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Home My WebLink AboutF-1. Fiscal Year 2015-2016 Second Quarter Budget Report Information Item Presented ?IZ2(IIP F-i A�USA ru A , M� INFORMATION ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSAUTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES,i,4 r 6. h9n-txlr DATE: FEBRUARY 22,2016 SUBJECT: FISCAL YEAR 2015-2016 SECOND QUARTER BUDGET REPORTS FOR ELECTRIC AND WATER FUNDS The attached reports include unaudited budget-to-actual performance for the Water and Electric Funds through December 31,2015. WATER Sales of water through second quarter were 14.9% lower than the second quarter of prior fiscal year. This decrease is primarily due to conservation efforts as a result of drought conditions and state water reduction mandate. The table below shows a 10-year trend of second quarter sales, billings, and number of billed accounts for the Water Utility: 2nd Quarter Water SalesBillin:s FY CCF Sales Billings Billed Accounts 06-07 5,677,810 $8,815,286 22,927 07-08 5,083,893 $8,696,748 23,035 08-09 4,735,337 $7,841,814 23,013 09-10 4,503,313 $8,513,021 23,135 10-11 4,269,226 $9,248,071 23,037 11-12 4,248,276 $9,315,888 22,889 12-13 4,591,058 $9,972,924 23,239 13-14 4,453,167 $9,709,489 23,470 14-15 4,097,618 $9,677,957 23,779 15-16 3,485,347 $8,360,920 23,857 UB-104 Quarterly Financial Report February 22, 2016 Page 2 FY 15/16 retail revenues through December declined $1.3 million compared to the same prior year period as a result of significant conservation due to drought conditions, and the state mandate for Azusa Light & Water to reduce water production by 20% from 2013 levels. Curtailing water use during colder months is typically harder than it is to cutback during warmer months. For this reason, second quarter conservation of 14.9% is less than first quarter conservation of 19.6%(compared to same quarters last fiscal year). Although sales have declined significantly compared to last year, second quarter operations resulted in a $341,363 increase in cash reserves to a total of $23.4 million, and also yielded estimated debt coverage of 1.58 times the amount of debt service obligations through December 2015, both exceeding the Utility's $19.0 million minimum reserve policy and the debt coverage minimum requirement of 1.25 times. Overall, Water Fund operating revenues and expenses were consistent with budget for the second quarter ended at 51%o and 48%of budget, respectively. ELECTRIC Sales of electricity through the second quarter ended were consistent with same period last fiscal year, just slightly declining by 0.5%. The table below shows a 10-year trend of second quarter sales, billings, and number of billed accounts for the Electric Utility: 2nd Quarter Electric Sales/Billings FY kWh Sales Billings Billed Accounts 06-07 139,649,981 $16,052,403 15,493 07-08 136,375,872 $15,872,058 15,735 08-09_ 139,176,034 $18,276,924 15,645 09-10 133,286,521 $16,229,555 15,520 10-11 126,364,551 $17,834,281 15,608 11-12 126,375,198 $19,286,751 15,696 12-13 133,442,520 $19,908,665 15,987 13-14 132,946,386 $19,930,370 16,169 14-15 142,695,051 $22,660,093 16,546 15-16 141,959,657 $20,852,033 16,724 Second quarter revenues and operating expenses were slightly under budget at 49% and 45%, respectively. Cash/Reserves are made up of cash on hand and cash held in rate stabilization fund. Cash increased by $856,220 for second quarter ended and totaled approximately $22.4 million. The Utility's minimum reserve policy requirement is$12.6 million. Positive operating results and fairly low debt service requirements have resulted in the Electric Utility exceeding the minimum debt coverage requirement of 1.10 with estimated debt coverage of 9.83 for the period ended. UB-105 Quarterly Financial Report February 22,2016 Page 3 Prepared by: Reviewed and Approved: Talika M. Johnson George F. Morrow Utilities Admin&Financial Srvs Mngr Director of Utilities Reviewed and Approved: Troy L. Butzlaff,ICMA-CM City Manager Attachments: 1. 2""Quarter Water Utility Operating Budget Report 2. 2"d Quarter Electric Utility Operating Budget Report • UB-106 Water Utility Quarterly Budget Report 2nd Quarter Ended December 31, 2015 (UNAUDITED) Fiscal Year End 2nd Qtr Ended Consumption and Cash Reserves 6/30/15 12131115 Percent Consumption-CCF: 7,094,934 3,485,347 49% Cash and Investments before transfers:(1) $ 27,013,700 $ 27,355,063 101% Cash and Investments after loans to other funds:(2) $ 23,007,273 $ 23,348,636 101% Budget Line Item Budget Actual Thru 12/31/15 Percent of FY 15-16 Budget Revenues: Retail Billing Amounts 131 $ 15,151,825 $ 8,360,920 55% Other Revenues(4) 3,419,720 1,179,314 34% Interest Income 125,000 58,125 47% Total Revenues $ 18,696,545 $ 9,598,359 51% Expenses: Production 6,069,570 2,607,783 43% Transmission and Distribution 2,654,630 1,309,282 49% Customer Accounting and Sales(5) 4,494,500 2,363,488 53% Administrative and Engineering 1,132,210 467,456 41% Franchise Fees 300,975 215,156 71% Subtotal Expenses $ 14,651,885 $ 6,963,165 48% Capital Expenditures/Debt Service: Debt Service Requirements(6) 4,659,890 1,803,170 39% Capital Outlays and Projects°1 4,440,496 432,536 10% Total Expenditures $ 23,752,271 $ 9,198,871 39% Adjustments: Transfers Out 181 125,000 58,125 N/A Total Expenditures and Transfers Out $ 23,877,271 $ 9,256,996 39% Net Increase(Decrease)in Cash $ (5,180,726) $ 341,363 Debt Coverage Ratio(9) 0.93 1.58 Notes: (1)Includes Cash and investments and Due from other funds.Reserve Policy is$19 million. (2)Loans and Advances to other funds at FYE 6/30/15 were$4,006,427. (3)Retail Billing Amounts based on Customer Information System as of 12/31/15. (4)Other Revenues include Drought Penalty revenues of$789,307. (5)Includes 65%of Customer Service Fund expenses less offsetting revenue and other miscellaneous costs. (6)Principal and Interest payment obligations on the 2012A and 2015 Revenue Bonds for Fiscal Year 2015/16 thru 12/31/2015. (7)Capital Outlays and Projects under budget due to ongoing construction of Main Replacements and Reservoir Rehabilitation. (8)Interest Income will be transferred to the CIP Fund by policy if there is positive net income at fiscal year end. (9)Total Revenues less Production,T&D,Cust Acctg,&A&G divided by Debt Service Payments.Minimum debt coverage requirement is 1.25 per bond financing agreements. UB-107 Electric Utility Quarterly Budget Report 2nd Quarter Ended December 31, 2015 (UNAUDITED) Consumption and Cash Reserves Fiscal Year End 2nd Qtr Ended Percent 6130115 12/31/15 Consumption-kWh: 257,361,329 141,959,657 55% Cash,Investments&Cash Reserves: (1) $ 21,497,681 $ 22,353,901 104% Budget Line Item Budget Actual Thru Percent of FY 15-16 12/31/15 Budget Revenues: Retail Billing Amounts(2) $ 38,699,845 $ 20,852,033 54% Resale Revenue(3) 7,704,885 1,938,356 25% Other Miscellaneous Revenue 250,000 32,368 13% Interest Income 115,000 64,688 56% Total Revenues $ 46,769,730 $ 22,887,445 49% Expenses: Purchased Power(3) 30,772,590 13,444,565 44% Transmission/Dispatching(3) 4,640,680 1,843,326 40% Operations and Maintenance 3,209,520 1,503,754 47% Administrative and General(4) 4,418,405 2,000,897 45% Franchise and In-Lieu-Tax 3,869,990 2,099,361 54% Subtotal Expenses $ 46,911,185 $ 20,891,903 45% Capital Expenditures/Debt Service: Debt Service Requirements(5) 839,015 416,405 50% Capital Outlays and Projects 2,111,960 707,109 33% Total Expenditures $ 49,862,160 $ 22,015,417 44% Adjustments: Transfers Out 31,615 15,808 50% Total Expenditures and Transfers Out $ 49,893,775 $ 22,031,225 44% Net Increase(Decrease)in Cash/Reserve $ (3,124,045) $ 856,220 Debt Coverage Ratio(6) 4.44 9.83 Notes: (1)Includes Cash and investments and Cash held for Rate Stabilization.Reserve Policy is$12.6 million. (2)Retail Billing Amounts based on Customer Information System as of 12/31/15. (3)Source for Resale Revenues,Purchased Power,and Transmission/Dispatching: Power Resources Division. (4)Includes 35%of Customer Service Fund expenses less offsetting revenue and other miscellaneous costs. (5)Principal and Interest payment obligations on the 2003 and 20128 Revenue Bonds for Fiscal Year 2015/16 thru 12/31/2015. (6)Total Revenue less Cost for Purch'd Pwr,T&D,O&M,and A&G,divided by debt service.Minimum debt coverage requirement is 1.10 per bond financing agreements. UB-108