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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Adopt Budget Resolution 2025-118 to amend the Fiscal Year 2023-24 budget, transferring funds from the Electric Power Cost over-recovery to support unfunded capital improvement projects in the amount of $1,028,541
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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 fluctuations in power costs are passed through to the customer. Key factors affecting fuel costs include natural gas prices and weather. Power costs and sales are reviewed each month to forecast over or under collections for the year.
Elevated energy prices led to under collections of $24.5 million and $4.5 million, respectively, in Fiscal Years 2022 and 2023. These shortfalls were managed through minimal rate increases and the use of reserves from the Rate Stabilization Funds to mitigate customer rate impacts. Since then, consistent rate collections have allowed the City to recover these under collections and restore reserve levels.
Following a thorough analysis and forecast by staff, a PCA rate decrease from $0.056 to $0.028 was approved by the Council effective March 1, 2024. Staff analysis identified the opportunity to decrease PCA rates while maintaining moderate collections to support bulk power purchases and reserve funding.
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.
The Electric Rate Stabilization Reserve fund was created to keep customer rates stable amid volatile fuel price changes and economic fluctuations. A fiscally sound reserve fund is essential to stabilize or smoo...
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