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HomeMy WebLinkAboutAgenda Report - November 3, 2021 C-03C-3 CITY OF LODI COUNCIL COMMUNICATION AGENDA TITLE: Fourth Quarter Fiscal Year 2020/21 Water, Wastewater and Electric Utility Department Financial Reports MEETING DATE: November 3, 2021 PREPARED BY: Deputy City Manager RECOMMENDED ACTION: Receive utility financial reports for the fourth 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 received was 98 percent of budget. It 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 98 percent of budget. An increase in residential and industrial sales mitigated, for the most part, the decline realized in commercial sales as a result of COVID- 19. Sales revenues include approximately $1.5 million in uncollected electric charges due to the pandemic that are anticipated to be repaid through California Arrearage Payment Program (CAPP) funds from the State. ✓ In addition, the utility realized higher than estimated receipts as it relates to impact fees as a result of increased development activities. • EXPENSES ended the year at 88 percent of budget. ✓ Non -power operating expenses ended the year at 88 percent of budget. ✓ Power supply costs ended the year at 93 percent of budget. ✓ Capital outlay expenses ended the year at 43 percent of budget primarily due to a delay associated with the utility's building renovation project which is scheduled to be completed in March 2022. • RESERVES as of June 30, 2021 totaled approximately $42 million. These reserves are used to fund pay-as-you-go capital improvement and system maintenance projects. • CAPITAL IMPROVEMENT PROJECTS includes approximately $24 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. The majority of capital improvement work in Fiscal Year 2021 focused on overhead system maintenance as well as work to install infrastructure associated with new development. • 5 -YEAR FINANCIAL FORECAST indicates sufficient reserves through Fiscal Year 2025. However, based on a variety of assumptions, a CPI level rate adjustment of approximately 2 percent is projected in Fiscal Year 2026 in order to meet Council approved reserve targets. APPROVED: il!!, tit :t Stephen Schwabauer, City Manager Wastewater Utility Highlights • REVENUE is stable and ended the fiscal year at 106 percent of budget. ✓ Wastewater sales for the fiscal year ended above target at 102 percent of budget. • EXPENSES are as a total ended the fiscal year below the budget at 70 percent. ✓ Operating expenses for the fiscal year ended lower than budget at 86 percent. ✓ Capital expenses for the fiscal year were below budget at 38 percent. Included in the capital budget was almost $3.4 million budgeted for White Slough projects that did not begin this fiscal year. These projects include the Fan Press Replacement, Aeration Diffuser Replacement, Digester #3 Cleaning and Upgrade Blowers. Projects crossing fiscal years also explains the below budget percentage of expenditures and these remaining encumbered budgets be rolled to the next fiscal year. • RESERVES as of June 30, 2021 totaled $15.9 million which is 258 percent of the 180 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 $30 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 110 percent of budget. ✓ Water sales for the fiscal year ended at 107 percent of budget. ✓ Other revenue tracked high due to both the Build America Bond subsidy that was received and reimbursement from Lodi Unified School District for the Henderson School water line project were not budgeted. • EXPENSES are as a total ended the fiscal year below the budget at 75 percent. ✓ Operating expenses are ended the fiscal year slightly lower than budget at 95 percent. ✓ Capital expenses ended the fiscal year below budget at 52 percent. Included in the capital budget is almost 3 million for projects that either did not begin this fiscal year or the majority of the expense did not occur by June 30. These projects include the Meter Shop Design/Construction, Water Plant Generator, Well 21 Pump Rehab, Well 28 GAC Treatment and the 2020 Well Rehab. Projects crossing fiscal years also explains the below budget percentage of expenditures and these remaining encumbered budgets be rolled to the next fiscal year. • RESERVES as of June 30, 2021 totaled $8.1 million which is 165 percent of the 180 days cash target. These reserves are used to fund pay-as-you-go capital improvement projects. • CAPITAL IMPROVEMENT PROJECTS include $12 million in planned projects over the next five years. The major projects include the multi -family phase of the meter program as well as the Surface Water Treatment Plant Membrane Replacement and Transmission Line 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 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. Q0�A;(� Andrew Keys Deputy City Manager/Internal Services Director OF 00 C,4IIFO ' Electric Utility Department IFY 21 Quarterly Update (Ending June 30, 2021) City Council Meeting November 3, 2021 Electric Utility Fund Cash Flow Summary (June 30, 2021) Revenue Budget Actual % of Budget Sales Revenues 75,558,490 74,197,232 98% Development Impact Fees 328,890 567,681 173% Other Revenues (interest, misc) 4,598,500 3,971,070 86% Total Revenues Expenses 80,485,880 78,735,983 98% Purchase Power 44,507,930 41,501,170 93% Non Power 16,085,452 14,079,849 88% Capital Projects 8,503,644 3,674,902 43% Debt Service 4,429,010 4,428,441 100% Cost of Service 2,275,670 2,275,670 100% In -lieu Transfer to General Fund 7,375,170 7,375,170 100% Total Expenses 83,176,876 73,335,202 88% Beginning Cash Balance (7/1/20) 38,969,879 Ending Cash Balance (6/30/21) 42,113,381 Reserve Policy Target % of Target 23,658,000 178% 2 Electric Utility Funds Cash Balances (June 30, 2021) Operating Funds $ 2910121760 Utility Outlay Reserve Fund $ 1,000,000 Low Carbon Fuel Standard Fund $ 193,175 Public Benefits Fund $ 3,6941930 Impact Fee Fund $ 1,222,112 Solar Surcharge Fund $ 338,756 Greenhouse Gas Fund $ 6,651,648 Total $ 42,113, 381 Electric Utility Reserve Policy (June 30, 2021) *Includes cash held locally and at NCPA $45,000 $40,000 $35,000 $30,000 c $25,000 O $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. El Capital Improvement Project 5 -Year Spending Plan *Includes approved FY 22 budget approved by Council and rollover from FY 21, including staff estimates **Includes planning and design costs only - construction costs estimated at -$30M and will be debt financed 5 FY 20-21 FY 21-22 Budget/Est* FY 22-23 Forecast FY 23-24 Forecast FY 24-25 Forecast FY 25-26 Forecast Project Actuals $58,765 Capacity Program $1,478,199 $450,000 $0 $0 $0 Underground/ Overhead Maint $2,248,744 $2,023,777 $1,891,000 $1,747,000 $1,732,000 $1,732,000 Streetlight Maintenance / Repair $25,751 $74,249 $50,000 $50,000 $50,000 $50,000 LED Streetlight Improvements $120,925 $250,000 $250,000 $250,000 $250,000 $0 230 kV Interconnection Project** $9,092 $163,410 $20,000 $25,000 $25,000 $25,000 Substation Maint / Improvements $146,382 $269,607 $0 $0 $100,000 $100,000 Building/Security Improvements $136,859 $4,024,142 $0 $0 $0 $0 Work for Others $883,920 $673,927 $550,000 $550,000 $550,000 $550,000 Vehicles & Equipment $44,464 $1,855,119 $675,000 $660,000 $278,000 $570,000 Total Projects $3,674,902 $10,812,430 $3,886,000 $3,282,000 $2,985,000 $3,027,000 *Includes approved FY 22 budget approved by Council and rollover from FY 21, including staff estimates **Includes planning and design costs only - construction costs estimated at -$30M and will be debt financed 5 5 -Year Financial Forecast Looking Ahead • 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 Actualls FY 21-22 FY 22-23 Forecast FY 23-24 Forecast FY 24-25 Forecast FY 25-26 Forecast Budget/Est Cash $42,113,381 $34,626,888 $33,496,930 $32,259,430 $30,270,898 $29,417,023 Days Cash 221 158 152 144 132 126 Reserve Target $23,658,000 $24,906,890 $25,622,156 $25,980,457 $26,411,903 $26,767,623 of Target 178% 139% 131 % 124% 115% 110% • 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 (June 30, 2021) Power Customer Class Budget 168,390,972 Actual 169,807,599 Small Commercial 157,614,492 155,026,789 Large Commercial/Small Industrial 45,399,914 44,443,586 Industrial 62,466,466 69,805,747 Total 433,871,844 439,083,721 Customer Class Residential $ Budget 32,396,420 $ 32,664,848 ..- Rate $ 0.1924 Small Commercial $ 27,739,230 $ 26,722,017 $ 0.1724 Large Commercial/Small Industrial $ 7,532,760 $ 6,691,030 $ 0.1505 Industrial $ 7,890,080 $ 8,119,337 $ 0.1163 Total $ 75,558,490 $ 74,197,232 $ 0.1690 Note: Revenue includes -$1.5M in uncollected to be recovered through CAPP funds in FY 22. ECA Revenue (June 30, 2021) Customer Class Total Residential $ 2,304,617 Small Commercial $ 2,146,143 Large Commercial / Small Industrial $ 590,506 Industrial $ 962,581 Total Revenue $ 6,003,847 Electric Utility Fund Operating Results (June 30, 2021) Personnel $ Budget 9,411,610 $ Actual 9,706,716 % of Budget 103% Supplies, Materials, Services $ 5,010,159 $ 3,412,142 68% Other Payments $ 1,574,283 $ 899,217 57% Utilities $ 89,400 $ 61,774 69% Total Operating Expenses $ 16,085,452 $ 14,079,849 88% Power Supply Costs (June 30, 2021) 10 Budget $ 28,338,230 Budget 94% $ 30,067,510 Transmission $ 12,954,850 $ 11,719,362 90% Management Services $ 1,485,570 $ 1,443,578 97% Total Power Supply Costs $ 44,507,930 $ 41,501,170 93% 10 Load Coverage 120,000 100,000 0f000 60,000 - 40,000 20,000 Q4-2021 Q1-2022 0,2-2022 Q3-2022 Cove rage wL Target --&-Load LEU continues to meet or exceed Risk Management targets 11 MWh Load ROC Matrix Target Load Coverage (Including Purchases) Q4-2021 100.670 80.0% 102.4% Ql - 2022 105.174 $O, 0% 96.3% Q2 - 2022 117.069 70.0% 102.9% Q3 -2022 144,526 WO% 74.2% 160,000 140,000 • 120,000 100,000 0f000 60,000 - 40,000 20,000 Q4-2021 Q1-2022 0,2-2022 Q3-2022 Cove rage wL Target --&-Load LEU continues to meet or exceed Risk Management targets 11 Risk Oversight Committee (ROC) Report Highlights • Three ROC meetings held April —June 2021 Forward energy purchases approved to cover open positions through 2022, including forecasted summer energy needs — Provided update on challenging hydrological conditions — Discussed confidential Cap and Trade strategy and activities — Discussed status of final contract negotiations regarding RPS eligible projects, including solar and hydroelectric and due diligence efforts on other potential projects — Discussed public EV charging station costs — Approved payment of NCPA Scheduling Coordination Balancing Account deposit adjustment invoice — Approved Annual Power Source Disclosure Report — Approved 2020 RPS Report — Approved 2020 GHG Use of Allowance Proceeds Report 12 • Customer Strategic Areas of Focus Project Highlights Increased program dollar cap for Commercial Energy Efficiency Rebate Program — Established 2 -Year Pilot Residential Shade Tree Program — Extended CARE Program to assist with COVID relief efforts • Technology — GIS deployment, data conversion and initial migration underway • Financial — Secured forward power purchase supplies to cover summer energy needs — Continued final negotiation on two contracts for utility scale renewable energy projects 13 • Reliability Strategic Areas of Focus Project Highlights (cont'd) — Secured long-term contract for vegetation management services — Completed more than 95% of work associated with pole testing and treatment — Continued work related to replacement of overhead #6 copper conductor — Physical Security Plan completed • Workforce Planning — Line Apprentice hired — Administrative Assistant vacancy filled (promotion from Public Works) — Part-time Meter Reader hired Recruitment efforts for Lineman position(s) and Electric Materials Technician 14 Public Works Department IFOR Water/Wastewater IFY 21 Quarterly Update (Ending June 30, 2021) Wastewater Fund Cash Flow Summary (Ending June 30, 2021) *Of the remaining capital budget, $4,890,939 or 51% of the total budget was rolled to the next FY in either encumbered contracts or 2 for projects that were not started in fiscal year 20/21. Budget Actuals % of Budget Revenue Sales 16,389,300 16,780,668 102% Development Impact Mitigation Fees 2,437,880 2,479,646 102% Other (interest, septic, misc.) 602,230 1,357,713 225% Total Revenues 19,429,410 20,618,027 106% Expenses Operating 9,190,564 7,889,882 86% Capital *9,526,679 3,596,122 38% Debt Service 3,340,970 3,550,012 106% Cost of Services Payment To General Fund 1,084,700 1,084,700 100% Total Expenses 23,142,913 16,120,716 70% Beginning Cash (Operations Only) 16,849,190 Ending Cash (Operations Only) 15,965,505 Days Cash (Excluding Capital) 465 % of Target — 180 Days Cash on Hand 258% *Of the remaining capital budget, $4,890,939 or 51% of the total budget was rolled to the next FY in either encumbered contracts or 2 for projects that were not started in fiscal year 20/21. Wastewater Operating Results (Ending June 30, 2021) 3 Budget Actuals % of Budget Personnel $ 4,595,340 $ 3,925,710 85% Supplies, Materials, Services $ 2,966,250 $ 2,563,920 86% Equipment, Land, Structures $ 340,234 $ 145,123 43% Other Payments $ 440,500 $ 366,527 83% Utilities $ 822,430 $ 863,602 105% Work for Others $ 25,810 $ 25,000 97% Total Operating Expenses $ 9,190,564 $ 7,889,882 86% 3 Wastewater Funds Cash Balances (Ending June 30, 2021) Actual Reserves vs. Target 18,000,000 279% 267% 273% 258% 16,000,00❑ 14,000,000 215% 12,000,00❑ 1❑,000,00❑ 8,000,000 6,000, 00❑ 4,000, 00❑ 2,000,00❑ 16/17 17/18 18/19 19/20 20121 Amounts above reserve target are held for scheduled ■Target capital maintenance Actual El Operating (530) 1519651505 Utility Capital / Infrastructure Replacement (531) 6,200,143 Capital Reserve (532) (Fund used to pay White Slough COP Debt Service) (1,553,239) Wastewater IMF (533) 3,271,065 Rate Stabilization Reserve (534) 500,000 Storm Drain IMF (535) 2,208,042 Total 26,591,516 Actual Reserves vs. Target 18,000,000 279% 267% 273% 258% 16,000,00❑ 14,000,000 215% 12,000,00❑ 1❑,000,00❑ 8,000,000 6,000, 00❑ 4,000, 00❑ 2,000,00❑ 16/17 17/18 18/19 19/20 20121 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 FY 25-26 Budget Forecast Forecast Forecast Forecast Forecast Available Cash $15,965,505 $15,210,508 $10,957,600 $7,976,500 $11,385,300 $12,241,100 Days Cash 465 414 293 208 327 282 (180 day target) Minimum $3,156,500 $3,345,500 Reserve Target (25%) Reserve Target $6,313,000 $6,691,000 (50%) % of Days Cash Target 258% 230% $3,420,500 $3,497,500 $3,176,500 $6,841,000 $6,995,000 $6,353,000 163% 116% 182% $3,786,500 7,573,000 157% Wastewater Planned Capital Projects MSC Fence Storm Drain Trash Handling MUS PW Admin Building Remodel Misc. System Relocations Misc. Wastewater Taps 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 Irrigation Improvements Digester #3 Cleaning Digester #4 Lib Rehab 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 Mosquito Pond Totals FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 44,781 225,895 350,000 350,000 350,000 350,000 150,000 35,000 35,000 35,000 35,000 35,000 40,000 40,000 40,000 40,000 40,000 2,287,328 2,000,000 250,000 200,000 200,000 200,000 200,000 100,000 200,000 28,560 125,000 125,000 125,000 25,000 32,019 75,000 75,000 75,000 450,000 75,000 13,920 750,000 500,000 100,000 138,896 100,000 110,000 100,000 75,000 100,000 200,000 200,000 200,000 200,000 200,000 200,000 69,875 1,000,000 3,000,000 500,000 150,000 150,000 150,000 150,000 150,000 320,000 754,848 1,000,000 7,000,000 5,500,000 450,000 112,000 $3,596,122 $10,007,000 $7,935,000 $6,775,000 $2,775,000 $1,600,000 no Water Fund Cash Flow Summary (Ending June 30, 2021) *Of the remaining capital budget, $4,017,889 or 35% of the total budget was rolled to the next FY in either encumbered contracts or for projects that were not started in fiscal year 20/21. 7 Budget Actuals % of Budget Revenue Sales 13,141,780 14,106,807 107% Development Impact Mitigation Fees 1,135,440 1,165,001 103% Other (interest, tap fees, water meters, misc.) 827,710 1,306,497 158% Total Revenues 15,104,930 16,578,305 110% Expenses Operating 7,616,210 7,237,615 95% Capital *11,331,876 5,894,827 52% Debt Service 2,073,650 1,943,200 94% Cost of Services Payment To General Fund 843,850 843,850 100% Total Expenses 21,333,586 15,919,492 75% Beginning Cash (Operations Only) 5,038,332 Ending Cash (Operations Only) 8,135,692 Days Cash (Excluding Capital) 296 % of Target — 180 Days Cash on Hand 165% *Of the remaining capital budget, $4,017,889 or 35% of the total budget was rolled to the next FY in either encumbered contracts or for projects that were not started in fiscal year 20/21. 7 Water Operating Results (Ending June 30, 2021) Budget Actuals % of Budget Personnel $ 3,368,330 $ 3,102,741 92% Supplies, Materials, Services $ 1,756,460 $ 1,634,650 93% Equipment, Land, Structures $ 105,000 $ 40,704 39% Other Payments $ 1,688,520 $ 1,622,624 96% Utilities $ 589,050 $ 728,046 124% Work for Others $ 108,850 $ 108,850 100% Total Operating Expenses $ 7,616,210 $ 7,237,615 95% Water Funds Cash Balances (Ending June 30, 2021) 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, 000 0 Actual Reserves vs. Target 37% 16/17 17/18 18/19 1VJlU 97% Amounts above ■ Target reserve target are held for scheduled Actual capital maintenance 19/20 20121 601 Operating (560) 8,135,692 Utility Capital / Infrastructure Replacement (561) 1,824,975 IMF (562) 3,986,129 PCE/TCE Settlements 8,948,064 PCE/TCE Rates (565) 3,842,182 Total 26,737,042 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, 000 0 Actual Reserves vs. Target 37% 16/17 17/18 18/19 1VJlU 97% Amounts above ■ Target reserve target are held for scheduled Actual capital maintenance 19/20 20121 601 Available Cash Days Cash (180 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 $7,989,527 $8,223,222 $9,162,050 $11,231,550 $10,402,550 $11,014,450 296 312 301 361 326 337 $2,322,000 $2,701,500 $2,769,500 $2,838,000 $2,910,000 $2,983,500 $4,644,000 165% $5,403,000 $5,539,000 $5,676,000 $5,820,000 $5,967,000 1 173% 167% 201% 181% 187% 10 Water Meter Program MUS PW Admin Building Remodel MSC Fence 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 2020 Well Rehab Well 4R & 22 GAC Replacement Well 5 Pump Rehab Well 6R GAC 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 2,777,493 1,000,000 1,000,000 150,000 100,734 75,000 75,000 75,000 75,000 75,000 50,000 50,000 50,000 50,000 250,000 75,000 75,000 75,000 75,000 75,000 157,000 300,000 300,000 300,000 300,000 17,222 182,778 500,000 2,000,000 500,000 1,000,000 19,047 303,750 85,790 200,000 662 143,000 20,083 154,920 200,000 170,000 705 165,000 139,357 250,000 200,000 166,000 177,169 200,000 200,000 1,122,928 569,521 615,000 26,425 25,000 25,000 25,000 25,000 22,042 50,000 50,000 50,000 50,000 50,000 Totals $4,993,387 $4,266,450 $1,825,000 $825,000 $3,275,000 $1,950,000 11