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HomeMy WebLinkAboutAgenda Report - July 21, 2021 C-27AGENDA ITEM C-27 &12� CITY OF LODI COUNCIL COMMUNICATION AGENDA TITLE: Third Quarter Fiscal Year 2020/21 Water, Wastewater and Electric Utility Department Financial Reports MEETING DATE: July 21, 2021 PREPARED BY: Deputy City Manager RECOMMENDED ACTION: Receive utility financial reports for the third quarter 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 77 percent of budget. ✓ Energy sales are strong tracking at 76 percent of budget based on adjustments made at midyear to reflect increased energy usage resulting from the State's stay at home order that was still in effect during the third quarter of Fiscal Year 2021. ✓ In addition, the utility is tracking higher than estimated interest income, development impact fees and payments received by others for work performed by utility personnel as a result of increasing development and business expansion activities. EXPENSES are tracking at nearly 70 percent of budget three-quarters of the way through the year. ✓ Non -power operating expenses are tracking at just over 60 percent of budget. ✓ With three months remaining to report for the fiscal year, power supply costs are tracking at 72 percent of budget based on adjustments made at midyear. ✓ Capital outlay expenses are tracking at slightly over 30 percent of budget. Approximately 40 percent of the total capital budget is allocated to the utility's building renovation project for which construction activities will commence July 2021 and take approximately 8 to 12 months to complete; these expenditures will post in Fiscal Year 2022. RESERVES as of March 31, 2021 totaled approximately $43.5 million. These reserves are used to fund pay-as-you-go capital improvement and system maintenance projects. CAPITAL IMPROVEMENT PROJECTS includes over $25 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 through Fiscal Year 2025. However, a CPI level rate adjustment of approximately 2 percent is needed in Fiscal Year 2026 in order to meet Council approved reserve targets. APPROVED: Stephen Schwabauer, City Manager Wastewater Utility Highlights • REVENUE is stable and ended the fiscal year at 99 percent of budget. ✓ Wastewater sales for the fiscal year ended on target at 99 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. Included in the capital budget is $2.6 million for the Main Replacement project 8 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 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 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. Included in the capital budget is almost 6 million for the Water Meter Project Phase 8 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 Well 27 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 over the next five years. The major projects include phase 8 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 Improvement 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. 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 ACFR. Andrew Keys Deputy City Manager/Internal Services Director OF 00 C,4IIFO ' Electric Utility Department IFY 20 Quarterly Update (Ending March 31, 2021) City Council Meeting July 21, 2021 Electric Utility Fund Cash Flow Summary (March 31, 2021) Revenue Budget Actual % of Budget Sales Revenues 75,558,490 57,671,898 76% Development Impact Fees 328,890 410,163 125% Other Revenues (interest, misc) 4,528,500 3,467,110 77% Total Revenues Expenses 80,415,880 61,549,171 77% Purchase Power 44,507,930 32,262,978 72% Non Power 16,013,952 10,097,611 63% Capital Projects* 7,283,644 2,259,003 31% Debt Service 4,429,010 3,749,330 85% Cost of Service 2,275,670 1,706,753 75% In -lieu Transfer to General Fund 7,375,170 5,531,378 75% Total Expenses 81,885,376 55,607,053 68% Beginning Cash Balance (6/30/20) 38,969,879 Ending Cash Balance (3/31/21) 43,497,970 Reserve Policy Target % of Target 23,658,000 184% *Budget does not include pending post of $1.15M for additional appropriation recently authorized by Council for LEU Renovation Project 2 Electric Utility Funds Cash Balances (March 31, 2021) Operating Funds $ 2916711482 Utility Outlay Reserve Fund $ 1,000,000 Low Carbon Fuel Standard Fund $ 193,697 Public Benefits Fund $ 3,7461052 Impact Fee Fund $ 1,561,324 Solar Surcharge Fund $ 339,671 Greenhouse Gas Fund $ 6,9851744 Total $ 4394979970 Electric Utility Reserve Policy (March 31, 2021) *Includes cash held locally and at NCPA $50,000 $45,000 $40,000 $35,000 y $30,000 0 o $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 20121 ■ Actual ❑ Target Cash balances support City Council approved reserve requirements and provide funds for pay as you go Capital Improvement Projects. El Capital Improvement Project 5 -Year Spending Plan *Includes estimate from FY 21 midyear review - any unused funds for non -maintenance projects will roll to FY 22; FY 22 includes budget approved by Council **Includes planning and design costs only - construction costs estimated at -$30M and will be debt financed ***Includes additional appropriation of $1,150,000 authorized by Resolution 2021-132 5 FY 20-21 FY 21-22 Budget* FY 22-23 Forecast FY 23-24 Forecast FY 24-25 Forecast FY 25-26 Forecast Project $526,964 Capacity Program $1,010,000 $450,000 $0 $0 $0 Underground/ Overhead Maint $2,401,000 $2,575,000 $2,214,000 $1,747,000 $1,732,000 $1,732,000 Streetlight Maintenance / Repair $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 LED Streetlight Improvements $75,000 $250,000 $250,000 $250,000 $250,000 $0 230 kV Interconnection Project** $152,502 $20,000 $20,000 $25,000 $25,000 $25,000 Substation Maint/ Improvements $256,990 $2,159,000 $0 $0 $600,000 $600,000 Building/Security Improvements*** $3,706,588 $452,500 $0 $0 $0 $0 Work for Others $1,000,000 $550,000 $550,000 $550,000 $550,000 $550,000 Vehicles & Equipment $264,600 $997,000 $735,000 $730,000 $444,000 $440,000 Total Projects $8,433,644 $8,063,500 $4,269,000 $3,352,000 $3,651,000 $3,397,000 *Includes estimate from FY 21 midyear review - any unused funds for non -maintenance projects will roll to FY 22; FY 22 includes budget approved by Council **Includes planning and design costs only - construction costs estimated at -$30M and will be debt financed ***Includes additional appropriation of $1,150,000 authorized by Resolution 2021-132 5 5 -Year Financial Forecast Looking Ahead • Represents estimated actuals for FY 21 based on midyear review; actual results will be provided in the FY 21 Q4 Quarterly Financial Update • Forecast assumes funding of all budgeted full-time positions in future years • FY 26 includes CPI level rate adjustment of —2% to meet Council approved reserve target Ce FY 20-21 Estimate FY 21-22 Budget FY 22-23 Forecast FY 23-24 Forecast FY 24-25 Forecast FY 25-26 Forecast Cash $36,586,669 $32,794,139 $31,396,458 $30,391,018 $28,551,150 $27,919,746 Days Cash 176 151 142 136 126 121 Reserve Target $23,658,000 $24,906,890 $25,636,561 $25,909,880 $26,248,400 $26,594,658 of Target 155% 132% 123% 117% 109% 105% • Represents estimated actuals for FY 21 based on midyear review; actual results will be provided in the FY 21 Q4 Quarterly Financial Update • Forecast assumes funding of all budgeted full-time positions in future years • FY 26 includes CPI level rate adjustment of —2% to meet Council approved reserve target Ce Power Sales (March 31, 2021) Power Sales Customer Class (kWh) Budget 168,390,972 Actual 133,769,439 Small Commercial 157,614,492 116,640,791 Large Commercial/Small Industrial 45,399,914 32,569,011 Industrial 62,466,466 51,297,207 Total 433,871,844 334,2765448 Customer Class Residential $ Budget 32,396,420 $ 26,105,096 ..- Rate $ 0.1951 Small Commercial $ 27,739,230 $ 20,243,776 $ 0.1735 Large Commercial/Small Industrial $ 7,532,760 $ 5,162,961 $ 0.1585 Industrial $ 7,890,080 $ 6,160,065 $ 0.1201 Total $ 75,558,490 $ 57,671,898 $ 0.1725 ECA Revenue (March 31, 2021) Customer Class Total Residential $ 1,837,365 Small Commercial $ 1,685,797 Large Commercial / Small Industrial $ 476,426 Industrial $ 765,155 Total Revenue $ 43764,743 Electric Utility Fund Operating Results (March 31, 2021) Personnel $ Budget 9,411,610 $ Actual 7,465,648 % of Budget 79% Supplies, Materials, Services $ 4,993,659 $ 2,114,842 42% Other Payments $ 1,519,283 $ 470,039 31% Utilities $ 89,400 $ 47,082 53% Total Operating Expenses $ 16,013,952 $ 10,097,611 63% Power Supply Costs (March 31, 2021) 10 Budget $ 21,931,408 Budget 73% $ 30,067,510 Transmission $ 12,954,850 $ 9,008,669 70% Management Services $ 1,485,570 $ 1,322,901 89% Total Power Supply Costs $ 44,507,930 $ 327262,978 72% 10 Q3 — 2021 Q4 — 2021 Q+1yy - 2�02+2 QC - 2022 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 Load Coverage MWh Loath ROC Matrix Target Load Coverage (including Purchases) 135,579 60.0% 99.70 100,671 80.0% 93,2% 195,175 70.0% 79.4% 117.090 60.0% 66,6% Q3-2021 Q4 -2D21 Ql - 2022 Q2-2022 � Coverage Target -a-Load • LEU continues to meet or exceed Risk Management targets • Includes purchases approved through June 2021 by the Risk Oversight Committee 11 Risk Oversight Committee (ROC) Report Highlights • Two ROC meetings held January— March 2021 — Forward energy purchases approved to cover open positions 2021-2022 — Discussed confidential Cap and Trade strategy and activities — Discussed status of contract negotiations regarding RPS eligible projects, including solar and hydroelectric — Approved payment of NCPA Scheduling Coordination Balancing Account deposit adjustment invoice — Approved and recommended Council approval of LEU Reserve Policy • Required for review every 3 years — Action taken May 27, 2021 as authorized by the Energy Risk Management Policy (ERMP) to approve market energy purchases to cover 100% of forecasted load for summer months (July -September) as recommended by NCPA • Action taken to lock in pricing and mitigate exposure to anticipated peak period market pricing as experienced during last year's heat wave 0 ERMP requires ROC to report such action to City Council 12 • Customer Strategic Areas of Focus Project Highlights — Completed remote connect/disconnect meter project — Adopted 10 -year energy efficiency targets • Technology — Broadband Feasibility Study accepted by City Council • Financial — Completed 3 -year review of LEU Reserve Policy — Awarded contract for LEU Office Remodel Project • Reliability — Commenced work on citywide pole testing and treatment — Completed substation load tap changer upgrade project • Workforce Planning — Administrative Assistant promoted to Electrical Materials Technician — Lineman promoted to Foreman — Field Services Representative position filled — Lineman position filled (return of previous employee) 13 Public Works Department IFOR Water/Wastewater IFY 21 Quarterly Update (Ending March 31, 2021) Wastewater Fund Cash Flow Summary (Ending March 31, 2021) Budget Actuals % of Budget Revenue Sales 16,389,300 12,574,339 77% Development Impact Mitigation Fees 2,437,880 1,909,730 78% Other (interest, septic, misc.) 602,230 932,991 155% Total Revenues 19,429,410 15,417,060 79% Expenses Operating 9,165,330 5,797,132 63% Capital 9,517,654 2,873,331 31% Debt Service 3,340,970 2,385,213 71% Cost of Services Payment To General Fund 1,084,700 813,525 75% Total Expenses 23,108,654 11,869,201 51% Beginning Cash (Operations Only) 17,657,691 Ending Cash (Operations Only) 19,638,987 Days Cash (Excluding Capital) 598 % of Target — 90 Days Cash on Hand 665% Wastewater Operating Results (Ending March 31, 2021) 3 Budget Actuals % of Budget Personnel $ 4,595,340 $ 3,132,885 68% Supplies, Materials, Services $ 2,966,250 $ 1,553,444 52% Equipment, Land, Structures $ 315,000 $ 89,539 28% Other Payments $ 440,500 $ 359,640 82% Utilities $ 822,430 $ 635,814 77% Work for Others $ 25,810 $ 25,810 100% Total Operating Expenses $ 9,165,330 $ 5,797,132 63% 3 Wastewater Funds Cash Balances (Ending March 31, 2021) 22,000,000 20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000, 000 4,000, 000 2,000,000 0 Actual Reserves vs. Target 16/17 17/18 547 18/19 558% 19/20 665% 20121 Amounts above reserve target are held for scheduled ■Target capital maintenance Actual El Operating (530) 1916381987 Utility Capital / Infrastructure Replacement (531) 214,639 Capital Reserve (532) (Fund used to pay White Slough COP Debt Service) 49,177 Wastewater IMF (533) 2,755,220 Rate Stabilization Reserve (534) 500,000 Storm Drain IMF (535) 2,166,223 Total 25,324,246 22,000,000 20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000, 000 4,000, 000 2,000,000 0 Actual Reserves vs. Target 16/17 17/18 547 18/19 558% 19/20 665% 20121 Amounts above reserve target are held for scheduled ■Target capital maintenance Actual El Available Cash Days Cash (90 day target) Minimum Reserve Target (25%) Reserve Target (50%) % of Days Cash Target 5 -Year Financial Forecast FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 Budget Forecast Forecast Forecast Forecast Forecast $14,849,711 $13,036,26 $8,778,069 $2,983,569 $5,354,269 $2,878,200 9 408 350 231 77 151 68 $3,320,500 $3,397,000 $3,473,000 $3,551,500 $3,232,000 $3,844,000 1 $6,641,000 $6,794,000 $6,946,000 $7,103,000 $6,464,000 453% 389% 256% 85% 168% •:: 111 76% 5 Lockeford Street Improvements MSC Fence Storm Drain Trash Handling MSC Security Improvements MUS PW Admin Building Remodel Wastewater Planned Capital Projects Misc. System Relocations Misc. Wastewater Taps 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 Laurel Storm Relocation Cluff Storm Water Pump Rehab Project Planning/Misc. Projects Vehicles/Equipment Upgrade Blowers Irrigation Improvements Digester #3 Cleaning Digester #4 Lib Rehab Main Building Rollup Door 2nd Control Room Roof Electrical Room Reroof Plant Maintenance Improvements Compliance Studies and Reports Dredge Pond 1 and EQ Pond 1 Fan Press Replacement Aeration Difusser Replacement Primary Treatment Rehab NCPA Maintenance Generator Pump & Equipment Upgrades Electrical/Screen/SCADA Design Electrical Upgrades/SCADA Construction UV Design/Replacement White Slough Recycled Water Storage Mosquito Pond FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 7,545 35,303 750,000 750,000 750,000 750,000 750,000 65,728 150,000 35,000 35,000 35,000 35,000 35,000 35,000 40,000 40,000 40,000 40,000 40,000 40,000 200,000 2,554,780 2,000,000 2,000,000 2,000,000 250,000 200,000 200,000 200,000 200,000 100,000 200,000 125,000 125,000 25,000 25,000 25,000 110,000 75,000 75,000 75,000 450,000 75,000 750,000 93,168 750,000 1,000,000 500,000 5,902 11,015 140,593 100,000 110,000 100,000 75,000 100,000 200,000 200,000 200,000 200,000 200,000 200,000 1,138,125 1,000,000 500,000 150,000 150,000 150,000 150,000 150,000 150,000 110,000 1,210,407 1,000,000 7,000,000 5,500,000 450,000 33,278 110,000 Totals $9.350.844 $6,075,000 $7,835,000 $9,075,000 3,425,000 4,000,000 no Water Fund Cash Flow Summary (Ending March 31, 2021) Budget Actuals % of Budget Revenue Sales 13,141,780 10,572,577 80% Development Impact Mitigation Fees 1,135,440 844,518 74% Other (interest, tap fees, water meters, misc.) 827,710 1,304,380 158% Total Revenues 15,104,930 12,721,475 84% Expenses Operating 7,616,210 5,618,332 74% Capital 10,799,876 4,218,121 39% Debt Service 2,073,650 435,118 21% Cost of Services Payment To General Fund 843,850 642,487 75% Total Expenses 21,333,586 10,914,058 51% Beginning Cash (Operations Only) 6,111,366 Ending Cash (Operations Only) 6,923,326 Days Cash (Excluding Capital) 283 % of Target — 90 Days Cash on Hand 315% Water Operating Results (Ending March 31, 2021) Budget Actuals % of Budget Personnel $ 3,368,330 $ 2,570,996 76% Supplies, Materials, Services $ 1,756,460 $ 908,519 52% Equipment, Land, Structures $ 105,000 $ 25,385 24% Other Payments $ 1,688,520 $ 1,603,314 95% Utilities $ 589,050 $ 510,119 87% Work for Others $ 108,850 $ - 0% Total Operating Expenses $ 7,616,210 $ 5,618,332 74% Water Funds Cash Balances (Ending March 31, 2021) Actual Reserves vs. Target 8,000,000 274% 315 7,000,000 6,000,000 — 193 5,000,000 — Amounts above reserve target are n,000,000 — — Target 1339'0 held for scheduled 3,000,000 — — Actual capital maintenance 2,000, 000 I--■ — — 1,000,000 — — 0 16/17 17/18 18/19 19/20 20121 9 Operating (560) 6,923,326 Utility Capital / Infrastructure Replacement (561) 2,235,595 IMF (562) 3,566,414 PCE/TCE Settlements 9,295,656 PCE/TCE Rates (565) 3,879,614 Total 25, 900, 605 Actual Reserves vs. Target 8,000,000 274% 315 7,000,000 6,000,000 — 193 5,000,000 — Amounts above reserve target are n,000,000 — — Target 1339'0 held for scheduled 3,000,000 — — Actual capital maintenance 2,000, 000 I--■ — — 1,000,000 — — 0 16/17 17/18 18/19 19/20 20121 9 Available Cash Days Cash (90 day target) Minimum Reserve Target (25%) Reserve Target (50%) % of Days Cash Target 5 -Year Financial Forecast FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 Budget Forecast Forecast Forecast Forecast Forecast $3,986,581 $4,962,050 $6,235,450 $8,666,550 $8,226,150 9,225,350 141 173 213 289 267 292 $2,582,500 $2,608,000 $2,672,500 $2,737,000 $2,805,000 $2,874,500 1 $5,165,000 $5,216,000 $5,345,000 $5,474,000 $5,610,000 5,749,000 157% 193% 237% 321% 297% 325% 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 5 Pump Rehab 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 Water Planned Capital Projects FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 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 75,000 50,000 50,000 50,000 50,000 50,000 250,000 75,000 75,000 75,000 75,000 75,000 300,000 300,000 300,000 300,000 300,000 300,000 200,000 500,000 2,000,000 500,000 1,000,000 70,000 450,000 85,790 200,000 171,513 200,000 170,000 166,000 198,000 185,000 200,000 166,000 120,952 200,000 200,000 1,142,900 1,540,000 25,000 40,000 50,000 50,000 50,000 50,000 50,000 Totals $8,513,847 $1,970,000 $1,800,000 $800,000 $3,250,000 $1,950,000 11