2006 Water Comprehensive Plan - City of Bellevue

Discussion:Providing reserves for equipment and information technology systems replacementallows monies to be set aside over the service life of these items to pay for theireventual replacement and alleviate one-time rate impacts that these purchases mightotherwise require. Annual revenues set aside for this purpose will be based onaggregate Utility asset replacement cash flow needs over the long-term forecast period,instead of individual asset replacement amounts. This strategy will allow Utilities tominimize the progressive build-up of excess Asset Replacement Account balances thatwould result from creating and funding separate reserve accounts for individual Utilityasset and equipment items.2-38