Calling to order. This is the electric advisory board meeting. Today's date is Monday, June 1st. It's 5:30 p.m. Please join me for the pledge and the invocation. I >> pledge allegiance to the flag of the United States of America and to the
republic for which it stands, one nation under God, indivisible, with liberty and justice for all. >> Lord, please give us wisdom and discernment. Help us make wise decisions. >> Can I get a motion to approve the minutes from last week?
>> Last month. >> Last month, I'm sorry. May May 4th, 2026. >> Motion to approve. >> Approved presentation. Uh fiscal year 27 review. >> So the good news is nothing has changed
since our last meeting. The bad news is nothing has changed. Um and really I was kind of on the borderline. So welcome Mr. Price to the Electric Advisory Board. So immediately I'm going to throw you under the bus because I almost
canled the meeting uh because I really I don't have any new news to share with y'all. But Mr. Price's first meeting I knew Mark wanted to get out of here. So you know >> to journ >> so let me zoom let So let me zoom
through this Mr. Price and we have a standing date that you know where I'm going to get uh Andy all up to speed on all the vernacular and all of that. But let me just kind of zoom through this again and and I'll be brief. I know you guys know I struggle with brevity. So,
um, so I'll hit it here real quick. So, as you all know, the city of Leburg has about a $250 million annual budget. Electric composes about 90 million of that $250. Um, we talk about the general
fund probably 90% of the time when we talk about the city budget and that's actually the smallest well relatively about 45 million of the general fund. So that probably gets 95% of our attention but is actually one of the smaller pieces. The electric fund probably
relatively gets the least amount of conversation and is the smallest part of our budget. Um, so with that, let me kind of the we we we kind of tee it up as what the important things we do in the electric fund is, which is basically
keep the lights on. And that kind of that that takes on three components. Um, kind of just maintenance, fixing thing that fixing things that break and then adding on to the system. And comparatively, most of our growth, when we were just talking about growth
offline there about the um stuff, most of I would say most of our electric system growth has been in Futland Park. Um so when you take a look at those appraiser numbers, if you if you dare, Futland Park is actually one of the
bigger growers from a tax taxable value in the county. And that's that checks out with our system because most of the growth that we've been planning for and having to react to in the electric fund is Futland Park. So this so we so then we call kind of things that stress out
the electric fund things that make us think about rate increases or things that we need to do and these are these are kind of the the the number one priorities is you know how aggressive are we going to be with CIP's capital improvement projects. So we'll talk about that a little bit. How much is
growth forcing us to do other CIPs? So when we get growth that comes on we we we have different things that we talk about like uh on on the table but hasn't moved forward is an expansion of another substation. Uh that's important. How do
we upgrade? We feeders or circuits synonyms we talk about. Um so those are growth for stuff. Inflation is a third factor. the, you know, when we look at all of our enterprise funds in the city, inflation has been humongous. Uh, say
and and we mark pretty much COVID 2020 as kind of where the inflationary factors have went. And so, for example, uh, a polemount transformer, you guys see that, you drive down the road all the time, you see a transformer on a pole, you know, before COVID, that thing cost about 500 bucks. Now, that thing,
Brad, cost about >> 25 >> about 2500 bucks. So, and that and so >> larger ones like 25,000. >> Yeah. The the pad mounts and those kind of stuff you see. So, inflation has hit a a meter. A meter used to cost us 50
bucks. Now, a meter cost us 300 bucks. So, all those little inflationary things have have have caught up. Um, and that's where I think when you see our rate structure and us being able to keep our rate where it's at has been a humongous
advantage for us because I will I will brag on Brad's job and and the and the folks in the electric department because they've continued to do a good job and we and we've kept the rate down. In fact, while it's getting closer and closer, uh when I first got to Leburg in
December of 13, our rate was 139 up. And I'm so we're going to talk about rates a little bit. I'll save that. Our rate was 139 per thousand um and scheduled to go up to about 145. And we didn't do that last increase. And actually we went down
and actually we so we've kind of slowly tipped back up to where our rate was 13 years ago. And I don't think many other entities can say that you're paying the same amount for a utility that you were 13 years ago. But but you can here uh
for Leburg Electric. So inflation is a big deal for us. Our sale purchases that's really the number one expense. So we have the budget book. You all have seen, I'm sure, it's, you know, it's literally this thick and it's $250
million. There's one line in that that's that's 50 million about and that's our wholesale electric cost. So, you what whatever that math is. What's 50 of 250 20% something like that. So, 20% of the
budget is one single number and a and so we'll talk about that. So wholesale purchases has a humongous impact. The transfer to the general fund is is we used to transfer a significant amount five million that number is now down to
about$2 and a half $3 million. So that's a big deal. Um and then of course the our primary and I I say primary not that this is our only but uh tree trimming and osmosis pole replacement are are continually
priorities. Tree trimming even though it sounds really super simple is really an important thing to do. The more we can keep the trims the le the limbs trimmed and the trees out of our lines the better off we are when storms come around. Yes ma'am. Do city employees
trim the trees or do you hire that out? >> Both. Both. Probably more outsourced so that the linemen can do different work. But when everybody's got nothing to do with, you know, we go trim trees. >> It's an operational need. And so, do we
need someone to do that? Are you looking for somebody? >> I I think the operational need is probably how much we do versus what we should be doing. And so Brad will tell you we need to trim more trees, >> but Yeah, there's but that but there's
not an electric director or general manager or lineman who would tell you we need we do enough tree trimming. So, you know, that's that that's one of the areas, you know, that's a number we'd like I like to trim on. Uh it's a number that Brad says don't trim on that. No
pun intended. Um but but that um osmosis pole replacement then is uh we have a series of uh mostly concrete or wood poles. Actually we're mostly wood but um so we do a test that's called osmosis pole replacement because woodpeckers and
other birds and stuff like to peck on our poles and and as they get beat on by the by the weather and birch they they start to lose their strength. So we test them to determine what we need. So that's an important part. and then well and personnel. I'm going to sum it up. Number three, electric. So those are
kind of the stressors. Those are the things that continually get attention every year when we put together the electric budget. So just if we were going to highlight it where we're where we're at from for fiscal year 27 is we
are really striving to have no base rate increase. Mr. Price for you, you know, are are there's two components to our rate matrix. There's the base rate and there's the power cost adjustment. The base rate is the fixed rate. Um, and we
measure everything per thousand kilowatts of residential usage. I would say probably 80% of our system. We've got just shy of 30,000 customers. >> And I would say 80% of that 30,000 customers residential.
>> So, and then it's kind of inverse. You Well, it's it's not. So, um, we've I don't uh our I don't I don't I would say our commercial load even though it's only 20% is probably maybe like 30 40% of our entire load even though our
customer base is 80% but that load draw is probably closer to like 60 65%. So even though we don't have a lot of commercial customers, they they we were just talking about that they they pull a little bit, you know, comparatively a pretty good load. But when we compare
rates, the industry uses that first thousand kilowatts sold as kind of the benchmark. So are we cheaper than TCO? Are we cheaper than Duke, Siko, whatever? The industry compares that first thousand. So our goal this year is
not to increase the base rate. The second component of our rate making portion is the power cost adjustment. Um that is actually by ordinance controlled by the city manager. Um and
and the philosophy there is the base rate is all the components that make up um how we purchase and how we do electricity. So that concerns capital expenses, operational expenses, wholesale expenses, transfer expenses,
kind of everything goes into that matrix to make the base rate. But then because of the volatility in the fuel market, whether that's coal, um, natural gas or what we call we refer to that affectionately as fuel. And
because fuel is elastic and you know constantly going um and our our generation mix is about 80% natural gas brings volatility. So um we manage the
fuel cost kind of on a rolling basis through the power cost adjustment. So we give you kind of periodic reports on where we're at with our power cost adjustment. Right now we're three cents per per kilowatt. Um, so every kilowatt you use, we hit you with another three
cents. Um, so that brings it up to 30 bucks. So our base rate is about 17097 per thousand and then we'll hit you with the power cost adjustment for another $30. So it's 13797 is our first thousand rates. So we'll
compare that. So what we're trying to do for fiscal year 27 is to have a no increase in the base rate and then we kind of let the fuel market go on the power cost adjustment. So we'll hit that another time. One of the biggest flexibilities that we we've seen is
you've all heard the GE contract we used to have that is officially phased out. We're now with it and we received about a million bucks of savings but that's gotten shifted around. So, um, we're using some of that to replace meters and then the other 700's kind of
metriculated back in there. And then capital projects. So, we talked a little bit when we talk about capital projects, we use the three-legged stool, things that we want to fix um as a preventative measure or improve things uh that break
because of storm related errors or or storm related occurrences or um you know things wear out um or growth related things. So, um, Brad initially pro provided my office with a $7.1 million
capital budget. We have that trimmed down to about $4.9 million. I think the next slide shows you the capital expenses, but let me just for Mr. Price's um, information, the budget process, we're always in budget mode at
the city, whether it's general fund or whatever. Um, so we work on a fiscal year. Every municipal corporation, aka city and political subdivision in the state, we all work on a October to September budget by statute. Um, and the
budget process pretty much is kind of first part of January, January, February, March, our budget director, Brady McDaniels, is kind of prepping the budget and getting forms and processes completed that go out to department
heads uh, for their budget and their budget requests. Department heads kind of March, April, come February, March, April, they're doing their budget requests, getting them into Brandy. Um by May the budget is in in a draft form
that then hits my desk. Um then I go through that and meet with each of the department heads and we start manipulating estimating typically by June 1. Actually that's a statutory number. The budget is probably
in pretty good draft form. Um I don't want to go into the gener all the other stuff. I'm trying to keep it electric. Um, but that's when our tax numbers that we talked about before come in. July is typically now the budget's
before the commission in workshop form and the commission typically will work on the budget July and August, not so much in August if our workshops have been pretty successful. But then September is the approvals the approval
time where we have to do our mandatory public hearings to adopt the the the millillage or the m millillage resolution and the and the and the budget resolutions we have to do by public hearing two of them that's done in September and then October one it starts
then October comes around Bry's kind of finishing off some stuff and then November and then she gets December off and and then we we're back at it in January. So, we're kind of in full budget till, as you guys know, about this time of year. Um, I think the first
budget workshop for the commission is like July 2nd or the 7th, something like that. Um, so that's process. I weave that in there and let me jump over here. Um, so I wanted to give you So, why do we feel comfortable kind of trimming
back some capital? Because we've been pretty aggressive with capital. So the these are the average expenditures per year of where we've been spending. So we range from a low of the 4.8 that we have proposed to a high of 12 million in 21. So we've been doing a lot of different
capital projects uh whether that's growth stuff, whether that's improving circuits, whether that's changing stuff out. So we've been taking good I think good care of the system. Um, and so I think we're in a position to be able to say 4.9 million, eh, it's probably not
as much as we want, but it's kind of the balancing act of being able to be proactive and doing system management while still being able to do all the other things that we talk about, low rates, safety, those type of things. Uh
so um we're um let me jump now to power supply and I'm going to just be super brief on this but you know power runs from 44 in these numbers here on the screen you know 44 to 48. So we kind of
hang in this the 80 to $100 megawatt time frame typically and this has been up kind of post 2122 um since I've been here we we've bounced around from when the number starts
getting over I'm going to say 85 bucks that's when power starts getting expensive for us and when you start seeing the the power cost adjustment started going up. We've peaked a couple of times in the last decade. Most of those were related to when fuel got
really crazy. Um I think we we've I think we've seen 115 bucks. And you kind of see those numbers here, which are seasonal. Um but on the average, so we're coming in at 27 um at 80 84 bucks a megawatt. I think we'll hang out
there. Um actually, we got a good email from Jacob Williams. So we buy all our power from FMPA, the Florida Municipal Power Agency, and they have several different what we call projects where you get generation and we're in the all requirements project. So that's 13
municipal cities who are in a pool and we buy all our requirements. So that's transmission, generation, wiggling power. It's basically from the power plant to our substation and then we take it from there. Um so we're hanging in.
Um Paul showed me a horrible report today where it looks like the futures for natural gas prices is going to go up because now our exports of natural gas are increasing. So typically when our exports of natural gas increase, you
know, supply and demand, cost goes up, demand is up, right? So where that number is going to be this fall, uh hopefully it's not north of 85, but if it is, that's where the fuel adjustment comes in. So we'll be watching that. We think we're pretty good on all our
projections that we've talked about for the other members of the board. I think we're going to hang in there at 3 cents through the end of the fiscal year. Knock on wood. So, by the end of the fiscal year, we should be right about to where we want to be with a little over three million in the in the PCA reserve
account and and and hopefully about the same price at that 137 per thousand. Um, FNPA did do some hedging if you saw that email from from um FNPA. Hedging meaning we go out we buy futures to try to lock
in our our gas cost at this. Now, we don't b lock in every ounce of gas or every drop of gas that we buy, but you know, we, you know, FNPA does that for us. They've been pretty successful at it, too. So, they locked in some lowcost power. So, that actually mitigated
Paul's, hey, did you see this? And so, we'll worry as that gets there. Um, but for a budget purpose, I think we're where we need to be. Um, we always measure everything back to our cash reserves. So, our cash reserves kind of took a little beating here last year and
we're we're recovering from that. I want to leave that at at that. Um, we saw a little bit of a dink down from the last time we we we spoke. That's not to worry. Uh, this number is probably still just about a million dollars low because we still haven't recouped. Uh, that
check from that city up in Georgia is on its way. >> We did. So, it hasn't hit the chart yet. So they owed us about 250 grand and the federal government actually paid the state about we they still owed us about 600,000 bucks. So but that's still
sitting in Tallahassee. So that number it should go up about 800 grand. So the cash is hanging in there. >> I'd like to see it higher, but it it's at at least a reasonable level. Um so the next thing where's our price? So we
we compare to the regionals. Um, I like to throw in FPL uh because FPL is kind of the giant in the state of the investor own side of the house. So, Mr. Price, we got, you know, there's three basic ways to buy utility in the nation. That's from an investorowned utility who
do it for money. And then cities who were pure, you know, we pass on costs easily to you all. We're the best providers of electricity. And then, you know, we tolerate co-ops. uh they have a similar philosophy to us where they're
memberowned and then members are on their board of directors. So um in the in our region here in Lake County there's basically uh four four providers. Leburg, Duke, Seco, and Mount
Dora. Mount Dora is pretty small. Um but so these guys are kind of you you know we constantly compare to. So I would say probably for the last 5 years we've beaten those utilities pretty consistently with the exception when we
spiked um in 2002 when we when our power cost adjustment went up to seven but now since we've been down we've consistently beaten these utilities. Duke is on its way down but I still don't see Duke dropping below us. Um, so th I think
this is an important chart to always keep in mind because we're an extremely around the state. I think the average municipal price is hanging out about 136. So we're a tick above average in our all requirements pool. We're in the
top 20% of of people who look like us. So I think we're doing a good job um at at at controlling our price. Um, Mount Dora is a little bit special. Um, but I I think probably in the next 12 to
18 months, you're going to see Mount Dora's price start leaking up. Uh, I already talked with some folks that the reason they're leaking up leaking up is because they're buying surplus contracts and they do a they're not in a locked in pool like we are in the municipal world.
So they were able to ride some cheap power purchasing, but when you're not in a pool like ours in the municipal world, you're really more exposed to the highs and the lows. So the the lows are great, the highs are bad. So with our route is
we're we don't see the fluctuations like a Mount Dora is. Um so actually I I I heard Mount Dora was looking at the all requirements project. >> Really? man, that vote should be no, by the way. So, um, in any case, so those
are the rates. We're we're hanging in there. And then compared kind of just to the the trends of power cost. Um, debt, we don't have a hugely significant debt fund. So, that we've got four issues out there. They total about uh 34
mil. Um, so debt's not overly burdensome from us. Um, and this is this is a snapshot of kind of the things that Brad suggested versus what we suggested. Um,
that doesn't say you're you're you know, basically we trimmed up in in in the CIPs. This is our list of CIPs. Um, it's probably a little bit Greek. Um but basically what we do is we list out
basically all the major things that the electric department buys. Meters, transformers, capacitors, lines, all sectional that's that's all the heavy lifting stuff that they need. Whether it goes bump in the night, whether it's uh
um we we want to proactively change or fix something out or whether it's growth. All those three we call that the three-legged stool. those three-legged stools all use those same things. So from a budgeting perspective, it's a
matter of how many meters, how many transformers, how much distribution line, how many poles are we going to buy? And so we we stick it in that chart and that basically shows what Brad's request was, the original CIP at the 7.1
million to no Brad, we could do that 4.4 or 4.8. Um, I think to to address, well, how do you survive with the $3 million delta? It it's the the projects that we want to do and don't need to do get held up if
something immediately happens. So, that's why we want significant, you know, nice reserve cash because if an emergency happens, you know, typically Brad sneezes a million bucks. So, if he needs a million bucks, that was unplanned. We're going to go grab it
from cash. But then again too with the dynamics of of how power purchasing is too, if we have a cloudy day on July 7th at 300 p.m. that might save us a couple hundred thousand bucks because it wasn't super hot in the summer. So, you know,
there there's I don't want to use the word fluff because that's not accurate, but there is a there there are a lot of unknown quantities that can affect the electric fund plus or minus. And typically on the
power supply side, we try to hit it on the high side. And then the through through the history of the last decade or so, we we've made good educated guesses on where we're at because, you know, we still have a good rate, we still have
cash, um, and we've been able to to balance that pretty well. Um, that's kind of everything in a nutshell. Last year was 85 million. This year's 80. the delta between I know five million is a big difference but that's all in power supply
>> back one screen please for subdivisions from 400 to 450 is that when a new subdivision comes to Leburg does is that what it cost Leburg >> that's no that's what we're planning that's just if new subdivisions come in that's he want
>> it's one of the areas where we budget for the subdivisions they also hit the transformer line the distribution line but the substation line item is where a lot of that hits >> and that's nothing that can pass on to the developer. >> Well, we passed quite a bit on
>> there is so that's that's a so that's a good question. So what we so we have a policy so what you're not seeing in this is you're seeing just the expense side you're not seeing the revenue side. So we also budget that in the revenue side
and we call that aid and contribution from the developers aid and contribution agreements. AICA CIA or is the acronym and basically we have a policy in city code that's established by the city commission that says when developers come in this is what you're responsible
this is what this is what we'll pay long story short the magic the magic number is a 4year ROI so if you hook up to our system and you ROI for us in five years so you want
to come into our system and we've got to make half a million dollars of improvements to hook you up to our system, but we'll get a half a million dollars back in four years. We don't charge you to hook up. But if you come
in and it costs a million dollars, you got to pony up the other half a million. >> From a real estate standpoint, they can pony up more than they're ponying up because I go to the broker opens and I hear them Oh, we just pass it on to that's a lot charge. We just pass it on to our people so develop developers
aren't paying it hurting them. >> Yeah. So, what we do though is we compare our CIC policies to our competitors. So, if Duke is doing a four-year ROI for the same thing, we're we try to match
it. So, whatever you're getting out in investor own land or co-op land, you see the same in MUN land. So if those developers are scamming the city, they're scamming Duke and they're scamming CCO2. So I'm not going to argue
that, but I'm going to what I am going to argue is there's an existing policy that's related to the four-year ROI. And that's and that's now we might see the ROI a little bit different. You know, might be two years versus three years or four years, but everybody is basically
in that same bucket of about a four-year ROI. Um and that is and so um the last one is kind of the departments within the the electric fund. So St. Lucy um we have
two sources of power. We have a share of the St. Lucy nuclear facility. So we kick in about a million bucks for that every year. And then the power purchase 45 million. That's the all requirements project. So by and large this is the the
ARP is our main provider of of sources but it's really this number plus this number is our total wholesale purchase requirement administration jobbing jobbing is is that Steve >> working for others >> yeah working for distribution is basically that's the bread and butter
everybody so when you see the guys out there in the bucket trucks fixing stuff in hurricanes that's this smart grid is our metering so that's where you see kind of our savings and this number is reduced as well. So that kind of tiered down over two years. I think the past years that was up over a million like a
million25 something like that. Um and and so when we got out of smart grid we were really able to reduce that that was a big savings other that's you know that's probably debt and some transfers and blah blah blah blah and then capital
projects. So that is the heartbeat of the electric budget. Pretty much the same as it was last month. I don't see it diametrically changing a lot over the summer. Unfortunately, if it does change, it's
probably going to be a fuel thing and then we'll be going back in addressing wholesale supply numbers. So hopefully those stay stable the next couple of months. >> Couple quick questions. >> Hit me. um your line item for other operating revenue. What falls under that heading
and why has it fluctuated so much over the last couple years? >> You're looking at something there. Can I look at it? >> Other operating revenue, of course. See this line here? What is that revenue? >> Do you know what that is? Other
operating revenue. >> I'll probably have to get back to you on that. >> Yeah, it may be rentals. It may be uh >> yeah I mean I'm going from 1.3 to 8 to down to 600 then back up to 800. So honestly it's a smaller revenue line but I don't have the I don't have the answer
for you. Let me look that up. >> I'll find out for you. >> Okay. Uh my other question is there's another uh item on there for transfer. Is that number transfer to other funds? Is that entirely that number is entirely transferring to the general fund or is
there any other transfer that's calculated in there or am I misunderstanding what that line is? >> That is the transfer to the general fund. >> Okay. And what number did you wind up using for that as far as percentage? >> I think that's 2.8.
So 2.8% 8% of electric revenues, less wholesale supply. >> Okay. >> Less fixed number. >> No. But yes. >> Here we go.
>> So long. So is that a fixed number? By charter it is. By charter. The charter says, and we added that number in there, that the electric funds shall transfer 6%.
We are actually below what the charter requirement says. And nobody has contested that we're in violation of the charter. And nobody has contested that we're in violation of the charter. I will assume because we're saving you money by keeping that number lower than
what the charter says. the the the philosophy behind a 6% franchise, the philosophy behind a 6% transfer or lower is if you're a non-electric municipal
corporation, your prime one of your primary sources of revenue for the general fund is your franchise fee with your electric provider. So under statutes, the the statutes give municipal corporations the
right to franchise like McDonald's municipal services. Municipal services are then defined by the statutes as gas, water, sewer, trash, those type of services. If a city has the right to provide has the first right to provide
those services and if the city doesn't provide those service they typically have a franchise fee with that service provider charging them for the right to use the municipal franchise and the right or the impact they have on using
city roads and rights of ways. That's how we justify the franchise >> and that 2.8% 28% is a percentage of what number? >> The 2.8% should be a percentage of total revenues less
the power supply number. So that would be 80 million less 50. So that would be 3.5 divided by about 50 million bucks. Am I getting in the ballpark of that transfer >> is okay. And 2.8 8 is what you used for
the most uh current year as well. Did that change at all? >> That did not. So our philosophy behind the 2.8 is a little special. What 2.8% transfer
represents is 6% of city sales. So we kind of backed into this number. So a couple years ago as we've been trying to reduce the electric transfer for all sorts of different reasons,
we came into the philosophy of why don't we set the transfer at the rate upon which the general fund would receive if we didn't have an electric system. So if we were just Core
Leburg and we didn't have an electric system, we'd have a franchise fee with Duke or SECO getting 6%. So we've taken our corporate sales number and applied that formula that Mark just asked to it
and that actual number is 2.8% 8% of the total electric fund, but it's actually 6% if it was incorporated sales only. So
in essence, the electric fund is kicking to the general fund the amount of revenue the general fund would have without an electric system. >> Do you want me to keep going, Mark? You want me to stop there?
>> No, you're good. Okay. >> Okay. Thank you. >> Thank you, Mr. Manager. Um, we'll go into roll call. Mr. Price, you have anything? >> Welcome, Mr. Price. >> Welcome. Yep. I will entertain a motion
to adjurnn. >> Motion. >> All right. Ajourned. And do you guys have if you guys if we're kind of looking the same next month, do you guys want to meet and go over this again or >> significantly changes? Yeah, >> I'll get it. So, we'll just get together
and and we'll do we'll do electrical 101. Just give me a shout or drop me