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Hurricane City utility weighs whether to keep $28.1 million cash reserve or shift costs to customers
Summary
Consultants told the Hurricane City Power Board the city’s 2018 cash-reserve resolution sets a $28.1 million minimum; the board discussed options — immediate rate hikes, multi‑year plans with debt, or a power‑cost adjustment that would share volatility with customers.
Hurricane City’s power board spent the meeting weighing whether to hold to an existing $28.1 million cash‑reserve figure written into a 2018 resolution or to pursue alternatives such as rate increases, bonding or a power cost adjustment (PCA).
Jill Jurzyk, rates manager with Utility Financial Solutions, presented a five‑year cost‑of‑service projection (fiscal years 2026–2030) and the calculations that produced the $28,100,000 figure. Jurzyk said the resolution’s total is derived from three line items: a 38% depreciation fund ($10.3 million), a contingency equal to 1% of budgeted revenue (~$213,000) and a 10‑month operating expense reserve (about $17.6 million). “That is how we’re coming up with the $28,100,000,” she said.
Jurzyk told the board the consultants would recommend the utility hold at least $10,700,000 in operating cash, and that the board currently meets that lower threshold. She added the $28.1 million target is higher than what most utilities write into policy, though it may be justified by Hurricane’s rapid growth and the city’s current lack of a formal PCA. “If you’re comfortable holding $28,000,000 because you don’t have a power cost adjustment and you have large capital coming up, that is perfectly acceptable,” Jurzyk said.
The board reviewed four scenarios for reaching the higher balance. A one‑year plan would require nearly all capital financed and a roughly 10% immediate rate adjustment; a three‑year plan assumed about 60% financing and smaller annual rate adjustments; a five‑year plan spread adjustments and financing to soften immediate customer impacts. Jurzyk also presented a PCA option — a rolling average charge to recover power‑supply volatility — estimating the PCA would add about 2% a year to bills under current forecasts and could eliminate the need for general rate adjustments while meeting the reserve target around 2030.
Board members debated the tradeoffs. Some argued that new development should fund infrastructure through impact fees and developer‑side financing or crediting, while others said lead times for substation equipment and developer schedules may require the city to bond and front costs. One member summarized the tension: keep cash high to protect the utility, or preference for shifting more volatility onto customers via PCA and use debt to spread capital costs.
No formal vote on rates, bonding or PCA took place. The board directed staff to convene a follow‑up (interim) meeting with a fuller complement of board members and key staff so the consultant can refine rate design once the board clarifies its cash‑policy philosophy. Jurzyk and her team will return with rate‑design options after receiving that guidance.
What to watch next: the interim meeting will determine whether the power board pursues a PCA, a multi‑year rate plan tied to bonding, or keeps the $28.1 million reserve as the policy minimum.
