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W A T E R E N E R G v I <br />RIVERSIDE PUBLIC UTILITIES <br />PUB LIC UTILITIES Board Memorandum <br />BOARD OF PUBLIC UTILITIES DATE: AUGUST 14, 2023 <br />SUBJECT: CAPITAL IMPROVEMENT PLAN ANALYSIS FOR FISCAL YEARS 2018-2023 <br />AND INVESTMENTS INCLUDED IN THE PROPOSED ELECTRIC AND WATER <br />UTILITY FIVE-YEAR RATE PLAN <br />ISSUE: <br />Consider receiving an update on the Capital Improvement Plan budgets and expenditures for <br />fiscal years 2018-2023 and the planned capital investments to be funded by the currently <br />proposed Electric and Water Utility Five -Year Rate Plan Proposal introduced to the Board on June <br />12, 2023. <br />RECOMMENDATION: <br />That the Board of Public Utilities receive and file an update on the Capital Improvement Plan <br />budgets and expenditures for fiscal years 2018-2023 and the planned capital investments to be <br />funded by the currently proposed Electric and Water Utility Five -Year Rate Plan Proposal <br />introduced to the Board on June 12, 2023. <br />BACKGROUND: <br />On June 12, 2023, the Board of Public Utilities (Board) approved a recommendation to the City <br />Council to conceptually approve both the Water and Electric Five -Year Rate plans. The proposed <br />average annual residential electric rate increases over the five-year rate plan period ranged from <br />7% annually in years 1-3 to 2% in years 4-5. During the Board's consideration of the conceptual <br />rate plans, several questions were asked that required additional research and follow-up. <br />On June 26, 2023, the Board received an update on Riverside Public Utilities (RPU) Fiscal <br />Policies — Cash Reserve Policy, as it relates to the Water and Electric Utility Five -Year Rate Plan <br />Proposals. The discussion addressed the purpose of the Reserve Policy to maintain the long-term <br />fiscal strength for RPU, defined and detailed the unaudited balances of all RPU reserve accounts, <br />and advised on the calculation formulas for the minimum reserved targets for the electric and <br />water funds. <br />On July 10, 2023, the Board received an update to review potential fiscal impacts of alternative <br />rate scenarios from the currently proposed Water and Electric Utility Five -Year Rate Plan <br />Proposals. The discussion included requests from the Board to model potential scenarios to <br />demonstrate the impact of the alternative rates on the financial health of the Electric and Water <br />utilities. The models were estimates, assuming no changes to the respective Cost of Service <br />