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Home My WebLink AboutF-1.1. Fiscal Year 2022-23 2nd 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: FEBRUARY 27, 2023 SUBJECT: FISCAL YEAR 2022-23 SECOND 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 December 31, 2022. RECOMMENDATION: Staff recommends the Utility Board take the following action: 1)Receive and file Fiscal Year 2022-23 2nd Quarter Budget Reports for Water and Electric funds. ANALYSIS: WATER Water sales through the second quarter were 7.7% lower than through the second quarter of the prior fiscal year, and billed amounts were 7.8% higher. The decrease in sales amounts is mainly due to customers abiding by the drought water conservation measures implemented in the current year. The table below shows a 10-year trend of second quarter sales, billings, and the number of billed accounts for the Water Utility: Approved Utility Board 02/27/2023 FY22-23 Second Quarter Financial Report February 27, 2023 Page 2 of 3 2nd Quarter Water Sales/Billings FY CCF Sales Billings Billed Accounts 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 16-17 3,702,589 $9,699,358 24,072 17-18 3,986,622 $10,346,480 24,105 18-19 3,861,929 $10,365,136 24,315 19-20 3,712,209 $10,254,412 24,076 20-21 3,776,096 $12,450,619 23,428 21-22 3,635,410 $11,864,601 23,443 22-23 3,353,680 $12,792,522 23,447 Second quarter revenues were lower, with revenues at 49% of the budget and expenditures lower at 48%, respectively, which yielded a net operating income of $3,379,561. Second quarter operations resulted in a $556K increase in cash reserves from fiscal year end after funding $66K 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 is 1.40 times the amount of debt service obligations, which is above the 1.25 bond covenant requirement. ELECTRIC Sales of electricity through the second quarter were 6.5% higher than through the second quarter of the prior fiscal year and billed amounts were 15.3% higher. The increase in sales and billed amounts is mainly 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 second quarter sales, billings, and the number of billed accounts for the Electric Utility: 2nd Quarter Electric Sales/Billings FY kWh Sales Billings Billed Accounts 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 16-17 140,646,522 $20,857,703 16,870 17-18 142,515,807 $19,588,666 16,983 18-19 139,845,969 $20,554,704 17,236 19-20 133,086,482 $20,005,710 17,157 20-21 135,253,522 $20,185,170 17,014 21-22 129,491,214 $20,656,565 17,300 22-23 137,962,045 $23,825,301 17,380 FY22-23 Second Quarter Financial Report February 27, 2023 Page 3 of 3 Second quarter revenues were higher, with revenues at 57% of the budget and expenditures higher at 54%, respectively, which yielded a net operating income of $2,550,601. Second quarter operations resulted in a $763K decrease in cash reserves from fiscal year end after funding $223K in capital improvements pursuant to the Capital Improvement Program. The current cash reserve balance is $27.3 million, which exceeds the Utility’s minimum reserve requirement target of $13.5 million. The estimated debt coverage ratio is 5.39 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) 2nd Quarter Water Utility Operating Budget Report FY 22-23 2) 2nd Quarter Electric Utility Operating Budget Report FY 22-23 FUND 32 - WATER Budget Summary (as of 12/31/22) Estimated FY 20-21 ACTUAL FY 21-22 ACTUAL FY 22-23 BUDGET FY 22-23 2ND QTR % FY 22-23 BUDGET $ $ $ $ % EXPENSE: Supervision & Engineering - Personnel $835,556 $603,774 $896,935 $210,053 23% Supervision & Engineering - Operation (1)$5,401,208 $3,776,576 $6,603,260 $3,363,201 51% Water Production - Personnel $1,529,185 $1,306,431 $1,251,850 $641,778 51% Water Production - Operation $1,857,420 $2,116,238 $2,131,277 $1,096,184 51% Water Distribution - Personnel $2,301,454 $2,022,612 $1,967,495 $994,548 51% Water Distribution - Operation $747,694 $1,217,375 $1,034,251 $380,298 37% Purchased Water $6,918,696 $9,080,108 $7,349,645 $3,494,146 48% Total Expenses $19,591,212 $20,123,115 $21,234,713 $10,180,208 48% REVENUE: Water Sales (CCF) 6,744,049 6,487,930 7,000,000 3,353,680 48% Retail Revenue (2)$22,517,764 $21,204,139 $26,225,000 $12,792,522 49% Lease Water Rights*$1,894,464 $2,453,510 $0 $0 Fees & Other $2,648,623 $3,090,603 $1,408,075 $767,246 54% Total Revenue $27,060,851 $26,748,253 $27,633,075 $13,559,769 49% Net Operating Revenue or (Deficit)$7,469,639 $6,625,137 $6,398,362 $3,379,561 Franchise Fees and Property Taxes $474,888 $452,340 $540,788 $270,110 50% Transfers (3)$26,635 $394,976 $147,606 $73,803 50% Debt Service (4)$3,837,740 $3,925,938 $4,826,024 $2,413,012 50% Capital Outlay and CIP (with carryovers)$3,686,476 $4,666,138 $3,396,180 $66,170 2% Change in Cash Reserves ($556,099)($2,814,255)($2,512,236)$556,466 % of Prior Year Cash Reserve Balance (Req. $19.6M) (5)$28,689,759 $22,939,365 $20,427,129 $25,922,326 113% Debt Service Ratio (Req. 1.25) (6)1.95 1.69 1.33 1.40 Notes: (1) Includes 55% of Customer Service Fund expenses. (2) Retail Revenue 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 12/31/22) Estimated FY 20-21 ACTUAL FY 21-22 ACTUAL FY 22-23 BUDGET FY 22-23 2ND QTR % FY 22-23 BUDGET $ $ $ $ % EXPENSE: Supervision & Engineering - Personnel $952,712 $756,931 $614,650 $314,538 51% Supervision & Engineering - Operation (1)$4,443,675 $2,996,290 $5,396,248 $2,569,242 48% Electric Distribution - Personnel $3,282,570 $3,383,250 $3,906,260 $1,794,720 46% Electric Distribution - Operation $968,387 $1,160,346 $1,635,083 $505,039 31% Power Resource Management - Personnel $499,463 $628,767 $656,685 $330,099 50% Power Resource Management - Operation $23,151,731 $25,933,087 $29,859,530 $17,337,630 58% Total Expenses $33,298,538 $34,858,671 $42,068,456 $22,851,268 54% REVENUE: Energy Sales (kWh) 241,466,624 237,344,466 236,719,000 137,962,045 58% Retail Revenue (2)$35,237,561 $38,571,753 $40,365,301 $23,825,301 59% Sales For Resale (3)$2,663,345 $4,347,629 $4,356,016 $1,487,593 34% Fees & Other $537,154 $348,445 $237,065 $88,974 38% Total Revenue $38,438,059 $43,267,828 $44,958,382 $25,401,869 57% Net Operating Revenue or (Deficit)$5,139,521 $8,409,156 $2,889,926 $2,550,601 Franchise and In-Lieu Fees $3,575,360 $3,505,013 $4,036,530 $2,547,076 63% Transfers $50,055 $258,574 $140,854 $70,427 50% Debt Service (4)$932,277 $928,922 $945,909 $472,955 50% Capital Outlay and CIP (with carryovers)$2,707,771 $1,261,954 $3,460,601 $223,190 6% Change in Cash Reserves ($2,125,941)$2,454,693 ($5,693,968)($763,047) % of Prior Year Cash Reserves Balance (Req. $13.5M) (5)$24,549,669 $27,233,852 $21,539,884 $27,303,116 100% Debt Service Ratio (Req. 1.10) (6)5.51 9.05 3.06 5.39 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.