The URL can be used to link to this page

04-11-2014 HUCMMINUTES Special Meeting — Hutchinson Utilities Commission Friday, April 11, 2014 Call to order — 9:01 a.m. President Hanson called the meeting to order. Members present: President Anthony Hanson; Secretary Mark Girard; Commissioner Donna Luhring; Attorney Marc Sebora; Interim General Manager John Webster. Members absent: Commissioner Dwight Bordson — due to a conflict of interest. Others present: Jared Martig, Jan Sifferath, Randy Blake, Dave Hunstad, Dan Lang, Kim Koski and Council Member Bill Arndt. President Hanson explained the purpose of the workshop was to discuss: 1. Results of the rate analysis completed by Dave Berg Consulting LLC; 2. Discuss HUC's 5 year financial forecast; and 3. Discuss the possibility of an industrial rate change and the impact it would have on HUC. At this time, Vice President Morrow arrived: 9:18 a.m. President Hanson distributed the rate analysis for review and discussion. The reports outlined the financial impact to HUC if 3M should self generate along with outlining the financial impact on HUC if changes were made to the electric industrial rates. (Analysis attached.) Jared Martig presented HUC's 5 year budget forecast along with a few options for implementing proposed rate changes with their financial impact to HUC. Two, three and four year phase -in options were discussed. (Budget forecast attached.) The Board discussed the goal is to have commission approval by end of April 2014 and then present the Commission's recommendations to the City Council for review and final approval. There being no further business, a motion was made by Commissioner Girard, seconded by Vice President Morrow to adjourn the meeting at 11:21 a.m. Motion was unanimously carried. L✓X1�` ATTEST: Anthony Hanson 11 Preside ht Mark Girard, Secretary Doc ame BEAC CCIt73ULTN7G. LLC January 10, 2013 Hutchinson Utilities Commission Hutchinson Utilities 225 Michigan Street SE Hutchinson, MN 55350 Subject: 3M Self- Generation Rate Impact Dear Hutchinson Utilities Commission: As requested, we have undertaken an analysis of the impact on HUC retail electric rates if 3M were to install 6 MW of self - generation for purposes of serving a portion of the electric service they currently purchase exclusively from HUC. I worked with HUC staff to estimate this impact based on the cost -of- service analysis from HUC's last electric rate study which was based on a 2010 test year. The results of the 2010 cost -of- service results are the basis of the rate information that was recently shared with 3M. For purposes of this analysis, we assumed that 3M would self - generate 6 MW of electric power every hour for the entire year. This would result in 52,560,000 kWh fewer sales to 3M over the course of one year. The analysis performed focused on the savings to HUC from not serving that portion of the 3M load. The 2010 cost -of- service analysis was reworked based on the estimated savings and a reallocation of the revised HUC electric revenue requirements utilizing new allocation factors reflecting the reduced sales to 3M. Wholesale Savings The savings that HUC would accrue from not serving 6 MW of 3M's load would be almost exclusively due to reductions in need for wholesale power /generation. Reduced retail sales of 52,560 MWh result in a reduction in wholesale requirements of 54,112 MWh. The wholesale reduction is higher due to system losses. Based on an analysis of RUC's load curve and supply in 2010, the wholesale reduction would be from 3 separate sources, market purchases, HUC generation and MRES contract purchases. All of the savings would be related to energy acquisition. There would be no estimated wholesale demand cost savings. The market purchases and HUC generation are energy only costs, the HUC fixed generation costs are a sunk cost and not avoidable. The capacity costs associated with the MRES contract are not avoidable and the HUC peak each month will still exceed the MRES contract amount. The amount of energy and estimated savings for each of these sources is shown in the table below. Dedicated to providing personal service to consumer -owned utilities Dave Berg Consulting, LLC 1 15213 Danbury Ave W, Rosemount, MN 55068 1 612 - 850 -2305 www.davebergconsulting.com Hutchinson Utilities Commission January 10, 2014 Page 2 Estimated Wholesale Power Cost Savings Source Energy (MWh) Avg Cost ($ /MWh) Total Savings HUC Generation 10,181 52.50 $ 534,503 Market Purchases 36,094 29.01 1,047,087 MRES 7,837 12M (76,646) Total 54,112 27.81 $ 1,504,944 The savings associated with the HUC generation is based on the average fuel cost for HUC generation in 2010. The savings for the market purchases is based on actual average market purchases made by HUC in 2010. The savings associated with MRES is actually negative. HUC is obligated to take the energy under the MRES contract whether it is needed to serve local load or not. When HUC has excess MRES energy, it is resold into the market. The energy price associated with the MRES contract is $32.50 /MWh. During the hours that HUC would have excess energy from MRES due to reduced sales to 3M, the average market price in 2010 was $22.72/MWh. As a result, during those hours the MRES energy would be resold into the market at a loss of $9.78 /MWh (32.50 minus 22.72). Lost Revenue HUC will lose retail revenue associated with the lost sales to 3M. Based on the 2010 rate paid by 3M, the estimated lost revenue is summarized below. Estimated Lost Retail Revenue Rate Item Billing Units Rate Revenue Loss Energy Charge 52,560,000 kWh l'I $.0675 /kWh $ 3,547,800 Demand Charge 72,000 kW -mo Izi $7.00 /kW -mo 504,000 Total $ 4,051,800 (1) 6000 kW times 8760 hours (2) 6000 kW times 12 months Financial Impact The table below compares the 2010 test year before and after the loss of sales to 3M due to the addition of 6 MW of self - generation. The reduction in revenue requirements is due to the wholesale power cost savings. The reduction in revenue is due to reduced sales to 3M. Hutchinson Utilities Commission January 10, 2014 Page 3 Financial Impact of Reduced Sales to 3M Item Original Test Year Adjusted Test Year Difference Total Revenue Requirement $25,626,034 $24,121,090 $1,504,944 Total Revenues $25,626,034 $21,574,234 $4,051,800 Revenue Shortfall $0 $2,546,856 $2,546,856 As shown above, due to the difference between lost revenue and wholesale savings, the net impact on HUC's financial results is a revenue shortfall of $2,546,856 or 11.8% of adjusted revenues. The electric system margin included in the 2010 test year was $2,118,556, based on this amount the revised shortfall is 120% of the electric utility's bottom line. To meet the same financial bottom line, HUC would need to increase rates to all customers by 11.8% or eliminate the margin completely and increase rates by 2 %, or some other combination of rate increase and margin reduction. Some of the revenue shortfall could also be addressed through implementation of a backup charge to customers like 3M that self - generate and wish for HUC to serve them during times that their generation is not operating. Industrial Rate Impact 3M specifically inquired about the impact on the industrial rates paid by 3M and HTI. In the information shared with 3M, the third set of rates shown was entitled the 'unbundled rate w/ customer charge in demand rate.' This was a cost based rate derived from the 2012 cost of service study. That analysis was redone based on the assumed changes to the HUC operation as describe above. The original unbundled rate as previously provided and the revised unbundled rate are both shown below. Attachment 1 to this letter shows more detail of this comparison based on the information developed in September. Attachment 1 shows the original information from September in the column marked 'Before Generation'. The column labeled 'After Generation' indicates how these values change based on the adjusted 2010 test year if 3M self - generates 6 MW. The column labeled 'After Generation (adjusted backup)' utilizes a lower backup of charge ($3.00 /kW -mo) more in line with Xcel's comparable charge. Unbundled Rate w/ Customer Charge in Demand Rate Rate Component Rate (Original Test Year) Rate (Adjusted Test Year) Demand Charge $17.40 /kW -mo $19.86 /kW -mo Energy Charge $0.0437 /kWh $0.0466 /kWh Customer Charge $0 /mo $0 /mo Hutchinson Utilities Commission January 10, 2014 Page 4 It is important to note that the rate shown above is not necessarily the rate that HUC would implement. This rate is shown to illustrate the relative impact on HUC of the change in operational and financial performance due to 3M's installation of self - generation. The actual rates implemented would require additional analysis based on updated operations and would be subject to policy considerations by the HUC Commission. Attachment 2 to this letter was prepared to show different unbundled rates, assuming no generation installed by 3M, to meet different conclusions relative to the operating margin of the electric utility. Based on the 2010 test year, the electric utility had an operating margin of $2,118,556. The first column in Attachment 2 is the unbundled large industrial rate including the customer charge in the demand rate as prepared in September. If this rate were implemented for both 3M and HTI, the large industrial class would see an overall decrease of 3.69% from current rates and the electric utility margin would be reduced to $1,736,906. Scenario 1 in Attachment 2 shows a rate with an overall 10.78% reduction for the large industrial class that would result in a margin of approximately $1 million. Scenario 2 is a 20.45% reduction for large industrial customers that results in a margin of approximately zero. It is important to note that this is based on the 2010 test year from the cost -of- service analysis. HUC's overall cost structure has not changed significantly since 2010 and an updated analysis on 2013 would likely yield similar results. Sincerely, Dave Berg Consulting, LLC David A. Berg, PE Principal Attachment 1 3M 6000 M self generation with HUC unbundled rate plus backup rate based on 2010 COS analysis before and after addition of 3M self generation Before Generation After Generation After Generation (adjusted backup) Demand $17.40 /kW -mo $19.86 /kW -mo $19.86 /kW -mo Energy $0.0437 /kWh $0.0466 /kWh $0.0466 /kWh Backup $6.80 /kW -mo $7.59 /kW -mo $3.00 /kW -mo 3M self gen cost $0.06 /kWh all -in $0.06 /kWh all -in $0.06 /kWh all -in 3M self gen demand 72,000 kW -mo 72,000 kW -mo 72,000 kW -mo 3M self gen energy 53,424,000 kWh 53,424,000 kWh 53,424,000 kWh HUC demand purch 110,350 kW -mo 110,350 kW -mo 110,350 kW -mo HUC energy purch 37,845,000 kWh 37,845,000 kWh 37,845,000 kWh HUC backup purch 72,000 kW -mo 72,000 kW -mo 72,000 kW -mo Self Gen Cost $3,205,440 $3,205,440 $3,205,440 Demand Cost $1,920,090 $2,191,551 $2,191,551 Energy Cost $1,653,827 $1,763,577 $1,763,577 HUC Avg $0.0944 /kWh $0.1045 /kWh $0.1045 /kWh Backup Cost $489,600 $546,480 $216,000 Total Cost $7,268,957 $7,707,048 $7,376,568 Total Avg $0.0796 /kWh $0.0844 /kWh $0.0808 /kWh Diff from current ($168,151)/(2.26 %) $269,940/3.63% ($60,540)/(0.81 %) Diff from unbundled $107,612/1.50% $545,703/7.62% $215,223/3.01% Attachment 2 Unbundled rate w/ customer charge in demand rate Item Sept. 18 Information Scenario 1 Scenario 2 Demand rate $17.40 /kW -mo $16.11 $14.37 Energy rate $0.0437 /kWh $0.0405 /kWh $0.0361 /kWh Customer charge $0 /mo $0 /mo $0 /mo 3M Demand cost $3,172,890 $2,937,659 $2,620,370 Energy cost $3,988,455 $3,696,394 $3,294,811 Total cost $7,161,345 $6,634,053 $5,915,181 Average cost $0.0785 /kWh $0.0727 /kWh $0.0648 /kWh Diff from current ($275,763)/(3.71 %) ($803,055)/(10.80 %) ($1,521,927)/(20.46 %) HTI Demand cost $1,245,144 $1,152,832 $1,028,317 Energy cost $1,560,920 $1,446,620 $1,289,456 Total cost $2,806,064 $2,599,452 $2,317,773 Average cost $0.0786 /kWh $0.0728 /kWh $0.0649 /kWh Diff from current ($105,889)/(3.64 %) ($312,501)/(10.73 %) ($594,180)/(20.41 %) Class Reduction ($381,650)/(3.69 %) ($1,115,556)/(10.78 %) ($2,116,107)/(20.45 %) Utility Margin Before $2,118,556 $2,118,556 $2,118,556 Utility Margin After $1,736,906 $1,003,000 $ 2,449 i u SAIC. May 23, 2012 Hutchinson Utilities Commission 225 Michigan Street SE Hutchinson, MN 55350 Commission Members: Subject: Electric and Gas Cost of Service and Unbundled Rate Study Report Hutchinson Utilities engaged the services of SAIC to conduct an Electric and Gas Cost of Service and Unbundled Rate Study. The attached report presents our findings and recommendations based on our analysis. There are four principal components to the study. The first of these is an examination of the revenue requirements for Hutchinson's Electric and Gas Divisions. To remain financially sound, Hutchinson's Electric and Gas Divisions must produce sufficient revenues through retail rates to cover revenue requirements. The second component of the rate study is the cost -of- service analysis. The electric and gas cost -of- service analyses are performed to determine the allocated cost of providing service to each class of customers. The third study aspect is an unbundled rate analysis for each customer class. These rates are a direct result of the cost -of- service analysis for each Division. The fourth and final component of the rate study is the design of new rates. The new rates have been designed, taking into account the results of the revenue requirements, cost -of- service analyses and unbundled analyses. Section 5 of the report presents our recommendations and the proposed rates developed as a result of our analyses. It also presents graphs comparing the monthly bills of each customer class at current and proposed rates. At this time, there are few specific rate design recommendations, however, we have also included general rate recommendations for Hutchinson's consideration as future rate changes are considered. Thank you for the opportunity to have prepared this study for Hutchinson Utilities. We would like to express our appreciation for the valuable assistance provided by Hutchinson personnel during the performance of this study. Sincerely, SAIC En rgy, Environment & Infrastructure, LLC David A. BerYPagger Senior Project 3153101010-0101 1 Hutchinson Cover Letter. docx SAIC Energy, Environment & Infrastructure, LLC 1380 Corporate Center Curve, Suite 305 1 SL Paul, MN 551211 tel. 651.994.8415 1 i'az 651.994.8396 ► saiccomlUondl u A Electric and Gas Cost -of- Service and Unbundled Rate Study Hutchinson Utilities Table of Contents Letter of Transmittal Table of Contents List of Tables List of Figures Section 1 Introduction Section 2 Estimated Operating Results — Existing Rates ElectricDivision ................................................................. ............................... 2 -1 Historical Electric Requirements .............................. ............................... 2 -1 Estimated Electric Requirements .............................. ............................... 2 -2 Estimated Revenue Requirements ............................ ............................... 2 -3 Generation and Purchased Power Expenses . ............................... 2 -3 Operating and Maintenance Expenses .......... ............................... 24 Other Income and Expenses ........................ ............................... 2 -4 Payment in Lieu of Taxes/ Services -in- Kind . ............................... 2 -4 Capital Improvements ................................... ............................... 2 -5 DebtService .................................................. ............................... 2 -5 Revenue Requirements ................................. ............................... 2 -5 Estimated Revenues — Existing Rates ....................... ............................... 2 -5 Estimated Electric Operating Results and Cash Reserves ....................... 2 -6 GasDivision ....................................................................... ............................... 2 -7 Estimated Gas Requirements .................................... ............................... 2 -7 Estimated Revenue Requirements ............................ ............................... 2 -7 Purchased Gas Expenses ............................... ............................... 2 -7 Operating Expenses ...................................... ............................... 2 -8 Payment in Lieu of Taxes ............................. ............................... 2 -9 Other Income and Expenses ........................ ............................... 2 -9 Capital Improvements ................................... ............................... 2 -9 DebtService .................................................. ............................... 2 -9 Revenue Requirements ................................. ............................... 2 -9 Estimated Revenues — Existing Rates ....................... ............................... 2 -9 Estimated Gas Operating Results and Cash Reserves ........................... 2 -10 Combined Electric and Gas Results ....................... ............................... 2 -11 Section 3 Cost -of- Service Study ElectricDivision ................................................................. ............................... 3 -1 Classification of Costs .................................:............ ............................... 3 -1 B1845 SAIC. Table of Contents Allocation to Customer Classifications ........................ ............................3 -2 Demand Allocations ......................................... ............................3 -2 EnergyAllocations ........................................... ............................3 -3 Customer Allocations ....................................... ............................3 -3 Cost -of- Service Study Results ...................................... ............................3 -3 GasDivision ........................................................................... ............................3 -5 Classification of Costs .................................................. ............................3 -5 Allocation to Customer Classifications ........................ ............................3 -6 DemandAllocations ......................................... ............................3 -7 EnergyAllocations ........................................... ............................3 -7 Customer Allocations ....................................... ............................3 -7 Cost -of- Service Study Results ...................................... ............................3 -8 Section 4 Unbundled Rates ElectricRate Components ...................................................... ............................4 -1 WholesalePower .......................................................... ............................4 -1 Transmission................................................................. ............................4 -1 Distribution................................................................... ............................4 -1 Customer....................................................................... ............................4 -1 Unbundled Electric Rates ............................................. ............................4 -2 GasRate Components ............................................................ ............................4 -3 Purchased Gas/ Production ............................................ ............................4 -3 Transmission................................................................. ............................4 -3 Distribution................................................................... ............................4 -4 Customer....................................................................... ............................4 -4 UnbundledGas Rates ................................................... ............................4 -4 Section 5 Proposed Rates Electric Division Rate Design ................................................ ............................5 -1 ProposedRates ............................................................. ............................5 -1 Power Cost Adjustment ................................................ ............................5 -2 General Rate Recommendations ................................. ............................5 -2 Estimated Operating Results at Proposed Rates ........... ............................5 -3 RateComparisons ......................................................... ............................5 -3 Gas Division Rate Design ...................................................... ............................5 -3 FuelCost Adjustment ................................................... ............................5 -4 General Rate Recommendations .................................. ............................5 -4 ii SAIC Energy, Environment & Infrastructure, LLC B1845 l 1 r Table of Contents List of Tables Table 2 -1 Historical Requirements ................................................. ............................2 -2 Table 2 -2 Estimated Electric Requirements ................................... ............................2 -2 Table 2 -3 Estimated Electric Purchases and Generation ................ ............................2 -3 Table 2 -4 Estimated Electric Generation and Purchased Power Expenses ................2 -4 Table 2 -5 Estimated Electric Operating Revenues — Existing Rates ..........................2 -5 Table 2 -6 Estimated Electric Division Operating Results — Existing Rates ...............2 -6 Table 2 -7 Estimated Electric Division Cash Reserves — Existing Rates ....................2 -6 Table 2 -8 Estimated Gas Requirements ........................... . ........................... ................2 -7 Table 2 -9 Estimated Wholesale Gas Commodity Rates for Retail Customers ........... 2 -8 Table 2 -10 Estimated Wholesale Gas Expenses ............................. ............................2 -8 Table 2 -11 Estimated Gas Operating Revenues ............................ ...........................2 -10 Table 2 -12 Estimated Gas Division Operating Results ................. ...........................2 -10 Table 2 -13 Estimated Gas Division Cash Reserves- Existing Rates ...................... ...2 -11 Table 2 -14 Estimated Combined Electric and Gas Operating Results — Gas Division, Percentage Comparison of Revenues and ExistingRates ............................................................ .............................2-11 Allocated Cost -of- Service 2010 Test Year .................... ............................3 -9 Table 2 -15 Estimated Combined Electric and Gas Cash Reserves — Existing Unbundled Electric Costs ............................................... ............................4 -2 Rates............................................................................ ...........................2 -12 Table 3 -1 Classification of Electric Division Costs — 2010 Test Year .............. Table 3 -2 Electric Division, Comparison of Revenues and Allocated Cost -of- Service 2010 Test Year ..................................... ............................3 -4 Table 3 -3 Electric Division, Percentage Comparison of Revenues and Allocated Cost -of- Service 2010 Test Year .................... ............................3 -5 Table 3 -4 Classification of Gas Division Costs — 2010 Test Year . ............................3 -6 Table 3 -5 Gas Division, Comparison of Revenues and Allocated Cost -of- Service 2010 Test Year ..................................... ............................3 -8 Table 3 -6 Gas Division, Percentage Comparison of Revenues and Allocated Cost -of- Service 2010 Test Year .................... ............................3 -9 Table 4-1 Unbundled Electric Costs ............................................... ............................4 -2 Table 4-2 Unbundled Electric Rates ............................................... ............................4 -3 Table 4 -3 Unbundled Gas Costs ..................................................... ............................4 -4 Table 4 -4 Unbundled Gas Rates ..................................................... ............................4 -5 Table 5 -1 Current and Proposed Retail Electric Rates ................... ............................5 -2 131945 SAIC Energy, Environment & Infrastructure, LLC iii Table of Contents This report has been prepared for the use of the client for the specific purposes identified in the report. The conclusions, observations and recommendations contained herein attributed to SAIC constitute the opinions of SAIC. To the extent that statements, information and opinions provided by the client or others have been used in the preparation of this report, SAIC has relied upon the same to be accurate, and for which no assurances are intended and no representations or warranties are made. SAIC makes no certification and gives no assurances except as explicitly set forth in this report. 0 2012 SAIC All rights reserved. I it iv SAIC Energy, Environment & Infrastructure, LLC B1845 I " Section 1 INTRODUCTION The City of Hutchinson, Minnesota through Hutchinson Utilities (HU), owns, operates and maintains a municipal utility which provides retail gas and electric service to its residents and businesses. HU provides electric service to approximately 7,000 retail customers through its Electric Division. HUC provides natural gas service to approximately 5,400 customers through its Gas Division. Overall responsibility for the operations of the Electric and Gas Divisions is charged to the Hutchinson Utilities Commission which has the authority to review and set the rates for service charged by HU. SAIC has performed a cost -of- service and rate design study for HU's Electric and Gas Divisions. The study included an analysis of estimated revenue requirements for 2012 - 2016 (the "Study Period "), the preparation of detailed cost -of- service analyses based on a 2010 test year, a rate analysis and the development of proposed new electric and gas rates for each customer classification. This report summarizes the analyses undertaken in our study of HU's retail electric and gas rates and describes the results of our study and our recommendations. The cost -of- service analysis performed for each of HU's retail electric and gas customer classifications was based on fully embedded costs. The rate design portion of the study includes recommendations on retail rates for each customer classification. 81845 SAIC Section 2 ESTIMATED OPERATING RESULTS - EXISTING RATES To remain financially sound, HU's electric and gas rates must produce sufficient revenues to cover the cost of providing electric and natural gas service and to permit the continued replacement and expansion of its facilities. These expenditures are commonly referred to as "revenue requirements" and consist of normal operating expenses, capital improvements and additions, contributions to the City and non - operating expenses. Periodically, a utility must examine its current and forecasted revenues and expenses to verify that the total revenue, including interest earnings and miscellaneous income is sufficient to cover all revenue requirements. This part of the study compares projected income earned from revenues at present rates to the expenses expected to be incurred in serving customers during the Study Period. In order to determine the adequacy of HU's existing electric and gas rates, we have worked with the HU personnel to develop estimates of the annual revenues and revenue requirements for the Study Period. These estimates serve as the basis for determining the overall level of revenue recovery and provide a foundation for our cost -of- service analyses. The analyses and assumptions incorporated in our development of estimated revenues and revenue requirements are described below. Electric Division Historical Electric Requirements HU purchases the majority of its electric requirements and generates the remainder of its requirements. HU signed an agreement with Missouri River Energy Services (MRES) to begin receiving capacity and energy in 2010. Its contract calls for 15 MW of capacity and energy in 2011 and 2012, with an increase to 25 MW of capacity and energy in 2013. HU's contract with Northern States Power/Xcel Energy for purchased power ends on December 31, 2012. HU will continue to generate a portion of its requirements and purchase from the open market any amounts needed beyond MRES purchases and generation. HU's historical electric requirements for 2007 through 2011 are shown in the table below. I-' B 184 SAIL Section 2 Table 2 -1 Historical Electric Requirements (MWh) Year Requirements Losses Sales (excluding Resale) 2007 328,860 13,086 315,774 2008 319,643 9,223 310,420 2009 289,175 15,519 273,656 2010 306,063 12,461 293,602 2011 311,359 12,564 298,795 Estimated Electric Requirements HU's forecasted electric sales, losses and requirements for the Study Period are shown in the table below. These requirements were forecasted by HU and reflect sales to HU's retail customers, as well as electricity supplied for street and traffic lights, HU internal use and system losses. In addition to providing electric service to its retail customers, HU sells to resale customers. HU's contract with Southern Minnesota Municipal Power Agency (SMMPA) for resale capacity sales ends in 2012. HU's contract to sell capacity to MRES begins in June 2013. The MRES contract is for capacity sales of 25 MW per month at $2.55 per MW- month. HU also provides energy sales to resale customers, depending on market prices. However, the margin on energy sales for resale is low, so no resale energy sales were assumed in the forecast. Table 2 -2 Estimated Electric Requirements (MWh) Year Retail Sales Losses Total Requirements Annual Percent Change 2012 303,989 12,666 316,655 2013 324,899 13,537 338,436 6.9% 2014 328,927 13,705 342,632 1.2% 2015 350,474 14,603 365,077 6.6% 2016 354,714 14,780 369,493 1.2% The "Estimated Electric Purchases and Generation" table below reflects the new purchased power arrangement HU began in 2010 with MRES. HU's purchase of 15 MW of capacity and energy from MRES in 2011 and 2012 is equivalent to 131,400 MWh per year. The 25 MW capacity purchase in 2013 is equivalent to 219,000 MWh. It is assumed that HU will generate 24 percent of its remaining requirements, after the MRES purchase. The remaining 76 percent of its remaining requirements will be market purchases through MISO. 2 -2 SAIC Energy, Environment & Infrastructure, LLC H1845 I i u ESTIMATED OPERATING RESULTS — EXISTING RATES t ` Table 2.3 Estimated Electric Purchases and Generation (MWh) Year MRES/ NSP Wind Market (MISO) Generation Total Purchases Purchases 2012 262,800 240 40,930 12,685 316,655 2013 219,000 240 90,772 28,425 338,436 2014 219,000 240 93,961 29,432 342,632 2015 219,000 240 111,018 34,818 365,077 2016 219,000 240 114,375 35,878 333,375 t Estimated Revenue Requirements A forecast of HU's Electric Division expenses, called revenue requirements, has been prepared for the Study Period. These revenue requirements consist of generated and purchased power costs and operating and non - operating expenses. Estimated revenues from the sale of electricity at current rates during the Study Period have been forecasted and compared to the revenue requirements. The estimates of the Study Period revenues and revenue requirements are contained as Exhibit 2 -A at the end of this report. Estimated revenue requirements for the Study Period were developed based on HU's annual financial reports for 2007 through 2011, budgeted expenses for 2012 and forecasts of expenses for 2013 -2016, as well as discussions with HU personnel. The assumptions used in these estimates are explained in detail below. Generation and Purchased Power Expenses SAIC used the rates from HU's contract with MRES to develop the cost for MRES capacity and energy purchases through the Study Period. The cost for wind purchases was escalated by 1 percent per year. The price for market purchases through MISO was escalated from 2012 levels by 3 percent per year. Transmission fees are forecasted to increase by $100,000 per year during the Study Period. The cost of natural gas for electric generation was based on the cost of market gas as forecasted on the NYMEX futures market website. The cost to transport the natural gas is estimated at $1.1 million per year. The table below shows the estimated expense for the projected generation and power purchases shown in the table earlier in this Section. Local production and transmission expenses are not included in this table. Exhibit 2 -A at the end of this report shows total expenses forecasted for the Study Period. B 184 SAIC Energy, Environment & Infrastructure, LLC 2 -3 Section 2 Table 2 -4 Estimated Electric Generation and Purchased Power Expenses Year MRES/ NSP Wind Market Purchases Transmission Natural Gas and Total (MISO) and Other Fees Transportation 2012 $12,643,344 $10,008 $1,547,141 $890,699 $1,632,776 $16,723,969 2013 10,240,500 10,108 3,534,106 1,008,389 2,189,379 16,982,481 2014 10,240,500 10,209 3,768,011 1,116,647 2,397,941 17,533,308 2015 10,486,272 10,311 4,585,615 1,236,272 2,781,728 19,100,198 2016 10,579,169 10,414 4,865,994 1,345,655 3,209,650 20,010,883 Operating and Maintenance Expenses Operating and maintenance expenses incurred are related to Production and Distribution facilities and services. Customer Service and Collection, Sales, Administrative and General and Depreciation are also part of operating and maintenance expenses. Expenses for 2012 have been based on HU's 2012 budget and discussion with HU staff. For the years 2013 -2016, local transmission, distribution and customer related expenses were escalated from 2012 levels by 3 percent per year. Most administrative and general expenses were escalated by 8 percent, due to their historically higher rates of increase each year. Forecasted depreciation is based on existing depreciation levels plus an assumed 30 year depreciation schedule on planned capital improvements. Other income and Expenses The Amortization of Development Study is related to planning expenses from the Big Stone H power project. Payments are expected to be completed in 2015. Revenues from non - utility operations include Other Income, Interest Income and Miscellaneous Income. Levels for Other Income and Miscellaneous Income during the Study Period are based on the 2012 budget. Interest Income is based on 0.25 percent interest on cash reserve levels and is expected to decrease considerably, due to use of cash reserves to fund planned capital improvements. Other Expenses include Miscellaneous Expense and Interest Expense. Miscellaneous Expense during the Study Period is based on the 2012 budget. Interest Expense is the interest portion of the Electric Division's debt service payments. the interest portion on HU's debt service payments for the gas pipeline. Payment In Lieu Of Taxes/Services -In -Kind Payment In Lieu Of Taxes (PILOT) and services -in -kind are provided to the City of Hutchinson by the Electric Division in two forms. The Electric Division provides a PILOT cash transfer based on 2.75 percent of the Division's total operating revenues, as determined by the second preceding year's financial audit. The Electric Division also reimburses the City of Hutchinson for charges related to the Division's provision 2 -4 SAIC Energy, Environment & Infrastructure, LLC B1845 u u it I I ME ESTIMATED OPERATING RESULTS — EXISTING RATES of street lighting electricity and maintenance service. In 2012 the total amount of these two forms of transfer payments are estimated at $885,646. Capital improvements The capital improvements included in the Cash Reserves portion of the forecasted operating results are based on HU's Capital Improvements Plan, plus discussion with HU staff. Final determination has not been made on the funding sources for capital improvements. Debt Service The Cash Reserves portion of the forecasted operating results includes the principal portion of the debt service payments made by the Electric Division. Debt service principal payments on current debt are approximately $125,000 per year. Revenue Requirements Each category included in the calculation of revenue requirements has been described above. The revenue requirements indicate the amount of funds on an annual basis necessary to operate the system. Estimated Revenues - Existing Rates Estimated operating revenues have been developed by SAIC for the Study Period to compare to forecasted revenue requirements during the same period. Operating revenues consist of revenues from the sale of retail electricity, sale of electricity for resale, and other operating revenues, including net income from other sources, revenues from security lights and pole rental fees. e1e45 SAIC Energy, Environment & Infrastructure, LLC 2 -5 Table 2 -5 Estimated Electric Operating Revenues Existing Rates Year 2012 2013 2014 2015 2016 Retail Sales Revenues $26,591,070 $28,379,562 $28,727,590 $30,570,476 $30,936,722 Resale Revenues 600,000 446,250 765,000 765,000 765,000 Other Operating Revenues 238,000 238.000 238,000 238.000 238.000 Total Operating Revenues $27,429,070 $29,063,812 $29,730,590 $31,573,476 $31,939,722 e1e45 SAIC Energy, Environment & Infrastructure, LLC 2 -5 Section 2 Estimated Electric Operating Results and Cash Reserves Based on the estimates described above, we have prepared the following tables which summarize the Electric Division's estimated annual operating results and cash reserves for the Study Period. As shown below, net income based on the Electric Division's existing rates will be sufficient to cover basic annual operating expenses, but cash reserves will not be sufficient to cover capital improvements during the Study Period. However, the ending cash reserve balance does remain positive by the end of the study period even though it decreases from approximately $12.3 million to $2.5 million during the period. Our estimate of the Electric Division's annual operating results is presented in detail in Exhibit 2 -A at the end of this report. Table 2-6 Estimated Electric Division Operating Results Existing Rates Year 2012 2013 2014 2015 2016 Estimated Operating $27,429,070 $29,063,812 $29,730,590 $31,573,476 $31,939,722 Revenues Estimated Revenue 26,474.747 27,291,939 28,248,113 29,647,493 30.672,660 Requirements Net Income $954,323 $1,771,872 $1,482,477 $1,925,983 $1,267,062 Net Income as Percent of Operating 3.5% 6.1% 5.0% 6.1% 4.0% Revenues Table 2 -7 Estimated Electric Division Cash Reserves Existing Rates Year 2012 2013 2014 2015 2016 Beginning of Year Cash Reserves $12,340,501 $6,741,174 $7,177,001 $3,757,434 $7,351,738 Plus Net Income 954,323 1,771,872 1,482,477 1,925,983 1,267,062 Plus Depreciation 2,400,000 2,693,955 2,823,955 3,077,322 3,120,122 Less Capital (8,818,650) (3,900,000) (7,601,000) (1,284,000) (9,073,000) Improvements Less Bond Principal (135,000) (130,000) (125,000) (125,000) (125,000) End of Year Cash Reserves $6,741,174 $7,177,001 $3,757,434 $7,351,738 $2,540,922 2 -6 SAIC Energy, Environment & Infrastructure, LLC 91845 i I , ]" ESTIMATED OPERATING RESULTS — EXISTING RATES Gas Division Estimated Gas Requirements HU provides gas for its retail customers and also purchases and transports gas for its transportation customers. HU has forecasted gas purchases for the Study Period, as shown in the table below. The purchases reflect sales to HU's retail customers and transportation customers and unaccounted for gas of 1 percent. Table 2 -8 Estimated Gas Requirements (MCF) Purchases for purchases for Year Retail Customers Transport Total Customers 2012 999,882 848,546 1,848,429 2013 955,169 797,900 1,753,069 2014 969,885 797,900 1,767,785 2015 984,601 797,900 1,782,501 2016 999,317 797,900 1,797,217 Estimated Revenue Requirements A forecast of HU's Gas Division expenses, called revenue requirements, has been prepared for the Study Period. These revenue requirements consist of purchased gas costs and operating and non - operating expenses. Estimated revenues from the sale of gas at current rates during the Study Period have been forecasted and compared to the revenue requirements. The estimates of the Study Period revenues and revenue requirements are contai ne d as Exhibit 2 -B at the end of this report. Estimated revenue requirements for the Study Period were developed based on HU's annual financial reports for 2007 through 2011, budgeted expenses for 2012, forecasts of expenses for 2013 -2016, estimated wholesale gas costs, and discussions with HU personnel. The assumptions used in these estimates are explained in detail below. Purchased Gas Expenses Projected commodity and reservation expenses for 2012 -2016 are based on forecasted gas commodity costs and reservation fees as developed through discussions with HU staff. Reservation fees are estimated to remain level at approximately $10,000 per year. HU has a significant portion of its gas commodity purchases for 2012 and 2013 locked in at a fixed rate. The commodity rates shown below reflect a weighted average of the locked -in gas purchases and gas purchases on the market at forecasted market prices, as listed on the NYMEX futures market website. The weighted average B 194 SAIC Energy, Environment & Infrastructure, LLC 2 -7 Section 2 commodity rates apply only to HU's retail customers. HU's transportation customers pay market rates for their gas purchases. Table 2 -9 Estimated Wholesale Gas Commodity Rates (Weighted Locked -in and Market) for Retail Customers Per MCF Year Commodity Rate 2012 $5.58 2013 4.68 2014 4.54 2015 4.60 2016 5.60 The table below shows the estimated wholesale gas commodity expense for the projected purchases shown in the table earlier in this Section. This table reflects the total gas expenses for supplying 3M, HTI and HU's other retail customers. Table 2 -10 Estimated Wholesale Gas Expenses Year Reservation Retail Transportation Total Fees Commodity Commodity 2012 $9,610 $5,584,047 $3,182,049 $8,775,706 2013 9,610 4,469,423 2,912,335 7,391,368 2014 9,610 4,401,380 3,351,180 7,762,170 2015 9,610 4,529,164 3,670,340 8,209,114 2016 9,610 5,596,173 4,468,240 10,074,023 Operating Expenses Operating and maintenance expenses incurred are related to Production, Transmission and Distribution facilities and services. Customer Service and Collection, Sales, Administrative and General expenses and Depreciation are also part of operating and maintenance expenses. Expenses for the Study Period have been forecasted based on the 2012 budget provided by HU and escalation of budgeted levels for 2013 -2016. 2 -8 SAIC Energy, Environment & Infrastructure, LLC s1845 0 u I] ESTIMATED OPERATING RESULTS — EXISTING RATES Payment In Lieu Of Taxes Payment In Lieu Of Taxes (PILOT) is provided to the City of Hutchinson by the Gas Division. The Gas Division provides a PILOT cash transfer based on 2.75 percent of the Division's total operating revenues, as determined by the second preceding year's financial audit. In 2012 the PILOT cash transfer is estimated at $394,000. Other Income and Expenses Revenues from non - utility operations are classified as Other Income -Net, Interest Income and Miscellaneous Income. Other Income -Net and Miscellaneous Income levels for the Study Period have been based on the Gas Division's 2012 budget. Interest Income is based on interest earned from cash reserves at 0.25 percent interest rate. Other Expenses include the expense portion on the gas pipeline debt service payments and Miscellaneous Expense, which has been based on the 2012 budget. Capital Improvements Planned improvements for the Gas Division during the Study Period range between $430,000 and $1.5 million per year. Capital improvements will be paid from cash reserves. Debt Service HU has gas revenue bonds issued to pay for the gas pipeline. Interest payments for the bonds have been included in the forecasted operating results shown in detail in Exhibit 2 -13. Principal payments have been included in the calculation of cash reserves. Principal payments range between $1 million and $1.2 million per year. Revenue Requirements Each category included in the calculation of revenue requirements has been described above. The revenue requirements indicate the amount of funds on an annual basis necessary to operate the system. Estimated Revenues - Existing Rates Estimated operating revenues have been developed by SAIC for the Study Period to compare to forecasted revenue requirements during the same period. The revenues are based on rates in effect in 2012. Operating revenues consist of revenues from the sale of retail gas, transportation revenues from gas sales to 3M and HTI and transportation fees from New Ulm and the Electric Division for use of the gas pipeline. B1845 SAIC Energy, Environment & Infrastructure, LLC 2 -9 Section 2 Table 2 -11 Estimated Gas Operating Revenues Existing Rates Year 2012 2013 2014 2015 2016 Retail Sales $9,571,619 $9,172,258 $9,307,061 $9,441,875 $9,576,701 Sales to 3M & HTI 3,294,335 3,079,101 3,513,601 3,829,601 4,619,601 New Ulm & Electric Division Transportation 1,800.000 1.800.000 1,800.000 1.800.000 1.800,000 Total Operating Revenues $14,665,954 $14,051,360 $14,620,662 $15,071,477 $15,996,302 1 Estimated Gas Operating Results and Cash Reserves Based on the estimates described above, we have prepared the following tables which summarize the Gas Division's estimated annual operating results and cash reserves for the Study Period. As shown below, net income based on the Gas Division's existing rates will be sufficient to cover operating expenses and capital improvements during the Study Period. In fact, estimated cash reserves increases from approximately $1.2 million to $7.5 million during the study period. Our estimate of the Gas Division's annual operating results is presented in detail in Exhibit 2 -B at the end of this report Table 2 -12 Estimated Gas Division Operating Results Existing Rates Year 2012 2013 2014 2015 2016 Estimated Revenues $14,665,954 $14,051,360 $14,620,662 $15,071,477 $15,996,302 Estimated Revenue Requirements 12,974,313 11,677,790 12.115.377 12,572,212 14.477.217 Net Income $1,691,640 $2,373,570 $2,505,285 $2,499,265 $1,519,085 Net Income as Percent of Operating 11.5% 16.9% 17.1% 16.6% 9.5% Revenues 2 -10 SAIC Energy, Environment & Infrastructure, LLC B 184 ESTIMATED OPERATING RESULTS — EXISTING RATES Table 2 -13 Estimated Gas Division Cash Reserves Existing Rates Year 2012 2013 2014 2015 2016 Beginning of Year Cash Reserves $1,163,169 $1,326,760 $2,499,231 $4,524,342 $6,540,826 Plus Net Income 1,691,640 2,373,570 2,505,285 2,499,265 1,519,085 Plus Depreciation 1,050,000 1,101,102 1,141,175 1,156,720 1,171,037 Less Capital Improvements (1,533,050) (1,202,200) (466,350) (429,500) (429,500) Less Bond Principal L1,045,000) (1 100 000 ) (1,155,000) (1 210 000 ) (1,275,000 End of Year Cash Reserves $1,326,760 $2,499,231 $4,524,342 $6,540,826 $7,526,448 Combined Electric and Gas Results Presented below are the estimated operating results and cash reserves for the combined electric and gas divisions at existing rates for both divisions. Table 2 -14 Estimated Combined Electric and Gas Operating Results Existing Rates Year 2012 2013 2014 2015 2016 Estimated Revenues $42,095,023 $43,115,171 $44,351,253 $46,644,952 $47,936,024 Estimated Revenue 39,449.060 38,969.729 40,363,490 42.219.705 45,149,877 Requirements Net Income $2,645,963 $4,145,442 $3,987,763 $4,425,247 $2,786,147 Net Income as Percent of Operating 6.3% 9.6% 9.0% 9.5% 5.8% Revenues B 184 SAIC Energy, Environment & Infrastructure, LLC 2 -11 Section 2 Table 2 -15 Estimated Combined Electric and Gas Cash Reserves Existing Rates Year 2012 2013 2014 2015 2016 Beginning of Year $13,503,671 $8,067,934 $9,676,233 $8,281,776 $13,892,565 Cash Reserves Plus Net Income 2,645,963 4,145,442 3,987,763 4,425,247 2,786,147 Plus Depreciation 3,450,000 3,795,057 3,965,130 4,234,042 4,291,158 Less Capital (10,351,700) (5,102,200) (8,067,350) (1,713,500) (9,502,500) Improvements Less Bond Principal (1,180,000) (1 230 000 1280 000 ) (1,335,000) (1 400 000 End of Year Cash $8,067,934 $9,676,233 $8,281,776 $13,892,565 $10,067,370 Reserves 2 -12 SAIC Energy, Environment & Infrastructure, LLC B1845 4 N 3 yf, v LL Ny K � C Q O > W �a L V U 'yC W N .0 O 2 PRM M b W N 01 hp N S pQ 8 h 8 N 0 0 0 h Ypbp1f1 0 r M T fn CCO N Ohi M M pH M O N Oa}} N O O O N N M O 00 OHf M H N N N N O t0 YI N O Q Q a N b M O N H h O h N IP411 0M1 0 N Q1 O N H PNIi S f�P1 H 'o ti h N N co QMQ M h N pppp 10p OW1 h O b 8 8 Q 0 0 8 b h W It to w PPN�p 0< O H W H h N ; Q N ONt h N VI 1G O h N M i+l OD 1H0 T a6 -t o M 8Q 4pO Q Of N N O /� rHi Of M m b eM1 h N Im/1 Op 0f O1 PM'1 t~�1 IH11 N N M N N wmT^ 8 p mQ tS it ma m OS N T N 1Q-1 n 000 Y N H m 0 m01 V1 N O1 O PI 001 P0/1 N N n N Wp H 10/1 M u1Mn ppH h OO� Nif N U1 0 Q N m N Of N N �+1 tMYf m 01 H Q wQ1 VI H N 1� pp ppff pp O N p N O ep} W O O M M h p� T W N pMpf 01 Opp Q Q b O fy 01 N Q W O O N N N m W N O W N m p Wp T I mp AbIpp Oq0 O N O 01 H H p Q w H M f0 O1 pmpff N O N N h m" N p O H N GWp IMO V Vf O' N N -AP V1 Oi M H OD N T N N 1 Q H 0f rd N N OHO 0 0O g g 8 0 O O O p n p 8 Gp O f0-1 f� tMO g N O .Qi O l7 pMp�1 M QNQ Q O h b QI N N T H p Ifl H tWI1 M O n W ppH�1 eMJ M N Q t0 O 1�'1 RNI O H b Q Co N N N N Q� T b H N H b N O T N H Q H H N Q N h m W W m N tO Yf tI1 Q H Qf O Co 00 t0 M N 1' 01 W Q A O h 00 T H h M N VI N M T N b M N 11'1 N N 1f`1 a N 01 O �p pp N b O1 h V1 O h LO O 01 N' N (+f O1 N M h Of Q' T O Of H O O M N h 0f N C N h N f-1 Q N N Yf N O b N Q N eMi h Of h h V1 O� M N n f+' N N Vf u1 H N N H H h O1 W W IO IWp N h M N O W N p1 Of m p �gf L1 W H m ep� h 10 m M N Q Q b IO N n fVMi PMO T N N 1Q11 \b0 N S erf CQO N O 1M-1 N b h T M 0 h N T 0 h O O1 W 00 N Y1 h W O Al O a a QI O N H m h H W b 01 a� W Q h T N M T M h O Of H h M 1p N O1 H H Q N b V1 W N N N N N fp1 Q bW Of Pn� Shp u1 P. Ip W In O 10 m Of H 8 W m m W N O h Q ea 0W N 00 N Vf GO OH1 pHQ IWD @ T T O eb1 Vf h K 3b1 N O1 R O M Uf 1mfl O H O O 4 1!1 N N O Q P^ OC N Oi N O f< M pp O N N h 01 h h b IA Q M b CC r1 01 Yf rl O h O O W h N O1 N ra T N M IG W b b H 01 N N N M Of M N M N N W H H Q N IO Q W O H N pN ��pp H H S N N m S O IMl1 0 QMQ Q Mp If1 n N N 0 O Q N O T N IWR n S T Oh N O N M h h m O O Q H O CO M a M h Q H W V� M M N Co O m a0 f-1 M a0 00 N N O Oi O O O vi vi Oi vi vi Q f� N eti 01 O m u1 aD Q Q1 O VI H h h Of l0 N W N O W N T .4 00 H M H H H N h M W H W O N o H Q M H h O O O p h 01 b O b N m H Q 1V YI M 1�1 h O1 1f1 � Yi 8 40 t� 111 OI h H W 1011 W Q N H N Of O pdpp1 tpp0 m Q p Qmp M Q Cf QTQ h N 0 T N W N 10 0000 pp PMPf 1N+1 N N WMW f'Y 1f1 N N !O N INO N 00 N OQ1 01 T tPf Q1 N 0 l0 ra O 00 N H T H O O1 N ry H W N M M N T M r�l N VI Ol C d C n , d A Q Q C O/ Q C Q W E YY C C d O LL C A O OTO Y L t 0 C Q O N A W J r! ec v v s E O r m r °-' r a y e� Z L c° q �° c CL A,y11_tzi Ems° r10. A 3v�fYO• ,Q o� 4. 0 MA W O •� u 2 d o v °C5v�iZ1�na $OaO a Sfv�iw �HH "'G t•5 O N H ph 6 �Q+ A fi W h ohm 10 m V W N .r m m 0 N 0 �-F W n Vf O n O O p Fy O p W N N N C g m Q O N N Ul h Q w S rl Fn W$ i0 N W m N N S 00 8 100 W N e Q m W O a Q W N h m N a ry CO Q H 00 V ri Q N FaA M n H M h F-i vi P n �CVpF Oi O ao O O O N i� N ri P O eFf N O N N1 Af O � N G ^ ti IFI v •' fV M NNff N N V1 ti M pt�1 W h ID W h N M Sq N Q 88 O N m N N Q N 8 pp 8 C pp pq ry O ImO M V V '"m Ot n S T n O^ OMi pe oe m CNO pN� n N N O O O O N p AI b N !` 00 Fy' n Q W IO O� oo M Q1 FD N n VOj 01 Y~1 N N eP•1 01 N M` N ONl n Of O N M RNI M N N Q H N N Of M N Of M H N N N FA M .-1 Q N Ot O N h N IO 01 N N T O1 N e1 Of AI N MI �` h pp�t aa �y pp� po p ppp Q ^ F� �N N N y r O O Qt N O YNf N^ S O Omf ? CO yOV�t1 n 00 Y1�f u0f uhf ON1 O r emi S< O1 O O n N m FO N F-1 h m N N O O VI h W Ot N p Np p hppp Q yj .-1 a U M N M a M 10 N N IM/f N N N Om0 T N 11�/f Q N 111'vl IF1 N N .hd N M a N V N O m O N n n W O h FVV 1p Lrr PC LL M N FV 00 L•1 e.1 N N~ ry � � N N M W N O a M n ppp Vf O Of Vl O 8 M m 10 % p�pp pO N N 01 M Vt h M 8 Oq m O Vf N is at Q ^ N M N 0 .10-1 M n n iW+i O a Om0 n W h Ol V 110+1 ONi N Ohi w m < O 0c0 P O Q Vhf OhO T �h-1 (p M O O S N e4 Oi vi Q ID F,p' N N N Ot] O O p 01 Oi M 00 M V1 ti YI M O V) O pp Vf 0p N 1^r�1 IIi Qp O P n rOV r n b V1 1m'F eNY N N N N N N N N N N V7 tD O h N N 00 r% t1 N e'1 n N N N N N N m` N 88 pppp �Ipp 8 S 8 oM V1 p Q1 p 8 N 0 o p p N IY O O Vf N Q IO n Oht O e10i N VI ei 1p 00 O N t0 O N 0�0 O p O O O oVO1 O Q M m r N eN1f 8O b O rhl O VI F-i M O V1 Oi W Q 10 00 i� VI t� H 1� 00' O Vt N I'/f O1 O1 O tV O yf N N O1 ea+l Of V W eMl n a P O1 O n 10 M .-F W N r-1 a 10 O m Q P rl O wr N N N r N Q N N ..1 ti e•1 M Q O h N Q C tp cc to pppp p yy�t pp�t �0pp po1 1� 8 pN1 Fro — N WL O O aao r0-F N C 1n r m O a N O W H 00p0 iF0�� O n O OIpp O O aW0 {bWp p hpft tFf Of f0 papdt ° p wppp N 3i a N M N NI M n t� !� h n 10 1+1 'FT Oi f/1 OO N Q Q O O N N N V O N 01 O O V v O N a V1 FL h N a^ N m N N m Fy�1 O C K N N FY N 1A N N N H Q fY h h N N N .N-. 1{ M IA A C C N N N N N N w N A 1D O1 vl h m H h W W VI FO W m 1p-1 M O O b F,p h O1 b Q r1 r1 h m m h K m y� C � m Oat S N N FO N Of M M east N� 00 N O O O rnF Q O M � n t0 O O O 10 Q � m W O o'er^ So.m+ew .W+llprfo Ihit �'i �1�1alNrt uNt nrpFfmaOmin I°io n`F'i C_ O r1 N N rl fp � N ry 1100 W V ry Oat I FQ1�t Vt F1DFl W ONi S Qpt N 1@ft N p10i 010001 tl�G m Fm'l C tOR Q OND j� j1t ry pp N a VX1 O 'C Oi b V) W N CO N N M FM-I N r•f Oml lO O) a Q1 M a O m N .h•1 11Oit h tans Ih-F m O v C Ot h a-1 Q Q m M W 0 1mr1 a p N pt p pp�� pp1 ry frvfF O Q O N Vt N n H 01pi N tOlf Ihf1 40 S N 10tlf o N N n S m INO 0t0 OSO 1� OM1 O x r th ry O N F-I N H N N h N M IO m ut Q O VI F-1 O .•1 OI FO Q h 00 Oh VI FY l0 N ID 01 O, FFf 10 n M f\ a O Q V1 V1 v3 Oi Vf O 0p .i N N N m .a .1 W F•F h P h .•1 H Q h h N Q OU pp 1p N ry P O N Q FD N CO1f N N N W N Ot W IO W W N Q N QI N Of M H h QI X N N {h�t m ppN11 m m w, Q of OOm11 W Q e n y S vt h N P O eppmFt �+ o m N {OfFt h N IhA N M tQ111 M N N n N PWFI Ih0 N N N M N N h W O1 h N ID N N h '� 010 Fhif ONO rl N h N T IO N Fy yyC OF ` NV W 4 W O C V O YI F ty yp X �C ei �n Cyb r V u !7 QL N E d1j x a.6 N c av uF ¢F w o " x -a °a °� w A� � ,� ? m � `o � m ° w c K�� g o f u p 'n w AleP o p NC W V> ?� yV �j a ,`ry_ C O O a0. 1 dF�F E 1O^ W ,� le C ii y i- H! CO A E V O 0 C C Y F °� aF o �"' W c N d A t�7 c 's N c a F_t' s '—� o o 3° J E a .+ c Y a A a 'm 41 an d dS Yu o m d o E o f 4 T c y $ t Fu ,� r a; . c v F?�umu ml'n� '�a Oa W acgf V E o a �S egSt� aF d d� >;•o In < O¢ a v O O Z Z¢ ti W S u Iy N M 's F ffi L1 s w n 9 ,.3 N X X VI V t C A 6 C E 0 O C Y M T a.V. a 0 o �r m .u1a i c 2 N .r h Q g a Exhibit Z -B Hutchinson Utilutes, Minnesota Natural Gas Operating Results Existing Rates Sales Expense Supervision 3,566 1,750 2,955 1,557 1,094 2,080 2,101 2,122 2,143 2,164 Misc. Selling Expense 82,284 90,508 77,020 79,422 55,827 66,475 67,140 67,811 69,489 69,174 Total Sales Expense 85,850 92,258 79,975 80,979 56,921 68,555 69,241 69,933 70,632 71,339 Administrative & General Historical Forecast Operating Revenues 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Sales-Natural Gas-Retail 13,840,672 10,297,231 9,503,930 7,988,961 81150,950 9,571,619 9,172,258 9,307,061 9,441,875 9,576,701 Sales to Transportation Customers 34,023 5,800,369 3,323,607 4,519,922 4,246,780 3,294,335 3,079,101 3,513,601 3,629,601 4,619,601 New Ulm Transportation 712,D49 720,662 719,272 721,218 724,187 700,000 700,000 700,000 700,000 700,000 Transportation- Electric Division 1,100,000 11100,000 1,100,000 1,100,000 111001000 21100,000 1,100,000 1,100,000 1,300,000 1,100,000 Total Operating Revenue 15,652,921 17,918,262 14,646,809 14,330,101 14,221,917 14,665,954 14,051,360 14,620,662 15,071,477 15,996,302 Purchased Gas 125,768 120,321 89,888 96,777 99,563 90,900 92,718 94,572 96,464 98,393 Purchased Gas for Retail 11,473,093 8,539,082 7,343,134 6,119,793 5,634,250 5,593,657 4,479,033 4,410,990 4,538,774 5,605,783 Contract Gas for Transport Customers 841,182 5,211,527 2,714,549 3,686,978 3,394,454 3,182,049 2,912,335 3,351,180 3,670,340 4,468,240 Total Gas Purchased 11,473,093 13,750,609 10,057,683 9,806,771 9,028,704 8,775,706 7,391,368 7,762,170 8,209,114 10,074,023 Transmission Expense 355,471 382,067 415,926 441,022 364,852 394,078 391,103 403,314 386,412 402,068 Gas Transmission Operation 88,611 102,144 96,520 98,lss 95,499 104,000 107,120 110,334 113,644 117,053 Gas Transmission Maintenance 7,361 1,647 1,920 2,210 2,962 12,100 12,463 12,837 13,222 13,619 Total Transmission 95,972 103,791 96,440 100,368 98,461 116,100 119,583 123,170 126,666 130,672 Distribution Expense 84,281 102,094 42,128 51,701 33,236 40,000 40,000 40,000 40,000 40,000 Distribution Operation 139,079 68,316 36,312 30,660 27,867 25,000 3,317 6,248 11,311 16,352 Supervision & Engineering 147,811 153,669 156,924 159,980 154,811 151,000 155.530 160,196 165,002 169,952 Mains & Services 129,229 319,534 99,452 107,963 104,475 108,500 111,755 115,108 118,561 122,118 Meters 10,170 5,308 9,663 4,448 4,304 3,500 3,605 3,713 3,825 3,939 Miscellaneous 121,646 143,729 150,933 142,912 138,294 157,100 172,113 177,276 182,595 188,073 Total Distribution Operation 408,656 422,240 416,972 415,303 401,884 430,100 443,003 456,293 469,982 484,081 Distribution Maintenance 276,352 75,314 328,333 433,613 1,168,935 1,691,640 2,373,570 2,505,285 2,499,265 1,519,085 Lines - Services & Mains 38,658 64,960 63,191 98,986 122,276 107,000 112,350 117,968 123,866 130,059 Meters & House Regulators 8,998 6,332 9,346 9,650 11,920 15,000 15,750 16,538 17,364 18,233 Maintenance of Other Plant 43,325 55,901 59,635 44,230 54,637 55,000 57,750 60,638 63,669 66,853 Total Distribution Maintenance 90,981 127,193 132,172 152,866 188,833 177,000 185,850 195,143 204,900 215,145 Total Distribution 499,837 549,433 549,144 568,159 590,717 607,100 628,853 651,436 674,882 699,226 Customer Service & Collection 1,691,640 2,373,570 2,505,285 2,499,265 1,519,085 Meter Reading 39,200 40,021 66,621 67,211 63,215 24,750 25,988 27,287 28,651 30,084 Collection Expense 66,478 71,499 51,018 72,633 68,314 94,815 99,556 104,534 109,760 115,248 Bad Debts 11,564 12,095 10,928 9,254 8,704 9,000 9,090 9,181 9,273 9,365 Customer Service 28,906 36,069 32,343 30,371 28,565 35,550 35,906 36,265 36,627 36,993 Total Customer Service & Collection 146,150 159,684 160,910 179,469 168,798 164,115 170,539 177,266 184,311 191,691 Sales Expense Supervision 3,566 1,750 2,955 1,557 1,094 2,080 2,101 2,122 2,143 2,164 Misc. Selling Expense 82,284 90,508 77,020 79,422 55,827 66,475 67,140 67,811 69,489 69,174 Total Sales Expense 85,850 92,258 79,975 80,979 56,921 68,555 69,241 69,933 70,632 71,339 Administrative & General Administrative &General Labor 140,750 150,519 163,546 122,585 126,114 158,250 161,415 164,643 167,936 171,295 Office Supplies & Expenses 68,391 67,027 85,499 58,096 59,768 68,990 90,770 92,585 94,437 96,326 Outside Services 34,023 29,838 39,534 26,286 27,043 46,000 48,300 50,715 53,251 55,913 Property Insurance 99,666 99,460 87,991 90,988 93,607 95,850 96,809 97,777 98,754 99,742 Employee Pension & Benefits 324,642 365,810 396,976 292,706 301,132 395,250 407,108 419,321 431,900 444,857 Regulatory Expense 19,209 13,472 22,065 17,837 18,350 22,500 24,300 26,244 28,344 30,611 Misc. General Expense iii 125,768 120,321 89,888 96,777 99,563 90,900 92,718 94,572 96,464 98,393 Malnt of General Plant 28,733 35,599 37,520 45,843 47,168 38,970 40,139 41,343 42,584 43,861 Total Administrative & General 841,182 872,045 923,019 751,123 772,746 936,710 961,558 987,200 1,013,669 1,040,998 Depreciation 948,789 966,926 1,026,235 1,037,707 1,042,071 1,050,000 1,101,102 1,141,175 1,156,720 1,171,037 Payment In lieu of Taxes 355,471 382,067 415,926 441,022 364,852 394,078 391,103 403,314 386,412 402,068 Total Operating Expense 14,446,344 16,876,813 13,311,332 12,965,608 12,123,270 12,112,364 10,833,345 11,315,664 11,822,606 13,781,053 Operating Income 1,206,577 1,041,449 1,335,477 1,364,493 2,098,647 2,553,589 3,218,014 3,304,998 3,248,870 1,215,249 B{ 1 i Otherincome /(Expense) ll4 Other Income -Net 84,281 102,094 42,128 51,701 33,236 40,000 40,000 40,000 40,000 40,000 Interestlncome 139,079 68,316 36,312 30,660 27,867 25,000 3,317 6,248 11,311 16,352 Miscellaneous Income 574 4,710 4,831 10,664 1,361 1,000 1,000 11000 1,000 11000 Gain on Disposal 2,354 Miscellaneous Expense j12,5511 (22,060) (6,416) (37,753) (35,177) (6,000) (61000) (61000) (6,000) (6,000) _Interest Expense (1,141,608) (1,119,195) (1,093,999) (988506) 956999) (921,949) (982,762) (940,961) (795,916) (747516) Total Other Income /(Expense) (930,225) (966,135) (1,007,144) (930,880) (929,712) (861,949) (844,444) (799,713) (749,605) (696,164) Net income 276,352 75,314 328,333 433,613 1,168,935 1,691,640 2,373,570 2,505,285 2,499,265 1,519,085 Net Income as Percent of Operating Revenue 1.8% 0.4% 2.2% 3.0% 8.2% 11.5% 16.9% 17.1% 16.6% 9.5% Revenue Requirements 15,376,569 17,942,948 14,318,476 13,896,488 13,052,982 12,974,313 11,677,790 12,115,377 11,572,212 14,477,217 Cash Reserves Beginning of Year Cash Reserves $1,163,169 $1,326,760 $2,499,231 $4,524,342 $6,540,826 Plus Net income 1,691,640 2,373,570 2,505,285 2,499,265 1,519,085 Plus Depreciation 1,050,000 1,101,102 1,141,175 1,156,720 1,171,037 Less Capital Improvements (1,533,050) (1,202,200) (466,350) (429,500) (429,S00) Less Bond Principal (1,045,000) (1,100,000) (1,155,000) (1,210000) (1275000) End of Year Cash Reserves $1,163,169 $1,326,760 $2,499,231 $4,524,342 $6,340,826 $7,526,448 I PA004712 Hutchinson \3153101010 Rate Study \Data Analysis \Hutchinson Gas Operating Results and COS.xlsx\Ex 2 -B Oper Results Exist Rates u u ]I Section 3 COST -OF- SERVICE STUDY Electric Division In order to compare revenues to revenue requirements by class for the Electric Division, we have performed an analysis of the cost to serve each customer classification based on adjusted 2010 revenue requirements ( "Test Year "). In the cost - of- service study, the functionalized costs of providing service are first classified by cost component and then allocated to each class of service based upon certain specific service characteristics. The results of the study indicate the degree to which existing rates recover revenues from each customer classification on a cost of service basis and are considered in designing new electric rates. The cost -of- service analyses used in this study have been based on: • Test Year reported revenue requirements and revenues based on current rates, • total system and customer classification power and energy requirements, • actual and assumed customer service characteristics, and • information obtained from customer accounts and records. Classification of Costs As a basis for allocating costs to individual customer classifications, we have first classified the Electric Division's Test Year revenue requirements to four specific cost components. These components and the type of costs assigned to each are described below. Demand Component - Those costs incurred to provide an electric system capable of meeting the total combined demands of customers. Demand costs include the portion of purchased power and generation costs, operating and maintenance expenses, capital expenditures and other costs which are generally fixed and do not vary materially with the amount of electricity consumed or which cannot be designated specifically as a customer or energy cost. Energy Component - Those costs that vary substantially or directly with the amount of energy purchased or generated. Energy costs are those costs which could be expected to vary with electricity consumption. Customer Service Component - Those costs directly related to the number and type of customers, such as customer service, customer accounting, sales, billing and collection. Customer Facilities Component - Those costs directly related to the number and size of customers, such as the costs of meters and services and other equipment needed to j provide service. B1845 SAIC Section 3 Other operating revenues, other income and expenses and Payment In Lieu Of Taxes were divided between the four cost components described above based on each component's percentage of total revenue requirements. Adjustments have been made to the Test Year revenue requirements to more accurately reflect costs during the Study Period, in particular the cost of purchased power. These adjustments are shown on Exhibit 3 -A at the end of this report. The table below summarizes the adjusted Test Year revenue requirements of the Electric Division by cost classification. Exhibit 3 -B details the classification of electric plant - in- service. Table 3 -1 Classification Of Electric Division Costs 2010 Test Year Cost Component Revenue Requirements Demand $11,106,682 Energy 12,826,049 Customer Service 921,478 Customer Facilities 771.825 Total $25,626,034 Allocation To Customer Classifications Based upon actual and assumed customer service characteristics, we have developed various factors for use in allocating the Electric Division's adjusted Test Year revenue requirements to individual customer classifications. These allocation factors reflect accepted ratemaking principles and are based upon fully - distributed, embedded cost allocation procedures. The following summary describes the specific allocation factors used in our cost -of- service analysis. Exhibit 3 -C at the end of this report sets forth the development of each of these factors. Demand Allocations Coincident peak demands by customer class reflect the maximum monthly and annual demands on the system. We have estimated class monthly peak demands coincident with the system monthly peaks for Test Year 2010. Non- coincident peak demands reflect the peak demand of customer classes whenever that may occur; they do not necessarily coincide with the overall system peak. Peak month and 12 -month coincident and non- coincident demand allocators have been developed for this study. Demand allocators are based on the monthly metered demand for the two demand billed classes — Large General Service and Large Industrial. Demand allocators were estimated for the non -demand metered classes - Residential and Small General Service, based on the results of load research studies for other utilities and the experience of other utilities relative to the load characteristics of individual classes of service. 3 -2 SAIC Energy, Environment & Infrastructure, LLC 81945 r T COST -OF- SERVICE STUDY For customer class allocation purposes, the annual coincident peak (1 CP), the 12- month coincident peak (12 CP), the annual non - coincident peak (1 NCP) and the 12- month non - coincident peak (12 NCP) were used to allocate the Electric Division's fixed production, transmission and distribution costs. The allocator chosen depended on the utility function and specific demand cost items. Energy Allocations The costs related to generation and the energy component of purchased power have been allocated on the basis of each customer classification's annual energy requirements at the inlet to HU's electrical system for the Test Year. Customer Allocations Customer Service related costs have been allocated among the customer classifications based on the Customer Service allocation factor. This factor allocates customer related costs such as customer billing, customer service, sales and meter reading in proportion to each classification's weighted number of customers. Such weighting factors are developed to represent the difference in service configurations between customer classifications. Customer Facilities related costs have been allocated among the customer classifications based on the Customer Facilities allocation factor. This factor allocates - customer facilities related costs in proportion to each classification's weighted number of customers. The weighting factor represents the difference in the cost of equipment used by different classifications. These two weighting factors were developed based on the experience of other utilities, as well as information obtained from HU. Cost -of- Service Study Results Based upon the cost classifications and allocation methods described above, we have estimated the cost to serve each customer classification during the Test Year. Exhibit 3 -A, Functionalization and Classification shows several adjustments to 2010 recorded expenses. These adjustments were made to better reflect expenses during the Study Period. Significant adjustments were made to reflect the change in HU's purchased power contract from NSP to MRES, as well as expected changes in the levels of generation and market purchases during the Study Period, compared to 2010. Overall purchased power and generation costs for the Test Year are approximately $1 million ' lower than in 2010. The margin has been increased to compensate for the decreased purchased power costs, in order for unbundled revenue requirements to produce the same revenue as the current revenues. The results of this study are presented in detail in Exhibit 3 -D at the end of this report. The table below compares our findings from Exhibit 3 -D with revenues from each customer classification during the Test Year. e1845 SAIC Energy, Environment & Infrastructure, LLC 3 -3 Section 3 Table 3.2 Electric Division Comparison Of Revenues And Allocated Cost -Of- Service 2010 Test Year Customer Classification Total Allocated Total Revenues Costs Residential $5,224,240 $5,107,357 Small General Service 1,725,538 1,637,967 Large General Service 7,616,237 7,408,962 Large Industrial 11.060,019 11.471.748 Total $25,626,034 $25,626,034 For purposes of determining the extent to which existing rates match recovery of costs for each class, we have made a comparison of Test Year revenues based on existing rates and the allocated cost -of- service for each customer classification. The results of this comparison are shown in the following table on a percentage basis. Also shown in the table are the approximate percentage increase /(decrease) in each customer classification's rates necessary to produce revenues from each classification which are in accordance with the corresponding percentage of total cost of service. The percentage increase or decrease shown in the table below does not represent a recommended rate increase or decrease for these classes. Recommendations for new rate designs will be presented in Section 5. 3 -4 SAIC Energy, Environment & Infrastructure, LLC a1845 u COST -OF- SERVICE STUDY Table 3.3 Electric Division Percentage Comparison Of Revenues And Allocated Cost -Of- Service 2010 Test Year Customer Classification Percentage Allocated Costs Percentage Revenues Increase/ (Decrease) (1) Residential 20.4% 19.9% 2.3% Small General Service 63% 6.4% 5.3% Large General Service 29.7% 28.9% 2.8% Large Industrial 43.2% 40% 3.6% Total 100.0% 100.0% 0.0% (1) Adjustment represents Test Year data used for cost of service analysis and does not represent a proposed rate increase or decrease. As indicated by the above comparison, HU's existing electric rates are not exactly in line with the cost to serve each customer class. Cost based rates are one of several goals in establishing rates. The relationship between allocated costs and revenues for each class should be considered, in addition to other rate related goals, in developing recommended rates. Gas Division In order to compare revenues to revenue requirements by class for the Gas Division, we have performed an analysis of the cost to serve each customer classification based on adjusted 2010 revenue requirements ( "Test Year "). In the cost -of- service study, the functionalized costs of providing service are first classified by cost component and then allocated to each class of service based upon certain specific service characteristics. The results of the study indicate the degree to which existing rates recover revenues from each customer classification on a cost of service basis and are considered in designing new gas rates. The cost -of- service analyses used in this study have been based on: • Test Year reported revenue requirements and revenues based on existing rates, • total system and customer classification commodity and capacity requirements, • actual and assumed customer service characteristics, and ■ information obtained from customer accounts and records. Classification of Costs As a basis for allocating costs to individual customer classifications, we have first functionalized and classified the Gas Division's Test Year revenue requirements to four specific cost components. These components and the type of costs assigned to each are described below. B1845 SAIC Energy, Environment & Infrastructure, LLC 3 -5 Section 3 Capacity Component - Those costs incurred to provide a gas system capable of meeting the total combined demands of customers. Capacity costs include the capacity portion of purchased gas costs, operating and maintenance expenses, capital expenditures and other costs which are generally fixed and do not vary materially with the amount of gas consumed or which cannot be designated specifically as a customer or commodity cost. Commodity Component - Those costs that vary substantially or directly with the amount of gas purchased or sold or which can be attributed to gas purchase volumes. Customer Service Component - Those costs directly related to the number and type of customers, such as customer service, customer accounting, billing and collection. Customer Facilities Component - Those costs directly related to the number and type of customer facilities, such as the costs of meters and services and other necessary equipment. Other operating revenues, other income and expenses and Payment In Lieu Of Taxes were divided between the four cost components described above based on each component's percentage of total revenue requirements. The table below summarizes the classification of Test Year revenue requirements of the Gas Division. Exhibit 3 -E at the end of this report shows the detailed classification of revenue requirements. Exhibit 3 -F details the classification of gas plant -in- service. Table 3-4 Classification Of Gas Division Costs 2010 Test Year Cost Component Revenue Requirements Demand $911,046 Commodity 10,165,718 Customer Service 552,422 Customer Facilities 882,074 Total $12,511,259 Allocation To Customer Classifications Based upon actual and assumed customer service characteristics, we have developed various factors for use in allocating the Gas Division's adjusted Test Year revenue requirements to individual customer classifications. These allocation factors reflect accepted ratemaking principles and are based upon fully- distributed, embedded cost allocation procedures. The following summary describes the specific allocation factors used in our cost -of- service analysis. Exhibit 3 -G at the end of this report shows the development of each of these factors. 3 -6 SAIC Energy, Environment & Infrastructure, LLC B1845 I COST-OF-SERVICE STUDY Demand Allocations To allocate demand related revenue requirements to individual customer classifications, we have used two different demand allocation methods. These methods are the peak responsibility method and the average /excess method. Under the peak responsibility method, demand costs are allocated to the customer classifications in proportion to their respective contributions to the Gas Division's peak demand. The peak responsibility method is used to allocate demand related purchased gas costs. It is based on class consumption during the peak month of the Test Year, January 2010. The average /excess method is used to allocate the remainder of the system capacity related costs. It is a two part formula. One part of the formula determines each class' share of the average use of the system, based on each class' annual consumption. The second part of the formula recognizes each class' share of the costs above the average use of the system (excess). This is done by determining the excess demand of each class on the system above their average demand. This part of the formula takes into account the class load factor. This capacity cost allocation method recognizes both the average gas requirements, as well as the peak loads of each customer classification. Exhibit 3 -H shows the development of this allocation factor in detail. We have used the peak month data for January 2010 as a measure of peak period requirements, as HU does not have sufficient data available to determine actual peak day usage by the various customer classifications. Commodity Allocations Commodity related costs have been allocated to each class of service based on recorded gas sales for the 2010 Test Year. Due to the different commodity rate for purchased gas between the retail full service customers and the gas transport customers, commodity related costs for retail customers have been allocated based on class sales. Commodity related costs for the transport customers have been directly assigned to the customers. Customer Allocations Customer Service related costs have been allocated among the customer classifications based on the Customer Service allocation factor. This factor allocates customer related costs such as customer billing, customer service, sales and meter reading in proportion to each classification's weighted number of customers. Such weighting factors are developed to represent the difference in service configurations between customer classifications. Customer Facilities related costs have been allocated among the customer classifications based on the Customer Facilities allocation factor. This factor allocates customer facilities related costs in proportion to each classification's weighted number of customers. The weighting factor represents the difference in the cost of equipment used by different classifications. These two weighting factors were developed based on the experience of other utilities, as well as information obtained from HU. e1845 SAIC Energy, Environment & Infrastructure, LLC 3 -7 Section 3 11 1_ Cost -of- Service Study Results Based upon the cost classifications and allocation methods described above, we have estimated the cost to serve each customer classification during the Test Year. The results of this study are presented in detail in Exhibit 3 -I at the end of this report. The table below compares our findings from Exhibit 3 -I with the revenues from each customer classification during the Test Year. The Industrial class had only one customer in 2010 for 4 months. This customer then became a transport customer for the remaining 8 months of 2010 and currently remains a transport customer. Table 3 -5 Gas Division Comparison Of Revenues And Allocated Cost -Of- Service 2010 Test Year Customer Classification Total Allocated Costs Total Revenues Residential $4,010,510 $3,979,581 Commercial 3,513,868 3,638,751 s Industrial 399,850 371,349 3M 4,258,686 4,213,609 HTI 328,345 306.313 Total $12,511,259 $12,509,603 For purposes of determining the extent to which existing rates match recovery of costs for each class, we have made a comparison of Test Year revenues based on current rates and the allocated cost -of- service for each customer classification. The results of this comparison are shown in the following table on a percentage basis. Also shown in the table are the approximate percentage increase (decrease) in each customer classification's rates necessary to produce revenues from each classification which are in accordance with the corresponding percentage of total cost of service. 3 -8 SAIC Energy, Environment & Infrastructure, LLC BI845 I COST -OF- SERVICE STUDY Table 3 -6 Gas Division Percentage Comparison Of Revenues And Allocated Cost -Of- Service 2010 Test Year Customer Percentage Percentage Increase/ Classification Allocated Costs Revenues (Decrease) (1) Residential 32.1% 31.8% 0.8% Commercial 28.1% 29.1% (3.4 %) Industrial 3.2% 3.0% 7.7% 3M 34.0% 33.7% 1.1% HTI 2.6% 2.4% 7.2% Total 100.0% 100.0% 0.0% (t) Adjustment represents percent increase needed to match revenues to revenue requirements by class and does not represent a proposed rate increase or decrease The table above indicates that the HU's existing gas rates are within an acceptable range of the cost to serve each customer class. The Industrial class during 2010 consisted of only one customer for 4 months. Consequently, the analysis results are not as accurate as for a full year of a customer. Cost based rates are one of several goals in establishing rates. The relationship between allocated costs and revenues for each class should be considered, in addition to other rate related goals, in developing recommended rates. B 184 SAIC Energy, Environment & Infrastructure, LLC 3 -9 Exhibit 3-A PA004712 Hutchinson \3153101010 Rate Study \Data AnalysiAl-lutchinson Electric Operating Results and COS.xlsx \Ex 3•A Func IXassif Hutchinson Utilities, Minnesota Electric Division Functionalixation & Classification Test Year 2010 2010 Adjustments Test Year Demand Energy Cust Sery Cust Facil Basis for Classification Operating Expenses ' Production Operations Supervision and Engineering 876,954 876,954 876,954 100% Demand Other Employee Benefits 93,214 93,214 93,214 100% Demand Fuels 32,707 32,707 32,707 100% Energy Station 70,573 70,573 70,573 100% Demand Gas for Generation 585,446 161,784 747,230 1 747,230 100% Energy Transportation 1,100,000 1,100,000 1,100,000 100% Energy Other 10,776 10,776 10,776 100% Demand Total Operations 2,769,670 161,784 2,931,454 1,051,517 1,879,937 0 0 t Maintenance Structures 3,117 3,117 3,117 100% Demand Generating Units 265,549 265,348 265,348 100% Demand Other Equipment 88,749 88,749 88,749 100% Demand Total Maintenance 357,214 0 _ 357,214 357,214 0 0 0 Total Production 3,126,884 161,784 3,288,668 1,408,731 1,879,937 0 0 j1E Power Costs Purchased Power 14,640,104 (1,174,360) 13,465,744 2 4,661,420 8,804,324 Wholesale Power Bills Other Power Supply Supervision and General Salaries 260,223 260,223 260,223 100% Demand Training 2,486 2,486 2,486 100% Demand Professional Services 85445 85445 85,445 100% Demand Total Other Power Supply 348,154 0 348,154 348,154 0 0 0 Transmission Operations Station 132,051 132,051 132,051 100% Demand Maintenance .. Plant and Equipment 25,153 25,153 25,153 Transmission Plant Total Transmission 157,204 0 157,204 157,204 0 0 0 Distribution Operations Supervision and Engineering 292,652 292,652 190,499 102,153 Direct Distribution Costs Line 30,717 30,717 15,359 15,359 Poles, Towers and Fixtures Plant Meter 16,325 16,325 16,325 Meters Plant Other 98,953 98,953 59,855 39,098 Distribution Plant Total Operations 438,647 0 438,647 265,712 0 0 172,935 ' Maintenance Station Equipment 8,135 8,135 8,135 Station Plant Underground Lines. 96,023 96,023 48,012 48,012 Underground Plant > Lines Transformers 21,854 21,854 21,854 Transformer Plant Street Lighting 73,026 73,026 73,026 100% Demand Other Equipment 35,678 35,678 21,581 24,097 Distribution Plant ' Total Maintenance 234,716 0 234,716 172,607 0 0 62,109 Total Distribution 673,363 0 673,363 438,320 0 0 235,043 .. Customer Accounts Expense Meter Reading 100,816 100,816 100,816 300% Customer Service Collection 99,709 99,709 99,709 100% Customer Service Other Employee Benefits 7,260 7,250 7,160 1D0%Customer Service Uncollectible Accounts 13,881 13,881 13,881 100% Customer Service gg Customer Services 45,557 45,557 45,557 10O% Customer Service Other 1,979 1,979 1,979 100% Customer Service Total Customer Accounts Expense 269,202 0 269,202 0 0 269,202 0 Sales Expense Salaries 46,645 46,645 46,645 100% Customer Service Conservation _ 196,292 196,292 196,292 100% Customer Service Total Sales Expense 242,937 0 242,937 D 0 242,937 0 PA004712 Hutchinson \3153101010 Rate Study \Data AnalysiAl-lutchinson Electric Operating Results and COS.xlsx \Ex 3•A Func IXassif _ 2010 Adjustments Hutchinson Utilities, Minnesota Electric Division Functionalization & Classification Test Year 2010 Test Year Demand Energy Cust Sery Exhibit 3 -A t R a (( Cust Facil Basis for Classification Administrative and General - '- Supervision and General Salaries 490,338 490,338 373,113 79,555 37,670 Subtotl Rev Req tau Pure Pwr Office Supplies 232,385 232,38S 176,829 37,704 17,853 Subtotl Rev Req less Pure Pwr Outside Services Employed 105,226 105,226 80,070 17,073 8,084 Subtod Rev Rep less Pun Pwr x Property insurance 111,208 111,208 96,653 14,555 Total Electric Plant Medical Insurance 612,188 612,1Ba 465,832 99,325 47,031 Subtotl Rev Req less Pure Pwr Other Employee Benefits 558,635 SSB,635 425,082 90,636 42,916 Subtotl Rev Req less Pun Pwr v Regulatory 21,801 21,801 16,589 3,537 1,675 Subtotl Rev Req less Pun Pwr Commissioners Salaries 15,075 15,075 11,471 2,446 1,158 Subtod Rev Req less Pure Pwr Travel 9,385 9,385 7,141 1,523 721 Subtod Rev Rep less Pure Pwr Miscellaneous Expense 92,894 92,894 70,686 15,072 7,136 Subtod Rev Req less Pure Pwr Maintenance of General Plant 56,965 55,96S 49,510 7,455 Total Electric Plant t Total Administrative and General 2,306,100 0 2,306,100 1,772,976 0 346,870 186,254 Depreciation 2,257,016 2,257,016 1,961,624 29S,392 Total Electric Plant , Contribution to City of Hutchinson Payment in Lieu of Taxes 895,407 395,407 341,827 517,060 24,785 11,736 Subtotl Rev Req include Pure Pwr Roadway Lighting 146,859 146,859 56,064 841105 4,065 1,925 Subtod Rev Req include Pure Pwr ( Total Contrib to Cry of Hutchinson 1,042,266 0 1042 266 397 891 601,865 28 SSO 13_660 ; Total Operating Expenses 25,063,230 (1,012,576) 24,OSD,6S4 11,146,320 11,286,126 9117,859 730,349 l]i Non - Operating Revenues /(Expenses) Interest Income 30,660 30,660 11,705 17,705 849 402 Subtotl Rev Req include Pure Pwr Merchandise and Contract Work, Net (16,394) (16,394) (6,259) (9,4671 (454) (215) Subtotl Rev Req include Pure Pwr r Miscellaneous Income 588,081 588,081 224,503 339,592 16,278 7,708 Subtod Rev Req Include Pure Pwr Gain (Loss) on Disposal of Assets (190,613) 190,613 D 3 Bond Service Fees (1,850) (1,850) (1,608) (242) Total Electric Plant Amortization of Development Study (1,299,176) (1,299,176) (1,299,176) 100% Energy Amort of Bond Discount and Issuance (1,864) (1,864) (1,620) (244) Total Electric Plant Interest Expense (191,567) (191,567) (166,495) (25,072) Total Electric Plant Total Non -Op Revenues/(Expenses) (1,032,723) 190,613 (892,110) 60,226 (951,346) 16,673 (17,663) Credit Resale Revenue (986,386) (986,386) (600,000) (386,386) (4) Credit Street Light Revenue (147,248) (147,248) 173,026) (74,222) (5) Credit for Other Oper Revenue 1301,652) (301,652) 1115,157) (174,191 8,350 ( ) t (3,954) Subtod Rev Req include Pure Pwr Margin 869,447 1,249,109 2,118,556 808,771 1,223,377 58,641 27,767 Subtotl Rev Req Include Pure Pwr Total Revenue Requirements 25 ,580,114 45,920 25,626,034 11,106,682 12,626,049 921,478 s 771,825 100% 43% 50% 4% 3% } 1. Adjusted to reflect Study Period self generation. 2. Adjusted to reflect power supply contracts during the Study Period + 3. Gain /(Loss) on Disposal of Assets has been adjusted to 0 to reflect a typical year. 4. Assumed historical capacity sale to SMMPA and remainder as energy sale. 5. Street Light revenue is allocated in proportion to costs related to O &M vs. energy. { }# + it PAD04712 Hutchinson \3153101010 Rate Study \Data Analysis \Hutchinson Electric Operating Results and COS.xlsx \Ex 3 -A Func_Classif 2 (1) Security lights not included in cost -of- service analysis. P: \004712 Hutchinson \3153101010 Rate Study \Data Analysis \Hutchinson Electric Operating Results and C05.xisx \Ex 3 -8 Plant in Service Exhibit 3 -B Hutchinson Utilities, Minnesota Classification of Electric Division Plant -in- Service 2010 Test Year Accumulated System Net Description Gross Plant Depreciation Plant -in- Service Demand Customer Basis of Classification Electric Generation Plant Land & Land Rights $153,900 $0 $153,900 $1S3,900 100% Demand Structures & Improvements 3,186,663 $1,228,495.80 1,958,167 1,958,167 100% Demand Fuel Holders/ Producers 243,788 $20,226.46 223,S62 223,562 100% Demand Generation & Prime Movers 36,188,510 $20,105,676.61 16,082,833 16,082,833 100% Demand Accessory Electric Eqpt 1,046,243 $394,078.67 652,164 652,164 100% Demand g Misc Power Plant Eqpt 538,677 $170,238.01 368,439 368,439 100% Demand Total Generation Plant 41,357,781 21,918,716 19,439,065 19,439,065 Transmission Plant Land & Land Rights 224,862 0 224,862 224,862 100% Demand Structures &Improvements 622,509 $158,172.21 464,337 464,337 100% Demand Station Equipment 4,448,864 $1,759,772.65 2,689,091 2,689,091 100% Demand Towers & Fixtures 1,119,298 $277,600.21 841,698 841,698 100% Demand Poles & Fixtures 1,329,161 $402,224.78 926,936 926,936 100% Demand Overhead Conductors 569,796 $194,664.41 375,132 375,132 100% Demand Underground Conduit & Manholes 102,424 $33,394.83 69,029 69,029 100% Demand Underground Conductors 71,569 $22,396.41 49,173 49,173 100% Demand Total Transmission Plant 8,488,483 2,848,226 5,640,258 S,640,2S8 Distribution Plant Land & Land Rights 123,361 0 123,361 123,361 100% Demand Structures & Improvements 425,169 $186,278.32 238,891 238,891 100% Demand Station Equipment 2,561,448 $1,265,208.64 1,296,239 1,296,239 100% Demand Poles, Towers & Fixtures 236,409 $71,498.23 164,911 82,4SS 82,455 50% Dmd/ 50% Cust Overhead Conductors 130,638 $75,454.16 55,184 27,592 27,592 50% Dmd/ 50% Cust Underground Conduit & Manholes 725,178 $438,024.02 287,154 143,577 143,577 SO% Dmd/ 50% Cust Underground Conductors 9,983,084 $2,940,292.32 7,042,792 3,521,396 3,521,396 50% Dmd/ 50% Cust Transformers 3,368,424 $1,288,418.92 2,080,005 2,080,OOS 100% Demand Meters 1,763,467 $630,487.95 1,132,979 1,132,979 100% Customer Security tights 0 0 0 (1) Street & Signal Lighting 0 0 0 (1) Total Distribution Plant 19,317,178 6,895,663 12,421,515 7,S33,S16 4,907,999 Total Electric Plant $69,163,442 $31,662,604 $37,500,838 $32,592,839 $4,907,999 Transmission Plant Percent 100% 0% Distribution Plant Percent 60% 40% Total Electric Plant Percent 87% 13% (1) Security lights not included in cost -of- service analysis. P: \004712 Hutchinson \3153101010 Rate Study \Data Analysis \Hutchinson Electric Operating Results and C05.xisx \Ex 3 -8 Plant in Service I . ; § _ .. � . k )�2 ;f |_ :| §■ )| 99| |§ #| §| )k t2 ,- . #- '- !!! �§| »| !§ 2■ &| a§ !#| �- ■■#, ¥| ;! �� !g§ _! �| ■| #| #| ! \m �§7 #�. §§ ; ) � �/■ �! }K ¥■ {! �! !|e l ;f,,,�! §| !_ � . ! ■ ■ ■ ■ ■ � ! a ! }� a ! _■ ;■ =K ; !__■ eee...f§ §| |, ® % i} 2 E ! }� ■ M. ~ � � ! .. ■ � 7, %� i ! !! L!� kkt || k !..| . . � Y w�e W ��a 8m„ T °m �°N p 3 n c E ^ Ydx F s �o AWN s W R;I!m^ $ L u Y p «o 0 G :emx° r ^ a a�qoP. Xig�`�Xn N � n O o a^ e N n N b a a ° n �E E E a N E v .r N e H �n N .°r °1S .aiH n 'P� a d � " maxId g8 °ova a °^ J! Y� N » mN + � T t r oMIRa HIM. 81 » u SiNd� "�^Y7q�:M� rt » abi�lar. m N x x« <mxN�c.xm ex xm w » m ^ n » a � N E v .r N e H �n N .°r °1S .aiH n 'P� a d � " maxId g8 °ova a °^ J! Y� E v 3 v v E + � T t r g S y HIM. N E v .r N e H �n N .°r °1S .aiH n 'P� a d � " maxId g8 °ova a °^ J! �N O � » ^xi A N » ss� g $ee Hit III ig z a HIM. 81 �N O � » ^xi A N » ss� g $ee Hit III ig z a Exhibit 3 -D Hutchinson Utilities, Minnesota Allocation of Electric Revenue Requirements Test Year 2010 P: \004712 Hutchinson \3153101010 Rate Study \Data Analysis \Hutchinson Electric Operating Results and COS.xisx \Ex 3 -D Ailoc of Rev Req Total Residential Sm Gen Sery Lg Gen Sery Lg Industrial Basis of Allocation Demand Component Production Operation $1,051,517 $18S,3S7 $70,724 $362,457 $432,978 12 CP Production Maintenance 357,214 62,968 24,026 123,131 147,088 12 CP Purchased Power 4,661,420 821,698 313,521 1,606,789 1,919,412 12 CP } Other Power Supply 348,154 61,371 23,416 120,009 143,358 12 CP Transmission Operations 132,OS1 33,990 8,105 37,121 52,835 1 CP Transmission Maintenance 25,153 6,474 S,S44 7,071 10,064 1 CP Distribution Operations 265,712 70,837 16,829 76,923 101,123 1 NCP Distribution Maintenance 172,607 46,016 10,932 49,969 65,690 1 NCP Administrative & General 1,772,976 347,678 121,000 596,304 707,995 12 NCP Depreciation 1,961,624 384,671 133,875 659,751 783,327 12 NCP Contribution to City 397,891 78,026 27,155 133,822 158,888 12 NCP Non - Operating (Rev) /Expns (60,226) (11,810) (4,110) (20,256) (24,050) 12 NCP Credit Resale Revenues (600,000) (117,659) (40,948) (201,797) (239,59S) 12 NCP Credit Street Light Revenue (73,026) (14,320) (4,984) (24,561) (29,161) 12 NCP Credit Other Oper Revenues (11S,157) (22,582) (7,859) (38,731) (45,985) 12 NCP Margin 808,771 158,599 SS,196 272,013 322,963 12 NCP Total Demand 11,106,682 2,091,313 748,422 3,760,017 4,506,930 100% 19% 7% 34% 41% Energy Component Production -Fuel Related 1,879,937 340,057 111,342 522,127 906,411 Annual kWh Purchased Power 8,804,324 1,592,592 521,449 2,445,282 4,245,000 Annual kWh Contribution to City 601,865 108,870 35,646 167,160 290,189 Annual kWh Non - Operating (Rev) /Expns 951,346 172,087 56,345 264,224 458,691 Annual kWh Credit for Resale Revenue (386,386) (69,892) (22,884) (107,314) (186,296) Annual kWh Credit Other Oper Revenue (174,191) (31,509) (10,317) (48,379) (83,986) Annual kWh Margin 1,223,377 221,293 72,456 339,776 589,850 Annual kWh Credit Street Light Revenue (74,222) (13,426) (4,396) (20,614) (35,786) Annual kWh Total Energy 12,826,049 2,320,071 759,642 3,562,263 6,184,073 100% 18% 6% 28% 48% Customer Service Component Customer Accounts 269,202 194,710 52,093 19,999 2,400 Wtd Cust Sery Sales 242,937 175,713 47,011 18,048 2,166 Wtd Cust Sery Administrative & General 346,870 250,886 67,123 25,769 3,092 Wtd Cust Sery Contribution to City 28,850 20,867 5,583 2,143 257 Wtd Cust Sery Non- Operating (Rev) /Expns (16,673) (12,OS9) (3,226) (1,239) (149) Wtd Cust Sery Credit Other Oper Revenues (8,350) (6,039) (1,616) (620) (74) Wtd Cust Sery Margin 58,641 42,414 11,348 4,356 523 Wtd Cust Sery Total Customer Service 921,478 666,491 178,315 68,456 8,215 100% 72% 19% 7% 1% Customer Facilities Component Distribution Operations 172,935 32,794 8,774 50,525 80,841 Wtd Cust Facil Distribution Maintenance 62,109 11,778 3,151 18,146 29,034 Wtd Cust Facil Administrative & General- 186,254 35,320 9,450 54,417 87,067 Wtd Cust Facil Depreciation 295,392 56,017 14,987 86,303 138,085 Wtd Cust Facil Contribution to City 13,660 2,590 693 3,991 6,386 Wtd Cust Facil Non - Operating (Rev) /Expns 17,663 3,350 896 S,161 8,257 Wtd Cust Facil Credit Other Oper Revenues (3,954) (7SO) (201) (1,155) (1,848) Wtd Cust Facil Margin 27,767 5,266 1,409 8,112 12,980 Wtd Cust Facil Total Customer Facilities 771,825 146,365 39,159 225,501 360,801 100% 19% 5% 29% 47% Total Revenue Requirements $25,626,034 $5,224,240 $1,725,538 $7,616,237 $11,060,019 Total Revenue $25,626,034 $5,107,357 $1,637,967 $7,408,962 $11,471,748 Revenue Requirement Percent 100% 20.4% 6.7% 29.7% 43.2% Revenue Percent 100% 19.9% 6.4% 28.9% 44.8% Percent Change 2.3% S.3% 2.8% -3.6% P: \004712 Hutchinson \3153101010 Rate Study \Data Analysis \Hutchinson Electric Operating Results and COS.xisx \Ex 3 -D Ailoc of Rev Req PA004712 Huschinson\3153101010 Rate Study\Oata Analysis \Hutchinson Gas Operating Resuhs and COS.xlsx \Ex 3 -E Func Classif Exhibit 3 -E Hutchinson Utilities, Minnesota Natural Gas Division Functionalixation & Classification Test Year 2010 -y 2010 Adjustments Test Year Demand Commodity Cust Sam Cust Facil Basis for Classification Operating Expenses Purchased Natural G- Retail 9,806,771 13,736,577) 6,070,194 (1) 5,944 6,064,250 Wholesale gas bills ' Purchased Natural Gas -3M 3,501.532 3,501,532 3,501,532 Whotesale gas bills Purchased Natural Gas -HTI 235,045 235,045 235,005 Wholesale ges bills Transmission ({ Operations Supervision and Engineering 46,462 46,462 44462 200%Demand Other 51,697 51,697 51,697 100% Demand Total Transmission Operations 98,159 98,159 98,159 0 0 0 Maintenance Supervision and Engineering 332 332 332 200% Demand �. Other 1,877 1,877 3.877 1W% Demand Total Transmission Maintenance 2,209 2,209 2,209 0 0 0 Total Transmission 100,368 0 100,368 100,368 0 0 0 Distribution g a Operations Supervision and Engineering 178,613 178,613 64,701 113,912 Distribution Oper & Mains i+ x Other Employee Benefits 101,023 102,023 36,595 64,428 Distribution Oper & Maint Mains and Services 101,272 101,272 39,268 62,004 Mains & Services Plant In Service Metent 4,448 4,448 0 4,448 Meters Plant M Service Other 29,948 29,948 10,848 19,100 Distribution Oper &Maint Total Distribution Operations 425,304 0 415,304 151,412 0 0 263,892 Maintenance Mains and Services 98,986 98,986 38,381 60,605 Mains & Services Plant in Sam. Meters 9,650 9,650 0 9,650 Motors Plant In Service Other Equipment 44,230 44,230 16,022 28,208 Distribution Oper& Metal Total Distribution Maintenance 252,866 0 152,866 54,403 0 0 98,463 Taal Distribution 568,170 0 568,170 205,816 0 0 362,354 Customer Accounts Expense Meter Reading 67,211 67,212 67,211 100% customer Service Collection 66,473 66,473 66,473 100% Customer Service a Other Employee Benefits 41840 4,840 4,840 100% Customer Service Uncollectible Accounts . 9,754 9,254 9,254 100% Customer Service Customer Servkes 30,372 30,372 30,372 100% Customer Service i Other 1,320 1,320 1,320 100% Customer Service Total Customer Accounts Expense 279,470 0 179,470 0 0 179,470 0 Sales Expense ry Salaries 15,548 25,548 15,548 300% Customer Service 11(( 1 Conservation 65,431 65,431 65,431 100% Customer Semite Total Sales Expense 80,979 0 80,979 0 0 80,979 0 y Administrative and General Supervision and General aries Sal 122,585 122,585 40,403 0 34,368 47,815 .,Trans. Dist, Cost, no parch gas Office Supplies 58,096 58,096 19,148 0 16,288 22,661 Prod,Tram, Dist, Cost, no purch gas Outside Services Employed 26,306 26,306 8,670 0 7,375 10,261 Prod,Trans, Dist, Cud, no purch gas Property Insurance 90,988 90,988 82,330 8,658 Total Gas Plant J Medical Insurance 153,047 153,047 50,443 0 42,908 59,696 Prod,Trans, Dist, Cuss, no purch gas Other Employee Benefits 139,659 139,659 46,030 0 39,155 54,474 Prcd,Trans, Dist, Cust, no porch gas Regulatory 17,837 17,837 5,879 0 5,001 6,957 Prod,Trans, Dist, Cust, no purch gas ,t Commissioners Salaries 12.334 12,334 4,065 0 3,458 4,811 Prod,Tranx, Dist, Cum, no purch gas E {(( Trmi 7,679 7,679 2,531 0 2,753 2,995 Prod,Trans, Dist, Cust, no purch gas Miscellaneous Expense 76,004 76,004 25,050 0 21,308 29,646 Prod,Trans, Dist, Cud, no purch gas Maintenance of General Plant 46,609 46,608 42.173 4,435 Total Gas Plant Total Administrative and General 751,143 0 751,143 326,721 0 112,013 252,409 Depreciation 1,037,707 1,037,707 938,966 98,741 Total Gas Plant Contribution to City of Hutchinson Payment In Lieu of Taxes 441,022 0 441,022 12,822 402,615 10,699 24,885 Prod,Trans, Dist, Cust, incl purch gas Total Operating Expenses 12,965,630 0 12, 965,630 1,590,637 10,203,443 443,161 728,389 Non- Operating Revenues/(Expenses) Interest income 30,660 30,660 991 27,990 744 1,035 Prod,Trans, Dist, Cust, Ind purch gas Merchandise and Contract Work, Net 43,151 43,151 14,222 0 12,098 26,831 Prod,Trans, Dist, Cud, no purch gas tit Miscellaneous Income 10,664 10,664 310 9,735 259 360 Prod,Trans, Dist, Cud, Intl purch gas a Gain (Loss) on Oisposat of Assets 2,354 (2,354) 0 (2) Amore of Band Discount and issuance Costs (29,203) 129,203) (26,424) (2,779) Total Gas Plant Interest Expense- Customer Deposits (794) 1794) (794) 100% Customer Servke Interest Expense (987,712) J987,712) 1987,712) 10D% Demand Total Non -0p Revenues /(Expenses) (930,880) (2,354) (933,234) (998,713) 37,725 12,306 15,447 Credit New Wm Transport Revenues (721,218) 1721,218) (721,218) 1DO%Demand .a Credit Electric Div Transport Revenues (1,100,000) (2,100,000) (1,100,000) 100% Demand Margin 433,613 433,613 142,914 0 127,567 169,132 Prod,Trans, Dist, Cust, no purch gas Total Revenue Requirements 12,508,905 2,354 12,511,259 O 9111046 10,165,718 552,422 882,074 0 100% 7% 81% 4% 7% check ; 1. Adjust for gas supplies sold directly to transportation customers, in order to show on separate lines. 2. Gain /(loss) on Disposal of Assets has been adjusted to 0 to reflect a typical test year. Distribution Oster& Manor 224,356 214,356 77,649 0 0 136,707 100% 36% 0% O% 64% Prod,Trans, Dist, Curt, no purch gas 928,987 0 306,184 0 260,449 362,354 100% 33% 0% 28% 39% Prod,Trans, Dist, Cost, inol purch gas 10,735,758 0 312,127 9,800,827 260,449 362,354 100% 3% 91% 2% 3% PA004712 Huschinson\3153101010 Rate Study\Oata Analysis \Hutchinson Gas Operating Resuhs and COS.xlsx \Ex 3 -E Func Classif Exhibit 3 -F Hutchinson Utilities, Minnesota i Classification of Gas Plant -in- Service ffff 2010 Test Year Accumulated System Net Description Gross Plant Depreciation Plant -in- Service Demand Cust Facilities Basis of Classification Gas Transmission Plant '. Rights of Way $3,815,718 $0 $3,815,718 $3,815,718 100% Demand Transmission Mains 26,659,032 3,567,356 23,091,676 23,091,676 100% Demand M &R Station Equipment- 069 1,804,761 259,149 1,S45,612 1,545,612 100% Demand Communication Equipment 4370 278,337 149,887 128,449 128,449 100% Customer Pipeline Locator 6,468 431 6,037 6,037 100% Customer Total Gas Transmission Plant 32,564,317 3,976,824 28,587,492 28,453,006 134,487 Gas Distribution Plant Mains 3,701,008 1,335,516 2,365,492 1,182,746 1,182,746 50 %Dmd /SO %Cust M &R Station Equipment -Gen #378 709,548 179,023 530,S2S 530,S2S 100% Demand M &R Station Equipment -City #379 67,334 45,711 21,623 21,623 100% Demand Services #380 935,105 250,274 684,831 684,831 100% Customer Meters & all Fittings 1,487,601 379,498 1,108,103 1,108,103 100% Customer House Regulators & All Fittings 98,810 38,278 60,533 60,533 100% Customer Industrial M &R Station Equipment 95,747 49,536 46,231 46,231 100% Demand Other Equip (CO tester, Gas Analyzer) 77,991 58,563 19,427 9,714 9,714 SO% Dmd/ SO% Cust Gas Distribution Plant 7,173,144 2,336,380 4,836,764 1,790,838 3,045,926 Total Gas Plant $39,737,461 $6,313,204 $33,424,256 $30,243,844 $3,180,413 Gas Transmission Plant Percent 100% 100% 0% Gas Distribution Plant Percent 100% 37% 63% Total Gas Plant Percent 100% 90% 10% Mains & Services 4,636,113 1,S85,791 3,050,323 1,182,746 1,867,577 39% 61% Meter 1,487,601 379,498 1,108,103 0 1,108,103 0% 100% IP: \004712 Hutchinson \3153101010 Rate Study \Data Analysis \Hutchinson Gas Operating Results and COS.xisx \Ex 3 -F Plant in Service Exhibit 3 -G Hutchinson Utilities, Minnesota Gas Demand, Commodity and Customer Allocation Factors 2010 Test Year Total Res Coml Indus 3M HTI Demand Allocation Factor Peak Period Sales (MCF) -Jan 2010 255,370 82,844 68,782 14,294 89,450 0 Peak Demand Factor 100% 32% 27% 6% 35% 0% Peak Period Sales (MCF) - w/o Transport 165,920 82,844 68,782 14,294 Peak Demand w/o Transport Factor 100% 50% 41% 9% Average /Excess Dmd (MCF) 255,370 78,325 65,451 13,310 86,857 11,426 Average /Excess Dmd Factor 100% 31% 26% 5% 34% 4% Retail Commodity Allocation Factor Retail Commodity Allocation Factor 863,608 417,391 400,222 45,995 Annual Retail Commodity Factor 100% 48% 46% 5% Transport Commodity Allocation Factor Transport Commodity Allocation Factor 798,444 742,444 56,000 Annual Transport Commodity Factor 100% 93°x6 7% All Customers Commodity Allocation Factor Retail Commodity Allocation Factor 1,662,052 417,391 400,222 45,995 742,444 56,000 Annual All Cust Commodity Factor 100% 25% 24% 3% 45% 3% Customer Service Allocation Factor Average Number of Customers 5,445 4,918 525 0.33 1 0.67 Service Weighting Factor 1 2.5 10 50 50 Weighted Number of Customers 6,317 4918 1313 3 50 33 Customer Service Factor 100% 78% 21% 0% 1% 1% Customer Facilities Allocation Factor Average Number of Customers 5,445 4,918 525 0.33 1 0.67 Facilities Weighting Factor 1 9 1000 5000 1000 Weighted Number of Customers 15,643 4918 4725 333 5000 667 Customer Facilities Factor 100% 31% 30% 2% 32% 4% (1) See Exhibit 3 -1) for developemtn of Average /Excess Demand. (2) 3M and HTI commodity costs directly assigned. Average gas use per customer month 7 64 11499 61870 7000 ratio to Res 1 9 1626 8748 990 \ E 0 k LU / rl C) CL a a a a a L § a § & _ t w Ln # - o u 3 $ /® 2§ m m o 2 - u E 3 ƒ E & 3 A CL 0 z Ln _ o r- � o § . � m / ri /// / - - ruEM m k E « uj A � � w\ m Ch 00 r, o N to _ _ \ E O § 2 . 7 e o m & 6 ¥ a / CO x E # m § k E r E 2 \ m C%l * # A) �ui kR k 2 ; W \ / c E_ § f U. z z z z z k M % s 2 t u§ / 4 2§# % f 3 o 0 $ / >. CL § ƒ \ \ 2 E j $/ S E o t E$£ j E E § � k k S £ ° , a 2 G¥ G 2 G$ ) E E 0 E o # _ e � cn $§ u 2 a f§ M. m 2 % ®� f 2 ■ k E ; E E » 2 \ # E u � • g ° E I $ � m 2 £ O LA � \>. to f_ co R m 7 G 0 > < a � m � � � L E o 2 §±¢ m k® m 7 C 4 W - k o \ < # g n $ m co m - - } in 0 u §\ 6 & 00 ¥ cn w - -$ R e E u 3 c © E « < « < « o zzzz \ k � � e c4 Ln � o cq a m g m# S C 0 2 R a k� to q* Ln a § § § # U 7 G \ \ E 0 k LU / rl C) CL \2 / _ k L § a § & ¢ $ [ \ M § 5 u = u 3 $ \ E 0 k LU / rl C) CL � � § E 0 k / § . � m � £ f k E 2 � � w\ ) k § 0 7 e CO 777k� § k E r E 2 \ m C%l * # A) kR k 2 ; W \ / c § 7 ƒ Ln M % s 2 t _ 4 2§# f 3 o 0 $ >. CL § ƒ \ \ 2 E j $/ S E o t E$£ j E R 6 § � k k S £ ° , a / ) E E § E C \ -/ { m E u K u ) k M. E 2 f 2 ■ k E ; E E » % # » 12 ®$ ; • g ° E / $ � m 2 £ O LA 333/376 \ E 0 k LU / rl C) CL PA004712 Hutchinson \3153101010 Rate Study \Data Analysis \Hutchinson Gas Operating Results and COS.xlsx \Ex 3 -1 Alloc of Rev Req Exhibit 3-1 Hutchinson Utilities, Minnesota Natural Gas Division Allocation of Gas Revenue Requirements Test Year 2010 Total Residential Commercial Industrial 3M Transport HTI Transport Allocation Demand Component Purchased Gas Expense - Retail $5,944 $2,968 $2,464 $512 Pk Dmd w/o Transport Purchased Gas -3M 0 $0 Direct Assignment Purchased Gas -HTI 0 $0 Direct Assignment Transmission Operation 98,159 30,107 25,158 5,116 33,386 4,392 Average Excess Transmission Maintenance 2,209 678 566 115 751 99 Average Excess Distribution Operation 151,412 46,440 38,807 7,892 51,499 6,775 Average Excess Distribution Maintenance 54,403 16,686 13,943 2,836 18,504 2,434 Average Excess Administrative & General 326,721 100,209 83,738 17,029 111,125 14,619 Average Excess Depreciation -Gas 938,966 287,992 240,656 48,941 319,363 42,014 Average Excess Payment in Lieu of Taxes 12,822 3,933 3,286 668 4,361 S74 Average Excess Non- Oper(Rev) /Expns 998,713 306,317 255,969 52,055 339,684 44,687 Average Excess Credit for New Ulm Transport Rev (721,218) (221,2D6) (184,947) (37,591) (245,302 (32,271) Average Excess Credit for Elec Div Transport Rev (1,100,000) (337,383) (281,929) (57,334) (374,134) (49,219) Average Excess Margin 142,914 43,833 36,629 7,449 48,608 6,395 Average Excess Total Demand 911,046 280,573 234,440 47,688 307,845 40,499 Commodity Component Purchased Gas Expense - Retail 6,064,250 2,930,919 2,810,355 322,977 0 0 Annual Retail Sales Purchased Gas for HTI 235,045 235,045 Direct Assignment Purchased Gas for 3M 3,501,532 3,501,532 Direct Assignment Payment in lieu of Taxes 402,615 101,109 96,950 11,142 179,850 13,565 Annual All Cust Sales Non -Oper (Rev) /Expns (37,725) (9,474) --(9,084) (1044) (16,852) (1,272) Annual All Cust Sales Total Commodity 10,165,718 3,022,554 2,898,220 333,074 _ 3,664,530 247,339 Customer services Component Cust Accounting & Collecting 179,470 139,720 37,288 95 1,420 947 Customer Service Sales 80,979 63,043 16,825 43 641 427 Customer Service Administrative & General 172,013 133,914 35,739 91 1,361 908 Customer Service Payment in Lieu of Taxes 10,699 8,329 2,223 6 85 56 Customer Service Non -Oper (Rev) /Expns (12,306) (9,581) (2,557) (6) (97) (65) Customer Service Margin 121,567 94,641 25,258 64 962 641 Customer Service Total Customer Services 552,422 430,068 114,775 291 4,372 2,915 Customer Facilities Component Distribution Operation 263,892 82,965 79,709 5,623 84,348 11,246 Customer Facilities Distribution Maintenance 98,463 30,956 29,741 2,098 31,472 4,196 Customer Facilities Administrative & General 252,409 79,355 76,241 5,379 80,678 10,757 Customer Facilities Depreciation -Gas 98,741 31,043 29,825 2,104 31,561 4,208 Customer Facilities Payment In Lieu of Taxes 14,885 4,680 4,496 317 4,758 634 Customer Facilities Non -Oper (Rev) /Expns (15,447) (4,856) (4,666) (329) (4,937) (658) Customer Facilities Margin 169,132 53,173 51,087 3,604 54,060 7,208 Customer Facilities ' Total Customer Facilities 882,074 277,315 266,432 18,796 281,939 37,592 Revenue Requirements $12,511,259 $4,010,510 $3,513,868 $399,850 $4,258,686 $328,345 Total Revenues $12,509,603 $3,979,581 $3,638,751 $371,349 $4,213,609 $306,313 + Percent Rev Requirements 100% 32.1% 28.1% 3.2% 34.0% 2.6% (rt t. Percent Revenues 100% 31.8% 29.1% 3.0% 33.7% 2.4% Percent Change 0.8% -3.4% 7.7% 1.1% 7.2% (1) Based on Demand, Commodity, Customer Services, Customer Facilities and Direct expenses. (2) Direct assignment to 3M. PA004712 Hutchinson \3153101010 Rate Study \Data Analysis \Hutchinson Gas Operating Results and COS.xlsx \Ex 3 -1 Alloc of Rev Req Section 4 UNBUNDLED RATES Based on the results of the cost of service study presented in Section 3 of this report, electric and gas unbundled rates have been developed to equal Test Year revenue requirements. Electric Rate Components HU's electric rates have been unbundled into four components: wholesale power, transmission, distribution and customer. Each of these components is described below. Wholesale Power The wholesale power component consists of power generation, fuel and purchased power charges. For retail classes billed on the basis of demand and energy, the retail demand portion of the wholesale power component represents wholesale demand charges and the energy portion represents wholesale energy charges. For retail classes billed on the basis of energy only, the retail energy charge represents the combined total of wholesale demand and energy charges. Transmission The transmission component represents transmission operations and maintenance charges. The transmission charge is a demand related charge. This is shown as a retail demand charge for retail demand and energy billed classes and as an energy charge for energy only retail classes. Distribution 1 . The majority of HU's local electric revenue requirements are reflected in the distribution portion of the unbundled retail rates. It includes a portion of the O &M expenses on the distribution system, the majority of the depreciation expenses, certain A &G and non - operating expenses, and a credit for non - operating income. These costs are shown as a retail demand charge for retail demand and energy billed classes and as an energy charge for energy only retail classes. Customer t The customer charge reflects both customer service and customer facilities expenses, including accounting and collection charges, sales, certain A &G expenses, O &M and depreciation on the customer portion of the system, and a credit for non - operating income. The customer charge is a monthly per customer charge. .., SAIC Section 4 Unbundled Electric Rates Unbundled electric costs and resulting retail rates for the Residential, Small General Service, Large General Service and Large Industrial classes are shown in the tables below. The individual unbundled components have been summed to show a total unbundled rate. Note that the following rates are not necessarily the proposed rates recommended by SAIC as a result of this study. The following unbundled rates: • Generate the same revenues as the adjusted Test Year 2010 revenue requirements. • Reflect the results of the cost -of- service analysis. The cost to serve each customer class is different. The cost depends on the combination of demand needs, the timing and amount energy use compared to demand and the cost of customer facilities and services. • Reflect the results of the unbundling of electric utility services. Table 4 -1 Unbundled Electric Costs 4 -2 SAIC Energy, Environment & Infrastructure, LLC 81845 Sect 4.docx 5/23/12 Rate Class Unbundled Rate Rate Component Res Sm Gen Sery Lge Gen Sery Large Indus Total Wholesale Power Purch Pwr Demand $883,069 $336,937 $1,726,798 $2,062,770 $5,009,574 Purch Pwr Energy 1,592,592 521,449 2,445,282 4,245,000 8,804,324 Gen Demand 248,326 94,749 485,589 580,067 1,408,731 Gen Energy 340,057 111,342 522,127 906,411 1,879,937 Trans Demand 40,464 9,649 44,192 62,899 157,204 Energy Dist Demand 919,454 307,086 1,503,438 1,801,194 $4,531,173 Energy 387,423 126,851 594,853 1,032,662 2,141,788 Cust Customer 812.856 217.474 293.957 369.016 1.693.303 Total $5,224,240 $1,725,536 $7,616,237 $11,060,019 $25,626,034 4 -2 SAIC Energy, Environment & Infrastructure, LLC 81845 Sect 4.docx 5/23/12 UNBUNDLED RATES Table 4 -2 Unbundled Electric Rates Gas Rate Components HU's gas rates have been unbundled into four components: purchased gas/ production, transmission, distribution and customer. Each of these components is described below. Purchased Gas/ Production The purchased gas/ production component represents the cost of wholesale gas delivered to the City and certain production expenses. It is expressed as both a demand and commodity component based on consumption. Transmission The transmission component represents transmission operations and maintenance charges. The transmission charge is a demand related charge. It is expressed as a demand component based on consumption. a1845 SAIC Energy, Environment & Infrastructure, LLC 4 -3 Rate Class Unbundled Rate Rate Component Res Small Large Large General General Industrial Service Service Purch Pwr Demand $7.39 $7.52 Wholesale Power ($ /kW) Purch Pwr Energy ($/kWh) 0.0466 0.0494 0.0300 0.0300 Gen Demand ($/kW) 2.08 2.11 Gen Energy ($/kWh) 0.0111 0.0119 0.0064 0.0064 Transmission Demand ($/kW) 0.19 0.23 Energy ($/kWh) 0.0008 0.0006 Distribution Demand ($/kW) 6.44 6.57 Energy ($/kWh) 0.0246 0.0250 Customer Customer ($ /mo) 11.13 22.26 195.97 10250.44 Total Customer ($/mo) $11.13 $22.26 $195.97 $10,250.44 Demand ($/kW) $16.10 $16.43 Energy ($ /kWh) $0.0831 $0.0868 $0.0437 $0.0437 Existing Rate Customer ($ /mo) $6.50 $10.00 Demand ($/kW) $6.00 $7.00 Energy ($/kWh) -blk 1 $0.0872 $0.0911 $0.0737 $0.0675 Energy ($/kWh)-Wk 2 $0.0855 Gas Rate Components HU's gas rates have been unbundled into four components: purchased gas/ production, transmission, distribution and customer. Each of these components is described below. Purchased Gas/ Production The purchased gas/ production component represents the cost of wholesale gas delivered to the City and certain production expenses. It is expressed as both a demand and commodity component based on consumption. Transmission The transmission component represents transmission operations and maintenance charges. The transmission charge is a demand related charge. It is expressed as a demand component based on consumption. a1845 SAIC Energy, Environment & Infrastructure, LLC 4 -3 Section 4 Distribution The distribution portion of the unbundled rate represents O &M expenses on the distribution system, depreciation, certain A &G expenses, a credit for non - operating income plus retained earnings requirements. It is expressed as both a demand and commodity component based on consumption. Customer The customer charge reflects both customer service and customer facilities expenses, including accounting and collecting charges, sales, certain A &G expenses, O &M and depreciation on the customer portion of the system and a credit for non - operating income. The customer charge is a monthly per customer charge. Unbundled Gas Rates Unbundled natural gas costs and resulting retail rates for the Residential, Commercial and Industrial rate classes are shown in the tables below. Costs associated with 3M and HTI have been eliminated from the unbundled analysis, due to the fact that 3M and HTI have contract rates. The individual unbundled components have been summed to show a total unbundled rate. Note that the following rates are not necessarily the proposed rates recommended by SAIC as a result of this study. The following unbundled rates: ■ Generate revenue equal to the adjusted 2010 Test Year revenue requirements. ■ Reflect the results of the cost -of- service analysis. The cost to serve each customer class is different. The cost depends on the amount and timing of natural gas use and the cost of customer facilities and services. ■ Reflect the results of the unbundling of gas utility services. Table 4 -3 Unbundled Gas Costs Rate Class Unbundled Rate Rate Component Residential Commercial Industrial Total Purchase/ Production Demand $2,968 $2,464 $512 $5,944 Commodity 2,930,919 2,810,355 322,977 6,064,250 Transmission Demand 30,784 25,724 5,231 61,740 Demand 246,822 206,252 41,945 495,019 Distribution Commodity $101,109 $96,950 $11,142 $209,200 Customer Customer 707.383 381.207 19.087 1.107.678 Total $4,019,984 $3,522,953 $400,894 $7,943,830 4 -4 SAIC Energy, Environment & Infrastructure, LLC e1845 s«t4.docX 5/23/12 B1845 SAIC Energy, Environment & Infrastructure, LLC 4 -5 UNBUNDLED RATES Table 4.4 Unbundled Gas Rates Rate Class Unbundled Rate Rate Component Residential Commercial Industrial Purchase/ Production Demand ($/Mcf) $0.01 $0.01 $0.01 Commodity ($/Mcf) $7.02 $7.02 $7.02 Transmission Demand ($(Mcf) $0.07 $0.06 $0.11 Distribution Demand ($/Mcf) $0.59 $0.52 $0.91 Commodity ($ /Mcf) $0.24 $0.24 $0.24 Customer Customer ($/mo) $11.99 $60.51 $4,771.86 Total Customer ($ /mo) $11.99 $60.51 $4,771.86 Commodity ($/McQ $7.94 $7.85 $8.30 Existing Rate Customer ($/mo) $6.50 $31.50 Commodity ($/McQ $9.08 $9.08 $8.54 Demand per MCF $10,00 B1845 SAIC Energy, Environment & Infrastructure, LLC 4 -5 u u Section 5 PROPOSED RATES Retail rate adjustments are generally made in response to revenue requirements and cost -of— service. In Section 2 of this report, the Electric and Gas Divisions' estimated annual operating results for the Study Period were presented. These two sets of operating results were developed utilizing HU's existing rates. Section 3 of this report summarizes the results of the cost of service analysis for both Divisions. Section 4 presents an analysis of unbundled rates for both Divisions. All of these factors have been considered in the development of the recommendations presented below for Electric and Gas rates. Electric Division Rate Design Forecasted revenues at current rates are adequate to cover forecasted revenue requirements during the Study Period while maintaining reasonable cash reserves in the near term. The cost -of- service analysis has shown that current rates are generally in line with the cost to serve each of the rate classes. The unbundled rate analysis indicates that some redesign of current rate structures may be justified. We are not recommending any increase in Electric Division revenues through a retail rate adjustment at this time. The only specific rate change we are recommending is in regard to the Small General Service classification. Presented below are the proposed rates and some recommendations for future rate considerations. Proposed Rates 1. No change in Residential rates has been proposed. 2. The Small General Service class currently has a two -tier energy rate design. Customers pay one rate for all monthly energy up to 2000 kWh and a slightly lower rate for all monthly energy over 2000 kWh. We have proposed moving this class to a single energy charge for all monthly energy usage. This change is revenue neutral for the class as a whole, however, smaller users will see a slight decrease in their monthly bill and larger users will see a slight increase in their monthly bill. 3. No change in Large General Service rates has been proposed. 4. No change in Large Industrial rates has been proposed. B1845 SA I C. Section 5 Power Cost Adjustment The Electric Division currently has in place a Power Cost Adjustment (PCA) to adjust for differences between its actual fuel and purchased power costs and the cost included in the customer rate schedules. The Electric Division uses the PCA as needed to adjust for fluctuations in its fuel and purchased power costs. We recommend that the Electric Division continue to monitor its PCA rates compared with its actual power supply related costs and use the PCA as needed. General Rate Recommendations Presented below are some general rate recommendations for HU's consideration regarding its Electric Division rates. 1. As rate adjustments are made in the future, consideration of higher customer charges for the Residential and Small General Service classes is justified. As shown in the unbundled analysis in Section 4 of this report, the total unbundled customer related cost for these classes is higher than the existing monthly customer charges for these classes. 2. The retail demand charges for the Large General Service and Large Industrial classes are $6 and $7 per kW -month respectively. Changes in HU's power supply program, while not raising costs overall, have moved costs from energy related to more fixed demand related costs. Total revenues from these classes are generally in line with cost -of- service. However, when rate adjustments are made, it is warranted to consider increasing retail demand charges while decreasing retail energy charges for these two classes. 5 -2 SAIC Energy, Environment & Infrastructure, LLC aisas Table 5.1 Current And Proposed Retail Electric Rates Class Rate Component Current Rate Proposed Rate Residential Monthly Charge 6.50 No change All kWh/mo 0.0872 No change Small General Service Monthly Charge 10.00 No change First 2000 0.0911 n/a kWh /mo Over2000 0.0855 n/a kWh/mo All kWh n/a 0.0886 Large General Service Demand per kW /mo 6.00 No change All kWh /mo 0.0737 No change Large Industrial Demand per 7.00 No change kW /mo All kWh/mo 0.0675 No change Power Cost Adjustment The Electric Division currently has in place a Power Cost Adjustment (PCA) to adjust for differences between its actual fuel and purchased power costs and the cost included in the customer rate schedules. The Electric Division uses the PCA as needed to adjust for fluctuations in its fuel and purchased power costs. We recommend that the Electric Division continue to monitor its PCA rates compared with its actual power supply related costs and use the PCA as needed. General Rate Recommendations Presented below are some general rate recommendations for HU's consideration regarding its Electric Division rates. 1. As rate adjustments are made in the future, consideration of higher customer charges for the Residential and Small General Service classes is justified. As shown in the unbundled analysis in Section 4 of this report, the total unbundled customer related cost for these classes is higher than the existing monthly customer charges for these classes. 2. The retail demand charges for the Large General Service and Large Industrial classes are $6 and $7 per kW -month respectively. Changes in HU's power supply program, while not raising costs overall, have moved costs from energy related to more fixed demand related costs. Total revenues from these classes are generally in line with cost -of- service. However, when rate adjustments are made, it is warranted to consider increasing retail demand charges while decreasing retail energy charges for these two classes. 5 -2 SAIC Energy, Environment & Infrastructure, LLC aisas PROPOSED RATES 3. As shown in Section 2 of this report, the Electric Division forecasted revenues during the Study Period are estimated to exceed revenue requirements. However, cash reserves are estimated to decline during the Study Period. This is primarily due to planned capital improvements. HU may wish to give some consideration to bonding for some of the capital improvements to spread the financial impact over l more operating years. 4. HU has indicated it may be interested in developing or participating in a local, dispatchable, green generating resource at some point in the future. If they were to pursue this option, they have indicated they may wish to consider an optional green rate for retail customers to choose to support the local green generation endeavor. The concept would be to have local customers pay some extra amount per kWh to help pay capital and operating costs for the new generation in excess of HU's standard power supply costs. For example, the estimated 2013 production O &M and other power supply expenses for HU were $18,689,963 as shown in Section 2 of this report. Total estimated retail sales for 2013 are 324,899,001 kWh. Average power supply costs per retail kWh in 2013 are estimated to be $0.0575 per kWh. If the cost of a local green resource exceeded this amount per kWh, HU could implement an optional green rate where customers pay an additional amount equal to the differential between HU's normal power supply costs and the new green resource. This amount could be applied to fixed amounts of energy that customers could subscribe to. For instance, if the green resource cost $0.02 per kWh more than the current resources, a customer could agree to pay $2 per month extra for a 100 kWh block of the new resource. HU could market monthly blocks of the new resource up to the expected monthly output of the unit. Estimated Operating Results at Proposed Rates The only rate adjustment for the Electric Division recommended is in the Small General Service classification. This change is designed to be revenue neutral. As such, the estimated Electric Division operating results and cash reserves for the Study Period incorporating the proposed rates are unchanged from the results at existing rates as presented in Section 2 of this Report Rate Comparisons Exhibit 5 -A graphically shows the effect of the proposed rates on the Electric Division's monthly bills for the Small General Service customer class based on a range of monthly consumption. Monthly bills for customers with low usage are slightly less and monthly bills for customers with high usage are slightly higher. Gas Division Rate Design As stated in Section 2, forecasted revenues at existing rates are expected to be sufficient to adequately cover forecasted revenue requirements during the Study Period. Additionally, cash reserves for the Gas Division are estimated to increase B1845 SAIC Energy, Environment & Infrastructure, LLC 5 -3 Section 5 during the study period. No changes are currently recommended for the Gas Division's retail rates. Fuel Cost Adjustment The Gas Division currently has in place a Fuel Cost Adjustment (FCA) to adjust for differences between its natural gas purchases for retail customers and the cost included in the customer rate schedules. We recommend that the Gas Division continue to monitor its FCA rates compared with its actual natural gas costs and use the FCA as needed. General Rate Recommendations Presented below are some general rate recommendations for HU's consideration regarding its Gas Division rates. 1. As rate adjustments are made in the future, consideration of higher customer ; charges for the Residential and Commercial classes is justified. As shown in , the unbundled analysis in Section 4 of this report, the total unbundled customer related cost for these classes is higher than the existing monthly customer charges for these classes. 5 -4 SAIC Energy, Environment & Infrastructure, LLC a1845 O O O O 00 0 8 r-:, O .0 0 CL C 0 CL O O O 8 r- W Ln m cv 4jv in 2. 4, c 4 Year Rate Chankye Phase In Combined Income Statement 2013 2014 2015 2016 2017 2018 2019 Operating Revenue 39,686,217.00 40,793,992.67 40,497,432.89 41,013,577.39 41,480,951.01 41,910,591.05 42,534,802.66 Operating Expense 38,009,102.00 38,718,303.74 39,080,255.74 39,699,170.90 40,115,398.94 40,535,685.29 41,360,280.54 Operating Income 1,677,115.00 2,075,688.93 1,417,177.15 1,314,406.49 1,365,552.07 1,374,905.76 1,174,522.12 Other Income and Deductions (995,571.00) (802,988.00) (746,112.50) (697,113.00) (645,588.00) (579,338.00) (509,275.00) Net Income 681 544:00 1;272,70G.93' 67l064:`65, 1,617,293>449 7.19,964 +07t 5 2 0121 Cash Flows Beginning of Year Cash (Includes All Accounts) Plus: Net Income Plus: Depreciation and Amortization Less: Capital Improvements Less: Bond and MRES Principal End of Year Cash (Includes All Accounts) Beginning of Year Cash By Account Capital Expenditures Current Year Electric Production PILOT Debt Service Reserve Fund Catastrophic Failure Fund Rate Stabilization Funds Development Study Bond and Interest Payment Cash in Bank 4 Year Rate Change Phase In 2013 2014 2015 2016 2017 2018 2019 9,752,726.23 8,779,199.91 10,989,303.84 5,920,340.49 5,723,633.99 7,442,098.06 9,131,665.82 681,544.00 1,272,700.93 671,064.65 617,293.49 719,964.07 795,567.76 665,247.12 4,166,003.00 4,281,953.00 4,018,972.00 3,781,000.00 3,781,000.00 3,806,000.00 3,806,000.00 (2,641,073.32) (2,169,550.00) (8,534,000.00) (3,310,000.00) (1,437,500.00) (1,492,000.00) (2,279,000.00) (3,180,000.00) (1,175,000.00) (1,225,000.00) (1,285,000.00) (1,345,000.00) (1,420,000.00) (1,495,000.00) ,,8;,779;199191 10 ;989;303:84 5;920,340:49': ' `5';723;63199 7j442 098't06> 9;13 >1665182 o% 94" 1/1/2013 1 1 2014 1/1/2015 1 1 2016 1/1/2017 1 1 2018 111/2019 1,576,183.00 1,597,050.00 1,810,000.00 980,000.00 817,500.00 927,000.00 989,000.00 2,781,702.40 572,500.00 6,724,000.00 2,330,000.00 620,000.00 565,000.00 1,290,000.00 1,403,076.07 1,900,000.00 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 629,096.93 1,194, 540.93 1,200,000.00 1,200,000.00 1,200,000.00 1,200,000.00 1,200,000.00 286,123.36 - - - - - - 666,585.41 400,579.01 400,500.00 400,500.00 400,500.00 400,500.00 400,500.00 ,(277 .89'1:,19) 425 "835:95' ;(3;733' "89018) (3 578 853 53)(1;903,06003 f, ) ;('2k3909596),g;:6634780 9,753,570.00 8,779,199.91 10,989,303.84 5,920,340.49 5,723,633.99 7,442,098.06 9,131,665.82 Yearly Cash Flow Current Rates 1 Year Phase In 2 Year Phase In 3 Year Phase In 4 Year Phase In Cash Balance at End of Year Current Rates 1 Year Phase In 2 Year Phase In 3 Year Phase In 4 Year Phase In 2014 2015 2,210,103.93 (4,830,695.85) 2,210,103.93 (5,783,765.85) 2,210,103.93 (5,307,230.85) 21210,103.93 (5,148,385.85) 2,210,103.93 (5,068,963.35) 2016 279,828.49 (673,241.51) (673,241.51) (355,551.50) (196,706.50) 2017 2,433,266.58 1,480,196.58 1,480,196.58 1,480,196.57 1,718,464.07 2018 2,642,637.76 1,689,567.76 1,689,567.76 1,689,567.76 1,689,567.76 2019 1,650,317.12 697,247.12 697,247.12 697,247.12 697,247.12 10,989,303.84 6,158,607.99 6,438,436.48 8,871,703.06 11,514,340.82 13,164,657.94 10,989,303.84 5,205,537.99 4,532,296.48 6,012,493.06 7,702,060.82 8,399,307.94 10,989,303.84 5,682,072.99 5,008,831.48 6,489,028.06 8,178,595.82 8,875,842.94 10,989,303.84 5,840,917.99 5,485,366.49 6,965,563.06 8,655,130.82 9,352,377.94 101989,303.84 5,920,340.49 5,723,633.99 7,442,098.06 9,131,665.82 9,828,912.94 Yearly Electric Net Income Current Rates 1 Year Phase In 2 Year Phase In 3 Year Phase In 4 Year Phase In Yearly Total Net Income Current Rates 1 Year Phase In 2 Year Phase In 3 Year Phase In 4 Year Phase In 2014 2015 2016 2017 2018 2019 (986,101.03) (1,214,345.49) (1,061,005.89) (752,300.77) (483,889.66) (661,996.83) (986,101.03) (2,167,415.49) (2,014,075.89) (1,705,370.77) (1,436,959.66) (1,615,066.82) (986,101.03) (1,690,880.49) (2,014,075.89) (1,705,370.77) (1,436,959.66) (1,615,066.82) (986,101.03) (1,532,035.49) (1,696,385.89) (1,705,370.77) (1,436,959.66) (1,615,066.82) (986,101.03) (1,452,612.99) (1,537,540.89) (1,467,103.27) (1,436,959.66) (1,615,066.82) 1,272,700.93 909,332.15 1,093,828.49 1,434,766.58 1,748,637.76 1,618,317.12 1,272,700.93 (43,737.85) 140,758.49 481,696.57 795,567.76 665,247.12 1,272,700.93 432,797.15 140,758.49 481,696.57 795,567.76 665,247.12 1,272,700.93 591,642.15 458,448.49 481,696.57 795,567.76 665,247.12 1,272,700.93 671,064.65 617,293.49 719,964.07 795,567.76 665,247.12 Current Rates ELECTRIC INCOME 6 EXPENSE SUMMARY Purchased Gas Generation Other Power Supply Expense (555, 556, 557) Purchased Power (555) System Control & Load Dispatch (556) Engineering Services (557) Total Other Power Supply Expense (555, 556, 557) Transmission Expense (560, 567, 574) Transmission Expense Operation (560, 567) Transmission Expense Maintenance (574) Total Transmission Expense (560, 567, 574) Distribution Expense: Distribution Operation (580, 581, 586, 588, 589) Distribution Maintenance (592, 594, 595, 596, 598) Total Distribution Expense: Customer Service and Collection(902, 903, 904, 906) 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 (911, 916) Supervison (911) Misc. Selling Expense (916) Total Sales Expense (911, 916) Admin and General (920, 921, 923, 924, 926, 928, 930, 935) 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 Admin and General (920, 921, 923, 924, 926, 928, 930, 935) Depreciation Expense (403) Amortization - Development Study Payment in Lieu of Taxes (408) Contribution To City -for Roadway Lighting (408) Other - Net Interest Income Misc. Income Misc. Expense Interest Expense TOTAL OPERATING EXPENSE OPERATING INCOME OTHER INCOME AND DEDUCTIONS TOTAL OTHER INCOME & EXP. NET INCOME 13,342,967.00 14,000,000.00 14,020,000.00 14,480,200.00 14,500,600.00 14,521,200.00 14,982,000.00 Assume $660,000 MRES increase in 2014 and $440,000 340,482.00 304,500.00 313,635.00 323,044.05 332,735.37 342,717.43 352,998.96 in 2016/2019, MISO purchases increase 1% annually, 86,382.00 25,000.00 25,750.00 26,522.50 27,318.18 28,137.72 28,981.85 556, and 557 increase 3% annually 13, 769, 831.00 14, 329, 500.00 14, 359, 385.00 14, 829, 766.55 14, 860, 65 3.55 14,892,055.15 15, 363, 980.81 1,419, 617.00 1,286,000.00 1,600, 000.00 73,734.00 24,000.00 24,720.00 1,493, 351.00 1,310,000.00 1,624,720,00 560,924.00 420,350.00 432,960.50 321,821.00 220,500.00 227,115.00 882,745.00 640,850.00 660,075.50 18, 794.00 17,050.00 17,561.50 127,589.00 105, 545.00 108, 711.35 5,070.00 3,300.00 3,399.00 40,260.00 41,250.00 42,487.50 191,713.00 167,145.00 172,159.35 6,240.00 6,000.00 6,180.00 191,500.00 301,500.00 310,545.00 197,740.00 307,500.00 316,725.00 520,388.00 500,250.00 515,257.50 281, 5 74.00 184,125.00 189, 648.75 147,846.00 56,475.00 58,169.25 102,512.00 105,050.00 108, 201.50 1, 240, 786.00 1, 324, 875.00 1,364,621.25 23,980.00 31,900.00 32,857.00 95, 031.00 103, 675.00 106, 785.25 71,061.00 37,180.00 38,295.40 2,483,178.00 2,343,530.00 2,413,835.90 2,612,388.00 2,700,000.00 2,700,000.00 525,953.00 525,953.00 262,972.00 912,000.00 1,235,000.00 1,235,000.00 142,666.00 4,193,007.00 4,460,953.00 4,197,972.00 1,648,000.00 25,461.60 1,673,461.60 445,949.32 233,928.45 679,877.77 18,088.35 111,972.69 3,500.97 43,762.13 177,324.13 6,365.40 319,861.35 326,226.75 530,715.23 195,338.21 59,914.33 111,447.55 1,405,559.89 33,842.71 109,988.81 39,444.26 2,486,250.98 2,725,000.00 1,235,000.00 3,960,000.00 1,697,440.00 26,225.45 1,723,665.45 459,327.79 240,946.30 700,274.10 18,631.00 115,331.87 3,606.00 45,074.99 182,643.85 6,556.36 329,457.19 336,013.55 546,636.68 201,198.36 61,711.76 114,790.97 1,447,726.68 34,857.99 113,288.47 40,627.59 2,560,838.51 2,725,000.00 1,235,000.00 3,960,000.00 1,748,363.20 1,800,814.10 Transmission increase of $100,000 in 2014 and 2015 -- 27,012.21 27,822.58 negotiated settlement with GRE, 574 increase of 3% 1,775,375.41 1,828,636.67 annually 473,107.63 487,300.86 248,174.69 255,619.93 3% Increase Annually 721,282.32 742,920.79 19,189.93 19,765.62 118,791.83 122,355.58 3% Increase Annually 3,714.18 3,825.60 46,427.24 47,820.06 188,123.17 193, 766.87 6,753.05 6,955.64 339,340.91 349,521.13 3% Increase Annually 346,093.96 356,476.78 563,035.78 579,926.86 207,234.31 213,451.34 3% Increase Annually 63,563.11 65,470.00 118, 234.70 121, 781.74 1,491,158.48 1,535,893.24 35,903.73 36,980.84 116,687.13 120,187.74 41,846.42 43,101.81 2,637,663.66 2,716,793.57 2,750,000.00 2,750,000.00 1,235,000.00 1,235,000.00 Flat 3,985,000.00 3,985,000.00 27,156,005.00 27,260,592.69 27,859,433.38 28,343,505.28 28,622,346.28 28,902,640.51 29,584,575.56 (1,357,958.00) 2013 2014 2015 2016 2017 2018 2019 OPERATING REVENUES 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 37,970.00 35,000.00 Sales - Electric Energy (440, 442, 444) 24,455,179.00 24,842,772.66 25,091,200.39 25,342,112.39 25,595,533.51 25,851,488.85 26,110,003.74 1% Growth Rate in retail sales Sales For Resale (447) 779,276.00 977,400.00 880,000.00 880,000.00 880,000.00 880,000.00 880,000.00 Split Actual 2013 and Budgeted 2014 for 2015 -2019 Capacity Sales (447) 112,000.00 80,000.00 294,000.00 675,500.00 1,004,500.00 1,292,000.00 1,532,000.00 SMMPA Contract Street Lighting (444) 143,002.00 139,307.00 140,000.00 140,000.00 140,000.00 140,000.00 140,000.00 Total Energy Sales 25,489,457.00 26,039,479.66 26,405,200.39 27,037,612.39 27,620,033.51 28,163,488.85 28,662,003.74 OTHER OPERATING REVENUES Net Income From Other Sources (450,451) 297,525.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 Security Lights (454.01) 11,033.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 Pole Rental (454.02, 454.03) 32.00 500.00 500.00 500.00 500.00 500.00 500.00 Total Other Operating Revenues 308,590.00 230,500.00 230,500.00 230,500.00 230,500.00 230,500.00 230,500.00 TOTAL OPERATING REVENUE 25,798,047.00 26,269,979.66 26,635,700.39 27,268,112.39 27,850,533.51 28,393,988.85 28,892,503.74 OPERATING EXPENSES Production Operation (546, 547, 550) Operation Supervison & Engineering (546) 1,126,083.00 1,072,164.69 1,104,329.63 1,137,459.52 1,171,583.31 1,206,730.80 1,242,932.73 3% increase annually for 546 and 550 Fuel (547) 2,156,277.00 2,180,050.00 2,580,000.00 2,630,000.00 2,680,000.00 2,700,000.00 2,700,000.00 N. Gas Prices $4.50 /MCF Operating Supplies and Expense (550) 162,780.00 111,100.00 114,433.00 117,865.99 121,401.97 125,044.03 128,795.35 Total Production Operation (546, 547, 550) 3,445,140.00 3,363,314.69 3,798,762.63 3,885,325.51 3,972,985.27 4,031,774.83 4,071,728.08 Production Maintenance (554) 499,300.00 337,800.00 315,798.00 325,272.00 325,272.00 325,272.00 325,272.00 3% Increase Annually Purchased Gas Generation Other Power Supply Expense (555, 556, 557) Purchased Power (555) System Control & Load Dispatch (556) Engineering Services (557) Total Other Power Supply Expense (555, 556, 557) Transmission Expense (560, 567, 574) Transmission Expense Operation (560, 567) Transmission Expense Maintenance (574) Total Transmission Expense (560, 567, 574) Distribution Expense: Distribution Operation (580, 581, 586, 588, 589) Distribution Maintenance (592, 594, 595, 596, 598) Total Distribution Expense: Customer Service and Collection(902, 903, 904, 906) 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 (911, 916) Supervison (911) Misc. Selling Expense (916) Total Sales Expense (911, 916) Admin and General (920, 921, 923, 924, 926, 928, 930, 935) 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 Admin and General (920, 921, 923, 924, 926, 928, 930, 935) Depreciation Expense (403) Amortization - Development Study Payment in Lieu of Taxes (408) Contribution To City -for Roadway Lighting (408) Other - Net Interest Income Misc. Income Misc. Expense Interest Expense TOTAL OPERATING EXPENSE OPERATING INCOME OTHER INCOME AND DEDUCTIONS TOTAL OTHER INCOME & EXP. NET INCOME 13,342,967.00 14,000,000.00 14,020,000.00 14,480,200.00 14,500,600.00 14,521,200.00 14,982,000.00 Assume $660,000 MRES increase in 2014 and $440,000 340,482.00 304,500.00 313,635.00 323,044.05 332,735.37 342,717.43 352,998.96 in 2016/2019, MISO purchases increase 1% annually, 86,382.00 25,000.00 25,750.00 26,522.50 27,318.18 28,137.72 28,981.85 556, and 557 increase 3% annually 13, 769, 831.00 14, 329, 500.00 14, 359, 385.00 14, 829, 766.55 14, 860, 65 3.55 14,892,055.15 15, 363, 980.81 1,419, 617.00 1,286,000.00 1,600, 000.00 73,734.00 24,000.00 24,720.00 1,493, 351.00 1,310,000.00 1,624,720,00 560,924.00 420,350.00 432,960.50 321,821.00 220,500.00 227,115.00 882,745.00 640,850.00 660,075.50 18, 794.00 17,050.00 17,561.50 127,589.00 105, 545.00 108, 711.35 5,070.00 3,300.00 3,399.00 40,260.00 41,250.00 42,487.50 191,713.00 167,145.00 172,159.35 6,240.00 6,000.00 6,180.00 191,500.00 301,500.00 310,545.00 197,740.00 307,500.00 316,725.00 520,388.00 500,250.00 515,257.50 281, 5 74.00 184,125.00 189, 648.75 147,846.00 56,475.00 58,169.25 102,512.00 105,050.00 108, 201.50 1, 240, 786.00 1, 324, 875.00 1,364,621.25 23,980.00 31,900.00 32,857.00 95, 031.00 103, 675.00 106, 785.25 71,061.00 37,180.00 38,295.40 2,483,178.00 2,343,530.00 2,413,835.90 2,612,388.00 2,700,000.00 2,700,000.00 525,953.00 525,953.00 262,972.00 912,000.00 1,235,000.00 1,235,000.00 142,666.00 4,193,007.00 4,460,953.00 4,197,972.00 1,648,000.00 25,461.60 1,673,461.60 445,949.32 233,928.45 679,877.77 18,088.35 111,972.69 3,500.97 43,762.13 177,324.13 6,365.40 319,861.35 326,226.75 530,715.23 195,338.21 59,914.33 111,447.55 1,405,559.89 33,842.71 109,988.81 39,444.26 2,486,250.98 2,725,000.00 1,235,000.00 3,960,000.00 1,697,440.00 26,225.45 1,723,665.45 459,327.79 240,946.30 700,274.10 18,631.00 115,331.87 3,606.00 45,074.99 182,643.85 6,556.36 329,457.19 336,013.55 546,636.68 201,198.36 61,711.76 114,790.97 1,447,726.68 34,857.99 113,288.47 40,627.59 2,560,838.51 2,725,000.00 1,235,000.00 3,960,000.00 1,748,363.20 1,800,814.10 Transmission increase of $100,000 in 2014 and 2015 -- 27,012.21 27,822.58 negotiated settlement with GRE, 574 increase of 3% 1,775,375.41 1,828,636.67 annually 473,107.63 487,300.86 248,174.69 255,619.93 3% Increase Annually 721,282.32 742,920.79 19,189.93 19,765.62 118,791.83 122,355.58 3% Increase Annually 3,714.18 3,825.60 46,427.24 47,820.06 188,123.17 193, 766.87 6,753.05 6,955.64 339,340.91 349,521.13 3% Increase Annually 346,093.96 356,476.78 563,035.78 579,926.86 207,234.31 213,451.34 3% Increase Annually 63,563.11 65,470.00 118, 234.70 121, 781.74 1,491,158.48 1,535,893.24 35,903.73 36,980.84 116,687.13 120,187.74 41,846.42 43,101.81 2,637,663.66 2,716,793.57 2,750,000.00 2,750,000.00 1,235,000.00 1,235,000.00 Flat 3,985,000.00 3,985,000.00 27,156,005.00 27,260,592.69 27,859,433.38 28,343,505.28 28,622,346.28 28,902,640.51 29,584,575.56 (1,357,958.00) (990,613.03) (1,223,732.99) (1,075,392.89) (771,812.77) (508,651.66) (692,071:83) 58,031.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 37,970.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 10, 000.00 15, 000.00 15,000.00 15,000.00 15,000.00 15,000.00 15, 000.00 (23,874.00) (25,000.00) (25,000.00) (25,000.00) (25,000.00) (25,000.00) (25,000.00) (85,537.00) (40,488.00) (35,612.50) (30,613.00) (25,488.00) (20,238.00) (14,925.00) (3,410.00) 4,512.00 9,387.50 14,387.00 19,512.00 24,762.00 30,075.00 (1;361,368:00) (986,101.03) (1,214,345.49) (1,061,Q05:89) (752,300.77) (483,889.66) (661,996.83) Current Rates NATURAL GAS INCOME & EXPENSE SUMMARY OPERATING REVENUES 2013 2014 2015 2016 2017 2018 2019 Sales - Natural Gas - Retail 8,356,512.00 8,490,262.14 8,000,000.00 8,080,000.00 8,160,800.00 8,242,408.00 8,324,832.08 1% Growth after $8 million in 2015 Contract Sale to Large Customer(Includes 3M & HTI transport) 3,646,509.00 4,533,750.87 4,200,000.00 4,242,000.00 4,284,420.00 4,327,264.20 4,370,536.84 1% Growth after $4.2 million in 2015 Pipeline Transportation 785,149.00 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00 Transportation - Electric Division 1,100,000.00 700,000.00 1,100,000.00 1,100,000.00 1,100,000.00 1,100,000.00 1,100,000.00 TOTAL OPERATING REVENUES 13,888,170.00 14,524,013.01 14,100,000.00 14,222,000.00 14,345,220.00 14,469,672.20 14,595,368.92 OPERATING EXPENSES Purchased Gas for Retail (807) Contract Gas for Large Customer Total Gas Purchased Transmission (856, 863) Gas Transmission Operations (856) Gas Transmission Maintenance (863) Total Transmission (865, 863) Distribution Expense: Distribution Operation (870, 874, 878, 880): Supervision and Engineering (870) Mains and Services (874) Meters (878) Misc. (880) Total Distribution Operation (870, 874, 878, 880) Distribution Maintenance (892, 893, 895) 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(902, 903, 904, 906) 4,482,870.00 4,106,505.55 4,147,570.61 2,950,652.00 3,695,980.50 3,360,000.00 7,433,522.00 7,802,486.05 7,507,570.61 114, 3 77.00 109, 500.00 112, 785.00 4,002.00 11, 500.00 11, 845.00 118, 379.00 121, 000.00 124, 630.00 289, 629.00 155,000-00 159, 65 0.00 67,595.00 129, 500.00 133, 385.00 240.00 3,500.00 3,605.00 48,415.00 161,100.00 165,933.00 405,879.00 449,100.00 462,573.00 126,902.00 133,000.00 136,990.00 9,932.00 20,000.00 20,600.00 47,403.00 56,000.00 57,680.00 184,237.00 209,000.00 215,270.00 4,189,046.31 3,393,600.00 7,582,646.31 116,168.55 12,200.35 128,368.90 164,439.50 137,386.55 3,713.15 170,910.99 476,450.19 141,099.70 21,218.00 59,410.40 221,728.10 4,230,936.77 3,427,536.00 7,658,472.77 119,653.61 12,566.36 132,219.97 169,372.69 141,508.15 3,824.54 176,038.32 490,743.70 145,332.69 21,854.54 61,192.71 228,379.94 4,273,246.14 4,315,978.60 Many long term N. Gas contracts purchased in 2013/14,1 3,461,811.36 3,496,429.47 N. Gas Prices $4.50 /MCF, 1% Increase w/ Sales 7,735,057.50 7,812,408.08 123,243.21 126,940.51 12,943.35 13,331.65 3% Increase Annually 136,186.57 140, 2 72.16 174,453.87 179,687.48 145,753.39 150,125.99 3% Increase Annually 3,939.28 4,057.46 181, 319.47 186, 759.05 505,466.01 520,629.99 149,692.67 154,183.45 22,510.18 23,185.48 3% Increase Annually 63,028.49 64,919.35 235,231.34 242,288.28 Meter Reading (902) 15,365.00 13,950.00 14,368.50 14,799.56 15,243.54 15,700.85 16,171.87 Collection Expense (903) 104,390.00 86,355.00 88,945.65 91,614.02 94,362.44 97,193.31 100,109.11 3% Increase Annually Bad Debt Write offs (904) 4,148.00 2,700.00 2,781.00 2,864.43 2,950.36 3,038.87 3,130.04 Customer Services (906) 32,940.00 33,750.00 34,762.50 35,805.38 36,879.54 37,985.92 39,125.50 Total Customer Service and Collection (902, 903, 904, 906) 156,843.00 136,755.00 140,857.65 145,083.38 149,435.88 153,918.96 158,536.53 Sales Expense (911, 916) Supervison (911) Misc. Selling Expense (916) Total Sales Expense (911, 916) Admin and General (920, 921, 923, 924, 926, 928, 930, 935) Administrative and General Labor (920) Office Supplies and Expenses (921) Outside Services (923) Property Insurance (924) Employee Pension 8 Benefits (926) Regulatory Expense (928) Misc. General Expense (930) Maint. Of General Plant (935) Total Admin and General (920, 921, 923, 924, 926, 928, 930, 935) Depreciation Expense (403) Payment in Lieu of Taxes (408) TOTAL OPERATING EXPENSE OPERATING INCOME OTHER INCOME AND DEDUCTIONS Other Misc. Income Other - Net Interest Income Misc. Income Misc. Expense Interest Expense TOTAL OTHER INCOME AND DEDUCTIONS NET INCOME 17,322.00 2,000.00 2,060.00 2,121.80 2,185.45 2,251.02 2,318.55 48,592.00 100,500.00 103,515.00 106,620.45 109,819.06 113,113.64 116,507.04 3% Increase Annually 65,914.00 102,500.00 105, 575.00 108,742.25 112,004.52 115, 364.65 118,825.59 173,463.00 166,750.00 171,752.50 176, 905.08 182,212.23 187,678.59 193,308.95 93,858.00 61,375.00 63,216.25 65,112.74 67,066.12 69,078.10 71,150.45 3% Increase Annually 49,282.00 18,825.00 19,389.75 19,971.44 20,570.59 21,187.70 21,823.33 83,872.00 85,950.00 88,528.50 91,184.36 93,919.89 96,737.48 99,639.61 413,595.00 441,625.00 454,873.75 468,519.96 482,575.56 497,052.83 511,964.41 19,620.00 26,100.00 26,883.00 27,689.49 28,520.17 29,375.78 30,257.05 77,719.00 84,825.00 87,369.75 89,990.84 92,690.57 95,471.28 98,335.42 58,175.00 30,420.00 31,332.60 32,272.58 33,240.76 34,237.98 35,265.12 969,584.00 915,870.00 943,346.10 971,646.48 1,000,795.88 1,030,819.75 1,061,744.35 1,027,662.00 1,056,000,00 1,056,000.00 1,056,000.00 1,056,000.00 1,056,000.00 1,056,000.00 491,077.00 665,000.00 665,000.00 665,000.00 665,000.00 665,000.00 665,000.00 Flat 1, 518, 739.00 1, 721, 000.00 1, 721, 000.00 1, 721, 000.00 1, 721, 000.00 1, 721, 000.00 1, 721, 000.00 10,853,097.00 11,457, 711.05 11,220,822.36 11,355,665.61 11,493,052.66 11,633,044.78 11,775,704.97 3,035,073.00 3,066,301.96 2,879,177.64 2,866,334,39 2,852,167.34 2,836,627.42;.' 2;819,663.95 243,008.00 40,000.00 37,970.00 25,000.00 1,008.00 1,000.00 (2,346.00) (6,000.00) (1,271,801.00) (867,500.00) (992,161.00) (807,500.00) 2,042,912.00 2,258,801.96 40,000.00 35,000.00 1,000.00 (6,000.00) (825,500.00) (755,500.00) 2,123,677:64' 40,000.00 35,000.00 1,000.00 (6,000.00) (781,500.00) (711,500.00) 2,154,834.39 40,000.00 40,000.00 35,000.00 35,000.00 1,000.00 1,000.00 (6,000.00) (6,000.00) (735,100.00) (674,100.00) (665,100.00) (604,100.00) 2,187,06734 ' 2,232,527:42' 40,000.00 35,000.00 1,000.00 (6,000.00) (609,350.00) Bond Refinancing (539,350.00) 2,280,313.95 COMBINED INCOME & EXPENSE SUMMARY Operating Revenues Sales Electric Energy Sales for Resale Security Lights Pole Rental Sales Gas New Ulm Transportation Transportation-Electric Net Income From Other Sources Total Operating Revenues Operating Expense Production Operations Production Maintenance Electric Purchased Power Other Power Supply Electric Transmission Operation Electric Transmission Maintenance Electric Distribution Operation Electric Distribution Maintenance Gas Purchased Power Gas Transmission Operation Gas Transmission Maintenance Gas Distribution Operation Gas Distribution Maintenance Customer Accounting Sales Expense General & Administrative Depreciation Amortization- Development Study Payment in Lieu of Taxes Roadway Lighting Total Operating Expense 2013 2014 24,598,181.00 24,982,079.66 891, 276.00 1,057,400.00 11,033.00 10,000.00 32.00 500.00 12, 003, 0 21.00 13,024,013.01 785,149.00 800,000.00 1,100,000.00 700,000.00 297,525.00 220,000.00 39,686,217.00 40,793,992.67 Current Rates 2015 25,231,200.39 1,174,000.00 10,000.00 500.00 12,200,000.00 800,000.00 1,100,000.00 220,000.00 40,735,700.39 2016 25,482,112.39 1,555,500.00 10,000.00 500.00 12,322,000.00 800,000.00 1,100,000.00 220,000.00 41,490,112.39 2017 25,735,533.51 1,884,500.00 10,000.00 500.00 12,445,220.00 800,000.00 1,100,000.00 220,000.00 42,195,753.51 2018 25,991,488.85 2,172,000.00 10,000.00 500.00 12,569,672.20 800,000.00 1,100,000.00 220,000.00 42,863,661.05 2019 26,250,003.74 2,412,000.00 10,000.00 500.00 12,695,368.92 800,000.00 1,100,000.00 220,000.00 43,487,872.66 3,445,140.00 3,363,314.69 3,798,762.63 3,885,325.51 3,972,985.27 4,031,774.83 4,071,728.08 499,300.00 337,800.00 315,798.00 325,272.00 325,272.00 325,272.00 325,272.00 13, 342, 967.00 14,000,000.00 14, 020,000.00 14,480, 200.00 14, 500,600.00 14,521, 200.00 14,982,000.00 426,864.00 329,500.00 339,385.00 349,566.55 360,053.55 370,855.15 381,980.81 1, 419, 617.00 1, 286, 000.00 1, 600, 000.00 1, 648, 000.00 1,697,440.00 1, 748, 363.20 1, 800, 814.10 73,734.00 24,000.00 24,720.00 25,461.60 26,225.45 27,012.21 27,822.58 560,924.00 420,350.00 432,960.50 445,949.32 459,327.79 473,107.63 487,300.86 321,821.00 220,500.00 227,115.00 233,928.45 240,946.30 248,174.69 255,619.93 7,433,522.00 7,802,486.05 7,507,570.61 7,582,646.31 7,658,472.77 7,735,057.50 7,812,408.08 114, 377.00 109,500-00 112, 785.00 116,168.55 119,653-61 123,243.21 126, 940.51 4,002.00 11, 500.00 11, 845.00 12, 200.35 12,566.36 12, 943.35 13,331.65 405,879.00 449,100.00 462,573.00 476,450.19 490,743.70 505,466.01 520,629.99 184,237.00 209,000.00 215,270.00 221,728.10 228,379.94 235,231.34 242,288.28 348,556.00 303,900.00 313,017.00 322,407.51 332,079.74 342,042.13 352,303.39 263,654.00 410,000.00 422,300.00 434,969.00 448,018.07 461,458.61 475,302.37 3,452,762.00 3,259,400.00 3,357,182.00 3,457,897.46 3,561,634.38 3,668,483.42 3,778,537.92 3,640,050.00 3,756,000.00 3,756,000.00 3,781,000.00 3,781,000.00 3,806,000.00 3,806,000.00 525,953.00 525,953.00 262,972.00 1,403,077.00 1,900,000.00 1,900, 000.00 1,900,000.00 1,900,000.00 1,900,000.00 1,900,000.00 142,666.00 38,009,102.00 38,718,303.74 39,080,255.74 39,699,170.90 40,115,398.94 40,535,685.29 41,360,280.54 1,677,115.00 2,075,688.93 1,655,444.65 1,790,941.49 2,080,354.58 2,327,975.76 2,127,592.12 301,039.00 Total Operating Income Other Income 60,000.00 Other Net Income Interest Income 60,000.00 Misc Income 75,940.00 Gain on Disposal 70,000.00 70,000.00 Total Other Income Other Expenses 70,000.00 Misc Expense 11, 008.00 Interest Expense 16, 000.00 16, 000.00 Total Other Expenses 16,000.00 Total Non - Operating Income 16,000.00 Net Income 2013 2014 24,598,181.00 24,982,079.66 891, 276.00 1,057,400.00 11,033.00 10,000.00 32.00 500.00 12, 003, 0 21.00 13,024,013.01 785,149.00 800,000.00 1,100,000.00 700,000.00 297,525.00 220,000.00 39,686,217.00 40,793,992.67 Current Rates 2015 25,231,200.39 1,174,000.00 10,000.00 500.00 12,200,000.00 800,000.00 1,100,000.00 220,000.00 40,735,700.39 2016 25,482,112.39 1,555,500.00 10,000.00 500.00 12,322,000.00 800,000.00 1,100,000.00 220,000.00 41,490,112.39 2017 25,735,533.51 1,884,500.00 10,000.00 500.00 12,445,220.00 800,000.00 1,100,000.00 220,000.00 42,195,753.51 2018 25,991,488.85 2,172,000.00 10,000.00 500.00 12,569,672.20 800,000.00 1,100,000.00 220,000.00 42,863,661.05 2019 26,250,003.74 2,412,000.00 10,000.00 500.00 12,695,368.92 800,000.00 1,100,000.00 220,000.00 43,487,872.66 3,445,140.00 3,363,314.69 3,798,762.63 3,885,325.51 3,972,985.27 4,031,774.83 4,071,728.08 499,300.00 337,800.00 315,798.00 325,272.00 325,272.00 325,272.00 325,272.00 13, 342, 967.00 14,000,000.00 14, 020,000.00 14,480, 200.00 14, 500,600.00 14,521, 200.00 14,982,000.00 426,864.00 329,500.00 339,385.00 349,566.55 360,053.55 370,855.15 381,980.81 1, 419, 617.00 1, 286, 000.00 1, 600, 000.00 1, 648, 000.00 1,697,440.00 1, 748, 363.20 1, 800, 814.10 73,734.00 24,000.00 24,720.00 25,461.60 26,225.45 27,012.21 27,822.58 560,924.00 420,350.00 432,960.50 445,949.32 459,327.79 473,107.63 487,300.86 321,821.00 220,500.00 227,115.00 233,928.45 240,946.30 248,174.69 255,619.93 7,433,522.00 7,802,486.05 7,507,570.61 7,582,646.31 7,658,472.77 7,735,057.50 7,812,408.08 114, 377.00 109,500-00 112, 785.00 116,168.55 119,653-61 123,243.21 126, 940.51 4,002.00 11, 500.00 11, 845.00 12, 200.35 12,566.36 12, 943.35 13,331.65 405,879.00 449,100.00 462,573.00 476,450.19 490,743.70 505,466.01 520,629.99 184,237.00 209,000.00 215,270.00 221,728.10 228,379.94 235,231.34 242,288.28 348,556.00 303,900.00 313,017.00 322,407.51 332,079.74 342,042.13 352,303.39 263,654.00 410,000.00 422,300.00 434,969.00 448,018.07 461,458.61 475,302.37 3,452,762.00 3,259,400.00 3,357,182.00 3,457,897.46 3,561,634.38 3,668,483.42 3,778,537.92 3,640,050.00 3,756,000.00 3,756,000.00 3,781,000.00 3,781,000.00 3,806,000.00 3,806,000.00 525,953.00 525,953.00 262,972.00 1,403,077.00 1,900,000.00 1,900, 000.00 1,900,000.00 1,900,000.00 1,900,000.00 1,900,000.00 142,666.00 38,009,102.00 38,718,303.74 39,080,255.74 39,699,170.90 40,115,398.94 40,535,685.29 41,360,280.54 1,677,115.00 2,075,688.93 1,655,444.65 1,790,941.49 2,080,354.58 2,327,975.76 2,127,592.12 301,039.00 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00 75,940.00 60,000.00 70,000.00 70,000.00 70,000.00 70,000.00 70,000.00 11, 008.00 16,000.00 16, 000.00 16, 000.00 16,000.00 16,000.00 16,000.00 387, 987.00 136,000.00 146,000.00 146,000.00 146, 000.00 146,000.00 146,000.00 (26,220.00) (31,000.00) (31,000.00) (31,000.00) (31,000.00) (31,000.00) (31,000.00) (1,357,338.00) (907,988.00) (861,112.50) (812,113.00) (760,588.00) (694,338.00) (624,275.00) (1,383,558.00) (938,988.00) (892,112.50) (843,113.00) ' (791,588.00) (725,338.00) (655,275.00) (995,571.00) (802,988.00) (746,112.50) (697,113.00) (645,588.00) (579,338.00) (509,275.00) 681,544.00 1,272,700.93 909,33115 1,093,828.49 1,434,766.58 1,748,637.76 1,618,317.12 Current Rates Combined Income Statement 2013 2014 2015 2016 2017 2018 2019 Operating Revenue 39,686,217.00 40,793,992.67 40,735,700.39 41,490,112.39 42,195,753.51 42,863,661.05 43,487,872.66 Operating Expense 38,009,102.00 38,718,303.74 39,080,255.74 39,699,170.90 40,115,398.94 40,535,685.29 41,360,280.54 Operating Income 1,677,115.00 2,075,688.93 1,655,444.65 1,790,941.49 2,080,354.58 2,327,975.76 2,127,592.12 Other Income and Deductions (995,571.00) (802,988.00) (746,112.50) (697,113.00) (645,588.00) (579,338.00) (509,275.00) Net Income "681;544`:00° . - 1;2.72;700 "'93, 909 332:15•. 1093,82'8 49 �11,48066 58 ' 1 7,4$ 6`3,V,76 `r 1�6Ti8;3,17 2 =: ¢. Cash Flows Beginning of Year Cash (Includes All Accounts) Plus: Net Income Plus: Depreciation and Amortization Less: Capital Improvements Less: Bond and MRES Principal End of Year Cash (Includes All Accounts) Beginning of Year Cash By Account Capital Expenditures Current Year Electric Production PILOT Debt Service Reserve Fund Catastrophic Failure Fund Rate Stabilization Funds Development Study Bond and Interest Payment Cash in Bank Current Rates 2013 2014 2015 2016 2017 2018 2019 9,752,726.23 8,779,199.91 10,989,303.84 6,158,607.99 6,438,436.48 8,871,703.06 11,514,340.82 681,544.00 1,272,700.93 909,332.15 1,093,828.49 1,434,766.58 1,748,637.76 1,618,317.12 4,166,003.00 4,281,953.00 4,018,972.00 3,781,000.00 3,781,000.00 3,806,000.00 3,806,000.00 (2,641,073.32) (2,169,550.00) (8,534,000.00) (3,310,000.00) (1,437,500.00) (1,492,000.00) (2,279,000.00) (3,180,000.00) (1,175,000.00) (1,225,000.00) (1,285,000.00) (1,345,000.00) (1,420,000.00) (1,495,000.00) 8,779;199 91� 1'0,989;303:84 6158;fi07i99 ;,6,43843648 .8;871, +703(06 1�1;51x4;'34082T316465 +794:a 1/1/2013 1 1 2014 1/1/2015 1 1 2016 1/1/2017 1 1 2018 1/1/2019 1,576,183.00 1,597,050.00 1,810,000.00 980,000.00 817,500.00 927,000.00 989,000.00 2,781,702.40 572,500.00 6,724,000.00 2,330,000.00 620,000.00 565,000.00 1,290,000.00 1, 403, 07 6.07 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 629,096.93 1,194, 540.93 1,200,000.00 1,200,000.00 1,200,000.00 1,200,000.00 1, 200, 000.00 286,123.36 - - - - - - 666,585.41 400,579.01 400,500.00 400,500.00 400,500.00 4900,500.00 400,500.00 (277';89119) 425 ;8 3 3 059004 " "x3;04614680 " y . ., 9,753,570.00 8,779,199.91 10,989,303.84 6,158,607.99 6,438,436.48 8,871,703.06 11,514,340.82 ELECTRIC INCOME & EXPENSE SUMMARY OPERATING REVENUES Sales - Electric Energy (440, 442, 444) Sales For Resale (447) Capacity Sales (447) Street Lighting (444) Total Energy Sales 2013 2014 2015 Entire Rate Change in 2015 2016 2017 2018 2019 24,455,179.00 24,842,772.66 24,138,130.39 24,389,042.39 24,642,463.51 24,898,418.85 25,156,933.74 1% Growth Rate in retail sales 779,276.00 977,400.00 880,000.00 880,000.00 880,000.00 880,000.00 880,000.00 Split Actual 2013 and Budgeted 2014 for 2015 -2019 112,000.00 80,000.00 294,000.00 675,500.00 1,004,500.00 1,292,000.00 1,532,000.00 SMMPA Contract 143, 002.00 139,307.00 140,000.00 140, 000.00 140, 000.00 140,000.00 140,000.00 25,489,457.00 26,039,479.66 25,452,130.39 26,084,542.39 26,666,963.51 27,210,418.85 27,708,933.74 OTHER OPERATING REVENUES 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 37,970.00 Net Income From Other Sources (450,451) 297,525.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 15,000.00 Security Lights (454.01) 11,033.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 (25,000.00) Pole Rental (454.02, 454.03) 32.00 500.00 500.00 500.00 500.00 500.00 500.00 (30,613.00) Total Other Operating Revenues 308,590.00 230,500.00 230,500.00 230,500.00 230,500.00 230,500.00 230,500.00 19,512.00 TOTAL OPERATING REVENUE 25,798,047.00 26,269,979.66 25,682,630.39 26,315,042.39 26,897,463.51 27,440,918.85 27,939,433.74 OPERATING EXPENSES Production Operation (546, 547, 550) Operation Supervison & Engineering (546) 1,126,083.00 1,072,164.69 1,104,329.63 1,137,459.52 1,171,583.31 1,206,730.80 1,242,932.73 3% increase annually for 546 and 550 Fuel (547) 2,156,277.00 2,180,050.00 2,580,000.00 2,630,000.00 2,680,000.00 2,700,000.00 2,700,000.00 N. Gas Prices $4.50 /MCF Operating Supplies and Expense (550) 162,780.00 111,100.00 114,433.00 117,865.99 121,401.97 125,044.03 128,795.35 Total Production Operation (546, 547, 550) 3,445,140.00 3,363,314.69 3,798,762.63 3,885,325.51 3,972,985.27 4,031,774.83 4,071,728.08 Production Maintenance (554) 499,300.00 337,800.00 315,798.00 325,272.00 325,272.00 325,272.00 325,272.00 3% Increase Annually Purchased Gas Generation Other Power Supply Expense (555, 556, 557) Purchased Power (555) System Control & Load Dispatch (556) Engineering Services (557) Total Other Power Supply Expense (555, 556, 557) Transmission Expense (560, 567, 574) Transmission Expense Operation (560, 567) Transmission Expense Maintenance (574) Total Transmission Expense (560, 567, 574) Distribution Expense: Distribution Operation (580, 581, 586, 588, 589) Distribution Maintenance (592, 594, 595, 596, 598) Total Distribution Expense: Customer Service and Collection(902, 903, 904, 906) 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 (911, 916) Supervison (911) Misc. Selling Expense (916) Total Sales Expense (911, 916) Admin and General (920, 921, 923, 924, 926, 928, 930, 935) 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 Admin and General (920, 921, 923, 924, 926, 928, 930, 935) Depreciation Expense (403) Amortization - Development Study Payment In Lieu of Taxes (408) Contribution To City-for Roadway Lighting (408) Other - Net Interest Income Misc. Income Misc. Expense Interest Expense TOTAL OPERATING EXPENSE OPERATING INCOME OTHER INCOME AND DEDUCTIONS TOTAL OTHER INCOME & EXP. 13, 342,967.00 14,000,000.00 14,020,000.00 340,482.00 304,500.00 313,635.00 86,382.00 25,000.00 25,750.00 13, 769, 831.00 14, 329, 500.00 14, 359, 385.00 1, 419, 617.00 1,286,000.00 1, 600, 000.00 73,734.00 24,000.00 24,720.00 1,493,351.00 1,310,000.00 1,624,720.00 560,924.00 420,350.00 432,960.50 321,821.00 220,500.00 227,115.00 882,745.00 640,850.00 660,075.50 18, 794.00 17, 050.00 17,561.50 127,589.00 105,545.00 108, 711.35 5,070.00 3,300.00 3,399.00 40,260.00 41,250.00 42,487.50 191,713.00 167,145.00 172,159.35 6,240.00 6,000.00 6,180.00 191,500.00 301,500.00 310,545.00 197,740.00 307,500.00 316,725.00 520,388.00 500,250.00 515,257.50 281,574.00 184,125.00 189,648.75 147,846.00 56,475.00 58,169.25 102,512.00 105, 050.00 108, 201.50 1, 240, 786.00 1,324,875.00 1, 364, 621.25 23,980.00 31,900.00 32,857.00 95, 031.00 103, 675.00 106, 785.25 71,061.00 37,180.00 38,295.40 2,483,178.00 2,343,530.00 2,413,835.90 2,612,388.00 2,700,000.00 2,700,000.00 525,953.00 525,953.00 262,972.00 912,000.00 1,235,000.00 1,235,000-00 142,666.00 4,193,007.00 4,460,953.00 4,197,972.00 27,156,005.00 27,260,592.69 27,859,433.38 14,480,200.00 323,044.05 26,522.50 14,829,766.55 1,648,000.00 25,461.60 1,673,461.60 445,949.32 233,928.45 679,877.77 18,088.35 111,972.69 3,500.97 43,762.13 177,324.13 6,365.40 319,861.35 326,226.75 530,715.23 195,338.21 59,914.33 111,447.55 1,405,559.89 33,842.71 109,988.81 39,444.26 2,486,250.98 2,725,000.00 1,235,000.00 3,960,000.00 28,343,505.28 14,500,600.00 332,735.37 27,318.18 14,860,653.55 1,697,440.00 26,225.45 1,723,665.45 459,327.79 240,946.30 700,274.10 18,631.00 115,331.87 3,606.00 45,074.99 182,643.85 6,556.36 329,457.19 336,013.55 546,636.68 201,198.36 61,711.76 114,790.97 1,447,726.68 34,857.99 113,288.47 40,627.59 2,560,838.51 2,725,000.00 1,235,000.00 3,960,000.00 28,622,346.28 14,521,200.00 14,982,000.00 Assume $660,000 MRES increase in 2014 and $440,000 342,717.43 352,998.96 in 2016/2019, MI50 purchases increase 1% annually, 28,137.72 28,981.85 556, and 557 increase 3% annually 14,892,055.15 15,363,980.81 1,748,363.20 1,800,814.10 Transmission increase of $100,000 in 2014 and 2015 -- 27,012.21 27,822.58 negotiated settlement with GRE, 574 increase of 3% 1,775,375.41 1,828,636.67 annually 473,107.63 487,300.86 248,174.69 255,619.93 3% Increase Annually 721,282.32 742,920.79 19,189.93 19,765.62 118,791.83 122,355.58 3% Increase Annually 3,714.18 3,825.60 46,427.24 47,820.06 188,123.17 193, 766.87 6,753.05 6,955.64 339,340.91 349,521.13 3% Increase Annually 346,093.96 356,476.78 563,035.78 579,926.86 207,234.31 213,451.34 3% Increase Annually 63,563.11 65,470.00 118, 2 34.70 121, 7 81.74 1,491,158.48 1,535,893.24 35,903.73 36,980.84 116,687.13 120,187.74 41,846.42 43,101.81 2,637,663.66 2,716,793.57 2,750,000.00 2,750,000.00 1,235,000.00 1,235,000.00 Flat 3,985,000.00 3,985,000.00 28,902, 640.51 29,584,575.56 (1,357,958.00) (990,613.03) (2,176,802.99) (2,028,462.89) (1,724,882.77) (1,461,721.66) (1,645,141.82) 58,031.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 37,970.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 10, 000.00 15,000.00 15, 000.00 15,000.00 15,000.00 15,000.00 15,000.00 (23,874.00) (25,000.00) (25,000.00) (25,000.00) (25,000.00) (25,000.00) (25,000.00) (85,537.00) (40,488.00) (35,612.50) (30,613.00) (25,488.00) (20,238.00) (14,925.00) (3,410.00) 4,512.00 9,387.50 14,387.00 19,512.00 24,762.00 30,075.00 NET INCOME (1;361;368.00) (986;101.03) (2,167,415.49) (2,014,075.89), (1,705,370.77) (1,436,959.66) (1,615,066.82) Entire Rate Change in 2015 NATURAL GAS INCOME & EXPENSE SUMMARY OPERATING REVENUES 2013 2014 2015 2016 2017 2018 2019 Sales - Natural Gas - Retail 8,356,512.00 8,490,262.14 8,000,000.00 8,080,000.00 8,160,800.00 8,242,408.00 8,324,832.08 1% Growth after $8 million in 2015 Contract Sale to Large Customer(Includes 3M & HTI transport) 3,646,509.00 4,533,750.87 4,200,000.00 4,242,000.00 4,284,420.00 4,327,264.20 4,370,536.84 1% Growth after $4.2 million in 2015 Pipeline Transportation 785,149.00 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00 Transportation - Electric Division 1,100,000.00 700,000.00 1,100,000.00 1,100,000.00 1,100,000.00 1,100,000.00 1,100,000.00 TOTAL OPERATING REVENUES 13,888,170.00 14,524,013.01 14,100,000.00 14,222,000.00 14,345,220.00 14,469,672.20 14,595,368.92 OPERATING EXPENSES Purchased Gas for Retail (807) Contract Gas for Large Customer Total Gas Purchased Transmission (856, 863) Gas Transmission Operations (856) Gas Transmission Maintenance (863) Total Transmission (865, 863) Distribution Expense: Distribution Operation (870, 874, 878, 880): Supervision and Engineering (870) Mains and Services (874) Meters (878) Misc. (880) Total Distribution Operation (870, 874, 878, 880) Distribution Maintenance (892, 893, 895) 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(902, 903, 904, 906) 4,482,870.00 4,106,505.55 4,147,570.61 2,950,652.00 3,695,980.50 3,360,000.00 7,433,522.00 7,802,486.05 7,507,570.61 114, 377.00 109,500.00 112,785.00 4,002.00 11,500-00 11,845.00 118, 379.00 121,000.00 124,630.00 289, 629.00 155,000.00 159, 650.00 67, 595.00 129,500.00 133, 385.00 240.00 3,500.00 3,605.00 48,415.00 161,100.00 165,933.00 405,879.00 449,100.00 462,573.00 126,902.00 133, 000.00 136,990.00 9,932.00 20,000.00 20,600.00 47,403.00 56,000.00 57,680.00 184,237.00 209,000.00 215,270.00 4,189,046.31 3,393,600.00 7,582,646.31 116,168.55 12,200.35 128,368.90 164,439.50 137,386.55 3,713.15 170,910.99 476,450.19 141,099.70 21,218.00 59,410.40 221,728.10 4,230,936.77 3,427,536.00 7,658,472.77 119,653.61 12,566.36 132,219.97 169,372.69 141,508.15 3,824.54 176,038.32 490,743.70 145,332.69 21,854.54 61,192.71 228, 379.94 4,273,246.14 4,315,978.60 Many long term N. Gas contracts purchased in 2013/14,1 3,461,811.36 3,496,429.47 N. Gas Prices $4.50 /MCF, 1% Increase w/ Sales 7,735,057.50 7,812,408.08 123,243.21 126,940.51 12,943.35 13,331.65 3% Increase Annually 136,186.57 140, 2 72.16 174,453.87 179, 687.48 145,753.39 150,125.99 3% Increase Annually 3,939.28 4,057.46 181, 319.47 186, 759.05 505,466.01 520,629.99 149, 69 2.67 154,183.45 22,510.18 23,185.48 3% Increase Annually 63,028.49 64,919.35 235,231.34 242,288.28 Meter Reading (902) 15,365.00 13,950.00 14,368.50 14,799.56 15,243.54 15,700.85 16,171.87 Collection Expense (903) 104,390.00 86,355.00 88,945.65 91,614.02 94,362.44 97,193.31 100,109.11 3% Increase Annually Bad Debt Write offs (904) 4,148.00 2,700.00 2,781.00 2,864.43 2,950.36 3,038.87 3,130.04 Customer Services (906) 32,940.00 33,750.00 34,762.50 35,805.38 36,879.54 37,985.92 39,125.50 Total Customer Service and Collection (902, 903, 904, 906) 156,843.00 136,755.00 140,857.65 145,083.38 149,435.88 153,918.96 158,536.53 Sales Expense (911, 916) Supenrison(911) Misc. Selling Expense (916) Total Sales Expense (911, 916) Admin and General (920, 921, 923, 924, 926, 928, 930, 935) 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 Admin and General (920, 921, 923, 924, 926, 928, 930, 935) Depreciation Expense (403) Payment In Lieu of Taxes (408) TOTAL OPERATING EXPENSE OPERATING INCOME OTHER INCOME AND DEDUCTIONS Other Misc. Income Other - Net Interest Income Misc. Income Misc. Expense Interest Expense TOTAL OTHER INCOME AND DEDUCTIONS NET INCOME 17,322.00 2,000.00 2,060.00 2,121.80 2,185.45 2,251.02 2,318.55 48,592.00 100,500.00 103,515.00 106,620.45 109,819.06 113,113.64 116,507.04 3% Increase Annually 65,914.00 102, 500.00 105,575.00 108, 742.25 112,004.52 115,364.65 118, 825.59 173,463.00 166, 750.00 93,858.00 61,375.00 49,282.00 18,825.00 83,872.00 85,950.00 413,595.00 441,625.00 19,620.00 26,100.00 77,719.00 84,825.00 58,175.00 30,420.00 969,584.00 915,870.00 1, 027, 662.00 1,056,000.00 491,077.00 665,000.00 1, 518, 739.00 1, 721, 000.00 171,752.50 63,216.25 19,389.75 88,528.50 454,873.75 26,883.00 87,369.75 31,332.60 943,346.10 1,056,000.00 665,000.00 1,721,000.00 176,905.08 65,112.74 19,971.44 91,184.36 468,519.96 27,689.49 89,990.84 32,272.58 971,646.48 1,056,000.00 665,000.00 1,721,000.00 182, 212.2 3 187, 678.5 9 67,066.12 69,078.10 20,570.59 21,187.70 93,919.89 96,737.48 482,575.56 497,052.83 28,520.17 29,375.78 92,690.57 95,471.28 33,240.76 34,237.98 1, 000, 795.88 1,030,819.75 1,056,000.00 1,056,000.00 665,000.00 665,000.00 1, 721, 000.00 1, 721, 000.00 193,308.95 71,150.45 3% Increase Annually 21,823.33 99,639.61 511,964.41 30,257.05 98,335.42 35,265.12 1,061,744.35 1,056,000.00 665,000.00 Flat 1,721,000.00 10,853,097.00 11,457,711.05 11, 220, 822.36 11, 355, 665.61 11,493,052.66 11, 633,044.78 11,775, 704.97 3;035,073.00 31066,301.96 2,879,177.64 2,866,334.39 2,852,16734 21836,627,42 2;819,663.95 243,008.00 40,000.00 40,000.00 40,000.00 40,000.00 40,000.00 40,000.00 37,970.00 25,000.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 1,008.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 (2,346.00) (6,000.00) (6,000.00) (6,000.00) (6,000.00) (6,000.00) (6,000.00) (1,271,801.00) (867,500.00) (825,500.00) (781,500.00) (735,100.00) (674,100.00) (609,350.00) Bond Refinancing (992,161.00) (807,500.00) (755,500.00) (711,500.00) (665,100.00) (604,100.00) (539,350.00) 2,042,912.00 2,258,801.96 2,123,677.64 2,154,834.39 2,187,067.34, 2,232,527.42 2,280,313.95 Entire Rate Change in 2015 COMBINED INCOME & EXPENSE SUMMARY Operating Revenues 2013 2014 2015 2016 2017 2018 Sales Electric Energy 24,598,181.00 24,982,079.66 24,278,130.39 24,529,042.39 24,782,463.51 25,038,418.85 96,9 25,296,933,74 Sales for Resale 891,276.00 1,057,400.00 1,174,000.00 1,555,500.00 1,884,500.00 2,172,000.00 2,412,000.00 Security Lights 11,033.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 Pole Rental 32.00 500.00 500,00 500.00 500.00 500.00 500.00 Sales Gas 12,003,021.00 13,024,013.01 12,200,000.00 12,322,000.00 12,445,220.00 12,569,672.20 12,695,368.92 New Ulm Transportation 785,149.00 800,000.00 800,000,00 800,000.00 800,000.00 800,000.00 800,000.00 Transportation - Electric 1,100,000.00 700,000.00 1,100,000.00 1,100,000.00 1,100,000.00 1,100,000.00 1,100,000.00 Net Income From Other Sources 297,525.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 Total Operating Revenues 39,686,217.00 40,793,992.67 39,782,630.39 40,537,042.39 41,242,683.51 41,910,591.05 42,534,802.66 Operating Expense Production Operations 3,445,140.00 3,363,314.69 3,798,762.63 3,885,325.51 3,972,985.27 4,031,774.83 4,071,728.08 Production Maintenance 499,300.00 337,800.00 315,798,00 325,272.00 325,272.00 325,272.00 325,272.00 Electric Purchased Power 13,342,967.00 14,000,000.00 14,020,000.00 14,480,200.00 14,500,600.00 14,521,200.00 14,982,000.00 Other Power Supply 426,864.00 329,500.00 339,385.00 349,566.55 360,053.55 370,855.15 381,980,81 Electric Transmission Operation 1,419,617.00 1,286,000.00 1,600,000.00 1,648,000.00 1,697,440.00 1,748,363.20 1,800,814.10 Electric Transmission Maintenance 73,734.00 24,000.00 24,720.00 25,461.60 26,225.45 27,012.21 27,822.58 Electric Distribution Operation 560,924.00 420,350.00 432,960.50 445,949.32 459,327.79 473,107.63 487,300.86 Electric Distribution Maintenance 321,821.00 220,500.00 227,115.00 233,928.45 240,946.30 248,174.69 255,619.93 Gas Purchased Power 7,433,522.00 7,802,486.05 7,507,570.61 7,582,646.31 7,658,472.77 7,735,057.50 7,812,408.08 Gas Transmission Operation 114,377.00 109,500.00 112,785.00 116,168.55 119,653.61 123,243.21 126,940.51 Gas Transmission Maintenance 4,002.00 11,500.00 11,845.00 12,200.35 12,566.36 12,943.35 13,331.65 Gas Distribution Operation 405,879.00 449,100.00 462,573.00 476,450.19 490,743.70 505,466.01 520,629.99 Gas Distribution Maintenance 184,237.00 209,000.00 215,270.00 221,728.10 228,379.94 235,231.34 242,288.28 Customer Accounting 348,556.00 303,900.00 313,017.00 322,407.51 332,079.74 342,042.13 352,303.39 Sales Expense 263,654.00 410,000.00 422,300.00 434,969.00 448,018.07 461,458.61 475,302.37 General & Administrative 3,452,762.00 3,259,400.00 3,357,182.00 3,457,897.46 3,561,634.38 3,668,483.42 3,778,537.92 Depreciation 3,640,050.00 3,756,000.00 3,756,000.00 3,781,000.00 3,781,000.00 3,806,000.00 3,806,000.00 Amortization - Development Study 525,953.00 525,953.00 262,972.00 Payment in Lieu of Taxes 1,403,077.00 1,900,000.00 1,900,000.00 1,900,000.00 1,900,000.00 1,900,000.00 1,900,000.00 Roadway Lighting 142,666.00 Total Operating Expense 38,009,102.00 38,718,303.74 39,080,255.74 39,699,170.90 40,115,398.94 40,535,685.29 41,360,280.54 Total Operating Income 1,677,115.00 2,075,688.93 702,374.65 837,871.49 1,127,284.57 1,374,905.76 1,174,522.12 Other Income Other Net Income 301,039.00 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00 Interest Income 75,940.00 60,000.00 70,000.00 70,000.00 70,000.00 70,000.00 70,000.00 Misc Income 11,008.00 16,000.00 16,000.00 16,000.00 16,000.00 16,000.00 16,000.00 Gain on Disposal - - - - - - - Total Other income 387,987.00 136,000.00 146,000.00 146,000.00 146,000.00 146,000.00 146,000.00 Other Expenses Misc Expense (26,220.00) (31,000.00) (31,000.00) (31,000.00) (31,000.00) (31,000.00) (31,000.00) Interest Expense (1,357,338.00) (907,988.00) (861,112.50) (812,113.00) (760,588.00) (694,338.00) (624,275.00) Total Other Expenses (1,383,558.00) (938,988.00) (892,112.50) (843,113.00) (791,588.00) (725,338.00) (655,275.00) Total Non - Operating income (995,571.00) (802,988.00) (746,112.50) (697,113.00) (645,588.00) (579,338.00) (509,275.00) Net Income 681,544.00 1,272,700.93 (43,737.85) 140,758.49 481,696.57 795,567.76 665,247.12 Entire Rate Change in 2015 Combined Income Statement 2013 2014 2015 2016 2017 2018 2019 Operating Revenue 39,686,217.00 40,793,992.67 39,782,630.39 40,537,042.39 41,242,683.51 41,910,591.05 42,534,802.66 Operating Expense 38,009,102.00 38,718,303.74 39,080,255.74 39,699,170.90 40,115,398.94 40,535,685.29 41,360,280.54 Operating Income 1,677,115.00 2,075,688.93 702,374.65 837,871.49 1,127,284.57 1,374,905.76 1,174,522.12 Other Income and Deductions (995,571.00) (802,988.00) (746,112.50) (697,113.00) (645,588.00) (579,338.00) (509,275.00) Net Income 681;544'00 ` . ,1',2:72'700:93 (43;737:85) 1407.;5849 481;69,6 57: 795567 7r6 .66524712; Cash Flows Beginning of Year Cash (Includes All Accounts) Plus: Net Income Plus: Depreciation and Amortization Less: Capital Improvements Less: Bond and MRES Principal End of Year Cash (Includes All Accounts) Beginning of Year Cash By Account Capital Expenditures Current Year Electric Production PILOT Debt Service Reserve Fund Catastrophic Failure Fund Rate Stabilization Funds Development Study Bond and Interest Payment Cash in Bank Entire Rate Chanee in 2015 2013 2014 2015 2016 2017 2018 2019 9,752,726.23 8,779,199.91 10,989,303.84 5,205,537.99 4,532,296.48 6,012,493.06 7,702,060.82 681,544.00 1,272,700.93 (43,737.85) 140,758.49 481,696.57 795,567.76 665,247.12 4,166,003.00 4,281,953.00 4,018,972.00 3,781,000.00 3,781,000.00 3,806,000.00 3,806,000.00 (2,641,073.32) (2,169,550.00) (8,534,000.00) (3,310,000.00) (1,437,500.00) (1,492,000.00) (2,279,000.00) (3,180,000.00) (1,175,000.00) (1,225,000.00) (1,285,000.00) (1,345,000.00) (1,420,000.00) (1,495,000.00) 8;7.79;199;:91 10;989303'i84 . 5. 205`;537x99 453.2296 48;. 6,032;493:06° 77A2060t &2; „ 83'9,930794 ., 1/1/2013 1 1 2014 1/1/2015 1 1 2016 1/1/2017 1 1 2018 1/1/2019 1,576,183.00 1,597,050.00 1,810,000.00 980,000.00 817,500.00 927,000.00 989,000.00 2,781,702.40 572,500.00 6,724,000.00 2,330,000.00 620,000.00 565,000.00 1,290,000.00 1, 403, 076.07 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 1,900,000-00 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 629,096.93 1,194,540.93 1,200,000.00 1,200,000.00 1,200,000.00 1,200,000.00 1,200,000.00 286,123.36 - - - - - - 666,585.41 400,579.01 400,500.00 400,500.00 400,500.00 400,500.00 400,500.00 (277;891:19), , 425;835.95, (3;733';890 "1`8) ';(4,'293;656 03j'' '; *397.i'4)(f1ti6870096j„ ;;(76`61p3320 }*' ,(309M4 9,753,570.00 8,779,199.91 10,989,303.84 5,205,537.99 4,532,296.48 6,012,493.06 7,702,060.82 2 Year Rate Change Phase In ELECTRIC INCOME & EXPENSE SUMMARY Admin and General (920, 921, 923, 924, 926, 926, 930, 935) Adminstrative and General Labor (920) 2013 2014 2015 2016 2017 2018 2019 OPERATING REVENUES Sales - Electric Energy (440, 442, 444) 24,455,179.00 24,842,772.66 24,614,665.39 24,389,042.39 24,642,463.51 24,898,418.85 25,156,933.74 1% Growth Rate in retail sales Sales For Resale (447) 779,276.00 977,400.00 880,000.00 880,000.00 880,000.00 880,000.00 880,000.00 Split Actual 2013 and Budgeted 2014 for 2015 -2019 Capacity Sales (447) 112,000.00 80,000.00 294,000.00 675,500.00 1,004,500.00 1,292,000.00 1,532,000.00 SMMPA Contract Street Lighting (444) 143,002.00 139,307.00 140,000.00 140,000.00 140,000.00 140,000.00 140,000.00 Total Energy Sales 25,489,457.00 26,039,479.66 25,928,665.39 26,084,542.39 26,666,963.51 27,210,418.85 27,708,933.74 OTHER OPERATING REVENUES (1,357,958.00) (990,613.03) (1,700,267.99) (2,028,462.89) (1,724,882.77) ',(1,461,721.66) (1,645,141.82) Net Income From Other Sources (450,451) 297,525.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 Security Lights (454.01) 11,033.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 Pole Rental (454.02, 454.03) 32.00 500.00 500.00 500.00 500.00 500.00 500.00 Total Other Operating Revenues 308,590.00 230,500.00 230,500.00 230,500.00 230,500.00 230,500.00 230,500.00 TOTAL OPERATING REVENUE 25,798,047.00 26,269,979.66 26,159,165.39 26,315,042.39 26,897,463.51 27,440,918.85 27,939,433.74 OPERATING EXPENSES (85,537.00) (40,488.00) (35,612.50) (30,613.00) (25,488.00) (20,238.00) (14,925.00) Production Operation (546, 547, 550) Operation Supervison & Engineering (546) 1,126,083.00 1,072,164.69 1,104,329.63 1,137,459.52 1,171,583.31 1,206,730.80 1,242,932.73 3% increase annually for 546 and 550 Fuel (547) 2,156,277.00 2,180,050.00 2,580,000.00 2,630,000.00 2,680,000.00 2,700,000.00 2,700,000.00 N. Gas Prices $4.50 /MCF Operating Supplies and Expense (550) 162,780.00 111,100.00 114,433.00 117,865.99 121,401.97 125,044.03 128,795.35 Total Production Operation (546, 547, 550) 3,445,140.00 3,363,314.69 3,798,762.63 3,885,325.51 3,972,985.27 4,031,774.83 4,071,728.08 Production Maintenance (554) 499,300.00 337,800.00 315,798.00 325,272.00 325,272.00 325,272.00 325,272.00 3% Increase Annually Purchased Gas Generation Other Power Supply Expense (555, 556, 557) Purchased Power (555) 13,342,967.00 14,000,000.00 14,020,000.00 14,480,200.00 14,500,600.00 14,521,200.00 14,982,000.00 Assume $660,000 MRES increase in 2014 and $440,000 System Control & Load Dispatch (556) 340,482.00 304,500.00 313,635.00 323,044.05 332,735.37 342,717.43 352,998.96 in 2016/2019, MISO purchases increase 1% annually, Engineering Services (557) 86,382.00 25,000.00 25,750.00 26,522.50 27,318.18 28,137.72 28,981.85 556, and 557 increase 3% annually Total Other Power Supply Expense (555, 556, 557) 13,769,831.00 14,329,500.00 14,359,385.00 14,829,766.55 14,860,653.55 14,892,055.15 15,363,980.81 Transmission Expense (560, 567, 574) Transmission Expense Operation (560, 567) 1,419,617.00 1,286,000.00 1,600,000.00 1,648,000.00 1,697,440.00 1,748,363.20 1,800,814.10 Transmission increase of $100,000 in 2014 and 2015- - Transmission Expense Maintenance (574) 73,734.00 24,000.00 24,720.00 25,461.60 26,225.45 27,012.21 27,822.58 negotiated settlement with GRE, 574 increase of 3% Total Transmission Expense (560, 567, 574) 1,493,351.00 1,310,000.00 1,624,720.00 1,673,461.60 1,723,665.45 1,775,375.41 1,828,636.67 annually Distribution Expense: Distribution Operation (580, 581, 586, 588, 589) 560,924.00 420,350.00 432,960.50 445,949.32 459,327.79 473,107.63 487,300.86 Distribution Maintenance (592, 594, 595, 596, 598) 321,821.00 220,500.00 227,115.00 233,928.45 240,946.30 248,174.69 255,619.93 3% Increase Annually Total Distribution Expense: 882,745.00 640,850.00 660,075.50 679,877.77 700,274.10 721,282.32 742,920.79 Customer Service and Collectton(902, 903, 904, 906) Meter Reading (902) 18,794.00 17,050.00 17,561.50 18,088.35 18,631.00 19,189.93 19,765.62 Collection Expense (903) 127,589.00 105,545.00 108,711.35 111,972.69 115,331.87 118,791.83 122,355.58 3% Increase Annually Bad Debt Write offs (904) 5,070.00 3,300.00 3,399.00 3,500.97 3,606.00 3,714.18 3,825.60 Customer Services (906) 40,260.00 41,250.00 42,487.50 43,762.13 45,074.99 46,427.24 47,820.06 Total Customer Service and Collection (902, 903, 904, 906) 191,713.00 167,145.00 172,159.35 177,324.13 182,643.85 188,123.17 193,766.87 Sales Expense (911, 916) Supervison(911) 6,240.00 6,000.00 6,180.00 6,365.40 6,556.36 6,753.05 6,955.64 Misc. Selling Expense (916) 191,500.00 301,500.00 310,545.00 319,861.35 329,457.19 339,340.91 349,521.13 3% Increase Annually Total Sales Expense (911, 916) 197,740.00 307,500.00 316,725.00 326,226.75 336,013.55 346,093.96 356,476.78 Admin and General (920, 921, 923, 924, 926, 926, 930, 935) Adminstrative and General Labor (920) 520,388.00 500,250.00 Office Supplies and Expenses (921) 281,574.00 184,125.00 Outside Services (923) 147,846.00 56,475.00 Property Insurance (924) 102,512.00 105,050.00 Employee Pension & Benefits (926) 1,240,786.00 1,324,875.00 Regulatory Expense (928) 23,980.00 31,900.00 Misc. General Expense (930) 95,031.00 103,675.00 Maint. Of General Plant (935) 71,061.00 37,180.00 Total Admin and General (920, 921, 923, 924, 926, 928, 930, 935) 2,483,178.00 2,343,530.00 515,257.50 530,715.23 189,648.75 195,338.21 58,169.25 59,914.33 108, 201.50 111, 447.55 1,364,621.25 1,405,559.89 32,857.00 33,842.71 106, 785.25 109, 988.81 38,295.40 39,444.26 2,413,835.90 2,486,250.98 546,636.68 201,198.36 61,711.76 114,790.97 1,447,726.68 34,857.99 113,288.47 40,627.59 2,560,838.51 563,035.78 207,234.31 63,563.11 118,234.70 1,491,158.48 35,903.73 116,687.13 41,846.42 2,637,663.66 579,926.86 213,451.34 3% Increase Annually 65,470.00 121,781.74 1,535,893.24 36,980.84 120,187.74 43,101.81 2,716,793.57 Depreciation Expense (403) 2,612,388.00 2,700,000.00 2,700,000.00 2,725,000.00 2,725,000.00 2,750,000.00 2,750,000.00 Amortization - Development Study 525,953.00 525,953.00 262,972.00 Payment In Lieu of Taxes (408) 912,000.00 1,235,000.00 1,235,000.00 1,235,000.00 1,235,000.00 1,235,000.00 1,235,000.00 Flat Contribution To City -for Roadway Lighting (408) 142,666.00 4,193,007.00 4,460,953.00 4,197,972.00 3,960,000.00 3,960,000.00 3,985,000.00 3,985,000.00 TOTAL OPERATING EXPENSE 27,156,005.00 27,260,592.69 27,859,433.38 28,343,505.28 28,622,346.28 28,902,640.51 29,584,575.56 OPERATING INCOME (1,357,958.00) (990,613.03) (1,700,267.99) (2,028,462.89) (1,724,882.77) ',(1,461,721.66) (1,645,141.82) OTHER INCOME AND DEDUCTIONS Other - Net 58,031.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 Interest Income 37,970.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 Misc. Income 10,000.00 15,000.00 15,000.00 15,000.00 15,000.00 15,000.00 15,000.00 Misc. Expense (23,874.00) (25,000.00) (25,000.00) (25,000.00) (25,000.00) (25,000.00) (25,000.00) Interest Expense (85,537.00) (40,488.00) (35,612.50) (30,613.00) (25,488.00) (20,238.00) (14,925.00) TOTAL OTHER INCOME & EXP. (3,410.00) 4,512.00 9,387.50 14,387.00 19,512.00 24,762.00 30,075.00 NET INCOME (1,361,368.00) (986;101.03) (1,690,880.49) (2,014,075.89) (1,705;370.77) (1,436,959.66) (1,615,066.82) 2 Year Rate Change Phase In NATURAL GAS INCOME & EXPENSE SUMMARY OPERATING REVENUES 2013 2014 2015 2016 2017 2018 2019 Sales - Natural Gas - Retail 8,356,512.00 8,490,262.14 8,000,000.00 8,080,000.00 8,160,800.00 8,242,408.00 8,324,832.08 1% Growth after $8 million in 2015 Contract Sale to Large Customer(Includes 3M & HTI transport) 3,646,509.00 4,533,750.87 4,200,000.00 4,242,000.00 4,284,420.00 4,327,264.20 4,370,536.84 1% Growth after $4.2 million in 2015 Pipeline Transportation 785,149.00 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00 Transportation - Electric Division 1,100,000.00 700,000.00 1,100,000.00 1,100,000.00 1,100,000.00 1,100,000.00 1,100,000.00 TOTAL OPERATING REVENUES 13,888,170.00 14,524,013.01 14,100,000.00 14,222,000.00 14,345,220.00 14,469,672.20 14,595,368.92 OPERATING EXPENSES Purchased Gas for Retail (807) Contract Gas for Large Customer Total Gas Purchased Transmission (856, 863) Gas Transmission Operations (856) Gas Transmission Maintenance (863) Total Transmission (865, 863) Distribution Expense: Distribution Operation (870, 874, 878, 880): Supervision and Engineering (870) Mains and Services (874) Meters (878) Misc. (880) Total Distribution Operation (870, 874, 878, 880) Distribution Maintenance (892, 893, 895) Lines - Services and Mains (892) Meters and House Regulators (893) Maintenance of Other Plant (895) Total Distribution Maintenance (892, 893, 895) 4,482,870.00 4,106,505.55 4,147,570.61 4,189,046.31 4,230,936.77 4,273,246.14 4,315,978.60 Many long term N. Gas contracts purchased in 2013/14, f 2,950,652.00 3,695,980.50 3,360,000.00 3,393,600.00 3,427,536.00 3,461,811.36 3,496,429.47 N. Gas Prices $4.50 /MCF, 1% Increase w/ Sales 7,433,522.00 7,802,486.05 7,507,570.61 7,582,646.31 7,658,472.77 7,735,057.50 7,812,408.08 114, 377.00 109,500.00 112,785.00 116,168.55 119,653.61 123,243.21 126,940.51 4,002.00 11,500.00 11,845.00 12,200.35 12,566.36 12,943.35 13,331.65 3% Increase Annually 118,379.00 121,000.00 124, 630.00 128, 368.90 132,219.97 136,186.57 140,272.16 289, 629.00 155,000.00 159, 650.00 164,439.50 169, 372.69 174,453.87 179, 687.48 67,595.00 129,500.00 133,385.00 137,386.55 141,508.15 145,753.39 150,125.99 3% Increase Annually 240.00 3,500.00 3,605.00 3,713.15 3,824.54 3,939.28 4,057.46 48,415.00 161,100.00 165,933.00 170,910.99 176,038.32 181,319.47 186,759.05 405,879.00 449,100.00 462,573.00 476,450.19 490,743.70 505,466.01 520,629.99 126, 902.00 133, 000.00 136,990.00 141, 099.70 145, 3 32.69 149, 69 2.67 154,183.45 9,932.00 20,000.00 20,600.00 21,218.00 21,854.54 22,510.18 23,185.48 3% Increase Annually 47,403.00 56,000.00 57,680.00 59,410.40 61,192.71 63,028.49 64,919.35 184,237.00 209,000.00 215,270.00 221,728.10 228,379.94 235,231.34 242,288.28 Customer Service and Collection(902, 903, 904, 906) Meter Reading (902) 15,365.00 13,950.00 14,368.50 14,799.56 15,243.54 15,700.85 16,171.87 Collection Expense (903) 104,390.00 86,355.00 88,945.65 91,614.02 94,362.44 97,193.31 100,109.11 3% Increase Annually Bad Debt Write offs (904) 4,148.00 2,700.00 2,781.00 2,864.43 2,950.36 3,038.87 3,130.04 Customer Services (906) 32,940.00 33,750.00 34,762.50 35,805.38 36,879.54 37,985.92 39,125.50 Total Customer Service and Collection (902, 903, 904, 906) 156,843.00 136,755.00 140,857.65 145,083.38 149,435.88 153,918.96 158,536.53 Sales Expense (911, 916) Supervison(911) 17,322.00 2,000.00 2,060.00 2,121.80 2,185.45 2,251.02 2,318.55 Misc. Selling Expense (916) 48,592.00 100,500.00 103,515.00 106,620.45 109,819.06 113,113.64 116,507.04 3% Increase Annually Total Sales Expense (911, 916) 65,914.00 102,500.00 105,575.00 108,742.25 112,004.52 115,364.65 118,825.59 Admin and General (920, 921, 923, 924, 926, 928, 930, 935) Adminstrative and General Labor (920) 173,463.00 166,750.00 171,752.50 176,905.08 182,212.23 187,678.59 193,308.95 Office Supplies and Expenses (921) 93,858.00 61,375.00 63,216.25 65,112.74 67,066.12 69,078.10 71,150.45 3% Increase Annually Outside Services (923) 49,282.00 18,825.00 19,389.75 19,971.44 20,570.59 21,187.70 21,823.33 Property Insurance (924) 83,872.00 85,950.00 88,528.50 91,184.36 93,919.89 96,737.48 99,639.61 Employee Pension & Benefits (926) 413,595.00 441,625.00 454,873.75 468,519.96 482,575.56 497,052.83 511,964.41 Regulatory Expense (928) 19,620.00 26,100.00 26,883.00 27,689.49 28,520.17 29,375.78 30,257.05 Misc. General Expense (930) 77,719.00 84,825.00 87,369.75 89,990.84 92,690.57 95,471.28 98,335.42 Maint. Of General Plant (935) 58,175.00 30,420.00 31,332.60 32,272.58 33,240.76 34,237.98 35,265.12 Total Admin and General (920, 921, 923, 924, 926, 928, 930, 935) 969,584.00 915,870.00 943,346.10 971,646.48 1,000,795.88 1,030,819.75 1,061,744.35 Depreciation Expense (403) 1,027,662.00 1,056,000.00 1,056,000.00 1,056,000.00 1,056,000.00 1,056,000.00 1,056,000.00 Payment in Lieu of Taxes (408) 491,077.00 665,000.00 665,000.00 665,000.00 665,000.00 665,000.00 665,000.00 Flat 1,518,739.00 1, 721, 000.00 1,721,000.00 1,721,000.00 1,721,000.00 1,721, 000.00 1,721,000.00 TOTAL OPERATING EXPENSE OPERATING INCOME OTHER INCOME AND DEDUCTIONS Other Misc. Income Other - Net Interest Income Misc. Income Misc. Expense Interest Expense TOTAL OTHER INCOME AND DEDUCTIONS NET INCOME 10, 853,097.00 11,457,711.05 11, 220, 822.36 11,355, 665.61 11,493,052.66 11, 633,044.78 11,775, 704.97 3,035,073.00 3,066,301.96 2,879,177.64 2,866,334.39 2,852,167:34 2,836,627.42 2,819,663.95 243,008.00 40,000.00 37,970.00 25,000.00 1,008.00 1,000.00 (2,346.00) (6,000.00) (1,271,801.00) (867,500.00) (992,161.00) (807,500.00) 2,042,912.00 2,258,801.96 40,000.00 35,000.00 1,000.00 (6,000.00) (825,500.00) (755,500.00) 2,123,677.64 40,000.00 35,000.00 1,000.00 (6,000.00) (781,500.00) (711,500.00) 2,154,83439 40,000.00 40,000.00 35,000.00 35,000.00 1,000.00 1,000.00 (6,000.00) (6,000.00) (735,100.00) (674,100.00) (665,100.00) (604,100.00) 2,187,067.34 2,132,527.42 40,000.00 35,000.00 1,000.00 (6,000.00) (609,350.00) Bond Refinancing (539,350.00) 2,280;313.95 2 Year Rate Change Phase In COMBINED INCOME & EXPENSE SUMMARY Operating Revenues 2013 2014 2015 2016 2017 2018 2019 Sales Electric Energy 24,598,181.00 24,982,079.66 24,754,665.39 24,529,042.39 24,782,463.51 25,038,418.85 25,296,933.74 Sales for Resale 891,276.00 1,057,400.00 1,174,000.00 1,555,500.00 1,884,500.00 2,172,000.00 2,412,000.00 Security Lights 11,033.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 Pole Rental 32.00 500.00 500.00 500.00 500.00 500.00 500.00 Sales Gas 12,003,021.00 13,024,013.01 12,200,000.00 12,322,000.00 12,445,220.00 12,569,672.20 12,695,368.92 New Ulm Transportation 785,149.00 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00 Transportation - Electric 1,100,000.00 700,000.00 1,100,000.00 1,100,000.00 1,100,000.00 1,100,000.00 1,100,000.00 Net Income From Other Sources 297,525.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 Total Operating Revenues 39,686,217.00 40,793,992.67 40,259,165.39 40,537,042.39 41,242,683.51 41,910,591.05 42,534,802.66 Operating Expense Production Operations 3,445,140.00 3,363,314.69 3,798,762.63 3,885,325.51 3,972,985.27 4,031,774.83 4,071,728.08 Production Maintenance 499,300.00 337,800.00 315,798.00 325,272.00 325,272.00 325,272.00 325,272.00 Electric Purchased Power 13,342,967.00 14,000,000.00 14,020,000.00 14,480,200.00 14,500,600.00 14,521,200.00 14,982,000.00 Other Power Supply 426,864.00 329,500.00 339,385.00 349,566.55 360,053.55 370,855.15 381,980.81 Electric Transmission Operation 1,419,617.00 1,286,000.00 1,600,000.00 1,648,000.00 1,697,440.00 1,748,363.20 1,800,814.10 Electric Transmission Maintenance 73,734.00 24,000.00 24,720.00 25,461.60 26,225.45 27,012.21 27,822.58 Electric Distribution Operation 560,924.00 420,350.00 432,960.50 445,949.32 459,327.79 473,107.63 487,300.86 Electric Distribution Maintenance 321,821.00 220,500.00 227,115.00 233,928.45 240,946.30 248,174.69 255,619.93 Gas Purchased Power 7,433,522.00 7,802,486.05 7,507,570.61 7,582,646.31 7,658,472.77 7,735,057.50 7,812,408.08 Gas Transmission Operation 114,377.00 109,500.00 112,785.00 116,168.55 119,653.61 123,243.21 126,940.51 Gas Transmission Maintenance 4,002.00 11,500.00 11,845.00 12,200.35 12,566.36 12,943.35 13,331.65 Gas Distribution Operation 405,879.00 449,100.00 462,573.00 476,450.19 490,743.70 505,466.01 520,629.99 Gas Distribution Maintenance 184,237.00 209,000.00 215,270.00 221,728.10 228,379.94 235,231.34 242,288.28 Customer Accounting 348,556.00 303,900.00 313,017.00 322,407.51 332,079.74 342,042.13 352,303.39 Sales Expense 263,654.00 410,000.00 422,300.00 434,969.00 448,018.07 461,458.61 475,302.37 General & Administrative 3,452,762.00 3,259,400.00 3,357,182.00 3,457,897.46 3,561,634.38 3,668,483.42 3,778,537.92 Depreciation 3,640,050.00 3,756,000.00 3,756,000.00 3,781,000.00 3,781,000.00 3,806,000.00 3,806,000.00 Amortization - Development Study 525,953.00 525,953.00 262,972.00 Payment in Lieu of Taxes 1,403,077.00 1,900,000.00 11900,000.00 1,900,000.00 1,900,000.00 1,900,000.00 1,900,000.00 Roadway Lighting 142,666.00 - Total Operating Expense 38,009,102.00 38,718,303.74 39,080,255.74 39,699,170.90 40,115,398.94 40,535,685.29 41,360,280.54 Total Operating Income 1,677,115.00 2,075,688.93 1,178,909.65 837,871.49 1,127,284.57 1,374,905.76 1,174,522.12 Other Income Other Net Income 301,039.00 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00 Interest Income 75,940.00 60,000.00 70,000.00 70,000.00 70,000.00 70,000.00 70,000.00 Misc Income 11,008.00 16,000.00 16,000.00 16,000.00 16,000.00 16,000.00 16,000.00 Gain on Disposal - - - - Total Other Income 387,987.00 136,000.00 146,000.00 146,000.00 146,000.00 146,000.00 146,000.00 Other Expenses Misc Expense (26,220.00) (31,000.00) (31,000.00) (31,000.00) (31,000.00) (31,000.00) (31,000.00) Interest Expense (1,357,338.00) (907,988.00) (861,112.50) (812,113.00) (760,588.00) (694,338.00) (624,275.00) Total Other Expenses (1,383,558.00) (938,988.00) (892,112.50) (843,113.00) (791,588.00) (725,338.00) (655,275.00) Total Non - Operating Income (995,571.00) (802,988.00) (746,112.50) (697,113.00) (645,588.00) (579,338.00) (509,275.00) Net Income 681,544.00 1,272,700.93 432,797.15 140,758.49 481,696.57 795,567.76 665,247.12 2 Year Rate Change Phase In Combined Income Statement 2013 2014 2015 2016 2017 2018 2019 Operating Revenue 39,686,217.00 40,793,992.67 40,259,165.39 40,537,042.39 41,242,683.51 41,910,591.05 42,534,802.66 Operating Expense 38,009,102.00 38,718,303.74 39,080,255.74 39,699,170.90 40,115,398.94 40,535,685.29 41,360,280.54 Operating Income 1,677,115.00 2,075,688.93 1,178,909.65 837,871.49 1,127,284.57 1,374,905.76 1,174,522.12 Other Income and Deductions (995,571.00) (802,988.00) (746,112.50) (697,113.00) (645,588.00) (579,338.00) (509,275.00) Net Income °'681,544M';; ; . 1;272300;93 .432,7797115:', 140,758 49 :' 48;1 69`6 5,7, 795 5647 76 665 247 12 Cash Flows Beginning of Year Cash (Includes All Accounts) Plus: Net Income Plus: Depreciation and Amortization Less: Capital Improvements Less: Bond and MRES Principal End of Year Cash (Includes All Accounts) Beginning of Year Cash By Account Capital Expenditures Current Year Electric Production PILOT Debt Service Reserve Fund Catastrophic Failure Fund Rate Stabilization Funds Development Study Bond and Interest Payment Cash in Bank 2 Year Rate Change Phase In 2013 2014 2015 2016 2017 2018 2019 9,752,726.23 8,779,199.91 10,989,303.84 5,682,072.99 5,008,831.48 6,489,028.06 8,178,595.82 681,544.00 1,272,700.93 432,797.15 140,758.49 481,696.57 795,567.76 665,247.12 4,166,003.00 4,281,953.00 4,018,972.00 3,781,000.00 3,781,000.00 3,806,000.00 3,806,000.00 (2,641,073.32) (2,169,550.00) (8,534,000.00) (3,310,000.00) (1,437,500.00) (1,492,000.00) (2,279,000.00) (3,180,000.00) (1,175,000.00) (1,225,000.00) (1,285,000.00) (1,345,000.00) (1,420,000.00) (1,495,000.00) 8;779;199191 10,9891,303.84 5 ;682;072199 1:;5;008;83'148:. ° 6;489;028 06 *8 ,178 595 1/1/2013 1 1 2014 1/1/2015 1 1 2016 1/1/2017 1 1 2018 1/1/2019 1,576,183.00 1,597,050.00 1,810,000.00 980,000.00 817,500.00 927,000.00 989,000.00 2,781,702.40 572,500.00 6,724,000.00 2,330,000.00 620,000.00 565,000.00 1,290,000.00 1, 403, 07 6.07 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 629,096.93 1,194,540.93 1,200,000.00 1,200,000.00 1,200,000.00 1,200,000.00 1,200,000.00 286,123.36 - - - - - - 666,585.41 400,579.01 400,500.00 400,500.00 400,500.00 400,500.00 400,500.00 (2.77;89119) 425;835;95 (3,733;890:18) (3 817,12`1 Q3) (2;617;862 °54) (1;12;165:96) `(28959820) 9,753,570.00 8,779,199.91 10,989,303.84 5,682,072.99 5,008,831.48 6,489,028.06 8,178,595.82 ELECTRIC INCOME & EXPENSE SUMMARY OPERATING REVENUES Sales - Electric Energy (440, 442, 444) Sales For Resale (447) Capacity Sales (447) Street Lighting (444) Total Energy Sales 3 Year Rate Chanae Phase In 2013 201.4 2015 2016 2017 24,455,179.00 24,842,772.66 24,773,510.39 24,706,732.39 24,642,463.51 779,276.00 977,400.00 880,000.00 880,000.00 880,000.00 112,000.00 80,000.00 294,000.00 675,500.00 1,004,500.00 143,002.00 139, 307.00 140,000.00 140,000.00 140,000.00 25,489,457.00 26,039,479.66 26,087,510.39 26,402,232.39 26,666,963.51 2018 2019 24,898,418.85 25,156,933.74 1% Growth Rate in retail sales 880,000.00 880,000.00 Split Actual 2013 and Budgeted 2014 for 2015 -2019 1,292,000.00 1,532,000.00 SMMPA Contract 140,000.00 140,000.00 27,210,418.85 27,708,933.74 OTHER OPERATING REVENUES 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 Net Income From Other Sources (450,451) 297,525.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 Security Lights (454.01) 11,033.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 Pole Rental (454.02, 454.03) 32.00 500.00 500.00 500.00 500.00 500.00 500.00 Total Other Operating Revenues 308,590.00 230,500.00 230,500.00 230,500.00 230,500.00 230,500.00 230,500.00 TOTAL OPERATING REVENUE 25,798,047.00 26,269,979.66 26,318,010.39 26,632,732.39 26,897,463.51 27,440,918.85 27,939,433.74 OPERATING EXPENSES Production Operation (546, 547, 550) Operation Supervison & Engineering (546) Fuel (547) Operating Supplies and Expense (550) Total Production Operation (546, 547, 550) Production Maintenance (554) Purchased Gas Generation Other Power Supply Expense (555, 556, 557) Purchased Power (555) System Control & Load Dispatch (556) Engineering Services (557) Total Other Power Supply Expense (555, 556, 557) Transmission Expense (560, 567, 574) Transmission Expense Operation (560, 567) Transmission Expense Maintenance (574) Total Transmission Expense (560, 567, 574) Distribution Expense: Distribution Operation (580, 581, 586, 588, 589) Distribution Maintenance (592, 594, 595, 596, 598) Total Distribution Expense: Customer Service and Collection(902, 903, 904, 906) 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 (911, 916) Supervison (911) Misc. Selling Expense (916) Total Sales Expense (911, 916) Admin and General (920, 921, 923, 924, 926, 928, 930, 935) 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 Admin and General (920, 921, 923, 924, 926, 928, 930, 935) Depreciation Expense (403) Amortization - Development Study Payment in Lieu of Taxes (408) Contribution To City-for Roadway Lighting (408) TOTAL OPERATING EXPENSE OPERATING INCOME OTHER INCOME AND DEDUCTIONS Other- Net Interest Income Misc. Income Misc. Expense Interest Expense TOTAL OTHER INCOME & EXP. 1,126,083.00 1,072,164.69 1,104,329.63 2,156,277.00 2,180,050.00 2,580,000.00 162, 780.00 111,100.00 114, 433.00 3,445,140.00 3,363,314.69 3,798,762.63 499,300.00 337,800.00 315,798.00 13, 342, 967.00 14,000,000.00 14,020,000.00 340,482.00 304,500.00 313,635.00 86,382.00 25,000.00 25,750.00 13, 769, 831.00 14,329,500-00 14,359,385.00 1,419,617.00 73,734.00 1,493,351.00 560,924.00 321,821.00 882,745.00 18, 794.00 127,589.00 5,070.00 40,260.00 191,713.00 6,240.00 191,500.00 197,740.00 520,388.00 281,574.00 147,846.00 102,512.00 1,240,786.00 23,980.00 95,031.00 71,061.00 2,483,178.00 2,612,388.00 525,953.00 912,000.00 142,666.00 4,193,007.00 27,156,005.00 1,286,000.00 24,000.00 1,310,000.00 420,350.00 220,500.00 640,850.00 17,050.00 105,545.00 3,300.00 41,250.00 167,145.00 6,000.00 301,500.00 307,500.00 500,250.00 184,125.00 56,475.00 105,050.00 1,324,875.00 31,900.00 103,675.00 37,180.00 2,343,530.00 2,700,000.00 525,953.00 1,235,000.00 4,460,953.00 27,260,592.69 1,600,000.00 24,720.00 1,624,720.00 432,960.50 227,115.00 660,075.50 17,561.50 108,711.35 3,399.00 42,487.50 172,159.35 6,180.00 310,545.00 316,725.00 515,257.50 189,648.75 58,169.25 108,201.50 1,364,621.25 32,857.00 106,785.25 38,295.40 2,413,835.90 2,700,000.00 262,972.00 1,235,000.00 4,197,972.00 27,859,433.38 1,137,459.52 2,630,000.00 117,865.99 3,885,325.51 325,272.00 14,480,200.00 323,044.05 26,522.50 14,829,766.55 1,648,000.00 25,461.60 1,673,461.60 445,949.32 233,928.45 679,877.77 18,088.35 111,972.69 3,500.97 43,762.13 177,324.13 6,365.40 319,861.35 326,226.75 530,715.23 195,338.21 59,914.33 111,447.55 1,405,559.89 33,842.71 109,988.81 39,444.26 2,486,250.98 2,725,000.00 1,235,000.00 3,960,000.00 28,343,505.28 1,171,583.31 2,680,000.00 121,401.97 3,972,985.27 325,272.00 14,500,600.00 332,735.37 27,318.18 14,860,653.55 1,697,440.00 26,225.45 1,723,665.45 459,327.79 240,946.30 700,274.10 18,631.00 115,331.87 3,606.00 45,074.99 182,643.85 6,556.36 329,457.19 336,013.55 546,636.68 201,198.36 61,711.76 114,790.97 1,447,726.68 34,857.99 113,288.47 40,627.59 2,560,838.51 2,725,000.00 1,235,000.00 3,960,000.00 28,622,346.28 1,206,730.80 1,242,932.73 3% increase annually for 546 and 550 2,700,000.00 2,700,000.00 N. Gas Prices $4.50 /MCF 125,044.03 128,795.35 4,031,774.83 4,071,728.08 325,272.00 325,272.00 3% Increase Annually 14,521,200.00 14,982,000.00 Assume $660,000 MRES increase in 2014 and $440,000 342,717.43 352,998.96 in 2016/2019, MISO purchases increase 1% annually, 28,137.72 28,981.85 556, and 557 increase 3% annually 14,892, 055.15 15, 363,980.81 1,748,363.20 1,800,814.10 Transmission increase of $100,000 in 2014 and 2015 -- 27,012.21 27,822.58 negotiated settlement with GRE, 574 increase of 3% 1,775,375.41 1,828,636.67 annually 473,107.63 487,300.86 248,174.69 255,619.93 3% Increase Annually 721,282.32 742,920.79 19,189.93 19,765.62 118,791.83 122,355.58 3% Increase Annually 3,714.18 3,825.60 46,427.24 47,820.06 188,123.17 193,766.87 6,753.05 6,955.64 339,340.91 349,521.13 3% Increase Annually 346,093.96 356,476.78 563,035.78 579,926.86 207,234.31 213,451.34 3% Increase Annually 63,563.11 65,470.00 118,234.70 121,781.74 1,491,158.48 1,535,893.24 35,903.73 36,980.84 116,687.13 120,187.74 41,846.42 43,101.81 2,637,663.66 2,716,793.57 2,750,000.00 2,750,000.00 1,235,000.00 1,235,000.00 Flat 3,985,000.00 3,985,000.00 28,902, 640.51 29, 584,575.56 (1,357,958.00) (990,613.03) '(1,541,422.99) (1,710,772.89) (1,724,882.77) (1,461,721.66) (1,645,141682) 58,031.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 37,970.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 10, 000.00 15, 000.00 15, 000.00 15, 000.00 15, 000.00 15, 000.00 15, 000.00 (23,874.00) (25,000.00) (25,000.00) (25,000.00) (25,000.00) (25,000.00) (25,000.00) (85,537.00) (40,488.00) (35,612.50) (30,613.00) (25,488.00) (20,238.00) (14,925.00) (3,410.00) 4,512.00 9,387.50 14,387.00 19,512.00 24,762.00 30,075.00 NET INCOME (1,361,368.00)' (986,101.03) (1,532,035.49) (1,696,385.89) _ (1,705,370.77)' (1,436,959.66),,, (1,615,066.82) 3 Year Rate Change Phase In NATURAL GAS INCOME & EXPENSE SUMMARY OPERATING REVENUES 2013 2014 2015 2016 2017 2018 2019 Sales - Natural Gas -- Retail 8,356,512.00 8,490,262.14 8,000,000.00 8,080,000.00 8,160,800.00 8,242,408.00 8,324,832.08 1% Growth after $8 million in 2015 Contract Sale to Large Customer(Includes 3M & HTI transport) 3,646,509.00 4,533,750.87 4,200,000.00 4,242,000.00 4,284,420.00 4,327,264.20 4,370,536.84 1% Growth after $4.2 million in 2015 Pipeline Transportation 785,149.00 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00 Transportation- Electric Division 1,100,000.00 700,000.00 1,100,000.00 1,100,000.00 1,100,000.00 1,100,000.00 1,100,000.00 TOTAL OPERATING REVENUES 13,888,170.00 14,524,013.01 14,100,000.00 14,222,000.00 14,345,220.00 14,469,672.20 14,595,368.92 OPERATING EXPENSES Purchased Gas for Retail (807) Contract Gas for Large Customer Total Gas Purchased Transmission (856, 863) Gas Transmission Operations (856) Gas Transmission Maintenance (863) Total Transmission (865, 863) Distribution Expense: Distribution Operation (870, 874, 878, 880): Supervision and Engineering (870) Mains and Services (874) Meters (878) Misc. (880) Total Distribution Operation (870, 874, 878, 880) Distribution Maintenance (892, 893, 895) 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(902, 903, 904, 906) 4,482,870.00 4,106,505.55 4,147,570.61 2,950,652.00 3,695,980.50 3,360,000.00 7,433,522.00 7,802,486.05 7,507,570.61 114,377.00 109,500.00 112,785.00 4,002.00 11,500.00 11,845.00 118, 379.00 121,000.00 124,630.00 289, 629.00 155,000-00 159,650.00 67,595.00 129, 500.00 133,38S.00 240.00 3,500.00 3,605.00 48, 415.00 161,100.00 165, 933.00 405,879.00 449,100.00 462,573.00 126, 902.00 133,000.00 136,990.00 9,932.00 20,000.00 20,600.00 47,403.00 56,000.00 57,680.00 184,237.00 209,000.00 215,270.00 4,189,046.31 3,393,600.00 7,582,646.31 116,168.55 12,200.35 128,368.90 164,439.50 137,386.55 3,713.15 170,910.99 476,450.19 141,099.70 21,218.00 59,410.40 221,728.10 4,230,936.77 3,427,536.00 7,658,472.77 119,653.61 12,566.36 132,219.97 169,372.69 141,508.15 3,824.54 176,038.32 490,743.70 145,332.69 21,854.54 61,192.71 228,379.94 4,273,246.14 4,315,978.60 Many long term N. Gas contracts purchased in 2013/14, f 3,461,811.36 3,496,429.47 N. Gas Prices $4.50 /MCF, 1% Increase w/ Sales 7,735,057.50 7,812,408.08 123, 243.21 126,940.51 12,943.35 13,331.65 3% Increase Annually 136,186.57 140, 272.16 174,453.87 179,687.48 145,753.39 150,125.99 3% Increase Annually 3,939.28 4,057.46 181,319.47 186,759.05 505,466.01 520,629.99 149,692.67 154,183.45 22,510.18 23,185.48 3% Increase Annually 63,028.49 64,919.35 235,231.34 242,288.28 Meter Reading (902) 15,365.00 13,950.00 14,368.50 14,799.56 15,243.54 15,700.85 16,171.87 Collection Expense (903) 104,390.00 86,355.00 88,945.65 91,614.02 94,362.44 97,193.31 100,109.11 3% Increase Annually Bad Debt Write offs (904) 4,148.00 2,700.00 2,781.00 2,864.43 2,950.36 3,038.87 3,130.04 Customer Services (906) 32,940.00 33,750.00 34,762.50 35,805.38 36,879.54 37,985.92 39,125.50 Total Customer Service and Collection (902, 903, 904, 906) 156,843.00 136,755.00 140,857.65 145,083.38 149,435.88 153,918.96 158,536.53 Sales Expense (911, 916) Supervison (911) Misc. Selling Expense (916) Total Sales Expense (911, 916) Admin and General (920, 921, 923, 924, 926, 928, 930, 935) 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 Admin and General (920, 921, 923, 924, 926, 928, 930, 935) Depreciation Expense (403) Payment in Lieu of Taxes (408) TOTAL OPERATING EXPENSE OPERATING INCOME OTHER INCOME AND DEDUCTIONS Other Misc. Income Other - Net Interest Income Misc. Income Misc. Expense Interest Expense TOTAL OTHER INCOME AND DEDUCTIONS NET INCOME 17,322.00 2,000.00 2,060.00 2,121.80 2,185.45 2,251.02 2,318.55 48,592.00 100,500.00 103,515.00 106,620.45 109,819.06 113,113.64 116,507.04 3% Increase Annually 65,914.00 102,500.00 105,575.00 108,742.25 112,004.52 115,364.65 118,825.59 173,463.00 166, 750.00 93,858.00 61,375.00 49,282.00 18,825.00 83,872.00 85,950.00 413,595.00 441,625.00 19,620.00 26,100.00 77,719.00 84,825.00 58,175.00 30,420.00 969,584.00 915,870.00 1,027,662.00 1, 056, 000.00 491,077.00 665,000.00 1, 518, 739.00 1, 721, 000.00 171,752.50 63,216.25 19,389.75 88,528.50 454,873.75 26,883.00 87,369.75 31,332.60 943,346.10 1,056,000.00 665,000.00 1,721,000.00 176,905.08 65,112.74 19,971.44 91,184.36 468,519.96 27,689.49 89,990.84 32,272.58 971,646.48 1,056,000.00 665,000.00 1,721,000.00 182,212.23 187,678.59 67,066.12 69,078.10 20,570.59 21,187.70 93,919.89 96,737.48 482,575.56 497,052.83 28,520.17 29,375.78 92,690.57 95,471.28 33,240.76 34,237.98 1, 000, 795.88 1, 030, 819.75 1,056,000.00 1,056,000.00 665,000.00 665,000.00 1,721,000.00 1, 721, 000.00 193,308.95 71,150.45 3% Increase Annually 21,823.33 99,639.61 511,964.41 30,257.05 98,335.42 35,265.12 1,061,744.35 1,056,000.00 665,000.00 Flat 1,721,000.00 10,853,097.00 11,457, 711.05 11, 220,822.36 11, 355, 665.61 11,493,052.66 11,633,044.78 11, 775, 704.97 3,035,073.00 3,066,301496 2,879,177.64 2,866,334.39 2,852,167.34 2,836,627.42 2,819,663.95 243,008.00 40,000.00 40,000.00 40,000.00 40,000.00 40,000.00 40,000.00 37,970.00 25,000.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 1,008.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 (2,346.00) (6,000.00) (6,000.00) (6,000.00) (6,000.00) (6,000.00) (6,000.00) (1,271,801.00) (867,500.00) (825,500.00) (781,500.00) (735,100.00) (674,100.00) (609,350.00) Bond Refinancing (992,161.00) (807,500.00) (755,500.00) (711,500.00) (665,100.00) (604,100.00) (539,350.00) 2,042,912.00 2,259,801.96 2,123,677.64 2,154,834.39 2,187,067,34 2,232,527.42 2,280313.95 3 Year Rate Change Phase In COMBINED INCOME & EXPENSE SUMMARY Operating Revenues 2013 2014 2015 2016 2017 2018 2019 Sales Electric Energy 24,598,181.00 24,982,079.66 24,913,510.39 24,846,732.39 24,782,463.51 25,038,418.85 25,296,933.74 Sales for Resale 891,276.00 1,057,400.00 1,174,000.00 1,555,500.00 1,884,500.00 2,172,000.00 2,412,000.00 Security Lights 11,033.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 Pole Rental 32.00 500.00 500.00 500.00 500.00 500.00 500.00 Sales Gas 12,003,021.00 13,024,013.01 12,200,000.00 12,322,000.00 12,445,220.00 12,569,672.20 12,695,368.92 New Ulm Transportation 785,149.00 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00 Transportation - Electric 1,100,000.00 700,000.00 1,100,000.00 1,100,000.00 1,100,000.00 1,100,000.00 1,100,000.00 Net Income From Other Sources 297,525.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 Total Operating Revenues 39,686,217.00 40,793,992.67 40,418,010.39 40,854,732.39 41,242,683.51 41,910,591.05 42,534,802.66 Operating Expense Production Operations 3,445,140.00 3,363,314.69 3,798,762.63 3,885,325.51 3,972,985.27 4,031,774.83 4,071,728.08 Production Maintenance 499,300.00 337,800.00 315,798.00 325,272.00 325,272.00 325,272.00 325,272.00 Electric Purchased Power 13,342,967.00 14,000,000.00 14,020,000.00 14,480,200.00 14,500,600.00 14,521,200.00 14,982,000.00 Other Power Supply 426,864.00 329,500.00 339,385.00 349,566.55 360,053.55 370,855.15 381,980.81 Electric Transmission Operation 1,419,617.00 1,286,000.00 1,600,000.00 1,648,000.00 1,697,440.00 1,748,363.20 1,800,814.10 Electric Transmission Maintenance 73,734.00 24,000.00 24,720.00 25,461.60 26,225.45 27,012.21 27,822.58 Electric Distribution Operation 560,924.00 420,350.00 432,960.50 445,949.32 459,327.79 473,107.63 487,300.86 Electric Distribution Maintenance 321,821.00 220,500.00 227,115.00 233,928.45 240,946.30 248,174.69 255,619.93 Gas Purchased Power 7,433,522.00 7,802,486.05 7,507,570.61 7,582,646.31 7,658,472.77 7,735,057.50 7,812,408.08 Gas Transmission Operation 114,377.00 109,500.00 112,785.00 116,168.55 119,653.61 123,243.21 126,940.51 Gas Transmission Maintenance 4,002.00 11,500.00 11,845.00 12,200.35 12,566.36 12,943.35 13,331.65 Gas Distribution Operation 405,879.00 449,100.00 462,573.00 476,450.19 490,743.70 505,466.01 520,629.99 Gas Distribution Maintenance 184,237.00 209,000.00 215,270.00 221,728.10 228,379.94 235,231.34 242,288.28 Customer Accounting 348,556.00 303,900.00 313,017.00 322,407.51 332,079.74 342,042.13 352,303.39 Sales Expense 263,654.00 410,000.00 422,300.00 434,969.00 448,018.07 461,458.61 475,302.37 General & Administrative 3,452,762.00 3,259,400.00 3,357,182.00 3,457,897.46 3,561,634.38 3,668,483.42 3,778,537.92 Depreciation 3,640,050.00 3,756,000.00 3,756,000.00 3,781,000.00 3,781,000.00 3,806,000.00 3,806,000.00 Amortization - Development Study 525,953.00 525,953.00 262,972.00 Payment in Lieu of Taxes 1,403,077.00 1,900,000.00 1,900,000.00 1,900,000.00 1,900,000.00 1,900,000.00 1,900,000.00 Roadway Lighting 142,666.00 Total Operating Expense 38,009,102.00 38,718,303.74 39,080,255.74 39,699,170.90 40,115,398.94 40,535,685.29 41,360,280.54 Total Operating income 1,677,115.00 2,075,688.93 1,337,754.65 1,155,561.49 1,127,284.57 1,374,905.76 1,174,522.12 Other Income Other Net Income 301,039.00 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00 Interest Income 75,940.00 60,000.00 70,000.00 70,000.00 70,000.00 70,000.00 70,000.00 Misc Income 11,008.00 16,000.00 16,000.00 16,000.00 16,000.00 16,000.00 16,000.00 Gain on Disposal - - - - Total Other Income 387,987.00 136,000.00 146,000.00 146,000.00 146,000.00 146,000.00 146,000.00 Other Expenses Misc Expense (26,220.00) (31,000.00) (31,000.00) (31,000.00) (31,000.00) (31,000.00) (31,000.00) Interest Expense (1,357,338.00) (907,988.00) (861,112.50) (812,113.00) (760,588.00) (694,338.00) (624,275.00) Total Other Expenses (1,383,558.00) (938,988.00) (892,112.50) (843,113.00) (791,588.00) (725,338.00) (655,275.00) Total Non - Operating Income (995,571.00) (802,988.00) (746,112.50) (697,113.00) (645,588.00) (579,338.00) (509,275.00) Net Income 681,544.00 1,272,700.93 591,642.15 458,448.49 481,696.57 795,567.76 665,247.12 3 Year Rate Chanee Phase in Combined Income Statement 2013 2014 2015 2016 2017 2018 2019 Operating Revenue 39,686,217.00 40,793,992.67 40,418,010.39 40,854,732.39 41,242,683.51 41,910,591.05 42,534,802.66 Operating Expense 38,009,102.00 38,718,303.74 39,080,255.74 39,699,170.90 40,115,398.94 40,535,685.29 41,360,280.54 Operating Income 1,677,115.00 2,075,688.93 1,337,754.65 1,155,561.49 1,127,284.57 1,374,905.76 1,174,522.12 Other Income and Deductions (995,571.00) (802,988.00) (746,112.50) (697,113.00) (645,588.00) (579,338.00) (509,275.00) Net Income 681;544:00 1,272;700:93 591;6'42 15:. 458 448`49 481;696 57k ; 795''�5'67.776 � H. fl ;, 2'47 Cash Flows Beginning of Year Cash (Includes All Accounts) Plus: Net Income Plus: Depreciation and Amortization Less: Capital Improvements Less: Bond and MRES Principal End of Year Cash (Includes All Accounts) Be .ginning of Year Cash By Account Capital Expenditures Current Year Electric Production PILOT Debt Service Reserve Fund Catastrophic Failure Fund Rate Stabilization Funds Development Study Bond and Interest Payment Cash in Bank 3 Year Rate Change Phase In 2013 2014 2015 2016 2017 2018 2019 9,752,726.23 8,779,199.91 10,989,303.84 5,840,917,99 5,485,366.49 6,965,563.06 8,655,130.82 681,544.00 1,272,700.93 591,642.15 458,448.49 481,696.57 795,567.76 665,247.12 4,166,003.00 4,281,953.00 4,018,972.00 3,781,000.00 3,781,000.00 3,806,000.00 3,806,000.00 (2,641,073.32) (2,169,550.00) (8,534,000.00) (3,310,000.00) (1,437,500.00) (1,492,000.00) (2,279,000.00) (3,180,000.00) (1,175,000.00) (1,225,000.00) (1,285,000.00) (1,345,000.00) (1,420,000.00) (1,495,000.00) 8,7791199,91,:,, 10;989,301184 5;840;917:99 5;4$5;366 49 6;965;563 06 °r' ,W55 13682 ; 9 35'2 377 "94,; .1/1/2013 1 1 2014 1/1/2015 1 1 2 016 1/1/2017 1 1 2018 1/1/2019 1,576,183.00 1,597,050.00 1,810,000.00 980,000.00 817,500.00 927,000.00 989,000.00 2,781,702.40 572,500.00 6,724,000.00 2,330,000.00 620,000.00 565,000.00 1,290,000.00 1, 403, 076.07 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 1, 900, 000.00 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 2,188,694.02 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 629,096.93 1,194,540.93 1,200,000.00 1,200,000.00 1,200,000.00 1,200,000.00 1,200,000.00 286,123.36 - - - - - - 666,585.41 400,579.01 400,500.00 400,500.00 400,500.00 400,500.00 400,500.00 (277'891:;19) 425;835:95' (3,733`;890 :18)„ (3;658;27,,6.03)j,, :4 - (2;RS4'1,32733)'` °, �, .: J, 0715,63096) ;. 186 9.36 80 -s 9,753,570.00 8,779,199.91 10,989,303.84 5,840,917.99 5,485,366.49 6,965,563.06 8,655,130.82 ELECTRIC INCOME & EXPENSE SUMMARY OPERATING REVENUES Sales - Electric Energy (440, 442, 444) Sales For Resale (447) Capacity Sales (447) Street Lighting (444) Total Energy Sales 2013 2014 2015 4 Year Rate Change Phase in 2016 2017 2018 2019 24,455,179.00 24,842,772.66 24,852,932.89 24,865,577.39 24,880,731.01 24,898,418.85 25,156,933.74 1% Growth Rate in retail sales 779,276.00 977,400.00 880,000.00 880,000.00 880,000.00 880,000.00 880,000.00 Split Actual 2013 and Budgeted 2014 for 2015 -2019 112,000.00 80,000.00 294,000.00 675,500.00 1,004,500.00 1,292,000.00 1,532,000.00 SMMPA Contract 143,002.00 139, 307.00 - 140,000.00 140,000.00 140,000.00 140,000.00 140,000.00 25,489,457.00 26,039,479.66 26,166,932.89 26,561,077.39 26,905,231.01 27,210,418.85 27,708,933.74 OTHER OPERATING REVENUES 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 37,970.00 Net Income From Other Sources (450,451) 297,525.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 Security Lights (454.01) 11,033.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 Pole Rental (454.02, 454.03) 32.00 500.00 500.00 500.00 500.00 500.00 500.00 Total Other Operating Revenues 308,590.00 230,500.00 230,500.00 230,500.00 230,500.00 230,500.00 230,500.00 TOTAL OPERATING REVENUE 25,798,047.00 26,269,979.66 26,397,432.89 26,791,577.39 27,135,731.01 27,440,918.85 27,939,433.74 OPERATING EXPENSES 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 37,970.00 Production Operation (546, 547, 550) Operation Supervison & Engineering (546) 1,126,083.00 1,072,164.69 1,104,329.63 1,137,459.52 1,171,583.31 1,206,730.80 1,242,932.73 3% increase annually for 546 and 550 Fuel (547) 2,156,277.00 2,180,050.00 2,580,000.00 2,630,000.00 2,680,000.00 2,700,000.00 2,700,000.00 N. Gas Prices $4.50 /MCF Operating Supplies and Expense (550) 162,780.00 111,100.00 114,433.00 117,865.99 121,401.97 125,044.03 128,795.35 Total Production Operation (546, 547, 550) 3,445,140.00 3,363,314.69 3,798,762.63 3,885,325.51 3,972,985.27 4,031,774.83 4,071,728.08 Production Maintenance (554) 499,300.00 337,800.00 315,798.00 325,272.00 325,272.00 325,272.00 325,272.00 3°% Increase Annually ' Purchased Gas Generation Other Power Supply Expense (555, 556, 557) 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 37,970.00 35,000.00 Purchased Power (555) 13,342,967.00 14,000,000.00 14,020,000.00 14,480,200.00 14,500,600.00 14,521,200.00 14,982,000.00 Assume $660,000 MRES increase in 2014 and $440,000 System Control & Load Dispatch (556) 340,482.00 304,500.00 313,635.00 323,044.05 332,735.37 342,717.43 352,998.96 in 2016/2019, MISO purchases increase 1% annually, Engineering Services (557) 86,382.00 25,000.00 25,750.00 26,522.50 27,318.18 28,137.72 28,981.85 556, and 557 increase 3% annually Total Other Power Supply Expense (555, 556, 557) 13,769,831.00 14,329,500.00 14,359,385.00 14,829,766.55 14,860,653.55 14,892,055.15 15,363,980.81 Transmission Expense (560, 567, 574) Transmission Expense Operation (560, 567) 1,419,617.00 1,286,000.00 1,600,000.00 1,648,000.00 1,697,440.00 1,748,363.20 1,800,814.10 Transmission increase of $100,000 in 2014 and 2015- - Transmission Expense Maintenance (574) 73,734.00 24,000.00 24,720.00 25,461.60 26,225.45 27,012.21 27,822.58 negotiated settlement with GRE, 574 increase of 3% Total Transmission Expense (560, 567, 574) 1,493,351.00 1,310,000.00 1,624,720.00 1,673,461.60 1,723,665.45 1,775,375.41 1,828,636.67 annually Distribution Expense: Distribution Operation (580, 581, 586, 588, 589) 560,924.00 420,350.00 432,960.50 445,949.32 459,327.79 473,107.63 487,300.86 Distribution Maintenance (592, 594, 595, 596, 598) 321,821.00 220,500.00 227,115.00 233,928.45 240,946.30 248,174.69 255,619.93 3% Increase Annually Total Distribution Expense: 882,745.00 640,850.00 660,075.50 679,877.77 700,274.10 721,282.32 742,920.79 Customer Service and Collection(902, 903, 904, 906) Meter Reading (902) 18,794.00 17,050.00 17,561.50 18,088.35 18,631.00 19,189.93 19,765.62 Collection Expense (903) 127,589.00 105,545.00 108,711.35 111,972.69 115,331.87 118,791.83 122,355.58 3% Increase Annually Bad Debt Write offs (904) 5,070.00 3,300.00 3,399.00 3,500.97 3,606.00 3,714.18 3,825.60 Customer Services (906) 40,260.00 41,250.00 42,487.50 43,762.13 45,074.99 46,427.24 47,820.06 Total Customer Service and Collection (902, 903, 904, 906) 191,713.00 167,145.00 172,159.35 177,324.13 182,643.85 188,123.17 193,766.87 Sales Expense (911, 916) Supervison (911) Misc. Selling Expense (916) Total Sales Expense (911, 916) Admin and General (920, 921, 923, 924, 926, 928, 930, 935) 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 Admin and General (920, 921, 923, 924, 926, 928, 930, 935) Depreciation Expense (403) Amortization - Development Study Payment in Lieu of Taxes (408) Contribution To City -for Roadway Lighting (408) Other - Net Interest Income Misc. Income Misc. Expense Interest Expense TOTAL OPERATING EXPENSE OPERATING INCOME OTHER INCOME AND DEDUCTIONS TOTAL OTHER INCOME & EXP. 6,240.00 6,000.00 6,180.00 6,365.40 6,556.36 6,753.05 6,955.64 191,500.00 301,500.00 310,545.00 319,861.35 329,457.19 339,340.91 349,521.13 3% Increase Annually 197,740.00 307,500.00 316,725.00 326,226.75 336,013.55 346,093.96 356,476.78 520,388.00 500,250.00 281,574.00 184,125.00 147,846.00 56,475.00 102,512.00 105, 050.00 1, 240, 786.00 1,324,875.00 23,980.00 31,900.00 95,031.00 103,675.00 71,061.00 37,180.00 2,483,178.00 2,343,530.00 515,257.50 189,648.75 58,169.25 108,201.50 1,364,621.25 32,857.00 106,785.25 38,295.40 2,413,835.90 530,715.23 195,338.21 59,914.33 111,447.55 1,405,559.89 33,842.71 109,988.81 39,444.26 2,486,250.98 546,636.68 563,035.78 201,198.36 207,234.31 61,711.76 63,563.11 114, 790.97 118,234.70 1,447,726.68 1,491,158.48 34,857.99 35,903.73 113, 288.47 116, 687.13 40,627.59 41,846.42 2,560,838.51 2,637,663.66 579,926.86 213,451.34 3% Increase Annually 65,470.00 121,781.74 1,535,893.24 36,980.84 120,187.74 43,101.81 2,716,793.57 2,612,388.00 2,700,000.00 2,700,000.00 2,725,000.00 2,725,000.00 2,750,000.00 2,750,000.00 525,953.00 525,953.00 262,972.00 912,000.00 1,235,000.00 1,235,000.00 1,235,000.00 1,235,000.00 1,235,000.00 1,235,000.00 Flat 142,666.00 4,193,007.00 4,460,953.00 4,197,972.00 3,960,000.00 3,960,000.00 3,985,000.00 3,985,000.00 27,156,005.00 27,260,592.69 27,859,433.38 28,343,505.28 28,622,346.28 28,902,640.51 29,584,575.56 (1,357,958.00) (990,613.03) (1,462,000.49) (1,551,927.89) (1,486,615.27) (1,461,721.66) (1,645,141.82) 58,031.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 37,970.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 10,000.00 15, 000.00 15,000.00 15,000.00 15, 000.00 15,000.00 15,000.00 (23,874.00) (25,000.00) (25,000.00) (25,000.00) (25,000.00) (25,000.00) (25,000.00) (85,537.00) (40,488.00) (35,612.50) (30,613.00) (25,488.00) (20,238.00) (14,925.00) (3,410.00) 4,512.00 9,387.50 14,387.00 19,512.00 24,762.00 30,075.00 NET INCOME (1,361,368.00), (986,101.03) (1;452,612.99) (1,537,540.89) (1,467,103.27) (1,436,959.66)', (1,615;066.82) 4 Year Rate Change Phase In NATURAL GAS INCOME & EXPENSE SUMMARY OPERATING REVENUES 2013 2014 2015 2016 2017 2018 2019 Sales - Natural Gas - Retail 8,356,512.00 8,490,262.14 8,000,000.00 8,080,000.00 8,160,800.00 8,242,408.00 8,324,832.08 1% Growth after $8 million in 2015 Contract Sale to Large Customer(Includes 3M & HTI transport) 3,646,509.00 4,533,750.87 4,200,000.00 4,242,000.00 4,284,420.00 4,327,264.20 4,370,536.84 1% Growth after $4.2 million in 2015 Pipeline Transportation 785,149.00 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00 Transportation - Electric Division 1,100,000.00 700,000.00 1,100,000.00 1,100,000.00 1,100,000.00 1,100,000.00 1,100,000.00 TOTAL OPERATING REVENUES 13,888,170.00 14,524,013.01 14,100,000.00 14,222,000.00 14,345,220.00 14,469,672.20 14,595,368.92 OPERATING EXPENSES Purchased Gas for Retail (807) Contract Gas for Large Customer Total Gas Purchased Transmission (856, 863) Gas Transmission Operations (856) Gas Transmission Maintenance (863) Total Transmission (865, 863) Distribution Expense: Distribution Operation (870, 874, 878, 880): Supervision and Engineering (870) Mains and Services (874) Meters (878) Misc. (880) Total Distribution Operation (870, 874, 878, 880) Distribution Maintenance (892, 893, 895) 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(902, 903, 904, 906) 4,482,870.00 4,106,505.55 4,147,570.61 2,950,652.00 3,695,980.50 3,360,000.00 7,433,522.00 7,802,486.05 7,507,570.61 114, 3 77.00 109, 5 00.00 112, 785.00 4,002.00 11,500.00 11, 845.00 118, 3 79.00 121, 000.00 124,630.00 289, 629.00 155,000.00 159, 650.00 67, 595.00 129,500.00 133, 385.00 240.00 3,500.00 3,605.00 48,415.00 161,100.00 165, 933.00 405,879.00 449,100.00 462,573.00 126,902.00 133, 000.00 136,990.00 9,932.00 20,000.00 20,600.00 47,403.00 56,000.00 57,680.00 184,237.00 209,000.00 215,270.00 4,189,046.31 3,393,600.00 7,582,646.31 116,168.55 12,200.35 128,368.90 164,439.50 137,386.55 3,713.15 170,910.99 476,450.19 141,099.70 21,218.00 59,410.40 221,728.10 4,230,936.77 3,427,536.00 7,658,472.77 119,653.61 12,566.36 132,219.97 169,372.69 141,508.15 3,824.54 176,038.32 490,743.70 145,332.69 21,854.54 61,192.71 228,379.94 4,273,246.14 4,315,978.60 Many long term N. Gas contracts purchased in 2013/14, f 3,461,811.36 3,496,429.47 N. Gas Prices $4.50 /MCF, 1% Increase w/ Sales 7,735,057.50 7,812,408.08 123, 243.21 126, 940.51 12,943.35 13,331.65 3% Increase Annually 136,186.57 140, 2 72.16 174, 453.87 179, 687.48 145,753.39 150,125.99 3% Increase Annually 3,939.28 4,057.46 181,319.47 186,759.05 505,466.01 520,629.99 149,692.67 154,183.45 22,510.18 23,185.48 3% Increase Annually 63,028.49 64,919.35 235,231.34 242,288.28 Meter Reading (902) 15,365.00 13,950.00 14,368.50 14,799.56 15,243.54 15,700.85 16,171.87 Collection Expense (903) 104,390.00 86,355.00 88,945.65 91,614.02 94,362.44 97,193.31 100,109.11 3% Increase Annually Bad Debt Write offs (904) 4,148.00 2,700.00 2,781.00 2,864.43 2,950.36 3,038.87 3,130.04 Customer Services (906) 32,940.00 33,750.00 34,762.50 35,805.38 36,879.54 37,985.92 39,125.50 Total Customer Service and Collection (902, 903, 904, 906) 156,843.00 136,755.00 140,857.65 145,083.38 149,435.88 153,918.96 158,536.53 Sales Expense (911, 916) Supervison (911) Misc. Selling Expense (916) Total Sales Expense (911, 916) Admin and General (920, 921, 923, 924, 926, 928, 930, 935) 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 Admin and General (920, 921, 923, 924, 926, 928, 930, 935) Depreciation Expense (403) Payment in Lieu of Taxes (408) TOTAL OPERATING EXPENSE OPERATING INCOME OTHER INCOME AND DEDUCTIONS Other Misc. Income Other - Net Interest Income Misc. Income Misc. Expense Interest Expense TOTAL OTHER INCOME AND DEDUCTIONS NET INCOME 17,322.00 2,000.00 2,060.00 2,121.80 2,185.45 2,251.02 2,318.55 48,592.00 100,500.00 103,515.00 106,620.45 109,819.06 113,113.64 116,507.04 3% Increase Annually 65, 914.00 102, 500.00 105,575.00 108, 742.25 112,004.52 115,364.65 118, 825.59 173, 463.00 166,750.00 93,858.00 61,375.00 49,282.00 18,825.00 83,872.00 85,950.00 413,595.00 441,625.00 19,620.00 26,100.00 77,719.00 84,825.00 58,175.00 30,420.00 969,584.00 915,870.00 1,027, 662.00 1,056,000-00 491,077.00 665,000.00 1,518,739.00 1,721,000.00 171,752.50 63,216.25 19,389.75 88,528.50 454,873.75 26,883.00 87,369.75 31,332.60 943,346.10 1,056,000.00 665,000.00 1,721,000.00 176,905.08 65,112.74 19,971.44 91,184.36 468,519.96 27,689.49 89,990.84 32,272.58 971,646.48 1,056,000.00 665,000.00 1,721,000.00 182,212.23 187, 678.5 9 67,066.12 69,078.10 20,570.59 21,187.70 93,919.89 96,737.48 482,575.56 497,052.83 28,520.17 29,375.78 92,690.57 95,471.28 33,240.76 34,237.98 1, 000, 795.88 1, 030, 819.75 1,056,000.00 1, 056, 000.00 665,000.00 665,000.00 1, 721, 000.00 1, 721, 000.00 193,308.95 71,150.45 3% Increase Annually 21,823.33 99,639.61 511,964.41 30,257.05 98,335.42 35,265.12 1,061,744.35 1,056,000.00 665,000.00 Flat 1,721,000.00 10, 853,097.00 11,457, 711.05 11, 220,822.36 11, 355, 665.61 11,493,052.66 11, 633, 044.78 11,775, 704.97 3,035,073.00 3,066,301.96 2,879,177.64 2,866,334.39 2,852,167.34 2,836,627.42 2,819,663.95 243,008.00 40,000.00 40,000.00 40,000.00 40,000.00 40,000.00 40,000.00 37,970.00 25,000.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 1,008.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 (2,346.00) (6,000.00) (6,000.00) (6,000.00) (6,000.00) (6,000.00) (61000.00) (1,271,801.00) (867,500.00) (825,500.00) (781,500.00) (735,100.00) (674,100.00) (609,350.00) Bond Refinancing (992,161.00) (807,500.00) (755,500.00) (711,500.00) (665,100.00) (604,100.00) (539,350.00) 2,042,912.00 2,258,801.96 2,123;677.64 2,154,83439 2,187,067.34, 21232,527.42 2,280,31195 Other Expenses Misc Expense (26,220.00) (31,000.00) (31,000.00) 4 Year Rate Change Phase In (31,000.00) (31,000.00) COMBINED INCOME & EXPENSE SUMMARY (907,988.00) (861,112.50) (812,113.00) (760,588.00) (694,338.00) (624,275.00) Total Other Expenses (1,383,558.00) Operating Revenues 2013 2014 2015 2016 2017 2018 2019 Sales Electric Energy 24,598,181.00 24,982,079.66 24,992,932.89 25,005,577.39 25,020,731.01 25,038,418.85 25,296,933.74 Sales for Resale 891,276.00 1,057,400.00 1,174,000.00 1,555,500.00 1,884,500.00 2,172,000.00 2,412,000.00 Security Lights 11,033.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 Pole Rental 32.00 500.00 500.00 500.00 500.00 500.00 500.00 Sales Gas 12,003,021.00 13,024,013.01 12,200,000.00 12,322,000.00 12,445,220.00 12,569,672.20 12,695,368.92 New Ulm Transportation 785,149.00 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00 Transportation - Electric 1,100,000.00 700,000.00 1,100,000.00 1,100,000.00 1,100,000.00 11100,000.00 1,100,000.00 Net Income From Other Sources 297,525.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 220,000.00 Total Operating Revenues 39,686,217.00 40,793,992.67 40,497,432.89 41,013,577.39 41,480,951.01 41,910,591.05 42,534,802.66 Operating Expense Production Operations 3,445,140.00 3,363,314.69 3,798,762.63 3,885,325.51 3,972,985.27 4,031,774.83 4,071,728.08 Production Maintenance 499,300.00 337,800.00 315,798.00 325,272.00 325,272.00 325,272.00 325,272.00 Electric Purchased Power 13,342,967.00 14,000,000.00 14,020,000.00 14,480,200.00 14,500,600.00 14,521,200.00 14,982,000.00 Other Power Supply 426,864.00 329,500.00 339,385.00 349,566.55 360,053.55 370,855.15 381,980.81 Electric Transmission Operation 1,419,617.00 1,286,000.00 1,600,000.00 1,648,000.00 1,697,440.00 1,748,363.20 1,800,814.10 Electric Transmission Maintenance 73,734.00 24,000.00 24,720.00 25,461.60 26,225.45 27,012.21 27,822.58 Electric Distribution Operation 560,924.00 420,350.00 432,960.50 445,949.32 459,327.79 473,107.63 487,300.86 Electric Distribution Maintenance 321,821.00 220,500.00 227,115.00 233,928.45 240,946.30 248,174.69 255,619.93 Gas Purchased Power 7,433,522.00 7,802,486.05 7,507,570.61 7,582,646.31 7,658,472.77 7,735,057.50 7,812,408.08 Gas Transmission Operation 114,377.00 109,500.00 112,785.00 116,168.55 119,653.61 123,243.21 126,940.51 Gas Transmission Maintenance 4,002.00 11,500.00 11,845.00 12,200.35 12,566.36 12,943.35 13,331.65 Gas Distribution Operation 405,879.00 449,100.00 462,573.00 476,450.19 490,743.70 505,466.01 520,629.99 Gas Distribution Maintenance 184,237.00 209,000.00 215,270.00 221,728.10 228,379.94 235,231.34 242,288.28 Customer Accounting 348,556.00 303,900.00 313,017.00 322,407.51 332,079.74 342,042.13 352,303.39 Sales Expense 263,654.00 410,000.00 422,300.00 434,969.00 448,018.07 461,458.61 475,302.37 General & Administrative 3,452,762.00 3,259,400.00 3,357,182.00 3,457,897.46 3,561,634.38 3,668,483.42 3,778,537.92 Depreciation 3,640,050.00 3,756,000.00 3,756,000.00 3,781,000.00 3,781,000.00 3,806,000.00 3,806,000.00 Amortization - Development Study 525,953.00 525,953.00 262,972.00 Payment in Lieu of Taxes 1,403,077.00 1,900,000.00 1,900,000.00 1,900,000.00 1,900,000.00 1,900,000.00 1,900,000.00 Roadway Lighting 142,666.00 Total Operating Expense 38,009,102.00 38,718,303.74 39,080,255.74 39,699,170.90 40,115,398.94 40,535,685.29 41,360,280.54 Total Operating Income 1,677,115.00 2,075,688.93 1,417,177.15 1,314,406.49 1,365,552.07 1,374,905.76 1,174,522.12 Other Income Other Net Income 301,039.00 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00 Interest Income 75,940.00 60,000.00 70,000.00 70,000.00 70,000.00 70,000.00 70,000.00 Misc Income 11,008.00 16,000.00 16,000.00 16,000.00 16,000.00 16,000.00 16,000.00 Gain on Disposal - - - - Total Other Income 387,987.00 136,000.00 146,000.00 146,000.00 146,000.00 146,000.00 146,000.00 Other Expenses Misc Expense (26,220.00) (31,000.00) (31,000.00) (31,000.00) (31,000.00) (31,000.00) (31,000.00) Interest Expense (1,357,338.00) (907,988.00) (861,112.50) (812,113.00) (760,588.00) (694,338.00) (624,275.00) Total Other Expenses (1,383,558.00) (938,988.00) (892,112.50) (843,113.00) (791,588.00) (725,338.00) (655,275.00) Total Non - Operating Income (995,571.00) (802,988.00) (746,112.50) (697,113.00) (645,588.00) (579,338.00) (509,275.00) Net Income 681,544.00 1,272,700.93 671,064.65 617,293.49 719,964.07 795,567.76 665,247.12