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Home My WebLink AboutMinutes - April 15, 2008 SSCITY OF LODI INFORMAL INFORMATIONAL MEETING "SHIRTSLEEVE" SESSION CARNEGIE FORUM, 305 WEST PINE STREET TUESDAY, APRIL 15, 2008 An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held Tuesday, April 15, 2008, commencing at 7:01 a.m. A. ROLL CALL Present: Council Members — Hitchcock, Hansen, Johnson, and Katzakian Absent: Council Members — Mounce Also Present: City Manager King, City Attorney Schwabauer, and City Clerk Johl B. TOPIC(S) B-1 "Presentation of Electric Utility Third Quarter (Fiscal Year 2007-08) Financial Reports" Electric Utility Director George Morrow provided a PowerPoint presentation regarding the electric utility third quarter financials. Specific topics of discussion included an overview, projected and actual financial results, 2008 fiscal year budget versus third quarter actual numbers, electric expenses, operating expenditures, power supply, sales, billing statistics, energy cost adjustment (ECA) billing statistics, Northern California Power Agency (NCPA) general operating reserve, open position, cash balance, and summary. In response to Mayor Pro Tempore Hansen, Mr. Morrow stated approximately $3.25 million of the increase is from the Roseville sale and the remaining is from the NCPA reserve and operating costs. In response to Mayor Pro Tempore Hansen, Mr. Morrow stated there may be more of a savings in operating by the end of the year as projected. In response to Council Member Hitchcock, Mr. Morrow stated the line item for other payments includes public benefit programs, including rebates, and there will be some catch up when the application process is completed. In response to Council Member Johnson, Mr. Morrow stated there is not something specific in the budget for solar as the intent was to match straight expenses with revenues. He stated the solar program will likely be sold out with full subscription. In response to Mayor Pro Tempore Hansen, Mr. Morrow and Mr. King stated staff will look into the possibility of absorbing the building L�e costs in light of the citizen complaint; although, there is a concern regarding staying competitive. Discussion ensued between Council Member Johnson, Mayor Pro Tempore Hansen, and Mr. King regarding the cost of solar programs in the State, the average cost to citizens to participate in solar programs, a first-time citizen complaint regarding building fees, the process of installing the solar equipment, and other cities doing similar solar projects. Council Member Hitchcock stated it appears to be a non -issue because there is not a big cost difference in the project even if the applicable solar -related building fees are reduced. In response to Council Member Johnson, Mr. Morrow stated staff will research whether public benefit monies could be used to assist with the cost of installing solar and return with the information. Mr. King also reiterated that he has been informed that the acde sections for solar installations are being revised. Continued April 15, 2008 A brief discussion ensued between Council Member Hitchcock and Mr. Morrow regarding citizen response to a 24 cent rate increase in the press and the need to present accurate information in response by the City through the press or by other means to inform the public at large. In response to Council Member Johnson, Mr. Morrow stated the three major electric companies in the State, which provide service to approximately 75% of the State, all have tiered systems and the City's rates are low. In response to Council Member Johnson, Mr. Morrow stated that, while they can do a comparison, the blocks will be different because PG&E rates are lower at the low usage rate and the City's rates are lower at the highest usage rate. Mr. King provided a brief overview of the transfer of the three-tier system to the five -tier system, high-end users, and interpreting the rate overall with taxes and fees included. In response to Mayor Pro Tempore Hansen, Mr. Morrow confirmed that, with the new project, the long-term goal is to be more competitive with the City's economic goals and overall usage costs. Council Member Hitchcock suggested preparing a small rate comparison cheat sheet for easy reference. In response to Mayor Pro Tempore Hansen, Mr. Morrow stated staff can look into methods to be more competitive on the lower tiers; although, in a zero sum game it is difficult to lower one tier's rate because that would mean an increase adjustment in another tier's rate. He stated there may be room for an adjustment with a new factor such as the new Lodi project. In response to Council Member Katzakian, Mr. Morrow stated the tiers only apply to residential users. In response to Council Member Katzakian, Mr. Morrow stated he signed off on a few residential solar programs recently and the program appears to be doing well in light of the overall costs. In response to Mayor Pro Tempore Hansen, Mr. Morrow stated solar has gone down some over the last five years; although, the theory of a million solar homes was more of a public relations piece. In response to Council Member Hitchcock, Mr. Morrow stated the projected figures combine the ECA and base, which is the difference between projected and actual figures. In response to Council Member Johnson, Mr. Morrow stated the average year cost of the ECA was projected as 8.99 cents and is closer to 9.1 cents, which is on target for what was projected to industrial users. He stated that, while the ECA is applied uniformly across the board, the actual affect may be different based on a variety of factors. In response to Mayor Pro Tempore Hansen, Mr. Morrow stated that, at the last snapshot, the industrial user rate for the City was approximately 26% less than PG&E. In response to Mayor Pro Tempore Hansen, Mr. Morrow confirmed that the numbers do not include the recent sale of the property. Mr. Morrow stated the $2 million figure may be accounted for at the end of this budget cycle or the next. 2 Continued April 15, 2008 B-2 "Presentation of Water and Wastewater Utility Third Quarter (Fiscal Year 2007-08) Financial Reports" Deputy City Manager Krueger provided a PowerPoint presentation regarding the water and wastewater quarterly update. Specific topics of discussion included a summary, water and wastewater financials ending March 31, 2008, water and wastewater operating expenses by series, and cash balances for both water and wastewater. In response to Mayor Pro Tempore Hansen, Mr. Krueger stated the difference of $3 million is due to the impact mitigation fees, which will affect the overall numbers. He also discussed the cash flow for revenues and expenses, sales revenues of 76.7%, and overall revenues of 72.1 %. In response to Council Member Hitchcock, Mr. King provided an overview of the previous Shirtsleeve Session discussion regarding the subject matter of the deficit in operations and maintenance for infrastructure and the options associated with the same. In response to Council Member Katzakian, Mr. Krueger indicated some money was spent on infrastructure replacement and the PCE/TCE litigation did have an affect. In response to Council Member Hitchcock, Mr. Morrow stated how quickly the $6.9 million will be reduced is dependent upon the mitigation efforts, which will need to be reviewed and brought back. In response to Mayor Pro Tempore Hansen, Mr. King confirmed that staff is not recommending a rate increase for the Council meeting the following night. Discussion ensued between Mayor Pro Tempore Hansen, Council Member Hitchcock, and Mr. King regarding the different options for consideration at the Council meeting, including retroactivity, combining funds to address both operations and infrastructure replacement, the need for adjustments going forward from this point on into the future, and possibly rebalancing at this point with a possible increase in the future. C. COMMENTS BY THE PUBLIC ON NON -AGENDA ITEMS None. D. ADJOURNMENT No action was taken by the City Council. The meeting was adjourned at 8:21 a.m. ATTEST: Randi Johl City Clerk AGENDA ITEM Sr I CITY OF Long COUNCIL COMMUNICATION TM AGFA TITLE: El;eotric Utility V Quwter FY08 Financial Report (EUD) MwD DATE: AprN 18, 2008 PROAR19D BY: Elmo Ut9lty Director RECOMMENDED ACTION: Receive a report prepared by rhe Electric uiiiiiy Department summarizing its financial performance for the 3rd quarter of FY08. BACKGROUND INFORMATION: The Electric Utility Department (EUD) is responsible for reporting its quarterly financial results to the City Council. A summary of the electric utility's financial performance for year-todate FY08 is as follows: • Power Costs are -$763K less than budget • Non -power Costs decreased -$1.2M • Revenues down --$148K • NCPA "General Operating Reserve is up -$1.6M • FY08 power costs are 96% hedged for the remainder of the fiscal year. • Revenues include a one-time receipt cf $3.25M from RosevilleCT1 Sale • Overall increase in cash is about $5.7M through 3rd Qtr (including Roseville revenue) • Total Reserve Fund (cash) balance is $10.9 million. Attached is a spreadsheet comparing financial performance through the 3'd quarterwith the FY08 budget. FISCAL IMPACT, Attachment None at this time. Not applicable. Electric Utility Director APPROVED: 8111E", City Manager FY08 Budget vs. Q3 Actual Cash Flow Sales Revenues Other Revenues 70,072,930 195289192 53,443,880 3,8375842 76.3% 251.1% Total Revenues Purchase Power 7156019122 42,3335517 57,281,722 32,854,650 80.0% 77.6% Non Power 1196491177 892471706 70.8% Total Expenses 53,982,694 41,102,356 76.1% Net Revenue for Debt Service 17,618,428 16,179,366 Debt Service 899719488 658755091 76.6% Net Revenue 81646,940 9,304,275 In -lieu Transfer to General Fund 6,873,228 5,154,921 75.0% Net Increase (Decrease) in Working Capital 197739712 491499354 Chan es in GOR Ending Cash Balance1 - 61935,997 1 642 927 1099549566 Electric Utility Department FY08 Quarterly Update (Through March 31, 2008) City Council Shirtsleeve Session April 15, 2008 n �Q '9<�FOverv'iew o0, • Power Costs are ~$763K under budget • Non -power Costs decreased ~$1.2M • Revenues down about $148K • NCPA "GOR" up $1.6M • FY08 power costs 96% hedged for Q4 • Revenues include sone-time receipt of $3.25M from Roseville CT1 transaction • Overall increase in cash is about $5.7M 2 Q3 Financial Results Projected vs. Actual (Y -T -D) Cash Flow Revenue Projected Actuals Difference Sales Revenues Other Revenues 5315911772 5344300 -0.3% 5871842 3,837,842 552.9% Total Revenues 5491799614 57,281,722 5.7% Expenses Purchase Power 3396179658 32,854,650 -2.3% Non Power 934813511 8,247,706 -13.0% Total Expenses 43,099,169 41,102,356 -4.6% Net Revenue for Debt Service 1110801445 16,179,366 46.0% Debt Service 618751091 6,875,091 0.0% Net Revenue 432053354 9,304,275 121.2% In -lieu Transfer to General Fund 5,1541921 5,154,921 0.0% Net Increase (Decrease) in Working Capital (9499567) 491499354 537.0% Beginning Cash Balance 591629285 591629285 Changes in GOR - 196429927 Ending Cash Balance 492129718 1099549566 3 09��FOR�`PFY08 Budget vs. Q3 Actua. Cash 1 Revenue Budget Actuals % of Budget Sales Revenues Other Revenues 70,072,930 5394439880 76.3% 11528,192 3,837,842 251.1% Total Revenues 71019122 57,281,722 80.0% Expenses Purchase Power 42,333,517 32,854,650 77.6% Non Power 1156495177 85247,706 70.8% Total Expenses 53,98204 41,102,356 76.1% Net Revenue for Debt Service 1756185428 1651795366 91.8% Debt Service 81971,488 6,875,091 76.6% Net Revenue 046,940 9,304,275 107.6% In -lieu Transfer to General Fund 61873,228 5,154,921 75.0% Net Increase (Decrease) in Working Capital 197739712 491499354 233.9% Beginning Cash Balance 591629285 591629285 Changes in GOR - 196429927 Ending Cash Balance 699359997 1099549566 4 Q3 Electric Expenses (Y=T=D) Personnel 4,403,998 3,927,048 89% 5,967,361 SUPPIies, Materials, Services 1,102,726 978,273 89% 1,382,319 Equipment, Land, Structures 732,340 596,730 81% 1,194,481 Other Payments 558,493 154,216 28% 530,770 Communication & Transportation 109,977 50,538 46% 64,470 Total pera ing Expenses o 9,139, 6i o Q Operat'ing 3,500,000 3,000,000 2,500,000 1,500,000 1,000,000 500,000 3,198,670 Q3: EUD is at 68% of annual O&M Budget 2,262,772 2,066,168 1,861,661> 1,045,633 1,039,839 694,001 Administration Business Planning And Engineering and Construction Marketing Operations Maintenance ■ Budget ■ Q3 Actuals DI t� �P Q3 Power Supply (Y=T=D) Generation $ 28,904,697 $ 30,372,053 $ 1,467,356 4.8% Transmission $ 4,015,793 $ 4,444,931 $ 429,138 9.7% Management Services $ 1,803,211 $ 1,814,456 $ 111245 0.6% Third Party Revenue $ 1,106,043 $ 3,776,790 $ 2,670,747 70.7% TOTAL $ 33,6171658 $ 32,854,650 $ 7639008 -2.3% 7 Q3 Sales m July 2007 0 0 412 0 390 August 2007 0 0 428 363 September 2007 12 5 201 247 October 2007 68 76 23 73 November 2007 255 348 0 0 December 2007 592 609 0 0 January 2007 587 592 0 0 February 2007 439 403 0 0 March 2007 337 313 0 0 Q1 -Q3 Totals 2290 2346 1 064 1 1 073 N Q3 Billing Statistics M Residential 123,506,103 $ 211487,052 $ I 0.1740 Small Commercial 130,675,094 $ 20,708,820 $ 0.1585 Large Commercial/Small Industrial 27,805,741 $ 3,886,905 $ 0.1398 Industrial 74,254,875 $ 7,508,995 $ 0.1011 TOTAL 356,241,812 $ 53,5911772 $ 0.1524 Residential 119,182,227 $ 211427,756 $ 0.1798 Small Commercial 126,100,236 $ 20,651,672 $ 0.1638 Large Commercial/Small Industrial 26,832,278 $ 3,876,178 $ 0.1445 Industrial 71,655,256 $ 7,488,273 $ 0.1045 TOTAL 343,769,997 $ 53,443,880 1 $ 0.1555 �7 ECA Billing Statistics Residential 159,594 545,871 783,649 1,169,926 Small Commercial (165,623) 586,856 808,793 1,230,026 Large Commercial/Small Industrial (38,987) 130,455 162,325 253,793 Industrial (100,489) 392,355 454,702 746,567 Total ECA Revenue (464,693) 11655,537 1 21209,468 1 31400,312 10 F NCPA GOR 0" • General Operating Reserve • Provides funding for contingencies • GOR levels ➢$4,790,663 (June 30, 2007) ➢$6,433,590 (March 31, 2008) • FY07 true -up of $847,000 • Geothermal Ins Recovery of $384,000 $1,642,927 Increase 11 P FY08 •• Position" q<�FOR� (3,699) 53,597 -6.9% (763) 33,935 -2.2% (2,936) 19,662 -14.9% (3,741) 49,592 -7.5% (1,994) 32,886 -6.1% (1,747) 16,706 -10.5% 222 42,940 0.5% 459 26,615 1.7% (237) 16,325 -1.5% (1,365) 38,430 -3.6% (1,318) 25,325 -5.2% (47) 13,105 -0.4% (1,534) 35,719 -4.3% (723) 23,150 -3.1% (811) 12,569 -6.5% (2,175) 37,802 -5.8% (420) 23,379 -1.8% (1,755) 14,422 -12.2% (5,948) 36,994 -16.1% (3,754) 23,390 -16.1% (2,193) 13,604 -16.1% (5,272) 35,512 -14.8% (3,129) 23,016 -13.6% (2,143) 12,496 -17.2% (3,176) 36,637 -8.7% (1,568) 23,066 -6.8% (1,609) 13,571 -11.9% (4,031) 36,293 -11.1% (4,521) 23,797 -19.0% 489 12,497 3.9% (961) 39,059 -2.5% (1,931) 25,104 -7.7% 970 13,955 6.9% (3,039) 43,062 -7.1% (1,950)1 27,469 -7.1 % (1,089) 15,593 1 -7.0% Net Total (34,720) 485,638 -7.1 % (21,611)1 311,132 r -6.9% (13,109) 174,506 1 12 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 Cash Balance — — Monthly Cash Balance 13 n �Q '9<�FSummary 0 1 • Power Costs are ~$763K under budget • Non -power Costs decreased ~$1.2m • Revenues down about $148K • NCPA "GOR" up $1.6M • FY08 power costs 96% hedged for Q4 • Revenues include sone-time receipt of $3.25M from Roseville CT1 transaction • Overall increase in cash is about $5.7M 14 AGENDA ITEM B-02 AIM CITY OF LODI COUNCIL COMMUNICATION TM AGENDA TITLE: Presentation of Water and Wastewater Utility Third Quarter (Fiscal Year 2007-08) Financial Reports MEETING DATE: April 15, 2008 (Shirtsleeve Session) PREPARED B Y Deputy City Manager RECOMMENDED ACTION: Receive presentation of Water and Wastewater Utility Third Quarter (Fiscal Year 2007-08) Financial Reports. BACKGROUND INFORMATION: The Public Works Department is responsible for reporting quarterly financial results to the City Council. The attached PowerPoint report summarizes such results for the Third Quarter of Fiscal Year 2007-08. A summary of the Water and Wastewater financial performance for this reporting period is attached and summarized as follows: WATER: • Cash balance is $2.65 million • Operating revenues are on target at 74.4% of budget • Fund operating expenses on target at 53.3% of budget WASTEWATER: • Cash balance is $2.86 million • Operating revenues are at 76.7% of budget • Operating expenses on target at 72.2% of budget FISCAL IMPACT: Not applicable. FUNDING: Not applicable. Jes R. Krueger,'Deputy City Manager JK Attachments: PowerPoint Presentation APPROVED: Bia , City Manager Water and Wastewater FY08 Quarterly Update (Through March 31, 2008) City Council Meeting April 15, 2008 n �Q '9<�FSummary 0 " WASTEWATER: • Cash balance is $2.86 million Operating revenues at 76.7% of budget Operating expenses on target at 72.2% of budget WATER: • Cash balance is $2.65 million Operating revenues are on target at 74.4 % of budget Fund Operating expenses on target at 53.3 % of budget 2 Wastewater Financials Quarter Ending 3/31/08 .I I Ending March 31, 2008 Revenue FY Budget Actuals % of Budget Sales Revenues 8,8381600 6,777,678 76.70 Other Revenues 510,000 863,495 169.3% Impact Mitigation Fees 2021770 546,233 27.3% Total Revenues $11,351,370 $8,187,406 72.1% Expenses Operating $512105090 3,760,951 72.2% Capital Outlay 4314651333 1318261468 31.8% Total Expenses $48,675,423 $17,5879419 36.1% Net Revenue for Debt Service ($37,324,053) ($9,400,013) 25.2% Debt Service 3,3391773 1,953,346 58.5% Net Revenue ($40,663,826) ($11,353,359) 27.9% Less Cost of Services Transfer to General Fund 1,404,661 1,053,496 75.0% Net Increase (Decrease) in Cash ($42,0681487) ($12,406,855) 29.5% Beginning Cash Balance 197579400 499569069 282.0% Other Changes in Cash 42,7109180 109308,302 Ending Cash Balance $293999093 $298579516 119.1% Note: Other Changes comprise proceeds from sale of 2004 COPS and other working capital items3 Wastewater Operating Expenses by Series Personnel $2,991,129 $2,198,573 73.5% Su lies, Materials, Services 1,032,686 746,617 72.3% EquipmentLand Structures 182 940 44 830 24.5% Other Payments 201 870 162 974 80.7% Communication & Transportation 801,465 607,957 75.9% Total Operating Expenses $ 5,210,090 $ 3,760,951 72.2% 4 Water Financials Quarter Ending 3/31/08 .I I Ending March 31, 2008 Revenue FY Budget Actuals % of Budget Sales Revenues 11138600 81471,560 74.4% Other Revenues 6411640 414,048 64.5% Impact Mitigation Fees 2241000 30,748 13.7% Total Revenues $12,251,640 $81916,356 72.8% Expenses Operating $4,378,128 2,332,760 53.3% Capital Outlay 49385,916 21629,581 60.0% Total Expenses $8,764,044 $4,962,341 56.6% Net Revenue for Debt Service $39487,596 $35954,015 113.4% Debt Service 2281025 47,766 20.9% Net Revenue $31259,571 $31906,249 119.8% Less Cost of Services Transfer to General Fund 11036,399 783,231 75.6% Net Increase (Decrease) in Cash $29223,172 $35123,018 140.5% Beginning Cash Balance 5349780 (4759262) -88.9% Other Changes in Cash Ending Cash Balance $297579952 $296479756 Note: PCE/TCE settlements in 07/08 ($8 million) for mitigation efforts are not included in analysis 5 Water Operating Expenses by Series Personnel $1,180,300 $534,842 45.3% Supplies, Materials, Services 694,411 248,030 35.7% Equipment, Land, Structures 3,500 1,068 30.5% Other Payments 1,620,980 988,216 61.0% Communication & Transportation 878,540 560,604 63.8% Total Operating Expenses $ 4,377,731 $ 2,332,760 53.3% C.1 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 ($2,000,000) ($4,000,000) ($6,000,000) ($8,000,000) Water Cash Balances - as of March 31, 2008 $15,000,000 $10,000,000 $5,000,000 $0 ($5,000,000) ($10,000,000) ($15,000,000) Wastewater Cash Balances - as of March 31, 2008