A critical aspect of the meeting was the presentation on the upcoming fiscal year’s budget, which emphasized the electric fund’s significance within Leesburg’s overall city budget. It was revealed that the electric fund, which comprises about $90 million of the $250 million annual budget, plays a vital role in maintaining essential services, such as system maintenance and addressing failures. These services are important for supporting areas like Futland Park, identified as a significant growth contributor in the county. Despite the budget’s importance, the electric fund often receives less attention than the smaller, $45 million general fund.

The presentation highlighted the stressors on the electric fund, including aggressive capital improvement projects (CIPs), inflation-induced cost increases, and the implications of municipal growth. Notable cost surges since 2020 include a fivefold increase in the price of pole-mounted transformers and a sixfold increase in meter costs. Despite these challenges, the electric department has managed to maintain stable rates, with the base rate for residents remaining unchanged since December 2013. The current base rate stands at about $170.97 per thousand kilowatts, with a power cost adjustment of three cents per kilowatt, totaling approximately $137.97 for the first thousand kilowatts. Plans for fiscal year 2027 aim to hold the base rate steady, with the power cost adjustment subject to market fluctuations, primarily influenced by natural gas prices, which account for 80% of the city’s energy generation.

In response to questions about capital projects, it was noted that the originally proposed budget of $7.1 million had been reduced to about $4.9 million. This reduction was attributed to the need to balance previous aggressive expenditures, with historical annual expenditures ranging from $4.8 million to $12 million. The budget operates on a fiscal year from October to September, with public hearings scheduled in September to finalize the budget.

The meeting also delved into the rising costs of natural gas and their impact on the fuel adjustment mechanism. There was optimism that costs would not exceed $85 and the expectation to maintain a 3-cent rate through the fiscal year. Discussions revealed the anticipated ending balance for the Power Cost Adjustment (PCA) reserve account to be over three million, aided by hedging strategies implemented by the Florida Municipal Power Agency (FMPA) to lock in lower gas costs. Concerns were expressed over cash reserves, which had been strained the previous year, but were expected to recover with pending payments from a Georgia city, totaling about $800,000.

Comparisons between Leesburg Electric and other utility providers, such as Duke Energy and Mount Dora, highlighted Leesburg’s competitive pricing over the past five years, except for a 2002 spike. With the average municipal price around $136, Leesburg ranks in the top 20% among similar providers. Mount Dora’s prices may rise due to their purchasing strategies.

Further discussions addressed the costs associated with new subdivisions and the policy ensuring developers bear the costs of connecting to the electric system. This policy allows for a four-year return on investment (ROI). Developers are responsible for costs exceeding estimated improvements, although these may be passed onto consumers.

The board also explored the city’s power sources, including a shared investment in the St. Lucie nuclear facility, with an annual expenditure of about a million dollars. The major component of the city’s wholesale purchase requirement was the all-requirements project. Cost reductions from the smart grid were noted, contributing to savings over the past two years. The electric fund budget is expected to remain stable, barring significant fuel price changes.

Inquiries about “other operating revenue” and transfers to the general fund were addressed. The 2.8% transfer rate of electric revenues to the general fund, excluding wholesale supply costs, was consistent with previous years. This rate, lower than the charter-mandated 6%, saves consumers money. The transfer was justified, as the city would otherwise pay a franchise fee to an external utility provider.