Let's call to order the electric advisory board meeting. It's Monday, May 5th, 5:30. Please stand for the invocation and the pledge. Lord, give us wisdom and discernment. Help us to make good decisions. Amen.
I pledge algiance 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. First order of business is approval of the minutes for the meeting held on
April 7th, 2025. Motion to approve. Discussion. All in favor say I. I motion carried. Right. Presentation of fiscal year 202526 budget.
All right. Good evening everybody. Um so this month and next month we're going to talk about the fiscal year 25 budget. This evening we're just going to talk about revenues. So we're kind of break it down for you. The primary reason for that is we don't have all the expenses
in yet. So, so and and we're on the bubble with the revenues. So, you'll get uh you're right in the middle of the mix here. So, whatever input or questions or whatever you have, let me know. Um so, let me if
this of course this isn't working. [Music] [Music] Turn it off. There we go. All right.
Energy is everything. There you go. So, so as far as our revenue discussions tonight, I wanted to review just a few things for you. Talk about electric rates a little bit, electrical rate comparisons, and that kind of fits into the revenue category. Um, I want to
point to some some standard electric bills that the city sends out to customers so you kind of see where we're where we're at and how that refers back to it. We'll talk a little bit about the power adjustment. Then we'll break down into revenues and then we'll get into some of the cash reserve levels as they
are now. Uh actually cash reserve I think that chart was February. So that's that's about as as much as an as update as we as snapshot we can get right now. So um our rates are pretty simple and that if you recall there's two kind of
forms of your rate and we'll talk about that here in a little bit too when we get to the electric bills because you'll see it there a little bit better. But we kind of have the fixed rates which we set by resolution every October 1st and then we have the power cost adjustment. So this is the matrix that's adopted by
the city commission on an annual basis that fixes the rates and these are these are all the all the typical rate classes. Um RS stands for uh residential, commercial, ND is commercial, non-demand I think mun is
municipal. Uh we have special rates for us municipal and you see it down there again. You see municipal I was going to point over here but you all are looking up here. Um so municipal so non-demand is a is a is a typical like customer load that doesn't have a a demand
component to the to the billing. um municipal indie non-demand commercial demand and then there's three phases of demands commercial demand GSD 1 2 and three um then municipal and then we have our fixed uh BCPA that that or that when it's not fixed it obviously you know
it's it's rolling right now it's at at 2 and a half cents a kilowatt um and then I put on there too some of the gross the the taxes that get paid on the bill and so when we get to the electric um bill section you kind of see where those come into play. So these are our electric
rates. Typically they'll the 80% of our customer base is residential. Um so it's really these this these two categories. Um everybody gets the $15 base charge and then for the first thousand kilowatts everybody pays about 9.2 cents
almost 9.3 cents a kilowatt for the first thousand and then it goes up to about 11.5 cents a kilowatt. So everything over the first thousand is 11 12 cents. Um, and that's that's really the composite. That's how we break down um our our residential rate structure.
I'm not going to get into the commercial demand side and all that stuff. It's it's a little bit more complex. Um, but the residential again is pretty much the bread and butter of everything we do. Those rates. So, when we talk about a rate increase or a rate decrease, this
is where we would go is adjusting the bait races and the base sales numbers. and that's where they're fixed this year. Uh fiscal year 26, we're kind of in the process of contemplating, do we need a rate increase effective October
1. Um I don't have the answer for that this evening but as we go through this process kind of our inclination is we might need to nudge up our base rates a little bit for many of the reasons that we have talked about inflationary issues
um primarily and and and and keeping pace with with where the industry is at. Um, so we'll pontificate on that a little bit more. Um, and we'll dig into that more next month too when we talk about
expenses. Um, so with the rates, we we've talked a little bit too about rate comparisons and and really this first thousand rate is is the rule of thumb in in the industry. when you want to compare one utility to another utility,
it's typically what is that first thousand kilowatts sold at. So, this next chart I put up, which pretty much shows all the power suppliers in the state of Florida. I know you can't read all those, but I'll point out the important stuff. This chart comes from
the Florida Municipal Electric Agency. You can go to their website at publicpower.com. Um, and that'll bring you right to the FMEA website. And then, uh, when you scroll through the options there, if you go to books and publications, and you hit that, click,
and then click down to rate comparison. And every month, they update this comparison. So, this comparison is the most recent one that they've done up at the top there, March 25. Um, the next one will be coming out for April,
probably in a couple of weeks. Um, but it it it shows you kind of the the base point of where we're at. So Leburg is right here. This was this was us uh up to March 31st 25. So our first thousand was
12794. Honestly, I think that was a really super good number. Um the important lines on here are the average municipal rate is 126.86. So we were a little bit over the average. But then the other dotted and
so that was the average MUN line which we were just right about at um the other dotted line shows you the average IOU rate. So we're constantly comparing ourselves to other utilities as well as investor own utilities which are Florida
Power and Light um Florida Power Light Northwest which used to be I think was that what was the name? That was Golf Power wasn't it? up in the panhandle. Um then you have public Florida public uh utilities kind
of another little utility. I think that's up in the panhandle too, but then Tiko and Duke. So really when when you talk about the the major investor own utilities, it's it's Duke, Tampa, Electric, and Florida Power. So you see where all their numbers are. They're
they're actually you this is probably the first time in my career that I've really seen where the municipal utilities are doing much better than our investorowned utilities. Typically it's inverse of that. Typically the investorowned utilities are a little bit
less expensive than us. So I put a couple of lines in here for for reference um because I I wanted to show you obviously April one we increased the power cost adjustment. We had that discussion last month. We increased it
the half a cent which is equals $5 per thousand. So our per thousand rate went up from 127 to 132. So FMEA hasn't caught it yet. That's why it's not on the chart. So I took the liberty of sticking in this yellow bar. And it puts us actually halfway between um
Chattahuchi and and JA. Um, so even with the five bucks or the the increased power cost supply, I think Leburg really can still boast of being a competitive supplier because
again when you look back in our area, you know, obviously you don't have a choice when it comes to uh power supply. Uh but but people watch obviously who's paying what. So even at the 132 rate, if
you go see Duke, you know, they're upwards of 160 for the first thousand. So Leburg has beating them by about 30 bucks. Um, Secco and the city of Leburg, SECO is not on this chart. Uh, but SECO stays um, pretty seco and Leburg have
been pretty equivalent uh, the last couple of years. And then the only other so so in our region in Lake County um the power suppliers would be Duke Leburg seco which is about the same as Leburg um and then the other power
supplier is Mount Dora. They're Mount Dora is actually really jamming right now. They're about 110 per thousand. And I'll just give you a quick reason why. Um, when you start seeing these lower numbers, with the exception of a couple,
those are cities that are typically buying uh shortterm wholesale contracts. We're a long-term wholesale contract. So, we're with FMPA all requirements project. So, once you sign up with that, you're pretty much that's your duration
of where you're going to buy power for the long haul. Let's say there have been a couple anomalies where cities have left the all requirements project, but they're few and far between and it's and it's typically difficult and they've either um gotten out of the
power business altogether like Vero Beach who was in the all requirements project or they've set up CRO which is they hit a certain amount of purchasing that they have to take from the pool and then above that number they go somewhere else. Um, so when you see cities like
Elatchua, Newra Beach, Homestead, Mount Dora, those are all cities that are buying it buying have short-term contracts typically one to five years from typically one of the the they're buying capacity somewhere. They could be
buying capacity energy from FMPA. They could be buying it from another investor on utility. Um, I actually ran into Mount Dora the other day and they're actually buying a spot contract from Duke. I need to say this because the
question of humor is is why aren't we doing that, right? Um, because it's dangerous. Uh, and it's dangerous because when you go out on the spot market, you typically have you're doing really good or you're doing really bad.
So you're getting energy super cheap or there's no energy to get because there's no capacity. So now your price has gone out and so now you're weathering the storm kind of alone. So this snapshot is at a time when the buying is good. I
would suggest that as these contracts run out, you'll start seeing these cities move back up in line. So you're going to see a lot more variables in pricing up and down and up and down as they can buy power on the market and and
again the market's not like today and then a new contract tomorrow. It's typically a short-term 3 to fiveyear dealish. Um so um a couple of other examples like Barto on here. Barto buys actually surplus energy from the all
requirements project. That's a long story, but that contract is kind of is going to be coming to an end. So, you'll see Barto start rising. Um, so typically if you see cities kind of in our our group, our price range of
average, those are typically cities that are going to be in the all requirements project or they're going to have more long-term strategies. So, their pricing is more consistent. That's why you see the difference. um you see the big increases on the investor own side these days because
they're fighting the same issues that we are inflation um I would I would say that the two issues that they're fighting these days probably more inflation and more storm recovery issues where they've gone to the public service commission to start increasing their power cost adjustments
as well as their their base rates. Um, so you I I don't think you're going to see the investor on utilities prices come down. So that's bad, right? Because the customers aren't aren't going to be seeing a break in the next couple of
years in terms of their electric bills. Uh, but that's good because Leburg comparatively is in is in a good position. Any questions on that chart? What what is a reasonable basis of
comparison when you look at these? Is it for instance number of customers? So if we want to say how does Leburg compare to which other one of those utilities based on comparable customers to be able to see what's our rate versus their rate. I don't
think the comparison is taking a residential customer at a thousand kilowatts. So everybody's being that it's an applesto apples comparison. Okay. I think your question gets more detailed because it it it you you're going to
start getting into other issues like uh what their what their efficiencies are in far as system peaks and and and load issues that go into rate making. Maybe not so much on the investor own side but on on
the city side where if there there's there becomes divisions in municipal utilities between are you a generator of electricity or you just a purchaser of electric utilities. So in the all requirements project which we are which
there's there's only 13 there's 13 but there's only is KUA is a generator. Oh um KUA is the only one right? You got Fort Pier still has the uh Lake Worth. The Keys have
some the Keys have so so of the So we're in the all requirements project and you can kind of spec out these cities. Um and uh Cassini's in the all requirements project. Cleon's in the all requirement
project. J Beach is in all requirements. More Haven's in I think so. I think so. Fort Pierce is in. Um I think you're right. They're all grouped together. Quincy, Newberry, Chattahuchi,
Havana, Fortme, Key West. So, so we're so in our own pool, we're right in the middle, which is representative to that. And so that's why your question's technical because the way this the the wholesale pricing structure is which I'm
not going to be the good one to provide that explanation but we can bring FMPA into that but really the highle approach there is the way the all requirements wholesale rate structure set up is if you are a producer a generator like KUA
and you're giving power back to the group the group pays you for that. So they take those base rates and they end up getting a credit. So for some cities that have generation like KUA, you see that they have a significantly dimminimous lower cost
than us, but that's because their composite on their wholesale is different. So typically we we've come in and we've said we're buying power for $80 a megawatt. That's the group the average group. So KUA who's in our group
is going to be buying it for less than that. we're going to be buying it for a little bit more. So that's how I try to answer your question. So it's an applesto apples comparison because it's all those utilities based on a thousand kilowatt sales, but then how those
individual cities get to lower higher rates has a bunch of different matrix in the one I explained then their personnel cost then their debt cost then you know all those other things that go into the rate making. Okay. Um, so all in all, I I actually think
Leburg's been in a is kind of the middle of the bus. We weren't always at the middle of the bus. Probably the last five, six years, we've been consistently at the middle of the bus. And even if we need a rate increase regionally and
statewide, we'll still be about the middle of the bus. Any questions on that? So I I would say the takeaway from that is Leburg's competitive. Leburg is
providing a reasonably good price to our customers based on that data and that's the statewide data. Okay. So let me go to the typical utility bill and and as members of the advisory board um I think that the
biggest thing to caution you is is I got a $700 electric bill. Okay. Chances are that that's a city customer and they didn't get a $700 electric bill. So why? So this is the typical what your your typical bill
looks like. Um and and on this utility bill, there's six utilities on this bill. There's an electric bill, a gas bill, a sewer bill, a trash bill, a storm water bill, and a water bill. And at the end, people look at that bottom number right down there. I think this
one says 257 bucks. They're going to say, "I got a $257 electric bill." We're going to say, "No, you didn't." So, so you will get that a lot. So, you So, please keep that in mind when residents come to you and say, "My electric bill
was out of control." So, you got to know who you're talking to when that happens because we have three customers. We have the resident customer, we have the Futland Park customer, and we have the unincorporated customer. And all those people are going to be different. So
people look at this bill if they're the typical city customer and they think that that bottom number is their electric bill and it's and it's not. And that's super important to point out. That's why I put all these arrows in there.
Um so what does that look like if we break it down? So this bill, the typical city electric bill, so this part of this bill right here is this. And so what I wanted to show on this is um this is the breakdown
of the two portions of your electric bill. This is the electric charge and the base charge. Um so in this case, this customer only used 740 kilowatts, so below a th00and. So it actually does
exist. People actually use less than 1,000 kilowatts. Um, and I'm really impressed with this one because I know these folks and I know exactly where they live and I might have lived there and that consumption is like really less than what I did while I was they did
something. Um, but in any case, I um so this this consumption so you don't see this base sales go to the over,000KW. So if you went over,000KW, you're going to have three lines here. So, everybody pays the base 15 bucks and
then the 9 cent over the usage. Um, and that's your fixed cost. This is the this is the portion of the bill, the fixed cost that the commission sets that you'll be recommending on during the budget process October 1st. The second cost is of course the bulk power cost.
That's adjusted by the city manager and right now we're at 2.5 cents. So, obviously this is a bill that went out after April. 25. So that's what so that is the one6th portion of the city of what a city bill
looks like. So that I think that just as perspective of then how this comes back and hopefully tie some miles together for you. A Futland Park bill is going to now start looking more like if you're a
typical customer um in a municipal or municipal municipality or municipal corporation, you're going to get an individual bill on power. So this person's bill, they're going to go down the bottom and say, "My power bill was
166 bucks." And I'm going to say it was with taxes. So let's talk about those breakdowns. So this is a Futland Park bill and again so this so this customer again look at that40. So that thousand thing is looking pretty good right now. Um so
this is um um actually this was a house in Winksburg. This is not your bill. Um but it is approved park bill. So you see you see the base bill of of 15 bucks. Then you see th00and then you see over a thousand then you see your your power
cost adjustment. So their electric consumption portion of this bill is $138.56 for,040 kilowatt. Um so now let's start talking taxes. Municipal corporations in
the state of Florida are permitted to levy two types of taxes. A franchise fee and a utility tax. Not I'm gonna come back to the microphone here. So here not all cities do that. Um and that's
important to know. Most cities do have some type of utility tax. Most cities use their utility taxing powers up to the maximum which is 10%. Fruitland Park is one of those. And oh by the way I skipped this part of the bill or maybe I
stuck it somewhere else. Um this is back to the city. I did on this. Let me go jump back to the city bill because what on the taxes part you want to look you want to look at the bottom part of the bill where the taxes
are. So on the city bill all the utility taxes are at the end. So we hit you on electric, gas, trash, sewer, water, and then we hit all the taxes down at the bottom. Okay. So, we have pretty much the same thing as Fland Park, but
for the franchise fee. So, everybody pays the governor the Florida gross receipts tax, which I think is like 2.3%. If you're in a municipal corporation, you you typically have a utility tax that's for electric and water. Uh I think it's electric, water,
and gas, 10% of of the sale. And then you have a franchise fee. And I think we talked a little bit about franchise fees, but I'll remind you real quick. So, electric service is considered a municipal service by state statutes. And
and by state statutes, if it is a municipal service, the municipal corporation has the franchise to sell you that service. So, if so, what cities do across the state of Florida is on all types of services whether they provide
it or not. Um, if they are not the direct supplier like the city of Leburg, you will see on your bill a franchise fee and a tax. Um, the purpose, they're different even though they look the same. I
understand that. Um, but a a tax is a tax and a franchise fee is a franchise fee. So a franchise fee in this case is a charge to the entity who's providing the service in that municipal
corporation where the statutes say that they are the sole provider of that service. So it's the right to provide that service. A and B it's the right to use the public easements and rights of ways. So in this case, Frootland Park
pays a franchise fee to us or we pay to them a franchise fee. So in in Fland Park there's an 8% franchise fee. The typical franchise fee I'll know
is 6%. So Fruitland Park is 2% higher and is atypical. Um, so in a Footland Park bill, you're going to get the city bill, then you're going to get your gross receipts tax, the city tax, and then the franchise fee of 8%. So we have a service agreement. The city of Leburg
has a service agreement with the city of Footland Park. I think it's three five-year rolling franchise agreements. Um so where they renew that every year and at the end of that agreement we either a renew it or b city of park has
the right to buy the infrastructure which typically we wouldn't advise Mr. Fland Park representative. Um but that's that's that's kind of the historic kind of pattern of what franchise fees have done. So other
cities like the city of Leburg also has a franchise fee uh agreement with Duke. So if you're not on the city system, the city of Leburg will charge 6%. Um and most other cities in the state have that same franchise
fee. Now to make matters a little more complicated is the unincorporated bill. So the unincorporated bill looks similar to it. It's actually a hybrid because you may receive water and um water and
gas service from the city of Leburg if you're in an unincorporated area. Um you may not. So it it could vary. Um we're in Frontland Park. The only city of Leburg service that you you would be getting is electric. Um so the
difference now as we serve in the county is you still see the same use charges here. Um this this particular customer though has the um the the surge protection. So that's you know that's
the that's that code. Uh so their bill was 122 for 861 um kilowatts. Uh but down at the bottom you'll see the same gross receipts percentage usage that goes to the state but instead of a franchise fee or a
utility tax you see the leber sir charge. So if you are an unincorporated and the and the counties political subdivisions don't have some of the same powers as municipal corporations. So the counties don't have a franchise fee. The counties
don't have a utility tax. Hence there is none. So what cities have done historically in in the electric industry specifically is on customers that are in unincorporated areas.
we have a sir charge in lie of a tax. So that's a 10% sir charge, not a 10% tax. So where these go at the end of the day, just because this is the end of the the billing segment of the presentation
here, this $15 ends up in the city general fund. This $122 ends up in the electric fund. And this one is is has kind of a a mirrored transaction when we start looking at the budget documents because
you will see in the electric revenues, the search charge is blended into residential sales or whatever sales category you are, but then you'll see a deduct in the expense line for the equivalent. Then in the general fund you'll see a
revenue and an expense for the search charge. So the search charge this is actually not electric money. That's search charge. That is electric money that goes to operating
and paying debt, paying supplies, paying the wholesale numbers. Any questions on that? You said that search charge is 10%. Search charge is 10%. What am I missing? The math is important. Shouldn't it be like $12 and change?
It's 10%. Yeah, because you got that extra five bucks in there. So, it's 10% on the customer charge and the use charges. So, it's probably this plus this plus this gets you that, not all of it. Not this. 10.
No, it's a So 10% of 122 almost like 12 and a half%. No. 10% of 122 would be 1220. 12. So why is that 15 bucks? That's a good question. Al there there's an answer.
I mean even if you added the gross receipts, it still doesn't add up and you we you won't put a search charge on the tax over there. I'll double check. Yeah, that's that's a little over 12%. Just roughly. It is. I will get you an answer on that. Can you also go back real quickly to the um uh the franchise
fee? Yes. for clarification on that. So, the city of Fruitland Park sets the franchise fee. Yes. They're charging the utility. The utility is basically billing the customer back for whatever that amount is. Yes. Right. You said it's typically 6%. Fruit Park is charging 8%. Any idea why there's a
difference? No. No. I can I can speculate if you want me to speculate, but the the honest answer is no. I don't know why Park does that. Okay. Do you want me to speculate? Has that been Has that been pretty
consistent? That 8%. Fruit Park has always been 8%. Yes. Okay. You know, we're 6% wildwood. We're No, we're 5% in Wildwood, but we don't have electric there. No, St. Catherine is Wildwood. Oh, are
we 6% there? Pretty sure that's the villages influence. It's the villages of St. Catherine, which is in Wildwood. I'll go look at those Wildwood bills. So, when you say it's typically 6%, is that are you just throwing out basically a statewide average or no statewide? Okay.
Sorry. It's okay. It's a good question. I don't know how the number of 6% came into being, but if you look at every municipal corporation's franchise agreement with their supplier, it's 6%. And it's been
that way forever. I don't know how I don't know what the formula was to say our franchise is worth 6%. Probably my guess is is cities would do as much as they can to generate as much revenue as they can and
that was the level of non-push back like the that that's as much as they could get. Um because the the non-municipal utilities, including the municipal utilities don't like to have the franchise because
people see it as an adder on to the electric bill, right? And it that's not the true cost of electric because the city is doing this quote unquote tax on you. So my guess is when when cities started getting out of the electric business. And so in in Florida, what we
saw is back in the 60s and and probably the late 50s as as as Florida became more urbanized, cities started getting out of the electric business and they started franchising it to whoever the
closest or territorial provider was. And when they signed off on those agreements, they kept the 6%. So there's a few oddballs. I know of two. Leburg happens to have both of them. Futland Park is 8%. That's probably the amount
that Futland Park wanted because they wanted to derive a certain amount of revenue in the general fund from franchising it. And that was the number they historically came. And then it's, you know, it's like a drug. once you get used to that amount, you don't go back
um without, you know, ramifications and you know that kind of thing. So, it's always been 8%. But that's I I would I would wager that you won't see 8% anywhere else in the state of Florida. To be clear though, that is a dollar for-doll transfer. Like Leburg is not
upcharging that 8%. That is a dollar for-doll transfer. So on that on this Futland Park bill that 12275 that's in there 12275 goes to Futland Park. We might keep a percentage of that but it's
like an administrative fee. It's like like pretty minimal but don't hold me to that. I have to look into that too because I think Duke Duke keeps a a minor percentage from our franchise fees. So, we might have a small piece in there, but I'm gonna say
99% of that 1275 is going to Futland Park. I I'm looking Yes, I'm looking at the wrong number. 1137. Um, then you mentioned the 5% franchise fee um for for we have the villages of of Catherine, which is in
the city of Wildwood and Sumpter County. My guess is that's and I don't remember how we did that. Um it's probably villages influence when we started providing utility services and sumpters the villages wanted to do it at 5%
instead of 6%. So the villages kind of was instrumental in orchestrating all this and so everybody capitulated to five versus six. Can I can I ask a favor maybe for the next
meeting? You want me to give you an explanation? The numbers aren't working. Like that's not the the the Fulin Park tax is not 9%. Uh is that the number you're coming up with? And the franchisee is not 8%. I'll
get you an answer. Would you please? Yeah. Just kind of curious. Yep. Before I before I Yes. Yeah. Thank you. I will get you an answer. One of the things I'll just to add on there with the with the bill that we have with gas, electric, sewer, etc. GRU
going through all their pains, you know, with the with the state is revising their bill. So the GRU bill will just have electric and not be coupled with the city of Gainesville, which increases the cost
for the city of Gainesville having to do a separate bill. So everybody's a little bit different there as far as process of billing. Any questions on the billing section before I move on? I owe you an
answer on the the fuzzy math. Thank you. Okay. So, with that, I'm going to jump into the power cost adjustment. Now, um so the first portion of the presentation kind of show you where our rate structure is and we're kind of hanging in there. Um how it how it's disseminated in the form of the bills.
And so, kind of the next component into revenue is our power cost adjustment. And the whole purpose of this chart, if you go to again, if you go to our website, this information is on there. So, you go to our the city's website, leberf florida.gov, gov. Then go up to the very top. It's electric ratewatch.
Click on that and then we'll start showing you all the stuff. Um, and this is the updated. So, I just this this bigger box is kind of the important one for the discussion. This bigger box, this smaller box, which you can't read, it's kind of everything we're comparing it at. What our base rate is, what the
power cost adjustment is, what our recovery is, what our balances are, yada yada yada. So we we changed this this year just to kind of show you our estimated versus actual in each of the primary categories that make up how we get to the power cost adjustment. So the
first one is wholesale cost from FMPA. So this would be the here are the months. I lpped off the months here but this is October, November, December, January, February, March, April, right? All the way through the end of the fiscal year. So, we anticipated our bill from um FPA was going to be about 46
million bucks this year. So, here's where we're over under on our estimates and actually we're we're we're actually pretty good. So, we were up a million or you know, so you see where we're at here. So, then we come into our our
recoveries uh over we anticipated. So, October was actually kind of a bad month. So even though we paid less than we anticipated, we didn't recover. We didn't over So black is an overreover. Over recovery meaning we charged too
much. An under recovery meaning red meaning we didn't charge enough. So all things being equal, we'd like to see this zero, but you know, you're never going to hit that. Um so we try to smooth it out. Um, so even though our
power bill was down by 200 grand, we didn't overreover as much as we thought. So now that's going to go into the the the the data of what did we peak at that month? Where, you know, all sorts of other metrics go in there as to why why was our recovery a little bit different
than anticipated. Um so again and then at the end we want to keep 3 million in in the in the power cost uh reserve account. So this chart then shows you kind of what we anticipated. So at the end of October we thought we were going
to have about 4.1 we had 3.6 but then we we made it up. Look in November we had a great November month and that was the month where we had that big credit coming back from FPA. our energy rate went really low that that month is why we ended up overreovering
by that. So, so that so when we over underreover that goes boom it's going right back to the customer because it's it it enables to keep our bill more steady. Um so then you know these are kind of the comparison. So by the end of the first quarter we thought we were
going to have about 4 million in the power reserve account and we had four 4.05. So we're only about 40 grand off. So that looked pretty good. So January was hard on us, but February was good. So you kind of see how we anticipated
good, good, bad, bad months, right? And then we we kind of balance out again in the summer. Summer's typically a good month for the because we have high sales, high consumption. Um even though we peak in the summer that we keep up with with the kilowatt usage. So, um, all things being
equal with what all of this means really in in English is we're we're only about 200 grand off of our projection, which in that account is actually a really good number. So, we'll see what April does. We should have our April
numbers. Today's the 5th, so we should have our April numbers. Typically, we get our numbers middle of the month, so we should have our April numbers in the middle of the month. um this month for for April. So, the purpose of this is to say we're pretty
much right on course where we anticipated with the power cost adjustment. Um so, we'll see how that goes. Um but that's an important part of rate making uh because we do account for it as a revenue. Um and it does affect
your bottom line when you pay the bill. Um, and typically I if my hope if if we were going for a rate increase was my hope was maybe we could bring the power cost adjustment down in the fall and then if your base rate goes up a little
bit, you're going to have a net neutral increase in your in your bill, but the city would have extra revenue uh to start covering some expenses in the in the electric fund. That's to be determined, but kind of one of the mechanisms we're going to be looking
at. So, the next I meant to make a copy of that off for you. Uh, but that's our revenue numbers. You can't see them. Um, uh, my apologies again on that. Um, but $75 million is what we anticipate as a
revenue right now. That's so that's bottom line. So, everything basic in that number. So the total number down here is 75.9. Okay. This these charts in here is all your all the residential or all the
customer classes all charges for services energy out money in. So 75.9 million is what that says. That number says 75.3 actually says 70 75.394049 is what that is. So basically
what that's 99 math Mark what's the math on that? It's like about 99%. Pretty close. So 99% of all the electric fund money comes from charges for services. We have some other stuff in here. interest, revenues, recovery, blah blah blah blah, some miscellaneous stuff, but
pretty much everything is coming from that charges for services and the primary charges for services uh residential and we have a couple of big commercial customers with that. There's kind of a super easy
formula that we use to come up and to to figure out where our overall revenues are going to be. And that formula is 60% of the revenue is your wholesale
costs. So you can work back into your revenue number. And then these all of these numbers give us enough historic trends that we can kind of proportionalize each one of those lines. Um because our our commercial and our residential counts and our industrial
counts, they're all pretty they historically they're all similar. So, it's really becomes a pattern of ratios. And if you can figure out what our wholesale number is going to be, then you can back into what our revenue stream is going to be. And then you take that revenue number and then
you break it down over the course of these. Um, and this year, although you can't see these numbers, we're pretty much spot on. And but then, but then you we we break it down month by month by month. So, if you take a fiscal year and you divide it, you're supposed to bring
like 12.2% 2% in each year, right? 12.2 times 12 get you your 100% of revenue. But we but our months are pretty historic. So we know in January we should we should capture 7% of our revenue. In July we should capture 15%.
And so then we we break those comparisons down. I didn't bring those for you today because I thought it just get too complicated and fuzzy. Um, but we're starting out the fiscal year 26. Um, thinking we'll probably bring in about
75.1 million. Um, so I I threw in this chart because this this looks similar to the power cost adjustment chart I showed you in the past, but this chart I'm just focusing in on what our wholesale cost numbers are. So that number right there is our So this is our projection from
FMPA for fiscal year 25 which goes from October till September starts October one. Um they're projecting that our costs are going to be about 45 million bucks. So that's how we start setting our our our
revenues. Any questions on that? You guys are easy there. Okay. So, we're looking at moving into as so when we talk next month and we break it down into expenses. Hopefully expenses will be
75.113 million. So, that's to be determined next month. Brad's still putting together his expenses. I think they're polishing it off with Brandy tomorrow and then it'll be in front of me and then back to you guys by June. And then we'll really start breaking it
down into some more detail. So before I go to the next slide, so so you have a feel for it. So we're looking at where our rate structure is. We're looking at where our power supply cost number is and how much cash we have there at 3 million. So the next kind of
component is how are we doing overall with our cash, which is this chart. So the past couple years I've I've been a little bit worried about the electric fund. Um, so this chart is really the composition of where our unreserved
electric cash is. So if you go back kind of to COVID, we were sitting around 20 million and then kind of as we came out of COVID, that's kind of where we saw inflation start to hit us. So we absorb the utility absorbed those costs. Um,
probably about March of 23 is when I started yelling at Brad to spend less. Um, and so you you you see Brad, don't look at this. Um, we we've started to catch up here probably in this fiscal
year. I would ultimately like to see this number sit around 15 million. The question becomes where should it sit? Um, and that's really anybody's rule of rule of rule of thought there. Um, the
government finance officers association says 90 days of operating capital. What's FPA? FPA is 90day operating capital. They wanted cash. Um, and so probably somewhere between, but what we want, we don't want to see the the ups
and downs, right? We want to see steady cash just sitting in there. So we use it if we need to. And typically where we're going to use that is in case of a storm and then we see it go back. And in storms we see our cash depleted typically in the neighborhood of 1 to
three million bucks depending on where that happens. 90 days cash for the general fund is 75 million times 25%. What's that number? It's like I think it's like nine.
What's the number? Uh 75 million. 12. Just do 25%. 8.75 8 I'm sorry 18.75 18. Okay. So it's going to be 25% without power cost is where we get that number from. So this actually this chart shows you where
we're at as far as that's the GFOA 90-day cash number. So as long as we're over in this about the $9 million mark. So we're sitting right now about um just about 11. So the couple things on this chart blue the blue re the blue shows uh
renewal and replacement. The green shows reserve cash. There's not a lot of difference functionally at your level between the blue and the green bar. That's pretty much all free cash. The difference is the depreciation number is
it what is what becomes the renewal and replacement number. So that goes blue. Um but they function for Brad as far as spendability that the same but blue the the concept is to build your cash through renewal and replacement. So, we
try to keep a beat on what that is from our depreciation entries and then what's left over from when Brad doesn't spend. Um, so you see the last the last quarter here, we've we've been actually doing pretty good and starting to catch up. This line here, this this orange in the
chart, those are our encumbrances. So, this is why Brad is going to be looking at this number thinking $11 million. I'm doing really good. I'm going to be looking at this number and saying you're not there yet. So those are the those are the encumbered expenses. So this so there's about $6
million of encumbered expenses that we were scheduled to spend but haven't spent yet. So really so we're not sitting at 11. We're really sitting at seven. But that's going to but that number is not going to all go out the door at once. And so a lot of those
those encumbrances the the greatest example of these encumbrances right now are the subdivision agreements that Brad has signed off on or now the city commission. So um what's that one in Frontland Park's name? Fland Park is Arbor Park. So Arbor Parks is the big
subdivision off Uclid Road and it actually they're coming in off Martin Luther King. So in Leburg so they're actually coming off of Leburg Road to go into the Futland Park subdivision. They worked all that out with us. Um, so there's a So that's a that's a pretty
big sub. I think 163 163 houses phase one and phase one. Yeah, I thought it was like 500 total. Yeah, it's going to go all the way to 468, but right now phase one is 163. That's a big one. So we've done the first phase of of our our
portions of our expense. So that's the expense where we do these um developer agreements. We haven't done the developer agreement with you all. We should we'll do that after the budget. Maybe we'll do that in the summer when we have nothing else to talk about. Um but but we have a cost when the the
utility has a cost when we build a subdivision and that cost we typically think we're going to return our investment in four years. So we've got wires and hardware and poles and whatever to put in and that's what's represented in this yellow box. Um the a
the auditors do look at us. Our bond or not our auditors but um the rating firms look at us on a quarterly basis. They call us monthly. Um we did just get downgraded. I think we went from a an A to an A minus. So it's not a huge
significant downgrade, but if we were going out to shop for debt, then we would see probably that kind of downgrade is literally a couple points. So even I mean a couple of points is it's not a huge increase if we were going to borrow but we don't like to see obviously our rating go our ratings go
down. So there's really a balance between where we want our cash flow and and and the rating firms did notice they noticed the drop and that was the biggest reason they downgraded us from the A to A minus. Um, so there there's a happy medium there where that needs to
sit and and my inclination is that number. We're getting better, but I'd like to see that number really solidify at 15 million. So that's why um kind of as we move into this fiscal year, we really
need to talk about rate structure if this number continues to increase. Um and remember so this is through February. Um that's so that's another component of finishing off all the expenses for February. So, we talked about expenses for wholesale purchasing,
which is a couple months ahead ahead um or almost pretty close to real time, but the actual expenditures that the department makes, paying personnel, paying for equipment, that takes accounting, uh you know, they're
probably we're in May, not quite 90 days to catch up with that. So, I do anticipate that that February number is going to hold steadyish, but we don't know until uh all the accountants kind of finish off Brad's books. Um, so I
think that's good news. So, put all those things in the hopper. Um, for our revenues, we're probably looking at the gener the electric fund being around 75 million. Um, we need to look at Brad's expenses and and and and shift through
those um to see kind of grade the wants and needs and then go back and see where we're at in terms of the rate structure because in the next couple months is when we'll really put the formulas together, working with you all to
determine whether we keep the rate where it's at or whether we might need an increase for October one. with that [Music] is everything. I I guess my only question is
um and without getting into a conversation about politics, how might tariffs impact expenses moving forward on some of your materials and equipment and things like that? that's going to be it's going to be like your car, you know, all those metals and all the
steels and all the the minerals, copper and those type of things, you know, it's to be determined. So, we're just starting to see that now in the economy, right? So, the tariffs went into effect, was it last month or so? And so, now we're starting to see the impacts on that um in the housing market. You know,
they're saying the slowdown in the housing sales is due to tariffs catching up. Auto industry saying the same thing. So in the months to come and that could you know long story short where we're going to see it is that chart right there. So
if if those price as pricings on meters and wire and poles and all those things start to increase because of tariff we're going to see unexpected expenses and we're going to start seeing the electric department expenses exceeding our estimates because of that. So which will eventually get passed on to the
customer. It it Yeah. Is there any strategy or an opportunity to buy now? Buy um stock up on materials. We probably missed that bus to a degree. And then that that that becomes the next
question of how much do you want to stock up on and and spend cash to put in the barn while it's not earning? So I I I think we've got a good blend of that. In fact, probably where we disagree a little bit because Brad
likes to sit on materials more than I do because I rather see it in cash. He rather see it in materials. Um, and our material number is up. Typically, our warehouse number used to hang around 2 to four million in in assets. Now, we're hanging around six to eight. And so, we
we try to manage that. Um, the other thing about buying ahead of time, too, is lead times. Some of these things are just hard to get. Um, so we try to keep stuff on hand as much as we can and then reordered as we go. So I think Brad does a pretty good job of that. The tariffs
is another added level of frustration. Um, hopefully that balances out in the future. Um, if the president's correct, but I wouldn't go on a spending spree to stock up on stuff now, okay? because it's going to hit us
there with pushing out cash and it sits in the barn. Uh so, and then when do we use it? So, and then when the storm comes, so if we took, you know, we're sitting on really I wouldn't say we're sitting on 11 million. I'd say we're sitting closer
to 7 million. So, how much of that seven are we going to hit? You know, we're going to spend five, six, seven of that and then when we get hit with the storm in the summertime. So ultimately it goes back to the customer and that's what you see the investor owns doing too. So most of
these costs are getting passed back on to the customers. Okay. So I think I really think our job is to contain as much of it as we can. Ultimately we're probably going to have to increase a little bit. What that number is I don't know. I would venture to say it's going
to be from zero to 10% increase. I don't I don't think 10. Um I I just don't want to say yet till we start seeing Brad's numbers and seeing what this next quarter does and
seeing how it impacts cash. To your point, we're still pulling on inventory because of the, you know, lead times went to two years on stuff we used to get in seven weeks. So, you know, we do have some inventory we're leaning on. But, you know, I see six, seven, eight
months down the road if all these things hit that, you know, that that thing that that that bulk that we built on that's sitting in the warehouse, we're going to keep pulling from, but eventually we're going to have to start buying again. And those higher costs are, you know, we
can't absorb it much longer. I mean, I that's my two cents. Yeah, we've been we I think we've been doing a really good job of absorbing those costs. Um, and and go back to that very first slide. I'll go here. How do we get back there? I I'll just tell you what it was.
So, our rate right now 132.95. I think that's what that number was. Yeah. When So, 13 years ago, 13 is it 13 and 13 when I first came here, our our rate was 133 going up 5% to 142. And so we
stopped that last increase and we actually went down. So and we didn't and we stayed so I don't know so for so I've been here 11 plus years now. So we're lower than we were 11 plus years ago. Who else has done that? So I think you
know that's something I think folks need to remember as well. Um, so even if we go up say 5%, now we're going to be at that 142ish level, which is still pretty competitive and just barely above where we were in 2013.
So I think we've done a pretty good job controlling the rate as much as possible with some especially these last last three or four years have just been super crazy. It might have been on your your fuzzy P&L sheet up there, but is the cash on hand is invested somewhere somehow
earning something. Yeah, it's bank notes. I don't know what the number it's. It's not huge. We've been doing better. Maybe we get one or two%. But it's you know, but it's that's a that's not a great number, right? But it's public money. But but that number
has been as great as five to six%. And then when interest rates were down of I mean you it cost money to have cost you money to have a secured account right not a lot but a couple points and so now where we're back in that one or 2% range
we've been there for the last couple years we're actually seeing our interest on investment numbers go up. So when we do get the budget numbers out to you look at that one in the revenue line and you'll see a little bit of that trend. Um but most everything is all secured and you nothing nothing crazy. Um, but
making decent numbers. Okay. All right. Thanks, Al. It's really good. Uh, roll call. Mark, nothing else. Thank you. Nothing good. I'll entertain a motion to adjurnn.
Motion. Stand adjourned.