Title
Approval of Budget Revision 2024-60 Uniper Settlement
Recommended Action
I move that Council approve Budget Revision 2024-60 as summarized in attachment A and that the attachment be made a part of the minutes of this meeting.
Utilities Manager's Recommendation
The Utilities Manager recommends that Council approve the motion as presented.
Board, Commission or Committee Recommendation
The Board of Public Utilities approved this request at their regular session on April 17, 2024 and recommends that Council approve Budget Revision 2024-60 as presented.
Body
In March, the Department of Public Utilities received a settlement from Uniper for the cancellation of two power purchase agreements. The first was for 25 megawatts at an average price of $62.25 per megawatt hour. The second was for 15 megawatts at a price of $39.67 per megawatt hour. The total settlement was $58 million. The replacement power contract is at a price of $76.75 per megawatt hour. The additional power costs for FY2024 are approximately $2.2 million. Attachment A is a budget revision to recognize the $58 million settlement and the estimated interest income.
The projected interest income is based on investing settlement remaining after covering the additional power costs for FY24. The investment strategy is based on the County's Investment Policy and was reviewed and approved by the County's Chief Financial Officer. This strategy allows DPU to follow the County Charter to first bring Electric reserves up to their required balances per DPU Financial Policies and the County Charter Section 509 and Section 40-63; and next to cover increased cost of power to minimize rate increases beyond those already anticipated in long term plans.
Alternatives
If Council does not approve the recommended actions, the settlement proceeds will remain unbudgeted.
Fiscal and Staff Impact
See attached budget revision
Attachments
A - 2024-60 Budget Revision