HomeMy WebLinkAboutMemo - Mail Packet - 11/6/2018 - Memorandum From Lance Smith Re: Electric Utility Rate Adjustment In Proposed 2019 BudgetUtilities
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700 Wood Street
PO Box 580
Fort Collins, CO 80522
970.221.6700
970.221.6619 – fax
970.224.6003 – TDD
utilities@fcgov.com
fcgov.com/utilities
M E M O R A N D U M
DATE: October 31, 2018
TO: Mayor Troxell and Councilmembers
FROM: Lance Smith, Utilities Strategic Finance Director
THROUGH: Darin Atteberry, City Manager
Jeff Mihelich, Deputy City Manager
Kevin R. Gertig, Utilities Executive Director
RE: Electric Utility Rate Adjustment in Proposed 2019 Budget
The proposed 5.0% electric rate increase in the 2019 Budget consists of 1.44% needed to offset
the increase in wholesale energy prices, 3.25% needed to increase operating revenues for
investments renewing the distribution system infrastructure and 0.32% for two enhancement
offers that support the City’s Climate Action Plan 2020 goals in this budget cycle.
1.44%
3.25%
0.32%
Proposed 5.0% 2019 Rate
Increase
CAP
Initiatives
Distribution
Capital
Purchased
Power
DocuSign Envelope ID: 7DDD58DD-9DB9-400F-AF66-3AE8E74C53B2
The 2019 Budget includes $10.9M of investment in Offers related to the Climate Action Plan
and ongoing environmental initiatives including partially funding those two Enhancements
(Offers 9.90 and 9.92).
Because Reserves have been drawn down over the last 3 budget cycles, it is necessary to
implement a 5.0% increase in each of the next two years rather than smoothing them out over a
longer period. Unanticipated operating revenues in 2018 are needed to be appropriated (First
Reading is November 20
th
) to offset the higher than anticipated purchased power expense
associated with these revenues. This is expected to leave an available balance of less than $3M
ahead of the 2019 budget.
Offer 2019
9.80 ENVIR Utilities: Light & Power - Energy Services $5,317,950
9.81 ENVIR
Utilities: Light & Power - Residential &
Commercial Solar Rebates
$710,000
9.82 ENVIR Utilities: Light & Power - Core Renewable Energy $3,874,500
9.83 ENVIR Utilities: Light & Power - Demand Response $620,400
9.90 ENVIR
ENHANCEMENT: Utilities: Light & Power -
Energy Efficiency
$237,500
9.92 ENVIR
ENHANCEMENT: Utilities: Light & Power - Non-
Residential Solar Rebates
$125,000
$10,885,350
$M
Reserve Balance 12/31/2017 $33.5
LESS Minimum Required Reserves ($8.4)
LESS Appropriations Prior to 12/31/2017 ($9.2)
LESS 2018 Budget Use of Reserves ($4.5)
Reserves Available 12/31/2017 $11.4
LESS 2018 Appropriations to date ($8.4)
LESS 2019-20 Budget Use of Reserves ($0.3)
PLUS 2018 Unanticipated Revenues $2.5
Reserves Available 10/15/2018 $5.2
DocuSign Envelope ID: 7DDD58DD-9DB9-400F-AF66-3AE8E74C53B2
The 2019 Budget includes $4.5M of capital investments for replacing existing distribution
infrastructure as it reaches the end of its useful life. This investment in the distribution system is
expected to maintain the current level of reliability in the near term ahead of more significant
capital investments being made in the future.
With this proposed 5.0% increase the average residential bill will still be on par with that of
customers in neighboring communities in 2019.
The long-term financial planning and objective financial metrics behind anticipated future rate
adjustments allow for more modest, gradual rate adjustments than are expected for some utility
services in neighboring communities in 2019.
Offer 2019
8.6 ECON Capital Replacement - Utilities: Light & Power - Substation Capital Upgrades $649,000
8.7 ECON
Capital Replacement - Utilities: Light & Power - Electric Distribution
Transformer Replacement
$940,000
8.8 ECON
Capital Replacement - Utilities: Light & Power - Attrition Based LED
Streetlight Conversion
$341,360
8.9 ECON Capital Replacement - Utilities: Light & Power - System Cable Replacement $500,000
8.12 ECON
ENHANCEMENT CAPITAL - Utilities: Light & Power - New Feeder Capacity
- Circuit 724 to Serve North College Area
$980,000
8.15 ECON
ENHANCEMENT CAPITAL - Utilities: Light & Power - New Feeder Capacity
- Circuit 236 to Serve Drake & Lemay Area
$500,000
10.19 HPG
ENHANCEMENT CAPITAL - Utilities: Asset Register and Work Order
Management System
$435,000
10.23 HPG ENHANCEMENT: CAPITAL - Utilities: 700 Wood Street Building/Facilities $160,000
$4,505,360
Electric Water Wastewater Stormwater Total
2019 2019 2019 2019 2019
Longmont $ 65.25 $ 49.08 $ 33.37 $ 13.70 $ 161.40
Greeley $ 79.38 $ 57.17 $ 20.23 $ 11.76 $ 168.55
Ft Collins $ 75.56 $ 47.88 $ 34.45 $ 15.73 $ 173.62
Loveland $ 77.08 $ 48.88 $ 34.02 $ 17.59 $ 177.56
Boulder $ 79.38 $ 47.17 $ 36.85 $ 16.39 $ 179.79
Colorado
Springs
$ 87.13 $ 88.92 $ 29.20 N/A $ 205.24
DocuSign Envelope ID: 7DDD58DD-9DB9-400F-AF66-3AE8E74C53B2
2019 Projected Rate Increases
Electric Water WW Stormwater
Longmont 0% 9% 2% 5%
Greeley - 5% 2.5% 7.7%
Loveland 5% 9% 11% 8%
Fort Collins 5% 0% 0% 2%
Boulder - 7% 5% 5%
Colorado Springs 0% 3.5% 2% N/A
DocuSign Envelope ID: 7DDD58DD-9DB9-400F-AF66-3AE8E74C53B2