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Home My WebLink AboutF-1.1. Fiscal Year 2022-23 1st Quarter Budget Reports for Water and Electric FundsINFORMATION ITEM F-1 TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: TIKAN SINGH, GENERAL MANAGER DATE: JANUARY 23, 2023 SUBJECT: FISCAL YEAR 2022-23 FIRST QUARTER BUDGET REPORTS FOR WATER AND ELECTRIC FUNDS BACKGROUND: The attached reports include unaudited budget-to-actual performance for the Water and Electric funds through September 30, 2022. RECOMMENDATION: Staff recommends the Utility Board take the following action: 1)Receive and file Fiscal Year 2022-23 1st Quarter Budget Reports for Water and Electric funds. ANALYSIS: WATER Water sales through the first quarter were 1.2% higher than the first quarter of the prior fiscal year, and billed amounts were 16.5% higher. The increase in sales and billed amounts were due to the hotter and dryer quarter compared to last year and the increased RWCAF. The table below shows a 10-year trend of first quarter sales, billings, and the number of billed accounts for the Water Utility: Approved Utility Board 01/23/2023 FY22-23 First Quarter Financial Report January 23, 2023 Page 2 of 3 1st Quarter Water Sales/Billings FY CCF Sales Billings Billed Accounts 13-14 2,450,574 $5,240,322 22,888 14-15 2,240,761 $5,245,932 23,175 15-16 1,802,376 $4,125,782 23,356 16-17 2,040,224 $5,054,514 23,427 17-18 2,125,058 $5,435,968 23,756 18-19 2,077,144 $5,731,539 23,761 19-20 1,987,901 $6,373,181 24,096 20-21 2,005,677 $6,504,857 24,100 21-22 1,955,143 $6,274,708 23,420 22-23 1,978,035 $7,314,838 23,501 First quarter revenues were higher with the revenues at 28% of budget and expenditures lower at 23%, respectively, which yielded a net operating income of $2,792,141. First quarter operations resulted in a $1.3M increase in cash reserves from fiscal year end after funding $61K in capital improvements pursuant to the Capital Improvement Program. The current cash reserve balance is $23.1 million, which exceeds the Utility’s minimum reserve requirement target of $19.6 million. The estimated debt coverage ratio is 2.31 times the amount of debt service obligations, which is above the 1.25 bond covenant requirement. ELECTRIC Sales of electricity through the first quarter were 14.3% higher than the first quarter of the prior fiscal year, and billed amounts were 23.3% higher. The increase in sales and billed amounts were due to the heatwave of August 31 to September 9, with a peak consumption day on September 7. The table below shows a 10-year trend of first quarter sales, billings, and the number of billed accounts for the Electric Utility: 1st Quarter Electric Sales/Billings FY kWh Sales Billings Billed Accounts 13-14 71,811,811 $10,996,464 16,142 14-15 75,927,794 $12,260,244 16,555 15-16 73,275,667 $10,990,027 16,765 16-17 78,394,179 $11,880,930 16,839 17-18 79,989,639 $11,192,286 17,031 18-19 79,224,988 $11,813,135 17,532 19-20 72,835,947 $11,037,139 17,204 20-21 72,651,978 $10,929,172 16,998 21-22 70,837,471 $11,374,456 17,341 22-23 80,978,508 $14,034,810 17,244 FY22-23 First Quarter Financial Report January 23, 2023 Page 3 of 3 First quarter revenues were higher, with the revenues at 33% of budget and expenditures higher at 31%, respectively, which yielded a net operating income of $1,796,382. First quarter operations resulted in a $462K increase in cash reserves from fiscal year end after funding $140K in capital improvements pursuant to the Capital Improvement Program. The current cash reserve balance is $24.8 million, which exceeds the Utility’s minimum reserve requirement target of $13.5 million. The estimated debt coverage ratio is 7.60 times the amount of debt service obligations, which is above the 1.10 bond covenant requirement. Prepared by: Reviewed and Approved: Danny Smith Tikan Singh Utilities Admin & Finance Manager General Manager Reviewed and Approved: Sergio Gonzalez City Manager Attachments: 1) 1st Quarter Water Utility Operating Budget Report FY 22-23 2) 1st Quarter Electric Utility Operating Budget Report FY 22-23 FUND 32 - WATER Budget Summary (as of 9/30/22) Estimated FY 20-21 ACTUAL FY 21-22 ACTUAL FY 22-23 BUDGET FY 22-23 1ST QTR % FY 22-23 BUDGET $ $ $ $ % EXPENSE: Supervision & Engineering - Personnel $833,406 $603,774 $896,935 $88,644 10% Supervision & Engineering - Operation (1)$5,401,208 $3,776,576 $6,603,260 $1,578,521 24% Water Production - Personnel $1,528,685 $1,306,431 $1,251,850 $301,255 24% Water Production - Operation $1,857,420 $2,116,238 $2,131,277 $556,841 26% Water Distribution - Personnel $2,301,454 $2,022,612 $1,967,495 $460,997 23% Water Distribution - Operation $747,694 $1,217,375 $1,034,251 $135,231 13% Purchased Water $6,918,696 $9,080,108 $7,349,645 $1,757,305 24% Total Expenses $19,588,562 $20,123,115 $21,234,713 $4,878,793 23% REVENUE: Water Sales (CCF) 6,744,049 6,487,930 7,000,000 1,978,035 28% Retail Revenue (2)$22,517,764 $21,204,139 $26,225,000 $7,314,838 28% Lease Water Rights*$1,894,464 $2,453,510 $0 $0 Fees & Other $2,648,623 $3,090,603 $1,408,075 $356,096 25% Total Revenue $27,060,851 $26,748,253 $27,633,075 $7,670,934 28% Net Operating Revenue or (Deficit)$7,472,289 $6,625,137 $6,398,362 $2,792,141 Franchise Fees and Property Taxes $474,888 $452,340 $540,788 $135,197 25% Transfers (3)$26,635 $394,976 $147,606 $36,902 25% Debt Service (4)$3,837,740 $3,925,938 $4,826,024 $1,206,506 25% Capital Outlay and CIP (with carryovers)$3,686,476 $4,666,138 $3,396,180 $61,443 2% Change in Cash Reserves ($553,449)($2,814,255)($2,512,236)$1,352,094 % of Prior Year Cash Reserve Balance (Req. $19.6M) (5)$28,689,759 $22,939,365 $20,427,129 $23,198,351 101% Debt Service Ratio (Req. 1.25) (6)1.95 1.69 1.33 2.31 Notes: (1) Includes 55% of Customer Service Fund expenses. (2) Retail Billing Budget based on projections of Customer Information System for last 12 months. (3) Interest Income will be transferred to the CIP Fund by policy if there is positive net income at fiscal year end. (4) Principal and Interest payment obligations on the Series 2012A and 2015 Revenue Bonds for Fiscal Year 22-23. (5) Includes Cash and Investments. Reserve Policy has minimum target of $19.6 million. (6) Total Revenues less Production, Purchased Water, T&D, and A&G divided by Debt Service (Net Revenue/Debt Service). Minimum debt coverage requirement is 1.25 per bond financing agreements. * One-time leasing rights expired FY 21-22. FUND 33 - ELECTRIC Budget Summary (as of 9/30/22) Estimated FY 20-21 ACTUAL FY 21-22 ACTUAL FY 22-23 BUDGET FY 22-23 1ST QTR % FY 22-23 BUDGET $ $ $ $ % EXPENSE: Supervision & Engineering - Personnel $952,712 $756,931 $614,650 $142,729 23% Supervision & Engineering - Operation (1)$4,443,675 $2,996,290 $5,396,248 $1,295,313 24% Electric Meter Maintenance - Personnel $311,658 $444,419 $345,700 $98,154 28% Electric Meter Maintenance - Operation $10,626 $11,688 $13,500 $0 0% Electric Distribution - Personnel $2,970,912 $2,938,831 $3,560,560 $789,302 22% Electric Distribution - Operation $957,762 $1,148,658 $1,621,583 $214,347 13% Power Resource Management - Personnel $499,463 $628,767 $656,685 $160,439 24% Power Resource Management - Operation $23,151,731 $25,933,087 $29,859,530 $10,179,622 34% Total Expenses $33,298,538 $34,858,671 $42,068,456 $12,879,906 31% REVENUE: Energy Sales (kWh) 241,466,624 237,344,466 236,719,000 80,978,508 34% Retail Revenue (2)$35,237,561 $38,571,753 $40,365,301 $14,034,811 35% Sales For Resale (3)$2,663,345 $4,347,629 $4,356,016 $604,875 14% Fees & Other $537,154 $348,445 $237,065 $36,602 15% Total Revenue $38,438,059 $43,267,828 $44,958,382 $14,676,288 33% Net Operating Revenue or (Deficit)$5,139,521 $8,409,156 $2,889,926 $1,796,382 Franchise and In-Lieu Fees $3,575,360 $3,505,013 $4,036,530 $920,879 23% Transfers $50,055 $258,574 $140,854 $35,214 25% Debt Service (4)$932,277 $928,922 $945,909 $236,477 25% Capital Outlay and CIP (with carryovers)$2,707,771 $1,261,954 $3,460,601 $140,948 4% Change in Cash Reserves ($2,125,941)$2,454,693 ($5,693,968)$462,865 % of Prior Year Cash Reserves Balance (Req. $13.5M) (5)$24,549,669 $27,233,852 $21,539,884 $24,812,903 91% Debt Service Ratio (Req. 1.10) (6)5.51 9.05 3.06 7.60 Notes: (1) Includes 45% of Customer Service Fund expenses. (2) Retail Revenue 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) Principal and Interest payment obligations on the 2012B Refunding Revenue Bond for Fiscal Year 22-23. (5) Includes Cash, Investments, and Restricted Funds. Reserve Policy has a minimum city target of $12.1 million and restricted bond requirement of $1.4 million. (6) Total Revenue less cost for Purch'd Pwr, T&D, O&M, and A&G, divided by Debt Service (Net Revenue/Debt Service). Minimum debt coverage requirement is 1.10 per bond financing agreements.