We're ready when you are. >> I was waiting for >> We got 5:30 exactly. I should take just >> call into order. This is the electric advisory board meeting. It's Monday, March 2nd at 5:30 p.m. Please join me in
the pledge of allegiance. I aliance >> 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. >> Dear Lord, please give us wisdom and
discernment as we go through this meeting. Jesus name we pray. Amen. >> Can I uh get a motion to approve the minutes from December 1st? >> Approved. discussion uh bulk power cost adjustment
update. >> So unfortunately >> manager >> yeah so unfortunately they wanted to give you a quick update where we left off on the power cost adjustment when we started the f this fiscal year obviously fiscal year 26 we we anticipated kind of
two minor adjustments. Um, we started the year at 2 cents per kWh and we and I think we went to 2 and a quarter and then 250 and we were incre incrementally jumping into that. December was a horrible month and the
end of January and the first two days of February were industry changing industry industry shockers and we're kind of the same mistakes of the past that we learned from and and and some of
the you know the weather um really big influencers on on what transpired. So with the extreme cold that that that really the the nation experienced the first two days of February, the gas market just went upside down. Um so now
if we back up, I think it was 01 or 02 time frame when we had to do the big adjustment. So kind of let me explain some differences there. So at that time frame we saw changes in the gas market and the and the and the thing that the
utility didn't do is we didn't adjust the power cost adjustment because we tried to absorb those differentials with our cash and ultimately that was not a good decision. Um because what happened was by the time we started to run out of
cash we had to make a quick adjustment. if you recall that time frame. I think that was before the power before the electric advisory board, but there was much public discussion about the increase from going from a power cost of adjustment. I can't
remember what it was at the time. So, I think it was around two cents to seven if you guys recall that. And really that adjustment, some of the same ingredients of gas being shipped out, the commodities market going crazy, it affected us again where we saw gas
prices typically in the $3 decay range jump into $15, you know, so we had we had seen that before. Um, we were slow to react trying to keep our rates down. Um, but ultimately that caught up with us. So we had to make the draconian move to recoup so we could move forward. And
then of course once we recovered that you saw rates drop back down. So again so since the past that that's almost four years ago now, right? So since that move again we've been making little adjustments up and little adjustments
down. Um so let me just kind of describe again. I think is hopefully this is repetition for y'all at this stage. But again, what we try to do is we try to keep the power cost adjustment fund at a balance of around $3 million to absorb
the ups and the downs of the market. And typically that's a good number. I still think that's a good number and I wouldn't advise changing our strategy for that because what we're going to get into is either an overre so if we want more cash on hand we're going to
overreover at a greater pace than we need to which artificially keeps your price high or if we keep your price low then we're going to be at a spot to where we're not recovering enough money. So what happens when we don't recover enough money? So,
we're not profit driven as you all know here. Um, but we're operations driven. So, if we don't have enough cash on hand, we don't get to pay the bills. So, the big bill is obviously the power cost align, which is about 50 million of the
$80 million budget. Um, then debt, those type of things. So, if we don't have enough cash on hand, reserves dwindle below. So, you you kind of the pots of money that we segregate. So, when the power cost adjustment numbers aren't there, when that when we we start
nipping into that $3 million to pay the power bill, when that $3 million number decreases, we go to the reserve kind of as a cash management process. And then as that, you know, we we don't want to go to the point to where we're eating
all our cash reserves. Um, as of October, they're sitting about 15 million. So, that the cash has kind of rebounded. So, that's a good thing. So the chart. So so now we hit this latest weather conundrum and again a lot
of the same ingredients were in four years ago. The overseas stuff with gas moving um getting shipped off um driving the commodity price up. Um there's strategies about well we're drilling
more. Is there more gas on the market? I don't you know I'll let Brad handle that one if you want to get into that in more detail but essentially what we saw for those few days was extreme cold extreme demand and we saw the prices surge not
to 15 but to 50 and $60 a deck of therm for shorter windows but at that higher cost level it you know it's a huge shock so we immediately saw losses so this first chart is presented to you from FMPA kind and it kind just shows you the
where we're at as far as what they projected and those projections are what we used and we reviewed during our budget process for 26. And so that spike of 134 we're talking about it is coming down. But those immediate spikes, that
immediate hit because of the volatility of the gas market for those two days really incurred the significant losses which we saw for January which we will see um in February and Paul should have
the bill in about a week couple weeks mid March 10th the 10th of every monthish. So we'll know where that's at. So what we did on a staff level was we immediately adjusted and did the calculations so that we're not in a situation where we were 5 years ago
where we have to do some draconian type of recovery. Um and we're also not sitting on a reserve level that we were back five years ago. So up went the power cost adjustment. The magic number with the with the backup in your packets
was um was three was three cents um which we based on our projections we think we'll need um for the end of the till the till the end of the fiscal year. It it could change. Hopefully, it does change. Um, but we we we thought we
needed to weave that three cents in immediately, especially for the March for the bills of March and April when when you know your usage is still down and so we can recover without your high usage, high usage, high rate, low usage,
higher rate kind of balances it out is is the is the theme. Um, so what you really see is we're about a million dollars a delta. So it's not a huge number. Um, so the quicker we can adjust for it, the lower we can keep the rate.
The bad side of this is is I think customers see I probably I would, you know, we haven't pulled customers, but they probably see, oh, here we go again. You know, that's the feedback we get up here. The city goes again raising rates. Um, we never hear the good side when the
adjustment comes down, but I think honestly, I know this is perhaps a bad word choice, but it's really it is a modest increase. Um, and and I and I think it gets us where we need to be. Um, but the reason for the consistent
adjustments is really trying to get to our customers the lowest price that we can and and keeping it at that lowest price. you're going to see fluctuations. Um, and I don't think really there's a need for the utility to sit on more than
three million bucks. Um, it the change would be to increase it, keep that reserve a little higher, but then you're going to see your rate go up as well. So I I think the fluctuations in in a in a in a minor adjustment are better than
high adjustment and and trucking down the road that way to when the if the fund starts pulling 510 million that starts you we were in those phases uh years ago but I don't I don't I don't think that's reasonable for the customers. Um so at the end of the day
um I'll answer any questions you have on the chart. We think three is the magic number. FMPA is working with us. Um we're starting again to see that commodity kind of headed back to where it was. So hopefully this was a blip and
as we cover again based on usage and price and where the markets at, we'll continue to look at the power cost adjustment. Hopefully we can get it down. Obviously that's the goal. When we immediately see that we can lower it, we'll lower it. I think our history and
our transparency on the website where you see our projections and our actual sites, if people actually go to that and read the numbers, they'll see what we're doing. And we're we're we're actually very consistent with the philosophy. And the philosophy is getting the customer the lowest price we can while the while
the utility pays the bills. Any questions? So are these projections on total power costs uh based on what the the typical cost
for electricity is >> um versus an in an inflated projection based on this you know scare concern from the spike that happened. >> Yes is the answer. And so if you go up
to the there's a on on these charts if you see this second yellow line right above that you see the energy charge 3922 4099 440345
and then you see in February the 75 bucks. >> So that's our energy charge that we're getting from FMPA. That 75 bucks is that's the spike. >> I see. So we'll probably see that, you know, that and that that's an estimate for now until we get the numbers
based on this chart and really so what we see is we see um we're nip and tuck with the actual versus budget and then you see the spike in the red. So kind of the new estimate versus the blue was the
original estimate that we balanced everything off at where that shows up. Jack is in that is in that um energy line. So you see out in March, April, May, you see us going to 40 bucks, 37, 32, 33. So that kind of
fluctuates, but all those numbers are a tick higher than the original. So the assumption of the the three cents for the kilowatt cost for the power cost is fixed into that new assessment
adjustments estimates. >> And is there not a a like the base price? Have we talked about having that a little bit higher to kind of help with the fluctuation? We have talked about that but the base price is not going to cover the fluctuations of fuel and we want to keep
base price costs and fuel costs separate. Okay. So, um I I think really our strategy I'm not going to say I think our strategy has been to keep that base price as low as possible.
Um because the base price is a fixed pursuant to our tariff which covers those operational expenses that we can plan for our capital improvements, our personnel, our debt. The fuel component of the rate is that
power cost. Now I digress slightly because in that base cost there are some fuel ingredients in that base price number. So our base price number is 107 per per thousand. So I if if we build in an increase to
the base price, I don't think there's a good way to smooth the curve because that that if we build in because we're still going to be guessing at what the actual fuel cost is. So if we build in the rate and to the base rate, we're
going to have an artificially high rate and and we won't have a way to track it pursuant to the to the power cost to the bulk power cost account because if it's built into the base rate if it's too
high, a Brad will spend it all, you know, or or B, we'll start seeing reserves grow. And so and and so we want reserves to grow, right? But we don't want reserves to grow too much because then our prices are is too high. So I
think for tracking purposes, for transparency purposes, the fluctuations show that when when when the cost of energy is high, >> we have the documentation, we have the evidence. This is why we bumped up the
power cost adjustment. This is why bring it up and down. And if it's buried in that base rate, you're not going to be able to demonstrate that. >> And then my final question is where are we on budget billing? >> Budget billing has been very difficult. So that's a total different topic, but
budget difficult, we're still kind of inhouse. We rolled out a program internally for a select number of customers. The select number of customers, by the way, are employees. So kind of we're using as our guinea
pigs. and and the our system is struggling with it. So, we're still we we haven't rolled out the kinks pro at and and that's the best update I can give you. Paul could probably give you more detail on some of the computer and software glitches, but at the end of the
day, we're we're our system is struggling with rolling it out and keeping it level. >> And those questions are because I need to be able to answer those questions specifically. The the bottom line is our our softwares are older and we're we're
having we're having problems adjusting how we adjust over and under billings. So, and and what that will end up for the customer is they'll get too far in a rears >> or they'll pay too much. Kind of the same thing with the power cost adjustment.
>> Well, that's a that's a constant question I'm asked about is budget billing because the majors do that. So, I just want to be able to answer that intelligently. >> Yeah, like Al said, it's been some there's been some technical challenges getting the math to to square up at the
end. Obviously, we can do it manually, but once you add 5 to 10,000 customers, that becomes awesome. So, >> uh we've changed all the parameters. It appears the the vendor that we use, uh I think we're the only one that's asking for this because they don't seem to be much help. So, we're doing a lot of
learning on our own. So, we recently changed some parameters. Our hope is that's going to fix what's tabulating correctly. We'll know by April if that pans out and do a larger test shortly after that. >> Okay. >> Thank you. >> And the only thing I'm going to quibble
with about the majors do it. Our cost is still lower than the majors. >> Agreed. But >> especially Duke. And so the majors put, I think, a lot of PR into programs that I don't think provides better service because at the
end of the day, I think especially as board members, when you guys get hit up, you know, at the end of the day, we're we are still regionally one of the best utilities as far as price and when the storms come, we get you up. When you have complaints, they're before people
who they're they're before decision makers. You don't get that at the majors. And I and I think everybody on this board needs to keep that in mind. I think there we we constantly have to defend public power because public power has been under attack and continues to
be under attack. And it's and that fight is driven by the majors. And the majors while they may have more whistles than we do, their price isn't better than us. And we get your power back on after the storm quicker than they do. And we have to constantly remind our customers of
that. And I think the I think the primary reason that we get those type of customer-driven complaints is is because you can you can complain to your local elected official. You can complain to
your city manager. You can complain to the electric advisory board members. And you guys touch the people that keep your power on. when you complain to Duke, you're complaining to somebody on a telephone or you're complaining to the
public service commission that's in Tallahassee. So, so the same thing that makes public power great is also one of our biggest challenges. So, I ask you guys as board members to be our frontline soldiers and to constantly
remember that. And you know, if if Duke was beating us and more competitive than us, that would be a different story. But we're sign I think we're beating Duke right now by 30 bucks, a thousand. And that's including their power reductions and our so
they're bragging about coming down and we went up a tick and we're still beating them. And that so that's important to remember. And if those of those who are going to complain about Mount Dora o over our neighbor who's still cheap, remember they're buying SP Market energy. they we need to ask them
what their rate's going to be in 10 years because it's not going to be 105 bucks. >> And another caveat to the budget billing is that Duke and now they they offer one service electric. We offer multiple. So
we have a customer that has maybe four services. We got to pull out that electric piece and do a bunch of math on the back end. So that makes the bill a little more challenging. And so that that that is super important because people are going to come to you with a bill that has five services on it.
Water, sewer, electric, trash, storm water, and they're say, "My electric bill was $500." No, your electric bill was probably $250. So again, the thing that makes us great, being responsive to the public, is also
a negative. Um, I think that the biggest underscore is, you know, um, why do we need the funds? Because we got to pay the bills. You know, that this isn't a profit generating utility. Um, and and as well too, you know, uh, I think Tallahassee
argues a lot about transfer numbers and that's been on and off the agenda. Uh, but our transfer from electric fund to to general fund has been the lowest it's been historically. Um it's it's 3% which represents 6% of
city usage but 3% transfer overall is probably one of the lowest I would probably say is one of the lowest municipal transfers in the state. So I think so we're I think we're doing a super job of making sure
electric is paying for itself and and not kicking into the general fund. So, you know, people like Mark, you know, being a outside customer, you know, we we have done a tremendous job trying to get the electric fund to look like a
little MUN major. Can >> you clarify those numbers, Al? 3% transfer, did you say represents 6% of the budget? >> Yeah, I'll clarify. We have a 3% transfer, meaning gross revenues in the in the formula. So it's gross revenue
minus power supply is the transfer. Typically that number is 6%. 6% represents a non-electric city's franchise fee. Our transfer is 3%. So it's the the
budget minus the power cost. So it's like 80 million minus 50 divided by you know total it's 3%. So we're transferring 3% I think. What's
the it's 4.5 or something? Four four millionish out of $80 million is getting transferred in the general fund. So that's represents the 3%. If my math is right I'll go back if I'm wrong I I'm doing this off the top of my head. But what that rep what that 3% overall
represents is a 6% franchise fee. So in the spirit of full disclosure, that's a little bit of a misnomer, right? Because the unincorporated
resident is paying into that transfer. So it it it's so you still have unincorporated dollars going into the general fund. So, we're not saying that, but our unincorporated dollars going into the general fund is significantly
lower than many other municipal utilities. So, and then on the positive side, what that represents is the general fund is spending within its means. Meaning that if we didn't operate if if the city
didn't operate its own electric utility, there would presumably be a franchise fee to its electric supplier, and that would be 6%. So, if there was no electric utility, that $4 million would still be coming into the general fund,
but instead of being a transfer, it would be a franchise fee. >> So, for instance, if I recall, Fland Park pays a franchise fee or charges a franchise fee to its residents. >> It does. >> And they determine that rate.
>> It does. Do they need any kind of approval or whatever from the the electrical utility to raise or decrease that rate or is that entirely independent? >> It is entirely dependent on the Futland City Commission.
That number is weaved into their budget process so they can change it at any time. Their number is 8%. Which is above industry standard. The city commission sets that two ways.
through their budget process and through the franchise agreement they have with the city of Leburg. So they have and I got to check the date when that comes up. It was a series of five-year extensions. So might be close to that. Were you looking at that, Brad?
>> Um and it it's in their franchise agreement with us that they charge 8%. And so what we and that's in that agreement because we passed that on. So your your bill as a Futland Park resident is going to have a 8% franchise
fee. So it our rate is roughly $139 per thousand. You're going to pay 8% to Futland Park. So we're going to charge you 8% of a buck40 and we're going to take that money from you and then we give it to Futland Park.
>> Okay. Can you also remind me the surplus that we do have when we have it? Is that invested? Is that is that working for us at all? >> Yes, it is invested and the there it kind of goes into the pool of all our
investments. So, we have kind of tiers of investment strategies. We have our typical checking account. You know, what's it getting? 1% 2% and and our CDs and longer term stuff is in the 3 4%
range. So it's not super crazy. It's better than it has been in the past. Not as been as it's super been. And I don't know how aggressive you want to be with those type of things either, but that's about that's about what we get on those. >> Okay. Thank you. >> I don't know. All in all funds, what do
we have about 8090 million in different investments scattered? >> Oh, managed in It's about 17060. >> Thank you. >> Hey, that was really the presentation to tee it up maybe for next month. Brad and
the team was in my office today already prepping for fiscal year 27. Um, and on on top of Brad's list is more personnel. um the sub the west substation
and then in addition to his the other capital projects and those other capital projects run somewhere in the neighbor you know that's where we that's where you guys will see our discussions you know I like 5 million he likes 8 million and those are various projects so the three-legged stool we explained make
ready projects fix things when they go bump in the night and you know ex system expansions kind of that stool um And really those are going to be rooted in what our propensity is for that base rate. So if we want to be more aggressive with capital improvements
um or changes then that base rate needs to come up. And so that's where the that's where the balancing act of working with what you got. I mean we could do a lot of different things if we want to bring that base rate up. Um and that ultimate, you know, your recommendation is city city commission's
final call. Um, again, my strategy going into the the 27 budget is to keep the base rate where it's at and to to maximize and keep it rolling as as providing, you know, we want to we want to provide a good product.
We want to be we want to we want to have safety when we work and we want to sell it to you. So, we want to be reliable, we want to be safe, and we want to be affordable. And so those are those are the those are the and so we'll probably um we'll see
where we end up but you know next month it might be kind of the first we'll start leaking into the budget process maybe a little early and and start planning where where we head um this year we digress. Um could be a very
interesting budget year. Um, a lot of the utility stuff in in the legislature has has eased back um as far as transfers, keeping the transfers, you know, the 10%. It doesn't look like that's going to change. The
legislature here has started to go towards on the which affects us on the water sewer side. We have um we have a tiered system for inside outside rates. So, we have a 25% search charge for outside customers. It's looking like
that might get rolled back by the state legislature. If that is ultimately rolled back, that that would be um um a a deficit for the water and sewer fund on those outside customers. So, the the reaction to that legislative change is
going to be to blend the rate so that there's not a loss. So what you'll see is you'll see the unincorporated water sewer rate come down, but you'll see the inside rate go up and and just rough how my guess is that's probably going to be a delta in
the 3 to5 million range. So if they say no sir charge, then we got to find three to five million and we'll adjust the rates. That'll be our proposal. And then the general fund is anybody's guess with where they go with taxes. So,
but the the goal will be not to go back to the old business um and increase transfer to and there's that room, you know, being now at 3% we probably could go up, but I I don't think that's going
to be the right strategy. So, we have a difficult budget year ahead. Brad, if I recall, Futland Park's window is in about 18 months >> for the franchise. >> Yes, sir. >> Yeah, that sounds about right. It's coming up.
>> Is that just a standard commission approval process or is that >> they have both the franchise agreement gets negotiated between the city? You know, we'll do it on the staff level and then it gets approved by the respective legislative bodies,
>> both city commissions. I think we did it by ordinance. >> That's our report for you. >> Thanks, Al. Mike, you have anything? >> You know, just considering what we've been through a short period of time with
watching the weather, I think city's done an outstanding job as usual. >> I agree. Bethany, >> um, you know, just the politics, our political situation with the United States, everything that's going on, is
that a factor, you think, for the gas? >> I Yeah, I do. Um I do absolutely. Um you know, so the kind of, you know, at least for my position, um I think the Trump administration policy is a drill, drill, drill. You know, environmentally, maybe
that's bad long term for us. probably electric fossil fuels is is going to result in lower energy prices. Having said that, there's the market issues of where gas is being. Um, and I
think there's a direct correlation as the administration kind of hits on Western Europe not to buy Russian gas, then they buy our natural gas. So that's that doesn't help the supply and demand curve. And then I think the third leg in there with a lot you've heard a lot of
talk recently too about these AI facilities being power hogs and putting a lot of stress. So with them kind of trying to feed and and let those guys handle I think Trump mentioned this the other day about putting in the AI facilities where they can be on their
own suppliers and off the grid. That's probably a good policy for us because then that allows our resources to stay stable and we don't have to look to other resources. is that's going to increase our cost or make us do different things. So it yes it it it
does it has an effect. >> Thank you. >> Thank you. All right. I'll entertain a motion to adjurnn. >> Second. >> Meeting adjourned.