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Home My WebLink AboutAgenda Report - October 19, 2022 C-03CITY OF fl IL 00, a a i r CALIFORNIA AGENDA ITEM IC 40 3 COUNCIL COMMUNICATION AGENDA TITLE: Fourth Quarter Fiscal Year 2021/22 Water, Wastewater and Electric Utility Department Financial Reports MEETING DATE: October 19, 2022 PREPARED BY: Deputy City Manager RECOMMENDED ACTION: Receive utility financial reports for the fourth 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 Hi hli hts • REVENUE is stable and ended the fiscal year at 101 percent of budget. ✓ Sales revenue was 101 percent of budget as energy sales exceeded estimates across all sectors. Overall, energy sales were 1.3 percent higher than expected. In addition, the utility received approximately $1 million in California Arrearage Payment Program (CAPP) funds from the State to pay down past due energy bills accumulated during the COVID pandemic. ✓ Other revenue ended the year at 106 percent of budget due to payments received from others as a result of work performed by the utility in support of new development and expansions, reimbursement of funds from the American Rescue Plan Act to the utility for energy bill credits issued to customers during the COVID pandemic, and increased auction proceeds from the consignment of freely allocated Greenhouse Gas allowances. • EXPENSES ended the year at 93 percent of budget. ✓ Non -power operating expenses ended the year at 90 percent of budget. ✓ Power supply costs ended the year at close to 100 percent of budget. ✓ Capital outlay expenses ended the year at 65 percent of budget. Unspent funds which will roll to Fiscal Year 2023 are primarily associated with system upgrade projects started later in the year and delays associated with long lead times on materials and vehicles/equipment. • RESERVES as of June 30, 2022 totaled approximately $37.7 million. These reserves are used to fund pay-as- you-go capital improvement and system maintenance projects. • CAPITAL IMPROVEMENT PROJECTS includes approximately $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. The majority of capital improvement work in Fiscal Year 2022 focused on overhead system maintenance, system capacity upgrades, work to install infrastructure associated with new development and completion of the LEU facility renovation. • 5 -YEAR FINANCIAL FORECAST indicates sufficient reserves through Fiscal Year 2024. However, based on a variety of assumptions, a CPI level rate adjustment of approximately 3 percent is projected in Fiscal Year 2025, followed by 2 percent in Fiscal Year 2026 in order to maintain Council approved reserve targets. APPROVED: (Oct s, 202210:47 PDT) Stephen Schwabauer, City Manager Wastewater Utility Highlights REVENUE is stable and ended the fiscal year at 107 percent of budget. ✓ Wastewater sales for the fiscal year ended above target at 104 percent of budget. EXPENSES as a total ended the fiscal year well below the budget at 61 percent. ✓ Operating expenses for the fiscal year ended slightly above budget at 104 percent. ✓ Capital expenses for the fiscal year were below budget at 13 percent. Included in the capital budget is $2 million for the Main Replacement project 9 which was bid in fiscal year 2022 and awarded in fiscal year 2023. Also included in the budget is $1.2 million for the design of the White Slough electrical building, $1.1 million for the White Slough fan press, $1.2 million for storm drain trash handling, $996,000 for the White Slough aeration diffuser and $500,000 for White Slough Digester #3 all of which had minimal expense in the fiscal year. RESERVES as of June 30, 2022 totaled $20.71 million which is 309 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 $36 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, UV design and 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 ended the fiscal year at 102 percent of budget. ✓ Water sales are ended the fiscal year at 102 percent of budget. • EXPENSES are as a total ended the fiscal year well below the budget at 72 percent. ✓ Operating expenses are ended the fiscal year on budget at 101 percent. ✓ Capital expenses ended the fiscal year well below budget at 26 percent. Included in the capital budget is $1.1 million for the Water Meter Project multi -family phase and over $2.3 million in well rehab projects which have not been awarded. • RESERVES as of June 30, 2022 totaled $9.6 million which is 180 percent of the 180 days cash target. These reserves are used to fund pay-as-you-go capital improvement projects. • CAPITAL IMPROVEMENT PROJECTS include $17 million in planned projects over the next five years. The major projects include water plant transmission line, membrane replacement and generator. 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 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 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. [.fir Andrew Keys Deputy City Manager/Internal Services Director CITY OF A ,91 l el0 O Z CALIFORNIA ELECTRIC 'UTILITY Electric Utility Department FY 22 Quarterly Update (Ending June 30, 2022) City Council Meeting October 19, 2022 C IT Y O F O Z CALI F O R N I A ELECTRIC ;UTILITY Electric Utility Fund Cash Flow Summary (June 30, 2022) Revenue Budget Actual % of Budget Sales Revenues 77,697,910 78,437,313 101% Development Impact Fees 596,910 426,580 71% Other Revenues (interest, misc) 6,727,100 7,133,299 106% Total Revenues 85,021,920 87,036,947 101% Power r 48,505,000 48,380,956 100% r 16,755,760 15,013,839 90% Capital Projects 12,639,952 8,213,466 65% Debt Service 4,428,640 4,383,698 99% Cost of Service 2,542,630 2,542,630 100% In -lieu Transfer to General Fund 7,432,690 7,432,690 100% Total Expenses 92,304,672 85,967,279 93% Beginning Cash Balance (7/1/21) 42,164,766 Ending Cash Balance (6/30/22) 37,741,126 Reserve Policy Target % of Target 24,906,890 152% 2 CITY OF A r Z CALIFORNIA ELECTRIC UTILITY Electric Utility Funds Cash Balances (June 30, 2022) Operating Funds $ 2117791359 Utility Outlay Reserve Fund $ 1,000,000 Low Carbon Fuel Standard Fund $ 839 Public Benefits Fund $ 5,3731265 Impact Fee Fund $ 1,131,149 Solar Surcharge Fund $ 331,164 Greenhouse Gas Fund $ 8,125,350 Total $ 3797419126 CITY OF A r Z CALIFORNIA ELECTRIC UTILITY Electric Utility Reserve Policy (June 30, 2022) *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 w --of FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22 ■Actual Marget Cash balances support City Council approved reserve requirements and provide funds for pay as you go Capital Improvement Projects. El G I'YY of r o t CALIFORNIA ELECTRIC UTILITY Capital Improvement Project 5 -Year Spending Plan *Includes approved FY 23 budget and estimated prior year rollover. **Includes planning and design costs only - construction costs estimated at -$30M and will be debt financed Note: FY 23/24 and beyond currently under review by Engineering staff 5 Budget*• $260,000 •Forecast $0 $0 Project Actual $557,064 Distribution Capacity Program $542,936 Underground / Overhead Maint $1,891,427 $1,332,000 $1,042,000 $542,000 $442,000 Streetlight Maintenance/ Repair $42,483 $50,000 $50,000 $50,000 $50,000 LED Streetlight Improvements $33,564 $466,435 $250,000 $250,000 $0 230 kV Interconnection Project** $29,798 $153,612 $20,000 $25,000 $25,000 Substation Maint/ Improvements $171,277 $1,525,296 $870,000 $870,000 $670,000 Building/Security Improvements $3,767,657 $353,984 $0 $0 $0 Work for Others $936,528 $550,000 $750,000 $750,000 $750,000 Vehicles & Equipment $783,668 $2,405,400 $1,010,000 $1,063,000 $170,000 Total Projects $8,213,466 $7,379,663 $4,252,000 $3,550,000 $2,107,000 *Includes approved FY 23 budget and estimated prior year rollover. **Includes planning and design costs only - construction costs estimated at -$30M and will be debt financed Note: FY 23/24 and beyond currently under review by Engineering staff 5 C Ir Y Q F is •� a �r CALIFORNIA ELECTRIC UTILITY 5 -Year Financial Forecast Looking Ahead Forecast assumes funding of all budgeted full-time positions in future years FY 25 and FY 26 include CPI level rate adjustments of 3% and 2% respectively to meet Council approved reserve target Co FY 21-22 Actual FY 22-23 Budget FY i •recast FY 24-25 Forecast Forecast Available Cash $37,741,126 $31,897,708 $30,502,218 $31,211,871 $33,978,911 Days Cash 177 129 123 123 132 Reserve Target $24,906,890 $26,850,330 $27,288,114 $27,769,822 $28,167,647 of Target 152% 119% 112% 112% 121 Forecast assumes funding of all budgeted full-time positions in future years FY 25 and FY 26 include CPI level rate adjustments of 3% and 2% respectively to meet Council approved reserve target Co C Ir Y Q F is •� a �r CALIFORNIA ELECTRIC UTILITY Power Sales (June 30, 2022) Power Customer• Residential • 162,893,827 164,488,219 Small Commercial 165,982,036 166,553,759 Large Commercial/Small Industrial 48,220,129 45,189,477 Industrial 67,396,337 74,307,869 Total 444,492,329 450,539,324 Class Residential $ BudgetCustomer 31,900,710 $ 32,234,880 ..- Rate $ 0.1960 Small Commercial $ 29,079,090 $ 29,876,198 $ 0.1794 Large Commercial/Small Industrial $ 8,073,310 $ 7,344,012 $ 0.1625 Industrial $ 8,644,800 $ 8,982,223 $ 0.1209 Total $ 77,697,910 $ 78,437,313 $ 0.1741 CITY OF A r Z CALIFORNIA ELECTRIC UTILITY ECA Revenue (June 30, 2022) Customer• Residential $ 3,407,236 Small Commercial $ 3,375,715 Large Commercial / Small Industrial $ 898,642 Industrial $ 1,512,652 Total Revenue $ 9,194,245 CITY OF A r Z CALIFORNIA ELECTRIC UTILITY Electric Utility Fund Operating Results (June 30, 2022) Personnel $ Budget 9,362,490 $ Actual 10,054,564 % of Budget 107% Supplies, Materials, Services $ 5,168,710 $ 3,820,942 74% Other Payments $ 2,137,360 $ 1,077,811 50% Utilities $ 87,200 $ 60,522 69% Total Operating Expenses $ 16,755,760 $ 15,013,839 90% �01 CITY OF A r Z CALIFORNIA ELECTRIC UTILITY Power Supply Costs (June 30, 2022) 10 $ Budget 34,291,580 $ Actual 32,894,137 % of Budget 95.9% Generation Transmission $ 12,836,020 $ 13,844,055 107.9% Management Services $ 1,377,400 $ 1,642,764 119.3% Total Power Supply Costs $ 48,505,000 $ 48,380,956 99.7% 10 CITY OF A r Z CALIFORNIA ELECTRIC UTILITY Q4 - 2022 01-2023 02-2023 Q3 - 2023 160,000 140,000 120,000 100,000 '8O,00o 60,000 40,000 20,006 Load Coverage MWh Load ROC Matrix Target Load Coverage (Including Purchases) 105,424 60.0% 84.2% 101,234 70.0% 78.4% 116,226 60,0% 71.3% 141,969 60,0% 67.8% Q4 - 2022 Ql - 2023 Q,2 - 2023 Q3 - 2023 M cove rage IF 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 • 3 ROC meetings held April —June 2022 — Forward energy purchases approved for 2022 and 2023 — Approved Vintage 2021/2022 Renewable Energy Credit purchases — Discussed confidential Cap and Trade strategy and activities — Discussed confidential renewable energy procurement activities — Provided hydrological conditions update — Provided update on FY 23 power supply costs — Approved sale of Low Carbon Fuel Standard Credits — Approved 2021 Power Source Disclosure Report — Approved Application for Unsecured Credit to CAISO — Approved 2021 Renewables Portfolio Standard (RPS) Report — Discussed RPS Compliance Period 3 Final Results — Approved 2021 GHG Use of Allowance Proceeds Report — Completed annual review of RPS Plan 12 C Ir Y Q F is •� a �r CALIFORNIA Strategic Areas of Focus ELECTRIC UTILITY Project Highlights • Customer — Approved rebates for purchase of new and used EVs — Approved energy efficiency loan for equipment upgrade — Approved contract with ESG to continue administration of customer rebate and assistance programs — Approved additional funding for Keep Your Cool Commercial Refrigeration Program — Approved contract to automate and streamline application process for Low Income Rate Assistance Programs • Technology — Approved contract with PowerClerk to automate and streamline solar application process — Facilitated presentation by NCPA to Council RE: Hydrogen Hub Project — Reviewed proposals and conducted interviews for Fleet Electrification Master Plan Project 13 C Ir Y Q F is •� a �r CALIFORNIA Strategic Areas of Focus ELECTRIC UTILITY Project Highlights (cont'd) • Financial — Received approval to submit Application for Unsecured Credit to CAISO to address required security associated with increased power supply costs — Submitted all required information as part of periodic rating review by S&P Global Ratings • Reliability — Participated in summer readiness training and workshops — Continued substation modernization initiative planning — Continued system protection coordination update project — Continued #6 copper replacement work on overhead system • Workforce Planning — New Hire - Senior Administrative Clerk — New Hire - Lineman — Promotion of P/T Meter Reader to F/T Field Services Representative — Promotion of Lineman to Troubleshooter — Promotion of Electric Distribution Operator I to Operator II 14 Public Works Department Water/Wastewater IFY 22 Quarterly Update (Ending June 30, 2022) Wastewater Fund Cash Flow Summary (Ending June 30, 2022) Budget Actuals % of Budget Revenue Sales 16,399,030 17,024,462 104% Development Impact Mitigation Fees 1,618,970 1,996,719 123% Other (interest, septic, misc.) 427,630 717,135 168% Total Revenues 18,445,630 19,738,316 107% Expenses Operating 8,826,870 9,143,562 104% Capital 11,456,708 1,497,036 13% Debt Service 3,346,260 3,338,608 100% Cost of Services Payment To General Fund 1,130,720 1,130,720 100% Total Expenses 24,760,558 15,109,926 61% Beginning Cash (Operations Only) 17,488,631 Ending Cash (Operations Only) 20,711,932 Days Cash (Excluding Capital) 555 % of Target — 180 Days Cash on Hand 309% Wastewater Operating Results (Ending June 30, 2022) 3 Budget Actuals % of Budget Personnel $ 4,438,920 $ 4,844,368 109% Supplies, Materials, Services $ 2,793,660 $ 2,480,705 89% Equipment, Land, Structures $ 300,000 $ 135,082 45% Other Payments $ 435,000 $ 724,605 167% Utilities $ 830,900 $ 931,303 112% Work for Others $ 28,390 $ 27,500 97% Total Operating Expenses I $ 8,826,870 1 $ 9,143,562 1 104% 3 Wastewater Funds Cash Balances (Ending June 30, 2022) Amounts above reserve target are held for scheduled ■Targe[ capital maintenance Actual El Actual Reserves vs. Target Operating (530) 20,7111932 Utility Capital / Infrastructure Replacement (531) 41985,295 Capital Reserve (532) (Fund used to pay White Slough COP Debt Service) (3,190,320) Wastewater IMF (533) 4,923,319 Rate Stabilization Reserve (534) 500,000 Storm Drain IMF (535) 2,463,937 Total 30,394,163 Amounts above reserve target are held for scheduled ■Targe[ capital maintenance Actual El Actual Reserves vs. Target 22,000,000 309% 20,000,000 18,000,000 267% 273% 279% 258% 16,000,000 14,000,000 12,000,000 10,000,000 8,000, 000 6,000, 000 4,000, 000 7 2,000,000 0 - 17/18 18/19 19/20 20121 21122 Amounts above reserve target are held for scheduled ■Targe[ 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 Actual Forecast Forecast Forecast Forecast Forecast Available Cash $20,711,932 $12,017,701 $4,699,000 $5,248,500 $5,779,100 $1,427,300 1 Days Cash (180 day target) Minimum Reserve Target (25%) Reserve Target (50%) % of Days Cash Target 540 319 122 150 137 33 $3,499,681 $3,441,000 $3,518,500 $3,198,500 $3,809,500 $3,895,500 $6,999,362 $6,882,000 $7,037,000 $6,397,000 7,619,000 7,791,000 300% 177% 68% 83% 76% 19% 5 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 White Slough Office Roof 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 Lower Sacramento Road Public Improvements Electrical Upgrades/SCADA Construction UV Design/Replacement Wastewater Planned Capital Projects FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 750,000 281,766 350,000 350,000 350,000 107,252 80,000 35,000 35,000 35,000 35,000 35,000 40,000 40,000 40,000 40,000 40,000 4,395 1,995,605 1,000,000 250,000 200,000 200,000 200,000 200,000 95,343 200,000 200,000 44,073 125,000 125,000 25,000 25.000 25,000 41,786 650,000 75,000 75,000 75,000 75,000 750,000 1,000,000 500,000 1,000,000 100,000 416,084 110,000 100,000 75,000 100,000 60,000 200,000 200,000 200,000 200,000 200,000 200,000 178,208 3,321,792 7,860 2,992,140 500,000 150,000 150,000 150,000 150,000 150,000 203,743 10, 879 105,647 3,000,000 8,000,000 2,500,000 450,000 2,000,000 Totals $1,497,036 $14,069,537$10,355,000 $4,900,000 $1,625,000 $5,535,000 6 Water Fund Cash Flow Summary (Ending June 30, 2022) Budget Actuals % of Budget Revenue Sales 13,338,910 13,618,433 102% Development Impact Mitigation Fees 1,113,050 1,198,960 108% Other (interest, tap fees, water meters, misc.) 605,600 604,463 100% Total Revenues 15,057,560 15,421,856 102% Expenses Operating 7,918,990 7.977,599 101% Capital 6,670,473 1,709,811 26% Debt Service 1,927,250 1,910,050 99% Cost of Services Payment To General Fund 959,910 959,910 100% Total Expenses 17,476,623 12,557,370 72% Beginning Cash (Operations Only) 12,441,032 Ending Cash (Operations Only) 9,614,372 Days Cash (Excluding Capital) 324 % of Target — 180 Days Cash on Hand 180% Water Operating Results (Ending June 30, 2022) Budget Actuals M % of Budget Personnel $ 3,295,870 $ 3,121,407 95% Su lies, Materials, Services $ 1,700,760 $ 1,553,917 91 Equipment, Land, Structures $ 105,000 $ 13,448 13% Other Payments $ 1,718,710 $ 2,036,404 118% Utilities $ 989,800 $ 1,252,424 127% Work for Others $ 108,850 $ - 0% Total Operating Expenses $ 71918,990 $ 7,977,599 101 Water Funds Cash Balances (Ending June 30, 2022) 12,000,000 10,000,000 8,000, 000 6,000, 000 4,000, 000 2,000,000 0 Actual Reserves vs. Target 180% 165% 0 17/18 18/19 19/20 20/21 2122 - = Amounts above reserve target are held for scheduled capital maintenance W Operating (560) 9,614,372 Utility Capital / Infrastructure Replacement (561) 1,650,128 IMF (562) 5,432,236 PCE/TCE Settlements 8,015,484 PCE/TCE Rates (565) 3,765,892 Total 28,441,916 12,000,000 10,000,000 8,000, 000 6,000, 000 4,000, 000 2,000,000 0 Actual Reserves vs. Target 180% 165% 0 17/18 18/19 19/20 20/21 2122 - = Amounts above reserve target are held for scheduled capital maintenance W 5 -Year Financial Forecast FY 21-22 Budget Available Cash $9,614,372 Days Cash 324 (180 day target) Minimum $2,626,500 Reserve Target (25%) Reserve Target $5,253,000 (50%) % of Days Cash 180% Target FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 Forecast Forecast Forecast Forecast Forecast $11,080,899 $11,628,650 $10,135,450 $9,048,350 $10,541,750 377 386 328 286 325 $2,681,000 $3,067,325 $2,816,500 $2,887,500 $2,961,500 1 $5,362,000 $6,134,650 $5,633,000 $5,775,000 $5,923,000 1 210% 215% 182% 159% 180% 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 26-27 128,138 1,500,000 1,500,000 107,252 80,000 75,000 75,000 75,000 75,000 75,000 50,000 50,000 250,000 250,000 500,000 75,000 75,000 75,000 75,000 150,000 300,000 300,000 300,000 300,000 300,000 (6,915) 275,865 1,000,000 2,500,000 500,000 1,500,000 530,897 400,000 400,000 400,000 400,000 400,000 200,000 94,432 96,781 200,000 170,000 165,000 250,000 200,000 200,000 250,000 250,000 250,000 250,000 689,405 29,172 25,000 25,000 25,000 25,000 25,000 40,649 50,000 50,000 100,000 100,000 100,000 Totals $1,709,811 $4,285,865 $2,805,000 $4,425,000 $3,925,000 $1,750,000 11