AGENDA TITLE:
title
Fiscal Year 2025/26 Electric Utility Quarterly Financial Update Report (EU)
end
MEETING DATE:
October 7, 2026
PREPARED BY:
Melissa Price, Assistant Electric Utility Director
recommendation
RECOMMENDED ACTION:
Receive Electric Utility Financial Update Report for the third and fourth quarters of Fiscal Year 2025/26.
body
BACKGROUND INFORMATION:
The Fiscal Year 2025/26 Financial Update Report through June 30, 2026 is attached as Exhibit 1. A highlight of activities and progress is outlined below. Overall, LEU maintains a strong financial position, operates within approved budgets and remains well positioned to continue maintenance, operations and capital improvement efforts.
Electric Utility Financial Highlights
• REVENUE is stable, ending the Fiscal Year (FY) at 94 percent of budget.
ü Resulting energy sales revenue totaled 97 percent of budget with energy consumption ending slightly higher (1%) than original estimates. This was primarily due to strong industrial customer demand despite an overall 5 percent decline in consumption due to more mild weather when compared to the prior year.
ü Other revenue ended at only 58 percent of budget primarily due to a $2.5 million multi-year write off of delinquent accounts approved by City Council. Other unrealized revenue is attributed to timing associated with both Low Carbon Fuel Standard and Cap and Trade revenues scheduled for receipt in FY 27.
• EXPENSES ended the year at 91 percent of budget.
ü Power supply costs ended at 96 percent of budget.
ü Non-power operating expenses ended the year at 86 percent of budget primarily due to staff vacancies in the Line worker, Metering and Engineering divisions.
ü Capital outlay expenses ended the year at 55 percent of budget primarily due to:
i. A delay associated with approval of the 230 kV Project by the California Public Utilities Commission and subsequent deposits placed for long lead time materials. Unspent funds of approximately $1.6M will roll to FY 27.
ii. Late start on deployment of the Electric Vehicle Master Plan due to contract negotiations. Unspent funds of approximately $883K will roll to FY 27.
• RESERVES as of June 30, 2026 totaled approximately $47 million or 160 percent of the Council approved reserve target. It is important to note that approximately $3.5 million in unspent capital funds will roll to FY 27. Utility reserves are used to fund pay-as-you-go capital improvement and system maintenance projects as well as provide funding, when needed, for business related areas of risk such as market power volatility and the cost of replacement power during dry year conditions for which costs cannot reasonably be forecasted and budgeted. Strong financial reserves these next few years are even more important for rating agencies as the utility looks to bond finance the 230 kV Project in FY 28.
• CAPITAL IMPROVEMENT PROJECTS are forecasted at nearly $70 million over the next 5 years with a major focus on construction of the 230 kV Project. The projects listed are included in the City’s current Capital Improvement Program included in the adopted budget.
• 5-YEAR FINANCIAL FORECAST indicates sufficient reserves through Fiscal Year 2028, based on current forecasted assumptions. LEU anticipates inflationary level adjustments over 3 years of approximately 2 percent each year starting in Fiscal Year 2029 with the last base rate adjustment implemented July 1, 2024.
FISCAL IMPACT:
There is no fiscal impact from the preparation of this report.
FUNDING AVAILABLE:
Adequate funding is available in the Fiscal Year 2025/26 budget, as amended by Council action from time to time, for the items in this report. All data is presented as current as of the date(s) obtained from the City’s financial reporting system. Please note all information is unaudited until such time as the Annual Comprehensive Financial Report is complete.