HomeMy WebLinkAbout8 Electric Rate Increase Agenda Item #
TRUCKEE Ew
Pt.jL)hc Utility District
Workshop
To: Board of Directors
From: John Ulrich, Interim General Manager
Date: October 31, 2007
SUBJECT: Discussion of an Electric Rate Increase
1. WHY THIS ITEM IS BEFORE THE BOARD
The 2008 budget calls for a 9.94% increase in electric rates to balance revenues
and expenses and to provide funding for a portion of the District's capital
improvements. In July 2006, the Board increased the water rates for 2007 and 2008
to begin building a water operating reserve and a water capital reserve. Rate
changes can only be approved by the Board.
2. HISTORY
In 2006, the Board adopted a 5% electric rate increase. In 2007, the District did not
have an electric rate increase but did have a 6% water rate increase.
3. NEW INFORMATION
During the 2008 budget workshops, the department heads reviewed their
department budgets and provided an overview of the main areas of change from
their 2007 to 2008 budgets. While there are many line item changes within each
department budget, the main increases are in power supply costs, labor costs, and
conservation program costs.
We have presented the Board with a Finance Master Plan that proposes a 9.94%
electric rate increase in order to balance the budget. Rate increases are never easy.
The Finance Master Plan allows for other possible options. As the Board proposes
other options, staff would like you to focus on the impacts on the following items for
all years shown:
General Fund Cash Change
General Fund Ending Cash Balance
Rate Reserve Fund Cash Balance (2% of energy sales)
Electric Rate Increase
Rate Reserve Ending Balance
Combined Cash Change (General Fund plus Rate Reserve)
Debt Service Coverage Ratio
Attached is a summary of some of the rate increase options that the staff has keyed
into the Finance Master Plan showing the impacts on the above key balance.
4. GOALS AND OBJECTIVES RELATING TO THIS ITEM
Objective 6 - Manage the District in an effective, efficient and fiscally
responsible manner.
Goal 6.5 - Review and implement a Financial Goals policy to achieve a
stable financial condition.
Goal 6.6 - Develop appropriate financial procedures to assure responsible
financial management.
5. RECOMMENDATION
That the Board provide direction to staff on how they would like to proceed.
Ulrich
In rim General Manager
2 Electric Rate Increase
Electric Rate Increase
Scenario Summary Projections
Draft Budget Projection Projection Projection Projection Projection
Scenario 2008 2009 2010 2011 2012 2013
9.0 %In 20,08
0100 In 2009 9.94% 0.00% 0.00% 0.00% 0.00% 0.00%
General Fund Cash Change 0 353,899 230,021 33,931 (183,768) 1,219,538
General Fund Ending Balance 1 7,576,958 7,930,856 8,160,877 8,194,808 8,011,040 9,230,578
Rate Reserve Fund Cash Change 500,721 492,105 516,045 540,985 566,966 594,029
Rate Reserve Ending Balance 1,663,329 2,155,434 2,671,479 3,212,464 3,779,430 4,373,459
Combined Cash Change 500,721 846,004 746,065 574,916 383,198 1,813,567
Combined Fund Ending Balance 9,240,287 10,086,291 10,832,356 11,407,272 11,790,470 13,604,037
Debt Ratio-1.20 Requirement 1.50 1.42 1.36 1.29 1.22 debt payoff
n
4.00Ni In 2009 6.00% 4.00% 0.00% 0.00% 0.00% 0.00%
General Fund Cash Change (798,693) 381,588 259,414 65,102 (150,742) 1,254,500
General Fund Ending Balance 1 6,778,264 7,159,852 7,419,265 7,484,367 7,333,625 8,588,125
Rate Reserve Fund Cash Change 485,620 492,662 516,636 541,612 567,629 594,731
Rate Reserve Ending Balance 1,648,229 2,140,891 2,657,527 3,199,139 3,766,768 4,361,498
Combined Cash Change (313,073) 874,250 776,050 606,713 416,887 1,849,231
Combined Fund Ending Balance 8,426,493 9,300,743 10,076,792 10,683,506 11,100,393 12,949,624
Debt Ratio-1.20 Requirement 1.26 1.45 1.38 1.31 1.24 debt payoff
5,00y.In 2tIIl9 5.00% 5.00% 0.00% 0.00% 0.00% 0.00%
General Fund Cash Change (1,001,407) 375,467 253,068 58,522 (157,564) 1,247,425
General Fund Ending Balance 1 6,575,550 6,951,017 7,204,085 7,262,607 7,105,042 8,352,467
Rate Reserve Fund Cash Change 481,787 492,548 516,517 541,488 567,501 594,598
Rate Reserve Ending Balance 1,644,396 2,136,944 2,653,461 3,194,949 3,762,451 4,357,049
Combined Cash Change (519,620) 868,014 769,585 600,011 409,937 1,842,023
Combined Fund Ending Balance 8,219,946 9,087,961 9,857,545 10,457,556 10,867,493 12,709,516
Debt Ratio-1.20 Requirement 1.20 1.45 1.38 1.31 1.24 debt payoff
33. 2j0%In 200g 7.00% 3.00% OAO% 0.00% 0.00% 0.00%
General Fund Cash Change (595,979) 383,733 261,585 67,300 (148,517) 1,256,752
General Fund Ending Balance 1 6,980,978 7,364,711 7,626,296 7,693,595 7,545,079 8,801,831
Rate Reserve Fund Cash Change 489,453 492,699 516,674 541,649 567,667 594,769
Rate Reserve Ending Balance 1,652,061 2,144,761 2,661,434 3,203,084 3,770,751 4,365,520
Combined Cash Change (106,527) 876,432 778,258 608,949 419,150 1,851,522
Combined Fund Ending Balance 8,633,040 9,509,472 10,287,730 10,896,679 11,315,829 13,167,351
Debt Ratio-1.20 Requirement 1.32 1.44 1.37 1.31 1.24 debt payoff
1. The ending balance at 12/31/07 is projected to be$7,576,958.