HomeMy WebLinkAbout11 Electric Water Rates Agenda Item # 11
Public Utility District
WORKSHOP
To: Board of Directors
From: Bob Mescher
Date: September 15, 2010
Subject: Discussion About 2011 Electric and Water Rates
1. WHY THIS MATTER IS BEFORE THE BOARD
This item involves the discussion of possible changes to Electric and Water rates.
2. HISTORY
On November 18, 2009, the Board adopted the FY10 and FY11 Budget. This budget
included a 0% and 3% electric rate increase in FY10 and FY11 respectively, and a
1.75% water rate increase in both FY10 and in FY11.
The required Proposition 218 process was completed on November 18, 2009 and the
water rate increases were adopted to be effective January 2010 and January 2011.
3. NEW INFORMATION
Electric Utility
Recent Board actions have lowered purchased power costs beginning in FY12. The
utility's purchased power costs remain 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 from prior years' purchased power. 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
budgets.
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.
Water Utility
The Water Utility continues to experience an overall reduction in water production
associated with leak elimination due to the pipeline replacement program and the
conservation aspect of residential meter installations. Comparing the trend from 2007
to present, a reduction of 20% has been achieved. (Attachment 1) Fewer leaks mean
lower pumping and water treatment costs which are a significant portion of the utility's
budget. These costs savings were anticipated and will be utilized to complete the
meter project and the replacement of the Supervisory Control and Data Acquisition
(SCADA) system.
Staff has updated the financial projections of the Water Utility to reflect these
changes. The already adopted 1.75% rate increase in FY11 is still necessary to cover
the projected operating costs.
4. FISCAL IMPACT
The proposed 3% electric rate increase for FY11 represents about $600,000 of
additional revenue. The waiving of the rate increase could be more than offset by the
recent $300,000 purchased power refund and the cancellation (for FY11 only) of the
$380,000 annual contribution to the Electric Rate Reserve.
Offsetting the 3% Rate Increase Deferral
Purchased Power Refund $300,000
Cancellation of FY11 Contribution to Rate Reserve 380,000
Deferring 3% Increase -600,000
Net Change $ 80,000
5. RECOMMENDATION
Review this report and provide comment.
TMary Ch anT Michael D. Holle y
Administrative Services Manager General Manager
ATTACHMENT 1
Overall System
2003-2010 Daily Well Production - Seven Day Running Averages
16,000,000
I I I
2005
2006
EI I -I - ........-- ----------
14,000,000 ----------------- -2007 --- - - .... - I- - -- -
-2008 I I
I
-2009 I I
-------------------------------------------------------------------------------------------------------
vs - --- - --- -- }- - - ` L---------- --- ------------------
10,000,000 - I - - - ..-.. - -- -
� I I
CD
c I I I
8 - -- - - - - - --- ------------------------------------------------------------------- ---------------
,00 -
t
� I I
o I
a I I
d -- - - - - -- t -- 1------------------------------ ------------------
� 6,000,000
-- - I -- -------- ---4,000,000 - - ------- I
I I
I I I
I I I
2,000,000 - t ------} ----
-------------------------------
Memorial Day
July 4 �� Labor Day
Jan-01 Feb-20 Apr-11 May-31 Jul-20 Sep-08 Oct-28 Dec-17
Date
i