Submitted By: Marie Brooks
Presentation By: Doug Peebles
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Department: Electric Utility
STAFF RECOMMENDATION (Motion Ready):
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Power Cost Adjustment Report - January 2023
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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 or under-collection of the power cost adjustment is attached.
On February 14, 2023, 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 $14,197,517 is projected for the fiscal year ending 2023.
The current balance in the rate stabilization reserve is $12,945,306 or 9% of fiscal year 2023 fuel costs of approximately $139 million. Policy sets the targeted rate stabilization reserve funding at a minimum of 15% of projected fuel costs and a maximum of 25%. Currently, the reserve is approximately 6% 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.