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Home My WebLink About12-17-2025 HUCCPHUTCHINSON UTILITIES COMMISSION AGENDA REGULAR MEETING December 17, 2025 3:00 p.m. 1. CONFLICT OF INTEREST 2. APPROVE CONSENT AGENDA a. Approve Minutes b. Ratify Payment of Bills 3. APPROVE FINANCIAL STATEMENTS 4. OPEN FORUM 5. COMMUNICATION a. City Administrator b. Divisions C. Human Resources d. Legal e. General Manager 6. POLICIES a. Review Policies No Policies to Review b. Approve Changes No Changes to Policies 7. UNFINISHED BUSINESS a. None 8. NEW BUSINESS a. Approve 2026 Non -Union Pay Grid Adjustment b. Approve 2026 Electric and Natural Gas Operating Budgets & 5 Year CIP c. Approve Cost of Service & Rate Design Study with UFS d. Approve Commercial Solar Agreement with Cedar Creek Energy e. Approve Solar PV Agreement with Apadana Energy f. Approve Solar PV Agreement Ziegler Energy Solutions g. Approve Solar PV Agreement with Apadana Energy h. Approve Solar PV Agreement Ziegler Energy Solutions i. Approve Plant #2 Substation Load Study with DGR j. Approve Plant #1 Substation 69-115kV Conversion Task Order #9 — Amendment #1 with DGR k. Approve Paid Family Medical Leave (PFML) Policy Conduct the Performance Review of Hutchinson Utilities Commission General Manager Pursuant to Minnesota Statute 13D.05 Subd. 3(a) 9. ADJOURN MINUTES Special Budget Meeting — Hutchinson Utilities Commission Wednesday, November 27, 2025 Call to order — 3:00 p.m. President Matt Cheney called the meeting to order. Members present: President Matt Cheney; Vice President Troy Pullis; Secretary Don Martinez; Commissioner Kathy Silvernale; GM Jeremy Carter Absent: Commissioner Tom Lambert; Attorney Marc Sebora: GM Carter thanked the Commissioners for coming and noted that these are preliminary budget numbers and the Commissioners will have about 3 weeks to review before final budget numbers need to be approved. GM carter presented HUC's 2026 preliminary budget, which is the same format as previous years. GM Carter highlighted the combined divisions, revenues are at $46.8M with expenses at $46.6M with a Net Profit of $224K, which is a decrease in net profit over last year. Electric Division shows an increase of $600K in the Power Cost Adjustment. Sales for Resales shows an increase of $849K. Electric Division Revenues are at $31 AM with expenses at $33AM with a Net Loss of $2M; this is doubled from last year. Gas Division Revenues are at $15.4M with expenses at $13.2M with a Net Profit of $2.3M which is about $600K less than last year.GM Carter reviewed the Combined Division graphs. Electric Division, Retail Customer sales of $26.5M which is an increase from last year. Power Cost Adjustment is $1.5M compared to $900K in 2025. Residential, Small General and Large General all had increases, whereas Industrial Sales showed a decrease from last year: which means HUC's loads are fairly consistent. Overall Kwhr volume sales show a .59% decrease. GM Carter pointed out that Sales for Resales has increased by $849K over 2025 budget due to a decrease in Capacity Sales of $66,250 and Inc in Market Sales of $915K. Other Revenues of $511 K are made up of Additional customer charges of $154K, Interest Earnings of $275K, Bond Premiums of $33K, and GIS Reimbursement of $49K. GM Carter reviewed the Pictorial Graphs; these graphs show the overall comparison as to how the revenue is derived. The Consumption History graph shows a snapshot of each customer class loads. GM Carter spoke on the Electric Division Expense Budget Highlights. Health Insurance will be staying with Medica with a 15% increase. Dental Insurance will be moving to Principal with a 13% increase. LTD will be moving to Hartford with a reduction of $5K, Basic Life and AD&D benefits remain the same. New for 2026 is the PFML rate of .423, which will be 50/50 split between ER & EE adding a cost of $13K. PILOT remains the same. GM Carter reviewed the GRE/MISO Transmission Expense with an increase of $1.2K along with the MRES Baseload Contract Expense of a $612K increase, MISO Expenses of a $128K decrease and the Bright Energy Choices Program of $68K which is a decrease of $55K from last year. Additional Operating Expenses of $227K for Unit 7 Selective Catalytic Reduction (SCR) Exhaust Repairs, $70K for Unit 1 Transformer Repair, $33K for IT Budget — additional FTE added, $55K additional Unit 5, 6 and 7 inventory, and $40K for Solar Land Lease Agreement were also highlighted. GM Carter reviewed the pictorial graphs of the Electric Division Expenses. 1 After discussion of the Electric Division preliminary budget, GM Carter gave an overview of the Natural Gas Division. Retail Customer Sales decreased $525K and showed a decrease of 5.9% in forecasted Retail MCF's sold, increase in FCA Credits. Contract Sales of 3M, TDK, UFC and Brownton show an increase in revenue of $131 K. GM Carter highlighted Other Revenues of $3.4M; which are made up of N.U/HCP/UFC/UNG Transport/Reservation Fees of $2.1 M, Electric Division Transportation Fees of $728K, Bond Premiums of $170K, Customer Charges of $54K, Interest Income of $275K, Brownton & HCP Operation/Maintenance Agreement of $78K, and GIS Reimbursement of $26K. GM Carter concluded by reviewing the pictorial graphs and expense budget highlights of the Natural Gas Division. GM Carter noted that the Retail Customer Gas purchases show an increase of $16K, Contracted Customers Gas purchases increase $114K, PILOT remains the same and Additional Operating Expenses of $70K for Engineering Cost for PHMSA's changes in programs and Flying Line, Patrolling and System Improvements, $30K for Transmission Line CIS Survey St. James - Hanska, $38K for Distribution District Regulator #5 and #6 Improvements and Painting and $21 K for IT Budget — Additional FTE added. GM Carter looked to the Commission for questions, concerns or comments on the 2026 Budget Presentation. President Cheney asked the Commissioners to spend time with GM Carter and ask questions about the budget between now and December 17th. There were no concerns from the Commissioners. Commissioners stated that the information was detailed and clear and to continue to present in the same format. Discussion was held on the Rate Stabilization Fund along with the large projects that are coming up in the next few years and the funding for the projects. Normal Cap X can be pared down in the interim, without sacrificing reliability and safety, as it is worth the investment to do these larger projects. Conversations were held on suspending Power Cost and Fuel Cost Adjustment Credits for 2026. Along with having a Strategic Planning meeting in January/February of 2026. Commissioners agreed to add item 8g. Approval of Suspending Power Cost and Fuel Cost Adjustment Credits for 2026 to the Regular Commission Meeting that will be held after today's Budget Workshop. Commissioner Tom Lambert walked in at 2:44pm Conversations were held on the PILOT and it was noted that the Commissioners would like to discuss this more in the future. There being no further business, a motion by Commissioner Pullis, second by Commissioner Martinez to adjourn the meeting at 2:55p.m. Motion carried unanimously. ATTEST: Matt Cheney, President 2 Don Martinez, Secretary MINUTES Regular Meeting — Hutchinson Utilities Commission Wednesday, November 26, 2025 Call to order — 3:00 p.m. President Matt Cheney called the meeting to order. Members present: President Matt Cheney; Vice President Troy Pullis; Secretary Don Martinez; Commissioner Kathy Silvernale; Commissioner Tom Lambert; GM Jeremy Carter; Attorney Marc Sebora: Conflict of Interest 2. Approve Consent Agenda a. Approve Minutes b. Ratify Payment of Bills Motion by Commissioner Martinez second by Commissioner Silvernale to Approve the Consent Agenda. Motion carried unanimously. 3. Approve Financial Statements Mr. Martig presented the Financial Statements. Electric Division usage increased slightly. Other Revenues decreased due to vehicle sales from last year along with Operating Expenses also decreasing due to the donation for the VMF field lighting last year. Market purchases of power decreased due to past true up credits from MISO, which resulted in a credit for purchased power from the market for October. Natural Gas Division Total Revenue and Expenses both increased from last year. GM Carter reviewed the cash position and bond payments along with the Investment portfolio. Motion by Commissioner Lambert, second by Commissioner Pullis to Approve the Financial Statements. Motion carried unanimously. 4. Open Forum 5. Communication a. City Administrator— Matthew Jaunich — i. Working on Taxes and Levies b. Divisions i. Dan Lang, Engineering Services Manager —Absent ii. Dave Hunstad, Electric Transmission/Distribution Manager — 1. Inverter in the Solar Field failed and was replaced 2. Outage report has a new look with all the same information iii. Mike Gabrielson, Production Manager — 1. Continuing to work with GE regarding Unit 1 2. CAT is working with Staff on Unit 7 oil leak iv. Jared Martig, Financial Manager 1. Postponing new billing software v. Byron Bettenhausen, Natural Gas Manager — 1. Wrapping up construction 2. Completed Cl Survey from Trimont to St. James with no major issues. c. Human Resources — Angie Radke - i. Working on PFML policy along with a couple of other policies ii. Next week information will be sent out to the Commissioners regarding General Manager Jeremy Carter's annual review d. Legal — Marc Sebora — i. Nothing to report e. General Manager — Jeremy Carter i. Finalizing Budget and CIP 6. Policies a. Review Policies i. CIP Rebate Level of Authority ii. Financial Reserve Policy iii. Service Beyond City Limits of Hutchinson iv. Surplus Property Policy v. Investment Policy vi. Delegation of Authority Policy vii. Purchasing Policy/Credit Cards/Fixed Assets b. Approve Changes i. Payments of HUC Payables Ms. Radke spoke of the above policy change. Payments of HUC Payables - looking to update the year to 2026 along with amending the date of the change. Motion by Commissioner Pullis, second by Commissioner Lambert to Approve Policy Changes. Motion carried unanimously. 7. Unfinished Business 8. New Business a. Approve Non -Waiver of Tort Liability Limits for General Liability Insurance Mr. Martig presented Approval of Non -Wavier Tort Liability Limits for General Liability Insurance, which is a requirement by the League of Minnesota Cities Insurance Trust. Staff is recommending to not waive the tort liability limits. Completion of the Wavier Form is done annually. In the past HUC has not waived the municipal tort limit. 2 Motion by Commissioner Martinez, second by Commissioner Silvernale to Approve Non -Wavier of Tort Liability Limits for General Liability Insurance. Motion carried unanimously. b. Approve Customer Uncollectable Write -Offs Mr. Martig presented Approval of Customer Uncollectable Write -Offs. HUC is requesting to approve write-offs of $6,036.58. Motion by Commissioner Silvernale, second by Commissioner Pullis to Approve Customer Uncollectable Write -Offs. Motion carried unanimously. c. Approve Resolution 25-01 Authorizing the Purchase of Natural Gas from Minnesota Municipal Gas Agency, D/B/A Minnesota Community Energy GM Carter presented Approval of Resolution 25-01 Authorizing the Purchase of Natural Gas from Minnesota Municipal Gas Agency, D/B/A Minnesota Community Energy. Approving the resolution authorizes HUC to continue moving forward under the pretense of executing final Long-term Gas Supply Agreements. Commissioner Lambert walked out at 3.11 pm. GM Carter noted Draft Form Gas Supply Agreements are included in the packet for the Commission to review along with an Attorney's Opinion Letter. The resolution does not bind HUC to execute the Gas Supply Agreements and allows for subsequent finalization of agreements with additional revisions if -001 Motion by Commissioner Pullis, second by Commissioner Martinez to Approve Resolution 25-01 Authorizing the Purchase of Natural Gas from Minnesota Municipal Gas Agency, D/B/A Minnesota Community Energy. Motion carried unanimously. Commissioner Lambert walked in at 3:13pm. d. Approve Resolution 25-02 Establishing a Natural Gas Rate Schedule for Large Industrial Customer GM Carter presented Approval of Resolution 25-02 Establishing a Natural Gas Rate Schedule for Large Industrial Customer. As part of the MCE Prepay Deal, HUC would be supplying natural gas volumes to a transportation customer on the transmission line. As part of the arrangement, a resolution needs to be approved establishing a rate schedule for natural gas sales to the large volume industrial customer. 3 Conversations were held on the rate schedule being used along with the volume and the final discount allocation between HUC and the industrial customer. Motion by Commissioner Pullis, second by Commissioner Silvernale to Approve Resolution 25-02 Establishing a Natural Gas Rate Schedule for Large Industrial Customer. Motion carried unanimously. e. Approve Req#010454 - B-MN Data Centers — Conductor and Terminators Mr. Hunstad presented Approval of Req#010454 — B-MN Data Centers — Conductor and Terminators. Last month the Board approved the Switchgears, the next step is approval of Conductor and Terminators. Mr. Hunstad reviewed the quotes that were received and Wesco has the best pricing for both the Conductor and Terminators that are needed for the project. Motion by Commissioner Silvernale, second by Commissioner Lambert to Approve Req#010454 — B-MN Data Centers — Conductor and Terminators. Motion carried unanimously. f. Discussion of 2026 Environmental Footprint Chart and 2024 Power Supply Mix Chart GM Carter reviewed the 2026 Environmental Footprint Chart and 2024 Power Supply Mix Chart. The Power Supply Mix Chart shows where HUC's electricity comes from for the previous year. Market purchases were the largest supply source at 44%, followed by Coal at 23%. The Environmental Footprint shows HUC's attributes. For 2026, because of the election the Board made, HUC will be 50% Carbon Free within the community. A portion (25%) will come from RECs that will be purchased from MRES as part of the allocation the Board approved, and a portion (25.3%) will come from market purchases declared as carbon free sources. HUC will be 25% Renewable. President Cheney added item 8g. g. Approval of Suspending Power Cost and Fuel Cost Adjustment Credits for 2026. GM Carter recapped the Budget meeting which was held prior to today's Regular Commission meeting. Looking at both Electric and Natural Gas, particularly on the Electric side, HUC is seeing large increases in transmission costs, wholesale power costs and operating costs. HUC has done retail rate increases and is currently in the 3rd year of rate adjustments based on a gradual glide path. 12 Looking at preliminary budgets, the retail rates and rate allocations that are being collected are not keeping pace with the forecasted increased costs of supplying power to HUC's customers. The mechanisms that have been used to level off the volatility of power supply costs for the retail rate customers while keeping adequate cash balance on hand to pay for these large projects coming up are not keeping pace. Staff is looking to suspend those mechanisms to keep cash on hand not only for operating cash purposes but also for large transmission and distribution projects coming up in the next 6 years. The large projects are unique circumstances that only happen every 40-50 years but are good projects to have with a good rate of financial return for those costs able to be reimbursed by the market. HUC needs to be respectful of the rate payers while still maintaining reliability as a priority. Normal Cap X can be pared down in the interim as its worth the investment to do these larger projects. It is customary for HUC to go through a Cost -of -Service Study every 5 years, unless circumstances dictate doing the study sooner. Since there are big projects coming up and operational costs are forecasted to increase above inflation, a Cost -of -Service Study would be helpful to set the financial direction for the next 6 years. A strategic planning meeting will be planned at the start of 2026. Motion by Commissioner Pullis, second by Commissioner Martinez to Approve Suspending Power Cost and Fuel Cost Adjustment Credits for 2026. Motion carried unanimously. GM Carter will bring forth a modified budget along with moving up the Cost -of - Service Study in 2026. Staff will also look at planning a Strategic Planning meeting in early 2026. h. Adjourn There being no further business, a motion by Commissioner Pullis, second by Commissioner Lambert to adjourn the meeting at 3:31 pm. Motion carried unanimously. 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U U M OD M OD M OD M W M W M W M W M W M W w w U U W W W W W W W W W co co C7 C7 C7 C7 C7 C7 C7 C7 C7 F, N u U U H H Ln Ln Ln Ln Ln Ln Ln Ln Ln C7 N N N N N N N N N z z N O N O N O N O N O N O N O N O N O N H H G) G) G) Ol Ol Ol Ol Ol Ol - - O O O O O O O O o w H H H H H H H H H HUTCHINSON UTILITIES COMMISSION COMBINED DIVISIONS FINANCIAL REPORT FOR NOVEMBER, 2025 Combined Division Customer Revenue Sales for Resale NG Transportation Electric Division Transfer Other Revenues Interest Income TOTAL REVENUES Salaries & Benefits Purchased Commodities Transmission Generator Fuel/Chem. Depreciation Transfers (Elect./City) Operating Expense Debt Interest TOTAL EXPENSES NET PROFIT/(LOSS) 91.6% of Year Comp. 2025 2024 Di %Chna 2025 2024 Di %Chna Full Yr Bud %of Bud $ 2,808,169 $ 2,895,643 $ (87,474) $ 318,124 $ 277,262 $ 40,862 $ 171,990 $ 177,458 $ (5,468) $ 60,639 $ 60,383 $ 255 $ 43,032 $ 40,898 $ 2,134 $ 33,115 $ 72,373 $ (39,258) $ 3,435,069 $ 3,524,016 $ (88,947) $ 623,567 $ 615,246 $ 8,322 $ 1,461,465 $ 1,534,511 $ (73,046) $ 215,022 $ 147,836 $ 67,186 $ 67,256 $ 29,443 $ 37,813 $ 345,434 $ 313,324 $ 32,110 $ 222,524 $ 222,269 $ 255 $ 313,688 $ 202,325 $ 111,362 $ 49,688 $ 58,438 $ (8,750) $ 3,298,644 $ 3,123,391 $ 175,253 $ 136,425 $ 400,625 $ (264,200) (3.0%) $ 32,046,263 $ 31,756,554 $ 289,709 0.9% $ 38,041,145 84.2% 14.7% $ 6,509,891 $ 3,260,810 $ 3,249,081 99.6% $ 3,490,250 186.5% (3.1%) $ 1,912,412 $ 1,830,988 $ 81,424 4.4% $ 2,071,218 92.3% 0.4% $ 667,027 $ 664,217 $ 2,811 0.4% $ 727,666 91.7% 5.2% $ 643,539 $ 1,372,439 $ (728,900) (53.1%) $ 483,841 133.0% (54.2%) $ 701,059 $ 901,257 $ (200,199) (22.2%) $ 633,457 110.7% (2.5%)1 $ 42,480,191 $ 39,786,265 $ 2,693,926 6.8%1 $ 45,447,577 93.5% 1.35% $ 7,138,912 $ 7,121,394 $ 17,518 (4.8%) $ 17,664,088 $ 17,075,575 $ 588,512 45.4% $ 2,626,575 $ 2,365,623 $ 260,952 128.4% $ 2,129,460 $ 1,109,627 $ 1,019,833 10.2% $ 3,823,527 $ 3,970,545 $ (147,018) 0.1% $ 2,447,768 $ 2,444,959 $ 2,809 55.0% $ 3,281,445 $ 3,154,938 $ 126,506 (15.0%) $ 546,568 $ 643,918 $ (97,350) 5.6% $ 39,658,341 $ 37,886,579 $ 1,771,762 (65.9%) $ 2,821,850 $ 1,899,686 $ 922,164 November November i, YTD YTD 2025 2024 Change 2025 2024 Change Gross Margin %: 34.6% 38.3% -3.8% 34.2% 33.7% 0.5% Operating Income Per Revenue $ (%): 3.7% 10.6% -6.9% 5.4% 1.2% 4.2% Net Income Per Revenue $ (%): 4.0% 11.4% -7.4% 6.6% 4.8% 1.9% 0.2% $ 8,248,534 86.5% 3.4% $ 20,256,167 87.2% 11.0% $ 3,015,064 87.1% 91.9% $ 1,284,200 165.8% (3.7%) $ 4,310,000 88.7% 0.1% $ 2,670,292 91.7% 4.0% $ 3,174,901 103.4% i5.1% $ 596,257 91.7% 4.7% $ 43,555,415 91.1% $ 1,892,162 149.1% 2025 HUC Budget Target 34.2% 3.5%N 4.2%N uuIIUuIINNI HUTCHINSON UTILITIES COMMISSION ELECTRIC DIVISION FINANCIAL REPORT FOR NOVEMBER, 2025 � , 91.6�6 of Year Comp. 2025 2024 Di . %Chna 2025 2024 Di %Chna FullYrBud %of Bud Electric Division Customer Revenue $ 1,783,492 $ 1,754,086 $ 29,405 1.7% $ 21,911,162 $ 21,927,978 $ (16,816) (0.1%) $ 25,609,217 85.6% Sales for Resale $ 318,124 $ 277,262 $ 40,862 14.7% $ 6,509,891 $ 3,260,810 $ 3,249,081 99.6% $ 3,490,250 186.5% Other Revenues $ 14,523 $ 17,116 $ (2,593) (15.2% $ 285,970 $ 308,044 $ (22,075) (7.2%) $ 191,126 149.6% Interest Income $ 17,952 $ 37,581 $ (19,629) (52.2%) $ 370,837 $ 465,963 $ (95,127) (20.4%) $ 333,457 111.2% TOTAL REVENUES $ 2,134,090 $ 2,086,045 $ 48,046 2.3% $ 29,077,859 $ 25,962,796 $ 3,115,063 12.0% $ 29,624,050 98.2% Salaries & Benefits $ 452,945 $ 473,011 $ (20,066) Purchased Power $ 817,810 $ 792,430 $ 25,380 Transmission $ 215,022 $ 147,836 $ 67,186 Generator Fuel/Chem. $ 67,256 $ 29,443 $ 37,813 Depreciation $ 247,848 $ 216,550 $ 31,297 Transfers (Elect./City) $ 172,789 $ 172,534 $ 255 Operating Expense $ 195,354 $ 137,134 $ 58,220 Debt Interest $ 32,771 $ 35,305 $ (2,533) TOTAL EXPENSES $ 2,201,796 $ 2,004,242 $ 197,553 NET PROFIT/(LOSS) $ (67,706) $ 81,802 $ (149,508) (4.2%) $ 5,296,533 $ 5,323,604 $ (27,072) 3.2% $ 11,317,478 $ 10,767,375 $ 550,103 45.4% $ 2,626,575 $ 2,365,623 $ 260,952 128.4% $ 2,129,460 $ 1,109,627 $ 1,019,833 14.5% $ 2,748,768 $ 2,943,465 $ (194,697) 0.1% $ 1,900,679 $ 1,897,869 $ 2,810 42.5% $ 2,211,094 $ 2,232,829 $ (21,735) (7.2%) $ 360,485 $ 388,352 $ (27,867) 9.9% $ 28,591,071 $ 27,028,744 $ 1,562,327 182.8%) $ 486,788 $ (1,065,948) $ 1,552,736 (0.5%) $ 5,955,489 88.9% 5.1% $ 12,605,893 89.8% 11.0% $ 3,015,064 87.1% 91.9% $ 1,284,200 165.8% (6.6%) $ 3,200,000 85.9% 0.1% $ 2,073,468 91.7% (1.0%) $ 2,145,148 103.1% 7.2% $ 393,257 91.7% 5.8% $ 30,672,519 93.2% 145.7%) $ (1,048,469) (46.4%) 91.6% of Year Comp. 2025 2024 Di . %Chna 2025 2024 Di %Chna FullYrBud %of Bud Electric Division Residential 3,827,673 3,837,549 (9,876) (0.26%) 49,730,095 47,621,832 2,108,263 4.43% 53,837,879 92.4% All Electric 211,355 212,744 (1,389) (0.65%) 2,150,555 1,925,463 225,092 11.69% 2,462,216 87.3% Small General 1,194,549 1,362,710 (168,161) (12.34%) 16,281,046 15,793,106 487,940 3.09% 18,074,963 90.1% Large General 6,899,480 6,057,170 842,310 13.91% 85,268,350 71,983,853 13,284,497 18.45% 80,805,047 105.5% Industrial 6,313,000 7,421,000 (1,108,000) (14.93%) 89,491,000 100,502,000 (11,011,000) (10.96%) 110,542,769 81.0% Total KWH Sold 18,446,057 18,891,173 (445,116) (2.36%) 242,921,046 237,826,254 5,094,792 2.14%1 265,722,875 91.4% November November YTD YTD 2025 HUC 2025 2024 Change 2025 2024 Change Budget Target Gross Margin %: 28.3% 34.4% -6.0% 28.3% 27.6% 0.7% 27.0% Operating Income Per Revenue $ (%): -2.6% 3.8% -6.4% 1.2% -5.2% 6.4% -3.5% Net Income Per Revenue $ (%): -3.2% 3.9% -7.1% 1.7% -4.1% 5.8% -3.5% Customer Revenue per KWH: $0.0967 $0.0929 $0.0038 $0.0902 $0.0922 -$0.0020 $0.0964 $0.0964 Total Power Supply Exp. per KWH: $0.0821 $0.0711 $0.0111 $0.0843 $0.0771 $0.0072 $0.0804 $0.0804 Net Profit decreased by $149,508 over November 2024. Revenues were up slightly but offset by increases in purchased power, transmission, generator fuels, and operating expenses. The increase in operating expenses included $14,000 in solar array repairs, $11,000 in MPCA fees, and $32,000 for Unit 7 repairs. Sales for Resale of $318,124 consisted of $87,124 in market sales, $98,000 in capacity sales to Rice Lake, $70,000 in capacity sales to AEP, and $63,000 in capacity sales to Nextera. November 2024 Sales for Resale of $277,262 included $33,012 in market sales, $98,000 in capacity sales to Rice Lake and $146,250 in capacity sales to AEP. November 2023 Sales for Resale of $291,786 consisted of $47,536 in market sales, $98,000 in capacity sales to Rice Lake and $146,250 in capacity sales to AEP. Overall Purchased Power increased by $25,380. MRES purchases increased by $25,927 and market purchases/MISO costs decreased by $547. The average cost of MISO power was $30.58/mwh (1,456 mwh's purchased), compared to $22.37mwh (1,802 mwh's purchased) in November 2024. re was no power cost adjustment for November 2025 leaving the total customer credits at $410,681 YTD. re was no power cost adjustment for November 2024 leaving the total customers were charged at $556,670 YTD. Gas Division Customer Revenue Transportation Electric Div. Transfer Other Revenues Interest Income TOTAL REVENUES Salaries & Benefits Purchased Gas Operating Expense Depreciation Transfers (City) Debt Interest TOTAL EXPENSES NET PROFIT/(LOSS) HUTCHINSON UTILITIES COMMISSION GAS DIVISION FINANCIAL REPORT FOR NOVEMBER, 2025 91.6% of Year Comp. 2025 2024 2 %Chna 2025 2024 2 . %Chna Full YrBud %of Bud $ 1,024,677 $ 1,141,556 $ (116,879) (10.2%) $ 10,135,101 $ 9,828,576 $ 306,525 3.1% $ 12,431,928 81.5% $ 171,990 $ 177,458 $ (5,468) (3.1%) $ 1,912,412 $ 1,830,988 $ 81,424 4.4% $ 2,071,218 92.3% $ 60,639 $ 60,383 $ 255 0.4% $ 667,027 $ 664,217 $ 2,811 0.4% $ 727,666 91.7% $ 28,510 $ 23,782 $ 4,728 19.9% $ 357,569 $ 1,064,394 $ (706,825) (66.4%) $ 292,715 122.2% $ 15,164 $ 34,792 $ (19,629) (56.4%) $ 330,222 $ 435,294 $ (105,072) (24.1%) $ 300,000 110.1% $ 1,300,979 $ 1,437,972 $ (136,992) (9.5%) $ 13,402,332 $ 13,823,469 $ (421,137) (3.0%) $ 15,823,527 84.7% $ 170,622 $ 142,235 $ 28,388 20.0% $ 1,842,379 $ 1,797,789 $ 44,590 2.5% $ 2,293,045 80.3% $ 643,655 $ 742,081 $ (98,426) (13.3%) $ 6,346,610 $ 6,308,200 $ 38,410 0.6% $ 7,650,274 83.0% $ 118,333 $ 65,191 $ 53,142 81.5% $ 1,070,351 $ 922,110 $ 148,241 16.1% $ 1,029,753 103.9% $ 97,586 $ 96,773 $ 812 0.8% $ 1,074,759 $ 1,027,080 $ 47,679 4.6% $ 1,110,000 96.8% $ 49,735 $ 49,735 $ (0) (0.0%) $ 547,089 $ 547,090 $ (1) (0.0%) $ 596,824 91.7% $ 16,917 $ 23,133 $ (6,217) 0.0% $ 186,083 $ 255,567 $ (69,483) 27.2% $ 203,000 91.7% $ 1,096,848 $ 1,119,149 $ (22,300) (2.0%) $ 11,067,270 $ 10,857,835 $ 209,435 1.9% $ 12,882,896 85.9% $ 204,131 $ 318,823 $ (114,692) (36.0%) $ 2,335,062 $ 2,965,634 $ (630,572) (21.3%) $ 2,940,631 79.4% 2025 2024 2 %Chnq 2025 2024 p %Chnq Full YrBud %of Bud Gas Division Residential 42,761,307 Commercial 29,642,103 Industrial 69,750,116 43,366,109 31,466,155 75,469,425 (604,802) (1,824,052) (5,719,309) (1.39%) (5.80%) (7.58%) 340,924,936 262,963,197 734,318,341 297,844,748 233,605,013 683,140,443 43,080,188 29,358,184 51,177,898 14.46% 12.57% 7.49% 435,250,000 337,584,000 895,764,000 78.3% 77.9% 82.0% Total CF Sold 142,153,526 150,301,689 (8,148,163) (5.42%) 1,338,206,474 1,214,590,204 123,616,270 10.18% 1,668,598,000 80.2% November November YTD YTD 2025 HUC 2025 2024 Change 2025 2024 Change Budget Target Gross Margin %: 45.1% 44.2% 0.9% 47.4% 46.4% 1.1% 48.0% Operating Income Per Revenue $ (%): 14.4% 20.8% -6.5% 14.8% 14.3% 0.4% 17.0% Net Income Per Revenue $ (%): 15.7% 22.2% -6.5% 17.4% 21.5% -4.0% 18.6% Contracted Customer Rev. per CF: $0.0067 $0.0072 -$0.0005 $0.0066 $0.0067 -$0.0001 $0.0061 Customer Revenue per CF: $0.0077 $0.0079 -$0.0002 $0.0086 $0.0097 -$0.0011 $0.0087 $0.0087 Total N.G. Supply Exp. per CF: $0.0049 $0.0051 ($0.0003) $0.0050 $0.0055 ($0.0004) $0.0048 $0.0048 Notes/Graphs: November Net Income decreased by $114,692. Decreased usage led to lower revenues offset slightly by lower purchased gas expense. Some increased operating expenses include $30,000 for CIS survey, $6,000 for risk assessment, and $14,000 in Heartland Corn materials. November 2025 Fuel Credit Adjustment was $1.58182/MCF crediting customers $117,503 for the month and $831,336 YTD. November 2024 Fuel Credit Adjustment was $1.21633/MCF crediting customers $98,722 for the month and $278,046 YTD. Current Assets UnrestrictedlUndesignated Cash Cash Petty Cash Designated Cash Capital Expenditures - Five Yr. CIP Payment in Lieu of Taxes Rate Stabilization - Electric Rate Stabilization - Gas Catastrophic Funds Restricted Cash Bond & Interest Payment 2017 Bond & Interest Payment 2012 Debt Service Reserve Funds Total Current Assets Receivables Accounts (net of uncollectible allowances) Interest Total Receivables Other Assets Inventory Prepaid Expenses Sales Tax Receivable Deferred Outflows - Electric Deferred Outflows - Gas Total Other Assets Total Current Assets Capital Assets Land & Land Rights Depreciable Capital Assets Accumulated Depreciation Construction - Work in Progress Total Net Capital Assets HUTCHINSON UTILITIES COMMISSION BALANCE SHEET - CONSOLIDATED NOVEMBER 30, 2025 Electric Gas Total Total Net Change Division Division 2025 2024 Total (YTD) (5,790,622.09) 12,318,027.96 6,527,405.87 13,446,197.03 (6,918,791.16) 680.00 170.00 850.00 850.00 - 2,750,000.00 700,000.00 3,450,000.00 3,450,000.00 - 1,345,802.00 596,824.00 1,942,626.00 1,942,626.00 - 1,359,247.38 - 1,359,247.38 540,964.58 818,282.80 - 615,294.19 615,294.19 615,294.19 - 800,000.00 200,000.00 1,000,000.00 1,000,000.00 - 987,028.13 - 987,028.13 - 987,028.13 - 2,081,500.00 2,081,500.00 - 2,081,500.00 1,183,256.00 2,072,000.00 3,255,256.00 3,255,656.00 (400.00) 2,635,391.42 18,583,816.15 21,219,207.57 24,251,587.80 (3,032,380.23) 1,690,095.26 1,022,577.93 2,712,673.19 2,816,610.89 (103,937.70) 74,314.28 74,314.29 148,628.57 141,412.63 7,215.94 1,764,409.54 1,096,892.22 2,861,301.76 2,958,023.52 (96,721.76) 2,269,003.71 516,111.21 2,785,114.92 2,550,844.72 234,270.20 150,407.71 21,150.18 171,557.89 226,705.86 (55,147.97) 496,220.57 - 496,220.57 392,913.47 103,307.10 342,759.00 - 342,759.00 741,556.00 (398,797.00) - 114,253.00 114,253.00 247,185.00 (132,932.00) 3,258,390.99 651,514.39 3,909,905.38 4,159,205.05 (249,299.67) 7,658,191.95 20,332,222.76 690,368.40 3,899,918.60 94,058,410.89 44,579,509.55 (50,978,846.15) (23,327,860.37) 9,785,909.63 526,091.81 53,555,842.77 25,677,659.59 27,990,414.71 31,368,816.37 (3,378,401.66) 4,590,287.00 4,590,287.00 - 138,637,920.44 159,479,431.80 (20,841,511.36) (74,306,706.52) (95,616,029.02) 21,309,322.50 10,312,001.44 5,493,230.09 4,818,771.35 79,233,502.36 73,946,919.87 5,286,582.49 Total Assets 61,214,034.72 46,009,882.35 107,223,917.07 105,315,736.24 1,908,180.83 Current Liabilities Current Portion of Long-term Debt Bonds Payable Bond Premium Lease Liability - Solar Array Accounts Payable Accrued Expenses Accrued Interest Accrued Payroll Total Current Liabilities Long -Term Liabilities Noncurrent Portion of Long-term Debt 2017 Bonds 2012 Bonds Bond Premium 2012 Pension Liability- Electric Pension Liability - Electric OPEB Pension Liability - Nat Gas Pension Liability - Nat Gas OPEB Accrued Vacation Payable Accrued Severance Deferred Outflows - Electric Deferred Outflows - Nat Gas Total Long -Term Liabilities Net Position Retained Earnings Total Net Position HUTCHINSON UTILITIES COMMISSION BALANCE SHEET - CONSOLIDATED NOVEMBER 30, 2025 Electric Gas Total Division Division 2025 820,000.00 19, 546.00 4,291,075.30 0.03 127,528.52 5,258,149.85 10,930,000.00 401,483.52 1,832,248.00 39,880.00 569,807.22 208,347.54 1,294,449.00 15,276,215.28 2,080,000.00 185,608.32 920,899.76 0.02 46,957.89 3,233,465.99 (0.37) 610,749.00 13,293.00 169,522.80 37,374.19 431,483.00 1,262,421.62 2,900,000.00 185,608.32 19, 546.00 5,211,975.06 0.05 174,486.41 8,491,615.84 10,930,000.00 401,483.15 1,832,248.00 39,880.00 610,749.00 13,293.00 739,330.02 245,721.73 1,294,449.00 431,483.00 16,538,636.90 Total Net Change 2024 Total (YTD) 2, 770, 000.00 130, 000.00 185,608.32 - - 19,546.00 3,076,069.37 2,135,905.69 - 0.05 163,031.88 11,454.53 6,194,709.57 2,296,906.27 11,750,000.00 (820,000.00) 2,080,000.00 (2,080,000.00) 620,548.43 (219,065.28) 2,776,372.00 (944,124.00) 64,096.00 (24,216.00) 925,458.00 (314,709.00) 21,365.00 (8,072.00) 718,594.32 20,735.70 153,920.05 91,801.68 998,815.00 295,634.00 332,938.00 98,545.00 20,442,106.80 (3,903,469.90) 40,679,669.59 41,513,994.74 82,193,664.33 78,678,919.87 3,514,744.46 40,679,669.59 41,513,994.74 82,193,664.33 78,678,919.87 3,514,744.46 Total Liabilities and Net Position 61,214,034.72 46,009,882.35 107,223,917.07 105,315,736.24 1,908,180.83 Hutchinson Utilities Commission Cash -Designations Report, Combined 11/30/2025 Financial Institution Current Interest Rate Annual Interest Balance, November 2025 Balance, October 2025 Change in Cash/Reserve Position Savings, Checking, Investments varies varies varies 21,219,207.57 23,825,424.21 (2,606,216.64) Total Operating Funds 21,219,207.57 23,825,424.21 (2,606,216.64) Debt Reserve Requirements Bond Covenants - sinking fund Debt Reserve Requirements Bond Covenants -1 year Max. P & I Total Restricted Funds Operating Reserve Rate Stabalization Funds PILOT Funds Catastrophic Funds Capital Reserves Total Designated Funds Min 60 days of 2025 Operating Bud. Charter (Formula Only) Risk Mitigation Amount 5 Year CIP (2025-2029 Fleet & Infrastructure Maintenance) 3,068,528.13 2,788,006.77 280,521.36 3,255,256.00 3,255,256.00 - 6,323,784.13 6,043,262.77 280,521.36 6,542,569.17 6,542,569.17 1,974,541.57 2,059,263.54 (84,721.97) 1, 942, 626.00 1, 942, 626.00 1, 000, 000.00 1, 000, 000.00 3,450,000.00 3,450,000.00 14,909,736.74 14,994,458.71 (84,721.97) YE YE YE YE YTD HUC 2021 2022 2023 2024 2025 Target Debt to Asset 30.8% 31.4% 28.6% 26.0% 23.3% Current Ratio 5.22 4.47 4.48 3.67 2.50 RONA 0.41% -1.38% 1.96% 2.63% 3.07% Historical Change in Cash Balance Month End Electric Elec. Change Natural Gas Gas Change Total Total Change 11/30/2025 2,635,391 18,583,816 21,219,208 12/31/2024 6,134,710 (3,499,319) 17,717,453 866,363 23,852,164 (2,632,956) 12/31/2023 12,158,338 (6,023,628) 15,622,242 2,095,211 27,780,580 (3,928,416) 12/31/2022 11,633,212 525,126 15,450,554 171,688 27,083,766 696,815 12/31/2021 12,870,253 (1,237,041) 15,086,000 364,554 27,956,253 (872,487) 12/31/2020 14,239,233 (1,368,981) 15,019,173 66,827 29,258,406 (1,302,153) 12/31/2019 12,124,142 2,115,092 13,837,040 1,182,133 25,961,181 3,297,225 12/31/2018 15,559,867 (3,435,725) 12,335,998 1,501,042 27,895,864 (1,934,683) 12/31/2017 23,213,245 (7,653,378) 10,702,689 1,633,309 33,915,934 (6,020,070) 12/31/2016 8,612,801 14,600,444 9,500,074 1,202,615 18,112,875 15,803,059 12/31/2015 6,170,790 2,442,011 9,037,373 462,701 15,208,163 2,904,712 12/31/2014 3,598,821 2,571,969 6,765,165 2,272,208 10,363,986 4,844,177 * 2017's Significant increase in cash balance is due to issuing bonds for the generator project. Hutchinson Utilities Commission Cash -Designations Report, Electric 11/30/2025 Change in Financial Annual Balance, Balance, Cash/Reserve Institution Current Interest Rate Interest November 2025 October 2025 Position �' Rr Savings, Checking, Investments varies varies varies 21,219,207.57 23,825,424.21 (2,606,216.64) Total HUC Operating Funds 21,219,207.57 23,825,424.21 (2,606,216.64) Debt Restricted Requirements Bond Covenants - sinking fund 987,028.13 888,423.44 98,604.69 Debt Restricted Requirements Bond Covenants -1 year Max. P & 1 1,183,256.00 1,183,256.00 - Total Restricted Funds 2,170,284.13 2,071,679.44 98,604.69 Excess Reserves Less Restrictions, Electric 465,107.29 1,314,388.62 (849,281.33) J11J! !!1 1 !1 J Operating Reserve Min 60 days of 2025 Operating Bud. 4,578,753.17 4,578,753.17 Rate Stabalization Funds $400K-$1.2K 1,359,247.38 1,443,969.35 (84,721.97) PILOT Funds Charter (Formula Only) 1,345,802.00 1,345,802.00 Catastrophic Funds Risk Mitigation Amount 800,000.00 800,000.00 Capital Reserves 5 Year CIP (2025-2029 Fleet & Infrastructure Maintenance) 2,750,000.00 2,750,000.00 Total Designated Funds 10,833,802.55 10,918,524.52 (84,721.97) YE YE YE YE YTD APPA Ratio HUC 2021 2022 2023 2024 2025 5K-10K Cust. Target Debt to Asset Ratio (* w/Gen.) 32.2% 34.8% 34.0% 33.9% 33.5% 39.8% Current Ratio 5.70 4.96 4.35 2.38 0.98 3.75 RONA -1.2% -4.2% -0.9% -2.1% 0.9% NA �p, Hutchinson Utilities Commission Cash -Designations Report, Gas 11/30/2025 Change in Financial Annual Balance, Balance, Cash/Reserve Institution Current Interest Rate Interest November 2025 October 2025 Position 51' Rr Savings, Checking, Investments varies varies varies 21,219,207.57 23,825,424.21 (2,606,216.64) Total HUC Operating Funds 21,219,207.57 23,825,424.21 (2,606,216.64) Debt Restricted Requirements Bond Covenants - sinking fund 2,081,500.00 1,899,583.33 181,916.67 Debt Restricted Requirements Bond Covenants -1 year Max. P & 1 2,072,000.00 2,072,000.00 - Total Restricted Funds 4,153,500.00 3,971,583.33 181,916.67 Excess Reserves Less Restrictions, Gas 14,430,316.15 16,467,772.82 (2,037,456.67) 1 1 JJJ1 111 1 11 J J Operating Reserve Min 60 days of 2025 Operating Bud. 1,963,816.00 1,963,816.00 Rate Stabalization Funds $200K-$600K 615,294.19 615,294.19 PILOT Funds Charter (Formula Only) 596,824.00 596,824.00 Catastrophic Funds Risk Mitigation Amount 200,000.00 200,000.00 Capital Reserves 5 Year CIP (2025-2029 Fleet & Infrastructure Maintenance) 700,000.00 700,000.00 Total Designated Funds 4,075,934.19 4,075,934.19 YE YE YE YE YTD HUC 2021 2022 2023 2024 2025 AGA Ratio Target Debt to Asset 28.8% 26.5% 21.0% 15.5% 9.8% 35%-50% Current Ratio 4.79 4.06 4.61 5.08 4.97 1.0-3.0 RONA 2.9% 3.0% 6.2% 9.1% 6.1% 2%-5% Notes/Graphs: ELECTRIC DIVISION Operating Revenue November 2025 CLASS AMOUNT KWH /KWH Street Lights 26.60 488 $0.0545 Electric Residential Service $457,652.22 3,827,673 $0.1196 All Electric Residential Service $23,545.00 211,355 $0.1114 Electric Small General Service $138,743.28 1,194,549 $0.1161 Electric Large General Service $636,974.34 6,899,480 $0.0923 Electric Large Industrial Service $526,550.35 6,313,000 $0.0834 Total $1,783,491.79 18,446,545 $0.0967 Power Adjustment $0.00000 Rate Without Power Adjustment $0.09668 Electric Division Year -to -Date ® 2025 $ Amount ❑ 2024 $ Amount ® 2025 KWH110 ❑ 2024 KWH110 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 Residential All Elec. Resid. Small Gen. Srv. Large Gen. Srv. Large Industrial Sales For Resale Total NOTE: This graph includes sales for resale (capacity and energy sales) but excludes street lights and security lights NATURAL GAS DIVISION Operating Revenue November 2025 CLASS AMOUNT MCF /MCF Residential $335,366.30 42,761 $7.8428 Commercial $222,995.58 29,642 $7.5229 Large Industrial $14,588.91 2,008 $7.2650 Large Industrial Contracts $451,726.44 67,742 $6.6683 Total $1,024,677.23 142,154 $7.2082 Fuel Adjustment-$1.58180 Rate Without Fuel Adjustment $8.79004 Natural Gas Division Year -to -Date ❑ 2025 $ Amount ❑ 2024 $ Amount m 2025 MCF ❑ 2024 MCF 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 Mor-1 MMM--L-- U Gas Residential Gas Commercial Large Industrial Large Industrial Total Contracts 2 0 N y o N N N N N N O N E N O N N N N 0 N O N N O O N_ N_ N_ Q Q Q Q Q Q Q Q Q Q Z a a a 0 0 W_ Z Z Z Z Z Z Z Z Z Z m N O O M M N N N N N Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q r Q Q Q Q Q Q Q Q Q Q Q Q Q Z Z Z Z Z Z Z Z Z Z Z Z Z Z Z Z Z Z Z Z Z Z Z Z> Z Z Z Z � Z Z Z Z Z Z Z Z Z O > O O O N O N N O O N 01 01 V O I� N W 7 O N V 01 O W V W V 01 N N O N O W N O N u M W O O O M W N W 01 O W 01 01 M M 01 C 01 M N W N N M W N O M M M O V' N C M W V' O 01 M V' O N W N W O W 01 V' I� C i O O O O O W W N 01 0 0 0 0 0 0 0� O O O O O N N M 0 0 0 0 0 0 0 O O O O O N O O 0 0 0 0 0 0 0� N O O O O W N � W V N .. 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c0 V c0 d) d) r O d) CO V 00 of G M Co CU N 00 N N Ot R r ( N M V U> o ) J N � M V LU m a N N N C R i n m W N L R N � N s 0 0 o o O O O O 0 0 o o O O O O 0 0 0 0 0 o o o o o O O O O O O O O O O O 0 o N O O Of W N N O O I� b N N O O O O Vf a M N eti N N N N N T w N r CU O N CO M r o) CU CU O V f0 � f0 o C O O r co O M N m r R L r N CO o o) O V o 'T rY'le., O co Efl fA E EL uj 0 0 0 0 o) Lo N Lo o O j O V' C 3 c O F V�2 O N N V o O y V O O O m o v co rr o R N > V V M — o) N V Co Co N N M II M O p l3 CO O O V' N CO T F N V CO N 69 O o N 4 p O o) CO CU O r 0. F �I O VCn N — V O O �I Co I-- CU O O CO V O o) N N oON L� m N J,.N 3 0 V o O N co O O O V a) M R r co I'- o W M N M Co 00 69 Ui I� N to F rn J p m� 2i o m o 7 Y 0 Y d c Q- Z o U n N o C) o D O U CD .5 L 0 ^Q^` ��W ry U) U V/ v) 0 10 N O N 0 O Z V Lo co Lo V m rn Lo o rn o o O V I— O 0 V O O co o O N o) O N V N O 0 O Z c 0 E E -0 0 E C) o z — U t D 0 0 0� N O C � r = y a 0 R V) C -a co Z N O N C N c Q W LL Q E in Z R w (o (o v a (o 2 } 0 4(sa4nutw) I(llvs �' Z. �2 Z �8 �� "�t ,� �,, �� 13 1 dli. . 6ildc;dd (suopdnjja4ui jo jaqwnu) IAIVS $ m $ J f z a j \ .0 2 § 2 } z ` § e § ƒ \ ( ( \ f ) § o + k ( & § @ 2 ] \ E 0 0 § o & ± ± 2 2 B k } } § ® ® k J Q Q O O O O 0 N N I.t CO R 0 V% N O O N N 0 M N N C C R R a n U U = F Z O 2 w 2 F K O W w U' F 7 O N O � � a LL LL L O LL F Electric Production Work Total Total Order Descri tion Materials Labor Budgeted Actual Difference 12204 Cooling Tower Repairs $ 723,509.18 $ 723,509.18 12402 Plant 1 Combustible Gas Detection System $ 46,316.07 $ 46,316.07 12403 SWOIS Computer Upgrade U5 300,000.00 $ 300,000.00 567,836.59 $ 267,836.59 12501 Tuck Pointing Phase III 40,000.00 - $ 40,000.00 103,506.51 $ 63,506.51 12502 Rubber Roof Repair West Portion of Plant 1 42,000.00 $ 42,000.00 - $ (42,000.00) 12503 Plant 1 Pump Room Ventilation 30,000.00 5,000.00 $ 35,000.00 - $ (35,000.00) 12504 Plant 1 Control Panel Upgrade 80,000.00 20,000.00 $ 100,000.00 - $ (100,000.00) 12505 Unit 1 CO2 System Update Code Compliance 20,000.00 $ 20,000.00 - $ (20,000.00) 12506 Cooling Tower Recirc and Chem Injection 130,000.00 $ 130,000.00 - $ (130,000.00) 12507 Pant 1 North Ground Fans 50,000.00 $ 50,000.00 $ - $ 50,000.00 $ 692,000.00 $ 25,000.00 $ 717,000.00 $ 1,441,168.35 $ 724,168.35 Electric Distribution Work Total Total Order Description Materials Labor Budgeted Actual Difference 22301 Hutch Sub Transformer Upgrade Engineering - 5,784,108.18 5,784,108.18 22401 Hutch Substation Transformer 829,812.43 829,812.43 22402 McLeod Sub Relay Replacement 150,000.00 150,000.00 13,960.00 (136,040.00) 22405 3M Sub SCADA Phase 2 878.35 878.35 22406 HTI Sub SCADA - 141,982.78 141,982.78 22501 Pole Repair and Replacement 15,000.00 - 15,000.00 - (15,000.00) 22502 Station Equipment 10,000.00 - 10,000.00 - (10,000.00) 22503 Plant 1 Sub Circuit Breakers 110,000.00 - 110,000.00 - (110,000.00) 22504 Plant 1 Sub Engineering for Willmar Line 75,000.00 - 75,000.00 32,670.23 (42,329.77) 22505 Right of Way Clearing - - - - 22506 Install Duct 18,000.00 65,000.00 83,000.00 76,409.98 (6,590.02) 22507 Ravenwood Circle - - 22508 Edmonton and Sherwood - - - 3,729.65 3,729.65 22509 New Developments 60,000.00 15,000.00 75,000.00 81,816.75 6,816.75 22510 Ravenwood Circle - - 22511 Edmonton and Sherwood - - - 1,160.28 1,160.28 22512 Transformer Replacements 50,000.00 15,000.00 65,000.00 2,512.58 (62,487.42) 22513 Transformer New Developments 60,000.00 15,000.00 75,000.00 977.52 (74,022.48) 22514 Meters 36,000.00 - 36,000.00 57,060.00 21,060.00 22515 Meter Testing Equipment 30,000.00 - 30,000.00 - (30,000.00) 22516 Security Lights - - - 992.75 992.75 22517 LED Street Light Conversion 175,000.00 35,000.00 210,000.00 19,123.50 (190,876.50) 22518 Reconductor Feeder 16 - - - 22,878.20 22,878.20 22519 Reconductor Feeder 16 Transformers 34,475.97 22520 Elk Ridge Development 32,254.91 22521 Elk Ridge Development Transformers - - - 14,099.68 14,099.68 22522 Data Center - _ $ 789,000.00 $ 145,000.00 $ 934,000.00 $ 7,150,903 .74 6,216,903.74 Administrative Work Order Descrirtion 52303 Replace 226 2012 Dodge RAM 1500 52501 Replace 451 Welding Truck 52502 Genie AWP 255 DC Manual Lift Total Total Bud eted Actual Difference - 57,374.57 (57,374.57) 11,102.00 (11,102.00) $ 68,476.57 $ 68,476.57 Natural Gas Work Total Total Order Descri ion, Materials Labor Budgeted, Actual Difference 62501 Transmitter Calibration Equipment 8,500.00 - 8,500.00 9,405.61 .....ffe 905.61 62502 Misc Developments & System Improvements 25,000.00 5,000.00 30,000.00 25,310.49 (4,689.51) 62503 City Projects 7,000.00 2,000.00 9,000.00 22,497.88 13,497.88 62504 Improvements to Regulator Stations 20,000.00 3,500.00 23,500.00 283.02 (23,216.98) 62505 Service Lines 57,000.00 15,000.00 72,000.00 55,503.35 (16,496.65) 62506 Meters, AMI, and All Fittings 250,000.00 10,000.00 260,000.00 63,575.76 (196,424.24) 62507 Residential Regulators - _ _ _ _ 62508 Industrial Metering and Regulation 25,000.00 3,500.00 28,500.00 490.90 (28,009.10) 62509 Edmonton Development - - - 4,754.83 4,754.83 62510 School Road River Crossing � .. - _.. - - 300.54 297c_ 297 300.54 — .............. $ 392,500.00 $ 39,000.00 $ 431,500.00 $ 479,122.38 $ 47,622.38 HUTCHINSON UTILITIES COMMISSION ^I'xP61Tti'°" Board Action Form Agenda Item: Consideration of the 2026 Non -Union Pay Grid Adjustment Presenter: Jeremy Carter Agenda Item Type: Time Requested (Minutes): 10 New Business Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: Per the objectives of the HUC Compensation Plan for non -union employees, HUC will: a) Establish and maintain a compensation plan that enables HUC to be highly competitive within our defined industry. b) Lead or exceed the market in attracting and retaining qualified, reliable and motivated employees who are committed to quality and excellence for those we serve. c) Ensure, subject to the financial condition of HUC, that employees receive fair and equitable compensation in relation to their individual contributions to HUC's success. To accomplish this, HUC annually considers a market adjustment to the current pay grid based on market statistics. Latest 2025 Statistics below: 1. U.S. CPI-U: 3.0%, U.S. CPI-W: 2.94%, Midwest Region CPI-U: 3.1 % 2. Mpls/St. Paul CPI-U: 2.6%, Mpls/St. Paul CPI-W: 2.2% 3. SS COLA: 2026 - 2.8% 2025 - 2.5%, 2024 - 3.2%, 2023 - 8.7% 2022 - 5.9% 4. Hutchinson Unemployment rate - 4.7% 5. Employee turnover rate - less than 2% 6. Bargaining Unit Increases: 2026: 4% 2025: 4.5%, 2024: 5%, 2023: 4%, 2022: 4% 7. Upper-midwest/other salary market data: Public /Private Sector avg inc. 3.3% - 3.7% Attached is the recommended non -union pay grid for 2026 that incorporates a 4.0% grid shift. BOARD ACTION REQUESTED: Approve the proposed 2026 non -union pay grid shift Fiscal Impact: $49,000-$79,000 Included in current budget: Yes Budget Change: PROJECT SECTION: Total Project Cost: Remaining Cost: O z (7 LM 'a a N 0 N 0 O O m v bA I .. m Q 0 _0 N bA N � 3 om In 0 O Il m o m r d' N m m m r m m lD W m m O W m to rl O m to m N m n n O W N d' to m Ln n Ln m A N d' I, N oW Ln d' Ln oq N of oq O to O of rl lD Lr! r,� m to lD oo O m Ln oo zt r, zt oo m I, N lD N n = m m v v v v Ln Ln Ln �� r, r, oo oo rn a)O 0 O 0 ti N ti O f0. �p I, N O lD Ln to rl Ol Ol Ln m O N to r,m N O ^ � -O I, Ln r, Z' oo0 d' lD to oo. 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At the November meeting on 11-26-25 a high level overview of the 2026 budgets were reviewed and the major changes budgeted from 2025 to 2026 were discussed in detail. As of the November meeting, there have been four amendments to the preliminary budget. See Below: 1. Suspended using Rate Stabilization Funds in 2026 in the electric division. This added $935,000 to the retail revenue forecast. 2. Suspended providing Fuel Cost Adjustment credits in the natural gas division. This added $700,000 to the retail revenue forecast. 3. Added $44,700 for a Cost of Service Study in 2026 (Electric - $23,500, NG - $21,200) 4. Added an additional $10,000 to the budget for the Compensation Study (split 50/50). The current budget reflects a 4.0% grid shift for non -union employees and a general wage adjust of 4.0% for union employees. Management recommends the Commission approve the final 2026 Operating budgets and 5 - Year CIP Program (2026-2030) as presented in the packet. 0 BOARD ACTION REQUESTED: Approve as presented the 2026 Electric and Natural Gas Division Operating Budgets &5Yr. CIP Fiscal Impact: Included in current budget: No Budget Change: PROJECT SECTION: Total Project Cost: Remaining Cost: FIg.mcf-fic. Division General 2026 Budget Items o Budget currently reflects a 15% increase in Health Insurance premiums compared to the 2025 budget based on a $5500/$11000 deductible program which includes a 25% co-insurance portion. The plan also continues to include the HRA embedded program within the insurance plan. In addition, the budget continues to reflect an 80%/20% employer/employee premium split for exempt and non-exempt employees. Dental will see a 13% increase over 2025 rates, while LTD will see a slight reduction in premiums with the addition of the Paid Family Medical Leave. Basic Life & AD&D rates will remain unchanged for 2026 and Worker's Comp expense is budgeted at a significant decrease over 2025 because of the change in work comp rates applied to the various employee class codes. o Budget reflects a continual allocation of benefits to the various cost centers. (System Controls/Load Dispatch, Electric Distribution, Electric Production, Customer Service, and General Administration) o Budget continues to reflect a salary/benefit allocation of system control personnel to the Natural Gas Division. o Budget reflects a slight decrease in the budgeted amount for 2026 to administer the Energy Conservation and Optimization (ECO) program to the current intentions of the State Statute language. However, the budgeted amount may not all be expended in 2026.2025 Budget: $312,263; 2026 Budget: $311,550 o Budget reflects an Electric Division PILOT transfer of 4.50% of 2024 audited operating revenues in the amount of $1,345,802 to the City of Hutchinson. This is the same amount budgeted in 2025. In addition, the budget continues a city reimbursement for IT and Legal services. Electric Operating Revenues o Retail Sales Forecast: o For 2026, retails sales are budgeted at a 7.2% increase in revenue over the 2025 budget, but a .59% decrease in KWHR consumption based off a weighted average of the 3, 4, and 5-year averages. This shorter duration forecasting equates to 264,153,919 KWHRs in sales. The 2026 budget also reflects the 3rd of 3 years in retail rate adjustments based on the latest Cost of Service Study. o Power Cost Adjustment: o Power Cost Adjustments (PCA's) of $2,435,000 are budgeted and allocated between the different customer rate classifications. This is the additional amount charged to customers when the monthly power supply costs exceed $54/Mwhr and the rate stabilization fund cash balance is below $400,000. The PCA for 2026 is forecasted to generate an additional $1,535,000 over the budgeted 2025 total of o KWHR Allocation used to determine KWHR retail sales by customer classes areas follows: o Electric Residential 20.45% o All Electric Residential .86% o Electric Small General Service 6.72% o Electric Large General Service 34.91% o Large Industrial 37.06% o Wholesale sales (Sales for Resale): o Capacity Sales are budgeted at $2,772,000; AEP - $840,000, Rice Lake Utility - $1,176,000, NextEra - $756,000 o Market sales are budgeted at $1,567,200 for 2026. o Other Revenues: o The 2026 budget shows $236,319 budgeted in miscellaneous revenue for areas including: GIS reimbursement, customer late payment and finance charges, security light fees, and bond premium revenue. In addition, the 2026 budget reflects $275,000 in investment earnings from investing cash in the secondary market. Electric Operating Expenses o Purchased Power: o MRES power expense is budgeted at purchasing 219,000 MWHR's at an average blended price of $54.06 per/MWHR. HUC will receive 219,000 MWHR's, with no system power loss factored as part of the purchases. MRES power received equates to 80.88% of power supply needed based on 2026 projections. o MISO LMP (Market) expense is budgeted on a 2021-2025 weighted average HUC LMP price. The budget reflects an average market price of $31.72 per MWHR and purchasing 28,496 MWHRs. LMP power needs equate to 10.52% of power supply needed based on 2026 projections. o Generation/Hedging expense is budgeted in various other expense categories. 23,262 MWHR's are budgeted for Hedging in 2026. Generation hedging equates to 8.60% of power supply needed based on 2026 projections. o Electric Production Expenses: o Fuel: Includes $201,456 in summer contracted natural gas at $3.785 per MMBTU for units #5, #6 & #7 hedging, $785,200 at a spot market price of $4.00 per MMBTU for units #5, #6, #7 hedging & market sales, and $840,000 in natural gas budgeted for strictly market sales on unit #1. There are also other operating expenses budgeted for chemicals, lubricants, water & sewer, and boiler to run generation. o In addition, production area includes $728,000 in natural gas transport expense. The transport expense reflects 1/3 of the annual principal and interest payments on the outstanding Revenue Refunding Bonds, Series 2012A to construct the natural gas transmission pipeline. The 1/3 transport expense is adjusted annually to reflect the current years P&I schedule. o The 2026 budget reflects generating 23,262 MWHR's for hedging purposes and 26,000 MWHR's for Market Sales. Market Sales MWHR's generated will fluctuate based on Market Prices. o Electric Transmission Expenses: o Electric transmission expenses are budgeted to increase by $1,184,936 over the 2025 budget. GRE - $3,500,000, MISO - $700,000 o Electric Distribution Expenses: o Roughly, 84% of the expenses in the distribution area are personnel related expenses. This area consists of routine replacement and maintenance related to distribution infrastructure, work on city infrastructure projects, street lighting replacements, and build outs for new developments. Natural Gas Division General 2025 Budget Items o Budget currently reflects a 15% increase in Health Insurance premiums compared to the 2025 budget based on a $5500/$11000 deductible program which includes a 25% co-insurance portion. The plan also continues to include the HRA embedded program within the insurance plan. In addition, the budget continues to reflect an 80%/20% employer/employee premium split for exempt and non-exempt employees. Dental will see a 13% increase over 2025 rates, while LTD will see a slight reduction in premiums with the addition of the Paid Family Medical Leave. Basic Life & AD&D rates will remain unchanged for 2026, and Worker's Comp expense is budgeted at a significant decrease over 2025 because of the change in work comp rates applied to the various employee class codes. o Budget reflects a continual allocation of benefits to the various cost centers. (Gas Transmission, Gas Distribution, Customer Service and General Administration) o Budget reflects a salary/benefit allocation of system control personnel to the Natural Gas Division. o Budget reflects a slight decrease in the budgeted amount for 2026 to administer the Energy Conservation and Optimization (ECO) program to the current intentions of the State Statute language. However, the budgeted amount may not all be expended in 2026.2025 Budget: $192,410; 2026 Budget: $191,900 o Budget reflects a Natural Gas Division PILOT transfer of 4.5% of 2024 audited operating revenues in the amount of $596,824 to the City of Hutchinson. This is the same amount budgeted in 2025. In addition, the budget continues a reimbursement for IT and Legal services. Natural Gas Operating Revenues o Retail Sales Forecast: o Retail Customer (Residential, Commercial, & 1 Industrial) volume sales forecasted on a 3-year average (2022-2024) at 791,689 MCF for 2026. o Contracted Customer Industrial volume sales forecasted on a 3-year (3M & Highland Park) average at 739,317 MCF's for 2026. Two of the three industrial customers are transport customers only with HUC providing the commodity as a pass through. Forecasted Industrial transport revenue sales are based off a transport charge on transported volumes of 739,317 MCF. The revenue generated from a forecasted blended natural gas price of $5.39 per DTH will have an offsetting expense for HUC to purchase the natural gas. The 2026 budget reflects the recent rate adjustments based on the Cost of Service Study. o Fuel Cost Adjustment: o There are no Fuel Cost Adjustment (FCA's) credits budgeted in 2026 and if system fuel costs rise above a revised benchmark rate per MCF a fuel cost adjustment would be allocated between residential, commercial, and (1) industrial customer, excluding the contracted transport industrial customers. o Other Revenues: o Budgeted $822,278 for the N.U. Contract o Budgeted $1,142,940 for HCP Reservation, Transportation and Operating & Maintenance Contracts o Budgeted $728,000 for the capacity used on the pipeline by the Electric Division's generation/production area. This is a transfer between divisions. o Central United Coop Transportation agreement - $120,370 o Operating Revenue to maintain the Brownton distribution system is budgeted at $30,000. o Misc. customer service billing revenue is budgeted at $54,000 o Bond Premium is budgeted at $170,141 o Investment Earnings are budgeted at $275,000 Natural Gas Operating Expenses o Purchased Gas Expense o Retail Customers: The expense for this class is based off a 15-year average (2011-2025) consumption level at 856,113 Dth's. Contracted Gas makes up —78% of the Dth's needed in 2026 for retail customers at an average price of $3.90 per Dth after forecasted discounts are applied. The remaining — 22% of retail gas needed will be purchased swing gas at an estimated price of $3.90 per Dth. Total average weighted natural gas price budgeted for retail customers is $3.90 per Dth. This price includes natural gas prepaid discounts for 2026 on a portion of the volumes at 32 cents & 10 cents/Dth. o Contracted Industrial Customers: consumption based on a 3-year (3M & Highland Park) average. The budget is based on 824,352 Dth's at an estimated blended gas price of $5.39 Dth. o * Total blended budgeted expense is $4.63 per Dth. o Natural Gas Transmission Expense o Mostly personnel costs, Public Awareness Materials, CIS Surveying of the pipeline and routine maintenance & repairs based on MNOPS program requirements. o Natural Gas Distribution Expense o Mostly personnel costs, routine maintenance & repair costs based on MNOPS program requirements. 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AA. a W O � N h a •� a � e h N uj ui E V� i .O W 14 O O k N W — a ' C ., = c W k. u. W a. >• y W W Or W 01 01 h 01 a i G a. X W O y O N Z 01 a a 01 J Z O C 01 N a— J O iti- W w o o + O X w a w a a or o: � � m W o n F- W a a o 1— o o � z OPERATING REVENUES Electric Energy Sales Natural Gas Sales Other Operating Revenues Total Operating Revenues OPERATING EXPENSES Production: Operations Maintenance Operations Purchased Power/Gas Other Power Supply Transmission: Operations Maintenance Distribution Expense: Operations Maintenance Customer Accounts Expense Sales Expense Administrative & General Depreciation Contribution to the City of Hutchinson Total Operating Expenses Operating Income (Loss) NONOPERATING REVENUES (EXPENSES) Interest Income Merchandise & Contract Work, Net Miscellaneous Income Gain (Loss) on Disposal of Assets Bond Service Fees Bond Premium Prior Period Adjustment Interest Expense - Customer Deposits Interest Expense - Bonds _ Total Nonoperating Revenus (Expenses) Detailed Income Statement Combined Divisions (Electric & Natural Gas) 2021 2022 2023 2024 10/31/2025 2023 2024 2025 2026 Actual I Actual I Act I Actual I YTD Budget Budget Budget I Budget $ 29,629,132 $ 30,321,138 $ 28,055,608 $ 27,516,950 $ 26,319,437 $ 29,980,654 $ 28,583,363 $ 29,099,467 $ 31,811,118 $ 13,444,627 $ 13,520,128 $ 11,976,909 $ 11,287,413 $ 9,110,424 $ 13,179,855 $ 12,248,803 $ 12,431,928 $ 12,737,529 $ 1,829,095 $ 2,004,144 $ 1,968,198 $ 2,937,465 $ 2,535,887 $ 2,275,266 $ 3,028,903 $ 2,995,384 $ 2,973,588 10 $ 42.000.715 $ 41.741.828 $ 37 $ 4,281,814 $ 5,702,451 $ 4,318,980 $ 3,981,539 $ 4,584,274 $ 770,277 $ 1,009,833 $ 826,298 $ 884,040 $ 892,639 $ 23,251,253 $ 22,521,870 $ 19,688,330 $ 19,167,749 $ 16,198,822 $ 319,382 $ 299,646 $ 296,849 $ 328,764 $ 320,890 $ 3,511,512 $ 3,618,364 $ 3,744,020 $ 3,460,542 $ 3,170,076 $ 74,406 $ 113,737 $ 47,432 $ 94,607 $ 68,946 $ 1,805,178 $ 2,027,000 $ 2,126,040 $ 2,156,923 $ 1,948,216 $ 625,624 $ 1,057,997 $ 1,043,217 $ 1,305,406 $ 921,914 $ 437,383 $ 475,356 $ 502,610 $ 538,414 $ 438,904 $ 211,320 $ 232,897 $ 208,673 $ 247,274 $ 156,194 $ 2,152,315 $ 2,257,065 $ 2,236,016 $ 2,293,475 $ 1,915,269 $ 4,431,549 $ 4,533,000 $ 4,423,776 $ 4,284,592 $ 3,478,093 $ 1,867,192 $ 1,867,192 $ 1,904,536 $ 2,195,248 $ 1,618,855 $ 1,163, 648 $ 129,002 $ 633,938 $ 803,255 $ 2, 252, 657 43,805 $ (878,836) $ 1,354,735 $ 1,241,242 $ 640,062 (38,937) $ 18,439 $ 7,262 $ 23,194 $ (32,064) 164,760 $ 96,081 $ 244,975 $ 970,211 $ 159,664 85,318 $ (3,693) $ - $ 74,421 $ - (475) $ (820) $ (475) $ (475) $ (850) 219,065 $ 219,065 $ 219,065 $ 219,065 $ 182,554 - $ (28,044) $ (28,044) $ (28,044) $ - (356) $ (653) $ (15,079) $ (16,210) $ (1,653) 983,515) $ (892,185) $ (779,885) $ (694,081) $ (497,355) 510,334) $ (1,470,645) $ 1,002,555 $ 1,789,323 $ 450,359 47 $ 4,473,985 $ 4,233,849 $ 4,192,817 $ 4,996,358 $ 865,150 $ 799,603 $ 916,977 $ 1,226,587 $ 21,566,760 $ 20,379,028 $ 20,256,167 $ 20,816,157 $ 282,627 $ 247,256 $ 349,208 $ 344,065 $ 4,226,330 $ 3,664,169 $ 3,833,169 $ 5,064,682 $ 88,427 $ 85,604 $ 72,262 $ 109,905 $ 2,546,553 $ 2,801,033 $ 2,645,838 $ 2,632,487 $ 750,933 $ 788,308 $ 973,951 $ 1,176,394 $ 535,115 $ 568,295 $ 514,605 $ 563,295 $ 496,141 $ 498,383 $ 504,673 $ 503,449 $ 2,165,681 $ 2,293,886 $ 2,370,116 $ 2,551,720 $ 4,400,000 $ 4,430,000 $ 4,310,000 $ 4,190,000 $ 1,904,536 $ 1,942,626 $ 1,942,626 $ 1,942,626 $ 1,133,537 $ 1,129,029 $ 1,644,371 $ 1,404,510 $ 500,000 $ 750,000 $ 600,000 $ 550,000 $ (60,500) $ (67,000) $ (44,000) $ 40,062 $ 64,074 $ 67,186 $ 71,733 $ 75,172 $ (500) $ (850) $ (475) $ (850) $ 219,065 $ 219,065 $ 219,065 $ 203,598 $ (100) $ (600) $ (1,800) $ (1,800) $ (786,906) $ (703,277) $ (596,732) $ (466,132) $ (64,867) $ 264,524 $ 247,791 $ 400,049 Net Income (Loss) $ 653,314 $ (1,341,643) $ 1,636,493 $ 2,592,578 $ 2,703,016 $ 1,068,670 $ 1,393,553 $ 1,892,161 $ 1,804,561 COGS $ 32,208,644 $ 33,265,901 $ 28,921,908 $ 27,917,242 $ 25,235,647 $ 31,503,279 $ 29,409,508 $ 29,620,600 $ 32,557,755 Gross Profit $ 12,694,210 $ 12,579,509 $ 13,078,807 $ 13,824,586 $ 12,730,101 $ 13,932,496 $ 14,451,561 $ 14,906,180 $ 14,964,481 Gross Margin 28966 27% 31% 33% 34% 31% 33% 33% 31% Operating Margin (%) 3% 0% 2% 2% 6% 2% 3% 4% 3% Net Income (%) of Operating Sales 1% -3% 4% 6% 7% 2.4% 3.2% 4.2% 3.8% N.I. (%) of Operating Sales (after cap labor) - - - - - 4.2% 4.5% 4.4% 4.3% 2026 COMBINED INCOME STATEMENT 2026 Net Income $ 1,804,561 Cap. Labor- Production $ 10,000 Cap. Labor- Distribution $ 150,000 Cap. Labor- Nat. Gas $ 60,000 2026 Combined Net Income $ 2,024,561 2026 COMBINED CASH FLOW STATEMENT 2026 Net Income $ 1,804,561 Depreciation $ 4,190,000 Bond Premium $ (170,141) 2026 Capital Improvement Plan $ (2,003,737) 2012A & 2017B Principal Bond Payment $ (2,900,000) Sale of Equipment Proceeds $ - 2026 Combined Cash Flow $ 920,683 Detailed Income Statement Electric Division 2021 2022 2023 2024 10/31/2025 2023 2024 2025 2026 Actual Actual Actual I Actual YTD 11 Budget I Budget Budget I Budget OPERATING REVENUES Energy Sales Revenue Sales - Electric Energy (440, 442, 444) Power Cost Adjustments Other Energy Sales (447) Total Energy Sales Revenue (440, 442, 444, 447) Revenue From Other Sources Revenue From Other Sources (450, 451) Security Lights (454.01) Pole Rental (454.02, 454.03) Total Revenue From Other Sources (450, 451, 454) TOTAL OPERATING REVENUES OPERATING EXPENSES Production Operations Operation Supervison & Engineering (546) Fuel(547) Operating Supplies and Expense (550) Total Production Operations (546, 547, 550) Maintenance Operations Structures (554) Generating Units (554) Other Equipment (554) Total Maintenance Operations (554) Other Power Supply Expense Purchased Power(555) System Control & Load Dispatch (556) Engineering Services (557) Total Other Power Supply Expense (555, 556, 557) Transmission Expense Transmission Expense Operation (560) Transmission Expense Operation (565) Transmission Expense Operation (567) Transmission Expense Maintenance (574) Total Transmission Expense (560, 565, 567, 574) Distribution Expense: Distribution Operation (580, 581, 586, 588, 589) Distribution Maintenance (592, 594, 595, 596, 598) Total Distribution Expense (580 ,581, 586, 588, 589, 592, 594, 595, 596, 598) Customer Service and Collection Meter Reading (902) Collection Expense (903) Bad Debt Write offs (904) Customer Services (906) Total Customer Service and Collection (902, 903, 904, 906) Sales Expense Supery ison (911) Misc. Selling Expense (CIP) (916) Total Sales Expense(911, 916) $ 23,759,403 $ 23,287,218 $ 22,629,937 $ 23,302,552 $ 20,511,723 $ 24,150,654 $ 24,502,363 $ 24,709,217 $ 25,971,918 $ 1,648,194 $ 1,587,435 $ 305,137 $ 557,971 $ (384,053) $ 1,600,000 $ 400,000 $ 900,000 $ 1,500,000 $ 4,221,535 $ 5,446,484 $ 5,120,534 $ 3,656,427 $ 6,191,767 $ 4,230,000 $ 3,681,000 $ 3,490,250 $ 4,339,200 $ 29,629,132 $ 30,321,138 $ 28,055,608 $ 27,516,950 $ 26,319,437 $ 29,980,654 $ 28,583,363 $ 29,099,467 $ 31,811,118 $ 56,300 $ 132,161 $ 137,699 $ 144,740 $ 133,054 $ 134,400 $ 135,100 $ 135,000 $ 144,000 $ 10,597 $ 10,515 $ 9,150 $ 9,495 $ 7,934 $ 11,000 $ 10,000 $ 9,500 $ 10,000 $ 29,696,029 $ 30,463,813 $ 28,202,457 $ 27,671,184 $ 26,460,425 $ 145,400 $ 145,100 $ 144,500 $ 154,000 $ 30,126,054 $ 28,728,463 $ 29,243,967 $ 31,965,118 $ 1,648,442 $ 2,255,577 $ 2,125,815 $ 1,978,435 $ 1,858,805 $ 1,901,362 $ 2,041,089 $ 2,106,951 $ 2,195,702 $ 2,357,038 $ 3,234,043 $ 1,896,121 $ 1,785,010 $ 2,508,941 $ 2,359,623 $ 1,954,760 $ 1,876,166 $ 2,581,656 $ 276,334 $ 212,830 $ 297,044 $ 218,094 $ 216,528 $ 213,000 $ 238,000 $ 209,700 $ 219,000 $ 4,281,814 $ 5,702,451 $ 4,318,980 $ 3,981,539 $ 4,584,274 $ 4,473,985 $ 4,233,849 $ 4,192,817 $ 4,996,358 $ 8,636 $ 90,602 $ 21,609 $ 19,620 $ 6,017 $ 36,000 $ 21,000 $ 26,000 $ 26,000 $ 507,501 $ 576,007 $ 511,006 $ 578,977 $ 629,339 $ 524,150 $ 569,603 $ 606,977 $ 925,587 $ 254,141 $ 343,224 $ 293,683 $ 285,444 $ 257,284 $ 305,000 $ 209,000 $ 284,000 $ 275,000 $ 770,277 $ 1,009,833 $ 826,298 $ 884,040 $ 892,639 $ 865,150 $ 799,603 $ 916,977 $ 1,226,587 $ 13,420,688 $ 13,164,998 $ 12,053,183 $ 11,904,189 $ 10,495,867 $ 12,862,000 $ 12,638,152 $ 12,605,893 $ 13,035,315 $ 319,382 $ 299,646 $ 296,849 $ 328,764 $ 320,890 $ 282,627 $ 247,256 $ 349,208 $ 344,065 $ 13,740,070 $ 13,464,644 $ 12,350,032 $ 12,232,954 $ 10,816,758 $ 13,144,627 $ 12,885,408 $ 12,955,101 $ 13,379,380 $ 197,074 $ 203,256 $ 213,925 $ 223,701 $ 192,323 $ 190,000 $ 200,000 $ 212,000 $ 200,000 $ 2,845,628 $ 2,882,993 $ 3,009,524 $ 2,522,972 $ 2,411,553 $ 3,325,000 $ 2,755,000 $ 3,015,064 $ 4,200,000 $ - $ 9,128 $ 2,118 $ 22,434 $ 23,486 $ 40,000 $ 40,000 $ 30,000 $ 30,000 $ 67,769 $ 94,083 $ 30,488 $ 84,576 $ 35,722 $ 32,381 $ 43,538 $ 32,097 $ 33,132 $ 3,110,471 $ 3,189,459 $ 3,256,055 $ 2,853,682 $ 2,663,083 IIIIIII $ 3,587,381 $ 3,038,538 $ 3,289,161 $ 4,463,132 $ 1,037,787 $ 1,126,088 $ 1,166,114 $ 1,412,832 $ 1,041,752 $ 1,371,030 $ 1,620,455 $ 1,466,320 $ 1,437,426 $ 408,868 $ 828,836 $ 759,979 $ 914,785 $ 664,767 $ 447,466 $ 486,587 $ 628,870 $ 772,803 $ 1,446,654 $ 1,954,924 $ 1,926,093 $ 2,327,617 $ 1,706,519 $ 1,818,497 $ 2,107,042 $ 2,095,190 $ 2,210,229 $ 5,101 $ 4,705 $ 4,126 $ 33,710 $ 4,250 $ 16,723 $ 14,207 $ 31,566 $ 32,895 $ 172,186 $ 186,732 $ 187,070 $ 208,866 $ 172,706 $ 201,993 $ 221,115 $ 202,927 $ 217,146 $ 1,253 $ (1,472) $ 33,848 $ (17,174) $ - $ 4,000 $ 4,000 $ 4,000 $ 4,000 $ 61,655 $ 63,138 $ 61,457 $ 70,799 $ 64,051 $ 74,147 $ 73,840 $ 48,889 $ 50,851 $ 240,195 $ 253,103 $ 286,500 $ 296,202 $ 241,008 $ 296,863 $ 313,162 $ 287,382 $ 304,892 $ 107,256 $ 137,673 $ 120,808 $ 144,231 $ 85,496 $ 107,256 $ 137,673 $ 120,808 $ 144,231 $ 85,496 Administrative and General Adminstrative and General Labor(920) $ 492,700 $ 527,645 $ 556,002 $ 568,022 $ 417,870 Office Supplies and Expenses(921) $ 246,645 $ 291,532 $ 271,655 $ 293,650 $ 297,886 Outside Services (923) $ 91,928 $ 99,983 $ 104,238 $ 71,807 $ 92,908 Property Insurance(924) $ 328,326 $ 391,607 $ 311,023 $ 324,841 $ 282,641 Employee Pension & Benefits (926) $ 188,373 $ 161,872 $ 204,517 $ 219,593 $ 143,203 Regulatory Expense(928) $ 4,483 $ 5,784 $ 1,350 $ 375 $ 420 Misc. General Expense (930) $ 93,313 $ 97,263 $ 92,203 $ 87,922 $ 90,435 Maint. Of General Plant(935) $ 114,195 $ 66,414 $ 49,755 $ 64,689 $ 47,984 $ 307,729 $ 307,118 $ 312,263 $ 311,550 $ 307,729 $ 307,118 $ 312,263 $ 311,550 $ 547,969 $ 532,533 $ 579,462 $ 603,798 $ 279,727 $ 290,961 $ 319,462 $ 353,652 $ 70,014 $ 74,815 $ 75,907 $ 112,608 $ 277,156 $ 318,355 $ 331,014 $ 354,521 $ 210,311 $ 236,387 $ 213,576 $ 228,560 $ 1,000 $ 1,400 $ 900 $ 900 $ 99,553 $ 106,659 $ 107,352 $ 102,836 $ 45,754 $ 69,058 $ 55,419 $ 53,526 Total Administrative and General (920, 921, 923, 924, 926, 928, 930, 935) $ 1,559,964 $ 1,642,100 $ 1,590,743 $ 1,630,899 $ 1,373,347 IIIIIII $ 1,531,484 $ 1,630,167 $ 1,683,093 $ 1,810,402 Detailed Income Statement Electric Division 2021 2022 2023 2024 10/31/2025 2023 2024 2025 2026 Actual Actual Actual I Actual YTD 11 Budget I Budget Budget I Budget Other Expenses Depreciation Expense (403) Payment in Lieu of Taxes (408) Contribution To City - Roadway Lighting (408) Total Other Expenses (403, 408) TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NONOPERATING REVENUES/(EXPENSES) Merchandise & Contract Work, Net Interest Income Misc. Income Interest - Customer Deposits Bond Service Fees Interest Expense - 2017B Bonds Bond Premium Gain (Loss) On Disposal Amortization - Solar Array Land Lease TOTAL NONOPERATING REVENUES/(EXPENSES) NET INCOME COGS Gross Profit Gross Margin Operating Margin (%) Net Income (%) of Operating Sales Net Income (%) of Operating Sales (after cap labor) $ 3,334,286 $ 3,440,752 $ 3,326,461 $ 3,160,015 $ 2,500,920 $ 3,300,000 $ 3,330,000 $ 3,200,000 $ 3,060,000 $ 1,293,543 $ 1,293,543 $ 1,319,414 $ 1,345,803 $ 1,121,502 $ 1,319,414 $ 1,345,802 $ 1,345,802 $ 1,345,802 $ - $ - $ - $ 252,620 $ - $ - $ - $ - $ - $ 4,627,829 $ 4,734,295 $ 4,645,875 $ 4,758,438 $ 3,622,422 $ 4,619,414 $ 4,675,802 $ 4,545,802 $ 4,405,802 $ 29,884,531 $ 32,088,481 $ 29,321,383 $ 29,109,603 $ 25,985,545 $ 30,645,130 $ 29,990,689 $ 30,277,787 $ 33,108,332 $ (188,502) $ (1,624,668) $ (1,118,926) $ (1,438,418) $ 474,880 $ (519,076) $ (1,262,226) $ (1,033,820) $ (1,143,214) $ (40,569) $ (17,798) $ (21,798) $ (26,401) $ (31,113) $ (61,000) $ (55,000) $ - $ - $ 21,851 $ (439,383) $ 677,583 $ 620,830 $ 325,004 $ 250,000 $ 375,000 $ 300,000 $ 275,000 $ 108,497 $ 64,639 $ 208,842 $ 77,851 $ 107,352 $ 41,648 $ 43,671 $ 46,626 $ 48,862 $ (232) $ (424) $ (9,801) $ (10,536) $ (1,074) $ - $ (300) $ (1,000) $ (1,000) $ (475) $ (820) $ (475) $ (475) $ (850) $ (500) $ (850) $ (475) $ (850) $ (505,606) $ (478,523) $ (450,423) $ (421,123) $ (327,714) $ (452,856) $ (423,657) $ (393,257) $ (361,657) $ 33,457 $ 33,457 $ 33,457 $ 33,457 $ 27,881 $ 33,457 $ 33,457 $ 33,457 $ 33,457 $ 37,150 $ (3,693) $ - $ 60,871 $ - $ - $ - $ - $ - $ - $ (28,044) $ (28,044) $ (28,044) $ - $ - $ - $ - $ - $ (345,928) $ (870,589) $ 409,341 $ 306,430 $ 99,486 $ (189,251) $ (27,679) $ (14,649) $ (6,188) $ (534,429) $ (2,495,257) $ (709,585) $ (1,131,988) $ 574,366 111111 $ (708,327) $ (1,289,905) $ (1,048,469) $ (1,149,401) $ 21,902,632 $ 23,366,387 $ 20,751,365 $ 19,952,215 $ 18,956,754 $ 22,071,143 $ 20,957,398 $ 21,354,056 $ 24,065,457 $ 7,793,396 $ 7,097,426 $ 7,451,093 $ 7,718,969 $ 7,503,671 $ 8,054,911 $ 7,771,065 $ 7,889,911 $ 7,899,661 26.2% 23.3% 26.4% 27.9% 28.4% 26.7% 27.1% 27.0% 24.7% -0.63% -5.33% -3.97% -5.20% 1.79% -1.8% -8.2% -2.5% -4.1% 2.2% -1.7% -4.4% -3.5% -3.6% -2.4% -4.5% -3.6% -3.6% -0.7% -1.6% -3.4% -3.1% NET INCOME 2026 Net Income $ (1,149,401) Cap. Labor - Production $ 10,000 Cap. Labor- Distribution $ 150,000 2026 Net Income $ (989,401) CASH FLOW STATEMENT 2026 Net Income $ (1,149,401) Depreciation $ 3,060,000 2017B Principal Debt Payment $ (820,000) 2026 Capital Improvement Plan $ (1,424,437) SOE Proceeds $ - 2026 Electric Cash Flow $ (333,838) OPERATING REVENUES Energy Sales Revenue Sales - Natural Gas --Retail Contract Sales to Large Customers (Includes 3M & HTI transport) New Ulm, HCP, & UFC Transportation Transportation --Electric Division Total Energy Sales Revenue (440, 442, 444, 447) Revenue From Other Sources Revenue From Other Sources (450,451) Total Revenue From Other Sources (450, 451, 454) TOTAL OPERATING REVENUES OPERATING EXPENSES Purchased Gas Purchased Gas for Retail (807) Contract Gas for Large Customer (807) Total Purchased Gas Transmission Gas Transmission System Control Operations (851) Gas Transmission Operations (856) Gas Transmission Maintenance (863) Total Transmission (851, 856, 863) Distribution Operations Supervision and Engineering (870) Mains and Services (874) Meters (878) Misc.(880) Total Distribution Operation (870, 874, 878, 880) Distribution Maintenance Lines --Services and Mains (892) Meters and House Regulators (893) Maintenance of Other Plant (895) Total Distribution Maintenance (892, 893, 895) Customer Service and Collection Meter Reading (902) Collection Expense (903) Bad Debt Write offs (904) Customer Services (906) Total Customer Service and Collection (902, 903, 904, 906) Sales Expense Supery ison (911) Misc. Selling Expense (CIP) (916) Total Sales Expense(911, 916) Administrative and General Adminstrative and General Labor (920) Office Supplies and Expenses (921) Outside Services (923) Property Insurance (924) Employee Pension & Benefits (926) Regulatory Expense (928) Misc. General Expense(930) Maint. Of General Plant (935) Total Administrative and General(920, 921, 923, 924, 926, 928, 930, 935) Other Expenses Depreciation Expense (403) Payment in Lieu of Taxes (408) Total Other Expenses (403, 408) TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NONOPERATING REVENUES/(EXPENSES) Merchandise & Contract Work, Net Interest Income Misc. Income Bond Premium Interest Expense - Bonds Interest Expense - Customer Deposits Gain (Loss) On Disposal Prior Period Adjustment TOTAL NONOPERATING REVENUES/(EXPENSES) uezauea Income simememi Natural Gas Division 2021 2022 2023 2024 10/31/2025 2023 2024 2025 2026 Actual Actua) Actua) Actua) YTD Budget I Budget I Budget I Budget $ 8,447,400 $ 8,200,434 $ 7,139,133 $ 6,328,462 $ 4,917,147 $ 7,753,388 $ 7,104,128 $ 7,160,799 $ 7,335,427 $ 4,997,227 $ 5,319,694 $ 4,837,776 $ 4,958,951 $ 4,193,277 '... $ 5,426,467 $ 5,144,675 $ 5,271,129 $ 5,402,102 $ 1,058,042 $ 1,093,578 $ 1,049,016 $ 2,003,454 $ 1,740,422 $ 1,354,349 $ 2,108,203 $ 2,071,218 $ 2,037,588 $ 682,550 $ 716,683 $ 719,517 $ 724,600 $ 606,388 $ 719,517 $ 724,600 $ 727,666 $ 728,000 $ 15,185,219 $ 15,330,389 $ 13,745,442 $ 14,015,467 $ 11,457,235 $ 15,253,721 $ 15,081,606 $ 15,230,812 $ 15,503,117 $ 21,606 $ 51,208 $ 52,815 $ 55,177 $ 48,089 '.. $ 21,606 $ 51,208 $ 52,815 $ 55,177 $ 48,089 '.'.. $ 15,206,825 $ 15,381,596 $ 13,798,257 $14,070,643 $ 11,505,323 $ 56,000 $ 51,000 $ 52,000 $ 54,000 $ 56,000 $ 51,000 $ 52,000 $ 54,000 $ 15,309,721 $ 15,132,606 $ 15,282,812 $ 15,557,117 $ 5,832,171 $ 4,863,302 $ 3,505,492 $ 3,573,637 $ 2,386,016 $ 4,307,762 $ 3,563,418 $ 3,321,839 $ 3,338,032 $ 3,998,395 $ 4,493,570 $ 4,129,655 $ 3,689,923 $ 3,316,939 $ 4,396,998 $ 4,177,458 $ 4,328,435 $ 4,442,810 $ 9,830,566 $ 9,356,872 $ 7,635,147 $ 7,263,559 $ 5,702,955 „i $ 8,704,760 $ 7,740,876 $ 7,650,274 $ 7,780,842 $ 246,339 $ 317,082 $ 332,750 $ 353,604 $ 260,493 $ 300,398 $ 283,497 $ 319,243 $ 359,046 $ 222,470 $ 205,906 $ 185,702 $ 337,832 $ 282,222 '... $ 370,932 $ 385,671 $ 256,862 $ 275,636 $ 6,636 $ 19,654 $ 16,944 $ 10,031 $ 33,224 $ 56,045 $ 42,066 $ 40,165 $ 76,773 $ 475,446 $ 542,642 $ 535,396 $ 701,467 $ 575,939 $ 727,375 $ 711,235 $ 616,270 $ 711,455 $ 379,876 $ 517,346 $ 549,835 $ 350,740 $ 416,535 $ 532,524 $ 561,378 $ 580,187 $ 589,175 $ 131,216 $ 167,673 $ 173,549 $ 149,028 $ 309,418 $ 285,053 $ 245,918 $ 255,082 $ 300,702 $ 22,988 $ 18,752 $ 21,486 $ 36,243 $ 53,807 $ 21,023 $ 21,033 $ 91,800 $ 76,877 $ 233,312 $ 197,141 $ 215,055 $ 208,081 $ 126,703 $ 336,923 $ 352,250 $ 252,448 $ 228,306 $ 767,391 $ 900,912 $ 959,926 $ 744,091 $ 906,464 $ 1,175,523 $ 1,180,579 $ 1,179,517 $ 1,195,061 $ 141,692 $ 155,849 $ 211,864 $ 280,699 $ 206,537 $ 207,309 $ 195,806 $ 268,036 $ 308,063 $ 15,624 $ 2,794 $ 19,619 $ 18,891 $ 11,859 $ 29,657 $ 44,415 $ 16,545 $ 36,028 $ 59,441 $ 70,518 $ 51,755 $ 91,030 $ 38,752 $ 66,500 $ 61,500 $ 60,500 $ 59,500 $ 216,757 $ 229,161 $ 283,238 $ 390,620 $ 257,147 $ 303,467 $ 301,721 $ 345,081 $ 403,591 $ 4,355 $ 4,788 $ 2,686 $ 31,583 $ 3,856 $ 23,500 $ 24,715 $ 6,827 $ 10,914 $ 141,811 $ 152,592 $ 152,959 $ 172,856 $ 141,634 $ 153,085 $ 169,003 $ 179,395 $ 184,883 $ 577 $ 13,214 $ 10,183 $ (20,154) $ '... $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 50,445 $ 51,658 $ 50,283 $ 57,927 $ 52,406 $ 60,666 $ 60,415 $ 40,000 $ 61,605 $ 197,188 $ 222,253 $ 216,111 $ 242,212 $ 197,896 $ 238,252 $ 255,133 $ 227,222 $ 258,403 $ 104,064 $ 95,224 $ 87,865 $ 103,043 $ 70,698 '.. $ 104,064 $ 95,224 $ 87,865 $ 103,043 $ 70,698 '.'.. $ 169,114 $ 180,948 $ 189,713 $ 192,906 $ 143,326 $ 80,642 $ 103,552 $ 100,741 $ 108,806 $ 104,038 $ 48,668 $ 43,204 $ 54,949 $ 35,957 $ 50,501 $ 75,553 $ 60,065 $ 69,683 $ 77,700 $ 63,301 $ 75,880 $ 68,878 $ 80,634 $ 84,886 $ 53,380 $ 35,582 $ 43,909 $ 46,742 $ 53,574 $ 47,538 $ 75,358 $ 66,030 $ 59,871 $ 56,143 $ 56,768 $ 31,555 $ 48,378 $ 42,939 $ 52,604 $ 23,070 $ 592,351 $ 614,965 $ 645,273 $ 662,576 $ 541,921 $ 188,412 $ 191,265 $ 188,412 $ 191,265 192,410 $ 191,900 '.... $ 183,010 $ 177,511 $ 193,154 $ 201,266 '.... $ 102,776 $ 111,054 $ 121,354 $ 141,584 '.... $ 32,005 $ 35,105 $ 35,969 $ 71,153 '.... $ 57,155 $ 69,638 $ 74,513 $ 81,220 '.... $ 74,270 $ 82,796 $ 83,525 $ 80,520 '.... $ 85,000 $ 60,000 $ 60,000 $ 55,000 '.... $ 65,558 $ 70,728 $ 71,728 $ 66,558 $ 34,425 $ 56,888 $ 46,780 $ 44,018 $ 634,197 $ 663,719 $ 687,023 $ 741,318 $ 1,097,263 $ 1,092,249 $ 1,097,315 $ 1,124,576 $ 977,173 $ 1,100,000 $ 1,100,000 $ 1,110,000 $ 1,130,000 $ 573,649 $ 573,649 $ 585,122 $ 596,825 $ 497,353 ,I. $ 585,122 $ 596,824 $ 596,824 $ 596,824 $ 1,670,912 $ 1,665,898 $ 1,682,437 $ 1,721,401 $ 1,474,526 $ 1,685,122 $ 1,696,824 $ 1,706,824 $ 1,726,824 $ 13,854,675 $ 13,627,927 $ 12,045,393 $ 11,828,970 $ 9,727,547 $ 13,657,108 $ 12,741,352 $ 12,604,621 $ 13,009,393 $ 1,352,150 $ 1,753,670 $ 1,752,865 $ 2,241,673 $ 1,777,777 $ 1,652,613 $ 2,391,255 $ 2,678,191 $ 2,547,724 $ 1,632 $ 36,238 $ 29,060 $ 49,595 $ (951)'.... $ 21,954 $ (439,453) $ 677,152 $ 620,411 $ 315,058 $ 56,263 $ 31,442 $ 36,134 $ 892,361 $ 52,312 $ 185,608 $ 185,608 $ 185,608 $ 185,608 $ 154,674 $ (477,908) $ (413,662) $ (329,463) $ (272,958) $ (169,642) $ (124) $ (228) $ (5,278) $ (5,674) $ (578) $ 48,168 $ - $ - $ 13,550 $ $ (164,407) $ (600,055) $ 593,214 $ 1,482,893 $ 350,873 '.. $ 500 $ (12,000) $ (44,000) $ 40,062 $ 250,000 $ 375,000 $ 300,000 $ 275,000 $ 22,426 $ 23,515 $ 25,106 $ 26,310 $ 185,608 $ 185,608 $ 185,608 $ 170,141 $ (334,050) $ (279,620) $ (203,475) $ (104,475) $ (100) $ (300) $ (800) $ (800) '.. $ 124,384 $ 292,203 $ 262,439 $ 406,238 uezauea Income szamememz Natural Gas Division 2021 2022 2023 2024 10/31/2025 2023 2024 2025 2026 Actua) Actua) Actua) Actua) YTD Budget I Budget I Budget I Budget NET INCOME $ 1,187,743 $ 1,153,614 $ 2,346,078 $ 3,724,566 $ 2,128,650 $ 1,776,998 $ 2,683,459 $ 2,940,631 $ 2,953,962 COGS $ 10,306,012 $ 9,899,514 $ 8,170,543 $ 7,965,027 $ 6,278,893 $ 9,432,135 $ 8,452,111 $ 8,266,544 $ 8,492,297 Gross Profit $ 4,900,813 $ 5,482,083 $ 5,627,714 $ 6,105,617 $ 5,226,430 $ 5,877,586 $ 6,680,496 $ 7,016,268 $ 7,064,820 Gross Margin 32% 36% 41% 43% 45% 38% 44% 46% 45% Operating Margin (%) 9% 11% 13% 16% 15% 11% 16% 18% 16% Net Income (%) of Operating Sales 8% 7% 17% 26% 19% 12% 18% 19% 19% Net Income (%) of Operating Sales (after cap labor) - 9% 12% 19% 19% NET INCOME 2026 Net Income $ 2,953,962 Cap. Labor - Nat. Gas $ 60,000 2026 Net Income $ 3,013,962 CASH FLOW STATEMENT 2026 Net Income $ 2,953,962 Depreciation $ 1,130,000 Bond Premium $ (170,141) 2026 Capital Improvement Plan $ (579,300) 2012A Principal Debt Payment $ (2,080,000) 2026 Cash Flow $ 1,254,521 Hutchinson Utilities Commission Capital l r° vPlan 2026 thru 2030 PROJECT COSTS BY DEPARTMENT Department Electric - Production Electric - Distribution Electric - Transmission Electric - Fleet, Misc. Equipment Electric Division Subtotal Natural Gas - Distribution Natural Gas - Transfnission Natural Gas - Fleet, Misc. Equirunent Natural Gas Division Subtotal 2026 2027 2028 2029 2030 $ 651,937 $ 544,865 $ 560,000 $ 325,000 $ 240,000 517,500 612,500 572,500 555,000 570,000 415,000 350,000 15,000 15,000 15,000 - 315,000 475,000 419,000 324,000 1,584,437 1,822,365 1,622,500 1,314,000 1,149,000 639,300 378,500 357,500 317,000 312,200 - - 256,000 226,000 200,000 - - 156,809 104,516 110,906 639,300 378,500 770,309 647,516 623,106 r----------------------0 0 GRAND TOTAL ____________0 $ 2,223,737 $ 2,200,865 $ 2,392,809 $ 1,961,516 $ 1,772,106 SUMMARY OF FUNDING SOURCES Department 2026 2027 2028 2029 2030 Capital Replacement Reserves $ 2,223,737 $ 1,885,865 $ 1,761,000 $ 1,438,000 $ 1,337,200 Fleet Designated Reserves- 315,000 631,809 523,516 434,906 --.-.-.-.-.-.-.-.-.-.- . _GRAND TOTAL 0 ____________ $ 2,223,737 $ 2,200,865 $ 2,392,809 $ 1,961,516 $ 1,772,106 Electric Production Capital Projects Electric Production Capital Expenditure Programming Account # 2026 2027 2028 2029 2030 Totals 340 $ - $ - $ - $ - $ - $ 341 $ 110,000 $ 281,000 $ 560,000 $ 325,000 $ 140,000 $ 1,416,000 342 $ - $ - $ - $ - $ - $ - 343 $ - $ $ $ $ - $ - 344 $ 541,937 $ $ $ $ 100,000 $ 641,937 345 $ - $ 263,865 $ $ $ - $ 263,865 346 $ - $ - $ $ $ - $ Totals 651,937 544,865 560,0001 $ 325,000 240,0001 $ 2,321,802 Production Capital Acct # Project List Material Labor Total 340 $ $ $ $ $ $ Total Account 340 Power Gates Plant 2 $ $ $ Rubber Roof Repairs - West portion of Plant 1 $ 60,000 $ $ 60,000 341 Plant 1 Pump Room Ventilation $ - $ 5,000 $ 5,000 Plant 1&2 Cooling Tower VFD's $ 40,000 $ 5,000 $ 45,000 $ 100,000 $ 10,000 $ 110,000 Total Account 341 342 $ $ $ $ $ $ Total Account 342 343 $ $ $ $ $ $ - Total Account 343 Unit 5 Hug Upgrade $ 351,000 $ $ 351,000 Plant 1 Web Master Upgrade $ 7,870 $ $ 7,870 344 Unit 1 Computer Upgrade $ 148,067 $ $ 148,067 Unit 1 CO2 System Update Code Compliance $ 35,000 $ $ 35,000 $ 541,937 $ $ 541,937 Total Account 344 345 Cooling Tower Recirculation and Chemical Injection Plant 1 North Ground Fans $ $ $ $ $ $ $ $ $ Total Account 345 346 $ $ $ $ $ $ Total Account 346 Total Production Capital Budget 2026 is 641,937 10,000 651,937 Production Capital Budget 2027 Acct # Project List Material Labor Total 340 $ $ $ $ $ $ Total Account 340 341 Plant 1 Camera System $ 100,000 $ $ $ $ 100,000 Plant 2 Cooling Tower Repair $ 181,000 $ $ 181,000 $ 281,000 $ $ 281,000 Total Account 341 342 $ - $ $ $ $ $ Total Account 342 343 $ $ $ $ $ $ Total Account 343 344 $ $ $ $ $ $ - Total Account 344 Plant 2 Automatic Valves - Cooling Tower $ 90,000 $ $ 90,000 345 Aux Boiler Feed Water and Piping Update $ 173,865 $ $ 173,865 $ 263,865 $ $ 263,865 Total Account 345 346 $ $ $ $ $ $ - Total Account 346 Total Production Capital Budget 2027 544,865 544,865 Electric Production Capital Projects Production Capital Budget 2028 Acct # Project List Material Labor Total 340 Total Account 340 $ $ $ 341 Unit 1 Boiler House Building Repair New Roof Switch Gear Building 4160 Cooling Tower Drain Valves Plant 1 Side Stream Filter Building and Chemical Injection Total Account 341 $ 150,000 $ 60,000 $ 80,000 $ 250,000 $ $ 20,000 $ - $ $ 150,000 $ 80,000 $ 80,000 $ 250,000 $ 540,000 $ 20,000 $ 560,000 342 Total Account 342 $ $ $ 343 Total Account 343 $ $ $ 344 Total Account 344 $ $ $ 345 Total Account 345 $ $ $ 346 Total Account 346 $ $ $ - Total Production Capital Budget 2028 540,000 20,000 560,000 Production Capital Acct # Project List Material Labor Total 340 Total Account 340 $ $ $ $ $ $ 341 Plant 2 Parking Lot Repair New Roof Switch Gear Building (Sub -Stations) Total Account 341 $ 175,000 $ 140,000 $ $ 10,000 $ 175,000 $ 150,000 $ 315,000 $ 10,000 $ 325,000 342 Total Account 342 $ $ $ $ $ $ 343 Total Account 343 $ $ $ $ $ $ 344 Total Account 344 $ $ $ $ $ $ 345 Total Account 345 $ $ $ $ $ $ 346 Total Account 346 $ $ $ $ $ $ - Total Production Capital Budget 2029 is 315,000 10,000 325,000 Production Capital Budget 2030 Acct # Project List Material Labor Total 340 Total Account 340 $ $ $ $ $ $ 341 New Roof Switch Gear Building (Sub -Stations) Total Account 341 $ 140,000 $ $ 140,000 $ 140,000 $ $ 140,000 342 Total Account 342 $ $ $ $ $ $ 343 Total Account 343 $ $ $ $ $ $ - 344 Plant 1 Control Panel Upgrade Total Account 344 $ 80,000 $ - $ 20,000 $ - $ 100,000 $ - $ 80,000 $ 20,000 $ 100,000 345 Total Account 345 $ $ $ $ $ $ 346 Total Account 346 $ $ $ $ $ $ - Total Production Capital Budget 2030 220,0001$ 20,000 240,000 Electric Distribution Capital Projects Electric Distribution Capital Expenditure Programming Account # Total 2026 2027 2028 2029 2030 360 $ $ $ $ $ $ 361 $ $ $ $ $ $ 362 $ 27,500 $ 17,500 $ 27,500 $ 10,000 $ 10,000 $ 92,500 364 $ - $ - $ - $ - $ - $ - 365 $ - $ - $ - $ - $ 15,000 $ 15,000 366 $ 83,000 $ 83,000 $ 83,000 $ 83,000 $ 83,000 $ 415,000 367 $ 178,000 $ 125,000 $ 75,000 $ 75,000 $ 75,000 $ 528,000 368 $ 157,000 $ 140,000 $ 140,000 $ 140,000 $ 140,000 $ 717,000 369 $ - $ - $ - $ - $ - $ - 370 $ 36,000 $ 36,000 $ 36,000 $ 36,000 $ 36,000 $ 180,000 371 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 5,000 373 is 35,000 1 $ 210, 000 $ 210, 000 $ 210, 000 $ 210, 000 $ 875,00 Total 517,5001 $ 612,5001 $ 572,5001 $ 555,0001 $ 570,000 2,827,500 ELECTRIC DISTRIBUTION PLANT 2026 Acct # Project List Material Labor Total 360 $ $ $ 361 $ $ $ Station Equipment $ 10,000 $ $ 10,000 362 Plant #1 Batteries Plant #1 Sub - Engineering - Willmar Line $ $ 15,000 - $ $ 2,500 - $ $ 17,500 - $ 25,000 $ 2,500 $ 27,500 Total Account 362 364 $ $ $ $ $ $ Total account 364 365 Right of way Clearing $ $ $ - 366 Install Duct $ 18,000 $ 65,000 $ 83,000 Re -Conductor Fdr 19 $ - $ 20,000 $ 20,000 New Developments $ 60,000 $ 15,000 $ 75,000 The Landing Downtown Apartments $ 15,000 $ 5,000 $ 20,000 Burns Manor Apartments $ 15,000 $ 5,000 $ 20,000 367 The Farmhouse memory care $ 7,000 $ 2,000 $ 9,000 Scooters Coffee $ 7,000 $ 2,000 $ 9,000 AAIM Data Center $ 20,000 $ 5,000 $ 25,000 $ 124,000 $ 54,000 $ 178,000 Total account 367 Transformer Replacements $ 50,000 $ 15,000 $ 65,000 Transformer New Developments $ 60,000 $ 15,000 $ 75,000 368 The Landing Downtown Apartments Burns Manor Apartments $ $ 20,000 20,000 $ $ 2,000 2,000 $ $ 22,000 22,000 The Farmhouse memory care $ 20,000 $ 2,000 $ 22,000 Scooters Coffee $ 15,000 $ 2,000 $ 17,000 $ 125,000 $ 32,000 $ 157,000 Total Account 368 369 $ - $ - $ - Meters $ 36,000 $ $ 36,000 370 $ $ $ $ 36,000 $ $ 36,000 Total Account 370 371 Installation on Customer Premises (Security Lights) $ 1,000 $ $ 1,000 373 LED Street Light Conversion $ $ 35,000 $ 35,000 $ $ 35,000 $ 35,000 Total Account 373 Total Electric Distribution Capital Budget 2026 is 329,0071 $ 188,500 517,500 Electric Distribution Capital Projects Acct # ELECTRIC DISTRIBUTION PLANT Project List Material 2027 Labor Total 360 $ $ $ 361 $ $ $ 362 HTI Sub Batteries Total Account 362 $ $ 15,000 - $ $ 2,500 - $ $ 17,500 - $ 15,000 $ 2,500 $ 17,500 364 $ $ $ 365 Right of way Clearing $ $ $ - 366 Install Duct $ 18,000 $ 65,000 $ 83,000 367 Energy Park Total account 367 $ $ 90,000 $ $ 35,000 $ $ 125,000 $ 90,000 $ 35,000 $ 125,000 368 Transformer Replacements Transformer New Developments Total Account 368 $ $ $ - 50,000 60,000 $ $ $ - 15,000 15,000 $ $ $ 65,000 75,000 $ 110,000 $ 30,000 $ 140,000 369 $ - $ - $ - 370 Meters Total Account 370 $ 36,000 $ $ 36,000 $ 36,000 $ $ 36,000 371 lInstallation on Customer Premises (Security Lights) $ 1,000 $ $ 1,000 373 ILED Street Light Conversion $ 175,000 $ 35,000 $ 210,000 Total Electric Distribution Capital Budget 2027 $ 445,000 $ 167,500 $ 612,500 Acct # DISTRIBUTIONELECTRIC Project List Material Labor Total 360 $ - $ $ 361 $ $ - 362 Station Equipment Plant #1 Substation Batteries Total Account 362 $ $ 10,000 15,000 $ $ 2,500 $ $ 10,000 17,500 $ 25,000 $ 2,500 $ 27,500 364 $ $ $ 365 Right of way Clearing $ $ $ - 366 Install Duct $ 18,000 $ 65,000 $ 83,000 367 New Developments Total account 367 $ $ - 60,000 $ $ - 15,000 $ $ - 75,000 $ 60,000 $ 15,000 $ 75,000 368 Transformer Replacements Transformer New Developments Total Account 368 $ $ 50,000 60,000 $ $ 15,000 15,000 $ $ 65,000 75,000 $ 110,000 $ 30,000 $ 140,000 369 $ - $ - $ - 370 Meters Total Account 370 $ 36,000 $ $ 36,000 $ 36,000 $ $ 36,000 371 Installation on Customer Premises (Security Lights) $ 1,000 $ $ 1,000 373 LED Street Light Conversion $ 175,000 $ 35,000 $ 210,000 Total Electric Distribution Capital Budget 2028 ols 141,5001$ 512,50ir Electric Distribution Capital Projects ELECTRIC DISTRIBUTION PLANT 2029 Acct # Project List Material Labor Total 360 $ $ $ 361 $ $ $ 362 Station Equipment Total Account 362 $ $ 10,000 - $ $ $ $ 10,000 - $ 10,000 $ $ 10,000 364 $ $ $ 365 Right of way Clearing $ $ $ - 366 Install Duct $ 18,000 $ 65,000 $ 83,000 367 New Developments Total account 367 $ $ - 60,000 $ $ - 15,000 $ $ - 75,000 $ 60,000 $ 15,000 $ 75,000 368 Transformer Replacements Transformer New Developments Total Account 368 $ $ 50,000 60,000 $ $ 15,000 15,000 $ $ 65,000 75,000 $ 110,000 $ 30,000 $ 140,000 369 $ - $ - $ - 370 Meters Total Account 370 $ 36,000 $ $ 36,000 $ 36,000 $ $ 36,000 371 Installation on Customer Premises (Security Lights) $ 1,000 $ $ 1,000 373 LED Street Light Conversion $ 175,000 $ 35,000 $ 210,000 Total Electric Distribution Capital Budget 2029 $ 410,000 $ 14 0001$ 555,000 DISTRIBUTIONELECTRIC 030 Acct # Project List Material Labor Total 360 $ $ $ 361 $ $ $ 362 Station Equipment $ $ 10,000 $ $ $ $ 10,000 $ 10,000 $ $ 10,000 Total Account 362 364 $ $ $ 365 Right of way Clearing $ 15,000 $ $ 15,000 366 Install Duct $ 18,000 $ 65,000 $ 83,000 367 New Developments $ $ - 60,000 $ $ - 15,000 $ $ - 75,000 $ 60,000 $ 15,000 $ 75,000 Total account 367 Transformer Replacements $ 50,000 $ 15,000 $ 65,000 368 Transformer New Developments $ 60,000 $ 15,000 $ 75,000 $ 110,000 $ 30,000 $ 140,000 Total Account 368 369 $ - $ - $ - 370 Meters $ 36,000 $ $ 36,000 $ 36,000 $ $ 36,000 Total Account 370 371 Installation on Customer Premises (Security Lights) $ 1,000 $ $ 1,000 373 LED Street Light Conversion $ 175,000 $ 35,000 $ 210,000 $ 175,000 $ 35,000 $ 210,000 Total account 373 Total Electric Distribution Capital Budget 2030 425,000 145,000 570,000 Electric Transmission Capital Projects Electric Transmission Capital Expenditure Programming 2026 2027 2028 2029 2030 Account # Totals 350 $ $ $ $ $ $ 352 $ $ $ $ $ $ 353 $ 400,000 $ 335,000 $ $ $ $ 735,000 354 $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 75,000 355 $ - $ - $ - $ - $ - $ - 356 $ $ $ $ $ $ 357 $ $ $ $ $ $ 358 $ $ $ $ $ $ - Total $ 415,000 $ 350,000 $ 15,000 $ 15,000 $ 15,000 $ 810,000 TRANSMISSIONELECTRIC i Acct# Project List Material Labor Total 350 $ $ $ 352 $ $ $ 353 McLeod Sub Relay Replacement Total Account 353 $ 400,000 $ $ $ $ 400,000 $ $ 400,000 $ $ 400,000 354 Pole Repair or Replacement $ 15,000 $ $ 15,000 355 $ $ $ - 356 $ $ $ 357 $ $ $ 358 $ $ $ i i i i TRANSMISSIONELECTRIC i Acct# Project List Material Labor Total 350 $ $ $ 352 $ $ $ - 353 McLeod Sub Relay Replacement McLeod Sub Batteries 3M Sub Batteries Total Account 353 $ 300,000 $ 15,000 $ 15,000 $ - $ $ 2,500 $ 2,500 $ - $ 300,000 $ 17,500 $ 17,500 $ $ 330,000 $ 5,000 $ 335,000 354 Pole Repair Replacement $ 15,000 $ - $ 15,000 355 $ $ $ - 356 $ $ $ 357 $ $ $ 358 $ $ $ 7777 i i i i i TRANSMISSIONELECTRIC i Acct# Project List Material Labor Total 350 $ $ $ 352 $ $ $ 353 Total Account 353 $ $ $ $ $ $ - 354 Pole Repair Replacement $ 15,000 $ $ 15,000 355 $ $ $ - 356 $ $ $ 357 $ $ $ 358 $ $ $ i i TRANSMISSIONELECTRIC i Acct# Project List Material Labor Total 350 $ $ $ 352 $ $ $ 353 Total Account 353 $ $ $ $ $ $ - 354 Pole Repair Replacment $ 15,000 $ $ 15,000 355 $ $ $ - 356 $ $ $ 357 $ $ $ 358 $ $ $ Electric Transmission Capital Projects ELECTRIC TRANSMISSION PLANT 2030 Acct# Project List Material Labor Total 350 $ $ $ 352 $ $ $ 353 Total Account 353 $ $ $ $ $ $ - 354 Pole Repair Replacment $ 15,000 $ $ 15,000 $ $ $ - $ $ $ E $ $ $ $ $ $ i i Electric Fleet, Misc Equipment ee , Misc. Equipment Capitalxpen i ure Programming Account # 2026 2027 2028 2029 2030 Totals 389 $ $ $ $ $ $ 390 $ $ $ $ $ $ 391 $ $ $ $ $ $ 392 $ $ 240,000 $ 365,000 $ 64,000 $ 195,000 $ 864,000 393 $ $ - $ - $ - $ - $ - 394 $ $ $ $ $ $ 395 $ $ $ $ $ $ - 396 $ $ 75,000 $ 110,000 $ $ 32,000 $ 217,000 397 $ $ - $ - $ $ - $ - 399 $ $ $ $ $ $ Administrative 2026 Acct # Project List Electric Gas Total 389 $ $ $ 390 $ $ $ 391 Total Account 391 $ $ $ $ $ $ 392 Total Account 392 $ $ $ $ $ $ 393 Total Account 393 $ $ $ $ $ 394 Total Account 394 $ $ $ $ $ $ 395 $ $ $ 396 $ $ $ 397 $ $ $ 399 $ $ $ Administrative 2027 Acct # Project List Electric Gas Total 389 $ $ $ 390 $ $ $ 391 Total Account 391 $ $ $ $ $ $ - 392 Small Bucket Truck Total Account 392 $ 240,000 $ $ $ $ 240,000 $ $ 240,000 $ $ 240,000 393 Total Account 393 $ $ $ $ $ $ 394 Total Account 394 $ $ $ $ $ $ 395 $ - $ $ - 396 Kubota Backhoe $ 75,000 $ $ 75,000 397 $ - $ $ - 399 $ - $ $ W� Electric Fleet, Misc Equipment Administrative 2028 Acct # Project List Electric Gas Total 389 $ $ $ 390 $ $ $ 391 Total Account 391 $ $ $ $ $ $ 392 Small Bucket Truck Ford Cargo Metering van GMC Sierra 1500 Total Account 392 $ 240,000 $ 65,000 $ 60,000 $ $ $ $ 240,000 $ 65,000 $ 60,000 $ 365,000 $ $ 365,000 393 Total Account 393 $ $ $ $ $ $ 394 Total Account 394 $ $ $ $ $ $ 395 - 396 2017 Ring-O-Matic Vac Machine 110,0001s 110,000 397 - 399 , Wn Administrative 2029 Acct # Project List Electric Gas Total 389 $ $ 390 $ $ $ 391 Total Account 391 $ $ $ $ $ $ 392 GMC Sierra 1500 (461) Total Account 392 $ 64,000 $ $ $ $ 64,000 $ $ 64,000 $ $ 64,000 393 Total Account 393 $ $ $ $ $ $ 394 Total Account 394 $ $ $ $ $ $ 395 $ - $ $ - 396 Directional Drill with trailer and mixer Total Account 396 $ 355,000 $ $ $ 355,000 $ $ 355,000 $ 355,000 397 $ - $ $ - 399 is $ $ General Plant 2030 Acct # Project List Electric Gas Total 389 $ $ $ 390 $ $ $ 391 Total Account 391 $ $ $ $ $ $ 392 Chevy Bolt EV F350 Service truck (141) 2020 Chevy Silverado (598) Total Account 392 $ $ $ 45,000 85,000 65,000 $ $ $ $ $ $ 45,000 85,000 65,000 $ 195,000 $ $ 195,000 393 Total Account 393 $ $ $ $ $ $ 394 Total Account 394 $ $ $ $ $ $ 395 $ - $ $ - 396 2005 Toyota Fork Lift Series 3000 1995 Toyota Fork Lift 2000 Air Compressor 2005 Skidsteer Total Account 396 $ $ $ $ 45,000 32,000 12,000 40,000 $ $ $ $ $ $ $ $ 45,000 32,000 12,000 40,000 $ 129,000 $ $ 129,000 397 $ - $ $ - 399 $ $ $ Natural Gas Distribution Capital Projects Gas Distribution Capital Expenditure Programming Totals 2026 2027 2028 2029 2030 Account# 376 $ 426,000 $ 39,000 $ 21,500 $ 19,000 $ 15,000 $ 520,500 378 $ 33,800 $ 28,500 $ 25,000 $ 18,000 $ - $ 105,300 379 $ - $ - $ - $ - $ - $ - 380 $ 55,000 $ 72,500 $ 72,500 $ 70,000 $ 87,200 $ 357,200 381 $ 110,000 $ 210,000 $ 210,000 $ 210,000 $ 210,000 $ 950,000 383 $ - $ - $ - $ - $ - $ - 385 $ 8,500 $ 28,500 $ 28,500 $ $ $ 65,500 386 $ 6,000 $ - $ - $ $ $ 6,000 387 $ $ $ $ $ $ Total is 639,300 $ 378,500 1 $ 357,500 $ 3 7,000 $ 312,200 1 $ 2,00 500 ; GAS DISTRIBUTIONPLANT 2026 Acct # Project List Material Labor Total 376 Misc Developments & System Improvements City Projects, Hilltop changes, Install 6" line from Plant 1 to School Road bridge Total Account 376 $ 25,000 $ 10,000 $ 370,000 $ 5,000 $ 4,000 $ 12,000 $ 30,000 $ 14,000 $ 382,000 $ 405,000 $ 21,000 $ 426,000 378 Improvements to Regulator Stations Make DRS#11 at plant 1 Dual run at DRS#5 Total Account 378 $ 10,000 $ 14,000 $ 2,300 $ 3,500 $ 2,000 $ 2,000 $ 13,500 $ 16,000 $ 4,300 $ 26,300 $ 7,500 $ 33,800 379 $ - $ - $ - 380 Service Lines, The Landing, Burns manor site $ 40,000 $ 15,000 $ 55,000 381 Meters, AMI and All Fittings $ 100,000 $ 10,000 $ 110,000 383 Residential Regulators $ - $ - $ - 385 Industrial Metering and Regulation $ 5,000 $ 3,500 $ 8,500 386 3M boiler bypass run $ 3,000 $ 3,000 $ 6,000 387 $ - $ - $ - Total Gas Distribution Capital Budget 2026 is 579,300 $ 60,000 $ 639,300 GAS DISTRIBUTIONPLANT 2027 Acct # Project List Material Labor Total 376 Misc Developments & System Improvements City Projects Total Account 376 $ 25,000 $ 7,000 $ 5,000 $ 2,000 $ 30,000 $ 9,000 $ 32,000 $ 7,000 $ 39,000 378 Improvements to Regulator Stations $ 25,000 $ 3,500 $ 28,500 379 $ - $ - $ - 380 Service Lines $ 57,500 $ 15,000 $ 72,500 381 Meters, AMI and All Fittings, Replace AMI Modules $ 200,000 $ 10,000 $ 210,000 383 $ - $ - $ - 385 Industrial Metering and Regulation $ 25,000 $ 3,500 $ 28,500 386 $ - $ - $ - 387 $ - $ - $ - Total Gas Distribution Capital Budget 2027 is 339,50o $ 39,000 $ 378,500 GAS DISTRIBUTIONPLANT 2028 Acct # Project List Material Labor Total 376 Misc. Developments & System Improvements City Projects Total Account 376 $ 10,000 $ 7,000 $ 2,500 $ 2,000 $ 12,500 $ 9,000 $ 17,000 $ 4,500 $ 21,500 378 Improvements to Regulator Stations $ 20,000 $ 5,000 $ 25,000 379 $ - $ - $ - 380 Service Lines $ 57,500 $ 15,000 $ 72,500 381 Meters, AMI and All Fittings, Replacment AMI Modules $ 200,000 $ 10,000 $ 210,000 383 $ - $ - $ - 385 Industrial Metering and Regulation $ 25,000 $ 3,500 $ 28,500 386 $ - $ - $ - 387 $ - $ - $ - Total Gas Distribution Capital Budget 2028 is 319,500 1 $ 38,000 1 $ 357,500 Natural Gas Distribution Capital Projects GAS DISTRIBUTIONPLANT 2029 Acct # Project List Material Labor Total 376 Misc. Developments & System Improvements City Projects Total Account 376 $ 10,000 $ 5,000 $ 2,500 $ 1,500 $ 12,500 $ 6,500 $ 15,000 $ 4,000 $ 19,000 378 Improvements to Regulator Stations $ 15,000 $ 3,000 $ 18,000 379 $ - $ - $ - 380 Service Lines $ 55,000 $ 15,000 $ 70,000 381 Meters, AMI and All Fittings, Replacement AMI Modules $ 200,000 $ 10,000 $ 210,000 383 $ - $ - $ - 385 $ $ $ 386 $ $ $ 387 $ $ $ - Total Gas Distribution Capital Budget 2029 is 2S5,000 1 $ 32,000 IS 317,000 GAS DISTRIBUTIONPLANT 2030 Acct # Project List Material Labor Total 376 Misc. Developments & System Improvements City Projects Total Account 376 $ 10,000 $ 2,000 $ 2,500 $ 500 $ 12,500 $ 2,500 $ 12,000 $ 3,000 $ 15,000 378 $ - $ - $ - 379 $ - $ - $ - 380 Service Lines $ 55,000 $ 32,200 $ 87,200 381 Meters, AMI and All Fittings, Replacement AMI Modules $ 200,000 $ 10,000 $ 210,000 383 $ - $ - $ - 385 $ $ $ 386 $ $ $ 387 $ $ $ - Total Gas Distribution Capital Budget 2030 is 267,000 1 $ 45,200 $ 312,200 Natural Gas Transmission Capital Projects Gas Transmission Capital Expenditure Programming Totals 2026 2027 2028 2029 2030 Account# 365 $ $ $ 256,000 $ - $ $ 256,000.00 366 $ $ $ - $ 13,000 $ $ 13,000.00 367 $ $ $ $ 200,000 $ 200,000 $ 400,000.00 368 $ $ $ $ - $ - $ - 369 $ $ $ $ $ $ 370 $ $ $ $ $ $ 371 $ $ $ $ $ $ Total $' - $ - $ 256,000;1 $ 213,000 ;$ 200,000 1 $ 669000' GAS TRANSMISSION PLANT 2026 Acct# Project List Material Labor Total 365-0100 $ $ $ 366-0100 $ $ $ 367-0100 $ $ 368-0100 $ $ 369-0100 Total $ $ $ $ - $ - $ - 370-0100 Total $ $ $ $ - $ - $ - 371-0100 $ $ Total Gus Transmission Capital Budget 2026 $ $ $ GAS TRANSMISSION PLANT 2027 Acct# Project List Material Labor Total 365-0100 $ $ $ 366-0100 $ $ $ 367-0100 $ 368-0100 $ $ $ 369-0100 $ $ $ 370-0100 $ $ $ 371-0100 $ $ $ Total Gas Transmission Capital Budget 2027 $ - $ - $ - GAS TRANSMISSION PLANT 2028 Acct# Material Labor Total 365 Purchase land and install 950 ft of new road to Trimont MLBV $ 250,000 $ 6,000 $ 256,000 366 $ - $ - $ - 367 $ $ $ 368 $ $ $ 369 $ $ $ 370 $ $ $ 371 $ $ $ - Total Gas Transmission Capital Budget 2028 $ 250,000 $ 6,000 $ 256,000 GAS TRANSMISSION PLANT 2029 Acct# Project List Material Labor Total 365 $ - 366 366 new fence modications at Hanskel $ 12,000 $ 1,000 $ 13,000 new fence and gate around MLBV atTrimont $ 12,000 $ 1,000 $ 13,000 367 Pigging HCA area in Hutchinson, contractor services $ 50,000 $ 150,000 $ 200,000 368 $ - $ - 369 $ $ - $ 370 $ $ $ 371 $ $ $ - Total Gas Transmission Capital Budget 2029 $ 74,000 $ 152,000 $ 226,000 Natural Gas Transmission Capital Projects GAS TRANSMISSION PLANT 2030 Acct# Project List Material Labor Total 365 $ $ $ 366 $ $ $ 367 Piping modifications for Pigging, contractor services $ 50,000 $ 150,000 $ 200,000 368 $ - $ - $ - 369 $ $ $ 370 $ $ $ 371 $ $ $ - Total Gus Transmission Capital Budget2030 $ 50,000 $ 150,000 $ 200,000 Natural Gas Fleet, Misc Equipment Account # Administration Capital Expenditure Programming Totals 2026 2027 2028 i 2029 2030 389 $ $ $ $ 104,516 $ 110,906 $ 215,422 390 $ $ $ $ - $ - $ - 391 $ $ $ $ $ $ - 392 $ $ $ 156,809 $ $ $ 156,809 393 $ $ $ - $ $ $ - 394 $ $ $ $ $ $ 395 $ $ $ $ $ $ 396 $ $ $ $ $ $ 397 $ $ $ $ $ $ - Total $ is is 156,809 1 $ 104,516 $ 110,906 1 $ 372,231' ADMINISTRATION 2026 Acet # Project List Electric Natural Gas Total 392 Annual Vehicle Budget $ $ $ $ - $ - $ - 393 Total Account 393 $ $ $ $ - $ - $ - 394 Total Account 394 $ $ $ $ - $ - $ - Total Administration Capital Budget 2026 $ - $ - $ - ADMINISTRATION 2027 Acet # Project List Electric Natural Gas Total $ $ $ 389 Total Acccount 389 $ - $ - $ - 390 $ $ $ $ - $ - $ - Total Account 390 $ $ $ 391 Total Account 391 $ - $ - $ - 392 Total Account 392 $ - $ - $ - $ $ $ 393 Total Account 393 $ - $ - $ - - Total Account 397 $ - $ - $ - Total Administration Capital Budget 2027 $ - $ - $ - ADMINISTRATION 2028 Acet # Project List Electric Natural Gas Total $ $ $ 389 Total Acccount 389 $ - $ - $ - $ $ $ 390 Total Account 390 $ - $ - $ - $ $ $ 391 Total Account 391 $ - $ - $ - Replace Vehicle 113-2014 Jeep Grand Cherokee Laredo $ - $ 46,120 $ 46,120 392 Replace Vehicle 451 - 2005 Welding Truck (Per Schedule) $ - $ 110,689 $ 110,689 $ - $ 156,809 $ 156,809 Total Account 392 393 $ $ $ $ - $ - $ - Total Account 393 $ $ $ 394 Total Account 394 $ - $ - $ - $ $ $ 395 Total Account 395 $ - $ - $ - Total Administration Capital Budget2028 $ $ 156,809 $ 156,809 Natural Gas Fleet, Misc Equipment ADMINISTRATION 2029 Acct # Project List Electric Natural Gas Total 392 Replace Vehicle 278 - F250 2019 DOT tech (Per Schedule) Replace Vehicle 294 - Chevy 3500 utility box 2018 (Per Schedule) Total Acccount 392 $ - $ - $ 95,008 $ 9,508 $ 95,008 $ 9,508 $ - $ 104,516.00 $ 104,516.00 394 Total Account 390 $ $ $ $ - $ - $ - 395 Total Account 391 $ $ $ $ - $ - $ - Total Administration Capital Budget2029 $ - $ 104,516.00 $ 104,516.00 ADMINISTRATION 2030 Acet # Project List Electric Natural Gas Total 392 replace vehcile 135, 2019, Ford F350 super duty Total Acccount392 $ - $ $ - $ 110,906.00 $ - $ 110,906.00 $ 110,906.00 $ - $ 110,906.00 394 Total Account 390 $ $ $ $ - $ - $ - 395 Total Account 391 $ $ $ $ - $ - $ - Total Administration Capital Budget2030 $ - $ 110,906.00 $ 110,906.00 HUTCHINSON UTILITIES COMMISSION ^I'�xP61Tti'°" Board Action Form Agenda Item: Approve Cost of Service & Rate Design Study with UFS Presenter: Jeremy Carter Agenda Item Type: Time Requested (Minutes): 10 New Business Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: Hutchinson Utilities Commission has identified that performing a Cost of Service (COS) study every 5 years is critical to ensure adequate revenue requirements are met to conduct HUC business in a proper fashion. If circumstances warrant a COS study be completed earlier than every 5 years a recommendation would be brought to the commission for consideration. The last COS study was conducted in 2022 using 2021 & 2022 financial and operational information as part of the test data. Before that, one was completed in 2017 using 2016 test data. The proposed cost of service study to be performed in 2026 will use financial and operational test data from 2024 & 2025 along with future forecasted operational budgets. The COS study entails generating sufficient revenue requirements to recover operating costs necessary to maintain reasonable operating reserves after funding operations, debt service, and capital projects. Please see attached a COS study proposal from the consulting firm UFS, which completed the last several studies for HUC. This amount has been added to the 2026 budget. BOARD ACTION REQUESTED: Approve 2026 Cost of Service and Rate Design Study with UFS Fiscal Impact: $44,700 Included in current budget: Yes Budget Change: PROJECT SECTION: Total Project Cost: Remaining Cost: Hutchinson Utilities Commission Electric and Gas Cost of Service Study December 3, 2025 UTILITY UFINANCIAL FSSOLUTIONS, LLC Corporate location: Utility Financial Solutions, LLC 185 Sun Meadow Court Holland, MI USA 49424 (616) 393-9722 Fax (888) 566-4430 mbeauchamp@ufsweb.com O: 616.393.9722 C: 616.403.5450 Utility Financial Solutions, LLC 185 Sun Meadow Ct UTILITY FINANCIAL I,AL Holland MI, 49424 SOWTIIONIIS LLC December 3, 2025 Jeremy Carter, General Manager Hutchinson Utilities Commission 225 Michigan Avenue Hutchinson, MN 55350 Utility Financial Solutions, LLC (UFS) is pleased to submit a proposal to provide an electric and gas cost of service, financial projection, and rate design for Hutchinson Utilities Commission. Our proposal is based on years of experience navigating complex financial challenges for municipal utilities around the United States. We approach challenges strategically, partnering with your team to understand your goals before using innovative processes and in-depth research to determine the best solution to suit your needs. We stay on top of industry trends and anticipate challenges to help you solve existing problems and prepare your utility for long- term success. Our methodology and educational components have earned us a reputation as the preferred provider of rate studies in the United States. Our project team members are experts in their respective fields and instruct for leading utility groups including the American Public Power Association, Southern Gas Association, and the National Association of Regulatory Utility Commissioners. Our specialized team of accountants, engineers, and economists have years of industry - specific experience to help ensure that you reach your goals. UFS was incorporated in 2001 and brings decades of experience to your utility. For your project, UFS will complete the study and provide an executive report detailing the process to help communicate with members of your governing body and community. The goal of these efforts is to: • Establish and maintain long-term financial stability. • Educate on principals of cost of service and financial planning. • Earn positive engagement from members of government We appreciate the opportunity to submit this proposal and look forward to discussing it with you. If you have questions or need additional information, please contact me at (616) 403-5450. Sincerely, Mark Beauchamp, CPA, MBA, CMA President, Utility Financial Solutions, LLC UFSUTILITY FlI ANCIAL. SOLUTIONS. LLC Table of Contents Understanding of Project Requirements....................................................................................................................1 Summaryof Ability.....................................................................................................................................................3 WorkPlan & Approach...............................................................................................................................................4 FinancialProjection................................................................................................................................................4 ElectricCost of Service Study.................................................................................................................................8 GasCost of Service Study.................................................................................................................................... 12 RateDesign.......................................................................................................................................................... 15 Reviewof Cost Adjustments................................................................................................................................ 20 Renewable Energy — Net Metering and Avoided Cost........................................................................................ 21 Meetings, Reports, and Presentations.................................................................................................................... 22 FirmQualifications.................................................................................................................................................. 23 Resumes.............................................................................................................................................................. 25 References............................................................................................................................................................... 35 ProjectSchedule...................................................................................................................................................... 37 Proposed Professional Services Agreement............................................................................................................ 38 UTILITY FINANCIAL IAL UFSSOLUT11ONS. L L Understanding of Project Requirements Summary of Scope of Services for the Electric and Gas Utilities Described below is an overview of the services UFS will provide. Greater detail is included within the detailed scope of service section. The list below includes sections not directly identified within the proposal but are critical in meeting the needs of the community and the utility department. 1. Development of Long -Term Financial Projections — These studies are included as part of the UFS scope and are critical in development of a long-term rate strategy. Our study incorporates the strategic plan, funding of long-term capital plans, amount, and timing of any financing needs, and balances the financial stability of the electric department. The long-term financial projection and development of key financial targets is discussed in the detailed work plan of our proposal. 2. Cost of Service Study — This study identifies the cost of providing services to each class of customer. Our electric study identifies the cost by customer class for general rate components including variable charges (commodity), capacity related costs (demand), and facilities charges for each customer based on meter sizes or service level. The cost of service study will break out each rate component. Examples of these breakouts include identification of power supply costs, transmission costs, and distribution costs by service level. These breakouts allow the utility to develop rates that meet future challenges including time of use rates, economic development rates, electric vehicle rates, single phase and three phase service rates, or high load factor rates. 3. Customer Rate Designs —The cost of service study provides solid empirical input on sustainable long-term rate structures, however, rate impacts on customers and achieving goals and objectives of each community is a significant factor in proper design of utility rates. UFS' rate design study identifies impacts on customers at various levels of usage. This function assists the governing body in making informed decisions and understanding impacts on customers and the community. 4. Review of Cost Adjustment (optional) — A cost adjustment is one of the most critical factors in ensuring long-term financial stability of the Utility. UFS will review the current implementation process to ensure its properly recovering costs and the fluctuations to customers are limited. UFS cost adjustment studies are easy to use and ensure fluctuations in the true up result in limited impacts on customers. 5. Presentation to Staff & Governing Body — The presentation to staff and the governing body serves two purposes: i. Obtain approval of rate adjustments, rate designs, and to obtain guidance during the rate design process. ii. Equally important is the education provided to the governing body to understand the importance of maintaining financial stability, how rates are used to achieve community goals and objectives, and why certain components such as a customer charge are used by utilities. UFS staff are skilled at obtaining guidance needed to develop rates and providing education to allow the governing body to make informed decisions during this process. Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 1 UFSUTILITY FINANCIAL SOLUTIONS. LL 6. Reports (PDF) L Executive Summary Report - - Summarization of the financial projection results, key financial targets and recommended long term rate track needed to achieve financial stability for the utility. — Summarization of the cost of service results and cost -based rate structures for consideration in design of utility rates. — Description of the major assumptions used in development of the financial projection and cost of service study. — Considerations on future rate adjustments and movement toward cost of service — The executive summary is used to obtain input from the governing body prior to designing utility rates. ii. Rate Design Report- - Summary of anticipated revenue to be received from the rate design and impacts on customers at various usage levels. Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 2 UFSUTILITY ElNANC;lAL SOLUTIONS. LL Summary of Ability A summary of the firm's ability to achieve the Utility's project goals. Introduction The Utility is requesting an Electric and Gas Cost of Service Study and Financial Plan to assess and evaluate the existing rates to ensure the utility operations and maintenance, capital improvement program, depreciation, and debts are adequately funded, while rate impacts are minimized. UFS has the staff available to complete the project in the Utility's desired timeframe. UFS' ability to achieve the Utility's project goals is best demonstrated by our references (noted in a later section) and our organized and well thought out processes outlined below. Project Set Up After project award, if selected, UFS will conduct a kick-off meeting to review the information request and confirm the project schedule and deliverables. As data is gathered by the Utility, UFS will process and enter it into the study. Progress calls will be scheduled to address any questions and to review outstanding data requests. UFS will analyze revenues by completing a revenue "proof" to ensure that the monthly billing units provided calculate out to the reported sales revenue when multiplied by current rate schedules. Revenue Requirements We will analyze operating expenses and test year budgets. Expenses are itemized at the finest level of detail available from the Utility and forecasted for the test year. Expenses are then categorized such that appropriate allocations can be applied, and costs distributed to the contributing rate class. A similar approach is applied to the Utility's fixed asset net book value and depreciation costs and incorporates the capital improvement program for interim and test years. Together, the expenses, depreciation and a rate of return comprise the revenue requirements of the system. These revenue requirements will flow through to both the cost of service study and the financial projection study. Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 3 UFSUTILITY FINANCIAL SOLLITIONS. LL Work Plan & Approach Financial Projection UFS' financial analysis and the subsequent cost of service studies are unique in their ability to easily change from cash basis revenue requirements to Utility Basis revenue requirements. The financial analysis includes both cash basis targets such as cash reserves and debt coverage; and accrual basis targets such as rate of return. UFS studies also include a review of secondary financial targets such as debt to equity ratios, age of system, days cash on hand and working capital requirements as part of the overall assessment of the financial health of the utility. The financial projection will incorporate assumptions such as inflation, anticipated changes in expenses, debt issuances, and capital improvements. The financial projection incorporates targets to help ensure the long-term financial stability of the Utility is maintained or improved and develop a plan for rate adjustments. Target One: Debt Coverage Ratio Based on review of bond issues and debt service schedules, the principal and interest expense will be identified and incorporated into the analysis. We will provide a table as shown below to compare projected Debt Service Ratios with requirements in the Bond Ordinance. Sample Report Table: Debt Coverage Ratio graph and calculation: [brget. 1- Debt, Coverage RatJo M 3.0 m„I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I II I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I Im„ M 1.0 Y V. Y2 Y3 Y4 Y`a Coverage Praia Target Ratio Projected Projected Projected Projected Projected Description Y1 Y2 Y3 Y4 Y5 Net Income $ 996,826 $ 997,462 $ 945,213 $ 826,113 $ 758,497 Add Depreciation/Amortization Expense 2,565,601 2,609,101 2,732,859 2,921,523 3,057,531 Add Interest Expense 764,408 726,408 688,408 648,408 606,408 Cash Generated from Operations $ 4,326,835 $ 4,332,971 $ 4,366,480 $ 4,396,044 $ 4,422,436 Debt Principal and Interest $ 1,714,408 $ 1,676,408 $ 1,688,408 $ 1,698,408 $ 1,706,408 Projected Debt Coverage Ratio (Covenants) 2.52 2.58 2.59 2.59 2.59 Minimum Debt Coverage Ratio 1.40 1.40 1.40 1.40 1.40 Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 4 TIIILIITY FINANCIAL IAL UFSSOLUTIONS. LLC Target Two: Minimum Cash Reserve Calculation To help ensure timely completion of capital improvements and enable the utility to meet requirements for large, unexpected expenditures and risk factors, the recommended minimum level of cash reserves will be identified. Development of the minimum cash reserves considers several factors. A sample list is below: • Working capital • Variations in expenses • Capital improvement programs • Annual bond payments • Exposure to catastrophic events such as extreme weather Sample Report Table: Minimum Cash Reserves III i ^ I:..Ruk'':): C-c) sh III:.'^ : '^ IIL '^ IIL..Ill i '^III : $1.0,000,000 Y1. Y2. Y3 Y4 Yf5 ............ l:11 icctcd Cash Baian ccs vn^°°�-Recorni-nee Idcd I''711"IIIT7UIT7 Cash Projected Projected Projected Projected Projected Description Y1 Y2 Y3 Y4 Y5 Minimum Cash Reserve Allocation Operation & Maintenance Less Depreciation Expense 25% 25% 25% 25% 25% Supply Expense 25% 25% 25% 25% 25% Historical Rate Base 2% 2% 2% 2% 2% Current Portion of Debt Service Payment 83% 83% 83% 83% 83% Five Year Capital Improvements- Net of Bond Proceeds 20% 20% 20% 20% 20% % Plant Depreciated 56% 54% 55% 55% 59% Calculated Minimum Cash Level Operation & Maintenance Less Depreciation Expense $ 6,589,952 $ 6,762,400 $ 6,941,318 $ 7,153,036 $ 7,281,393 Supply Expense 8,381,482 9,722,132 9,982,984 10,548,544 11,075,971 Historical Rate Base 1,527,454 1,689,254 1,769,511 1,877,918 1,877,918 Current Portion of Debt Service Payment 1,391,419 1,401,379 1,409,679 1,416,319 1,462,799 Five Year Capital Improvements- Net of Bond Proceeds 3,939,646 3,939,646 3,939,646 3,939,646 3,939,646 Minimum Cash Reserve Levels $ 21,829,953 $ 23,514,811 $ 24,043,138 $ 24,935,463 $ 25,637,727 Projected Cash Reserves $ 24,692,803 $ 19,224,903 $ 17,829,253 $ 15,047,239 $ 12,790,153 Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 5 UFSUTILITY FINANCIAL SOLLIT11ONS. L L Target Three: Operating Income The optimal target for setting rates is the establishment of a target operating income to consistently fund capital improvements and replacements. Development of this target considers the following: • Interest expense on the outstanding debt • Inflationary increase on asset replacement costs • Assets contributed by customers to the Utility Sample Report Table: Target Operating Income i° .v.�Ilfeiraflrig III iino:)rv.iue $3,000,C. 00 $2,500,000„ $2,000,000 $1,500,000 $1,000,000 $G: 00,000 Y I. Y2 Y3 Y4 Y5 "I'l""I'll"alllw��,jus Led Operating Inconie ..�..�1aa%��. Farget Operating Inconie Description Projected Y1 Projected Y2 Projected Y3 Projected Y4 Projected Y5 Target Operating Income Determinants Net Book Value/Working Capital $ 33,525,928 $ 38,888,526 $ 39,931,938 $ 42,194,174 $ 38,927,644 Outsanding Principal on Debt $ 18,160,200 $ 17,210,200 $ 16,210,200 $ 15,160,200 $ 14,060,200 System Equity $ 15,365,728 $ 21,678,326 $ 23,721,738 $ 27,033,974 $ 24,867,444 Target Operating Income Allocation Interest on Debt 4.21% 4.22% 4.25% 4.28% 4.31% System Equity 7.06% 6.73% 6.87% 6.90% 7.48% Target Operating Income System Equity $ 1,085,106 $ 1,459,590 $ 1,629,338 $ 1,864,944 $ 1,859,437 Target Operating Income $ 1,849,514 $ 2,185,998 $ 2,317,746 $ 2,513,352 $ 2,465,845 Projected Operating Income $ 2,728,770 $ 2,599,641 $ 2,394,956 $ 2,247,337 $ 2,037,669 Rate of Return in % 5.5% 5.6% 5.8% 6.0•% 6.3% Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 6 UFSUTILITY FINANCIAL SOLLITIONS. LL Five -Year Projection Summary The projections will be summarized, and development of alternative rate tracks will be reviewed and compared to each financial target to help ensure the future financial stability of the utility. We will work with Management and the Governing body in review and development of five-year strategies and rate track. All adjustments are tied to the cost of service study for the test year, so results can easily be updated, and sensitivities run within the same study. Projected Summary Financial before Rate Adjustments Projected Adjusting Target Projected Recommended Capital Debt Rate Operating Operating Cash Minimum Improvements Coverage Fiscal Year Adjustments Income Income Balances Cash Plan Ratio Year 1 0.00/0 $ 2,728,770 $ 3,038,480 $ 16,392,621 $ 18,099,160 $ 6,065,000 1.10 Year 2 0.00/0 2,711,845 3,019, 772 14, 592, 541 19,169, 551 2,175, 000 1.11 Year 3 0.00/0 2,622,411 3,061, 319 10, 964, 992 19, 674, 886 4,012, 870 1.11 Year 4 0.00/0 2,473,225 3,149, 568 5,938,354 20, 516, 844 5,420, 360 1.12 Year 5 0.00/0 2,380,491 3,098, 229 4,959,247 20, 862, 261 1,380,000 1.12 Projected Summary Financials with Rate Adjustment and $5.0 Million Bond Issuance Projected Adjusting Target Projected Recommended Capital Debt Rate Operating Operating Cash Minimum Improvements Coverage Fiscal Year Adjustments Income Income Balances Cash Plan Ratio Year 1 2.0% $ 3,350,054 $ 3,038,480 $ 17, 013, 904 $ 18, 099,160 $ 6,065,000 1.26 Year 2 2.0% 3,972,613 3,019,772 22, 477, 689 19,169, 551 2,175, 000 1.44 Year 3 2.0% 4,216,200 3,061,319 21, 453, 355 19, 674, 886 4,012,870 1.53 Year 4 2.0% 4,407, 444 3,149, 568 21, 578, 377 20, 516, 844 5,420,360 1.62 Year 5 2.0% 4,662,614 3,098,229 21, 908, 593 20, 862, 261 1,380,000 1.71 Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 7 TIILIITY FINANCIAL IAL UFSSOLUTIONS. LL The development of the cost of service study incorporates the revenue requirement identified as part of the financial projection. This section describes the additional procedures used in development of the cost of service study and sample outputs from previous studies. Load Profile Information Load profile information identifies how customers use electricity at various times of the day and is critical to ensure the cost of service study is accurate and defensible. UFS works with utility staff in identification of the appropriate sources of load research information. We will analyze information from the following sources: • Electronic meters installed on time of use and other customers • Load research information available from other sources • Analysis of substation feeders • Utilize our data base of existing load research obtained from other utilities The load research information identifies the monthly load factors for each class, how much is being used by the class at the peak time of the day when power supply demand or transmission demand charges are determined. The load research information is compared with the hourly system hourly load data to determine the class contributions. The information is then used to determine the class share of transmission and power supply costs. System Losses Losses can vary substantially depending on system loading and temperature. We will identify the system loss at the various voltage levels of service to customers. To determine the overall system losses, we typically use a three-year average of losses to reduce the impact of changing weather patterns between the last and first month of each year. The losses are then allocated between voltage level such as transmission, substations, primary service, and secondary voltage levels. Development of Allocators The load profile information for each class is used to determine the allocation factors used to allocate expenses based on cost -causation. Examples of cost causation include the identification of the date and time power supply demand charges are determined and each class usage at the time of the peak demands. Allocation factors are developed for each season and developed for specific expenses. A summary of the costs where specific allocation factors need to be developed are listed below. Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 8 UTILITY FINANCIAL IAL UFSSOLUTIONS. LLC Prepare Cost of Service Analysis Customer classes are typically established based on differences in load and usage patterns. How customers use electricity dictates the cost of providing many utility services. The cost of service portion of the study will determine the following: Adjustments neccesary to meet financial targets: target operating income, minimum cash reserves, debt coverage ratio Actual costs compared with projected revenues by class and adjustments neccessary to meet requirements Monthly customer charge, usage charge, and demand charge (for demand metered customers) broken down by customer class A summary of the cost of service analysis is developed similar to the following table: Customer Class Cost of Service Projected Revenues % Change Residential A $ 4,672,077 $ 4,183,897 11.7% General Secondary B 3,032,446 2,974,374 2.0% Street Light Service S 144,370 133,504 8.1% Secondary Energy & Demand C 3,144,714 3,072,174 2.4% Primary Energy & Demand D 20,191,294 20,700,210 -2.5% $ 31,184, 901 $ 31, 064,159 0.4% The cost of service column from the table above identifies the cost to provide service to each class of customers and is compared with the projected revenues from each class. The percent change is the rate adjustment necessary for each class to achieve cost of service. We typically do not recommend rates move fully to cost of service, but as part of the discussions with staff and Council we develop a plan to move classes toward cost of service to minimize rate impacts on any specific customer class. Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 9 UFSUTIILIITY FINANC IAL SOLUTIONS. LL Development of New Rate Classes As part of the initial discussions with management and review of the existing rate tariffs, we will discuss with utility staff if new rate classes should be considered or if existing rate classes should be combined. Rate classes are created based on similarity in usage patterns, but often utilities will develop new rate classes to create incentives for customers to shift usage to periods of time where power supply costs are lower such as on and off peak time periods for time of use rates. Examples of new rate class developments are listed below. • Standby charges — Cost isolated by investment in facilities to serve customers on a standby basis. • Interruptible Loads — Rates to promote interruptible loads that reflect the savings to the Utility. Our study will isolate costs by power supply demand, energy, and transmission to identify the potential cost savings of an interruptible customer. • Seasonal Rates —The cost of service study allocates costs to each rate class based on seasonal time period. The time periods will be identified through review of system loads and power supply and transmission costs. • Time of Use — For time of use rates to be effective in sending the proper price signal, the cost of service analysis is supplemented with marginal costs to identify and recommend appropriate charges on a time of use basis. • Economic Development Rates — Rates can be developed to promote economic development by attracting new customers or expansion of existing customers. It is important economic development rates be developed using a marginal cost approach to ensure existing customers are not unduly subsidizing any reduce rates or fees charged under an economic development program. • Other Potential Rates are listed below: Public education rates Green Rates Net Metering Rates Aggregation Rates New rate designs may result in additional charges for the services provided by UFS. As part of the initial kick off conference call, we should discuss if any potential new rate classes are being considered. Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 10 UFSUTILITY FINANCIAL SOLUTIONS. LL Breakdown of cost of service rate structure by type of expense for each class of customers UFS cost of service studies identify cost in a summary and a detail cost breakdown for each class of customers. For example, the summary of costs identifies the class cost breakdown by customer charge, power supply demand, transmission demand, distribution demand and energy costs. An example is shown below: Power Supply Monthly Summer Winter Customer Distribution FDemand Customer Class Charge Rate Energy Demand Energy Residential A $ 13.65 $ 0.0249 $ 0.0181 $ 0.0479 $ 0.0101 $ 0.0353 General Secondary B 26.60 0.0288 0.0311 0.0550 0.0136 0.0319 Street Light Service S - 0.0175 - 0.0689 - 0.0300 Secondary Energy & Demand C 120.60 8.52 12.09 0.0577 4.88 0.0313 Primary Energy & Demand D 223.90 7.24 12.38 0.0573 4.85 0.0296 In addition, further breakdowns are available in the studies depending on the needs of the utility. A sample detailed breakdown of distribution costs is shown below: kWh kWh KW KW Secondary Primary General Eneregy & Energy & Rate Breakdown Residential A Secondary B Demand C Demand D Demand Breakdown Distribution $ 0.0110 $ 0.0117 $ 3.44 $ 2.95 Transmission 0.0059 0.0084 2.91 2.91 Transformer 0.0027 0.0029 0.73 - Substation 0.0052 0.0057 1.43 1.39 Direct - - - - Subtotal - kWh, kW, HP Charge $ 0.0248 $ 0.0287 $ 8.51 $ 7.25 Customer Breakdown Distribution Customer Costs $ 6.07 $ 12.13 $ 54.59 $ 109.18 Transformer Customer Costs 2.07 4.14 18.62 - Meter O&M 0.57 0.57 2.87 39.11 Meter Reading 0.13 0.13 1.15 2.30 Billing 0.08 0.15 0.70 1.39 Services 1.20 2.41 10.83 8.23 Customer Service 3.54 7.08 31.84 63.68 Customer Charge $/Meter $ 13.66 $ 26.61 $ 120.60 $ 223.89 Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 11 UFSUTILITY FINANOAL SOLUTIONS. LL Gas Cost of Service Study The development of the cost of service study incorporates the revenue requirement identified as part of the financial projection. This section describes the additional procedures used in development of the cost of service study and sample outputs from previous studies. Development of Allocators Customer classes are typically established based on differences in usage patterns. How customers use natural gas dictates the cost of providing many of the services. The cost of service portion of the study will determine the following: • Rate adjustment necessary to meet rate of return requirements of the utility • Cost to serve each class compared with projected revenues • Rate adjustment necessary for class to meet cost of service requirements • Monthly customer charge by class • Commodity charges for each customer class Prepare Cost of Service Analysis Customer classes are typically established based on differences in load and usage patterns. How customers use natural gas dictates the cost of providing many utility services. The cost of service portion of the study will determine the following: • Rate adjustment necessary to meet rate of return requirements of the utility • Cost to serve each class compared with projected revenues • Rate adjustment necessary for class to meet cost of service requirements • Monthly customer charge by class • Commodity charges for each customer class A summary of the cost of service analysis is developed similar to the following table: Projected Customer Class Cost of Service Revenues % Change Residential $ 11,204,309 $ 10,527,368 6.4% Firm Commercial 5,120,204 4,773,971 7.3% Commercial Transportation 17,692 24,148 -26.7% Interruptible Commercial 579,302 618,785 -6.4% Firm Industrial 1,656,619 1,538,041 7.7% Interruptible Industrial 806,610 840,675 -4.1% Interruptible Industrial w/ Hedging 7,511,241 7,492,706 0.2% Firm Industrial Transportaion 303,936 313,940 -3.2% $ 27,199, 913 $ 26,129, 634 4.1% The cost of service column from the table above identifies the cost to provide service to each class of customers and is compared with the projected revenues from each class. The percent change is the rate adjustment necessary for each class to achieve cost of service. We typically do not recommend rates move fully to cost of service, but as part of the discussions with staff and Council we develop a plan to move classes toward cost of service to minimize rate impacts on any specific customer class. Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 12 UFSUTILITY FINANCIAL SOLUTIONS. LL Development of New Rate Classes As part of the initial discussions with management and review of the existing rate tariffs, we will discuss with utility staff if new rate classes should be considered or if existing rate classes should be combined. Rate classes are created based on similarity in usage patterns, but often utilities will develop new rate classes to create incentives for customers to shift usage to periods of time where gas supply costs are lower. Most new rate designs do not result in additional charges for the services provided by UFS unless it requires substantial additional analysis. As part of the initial kick off meeting, we should discuss if any potential new rate classes are being considered. Unbundling Costs by Type of Expense for each Class of Customers To obtain information for setting distribution rates the gas unbundling study isolates revenue requirements into various components required to deliver gas to a customer. As part of the study, we will unbundle the utility costs in the following manner. • Gas supply cost by month • Transportation related costs to City Gate • Local transportation related costs and operation and maintenance costs of the system • Customer service costs for meter installation, meter reading, billing and collections, customer service and any direct cost for specific customer classes Allocation of Revenue Requirements - Example Interruptible Firm Commercial Interruptible Firm Interruptible Industrial W/ Firm Industrial Utility Cost Function Amount Allocation Factor Residential Commercial Transportation Commercial Industrial Industrial Hedging Transportation Gas Firm Commodity Purchases $10,801,079 Firm Sales $ 6,332,619 $ 3,307,888 $ - $ - $ 1,160,573 $ - $ - $ Gas Interruptible Commodity Purchases 5,488,582 Interruptible Sales - - - 351,395 - 482,060 4,655,128 - DistributionOverhead 1,060,154 Distribution Expense 489,931 180,025 1,597 21,253 48,738 30,311 263,003 25,296 Measuring& Regulating Equipment 4,050 Avg&Excess 1,415 654 8 113 258 134 1,335 134 Mains MCF Related 218,416 Total Sales 56,875 29,709 479 6,579 10,423 9,026 87,160 18,164 Mains Demand Related 133,811 Peak Demand 34,844 18,201 293 4,031 6,386 5,530 53,399 11,128 Services- Customer Related 101,227 Weighted Services Distribution 79,366 17,737 234 146 1,345 877 585 936 Regulators Demand 4,672 Peak Demand 1,216 635 10 141 223 193 1,864 389 Regulators MCF's 2,862 Sales Distribution 778 406 7 90 143 123 1,192 124 Meters 193,869 Meter Cost 159,824 29,765 196 20 2,597 339 226 903 Shop & Field Equipment 4,715 NBV 1,769 704 10 117 203 165 1,530 218 Customer Service 302,937 Weighted Services 235,338 52,594 694 434 3,990 2,602 1,735 5,551 Billing 466,458 Billing 365,721 81,733 1,078 674 6,200 4,044 2,696 4,313 GF Equity Transfers 3,008,330 City Transfer Out 1,212,026 549,632 2,780 71,241 177,076 96,788 862,642 36,144 Uncollectible 54,662 Revenues 22,023 9,987 51 1,294 3,217 1,759 15,674 657 Other Revenues/Expenses 2,045,604 Distribution Expense 945,338 347,364 3,081 41,009 94,042 58,486 507,474 48,810 Debt Service& Revenue Financed Capital 1,952,962 BOB 732,655 291,376 4,197 48,314 84,270 68,424 633,626 90,100 Total Expenses $ 25,844,390 $10,671,738 $ 4,918,410 $ 14,715 $ 546,851 $ 1,599,684 $ 760,861 $ 7,089,269 $ 242,867 General Plant 89,464 Avg& Excess 31,251 14,445 176 2,498 5,690 2,950 29,500 2,953 Measuring& Regulating Equipment 25,895 Sales Distribution 7,036 3,675 59 814 1,289 1,117 10,782 1,123 Mains - - - - - - - - - Mains MCF 562,288 Sales Distribution 152,771 79,801 1,286 17,673 27,998 24,244 234,141 24,396 Mains Demand 344,483 Peak Demand 89,703 46,857 753 10,377 16,440 14,236 137,469 28,649 Services Customer Related 261,862 Weighted Services Distribution 205,310 45,883 605 378 3,481 2,270 1,513 2,421 Regulators Demand 15,404 Anytime Peak Average 5,612 2,618 29 401 927 435 4,491 891 Regulators MCF 9,437 Sales Distribution 2,564 1,339 22 297 470 407 3,929 409 Meters 46,240 Meter Cost 38,120 7,099 47 5 619 81 54 215 Other Equipment 448 Distribution Expense 207 76 1 9 21 13 111 11 Total Depreciation Expense $ 1,355,521 $ 532,574 $ 201,793 $ 2,978 $ 32,452 $ 56,935 $ 45,753 $ 421,990 $ 61,068 Revenue Requirements $ 27,199,911 $11,204,312 $ 5,120,203 $ 17,693 $ 579,303 $ 1,656,619 $ 806,614 $ 7,511,259 $ 303,935 Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 13 UFSTIILIITY FII Ail^ OAL SOLUTIONS. LLC Gas Distribution Rate Summary and Breakdown Cost of Service Distribution Charges Monthly General Total Customer Fund Equity Distribution Billing Customer Class Charge Transfers Distribution Rate Basis Residential $ 12.58 $ 0.2133 $ 0.1180 $ 0.3313 Therms Firm Commercial 24.46 0.1851 0.1165 0.3017 Therms Commercial Transportation 45.40 0.0581 0.1123 0.1704 Therms Interruptible Commercial 265.25 0.1084 0.1134 0.2218 Therms Firm Industrial 124.95 0.1700 0.1170 0.2870 Therms Interruptible Industrial 543.71 0.1073 0.1125 0.2198 Therms Firm Industrial Transportation 275.92 0.0199 0.0803 0.1002 Therms Gas Supply Cost by Class and Breakdown Total Commodity Administrative PG&E Local Commodity Customer Class Charge Fee Transportation Rate Billing Basis G1- Residential 0.794 0.028 0.023 0.846 Therm G2 - Commercial 0.794 0.028 0.023 0.846 Therm G3 - Large Commercial 0.684 0.028 0.023 0.736 Therm G6- Municipal 0.794 0.028 0.023 0.846 Therm G8 - Cobug 0.684 0.028 0.023 0.736 Therm G10-Compressed 0.684 0.028 0.023 0.736 Therm Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 14 UTILITY FINANCIAL IAL UFSSOLUT11ONS. LL Rate Design A five-year rate track will be provided with the financial projection, along with a rate design for the requested number of years. Design of utility rates uses input from the cost of service study as guidance on changes to rate classes and the rate components for each rate class. Cost of service results are one factor in design of rates for customers. Other factors must be considered such as impact on customers, social and environmental issues, and philosophy of the utility's governing body. The rate design study identifies the impacts on customers at various usage levels and is listed by rate class, meter size and usage level. UFS will develop and recommend a schedule of electric and gas rates designed to generate adequate revenues from current rate structures and reflect or move toward the recommended rate adjustment. Please note that all rate designs outside of the current rate structure will be charged hourly. Summary of overall rate adjustments for each class — Electric Projected Projected Projected Revenues Under Percentage Revenues Under Proposed Rates Change Customer Class Current Rates Year 1 Year 1 Residential A $ 4,183,897 $ 4,272,065 2.11% General Secondary B 21974,374 3,019,822 1.53% Street Light Service S 133,504 135,687 1.64% Secondary Energy & Demand C 3,072,174 3,125,649 1.74% Primary Energy & Demand D 20,700,210 20,956,423 1.24% Totals $ 31, 064,159 $ 31, 509, 646 1.43% Summary of Overall Rate Adjustments, for each class — Gas Projected Proposed Dollar Change % Change Customer Class Revenues Revenues Year 1 Year 1 Residential $ 10,401,709 $ 10,620,897 $ 219,188 2.1% Firm Commercial 4,702,929 4,804,923 101,994 2.2% Commercial Transportation 24,522 24,859 337 1.4% Interruptible Commercial 605,130 614,652 9,522 1.6% Firm Industrial 1,510,731 1,547,062 36,331 2.4% Interruptible Industrial 822,292 834,935 12,643 1.5% Interruptible Industrial w/ Hedging 7,304,014 7,431,105 127,091 1.7% Firm Industrial Transportation 318,799 325,175 6,376 2.0% Totals $ 25,690,126 $ 26,203,608 $ 513,482 2.0% Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 15 UFSUTILITY EINAINOAL SOLUTIONS. LLC Electric Sample Rate Design, Single Year Projected Residential Rates Rates Current Year 1 COS Monthly Facilities Charge: All Customers $ 6.50 $ 8.50 $ 14.47 Energy Charge: A I I Energy $ 0.0681 $ 0.0666 $ 0.08093 Revenue from Rate $ 3,584,465 $ 3,648,247 $ 4,709,219 Change from Previous 1.8% ChainChainge Iby Moin-t1hilly IkWlh Usage (%) 1.0.0% 8.0% 6.0% 2.0% 4.00 650 900 1.1.50 1.400 1.650 2.0% Yrear a. Average Monthly Bill Increase by Usage Year 1 Year 1 All Energy $ 400 $1.40 4.1 650 $1.03 2.0% 900 $0.65 1.0% 1150 $0.28 0.3 1400 $0.10 -0.1 % 1650 $0.47 -0.4% 1900 $0.85 -0.6% 2150 $1.22 -0.8% 2400 $1.60 -0.9% 2650 $1.97 -1.1% Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 16 UFSUTILITY FINANCIAL SOLLITIONS. LLC Electric Sample Rate Design, Multi Year Projected Residential Rates Rates Current Year 1 Year 2 Year 3 COS Rates Monthly Facilities Charge: All Customers $ 11.75 $ 13.25 $ 14.75 $ 16.25 $ 18.86 Energy Charge: Winter All Energy $ 0.1018 $ 0.1019 $ 0.1020 $ 0.1020 $ 0.10383 Summer Block 1(First 20 kWhs per day) 0.1100 0.1100 0.1100 0.1070 0.10383 Summer Block 2 (Excess) 0.1249 0.1240 0.1220 0.1190 0.10383 Revenue from Rate $ 10,337,868 $ 10,553,155 $ 10,762,483 $ 10,879,557 $ 11,175,415 Change from Previous 2.1% 2.0% 1.1% Change by Mon-Ny kWh Usage 6.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% .„.,.... I ,,,,,,,,,,,u,u,u,u, ��...,,.„.,.,m,.,r„.,r..,r..,r..,r.,,,r..... I,,,��,,,„��„��,,,,,,,��,��,,,,,,,n�n 400 500 600 700 800 900 1.000 1.1.00 1.200 1.300 nunuuuuuuuuuuuuuuuNea 1 -uououou -Yea 3 Average Monthly Bill Increase by Usage Year 1 Year 1 Year 2 Year 2 Year 3 Year 3 All Energy j $ % $ % $ % 400 $1.52 2.8% $1.53 2.8% $1.10 1.9% 500 $1.52 2.4% $1.53 2.3% $1.00 1.5% 600 $1.53 2.0% $1.54 2.0% $0.90 1.2% 700 $1.20 1.9% $1.49 1.8% $0.80 1.00/0 800 $1.47 1.7% $1.42 1.6% $0.70 0.8% 900 $1.44 1.6% $1.35 1.5% $0.60 0.7% 1000 $1.41 1.5% $1.29 1.4% $0.50 0.5% 1100 $1.38 1.4% $1.22 1.2% $0.40 0.4% 1200 $1.35 1.3% $1.15 1.1% $0.30 0.3% 1300 $1.32 1.2% $1.09 1.00/0 $0.20 0.2% Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 17 UFSTIICIITY FII ANC] L SOLLITIONS. L LC Gas Sample Rate Design, Single Year Projected Residential Rates Rates Current Year 1 COS Rates Monthly Facilities Charge: All Customers $ 8.50 $ 10.00 $ 13.94 Base Commodity Charge: All CCF $ 0.66900 $ 0.63232 $ 1.26140 Incremental Cost of Gas: All CCF $ 0.30823 $ 0.30823 $ 0.30823 BTU Factor: All CCF $ 1.03259 $ 1.03259 $ 1.03259 Revenue from Rate $ 3,211,368 $ 3,232,650 $ 5,180,692 Change from Previous 0.7% 10.0% 8.0% 6.0% 4.0% „ 2.0% 0.0% 10 -2.0% Change by Monthly CCF Usage (%) 15 20 25 30 35 Monthly $ Change by Usage Al I CCF Year 1 Year 1 10 $1.13 4.0% 15 $0.95 2.5% 20 $0.77 1.6% 25 $0.58 1.0% 30 $0.40 0.6% 35 $0.22 0.3% 40 $0.03 0.0% 45 $0,' IS -0.2% 50 $0,33 -0.3% 55 $u; .15"? -0.4% 40 45 50 55 Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 18 UFST II iL IIT Y lI I A li`~~CCI A L SOLLIT11ONS. LL Gas Sample Rate Design, Multi Year Projected Residential Rates Rates Current Year 1 Year 2 Year 3 1 COS Rates Monthly Facilities Charge: All Customers Base Commodity Charge: All CCF Incremental Cost of Gas: All CCF BTU Factor: $ 8.50 $ 10.00 $ 11.50 $ 13.00 $ 0.66900 $ 0.63232 $ 0.62289 $ 0.61409 $ 0.30823 $ 0.30823 $ 0.30823 $ 0.30823 $ 13.94 $ 1.26140 $ 0.30823 All CCF 5 1.03259 $ 1.03259 $ 1.03259 $ 1.03259 $ 1.03259 Revenue from Rate $ 3,211,368 $ 3,232,650 $ 3,325,002 $ 3,418,997 $ 5,180,692 Change from Previous 0.7% 2.9% 2.8% Year.l ---�--,Year2:-:Yeary Average Monthly Bill Increase by Usage Year 1 Year 1 Year 2 Year 2 Year 3 Year 3 A I I CCF $ °% $ °% $ °% 10 $1.12 6.2% $1.40 7.2% $1.41 6.8% 15 $0.93 4.1% $1.35 5.6% $1.36 5.4% 20 $0.74 2.7% $1.31 4.6% $1.32 4.4% 25 $0.55 1.8% $1.26 3.8% $1.24 3.7% 30 $0.36 1.1% $1.21 3.2% $1.23 3.1% 35 $0.17 0.5% $1.16 2.7% $1.18 2.7% 40 $0,0';2!'. 0.1% $1.11 2.4% $1.14 2.4% 45 $0,';2!'.0 -0.3% $1.06 2.1% $1.09 2.1% 50 $I: -39 -0.6% $1.01 1.8% $1.05 1.8% 55 $0,'!r:18 -0.8% $0.96 1.6% $1.00 1.6% Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 19 UFSTIILIITY FINANOAL. SOLUTIONS. ILL Power Cost Adjustments (PCA) are used by many municipal electric utilities to help ensure power costs are recovered from customers in a timely fashion and the electric utility remains financially stable. A PCA reduces the utility's risk and exposure to changes in power supply costs or changes in transmission charges and helps ensure retail customers are not over or undercharged for electricity in any given year. A PCA must be implemented properly to ensure dramatic changes in the PCA do not occur on a month to month basis leading to customer complaints. UFS has implemented PCAs for electric utilities around the nation and has extensive experience in identifying the most appropriate method that balances customer impacts while maintaining the financial health of the utility. UFS will review the risks and monthly power cost to identify the most appropriate method. Purchased Gas Adjustments (PGA) are used by many municipal gas utilities to help ensure gas costs are recovered from customers in a timely fashion and the gas utility remains financially stable. A PGA reduces the utility's risk and exposure to changes in gas supply costs, changes in transportation charges, and helps ensure retail customers are not over or undercharged for gas in any given year. A PGA must be implemented properly to ensure dramatic changes in the PGA do not occur on a month to month basis leading to customer complaints. UFS has implemented PGAs for gas utilities around the nation and has extensive experience in identifying the most appropriate method that balances customer impacts while maintaining the financial health of the utility. UFS will review the risks and monthly gas cost to identify the most appropriate method. Listed below are general methods used by utilities. Several variations of each method exist for either PCA or PGA. • Monthly (Quarterly, Semi Annual) — Typically calculated each month or period of time such as quarterly. This methodology tends to result in dramatic changes in the PCA or PGA at the time of the true up and may result in increased complaints from customers. • Annual —The power costs are trued -up each year, and significant changes can occur at the beginning of each year. Also, the Utility must maintain significant reserves to provide funds to cover the fluctuations in the power costs. • Rolling Average —Tends to smooth out the fluctuations while maintaining the financial integrity of the utility. Costs are reviewed each month with small changes occurring with the goal of balancing power or gas costs at the end of a specific period of time such as 12 months. • Forecasted Monthly Review — Based on the annual budget then adjusted monthly to reflect actual power or gas supply costs. Implementing a new power cost adjustment mechanism or reviewing an existing mechanism may result in additional charges for the services provided by UFS. Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 20 TILITY FINANCIAL. UFSSOLUT11ONS. I_L The growth of customer installed Photovoltaic (PV) may result in under -recovering the utilities' fixed costs due to inappropriately structured residential rates. Many utilities face the following residential rate structure issues: • Customer charges have historically been held low • Many states require net metering customers with renewables rather than pricing on avoided costs • Inverted block rate structures that shift fixed cost recovery to outer rate blocks • Metering and billing limitations • Historical practices of recovering fixed costs in the energy component of the rate These issues have resulted in unstable revenue recovery and under -recovery of costs from customers installing distributed generation. This also causes cost shifts and subsidies. The current rate structures may artificially over- value or under -value distributed generation. S V 20.00 $IiP+OM $80,0 i $60.00 S40, 0 $2@ dPti Typical Residential Summer Customer (Average monthly consumption -: 798 kwh's) costs Revenue If the customer installed a 5kW PV generator producing 700 kWh (estimated production from a 5kW PV) the billed energy consumption is reduced to less than 100 kWh's. When the Utility applies its current rates to the remaining usage the revenues recovered from the customer are approximately $23.00, however, the cost to provide electricity to the customer is $45.00. This occurs because residential rate structures do not align with costs. $'50.00 $45= $40.00 $35.00 $@0.a@ $a^,.nn1 $1 S.Q1(A 51ra.n@ $ 5 i@0 5. Typical Residential Sum merCustomer Installation oi5kW PV Costs Revenue For this utility, the under -recovery occurs because distribution costs should be recovered through a demand charge and customer charges rather than through the energy (kWh) charge. Avariety of difficulties and limitations exist to correct the rate structure, although some can be easily corrected. They include: • Limitation on metering & billing systems • Education of the governing body & customers • Opposition from interveners and special interest groups • Past practices in rate designs • Incorrect price signals sent by certain Joint Action Agencies Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 21 UFSTIILIITY FINANOAL. SOLUTIONS. ILL Meetings, Reports, and Presentations Meetings The following meetings are anticipated (conducted virtually): • Kickoff meeting — Clarify scope of services and expectations of management • Data Verification —Verify data collected • Financial Review — Review assumptions used in the long-term projections • Review draft reports with management • Presentation as requested by management such as review report with Governing body Format of Reports UFS reports are typically separated into the reports listed below: • Power Point Summary — A concise presentation of study results that is shared with management and staff. This summary will include graphs, charts, tables, and findings. • Executive Summary Report (PDF) — An overview that identifies the objectives, process, and results of the rate study in a clear and concise format. • Rate Design —The rate design includes the following: Comparison of the current and proposed rates. Expected revenues generated from proposed rates. Impact on customer classes at various usage levels or load factors within each rate class. Presentation of Cost of Service and Rate Design Study A critical aspect of the study is the clear and concise presentation to the governing body of the utility. UFS professionals are skilled at explaining and working with advisory and governing bodies to ensure decisions are based on information they can understand and apply to their community. Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 22 UFSTIILIITY FINANCIAL. SOLUT11ONS. IL L Firm Qualifications This section discusses UFS' experience and qualifications assisting municipalities with cost of service and financial analysis. UFS personnel are recognized as national experts and include highly qualified, motivated, experienced, and knowledgeable professionals. UFS' reputation has resulted in industry leading status shown by the number of clients we serve, our frequent requests to instruct classes and speak at conferences around the nation and our frequent requests to serve as expert witnesses on rate related issues. UFS' experience includes completion of rate studies in 43 states, Guam, several Caribbean Islands and Canada. This provides UFS with the experience and knowledge to provide creative solutions. UFS is the industry leader in electric, water, and sewer studies. Our national experience is summarized below: In Demand 4 UFS has completed numerous rate studies for electric, water, sewer, gas, telecommunications, and solid waste. Diverse 4 UFS is the preferred provider of rate services for municipalities, electric cooperatives, and members of Joint Action Agencies. Innovative 4 UFS is leading the industry in development of Time of Use rates including variations of Variable Peak Pricing, Dynamic Pricing and Real Time Pricing. Reliable 4 Our methodologies on establishing financial targets and cash reserve policies have become industry standards and have assisted utilities in improving bond ratings with Fitch, S&P and Moody's. Supported 4 Our establishment of rates for customers located outside city limits have been accepted in State Courts and resulted in UFS becoming expert witnesses and arbitrators on rate disputes across the United States. Experienced 4 UFS has provided electric, gas, water, wastewater, and telecommunications services to some of largest utilities in the country including Nashville TN, Knoxville TN, Sacramento Municipal Utility District, Rochester MN, Imperial Irrigation District CA, Austin TX, Huntsville AL, Columbia MO, and Lansing MI. Knowledgeable 4 We are frequent speakers on special rate topics around the United States including APPA's National Conference, APPA's Educational Institutes, E&O Workshop, Legal Conferences, Business and Financial Workshop, numerous webinars topics and state conferences in over 15 states. A sample of recent presentations are listed below: Development of Key Financial Targets Information provided by Cost of Service Studies Cash Reserve Policies for Municipal Utilities Development of Utility Extension Policies Cost of Service Challenges and Solutions Appropriate levels of Contributions to City (Payment in lieu of Tax) The Rate Race Development of Avoided Cost and Rate Designs for Distributed Generation Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 23 UFSTIILIITY FINANOAL. SOLUTIONS. ILL Teachers 4 UFS personnel are the instructors on cost of service and financial planning courses offered through the American Public Power Association (APPA), American Water Works Association (AWWA), and the National Association of Regulatory Utility Commissioners (NARUC), EUCI, and Southern Gas Association. UFS' industry leading status has resulted in courses on distributed generation to the US Department of Energy. These courses include the following: Basic Cost of Service Intermediate Cost of Service Advanced Cost of Service Financial Planning Utility Financial Check-up Cost of Service and Rate Design for Distributed Generation Development of Line Extension Policies Rate Structures to promote Energy Conservation Rate Structures to create Revenue Stability Advanced issues in Rate Design Advanced issues in Cost Allocations Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 24 UFSTIILIITY FlIA IAL. SOLUTIONS. IL L UFS holds a commitment to the following: • Quality Control — Proper quality control and management help ensure the accomplished work is in alignment with the project scope, is completed timely, within budget and the results are accurate and defensible. The quality controls developed by UFS are specific to utility rate studies and are based on our prior experience working with electric utilities. • Timeliness of Studies — Part of the quality control includes the timely completion of the rate studies. UFS experience in completing studies provides us the ability to complete the studies as requested and discussed in the initial kick-off meeting. • Financial Strength — UFS commenced business in 2001 and has the highest financial rating by Dunn and Bradstreet. • Independence — UFS maintains its independence throughout its engagements to help ensure unbiased recommendations to the governing bodies. We do not provide services that could impair our independence such as engineering, accounting, or auditing services. • Diverse Staff Backgrounds — Proper development of rate studies require knowledge in accounting, finance, economics, and engineering. UFS staff has diverse backgrounds that include degrees in accounting (CPA), engineering, finance, economics, information technology and degrees in Water Purification Technology. Proposed service team including titles: Mark Beauchamp — President Dawn Lund —Vice President Dan Kasbohm — Manager Mike Johnson — Manager Chris Lund — Business and Technology Manager Jillian Jurczyk — Manager Joan Bakenhus — Senior Financial Analyst Robert Blank — Senior Financial Analyst Janel Albrecht — Financial Analyst Jayde Dono — Financial Analyst Staff Availability UFS has adequate staff available to complete the tasks in the timeline requested. Resumes The next section consists of resumes of UFS team members. Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 25 UFSUTIILIITY FlIA IAL. SOLUT11ONS. LLC Mark Beauchamp, CPA, CMA, MBA President, Utility Financial Solutions, LLC Email: mbeauchamp@ufsweb.com Cellular: 616-403-5450 Location: Holland, MI Education • AAS Water Purification Technology • ABA Business Administration • BBA Major —Accounting • MBA Master's Degree in Business Expert Witness Service • Detroit Edison vs. Ameritech — Provided expert witness services for Detroit Edison on development of Pole Attachment Rates for Ameritech • Nebraska State Unicameral — Served as an expert witness before the State of Nebraska Unicameral on proper rate setting and credits to provide customer installed renewable generation • Dayton Power & Light — Provided expert witness services on pole attachment rates. Case was resolved prior to Court appearance • Coldwater Board of Public Works — Provide expert witness services on rate challenge by large industrial customer. Case was dropped after deposition was provided • Smethport PA— Provided deposition and responses to Pennsylvania Public Service Commission on Rate Filing for Smethport Industry Involvement • Member of the American Public Power Association • Member of the American Water Works Association • Member of the Institute of Management Accountants • Speaker at national conferences on Financial Planning for Municipal Utilities, Pricing for Water Utilities, Pricing Fiber Optic backbone systems, Unbundling Electric Rates, and Ways to Attract and Retain Customers • Author of articles appearing in national magazines and newsletters regarding pricing fiber optics, training electric rates, and designing water rates License and Qualifications • Class "A" license in wastewater treatment from the State of Michigan • (CPA) Certified Public Accountant — Wisconsin • (CMA) Certified Management Accountant — Institute Certified Management Accountants Course Instructor • American Public Power Association (APPA) • Advanced Cost of Service Course (Cash Basis & Utility Basis of Ratemaking) • Intermediate Cost of Service (Cash Basis & Utility Basis of Ratemaking) • Basic Cost of Service (Cash Basis & Utility Basis of Ratemaking) • Financial Planning for Municipal Utilities • Financial Planning for Board & Councils • Financial Planning and Rate Setting for Managers (Part of Managers Certificate Program) • American Municipal Power (AMP) • Financial Planning and Rate Designs for Electric Utilities • Michigan State University • Advanced Issues in Cost Allocation (Utility Basis of Rate Making) • Retail Costing and Pricing of Electricity • Wholesale Costing and Pricing of Electricity • Southwest American Water Works Association • Michigan Rural Water Association • Cost of Service & Rate Making for Water Utilities • Michigan Finance Government Officers Association • Cost of Service & Rate Making for Water & Wastewater Utilities Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 26 UFSTIILIITY FINANCIAL. SOLUT11ONS. LLC Dawn Lund Vice -President, Utility Financial Solutions, LLC Dawn has over 25 years of experience pricing utility services for electric, water and wastewater. She works with utilities across the country on cost of service, financial planning, and a variety of complex financial analyses. She also teaches Gi cost of service and financial planning courses for the American Public Power Association and MI-AWWA. She is also a regularly requested speaker for various regional and national organizations. Email: dlund@ufsweb.com Cellular: 231-218-9664 Location: Traverse City, MI Cost of Service (COS) • Completed electric, water, and wastewater cost of service and rate design studies for utilities across the country, Guam, the Caribbean, and Canada • Determining appropriate allocations of overhead costs between utility services Long-term Financial Analysis • Development of long-term sales and expense projections for electric, water, and wastewater utilities • Development of long-term financial plan and rate track for electric, water, and wastewater Presentation & Training • Presentations to City Councils and Boards for approval of utility rates and proposed rate tracks • Instructor for APPA's Financial Planning and Basic Cost of Services courses and MI-AWWA • Monthly presentations to various organizations on topics such as: cost of service, financial planning, key financial targets, cash policies, and how to explain rate increases to the end user, cost of services challenges/solutions, and introduction to allocation studies Rate Design • Development of equitable rates between inside - city and outside -city customers • Development of wholesale contract rates • Development of special rates; Economic and Time of Use • Development of Connection Fees • Development of rate designs to meet financial objectives of utility Other Professional Involvement • Member of AWWA Finance, Accounting, Management and Controls Committee • Member of AWWA Rates and Charges Committee • Member of MI-AWWA Education Committee • Developed MI-AWWA Water Academy material for Cost of Service and Financial Planning • Developed the Basic Cost of Service and Financial Planning courses for APPA • Preferred consulting firm for Hometown Connections Financial Planning, Cost of Service, and Rate Design Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 27 UFSTIILIITY FINANCIAL. SOLUT11ONS. ILLC Dan Kasbohm Manager, Utility Financial Solutions, LLC Dan joined Utility Financial Solutions, LLC in 2007 and has experience in conducting cost of service and financial analysis for electric, water, wastewater, stormwater and cable utilities around the nation. He has a Bachelor of Science degree in Engineering and has helped public utilities improve revenue stability, set fair and equitable rates, prepare for large capital projects, and help answer questions to many of the unique challenges our industry faces today. Dan is a co - instructor for the Cost of Service course for the American Public Power Association. Email: dkasbohm@ufsweb.com Cellular: 616-402-7045 Location: Grand Haven, MI Cost of Service (COS) • Utilities include Electric, Gas, Water, and Sewer • Functionalization & classification of assets and costs related to: — Maintaining customer connection to system — Variable drivers in production of energy — Fixed drivers to support various customer sized loads • Development of fair & equitable allocators to share assigned costs in each customer class • Identification of unbundled costs that support rate design and customer price signals Financial Plan & Key Financial Objectives • Determine proper revenue requirements (utility costs to be recovered through published rates) • Provide detailed long-term view of financials • Develop strategy to meet key financial objectives (debt affordability, minimum cash levels, optimal operating income position, infrastructure age) • Utilization of financial plan and objectives to provide optional future revenue adjustments with the least impact on utility's customer bills Presentation & Training • Presentation of results to each Utility's governing body to help highlight key study findings for: — Needed revenue increase — Modification of rate components — Equitable adjustments toward COS • Training of Utility staff on use of study results, financial projection, and COS calculations • Co -Instructor for the American Public Power Association Academy for Cost of Service Rate Design • Adjusting current rate structures with focus on: — Revenue impacts on Utility financials — Customer bill impacts at various usage levels — Gradual shift of rate components to COS — Improved revenue stability to Utility — Increased fairness of revenue recovery • Development of new rates structures including: — Time of Use (seasonal, daily, hourly) — Distribution demand bill component — Capacity reservation rates — Standby service rates — Rephrasing rate descriptions to more clearly define application of each rate class — Unique large power rates (interruptible, high load factor, pass -through supply) — Coincidental -Peak Rates — Street lighting rates Development of Other Effective Tools • Power Cost Adjustment (PCA) mechanisms based on supply costs, cash position, and financial goals • Unbundled street light cost of service by lamp • Policy to identify amount a utility should contribute towards new customer connections • Policy to offer an economic development discount that doesn't financially impact current rates • Implementation of a justified minimum cash policy • Identify cost variations among city & rural meters • Load profile analysis to identify utility and customer usage patterns • Calculation of fees for standard utility work • Rate surveys for similar nearby utilities Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 28 UFSTIILIITY FINANCIAL. SOLUT11ONS. LLC Mike Johnson Manager, Utility Financial Solutions, LLC Mike joined Utility Financial Solutions, LLC in 2011 and has experience assisting utilities since 1995. He has a Higher National Diploma in Mechatronics (Combined Electrical/Mechanical Engineering). Mike is experienced in cost of service, rate making, financial/operational modeling, automation, electric utility operations, and power supply. Email: mjohnson@ufsweb.com Cellular: 608-230-5849 Location: Madison, WI Cost of Service (COS) • Development of cost of service studies for electric, communication, gas, water, and wastewater utilities • Forecasts utility revenue requirements • Cost allocation model development Long-term Financial Analysis • Develops utility financial analysis models • Identifies growth and load forecasting • Models rate and revenue effect for customer change within utilities (loss of customers/additional load) • Develops target metrics for utilities including cash policies, operating income, debt coverage Expert Witness Services • Prepared and testified on filings to Public Utility Commission Rate Design • Provides cost of services class allocations and rate making • Designs time of use rates • Identify effects for different usage patterns within the same class • Development of rates for alternative fuels and vehicles • Evaluate marginal costs and development of line extension policies and economic development rates Other Utility Tools • Computes cost functionalization and allocation systems for designing and managing complex changes • Evaluates data and system integration issues associated with new software implementations • Provides market analysis, bidding, and settlement processes analysis • Identification and valuation of fixed assets • Assessment of utility value for sales/purchase • Development of risk mitigation tools, power/fuel cost adjustment mechanisms Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 29 UFSTIILIITY FINANOAL. SOLUTIONS. LLC Chris Lund Business &Technology Manager, Utility Financial Solutions, LLC Chris has a bachelor's degree in Business Administration with concentration in Computer Science and Speech Communications. He has been a technology and management consultant since 1992 and has utility experience since 2005. Chris is i an employee of UFS since 2012 and has also sub -consulted on a variety of technology projects for UFS since 2003. Email: clund@ufsweb.com Cellular: 231-342-9798 Location: Traverse City, MI Financial Consulting • Completed cost of service and rate design studies for electric, water, wastewater, telecommunications, and refuse utilities • Designed, wrote, and implemented long term financial projection model including revenue requirements and rate track • Determined avoided cost for solar (photovoltaic - PV) and wind for renewable energy rates • Lead consultant for electric vehicle (EV) rates and service study • Conducted multiple fiber optic cost of service and rate design studies • Presentations to Governing Bodies for approval of utility rates and proposed rate tracks Data Analytics • Data mining and analysis specialist for electric load data research • Specialist with data mining, data conversion and custom reporting • Experienced with various ODBC (database connectivity) • Implemented job costing solution for manufacturing companies • Designed, written, implemented, supported multiple, custom bar coding and data collection systems for wholesale distribution and manufacturing organizations • Data collection systems pushed data to payroll for time and attendance, automated inventory tracking and job costing Technology Experience • Experienced in Microsoft Excel automation — including payroll data, job costing and automated billing (office automation) • Experienced in Microsoft Access custom database, programming, and reporting — including electronic data interchange (EDI) mapping using Microsoft VBA • Lead consultant for multiple mission critical, corporate wide enterprise resource planning (ERP) technology solutions • Implemented, trained, and supported multiple telecommunications projects • Implemented and supported some of the first voice over internet protocol (VOIP) telecommuting systems • Guide management with technology related strategy and business integration • Modification and complete custom program solutions on midrange and PC • Wrote automated bill of material (BOM) purchasing forecasting system • Specify, install, and maintain mission critical PC network infrastructure, servers, workstation, and related software • Experienced in network security and virtual private network (VPN) technology • Implemented and supported web storefronts integrated with corporate backend database solution for inventory management, order processing, billing, and account status Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 30 UFSUTILITY FINANCIAL. SOLUT11ONS. LLC Jillian Jurczyk Manager, Utility Financial Solutions, LLC Jill has been with UFS since 2013. She has a Bachelor's degree in Mathematics and a Master's degree in Applied Economics from Johns Hopkins University. Jill has populated and analyzed cost of service models, developed long-term financial projections, and designed rates for utilities. Jill specializes in econometric modeling and statistical analysis to project sales and usage. She has worked with a variety of econometric software packages and is competent in handling jseasonality, trend, heteroscedasticity, and other economic inefficiencies that arise in data analysis. E-mail: jjurczyk@ufsweb.com Cellular: 616-283-8502 Location: Holland, MI Cost of Service (COS) Prepares and analyzes cost of service studies to determine appropriate allocations of cost between customer classes, including identification of fixed and variable costs, and assigning appropriate cost drivers to utility expenses, such as kWh sales and non - coincident peak. Long-term Financial Analysis Extensive experience utilizing client data to build financial projections, determine revenue requirements, forecast utility sales, and develop cost allocations. Rate Design Identifies cross -subsidization between rate classes through cost of service analysis and develops rate design plans to assist in moving utilities toward more equitable rate structures. Analyzes customer bill impacts at various usage levels and identifies revenue stability of rates. Presentation/Training Skilled at presenting study results to management and educating governing body of utility. Speaker at various industry conference events. Management Excels at managing project workflow and timelines, including consistent and clear client communication among UFS, client, and other stakeholders, throughout the project, and ensuring complete fulfillment of project deliverables. Other Utility Tools • Technical expertise in conducting long-term econometric forecasts for electric and water load forecasting • Proficient at using system and class load data to develop load curves, calculate load factors, and identify system coincidence factors • Conducting time of use studies, including identification of on -peak and off-peak time periods, and identifying time -based cost to adequately set rates • Development of power cost adjustment methodology that allows for proper power cost recovery • Setting avoided cost rates for distributed generation resources • Development of sales and expense projections to adequately determine a financial plan and rate track • Innovating rate designs to meet the financial and social objectives of the utility • Evaluating rate impacts at various usage levels prior to rate implementation Certifications and Professional Affiliations • American Water Works Association • Solid Waste Association of North America • 2024 American Public Power Association Business and Finance Committee Corporate Officer • Women in leadership, Cornell University Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 31 UFSUTILITY FlINANCIAL. SOLUT11ONS. LLC Joan Bakenhus Senior Financial Analyst, Utility Financial Solutions, LLC Joan has experience working with municipal utilities from 1986-1996 and came back to industry in 2006. Joan has a degree in Business Administration. Joan has worked as a Rate Analyst for one of the largest public power systems in the nation (Lincoln Electric System) and for Utility Financial Solutions, LLC since 2006. Joan is experienced in development of long-term financial plans, rate design models and cost of service studies for electric, water, and wastewater utilities. Email: jbakenhus@ufsweb.com Cellular: 402-450-7544 Location: Nebraska Cost of Service (COS) • Working with Utilities to identify information requirements to complete cost of service and financial plans • Set up and develop utility revenue requirements, cost of service program and utility revenue proof • Balancing and set up of models for development of cost of service for water, wastewater, and electric utilities to determine commodity and customer charges • Responsible for analysis, preparation and updating cost of service models for several electric, water utilities Long-term Financial Analysis • Development of long-term financial forecasts for water, wastewater, and electric utilities to determine the amount of timing of rate adjustments Rate Design • Balancing and set up of models for development rate design for water, wastewater, and electric utilities to determine commodity and customer charges • Development of rate design models for electric, water utilities • Development of rate surveys Other Utility Tools • Balancing of sales with revenue to help ensure proper billing statistics are used in cost of service models Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 32 UFSTIILIITY FINANCIAL. SOLUT11ONS. LLC Robert Blank Senior Financial Analyst, Utility Financial Solutions, LLC Robert has been working for Utility Financial Solutions, LLC since May of 2014 and has a Bachelor of Business Administration with a major in Finance from Davenport University. Over his time at UFS he has conducted Utility rate surveys as well as developed rate designs. Robert has experience with long term financial projections and cost of service studies for Electric, Water, Wastewater, and Gas utilities. E-mail: bblank@ufsweb.com Cellular: 616-403-9926 Location: Holland, MI Long Term Financial Analysis • Responsible for analysis of financial statements and preparation of cost of service models • Development of financial targets to determine the financial health of the Utility • Determine the minimum cash reserve level to maintain financial stability of the Utility • Calculating debt coverage ratios to identify responsible borrowing to help obtain a higher bond rating • Calculate an optimal operating income to ensure current customers pay their fair share of the infrastructure • Develop projected rate tracks to minimize customer impacts while achieving financial targets Cost of Service (COS) • Working with utilities to identify the information needed to conduct an accurate cost of service study • Analyzing billing reports to proof data with financials • Determine interclass and intraclass subsidizations of various rate classes • Identify fixed and variable costs related to customer, commodity, and demand Rate Design • Develop rate design models for electric, water, wastewater, and gas utilities • Implementation strategies for monthly customer charges and demand charges • Identify customer impacts for various customer types at different usage levels • Conducting rate surveys • Designing irrigation and horsepower rates Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 33 UFSUTILITY FlINANCIAL. SOLUT11ONS. LLC Janel Albrecht Financial Analyst, Utility Financial Solutions, LLC Janel began working for Utility Financial Solutions, LLC in February 2024. She has 25 years of experience as an administrative professional with strong attention to detail. Janel worked in the paper industry handling a wide variety of responsibilities, including data management and reporting. For seven years, she managed a small team, scheduled onsite service work, and utilized Excel for tracking schedules, financial data, and operational reports. E-mail: jalbrecht@ufsweb.com Cellular: 920-213-7491 Location: Neenah, WI Janel is skilled in the following: • Preparing business proposals and reports • Strong attention to detail and accuracy • Experienced in Excel (data entry) • Billing and invoicing • Customer service and professional correspondence • Maintaining and managing customer information databases • Order entry and production scheduling Jayde Dono Financial Analyst, Utility Financial Solutions, LLC `'""""" Jayde joined Utility Financial Solutions LLC in April 2025 bringing a strong foundation in finance and economics. She earned a Bachelor of Science in Economics and a Bachelor of Business Administration in Finance from the University of Central Florida. Prior to joining UFS, Jayde gained hands-on experience in finance and accounting as an intern, where she designed dashboards, performed reconciliations, and developed impactful presentations for management. E-mail: jdono@ufsweb.com Cellular: 386-457-9895 Location: Mobile, Alabama Jayde is skilled in the following: • Building Power BI dashboards and analyzing data • Preparing finance presentations for various levels of management • Reconciling reports across NetSuite, vendor data, and internal systems • Performing financial analysis and forecasting • Customer service and conflict resolution • Proficiency in Excel • Team collaboration and cross -departmental communication • Managing and maintaining accurate records Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 34 UFSTIILIITY FINANOAL. SOLUTIONS.ILL References Austin Utilities —Austin, MN Client Contact: Mark Nibaur, General Manager Phone: 507-433-8886 Email: markn@austinutilities.com Utility Electric Gas Water Services Provided 2012 — 2024 2012 — 2024 2014 — 2024 • Long-term financial projections, review of financial targets, and long term rate track • Cost of service study, and two-year rate design • Asset review Scope of Work e Allocation study • Rate tariff text review • Reports and presentations to governing body • Street light cost of service • Interruptible Rate • Analysis for change in • PCA model Analysis water usage Additional • Time of use analysis • Gas commercial rate Information • Line extension study definition • Line extension study Cedar Falls Utilities — Cedar Falls, IA Client Contact: Wynette Froehner, Finance Director Phone: 319-268-5209 Email: wynette.froehner@cfunet.net FallsCedar ill "r�IE POWER OF R V s c r Utility Electric Gas Water Services Provided 2012 — 2023 2019 — 2024 2013 — Present • Long-term financial projections, review of financial targets, and long term rate track • Cost of service study, and one-year rate design Scope of Work e Identify overall rate impacts on customers • Reports and presentations to governing body • Review current ECA • Fire protection cost of methodology service • Time of use rate analysis • Three-year rate design Additional e Review solar and net - Information metering charges • Review non-profit rates and justification Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 35 UFSUTILITY FINANOAL. SOLUTIONS. IL L Village of Rantoul - Rantoul, IL Client Contact: Jake McCoy, Public Works Director Phone: 217-892-2178 Email: jmccoy@village.rantoul.il.us Utility Electric Gas Water Wastewater Services Provided 2009 — Present 2017 — 2023 2018 — 2023 2018 — 2023 • Long-term financial projections, review of financial targets, and long term rate track • Cost of service study, and five-year rate design Scope of Work e Review utility rate classes and recommend additional/alternative rate classes • Reports and presentations to governing body • Line extension • Line extension • Review and analysis analysis update wholesale • Net metering study • Economic customer Additional • Economic development Information development study study • Analysis of solar, wind, and biomass generation Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 36 UFSTIILIITY FINANCIAL. SOLUT11ONS. IL L Project Schedule Our experience with cost of service and rate design studies allows us to conduct a cost effective and efficient study. The following is the tentative project schedule for completion of the cost of service and rate design. This schedule will be finalized during the initial project kick-off meeting with management. Task Expected Completion — Twelve Weeks Initial Meeting — Preparation of Information Request Completion of Information Request by Client Planning/Set-up Study Development of Revenue Requirements Cost of Service Analysis Component/Functional Costs Review Rate Design and Alternatives Report, Recommendations & Presentation of Draft Final Report Week One Week Two Week Three — Five Week Six — Seven Week Eight - Nine Week Ten Week Eleven Week Twelve The completion of the project on the proposed schedule is dependent on the cooperation of various departments within the Utility to prepare the information request in a timely manner. Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 37 UFSUTILITY FINANCIAL. SOLUT11ONS. LLC Proposed Professional Services Agreement Prices, terms, and conditions are good for a period of 90 days from this proposal date of December 3, 2025. Payment will be made through submission of invoice which itemizes the work performed. Electric Cost of Service, Financial Projection, One -Year Rate Design ............ $23,500 Gas Cost of Service, Financial Projection, One -Year Rate ............................. $17,700 Totals above do not include onsite meetings, out of pocket travel expenses, or travel time. Anticipated Meetings (Virtual, unless noted): • Project kickoff • Data collection summary • Financial review summary • Draft report with management • Final report with management Hourly Rates (travel is discounted at 50%) Mark Beauchamp Dawn Lund Dan Kasbohm Mike Johnson Chris Lund Jillian Jurczyk Robert Blank Joan Bakenhus Support Staff $ 375.00 $ 350.00 $ 310.00 $ 310.00 $ 310.00 $ 295.00 $ 195.00 $ 190.00 $ 70.00 — $ 195.00 Deliverables (for all utilities): • Final Report (PDF), detailing: • Long-term Financial Projection and Rate Track • Minimum cash reserve determination • Debt service ratio • Target operating income (rate of return) • Cost of Service Analysis • One -Year Rate Design Optional Out of Scope Pricing: Additional one-year electric rate design : $3,300 Additional one-year gas rate design : $1,900 Update gas transmission transportation rate : $3,500 Out of scope work hours will be billed at the current hourly rates in effect at the time the services are performed. Onsite meetings, if requested and agreed upon, will be billed as out of scope. Out of pocket expenses will be billed at cost. We look forward to exceeding your expectations. Please sign, date, and return to dkask rahlTn gf w k . ra„Nrq at your earliest convenience. Sincerely, Mark Beauchamp, CPA, MBA, CMA President, Utility Financial Solutions, LLC Date: Accepted By: Hutchinson Utilities Commission Utility Financial Solutions, LLC Proposal for Hutchinson Utilities Commission P a g e 1 38 HUTCHINSON UTILITIES COMMISSION ^I'�xP61Tti'°" Board Action Form Agenda Item: Approve Commercial Solar Agreement with Cedar Creek Energy Presenter: Dave Agenda Item Type: Time Requested (Minutes): 5 New Business Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: We entered into an agreement with Energy Management Solutions Inc. on 8-28-25 to help with the application process for Solar on Public Buildings Grant Program. The State will reimburse 70% of the total costs and 30% will be reimbursed by the Federal Government. We are still in the review process with the state and the next step is to have an agreement signed with the solar developer. The agreement is contingent on being awarded the Grant for the project. Once the Grant is awarded, we will need to send a 10% down payment by 12-31-25 to initiate the project. 50KW Solar on Main office building Total cost= $155,000.00 10% Down = $14,500.00 See attachment for more detailed costs breakdown. BOARD ACTION REQUESTED: Approve Commercial Solar Agreement with Cedar Creek Energy Fiscal Impact: Included in current budget: No Budget Change: No PROJECT SECTION: Total Project Cost: Remaining Cost: Illllllllllllllllllll@�IIIIIIIIIIIIIIIIIIIIIIV��IIIIIIIIIIIIIIIIIIIII�� Commercial Solar Agreement Hutchinson Utilities Commission HUC Office as "Customer" Dated as of December 9, 2025 M U 1 MUMM 1. General Agreement......................................................................3 2. Scope of Work............................................................................3 3. Payment & Contract Price.............................................................3 4. Proposed Project Schedule..............................................................11 5. Change Orders...........................................................................5 6. Limited Warranty........................................................................5 7. Subcontractors............................................................................6 8. Utility, Authority Access................................................................6 9. Insurance..................................................................................6 10. Modification/Waiver....................................................................7 11. Indemnification/Limitation of Liability.............................................7 12. Binding Effect/Assignment.............................................................7 13. Entire Agreement..........................................................................8 14. Severability................................................................................9 15. Applicable Law............................................................................9 16. Notices.......................................................................................9 17. Capacity to Sign.........................................................................9 18. Mechanics' Lien Notice............................................................... 9 I This Commercial Solar Agreement (this "Agreement") is entered into as of December 9, 2025 (the "Effective Date"), between Cedar Creek Energy Corporation ("Company"), whose principal place of business is located at 3155 104th Ln NE, Blaine, MN 55449, and Hutchinson Utilities Commission ("Customer"), whose principal place of business is located at 225 Michigan St SE Boiler Rm, Hutchinson, MN 55350. Company and Customer are sometimes referred to herein as a "Party" or collectively as the "Parties". Whereas owner is approving this contract subject to getting MN Solar on Public Buildings state grant approval and final site inspection. Both will occur prior to 1/l/2026. NOW, THEREFORE, in consideration fo the commitments, obligations, representations and warranties contained herein, together with other good and valuable consideration, the receipt and sufficiency of which is acknowledged by each Party, it is HEREBY AGREED as follows: 1. General Agreement Customer hereby certifies that they are the owner(s) of the real property at 225 Michigan St SE Boiler Rm, Hutchinson, MN 55350 (the "Property"). The Company hereby contracts with Customer to provide labor and materials to improve the Property, as outlined in Section 2 of this Agreement (the "Work"). Customer agrees to all terms contained this Agreement, and as detailed below. 2. Scope of Work The Company shall provide all labor and materials to install and commission the solar array(s) as detailed below The Company will provide the following labor and materials to install and commission a 55.68 kilowatt (DC) solar array: 3. (96) Jinko JKM580N-72-HL4-BDV or Tier 1 Equivalent +/- 15W 4. (2) CPS SCA50KTL-DO/US-208V Inverter 5. Roof Racking 6. Wire, Conduit, Disconnects, and Miscellaneous Materials 7. Building & Electrical Permits 8. Utility Interconnection 9. 5-year Workmanship Warranty' 10. Payment & Contract Price Customer agrees to pay Company the sum of $145,000.00 ("Contract Price") in accordance with Payment Schedule and Terms specified herein. Invoices not paid when due shall be subject a 5% penalty after 30 days and shall accrue interest at the rate of the eight percent (8%) per annum thereafter. 10.1. Payment Schedule & Terms The Contract Price shall be paid to the Company according to the following schedule and terms (the "Payment Schedule and Terms"): Event Due Date Amount Safe Harbor Deposit Upon execution 1 $14 500.00 Initial Payment Interconnection Submittal Upon Notice of Submittal 40% of remainder Mobilization Upon notice of Mobilization 40% of remainder Upon receipt of Inspection Final Electrical Inspection approval 20% of remainder Company shall be responsible for obtaining any and all required permits, permissions, authorizations, or other approvals for proceeding with the Work. If Customer fails to pay Company any payment(s) due under this Agreement, the Company may suspend its Work following notice to Customer of such non-payment. Upon any suspension of Work by Company for nonpayment by Customer, Customer shall remain liable to Company for payment in full for all Work performed up to the time that Work is suspended (whether or not such Work has been fully invoiced at such time), and for all losses or damages sustained or suffered by Company, including any costs to suspend or de -mobilize Work. Company shall restart Work only upon payment by Customer for all Work completed to date, including any losses or damages, whether direct or consequential, sustained or suffered by Company. If Work remains suspended for a period of 14 days due to nonpayment by Customer, such non-paymeht shall constitute a material breach of this Agreement, at whjich time Company may pursue all available remedies and damages. Customer represents and warrants that it is neither aware of any pending or threatened litigation, action, or administrative proceeding against it with respect the Property, nor is Customer aware of any basis or grounds for any such litigation, action, or proceeding against them or the Property. No unpaid work, labor, or materials have been supplied to the Property upon which anyone could base a mechanics' lien, equitable lien, or any other type of lien against the Property. 10.2. Costs of Collection If Company takes action to enforce or defend this Agreement or collect monies owed arising out of or in connection with this Agreement, Company shall be entitled to recover from Customer all of Company's reasonable attorney's fees, costs, and disbursements incurred, including pre judgment interest. 11. Proposed Project Schedule Company shall commence the Work within 180 days of Utility Interconnection Approval, assuming no delays in permitting and/or interconnection exist, and all Work shall be substantially complete within 90 days after commencement of Work. "Substantial Completion" shall mean completion of all Work with the exception of any final punch list items. Work shall not commence until interconnection approval by the applicable utility has been received. Customer agrees that Company is not responsible for delays in completion of the Work due to the following events or occurrences ("Excusable Events"): (i) Force Majeure Events, or (ii) any other causes beyond Company's control, including but not limited to any delays caused by Customer, Customer's failure to make any payment to Company when due, or interference by Customer's employees, contractors, agents, representatives, or guests, or any other persons, parties, or causes not under Company's control. As used herein, "Force Maj eure Event" means an event or circumstance which wholly or partly prevents one Party from performing its obligations, which event or circumstance is not within the reasonable control of, or the result of the negligence of, the claiming Party, and which, by the exercise of due diligence, the claiming Party is unable to overcome or avoid or cause to be avoided. So long as the requirements of the preceding sentence are met, a Force Maj eure Event may include, but shall not be limited to, flood, drought, earthquake, fire, lightning, extreme weather, epidemic, war, terrorism or riot, strikes, changes in applicable codes or applicable law (including (A) any impositions of conditions on the issuance or renewal of any permits after the Effective Date, and (B) changes in import tax, duties, tariffs, or fees relating to the importation of any component of the proposed project), or acts or omissions of any governmental authority. In the event of any such delay, Company's time to achieve Substantial Completion shall be extended by a period equal to the time lost by reason of such delay, plus any reasonable time for re -mobilizing if work teams have been de -mobilized during the event. However, if Work remains suspended for a period of 30 consecutive days due to a Force Majeure event and the Company determines that such event is likely to persist, Company may, at its option, treat this Agreement as having been cancelled, at which time payment for all Work completed to date shall be invoiced by Company and payable by Customer. Following such payment, neither Party shall have further obligation to the other hereunder. 12. Change Orders As used herein, "Change Order" shall mean a written document signed by both Company and Customer that authorizes Company to perform a change to the Scope of Work. The Change Order shall modify the Scope of Work and shall identify: (i) the change to the Scope of Work, (ii) any additional compensation or reduction in compensation to be paid to Company to perform such change, and (iii) any extensions of time to the Project Schedule to perform such change. Either Party may request a change in Scope of Work, provided that Company shall not be obligated to proceed with such change until the value of such Change Order and its effect on the time of performance or on warranties has been agreed upon, and a Change Order has been signed by Customer and Company. If an Excusable Event occurs that results in (a) an actual, substantiated delay in Company's ability to perform the Work or timely achieve any component of the Project Schedule, Company shall be entitled to a Change Order allowing an equitable extension of such date to the extent of such actual, substantiated delay; or (b) actual, substantiated increase in Company's costs for the Work, Company shall be entitled to a Change Order allowing an increase in the Contract Price to the extent of such actual, substantiated increase in cost. In the event that tariffs or similar costs imnposed by government are imposed following execution of the contract, Company shall issue a Change Order specifying the increase in cost caused by such tariffs or costs. 13. Limited Warranty Company warrants that all Work shall be completed in a good and workmanlike manner and in compliance with all codes and applicable building standards and practices. Company shall promptly correct any material deficiency in the Work, provided that Customer gives Company timely written notice thereof. Company's warranty shall extend to and cover all Work furnished by subcontractors and suppliers of Company, and shall be in addition to any other rights of Customer; provided, however, that Company does not warrant manufacturer's defects occurring in the equipment covered by an applicable manufacturer's warranty, nor work necessary to correct such defects such as installation of replacement equipment. To the extent that the Work constitutes a major structural change or addition to a residential building, the statutory warranties of Minnesota Statutes Section 327A.02 shall apply. Company shall have no liability for (i) any roof damage, roof leaking, or deterioration not caused by the negligence of Company, (ii) breach of this Agreement by Company, nor (iii) any consequential damages or loss to the building or its contents as a result of such damages or breach detailed in clause "(i)" or "(ii)" or from any Force Majeure event that affects the building or its contents. Company's liability shall be limited to warranty claims occurring within five (5) years of the completion of Company's Work. Company uses industry -standard production modelling software, along with manufacturers specifications, to estimate anticipated energy production. While this is the industry standard, many factors can affect energy production, and the Company does not warrant or guarantee specific energy production. Manufacturer warranties for components incorporated into the Work shall be assigned by Company to Customer as of Substantial Completion, unless the warranties are directly in favor of Customer. 14. Subcontractors Company may, at its discretion, engage subcontractors to perform the Work under this Agreement, but Company shall remain responsible for proper completion of this Agreement. 15. Utility, Authority Access Customer agrees to comply with all applicable requirements of permitting authorities, utilities, and other governmental bodies, including but not limited to: unrestricted utility / first responder access to system disconnecting means so that utility/ first responder personnel may disconnect the system for safety and emergency situations. Company shall at its expense comply with all applicable federal, state and local laws, ordinances, rules, and regulations in the performance of the Work by Company and its employees, subcontractors, and suppliers, including, without limitation, all applicable requirements relating to workplace and worker safety and the treatment of hazardous substances. 16. Insurance Customer agrees, upon request of Company prior to commencement of the Work, to provide Company with a copy of Customer's property insurance policy showing coverage for property damage and liability claims. Company agrees to maintain adequate insurance to comply with any requirements of statute or law and in accordance with the standards set forth in Attachment A hereto. The Company recommends that Customer obtain adequate insurance coverage for the solar array starting at the time of Mobilization of work by the Company. 17. Modification / Waiver This Agreement shall not be altered, amended, or modified by oral representation made before or after the execution of this Agreement. Any modifications to this Agreement must be in writing and duly executed by the Parties. Any waiver of any requirement of this Agreement must be in writing and shall be limited to the circumstance or event specifically referenced in the written waiver document and shall not be deemed a waiver of any other term of this Agreement. For the avoidance of doubt, Customer acknowledges that no Company personnel working on any jobsite has the authority to alter any terms of this Agreement. 18. Indemnification / Limitation of Liability 18.1. Customer's Indemnity. Except as otherwise detailed in this Agreement or to the extent caused by Company's or its agents' gross negligence or willful misconduct, Customer shall indemnify, defend, and hold harmless Company and its respective subsidiaries, affiliates, officers, directors, agents and employees from any claims, damages, losses, or expenses, including reasonable attorneys' fees, arising from physical damage to property or injury to persons, including death, to the extent resulting directly from negligence, willful misconduct or breach of this Agreement by Customer or its agents. 18.2. Company's Indemnity. Except to the extent caused by Customer's or its agents' gross negligence or willful misconduct, Company shall indemnify, defend and hold harmless Customer and its respective subsidiaries, affiliates, officers, directors, agents and employees from all claims, damages, losses, and expenses, including reasonable attorney's fees, arising out of or resulting from the performance of the Work or any failure by Company to comply with the terms of this Agreement. The Company makes no representation regarding the availability of state, local or federal invicentives nor shall the Company indemnify Customer for any lost incentives. 18.3. Company's total liability (including, without limitation, damages, indemnification, default, and termination) for all damages under this Contract shall be limited to extent of applicable insurance coverage carried or required to be carried by the Company. 18.4. Except as detailed in this Agreement, neither Party shall be liable to the other Party for any consequential, incidental, indirect, special, exemplary or punitive damages, loss of actual or anticipated profits, revenues or product; increased expense of borrowing or financing; or increased cost of capital arising out of this Agreement, whether any such claim arises out of breach of contract, guarantee or warranty, tort, product liability, indemnity, contribution, strict liability, or any other legal theory. 19. No Tax Advice 19.1. General Information Only. The Company may, from time to time, provide general information regarding potential federal, state, or local tax incentives, credits, or other benefits that may be available in connection with the purchase, ownership, or operation of the solar energy system (the "System"). Any such information is provided solely as a general description of Company's understanding of currently available programs and does not constitute legal, accounting, or tax advice. The Company has used good faith efforts to represent the available tax incentives for the proposed solar system. Customer's specification tax situation may impact its ability to benefit from these incentives. 19.2. Customer's Responsibility. Customer acknowledges and agrees that: 19.2.1. Customer is solely responsible for consulting with its own tax advisors regarding the availability and effect of any tax incentives, credits, depreciation, or other benefits; 19.2.2. Customer will not rely on any information, statement, or representation made by the Company or its agents as tax advice; and 19.2.3. The Company shall have no liability, obligation, or responsibility for the Customer's failure to qualify for or obtain any tax benefit or incentive. 19.3. No Guarantee. The Company expressly disclaims any guarantee or assurance that any specific tax incentive, credit, or benefit will be available to Customer or that any particular tax treatment will apply. 20. Binding Effect / Assignment 20.1. This Agreement shall be binding on and shall inure to the benefit of the Parties and their respective heirs, executors, administrators, agents, representatives, successors, and assignees. 20.2. Except as detailed in this Section 19, this Agreement may only be assigned by the Parties only upon the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned, or delayed. 20.2.1. Notwithstanding the forgoing, Customer may, without the need for consent from Company, (i) transfer, pledge, or assign this Agreement to an affiliate or as security for any financing and/or to an affiliated special purpose entity created for financing or tax credit purposes with regards to the project contemplated by this Agreement (a "Financing Assignment"); or (ii) transfer or assign this Agreement to any person or entity succeeding to all or substantially all of the assets of Customer or a successor entity in a merger or acquisition transaction; provided, however, that any such assignee shall agree to be bound by the terms and conditions hereof and provided further, that in the case of a Financing Assignment, the Customer shall guarantee the performance of the Agreement by the Assignee. 20.2.2. Notwithstanding the forgoing, Company may transfer, pledge, or assign all of its rights, title, and interest in this Agreement and delegate all (but not less than all) of its duties, assign any part of the Work to (i) any successor by merger to, or any purchaser of all or substantially all of the assets of, Company or (ii) any affiliate of Company; provided that (1) any such successor or affiliate shall possess the technical and financial resources and experience necessary to perform Company's obligations under this Agreement, and (2) any such successor or affiliate assumes all of Company's obligations hereunder. 21. Entire Agreement This Agreement, along with any amendments and Change Orders hereto, represents a single, integrated, written contract expressing the entire understanding and agreement between the Parties concerning the subject matter hereof and supersedes any prior agreements, whether written or oral, relating thereto. 22. Severability The provisions of this Agreement are severable. If any portion, provision, or part of this Agreement is held, determined, or adjudicated by a court of competent jurisdiction to be invalid, unenforceable or void for any reason whatsoever, each such portion, provision or part shall be severed from the remaining portions, provisions or parts of this Agreement and shall not affect the validity or enforceability of any remaining portions, provisions or parts, which remaining portions, provisions or parts shall be enforced as amended. 23. Applicable Law This Agreement is and shall be governed by the laws of the State of Minnesota, without regard to the conflicts of law principles thereof. Customer and Company each consent to jurisdiction and venue in the state and federal courts of Hennepin County in the State of Minnesota. No Party shall object to such venue as being an inconvenient forum. 24. Notices Any notices required to be sent or provided under this Agreement shall be mailed, sent or delivered to the parties at the addresses given below. Notices shall be deemed as delivered three business days after deposit in first class mail or upon delivery by any nationally recognized courier service or if delivered by hand. Electronic mail shall be used for convenience between Company and Customer only and shall in no case be considered formal notice hereunder, regardless of whether receipt has been specifically acknowlegded. If to Company. Cedar Creek Energy 3155 104th Ln NE Blaine, MN 55449 Attn: Rob Appelhof Tel.: (763) 432-5261 Email: robe ,cedarcreekenem 25. Capacity to Sign If to Customer: [Name] 111 Hassan St SE Hutchinson, MN 55350 Attn.: [Name] Tel.: [(XXX) XXX-XXXX] [Email Address] The individuals whose signatures are affixed to this Agreement in a representative capacity represent and warrant that they are authorized to execute the Agreement on behalf of and to bind the entity on whose behalf the signature is affixed. 26. Mechanics Lien Notice Pursuant to Minn. Stat. §514.011, every person who enters into a contract with the owner for the improvement of real property and who has contracted or shall contract with any subcontractors or material suppliers to provide labor, skill, or materials for the improvement shall include in any written contract with the owner the following notice, and shall provide the owner with a copy of the written contract: "(A) ANY PERSON OR COMPANY SUPPLYING LABOR OR MATERIALS FOR THIS IMPROVEMENT TO YOUR PROPERTY MAY FILE A LIEN AGAINST YOUR PROPERTY IF THAT PERSON OR COMPANY IS NOT PAID FOR THE CONTRIBUTIONS. (B) UNDER MINNESOTA LAW, YOU HAVE THE RIGHT TO PAY PERSONS WHO SUPPLIED LABOR OR MATERIALS FOR THIS IMPROVEMENT DIRECTLY AND DEDUCT THIS AMOUNT FROM OUR CONTRACT PRICE, OR WITHHOLD THE AMOUNTS DUE THEM FROM US UNTIL 120 DAYS AFTER COMPLETION OF THE IMPROVEMENT UNLESS WE GIVE YOU A LIEN WAIVER SIGNED BY PERSONS WHO SUPPLIED ANY LABOR OR MATERIAL FOR THE IMPROVEMENT AND WHO GAVE YOU TIMELY NOTICE." (signatures to follow) IN WITNESS THEREOF, the Parties hereto have executed the document by their authorized representatives on the date first above written. CEDAR CREEK ENERGY CORPORATION Rob Appelhof, President & CEO Date ACKNOWLEDGED and AGREED by: [COUNTERPARTY NAME] [Name, Title] Date Attachment A Company Minimum Insurance Coverage Company shall carry the following minimum coverages, and prior to any Work, Company shall provide Customer proof of such coverage: a. Commercial general liability insurance, including, without limitation, coverage for bodily injury, property damage, personal injury, contractual liability (applying to this Agreement), and products -completed operations liability, having a combined single limit of not less than $1,000,000 per occurrence. Such policy shall not contain explosion, collapse and/or underground exclusions. Each Occurrence Damage to Rented Premises Personal & Adv Injury General Aggregate Products — Comp/Op Agg $ 1,000,000.00 $ 100,000.00 $ 1,000,000.00 $ 2,000,000.00 $ 2,000,000.00 b. Comprehensive automobile liability insurance, including hired and non -owned vehicles, with a combined single limit of not less than $ 1,000,000 per occurrence. c. Worker's Compensation as required by law. d. Employer's Liability with limits of $500,000. e. Excess/Umbrella Liability, each occurrence, of $10,000,000.00, and aggregate of $10,000,000.00. f. Professional Liability Insurance of $5,000,000. g. Installation Builder's Risk of $2,000,000. h. Pollution coverage of $5,000,000. N MN EMS �Vr II'd�a:rgy II�I„py�o��gzmi�auox 5a4u[ians, �mc r EpgLqy Mana ement A reement 8/12/25 The purpose of this Agreement is to set forth the understanding and agreement between Energy Management Solutions, Inc. (EMS) and City (CUSTOMER). PROJECT DESCRIPTION: EMS will help CUSTOMER with the No -Cost Solar on Public Buildings projects. The state will pay 70% of the project (up to $112,000) and the Federal government will pay 30% of the project through the IRA Direct Pay Program. EMS will make sure this project is still a no - cost project for CUSTOMER, including EMS' fees. The buildings to be included are attached on Addendum A. Energy Services — a. Analyze sites to determine best locations for solar. b. Review energy usage to determine proper size of Solar — Max of 40 kW AC. c. Prepare bid documents for solar vendors and answer any questions. d. Visit site to take pictures and determine where equipment should be installed. e. Analyze bids from Solar vendors. It is important to note that low cost could result in low production of solar due to poor performing solar panels. EMS will make sure CUSTOMER received the best panels available and still at no cost to CUSTOMER. f. Make sure Solar company can start project before 12/31/25 to still qualify for the grants. g. Submit State Grant information. EMS will submit State Grant applications in 1 week from approving this agreement. This is critical since the grants are on a first come first serve basis. If we don't submit the grants guickly, they will be one. h. Complete a final inspection once the project is completed. i. Complete Federal Grant Application. j. Help CUSTOMER sell the RECs in the future. k. CUSTOMER agrees to only use Energy Management Solutions (EMS) for this program. guality Assurance - All work will be completed or reviewed by a Professional Engineer. FEES: EMS Fees are included in the Grant fees so there is no out pocket fees to CUSTOMER. BILLING AND PAYMENT: EMS shall be paid by once CUSTOMER receives money from grants. INDEPENDENT CONTRACTOR: EMS shall be and remain an independent contractor -consultant during the term of this Agreement, and EMS, its directors, officers and employees, shall not act for, or bind CUSTOMER in any manner, unless specifically authorized to do so by CUSTOMER. CUSTOMER: City 41E xcelsior Blvd, Simite 200 tlfl : celsi iir, IM f 553,31 EMS' Initiaics., EMS: (Payment and Notices) Energy Management Solutions, Inc. 684 Excelsior Blvd., Suite 200 P.O. Box 255 Excelsior, MN 55331 Attn: Gary A. Swanson, PE Phone: (612) 819-7975 Fax: (952) 556-9171 Email: IMagrie fgy. ASSIGNMENT OR AMENDMENT: The Agreement may not be assigned or amended without the written consent of EMS and CUSTOMER. APPLICABLE LAW: The Agreement shall be construed in accordance with the laws of the State of Minnesota. ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement among the parties pertaining to the subject matter hereof and supersedes all prior Agreements and understanding pertaining hereto. If the above correctly sets forth CUSTOMER's understanding of the Agreement, please so indicate in the spaces below and return one copy to EMS, Attention: Gary Swanson. ENERGY MANAGEMENT SOLUTIONS Inc. By: (Sian) Name: Gary A. Swanson Title: President Date: 8/11 /25 ACCEPTED AND DATED TO THIS i 46 DAY of �"� , 2025 CITY .74 By: fSian Name: ' � �. W� Print 01 Title: C oow Date: W . 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CL W �Qm+ O W~= J O f6 C a VCW.7i0wnzI-Cryo M:E O.N o ro W O W ll - w� � a7 ° o cnzm0� =r�j""0 W o'B no Vl C CL U V� z= U 6~ CL C S s+ W O ._ O za Luz - V 0 z 0 y ro �'g v0zW °ov_ mE r1 w!0 ��Z�OV¢ mw-oo �2: W JLLJ �� c m 0 ��z�< U 0LJ�� ¢�w _ -' �u�; 0Lli 0PTU- I I A.' HUTCHINSON UTILITIES COMMISSION ^I'�xP61Tti'°" Board Action Form Agenda Item: Approve Solar PV System -purchase agreement Presenter: Dave Agenda Item Type: Time Requested (Minutes): 5 New Business Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: We entered into an agreement with Energy Management Solutions Inc. on 8-28-25 to help with the application process for Solar on Public Buildings Grant Program. The State will reimburse 70% of the total costs and 30% will be reimbursed by the Federal Government. We are still in the review process with the state and the next step is to have an agreement signed with the solar developer. The agreement is contingent on being awarded the Grant for the project. Once the Grant is awarded, we will need to send a 10% down payment by 12-31-25 to initiate the project. 10 KW solar installed on Inventory building Total cost= $39,424.00 10% Down = $ 3,942.00 See attachment for more detailed costs breakdown. BOARD ACTION REQUESTED: Approve Solar PV System -purchase agreement Fiscal Impact: Included in current budget: No Budget Change: No PROJECT SECTION: Total Project Cost: Remaining Cost: (V�IIOIII��IIJI/�, ��IU�' �/ ri�pPpi, muu yyJ+wrmi��,, amrry�y mm� rtu imrrvNi�V Gr mrrniauumiii A V�arvimo��IlUlll i �� II� m��Yl01B� o�um�lmj%� umunr�nd i I ��muwr� E= N E: R CaY SOLAR PV SYSTEM - PURCHASE AGREEMENT THIS AGREEMENT (the "Agreement") made the 8th day of December, 2025 (the "Effective Date") by and between Apadana, L.L.C., and Apadana Energy LLC dba Apadana Solar Technologies together hereinafter "Apadana" and _City of Hutchinson_ hereinafter "Buyer", collectively the "Parties". WHEREAS Apadana is an engineering, procurement, and construction provider of solar PV systems ("solar array"), and WHEREAS Buyer seeks to purchase and install a new solar array at Buyer's facility, and WHEREAS Buyer wishes to contract with Apadana to provide all necessary items, including labor and materials, to install a Solar Array, as defined herein, to be operated at Buyer location, and WHEREAS the Parties hereby agree that the terms and conditions contained herein shall be those which govern the purchase and installation of the Solar Array and that in the even that Buyer issues its own purchase order and terms contained in Buyer purchase order are in conflict with those contained herein, that the terms in this Agreement shall govern, NOW THEREFORE, the Parties hereby agree as follows: 1. Scope of Work Apadana shall furnish the material, labor, equipment, tools, and supervision necessary to construct a solar PV system described in the "Specifications" attached here to Exhibit A (the "Project"), which shall be delivered to and performed at Buyer's property location identified below. In addition, Apadana shall obtain utility and city governmental approval of the engineering plans and permits for construction of the project. The cost of engineering and electrical building permit(s) is included in the lump sum amount. Any upgrades required for electrical code, electrical effectiveness and utility transmission capacity will be paid for by Buyer. Apadana will work with Buyer and the local utility to secure the interconnection agreement and bring the project through to commissioning. APADANA. LLC PURCHASE ORDER— SOLAR PV SYSTEM PAGE 1 (V�IIOIII��IIJI/�, ��IU�' �/ ri�pPpi, muu yyJ+wrmi��,, amrry�y mm� rtu imrrvNi�V Gr mrrniauumiii A V�arvimo��IlUlll i �� II� m��Yl01B� o�um�lmj%� umunr�nd i I ��muwr� E N E R CaY Project size in kilowatts and subsequent project price may change based on utility feedback and approval parameters. Any alteration or deviation from the Specifications, including but not limited to any alteration or deviation involving modifications to specified material or labor, will be executed only upon a written order signed by the Parties (a "Change Order"). When a Change Order results in a price change, such a change will be incorporated into the Specifications, updating the Project Price. 2. Payments Buyer payment for services and materials included in the Specifications, which may be adjusted from time to time by a Change Order will be made in accordance with the Payment Schedule below. a) Buyer checks should be made payable to Apadana, LLC b) Buyer payment by Credit Card is subject to a 3.5% processing fee. c) Buyer agrees that in the event of a Change Order where the project cost changes, then the payments due per the above schedule will be updated and Buyer will submit additional payments when necessary to meet the defined percent of total project cost. d) The commitment fee for engineering and permitting is not refundable. e) Any payment not received within five (5) days after commissioning of the project shall incur a late fee of $35 plus 1.5% monthly interest rate will be added for payments received after 5 days past the invoice due date. f) Apadana participates in the Credit Trade Exchange Program, reporting both prompt and slow payments. g) In the event that payment is not received as required, Apadana may suspend work on the project until such time as all payments due have been made. A failure to make payment for a period in excess of 30 days from the due date of the payment shall be deemed a material breach of this Agreement. APADANA. LLC PURCHASE ORDER— SOLAR PV SYSTEM PAGE 2 (V�IIOIII��IIJI/�, ��IU�' �/ ri�pPpi, muu yyJ+wrmi��,, amrry�y mm� rtu imrrvNi�V Gr mrrniauumiii A V�arvimo��IlUlll i �� II� m��Yl01B� o�um�lmj%� umunr�nd i I ��muwr� E N E R CaY 3. General Working Provisions a) All work delivered under this Agreement shall be completed in a workman -like manner and in compliance with all building codes and other applicable laws. b) Apadana shall furnish a plan and scale drawing showing the shape, size dimensions, and construction and equipment specifications for property improvements, a description of the work to be done, and a description of the materials to be installed. c) Apadana may, at its sole discretion, engage qualified third -party subcontractors to perform any or all of the work associated with this project, provided Apadana shall remain responsible for the performance of such third parties and that such subcontractors shall be paid in full for their work. d) Apadana shall furnish to Buyer appropriate releases or waivers of lien for all work performed or materials provided at the time the next periodic payment shall be due, if requested by Buyer. e) All change orders shall be made in writing and signed both by Buyer and Apadana, and shall be incorporated herein, and become a part of this Agreement. f) Apadana shall at its own expense, unless noted in the Specifications, obtain all permits necessary for the work to be performed. g) Apadana shall remove all construction debris associated with this project and leave the property in pre-existing condition. h) Unless otherwise included in the Specification, Apadana will not be required to repair existing electrical wiring issues or code violations identified on the Project property. Such items will be identified and brought to the Buyer's attention to resolve or be treated as a Change Order. i) Buyer will provide access to the property and roof for inspection or evaluation by local, state, or federal agencies, electric utility representatives, and as needed for engineering, permitting, certification and/or inspection. Once commissioned, certain solar energy equipment systems will be enabled to "net -meter" (i.e., to produce more electricity than that which is being consumed, with the excess electricity transferred to the utility grid for a credit). When consumption exceeds the PV system's production, electricity will be drawn from the grid. j) Apadana shall mount solar modules and racking to the building's roof, including any required electrical equipment such as inverters, electrical panels, utility meters, disconnects, and monitoring equipment shall be permanently mounted to the building's exterior wall near the existing electrical service equipment. If needed, customer may install a fence around the wall -mounted panel and equipment to protect against vandalism. k) Industry best practices advise against installation of solar systems on roofs over 15 years of age. Buyer acknowledges that the entire existing roof is less than 15 years old and meets these requirements, and Buyer assumes all future costs related to solar system modifications to accommodate roof repairs. 1) The estimated energy production of the solar photovoltaic (PV) system described in this Proposal (Agreement) is based on system specifications, site conditions, and third -party modeling software, including but not limited to Aurora Solar, which utilizes 44-year historical weather and solar irradiance data specific to the installation location. These projections are intended solely for informational and planning purposes. Customer understands and acknowledges that actual system performance and energy output may vary year to year from these estimates due to numerous factors beyond Apadana's control, including but not limited to variations in weather and climate patterns, changes in shading or environmental conditions, utility grid limitations, equipment degradation, and other unforeseen circumstances. Installer does not guarantee or warrant specific energy production levels or financial savings. Apadana expressly disclaims any liability for losses or underperformance arising from deviations between estimated and actual system production attributable to weather variability or other external factors not caused by Installer's negligence or breach of contract. APADANA. LLC PURCHASE ORDER— SOLAR PV SYSTEM PAGE 3 (V�IIOIII��IIJI/�, ��IU�' �/ ri�pPpi, muu yyJ+wrmi��,, amrry�y mm� rtu imrrvNi�V Gr mrrniauumiii A V�arvimo��IlUlll i �� II� m��Yl01B� o�um�lmj%� umunr�nd i I ��muwr� E N E R CaY m) Any financial models, return -on -investment (ROI) estimates, payback timelines, or related economic forecasts provided by Apadana are based on assumptions including, but not limited to, estimated solar energy production, current utility rates and rate structures, available tax incentives or rebates, and customer energy usage patterns. These estimates are intended for illustrative purposes only and do not constitute a guarantee of performance, savings, or financial return. Customer acknowledges that utility rates may change, tax incentives may expire or become unavailable, and actual energy usage or system output may vary due to weather, maintenance, or other factors outside Installer's control. As such, Installer makes no warranty or representation regarding the accuracy of projected financial outcomes and shall not be held liable for any difference between projected and actual savings, returns, or payback period. n) Upon completion of the installation, Apadana will arrange for inspection of the system by the municipal inspector and/or utility inspector. Upon successful completion of these inspections, the solar system will be turned on for operation. Apadana has no control over the scheduling of these inspections and will make the best efforts to expedite them when possible. o) Buyer will make the property accessible and all electrical equipment available for maintenance and inspection at any reasonable time. If Apadana performance of any obligation hereunder is delayed due to reasons beyond Apadana control, the time for performance of such obligation will be postponed for a period equal to the number of days of such delay. In no event will Apadana be liable for any damages or loss of production resulting from any delay in the delivery or repair of the equipment or any delay in the performance of any maintenance outside of Apadana's control. p) All repairs, maintenance, and related solar system warranty work performed by any third party hired by the Buyer without Apadana written approval shall nullify any existing solar system warranties. q) Apadana is responsible for all shipping, tax, and delivery cost of all equipment and materials. 4. Prevailing Wage and Apprenticeship Compliance - Responsibility for Compliance with Federal Funding Requirements Buyer acknowledges that certain funding sources, including but not limited to federal tax credits under the Inflation Reduction Act (IRA) or other government programs, may trigger compliance obligations under the Davis -Bacon Act (DBA) or similar prevailing wage and apprenticeship mandates (collectively, "PWA Requirements"). Apadana shall not be responsible for compliance with any PWA Requirements unless such obligations are expressly identified in writing and agreed to by Apadana prior to the commencement of construction. If Buyer elects to pursue funding, tax credits, or other benefits that impose PWA Requirements after execution of this Agreement, Buyer shall: a) Notify Apadana in writing of such election at least thirty (30) days prior to the commencement of construction; b) Indemnify and hold harmless Apadana from any and all costs, penalties, liabilities, or obligations arising from such compliance, including but not limited to wage adjustments, fringe benefit contributions, apprenticeship participation, recordkeeping, and audit defense; c) Amend this Agreement to reflect any changes in scope, cost, or schedule resulting from the imposition of PWA Requirements, including equitable adjustments to the contract price and timeline; d) Provide all necessary documentation and guidance to enable Apadana to comply with applicable PWA Requirements, including wage determinations, apprenticeship program details, and reporting formats. Failure by Buyer to comply with the obligations set forth in this clause shall relieve Apadana of any responsibility for PWA compliance and shall constitute a material breach of this Agreement. APADANA. LLC PURCHASE ORDER— SOLAR PV SYSTEM PAGE 4 (V�IIOIII��IIJI/�, ��IU�' �/ ri�pPpi, muu yyJ+wrmi��,, amrry�y mm� rtu imrrvNi�V Gr mrrniauumiii A V�arvimo��IlUlll i �� II� m��Yl01B� o�um�lmj%� umunr�nd i I ��muwr� E N E R CaY 5. Warranties a) Apadana utilizes manufacturers' performance and production specifications to engineer the PV system and disclaims any responsibility or guarantee for actual energy production achieved by the PV system which relies significantly on local site conditions and other variable outside Apadana's control. b) All warranties are subject to and contingent upon payment in full of all amounts as set forth in this agreement. Manufacturer's warranties are passed through to the Buyer. The warranties herein do not apply to damage from fire (except if it was directly caused by the solar installation), vandalism, extreme acts of nature, and other conditions beyond control of Apadana. c) Apadana workmanship warranties are solely limited to the proper installation of the solar system. Apadana cannot promise total uninterrupted or error -free operation of the Solar PV equipment, which is dependent on electrical components and other variables including Wi-Fi, internet, and utility transmission. d) Apadana shall not be liable under any circumstances for limitations, depletion, interruptions, disruptions, or fluctuations in the energy collection to or output from the solar panels or equipment caused by occurrences beyond the control of Apadana. e) All solar and electrical equipment is warranted by the manufacturers. Manufacturers provide 25 or 30-year performance warranties for solar modules, and 10 to 20 years inverter warranties (depending on model) which can be extended with the purchase of extended warranty coverage. f) Installation and workmanship warranties are provided for 10 years and can be extended up to 25 years from the date of commissioning of the solar system with the purchase of extended warranty coverage. Project -specific warranties are listed in the Specifications. g) Apadana shall not warranty occurrences of failure including, and without limitation, manufacturing defects; design specifications of the equipment; pre-existing conditions of the roof, trees or obstacles impeding the solar system, sunlight depletion, blockage or limitations; unintended or increased shading within or near the vicinity, weather -related impacts, Buyer or third party tampering with the solar equipment or other electrical equipment, including attempts to reposition equipment, walk on top of or hinder equipment, re -calibrate or reorient the equipment or electrical flow, lightning, static electricity, temperature cycling and/or fluctuation, the collection on or near the equipment of dust, leaves, debris or burying rodents or birds nesting and damaging equipment, hail damage, water damage, or damage to the equipment caused by events beyond the control or foreseeability of Apadana, such as, but not limited to, issues arising from plumbing, mechanical or electrical interfaces with the solar equipment or solar system malfunctions due to manufacturing defects or deficiencies. EXCEPT FOR THE WARRANTIES SET FORTH IN THIS AGREEMENT AND ANY SPECIFICATION, EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL OTHER WARRANTIES OF ANY KIND OR NATURE, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, INCLUDING WITHOUT LIMITATION TO ANY WARRANTY THAT DELIVERABLES ARE ERROR -FREE, OR ARE COMPATIBLE WITH ALL HARDWARE AND SOFTWARE CONFIGURATIONS, AND ANY AND ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. DELIVERABLES, INTELLECTUAL PROPERTY, TECHNICAL SUPPORT AND/OR SERVICES UNDER THIS AGREEMENT ARE PROVIDED "AS IS". APADANA. LLC PURCHASE ORDER— SOLAR PV SYSTEM PAGE 5 (V�IIOIII��IIJI/�, ��IU�' �/ ri�pPpi, muu yyJ+wrmi��,, amrry�y mm� rtu imrrvNi�V Gr mrrniauumiii A V�arvimo��IlUlll i �� II� m��Yl01B� o�um�lmj%� umunr�nd i I ��muwr� E N E R CaY 6. Indemnification To the fullest extent permitted by law, Buyer shall indemnify, defend and hold harmless Apadana and its agents, employees, and owners, from and against claims, damages, losses and expenses, including but not limited to attorney's fees, arising out of or resulting from performance of the equipment or providing of materials to the extent caused in whole or in part by negligent or wrongful acts or omissions of, or a breach of this agreement by, Apadana, a subcontractor, anyone directly or indirectly employed by them or anyone whose acts they are responsible for legally. 7. Insurance Apadana, and any subcontractor involved in this project, has purchased insurance and agrees that they will keep in force for the duration of the performance of the work or for such longer term as may be required by this agreement, in a company or companies lawfully authorized to do business in the State of Minnesota, such insurance as will protect the Buyer and the owner of the real property, from claims for loss or injury, which might arise out of or result from Apadana's performance hereunder. Apadana represents and agrees that said insurance is written for and shall be maintained in an amount not less than the limits of the liability specified below or required by law, whichever coverage is greater. Apadana certifies that coverage written on a "claims made" form will be maintained without interruption from the commencement of work until the expiration of all applicable statutes of limitation. Worker's Compensation $500,000. Comprehensive General Liability with limits of not less than $1,000,000 per occurrence. Comprehensive Automobile Liability (owned, non -owned, hired) of $1,000,000 for each accident. 8. Lien Notice This notice advises Buyer of their rights under state laws concerning property improvements. For example: Any person or company supplying labor or materials for this solar project to Buyer property may file a lien against this property if that person or company is not paid for their work. Under [state] law, Buyer may pay persons, who supplied labor or material, for this project directly and deduct this amount from the Contract Price (Project Fee) or withhold the amounts due Apadana until 120 days after completion of the improvement unless Apadana provides Buyer a lien waiver signed by persons who supplied the labor or material and provided timely notice. 9. Notices Any notice to be given or document to be delivered to either the Buyer or Apadana pursuant to the Agreement will be sufficient if delivered personally or sent by prepaid registered mail to the address specified below. Any written notice or delivery of documents will have been given, made, and received on the day of delivery if delivered personally or on the third (3d) consecutive business day next following the date of mailing if sent by prepaid registered mail: To Apadana: Lev Buslovich, President, Apadana, 3401 Nevada Avenue North, New Hope, MN 55427 To Buyer: Dave Hunstad, Elec Dist./Transmission Mgr, Hutchinson Utilities, 225 Mich St. SE, Hutchinson, MN 55350 APADANA. LLC PURCHASE ORDER— SOLAR PV SYSTEM PAGE 6 (V�IIOIII��IIJI/�, ��IU�' �/ ri�pPpi, muu yyJ+wrmi��,, amrry�y mm� rtu imrrvNi�V Gr mrrniauumiii A V�arvimo��IlUlll i �� II� m��Yl01B� o�um�lmj%� umunr�nd i I ��muwr� E= N E= R CaY 10. General Provisions: a) Heading. Headings are inserted for the convenience only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa. b) Survival. Sections 2, 4 and 5 shall survive termination of this Agreement. c) No Assignment. Neither Party may assign its right or delegate its performance hereunder without prior written consent of the other party, and any attempted assignment or delegation without such consent will be void. d) Modifications. This Agreement shall not be altered, amended, nor modified by oral representation made before or after the execution of this Agreement. Any modifications to this Agreement must be in writing and duly executed by all Parties. Any waiver of any requirement of this Agreement shall be limited to the circumstance or event specifically referenced in the written waiver document and shall not be deemed a waiver of any other term of this Agreement. e) Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Minnesota, including the Minnesota Uniform Commercial Code and the Buyer and Apadana hereby attorn to the jurisdiction of the Courts of the State of Minnesota. f) Severability. The provisions of this Agreement are severable. If any portion, provision, or part of this Agreement is held, determined, or adjudicated by a court of competent jurisdiction to be invalid, unenforceable or void for any reason whatsoever, each such portion, provision or part shall be severed from the remaining portions, provisions or parts of this Agreement and shall not affect the validity or enforceability of any remaining portions, provisions or parts, which remaining portions, provisions or parts shall be enforced as amended. g) Inurement of Agreement. This Agreement will inure to the benefit of and be binding upon the Buyer and Apadana and their respective successors and assigns. h) Agreement Timing. Time is of the essence in this Agreement. Both parties will use reasonable business efforts to perform all tasks laid out in this Agreement. i) Capacity to Sign. The individual whose signatures are affixed to this Agreement in a representative capacity represent and warrant that they are authorized to execute the Agreement on behalf of and to bind the entity on whose behalf the signature is affixed. j) Costs for Collections. If Apadana takes actions to enforce this agreement, including collecting unpaid amounts due from Buyer arising out of or in connection with this Agreement, Apadana shall be entitled to recover from Buyer and Buyer agrees to pay Apadana's attorney's fees as well as related expenses incurred. k) Buyer Right to Cancel Agreement. Buyer may cancel this purchase any time prior to midnight of the third business day following purchase date. See attached notice of cancellation form for an explanation of this right. 1) Entire Agreement. This Agreement constitutes the entire agreement between the parties and there are no further items or provision either oral or otherwise. Buyer acknowledges that it has not relied upon any representations of Apadana as to prospective performance of any subject matter covered in this Agreement but has relied upon its own inspection and investigation of the subject matter. This Agreement, along with the Specifications, represent a single, integrated, written contract expressing the entire understanding and agreement between the Parties concerning the subject matter hereof and supersedes any prior agreements, written or oral, relating thereto. APADANA. LLC PURCHASE ORDER— SOLAR PV SYSTEM PAGE 7 a, c),:J a rt� a ENERC3Y (DLA"'FI 1 VC:. iA I CRJ('l, I B�4, f ( L.J S r (D' a A CA7 IN WITNESS THEREOF, the parties by signing below agree to the terms and conditions as outlined within. APADANA BUYER: Authorized Signature: Authorized Si nature: Name (printed) Lev Buslovich Name rinted) Date: 12/9/25 Date: APADANA. LLC PURCHASE ORDER— SOLAR PV SYSTEM PAGE 8 a., r4,),:J a rt� a ENERC3Y I 1 V Cl iA I I D. 4, f ( L,l S r (D' a A CA7 EXHIBIT A Specifications APADANA. LLC PURCHASE ORDER- SOLAR PV SYSTEM PAGE 9 MN EMS �Vr II'd�a:rgy II�I„py�o��gzmi�auox 5a4u[ians, �mc r EpgLqy Mana ement A reement 8/12/25 The purpose of this Agreement is to set forth the understanding and agreement between Energy Management Solutions, Inc. (EMS) and City (CUSTOMER). PROJECT DESCRIPTION: EMS will help CUSTOMER with the No -Cost Solar on Public Buildings projects. The state will pay 70% of the project (up to $112,000) and the Federal government will pay 30% of the project through the IRA Direct Pay Program. EMS will make sure this project is still a no - cost project for CUSTOMER, including EMS' fees. The buildings to be included are attached on Addendum A. Energy Services — a. Analyze sites to determine best locations for solar. b. Review energy usage to determine proper size of Solar — Max of 40 kW AC. c. Prepare bid documents for solar vendors and answer any questions. d. Visit site to take pictures and determine where equipment should be installed. e. Analyze bids from Solar vendors. It is important to note that low cost could result in low production of solar due to poor performing solar panels. EMS will make sure CUSTOMER received the best panels available and still at no cost to CUSTOMER. f. Make sure Solar company can start project before 12/31/25 to still qualify for the grants. g. Submit State Grant information. EMS will submit State Grant applications in 1 week from approving this agreement. This is critical since the grants are on a first come first serve basis. If we don't submit the grants guickly, they will be one. h. Complete a final inspection once the project is completed. i. Complete Federal Grant Application. j. Help CUSTOMER sell the RECs in the future. k. CUSTOMER agrees to only use Energy Management Solutions (EMS) for this program. guality Assurance - All work will be completed or reviewed by a Professional Engineer. FEES: EMS Fees are included in the Grant fees so there is no out pocket fees to CUSTOMER. BILLING AND PAYMENT: EMS shall be paid by once CUSTOMER receives money from grants. INDEPENDENT CONTRACTOR: EMS shall be and remain an independent contractor -consultant during the term of this Agreement, and EMS, its directors, officers and employees, shall not act for, or bind CUSTOMER in any manner, unless specifically authorized to do so by CUSTOMER. CUSTOMER: City 41E xcelsior Blvd, Simite 200 tlfl : celsi iir, IM f 553,31 EMS' Initiaics., EMS: (Payment and Notices) Energy Management Solutions, Inc. 684 Excelsior Blvd., Suite 200 P.O. Box 255 Excelsior, MN 55331 Attn: Gary A. Swanson, PE Phone: (612) 819-7975 Fax: (952) 556-9171 Email: IMagrie fgy. ASSIGNMENT OR AMENDMENT: The Agreement may not be assigned or amended without the written consent of EMS and CUSTOMER. APPLICABLE LAW: The Agreement shall be construed in accordance with the laws of the State of Minnesota. ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement among the parties pertaining to the subject matter hereof and supersedes all prior Agreements and understanding pertaining hereto. If the above correctly sets forth CUSTOMER's understanding of the Agreement, please so indicate in the spaces below and return one copy to EMS, Attention: Gary Swanson. ENERGY MANAGEMENT SOLUTIONS Inc. By: (Sian) Name: Gary A. Swanson Title: President Date: 8/11 /25 ACCEPTED AND DATED TO THIS i 46 DAY of �"� , 2025 CITY .74 By: fSian Name: ' � �. W� Print 01 Title: C oow Date: W . N Addendum A u) N O N a) N %-I A 0, r w cm r i` 00r r r r r r r ti I 1` 00 i` ti r M Iv Iv U>1� �y �y U L) w 5 a ° n° O n U o a, o a>°> E e° o o f im °�� 6 a E E° Q —0o y o y N ump w a tj O m n O m a� o e i Z ® IIIIIIIIIIIIIIIIIIIIIIII EE o b E :1', z m a)yE in n �° ro a) a, m y y sJ m m m ro m y °' m -° yo '�N mf lµ" o ° m° o -o 0 o n. s m n m f6 E uQ) y n � uuuuuul o f6 -o '� ns "° m o > U E❑ 2 m -y ,� ❑ U m Im O U } o o u m y u c a� -o E o- o N m o-u mro °Ena�Ero�>Ew` III m U `m y `°t E o o u N a� -o o `o a� s- s- „W V n E S m u n S o n° E2: n vy m m y G u�u 0 o' Vi ,Q 62 O t6 y d W W (n LLJ Z actin 0 0 Q o ro - `� a� n'y o o ��OizzQw¢nzwiQ ° m V f6 s y Q w Q -, Z m 3 w 'B J Vi CL W W W CL I -o 0 Z ZcQ ° wZ " Q H zm OO W r1 w ZE wE VO w Z 00nuOwz o w w 5 Ozm0xQ , W s.n `+� a o o�QZ��z o =r HJ 0 a:� J.n-� m m °� c ° Oa� ° Qwvi zg�w0¢�Oz o Z p p0°Z °Ym LLJ 0 �O¢��Oaa¢�c iU za wwon2: a 0 U 0 cn 0 M w w OR c z = J O OR O 11le le = v 0 v L 0 0 cn 0 0 0 cr 0 J 0 J _ d 0 = co 0 x 0 a ry o o r 0 � r r r CR a LL Z 0 0 v d N d ! fn ®y N N_ 0 y N U >+ 7 >. d >. 0cn _ v U 0 U > 0 0 Q cn _= a rJrJ cnC�rC� —C� Cc C -,'aCW J J z W z O z O m O O s f6 cna¢ a O cc o.. c 0 a 2mm mmOz4= m 3 °� wz W d¢�u_U-0C = .n u n�i W J,n= O J a 1- V1 . CL W �Qm+ O W~= J O f6 C a VCW.7i0wnzI-Cryo M:E O.N o ro W O W ll - w� � a7 ° o cnzm0� =r�j""0 W o'B no Vl C CL U V� z= U 6~ CL C S s+ W O ._ O za Luz - V 0 z 0 y ro �'g v0zW °ov_ mE r1 w!0 ��Z�OV¢ mw-oo �2: W JLLJ �� c m 0 ��z�< U 0LJ�� ¢�w _ -' �u�; 0Lli 0PTU- I I A.' HUTCHINSON UTILITIES COMMISSION ^I'�xP61Tti'°" Board Action Form Agenda Item: Approve Solar PV Equipment and Installation agreement Ziegler Energy Solutions Presenter: Dave Agenda Item Type: Time Requested (Minutes): 5 New Business Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: We entered into an agreement with Energy Management Solutions Inc. on 8-28-25 to help with the application process for Solar on Public Buildings Grant Program. The State will reimburse 70% of the total costs and 30% will be reimbursed by the Federal Government. We are still in the review process with the state and the next step is to have an agreement signed with the solar developer. The agreement is contingent on being awarded the Grant for the project. Once the Grant is awarded, we will need to send a 10% down payment by 12-31-25 to initiate the project. 38AKW Solar at Plant 1 Total cost= $144,718.00 10% Down = $14,472.00 See attachment for more detailed costs breakdown. BOARD ACTION REQUESTED: Approve Solar PV Equipment and Installation agreement Ziegler Energy Solutions Fiscal Impact: Included in current budget: No Budget Change: No PROJECT SECTION: Total Project Cost: Remaining Cost: SOLAR PV EQUIPMENT AND INSTALLATION AGREEMENT THIS EQUIPMENT AND INSTALLATION AGREEMENT ("Agreement") is made and entered into on this day December 23, 2025 by and between Hutchinson Utilities Commission ("Buyer") and Ziegler Energy Solutions, LLC, a Minnesota Limited Liability Company ("Seller"). Seller and Buyer may be individually referred to herein as a "Party" or collectively as the "Parties" as the context dictates. FOR AND IN CONSIDERATION of the mutual promises, covenants, agreements and payments set forth herein, the sufficiency of which is hereby acknowledged, Seller and Buyer agree as follows: 1. Sale of Goods. Subject to the terms and conditions specified herein, Seller shall sell to Buyer, and Buyer shall purchase from Seller the Equipment set forth in Exhibit "A" attached hereto (collectively, the "Equipment"). (Seller's work to be performed under this Agreement is sometimes hereafter referred to as the "Scope of Work"). Upon completion, there may be variations in the details of design, fabrication, arrangement or installation of any particular piece of Equipment that does not affect the ability of the Equipment to operate as originally intended. Seller reserves the right to make such changes in details of design, fabrication, arrangement or Equipment as shall in Seller's judgment constitute an improvement or needed change, all with notice to Buyer. If changes are made which affect the Buyer's layout or schedule, Seller will notify Buyer for concurrence with the change. Any changes made at Buyer's request that relate to sizing of Equipment or integration of Equipment in a manner different than that designed by Seller shall require a change order that may result in the increase of the Purchase Price. Buyer will use commercially reasonable efforts to provide all permits ("Permits") not otherwise obtained by the Seller, to the extent necessary for the Seller to perform the Scope of Work and comply with all applicable laws, regulations and ordinances. 2. Installation. (a) The Equipment shall be installed at Buyer's address located at 44 4' Ave NE Hutchinson, MN ("Property"). The installation services ("Installation Services") to be provided by Seller are set forth in Exhibit `B". The Equipment shall be installed in a workmanlike manner and in compliance with applicable laws, regulations and ordinances in effect as of the Effective Date and continuing throughout the duration of the Installation Services until completed. At all times during the installation, Buyer shall remain the operator of the Property as that term is used in applicable federal and state regulations. Buyer will use best efforts to provide all Permits in a timely manner. To the extent that Buyer's internal safety requirements differ from applicable laws and safety regulations and such difference requires Seller to incur additional cost for personnel, labor or materials in excess than that required for compliance with applicable laws and safety regulations, then the parties agree that the additional cost shall be added to the Purchase Price by change order signed by both Parties. (b) The Installation Services shall begin on or around December 30, 2025 and continue thereafter until completed. Seller estimates that installation of the Equipment will take approximately 295 calendar days. In the event Buyer fails to timely obtain applicable Permits, then the parties will mutually agree on a new date to begin the Installation Services. An informational project schedule is attached hereto as Exhibit «C» (c) Buyer shall make the Property available to Seller during the pendency of Installation Services, and keep the Property site free of obstructions or unusable /impassable road travel or structure for equipment and material delivery and storage including but not limited to roads/highways, bridges, canal/drainage crossings, irrigation lines, and utility lines, unless previously identified in Buyer furnished documents. All project impacts and costs associated with the discovery, rerouting, repair, improvement, renovation or enhancement of or due to previously unidentified site access obstructions will be the responsibility of the Buyer. The parties acknowledge that the installation of the Equipment may require the Property to be shut down for its intended use for a period of time on multiple occasions. Buyer acknowledges that due to ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT 1 unforeseen circumstances, shutdowns and/or an extension of the previously mentioned time may be required. (d) Seller will issue a "Certificate of Completion of Installation" upon the completion of the installation of the Equipment at the Property. The Certificate of Completion of Installation shall be countersigned by Buyer. Following the issuance of the Certificate of Completion of Installation, the Equipment may be tested by the Buyer. 3. Purchase Price. The purchase price which Buyer shall pay to Seller for the Equipment and Installation Services is $144,718 USD ("Purchase Price"). The Purchase Price does not include applicable sales and local taxes, and all such applicable taxes will be Buyer's responsibility and will be billed as an additional cost to Buyer to the extent that Seller is obligated to collect and remit such taxes. All pricing provided in this agreement is preliminary and subject to change following the completion of an on -site assessment. If conditions identified during the site visit require modifications to the design, equipment, or installation process, the final price will be adjusted accordingly. Any changes will be communicated and approved in writing prior to proceeding. This contract is subject to the State Grant Award of 70%. 4. Terms of Payment. (a) Safe Harbor Down Payment - Ten percent (10%) of the Purchase Price, $14,471.80 USD, shall be due and payable within 20 days from the date this Agreement is signed by Buyer. (b) Equipment Procurement - Forty percent (40%) of the Purchase Price, $57,887.20 USD, shall be due and payable upon a date as communicated to Buyer by Seller in advance to enable Seller to purchase the Equipment as set forth in Exhibit A. (c) Construction Begins— Twenty-five percent (25%) of the Purchase Price, $36,179.50 USD, shall be due and payable prior to Installation Services commencement as communicated to Buyer by Seller in advance. (d) Substantial Completion - Twenty percent (20%) of the Purchase Price, $28,943.60 USD, shall be due and payable upon receiving a notification of substantial completion on a date as communicated to Buyer by Seller. (e) Final Payment/Commissioning - Five percent (5%) of the Purchase Price, $7,235.90 USD, shall be due and payable upon receipt of the executed Certificate of Completion of Installation. Invoices shall be payable within twenty (20) calendar days of issuance by Seller. If Buyer fails or refuses to pay Seller all or any part of the Purchase Price within twenty (20) calendar days following the date upon which any payment is due, interest shall accrue and be paid by Buyer to Seller in addition to the unpaid Purchase Price at the rate of eighteen percent (18%) per annum on the unpaid and undisputed amount, or the highest interest rate allowed by law, whichever rate is less. In any action or proceedings arising out of this Agreement in which Seller seeks collection of any portion of the Purchase Price not paid when due, Seller shall be entitled to recovery of its reasonable attorneys' fees and costs. 5. Limited Warranty. (a) The Seller shall assign to Buyer, or have issued in Buyer's name, all applicable pass -through warranties from manufacturers, suppliers and installers ("Pass -through Warranties"). Except for the Pass - Through Warranties, no other warranties are provided. (b) Warranty Exclusions and Disclaimers. The following are not covered: (1) Damage caused by use of the Equipment for purposes other than those for which it was designed, and/or in violation of Seller's recommended operating procedures. Operating the Equipment at a rate above the capacity at which it was designed will have an adverse effect on the Equipment and system including mechanical components and emission performance. The Equipment is to be operated within the guidelines of the operating procedures defined by Seller or the Equipment manufacturer provided to Buyer ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT by Seller. All operations outside these guidelines will be in violation of Seller's limited warranty and will void such limited warranties. (ii) Damage caused by disasters such as fire, flood, tornado, wind, hail, and lightning or other acts of God. (iii) Damage or failure caused by improper maintenance, unauthorized attachments, modifications. (iv) Use in a manner not in accordance with any operation manual or recommended operating procedure supplied by Seller or manufacturer (as such manual may be amended or supplemented from time to time, with notice to Buyer). (v) Any other abuse or misuse by Buyer or any other third parry. EXCEPT AS SPECIFICALLY STATED IN THIS AGREEMENT, SELLER DISCLAIMS ALL REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. 6. Limitation of Liability. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR TO ANY THIRD PARTY FOR ANY LOST PROFITS, LOST SAVINGS, PUNITIVE, EXEMPLARY OR ENCHANCED DAMAGES, OR FOR ANY INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. SELLER SHALL NOT BE LIABLE FOR ANY CLAIM BY THE BUYER BASED UPON ANY CLAIM BY ANY OTHER PARTY AGAINST THE BUYER. IN NO EVENT SHALL SELLER'S TOTAL LIABILITY HEREUNDER EXCEED $2,000,000. 7. Insurance. Buyer shall procure at its own expense and maintain in full force and effect, while this Agreement is in effect, comprehensive general liability insurance for bodily injury and property damage, in an amount not less than one million dollars ($1,000,000) combined single limit to cover Buyer's employees and equipment while on the Property. 8. Force Majeure. Except with respect to payment obligations, neither Party shall be responsible for any failure to perform due to causes beyond a Party's reasonable control, including but not limited to labor disputes, strikes, war or terrorism, civil unrest, acts of God, fire, floods, severe weather, explosion, pandemics or public health emergencies including failure or delay related to Coronavirus/Covid-19, executive orders, delays in transportation, interruption or failure of electricity or communications systems, governmental actions, cyber-attacks, delays in manufacture, or supply shortages, including supplier or sub - supplier or subcontractor delays caused by any of the above. Any delay beyond a Party's reasonable control shall be excused and the period of performance extended as may be necessary to enable the Party to perform after the cause of delay has been removed. 9. Indemnification. Subject to the limitations set forth in Section 6, each party agrees to indemnify and save harmless the other party from and against any and all losses, liabilities, expenses (including, without limitation, reasonable fees and disbursements of counsel), claims, liens, damages or other obligations whatsoever (collectively, "Claims") that may actually and reasonably be payable by virtue of or which may actually and reasonably result from the inaccuracy of any of their respective representations or the breach of any of their respective warranties, covenants or agreements made in this Agreement or in any certificate, schedule or other instrument delivered pursuant to this Agreement; provided, however, that no claim for indemnity may be made hereunder if the facts giving rise to such Claim were in writing and known to the party seeking indemnification hereunder, such facts constituted a breach of the party seeking indemnification and the party seeking indemnification elected in any event to consummate the transactions contemplated by this Agreement. ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT 10. Use of Subcontractors. Buyer expressly agrees that Seller may use any subcontractor that it chooses without prior approval for Installation Services, the Equipment or any other work related to the Scope of Work. 11. Miscellaneous. (a) This Agreement shall be governed by the laws of the State of Minnesota. Any legal proceeding relating to this Agreement shall be brought exclusively in the Hennepin County District Court, or in the United States District Court for the District of Minnesota, and both Parties hereto consent to the jurisdiction of said courts. (b) This Agreement shall become a legal and binding contract upon signature of the same by both Parties. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their permitted successors and assigns. (c) This Agreement may not be assigned to another party by either Party, either in whole or in part, without the prior written consent of the other Party, and such consent shall not be unreasonably withheld. (d) In the event any provision herein shall be judicially interpreted or held to be void or otherwise unenforceable as written, it shall be deemed to be revised and modified to the extent necessary to make it legally enforceable, and the remaining terms of this Agreement shall not be affected thereby. (e) No waiver by any Party of a breach of any provision of this Agreement shall be construed as a waiver of any subsequent or different breach, and no forbearance by a Party to seek a remedy for noncompliance or breach by another Party shall be construed as a waiver of any right or remedy with respect to such noncompliance or breach. (f) Each of the parties hereto represents to the other that (1) it has full power, authority and legal right to enter into and perform this Agreement, (ii) the execution delivery and performance of this Agreement has been duly authorized by all necessary action on each party's part, does not require any approvals or consents except such approvals and consents as have heretofore been duly obtained or which are specifically enumerated herein to which this Agreement is subject, and (iii) this Agreement does not contravene any law binding on either of the parties or contravene any agreement to which either of the parties hereto is a party or by which it is bound, or any law, governmental rule, regulation or order. Upon request, each of the parties will provide the other party with documentary evidence of its authority to enter into this Agreement. (g) All notices to be given in connection with this Agreement shall be in writing and delivered personally, sent by e-mail, by a nationally recognized overnight courier service or by registered or certified mail, return receipt requested, postage prepaid. (h) This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which shall constitute one Agreement. Delivery of an executed copy of this Agreement by e-mail shall be deemed delivery of the executed original. IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written. BUYER: Hutchinson Utilities Commission By: Its: SELLER: Ziegler Energy Solutions, LLC By: Its: ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT Exhibit A — Site Address and Initial Layout • Site Address o 44 4t' Ave NE Hutchinson, MN • Initial Layout ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT Installed capacity (e.g., 100 MW AC). o 38.4kW AC/50.88kW DC • Interconnection voltage. o Pending Site Visit ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT Exhibit B — Project Scope o General Obligations ■ Deliver a fully operational solar PV facility on a turnkey basis. ■ Comply with all applicable codes, standards, and regulations (NEC, IEEE, UL, NFPA, local building codes). ■ Obtain all permits, licenses, interconnection applications and approvals required for construction and commissioning. o Procurement ■ PV Modules. Tier-1 modules meeting IEC/UL standards. ■ Inverters. ■ Balance of System (BOS) ■ Mounting structures, cabling, and connectors. ■ Data acquisition system and remote monitoring capability. ■ Warranties o Construction ■ Site Preparation ■ Civil Work ■ Mechanical Installation ■ Electrical Installation ■ Grid Interconnection ■ Safety & Quality Control o Commissioning & Testing ■ Pre -Commissioning Checks • Insulation resistance, continuity, and torque checks. ■ Functional Testing • Inverter start-up, monitoring integration, and protection relay testing. ■ Performance Testing ■ Grid Synchronization • Coordination with utility for final energization. o Documentation & Handover ■ As -Built Drawings • Complete set of updated drawings and schematics. ■ Operation & Maintenance (O&M) Manuals • Detailed procedures for preventive and corrective maintenance. o Training ■ On -site training for organization staff. o Warranty Certificates ■ OEM and EPC warranties for equipment and workmanship. • Engineering Scope o Electrical design services including: ■ PE Stamped electrical drawings. o Structural services including: ■ In the event that the structural engineering report determines the existing roof structure cannot safely support the proposed solar array, the City shall bear full responsibility for the cost of the structural engineering report. o Deliverables: ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT 7 Permit set documents and specifications. Responses to review comments. One resubmittal set, when required. 60/90 drawings and construction set • Exclusions o Fencing around solar array. o Land acquisition and site security (unless specified). o Long-term O&M beyond initial commissioning period o Fiberoptic communications cabling o Tax leadership (it is customer's responsibility to engage with a certified tax professional to obtain ITC) ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT Exhibit C — Construction Schedule / Milestone Payments o Preliminary Construction Milestones. Dependent on receipt of payments, weather, and procurement lead times o Final contract and agreements executed o Long lead time material and engineering begins 1 week after contract execution o Permitting begins: 2 weeks after contract execution 0 60% Construction Documents: Completed 5 weeks after contract execution o Equipment Procurement: Begins 6 weeks after contract execution 0 90% Construction Documents design plans complete: 12 weeks after contract and agreement executed o Final Construction Build Documents Complete: 18 weeks after contract o Construction Begins 18 weeks after contract signing: ■ Site prep, civil, and grading (3 weeks) ■ Mechanical Construction (4 weeks) ■ Electrical Construction (7 weeks) o Inspection and Commissioning: (2 weeks) o Electrical Generation Begins (Permission to operate): • Milestone Payments: o Safe Harbor Down Payment - Ten percent (10%) o Equipment Procurement - Forty percent (40%) o Construction Begins — Twenty-five percent (25%) o Substantial Completion - Twenty percent (20%) o Final Payment/Commissioning - Five percent (5%) ver. 4.6.2021 ZES -EQUIPMENT AND INSTALLATION AGREEMENT 9 Exhibit E — Warranties Workmanship: 2 Year Ziegler Energy Solutions Factory (Major equipment) o Solar Module: 15 Year Workmanship and 25 Year Linear Performance Guarantee o Inverters: 10 Year Product Warranty o Racking: 20 Year Product Warranty ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT 10 MN EMS �Vr II'd�a:rgy II�I„py�o��gzmi�auox 5a4u[ians, �mc r EpgLqy Mana ement A reement 8/12/25 The purpose of this Agreement is to set forth the understanding and agreement between Energy Management Solutions, Inc. (EMS) and City (CUSTOMER). PROJECT DESCRIPTION: EMS will help CUSTOMER with the No -Cost Solar on Public Buildings projects. The state will pay 70% of the project (up to $112,000) and the Federal government will pay 30% of the project through the IRA Direct Pay Program. EMS will make sure this project is still a no - cost project for CUSTOMER, including EMS' fees. The buildings to be included are attached on Addendum A. Energy Services — a. Analyze sites to determine best locations for solar. b. Review energy usage to determine proper size of Solar — Max of 40 kW AC. c. Prepare bid documents for solar vendors and answer any questions. d. Visit site to take pictures and determine where equipment should be installed. e. Analyze bids from Solar vendors. It is important to note that low cost could result in low production of solar due to poor performing solar panels. EMS will make sure CUSTOMER received the best panels available and still at no cost to CUSTOMER. f. Make sure Solar company can start project before 12/31/25 to still qualify for the grants. g. Submit State Grant information. EMS will submit State Grant applications in 1 week from approving this agreement. This is critical since the grants are on a first come first serve basis. If we don't submit the grants guickly, they will be one. h. Complete a final inspection once the project is completed. i. Complete Federal Grant Application. j. Help CUSTOMER sell the RECs in the future. k. CUSTOMER agrees to only use Energy Management Solutions (EMS) for this program. guality Assurance - All work will be completed or reviewed by a Professional Engineer. FEES: EMS Fees are included in the Grant fees so there is no out pocket fees to CUSTOMER. BILLING AND PAYMENT: EMS shall be paid by once CUSTOMER receives money from grants. INDEPENDENT CONTRACTOR: EMS shall be and remain an independent contractor -consultant during the term of this Agreement, and EMS, its directors, officers and employees, shall not act for, or bind CUSTOMER in any manner, unless specifically authorized to do so by CUSTOMER. CUSTOMER: City 41E xcelsior Blvd, Simite 200 tlfl : celsi iir, IM f 553,31 EMS' Initiaics., EMS: (Payment and Notices) Energy Management Solutions, Inc. 684 Excelsior Blvd., Suite 200 P.O. Box 255 Excelsior, MN 55331 Attn: Gary A. Swanson, PE Phone: (612) 819-7975 Fax: (952) 556-9171 Email: IMagrie fgy. ASSIGNMENT OR AMENDMENT: The Agreement may not be assigned or amended without the written consent of EMS and CUSTOMER. APPLICABLE LAW: The Agreement shall be construed in accordance with the laws of the State of Minnesota. ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement among the parties pertaining to the subject matter hereof and supersedes all prior Agreements and understanding pertaining hereto. If the above correctly sets forth CUSTOMER's understanding of the Agreement, please so indicate in the spaces below and return one copy to EMS, Attention: Gary Swanson. ENERGY MANAGEMENT SOLUTIONS Inc. By: (Sian) Name: Gary A. Swanson Title: President Date: 8/11 /25 ACCEPTED AND DATED TO THIS i 46 DAY of �"� , 2025 CITY .74 By: fSian Name: ' � �. W� Print 01 Title: C oow Date: W . N Addendum A u) N O N a) N %-I T!o A 0, N N 0) 00 le m r le cm 0) f� M d' Ci N w O d' W) w fl- N N M --ii Ici W W C W --ii M N N I ti 00 ti le N ti r ti ti N U>1� �y �y U��L)w�5a��nD0 °e °a o U a, o a>°> E o f °�� 6 a E E° Q —0o y o y N ump w a tj O m n O m a� o e i Z ® IIIIIIIIIIIIIIIIIIIIIIII EE o b E :1', z m a)yE in n �° ro a) a, m y y sJ m m m ro m y °' m -° yo '�N mf lµ" o ° m° o -o 0 o n. s m n m f6 E uQ) y n � uuuuuul o f6 -o '� ns "° m o > U E❑ 2 m -y ,� ❑ U m Im O U } o o u m y u c a� -o E o- o N m o-u mro °Ena�Ero�>Ew` III m U `m y `°t E o o u N a� -o o `o a� s- s- „W V n E S m u n S o n° E2: n vy m m y G Ws 0 o' Vi ,Q 62 O t6 y d W W !] (n LLJ Z ,�., actin 0 0 Q o ro - `� a� n'y o o ��OizzQw¢nzwiQ ° m V f6 s y Q w Q -, Z m 3 w 'B J Vi CL W W W CL I -o 0 Z ZcQ acL wZ " Q Hzm OO W r1 w Z a) E wE UO �w Z 0 uOwz o w w 5 Ozm0xQ ,w s.n ` + a QZ o 0 o oQ Q o m Y w Q a:� J.n-� m m °� c ° Oa� o Qwvi zg�w0¢z o Z p p0°Z °o1� _rm LLJ 0 �O¢��Oaa¢�c iU za wwon2: a 0 U 0 cn 0 M w w OR c z = J O OR O 11le le = v 0 v L 0 0 cn 0 0 0 cr 0 J 0 J _ d 0 = co 0 o x 0 a ry o o 0 r r r CR a LL Z 0 0 v d N d ! fn ®y N N_ 0 y N U >+ 7 >. d >. 0cn _ v U 0 U > 0 0 Q cn _= a rJrJ cnC�rC� —C� Cc C -,'aCW J J z W z O z O m O O s f6 cna¢ a O cc o.. c 0 a 2mm mmOz4= m 3 °� wz W d¢�u_U-0C = .n u n�i W J,n= O J a 1- V1 . CL W �Qm+ O W~= J O f6 C a VCW.7i0wnzI-Cryo M:E O.N o ro W O W ll - w� � a7 ° o cnzm0� =r�j""0 W o'B no Vl C CL U V� z= U 6~ CL C S s+ W O ._ O za Luz - V 0 z 0 y ro �'g v0zW °ov_ mE r1 w!0 ��Z�OV¢ mw-oo �2: W JLLJ �� c m 0 ��z�< U 0LJ�� ¢�w _ -' �u�; 0Lli 0PTU- I I A.' HUTCHINSON UTILITIES COMMISSION ^I'�xP61Tti'°" Board Action Form Agenda Item: Approve Solar PV System - Purchase agreement with Apadana Energy Presenter: Dave Agenda Item Type: Time Requested (Minutes): 5 New Business Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: We entered into an agreement with Energy Management Solutions Inc. on 8-28-25 to help with the application process for Solar on Public Buildings Grant Program. The State will reimburse 70% of the total costs and 30% will be reimbursed by the Federal Government. We are still in the review process with the state and the next step is to have an agreement signed with the solar developer. The agreement is contingent on being awarded the Grant for the project. Once the Grant is awarded, we will need to send a 10% down payment by 12-31-25 to initiate the project. 20KW solar installed on cold storage building Total cost= $75,790.00 10% Down = $ 7,579.00 See attachment for more detailed costs breakdown. BOARD ACTION REQUESTED: Approve Solar PV System - Purchase agreement with Apadana Energy Fiscal Impact: Included in current budget: No Budget Change: No PROJECT SECTION: Total Project Cost: Remaining Cost: (V�IIOIII��IIJI/�, ��IU�' �/ ri�pPpi, muu yyJ+wrmi��,, amrry�y mm� rtu imrrvNi�V Gr mrrniauumiii A V�arvimo��IlUlll i �� II� m��Yl01B� o�um�lmj%� umunr�nd i I ��muwr� E= N E: R CaY SOLAR PV SYSTEM - PURCHASE AGREEMENT THIS AGREEMENT (the "Agreement") made the 8th day of December, 2025 (the "Effective Date") by and between Apadana, L.L.C., and Apadana Energy LLC dba Apadana Solar Technologies together hereinafter "Apadana" and _City of Hutchinson_ hereinafter "Buyer", collectively the "Parties". WHEREAS Apadana is an engineering, procurement, and construction provider of solar PV systems ("solar array"), and WHEREAS Buyer seeks to purchase and install a new solar array at Buyer's facility, and WHEREAS Buyer wishes to contract with Apadana to provide all necessary items, including labor and materials, to install a Solar Array, as defined herein, to be operated at Buyer location, and WHEREAS the Parties hereby agree that the terms and conditions contained herein shall be those which govern the purchase and installation of the Solar Array and that in the even that Buyer issues its own purchase order and terms contained in Buyer purchase order are in conflict with those contained herein, that the terms in this Agreement shall govern, NOW THEREFORE, the Parties hereby agree as follows: 1. Scope of Work Apadana shall furnish the material, labor, equipment, tools, and supervision necessary to construct a solar PV system described in the "Specifications" attached here to Exhibit A (the "Project"), which shall be delivered to and performed at Buyer's property location identified below. In addition, Apadana shall obtain utility and city governmental approval of the engineering plans and permits for construction of the project. The cost of engineering and electrical building permit(s) is included in the lump sum amount. Any upgrades required for electrical code, electrical effectiveness and utility transmission capacity will be paid for by Buyer. Apadana will work with Buyer and the local utility to secure the interconnection agreement and bring the project through to commissioning. APADANA. LLC PURCHASE ORDER— SOLAR PV SYSTEM PAGE 1 (V�IIOIII��IIJI/�, ��IU�' �/ ri�pPpi, muu yyJ+wrmi��,, amrry�y mm� rtu imrrvNi�V Gr mrrniauumiii A V�arvimo��IlUlll i �� II� m��Yl01B� o�um�lmj%� umunr�nd i I ��muwr� E N E R CaY Project size in kilowatts and subsequent project price may change based on utility feedback and approval parameters. Any alteration or deviation from the Specifications, including but not limited to any alteration or deviation involving modifications to specified material or labor, will be executed only upon a written order signed by the Parties (a "Change Order"). When a Change Order results in a price change, such a change will be incorporated into the Specifications, updating the Project Price. 2. Payments Buyer payment for services and materials included in the Specifications, which may be adjusted from time to time by a Change Order will be made in accordance with the Payment Schedule below. a) Buyer checks should be made payable to Apadana, LLC b) Buyer payment by Credit Card is subject to a 3.5% processing fee. c) Buyer agrees that in the event of a Change Order where the project cost changes, then the payments due per the above schedule will be updated and Buyer will submit additional payments when necessary to meet the defined percent of total project cost. d) The commitment fee for engineering and permitting is not refundable. e) Any payment not received within five (5) days after commissioning of the project shall incur a late fee of $35 plus 1.5% monthly interest rate will be added for payments received after 5 days past the invoice due date. f) Apadana participates in the Credit Trade Exchange Program, reporting both prompt and slow payments. g) In the event that payment is not received as required, Apadana may suspend work on the project until such time as all payments due have been made. A failure to make payment for a period in excess of 30 days from the due date of the payment shall be deemed a material breach of this Agreement. APADANA. LLC PURCHASE ORDER— SOLAR PV SYSTEM PAGE 2 (V�IIOIII��IIJI/�, ��IU�' �/ ri�pPpi, muu yyJ+wrmi��,, amrry�y mm� rtu imrrvNi�V Gr mrrniauumiii A V�arvimo��IlUlll i �� II� m��Yl01B� o�um�lmj%� umunr�nd i I ��muwr� E N E R CaY 3. General Working Provisions a) All work delivered under this Agreement shall be completed in a workman -like manner and in compliance with all building codes and other applicable laws. b) Apadana shall furnish a plan and scale drawing showing the shape, size dimensions, and construction and equipment specifications for property improvements, a description of the work to be done, and a description of the materials to be installed. c) Apadana may, at its sole discretion, engage qualified third -party subcontractors to perform any or all of the work associated with this project, provided Apadana shall remain responsible for the performance of such third parties and that such subcontractors shall be paid in full for their work. d) Apadana shall furnish to Buyer appropriate releases or waivers of lien for all work performed or materials provided at the time the next periodic payment shall be due, if requested by Buyer. e) All change orders shall be made in writing and signed both by Buyer and Apadana, and shall be incorporated herein, and become a part of this Agreement. f) Apadana shall at its own expense, unless noted in the Specifications, obtain all permits necessary for the work to be performed. g) Apadana shall remove all construction debris associated with this project and leave the property in pre-existing condition. h) Unless otherwise included in the Specification, Apadana will not be required to repair existing electrical wiring issues or code violations identified on the Project property. Such items will be identified and brought to the Buyer's attention to resolve or be treated as a Change Order. i) Buyer will provide access to the property and roof for inspection or evaluation by local, state, or federal agencies, electric utility representatives, and as needed for engineering, permitting, certification and/or inspection. Once commissioned, certain solar energy equipment systems will be enabled to "net -meter" (i.e., to produce more electricity than that which is being consumed, with the excess electricity transferred to the utility grid for a credit). When consumption exceeds the PV system's production, electricity will be drawn from the grid. j) Apadana shall mount solar modules and racking to the building's roof, including any required electrical equipment such as inverters, electrical panels, utility meters, disconnects, and monitoring equipment shall be permanently mounted to the building's exterior wall near the existing electrical service equipment. If needed, customer may install a fence around the wall -mounted panel and equipment to protect against vandalism. k) Industry best practices advise against installation of solar systems on roofs over 15 years of age. Buyer acknowledges that the entire existing roof is less than 15 years old and meets these requirements, and Buyer assumes all future costs related to solar system modifications to accommodate roof repairs. 1) The estimated energy production of the solar photovoltaic (PV) system described in this Proposal (Agreement) is based on system specifications, site conditions, and third -party modeling software, including but not limited to Aurora Solar, which utilizes 44-year historical weather and solar irradiance data specific to the installation location. These projections are intended solely for informational and planning purposes. Customer understands and acknowledges that actual system performance and energy output may vary year to year from these estimates due to numerous factors beyond Apadana's control, including but not limited to variations in weather and climate patterns, changes in shading or environmental conditions, utility grid limitations, equipment degradation, and other unforeseen circumstances. Installer does not guarantee or warrant specific energy production levels or financial savings. Apadana expressly disclaims any liability for losses or underperformance arising from deviations between estimated and actual system production attributable to weather variability or other external factors not caused by Installer's negligence or breach of contract. APADANA. LLC PURCHASE ORDER— SOLAR PV SYSTEM PAGE 3 (V�IIOIII��IIJI/�, ��IU�' �/ ri�pPpi, muu yyJ+wrmi��,, amrry�y mm� rtu imrrvNi�V Gr mrrniauumiii A V�arvimo��IlUlll i �� II� m��Yl01B� o�um�lmj%� umunr�nd i I ��muwr� E N E R CaY m) Any financial models, return -on -investment (ROI) estimates, payback timelines, or related economic forecasts provided by Apadana are based on assumptions including, but not limited to, estimated solar energy production, current utility rates and rate structures, available tax incentives or rebates, and customer energy usage patterns. These estimates are intended for illustrative purposes only and do not constitute a guarantee of performance, savings, or financial return. Customer acknowledges that utility rates may change, tax incentives may expire or become unavailable, and actual energy usage or system output may vary due to weather, maintenance, or other factors outside Installer's control. As such, Installer makes no warranty or representation regarding the accuracy of projected financial outcomes and shall not be held liable for any difference between projected and actual savings, returns, or payback period. n) Upon completion of the installation, Apadana will arrange for inspection of the system by the municipal inspector and/or utility inspector. Upon successful completion of these inspections, the solar system will be turned on for operation. Apadana has no control over the scheduling of these inspections and will make the best efforts to expedite them when possible. o) Buyer will make the property accessible and all electrical equipment available for maintenance and inspection at any reasonable time. If Apadana performance of any obligation hereunder is delayed due to reasons beyond Apadana control, the time for performance of such obligation will be postponed for a period equal to the number of days of such delay. In no event will Apadana be liable for any damages or loss of production resulting from any delay in the delivery or repair of the equipment or any delay in the performance of any maintenance outside of Apadana's control. p) All repairs, maintenance, and related solar system warranty work performed by any third party hired by the Buyer without Apadana written approval shall nullify any existing solar system warranties. q) Apadana is responsible for all shipping, tax, and delivery cost of all equipment and materials. 4. Prevailing Wage and Apprenticeship Compliance - Responsibility for Compliance with Federal Funding Requirements Buyer acknowledges that certain funding sources, including but not limited to federal tax credits under the Inflation Reduction Act (IRA) or other government programs, may trigger compliance obligations under the Davis -Bacon Act (DBA) or similar prevailing wage and apprenticeship mandates (collectively, "PWA Requirements"). Apadana shall not be responsible for compliance with any PWA Requirements unless such obligations are expressly identified in writing and agreed to by Apadana prior to the commencement of construction. If Buyer elects to pursue funding, tax credits, or other benefits that impose PWA Requirements after execution of this Agreement, Buyer shall: a) Notify Apadana in writing of such election at least thirty (30) days prior to the commencement of construction; b) Indemnify and hold harmless Apadana from any and all costs, penalties, liabilities, or obligations arising from such compliance, including but not limited to wage adjustments, fringe benefit contributions, apprenticeship participation, recordkeeping, and audit defense; c) Amend this Agreement to reflect any changes in scope, cost, or schedule resulting from the imposition of PWA Requirements, including equitable adjustments to the contract price and timeline; d) Provide all necessary documentation and guidance to enable Apadana to comply with applicable PWA Requirements, including wage determinations, apprenticeship program details, and reporting formats. Failure by Buyer to comply with the obligations set forth in this clause shall relieve Apadana of any responsibility for PWA compliance and shall constitute a material breach of this Agreement. APADANA. LLC PURCHASE ORDER— SOLAR PV SYSTEM PAGE 4 (V�IIOIII��IIJI/�, ��IU�' �/ ri�pPpi, muu yyJ+wrmi��,, amrry�y mm� rtu imrrvNi�V Gr mrrniauumiii A V�arvimo��IlUlll i �� II� m��Yl01B� o�um�lmj%� umunr�nd i I ��muwr� E N E R CaY 5. Warranties a) Apadana utilizes manufacturers' performance and production specifications to engineer the PV system and disclaims any responsibility or guarantee for actual energy production achieved by the PV system which relies significantly on local site conditions and other variable outside Apadana's control. b) All warranties are subject to and contingent upon payment in full of all amounts as set forth in this agreement. Manufacturer's warranties are passed through to the Buyer. The warranties herein do not apply to damage from fire (except if it was directly caused by the solar installation), vandalism, extreme acts of nature, and other conditions beyond control of Apadana. c) Apadana workmanship warranties are solely limited to the proper installation of the solar system. Apadana cannot promise total uninterrupted or error -free operation of the Solar PV equipment, which is dependent on electrical components and other variables including Wi-Fi, internet, and utility transmission. d) Apadana shall not be liable under any circumstances for limitations, depletion, interruptions, disruptions, or fluctuations in the energy collection to or output from the solar panels or equipment caused by occurrences beyond the control of Apadana. e) All solar and electrical equipment is warranted by the manufacturers. Manufacturers provide 25 or 30-year performance warranties for solar modules, and 10 to 20 years inverter warranties (depending on model) which can be extended with the purchase of extended warranty coverage. f) Installation and workmanship warranties are provided for 10 years and can be extended up to 25 years from the date of commissioning of the solar system with the purchase of extended warranty coverage. Project -specific warranties are listed in the Specifications. g) Apadana shall not warranty occurrences of failure including, and without limitation, manufacturing defects; design specifications of the equipment; pre-existing conditions of the roof, trees or obstacles impeding the solar system, sunlight depletion, blockage or limitations; unintended or increased shading within or near the vicinity, weather -related impacts, Buyer or third party tampering with the solar equipment or other electrical equipment, including attempts to reposition equipment, walk on top of or hinder equipment, re -calibrate or reorient the equipment or electrical flow, lightning, static electricity, temperature cycling and/or fluctuation, the collection on or near the equipment of dust, leaves, debris or burying rodents or birds nesting and damaging equipment, hail damage, water damage, or damage to the equipment caused by events beyond the control or foreseeability of Apadana, such as, but not limited to, issues arising from plumbing, mechanical or electrical interfaces with the solar equipment or solar system malfunctions due to manufacturing defects or deficiencies. EXCEPT FOR THE WARRANTIES SET FORTH IN THIS AGREEMENT AND ANY SPECIFICATION, EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL OTHER WARRANTIES OF ANY KIND OR NATURE, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, INCLUDING WITHOUT LIMITATION TO ANY WARRANTY THAT DELIVERABLES ARE ERROR -FREE, OR ARE COMPATIBLE WITH ALL HARDWARE AND SOFTWARE CONFIGURATIONS, AND ANY AND ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. DELIVERABLES, INTELLECTUAL PROPERTY, TECHNICAL SUPPORT AND/OR SERVICES UNDER THIS AGREEMENT ARE PROVIDED "AS IS". APADANA. LLC PURCHASE ORDER— SOLAR PV SYSTEM PAGE 5 (V�IIOIII��IIJI/�, ��IU�' �/ ri�pPpi, muu yyJ+wrmi��,, amrry�y mm� rtu imrrvNi�V Gr mrrniauumiii A V�arvimo��IlUlll i �� II� m��Yl01B� o�um�lmj%� umunr�nd i I ��muwr� E N E R CaY 6. Indemnification To the fullest extent permitted by law, Buyer shall indemnify, defend and hold harmless Apadana and its agents, employees, and owners, from and against claims, damages, losses and expenses, including but not limited to attorney's fees, arising out of or resulting from performance of the equipment or providing of materials to the extent caused in whole or in part by negligent or wrongful acts or omissions of, or a breach of this agreement by, Apadana, a subcontractor, anyone directly or indirectly employed by them or anyone whose acts they are responsible for legally. 7. Insurance Apadana, and any subcontractor involved in this project, has purchased insurance and agrees that they will keep in force for the duration of the performance of the work or for such longer term as may be required by this agreement, in a company or companies lawfully authorized to do business in the State of Minnesota, such insurance as will protect the Buyer and the owner of the real property, from claims for loss or injury, which might arise out of or result from Apadana's performance hereunder. Apadana represents and agrees that said insurance is written for and shall be maintained in an amount not less than the limits of the liability specified below or required by law, whichever coverage is greater. Apadana certifies that coverage written on a "claims made" form will be maintained without interruption from the commencement of work until the expiration of all applicable statutes of limitation. Worker's Compensation $500,000. Comprehensive General Liability with limits of not less than $1,000,000 per occurrence. Comprehensive Automobile Liability (owned, non -owned, hired) of $1,000,000 for each accident. 8. Lien Notice This notice advises Buyer of their rights under state laws concerning property improvements. For example: Any person or company supplying labor or materials for this solar project to Buyer property may file a lien against this property if that person or company is not paid for their work. Under [state] law, Buyer may pay persons, who supplied labor or material, for this project directly and deduct this amount from the Contract Price (Project Fee) or withhold the amounts due Apadana until 120 days after completion of the improvement unless Apadana provides Buyer a lien waiver signed by persons who supplied the labor or material and provided timely notice. 9. Notices Any notice to be given or document to be delivered to either the Buyer or Apadana pursuant to the Agreement will be sufficient if delivered personally or sent by prepaid registered mail to the address specified below. Any written notice or delivery of documents will have been given, made, and received on the day of delivery if delivered personally or on the third (3d) consecutive business day next following the date of mailing if sent by prepaid registered mail: To Apadana: Lev Buslovich, President, Apadana, 3401 Nevada Avenue North, New Hope, MN 55427 To Buyer: Mike Stifter, Hutchinson Public Works Director, 111 Hassan St. SE, Hutchinson, MN 55350 (Buyer Representative, Title, Buyer Address) APADANA. LLC PURCHASE ORDER— SOLAR PV SYSTEM PAGE 6 (V�IIOIII��IIJI/�, ��IU�' �/ ri�pPpi, muu yyJ+wrmi��,, amrry�y mm� rtu imrrvNi�V Gr mrrniauumiii A V�arvimo��IlUlll i �� II� m��Yl01B� o�um�lmj%� umunr�nd i I ��muwr� E= N E= R CaY 10. General Provisions: a) Heading. Headings are inserted for the convenience only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa. b) Survival. Sections 2, 4 and 5 shall survive termination of this Agreement. c) No Assignment. Neither Party may assign its right or delegate its performance hereunder without prior written consent of the other party, and any attempted assignment or delegation without such consent will be void. d) Modifications. This Agreement shall not be altered, amended, nor modified by oral representation made before or after the execution of this Agreement. Any modifications to this Agreement must be in writing and duly executed by all Parties. Any waiver of any requirement of this Agreement shall be limited to the circumstance or event specifically referenced in the written waiver document and shall not be deemed a waiver of any other term of this Agreement. e) Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Minnesota, including the Minnesota Uniform Commercial Code and the Buyer and Apadana hereby attorn to the jurisdiction of the Courts of the State of Minnesota. f) Severability. The provisions of this Agreement are severable. If any portion, provision, or part of this Agreement is held, determined, or adjudicated by a court of competent jurisdiction to be invalid, unenforceable or void for any reason whatsoever, each such portion, provision or part shall be severed from the remaining portions, provisions or parts of this Agreement and shall not affect the validity or enforceability of any remaining portions, provisions or parts, which remaining portions, provisions or parts shall be enforced as amended. g) Inurement of Agreement. This Agreement will inure to the benefit of and be binding upon the Buyer and Apadana and their respective successors and assigns. h) Agreement Timing. Time is of the essence in this Agreement. Both parties will use reasonable business efforts to perform all tasks laid out in this Agreement. i) Capacity to Sign. The individual whose signatures are affixed to this Agreement in a representative capacity represent and warrant that they are authorized to execute the Agreement on behalf of and to bind the entity on whose behalf the signature is affixed. j) Costs for Collections. If Apadana takes actions to enforce this agreement, including collecting unpaid amounts due from Buyer arising out of or in connection with this Agreement, Apadana shall be entitled to recover from Buyer and Buyer agrees to pay Apadana's attorney's fees as well as related expenses incurred. k) Buyer Right to Cancel Agreement. Buyer may cancel this purchase any time prior to midnight of the third business day following purchase date. See attached notice of cancellation form for an explanation of this right. 1) Entire Agreement. This Agreement constitutes the entire agreement between the parties and there are no further items or provision either oral or otherwise. Buyer acknowledges that it has not relied upon any representations of Apadana as to prospective performance of any subject matter covered in this Agreement but has relied upon its own inspection and investigation of the subject matter. This Agreement, along with the Specifications, represent a single, integrated, written contract expressing the entire understanding and agreement between the Parties concerning the subject matter hereof and supersedes any prior agreements, written or oral, relating thereto. APADANA. LLC PURCHASE ORDER— SOLAR PV SYSTEM PAGE 7 a, c),:J a rt� a ENERC3Y (DLA"'FI 1 VC:. iA I CRJ('l, I B�4, f ( L.J S r (D' a A CA7 IN WITNESS THEREOF, the parties by signing below agree to the terms and conditions as outlined within. APADANA BUYER: Authorized Signature: Authorized Signature: Name (printed) Lev Buslovich, President Name rinted) Date: 12/8/2025 Date: APADANA. LLC PURCHASE ORDER— SOLAR PV SYSTEM PAGE 8 a., r4,),:J a rt� a ENERC3Y I 1 V Cl iA I I B. 4, f ( L,l S r (D' a A CA7 1 *,V,4 M I 1 0.1 k ff 1-1 Specifications APADANA. LLC PURCHASE ORDER- SOLAR PV SYSTEM PAGE 9 MN EMS �Vr II'd�a:rgy II�I„py�o��gzmi�auox 5a4u[ians, �mc r EpgLqy Mana ement A reement 8/12/25 The purpose of this Agreement is to set forth the understanding and agreement between Energy Management Solutions, Inc. (EMS) and City (CUSTOMER). PROJECT DESCRIPTION: EMS will help CUSTOMER with the No -Cost Solar on Public Buildings projects. The state will pay 70% of the project (up to $112,000) and the Federal government will pay 30% of the project through the IRA Direct Pay Program. EMS will make sure this project is still a no - cost project for CUSTOMER, including EMS' fees. The buildings to be included are attached on Addendum A. Energy Services — a. Analyze sites to determine best locations for solar. b. Review energy usage to determine proper size of Solar — Max of 40 kW AC. c. Prepare bid documents for solar vendors and answer any questions. d. Visit site to take pictures and determine where equipment should be installed. e. Analyze bids from Solar vendors. It is important to note that low cost could result in low production of solar due to poor performing solar panels. EMS will make sure CUSTOMER received the best panels available and still at no cost to CUSTOMER. f. Make sure Solar company can start project before 12/31/25 to still qualify for the grants. g. Submit State Grant information. EMS will submit State Grant applications in 1 week from approving this agreement. This is critical since the grants are on a first come first serve basis. If we don't submit the grants guickly, they will be one. h. Complete a final inspection once the project is completed. i. Complete Federal Grant Application. j. Help CUSTOMER sell the RECs in the future. k. CUSTOMER agrees to only use Energy Management Solutions (EMS) for this program. guality Assurance - All work will be completed or reviewed by a Professional Engineer. FEES: EMS Fees are included in the Grant fees so there is no out pocket fees to CUSTOMER. BILLING AND PAYMENT: EMS shall be paid by once CUSTOMER receives money from grants. INDEPENDENT CONTRACTOR: EMS shall be and remain an independent contractor -consultant during the term of this Agreement, and EMS, its directors, officers and employees, shall not act for, or bind CUSTOMER in any manner, unless specifically authorized to do so by CUSTOMER. CUSTOMER: City 41E xcelsior Blvd, Simite 200 tlfl : celsi iir, IM f 553,31 EMS' Initiaics., EMS: (Payment and Notices) Energy Management Solutions, Inc. 684 Excelsior Blvd., Suite 200 P.O. Box 255 Excelsior, MN 55331 Attn: Gary A. Swanson, PE Phone: (612) 819-7975 Fax: (952) 556-9171 Email: IMagrie fgy. ASSIGNMENT OR AMENDMENT: The Agreement may not be assigned or amended without the written consent of EMS and CUSTOMER. APPLICABLE LAW: The Agreement shall be construed in accordance with the laws of the State of Minnesota. ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement among the parties pertaining to the subject matter hereof and supersedes all prior Agreements and understanding pertaining hereto. If the above correctly sets forth CUSTOMER's understanding of the Agreement, please so indicate in the spaces below and return one copy to EMS, Attention: Gary Swanson. ENERGY MANAGEMENT SOLUTIONS Inc. By: (Sian) Name: Gary A. Swanson Title: President Date: 8/11 /25 ACCEPTED AND DATED TO THIS i 46 DAY of �"� , 2025 CITY .74 By: fSian Name: ' � �. W� Print 01 Title: C oow Date: W . N Addendum A u) N O N a) N %-I A 0, N m cm a LO m r a w 00 Ln 0) Ln w le oo 00 0) 00 w i` TM le 1` M LO 1` 09 r 00 M 09 le N Ti Ti N N N N M N N r r r le Ln Ci Iv Ln IvCR cm M LO LO LO N I U>1@ �y �y U C A a ° IC VL4%i f6 °' l° °- z 5 U o a, o a>°> E O°° o f im °�� 6 a E E° Q -0o y o y N ump w a tj O m n O m a� o e i Z ® IIIIIIIIIIIIIIIIIIIIIIII EE o b E :1', z m a)yE in n �° ro a) a, m y y sJ m m m ro m y °' m -° yo '�N mf lµ" o ° m° o -o 0 o n. s m n m f6 E uQ) y n � uuuuuul o f6 -o '� ns "° m o > U E❑ 2 m -y ,� ❑ U m Im O U } o o u m y u c a� -o E o- o N m o-u mro °Ena�Ero�>Ew` LII m U `m y `°t E o o u N a� -o o `o a� s- s- „W V n E S m u n S o n° E2: n vy m m y G u�u 0 o' Vi ,Q 62 O t6 y d W W !] (n LLJ Z actin 0 0 Q o ro - `� a� n'y o o ��OizzQw¢nzwiQ ° m V f6 s y Q w Q -, Z m 3 w 'B J Vi CL W W W CL I -o 0 Z ZcQ ° wZ " Q H zm OO W r1 w ZE wE VO w Z 00nuOwz o w w 5 Ozm0xQ , W s.n `+� a QZ o 0 o oQ Q o m Y w Q a:� J.n-� m m °� c ° Oa� ° Qwvi zg�w0¢�Oz o Z p p0°Z °Ym LLJ 0 �O¢��Oaa¢�c iU za wwon2: a 0 U 0 cn 0 M w w OR c z = J O OR O 11le le = v 0 v L 0 0 cn 0 0 0 cr 0 J 0 J _ d 0 = co 0 x 0 a ry o o cm 0 r r r CR a LL Z 0 0 v d N d ! fn ®y N N_ 0 y N U >+ 7 >. d >. 0cn _ v U 0 U > 0 0 Q cn _= a rJrJ cnC�rC� —C� Cc C -,'aCW J J z W z O z O m O O s f6 cna¢ a O cc o.. c 0 a 2mm mmOz4= m 3 °� wz W d¢�u_U-0C = .n u n�i W J,n= O J a 1- V1 . CL W �Qm+ O W~= J O f6 C a VCW.7i0wnzI-Cryo M:E O.N o ro W O W ll - w� � a7 ° o cnzm0� =r�j""0 W o'B no Vl C CL U V� z= U 6~ CL C S s+ W O ._ O za Luz - V 0 z 0 y ro �'g v0zW °ov_ mE r1 w!0 ��Z�OV¢ mw-oo �2: W JLLJ �� c m 0 ��z�< U 0LJ�� ¢�w _ -' �u�; 0Lli 0PTU- I I A.' HUTCHINSON UTILITIES COMMISSION ^I'�xP61Tti'°" Board Action Form Agenda Item: Approve Solar PV Equipment and Installation agreement Ziegler Energy Solutions Presenter: Dave Agenda Item Type: Time Requested (Minutes): 5 New Business Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: We entered into an agreement with Energy Management Solutions Inc. on 8-28-25 to help with the application process for Solar on Public Buildings Grant Program. The State will reimburse 70% of the total costs and 30% will be reimbursed by the Federal Government. We are still in the review process with the state and the next step is to have an agreement signed with the solar developer. The agreement is contingent on being awarded the Grant for the project. Once the Grant is awarded, we will need to send a 10% down payment by 12-31-25 to initiate the project. 38AKW Solar at Plant 2 Total cost= $144,718.00 10% Down = $14,472.00 See attachment for more detailed costs breakdown. BOARD ACTION REQUESTED: Approve Solar PV Equipment and Installation agreement Ziegler Energy Solutions Fiscal Impact: Included in current budget: No Budget Change: No PROJECT SECTION: Total Project Cost: Remaining Cost: SOLAR PV EQUIPMENT AND INSTALLATION AGREEMENT THIS EQUIPMENT AND INSTALLATION AGREEMENT ("Agreement") is made and entered into on this day December 23, 2025 by and between Hutchinson Utilities Commission ("Buyer") and Ziegler Energy Solutions, LLC, a Minnesota Limited Liability Company ("Seller"). Seller and Buyer may be individually referred to herein as a "Party" or collectively as the "Parties" as the context dictates. FOR AND IN CONSIDERATION of the mutual promises, covenants, agreements and payments set forth herein, the sufficiency of which is hereby acknowledged, Seller and Buyer agree as follows: 1. Sale of Goods. Subject to the terms and conditions specified herein, Seller shall sell to Buyer, and Buyer shall purchase from Seller the Equipment set forth in Exhibit "A" attached hereto (collectively, the "Equipment"). (Seller's work to be performed under this Agreement is sometimes hereafter referred to as the "Scope of Work"). Upon completion, there may be variations in the details of design, fabrication, arrangement or installation of any particular piece of Equipment that does not affect the ability of the Equipment to operate as originally intended. Seller reserves the right to make such changes in details of design, fabrication, arrangement or Equipment as shall in Seller's judgment constitute an improvement or needed change, all with notice to Buyer. If changes are made which affect the Buyer's layout or schedule, Seller will notify Buyer for concurrence with the change. Any changes made at Buyer's request that relate to sizing of Equipment or integration of Equipment in a manner different than that designed by Seller shall require a change order that may result in the increase of the Purchase Price. Buyer will use commercially reasonable efforts to provide all permits ("Permits") not otherwise obtained by the Seller, to the extent necessary for the Seller to perform the Scope of Work and comply with all applicable laws, regulations and ordinances. 2. Installation. (a) The Equipment shall be installed at Buyer's address located at 1106 Industrial Blvd SE Hutchinson, MN ("Property"). The installation services ("Installation Services") to be provided by Seller are set forth in Exhibit `B". The Equipment shall be installed in a workmanlike manner and in compliance with applicable laws, regulations and ordinances in effect as of the Effective Date and continuing throughout the duration of the Installation Services until completed. At all times during the installation, Buyer shall remain the operator of the Property as that term is used in applicable federal and state regulations. Buyer will use best efforts to provide all Permits in a timely manner. To the extent that Buyer's internal safety requirements differ from applicable laws and safety regulations and such difference requires Seller to incur additional cost for personnel, labor or materials in excess than that required for compliance with applicable laws and safety regulations, then the parties agree that the additional cost shall be added to the Purchase Price by change order signed by both Parties. (b) The Installation Services shall begin on or around December 30, 2025 and continue thereafter until completed. Seller estimates that installation of the Equipment will take approximately 295 calendar days. In the event Buyer fails to timely obtain applicable Permits, then the parties will mutually agree on a new date to begin the Installation Services. An informational project schedule is attached hereto as Exhibit «C» (c) Buyer shall make the Property available to Seller during the pendency of Installation Services, and keep the Property site free of obstructions or unusable /impassable road travel or structure for equipment and material delivery and storage including but not limited to roads/highways, bridges, canal/drainage crossings, irrigation lines, and utility lines, unless previously identified in Buyer furnished documents. All project impacts and costs associated with the discovery, rerouting, repair, improvement, renovation or enhancement of or due to previously unidentified site access obstructions will be the responsibility of the Buyer. The parties acknowledge that the installation of the Equipment may require the Property to be shut down for its intended use for a period of time on multiple occasions. Buyer acknowledges that due to ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT 1 unforeseen circumstances, shutdowns and/or an extension of the previously mentioned time may be required. (d) Seller will issue a "Certificate of Completion of Installation" upon the completion of the installation of the Equipment at the Property. The Certificate of Completion of Installation shall be countersigned by Buyer. Following the issuance of the Certificate of Completion of Installation, the Equipment may be tested by the Buyer. 3. Purchase Price. The purchase price which Buyer shall pay to Seller for the Equipment and Installation Services is $144,718 USD ("Purchase Price"). The Purchase Price does not include applicable sales and local taxes, and all such applicable taxes will be Buyer's responsibility and will be billed as an additional cost to Buyer to the extent that Seller is obligated to collect and remit such taxes. All pricing provided in this agreement is preliminary and subject to change following the completion of an on -site assessment. If conditions identified during the site visit require modifications to the design, equipment, or installation process, the final price will be adjusted accordingly. Any changes will be communicated and approved in writing prior to proceeding. This contract is subject to the State Grant Award of 70% 4. Terms of Payment. (a) Safe Harbor Down Payment - Ten percent (10%) of the Purchase Price, $14,471.80 USD, shall be due and payable within 20 days from the date this Agreement is signed by Buyer. (b) Equipment Procurement - Forty percent (40%) of the Purchase Price, $57,887.20 USD, shall be due and payable upon a date as communicated to Buyer by Seller in advance to enable Seller to purchase the Equipment as set forth in Exhibit A. (c) Construction Begins— Twenty-five percent (25%) of the Purchase Price, $36,179.50 USD, shall be due and payable prior to Installation Services commencement as communicated to Buyer by Seller in advance. (d) Substantial Completion - Twenty percent (20%) of the Purchase Price, $28,943.60 USD, shall be due and payable upon receiving a notification of substantial completion on a date as communicated to Buyer by Seller. (e) Final Payment/Commissioning - Five percent (5%) of the Purchase Price, $7,235.90 USD, shall be due and payable upon receipt of the executed Certificate of Completion of Installation. Invoices shall be payable within twenty (20) calendar days of issuance by Seller. If Buyer fails or refuses to pay Seller all or any part of the Purchase Price within twenty (20) calendar days following the date upon which any payment is due, interest shall accrue and be paid by Buyer to Seller in addition to the unpaid Purchase Price at the rate of eighteen percent (18%) per annum on the unpaid and undisputed amount, or the highest interest rate allowed by law, whichever rate is less. In any action or proceedings arising out of this Agreement in which Seller seeks collection of any portion of the Purchase Price not paid when due, Seller shall be entitled to recovery of its reasonable attorneys' fees and costs. 5. Limited Warranty. (a) The Seller shall assign to Buyer, or have issued in Buyer's name, all applicable pass -through warranties from manufacturers, suppliers and installers ("Pass -through Warranties"). Except for the Pass - Through Warranties, no other warranties are provided. (b) Warranty Exclusions and Disclaimers. The following are not covered: (1) Damage caused by use of the Equipment for purposes other than those for which it was designed, and/or in violation of Seller's recommended operating procedures. Operating the Equipment at a rate above the capacity at which it was designed will have an adverse effect on the Equipment and system including mechanical components and emission performance. The Equipment is to be operated within the guidelines of the operating procedures defined by Seller or the Equipment manufacturer provided to Buyer ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT by Seller. All operations outside these guidelines will be in violation of Seller's limited warranty and will void such limited warranties. (ii) Damage caused by disasters such as fire, flood, tornado, wind, hail, and lightning or other acts of God. (iii) Damage or failure caused by improper maintenance, unauthorized attachments, modifications. (iv) Use in a manner not in accordance with any operation manual or recommended operating procedure supplied by Seller or manufacturer (as such manual may be amended or supplemented from time to time, with notice to Buyer). (v) Any other abuse or misuse by Buyer or any other third parry. EXCEPT AS SPECIFICALLY STATED IN THIS AGREEMENT, SELLER DISCLAIMS ALL REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. 6. Limitation of Liability. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR TO ANY THIRD PARTY FOR ANY LOST PROFITS, LOST SAVINGS, PUNITIVE, EXEMPLARY OR ENCHANCED DAMAGES, OR FOR ANY INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. SELLER SHALL NOT BE LIABLE FOR ANY CLAIM BY THE BUYER BASED UPON ANY CLAIM BY ANY OTHER PARTY AGAINST THE BUYER. IN NO EVENT SHALL SELLER'S TOTAL LIABILITY HEREUNDER EXCEED $2,000,000. 7. Insurance. Buyer shall procure at its own expense and maintain in full force and effect, while this Agreement is in effect, comprehensive general liability insurance for bodily injury and property damage, in an amount not less than one million dollars ($1,000,000) combined single limit to cover Buyer's employees and equipment while on the Property. 8. Force Majeure. Except with respect to payment obligations, neither Party shall be responsible for any failure to perform due to causes beyond a Party's reasonable control, including but not limited to labor disputes, strikes, war or terrorism, civil unrest, acts of God, fire, floods, severe weather, explosion, pandemics or public health emergencies including failure or delay related to Coronavirus/Covid-19, executive orders, delays in transportation, interruption or failure of electricity or communications systems, governmental actions, cyber-attacks, delays in manufacture, or supply shortages, including supplier or sub - supplier or subcontractor delays caused by any of the above. Any delay beyond a Party's reasonable control shall be excused and the period of performance extended as may be necessary to enable the Party to perform after the cause of delay has been removed. 9. Indemnification. Subject to the limitations set forth in Section 6, each party agrees to indemnify and save harmless the other party from and against any and all losses, liabilities, expenses (including, without limitation, reasonable fees and disbursements of counsel), claims, liens, damages or other obligations whatsoever (collectively, "Claims") that may actually and reasonably be payable by virtue of or which may actually and reasonably result from the inaccuracy of any of their respective representations or the breach of any of their respective warranties, covenants or agreements made in this Agreement or in any certificate, schedule or other instrument delivered pursuant to this Agreement; provided, however, that no claim for indemnity may be made hereunder if the facts giving rise to such Claim were in writing and known to the party seeking indemnification hereunder, such facts constituted a breach of the party seeking indemnification and the party seeking indemnification elected in any event to consummate the transactions contemplated by this Agreement. ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT 10. Use of Subcontractors. Buyer expressly agrees that Seller may use any subcontractor that it chooses without prior approval for Installation Services, the Equipment or any other work related to the Scope of Work. 11. Miscellaneous. (a) This Agreement shall be governed by the laws of the State of Minnesota. Any legal proceeding relating to this Agreement shall be brought exclusively in the Hennepin County District Court, or in the United States District Court for the District of Minnesota, and both Parties hereto consent to the jurisdiction of said courts. (b) This Agreement shall become a legal and binding contract upon signature of the same by both Parties. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their permitted successors and assigns. (c) This Agreement may not be assigned to another party by either Party, either in whole or in part, without the prior written consent of the other Party, and such consent shall not be unreasonably withheld. (d) In the event any provision herein shall be judicially interpreted or held to be void or otherwise unenforceable as written, it shall be deemed to be revised and modified to the extent necessary to make it legally enforceable, and the remaining terms of this Agreement shall not be affected thereby. (e) No waiver by any Party of a breach of any provision of this Agreement shall be construed as a waiver of any subsequent or different breach, and no forbearance by a Party to seek a remedy for noncompliance or breach by another Party shall be construed as a waiver of any right or remedy with respect to such noncompliance or breach. (f) Each of the parties hereto represents to the other that (1) it has full power, authority and legal right to enter into and perform this Agreement, (ii) the execution delivery and performance of this Agreement has been duly authorized by all necessary action on each party's part, does not require any approvals or consents except such approvals and consents as have heretofore been duly obtained or which are specifically enumerated herein to which this Agreement is subject, and (iii) this Agreement does not contravene any law binding on either of the parties or contravene any agreement to which either of the parties hereto is a party or by which it is bound, or any law, governmental rule, regulation or order. Upon request, each of the parties will provide the other party with documentary evidence of its authority to enter into this Agreement. (g) All notices to be given in connection with this Agreement shall be in writing and delivered personally, sent by e-mail, by a nationally recognized overnight courier service or by registered or certified mail, return receipt requested, postage prepaid. (h) This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which shall constitute one Agreement. Delivery of an executed copy of this Agreement by e-mail shall be deemed delivery of the executed original. IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written. BUYER: Hutchinson Utilities Commission By: Its: SELLER: Ziegler Energy Solutions, LLC By: Its: ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT Exhibit A — Site Address >6d;jA LoX • Site Address o 44PAveNEHutchinson,MN 1106 Industrial Blvd SE Hutchinson, MN • I aXayXt ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT Installed capacity (e.g., 100 MW AC). o 38.4kW AC/50.88kW DC • Interconnection voltage. o Pending Site Visit ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT Exhibit B — Project Scope o General Obligations ■ Deliver a fully operational solar PV facility on a turnkey basis. ■ Comply with all applicable codes, standards, and regulations (NEC, IEEE, UL, NFPA, local building codes). ■ Obtain all permits, licenses, interconnection applications and approvals required for construction and commissioning. o Procurement ■ PV Modules. Tier-1 modules meeting IEC/UL standards. ■ Inverters. ■ Balance of System (BOS) ■ Mounting structures, cabling, and connectors. ■ Data acquisition system and remote monitoring capability. ■ Warranties o Construction ■ Site Preparation ■ Civil Work ■ Mechanical Installation ■ Electrical Installation ■ Grid Interconnection ■ Safety & Quality Control o Commissioning & Testing ■ Pre -Commissioning Checks • Insulation resistance, continuity, and torque checks. ■ Functional Testing • Inverter start-up, monitoring integration, and protection relay testing. ■ Performance Testing ■ Grid Synchronization • Coordination with utility for final energization. o Documentation & Handover ■ As -Built Drawings • Complete set of updated drawings and schematics. ■ Operation & Maintenance (O&M) Manuals • Detailed procedures for preventive and corrective maintenance. o Training ■ On -site training for organization staff. o Warranty Certificates ■ OEM and EPC warranties for equipment and workmanship. • Engineering Scope o Electrical design services including: ■ PE Stamped electrical drawings. o Structural services including: ■ In the event that the structural engineering report determines the existing roof structure cannot safely support the proposed solar array, the City shall bear full responsibility for the cost of the structural engineering report. o Deliverables: ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT 7 Permit set documents and specifications. Responses to review comments. One resubmittal set, when required. 60/90 drawings and construction set • Exclusions o Fencing around solar array. o Land acquisition and site security (unless specified). o Long-term O&M beyond initial commissioning period o Fiberoptic communications cabling o Tax leadership (it is customer's responsibility to engage with a certified tax professional to obtain ITC) ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT Exhibit C — Construction Schedule / Milestone Payments o Preliminary Construction Milestones. Dependent on receipt of payments, weather, and procurement lead times o Final contract and agreements executed o Long lead time material and engineering begins 1 week after contract execution o Permitting begins: 2 weeks after contract execution 0 60% Construction Documents: Completed 5 weeks after contract execution o Equipment Procurement: Begins 6 weeks after contract execution 0 90% Construction Documents design plans complete: 12 weeks after contract and agreement executed o Final Construction Build Documents Complete: 18 weeks after contract o Construction Begins 18 weeks after contract signing: ■ Site prep, civil, and grading (3 weeks) ■ Mechanical Construction (4 weeks) ■ Electrical Construction (7 weeks) o Inspection and Commissioning: (2 weeks) o Electrical Generation Begins (Permission to operate): • Milestone Payments: o Safe Harbor Down Payment - Ten percent (10%) o Equipment Procurement - Forty percent (40%) o Construction Begins — Twenty-five percent (25%) o Substantial Completion - Twenty percent (20%) o Final Payment/Commissioning - Five percent (5%) ver. 4.6.2021 ZES -EQUIPMENT AND INSTALLATION AGREEMENT 9 Exhibit E — Warranties Workmanship: 2 Year Ziegler Energy Solutions Factory (Major equipment) o Solar Module: 15 Year Workmanship and 25 Year Linear Performance Guarantee o Inverters: 10 Year Product Warranty o Racking: 20 Year Product Warranty ver. 4.6.2021 ZES —EQUIPMENT AND INSTALLATION AGREEMENT 10 MN EMS �Vr II'd�a:rgy II�I„py�o��gzmi�auox 5a4u[ians, �mc r EpgLqy Mana ement A reement 8/12/25 The purpose of this Agreement is to set forth the understanding and agreement between Energy Management Solutions, Inc. (EMS) and City (CUSTOMER). PROJECT DESCRIPTION: EMS will help CUSTOMER with the No -Cost Solar on Public Buildings projects. The state will pay 70% of the project (up to $112,000) and the Federal government will pay 30% of the project through the IRA Direct Pay Program. EMS will make sure this project is still a no - cost project for CUSTOMER, including EMS' fees. The buildings to be included are attached on Addendum A. Energy Services — a. Analyze sites to determine best locations for solar. b. Review energy usage to determine proper size of Solar — Max of 40 kW AC. c. Prepare bid documents for solar vendors and answer any questions. d. Visit site to take pictures and determine where equipment should be installed. e. Analyze bids from Solar vendors. It is important to note that low cost could result in low production of solar due to poor performing solar panels. EMS will make sure CUSTOMER received the best panels available and still at no cost to CUSTOMER. f. Make sure Solar company can start project before 12/31/25 to still qualify for the grants. g. Submit State Grant information. EMS will submit State Grant applications in 1 week from approving this agreement. This is critical since the grants are on a first come first serve basis. If we don't submit the grants guickly, they will be one. h. Complete a final inspection once the project is completed. i. Complete Federal Grant Application. j. Help CUSTOMER sell the RECs in the future. k. CUSTOMER agrees to only use Energy Management Solutions (EMS) for this program. guality Assurance - All work will be completed or reviewed by a Professional Engineer. FEES: EMS Fees are included in the Grant fees so there is no out pocket fees to CUSTOMER. BILLING AND PAYMENT: EMS shall be paid by once CUSTOMER receives money from grants. INDEPENDENT CONTRACTOR: EMS shall be and remain an independent contractor -consultant during the term of this Agreement, and EMS, its directors, officers and employees, shall not act for, or bind CUSTOMER in any manner, unless specifically authorized to do so by CUSTOMER. CUSTOMER: City 41E xcelsior Blvd, Simite 200 tlfl : celsi iir, IM f 553,31 EMS' Initiaics., EMS: (Payment and Notices) Energy Management Solutions, Inc. 684 Excelsior Blvd., Suite 200 P.O. Box 255 Excelsior, MN 55331 Attn: Gary A. Swanson, PE Phone: (612) 819-7975 Fax: (952) 556-9171 Email: IMagrie fgy. ASSIGNMENT OR AMENDMENT: The Agreement may not be assigned or amended without the written consent of EMS and CUSTOMER. APPLICABLE LAW: The Agreement shall be construed in accordance with the laws of the State of Minnesota. ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement among the parties pertaining to the subject matter hereof and supersedes all prior Agreements and understanding pertaining hereto. If the above correctly sets forth CUSTOMER's understanding of the Agreement, please so indicate in the spaces below and return one copy to EMS, Attention: Gary Swanson. ENERGY MANAGEMENT SOLUTIONS Inc. By: (Sian) Name: Gary A. Swanson Title: President Date: 8/11 /25 ACCEPTED AND DATED TO THIS i 46 DAY of �"� , 2025 CITY .74 By: fSian Name: ' � �. W� Print 01 Title: C oow Date: W . N Addendum A u) N O N a) N %-I T!o A 0, N N 0) 00 le m r le cm 0) f� M d' Ci N w O d' W) w fl- N N M --ii Ici W W C W --ii M N N I ti 00 ti le N ti r ti ti N U>1� �y �y U��L)w�5a��nD0 °e °a o U a, o a>°> E o f °�� 6 a E E° Q —0o y o y N ump w a tj O m n O m a� o e i Z ® IIIIIIIIIIIIIIIIIIIIIIII EE o b E :1', z m a)yE in n �° ro a) a, m y y sJ m m m ro m y °' m -° yo '�N mf lµ" o ° m° o -o 0 o n. s m n m f6 E uQ) y n � uuuuuul o f6 -o '� ns "° m o > U E❑ 2 m -y ,� ❑ U m Im O U } o o u m y u c a� -o E o- o N m o-u mro °Ena�Ero�>Ew` III m U `m y `°t E o o u N a� -o o `o a� s- s- „W V n E S m u n S o n° E2: n vy m m y G Ws 0 o' Vi ,Q 62 O t6 y d W W !] (n LLJ Z ,�., actin 0 0 Q o ro - `� a� n'y o o ��OizzQw¢nzwiQ ° m V f6 s y Q w Q -, Z m 3 w 'B J Vi CL W W W CL I -o 0 Z ZcQ acL wZ " Q Hzm OO W r1 w Z a) E wE UO �w Z 0 uOwz o w w 5 Ozm0xQ ,w s.n ` + a QZ o 0 o oQ Q o m Y w Q a:� J.n-� m m °� c ° Oa� o Qwvi zg�w0¢z o Z p p0°Z °o1� _rm LLJ 0 �O¢��Oaa¢�c iU za wwon2: a 0 U 0 cn 0 M w w OR c z = J O OR O 11le le = v 0 v L 0 0 cn 0 0 0 cr 0 J 0 J _ d 0 = co 0 o x 0 a ry o o 0 r r r CR a LL Z 0 0 v d N d ! fn ®y N N_ 0 y N U >+ 7 >. d >. 0cn _ v U 0 U > 0 0 Q cn _= a rJrJ cnC�rC� —C� Cc C -,'aCW J J z W z O z O m O O s f6 cna¢ a O cc o.. c 0 a 2mm mmOz4= m 3 °� wz W d¢�u_U-0C = .n u n�i W J,n= O J a 1- V1 . CL W �Qm+ O W~= J O f6 C a VCW.7i0wnzI-Cryo M:E O.N o ro W O W ll - w� � a7 ° o cnzm0� =r�j""0 W o'B no Vl C CL U V� z= U 6~ CL C S s+ W O ._ O za Luz - V 0 z 0 y ro �'g v0zW °ov_ mE r1 w!0 ��Z�OV¢ mw-oo �2: W JLLJ �� c m 0 ��z�< U 0LJ�� ¢�w _ -' �u�; 0Lli 0PTU- I I A.' HUTCHINSON UTILITIES COMMISSION ^I'�xP61Tti'°" Board Action Form Agenda Item: Plant #2 Substation Load Study Presenter: D. Lang Agenda Item Type: Time Requested (Minutes): 5 New Business Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: HUC staff is recommending to enter into an agreement (Task Order #11) with DGR Engineering to study the anticipated 20MW load to be added to the Plant #2 Substation. DGR will review HUC's design as well as the relay settings presently in place at the 3M and Plant #2 Substations to ensure proper operation with the additional load. Attachments: -Task Order No. 11 Agreement Dec 2025 BOARD ACTION REQUESTED: Approval of Task Order #11 to DGR Engineering for the Plant #2 Substation load study Fiscal Impact: $49,000 Included in current budget: No Budget Change: No PROJECT SECTION: Total Project Cost: Remaining Cost: TASK ORDER Task Order No. 11 Effective Date: 12/17/2025 Task Order Amendment to the DGR ENGINEERING Master Agreement for Professional Services DGR Engineering (Consultant) agrees to provide to: Hutchinson Utilities Commission — Hutchinson, Minnesota (Client), the professional services described below for the Project identified below. The professional services shall be performed in accordance with and shall be subject to the terms and conditions of the Master Agreement for Professional Services executed by and between Consultant and Client on the 251h day of February, 2021. TASK ORDER PROJECT NAME: Plant 42 Data Center Load Addition TASK ORDER PROJECT DESCRIPTION: Hutchinson Utilities Commission (HUC) is modifying its existing Feeder 24 (currently a solar feeder) circuitry to accommodate a new data center load addition of approximately 20 MW. The load addition is categorized as a load modifying resource (LMR) and considered interruptible. However, Feeder 33 at 3M will serve as the backup to this load addition via the Feeder 23 tie when Plant 42 is out of service. The load addition is expected to go online Fall of 2026. The project includes performing analysis to evaluate the circuitry's ability to carry the load addition and involves reviewing and recommending any required relay setting changes at Plant #2 and 3M. Also included in the project is review of HUC's proposed circuit one -line and the RTU/metering cabinet at the load. DGR CONTACT PERSON: Alex Richter, Project Manager CLIENT CONTACT PERSON: Daniel Lang, Engineering Services Manager SCOPE OF WORK: 1. Preliminary: a. Gather relevant information from HUC staff. b. Obtain updated circuit information from the GIS model to be provided by HUC GIS staff. c. Acquire load data from HUC SCADA system. HUC will provide load data for the substation feeders in .xlsx format. d. HUC to share preliminary one -lines and specifications of the material on order. e. HUC to share preliminary concepts for the RTU and metering cabinet solution at the load. 2. Load Flow and Voltage Study: a. Review the assumptions, projections, and planned configuration changes proposed by HUC staff. Interview Utility staff regarding their opinions of the affected portions of the electric system. Criteria for acceptable service levels in the nearby area will be discussed and decided upon. 11:A04\285\00\11ropnt.r\1ask Ord er1" o. DD -Plant 1/2LData Center Load Add rtion.docx Page D ot'4 (G9/D4) b. Develop a detailed computer model of the nearby primary electric system using the Milsoft "Windmil"® modeling software. This model will be used in this study for voltage and thermal analysis of the nearby system and will be developed to include the data center customer and system load information, as well as the proposed system configuration and circuitry changes due to the project load addition. c. Based on the computer models and the projected load addition, assess the ability of the electric distribution system to handle the expected load addition. This will include an assessment of the ability of the system to properly provide backup service should the loss of any major component (such as a substation transformer, substation bus, or mainline feeder) be out of service. d. Develop a memo for use as a reference tool for Utility staff. A review draft of the memo will be made available to Utility staff prior to finalizing the memo. e. Presentation of the final memo will be made once the review draft has been approved by Utility staff and any necessary revisions have been made. DGR will furnish an electronic .pdf version of the memo. Coordination Study: a. Review proposed sectionalizing practices for the affected circuitry with utility staff. b. Obtain and review settings for microprocessor relays at PL2 and 3M substations, pertaining to the coordination of overcurrent functions during system normal and N-I scenarios. c. Utilize the Aspen software to determine the maximum fault current produced by the substation and generation facilities at the substation buses for relevant operating scenarios (generation on or off and back -feeding scenarios). d. Perform calculations to determine available fault current at the primary interrupting device directly serving the load addition. e. Check the coordination of the affected sectionalizing devices on the primary distribution system using Milsoft WindMil® and Milsoft LightTable® modeling software. f. Update time -current curves (TCCs) for the substations which include all sectionalizing devices between the substations and the primary interrupting device directly serving the load addition. g. Identify deficiencies present and provide subsequent recommendations for improvement. h. Develop updated SEL .rdb files including recommended setting changes. 4. Material design review/assistance: a. One -line and material spec review: i. Review the proposed one -lined provided by HUC. ii. Confirm material specifications meet the application requirements. b. Metering and RTU cabinet review: i. Review material BOM proposed by HUC. ii. Offer technical guidance or propose alternatives based on previous experience. iii. Provide sample layout and wiring diagrams for HUC use or develop the layout and wiring diagrams for HUC's use upon request. iv. Assist with review of the points list, RTAC settings, and/or meter settings. 11:A04\285\00\11ropnt.r\1ask Ord er1" o. DD -Plant 1/2 Data Center Load Add rtion.docx Page 2 ot'4 (G9/D4) FEE ARRANGEMENT: We propose the following fee arrangement for the identified work: Component Fee Type Fee Preliminary Phase Hourly + Expenses (estimate) $ 3,000 Load Flow and Voltage Study Lump Sum 18,000 Coordination Study Lump Sum 16,000 Material design review/assistance Hourly + Expenses (estimate) 12,000 Total Fee $ 49,000 The lump sum fee includes all expenses including mileage, subsistence, and deliverables costs through final design. The fee will be billed on a monthly basis in proportion to the percentage of work completed at the time. All "Hourly" work will be billed at the Hourly Fee Schedule in effect at the time the work is performed. A copy of the current 2026 Hourly Fee Schedule A is attached as Appendix L In addition, expenses associated with subsistence, travel and vehicle mileage at IRS rates will be charged while personnel are on -site. All other costs for our services, including deliverables, office supplies, telephone and computer use, are included in our hourly rates and will not be billed separately. Additional work beyond the Scope of Work described herein will be billed at our standard hourly rates in effect at the time the work is done. SPECIAL TERMS AND CONDITIONS: None. Hutchinson Utilities Commission Hutchinson, Minnesota (Client) By: _ Title (Authorized signature and Title) By: Title: (Authorized signature and Title) Address: 225 Michigan Street SE City: Hutchinson, MN 55350 Date: DeWild Grant Reckert and Associates Company d/b/a DGR Engineering (Consultant) am Title: Vice President (Authorized signature and Title) Address: 1302 South Union Street City: Rock Rapids, IA 51246 Date: P:A04\235\00\11ropnt.r\1ask Ord er1" o. DD-Plant 1/2Data Center Load Add rtion.docx Page 3 ot'4 (G9/D4) DGR ENGINEERING JANUARY 2026 HOURLY FEE SCHEDULE A Personnel Grade Engineer Hourly Rate Technician Hourly Rate Administrative Hourly Rate' 01 $135 $81 $80 02 $143 $86 $85 03 $152 $91 $90 04 $162 $96 $95 05 $172 $101 $101 06 $183 $107 $108 07 $194 $113 $116 08 $206 $120 $124 09 $218 $127 $133 10 $230 $135 $143 11 $243 $143 $153 12 $258 $151 $165 13 $271 $161 $181 14 $281 $172 $213 15 $288 $183 1 $266 Reimbursable Expenses: 1. Standard vehicle mileage at the IRS standard mileage rate in effect at the time. 2. Survey/staking/heavy duty trucks at IRS standard mileage rate plus $0.25 per mile. 3. Other travel, subsistence, lodging at actual out-of-pocket cost. 4. GPS Survey Equipment (when used) at $31.25 per hour. 5. ATV and UTV Equipment (when applicable) at $12.50 per hour. P:A04\285\00\11ropnt.r\1ask Ord er1" o. DD -Plant 1/2 Data Center Load Addit.ion.docx Page 4 ot'4 (G9/D4) HUTCHINSON UTILITIES COMMISSION ^I'�xP61Tti'°" Board Action Form Agenda Item: Plant #1 Substation 69-115kV Conversion Task Order #9, Amendment #1 Presenter: D. Lang Agenda Item Type: Time Requested (Minutes): 5 New Business Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: In February of 2025 HUC entered into an agreement (Task Order #9) with DGR Engineering to evaluate the Plant #1 Substation 69 to 115kV conversion as part of the Willmar Line 115kV rebuild project and develop the preliminary substation design and cost estimate. Amendment #1 will direct DGR to begin the process of developing a transformer specification which will be used for bid solicitation. Attachments: -Amendment #1 to Task Order #9 Dec 2025 BOARD ACTION REQUESTED: Approval of Amendment #1 to Task Order #9 to DGR Engineering. Fiscal Impact: $43,000 Included in current budget: No Budget Change: No PROJECT SECTION: Total Project Cost: Remaining Cost: AMENDMENT #1 RE: Amendment to Task Order No. 9 Plant 1 69 kV to 115 kV Conversion Hutchinson Utilities Commission, Hutchinson, MN DGR Project No. 428509 Original Task Order Date: February 3, 2025 Amendment Date: December 17, 2025 Amendment Items: This amendment adjusts the fee as follows: 1. Addition of transformer procurement services for the project. 2. Updated Fee Arrangement: Revised Fee Fee Changes Established by this by this Previous Amendment Amendment Component Fee #1 #1 Fee Type Preliminary Phase $ 70,000 ** $ 70,000 Hourly Estimate Transformer Procurement ** 43,000 43,000 Lump Sum Final Design ** ** ** Lump Sum Bidding * * Lump Sum Construction Administration ** ** ** Hourly Estimate Post Construction * * * * * * Hourly Estimate Total $70,000 $ 43,000 $ 113,000 P:\04\285\00\PropntrVlask ask Order No. 9 ... Plant] 69 kVto 115 kcV Conn eBion (mend dent: fl ).rlocx Pape 1 of 2 Hutchinson Utilities Commission Hutchinson, Minnesota (Client) By: Title: (Authorized signature and Title) By: Title: (Authorized signature and Title) Address: 225 Michigan Street SE City: Hutchinson, MN 55350 Date: DeWild Grant Reckert and Associates Company d/b/a DGR Engineering (Consultant) in Title: Vice President (Authorized signature and Title) Address: 1302 South Union Street City: Rock Rapids, IA 51246 Date: P:A04\285\00\Propnt.rV'l ask Order No. 9 ... Plant] 69 kVto 115 kcV Conn eBion (Amend dent: fl ).rlocx Pape 2 o6 2 HUTCHINSON UTILITIES COMMISSION ^I'�xP61Tti'°" Board Action Form Agenda Item: Approve Paid Family Medical Leave (PFML) Policy Presenter: Angie Radke Agenda Item Type: Time Requested (Minutes): 5 New Business Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: HUC is looking to Implement a new Organizational Policy to both the Union and Non -Union Policy Handbooks. The Organizational Policy addresses the new MN state requirements that go into effect on 1/1/2026 as it pertains to MN Paid Leave (MNPL). HUC was approved by the State to go with an Approved Private Insurance Carrier at a rate of .423 vs the State's .88 rate. The PFML rate of .423, will be split 50/50 between ER and EE. BOARD ACTION REQUESTED: Approve Implementing a PFML Policy to Exempt and Non -Exempt Handbooks Fiscal Impact: $13,295 Included in current budget: Yes Budget Change: No PROJECT SECTION: Total Project Cost: Remaining Cost: EXEMPT MINNESOTA PAID LEAVE HUC provides time off to eligible employees who qualify for Minnesota Paid Leave (MNPL) benefits under Minnesota law. HUC is a participant in an equivalent plan through an approved private insurance carrier. MNPL benefits are funded through premium contributions payable to the equivalent plan through an approved private insurance carrier. The premium cost will be split between HUC and employees as follows: HUC will pay 50% of the required premium and employees will pay 50% of the premium cost through payroll deductions starting January 1, 2026. F LIGIRII,ITV - Eligibility determinations for MNPL benefits are made by the approved private insurance carrier. Generally, to be eligible for MNPL, the employee must: • Work at least 50% of the time from a location in Minnesota, including employees who work from home or spend time in other states occasionally. • Meet the financial eligibility requirements by having earned over a specific amount of wages as defined by Minnesota law at the time of the requested leave. BENEFIT AMOUNT: HUC does not determine eligibility or benefit amount. Benefit amount is determined by the approved private insurance carrier. LEAVE ENTITLEMENT AND USAGE: The approved private insurance carrier may approve MNPL leave for the following conditions in a benefit year: • Up to 12 weeks of medical leave (for yourself) to take care of yourself for a serious health condition, including pregnancy, childbirth, recovery, or surgery. • Up to 12 weeks of family leave to: o Bond with a child through birth, adoption, or foster placement within 12 months of birth or placement of a child o Care for a family member with a serious health condition o Support a military family member called to active duty o Receive covered types of care for yourself or a family member because of domestic abuse, sexual assault, or stalking You can take both types of leave in the same year, but you cannot exceed 20 weeks total within a single benefit year. For example, an employee may be entitled to 12 weeks of family leave to bond with a child and another 8 weeks of medical leave for their serious health condition. Benefit year starts the first day Paid Leave is taken. There is no waiting period for MNPL if MNPL is granted. MNPL INTERMITTENT LEAVE: Employees may apply for intermittent leave in most cases, provided the leave is reasonable and appropriate to the needs of the individual requiring care. A. Eligibility In addition to the other eligibility requirements under the MN Paid Leave law, employees seeking intermittent leave must have at least eight hours of accumulated leave (unless more than 30 days have lapsed since taking the initial leave). B. Notice In situations where employees seek MNPL on an intermittent basis, employees must make a reasonable effort to provide written notice to HUC Admin/HR Coordinator of the need for intermittent leave before applying for MNPL benefits through the approved private insurance carrier. As part of the notice, employees must provide HUC with the following: 1. proposed intermittent leave schedule; and 2. a completed certification from a health care provider identifying the leave as necessary and a reasonable estimate of the frequency, duration, and treatment schedule for the leave. C. Increments of Leave & Maximum Number of Hours Consistent with other forms of leave provided by HUC, employees may take intermittent leave in increments of .25 hours. If eligible for intermittent leave, HUC allows a maximum of 480 hours of intermittent leave in any 12-month period. After reaching the maximum amount of allowed intermittent leave, employees may request continuous MNPL provided the continuous leave does not exceed the maximum amount of MNPL allowed by law. DFFINITIONS- • Family member c•7 Spouse or partner • Child (including biological, adopted, step, or foster children, or a child you raise even if you are not legally related) r:7 Parent or person who raised you o Sibling r:7 Grandchild or Grandparent r:7 In-laws (including son, daughter, father, or mother) o Anyone close to you who depends on you like family, even if not related by blood. • A Serious health condition means a physical or mental illness, injury, impairment, condition, or substance use disorder. Taking care of yourself for this serious condition may involve evaluation, treatment, inpatient care, recovery, or not being able to perform regular work, attend school, or do regular daily activities. This includes childbirth, conditions related to pregnancy, or surgery. Please see Admin/HR Coordinator for more information regarding a serious health condition. NOTICE: Prior to starting a claim with the equivalent plan through an approved private insurance carrier, employees should reach out to HR to notify the intention to take leave. If the need is foreseeable, HUC asks that the employee provide at least 2 weeks' notice prior to taking leave. If the leave is not foreseeable the employee will still be able to take leave under MNPL. HUC asks that the employee provide as much notice as possible. HOW TO APPLY FOR MINNESOTA PAID LEAVE: After leave has been discussed with HR/Admin Coordinator, employee may apply for MNPL through the equivalent plan that HUC has received approval on from the State. Please see Admin/HR Coordinator for more information regarding where to apply. INTERACTION WITH OTHER LAWS AND BENEFITS: MNPL will run concurrently with any leave and/or wage supplement for which you may be eligible for under local, state, or federal law which may include: FMLA and Pregnancy and Parenting Leave. SUPPLEMENTING MNPL BENEFITS WITH ACCRUED PAID LEAVE: If receiving MNPL benefits, HUC allows the employee to supplement, or "top off," MNPL benefits with any accrued but unused paid leave. If an employee chooses to supplement MNPL benefits in this way, the combined weekly sum of MNPL benefits and HUC paid leave benefits cannot exceed the employees' Individual Average Weekly Wage (IAWW). For more information contact Admin/HR Coordinator. MAINTAINING HEALTH COVERAGE DURING LEAVE: Unless the employee revokes coverage while on MNPL, HUC will continue to provide group health insurance coverage for an employee on MNPL under the same conditions as the coverage was provided before the employee took leave. The employee must continue to make timely payments for his/her share of the premiums for such coverage. If the employee is not using paid time off to cover part or all the leave, the employee will be responsible for remitting his/her portion of health premiums to HUC in order to ensure continuation of benefits. Group health insurance may be cancelled if an employee's premium payment is 30 days late. Before terminating coverage, HUC will provide written notice to the employee at least 15 days before the coverage is terminated listing the final date payment is due (30 days past the due date) to avoid cancellation and the date coverage will end if payment is not received. An employee's share of premium payments for his/her group health insurance coverage may, at the employee's option, be: 1. Prepaid at or before the start of the leave in which his/her health deductions may be modified to accept the agreed upon amounts and frequency of premium deductions; 2. Arranged to write a check every 2-4 weeks for the duration that the employee may be out; 3. Be postpaid after the leave ended in which his/her health deductions may be modified to accept the agreed upon amounts and frequency of premium deductions. Coverage that lapses due to nonpayment of premiums will be reinstated immediately upon return to work without a waiting period. REINSTATEMENT: Upon return from covered MNPL, the employee will be reinstated to his/her previous position or to an equivalent position, with the same status, pay, employment benefits, length -of service credit, and seniority credit as of the date of leave as long as he/she has worked for HUC for a minimum of 90 calendar days. Upon return to work, if it becomes evident that the employee is unable to perform the key essential functions of his/her position (with or without reasonable accommodation), HUC may engage in an interactive process, consistent with the American with Disability Act (ADA) and/or Minnesota Human Rights Act (MHRA) and other applicable workplace policies, including workplace safety protocols, to determine appropriate next steps. RETALIATION: HUC will not interfere or retaliate against employees who request or take leave in accordance with the MN Paid Leave law. Disclaimer This policy is not a contract for employment. The Utility periodically may update this policy and reserves the right to interpret the policy as well as replace, modify, or revoke it at any time, upon reasonable notice.