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Home My WebLink AboutMinutes - March 17, 2009 SSLODI CITY COUNCIL SHIRTSLEEVE SESSION CARNEGIE FORUM, 305 WEST PINE STREET TUESDAY, MARCH 17, 2009 A. Roll Call by City Clerk An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held Tuesday, March 17, 2009, commencing at 7:01 a.m. Present: Council Member Hitchcock, Council Member Johnson, Mayor Pro Tempore Katzakian, Council Member Mounce, and Mayor Hansen Absent: None Also Present: City Manager King, City Attorney Schwabauer, and City Clerk Johl .. 01 B-1 Second Quarter Fiscal Year 2008-09 Water. Wastewater. and Electric Utility De ap rtmen Financial Reports (PW/EUD) City Manager King and Deputy City Manager Jordan Ayers provided a brief introduction to the quarterly update for Public Works and Electric Utility. Charlie Swimley, Water Services Manager, provided a PowerPoint presentation regarding the Public Works Department Water/Wastewater fiscal year 2009 quarterly update. Specific topics of discussion included wastewater operating results, wastewater fund cash flow summary operations, wastewater funds cash balances, water operating results, water fund cash flow summary operations, water funds cash balances, and water/wastewater utility accomplishments including valve program. In response to Mayor Hansen, Mr. Swimley stated the $44,000 amount that was budgeted will be transferred and shown as a zero by the end of the year. In response to Mayor Hansen, Mr. Swimley stated the ongoing operating deficit is $917,286. In response to Council Member Hitchcock, Mr. Swimley stated staff has gotten control of some of the deficit and will be bringing forth a plan to address the same on March 31. In response to Mayor Hansen, Public Works Director Wally Sandelin stated that, with respect to PCE/TCE costs and clean-up, the current status is that bids are out for a monitoring program, the first phase for design and construction for extraction wells is in place, equipment should be in the ground this year, and intermediate remedial actions are going forth as well. Mr. Schwabauer stated staff is looking into stimulus funding opportunities also. In response to Council Member Hitchcock, Mr. Sandelin stated the annual collection for PCE/TCE was approximately $2.5 million. Mr. Sandelin stated the expenses may be less than the original report and rate model indicated, an adjustment may be applicable, and the information will be coming forward for Council consideration on March 31. In response to Mayor Hansen, Mr. Swimley stated staff is in the process of preparing a required sewer management plan, which is required as the City can be audited at any time. Mr. Swimley stated the order is relatively new and staff wants to ensure that it is in compliance with all regulations in the event that an audit occurs. Continued March 17, 2009 In response to Mayor Hansen, Mr. Swimley stated there is no State funding available for this mandate and the City is required to file a report with the State every time there is a spill. Mr. Swimley stated the State in turn keeps a database of all these reports, which is accessible to various agencies. In response to Council Member Hitchcock, Mr. Swimley stated underreporting by agencies may be a concern and one reason for the State to create and maintain this database for spills. In response to Council Member Mounce, Mr. King stated the State does not give any provisions for cities that cannot pay for the enhanced infrastructure as a standard is a standard. In response to Council Member Johnson, Mr. Swimley stated there was a meeting last Thursday, staff does not believe that the State Board will move from its current position on the order, and the best the City can hope for is some revised language. Mr. Swimley stated a footnote referencing disposal and recycle practices would be preferred. In response to Council Member Johnson, Mr. Swimley stated the decision should be made today. Mr. Schwabauer clarified that the State Board will likely uphold the order of its staff, send the order back to the Regional Board with its findings, and in turn tie the Regional Board's hands to finish the permitting process with the findings of the order in place. Mr. Schwabauer stated a writ of mandate may be an option and provided a brief overview of the legal process for the same. In response to Mayor Hansen, Mr. Swimley stated the order may cost more money because the City may need to line the ponds per Title 27, change land application practices, and there may be an impact on the cannery. In response to Council Member Hitchcock, Mr. Swimley stated lining the ponds would cost about $1 million and will be mentioned in the March 31 presentation. In response to Mayor Hansen, Mr. Swimley stated there are approximately 4,500 valves in the City. George Morrow, Electric Utility Director, provided a PowerPoint presentation regarding the fiscal year 2009 quarterly update. Specific topics of discussion included mid -year summary, budget versus quarter actual, financial results, electric expenses by series, power supply, quarter sales, billing statistics, energy cost adjustment by customer class, Northern California Power Agency (NCPA) general operating reserve, Lodi Energy Center, unrestricted reserves, electric reserve policy, days cash, Fitch ratings, and open position. In response to Council Member Hitchcock, Mr. Morrow stated the 92.1 % is a combination of revenue and expense numbers. Mr. Morrow stated it is likely normal because other quarters may be in the negative and therefore the numbers will even out throughout the year. In response to Council Member Hitchcock, Mr. Morrow stated the total operating expenses should even out by the year as well and generate some revenue if the numbers are low now. Mr. King stated he does have some concern about maintenance and sustaining operating numbers as compared with where other electric utilities are in these numbers for the quarter. In response to Council Member Johnson, Mr. Morrow stated there is a good correlation between power use and billing because if the utility purchases power for March it will generally pay for the costs in March after it goes through NCPA or related process. Mr. Morrow stated the billing for the customers will not come until shortly thereafter because of the meter reading cycles. In response to Council Member Mounce, Mr. Morrow stated the reserve policy was set in 2007 2 Continued March 17, 2009 with a goal of 2010 and the discussion regarding reserves should be on line with that time period, although it may occur earlier. In response to Council Member Hitchcock, Mr. Morrow stated the goal since the policy has been set is to focus on the target number rather than the basis for that number as outlined by the consultant. Mr. Morrow stated his understanding was that once that number is reached, or before that time, there may be a discussion about what to do next. In response to Council Member Hitchcock, Mr. King stated some of the concerns at the time the policy was adopted included financial ratings and standing, getting everyone on the same page as to what the goal was, the necessity of rate adjustments in the near future, equipment replacement, and operating costs. In response to Council Member Johnson, Mr. King stated ratings equal credit score for power purchases. Mr. Morrow stated the largest factor for the Electric Utility to have a good rating is for credit purposes and he is not aware of any insured based ratings since the demise of the bond market. Council Member Johnson requested some information on how much it would cost to purchase power at the various letter ratings (i.e., A+, A, A-, BBB+, etc.). Mr. Morrow stated he does not have the information readily available but will forward it. In response to Council Member Hitchcock, Mr. Morrow stated rating agencies will say that days cash is important; although, there are factors such as management of the utilities and power supply portfolio. Mr. Morrow stated the Lodi focus has been days cash because that was previously the weakest factor. In response to Mayor Hansen, Mr. Morrow stated the next open position power purchase is tomorrow for the high load and winter period. C. Comments by Public on Non-Aaenda Items Lori Laney, a resident of the City, spoke in regard to her utility bill increasing significantly when an older meter was removed and a new meter was installed. Ms. Laney had concerns regarding an invoice she received for $1,200 covering an eight-month period during which her old meter may not have been working. In response to Mayor Hansen, Ms. Laney stated the new meter was installed in February. Mr. King stated he had a similar situation occur to him personally and suggested it may be a good time for the City Council to look at variance information at large. In response to Council Member Katzakian, Mr. Morrow stated the estimate is based on historical usage and after the new meter is installed they can look forward. Mr. Morrow stated there are a handful of older faulty meters still remaining; although, most have been phased out and provided an overview of how the meters were malfunctioning. Mr. Morrow stated they will look at the specifics of this situation and work with the customer accordingly. Council Members Johnson and Mounce and Mayor Hansen expressed concerns about going back and creating an estimate based on past usage and looking forward. In response to Council Member Hitchcock, Mr. Morrow stated the $1,200 figure covers approximately eight months. In response to Council Member Hitchcock, Mr. Morrow stated no one has 10 to 20 faulty meters and staff does do its best to catch the faults as soon as possible, although the system is not fail safe. Continued March 17, 2009 Mayor Hansen suggested staff research and bring forth information regarding the meter and variance policy. No action was taken by the City Council. The meeting was adjourned at 8:34 a.m. ATTEST: Randi Johl City Clerk M 8-I Ah CITY OF LODI COUNCIL COMMUNICATION TM AGENDA TITLE: Second Quarter Fiscal Year 08/09 Water, Wastewater and Electric Utility Department Financial Reports MEETING DATE: March 17.2009 PREPARED BY Deputy City Manager RECOMMENDED ACTION: Receive utility financial reports for the second quarter of fiscal year 2008/09. BACKGROUND INFORMATION: In accordance with the Lodi Municipal Code, quarterly financial reports are to be prepared for the Water, Wastewater, and Electric Utilities. Highlights of the operations and financial performance of each utilitywill be presented at the meeting of March 17, 2009. FISCAL IMPACT: None directly related to the preparation of the report. However, the presentation is intended to keep the Council apprised of the financial conditions of the major municipal utilities. Jordan Ayers Deputy City Manager APPROVED: Blair ' ity Manager i c� Public •Department Water/Wastewater IFY 09 Quarterly Update (Through December 31, 2008) City Council Shirtsleeve Session March 17, 2009 Wastewater Operating Results (Ending December 31, 2008) Personnel 2,951,436 1,425,195 48% Supplies, Materials, Services 2,323,442 684,042 29% Equipment, Land, Structures 115,270 35,219 31% Other Payments 200,212 154,984 77% Communication & Transportation 819,210 464,216 57% Work for Others 43,960 0 0% Total Operating Expenses 6,453,530 2,763,656 43% Wastewater Fund Cash Flow Summary Operations (Ending December 31, 2008) M Sales I 3,208,197 Other (interest, rent, septic, misc.) 652,473 l Revenues i Operating 3,860,670 2,763,656 Debt Service 1,288,561 Cost of Services Payment To General Fund 725,739 Total Expenses 4,277,956 Net Increase in Undesignated Reserves (917,286) Wastewater Funds Cash Balances (Ending December 31, 2008) Operating (170) (8,414,114) Utility Capital / Infrastructure Replacement (171) 15,601,462 Capital Reserve (172) (Fund used to pay White Slough COP Debt Service) (879757238) Capital Reserve Restricted Assets (172) (White Slough COP Remaining Proceeds) 775367440 IMF (173) 9,232, 767 Total 147981,317 Water Operating Results (Ending December 31, 2008) Personnel 11259,632 651188 52% Supplies, Materials, Services 926,012 318,687 34% Equipment, Land, Structures 3,500 4,431 127% Other Payments 11267,750 924,104 73% Communication & Transportation 882,340 486,513 55% Work for Others 360,000 0 0% Total Operating Expenses 4,699,234 2,384,923 51% Water Fund Cash Flow Summary Operations (Ending December 31, 2008) Sales 3,373,613 Other (interest, rent, misc.) 104,696 inTotal Revenues Operating 3,478,309 2,384,923 Debt Service 14,957 Cost of Services Payment To General Fund 530,061 Total Expenses 2,929,941 Net Increase in Undesignated Reserves 548,368 Water Funds Cash Balances (Ending December 31, 2008) M Operating (180) I (563,217) Utility Capital / Infrastructure Replacement (181) 10,853,636 IMF (182) (193,252) PCE/TCE Settlements 15,8237775 PCE/TCE Rates (185) 175187339 Total 277439,281 Water / Wastewater Utility Accomplishments • Treatment Plant Upgrade Status • Better Understanding of the Financial Condition of Our W/WW Utilities • Kicked Off Main Replacement Project 4 • The Revised Draft State Board Order • SSO Tracking • Draft FOG Ordinance • Water Valve Exercising Program Questions??? Electric Utility Department FY09 Quarterly Update (Through December 31, 2008) City Council Shirtsleeve Session March 17, 2009 O �Q Mid=Year 9��FOR� • Utility finances in line with projections • Power Costs up ~$1.7M • Revenues up about $300K • NCPA "GOR" down $925K • Overall increase in cash is about $3.7M 2 t� �P 09 Budget vs. Q2 Actual Cash Flow Revenue Budget Actuals % of Budge Sales Revenues 73925205 41,032308 56.0% Other Revenues 9551000 504,823 52.9% Total Revenues 749207,805 41,536,931 56.0% Expenses Purchase Power 4607,976 24,778,843 53.1% Non Power 1294225535 555305015 44.5% Total Expenses 59,120,511 30,308,858 51.3% Net Revenue for Debt Service 1590875294 11,228,073 74.4% Debt Service 6,339,831 311691916 50.0% Net Revenue 8,747,463 890589157 92.1% In -lieu Transfer to General Fund 6,879,414 314391707 50.0% Net Increase (Decrease) in Working Capital 198689049 496189450 247.2% Beginning Cash Balance 1193399624 1193399624 Changes in GOR LEC PMT) - (9249557) ,Ending Cash Balance 1392079673 1590339517 3 Q2 Financial Results Projected vs. Actual 4 Revenue Projected Actuals Difference Sales Revenues 40,7341542 411032,108 0.7% Other Revenues 477,500 5049823 5.7% Total Revenues 41,2121042 411536,931 0.8% Expenses Purchase Power 2310631138 241778,843 7.4% Non Power 54609451 5,530,015 1.3% Total Expenses 28,5231589 301308,858 6.3% Net Revenue for Debt Service 12081452 115228,073 -11.5% Debt Service 3,1699916 3,169,916 0.0% Net Revenue 915185536 8,058,157 -15.3% In -lieu Transfer to General Fund 3,439,707 3,439,707 0.0% Net Increase (Decrease) in Working Capital 690789829 496189450 24.0% Beginning Cash Balance 1193399624 1193399624 Changes in GOR (9249557) (924,557) Ending Cash Balance 169493,896 1590339517 4 Electric Expenses by Series Personnel 6,317,083 2 832 801 45% Supplies, Materials, Services 1,729,829 688,817 40% Equipment, Land Structures 909 151 385,729 42% Other Payments 440,196 161,251 37% Communication & Transportation 69,891 33,224 48% Total Operating Expenses 9,4669150 491019822 43.3% Note: Includes Capital Expenditures in Other Payments 6i F <0 00 Q2 Power Supply Generation $ 19,986,619 $ 23,964,720 $ 3,978,101 19.9% Transmission $ 3,564,939 $ 3,451,581 $ 113,358 -3.2% Management Services $ 1,104,318 $ 1,124,736 $ 20,418 1.8% Third Party Revenue $ (1,592,738) $ (3,762,194) $ (2,169,456) 136.2% TOTAL $ 23,063,138 $ 24,7783843 $ 137153705 7.4% C.1 Q2 Sales m July 2008 0 0 380 m 390 August 2008 0 0 415 363 September 2008 0 5 266 247 October 2008 36 76 53 73 November 2008 276 348 0 0 December 2008 645 609 0 0 Q2 Total 957 1038 1114 1073 7 Q2 Billing Statistics Residential 85,601,832 $ 15,991,079 $ 0.1868 Small Commercial 92,064,784 $ 16,000,758 $ 0.1738 Large Commercial/Small Industrial 18,898,012 $ 3,005,755 $ 0.1591 Industrial 51,734,907 $ 5,736,951 1 $ 0.1109 TOTAL 24892995535 $ 405734,542 $ 0.1641 Residential 84,499,165 $ 16,107,894 $ 0.1906 Small Commercial 90,878,865 $ 16,117,644 $ 0.1774 Large Commercial/Small Industrial 18,654,580 $ 3,027,712 $ 0.1623 Industrial 51,068,491 $ 5,778,859 $ 0.1132 TOTAL 245,101,101 $ 41, 032,108 $ 0.1674 E:3 n �Q 9��FOR�E bCA Customer Class M Residential 832,498 725,150 0 11557,648 Small Commercial 8339776 7469906 1,580,683 Large Commercial/Small Industrial 176,414 158,323 334,736 Industrial 449,032 438,014 887,046 Total ECA Revenue 2,2911721 210681393 41360,113 99 n �QNCPA GOR • General Operating Reserve • Provides funding for contingencies • GOR levels ➢$6,959,239 (June 30, 2008) ➢$6,034,682 (December 31, 2008) • Geothermal Solar Project ($477K) • Lodi Energy Center ($453K) $924,557 Decrease 10 Lodi Energy Center 11 Projected FY09 Unrestricted Reserves Beginning Cash Balance $ 11,339,624 plus Pro' Increase in Working Capital 198689049 less Substation/Transmission Fund 5829000 less Net Solar Surcharge Fund 3519000 less Lodi Energy Center 298239530 plus Changes in GOR 6729533 Projected Ending Balance $ 1091239676 12 licyElectric Reserve Po • Initial Electric Reserve Fund Target of $12.9 million • Goal to reach target by year-end FY2010 • EUD to highlight cash "raising" opportunities during budget process • Reserve formula to be reassessed at least every 3 years • One time cash receipts shall be dedicated to increasing reserves. • Staff shall consider all options to increase reserves *Adopted by Lodi City Council, Resolution 2007-13, January 17, 2007 Days Cash (FY08) Alameda A- 418 Biggs None 401 Gridley None 183 Healdsburg Lodi Lompoc None BBB+/A- None 127 59 95 Palo Alto AA- 756 Redding A+ 178 Roseville A+ 239 Santa Clara A 272 Truckee Donner A 132 Ukiah None 511 Average 281 % Lodi to AVG 1 20.94% 14 FitchRatin KMlw 1OUR RISK NMI System Medians Per Rating CAtegory A%Winq R it S stm 'AA' 6.00 `A- covewof 14 MOW Net '6B' 1.87 04usw Full Transfer as BW Dap W unity on COWUjo Debt•5errioe DdA-S 'VA 4bhpWns WADS AdOsted Raging CAM comap (1) Coma" (xl JA) jx} FADS All Rdail " 46 39 3S 02 'AA' 2.45 1 N 1.40 9.3 O.1 'A' 2.0 1.2 1,47 4 9 4.0 1.55 1,35? $.1 1.87 197 1.03 61 5.� A%Winq R it S stm 'AA' 6.00 `A- 1. 14 EquO '6B' 1.87 101 wtw nl vMWA 14 EquO Find ExprAnt Dx s Add Transfer as TOW Dap W unity on COWUjo n Cap tion % o1 capoilkAm m Had Hwd (V N Rewo M 101 131 47 34 14 0,0 113 121 G4 34 4A 0,0 27 57 1 N 14 U DA 35 M 21 21 0.7 3.0 1.80 1.40 7.4 7.5 101 143 45 N 0.3 7.0 1.98 1.$5 9.0 4.0 113 141 46 34 �.3 4.0 2 DO 2-M 0.3 4.3 ID 46 39 3S 02 4.0 1.87 113 51 5.� 35 31 21 21 07 3.0 p"" pumbaw ill Sydem 'A4' :.01 1.12 1.35 4.1 5.7 $2 121 0 33 3,$ 0,0 `A' 3.14 151 1.42 44 0.0 105 W N 35 4A 0.0 'ow 3.51 144 1,24 2� 51 42 H 5'0 10 2,8 0,0 ' On.Of* ue& in ramp aW. FAD 5 - Nadi aWah br Mi sem. Sww Fuh Rat , QFY09 "Open Position" q<�FOR� 16 - 50,349 0.0% - 32,631 0.0% - 17,718 0.0% - 50,833 0.0% - 32,735 0.0% - 18,099 0.0% - 42,198 0.0% - 27,096 0.0% - 15,102 0.0% - 38,554 0.0% - 25,226 0.0% - 13,328 0.0% - 35,835 0.0% - 21,857 0.0% - 13,979 0.0% - 38,210 0.0% - 24,311 0.0% - 13,899 0.0% 1,266 38,403 3.3% 509 24,311 2.1% 757 14,092 5.4% 2,052 33,447 6.1% 2,157 21,612 10.0% 104 11,835 -0.9%- 11,680 36,080 32.4% 10,815 22,918 47.2% 864 13,163 6.6% 5,337 36,489 14.6% 5,266 23,778 22.1% 71 12,711 0.6% 4,354 39,431 11.0% 3,900 24,509 15.9% 454 14,922 3.0% 2,499 43,776 5.7% 2,497 29,430 8.5% 2 14,346 0.0% FY Total 27,189 483,606 5.6% 25,145 310,412 8.1% 2,044 173,194 1.2% Bal Yr Total 27,189 r 227,627 1 11.9% r 25,145 146,557 17.2% 2,044 81,070 2.5% 16 O �Q Mid=Year 9��FOR� • Utility finances in line with projections • Power Costs up ~$1.7M • Revenues up about $300K • NCPA "GOR" down $925K • Overall increase in cash is about $3.7M 17