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Home My WebLink AboutAgenda Report - March 16, 2022 C-05C�=5 CITY O F AGENDA ITEM IVzb�410 Z CALIFORNIA COUNCIL COMMUNICATION AGENDA TITLE: First and Second Quarters Fiscal Year 2021/22 Water, Wastewater and Electric Utility Department Financial Reports MEETING DATE: March 16, 2022 PREPARED BY: Deputy City Manager RECOMMENDED ACTION: Receive utility financial reports for the first and second quarters of Fiscal Year 2021/22. 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 nearly 60 percent of budget. ✓ Energy sales are tracking at 57 percent of budget. Energy sales tend to track higher during the early, warmer months of the fiscal year. ✓ In addition, the utility is tracking higher than estimated revenue overall primarily due to the Cap and Trade Program with auction prices clearing higher than anticipated. EXPENSES are tracking at nearly 50 percent of budget halfway through the year. ✓ Non -power operating expenses are tracking at 40 percent of budget. ✓ Power supply costs are tracking at 56 percent of budget. Adjustments to forecasted power supply costs are addressed each year as part of the midyear budget review. Should the dry weather continue, less than ideal hydro conditions will contribute to power supply costs tracking higher than original estimates. ✓ Capital outlay expenses are tracking at close to 20 percent of budget. Progress continues to be made on the utility's building renovation project anticipated to be completed in April. Most vehicle and equipment purchases have been submitted to vendors; however, due to longer lead times, actual expenses may not be realized for these budgeted expenses until later this fiscal year or early next fiscal year. RESERVES as of December 31, 2021 totaled approximately $41 million. These reserves are used to fund pay-as-you-go capital improvement and system maintenance projects as well as provide funding, when needed, for business related areas of risk such as market power volatility and the cost of `T APPROVED: 5t , ��` (Wr8.202. fR59P5T) Stephen Schwabauer, City Manager replacement power during dry year conditions for which costs cannot reasonably be forecasted and budgeted. 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 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. Wastewater Utility Highlights • REVENUE is stable and tracking at 51 percent of budget. ✓ Wastewater sales are tracking on target at 50 percent of budget. • EXPENSES are as a total tracking well below the budget at 23 percent. ✓ Operating expenses are tracking lower than budget at 36 percent. ✓ Capital expenses for the first two quarters are tracking below budget at 2.5 percent. Included in the capital budget is $2 million for the Main Replacement project which has yet to be bid out. Also included in the budget is $1 million for the Fan Press Replacement, $3 million for the Aeration Diffuser Replacement and $500,000 for the Digester #2 Cleaning projects at White Slough. Capital expense is tracking far lower than budget due to many of the projects either not bid or awarded yet. • RESERVES as of December 3, 2021 totaled $15.9 million which is 413 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 over $36 million in planned projects through fiscal year 26/27. 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 2027. Water Utility Highlights • REVENUE is stable and tracking at 54 percent of budget. ✓ Water sales tracking slightly above target at 55 percent of budget. ✓ Other revenue is tracking low due to timing of the annual DBCP settlement funds. • EXPENSES are as a total tracking well below the budget at 27 percent. ✓ Operating expenses are tracking slightly lower than budget at 40 percent. ✓ Capital expenses are tracking well below budget at 12 percent. Included in the capital budget is almost 615,000 for the Well 28 GAC Treatment, almost 300,000 for the Meter Shop construction and 300,000 for the 2020 Well Rehab project in which the contract had been awarded in a prior fiscal year but with significant delays the expense had yet to be incurred. • RESERVES as of December 31, 2021 totaled $11 million which is 276 percent of the 180 days cash target. These reserves are used to fund pay-as-you-go capital improvement projects. • CAPITAL IMPROVEMENT PROJECTS include almost $19 million in planned projects through fiscal year 2027. 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. 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 2026. FISCAL IMPACT: There is no fiscal impact from the preparation of this report. FUNDING AVAILABLE: Adequate funding is available in the Fiscal Year 2021/22 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 Annual Comprehensive Financial Report (ACFR). a x,�Obj Andrew Keys Deputy City Manager/Internal Services Director �44aLlAL; fz asee2 Jeff 13 A lio im ed i rely 28.707810: kL PST] Charlie Swimley(Mar 8, 202214:05 PST) [Department Signature] CITY OF egg046 zt� zo CALIFORNIA ELECTRIC./ UTILITY Electric Utility Department FY 22 Quarterly Update (Ending December 31, 2021) City Council Meeting March 16, 2022 CITY OF lsr � O Z CALIFORNIA ELECTRIC ,UTILITY Electric Utility Fund Cash Flow Summary (December 31, 2021) Revenue Budget Actual % of Budget Sales Revenues 77,197,350 44,338,696 57% Development Impact Fees 596,910 184,606 31% Other Revenues (interest, misc) 4,197,130 3,815,052 91% Total Revenues 81,991,390 48,338,354 59% Purchase Power 46,200,000 26,013,637 56% Non Power 17,417,080 6,894,075 40% Capital Projects 13,106,431 2,228,000 17% Debt Service 4,428,640 2,910,370 66% Cost of Service 2,542,630 1,271,315 50% In -lieu Transfer to General Fund 7,432,690 3,716,345 50% Total Expenses 91,127,471 43,033,742 47% Beginning Cash Balance (7/1/21) 42,164,766 Ending Cash Balance (12/31/21) 40,960,605 Reserve Policy Target % of Target 24,906,890 164% 2 CITY OF A r Z CALIFORNIA ELECTRIC UTILITY Electric Utility Funds Cash Balances (December 31, 2021) Operating Funds $ 26,5131609 Utility Outlay Reserve Fund $ 1,000,000 Low Carbon Fuel Standard Fund $ 864 Public Benefits Fund $ 47129,712 Impact Fee Fund $ 1,366,814 Solar Surcharge Fund $ 341,088 Greenhouse Gas Fund $ 7,608,518 Total $ 40,9607605 3 CITY OF A r Z CALIFORNIA ELECTRIC UTILITY Electric Utility Reserve Policy (December 31, 2021) *Includes cash held locally and at NCPA $45,000 $40,000 $35,000 $30,000 c $25,000 0 �. $20,000 cry $15,000 $10,000 $5,000 Actual Reserves vs. Target FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22 ■Actual p Target Cash balances support City Council approved reserve requirements and provide funds for pay as you go Capital Improvement Projects. 0 C Ir Y o f is •� a �r CALIFORNIA ELECTRIC UTILITY Capital Improvement Project 5 -Year Spending Plan *Includes approved FY 22 budget as revised including prior year rollover and staff estimates **Includes planning and design costs only — construction costs estimated at —$30M and will be debt financed 5 •recast Forecast • Forecast $0 Project Budget*• $1,100,000 Distribution Capacity Program $0 $0 $0 Underground / Overhead Maint $1,515,776 $1,081,000 $937,000 $922,000 $422,000 Streetlight Maintenance / Repair $74,250 $50,000 $50,000 $50,000 $50,000 LED Streetlight Improvements $250,000 $250,000 $250,000 $250,000 $0 230 kV Interconnection Project** $163,410 $20,000 $20,000 $25,000 $25,000 Substation Maint/ Improvements $1,392,795 $500,000 $500,000 $0 $0 Building/Security Improvements $4,024,142 $0 $0 $0 $0 Work for Others $673,927 $550,000 $550,000 $550,000 $550,000 Vehicles & Equipment $2,200,120 $845,000 $1,010,000 $1,063,000 $170,000 Total Projects $11,394,420 $3,296,000 $3,317,000 $2,860,000 $1,217,000 *Includes approved FY 22 budget as revised including prior year rollover and staff estimates **Includes planning and design costs only — construction costs estimated at —$30M and will be debt financed 5 CITY OF qtwilb,�, r 5 -Year Financial Forecast CALIFORNIA Looking Ahead ELECTRIC UTILITY 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 0 FY 21-22 FY 22-23 FY i FY 24-25 •Forecast Budget Forecast• Available Cash $36,622,336 $35,884,948 $34,453,628 $32,652,972 $32,047,674 Days Cash 164 158 149 138 134 Reserve Target $24,906,890 $26,208,081 $26,578,289 $27,021,930 $27,388,776 of Target 147% 137% 130% 121 % 117% 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 0 C Ir Y Q F is •� a �r CALIFORNIA ELECTRIC UTILITY Power Sales (December 31, 2021) Power Sales CustomerBudget Residential (kWh) 168,667,005 95,084,131 Small Commercial 156,990,285 90,914,433 Large Commercial/Small Industrial 44,466,148 24,115,574 Industrial 63,886,577 36,535,075 Total 434,010,015 246,649,213 Customer••- Residential $ 33,340,988 $ 18,584,363 - .• Rate $ 0.1954 Small Commercial $ 28,017,519 $ 16,696,038 $ 0.1836 Large Commercial/Small Industrial $ 7,534,122 $ 4,233,640 $ 0.1755 Industrial $ 8,304,721 $ 4,824,655 $ 0.1320 Total $ 77,197,350 $ 44,338,696 $ 0.1798 7 CITY OF A r Z CALIFORNIA ELECTRIC UTILITY ECA Revenue (December 31, 2021) Customer• Residential $ 1,780,096 Small Commercial $ 1,605,075 Large Commercial / Small Industrial $ 435,847 Industrial $ 684,139 Total Revenue $ 4,505,157 CITY OF A r Z CALIFORNIA ELECTRIC UTILITY Electric Utility Fund Operating Results (December 31, 2021) 9 $ BudgetBudget 9,362,490 $ 5,235,359 56% Supplies, Materials, Services $ 5,596,722 $ 892,992 16% Other Payments $ 2,370,668 $ 735,902 31% Utilities $ 87,200 $ 29,822 34% Total Operating Expenses $ 17,417,080 $ 6,894,075 40% 9 G I'YY or r 4 dt CALIFORNIA ELECTRIC %UTILITY Power Supply Costs (December 31, 2021) 10 Budget Actua, of • • - 58% Generation $ 31,986,580 $ 18,547,560 Transmission $ 12,836,020 $ 6,664,516 52% Management Services $ 1,377,400 $ 801,561 58% Total Power Supply Costs $ 46,200,000 $ 26,013,637 56% 10 CITY OF A r Z CALIFORNIA ELECTRIC UTILITY Q2 — 2022 Q3 — 2022 Q4 — 2022 Ql — 2023 160,000 140,000 120,000 100,000 L 80,000 60,000 40,000 20,000 Load Coverage MINK Load ROC Matrix Target Load Coverage (Including Purchases) 118.089 80.0% 85.2% 148.324 76.7% 81.3% 108,967 66,7% 72.6% 114.067 60.0% 65.7% Q2-2022 Q3-2022 Q4-2022 QI — 2023 Coverage M Target —Load LEU continues to meet or exceed Risk Management targets 11 VeI ry OF a Risk Oversight Committee (ROC) CALIFORNIA ELECTRIC UTILITY Report Highlights 0 6 ROC meetings held July— December 2021 — Completed 3 -Year review of Energy Risk Management Policy — Forward gas/energy purchases approved to cover open positions through 2024 — Approved short-term renewable energy and capacity purchases — Discussed confidential Cap and Trade strategy and activities — Discussed confidential renewable energy procurement activities — Approved Annual Power Source Disclosure/Power Content Label Reports — Approved Annual GHG Use of Allowance Proceeds Report — Recommended approval of WAPA Base Resource Assignment and NCPA Assignment Administration Agreement — Approved agreements associated with two confidential pilot projects — Discussed summer energy hedging activities — Recommended Council approval to use reserve funds to reduce energy cost adjustment for customers — Discussed RPS long-term procurement requirements 12 C Ir Y Q F is •� a �r CALIFORNIA Strategic Areas of Focus ELECTRIC UTILITY Project Highlights • Customer — Expanded new jobs discount program — Approved contract for replacement/installation of public EV charging stations • Technology — Authorized design and project management contract with Magellan for Phase I Broadband Infrastructure Project • Financial — Approved new LED dusk to dawn tariff — Authorized use of operating reserves to reduce energy cost adjustment for customers — Approved long-term renewable energy purchase for additional hydroelectric resource from South Feather Water & Power Agency — Expanded purchasing authority to address supply chain challenges 13 C Ir Y Q F is •� a �r CALIFORNIA Strategic Areas of Focus ELECTRIC UTILITY Project Highlights (cont'd) • Reliability — Removed hazardous trees under power lines along Lower Sacramento Road — Approved updated Wildfire Mitigation Plan — Approved purchase of asset data and management solution software — Continued work related to replacement of overhead #6 copper conductor • Workforce Planning — Field Services Supervisor promoted to Electric Materials Technician — Lineman hired — Part-time Administrative Clerk hired — Electric Distribution Operator hired 14 ,. Public Works Department Water/Wastewater IFY 22 Quarterly Update (Ending December 31, 2021) Wastewater Fund Cash Flow Summary (Ending December 31, 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 16,399,030 8,135,126 50% Development Impact Mitigation Fees 1,618,970 914,975 57% Other (interest, septic, misc.) 427,630 330,928 77% Total Revenues 18,445,630 9,381,028 51% Expenses Operating 8,471,104 3,069,925 36% Capital 12,813,887 316,826 2.5% Debt Service 3,346,260 1,903,848 57% Cost of Services Payment To General Fund 1,130,720 565,360 50% Total Expenses 25,761,971 5,855,959 23% Beginning Cash (Operations Only) 15,965,505 Ending Cash (Operations Only) 15,982,416 Days Cash (Excluding Capital) 744 % of Target — 180 Days Cash on Hand 413% *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 December 31, 2021) 3 Budget Actuals % of Budget Personnel $ 3,952,380 $ 1,712,140 43% Supplies, Materials, Services $ 2,888,380 $ 557,600 19% Equipment, Land, Structures $ 336,054 $ 47,648 14% Other Payments $ 435,000 $ 243,104 56% Utilities $ 830,900 $ 509,433 61% Work for Others $ 28,390 $ - 0% Total Operating Expenses $ 8,471,104 $ 3,069,925 36% 3 Wastewater Funds Cash Balances (Ending December 31, 2021) Amounts above reserve target are Ta,,e: held for scheduled capital maintenance HClla Ell Operating (530) 15,982,416 Utility Capital / Infrastructure Replacement (531) 5,835,607 Capital Reserve (532) (Fund used to pay White Slough COP Debt Service) (1,504,076) Wastewater IMF (533) 4,055,891 Rate Stabilization Reserve (534) 500,000 Storm Drain IMF (535) 2,392,388 Total 29,214,487 Amounts above reserve target are Ta,,e: held for scheduled capital maintenance HClla Ell Actual Reserves vs. Target 18,000,000 0 267/0 273% 279% 258% 413% 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 17/18 18/19 19/20 20121 21122 Amounts above reserve target are Ta,,e: held for scheduled capital maintenance HClla Ell 5 -Year Financial Forecast FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 Budget Forecast Forecast Forecast Forecast Forecast Available Cash $15,185,508 $10,902,900 $7,891,200 $11,268,400 $12,120,700 $5,747,400 Days Cash 414 291 206 323 292 (180 day target) 135 Minimum $3,345,500 $3,420,500 $3,497,500 $3,176,500 $3,786,500 $3,872,000 Reserve Target (25%) Reserve Target $6,691,000 $6,841,000 $6,995,000 $6,353,000 7,573,000 (50%) % of Days Cash Target 230% 162% 114% 180% 162% 7,744,000 75% 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 Beckman 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 Wastewater Planned Capital Projects FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 350,000 350,000 350,000 350,000 750,000 150,000 35,000 35,000 35,000 35,000 35,000 35,000 40,000 40,000 40,000 40,000 40,000 40,000 2,000,000 1,000,000 250,000 200,000 200,000 200,000 200,000 100,000 200,000 200,000 125,000 125,000 125,000 25,000 75,000 75,000 75,000 450,000 75,000 75,000 750,000 1,000,000 500,000 100,000 100,000 110,000 100,000 75,000 100,000 60,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 1,000,000 3,000,000 500,000 150,000 150,000 150,000 150,000 150,000 150,000 320,000 1,000,000 7,000,000 5,500,000 450,000 4,000,000 112,000 Totals $10,007,000 $7,935,000 $6,775,000 $2,775,000 $1,600,000 7,510,000 0 Water Fund Cash Flow Summary (Ending December 31, 2021) 7 Budget Actuals % of Budget Revenue Sales 13,338,910 7,271,177 55% Development Impact Mitigation Fees 1,113,050 571,933 51% Other (interest, tap fees, water meters, misc.) 605,600 234,597 39% Total Revenues 15,057,560 8,077,707 54% Expenses Operating 7,936,029 3,198,738 40% Capital 7,983,327 977,237 12% Debt Service 1,927,250 418,021 22% Cost of Services Payment To General Fund 959,910 479,955 50% Total Expenses 18,806,516 5,073,951 27% Beginning Cash (Operations Only) 8,135,692 Ending Cash (Operations Only) 11,063,546 Days Cash (Excluding Capital) 496 % of Target — 180 Days Cash on Hand 276% 7 Water Operating Results (Ending December 31, 2021) Budget Actuals % of Budget Personnel $ 3,295,870 $ 1,160,291 35% Supplies, Materials, Services $ 1,710,760 $ 383,977 22% Equipment, Land, Structures $ 112,039 $ 9,646 9% Other Payments $ 1,718,710 $ 785,304 46% Utilities $ 989,800 $ 859,519 87% Work for Others $ 108,850 $ - 0% Total Operating Expenses $ 7,936,029 $ 3,198,738 40% Water Funds Cash Balances (Ending December 31, 2021) Actual Reserves vs. Target 12,000,000 10,000,000 � - 8,000,000 6,000,000 4,000,000 67% 2,000,000 - 0 137% 17/18 18/19 165% 0 19/20 20121 276% 21122 Amounts above ■Target reserve target are held for scheduled Actual capital maintenance 0 Operating (560) 1170637546 Utility Capital / Infrastructure Replacement (561) 405,489 IMF (562) 4,634,823 PCE/TCE Settlements 8,312,918 PCE/TCE Rates (565) 3,820,359 Total 28,237,135 Actual Reserves vs. Target 12,000,000 10,000,000 � - 8,000,000 6,000,000 4,000,000 67% 2,000,000 - 0 137% 17/18 18/19 165% 0 19/20 20121 276% 21122 Amounts above ■Target reserve target are held for scheduled Actual capital maintenance 0 Available Cash Days Cash (180 day target) Minimum Reserve Target (25%) Reserve Target (50%) % of Days Cash Target 5 -Year Financial Forecast FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 Budget Forecast Forecast Forecast Forecast Forecast $9,655,222 $8,014,050 $7,911,050 $5,649,450 $4,953,750 $5,648,950 326312 264 254 177 152 168 $2,701,500 $2,769,500 $2,838,000 $2,910,000 $2,983,500 $3,059,500 $5,403,000 181% $5,539,000 $5,676,000 $5,820,000 $5,967,000 $6,119,000 147% 141% 98% 84% 94% 10 Water Meter Program MUS PW Admin Building Remodel 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 Water Well Rehab 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 18 Pump Rehab Well 21 Pump Rehab Well 22 Pump Rehab Well 23 Pump Rehab Well 25 Pump Rehab Well 3R Pump Rehab Well 15 Pump Rehab Well 28 GAC Treatment Project Planning Vehicles/Equipment Water Planned Capital Projects FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 1,500,000 1,500,000 200,000 75,000 75,000 75,000 75,000 75,000 75,000 50,000 50,000 50,000 250,000 250,000 500,000 75,000 75,000 75,000 75,000 75,000 150,000 157,000 300,000 300,000 300,000 300,000 300,000 282,778 1,000,000 2,500,000 500,000 1,500,000 303,750 400,000 400,000 400,000 400,000 400,000 200,000 143,000 154,920 200,000 170,000 165,000 250,000 200,000 200,000 250,000 250,000 250,000 250,000 615,000 25,000 25,000 25,000 25,000 25,000 25,000 50,000 50,000 50,000 100,000 100,000 100,000 Totals $2,916,450 $4,225,000 $2,725,000 $4,425,000 $2,925,000 $1,750,000 11