) (7,801) (1,830) Combined service center lease revenues 127,693 132,107 123,430 (4,414) 8,677 Payment in lieu of taxes (825,825) (824,925) (653,542) (900) (171,383)
Total Non-Operating Revenues (Expenses) (480,546) (561,363) (304,660) 80,817 (256,703)
Income (Loss) Before Contributions 1,268,115 210,901 331,632 1,057,214 (120,731)
Capital Contributions 3,228,503 (205,055) 1,271,193 3,433,558 (1,476,248) Changes in Net Assets 4,496,618 5,846 1,602,825 4,490,772 (1,596,979)
Beginning Net Assets 36,900,096 36,894,250 35,291,425 5,846 1,602,825
Total Net Assets - Ending $ 41,396,714 $ 36,900,096 $ 36,894,250 $ 4,496,618 $ 5,846
Page 21
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS December 31,2010,2009, and 2008
(UNAUDITED)
FINANCIAL ANALYSIS (cont.)
In 2010, total operating revenues increased $2,687,076, or 13.42% from the prior year. Electric revenues increased $1,626,577, or 12.29%. After adjusting for higher electric rates implemented in 2010, electric kWh sales actually increased about 1.2%. Water revenues increased $29,369, or 2.1 %, while gallons sold decreased 3.13%. The decrease in water sales was offset by revenue received from a state petrofund reimbursement for contaminated soils. Wastewater Collection revenues rose by $146,111, or about 12.73%, due to a rate increase in 2010. Wastewater gallons collected actually decreased. Wastewater Treatment revenues were 20.82%, or $885,019, higher than in 2009, due to higher industrial treatment costs and sludge dump closure costs. Total operating expenses increased $1,710,679 or 8.88% over the prior year. The increased costs were mainly related to higher purchased power costs, increases in electric distribution expenses, higher water main maintenance costs, and increased industrial treatment and sludge landfill closure costs. Non-operating revenues rose $408,963 in 2010, while non-operating expenses decreased by $328,146.
In 2009, total operating revenues increased $642,264 or 3.31 % from the prior year. Electric revenues increased $857,201, or 6.93%. After adjusting for higher electric rates implemented in 2009, electric kWh sales actually decreased about 2.70%. Water revenues decreased $8,647, or .61 %. Water sales actually fell 3.6%, after accounting for the 2009 rate increase. Wastewater Collection revenues rose by $35,107, or about 3.2%. After adjusting for the 2009 rate increase, sales revenues based on volume fell 7.0%. Wastewater Treatment revenues were 5.4%, or $241,397 lower than in 2008, due to reduced industrial flow to the Wastewater Treatment facilities. Total operating expenses increased $506,292 or 2.70% over the prior year. Most of the increase was due to higher purchased power costs and the write-off of feasibility costs related to the Wastewater Treatment Plant Expansion project. Non-operating revenues fell $75,340 in 2009, while nonoperating expenses increased by $181 ,363, mainly due to an increase in the Payment in Lieu of Taxes.
Page 22
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS December 31 , 2010, 2009, and 2008
(UNAUDITED)
FINANCIAL ANALYSIS (cont.)
7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000
o m '~
~ 'ill CI) .... z,. 'u
Comparison of Electric Revenues
l!! ~ l!! ro "0 ~ '13 ~ '13 fa ....
"0 is) -8 :u "EiS) '5 ~ fa :u 'iii ~ ~ :u E i 5i
CI)
8 0 ... -85i u "0 l!!
z,. z,. ... l!! l!! 2 .... '13 'u :::l .... .... 2
112009 _2008
Electric sales in 2010 increased $1,187,707 or 8.96% over 2009 sales. About half of the revenue increase occurred in the demand and energy sales. The remainder of the increase was relatively evenly split between residential and commercial sales.
Electric sales for 2009 increased $1,433,421 or 12.13%, over the prior year. The increase was due to a 2009 electric rate increase. The largest percentage increase occurred in the city residential rate class, followed by city commercial sales. Sales revenues increased in all classes except rural, due to City annexations.
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
city
Comparison of Water Revenues
_____________ -j m2010
02009 --- -----------j _2008
rural public authorities
Water sales decreased $24,601 or 1.87% in 2010 over the prior year. Sales in all customer classes were below the previous year.
Water sales revenues for 2009 decreased $21,648 or 1.62% over 2008 sales. After adjusting for the 2009 rate increase, sales revenues actually decreased about 3.6%.
Page 23
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS December 31 , 2010, 2009, and 2008
(UNAUDITED)
FINANCIAL ANALYSIS (cont.)
1,200,000
1,000,000
800,000
600,000
400,000
200,000
o
Comparison of Wastewater Collection Revenues
city rural public septage haulers authorities
1:12010
02009
.2008
Wastewater Collection utility revenues for 201 0 increased $96,213 or 8.47%, over 2009 revenues. The increase in revenues was due to a rate increase.
Wastewater Collection department revenues increased $32,466 or 2.94% in 2009, over the previous year. The increase in revenues was due to a rate increase, while the total volume of collections actually decreased over 2008.
Page 24
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS December31,2010,2009,and2008
(UNAUDITED)
FINANCIAL ANALYSIS (cont.)
The Statement of Cash Flows reports the cash provided and used by operating activities, as well as other cash sources such as investment income and cash payments for repayment of debt and capital additions.
Table 3 Condensed Statement of Cash Flows
Change Change 2010 2009 2008 2010-2009 2009-2008
Cash Flows From: Operating activities $ (344,963) $ 4,804,468 $ 2,228,438 $ (5,149,431) $2,576,030 Noncapital financing activities (145,173) (467,460) (318,245) 322,287 (149,215) Capital and related financing activities 818,407 (2,591,479) (3,320,422) 3,409,886 728,943 Investing activities 450,629 {624,386~ 1,712,230 1,075,015 {2,336,616~
Net Change in Cash and Cash Equivalents 778,900 1,121,143 302,001 (342,243) 819,142
Cash and Cash Equivalents -Beginning of Year 2,035,024 913,881 611,880 1,121,143 302,001
Cash and Cash Equivalents -End of Year $ 2,813,924 $ 2,035,024 $ 913,881 $ 778,900 $ 1,121,143
Cash and Cash Equivalents decreased by $342,243 in 2010. Most of the decrease was due to a reduction in cash from operating activities.
Cash and Cash Equivalents increased by $1,121,143 in 2009. An increase in cash from operating activities, along with proceeds from two debt issues used to offset some capital construction costs, contributed to the increase.
Page 25
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS December 31,2010,2009, and 2008
(UNAUDITED)
FINANCIAL ANALYSIS (cont.)
Table 4 Condensed Schedule of Capital Assets
Change Change 2010 2009 2008 2010-2009 2009-2008
Capital Assets - Electric Distribution $ 21,762,167 $ 20,539,730 $ 19,810,198 $ 1,222,437 $ 729,532 General 3,882,821 3,708,160 3,686,548 174,661 21,612
Total Electric Capital Assets 25,644,988 24,247,890 23,496,746 1,397,098 751,144
Capital Assets - Water Production 4,334,648 4,314,119 4,314,119 20,529 0 Distribution 8,335,954 7,959,129 7,201,231 376,825 757,898 General 647,137 618,027 614,425 29,110 3,602
Total Water Capital Assets 13,317,739 12,891,275 12,129,775 426,464 761,500
Capital Assets - Wastewater Collection Collection 4,147,966 3,846,209 3,269,185 301,757 577,024 General 647,137 618,027 614,425 29,110 3,602
Total Wastewater Collection Capital Assets 4,795,103 4,464,236 3,883,610 330,867 580,626
Capital Assets - Wastewater Treatment Treatment Facilities 23,056,484 23,005,229 22,987,998 51,255 17,231
Total Wastewater Treatment Capital Assets 23,056,484 23,005,229 22,987,998 51,255 17,231
Total Capital Assets 66,814,314 64,608,630 62,498,129 2,205,684 2,110,501
Less: Accumulated Depreciation (32,815,323) (31,475,395) (30,051,695) (1,339,928) (1,423,700) Construction in Progress 28,830,673 11,446,000 3,219,082 17,384,673 8,226,918
Net Capital Assets $ 62,829,664 $ 44,579,235 $ 35,665,516 $ 18,250,429 $ 8,913,719
During 2010, net capital assets increased $18,250,429. Electric department capital assets increased $1,397,098 or 5.76%. Electric distribution infrastructure projects made up most of these additions. Water department capital assets increased $426,464 or 3.31 %. Water infrastructure projects for the City of Grand Rapids accounted for most of the increase. Wastewater Collection capital assets increased $330,867 or 7.41%. The increase was related to infrastructure projects for the City. Wastewater Treatment assets increased by $51 ,255 or .22%, due to equipment purchases. The increase in Construction in Progress was related to the WWTF Improvements Project.
In 2009, the GRPUC's capital assets increased $8,913,719. Electric capital assets increased $751,144 or 3.20%. Various electric infrastructure projects and vehicle purchases contributed to the Electric additions. Water department capital assets increased $761,500 or 6.28%. Wastewater collection capital assets increased $580,626 or 14.95%. Increases in Water and Wastewater Collection were related to infrastructure construction projects for the City of Grand Rapids. Wastewater Treatment assets increased by $17,231 or .07%, due to equipment purchases. The $8,226,918 increase in Construction in Progress was related to the WWTF Improvements project. More detailed information on capital asset activity can be found in Note 6 of the Notes to Financial Statements.
Page 26
LONG-TERM DEBT
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS December 31,2010,2009, and 2008
(UNAUDITED)
At December 31,2010, the GRPUC had three bond issues and two revenue notes outstanding. The Taxable General Obligation Wastewater Revenue Bonds, Series 2001 A were issued to fund construction of the Secondary Treatment Plant Phase I improvements in 2002. Proceeds from the General Obligation Water Revenue Note of 1999 were used to construct an elevated water storage tank. The Taxable General Obligation Wastewater Revenue Bonds, Series 2006A were issued to fund the construction of Phases 5 and 6 of the Industrial Sludge Landfill.
In 2009, the GRPUC approved the issuance and sale of $925,000 City of Grand Rapids (Public Utilities Commission) Taxable General Obligation Wastewater Revenue Bonds, Series 2009A. The proceeds of the bonds were used to design and construct Phase 7 of the Industrial Sludge Landfill.
Late in 2009, the $28,509,779 Taxable General Obligation Wastewater Revenue Note, Series 2009E was issued. This financing is used to fund the construction of the Wastewater Treatment Facility Phase 1 Improvements Project. Proceeds from the note are released as project costs are incurred. At the end of 2010, the principal amount of $22,563,597 had been received to pay for project costs. The repayment of this note is secured by a letter of credit for 90% of the principal and interest payments due on the debt.
During 2006, the Grand Rapids Public Utilities Revenue Bonds, Series 1996A were advance refunded by the City. The new bond issue was recorded in the City's financial records, with a corresponding long-term payable due to the City from the GRPUC as described in Note 9 of the Notes to Financial Statements.
Additional information on the GRPUC's long-term debt can be found in Note 8 of the Notes to Financial Statements.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the Grand Rapids Public Utilities Commission finances to all those with an interest in the GRPUC's finances. If you have questions about this report, or need additional financial information, contact the Accounting and Finance Manager, Grand Rapids Public Utilities Commission, PO Box 658,500 SE 4th Street, Grand Rapids, MN 55744.
Page 27
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Page 28
FINANCIAL STATEMENTS
Page 29
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
CURRENT ASSETS Cash and cash equivalents Other deposits and investments Accounts receivable Due from City of Grand Rapids Materials and supplies Interest receivable Prepaid expenses
STATEMENTS OF NET ASSETS December 31, 2010 and 2009
ASSETS
Restricted cash and investments - current portion Restricted accounts receivable - current portion
Total Current Assets
NON·CURRENT ASSETS Restricted cash and investments - non-current portion Restricted accounts receivable - non-current portion Capital Assets
Plant in service Accumulated depreciation Construction work in progress
Other Assets Other investments Unamortized debt issuance costs Other deferred debit Financial assurance landfill closure
Total Non-Current Assets
Total Assets
2010
$ 2,813,924 3,141,501 3,430,446
83,816 645,821
2,801 126,658 289,282
1,671,952
12,206,201
471,654 26,118,564
66,814,314 (32,815,323) 28,830,673
96,000 203,101
2,462,644 2,797,030
94,978,657
107,184,858
2009
$ 1,556,024 3,983,903 2,239,831
113,304 726,734
12,660 255,483 278,854
1,078,224
10,245,017
505,680 11,919,623
64,608,630 (31,475,395) 11,446,000
96,000 219,416
2,039,333 3,336,058
62,695,345
72,940,362
Page 30
LIABILITIES
2010 2009
CURRENT LIABILITIES Accounts payable $ 2,209,900 $ 4,397,724 Sales tax payable 69,717 64,428 Due to City of Grand Rapids 600,744 208,299 Accrued compensated absences 200,571 206,736 Current portion of advance from City of Grand Rapids 177,200 157,200 Current portion of demand payment deferral 1,671,952 1,078,224 Other current liabilities 1,577 62,552 Current liabilities payable from restricted assets:
Current portion of long-term debt 1,660,000 1,216,779 Accrued interest 255,411 37,938 Customer deposits 283,384 272,389
Total Current Liabilities 7,130,456 7,702,269
NON-CURRENT LIABILITIES Long-term debt 26,875,597 9,763,635 Advance from City of Grand Rapids 1,012,000 1,189,200 Customer advances for construction 2,500 51,271 Other deferred credits 98,968 102,942 Accrued compensated absences 292,739 318,702 Unearned revenue - grant 1,684,178 1,684,178 Demand payment deferral 25,894,676 11,892,011 Landfill closure costs 2,797,030 3,336,058
Total Non-Current Liabilities 58,657,688 28,337,997
Total Liabilities 65,788,144 36,040,266
NET ASSETS
Invested in capital assets, net of related debt 36,404,067 35,968,821 Restricted for
Capital replacement 219,704 471,770 Employee benefits 2,437 2,437
Un restri cted 4,770,506 457,068
TOTAL NET ASSETS $ 41,396,714 $ 36,900,096
See accompanying notes to financial statements. Page 31
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Page 32
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS Years Ended December 31,2010 and 2009
2010
OPERATING REVENUES Electric $ 14,853,521 $ \1\I",to~ 1 }432,994 VVl ... U.VI
Wastewater collection 1 ,293,227 Wastewater treatment 5,134,947
Total Operating Revenues 22,714,689
OPERATING EXPENSES Production 428,559 Purchased power 9,388,255 Distribution/collection 1,547,516 Customer accounts 406,041 Administrative and general 1,541,125 Service center 134,560 Communications 1,206 Domestic wastewater treatment 432,049 Industrial wastewater treatment 5,431,186 Depreciation and amortization 1,655,531
Total Operating Expenses 20,966,028
OPERATING INCOME 1,748,661
NON-OPERATING REVENUES (EXPENSES) Investment income 53,770 Investment income - demand payment 664,955 Landfill contribution 260,000 Gain on property disposition 13,914 Interest expense (791,102) Allowance for funds used during construction 33,417 Bond fees (1,053) Amortization of debt issuance costs (16,315) Combined service center lease revenues 127,693 Payment in lieu of taxes {825,825)
Total Non-Operating Revenues (Expenses) {480,546)
Income Before Contributions 1,268,115
CAPITAL CONTRIBUTIONS - CONNECTION FEES 248,667 CAPITAL CONTRIBUTIONS - REFUNDED CAPITAL CONTRIBUTIONS 2,979,836
CHANGES IN NET ASSETS 4,496,618
NET ASSETS - Beginning of Year 36,900,096
NET ASSETS - END OF YEAR $ 41,396,714 $
See accompanying notes to financial statements.
2009
13,226,944 1 A ()') a0c. ',"''tVv,ULv
1,147,116 4,249,928
20,027,613
440,656 8,644,119 1,126,678
414,286 1,621,733
113,533 2,293
479,378 4,722,876 1,689,797
19,255,349
772,264
73,958 314,380 165,000 25,924
(437,618)
(1,675) (8,514)
132,107 {824,925)
{561,363)
210,901
76,664 (901,322) 619,603
5,846
36,894,250
36,900,096
Page 33
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
STATEMENTS OF CASH FLOWS Years Ended December 31,2010 and 2009
CASH FLOWS FROM OPERATING ACTIVITIES Received from customers Paid to suppliers for goods and services Paid to employees for services
Net Cash Flows From Operating Activities
CASH FLOWS FROM NONCAPIT AL FINANCING ACTIVITIES Combined service center lease revenues Investment income - demand payments Landfill contributions Principal payments on long-term debt - landfill Interest paid on long-term debt - landfill Payment in lieu of taxes to City of Grand Rapids
Net Cash Flows From Non-Capital and Related Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets Capital contributions Capital contributions refunded Proceeds from debt issue Principal payments on long-term debt Payments on capital related advance from City of Grand Rapids Debt issuance costs Interest paid on long-term debt and advance
Net Cash Flows From Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Investment income Sale of investments Purchase of investments
Net Cash Flows From Investing Activities
Net Change in Cash and Cash Equivalents
CASH AND CASH EQUIVALENTS - Beginning of Year
CASH AND CASH EQUIVALENTS - END OF YEAR
There were no non-cash activities in 2010 or 2009.
2010
$ 20,942,644 (18,842,710)
{2,444,897)
{344,963)
127,693 664,955 260,000
(260,000) (111,996) {825,825)
{145,173)
( 19,439,257) 3,061,314
18,771,962 (956,779) (157,200)
{461 ,633)
818,407
63,629 4,287,000
{3,900,000)
450,629
778,900
2,035,024
$ 2,813,924
2009
$ 20,620,921 (13,476,539) {2,339,914 )
4,804,468
132,107 314,380 165,000
(165,000) (89,022)
{824,925)
{467,460)
(8,940,820) 1,062,600 (901,322)
7,101,592 (244,000) (164,800) (160,639) {344,090)
{2,591,479)
89,614 3,478,000
{4,192,000)
{624,386)
1,121,143
913,881
$ 2,035,024
Page 34
2010 2009
RECONCILIATION OF OPERATING INCOME TO NET CASH FLOWS FROM OPERATING ACTIVITIES
Operating income $ 1,748,661 $ 772,264 Adjustments to reconcile operating income to cash from operating activities
Non-operating expense (1,053) (1,675) Depreciation and amortization 1,655,531 1,689,797
Changes in assets and liabilities Accounts receivable (1,268,473) 660,596 Other current assets 239,226 54,567 Other assets 115,717 (316,595) Accounts payable (2,194,990) 1,920,891 Other current liabilities (107,575) 48,076 Other liabilities (532,007) (23,453)
NET CASH FLOWS FROM OPERATING ACTIVITIES $ (344,963) $ 4,804,468
RECONCILIATION OF CASH AND CASH EQUIVALENTS TO STATEMENTS OF NET ASSETS
Cash and cash equivalents $ 2,813,924 $ 1,556,024 Other deposits and investments 3,141,501 3,983,903 Restricted cash and investments - current portion 289,282 278,854 Restricted cash and investments 471,654 505,680 Other investments 96,000 96,000
Sub-totals 6,812,361 6,420,461 Less: Non-cash equivalents (3,998,437) (4,385,437)
CASH AND CASH EQUIVALENTS $ 2,813,924 $ 2,035,024
See accompanying notes to financial statements. Page 35
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2010 and 2009
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Grand Rapids Public Utilities Commission (GRPUC) have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to enterprise funds of governmental entities. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles.
GRPUC provides water supply and distribution, electric distribution and wastewater collection and treatment operations to properties within the City of Grand Rapids (municipality) as well as to certain other areas outside the municipality. GRPUC accounts for the cost of water, electric and wastewater operations on a continuing basis and is governed by the Grand Rapids Public Utilities Commission (Commission), which is appOinted by the city council. Customer rates and service rates are established by the Commission. The significant accounting principles and poliCies utilized by GRPUC are described below.
REPORTING ENTITY
GRPUC is a component unit of the municipality. Component units are legally separate organizations for which elected officials of the primary government (municipality) are financially accountable. Component unit status is determined using the following criteria:
The municipality is financially accountable if it appoints a voting majority of the organization's governing body and is either:
1. Able to impose its will on that organization, or
2. There is a potential for the organization to provide specific financial benefits to, or impose financial burdens on the municipality. The municipality may be financially accountable if an organization is fiscally dependent on the municipality.
Since GRPUC is responsible for payment of certain general obligation debt, it has the potential to impose a financial burden on the municipality. This capability qualifies GRPUC as a component unit of the municipality.
There are no component units of GRPUC.
MEASUREMENT Focus, BASIS OF ACCOUNTING AND BASIS OF PRESENTATION
The term measurement focus is used to denote what is being measured and reported in GRPUC's operating statement. GRPUC is accounted for on the flow of economic resources measurement focus. The fundamental objective of this focus is to measure whether GRPUC is better or worse off economically as a result of events and transactions of the period.
The term basis of accounting is used to determine when a transaction or event is recognized on GRPUC's operating statement. GRPUC uses the full accrual basis of accounting. Under this basis, revenues are recorded when earned and expenses are recorded when incurred, even though actual payment or receipt may not occur until after the period ends.
Page 36
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31,2010 and 2009
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
MEASUREMENT Focus, BASIS OF ACCOUNTING AND BASIS OF PRESENTA TlON (cont.)
GRPUC is presented as a component unit of the municipality. GRPUC is presented similar to enterprise funds which are used to account for operations that are financed and operated in a manner similar to private business or where the governing body has decided that the determination of revenues earned, costs incurred and net income is necessary for management accountability.
GRPUC follows all pronouncements of the Governmental Accounting Standards Board, and has elected not to follow Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989 except for FASB No. 71 as discussed later.
Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
References to Generally Accepted Accounting Princlliles (GAAP) issued by the FASB in these footnotes are to the FASB Accounting Standards Codification ,sometimes referred to as the Codification or ASC. The FASB finalized the Codification for periods ending on or after September 15, 2009. The previous standard of SFAS No. 71 Accounting for the Effect of Certain Types of Regulation is now discussed under Accounting Standards Codification (ASC) 980- Regulated Operations.
ASSETS, LIABILITIES AND EQUITY
Deposits and Investments
GRPUC's cash and cash equivalents are considered to be cash and investments having original maturities of three months or less from the date of acquisition.
Investments are recorded at amortized cost. There is no material difference from fair value for investments that mature after one year.
GRPUC has adopted a formal investment policy. The policy follows the state statute for allowable investments.
Receivables/Payables
Outstanding balances between GRPUC and the primary government are reported as due from/to the City. Transactions between GRPUC and the primary government that are representative of lending/borrowing arrangements outstanding at year end are referred to as advances to/from the City.
An allowance for doubtful accounts is recorded annually based on historical experience and management's evaluation of receivables at the end of each year. Bad debts are charged against revenue when deemed uncollectible.
Page 37
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
ASSETS, LIABILITIES AND EQUITY (cont.)
Materials and Supplies
Materials and supplies are generally used for construction, operation and maintenance work, not for resale. They are valued using the average cost method and charged to construction or expense when used.
Prepaid Expenses
Prepaid expenses are recorded for maintenance contracts related to substations, SCADA systems, and computer and other equipment. Costs under these agreements are expensed over the time periods covered by the agreements.
Restricted Assets
Mandatory segregations of assets are presented as restricted assets. Such segregations are required by bond agreements and other external parties. Current liabilities payable from these restricted assets are so classified.
Capital Assets
Capital assets are defined by GRPUC as assets with an initial, individual cost of more than $500 and an estimated useful life in excess of one year.
Capital assets are recorded at cost or the fair market value at the time of contribution to GRPUC. Major outlays for capital assets are capitalized as projects are constructed. Interest incurred (net of interest earned on invested proceeds during the construction phase) is reflected in the capitalized value of the capital assets constructed. Capital assets are depreciated using the straight-line method over the following useful lives:
Buildings Production systems Distribution systems Machinery and equipment Intangibles
Years
50 20 - 25 25- 33
10 10
Donated capital assets are valued at their estimated fair value at the date donated.
Page 38
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31,2010 and 2009
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
ASSETS, LIABILITIES AND EQUITY (cont.)
Other Investments
GRPUC has the following investments:
Property/Casualty Deductible - Internally restricted resources to be used for the general aggregate deductible on property/casualty insurance policy. $
Short Term Disability - Internally restricted resources to be used for non-industrial injury or sickness.
Group Medical Co-Insurance - Internally restricted resources to be used for single or family health insurance coverage.
Totals
Compensated Absences
Sick Leave and Vacation
$
2010 2009
10,000 $ 10,000
50,000 50,000
36,000 36,000
96,000 =$==9=6=,0=0=0
GRPUC's policy was to permit employees to accumulate earned but unused vacation and sick pay benefits. Vacation and sick leave were recorded as expenses and liabilities as the benefits accrued to the employees. Employees were permitted to accumulate a limited amount of earned but unused vacation benefits which was to be paid to employees upon separation from GRPUC service.
In accordance with the provisions of Statement of Government Accounting Standards No. 16, Accounting for Compensated Absences, no liability was recorded for nonvesting accumulating rights to receive sick pay benefits. However, a liability was recognized for that portion of accumulating sick leave benefits that was vested as severance pay.
GRPUC offered its employees the option of taking 50% of vested sick leave as a lump sum severance payment upon retirement, or 100% of sick leave to be paid by the utility for future health care benefits. To become vested for these benefits an employee must have had five years of service to receive the lump sum payment. There was no vesting requirement for the payment of future health care benefits.
Beginning August 2006, there was a change in GRPUC's compensated absence benefit policy, and GRPUC's vacation and sick leave benefit accruals were converted to a Paid Time Off (PTO) plan. Under the plan, PTO is earned and accrued monthly. Unused PTO that exceeds the maximum accrual may be transferred to a post-employment Health Care Savings Plan (HCSP). There is also a limited accrual for
Page 39
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31,2010 and 2009
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
ASSETS, LIABILITIES AND EQUITY (cont.)
Compensated Absences (cont.)
Sick Leave and Vacation (cant.)
Extended Illness Benefit (EIB). Unused EIB may be converted to the HCSP at termination of service with GRPUC. A liability is recognized for all PTO and EIB accrued under the GRPUC's compensated absence benefit plan. When unused benefits are converted to HCSP accounts, the funds are transferred to the trustee of the plan, and GRPUC no longer has a liability for these amounts.
Minnesota statutes authorize Minnesota State Retirement System (MSRS) to offer health care savings plans (HCSP) to governmental employees. The plan allows employees to save money, tax-free, to use upon termination of employment to pay for eligible health care expenses. MSRS acts as trustee of the plans and the State Board of Investment manages the investment of employee funds.
Customer Deposits
Customer deposits are recorded for security deposits paid by customers to receive utility services. Deposits are returned to customers with good credit history in accordance with criteria established in GRPUC policies. Customers are paid interest on deposits at the rate established annually by the Minnesota Department of Commerce.
Customer Advances for Construction
This account represents customer advances for construction which may be refundable in part or whole.
Unearned Revenue - Grant
Under the provisions of the federal American Recovery and Reinvestment Act of 2009, a grant in the amount of $1 ,684,178 was awarded to GRPUC. This grant was awarded through a principal forgiveness associated with the 2009E bond issue. Under the provisions of the agreement, the forgiveness amount is to be recognized once all terms of the agreement have been achieved. These terms were not fully achieved as of December 31, 2010. Therefore, the revenue is deferred until such time that all terms have been met.
Long-Term Obligations
Long-term debt and other obligations are reported as GRPUC liabilities. Bond issuance costs are deferred and amortized over the life of the bonds using the effective interest method.
Post-employment Benefits Other Than Pension
GASB No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions became effective January 1, 2008. This Statement establishes standards of accounting and financial reporting for OPEB expense and related OPEB liabilities or assets. OPEB refers to postemployment benefits other than pension benefits such as postemployment healthcare benefits. GRPUC elected not to implement GASB No. 45 due to the fact that the implementation would not have any material impact on its financial condition, results of operations, and footnote disclosures.
Page 40
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31,2010 and 2009
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
REVENUES AND EXPENSES
GRPUC distinguishes 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 utility's principal ongoing operations. The principal operating revenues of GRPUC are charges to customers for sales and services. Operating expenses for component units 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.
Charges for Services
Billings are rendered and recorded monthly based on metered usage.
Current electric rates were approved by the Commission and placed into effect on February 4, 2010.
Current water rates were approved by the Commission and placed into effect on February 1,2009.
Current wastewater rates were approved by the Commission and placed into effect on February 4, 2010.
Capital Contributions
Cash and capital assets are contributed to GRPUC from customers, the municipality or external parties. The value of property contributed to GRPUC is reported as revenues on the statements of revenues, expenses and statement of net assets.
Electric Power Costs
Monthly bills from the wholesale power supplier, which are for power costs to the last day of the month are reflected in the accounts.
EFFECT OF NEW ACCOUNTING STANDARDS ON CURRENT PERIOD FINANCIAL STATEMENTS
The Governmental Accounting Standards Board (GASB) has approved GASB Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements and Statement No. 61, The Financial Reporting Entity: Omnibus. Application of these standards may restate portions of these financial statements.
COMPARATIVE DATA
Certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year's presentation.
Page 41
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009
NOTE 2 - DEPOSITS AND INVESTMENTS
The GRPUC's cash and investments at year end were comprised of the following:
Carrying Value as of December 31, Associated
2010 2009 Risks
Demand deposits and cash on hand $ 6,316,361 $ 5,941,461 Custodial Custodial, concentration,
Certificates of deposit - negotiable 96,000 479,000 credit, and interest rate Custodial, concentration,
US agencies - implicitly guaranteed 400,000 credit, and interest rate
Total Cash and Investments $ 6,812,361 $ 6,420,461
Reconciliation to Financial Statements Per Statements of Net Assets
Cash and cash equivalents $ 2,813,924 $ 1,556,024 Other deposits and investments 3,141,501 3,983,903 Restricted cash and investments 760,936 784,534 Other investments 96,000 96,000
Total Cash and Investments $ 6,812,361 $ 6,420,461
Investment of GRPUC funds is restricted by state law, bond fund resolutions and GRPUC investment policy to:
> government bonds, notes, bills, mortgages, and other securities, which are direct obligations of the United States or its agencies.
> negotiable or non-negotiable instruments that are issued by commercial banks and insured by the Federal Deposit Insurance Corporation (FDIC). Interest bearing deposits in authorized depositories must be fully insured or collateralized.
> repurchase agreements fully collateralized by securities described above, if the repurchase agreements are only entered into with an entity which is a primary reporting dealer to the Federal Reserve Bank of New York, or one of the 100 largest U.S. commercial banks.
> any security which is general obligation of the State of Minnesota or any of its municipalities.
> commercial paper issued by the United States corporations or their Canadian subsidiaries that is the highest quality and matures in 270 days or less.
> statewide investment pools that invest in authorized investments according to MN Statutes 118A.
> money market mutual funds that invest in authorized instruments according to MN Statutes 118A.
Deposits in each local and area bank are insured by the FDIC in the amount of $250,000 for interest bearing accounts and an unlimited amount for non-interest bearing accounts as of December 31, 2010 and 2009.
Page 42
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2010 and 2009
NOTE 2 - DEPOSITS AND INVESTMENTS (cont.)
At December 31, 2010 and 2009, the entire bank balance, deposits and investments were covered by federal depository insurance, Securities Investor Protection Corporation or by collateral held by GRPUC's agent in GRPUC's name.
Custodial Credit Risk
Deposits
Custodial credit risk is the risk that in the event of a financial institution failure, GRPUC's deposits may not be returned to the utility.
GRPUC does not have any deposits exposed to custodial credit risk.
GRPUC's investment policy addresses this risk by requiring deposits to be fully insured or collateralized.
Investments
For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, GRPUC will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party.
GRPUC does not have any investments exposed to custodial credit risk.
GRPUC's investment policy does not address this risk.
Credit Risk
Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligation.
As of December 31, 2010, GRPUC's investments were rated as follows:
Investment Type
US Agencies - Implicitly Guaranteed
Standard and Poor's Investors
Services
AAA
GRPUC also held investments in the following negotiable certificate of deposits which are not rated:
2010
GE Capital Financial Inc.
GRPUC's investment policy does not address this risk.
2009
Bank of America American Express Bank GE Capital Financial Wachovia Bank AE Centurion Bank
Page 43
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009
NOTE 2 - DEPOSITS AND INVESTMENTS (cont.)
Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer.
At December 31, 2010 and 2009, the investment portfolio was concentrated as follows:
Percentage of Portfolio
FNMA FLHP
Issuer
GE Capital Financial Inc. - CD Wachovia Bank - CD American Express Bank - CD Bank of America - CD AE Centurion Bank - CD
Investment Type
US Agencies - Implicitly Guaranteed US Agencies - Implicitly Guaranteed Certificates of Deposit - Negotiable Certificates of Deposit - Negotiable Certificates of Deposit - Negotiable Certificates of Deposit - Negotiable Certificates of Deposit - Negotiable
GRPUC's investment policy does not address this risk.
Interest Rate Risk
2010 2009
20.16% N/A 60.48% N/A 19.35% 20.04%
N/A 20.04% N/A 19.84%
N/A 20.04% N/A 20.04%
Interest rate risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or deposit.
As of December 31, 2010, the utility's investments were as follows:
Investment Type
US Agencies - Implicitly Guaranteed
Certificates of Deposit -Negotiable
Totals
Amortized Cost
$ 400,000 $
96,000
$ 496,000 $
Maturity (In Years) Less than 1
Year 1 - 5 Years > 5 Years
- $ 300,000 $ 100,000
96,000
96,000 $ 300, 000 ~$ ==,,;,1 0;;,;0;b'0;;,;0;;,,;,0
Page 44
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31,2010 and 2009
NOTE 2 - DEPOSITS AND INVESTMENTS (cont.)
Interest Rate Risk (cont.)
As of December 31,2009, the utility's investments were as follows:
Maturity (In Years) Less than 1
Investment Type Amortized Cost Year 1 - 5 Years > 5 Years
Certificates of Deposit -Negotiable $ 479,000 $ 383,000 $ 96,000 $
Totals $ 479,000 $ 383,000 $ 96,000 $
Investments are recorded at amortized cost. There is no material difference from fair value for investments that mature after one year.
GRPUC's investment policy addresses this risk. The policy recommends no more than 5% of the total investments extend beyond five years and in no circumstances should any extend beyond ten years.
NOTE 3 - RECEIVABLES/PAYABLES TO PRIMARY GOVERNMENT
The following is a schedule of balances as of December 31, 2010 and 2009.
2010 2009 Due To Due From Amount Principal Purpose Amount Principal Purpose
GRPUC Primary Utility bills and service Utility bills and service government $ 72,116 center operating costs $ 100,304 center operating costs
GRPUC Primary government 11,700 Lease payment 13,000 Lease payment
Total Due From City $ 83,816 $ 113,304
Primary GRPUC General operating General operating government $ 600,744 and capital costs $ 208,299 and capital costs
Page 45
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31,2010 and 2009
NOTE 4 - DUE FROM THE MUNICIPALITY
GRPUC has a lease agreement with the municipality whereby the City leases a portion of the Public Works/Public Utilities Service Center. Lease payments are due over a 20 year period beginning September 1, 1996 and ending December 1, 2016. Annual lease payments vary between $117,005 and $132,107 per year, subject to annual appropriation by the City. The City also pays the operating costs related to the leased portion of the building.
The amount of lease receivable from the municipality at December 31,2010 was $11,700 and at December 31,2009 was $13,000. Total lease revenues were $127,693 and $132,107 for 2010 and 2009, respectively. Additional amounts due from the City at December 31, 2010 and 2009 of $72,116 and $100,304 were for utility bills and service center operating costs.
NOTE 5 - RESTRICTED ASSETS
REVENUE BOND ACCOUNTS
Certain proceeds of GRPUC's revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. The following revenue bond accounts are reported as restricted assets:
1999 G.O. Water Revenue Note Fund established by note agreement which requires semiannual deposits of amounts necessary to meet principal and interest payments. $
OTHER RESTRICTED ASSETS
Sanitary Sewer Collection and Treatment Infrastructure Replacement Fund
Resources to be used for future replacement of domestic sanitary sewer infrastructure and plant.
Water Main Replacement Fund Resources used for future water main replacements and upgrades.
Cafeteria Plan Fund Resources to be used to cover timing differences between additions to and withdrawals from the employee cafeteria fund.
Consumer Deposit Funds Resources to be used for refunds of customer security deposits.
Demand Payment Accounts Receivable Receivables to be used for future repayment of wastewater treatment debt.
2010 2009
5,898 $ 6,465
71,103 71,103
398,114 432,140
2,437 2,437
283,384 272,389
27,790,516 12,997,847
Totals $ 28,551,452 $ 13,782,381
Page 46
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31,2010 and 2009
NOTE 5 - RESTRICTED ASSETS (cont.)
OTHER RESTRICTED ASSETS (cont.)
The following calculation supports the amount of restricted net assets:
Restricted Assets Restricted assets and investments - current Restricted assets and investments - noncurrent
Less: Current Liabilities Payable From Restricted Assets Accrued interest Customer deposits
Total Restricted Net Assets
NOTE 6 - CHANGES IN CAPITAL ASSETS
A summary of changes in capital assets for 2010 follows:
Balance 1/1/10
Capital assets, not being depreciated/amortized
Land and land rights $ 1,399,372 $
Capital assets being depreciated/amortized
Electric 20,320,832 Water 12,017,740 Wastewater collection 3,834,024 Wastewater treatment 22,690,372 General 4,346,290
Total Capital Assets Being Depreciated/Amortized 63,209,258
Total Capital Assets 64,608,630
Less: Accumulated depreciation/amortization
Electric (7,241,218) Water (5,807,306) Wastewater collection (1,044,953) Wastewater treatment (16,077,583) General {1,304,335)
Total Accumulated Depreciation/Amortization (31,475,395)
Construction work in progress 11,446,000
Net Capital Assets $ 44,579,235
$
$
Additions/ Reclass-ifications
1,395,915 417,446 305.518 102,865 233,964
2,455,708
2,455,708
(632,776) (279,474) (115,149) (418,014) (144,539)
(1,589,952)
19,328,709
2010
289,282 $ 471,654
(255,411 ) (283,384)
222,141 $
Deletions/ Reclass-ifications
$
173,478 20,092
3,761 51,610
1,083
250,024
250,024
173,478 20,092
3,761 51,610
1,083
250,024
1,944,036
2009
278,854 505,680
(37,938) (272,389)
474,207
Balance 12/31/10
$ 1,399,372
21,543,269 12,415,094 4,135,781
22,741,627 4,579,171
65,414,942
66,814,314
(7,700,516) (6,066,688) (1,156,341)
(16,443,987) {1,447,791)
(32,815,323)
28,830,673
$ 62,829,664
Page 47
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009
NOTE 6 - CHANGES IN CAPITAL ASSETS (cont.)
A summary of changes in capital assets for 2009 follows:
Additionsl Deletionsl Balance Reclassifi- Reclassifi- Balance 1/1/09 cations cations 12/31/09
Capital assets, not being depreciated Land and land rights $ 1,454,998 $ $ 55,626 $ 1,399,372
Capital assets being depreciated Electric 19,591,300 955,495 225,963 20,320,832 Water 11,259,842 763,643 5,745 12,017,740 Wastewater collection 3,257,000 577,127 103 3,834,024 Wastewater treatment 22,617,515 72,857 22,690,372 General 4,317,474 28,816 4,346,290
Total Capital Assets Being Depreciated 61,043,131 2,397,938 231,811 63,209,258
Total Capital Assets 62,498,129 2,397,938 287,437 64,608,630
Less: Accumulated depreciation Electric (6,831,386) (635,513) 225,681 (7,241,218) Water (5,476,046) (337,006) 5,746 (5,807,306) Wastewater collection (936,072) (111,012) 2,131 (1,044,953) Wastewater treatment (15,627,667) (449,916) (16,077,583) General (1,180,524) {123,811) (1,304,335)
Total Accumulated Depreciation (30,051,695) {1,657,258) 233,558 (31,475,395)
Construction work in progress 3,219,082 11,168,750 2,941,832 11,446,000
Net Capital Assets $ 35,665,516 $ 44,579,235
Reductions in accumulated depreciation may exceed deletions of capital assets due to the cost of removal.
NOTE 7 - OTHER DEFERRED DEBITS AND CREDITS
LANDFILL SITES
During 1997-1998, 2006-2007, and again in 2009-2010, GRPUC constructed landfill sites to dispose of industrial waste from Blandin Paper. Cost of the sites is deferred and expensed over the estimated useful life of the individual site. The entire cost of the 1997 and a portion of the 2007 site is reimbursed by Blandin Paper and is recorded as a deferred credit. These deferred credits are amortized as revenue over the life of the landfill. The 2006A and 2009A bonds were issued to fund the remaining portion of the 2007 landfill project. Blandin Paper pays a demand charge in amounts sufficient to pay principal and interest on these bonds. For rate making the commission has elected to defer the demand charge revenue until the debt service is paid.
Page 48
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31,2010 and 2009
NOTE 7 - OTHER DEFERRED DEBITS AND CREDITS (cont.)
LANDFILL SITES (cont.) 2007 Landfill Phases 5 & 6
Cost $ 2,126,589
Estimated useful life 10 years
2010 deferred debit $ 1,275,954
2009 deferred debit $ 1,488,613
2010 expense amortization $ 212,659
2009 expense amortization $ 212,659
2010 deferred revenue $ 38,979
2009 deferred revenue $ 45,476
2010 revenue amortization $ 6,497
2009 revenue amortization $ 6,497
WATER TOWER ANTENNA LEASE
2007 Landfill Phase 7
$ 900,810
10 years
$ 810,729
$
$ 90,081
$
$
$
$
$
GRPUC has received advance payments for leasing antenna space on its water towers. These payments were $59,988 for 2010 and $57,466 for 2009.
WATER TOWER PAINTING
GRPUC performed water tower reconditioning in 2008-2009 at a total cost of $469,951. The Commission has elected to create a regulatory asset for this cost and amortize it over 10 years which is the estimated useful life of the enhancement. The unamortized balance at December 31, 2010 and 2009 is $375,961 and $422,955, respectively.
POLLUTION REMEDIA TlON
GRPUC performed pollution remediation efforts in 2007-2009 at a total cost of $127,765. These efforts were performed by GRPUC on behalf of the City of Grand Rapids. The Commission has elected to create a regulatory asset for this cost until reimbursement is received from the responsible party. As of December 31, 2010, all of these costs have been reimbursed and the regulatory asset removed.
NOTE 8 - LONG-TERM DEBT
The following general obligation revenue bonds and notes have been issued:
General Obligation Water Revenue Note of 1999 General Obligation Wastewater Revenue Bonds, Series 2001A General Obligation Wastewater Revenue Bonds, Series 2006A General Obligation Wastewater Revenue Bonds, Series 2009A General Obligation Wastewater Revenue Note, Series 2009E
Page 49
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31,2010 and 2009
NOTE 8 - LONG-TERM DEBT (cont.)
Final Interest Date Purpose Maturity Rates
Jan.3,2000 Water construction Jan.1,2019 3.04% $ Oct. 1,2001 Improvements to wastewater Dec. 1,2021 5.0 - 6.5
treatment facility Oct. 1,2006 Landfill site construction June 1,2016 5.7 - 5.9 June 1,2009 Landfill site construction Dec. 1,2019 2.0 -4.9
r'\ .. .&. ..... .&. __ ..... ...J: ..... _ VUl::'lc:lIIUIIIY
Original Amount Amount 12/31/10
1,079,657 $ 582,000 4,700,000 3,280,000
1,915,000 1,270,000 925,000 840,000
Nov.10, 2009 Improvements to wastewater Aug.20,2029 2.9 28,509,779* 22,563,597 treatment facility
*During 2009, the utility was authorized to issue $28,509,779 of sewer system Clean Water Fund revenue bonds. The outstanding amount reported above has been issued as of December 31, 2010. The repayment schedule below reflects the entire $28,509,779 authorized less the $700,779 principal payment made in 2010.
General obligation revenue bonds and notes debt service requirements to maturity follow:
Year Ending December 31 Principal Interest
2011 $ 1,660,000 $ 1,126,617 $ 2012 1,714,000 1,067,605 2013 1,780,000 1,006,126 2014 1,841,000 940,498 2015 1,907,000 871,919 2016-2020 9,417,000 3,331,991 2021-2025 8,293,000 1,765,026 2026-2029 7,169,000 527,191
Totals $ 33,781,000 $ 10,636,973 $
Long-term obligation activity for the year ended December 31, 2010 and 2009 is as follows:
Balance 1/1/10 Additions Retirements
Balance 12131/10
Totals
2,786,617 2,781,605 2,786,126 2,781,498 2,778,919
12,748,991 10,058,026 7,696,191
44,417,973
Due Within One Year
Long-term debt $ 10,980,414 $ 18,771,962 $ 1,216,779 $ 28,535,597 $ 1,660,000 Advance from City of
Grand Rapids 1,346,400 Customer advances
for construction 51,271 Other deferred credits 102,942 Accrued com pensated
absences 525,438 Demand payment deferral 12,970,235 Unearned revenue - grant 1,684,178 Landfill closure costs 3,336,058
Totals $ 30,996,936
157,200
48,771 2,522 6,496
273,195 305,323 15,647,094 1,050,701
539,028
$ 34,694,773 $ 3,324,298
1,189,200
2,500 98,968
493,310 27,566,628
1,684,178 2,797,030
$ 62,367,411
177,200
200,571 1,671,952
Page 50
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31,2010 and 2009
NOTE 8 - LONG-TERM DEBT (cont.)
Balance Balance Due Within 1/1/09 Additions Retirements 12/31/09 One Year
Long-term debt $ 5,972,000 $ 5,417,414 $ 409,000 $ 10,980,414 $ 1,216,779 Advance from City of
Grand Rapids 1,511,200 164,800 1,346,400 157,200 Customer advances
for construction 51,271 51,271 Other deferred credits 106,528 2,911 6,497 102,942 Accrued compensated
absences 494,763 274,488 243,813 525,438 206,736 Demand payment deferral 4,546,000 8,741,235 317,000 12,970,235 1,078,224 Unearned revenue - grant 1,684,178 1,684,178 Landfill closure costs 3,357,524 21,466 3,336,058
Totals $ 16,039,286 $16,120,226 $ 1,162,576 $ 30,996,936
NOTE 9 - ADVANCE FROM CITY OF GRAND RAPIDS
In 2006, the City of Grand Rapids issued G.O. Capital Improvement Plan Refunding Bonds, Series 2006B. A portion of these bonds were used to advance refund the Public Utilities Revenue Bonds, Series 1996A. Net revenues of GRPUC are expected to be available to pay 48% of the principal and interest on the bonds. Accordingly, the GRPUC has agreed to pay to the City, by no later than the date the City certifies its final tax levy for the following year (approximately the third week of December), net revenues of GRPUC in an amount equal to 48% of the principal and interest due and payable on the Refunding Bonds on August 1 in the following year and February 1 in the next following year. The City will repay to GRPUC investment interest earned on the amount deposited with the City each year.
The repayment requirements for the advance from City of Grand Rapids are as follows:
Year Ending December 31 Principal Interest
2011 $ 177,200 $ 45,800 2012 179,400 38,764 2013 194,600 31,380 2014 202,200 23,492 2015 212,200 15,300 2016-2017 223,600 9,048
Totals $ 1,189,200 $ 163,784
Totals
$ 223,000 218,164 225,980 225,692 227,500 232,648
$ 1,352,984
Page 51
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTE 10 - NET ASSETS
NOTES TO FINANCIAL STATEMENTS December 31,2010 and 2009
GASB Statement No. 34 requires the classification of net assets into three components - invested in capital assets, net of related debt; restricted; and unrestricted. These classifications are defined as follows:
Invested in capital assets, net of related debt - This component of net assets consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt attributable to the unspent proceeds are not included in the calculation of invested in capital assets, net of related debt. Rather, that portion of the debt is included in the same net assets component as the unspent proceeds.
Restricted - This component of net assets consists of constraints placed on net asset use through external constraints imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.
Unrestricted net assets - The component of net assets consists of net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt."
When both restricted and unrestricted resources are available for use, it is GRPUC's policy to use restricted resources first, then unrestricted resources as they are needed.
The following calculation supports the net assets invested in capital assets, net of related debt:
Plant in service Accumulated depreciation Construction work in progress
Sub-totals
Less: Capital related debt Current portion of capital related long-term debt Long-term portion of capital related long-term debt
Sub-totals
Total Net Assets Invested in Capital Assets, Net of Related Debt
$
$
2010
66,814,314 (32,815,323) 28,830,673 62,829,664
1,390,000 25,035,597 26,425,597
36,404,067
2009
$ 64,608,630 (31,475,395) 11,446,000 44,579,235
956,779 7,653,635 8,610,414
$ 35,968,821
Page 52
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31,2010 and 2009
NOTE 11 - EMPLOYEES' RETIREMENT SYSTEM
DEFINED BENEFIT PENSION PLANS - STA TEWIDE
Plan Description
All full-time and certain part-time employees of GRPUC are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF), which is a cost-sharing, multiple-employer retirement plan. This plan is established and administered in accordance with Minnesota Statutes, Chapters 353 and 356.
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. All new members must participate in the Coordinated Plan.
PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by state statute, and vest after three years of credited service. The defined retirement 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% of average salary for each of the first 10 years of service and 2.7% for each remaining year. For a Coordinated Plan member, the annuity accrual rate is 1.2% of average salary for each of the first 10 years and 1.7% for each remaining year. Under Method 2, the annuity accrual rate is 2.7% of average salary for Basic Plan members and 1.7% for Coordinated Plan members for each year of service. For GERF members hired prior to July 1, 1989 whose annuity is calculated using Method 1, a full annuity is available when age plus years of service equal 90. Normal retirement age is 65 for Basic and Coordinated members hired prior to July 1, 1989. Normal retirement age is the age for unreduced Social Security benefits capped at 66 for Coordinated Members hired on or after July 1, 1989. A reduced retirement annuity is also available to eligible members seeking early retirement.
There are different types of annuities available to members upon retirement. A single-life annuity is a lifetime annuity that ceases upon the death of the retiree-no survivor annuity is payable. There are also various types of joint and survivor annuity options available which will be payable over joint lives. Members may also leave their contributions in the fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service, but before retirement benefits begin.
The benefit provisions stated in the previous 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.
PERA issues a publically available financial report that includes financial statements and required supplementary information for GERF. That report may be obtained on the internet at www.mnpera.org.by writing to PERA at 60 Empire Drive #200, St. Paul, Minnesota 55103-2088, or by calling 651 2967460 or 1 800 652 9026.
Page 53
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31,2010 and 2009
NOTE 11 - EMPLOYEES' RETIREMENT SYSTEM (cont.)
DEFINED BENEFIT PENSION PLANS - STA TEWIDE (cont.)
Funding Policy
Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The GRPUC makes annual contributions to the pension plans equal to the amount required by state statutes. GRPUC employees are covered by the GERF Basic and Coordinated Plans. GERF Basic Plan members and Coordinated Plan members are required to contribute 9.10% and 6.00%, respectively, of their annual covered salary in 2010. Contribution rates in the Coordinated Plan in 2009 and 2008 were 6.00% and 5.75% respectively. The GRPUC is required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan GERF members and 7.00% for Coordinated Plan GERF members in 2010. Coordinated plan GERF member contributions were 6.75% in 2009 and 6.50% in 2008. The GRPUC's contributions to the Public Employees Retirement Fund for the years ending December 31, 2010, 2009, and 2008 were $185,119, $166,173, and $161,047, respectively. The GRPUC's contributions were equal to the contractually required contributions for each year as set by state statute.
NOTE 12 - OTHER POST-EMPLOYMENT BENEFITS
Minnesota statutes chapter 352.98 authorizes Minnesota State Retirement System (MSRS) to offer plans for health care savings accounts (HCSA) to governmental employees. MSRS received its private letter ruling establishing these plans as tax exempt benefits on July 29, 2002. The plans allow employees to save money, tax-free, to use upon termination of employment to pay for eligible health care expenses. MSRS acts as trustee of the plans and the State Board of Investment manages the investment of employee funds.
In 2006, at the time of conversion to the PTO plan, up to 40 hours of accumulated, unused sick leave was converted to PTO. Any excess sick leave was converted to EIB, subject to a maximum initial EIB account balance of 320 hours. Any remaining sick leave balance that was not converted to PTO or EIB was contributed on the employee's behalf to a post-employment HCSA.
At the time of conversion, excess sick leave of $477,554 was contributed to the employees' Health Care Savings Accounts. The wage rates used for conversion were those in effect at the time of conversion.
CONTRIBUTIONS TO HCSA
Unused PTO that exceeds the maximum accrual may be transferred to a post-employment Health Care Savings Account (HCSA) annually, on the employee's anniversary date. At termination of service with the GRPUC, any balance of unused EIB may also be converted to the employee's HCSA. There are no other provisions for contributions to HCSA plans. When unused benefits are converted to an employee's HCSA, the funds are transferred to the trustee of the plan, and the GRPUC no longer has a liability for these amounts.
Page 54
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31, 2010 and 2009
NOTE 12 - OTHER POST-EMPLOYMENT BENEFITS (cont.)
CHANGES TO HCSA PLANS
Any changes in contributions to the HCSA must be agreed to by the employer and the bargaining unit. In the case of employees not covered by the bargaining unit, amounts to be contributed must be outlined in the written personnel policy.
NOTE 13 - PAYMENTS IN LIEU OF TAXES
Effective January 1, 1997, GRPUC and the City of Grand Rapids established a formal agreement for payments in lieu of taxes (PILOT) from the GRPUC to the City. This payment is equal to 7% of gross retail electric sales for the prior year.
The amount of the PILOT, including cash and utility supplied services, to the City for 2010 and 2009 was $825,825 and $824,925, respectively.
NOTE 14 - LANDFILL CLOSURE AND POST-CLOSURE CARE COSTS
State and federal laws and regulations require GRPUC to place a final cover on its landfill sites when it stops accepting waste and to perform certain maintenance and monitoring functions at those sites for thirty years after closure. Although closure and post-closure care costs will be paid only near or after the date that the landfill stops accepting waste, GRPUC is required to establish financial assurance for closure, post-closure care and contingency action.
The current calculations of projected costs for all open and planned landfill sites included in the existing Industrial Solid Waste Disposal Facility Permit are:
Closure cost estimate Post-closure care cost estimate Contingency action
Totals
2010
$ 1,084,800 1,227,610
484,620
$ 2,797,030
2009
$ 1,543,473 1,299,711
492,874
$ 3,336,058
These costs are reviewed annually and adjusted for the effects of inflation, changes in technology, or changes in laws and regulations.
Under the 1996-2001 permit, landfill sites C, D, E and F were filled to capacity. The 2001-2006 permit included Kettle D and landfill Phases One through Four. Phases Five through Eight were added under the new permit effective September 2006 to September 2011. Kettle D was filled in 2006 and closed in 2008. Phases One-Four were filled and began the closure process in 2007. Final closure on phases 1-4 was completed in 2010. Construction of Phases Five and Six was completed in 2008. Phases Five and Six were put into service in 2008 and have an estimated life of 10 years. Phase 7 was constructed in 2010 and placed into service in 2010 with an estimated life of 10 years.
Page 55
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31,2010 and 2009
NOTE 14 - LANDFILL CLOSURE AND POST-CLOSURE CARE COSTS (cont.)
On January 12, 2011 and November 30, 2009, Blandin Paper Company established an irrevocable letter of credit for $2,797,030 and $3,336,058 with Nordea Bank on behalf of GRPUC. The purpose of the letter of credit is to provide assurance that funds will be available when needed for closure, post-closure care of, and/or contingency action of the landfill.
NOTE 15 - RISK MANAGEMENT
GRPUC is exposed to various risks of loss related to torts, theft of, damage to, or destruction of assets, errors and omissions, workers compensation, and health care of its employees. These risks are covered through the purchase of commercial insurance, with minimal deductibles. Settled claims have not exceeded the commercial liability in any of the past three years. There were no significant reductions in coverage compared to the prior year.
NOTE 16 - MAJOR CUSTOMER AND DEMAND PAYMENT DEFERRAL
GRPUC has a contract with Blandin Paper Company (Blandin) where Blandin reimburses GRPUC for expenses associated with the operations of the industrial wastewater treatment plant. Amounts reimbursed were $5,134,947 and $4,249,928 for 2010 and 2009, respectively. GRPUC also has contracts with Blandin whereby Blandin pays demand charges for principal and interest on the General Obligation Revenue Bonds Series 2001A, 2006A, 2009A and 2009E. For ratemaking purposes the commission has elected to defer the recognition of the revenue until the debt service on the bonds are paid. The total demand charges paid by Blandin for 2010 and 2009 were $1,717,656 and $631,380, respectively.
NOTE 17 - ACCOUNTING FOR THE EFFECTS OF RATE REGULATION
GRPUC is subject to the provisions of Statement of Financial Accounting Standards ("SFAS") No. 71, "Accounting for the Effects of Certain Types of Regulation" ("SFAS No. 71"). This statement recognizes the economic ability of regulators, through the ratemaking process, to create future economic benefits and obligations affecting rate-regulated entities. Accordingly, GRPUC records these future economic benefits and obligations as regulatory assets and regulatory liabilities, respectively.
Regulatory assets represent probable future revenues associated with previously incurred costs that are expected to be recovered from customers. Regulatory liabilities represent probable future reductions in revenues associated with amounts that are expected to be refunded to customers through the ratemaking process.
In order for a rate-regulated entity to continue to apply the provisions of SFAS No. 71, it must continue to meet the following three criteria:
1. The entities' rates for regulated services provided to its customers must be established by an independent third-party regulator or its own governing board empowered by a statute to establish rates that bind customers;
2. The regulated rates must be designed to recover the specific entities' costs of providing the regulated services;
Page 56
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31,2010 and 2009
NOTE 17 - ACCOUNTING FOR THE EFFECTS OF RATE REGULATION (cont.)
3. In view of the demand for the regulated services and the level of competition, it is reasonable to assume that rates set at levels that will recover the entities' costs can be charged to and collected from customers.
Based upon GRPUC's management evaluation of the three criteria discussed above in relation to its operations, and the effect of competition on its ability to recover its costs, GRPUC believes that SFAS No. 71 continues to apply.
SFAS No. 71 is used in the accounting of contributions in aid of construction and other deferred debits and credits.
NOTE 18 - COMMITMENTS AND CONTINGENCIES
POWER CONTRACT
GRPUC is obligated to purchase its wholesale power requirements from Minnesota Power through January 31, 2013, terminable upon a three year termination notice. The Commission may acquire generating capacity to serve its power requirements over 16,000 kW. The peak power requirements for 2010 and 2009 were 31,560 and 29,650 kW, respectively.
OPEN CONTRACTS
GRPUC has active construction projects as of December 31, 2010. At year end, GRPUC's commitments with contractors are as follows:
Project Spent-to-Date Remaining
Commitment
2009 Wastewater Treatment Facilities Improvement Project $ 2009 Contract A: Casper Construction Sludge Placement - 2010 2009 Contract B: Leachete Collection TransporUDischarge - 2010
Totals $
PENDING CLAIMS AND LEGAL PROCEEDINGS
24,127,927 $ 80,398
188,559
1,514,350 10,742 5,761
24,396,884 =$=====1,=53=0=,8=5=3
From time to time, GRPUC is party to various pending claims and legal proceedings. Although the outcome of such matters cannot be forecasted with certainty, it is the opinion of management and GRPUC's attorney that the likelihood is remote that any such claims or proceedings will have a material adverse effect on GRPUC's financial position or results of operations.
GRANTS AND FEDERAL FUNDS
GRPUC has received federal funds for specific purposes that are subject to review and audit by the grantor agencies. Such audits could lead to requests for reimbursements to the grantor agency for expenditures disallowed under terms of the grants. Management believes such disallowances, if any, would be immaterial.
Page 57
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NOTES TO FINANCIAL STATEMENTS December 31,2010 and 2009
NOTE 19 - SUBSEQUENT EVENTS
OPEN CONTRACTS
During 2011, GRPUC awarded the following contracts:
Project
2011 Vegetation Control Contract #13 2011 Conservation Improvement Program Funds for Low Income Weatherization
Refinish softening room at Water Treatment Plant Service Agreement for Asbestos Removal
and Disposal
Total
Vendor
Plackner Tree Care Kootasca Community Action Council
Mangseth Painting
North Country Abatement
Contract Amount
$ 93,516 62,000
12,600
4,500
$ 172,616
Page 58
SUPPLEMENTAL INFORMATION
Page 59
THIS PAGE IS INTENTIONALLY LEFT BLANK
Page 60
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
COMBINING SCHEDULE OF REVENUES AND EXPENSES Year Ended December 31, 2010
Wastewater Wastewater Electric Water Collection Treatment Totals
OPERATING REVENUES Utility revenues - city $ 12,718,394 $ 1,251,679 $ 1,077,948 $ 5,134,947 <I: ?O 1A? QRA "+' -v, ..... _, ...............
Utility revenues - rural 1,659,631 39,150 153,591 1,852,372 Windsense program 7,753 7,753 Security lighting 52,952 52,952
Total Retail Sales 14,438,730 1,290,829 1,231,539 5,134,947 22,096,045 Purchased power adjustment passthrough 186,387 186,387
Total Utility Revenues 14,625,117 1,290,829 1,231,539 5,134,947 22,282,432 Other Operating Revenue
Pole rentals 16,338 16,338 Other 174,153 138,783 58,484 371,420 Penalties 37,913 3,382 3,204 44,499
Total Operating Revenues 14,853,521 1,432,994 1,293,227 5,134,947 22,714,689
OPERATING EXPENSES Production 428,559 428,559 Purchased power 9,388,255 9,388,255 Distribution/collection 984,275 327,219 236,022 1,547,516 Customer accounts 264,096 81,586 60,359 406,041 Administrative and general 1,102,042 281,699 157,384 1,541,125 Service center 100,920 16,820 16,820 134,560 Communications 904 151 151 1,206 Domestic wastewater treatment 432,049 432,049 Industrial wastewater treatment 5,431,186 5,431,186 Depreciation and amortization 801,362 302,039 134,116 418,014 1,655,531
Total Operating Expenses 12,641,854 1,438,073 1,036,901 5,849,200 20,966,028
OPERATING INCOME (LOSS) 2,211,667 (5,079) 256,326 (714,253) 1,748,661
NON-OPERATING REVENUES (EXPENSES) Investment income 53,770 53,770 Investment income - demand payment 664,955 664,955 Landfill contribution 260,000 260,000 Gain (loss) on property disposition (1,078) (456) 448 15,000 13,914 Interest expense (41,014) (25,653) (6,825) (717,610) (791,102) Bond fees (1,053) (1,053) Allowance for funds used during construction 33,417 33,417 Amortization of debt issuance costs (16,315) (16,315) Combined service center lease revenues 95,769 15,962 15,962 127,693 Payment in lieu of taxes {825,825) {825,825)
Total Non-Operating Revenues (Expenses) {718,378) {10,147) 9,585 238,394 {480,546)
INCOME (LOSS) BEFORE CONTRIBUTIONS $ 1,493,289 $ {15,226) $ 265,911 $ {475,859) $ 1,268,115
Page 61
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
ELECTRIC DEPARTMENT DETAILED SCHEDULE OF REVENUES AND EXPENSES
Years Ended December 31. 2010 and 2009
2010
OPERATING REVENUES Utility Revenues
City residential $ 3.528,456 City commercial and light and power 9.189.938 Rural residential -1 -1/1.') '171"}
I, IV£.,£.I L
Rural commercial and light and power 557.359 Wind sense program 7.753 Security lighting 52.952
Total Retail Sales 14,438.730 Purchased power adjustment passthrough 186.387
Total Utility Revenues 14.625.117 Other Operating Revenues
Pole rentals 16.338 Other 174.153 Penalties 37.913
Total Operating Revenues 14.853.521
OPERATING EXPENSES Purchased Power 9.388.255
Distribution Operations Supervision and engineering 123.929 Substations 4.561 Overhead and underground lines 101.875 Meters 17.733 Customer installations 41.305 Mapping 31.763 Small tools 19,435 Safety 26.568 Seminar/training 29.023 Stores and other 46.236
Distribution Maintenance Supervision and engineering 100.562 Substations 72.073 Overhead lines 256.048 Underground lines 96.027 Line transformers 2,429 Security lighting 7.378 Street lighting (32) Meters 4.347 Other 3.015
Total Distribution Expenses 984.275
Other Operating Expenses Customer accounts expense 264.096 Administrative and general 1.102.042 Depreciation - electric 693.022 Depreciation - other 97.249 Amortization - intangibles 11.091 Service center 100.920 Communications 904
Total Other Operating Expenses 2.269.324
Total Operating Expenses 12.641.854
OPERATING INCOME 2.211.667
2009
$ 3.260.588 8.278.227 ..t nc::.1") D'("'l ',V;Jv,UI0
595.507 7.619
55,470
13.251.024 {193.203)
13.057.821
16.338 123.912 28.873
13.226.944
8.644.119
96.638 4.097
22.831 15.299 46.704 36.566 12.170 19.266 33,719 45,483
72.326 30,768
206.602 65.191
6.305 6.806
112 3.355 6.767
731.005
270,457 1.183.167
664.062 92.858
85.149 1.719
2.297,412
11.672.536
1.554,408
Page 62
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
ELECTRIC DEPARTMENT DETAILED SCHEDULE OF REVENUES AND EXPENSES (cont.)
Years Ended December 31, 2010 and 2009
2010
NON·OPERATING REVENUES (EXPENSES) Investment income $ 53,770 Gain (loss) on property disposition (1,078) Interest expense (41,014) Lease revenues combined service center 95,769 Payment in lieu of taxes {825,825)
Total Non-Operating Revenues (Expenses) {718,378)
INCOME BEFORE CONTRIBUTIONS $ 1,493,289
2009
$ 73,958 17,534
(67,937) 107,799
{824,925)
{693,571 )
$ 860,837
Page 63
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
WATER DEPARTMENT DETAILED SCHEDULE OF REVENUES AND EXPENSES
Years Ended December 31, 2010 and 2009
OPERATING REVENUES Utility Revenues
City sales Rural sales
Total Utility Revenues Other Operating Revenues
Miscellaneous service Penalties
Total Operating Revenues
OPERATING EXPENSES Production
Operations Operators wages Water treatment expense Power purchased Other
Maintenance WTP buildings and grounds Wells, pumps, mains WTP equipment DCS Inspections
Total Production Expenses
Distribution Operations
Supervision and engineering Records Thaw and flush hydrants, etc. Service on customer premises Mapping Small tools Safety Seminar/training Other Stores
Maintenance Towers and tanks Booster station Mains and hydrants Services Meters Other
Total Distribution Expenses
2010
$ 1,251,679 39,150
1,290,829
138,783 3,382
1,432,994
76,575 80,349
149,185 13,703
25,014 20,838 29,145 23,722 10,028
428,559
518 2,958
494 9,214
10,687 1,451
31,949 4,389
764 10,180
64,084 166
157,526 21,924 10,463
452
327,219
2009
$ 1,273,448 41,982
1,315,430
84,020 4,175
1,403,625
97,730 84,428
132,835 14,703
19,147 22,787 41,330 20,344
7,352
440,656
8,011 943
7,490 7,778
14,246 1,126
33,328 4,288 1,174 9,800
49,063 2,679
47,285 15,429 5,426
158
208,224
Page 64
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
WATER DEPARTMENT DETAILED SCHEDULE OF REVENUES AND EXPENSES (cont.)
Years Ended December 31,2010 and 2009
2010 2009
OTHER OPERATING EXPENSES Customer accounts expense $ 81,586 $ 82,113 Administrative and general 281,699 274,148 Depreciation - water 283,982 340,997 Depreciation - other 16,208 15,476 Amortization - intangibles 1,849 Service center 16,820 14,192 Communications 151 287
Total Other Operating Expenses 682,295 727,213
Total Operating Expenses 1,438,073 1,376,093
OPERATING INCOME (LOSS) (5,079) 27,532
NON-OPERATING REVENUES (EXPENSES) Loss on property disposition (456) Interest expense -1999 Water Note (18,828) (20,490) Interest expense - other (6,825) (10,826) Lease revenues combined service center 15,962 12,154
Total Non-Operating Revenues (Expenses) (10,147) (19,162)
INCOME (LOSS) BEFORE CONTRIBUTIONS $ (15,226) $ 8,370
Page 65
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
WASTEWATER COLLECTION DEPARTMENT DETAILED SCHEDULE OF REVENUES AND EXPENSES
Years Ended December 31 , 2010 and 2009
OPERATING REVENUES Utility Revenues
City Rural Septage haulers
Total Utility Revenues Other Operating Revenues
Other Penalties
Total Operating Revenues
OPERATING EXPENSES Collection
Operations Inspections Service on customer premises Mapping Small tools Safety Seminar/training Other Stores Power purchased Truck expenses
Maintenance Lift stations Mains Services Other
Total Collection Expenses
Domestic Wastewater Treatment Domestic plant Secondary treatment - domestic portion
Total Domestic Treatment Expenses Other Operating Expenses
Customer accounts expense Administrative and general Depreciation - wastewater collection Depreciation - other Amortization - intangibles Service center Communications
$
2010
1,077,948 97,829 55,762
1,231,539
58,484 3,204
1,293,227
32,526 1,273
10,961 748
31,278 2,844
57 2,036
15,750 229
23,306 109,138
5,876
236,022
24,275 407,774
432,049
60,359 157,384 116,059
16,208 1,849
16,820 151
368,830 Total Other Operating Expenses Total Operating Expenses 1,036,901
OPERATING INCOME 256,326
2009
$ 976,145 103,377
55,804
1,135,326
9,455 2,335
1,147,116
30,259 4,097
14,388 1,429
31,967 2,463
290 1,960
15,033 277
34,201 44,768
5,697 620
187,449
16,914 462,464
479,378
61,716 164,418 111,012
15,476
14,192 287
367,101
1,033,928
113,188
Page 66
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
WASTEWATER COLLECTION DEPARTMENT DETAILED SCHEDULE OF REVENUES AND EXPENSES (cont.)
Years Ended December 31,2010 and 2009
2010
NON-OPERATING REVENUES (EXPENSES) Gain on property disposition $ 448 Interest expense (6,825) Lease revenues combined service center 15,962
Total Non-Operating Revenues (Expenses) 9,585
INCOME BEFORE CONTRIBUTIONS $ 265,911
2009
$ (9,390) 12,154
2,764
$ 115,952
Page 67
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
WASTEWATER TREATMENT FACILITY DETAILED SCHEDULE OF REVENUES AND EXPENSES
Years Ended December 31, 2010 and 2009
2010 2009
OPERATING REVENUES Utility revenues $ 5,134,947 $ 4,249,928
OPERATING EXPENSES Screen house 277,030 193,128 Industrial waste treatment plant 1,992,361 1,754,792 Sludge disposal 1,446,137 997,848 Secondary waste treatment plant 1,715,658 1,777,108 Depreciation 418,014 449,916
Total Operating Expenses 5,849,200 5,172,792
OPERATING LOSS (714,253) (922,864)
NON-OPERATING REVENUES (EXPENSES) Gain on property disposition 15,000 8,390 Interest expense (717,610) (328,975) Investment income- demand payment 664,955 314,380 Landfill contribution 260,000 165,000 Bond fees (1,053) (1,675) Allowance for funds used during construction 33,417 Amortization of debt issuance costs {16,315) {8,514)
Total Non-Operating Revenues (Expenses) 238,394 148,606
LOSS BEFORE CONTRIBUTIONS $ {475,859) $ {774,258)
Page 68
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
SCREEN HOUSE SCHEDULE OF EXPENSES
Years Ended December 31,2010 and 2009
2010 2009
SCREEN HOUSE Supervision $ 13,025 $ 12,071 Operating labor 17,168 17,946 Group insurance 13,171 12,541 Life insurance 316 317 Dental insurance 865 852 Health savings account funding 3,072 3,150 Other fringe costs 10,891 9,388 Supplies 1,212 881 Fuel 5,291 5,860 Administrative 17,162 18,356 Safety 992 1,081 Seminars 469 477 Miscellaneous meetings 12 Insurance 6,746 6,029 Permits 20 Legal 1,332 664 DCS support contract 9,409 12,164 Screens - conv - spray water 435 587 Sewage pumps 29,596 7,701 Electric motors and controls 903 501 Instrumentation 261 273 Buildings and grounds 6,474 6,775 Force main and manholes 68,228 Power purchased 62,608 65,961 Water purchased 4,398 6,563 Utilities use tax 3,006 2,958
TOTAL SCREEN HOUSE EXPENSE $ 277,030 $ 193,128
Page 69
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
INDUSTRIAL WASTE TREATMENT FACILITY SCHEDULE OF EXPENSES
Years Ended December 31,2010 and 2009
2010 2009
INDUSTRIAL WASTE TREATMENT FACILITY Supervision $ 48,557 $ 44,815 Operating labor 225,167 218,491 Group insurance 64,287 61,403 Life insurance 1,973 1,980 Dental insurance 4,552 4,424 Health savings account funding 15,065 15,467 Other fringe costs 69,124 61,073 Supplies and tools 21,501 16,438 Fuel - trucks and heating 9,977 10,560 Administrative and engineering 130,211 108,629 Safety 7,949 8,097 Seminars 3,063 2,647 Miscellaneous meetings 82 Insurance 33,753 33,281 Permits and legal fees 7,218 4,912 Outside testing 730 Records 1,634 1,001 Telephone 5,731 3,008 Chemicals 1,078,669 893,892 DCS support contract 1,312 23 Primary clarifier and floc tank 3,198 8,594 Sludge pumps 9,896 35,499 Sludge conveyors 493 548 Additive systems 12,477 8,942 Electric motors and controls 1,222 355 Instrumentation 1,901 4,492 Buildings and grounds 50,129 44,464 Belt presses 12,526 14,948 Sludge grinders 280 Spray water systems 15,320 452 Maintenance inspection 1,671 1,453 Operation and maintenance diesel generator 6,264 1,264 Power purchased 87,624 85,775 Water purchased 50,933 50,238 Utilities use tax 7,954 7,545
TOTAL INDUSTRIAL WASTE TREATMENT FACILITY EXPENSE $ 1,992,361 $ 1,754,792
Page 70
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
SLUDGE DISPOSAL SCHEDULE OF EXPENSES
Years Ended December 31, 2010 and 2009
2010 2009
SLUDGE DISPOSAL Supervision $ 16,560 $ 15,533 Truck driver labor 184,207 165,041 Group insurance 41,753 38,486 Life insurance 1,040 1,044 Dental insurance 2,728 2,259 Health savings account funding 9,263 9,262 Other fringe costs 39,661 28,816 Legal 144 Short-term disability payments 82 Uniforms 208 50 Engineering-sludge landfill 16,090 10,925 Administrative 11,513 8,201 Safety 33 Miscellaneous meetings 642 Insurance 10,761 7,493 Permits and legal fees 1,550 949 Sludge placement 98,043 102,749 Miscellaneous landfill operations 29,234 32,746 Sludge dump closure 432,925 28,471 Leachate collection 158,321 226,473 Solid waste tax 312 420 Sludge landfill amortization 302,740 212,659 Well monitoring 31,061 30,088 Sludge hauling trucks 58,023 75,426
TOTAL SLUDGE DISPOSAL EXPENSE $ 1,446,137 $ 997,848
Page 71
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
SECONDARY TREATMENT FACILITY SCHEDULE OF EXPENSES
Years Ended December 31, 2010 and 2009
2010 2009
SECONDARY TREATMENT FACILITY Supervision $ 49,119 $ 48,188 Operating labor 71,322 69,718 Group insurance 34,160 31,577 Life insurance 898 901 Dental insurance 2,140 2,099 Health savings account funding 7,701 7,870 Other fringe costs 34,683 31,260 Supplies 5,838 5,709 Fuel - trucks and heating 132 123 Administrative and engineering 48,676 376,039 Safety 4,005 5,837 Seminars 5,867 3,472 Miscellaneous meetings 40 37 Insurance 32,736 30,939 Permits 14,350 14,350 Outside testing 9,623 11,069 Legal 2,664 2,199 Maintenance inspection 372 Laboratory supplies 13,996 14,792 Chemicals 40,015 28,315 DCS support contract 9,459 7,606 Blowers - air system 5,556 6,148 Aerators 22,148 35,355 Secondary clarifiers 2,837 3,502 Pumps 12,592 54,405 Chlorination system 5,510 942 Additive systems 1,100 1,314 Laboratory equipment 2,620 244 Plant vehicles 22,648 20,649 Electric motors and controls 272 681 Instrumentation 451 Buildings and grounds 54,043 28,768 Power purchased 1,482,613 1,297,505 Water purchased 33,773 33,021 Utilities use tax 89,924 64,487
TOTAL SECONDARY TREATMENT FACILITY EXPENSE $ 2,123,432 $ 2,239,572
Industrial Portion $ 1,715,658 $ 1,777,108
Domestic Portion $ 407,774 $ 462,464
Page 72
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
COMBINED SCHEDULE OF ADMINISTRATIVE, GENERAL AND CUSTOMER ACCOUNTS EXPENSE
Years Ended December 31, 2010 and 2009
2010 2009
CUSTOMER ACCOUNTS EXPENSE Supervision $ 19,502 $ 23,265 Meter reading 73,561 70,910 Customer records and collection expense 287,619 297,194 Other 25,359 22,917
Total Customer Accounts Expense $ 406,041 $ 414,286
ALLOCATION OF CUSTOMER ACCOUNTS EXPENSE Electric $ 264,096 $ 270,457 Water 81,586 82,113 Wastewater collection 60,359 61,716
Total Allocation of Customer Accounts Expense $ 406,041 $ 414,286
ADMINISTRATIVE AND GENERAL EXPENSE Administrative and general salaries $ 108,383 $ 114,129 Office supplies and expense 23,661 19,387 Outside services employed 184,930 240,955 Property and liability insurance 108,566 116,252 Employees' pensions and benefits 847,350 909,375 Maintenance of general plant 20,899 16,034 Conservation improvement program 172,607 154,354 Other 74,729 51,247
Total Administrative and General Expense $ 1,541,125 $ 1,621,733
ALLOCATION OF ADMINISTRATIVE AND GENERAL EXPENSE Electric $ 1,102,042 $ 1,183,167 Water 281,699 274,148 Wastewater collection 157,384 164,418
Total Allocation of Administrative and General Expense $ 1,541,125 $ 1,621,733
Page 73
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
SCHEDULE OF CHANGES IN UTILITY PLANT December 31, 2010
Balance Balance 1-1-10 Additions Retirements 12-31-10
ELECTRIC DEPARTMENT Distribution
Land and land improvements $ 218,898 $ - $ - $ 218,898 Completed construction not classified 121,652 465,415 587,067 Structures and improvements 400,408 400,408 Distribution system 17,801,070 899,880 159,239 18,541,711 Street and security lighting system 94,844 3,104 2,399 95,549 Machinery and equipment 1,902,858 27,516 11,840 1,918,534
Total Electric Department 20,539,730 1,395,915 173,478 21,762,167
WATER DEPARTMENT Production
Land and land improvements 255,508 255,508 Structures and improvements 1,671,991 1,671,991 Wells, pumps and accessories 435,643 29,629 9,100 456,172 Water treatment plant equipment 1,950,977 1,950,977
4,314,119 29,629 9,100 4,334,648 Distribution
Completed construction not classified 564,404 564,404 Distribution system 7,200,012 380,651 10,294 7,570,369 Machinery and equipment 194,713 7,166 698 201,181
7,959,129 387,817 10,992 8,335,954 Total Water Department 12,273,248 417,446 20,092 12,670,602
WASTEWATER COLLECTION DEPARTMENT
Distribution Land 12,185 12,185 Completed construction not classified 348,688 348,688 Treatment plant 470,462 470,462 Collection system 2,774,945 292,771 34 3,067,682 Machinery and equipment 239,929 12,747 3,727 248,949
Total Wastewater Collection Department 3,846,209 305,518 3,761 4,147,966
WASTEWATER TREATMENT DEPARTMENT Land 314,857 314,857 Domestic treatment facility 536,229 536,229 Screen house 1,887,581 1,887,581 Industrial treatment facility 7,053,944 2,930 7,056,874 Sludge disposal 163,871 92,049 51,610 204,310 Secondary treatment facility 13,048,747 7,886 13,056,633
Total Wastewater Treatment Department 23,005,229 102,865 51,610 23,056,484
GENERAL PLANT Land and improvements 597,924 597,924 Intangibles 147,887 147,887 Service center 4,286,979 81,796 1,083 4,367,692 Communications equipment 59,311 4,281 63,592
Total General Plant 4,944,214 233,964 1,083 5,177,095
Total Utility Plant in Service 64,608,630 2,455,708 250,024 66,814,314
Construction Work in Progress 11,446,000 19,328,709 1,944,036 28,830,673
TOTAL INVESTMENT IN UTILITY PLANT $ 76,054,630 $ 21,784,417 $ 2,194,060 $ 95,644,987
Page 74
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
SCHEDULE OF CHANGES IN ACCUMULATED DEPRECIATION December 31,2010
Composite Percent Depreciation Balance Balance of Plant
Rates 1-1-10 Additions Retirements 12-31-10 Balance
ELECTRIC DEPARTMENT Distribution
Structures and improvements $ 55,754 $ 8,317 $ - $ 64,071 Distribution system 5,564,006 554,130 159,239 5,958,897 Street and security lighting system 18,622 3,822 2,399 20,045 Machinery and equipment 1,602,836 66,507 11,840 1,657,503
Total Electric Department 3.0% 7,241,218 632,776 173,478 7,700,516 35.4%
WATER DEPARTMENT Production
Structures and improvements 774,176 36,224 810,400 Wells, pumps and accessories 417,066 4,516 9,100 412,482 Water treatment plant equipment 1,490,497 76,370 1,566,867
2,681,739 117,110 9,100 2,789,749
Distribution Distribution system 2,972,676 154,171 10,294 3,116,553 Machinery and equipment 152,891 8,193 698 160,386
3,125,567 162,364 10,992 3,276,939
Total Water Department 2.2% 5,807,306 279,474 20,092 6,066,688 47.9%
WASTEWATER COLLECTION DEPARTMENT Distribution
Treatment plant 131,583 16,041 147,624 Collection system 838,813 69,246 945 907,114 Machinery and equipment 74,557 29,862 2,816 101,603
Total Wastewater Collection Department 2.9% 1,044,953 115,149 3,761 1,156,341 27.9%
WASTEWATER TREATMENT DEPARTMENT Domestic treatment facility 505,203 9,461 514,664 Screen house 1,381,212 33,680 1,414,892 Industrial treatment facility 5,644,919 151,442 51,610 5,744,751 Sludge disposal 115,220 11,988 127,208 Secondary treatment facility 8,431,029 211,443 8,642,472
Total Wastewater Treatment Department 1.8% 16,077,583 418,014 51,610 16,443,987 71.3%
GENERAL PLANT Intangibles 14,874 14,874 Service center 1,258,335 126,054 1,083 1,383,306 Communications equipment 46,000 3,611 49,611
Total General Plant 2.9% 1,304,335 144,539 1,083 1,447,791 28.0%
Total Utility Plant in Service 2.4% 31,475,395 1,589,952 250,024 32,815,323 49.1%
TOTAL INVESTMENT IN UTILITY PLANT $31,475,395 $ 1,589,952 $ 250,024 $32,815,323
Page 75
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
SCHEDULE OF CONTRIBUTIONS TO THE CITY OF GRAND RAPIDS Years Ended December 31,2010 and 2009
CASH Annual cash payment
LABOR AND MATERIALS PROVIDED Miscellaneous city services
TOTAL CONTRIBUTIONS
This schedule does not include:
1. Administrative costs 2. Employee benefits 3. Water used for City purposes
2010 Payment 2009 Payment in Lieu of Taxes in Lieu of Taxes
$ 823,000 $ 823,222
2,825 1,703
$ 825,825 ,;;,,$ ==~8;;;;.24,;,;",9;;;;2;;;;,5
Page 76
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
STA TIS TICAL SECTION
Page 77
Grand Rapids Public Utilities Commission STATISTICAL SECTION (UNAUDITED)
This portion of the Grand Rapids Public Utilities Commission's Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements note disclosures, and required supplementary information says about the Commission's overall financial health.
Contents
Financial Trends These schedules contain trend information to help the reader understand how the Commission's financial performance and well-being have changed over time.
Revenue Capacity These schedules contain information to help the reader assess the Commission's most significant revenue source, utility revenues.
Debt Capacity These schedules present information to help the reader assess the affordability of the Commission's current levels of outstanding debt and the Commission's ability to issue additional debt in the future.
Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the Commission's financial activities take place.
Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the Commission's financial report relates to the services the Commission provides.
Page
79 - 84
85 - 96
97 - 98
99 - 100
101 - 105
Page 78
2001
Primary government Invested in capital assets, net of related debt $ Restricted Unrestricted
Total primary government net assets $ 30,802,643 $
•• - detail not available
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
2002
24,196,163 $ 1,280,209 7,263,691
32,740,063 $
Net Assets by Component, Last Ten Fiscal Years
2003 2004
25,286,965 $ 26,515,066 $ 1,325,465 1,366,576 7,328,495 5,258,899
33,940,925 $ 33,140,541 $
2005 2006
27,872,469 $ 31,387,007 1,568,262 1,302,441 4,635,094 2,062,252
34,075,825 $ 34,751,700
2007 2008 2009 2010
$ 30,070,506 $ 31,303,516 $ 35,968,821 $ 36,404,067 943,851 370,895 474,207 222,141
4,277,068 5,219,839 457,068 4,770,506 $ 35,291,425 $ 36,894,250 $ 36,900,096 $ 41,396,714
Page 79
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
CHANGES IN NET ASSETS Last Ten Fiscal Years
Total Nonoperating Income/ (Loss)
Operating Operating Operating Revenues/ before Capital Capital Change in Net Fiscal Year Revenues Expenses Income (Expenses) Contributions Contributions Assets
2001 $ 14,442,512 $ 13,077,200 $ 1,365,312 $ (307,998) $ 1,057,314 $ 323,856 $ 1,381,170 2002 15,433,559 13,310,360 2,123,199 (441,705) 1,681,494 255,926 1,937,420 2003 14,374,373 12,707,568 1,666,805 (621,533) 1,045,272 155,590 1,200,862 2004 14,646,543 13,555,834 1,090,709 (2,151,069) 1,060,360 259,976 (800,384)
2005 15,542,793 14,456,714 1,086,079 (676,443) 409,636 525,648 935,284 2006 16,864,481 15,544,406 1,320,075 (827,947) 492,128 183,747 675,875 2007 19,051,295 18,256,420 794,875 (752,323) 42,552 497,173 539,725 2008 19,385,349 18,749,057 636,292 (304,660) 331,632 1,271,193 1,602,825 2009 20,027,613 19,255,349 772,264 (561,363) 210,901 (205,055) 5,846 2010 22,714,689 20,966,028 1,748,661 (480,546) 1,268,115 3,228,503 4,496,618
Page 80
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
OPERATING REVENUES BY SOURCE Last Ten Fiscal Years
Wastewater Wastewater Electric Water Collection Treatment
Fiscal Year Revenues Revenues Revenues Revenues Total
2001 $ 9,061,775 $ 1,234,826 $ 545,308 $ 3,600,603 $ 14,442,512 2002 9,040,129 1,480,014 727,708 4,202,237 15,450,088 2003 8,958,095 1,413,453 736,282 3,266,543 14,374,373 2004 9,343,214 1,413,331 737,328 3,152,670 14,646,543 2005 9,872,370 1,482,556 801,175 3,386,692 15,542,793 2006 10,489,735 1,425,864 768,500 4,180,382 16,864,481 2007 11,515,707 1,400,847 1,100,136 5,034,605 19,051,295 2008 12,369,743 1,412,272 1,112,009 4,491,325 19,385,349 2009 13,226,944 1,403,625 1,147,116 4,249,928 20,027,613 2010 14,853,521 1,432,994 1,293,227 5,134,947 22,714,689
Page 81
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
OPERATING EXPENSES BY SOURCE Last Ten Fiscal Years
Domestic Industrial Total Purchased Distribution/ Customer Administrative Service Wastewater Wastewater Operating
Fiscal Year Production Power Collection Accounts and General Center Communications Treatment Treatment Depreciation Expenses
2001 $ 371,516 $ 5,435,584 $ 859,796 $ 360,407 $ 838,646 $ 118,455 $ $ 261,480 $ 3,434,481 $ 1,396,835 $13,077,200 2002 342,329 5,288,131 921,610 375,657 863,091 98,996 135,236 3,836,406 1,448,904 13,310,360 2003 382,489 5,405,805 954,375 357,927 982,448 105,184 392 212,005 2,898,293 1,408,650 12,707,568 2004 342,404 6,066,335 1,064,753 334,709 1,137,354 103,671 1,054 211,002 2,792,592 1,501,960 13,555,834 2005 373,724 6,174,451 1,211,997 341,916 1,276,434 116,823 666 364,086 3,027,384 1,569,233 14,456,714 2006 348,360 6,637,729 1,196,208 372,638 1,252,631 127,828 632 260,333 3,774,446 1,573,601 15,544,406 2007 412,302 7,904,277 1,344,582 373,984 1,475,620 107,793 223 382,729 4,632,864 1,622,046 18,256,420 2008 444,077 8,116,273 1,432,753 401,624 1,528,307 126,367 532 378,338 4,697,490 1,623,296 18,749,057 2009 440,656 8,644,119 1,126,678 414,286 1,621,733 113,533 2,293 479,378 4,722,876 1,689,797 19,255,349 2010 428,559 9,388,255 1,547,516 406,041 1,541,125 134,560 1,206 432,049 5,431,186 1,655,531 20,966,028
Page 82
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NONOPERATING REVENUES AND EXPENSES Last Ten Fiscal Years
Investment Amortization Combined Street Income - Gain (Loss) of Debt Service Lighting Total
Investment Demand Landfill on Property Interest Capitalized Issuance Center Lease Payment in System Nonoperating Fiscal Year Income Pa~ment Contribution Disposition Expense Bond Fees Interest Costs Revenues Lieu of Taxes Transfer Expenses
2001 $ 327,126 $ $ $ (71,688) $ (229,936) $ (1,070) $ - $ (11,008) $ 139,582 $ (461,004) $ $ (307,998) 2002 228,319 12,693 (355,144) (678) (11,775) 132,986 (448,106) (441,705) 2003 124,958 (1,401) (428,670) (578) (9,821) 140,716 (446,737) (621,533) 2004 119,778 (4,535) (409,566) (1,005) (7,086) 134,864 (1,016,573) (966,946) (2,151,069) 2005 182,687 (4,105) (394,073) (584) (7,086) 135,840 (589,122) (676,443) 2006 260,265 (152,719) (438,938) (1,269) (8,549) 143,738 (630,475) (827,947) 2007 300,464 326,154 150,000 (9,769) (452,039) (585) (6,684) 55,945 (639,655) (276,169) 2008 189,462 310,068 155,000 8,749 (429,542) (1,601) (6,684) 123,430 (653,542) (304,660) 2009 73,958 314,380 165,000 25,924 (437,618) (1,675) (8,514) 132,107 (824,925) (561,363) 2010 53,770 664,955 260,000 13,914 (791,102) (1,053) 33,417 (16,315) 127,693 (825,825) (480,546)
Page 83
Fiscal Year
2006 2007 2008 2009 2010
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
ANNUAL CAPITAL CONTRIBUTIONS BY SOURCE Last Five Fiscal Years
Wastewater Wastewater Treatment
Electric Water Collection Capital Connection Connection Connection Contributions
Fees Fees Fees (Refunds)
$ 55,585 $ 2,655 $ $ 125,507 80,509 9,099 5,800 533,515 35,635 11,561 87 1,223,910 75,746 718 200 (281,719)
230,089 16,587 1,991 2,979,836
Total
$ 183,747 628,923
1,271,193 (205,055)
3,228,503
Page 84
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
ELECTRIC PRODUCTION AND DISTRIBUTION Last Ten Fiscal Years
Power Average Peak Purchased kWh Sold or Unaccounted Percent Line Peak Demand Demand for Average Load
Fiscal Year (kWh) Accounted for for kWh Loss (kW) Year (kW) Factor for Year
2001 156,629,588 146,067,341 10,562,247 6.7% 29,718 24,765 72.7% 2002 161,780,184 150,733,491 11,046,693 6.8% 30,559 25,161 73.6% 2003 158,951,376 147,605,768 11,345,608 7.1% 29,848 25,148 72.4% 2004 157,673,524 145,565,193 12,108,331 7.7% 29,023 24,824 72.6% 2005 167,745,544 157,656,101 10,089,443 6.0% 32,191 26,194 73.7% 2006 169,938,920 159,570,696 10,368,224 6.1% 33,872 26,241 74.3% 2007 171,377 ,400 161,459,820 9,917,580 5.8% 32,356 27,164 72.5% 2008 180,044,840 170,117,890 9,926,950 5.5% 29,812 27,156 75.6% 2009 175,360,400 165,472,144 9,888,256 5.6% 29,652 26,780 74.9% 2010 175,981,600 167,454,167 8,527,433 4.9% 31,560 26,902 74.9%
Page 85
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
kWh SOLD OR ACCOUNTED FOR BY CUSTOMER CLASS Last Ten Fiscal Years
Rural Total kWh Sold City City City Demand Rural Rural Demand and Street Security or Accounted
Fiscal Year Residential Commercial and Energ~ Residential Commercial Energ~ Industrial Dual Fuel Lighting Lighting for
2001 25,538,397 21,138,711 55,275,772 14,187,462 3,370,763 3,816,843 19,534,781 1,545,093 1,345,859 313,660 146,067,341 2002 26,918,293 21,164,916 55,949,318 14,671,599 3,249,953 4,439,281 20,465,676 2,191,696 1,362,347 320,412 150,733,491 2003 27,587,462 22,015,042 58,443,753 14,231,841 3,260,378 4,627,251 13,296,218 2,443,621 1,373,114 327,088 147,605,768 2004 27,269,498 21,653,175 57,539,293 13,737,438 3,352,176 4,300,111 13,558,249 2,673,996 1,153,135 328,122 145,565,193 2005 29,209,003 23,096,879 63,993,978 14,318,753 3,497,210 4,287,973 14,334,995 3,294,040 1,294,476 328,794 157,656,101 2006 28,846,457 22,516,217 66,433,201 13,601,381 3,395,516 3,728,524 16,119,545 3,247,062 1,359,875 322,918 159,570,696 2007 30,186,620 22,540,310 63,079,505 13,853,009 3,196,527 4,359,287 18,406,968 4,160,671 1,358,455 318,468 161,459,820 2008 32,653,079 23,015,184 64,216,253 11,982,897 2,897,210 4,286,826 23,934,970 5,468,155 1,341,776 321,540 170,117,890 2009 34,857,112 22,744,018 60,467,146 9,952,254 2,817,227 3,731,572 23,048,953 6,185,277 1,354,159 314,426 165,472,144 2010 34,496,223 23,384,186 62,629,317 9,660,114 2,588,012 3,296,930 23,684,310 6,010,488 1,395,779 308,808 167,454,167
Note: All data in kWh
Page 86
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NUMBER OF ELECTRIC CUSTOMER METERS BY TYPE Last Ten Fiscal Years
Water Total Heater
Fiscal City City Rural Rural Electric Security Control Windsense Year Residential Commercial Residential Commercial Industrial Dual Fuel Customers Lights Customers Customers
2001 3,535 1,017 1,477 187 5 96 6,317 514 814 2002 3,675 1,059 1,408 177 5 111 6,435 531 821 2003 3,683 1,097 1,431 185 5 124 6,525 534 813 78 2004 3,795 1,130 1,368 194 5 137 6,629 540 812 92 2005 3,867 1,269 1,378 205 5 161 6,885 527 795 96 2006 3,920 1,235 1,359 206 5 190 6,915 517 773 101 2007 3,941 1,204 1,363 215 5 230 6,958 519 690 95 2008 4,391 1,230 1,076 200 5 319 7,221 529 708 109 2009 4,192 1,117 1,023 176 6 339 6,853 503 698 113 2010 4,278 1,155 996 155 6 352 6,942 499 706 109
Page 87
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
ELECTRIC RATES - CITY CUSTOMERS Last Ten Fiscal Years
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
City Residential Base Charge $ 4.20 $ 4.20 $ 4.20 $ 4.20 $ 4.20 $ 4.20 $ 4.20 $ 5.25 $ 5.75 $ 6.25 All kWh per month 0.0559 0.0559 0.0559 0.0559 0.0559 0.0559 0.0559 0.0784 0.0846 0.0913
City Commercial Base Charge 6.10 6.10 6.10 6.10 6.10 6.10 6.10 7.25 10.00 12.30 First 10,000 kWh per month 0.0615 0.0615 0.0615 0.0615 0.0615 0.0615 0.0615 0.0810 0.0852 0.0913 Over 10,000 kWh per month 0.0417 0.0417 0.0417 0.0417 0.0417 0.0417 0.0417 0.0610 0.0852 0.0913
Load Management Heating Customer Charge 5.10 5.10 5.10 5.10 5.10 5.10 5.10 5.25 5.75 6.25 Energy Charge: Per kWh 0.0303 0.0303 0.0303 0.0303 0.0303 0.0303 0.0303 0.0400 0.0445 0.0481
Load Management -Storage Heat
Customer Charge 5.25 5.75 6.25 Energy Charge: Per kWh 0.0380 0.0410 0.0443
Load Management Cooling -Continuous Control
Customer Charge 5.10 5.10 5.25 5.75 6.25 Energy Charge: Per kWh 0.0303 0.0303 0.0400 0.0445 0.0481
Load Management Cooling -Cycled Control
Customer Charge 5.10 5.10 5.25 5.75 6.25 Energy Charge: Per kWh 0.0474 0.0474 .0784* 0.0846* .0913*
* kWh chged @ normal rate for customer class
Monthly Credit 8.75 8.75 8.75
Controlled Water Heating Monthly Credit 3.00 3.00 3.00 3.00 3.00 3.00 3.00 5.00 5.00 5.00
Purchase Power Adjustment {Base Energ~ Charge-~.02134} + Fuel Adjustment Charge Clause (PPAC) (i-Estimated Annual Losses)
City Light & Power Demand Charge: Per kWh 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.75 12.50 15.00 Energy Charge: Per kWh 0.0272 0.0272 0.0272 0.0272 0.0272 0.0272 0.0272 0.0425 0.0436 0.0437 Minimum Charge: kW/month 10 10 10 10 10 10 10 10 10 10
Industrial Demand Charge: Per kW 8.60 8.60 8.60 8.60 8.60 8.60 8.60 9.20 12.25 15.00 Energy Charge: Per kWh 0.0308 0.0308 0.0308 0.0308 0.0308 0.0308 0.0308 0.0445 0.0441 0.0437 Minimum charge: kW/month 10 10 10 10 10 10 10 10 10 10
Entertainment Lighting Rate Seasonal Evening Customer Charge 6.10 6.10 6.10 6.10 6.10 6.10 6.10 7.25 7.85 8.50 Energy Charge: Per kWh/mo 0.0615 0.0615 0.0615 0.0615 0.0615 0.0615 0.0615 0.0810 0.0875 0.0946
Page 88
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
ELECTRIC RATES-RURAL CUSTOMERS Last Ten Fiscal Years
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Rural Residential Base Charge $ 6.30 $ 6.30 $ 6.30 $ 6.30 $ 6.30 $ 6.30 $ 6.30 $ 6.25 $ 6.75 $ 7.25 All kWh per month 0.0625 0.0625 0.0625 0.0625 0.0625 0.0625 0.0625 0.0817 0.0881 0.0948
Rural Commercial Base Charge 8.15 8.15 8.15 8.15 8.15 8.15 8.15 8.25 11.00 13.30 First 10,000 kWh per month 0.0734 0.0734 0.0734 0.0734 0.0734 0.0734 0.0734 0.0870 0.0912 0.0948 Over 10,000 kWh per month 0.0502 0.0502 0.0502 0.0502 0.0502 0.0502 0.0502 0.0670 0.0912 0.0948
Load Management Heating Customer Charge 5.10 5.10 5.10 5.10 5.10 5.10 5.10 5.25 5.75 6.25 Energy Charge: Per kWh 0.0303 0.0303 0.0303 0.0303 0.0303 0.0303 0.0303 0.0400 0.0445 0.0481
Load Management-Storage Heat
Customer Charge 5.25 5.75 6.25 Energy Charge: Per kWh 0.0380 0.0410 0.0443
Load Management Cooling -Continuous Control
Customer Charge 5.10 5.10 5.25 5.75 6.25 Energy Charge: Per kWh 0.0303 0.0303 0.0400 0.0445 0.0481
Load Management Cooling -Cycled Control
Customer Charge 5.10 5.10 5.25 5.75 6.25 Energy Charge: Per kWh 0.0518 0.0518 .0817* .0881* .0948*
* kWh chged @ normal rate for customer class
Monthly Credit 8.75 8.75 8.75
Controlled Water Heating Monthly Credit 3.00 3.00 3.00 3.00 3.00 3.00 3.00 5.00 5.00 5.00
Purchase Power Adjustment (Base Energ~ Charge-~.02134) + Fuel Adjustment Charge Clause (PPAC) (1-Estimated Annual Losses)
Rural Light & Power Demand Charge: Per kWh 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 13.25 15.75 Energy Charge: Per kWh 0.0343 0.0343 0.0343 0.0343 0.0343 0.0343 0.0343 0.0460 0.0473 0.0473 Minimum Charge: kW/month 10 10 10 10 10 10 10 10 10 10
Industrial Demand Charge: Per kW 8.60 8.60 8.60 8.60 8.60 8.60 8.60 9.20 12.25 15.00 Energy Charge: Per kWh 0.0308 0.0308 0.0308 0.0308 0.0308 0.0308 0.0308 0.0445 0.0441 0.0437 Minimum charge: kW /month 10 10 10 10 10 10 10 10 10 10
Entertainment Lighting Rate Seasonal Evening Customer Charge 6.10 6.10 6.10 6.10 6.10 6.10 6.10 7.25 7.85 8.50 Energy Charge: Per kWh/mo 0.0615 0.0615 0.0615 0.0615 0.0615 0.0615 0.0615 0.0810 0.0875 0.0946
Page 89
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
WATER PRODUCTION AND DISTRIBUTION Last Ten Fiscal Years
Gallons of Gallons of Gallons of Gallons of Water Water Used in Water to Water Unaccounted Percent
Fiscal Year Pumped Processing System Distributed for Gallons System Loss
2001 603,485 96,722 506,763 443,570 63,193 12.5% 2002 570,852 74,841 496,011 440,156 55,855 11.3% 2003 516,059 69,349 446,710 419,603 27,107 6.1% 2004 509,357 65,774 443,583 409,594 33,989 7.7% 2005 528,028 68,646 459,382 426,324 33,058 7.2% 2006 511,231 72,071 439,160 403,762 35,398 8.1% 2007 523,685 67,073 456,612 392,665 63,947 14.0% 2008 512,429 43,959 468,470 383,985 84,485 18.0% 2009 463,608 28,072 435,536 366,740 68,796 15.8% 2010 448,378 32,306 416,072 352,508 63,564 15.3%
Note: Data in 1000's of gallons
Page 90
Fiscal Year City Residential
2001 118,660 2002 118,882 2003 120,162 2004 118,535 2005 122,749 2006 121,151 2007 122,105 2008 115,583 2009 110,614 2010 108,070
N/A = not available
Notes: Data in 1000's of gallons.
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
City Commercial
302,256 295,791 247,945 245,645 254,761 237,035 221,792 215,422 199,116 194,180
WATER DISTRIBUTION BY CUSTOMER CLASS Last Ten Fiscal Years
Rural Rural Residential Commercial City Industrial
89 19,253 69 22,834
18,394 23,168 19,527 25,587 21,790 24,079 18,454 26,205 17,363 28,380 16,126 33,520 14,370 34,375
21 32,518
Rural Industrial
12,456
Industrial gallons included in City Commercial in 2001 and 2002.
Total Water System Gallons
Maintenance Distributed
3,312 443,570 2,580 440,156 9,934 419,603
300 409,594 2,945 426,324
917 403,762 3,025 392,665 3,334 383,985 8,265 366,740 5,263 352,508
Page 91
Fiscal Year
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fiscal Year
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
NUMBER OF WATER AND WASTEWATER COLLECTION CUSTOMER METERS BY TYPE Last Ten Fiscal Years
City City Rural Rural City Rural Residential Commercial Residential Commercial Industrial Industrial
2,420 598 3 20 2,438 615 6 2,455 622 6 2,498 638 6 2,547 768 6 1 2,570 712 5 1 2,586 675 5 2,599 616 3 2,497 613 4 1 2,507 587 3 2
City City Rural Rural City Rural Residential Commercial Residential Commercial Industrial Industrial
2,421 546 3 20 2,438 558 4 18 2,421 546 3 20 2,484 579 5 18 2,546 700 5 19 2,572 642 5 19 2,588 598 5 21 2,559 582 4 22 2,503 584 4 17 2,513 587 4 13 3
Total Water Customers
3,042 3,060 3,084 3,143 3,322 3,288 3,267 3,219 3,115 3,099
Total Wastewater Collection Customers
2,991 3,019 2,991 3,087 3,271 3,239 3,213 3,168 3,109 3,121
Page 92
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
WATER AND WASTEWATER COLLECTION RATES - CITY CUSTOMERS
Water Rates Base rate (meter size)
5/8" - 3/4" 1" 1 1/4" 1 1/2" 2" 3" 4" 6"
Usage rate (per 1,000 gallons)
First 10,000 gallons Next 30,000 gallons Next 210,000 gallons Next 250,000 gallons
Wastewater Base Charge
Wastewater Collection Rates (per 1,000 gallons)
2001
$ 5.25 7.05 7.95 8.90
13.85 50.55 64.15 95.85
2.50 2.28 2.13 1.98
3.35
0.91
Last Ten Fiscal Years
2002 2003 2004 2005 2006 2007 2008
$ 5.25 $ 5.25 $ 5.25 $ 5.25 $ 5.25 $ 5.25 $ 5.46 7.05 7.05 7.05 7.05 7.05 7.05 7.33 7.95 7.95 7.95 7.95 7.95 7.95 8.27 8.90 8.90 8.90 8.90 8.90 8.90 9.26
13.85 13.85 13.85 13.85 13.85 13.85 14.40 50.55 50.55 50.55 50.55 50.55 50.55 52.57 64.15 64.15 64.15 64.15 64.15 64.15 66.72 95.85 95.85 95.85 95.85 95.85 95.85 99.68
3.10 3.10 3.10 3.10 3.10 3.10 3.22 2.83 2.83 2.83 2.83 2.83 2.83 2.94 2.64 2.64 2.64 2.64 2.64 2.64 2.75 2.45 2.45 2.45 2.45 2.45 2.45 2.55
4.15 4.15 4.15 4.15 4.15 5.88 5.88
1.36 1.36 1.36 1.36 1.36 2.28 2.28
2009 2010
$ 5.57 $ 5.57 7.48 7.48 8.44 8.44 9.45 9.45
14.69 14.69 53.62 53.62 68.05 68.05
101.67 101.67
3.28 3.28 3.00 3.00 2.81 2.81 2.60 2.60
6.47 6.25
2.51 2.91
Page 93
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
WATER AND WASTEWATER COLLECTION RATES - RURAL CUSTOMERS
Water Rates Base rate (meter size)
5/8" - 3/4" 1" 1 1/4" 1 1/2" 2" 3" 4" 6"
Usage rate (per 1,000 gallons)
First 10,000 gallons Next 30,000 gallons Next 210,000 gallons Next 250,000 gallons
Wastewater Base Charge
Wastewater Collection Rates (per 1,000 gallons)
$
2001 2002
5.65 $ 5.65 7.65 7.65 8.65 8.65 9.65 9.65
15.10 15.10 55.25 55.25 70.10 70.10
104.80 104.80
2.90 3.35 2.66 3.07 2.47 2.85 2.30 2.66
3.80 4.30
1.16 1.45
Last Ten Fiscal Years
2003 2004 2005 2006 2007 2008
$ 5.65 $ 5.65 $ 5.65 $ 5.65 $ 5.65 $ 5.88 7.65 7.65 7.65 7.65 7.65 7.96 8.65 8.65 8.65 8.65 8.65 9.00 9.65 9.65 9.65 9.65 9.65 10.04
15.10 15.10 15.10 15.10 15.10 15.70 55.25 55.25 55.25 55.25 55.25 57.46 70.10 70.10 70.10 70.10 70.10 72.90
104.80 104.80 104.80 104.80 104.80 108.99
3.35 3.35 3.35 3.35 3.35 3.48 3.07 3.07 3.07 3.07 3.07 3.19 2.85 2.85 2.85 2.85 2.85 2.96 2.66 2.66 2.66 2.66 2.66 2.77
4.30 4.30 4.30 4.30 6.02 6.02
1.45 1.45 1.45 1.45 2.55 2.55
2009 2010
$ 6.00 $ 6.00 8.44 8.44 9.18 9.18
10.24 10.24 16.01 16.01 58.61 58.61 74.36 74.36
111.17 111.17
3.55 3.55 3.25 3.25 3.02 3.02 2.83 2.83
6.62 6.85
2.81 3.25
Page 94
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
TEN LARGEST CUSTOMERS Current Year and Nine Years Ago
Fiscal Year 2010 Water Revenue Wastewater Collection Revenue
Amount % Amount % Customer
Blandin Paper Co. $ 94,111 7.29% $ 100,149 8.13% City of Cohasset 68,635 5.57% Wastewater Treatment Plant 89,104 6.90% City of LaPrairie 36,173 2.80% 17,029 1.38% Grand Itasca Clinic & Hospital 18,748 1.45% 18,295 1.49% School District 318 17,114 1.33% 14,362 1.17% Housing and Redevelopment 15,411 1.19% 13,384 1.09% Sawmill Inn 14,643 1.13% 14,720 1.20% Itasca Community College 14,607 1.19% Grand Village 13,831 1.07% 13,817 1.12% City of Grand Rapids 12,877 1.00% 9,407 0.76% Pine Ridge Apartments 11,138 0.86% 9,974 0.81%
Subtotal (10 largest) 323,150 25.03% 294,379 23.90%
Balance from other customers 967,679 74.97% 937,160 76.10%
Grand Totals $ 1,290,829 100.00% $ 1,231,539 100.00%
Fiscal Year 2001 Water Revenue Wastewater Collection Revenue
Amount % Amount % Customer
Blandin Paper Co. $ 151,357 12.55% $ 65,298 12.12% City of Cohasset 23,703 4.40% Wastewater Treatment Plant 79,913 6.62% City of LaPrairie 26,419 2.19% 5,528 1.03% Grand Itasca Clinic & Hospital 24,196 2.01% 10,047 1.87% School District 318 23,770 1.97% 7,374 1.37% Sawmill Inn 19,417 1.61% 8,433 1.57% Northprint International 14,906 1.24% 6,154 1.14% Rainbow Inn, Inc. 13,874 1.15% 6,066 1.13% Itasca Community College 4,739 0.88% Housing and Redevelopment 12,957 1.07% 4,709 0.87% Pine Ridge Apartments 10,973 0.91% 4,177 0.78% Grand Village 10,831 0.90% 5,715 1.06%
Subtotal (10 largest) 388,613 32.21% 151,943 28.21%
Balance from other customers 817,807 67.79% 386,700 71.79%
Grand Totals $ 1,206,420 100.00% $ 538,643 100.00%
Notes: Dollar values reflected include base rate charges, as well as multiple meters on various accounts
Due to changes in Minnesota state statutes, the Commission is no longer allowed to disclose information on its electric customers.
Page 95
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
WASTEWATER COLLECTION AND TREATMENT Last Ten Fiscal Years
Influent Effluent Flow Total Suspended Solids Biochemical OX~gen Demand
Biochemical Total Total Oxygen
Domestic (1,000 Industrial (1,000 Total Flow Domestic Industrial Suspended Domestic Industrial Total BOD Flow (1,000 Suspended Demand Landfill Solids Fiscal Year gaL) gaL) (1,000 gaL) (tons) (tons) Solids (tons) (tons) (tons) (tons) gaL) Solids (tons) (tons) (cubic yards)
2001 566,900 3,631,100 4,198,000 840 38,120 38,960 363 6,821 7,184 3,968,000 228 37 96,060 2002 487,200 3,463,000 3,950,200 984 28,408 29,392 476 8,629 9,105 3,679,000 242 53 90,528 2003 411,500 2,377,300 2,788,800 692 17,011 17,703 381 4,720 5,101 2,441,600 105 20 60,180 2004 413,400 2,028,500 2,441,900 636 11,945 12,581 358 3,518 3,876 2,042,300 81 16 51,696 2005 480,900 2,189,300 2,670,200 655 11,851 12,506 328 3,974 4,302 2,209,000 61 15 56,508 2006 490,000 2,312,000 2,802,000 808 14,800 15,608 434 5,707 6,141 2,802,000 47 30 62,112 2007 504,000 2,432,000 2,936,000 755 16,792 17,547 663 6,661 7,324 2,936,000 49 37 64,679 2008 507,000 2,703,000 3,210,000 798 17,336 18,134 658 8,232 8,890 3,209,000 76 74 67,316 2009 473,000 2,566,000 3,039,000 784 18,189 18,973 528 8,442 8,970 3,027,000 48 32 72,000 2010 465,000 2,512,000 2,977,000 758 19,748 20,506 515 10,229 10,744 2,977,000 108 62 65,248
Page 96
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
RATIOS OF OUTSTANDING DEBT BY TYPE Last Ten Fiscal Years
Total General
Obligation As a Share Revenue Revenue G.O. Revenue Long-Term Contract for of Personal
Fiscal Year Bonds Bonds Notes (1) Payable to City Deed Amount Per Capita Income
2001 $ 5,145,000 $ 2,360,000 $ 1,027,000 $ $ $ 8,532,000 $ 1,090.49 N/A
2002 4,810,000 2,255,000 983,000 8,048,000 1,027.97 N/A
2003 4,475,000 2,145,000 938,000 7,558,000 918.01 N/A
2004 4,330,000 2,030,000 892,000 7,252,000 855.39 N/A
2005 4,180,000 1,910,000 844,000 6,934,000 811.66 N/A
2006 5,935,000 795,000 N/A 6,730,000 765.64 N/A
2007 5,615,000 744,000 N/A 6,359,000 723.44 N/A
2008 5,280,000 692,000 N/A 5,972,000 669.06 N/A
2009 5,850,000 5,130,414 2,221,200 13,201,614 1,362.40 N/A
2010 5,390,000 23,145,597 1,189,200 29,724,797 2,734.82 N/A
(1) In 2010, $20,307,237 ($22,563,597 x 90%) in G.O. Revenue Notes are secured by a Bank Letter of Credit
Page 97
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
PLEDGED REVENUE COVERAGE Last Ten Fiscal Years
Debt Service Gross Net Revenue
Gross Expenses Available for Coverage Fiscal Year Revenues (1 )(2) Debt Service Principal Interest Total Ratio
2001 $ 14,909,220 $ 11,752,053 $ 3,157,167 $ 517,000 $ 199,206 $ 716,206 441%
2002 15,807,557 11,861,456 3,946,101 484,000 496,735 980,735 402%
2003 14,640,047 11,300,319 3,339,728 490,000 422,551 912,551 366%
2004 14,901,185 12,058,409 2,842,776 306,000 404,494 710,494 400%
2005 15,861,320 12,891,586 2,969,734 318,000 390,094 708,094 419%
2006 17,268,484 14,123,524 3,144,960 399,000 457,849 856,849 367%
2007 19,407,704 17,283,798 2,123,906 447,800 403,577 851,377 249%
2008 20,316,058 17,779,303 2,536,755 459,000 381,839 840,839 302%
2009 20,890,982 18,390,477 2,500,505 573,800 403,637 977,437 256%
2010 24,627,722 20,136,322 4,491,400 1,373,979 566,166 1,940,145 231%
(1) Excludes interest expense, bond fees, amort of issuance costs, depreciation and payment in lieu of tax (PILOT) (2) Beginning in 2007, PILOT is included in gross expenses
Page 98
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Fiscal Years
Per Capita Personal Personal Unemployment
Fiscal Year Population Income Income Rate
2001 7,824 N/A N/A 9.20%
2002 7,829 N/A N/A 10.40%
2003 8,233 N/A N/A 12.50%
2004 8,478 N/A N/A 11.70%
2005 8,543 N/A N/A 8.90%
2006 8,790 N/A N/A 8.70%
2007 8,790 N/A N/A 9.30%
2008 8,926 N/A N/A 12.40%
2009 9,690 N/A N/A 13.70%
2010 10,869 N/A N/A 9.60%
Page 99
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
PRINCIPAL EMPLOYERS Current Year and Nine Years Ago
2010 2001 Percentage Percentage of Total City of Total City
Taxpayer Employees Rank Employment Employees Rank Employment
ISO #318 1,065 1 10.70% 600 2 6.10% Grand Itasca Clinic & Hospital 584 2 5.87% 386 3 3.92% UPM Blandin Paper Mill 453 3 4.55% 857 1 8.71% Itasca County 408 4 4.10% 380 4 3.86% Wal-Mart Stores, Inc. 300 5 3.02% 185 6 1.88% City of Grand Rapids (1 ) 225 6 2.26% 105 10 1.07% Arrowhead Prom & Fulfillment Co. 205 7 2.06% 270 5 2.74% Terex Corporation 186 8 1.87% Grand Village Nursing Home (2) 168 9 1.69% 136 9 1.38% Itasca Community College 146 10 1.47% Potlatch Corporation 162 7 1.65% Target 109 8 1.11%
Total Principal Taxpayers 3,740 37.84% 3,190 32.43%
All other Taxpayers 6,209 62.16% 6,648 67.57%
Total 9,949 100.00% 9,838 100.00%
Source: Minnesota Department of Employment and Economic Development
(1) Includes 150 part-time employees (2) Formerly Itasca County Nursing Home
Page 100
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
FULL-TIME EQUIVALENT COMMISSION EMPLOYEES BY FUNCTION Last Ten Fiscal Years
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Administration 1 2 2 2 2 2 2 2 2 Customer Service and Billing 5 5 4 4 4 4 4 4 4 4 Electric 11 13 11 12 14 14 14 13 13 12 Finance and Accounting 4 4 4 4 4 4 4 4 4 4 Meter Reading 2 2 2 2 2 2 2 2 2 2 Wastewater Treatment 16 16 15 16 12 13 13 13 13 13 Water DistributionlW astewater Collection 3 3 3 3 3 3 3 3 3 4 Water Treatment 5 5 5 5 4 4 4 4 4 2 Total Employees 47 49 46 48 45 46 46 45 45 43
Commissioners 5 5 5 5 5 5 5 5 5 5
Notes: All managers and supervisors are included with their departments
Page 101
Electric
Number of substations
Main substation capacity (MVA)
Distribution transformer capacity (KVA)
Miles of electric overhead line (not including neutral conductor)
Miles of electric underground line
MVA = megavolt ampere KVA = kilovolt ampere N/A = not available
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
OPERATING AND CAPITAL INDICATORS - ELECTRIC Last Ten Fiscal Years
2001 2002 2003 2004 2005 2006
5 5 5 5 5 5
37.5 37.5 37.5 37.5 54 54
N/A N/A N/A N/A N/A 76,900
195 195 195 195 195 195
119 119 119 119 119 119
2007 2008 2009 2010
5 5 5 5
54 54 54 54
76,900 76,900 76,900 76,900
164 164 173 169
151 155 155 169
Page 102
Water
Number of treatment plants
Treatment capacity (MGD)
Water Storage Capacity (MG)
Number of wells
Number of booster stations
Number of pressure districts
Miles of water main
Wastewater
Number of treatment plants
Treatment capacity (MGD)
Number of lift stations
Number of pump stations
Miles of wastewater collection main
MGD = millions of gallons per day MG = million gallons
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
OPERATING AND CAPITAL INDICATORS - WATER AND WASTEWATER
Last Ten Fiscal Years
2001 2002 2003 2004 2005 2006 2007
3.24 3.24 3.24 3.24 3.24 3.24 3.24
2 2 2 2 2 2 2
5 5 5 5 5 5 5
2 2 2 2 3 3 3
52 52 52 64 69 74 74
2 2 2 2 2 2 2
15.2 15.2 15.2 15.2 15.2 15.2 15.2
10 10 10 10 10 10 10
51 51 51 56 60 64 64
2008 2009 2010
3.24 3.24 3.24
2 2 2
5 5 5
3 3 3
74 79 79
2 2 2
15.2 15.2 15.2
10 11 11
64 69 69
Page 103
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
ELECTRIC DEPARTMENT SELECTED FINANCIAL AND OPERATING RATIOS
(Unaudited)
Industry Average
2010 2009 (2009)*
FINANCIAL RATIOS
Electric revenue per kWh All retail customers $ 0.088 $ 0.079 $ 0.081 Residential customers $ 0.103 $ 0.096 $ 0.094 Commercial customers $ 0.084 $ 0.075 $ 0.083 Industrial customers $ 0.069 $ 0.063 $ 0.070
Electric operating ratio 0.851 0.882 0.888
Net income per electric revenue dollar $ 0.101 $ 0.065 $ 0.051
Uncollectible accounts per electric revenue dollar $ 0.0009 $ 0.0011 $ 0.0034
OPERATING RATIOS
Retail customers per non-power-generation employee 381 342 378
Total electric O&M expense per kWh sold $ 0.071 $ 0.062 $ 0.071
Total electric O&M expense (excluding power supply expense) per retail customer $ 353 $ 355 $ 348
Total power supply expense per kWh sold $ 0.056 $ 0.048 $ 0.059
Purchased power cost per kWh purchased $ 0.053 $ 0.045 $ 0.057
Retail customers per meter reader 5,340 5,309 6,157
Distribution O&M expense per retail customer $ 156 $ 159 $ 161
Distribution O&M expense per circuit mile $ 3,213 $ 3,444 $ 5,582
Page 104
GRAND RAPIDS PUBLIC UTILITIES COMMISSION
ELECTRIC DEPARTMENT SELECTED FINANCIAL AND OPERATING RATIOS
(Unaudited)
2010 2009
Customer accounting, service and sales expense per retail customer $ 38 $ 39
Administrative and general expense per retail customer $ 159 $ 173
Energy loss percentage 4.85% 5.60%
System load factor 74.9% 74.9%
* APPA "Selected Financial and Operating Ratios of Public Power Systems" published November 2010, using 2009 data.
Industry Average (2009)*
$ 41
$ 146
3.82%
59.3%
Page 105
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Page 106
Page 107
Baker Tilly Virchow Krause, LLP Ten Terrace Ct, PO Box 7398 Madison, WI 53707-7398 tel 608 249 6622 fax 608 249 8532 bakertilly.com
AUDITORS' REPORT ON LEGAL COMPLIANCE To the Grand Rapids Public Utilities Commission Grand Rapids Public Utilities Grand Rapids, Minnesota We have audited the financial statements of Grand Rapids Public Utilities Commission as of December 31, 2010, and for the year then ended, and have issued our report thereon dated June 17, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, and the provisions of the Minnesota Legal Compliance Audit Guide for Political Subdivisions, promulgated by the State Auditor pursuant to Minn. Stat. § 6.65. Accordingly, the audit included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. The Minnesota Legal Compliance Audit Guide for Political Subdivisions covers 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 incremental financing. Our study included all of the listed categories except we did not test for tax incremental financing because the Grand Rapids Public Utilities Commission does not have any tax incremental financing districts. The results of our tests indicate that for the items tested, Grand Rapids Public Utilities Commission complied with the material terms and conditions of the applicable legal provisions. This report is intended solely for the information and use of the Grand Rapids Public Utilities Commission and is not intended to be, and should not be, used by anyone other than those specified parties.
Madison, Wisconsin June 17, 2011