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Home My WebLink AboutOrdinance - 2023-O0143 - Article 2.03, Division 12, Amending The Membership & Qualifications EUB Members - 11/14/2023First Reading November 7, 2023 Item No. 6.4 ORDINANCE NO. 2023-00143 Second Reading November 14, 2023 Item No. 7.20 AN ORDINANCE AMENDING ARTICLE 2.03, DIVISION 12 OF THE CODE OF ORDINANCES OF THE CITY OF LUBBOCK, TEXAS WITH REGARD TO AMENDING THE MEMBERSHIP AND QUALIFICATIONS OF THE ELECTRIC UTILITY BOARD MEMBERS; AMENDING THE QUALIFICATIONS OF THE DIRECTOR OF ELECTRIC UTILITIES; AMENDING THE DISBURSEMENT OF ELECTRIC UTILITY FUNDS FROM THE GENERAL RESERVE; AMENDING THE METHOD OF AMENDING ARTICLE 2.03, DIVISION 12; PROVIDING FOR A PENALTY; PROVIDING A SAVINGS CLAUSE; AND PROVIDING FOR PUBLICATION. WHEREAS, the City Council of the City of Lubbock, Texas deems it in the best interest of the citizens of the City of Lubbock to protect their health, safety, and welfare to make the following amendments to Division 12 of the Code of Ordinances with regard to amending the membership and qualifications of the electric utility board members, amending the qualifications of the director of electric utilities, amending the disbursement of electric utility funds from the general reserve, and amending the method of amending Article 2.03, Division 12; and WHEREAS, the City Council hereby exercises its authority under Article 11, Section 5, of the Texas Constitution as a home rule city to enact regulations not inconsistent with the general laws of the State of Texas in the interest of the health, safety and welfare of the citizens of the City of Lubbock; NOW THEREFORE: BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: SECTION 1. THAT Section 2.03.413(a) of the Code of Ordinances of the City of Lubbock is hereby amended to read as follows: §2.03.413 Members, qualifications. (a) The number of board members and their terms are governed by chapter 1, article XII, section 1 of the Lubbock City Charter and shall be considered officers of the City of Lubbock. No board member shall serve more than four consecutive terms. However, for any board member appointed to fill a vacancy which occurred prior to the end of a full term, and the appointee's original term was for one year or less, such original term shall not apply towards the four-term limitation outlined herein. The city council shall consider extensive business and/or financial experience as a qualification for serving on the board as well as whether or not the individual is a customer of the city's electric utility provided that service with the city's electric utility is available. The mayor or the mayor's appointee shall serve as ex-officio, nonvoting member of the board. SECTION 2. THAT Section 2.03.416(c) of the Code of Ordinances of the City of Lubbock is hereby amended to read as follows: §2.03.416 Director of electric utilities. (c) A director of electric utilities who ceases to possess any of the qualifications outlined in this section shall forfeit the position, and any contract in which the director shall or may become interested may be declared void by the board. Failure by the director of electric utilities to disclose the interest outlined in subsection (b) above shall be a class C misdemeanor, and, on conviction thereof, such employment shall be forfeited. SECTION 3. THAT Section 2.03.417 of the Code of Ordinances of the City of Lubbock is hereby amended to read as follows: §2.03.417 Disbursement of funds from the general reserve. (a) Prior to paying any fee equivalent to a franchise fee, making any payment in lieu of taxes (PILOT), and prior to disbursing any funds from appropriable net assets (the "general reserve") of the city's electric utility, the board shall first fully meet all bond reserve or fund obligations defined in any bond covenant for the city's electric utility. (b) After providing for sufficient funds to meet the obligations contained in subsection (a) above, by the end of the fiscal year, the board shall ensure that the general reserve meets the requirements to maintain a range of 90 to 200 days operating cash. This range is sufficient to meet an A to AA credit rating, as defined by Standard & Poor's Global Ratings. The board may create a reserve target within the policy range such that the utility may achieve a higher credit rating. The reserve calculation shall be derived by dividing LP&L's annual budgeted total expense by 365 times 90 days for the minimum and 200 for the upper bound. A calculation of the days cash reserve shall be performed at the end of each fiscal year to determine compliance with the above policy. A reserve balance below 90 days cash shall be properly addressed with a plan to correct within three years as determined by the EUB. (c) The board may use the general reserve for rate stabilization, future obligations, unforeseen emergency situations, and for meeting the electric utility demand of any rapid or unforeseen increase in residential and/or commercial development. (d) Beginning October 1, 2023, the franchise fee equivalent (FFE) rate and PILOT rate will be based on a per kilowatt hour basis. The FFE rate will be based on a budgeted amount (calculated as the three-year average of FFE paid in FY20, FY21, FY22) to be collected then divided by the expected total system load for the budgeted year. The rate determined �►� will remain fixed with FFE income changing with load volumes. The PILOT rate will be based on the amount of the City of Lubbock's calculated ad valorem property tax estimate as of April 30th each year for LP&L and divided by the expected total system load for the budgeted year. The transfers shall be made on the 15th day of each month and shall be based on the kWh's delivered by LP&L during the preceding calendar month. For budgeting purposes, on or before May 1 st of each year, the board shall report to the city council their estimate of the general reserve, the kWh's delivered by LP&L and the resulting franchise fee and PILOT. (e) Subject to the approval of the board, any general reserve balance above board policy limits may be refunded to the ratepayers of the city's electric utility in the form of rate reductions in the next cost of service rate update following the fiscal year in which the general reserve balance exceeds the board policy. SECTION 4. THAT Section 2.03.418 of the Code of Ordinances of the City of Lubbock is hereby amended to read as follows: §2.03.418 Amendments. To the extent authorized by law and subject to the city's charter and Code of Ordinances, the board shall be responsible for recommending any amendments to this division. SECTION 5. THAT violation of any provision of this Ordinance shall be deemed a misdemeanor punishable as provided by Section 1.01.004 of the Code of Ordinances of the City of Lubbock, Texas. SECTION 5. THAT should any paragraph, sentence, clause, phrase or word of this Ordinance be declared unconstitutional or invalid for any reason, the remainder of this Ordinance shall not be affected thereby. SECTION 6. THAT the City Secretary is hereby authorized to cause publication of the descriptive caption of this Ordinance as an alternative method provided by law. AND IT IS SO ORDERED. -3- Passed by the City Council on first reading on November 7, 2023 Passed by the City Council on second reading on November 14, 2023 TRAY N , MAYOR ATTEST: Courtney Paz, City Secr ta APPROVED AS TO FORM: , Am s, eputy Ci orney -4- APPROVED AS TO CONTENT: