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Home My WebLink AboutAgenda Report - October 21, 2020 C-19&nAGENDA ITEM Crry on'Lonr C ouxcrr C ovrMUNrcATroN AGENDA TITLE MEETING DATE: PREPARED BY: Fourth Quarter Fiscal Year 2019120 Water, Wastewater and Electric Utility Department Financial Reports October 21,2020 Deputy City Manager RECOMMENDED ACTION Receive utility financial reports for the fourth quarter of Fiscal Year 2019t20. BACKGROUND INFORMATION: ln accordance with the Lodi Municipal Code, quarterly financial reports are to be prepared for the Water, Wastewater, and Electric Utilities. Quarterly update presentations have been included in this report and a highlight of activities and progress is outlined below for each utility. Electric Utilitv Financial Hiqhliqhts REVENUE received was 103 percent of budget. lt is important to note that the budget reflected in this report was revised at midyear and includes estimated impacts due to COVID-19../ Sales revenue was 101 percent of budget. While the utility experienced a drop in commercialand industrialsales as a result of COVID-19, the increase in residentialsales more than offset the loss experienced on the non-residential side../ ln addition, the utility realized higher than estimated interest income and payments received by others for work performed by utility personnel. EXPENSES ended the year at 92 percent of budget../ Non-power operating expenses ended the year at 89 percent of budget.,/ Power supply costs ended the year at 98 percent of budget.,/ Capital outlay expenses ended the year at 63 percent of budget due to a delay associated with the utility's building renovation project which is scheduled to be completed in Fiscal Year 2021 as well as several vacancies in the utility's Engineering and Construction/Maintenance Divisions. RESERVES as of June 30,2020 totaled approximately $09 million. These reserves are used to fund pay-as-you-go capital improvement and system maintenance projects. These reserves were recently used during the Fiscal Year 2019/20 budget to fund approximately $3 million in customer bill credits to help mitigate financial hardships caused by COVID-19. CAPITAL IMPROVEMENT PROJECTS includes over $24 million over 5 years for capital improvement efforts. Most notable for Fiscal Year 2019/20 was completion of the Mclane Substation Renovation Project as well as the utility's ongoing overhead and underground system maintenance efforts. The projects listed are all in the FiscalYear 2020-2025 Capital lmprovement Program that was included in the adopted budget. 5-YEAR FINANCIAL FORECAST indicates sufficient reserves over the next 5 years as capital efforts continue. a a a a \fÈffi Steve Schwàåauêr {Ocl 12,2020 10i26 PDI)APPROVED Stephen Schwabauer, City Manager Wastewater litv Hiohliqhts REVENUE is stable and ended the fiscal year at g9 percent of budget./ Wastewater sales for the fiscal year ended on target at gg percent of budget. EXPENSES are as a total ended the fiscal year well below the budget at 70 percent./ Operating expenses for the fiscal year ended slightly lower than budget at 93 percent./ Capital expenses for the fiscal year were below budget at 26 percent. lncluded in the capital budget ¡s $2 6 million for the Main Replacement project B which was bid in the third quarter and awarded in the fourth quarter, the majority of this expense will occur in fiscal year 2021. Also included in the budget is $1.5 million for the design of the White Slough electrical building which the contract has been awarded but only a little over a quarter of this expense has been incurred through the end of the fiscal year. RESERVES as of June 30,2020 totaled $16.8 million which is 558 percent of the 90 days cash target. These reserves are used to fund pay-as-you-go capital improvement projects planned over the next several fiscal years. CAPITAL IMPROVEMENT PROJECTS include almost $33 million in planned projects over the next 5 years. The major projects include main replacement projects, construction of the electrical building, fan press replacement, aeration diffuser replacement and the storm drain trash handling systems to comply with state regulations. The projects listed are all in the fiscal year 20-25 Capital lmprovement Program that was included in the adopted budget. 5-YEAR FINANCIAL FORECAST indicates a decline in reserves through fiscal year 2024. Water Utilitv Hiqhliqhts REVENUE is stable and ended the fiscal year at 103 percent of budget./ Water sales are ended the fiscal year at 106 percent of budget./ Other revenue is tracking low due to the Build America Bond subsidy that was received is half of the budgeted amount. EXPENSES are as a total ended the fiscal year well below the budget at 69 percent./ Operating expenses are ended the fiscal year slightly lower than budget at 92 percent./ Capital expenses ended the fiscal year well below budget at 41 percent. lncluded in the capital budget is almost 6 million for the Water Meter Project Phase B in which the contract has been awarded but only a little over half that expense occurred in the fiscal year, the remainder will be expended in fiscal year 2021. Projects awarded at the end of the fiscal year but the majority of the expense will be occurring in the following fiscal were Well 3R Rehabilitation and Well27 GAC Replacement. RESERVES as of March 31, 2020 totaled $5 million which is 174 percent of the 90 days cash target. These reserves are used to fund pay-as-you-go capital improvement projects. CAPITAL IMPROVEMENT PROJECTS include almost $15 million in planned projects overthe next five years. The major projects include phase I and multi-family phase of the meter program as well as Well 27 and Well 28 GAC treatment projects. The projects listed are all in the fiscal year 20-25 Capital lmprovement Program that was included in the adopted budget 5-YEAR FINANCIAL FORECAST indicates a slight decline in reserves in fiscal year 2022 and 2023 due to the completion of the meter project and then forecasts sufficient reserves through fiscal year 2025. a a a a a FISCAL IMPACT: FUNDING AVAILABLE There is no fiscal impact from the preparation of this report. Adequate funding is available in the FiscalYear 2019120 budget, as amended by Council action from time to time, for the items in this report. All data is presented as current as of the date(s) obtained from the City's financial reporting system. Final year-end audited data will be provided in the City's CAFR. 0d*T'w Andrew Keys Deputy City Ma nage r/l nterna I Services Director Electric Utility Department FY 20 Quarterly Update (Ending June 30, 2020) City Council Meeting October 7, 2020 2 Electric Utility Fund Cash Flow Summary (June 30, 2020) Budget Actual % of Budget Revenue Sales Revenues 71,082,330 72,181,616 101% Development Impact Fees 333,870 265,348 79% Other Revenues (interest, misc)4,147,580 5,348,773 129% Total Revenues 75,563,780 77,795,737 103% Expenses Purchase Power 41,909,430 40,862,716 98% Non Power 17,762,992 15,727,962 89% Capital Projects 8,621,113 5,407,693 63% Debt Service 3,988,010 3,954,223 99% Cost of Service 2,269,670 2,269,670 100% In-lieu Transfer to General Fund 7,273,890 7,273,890 100% Total Expenses 81,825,105 75,496,154 92% Beginning Cash Balance (6/30/19)37,009,865 Ending Cash Balance (6/30/20)38,969,879 Reserve Policy Target 22,512,000 % of Target 173% 3 Electric Utility Funds Cash Balances (June 30, 2020) Operating Funds $ 27,506,371 Utility Outlay Reserve Fund $ 1,000,000 Public Benefits Fund $ 2,707,800 Impact Fee Fund $ 1,151,758 Solar Surcharge Fund $ 335,650 Greenhouse Gas Fund $ 6,268,300 Total $ 38,969,879 Electric Utility Reserve Policy (June 30, 2020) 4 Purpose Target Actual* Operating Reserves $ 21,512,000 $ 37,969,879 Capital Reserve $ 1,000,000 $ 1,000,000 Total Target $ 22,512,000 $ 38,969,879 Cash balances support City Council approved reserve requirements and provide funds for pay as you go Capital Improvement Projects. *Includes cash held locally and at NCPA Capital Improvement Project 5-Year Spending Plan 5 Project FY 19-20 Actuals FY 20 -21 Budget*** FY 21 -22 Forecast FY 22 -23 Forecast FY 23 -24 Forecast Distribution Capacity Program $383,036 $526,964 $0 $1,100,000 $0 Underground / Overhead Maint $1,845,247 $2,701,000 $1,610,000 $1,342,700 $1,342,700 Streetlight Maintenance / Repair $40,447 $50,000 $50,000 $50,000 $50,000 LED Streetlight Improvements $88,167 $150,000 $150,000 $150,000 $150,000 230 kV Interconnection Project*$237,498 $112,502 $0 $0 $0 Substation Maint / Improvements $1,826,262 $256,990 $0 $300,000 $1,775,000 Building & Security Improvements**$68,262 $2,556,588 $350,000 $0 $0 Work for Others $786,207 $300,000 $550,000 $550,000 $550,000 Vehicles & Equipment $132,567 $255,000 $847,000 $330,000 $680,000 Total Projects $5,407,693 $6,909,044 $3,557,000 $3,822,700 $4,547,700 *Includes planning and design costs only **LEU Office Renovation Project will commence in FY 2021 ***Includes approved CIP budget plus estimated prior year rollover 5-Year Financial Forecast Looking Ahead 6 FY 19/20 Actuals FY 20 -21 Budget FY 21 -22 Forecast FY 22 -23 Forecast FY 23 -24 Forecast Available Cash $38,969,879 $34,855,995 $33,810,283 $31,954,881 $29,018,697 Days Cash 210 175 167 156 141 Reserve Target $22,512,000 $23,658,000 $24,020,206 $24,222,231 $24,292,760 % of Target 173%147%141%132%120% •Forecast represents preliminary actual results for FY 19/20 •FY 19/20 actuals include ~$3 million in bill credit assistance due to COVID-19 •Current forecast assumes funding of all budgeted full-time positions. •LEU currently has approximately 20% vacancy rate Power Sales (June 30, 2020) 7 Power Sales (kWh) Customer Class Budget Actual Residential 156,294,837 157,421,444 Small Commercial 159,140,314 155,726,298 Large Commercial/Small Industrial 46,249,031 41,595,289 Industrial 62,480,889 62,260,480 Total 424,165,071 417,003,511 Revenue ($) Customer Class Budget Actual Average Rate Residential $ 27,853,848 $ 30,390,732 $ 0.1931 Small Commercial $ 28,167,008 $ 27,434,013 $ 0.1762 Large Commercial/Small Industrial $ 7,408,165 $ 6,749,733 $ 0.1623 Industrial $ 7,653,309 $ 7,607,138 $ 0.1222 Total $ 71,082,330 $ 72,181,616 $ 0.1731 ECA Revenue (June 30, 2020) 8 Customer Class Total ($) Residential $ 2,757,621 Small Commercial $ 2,758,655 Large Commercial / Small Industrial $ 754,921 Industrial $ 1,114,927 Total Revenue $ 7,386,124 9 Electric Utility Fund Operating Results (June 30, 2020) Budget Actual % of Budget Personnel $ 8,593,370 $ 8,538,207 99% Supplies, Materials, Services $ 4,431,722 $ 3,404,452 77% Other Payments $ 4,656,400 $ 3,712,892 80% Utilities $ 81,500 $ 72,411 89% Total Operating Expenses $ 17,762,992 $ 15,727,962 89% Power Supply Costs (June 30, 2020) 10 Budget Actual % of Budget Generation $ 29,847,900 $ 28,563,913 96% Transmission $ 10,540,550 $ 10,860,269 103% Management Services $ 1,520,980 $ 1,438,534 95% Total Power Supply Costs $ 41,909,430 $ 40,862,716 98% Load Coverage 11 •LEU continues to meet or exceed Risk Management targets •Includes purchases approved through July 2020 by the Risk Oversight Committee ROC Matrix Load Coverage Target (Including Purchases) Q4 – 2020 99,086 80.0%81.6% Q1 – 2021 93,097 80.0%81.8% Q2 – 2021 105,592 70.0%74.1% Q3 – 2021 133,140 60.0%61.7% MWh Load 12 Risk Oversight Committee (ROC) Report Highlights •Two ROC meetings held April –June 2020 –Provided ROC introduction/training for Mayor as new Alternate –Forward gas and energy purchases approved to cover open positions in 2020, 2021 and 2022 –Provided update on hydrologic conditions –50% below average –Discussed confidential Cap and Trade strategy and activities –Authorized sale of Low Carbon Fuel Standard Credits •Note this auction did not occur due to lack of demand for credits –Approved participation in Clean Fuel Reward Program •Statewide point-of-purchase rebate program for electric vehicles –Approved 2019 regulatory reports including Power Source Disclosure, Renewables Portfolio Standard and GHG Use of Allowance Proceeds –Approved Fiscal Year 2021 reserve target amounts based on Council adopted policy –Discussed potential new utility scale solar project 13 Strategic Areas of Focus Project Highlights •Customer –Continued public outreach campaign targeting low income assistance –Expanded CARE Program to June 30, 2021 –Work underway for transition to new after-hours answering service –Extensive social media campaign during recent California Energy Crisis to keep customers informed during rolling black outs •Technology –Broadband Feasibility Study nearly complete –GIS system deployment architecture review and design completed –OMS system integration undergoing final testing •Financial –Negotiations underway for 10MW solar PPA supporting long term RPS requirements –Working with NCPA and other members on joint effort to sell Low Carbon Fuel Standard credits 14 Strategic Areas of Focus Project Highlights (continued) •Reliability –Scope of work and contract negotiations underway for citywide pole testing and treatment contract –Infrastructure inspections continue on schedule –System-wide engineering study underway for refreshed capacity, reliability, and system protection analysis •Workforce Planning –New Senior Power Engineer hired –New Senior Electrical Engineering Technician hired –Continued vacancies on field construction side posing significant challenges to LEU operations –Almost 50% vacancy rate for Lineworker classification 1 Public Works Department Water/Wastewater FY 20 Quarterly Update (Ending June 30, 2020) 2 Wastewater Fund Cash Flow Summary (Ending June 30, 2020) Budget Actuals % of Budget Revenue Sales 16,249,100 16,096,777 99% Development Impact Mitigation Fees 1,579,760 1,075,539 68% Other (interest, septic, misc.)771,000 1,241,641 161% Total Revenues 18,599,860 18,413,957 99% Expenses Operating 8,435,687 7,880,629 93% Capital 7,442,946 1,942,454 26% Debt Service 3,324,590 3,236,084 97% Cost of Services Payment To General Fund 1,119,970 1,119,970 100% Total Expenses 20,323,193 14,179,137 70% Beginning Cash (Operations Only)16,333,666 Ending Cash (Operations Only)16,849,190 Days Cash (Excluding Capital)503 % of Target –90 Days Cash on Hand 558% 3 Wastewater Operating Results (Ending June 30, 2020) Budget Actuals % of Budget Personnel $ 4,174,350 4,222,783$ 101% Supplies, Materials, Services $ 2,690,167 2,265,520$ 84% Equipment, Land, Structures $ 285,000 200,781$ 70% Other Payments $ 455,200 358,964$ 79% Utilities $ 805,160 808,581$ 100% Work for Others $ 25,810 24,000$ 93% Total Operating Expenses $ 8,435,687 $ 7,880,629 93% 4 Operating (530)16,849,190 Utility Capital / Infrastructure Replacement (531)2,761,144 Capital Reserve (532) (Fund used to pay White Slough COP Debt Service)0 Wastewater IMF (533)1,433,660 Rate Stabilization Reserve (534)500,000 Storm Drain IMF (535)1,540,959 Total 23,084,953 Wastewater Funds Cash Balances (Ending June 30, 2020) Amounts above reserve target are held for scheduled capital maintenance 326% 429% 534%547%558% 0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 18,000,000 15/16 16/17 17/18 18/19 19/20 Actual Reserves vs. Target Target Actual 5-Year Financial Forecast 5 FY 19 -20 Actual FY 20 -21 Budget FY 21-22 Forecast FY 22 -23 Forecast FY 23 -24 Forecast Available Cash $16,849,190 $16,495,922 $15,533,969 $12,185,569 $7,347,669 Days Cash (90 day target) 503 465 427 328 193 Minimum Reserve Target (25%) $3,131,000 $3,240,500 $3,316,000 $3,392,500 $3,470,500 Reserve Target (50%)$6,262,000 $6,481,000 $6,632,000 $6,785,000 $6,941,000 % of Days Cash Target 558%516%475%364%215% Wastewater Planned Capital Projects 6 FY 19-20 FY 20-21 FY 21-22 FY 22-23 FY 23-24 Lockeford Street Improvements 13,135 Candy Cane Park 28,000 Storm Drain Trash Handling 750,000 750,000 750,000 MSC Security Improvements 4,272 65,728 MUS PW Admin Building Remodel 150,000 Misc. System Relocations 35,000 35,000 35,000 35,000 Misc. Wastewater Taps 547 40,000 40,000 40,000 40,000 Collection System Capacity Enhancement Projects Main Replacement Project 52,007 2,547,993 2,000,000 2,000,000 Sewer Lift Station Wet Well Rehab 250,000 Kofu Storm Water Pump Rehab 200,000 Salas Storm Water Pump Rehab 200,000 Henry Glaves Storm Water Pump Rehab 200,000 Lincoln Storm Pump Rehab Vehicles/Equipment 161,801 211,000 75,000 75,000 75,000 Upgrade Blowers 750,000 Irrigation Improvements 752,763 750,000 Digester #3 Cleaning 500,000 Main Building Rollup Door 12,098 2nd Control Room Roof 36,361 Electrical Room Reroof 92,000 Plant Maintenance Improvements 89,182 100,000 110,000 100,000 Compliance Studies and Reports 200,000 200,000 200,000 Fan Press Replacement 24,375 1,000,000 Aeration Difusser Replacement 1,000,000 NCPA Maintenance Generator 150,000 150,000 150,000 150,000 Pump & Equipment Upgrades 110,000 Electrical/Screen/SCADA Design 404,225 600,000 Electrical Upgrades/SCADA Construction 1,000,000 7,000,000 5,500,000 White Slough Recycled Water Storage 363,689 Miscellaneous Future Projects 100,000 Totals $1,942,455 $8,101,721 $5,550,000 $7,810,000 $9,050,000 7 Water Fund Cash Flow Summary (Ending June 30, 2020) Budget Actuals % of Budget Revenue Sales 13,395,170 14,191,983 106% Development Impact Mitigation Fees 775,450 618,182 80% Other (interest, tap fees, water meters, misc.)1,294,040 1,074,091 83% Total Revenues 15,464,660 15,884,256 103% Expenses Operating 7,162,147 6,580,042 92% Capital 11,058,234 4,573,669 41% Debt Service 2,969,760 3,138,740 106% Cost of Services Payment To General Fund 860,640 860,640 100% Total Expenses 22,050,782 15,153,091 69% Beginning Cash (Operations Only)4,191,634 Ending Cash (Operations Only)5,038,332 Days Cash (Excluding Capital)174 % of Target –90 Days Cash on Hand 193% 8 Water Operating Results (Ending June 30, 2020) Budget Actuals % of Budget Personnel $ 3,180,680 3,137,863$ 99% Supplies, Materials, Services $ 1,569,547 1,081,665$ 69% Equipment, Land, Structures $ 105,000 80,554$ 77% Other Payments $ 1,661,480 1,579,302$ 95% Utilities $ 536,590 591,808$ 110% Work for Others $ 108,850 108,850$ 100% Total Operating Expenses $ 7,162,147 $ 6,580,041 92% 9 Water Funds Cash Balances (Ending June 30, 2020) Operating (560)5,038,332 Utility Capital / Infrastructure Replacement (561)4,610,212 IMF (562)2,498,937 PCE/TCE Settlements 9,341,934 PCE/TCE Rates (565)3,962,275 Total 25,451,690 Amounts above reserve target are held for scheduled capital maintenance 238% 145%133% 274% 193% 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 15/16 16/17 17/18 18/19 19/20 Actual Reserves vs. Target Target Actual 5-Year Financial Forecast 10 FY 19 -20 Budget FY 20 -21 Forecast FY 21-22 Forecast FY 22 -23 Forecast FY 23 -24 Forecast Available Cash $5,038,332 $5,588,071 $5,465,244 $5,786,044 $7,256,281 Days Cash (90 day target) 174 197 174 180 222 Minimum Reserve Target (25%) $2,644,856 $2,591,500 $2,868,000 $2,928,000 $2,988,000 Reserve Target (50%)$5,289,711 $5,183,000 $5,736,000 $5,856,000 $5,976,000 % of Days Cash Target 193%219%193%200%246% Water Planned Capital Projects 11 FY 19-20 FY 20-21 FY 21-22 FY 22-23 FY 23-24 Water Meter Program 3,368,896 2,500,000 1,000,000 1,000,000 MUS PW Admin Building Remodel 150,000 Lockeford Street Imprv.10,372 Water Taps 75,000 75,000 75,000 75,000 Misc. Water Mains 50,000 50,000 50,000 50,000 Water Meter Replacement Program 75,000 75,000 75,000 GAC Replacement 300,000 300,000 300,000 300,000 Meter Shop Design/Construction 200,000 Water Plant Generator 500,000 MSC Security Improvements 4,272 70,000 Well 4R & 22 GAC Replacement 566,179 Well 7 Pump Rehab 3,487 171,513 Well 14 Pump Rehab 170,000 Well 16 Pump Rehab 166,000 Well 17 Pump Rehab 185,000 Well 21 Pump Rehab 200,000 Well 22 Pump Rehab 166,000 Well 3R Pump Rehab 49,048 120,952 Well 15 Pump Rehab 200,000 Well 25 Pump Rehab 200,000 Well 27 GAC Treatment & Standby Generator 19,672 800,328 Well 28 GAC Treatment 950,000 Vehicles/Equipment 251,575 40,000 50,000 50,000 50,000 Totals $4,273,501 $6,293,793 $2,071,000 $1,750,000 $750,000