AGENDA TITLE:
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Adopt a Resolution Reviewing and Maintaining the Current Lodi Electric Utility Reserve Policy (EU)
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MEETING DATE:
December 3, 2025
PREPARED BY:
Melissa Price, Assistant Electric Utility Director
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RECOMMENDED ACTION:
Adopt a resolution reviewing and maintaining the current Lodi Electric Utility (LEU) Reserve Policy.
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BACKGROUND INFORMATION:
The LEU Reserve Policy requires an assessment of the targets identified with a report to the City Council every three years. The last review was completed November 2022.
From 2011, the formula for establishing the LEU Reserve Policy remained unchanged until 2022 when City Council authorized removal of the Capital Reserve component and instead authorized LEU staff to purchase a spare substation transformer to ensure equipment is available and on hand should a catastrophic failure occur. This change was implemented to mitigate risk associated with potential supply chain challenges, procurement lead times and material price escalation.
November 2025 marks the three-year deadline to review the existing LEU Reserve Policy. The current Reserve Policy includes both an operating days cash requirement as well as a General Operating Reserve requirement identified by the Northern California Power Agency (NCPA) as part of the annual power supply budget planning process. This component addresses recommended reserve funds specific to LEU's generation entitlement shares in various power plants, including self-insured retention and insurance deductibles and includes recommendations related to replacement power purchase costs associated with dry water year conditions and reduced hydroelectric generation.
While the individual components and formula are approved by City Council, the actual dollar amounts are reviewed and approved each year by the Risk Oversight Committee (ROC) in accordance with the approved annual budget. The approved formula for those targets as well as the ...
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