HomeMy WebLinkAboutH-1 UB Staff Report - FY 2019-2020 Third Quarter Budget Reports for Electric and Water FundsREPORTS ITEM
H-1
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: MANNY ROBLEDO, DIRECTOR OF UTILITIES
DATE: MAY 18, 2020
SUBJECT: FISCAL YEAR 2019-2020 THIRD QUARTER BUDGET REPORTS FOR
ELECTRIC AND WATER FUNDS
BACKGROUND:
The attached reports include unaudited budget-to-actual performance for the Water and Electric
Funds through March 31, 2020.
RECOMMENDATION:
Staff recommends the Utility Board take the following action:
1)Receive and file Fiscal Year 2019-20 Third Quarter Budget Reports for Electric
and Water funds.
ANALYSIS:
WATER
Sales of water through the third quarter were 2.4% lower than the third quarter of prior fiscal
year, and billed amounts were 7.6% higher. Above average rainfall through March 2020 resulted
in slightly lower water sales for the quarter. The table below shows a 10-year trend of third
quarter sales, billings, and number of billed accounts for the Water Utility:
3rd Quarter Water Sales/Billings
FY CCF Sales Billings Billed Accounts
10-11 5,650,960 $12,636,448 22,298
11-12 5,832,676 $13,163,020 22,472
12-13 6,138,787 $13,665,652 22,707
13-14 6,091,647 $13,540,042 22,950
APPROVED
UTILITY BOARD
5/18/2020
Special Meeting
Quarterly Financial Report
May 18, 2020
Page 2
14-15 5,452,349 $13,176,832 23,198
15-16 4,696,053 $11,637,738 23,359
16-17 4,869,555 $13,148,728 23,545
17-18 5,483,914 $14,493,985 23,618
18-19 5,078,254 $15,390,850 23,777
19-20 4,956,905 $16,564,658 24,025
Third quarter revenues and expenses were slightly lower with the expenditures at 62% of budget
and revenues at 65%, respectively, which yielded a net income of $1,302,927. Third quarter
operations resulted in a $3.32 million decrease in cash reserves from fiscal year end, after
funding $4.50 million in capital improvements pursuant to the Capital Improvement Program.
The current cash reserve balance is $28.1 million, which exceeds the Utility’s minimum reserve
requirement target of $19.6 million. The estimated debt coverage ratio remains steady at 1.52
times the amount of debt service obligations, which is above the 1.25 bond covenant
requirement.
ELECTRIC
Sales of electricity through the third quarter were lower than the same period last fiscal year,
with a decrease of 4.2%. The small decrease was mainly due to a reduction in commercial and
residential consumption from a mild winter, continued conservation efforts by customers, and an
economic slowdown due to the COVID-19 pandemic. The table below shows a 10-year trend of
third quarter sales, billings, and number of billed accounts for the Electric Utility:
3rd Quarter Electric Sales/Billings
FY kWh Sales Billings Billed Accounts
10-11 181,142,283 $25,165,128 15,577
11-12 180,099,346 $27,116,305 15,760
12-13 190,501,254 $28,129,703 16,017
13-14 189,279,818 $27,842,470 16,273
14-15 197,733,299 $30,404,653 16,571
15-16 196,509,373 $28,440,555 16,781
16-17 195,758,432 $28,516,108 16,886
17-18 196,805,281 $26,341,840 17,023
18-19 193,908,074 $28,211,508 17,088
19-20 185,977,846 $27,564,204 18,478
Third quarter revenues and expenses were slightly lower with the expenditures at 56% of budget
and revenues at 61%, respectively, which yielded a net income of $1,701,654. Third quarter
operations resulted in a $758 thousand decrease in cash reserves from fiscal year end, after
funding 2.36 million in capital improvements pursuant to the Capital Improvement Program. The
current cash reserve balance is $22.2 million, which exceeds the Utility’s minimum reserve
requirement target of $12.6 million. The estimated debt coverage ratio remains steady at 5.83
Quarterly Financial Report
May 18, 2020
Page 3
times the amount of debt service obligations, which is above the 1.10 bond covenant
requirement.
Prepared by: Reviewed and Approved:
Danny Smith Manny Robledo
Utilities Admin & Finance Manager Director of Utilities
Reviewed and Approved:
Sergio Gonzalez
City Manager
Attachments:
1) 3rd Quarter Water Utility Operating Budget Report
2) 3rd Quarter Electric Utility Operating Budget Report
Fiscal Year End
6/30/2019
Quarter Ended
3/31/2020
Percent of Prior
Year
Consumption - CCF:6,612,702 4,956,905 75%
Cash and Investments before transfers: (1)$ 28,063,48929,561,786 $ 95%
Cash and Investments after loans to other funds: (2)$ 24,532,71426,031,011 $ 94%
Budget
FY 19-20
Actuals Thru
3/31/2020
Percent of
Budget
Retail Billing Amounts (3)$ 22,864,916 13,440,684$ 69%
Other Revenues (4)3,037,548 3,134,824 103%
Interest Income 225,000 `308,330 137%
$ 26,127,464 16,883,838$ 65%
Expenses:
Production 3,216,355 1,901,480 59%
Purchased Water 7,046,545 4,922,641 70%
Transmission and Distribution 3,473,078 1,987,274 57%
Customer Accounting and Sales (5)5,706,999 2,768,480 49%
Administrative and Engineering 979,304 598,343 61%
Franchise Fees 461,091 313,697 68%
Debt Service Requirements (6) 3,909,688 3,088,996 79%
$ 24,793,060 15,580,911$ 62%
$1,302,9271,334 ,404
Capital Investments & Transfers:
Capital Outlays and CIP Projects (7)14,468,444 4,507,178 31%
Transfers Out (8) 250,275 125,138 50%
$ 14,718,719 4,632,316$31%
$ ($3,329,389)
1.46 1.52
Notes:
Net Increase (Decrease) in Cash/Reserve
Change in Cash From Operations
(1)Includes Cash and investments and Due from other funds. Reserve Policy has minimum target of $19.6 million.
(2)Advances to other funds at FYE 6/30/18 were $3,530,775.
(3)Retail Billing Budget based on projections of Customer Information System for last 12 months.
(4)Other Revenues include reduction in available Lease Rights.
(5)Includes 60% of Customer Service Fund expenses less offsetting revenue and other miscellaneous costs.
(6)Principal and Interest payment obligations on the 2012A and 2015 Revenue Bonds for Fiscal Year 19-20.
(7)Capital Outlays and Projects tracking with budget due to AMI installation of meters.
(8)Interest Income will be transferred to the CIP Fund by policy if there is positive net income at fiscal year end.
(9)Total Revenues less Production, T&D, Cust Acctg, & A&G divided by Debt Service Payments. Minimum debt coverage
requirement is 1.25 per bond financing agreements.
Debt Coverage Ratio (9)
Water Utility Quarterly Budget Report
Quarter Ended March 31, 2020
(UNAUDITED)
Consumption and Cash Reserves
Budget Line Item
Revenues:
Total Revenues
Total Operating Expenses
Total Capital Investments & Transfers
(13,384,315)
Attachment 1
Fiscal Year End
6/30/2019
Quarter Ended
3/31/20
12/31/2019
Percent of
Prior Year
Consumption - kWh:248,413,138 185,977,846 75%
Cash, Investments & Cash Reserves: (1)$ 21,109,506 $ 22,276,961 105%
Budget
FY 19-20
Actuals Thru
3/31/2020
Percent of
Budget
Revenues:
Retail Billing Amounts (2)$ 37,010,892 $ 23,080,668 62%
Resale Revenue (3) 3,088,911 1,506,619 48%
Other Miscellaneous Revenue 35,000 19,654 56%
Interest Income 282,000 219,272 77%
$ 40,416,803 $ 24,826,214 61%
Expenses:
Purchased Power (3) 26,151,971 14,998,424 57%
Transmission/Dispatching (3) 4,385,334 2,377,932 54%
Operations and Maintenance 1,015,848 344,262 33%
Administrative and General (4) 4,170,139 1,985,733 47%
Franchise and In-Lieu-Tax 4,009,980 2,539,290 63%
Debt Service Requirements (5) 946,419 878,919 92%
$ 40,679,691 $ 23,124,560 56%
$ (262,888)$ 1,701,654
Capital Investments & Transfers:
Capital Outlays and Improvement Projects 9,462,561 2,360,599 25%
Transfers Out 198,975 99,488 50%
$ 9,661,536 $ 2,460,087 25%
$ (9,924,424) $ (758,433)
4.96 5.83
Notes:
Total Operating Expenses
Total Capital Investments & Transfers
Net Increase (Decrease) in Cash/Reserve
Debt Coverage Ratio (6)
(1)Includes Cash and investments and Cash held for Rate Stabilization. Reserve Policy has a minimum target of $12.6 million.
(2)Retail Billing Budget based on projections of Customer Information System for last 12 months.
(3)Source for Resale Revenues, Purchased Power, and Transmission/Dispatching: Power Resources Division.
(4)Includes 40% of Customer Service Fund expenses less offsetting revenue and other miscellaneous costs.
(5)Principal and Interest payment obligations on the 2012B Revenue Bonds for Fiscal Year 19-20.
(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.
Change in Cash/Reserves From Operations
Total Operating Revenues
Electric Utility Quarterly Budget Report
Quarter Ended March 31, 2020
(UNAUDITED)
Consumption and Cash Reserves
Budget Line Item
Attachment 2