04-22-2019 BPU RPT 14 - Laserfiche WebLink

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WATER I ENERGY I LIF E RIVERSIDE PUBLIC UTILITIES Board Memorandum P U B L I C U I I I I I I F S BOARD OF PUBLIC UTILITIES DATE: APRIL 22, 2019 ITEM NO: 14 SUBJECT: SUPPLEMENTAL APPROPRIATION FROM ELECTRIC FUND UNRESTRICTED, UNDESIGNATED CASH RESERVE TO ELECTRIC FUND'S POWER SUPPLY ACCOUNT FOR REMAINDER OF FISCAL YEAR 2018/19 IN THE AMOUNT OF $7,000,000 ISSUE: Recommend that the City Council authorize a supplemental appropriation from the Electric Fund Unrestricted, Undesignated Cash Reserve to the Electric Fund's Power Supply account for the remainder of fiscal year 2018/19 in the amount of $7,000,000, due to higher than anticipated retail energy load and abnormally elevated gas and power prices during the summer of 2018, and continued elevated gas prices during the winter of Fiscal Year 2018/19. RECOMMENDATIONS: That the Board of Public Utilities recommend that the City Council: 1. Authorize a supplemental appropriation in the amount of $7,000,000 from the Electric Fund Unrestricted, Undesignated Cash Reserve due to higher than anticipated retail energy load and abnormally elevated gas and power prices during the summer of 2018, and continued elevated gas prices during the winter of Fiscal Year 2018/19; and 2. Appropriate expenditures in the amount of $7,000,000 to the Electric Fund's Power Supply Account No. 6120100-422926 for the remainder of fiscal year 2018/19. BACKGROUND: The Riverside Public Utilities (RPU) Electric Fund budget for fiscal years (FY) 2018/19 and 2019/20 was approved by the Board of Public Utilities on April 23, 2018, and was subsequently adopted by City Council on June 12, 2018. The adopted FY 2018/19 and FY 2019/20 Power Supply budget is $205.8 million and $217.3 million, respectively. DISCUSSION: During the July to September 2018 summer time period, RPU collected approximately $8,680,000 in additional retail revenues from higher than expected energy load due to the warmer than normal summer weather conditions. However, during this same period, RPU's Power Supply budget experienced a corresponding $9,710,000 cost overrun. Approximately $4,930,000 of this cost overrun was a direct result of RPU's need to purchase additional natural gas and wholesale power to serve the above mentioned excess retail load. The remaining $4,780,000 cost overrun was due to abnormally elevated gas and power prices, particularly in July and August 2018.