Title
Transfer of Funds from the Gas Fund to the Wastewater Fund
Recommended Action
I move Board of Public Utilities approve transfer of $2.5 million from the gas fund to the wastewater fund. I further move the Board of Public Utilities approve Budget Revision 2018-10 for the fund transfer and for expenditure of $2.5 million from the wastewater fund for the purpose of advance payment on the Los Alamos Wastewater Treatment plant construction debt and forward to the County Council for their approval.
Staff Recommendation
The Staff recommends approval of the fund transfer, budget amendment and pay-down of the Los Alamos Wastewater Treatment Plant indebtedness.
Body
The Department of Public Utilities faces the cost of replacement of the White Rock Wastewater Treatment Plant while still paying debt service on construction of the Los Alamos Wastewater Treatment Plant. In order to be able to pay the debt of both plants, estimated at approximately $2.1 million per year, sewer rates for our customers would have to be increased significantly, or alternatively, construction of the White Rock plant delayed until 2029 when the LA Plant debt is retired. In previous BPU meetings, numerous scenarios of debt restructuring, alternative financing, and delay of construction have been examined. The final recommendation of the Board was to pursue immediate construction of the White Rock plant, refinance existing debt, phase in a series of small rate increases and transfer excess funds from the gas fund to the wastewater fund in order to pay down the debt.
Staff have evaluated the existing status of the gas reserves, requirements to comply with the financial reserves policy, future capital and operational needs, and the long-range forecast of gas demand and have determined that $2.5 million dollars could be transferred to the wastewater fund without compromising the gas fund.
Attached is a fund flow showing anticipated gas reserves out 10 years into the future at the present...
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