Title
Financial Plan Update
Recommended Action
N/A - Discussion item only
Staff Recommendation
N/A - Discussion item only
Body
The Board of Public Utilities adopted formal policies for financial targets in August of 2016. For review, that guidance is attached as Attachment A. With adoption of formal targets for desired cash balances for the Utilities funds, initial steps for implementation involved assessment of then current status, followed by consideration of methods and alternatives for resolving differences. It has been a little over two years since adoption. This report is intended to provide information to help assess progress toward financial goals, and to assist the Board in determining if revision of guidelines or targets is prudent at this time.
Status of the Utility Department’s cash position as relates to the Board adopted financial policies is presented as Attachment B. The Exhibit shows reserve status by Utility, broken down by reserve category, and showing the total amount over or under policy targets by utility. Status upon adoption is shown, and current status is shown as well.
There are some anomalies with this presentation. Debt service payments are made twice a year, but amounts are “deposited” into the debt service reserve monthly to facilitate recognition of that expense monthly. In addition, the debt covenants require that the entire next year’s payments be held in a restricted fund. Payments are due in either July and January, or June and December. Thus, as of March 30, there are several month’s “extra” funds showing in the reserve account.
Also, the guidance calls for a significant rate stabilization fund in Electric, but due to the Power Pool it has never been funded. This reserve may be one where revisiting the guidance would be prudent.
It also shows that electric operations reserves are negative in total, but by looking at the Cash report (Attachment C), we can see that in the Electric Distributio...
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