HomeMy WebLinkAboutAgenda Report - March 17, 2021 C-15AGENDA ITEM
C-1 5
CITY OF LODI
COUNCIL COMMUNICATION
AGENDA TITLE: First and Second Quarters Fiscal Year 2020/21 Water, Wastewater and Electric
Utility Department Financial Reports
MEETING DATE: March 17, 2021
PREPARED BY: Deputy City Manager
RECOMMENDED ACTION: Receive utility financial reports for the first and second quarters of
Fiscal Year 2020/21.
BACKGROUND INFORMATION- In 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 Utility Financial Highlights
REVENUE is stable tracking at 61 percent of budget.
✓ Energy sales are tracking at 60 percent of budget due primarily to the August heat event,
and increased energy usage due to the stay at home order(s) issued in response to the
pandemic. Also, energy sales tend to track higher during the early, warmer months of the
fiscal year.
✓ In addition, the utility is tracking higher than estimated interest income and payments
received by others for work performed by utility personnel.
EXPENSES are tracking at nearly 50 percent of budget halfway through the year.
✓ Non -power operating expenses are tracking at just over 40 percent of budget.
✓ Power supply costs are tracking at 55 percent of budget. It is anticipated that power
supply costs will exceed original budget estimates and will be addressed as part of
midyear budget review and adjustments. Increased energy usage, as noted above,
coupled with less than ideal hydro conditions have resulted in costs tracking higher than
original estimates.
✓ Capital outlay expenses are tracking at 20 percent of budget. Approximately 35 percent of
the total capital budget is allocated to the utility's building renovation project for which
construction activities are scheduled to start by late spring/early summer.
RESERVES as of December 31, 2020 totaled approximately $44.6 million. These reserves are
used to fund pay-as-you-go capital improvement and system maintenance projects.
CAPITAL IMPROVEMENT PROJECTS includes over $20 million over 5 years for capital
improvement efforts. The projects listed are included in the City's current Capital Improvement
Program included in the adopted budget.
5 -YEAR FINANCIAL FORECAST indicates sufficient reserves over the next 5 years as capital
efforts continue.
w.
APPROVED:.
Stephen Schwabauer, City Manager
Wastewater Utility Highlights
• REVENUE is stable tracking at 52 percent of budget.
✓ Wastewater sales for the first half of the fiscal year ended on target at 51 percent of budget.
• EXPENSES as a total ended the second quarter well below the budget at 34 percent.
✓ Operating expenses for the second quarter ended slightly lower than budget at 44 percent.
✓ Capital expenses for the second quarter were below budget at 15 percent. Included in the
capital budget is $2.5 million for the Main Replacement project 8 which was bid in the third
quarter and awarded in the fourth quarter of last fiscal year with the majority of this
expense occurring in fiscal year 2021. Major projects also included in the budget is
$750,000 for the Storm Drain Trash Handling project, $1.2 million for the design of the
White Slough electrical building, $1.2 million for the fan press replacement, $1 million for
the aeration diffuser replacement, $750,000 for blower upgrades and $500,000 for the
Digester #3 cleaning at White Slough.
• RESERVES as of December 31, 2020 totaled $17.6 million which is 575 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 and are expected to trend downward as projects are
constructed.
• CAPITAL IMPROVEMENT PROJECTS include almost $26.5 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, irrigation improvements and the
storm drain trash handling systems to comply with state regulations. The projects listed are all in
the fiscal year 20-25 Capital Improvement Program that was included in the adopted budget.
• 5 -YEAR FINANCIAL FORECAST indicates a decline in reserves through fiscal year 2024.
Water Utility Highlights
REVENUE is stable tracking at 67 percent of budget.
✓ Water sales for the first half of the fiscal year ended above target at 66 percent of budget
attributed to seasonal usage during the warm summer months
✓ Other revenue is tracking high due to the Build America Bond subsidy that was received is
was not included in the original budget revenue estimates.
EXPENSES as a total ended the second quarter well below the budget at 33 percent.
✓ Operating expenses for the second quarter ended on target at 50 percent of budget.
✓ Capital expenses for the second quarter ended well below budget at 23 percent. Included
in the capital budget is almost 2.9 million for the Water Meter Project Phase 8 which was
carried over from the prior fiscal year and is projected to be fully expensed by the end of
this fiscal year. Major projects also included in the budget are $1.1 million for the Well 27
GAC, $1.5 million for the Well 28 GAC, $450,000 for the 2020 Well Rehab project.
RESERVES as of December 31, 2020 totaled $6 million which is 278 percent of the 90 days cash
target. These reserves are used to fund pay-as-you-go capital improvement projects.
CAPITAL IMPROVEMENT PROJECTS include $16 million in planned projects over the next five
years. The major projects include the completion of phase 8 and multi -family phase of the meter
program, GAC treatment projects. The projects listed are all in the fiscal year 20-25 Capital
Improvement Program that was included in the adopted budget.
5 -YEAR FINANCIAL FORECAST indicates a slight decline in reserves in fiscal year 2021 and
then begins to increase through fiscal year 2024 due to the completion of the meter project and
then forecasts sufficient reserves through fiscal year 2025.
FISCAL IMPACT: There is no fiscal impact from the preparation of this report.
FUNDING AVAILABLE: Adequate funding is available in the Fiscal Year 2020/21 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.
Andrew Keys
Deputy City Manager/Intemal Services Director
OF
00
C,4IIFO '
Electric Utility Department
IFY 20 Quarterly Update
(Ending December 31, 2020)
City Council Meeting
March 17, 2021
Electric Utility Fund
Cash Flow Summary
(December 31, 2020)
Revenue
Budget
Actual
% of Budget
Sales Revenues
70,860,780
42,735,672
60%
Development Impact Fees
328,890
272,232
83%
Other Revenues (interest, misc)
3,378,010
2,693,820
80%
Total Revenues
74,567,680
45,701,724
OF- -11111111111F�
61%
Purchase Power
41,307,930
22,513,917
55%
Non Power
16,589,952
6,821,764
41%
Capital Projects
6,909,044
1,372,041
20%
Debt Service
4,429,010
2,808,080
63%
Cost of Service
2,275,670
1,137,835
50%
In -lieu Transfer to General Fund
7,375,170
3,687,585
50%
Total Expenses
78,886,776
38,341,222
49%
Beginning Cash Balance (6/30/20) 38,969,879
Ending Cash Balance (12/31/20) 44,650,103
Reserve Policy Target 23,658,000
% of Target 189%
K
Electric Utility Funds
Cash Balances
(December 31, 2020)
Operating Funds
$
3114091254
Utility Outlay Reserve Fund
$
1,000,000
Public Benefits Fund
$
3,385,443
Impact Fee Fund
$
1,4241056
Solar Surcharge Fund
$
338,449
Greenhouse Gas Fund
$
7,092,901
Total
$
4496509103
Electric Utility Reserve Policy
(December 31, 2020)
*Includes cash held locally and at NCPA
$50,000
$45,000
$40,000
$35,000
$30,000
0
c $25,000
+h $20,000
$15,000
$10,000
$5,000
Actual Reserves vs. Target
FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21
■ Actual
❑ Target
Cash balances
support City Council
approved reserve
requirements and
provide funds for pay
as you go Capital
Improvement
Projects.
n
Capital Improvement Project
5 -Year Spending Plan
Project
Capacity Program
FY 20-21
Budget
$526,964
FY 21-22
Forecast
$0
FY 22-23
Forecast
$1,100,000
FY 23-24
Forecast
$0
FY 24-25
Forecast
$0
Underground/ Overhead Maint
$2,701,000
$1,610,000
$1,342,700
$1,342,700
$11200,000
Streetlight Maintenance / Repair
$50,000
$50,000
$50,000
$50,000
$50,000
LED Streetlight Improvements
$150,000
$150,000
$150,000
$150,000
$150,000
230 kV Interconnection Project*
$112,502
$0
$0
$0
$0
Substation Maint/ Improvements
$256,990
$0
$300,000
$1,775,000
$0
Building & Security Improvements
$2,556,588
$350,000
$0
$0
$0
Work for Others
$300,000
$550,000
$550,000
$550,000
$550,000
Vehicles & Equipment
$255,000
$847,000
$330,000
$680,000
$444,000
Total Projects
$6,909,044
$3,557,000
$3,822,700
$4,547,700
$2,394,000
*Includes planning and design costs only - construction costs estimated at -$30M and will be debt financed
5
5 -Year Financial Forecast
Looking Ahead
• Represents preliminary estimated actuals for FY 20/21 based on midyear review
• Forecast assumes funding of all budgeted full-time positions in future years
Ce
EstimatedFY 20-21
FY 21-22
Forecast
FY 22-23
Forecast
FY 23-24
Forecast
FY 24-25
Forecast
Available Cash
$37,636,669
$37,435,146
$36,228,136
$33,866,877
$32,943,062
Days Cash
181
176
167
155
148
Reserve Target
$23,658,000
$24,868,550
$25,277,054
$25,481,602
$25,750,876
of Target
159%
150%
143%
133%
128%
• Represents preliminary estimated actuals for FY 20/21 based on midyear review
• Forecast assumes funding of all budgeted full-time positions in future years
Ce
Power Sales
(December 31, 2020)
Power
Customer Class
Budget
156,663,103
Actual
98,893,675
Small Commercial
152,353,785
83,776,383
Large Commercial/Small Industrial
46,478,459
22,602,638
Industrial
57,602,257
34,462,934
Total
413,097,604
239,735,630
Customer Class
Residential
$
Budget
29,706,030
$
19,198,193
..- Rate
$ 0.1941
Small Commercial
$
26,412,710
$
15,128,400
$ 0.1806
Large Commercial/Small Industrial
$
7,625,560
$
3,911,040
$ 0.1730
Industrial
$
7,116,480
$
4,498,039
$ 0.1305
Total
$
70,860,780
$
42,735,672
$ 0.1783
ECA Revenue
(December 31, 2020)
Customer Class
Total
Residential
$
1,312,344
Small Commercial
$
1,217,871
Large Commercial / Small Industrial
$
344,933
Industrial
$
534,718
Total Revenue
$
3,409,866
Electric Utility Fund
Operating Results
(December 31, 2020)
Personnel
$
Budget
9,790,860
$
Actual
5,003,347
% of Budget
51%
Supplies, Materials, Services
$
4,903,409
$
1,348,567
28%
Other Payments
$
1,806,283
$
438,260
24%
Utilities
$
89,400
$
31,590
35%
Total Operating Expenses
$
16,589,952
$
6,821,764
41%
�01
Power Supply Costs
(December 31, 2020)
10
Budget
$
14,980,380
Budget
53%
$ 28,184,310
Transmission
$
11,843,870
$
6,584,389
56%
Management Services
$
1,279,750
$
949,148
74%
Total Power Supply Costs
$
41,307,930
$
22,513,917
55%
10
Q2 — 20211
Q3 — 2021
04-2021
011 - 2022
160,000
140,000
120,000
100,0 0
80,0oc)
60,000
40,000
20,000
Load Coverage
MWh Load
ROC Matrix
Target
Load Coverage
(Including Purchases)
110,773
8{}_0%
87-8%
136.330
80.0%
87.8%
99.241
70.0%
79.5%
97.631
60.000
68.7%
Q2 = 2021 Q3 2021 Q4 - 2421 Q1- 2022
M Coverage
�Targ,et
-• load
• LEU continues to meet or exceed Risk Management targets
• Includes purchases approved through March 2021 by the Risk Oversight
Committee
11
Risk Oversight Committee (ROC)
Report Highlights
• Two ROC meetings held July - December 2020
— Forward gas/energy purchases approved to cover open positions 2021-2023
— Approved purchase of RPS eligible products (Portfolio Content Category 3 RECs)
— Authorized sale of Low Carbon Fuel Standard (LCFS) credits
— Discussed confidential Cap and Trade strategy and activities
— Approved and recommended Council adoption of LEU energy storage target
— Discussed status of contract negotiations regarding long-term RPS eligible
projects, including solar and hydroelectric
— Approved payment of NCPA Scheduling Coordination Balancing Account
deposit adjustment invoices
— Approved and recommended Council approval of Revised Renewables Portfolio
Standard (RPS) Procurement Plan & Enforcement Program
— Approved and recommended Council approval of Western Area Power
Administration Base Resource Contract
— Approved and recommended Council approval of 2019 Power Content Label
filing
12
• Customer
Strategic Areas of Focus
Project Highlights
— Successfully transitioned to new after-hours answering service
— Commenced work on remote connect/disconnect meter project
— Added additional funding to Keep Your Cool Program for commercial
refrigeration energy efficiency improvements
• Technology
— Broadband Feasibility Study completed
— Commenced work on Wireless Policy (5G Pole Attachment) standards and
requirements
• Financial
— Completed updated Renewables Portfolio Standard Procurement Plan and
Enforcement Program
— Negotiations continue on two renewable energy projects
— Completed first sale of Low Carbon Fuel Standard Credits ($193K)
— Work underway to develop new rate tariff for LED Dusk to Dawn lights
13
• Reliability
Strategic Areas of Focus
Project Highlights (continued)
— Contract approved for citywide pole testing and treatment
— Adopted updated Wildfire Mitigation Plan
— In discussions with Tree Lodi on shade tree program to encourage planting of
"power line friendly" vegetation
— Commencing work on Physical Security Plan
• Workforce Planning
— New Line Apprentice hired (from Public Works Department)
— Electrical Materials Technician promoted to Utility Warehouse Supervisor
— Commenced work on Organizational Gap Analysis and Preferred Work
Methods
14
Public Works Department
IFOR
Water/Wastewater
IFY 21 Quarterly Update
(Ending December 31, 2020)
Wastewater Fund
Cash Flow Summary
(Ending December 31, 2020)
Budget
Actuals
% of Budget
Revenue
Sales
15,572,870
8,016,784
51%
Development Impact Mitigation Fees
2,437,880
1,396,218
57%
Other (interest, septic, misc.)
602,230
358,192
59%
Total Revenues
18,612,980
9,771,194
52%
Expenses
Operating
8,877,790
3,911,725
44%
Capital
9,325,654
1,411,807
15%
Debt Service
3,340,970
1,839,188
55%
Cost of Services Payment To General Fund
1,084,700
542,350
50%
Total Expenses
22,629,114
7,705,070
34%
Beginning Cash (Operations Only)
16,849,190
Ending Cash (Operations Only)
17,684,736
Days Cash (Excluding Capital)
517
% of Target — 90 Days Cash on Hand
575%
Wastewater
Operating Results
(Ending December 31, 2020)
3
Budget
Actuals
% of Budget
Personnel
$
4,425,200
$
2,216,291
50%
Supplies, Materials, Services
$
2,848,850
$
845,702
30%
Equipment, Land, Structures
$
315,000
$
60,030
19%
Other Payments
$
440,500
$
356,132
81%
Utilities
$
822,430
$
433,572
53%
Work for Others
$
25,810
$
-
0%
Total Operating Expenses
$
8,877,790
$
3,911,725
44%
3
Wastewater Funds
Cash Balances
(Ending December 31, 2020)
Actual Reserves vs. Target
20,000,000
18,000,000 534% 547% 558% 575%
16,000,000
14,000,000 429%
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,0000 . . . . .
16/17 17/18 18/19 19/20 20/21
Amounts above
reserve target are
held for scheduled
Target
capital maintenance
Actual
El
Operating (530)
1716841736
Utility Capital / Infrastructure Replacement (531)
11200,941
Capital Reserve (532) (Fund used to pay White Slough COP Debt Service)
49,172
Wastewater IMF (533)
2,310,009
Rate Stabilization Reserve (534)
500,000
Storm Drain IMF (535)
2,082,204
Total
23,837,062
Actual Reserves vs. Target
20,000,000
18,000,000 534% 547% 558% 575%
16,000,000
14,000,000 429%
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,0000 . . . . .
16/17 17/18 18/19 19/20 20/21
Amounts above
reserve target are
held for scheduled
Target
capital maintenance
Actual
El
5 -Year Financial Forecast
FY 20-21
FY 21-22
FY 22-23
FY 23-24
FY 24-25
Budget
Forecast
Forecast
Forecast
Forecast
Available Cash
Days Cash
(90 day target)
Minimum
Reserve Target
(25%)
Reserve Target
(50%)
% of Days Cash
Target
$14,849,711
$13,515,069
$9,785,369
$4,552,469
$8,118,869
408
363
257
116
229
$3,320,500
$6,641,000
453%
$3,397,000
$6,794,000
403%
$3,473,000 $3,551,500 $3,232,000
$6,946,000 $7,103,000 $6,464,000
286% 130% 255%
5
Lockeford Street Improvements
MSC Fence
Storm Drain Trash Handling
MSC Security Improvements
MUS PW Admin Building Remodel
Misc. System Relocations
Misc. Wastewater Taps
Wastewater
Planned Capital Projects
Collection System Capacity Enhancement Projects
Main Replacement Project
Sewer Lift Station Wet Well Rehab
Kofu Storm Water Pump Rehab
Salas Storm Water Pump Rehab
Henry Glaves Storm Water Pump Rehab
Peterson Storm Water Pump Rehab
Project Planning/Misc. Projects
Vehicles/Equipment
Upgrade Blowers
Irrigation Improvements
Digester #3 Cleaning
Main Building Rollup Door
2nd Control Room Roof
Electrical Room Reroof
Plant Maintenance Improvements
Compliance Studies and Reports
Fan Press Replacement
Aeration Difusser Replacement
NCPA Maintenance Generator
Pump & Equipment Upgrades
Electrical/Screen/SCADA Design
Electrical Upgrades/SCADA Construction
White Slough Recycled Water Storage
Mosquito Pond
FY 20-21
FY 21-22
FY 22-23
FY 23-24
FY 24-25
7,545
35,303
750,000
750,000
750,000
750,000
65,728
150,000
35,000
35,000
35,000
35,000
35,000
40,000
40,000
40,000
40,000
40,000
200,000
2,554,780
2,000,000
2,000,000
250,000
200,000
200,000
200,000
200,000
125,000
110,000
75,000
75,000
75,000
450,000
750,000
93,168
750,000
1,000,000
500,000
5,902
11,015
140,593
100,000
110,000
100,000
75,000
200,000
200,000
200,000
200,000
1,138,125
1,000,000
150,000
150,000
150,000
150,000
150,000
110,000
1,210,407
1,000,000
7,000,000
5,500,000
33,278
110,000
Totals $9,325,844 $5,550,000 $7,810,000 $9,050,000 2,900,000
no
Water Fund
Cash Flow Summary
(Ending December 31, 2020)
7
Budget
Actuals
% of Budget
Revenue
Sales
11,908,430
7,830,544
66%
Development Impact Mitigation Fees
1,135,440
570,605
50%
Other (interest, tap fees, water meters, misc.)
827,710
874,281
106%
Total Revenues
13,871,580
9,275,430
67%
Expenses
Operating
7,412,000
3,681,937
50%
Capital
10,479,212
2,360,810
23%
Debt Service
2,073,650
416,918
20%
Cost of Services Payment To General Fund
843,850
421,925
50%
Total Expenses
20,808,712
6,881,590
33%
Beginning Cash (Operations Only)
5,038,332
Ending Cash (Operations Only)
6,150,021
Days Cash (Excluding Capital)
250
% of Target — 90 Days Cash on Hand
278%
7
Water
Operating Results
(Ending December 31, 2020)
Budget
Actuals
% of Budget
$
3,198,190
$
1,634,101
51
Supplies,aterials, Services
$
1,722,390
$
519,393
30%
Land, Structures
$
105,000
$
20,608
20%
[Equipment,
ents
$
1,688,520
$
1,140,032
68%
$
589,050
$
367,803
62%
hers
$
108,850
$
-
0%
l Operating Expenses
$
7,412,000
$
3,681,937
50%
Water Funds
Cash Balances
(Ending December 31, 2020)
Actual Reserves vs. Target
Operating (560)
6,150,021
Utility Capital / Infrastructure Replacement (561)
3,641,260
IMF (562)
3,093,833
PCE/TCE Settlements
9,303,080
PCE/TCE Rates (565) Es
3,898,606
Total
26,086,800
Actual Reserves vs. Target
8,000,000
274%
7,000,000
278
6,000,000 - -
193
5,000,000 — - —
Amounts above
reserve target are
4,000,000 — —
133% ■Target
held for scheduled
3,000,000 — Actual
capital maintenance
2,000,000 —
1,000,000 -
1 A
0
16/17 17/18 18/19 19/20 20/21
W
Available Cash
Days Cash
(90 day target)
5 -Year Financial Forecast
FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25
Budget Forecast Forecast Forecast Forecast
$3,686,581
130
$4,653,050
163
$5,917,150 $8,338,650
202 278
Minimum Reserve $2,582,500 $2,608,000 $2,672,500 $2,737,000
Target (25%)
Reserve Target (50%) $5,165,000 $5,216,000 $5,345,000 $5,474,000
% of Days Cash
Target
145% 181% 224% 309%
$7,256,281
256
$2,805,000
$5,610,000
285%
10
Water
Planned Capital Projects
Water Meter Program
MUS PW Admin Building Remodel
MSC Fence
Lockeford Street Imprv.
Water Taps
Misc. Water Mains
Water Meter Replacement Program
GAC Replacement
Meter Shop Design/Construction
Water Plant Generator
Surface Water Treatment Plant Membrane Repl.
Surface Water Treatment Plant Transmission Line
MSC Security Improvements
2020 Well Rehab
Well 4R & 22 GAC Replacement
Well 7 Pump Rehab
Well 9 Pump Rehab
Well 14 Pump Rehab
Well 16 Pump Rehab
Well 16 GAC
Well 17 Pump Rehab
Well 21 Pump Rehab
Well 22 Pump Rehab
Well 3R Pump Rehab
Well 15 Pump Rehab
Well 25 Pump Rehab
Well 27 GAC Treatment & Standby Generator
Well 28 GAC Treatment
Project Planning
Vehicles/Equipment
FY 20-21
FY 21-22
FY 22-23
FY 23-24
FY 24-25
2,901,010
1,000,000
1,000,000
150,000
86,178
41,505
75,000
75,000
75,000
75,000
75,000
50,000
50,000
50,000
50,000
50,000
75,000
75,000
75,000
75,000
300,000
300,000
300,000
300,000
300,000
200,000
500,000
2,000,000
500,000
70,000
450,000
85,790
171,513
200,000
170,000
166,000
198,000
185,000
200,000
166,000
120,952
200,000
200,000
1,142, 900
1,540,000
25,000
40,000
50,000
50,000
50,000
50,000
Totals $8,513,847 $1,970,000 $1,800,000 $800,000 $3,250,000
11