Title
Approval of the Calculation of Profit Transfer from Electric and Gas Funds for Fiscal Year 2022.
Recommended Action
I move that the Board of Public Utilities recommend the five percent transfer profit transfer amount of revenues from the electric and gas funds during fiscal year 2021 in the amount of $848,910.95 to the general fund for fiscal year 2022 in accordance with Incorporated County of Los Alamos Ordinance 02-302 and redirect these amounts to be used by the joint utility fund's FY 2022 capital improvement projects to facilitate coordination with roads projects and forward to the County Council for their approval.
Staff Recommendation
The Utilities Department staff recommends approval of the profit transfers as presented.
Body
Five percent of gross sales of the gas and electric utilities exclusive of sales to the County or the Schools are to be calculated as Profit Transfer amounts. Transfer amounts are to be computed after completion of the County’s annual financial audit. Accordingly, the transfer for each year’s activity is reflected in the following year’s budget. Ordinance 02-302 further specifies that “for the period of fiscal years 2020 through 2022, after approval of the profit transfer amounts, but prior to the transfers occurring, the Council may, through formal action, re-direct these amounts to be used within the Joint Utility System Fund for purposes designated by the Council. Those purposes may include, but are not limited to, accelerating investment in utility infrastructure, investing in utility infrastructure to facilitate coordination with roads projects, investing in utility infrastructure to facilitate economic development and housing projects, facilitating utility debt restructuring, and transferring funds between individual utility sub-funds.” In January 2022, Council passed code ordinance 02-324 to continue the above outlined processed, “For a five (5) year period which may be extended by Council for one (1) additional year at the time of Council’s consideration of an annual redirection of a profit transfer.” The request to extend the annual redirection of a profit transfer will be made when Fiscal Year 2023 profit transfer is considered next year.
Utilities Department proposed uses for Profit Transfer Funds are included in the annual budget package as Budget Options and are not discussed further here. This action is simply to review and approve the Revenues and Calculation of the Profit Transfer Amounts and forward to Council for further action in consideration of the Department’s budget proposal.
Alternatives
If the Board and Council do not approve the profit transfers, the funds will remain with the Department of Public Utilities electric and gas funds, pending further negotiation between the parties or confirmation of the calculations in accordance with Ordinance 02-302.
Fiscal and Staff Impact
Profit transfers computed by using fiscal year 2021 retail sales are $584,290.00 and $264,620.95 for the electric and gas utilities respectively that totals to $848,910.95. A computation worksheet is attached as Attachment C. The ten year history of past profit transfers is attached in Attachment D.
Attachments
A - Incorporated County of Los Alamos Ordinance 02-302
B - Incorporated County of Los Alamos Ordinance 02-324
C - Utilities Profit Transfer Schedule - FY2022 for FY2021 Sales
D - Utilities Transfers To General Fund Ten Year History FY2012 through FY2021