Submitted By: Marie Brooks
Department: Electric Utility
STAFF RECOMMENDATION (Motion Ready):
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Power Cost Adjustment Report - February 2022
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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 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 (under) collection of the power cost adjustment is attached.
FINDINGS AND CONCLUSIONS:
On March 15, 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 $15,656,049 is projected for the fiscal year ending 2022.
The current balance in the rate stabilization reserve is $20,954,306 or 17.2% of fiscal year 2022 projected fuel costs of approximately $121.5 million. Policy sets the targeted rate stabilization reserve funding at a minimum of 15% of projected fuel costs and a maximum of 25%.
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
SUPPORT MATERIALS:
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