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consider, adding either the prior year's peak monthly purchased power cost or, adding the <br />average monthly amount of the prior year or the budgeted year. Any of the three scenarios result <br />in achieving target balances and are presented for your review. The impacted variable component <br />is the Unrestricted Reserves account and, ultimately, the Commission's comfort level with that <br />balance. <br />The Water Department has a significant balance in the Unrestricted Reserves account, and also <br />has significant upcoming capital projects that could utilize these funds without having to bond <br />for these projects. For the 2011 year, it was determined that the Gary Street Water Tower project <br />and the Well 9 project would be funded through reserves instead of bonding. The 2012 year has <br />an upcoming project for the Freeport Water Tower that could be partially funded or entirely <br />funded through reserves, again depending upon the Commission's comfort level with the <br />Unrestricted Reserves account balance. <br />ACTION REQUESTED: <br />Staff recommends revising the Electric Reserves Policy to include a component for purchased <br />power. <br />