1995 RES R-32-95 - Laserfiche WebLink

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ATTACHMENT 4 APPROVE STAFF RECOMMENDED CHANGES TO THE CUSTOMER SERVICE POLICY, INCLUDING ELECTRIC RATE CHANGES, AND ADOPT RESOLUTION BACKGROUND On June 21, 1994, City Council adopted Resolution Number R-74-94 which approved Staff recommended changes to the Electric Utility Customer Service Policy, including a two-year phased -in increase in electric rates. This included an increase of 3.5% in base rate revenues which became effective for all service rendered on and after July 1, 1994. An additional 3.5% base rate increase was also approved to be effective July 1, 1995. In addition, the Power Cost Adjustment (PCA) in the General Provisions changed from zero to a positive $.00558 per kwh. These changes in base rates generate approximately $720,000 annually. The PCA is expected to increase annual revenues by around $1.3 million at the current rate of $.00558 per kwh. These revenues were required to maintain a break-even financial position of the Electric Utility as of the status of the Electric Utility on June 21, 1994. The financial condition of the Electric Utility has changed significantly since June 21, 1994, and has resulted in a need for Staff to request increased revenues through increases in base rates and the power cost adjustment factor. Since June 21, 1994: 1. The cash reserve fund of the Electric Utility has been depleted due to loans made to the General Fund, and 2. The issuance of bonds to cover capital construction expenses has been forestalled which is requiring capital construction expenses to be paid from operating expenses rather than bond proceeds The immediate financial impact on the Electric Utility requires Staff to request revenue increases totaling about $1.8 million; $1.1 million of which will be used to develop reserves adequate to ensure that the Colton Electric Utility can pay purchased power bills from suppliers; $700,000 of which will be used to cover an existing cash deficit resulting from capital construction expenses being paid from operating revenues. DISCUSSION/ANALYSIS Rate changes will result in an increase of approximately $1.8 million in revenues as compared with currently approved rates between the proposed effective date of April 3, 1995, and June 30, 1996. Over $500,000 of this increase is expected to occur in the current fiscal year.