07-10-2023 BPU RPT 06 - Laserfiche WebLink

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W A T E R E N E R G Y L I F E RIVERSIDE PUBLIC UTILITIES P UB LIC UTILITIES Board Memorandum BOARD OF PUBLIC UTILITIES DATE: JULY 10, 2023 SUBJECT: FISCAL IMPACTS OF ALTERNATIVES TO THE PROPOSED ELECTRIC AND WATER UTILITY FIVE-YEAR RATE PLAN ISSUE: Consider receiving an update on the fiscal impact of alternative rate scenarios from the currently proposed for the Electric and Water Utility Five -Year Rate Plan Proposal introduced to the Board on June 12, 2023. RECOMMENDATION: That the Board of Public Utilities receive an update on the fiscal impacts of alternative rate scenarios from the currently proposed Water and Electric Utility Five -Year Rate Plan Proposal introduced to the Board on June 12, 2023. BACKGROUND: On June 12, 2023, the Board approved a recommendation to the City Council to conceptually approve both the Water and Electric Five -Year Rate plans. The proposed average annual residential electric rate increases over the five-year rate plan period ranged from 7% annually in years 1-3 to 2% in years 4-5. During the Board's consideration of the conceptual rate plans, several questions were asked that required additional research and follow-up: Board Meeting Follow-up Topics 1 June 26, 2023 Utility reserves and reserve policies. The Board received a presentation on reserves and reserve policies. Additional questions were asked including, but not limited to, the following: bond ratings, how reserves effect bond ratings, what it would take to raise the utility's bond rating, and what does it take to eliminate the Line of Credit. 2 July 10, 2023 Rate smoothing to a fixed amount. This staff report considers alternate rate scenarios, along with the possibility of "smoothing" the rate increase to a fixed amount, over the 5 -year rate plan instead of higher increases in the first three ears of the rate plan. 3 July 24, 2023 Capital Pro'ect accomplishments from the prior rate gLqn. 4 August 14, 2023 Update comparing rates for other agencies.