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Home My WebLink AboutAgenda Report - July 20, 2022 C-04CITY OF 400 o t CALIFORNIA AGENDA ITEM Ce4 COUNCIL COMMUNICATION AGENDA TITLE: Third Quarter Fiscal Year 2021/22 Water, Wastewater and Electric Utility Department Financial Reports MEETING DATE: July 20, 2022 PREPARED BY: Deputy City Manager RECOMMENDED ACTION: Receive utility financial reports for the third quarter 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 77 percent of budget. ✓ Energy sales revenues are strong tracking at 76 percent of budget based on adjustments made at midyear to reflect an approximate 2.5 percent increase in energy usage. ✓ In addition, the utility is tracking higher than estimated interest income, payments received by others for work performed by utility personnel as a result of increasing development and business expansion activities as well as higher than estimated Cap and Trade auction proceeds due to rising auction clearing prices. 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 40 percent of budget. Approximately 40 percent of the total capital budget is allocated to the utility's building renovation project for which construction activities were completed in May; total expenses for this project will be reflected in the final Fiscal Year 2022 results. In addition, the capital budget includes over $2M in budgeted vehicle and equipment purchases. Due to long lead times associated with these items as a result of supply chain challenges, expenses may not be realized for another 12 to 24 months. RESERVES as of March 31, 2022 totaled approximately $43.7 million. These reserves are used to func pay-as-you-go capital improvement and system maintenance projects. APPROVED: "- `t, Stephen Schwabauer, City Manager 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, 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 78 percent of budget. ✓ Wastewater sales are tracking on target at 78 percent of budget. • EXPENSES are as a total tracking well below the budget at 45 percent. ✓ Operating expenses are tracking slightly higher than target at 79 percent. ✓ Capital expenses through the third quarter is tracking well below budget at 4 percent. Included in the capital budget is $2 million for the Main Replacement project which was yet to be bid out in the third quarter but will be awarded by the end of the fiscal year. 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 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 March 31, 2022 totaled $17.5 million, which is 443 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 $40 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 77 percent of budget. ✓ Water sales tracking on target at 76 percent of budget. ✓ Other revenue is tracking higher than budget due to timing of the annual DBCP settlement funds. • EXPENSES are as a total tracking well below the budget at 38 percent. ✓ Operating expenses are tracking lower than budget at 55 percent. ✓ Capital expenses are tracking well below budget at 18 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 March 31, 2022 totaled $12.4 million, which is 613 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 ACFR. Oovc�� xv�obj Andrew Keys Deputy City Manager/Internal Services Director ,. Public Works Department Water/Wastewater IFY 22 Quarterly Update (Ending March 31, 2022) Wastewater Fund Cash Flow Summary (Ending March 31, 2022) Budget Actuals % of Budget Revenue Sales 16,399,030 12,803,794 78% Development Impact Mitigation Fees 1,618,970 1,175,252 73% Other (interest, septic, misc.) 427,630 441,248 103% Total Revenues 18,445,630 14,420,294 78% Expenses Operating 8,862,924 6,983,848 79% Capital 11,456,708 437,053 4% Debt Service 3,346,260 2,832,397 85% Cost of Services Payment To General Fund 1,130,720 848,040 75% Total Expenses 24,796,612 11,101,338 45% Beginning Cash (Operations Only) 15,880,578 Ending Cash (Operations Only) 17,481,816 Days Cash (Excluding Capital) 443 % of Target — 180 Days Cash on Hand 246% Wastewater Operating Results (Ending March 31, 2022) 3 Budget Actuals % of Budget Personnel $ 4,438,920 $ 4,472,548 101% Supplies, Materials, Services $ 2,793,660 $ 1,360,240 49% Equipment, Land, Structures $ 336,054 $ 90,345 27% Other Payments $ 435,000 $ 365,241 84% Utilities $ 830,900 $ 695,474 84% Work for Others $ 28,390 $ - 0% Total Operating Expenses I $ 8,862,924 1 $ 6,983,848 1 79% 3 Wastewater Funds Cash Balances (Ending March 31, 2022) Amounts above reserve target are held for scheduled ■Target capital maintenance Actual El Actual Reserves vs. Target Operating (530) 17,481,816 Utility Capital / Infrastructure Replacement (531) 5,740,195 Capital Reserve (532) (Fund used to pay White Slough COP Debt Service) (1,504,076) Wastewater IMF (533) 4,370,220 Rate Stabilization Reserve (534) 500,000 Storm Drain IMF (535) 2,434,780 Total 29,022,935 Amounts above reserve target are held for scheduled ■Target capital maintenance Actual El Actual Reserves vs. Target 20,000,000 18,000,000 273% 279% 258% 246% 16,000,000 267/ 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 held for scheduled ■Target capital maintenance Actual El 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 $6,229,260 $2,895,900 $6,478,100 $7,060,500 Days Cash 414 (180 day target) 25 91 :K $405,000 5 Minimum $3,345,500 $3,442,000 $3,519,500 $3,810,500 $3,786,500 $3,575,500 Reserve Target (25%) Reserve Target $6,691,000 $6,884,000 $7,039,000 $6,399,000 7,621,000 (50%) % of Days Cash Target 230% 45% 14% 51% 46% 7,151,000 3% Storm Drain Trash Handling MUS PW Admin Building Remodel MUS PW Admin Building Roof 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 Mixing Imprv. 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 80,000 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 25.000 25,000 75,000 650,000 75,000 75,000 75,000 75,000 750,000 1,000,000 500,000 1,000,000 100,000 100,000 110,000 100,000 75,000 100,000 60,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 1,000,000 2,500,000 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 $12,010,000 $6,855,000 $2,400,000 $1,625,000 7,535,000 6 Water Fund Cash Flow Summary (Ending March 31, 2022) 7 Budget Actuals % of Budget Revenue Sales 13,338,910 10,145,092 76% Development Impact Mitigation Fees 1,113,050 781,863 70% Other (interest, tap fees, water meters, misc.) 605,600 703,052 116% Total Revenues 15,057,560 11,630,007 77% Expenses Operating 7,918,990 4,341,646 55% Capital 6,491,373 1,176,332 18% Debt Service 1,927,250 418,021 22% Cost of Services Payment To General Fund 959,910 719,933 75% Total Expenses 17,297,523 6,655,932 38% Beginning Cash (Operations Only) 11,009,730 Ending Cash (Operations Only) 12,436,162 Days Cash (Excluding Capital) 613 % of Target — 180 Days Cash on Hand 340% 7 Water Operating Results (Ending March 31, 2022) Budget Actuals % of Budget Personnel $ 3,295,870 $ 1,362,535 41% Supplies, Materials, Services $ 1,700,760 $ 698,371 41 Equipment, Land, Structures $ 105,000 $ 11,641 11% Other Payments $ 1,718,710 $ 1,266,026 74% Utilities $ 989,800 $ 1,003,073 101% Work for Others $ 108,850 $ - 0% Total Operating Expenses $ 7,918,990 1 $ 4,341,646 55% Water Funds Cash Balances (Ending March 31, 2022) 14,000,000 12,000,000 10,000,000 8,000,000 6,000, 000 4,000,000 679'0 2,000,000 - 0 17/18 Actual Reserves vs. Target 137% 18/19 165% 91,96 19/20 20121 340% 21122 Amounts above Targe: reserve target are Acual held for scheduled capital maintenance 0 Operating (560) 1274367162 Utility Capital / Infrastructure Replacement (561) 727,494 IMF (562) 4,907,705 PCE/TCE Settlements 8,253,691 PCE/TCE Rates (565) 3,804,300 Total 30,129,352 14,000,000 12,000,000 10,000,000 8,000,000 6,000, 000 4,000,000 679'0 2,000,000 - 0 17/18 Actual Reserves vs. Target 137% 18/19 165% 91,96 19/20 20121 340% 21122 Amounts above Targe: reserve target are Acual held for scheduled 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 $9,597,222 $8,921,250 $8,625,450 $6,254,350 $4,253,750 $4,796,950 159 145 136 97 64 71 $2,701,500 $2,769,500 $2,838,000 $2,910,000 $2,983,500 $3,059,500 $5,403,000 89% $5,539,000 $5,676,000 $5,820,000 $5,967,000 $6,119,000 81% 76% 54% 36% 39% 10 Water Meter Program MUS PW Admin Building Remodel MUS PW Admin Building Roof 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 80,000 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 $3,225,000 $2,805,000 $4,425,000 $3,925,000 $1,750,000 11 CITY OF age06 zt� zo CALIFORNIA ELECTRIC./ UTILITY Electric Utility Department FY 22 Quarterly Update (Ending March 31, 2022) City Council Meeting July 20, 2022 CITY OF lsr � O Z CALIFORNIA ELECTRIC ,UTILITY Electric Utility Fund Cash Flow Summary (March 31, 2022) Revenue Budget Actual % of Budget Sales Revenues 77,730,570 59,092,860 76% Development Impact Fees 545,000 263,634 48% Other Revenues (interest, misc) 6,553,350 5,781,250 88% Total Revenues 84,828,920 65,137,744 77% Purchase Power 48,505,000 34,740,672 72% Non Power 16,562,760 10,069,015 61% Capital Projects* 10,394,418 4,331,678 42% Debt Service 4,428,640 3,792,495 86% Cost of Service 2,542,630 1,906,972 75% In -lieu Transfer to General Fund 7,432,690 5,574,517 75% Total Expenses 89,866,138 60,415,349 67% Beginning Cash Balance (7/1/21) 42,164,766 Ending Cash Balance (3/31/22) 43,680,888 Reserve Policy Target % of Target 24,906,890 175% *Includes budget and expenses as of 3/31/22 in Munis. Current budget/forecast on Slide 5. 2 G I'YY or 1 �•� r r o t CALIFORNIA ELECTRIC UTILITY Electric Utility Funds Cash Balances (March 31, 2022) Operating Funds $ 26,9281735 Utility Outlay Reserve Fund $ 1,000,000 Low Carbon Fuel Standard Fund $ 866 Public Benefits Fund $ 67021,637 Impact Fee Fund $ 1,455,002 Solar Surcharge Fund $ 341,887 Greenhouse Gas Fund $ 7,932,761 Total $ 43,6807888 3 CITY OF A r Z CALIFORNIA ELECTRIC UTILITY Electric Utility Reserve Policy (March 31, 2022) *Includes cash held locally and at NCPA $50,000 $45,000 $40,000 $35,000 y $30,000 O o $25,000 *h $20,000 $15,000 $10,000 $5,000 Actual Reserves vs. Target FY 17/18 FY 18/19 FY 19/20 FY 20121 FY 21122 ■Actual CITarget Cash balances support City Council approved reserve requirements and provide funds for pay as you go Capital Improvement Projects. 12 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. Unspent funds will roll to FY 23. **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 $260,000 $0 Underground / Overhead Maint $1,515,776 $1,332,000 $1,042,000 $542,000 $442,000 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 $1,416,868 $140,000 $1,727,500 $1,917,500 $1,057,500 Building/Security Improvements $4,121,642 $0 $0 $0 $0 Work for Others $673,927 $550,000 $550,000 $550,000 $550,000 Vehicles & Equipment $2,200,120 $897,000 $1,010,000 $1,063,000 $170,000 Total Projects $11,515,993 $3,239,000 $4,909,500 $4,397,500 $2,294,500 *Includes approved FY 22 budget as revised including prior year rollover and staff estimates. Unspent funds will roll to FY 23. **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 $36,883,263 $37,357,373 $35,054,383 $31.985,893 $31,967,321 Days Cash 166 151 139 124 122 Reserve Target $24,906,890 $26,850,330 $28,003,227 $28,491,625 $28,894,975 of Target 148% 139% 125% 112% 111 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 (March 31, 2022) Power Sales CustomerBudget Residential (kWh) 162,893,827 130,240,190 Small Commercial 165,982,036 126,892,687 Large Commercial/Small Industrial 48,220,129 34,157,784 Industrial 67,396,337 54,428,866 Total 444,492,329 345,719,527 Customer••- Residential $ 31,900,710 $ 25,060,908 - .• Rate $ 0.1924 Small Commercial $ 29,111,750 $ 22,087,388 $ 0.1741 Large Commercial/Small Industrial $ 8,073,310 $ 5,527,267 $ 0.1618 Industrial $ 8,644,800 $ 6,417,297 $ 0.1179 Total $ 77,730,570 $ 59,092,860 $ 0.1709 7 CITY OF A r Z CALIFORNIA ELECTRIC UTILITY ECA Revenue (March 31, 2022) Customer• Residential $ 2,052,741 Small Commercial $ 1,883,793 Large Commercial / Small Industrial $ 512,041 Industrial $ 810,387 Total Revenue $ 5,258,962 CITY OF A r Z CALIFORNIA ELECTRIC UTILITY Electric Utility Fund Operating Results (March 31, 2022) 9 $ BudgetBudget 9,362,490 $ 7,379,312 79% Supplies, Materials, Services $ 5,168,710 $ 1,944,719 38% Other Payments $ 1,944,360 $ 701,426 36% Utilities $ 87,200 $ 43,558 50% Total Operating Expenses $ 16,562,760 $ 10,069,015 61% 9 G I'YY ❑F r 4 dt CALIFORNIA ELECTRIC %UTILITY Power Supply Costs (March 31, 2022) 10 Budget Actua, of Budget 69% Generation $ 34,291,580 $ 23,507,581 Transmission $ 12,836,020 $ 10,025,593 78% Management Services $ 1,377,400 $ 1,207,498 88% Total Power Supply Costs $ 48,505,000 $ 34,740,672 72% 10 CITY OF A r Z CALIFORNIA ELECTRIC UTILITY Q3 - LULL Q4 — 2022 Ql — 2023 Q2 — 2023 16Of�00'yj�0yy 140,000 120,000 100,000 80,0oo 60,000 40,000 20,000 Load Coverage Q3-2022 X14-2022 QI-2023 QZ- 2023 � Coverage SW Target Load LEU continues to meet or exceed Risk Management targets 11 ROC Matrix Load Coverage Mh Load Target (Including Purchases) 142,874 80.0% 88.8% 106,724 70.0% 82.9% 1017984 00.0% 78.0% 121,626 00.0% 69.8% Q3-2022 X14-2022 QI-2023 QZ- 2023 � Coverage SW 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 • 2 ROC meetings held January — March 2022 — Forward energy purchases approved to cover open positions through 2023 — Approved short-term renewable energy and capacity purchases — Discussed confidential Cap and Trade strategy and activities — Discussed confidential renewable energy procurement activities — Discussed impacts of prior year energy hedging activities — Approved sale of Low Carbon Fuel Standard Credits 12 C Ir Y Q F is •� a �r CALIFORNIA Strategic Areas of Focus ELECTRIC UTILITY Project Highlights • Customer — Conducted Customer Satisfaction Survey — Completed installation of 3 new Level II EV charging stations at Hutchins Street Square, Finance and Downtown Parking Garage • Technology — Held Kick Off Meeting with Magellan for Phase I Broadband Infrastructure Project — Issued Fleet Electrification Master Plan Request for Proposals • Financial — Approved short-term renewable energy purchase for additional hydroelectric resource from Nevada Irrigation District — Approved Assignment and Administration Agreements associated with federal hydroelectric contract (Western Base Resource) 13 CITr of Ar Strategic Areas of Focus C A L I FO R N I A ELECTRIC UTILITY Project Highlights (cont'd) • Reliability — Completed system wide underground inspection cycle — Continued overhead circuit re -conductor work — Approved Henning Substation Getaway Project to improve system capacity for southwest portion of Lodi — Continued substation modernization initiative planning — Continued system protection coordination update project • Workforce Planning — Continued recruitment efforts for several vacancies 14