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HomeMy WebLinkAbout1977-068-11/01/1977-SETTING FORTH THE FINANCIAL POLICIES OF THE CITY LIGHT AND POWER DEPARTMENT y . F RESOLUTION 77- 68 OF THE COUNCIL OF THE CITY OF FORT COLLINS SETTING FORTH THE FINANCIAL POLICIES OF THE CITY LIGHT AND POWER DEPARTMENT WHEREAS, the Board of Directors for the Platte River Power Authority, which furnishes power to the Light and Power Department of the City of Fort Collins, is re- quired by their General Bond Resolution to make annual rate reviews and adopt rates necessary to meet the Bond covenants and WHEREAS, the City of Fort Collins is notified of these revised rates each year and WHEREAS, the City Charter requires that the Depart- ment collect sufficient revenues to meet specified expenses and WHEREAS, it is apparent that it will be necessary to revise the rates for customers of the Fort Collins Light and Power Department in order to meet changing expenses which will be incurred by the City utility and WHEREAS, the City Council desires to set forth certain policies of the City Council and requirements of the City Charter and ordinances relating to the establish- ment of rates for the City electric utility NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS Section 1 The Light and Power Department is hereby directed to undertake rate studies for the City electric utility and to make recommendations to the City Council regarding the rates to be charged for service from said utility Section 2 The rate and finance policy for the City of Fort Collins Light and Power Department shall be as follows A Fundamental Purpose The fundamental purpose of the Fort Collins Light and Power Department shall be 1 To supply electric energy in adequate amounts, reliably, economically, in an environmentally accept- able fashion, and with due regard to conservation of natural resources a 2 To provide ever higher standards of electric service, utilizing progressive management techniques and business principles to construct, operate and maintain the Fort Collins energy supply system for the benefit of the consumer and the community B Rates Electric rates will be based upon the cost of service approach to reflect full distribution of costs to appropriate rate classes in order to effect equitable sharing of costs Rates will be established and maintained at a level sufficient 1 To pay the full cost of operation and maintenance of the electric utility in good repair and working order 2 To pay the principal and interest on all bonds of the City due and payable from electric revenue 3 To provide and maintain an adequate working capital for the day to day business operations 4 To provide and maintain a depreciation and capital improvement fund for the replacement of depreciated and obsolete property and for the extension, improvement, enlargement, and betterment of the electric utility The depreciation and capital improvement fund will be maintained at an average level equal to i5ventory plus the 6-month average of the approved 5-year Capital Injprovements Procram 5 To pay into the general fund of the City of Fort Collins in lieu of taxes and franchise permits a percen- tage of revenue from the sale of electric energy and/or specified mils per kwh as defined below YEAR FORMULA 1978 7 58 of revenue 1979 3 75% of revenue plus 1 0381 mils/kwh 1980 and 1 15% of revenue plus thereafter 6 mils/kwh Payments will be made monthly on the basis of actual revenue and kwh energy sales The Department will submit to the Council at budget time an estimate of the amount of taxes and franchise fees that would be chargeable against the Light and Power Department if the utility were privately owned -2- M � C Revenues All net operating revenues of the Light and Power Department shall be paid into the Light and Power Depreciation and Capital Improvement Fund and such funds shall be expended only for renewals, replacements, extraordinary repairs, extensions, improvements, enlargements and betterments of the electric utility D Operating Records 1 The Light and Power Department will maintain a standard system of accounting which shall at all times correctly reflect all financial operations of the system and keep such other records and data as are generally used by the electric utility industry 2 The accounts of the Light and Power Department shall be kept separate and distinct from all other accounts of the City and shall contain proportionate charges for all services performed by other departments as well as proportionate credits for all services rendered to other departments The charge for administrative services shall be based upon appropriate studies and may be determined thereafter, until a new study is indicated, by an appropriate formula which is designed to track the actual cost of such services Passed and adopted at a regular meeting of the City Council held this 1st day of November A D 1977 ATTEST Mayo City Clerk -3- `