Submitted By: Marie Brooks
presenter
Presentation By: Doug Peebles
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Department: Electric Utility
FORMAL TITLE:
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Budget Resolution 2025-114 to amend the Fiscal Year 2024-25 budget to offset unanticipated bulk power expense by transferring the power cost adjustment over-collection to the Electric Utility Reserve in the amount of $3,701,630
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OCALA’S RELEVANT STRATEGIC GOALS:
Fiscally Sustainable
PROOF OF PUBLICATION:
N/A
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BACKGROUND:
The Power Cost Adjustment (PCA) rate serves as the mechanism through which fluctuations, both positive and negative, in power costs are passed through to customers. Power costs and sales are reviewed monthly to project potential over- or under-collections for the year. Although the PCA may be adjusted as frequently as monthly, recent practice has been to make limited adjustments to promote rate stability for customers.
At the close of Fiscal Year 2024-25, the PCA program reflected an over-collection relative to actual power costs incurred. The over-collection amount, totaling $3,701,630, was primarily due to a prior-year adjustment, favorable market conditions earlier in the fiscal year, and a largely conservative rate-setting practice. Concurrently, the Utility experienced an increase in bulk power costs totaling $6,968,957, driven by heightened market demand during the year, resulting in expenditures that exceeded the adopted budget. Early projections indicated that $112 million would be sufficient to cover the Fiscal Year 2024-25 expenditures; however, the actual bulk power cost totaled approximately $119 million by the end of the year.
FINDINGS AND CONCLUSIONS:
The Rate Stabilization Policy establishes a reserve funding range of 15 to 25 percent of projected fuel costs. As of September 30, 2025, the reserve is funded at approximately 23 percent of the power cost and complies with policy requirements.
To ensure the Electric Utilities Fund maintains its required cash-on-hand and remains adequately prepared for unforeseen operational or market-related contingencies, staff recommend that the Fiscal Year 2024-25 PCA over-collection be transferred to the Utility Reserve Fund. This strategic allocation will help absorb unanticipated increases in bulk power costs while preserving the department’s reserve requirements and strengthening the utility fund's long-term stability and resilience.
FISCAL IMPACT:
The reallocation of $3,701,630 of over-collected PCA funds will support the Electric Utility Fund in offsetting the total of $6,968,957 in unanticipated bulk power cost increases incurred during Fiscal Year 2024-25.
PROCUREMENT REVIEW:
N/A
LEGAL REVIEW:
N/A
ALTERNATIVE:
• Approve with Changes
• Table
• Deny
BUDGET RESOLUTION 2026-114
A RESOLUTION AMENDING THE FISCAL YEAR 2024-25 BUDGET TO OFFSET UNANTICIPATED BULK POWER EXPENSE BY TRANSFERING THE POWER COST ADJUSTMENT OVER-COLLECTION TO THE ELECTRIC UTILITY RESERVE IN THE AMOUNT OF $3,701,630
WHEREAS, at the close of Fiscal Year 2025, the PCA program reflected an over-collection of revenues totaling $3,701,630; and
WHEREAS, during Fiscal Year 2025, the Utility experienced an increase in bulk power costs totaling $6,968,957, driven by heightened market demand, resulting in expenditures that exceeded the adopted budget; and
WHEREAS, early projections estimated that $112 million would be sufficient to cover Fiscal Year 2025 bulk power expenditures, but actual costs reached approximately $119 million by year-end; and
WHEREAS, the reallocation of $3,701,630 in over-collected PCA funds will support the Electric Utility Fund in offsetting the total of $6,968,957 in unanticipated bulk power cost increases incurred during Fiscal Year 2025.
NOW THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF OCALA, FLORIDA, duly assembled in regular session, that the Fiscal Year 2024-25 budget be amended as outlined below:
SOURCE:
457-369-000-000-16-39211 Miscellaneous Revenues $3,701,630
USE:
457-099-999-531-81-99800 Reserve For Contingencies $3,701,630
This resolution adopted this ______ day of ______________________, 2025.
ATTEST: CITY OF OCALA
By: By:
Angel B. Jacobs Kristen M. Dreyer
City Clerk President, Ocala City Council
Approved as to form and legality:
By: _________________________________
William E. Sexton
City Attorney
Reviewed for accounting accuracy & completeness:
By: _________________________________
Peter A. Lee
City Manager