Submitted By: Marie Brooks
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Presentation By: Doug Peebles
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Department: Electric Utility
STAFF RECOMMENDATION (Motion Ready):
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Approve the transfer of funds from the Power Cost Adjustment over-collection into the Electric Rate Stabilization Reserve fund, to both replenish reserves depleted during high fuel cost periods and restore the Rate Stabilization Reserve funds to the targeted compliance level in the amount of $14,187,000
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OCALA'S RELEVANT STRATEGIC GOALS:
Fiscally Sustainable
PROOF OF PUBLICATION:
N/A
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BACKGROUND:
The Electric Rate Stabilization Reserve (RSR) fund was established to stabilize customer rates against fuel price volatility and economic flections. The policy sets a target funding level of 25 percent of projected annual fuel costs, with a minimum threshold of 15 percent.
Elevated energy prices led to under collections of $24.5 million and $4.5 million in Fiscal Years 2022 and 2023. These shortfalls were managed through minimal rate increases and using reserves from the RSR fund to mitigate customer rate impacts. Since then, consistent rate collections have allowed the City to recover these under collections and restore reserve levels.
The end of Fiscal Year 2023-24 resulted in an over-collection of $15,215,541, creating an opportunity to both replenish the Rate Stabilization Reserves to policy-compliant levels and provide funding for unbudgeted capital improvement projects (CIP), which were delayed due to unavailable funding.
FINDINGS AND CONCLUSIONS:
A fiscally sound reserve fund is essential for stabilizing customer rates during fuel price volatility and economic fluctuations. Replenishing the RSR fund will enhance financial stability, provide rate protection during future high fuel cost periods, and ensure compliance with the target reserve requirement. This request aligns with the Council's strategic goal of Fiscal Sustainability. Staff requests approval to transfer the excess funds.
FISCAL IMPACT...
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