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HomeMy WebLinkAboutElectric Board - Minutes - 02/19/1992+. 4 0 Draft Minutes to be approved by the Board at the March 18, 1992 meeting. FORT COLLINS ELECTRIC BOARD MEETING MINUTES FEBRUARY 19, 1992, 5:00 - 6:30 P.M. BOARD MEMBERS PRESENT: John Allum, Dane Brandt, Mark Fidrych, William Orendorff, Barbara Rutstein, Richard Smart, and Larry Walsh. BOARD MEMBERS ABSENT: None STAFF PRESENT: Ellen Alward, Don Botteron, Allen Boushee, Delynn Coldiron, John DeHaes, Ron King, Bob Kost, Bob Nastan, Dennis Sumner and Bill Switzer. BOARD LIAISONS: Council Liaison -- Gerry Horak Staff Liaison -- Don Botteron CALL TO ORDER: Barbara Rutstein called the meeting to order. AGENDA: 1) Approval of Minutes 2) Rate Issue Review 3) Rate Option Discussion 4) Phase 1 (draft) Comprehensive Energy Policy (Item was not addressed) 5) By-laws 6) Critique Meeting/Next Meeting's Agenda/Set Next Meeting Date and Time DISCUSSION TOPICS: 1. APPROVAL OF MINUTES: A Motion was made by Board Member Smart to accept the Minutes. Board Member Brandt seconded the Motion. The Motion carried unanimously and the Minutes from the January 15, 1992 meeting were approved. 2. RATE ISSUE REVIEW: Don Botteron gave the Board a brief refresher on rate issues. Don explained to the Board that the revised Comparative Statement of Income and Changes in Working Capital show an unaudited gain in reserves of $2,248,610 for year end 1991. The Utility has been able to identify that most of the deferred capital expense, which contributed to that gain, was growth related so the expense has been cancelled, not just deferred. In response to a question, Don explained the "Contribution" line as: Payment for the developer's share of the system, both internal to his development and externally from the substation to the development, to actually provide electrical service for the development. RATE OPTION DISCUSSION: The Board was given an update on the status of the Western Area Power Administration (WAPA) rate changes. Board Member Rutstein asked for some clarification on why the rates keep fluctuating. Board Member Fidrych explained that the initial projections were based on a worst -case scenario. Based on a couple of months' experience, the worst -case did not happen, so the rates were adjusted accordingly. He thought there were also some adjustments made to the assumptions and numbers going into the studies. Implementation dates are being delayed whenever possible. Board Member Allum added that the Bureau of Reclamation costs are passed to WAPA and WAPA includes these in their rates. Because of all of the studies going on, the numbers are jumping all over the place. They are gaining more experience with the new operating environment, which so far has gone well, and, therefore, the risk is decreasing. Rates are now being projected/adjusted from more of a conservative approach, rather than a worst -case scenario approach. It is still unclear what WAPA is going to do and what influence this will have on PRPA and our purchase power rates year end 1992. Not influenced by this is the fact that the Utility is faced with a 5.9% rate increase in purchase Power on April 1, 1992. Don Botteron discussed with the Board the assumptions that went into the rate scenarios. He mentioned that there are two issues which need to be taken into account prior to making a decision on a recommended option: 1) The timing of the rate increase, and 2) The amount which constitutes a reasonable/adequate Purchase Power Reserve. Options 2 through 5 allow the Utility to maintain the current revenue and capital reserve levels prescribed in the budget. The Utility has three reserves: Revenue Reserve (8% of annual 0&M costs less Purchase Power) -- purpose of this is to offset a one month interruption in revenues. Capital Reserve (1 year's average of the 5 year capital program) -- purpose is to allow us to absorb fluctuations in capital purchases without violating rate stability. Rate changes are recommended if this reserve begins to taper down below the five year projected level. This Reserve is used to develop and project rate programs. Purchase Power Reserve (Up to 25% of annual operating income) -- purpose is to partially offset, defer or mitigate the impact of purchase power cost increases. This Reserve allows time for the customer to prepare for rate increases and to get rate programs in place. -2- Staff recommendation relating to the Revenue Reserve and Capital Reserve: No change. Staff recommendation relating to the Purchase Power Reserve: a) Revise the Financial Policy Statement to read "To provide a purchase power reserve #AOXX UP to approximately 25% of the annual revenue from the sale of electrical energy." b) Endorse the operating guideline of targeting 10% of the average annual electric sales revenue (or some target level which seems reasonable to the Board) for the purpose of projecting revenue needs and developing rate programs. Staff recommendation relating to rates: Don summarized the main advantages/disadvantages of rate options #1 through #5 and concluded with a staff recommendation of Option #5; "Delayed implementation (January 1, 1993)". Board discussed the rate scenarios and staff recommendations and reached consensus to give Don the authorization to prepare a report and resolution to Council based on Option #5. This will be presented to the Board at the next meeting for formal action by the Board. 4. BY-LAWS: Board Member Rutstein mentioned that she had reviewed the sample by-laws and wasn't impressed with any of them. She called Delynn to find out if APPA had a record of any other communities who had appointed, not elected, Boards and, if so, if we could get copies of their by-laws. 5. MEETING SCHEDULE: Don mentioned to the Board that because of the Open Records Act, it is preferred that the Board have a set meeting date and time which can be published. Board discussed current meeting arrangements. Board Member Walsh moved that the normal meeting day of the Board be the third Wednesday of each month, at 5:00 p.m. After a second from Board Member Fidrych, the Motion carried unanimously. 6. CRITIQUE MEETING/NEXT MEETING'S AGENDA: Board Members were very pleased with the meeting. Board discussed items to be included on next month's Agenda: - Rate issues -- proposed report and resolution - Undergrounding program - Energy Policy -3- TASKS: Don will prepare drafts of a rate options report, a resolution, and a memo of recommendation from the Board to Council for the Board's review at next meeting (March 18, 1992). Delynn has checked with APPA and will continue to work towards obtaining by-laws compatible to our Board. F.,111111WIMI IN The meeting adjourned at 7:00 p.m. 5�.e�y� .c- . C��o�✓ elynn . Coldiron, Board Secretary -4-