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Home My WebLink AboutH-6 Staff Report - FY 2019-20 Fourth Quarter Budget Reports for Electric and Water FundsCONSENT ITEM H-6 TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: MANNY ROBLEDO, DIRECTOR OF UTILITIES DATE: SEPTEMBER 21, 2020 SUBJECT: FISCAL YEAR 2019-20 FOURTH 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 June 30, 2020. RECOMMENDATION: Staff recommends the Utility Board take the following action: 1)Receive and file Fiscal Year 2019-20 Fourth Quarter Budget Reports for Electric and Water funds. ANALYSIS: WATER Sales of water through the fourth quarter were 3.1% lower than the fourth quarter of the prior fiscal year, and billed amounts were 5.1% higher. The slight decrease in sales was due mostly to COVID-19 economic slow-downs. The table below shows a 10-year trend of fourth quarter sales, billings, and number of billed accounts for the Water Utility: 4th Quarter Water Sales/Billings FY CCF Sales Billings Billed Accounts 10-11 7,384,003 $16,600,100 23,100 11-12 7,598,788 $17,199,870 23,104 12-13 8,094,910 $18,043,742 23,302 13-14 8,020,459 $17,933,551 23,597 APPROVED UTILITY BOARD 9/21/2020 Special Meeting Quarterly Financial Report September 21, 2020 Page 2 14-15 7,094,934 $17,209,924 23,871 15-16 6,215,491 $16,877,625 23,934 16-17 6,598,143 $17,698,854 24,156 17-18 7,095,830 $18,912,360 24,284 18-19 6,612,342 $20,517,490 24,453 19-20 6,407,970 $21,576,236 24,091 Fourth quarter revenues and expenses were slightly lower with the expenditures at 89% of budget and revenues at 90%, respectively, which yielded a net income of $1,638,663. Fourth quarter operations resulted in a $7.07 million decrease in cash reserves from fiscal year end, after funding 6.88 million in capital improvements pursuant to the Capital Improvement Program. The current cash reserve balance is $25.9 million, which exceeds the Utility’s minimum reserve requirement target of $19.6 million. The estimated debt coverage ratio remains steady at 1.51 times the amount of debt service obligations, which is above the 1.25 bond covenant requirement. ELECTRIC Sales of electricity through the fourth quarter were lower than the same period last fiscal year, with a decrease of 2.4%. The small decrease was mainly due to a reduction in commercial and residential consumption from COVID-19 economic slow-downs and continued conservation efforts by customers. The table below shows a 10-year trend of fourth quarter sales, billings, and number of billed accounts for the Electric Utility: 4th Quarter Electric Sales/Billings FY kWh Sales Billings Billed Accounts 10-11 238,728,205 $32,829,429 15,362 11-12 236,527,153 $35,315,430 15,567 12-13 247,422,942 $36,270,465 15,749 13-14 250,280,276 $36,415,546 15,955 14-15 257,361,329 $38,763,711 16,226 15-16 253,655,020 $36,343,584 16,740 16-17 255,975,406 $36,843,301 16,555 17-18 252,892,628 $33,329,648 16,695 18-19 248,413,138 $36,005,653 16,854 19-20 242,611,536 $35,587,303 18,485 Fourth quarter revenues and expenses were slightly lower with the expenditures at 80% of budget and revenues at 89%, respectively, which yielded a net income of $3,662,570. Fourth quarter operations resulted in a $1.0 million decrease in cash reserves from fiscal year end, after funding 4.52 million in capital improvements pursuant to the Capital Improvement Program. The current cash reserve balance is $21.3 million, which exceeds the Utility’s minimum reserve requirement target of $12.6 million. The estimated debt coverage ratio remains steady at 8.74 Quarterly Financial Report September 21, 2020 Page 3 times the amount of debt service obligations, which is above the 1.10 bond covenant requirement. Prepared by: Reviewed and Approved: Danny Smith Manny Robledo Utilities Admin & Finance Manager Director of Utilities Reviewed and Approved: Sergio Gonzalez City Manager Attachments: 1) 4th Quarter Water Utility Operating Budget Report 2) 4th Quarter Electric Utility Operating Budget Report Fiscal Year End 6/30/2019 Quarter Ended 6/30/2020 Percent of Prior Year Consumption - CCF:6,612,702 6,407,970 97% Cash, Investments & Cash Reserves: (1)29,561,786$ 25,938,178$ 88% Budget FY 19-20 Actuals As of 6/30/2020 Percent of Budget Retail Billing Amounts (2)22,864,916$ 19,878,672 87% Other Revenues (3)3,037,548 3,414,275 112% Interest Income 225,000 308,300 137% 26,127,464$ 23,601,248$ 90% Expenses: Production 3,216,355 2,802,968 87% Purchased Water 7,046,545 6,692,236 95% Transmission and Distribution 3,473,078 2,806,770 81% Customer Accounting and Sales (4)5,706,999 4,415,459 77% Administrative and Engineering 979,304 746,029 76% Franchise Fees 461,091 446,708 97% Debt Service Requirements (5)3,909,688 4,052,414 104% 24,793,060$ 21,962,585$ 89% 1,334,404$ 1,638,663$ Capital Investments & Transfers: Capital Outlays and CIP Projects (6)14,468,444 6,888,108 48% Transfers Out (7)250,275 187,706 75% 14,718,719$ 7,075,814$ 48% (13,384,315)$ (5,437,151)$ 1.46 1.51 Notes: (2) Retail Billing Budget based on projections of Customer Information System for last 12 months. (3) Other Revenues include reduction in available Lease Rights. (4) Includes 60% of Customer Service Fund expenses less offsetting revenue and other miscellaneous costs. (5) Principal and Interest payment obligations on the 2012A and 2015 Revenue Bonds for Fiscal Year 19-20. requirement is 1.25 per bond financing agreements. (1) Includes Cash and investments and Due from other funds. Reserve Policy has minimum target of $19.6 million. (7) Interest Income will be transferred to the CIP Fund by policy if there is positive net income at fiscal year end. Net Increase (Decrease) in Cash/Reserve Change in Cash From Operations (6) Capital Outlays and Projects under budget due to ongoing construction of Main Replacements and Reservoir Rehabilitation. (8) Total Revenues less Production, T&D, Cust Acctg, & A&G divided by Debt Service Payments. Minimum debt coverage Debt Coverage Ratio (8) Water Utility Quarterly Budget Report Quarter Ended June 30, 2020 (UNAUDITED) Consumption and Cash Reserves Budget Line Item Revenues: Total Revenues Total Operating Expenses Total Capital Investments & Transfers Fiscal Year End 6/30/2019 Quarter Ended 6/30/2020 Percent of Prior Year Consumption - kWh:248,413,138 242,611,536 98% Cash, Investments & Cash Reserves: (1)21,109,506$ $21,603,277 102% Budget FY 19-20 Actuals As of 6/30/2020 Percent of Budget Revenues: Retail Billing Amounts (2)37,010,893$ $33,400,331 90% Resale Revenue (3)3,088,911 2,165,481 70% Other Miscellaneous Revenue 35,000 125,729 359% Interest Income 282,000 373,552 132% 40,416,804$ 36,065,094$ 89% Expenses: Purchased Power (3)26,151,971 20,586,262 79% Transmission/Dispatching (3)4,385,334 2,874,186 66% Operations and Maintenance 1,015,848 722,202 71% Administrative and General (4)4,170,139 3,704,150 89% Franchise and In-Lieu-Tax 4,009,980 3,579,745 89% Debt Service Requirements (5)946,419 935,978 99% 40,679,691$ 32,402,524$ 80% (262,887)$ 3,662,570$ Capital Investments & Transfers: Capital Outlays and Improvement Projects 9,462,561 4,523,012 48% Transfers Out 198,975 149,231 75% 9,661,536$ 4,672,243$ 48% (9,924,423)$ (1,009,673)$ 4.96 8.74 Notes: (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. (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. (4) Includes 40% of Customer Service Fund expenses less offsetting revenue and other miscellaneous costs. Total Operating Expenses Total Capital Investments & Transfers Net Increase (Decrease) in Cash/Reserve Debt Coverage Ratio (6) (3) Source for Resale Revenues, Purchased Power, and Transmission/Dispatching: Power Resources Division. Change in Cash/Reserves From Operations Total Operating Revenues Electric Utility Quarterly Budget Report Quarter Ended June 30, 2020 (UNAUDITED) Consumption and Cash Reserves Budget Line Item