HomeMy WebLinkAboutReso 93-376 - Modifying its mechanism for activating consideration of Electric Utility Rate Adjustments1
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� RESOLUTION NO. 93- 3-74P
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A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDDING
MODIFYING ITS MECHANISM FOR ACTIVATING CONSIDERATION OF
ELECTRIC UTILITY RATE ADJUSTMENTS.
WHEREAS, on March 21, 1989 , by Resolution 89-94, the City
Council adopted a Mechanism for Activating Consideration of
Electric Utility Rate Adjustments (Mechanism) ; and
WHEREAS, the purpose of such a Mechanism is to provide a
consistent methodology for determining when consideration of a
rate adjustment is necessary; and
WHEREAS, the Electric Utility Commission and staff have
reviewed the existing Mechanism, and have:
( 1) concluded that it is not necessary for the Utility to
hold reserves against take-or-pay wholesale power
contracts that do not represent a financial risk to the
Utility; and
( 2) recommended that the City Council modify the existing
Mechanism to establish a nominal Electric Utility
reserve level which is lower than that required under
the definition of operation and maintenance expense;
NOW, THEREFORE, IT IS HEREBY RESOLVED that the City Council
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of the City of Redding hereby adopts the MECHANISM FOR ACTIVATING
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CONSIDERATION OF ELECTRIC UTILITY RATE ADJUSTMENTS attached
hereto and incorporated herein by reference.
'I I HEREBY CERTIFY that the foregoing Resolution was
introduced and read at a regular meeting of the City Council of
the City of Redding on the 19th day of October , 1993 , and was
duly adopted at said meeting by the following vote:
AYES- COUNCIL MEMBERS: Anderson, Dahl, Kehoe, Moss and Arness
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NOES: COUNCIL MEMBERS: None
ABSENT: COUNCIL MEMBERS: None
ABSTAIN: COUNCIL MEMBERS: None
,i CARL ARNESS, Mayor
City of Redding
A EST:
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CONNIE STROHMAY , City Clerk
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FORM PPROVED:
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RANDALL A. HAYS, City Attorney
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MECHANISM FOR ACTIVATING CONSIDERATION OF
ELECTRIC UTILITY RATE ADJUSTMENTS
R (E0O)MMENN O[En Mc0 nQ PFC0500 M
THE NEED FOR A RATE ADJUSTMENT WILL BE BASED ON A
REVIEW OF THE ELECTRIC UTILITY'S FINANCIAL FORECAST
ABSENT A RATE ADJUSTMENT, WHICH WILL BE MAINTAINED
BY THE ELECTRIC DEPARTMENT.
1 . A rate increase should be considered if any of the
following conditions is projected:
a. Debt service coverage ratio will be less than 1.2, or
b. End of year reserve will be less than 20% of O&M
c. The following year rata increase will be above 6%, or
d. A major expenditure is expected.
2. A rate decrease should be considered if none of the four
conditions discussed above is projected, AND if any of
the following conditions is projected:
a. Debt service coverage ratio will be greater than 1 .4, or
b. End of year reserve will be greater than 30% of O&M
THE ELECTRIC DEPARTMENT SHALL NOTIFY THE EUC IF THE
DEPARTMENT'S FINANCIAL FORECAST PROJECTS THAT A TRANS—
GRESSION FROM THE LIMITS DISCUSSED ABOVE WILL OCCUR. THE
EUC WILL THEN CONSIDER THE VALIDITY OF THE DEPARTMENTS
ASSUMPTIONS INCLUDED IN THE FORECAST AND WILL MAKE
APPROPRIATE RECOMMENDATIONS TO THE CITY COUNCIL.
RC044XOb