Submitted By: Marie Brooks
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Presentation By: Doug Peebles
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Department: Electric Utility
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FORMAL TITLE:
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Utilization of the Electric Rate Stabilization Reserve Funds to offset power cost under-collections in the amount of $7,000,000 and carry forward of $3,005,487 to Fiscal Year 2026-27 to absorb the total Fiscal Year 2025-26 under-collection of $10,005,487
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OCALA’S RELEVANT STRATEGIC GOALS:
Fiscally Sustainable
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PROOF OF PUBLICATION:
N/A
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BACKGROUND:
The Power Cost Adjustment (PCA) rate is the mechanism by which positive and negative fluctuations in power costs are passed through to customers. Power costs and sales are reviewed monthly to project annual over-or under-collections. While the PCA can be adjusted monthly, the city’s practice has been to make minimal adjustments to keep customer rates stable.
As of September 30, 2026, the PCA rate and actual sales resulted in an under-collection of $10,005,487 for the end of Fiscal Year 2025-26.
The Electric Utility maintains a Rate Stabilization Reserve (RSR) to mitigate fluctuation in purchased power costs, promote financial stability, and minimize the impact of volatile energy markets on customer electric rates. The City’s reserve policy establishes a funding range of 15 percent to 25 percent of annual purchase cost. The reserve currently maintains a balance of $27,132,306.20, representing 20 percent of projected annual power cost as of September 30, 2026.
FINDINGS AND CONCLUSIONS:
To address the PCA shortfall and minimize the need for immediate rate adjustments, staff recommend utilizing $7 million from the RSR and carrying forward the remaining $3 million into the Fiscal Year 2026-27. Current Fiscal Year 2026-27 projections indicate that anticipated PCA recoveries will be sufficient to absorb the $3 million carryforward balance and generate an additional $900,000 in net over-collection for the fiscal year ending September 30, 2027.
This approach allows the Electric ...
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