ORDINANCE NO. 126-14 – 9/19

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ORDINANCE NO. 126-14
ORDINANCE TO AMEND CHAPTER 28 OF THE CODE OF ORDINANCES OF THE CITY OF OPELIKA, ALABAMA TO ADD A NEW SECTION 28-60 ENTITLED
“RATE STABILIZATION/EQUALIZATION TARIFF (RSE RIDER)”
BE IT ORDAINED by the City Council (the “City Council”) of the City of Opelika, Alabama (the “City”) as follows:
Section 1. AMENDMENT. That Chapter 28 of the Code of Ordinances of the City of Opelika, Alabama, is hereby amended to add a new Section 28-60 entitled “Rate Stabilization/Equalization Tariff (RSE Rider)” which section shall read as follows:
SECTION 28-60. RATE STABILIZATION/EQUALIZATION TARIFF (RSE RIDER)
(a) Applicability. This Rate Stabilization/Equalization Tariff (RSE Rider) is applicable to and becomes a part of each of the electric retail rate schedules of the City of Opelika. This tariff shall be added to the power cost adjustment rate rider as calculated in Section 28-59.
(b) General. It is the purpose of this tariff to enable Opelika Power Services (OPS) to lessen the impact, frequency and size of retail rate changes by allowing the City Council, who has the authority to regulate an set retail rates for OPS, to adjust its charges more readily in order to meet the annual revenue requirements of OPS and to adjust for fluctuations in annual energy sales volumes. This rate rider is intended to strengthen the credit value and financial status of OPS by allowing it to meet the annual revenue requirements of the system and meet its annual obligation to the City of Opelika for the opportunity to serve as the utility provider within the territorial limits set for the City of Opelika.
By using this “RSE Rider” the rates/charges are adjusted to assure that the electric revenues of OPS will always remain adequate to meet the annual revenue requirements of providing electricity to its customers. These annual revenue requirements include operations and maintenance costs, energy and fuel costs, taxes, debt-service costs, payment in lieu of taxes and the annual funds necessary to fund capital costs that are not funded by additional debt.
By enacting this rate rider, the charges for energy are adjusted (with RSE Rider) when and if revenue projections for the upcoming year reflect that the designated revenues from energy sales are not going to be adequate to fund the annual revenue requirements of OPS. Once the rider is set, it will remain in effect for the subsequent three-month period, at which time, updated projections for revenue and the need for funding to meet annual revenue requirements will be set by the Mayor, Controller and Director of OPS (collectively the “Management Committee”). The Management Committee will be responsible for developing and providing updated revenue projections and the necessary costs of the system needed to meet its annual requirements funding. The Management Committee shall monitor and review monthly financial statements, balance sheets, statements of income, details concerning revenues and energy sold by customer class, O & M expenses, expenses by functions (e.g. transmission and distribution, administrative and customer service) in order to project revenues and expenditures. Energy demand forecasts shall be based on ten (10) year historic data and the Management Committee may rely upon forecast models developed by the Alabama Municipal Electric Authority. This rate rider will consist of two components:
Power Cost Adjustment Rider (currently in effect)
Rate Adjustment needed to fund revenue requirements
Total “RSE” Rider
(c) Determination of Tariff. The rate rider adjustment will be calculated by first determining the projected revenue shortfall (PRS). This calculation shall be derived (Annual Revenue Requirements minus the Projected Revenue from Energy Sales). The PRS will then be divided by the anticipated and normalized volume of energy (kWh) projected to be sold by OPS for the coming year. This amount of charge shall be rounded to the nearest mill ($0.001) per kWh of energy sold. The monthly customer energy usage (kWh) will be charged this rate rider adjustment as an additional charge to the base retail rates as last approved by the City Council. This rate rider adjustment will remain in effect for the following three-month period, at which time, the Management Committee will adjust the RSE Rider (if necessary). The City Council shall annually review as part of the budget process all rate rider adjustments made by the Management Committee during the preceding fiscal year and shall review the operating conditions of OPS. This example illustrates how the RSE Tariff is calculated:
OPELIKA POWER SERVICES
2015 BUDGET OPS
Revenue Requirements:
Annual Operation and Maintenance $7,720,588
Annual Power Costs 24,635,000
Annual Debt-Service 1,459,090
Capital Additions 3,570,000
Pilot (Payment to City) 3,000,000
Total Revenue Requirements for 2015 $40,384,678
Capital to be Funded w/Reserves <3,000,000>
Net Revenue Needs From Electric $37,384,678
Electric Revenue From (JTUC) $36,599,743
Projected Revenue Shortfall (PRS) $784,935
Estimated kWh Sales for 2015 370,447,652 kWh
Revenue Stabilization Rider
($784,935/370,447,652 kWh) $.0021/kWh
Current Power Cost Adjustment $.0080/kWh
Total RSE Adjustment Rider for 2015 $.0101/kWh
(d) Other Terms and Conditions. This “RSE Rider” Tariff shall be effective for bills rendered on or after October 1, 2014. Adjustments shall be determined and applied quarterly (October-December; January-March; April –June and July-September). At the end of each fiscal year (9/30) the management of OPS will determine if any (over-recovery) from the RSE Rider Tariff has occurred for the current year. Any additional recovery of revenue will be used to fund a Rate Stabilization Reserve for OPS. This Rate Stabilization Reserve shall be set aside until it has a balance of not more than 7{44c616e11cf70d617c8dd92fb0bc15f41001df771f775c6b004238009c89a3f0} of the annual revenue requirement for OPS. This Rate Stabilization Fund reserve shall not exceed $2,500,000 and be encumbered to use for keeping retail rates stable. Once fully funded, the purpose of the Rate Stabilization Reserve will be used to help absorb future retail rate increases. The Management Committee will decide at what level of this Reserve Account is needed in order to keep retail rates stable. Should any of these funds be used, the Rate Stabilization Reserve will be refunded back to its maximum level by using the “RSE Rider” in future periods.
Section 2. Repealer Clause. All former Ordinances or parts thereof conflicting or inconsistent with the provisions of this Ordinance or the section hereby adopted are repealed.
Section 3. Severability. If any section, clause, provision or portion of this Ordinance shall be held to be invalid or unconstitutional by any court of any competent jurisdiction, said holding shall not effect any other section, clause, provision or portion of this Ordinance which is not in or of itself invalid or unconstitutional.
Section 4. Construction. If any section, paragraph, sentence or word of this Ordinance or the section hereby adopted be declared for any reason to be invalid, it is the intent of the City Council that it would have passed all other portions of this Ordinance and the section hereby adopted independent of the elimination of such portion that may be declared invalid.
Section 5. Effective Date. This Ordinance and the section hereby adopted shall become effective on October 1, 2014.
Section 6. Publication. The City Clerk of the City of Opelika, Alabama is hereby authorized and directed to cause this Ordinance to be published one (1) time in a newspaper of general circulation published in the City of Opelika, Lee County, Alabama.
ADOPTED AND APPROVED this the 16th day of September, 2014.
/s/ C. E. “Eddie” Smith, Jr.
___________________

PRESIDENT OF THE CITY COUNCIL OF THE
CITY OF OPELIKA, ALABAMA
ATTEST:
/s/ R. G. Shuman
________________

CITY CLERK
TRANSMITTED TO MAYOR on this the 17th day of September, 2014.
/s/ R. G. Shuman
________________

CITY CLERK
ACTION BY MAYOR
APPROVED this the 17th day of September, 2014.
/s/ Gary Fuller
_______________

MAYOR
ATTEST:
/s/ R. G. Shuman
___________________

CITY CLERK
Legal run 9/19/14

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