Put it when you are call to order. This is the electric advisory board meeting. It's Monday, May 4th at 5:30 p.m. Uh, please join me for the pledge of allegiance and 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, thank you for giving us this day. Please give us wisdom and discernment. Jesus name.
>> Amen. All right. >> Can I get a motion to approve? Motion to approve minutes. >> Approved. Uh presentation budget review. >> So, we're here. Fiscal year 27 is around
the corner. Um my apologies for not getting out more detail to y'all before the meeting. Um you have a draft proposal of the electric budget that I just handed out to you. Um,
we still have several months to review and go over this. So, there's nothing definitive that you really have to do this evening. Um, so with with that, let me go jump right into the PowerPoint presentation. And this really just kind
of gives you the high view details. Um, the packet you handed out hopefully looks familiar with to you from it's, you know, the process we followed pretty much the whole time. We break the electric fund down into different divisions. The purchasing of electric power, administration,
jobbing, uh I keep I'm I'm not going to rattle off all the stuff. Um the big one is the distribution division. That's kind of like the lion share of everything. Well, no, actually the big one is the wholesale. So, what am I talking about?
That's 50 that's 50 of the $80 million. Um, but that that's kind of where the the lion share kind of what people see here as far as work and that kind of stuff. Anyway, so before I stick my foot in my mouth anymore, let me just go to the presentation.
Um, again, kind of wanted the the stressors on the electric fund. Uh, trying to keep up with um this is kind of the the the summary of, you know, we talked about the three-legged stool. So, you know, we have personnel, operation, and capital
expenses and wholesale expenses. Kind of put that in a separate category. Um, and the capital improvements kind of have three-legged stool. Those things that we want to fix. Um, those things that we have to build um forced by growth. Um,
and then what's the third leg? >> System improvements. >> System improvements. So things we have to fix, meaning something blows up, things go bump in the night, a storm or hurricane, things that we're forced to fix by environment, um things that we want to fix for better service, and then
growth. Those are that's kind of the three-legged stool of the CIP. So obviously capital improvements always are pinched in in the budget. So um we we have been aggressive with CIPs, believe it or not. Um, so let me jump to
that chart. That that's kind of what we've spent on capital the last I don't know 10 years since since 18. So we I would say we've been aggressive and and Brad will say we
need to continue that and be more aggressive. Um and so kind of the the synopsis there on um kind of the the philosophy where where Brad's trying to head with the department is to identify improvements or capital expenditures
that we need to do to make the system I'll use the word more resilient. Um so that's looping what they'll call feeders or circuits synonyms. So the city has how many circuits we have? 55 >> 25 circuits. So we have the the four
substation with about five circuits coming out of each substation. Um so what we what we want to do out in the field is we want to a make sure all those circuits have good poles, make sure the conductor or what we would call the wire is in good shape,
up to date, um big enough to handle appropriate load and that kind of stuff. We want circuitry and switches in there so that if one section goes down, we can close other relay sections so your outage time is shorter. Um, and so all
of the capital improvements that Brad and his team put together look at ways that we can make the system more efficient. Um and towards that that end those are kind of you know so you know I won't read you off the numbers but you know we've spent
upwards of of five million to as much as 12 million in any given year on system improvements. Um so I would say that's pretty good. So, if you're looking at, you know, an $80 million budget, kind of where the the electric fund hangs out all the time, you know, we're we're
spending somewhere in the neighborhood on average of about 10% on on capital. Um, so back up to this slide. So, the what what we have before you is a balanced budget. Um and
and so these are the things that we kind of look in the you know how aggressive we are with CIPs, what we can accomplish with grow growth force CIP. So growth for CIPs are um just to just to review our capital improvement projects
pursuant to our policy that's laid out in code. So when somebody or a developer comes into and needs service and off from our distribution system, um we work out a formula aid and contribution we
call it and we get money from developers that we keep and we get the money from developers that we have to give back. Um, and so we run it through a performer and typically if you uh cost the utility X dollars, but the utility gets that
money back in four years. So we ROI, return on investment in four years, your cost to hook up to us is nothing. So most of these growth for CIPs are on issues where we won't ROI in four years.
So major subdivisions and these type of things. So then we have these formulas where we'll share the contribution, we'll absorb some cost, they do some cost, but we try to shift those costs as much as possible to the developers. Inflation has also been a humongous
issue for us. As you guys know, it hasn't changed. Um the transfer to the general fund is always an issue, but I will really boast that the the utility has done really I think a super good job of reducing transfer numbers. So let me
jump to that chart while we're at it while we're talking about that. Um so there's your transfer numbers si pretty much since 2010. Um so when we were back in 2010 um transferring about
4.7 4.8 $8 million into the general fund from the electric fund. That was probably a percentage of about 8%. Our percentage now is 2.8 um on this chart, which represents about $1.8 million. So, we talked about that
number a lot because um while it's 2.8% of our formula, so our formula, let me repeat that. How do we come up with a formula on what we transfer? It's obstensively the entire electric fund
budget $80 million minus the power cost adjustment gross receipt taxes and fees. So if you add a sir charge sir charge taxes and the power cost adjustment. So when you pull
that number out that's about $30 million believe it or not of the of the budget. So we're dividing about $1.8 million into 50 million and that's about 2.8%. So what that number really represent and you could look at it different ways but
the way I look at that number is the $1.8 8 million equals 6% franchise fee. If the municipal corporation, the city itself, the general fund, didn't have an electric
system, we would we would have a franchise fee with a utility provider, charging them a franchise to generate the revenue to use our municipal rideways and easements, as well as the
franchise that the statutes grant municipal corporations for electric service, which is defined as a municipal service. Did you catch all that? It wasn't BS, I promise. Um, so that's So that's So
we're sitting here at the $ 1.8 million number. Um, which is lower than what the charter says, by the way. The charter says we won't ever transfer more than 6%. Um, so we're transferring less. you guys might want to have a discussion
about that, you know, because that number depending on what type of customer class you're in the city and it could have some impact on how you feel about that transfer. Um, so I will leave the discussion at that. Um, but I think what you what you see with with our
reduction of the transfer to the $ 1.8 million level is a really significant milestone. Um, so back to kind of so um that that that tackles the stresses. So general fund, I really think that's that's been
minimized to a great degree. And then our operation needs that we kind of always balanced. So um when Brad basically turned in his budget, he was about $1.8 million um almost exactly what the transfer is
by coincidence, I promise. Um um is about $1.8 million over. So the things that we look at it's like do we look at transfer reduction do we look what capital things do we cut what people things do we we cut we'll get
into that with you here in a little bit but also operational needs like tree trimming the osmosis pole replacements osmosis pole replacements is so where we have wood poles we test them or ones that we think may be failing and that test tells us whether that pole is good
or not so it's important part what Would you say what percentage of the system is still wood poles? >> Oh >> well, we'd say well so of the system about 60% of it is underground about 40% is overhead. So of overhead
>> probably 40% are still wood poles are replacing them underground or >> would depends. It depends. Um, if it's in an area where we've targeted to go underground, we'll start going underground. If it's an area we haven't
targeted to go underground, we'll we'll replace with with like poles. Um, and then the uh electric meter service tech. So, that was a position we wanted and I think we get into a little more detail here in a second. So
some highlights where we're at from the budget is we are not at this stage proposing a rate increase. So right now our rate is about $137.97 for the first thousand kilowatts of
residential usage. Again, I go to that number because that first thousand residential sales number is pretty much the measuring stick that all the utilities use to kind to compare and contrast what you cost, what we cost, yada yada yada. So at 13797,
what that represents is about the base rate without any power cost adjustment is 107.97. And then with the cost adjustment, you know, we call it different things depending on
we call it different names has it has its name, but it also has different values depending on where we put the decimal point. But three cents per kilowatt hour is what the fee is. And on a,000 that equals 30 bucks. So So in the
comparison realm, we're going to talk about it in in as a $30 fee. So at $1,000, your 107 price is base. That's the base cost that's fixed. And then our fuel cost or our generation cost fluctuates so much during the year that
we need another 30 bucks. And that 30 bucks can only go to the purchase of power. So out of 137.97, we can tell you right off the top, 30 bucks of that goes to the power bill. Nothing else. not personnel, not
capital, not debt payment to it's that's power and that's how our rate matrix works and that's how we have our tariff file with the public service commission. So no rate increase and that means no
base rate increase. We're still open on what the fluctuations of the power cost may be that could go up, that could go down. In all honesty and cander with the information before us, as of May 4th, I don't see the power cost going up or
down, but staying at the 3 cents, at least through the end of the fiscal year. Um, I didn't put together a power uh bulk power cost summary for you today, but as of March data, the power cost um the rate stabilization account
is sitting at 689,000 in it. So that number should spark your interest because we try to keep that at three million. So it's a little low right now. Um all signs indicate that as we unfortunately as we get into the the
higher use months, we'll recollect that with the three cent over over the summertime. We try to avoid that. You know, we'd like to have the power cost number low in the summer and maybe be a little bit more in the winter, but as
you guys know, the fuel what what you've heard on the news is all real. Those fuel costs have an impact and and and we're probably going to need we're we're going to need to keep it at 3 cents for the near future. Um, but we're trying to
keep the base rate stable. Um the next couple things there there's kind of been um two kind of conundrums that we've gotten into to balance the the electric budget kind of there's you know number of philosophies increase rates
uh or cut. So we've really approached this year's budget with we need to cut um and where we've cut is really two areas capital and personnel requests. So Brad put forth a list of two recclass
and three new positions. Um we approve we're going to and mind you all this is all recommended. So your feedback to the city commission final budget adoption. So we're in May we've got May, June, July, August really five months to
bounce all these concepts around. So nothing I'm saying here is fixed. It's the picture as of today. Um, but where we've really trimmed on Brad's budget to date has been on the capital side and the personnel request side. So we we are
going to be recommending uh the the reclasses. So the reclasses is you have existing personnel kind of been working above their pay grade or doing different things. So we need to reward that those employees and pay them a little bit more. Um and then the new
positions which of the three uh he requested so we request Brad requested two groundsmen and a meter technician. So just real brief the life of a a utility line person is trained get
certified in uh line work. Uh and that's that's kind of your apprentice phase. And then once you complete four years, pass certain number of tests, then you're signed sealed journeyman, you're an electric lineman, and your pay goes up to alignment rate. I think we're
paying linemen like 52 50 53 bucks an hour in that ballpark. Don't hold me to it, but it's it's north of 50 and around 52 bucks. Um, and that's really a market rate. Um there's a couple of utilities on the investor own side, you'll find a couple of bucks more and probably on the
contract side where if you're working for contract outfits, you see a lot of those trucks around. Um Team Fishial is probably is a yellow truck that you may see driving around. You know, they typically pay, you know, they'll pay a little bit more per hour, but their
benefits are significantly less. So it it that the the market's kind of all over the place, but at 52 bucks that the we're we're we're getting uh the the pretty competitive pay and what we've seen in exchange for paying competitively, we haven't seen a lot of
turnover in our in our line men. So that's a good thing. Um Brad's concern is that some of our linemen are going to age out. So based on losing experience and workload life as a lineman starts typically as a
groundman. So that's really kind of you know the helper role. Um person on the it works get uh groundsman gets assigned to a line crew. They learn the trade. They start seeing frankly if they're worthy and if
they're worthy we'll bump them up from a groundman to an apprentice. And then they're in our formal program. There's where there's a four-year program where we have certain benchmarks of performance. They meet pay, they pass, then you go into the line world. So
Brad's request to bring in two additional groundmen is Brad's attempt to start bringing in more people who will potentially help us with workload and fill in as older linemen start to retire.
That was cut. Um these cuts don't come without significant cost, but really our number, you know, there's a couple areas in the budget that automatically increase your bottom line. And so, at least from my seat, U weigha bottom line
versus all the other needs and obligations we want to make. And this year, I think we can live without the new people. They would be nice. So, it's kind of need and want. And so, if we lose a senior
lineman, we'll go back to do two things. We'll go try to hire a seasoned line person or we'll have to go back in and train somebody. So, I I don't think that the I actually I
lied to you because that was the story of about two hours ago. I think where Brad's going to go is um I I'm telling you this from my perspective, so now I got to refocus. Um >> we have three positions and we were
going to keep the meter tech the meter tech traininee. Brad's like, "No, I'll live without the meter tracky and I'll bring a groundsman." But that story in and of itself is a great example of how you become resourceful when the city
manager says no. So we shifted stuff around and we caught some of the some of the need but not all of it. And then on the capital side, we did do we did do quite a bit to the capital projects. Um Brad submitted a capital budget that had
about $7.1 million of expenses. you have a capital budget that has about $4.9 million of expenses. That's where it's going. So, so long story short, the the
there's we're the difficult thing in in explaining all this is there's a couple of different ways to tell the stories. But every story in the electric department starts with the number of meters, transformers,
capacitors, all those that list of stuff is all the things that make up what they need to do the three-legged stool, repair stuff, build new stuff, or do enhancements to
the systems. So, we're always buying the same things. So when you put it in the pot and you you just try to be succinct and make a short story, you go back into So instead of buying $7.1 million of all that stuff, we're buying $4.8 million.
And what it does is it basically cuts out, I'm going to say two major projects, two major projects that we want to do that fixes the system. So, let me tell you roughly what those
projects are. Brad would love to get a new dedicated circuit that comes out of East Substation here at Katroli or used what used to be Catroli and head east and tie it in with circuitry that's over
by uh the 44 Sunnyside intersection by making that connection which is about three miles. If anything would go down in the east or the airport sub that serves the Silver Lake area, we can hit a couple of switches and back
feed. So instead of back feeding within the circuitry of kind of East Leburg, there would be a leg that would come over from center of Leburg, even though we call it esub that would feed that. That would give us some redundancy. We
don't have to have it, but it would be a nice addition. We haven't run into troubles, but it would be nice. So, that's one of those projects where, man, we'd love to have it. It makes sense, but it's kind of weighing what do we want to do? Charge customers more or
have more redundancy? Unfortunately, we're pretty good at fixing stuff when it breaks. So, in this case, that redundancy got put away. Another example is it's we call it circuit 58 or 59. It goes down US 27 out of center sub. So
center sub is the one with the mural over there on north 27 and center street that feeds a circuit that goes down and picks up some bigger load kind of down south 27. Brad has put together I don't know the fourpoint plan to fix that
circuit kind of step by step. And of the four steps we've got one. So the other three steps again kind of pushed aside. The other bigger one in there uh that again we've kind of kicked the can down is the creation of the new what are you
calling it? West sub. >> West sub >> west substation. So I'm not going to rattle off all the substation names but if you want I can. Um of the four we've been trying to build now the fifth substation.
>> Oh so this is six. Okay, I got my So, so it's center, it's east, it's north, it's airport >> and Pixiola, right? So, west would be actually out on 44 um kind of near um
Pimrook Pines in that area. Um the the the objective of that location was it was uh and we purchased the property three years ago. I think you guys were created or maybe just about created when
we purchased that property. Um I think we bought eight acres. >> Was it five? >> A little over an acre. >> It was a little over an acre. Um I can't remember the price so I'm not going to do that. It was like half a mill. Um but that location was strategic because it
tied in some loads from that came out of North Substation. Mark, that's your substation. Um and center as well as the expansion stuff that we see potentially that would be on 44 and
over into the villages. So, we're we're living without that sub. Um, we can still operate without it. It's going to be something eventually we're going to get to, but that that project kind of keeps kicking the can. >> Has the city received all of the um
federal and state emergency management reimbursements that they were expecting? How much have we received? >> So, so we so in rough numbers >> right totaling. >> Sorry.
>> Are you reading it from that cash graph? >> I am. I'm on um page 334 at the bottom. It says 334. >> Does the crash Does the cash graph assume that or it it doesn't have the reimbursement? Okay. >> Yeah. So, so the cash graph shows about 15 million bucks. Is that Let me see
what you're looking at. Is it Is it that >> Oh, okay. So, okay. So, >> sorry. I've just >> You've received all the money you're expecting? >> No, we have not. There's still about $750,000 outstanding. >> So, this number is going to double then?
>> No, we've we've we spent we've spent about So, that was the last hurricane. Don't remember when that was. Two years ago. We spent about $1.8 million of electric money fixing after the storm. So that's that's why I referred to the
cash graph because that went down on the cash graph. You I got a picture I got a picture of the crash graph right there. So that money was actually spent. What was that? 23. It was October 23. >> No.
>> Or was it 24? >> So that's actually in in one of these numbers. here this decline. So it, you know, it wasn't a big one, but it was about 1.8 million out in cash. The federal
government has been horrible about paying back money. So what we're waiting on is that 780,000. So we've received about half. >> Okay. So let me let me complain about the correct government.
>> It's the state >> and and and that's typical. So, how the FEMA money works is it goes fed to state to city. And so, the feds say they've cut the check to the state and so the governor's holding on to it and he and
the governor hasn't released the rest of it. We will eventually get it. >> So, we have to call Ron. >> Yes. If you know Mr. Dantis, please encourage him to release our money. Um, so that's a that's a note that says we still have that. Um,
so kind of back to um the highlights, you know, so those are the big things we cut. We can get into kind of those nitty-g gritties here in a second. Let me jump to a couple of other topics. So we we talked a little bit about, well, we cut capital expenses because we, you know, we're doing well.
We've done a lot of stuff. We haven't done everything, but we're not ignoring it. Um and um the other parameter here we we always talk about is our price. So this is kind of our price chart. So up in the gray box you see our regional
competitors. Regionally we're doing really well as far as our price versus the other providers that are in Lake County region. So Leburg at 137. Mount Dora is really kind of still the leader 12345. And I'm not going to spend a lot
of time on that, but you know, if I'm in your seat, I'm saying, "Well, why is Mount Dora cheaper than us?" The the the the reason is they're kind of a standalone operation. So, when you're a municipal electric utility, you you you
get power really only one or two sources. You buy it or you generate it. Um Mount Dora is a buyer. So, like us, we're a buyer. We buy our energy. So the two stools are you generate it or you buy it or actually you do a combination
of both. Um Leburg and Mount Dora were both buyers of wholesale of our wholesale requirements. When you go to buy it, there's really several ways to do it and but that
breaks down to two as well. you're either in the all requirements project with other Florida municipalities or you're kind of floating the market by yourself. So there's a handful of cities that are floating it by themselves and
and and so what you do then is you're picking up what we call spot contracts. So as utilities and big providers have excess energy including the all requirements project, cities can smaller cities can go around and buy up
capacities and and excess energies and on the short term they can get a really good deal. But on the long term you're going to see them really bouncing. You think we bounce up and down, you know, you really they bounce way up and down. So, what you're going to see, and I'm
going to touch on this a little bit later, um, is is what I think we're going to see in the next couple of years, some of these cities who have really cheap prices now, like Mount Dora, in about two or three years, as capacities get absorbed from growth and
other issues, those available spot contracts aren't going to be out there. So, their costs are going to go up. So, while we hate to talk about when we go up and we brag when we go down, the all requirements project is still for the 42
cities in the state that are municipal electric utility providers and ones that look like us is really the best source of of of wholesale requirements to buy because it's really stable long term. So, we won't see some of the ups and
downs and we'll kind of be more steady. So, it's it's kind of a trade-off. So, right now it's like, oh, we suck because Mount Dora is great because they're buying it cheap. Well, it won't stay that way for long. And even though we have a higher fuel cost right now,
everybody's affected by that. Um, but really going it alone really not the safer route. So, we'll touch on some of those things later on because I do want to plant that seed. But our other competitors like Duke, SECO, and FPL, we and FPL, even though they're not in our
area, we always kind of I always like to keep a watch on FPL because they're the state's largest utility. And for a long time, they were the most inexpensive. So, for the last couple years, we've actually been beating uh FPL. So, whenever we beat
FPL, I always like to brag on that. We're cheaper than FPL. So remind the folks who complain to you about your utility bill that you're less than FPL. So from a rate standpoint, we look competitive. that might give us an excuse to bump up
rates, but I think I'm still a no recommendation on that from me because I think when you compare it to where we've been, where we're going, our fuel cost adjustments, taxes, other utilities that the city manages,
I I just don't think it's the right environment to say, "Hey, we need 5% more from you." So, um, the blue box, the blue box kind of mir mirrors where we've been. And so, what the blue box shows is like in 17,
we bought energy for 76.44 a megawatt. I think I've showed you another chart that when we were buying it at 76.44 a megawatt, our cost was more like 117. And now, when we're buying energy at 8419 a megawatt, our cost is about 137.
So just as so as we've seen our wholesale costs go up, you know, that gets reflected in where we're at in our rates. Um, this is the debt. So we've got we've got uh a little bit of debt on the system. Our annual debt payment is we
got 34. What's our annual debt payment, Brandy? So that's weaved in there as well. I don't think I have a specific slide on that, but that's just our our residual debt at 34.5 million. So about which is actually I'm going to I think that's probably a pretty low number
comparative. So if you looked at we do $80 million of business a year, our debts only 50% of our total take. >> So of that we're about 3.8 million um a year in debt payments.
Um, I threw these numbers in there if you want. Again, it's kind of a little bit more detailed look at kind of how, um, so we've got our usage number, what we pay at PA, and then kind of our
breakdown per megawatt. So, you can kind of see, you know, in the in this in the when when our when our light period, when our low cost periods are, April through September. Um, and then get expensive there in the winter time,
winter and spring. So, and that pattern kind of repeats itself. That chart's good, too, because it kind of shows you where we had some troubles areas like, man, when we spiked here, that was a big that was a big deal. Um, this doesn't include a couple of years ago. That
12647 number. Um, that was this year when everything went up to 50 bucks when gas kind of had that craziness. Um, but then it came back. So, just toform informationational kind of stuff. Um this was uh this is a chart a
little bit kind of just shows you where we went. I already talked about this where it shows you where we've cut and where we're recommending cut where we did. So um Brad's Brad's original budget and and now we now he's balanced. Um that's a capital expenses we talked
about. um the transfer number um and then the ever important uh cash number that we like to watch. Um so you know all in all we're sitting there around 15 million bucks in in a reserve account. Our reserve requirement hangs out about
I'm going just for sake of argument I'm gonna call it 10 million. So we're about five million over our requirement. So that sounds kind of fun and groovy. Um, but underlying in this chart is that
yellow number, this this number here, that's that shows you what we have as far as encumbrances. So, you kind of got to compare the encumbrances. Now, they don't all come at one time. And so, in there is an encumbrance for for the
transformers that haven't been spent yet or it's going to take some time. So, you know, I'm not saying, oh, we're, you know, we've got a deficit of five million, you know, between the our our cash and where those incumbrances bring us up to because that goes back into
cash management and those kind of things. But it it so long story short, the electric fund um it's not bankrupt, but you know, when you look at it four
years ago, This is a fun picture, right? We're sitting on 18 million and our incumbrances are pretty low versus here we're sitting on 15 million with our coverage high. So, this isn't as good as this, but it's not as bad as when my hair was
on fire a couple of years ago. So, we're we're rebounding. And I think what what what you see that steady rebound is is from growth. So, as these new subdivisions come on, and I I'll pontificate a little bit. I think a lot of the Leburg electric growth is really
in the Futland Park area is you know we've seen more growth in the Futland you know I know we talk about Leburg growth and Leburg gets a lot of you know a lot of complaints about growth and Leburg's growing real fast but the irony is Leburg core Leburg is not growing as
fast as the areas that surrounds us. So that's a factual statement. Um, it doesn't dim minimize the concern, but the factual statement is Lake County is growing around us faster than it is in
incorporated Leburg. And so you we see a lack