HomeMy WebLinkAboutAgenda Report - March 7, 2018 C-09AGENDA ITEM
CITY OF LODI
COUNCIL COMMUNICATION
TM
AGENDA TITLE:
MEETING DATE:
PREPARED BY:
cq
Adopt Resolution Reviewing and Maintaining the Current Electric Utility Reserve
Policy
March 7, 2018
Electric Utility Director
RECOMMENDED ACTION
BACKGROUND INFORMATION:
Adopt a resolution reviewing and maintaining the current Electric
Utility Reserve Policy.
The Lodi Electric Utility (LEU) Reserve Policy requires an
assessment of the targets identified with a report to the City
Council every three years. The last review was completed in June
2014.
Since 2011, the formula for establishing the LEU reserve policy has remained unchanged. The actual
dollar amounts have been reviewed and updated each year by the Risk Oversight Committee (ROC) in
accordance with the approved annual budget. The approved formula for those targets, as well as the
specific targets for Fiscal Year 2017/18, is as follows as approved by the ROC on December 5, 2017:
Fund Designation
Operating Reserve
Capital Reserve
Basis
For FY 2018
90 days cash on hand
$17,866,000
Largest distribution system contingency
$ 1,000,000
NCPA General Operating
Reserve
Total Target
Identified by NCPA plus allowance for
unanticipated studies
$ 4,435,000
$23,301,000
Per the most recent LEU Quarterly Financial Report, LEU had total unrestricted cash reserves of $26.6
million and, based on the current formula, was meeting 114 percent of the current council reserve policy
target. As such, the ROC recommends that the formula for calculating the reserve targets be maintained
as represented above.
This action supports the LEU Strategic Plan as adopted by the City Council to ensure financial stability by
maintaining adequate reserves.
FISCAL IMPACT:
The funding needed to meet the LEU Reserve Policy targets will be
evaluated each year as part of the utility's annual review and update of its
financial forecast.
FUNDING AVAILABLE: Not applicable.
y„ r Elizabeth A. Kirkley
Electric Utility Director
PREPARED BY: Melissa C. Price, Rates & Resources Manager
EAK/MCP/nb
APPROVED:
RESOLUTION NO 2018-31
A RESOLUTION OF THE LODI CITY COUNCIL
REVIEWING AND MAINTAINING THE CURRENT
ELECTRIC UTILITY RESERVE POLICY
WHEREAS, the City Council approved Resolution No. 2011-39 approving a financial
reserve policy for the Electric Utility (EU); and
WHEREAS, this policy requires an assessment of the targets identified with a report to
the City Council every three years; and
WHEREAS, since 2011, the formula for establishing the EU reserve policy has remained
unchanged; and
WHEREAS, the actual dollar amounts have been reviewed and updated each year by
the Risk Oversight Committee (ROC) in accordance with the approved annual budget; and
WHEREAS, on December 5, 2017, the ROC recommended that the formula for
calculating the reserve targets be maintained.
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby approve
the review and maintenance of the current Electric Utility Reserve Policy formula as follows with
the annual dollar targets to be updated by the Risk Oversight Committee each year:
Fund Designation
Operating Reserve
Capital Reserve
Basis
90 days cash on hand
NCPA General Operating
Reserve
Largest distribution system
contingency
Identified by NCPA plus allowance
for unanticipated studies
Total Target
Dated: March 7, 2018
For FY 2018
$17,866,000
$ 1,000,000
$ 4,435,000
$23,301,000
I hereby certify that Resolution No. 2018-31 was passed and adopted by the City
Council of the City of Lodi in a regular meeting held on March 7, 2018, by the following vote:
AYES: COUNCIL MEMBERS — Chandler, Johnson, Kuehne, Mounce, and
Mayor Nakanishi
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — None
ABSTAIN: COUNCIL MEMBERS — None
2018-31
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NNIFERI►�i . FERRAIOLO
ity Clerk