Submitted By: Charlene Pollette
Presentation By: Doug Peebles
Department: Electric Utility
STAFF RECOMMENDATION (Motion Ready):
title
Power Cost Adjustment Report - June 2022
end
OCALA’S RELEVANT STRATEGIC GOALS:
Fiscally Sustainable
PROOF OF PUBLICATION:
N/A
body
BACKGROUND:
The Power Cost Adjustment (PCA) rate is the mechanism by which the positive and negative fluctuations in the cost of power are passed through to the customer. Power costs and sales are reviewed monthly to project over or under collections for the year. While the PCA can be adjusted as often as monthly, the recent practice has been to make minimal adjustments in order to maintain stable rates to customers.
As requested by City Council, a monthly report on the projected over or under collection of the power cost adjustment is attached.
FINDINGS AND CONCLUSIONS:
On June 12, 2022, staff participated in a rate call with the Florida Municipal Power Agency (FMPA). Based on rate projections at that time, and our sales projections, an under collection of $21,243,591 is projected for the fiscal year ending 2022.
The current balance in the rate stabilization reserve is $20,954,306 or 14.6% of fiscal year 2022 projected fuel costs of approximately $143 million. Policy sets the targeted rate stabilization reserve funding at a minimum of 15% of projected fuel costs and a maximum of 25%. At this time, the reserve is 1% below the minimum policy requirement.
This report supports City Council's strategic goal of Fiscal Sustainability by ensuring the City's electric rates are adequate to cover power costs.
FISCAL IMPACT:
N/A
PROCUREMENT REVIEW:
N/A
LEGAL REVIEW:
N/A
ALTERNATIVE:
Table for discussion and guidance