HomeMy WebLinkAbout8 FY11 Budget Revisions Agenda Item # 8
Public Utility District I
ACTION
To: Board of Directors
From: Bob Mescher
Date: October 05, 2010
Subject: Consideration of FY11 Budget Revisions
1. WHY THIS MATTER IS BEFORE THE BOARD
Only the Board can revise the Budget.
2. HISTORY
On November 18, 2009, the Board adopted the FY10 and FY11 Budgets. The budgets
included a 0% and 3% electric rate increase in FY10 and FY11 respectively.
Recent Board actions have lowered purchased power costs beginning in FY12. The
utility's purchased power costs have remained stable this year and are projected to
remain stable in the near future. Additionally, the utility was notified by UAMPS that it
would receive a $300,000 one-time refund to be credited toward our purchased power
costs. These cost reductions, along with a significant reduction in Electric Utility debt
service beginning in the later part of FY12, create a positive effect on the Electric
Utility's current and future budget operating costs.
Staff has updated the financial projections of the Electric Utility to reflect these
changes. The 3% rate increase in FY11, as proposed in the adopted budget, is no
longer necessary to cover the projected costs of service. Deficit spending, if any, in
FY11 can be temporarily funded by the Electric Rate Reserve Fund, which can be
refunded after the retirement of the Electric Utility debt service in the following year.
3. NEW INFORMATION
At the September 15, 2010 workshop, the Board requested an action item to be
placed on the agenda to reflect their changes in the FY11 Budget.
4. FISCAL IMPACT
The proposed 3% electric rate increase for FY11 represents about $600,000 of
additional revenue. The eliminating the rate increase could be more than offset by the
recent $300,000 UAMPS refund and the contribution reduction of $300,000 to the
Electric Rate Reserve.
Offsetting the Elimination of 3%Electric Rate Increase
Eliminate 3% Increase -$600,000
UAMPS Refund 300,000
Reduce FY11 Contribution to Rate Reserve 300,000
Net Change $ 0
5. RECOMMENDATION
a) Eliminate the proposed 3% electric rate increase in the FY11 Budget.
b) Amend the FY11 Budget to reduce the contribution to the Electric Rate Reserves by
$300,000.
Mary Cha an Michael D. Holley
Administrative Services Manager General Manager