The board delved deeply into the financial intricacies of managing the city’s electric utility, with a particular focus on the power cost recovery plan. A presentation revealed the utility’s expenditures over the fiscal year, depicting various charges such as capacity, transmission, and energy. Notably, the utility paid a capacity charge of $16 per kilowatt-hour, a transmission charge of $585 per kilowatt-hour, and an energy charge of $32.48 per megawatt-hour in October. The board emphasized the importance of maintaining a cash reserve of $3 million to cushion against seasonal fluctuations and power cost spikes. However, concerns were raised about potential under-recovery in the spring months, with historical losses cited as $550,000, $717,000, and $610,000.

In response to these financial pressures, the utility’s management proposed increasing the PCA to 2.5 cents per kilowatt-hour. This proposal sparked a debate on the impact of PCA rates on residential bills. A PCA of 0.25 cents per kilowatt-hour would result in a $25 charge for the first 1,000 kilowatt-hours, while a PCA of 0.225 cents would incur a $20 charge. The discussion weighed the necessity of the increase against the potential financial burden on consumers, emphasizing the need to balance operational cost recovery with customer impact.

Further complicating the situation, the Florida Municipal Power Agency (FMPA), an influencer of wholesale power costs for the utility, projected costs between $76 and $86 per megawatt-hour for the upcoming months. The board noted that Leesburg, lacking its generation facilities, faces higher costs compared to other municipalities, with these anticipated expenses constituting about 25% of the city’s budget. These figures underscored the need for a structured approach to power cost recovery to ensure the utility’s financial health while preserving customer satisfaction.

The meeting also addressed the utility’s hedging strategies. It was noted that the utility hedges between 25% to 50% of its gas purchases, affecting the cost structure. The FMPA’s fluctuating pricing contributes to the city’s rates, and the utility strives to smooth these variations to maintain stable billing. Unexpected returns from FMPA due to favorable gas prices had previously led to lower charges.

In parallel to the financial discussions, the utility’s leadership saw a transition with the retirement of the former Finance Director and the appointment of Paul Austin, the previous customer service manager, as the new Finance Director. This change came at a crucial time for managing power cost adjustments, prompting a more conservative approach to rate changes. The board expressed a commitment to maintaining billing stability while adapting to the new leadership.

Amidst these discussions, an unrelated inquiry arose regarding a pollution abatement charge appearing on some customer bills. It was clarified that the charge, related to sewer services, is a standard fee based on water usage, adhering to industry standards. This clarification addressed customer confusion over billing items not directly linked to electricity usage.