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Power department says reserves recovering after 2022 price shock; turbine replacement and substation work remain costly
Summary
Murray power staff reported the utility remains near its reserve policy target after draws during the 2022 gas‑price spike, outlined remaining bond draw and capital work including a new turbine diffuser and central substation transformers, and previewed an Energy Day‑Ahead Market connection in mid‑May.
City power staff gave the Committee of the Whole a quarterly update Thursday, saying the utility’s cash reserves have recovered toward policy targets after steep drawdowns during an energy‑market spike in 2022.
Staff said the utility’s reserve policy targets 30% of prior‑year revenue for emergency stability. According to presenters, last year’s revenue was about $46,400,000, which yields a policy reserve goal of roughly $13,900,000. Presenters said reserves fell during the 2022 gas‑price surge—an episode they described as a “perfect storm” of high fuel costs and generation limits that drove the utility through roughly $12.2 million of reserves—and that subsequent capital spending, including about $3.8 million for AMI meters in 2024, also reduced balances.
Presenters reported the utility began a bond originally sized at $19,000,000 and has drawn about $8,300,000 so far, leaving an outstanding balance near $11,100,000. They said interest earnings and some reimbursements (including a $1.5 million bond reimbursement tied to transformer purchases and roughly $600,000 returned after reduced coal‑plant operations) helped recent cash flows.
On projects, staff said a remaining turbine diffuser part (cost about $254,000) is expected at month end and should allow testing in mid‑April. Central‑substation transformer orders total about $7.2 million (two units at roughly $3.6 million each); staff have paid an initial $1.5 million and estimate construction at about $3.5 million, yielding an approximate total project cost of $11.2 million when combined with prior work. The penstock and Sandy siphon require further repair; a budgetary estimate for penstock repairs is about $360,000.
Staff also said they will go live on an Energy Day‑Ahead Market (EDM) pooling arrangement in mid‑May and are finalizing a new rate study and a master plan, both expected to be available in the coming months.
Council members asked about the code language that requires a 30% reserve target and whether the utility can remain below it temporarily. Presenters said the municipal code allows up to five years to replenish reserves and that options to restore funding include future rate adjustments. Several council members expressed support for maintaining higher reserves to avoid future spikes in rates for residents.
The department asked the council for no immediate actions; staff will return with more detail as the rate study and master plan conclude.
