The city initially planned to repay the energy fund with the payments from the network's new owners, first Broadweave Networks and then Veracity Networks, which defaulted on its purchase agreement last year.
"The decision to spend this money was made years ago," Mayor John Curtis said. "We are acknowledging that we are not able to pay this debt back to ourselves, and are moving the money from one pocket to another."
The move lowers the energy reserve fund to $7.5 million by declaring the debt unrecoverable.
But Councilman Sterling Beck thinks the city should try to get back roughly $1.5 million of it.
Specifically, Beck believes the city should get Veracity Networks to pay back the energy fund for the money spent when the city lowered Veracity's monthly payments for a year-and-a-half to help the company build up its own cash reserves.
The fiber-optic network has yet to get enough subscribers to be profitable.
"It was represented to the taxpayers that [the agreement with Veracity] was something that was a net positive Provo," Beck said. "We would get the money back with interest."
Drew Peterson, Veracity's CEO, said in a phone interview Tuesday night that the energy fund debt did not involve Veracity.
"Veracity was not involved in that discussion," Peterson said, referring to the original debt.
John Borget, the city's finance director, said the utility fee the city began charging in October to cover the bond the city took out to build iProvo, does not include money for the energy fund debt.
Borget said the Energy Board recommended writing off the debt, with the understanding that if any additional money became available it should be applied to it.
Former Provo Mayor George Stewart, a member of the Energy Board, said earlier he was concerned about lowering the reserves that far. If the city were to have a disaster, he said there might not be enough money for repairs.
Wayne Parker, the city's chief administrator, said the write-off still leaves sufficient funds in the energy account for emergencies.