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Utility board recommends five-year plan to meet reserve goal, keeps existing cash-reserve policy
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Summary
The utility board directed staff to ask the consultant to model a five‑year path to reach the cash‑reserve target in Resolution 2018‑12, keeping the existing cash‑reserve structure rather than immediately adopting a Power Cost Adjustment (PCA); the board approved the recommendation by voice vote and asked for rate scenarios for council.
Speaker S9 recommended the board stick with the city’s current cash‑reserve policy and reach the target using a five‑year rate plan; the board approved the recommendation on a voice vote and asked the consultant to model the five‑year scenario for council review.
The board met to review a cost‑of‑service study and options for the utility’s cash reserves. Speaker S1 opened the discussion by noting the city’s current cash‑reserve policy is structured around a depreciation fund, contingency fund and a 10‑month operating cushion, and that the policy’s formula produces a moving target of roughly $28,000,000. Speaker S2 summarized the consultant Jillian’s point that the existing policy (Resolution 2018‑12) requires action if reserves fall below the target for 12 months, and that such actions could include raising electric rates: “If the reserve fund drops below the target for 12 months or it’s forecasted to drop below the target, action must be taken to bring these funds into compliance of the cash reserve policy including raising electric usage rates,” S2 said.
Board members discussed options including keeping the present reserve policy and pursuing a multi‑year rate plan, implementing a Power Cost Adjustment (PCA) that adds a monthly adder based on a 6–12 month rolling average of wholesale power cost, or bonding to fund near‑term capital. S1 explained EDAM (the market scheduling/settlement mechanism) and said it makes the city more exposed to market price swings, which bolstered his case for preserving reserve levels. Several board members cautioned that the reserve calculation is a moving target tied to depreciable assets and future substations, and flagged legal and development pressures to fund capital in coming years.
In a motion, Speaker S9 recommended the board “keep the 48‑day cash on hand policy as it stated in the resolution 2018‑12, and do that using a five‑year plan, with rates.” Speaker S11 seconded the motion, and the board carried the recommendation on a voice vote. The board directed staff to have the consultant produce modeling and charts for the five‑year option and return to the board and to city council.
The action does not itself change the ordinance or rate structure; rate and ordinance changes would go to city council for adoption. Staff said the consultant needs the board’s direction on which target to model before the cost‑of‑service study can be completed. The board scheduled a follow‑up meeting next Wednesday at 3:00 p.m. for further consideration.
The decision balances competing aims the board described during discussion: protecting the city’s fund balance to preserve bond capacity and weather wholesale price spikes, while seeking a paced, multi‑year approach to reach the policy goal rather than an immediate one‑time step that could sharply raise customer bills.